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+advocate v.拥护，提倡 +aerial adj.天空的，航空的 +aeroplane n.飞机 +affair n.事件，事情 +affect v.影响，改变 +affection n.友爱，爱慕 +affectionate adj.充满感情的 +affiliate n.分号(公司) +affirm v.断言，肯定 +affirmation n.确定，确认 +affirmative adj.肯定的 +afford v.买得起，经受得起 +affordable adj.买得起的 +afloat adj.航行中的 +aforesaid adj.上述的 +afraid adj.害怕的，恐怕 +africa n.非洲 +african adj.非洲的 n.非洲人 +after prep.在...后 +afternoon n.下午 +afterward adv.后来 +again adv.再，又 +against prep.反对，对着 +age n.年龄，时代 +agency n.代理，代理处 +agent n.代理人，试剂 +aggravate v.加重，恶化 +aggravation n.加重，恶化 +aggregate v.,n.,adj.合计(的) +aggregation n.总计，集合 +aggression n.侵略 +aggressive adj.侵略的，进取的 +aggressor n.侵略者 +agitate v.鼓动 +agitation n.鼓动，不安 +ago adv....以前 +agonize v.使痛苦 +agony n.苦恼，痛苦 +agree v.同意，一致认为 +agreeable adj.惬意的，易相处的 +agreeably adv.欣然，依照 +agreed adj.商定的 +agreement n.一致，协议 +agricultural adj.农业的 +agriculture n.农业 +ahead adv.在...前 +aid n.,v.援助，救护 +aids n.(缩)艾滋病 +ailment n.疾病 +aim n.目的 v.旨在，指向 +aimless adj.无目的的 +air n.空气，气派 +aircraft n.航空器 +airline n.航线，航空公司 +airliner n.定期航班 +airmail n.航空邮件 +airplane n.飞机 +airport n.机场 +airway n.航线 +aisle n.过道，走廊 +ajar adv.半开的 +alarm n.惊慌，警报 +alarming adj.警告的 +alas int.唉，哎呀 +album n.相册，地图册 +alcohol n.酒精 +alcoholic adj.含酒精的 +alcoholism n.嗜酒者，酒鬼 +ale n.淡啤酒 +alert adj.警惕的，灵活的 +algebra n.代数 +alien adj.异国的，异样的 +alienate v.疏远，转让，挪用 +alienation n.异化 +alignment n.对准，准线 +alike adj.相象的 +alive adj.活着的，有生命的 +all adj.所有的 n.一切 +allergic adj.过敏的，变态的 +allergy n.反感，过敏 +alliance n.联合，同盟 +allied adj.同盟的 +allocate v.分配 +allocation n.分配 +allot v.分配，配给 +allotment n.分配，份额 +allow v.允许，许可 +allowance n.补助，津贴 +alloy n.合金 +ally n.同盟者 v.结盟 +almost adv.几乎，差不多 +alone adj.单独的，仅仅 +along prep.沿着 adv.一起 +alongside prep.在...旁边 +aloud adv.大声地 +alphabet n.字母表 +also adv.也 +alter v.改变，变动 +alternate v.轮流，交替 +alternation n.改变，变更 +alternative n.,v.两者取一 +although conj.虽然 +altitude n.高度 +altogether adv.全部地，总共 +aluminum n.铝 +always adv.总是，始终 +a.m. (缩)上午 +amateur adj.业余的 +amaze v.使惊叹 +amazement n.惊奇，诧异 +ambassador n.大使 +ambient adj.周围的，包围着的 +ambiguity n.歧义性，意义不明处 +ambiguous adj.模棱两可的 +ambition n.抱负，野心 +ambitious adj.雄心勃勃的 +ambulance n.救护车 +amend v.修改，更正 +amendment n.修改(通知书) +amends n.赔偿 +america n.美国，美洲 +american adj.美国的 n.美国人 +amiable adj.和蔼的，亲切的 +amicable adj.友好的，和睦的 +amid prep.在...之间 +ammunition n.弹药 +among prep.在...之中 +amount n.数量，总数 v.合计 +ampere n.【电】安培 +ample adj.宽大的，充裕的 +amplification n.放大 +amplifier n.放大器，扩音机 +amplify v.详述，放大 +amuse v.逗乐，给娱乐 +amusement n.娱乐，乐趣 +analogue n.模拟，类似物 +analogy n.类似，类推 +analysis n.分析，分解 +analytical adj.分析的，解析的 +analyze v.分析，分解 +ancestor n.祖先，祖宗 +anchor n.锚 v.停泊 +ancient adj.古老的，古代的 +and conj.和，与，而 +anecdote n.轶事，轶闻 +angel n.天命，安琪儿 +anger n.生气，愤怒 +angle n.角，角度 +angry adj.生气的，愤怒的 +angular adj.角状的 +animal n.动物 +animate v.使有活力，激活 +animation n.生气，生机 +ankle n.踝，踝骨 +annex n.附录，附件 +anniversary n.周年纪念日 +announce v.宣布，通报 +announcement n.通知 +announcer n.播音员 +annoy v.烦扰，使生气 +annoyance n.烦恼，麻烦事 +annual adj.每年的，年度的 +annually adv.每年，年年 +another pron.,prep.另一个 +answer n.答案 v.答复 +ant n.蚂蚁 +antagonism n.对立，敌对 +antagonist n.对手，敌手 +antarctic adj.南极的 +antibiotic adj.抗菌的 +antecedent n.触角，天线 +anticipate v.期望，预料 +anticipation n.期望，预料 +antique adj.古老的 n.古玩 +antonym n.反义词 +antonymous adj.反义的 +anxiety n.焦虑，担心 +anxious adj.焦急的，切盼的 +anxiously adv.焦急地，急切地 +any adj.任何，一些 +anybody pron.任何人 +anyhow adv.无论如何 +anyone pron.无论谁 +anything pron.无论什么 +anyway adv.不管怎样 +anywhere adv.无论何地 +apart adv.分离，隔开 +apartment n.套房，公寓 +ape n.猿猴 +apologize v.道歉 +apology n.道歉 +apparatus n.仪器，设备 +apparent adj.明显的，表面上的 +apparently adj.显然，似乎 +appeal v.,n.呼吁，上诉 +appealing adj.有吸引力的 +appear v.出现，好象 +appearance n.出现，外表 +appendix n.附录，盲肠 +appetite n.食欲，欲望 +applaud v.称赞，拍手喝彩 +applause n.喝彩，欢呼 +apple n.苹果 +appliance n.用具，器械 +applicable adj.生动的，适用的 +applicant n.申请人 +application n.申请，应用 +apply v.应用，申请 +appoint v.任命，约定 +appointment n.任命，约会 +appreciable adj.可看到的 +appreciably adv.相当大地 +appreciate v.欣赏，感激 +appreciation n.欣赏，感激 +appreciative adj.感激的 +apprentice n.学校 +apprize v.通知 +approach v.接近 n.途径 +appropriate adj.恰当的 v.拨给 +approval n.同意，批准 +approve v.赞成，批准 +approximate adj.,v.近似，约略 +approximately adv.近乎，大约 +approximation n.近似值 +april n.四月 +apt adj.恰当的，易于..的 +aptitude n.才智，天资 +arab n.阿拉伯 +arabian n.阿拉伯人，阿拉伯语 +arabic adj.阿拉伯的 +arbitrary adj.专横的，任意的 +arbitrate v.仲裁 +arbitration n.仲裁 +arbitrator n.仲裁员 +arc n.弧 +arch n.拱门，弓形 +archaeologist n.考古学家 +archaeology n.考古学 +architect n.建筑师 +architecture n.建筑学 +arctic adj.北极的 +ardent adj.热心的，强烈的 +arduous adj.艰巨的，努力的 +area n.地区，面积，领域 +arena n.竞技场 +argue v.争论，辩论 +argument n.争论，论点 +arise v.起来，出现 +aristocracy n.贵族阶层 +aristocrat n.贵族 +aristocratic adj.贵族的 +arithmetic n.算术 +arm n.手臂，扶手 v.武装 +arms n.武器 +armchair n.手扶椅 +armour n.盔甲，装甲 +army n.军队，陆军 +around adv.在周围，大约 +arouse v.唤醒，唤起 +arrange v.整理，安排 +arrangement n.安排，计划 +array v.装扮，排列 +arrear n.欠款 +arrest v.逮捕，吸引 +arrival n.到达，到货 +arrive v.到达，达到 +arrogance n.傲慢 +arrogant adj.傲慢的 +arrogantly adv.傲慢地 +arrow n.箭，箭头 +art n.艺术，技艺 +article n.文章，物品，冠词 +artificial adj.人造的，假的 +artist n.艺术家 +artistic n.艺术的 +as adv.一样 prep.作为 +ascend v.登，上升 +ascertain v.查明，弄清 +ascribe v.归于 +asean n.(缩)东盟 +ash n.灰，灰烬 +ashamed adj.惭愧的，羞耻的 +ashore adv.在岸上，上岸 +ashtray n.烟灰缸 +asia n.亚洲 +asian adj.亚洲的 n.亚洲人 +aside adv.在旁边，搁在一边 +ask v.问，要求，邀请 +asleep adj.睡着的 +aspect n.容貌，方面 +aspirin n.阿斯匹林 +ass n.驴，愚蠢的人 +assassinate v.暗杀 +assassination n.暗杀 +assassinator n.暗杀者 +assault v.袭击，攻击 +assemble v.集合，装配 +assembly n.集合，装配 +assert v.断言，宣称 +assertion n.断言 +assess v.评定，估价 +assessment n.估值，评价 +assign v.分配，指定 +assignment n.任务，作业 +assist v.协助 +assistance n.协助，辅助 +assistant n.助手 +associate v.联想 adv.副的 +associated adj.联合的 +association n.协会，合营 +associative adj.联想的 +assorted adj.各种各样的 +assortment n.花色品种 +assume v.假定，担任 +assumption n.假定，假装 +assurance n.自信，保证 +assure v.使..放心，向..保证 +assured adj.感到放心的 +astonish v.使惊讶 +astonishment n.惊讶 +astound v.使惊讶 +astray adv.(信件)遗失、误传 +astronaut n.宇宙飞行员 +astronomer n.天文学家 +astronomical adj.天文学的 +astronomy n.天文学 +at prep.在，处于，以 +athlete n.田径运动员 +athletic adj.田径的 +atlantic n.,adj.大西洋(的) +atlas n.地图集 +atmosphere n.大气，气氛 +atmospheric adj.大气的，空气的 +atom n.原子，微粒 +atomic adj.原子的，原子能的 +attach v.附着于，依恋 +attachment n.依附，附件，爱慕 +attack v.,n.进攻，侵袭 +attain v.赢得，到达 +attempt v.,n.尝试，企图 +attend v.出席，照顾 +attendance n.出勤(率)，出席 +attendant n.随从，服务员 +attention n.注意，关心 +attentive adj.注意的，关心的 +attentively adv.关心地 +attic n.阁楼 +attitude n.态度，看法 +attorney n.辩护律师 +attract v.吸引，引力 +attraction adj.有吸引力的 +attributable adj.归于...的 +attribute v.属于 n.属性 +attribution n.属于 +attributive adj.定语的，属性的 +auction n.拍卖 +audience n.听众，观众 +auditorium n.礼堂 +august n.八月 +aunt n.伯(婶、姨、姑)母 +aural adj.听觉的，耳的 +auspice n.赞助，主办 +australia n.澳大利亚 +australian adj.澳大利亚的 +author n.作者，创造者 +authority n.权力，权威 +authorization n.授权 +authorize v.授权，批准 +autobiography n.自传 +automate v.自动化 +automatic adj.自动的 +automation n.自动化 +automobile n.汽车 +autonomous adj.自治的 +autonomy n.自治 +autumn n.秋天 +auxiliary adj.辅助的，补助的 +avail v.帮助，有用 n.效用 +availability n.可用性，可供货 +available adj.可得到的 +avenge v.报复 +avenue n.林荫道，途径 +average adj.平均的 n.平均数 +averagely adv.平均 +aviation n.航空 +avoid v.避免，逃避 +await v.等候，等待 +awake v.醒来,醒悟 adj.醒的 +awaken adj.醒着的 +award v.授予 n.奖，奖品 +aware adj.知道的，意识到的 +away adv.去，远离，在远处 +awe n.威惧 +awesome adj.可怕的 +awful adj.令人畏惧的 +awfully adv.可怕地，非常 +awkward adj.笨拙的，不熟练的 +awkwardly adv.笨拙地 +awkwardness n.笨拙 +ax n.斧子 +axial adj.轴的，轴向的 +axis n.轴，轴线，轴心 +axle n.(轮)轴 +baby n.婴儿，年龄最小的人 +baby-sit v.(替人)看护小孩 +baby-sitter n.看护小孩的人 +bachelor n.单身汉，学士 +back n.背 adj.背后的 +backbone n.脊梁骨 +backdate v.回溯 +background n.背景，经历 +backing n.倒退，支持物 +backlog n.未交付的订货 +backward adv.向后，逆 +backwardness n.落后(状态) +bacon n.咸肉，熏肉 +bacterium n.细菌 +bad adj.坏的，低劣的 +badge n.徽章 +badly adv.坏，非常，严重地 +badminton n.羽毛球 +baffle v.困扰，难倒 +bag n.袋子，提包 +baggage n.行李 +baggy adj.袋状的 +bait n.饵，诱饵 +bake v.烤，烘 +baker n.面包师 +bakery n.面包店 +balance n.平衡，天平，余额 +balcony n.阳台 +bald adj.秃的 +ball n.球，球状物，舞会 +ballet n.芭蕾舞 +balloon n.气球 +ballooning n.热气球飞行运动 +ball-point pen n.圆珠笔 +ballroom n.舞厅 +bamboo n.竹 +bamboo-shoot n.竹笋 +banana n.香蕉 +band n.乐队，带子 v.联合 +bandage n.绷带 +bandit n.盗匪，歹徒 +bang n.,v.砰的一响 +bank n.岸，银行 +banker n.银行家 +banking n.银行业务、金融业 +bankrupt n.,v.,adj.破产 +banner n.旗帜，横幅 +banquet n.宴会 +bar n.棒，杆，酒吧 +barber n.理发师 +bare adj.裸的，直率的 +barely adv.赤裸裸地 +bargain n.交易，便宜货 +barge n.驳船 +bark n.狗吠，树皮 v.吠 +barn n.谷仓，牲口棚 +barometer n.晴雨表，标记 +baron n.男爵 +baroness n.男爵夫人，女男爵 +barrel n.桶，枪(炮)管 +barren adj.不育的，贫瘠的 +barrier n.障碍，壁垒 +barter n.易货贸易 +base n.基础，基地 v.基于 +baseball n.棒球 +basement n.地下室，地窖 +basic adj.基本的，基础的 +basically adv.基本上，主要地 +basin n.盆，盆地 +basis n.基础，根据 +basket n.篮子，筐 +basketball n.篮球 +bat n.球拍，蝙蝠 v.击打 +bath n.洗澡，浴室 +bathe v.洗澡，冲洗 +bathroom n.浴室，洗手间 +batter v.打击 +battery n.电池 +battle n.战斗，战役 +bay n.海湾，湾 +bazaar n.集市 +b.c. (缩)公元前 +be v.是，存在 +beach n.海滩，湖滨 +bead n.有孔小珠 +beak n.鸟嘴 +beam n.梁，射线 v.发光 +bean n.豆子 +bear v.负担，忍受，生育 +bearing n.举止，意义，轴承 +bearish adj.熊市的 +beast n.野兽，牲畜 +beat v.打，击败 n.击打 +beautiful adj.美丽的，绝妙的 +beauty n.美，美女 +because conj.因为，由于 +become v.变成 +bed n.床，河床，苗圃 +bedroom n.卧室 +bee n.蜜蜂 +beef n.牛肉 +beer n.啤酒 +beetle n.甲虫 +before prep.在...前面 +beforehand adv.事先，预先 +beg v.乞讨，恳求 +beggar n.乞丐 +begin v.开始，着手进行 +beginner n.初学者 +beginning n.开端，起点 +behalf n.代表 +behave v.行为，举动 +behavior n.行为，举止 +behind prep.在...后面 +behindhand adj.落后，事后 +being n.生物，存在 +belief n.信仰，信心 +believe v.相信，认为 +bell n.钟，铃 +belly n.肚子 +belong v.属于 +beloved adj.敬爱的 n.爱人 +below adj.,prep.在...下面 +belt n.带，腰带 +bench n.长凳，工作台 +bend v.弯曲，俯身 n.拐弯 +beneath prep.在...之下 +beneficial adj.有益的，有利的 +beneficiary n.受益者 +benefit n.益处，利益 +benevolence n.慈悲，捐助 +benevolent adj.乐善好施的 +bent adj.弯曲的 +berry n.浆果 +beside prep.在...之旁 +besides adj.而且 prep...之外 +best adj.最好的 +best-seller n.畅销书(货) +best-selling adj.畅销的 +bestow v.赠给，授予 +bet n.,v.打赌 +betray v.背叛，泄露 +betrayal n.背叛，暴露 +better adj.更好的 adv.较好 +better-off adj.经济情况较好的 +between prep.在两者之间 +beverage n.饮料 +beware v.当心 +bewilder v.迷惑，茫然 +beyond prep.在...那边，超出 +bias n.偏好 +bible n.圣经 +bicycle n.自行车 +bid n.,v.报价，投标 +bidding n.投标 +big adj.大的，重大的 +bike n.自行车 +bill n.帐单，议案，钞票 +billion n.十亿 +bind v.捆绑，约束 +binding n.装订 +biographer n.传记记者 +biography n.传记 +biologist n.生物学家 +biology n.生物学 +bird n.鸟 +birth n.出生，创始 +birthday n.生日，诞辰 +birthplace n.出生地 +biscuit n.饼干 +bishop n.主教 +bit n.小片，一点 +bite n.,v.咬，叮 n.一口 +bitter adj.苦的，痛苦的 +bitterly adv.惨痛地，辛酸地 +bitterness n.苦味，苦难 +b/l n.(缩)提单 +black adj.黑的 n.黑色 +blackboard n.黑板 +blacksmith n.铁匠 +blade n.刀刃，叶片 +blame v.责备 n.过失 +blank adj.空白的 n.空格 +blanket n.毛毯 +blast n.阵风 v.爆炸 +blaze n.火光，光亮 +bleach v.漂白，变白 +bleed v.出血，流血 +blend v.混合，掺混 +bless v.保佑，祝福 +blessing n.祝福 +blind adj.瞎的 v.使失明 +blink adj.眨眼，闪烁 +block n.大块，街区，障碍物 +blockage n.封锁 +blond adj.金发的 +blood n.血，血统 +bloody adj.流血的，残忍的 +bloom n.花 v.开花 +blossom n.(果树的)花 +blot n.污迹 +blouse n.女衫 +blow v.吹，吹掉，刮风 +blue adj.蓝色的，忧郁的 +blunder n.大错 +blunt adj.钝的，生硬的 +blush v.脸红，害臊 +blushy adj.害羞的 +board n.木板，伙食，董事会 +boarding n.伙食 +boast v.夸口，以...而自豪 +boat n.小船，艇 +body n.身体，尸体，团体 +bodyguard n.保镖 +boil v.沸腾，煮沸 +boiler n.锅炉 +boiling adj.沸腾的 +bold adj.大胆的 +boldness n.胆略 +bolt n.螺检，插销 v.闩门 +bomb n.炸弹 v.轰炸 +bomber n.轰炸机 +bona fide adj.真诚的，无欺的 +bond n.束缚，联结，债券 +bonded adj.保税的 +bone n.骨，骨骼 +bony adj.骨头的 +bonus n.红利 +book n.书 v.预订(票) +booking adj.定货 +booklet n.小册子 +bookcase n.书橱 +bookshelf n.书架 +bookstore n.书店 +boom v.隆隆响，兴旺，繁荣 +booming adj.兴旺的，繁荣的 +boost v.抬高，促进 +boot n.靴子 +booth n.货摊，电话亭 +border n.国界，边境 +bore v.烦扰，使厌烦，钻孔 +boring adj.讨厌的 +born adj.出生的，天生的 +borrow v.借，借用 +borrowings n.借款 +bosom n.胸，胸怀 +boss n.上司，老板 +bossy adj.好发号施令的 +both pron.,adj.双方，两 +bother v.打扰，麻烦 n.麻烦 +bottle n.瓶子 +bottle-neck n.影响...的环节 +bottom n.底部，末尾 +bottom-line n.末行数字，结果 +bough n.大树枝 +bounce v.跳起 n.跳跃 +bound v.缚，以...为界 +boundary n.界线，边界 +bourgeois n.资产阶级分子 +bow v.鞠躬，服从 n.弓 +bowl n.碗，钵 +bowling n.保龄球 +box n.箱，盒 v.拳击 +boxer n.拳击运动员 +boxing n.拳击 +boxing-day n.节礼日 +boy n.男孩，小伙子 +boycott v.,n.抵制 +brace n.支撑 v.激励 +bracket n.括号 +brag v.吹嘘，夸口 +brain n.脑子，头脑，智能 +brake n. 制动器 v.刹车 +branch n.树枝，分支，分部 +brand n.牌子，商标 +brandy n.白兰地 +brass n.黄铜 +brave adj.勇敢的 v.冒着 +bravely adv.勇敢地 +bravery n.勇敢 +brazil n.巴西 +brazilian adj.,n.巴西的(人) +breach n.违反(契约) +bread n.面包，生计 +bread-earner n.挣钱养家的人 +breadth n.宽度，大量 +break n.打破，破坏 n.裂口 +breakage n.裂口 +breakdown n.故障，衰竭 +breakthrough n.突破 +breakfast n.早饭 +breast n.乳房，胸脯 +breath n.呼吸，气息 +breathe v.呼吸 +breed v.繁殖，饲养 n.品种 +breeze n.微风 +bribe v.贿赂 +bribery v.贿赂 +brick n.砖 +bride n.新娘 +bridegroom n.新郎 +bridge n.桥梁，桥牌 +bridle n.约束 v.抑制 +brief adj.简短的 +briefing n.简要情况 +briefly adv.简单地，简短地 +bright adj.明亮的，鲜明的 +brighten v.使发光 +brightness n.光辉，明亮 +brilliance n.辉煌，光彩 +brilliant v.辉煌的，杰出的 +brim n.边，边缘 +bring v.拿来，带来 +brink n.边缘 +brisk adj.敏捷的，活跃的 +bristle n.鬃毛 +britain n.不列颠，英国 +british adj.英国的，英属的 +brittle adj.易碎的，脆的 +broad adj.宽的，辽阔的 +broadcast v.,n.广播 +broadcasting n.广播节目 +broaden v.加宽，扩大 +brochure n.产品介绍手册 +broken adj.破碎的，毁坏了的 +broker n.经纪人 +bronze n.青铜 +brood n.一窝 +brook n.小河，溪流 +broom n.扫帚 +brother n.兄弟，同胞 +brotherhood n.兄弟情谊 +brother-in-law n.姻兄(弟) +brow n.眉毛，额 +brown n.,adj.褐色(的) +bruise n.青肿 v.打伤 +brush n.刷子，画笔 v.刷 +brutal adj.野蛮的 +brute n.禽兽，畜生 +bubble n.气泡 +bucket n.水桶 +bud n.芽，蓓蕾 +buddhism n.佛教 +buddhist n.佛教徒 +budget n.预算 +buffalo n.水牛，野牛 +buffet n.冷餐 +bug n.臭虫，虫子 +bugle n.喇叭 +build v.建造，建设 +builder n.建筑工人，建设者 +building n.建筑物，大楼 +bulb n.球形物，灯泡 +bulk n.体积，大半 +bulky adj.庞大的，笨重的 +bull n.公牛 +bullet n.子弹 +bulletin n.公报 +bullion n.金块，金条 +bullish adj.行情看涨的 +bump v.碰，颠簸 n.碰撞 +bumpy adj.颠簸不平的 +bunch n.一束 +bundle n.,v.捆，包 +burden n.担子，负担 +burdensome adj.沉重的 +bureau n.局，司，办公室 +bureaucracy n.官僚主义 +bureaucratic adj.官僚主义的 +burglar n.夜盗，窃贼 +burglary n.盗窃 +burial n.埋葬 +burn v.烧，燃烧，烧伤 +burner n.喷灯 +burnt adj.烧焦的，烧坏的 +burst v.,n.爆炸，破裂 +bury v.掩埋，安葬 +bus n.公共汽车 +bush n.灌木 +bushel n.蒲式耳(重量单位) +business n.行业，买卖，商号 +businesslike adj.事务式的 +busy adj.忙碌的，热闹的 +but prep.但是，除了 +butcher n.屠夫 v.屠宰 +butchery n.肉食店 +butt n.根端 v.顶撞 +butter n.黄油 +butterfly n.蝴蝶 +button n.钮扣，按钮 +buy v.买，购买 +buyer n.购买者 +buzz v.嗡嗡叫 n.嗡嗡声 +by prep.在...旁边，按照 +bygone n.已往的，过时的 +bypass n.旁道，分路 +by-product n.副产品 +cab n.出租汽车 +cabbage n.卷心菜；圆白菜 +cabin n.小屋，船舱 +cabinet n.橱柜，内阁 +cable n.电缆，海底电报 +cafe n.咖啡馆 +cafeteria n.自助餐厅 +cage n.笼子，鸟笼 +cake n.糕，饼 +calculate v.计算，估计 +calculation n.计算(结果) +calculus n.微积分 +calendar n.日历 +calf n.小牛，腿肚子 +calibration n.刻度，核定 +call v.叫，称为，打电话 +calm adj.宁静的，镇静的 +calmly adv.平静地，沉着地 +calorie n.热卡，卡路里 +camel n.骆驼 +camera n.照相机 +camp n.帐篷，野营 n.宿营 +campaign n.战役，运动 +camping n.野营 +campus n.校园 +can v.aux.能，会，可以 +canada n.加拿大 +canadian adj.,n.加拿大的(人) +canal n.运河，渠道 +canary n.金丝雀 +cancel v.删除，取消 +cancellation n.删除，取消 +cancer n.癌 +candid adj.坦白的，直率的 +candidate n.候选人 +candle n.蜡烛 +candy n.糖果 +cane n.手杖，(藤、竹的)茎 +canned adj.罐装的 +cannon n.大炮 +canoe n.独木舟，游艇 +canon n.规范，准则 +canteen n.食堂 +canvas n.帆布，画布 +canvass v.游说 +cap n.帽子，盖子 v.覆盖 +capability n.才能，能力 +capable adj.有能力的 +capacity n.容量，容积，资格 +cape n.披肩，岬，海角 +capita n.人 +capital n.首都，资本 +capital-intensive adj.资本密集型的 +capitalism n.资本主义 +capitalist adj.资本主义的 +capitalization n.资本化 +capitalize v.大写，资本化 +captain n.队长，船长，上尉 +caption n.标题 +captive adj.被俘虏的 n.俘虏 +capture v.,n.俘获，捉拿 +car n.小汽车 +caravan n.车队，大蓬车 +carbon n.碳，复写纸 +card n.卡片，纸牌，名片 +cardboard n.硬纸板 +cardinal adj.主要的 +care n.注意，小心 v.关心 +career n.职业，生涯 +careful adj.小心的，仔细的 +careless adj.粗心的，不关心的 +carelessness n.粗心 +cargo n.货物 +carol n.颂歌 +carpenter n.木匠 +carpet n.地毯 +carriage n.马车，(火车)车厢 +carrier n.运载工具，媒介 +carrot n.胡萝卜 +carry v.搬运，携带 +cart n.手推车 +carton n.纸箱 +cartoon n.漫画，动画片 +cartridge n.弹仓 +carve v.雕刻，切 +carving n.雕塑 +case n.事实，案例，箱子 +cash n.现金 v.兑现 +cashier n.出纳 +cassette n.小盒，磁盘盒 +cast v.掷，投射，铸造 +castle n.城堡 +casual adj.偶然的，随便的 +casualty n.伤亡 +cat n.猫 +catalog n.(商品)目录 +catastrophe n.灾难 +catalyst n.催化剂 +catch v.捕获，染病 n.捉 +category n.种类，范畴 +cater v.提供 +cathedral n.大教堂 +catholic adj.天主教的 +cattle n.牛(总称) +cause n.原因，理由，事业 +caution n.谨慎，告诫 +cautious adj.谨慎的，当心的 +cavalry n.骑兵，马术 +cave n.洞穴，山洞 +cavern n.酒馆 +cavity n.坑，孔穴 +cease v.停止，平息 +ceiling n.天花板 +celebrate v.庆祝 +celebration n.庆祝仪式 +celery n.芹菜 +cell n.细胞，牢房，电池 +cellar n.地窖，地下室 +cement n.水泥 +cemetery n.墓场 +censor v.审查 +censorship n.审查 +cent n.分币 +centigrade adj.摄氏的 +centimeter n.厘米 +central adj.中心的，中央的 +center n.中心 v.集中 +century n.世纪 +cereal n.谷物 +ceremonial adj.仪式的 +ceremony n.仪式，典礼，礼节 +certain adj.确信的，一定的 +certainly adv.一定，当然，行 +certainty n.确实，必然的事 +certificate n.证书，执照 +certification n.证明 +certify v.证明 +chain n.链条，一系列，锁链 +chair n.椅子 +chairman n.主席，董事长 +chairperson n.主席(无性别之分) +chairwoman n.女主席，女董事长 +chalk n.白垩，粉笔 +challenge n.,v.挑战，质问 +challenging adj.具有挑战性的 +chamber n.房间 +champion n.优胜者，冠军 +championship n.锦标(赛) +chance n.机会，可能性 +change n.变化，零钱 v.改变 +changeable adj.变化的 +channel n.沟渠，途径，频道 +chaos n.混乱 +chap n.伙计 +chapter n.章，节 +character n.性格，角色，特牲 +characteristic n.特征，特性 +characteristical adj....特征的 +characterize v.具有...特征 +charcoal n.木炭 +charge v.收费，冲向，控告 +charity n.施舍，仁慈 +charm n.魅力 v.迷惑 +charming adj.迷人的 +chart n.图表 v.制定计划 +charter n.特许证，宪章 +chase v.追逐，驱除 +chat v.聊天 +chatter v.喋喋不休，啁啾 +cheap adj.便宜的，可鄙的 +cheat v.欺骗，作弊 n.骗子 +cheating n.欺骗行为 +check v.检验，核对 n.支票 +check-out n.结帐，离店时限 +check-up n.核对，检查 +cheek n.颊，脸 +cheeky adj.胖乎乎的 +cheer n.喝彩 v.向...喝彩 +cheerful adj.快活的 +cheese n.干酪，奶酪 +chemical adj.化学的 +chemist n.化学家，药剂师 +chemistry n.化学 +cheque n.支票 +cherish v.珍爱，怀有 +cherry n.樱桃 +chess n.国际象棋 +chest n.胸膛，柜子 +chestnut n.栗树，栗子 +chew v.咀嚼 +chick n.小鸡 +chicken n.鸡，鸡肉 +chief adj.首席的，首要的 +chiefly adv.多半，首要地 +child n.孩子，儿童 +childhood n.童年 +childish adj.孩子气的 +childlike adj.孩子似的，天真的 +chill n.寒意 v.冷却 +chilly adj.凉的，冷淡的 +chimney n.烟囱 +chin n.下巴，下颊 +china n.中国 +china n.瓷器，陶瓷 +chinese adj.,n.中国的 +chip n.片，屑，缺口 +chocolate n.巧克力 +choice n.选择，选中的人或物 +choke v.闷死，窒息，阻塞 +choose v.选择，愿意 +chop v.劈，剁 n.带骨肉 +chorus n.合唱队，齐声 +christ n.基督 +christian adj.基督教的n.基督徒 +christianity n.基督教(精神) +christmas n.圣诞节 +church n.教堂 +cif n.(缩)到岸价 +cigar n.雪茄 +cigarette n.卷烟 +cinema n.电影院 +circle n.圆，果 v.画圈于 +circular adj.圆圈的 +circuit n.巡回，电路 +circulate v.循环，流通，流传 +circulation n.循环，销路，周转 +circumference n.周围，圆周 +circumstance n.情况，环境 +circus n.马戏团 +cite v.引证，举例 +citizen n.公民，市民 +citizenship n.公民权 +city n.城市 +civil adj.民用的，民事的 +civilization n.文明，民族文化 +civilize v.使...文明，开化 +claim v.要求，索赔，声称 +clamp n.夹子 v.夹紧 +clap v.排手，鼓掌 +clarify v.弄清(问题) +clarification n.澄清 +clash v.,n.碰撞，冲突 +clasp n.扣子 v.紧握(抱) +class n.阶级，种类，班级 +classic n.经典作品 +classical adj.经典的，古典的 +classification n.分类 +classify v.分类，分等 +classmate n.同班同学 +classroom n.教室 +clatter v.咔嗒响 n.卡嗒响 +clause n.条款，从句 +claw n.爪 +clay n.黏土 +clean adj.清洁的，干的 +clear adj.清楚的，明确的 +clearance n.结关 +clearly adv.清晰地，无疑地 +clench v.咬紧，握紧，决定 +clerk n.办事员，职员，店员 +clever adj.聪明的，灵巧的 +cleverness n.聪明，机灵 +client n.当事人，顾客，用户 +clientele n.顾客(总称) +cliff n.悬崖，峭壁 +climate n.气候 +climax n.顶点，高潮 +climb v.爬，攀登，上升 +cling v.粘住，依附 +clinic n.诊所 +clip n.夹子，卡子 v.夹住 +cloak n.外套，借口 +clock n.时钟 +clockwise adj.,adv.顺时针的 +close v.关闭，结束 n.终结 +closed adj.关闭的，停业的 +close down n.倒闭 +closely adv.紧密地，严密地 +closet n.壁橱 +cloth n.织物，布，衣料 +clothe v.给...着衣 +clothes n.衣服(总称) +clothing n.服装(总称) +cloud n.云 +cloudy adj.多云的 +clown n.小丑，丑角 +club n.俱乐部，会，棍棒 +clue n.线索 +clumsy adj.笨拙的，愚蠢的 +cluster n.群，串 +clutch v.,n.抓紧 +c/o v.(缩)请转交... +coach n.客车，教练 +coal n.煤 +coarse adj.粗糙的，粗的 +coast n.海岸，海滨 +coastal adj.沿海的 +coat n.上衣，涂层 +cock n.公鸡 +cocktail n.鸡尾酒 +code n.法规，代码，密码 +codify v.编码 +coefficient n.系数 +coffee n.咖啡 +coffin n.棺材 +coherence n.凝聚性 +coherent adj.有条理的，粘着的 +cohesion n.凝聚力，团结 +cohesive adj.有粘性的 +coil v.卷曲 n.一卷，线圈 +coin n.硬币，创造新词 +coinage v.重合，一致 +coincide n.巧合，同时发生 +coincidence adj.同时发生的 +coincident adj.冷，冷冰冰的 +coldness n.寒冷，冷淡 +collaborate v.协作，勾结 +collaboration n.协作，通敌 +collapse v.倒塌 v.坍塌 +collar n.领子 +colleague n.同事，同行 +collect v.收集，征收，聚集 +collection n.收集，收藏 +collective n.集体 adj.集体的 +college n.学院 +collide v.猛烈碰撞，冲突 +collision n.猛烈碰拉，冲突 +colonel n.上校 +colonial adj.殖民的，殖民地的 +colonist n.殖民者，移民 +colonist n.殖民主义 +colony n.殖民地 +color n.颜色，色彩，气色 +color-blind adj.色盲的 +colorful adj.色彩丰富的 +colorless adj.无色的 +column n.圆柱，栏 +columnist n.专栏作家 +comb v.梳 n.梳子 +combat v.,n.战斗，斗争 +combination n.混合，组合 +combine v.组合，化合，结合 +come v.来到，出现，发生 +comedian n.喜剧演员 +comedy n.喜剧 +comfort n.舒适，慰藉 v.安慰 +comfortable adj.舒适的，自在的 +comic adj.喜剧的，滑稽的 +command v.,n.命令，控制 +commander n.司令，指挥官 +commemorate n.纪念 +commemoration v.纪念 +commence v.开始 +commend v.称赞，推荐 +commandment n.称赞 +comment n.,v.评论 +commerce n.商业 +commercial adj.商业的，商务的 +commission n.,v.委托，委任 +commit v.委托，犯(错误) +commitment n.责任 +committee n.委员会 +commodity n.商品 +common adj.共同的，普通的 +commonly adv.通常，平常 +commonplace adj.平凡的，平淡的 +commonsense n.常识 +commonwealth n.共同体，联邦 +commune n.公社 +communicate v.传播，通讯 +communication n.通信，通讯系统 +communicative adj.通讯的 +communism n.共产主义 +communist n.共产主义者 +community n.团体，共同体，群体 +compact adj.严密的，紧凑的 +companion n.同伴，伴侣 +company n.公司，同伴 +comparable adj.可比较的 +comparative adj.比较的，相当的 +comparatively adv.比较地 +compare v.比较，比作 +comparison n.比较 +compass n.指南针，圆规 +compatible adj.可兼容的，一致的 +compel v.强迫，逼迫 +compensate v.赔偿，补偿，酬报 +compensation n.赔偿，补偿 +compete v.竞争，比赛 +competent adj.称职的，有能力的 +competition n.竞争，比赛 +competitive adj.竞争的 +competitiveness n.竞争能力 +competitor n.竞争者，对手 +compile v.编(书)，编辑 +complain v.抱怨，控诉 +complaint n.怨言，控告 +complement n.补充，余数 +complete v.完成，结束 +completely adv.完全地，十分 +completion n.完成，完满 +complex adj.综合的，复杂的 +complexity n.复杂性 +compliance n.顺从，应允 +complicate v.使复杂 +complicated adj.错综复杂的 +compliment n.,v.称赞，问候 +complimentary adj.称赞的 +comply v.履行，遵守 +component n.成分，组分 +componential adj.成分的 +compose v.由...组成，作曲 +composed adj.镇静的 +composer n.作曲家 +composite adj.合成的，组合的 +composition n.作文，组成 +compound n.化合物 v.混合 +comprehend v.理解，了解 +comprehension n.理解 +comprehensive adj.综合的，广泛的 +compress v.压缩 +compression n.压缩，凝缩 +comprise v.包括，由...组成 +compromise n.,v.妥协，和解 +compels v.强迫 +compulsory adj.强制的，必修的 +computation n.计算 +compute v.计算 +computer n.计算机 +computerization n.计算机化 +computerize v.使...计算机化 +comrade n.同志 +conceal v.隐瞒，隐藏 +concede v.让步，输 +conceit n.自负，自大 +conceited adj.自负的 +conceive v.想象，怀孕 +concentrate v.集中，浓缩 +concentrated adj.全神贯注的 +concentration n.专心，浓度 +concept n.概念 +conception n.想法，概念 +conceptive adj.概念的 +concern v.涉及，关心 n.商行 +concerned adj.有关的 +concerning prep.关于 +concert n.音乐会 +concerted adj.齐心协力的 +concess v.让步 +concession n.让步，减免，租界 +concise adj.简明的，简要的 +conclude v.结束，缔结，断定 +conclusion n.结束，结论 +conclusive adj.结束的，结论性的 +concrete n.混凝土 adj.具体的 +concur v.同地发生 +concurrence n.合作，并发 +concurrent adj.同时发生的 +condemn v.谴责，判刑 +condemnation n.谴责，判决 +condensation n.凝聚 +condense v.凝结，冷凝，精简 +condenser n.冷凝器，聚光器 +condition n.状态，情形，条件 +conditional adj.有条件的 +conduce v.导致，有益于 +conducive adj.有助于...的 +conduct n.行为，管理 v.为人 +conduction n.传导，传热 +conductor n.(乐队)指挥，售票员 +cone n.锥体，锥形 +confer v.授予，颁布，商议 +conference n.会议 +confess v.坦白，供认 +confession n.供认，自由 +confide v.委托，吐露秘密 +confidence n.信任，信心 +confident adj.确信的，自信的 +confidential adj.机密的 +confine v.限制 +confinement n.限制 +confirm v.证实，确认，批准 +confirmation n.确认 +conflict v.,n.冲突，斗争 +conform v.遵守，使...一致 +conformity n.遵照，一致 +confront v.面对，与...相对 +confrontation n.面对，对峙 +confuse v.混淆，弄糊涂，搅乱 +confusion n.混乱，糊涂 +congestion n.阻塞，消化不良 +congratulate v.祝贺 +congratulation n.祝贺，贺辞 +congress n.(代表)大会，国会 +congressman n.国会议员 +conjunction n.连词，联结 +connect v.连接，联想 +connection n.联系，社会关系 +conquer v.征服，战胜 +conqueror n.征服者，胜利者 +conquest n.征服 +conscience n.良心，良知 +conscientious adj.有良心的 +conscientiously adv.认真地 +conscious adj.意识到的，自觉的 +consciousness n.知觉，意识 +consecutive adj.连续的，连贯的 +consent v.,n.同意，允许 +consequence n.后果，重要性 +consequently adv.因而，所以 +conservation n.保护，保存 +conservative adj.保守的，稳健的 +consider v.考虑，以为，体谅 +considerable adj.相当的，可观的 +considerably adv.相当 +considerate adj.考虑周全的 +consideration n.考虑，照顾 +consign v.委托，托运货物 +consignment n.委托，货物 +consist v.由...组成 +consistency n.一致(性) +consistent adj.始终如一的，符合 +console v.安慰 +consolidate v.团结 +consolidated adj.加固的，统一的 +consolidation n.团结 +consonant adj.响亮的 +conspicuous adj.显眼的，出众的 +conspiracy n.阴谋 +constable adv.警官 +constant adj.不变的，恒定的 +constantly adv.经常地 +constituent adj.组成的 n.成分 +constitute v.组成，构成，设立 +constitution n.宪法，章程 +constitutive adj.宪法的，章程的 +constraint n.强制，拘束 +construct v.建设，建立 +construction n.建设，建筑 +construe v.翻译，解释 +consul n.领事 +consulate n.领事馆 +consult v.咨询，磋商 +consultant n.咨询顾问(公司) +consultation n.咨询 +consume v.消费，消耗 +consumer n.消费者，用户 +consumption n.消费，消耗量 +contact n.,v.接触，联系 +contain v.含有，容纳，抑制 +container n.容器，集装箱 +contemplate v.沉思 +contemplation n.苦思冥想 +contemporarian n.同时代人 +contemporary adj.当代的，同时代的 +contempt n.轻视，蔑视 +contemptuous adj.轻视的 +content n.含量，内容 v.满足 +contest n.,v.争夺，比赛 +contestant n.参赛人 +context n.上下文，语境，环境 +contextual adj.上下文的，环境的 +continent adj.节制的 n.大陆 +continental adj.大陆的 +contingency n.事故，意外 +continual adj.连续的，频繁的 +continuance n.连续 +continue v.继续，连续，依旧 +continuous adj.持续的，不断的 +continuously adv.连续不断地 +contract n.契约，合同 v.订 +contracted adj.合同所规定的 +contractual adj.合同的，契约的 +contradict v.反驳，与...矛盾 +contradiction n.矛盾，反驳 +contrary adj.相反的 n.反面 +contrast n.,v.对照，对比 +contribute v.捐献，贡献，投稿 +contribution n.贡献，捐献物 +control v.,n.控制，管理 +controversy n.论战，论争 +controversial adj.有争议的 +convenience n.方便，便利 +convenient adj.便利的，方便的 +convention n.大会，协定，惯例 +conventional adj.传统的，常规的 +conversant adj.精通的，有交情的 +conversation n.会话，谈话 +converse v.谈话，对话，交往 +conversely adv.相反地 +conversion n.转变，转化，换算 +convert v.转换，改变信仰 +convey v.运输，传达 +conveyance n.运送，传达 +convict n.罪犯 +conviction n.定罪，确信 +convince v.使...确信，信服 +convinced adj.信服的 +cook v.烹调，烧 n.厨师 +cooker n.厨具，厨灶 +cool adj.凉的，冷静的 +coolness n.凉爽，冷淡 +cooperate v.合作，协作 +cooperation n.合作，协作 +cooperative adj.合作的 n.合作社 +coordinate v.协调，配合 +coordination n.协调，配合 +cope v.应付，对付 +copper n.铜 +copy v.抄写，复制 n.副本 +cord n.细绳，电线 +cordial adj.诚恳的，亲切的 +cordially adv.亲切地 +core n.核，核心 +cork n.软木塞 +corn n.谷物，玉米 +corner n.角落，拐角 +corporate n.有限公司 +corporation n.公司 +correct adj.正确的，恰当的 +correction n.修改，校正 +correctly adv.正确地 +correlate v.相关，关联 +correlation n.相互关系 +correspond v.符合，通信，相当于 +correspondence n.相应，通信 +correspondent adj.对应的 n.记者 +corresponding adj.相应的，通信的 +corridor n.走廓 +corrode v.腐蚀 +corrosion n.腐蚀 +corrupt adj.腐败的，腐化的 +corruption n.腐败，腐化 +cosmetics n.化妆品 +cosmic adj.宇宙的 +cosmos n.宇宙 +cosmopolitan n.大都市 +cost n.成本，费用 v.花费 +costly adj.昂贵的 +cottage n.村舍 +cotton n.棉花，棉布，棉纱 +couch n.躺椅 +cough v.,n.咳嗽 +council n.理事会，委员会 +counsel n.劝告，辩护律师 +counsellor n.顾问 +count v.计算，数，认为 +countable adj.可计算的 +countenance n.容貌，支持 +counter n.柜台 adj.相反的 +countermand v.撤回，取消 +countermeasure n.对策 +counter-offer n.还价，还盘 +counterpart n.同类的人或物 +countersign v.副署，会签 +countersignature n.副署，会签 +countless adj.无数的 +country n.国家，乡间，故乡 +countryside n.乡下 +county n.县，郡 +couple n.一对，几个，夫妇 +courage n.勇气，胆量 +courageous adj.勇敢的 +course n.过程，路线，课程 +court n.法庭，宫廷，球场 +courteous adj.有礼貌的 +courtesy n.礼貌，礼仪，好意 +courtyard n.院子 +cousin n.堂(或表)兄弟姐妹 +cover v.盖，掩盖 n.盖子 +coverage n.覆盖率 +covering adj.包括的 +cow n.母牛，奶牛 +coward n.懦夫 +cowardly adv.胆小地 +crab n.蟹 +crack v.使...破裂 n.裂缝 +cracker n.苏打饼干，克力架 +cradle n.摇篮，发源地 +craft n.工艺，手艺，飞机 +craftsman n.手艺人 +craftsmanship n.手艺 +crane n.鹤，起重机 +crash v.碰撞 n.坠毁 +crate n.一箱，篓，筐 +crave v.渴望，恳求 +crawl v.爬行，徐徐行进 +craziness n.疯狂 +crazy adj.疯狂的，迷恋的 +cream n.乳脂，奶油 +creamy adj.奶油的，奶黄色的 +create v.创造，创作，造成 +creation n.创造，创造物 +creative adj.有创造力(性)的 +creature n.家伙，生物 +credit n.信誉，信用 v.相信 +creditworthy adj.有信誉的 +creditworthiness n.商誉 +creek n.小川，小湾 +creep v.爬行，蔓延 +crew n.(飞机等的)全体人员 +cricket n.板球，蟋蟀 +crime n.罪，罪行 +criminal n.罪犯 adj.犯罪的 +crimson adj.,n.深红色(的) +cripple n.跛子 v.使残废 +crisis n.危险，危险期 +crisp adj.松脆的，鲜嫩的 +critic n.评论家，爱挑剔的人 +critical adj.批评的，危急的 +criticism n.批评 +criticize v.批评，评论 +crook n.钩子 +crooked adj.弯曲的，歪的 +crop n.作物，庄稼 +cross n.十字，交叉 v.横过 +crossing n.交叉，十字路口 +crossroads n.交叉路口，十字路 +crouch v.蹲下，缩着 +crow n.乌鸦 v.鸦啼 +crowd n.人群 v.挤满 +crown n.王冠 v.加冕 +crude adj.未加工的，粗糙的 +cruel adj.残酷的，残忍的 +cruelty n.残忍，残酷行为 +cruise v.巡游，巡航 +crumb n.面包屑 +crumble adj.粉碎，崩溃 +crush v.压榨，粉碎 +crust n.面包皮，硬的表面 +crutch n.拐杖 +cry v.,n.叫喊，哭泣 +crystal n.水晶，晶体 +cube n.立方体，三次方 +cubic adj.立方的 +cubism n.立体主义 +cuckoo n.布谷鸟，杜鹃 +cucumber n.黄瓜 +cultivate v.耕作，栽培，培养 +cultivation n.耕作，培养 +cultural adj.文化的 +culture n.文化，养殖 +cunning adj.狡猾的，狡诈的 +cup n.杯子，一杯 +cupboard n.碗橱 +curb v.制止，束缚 +cure v.,n.治疗，矫正 +curiosity n.好奇心，古玩 +curious adj.好奇的，爱打听的 +curl v.卷曲，缭绕 n.卷发 +curly adj.卷曲的，波浪式的 +currency n.通货，货币 +current adj.现令的 n.流 +currently adv.当前，广泛地 +curse n.,v.诅咒，咒骂 +curtail n.削减，剥夺 +curtain n.窗帘，幕布 +curve n.曲线，弯曲 +cushion n.垫子，靠垫 +custody n.保管，监护 +custom n.风俗，习惯 +customary adj.习惯的，通常的 +customer n.顾客，主顾 +customs n.海关 +cut v.割，切，削减，切断 +cutlery n.刀具，餐刀 +cutter n.刀具，裁剪者 +cutting n.切片，剪辑 +cycle n.周期，循环，自行车 +cyclist n.自行车运动员 +cylinder n.圆筒，柱，汽缸 +d/a n.(缩)承兑交单 +dacron n.涤纶 +dad n.爸爸 +dagger n.匕首 +daily adj.每日的 adv.天天 +dainty adj.优雅，考究 +dairy n.奶牛场，乳品商店 +dam n.坝 +damage v.,n.损害，破坏 +damn v.,n.诅咒 +damp adj.潮湿的 n.潮气 +dance v.跳舞 n.舞蹈 +dancer n.舞蹈者，舞蹈演员 +danger n.危险，威胁 +dangerous adj.有危险的 +danish adj.,n.丹麦人(的) +denmark n.丹麦 +dare v.敢，挑战，竟敢 +daring adj.大胆的，勇敢的 +dark adj.黑暗的 n.暗处 +darken v.变黑，转暗 +darkness n.黑暗 +darling n.爱人 adj.心爱的 +dart n.飞标游戏 +dash v.猛冲,泼溅 n.破折号 +data n.(复数)资料，数据 +date n.日期 v.注日期 +dating n.约会 +daughter n.女儿 +daughter-in-law n.儿媳 +dawn n.黎明，开端 +day n.一天，白天 +daybreak n.破晓 +daylight n.日光，白昼 +daytime n.日间 +daze v.耀眼，使迷乱 +dazzle v.使...眼花缭乱 +dazzling adj.令人目眩的 +dead adj.死的 n.死者 +deadline n.期限 +deadly adj.致命的，死一般的 +deaf adj.聋的 +deafen v.使...聋，震聋 +deal v.处理，交易 n.买卖 +dealer n.商人，贩子 +dealing n.交往，生意 +dean n.系主任 +dear adj.亲爱的，敬爱的 +death n.死，死亡 +deathly adj.致死的 +debate v.,n.辩论，讨论 +debit n.借方 +debt n.债，债务 +decade n.十年 +decay v.,n.腐烂，衰败 +deceased adj.已死的 +deceit n.欺骗，欺诈行为 +deceive v.欺骗 +deception n.欺诈 +deceitful adj.欺骗性的 +december n.十二月 +decency n.体面 +decent adj.体面的，象样的 +decide v.决定，判决 +decided adj.明确的，果断的 +decidedly adv.明确地，果断的 +decimal adj.十进制的，小数的 +decision n.决定，决议 +decisive adj.决定性，明确的 +deck n.甲板 +declaration n.宣布，宣告 +declare v.宣布，声明 +decline v.婉谢，推辞 n.衰落 +declining adj.下降的，衰落的 +decompose v.分解，腐烂 +decorate v.装饰 +decoration n.装饰物 +decorative adj.装饰的，装璜的 +decrease v.,n.减少 +decree n.法令 v.判决 +dedicate v.奉献，致力 +deduce v.演绎，推断 +deduct v.减 +deduction n.推断，减少 +deed n.行为，契据 +deem v.以为，认为 +deep adj.深的，深远的 +deepen v.加深，深化 +deeply adv.深深的，深切地 +deer n.鹿 +default n.,v.不履行，不负责 +defeat v.击败 n.失败 +defect n.缺点，缺陷 +defective adj.有缺点的 +defence n.保卫，防御 +defend v.保卫，为...辩护 +defer v.拖延 +defiance n.蔑视，挑战 +defiant adj.无礼的，挑战的 +deficiency n.缺乏 +deficient adj.缺乏的，不足的 +deficit n.赤字 +define v.下定义，界定，规定 +definite adj.明确的，限定的 +definitely adv.明确地，肯定地 +definition n.定义，解释 +definitive adv.定义的 +deflate v.收缩，紧缩 +deflect v.偏斜 +deflection n.偏转，偏斜 +deform v.使变形，使残废 +deformation n.变形 +defray v.支付 +defy v.反抗，蔑视，使不能 +degradation n.降低，恶化 +degrade v.败低，下降，堕落 +degree n.程度，度，学位 +delay v.,n.耽搁，延误 +del credere n.保付 +delegate n.代表 n.委派 +delegation n.代表团 +delete v.删除 +deletion n.删除 +deliberate adj.故意的，审慎的 +deliberately adv.故意地，从容地 +deliberation n.慎重，故意 +delicacy n.精致 +delicate adj.优雅的，精致的 +delicious adj.美味的 +delight n.快乐，乐事 n.喜爱 +delightful adj.令人高兴的 +delinquency n.轻微犯罪 +delinquent adj.拖欠的 +deliver v.交付，递送，讲述 +deliverance n.救助 +delivery n.交付，递送，讲述 +delusion n.错觉 +delusive adj.令人产生错觉的 +demand v.,n.要求，需求 +demanding adj.对人要求严格的 +democracy n.民主，民主政体 +democrat n.民主党人 +democratic adj.民主的 +demolish v.拆除 +demolition n.拆除 +demonstrate v.论证，演示，表明 +demonstration n.示范，表演，示威 +demurrage n.滞期费 +den n.窝 +denial n.拒绝，否定 +denominate v.为...命名 +denomination n.命名 +denote v.表示 +denounce v.谴责，斥责 +dense adj.稠密的，浓厚的 +density n.密度，稠密 +dent n.牙，槽，凹陷 +dentist n.牙科医生 +deny v.否认，拒绝 +depart v.离去，出发，违反 +department n.部，部门，系 +departure n.离开，违背 +depend v.依靠，依赖 +dependability n.可依赖性 +dependable adj.可依赖的 +dependant n.受赡养者 +dependence n.依靠，依赖 +dependent adj.依靠的，随..而定 +depict v.描述，描画 +depiction n.描述 +deplete v.减少，耗尽 +deposit v.存放，储蓄 n.存款 +deposition n.免职，罢官 +depreciate v.降价，贬值，折旧 +depreciation n.折旧，贬值 +depress v.抑制，使人抑郁 +depressed adj.情绪低落的 +depression n.沮丧，萧条 +deprive v.剥夺，丧失 +depth n.深度 +deputy n.代表 adj.副职的 +derivation n.起源，衍生物 +derive v.从...而来，得来 +derrick n.钻塔，井架 +descend v.降临，下来，遗传 +descendant n.子孙，后裔 +descent n.下降，血统 +describe v.描写，作图 +description n.描述，形容 +desert v.遗弃，擅离 n.沙漠 +deserve v.应受，值得 +design v.设计，旨在 n.设计 +designate v.指明，指定 +designation n.指定，委派 +designer n.设计者 +desirable adj.合乎要求的 +desire n.欲望，要求 v.要求 +desk n.课桌，写字台 +desolate adj.荒芜的，凄凉的 +desolation n.荒凉，凄凉 +despair n.,v.绝望 +desperate adj.不顾一切的 +desperation n.绝望 +despise v.鄙视，看不起 +despite prep.不管，任凭 +dessert n.(最后一道)甜食 +destination n.终点，目的地 +destine v.注定，预定 +destiny n.命运，定数 +destroy v.破坏，摧毁，消灭 +destruction n.破坏，毁灭 +destructive adj.破坏性的 +detach v.分离，拆开 +detail n.细节 +detailed adj.详细的，详尽的 +detain v.留住，阻止 +detect v.发现，侦察 +detection n.发现，侦查 +detective n.侦探 +deteriorate v.恶化，败坏 +deterioration n.退化 +determination n.决心，决定 +determine v.决心，决定，测定 +detour v.绕道，绕开 +detract v.降低 +detriment n.损害 +detrimental adj.有害的 +devaluation n.贬值 +devalue v.贬值 +develop v.发展，开发，成长 +developing adj.发展中的 +development n.进展，发展 +deviate v.背离 +deviation n.背离，偏向 +device n.装置，方法 +devil n.魔鬼，恶人 +devise v.设计，计划 +devote v.奉献，贡献 +devoted adj.献身于...的 +devotion n.献身，专心 +devour v.吞吃，吞没 +dew n.露水 +diagnose v.诊断 +diagnosis n.诊断 +diagram n.图表，图解 +dial n.钟盘 v.拨电话 +dialect n.方言 +dialog n.对话，对白 +diameter n.直径 +diamond n.钻石，金刚石 +diary n.日记 +dictate v.口授，命令 +dictation n.口授，听写 +dictator n.独裁者 +dictatorship n.独裁，专政 +diction n.措辞 +dictionary n.词典，字典 +die v.死，消亡 +diesel n.内燃机，柴油机 +diet n.饮食，节食 +differ v.不同，相异 +difference n.差异，差别 +different adj.不同的，各种 +differential adj.有差别的 +differently adv.不同地 +difficult adj.困难的 +difficulty n.困难，难题 +dig v.挖，采掘 +digest v.消化 n.摘要 +digestion n.消化 +digit n.数字 +digital adj.数字的 +dignity n.尊贵，尊严 +dike n.堤 +dilute v.稀释 +diligent adj.勤奋的，用功的 +dim adj.暗淡的，模糊的 +dime n.(美元)一角 +dimension n.维，方面，尺寸 +dimensional adj.尺寸的 +diminish v.减少，缩小 +dine v.用餐 +dining-room n.餐厅 +dingy adj.肮脏的 +dinner n.正餐，晚餐，宴会 +dip v.,n.蘸，浸 +diploma n.毕业文凭，学位证书 +diplomacy n.外交 +diplomat n.外交人员 +diplomatic n.外交的 +direct v.支配，指挥，对准 +direction n.方向，指示，说明 +directive n.命令，指令 +directly adv.直接地，立即 +director n.指导者，导演，领导 +directory n.目录，地址录 +dirt n.尘埃，灰尘，泥土 +dirty adj.肮脏的 +disable v.使残废 +disabled adj.残废的 n.残疾人 +disadvantage n.不利之处 +disadvantageous adj.不利的 +disagree v.意见不合，不符 +disagreement n.不和，不一致 +disallow v.不允许 +disappear v.失踪，消失 +disappearance n.消失 +disappoint v.使...失望 +disappointed adj.失望的，扫兴的 +disappointment n.失望 +disapproval n.不批准 +disaster n.自然灾害，祸患 +disastrous adj.灾难性的 +disburse v.支付 +disbursement n.支付 +disc n.圆盘，唱片 +discard v.,n.丢弃，扔掉 +discern v.操作别，辨明 +discharge v.解除，放出，卸货 +disciplinary adj.纪律的，学科的 +discipline n.训练，纪律 n.锻炼 +disclaim v.放弃，不承认 +disclose v.揭开，透露 +discomfort n.不安，不舒服 +discomfortable adj.不舒服的 +discontinue v.中断 +discount n.,v.折扣 +discourage v.使...泄气，阻止 +discourse n.演说，谈话，话语 +discover v.发现 +discovery n.发现，发现物 +discreet adj.周到的，慎重的 +discreetly adv.慎重地 +discrepancy n.单货不符 +discretion n.慎重 +discriminate v.区别，岐视 +discrimination n.辨别，岐视 +discuss v.讨论 +discussion v.讨论，商议 +disdain v.轻视 +disease n.疾病 +disgrace n.耻辱 v.使受辱 +disgraceful adj.耻辱的，受辱的 +disguise v.,n.伪装，掩饰 +disgust n.厌恶 v.使讨厌 +disgustful adj.令人生厌的 +dish n.盘子，碟子 +dishonorable adj.不名誉的 +dishonor n.耻辱 v.凌辱 +disillusion v.使觉醒，幻灭 +disinclined adj.不愿意的 +disinfectant n.消毒剂 +disintegration n.分散，解体 +dislike v.,n.厌恶 +disloyal adj.不忠的 +disloyalty adj.不忠 +dismal adj.阴郁的，沉闷的 +dismay v.使沮丧 n.沮丧 +dismiss v.解散，开除 +dismissal n.解散，开除 +disobey v.不服从 +disorder n.紊乱，骚乱，失调 +disparity n.不同，悬殊 +dispatch v.迅速派遣 n.快件 +dispel v.驱散 +dispense v.分配，施予 +disperse v.驱散，散布 +displace v.置换，取代 +displacement n.置换，替换物 +display v.,n.陈列，表现 +displease v.使生气，惹怒 +displeasure n.不快 +disposal n.处置，对付 +dispose v.处置，对付，解决 +disposed adj.有...倾向的 +disposition n.布置，处置 +dispute v.争论，质疑 n.争论 +disregard v.,n.无视，不顾 +dissatisfaction n.不满 +dissatisfy v.使不满 +dissimilar adj.不同的 +dissipate v.驱散，消耗，浪费 +dissolve v.溶解，使终结 +distance n.距离，远处 +distant adj.远方的，疏远的 +distillation n.蒸馏 +distinct adj.不同的，明显的 +distinction n.差别，非凡 +distinctly adv.明晰地，清楚地 +distinguish v.辨别，认出 +distinguished adj.尊贵的，尊敬的 +distort v.扭曲，歪曲 +distortion n.曲解，失真，变形 +distract v.分神，迷惑 +distraction n.分心 +distress n.苦恼，不幸 +distribute v.分配，分布，分销 +distribution n.分配，分布 +distributor n.分销商 +distributorship n.分销权 +district v.区，区域，地区 +disturb v.打扰，打乱，使烦恼 +disturbance n.干扰，动乱 +disunite v.使分裂 +disuse v.,n.废止 +ditch n.沟，渠，下水道 +ditto n.同上 +dive v.潜水，跳水，俯冲 +diver n.潜水员，跳水运动员 +diverge v.分歧，离题 +divergence n.分歧 +diverse adj.不同的，分歧的 +diversion n.转移，消遣 +diversity n.多样化 +divert v.使转向，消遣 +divide v.分开，分享，分裂 +divine adj.神的，神圣的 +division n.划分，部分 +divorce v.离婚，使脱离 +dizzy adj.晕眩的 +do v.做，干，足够，制作 +dock n.码头 +doctor n.医生，博士 +doctrine n.教义，学说 +document n.文件，公文 +documentary adj.文化的 +documentation n.提供文件 +dodge v.躲避 +dog n.狗 +doggedly adv.顽固地 +doll n.玩偶，娃娃 +dollar n.元，美元 +domain n.领土，领域 +dome n.圆顶，穹窿 +domestic adj.家里的，国内的 +dominant adj.统治的 +dominate v.统治，支配，占优势 +donate v.捐献 +donation n.捐献 +donkey n.驴，笨蛋 +doom n.命运，判决 v.命定 +door n.门，(一户)人家 +doorway n.门口，门道 +dormitory n.集体宿舍 +dose n.剂量，一服药 +dot n.点，圆点 +double adj.两倍的，双重的 +doubt v.,n.怀疑，疑惑 +doubtful adj.怀疑的，可疑的 +doubtless adv.无疑地，大约 +dough n.面团 +dove n.鸽子 +down adv.向下，下降 +downstairs adv.在楼下 +downtown n.闹市 adv.去市里 +downward adj.向下的，下坡的 +downwards adv.向下，以下 +doze v.打瞌睡 +dozen n.一打 +draft n.草案，草稿，穿堂风 +drag v.拖，拽 +dragon n.龙 +drain v.排水，耗竭，泄 +drainage v.排水系统，污水 +drama n.戏剧，剧本 +dramatic adj.戏剧性的，显著的 +dramatist n.戏剧家 +dramatize v.使戏剧化 +drastic adj.激烈的，严厉的 +draw v.画，拉，吸引 +drawback n.不利，欠缺 +drawer n.抽屉 +drawing n.素描，绘画，图样 +dread v.,n.恐惧，担心 +dreadful adj.可怕的，糟糕的 +dream n.梦，梦想 v.做梦 +dreary adj.疲劳的 +drench v.浸泡，充满 +dress n.服装 v.穿衣 +dressing n.打扮，调味品 +drift v.漂流，游荡 +drill n.钻头，操练 v.训练 +drink v.喝，饮 n.饮料，酒 +drip v.滴下，流下 +drive v.驾驶，乘车 n.车道 +driver n.司机 +droop v.下垂 +drop v.落下 n.滴，下降 +dropout n.中途退出者 +drought n.旱灾 +drown v.淹死 +drug n.药物，麻醉剂 +drugstore n.零食店 +drum n.鼓 v.敲鼓 +drunk adj.喝醉的 +drunkard n.醉鬼 +dry adj.干的，枯燥的 +dubious adj.怀疑的 +duck n.鸭子 +due adj.到期的，预定的 +duke n.公爵 +dull adj.沉闷的，钝的 +duly adv.按期地 +dumb adj.哑的 +dummy n.傀儡 +dump v.倾倒 n.垃圾堆 +dumping n.倾销 +dung n.粪 +dungeon n.地牢 +duplicate adj.二重的，复制的 +durable adj.持久的，耐用的 +duration n.期间，待续时间 +during prep.在...期间 +dusk n.黄昏 +dust n.尘土，粉末 v.掸土 +dustbin n.簸箕 +dusty adj.沾满灰尘的 +duty n.责任，义务，关税 +duty-free adj.免税的 +dwarf n.矮子，侏儒 +dwell v.居住 +dweller n.居住者，住客 +dwelling n.住宅 +dye n.染料 v.染色 +dynamic adj.动力的，动态的 +dynasty n.朝代，王朝 +each adj.,adv.名，每个 +eager adj.热切的，渴望的 +eagle n.鹰 +ear n.耳朵，穗 +earl n.伯爵 +early adj.早的，初期的 +earmark n.标记，特征 +earn v.挣钱，赢得 +earnest adj.认真的，诚恳的 +earnings n.收入，赚得的钱 +earphone n.耳机 +earth n.地球，地上，泥土 +earthly adj.世俗的 +earthquake n.地震 +ease n.安逸，轻易 +easily adv.容易地，安逸地 +east adj.东方的 n.东方 +easter n.复活节 +eastern adj.东的，朝东的 +eastward adv.向东 +easy adj.容易的，轻松的 +easy-going adj.逍遥自在的 +eat v.吃 +eccentric adj.性格怪僻的 +eccentricity n.怪僻 +echo n.回声，反响，共呜 +eclipse n.(日、月)食，蚀 +ecology n.生态学 +economic adj.经济的，经济学的 +economical adj.节省的，经济的 +economically adv.经济上 +economics n.经济学 +economize v.节省 +economy n.经济，节约 +ecstasy n.狂喜 +edge n.边，边缘，刀刃 +edit v.校订，编辑 +edition n.片(本) +editor n.编辑，编者 +editorial n.社论 +educate v.教育 +education n.教育，训练 +educational adj.教育的 +eel n.鳝鱼 +effect n.后果，效力 v.导致 +effective adj.有效的 +effectively adv.有效地 +effectiveness n.有效 +efficiency n.效率，功效 +efficient adj.效率高的 +effort n.努力，尽力，成果 +e. g. (缩)例如 +egg n.卵，蛋，鸡蛋 +eggplant n.茄子 +egypt n.埃及 +egyptian adj.,n.埃及人(的) +eight num.八 +eighteen num.十八 +eighth num.第八，八分之一 +eighty num.八十 +either adj.二者之一 adv.也 +eject v.喷射 +ejection n.喷射 +elaborate v.,adj.详尽阐述 +elaboration n.详尽阐述 +elapse v.(时间)消逝 +elastic adj.弹性的，灵活的 +elasticity n.弹性 +elbow n.肘，弯管 +elder adj.年长的，资格老的 +elect v.选举 adj.当选的 +election n.选举 +electric adj.电的，电力的 +electrical adj.电的 +electrician n.电工 +electricity n.电 +electrify v.充电，电气化 +electron n.电子 +electronic adj.电子的 +electronics n.电子学 +elegance n.优雅 +elegant adj.优雅的，典雅的 +element n.成分，元素 +elemental adj.自然力的，基本的 +elementary adj.基础的，初步的 +elephant n.象 +elevate v.提升，抬高 +elevation n.海拔，提高，崇高 +elevator n.电梯 +eleven num.十一 +eleventh num.第十一 +eliminate v.消灭，删除 +elimination n.消灭，删除 +elliptical adj.椭圆的，省略的 +ellipsis n.省略 +eloquence n.雄辩，口才 +eloquent adj.雄辩的，有口才的 +else adj.别的 adv.否则 +elsewhere adv.在别处 +elusive adj.躲闪的 +email n.電子郵件 +emancipate v.解放 +emancipation n.解放 +embargo n.禁运 +embark v.登陆 +embarrass v.使窘，使为难 +embarrassing adj.令人尴尬的 +embarrassment n.窘迫，尴尬 +embassy n.使馆 +embody v.体现，包含 +embrace v.拥抱，接受，包括 +embroider v.绣 +embroidery v.刺绣(品) +emerge v.出现，暴露 +emergency n.紧急情况，急诊 +emigrant n.移居国外的人 +emigrate v.移居国外，移民 +emigration n.向国外移民 +eminent adj.杰出的，突出的 +emission n.发射，散发 +emit v.发射，散发 +emotion n.感情，情绪 +emotional adj.感情的，激动的 +emperor n.皇帝 +emphasis n.强调，重点，重读 +emphasize v.强调，着重 +emphatic adj.强调的，着重的 +empire n.帝国，财团 +empirical adj.经验的 +employ v.雇用，使用，从事 +employee n.雇员 +employer n.雇主 +employment n.职业，就业 +emptiness n.空虚，空白 +empty adj.空的，空虚的 +enable v.使能够，使可能 +enchant v.迷住，陶醉 +encircle v.环绕，包围 +enclose v.围住，圈起，封入 +enclosure n.围绕，附件 +encounter v.面临，遭遇 +encourage v.鼓舞，鼓励，助长 +encouragement n.鼓舞，鼓励 +encyclopaedia n.百科全书 +end n.结尾 v.终止，结束 +endanger v.危及，危害 +endeavor v.,n.努力，尽力 +ending n.结局 +endless adj.无穷无尽的 +endorse v.背签 +endorsement n.背书 +endow v.资助，赋予，授予 +endurance n.忍耐力，耐用 +endure v.忍受，容忍，持久 +endures n.最终用户 +enemy n.敌人，对手 +energetic adj.精力旺盛的 +energy n.精力，活力，能量 +enforce v.实施，强制 +engage v.从事，雇用，吸引 +engaged adj.占用的，从事..的 +engagement n.约束，约会，婚约 +engine n.发动机，火车头 +engineer n.工程师 +engineering n.工程 +england n.英格兰，英国 +english n.,adj.英国的，英语 +englishman n.英国人 +engrave v.刻上，牢记 +engraving adj.雕刻 +engulf v.吞没 +enhance v.提高，增加 +enhancement n.提高 +enjoy v.欣赏，享有，享受 +enjoyable adj.愉快的 +enjoyment n.享受，乐趣 +enlarge v.扩大，扩展，放大 +enlargement n.扩大 +enlighten v.启发，教导 +enlightening adj.给人启发的 +enormous adj.巨大的，庞大的 +enough adj.,adv.足够(的) +enquire v.询问 +enquiry v.询问 +enrich v.使富裕 +enroll v.登记，招收 +enrolment n.招收 +en route adv.在途中 +ensure v.保证，担保，保护 +entail v.遗留给，引起 +enter v.进入，加入 +enterprise n.事业，企业 +entertain v.招待，使欢乐 +entertainment n.招待，娱乐 +enthusiasm v.热情，热心 +enthusiastic adj.热情的，热心的 +entire adj.完全的，全部的 +entirely adv.完全地，彻底地 +entirety n.全部 +entitle v.给...权利，资格 +entrance n.进入，入口 +entreat v.恳求，请求 +entrust v.委托 +entry n.进入，入口，词条 +enumerate v.列举 +envelop v.包，围绕 +envelope n.信封 +envious adj.嫉妒的 +environment n.环境 +environmental adj.环境的 +envy v.,n.嫉妒，羡慕 +epidemic adj.传染的 n.传染病 +episode n.事件，情节，插曲 +epoch n.时代，纪元 +epoch-making adj.划时代的 +equal adj.相等的，胜任的 +equality n.平等，相等 +equally adv.相等地，相同地 +equation n.等式，方程式 +equator n.赤道 +equilibrium n.平衡，均衡 +equip v.装备，配备 +equipment n.设备，器材，装置 +equivalence n.相等，等值 +equivalent adj.相等的，等值的 +era n.时代，年代 +eradicate v.根除 +eradication n.根除 +erase v.擦掉，抹去 +erasure n.抹去 +erect v.树立，建立，竖立 +erection n.竖立，建立 +erosion n.腐蚀，侵蚀 +err v.犯错误 +errand n.差事，差使 +error n.错误，过失 +erupt v.喷发，爆发 +eruption n.喷发，爆发 +escalator n.电动扶梯 +escape v.逃跑，避免，被遗忘 +escort v.护送 n.护卫队 +especial adj.特别的，专门的 +especially adv.特别地，专门地 +essay n.散文，论文，小品文 +essayist n.散文作家 +essence n.本质，情髓，香精 +essential adj.必需的，本质的 +essentially adj.本质上，实质上 +establish v.建立，设立，确立 +established adj.已建立的 +establishment n.建立，组织 +estate n.房地产，财产 +esteem v.,n.尊重 +estimate v.,n.估算，预算 +estimation n.估算，估计 +etc. (缩)等等 +eternal adj.永恒的，无休止的 +europe n.欧洲 +european n.,adj.欧洲人(的) +evaluate v.估价，评价 +evaluation n.估价，评价 +evaporate v.蒸发，脱水，消失 +evaporation n.蒸发，升华 +eve n.前夕，前夜 +even adj.平坦的，均匀的 +evening n.傍晚，晚上 +evenly adv.平坦地，均匀地 +event n.事件，场合，比赛 +eventful adj.多事的 +eventually adv.最终，终于 +ever adv.曾经，总是，究竟 +everlasting adj.永久的，持久的 +every adj.每个，所有的 +everybody pron.人人，每人 +everyday adj.每日的，日常的 +everyone pron.人人，每人 +everything pron.事事，一切 +everywhere adv.处处，到处 +evidence n.证据，迹象 +evident adj.明显的，明白的 +evidently adv.明显地，显然 +evil adj.坏的，邪恶的 +evolution v.发展，渐进，进化 +evolve v.发展，进化 +ex prep.在...交货 +exact adj.精确的，精密的 +exactly adv.确切地，正是 +exaggerate v.夸张，夸大 +exaggerated adj.言过其辞的 +exaggeration n.夸张 +exalt v.抬高，发扬 +exalted adj.高贵的，得意的 +exam n.考试 +examination n.检查，考试 +examine v.检查，细看，考试 +example n.例子，榜样 +exasperate v.激怒，恶化 +exasperation n.愤慨，加剧 +exceed v.超过，过度 +exceedingly adv.非常，极端地 +excel v.胜过，优于 +excellence n.优秀，卓越 +excellent adj.优秀的，卓越的 +except prep.除...外 v.除外 +exception n.除外，例外 +exceptional adj.异常的，例外的 +excess n.过量，过剩 +excessive adj.过分的，极度的 +exchange v.交换，兑换 n.交易 +excite v.刺激，使兴奋 +excited adj.兴奋的 +excitement n.兴奋，激动 +exciting adj.令人激动的 +exclaim v.呼喊，感叹 +exclamation n.呼喊，感叹 +exclude v.排除，拒绝考虑 +exclusion n.排除 +exclusive adj.独有的 +exclusively adv.独占地 +exclusivity n.独家经营权 +excursion n.短途游览 +excuse v.原谅 n.借口 +execute v.执行，实施，处决 +execution n.执行，处决 +executive adj.执行的 n.执行者 +exemplify v.举例说明 +exempt v.免除 +exercise n.锻炼，练习，运用 +exercise-book n.练习簿 +exert v.尽(力)，发挥 +exertion n.尽力，竭力 +exhaust v.竭尽，用完 +exhausted adj.精疲力竭的 +exhaustion n.用尽，详述 +exhaustive adj.详尽的 +exhibit v.展出,显示 n.展览品 +exhibition n.展览会，表现 +exile v.放逐 n.流亡者 +exist v.存在，生存 +existence n.存在，生存 +existing adj.现存的，已有的 +exit n.出口，安全门，离开 +exonerate v.昭雪，解除 +exoneration n.免罪，免除 +expand v.扩张，膨胀，扩充 +expansion n.扩张，扩大 +expect v.盼望，期待，预料 +expectation v.期待，前程 +expedience n.便利，权宜之计 +expedient adj.方便的，临时的 +expedite v.加快，急送 +expedition n.探险，考察队 +expel v.驱逐，开除 +expend v.花费，消耗 +expenditure n.支出，费用 +expense n.支出，开支 +expensive adj.昂贵的，高价的 +experience n.,v.经历，经验 +experienced adj.有经验的 +experiment n.,v.实验，试验 +experimental adj.实验的 +experimentation n.实验 +expert n.专家，能手 +expertise n.专家队伍(总称) +expiration n.期满 +expire v.到期，断气 +expiry n.逾期 +explain v.解释，说明 +explanation n.说明，解释 +explanatory adj.说明的 +explicit adj.清楚的，明晰的 +explicitly adv.清晰地 +explode v.爆炸，激增 +exploit v.开发，利用，剥削 +exploitation n.开发，利用 +exploration n.勘探，考察 +explore v.勘探，考察 +explorer n.勘探者，探险家 +explosion n.爆炸，爆发，激增 +explosive adj.爆炸性的 n.炸药 +export v.,n.输出，出口 +exportation n.出口 +exporter n.出口商 +expose v.暴露，揭露，陈列 +exposition n.展览会，说明 +exposure n.揭露，曝光 +express v.表达，快递 n.快车 +expression n.表达，措辞，表情 +expressive adj.有表现力的 +expressly adj.明确表示的 +expressway n.高速公路 +exquisite adj.精致的 +extend v.延伸，扩大，给予 +extension n.延伸，电话分机 +extensive adj.广泛的，密集的 +extensively adv.广泛地 +extent n.范围，限度，一大片 +exterior adj.,n.外部(的) +external adj.外部的，对外的 +extinct adj.绝灭的，熄灭的 +extinction n.绝灭，熄灭 +extinguish v.扑灭，熄灯 +extra adj.额外的，外加的 +extract v.取出，榨出，摘录 +extraction n.出身，摘要 +extraordinary n.特别的，格外的 +extravagance n.奢侈，浪费 +extravagant adj.奢侈的，浪费的 +extreme adj.极度的，极端的 +extremely adv.极其，非常 +eye n.眼睛，孔眼，视力 +eyeball n.眼球 +eyebrow n.眉毛 +eyeglass n.眼镜 +eyelid n.眼睑 +eyesight n.视力 +fable n.寓言 +fabric n.织物，结构，组织 +fabricate v.制作，捏造 +fabrication n.制作，虚构 +face n.脸，正面 v.面对 +facilitate v.使便利，使容易 +facility n.方便，设施，便利 +fact n.事实，真相 +faction n.宗派，派别 +factor n.因素，因数，要素 +factory n.工厂，制造厂 +faculty n.本领，学系 +fade v.褪色，枯萎 +fahrenheit n.,adj.华氏(的) +fail v.失败，不及格，不能 +failing adj.缺点 +failure n.失败，疏忽，破产 +faint adj.软弱的，模糊的 +fair adj.公平的 n.交易会 +fairly adj.公平地，相当 +fairy n.妖精，仙女 +faith n.信任，信念 +faithful adj.忠诚的，可靠的 +faithfully adv.忠诚地 +fake adj.冒片的 n.冒牌货 +fall v.落下，跌倒 n.瀑布 +false adj.假的，假造的 +fame n.名声，声誉 +familiarity n.熟悉，相似 +familiar adj.熟悉的，亲近的 +family n.家庭，家属 +famine n.饥荒，饥饿 +famous adj.著名的 +fan n.扇子，...迷 v.扇 +fanatic adj.狂热的，入迷的 +fancy n.幻想，爱好 v.想象 +fantastic adj.奇异的，荒谬的 +far adj.遥远的 adv.远 +fare n.车费 v.饮食 +farewell int.再见 adj.告别的 +farm n.农场，农庄 +farmer n.农夫，农场主 +farmhand n.农工，农场工人 +farmhouse n.农舍 +farming n.农业，种植业 +farther adv.较远，更进一步 +fascinate v.吸引，入迷，蛊惑 +fascination n.入迷 +fascism n.法西斯 +fascist n.法西斯分子 +fashion n.方式，时髦，时装 +fashionable adj.流行的，时髦的 +fast adj.快的 adv.快 +fasten v.捆紧，钉牢 +fat n.脂肪 adj.肥胖的 +fatal adj.致命的 +fate n.命运，厄运，宿命 +father n.父亲，神父，始祖 +father-in-law n.岳父，公公 +fathom v.领会，推测 +fatigue n.,v.(使)疲劳 +fault n.缺点，过失，断层 +faultless adj.完美的 +faulty adj.有缺点的 +favor n.帮助，偏爱 v.宠爱 +favorable adj.赞成的，有利的 +favorably adv.有利地，顺利地 +favorite n.adj.最喜爱的人或物 +fbi 國際刑警 +fear n.,v.害怕，担忧 +fearful adj.可怕的，吓人的 +fearless adj.毫不畏惧的 +feasibility n.可行性 +feasible adj.可行的，做得到的 +feast n.,v.宴会，宴请 +feat n.功绩 +feather n.羽毛 +feature n.相貌，特征，特写 +february n.二月 +federal adj.联邦的 +federation n.联邦 +fee n.费用，酬金 +feeble adj.虚弱的，无力的 +feed v.喂养，吃东西 +feedback n.反馈 +feel v.感到，摸，意识到 +feeling n.知觉，感觉，感情 +fell v.砍到 +fellow n.家伙，同事 +fellowship n.交情，会员资格 +female adj.女性的，雌的 +feminine adj.女性的，妇女的 +fence n.围栏，篱笆 +ferocious adj.凶猛的，野蛮的 +ferrous adj.铁的，含铁的 +ferry n.渡船 v.渡运 +ferryboat n.渡船 +fertile adj.肥沃，多产的 +fertilizer n.肥料，化肥 +fervent adj.强烈的，热烈的 +festival n.节日 adj.喜庆的 +fetch v.去取来，去请来 +feud n.纠纷，封地 +feudal adj.封建的 +feudalism n.封建主义 +fever n.发烧，狂热 +few adj.少的 n.少数 +fiber n.纤维，质地 +fiction n.小说，虚构 +fictional adj.虚构的 +fiddle n.提琴 +field n.田野，战场，场 +fierce adj.凶猛的，猛烈的 +fiery adj.火的 +fifteen num.十五 +fifth num.第五，五分之一 +fifty num.五十 +fig n.无花果 +fight v.打仗，战斗，作斗争 +fighter n.战士 +figurative adj.比喻的，修饰的 +figure n.数字，图形，人物 +file n.档案，纵列，锉刀 +filing n.档案管理 +fill v.装满，充满，补缺 +filling n.充填物，馅 +film n.胶片，电影，薄膜 +filter n.滤器 v.过滤 +filth n.污秽，污物 +filthy adj.污秽的 +final adj.最终的 n.决赛 +finalize v.落实，定下来 +finally adv.最终，终于 +finance n.金融 v.资助 +financial adj.金融的，财政的 +financier n.金融家 +financing n.金融业，财政学 +find v.寻找，找到，发现 +finding n.发现，发现物 +fine adj.好的，精细的 +finger n.手指 +finish v.,n.结束，抛光 +finished adj.制成的 +finite adj.有限的，限定的 +fir n.裘皮 +fire n.火，火灾 v.开火 +fire-engine n.消防车 +fireman n.消防队员 +fireplace n.壁炉 +firework n.焰火 +firm adj.坚固的 n.商号 +firmly adv.坚定地，坚固地 +firmness n.坚定，坚固 +first adj.第一的 adv.首先 +first-rate adj.第一流的 +fish n.鱼 v.捞取，探听 +fisherman n.渔夫 +fishery n.渔业 +fission n.裂变，分裂 +fist n.拳头 +fit adj.适合的，健康的 +fitness n.适合，健康 +fitting adj.适当的 +five num.五 +fix v.固定，确定，修理 +fixed adj.固定的，已确定的 +fixture n.固定物，固定装置 +flag n.旗 +flake n.片，片状物 +flame n.火焰，热情 +flank n.侧面，胁腹 +flannel n.法兰绒 +flap v.拍打 n.垂下物 +flare v.,n.闪烁 +flash n.,v.闪光，闪现 +flask n.瓶，烧瓶 +flat adj.平的，平淡的 +flatten v.弄平，变平 +flatter v.奉承，谄媚 +flavor n.滋味，风趣 +flaw n.裂缝，瑕疵，缺点 +flee v.逃走，消散 +fleece n.羊毛 +fleet n.船队 +flesh n.肌肉，骨肉，果肉 +fleshy adj.肉的 +flexibility n.柔韧，灵活性 +flexible adj.柔韧的，灵活的 +flicker v.闪烁 +flight n.飞，航班，逃走 +fling v.抛，掷 +float v.浮，漂 n.彩车 +flock n.群 v.群集 +flood n.洪水，大量 +floor n.地板，(楼)层 +flour n.面粉 +flourish v.茂盛，兴旺 +flow v.流动 n.流动，流量 +flower n.花，盛期 +flu n.流感 +fluctuate v.波动，起伏 +fluctuation n.波动 +fluency n.流利，流畅 +fluent adj.流利的 +fluid n.液体 adj.流动的 +flush v.(脸)发红 n.红晕 +flute n.长笛，笛子 +flutter v.飘动，振翼 +flux n.流动，变迁 +fly v.飞，驾机 n.苍蝇 +foam n.泡沫 v.起泡 +fob (缩)离岸价 +focus n.焦点，中心 v.集中 +fodder n.饲料 +foe n.敌人，宿敌 +fog n.雾，翳 +foggy adj.有雾的，雾蒙蒙的 +fold v.折叠 n.折痕 +foliage n.叶子(总称) +folk n.人们，乡亲，亲属 +follow v.跟随，听懂，遵循 +follower n.追随者，信徒 +following adj.下列的，其次的 +follow-up n.,adj.后续(的) +fond adj.喜爱..的，慈爱的 +food n.食物，食粮 +foodstuff n.食品 +fool n.蠢人，傻瓜 v.愚弄 +foolish n.愚蠢的，笨的 +foot n.脚，英尺，最下部 +football n.足球 +footing n.立足点，立场 +footstep n.足迹，脚步声 +for prep.给，作...用的 +forbid v.禁止，不许 +forbidden adj.禁止的 +force n.力，力量 v.强迫 +fore adj.前面的adv.在前面 +forecast n.,v.预测，预报 +forefather n.祖先，先辈 +forefinger n.食指 +foregoing adj.先行的，上述的 +forehead n.前额 +foreign adj.外国的，对外的 +foreigner n.外国人，异乡人 +foreman n.领班 +foremost adj.最初的，第一流的 +foresee v.预见，预知 +forest n.森林 +forestry n.林业 +foretell v.预告，预言 +forever adv.永远，总是 +forge v.打铁，锻造，伪造 +forgery n.锻炉，锻造厂 +forget v.忘记，疏忽，没想到 +forgive v.饶恕，原谅，豁免 +fork n.餐叉，岔口 +form n.形状，类型，表格 +formal adj.形式上的，正式的 +formality n.礼节，正式 +format n.格式，样式 +formation n.形成，构成 +former adj.以前的，前者 +formerly adv.从前，以前 +formidable adj.可怕的，难对付的 +formula n.公式 +formulate v.系统阐述 +formulation n.确切表述 +forsake v.遗弃，抛弃 +fort n.堡垒，要塞 +forth adv.向前，向外 +forthcoming adj.即将到来的 +fortitude n.坚毅 +fortnight n.两星期 +fortress n.堡垒，城堡 +fortuity n.偶然事件 +fortunate adj.幸运的，侥幸的 +fortunately adv.幸运地，幸而 +fortune n.运气，财富 +forty num.四十 +forum n.讨论会，座谈会 +forward adj.向前的 adv.向前 +fossil n.化石，守旧者 +foster v.养育，抚养 +foul adj.肮脏的，邪恶的 +found v.创办，使有根据 +foundation n.建立，基金，基础 +founder n.创办人，奠基人 +fountain n.泉，源泉，喷泉 +four num.四 +fourteen num.十四 +fourth num.第四，四分之一 +fowl n.家禽，鸡，禽肉 +fox n.狐狸，狡猾的人 +fraction n.片断，分数 +fractional adj.零碎的，不足的 +fracture n.断裂 v.折断 +fragile adj.易碎的，脆的 +fragment n.碎片，片断 +fragrance n.芬芳，香气 +fragrant adj.香的，芬芳的 +frail adj.脆弱的，虚弱的 +frame n.框架，骨骼 v.构造 +framework n.构架，机构 +france n.法国 +franchise n.特许权 +frank adj.坦率的，真诚的 +frankly adv.坦率地 +free adj.自由的，空闲的 +freedom n.自由，免除 +freely adv.自由地，随意地 +freeze v.结冰，楞住，冻结 +freezer n.冷冻箱 +freight n.货运，货物，运费 +french adj.法国的 n.法语 +frenchman n.法国人 +frequency n.频繁，频率 +frequent adj.频繁的，经常的 +frequently adv.时常，往往 +fresh adj.新鲜的，崭新的 +freshen v.使新鲜，使振作 +freshman n.新人，新生 +fret v.使烦恼 n.烦燥 +friction n.摩擦，摩擦力 +friday n.星期五 +friend n.朋友 +friendly adj.友好的，和气的 +friendship n.友谊，友好 +fright n.恐怖，惊吓 +frighten v.惊吓，吓唬 +frightening adj.令人害怕的 +frightful adj.可怕的 +fringe n.边缘，花边，穗子 +frock n.女上衣，童上装 +frog n.蛙 +from prep.自，从...来 +front n.正面，前线 v.面对 +frontier n.边界，国境，新领域 +frost n.霜，霜冻 +frosty adj.霜的 +frown v.皱眉头，厌恶 +frugal adj.节俭的 +fruit n.果子，水果，成果 +fruitful adj.果实累累的 +frustrate v.阻挠，使灰心 +frustration n.挫折，灰心 +fry v.油煎，炸 +frying-pan n.煎锅 +fuck 渾蛋，辱駡 +fuel n.燃料 +fulfil v.完成，满足要求 +fulfillment n.完成，成就 +full adj.满的，完全的 +fully adv.完全，彻底 +fumble v.摸索 +fun n.娱乐，玩笑，乐趣 +function n.作用，集会，函数 +functional adj.功能的 +fund n.基金，资金，蕴藏 +fundamental adj.基本的，根本的 +funeral n.葬礼 +funny adj.有趣的，好笑的 +fur n.毛皮，裘衣 +furious adj.狂怒的，狂暴的 +furnace n.熔炉 +furnish v.供应，装备，摆家具 +furniture n.家具(总称) +furrow n.犁沟 +further adv.更远，进一步 +furthermore adv.而且 +fury n.狂暴，狂怒 +fuse n.保险丝，导火线 +fuss n.忙乱，大惊小怪的 +fussy adj.爱大惊小怪的 +future n.将来，前途 +futures n.期货 +gain v.获得，赢得 n.收益 +gale n.大风，定期交付 +gallery n.美术馆 +gallon n.加仑 +gallop v.奔驰，飞跑 +gamble v.,n.赌博，投机 +gambler n.赌徒 +game n.游戏，比赛，猎物 +gang n.一群，一帮 +gangster n.匪徒，歹徒 +gaol n.监狱 +gap n.空隙，隔阂，山口 +garage n.车库，汽车修理站 +garbage n.垃圾 +garden n.花园，菜园 +gardener n.园丁 +gardening n.园艺 +garlic n.大蒜 +garment n.衣服，服装 +garrison n.要塞，警备队 +gas n.气体，煤气，汽油 +gasoline n.汽油 +gasp v.,n.喘息，喘气 +gate n.大门，门票收入 +gather v.聚集，收集，采集 +gathering n.集会，聚集 +gauge n.规格，计量表 +gay adj.快活的，快乐的 +gaze v.,n.凝视，注视 +gear n.齿轮，用品 +gem n.宝石 +general adj.一般的，总的 +generalization n.概括 +generalize v.总结，归纳 +generally adv.通常，大概 +generate v.产生，发生，生殖 +generation n.世代，一代人 +generator n.发电机 +generosity n.慷慨，大方 +generous adj.慷慨的，丰盛的 +genius n.天份，才华，天才 +gentle adj.温柔的，温和的 +gentleman n.绅士，先生，君子 +gently adv.轻轻地，温柔地 +genuine adj.真正的，道地的 +geography n.地理学，地形 +geology n.地质学 +geometry n.几何学 +germ n.萌芽，起源，细菌 +german adj.德国的 n.德语 +germany n.德国 +gesture n.姿势，手势，姿态 +get v.获得，记住，到达 +get-together n.集会，聚会 +ghost n.鬼魂，幽灵 +giant n.巨人 adj.巨大的 +gift n.礼品，天赋 +gigantic adj.巨大的 +giggle v.咯咯地笑 +ginger n.姜 +girl n.少女，姑娘 +giver v.给予，付出 n.让步 +glad adj.快乐的，高兴的 +glance v.看一眼 n.一瞥 +glare n.,v.闪耀，瞪眼 +glass n.玻璃，镜子 +glassware n.玻璃制品 +gleam n.微光，闪光 +glide v.,n.滑行，溜 +glimpse v.,n.瞥见 +glisten v.闪光 +glitter v.闪闪发光 +global adj.全世界的，总的 +globalization n.全球化 +globalize v.使...全球化 +globe n.地球，球体，地球仪 +gloom n.黑暗，忧郁 +gloomy adj.阴沉的，忧郁的 +glorious adj.光荣的，辉煌的 +glorify v.颂扬，赞美 +glory n.光荣，壮丽，荣誉 +glossary n.词汇表 +glove n.手套 +glow v.发光，发红 +glue n.胶水 n.粘贴 +glut n.供过于求v.狼吞虎咽 +gnaw v.啃，咬 +gnp n.(缩)国民总收入 +go v.去，进行，打算 +goal n.目标，目的，球门 +goat n.山羊 +god n.神，上帝 +goddess n.女神 +gold n.黄金，金币，金色 +golden adj.黄色的，金黄色的 +golf n.高尔夫球 +good adj.好的，善良的 +good-bye int.再见 +good-looking adj.好看的 +goodness n.优良，天哪 +goodself n.你方 +goods n.货物，商品 +goodwill n.商誉 +goose n.鹅 +gorge n.咽喉，峡谷，山口 +gorgeous adj.绚丽的，了不起的 +gorilla n.大猩猩 +gossip n.闲谈，聊天 +govern v.统制，支配，决定 +government n.编制，政体，政府 +governess n.女家庭教师 +governor n.州长，总督 +gown n.长袍，法衣 +grab v.抓住，攫取 +grace n.优美，文雅，恩惠 +graceful adj.优美的，文雅的 +gracious adj.亲切的，客气的 +grade n.等级，年级 +gradual adj.逐渐的，逐步的 +gradually adv.逐渐地，逐步地 +graduate v.毕业生 v.毕业 +graduation n.毕业 +grain n.谷物，颗粒，一点点 +gram n.克 +grammar n.语法 +grammatical adj.语法的 +gramophone n.留声机 +grand adj.雄伟的，重大的 +grandchild n.(外)孙儿、女 +granddaughter n.孙女，外孙女 +grandfather n.祖父，外祖父 +grandmother n.祖母，外祖母 +grandparent n.(外)祖父(母) +grandson n.孙子，外孙 +granite n.花岗石 +grant v.答应，授予，承认 +grape n.葡萄 +graph n.图象，图解 +grasp v.,n.抓住，领悟 +grass n.草，禾本植物 +grasshopper n.蚱蜢 +grateful adj.感激的，致谢的 +gratify v.使满足，使高兴 +gratifying adj.可喜的 +gratis adj.免费的 +gratitude n.感激，感谢 +grave adj.严肃的，庄重的 +gravel n.砂砾，石子 +gravity n.引力，严肃 +graze v.吃草，擦碰 +grease v.润滑油脂 +great adj.大的，伟大的 +greatly adj.大大地，非常地 +greatness n.伟大，大 +greece n.希腊 +greed n.贪婪，贪心 +greedy adj.贪婪的 +greek n.,adj.希腊人(的) +green adj.绿的，没有经验的 +greengrocer n.蔬菜商 +greenhouse n.温室 +greet v.打招呼 +greeting n.问候，致意 +grey adj.灰色的，阴郁的 +grief n.悲哀，悲伤 +grieve v.使悲伤，伤心 +grim adj.冷酷的，不祥的 +grin v.露齿而笑 +grind v.碾碎，磨快，折磨 +grip v.,n.紧握，吸引 +groan v,,n.呻吟 +grocer n.杂货铺 +grocery n.杂货店 +groove n.槽，沟，常规 +grope v.摸索，探索 +gross adj.总的，粗糙的 +ground n.地面，场，根据 +groundless adj.无根据的 +group n.群，组，团体 +grove n.林子，树丛 +grow v.增长，成长，种植 +growl v.,n.咆哮，嗥叫 +grown adj.已长成的 +grown-up n.成人 adj.成人的 +growth n.增长，发展，生长 +grudge v.嫉妒，吝啬 +grumble v.抱怨，咕哝，发牢骚 +grunt n.,v.(作)呼噜声 +guarantee n.,v.保证，担保 +guard v.警卫，提防 v.哨兵 +guardian n.保护人 +guess v.,n.猜想，推测 +guest n.客人，宾客，旅客 +guesthouse n.宾馆 +guidance n.向导，指导 +guide v.向导，指引 n.导游 +guilt n.犯罪，过失 +guilty adj.有罪的，内疚的 +guitar n.吉它，六弦琴 +gulf n.海湾，鸿沟 +gulp v.吞下 +gum n.树胶，口香糖，牙龈 +gun n.枪，炮 +gunpowder n.火药 +gust n.一阵(大风) +gutter n.街沟 +guy n.家伙 +gymnasium n.体育馆，健身房 +gymnastics n.体操 +gymnast n.体操运动员 +habit n.习惯 +habitual adj.习惯的，惯常的 +haggard adj.消瘦的，憔悴的 +haggle n.争论，讨价还价 +hail v.欢呼 n.冰雹 +hair n.头发，毛发 +haircut n.理发 +hairdress n.美发 +hairpin n.发卡 +hairy adj.毛发的，多毛的 +half n.一半 adv.一半 +halfway adv.半途 +hall n.大厅，会堂 +hallmark n.标志 +halt v.,n.停住 +halve v.对分，减半 +ham n.火腿 +hamburger n.汉堡包 +hammer n.锤子 v.锤击 +hamper v.妨碍 +hand n.手，人手，指针 +handbag n.手袋，手提包 +handbook n.手册 +handful adj.一把，少量 +handicap n.障碍 v.妨碍 +handicapped adj.有残疾的 +handkerchief n.手帕，手绢 +handle v.处理，对待 n.把 +handling n.处理，管理 +handsome adj.漂亮的，得体 +handout n.分发物(印刷品等) +handwriting n.手写，书法，笔迹 +handy adj.方便的，近便的 +hang v.挂，垂，绞死 +hanger n.衣架 +haphazard adj.偶然的 +happen v.发生，碰巧，出事 +happening n.事件 +happily adv.幸运地 +happiness n.幸福 +happy adj.高兴的，幸运的 +harbor n.港口，停泊处 +hard adj.硬的 adv.努力 +harden v.硬化，变硬 +hardly adv.刚刚，几乎不 +hardness n.坚硬，硬度 +hardship n.困苦，艰难 +hardware n.硬件 +hard-working adj.勤劳的 +hardy adj.耐劳的，耐寒的 +hare n.野兔 +harm n.,v.损害，伤害 +harmful adj.有害的 +harmless adj.无害的，无恶意的 +harmonious adj.和睦的，和谐的 +harmony n.融洽，和谐 +harness v.支配，治理 +harsh adj.刺耳的，严厉的 +harvest v.,n.收获 +haste n.急忙，急速 +hasten v.赶紧，加快 +hasty adj.急促的，草率的 +hat n.帽子 +hatch v.孵化，策划 +hate v.恨，憎恶，不愿意 +hateful adj.可恨的，可憎的 +hatred n.憎恶，敌意 +haughty adj.傲慢的 +haul v.拉，拖 n.获得量 +haunt v.萦绕，作崇 +have v.有，不得不，拿 +hawk n.鹰隼 +hay n.干草 +hazard n.危险 +he pron.他 +head n.头，领导 v.率领 +headache n.头疼，头疼的事 +heading n.标题 +headline n.通栏标题 +headlong ad.头向前地，卤莽地 +headmaster n.(中、小学)校长 +headquarters n.司令部，总部 +heal v.治愈，医治 +health n.健康(状况) +healthy adj.健康的 +heap n.一堆，许多 v.堆积 +hear v.听见，听取，听说 +hearing n.听力，审讯 +heart n.心，心肠，中心 +heartfelt adj.衷心的 +hearth n.壁炉，炉边 +heartily adv.精神饱满的 +hearty adj.衷心的，热诚的 +heat n.热，热烈 v.加热 +heated n.激烈的，热烈的 +heating n.取暖，供热 +heave v.起伏，举起，叹气 +heaven n.天空，天堂 +heavily adv.重，沉重的 +heavy adj.星的，繁重的 +hedge n.树篱，套期保值 +hedgehog n.刺猬 +heed v.,n.注意，留心 +heel n.后跟 +height n.高度，顶点 +heighten v.加高，增加 +heir n.继承人 +heiress n.女继承人 +helicopter n.直升飞机 +hell n.地狱，苦境 +hello int.喂，你好 +helmet n.头盔 +help v.,n.帮助，有助于 +helpful adj.有用的 +helpless adj.无用的，无效的 +hemisphere n.半球，领域 +hen n.母鸡 +hence adv.因此，由此 +henceforth adv.今后 +her pron.她的，她(宾格) +herald n.先兆，先驱 +herb n.药草 +herbal adj.草药的 +herd v.放牧 n.(牲畜)群 +here adv.这里，在这里 +hereafter adv.此后 +hereby adv.以此 +herein adv.在此 +hereinafter adv.以下 +hereof adv.在本文件中 +hereto adv.对此 +herewith adv.与此一道 +hero n.英雄，男主角 +heroic adj.英雄的，英勇的 +heroine n.女英雄，女主角 +herself pron.她自己 +hesitant adj.犹豫的 +hesitate v.犹豫，不想 +hesitation n.犹豫，踌躇 +hey int.嗨 +hi int.嗨，你好 +hide v.躲藏，隐瞒，掩盖 +hideous adj.骇人听闻的 +high adj.高的，高度的 +highland n.高地 +highly adv.十分，赞许地 +highway n.公路 +hijack v.拦路抢劫 +hijacker n.栏路抢劫者 +hike n.,v.徒步郊游 +hill n.小山，丘陵 +hillside n.山坡，山腰 +him pron.他(宾格) +himself pron.他自己 +hind adj.后面的，后部的 +hinder v.妨碍，阻止 +hinterland n.内地 +hindrance n.障碍(物) +hinge n.合页，绞链 +hint n.暗示，迹象 v.暗示 +hip n.臀部 +hire v.租，雇佣 +his pron.他的 +hiss v.,n.(发)嘶嘶声 +historian n.历史学家 +historic adj.历史性的 +historical adj.历史的 +history n.历史 +hit v.打，碰，打击 +hitchhike v.搭车旅行 +hitherto adv.迄今，到那时 +hoarse adj.嘶哑的，沙哑的 +hobby n.嗜好，业余爱好 +hoe n.锄头 v.锄 +hoist v.升起，扯起 +hold v.握住，容纳 n.控制 +holder n.持有人，支架 +holding n.支持，控股 +hold-up n.停顿，耽误 +hole n.洞，孔穴 +holiday n.节日，假日 +hollow adj.空心的，凹陷的 +holy adj.神圣的，圣洁的 +home n.家，故乡 adv.回家 +homeless adj.无家可归的 +homely adj.家常的，简便的 +homesick n.思乡的 +homework n.家庭作业 +homogenous adj.同质的，同类的 +honest adj.诚实的，正直的 +honesty n.诚实，正直 +honey n.蜂蜜 +honeymoon n.蜜月 +honor n.荣誉，名誉 v.尊敬 +honorable adj.可尊敬的，体面的 +hook n.钩 v.钩住 +hop v.跳跃 +hope v.,n.希望，愿望 +hopeful adj.有希望的 +hopefully adv.可以指望 +hopeless adj.无望的，绝望的 +horizon n.地平线，视野 +horizontal adj.水平的，横的 +horn n.角，触须，号角 +horrible adj.可怕的，糟透的 +horrify v.使恐惧 +horror n.恐惧，恐怖 +horse n.马 +horsepower n.马力 +hose n.软水管，长统袜 +hospital n.医院 +hospitable adj.好客的 +hospitality n.好客，款待 +host n.一大群，男主人 +hostage n.人质 +hostel n.廉价旅馆 +hostess n.女主人，女主持人 +hostile adj.怀敌意的 +hot adj.热的，辣的 +hotdog n.热狗(面包) +hotel n.旅馆 +hotelling n.旅馆业 +hour n.小时，点钟 +hound n.猎狗 v.追逐 +house n.房子，剧场，家 +household n.户 adj.家庭的 +housekeeper n.看门人，保姆 +housewife n.家庭主妇 +housework n.家务 +hover v.翱翔，盘旋，徘徊 +how adv.如何，多么，怎样 +however adv.可是，然而 +howl v.,n.嚎叫，嚎哭 +hug v.,n.紧抱 +huge adj.庞大的，巨大的 +hull n.豆荚，外壳，船壳 +hum v.哼，嗡嗡叫 +human adj.人的，人类的 +humane adj.人慈的 +humanism n.人道主义 +humanitarian n.慈善家 +humanity n.人类，人性 +humble adj.谦卑的，卑贱的 +humid adj.湿的，潮湿的 +humidity n.湿度，湿气 +humiliate v.使受辱 +humiliation n.羞辱，耻辱 +humor n.幽默(感)，心情 +humorous adj.幽默的，诙谐的 +hundred num.一百 +hundredth num.第一面，百分之一 +hunger n.饥饿，渴望 +hungry adj.饥饿的，渴望的 +hunt v.打猎，搜索，寻找 +hunter n.猎人，搜索者 +hurl v.猛掷，猛投 +hurrah int.好哇 n.喝彩声 +hurry v.赶紧，急忙，急运 +hurt v.使受伤，使痛，伤害 +husband n.丈夫 +hush int.嘘 n.沉默 +hustle v.奔忙 +hut n.小屋 +hydraulic adj.水力的，液压的 +hydroelectric adj.水电的 +hydrogen n.氢，氢气 +hygiene n.卫生 +hymn n.赞美诗，赞歌 +hypocrisy n.伪善 +hypothesis n.假设，前提 +hypothetical adj.假设的 +hysteria n.歇斯底里，癔病 +hysteric adj.亢奋的 +i .我 +ice n.冰，冰块 +ice-cream n.冰淇淋 +ice-bound adj.冰封的 +iceland n.冰岛 +icy adj.冰冷的，结了冰的 +idea n.思想，主意，打算 +ideal adj.理想的 n.理想 +idealism n.理想主义 +idealize v.使理想化 +identical adj.同一的，相同的 +identification n.识别，身分 +identify v.认出，认为...一致 +identity n.认同，同一性 +idiom n.习语，成语 +idiomatic adj.习语的，惯用的 +idiot n.傻子，白痴 +idle adj.空闲的，懒的 +idleness n.闲散，无所事事 +idol n.偶像，被崇拜的人 +i.e. (缩)即，也就是 +if conj.如果，虽然,是否 +ignite v.点燃 +ignorance n.无知，不知道 +ignorant adj.不知道的，无知的 +ignore v.忽视，不理睬 +ill adj.患病的，坏的 +illegal adj.不合法的，非法的 +illegible adj.字迹不清的 +illiteracy n.文盲 +illiterate adj.文盲的 n.文盲 +illness n.疾病，生病 +illuminate v.照亮，启发 +illusion n.幻想，幻觉 +illusive adj.幻觉的 +illustrate v.图解，用图说明 +illustration n.阐明，实例 +image n.图像，影像，形象 +imaginary adj.想象的，虚构的 +imagination n.想象力，想象 +imagine v.想象，猜想 +imitate v.模仿，仿造，模拟 +imitation n.模仿，仿制品 +immaterial adj.无形的，不重要的 +immature adj.不成熟的 +immediate adj.立即的，最近的 +immediately adv.立即，马上 +immense adj.巨大的，极大的 +immerse v.浸泡，埋头于 +immigrant n.移民 +immigrate v.移入 +immigration n.移居入境 +imminent adj.迫切的，危急的 +immoral adj.不道德的 +immortal adj.不朽的 +impact n.冲击，影响 +impart v.给予，告诉 +impartial adj.公证的 +impatience n.不耐烦 +impatient adj.急切的，不耐烦的 +imperative adj.绝对必要的 +imperfect adj.不完善的 +imperialism n.帝国主义 +imperialist n.帝国主义者 +implement v.实行 n.工具 +implementation n.实行，执行 +implication n.暗示，含义 +implied adj.暗含的，暗示的 +implore v.恳求，哀求 +imply v.暗示，意味 +import v.进口,引进 n.进口货 +importance n.重要性，意义 +important adj.重要的，重大的 +importation n.进口 +importer n.进口商 +impose v.征(税)，强加 +imposition n.强迫接受 +impossibility n.不可能性 +impossible adj.不可能的，不妥的 +impost n.进口税，关税 +impractical v.不可行的 +impress v.印，铭刻，产生印象 +impression n.印象，影响，印迹 +impressive adj.给人深刻印象的 +imprison v.关押，监禁 +imprisonment n.监禁，徒刑 +improper adj.不适当的 +improve v.改善，提高 +improvement n.改善，好转 +impulse n.冲击，冲动，脉搏 +impurity n.不纯，杂质 +in prep.在...内，穿戴 +inability n.无能 +inaccessible adj.很难得到的 +inaccurate adj.不准确的，不确切 +inadequate adj.不充足的，不足以 +inasmuch adv.因为，由于 +inaugural adj.开幕的 +inaugurate v.举行开幕、就职典礼 +inauguration n.开幕、就职典礼 +incapable adj.不能的，不会的 +incense v.使发怒 n.香 +incentive n.刺激的，鼓励的 +inch n.英寸 +incident n.事件，事变，插曲 +incidentally adv.偶然地，另外 +inclination n.倾斜，倾向 +incline v.低头，喜欢，倾斜 +inclined adj.倾向于...的 +include v.包括 +inclusion n.包括在内 +inclusive adj.包括在内的 +income n.收入，所得 +incompatibility n.不兼容 +incompatible adj.不相容的 +incomplete adj.不完全的，没完成 +inconsistency n.不一致 +inconsistent adj.不一致的 +inconvenience n.不便，不利 +inconvenient adj.不方便的 +incorporate v.合并，体现 +incorporated adj.有限的 +incorrect adj.不正确的 +incoterms n.(缩)国际贸易术语 +increase v.,n.增加，增长 +increasing adj.不断增长的 +increasingly adv.日益，越来越 +incredible adj.不可信的，惊人的 +incredulous adj.表示怀疑的 +increment n.增值 +incur v.招致，承受 +indebted adj.感激的，感恩的 +indebtedness n.感激 +indeed adv.的确，实际上 +indefinite adj.不明确的，不确定 +indefinitely adv.不明确地 +indemnify v.赔偿，保护 +indent v.(书写)缩行 +independence n.独立，自主 +independent adj.独立的 +independently adv.独立地 +index n.索引，标志，指数 +india n.印度 +indian adj.,n.印度人(的) +indicate v.指明，表示 +indication n.表示，迹象 +indicative adj.表示...的 +indifference n.冷淡，不关心 +indifferent adj.冷淡的，不在乎的 +indigestion n.消化不良 +indignant adj.气愤的，愤慨的 +indignation n.愤慨，气愤 +indirect adj.间接的，侧面的 +indirectly adj.间接地 +indispensable adj.必不可少的 +individual adj.个人的，各自的 +indoor adj.室内的 +indoors adv.在户内，在屋里 +induce v.诱使，引起，归纳 +inducement n.诱导，动机 +induction n.感应，归纳 +indulge v.放纵，放任，纵容 +industrial adj.工业的 +industrialize v.使工业化 +industrialization n.工业化 +industrialized adj.工业化的 +industrious adj.勤劳的，勤奋的 +industry n.工业，产业，勤奋 +ineffective adj.效率低的 +ineffectiveness n.低效率 +inefficiency n.无效力 +inefficient adj.无效的 +inertia n.惯性，惰性，不活动 +inevitable adj.必然的，不可避免 +inevitably adv.必然地 +inexpensive adj.便宜的 +infant n.婴儿，幼儿 +infantry n.步兵 +infect v.感染，传染 +infection n.感染 +infectious adj.传染的 +infer v.推断，推论 +inference n.推断，推论的结果 +inferior adj.低级的 n.下级 +inferiority n.劣势 +infinite adj.无限大的，无穷的 +infinitely adv.无限地，无穷地 +infinitive adj.不定式的 +infinity n. 无限，无数，极多 +inflammable adj.不易燃的 +inflation n.充气，通货膨胀 +inflict v.打击 +influence n.影响，势力(范围) +influential adj.有影响的 +influenza n.流行性感冒 +inform v.通知，告诉，告密 +informal adj.非正式的 +information n.通知，情报，资料 +informative adj.提供资料的 +infrequent adj.不经常的 +infringe v.侵权 +infringement n.侵权 +ingenious adj.灵巧的，精巧的 +ingenious adj.独创的，机智的 +ingenuity n.灵巧，机灵，巧妙 +inhabit v.居住，栖身 +inhabitant n.居民 +inherent adj.生来俱有的 +inherit v.继承，遗传 +initial adj.最初的 +initially adv.最初 +initiate v.发动，开始，使入门 +initiative n.积极性，首创精神 +inject v.注射 +injection n.注射 +injure v.伤害，损害 +injury n.伤害，损害 +injustice n.不公正 +ink n.墨水，油墨 +inland n.内地的，内陆的 +inlet n.水湾，入口 +inn n.客栈 +inner adj.里面的，内心的 +innocence n.清白，天真 +innocent adj.无罪的 +innovate v.革新，变革，创始 +innovation n.革新，创新 +innumerable adj.无数的 +inorganic adj.无机的 +input n.输入，投入 +inquire v.询问 +inquiry n.询问，查询，调查 +insane adj.疯狂的 +insect n.昆虫 +insert v.插入，嵌入 +insertion n.插入 +inside n.里面 adj.里面的 +insider n.知情者 +insight n.洞察力 +insignificant adj.无足轻重的 +insist v.坚持，坚决要求 +insistent adj.紧迫的，坚持的 +insofar adv.在...范围内 +insolvent adj.无偿付能力的 +inspect v.检查，视察，审查 +inspection n.检查，视察 +inspector n.检查员，视察者 +inspiration n.灵感 +inspire v.鼓舞，激励，受启发 +instable adj.不稳定的 +install v.安装，安置 +installation n.安装，装置 +installment n.分期付款 +instance n.例子 +instant adj.立即的，速溶的 +instantly adv.立即，立刻 +instead adv.代替，而是 +instinct n.本能，直觉，天性 +instinctive adj.本能的，天性的 +institute n.(专科)学院 v.建立 +institution n.机构，制度 +instruct v.指导，指示，告知 +instruction n.指导，指示 +instructive adj.指示的，教育的 +instructor n.教员，教练 +instrument n.仪器，乐器，手段 +instrumental adj.仪器的，工具的 +insufficient adj.不充足的 +insulate v.绝缘，隔离，使孤立 +insulation n.隔离，绝缘 +insult v.,adj.侮辱 +insurance n.保险(业)，保障 +insure v.保险，确保 +intangible adj.无形的 +integral adj.组成的，整体的 +integrate v.整合，结合 +integration n.结合，整体 +integrity n.完整性，诚实 +intellect n.理智，才智 +intellectual n.知识分子 +intelligence n.智慧，情报 +intelligent adj.聪明的，明智的 +intend v.打算 +intense adj.强烈的，极度的 +intensity n.强烈，强度 +intensive adj.强化的，密集的 +intent n.意图 adj.专心的 +intention n.意图，目的 +intentional adj.有意的，故意的 +interact v.相互作用，相互影响 +interaction n.相互作用 +intercourse n.交流，往来 +interest n.兴趣，利息，利益 +interested adj.感兴趣的 +interesting adj.有趣的 +interface n.交界，接口 +interfere v.妨碍，干涉 +interference n.干涉，干扰 +interior n.内部，内地，内政 +intermediate adj.中间的 +internal adj.内部的，国内的 +international adj.国际的 +internationalization n.国际化 +internationalize v.使国际化 +interpret v.解释，当...译员 +interpretation n.解释，口译 +interpreter n.译员 +interrupt v.打断，中断 +interruption n.中断，打扰 +interval n.间隔，中间休息 +intervene v.介入，调解 +interview n.,v.会见，面谈 +intimate adj.亲密的，熟悉的 +intimation n.亲密，熟悉 +into prep.到...里面，..成 +intonation n.语调，声调 +introduce v.介绍，引进，采用 +introduction n.介绍，引言 +introductory adj.介绍的，入门的 +intrude v.侵入，强加于 +inundate adj.使充满 +invade v.入侵，侵犯 +invader n.入侵者 +invalid adj.伤残的，无效的 +invalidate v.使无效 +invaluable adj.非常宝贵的 +invariably adv.不变地，总是 +invasion n.侵略，侵袭 +invent v.发明，创造，编造 +invention n.发明，创造 +inventor n.发明者 +inverse adj.相反的，倒转的 +inversely adv.相反地 +invest v.投资，花费 +investigate v.调查，研究 +investigation n.调查 +investment n.投资(额) +invisible adj.看不见的 +invitation n.邀请(信) +invite v.邀请，招致，征求 +invoice n.发票，装货清单 +involve v.使卷入，忙于 +involved adj.涉及的，复杂的 +involvement n.卷入，涉足 +inward adj.里面的，内心的 +inwards adv.向内的 +ireland n.爱尔兰 +iIrish n.,adj.爱尔兰人(的) +iron n.铁，熨斗 v.熨平 +ironical adj.反讽的，讽刺的 +irony n.反讽，讽刺 +irregular adj.不规则的 +irregularity n.不规则 +irresistible adj.不可抗拒的 +irrespective adj.不论，不考虑 +irrevocable adj.不可撤消的 +irrigate v.灌溉 +irrigation n.灌溉 +irritate v.使生气，刺激 +irritation n.刺激，恼怒 +islam n.伊斯兰教，回教 +island n.岛屿 +isolate v.隔离，孤立 +isolation n.隔离，孤立状态 +issue v.发行,发布 n.发行物 +it pron.它 +italian n.,adj.意大利人(的) +italy n.意大利 +itch v.,n.痒，热望 +item n.条款，项目 +itemize v.分列 +its pron.它的 +itself pron.它自己 +ivory n.象牙，象牙色 +jack n.千斤顶，船首旗 +jacket n.短外套，茄克衫 +jail n.监狱 v.监禁 +jam n.果酱，阻塞 +january n.一月 +japan n.日本 +japanese n.,adj.日本人(的) +jar n.罐子，坛子，刺耳声 +jaw n.下颚，下巴 +jazz n.爵士乐 +jealousy n.妒忌 +jealous adj.妒忌的 +jeans n.牛仔裤 +jelly n.果冻 +jeep n.吉普车 +jeopardize v.危及 +jerk n.颠簸，猛推 +jesus n.耶稣 +jet v.喷射 v.喷气发动机 +jettison n.投弃货物 v.抛弃 +jew n.犹太人 +jewel n.珠宝，宝石 +jewelry n.珠宝(总称) +jewish adj.犹太人的 +jingle v.,n.(发)叮当声 +job n.工作，活儿，差使 +jobless adj.失业的 +jog v.慢跑 +join v.连接，加入，参加 +joint n.接着，关节 +joke n.笑话 v.开玩笑 +jot v.匆匆记下 +journal n.刊物，日志 +journalism n.新闻体 +journalist n.记者 +journey n.旅行，旅程 +joy n.高兴，乐事 +joyful adj.令人高兴的 +judge n.法官，裁判 v.审判 +judgement n.判决，意见，判断 +jug n.大壶，罐 +juice n.汁，液 +juicy adj.多汁的 +july n.七月 +jumble n.搞乱，混乱 +jump v.,n.跳跃，跳动 +junction n.连接，结合处，接头 +june n.六月 +jungle n.密林，热带丛林 +junior adj.年少的，低级的 +jupiter n.木屋 +jury n.陪审团，评奖团 +just adv.只，刚才 +justice n.公正，正直 +justifiable adj.有理由的 +justification n.辩护，正当理由 +justify v.认为...有理 +juvenile adj.青少年的 +kangaroo n.带鼠 +keen adj.锋利的，敏捷的 +keep v.保持，保留，防止 +keeper n.保管人，管理员 +keeping n.一致，协调 +kernel n.核(仁)，核心 +kerosene n.煤油 +kettle n.水壶 +key n.钥匙，关键，答案 +keyboard n.键盘 +keyhole n.钥匙孔 +kick v.,n.踢 +kid n.小孩 v.哄骗 +kidnap v.绑架，诱拐 +kidnaper n.绑架者 +kidney n.肾，腰子 +kill v.杀死，杀害 +killer n.杀人者，杀手 +kilo n.(缩)公斤，公里 +kilogram n.公斤 +kilometer n.公里 +kilowatt n.千瓦 +kind n.种类 adj.仁慈的 +kindergarten n.幼儿园 +kindle v.点燃，激发 +kindly adv.仁慈地，好心地 +kindness n.仁慈，好意 +king n.国王 +kingdom n.王国 +kiss v.接吻，亲嘴 +kit n.全套工具、装备 +kitchen n.厨房 +kite n.风筝 +knee n.膝 +kneel v.跪下 +knife n.小刀 +knight n.骑士，爵士 +knit v.编织，皱(眉) +knob n.球形把手 +knock v.敲，击倒 n.敲门声 +knot n.结，树节 v.打结 +know n.知道，认识，懂 +know-how n.专项技术，诀窍 +knowledge n.知识，学识 +knowledgeable adj.博学的 +lab n.(缩)实验室 +label n.标签 v.标明 +laboratory n.实验室 +labor n.劳动，劳动力 +laborer n.劳工，劳动者 +labor-intensive adj.劳动密集型的 +lace n.花边，鞋带 +lack v.,n.缺少 +lad n.少年，小伙子 +ladder n.梯子，阶梯 +lady n.女士，贵妇人，夫人 +lag v.,n.落后，滞后 +lake n.湖，湖泊 +lamb n.羔羊，小羊肉 +lame adj.跛的，站不住脚的 +lamp n.灯 +land n.陆地，土地 v.着陆 +landed adj.卸货的 +landing n.楼梯平台，着陆 +landlady n.女房东 +landlord n.房东，地主 +landscape n.风景(画)，地形 +lane n.小巷，跑道，行车道 +langkap 冷甲(馬來西亞,霹靂洲内一地方名) +language n.语言 +lantern n.灯笼 +lap n.膝盖 +lapse v.(时间)流失 +large adj.大的，巨大的 +largely adv.大部分，基本上 +lark n.云雀，百灵鸟 +laser n.激光 +last adj.最后的 adv.上次 +lasting adj.持久的，持续的 +late adj.迟到的，晚的 +lately adv.近来，最后 +latent adj.潜伏的，潜在的 +later adv.更晚，以后，过后 +lateral adj.横向的，侧向的 +lathe n.车床 +latin n.,adj.拉丁语(的) +latitude n.纬度，活动余地 +latter adj.后面的，后者的 +lattice n.结构，点阵 +laugh v.笑，嘲笑 +laughter n.笑，笑声 +launch v.发射，发动，开始 +laundry n.洗衣店，送洗的衣物 +lavatory n.盥洗室，厕所 +law n.法律，定律 +lawful adj.合法的，法律的 +lawn n.草地，草坪 +lawyer n.律师，法学家 +lay v.放，安排，打基础 +layday n.装卸日期 +layer n.层，层次 +layout n.设计，规划，图案 +laziness n.懒惰 +lazy adj.懒惰的 +l/c n.(缩)信用证 +lead v.引导，领先，率领 +leader n.领导，领袖 +leadership n.领导 +leading adj.领先的，一流的 +leaf n.叶子，页 +leaflet n.传单，单页宣传品 +league n.同盟，协会 +leak v.漏，泄漏 +leakage n.渗漏 +lean v.俯身，倚 adj.瘦的 +leap v.,n.跳跃 adj.闰年的 +learn v.学习，获悉 +learned adj.有学问的 +learner n.学习者，学生 +learning n.学问，学习 +lease v.租凭，出租 n.租约 +least adj.最少的 +leather n.皮革 adj.皮革制的 +leave v.出发，离开 n.休假 +lecture n.,v.演讲，讲课 +lecturer n.演讲者，讲师 +leeway adj.活动余地 +left adj.左的 adv.向左 +left-handed adj.左手的，左侧的 +leftover n.剩余物 +leg n.腿，裤脚 +legal adj.合法的，法律的 +legend n.传说，传奇 +legendary adj.传说的，传奇的 +legislation n.立法，法规 +legitimate adj.合法的，合理的 +legitimation n.合法 +leisure n.闲暇，闲空 +lemon n.柠檬 +lemonade n.柠檬汽水 +lend v.出借，贷款 +lending n.贷款，借款 +length n.长度，期限 +lengthen v.延长，变长 +leninism n.列宁主义 +lens n.透镜，镜片，晶体 +leopard n.豹 +less adj.更少的 adv.较小 +lessen v.减少，变小，变弱 +lesson n.功课，课程，教训 +lest prep.唯恐，以免 +let v.让，使 +letter n.字母，信，函件 +level n.水平，级 v.弄平 +lever n.杠杆 +levy v.征税 n.关税 +liability n.责任，义务，债务 +liable adj.有责任的 +liar n.说谎者 +liberal adj.思想开放的 +liberate v.解放，释放，使自由 +liberation n.解放 +liberty n.自由 +librarian n.图书管理员 +library n.图书馆，藏书 +license n.许可(证)，执照 +lick v.舔 +lid n.盖，脸 +lie v.躺，位于 v.,n.说谎 +lieutenant n.中尉，副职 +life n.生活，生命，一生 +lifetime n.一生 +lift v.举起，吊 n.电梯 +light n.光，灯 adj.明亮的 +lighten v.发亮，使...愉快 +lighter n.打火机 +lighthouse n.灯塔 +lightly adv.轻轻地，轻易地 +lightning n.闪电 +like v.喜欢 prep.像 +likelihood n.可能，相似性 +likely adj.可信的adv.很可能 +likeness n.相像，类似 +likewise adv.同样，照样 +liking n.兴趣，嗜好 +lily n.百合，睡莲 +limb n.肢，树枝 +lime n.石灰 +limestone n.石灰岩 +limit n.界限，限度 v.限制 +limitation n.限制，局限 +limited adj.有限的，限定的 +limousine n.豪华轿车 +limp adj.柔软的 v.跛行 +line n.行，线条，界线 +linear adj.线性的，线状的 +linen n.亚麻(织物) +liner n.班轮，班机 +linger v.徘徊，逗留，拖延 +linguist n.语言学者 +linguistics n.语言学 +lining n.夹里，衬里 +link v.联系，连结 n.纽带 +lion n.狮子 +lioness n.母狮子 +lip n.嘴唇 +lipstick n.口红，唇膏 +liquid n.液体 adj.液体的 +liquor n.烈性酒 +list n.表，名单 v.列表 +listen v.听，听从 +listener n.听者 +literacy n.识字 +literal adj.字面的，不夸张的 +literally adv.简直，字面上 +literary adj.文学的 +literate n.有文化的 +literature n.文学，文献 +litre n.公升 +litter v.乱丢废物 n.废物 +little adj.小的，一点，少的 +live v.居住,生存 adj.活的 +livelihood n.生活 +lively adj.活跃的，热闹的 +liver n.肝 +livestock n.牲畜 +living adj.活着的 n.生计 +living-room n.客厅，起居室 +load n.负载，负担 v.装载 +loaf n.面包 v.游荡 +loan n.贷款 v.出借 +lobby n.前厅 v.游说 +lobster n.龙虾 +local adj.地方的，当地的 +locality n.地点，现场 +locate v.找出，确定地点 +location n.地点，位置 +lock v.锁上 n.锁，绺 +lock-up n.锁，固定资本 +locomotive n.火车头，机车 +locust n.蝗虫 +lodge v.寄宿 +lodging n.住处，住房 +lofty adj.崇高的，高耸的 +log n.原木，航海日志 +logic n.逻辑，论理学 +logical adj.逻辑的 +loneliness n.孤独，寂寞 +lonely adj.孤独的，寂寞的 +lonesome adj.寂寞的 +long adj.长的 adv.长久 +longevity n.长寿 +longing n.渴望，思慕 +longitude n.经度，经线 +long-term adj.长期的 +look v.看，看上去 n.外表 +loom v.隐隐出现 n.织布机 +loop n.环，回路 v.环绕 +loose adj.松的，自由自在的 +loosen v.解开，放松 +lord n.君主，贵族，上帝 +lorry n.卡车，载重汽车 +lose v.失去，丢失，输 +loss n.丧失，失利，损失 +lost adj.失去的 +lot n.许多，地 adv.相当 +lottery n.抽彩，抓阄，彩票 +loud adj.响亮的，大声的 +loudness n.响亮 +loudspeaker n.扬声器，扩音器 +lounge n.休息室 +lovable adj.可爱的 +love v.爱，喜欢 n.爱情 +lovely adj.好看的，可爱的 +lover n.爱人，情人，爱好者 +low adj.低的，低廉的 +lower v.降低，减弱 +loyal adj.忠诚的，忠贞的 +loyalty n.忠诚，忠贞 +lubricate v.润滑 +lubrication n.润滑 +luck n.运气，幸运 +lucky adj.幸运的 +luggage n.行李 +lumber n.木材，木料 +luminous adj.发光的，明晰的 +lump n.块，肿块 +lumpsum n.总数 +lunar adj.月亮的，阴历的 +lunch n.午饭，便餐 +luncheon n.午餐，午宴 +lung n.肺 +luxurious adj.豪华的，奢侈的 +luxury n.奢侈(品) +machine n.机器 +machinery n.机械(总称) +mackintosh n.雨衣 +macroeconomics n.宏观经济学 +mad adj.疯狂的，狂热的 +madam n.夫人，太太，女士 +madman nn.疯子 +madness n.疯狂，疯病 +magazine n.杂志，期刊 +magic n.魔法，魔术，魅力 +magician n.魔术师 +magistrate n.地方法官 +magnet n.磁性，磁铁 +magnetic adj.磁性的 +magnetism n.磁性，磁力，吸引力 +magnificent adj.壮丽的，宏伟的 +magnify v.放大，扩大 +magnitude n.宏大，重要(性) +maid n.女仆，侍女 +maiden n.少女 adj.未婚的 +mail n.邮件 v.邮寄 +mailbox n.信箱 +main adj.主要的 +mainland n.大陆，本土 +mainly adv.主要地，大部分 +mainstream n.主流 +maintain v.维持，保养，坚持 +maintenance n.保养，维修 +maize n.玉米 +majesty n.陛下，雄伟，庄严 +major adj.主要的，多数的 +majority n.多数，过半数 +make v.做，制造 n.种类 +maker n.制造者，制造商 +make-shift adj.临时的n.权宜之计 +make-up n.气质，化妆品 +malady n.病 +malaria n.疟疾 +malaise n.马来西亚 +malaysia n.马来西亚 +male adj.男性的，雄的 +malice n.恶意，恶感 +malicious adj.恶意的 +man n.人，男人，人类 +manage v.管理，处理，设法 +management n.管理(人员)，经营 +manager n.经理 +managerial adj.管理的 +manhood n.男子气 +manifest v.表明 adj.明白的 +manifestation n.表明 +manifesto n.宣言 +manipulate v.操纵，操作，摆布 +manipulation n.操纵，操作 +mankind n.人类 +manly adj.大丈夫的 +manner n.方法，方式，礼貌 +mansion n.宅第，官邸，大厦 +manual adj.用手的 n.手册 +manufacture v.,n.制造 +manufactured adj.制成的 +manufacturer n.制造商 +manuscript n.手稿，原稿 +many adj.许多的 n.许多 +map n.地图 v.筹划 +maple n.枫树 +marble n.大理石，弹子 +march n.三月 +march n.,v.行进，行军 +margin n.余地，边缘 +marginal adj.边缘的，边际的 +marine adj.海的，海生的 +mariner n.海员，水手 +mark n.痕迹，符号，标记 +marked adj.有标记的，标明的 +market n.市场，销路 +marketable adj.有销路的 +marketing n.市场学，营销学 +marketplace n.市场，集市 +marking n.唛头，标记 +marriage n.婚姻，婚礼 +married adj.已婚的 +marry v.娶，嫁，为...主婚 +mars n.火星 +marsh n.沼泽 +marshal n.元帅 +martyr n.烈士，殉道者 +marvel n.奇迹 v.惊奇 +marvellous adj.奇异的，绝妙的 +marxism n.马克思主义 +marxist n.马克思主义者 +masculine adj.男性的，阳性的 +mask n.假面具 v.掩饰 +mass n.堆，大量，群众 +massacre n.,v.屠杀，残杀 +massage n.按摩，推拿 +massive adj.粗大的，厚重的 +mass media n.传媒工具，新闻界 +mast n.桅杆 +master n.主人，大师，硕士 +masterpiece n.杰作 +mat n.垫子，席子 +match n.火柴，对手，比赛 +mate n.伙伴 v.配对 +material n.材料，资料，原料 +materialism n.唯物主义 +materialize v.使具体化，物质化 +mathematical adj.数学的 +mathematics n.数学 +mathematician n.数字家 +maths n.(缩)数学 +matinee n.日场演出 +matter n.事情，物资，毛病 +mattress n.床垫 +mature adj.成熟的，到期的 +maturity n.成熟，到期 +maximize v.增加到最大程度 +maximum n.最大量，极限 +may n.五月 +may v.可以，也许，祝愿 +maybe adv.或许，大概 +mayor n.市长 +me pron.我(宾格) +meadow n.牧场，草地 +meal n.膳食，一顿饭 +mean v.打算，意指 +meaning n.意义，意图 +means n.手段，财力 +meantime adv.同时，在这期间 +meanwhile adv.,n.在这期间 +measure n.尺寸，量具，措施 +measurement n.测量(结果) +meat n.肉 +mechanic n.技工 +mechanical adj.机械的、机动的 +mechanically adv.机械地 +mechanics n.力学，机械学 +mechanism n.机制，机械装置 +medal n.奖章，勋章，纪念章 +medical adj.医学的，医务的 +medicine n.药，医学 +medieval adj.中世纪的 +meditate v.考虑，沉思 +meditation n.考虑，沉思冥想 +mediterranean n.地中海 +medium n.中间，媒介，中庸 +meek adj.温顺的 +meet v.遇到，会见，迎接 +meeting n.会议，集会 +melancholy n.,adj.忧郁(的) +melody n.旋律，曲调 +melon n.瓜，甜瓜 +melt v.熔化，融解 +member n.成员，会员 +membership n.会员资格，全体成员 +memo n.备忘录 +memoir n.回忆录 +memorial adj.纪念的，追悼的 +memorize v.记住，记忆 +memory n.记忆(力)，回忆 +menace v.,n.威胁，恐吓 +mend v.修理，修补，好转 +mental adj.心理的，精神的 +mentality n.心理，意识 +mention v.,n.提及，讲到 +menu n.菜单 +merchandise n.商品，货物 +merchant n.商人 adj.商业的 +mercantile n.商品 +merciful adj.仁慈的，宽大的 +mercury n.水星 +mercury n.汞，水银 +mercy n.宽大，慈悲，怜悯 +mere adj.仅仅的，起码的 +merely adv.仅仅，只 +merge v.合并 +merit n.价值，功绩 v.应得 +mermaid n.美人鱼 +merry adj.欢乐的 +mesh n.网孔，筛眼 +mess n.肮脏，凌乱 v.弄脏 +message n.音讯，消息 +messenger n.通讯员，使者 +metal n.金属 +metallic adj.金属的 +metallurgy n.冶金学 +meter n.量器，仪表 +method n.方法 +methodology n.方法(论) +meticulous adj.小心翼翼的 +meticulously adv.胆小地 +metre n.米，公尺 +metric adj.公制的，米的 +metropolitan n.大都市 +mexican n.,adj.墨西哥人(的) +mexico n.墨西哥 +microeconomics n.微观经济学 +microphone n.扩音器，话筒 +microprocessor n.微处理机 +microscope n.显微镜 +microwave n.微波 +midday n.正午，晌午 +middle n.当中 adj.中部的 +middleman n.中人，中间人 +middling n.中等的，第二流的 +midnight n.午夜 +midst n.中间，中部 +might v.或许，可以 n.力 +mighty adj.强有力的 +migrant adj.迁移的，候鸟的 +migrate v.迁移(海外)，移栖 +migration n.迁移，移居海外 +mild adj.温和的，味淡的 +mile n.英里 +mileage n.里程 +milestone n.里程碑 +military adj.军事的，好斗的 +militia n.民兵(组织) +milk n.奶，乳夜 v.挤奶 +milkman n.送奶人 +milky adj.加奶的，乳白色的 +mill n.磨坊，工厂 v.滚乱 +miller n.磨坊主 +millimetre n.毫米 +million n.百万 +millionaire n.百万富翁 +mince v.切碎，绞碎 +mincer n.粉碎机 +mind n.头脑，智力 v.介意 +mine pron.我的 n.矿山 +miner n.矿工 +mineral n.矿物 adj.矿物的 +mingle v.混合，混入 +miniature n.雏形，缩影，袖珍 +minicomputer n.微型计算机 +minimize v.使减到最小 +minimum n.最少量 adj.最小的 +minister n.教士，部长，大臣 +ministry n.(政府)部 +minor adj.较小的，次要的 +minority n.少数，少数民族 +mint n.造币厂，薄荷 +minus prep.减去 adj.减的 +minute n.分钟，片刻 +miracle n.奇迹，令人惊讶的事 +miraculous adj.奇迹(般)的 +mirror n.镜子 v.反映 +miscarriage n.未到目的地 +miscarry v.未运到(目的地) +mischief n.伤害，恶作剧 +miser n.吝啬鬼，守财奴 +miserable adj.悲惨的，糟糕的 +misery n.痛苦，悲惨，苦难 +misfortune n.不幸 +misgiving n.疑虑，担心 +mishandle v.装卸不慎 +mishap n.事故 +misinterpret v.误解 +mislead v.引入岐途 +miss v.未击中,错过 n.小姐 +missile n.导弹，发射物 +missing adj.丢失的，缺少的 +mission n.使团，使命，天职 +missionary n.传教士 +mist n.薄雾 v.使迷糊 +mistake n.错误，误解 v.搞错 +mistaken adj.搞错了的，误解的 +mister n.先生(缩写为Mr.) +mistress n.女主人，情妇 +misty adj.雾蒙蒙的，有雾的 +misunderstand v.误解，误会 +misunderstanding n.误会，曲解 +mitten n.连指手套，露指手套 +mix v.混合，配料，交往 +mixer n.混合器 +mixture n.混合物，混和 +moan v.,n.呻吟，悲叹 +mob n.暴民，乌合之众 +mobile adj.机动的，流动的 +mobilize v.动员 +mock v.嘲笑，愚弄 +mode n.方式，方法 +model n.模范，模型，模特儿 +moderate adj.适度的 v.缓和 +moderately adv.适度地，适中地 +modern adj.现代的，时髦的 +modernization n.现代化 +modernize v.使...现代化 +modest adj.谦虚的，质朴的 +modesty n.谦虚 +modification n.修改，缓和 +modified adj.改良的，改进的 +modify v.修改，减轻，修饰 +modulate v.调整，改变 +module n.模量，模件 +moist adj.潮湿的 +moisture n.潮气 +molecular adj.分子的 +molecule n.分子 +moment n.时刻，瞬间 +momentary adj.片刻的，瞬间的 +momentous adj.重要的，重大的 +monarch n.君主，王室 +monastery adj.修道院，寺院 +monday n.星期一 +monetary adj.货币的，金融的 +money n.金钱，货币，财富 +monitor n.班长,监视器 v.监视 +monk n.和尚，修道士 +monkey n.猴子 +monopolize v.垄断，独占 +monopoly n.垄断，独占 +monotonous adj.单调的，枯燥的 +monotony n.单调，枯燥 +monster n.怪兽，怪物，魔鬼 +monstrous adj.可怕的，极恶的 +month n.月份 +monthly adj.每月的 n.月刊 +monument n.纪念章，不朽之物 +monumental adj.纪念碑式的 +mood n.心情，心境，情绪 +moon n.月亮 +moonlight n.月光 +moonlighting n.业余干活 +moor v.系泊，把船栓定 +mop n.拖把，墩布 +moral adj.道德的 n.教训 +morale n.士气，斗志 +morality n.道德品质 +more adj.更多的,更 adv.更 +moreover adv.此外，而且 +morning n.早晨，上午 +mortal adj.致命的 +moslem n.,adj.穆斯林 +mosque n.清真寺 +mosquito n.蚊子 +moss n.苔藓，地衣 +most adj.最多的 adv.非常 +mostly adv.主要地，大多 +motel n.汽车旅馆 +moth n.蛾 +mother n.母亲 adj.出生地的 +mother-in-law n.岳母，婆婆 +motion n.运动，议案 +motionless adj.不动的 +motivate v.促进，激发 +motivation n.动机 +motive n.动机 +motor n.发动机 +motorcar n.汽车 +motorcycle n.摩托车 +motorist n.摩托车手 +motorway n.汽车道，高速公路 +motto n.座右铭 +mould n.模子，型，霉菌 +mount n.山，岳 v.登上 +mountain n.山 +mountainous adj.多山的，山一般的 +mourn v.悲悼，哀痛 +mournful adj.悲悼的，哀痛的 +mourning n.哀痛 +mouse n.老鼠 +moustache n.胡子，须 +mouth n.口，嘴巴，河口 +mouthful n.一口，满口 +move v.移动，推动，搬家 +movement n.活动，运动，动作 +movie n.电影(院) +mr. n.(缩)先生 +mrs. n.(缩)夫人，太太 +ms. n.(缩)女士 +much adj.许多的 n.许多 +mud n.泥浆 +muddy adj.泥泞的 +muffle v.裹住，捂住 +muffler n.围巾，消音器 +mug n.(有柄)大杯 +mule n.骡子 +multiple adj.复合的，多次方的 +multiplication n.乘法，增加 +multiply v.乘，增加，繁殖 +multifunction n.多功能的 +multitude n.大批，大群 +municipal adj.市的，市政的 +mumble v.咕哝，嘟囔 +mumps n.腮腺炎 +murder v.,n.谋杀(案) +murderer n.凶手，杀人犯 +murmur v.低声说 +muscle n.筋，肌肉 +muscular adj.肌肉发达的 +muse v.沉思，默想 +museum n.博物馆，陈列馆 +mushroom n.“蘑菇 +music n.音乐，乐曲 +musical adj.音乐的 n.歌舞片 +musician n.音乐家，作曲家 +must v.必须，准是 n.必须 +mustard n.芥末 +mute adj.缄默的 n.哑巴 +mutter v.咕哝，抱怨 +mutton n.羊肉 +mutual adj.相互的，共同的 +my pron.我的 +myriad n.,adj.无数(的) +myself pron.我自己，我亲自 +mysterious adj.神秘的，玄妙的 +mystery n.神秘，奥妙，秘事 +mystic adj.神秘的 +myth n.神话 +mythology n.神话(学) +nail n.钉子，指甲 v.钉 +naive adj.天真的 +naked adj.裸体的，赤裸裸的 +name n.姓名，名称 v.命名 +nameless adj.无名的 +namely adv.即，也就是 +namesake n.名义 +nap n.打盹，小睡 +napkin n.餐巾(纸) +narrate v.叙述 +narration n.叙述 +narrator n.叙述者 +narrow adj.狭窄的，勉强的 +nasty adj.肮脏的，下流的 +nation n.国家，国民，民族 +national adj.民族的，国家的 +nationality n.国籍 +native adj.本国的，出生地的 +natural adj.自然的，通常的 +naturally adv.自然地 +nature n.自然，本性，性质 +naughty adj.淘气的，顽皮的 +nausea v.恶心，讨厌 +naval adj.海军的 +navel n.脐，中心 +navigable adj.可航行的 +navigation n.航行，航海，航空 +navy n.海军 +near adv.近 adj.近的 +nearby adj.,adv.附近(的) +nearly adv.几乎，差不多 +neat adj.整洁的，简洁的 +necessarily adv.必然，当然 +necessary adj.必要的，必然的 +necessitate v.使需要，强迫 +necessity n.必要性，必须品 +neck n.颈，脖子 +necklace n.项链 +need n.需要，贫困 v.需要 +needful adj.必要的 +needle n.针，指针，针叶 +needless adj.不必要的，无用的 +needy adj.贫穷的 +negate v.否定 +negation n.否定 +negative adj.否定的 n.负片 +neglect v.,n.疏忽，忽视 +negligence n.疏忽，过失 +negligent adj.粗心大意的 +negligible adj.微不足道的 +negotiable adj.可谈判的 +negotiate v.谈判，交涉 +negotiation n.谈判 +negro n.黑人(贬义) +neighbor n.邻居，邻国 +neighborhood n.邻里，街坊 +neighboring adj.邻近的，相邻的 +neither conj.既不...又不... +nephew n.侄子，外甥 +nerve n.神经，胆量 +nervous adj.神经(质)的， +nest n.巢，窝 +nestle v.安顿，建巢 +net n.网 adj.净的，纯的 +network n.网络，网状组织 +neutral adj.中立的，中和的 +neutrality n.中立 +neutron n.中子 +never adv.从不，永不，未曾 +nevertheless adv.还是，然而 +new adj.新的，重新的 +news n.新闻，消息 +newspaper n.报纸，新闻纸 +next adv.下一次，然后 +nice adj.令人愉快的 +nickel n.镍，镍币 +nickname n.绰号，诨号 +niece n.侄女，外甥女 +night n.夜，黑夜 +nightgown n.睡衣 +nightingale n.夜莺 +nightmare n.恶梦 +nine num.九 +nineteen num.十九 +ninety num.九十 +ninth num.第九，九分之一 +nitrogen n.氮 +no adv.不,毫不 adj.没有 +no. n.(缩)...号，号码 +nobility n.高贵，庄严 +noble adj.高尚的，贵族的 +nobody prep.谁也不 +nod v.,n.点头 +noise n.噪音，吵嚷声 +noisy adj.吵闹的 +nominal adj.名义上的，票面的 +nominate v.提名，推荐，任命 +nomination n.提名，任命 +none prep.没人，毫无 +nonsense n.废话，谬论 +noon n.中午，正午 +nor conj.也不，也没 +norm n.标准，规范，定额 +normal adj.正常的，标准的 +normalization n.正常化 +normalize v.使正常，使标准化 +normally adv.正常地，通常 +north n.北，北方 adj.北的 +northeast adj.,n.东北(的) +northern adj.北方的，北部的 +northward adj.,adv.向北(的) +northwest adj.,n.西北(的) +nose n.鼻子 +nostril n.鼻孔 +not adv.不 +notable adj.值得注意的 +notably adj.尤其，值得注意地 +note n.笔记，注释，便条 +notebook n.笔记本 +noted adj.著名的 +note-taking n.笔记，笔录 +nothing n.没有东西 adv.毫不 +notice v.留意 n.注意，通知 +noticeable adj.显而易见的 +notification n.通知(书)，布告 +notify v.通知，通告，报告 +notion n.概念，意见，看法 +notorious adj.臭名昭著的 +notwithstanding prep.,conj.尽管 +nought n.零 +noun n.名词 +nourish v.养育，提供养分 +nourishment n.食物，补品 +novel adj.新颖的 n.小说 +novelist n.小说家 +novelette n.中篇小说 +novelty n.新奇，新颖 +november n.十一月 +now adv.n.现在 conj.既然 +nowadays adv.现今，目前 +nowhere adv.哪儿也不 +nuclear adj.核的，原子核的 +nucleus n.(原子)核，核心 +nuisance n.令人讨厌的人或事 +null n.无 +nullify v.使无效，取消 +number n.数字，若干，号码 +numerical adj.数字的 +numerous adj.众多的，大量的 +nun n.修女，尼姑 +nurse n.护士，保姆 v.护理 +nursery n.托儿所，苗圃 +nut n.坚果，螺母 +nylon n.尼龙 +oak n.橡树，栎树 +oar n.橹，桨 +oath n.誓言，誓约 +obedience n.服从，顺从 +obedient adj.服从的，顺从的 +obey v.服从，遵守 +object n.物体，目的 v.反对 +objection n.反对，异议，不愿 +objective n.目标 adj.客观的 +obligation n.义务，责任 +oblige v.责成，使感激 +obliterate adj.删去，抹掉 +oblong adj.椭圆形的 +obscure adj.无名的 v.遮蔽 +observance n.仪式，习惯 +observation n.观察，评述 +observe v.观察，遵守，注视 +observer n.观察员 +obstacle n.障碍(物) +obstinate adj.固执的，顽强的 +obstruction n.堵塞，妨碍 +obtain v.获得 +obtainable adj.可得到的 +obvious adj.明显的 +obviously adv.明显地，显然 +occasion n.场合，盛事，机会 +occasional adj.偶然的，有时的 +occasionally adv.偶而，有时 +occident n.西方 +occidental adj.西方的，西洋的 +occupation n.职业，占有 +occupy v.占据，占领，担任 +occur v.发生，出现，想到 +occurrence n.发生，出现，事件 +ocean n.海洋，大洋 +oceania n.大洋洲 +oceanography n.海洋学 +o'clock adv.点钟 +october n.十月 +odd adj.古怪的，奇数的 +odour n.气味 +of prep..的(表示领属等) +off adv....去 prep.离开 +off-duty adj.不当班的 +offence n.过错，冒犯，攻击 +offend v.冒犯，得罪 +offensive adj.冒犯的，攻击的 +offer v.,n.提供，报盘 +offering n.报盘，提供的货物 +off-grade adj.等外的，质差的 +office n.办公室，事务所 +officer n.军官，警官，官员 +official n.官员 adj.官方的 +offset v.抵消，弥补 +offspring n.子女，子孙 +often adv.经常，常常 +oh int.哦，嗬 +oil n.油，石油 +o.k. adj.,n.(缩)对，行 +old adj.老的，...岁的 +olive n.橄榄(树) +omen n.前兆 +ominous adj.不祥的 +omission n.省略 +omit v.省略，遗漏 +on prep.在...上，关于 +once adv.一度，一次 +one num.,n.一，一个 +oneself pron.自己，自身 +onion n.洋葱 +only adj.唯一的 adv.仅仅 +onset n.攻击，着手 +onto prep.到...上 +onward adv.,adj.向前(的) +opal n.蛋白石 +opaque adj.不透明的 +open adj.开的 v.打开 +opener n.开罐器，起子 +opening n.开始，通路，孔 +opera n.歌剧 +operate v.运转，操作，开刀 +operation n.操作，生效，手术 +operational adj.业务上的，操作的 +operative adj.有效的 +operator n.操作人员，接线员 +opinion n.意见，评论，看法 +opium n.鸦片 +opponent n.对手，敌手 +opportune adj.及时的，凑巧的 +opportunity n.机会，机遇，时机 +oppose v.反对，反抗 +opposite adj.对立的，对面的 +opposition n.敌对，反抗 +oppress v.压抑，压迫，压制 +oppression n.压迫 +optical adj.视觉的，光学的 +optimal adj.最佳的 +optimism n.乐观(主义) +optimistic adj.乐观(主义)的 +optimize v.最佳化 +optimum n.最佳条件 +option n.选择，可选择的东西 +optional adj.可任选的，随意的 +or conj.或者，即，否则 +oral adj.口头的，口的 +orange n.柑桔，橙色 +orbit n.轨道 +orchard n.果园 +orchestra n.管弦乐队，交响乐 +order n.命令，订货，次序 +orderly adj.整齐的 n.勤务员 +ordinarily adv.通常 +ordinary adj.普通的，一般的 +ore n.矿石，矿物 +organ n.器官，风琴 +organic adj.器官的，有机的 +organism n.有机体 +organization n.组织，团体 +organizational adj.组织的 +organize v.组织，筹备，编排 +orient n.东方 v.定方针 +oriental adj.,n.东方的(人) +orientation n.定向，倾向性 +origin n.起源，产地 +original adj.原始的 n.原物 +originality n.独创性 +originally adv.原来，当初 +originate v.起源，首创 +ornament n.装饰(品) +ornamental adj.装饰的 +orphan n.孤儿 +oscillation n.摆动，振动 +other adj.其他的，别的 +otherwise adv.另外的 conj.否则 +ought v.应该，大概 +ounce n.盎司 +our pron.我们的 +ourselves pron.我们自己 +out adv.出外，向外，完 +outbreak n.爆发，发作 +outcome n.结果 +outdoor adj.野外的，露天的 +outdoors adv.在外的，在野外的 +outer adj.外部的，外面的 +outermost adj.最外的 +outland n.偏僻地区 +outlandish adj.外国的 +outlaw n.逃犯，歹徒 +outlay n.费用，支出 +outlet n.出口，销路 +outline n.轮廓，略图，大纲 +outlook n.看法，景色，展望 +output n.出产，产量 +outrage n.暴行 +outrageous adj.残暴的 +outright adj.公然地，直率地 +outset n.开头，起初 +outside n.外部 adv.在外面 +outsider n.局外人 +outskirts n.郊区 +outstanding adj.杰出的，未付款的 +outturn n.卸货情况 +outward adj.,adv.向外(的) +oval adj.椭圆(形)的 +oven n.烤炉，锅灶 +over prep.在...上方，越过 +overall adj.总的，全面的 +overcast adj.多云的 +overcharge v.,n.多收(的)钱 +overcoat n.外套，大衣 +overcome v.征服，克服，压倒 +overestimate v.估计过高 +overextend v.使..承担过多的义务 +overflow v.泛滥，溢出，满怀 +overhead adv.,adj.头上(的) +overhear v.偶然听到，偷听 +overjoy n.使大喜 +overlap v.重叠 +overlapping adj.相互重叠的 +overload v.,n.超载 +overlook v.视察，俯瞰，宽容 +overnight adv.,adj.终夜(的) +overpayment n.多付的款项 +overseas adv.,adj.海外(的) +oversight n.监视，疏忽 +overtake v.赶上，压倒 +overthrow v.推翻，颠覆 +overtime n.超时，加班 +overwhelm v.压倒，淹没 +overwhelming adj.压倒的 +owe v.欠，归功于 +owing adj.该付的 +owl n.猫头鹰 +own adj.自己的 v.拥有 +owner n.物主，所有人 +ownership n.所有权，所有制 +ox n.公牛 +oxide n.氧化物 +oxygen n.氧，氧化 +oyster n.牡蛎，蚝 +pace n.步，速度，步调 +pacific n.太平洋 +pack v.包装，挤满 n.背包 +package n.包裹 v.打包 +packaging n.包装 +packet n.一盒，小件包裹 +packing n.装箱，收拾行李 +pad n.垫，便笺本 +page n.(书)页 +pail n.提桶 +pain n.疼痛，悲痛 v.作痛 +painful adj.痛苦的 +paint n.涂料，油漆 v.刷漆 +painter n.画家，油漆匠 +painting n.画，绘画(艺术) +pair n.对，双，夫妇 +palace n.宫殿 +pale adj.苍白的，淡的 +palm n.手掌，掌心，棕榈树 +pamphlet n.小册子 +pan n.平底锅 +panda n.熊猫 +pane n.窗(门)玻璃 +panel n.镶板，仪表盘，小组 +panic n.,v.恐慌，惊慌 +panorama n.全景 +panoramic adj.全景的 +pant n.,v.喘气 +panther n.豹，美洲豹 +pantry n.配膳室，食品室 +pants n.长裤，衬裤 +paper n.纸，报纸，文件 +papercut n.剪纸，刻纸 +papercutting n.剪纸艺术 +papers n.文件，证书 +par n.(跟)原价相等 +parachute n.降落伞 +parade n.,v.游行 +paradise n.天堂，天国 +paragraph n.段落，节 +parallel adj.平行的，类似的 +paralyse v.使麻痹，惊呆 +parameter n.参数，参量 +parasite n.寄生虫，寄生物 +parcel n.包裹，邮包 +pardon n.,v.原谅，赦免 +parent n.父或母亲，母体 +paris n.巴黎 +parish n.教区 +park n.公园 v.停放车辆 +parking n.停放车辆 +parliament n.议会，国会 +parlimental adj.国会的，议会的 +parlor n.客厅 +parrot n.鹦鹉 +part n.部分，零件，角色 +partial adj.局部的，偏颇的 +partially adv.局部地，部分地 +participant n.参加者，参与者 +participate v.参与，分享 +participation n.参加，参与 +particle n.颗粒，微粒，虚词 +particular adj.特殊的 n.项目 +particularly adv.特别地 +partition v.,n.划分，隔开 +partly adv.部分地 +partner n.伙伴，合伙人，搭档 +partnership n.伙伴关系，合伙 +part-time adj.计时(干活)的 +party n.聚会，政党，一方 +pass v.经过，传给 n.关口 +passable adj.过得去的 +passage n.一段，通过，通道 +passenger n.旅客，乘客 +passion n.激情，热衷 +passionate adj.多情的，热烈的 +passive adj.被动的，消极的 +passport n.护照 +past adj.过去的 n.过去 +past-due adj.过期的 +paste n.浆糊，糊状物 +pastime n.消谴，娱乐 +pasture n.牧场 +pat n.,v.轻拍，抚摸 +patch n.补丁，眼罩 +patent n.专利权，专利证 +path n.小径，路线 +pathetic adj.凄婉动人的 +patience n.耐心，忍耐力 +patient adj.耐心的 n.病人 +patriot n.爱国者 +patriotic adj.爱国的 +patriotism n.爱国主义 +patrol v.巡逻 n.巡逻队 +patron n.赞助人，保护人 +patronage n.保护人身分 +pattern n.模式，式样，图案 +pause v.,n.暂停，中止 +pave v.铺路，为..铺平道路 +pavement n.人行道 +paw n.脚瓜 +pawn v.产卵 +pay v.支付 n.工资 +payable adj.支付给...的 +payment n.支付，付款 +pea n.豌豆 +peace n.和平，平静，和约 +peaceful adj.和平的，平静的 +peach n.桃子 +peacock n.孔雀 +peak n.顶点，巅，山峰 +peanut n.花生 +pear n.梨 +pearl n.珍珠 +peasant n.农民 +peasantry n.农民(总称) +pebble n.鹅卵石 +peck v.啄 +peculiar adj.古怪的，独特的 +peculiarity n.特性，怪癖 +pedal n.踏板 v.骑车 +pedestrian n.行人 +pedlar n.小贩 +peel n.果皮 v.削、剥皮 +peep v.偷看，窥视 +peer n.同行 v.盯，凝视 +peg n.桩 v.(汇率)钉住 +pen n.钢笔，栏，圈 +penalty n.刑罚，处罚，罚款 +pencil n.铅笔 +pending adj.未决的，紧迫的 +penetrate v.贯穿，穿透，弥漫 +penetration n.贯穿，洞察力 +penicillin n.青霉素，盘尼西林 +peninsular n.半岛 +penny n.便士 +pension n.养老金，年金 +people n.人们，人民，人员 +pepper n.胡椒 +per prep.每，由，按照 +perceive v.知觉，觉察，领悟 +percent n.每百，百分之 +percentage n.百分率 +perception n.感觉，理解力 +perch v.栖息 +perfect adj.完美的，完备的 +perfection n.完成，完善 +perfectly adv.完全地，完美地 +perform v.执行，表演 +performance n.执行，演出 +performer n.执行者，表演者 +perfume n.香味，香水 +perhaps adv.也许，多半 +peril n.危难，巨大危险 +perimeter n.周长 +period n.时期，句号 +periodic adj.周期的，定时的 +periodical n.期刊 +peripheral adj.边缘的，周边的 +perish v.死亡，枯萎 +permanence n.永久，持久 +permanent n.永久性的，持久的 +permanently adv.永久地 +permission n.允许，许可 +permissive adj.允许的，许可的 +permit v.允许 n.许可证 +perpendicular adj.垂直的 +perpetual adj.永久的，永恒的 +perplex v.迷惑，难住 +persecute v.迫害 +persecution n.迫害 +persevere v.坚持 +perseverance n.坚持 +persist v.坚持，固执，持续 +persistence n.坚持，持续 +person n.人，人称，身体 +personal adj.私人的，个人的 +personality n.人格，个性，人物 +personally adv.亲自，就个人而言 +personnel n.全体人员，人事部门 +perspective n.展望，观点，透视 +persuade v.说服，劝导 +persuasion n.说服，信念 +pertain v.属于 +pertinence n.中肯 +pertinent adj.中肯的，恰当的 +perturb v.扰乱 +perturbed adj.烦燥不安的 +perusal n.细读 +peruse v.仔细阅读，审查 +pessimist n.悲观(主义) +pessimistic adj.悲观的 +pest n.害虫 +pet n.爱畜，宠儿 +petition v.,n.请愿(书) +petrol n.石油，汽油 +petroleum n.石油 +petty adj.细小的，不重要的 +phase n.阶段，时期，侧面 +phenomenon n.现象，非凡的人 +philosopher n.哲学家 +philosophical adj.哲学上的 +philosophy n.哲学，基本原则 +phone n.电话 v.打电话 +phonetics n.语音学 +photo n.照片 +photograph n.照片 v.拍照 +photographer n.摄影师 +photography n.摄影术 +photostatic adj.静电复印的 +phrase n.词组，短语 +physical adj.身体的，物质的 +physically adv.物质上，身体上 +physician n.内科医生 +physicist n.物理学家 +physics n.物理学 +pianist n.钢琴家 +piano n.钢琴 +pick v.拣，采 n.精华，镐 +pickle n.腌渍品，泡菜 +pickpocket n.扒手，小偷 +picnic n.,v.郊游，野餐 +pictorial n.画报 +picture n.图片，画，照片 +picturesque adj.风景如画的 +pie n.馅饼 +piece n.件，片段，张 +pier n.码头，栈桥 +pig n.猪 +pigeon n.鸽子 +pigment n.色料 +pile n.堆 v.堆积 +pilferage v.偷窃 +pilgrim n.香客，朝圣者 +pilgrimage n.朝圣 +pill n.药片，药丸 +pillar n.柱子 +pillow n.枕头 +pilot n.飞行员，领航员 +pin n.别针，发卡 v.别住 +pinch v.捏，掐，挤痛 +pine n.松树 +pineapple n.菠萝 +pink adj.,n.桃色，粉红色 +pint n.品脱(容量单位) +pioneer n.先驱者 v.倡导 +pioneering n.先驱的 +pious adj.虔诚的 +pipe n.管子，烟斗 +pipeline n.管道，管线 +pirate n.海盗 adj.盗版的 +pistol n.手枪 +piston n.活塞 +pit n.坑，洼，煤矿，桃核 +pitch v.搭帐篷，投掷 +pitcher n.水罐 +pity n.怜悯，惋惜，憾事 +place n.地方，位置 v.放置 +plague n.瘟疫 +plain adj.明白的，朴素的 +plan n.计划,平面图 v.打算 +plane n.水平，平面，飞机 +planet n.行星 +plant n.植物，工厂 v.栽培 +plantation n.种植园 +plaster n.灰泥 v.粘贴 +plastic n.塑料 adj.可塑的 +plastics n.塑料(制品) +plate n.盘子，金属牌 +plateau n.高原，高地 +platform n.讲台，站台，政纲 +platinum n.白金 +play v.玩，扮演，演奏 +player n.选手，演奏者 +playground n.运动场，操场 +playmate n.游伴 +playwright n.剧作家 +plea n.请求，恳求，辩解 +plead v.恳求，辩解 +pleasant adj.令人愉快的 +please v.使高兴，喜欢，请 +pleased adj.高兴的，乐意的 +pleasure n.快乐，乐事，乐趣 +pledge n.暂约，抵押 v.保证 +plenary adj.完全的 +plentiful adj.大量的，丰富的 +plenty n.大量，丰富 +plight n.保证，困境 +plot n.阴谋，情节 v.密谋 +plough n.,v.犁 +pluck v.拔，摘 n.勇气 +plug n.塞子，插头 v.堵住 +plumb v.测锤，垂直 +plumber n.管子工 +plume n.羽毛，羽饰 +plump adj.丰满的 +plunder v.,n.掠夺，抢劫 +plunge v.插进，跳入 +plural adj.复数的 +plus prep.加 n.加号，正号 +ply v.出力，努力从事 +p.m. (缩)下午 +pneumatic adj.气体的，空气的 +pneumonia n.风湿病 +pocket n.衣袋 adj.袖珍的 +poem n.诗歌 +poet n.诗人 +poetry n.诗，诗意，诗艺 +point n.尖，点，分 v.指 +pointed adj.尖的 +poison n.毒，毒药 v.放毒 +poisonous adj.有毒的 +poke v.戳，刺 +poker n.扑克 +polar adj.极的 +polarity n.极性，极端 +pole n.柱，杆，极 +police n.警察(局) +policeman n.警察 +policy n.政策，方针，保险单 +polish v.擦亮，磨光，润色 +polite adj.有礼貌的，客气的 +politeness n.礼貌，客气 +political adj.政治的 +politician n.政治家，政客 +politics n.政治学，政治活动 +poll n.选举投票，民意测验 +pollute v.污染，弄脏 +pollution n.污染 +polymer n.聚合物 +pond n.池塘 +ponder v.考虑，沉思 +pony n.小马 +pool n.水塘，游泳池 +poor adj.穷的，差的 +pop v.,n.砰的一声，爆裂 +popcorn n.爆米花 +pope n.教皇 +popular adj.受欢迎的 +popularity n.名望，知名 +popularize v.普及，宣传 +population n.人口 +porcelain n.瓷，瓷器 +porch n.门廊 +pore n.毛孔 +pork n.猪肉 +porridge n.粥，麦片粥 +port n.港口，港 +portable adj.手提的，经便的 +porter n.搬运工 +portion n.一份，部分 +portrait n.肖像，画像，描写 +portray v.描写，给...画像 +portugal n.葡萄牙 +portuguese n.,adj.葡萄牙人(的) +pose v.作姿态，提供考虑 +position n.位置，地位，处境 +positive adj.明确的，肯定的 +positively adv.断言地，绝对地 +possess v.占有，拥有，控制 +possession n.所有，财产 +possessive adj.所有(格)的 +possibility n.可能性 +possible adj.可能的 +possibly adv.可能，或许 +post n.柱，职位 v.邮寄 +postage n.邮资 +postal adj.邮政的 +postcard n.明信片 +posterity n.子孙，后代 +postman n.邮递员 +post-office n.邮局 +postpone v.推迟，延迟 +postponement n.推迟 +postulate v.假定，主张 +pot n.罐，壶，锅 +potato n.马铃薯，土豆 +potent adj.有效的 +potential adj.潜在的 n.潜力 +potentiality n.潜在性 +poultry n.家禽 +pound n.英镑，磅 v.重击 +pour v.注，灌，倒，涌出 +poverty n.贫穷，缺乏 +powder n.粉末 +power n.力，动力，权力 +powerful adj.有力的，强的 +practicable adj.可行的 +practical adj.实用的，可行的 +practically adj.实际地，几乎 +practice n.练习，习惯，实施 +practise v.练习，习惯于做 +prairie n.大草原 +praise v.,n.赞美，称颂 +pray v.祈祷 +prayer v.祷告，祷文 +preach v.说教，鼓吹，布道 +preacher n.鼓吹者，宣教士 +precaution n.预防，防备 +precede v.在前，高于 +precedence n.领先，优先权 +precedent n.先例，惯例 +preceding adj.前面的，上述的 +precious adj.宝贵的，珍爱的 +precise adj.精确的，严格的 +precisely adv.精确地 +precision n.精确，精度 +predecessor n.前任，原有物 +predict v.预言 +prediction n.预言，预报 +predominance n.优越，杰出 +predominant adj.主要的，有势力的 +preface n.序言，开场白 +prefer v.较喜欢，宁愿 +preferable adj.更喜爱的 +preferably adv.更好地 +preference n.偏爱(之物) +preferential adj.优惠的 +prefix n.前缀 +pregnancy n.怀孕 +pregnant adj.怀孕的 +prejudice n.偏见，成见 +preliminary adj.初步的，预备的 +prelude n.序言，前兆，序曲 +premature adj.早熟的 +premier n.首相，总理 +premises n.建筑物 +premium n.津贴 +preoccupy v.使迷住，专心于 +preparation n.准备，预备 +prepare v.准备，配制 +prepared adj.准备好的，预制的 +preposition n.介词 +prescribe v.命令，规定，开处方 +prescribed adj.规定的 +prescription n.药方 +presence n.出席，在场 +present adj.在场的 n.现在 +presentation n.提出，演出 +presently adv.不久，目前 +preservation n.保藏，保存 +preserve v.保护，保藏，保持 +preset v.预先安排 +preside v.主持 +president n.总统，总经理，校长 +presidential adj.总统的 +press v.压，榨，按 n.印刷 +pressing adj.急迫的 +pressure n.压力，繁忙，紧迫 +prestige n.威望，声望 +presumably adv.也许，大概 +presume v.假定，推测 +pretend v.假装，佯称 +pretense n.借口 +pretentious adj.自负的，虚伪的 +pretty adj.精致的，漂亮的 +prevail v.获胜，流行 +prevailing adj.占上风的 +prevalence n.流行 +prevalent adj.流行的，普遍的 +prevent v.防止，阻碍 +prevention n.防止，预防 +previous adj.早先的，先前的 +previously adv.预先，先前 +prey n.猎物，牺牲品 +price n.价格，代价 v.定价 +price-list n.价格表 +pricing n.定价 +prick v.刺穿 n.刺痛 +pride n.骄傲，自豪，自负 +priest n.教士，神父 +primarily adv.首要地，主要地 +primary adj.首要的，初级的 +prime adj.首要的，第一的 +primitive adj.原始的，简朴的 +prince n.王子，诸侯 +princess n.公主，王妃 +principal adj.重要的，主要的 +principally adv.主要地 +principle n.原则，原理，主义 +print v.印刷，出版 n.字体 +printer n.印刷者 +prior adj.较早的，在前的 +priority n.优先，居先 +prism n.棱镜 +prison n.监狱，牢房 +prisoner n.囚犯 +privacy n.私事，隐私 +private adj.私人的，秘密的 +privilege n.特权 v.给特权 +privileged adj.有特权的 +prize n.奖品，奖赏 +probability n.可能性，概率 +probable adj.很可能的 +probably adv.或许，大概 +probe v.细察，查究 +problem n.课题，难题，问题 +problematic adj.有问题的 +procedure n.手续，程序 +proceed v.前进，继续向前 +proceeding n.进行，诉讼 +proceeds n.收益 +process n.程序，过程 v.处理 +processing n.,adj.加工(的) +procession n.行列，仪仗 +proclaim v.宣布，公布 +procure v.采购 +procurement n.采购 +produce v.生产，制造，创作 +producer n.生产者 +product n.产品，作品 +production n.生产，制造 +productive adj.能生产的，多产的 +productivity n.生产力，生产率 +profess v.表白 +profession n.职业，专业，表白 +professional adj.职业的n.专业人员 +professor n.教授 +proficiency n.熟练，精通 +proficient adj.熟练的，精通的 +profile n.侧面，轮廓 +profit n.利润 v.获益 +profitable adj.有利可图的 +proforma adj.形式的 +profound adj.深奥的，深深的 +program n.节目，规划，项目 +programer n.项目，程序制定者 +programing n.程序编排 +progress n.,v.进步，进展 +progressive adj.前进的，进步的 +prohibit v.禁止，阻止 +prohibition n.禁止，禁令 +prohibitive adj.禁止的 +project n.计划 v.设计，射出 +projection n.射出，投射 +projector n.电影放映机 +proletarian adj.,n.无产阶级 +prolong v.延长 +prominence n.显著，突出 +prominent adj.著名的，显著的 +promise v.允诺，预示 n.诺言 +promising adj.有希望的 +promissory adj.约定的 +promote v.提升，促进，宣传 +promotion n.晋级，提高，促销 +prompt adj.及时的，迅速的 +promptly adv.及时地，敏捷地 +prone adj.俯伏的 +pronoun n.代词 +pronounce v.发音，宣布 +pronunciation n.发音 +proof n.证明，证据，实验 +propaganda n.宣传 +propagate v.繁殖，传播，宣传 +propagation n.繁殖，传播 +propel v.推进，推动 +propellent adj.推进的 +propeller n.推进器，螺旋桨 +proper adj.合适的，本来的 +properly adv.合适地 +property n.财产，地产，特性 +prophesy n.预言 +prophet n.预言家 +proportion n.比例，部分 +proportional adj.成比例的 +proposal n.建议，计划 +propose v.建议，打算，求婚 +proposition n.建议，提议 +proprietor n.所有者，业主 +proprietorship n.业主资格 +prose n.散文 +prosecute v.迫害 +prosecution n.迫害 +prosecutor n.检查官 +prospect n.前景 v.勘探 +prosperity n.繁荣，兴旺 +prosperous adj.繁荣的，兴旺的 +protect v.保护，警戒 +protection n.保护，警戒 +protectionism n.贸易保护主义 +protective adj.保护的 +protein n.蛋白质 +protest v.,n.抗议，反对 +protestant n.清教徒，新教徒 +protocol n.协议，议定书 +prototype n.原型 +protracted adj.延长了的 +proud adj.骄傲的，得意的 +prove v.证明，表明是 +proverb n.谚语，格言 +provide v.供给，提供，准备 +provided conj.只要 +province n.省份，领域 +provincial adj.省级的，省的 +provision n.准备，条款，辎重 +provisional adj.临时的 +provocation n.刺激，煸动 +provoke v.激怒，引起 +proximo adj.下月的 +prudence n.谨慎 +prudent adj.谨慎的 +psychological adj.心理(上)的 +psychologist n.心理学家 +psychology n.心理学，心理状态 +public adj.公众的，公共的 +publication n.出版物，发表 +publicity n.公开 +publicly adv.公开地 +publish v.出版，发表，公布 +publisher n.出版商 +pudding n.布丁 +puff n.一阵 v.喘气 +pull v.拖，拔， 扯 n.牵引 +pulley n.滑轮 +pulse n.脉搏 v.跳动 +pump n.泵 v.抽水，打气 +pumpkin n.南瓜 +punch n.,v.用拳击，冲孔 +punctual adj.准时的，守时的 +punctuality n.准时 +punctuation n.准时 +punish v.处罚，惩罚 +punishment n.处罚，刑罚 +pupil n.小学生，瞳孔 +puppet n.木偶，傀儡 +puppy n.小狗 +purchase v.,n.购买 +purchaser n.买主 +pure adj.纯洁的，纯净的 +purely adv.全然，纯然 +purify v.净化 +purity n.纯粹，纯净 +purple n.紫色 adj.紫色的 +purpose n.目的，用途，意图 +purse n.钱包 +pursuance n.追求，实行 +pursuant n.追逐者 +pursue v.追逐，从事，追求 +pursuit n.追逐，追求，职业 +push v.推，推动 n.推力 +put v.放置，估价，表达 +puzzle v.使困惑 n.难题,谜语 +pyjamas n.睡衣 +pyramid n.金字塔 +qualification n.资格，条件 +qualified adj.有资格的 +qualify v.使合格，使胜任 +qualitative adj.质量的，定性的 +quality n.特性，属性，质量 +quantitative adj.数量的，定量的 +quantity n.量，大量 +quarrel v.,n.争吵 +quart n.夸脱(容量单位) +quarter n.四分之一，一刻钟 +quarterly adj.季度的 n.季刊 +quartz n.石英 +quay n.码头 +queen n.王后，女王 +queer adj.奇妙的，古怪的 +quench v.抑制，熄灭，淬火 +query v.,n.询问 +quest n.寻找，搜索 +question n.问题，疑问 v.询问 +questionnaire n.调查表 +queue n.辫子，队 v.排队 +quick adj.快的，灵敏的 +quicken v.加快，加速，刺激 +quickly adv.快，迅速地 +quiet adj.安静的，轻声的 +quietly adv.安静地，静静地 +quietness n.平静，安定，安静 +quilt n.被子 +quit v.停止，放弃，退出 +quite adv.完全，十分，相当 +quiver v.颤抖 +quiz n.测验，问答比赛 +quota n.定额，配额 +quotation n.引语，语录，报价单 +quote v.引用，引证，报价 +rabbit n.兔子 +race n.种族，竞赛 v.赛跑 +racial adj.种族的，人种的 +rack n.搁班，行李架 +racket n.喧闹，球拍 +radar n.雷达 +radial adj.放射的，辐射的 +radiant adj.发光的 +radiate v.辐射，放射，发光 +radiation n.辐射，发射 +radical adj.基本的，激进的 +radio n.无线电，收音机 +radioactive adj.放射性的 +radioactivity n.放射性 +radish n.萝卜 +radium n.镭 +radius n.半径，活动范围 +rag n.抹布，破衣服 +rage n.盛怒，流行 v.大怒 +raid v.袭击，搜查 +rail n.栏杆，钢轨 +railroad n.铁路 +railway n.铁路，铁路公司 +rain n.雨 v.下雨 +rainbow n.虹 +raincoat n.雨衣 +rainfall n.下雨，降雨量 +rainy adj.有雨的 +raise v.举起，提高，唤起 +rake n.,v.耙 +rally n.,v.集会 +ramble n.漫步 +ranch n.牧场 +random adj.胡乱的，随便的 +range n.射程，范围，一系列 +rank n.军衔，等级 v.排列 +rapid adj.快的，急速的 +rapidly adv.迅速地，急速地 +rapture n.狂喜 +rare adj.稀有的，罕见的 +rarely adv.难得，少有 +rascal n.无赖，恶棍 +rash adj.轻率的，鲁莽的 +rat n.老鼠，耗子 +rate n.比率，速度，费率 +rather adv.相当，颇，宁愿 +ratification n.批准，认可 +ratify v.批准，认可，追认 +ratio n.比，比率 +ration n.理性 +rational adj.合理的，有理性的 +rattle v.,n.嘎吱响 +ravage n.破坏，暴力 +raw adj.生的，未加工的 +ray n.光线，射线，辐射 +razor n.剃须刀 +re prep.关于 +reach v.到达，伸手，够到 +react v.反应，起反应，反抗 +reaction n.反应，反动 +reactionary adj.反动的 +reactor n.反应堆 +read v.读，阅读，朗诵 +reader n.读者，读本 +readily adv.容易地，乐意地 +reading n.读书，读数，读本 +ready adj.准备好的，乐意的 +real adj.真的，纯粹的 +realism n.现实主义，写实主义 +realist n.adj.现实主义者(的) +realistic adj.现实的，实在的 +reality n.现实，真实性 +realization n.实现 +realize v.认识到，实现，执行 +really adv.真正地，果然 +realm n.王国，领域 +reap v.收割，收获 +rear n.后部 adj.后面的 +reason n.原因，理由 v.推论 +reasonable adj.有理的，讲理的 +reasonably adv.合理地，适当地 +reassure v.使...放心 +rebate n.回扣，折扣 +rebel v.起义，反叛 +rebellion n.叛乱，起义 +rebuke v.斥责 +recall v.想到，召回，取消 +recede v.归还，撤回 +receipt n.收到，收据 +receive v.收到，接待， 接见 +receiver n.受领人，听筒 +recent adj.近来的，新近的 +recently adv.近来，最近 +reception n.招待会，欢迎会 +receptionist n.接待员 +recession n.衰退 +recipe n.菜谱，配方 +recipient n.接受者 +reciprocal adj.相互的，互易的 +recitation n.朗诵 +recite v.背诵，朗诵，讲述 +reckless adj.鲁莽的 +reckon v.数，计算，认为 +reclaim v.收回，开垦 +recognition n.认出，承认 +recognize v.认出，识别，承认 +recollect v.回忆，追想 +recollection n.回忆 +recommend v.推荐，介绍，劝告 +recommendation n.推荐(书) +recompense v.,n.回报，赔偿 +reconcile v.使和好，调停 +reconnaissance n.探索，勘查 +record v.记录，录音 n.记录 +recorder n.记录员，录音机 +recourse n.求助 +recover v.寻回，恢复，复原 +recovery n.寻回，恢复 +recreation n.消遣，文娱活动 +recruit v.招募，征兵 +recruitment n.招募 +rectangle n.长方形，矩形 +rectification n.纠正 +rectify v.纠正，订正 +recur v.再发生，复发 +recurrence n.再发生 +red adj.红的 n.红色 +redeem v.买回，赎回 +redound v.增加，促进 +reduce v.减少，贬为 +reduction n.减少，缩减 +reed n.芦苇，芦笛 +reef n.礁石 +reel n.卷，线轴 v.卷绕 +reexport v.再出口 +refer v.查阅，提及 +referee n.裁判员 +reference n.参考(书)，推荐书 +referent n.被谈到的事 +refine v.精炼，精制 +refined adj.精炼的，精的 +refinement n.精炼 +refinery n.精炼厂 +reflect v.反射，反映，反省 +reflection n.反射，映象，反思 +reform v.,n.改革，改造 +refrain v.抑制 +refresh v.使清醒，使振作 +refreshment n.茶点，饮料 +refrigerator n.冰箱 +refuge n.藏身处，避难所 +refugee n.难民 +refund v.再投资,归还 n.退款 +refusal n.拒绝，谢绝 +refuse v.拒绝 n.渣，废物 +refute v.驳斥，反驳 +regard v.认为，尊重，关于 +regarding prep.关于 +regardless adj.,adv.不顾的(地) +regime n.政体，制度 +regiment n.团，大量 +region n.地区，地域，地带 +regional adj.地区的，区域的 +regionalization n.区域化 +regionalize v.使区域化 +register v.登记，注册，挂号 +registered adj.登记的，注册的 +registration n.登记 +regret v.懊悔 n.遗憾 +regretful adj.遗憾的 +regretfully adv.遗憾地 +regrettable adj.可遗憾的 +regular adj.正常的，有规律的 +regularity n.整齐，规律 +regularly adv.整齐地，有规律地 +regulate v.管理，调整 +regulation n.管理，规则，法令 +rehearsal n.排练，彩排 +rehearse v.排练 +reign n.统治 v.统治，盛行 +reimburse v.偿还 +reimbursement n.偿还，还款 +rein n.缰绳 v.驾驭，约束 +reinforce v.增援，加强 +reinforcement n.加强，援兵 +reiterate v.重申 +reject v.拒绝 +rejection n.拒绝 +rejoice v.欢欣，使喜悦 +relate v.叙述，关联，涉及 +related adj.与...有关的 +relation n.关系，得害关系 +relationship n.关系，联系 +relative n.亲戚 adj.有关系的 +relatively adv.比较地，相对地 +relativity n.相关性，相对论 +relax v.松弛，舒张，休息 +relaxation n.放松，松弛 +relay v.转播，中继 +release v.释放，透露，发行 +relevant adj.相关的 +reliability n.可靠性 +reliable adj.可靠的，可依赖的 +reliance n.依靠，信赖 +relief n.解除，减轻，安慰 +relieve v.解除，减轻，换班 +religion n.宗教(信仰) +religious adj.宗教的，信教的 +relinquish v.放弃 +relish n.味道，风味 +reluctance n.不愿，勉强 +reluctant adj.不愿的，勉强的 +rely v.依靠，依赖 +remain n.依旧的，剩余，逗留 +remainder n.剩余部分 +remains n.剩余，遗迹，遗体 +remark v.说起，留意，评论 +remarkable adj.显著的，异常的 +remedy n.药品，治疗(方法) +remember v.记得，想起，记住 +remembrance n.记得，记忆 +remind v.提醒，使想起 +reminiscence n.回想，回忆，怀念 +reminiscent adj.使想起...的 +remit v.汇款，汇出 +remittance n.汇款 +remnant n.残余，残迹 +remote adj.遥远的，疏远的 +remoteness n.遥远，疏远 +removal n.移开，除去，移居 +remove v.移开，除去，罢免 +remuneration n.列举 +renaissance n.(文艺)复兴 +render v.使得，给予，翻译 +renew v.更新，续期 +renewable adj.可续期的 +renewal n.更新，续订 +rent n.租金 v.租 +rental adj.租借的，租金的 +repair v.修理，纠正 +repairmen n.修理，修补，纠正 +repay v.偿付，报答 +repeal v.,n.撤消，废除 +repeat v.重复，背诵 +repeatedly adj.重复地，一再地 +repel v.驱逐，推开 +repent v.后悔，悔悟 +repetition n.重复，反复，复制 +repetitive adj.重复的，反复的 +replace v.归还原处，代替 +replacement n.归回，代替(物) +replenish v.补充 +replenishment n.补充(货物) +reply v.,n.回答，答复 +report v.报告，报导，报道 +reportage n.报告文学 +reporter n.报告人，记者 +represent v.表示，表现，代表 +representation n.表示，代表 +representative adj.代表 +reproach v.,n.责备，指责 +reproduce v.复制，再造，繁殖 +reproduction n.复制(器) +reptile n.爬行动物 +republic n.共和国 +republican n.,adj.共和(派)的 +repudiate n.拒绝接收，拒付 +reputable adj.声誉好的 +reputation n.名声，声誉 +repute n.声誉 v.看作，评价 +request n.请求 +require v.需要，请求 +requirement n.要求，需要 +requisite adj.必要的，需要的 +rescind adj.退还，取消 +rescue v.,n.救援，救出 +research v.,n.调查，研究 +researcher n.调查者，研究人员 +resemblance n.相仿，类似 +resemble v.象，类似 +resent v.不满于，愤恨 +resentful adj.不满的，怨恨的 +resentment n.不满，愤恨 +reservation n.贮存物，预定 +reserve v.贮备，保存，预定 +reservoir n.水库 +reside v.居住，存在 +residence n.住宅，住处 +resident n.居民 +residual adj.剩余的 +resign v.辞职 +resignation n.辞职 +resist v.抵抗，忍住 +resistance n.抵抗，阻力，反感 +resistant n.抵抗的，反对的 +resolute adj.坚决的，果断的 +resolution n.决议，决定，决心 +resolutely adj.坚决地，果断地 +resolve v.决定，解决，分解 +resort v.诉诸，求助 n.胜地 +resource n.资源，机智，策略 +respect v.尊重，重视，尊敬 +respectable adj.可敬的 +respectful adj.恭敬的，尊重的 +respectfully adv.恭敬地 +respective adj.各自的，各个的 +respectively adv.各自，分别地 +respond v.答复，反应，响应 +response v.答复，反应，响应 +responsibility n.责任，职责 +responsible adj.负责的，尽责的 +rest v.休息 n.休息，休止 +restaurant n.饭馆，餐厅 +restless adj.没休息的，不安的 +restock v.重新进货 +restore v.恢复，复原，归还 +restrain v.抑制，制止 +restraint n.抑制，自制 +restrict v.限制，约束 +restriction n.限制，约束 +restrictive n.限制的 +result n.结果，效果，后果 +resultant adj.结果的，合成的 +resume v.继续，再度 +resume n.个人简历，摘要 +retail v.,n.零售 +retailer n.零售商 +retain v.保留，记忆，雇 +retell v.复述 +retire v.退休，退隐，就寝 +retirement n.退休，隐居 +retort v.反驳，回嘴 +retreat v.,n.退却，撤退 +retroactive adj.可追溯的 +return v.回归，归还 n.归来 +reveal v.揭露，透露，显示 +revenge n.,v.报仇，报复 +revenue n.岁入，收入 +reverence n.尊敬，崇敬 +reverse adj.颠倒的，相反的 +revert v.回复到，重议 +review v.,n.检查，复习 +revise v.修改，校订，复习 +revision n.修改，修订 +revival n.复苏，再生 +revive v.苏醒，复苏 +revoke v.废除，取消，撤回 +revolt n.,v.起义，反抗 +revolution n.革命，变革 +revolutionary adj.革命的 +revolve v.旋转，绕行 +reward n.报酬，酬金，报答 +rewarding adj.有收获的 +rheumatism n.风湿病 +rhyme n.韵，脚韵 +rhythm n.韵律，节奏 +rib n.肋，肋骨 +ribbon n.带子，缎带 +rice n.稻子，大米，米饭 +rich adj.富的，富饶的 +richness n.富饶，富有 +rid v.使摆脱，使除去 +riddle n.谜语，谜 +ride v.乘坐，骑 n.乘车 +ridge n.山脉，岭，屋脊 +ridicule n.,v.嘲笑，挖苦 +rediculous adj.可笑的，荒谬的 +rifle n.步枪，来福枪 +right adj.正确的，右的 +righteous adj.正直的，公正的 +rigid adj.僵硬的，严厉的 +rigidity adj.僵硬，严厉，死板 +rigor n.严格，严肃 +rigorous adj.严厉的，酷热的 +rim n.边缘，眼镜架 +ring v.鸣，打铃，打电话 +rinse v.漂洗，润丝 +riot n.,v.骚乱，闹事 +riotous adj.骚乱的，喧扰的 +rip v.撕破，扯碎 +ripe adj.熟的，成熟的 +ripen v.成熟，变热 +ripple n.波纹，涟漪 +rise v.起立，晋级，增长 +risk n.,v.冒险，风险 +risky adj.有风险的，冒险的 +rival n.对手 adj.竞争的 +rivalry n.竞争，对抗 +river n.河，江 +road n.道路，路 +roam v.漫步，漫游 +roar v.,n.吼，怒号，轰鸣 +roast v.烤，炙 adj.烘烤的 +rob v.抢劫，偷 +robber n.强盗 +robbery n.抢劫(案) +robe n.长袍 +robot n.机器人 +robust adj.强壮的，粗壮的 +rock n.岩石 v.摇摆，摇晃 +rock-bottom n.adj.(价格)最低(的) +rocket n.火箭 +rod n.小棒，竿 +role n.角色，作用 +roll v.滚，卷，转动，压平 +roller n.滚筒，压路机 +roman adj.古罗马的n.罗马人 +romance n.浪漫文学，浪漫故事 +romantic adj.浪漫的，好幻想的 +romanticism n.浪漫主义 +rome n.罗马 +roof n.屋顶 +room n.房间，室，空间 +rooster n.公鸡 +root n.根，根源 +rope n.绳，索 +rose n.玫瑰，蔷薇 +rosy adj.玫瑰红的，幻想的 +rot v.腐烂，枯朽 +rotary adj.旋转的 +rotate v.旋转，循环，转流 +rotation n.旋转，更替 +rotten adj.腐烂的，发臭的 +rough adj.粗糙的，粗野的 +roughly adv.大约地，粗略地 +round adj.圆形的adv.在周围 +roundabout adj.迂回的，转弯抹角 +rouse v.唤醒，惊起 +route n.路线，航线 +routine n.日常事务 +row v.划船 n.排，列 +royal adj.王室的，皇家的 +royalty n.皇家，皇族 +rub v.擦，摩擦，涂抹 +rubber n.橡胶，橡皮 +rubbish n.垃圾，废物，废话 +rude adj.粗鲁的，下流的 +rug n.小块地毯 +ruin n.废墟 v.毁坏，破坏 +ruinous adj.毁灭性的 +rule n.法规，常规，统治 +ruler n.统治者，直尺 +ruling adj.统治的 +rumor n.,v.传闻，谣言 +run v.跑，竞选，行驶 +runner n.奔跑者，赛跑运动员 +running adj.连续的 n.经营 +rural adj.农村的 +rush v.,n.冲，冲进 +russia n.俄罗斯，俄语 +russian n.,adj.俄国(人)的 +rust n.锈 v.生锈，衰退 +rusty adj.生锈的 +ruthless adj.无情的，冷酷的 +sack n.麻袋 v.解雇 +sacred adj.神圣的 +sacrifice n.,v.牺牲(品) +sad adj.悲哀的，可悲的 +saddle n.马鞍 +sadly adv.悲哀地，可惜 +sadness n.悲哀 +safe adj.安全的，无风险的 +safely adv.安全地，平安地 +safety n.安全 adj.保险的 +sag v.下跌 +said adj.上述的，该 +sail n.帆 v.行驶，开航 +sailing adj.启航的 n.航行 +sailor n.水手，海员 +saint n.圣人，圣徒 +sake n.缘故，利益 +salad n.色拉，拌凉菜 +salability n.适销性 +salable adj.有销路的，适销的 +salary n.工资，薪水 +sale n.出售，贱卖 +sales n.销售 adj.出售的 +salesman n.售货员，推销员 +salmon n.鲑，大马哈鱼 +salt n.盐 +salty adj.咸的 +salute v.行礼，致敬 +salution n.致敬 +same adj.同样的 +sample n.样品 v.抽样 +sampling n.抽样 +sand n.沙子 +sandwich n.三明治 v.夹入 +sandy adj.沙的，沙色的 +sanitary n.疗养院 +santa Claus n.圣诞老人 +sarcasm n.讽刺，挖苦 +sarcastic adj.讽刺的 +sardine n.沙丁鱼 +satellite n.卫星 +satire n.讽刺作品 +satisfaction n.满足，满意 +satisfactorily adv.圆满地 +satisfactory adj.令人满意的 +satisfy v.满足，使满意，偿还 +saturation n.浸透，饱和 +saturday n.星期六 +saturn n.土星 +sauce n.调味汁，酱油 +saucer n.茶碟 +sausage n.香肠，腊肠 +savage adj.野蛮的，残暴的 +save v.救，拯救，储蓄 +savings n.存款，储蓄额 +saw v.,n.锯 +say v.说 n.发言(权) +scale n.刻度，等级，秤 +scaly adj.鱼鳞状的 +scan v.浏览，细察，扫描 +scandal n.丑闻 +scar n.疤，疤痕 +scarce adj.缺乏的，罕见的 +scarcely adv.几乎没有，将近 +scarcity n.缺乏，不足 +scare v.惊吓 n.惊恐 +scarf n.围巾，头巾 +scarlet adj.n.猩红的，鲜红的 +scatter v.散布，撒播 +scene n.现场，情景，一场戏 +scenery n.风景，布景 +scenic adj.风景如画的 +scent n.气味，香味 +schedule n.时间表 v.排定 +scheme n.计划，方案，图谋 +scholar n.学者 +scholarship n.奖学金，学问 +school n.学校，上学，学系 +schooling n.学校教育 +science n.科学，学科 +scientific adj.科学的 +scientist n.科学家 +scissors n.剪刀 +scoff v.嘲笑，嘲弄 +scold v.,n.训斥，责骂 +scope n.范围 +scorch v.烧焦 +scorching adj.灼热的 +score n.得分，成绩，二十 +scorn n.,v.蔑视，不屑 +scornful adj.蔑视的，轻视的 +scotch n.苏格兰 +scotsman n.苏格兰人 +scottish adj.苏格兰的 +scotland n.苏格兰 +scout n.侦察员，童子军 +scramble v.爬，攀，争夺 +scrap n.碎片，废品，屑 +scrape v.擦，刮，凑集 +scratch v.抓破，挠 n.抓痕 +scream v.,n.尖叫声 +screech v.,n.尖叫(声) +screen n.屏，帘 v.甄别 +screw v.拧 n.螺钉 +screwdriver n.螺丝刀，改锥 +script n.临时单据 +scrub v.擦洗，刷 +scrutiny n.细看，复查 +sculptor n.雕塑家 +sculpture n.雕塑，雕刻 +sea n.海，海洋 +seal v.封 n.图章，封条 +seam n.接缝 +seaman n.海员，水手 +seaport n.海港，港口 +search v.,n.搜查，寻找 +seashore n.海滨 +seaside n.海边 +season n.季节 v.调味 +seasonal adj.季节性的 +seat n.座位，席位 v.就座 +second num.第二 n.第二，秒 +secondary adj.第二的，次要的 +secondhand adj.二手的，间接的 +secondly adv.第二，其次 +secrecy n.秘密(状态) +secret adj.秘密的 n.秘密 +secretariat n.秘书处 +secretary n.秘书，部长，书记 +section n.部分，区域 +sector n.部分，部门 +secure adj.安全的，可靠的 +security n.安全，有价证券 +see v.看见，明白，查看 +seed n.种子 v.播种 +seek v.寻觅，企图获得 +seem v.好象，似乎 +seemingly adv.表面上 +segment n.部分，节，片 +seize v.抓住，夺取，占领 +seizure n.强占，没收 +seldom adv.难得，不常 +select v.挑选 adj.精选的 +selection n.选择，选集 +self n.自己，自身，品质 +selfish adj.自私的，利己的 +sell v.卖，出售 +seller n.卖方 +seminar n.研讨会，学术讲座 +semiconductor n.半导体 +senate n.参议院 +senator n.参议员 +send v.派遣，送，寄出，请 +sender n.寄信人 +senior adj.年长的，老资格的 +sensation n.感觉，感动 +sensational adj.轰动的 +sense n.感官，感觉，见识 +senseless adj.无意义的 +sensible adj.明智的，感知的 +sensitive adj.敏感的 +sensitivity n.灵敏度 +sentence n.句子 v.判决 +sentiment n.感情，情绪 +sentimental adj.多愁善感的 +separate v.分离，分隔，分手 +separately adv.分别地 +separation n.分离，分开 +september n.九月 +sequence n.一连串，顺序 +serene adj.清澈的，晴朗的 +serenity n.晴朗 +series n.系列，从书 +serious adj.慎重的，严重的 +seriously adv.严肃地，严重地 +sermon n.布道，说教 +serpent n.大蛇 +servant n.仆人 +serve v.服务，任职，服役 +service n.服务，公共设施 +serviceable adj.有用的，耐用的 +session n.会议，会期，市，盘 +set v.放，指定 n.全套 +setting n.安置，背景，环境 +settle v.解决，安置，支付 +settlement n.解决，结算 +seven num.七 +seventeen num.十七 +seventh num.第七，七分之一 +seventy num.七十 +several adj.几个 +severe adj.严厉的，苛刻的 +severely adv.严厉地，苛刻地 +sew v.缝纫 +sewing-machine n.缝纫机 +sex n.性，性别 +sexual adj.性的，性感的 +sexuality n.性欲 +shabby adj.褴褛的，不体面的 +shade n.阴影，遮光物，浓淡 +shadow n.影子，阴影 +shadowy adj.有阴影的，模糊的 +shady adj.遮阴的，背阴的 +shaft n.柄，竖井 +shake v.摇动，发抖，握手 +shall v.将 +shallow adj.浅的，浅薄的 +sham n.赝品 v.假冒 +shame n.羞耻，耻辱 +shameful adj.可耻的，丢脸的 +shampoo n.洗发香波 +shape n.形状，轮廓 v.形成 +shapeless adj.不定形的 +share n.份，股份 v.分配 +shark n.鲨鱼 +sharp adj.锐利的，明显的 +sharpen v.削尖，磨快 +sharpener n.铅笔刀，磨石 +sharply adv.尖锐地，敏锐地 +shatter v.粉碎，毁坏 +shave v.剃，修脸 +she pron.她 +shear v.剪毛，切割 +shed v.流下 n.棚子 +sheep n.绵羊 +sheepish adj.胆怯的 +sheer adj.全然的，极薄的 +sheet n.被单，张，大片 +shelf n.架子，搁板 +shell n.壳，英，炮弹，外壳 +shelter n.躲避处，庇护 +shepherd n.牧羊人 +sheriff n.郡长，警官 +shield n.盾牌 v.防护 +shift v.转变 n.转移，轮班 +shilling n.先令 +shine v.发光，照射，照耀 +shiny adj.耀眼的 +ship n.船，舰 v.船运 +shipbuilding n.造船业 +shipmail n.随船带交 +shipment n.船运，一船货 +shipowner n.船主 +shipping n.船运，装运 +shipwreck n.(船只)失事 +shipyard n.船坞 +shirt n.衬衣 +shiver v.发抖 +shock n.震惊，电击 v.震动 +shoe n.鞋 +shoemaker n.鞋匠 +shoot v.射击，发芽 n.嫩芽 +shop n.商店，车间 +shopkeeper n.店主 +shopping n.购物 +shore n.岸，滨 +short adj.短的，矮的 +shortage n.缺少，不足 +shortcoming n.短处，缺点 +shortcut n.捷径 +shorten v.缩短 +shorthand n.速记 +shortly adv.立刻，不久 +shorts n.短裤 +short-weight n.短装，短重 +shot n.射击，弹丸 +should v.应该，会 +shoulder n.肩膀 +shout v.,n.叫喊 +shove v.推，推开 +shovel n.铲子 +show v.显示，表明 n.演出 +shower n.阵雨，淋浴 +showroom n.展室，陈列室 +shrewd adj.机敏的，精明的 +shriek v.,n.尖叫(声) +shrill v.刺耳的 v.尖叫 +shrine n.神龛 +shrimp n.虾 +shrink v.收缩，畏缩 +shroud n.遮蔽物 +shrub n.灌木 +shrug v.,n.耸肩 +shuffle v.拖脚走 +shun v.躲避，躲开 +shut v.关闭，合拢 +shutter n.百叶窗，快门 +shuttle n.梭 v.穿梭 +shy adj.害羞的，腼腆的 +sick adj.有病的，厌恶的 +sickness n.病 +sickle n.镰刀 +side n.边，面，侧面，一方 +sidewalk n.人行道 +sideways adv.侧面地 +siege v.包围，围攻 +sieve n.筛子 +sift v.筛，细查 +sigh v.,n.叹息，叹气 +sight n.视力，情景 +sightseeing n.观光，游览 +sign n.告示，迹象，符号 +signal n.信号 v.做手势 +signature n.签字 +significance n.重要性，意义 +significant adj.重要的，有意义的 +signify v.表示，意味 +signpost n.路标，广告柱 +silence n.寂静，沉默 +silent adj.寂静的，沉默的 +silicon n.硅 +silk n.丝，绸 adj.丝的 +silky adj.丝绸般的 +silly adj.糊涂的，愚蠢的 +silver n.银，银餐具 +similar adj.类似的，相象的 +similarity n.类似，相似 +simple adj.简单的，朴素的 +simplicity n.简单，简朴，单纯 +simplify v.简单化 +simply adv.简单地，仅 +simulate v.假装，佯伪 +simultaneous adj.同时(发生)的 +simultaneously adv.同时地 +sin n.罪，罪恶 +since prep.自从 conj.既然 +sincere adj.真诚的，诚挚的 +sincerely adv.真诚地 +sincerity n.真诚，诚挚 +sinful adj.有罪的，罪恶的 +sing v.唱 +singer n.歌手 +single adj.单个的，单身的 +singular adj.非凡的，单数的 +sink v.沉，下落 n.水槽 +sir n.先生 +siren n.汽笛，报警器 +sister n.姊，妹 +sit v.坐，栖息 +site n.场所，场地 +sitting-room n.起居室 +situate v.位于，坐落在 +situation n.形势，局面 +six num.六 +sixteen num.十六 +sixth num.第六，六分之一 +sixty num.六十 +sizable adj.相当大的 +size n.大小，规模，尺寸 +skate n.冰鞋 v.滑冰 +skating n.滑冰，溜冰 +skeleton n.骨架 +sketch n.素描，速写，草图 +ski n.雪撬 v.滑雪 +skiing n.滑雪 +skill n.技能，技艺 +skillful adj.熟练的 +skim v.撇去，掠过，略谈 +skin n.皮，皮肤 v.剥皮 +skip v.跳过，遗漏 +skirmish n.小冲突 +skirt n.裙子 +skull n.颅骨 +sky n.天，天空 +skyrocket v.猛涨 +skyscraper n.摩天大楼 +slack adj.松驰的，不景气的 +slam v.砰地关上 +slander n.,v.诽谤，污蔑 +slang n.俚语 +slap v.掌击，掴 +slaughter v.,n.屠宰，屠杀 +slave n.奴隶 v.做苦工 +slavery n.奴隶制，奴役 +slay v.屠杀 +sleep v.,n.睡眠 +sleepy adj.欲睡的 +sleet n.雨加雪 +sleeve n.袖子 +slender adj.细长的，苗条的 +slice n.薄片 v.切成薄片 +slide v.滑，溜 +slight adj.轻微的，纤瘦的 +slightly adv.轻微地，稍稍 +slim adj.苗条的 +slip v.滑，滑行，溜走 +slipper n.便鞋，拖鞋 +slippery adj.滑的 +slit v.割裂 n.狭口，裂缝 +slogan n.标语，口号 +slope v.倾斜 n.坡，坡度 +slow adj.慢的，迟钝的 +slowdown n.放慢，迟缓 +slowly adj.慢慢地 +slum n.贫民窟 +slumber n.睡眠，微睡 +slump n.暴跌，不景气 +sly adj.狡猾的 +smack n.滋味 v.劈啪地响 +small adj.小的，不重要的 +smart adj.聪明的，漂亮的 +smash v.打破，粉碎，猛撞 +smell v.嗅,发出气味 n.气味 +smile v.,n.微笑 +smog n.烟雾 +smoke v.冒烟，抽烟 n.烟 +smoker n.抽烟者 +smoking n.抽烟 +smooth adj.平稳的，光滑的 +smoothly adv.顺利地，安稳地 +smuggle v.走私，夹带 +smuggler n.走私者 +smuggling n.走私 +snack n.快餐，小吃 +snail n.蜗牛 +snake n.蛇 +snap v.,n.折断(声) +snatch v.,n.抢夺，攫取 +sneak v.偷偷地逃走、做 +sneakers n.旅游鞋 +sneer v.,n.嘲笑，讥笑 +sneeze v.打喷嚏 +sniff v.嗅，闻 +snob n.势利小人 +snobbery n.势利 +snobbish adj.势利的 +snore v.打鼾 +snow n.雪 v.下雪 +snowman n.雪人 +snowstorm n.暴风雪 +snowy adj.有雪的，下雪的 +so adv.这样，也一样 +soak v.浸，吸水，湿透 +soap n.肥皂 +soar v.急速上升，暴涨 +sob v.,n.呜咽，啜泣 +sober adj.清醒的，冷静的 +so-called adj.所谓的 +soccer n.足球 +sociable adj.善交际的，社交的 +social adj.社会的，社会性的 +socialism n.社会主义 +socialist n.adj.社会主义者、的 +society n.社会，协会，社交界 +sociologist n.社会学家 +sociology n.社会学 +sock n.短袜 +soda n.苏打，碱，苏打水 +sodium n.钠 +sofa n.沙发，软椅 +soft adj.柔软的，温和的 +soften v.使柔软，变软 +softly adv.柔软地，温和地 +softness n.柔软，温和 +software n.软件 +soil n.土壤，国土，污秽 +solar adj.太阳的 +soldier n.士兵，兵 +sole adj.唯一的，单独的 +solely adv.唯一地，只 +solemn adj.正式的，严肃的 +solicitor n.律师 +solid adj.固体的，牢固的 +solidarity n.团结 +solitary adj.独自的，孤独的 +solitude n.寂寞，独居 +solo n.独唱，独奏 +solution n.解决，溶液 +solve v.解答，溶解 +solvency n.偿付能力 +solvent adj.有偿付能力的 +some adj.若干，某一 +somebody pron.某人，重要人物 +somehow adv.以某种方式 +someone pron.有人，某人 +something pron.某事，某物 +sometime adv.日后，曾经 +sometimes adv.有时，不时 +somewhat adv.稍微，有点 +somewhere adv.某地，到某处 +son n.儿子 +song n.歌，歌词，鸟鸣 +son-in-law n.女婿 +sonnet n.十四行诗 +sonyericsson n.索尼愛立信通訊手機公司 +soon adv.不久，很快，早 +soot n.油烟，煤烟 +soothe v.安慰，使镇定 +sophisticated adj.复杂的，先进的 +sophistication n.世故 +sore adj.疼痛的，恼火的 +sorrow n.伤心，悲哀，忧患 +sorrowful adj.悲哀的，忧愁的 +sorry adj.难过的，遗憾的 +sort n.种类 v.分类，拣 +soul v.灵魂，心灵，人 +sound n.声，声音 v.听起来 +soup n.汤 +sour adj.酸的，不高兴的 +source n.来源，出处，源泉 +south n.南,南方 adj.南方的 +southeast n.东南(部) +southern adj.南的，南方的 +southward adj.,adv.向南 +southwest n.西南(部) +souvenir n.纪念品 +sovereign n.君主 adj.主权的 +sovereignty n.主权 +sow v.播种，散布 n.母猪 +soy n.酱油 +space n.空间，太空，空地 +spacecraft n.宇宙飞船 +spaceship n.太空船，宇宙飞船 +spaceshuttle n.航天飞机 +spacious adj.广阔的，宽敞的 +spade n.铲子，铁锹，黑桃 +spain n.西班牙 +span n.跨度；指距 v.跨越 +spanish adj.,n.西班牙人(的) +spare v.腾出时间adj.备用的 +spark n.火花，火星 +sparkle v.发火花，闪耀 +sparrow n.麻雀 +spatial adj.空间的 +speak v.说话，发言，讲 +speaker n.说话者，发言人 +spear n.矛，枪 +special adj.特别的，专门的 +specialist n.专家 +specialize v.专攻，专门研究 +specialized adj.专业的，专门的 +specially adv.特地，专门地 +specialty n.专业，专长 +species n.物种，种类 +specific adj.特殊的，明确的 +specification n.规格，明细表 +specify v.详细说明，指定 +specimen n.标本，样本 +spectacle n.眼镜，场面，壮观 +spectacular adj.壮观的 +spectator n.观众，旁观者 +spectrum n.光谱 +speculate v.推测，投机 +speculation n.推测，投机 +speculator n.投机商 +speech n.演说，语言能力 +speed n.速度 v.飞驰 +speedy adj.快速的 +spell v.拼写，咒语 +spelling n.拼音，拼写 +spend v.花费，消耗 +sphere n.球体，范围，领域 +spice n.香料，调味品 +spicy adj.辛辣的 +spider n.蜘蛛 +spill v.溢出，流出 +spin v.自转，纺 +spiral adj.,n.螺旋(的) +spirit n.精神，心灵 n.酒精 +spiritual adj.精神上的，心灵的 +spit v.吐，倾吐 n.唾液 +spite n.恶意，怨恨 +splash v.溅，泼 +splendid adj.辉煌的，灿烂的 +split v.劈，分割 +spoil v.损坏，宠坏 +spokesman n.发言人 +sponge n.海绵 +sponsor n.发起人，主办者 +sponsorship n.发起，主办 +spontaneous adj.自发的 +spoon n.汤匙 +spoonful adj.一匙的量 +sport v.运动，嬉戏 +sportsman n.运动员 +sportsmanship n.体育精神 +spot n.点，斑，污点，场所 +sprain v.,n.扭伤 +spray n.水雾 v.喷射 +spread v.伸开，散布，传播 +spring v.跳跃，萌芽 n.春季 +sprinkle v.洒，撒，不细雨 +sprout n.幼芽 v.出芽 +spur n.,v.刺激，鼓舞 +spy n.间谍 +square n.正方形，广场，平方 +squash v.压碎 n.果子汁 +squat v.蹲 +squeeze v.压，榨，挤 +s. s. n.(缩)轮船 +squirrel n.松鼠 +stab v.,n.刺，戳 +stability n.稳定性 +stable adj.稳固的，稳定的 +stack n.,v.推放，垛 +stadium n.露天运动场 +staff n.工作人员，棒子 +stage n.舞台，阶段 v.上演 +stagger v.蹒跚 +stagnation n.停滞 +stain n.污点，瑕疵 v.弄脏 +stainless adj.无瑕的，不锈的 +stair n.楼梯 +staircase n.扶手楼梯 +stake n.桩，赌注 +stale adj.陈旧的 +stalk n.主茎，叶柄 +stall n.厩，货摊 +stammer v.,n.口吃，结巴 +stamp n.邮票，图章 v.盖章 +stand v.站立，坐落，忍受 +standard n.标准 adj.标准的 +standardize v.标准化 +standing adj.常务的 n.地位 +standpoint n.立场，观点 +standstill n.停顿 +staple n.钉书钉，主要产品 +stapler n.钉书机 +star n.星 v.主演 +stare n.,v.凝视 +start v.开始，着手，发动 +starting n.出发，开始 +startle v.惊吓，使吃惊 +starvation n.饥饿 +starve v.挨饿，渴求 +state n.状态，国家，州 +statement n.声明，陈述 +statesman n.政治家，国务活动家 +static adj.静止的，静态的 +station n.站，台 v.驻扎 +stationary adj.固定的，稳定的 +stationery n.文具 +statistical adj.统计的 +statistics n.统计(学) +statue n.雕像，铸像 +status n.形势，身分 +statute n.法令，章程，条例 +stay v.停留，暂住，保持 +steadily adv.稳固地，稳步地 +steady adj.平稳的，稳健的 +steak n.牛排，排骨 +steal v.偷窃 +steam n.汽，蒸汽 v.蒸 +steamer n.汽船 +steel n.钢 +steep adj.陡峭的 +steer v.驾驶，行驶 +stem n.茎 +stencil n.复写纸，蜡纸 +step n.脚步，台阶，步骤 +stereo n.立体声 +sterling adj.英镑的 +stern adj.严厉的，坚决的 +stevedore n.码头工人 +stew v.炖，煮 n.炖菜 +steward n.乘务员，男仆 +stewardess n.女乘务员，空姐 +stick n.枝，杆，手杖 v.扎 +sticky adj.黏的 +stiff adj.僵硬的，生硬的 +still adj.静止的 adv.仍旧 +stillness n.寂静，静止 +stimulate v.刺激，使兴奋 +stimulation n.刺激 +sting n.刺痛 v.刺，叮 +stink adj.臭的 +stipulate v.合同规定，约定 +stipulation n.规定 +stir v.搅拌，激起 n.骚动 +stirring adj.动人的 +stitch n.一针 v.缝合 +stock n.存货，股份 v.贮存 +stocking n.长袜 +stomach n.胃 +stone n.石头，石料，宝石 +stony adj.石头多的 +stool n.凳子 +stoop v.弯腰，屈从 n.俯身 +stop v.停止，终止 n.停止 +storage n.贮藏，货栈 +store n.商店 v.贮藏，储备 +storey n.楼层 +storm n.暴风雨，暴怒 +stormy adj.有暴风雨的 +story n.故事，小说，经历 +stout adj.肥胖的，结实的 +stove n.炉子，火炉 +stow v.装载，理舱 +stowage n.装载 +straight adj.直的 adv.笔直地 +straightforward adj.直爽的 +straighten v.弄直 +strain v.拉紧，扭伤，使紧张 +strait n.海峡 +strand n.(绳)股，缕 +strange adj.奇怪的，陌生的 +stranger n.新人，陌生人 +strap n.带，皮带 +strategic adj.战略的 +strategy n.战略，策略，计谋 +straw n.麦杆，稻草，吸管 +strawberry n.草莓 +stray v.迷路 adj.走失的 +streak n.纹理，条纹 +stream n.小溪，流 +streamline n.流线型 v.精简 +street n.大街 +streetcar n.有轨电车 +strength n.力气，力量，强度 +strengthen v.加强，巩固 +stress v.,n.强调，压力 +stretch v.伸展，拉长 n.伸展 +strict adj.严格的，精确的 +strictly adv.严格地，绝对 +stride adv.阔步走 n.阔步 +strife n.冲突，争斗 +strike v.打，攻击，罢工 +striking adj.引人注目的 +string n.细绳，弦，一串 +strip v.剥 n.窄条 +stripe n.条纹 +strive v.努力，奋斗 +stroke n.敲，笔划 v.抚摸 +stroll v.,n.散步，闲逛 +stroller n.散步者 +strong adj.强壮的，强烈的 +strongly adv.强烈地，强有力地 +stronghold n.堡垒，要塞 +structural adj.结构的，组织上的 +structure n.结构，构造，组织 +struggle v.,n.斗争，奋斗 +stubborn adj.顽固的，倔强的 +student n.学生，研究人员 +studio n.画室，工作间 +study v.,n.学习，研究 +stuff n.材料，东西 v.塞满 +stuffy adj.闷热的，不透气的 +stumble v.绊跌 +stump n.树桩，残茬 +stupid adj.愚蠢的，迟钝的 +stupidity n.愚蠢 +sturdy adj.健壮的 +style n.风格，时尚，作风 +stylist n.时装设计师 +subdivide v.细分，再分 +subdue v.战胜，征服 +subject n.题目，学科，主语 +subjective adj.主观的 +subjunctive adj.虚拟的 +submarine adj.海底的 n.潜水艇 +submerge v.浸没，淹没 +submit v.服从，呈交 +subordinate adj.下级的，辅助的 +subordination n.服从 +subscribe v.订购，订阅 +subscription n.预订，订购 +subsequence n.后果 +subsequent adj.以后的，后起的 +subsequently adv.后来，其后 +subsidiary adj.辅助的，次要的 +substance n.物质，实质 +substantial adj.可观的，实质的 +substantiate v.证实 +substitute n.,v.代替，代用品 +substitution n.代替 +subtle adj.敏锐的，微妙的 +subtract v.减去 +subtraction n.减法，减去 +suburb n.郊区，郊外 +suburban adj.郊区的 +subway n.地铁 +succeed v.成功，后继 +success n.成功 +successful adj.成功的 +successfully adv.成功地 +succession n.接连，继任 +successive adj.接连的，连续的 +successor n.继承人，继任者 +such adj.这样的，如此的 +suck v.吮，咂 +sudden adj.突然的，意外的 +suddenly adv.突然，忽然 +suffer v.遭受，受苦，忍受 +suffering n.苦难 +suffice v.足够，满足需要 +sufficient adj.充足的，充分的 +sufficiently adv.充分地，足够地 +suffix n.后缀 +sugar n.糖 +suggest v.建议，暗示 +suggestion n.建议，示意 +suicide n.自杀 +suit n.一身西服，起诉 +suitable adj.合适的，适宜的 +suitcase n.手提箱 +suite n.随员，一套(房间) +sullen adj.板着脸的 +sultry adj.闷热的 +sum n.总数，会计 v.总结 +summarize v.概括，总结 +summary n.概要 adj.概括的 +summer n.夏季 +summit n.顶峰，最高点 +summon v.,n.召唤，召集 +sun n.太阳，阳光 +sunburn v.晒黑 +sunday n.星期日 +sunflower n.葵花 +sunlight n.阳光 +sunny adj.向阳的，晴朗的 +sunrise n.日出 +sunset n.日落 +sunshine n.日照，日光 +super adj.特级的，超级的 +superb adj.华丽的，超等的 +superficial adj.表面的，肤浅的 +superinrtendent n.管理人，负责人 +superior adj.优良的，上级的 +superiority n.优越(性) +supermarket n.超级市场 +supersede v.代替 +supersonic adj.超音速的 +superstition n.迷信 +superstitious adj.迷信的 +supervise v.管理，监督，监考 +supervision n.监督 +supervisor n.监考人，监查 +supper n.晚餐 +supplement n.,v.增补，补充 +supplementary adj.补充的 +supplier n.供应商 +supply v.供应，供给 +support v.支持，资助，支援 +supporter n.支持者 +suppose v.猜想，假设 +supposing conj.假使 +suppress v.镇压，压制，遏止 +suppression n.镇压，压制 +supreme adj.最高的 +surcharge n.附加费，超载 +sure adj.有把握的，一定的 +surely adv.一定，肯定，谅必 +surface n.表面 adj.表面的 +surge n.,v.汹涌，波动 +surgeon n.外科医生 +surgery n.外科(学) +surmise v.,n.猜想，推测 +surname n.姓 +surpass v.超过，胜过 +surplus n.过剩 adj.剩余的 +surprise v.使惊诧 n.惊奇 +surprising adj.惊人的 +surrender v.放弃，交出，投降 +surround v.包围 +surroundings n.环境，周围事物 +survey v.视察，测量 n.调查 +surveyor n.调查人，检验人 +survival n.幸存，遗风 +survive v.幸免于，幸存 +survivor n.幸存者 +suspect v.怀疑 n.嫌疑犯 +suspend v.吊，悬，暂停，停学 +suspense n.暂停，中止 +suspicion n.怀疑，嫌疑 +suspicious adj.可疑的，猜疑的 +sustain v.支撑，遭受 +swallow n.燕子 v.吞咽 +swamp n.沼泽 +swan n.天鹅 +swarm n.群 v.云集 +sway v.摇晃，影响 +swear v.宣誓，诅咒 +sweat v.出汗 n.汗水 +sweater n.运动衫，毛衣 +swede n.瑞典人 +sweden n.瑞典 +swedish adj.,n.瑞典人(的) +sweep v.扫除，席卷 +sweet adj.甜的，甜蜜的 +sweeten v.变甜，加糖 +sweetheart n.心肝，宝贝 +sweetness n.甜味 +swell v.膨胀，肿 +swift adj.快的，迅速的 +swim v.游泳，游 +swing v.摇摆 n.秋千 +swiss n.瑞士人 +switch v.转换 n.开关 +switzerland n.瑞士 +sword n.剑 +syllable n.音节 +symbol n.象征，符号 +symbolize v.象征 +symmetric adj.对称的，匀称的 +symmetry n.对称 +sympathetic adj.同情的，有共鸣的 +sympathize v.同情 +sympathy n.同情，同感，共鸣 +symphony n.交响乐 +symposium n.座谈会，学术讨论会 +symptom n.症状，征兆 +synonym n.同义词 +synthesis n.综合，合成 +synthetic adj.合成的，人造的 +system n.系统，体制，制度 +systematic adj.系统的，有组织的 +systematically adv.有系统地 +table n.桌子，表格 +tablet n.药片 +tabulate v.制表，将...列表 +tack n.图钉 +tackle n.用具，辘轳 v.抓住 +tact n.机敏，圆滑 +tactful adj.机智的，老练的 +tactics n.战术，策略 +tag n.标签，货签 +tail n.尾巴，尾部 +tailor n.裁缝 v.缝制 +take v.拿，带，吃，乘 +take-off n.起飞 +tale n.故事 +talent n.人才，天资 +talk v.谈话 n.讲话，会谈 +talkative adj.罗嗦的 +tall adj.高的 +tally v.吻合，符合 +tame v.驯养，制报 +tan n.黄褐色 v.鞣草 +tangle v.缠绕，纠缠 +tank n.油箱，水箱，坦克 +tanker n.油轮 +tap v.叩击 n.轻敲 +tape n.条，带，磁带 +tape-recorder n.录音机 +tape-recording n.录音 +tar n.沥青，柏油 +target n.目标，对象，靶 +tare n.皮重 +tariff n.关税 +task n.工作，任务 +taste n.味道，趣味 v.品尝 +tasteful adj.有滋味的，好吃的 +tax n.税 v.征税 +taxation n.税(总称)，税务 +taxi n.出租汽车 +tea n.茶，茶叶 +teach v.教，教书，教导 +teacher n.教员，老师 +teaching n.教学，教导 +teacup n.茶杯 +team n.小队 v.协同工作 +teapot n.茶壶 +tear n.眼泪 v.撕，拔 +tease v.取笑，逗乐 +technical adj.技术的，技能的 +technician n.技术员，技师 +technique n.技术，技巧 +technological adj.技术的，工艺的 +technology n.技术，工艺 +tedious adj.腻烦的，乏味的 +teenager n.(十几岁的)少年 +teens n.十多岁 +telefax n.传真 v.发传真 +telegram n.电报 +telegraph n.电报 +telephone n.电话 v.打电话 +telescope n.望远镜 +television n.电视，电视机 +telex n.电传 v.发电传 +tell v.告诉，讲，说出 +teller n.出纳 +temper n.情绪，脾气 +temperature n.温度，体温 +temple n.庙，寺院，太阳穴 +temporary adj.暂时的，临时的 +tempt v.引诱，诱惑 +tempatation n.诱惑，引诱 +ten num.十 +tenant n.房客，承租人 +tend v.趋向，照料，投标 +tendency n.趋势，倾向 +tender n.投标人 adj.温柔的 +tenis n.网球 +tenor n.(支票)限期 +tense adj.紧张的 v.拉紧 +tension n.紧张状态，张力 +tent n.帐篷 +tentative adj.试探性的 +tenth num.第十，十分之一 +term n.期限，学期，术语 +terminable adj.可终止的 +terminal n.终点 adj.末端的 +terminate v.终止，结束 +termination n.终止，结束 +terminology n.术语(总称) +terrace n.平台，台阶 +terrible adj.可怕的，极度的 +terribly adv.可怕地，极 +terrific adj.了不起的，极好的 +terrify v.惊吓，使恐怖 +territory n.领土，领域，地区 +terror n.恐怖，令人恐怖的事 +terrorism n.恐怖主义 +terrorist n.恐怖分子 +test v.,n.测验，试验 +testify v.证明，证实 +testimony n.证据 +text n.正文，课文，原文 +textbook n.课本，教科书 +textile n.纺织品 +textual adj.课文的，正文的 +than conj.比，除...外 +thank v.谢谢，感谢 +thankful adj.感谢的，欣慰的 +thanks n.感谢 int.谢谢 +thanksgiving day ]n.感恩节 +that adj.那,那个 adv.那么 +the (定冠词)那，这 +theatre n.剧场，戏剧，舞台 +theatrical adj.戏剧的 +theft n.偷盗 +their adj.他们的，它们的 +them pron.他(她)们，它们 +theme n.主题，题目 +themselves pron.他们、它们自己 +then adv.当时，然后，那么 +theoretical adj.理论的 +theory n.理论，学说 +there adv.那里，到那里 +thereafter adv.此后，其后 +thereby adv.因此，由此 +therefor adv.为此 +therefore adv.因而，所以 +therefrom adv.由此 +therein adv.在那里，其中 +thereof adv.及其，由此，它的 +thereon adv.关于那 +therewith adv.对此 +thermometer n.温度计 +these pron.这些 +thesis n.论文 +they pron.他(她)们，它们 +thick adj.厚的，浓的 +thicken v.加厚，变浓 +thickness n.厚，厚度，浓 +thief n.窃贼，小偷 +thigh n.大腿 +thin adj.薄的，瘦的 +thing n.东西，事情 +think v.想，相信，认为 +thinking n.思想 +thinker n.思想家 +third num.第三，三分之一 +thirst n.渴，渴望 +thirsty adj.渴的，渴望的 +thirteen num.十三 +thirty num.三十 +this adj.,pron.这，这个 +thorn n.刺，荆棘 +thorough adj.充分的，彻底的 +thoroughly adv.充分地，彻底地 +those pron.,adj.那些 +though conj.虽然，可是 +thought n.想法，思想，关怀 +thoughtful adj.深思的，体贴的 +thoughtless adj.轻率的，粗心的 +thousand num.千 +thrash v.抽打 +thread n.线，思路 +threat n.恐吓，威胁 +threaten v.恐吓，威胁 +three num.三 +threshold n.开端，门槛 +thrift n.节俭 +thrifty adj.节俭的 +thrill v.发抖 n.激动 +thriller n.惊险小说，电影 +thrive v.兴旺，繁荣 +throat n.咽喉 +throne n.王位 +throng n.一群人 v.挤满 +through prep.通过，借助 +throughout prep.贯穿 adv.全部 +throw v.,n.投，扔，抛 +thrust v.强推，插入，刺 +thumb n.拇指 +thumbtack n.按钉，图钉 +thunder n.雷 v.隆隆响 +thunderstorm n.雷雨 +thursday ]n.星期四 +thus adv.如此，这样，因而 +tick n.滴答声 v.打勾号 +ticket n.票，标签，价目单 +tickle v.挠，搔，逗乐 +tide n.潮汐，潮流 v.度过 +tidy adj.整齐的，整洁的 +tie v.捆，打结 n.领带 +tie-up n.(资金)占用，冻结 +tiger n.虎 +tight adj.紧的，密封的 +tighten v.拉紧 +tightly adv.紧紧地，紧密地 +tigress n.母虎 +tile n.瓦，瓷砖 +till prep.直到 +tilt v.,n.倾斜 +timber n.木材 +time n.时间，时候，次数 +timely adj.及时的 +timetable n.时刻表，时间表 +timid adj.胆怯的，害羞的 +tin n.锡，锡器 +tiny adj.微小的 +tip n.梢，尖，小费 +tiptoe v.用脚尖走 +tire v.疲劳，厌倦 +tired adj.疲劳的，厌倦的 +tiresome adj.使人厌倦的 +tissue n.组织，卫生纸 +title n.标题，题目，称号 +to prep.向，到 +toad n.蟾蜍，癞蛤蟆 +toast n.烤面包，祝酒 v.烘 +tobacco n.烟草 +today adv.今天,现在 n.今日 +toe n.脚趾，鞋头 +together adv.共同，一起，同时 +toil v.苦干 +toilet n.卫生间，便桶 +token n.象征，纪念章 +tolerable adj.可容忍的 +tolerance n.宽容，容忍 +tolerant adj.宽容的，宽大的 +tolerate v.容忍，宽容 +toll n.税 +tomato n.蕃茄，西红柿 +tomb n.坟 +tombstone n.墓碑 +tomorrow n.明天 adv.在明天 +ton n.吨 +tone n.语气，腔调，市况 +tongue n.舌，语言 +tonight n.今晚 adv.在今晚 +tonnage n.吨位，吨数 +tonne n.公吨 +too adv.也，非常 +tool n.工具，手段 +tooth n.牙齿 +toothache n.牙疼 +toothbrush n.牙刷 +toothpaste n.牙膏 +top n.顶，盖子 v.高于 +topic n.课题，主题 +torch n.火炬，手电筒 +torment v.,n.折磨，虐待 +torpedo n.鱼雷 +torrent n.激流，山洪 +tortoise n.龟 +torture v.,n.拷打，折磨 +toss v.向上扔，颠簸，辗转 +total adj.总 n.总和，合计 +totally adv.统统，完全地 +touch v.碰，接触，触动 +tough adj.坚韧的，难嚼烂的 +tour n.,v.旅行，周游 +tourism n.旅游业 +tourist n.旅游者，游客 +tow v.,n.拖，牵引 +toward prep.向，对于，将近 +towel n.毛巾 +tower n.塔 v.高耸 +town n.市镇，城市，闹市 +toy n.玩具 +trace n.痕迹，微量 v.追踪 +track n.径赛，轨道，路径 +tractor n.拖拉机 +trade n.贸易，交换 v.经商 +trader n.商人 +trademark n.商标 +tradesman n.商人 +tradition n.传统，惯例 +traditional adj.传统的 +traffic n.交通，交易，运输 +tragedy n.悲剧，惨事，灾难 +tragic adj.悲剧的，悲惨的 +trail v.拖曳，尾随 n.踪迹 +train n.列车，一列 v.训练 +trainee n.受训练者 +trainer n.教练 +training n.训练 +traitor n.叛徒 +tram n.有轨电车 +tramp n.跋涉，流浪者 +trample v.践踏，蹂躏 +tranquil adj.平静的，安宁的 +transact v.交易 +transaction n.交易 +transfer v.转移，转让 +transferable adj.可转让的 +transform v.转变，转化 +transformation n.转化，转变 +transformer n.变压器 +transcient adj.短暂的，瞬时的 +transistor n.晶体管(收音机) +transit v.运输，转运 +transition n.过渡，转变 +translate v.翻译 +translation n.翻译，译文 +translator n.译音 +transmission n.传送，播送 +transmit v.传播，传导，发射 +transparent adj.透明的 +transplant v.移植 +transport v.运送 v.运输 +transportation n.运输，交通 +transship v.转运，转船 +transshipment n.转运 +transverse adj.横向的，横断的 +trap n.陷井，圈套 v.诱捕 +traverse n.,v.横断，横过 +travel v.旅行，传导 +traveler n.旅行者 +tray n.托盘 +tread v.踩，践踏 +treason n.谋反，叛国 +treasure n.财宝，珍宝 v.珍藏 +treasurer n.司库 +treat v.对待，医治，论述 +treatment n.待遇，疗法 +treaty n.条约 +tree n.树 +tremble v.哆嗦，发抖 +tremendous adj.巨大的，惊人的 +trench n.沟，壕 +trend n.走向，趋势 +trial n.审讯，尝试，试验 +triangle n.三角(形) +triangular adj.三角形的，三方的 +tribe n.部落 +tribute n.颂词，献礼 +trick n.诡计，骗局，伎俩 +trickle v.滴下，流下 +tricky adj.巧妙的，狡猾的 +trifle n.小事，琐事 +trigger n.扳机 v.触发 +trim v.修剪，修整 +trip n.旅行，远足 +triple adj.三倍的，三重的 +triplicate n.一式二份 +triumph n.胜利 v.战胜 +triumphant adj.得胜的，得意的 +trivial adj.琐碎的 +trolley n.手推车，电车 +troop n.队，军队 +tropic n.回归线，热带 +tropical adj.热带的 +trot v.,n.小跑，快步走 +trouble n.,v.麻烦 +troublesome adj.讨厌的，麻烦的 +trousers n.裤子 +truck n.卡车，载重汽车 +true adj.真实的，真正的 +truly adv.真正地，确实 +trumpet n.喇叭 +trunk n.树干，躯干，皮箱 +trust n.v.委托，信任，信托 +truth n.真相，真理 +truthful adj.诚实的，真正的 +try v.尝试，审讯 n.尝试 +tub n.浴 缸，木盆 +tube n.管子，试管 +tuberculosis n.结核，肺结核 +tuck v.卷起，塞进 +tuesday ]n.星期二 +tug v.,n.用力拖，拖船 +tuition n.学费 +tulip n.郁金香 +tumble v.跌倒，摔跤，打滚 +tumult n.骚动，暴动，吵闹 +tuna n.金枪鱼 +tune n.调子 v.调谐 +tunnel n.隧道，地道，坑道 +turbine n.汽轮机，涡轮机 +turbulent adj.骚动的 +turk ]n.土耳其人 +turkey n.火鸡adj.,n.土耳其 +turn v.转向，旋转 n.轮流 +turning n.拐角 adj.旋转的 +turnip n.萝卜 +turnover n.周转，营业额 +turtle n.海龟 +tutor n.辅导教师 +twelfth num.第十二 +twelve num.十二 +twentieth num.第二十 +twenty num.二十 +twice adv.两次，两倍 +twig n.细枝 +twilight n.黎明，黄昏，微亮 +twin n.,adj.孪生(的) +twinkle v.,n.闪烁，眨眼 +twist v.拧，扭，搓，歪曲 +two num.二 +type n.类型，典型 v.打字 +typewriter n.打字机 +typhoon n.台风 +typical adj.典型的 +typist n.打字员 +tyranny n.暴政，暴行 +tyrant n.暴君，专制 +tyre n.轮胎 +ugly adj.丑恶的，丑陋的 +ulcer n.溃疡 +ultimate adj.最终的，极限的 +ultimately adv.最后，终究 +ultimo adj.上月的 +ultrasonic adj.超声速的 +ultraviolet adj.紫外的 +umbrella n.伞，保护伞 +unable adj.不能的，不会的 +unacceptable adj.不能接受的 +unaccommodating adj.不青通融的 +unaffordable adj.买不起的 +unanimous adj.一致的 +unavoidable adj.不可避免的 +unbearable adj.不可忍受的 +uncertain adj.不确定的，易变的 +uncertainty n.不定，易变 +uncle n.伯、叔、舅、姑父 +uncomfortable adj.不舒服的 +uncommon adj.罕见的，不常见的 +unconditionally adv.无条件地 +unconscious adj.无知觉的 +uncover v.揭开 +under prep.在...下面 +underestimate v.低估 +undergo v.经受，经历 +undergraduate n.本科生 +underground adj.地下的，秘密的 +underline v.在...下划线，强调 +underlying adj.根本的，在下面的 +undermentioned adj.下述的 +undermine v.破坏 +underneath prep.,adv.在...下面 +undersigned adj.在...下面签名的 +understand n.了解，懂，熟悉 +understanding n.理解，谅解 +undertake v.从事，承担 +undertaking n.事业，许诺 +underwear n.内衣 +underwriter n.保险商，承购人 +undo v.解开，取消 +undoubtedly adv.无容置疑地 +undue adj.过分的，不适当的 +unduly adv.过分地，不适当地 +uneasy adj.不自在的，担心的 +unemloyment n.失业 +unexpected adj.意外的，未料到的 +unfair adj.不公平的 +unfit adj.不合适的 +unfold v.展示，摊开 +unfortunate adj.不幸的，遗憾的 +unfortunately adv.不幸地，不凑巧 +unhappy adj.不幸福的 +uniform adj.均匀的，统一的 +uniformly adv.单调地，一样地 +uninterested adj.不感兴趣的 +union n.联合，联盟，联合会 +unique adj.唯一的 +unit n.单位，个体 +unite v.统一，联合，团结 +united adj.联合的 +united kingdom n.英国，联合王国 +united nations n.联合国 +united states n.美国，合众国 +unity n.统一，团结 +universal adj.宇宙的，普遍的 +universally adv.普遍地 +universe n.宇宙 +university n.大学 +unjust adj.不公正的 +unkind adj.不仁慈的，冷酷的 +unknown adj.未知的 n.未知物 +unlawful adj.不合法的，违法的 +unless prep.除非 +unlike adj.不同的 +unlikely adj.未必的，不象的 +unlimited adj.无限的 +unload v.卸货，卸除 +unlock v.开启，揭开 +unlucky adj.不幸的，倒霉的 +unmerchantable adj.无销路的 +unnecessary adj.不必要的 +unobtainable adj.无法得到的 +unpaid adj.未付的 +unpleasant adj.令人不愉快的 +unprecedented adj.前所未有的 +unprecedentedly adv.空前地 +unreasonable adj.不合理的，贵的 +unsalable adj.不好销售的 +unsatisfactory adj.不令人满意的 +unstable adj.不稳定 +unsuitable adj.不适宜的 +untie v.解开 +until prep.,conj.到...为止 +unusable adj.无法使用的 +unusual adj.不寻常的 +unwarranted adj.无根据的 +unwelcome adj.不受欢迎的 +unwilling adj.不愿意的 +unworkable adj.行不通的 +up adv.向上，起床 +upcreep n.(价格)上涨 +uphold v.支持，维持 +upon prep.在...之上 +upper adj.上部的，较高的 +upright adj.直立的，正直的 +uproar n.喧闹，轰鸣 +upset v.倾覆，打乱，使心烦 +upside n.上面，上部 +upside-down adj.颠倒的，倒置的 +upstairs adv.在楼上，往楼上 +up-to-date adj.时新的，最近的 +upward adv.,adj.向上(的) +uranium n.铀 +urban adj.都市的，城市的 +urge v.敦促，推动 n.冲动 +urgent adj.紧迫的，紧急的 +urgently adv.紧急地 +us pron.我们(宾格) +usage n.使用，惯用法 +use v.使用 n.用途，利用 +useful adj.有用的，有益的 +usefulness n.用处，有效性 +useless adj.无用的 +user n.使用者，用户 +usual adj.通常的，习惯性的 +usually adv.通常，平常 +utensil n.用具，器皿 +utility n.效用，公用事业 +utilization n.利用 +utilize v.利用 +utmost adj.最大的，最高的 +utter v.说,发声 adj.完全的 +utterance n.说话 +vacacy n.空缺，空位 +vacant adj.空的，闲置的 +vacation n.假期 +vaccinate v.接种疫苗 +vaccination n.接种 +vacuum n.真空 +vague adj.含糊的，不清楚的 +vain adj.徒然的，自负的 +vainly adv.徒劳地 +valian n.坏蛋 +valid adj.正当的，有效的 +validity n.有效，确实 +valley n.山谷 +valuable adj.宝贵的，有价值的 +value n.价值 v.评价，估价 +valued adj.宝贵的 +valve n.阀门 +van n.小货车，面包车 +vanish v.消失，消散 +vanity n.虚荣心，浮华 +vapor n.水汽，蒸汽 +variable adj.可变的 n.变量 +variance n.分歧，不一致 +variant adj.不同的，不一致的 +variation n.变化，变更 +varied adj.不同的 +variety n.多样(性)，品种 +various adj.各种各样的 +varnish n.清漆 +vary v.变化，使多样化 +vase n.花瓶 +vast adj.巨大的，宏大的 +vault n.拱顶 +vegetable n.蔬菜，植物 +vehicle n.运载工具 +veil n.面纱，账，托辞 +vein n.静脉，矿脉，脉 +velocity n.速度，速率 +velvet n.丝绒 adj.柔软的 +vender n.商贩 +vengeance n.报复，复仇 +ventilate v.换气，自由讨论 +ventilation n.通风 +venture n.,v.冒险 +venus n.金星 +verb n.动词 +verbal adj.文字的，口头的 +verge n.边缘，界限 +verification n.检验 +verify v.检验，证实 +versatile adj.多才多艺的 +verse n.诗，韵文 +version n.译文，译本，看法 +versus prep.对 +vertical adj.垂直的 +very adv.很，非常 +vessel n.船只，容器，血管 +vest n.背心，汗衫 +veteran n.老手，老兵 +veto v.,n.否决(权) +vex v.使烦恼 +via prep.经由，取道 +vibrate v.振动，战栗 +vibration n.振动，颤动 +vice n.坏事，恶习 +vicinity n.邻近，附近，接近 +vicious adj.邪恶的，不道德的 +victim n.受害者 +victorious adj.胜利的，成功的 +victory n.胜利 +video adj.电视的，视频的 +view n.视域，景色，见解 +viewer n.观察者，电视观众 +viewpoint n.观点，看法 +vigor n.活动，精力，元气 +vigorous adj.精力旺盛的 +villa n.别墅 +village n.村庄 +villain n.坏蛋 +vine n.藤，葡萄树 +vinegar n.醋 +violate v.违犯，违背 +violation n.违犯，侵犯 +violence n.猛烈，暴力，暴行 +violent adj.猛烈的，暴力的 +violet n.紫罗兰，紫色 +violin n.小提琴 +virgin adj.处女的 n.处女 +virtual adj.实质上的 +virtually adj.几乎，差不多 +virtue n.善，美德，优点 +virus n.病毒 +visa n.签证 +viscous adj.粘的 +visible adj.看得见的 +vision n.视觉，视力，想象力 +visit v.,n.访问，参观 +visitor n.客人，来宾，来访者 +visual adj.视觉的 +vital adj.必不可少的 +vitamin n.维生素 +vivid adj.鲜艳的 +vividly adv.生动地 +vividness n.生动(性) +vocabulary n.词汇，词汇表、量 +vocation n.职业 +vogue n.时尚，时髦 +voice n.声音，嗓音 v.吐露 +voiceless adj.无声的 +void adj.空的，无效的 +volcano n.火山 +volley n.,v.齐射 +volleyball n.排球 +volt n.伏特 +voltage n.电压 +volume n.卷，册，量，体积 +voluntary adj.自愿的，志愿的 +volunteer n.志愿者 v.志愿 +vote n.投票(权)，得票数 +voter n.投票人，选举人 +voting adj.有投票权的 +vouch v.担保 +voucher n.凭证，收据 +vow v.,n.许愿，发誓 +vowel n.元音 +voyage n.,v.航行 +vulgar adj.低级趣味的 +vulnerability n.易损性 +vulnerable adj.晚受损害的 +wade v.消，跋涉 +wag v.摇，摆 +wage n.工资 v.进行 +wagon n.货车 +waist n.腰(部) +wait v.等候，伺候 +waiter n.服务员，侍者 +waitress n.女服务员 +waive v.放弃(要求、权利) +wake v.醒来 +waken v.唤醒，使觉醒 +walk v.步行，走 n.散步 +walker n.步行者，散步者 +wall n.墙壁 +wallet n.钱夹 +walnut n.核桃 +wander v.徘徊，离题，迷失 +want v.想要，通辑 n.缺乏 +war n.战争，斗争 +ward n.病房，牢房 +wardrobe n.衣柜 +ware n.货物 +warehouse n.仓库，货栈 +warehousing n.仓储 +warfare n.战争(状态) +warm adj.温暖的，热情的 +warmly adv.热烈地，热情地 +warmth n.温暖，暖和，热烈 +warn v.警告，预先通知 +warning n.警告 +warrant n.许可证，正当理由 +warranted adj.担保的 +warranty n.担保，保证 +warrior n.勇士，战士 +warship n.军舰 +wash v.洗，冲走 +washing-machine n.洗衣机 +wasp n.黄蜂，马蜂 +waste v.浪费 n.垃圾，废料 +wasteful adj.浪费的，挥霍的 +watch v.观看，看过 n.手表 +watchful adj.注意的，警惕的 +water n.水 v.浇水，垂涎 +waterfall n.瀑布 +waterfront n.水边，滩 +waterproof adj.防水的 +watertight adj.不透水的 +watery adj.水汪汪的，淡的 +watt n.瓦特 +wave n.波浪，波 v.挥手 +wavelength n.波长 +waver n.晃动，动摇 +waving adj.波浪状的 +wax n.蜡 v.打蜡 +way n.方法，路，方向 +we pron.我们 +weak adj.弱的，差的 +weakness n.弱点，软弱 +wealth n.财富，丰富 +wealthy adj.富裕的，富庶的 +weapon n.武器 +wear v.穿，戴，磨损，耐久 +weary adj.疲倦的 +weather n.天气 v.经受住 +weave v.编织 +weaver n.织布工，编织者 +web n.网，蛛网，圈套 +wedding n.婚礼 +wedge n.楔子，起因 v.楔住 +wednesday n.星期三 +weed n.杂草 v.除草，清除 +week n.星期，周，工作周 +weekday n.工作日 +weekend n.周末 +weekly adj.每周的 n.周刊 +weep v.哭泣，哀悼 +weigh v.重...，称，权衡 +weight n.重量，重担，重物 +welcome adj.受欢迎的 v.欢迎 +weld v.焊接 +welfare n.福利 +well n.井 adv.好，充分 +well-known adj.有名的，著名的 +west n.西方 adj.向西的 +western adj.西的，西方的 +westerner n.西方人，欧美人 +westward adj.,adv.向西(的) +wet adj.湿的，多雨的 +whale n.鲸 +whaling n.捕鲸(业) +wharf n.码头，停泊处 +what pron.什么 adj.什么的 +whatever pron.无论什么 +wheat n.小麦 +wheel n.轮，车轮 +when adv.何时 +whenever conj.无论何时 +where adv.哪里 +whereabouts n.下落 +whereas conj.而，却 +whereby adv.借此 +wherein adv.在何处 +wherever adv.无论哪里 +whether conj.是否，还是... +which pron.,adj.哪个，那个 +whichever pron.无论哪个 +while n.一会儿 conj.当..时 +whilst conj.当...时，尽管 +whip v.抽打，搅 n.鞭子 +whirl v.,n.旋转，飞转 +whisker n.络腮胡子 +whisky n.威士忌洒 +whisper v.,n.耳语，发飒飒声 +whistle v.吹哨，鸣笛，啸叫 +white adj.白的 n.白色,蛋清 +whitewash v.粉刷，掩饰 +who pron.谁 +whoever pron.无论谁 +whole adj.全部的 n.全部 +wholesale n.,v.批发 +wholesaler n.批发商 +wholesaling n.批发 +wholesome adj.卫生的 +wholly adv.完全，一概 +whom pron.谁(宾格) +whose pron.谁的 +why adv.为什么 +wicked adj.坏的，不道德的 +wide adj.宽的，广阔的 +widely adv.广泛地，非常 +widen v.加宽，扩大 +widespread adj.流传广泛的 +widow n.寡妇 +widower n.鳏夫 +width n.宽度 +wield v.挥动，行使 +wife n.妻子，夫人 +wild adj.野生的，狂暴的 +wilderness n.荒原 +will v.aux.将，愿 n.意志 +willing adj.乐意的，自愿的 +willingly adv.乐意地，自愿地 +willingness n.乐意，自愿 +willow n.柳树 +win v.赢得，成功 +wind n.风，风声 v.绕 +winding adj.弯曲的，蜿蜒的 +windmill n.风车 +window n.窗户 +windowsill n.窗台 +windy adj.刮风的 +wine n.酒，葡萄酒 +winery n.酿酒厂 +wing n.翅膀，翼，派别 +wink v.眨眼，使眼色 +winner n.得胜者，获奖者 +winter n.冬季 +wipe v.擦，抹掉 +wire n.金属线，电线 +wireless adj.,n.无线电 +wisdom n.智慧，明智 +wise adj.智慧的，博学的 +wish v.希望，祝愿，想要 +wit n.机智，才智 +with prep.同...一起，用 +withdraw v.撤消，退出，提款 +withdrawal n.撤退，取款 +wither v.枯萎，凋谢，衰弱 +withhold v.坚持 +within prep.,adv.在...内 +without prep.没有，在...外部 +withstand v.抵挡，顶住 +witness n.目击者,证人 v.目睹 +witty adj.机智的，风趣的 +woe n.悲痛，苦恼 +wolf n.狼 +woman n.妇女，女人 +wonder v.想知道,诧异 n.奇迹 +wonderful adj.奇妙的，精彩的 +wood n.木，木材 +wooden adj.木制的 +woodpecker n.啄木鸟 +woods n.树林 +wool n.羊毛，毛线 +woollen adj.羊毛的，毛织的 +word n.字，词，诺言，音讯 +wording n.措辞 +wordy adj.冗长的，罗嗦的 +work n.劳动，工作，作品 +workable adj.可行的，起作用的 +worker n.工人 +workman n.工作者 +workmanship n.工艺，手艺 +works n.工厂 +workshop n.车间，工场，学习班 +world n.世界，...界，世间 +worldwide adj.,adv.全世界的 +worm n.蠕虫，幼虫 +worry v.,v.烦恼，担心 +worse adj.更坏的，更差的 +worship v.,n.崇拜，礼拜 +worst adj.最坏的，最差的 +worth n.价值 adj.值...的 +worthless adj.不值钱的 +worthwhile adj.值得做的 +worthy adj.值得的，配...的 +wound v.受伤 n.伤口，创伤 +wounded adj.受伤的 n.伤员 +wrap v.包，裹 +wrapper n.(饺子)皮，包装用品 +wrath n.暴怒 +wreath n.花圈，花环 +wreck v.毁坏 n.失事 +wrench v.拧，扭伤 n.扳手 +wrestle v.,n.摔交，搏斗 +wretched adj.可怜的，可耻的 +wring v.拧，扭 +wrinkle n.皱纹 v.折皱 +wrist n.腕 +write v.写，写信，写作 +writer n.作者，作家 +writing n.写作 +written adj.写作的，书面的 +wrong adj.错误的，有毛病的 +wrongly adv.错误地，不正当地 +xerox n.,v.复印 +x-ray n.X射线 v.X光检查 +yacht n.游船，快艇 +yard n.码，庭院，场 +yawn v.,n.打呵欠 +year n.年，年度 +yearly adj.,adv.每年的 +yearn v.向往 +yeast n.酵母 +yell v.,n.叫嚷 +yellow n.,adj.黄色(的) +yes adv.是，好 +yesterday n.昨天 adv.在昨天 +yet adv.仍然，还，尚 +yield v.生产，屈服 n.产量 +yoke n.轭 +yolk n.蛋黄 +you pron.你，你们 +young adj.年轻的 n.青年人 +youngster n.少年 +your pron.你的，你们的 +yourself pron.你(们)自己 +youth n.青春，青年 +youthful adj.年轻的 +zeal n.热情，热忱 +zealous adj.热情的，热心的 +zebra n.斑马 +zero n.零，零度 +zinc n.锌 +zip n.活动，尖啸声 +zipcode n.邮政编码 +zipper n.拉链 +zone n.地带，区域，区 +zoo n.动物园 +zoology n.动物学 \ No newline at end of file diff --git a/homeworks/B20769/homework1/B20769_feiyu_day4_homework.py b/homeworks/B20769/homework1/B20769_feiyu_day4_homework.py new file mode 100644 index 0000000..c29fb78 --- /dev/null +++ b/homeworks/B20769/homework1/B20769_feiyu_day4_homework.py @@ -0,0 +1,96 @@ +# -*- coding: utf-8 -*- + +import codecs +import os +#根据“-”划分单词 +def handle_split(words): + new_words = [] + for word in words: + if '-' in word: + temp_words = word.split('-') + new_words.extend(temp_words) + else: + new_words.append(word) + return new_words +#1. 读取文件 +def read_file(file_path): + f = codecs.open(file_path, 'r', "utf-8") + lines = f.readlines() + words = [] + for line in lines: + line = line.strip() + line_words = line.split(" ") + if len(line_words) > 0: + line_words = handle_split(line_words) + words.extend(line_words) + return words +#清洗单个单词 +def format_word(word): + fmt = 'abcdefghijklmnopqrstuvwxyzABCDEFGHIJKLMNOPQRSTUVWXYZ-' + for char in word: + if char not in fmt: + word = word.replace(char, '') + return word.lower() +#清洗所有单词 +def format_words(words): + f_words = [] + for word in words: + new_word = format_word(word) + if new_word: + f_words.append(new_word) + return f_words +#统计单词数量 +def statictics_words(words): + s_dict = {} + for word in words: + if s_dict.has_key(word): + s_dict[word] = s_dict[word] + 1 + else: + s_dict[word] = 1 + return s_dict +#4.输出成csv +def print_to_csv(items_list, to_file_path, total_num, a ,b): + nfile = open(to_file_path,'w+') + curr_total = 0 + for item in items_list: + curr_total = curr_total + item[0] + curr_percent = (float(curr_total)/total_num)*100 + if (curr_percent > a) & (curr_percent < b) : + nfile.write("%s,%s,%0.2f\n" % (item[1], str(item[0]), curr_percent)) + else: + pass + nfile.close() +#读取文件夹中的所有文件的路径 +def get_file_from_folder(folder_path): + paths = [] + for root, dirs, files in os.walk(folder_path): + for file in files: + file_path = os.path.join(root, file) + paths.append(file_path) + print paths + return paths +#读取所有文件，并合并为一个list +def read_files(paths): + world_words = [] + for path in paths: + words = read_file(path) + world_words.extend(words) + return world_words +#根据单词出现的频率排序 +def sort_by_value(word_dict): + items = word_dict.items() + item_list = [[it[1], it[0]] for it in items] + item_list.sort(reverse = True) + return item_list + +def main(): + # words = read_file('data1/dt01.txt') # todo:扩展成所有的文件 + words = read_files(get_file_from_folder('data2')) + f_words = format_words(words) + total_num = len(f_words) + word_dict = statictics_words(f_words) + items_list = sort_by_value(word_dict) + print_to_csv(items_list, 'output/select_words.csv', total_num, 30, 70) + +if __name__ == "__main__": + main() diff --git a/homeworks/B20769/homework1/B20769_feiyu_day5_homework.py b/homeworks/B20769/homework1/B20769_feiyu_day5_homework.py new file mode 100644 index 0000000..f31777c --- /dev/null +++ b/homeworks/B20769/homework1/B20769_feiyu_day5_homework.py @@ -0,0 +1,156 @@ +# -*- coding: utf-8 -*- + +import codecs +import os + +import sys +reload(sys) +sys.setdefaultencoding('utf8') +#1. 读取文件 +#根据“-”再次划分单词：['aa', 'aaa-bbb-sds'] => ['aa', 'aaa', 'bbb', 'sds'] +def word_split(words): + new_list = [] + for word in words: + if '-' not in word: + new_list.append(word) + else: + lst = word.split('-') + new_list.extend(lst) + return new_list +#读取单个文件，输出问由文件中所有单词组成的列表 +def read_file(file_path): + f = codecs.open(file_path, 'r', "utf-8") #打开文件 + lines = f.readlines() #按段落（行）读取文件，输出为n行数据 + word_list = [] + for line in lines: + line = line.strip()#去掉行首尾的空格 + words = line.split(" ") #用空格分割 + words = word_split(words) #用”-“分割 + word_list.extend(words) + return word_list +#读取文件夹中所有文件的路径，输出为一组文件路径 +def get_file_from_folder(folder_path): + file_paths = [] + for root, dirs, files in os.walk(folder_path): + for file in files: + file_path = os.path.join(root, file) + file_paths.append(file_path) + return file_paths +#读取多个文件里的单词，输出问所有单词的一个列表 +def read_files(file_paths): + final_words = [] + for path in file_paths: + final_words.extend(read_file(path)) + return final_words +#2.获取格式化之后的单词 +#格式化一个单词，并输出 +def format_word(word): + fmt = 'abcdefghijklmnopqrstuvwxyzABCDEFGHIJKLMNOPQRSTUVWXYZ-' + for char in word: + if char not in fmt: + word = word.replace(char, '') + return word.lower() +#格式化一串单词，并输出为一个新的列表 +def format_words(words): + word_list = [] + for word in words: + wd = format_word(word) + if wd:#判断该单词是否为空格，若为空格则略过 + word_list.append(wd) + return word_list +#3. 统计单词数目 +# {'aa':4, 'bb':1} +#统计每个单词出现的次数 +def statictcs_words(words): + s_word_dict = {} + for word in words: + if s_word_dict.has_key(word): + s_word_dict[word] = s_word_dict[word] + 1 + else: + s_word_dict[word] = 1 + + #根据单词出现的频次排序，， + sorted_dict = sorted(s_word_dict.iteritems(), key=lambda d: d[1], reverse=True) + return sorted_dict +#将元组转变为列表，（将字典转化为以小列表为元素的列表） +def tup2list(volcaulay_list_tup): + volcaulay_list_lst = [] + for val in volcaulay_list_tup: + volcaulay_list_lst.append(list(val)) + return volcaulay_list_lst +#4.输出成csv +def print_to_csv(volcaulay_list, to_file_path): + nfile = open(to_file_path, 'w+') + for val in volcaulay_list: + nfile.write("%s,%s,%0.2f,%s \n" % (val[0], str(val[1]), val[2], val[3])) + nfile.close() +#计算单词比例 +def word_rate(volcaulay_list,total_count): + word_rates_dict = [] + current_count = 0 + for val in volcaulay_list: + current_count = current_count + val[1] + word_rate = (float(current_count) / total_count) * 100 + val.append(word_rate) + word_rates_dict.append(val) + return word_rates_dict +#截取累积频次在一定范围的单词 +def select_word(word_percent_list, rate_range): + word_list_recite = [] + start = rate_range[0] * 100 + end = rate_range[1] * 100 + for val in word_percent_list: + if val[2] >= start and val[2] <= end: + word_list_recite.append(val)###列表中的元素就是列表 + return word_list_recite +#读取释义 +def read_meaning(file_path): + f = codecs.open(file_path, 'r', "utf-8") #打开文件 + lines = f.readlines() #按段落（行）读取文件，输出为n行数据 + words_meaning_list = [] + for line in lines: + line = line.strip()#去掉行首尾的空格 + word, space, meaning = line.partition(" ")#partition 和 split分割得到的结果不一样 + meaning = meaning.strip() + word_meaning = [word,meaning] + words_meaning_list.append(word_meaning) + return words_meaning_list +#给单词配上解释 +def meanging_word(volcaulay_list,words_meaning): + words_meaning_dict = {} + meanings2words = [] + for word in words_meaning: + words_meaning_dict[word[0]] = word[1] + for val in volcaulay_list: + if words_meaning_dict.has_key(val[0]): + val.append(words_meaning_dict[val[0]]) + else: + val.append('没有该单词的解释') + meanings2words.append(val) + return meanings2words +def main(): + #读取文本 + words = read_files(get_file_from_folder('data2')) + print '获取了未格式化的单词 %d 个' % (len(words)) + #清洗文本 + f_words = format_words(words) + total_word_count = len(f_words) + print '获取了已经格式化的单词 %d 个' %(len(f_words)) + # 统计单词和排序 + word_list = statictcs_words(f_words) + #将字典变成以列表为元素的列表 + word_list_lst = tup2list(word_list) + #计算单词的累积频率并将其加到单词频数列表中 + word_rates_dict = word_rate(word_list_lst,total_word_count) + #截取单词 + start_and_end = [0.3, 0.7] #截取这一部分的单词 + s_word_list = select_word(word_rates_dict,start_and_end) + #读取单词解释文件 + words_meaning = read_meaning("8000-words.txt") + #单词解释和经济学人中抽取的单词配对 + meanings_words = meanging_word(s_word_list, words_meaning) + # 输出文件 + print_to_csv(meanings_words, 'output/words_meanings.csv') + +if __name__ == "__main__": + main() \ No newline at end of file diff --git a/homeworks/B20769/homework1/B20769_feiyu_day6_homework.py b/homeworks/B20769/homework1/B20769_feiyu_day6_homework.py new file mode 100644 index 0000000..c81e95c --- /dev/null +++ b/homeworks/B20769/homework1/B20769_feiyu_day6_homework.py @@ -0,0 +1,188 @@ +# -*- coding: utf-8 -*- + +import codecs +import os + +import sys +reload(sys) +sys.setdefaultencoding('utf8') +#1. 读取文件 +#根据“-”再次划分单词：['aa', 'aaa-bbb-sds'] => ['aa', 'aaa', 'bbb', 'sds'] +def word_split(words): + new_list = [] + for word in words: + if '-' not in word: + new_list.append(word) + else: + lst = word.split('-') + new_list.extend(lst) + return new_list +#读取单个文件，输出问由文件中所有单词组成的列表 +def read_file(file_path): + f = codecs.open(file_path, 'r', "utf-8") #打开文件 + lines = f.readlines() #按段落（行）读取文件，输出为n行数据 + word_list = [] + for line in lines: + line = line.strip()#去掉行首尾的空格 + words = line.split(" ") #用空格分割 + words = word_split(words) #用”-“分割 + word_list.extend(words) + return word_list +#读取文件夹中所有文件的路径，输出为一组文件路径 +def get_file_from_folder(folder_path): + file_paths = [] + for root, dirs, files in os.walk(folder_path): + for file in files: + file_path = os.path.join(root, file) + file_paths.append(file_path) + return file_paths +#读取多个文件里的单词，输出问所有单词的一个列表 +def read_files(file_paths): + final_words = [] + for path in file_paths: + final_words.extend(read_file(path)) + return final_words +#2.获取格式化之后的单词 +#格式化一个单词，并输出 +def format_word(word): + fmt = 'abcdefghijklmnopqrstuvwxyzABCDEFGHIJKLMNOPQRSTUVWXYZ-' + for char in word: + if char not in fmt: + word = word.replace(char, '') + return word.lower() +#格式化一串单词，并输出为一个新的列表 +def format_words(words): + word_list = [] + for word in words: + wd = format_word(word) + if wd:#判断该单词是否为空格，若为空格则略过 + word_list.append(wd) + return word_list +#3. 统计单词数目 +# {'aa':4, 'bb':1} +#统计每个单词出现的次数 +def statictcs_words(words): + s_word_dict = {} + for word in words: + if s_word_dict.has_key(word): + s_word_dict[word] = s_word_dict[word] + 1 + else: + s_word_dict[word] = 1 + + #根据单词出现的频次排序，， + sorted_dict = sorted(s_word_dict.iteritems(), key=lambda d: d[1], reverse=True) + return sorted_dict +#将元组转变为列表，（将字典转化为以小列表为元素的列表） +def tup2list(volcaulay_list_tup): + volcaulay_list_lst = [] + for val in volcaulay_list_tup: + volcaulay_list_lst.append(list(val)) + return volcaulay_list_lst +#4.输出成csv +def print_to_csv(volcaulay_list, to_file_path): + nfile = open(to_file_path, 'w+') + for val in volcaulay_list: + if len(val) == 4: + nfile.write("%s,%s,%0.2f,%s \n" % (val[0], str(val[1]), val[2], val[3])) + if len(val) == 2: + nfile.write("%s,%s \n" % (val[0],val[1])) + nfile.close() +#计算单词比例 +def word_rate(volcaulay_list,total_count): + word_rates_dict = [] + current_count = 0 + for val in volcaulay_list: + current_count = current_count + val[1] + word_rate = (float(current_count) / total_count) * 100 + val.append(word_rate) + word_rates_dict.append(val) + return word_rates_dict +#截取累积频次在一定范围的单词 +def select_word(word_percent_list, rate_range): + word_list_recite = [] + start = rate_range[0] * 100 + end = rate_range[1] * 100 + for val in word_percent_list: + if val[2] >= start and val[2] <= end: + word_list_recite.append(val)###列表中的元素就是列表 + return word_list_recite +#读取释义 +def read_meaning(file_path): + f = codecs.open(file_path, 'r', "utf-8") #打开文件 + lines = f.readlines() #按段落（行）读取文件，输出为n行数据 + words_meaning_list = [] + for line in lines: + line = line.strip()#去掉行首尾的空格 + word, space, meaning = line.partition(" ")#partition 和 split分割得到的结果不一样 + meaning = meaning.strip() + word_meaning = [word,meaning] + words_meaning_list.append(word_meaning) + return words_meaning_list +#给单词配上解释 +def meanging_word(volcaulay_list,words_meaning): + words_meaning_dict = {} + meanings2words = [] + for word in words_meaning: + words_meaning_dict[word[0]] = word[1] + for val in volcaulay_list: + if words_meaning_dict.has_key(val[0]): + val.append(words_meaning_dict[val[0]]) + else: + val.append('没有该单词的解释') + meanings2words.append(val) + return meanings2words +#输出指定某一天背的单词 +def everyday_words(volcaulay_list,time,day): + totle_number = len(volcaulay_list) + everyday_number = totle_number //(time-1) + words_day = [] + start= (day-1)*everyday_number+1 + if day == time: + end = totle_number + else: + end = day*everyday_number + for num in range(start,end): + val = volcaulay_list[num] + words_day.append([val[0],val[3]]) + return words_day +#输出所有日子的单词 +def everyday_words_list(meanings_words,time): + for index in range(1,time + 1): + everyday_word = everyday_words(meanings_words, time, index) + file_path = 'output_everyday_word/day' + str(index) + '.csv' + print_to_csv(everyday_word,file_path) + +def main(): + #读取文本 + words = read_files(get_file_from_folder('data2')) + print '获取了未格式化的单词 %d 个' % (len(words)) + #清洗文本 + f_words = format_words(words) + total_word_count = len(f_words) + print '获取了已经格式化的单词 %d 个' %(len(f_words)) + # 统计单词和排序 + word_list = statictcs_words(f_words) + #将字典变成以列表为元素的列表 + word_list_lst = tup2list(word_list) + #计算单词的累积频率并将其加到单词频数列表中 + word_rates_dict = word_rate(word_list_lst,total_word_count) + #截取单词 + start_and_end = [0.3, 0.7] #截取这一部分的单词 + s_word_list = select_word(word_rates_dict,start_and_end) + #读取单词解释文件 + words_meaning = read_meaning("8000-words.txt") + #单词解释和经济学人中抽取的单词配对 + meanings_words = meanging_word(s_word_list, words_meaning) + # 输出文件 + print_to_csv(meanings_words, 'output/test2copy.csv') + number_totle_words = len(meanings_words) + print number_totle_words + time = 30 + day = 20 + everyday_word = everyday_words(meanings_words, time, day) + print_to_csv(everyday_word, 'output/homeworkday6.csv') + everyday_words_list(meanings_words, time) + + +if __name__ == "__main__": + main() \ No newline at end of file diff --git a/homeworks/B20769/homework1/data1/2016.01.02.TXT b/homeworks/B20769/homework1/data1/2016.01.02.TXT new file mode 100644 index 0000000..117b193 --- /dev/null +++ b/homeworks/B20769/homework1/data1/2016.01.02.TXT @@ -0,0 +1,3974 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +The world this week + +KAL's cartoon + + + + + +Articles Sections Next + +The world this week + +Jan 2nd 2016 | From the print edition + +Iraq’s armed forces recaptured Ramadi, the capital of Anbar province, which fell to Islamic State in May and is just 100km from Baghdad. The country’s prime minister, Haider al-Abadi, said that IS would be driven from his country by the end of 2016. IS also suffered fresh reverses in Syria; on December 26th it lost the important power-generating Tishreen dam to a mainly Kurdish force. See article. + +Saudi Arabia’s stockmarkets fell sharply after it announced swingeing spending cuts to close a gaping budget deficit. Saudi public finances have been hurt by declining oil revenues. In the middle of 2015 Brent crude was trading at $65 a barrel; now it is under $38. + +An outbreak of Ebola that rampaged through three African countries officially ended when the World Health Organisation declared that Guinea was free of the disease. The outbreak, which started two years ago, killed some 11,000 people, most of them in Guinea, Liberia and Sierra Leone. + +Stockmarkets responded positively to the Federal Reserve’s decision on December 16th to raise interest rates for the first time since 2006. After months of dithering the central bank lifted the range for its benchmark rate by a quarter of a percentage point to between 0.25% and 0.5%. + +Martin Shkreli was arrested by the FBI on December 17th and charged with securities fraud. Mr Shkreli made the headlines in 2015 when a drugs company he ran bought the rights to a medicine and raised its price by 5,000%. The (unrelated) charges against Mr Shkreli, which he denies, pertain to his time as a hedge-fund manager. + +Poland’s right-wing government passed a law requiring the constitutional court to approve decisions by a two-thirds majority, and with at least 13 of the 15 judges present. The law will force the court to accept disputed new judges whom the government has appointed. It will also make it much harder to strike down new laws. The opposition staged furious demonstrations. See article. + +Spain held an election before Christmas, which resulted in no stable majority. The ruling People’s Party of Mariano Rajoy came first and the Socialists second. Two smaller parties took seats, breaking the traditional two-party system. + +Brazil’s finance minister, Joaquim Levy, resigned on December 18th. He came into office in January 2015 with a mandate to slash the budget deficit but was thwarted by a severe recession and political turmoil. His successor is Nelson Barbosa, who was the planning minister. + +A group of Central American countries plus Mexico reached an agreement to allow some of the 7,000 migrants from Cuba who are stuck on Costa Rica’s border with Nicaragua to travel to the United States. Nicaragua had blocked their entry. The migrants will now be airlifted to El Salvador and continue by bus. The number of migrants from Cuba has increased since a diplomatic thaw with the United States began in 2014. Many fear that the rapprochement will end the United States’ policy of accepting émigrés from Cuba if they reach American soil. + +Argentina lifted exchange controls and allowed the peso to float freely, days after the inauguration of its new president, Mauricio Macri. This forms part of a liberalisation programme to reverse populist policies of the outgoing government of Cristina Fernández de Kirchner. See article. + +Carlos Rosales Mendoza, the founder of La Familia Michoacana, a Mexican drug gang, was found dead along with the bodies of three other people near a motorway in western Mexico. He was on the most-wanted list of the Drug Enforcement Agency in the United States. + + + +A landslide in the southern Chinese city of Shenzhen killed seven people and left dozens of others missing. Officials called it an “industrial safety accident”, caused by a collapsing heap of construction waste. An official who had once overseen the site committed suicide. + +The chairman of one of China’s largest state-owned mobile operators, China Telecom, is being investigated by anti-graft officials. The businessman, Chang Xiaobing, is among several senior executives who have been targeted in an anti- corruption campaign being waged by President Xi Jinping. + +Japan and South Korea agreed to settle a long-standing dispute over women forced to work in Japanese brothels during the second world war. Japan apologised and said it would pay ¥1 billion ($8.3m) to help victims. + +The bodies of six American troops killed by a Taliban suicide-bomber near Bagram air base in Afghanistan were flown home. It was the deadliest attack on American personnel in the country in years. A sizeable contingent of troops is to remain in Afghanistan until at least the start of 2017. + +The season of goodwill extended to America’s House of Representatives, which passed a $1.8 trillion spending measure before Christmas with little argument and thus avoided a government shutdown. Paul Ryan, the new Speaker, was commended for his adroit handling of the bill. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21684815-world-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Jan 2nd 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21684817-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Latin America: Brazil’s fall + +Travel visas: Sticker shock + +Republican tax plans: Be serious + +Global inflation: Low and behold + +Internet security: When back doors backfire + + + + + +Articles Sections Next + +Latin America + +Brazil’s fall + +Disaster looms for Latin America’s biggest economy + +Jan 2nd 2016 | From the print edition + + + +AT THE start of 2016 Brazil should be in an exuberant mood. Rio de Janeiro is to host South America’s first Olympic games in August, giving Brazilians a chance to embark on what they do best: throwing a really spectacular party. Instead, Brazil faces political and economic disaster. + +On December 16th Fitch became the second of the three big credit-rating agencies to downgrade Brazil’s debt to junk status. Days later Joaquim Levy, the finance minister appointed by the president, Dilma Rousseff, to stabilise the public finances, quit in despair after less than a year in the job. Brazil’s economy is predicted to shrink by 2.5-3% in 2016, not much less than it did in 2015. Even oil-rich, sanction-racked Russia stands to do better. At the same time, Brazil’s governing coalition has been discredited by a gargantuan bribery scandal surrounding Petrobras, a state-controlled oil company. And Ms Rousseff, accused of hiding the size of the budget deficit, faces impeachment proceedings in Congress. + +As the B in BRICS, Brazil is supposed to be in the vanguard of fast-growing emerging economies. Instead it faces political dysfunction and perhaps a return to rampant inflation. Only hard choices can put Brazil back on course. Just now, Ms Rousseff does not seem to have the stomach for them. + +Dismal Dilma + +Brazil’s suffering, like that of other emerging economies, stems partly from the fall in global commodity prices. But Ms Rousseff and her left-wing Workers’ Party (PT) have made a bad situation much worse. During her first term, in 2011-14, she spent extravagantly and unwisely on higher pensions and unproductive tax breaks for favoured industries. The fiscal deficit swelled from 2% of GDP in 2010 to 10% in 2015. + +Brazil’s crisis managers do not have the luxury of waiting for better times to begin reform (see article). At 70% of GDP, public debt is worryingly large for a middle-income country and rising fast. Because of high interest rates, the cost of servicing it is a crushing 7% of GDP. The Central Bank cannot easily use monetary policy to fight inflation, currently 10.5%, as higher rates risk destabilising the public finances even more by adding to the interest bill. Brazil therefore has little choice but to raise taxes and cut spending. + +Mr Levy made a game attempt to renovate the building while putting out the fire. He trimmed discretionary spending by a record 70 billion reais ($18 billion) in 2015 and tightened eligibility for unemployment insurance. But it was not enough. The recession dragged down tax revenues. Ms Rousseff gave her finance minister only lukewarm support and the PT was hostile towards him. The opposition, intent on ousting the president, was in no mood to co-operate. + +Although he was a senior treasury official during Ms Rousseff’s disastrous first term, Nelson Barbosa may be able to accomplish more as finance minister. He has political support within the PT. He also has bargaining power, because Ms Rousseff cannot afford to lose another finance minister. One early test will be whether Mr Barbosa persuades a recalcitrant Congress to reinstate an unpopular financial-transactions tax. + +A central target should be pensions. The minimum benefit is the same as the minimum wage, which has risen by nearly 90% in real terms over the past decade. Women typically retire when they are 50 and men stop work at 55, nearly a decade earlier than the average in the OECD (a club of mostly rich countries). Brazil’s government pays almost 12% of GDP to pensioners, a bigger share than older, richer Japan. + +If Brazil is to fulfil its promise, much, much more is needed. A typical manufacturing firm spends 2,600 hours a year complying with the country’s ungainly tax code; the Latin American average is 356. Labour laws modelled on those of Mussolini make it expensive for firms to fire even incompetent employees. Brazil has shielded its firms from international competition. That is one reason why, among 41 countries whose performance was measured by the OECD, its manufacturing productivity is the fourth-lowest. + +To reform work and pensions, Ms Rousseff must face up to problems that have been decades in the making. Some 90% of public spending is protected from cuts, partly by the constitution which, in 1988, celebrated the end of military rule by enshrining generous job protection and state benefits. Because it is so hard to reform, Brazil’s public sector rivals European welfare states for size but emerging ones for inefficiency. Long a drain on economic vitality, Brazil’s overbearing state is now a chief cause of the fiscal crisis. + + + +Waxing and waning: Brazil's economic woes, in charts + +Overcoming such deep-rooted practices would be hard for any government. In Brazil it is made all the harder by a daft political system, which favours party fragmentation and vote-buying and attracts political mercenaries who have little commitment either to party or to programme. The threshold for a party to enter the lower house of Congress is low; today 28 are represented, adding to the legislative gridlock. Congressmen represent entire states, some as populous as neighbouring Latin American countries, which makes campaigning ruinously expensive—one reason why politicians skimmed off huge amounts of money from Petrobras. + +It is therefore hard, despite Mr Barbosa’s advantages, to feel optimistic about the prospects for deep reform. Voters hold politicians in contempt. The opposition is bent on impeaching Ms Rousseff, a misguided battle that could dominate the political agenda for months. The PT has no appetite for austerity. Achieving the three-fifths support in both houses of Congress needed for constitutional reforms will be a tall order. + +Reckless Rousseff + +And if Ms Rousseff fails to bring about change? Most of Brazil’s borrowing is in local currency, which makes default unlikely. Instead, the country may end up inflating away its debts. Brazil’s achievement has been to lift tens of millions of people out of rag-and-flip-flop poverty. Recession will halt that, or even begin to reverse it. The hope is that Brazil, which has achieved hard-won economic and democratic stability, does not lapse once again into chronic mismanagement and turmoil. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21684779-disaster-looms-latin-americas-biggest-economy-brazils-fall/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Travel visas + +Sticker shock + +They have their uses, but the burden visas impose on travellers and recipient countries is too high + +Jan 2nd 2016 | From the print edition + + + +VISAS are necessary evils. They offer governments a way to control their borders, whether to regulate the flow of immigrants or to pick out threats to security. But the paperwork and fees they entail also deter legitimate tourists and business travellers. Researchers at the Cato Institute, a libertarian think-tank, reckon that eliminating all travel visas to the United States would add between $90 billion and $123 billion in annual tourist spending. By one estimate, introducing visa restrictions can lower trade and foreign direct investment between a pair of countries by as much as 25%. + +The job of policymakers is to strike the right balance between such costs and benefits. On short-term business and tourist visas, they have failed. Take security. Visas, proponents say, keep countries safer by controlling who is able to enter. That is true, but they are not very efficient. Terrorists can be home-grown as well as foreign, qualify for visas (as the 9/11 attackers did) or slip across borders illegally. Imposing restrictions on the basis of nationality is the bluntest of instruments, scooping up legions of ordinary tourists and travellers as well as the occasional suspect. America’s decision to tighten the rules for anyone who has recently been to Iran, Iraq, Sudan and Syria will affect aid workers and plotters alike. + +It is a similar story with unauthorised migration. Identifying visitors who might overstay their welcome is a core duty of visa officers. Western countries often require several months’ bank statements, pay slips, proof of financial and property holdings, tax returns and letters from bosses promising that their employees will return (see article). These strictures also put off legitimate travellers. When Canada lifted visa requirements for Czech citizens in 2007, the number of Czech tourists jumped by a third; when restrictions were reintroduced in 2009, after a rise in asylum applications, arrivals fell by 70% over three years. Rather than gumming up all travel, it made more sense to process asylum claims faster. The rules have subsequently been relaxed again. + +Governments can take three steps to ease the burden of visas without simply throwing borders open to all-comers. The first is to slash the length of their forms. Britain, a grave offender when it comes to high fees and piles of paperwork, requires visa applicants to fill in a ten-page form, provide a list of every foreign trip over the past decade and declare that they have never incited terrorism to boot. This is absurd. Schengen-area bureaucrats in continental Europe manage to screen visitors in just two pages. America’s visa-waiver programme allows citizens of 28 countries to visit by filling out a simple online form with basic personal information. + +Second, government departments need to get better at sharing that information, both within borders and across them. Most big receiving countries now demand biometric data such as fingerprints and retinal scans. Many also require “advance passenger information” before a traveller is allowed to board an aeroplane. Cross-checking these data against intelligence and criminal databases will usually obviate the need for lengthy inquisitions. + +La visa loca + +Usually, but not always. Countries will want to investigate some applicants in greater detail. So the third step is to grant longer visas to those people who have easily cleared the necessary hurdles. America routinely grants ten-year visas; Europe routinely grants ten-day ones. That means travellers to the Schengen area must repeatedly prove their good intentions, leading to more otiose paperwork, and fewer visits. Necessary as they are, visas need not be so evil. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21684782-they-have-their-uses-burden-visas-impose-travellers-and-recipient-countries-too/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Republican tax plans + +Be serious + +The Republican candidates’ tax plans are welcome for their detail, but not their contents + +Jan 2nd 2016 | From the print edition + + + +A MONTH before the first primary contest in Iowa, the Republican race is more warlike than wonkish. Yet the candidates have found time to write sometimes intricate plans to reform America’s taxes (see article). Though no one blueprint will become law, if America chooses a Republican president, he may well have a Republican Congress to work with. At that point, the winner’s tax plan will seem less like a campaign gimmick and more like a promise to be kept. + +Republicans are right to seek to reform America’s incoherent, tangled-up tax system. America’s corporate tax is a toxic combination of a high rate—the highest in the OECD—and a series of complex distortions, which encourage bad behaviour such as gorging on debt and stashing cash in foreign subsidiaries. Republicans rightly want to cut the rate and put an end to most of the distortions. Marco Rubio and Jeb Bush would also let businesses deduct the cost of their investments from their taxes immediately, rather than as their assets deteriorate and lose value. This would encourage investment and boost economic growth. + +The candidates have interesting ideas for helping low earners, too. Mr Bush and Donald Trump want to raise the standard deduction (the amount Americans can earn before paying income tax). That would be a simple way to encourage work and to help low- and middle-income households: a similar policy has proved a success in Britain. Mr Bush would also double the earned-income tax credit, a wage top-up for low-earners, for childless workers. Mr Rubio wants to replace the standard deduction with a universal payment to those in work, which would help even those who earn too little to benefit from an increased tax allowance. + +These ideas, though, are mere footnotes to the plans’ central chapters: huge tax cuts for high earners. At 39.6%, America’s top federal income-tax rate is hardly high by global standards. Yet the candidates are racing to see who can promise to cut it most. Mr Bush aims for 28%; Mr Trump 25%. Ted Cruz wants to replace income tax entirely with a 10% flat tax and a value-added tax. Mr Rubio, whose promise of a 35% top rate seems timid by comparison, serves up largesse elsewhere by promising to abolish levies on capital gains and dividends. + +The first problem with these schemes is their cost. On today’s growth forecasts, even Mr Bush’s relatively moderate plan would reduce revenues by $715 billion, or 13.5%, a year by 2026—more than the projected national defence budget. Paying for Mr Trump’s plan with reduced day-to-day spending (as opposed to mandatory spending on things like pensions and health care) would require cutting budgets by a staggering 82%. + +The candidates claim that tax cuts will spur the economy, filling the government’s coffers with new revenue. But the pace of any economic acceleration is uncertain. The evidence that income-tax cuts for high earners boost growth is thin at best. Predictions that tax cuts in the early 2000s would cause enough growth to pay for themselves look foolish today. + +This is no time to be taking chances with America’s budget. Retiring baby-boomers are increasing the cost of providing pensions and health care for the old. There is no appetite among Republicans for defence cuts, and other day-to-day spending has already been cut by 22% in real terms since 2010. If tax cuts were paid for with more borrowing rather than lower spending, they would end up as deadweight for the economy rather than as fuel. + +The plans would also greatly exacerbate inequality, which has increased in the 15 years since George W. Bush cut taxes for high earners. Under Mr Trump’s plan, for instance, the top 1% of earners would receive a windfall worth 18% of their after-tax income. Middle-earners have to settle for a 5% boost; the bottom fifth, just 1%. This belies Mr Trump’s claim to champion the cause of ordinary working people. The other plans are little better; Mr Rubio’s plan is probably more generous at the bottom than at the top, but he gives middle-income Americans little to cheer about. + +The Republicans have spent much of Barack Obama’s presidency denouncing debt and deficits. Yet their proposals to introduce unaffordable tax cuts for the rich would send both ballooning. So long as such schemes are a prerequisite for winning the Republican nomination, a party that prides itself on economic management will lack a credible policy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21684780-republican-candidates-tax-plans-are-welcome-their-detail-not-their-contents-be/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Global inflation + +Low and behold + +Another year of low prices will create strains in the world economy + +Jan 2nd 2016 | From the print edition + + + +ECONOMISTS don’t forecast because they know, said J.K. Galbraith; they forecast because they’re asked. A question that is increasingly put to them is whether inflation, which has been remarkably quiescent for years, will spring a surprise in 2016. After all, the debt troubles that have weighed down rich economies since 2007 are fading; labour markets in America, Britain and Germany are increasingly tight; housing markets are gathering steam; and the Federal Reserve has just raised interest rates for the first time in almost a decade. + +Inflation in America and Europe should indeed pick up from its present, near-zero state as the big declines in energy prices at the turn of 2015 drop out of the headline rate. But a glut in the supply of crude means that oil prices are falling again. If debt is receding as a problem in rich countries, it looms larger in emerging markets, where overcapacity brought on by binge-borrowing exerts a downward force on prices. There is inflation in commodity-exporting countries, such as Brazil, whose currencies have been trashed. But global inflation is a tug-of-war between bottlenecks in parts of the rich world and imported deflation from emerging markets, and the enduring fall or stagnation of prices looks set to dominate for a while yet (see article). Indeed, this “lowflation” means that three aspects of the world economy are worth watching in 2016. + +Start with Saudi Arabia. The falling price of crude is in part a consequence of its commitment (reiterated by OPEC ministers on December 4th) to produce at full tilt. The idea is to flush out the weaker producers in America’s shale-oil industry and elsewhere. This is proving a costly gambit. Saudi Arabia needs a barrel of oil to fetch around $85 to finance public spending and around $60 to keep its current account in balance. Yet the oil price recently fell below $36, to an 11-year low, before rebounding a little. America has sustained oil production of above 9m barrels a day, despite a sharp fall in the number of oil rigs, suggesting that shale firms are becoming more efficient. + +This week Saudi Arabia said that it would cut local subsidies on petrol, electricity and water in order to chip away at a budget deficit that reached 367 billion riyals ($98 billion), or 15% of GDP, in 2015. The Saudis are burning through their (ample) foreign-exchange reserves to pay for imports while maintaining the riyal’s peg with the dollar. But the cost of this strategy has already forced two other oil exporters, Kazakhstan and, more recently, Azerbaijan, to abandon their dollar pegs. The public finances of other big oil producers, such as Russia and Nigeria, are also under pressure. No wonder a devaluation of the riyal this year is a favoured tail-risk for currency forecasters. + +A second place to watch is China. A construction boom has left it with a mountain of debt and excess capacity in some industries—notably steel, whose falling global price has claimed jobs in Europe’s industry and led to growing complaints of Chinese dumping. Factory-gate prices have fallen in China for 45 consecutive months. Further fiscal and monetary stimulus should help to boost demand, but will also hinder the management of China’s exchange rate, which is already under pressure from an outflow of capital. + +As with the riyal, the yuan has just about kept pace with the dollar’s ascent over the past two years, leaving it looking expensive. Beijing has signalled that it wants to benchmark the yuan against a basket of currencies, and some forecasters expect a gradual decline in its value against the dollar in 2016. But there is an understandable fear that the yuan may slip anchor, potentially touching off a round of devaluations in Asia. + +A third outcome from continued lowflation will be increasingly lopsided economies in the rich world, particularly in America, where recovery is more advanced than in Europe. If productivity stays as weak as it has been recently, unemployment is likely to fall still further. At the same time, slow growth in emerging markets is likely to keep downward pressure on commodity prices and on their currencies. A strong dollar has already driven a wedge between the performance of America’s manufacturing and service industries. Further appreciation would make it harder for the Federal Reserve to push through more increases in interest rates. + +Strong on jobs, weak on prices + +All this would make for a strangely configured economy by the end of the year. An unemployment rate of 4%, a Fed Funds rate below 1%, an overvalued dollar, a strong housing market and inflation below the Fed’s target of 2% is a plausible, if very odd, mix, which could portend either a sudden burst of inflation or enduringly feeble demand (see article). An honest economist will admit the uncertainties in any forecast. But another year of lowflation will surely tax policymakers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21684781-another-year-low-prices-will-create-strains-world-economy-low-and-behold/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Internet security + +When back doors backfire + +Some spy agencies favour “back doors” in encryption software, but who will use them? + +Jan 2nd 2016 | From the print edition + + + +WITHOUT encryption, internet traffic might as well be written on postcards. So governments, bankers and retailers encipher their messages, as do terrorists and criminals. + +For spy agencies, cracking methods of encryption is therefore a priority. Using computational brute force is costly and slow, because making codes is far easier than breaking them. One alternative is to force companies to help the authorities crack their customers’ encryption, the thrust of a new law just passed in China and a power that Western spy agencies also covet. Another option is to open “back doors”: flaws in software or hardware which make it possible to guess or steal the encryption keys. Such back doors can be the result of programming mistakes, built by design (with the co-operation of the encryption provider) or created through unauthorised tinkering with software—or some combination of the three. + +The problem with back doors is that, though they make life easier for spooks, they also make the internet less secure for everyone else. Recent revelations involving Juniper, an American maker of networking hardware and software, vividly demonstrate how. Juniper disclosed in December that a back door, dating to 2012, let anyone with knowledge of it read traffic encrypted by its “virtual private network” software, which is used by companies and government agencies worldwide to connect different offices via the public internet. It is unclear who is responsible, but the flaw may have arisen when one intelligence agency installed a back door which was then secretly modified by another. The back door involved a faulty random-number generator in an encryption standard championed by America’s National Security Agency (NSA); other clues point to Chinese or British intelligence agencies. + +Decrypting messages that involve one or more intelligence targets is clearly within a spy agency’s remit. And there are good reasons why governments should be able to snoop, in the interests of national security and within legal limits. The danger is that back doors introduced for snooping may also end up being used for nefarious ends by rogue spooks, enemy governments, or malefactors who wish to spy on the law-abiding. It is unclear who installed Juniper’s back door or used it and to what end. + +Intelligence agencies argue that back doors can be kept secret and are sufficiently complex that their unauthorised use is unlikely. But an outsider may stumble across a weakness or steal details of it. America, in particular, has a lamentable record when it comes to storing secrets safely. In the summer it became known that the Office of Personnel Management, which stores the sensitive personal data of more than 20m federal employees and others, had been breached—allegedly by the Chinese. Some call that the biggest disaster in American intelligence history. It is rivalled only by the data taken by Edward Snowden, a former NSA contractor now living in Moscow. (The authorities responsible for airport security also let slip the details of master keys that can open most commercially available luggage—a form of physical back door.) + +Push back against back doors + +Calls for the mandatory inclusion of back doors should therefore be resisted. Their potential use by criminals weakens overall internet security, on which billions of people rely for banking and payments. Their existence also undermines confidence in technology companies and makes it hard for Western governments to criticise authoritarian regimes for interfering with the internet. And their imposition would be futile in any case: high-powered encryption software, with no back doors, is available free online to anyone who wants it. + +Rather than weakening everyone’s encryption by exploiting back doors, spies should use other means. The attacks in Paris in November succeeded not because terrorists used computer wizardry, but because information about their activities was not shared. When necessary, the NSA and other agencies can usually worm their way into suspects’ computers or phones. That is harder and slower than using a universal back door—but it is safer for everyone else. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21684783-some-spy-agencies-favour-back-doors-encryption-software-who-will-use-them-when-back/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On business, species, elections, whistleblowers, plurals, Donald Trump: Letters to the editor + + + + + +Articles Sections Next + +On business, species, elections, whistleblowers, plurals, Donald Trump + +Letters to the editor + +Jan 2nd 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + +Changing gears + + + +It is true that businesses need to make deliberate decisions about clock speed, and therefore strategy, according to their individual circumstances (“The creed of speed”, December 5th). Research for our recent book, “Your Strategy Needs a Strategy”, showed that competitive conditions overall have accelerated in some important respects. For example, the volatility of competitive rankings has increased several fold in many industries, and the five-year mortality rate for public corporations has increased from around 5% to over 30% in recent decades. + +However, a more important finding is that there has been a marked divergence in competitive conditions, requiring companies to adopt very different approaches to strategy according to what they face. Although short-term adaptive strategies are appropriate for some fast-moving, unpredictable businesses, others will be best served by more classical plan-based approaches. Furthermore, large companies will need to master the art of running strategies with different clock speeds in different parts of their business. + +One might say that businesses need not only an accelerator pedal, but a gearbox too. + +MARTIN REEVES + +Director + +BCG Henderson Institute + +New York + +I am amazed that your leader (“Hyperactive, yet passive”, December 5th) cited lengthening maturities of company bonds as evidence against corporate short-termism. Rather, that is evidence of companies locking-in historically low interest rates driven down by governments’ monetary policies. The proceeds of this low-cost debt have been used to repay high-cost debt, or to fund share buy-backs, both enhancing earnings per share in the short term. This is hardly value-creating for the economy at large. + +FRANK KNOWLES + +Clavering, Essex + +The data you presented to challenge the widely held view that the speed of business is increasing are not convincing. The measures chosen, such as years of job tenure, bond durations and length of shareholdings, merely capture the churn of business, not its speed. They capture how fast the engine of business is revving, but not its velocity. + +For time-based competition, the critical measures of speed are the response time to customers and the development time for new products and services. In most industries these dropped dramatically in the 1970s and 1980s. + +JOSEPH BLACKBURN + +Professor of operations management, emeritus + +Vanderbilt University + +Nashville, Tennessee + + + + + +Invasive species + + + +Although eradicating invasive species is indeed difficult (“Day of the triffids”, December 5th), the primary goal of most management efforts is to reduce their damage. In the case of invasive brown tree snakes on Guam, the economic and ecological damage is clear. Only two of the 12 native forest-bird species remain, $4m is lost a year in productivity from the snakes electrocuting themselves on power lines and one out of 1,000 emergency-room visits is from a snake bite. If the snakes were to colonise Hawaii, the estimated damage could be as high as $2 billion a year. + +It is important to note the difference between exotic and invasive species. The latter cause great harm ecologically and economically. But there are numerous exotic species, such as rainbow trout, which are not considered invasive. We agree that a knee-jerk reaction to all exotic species is not the best policy. However, when an exotic species becomes injurious and its costs high, investing in control measures is justified. + +LARRY CLARK + +Director + +USDA National Wildlife Research Centre + +Fort Collins, Colorado + + + + + +Legitimacy at the polls + +Venezuela’s Bolivarian revolution was “resoundingly rejected” in the recent parliamentary election, you say (“A democratic counter-revolution”, December 12th). Yet the defeated party of President Nicolás Maduro got 41%. That was a larger share of the vote than the 37% that the victorious Conservatives gained in Britain’s election last May. + +JULIA BUXTON + +Professor of comparative politics + +Central European University + +Budapest + + + + + +Rewarding whistleblowers + + + +Whistleblowing has increased because of the success of American whistleblower-reward programmes (“The age of the whistleblower”, December 5th). These programmes offer monetary awards, confidentiality and job protection. In 2015 British regulators failed to enhance their anti-fraud efforts in the financial industry when they decided against introducing such incentives. My law firm has been contacted by dozens of people in Britain hoping to participate in American whistleblower programmes. + +In instances where their claims did not fall under American jurisdiction, every one of them chose to keep quiet rather than contact British regulators. Without the potential for financial rewards, not one was willing to risk his livelihood by stepping forward. + +In the financial world, it’s all about risk versus benefit. For whistleblowers, it’s the same calculation. + +ERIKA KELTON + +Phillips & Cohen LLP + +Washington, DC + + + + + +Plural sex + +According to Dennis Baron’s Web of Language Distinguished Usage Panel, singular “they” is the word of the year. + +But I may not be the only one of your readers to be troubled by the ambiguity of a proposition in “Pot luck”: + +“I have to be closely attached to someone before I am comfortable having sex with them” (December 12th). + +RONALD MACAULAY + +Claremont, California + + + + + +Better than the primaries + +The qualities associated with strong leadership are well known. Potential business leaders are often evaluated on their verbal and non-verbal IQ, communication skills, temperament, physical fitness and health, and the ability to handle stressful situations. + +Rather than dwelling on the buffoonery of Republican candidates for president (“The greatest show on earth”, December 5th), why not call for formal leadership testing? Those who are likely to excel will relish in brandishing their credentials. Those who refuse testing would be branded cowards. Those who are tested and perform poorly would be exposed and humiliated, giving the voting public a picture of their true calibre. + +GOUTHAM RAO + +Clinical associate professor + +Pritzker School of Medicine + +University of Chicago + + + +I was relieved to read of Nate Silver’s calculation that only about 6-8% of the electorate—roughly equal to the proportion who think the moon landings were faked—really support Donald Trump. + +Can I assume we are talking about the same 6-8%? + +JOSEPH FRAZIER + +Yachats, Oregon + +* Thank you, thank you, thank you. Despite repeated scrutiny, the cover of The World in 2016 does not reveal a likeness of Donald Trump. The future looks brighter already. + +CLIFF FELDWICK + +Columbia, Maryland + +* Letter appears online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21684762-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Brazil’s crisis: Irredeemable? + + + + + +Articles Sections Next + +Brazil’s crisis + +Irredeemable? + +A former star of the emerging world faces a lost decade + +Jan 2nd 2016 | RIO DE JANEIRO | From the print edition + + + +THE longest recession in a century; the biggest bribery scandal in history; the most unpopular leader in living memory. These are not the sort of records Brazil was hoping to set in 2016, the year in which Rio de Janeiro hosts South America’s first-ever Olympic games. When the games were awarded to Brazil in 2009 Luiz Inácio Lula da Silva, then president and in his pomp, pointed proudly to the ease with which a booming Brazil had weathered the global financial crisis. Now Lula’s handpicked successor, Dilma Rousseff, who began her second term in January 2015, presides over an unprecedented roster of calamities. + +By the end of 2016 Brazil’s economy may be 8% smaller than it was in the first quarter of 2014, when it last saw growth; GDP per person could be down by a fifth since its peak in 2010, which is not as bad as the situation in Greece, but not far off. Two ratings agencies have demoted Brazilian debt to junk status. Joaquim Levy, who was appointed as finance minister last January with a mandate to cut the deficit, quit in December. Any country where it is hard to tell the difference between the inflation rate—which has edged into double digits—and the president’s approval rating—currently 12%, having dipped into single figures—has serious problems. + +Ms Rousseff’s political woes are as crippling as her economic ones. Thirty-two sitting members of Congress, mostly from the coalition led by her left-wing Workers’ Party (PT), are under investigation for accepting billions of dollars in bribes in exchange for padded contracts with the state-controlled oil-and-gas company, Petrobras. On December 15th the police raided several offices of the Party of the Brazilian Democratic Movement (PMDB), a partner in Ms Rousseff’s coalition led by the vice-president, Michel Temer. + +Brazil’s electoral tribunal is investigating whether to annul Ms Rousseff’s re-election in 2014 over dodgy campaign donations. In December members of Congress began debating her impeachment. The proceedings were launched by the speaker of the lower house, Eduardo Cunha (who though part of the PMDB considers himself in opposition) on the grounds that Ms Rousseff tampered with public accounts to hide the true size of the budgetary hole. Some see the impeachment as a way to divert attention from Mr Cunha’s own problems; Brazil’s chief prosecutor wants him stripped of his privileged position so that his role in the Petrobras affair can be investigated more freely. Mr Cunha denies any wrongdoing. + + + +Brazil is no stranger to crises. Following the end of two decades of military rule in 1985, the first directly elected president, Fernando Collor, was impeached in 1992. After a “lost decade” of stagnation and hyperinflation ended in the mid-1990s the economy was knocked sideways by the emerging-markets turmoil of 1997-98. In the mid-2000s politics was beset by the scandal of a bribes-for-votes scheme known as the mensalão (“big monthly”, for the size and schedule of the payments), which eventually saw Lula’s chief of staff jailed in 2013. + +Yet rarely, if ever, have shocks both external and domestic, political and economic, conspired as they do today. During the original lost decade global conditions were relatively benign; in the crisis of the late 1990s the tough measures to quell inflation and revive growth taken after Mr Collor’s departure stood Brazil in moderately good stead; when scandal rocked the 2000s commodity markets were booming. + +A sad convergence + +Now prices of Brazilian commodities such as oil, iron ore and soya have slumped: a Brazilian commodities index compiled by Credit Suisse, a bank, has fallen by 41% since its peak in 2011. The commodities bust has hit economies around the world, but Brazil has fared particularly badly, with its structural weaknesses—poor productivity and unaffordable, misdirected public spending—exacerbating the damage. Regardless of what she may or may not have done with respect to the impeachment charge, Ms Rousseff’s cardinal sin is her failure to have confronted these problems in her previous term, when she had some political room for manoeuvre. Instead, that term was marked by loose fiscal and monetary policies, incessant microeconomic meddling and fickle policymaking that bloated the budget, stoked inflation and sapped confidence. + +Poor though her record has been, some of these problems have deeper roots in what is in some ways a great achievement: the federal constitution of 1988, which enshrined the transition from military to democratic rule. This 70,000-word doorstop of a document crams in as many social, political and economic rights as its drafters could dream up, some of them highly specific: a 44-hour working week; a retirement age of 65 for men and 60 for women. The “purchasing power” of benefits “shall be preserved”, it proclaims, creating a powerful ratchet on public spending. + + + +Since the constitution’s enactment, federal outlays have nearly doubled to 18% of GDP; total public spending is over 40%. Some 90% of the federal budget is ring-fenced either by the constitution or by legislation. Constitutionally protected pensions alone now swallow 11.6% of GDP, a higher proportion than in Japan, whose citizens are a great deal older. By 2014 the government was running a primary deficit (ie, before interest payments) of 32.5 billion reais ($13.9 billion) (see chart). + +Mr Levy tried to live up to the nickname he had earned during an earlier stint as a treasury official—“Scissorhands”—with record-breaking cuts of 70 billion reais from discretionary spending. But Mansueto Almeida, a public-finance expert, points out that this work was more than countered by constitutionally mandated spending increases; government expenditure as a share of output rose in 2015. On top of that, a new scrupulousness in government accounting surely not unrelated to the impeachment proceedings has seen 57 billion reais in unpaid bills from years past newly recognised by the treasury. + +Nor could Mr Levy easily fill the fiscal hole by raising taxes. Taxes already consume 36% of GDP, up from a quarter in 1991. And the recession has hit tax receipts hard. On December 18th, days after Fitch, a rating agency, followed the lead of Standard & Poor’s in downgrading Brazilian debt, Mr Levy threw in the towel. His job went to Nelson Barbosa, previously the planning minister, who insists he is committed to following the same policies. But before his elevation Mr Barbosa made no secret of favouring a more gradual fiscal adjustment—for example, a primary surplus of 0.5% of GDP in 2016, against Mr Levy’s preferred 0.7% (and an original promise of 2% a year ago). The real and the São Paulo stockmarket tumbled on news of his appointment. + +Analysts at Barclays, a bank, expect debt to reach 93% of GDP by 2019; among big emerging markets only Ukraine and Hungary are more indebted. The figure may still seem on the safe side compared with 197% in Greece or 246% in Japan. But those are rich countries; Brazil is not. As a proportion of its wealth Brazil’s public debt is higher than that of Japan and nearly twice that of Greece. + +Unable to increase taxes, Ms Rousseff’s government may prefer something even more troubling to investors and consumers alike: inflation. Faced with the inflationary pressure that has come with the devalued real, the Central Bank has held its nerve, increasing its benchmark rate by three percentage points since October 2014 and keeping it at 14.25% since July in the face of the recession. But despite this juicy rate the real continues to depreciate. + +There is a worry that the bank may be unable to raise rates further for fear of making public debt unmanageable—what is known as “fiscal dominance”. This year the treasury spent around 7% of GDP servicing public debt. What is more, raising rates may have the perverse effect of stoking inflation rather than quenching it; an increasing risk of default as borrowing costs grow is likely to see investors dumping government bonds, provoking further currency depreciation. + +A handful of economists, including Monica de Bolle of the Peterson Institute for International Economics, believe that Brazil is on the verge of fiscal dominance. And once interest rates no longer have a hold on inflation, she says, it can quickly spiral out of control. Forecasts by Credit Suisse warn that prices could be rising by 17% in 2017. Three-quarters of government spending remains linked to the price level, embedding past inflation in future prices. That said, the economy as a whole is much less indexed than it was in the hyperinflationary early 1990s. That leaves the government a bit more time, thinks Marcos Lisboa of Insper, a university in São Paulo. But not much more: perhaps a year or two. + +Despite this pressing economic need for speed there seems to be no political capacity for it. Members of Congress are consumed by Ms Rousseff’s impeachment. By February they must decide whether to send her case to the Senate, which would require the votes of three-fifths of the 513 deputies in the lower house. To fend off such a decision Ms Rousseff is rallying her left-wing, anti-austerity base. + +Gently doesn’t always do it + +These efforts are meeting with some success: in December pro-government rallies drew more people than anti-government ones for the first time all year. It looks unlikely that the impeachment will indeed move to the Senate (which would trigger a further six months of turmoil). But this hardly provides a political climate conducive to belt-tightening, let alone to the amendment of the constitution which Mr Barbosa has said is needed to deal with the ratchet effect on benefits. Fiscal adjustment is anathema to the government workers and union members who are Ms Rousseff’s core supporters. + +Like the country’s economic problems, its political ones, while specific to today’s particular scandals and manoeuvring, can be traced to the transition of the 1980s. History reveals a consistent tendency towards negotiated consensus at Brazil’s political watersheds; it can be seen in the war- and regicide-free independence declared in 1822, the military coup of 1964, which was mild compared with the blood-soaked affairs in Chile and Argentina, and the transition that created the new constitution. One aspect of this often admirable trait is a resistance to purging. The mid-1980s saw a lot of institutions—the federal police, the public prosecutor’s office, the judiciary, assorted regulators—overhauled or created afresh. But many of the old regime kept their jobs in the civil service and elsewhere. The transition was thus bound to be a generational affair. + + + +So it is now proving, with a retiring old guard being replaced by fresh blood often educated abroad. In 2013 the average judge was 45 years old, meaning he entered university in a democratic Brazil. Civil servants are getting younger and better qualified, says Gleisson Rubin, who heads the National School of Public Administration. More than a quarter now boast a postgraduate degree, up from a tenth in 2002. Sérgio Moro, the crusading 43-year-old federal judge who oversees the Petrobras investigations, and Deltan Dallagnol, the case’s 35-year-old lead prosecutor, are the most famous faces of this new generation. + +Unfortunately, this rejuvenation does not extend to the institution most in need of it: Congress. Its younger faces typically have family ties to the old guard. “Party politics is a market for lemons,” says Fernando Haddad, the fresh-faced PT mayor of São Paulo and a rare exception to the dynastic rule, nodding to George Akerlof’s classic analysis of adverse selection in the market for used cars: it attracts the venal and repels the honest. Consultants who have advised consecutive Congresses agree that each one is feebler than the last. + +Brazilians have noticed the decline, and are transferring their hopes accordingly. “Judges and prosecutors are becoming more legitimate representatives of the Brazilian people than politicians,” says Norman Gall of the Braudel Institute, a think-tank in São Paulo. Everyone wants a selfie with Mr Moro and, disturbingly, nearly half of Brazilians think that military intervention is justified to combat corruption, according to a recent poll. Barely one in five trusts legislators; just 29% identify with a political party. + +Monthly, oily, deeply + +That last fact is perhaps particularly impressive given that they have so many parties to choose from. Keen to promote pluralism the constitution’s framers set no national cut-off below which a party’s votes would not count. It is possible to get into Congress with less than 1% of the vote: in principle, it could be done with 0.02%. As a result the number of parties has grown from a dozen in 1990 to 28 today. The three biggest—the PT, the PMDB and the opposition centre-right Party of Brazilian Social Democracy (PSDB)—together account for just 182 of 513 seats in the lower house and 42 out of 81 senators. + +One of the causes of the mensalão scandal was corruption that provided Lula’s government with a way to get the votes it needed from the disparate small parties. The petrolão (“big oily”, as the Petrobras affair is widely known) apparently shared a similar aim. Such ruses may have helped PT governments pass some good laws, such as an extension of the successful Bolsa Família (family fund) cash-transfer programme. But the party was not able to do all that it had said it would; potentially helpful reforms in which it was less invested fell by the wayside. Raphael Di Cunto of Pinheiro Neto, a big law firm in São Paulo, points to many antiquated statutes in need of an update, such as the Mussolini-inspired labour code (from 1943) and laws governing foreign investments (1962) and capital markets (1974). + + + +A Congress in which dysfunction feeds corruption which feeds further dysfunction is not one likely to take the hard decisions that the economy needs. But this is the Congress Brazil has: though there will be local elections in October 2016, congressional elections, like the next presidential poll, are not due until 2018. Can Brazil’s public finances hold out that long? + +Many prominent economists think they just about can. They forecast a “muddling-through” in which Ms Rousseff holds on to her job, Congress passes a few modest spending cuts and tax rises, including a financial-transactions levy, the Central Bank continues to fight inflation, the cheap real boosts exports and investors don’t panic. After three years of this, the theory goes, an electorate fed up with stagnation and sleaze will give the PSDB a clear mandate for change. Ms Rousseff narrowly defeated the party’s candidate in 2014 by deriding his calls for prudence as heartless “neoliberalism”, only to propose a similar agenda (through gritted teeth) immediately after winning. If proposed by a PSDB in power that actually believed in them, such measures might receive cross-party support—though given the PSDB’s spiteful unwillingness to support Mr Levy’s measures in 2015 this would not be without irony. + +Such a scenario is possible. Figures for the third quarter of 2015 show exports picking up. Price rises could slow down as steep increases in government-controlled prices for petrol and electricity put in place in 2015 run their course. Politicians and policymakers are keenly aware that Brazilians are less tolerant of inflation than in the 1980s and 1990s, when rates of 10% would have seemed mild. + +Investors are staying put, at least in aggregate. Yield-hungry asset managers are taking the place of pension and mutual funds that left in anticipation of Brazil’s inevitable demotion to junk status. The real has fallen 31% since the start of 2015 and the stockmarket is down by 12.4%; but though battered they are not knocked flat. The banking system is well capitalised and, observers agree, diligently monitored by the Central Bank. The $250 billion in foreign-denominated debt racked up by Brazilian companies during the commodity-price-fuelled binge has ballooned in local-currency terms and remains a worry. But much of it is hedged through the firms’ own dollar revenues or with swaps—though settling some of those swaps has cost the government, which sold them, some 2% of GDP this year. + + + +Waxing and waning: Brazil's economic woes, in charts + +The sardonic Mr Lisboa observes with uncharacteristic optimism that “at last people are talking seriously about Brazil’s structural problems”. Fiscal dominance has left arcane discussions among economic theorists and burst onto newspaper columns. Mr Barbosa is openly discussing pension reform and the constitutional change that would have to go with it. In October the PMDB, which tends to lag behind public opinion more than to lead it, published a manifestothat talked about privatising state businesses and raising the retirement age. Even the famously stubborn Ms Rousseff has begun to listen rather than to hector, says a foreign economic dignitary who met her recently. + +But the fact that muddling through may be possible does not mean it is assured. It hinges on the hope that politicians come to their senses more quickly than they have done in the past (witness the lost decade begun in the 1980s). It also assumes that Brazil’s penchant for consensus will hold its people back from social unrest on the sort of scale that topples regimes in other countries. The anti-government protests of 2015 were large, drawing up to a million people in a single day. But they were middle-class affairs which took place on sporadic Sundays, causing Ms Rousseff more annoyance than grief. As wages sag and unemployment rises, though, tempers could flare. If they do there will be every chance of a facile populist response that does even deeper economic damage. + +Should Ms Rousseff be booted out—through impeachment, annulment of the election or coerced resignation (none of which looks likely just now)—chaos would surely ensue. Her core supporters may be less numerous than they once were, but she has many more than Mr Collor had in 1992. They would close ranks against the “coup-mongers”. + +The strength of Brazil’s institutions suggests something shy of the failed populist experiments of some South American neighbours. And the fact that voters in Argentina and Venezuela rebuffed that populism in the past few months has not escaped the notice of Brazil’s politicians. But every month of dithering and every new petrolão revelation chips away at Brazil’s prospects. The 2010s are already certain to be another lost decade; GDP per person won’t rebound for years to come. + +It will be a long time before a president can match the pride with which Lula showed off his Olympic trophy. But if Brazil’s politicians get their act together, the 2020s could be cheerier. Alas, if they do not, things will get a great deal worse. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21684778-former-star-emerging-world-faces-lost-decade-irredeemable/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Republican tax plans: Indecent disclosure + +Race on campus: Of slavery and swastikas + +Rating police officers: Revenge of the nerds + +Election forecasting: Prediction 2016 + +Lexington: Pitchfork politics + + + + + +Articles Sections Next + +Republican tax plans + +Indecent disclosure + +The Republican candidates’ tax proposals are exorbitant + +Jan 2nd 2016 | WASHINGTON, DC | From the print edition + + + +ASK Republicans how best to reform taxes, and they will inevitably mention Ronald Reagan. In 1986 the Gipper slashed levies on earnings; the highest income-tax rate tumbled from 50% to 28%. At the same time, Reagan simplified taxes by closing loopholes and killing off exemptions. Today’s Republican presidential contenders would dearly love to repeat the trick. But they have given up a key ingredient in the recipe. The 1986 reform cost nothing, mainly because taxes on businesses went up. In stark contrast, today’s Republican tax plans are jaw-droppingly expensive. + +American taxes are a mess. There are seven different rates of federal income tax, up from three after Reagan’s reform (in Canada there are four; in Britain, three). Endless exemptions and deductions cost just over 7% of GDP. These distort incentives and benefit mainly richer folk, but are hard to keep track of because their cost stays off the government’s books. Filling in tax returns takes the average non-business filer eight hours and costs $110 every year. By one recent estimate, the inconvenience costs of filing add up to 1.3% of GDP. + + + +Business taxes are no better. At 39%, the tax on corporate profits is the highest in the OECD. In reality, businesses pay less because of a whirlwind of incentive-distorting exemptions. Want to invest in America? Issue shares to finance your project, and your marginal tax rate ends up at 38%. Load up on risky debt and the rate plummets—in fact, you will benefit from a 6% subsidy. Across industries, average tax rates range from 40% for making software to 15% for building mineshafts. The World Bank and PricewaterhouseCoopers, an accounting firm, ranks America’s tax system 53rd in the world, wedged between Jordan and Vanuatu. It takes American businesses 87 hours, on average, to pay their taxes; in France it takes just 26 hours. + +Tax reform, then, is essential, and Republicans have embraced the cause. Among the presidential candidates, Jeb Bush has proposed the most detailed plan, and is cheered on by a crew of right-leaning economists. One thing keeping the plan on the shelf is that Mr Bush lags behind in the polls. But thanks to its detail—and the scrutiny poured on it as a result—it is a useful benchmark. + +Mr Bush rightly wants to reduce the number of income tax bands, to three. In doing so, though, he calls for a whopping reduction in the top rate of income tax to 28%, from 39.6% today. Mr Bush would slash the corporate tax rate to 20% and all but abolish the tax incentive to borrow. Today, if a firm buys a new computer or piece of machinery, it can knock the cost off its tax bill only incrementally as the new equipment loses value; but under Mr Bush’s plan it could deduct the full cost up-front. That should encourage investment. + +The plan is hugely expensive. Before accounting for its economic effects, it would cost $6.8 trillion, or 2.6% of GDP, over a decade, according to the Urban-Brookings Tax Policy Centre, a think-tank. About two-thirds of the bill comes from income-tax cuts. Cuts for high-earners are costly, because the highest-earning 1%—who would see a 12% increase in after-tax income under the plan—produce almost half of income-tax revenues. By 2026 the $715 billion annual cost of the plan exceeds the projected budget for national defence. + +The plan would wrench on purse-strings that are already stretched. By 2025 government health-care and pensions programmes will have nearly 60% more beneficiaries than in 2007. Mr Bush, like most Republicans, wants to increase rather than cut defence spending. And non-defence day-to-day spending has already been slashed by 22% in real terms since 2010. + +Mr Bush’s plan, then, looks unachievable. Incredibly, though, it is one of the most modest in the pack. Donald Trump, who tops opinion polls, wants to cut income taxes still further; under his plan, the top rate of tax falls to 25%. Whereas Mr Bush would nearly double the standard deduction, the amount that can be earned before paying income tax Mr Trump would quadruple it. The Donald would cut business taxes more aggressively, too. Though he talks about raising taxes on hedge-fund managers by removing the “carried interest” provision, Mr Trump’s cuts to income tax are so deep that the provision barely matters. In all, reckons the Tax Policy Centre, Mr Trump’s plan is almost 40% more expensive than Mr Bush’s. + +Must be funny + +Where to look for realism? Marco Rubio offers more modest income-tax cuts, but would eliminate most taxes on capital gains and company dividend payments. Many economists view these taxes as inefficient. Yet capital is mostly the preserve of the well-off: only a fifth of adults who earn less than $30,000 tell pollsters they have stockmarket investments, compared with nearly nine in ten who earn more than $75,000. Citizens for Tax Justice, an advocacy group, reckons Mr Rubio’s plan would make the pockets of the top 1% of earners bulge more than Mr Bush’s would. + + + +Teflon Trump: Donald Trump’s gravity-defying poll ratings + +Ted Cruz has the boldest plan. The Texan senator promises to replace all income taxes—including payroll taxes which fund Social Security and Medicare payments—with a 10% flat tax. Business taxes would be replaced with a value-added tax of 16%. This plan is roughly as expensive as the Bush plan, before accounting for its economic effects, according to the Tax Foundation, a right-leaning think tank. But it would be still more generous to the highest earners, as value-added taxes are less progressive than income tax. + +The candidates all say their plans will increase economic growth, boosting tax-revenues and dramatically bringing down costs. Mr Bush’s cheerleaders say his plan will add 0.5 percentage points to growth each year, knocking two-thirds off the so-called “static” cost. Mr Trump claims—with a straight face—that his plan is revenue-neutral. + +Done right, reforming and simplifying taxes would boost growth. Yet the gargantuan cost of the plans comes from tax cuts for high earners, and the evidence that these help the economy is patchy. Crucially, whether tax cuts boost growth depends on how they are paid for. If they cause deficits to gape larger, tax cuts will weigh on growth rather than support it, by gradually pushing up interest rates. + +There is better evidence that tax cuts for businesses help the economy. But that does not mean they would pay for themselves—as Mr Trump suggests—or make up for expensive giveaways elsewhere. The best evidence suggests that taxes on dividends, which Mr Rubio would abolish, have no effect at all on investment. More than most proposals, Republican tax plans are articles of faith. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21684808-republican-candidates-tax-proposals-are-exorbitant-indecent-disclosure/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Race on campus + +Of slavery and swastikas + +The University of Missouri’s efforts to placate protesters have created a backlash + +Jan 2nd 2016 | COLUMBIA, MISSOURI | From the print edition + +Where intersextionality meets microaggressive adultism + +WISHING for his death “in a fiery car accident” was only one of many messages directed at Chuck Henson when he became the University of Missouri’s new interim vice-chancellor for inclusion, diversity and equity. Mr Henson does not follow social media, but his wife does. Recently she agreed to stop reading the death threats and other missives intended for her husband, and instead to help him focus on his task, which is to end the racial turmoil that has made the university the centre of a nationwide campus protest movement over race for the past three months. + +“We have a unique history and we have a unique problem,” says Mr Henson, a law professor. Missouri was a slave state until 1865; its first public university was founded in 1839 by James Rollins, an owner of slaves. It first admitted black students only in 1950 (Yale’s first black student graduated in 1857, Harvard’s in 1870). The relations of African-Americans both with other students, and with the overwhelmingly white faculty, have frequently been uneasy. Anger boiled over in November, leading to the resignation of Tim Wolfe, the university’s president and chancellor, after weeks of protests by students outraged by what they saw as Mr Wolfe’s failure to deal with racism on campus. + +Offensive incidents last year included a swastika smeared with faeces on the wall of a dormitory bathroom and racial epithets hurled at black students, including Payton Head, the president of the student body. Cynthia Frisby, a member of faculty, recounted in a Facebook post how, when jogging along a road, a white man in a lorry flying the Confederate flag stopped, spat at her, delivered racist abuse, gave her the finger and drove off. “I have been called the N-word too many times to count”, she wrote, including, she says, by other members of faculty. The student protests gained momentum when Jonathan Butler, a graduate student, staged a hunger strike to force Mr Wolfe to resign. Yet the turning point was the announcement by members of the football team that they would not play or practise and boycott a game against Brigham Young University (BYU) unless Mr Wolfe stepped down. The footballers’ boycott of the game would have cost the university around $1m. + +Mr Wolfe was replaced as president of the university, temporarily, by Michael Middleton, a long-standing member of the law faculty and graduate of the university, who founded its Legion of Black Collegians in 1968. Mr Middleton promises to meet all the demands of “Concerned Student 1950”, the group of black students leading the protests, which include the creation of a “comprehensive racial awareness and inclusion curriculum” and an increase in black members of faculty to 10% from around 3%. Mr Middleton cautions, however, that some demands will be tricky to meet by the deadline the student group proposes, adding that he will explain why. + +Mr Middleton insists that racism at the University of Missouri, nicknamed Mizzou, is no worse than at other big universities. He calls the often inadvertent “micro-aggressions” against minority students a “national problem” that is embedded in American history, and adds: “We are the first in finding effective solutions.” So far that has meant a clean-out of the university’s leadership. Seven temporary officials, in addition to Mr Middleton, are now running the university, including Mr Henson and Hank Foley, Mizzou’s new interim chancellor. + +Yet while the university is making changes, the student protests have also set off a different kind of reaction. Kurt Bahr, a Republican state representative, says some of his constituents have told him that they regret attending Mizzou and do not want their children to go there, because they do not trust the new leadership of the university. One of his constituents even said that he feared for the safety of his daughter on campus thanks to the “instability” there. + +Mr Bahr co-sponsored a bill in December that would strip scholarships from any athlete who “calls, incites, supports or participates in any strike”, and would require colleges and universities to fine coaching staff who encourage them. The bill has been withdrawn since because its author, Rick Brattin, another Republican state lawmaker, realised that the state could not mandate the revocation of privately funded athletic scholarships such as the football scholarships at Mizzou. But Mr Bahr insists that the proposed bill “made its point”, which is that a strike is not a good way to cope with a possible systemic problem. “Are we promoting anarchy within our university system?” he asks. + +The backlash against the changes at Mizzou is likely to continue, led by self-styled defenders of the First Amendment (which protects free speech). Yet the First Amendment does not give people a free pass to go round saying hateful things, points out Mr Henson. To help students and faculty realise this, Mizzou has developed a new guide to “inclusive terminology” which ensures a healthy level of respect for all minority groups. It includes terms such as “adultism” (prejudice against the young), “minoritised” (when under-represented groups are made to feel inferior) and intersextionality (obscure). Some will see this stuff as movement in the right direction. But it is also likely to increase the ire of those who watched the protests and thought they saw a group of privileged college students complaining about how terrible their lot is. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21684819-university-missouris-efforts-placate-protesters-have-created-backlash/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Rating police officers + +Revenge of the nerds + +How one family of high-school students is policing the cops + +Jan 2nd 2016 | From the print edition + +Steve McGarrett, awaiting feedback + +THE Christian siblings were doing their homework when the police arrived. Two officers entered the house, guns drawn, pursuing what was evidently a prank tip-off about a captive being held at their address. The guns stayed out even when the mistake became apparent. The officers ran the details of the children’s father—who, like them, is black—through the police system on the off-chance of turning something up. + +The family was traumatised. The incident, in 2013, brought home to Ima Christian, now 18, that Americans could be vulnerable to rough policing “no matter where you live, or who you are”; her sister Asha, who is 16, says it is “not until you are face to face with an officer that you realise what the deal is.” The sisters—from Stone Mountain, just outside Atlanta—didn’t get even, exactly. Instead, with their brother Caleb (now 15), they developed an app, called Five-O, intended to help improve police behaviour and community relations. It lets citizens rate their experiences with officers, record both parties’ race and sex and the purpose of the interaction, and find aggregate scores for county forces. + +Five-O (a slang term for cops) was launched in 2014, but will get a boost this spring from the €20,000 ($22,000) prize it won at an international contest for justice-related initiatives, organised by a think-tank in the Netherlands. The money will go towards marketing the tool in Baltimore and Chicago. Attracting input from broad cross-sections of such communities is one of the ways the Christians believe they can neutralise an obvious potential bias—ie, that the ratings will be skewed by the aggrieved, legitimate as those grievances may sometimes be. That composite picture, combining good and bad feedback, is, they reckon, one of the ways their product differs from other police-related apps, which concentrate on uploading video. They also want to extend its availability from Android to iPhones. The long-term plan is to include Britain, Brazil, Canada and Russia, making Five-O, as Asha puts it, “a global repository of unbiased police data”. + +That is an ambitious goal for teenagers who mostly taught themselves to code. (Their parents used to work for an internet start-up and, Caleb recalls, noticed youngsters “getting paid insane amounts of money” for programming.) In 2016 they aim to launch another app through their firm, Pinetart Inc: this one, Coily, lets women rate hair-care products, and so avoid shower-stall accumulations of half-empty bottles. Studies permitting, that is. Ima is a freshman at Stanford University; Asha—who is finishing high school online, to free up time for enterprise—hopes to join her or go to Columbia. “I’m very proud of them,” says their mother Karen. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21684818-how-one-family-high-school-students-policing-cops-revenge-nerds/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Election forecasting + +Prediction 2016 + +How Jesse Jackson inadvertently revived political betting + +Jan 2nd 2016 | NEW YORK | From the print edition + + + +IF YOU believed the pollsters, America’s 2012 presidential election looked like a nail-biter. Most national surveys had Mitt Romney and Barack Obama tied; Gallup, the country’s oldest scientific polling outfit, had the challenger ahead, 49% to 48%. When the votes were counted, however, Mr Obama won by four percentage points. To many political pundits, as to Mr Romney, Mr Obama’s margin of victory came as a shock. Among bettors, however, it barely elicited a shrug: prediction markets, in which punters wager on the outcomes of elections, had always considered the incumbent a heavy favourite. An Irish bookmaker, Paddy Power, was so confident of his chances that it paid out £400,000 ($640,000) two days before the election to people who had bet on Mr Obama. Will this trick be repeated in 2016? + +Though now a fringe asset class, prediction markets are in fact among the oldest exchanges in America. In the 1820s prominent supporters of candidates frequently offered public wagers on them as a demonstration of their conviction. Punters who could not afford to pony up cash would compensate with offers of public humiliation: one common wager made losers trundle winners around in a wheelbarrow; another required them to roll peanuts up and down streets with toothpicks. Some losers had to eat real crow. + +Half a century later, these expressions of bravado had evolved into semi-formal financial markets. Trading volume began to approach that of actual shares: in 1916 $10m ($218m in today's prices) was wagered on the photo-finish race between Woodrow Wilson and Charles Hughes. The markets were wrong that year, predicting a win for Hughes. But in 11 of 12 elections between 1884 and 1940 when bettors had identified a clear favourite by mid-October they were vindicated, despite operating in an era without any reliable polling. Newspapers diligently reported presidential betting odds: according to Paul Rhode and Koleman Strumpf, the economists who unearthed the records of these markets, the press published prices five days a week in the month before an election. + +The death knell for the electoral markets of yesteryear sounded in 1936, when George Gallup of the American Institute of Public Opinion stationed pollsters on street corners and asked passers-by whom they would vote for, thus obtaining a random sample. The well-known Literary Digest survey, which relied on readers mailing in postcards, had over-sampled the well-off and called the election for the Republican Alf Landon, while Gallup accurately predicted an easy victory for the incumbent, Franklin Roosevelt. Punters were not fooled by the Digest’s “poll”, and also forecast that Roosevelt would win. But the dawn of scientific polling made gambling odds look amateurish, and allowed newspapers to publish campaign updates without having to cite markets of dubious legality and (in their view) morality. + +Nonetheless, the markets might have soldiered on had history not conspired against them. The industry was centred in New York, and during the second world war Fiorello La Guardia, the city’s mayor, launched a crackdown on unauthorised gambling. His raids drove political bookmakers deep underground or out of town. At the same time, competing forms of wagering began to offer alluring substitutes. In 1939 the state legalised betting on horse races, allowing punters to slake their thirst for action dozens of times a day rather than once every four years, without any risk that a bookie would fail to pay out. + +By the late 1940s, what was once an eight-figure marketplace had all but vanished. Electoral betting would not make a comeback until 1988, when Jesse Jackson defied expectations to win Michigan’s Democratic presidential primary. His victory highlighted how unreliable polls could be, and led a group of professors at the University of Iowa to hunt for an alternative. Though unaware of prediction markets’ pre-war history, they reinvented the idea by setting up an “Iowa Political Stock Market”, in which students and faculty could wager modest sums on the upcoming general election. Four years later, America’s Commodity Futures Trading Commission (CFTC) authorised the Iowa Electronic Markets to take money from the public because they were at heart an academic enterprise, though the regulators capped bets at $500 to prevent speculation with meaningful sums. + +For the next 20 years the IEM consistently out-performed polls in various executive, legislative, national and local elections in a dozen different countries. But the logistical difficulty of placing bets on the exchange (particularly before internet access became widespread), along with the low wagering ceiling, limited it to trivial volumes of a few hundred thousand dollars a year. It was not until 2008, after the internet had globalised both information and financial flows, that pre-war prediction markets found a worthy heir. + +During the 2004 presidential campaign an Irish sports-betting site called Intrade started taking bets without the low limits of the IEM. Even though credit-card companies in America would not process deposits to the site, punters flocked to it. A whopping $230m was wagered on the 2012 election—an even greater sum in constant dollars than on the Hughes-Wilson contest of 1916. And like its predecessors, Intrade was deadly accurate. Its markets correctly predicted the results of 47 of the 50 states in the election of 2008, and 49 of 50 in 2012. + +But just like the street-corner action of the 1930s, Intrade soon came under legal scrutiny. In November 2012 the CFTC ordered the site to stop offering contracts on the price of goods under the agency’s oversight, such as oil and gold. Four months later, the risks of investing in Intrade’s unregulated marketplace were laid bare when the site abruptly shut down after it dipped into its clients’ funds to transfer money to its late founder. It took months for account-holders to be made whole. The site’s untimely demise provided fresh ammunition for those who regard prediction markets as unsavoury speculation. + +The collapse of Intrade did not annihilate prediction markets, though. The IEM is alive and well, and in late 2014 PredictIt, an online exchange sponsored by Victoria University of Wellington in New Zealand, entered the fray with an $850 wager cap and official authorisation from the CFTC. But these operations still fall far short of realising prediction markets’ full potential. Their low betting limits prevent investors with extremely valuable information—say, a looming scandal—from cashing in on the value of their knowledge and incorporating it into the market price. + +At the time of writing, PredictIt reckons that the fight for the Republican nomination is between Ted Cruz and Marco Rubio, and that Hillary Clinton has a 54% chance of becoming the next president. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21684798-how-jesse-jackson-inadvertently-revived-political-betting-prediction-2016/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Pitchfork politics + +A pioneer of Trump-style populism wonders if it can succeed in today’s America + +Jan 2nd 2016 | From the print edition + + + +BEFORE Donald Trump, there was Patrick Buchanan. More than two decades before Mr Trump kicked over the Republican tea table, Mr Buchanan, a former speechwriter and White House aide to Presidents Richard Nixon and Ronald Reagan, launched his own revolt against Republican grandees. He made bids for the Republican presidential nomination in 1992 and 1996, the first of which challenged a sitting president, George H.W. Bush. Like his billionaire successor, Mr Buchanan ran against free trade and called for restrictions on immigration. As early as 1991 he called for a fence on the border with Mexico (talk of a “great, great” wall would have to wait for Mr Trump). + +On foreign policy, the end of the cold war turned him into a non-interventionist. Mr Buchanan—who in 1972 accompanied Nixon on his trip to Maoist China—now concluded that America should shun foreign entanglements and defend only vital national interests. In January 1991 Mr Buchanan found himself speaking in New Hampshire during the American-led operation to expel Iraqi forces from Kuwait, which he opposed. Stepping from the podium, he was given a message: America had just started bombing Baghdad. There goes my non-interventionist line, he recalls telling the watching governor of New Hampshire, Judd Gregg: it is “all over once the bombs begin to drop”. Mr Bush’s approval ratings rose to 90%. Yet by the time of the 1992 election the president was not saved by victory in the Gulf. + +Timing matters—a political lesson that Mr Buchanan learned early. He was one of the first aides to describe a new voter coalition that Nixon might assemble. This would unite business bosses with doctrinaire conservatives, southern whites, socially conservative Roman Catholics and middle Americans who liked such government safety nets as pensions for the old, but despised Democrats for seeming to condone social unrest—whether race riots, campus radicals or flag-burning protesters opposed to the war in Vietnam. In a memo of 1968 Mr Buchanan spoke of a “silent majority” to be won. Nixon made the phrase his own. + +Today Mr Trump calls his own supporters a “silent majority”, though his borrowing comes with a twist. In the late 1960s Nixon asked the “great silent majority” for their support. In 2015 the businessman assumes he has already sealed the deal. Printed signs handed out at his rallies declare: “The silent majority stands with Trump”. Asked about the slogan’s Nixonian overtones by the Washington Post, Mr Trump denied the connection, scoffing: “Nah. Nobody remembers that.” + +Speaking in his home in northern Virginia, Mr Buchanan does not grumble about Mr Trump’s swiping of his phrase. He is too interested in a new question of political timing. As a candidate, he was less successful than as an adviser. His high point was his win in the 1996 New Hampshire primary, after a populist surge that saw him declare: “The peasants are coming with pitchforks.” A full-size silver pitchfork (a gift from campaign aides) hangs in his wood-panelled study, alongside a souvenir mug that asks: “What would Nixon Do?” + +Back in the 1990s moderate Republicans agreed that Candidate Buchanan was doomed by his ferocious opposition to abortion, homosexuality and feminism: in 1992 he told his party’s national convention that America faced a “cultural war”. He also caused alarm with intemperate talk about Israel’s clout in Washington. Today, though, he argues that his timing was off when it came to three big issues: immigration, globalisation and non-interventionism. “Those issues are mature now,” says Mr Buchanan, rattling off statistics on undocumented immigrants in America (their numbers have more than tripled since 1991) and factory closures since such pacts as the North American Free Trade Agreement (NAFTA) was signed. At 77, Mr Buchanan writes newspaper columns and is a frequent public speaker. He reports that people “constantly” voice the same complaint to him: “This isn’t the country I grew up in.” He lists reasons why he thinks they are right: immigrants have reached even small communities, factory jobs have vanished and interventionist wars launched by George W. Bush left Americans “with ashes in our mouths”. + +Mr Buchanan was called a fringe candidate, a protectionist and an isolationist in the style of the America First Committee, which argued against declaring war on Nazi Germany. Now today’s frontrunner, Mr Trump, echoes his scorn for free-trade pacts and nation-building overseas, and praises Vladimir Putin (Mr Buchanan has long admired the Russian president’s ethno-nationalism). Senator Ted Cruz of Texas, Mr Trump’s big rival on the hard right, recently said: “I believe in an “America first” foreign policy.” + +The silent majority, outnumbered + +Yet Mr Buchanan cannot conceal a thought that grieves him. Evidence to support his beliefs is, to him, now irrefutable. But if he was early in the 1990s, demographic and cultural shifts now make it too late to rally the conservative majorities that elected Nixon or Reagan. If given $100 to bet on the Republican nomination, Mr Buchanan would put at least $40 on Mr Trump and at least $30 on Mr Cruz, whom he compares to an earlier “down-the-line” conservative, Barry Goldwater (who lost the 1964 presidential election by a landslide). If he were Mr Trump, he would attack Hillary Clinton over free trade in rustbelt states such as Ohio, Pennsylvania and Michigan that are key to winning the White House. He would tell voters that “she and her husband” backed NAFTA and deals that “sent your jobs overseas”. No other Republican has Mr Trump’s potential to win some blue-collar Democrats, he says: “It is hard to see how Cruz, for example, takes Ohio.” For all that, he thinks the odds probably favour Mrs Clinton to win the election. Either way he sees a country “at war with itself ideologically and politically, culturally”, triggering a measure of foreign policy “paralysis”. If even half-right, it is a bleak prediction: America first nationalism, in a divided America. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21684799-pioneer-trump-style-populism-wonders-if-it-can-succeed-todays-america-pitchfork/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Human rights in El Salvador: Digging for justice + +Argentina’s new president: A fast start + + + + + +Articles Sections Next + +Human rights in El Salvador + +Digging for justice + +Survivors of wartime atrocities are questioning the country’s amnesty + +Jan 2nd 2016 | EL MOZOTE | From the print edition + + + +ONE afternoon eight months ago in the mountains of eastern El Salvador, Rosario Sánchez peered into a pit where forensic experts were at work. They were unearthing human remains—two skinny leg bones, several ribs and two halves of a skull. One held up a thin chain hardened with blood and soil. Ms Sánchez gasped. “My sister loved that necklace,” she said. + +Over three days in December 1981 soldiers from the Salvadorean army, who had been trained by the United States, machinegunned hundreds of unarmed men, women and children in the village of El Mozote and surrounding hamlets. It was the worst atrocity committed during the 12-year-long war between leftist guerrillas and El Salvador’s right-wing government, in which some 75,000 Salvadoreans died. No one has been punished for the massacre, and almost no one has been held to account for any other human-rights crime committed during the conflict. An amnesty law in 1993 shielded perpetrators on both sides from prosecution, and helped make a political settlement possible. + +As the exhumations in La Joya, near El Mozote, show, the amnesty is being called into question. El Salvador’s Supreme Court is considering a constitutional challenge to it. The court ruled in 2000 that the amnesty does not apply to violations of “fundamental” rights, but left it to judges and prosecutors to decide which crimes are grave enough to qualify. + +Some human-rights advocates argue that impunity for war crimes is one reason why El Salvador has the world’s highest murder rate, although other factors, such as the lack of economic opportunity, undoubtedly also play a role. “The same system that was incapable of investigating human-rights violations has found itself incapable of confronting post-war violence and crime,” says David Morales, El Salvador’s Human Rights Ombudsman. + +The country’s post-war reconciliation was in many ways exemplary. Both sides disarmed, the army shrank and the security forces were transformed into a civilian police. After the war’s end in 1992, a UN Truth Commission spent six months investigating “serious acts of violence”. It registered 22,000 complaints, 85% of them against the armed forces, paramilitary groups and right-wing death squads. Their left-wing foe, the Farabundo Martí National Liberation Front (FMLN), was accused in 5% of the cases. The commission’s report blamed the army’s elite Atlacatl battalion for the murder of six Jesuit priests in 1989 and for the El Mozote massacre, among other findings. + +For the leaders of post-war El Salvador, the commission’s revelations were justice enough. Five days after its report was published the government enacted the amnesty law. It is one of the few things on which both leftist and conservative politicians agree. “We chose peace over justice,” says Mauricio Vargas, a retired general who represented the army in the peace process. Without the amnesty, “the whole building comes crashing down.” Salvador Samayoa, who represented the guerrillas, warns that if the left demands trials of former military officers the right will go after ex-guerrillas, including the president, Salvador Sánchez Céren. He was a commander of the FMLN, which became a political party after the war. + +Other countries in Latin America, perhaps surer that their democracies are stable, are testing whether justice in the courts will jeopardise peace. In Guatemala, a UN–backed commission to investigate corruption has strengthened the justice system. That helped make it possible for prosecutors to bring several human-rights cases, including against the former dictator, Efraín Rios Montt. Colombia, which is close to a peace agreement with leftist FARC guerrillas, whom it has been fighting for more than 50 years, will not offer a general amnesty, although just how criminals will be punished has yet to be decided. + +Not even past + +The United States, once a haven for criminals from Latin America’s wars, has changed its stance. It is seeking to deport José Guillermo García, a former Salvadorean defence minister, on charges that he bears responsibility for the El Mozote massacre and the murder in 1980 of three American nuns and a lay worker. A proposed $750m aid package for three Central American countries sets as one condition that governments must prosecute soldiers and police officers suspected of human-rights violations, including past war crimes. + +In El Mozote daily reminders of the atrocity keep alive the demand for an accounting. One farmer, digging the foundation for a new house, recently uncovered skeletons of 15 of his relatives. He recognised his mother’s skull from the crown on a tooth. Still isolated and poor, the village trades on its tragedy: locals sell mementos of the massacre at stalls near the site and jostle to relate the story to tourists in exchange for small tips. + +The demand for justice is chipping away at El Salvador’s amnesty. In 1990 relatives of the victims, helped by Tutela Legal, a human-rights group, filed a suit at the Inter-American Court of Human Rights. Twenty-two years later the court ordered El Salvador’s government to investigate the massacre, punish the culprits and compensate victims’ relatives. El Salvador’s then-president, Mauricio Funes, admitted the state’s responsibility and, weeping publicly, begged forgiveness. A trickle of aid to El Mozote followed: a clinic, computers for the school and road repairs. + +But the messy conduct of the exhumation shows how little official enthusiasm there is for investigation and punishment. The human-rights unit of the attorney-general’s office, which promised in 2013 to investigate El Mozote and seven other massacres, put in charge of the dig a systems engineer with no formal training in excavation. Work started in the rainy season, when floods threatened to damage DNA evidence. The villagers received no advance notice, and at first no counselling from psychologists. Instead of healing wounds, the investigation reopened them, their lawyers said. + +The intervention of the government’s forensics agency, the Legal Medicine Institute, improved matters, and showed that the government’s apparent hostility to the investigation is not uniform. The agency assigned three Canadians—two anthropologists and an archaeologist—to help with the excavation. The attorney-general’s office sought to undermine the three women, claiming that they were unqualified. The director of the human-rights unit, Mario Jacobo, declined to comment on the conduct of the excavation. He recently lost responsibility for it. A judge suspended it after two weeks of digging, and said it should resume under the direction of the Legal Medicine Institute. Work is likely to restart in early 2016. + +Although opinion may be shifting, many Salvadoreans are loth to unpick an amnesty that has served the country well in many ways. There is speculation that the Supreme Court will strike a compromise: uphold the amnesty law, but compel prosecutors and judges to pursue violations of fundamental rights, rather than leaving the decision to them, as its earlier ruling did. On November 23rd six members of the United States House of Representatives sent a letter to legislators in El Salvador urging them to choose a “new attorney-general focused on defeating corruption and organised crime”. This was widely interpreted as a slap at the incumbent, Luis Martínez, who hopes to be re-elected by El Salvador’s Congress. + +The families of El Mozote hope that pressure to investigate and punish today’s crimes will lead to prosecutions for past atrocities. In December laboratory tables in the San Salvador headquarters of the Legal Medicine Institute were covered with the bones of Ms Sánchez’s murdered relatives. Brittle and brown, they lay among bundles of tattered clothing and stacks of rusted coins. Other tables displayed larger, lighter-coloured bones. They belonged to unidentified victims of recent gang violence. The government—and probably still most Salvadoreans—think going after today’s murderous gangs should be the priority: 95% of murders are unsolved. To the survivors of El Mozote, both groups of victims are entitled to the same justice. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21684820-survivors-wartime-atrocities-are-questioning-countrys-amnesty-digging-justice/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Argentina’s new president + +A fast start + +Mauricio Macri’s early decisions are bringing benefits and making waves + +Jan 2nd 2016 | BUENOS AIRES | From the print edition + +Nice sash, horrible inheritance + +MAURICIO MACRI, who took office as Argentina’s president in December, has wasted little time in undoing the populist policies of his predecessor. On December 14th he scrapped export taxes on agricultural products such as wheat, beef and corn and reduced them on soyabeans, the biggest export. Two days later Alfonso Prat-Gay, the new finance minister, lifted currency controls, allowing the peso to float freely. A team from the new government then met the mediator in a dispute with foreign bondholders in an attempt to end Argentina’s isolation from the international credit markets. + +This flurry of decisions is the first step towards normalising an economy that had been skewed by the interventionist policies of ex-president Cristina Fernández de Kirchner and her late husband, Néstor Kirchner, who governed before her. They carry an immediate cost, which Mr Macri will seek to pin on the Kirchners. Some of the new president’s other early initiatives are proving more controversial. + +The economic reforms seem to be working. Farmers who had hoarded grain in the hope that the tariffs would be lifted are now selling, replenishing foreign-exchange reserves that had been drained to defend the artificially strong peso. The newly freed currency fell by more than 30%, a further boost to exporters. It has stabilised at around 13 pesos to the dollar. “Substantive” talks with holdout bondholders starting in early January could lead to a return to credit markets in 2016. + +But the devaluation has pushed up the inflation rate, already more than 25% when Mr Macri took office. To rein it back, on December 15th the central bank raised interest rates on short-term fixed deposits by eight percentage points to 38%. The government hopes to persuade business and trade-union leaders to keep tight control of prices and wages. But that may prove difficult: the unions are fragmented and little disposed to help Mr Macri, a centre-right politician; businesses may balk at holding down prices. Barclays, a bank, expects the economy to contract by 1.1% in 2016. But increased foreign investment should lead to renewed growth of 3.5% in 2017. + +Mr Macri’s attempts to bring fresh talent into institutions dominated by Ms Fernández’s kirchneristas have run into resistance, from both foes and allies. On December 14th, with the Senate in recess, Mr Macri temporarily appointed by decree two Supreme Court judges. He then booted out the chief of the media regulator, Martín Sabbatella. + +In both cases his motives were worthy. He wants independent jurists in the courts. Mr Sabbatella had clashed with Grupo Clarín, a big media group. Mr Macri thinks his removal will strengthen press freedom. But critics say he misused his authority. On the judges, at least, he has relented. He will now wait for the Senate’s approval. + +Touring northern Argentina, where 20,000 people have been displaced from their homes by floods, Mr Macri blamed the former president, saying she had failed to invest in flood defences (see article). For now, Argentines are likely to believe their new president. However, if the economic slowdown is prolonged, the honeymoon will not be. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21684823-mauricio-macris-early-decisions-are-bringing-benefits-and-making-waves-fast-start/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Japan, South Korea and their history wars: Saying sorry for sex slavery + +Family planning in Vietnam: Running deer + +Thailand’s southern insurgency: No end in sight + +Simplifying Indian taxes: One country, but no single market + + + + + +Articles Sections Next + +Japan, South Korea and their history wars + +Saying sorry for sex slavery + +A surprise deal over forced prostitution during the war may soothe troubled relations between two democratic neighbours + +Jan 2nd 2016 | TOKYO | From the print edition + + + +THE bronze statue of a teenage “comfort woman” in Seoul, South Korea’s capital, is intended as a daily rebuke to the Japanese embassy opposite. The figure represents one of many thousands of Korean women who were forced to serve as prostitutes in wartime military brothels catering to imperial Japanese soldiers. Citizens’ groups paid for the figure to be erected in 2011 when relations between Japan and South Korea were at a nadir. Well-wishers bring her flowers, shoes and, in stormy weather, even a hat and raincoat. Yet now the statue is meant to move elsewhere as part of a landmark agreement struck between the two countries on December 28th to try to settle their dispute over comfort women once and for all—and transform dangerously strained relations. + +Of former sex slaves who have come forward in South Korea, only 46 survive. Under the deal, South Korea will set up a fund for them into which the Japanese government will pay $8.3m for their medical and nursing care. The Japanese prime minister, Shinzo Abe, has expressed “sincere apologies and remorse” for their suffering, which was appalling. In all, there were tens of thousands of comfort women. Many were raped dozens of times a day, beaten and infected with venereal diseases. + +It is a big change for Mr Abe, who has in the past questioned whether the comfort women were coerced at all. But he hopes to have found what the two countries’ foreign ministers called a “final and irrevocable” resolution to an issue that has poisoned the relationship for years. South Korea’s president, Park Geun-hye, hailed the deal—hastened by the two leaders’ first bilateral meeting in November—as a key to improved relations. + +The administration of Barack Obama is cock-a-hoop that its two closest Asian allies are making up. It had long pressed South Korea to do so. Better relations between the two should help America’s strategy to balance China’s rise. + +But some South Korean policymakers had also grown uneasy that relations with Japan were at a dead end and—though they would not say it out loud—that Ms Park sometimes seemed to hew too closely to China. Meanwhile, a stronger trilateral relationship with Japan and America would help in dealing with dangerous North Korea. It has taken time for Ms Park to see all this, and her family history helps explain why. Her late father, Park Chung-hee, was a star officer in the Japanese imperial army, and later the South Korean dictator who normalised relations with Japan. These were liabilities for the cautious Ms Park as anti-Japanese hysteria grew. + +A question now is whether a deal will hold. Some of Japan’s loony ultranationalists will feel betrayed by Mr Abe. But he is too politically dominant at home to be worried by that. Besides, the government can argue that saying sorry does not imply legal responsibility, which was settled in Japan’s normalisation treaty with South Korea in 1965. “We didn’t give an inch,” says a government adviser. Indeed, one observer critical of Japan’s attitudes towards history, Tessa Morris-Suzuki of the Australian National University, says that the agreement rows back from the landmark Kono statement of 1993, Japan’s first official acknowledgment of wartime coercion. For it refers only to the imperial army’s “involvement” in the recruitment of comfort women, while excluding references to the use of deception or force. + +The agreement is more likely to face problems in South Korea. Groups representing the survivors say that the women were not consulted, and at least one of them has already railed against it as a betrayal. South Korean activists will oppose moving the statue, something Japan cares deeply about. Calls may grow for Mr Abe to come and make a personal apology to survivors, rather than through Ms Park. Whether he would swallow his pride to do so is unclear. Chung-in Moon of Yonsei University in Seoul says it is a fragile deal born of diplomatic necessity. + +Make it work + +Yet both sides have good reason to try to make it stick, for the bilateral relationship could quickly improve, on military matters as well as others. For instance, an agreement to share military intelligence that was scuppered in 2012 could be revived. The benefits could also show in trade diplomacy, with Japan and America working together to bring South Korea into the Trans-Pacific Partnership, a free-trade grouping recently agreed among a dozen countries. With luck, the idea of two democracies in a dangerous corner of the world not talking to each other will soon look too absurd to go back to. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21684758-surprise-deal-over-forced-prostitution-during-war-may-soothe-troubled-relations-between-two/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Family planning in Vietnam + +Running deer + +A draft population law looks ill-considered and discriminatory + +Jan 2nd 2016 | HANOI | From the print edition + +Voiding the topic ain’t gonna stop it + +BRIGHTLY coloured plastic flowers greet patients at the reception desk of Nguyen To Hao’s abortion clinic. Yet the mood in her waiting room is grim. Ms Hao, an obstetrician and gynaecologist, says that many of her patients are teenagers who know shockingly little about sex or its consequences. Some young women with late-term pregnancies are sent to a nearby hospital for abortions; others carry their pregnancies to term and leave their newborn babies in the care of Buddhist monks. + +Unwanted pregnancies could be avoided if only Vietnam had better sex education in secondary schools. A Vietnamese adage claims that avoiding discussions of sex is the surest way to “prevent the deer from running”. Yet the deer are “already running”, Dr Hao insists, and the government is failing to guide them. + +Vietnam’s abortion rate is not known for certain, but is thought to be among the world’s highest. According to researchers at the Central Obstetrics Hospital in Hanoi, the capital, two-fifths of all pregnancies in Vietnam end in abortion—double the government’s tally. + +Ignorance about sex and contraception is one glaring factor. Some women who have abortions never meant to get pregnant. Others desperately wanted a boy, since male children keep the family bloodline going and are traditionally expected to look after their elderly parents. Sex-selective abortions have been illegal since 2003, but the ban is hard to enforce. Ultrasounds are widely available. Nguyen Thi Hien, a mother of two in Hanoi, says that for $75 doctors at the capital’s private clinics are happy to tell couples the sex of their fetus. + +So for every 100 girls, 111 boys are born in Vietnam, according to the UN Population Fund—a sex ratio at birth nearly as lopsided as neighbouring China’s. Vietnam’s Communist Party worries that this sex imbalance will leave a generation of men struggling to find a mate. As in other societies with lots of frustrated single men, that may mean more trafficking and prostitution, more rape and a greater risk of political instability. + +Vietnam’s reproductive and demographic policies are in flux. China’s recent decision to relax its one-child policy may prompt Vietnam to reconsider its own (more loosely enforced) two-child policy, says a former official from Vietnam’s health ministry. The ministry is now soliciting public comments for a revision of that law, and the National Assembly may take it up this spring. + +It is not a moment too soon. A whopping two-thirds of the country’s 90m people are of working age. That gives Vietnam a chance to boom economically over the next three decades. But the “demographic dividend” may then stop abruptly. Fertility rates in some Vietnamese cities have fallen to below the population replacement rate, a trend that could eventually lead to a shortage of workers, as Japan and other rich countries have learnt to their cost. The difference is that Vietnam risks growing old before it grows rich. + +The new population law, in its current wording, would not help. It proposes to leave the two-child policy in place and ban abortion after 12 weeks, down from the current limit of 22 weeks, except in cases of rape. That may send even more pregnant Vietnamese into shadowy abortion clinics. In September some 17 public-health professionals complained about the proposed law in a letter to the health minister. Such pressure may prompt the government to extend the proposed 12-week limit. + +However, the population-control measures being mulled by the ministry contain another troubling feature: a pre-natal focus on “population quality”. That sounds harmless enough, but the underlying idea, according to a foreign health-policy expert in Hanoi, is that health officials could encourage mothers to abort fetuses showing signs of disability. + +Some in the ministry have also proposed lifting the two-child policy in cities while continuing to enforce it in the countryside—ie, encouraging the better-educated and better-off to have more children while denying the same right to poor folk, including ethnic minorities, who view their children and grandchildren as their only social safety net. That would allow the bureaucrats in charge of the two-child policy to keep their jobs. But the idea is regressive, unfair and needs to be junked. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21684813-draft-population-law-looks-ill-considered-and-discriminatory-running-deer/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Thailand’s southern insurgency + +No end in sight + +A southern village tries to remain united as divisions elsewhere grow + +Jan 2nd 2016 | TOH CHUD | From the print edition + +He’s backed by a fat budget + +SITTING on the floor with neighbours, Sakariya uses a mobile phone to flick through photos of his son. In one, Kholid stands dressed in his school uniform. In another he sits hunched over his university work. In a third he is dead—lying cold on a mortuary slab. The picture was taken in March, only hours after soldiers surrounded a group of men at a construction site in Toh Chud, their home in Thailand’s restive south. Seven bullet holes perforate his chest. + +Kholid was one of four to die that day—victims of a botched operation seeking to collar murderous separatists who for years have dreamed of resurrecting an independent sultanate in Thailand’s southern borderlands. Nearly two dozen villagers were detained and interrogated but later released. The men who were shot may have tried to run, perhaps for fear of being found with soft drugs on them. A fact-finding panel says the killings were an error. Compensation is promised. But what the families want is justice, says Mohammad, another parent whose son is among the dead. + +Toh Chud up in the hills had mostly managed to escape the nightmares suffered by so many communities in Thailand’s southernmost provinces. Of 2m-odd people in the region, over four-fifths are ethnic-Malay Muslims. Hotheads among them have long agitated against the Thai government in Bangkok and its policies of assimilation—denying the region autonomy, for instance, and even recognition of the local Malay language. In 2004 secretive insurgent groups began a campaign of exceptionally violent attacks on security forces as well as on their own Buddhist neighbours. + + + +Since then about 6,500 people have died in this lush coastal strip, most of them civilians. Terrorists have bombed shops and restaurants and murdered scores of schoolteachers, who are seen as agents of the state; victims’ bodies are sometimes beheaded or set alight. Moderate ethnic-Malays considered to be collaborators are also targets. On December 13th an ethnic-Malay Thai soldier and his father were blown up in a graveyard, where they had gone to bury his mother. + +State violence has done much to boost the body count. The apparent legal immunity enjoyed by trigger-happy soldiers and pro-government vigilantes continues to radicalise new generations of combatants. Kholid’s family say his killers placed an assault rifle next to his body to make him look like an insurgent. + +Over the past decade seven Thai governments, swept in and out of power by broader political problems, have grasped for a resolution. Officials say that regional autonomy of the type that has soothed Islamist insurgencies in Indonesia and the Philippines is off the table. But so are smaller concessions, such as formal recognition of the region’s odd Malay language. Some argue that the fat budget the security forces get to prosecute the conflict gives them little incentive to end it. Three checkpoints clog the road out of Pattani, a seaside town, each manned by a different force. + +Some energy has gone into boosting the deep south’s economy, which depends greatly on its rubber trees. Though it remains far poorer than Bangkok, the region is not as hard-up as some other far-flung parts of Thailand. But locals tend to compare their fortunes with those of ethnic kin across the border in Malaysia, where laws grant the Malay majority a host of advantages over ethnic-Chinese and Indian minorities. Christopher Joll, an academic, says the region is like “meat in a sandwich”, squeezed by inflexible nationalisms from either side. + +Thailand’s ruling junta, which had said it would try to fix the conflict by the end of 2015, trumpets progress. Lured by the promise of fresh peace talks, a gaggle of once-shadowy separatist groups has formed a common political wing. The violence has ebbed markedly in recent months. But Don Pathan, a local security analyst, speculates that militants may be swapping frequent small assaults for better planned and more lethal ones. As for dialogue, hardliners within BRN, the most powerful rebel group, say they will play no part in the junta’s proposed talks. + +Peace-builders on the ground complain that it is getting harder to discuss unpopular solutions. The army has long refused to countenance international mediation, one of the separatists’ principal demands, for fear of legitimising separatist claims. And it is hardly likely to consider devolving powers when it is busily recentralising the state, in part to neuter the government’s opponents in other provinces and in part to keep a lid on the dissent which may follow a looming royal succession. + +Matt Wheeler of the International Crisis Group, a research outfit, thinks the generals are simply “kicking the can down the road”. Yet that carries two risks. Although the insurgents have largely rejected international jihadism, some people fret that Islamic State’s flashy propaganda may yet find an audience among the region’s unhappy young. Lately someone in cyberspace has been adding Thai subtitles to the jihadists’ video-nasties. + + + +In graphics: Explaining Thailand’s volatile politics + +A deeper worry is that the bubbling southern war may fuel Buddhist chauvinism. Perhaps a tenth of Thais are Muslim, most of them living well-integrated lives far from the conflict zone. On a recent public holiday girls in black headscarves cycled cheerfully around the Haroon mosque, one of Bangkok’s oldest, which was festooned with royal flags. Yet Thailand’s Muslims are gradually growing more conservative under the influence of Middle Eastern doctrines, which unnerves their Buddhist compatriots. And some people think that Buddhist authorities are growing more strident as the influence of Thailand’s royal establishment, which has traditionally checked them, begins to wane. In October a senior Buddhist monk said that Thais should set fire to a mosque every time southern “bandits” kill a monk. + +The locals gathered at the house in Toh Chud worry that outsiders are seeking to sow division. Unlike nearby ghettos, their village of 300 households includes 30 Buddhist families, and the tragedy in March has tightened their village bonds. On the day of the raid local Buddhists helped to conceal one young man who had escaped the soldiers’ cordon. + +As lunch approaches, Somkhuan, a Buddhist who once served as village headman, joins the group for a smoke. When his daughter got married he threw two parties, his neighbours recall enthusiastically, one of them halal. Such good relations are not a big deal, Somkhuan says: it has always been this way. But what if Toh Chud started to become the exception? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21684829-southern-village-tries-remain-united-divisions-elsewhere-grow-no-end-sight/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Simplifying Indian taxes + +One country, but no single market + +India’s excitable politics is blocking the best chance of promoting growth + +Jan 2nd 2016 | DELHI | From the print edition + + + +NARENDRA MODI likes to make a splash abroad. On December 25th he turned up in Pakistan, the first visit by an Indian prime minister in more than a decade, for an impromptu summit with his counterpart, Nawaz Sharif. At home, though, Mr Modi appears less impressive. Despite his Bharatiya Janata Party (BJP)’s thumping general-election victory in 2014, his promises of business-friendly reforms are stuck. + +The passage of an all-embracing value-added tax, known as the goods and services tax (GST), has become the litmus test of his liberalising credentials. It is the one reform that both the BJP and the opposition Congress party ostensibly agree on. Raising funds for both the federal government at the centre and the states, it is meant to replace a monstrous excrescence of taxes, duties, surcharges and cesses levied by the centre, the states and local authorities—a system that fragments the economy and gives huge scope for corruption by officials and politicians. Replacing most taxes with a GST would, for the first time, create a single market in India—of 1.3 billion people. + +The latest and perhaps most promising attempt to pass the necessary constitutional amendment failed with the closing of the winter session of parliament in December. Mr Modi will try again in the budget session, which opens in February. But if he is to succeed, he will have to overcome India’s cynical politics. + +The economy grew at a pleasing annualised rate of 7.4% from July to September—faster than China’s. Yet many economists cast doubt on the official figures, and Mr Modi’s attempt to boost manufacturing is not making much progress. Indeed, the best chance of turning his slogan of “Make in India” into reality is through a single market—“Make in India by Making One India”, as a recent government report put it. + +The existing system, senior officials say, taxes production more than consumption and, in effect, subsidises importers at the expense of domestic producers. Perversely, trade between states is taxed, through a central sales tax of 2%. Some states also impose duties on products entering from elsewhere in India. Lorries are held up at internal checkpoints (see picture). + +An executive from a prominent Indian firm explains that, because trade between one state and another is subject to the central sales tax while the transfers of inventory are not, his company has set up warehouses in every state to avoid the tax. And because duties paid on inputs often cannot be claimed back, there is a “cascade” of taxes levied upon previous ones. Among other things, it discourages investment in machinery. “The entire ecosystem”, he says, “works to optimise tax, not productivity.” + +One study suggests that a “flawless” GST—with a single rate for all goods and services, and minimal exemptions—could boost Indian growth by anything between 0.9 and 1.7 percentage points a year. Another benefit would be to create a paper trail and an incentive for firms to declare transactions in order to claim tax credits, so reducing overall tax evasion. + +Attempts to streamline indirect taxes date back to liberalisations in the 1990s, yet moves towards forms of value-added taxes have been partial at best. A version of a more encompassing GST bill was passed by the lower house in May. Unwisely, it postponed imposing the tax on oil products (a vital input) till an unspecified future date. It exempted alcohol entirely. That these two categories currently account for a large share of states’ revenues (and of illicit party funding) is no coincidence. The bill also still stipulates a temporary central sales tax, of 1%, on interstate trade. + +Even this watered-down law has been stuck in Parliament’s upper house, where the BJP lacks a majority. When Congress was in office, its own attempt to introduce a GST was blocked by the BJP. Now it acts as the spoiler. Congress rightly objects to the central sales tax. But its demand that the constitution should enshrine a maximum rate for the GST of 18% makes little sense. (A third demand is for a different mechanism to resolve disputes over the working of the tax.) + +For more than a year Mr Modi haughtily ignored the opposition. He no doubt hoped that the momentum from his general-election victory would carry him to wins in subsequent state elections, automatically sending delegates to the upper house and giving him a majority there, too. But lately the BJP has been defeated in key places, most recently in Bihar, the third-most-populous state. + +So Mr Modi has become a bit humbler. He belatedly invited Sonia Gandhi, president of Congress, and Manmohan Singh, his predecessor as prime minister, to tea in the hope of finding a deal on a GST. A committee led by the finance ministry’s chief economic adviser, Arvind Subramanian, offered some concessions: scrapping the central sales tax and setting two bands for the GST (a standard rate of 17-18% and a lower 12% rate for certain sensitive goods) which are within Congress’s declared ceiling. The committee also proposed that alcohol as well as property transactions should be subject to the GST; in return, states could levy “sin taxes” on things like alcohol and tobacco of up to 40%. + +Taxing times + +The committee’s report appeared to bring a much-improved GST bill within reach. But Congress took to disrupting the upper house. The cause of its rowdy outrage at first was the government’s “intolerance” of minorities (especially Muslims); then a minister’s allegedly derogatory remarks about low-caste dalits; then the BJP’s supposed “vendetta” in a court wrangle involving Mrs Gandhi, her son Rahul, and the allegedly corrupt disposal of a failed party newspaper; and lastly the party’s demand that the finance minister, Arun Jaitley, should step down over claims of corruption in cricket. + +Congress might have claimed victory in forcing Mr Modi to see sense over the GST, even as it challenged his excesses. Instead it chose obstructionism. If he is to secure any economic legacy, Mr Modi may now have to spend more time on the art of buttering up opponents at home rather than fellow leaders abroad. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21684824-indias-excitable-politics-blocking-best-chance-promoting-growth-one-country-no-single/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Social media: Weibo warriors + +Economic ideology: Reagan’s Chinese echo + + + + + +Articles Sections Next + +Social media + +Weibo warriors + +The Communist Party’s battle with social media is a closely fought one + +Jan 2nd 2016 | From the print edition + + + +ON DECEMBER 25th, some three years after taking over as China’s leader, Xi Jinping posted his first tweet. For a man clearly rattled by the rapid spread of social media, and grimly determined to tame them, the venue was fitting. Uniformed military officials stood around as he typed his message into a computer in the office of an army-run newspaper (see picture). His new-year greeting was not to China’s more than 660m internet users, but to the armed forces—most of whose members are banned from tweeting. + +It was clearly in part to intimidate feistier members of the country’s online community that the authorities arrested one of the country’s most prominent civil-rights activists, Pu Zhiqiang, in 2014 and eventually put him on trial on December 14th. On the basis of seven messages posted on Weibo, China’s heavily censored version of Twitter, Mr Pu was charged with “picking quarrels and stirring up trouble” as well as “inciting ethnic hatred”. The court handed down a three-year suspended prison sentence, which means that Mr Pu will not be allowed to continue his widely acclaimed work as a lawyer (less than three years ago, he was the subject of a laudatory cover story in a state-controlled magazine). “It was not the worst outcome, but it set the most odious of precedents,” said a Weibo user in Beijing in a message to his nearly 57,000 online followers. + +Mr Xi is the first Chinese leader to come to power amid the rapid growth of a middle class whose members are equipped with a powerful means of airing dissent and linking up with like-minded malcontents. He inherited an army of internet censors, but despite his efforts to give them more legal muscle (the country’s first counter-terrorism law, passed on December 27th, includes restrictions on the reporting of terrorist incidents), Mr Xi is still struggling. Support for Mr Pu both online and off has shown the scale of the challenge he faces. Some had feared that Mr Pu would be jailed for years. It is possible, in the face of huge support for the activist and a lack of strong evidence, that officials blinked. + +Napping net nannies + +Social-media messages relating to Mr Pu were quickly purged from the internet. Yet it is likely that some were seen by many people before disappearing. Some sensitive postings were retweeted by users with large followings before they were eventually deleted, suggesting that censors occasionally failed to keep up. “If you can be found guilty on the basis of a few Weibo postings, then every Weibo user is guilty, everyone should be rounded up,” wrote a Beijing-based journalist to his more than 220,000 followers. “I don’t understand the law, but I do know that [handling Mr Pu this way] was absolutely against the spirit of rule by law,” said Zhang Ming, a politics professor in Beijing, to his following of nearly 790,000 people. + +Mr Pu’s prosecutors also provided evidence of the censors’ weaknesses. They said one of his allegedly criminal messages, which suggested that a terrorist attack in 2014 may have reflected failings in the government’s policies in the western region of Xinjiang, had garnered 1,930 retweets—remarkable given Mr Pu’s well-known propensity to criticise officialdom. + +Outside the court, dozens of Mr Pu’s supporters defied a heavy police presence, which included the deployment of thuggish men in plain clothes (oddly wearing smiley badges during the trial). Several protesters were dragged away, some after chanting “Pu Zhiqiang is innocent”. + +Internet users showed similar disdain for the censors on the anniversary on December 26th of the birth of Mao Zedong (“He wreaked greater destruction on human civilisation than any other villain,” one businessman told his more than 106,000 followers). They piped up, too, after an avalanche of construction waste on December 20th in the southern city of Shenzhen that killed at least seven people and left more than 70 others missing. One Weibo user with nearly 75,000 followers lamented how effective a modern city like Shenzhen was at downplaying such news. “What’s frightening is that this is the way China as a whole will be,” he said. + +Mr Xi need not worry about his own social-media pulling power. By the time The Economist went to press, his first post on Weibo—sent through the account of an unnamed journalist at the newspaper he visited—had been retweeted more than 380,000 times and had garnered more than 50,000 comments. Most of these are fawning—of those still visible, at least. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21684793-communist-partys-battle-social-media-closely-fought-one-weibo-warriors/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Economic ideology + +Reagan’s Chinese echo + +The mystery of Xi Jinping’s supply-side strategy + +Jan 2nd 2016 | SHANGHAI | From the print edition + + + +RONALD REAGAN, a sworn enemy of communism, and Xi Jinping, a doughty defender of Communist rule in China, ought to have little in common. Lately, though, Mr Xi has seemed to channel the late American president. He has been speaking openly for the first time of a need for “supply-side reforms”—a term echoing one made popular during Reagan’s presidency in the 1980s. It is now China’s hottest economic catchphrase (even featuring in a state-approved rap song, released on December 26th: “Reform the supply side and upgrade the economy,” goes one catchy line). + +Reagan’s supply-side strategy was notable, at least at the outset, for its controversial focus on cutting taxes as a way of encouraging companies to produce and invest more. In Xiconomics, the thrust of supply-side policy is less clear, despite the term’s prominence at recent economic-planning meetings and its dissection in numerous articles published by state media. Investors, hoping the phrase might herald a renewed effort by the leadership to boost the economy, are eager for detail. + +Mr Xi’s first mentions of the supply side, or gongjice, in two separate speeches in November, were not entirely a surprise. For a couple of years think-tanks affiliated with government ministries had been promoting the concept (helped by a new institute called the China Academy of New Supply-Side Economics). Their hope is that such reforms will involve deep structural changes aimed at putting the economy on a sounder footing, rather than yet more stimulus. Since Mr Xi gave the term his public blessing, officials have been scrambling to fall in line with supply-side doctrine, designing policies that seem to fit it or, just as energetically, working to squeeze existing ones into its rubric. + +Mr Xi’s aim may be to reinvigorate reforms that were endorsed by the Communist Party’s 370-member Central Committee in 2013, a year after he took over as China’s leader. They called for a “decisive” role to be given to market forces, with the state and private sectors placed on an equal footing. But Mr Xi lacked a catchy phrase to sum up his economic vision. The one he most commonly used was simply that the economy had entered a “new normal” of slower, more mature, growth. That phrase had its detractors, for it seemed to imply passive acceptance of a more sluggish future. “Supply-side reform” is being made to sound like a call to action. Xinhua, a state news agency, neatly tied the two phrases together: “supply-side structural reform is the new growth driver under the new normal.” + +But what does it mean? Those who first pushed supply-side reform onto China’s political agenda want a clean break with the credit-driven past. Jia Kang, an outspoken researcher in the finance ministry who co-founded the new supply-side academy, defines the term in opposition to the short-term demand management that has often characterised China’s economic policy—the boosting of consumption and investment with the help of cheap money and dollops of government spending. + +The result of the old approach has been a steep rise in debt (about 250% of GDP and counting) and declining returns on investment. Supply-siders worry that it is creating a growing risk of stagnation, or even a full-blown economic crisis. Mr Jia says the government should focus instead on simplifying regulations to make labour, land and capital more productive. Making it easier for private companies to invest in sectors currently reserved for bloated state-run corporations would be a good place to start, some of his colleagues argue. + +There are plenty of differences between China’s supply-siders and those who shaped Mr Reagan’s programme, not least in their diagnosis of their respective economies’ ills. The Americans thought that production bottlenecks were fuelling inflation and stifling growth. Their Chinese counterparts worry about the opposite: excessive production causing deflation and unsustainably rapid growth. Still, the language used in China can sound just as radical. “We can no longer delay the clean-up of zombie corporations,” Chen Changsheng of the Development Research Centre, a government think-tank, wrote recently. “Taking painkillers and performing blood transfusions is not enough. We need the determination to carry out surgery.” + +There may be another similarity as well: a revolution that falls short of its hype. Reagan had to work with a Congress controlled by his political opponents, and the policies he enacted were more moderate and muddled than supply-side purists had hoped. Mr Xi faces no such democratic checks, but China’s ruling party is split between rival interest groups, and economic policy is often implemented in fits and starts as party leaders try to reconcile their competing demands. + +Supply us with a slogan + +Mr Xi’s adoption of the supply-side mantra marks the start of protracted tiptoeing. Over the past two months, party propagandists have asked economists at top universities and research institutions to expound on their views of what supply-side reforms should entail, according to insiders. It is a slogan in search of content. + +In the recent proliferation of articles and speeches about supply-side reforms, there are clearly differences over what the emphasis should be. The National Development and Reform Commission, a powerful planning agency, argues that China needs to become more innovative and efficient in making the kinds of things its consumers want to buy. But its version of “supply-side reform” would look more like stimulus than surgery. Tax cuts since 2014 on purchases of electric cars offer a taste of what may lie ahead; sales of these vehicles have surged nearly fourfold this year. + +Some fret that the supply-side talk is a dangerous distraction. As Yao Yang of Peking University puts it, the economy’s main ailment now is a lack of demand, not a problem with supply. The cure for that, he believes, is a short-term burst of monetary easing, the very thing that ardent supply-siders have been hoping to banish. + +For all the recent debate, early signs are that the supply-side shift may not amount to a serious change of course. Measures proposed by the government in late December include lower corporate borrowing costs, an easing of entry barriers in underdeveloped sectors such as health care and a reduction of excess capacity in sectors such as property. It just so happens that all these policies have already been in place for months or even years. If nothing else, Mr Xi’s supply-side reforms will prove that China is among the world’s most accomplished suppliers of slogans. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21684804-mystery-xi-jinpings-supply-side-strategy-reagans-chinese-echo/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Iraq: Reclaiming the ruins from Islamic State + +Christians in the Middle East: And then there were none + +Enforcing morality: No sex please, we’re Middle Eastern + +Ethiopia: What if they were really set free? + + + + + +Articles Sections Next + +Iraq + +Reclaiming the ruins from Islamic State + +By retaking Ramadi, Iraq’s security forces have won a morale-boosting victory + +Jan 2nd 2016 | From the print edition + + + +IT HAS been a long time in coming. But on December 27th Iraq’s security forces announced they had recaptured the city of Ramadi from Islamic State (IS), with only pockets of resistance remaining. This followed a week of heavy fighting by the Iraqi army, local police and Sunni tribal fighters, all backed by American air strikes. + +The expulsion of jihadists from the capital of Anbar, a mainly Sunni province, is a morale-boosting victory for the beleaguered government of Haider al-Abadi in Baghdad. It will go some way towards expunging the memory of the humiliating flight of the army from the city seven months ago, when a numerically inferior IS force launched a stunning assault, spearheaded by at least 30 vehicular suicide-bombs, some of them armoured bulldozers packing enough explosive to demolish entire streets. Outflanked and outgunned, even the army’s Golden Division, a highly regarded American-trained special-forces unit, succumbed to panic. + +The carefully orchestrated campaign to recover Ramadi, which saw much closer co-ordination between troops on the ground and coalition air power than in the past, is an indication of how other battles to expel IS from Iraqi cities may be conducted. Air strikes are claimed to have killed at least 350 IS fighters in the days before the ground offensive began in earnest. + +While it is true that Iraqi forces some 10,000 strong were needed to defeat no more than 1,000 IS fighters, the difficulties should not be underestimated. IS had time to construct a multilayered defence based on booby traps and a network of tunnels that allowed shooters and suicide-bombers to move around the town unseen by surveillance drones. The Iraqi army had to spend months encircling the city and slowly cutting IS off from outside help. This allowed Iraqi units to move cautiously into the ruined city, street by street. + +Significantly, Iranian-backed Shia militias, who have often been in the vanguard of the fight against IS during the past 18 months, were largely excluded from the battle. This was at the insistence of the Americans, who want to encourage a Sunni uprising against IS, like the one they fomented against its predecessor, al-Qaeda in Iraq, in 2006. But the results have been patchy, because the promised supply of American weapons to Anbari Sunni tribes has been blocked by the predominantly Shia government in Baghdad. + +Next stop, Fallujah + +Given the deep sectarian divisions, limiting the role of the Shia “Popular Mobilisation Forces” in Anbar remains a priority for the Americans. Most are backed and financed by Iran—and Mr Abadi has little influence over such groups. + +If the government is to build on its success in Ramadi, it must show displaced Sunni inhabitants that it can both hold the city and start rebuilding it. That means providing material support for the Sunni tribes and local police to garrison Ramadi, while freeing up the overstretched Iraqi army to take on IS elsewhere in Anbar. The jihadists still control not only Fallujah, but also Ana, Rawa, Hit and al-Qaim, towns which between them have (or had) a population of over 700,000. + +The Iraqi army will have little choice but to work with the Shia militias in the continuing attempt to recapture Fallujah, which has seen only intermittent progress in the past year. The tactics used in Ramadi—encirclement and air strikes—are being applied to the city, which is now more or less completely cut off. But Fallujah, which was al-Qaeda in Iraq’s first stronghold and the scene of bitter fighting with American troops in 2004, will be much harder to crack. + +Mr Abadi promised on December 28th that IS will be driven from his country by the end of 2016. “We are coming to liberate Mosul, which will be the fatal blow to [IS],” he said. A concerted attempt to retake Iraq’s second city (seized by IS 18 months ago) does now appear more likely, although it will have to wait until Fallujah is restored to government control and the Iraqi army can field more effective units to join with Kurdish Peshmerga fighters. + +Estimates differ as to how many IS combatants there are in Mosul. IS says it has 30,000. Iraqi government sources put the number at a more modest 1,500. But IS has had a long time to dig itself in to the northern city, and at least some of the people there are said to prefer the so-called caliphate, for its all brutality, to rule from Baghdad. Mosul is a huge source of funding for IS, because it has so many people for the jihadists to tax. If it should fall, IS’s pretensions to being a state will fall with it. But there is still quite a way to go. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21684689-retaking-ramadi-iraqs-security-forces-have-won-morale-boosting/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Christians in the Middle East + +And then there were none + +Fed up and fearful, Christians are leaving the Middle East + +Jan 2nd 2016 | BEIRUT, BETHLEHEM AND CAIRO | From the print edition + +Cryin’ Christmas tears + +FAR from spreading cheer this holiday season, Pope Francis has been in a Grinch-like mood. “There will be lights, parties, Christmas trees and Nativity scenes,” he said in late November. “It’s all a charade.” As the Vatican unveiled its own giant spruce, he sounded downright depressed: “We should ask for the grace to weep for this world, which does not recognise the path to peace.” + +It is easy to see why the pope is so downhearted. Look no further than Bethlehem, where young Palestinians throw stones at Israeli soldiers manning the wall separating the West Bank from Israel. From afar, the Israeli tear gas looks like the smoke from frankincense, of the sort that pilgrims burn when visiting the Church of the Nativity. But there were few pilgrims this Christmas—they were too scared. + + + +Most victims of war and terrorism in the Middle East are Muslims, since they are by far the majority of the population. But the tiny Christian minority often feels singled out. Their numbers are declining where the fighting is worst (see chart). Overall, the proportion of Middle Easterners who are Christian has dropped from 14% in 1910 to 4% today. Church leaders and pundits have begun to ask whether Christianity will vanish from the Middle East, its cradle, after 2,000 years. + +An exodus is under way. Many Christians feel more at home in the West and have the means to get there. Some are leaving because of the general atmosphere of violence and economic malaise. Others worry about persecution. A recent video of three Assyrian Christians in orange jumpsuits being made to kneel before being shot in the head by Islamic State (IS) jihadists fuelled this fear—though IS treats many other groups equally badly. + +Fewer births, virgin or otherwise + +The Christians who remain tend to have fewer babies than their Muslim neighbours, according to the Pew Research Centre. Regional data are unreliable, but in Egypt the fertility rate for Muslims is 2.7; for Christians it is 1.9. + +Mosul, in northern Iraq, was once home to tens of thousands of Christians. Perceived as supporting the Americans, they were targeted by insurgents after the invasion. A wave of killings in 2008, including that of the local Chaldean archbishop, seemed to mark the low point for the community. Then came IS. When the jihadists entered the city in 2014, they reportedly tagged Christian houses with an “N” for “Nazarene”, and gave their occupants a choice: convert, pay the jizya, a tax on non-Muslims, or face possible death. Most fled. In July 2014 IS announced that the city was free of Christians. + +Many who left Mosul went to Erbil, the Kurdish capital of northern Iraq, where they have trouble finding work or obtaining public services. Even there, some refugees chafe at the enforcement of Muslim customs. “You wouldn’t want to live there,” says Samir, a Christian refugee now in Lebanon. In general, Christians complain that their Muslim neighbours are growing increasingly intolerant. + +Some retort that Westerners exaggerate tales of Christian persecution to justify interventionist policies. “There is talk as if the West is genuinely interested in Christians, but most of the time they only use them for their own political ends,” says Mitri Raheb, pastor of a church in Bethlehem. He says that the Israeli occupation hurts Palestinian Christians far more than persecution by Muslims, but provokes less outrage in the West. + +Christian leaders are in a tough spot. “I cannot preach to people: ‘Do not leave,’” says Father Raheb. But other priests have. In an open letter published in September one of Syria’s most senior Catholic leaders, Melkite Patriarch Gregory III, wrote: “Despite all your suffering, stay! Be patient! Don’t emigrate! Stay for the church, your homeland, for Syria and its future!” Rankling many, he then urged Europe not to “encourage Syrian Christians to emigrate”. Haitham, a refugee from Mosul, says the pleas go “in one ear, out the other”. + +In the decades before the Arab spring, many Christian leaders lent their support to authoritarian rulers in return for the protection of Christians—and their own lofty status. But the deals broke down when the dictators fell or wobbled, leaving Christians in a predicament. “In Iraq, when Saddam Hussein was removed, we lost a million Christians,” said Bechara Boutros al-Rahi, Lebanon’s Maronite Christian Patriarch, to AFP in 2012. “Why? Not because the regime fell, but because there was no more authority, there was a vacuum. In Syria, it’s the same thing, Christians do not back the regime [of Bashar al-Assad], but they are afraid of what may come next.” + +Christian leaders have often supported whichever strongman is in power. The late Pope Shenouda III, head of the Coptic church, the largest in the Middle East, backed Hosni Mubarak, Egypt’s former dictator, and discouraged Copts from joining the protests that would eventually topple him. In 2012 Shenouda was succeeded by Tawadros II, who supports the current strongman, Abdel-Fattah al-Sisi. He has described the Arab spring as being more like a “winter, plotted by malicious hands” in order to break up the region into smaller states. + +Yet the Copts have gained little from their leaders’ loyalty. Mr Mubarak stood by as relations between Christians and Muslims deteriorated and sectarian violence increased. Mr Sisi is seen as better than the Islamist government that he toppled. A draft law would make it easier to build churches. But Copts are still expelled from villages for such crimes as falling in love with a Muslim. + +Even in Lebanon, where Christians were once a majority and still hold considerable power, their political leaders have disappointed. Under the country’s unique system, government posts are shared out based on sect. The presidency goes to a Maronite, the largest group of Christians. But in recent decades many Christians have left. Muslims are now a majority, and want power to match their numbers. Christian political leaders complain of persecution, but many seem more concerned with enhancing their own power. Bickering between politicians has left the presidency vacant for 18 months. + +Oddly enough it is the Gulf, home to the most conservative brand of Islam, which has welcomed the largest number of Christians recently, though not from Iraq or Syria. A wave of migrant labourers from the Asia-Pacific has dramatically increased the share of Christians in countries such as Saudi Arabia and the United Arab Emirates (UAE), which had few before. Tolerance varies between countries. Saudi Arabia, for example, bans the practice of Christianity (though many Christians worship in private). The UAE restricts proselytisation, but has otherwise supported its Christians. The number of churches in the country has grown from 24 in 2005 to 40 today. The emirate’s rulers often provide churches with free land, water and electricity. But these new Christian enclaves may not last. Migrant workers in the Gulf cannot easily become citizens or put down roots. + +In any case it is the loss of ancient communities that most concerns church leaders. “Christians are not guests in the Middle East,” says Father Paul Karam, the president of Caritas, a Catholic charity, in Lebanon. “We are the original owners of the land.” But none of the Christian refugees who spoke with your correspondent plans to return home. “We don’t belong there,” says Samir, who expects Iraq soon to be empty of Christians altogether. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21684795-fed-up-and-fearful-christians-are-leaving-middle-east-and-then-there-were/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Enforcing morality + +No sex please, we’re Middle Eastern + +The bossiness of the vice police + +Jan 2nd 2016 | BEIRUT | From the print edition + +Endangered pleasures + +IT WAS a disquieting announcement. On November 25th Egypt’s President Abdel-Fattah al-Sisi approved a committee tasked with “improving the morals and values” in his country. Efforts to reduce littering or sexual harassment, both plagues in Egypt, might be welcome. But experience in the Middle East suggests that the boot will be put into more harmless activities. + +In September, for example, Egypt locked up two belly-dancers for “inciting debauchery” after they showed a little skin in online videos; one of the dancers, known as “Egypt’s Shakira”, is most famous for a video which features much suggestive use of a pestle and mortar, but no more flesh than is revealed by a low-cut blouse and an above-the-knee skirt. A young Egyptian couple tells of police accusing them of being together without being married, something that is not banned in the country. Across the region gay people, atheists and dissidents are punished for their supposed moral transgressions. + +Saudi Arabia and Iran, regional and religious rivals, are the bossiest. Both regimes claim to be Islamic. Both have vice squads. In Iran they berate women for showing too much fringe; in Saudi Arabia, for wearing too flirty an abaya, the big, usually black, cloak that is mandatory for females there, or being in the company of unrelated males. They enforce bans on alcohol, parties and other things that normal people, even the most morally upright, enjoy. Saudi media recently reported that female bureaucrats wearing too much make-up would be fined 1000 riyals ($266). + +Police in Algeria, Morocco and Sudan, too, have powers to stamp out immorality. Sudan’s criminal code, which outlaws adultery and women wearing trousers, is particularly harsh. Vague laws across the region such as causing offence and encouraging indecency are broad and open to abuse. Violators can be flogged. + +In November Saudi Arabia sentenced Ashraf Fayadh, a poet, to death. He was accused of apostasy and of having illicit relations with women, whose images he stored in his phone. He denies the charges. He had previously posted a video showing the religious police whipping a man; his supporters think the police are taking revenge. Saudi Arabia beheads people for moral transgressions. Iran hangs them. + +Since the 1970s Arab populations have grown more devout. This makes it easier for rulers to use “morality” to keep them in line. Women, especially, are told how to dress and under what circumstances they may have sex. In Morocco and Algeria, women who are raped are sometimes made to marry their rapist. + +Social censure is pervasive, and can be deadly. Even in moderate countries such as Jordan, men sometimes kill women to uphold family “honour”. The murderers—usually a father or brother—often escape with light sentences. “If I go out with a boyfriend in Beirut it’s fine,” says a Lebanese Christian woman. “But in the villages, people will say, ‘Look, she’s seeing him and they’re not married’.” + +Some among the region’s ever more globalised young are pushing back. Grindr and Tinder, two hook-up apps for gays and straights respectively, have a fair number of users in the Middle East. Men and women mix and, more and more, choose their own partners. When parts of films are cut, such as an explicit scene in “The Wolf of Wall Street”, people go online to watch the full version. In Jeddah, if not Riyadh, colourful abayas swing open as unrelated men and women mingle in cafés. + +A few leaders say they want to give people a break. Hassan Rohani, Iran’s relatively moderate president, has talked about stopping the religious police from fining women for failing to conceal their hair, wrists and bottoms. Such small freedoms, so far only very partially implemented, would be popular. + +Some of the region’s moral arbiters do not practise what they preach, as bartenders and madams in posh parts of Europe can attest. Imagine if the vice police cracked down on hypocrisy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21684801-bossiness-vice-police-no-sex-please-were-middle-eastern/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Ethiopia + +What if they were really set free? + +If the government let people breathe, they might fly + +Jan 2nd 2016 | ADDIS ABABA AND LALIBELA | From the print edition + + + +THE Ben Abeba restaurant is a spiral-shaped concrete confection perched on a mountain ridge near Lalibela, an Ethiopian town known for its labyrinth of 12th-century churches hewn out of solid rock. The view is breathtaking: as the sun goes down, a spur of the Great Rift Valley stretches out seemingly miles below in subtly changing hues of green and brown, rolling away, fold after fold, as far as the eye can see. An immense lammergeyer, or bearded vulture, floats past, showing off its russet trousers. + +The staff, chivvied jovially along by an intrepid retired Scottish schoolmarm who created the restaurant a few years ago with an Ethiopian business partner, wrap yellow and white shawls around the guests against the sudden evening chill. The most popular dish is a spicy Ethiopian version of that old British staple, shepherd’s pie, with minced goat’s meat sometimes replacing lamb. Ben Abeba, whose name is a fusion of Scots and Amharic, Ethiopia’s main language, is widely considered the best eatery in the highlands surrounding Lalibela, nearly 700km (435 miles) north of Addis Ababa, the capital, by bumpy road. + +Yet the obstacles faced by its owners illustrate what go-ahead locals and foreign investors must overcome if Ethiopia is to take off. Electricity is sporadic. Refrigeration is ropey, so fish is off the menu. So are butter and cheese; Susan Aitchison, the restaurant’s resilient co-owner, won’t use the local milk, as it is unpasteurised. Honey, mangoes, guava, papaya and avocados, grown on farmland leased to the enterprising pair, who have planted 30,000 trees, are delicious. All land belongs to the state, so it cannot be used as collateral for borrowing, which is one reason why commercial farming has yet to reach Lalibela. Consequently supplies of culinary basics are spotty. Local chickens are too scrawny. The government will not yet allow retailers such as South Africa’s Shoprite or Kenya’s Nakumatt to set up in Ethiopia, let alone in Lalibela, a UNESCO World Heritage site. + +Bookings at Ben Abeba are tricky to take, since the internet and mobile-phone service are patchy. Credit cards work “about half the time”, says Ms Aitchison. Imports for such essentials as kitchen spares are often held up at the airport, where tariffs are sky-high: a recent batch of T-shirts with logos for the staff ended up costing three times its original price. Wine, even the excellent local stuff, is sometimes unavailable, because transport from Addis, two days’ drive away, is irregular and private haulage minimal. The postal service barely works. Fuel at Lalibela’s sole (state-owned) petrol station runs out. Visitors can fly up from Addis on Ethiopian Airways every morning, but private airlines are pretty well kept out. + + + +Many of these annoyances could be removed—if only the government were brave enough to set the economy free. “The service sector here is one of the most restrictive in the world,” says a frustrated foreign banker. The government’s refusal to liberalise mobile-telephone services and banks is patently self-harming. Ethiopians have one of the lowest rates of mobile-phone ownership in Africa (see chart); the World Bank reckons that fewer than 4% of households have a fixed-line telephone and barely 3% have access to broadband. + +The official reason for keeping Ethio Telecom a monopoly is that the government can pour its claimed annual $820m profit straight into the country’s grand road-building programme. In fact, if the government opened the airwaves to competition, as Kenya’s has, it could probably sell franchises for at least $10 billion, and reap taxes and royalties as well; Safaricom in Kenya is the country’s biggest taxpayer. + +Moreover, Kenya’s mobile-banking service has vastly improved the livelihood of its rural poor, whereas at least 80% of Ethiopians are reckoned to be unbanked. For entrepreneurs like Ms Aitchison and her partner, Habtamu Baye, local banks may suffice. But bigger outfits desperately need the chunkier loans that only foreign banks, still generally prevented from operating in the country, can provide. A recent survey of African banks listed 15 Kenyan ones in the top 200, measured by size of assets, whereas Ethiopia had only three. + + + +Land reform is another big blockage, though farmers can now have their plots “certified” as a step towards greater security of tenure. Given Ethiopia’s not-so-distant feudal past and the dreadful abuses that immiserated millions of peasants in days of yore, especially in time of drought, the land issue is sensitive; the late Meles Zenawi, who for 21 years until his death in 2012 ran the country with an iron fist and a fervent desire to reduce poverty, was determined to prevent a rush of landless or destitute peasants into slums edging the big towns, as has happened in Kenya. But the increasing fragmentation of land amid the rocketing increase in population is plainly unsustainable, even though productivity has risen fast through government-provided inputs such as fertiliser and better seed. (Ethiopia is Africa’s second-most-populous country after Nigeria; by some estimates it has nearly 100m people.) Most women still have four or five children. The standard family plot has shrunk to less than a hectare. + +Yet, despite these self-imposed brakes, Ethiopia’s economic progress has been spectacular. Its growth rate, if the latest official figure of 11% is true, is the fastest in Africa; and even the lower figure of around 8%, which the IMF and many Western analysts prefer, is still very perky. Social and economic indices are reckoned to have improved faster than anywhere else in Africa, albeit from a low base. Extreme poverty, defined as a daily income of under $1.25, afflicted 56% of the population in 2000, according to the World Bank, but had fallen to 31% by 2011 and is thought to be dipping still. The average Ethiopian lifespan has risen in the same period by a year each year, and now stands at 64. Child and infant mortality have dived. Protection for the rural poor in time of drought, which presently afflicts swathes of the north and east, is more effective than before. The government has “the most impressive record in the world” in reducing poverty, says a British aid official. (Britain gives its fattest dollop of largesse to Ethiopia.) + +Nonetheless, at least 25m Ethiopians are still deemed to be “extremely poor”. A waitress at Ben Abeba, a university graduate in biology, seems happy to get a monthly wage of $26. A labourer earns a lot less. + +How they made a miracle + +The core of the government’s economic policy is to improve agriculture, nurture industry and build lots of infrastructure. This includes a series of huge dams on the Blue Nile (which provides most of the water that flows into Egypt via Sudan) and on the Omo river, which flows south into Kenya’s Lake Turkana. The mass electrification that is expected to ensue should eventually help Ms Aitchison’s kitchen and communications in Lalibela. + +Roads and railways are also being built apace. Driving east from the town on a dirt track to join a paved road 80km or so away, your correspondent saw not a single other vehicle in two hours. The government puts its hope in industrialisation and light manufacturing, spurred on by investment and also by mass education (more than 32 universities have been created since 2000). It promotes industrial parks, which are supposed to boost their share of GDP from 5% today to 20% within a decade—and create millions of jobs for a population whose median age is only 19. + +Though the government invokes no precise model, it has various Asian ones in mind, most obviously China’s system of state capitalism under the strict control of a dominant political party. Meles rose to power at the head of the Tigrayan People’s Liberation Front, a revolutionary regional party that originally drew its inspiration from Enver Hoxha’s Albanian brand of communism and which, after years of guerrilla warfare in the mountains, overthrew a vicious Soviet-backed Marxist regime, known as the Derg, in 1991. + +Meles gradually began to open the country’s economy, but he also felt obliged to close down an experiment in multiparty democracy after an assorted opposition made big advances in a general election (which it claimed to have won) in 2005. The two main opposition parties, which both want to liberalise the economy and privatise the land, were eventually allowed to keep 161 seats in the 547-strong parliament. In the post-election fracas, about 200 people were killed and at least 20,000 are reckoned subsequently to have done stints in prison. In the next two rounds of elections, in 2010 and again in May 2015, the tally of opposition MPs, after a government campaign of outright repression, slumped to one and now none. + +The opposition is crushed, fragmented and feeble. Prominent dissenters have fled or are behind bars. Human Rights Watch, a monitoring group based in New York, reckons there are “thousands” of political prisoners. Torture is routine. “Ethiopians are cowed,” says a longtime analyst. It was notable, at a recent Economist conference in Addis, that virtually no businessman, Ethiopian or foreign, had the nerve to disparage any of the government’s policies. In public Ethiopians tend dutifully to echo the government line; in private, though, they can be franker. + +After Meles’s death, Hailemariam Desalegn emerged as prime minister. In September of 2015 he was confirmed as head of the ruling Ethiopian People’s Revolutionary Democratic Front, itself a coalition whose key component is still Meles’s Tigrayan front. But Mr Hailemariam, a southern Pentecostalist from a small ethnic group outside Meles’s circle of revolutionaries from the north, has yet to achieve his predecessor’s authority. + +Just take the plunge + +He says he favours a loosening of economics and politics. But so far he has been tentative. “He’s a compromise guy encircled by old-guard Leninist ideologues, the Tigray boys,” says Beyene Petros, a veteran leader of the opposition. One of Mr Hailemariam’s close advisers, Arkebe Oqubay, a reformist who promotes industrial policy (especially the creation of industrial parks) and craves foreign investment, cagily suggests that banking will open up “in five years”. Yet the ruling front still reflects a deep wariness of foreigners who, in the words of a long-standing expatriate, remain widely suspected of plotting to “get rich at the expense of Ethiopians”. + + + +Most independent observers feel that, overall, Ethiopia is on the rise, and may even emerge as an African powerhouse alongside South Africa and Nigeria—and ahead of Kenya, its regional rival. It is proud of having the African Union’s headquarters and of providing more UN peacekeepers than any other African country. It is a leading mediator in the region, especially in war-torn South Sudan, and has won plaudits from the West for its fierce stand against jihadism. It also caters for more refugees than any other African country—some 820,000 at last count. + +On the home front, Ethiopia’s infrastructure plans have attracted the interest of potential investors from across the globe. Yet unless the government gets a move on frustration will grow, at home and abroad. If the ruling party had the courage to open up the economic and political system, the pace of Ethiopia’s progress towards prosperity and stability would quicken. Even lovely, remote Lalibela would gain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21684816-if-government-let-people-breathe-they-might-fly-what-if-they-were-really-set/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Russia’s Far East: Snow job + +Vladivostok’s new casino: Russian roulette + +Spanish politics: The chore of the Spanish succession + +Poland’s religious politics: Courting disaster + +Educating refugees: Learning the hard way + + + + + +Articles Sections Next + +Russia’s Far East + +Snow job + +Russia’s much-ballyhooed turn towards China is less than it seems + +Jan 2nd 2016 | VLADIVOSTOK AND KHABAROVSK | From the print edition + + + +DOWN a bumpy two-lane road through the hills north-west of Vladivostok, the Pogranichny border crossing is where Russia meets China. Bilateral relations are blossoming, and trade should be booming. Yet lorries loaded with timber idle on the roadside, as obstructive bureaucrats keep them waiting for days. On a recent visit, the electricity was out; candles flickered in the truck stop’s lavatories. “Nothing new here,” said a shopkeeper. + +Over the past two years, as its relations with the West have soured, Russia has proclaimed a “pivot to the East”. Officials envisioned China replacing Western capital markets and hoovering up Russian exports of oil, minerals and food. Vladimir Putin and Xi Jinping, the countries’ presidents, visited each other’s capitals for ceremonies commemorating the end of the second world war; Western leaders stayed away. Big deals in energy, transport and arms seemed to augur a new friendship. In September Mr Putin declared that Sino-Russian relations had “probably reached a peak in their entire history”. + +That was the official story, at least. “The turn to the east is happening, but in a characteristically Russian way: slowly, foolishly and with unrealistically high expectations,” says Alexander Gabuev, the chairman of the Russia in the Asia-Pacific programme at the Moscow Carnegie Centre, a think-tank. The Russian recession and China’s slowdown have put a damper on grand plans. With oil prices low and the rouble weak, bilateral trade shrank by around 30% in the first half of 2015. Corruption, bureaucracy and the rickety infrastructure of Russia’s Far East cloud the business climate. + + + +Mr Putin is not the first Russian leader to turn towards Asia. Chinese and Soviet communists feuded during the cold war, but by the time of perestroika Mikhail Gorbachev was calling Vladivostok a “window to the East” and declaring the Soviet Union “an Asian and Pacific country”. Nor is Mr Putin’s interest in the Pacific Rim new: when Vladivostok hosted the Asia-Pacific Economic Co-operation (APEC) conference in 2012, he poured resources into the city, building two bridges and a sprawling campus for the talks. “In the 21st century, the vector of Russia’s development will be the development of the East,” Mr Putin said, in a rare echo of Mr Gorbachev. + +But after the conference, Moscow’s attention shifted and funds dried up. Development projects fell by the wayside. Two five-star Hyatt hotels went unfinished. The government says funds allocated to rebuild the Pogranichny border area were stolen (by contrast, a shopping mall and a Holiday Inn await on the Chinese side). + +The clash with the West over Ukraine turned Russia’s focus eastward again. In May 2014, two months after the annexation of Crimea, Mr Putin met Mr Xi and announced a 30-year, $400 billion gas deal, ending a decade of talks. Russia’s rail monopoly awarded a tender to the state-controlled China Railway Group to design a high-speed train between Moscow and Kazan. Moscow agreed to sell Beijing sophisticated S-400 anti-aircraft missiles and Su-35 fighter jets. China extended a yuan currency-swap agreement. + + + +In the autumn of 2015 Russia declared several Far Eastern regions priority development zones. Investors will enjoy a five-year break on most taxes and streamlined bureaucracy. Foreigners arriving through Vladivostok will be allowed in without visas. Some firms have moved in: En+ Group, an energy holding company controlled by Oleg Deripaska, a Russian oligarch, has signed a deal with China’s Huawei to build data centres in Siberia. + +But it has not exactly been a gold rush. Western sanctions have made Chinese lenders cautious about Russian firms. Chinese foreign direct investment in Russia more than doubled in 2014, but collapsed during the first half of 2015. Gas export volumes are up, making Russia China’s largest supplier, but falling oil prices have slashed revenues. And although China is now Russia’s largest trading partner, Russia does not crack China’s top five—a fact not lost on Chinese businessmen. “They believe, and not without good reason, that they can dictate the conditions,” says the boss of a Vladivostok-based shipping firm. + +Russia, meanwhile, frets about being exploited. The desire to get closer to China is offset by a fear of becoming dependent, says Victor Larin of the Russian Academy of Sciences in Vladivostok. Russia imposes tough restrictions on businesses because of unfounded fears that the Chinese will take over its sparsely-populated Far East. Chinese businessmen complain about restrictions on hiring foreign labourers. Deals to lease farmland draw the ire of Russian nationalists. + +Even innocuous projects can incur the wrath of Russian apparatchiks. In November Cai Shangjun, an internationally acclaimed Chinese film director, brought more than 50 cast and crew to Khabarovsk to shoot a new movie, but customs officials held his camera equipment at the border. The frustrated cinéaste was left cooling his heels in his hotel for over a week. “It’s a tragedy,” said Mr Cai, as his crew lingered aimlessly in the lobby. His film “Under the Ice”, about two Chinese lovers who meet in Russia, has since resumed production. But like most things under ice, and Russia’s eastern pivot itself, it is moving slower than hoped. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21684809-russias-much-ballyhooed-turn-towards-china-less-it-seems-snow-job/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Vladivostok’s new casino + +Russian roulette + +How to lure rich Chinese to take a chance on Russia + +Jan 2nd 2016 | VLADIVOSTOK | From the print edition + +A billion on Siberia, please + +THE shiny new Tigre de Cristal casino looks like a black glass and steel spacecraft that has landed in the Siberian forest. A neon sign advertises “Seafood delicacies from the Sea of Japan”. Inside, Russian ladies deal out baccarat cards to Chinese gamblers. The casino itself represents a bit of a bet: that Russia can tap some of the cash from rising Asian economies to help develop its own Far East, a territory larger than the European Union that is home to just 6m people. + +Though the Far East is staunchly Russian, it has grown dependent on its Asian neighbours. Some regions do 85% of their foreign trade with China. Europe feels a world away. When Russia’s economy was booming, locals took their holidays at Chinese resorts and popped over the border for cheap massages and shopping. + +Since the collapse of the rouble the flow has reversed. Chinese shoppers come to buy Russian food, which they think safer than their own chemical-ridden produce. Others come for a bit of Europe. Li Tsang, a hairdresser from Fuyuan, raves about Khabarovsk, just across the Amur river: “It’s so clean!” + +At Tigre de Cristal, the brainchild of Lawrence Ho, son of the Macao mogul Stanley Ho, investors are banking on an influx of gamblers from north-east China, South Korea and Japan. “Within a two- or three-hour radius, you have 200m-300m people under-served from a gambling perspective,” says Craig Ballantyne, the casino’s upbeat Scottish manager. + +The fate of such foreign-backed projects depends on Russia providing the conditions for success. For Tigre de Cristal, little went smoothly. A bizarre legislative oversight means that it is illegal to advertise the casino: with the exception of a handful of special gaming zones, gambling is banned in Russia. The launch was postponed because of bureaucratic hassles. Even with the delay, the local government failed to revamp the main road from the airport in time for the grand opening, much to the chagrin of casino staff. “When Disneyland opened,” Mr Ballantyne notes pointedly, “the Santa Ana highway was finished.” + +Correction: In “The gauge of history” in our Christmas issue, a portrait was wrongly described as showing Fyodor Shekhtel, a Russian architect. The subject was in fact Savva Mamontov, a Russian industrialist and patron of the arts. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21684806-how-lure-rich-chinese-take-chance-russia-russian-roulette/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Spanish politics + +The chore of the Spanish succession + +A fissiparous electorate makes for difficult coalition negotiations + +Jan 2nd 2016 | MADRID | From the print edition + + + +IN MOST places, when 3,030 people take an up-or-down vote, some sort of decision will probably emerge. But one should never underestimate the contentiousness of the Catalans. On December 27th an assembly of the far-left Popular Unity Candidacies (CUP) party deciding whether to back Catalonia’s acting president, Artur Mas, split the vote evenly—1,515 on each side. The deadlock means that, three months after elections, Mr Mas still cannot form a government to carry out his programme of moving steadily towards secession from Spain. + +The Catalan impasse is part of a wider Spanish gridlock. Elections on December 20th splintered the political landscape. The duopoly of the conservative People’s Party (PP) of the prime minister, Mariano Rajoy, and the opposition Socialists (PSOE), who have traded turns in power for the past 33 years, has been upended. The insurgent left-wing Podemos and liberal Ciudadanos parties grabbed a third of the parliamentary seats between them, making a coalition or minority government a necessity. But Spain has little culture of coalition-building, and forming a government is a tall order. Fresh elections are also possible. + +After losing over a third of the PP’s seats, Mr Rajoy’s attempts to form a new government seem destined to fail. Meanwhile Pedro Sánchez, the Socialist leader, led his party to a historic low with barely one in five votes. A “grand coalition” between them, possibly backed by Ciudadanos, would be the most stable option. But decades of enmity make that unlikely. + +Instead Mr Sánchez fancies himself as the next prime minister. He would need to include the far-leftists of Podemos, which would be a triumph for southern Europe’s anti-austerity rebellion. But Podemos demands that Catalonia be granted a referendum on independence, which the Socialists refuse to accept. Mr Sánchez himself may soon face a leadership challenge, especially if party heavyweights, led by Susana Diez, the president of Andalusia, think he is selling them out. And even if Mr Sánchez and Podemos reach agreement, they do not have enough deputies; they would need the backing of either Ciudadanos or Catalan separatist parties. + +Podemos and Ciudadanos would make strange bedfellows. One party rails against neoliberalism; the other backs liberal reforms. The leaders of Podemos, Pablo Iglesias, and of Ciudadanos, Albert Rivera, have good personal chemistry, and both see themselves as crusaders ridding Spanish politics of corruption. They agree on the need to depoliticise the judiciary and some regulatory agencies. Yet a government of the Socialists, Podemos and Ciudadanos would lack the votes to change the constitution, making it hard to resolve Spain’s biggest looming problem: Catalonia’s threat to secede. + + + +Spanish election results + +Mr Mas and his Catalan Democratic Convergence party have been plodding towards secession for years. To secure the CUP’s backing, the once business-friendly leader is now dabbling in anti-austerity populism, promising to scrap a privatisation programme and commit his indebted region to an extra €270m ($296m) of social spending. His next steps towards independence are likely to clash with Spain’s constitution and may prod the new government to employ legal force against him. After four years without dialogue between Madrid and Barcelona, however, the two new governments may both be too weak to sort the problem out. + +Spain’s economy grew by an estimated 3% in 2015, but the recovery remains fragile and inadequate. Unemployment is 21% and GDP is still lower than in 2007. The most recent report by Fitch, a ratings agency, stated the obvious: a long period of political uncertainty and reversals of reforms will damage business confidence. Spain could use a strong government. It looks likely to get a weak one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21684827-fissiparous-electorate-makes-difficult-coalition-negotiations-chore-spanish/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Poland’s religious politics + +Courting disaster + +An attack on judicial independence reveals the government’s ideology + +Jan 2nd 2016 | TORUN | From the print edition + +Communists, communists everywhere + +WHEN the far-right Law and Justice (PiS) party won Poland’s parliamentary elections on October 25th, it was clear that the country was headed for change. But few expected anything like what has followed: purges of senior security officials, threats against public broadcasters, a police raid on a NATO–affiliated office and a deepening crisis over the constitutional court. On December 28th President Andrzej Duda (nominated by PiS, though technically non-partisan) signed a law that would, among other things, require Poland’s constitutional tribunal to approve all verdicts by a two-thirds margin, crippling its ability to review legislation. PiS has appointed five additional judges to the tribunal, in a move the standing judges ruled unconstitutional. PiS politicians refer to the court as a bastion of the previous Civic Platform government that must be subdued. Liberals and centrists have taken to the streets in protest. + +Observers wondering why a stable EU member with a growing economy has suddenly plunged into such turmoil might do well to visit Torun, a small city in northern Poland. Torun is home to Radio Maryja, an ultra-conservative radio station run by Father Tadeusz Rydzyk, a Roman Catholic priest. From its gated headquarters, guarded by silver-haired devotees, it broadcasts warnings against “gender ideology” (an umbrella term for feminism and gay rights) and the “Islamisation” of Europe. The station’s audience is small, under 2% of all listeners. Yet its political ideology is close to that of the new government. PiS would not have won without Radio Maryja, said Jaroslaw Kaczynski, the party’s leader, at the broadcaster’s 24th anniversary celebration in December. + +The 70-year-old Father Rydzyk does not think much of the way Poland has evolved since the end of communism. The country needs a spiritual renaissance, or it will become a “republic of bandits, thieves and perverts”, he said in an October interview with Nasz Dziennik, the daily newspaper he publishes. Like PiS, Radio Maryja propounds social conservatism, suspicion of Brussels and hostility towards refugees from the Middle East. The station’s listeners are sympathetic to conspiracy theories positing that the parties that have ruled Poland since the 1990s (apart from PiS) are secretly controlled by communist apparatchiks. Right-wing demonstrators (see picture) often demand that the constitutional court be “decommunised”, a request that leaves its moderate justices bemused. + +Radio Maryja’s listeners are not so much religious fanatics as the socially vulnerable. It speaks to Poles alienated by economic and cultural change. Religious symbols are their means of showing discontent, says Tomasz Szlendak, a sociologist at the University of Torun; Radio Maryja is the only media outlet that “speaks their language”. PiS, too, blends religious and nationalist symbolism with a focus on social injustice; a new monthly child benefit crowns the government’s list of election promises. Some term PiS the “pious left”. The party castigates its critics as heathen liberals. “Every hand raised against the Church is a hand raised against Poland,” said Mr Kaczynski in December. + +Like Father Rydzyk, Mr Kaczynski speaks of PiS’s election as the first step in a spiritual renaissance that will remake the Polish state. But his party’s interference with the constitutional tribunal has raised hackles in Brussels. The European Commission had asked the Polish government to put the process on hold; Mr Duda ignored the request. On January 13th the commission will meet to discuss the statute and whether it infringes EU treaty commitments to the rule of law. + +Meanwhile, Father Rydzyk, too, is disappointed in the new government. After a spat over access to the president, he threatened to break off co-operation, saying he expected his media outlets to be “treated differently”. It remains to be seen whom Mr Kaczynski and his party fear more: the EU, or Radio Maryja. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21684826-attack-judicial-independence-reveals-governments-ideology-courting-disaster/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Educating refugees + +Learning the hard way + +Integrating migrants into schools will not be easy + +Jan 2nd 2016 | STOCKHOLM | From the print edition + +That’s an ä not an å + +AFTER Aida Hadzialic’s parents fled war-torn Bosnia for Sweden in the early 1990s, they put their five-year-old daughter in a school full of native Swedes and made sure she studied hard to get ahead. It worked. Today Ms Hadzialic, 27, is Sweden’s minister for upper secondary education. Like her counterparts across Europe, she faces a new challenge: ensuring that a fresh wave of refugee children can integrate as successfully as she did. + +Even before this year’s surge, western Europe had lots of immigrant students. According to the Organisation for Economic Cooperation and Development (OECD), the proportion of 15-year-old schoolchildren in Spain who are foreign-born rose from 3% to 8% from 2003 to 2012 (though in Germany it fell by about the same amount). The new wave of migrants from Syria, Afghanistan, Iraq and elsewhere has redoubled the strains on school systems. + +In the countries accepting the most refugees—Sweden and Germany—lack of space is not a problem. Before the migrant surge, both countries faced declining numbers of pupils because of low birth rates. In Sweden the number of children in ninth grade fell from 120,000 in 2005 to 96,000 in 2015. “We have places for a hundred more pupils,” says Henrik Ljungqvist, the headmaster of Ronna School in Sodertalje, a city near Stockholm. (His school admits two to four new refugee pupils a week.) In Germany, without the new migrants, the number of students was projected to decline by 10% over the next decade, says Ludger Woessmann of the University of Munich. + +The biggest problem for education systems is that refugee children tend to be concentrated together. Many attend schools near refugee centres or in immigrant neighbourhoods. In Norway, Denmark and Sweden about 70% go to schools where at least half of the pupils are immigrants. This means they are partially segregated and less likely to learn the local language. + + + +Moreover, immigrants tend to find housing in poor areas with lower education standards. Schools where more than a quarter of students are immigrants usually perform worse than those with no immigrants (see chart), although the gap shrinks when economic status is accounted for. At Mr Ljungqvist’s school, where about 350 of the 750 students were born abroad, many of the brightest pupils have left. + +Swedish schools faced problems well before the latest migrants began arriving. From 2002 to 2012 Sweden’s rank in the OECD’s Programme for International Student Assessment (PISA) fell more than any other country’s, to 28th out of 34 countries in mathematics and 27th in reading and science. Pupils in Sweden are more likely to arrive late to school than in any other rich-world country. The government has responded to declining scores by increasing teachers’ pay, but it still does little or no inspecting of schools. The OECD’s Andreas Schleicher says the system lacks a culture of accountability. + +Germany’s PISA rankings remain high, but its school system is “almost the worst you could pick” for migrants, says Maurice Crul, an expert on immigrant youth at Erasmus University in Rotterdam. Unlike France or Sweden, where most children start preschool before age three, German children tend to start school at four or five. Many schools have only half-day classes. + +Moreover, the German system streams pupils at 10 into either vocational or academic systems—and immigrant children are 44 percentage points more likely than natives to be sent to vocational courses. Unlike other vocational systems such as that in the Netherlands, Germany’s makes it hard to move from a vocational track to an academic one. Lack of native language skills can steer bright immigrant children away from a university education. The system’s inflexibility also makes it harder to integrate older immigrant children. Germany has one of the world’s biggest gaps in reading proficiency between those who arrive aged between six and 11 and those who arrive aged 12 or over. + +The German system has its strengths. In less than a decade, Germany has improved the mathematics grades of second-generation migrant children by the equivalent of over a year of schooling. In some German states school days are being extended, and the government has made a big investment in preschool education. In Sweden, meanwhile, older refugees are being trained as teaching assistants to speed integration. Ronna School and others scrapped separate “introductory lessons” for refugees after realising they led to immigrants being segregated and bullied. + +But far more could be done. Pupils could be distributed throughout the school system more effectively. In Aarhus, a city in Denmark, the proportion of pupils from migrant backgrounds cannot exceed 20% in each school; a similar distribution in Germany and Sweden could help fight ghettoisation. And refugee children should be getting more preschool. According to the OECD, 15-year-old immigrant children are 20% less likely to have attended pre-primary education than the native-born, but those who have score 49 points higher in reading than those who have not. + +Most important, European governments need to treat refugee children as an opportunity rather than a problem. Driven by a desperate desire for a better life, they and their parents tend to be hard-working and ambitious. Europeans worried about migrants studying beside their children should take comfort: the most important predictor of pupils’ school results is their parents’ level of education, and about half of the refugees reaching Europe from Syria have university degrees, according to UNHCR, the UN refugee agency. “Sometimes I joke that Syrian children may help reverse [our decline in] PISA results in maths,” quips Ms Hadzialic. If they are integrated properly, she may be right. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21684830-integrating-migrants-schools-will-not-be-easy-learning-hard-way/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Funding the police: Counting up the coppers + +Floods: Northern waterhouse + +Bagehot: Bring on the tempest + + + + + +Articles Sections Next + +Funding the police + +Counting up the coppers + +As the police get more control over their budgets, different forces are taking very different approaches to fundraising + +Jan 2nd 2016 | BEDFORD | From the print edition + + + +ON A recent Sunday night in Bedfordshire, north of London, a damp-looking officer enters police headquarters. He has been fishing a possible murder victim out of the river, he says, but “had nothing to fish him out with”. Under the gaze of throngs of Christmas shoppers, he found he also had no tent with which to cover the body, and “embarrassingly” had to borrow one from an ambulance. + +Following big increases in spending on the police in 2000-10, the past five years have been austere. Police spending per person has been remorselessly trimmed back to roughly where it was in 2003, accounting for inflation. Further cuts were expected to be imposed in 2015, but after intensive lobbying by officers, and the jolt of the Paris terrorist attacks, on November 25th the government announced that the police would be protected from cuts for the next five years. + + + +Amid rises and falls in police funding there has been one constant trend. The police in England and Wales long received almost all their money in the form of a grant from the central government. But over the past two decades they have been raising more and more of their money locally. Whereas in 1995 only 12% of police funding was local, by 2014 30% of it was earned in this way (see chart). Tweaks announced in November mean that in five years’ time the proportion will be higher still. Britain’s police forces are slowly gaining real control of their finances—and they are using this power in very different ways. + +The shift began in 1995, when forces gained the ability to raise money by adding a supplementary “precept” to council tax, a local property levy. Police precepts were small at first: about £70 ($100) per household in today’s terms. They crept up in the 1990s, before soaring in the 2000s: in the decade to 2010, forces increased local charges by an average of 98%. + +There was wide variation. Whereas some forces increased their precepts by just a few percent each year, others went for broke: in North Yorkshire the police more than trebled the amount raised from local taxation in 2000-10. In the main, according to an analysis by the Institute for Fiscal Studies, a think-tank, those forces that increased their local funding most were those that had done least well under the old system of direct grants, which favoured populous places with high crime rates. Forces covering England’s largest cities—Greater Manchester, Merseyside, West Midlands and London’s Metropolitan Police—all raised their local taxes less than average. The most enthusiastic taxers were small or rural forces: after North Yorkshire, the biggest increases were in Durham, Cambridgeshire and Cleveland. + +After entering office in 2010, the Conservative-led coalition put a brake on local fundraising, forbidding police bosses from raising taxes by more than 2% without holding a referendum, a feat none has yet managed. (Only one force, Bedfordshire, has tried it; Surrey considered it, but backed down in 2015 after a Conservative minister branded it a “lazy option”.) Yet the government has increased reliance on local funding in another way, by reducing the central grant. Central funding for the police was cut by one-fifth across the board in 2010-14. The forces that suffered least were those that had plenty of local income. The differences are stark: overall, North Yorkshire’s total budget is now 30% higher in real terms than in 2000, whereas in Northumberland, which increased its local precept the least, it is 8% lower. + +The devolution of funding allows locals to decide for themselves how much to spend on security. But it may lead to more being spent in wealthy areas—an odd way to approach crime, which is strongly correlated with poverty, points out Tom Kirchmaier, a policing expert at the London School of Economics. The reliance on raising money from households also punishes districts that combine sparsely populated rural areas with troublesome urban patches. Bedfordshire falls into this category: of the 43 forces in England and Wales, it ranks 32nd in the number of police officers per person, yet the presence of Luton, a rundown town with an international airport, gives it the fourth-highest rate of gun crime per head, as well as what local officials believe to be a high terror threat. There are sometimes so few officers on duty, says Kate Rowley, a local copper, that she knows that if she pressed her emergency panic-button no one would come. + +Police forces are finding new ways to supplement their incomes. In April the Home Office raised the modest fee charged by police for licensing firearms for the first time in 14 years. More controversially, the police make money by sending dangerous drivers on remedial “speed awareness” courses costing £85. Between 2010 and 2014, as forces’ central funding was squeezed, twice as many motorists were sent on such courses. Some police bosses have threatened to raise money by fining motorists who stray only fractionally above speed limits. + +Like doctors, police officers report that they are increasingly “dumped on” by social services, whose budgets have been drastically cut. In November the government announced that social services, too, would be supplemented in future by an optional local levy, to be determined by councils. Increasingly, it will be for local people to decide what sort of services they are willing to pay for. With a round of elections of police commissioners due in May, voters will get a chance to say just how thin a blue line they want. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21684822-police-get-more-control-over-their-budgets-different-forces-are-taking-very-different/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Floods + +Northern waterhouse + +Anger rises as fast as the water across inundated northern cities + +Jan 2nd 2016 | YORK | From the print edition + + + +EARLY on December 27th, residents of Huntington Road in York were woken by cries warning them of torrents of water gushing down the street; the River Foss had burst its banks. The flooding was the worst in the neighbourhood since the last great inundation in 1982, says one local, John. With his house situated on a slight rise, the waters lapped at his front steps but rose no further. Most of his neighbours were less fortunate: by the afternoon most of the houses had to be evacuated. Here and there a few car tops were still just visible poking above the muddy waters. + +York was one of several northern cities to be swamped by the latest round of floods in Britain’s wet winter. By December 29th at least 6,700 properties had been inundated in northern England. At the time of writing (with more storms forecast), no one had died; the floods pale in comparison with recent disasters in other parts of the world (see article). But the rampaging waters, and the limp official response to them, are a problem for David Cameron, who has put the project of creating an economic “Northern Powerhouse” at the centre of his second term. “A Northern Powerhouse is nothing when it is under several feet of mucky water,” thundered the Yorkshire Evening Post. Splashing around York on December 28th, the welly-shod prime minister was heckled. + +He deserved it. After entering office in 2010, he reduced flood-protection spending by one-fifth, and in spite of a splurge in 2014, after severe floods in Somerset, it has dropped back to below its level when he entered Downing Street. The cuts have resulted in hundreds of relatively cheap flood-defence schemes being cancelled, including one that could have prevented Leeds city centre flooding this week. + + + +The Environment Agency, which administers most flood-defence spending in England, funds only defences against sea and river flooding, not surface or groundwater, which cause more than 60% of the damage done by water to houses. A “complete rethink” is needed, the agency’s acting head said this week (his unfortunate boss was found on holiday in Barbados). Climate change has increased the frequency of the intense rains that cause severe flooding; some parts of Cumbria with a one-in-100-years chance of it have been inundated three times in the past decade. + +Yet if central government was found wanting, the local response was little better. “It was a poor show,” complains Ken Heald, a York hairdresser, with obvious understatement. He phoned a council helpline to request sandbags for his salon, Mamselle, as soon as he saw water seeping under the front door. Nobody got back to him, nor replied to two more pleas. Overall, the council was “no help at all”, he says. And for all the talk of e-government, the online response was glitchy, too: requests for sandbags on Leeds council’s website were met with error messages. + +Hard-up local authorities have struggled to do much beyond leading search-and-rescue efforts. In Leeds and York, the council response mainly consisted of organising evacuations. The stripped-down service is part of a wider trend of councils “becoming more like emergency services”, says Simon Parker of the New Local Government Network, a think-tank. Forced to make deep cuts to their budgets in the past five years, they have sacrificed long-term investment: in 2010-15 councils’ capital spending fell by 25% in real terms, and their outlay on planning and development by 50%. Saving so much money without seriously denting voter satisfaction has been a marvel, but the apparently thin preparation on display this week suggests how the trick has been pulled off. + +In the absence of much help from government, people have helped each other. “The spirit round here has been very good,” says Mr Heald, whose neighbours have rallied to help him out; one spent hours scooping water out of his salon. Groups such as Bingley Flood Support, near Bradford, have been organising clean-up operations, using Facebook to co-ordinate efforts: in Bingley members of a local mosque have brought food, a local newspaper has donated old newsprint to soak up water, and a bouncy-castle firm has lent its van to run errands. + +Social media have also eclipsed the conventional sort. Twitter and Instagram have provided updates and advice quicker than the local press, whose skeleton staff were caught on the hop over Christmas. Mr Cameron has long wanted to encourage a “Big Society” of volunteers. The floods have provided it—though perhaps not in quite the way he wanted. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21684825-anger-rises-fast-water-across-inundated-northern-cities-northern-waterhouse/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Bring on the tempest + +Britain’s interlocking political dramas may be just what the country needs + +Jan 2nd 2016 | From the print edition + + + +BRITONS have much to look forward to in 2016. Street parties will take place on the queen’s 90th birthday. The English, Welsh and Northern Irish football teams will all contest the European Championship. The Royal Shakespeare Company is promising the biggest-ever celebration of the Bard’s work to mark the 400th anniversary of his death, and the Globe theatre will stage a new production of “The Tempest”. + +Yet in politics, as in the skies, storms loom. Jeremy Corbyn, the far-left leader of the Labour Party, is consolidating his grip on the opposition. In an imminent shadow-cabinet reshuffle he will show moderates the business end of his proverbial ice-axe. North of the border, the pro-independence Scottish National Party will consolidate its political hegemony at elections in May. Another vote on separation is now only a matter of time. London’s mayoral election, also in May, will accentuate the growing divide between the rich, worldly capital and the rest of Britain. And with its EU referendum expected to take place as early as June, the country’s status as a leading European power hangs by a thread. + +Small wonder, then, that its allies are perturbed. Barack Obama privately talks of Britain’s “mid-life crisis”. As a commentary in the New York Times in 2014 put it: “Britain is having a kind of nervous breakdown, and its friends aren’t sure whether to say something or just look away.” Such observers are right to imply that the traumas were long in the making; more than freak intrusions on a country that has been calm and stable for decades. + +Why? Each polity has its pathology and Britain’s, as Walter Bagehot noted, is muddling through. Just as its people pride themselves on their—only partly imagined—“mustn’t grumble” stoicism, its leaders possess the institutional equivalent of the stiff upper lip: a preference for patching and fudging over abolishing and remaking. It has no written constitution; its union is the messy product of years of tweaks; its political bodies, from local councils to the Lords, are great mounds of sticking plasters. + +This predilection has its pros and cons. On the one hand, Britons’ mistrust of wide-eyed ideas (“Don’t you know it’s gonna be all right”, the Beatles sang in their sceptical hit, “Revolution”) explains their historical aversion to political extremism. It steers the country away from risky ventures like, some would argue, the euro. Thomas Kielinger, a veteran German correspondent in London, claims Britain’s seafaring history has made it flexible but cautious; more comfortable tacking with the winds than its uncompromising continental neighbours. + +On the other hand, a penchant for the zigzag and the gentle curve over the straight line comes at a cost. Consider the Palace of Westminster. Bombed during the war, it was quickly repaired and is now crumbling. A rolling programme of restoration struggles to keep up with its decay. Muddling through, in other words, can leave big problems unresolved. It stores up contradictions that occasionally unleash thoroughly un-British political earthquakes: the Labour landslide of 1945 would have been unthinkable without the hemming and hawing of pre-war governments, just as Margaret Thatcher’s economic revolution would have been without her predecessors’ procrastinations. + +The same pattern is in evidence now. Thatcherism created doubts about Britain’s place in Europe, divided England from other parts of the union, propelled London towards vast wealth and presented socialists with an existential challenge. Labour inherited these tensions when it came to power in 1997, but a combination of political skill and benign economic circumstances allowed it to fudge them. It sought European integration without convincing voters of the need for it; devolved powers to Edinburgh, Cardiff and Belfast without reforming the architecture of the union; encouraged the capital to boom without building up a counterweight and made its peace with markets without finally defeating anti-capitalists on the left. Today’s crises are, in other words, Tony Blair’s unfinished business. + +O brave new world + +Thus Britain’s current period of upheaval is not just overdue. It is necessary. The EU referendum forces pro-Europeans to make the gutsy case for continental co-operation. If they succeed, the vote should give British leaders a fresh mandate to build and wield influence in Brussels. Scotland’s swerve towards independence, and the accompanying grievances in England, should push politicians to transform Britain into a federation, at last putting the union on a stable footing. This should also precipitate the long-overdue decentralisation of England (a process that has already begun; Manchester will run its own health service from April). Lastly, Mr Corbyn’s leadership should force his moderate MPs to take on a reality that even Mr Blair ducked: Labour has always been two parties, one social democratic and the other anti-capitalist. Over the years it has muddled through, as concessions, feints and tactical battles have postponed a decisive confrontation. No longer: as Mr Corbyn bears down on the moderates, they will have to decide whether to push back, concede the party to him or quit—en masse, not in a dribble, as did their predecessors in 1981 when Labour last swung left—and form a new party. + +Britain’s crises may yet go to waste. But today’s flux gives the country a rare chance: to forge happier relations with continental Europe, to federalise the union and to update creaky institutions (asked to vote on a painfully expensive renovation of the Palace of Westminster in the spring, MPs should demand that Parliament move to a new, modern building). It is a test not just of Britain’s ability to evolve, but also of the very practice of muddling through. A political entity can only be sceptical and incremental most of the time if, when events demand it, it can bring about a sea-change. So let Britain’s leaders take in “The Tempest” and heed its wisdom: storms may be destructive, but they can also bring redemption. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21684803-britains-interlocking-political-dramas-may-be-just-what-country-needs-bring-tempest/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +The unexplored world: A new age of discovery + + + + + +Articles Sections Next + +The unexplored world + +A new age of discovery + +The glory-seeking adventurer of old is giving way to explorers who want to understand the planet rather than dominate it + +Jan 2nd 2016 | From the print edition + + + +TWENTY years ago this newspaper published an essay that hailed a coming “golden age of discovery”. Great expanses of the Earth were beckoning the intrepid to put their footprints on untrodden ground, scale unclimbed mountains, peer into unscrutinised forest canopies, plumb unvisited caves and dive into unfathomed seas. + +Many such challenges remain. But exploration for the sake of being the first, and testing willpower, nerve and endurance, has been giving way to a higher-minded thirst to preserve the planet for future generations. As technology advances, especially in photography and telecoms, it is getting easier for ordinary citizens to play a part. Exploration is becoming both more scientific and more democratic. + +All the same, vast unknown chunks of the world still tempt the purely adventurous. The most obvious are mountains: thousands remain unconquered. Then there are caves: speleologists, as cavers are more grandly known, reckon that a good half of them have never even been poked into. Antarctica, larger than the United States and Mexico combined, and Greenland still offer vast, untouched icebound stretches for the ultra-hardy. (The picture above shows a crevasse on Ross Island, Antarctica.) Millions of hectares of forest canopy in the Amazon Basin and in Africa and East Asia, especially Borneo and New Guinea, are yet to be inspected. Least charted of all is the seabed. Oliver Steeds, a leading British ocean explorer and film-maker, reckons that barely 1% of it has been explored. Lastly, there are still isolated peoples who have never been in contact with the outside world, and whose languages remain untranslated and unclassified. + +Start with mountains. All 14 higher than 8,000 metres have been scaled; the tallest of all, Mount Everest, has been climbed more than 7,000 times. But many thousands of peaks across the world are still unconquered, including hundreds in the Himalayas rising to 6,000-7,000 metres. Only 200-odd of the 2,800 Nepalese mountains that are higher than 6,000 metres may have been climbed, guesses Glyn Hughes, the archivist of the London-based Alpine Club. The highest unscaled mountain is Gangkhar Puensum, in Bhutan, near the border with China: the authorities have closed it to climbers to respect local beliefs. Muchu Chhish, in Pakistani Kashmir, is thought to be the highest unscaled mountain that it is still possible to get a permit to climb. It defeated a British team in 2014. + +Shifting geopolitics have opened some new ranges to Westerners wanting to display their derring-do, especially in the former Soviet republics but also in Chinese-run Tibet. Kyrgyzstan and Kazakhstan offer many challenging virgin peaks. And of course mountaineers are for ever seeking new “lines”, as they call routes, up mountains whose tops have already been reached. The sheer faces of the range of table-top mountains known as tepuis, near where Venezuela, Brazil and Guyana meet, offer a host of staggeringly hard tests. Even in Europe’s Alps new lines still beckon. + +Mountains apart, Antarctica is the continent we know least about, says Julian Dowdeswell, director of the Scott Polar Research Institute in Cambridge, England. It is the coldest, driest and windiest, and probably offers the greatest opportunity for old-style glory-seekers wanting to secure a “first”—if they can find a sponsor rich enough. In the past 20 years numerous new feats (crossings and climbs by new routes, “unsupported” by mechanical devices, for instance) have been achieved, but many more are still to be tackled. + +The most impressive endurance champion is probably Rune Gjeldnes, a Norwegian. Already the first person to cross the Arctic Ocean bringing all his provisions with him, in 2006 he became the first person to cross the Antarctic continent on skis without being resupplied. He is reckoned to be the only person to have traversed the North Pole, the South Pole and Greenland without resupplies. + +Caving offers explorers opportunities to test themselves that until recently were not even known to exist. Speleology “has changed massively” in the past two decades, says Andy Eavis, widely considered the world’s foremost caver. The Krubera cave in Georgia, near the Black Sea, down which a Ukrainian team descended in 2004, is twice as deep, at more than 2,000 metres, as the Pierre St Martin cave in the French Pyrenees, which had been reckoned the deepest when Mr Eavis plumbed it in 1971. A new technique of laser scanning can measure such “chambers” far more accurately than before. Mr Eavis still marvels at the great chambers still being found in the Malaysian state of Sarawak, on the island of Borneo. In 1981 he was the first to explore a cave there that is still the largest by area in the world—it could enclose the Hollywood Bowl. Now South China, among other places, is offering new opportunities for cavers. Its Miao Room, penetrated in 1989, is 852 metres long, and the largest by volume. + +Access to forest canopies is also being transformed by technology. Towers, balloons, inflatable rafts, light aerial walkways, drones and even giant cranes that have been helicoptered into place allow scientists to see what is going on under once-inaccessible foliage. A new remote-sensing technology known as lidar can illuminate objects high up under the canopy and analyse them through reflected light. + +The world’s most extensive unexplored place is undoubtedly the seabed. At first the aim was to get to the ocean’s very bottom. In 1960 Jacques Piccard, a Swiss oceanographer, and Don Walsh, an American, touched the floor of the Mariana Trench, the ocean’s deepest point, off the Pacific island of Guam. It is nearly 11,000 metres down; for comparison, Mount Everest rises 8,848 metres. Since then only one other person, a film-maker, James Cameron, has achieved the feat, in 2012. + +Lastly, there is one of the old-school Western explorers’ oldest quests: to find people who have never made contact with other human beings. The richest area in this respect is the Amazon Basin, mainly in Brazil but also extending into Bolivia, Colombia, Ecuador, Peru and Venezuela. (Paraguay, though not Amazonian, may also host an uncontacted people.) Estimates of the number of uncontacted groups are rising, says Fiona Watson of Survival International, an organisation that seeks to protect tribal peoples and their lands, and to help them determine their own future. Ten years ago the Brazilian government department that deals with the country’s indigenous people reckoned there were between 20 and 30 such groups. Ms Wilson now thinks there are between 70 and 80. + +The other last bastion of uncontacted people (or isolated people, as some anthropologists prefer to call them) is New Guinea, an immense island whose western chunk, West Papua, is part of Indonesia and whose eastern side comprises a country of its own, Papua New Guinea (PNG). Half a century ago, many of its people lived in complete isolation from the rest of the world: even, often, from nearby groups. In the 1990s, says Sophie Grig of Survival International, missionaries made contact for the first time with at least 40 distinct groups in West Papua. But recent experiences in Amazonia lead the group to believe that there are still isolated people in various areas of West Papua. It would generally be best for them if they stayed that way, Ms Grig thinks. + +“All of the tribes in PNG have had contact with the modern world to one degree or another,” says Jonathan Claussen, an American linguist-cum-explorer who roams PNG. But many have seen only one or two visitors in the past 40 years, he adds; many outlying regions have yet to be visited. “The last uncontacted people are usually clans and families of a tribe that live on the fringes in isolated valleys, sub-ranges and forests,” he says. A tribe may be labelled as contacted, but “perhaps only 20% of the villages have actually been visited…Whole sections of mountain ranges and valleys have had no recorded visits by researchers or travellers.” + + + +Finding and saving endangered languages is yet another challenge. Early this century Tom Headland, an expert on tribal languages in the Philippines at SIL International, a non-profit organisation formerly known as the Summer Institute of Linguistics, reckoned there were 6,809 known languages, but half had fewer than 6,000 speakers each; a quarter, fewer than 1,000. Five hundred, he wrote, had no more than 100 speakers, 200 had fewer than ten. Two languages every month were reckoned to be dying out. Yet previously unknown and not properly deciphered languages are still, he reckons, occasionally found. The Ethnologue, a scholarly compendium published by SIL, has recently put the tally of “living languages” at 7,102, but says that 2,447 are “in trouble” or “dying”. + +Don’t just show off + +While the prospect of reaching new places and even people still tantalises the adventurous, explorers have become far more conscious of a duty to preserve the environment and less keen to be seen as no more than frostbitten action heroes. Even mountaineers, still often obsessive individualists seeking to pit themselves against the forces of nature, now tend to stress their role in advancing science and protecting the environment and local people. Mr Gjeldnes took regular samples of his blood as he crossed the Antarctic to help research into the functioning of the immune system under extreme conditions. Community Action Nepal, a charity founded by a British mountaineer, Doug Scott, who in 1975 was the first Briton to scale Mount Everest, is supported by thousands of climbers across the globe. It works to improve education, health care and living conditions in the Middle Hill Regions of Nepal, the home of most of the porters who assist Himalayan climbing expeditions. + +Krubera, the world’s deepest known cave + +Today’s ocean explorers, too, think at least as much about scientific progress as about being the first to reach the bottom of another seabed. Considering its vast expanse, remarkably little is known about it. “Only 0.05% of the ocean floor has been mapped in detail,” says Mr Steeds, who has switched from desert and jungle to the ocean. The “blue economy”, he reckons, could provide a wealth of minerals such as cobalt and manganese, and new plant and fish life. He talks poetically about the five watery zones: “sunlit” means down to 200 metres; “twilit”, descending to 1,000; “midnight” to 4,000; “abyssal” to 6,000; and finally “hadal”, meaning the deepest trenches, where (not being immune to the lure of being first) he has filmed a fish at a deeper level than anyone else. + +Virtually all today’s leading explorers stress climate change. “We’ve learnt a totally new way of presenting rainforests to the world,” says Andrew Mitchell, a British zoologist who runs the Global Canopy Programme. “It’s like understanding the lining of your lungs.” Forest coverage, he reckons, hosts 40% of the world’s terrestrial biodiversity. Mr Eavis says that caving offers climatologists “an incredibly detailed history of the planet” in terms of the composition of water and the atmosphere. Bertrand Piccard, son of the late Jacques, is trying, with a British balloonist, Brian Jones, to achieve the first around-the-world trip in a solar-powered aircraft—“to promote clean technologies”. + +“The key word nowadays is discovery rather than exploration,” says John Hemming, a former director of Britain’s Royal Geographical Society and an expert on the Amazon. “The term ‘explorer’ has been diminished and debased by headline-grabbing stuntmen and adventurers.” The RGS now gives grants almost solely for research. Mr Hemming quotes Robert Ballard, an American oceanographer famous for discovering the wrecks of the Titanic and the German battleship Bismarck—but who is far prouder of his work on hydrothermal vents. “Science gives legitimacy and worth to exploration,” wrote Mr Ballard. “You see lots of stunts today, but if you’re not doing worthwhile science, you’re not an explorer.” + +Most good research, Mr Hemming continues, involves patient observation, often in the same spot, under concealment and for a long time. “It is near-impossible to do that if you’re doing it solo or travelling by some awkward method.” He notes hopefully that many countries that once took less interest in the environment, including China and Brazil, along with smaller countries, such as Oman and various African ones, are becoming keener on conservation. Brazil has improved its once-dismal treatment of indigenous peoples. Mr Mitchell says the world should be grateful to them for helping to preserve the rainforest, which in turn provides the Earth with so much of its potable water. + +Exploring an underwater cave off Fiji + +Nigel Winser, another British explorer-scientist and long-time RGS luminary who more recently worked for the Earthwatch Institute, a charity founded in the United States to study and protect the environment, praises what he calls “citizen’s science”. Advances in technology, particularly in photography and the internet, make it possible for far more people to carry out valuable research. What he calls “the revolution of the camera trap” means images of animals can be captured seemingly with no interference by humans. Drastic improvements in nocturnal and underwater photography have opened whole new vistas of knowledge. Apps nowadays make it possible to identify the species of a bird by its chirp, often on the spot. Shane Winser, another RGS stalwart (and wife of Nigel), points also to the benefits of television, since it brings the best aspects of exploration into the public domain, not least thanks to sponsorship; witness David Attenborough and Alastair Fothergill, creators of “Planet Earth” and more recently “The Hunt”, two BBC television series. + +Nigel Winser, another British explorer-scientist and long-time RGS luminary who more recently worked for the Earthwatch Institute, a charity founded in the United States to study and protect the environment, praises what he calls “citizen’s science”. Advances in technology, particularly in photography and the internet, make it possible for far more people to carry out valuable research. What he calls “the revolution of the camera trap” means images of animals can be captured seemingly with no interference by humans. Drastic improvements in nocturnal and underwater photography have opened whole new vistas of knowledge. Apps nowadays make it possible to identify the species of a bird by its chirp, often on the spot. Shane Winser, another RGS stalwart (and wife of Nigel), points also to the benefits of television, since it brings the best aspects of exploration into the public domain, not least thanks to sponsorship; witness David Attenborough and Alastair Fothergill, creators of “Planet Earth” and more recently “The Hunt”, two BBC television series. + +Not that the new zest for scientific discovery has quenched the desire to see what is over the horizon, behind the tree, up the mountain or under the sea. What Robin Hanbury-Tenison, another British explorer, who is president of Survival International, calls “the gosh factor”—that rush of amazement and catharsis when a pinnacle is reached or a mad exploit in some jungle or desert achieved—still motivates many an explorer. + +There is still no limit to the feats of endurance that people seek to achieve without a tangible scientific purpose—though often for a charitable one. Just after Christmas a 53-year-old Briton, John Beeden, became the first man to row solo non-stop across the Pacific Ocean (from San Francisco to Cairns in Australia). As Ranulf Fiennes, a British explorer, once said, people are still trying to cross the oceans “in ever tinier gin-bottles”, claiming firsts that have no bearing on science. Mountaineering still offers the same thrills it always has done. Even Everest has an almost endless list of feats yet to have been achieved. In 2006 Mark Inglis, a New Zealander, became the first double amputee to scale it. + +But, however admirable, this is not exploration or discovery. The gosh factor has been overtaken by the “do-good factor”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21684786-glory-seeking-adventurer-old-giving-way-explorers-who-want-understand/print + + + + + +Articles Sections Next + + + + + +Business + + + + +Travel visas: A strange sort of welcome + +Companies’ investment plans: From diggers to data centres + +Activists and resources companies: Icahn, you can’t + +Cruise lines: Eastward ho! + +Schumpeter: Social saints, fiscal fiends + + + + + +Articles Sections Next + +Travel visas + +A strange sort of welcome + +Governments are deterring business travellers and tourists with cumbersome visa requirements that do little to make their countries more secure + +Jan 2nd 2016 | From the print edition + + + +THE rise of big emerging economies like China and India, and the steady march of globalisation, have led to a surge in the numbers of people wanting to travel abroad for business or tourism. As a result, demand for visas is at unprecedented levels. In the fiscal year to the end of September 2014 the United States granted just under 10m visas—up from around 6m in 1997, despite blips in the wake of the terrorist attacks of September 11th 2001 and the global financial crisis of 2007-08 (see chart 1). + + + +Citizens of America, Britain and some other rich countries can travel to most places without a visa. Chinese and Indian travellers are far more likely to have to apply for them. And citizens of a few benighted places, such as Iraq and Afghanistan, have to submit to the cost and bureaucracy—and often the humiliation—of the visa-application process to get to most places (see chart 2). + + + +The most sensible response to this surge in demand for short-term visas would be for governments to streamline the application process and scrap the most onerous requirements. But governments are often not sensible about such things. The 26 European countries with a common visa policy—the “Schengen group”—require tourists from India and other developing countries to provide several months’ worth of bank statements and pay slips. Visitors to Britain often have to fill in a ten-page application form, including details of every trip abroad for the past ten years. Business travellers to India must provide two references. Mexico has scrapped a rule requiring visa applicants (including women) to submit a description of their moustaches. But in 2016 America will start requiring visas for some travellers who currently do not need them—if, for example, they have visited Iran, Iraq, Syria or Sudan in the previous five years. + +In many cases, instead of simplifying the visa process, governments have offloaded it to private contractors. Travellers may now have to pay a service fee to the company handling their application on top of the standard visa fee. The biggest firm in this growing business is VFS Global, which is part of Kuoni, a Swiss tourism company. Starting from a single premises in Mumbai in 2001, handling applications for American visas, VFS now has more than 1,900 visa centres in 124 countries, processing paperwork for 48 governments. + +Of the 113m visa applications made worldwide in 2013, one in three went through a contractor, reckons VFS, which has about half the market. Its main rivals are CSC, with around 10% of the market, and TLScontact, with around 7%. Dozens of smaller firms make up the remainder of the market. The private contractors collect and verify the applicant’s paperwork, ensure that forms are filled in properly, take fingerprints and other biometric information and collect the fees. The consular staff of the destination country simply decide whether to grant the visa, and slap a sticker in the passport of successful applicants. + +For the contractors, it is a nice little earner. VFS probably enjoys operating margins of 20%, reckons Kathleen Gailliot, an analyst at Natixis, a French bank. The companies are given a free hand to pad their earnings with pricey “premium” services. In Mumbai, for example, VFS offers Indians applying for British visas a text on their mobile phones to notify them that their passports are ready for collection, at 128 rupees ($2) a shot. For an extra 2,548 rupees, applicants can use a special “lounge” area while submitting their documents, and have their passports posted back to them. + +VFS accounts for just 5% of Kuoni’s revenues but more than 60% of its operating profits. So bright are the division’s prospects that its parent company is getting out of the tour-operator business, which it has been in since 1906, to concentrate on visa-processing and a few other specialist travel services. + +Until VFS opened its Mumbai office, applicants had to queue for an average of five hours in the sweltering heat outside the American consulate. After the job was handed to the contractor, the typical waiting time fell to one hour. However, applicants still have no choice but to submit to whatever petty demands contractors make—such as, say, banning them from using mobile phones while they sit waiting for their appointments. If the staff are rude, the queues are badly managed or the “extras” extravagantly priced, travellers can hardly take their business elsewhere. + +The application-processing firms are profiting both from travellers’ lack of choice and from governments’ failure to consider the economic damage caused by their visa requirements. There is scant evidence that making all travellers submit the same documents every time they want to travel, or provide extensive financial details, protects countries from terrorists or illegal immigrants. In contrast, there is evidence of how liberal visa regimes bring in the bucks. A report in 2014 from the European Parliament, “A Smarter Visa Policy for Economic Growth”, estimated that over-strict visa rules probably cost the EU economy 250,000 jobs and €12.6 billion ($13.8 billion) a year in lost output. It recommended requiring fewer documents from applicants, handing out longer visas and simplifying the whole process. + +Since Britain is not part of the Schengen group, Chinese people taking a tour of Europe have to apply for a second visa to cross the Channel. Only 6% of them do so, says Euromonitor, a research firm. The British Tourist Authority has complained that the country’s visa policies cost it £2.8 billion ($4.1 billion) a year in lost revenue. + +However, amid worries about the wave of asylum-seekers from Syria and elsewhere, governments in Europe and beyond will face pressure to keep making life hard for tourists and business travellers—even as other departments of those same governments spend heavily on promoting tourism and foreign investment. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21684791-governments-are-deterring-business-travellers-and-tourists-cumbersome-visa-requirements/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Companies’ investment plans + +From diggers to data centres + +Computers, research and software will be the big-ticket items in 2016 + +Jan 2nd 2016 | From the print edition + +THERE have been three great waves of corporate investment in the past two decades. First came the dotcom splurge of 1997-2001, when cash was poured into building mobile-phone networks and the internet’s backbone. Then there was the emerging-market frenzy of 2003-10. Western firms threw about $2 trillion into factories and other facilities in places like China and India. In 2005-13 there was a craze for commodities, partly driven by insatiable Chinese demand. Global energy and metals firms spent $6 trillion digging in the Australian outback and drilling for oil in North Dakota and deep beneath Brazil’s coastal waters. + + + +The dotcom boom turned to bust, emerging markets are now in poor shape and commodity prices have slumped in the past year (costing some firms’ bosses their jobs—see article). So where are companies looking to invest now? A new study by Hugo Scott-Gall, of Goldman Sachs, a bank, crunches the numbers for capital investment at more than 2,500 firms worldwide, forecasting how things will look in 2017 compared with 2014. It finds a startling divergence across industries (see chart). + +Energy, mining and chemicals firms are expected to slash their capital-investment budgets by 20-50%. Property firms are cutting back too, in part reflecting the end of China’s building boom. This has a knock-on effect on those capital-goods firms that supply equipment to these industries. For example, Caterpillar, which makes diggers used by mining and construction firms, expects its capital investment in 2016 to be half the level of 2012. + +In contrast, internet, software and other tech firms are on a high, with their budgets expected to expand by a quarter or more. Though some tech firms have gone asset-light, renting their processing power and data storage in the online “cloud”, others—including cloud-providers themselves—are splurging on hardware. In 2016 the combined capital spending of Google and Apple will be $24 billion, almost equal to Exxon’s $28 billion budget. + + + +Measured in dollars, the overall picture is of a 15% fall in corporate capital spending by 2017. Allowing for the greenback’s big rise since 2014, the fall will be just 5% or so in local-currency terms. And the figures exclude research-and-development (R&D) spending. That is rising quickly. America’s national accounts, for example, show an economy-wide decline in investment in physical plant being offset by a rise in R&D and software spending. + +However you slice the numbers, growth in capital investment is unusually concentrated. Of the industries that Goldman studied, 22 are forecast to have shrinking budgets in dollar terms and 12 are expected to grow. The top 20 spenders on R&D—firms such as Samsung, Roche, Novartis and Microsoft—account for 25% of worldwide R&D spending by listed firms, according to Bloomberg, an information provider. The corporate world seems mostly destined to stagnation, with only a few hotspots of investment and growth. + + + +So investors might hope that an elite of investment-intensive, technology-based firms will conquer new markets and increase profits faster than all others. That is certainly what Silicon Valley’s boosters think will happen. They cheer each time tech firms unveil some new area of expansion—smart watches, driverless cars, virtual-reality goggles, delivery drones. + +Yet history suggests that whenever there is a near-unanimous view on what to invest in, disaster follows as firms in those industries lose their spending discipline. The shares of Western firms exposed to energy and emerging markets have lagged the S&P 500 index by over 50% in the past two years. In 2016 it should become clearer whether the present funnelling of investment into tech-based industries reflects a step change in the way the economy works, or is just a symptom of a stagnant climate in which pockets of opportunity are hyped beyond their true potential. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21684796-computers-research-and-software-will-be-big-ticket-items-2016-diggers-data/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Activists and resources companies + +Icahn, you can’t + +Swashbucklers of the commodities boom meet their match + +Jan 2nd 2016 | From the print edition + + + +“PEOPLE call us pioneers. Well...some people say pioneers end up with arrows in their back.” So James “Jim Bob” Moffett, one of the great wildcatters of the past half-century, presaged his fate in 2012. On December 28th Freeport-McMoRan, the firm he founded and built into a global mining and oil giant, said he was stepping aside as executive chairman. + +He seems to be the latest casualty of the “Icahn effect”, the toppling of larger-than-life entrepreneurs of the commodities boom after Carl Icahn, a veteran activist investor, buys stakes in their firms and seeks to shift their focus to cost-cutting. Though Mr Moffett, a geologist, found one of the world’s largest copper and gold mines, Grasberg, in the mountains of Indonesia, in 1988, his costly pursuit of the appropriately named Davy Jones gasfield in the Gulf of Mexico, as well as controversial takeovers, upset many shareholders. So did a 70% drop in Freeport’s share price during 2015. + +Since it invested in Freeport in August, Mr Icahn’s firm has acquired two seats on the board, and the miner has halted the dividend and shrunk operations to stabilise its debt. Mr Icahn has not commented on Mr Moffett’s removal, but the defenestration fits a pattern. + +In mid-December Mr Icahn increased his stake in Cheniere Energy, which is preparing to export the first-ever shipment of liquefied natural gas (LNG) from America’s lower-48 states. After he did so, Cheniere’s board pushed out Charif Souki, its co-founder and chief executive, because it opposed his strategy of betting even bigger on LNG, despite a global glut. Acknowledging the changing times, Mr Souki displayed no hard feelings: “Am I the best person to manage a quasi-utility? I’m a builder, not a cost-cutter,” he told Forbes magazine. + +Two years earlier one of the biggest mavericks of the shale boom, Aubrey McClendon, also came a cropper after Mr Icahn invested in his firm, Chesapeake Energy. Other commodities chiefs with an overdeveloped risk appetite, such as Ivan Glasenberg of Glencore, a debt-ridden mining and trading firm, should keep looking over their shoulders. + +Mr Icahn’s victories can be pyrrhic, though. Almost all his energy investments were deep in the red in 2015. And Mr Moffett’s arrow in the back comes with a painkiller. He will become “chairman emeritus”, on $1.5m a year. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21684792-swashbucklers-commodities-boom-meet-their-match-icahn-you-cant/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cruise lines + +Eastward ho! + +The biggest cruise operators are sailing full steam ahead to China + +Jan 2nd 2016 | From the print edition + +Sailing and shopping, the perfect mix + +EVERY New Year, cruise lines brace themselves for “wave season”—the first three months of the year, in which nearly a third of all holidays at sea are booked. They will do well to improve on their 2015 results. On December 18th Carnival, the world’s largest operator, with more than 40% of a global market worth nearly $40 billion a year, announced a record $2.1 billion in full-year earnings, 40% up on 2014, thanks to buoyant demand and cheap fuel oil. Along with Royal Caribbean Cruises (RCL) and Norwegian Cruise Line (NCL), the trio now control around 80% of the industry. + +Amid worries that demand for cruises may be peaking in some rich countries, the big three are now piling into the biggest potential market of all, China. Although Carnival based its first ship—the Costa Allegra—at a mainland Chinese port back in 2006, only in the past year have the big three got serious about moving capacity there from America and Europe. + +In 2016 Carnival plans to increase the number of its ships in China from four to six. In October it announced the launch of a joint venture with a Chinese shipbuilder and China Investment Corporation, a sovereign-wealth fund, to establish the first new cruise brand aimed at the domestic Chinese market. RCL, which had three ships based in China in 2014, now has four and will add a fifth in the next few months. NCL, which has hitherto stayed away, plans to enter the Chinese market in 2017. + +Carnival and RCL no longer send elderly cast-off hulks from America and Europe to China. Now they send their newest and best, such as RCL’s Quantum of the Seas, a megaship that can carry 4,180 holidaymakers, which has been based in Shanghai since June 2015. + +Such are Carnival’s hopes for the Chinese market that it recently moved its chief operations officer, Alan Buckelew, to Shanghai to oversee the firm’s expansion there. The number of Chinese households earning over $35,000 a year—the figure the industry sees as the point at which foreign travel takes off—has increased from 6m to more than 27m over the past decade, according to Oxford Economics, a consulting firm. The number of mainland holidaymakers going on cruises—a comparatively fuss-free way of travelling abroad for the first time—has been growing by around 80% a year, and is expected to keep doing so despite China’s slowing growth rate. The government wants to promote the cruise-lines business together with the building of the ships it uses, as part of a rebalancing of the economy towards consumption in its latest five-year plan. + +The Chinese market is also very profitable. This is partly because higher daily rates can be charged for the short, four-to-six-night cruises that are more popular in China, but also because the Chinese spend far more onboard. They are less interested than Americans or Britons in boozing and spa treatments, but keener on gambling, and really go to town in the onboard shops, buying such things as foreign-made appliances. One recent shopping craze on Carnival’s Chinese ships was for Japanese rice cookers, Mr Buckelew says. + +If China’s economic slowdown intensifies, or if consumer interest in cruises turns out to be a fad, the operators risk being left with excess capacity and having their margins squeezed. Even so, betting on the rise of the Chinese holidaymaker looks more attractive than sticking to the main Western markets. + +In Europe bookings have been hit by recent terrorist attacks in France and north Africa, according to Greg Badishkanian, a cruise-line analyst at Citigroup, a bank. And in Britain cruise-passenger numbers have been falling since 2013 because newly retired people, staple customers, have less disposable income than the previous generation of pensioners, who are now too old to travel. The future plans of the big three operators suggest they have concluded that the American market is saturated and has poor growth prospects. In 2017 there could be the first fall on record in North American cruise-ship capacity, according to Robin Farley, an analyst at UBS, another bank. For the moment, the decision by the big three to sail for China is a choice. But it could become a necessity. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21684800-biggest-cruise-operators-are-sailing-full-steam-ahead-china-eastward-ho/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Social saints, fiscal fiends + +Opinions vary on whether firms can be “socially responsible” while avoiding taxes + +Jan 2nd 2016 | From the print edition + + + +PFIZER has always prided itself on its commitment to corporate social responsibility (CSR). The drugs giant talks loftily about “embracing our responsibility to society”. It insists that it does as much as it can to make sure that the world’s poor can gain access to its products. It is particularly proud of the work that it does with NGOs and “other global health stakeholders” to strengthen and improve health-care systems. But this has not deterred it from seeking a gargantuan “tax inversion”. The company intends, as part of a $160 billion takeover of Allergan, to shift its tax domicile from America to Ireland, where Allergan is domiciled, and where corporate-income taxes are considerably lower. Pfizer’s shareholders no doubt rejoiced: in 2014 the company would have saved $1 billion of the $3.1 billion it paid to the US Treasury. But many Americans were outraged: Hillary Clinton, the front-runner for the Democratic presidential nomination, promised to impose an “exit tax” on companies that engage in such tactics. + +A paper in the January issue of the Accounting Review suggests that Pfizer is far from unusual in trying to perform this pro-CSR, anti-tax straddle. David Guenther of the University of Oregon’s Lundquist College of Business and his co-authors compared the effective tax rates paid by a sample of American firms between 2002 and 2011 with a measure of those companies’ CSR programmes compiled by MSCI, an index provider. It found that the companies which do the most CSR also make the most strenuous efforts to avoid paying tax—and that those with a high CSR score also spend more lobbying on tax. + +The most obvious explanation for this inverse relationship is hypocrisy. Surely CSR depends on the idea that firms have an obligation to society, not just to shareholders? And surely the most basic obligation to society is to pay the taxes that support the poor and vulnerable? Another explanation is that firms are not monoliths but collections of rival fiefs with different priorities. The department that oversees the CSR programmes, and thus has an interest in boosting their budgets, may never talk to those in the finance department who are paid to minimise the tax bill. + +Mr Guenther and his colleagues suggest two more intriguing explanations. The first is that companies intentionally embrace CSR for exactly the same reason they try to reduce their taxes—to maximise their profits. There is some evidence that companies with large CSR programmes find it easier to attract talented workers (particularly among the millennial generation) and to generate a buzz around their products. Baruch Lev of New York University has found that companies with higher CSR scores have higher revenue growth. Yet the more vigorous companies are in reducing their taxes, the more they destroy any social capital that they have accumulated through CSR. Starbucks recognised how much damage its British operation had done to its reputation when the extent of its tax planning was exposed in 2012, and promised to pay around £10m (then $16m) a year in each of the following two years, whether or not it was profitable. + +The second possible explanation is that companies regard CSR and taxes as substitutes for each other: the less you pay in taxes, the more you have left over for good works. Firms might even convince themselves that they have a moral obligation to reduce their tax bills: they have no control over what governments do with their taxes, whereas they can select their CSR projects and ensure they are run efficiently. + +These rival theories reflect conflicting ideas on what counts as a socially responsible company. The view put forward by various international bodies that seek to set standards for corporate behaviour, and accepted by many big European firms, is that responsible firms should pay a fair share of taxes while privately sponsoring some do-gooding on top of this. The Global Reporting Initiative, which issues guidelines on how companies should report their “sustainability” efforts, recommends that they provide detailed information on their tax payments, since the public wants to know what they are contributing to the sustainability of “a larger economic system”. The UN Global Compact, a body that presses firms to align themselves with universal social goals, encourages them to collaborate with governments and other organisations to “generate more taxes”. + +The business of business: discuss + +However, many CEOs, particularly in America, take a different view: that the best way for companies to contribute to the common good is to succeed as businesses. Furthermore, they argue, the more money they can keep from the government’s clutches, the more they can invest in new plants (which create jobs in the short term) or research (which creates jobs in the longer term). And the more money they will have left over for good causes as well: thus Intel’s 2011 CSR report stated that the company “believes in promoting tax policies that encourage innovation and competition around the world”, while 3M’s sustainability report for the same year stated that its top public-policy objective was “To make the case for tax reform and lower US corporate-tax rates for a more level global playing field”. + +The CEO school of corporate responsibility has something going for it. Such bosses are right to argue that a business’s main contribution to society is to provide jobs and income. They are also right to argue for tax harmonisation: America has only itself to blame if firms revolt against its high corporate-tax rate. But they should recognise that there is a big difference between moving to a place like Ireland because it has made a more sensible trade-off between collecting taxes and promoting business, and indulging in contortions such as the “Double Irish with a Dutch Sandwich”, whose only aim is to avoid paying taxes anywhere. They also need to recognise that there is a big difference between worrying that government is inefficient and pretending that it is irrelevant, and thus that contributing to its upkeep is unnecessary. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21684770-social-saints-fiscal-fiends-opinions-vary-whether-firms-can-be-socially-responsible/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Global inflation: Low for longer + +The first venture capitalists: Fin-tech + +Buttonwood: Tales of the unexpected + +European insurance firms: One rule to bind them all + +South-East Asian integration: More hat than cattle + +Free exchange: Exit, pursued by bear + + + + + +Articles Sections Next + +Global inflation + +Low for longer + +Inklings of inflation in the rich world are outweighed by downward pressure on prices elsewhere + +Jan 2nd 2016 | From the print edition + + + +EVER since the financial crisis of 2008, forecasters have scanned the horizon for the next big disruption. There are plenty of candidates for 2016. China’s economy, whose might acted as a counterweight to the slump in the rich world in the years after the crisis, is now itself a worry. Other emerging markets, notably Brazil, remain in a deep funk. The sell-off in the high-yield-debt market in December has prompted fears of a broader re-pricing of corporate credit this year. + +Yet one worry is absent: financial markets are priced for continued low inflation or “lowflation”. A synthetic measure, derived from bond prices, puts expected consumer-price inflation in America in five years’ time at around 1.8%. That translates into an inflation rate of around 1.3% on the price index for personal-consumption expenditure (PCE), the measure on which the Federal Reserve bases its 2% inflation target. Ten-year bond yields are just 2.3% in America, and are below 2% in Britain and below 1% in much of the rest of Europe. The price of an ounce of gold, a common hedge against inflation, has fallen to $1,070, far below its peak in 2011 of $1,900. Yet market expectations are often confounded. Economic recoveries are maturing. Labour markets are tightening. Could inflation be less subdued than expected in 2016? + + + +Rich-world inflation is currently depressed because of temporary influences. In America the PCE index rose by just 0.4% year on year in November—but that is in large part because of a sharp fall in consumers’ energy prices in early 2015, which will soon drop out of the annual comparison. The core measure, which excludes food and energy prices, has been stable at 1.3% for months. It might also be somewhat suppressed by the sharp fall in oil prices, which has held down the cost of producing other sorts of goods and services. An analysis by Joseph Lupton of J.P. Morgan finds that core inflation worldwide has crept up to 2.3%, a rate that has rarely been exceeded in the past 15 years. In biggish emerging markets, including Brazil, Russia and Turkey, core inflation is above the central bank’s target (see chart). + +A low blow + +In the view of some, lowflation is a relic of the past. Even the euro zone is recovering from its prolonged recession; the business cycle in other rich economies is more advanced. The debt hangover that has troubled them for almost a decade has faded. Job markets are also a lot tighter than a few years ago, when deflation was a serious concern. Unemployment in America has fallen to 5%, a rate which is close to many estimates of full employment. The jobless rate in Britain is 5.2%. In Germany it is 6.3%. If the recent trend of low productivity growth in these economies continues, bottlenecks in the jobs market will emerge and higher inflation may not be far behind. For instance, if America’s GDP grows by 2.3% in 2016, its recent average, and growth in output per worker also matches its recent sluggish trend, the unemployment rate would decline further, to around 4%, reckons Mr Lupton. The lower the jobless rate goes, the more likely it is that wages—and eventually inflation—will pick up. + +As rich countries were wrestling to reduce their debts, emerging markets went on a credit binge for which the reckoning is just beginning. Debt in China in particular has risen sharply relative to GDP since 2008. Some of the resulting stimulus went into factories, leading to overcapacity and falling global prices for various goods, from steel to solar panels. But a lot of China’s debt went on financing housing and infrastructure, rather than its export capacity. Moreover, the Chinese authorities’ desire to avoid big lurches downwards in the yuan ought to minimise the risk that it exports lowflation to the rest of the world. + +Nonetheless, the expectations projected by bond markets—that lowflation will persist—have sound underpinnings. For a start, the price of oil and other commodities does not yet seem to have reached bottom. The price of a barrel of oil fell to an 11-year low of under $36 before Christmas, before rallying a little on hopes of renewed stimulus in China. Saudi Arabia is pumping at close to capacity, in an effort to force out high-cost producers such as America’s shale-oil firms and thus grab a bigger slice of the global market. The strategy has had some success. For instance, the number of oil-rigs operating in America has fallen from around 1,500 a year ago to just 538, according to Baker Hughes, an oil-services firm. But oil production in America remains above 9m barrels a day, and Iran’s exports are likely to increase in 2016, thanks to the lifting of Western sanctions. For the time being, the oil market heavily favours buyers over sellers. + +Where inflation can be found in the world, it is not obviously a function of capacity constraints. The biggish economies in which core inflation is above the central bank’s target tend to be commodity exporters that have suffered big falls in their currencies. That, in turn, has stoked domestic inflation. Core inflation is typically well below target in countries that are importers of raw materials. And despite tighter labour markets in rich countries, wages are not rising very fast. That might in part be because of low expectations of inflation. + +It seems likely, also, that the debt burden in emerging markets, and the slower growth that usually comes after a credit binge, will bear down on global prices for a while. Even if China’s spare capacity is not fully exportable, plenty of other emerging markets have built mines and factories in expectation of higher Chinese growth that will now prove redundant. As nervous investors creep back to the comparative safety of developed markets, the upward pressure on big currencies, notably the dollar, will increase—adding to downward pressure on local prices. + +As was the case in the late 1990s, rich-world policymakers will find that they have to keep their domestic economies primed with low interest rates to offset disinflation from abroad. The strong dollar has already caused a split in American industry between strong services and weaker manufacturing. Lopsided economies may prove as hard for policymakers to steer as deleveraging ones. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21684802-inklings-inflation-rich-world-are-outweighed-downward-pressure/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The first venture capitalists + +Fin-tech + +Before there were tech startups, there was whaling + +Jan 2nd 2016 | NEW BEDFORD | From the print edition + + + +FEW industries involve as much drama and risk as whaling did. The last voyage of the Essex, which inspired Herman Melville’s classic, “Moby Dick”, and is the subject of a new film, “In the Heart of The Sea”, gives a sense of the horrors involved. The ship left Nantucket in 1819 and sailed for over a year before being destroyed by a whale it was hunting. The 20 crew members survived the sinking, but found themselves adrift in the Pacific in three longboats, with little food and no water. Three opted to stay on a desert island, from which they were rescued three months later, on the verge of starvation. The others sailed on, hoping to reach South America but dying one by one. At first the survivors buried the dead at sea; then they resorted to eating the corpses of their crewmates. When they ran out of bodies, they drew lots to decide whom to shoot and eat. Only five of the 17 were eventually rescued. By then, they were so delirious that they did not understand what was happening. + +The only reason that anyone could be induced to take part in such a dangerous business was the fabulous profit that could be made. Gideon Allen & Sons, a whaling syndicate based in New Bedford, Massachusetts, made returns of 60% a year during much of the 19th century by financing whaling voyages—perhaps the best performance of any firm in American history. It was the most successful of a very successful bunch. Overall returns in the whaling business in New Bedford between 1817 and 1892 averaged 14% a year—an impressive record by any standard. + +New Bedford was not the only whaling port in America; nor was America the only whaling nation. Yet according to a study published in 1859, of the 900-odd active whaling ships around the world in 1850, 700 were American, and 70% of those came from New Bedford. The town’s whalers came to dominate the industry, and reap immense profits, thanks to a novel technology that remains relevant to this day. They did not invent a new type of ship, or a new means of tracking whales; instead, they developed a new business model that was extremely effective at marshalling capital and skilled workers despite the immense risks involved for both. Whaling all but disappeared as an industry after mineral oil supplanted whale oil as a fuel. But the business structures pioneered in New Bedford remain as relevant as they ever were. Without them, the tech booms of the 1990s and today would not have been possible. + +Most historians trace the origins of the modern company back to outfits like the Dutch East India Company and its British equivalent. These were given national monopolies on trade in certain goods or with certain places. This legally buttressed status allowed them to fund themselves by selling shares to the public, helping to get stockmarkets off the ground. The managers of these multinational enterprises were professionals with only small ownership stakes. Lower-level employees generally had no shareholding at all. + +By eliminating dependence on individual owners or managers, these entities became self-perpetuating. But their monopolies also embroiled them in politics and led inevitably to corruption. Both the British and Dutch versions ended up requiring government bail-outs—a habit giant firms have not yet kicked. + +The whaling industry involved a radically different approach. It was one of the first to grapple with the difficulty of aligning incentives among owners, managers and employees, according to Tom Nicholas and Jonas Peter Akins of Harvard Business School. In this model, there was no state backing. Managers held big stakes in the business, giving them every reason to attend to the interests of the handful of outside investors. Their stakes were held through carefully constructed syndicates and rarely traded; everyone was, financially at least, on board for the entire voyage. Payment for the crew came from a cut of the profits, giving them a pressing interest in the success of the voyage as well. As a consequence, decision-making could be delegated down to the point where it really mattered, to the captain and crew in the throes of the hunt, when risk and return were palpable. + +The investors often ended up underwater too + +At the top of the New Bedford hierarchy was an agent or firm of agents like Gideon Allen, responsible for the purchase and outfitting of the ship, the hiring of the crew and the sale of the catch. To give them an incentive to cut the best deals possible, the agents put up a big share of the investment. Those with the best reputation received better terms from the other investors. Captains, who ran the show while the ship was at sea, often put up capital as well. A similar system of incentives is used in the riskier reaches of the investment-management business today, notes Mr Nicholas. + +Investors received half to two-thirds of the profits. The rest was divided among the crew in what was known as the “lay” system. A captain might get a 12th lay (one-twelfth of the remaining profit). In Melville’s novel, Ishmael, who was new to the business, was originally offered a 777th lay but managed to haggle a 300th. Although that would probably have proved a paltry amount, it was a stake nonetheless, and set a benchmark for future pay. Ishmael’s friend Queequeg, a cannibal from the South Sea islands, got a 90th lay because he had experience with a harpoon. Demand for experienced crewmembers was so high that the Essex’s ill-fated captain, George Pollard, was immediately given a second command on the ship that rescued him (which sank as well). + +Every participant wanted to bring in returns quickly, but there were no artificial deadlines—nothing resembling what is now called “quarterly capitalism”. When whales became rare in accessible places, the crews from New Bedford extended their search to every corner of every ocean, however many years that took. + +Safety in numbers + +To ensure that they were not ruined by a few disastrous voyages, the whaling firms invested in multiple expeditions at the same time, much as the venture capitalists of today “spray and pray”. A study published in 1997 concluded that, of the 787 boats launched from New Bedford during the 18th century, 272 sank or were destroyed. The firm that belonged to George Howland was not atypical: of its 15 ships, between four and nine were at sea at any given moment. One was sunk by a whale, three lost at sea, two burned by their crews, one destroyed by a Confederate gunboat during America’s civil war and five abandoned in Arctic ice. Yet Howland died a millionaire in 1852. + +It helped that most of the whalers of New Bedford were strict Quakers, who prized frugality and shunned ostentation. This helped them not only husband their own capital, which was needed to finance voyages, but also to win over other investors. Hetty Howland Green, one of the richest agents, was said to have made her own shoes and to have owned only one dress. + +It also helped that they were open-minded: they readily employed anyone who could contribute to their ventures. Perhaps the single most important technological innovation used by New Bedford’s whaling fleet was the “Temple Toggle”, a harpoon tip devised by Lewis Temple, a former slave from Virginia. + +But the whalers’ main asset was their business model. In the 1830s, the legislatures of six American states approved charters for whaling corporations giving them the right to raise capital by selling shares to the public—much the same corporate structure as the Dutch and British East India Companies. None of the six survived the 1840s. “The diffuse ownership structure of the corporations, and the reduced stakes held by their managers, likely diminished the incentives for the managers to perform their role diligently,” concludes Eric Hilt of Wellesley College. Given the expense of buying, outfitting and launching a boat into the perilous ocean, the link between risk and reward needed, it seems, to be tighter. + +The lay system could work to the crew’s disadvantage, however. In an effort to reduce claims on the crew’s share of the profits, ruthless captains were said to abandon men on the trip home. (Similar shedding of employees is not unheard of at contemporary tech startups before a big payout.) Other schemes existed to cheat crew members, such as forcing them to buy clothing at inflated prices or to pay usurious interest on advances on their pay. And open-mindedness went only so far: although black sailors were not discriminated against in terms of pay, they were treated less well in other respects, receiving less food and worse quarters. + +Yet the New Bedford system was undeniably effective. It soon emptied the oceans of whales, even as other lucrative opportunities emerged for daredevils determined to strike it rich, such as the California gold rush. “The same industrial growth that initially supplied markets and profits for whaling activity ultimately yielded opportunities more attractive than whaling to local capital,” wrote David Moment, a student at Harvard Business School, in 1957. In short, with returns dwindling, the crews and the capitalists turned to other ventures. But the business practices they developed are used in high-risk, high-return industries to this day. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21684805-there-were-tech-startups-there-was-whaling-fin-tech/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Tales of the unexpected + +Five potential surprises for 2016 + +Jan 2nd 2016 | From the print edition + +INVESTORS often start the calendar year in a buoyant mood, only to be caught out by unexpected events. It is almost inevitable that the consensus will be proved wrong in some respects, not least because the views of most investors will already be reflected in market prices. + +So this column would like to suggest five potential surprises for 2016. The definition of a surprise is something that the consensus (as judged by betting sites or polls of fund managers) does not expect. + +The first surprise may be that the dollar weakens, not strengthens. The consensus view is that the Federal Reserve, having pushed up rates before Christmas, will tighten monetary policy two or three more times in 2016. Higher rates will make investors eager to buy the dollar, especially as both the European Central Bank and the Bank of Japan will keep their rates near zero. However, the dollar has already had a very good run, so higher rates may already be priced into the currency. As it is, investors seem to doubt that the Fed will tighten as much as the central bank currently projects. The actual outcome may be feebler still (see article). + +The second surprise may be too familiar to deserve the name. Commentators have been calling an end to the bull market in government bonds for many years now, and the pundits are expecting much the same in 2016. But persistently low inflation and the support of central banks have kept yields low to date, and may keep doing so. It is all reminiscent of Japan: since 2000, so many investors have failed to profit from betting on higher Japanese yields that the trade is known as the “widowmaker”. In the developed world, pension funds, insurers and retired workers are all eager buyers of fixed-income assets. Perhaps bond yields will edge higher in 2016, but not by very much. + +These two surprises may have a common cause: the failure of the global economy to grow as rapidly as some hope. In turn, economic sluggishness seems likely to drive voter discontent. And that may lead to the third and fourth surprises. + +American political risk could dog the markets in late 2016. At the start of 2015, investors probably anticipated a dynastic clash between Jeb Bush and Hillary Clinton. But the Republican candidate seems more likely to be either Donald Trump or Ted Cruz. The former has argued for a ban on Muslims coming to America and a wall on the southern border; the latter’s proposals include a flat income tax, a sales tax and a monetary system linked to gold. Although Mrs Clinton would be the favourite in a race against either man, she is a flawed candidate, mistrusted by many voters. The prospect of a Cruz or Trump presidency would lead to considerable uncertainty in the markets: should either man be elected, would they try to stick to their campaign pledges and would Congress let them? Indeed, this uncertainty might be another reason why the dollar may struggle in 2016. + +Political risk might also be a problem in Britain, which is likely to hold a referendum on leaving the European Union in 2016. It is widely assumed that Britons will vote for the status quo: that outcome has a 78% probability on the PredictIt website. But opinion polls show that the “remain” and “leave” camps are almost deadlocked and the press is fairly Eurosceptic. Voters might use the referendum as a means of protesting against high levels of immigration, which the government has promised, but failed, to reduce. + +If Britain votes for exit, there will be much uncertainty about the country’s attractiveness to foreign investors. Scottish voters are much more pro-EU than English ones, and Brexit would prompt calls for a second independence referendum so Scotland could stay in the single market. David Cameron, Britain’s prime minister, would surely have to resign if his referendum gamble backfired. All this might be good reason to sell the pound. + + + +The final surprise might be more benign: emerging markets could perform rather better than investors expect. A poll of fund managers in December by Bank of America-Merrill Lynch found that pessimists on emerging markets outnumbered optimists by 27 percentage points. There is plenty of bad news: China’s slowdown, falling commodity prices and recessions in Brazil and Russia, for example. But this may have been built into prices; the MSCI emerging-market index has fallen by 20% over the past six years while the S&P 500 index is up by 40% (see chart). It may be time for a rebound. + +Not all of these surprises will come to pass, of course. But it seems likely that at least one or two will. Predicting which ones may mark the difference between success and failure for investors in 2016. + +Economist.com/blogs/buttonwood + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21684807-five-potential-surprises-2016-tales-unexpected/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +European insurance firms + +One rule to bind them all + +New regulations will give a better sense of the soundness of Europe’s insurers + +Jan 2nd 2016 | From the print edition + + + +LIKE banks, insurers need a cushion of capital to ensure that they can meet customers’ claims in the event of unexpectedly big payouts or poor investment performance. As at banks, these cushions have at times proved woefully thin. In theory, all that changes on January 1st—in the European Union, at least—when a new set of regulations known as Solvency 2 comes into force. After more than ten years of negotiation, all European insurers will have to follow uniform rules on capital that are designed to make the firms more robust and allow investors and customers to assess their strength much more easily. + +Not everyone is thrilled at this prospect. Mention “upcoming regulatory changes” to an insurance executive and a tirade inevitably follows about ambiguities and inconsistencies within the new rules, discrepancies in enforcement and the mountains of paperwork involved. Some firms have had to bolster capital in anticipation: Delta Lloyd, a Dutch insurer, announced in November that it would raise €1 billion ($1.1 billion). The rules favour diversified firms, so those that offer just one form of insurance are under pressure to merge. That impetus contributed to several deals involving specialist insurers in 2015, including Fairfax’s purchase of Brit in February and XL’s takeover of Catlin in May. Anxious bosses have trimmed the industry’s own debts to relatively low levels. + +Some of the disgruntlement is legitimate. Regulators themselves seem to agree that the current risk weightings unduly penalise investments in long-term debt tied to infrastructure; some government bonds, in contrast, may be considered too safe. European firms with big international operations say it is not clear to what extent Solvency 2 applies to their non-European subsidiaries. Transitional rules designed to make life easier for German life insurers in particular will shield them from some elements of the new rules for up to 16 years. + +Then there is the question of how many insurers will be allowed to substitute internal models for the standardised formulae used to calculate capital requirements. Some big firms, including 19 in Britain, have persuaded their national regulator that their own calculations are at least as good as the prescribed ones. More firms will apply in 2016, in the hope of trimming the amount of capital required and thus increasing profits. + +To some extent that undermines the logic of a uniform system, by making insurers using internal models and those using the standard one hard to compare, says Jim Bichard of PwC, an accounting firm: “The solvency ratios will be all over the place and there’s a high risk of misinterpretation.” It also raises the concern that some of the national regulators charged with applying the new rules will be more lenient than others. The British and Dutch ones, for example, are thought to be more exacting than their Italian counterpart. + +Yet whatever Solvency 2’s failings, the new regime will still provide a continent-wide benchmark for the first time. “It will confirm who is strong and who is weak,” says David Prowse of Fitch, a rating agency. The strong will presumably start to put their excess capital to work, making acquisitions or returning cash to shareholders. The weak, meanwhile, will have to boost their capital, trim their liabilities by offering stingier policies, sell capital-intensive parts of the business or fall into the arms of one of their brawnier counterparts. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21684810-new-regulations-will-give-better-sense-soundness-europes-insurers-one/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +South-East Asian integration + +More hat than cattle + +A seamless regional economic bloc is just around the corner—as always + +Jan 2nd 2016 | SINGAPORE | From the print edition + +Opening up, ASEAN-style + +GRANDIOSE statements from the Association of South-East Asian Nations (ASEAN) are the region’s Christmas crackers: they appear at regular intervals, create a commotion but contain little of substance. In November the leaders of the club’s ten members declared that the ASEAN Economic Community (AEC)—a single market around which goods, services, capital and “skilled labour” are supposed to flow freely—would come into being on December 31st. So will South-East Asia’s 622m people wake up in a new world in 2016, or will the AEC prove another paper crown? + +The answer probably lies somewhere in the middle. For one thing, much of the work towards economic integration has been done: by ASEAN’s reckoning, 79.5% of the measures the AEC involves have already been implemented. ASEAN already attracts large amounts of foreign investment, and its leaders have been talking up integration and regionalism since the organisation was founded in 1967. So the AEC represents less a radical change than an attempt to accelerate existing trends. + +But anyone hoping that ASEAN is about to turn into an Asian version of the European Union will be disappointed. European integration is fundamentally a political project with an inward focus, argues Jayant Menon of the Asian Development Bank, which has led to a mushrooming of institutions. The AEC, in contrast, is an economic project, with almost no institutional heft—just a small secretariat—devoted to “outward-oriented regionalism”. It is designed to make the region an easier and more attractive place for foreign companies to do business and thus to boost trade and investment. + +Those missions are helped by ASEAN’s economic dynamism. Between 2007 and 2014 regional GDP doubled, from $1.3 trillion to $2.6 trillion, and GDP per person grew from $2,343 to $4,135. Total internal and external trade grew from $1.6 trillion to $2.5 trillion, and foreign direct investment rose from $85 billion to $136 billion. Viewed as a single economy, ASEAN is the world’s seventh-largest and Asia’s third-largest, behind China and Japan. And while China and Japan are ageing rapidly, ASEAN remains young, with more than half its population under 30. China’s slowdown has taken its toll on the region—particularly on commodity exporters such as Malaysia and Indonesia—but its young workforce, improving infrastructure and rising incomes leave it poised for strong future growth. + +Behind those aggregate figures, though, lie vast differences, not all of which are conducive to economic integration. Vietnam and Laos are communist dictatorships; Brunei an absolute monarchy; the Philippines and Indonesia rowdy democracies. Singapore was founded as a trading entrepot in 1819; Indonesia has a history of protectionism. Perhaps inevitably, the commitment of such a diverse bunch to regional integration, and the pooling of sovereignty it implies, is not as strong as ASEAN’s triumphant statements suggest. There is no mechanism to enforce the group’s many agreements and treaties. Regional banking systems and capital markets remain unintegrated. Tariffs may vanish, but non-tariff barriers pop up in their place. Members continue to set their own intellectual-property, land-use and immigration policies. + +The rules regarding the free movement of “skilled labour” provide a good illustration of the AEC’s limitations. Under its mutual-recognition arrangements (MRAs), certain professional qualifications from any member are deemed valid in all the others, allowing holders of them to work throughout the region. But the AEC’s MRAs cover only eight professions, accounting for just 1.5% of ASEAN’s total workforce. Moreover, even in these fields, other domestic regulations inhibit foreign workers. Nursing, for instance, is among the eight professions subject to an MRA, but to work in Thailand nurses still must pass a qualifying exam in Thai. As Mr Menon points out, this is short-sighted: English-speaking Filipino nurses would be a boon to Thailand’s burgeoning medical-tourism sector. + +Knitting South-East Asia together economically sounds appealing, but the political will to make it happen is hard to find. For the moment, ASEAN seems more focused on the letter than the spirit of regional integration. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21684811-seamless-regional-economic-bloc-just-around-corneras-always-more-hat/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Exit, pursued by bear + +The Fed has at last raised rates. What happens next? + +Jan 2nd 2016 | From the print edition + + + +IT IS more than two weeks since the Federal Reserve raised interest rates for the first time in over nine years, and the world has not (yet) ended. But it is too soon to celebrate. Several central banks have tried to lift rates in recent years after long spells near zero, only to be forced to reverse course and cut them again (see chart). The outcome of America’s rate rise, whatever it may be, will help economists understand why zero exerts such a powerful gravitational pull. + +Recessions strike when too many people wish to save and too few to spend. Central banks try to escape the doldrums by slashing interest rates, encouraging people to loosen their grip on their money. It is hard to lower rates much below zero, however, since people and businesses would begin to swap bank deposits for cash or other assets. So during a really nasty shock, economists agree, rates cannot go low enough to revive demand. + +There is significant disagreement, however, on why economies become stuck in this quagmire for long periods. There are three main explanations. The Fed maintains that the problem stems from central-bank paralysis, either self-induced or politically imposed. That prevents the use of unconventional monetary policies such as quantitative easing—the printing of money to buy bonds. The intention of QE is to buy enough long-dated debt to lower long-term borrowing rates, thereby getting around the interest-rate floor. Once QE has generated a speedy enough recovery, senior officials at the Fed argue, there is no reason not to raise rates as in normal times. + +If the Fed is right, 2016 will be a rosy year for the American economy. The central bank expects growth to accelerate and unemployment to keep falling even as it lifts rates to 1.5% or so by the end of the year. Yet markets reckon that is wildly optimistic, and that rates will remain below 1%. That is where the other two explanations come in. + +The first is the “liquidity trap”, an idea which dates back to the 1930s and was dusted off when Japan sank into deflation in the late 1990s. Its proponents argue that central banks are very nearly helpless once rates drop to zero. Not even QE is much use, since banks are not short of money to lend, but of sound borrowers to lend to. + +Advocates of this theory see only two routes out of the trap. The government can soak up excess savings by borrowing heavily itself and then spending to boost demand. Or the central bank can promise to tolerate much higher inflation when, in the distant future, the economy returns to health. The promise of higher-than-normal inflation in future, if believed, reduces the real, or inflation-adjusted, interest rate in the present, since money used to repay loans will be worth less than the money borrowed. Expectations of higher future inflation therefore provide the stuck economy with the sub-zero interest rates needed to escape the rut. + +Governments pursued both these policies in the 1930s to escape the Depression. But when they reversed course prematurely, as America’s did in 1937, the economy suffered a nasty and immediate relapse. The liquidity-trap explanation suggests the Fed’s rate rise was ill-advised. The American economy, after all, is far from perky: it is growing much more slowly than the pre-crisis trend; inflation is barely above zero; and expectations of inflation are close to their lowest levels of the recovery. If this view is correct, the Fed will be forced by tumbling growth and inflation to reverse course in short order, or face a new recession. + +Stuck in a glut + +There is a third version of events, however. This narrative, which counts Larry Summers, a former treasury secretary, among its main proponents, suggests that the problem is a global glut of savings relative to attractive investment options. This glut of capital has steadily and relentlessly pushed real interest rates around the world towards zero. + +The savings-investment mismatch has several causes. Dampened expectations for long-run growth, thanks to everything from ageing to reductions in capital spending enabled by new technology, are squeezing investment. At the same time soaring inequality, which concentrates income in the hands of people who tend to save, along with a hunger for safe assets in a world of massive and volatile capital flows, boosts saving. The result is a shortfall in global demand that sucks ever more of the world economy into the zero-rate trap. + +Economies with the biggest piles of savings relative to investment—such as China and the euro area—export their excess capital abroad, and as a consequence run large current-account surpluses. Those surpluses drain demand from healthier economies, as consumers’ spending is redirected abroad. Low rates reduce central banks’ capacity to offset this drag, and the long-run nature of the problem means that promises to let inflation run wild in the future are less credible than ever. + +This trap is an especially difficult one to escape. Fixing the global imbalance between savings and investment requires broad action right across the world economy: increased immigration to countries with ageing populations, dramatic reforms to stagnant economies and heavy borrowing by creditworthy governments. Short of that, the only options are sticking plasters, such as currency depreciation, which alleviates the domestic problem while worsening the pressure on other countries, or capital controls designed to restore monetary independence by keeping the tides of global capital at bay. + +If this story is the right one, the outcome of the Fed’s first rises will seem unremarkable. Growth will weaken slightly and inflation will linger near zero, forcing the Fed to abandon plans for higher rates. Yet the implications for the global economy will be grave. In the absence of radical, co-ordinated stimulus or restrictions on the free flow of capital, ever more of the world will be drawn, indefinitely, into the zero-rate trap. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21684797-fed-has-last-raised-rates-what-happens-next-exit-pursued-bear/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Aircraft engines: Flying’s new gear + +The future of the Nobel prize: Throw caution to the wind? + +Meteorology: Barmy weather + + + + + +Articles Sections Next + +Aircraft engines + +Flying’s new gear + +A quieter, more economical jet engine, fitted with a gearbox, is about to arrive + +Jan 2nd 2016 | From the print edition + + + +EVERYONE remembers the Wright brothers, who made the first powered, heavier-than-air flights by human beings on a beach in North Carolina in 1903. Few, by contrast, remember Charlie Taylor, a mechanic at the brothers’ bicycle business in Dayton, Ohio. Yet it was Taylor who, by building an internal-combustion engine out of aluminium castings rather than iron ones, created a device both light enough and powerful enough to lift Orville and Wilbur into the sky. + +Engine design has always been crucial to aviation. To start with, more powerful versions of the piston-driven motor pioneered by Taylor ruled the roost. Then, a radical, new approach emerged as the designs of Frank Whittle, a British engineer, ushered in the jet age. The jet has since evolved into the turbofan, whose gaping intakes have—as seasoned air travellers will have noticed—grown larger and larger over the years, to accommodate ever bigger and better fans. And now, as 2015 turns into 2016, another new design is being rolled out. This is the geared turbofan, which is available as an option on the A320neo, the latest product of Airbus, Europe’s biggest aerospace group. + +Geared turbofans, as their name suggests, include a gearbox as part of the mechanism. Those on the A320neo are the brainchildren of engineers at Pratt & Whitney, a division of United Technologies, an American conglomerate. Designing and building geared turbofans, which Pratt & Whitney brands “PurePower”, is a gamble. The firm has spent two decades and more than $10 billion developing them. Connecting an engine’s inlet fan to the compressor and turbine in its core through a gearbox should give better fuel economy and make the thing quieter—both desirable outcomes. But the bigger the engine the bigger the forces on the gearbox and the more likely it is that something will go wrong. So, though gearboxes are found in turboprops (jet engines that turn a propeller) and in a few executive jets, no one had until now managed to scale one up to cope with the 30,000 horsepower delivered by the core of an airliner’s engine. + +Pratt & Whitney has persevered because it thinks the conventional, ungeared turbofan is reaching its limits, and that only by adding a gearbox can airlines achieve the performance and economy which will be required of them in the future. Airlines, though, are notoriously conservative, and are wary of new, complicated kit like gearboxes, which are yet one more thing that can go wrong. So Pratt & Whitney has had its work cut out to persuade them. + +Meshing it together + +A jet engine works according to Newton’s third law of motion: to every action there is an equal and opposite reaction. The reaction is forward movement. The action which provokes that is the ejection from the back of the jet of fast-moving gas. This gas generates thrust in proportion to its mass and to the speed with which it is being ejected. In the early, ear-splitting jet engines designed by Whittle and his contemporaries, the thrust came from air that entered the engine’s core at the front (see diagram) where it was squeezed by a compressor, mixed with fuel and ignited to produce hot gases that rushed out of the rear. Though the mass of this exhaust gas was small, its velocity was high, so the resulting thrust kept an aircraft fitted with such an engine aloft. The compressor, meanwhile, was turned by a turbine propelled by the exhaust gases. + + + +A turbofan works in a broadly similar way, but with a fan also turned by the turbine to push some of the air around, rather than through, the core. Though this core-bypassing air is not moving as fast as the exhaust gases, there is a lot of it—so it, too, produces a great deal of thrust. The upshot is a system that is more efficient and quieter than earlier jet engines. + +The proportion of air going around the core compared with that going through it is known as the bypass ratio. Some of the latest turbofans have bypass ratios as high as 9:1. It is to achieve this that fans (and therefore inlets) have increased in size. But as fan blades get longer, their tips travel faster—and now those tips are going at close to the speed of sound. Accelerating them any further would cause shock waves, and these might result in dangerous vibrations. + +A gearbox gets around this by letting the fan turn more slowly than the compressor and the turbine. This means the fan can be made bigger (and can thus accelerate a greater volume of air) without slowing everything else down to its rev rate. This arrangement permits all parts to be engineered for optimal performance. As a result, PurePower has a bypass ratio of 12:1. + +Doing all of this does, though, require an utterly reliable gear box. Pratt & Whitney uses advanced nickel-based alloys for the components of the box itself. The fan blades are made from a lightweight alloy of aluminium and lithium. And the turbine is composed of titanium aluminide, a substance developed in collaboration with MTU, a German firm, that has twice the strength of the conventional cast alloys used to make turbines. + +The upshot is that a pair of PurePower engines slung under an A320neo’s wings promise to reduce fuel consumption by 15% compared with a standard A320. This could save an airline more than $1.5m a year per aircraft in fuel costs. Geared turbofans also give the plane a longer range and are markedly less noisy. + +There have, inevitably, been teething problems. Industry reports suggest that the geared turbofan needs a slightly longer period to cool down than was expected, to avoid uneven wear when it is restarted. This might sound trivial, but at a busy airport it could cost a plane its take-off slot. For that reason Qatar Airways, which had been expected to be the first to take delivery of the A320neo, is believed to have postponed receipt. The honour of being first now looks like going to Lufthansa, a German carrier. Pratt & Whitney says the geared turbofan meets or exceeds all its performance requirements. During routine flight testing, ways to improve the engine were identified, but the company adds that any modifications will be minor. + +Whether geared turbofans will sweep all before them remains to be seen—and depends, at least in part, on the response of Pratt & Whitney’s two big rivals in the jet-engine business, General Electric (another American firm) and Rolls-Royce (a British one). These companies are also working on more efficient aircraft engines. Both, though, think improvements can still be squeezed from the conventional turbofan design without resorting to a gearbox. General Electric, in partnership with Snecma, a French firm, is offering a rival engine, called the CFM Leap, for the A320neo. This will be available later in 2016 and is claimed by the partners to provide fuel savings similar to those of a geared arrangement. The Leap is a conventional turbofan, but it is made using some unconventional techniques. These include new composite materials and also additive manufacturing (popularly known as 3D printing). Rolls-Royce, too, aims to get greater efficiency from its turbofan designs, though it does also have a gearbox-development programme, with a view to making a geared turbofan that might enter service on large passenger aircraft in around a decade’s time. + +As to PurePower itself, so far the opinion of airlines is divided. Airbus has taken orders for more than 4,400 A320neos. About a third of these will sport PurePower, a third Leap, and in the cases of the remaining third, the customer has yet to make up his mind. + +Pratt & Whitney, though, does not plan to be tied only to Airbus. It is also offering versions of PurePower to firms trying to break the duopoly enjoyed on short-to-medium-range aircraft by that firm and Boeing. Bombardier of Canada is one such. Its competitor to the A320 is called the CSeries. The Mitsubishi Regional Jet, from Japan, is another plane which Pratt & Whitney hopes might use PurePower. And there are also the MC-21, a 180-seat airliner from Irkut, a Russian aerospace company better known for its Sukhoi fighter jets, and the E-Jet from Embraer, of Brazil. Whether Pratt & Whitney’s PurePower play will pay off remains to be seen, but as Charlie Taylor knew over 100 years ago, gearing up for success does mean taking risks. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21684775-quieter-more-economical-jet-engine-fitted-gearbox-about/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The future of the Nobel prize + +Throw caution to the wind? + +For everything to stay the same, everything may need to change + +Jan 2nd 2016 | Stockholm | From the print edition + + + +FEW events exceed the splendour of the Nobel ceremony and gala dinner held every December in Stockholm. After champagne toasts to Sweden’s king, and to the memory of Alfred Nobel, 1,300 guests sitting in the city hall cheer the latest crop of laureates in chemistry, physics, physiology or medicine, literature and economics. (The peace prize is awarded at a separate shindig, in Oslo.) For many of the winners, perhaps more used to sporting white coats than white ties, the occasion is a career-defining moment of glamour. No other prize has anything like the stature of a Nobel. In scientific circles it is known simply as “the trip to Stockholm”. But some do whisper the question, “for how much longer?” + +Nobel, who made his money by inventing dynamite, set things off with a bang. In 1895 he bequeathed 31m kronor (roughly $200m at today’s values) to create a foundation, the income from which would pay for the prizes. The endowment is now worth 4 billion kronor (some $500m). That sounds like a lot, but it hardly represents a spectacular return after 120 years. + + + +As a result, the prizes have suffered. Today, an individual award—which can be split up to three ways—is worth 8m kronor in addition to the 18-carat gold medal each recipient receives. A handy sum, but one whose lavishness has fallen as cautious investing has failed to increase the pot as fast as economic growth has increased people’s incomes. According to the foundation’s boss, Lars Heikensten, who was once governor of Sweden’s central bank, when the first prizes were awarded, in 1901, they represented 25 times the annual salary of a professor at a typical university in Europe or America. Now, the ratio is more like ten. Meanwhile rivals, such as the Kavli and Breakthrough prizes, are being endowed by more recent plutocrats. Many of these (see chart) pay out more than the Nobel Foundation—in the case of the Breakthrough prize, three times as much. The Nobel brand may thus be in danger of erosion, as the foundation itself admits in its most recent annual report. This says that “ensuring the importance of the Nobel prize in the long term continues to pose a significant challenge”. + +Mr Heikensten is trying to take matters in hand. He has overseen a big awareness-raising push on social media, and through conferences and debates that carry the Nobel name. And, sometime in the next 12 months, work will start on a Nobel visitor centre and conference venue in the heart of old Stockholm. This controversial cube of glass, costing 1.2 billion kronor, will be paid for by private donors, with much of the money coming from two families of Swedish billionaires, the Wallenbergs and the Perssons. Which is all well and good, but does not really get to the heart of the matter—that the whole Nobel proposition needs dragging into the 21st century. + +One ticklish question is whether the prize categories are still relevant. The science prizes—the core of the foundation’s fame—reflect the academic priorities of the founder’s era. Things have changed. Galling though it is to the memory of Nobel, a chemist, pure chemistry is largely worked out as an academic discipline. These days, most of the winners of the chemistry prize could have fitted just as easily into the physics or physiology-or-medicine categories. Meanwhile, biology has hypertrophied. Shoe-horning it into “physiology or medicine” seems bizarre, and excludes important fields such as ecology. + +Rivals have prizes for categories such as neuroscience and nanoscience. Changing or adding to the Nobel list, though, has not found favour. Even the economics prize, introduced in 1969, is looked down on by traditionalists as not being a proper Nobel. + +Then there is the question of replenishing the coffers. A praiseworthy desire to preserve independence by not taking donations into the endowment has become something of a drawback. This, as much as overcautious investing, is responsible for the prizes’ diminished financial value. A more welcoming attitude to donations (even if these are restricted to the personal, rather than the corporate, and perhaps to legacies rather than lifetime gifts that might be seen as involving some quid pro quo) might be sensible, to boost the prizes’ value. For reputation is a funny thing. Scandal can destroy it overnight, of course, and the foundation’s trustees might fairly argue that their cautious approach has avoided that fate. But reputation can also slip away, unnoticed, as the world’s attention shifts elsewhere. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21684774-everything-stay-same-everything-may-need-change-throw-caution/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Meteorology + +Barmy weather + +The rain gods have brought a dreadful Christmas + +Jan 2nd 2016 | From the print edition + + + +THE year 2015 was probably the hottest since meteorological records began. It certainly ended with a flourish. On North America’s east coast, dreams of a white Christmas were banished by springlike temperatures. In New York, for instance, the mercury hit 22°C (72°F) on Christmas Eve. Europe, too, enjoyed unseasonal warmth. But this was no festive gift, for the warm, moist air that caused it also brought humungous storms. + +In South America flooding has forced 130,000 Paraguayans from their homes. In the United States tornadoes before and after Christmas have killed at least 29 people. Thirteen more have drowned in floods caused by a storm that this week tracked across the Atlantic (see map), where it may add to the misery of people in large parts of northern England, who have already been inundated several times this year, the Christmas period included (see article). + +As The Economist went to press, forecasters were warning that this storm, dubbed Frank by British meteorologists, may develop into what is known as a bomb cyclone, undergoing a sudden, drastic drop in air pressure at its centre in a way that will suck warm air from the tropics and funnel it northward. If these predictions prove correct, the temperature at the North Pole is likely to rise a little above freezing. Though that is still chilly by most people’s standards, it is an extraordinary 30°C above the average for this sunless time of year. + +One explanation for the weird weather, at least in the Americas, is El Niño—a phenomenon in which a slackening of trade winds over the Pacific allows warm water to slosh back eastward, increasing the amount of heat and moisture in the atmosphere in a way that has various predictable effects across the tropics. The floods in South America are part of a typical Niño pattern, and the tornadoes in the United States tend to fit, too. + +Another factor is that the polar vortex, which traps cold air in the Arctic, has taken a form which permits balmier than normal weather in much of the northern high latitudes. This week’s bomb cyclone may change that, though. Bits of Europe could be in for a cold new year. + +Climate change is a contributor too. The greenhouse effect warms the oceans as well as the atmosphere, and they have stored up quite a lot of heat in recent years. The oceans are therefore unusually warm—not just the eastern Pacific, but the Indian and Atlantic, too. + +Kevin Trenberth of the National Centre for Atmospheric Research, in Boulder, Colorado, points out that a lack of hurricanes—which most people would welcome—may explain some of the effects around the Atlantic at the moment as heat normally released by summer hurricanes stayed in the ocean. As ever, connecting weather patterns across the seasons and across the globe is difficult. But learning how to do so is becoming ever more important. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21684773-rain-gods-have-brought-dreadful-christmas-barmy-weather/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +The Great War at midpoint: A most terrible year + +China and India: Clash of the titans + +Ukraine’s war-torn history: Keeping hope alive + +Non-Western classical music: Voyages of discovery + +New film: Bearing down + +New film: Correction: Whatever should I do? + + + + + +Articles Sections Next + +The Great War at midpoint + +A most terrible year + +Two long battles of attrition engulfed the European powers in 1916, a year crammed both with horrors and with consequences, many of which still endure + +Jan 2nd 2016 | From the print edition + + + +BOOKS that focus on what happened in a particular year have become a publishing phenomenon. So Keith Jeffery, a British academic historian whose last work was a fascinating, if slightly plodding, official history of Britain’s secret intelligence service, MI6, must have thought it a clever idea to go for 1916, the midpoint of the first world war. Mr Jeffery’s purpose is to show that not only was it a year of tremendous events, but one in which the effects of the war spread across most of the world, often with consequences that can still be felt a century later. + +By 1916, the war that some had believed would be over by Christmas 1914 had become an attritional slog on both the largely static Western Front and on the rather more fluctuating front in the East. To break the deadlock, the general staffs of all the main belligerents continued to work on new tactics, such as the creeping artillery barrage, and to seek new technologies, including the tank, which first saw action in September 1916. Contrary to a widely held view, the second half of the war was a period of unprecedented military innovation. + +The idea that sheer offensive élan could overcome well-entrenched defences equipped with modern weaponry, in the form of accurate artillery and the machine- gun, had died during the appalling bloodletting of late 1914. In the four months before the war of movement in the West ground to a halt, France and Germany had between them suffered over 1.5m casualties—a loss rate that was not exceeded until manoeuvre returned to the battlefield in the final months of fighting. By 1916 most of the soldiers on both sides had not only lost faith in imminent victory, but had become fatalistically resigned to the war as permanent crucible for their generation which civilians and politicians at home could not begin to comprehend. + +The last hope that the war might be brought to a swift conclusion by a stroke of strategic brilliance had faded with the abject failure of the Gallipoli campaign to deal the expected blow to the Ottoman Empire. Just a few days before the close of 1915, the Allied forces withdrew stealthily from the beaches at Suvla Bay and “Anzac” Cove (the acronym for the Australian and New Zealand Army Corps, which fought there with great gallantry, but, contrary to national myths, did not suffer the bulk of the casualties). The withdrawal, in contrast to the rest of the shambolic campaign, was rather brilliantly conducted. But the lesson was still a painful one: although “sideshows” continued to exercise the imagination of those with an imperialistic mindset, the grim reality for Britain and France was that the war would be won or lost on the Western Front. + +That realisation fed into something else. By 1916 sentiment had hardened into a widespread feeling on both sides that the sacrifices had already been so great that the possibility of a negotiated peace had ceased to be politically conceivable. The only way forward, it seemed, was to prevail in a fight to the finish whatever the cost. That was one reason why 1916 saw two of the most terrible confrontations of the war: the battle of Verdun, which began in February, and the battle of the Somme, which was launched on July 1st. + +During the whole of 1915 there were 1.8m casualties on the Western Front; in just eight months of 1916, thanks to those two epic struggles, France, Britain and Germany together sustained 2.2m casualties. For the German chief of staff, Erich von Falkenhayn, the fortress at Verdun was chosen as the place where “the forces of France will bleed to death”. Verdun, writes Mr Jeffery in “1916: A Global History” (Bloomsbury, $32 and £25) “became a byword for the manifest horrors of industrialised, ‘total’ war”. But for France, the defence of Verdun in the face of Germany’s greatest onslaught of the war so far became the ultimate symbol of national heroism. For the British, the battle of the Somme came to represent something less noble. At the outset, the British army suffered its greatest-ever loss in a single day (more than 57,000 casualties). The shock of July 1st 1916 came to stand for not just the suffering and courage of the soldiers, but, later, anger over the human cost of flawed tactics and supposedly callous military leadership. + +Yet at the time the battle, which continued until November, was not regarded as a disaster. The French made significant gains during September, which, William Philpott, author of “Bloody Victory” (2009), believes was the “tipping point” of the war. He argues that the Somme “relieved the pressure on Verdun, restored the initiative of the Allies, wore down the enemy’s manpower and morale and…stretched German resources dangerously thin”. With their superior manpower and resources, the Allies believed the Somme was “a strategic victory in a war of attrition” which they would eventually win. + +Paradoxically, the great naval battle of Jutland, two months before the Somme offensive, looked at best like a costly draw for the Royal Navy, which lost more ships and men than Germany’s High Seas Fleet, but was in fact a strategic success. Although, as Mr Jeffery points out, contrary to myth, it was not the last time the High Seas Fleet ventured out of Wilhelmshaven, the damage done to its smaller naval force at Jutland underlined the risks of seeking a definitive engagement. As a result, there was no further real threat to Britain’s naval blockade of Germany which, according to German apologists for their eventual military defeat, led to deteriorating conditions on the home front (malnutrition and sickness if not actual starvation) and the myth of the “stab in the back” by treacherous republican politicians. + +A further consequence of Jutland was that with waning appetite for another major fleet action and its attendant risks, German U-boats went back to a largely commerce-raiding role. It was the fateful decision early in 1917 to expand into unrestricted warfare that led directly to America’s entry into the war a few months later, in April. A thread thus leads from Jutland to the single event that perhaps did most to ensure that Germany would lose the war. + +The attritional struggles on both the main fronts were directly connected to the wider impact of the war as the fragile regimes of three of the belligerents, Austria-Hungary, Russia and the Ottoman Empire, began to crack under the strain. Austria-Hungary, whose attempt to chastise rebellious Serbia fuelled the initial descent into war, was by 1916 buckling at the seams. Neglecting the struggle against Russia in the East, Austria-Hungary’s chief of the general staff, Franz Conrad von Hötzendorf, had sent his best troops to fight the Italians, but had still got bogged down. Things turned from bad to worse when the Russian general Aleksei Brusilov launched a brilliantly conceived offensive in June. The Russian advance put intolerable pressure on the fragile loyalties of the multi-ethnic Habsburg armies. There were mass defections of Czech, Ukrainian, Croat and Slovenian units who were deeply reluctant to fight fellow Slavs. + +Brusilov eventually ran out of steam when German divisions arrived to stiffen Habsburg resistance. But his offensive proved to be another major turning point. Austria-Hungary was more or less destroyed as a military power, increasingly dependent on Germany to stay in the fight. Less obviously, exhausted by the inconclusive effort of its greatest feat of arms in the war, the Russian army turned in on itself, creating the conditions for the revolution the next year that was hijacked by Lenin with help from Germany. + +The battles on the Eastern Front in 1916 “crucially accelerated the political and social destabilisation of both the Russian and Habsburg empires”, as Mr Jeffery notes. Nearly all the areas where the fighting took place were in the colonised spaces of eastern Europe: that is to say, in places where “the population felt itself under the domination of a foreign power”. The war encouraged people to challenge the imperial status quo and assert their right to national self-determination, still a relatively new concept and one that has remained a source of conflict and controversy. + +With every major belligerent by 1916 in extremis, it was not just in eastern Europe and the Balkans that nationalist movements surfaced to exploit the distraction of the colonial power. Ireland saw the Easter Rising when 1,400 armed republicans seized a number of Dublin landmarks, including the GPO building, only surrendering when British artillery was used to shell their positions. The subsequent execution of 15 of the rebels and the imposition of martial law increased opposition to Ireland’s role in the war and gave a boost the republican cause that led to the establishment of the Irish Free State six years later. + +In the Middle East, the British and French pursued a policy of fomenting Arab nationalism as a means of undermining the Ottoman Empire and staving off German attempts to promote a pan-Islamist jihad against the two older colonial powers. In May 1916 two rather obscure diplomats, François Georges-Picot and Sir Mark Sykes, reached an agreement that divided Arab Ottoman provinces into areas of future British and French control or influence. The baleful results of their insouciant map-drawing are still being felt today, notably in the turmoil of Syria and Iraq. + +That 1916 was an extraordinary year is not in doubt. It was the pivotal year of the Great War, which as Fritz Stern, a German-American historian, rightly observed, was “the first calamity of the 20th century, the calamity from which all other calamities sprang”. The intensity and scale of the fighting was the trigger for a wave of political, economic and social upheavals that destroyed empires and forged national identities, sometimes for the better, very often for the worse. Historians have been hard at work teasing out the threads; readers can expect a deluge of new books in the coming months. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21684766-two-long-battles-attrition-engulfed-european-powers-1916-year-crammed-both/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +China and India + +Clash of the titans + +The war that echoes down the decades + +Jan 2nd 2016 | From the print edition + +Kennedy and Nehru step out + +JFK’s Forgotten Crisis: Tibet, the CIA and the Sino-Indian War. By Bruce Riedel. Brookings Institution Press; 256 pages; $29. + +IN THE autumn of 1962 Chinese troops invaded Indian-held territory, attacking across the 1,800-mile (2,880km) border that stretches along the Himalayas between the two giants of Asia. Mao Zedong instructed his army to expel Indian soldiers from territory that China claimed in Kashmir. In Washington the Chinese offensive was seen as a serious communist move in the cold war. + +It was an inconvenient moment for the White House. President John Kennedy was absorbed in an even bigger crisis with communism closer to home: the flow of Soviet missiles to Cuba which threatened a nuclear conflict. Luckily for Kennedy, he had his own man in New Delhi. His friend from Harvard, John Kenneth Galbraith, was the American ambassador. So in a relatively easy act of delegation, Galbraith was put in charge of the “other” crisis. + +Galbraith proved up to the task, in part, as Bruce Riedel writes in “JFK’s Forgotten Crisis”, because he had access to the president and his aides. Most ambassadors report to the State Department, but the blunt Galbraith told the president that going through those channels was “like trying to fornicate through a mattress”. + +The border war did not last long. The Chinese crushed the Indians. Mao declared a unilateral ceasefire a month later and withdrew Chinese forces. He had prevailed over his Asian rival, humiliating the Indian prime minister, Jawaharlal Nehru. + +But victory was not just about Chinese might. At Galbraith’s urging, the Americans had quickly backed the distressed Nehru. An emergency airlift of supplies was sent to Calcutta and a carrier battle group was dispatched to the Bay of Bengal. In the end, Mao judged that the Americans might actually come to the help of India. He did not want to suffer huge losses of Chinese soldiers so soon after the Korean war. Thus American deterrence worked, and a confrontation between America and China was avoided, Mr Riedel writes. + +The actual war is just one facet of this high-wire story of the geopolitics of the period, with its outsized characters and decisions that still reverberate today. Mr Riedel puts his experience as a former CIA analyst and a senior adviser on the National Security Council to canny use, uncovering details about an American covert operation in Tibet that has been mostly forgotten, though not by China. + +Between 1957 and the early 1970s America spirited young Tibetans out of their homeland through Bangladesh (then East Pakistan), trained them in Colorado, and parachuted them back into Tibet, where they fought the Chinese army. Galbraith described the covert effort as “a particularly insane enterprise”. But the CIA prevailed. In 1961 the Americans were so starved for information about China that the CIA bragged about the ambush of a Chinese army truck by the Tibetan rebels. Mr Riedel describes how a bloodstained satchel of Chinese documents from the truck was taken to the White House as prized bounty. The Americans were so ignorant about the early years of communist China, he writes, that the operation was deemed worth the risk because of the documents’ descriptions of the status of Sino-Soviet relations, and the grim conditions in the Chinese countryside. + +The current alliances on the subcontinent and the unsettling arms race between Pakistan and India hark back to the war of 1962. Kennedy’s decision to help India drew Pakistan closer to China. India started down its path to becoming a nuclear power after its defeat by China. When India tested a nuclear weapon in 1998, the rationale was the threat from China. + +Today China and India are competitors, not enemies. But more than 50 years after the war, the border dispute remains unresolved. The two countries account for more than a third of the world’s population. In July 2014 at the first meeting between the Chinese leader, Xi Jinping, and Narendra Modi, India’s prime minister, Mr Xi said: “When India and China meet, the whole world watches.” This superb history shows why. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21684764-war-echoes-down-decades-clash-titans/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Ukraine’s war-torn history + +Keeping hope alive + +Why the struggle for Ukraine is the key to Europe’s future + +Jan 2nd 2016 | From the print edition + +Remembering the revolution + +The Gates of Europe: A History of Ukraine. By Serhii Plokhy. Basic Books; 395 pages; $29.99. Allen Lane; £25. + +ROWS over inheritances are bitter—within families and between countries. At the heart of the conflict between Russia and Ukraine is the contested legacy of a long-forgotten superpower: Kievan Rus. Both Vladimir Putin’s Russia and post-Soviet Ukraine lay claim to the mantle of Vladimir the Great, a prince who just over 1,000 years ago accepted Christian baptism for his unruly tribes of Slavs and Vikings. To patriotic Russians, that was the founding action of their statehood. For Ukrainians, the story is the other way round: their country, so often wiped off the map by its neighbours, is the true descendant. + +That dispute underlies today’s smouldering war. Many Russians find it hard to accept that Ukraine is really a state; moreover, Ukrainians (especially if they speak Russian as a first language) are essentially Russians. The territory they inhabit is therefore part of Moscow’s patrimony. + +Ukraine’s identity and its enemies over the past ten centuries are the central threads of Serhii Plokhy’s admirable new history. He eschews polemic—almost to a fault, given the horrors he describes. The subject material could seem dauntingly dense: few readers will be familiar with the twists and turns of the history, and unfamiliar names and places abound. But Mr Plokhy—a Harvard historian whose previous book, “The Last Empire”, was a notable account of the Soviet Union’s downfall—treads a careful path. + +The story is not just of high politics, gruesome and enthralling though that is. Even when Ukraine did not exist as a state, he writes, “language, folklore, literature and, last but not least, history became building blocks of a modern national identity”. He pays particular attention to the linguistic complexities. Ukrainians may speak Russian yet also identify profoundly with the Ukrainian state. The real linguistic divide is with Polish: western Ukraine was for many decades under Polish rule. Memories of massacres and oppression are recent and vivid, making the reconciliation between those two countries all the more remarkable. + +The epilogue to “The Gates of Europe” rightly describes the Ukraine crisis as central to Russia and Europe as a whole. It is widely known that the Ukrainian national anthem begins: “Ukraine has not yet perished”. Mr Plokhy points out that the Polish one begins in similarly mordant style. The question for Ukrainians—and for Europe—is whether the country can summon up the determination that Poland has shown to tread the hard road which history has set before it. + +The stakes are high: a successful, stable Ukraine would be a strong candidate to join and strengthen the European Union. It would also be a devastating refutation of the Putin regime’s contention that bellicose autocracy is the best way of running a large ex-Soviet Slavic country. + +But the odds are uncomfortably long. Ukraine returned to statehood in 1991 shorn of its elites, thanks to famine, repression and Russification. The creeps and cronies who have so signally misruled the country since then have acquired great riches, and put down deep roots. Two democratic upheavals—the Orange revolution that began in late 2004 and the Maidan protests of 2013—have failed to dislodge this parasitic ruling class. + +Yet belief in Ukraine’s history of tolerance and legality, rooted in European Christian civilisation, keeps hope alive. In his elegant and careful exposition of Ukraine’s past, Mr Plokhy has also provided some signposts to the future. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21684765-why-struggle-ukraine-key-europes-future-keeping-hope-alive/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Non-Western classical music + +Voyages of discovery + +Classical music that no one talks about + +Jan 2nd 2016 | From the print edition + + + +The Other Classical Musics: Fifteen Great Traditions. Edited by Michael Church. Boydell Press; 426 pages; £25. + +ANY self-respecting arts-lover living in America or Europe is familiar with a smattering of writers, painters and sculptors from outside the West. But few cultural buffs could name a single composer from, say, China or Turkey, let alone give any detail about them. A collection of essays, entitled “The Other Classical Musics”, shows how much they are missing. + +Intelligently edited by Michael Church, a British critic, the book looks at the canons of different parts of the world (India and China are deemed worthy of two chapters each, though Latin America is ignored). Written by different scholars, each chapter has a common structure, with a concise outline of the instruments, the style and the social relations behind the music. Lots of beautiful pictures and extracts of musical notation break up the text. + +The chapters on Indian classical music will be of particular interest to many readers, who may already have a vague understanding of it through the works of Ravi Shankar, a sitar-player (pictured). The book shows important differences between north (Hindustani) and south (Carnatic) Indian styles. For instance, tablas—drums with heads usually fashioned from goat skin—are more commonly used in Hindustani music; Carnatic melodies tend to contain more flourishes. (Shankar played largely Hindustani music.) + +Such characterisations are helpful for the lay reader; but the contributors also show a keen eye for historical nuance. Many of them question the usefulness of the term “classical”, arguing that what people may now perceive to be traditional has in fact constantly changed over time. In the chapter on classical Japanese music there is a wonderful illustration of two sheets of musical notation, one from 1303 and the other from the present day; their different styles hint at how the form has evolved. + +Classical Iranian music has likewise seen much change. During the 1950s it fell under the sway of European musical practices, but as the government grew concerned about Westernisation it sponsored efforts to reassert a Persian flavour. As for India, before the 20th century the country’s music was no more than “a variety of musical traditions performed in different places by different social groups”. Some historians argue that Indian “classical” music was really a cobbling together of different traditions by 20th-century nationalists. + +Alongside other chapters on places like Tajikistan, north Africa and Java, the book has one on European classical music. For many readers this chapter will be rather familiar; but for those who know little about composers like Pérotin (who was born in Paris and active in the late 12th century, when he came to be known as Pérotin the Great) or John Dunstable (c.1390-1453), a celebrated English composer of polyphonic music, it will be just as interesting as the others. And in fewer than 30 pages it offers as good a summary of the Western canon as can be found anywhere. + +Readers should not try and digest the whole book in one go; far better to use it for reference. Indeed, the best way to appreciate it is to read it while listening to the music under discussion (your reviewer searched for the relevant compositions on YouTube and played the extracts of notation on the piano). There is a treasure trove of underappreciated music out there; this book will convince many to explore it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21684767-classical-music-no-one-talks-about-voyages-discovery/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +New film + +Bearing down + +“The Revenant” comes so close to being an action classic. Why does it fail? + +Jan 2nd 2016 | From the print edition + +Dealing with the wildlife + +WHEN one online reviewer misinterpreted a key sequence in “The Revenant”, Alejandro Iñárritu’s harrowing wilderness-survival drama acquired a nickname: “The Bear Rape Movie”. It is important to clarify, then, that Leonardo DiCaprio’s character, a shaggy-bearded 19th-century frontiersman called Hugh Glass, is not raped by a bear, although ursine sexual assault is just about the only ordeal he is spared. + +At the start of the film, Mr Iñárritu’s first since his Oscar-winning Broadway farce, “Birdman”, Glass is a member of a fur-trading party that is ambushed by Arikara natives. The ensuing forest battle has the nerve-shredding immediacy of the D-Day set piece in “Saving Private Ryan” (1998), Steven Spielberg’s second-world-war drama. Shortly afterwards, Glass is bitten, clawed, trodden on and flung around (but not raped) by a hulking grizzly, and then left for dead by a treacherous colleague (Tom Hardy). But he forces himself to trek for hundreds of miles to his associates’ fort, via frozen landscapes as hostile and beautifully strange as the surface of an alien planet. + +Mr DiCaprio has said that his notoriously gruelling experiences on the set of “Titanic” nearly 20 years ago were a breeze compared with making “The Revenant” on location in Canada and Argentina. But his tribulations have paid off. Like Mr Hardy’s recent hit, “Mad Max: Fury Road”, “The Revenant” is a thunderous riposte to those blockbusters in which digitally rendered cities are flattened, but the violence never registers as anything other than what it is: the reorganising of pixels on a computer screen. Watching Mr Iñárritu’s visceral film, the viewer feels Glass’s pain. Every plunge into an icy river, every mouthful of twitching raw fish, every arrow through the throat seems excruciatingly real. + +It is unfortunate, then, that the director has given in to his fatal weakness for distracting subplots and mystical hallucinations. If Mr Iñárritu had not fallen for padding out his primal revenge yarn to an unnecessary 156 minutes, the overpowering scenes of Glass struggling against the bear, his human enemies and nature itself would have made “The Revenant” into a classic of the action-movie genre. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21684768-revenant-comes-so-close-being-action-classic-why-does-it-fail-bearing-down/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Correction: Whatever should I do? + +Jan 2nd 2016 | From the print edition + +In a piece on historical agony aunts in our Christmas issue ("Whatever should I do?"), we described a British bigamist as having been transported to Australia before Captain Cook "discovered" the place. The two-timer may well have been shipped to another colony, such as America. Thanks to an alert reader for spotting this. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21684769-correction-whatever-should-i-do/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Elsie Tulead: From missionary to firebrand + + + + + +Articles Sections Next + +Obituary: Elsie Tulead + +From missionary to firebrand + +Elsie Tu, campaigner for the people of Hong Kong, died on December 8th, aged 102 + +Jan 2nd 2016 | From the print edition + + + +HAD you visited the squatter slums of Kai Tak in Kowloon, Hong Kong, in the 1950s, a curious sight might have met your eyes. Among the thousands of tiny dilapidated wooden huts, crammed with refugees from newly communist China, threaded with muddy paths where adults clopped in wooden sandals and children splashed in storm-drains, a prim Englishwoman would be picking her way with care. Her fair hair was brushed in an immaculate shape, her flowered dress suitable for Cheltenham; a large handbag was on her arm. Her large eyes and prominent teeth gave her a look of keen concern. + +Her name then was Elsie Elliott. Later she was Elsie Tu. Under both names she was a formidable advocate for the rights of the downtrodden in Hong Kong, shaming and tormenting the police, the Legislative Council and successive British governors for more than 30 years. Wherever second-class citizens—that is, Chinese—lacked transport, housing, education, fair wages or a voice, she would be there, on their side. + +This transformation surprised even her. She had arrived in the colony in 1951 as a meek missionary’s wife from the north of England, ready to support her husband, Bill Elliott, in the saving of souls. The merry notes of her piano accordion rang out then over the huts of Kai Tak, inviting everyone to be washed in the blood of the Lamb. Otherwise she made no noise, for women in the Plymouth Brethren were consigned to silence. But gradually, surrounded by such privation, she grew restless. Eventually she left both the Brethren and her husband. Christian witness, to her, meant being “good and useful”, the motto she had adopted as a timid, studious schoolgirl. It meant speaking out, too—even, as her pacifist father had hoped, getting into politics. + +Hong Kong in those days had no social welfare. It was run by British officials and rich businessmen for themselves alone. The poor Chinese who wandered into her tiny church had boils from malnutrition and fungus-encrusted feet; she set up a clinic to treat them. Children, desperate to learn, sat in the street devouring cheap comics; in 1954 she set up Mu Kuang Middle School, which grew from a 30-desk army tent, flapping in winds and summer downpours, to a seven-storey block with 1,300 pupils by 2015. Buying land and buildings, hurdling regulations and dealing with the Education Department introduced her to Hong Kong’s subculture of corruption, in which the ba wong, or triads, extorted protection money from every hut-dweller and even from street hawkers; in which everyone expected backhanders; and where the police were up to theirkhaki shorts in the narcotics trade. + +Her relentless exposure of the police, in reports and letters to the South China Morning Post (her favourite, “restrained” modus operandi), became an all-out war, especially when after 1963 she sat on the Urban Council. In 1966, when she campaigned against a fare rise on the Star Ferry linking Hong Kong island and Kowloon, the police accused her of inciting violence among the protesters; she proved them liars and became wildly popular, as well as later winning the CBE for her anti-corruption efforts. To her backers she was invaluable, a British gadfly with pretty good Mandarin and passable Cantonese, who could intercede easily with those in power and could neither be silenced nor deported. + +Love and politics + +The authorities themselves, in the governor’s office and on the Legislative Council (where she also sat, from 1988 to 1995), were less certain what to make of her. She had no stated ideology, beyond “justice for the people”, but was scornful of the favours shown to Taiwanese and would not censure China. In the run-up to the handover of the colony to China in 1997 she attacked the “disgraceful” reforms belatedly introduced by the British, and belittled the self-styled democrats who attacked the Basic Law agreed on, with some input from her, with the Chinese. In 1995 she lost her seat at the age of 82 to a “pro-democracy” candidate whose hand she refused to shake. + +Her motivations were in fact rather simple. She hated colonialism, believing that it brought out the worst sort of arrogance in the British. She championed the Chinese because, to her, they were its victims. But she embraced them, too, because she fell in love with—and, in 1985, married—a Chinese patriot from Inner Mongolia, Tu Hsueh-kwei. He had joined her church and co-founded her school; they had taught each other their respective languages. She called him “Andrew” after the apostle who cared for the needy. Through him she absorbed the philosophy and poetry of China, the songs of the Beijing Opera, the habit of patience and an enhanced sense of racial injustice. In return he supported her in every way he could—except publicly, which might have meant deportation. + +With him she experienced a strange reversal of her first role in Hong Kong. Then, as a missionary wife, it was she who had been silent and second-class, reduced to making the refreshments at meetings. Now it was Andrew who would greet her, after another rowdy day on the Legislative Council, with a cup of tea just as she liked it. But then, reverting to the natural shyness she always felt she had, she would say “Thank you, husband,” and sip demurely, as if the order of things were not inverted; and as if she posed no threat to anyone. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21684754-missionary-firebrand-elsie-tu-campaigner-people-hong-kong-died-december/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +GDP forecasts + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Jan 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21684852/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Jan 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21684790-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Jan 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21684785-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Jan 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21684787-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +GDP forecasts + +Jan 2nd 2016 | From the print edition + + + +WORLD GDP is forecast to grow by 2.7% in 2016, according to the Economist Intelligence Unit (in 2015 the economy is estimated to have expanded by 2.4%). This moderate outlook reflects the fact growth is still lacklustre in the euro area, Japan and emerging market economies as a whole. + +The picture is particularly gloomy for commodity-exporting nations such as Venezuela, which is in deep economic recession. The outlook for Brazil is not positive either: falling oil prices combined with the implications of the Petrobras scandal will affect investment in oil and gas. War-torn countries also feature in the projected worst performers of 2016. Libya’s GDP has been contracting since 2013; continued fighting and political uncertainty means that it will continue to shrink this year. + +There are a few bright spots however. Although GDP growth in Turkmenistan is slowing, the construction of a new branch of the Central Asia-China gas pipeline will support exports until the end of 2016. A few emerging Asian countries make a notable appearance in the top-ten: growth in the region is buoyed by rising private consumption, and in particular a revitalised tourism sector in Laos. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21684788-gdp-forecasts/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Jan 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21684789-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 01 Jan 2016] + +The world this week + + + +The world this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Latin America: Brazil’s fall + + + + + +Travel visas: Sticker shock + + + + + +Republican tax plans: Be serious + + + + + +Global inflation: Low and behold + + + + + +Internet security: When back doors backfire + + + + + +Letters + + + +On business, species, elections, whistleblowers, plurals, Donald Trump: Letters to the editor + + + + + +Briefing + + + +Brazil’s crisis: Irredeemable? + + + + + +United States + + + +Republican tax plans: Indecent disclosure + + + + + +Race on campus: Of slavery and swastikas + + + + + +Rating police officers: Revenge of the nerds + + + + + +Election forecasting: Prediction 2016 + + + + + +Lexington: Pitchfork politics + + + + + +The Americas + + + +Human rights in El Salvador: Digging for justice + + + + + +Argentina’s new president: A fast start + + + + + +Asia + + + +Japan, South Korea and their history wars: Saying sorry for sex slavery + + + + + +Family planning in Vietnam: Running deer + + + + + +Thailand’s southern insurgency: No end in sight + + + + + +Simplifying Indian taxes: One country, but no single market + + + + + +China + + + +Social media: Weibo warriors + + + + + +Economic ideology: Reagan’s Chinese echo + + + + + +Middle East and Africa + + + +Iraq: Reclaiming the ruins from Islamic State + + + + + +Christians in the Middle East: And then there were none + + + + + +Enforcing morality: No sex please, we’re Middle Eastern + + + + + +Ethiopia: What if they were really set free? + + + + + +Europe + + + +Russia’s Far East: Snow job + + + + + +Vladivostok’s new casino: Russian roulette + + + + + +Spanish politics: The chore of the Spanish succession + + + + + +Poland’s religious politics: Courting disaster + + + + + +Educating refugees: Learning the hard way + + + + + +Britain + + + +Funding the police: Counting up the coppers + + + + + +Floods: Northern waterhouse + + + + + +Bagehot: Bring on the tempest + + + + + +International + + + +The unexplored world: A new age of discovery + + + + + +Business + + + +Travel visas: A strange sort of welcome + + + + + +Companies’ investment plans: From diggers to data centres + + + + + +Activists and resources companies: Icahn, you can’t + + + + + +Cruise lines: Eastward ho! + + + + + +Schumpeter: Social saints, fiscal fiends + + + + + +Finance and economics + + + +Global inflation: Low for longer + + + + + +The first venture capitalists: Fin-tech + + + + + +Buttonwood: Tales of the unexpected + + + + + +European insurance firms: One rule to bind them all + + + + + +South-East Asian integration: More hat than cattle + + + + + +Free exchange: Exit, pursued by bear + + + + + +Science and technology + + + +Aircraft engines: Flying’s new gear + + + + + +The future of the Nobel prize: Throw caution to the wind? + + + + + +Meteorology: Barmy weather + + + + + +Books and arts + + + +The Great War at midpoint: A most terrible year + + + + + +China and India: Clash of the titans + + + + + +Ukraine’s war-torn history: Keeping hope alive + + + + + +Non-Western classical music: Voyages of discovery + + + + + +New film: Bearing down + + + + + +New film: Correction: Whatever should I do? + + + + + +Obituary + + + +Obituary: Elsie Tulead: From missionary to firebrand + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +GDP forecasts + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data1/8000-words.txt b/homeworks/B20769/homework1/data1/8000-words.txt new file mode 100644 index 0000000..cf543f3 --- /dev/null +++ b/homeworks/B20769/homework1/data1/8000-words.txt @@ -0,0 +1,7989 @@ +abandon v.抛弃，放弃 +abandonment n.放弃 +abbreviation n.缩写 +abeyance n.缓办，中止 +abide v.遵守 +ability n.能力 +able adj.有能力的，能干的 +abnormal adj.反常的，变态的 +aboard adv.船(车)上 +abolish v.废除，取消 +abolition n.废除，取消 +abortion n.流产 +abortive adj.无效果的，失败的 +about prep.关于，大约 +above prep.在...之上，高于 +above-mentioned adj.上述的 +abreast adv.并肩，并列 +abridge v.省略，摘要 +abroad adv.国外，海外 +abrogate v.取消，废除 +abrogation n.取消，废除 +abrupt adj.突然的，生硬的 +abruptly adv.突然地 +absence n.缺席，缺乏 +absent adj.缺席的，不存在 +absent-minded adj.心不在焉的 +absolute adj.完全的，绝对的 +absolutely adv.绝对，完全 +absorb v.吸收，专心于 +absorption n.吸收，专注 +abstract adj.抽象的，难懂的 +abstraction n.抽象，提取 +absurd adj.荒唐的 +absurdity n.荒唐(事) +abundance n.丰富，大量 +abundant adj.丰富的，充裕的 +abuse v.滥用，谩骂 +abasement n.滥用 +academic adj.学院的，学术的 +academy n.学院，研究院 +accede v.同意 +accelerate v.加速，加快 +acceleration v.加速，促进 +accent n.腔调 v.重读 +accept v.接受，同意 +acceptable adj.可接受的，合意的 +acceptance n.接受，承兑 +access n.接近，入口 +accessible adj.可接近的 +accessory n.附件，装饰品 +accident n.事故，意外之事 +accidental adj.意外的，偶然的 +accidentally adv.偶尔，附带 +accommodate v.提供便利，拆借 +accommodation n.便利，通融 +accompaniment n.伴侣，伴奏 +accompany v.伴随，伴奏 +accomplish v.完成，达到 +accomplishment n.成就 +accord v.符合，协调 +accordance n.按照，与...一致 +according adj.按照，据...说 +accordingly adj.相应地，从而 +account n.账目 v.说明 +accountant n.会计(师) +accounting n.会计学 +accrue v.产生，发生 +accrued adj.增值的，应计的 +accumulate v.积累，积蓄 +accumulation n.积累 +accumulative adj.积累的 +accuracy n.准确(性) +accurate adj.准确的，精密的 +accurately adj.准确地 +accusation n.控告 +accuse v.告发，指责 +accustom v.使...习惯于 +ache v.觉得疼 n.疼痛 +aching adj.疼痛的 +achieve v.完成，实现 +achievement n.完成，成就 +acid n.酸 +acknowledge v.承认，鸣谢 +acknowledgment n.承认，鸣谢，回执 +acquaint n.使熟悉，相识 +acquaintance n.熟悉人，相识 +acquaintant adj.熟悉的 +acquire v.求得，获得 +acquisition n.获得 +acre n.英亩 +acrobat n.杂技演员 +acrobatics n.杂技 +across prep.横越 adv.横穿 +act n.行为，法令 v.表演 +action n.行为，行动 +activate v.使活跃，开动 +active adj.活跃的，积极的 +actively adv.积极地，活跃地 +activity n.活动 +actor n.男演员 +actress n.女演员 +actual adj.现实的，实际的 +actuality n.实际 +actually adv.实际上，居然 +acute adj.剧烈的，敏锐的 +a.d. (缩)公元 +ad n.(缩)广告 +adapt v.使适应，改编 +adaptation n.适应 +add v.增添，加，补充 +addition n.增加，附加物 +additional adj.增加的，附加的 +additive adj.附加的 n.添加剂 +address n.地址 v.致词 +adequate adj.足够的，恰当的 +adequately adv.恰当地 +adhere v.粘附，坚持 +adhesive n.粘合剂 +adjacent adj.邻近的 +adjective n.形容词 +adjoin v.毗连 +adjust v.调整，修整 +adjustable adj.可调整的 +adjustment n.调整 +administer v.管理 +administration n.行政管理，管理机关 +administrative adj.行政管理的 +admirable adj.可钦佩的 +admiration n.羡慕，钦佩 +admire v.钦佩，赞美 +admission n.准入，承认 +admit v.承认，接纳 +admittedly adv.明白地 +adolescence n.青春期 +adolescent adj.青春期的 +adopt v.采用，采纳 +adoption n.采用 +adore v.崇拜，敬慕 +adorn v.装饰，佩带 +adornment n.装饰(品) +adult n.成年人 adj.成年的 +advance n.,v.前进 +advanced adj.先进的，发达的 +advantage n.优点，优势 +advantageous adj.有利的，有用的 +adventure n.冒险，惊险活动 +adventurous adj.冒险的 +adverb n.副词 +adverbial adj.副词的 +adversary adj.敌手，对手 +adverse v.逆的，相反的 +adversity n.逆境，不幸 +advertise v.登广告，推销 +advertising adj.广告的 +advertisement n.广告 +advice n.忠告，意见 +advisable adj.适当的，可行的 +advise v.劝告，通知 +adviser n.顾问 +advocate v.拥护，提倡 +aerial adj.天空的，航空的 +aeroplane n.飞机 +affair n.事件，事情 +affect v.影响，改变 +affection n.友爱，爱慕 +affectionate adj.充满感情的 +affiliate n.分号(公司) +affirm v.断言，肯定 +affirmation n.确定，确认 +affirmative adj.肯定的 +afford v.买得起，经受得起 +affordable adj.买得起的 +afloat adj.航行中的 +aforesaid adj.上述的 +afraid adj.害怕的，恐怕 +africa n.非洲 +african adj.非洲的 n.非洲人 +after prep.在...后 +afternoon n.下午 +afterward adv.后来 +again adv.再，又 +against prep.反对，对着 +age n.年龄，时代 +agency n.代理，代理处 +agent n.代理人，试剂 +aggravate v.加重，恶化 +aggravation n.加重，恶化 +aggregate v.,n.,adj.合计(的) +aggregation n.总计，集合 +aggression n.侵略 +aggressive adj.侵略的，进取的 +aggressor n.侵略者 +agitate v.鼓动 +agitation n.鼓动，不安 +ago adv....以前 +agonize v.使痛苦 +agony n.苦恼，痛苦 +agree v.同意，一致认为 +agreeable adj.惬意的，易相处的 +agreeably adv.欣然，依照 +agreed adj.商定的 +agreement n.一致，协议 +agricultural adj.农业的 +agriculture n.农业 +ahead adv.在...前 +aid n.,v.援助，救护 +aids n.(缩)艾滋病 +ailment n.疾病 +aim n.目的 v.旨在，指向 +aimless adj.无目的的 +air n.空气，气派 +aircraft n.航空器 +airline n.航线，航空公司 +airliner n.定期航班 +airmail n.航空邮件 +airplane n.飞机 +airport n.机场 +airway n.航线 +aisle n.过道，走廊 +ajar adv.半开的 +alarm n.惊慌，警报 +alarming adj.警告的 +alas int.唉，哎呀 +album n.相册，地图册 +alcohol n.酒精 +alcoholic adj.含酒精的 +alcoholism n.嗜酒者，酒鬼 +ale n.淡啤酒 +alert adj.警惕的，灵活的 +algebra n.代数 +alien adj.异国的，异样的 +alienate v.疏远，转让，挪用 +alienation n.异化 +alignment n.对准，准线 +alike adj.相象的 +alive adj.活着的，有生命的 +all adj.所有的 n.一切 +allergic adj.过敏的，变态的 +allergy n.反感，过敏 +alliance n.联合，同盟 +allied adj.同盟的 +allocate v.分配 +allocation n.分配 +allot v.分配，配给 +allotment n.分配，份额 +allow v.允许，许可 +allowance n.补助，津贴 +alloy n.合金 +ally n.同盟者 v.结盟 +almost adv.几乎，差不多 +alone adj.单独的，仅仅 +along prep.沿着 adv.一起 +alongside prep.在...旁边 +aloud adv.大声地 +alphabet n.字母表 +also adv.也 +alter v.改变，变动 +alternate v.轮流，交替 +alternation n.改变，变更 +alternative n.,v.两者取一 +although conj.虽然 +altitude n.高度 +altogether adv.全部地，总共 +aluminum n.铝 +always adv.总是，始终 +a.m. (缩)上午 +amateur adj.业余的 +amaze v.使惊叹 +amazement n.惊奇，诧异 +ambassador n.大使 +ambient adj.周围的，包围着的 +ambiguity n.歧义性，意义不明处 +ambiguous adj.模棱两可的 +ambition n.抱负，野心 +ambitious adj.雄心勃勃的 +ambulance n.救护车 +amend v.修改，更正 +amendment n.修改(通知书) +amends n.赔偿 +america n.美国，美洲 +american adj.美国的 n.美国人 +amiable adj.和蔼的，亲切的 +amicable adj.友好的，和睦的 +amid prep.在...之间 +ammunition n.弹药 +among prep.在...之中 +amount n.数量，总数 v.合计 +ampere n.【电】安培 +ample adj.宽大的，充裕的 +amplification n.放大 +amplifier n.放大器，扩音机 +amplify v.详述，放大 +amuse v.逗乐，给娱乐 +amusement n.娱乐，乐趣 +analogue n.模拟，类似物 +analogy n.类似，类推 +analysis n.分析，分解 +analytical adj.分析的，解析的 +analyze v.分析，分解 +ancestor n.祖先，祖宗 +anchor n.锚 v.停泊 +ancient adj.古老的，古代的 +and conj.和，与，而 +anecdote n.轶事，轶闻 +angel n.天命，安琪儿 +anger n.生气，愤怒 +angle n.角，角度 +angry adj.生气的，愤怒的 +angular adj.角状的 +animal n.动物 +animate v.使有活力，激活 +animation n.生气，生机 +ankle n.踝，踝骨 +annex n.附录，附件 +anniversary n.周年纪念日 +announce v.宣布，通报 +announcement n.通知 +announcer n.播音员 +annoy v.烦扰，使生气 +annoyance n.烦恼，麻烦事 +annual adj.每年的，年度的 +annually adv.每年，年年 +another pron.,prep.另一个 +answer n.答案 v.答复 +ant n.蚂蚁 +antagonism n.对立，敌对 +antagonist n.对手，敌手 +antarctic adj.南极的 +antibiotic adj.抗菌的 +antecedent n.触角，天线 +anticipate v.期望，预料 +anticipation n.期望，预料 +antique adj.古老的 n.古玩 +antonym n.反义词 +antonymous adj.反义的 +anxiety n.焦虑，担心 +anxious adj.焦急的，切盼的 +anxiously adv.焦急地，急切地 +any adj.任何，一些 +anybody pron.任何人 +anyhow adv.无论如何 +anyone pron.无论谁 +anything pron.无论什么 +anyway adv.不管怎样 +anywhere adv.无论何地 +apart adv.分离，隔开 +apartment n.套房，公寓 +ape n.猿猴 +apologize v.道歉 +apology n.道歉 +apparatus n.仪器，设备 +apparent adj.明显的，表面上的 +apparently adj.显然，似乎 +appeal v.,n.呼吁，上诉 +appealing adj.有吸引力的 +appear v.出现，好象 +appearance n.出现，外表 +appendix n.附录，盲肠 +appetite n.食欲，欲望 +applaud v.称赞，拍手喝彩 +applause n.喝彩，欢呼 +apple n.苹果 +appliance n.用具，器械 +applicable adj.生动的，适用的 +applicant n.申请人 +application n.申请，应用 +apply v.应用，申请 +appoint v.任命，约定 +appointment n.任命，约会 +appreciable adj.可看到的 +appreciably adv.相当大地 +appreciate v.欣赏，感激 +appreciation n.欣赏，感激 +appreciative adj.感激的 +apprentice n.学校 +apprize v.通知 +approach v.接近 n.途径 +appropriate adj.恰当的 v.拨给 +approval n.同意，批准 +approve v.赞成，批准 +approximate adj.,v.近似，约略 +approximately adv.近乎，大约 +approximation n.近似值 +april n.四月 +apt adj.恰当的，易于..的 +aptitude n.才智，天资 +arab n.阿拉伯 +arabian n.阿拉伯人，阿拉伯语 +arabic adj.阿拉伯的 +arbitrary adj.专横的，任意的 +arbitrate v.仲裁 +arbitration n.仲裁 +arbitrator n.仲裁员 +arc n.弧 +arch n.拱门，弓形 +archaeologist n.考古学家 +archaeology n.考古学 +architect n.建筑师 +architecture n.建筑学 +arctic adj.北极的 +ardent adj.热心的，强烈的 +arduous adj.艰巨的，努力的 +area n.地区，面积，领域 +arena n.竞技场 +argue v.争论，辩论 +argument n.争论，论点 +arise v.起来，出现 +aristocracy n.贵族阶层 +aristocrat n.贵族 +aristocratic adj.贵族的 +arithmetic n.算术 +arm n.手臂，扶手 v.武装 +arms n.武器 +armchair n.手扶椅 +armour n.盔甲，装甲 +army n.军队，陆军 +around adv.在周围，大约 +arouse v.唤醒，唤起 +arrange v.整理，安排 +arrangement n.安排，计划 +array v.装扮，排列 +arrear n.欠款 +arrest v.逮捕，吸引 +arrival n.到达，到货 +arrive v.到达，达到 +arrogance n.傲慢 +arrogant adj.傲慢的 +arrogantly adv.傲慢地 +arrow n.箭，箭头 +art n.艺术，技艺 +article n.文章，物品，冠词 +artificial adj.人造的，假的 +artist n.艺术家 +artistic n.艺术的 +as adv.一样 prep.作为 +ascend v.登，上升 +ascertain v.查明，弄清 +ascribe v.归于 +asean n.(缩)东盟 +ash n.灰，灰烬 +ashamed adj.惭愧的，羞耻的 +ashore adv.在岸上，上岸 +ashtray n.烟灰缸 +asia n.亚洲 +asian adj.亚洲的 n.亚洲人 +aside adv.在旁边，搁在一边 +ask v.问，要求，邀请 +asleep adj.睡着的 +aspect n.容貌，方面 +aspirin n.阿斯匹林 +ass n.驴，愚蠢的人 +assassinate v.暗杀 +assassination n.暗杀 +assassinator n.暗杀者 +assault v.袭击，攻击 +assemble v.集合，装配 +assembly n.集合，装配 +assert v.断言，宣称 +assertion n.断言 +assess v.评定，估价 +assessment n.估值，评价 +assign v.分配，指定 +assignment n.任务，作业 +assist v.协助 +assistance n.协助，辅助 +assistant n.助手 +associate v.联想 adv.副的 +associated adj.联合的 +association n.协会，合营 +associative adj.联想的 +assorted adj.各种各样的 +assortment n.花色品种 +assume v.假定，担任 +assumption n.假定，假装 +assurance n.自信，保证 +assure v.使..放心，向..保证 +assured adj.感到放心的 +astonish v.使惊讶 +astonishment n.惊讶 +astound v.使惊讶 +astray adv.(信件)遗失、误传 +astronaut n.宇宙飞行员 +astronomer n.天文学家 +astronomical adj.天文学的 +astronomy n.天文学 +at prep.在，处于，以 +athlete n.田径运动员 +athletic adj.田径的 +atlantic n.,adj.大西洋(的) +atlas n.地图集 +atmosphere n.大气，气氛 +atmospheric adj.大气的，空气的 +atom n.原子，微粒 +atomic adj.原子的，原子能的 +attach v.附着于，依恋 +attachment n.依附，附件，爱慕 +attack v.,n.进攻，侵袭 +attain v.赢得，到达 +attempt v.,n.尝试，企图 +attend v.出席，照顾 +attendance n.出勤(率)，出席 +attendant n.随从，服务员 +attention n.注意，关心 +attentive adj.注意的，关心的 +attentively adv.关心地 +attic n.阁楼 +attitude n.态度，看法 +attorney n.辩护律师 +attract v.吸引，引力 +attraction adj.有吸引力的 +attributable adj.归于...的 +attribute v.属于 n.属性 +attribution n.属于 +attributive adj.定语的，属性的 +auction n.拍卖 +audience n.听众，观众 +auditorium n.礼堂 +august n.八月 +aunt n.伯(婶、姨、姑)母 +aural adj.听觉的，耳的 +auspice n.赞助，主办 +australia n.澳大利亚 +australian adj.澳大利亚的 +author n.作者，创造者 +authority n.权力，权威 +authorization n.授权 +authorize v.授权，批准 +autobiography n.自传 +automate v.自动化 +automatic adj.自动的 +automation n.自动化 +automobile n.汽车 +autonomous adj.自治的 +autonomy n.自治 +autumn n.秋天 +auxiliary adj.辅助的，补助的 +avail v.帮助，有用 n.效用 +availability n.可用性，可供货 +available adj.可得到的 +avenge v.报复 +avenue n.林荫道，途径 +average adj.平均的 n.平均数 +averagely adv.平均 +aviation n.航空 +avoid v.避免，逃避 +await v.等候，等待 +awake v.醒来,醒悟 adj.醒的 +awaken adj.醒着的 +award v.授予 n.奖，奖品 +aware adj.知道的，意识到的 +away adv.去，远离，在远处 +awe n.威惧 +awesome adj.可怕的 +awful adj.令人畏惧的 +awfully adv.可怕地，非常 +awkward adj.笨拙的，不熟练的 +awkwardly adv.笨拙地 +awkwardness n.笨拙 +ax n.斧子 +axial adj.轴的，轴向的 +axis n.轴，轴线，轴心 +axle n.(轮)轴 +baby n.婴儿，年龄最小的人 +baby-sit v.(替人)看护小孩 +baby-sitter n.看护小孩的人 +bachelor n.单身汉，学士 +back n.背 adj.背后的 +backbone n.脊梁骨 +backdate v.回溯 +background n.背景，经历 +backing n.倒退，支持物 +backlog n.未交付的订货 +backward adv.向后，逆 +backwardness n.落后(状态) +bacon n.咸肉，熏肉 +bacterium n.细菌 +bad adj.坏的，低劣的 +badge n.徽章 +badly adv.坏，非常，严重地 +badminton n.羽毛球 +baffle v.困扰，难倒 +bag n.袋子，提包 +baggage n.行李 +baggy adj.袋状的 +bait n.饵，诱饵 +bake v.烤，烘 +baker n.面包师 +bakery n.面包店 +balance n.平衡，天平，余额 +balcony n.阳台 +bald adj.秃的 +ball n.球，球状物，舞会 +ballet n.芭蕾舞 +balloon n.气球 +ballooning n.热气球飞行运动 +ball-point pen n.圆珠笔 +ballroom n.舞厅 +bamboo n.竹 +bamboo-shoot n.竹笋 +banana n.香蕉 +band n.乐队，带子 v.联合 +bandage n.绷带 +bandit n.盗匪，歹徒 +bang n.,v.砰的一响 +bank n.岸，银行 +banker n.银行家 +banking n.银行业务、金融业 +bankrupt n.,v.,adj.破产 +banner n.旗帜，横幅 +banquet n.宴会 +bar n.棒，杆，酒吧 +barber n.理发师 +bare adj.裸的，直率的 +barely adv.赤裸裸地 +bargain n.交易，便宜货 +barge n.驳船 +bark n.狗吠，树皮 v.吠 +barn n.谷仓，牲口棚 +barometer n.晴雨表，标记 +baron n.男爵 +baroness n.男爵夫人，女男爵 +barrel n.桶，枪(炮)管 +barren adj.不育的，贫瘠的 +barrier n.障碍，壁垒 +barter n.易货贸易 +base n.基础，基地 v.基于 +baseball n.棒球 +basement n.地下室，地窖 +basic adj.基本的，基础的 +basically adv.基本上，主要地 +basin n.盆，盆地 +basis n.基础，根据 +basket n.篮子，筐 +basketball n.篮球 +bat n.球拍，蝙蝠 v.击打 +bath n.洗澡，浴室 +bathe v.洗澡，冲洗 +bathroom n.浴室，洗手间 +batter v.打击 +battery n.电池 +battle n.战斗，战役 +bay n.海湾，湾 +bazaar n.集市 +b.c. (缩)公元前 +be v.是，存在 +beach n.海滩，湖滨 +bead n.有孔小珠 +beak n.鸟嘴 +beam n.梁，射线 v.发光 +bean n.豆子 +bear v.负担，忍受，生育 +bearing n.举止，意义，轴承 +bearish adj.熊市的 +beast n.野兽，牲畜 +beat v.打，击败 n.击打 +beautiful adj.美丽的，绝妙的 +beauty n.美，美女 +because conj.因为，由于 +become v.变成 +bed n.床，河床，苗圃 +bedroom n.卧室 +bee n.蜜蜂 +beef n.牛肉 +beer n.啤酒 +beetle n.甲虫 +before prep.在...前面 +beforehand adv.事先，预先 +beg v.乞讨，恳求 +beggar n.乞丐 +begin v.开始，着手进行 +beginner n.初学者 +beginning n.开端，起点 +behalf n.代表 +behave v.行为，举动 +behavior n.行为，举止 +behind prep.在...后面 +behindhand adj.落后，事后 +being n.生物，存在 +belief n.信仰，信心 +believe v.相信，认为 +bell n.钟，铃 +belly n.肚子 +belong v.属于 +beloved adj.敬爱的 n.爱人 +below adj.,prep.在...下面 +belt n.带，腰带 +bench n.长凳，工作台 +bend v.弯曲，俯身 n.拐弯 +beneath prep.在...之下 +beneficial adj.有益的，有利的 +beneficiary n.受益者 +benefit n.益处，利益 +benevolence n.慈悲，捐助 +benevolent adj.乐善好施的 +bent adj.弯曲的 +berry n.浆果 +beside prep.在...之旁 +besides adj.而且 prep...之外 +best adj.最好的 +best-seller n.畅销书(货) +best-selling adj.畅销的 +bestow v.赠给，授予 +bet n.,v.打赌 +betray v.背叛，泄露 +betrayal n.背叛，暴露 +better adj.更好的 adv.较好 +better-off adj.经济情况较好的 +between prep.在两者之间 +beverage n.饮料 +beware v.当心 +bewilder v.迷惑，茫然 +beyond prep.在...那边，超出 +bias n.偏好 +bible n.圣经 +bicycle n.自行车 +bid n.,v.报价，投标 +bidding n.投标 +big adj.大的，重大的 +bike n.自行车 +bill n.帐单，议案，钞票 +billion n.十亿 +bind v.捆绑，约束 +binding n.装订 +biographer n.传记记者 +biography n.传记 +biologist n.生物学家 +biology n.生物学 +bird n.鸟 +birth n.出生，创始 +birthday n.生日，诞辰 +birthplace n.出生地 +biscuit n.饼干 +bishop n.主教 +bit n.小片，一点 +bite n.,v.咬，叮 n.一口 +bitter adj.苦的，痛苦的 +bitterly adv.惨痛地，辛酸地 +bitterness n.苦味，苦难 +b/l n.(缩)提单 +black adj.黑的 n.黑色 +blackboard n.黑板 +blacksmith n.铁匠 +blade n.刀刃，叶片 +blame v.责备 n.过失 +blank adj.空白的 n.空格 +blanket n.毛毯 +blast n.阵风 v.爆炸 +blaze n.火光，光亮 +bleach v.漂白，变白 +bleed v.出血，流血 +blend v.混合，掺混 +bless v.保佑，祝福 +blessing n.祝福 +blind adj.瞎的 v.使失明 +blink adj.眨眼，闪烁 +block n.大块，街区，障碍物 +blockage n.封锁 +blond adj.金发的 +blood n.血，血统 +bloody adj.流血的，残忍的 +bloom n.花 v.开花 +blossom n.(果树的)花 +blot n.污迹 +blouse n.女衫 +blow v.吹，吹掉，刮风 +blue adj.蓝色的，忧郁的 +blunder n.大错 +blunt adj.钝的，生硬的 +blush v.脸红，害臊 +blushy adj.害羞的 +board n.木板，伙食，董事会 +boarding n.伙食 +boast v.夸口，以...而自豪 +boat n.小船，艇 +body n.身体，尸体，团体 +bodyguard n.保镖 +boil v.沸腾，煮沸 +boiler n.锅炉 +boiling adj.沸腾的 +bold adj.大胆的 +boldness n.胆略 +bolt n.螺检，插销 v.闩门 +bomb n.炸弹 v.轰炸 +bomber n.轰炸机 +bona fide adj.真诚的，无欺的 +bond n.束缚，联结，债券 +bonded adj.保税的 +bone n.骨，骨骼 +bony adj.骨头的 +bonus n.红利 +book n.书 v.预订(票) +booking adj.定货 +booklet n.小册子 +bookcase n.书橱 +bookshelf n.书架 +bookstore n.书店 +boom v.隆隆响，兴旺，繁荣 +booming adj.兴旺的，繁荣的 +boost v.抬高，促进 +boot n.靴子 +booth n.货摊，电话亭 +border n.国界，边境 +bore v.烦扰，使厌烦，钻孔 +boring adj.讨厌的 +born adj.出生的，天生的 +borrow v.借，借用 +borrowings n.借款 +bosom n.胸，胸怀 +boss n.上司，老板 +bossy adj.好发号施令的 +both pron.,adj.双方，两 +bother v.打扰，麻烦 n.麻烦 +bottle n.瓶子 +bottle-neck n.影响...的环节 +bottom n.底部，末尾 +bottom-line n.末行数字，结果 +bough n.大树枝 +bounce v.跳起 n.跳跃 +bound v.缚，以...为界 +boundary n.界线，边界 +bourgeois n.资产阶级分子 +bow v.鞠躬，服从 n.弓 +bowl n.碗，钵 +bowling n.保龄球 +box n.箱，盒 v.拳击 +boxer n.拳击运动员 +boxing n.拳击 +boxing-day n.节礼日 +boy n.男孩，小伙子 +boycott v.,n.抵制 +brace n.支撑 v.激励 +bracket n.括号 +brag v.吹嘘，夸口 +brain n.脑子，头脑，智能 +brake n. 制动器 v.刹车 +branch n.树枝，分支，分部 +brand n.牌子，商标 +brandy n.白兰地 +brass n.黄铜 +brave adj.勇敢的 v.冒着 +bravely adv.勇敢地 +bravery n.勇敢 +brazil n.巴西 +brazilian adj.,n.巴西的(人) +breach n.违反(契约) +bread n.面包，生计 +bread-earner n.挣钱养家的人 +breadth n.宽度，大量 +break n.打破，破坏 n.裂口 +breakage n.裂口 +breakdown n.故障，衰竭 +breakthrough n.突破 +breakfast n.早饭 +breast n.乳房，胸脯 +breath n.呼吸，气息 +breathe v.呼吸 +breed v.繁殖，饲养 n.品种 +breeze n.微风 +bribe v.贿赂 +bribery v.贿赂 +brick n.砖 +bride n.新娘 +bridegroom n.新郎 +bridge n.桥梁，桥牌 +bridle n.约束 v.抑制 +brief adj.简短的 +briefing n.简要情况 +briefly adv.简单地，简短地 +bright adj.明亮的，鲜明的 +brighten v.使发光 +brightness n.光辉，明亮 +brilliance n.辉煌，光彩 +brilliant v.辉煌的，杰出的 +brim n.边，边缘 +bring v.拿来，带来 +brink n.边缘 +brisk adj.敏捷的，活跃的 +bristle n.鬃毛 +britain n.不列颠，英国 +british adj.英国的，英属的 +brittle adj.易碎的，脆的 +broad adj.宽的，辽阔的 +broadcast v.,n.广播 +broadcasting n.广播节目 +broaden v.加宽，扩大 +brochure n.产品介绍手册 +broken adj.破碎的，毁坏了的 +broker n.经纪人 +bronze n.青铜 +brood n.一窝 +brook n.小河，溪流 +broom n.扫帚 +brother n.兄弟，同胞 +brotherhood n.兄弟情谊 +brother-in-law n.姻兄(弟) +brow n.眉毛，额 +brown n.,adj.褐色(的) +bruise n.青肿 v.打伤 +brush n.刷子，画笔 v.刷 +brutal adj.野蛮的 +brute n.禽兽，畜生 +bubble n.气泡 +bucket n.水桶 +bud n.芽，蓓蕾 +buddhism n.佛教 +buddhist n.佛教徒 +budget n.预算 +buffalo n.水牛，野牛 +buffet n.冷餐 +bug n.臭虫，虫子 +bugle n.喇叭 +build v.建造，建设 +builder n.建筑工人，建设者 +building n.建筑物，大楼 +bulb n.球形物，灯泡 +bulk n.体积，大半 +bulky adj.庞大的，笨重的 +bull n.公牛 +bullet n.子弹 +bulletin n.公报 +bullion n.金块，金条 +bullish adj.行情看涨的 +bump v.碰，颠簸 n.碰撞 +bumpy adj.颠簸不平的 +bunch n.一束 +bundle n.,v.捆，包 +burden n.担子，负担 +burdensome adj.沉重的 +bureau n.局，司，办公室 +bureaucracy n.官僚主义 +bureaucratic adj.官僚主义的 +burglar n.夜盗，窃贼 +burglary n.盗窃 +burial n.埋葬 +burn v.烧，燃烧，烧伤 +burner n.喷灯 +burnt adj.烧焦的，烧坏的 +burst v.,n.爆炸，破裂 +bury v.掩埋，安葬 +bus n.公共汽车 +bush n.灌木 +bushel n.蒲式耳(重量单位) +business n.行业，买卖，商号 +businesslike adj.事务式的 +busy adj.忙碌的，热闹的 +but prep.但是，除了 +butcher n.屠夫 v.屠宰 +butchery n.肉食店 +butt n.根端 v.顶撞 +butter n.黄油 +butterfly n.蝴蝶 +button n.钮扣，按钮 +buy v.买，购买 +buyer n.购买者 +buzz v.嗡嗡叫 n.嗡嗡声 +by prep.在...旁边，按照 +bygone n.已往的，过时的 +bypass n.旁道，分路 +by-product n.副产品 +cab n.出租汽车 +cabbage n.卷心菜；圆白菜 +cabin n.小屋，船舱 +cabinet n.橱柜，内阁 +cable n.电缆，海底电报 +cafe n.咖啡馆 +cafeteria n.自助餐厅 +cage n.笼子，鸟笼 +cake n.糕，饼 +calculate v.计算，估计 +calculation n.计算(结果) +calculus n.微积分 +calendar n.日历 +calf n.小牛，腿肚子 +calibration n.刻度，核定 +call v.叫，称为，打电话 +calm adj.宁静的，镇静的 +calmly adv.平静地，沉着地 +calorie n.热卡，卡路里 +camel n.骆驼 +camera n.照相机 +camp n.帐篷，野营 n.宿营 +campaign n.战役，运动 +camping n.野营 +campus n.校园 +can v.aux.能，会，可以 +canada n.加拿大 +canadian adj.,n.加拿大的(人) +canal n.运河，渠道 +canary n.金丝雀 +cancel v.删除，取消 +cancellation n.删除，取消 +cancer n.癌 +candid adj.坦白的，直率的 +candidate n.候选人 +candle n.蜡烛 +candy n.糖果 +cane n.手杖，(藤、竹的)茎 +canned adj.罐装的 +cannon n.大炮 +canoe n.独木舟，游艇 +canon n.规范，准则 +canteen n.食堂 +canvas n.帆布，画布 +canvass v.游说 +cap n.帽子，盖子 v.覆盖 +capability n.才能，能力 +capable adj.有能力的 +capacity n.容量，容积，资格 +cape n.披肩，岬，海角 +capita n.人 +capital n.首都，资本 +capital-intensive adj.资本密集型的 +capitalism n.资本主义 +capitalist adj.资本主义的 +capitalization n.资本化 +capitalize v.大写，资本化 +captain n.队长，船长，上尉 +caption n.标题 +captive adj.被俘虏的 n.俘虏 +capture v.,n.俘获，捉拿 +car n.小汽车 +caravan n.车队，大蓬车 +carbon n.碳，复写纸 +card n.卡片，纸牌，名片 +cardboard n.硬纸板 +cardinal adj.主要的 +care n.注意，小心 v.关心 +career n.职业，生涯 +careful adj.小心的，仔细的 +careless adj.粗心的，不关心的 +carelessness n.粗心 +cargo n.货物 +carol n.颂歌 +carpenter n.木匠 +carpet n.地毯 +carriage n.马车，(火车)车厢 +carrier n.运载工具，媒介 +carrot n.胡萝卜 +carry v.搬运，携带 +cart n.手推车 +carton n.纸箱 +cartoon n.漫画，动画片 +cartridge n.弹仓 +carve v.雕刻，切 +carving n.雕塑 +case n.事实，案例，箱子 +cash n.现金 v.兑现 +cashier n.出纳 +cassette n.小盒，磁盘盒 +cast v.掷，投射，铸造 +castle n.城堡 +casual adj.偶然的，随便的 +casualty n.伤亡 +cat n.猫 +catalog n.(商品)目录 +catastrophe n.灾难 +catalyst n.催化剂 +catch v.捕获，染病 n.捉 +category n.种类，范畴 +cater v.提供 +cathedral n.大教堂 +catholic adj.天主教的 +cattle n.牛(总称) +cause n.原因，理由，事业 +caution n.谨慎，告诫 +cautious adj.谨慎的，当心的 +cavalry n.骑兵，马术 +cave n.洞穴，山洞 +cavern n.酒馆 +cavity n.坑，孔穴 +cease v.停止，平息 +ceiling n.天花板 +celebrate v.庆祝 +celebration n.庆祝仪式 +celery n.芹菜 +cell n.细胞，牢房，电池 +cellar n.地窖，地下室 +cement n.水泥 +cemetery n.墓场 +censor v.审查 +censorship n.审查 +cent n.分币 +centigrade adj.摄氏的 +centimeter n.厘米 +central adj.中心的，中央的 +center n.中心 v.集中 +century n.世纪 +cereal n.谷物 +ceremonial adj.仪式的 +ceremony n.仪式，典礼，礼节 +certain adj.确信的，一定的 +certainly adv.一定，当然，行 +certainty n.确实，必然的事 +certificate n.证书，执照 +certification n.证明 +certify v.证明 +chain n.链条，一系列，锁链 +chair n.椅子 +chairman n.主席，董事长 +chairperson n.主席(无性别之分) +chairwoman n.女主席，女董事长 +chalk n.白垩，粉笔 +challenge n.,v.挑战，质问 +challenging adj.具有挑战性的 +chamber n.房间 +champion n.优胜者，冠军 +championship n.锦标(赛) +chance n.机会，可能性 +change n.变化，零钱 v.改变 +changeable adj.变化的 +channel n.沟渠，途径，频道 +chaos n.混乱 +chap n.伙计 +chapter n.章，节 +character n.性格，角色，特牲 +characteristic n.特征，特性 +characteristical adj....特征的 +characterize v.具有...特征 +charcoal n.木炭 +charge v.收费，冲向，控告 +charity n.施舍，仁慈 +charm n.魅力 v.迷惑 +charming adj.迷人的 +chart n.图表 v.制定计划 +charter n.特许证，宪章 +chase v.追逐，驱除 +chat v.聊天 +chatter v.喋喋不休，啁啾 +cheap adj.便宜的，可鄙的 +cheat v.欺骗，作弊 n.骗子 +cheating n.欺骗行为 +check v.检验，核对 n.支票 +check-out n.结帐，离店时限 +check-up n.核对，检查 +cheek n.颊，脸 +cheeky adj.胖乎乎的 +cheer n.喝彩 v.向...喝彩 +cheerful adj.快活的 +cheese n.干酪，奶酪 +chemical adj.化学的 +chemist n.化学家，药剂师 +chemistry n.化学 +cheque n.支票 +cherish v.珍爱，怀有 +cherry n.樱桃 +chess n.国际象棋 +chest n.胸膛，柜子 +chestnut n.栗树，栗子 +chew v.咀嚼 +chick n.小鸡 +chicken n.鸡，鸡肉 +chief adj.首席的，首要的 +chiefly adv.多半，首要地 +child n.孩子，儿童 +childhood n.童年 +childish adj.孩子气的 +childlike adj.孩子似的，天真的 +chill n.寒意 v.冷却 +chilly adj.凉的，冷淡的 +chimney n.烟囱 +chin n.下巴，下颊 +china n.中国 +china n.瓷器，陶瓷 +chinese adj.,n.中国的 +chip n.片，屑，缺口 +chocolate n.巧克力 +choice n.选择，选中的人或物 +choke v.闷死，窒息，阻塞 +choose v.选择，愿意 +chop v.劈，剁 n.带骨肉 +chorus n.合唱队，齐声 +christ n.基督 +christian adj.基督教的n.基督徒 +christianity n.基督教(精神) +christmas n.圣诞节 +church n.教堂 +cif n.(缩)到岸价 +cigar n.雪茄 +cigarette n.卷烟 +cinema n.电影院 +circle n.圆，果 v.画圈于 +circular adj.圆圈的 +circuit n.巡回，电路 +circulate v.循环，流通，流传 +circulation n.循环，销路，周转 +circumference n.周围，圆周 +circumstance n.情况，环境 +circus n.马戏团 +cite v.引证，举例 +citizen n.公民，市民 +citizenship n.公民权 +city n.城市 +civil adj.民用的，民事的 +civilization n.文明，民族文化 +civilize v.使...文明，开化 +claim v.要求，索赔，声称 +clamp n.夹子 v.夹紧 +clap v.排手，鼓掌 +clarify v.弄清(问题) +clarification n.澄清 +clash v.,n.碰撞，冲突 +clasp n.扣子 v.紧握(抱) +class n.阶级，种类，班级 +classic n.经典作品 +classical adj.经典的，古典的 +classification n.分类 +classify v.分类，分等 +classmate n.同班同学 +classroom n.教室 +clatter v.咔嗒响 n.卡嗒响 +clause n.条款，从句 +claw n.爪 +clay n.黏土 +clean adj.清洁的，干的 +clear adj.清楚的，明确的 +clearance n.结关 +clearly adv.清晰地，无疑地 +clench v.咬紧，握紧，决定 +clerk n.办事员，职员，店员 +clever adj.聪明的，灵巧的 +cleverness n.聪明，机灵 +client n.当事人，顾客，用户 +clientele n.顾客(总称) +cliff n.悬崖，峭壁 +climate n.气候 +climax n.顶点，高潮 +climb v.爬，攀登，上升 +cling v.粘住，依附 +clinic n.诊所 +clip n.夹子，卡子 v.夹住 +cloak n.外套，借口 +clock n.时钟 +clockwise adj.,adv.顺时针的 +close v.关闭，结束 n.终结 +closed adj.关闭的，停业的 +close down n.倒闭 +closely adv.紧密地，严密地 +closet n.壁橱 +cloth n.织物，布，衣料 +clothe v.给...着衣 +clothes n.衣服(总称) +clothing n.服装(总称) +cloud n.云 +cloudy adj.多云的 +clown n.小丑，丑角 +club n.俱乐部，会，棍棒 +clue n.线索 +clumsy adj.笨拙的，愚蠢的 +cluster n.群，串 +clutch v.,n.抓紧 +c/o v.(缩)请转交... +coach n.客车，教练 +coal n.煤 +coarse adj.粗糙的，粗的 +coast n.海岸，海滨 +coastal adj.沿海的 +coat n.上衣，涂层 +cock n.公鸡 +cocktail n.鸡尾酒 +code n.法规，代码，密码 +codify v.编码 +coefficient n.系数 +coffee n.咖啡 +coffin n.棺材 +coherence n.凝聚性 +coherent adj.有条理的，粘着的 +cohesion n.凝聚力，团结 +cohesive adj.有粘性的 +coil v.卷曲 n.一卷，线圈 +coin n.硬币，创造新词 +coinage v.重合，一致 +coincide n.巧合，同时发生 +coincidence adj.同时发生的 +coincident adj.冷，冷冰冰的 +coldness n.寒冷，冷淡 +collaborate v.协作，勾结 +collaboration n.协作，通敌 +collapse v.倒塌 v.坍塌 +collar n.领子 +colleague n.同事，同行 +collect v.收集，征收，聚集 +collection n.收集，收藏 +collective n.集体 adj.集体的 +college n.学院 +collide v.猛烈碰撞，冲突 +collision n.猛烈碰拉，冲突 +colonel n.上校 +colonial adj.殖民的，殖民地的 +colonist n.殖民者，移民 +colonist n.殖民主义 +colony n.殖民地 +color n.颜色，色彩，气色 +color-blind adj.色盲的 +colorful adj.色彩丰富的 +colorless adj.无色的 +column n.圆柱，栏 +columnist n.专栏作家 +comb v.梳 n.梳子 +combat v.,n.战斗，斗争 +combination n.混合，组合 +combine v.组合，化合，结合 +come v.来到，出现，发生 +comedian n.喜剧演员 +comedy n.喜剧 +comfort n.舒适，慰藉 v.安慰 +comfortable adj.舒适的，自在的 +comic adj.喜剧的，滑稽的 +command v.,n.命令，控制 +commander n.司令，指挥官 +commemorate n.纪念 +commemoration v.纪念 +commence v.开始 +commend v.称赞，推荐 +commandment n.称赞 +comment n.,v.评论 +commerce n.商业 +commercial adj.商业的，商务的 +commission n.,v.委托，委任 +commit v.委托，犯(错误) +commitment n.责任 +committee n.委员会 +commodity n.商品 +common adj.共同的，普通的 +commonly adv.通常，平常 +commonplace adj.平凡的，平淡的 +commonsense n.常识 +commonwealth n.共同体，联邦 +commune n.公社 +communicate v.传播，通讯 +communication n.通信，通讯系统 +communicative adj.通讯的 +communism n.共产主义 +communist n.共产主义者 +community n.团体，共同体，群体 +compact adj.严密的，紧凑的 +companion n.同伴，伴侣 +company n.公司，同伴 +comparable adj.可比较的 +comparative adj.比较的，相当的 +comparatively adv.比较地 +compare v.比较，比作 +comparison n.比较 +compass n.指南针，圆规 +compatible adj.可兼容的，一致的 +compel v.强迫，逼迫 +compensate v.赔偿，补偿，酬报 +compensation n.赔偿，补偿 +compete v.竞争，比赛 +competent adj.称职的，有能力的 +competition n.竞争，比赛 +competitive adj.竞争的 +competitiveness n.竞争能力 +competitor n.竞争者，对手 +compile v.编(书)，编辑 +complain v.抱怨，控诉 +complaint n.怨言，控告 +complement n.补充，余数 +complete v.完成，结束 +completely adv.完全地，十分 +completion n.完成，完满 +complex adj.综合的，复杂的 +complexity n.复杂性 +compliance n.顺从，应允 +complicate v.使复杂 +complicated adj.错综复杂的 +compliment n.,v.称赞，问候 +complimentary adj.称赞的 +comply v.履行，遵守 +component n.成分，组分 +componential adj.成分的 +compose v.由...组成，作曲 +composed adj.镇静的 +composer n.作曲家 +composite adj.合成的，组合的 +composition n.作文，组成 +compound n.化合物 v.混合 +comprehend v.理解，了解 +comprehension n.理解 +comprehensive adj.综合的，广泛的 +compress v.压缩 +compression n.压缩，凝缩 +comprise v.包括，由...组成 +compromise n.,v.妥协，和解 +compels v.强迫 +compulsory adj.强制的，必修的 +computation n.计算 +compute v.计算 +computer n.计算机 +computerization n.计算机化 +computerize v.使...计算机化 +comrade n.同志 +conceal v.隐瞒，隐藏 +concede v.让步，输 +conceit n.自负，自大 +conceited adj.自负的 +conceive v.想象，怀孕 +concentrate v.集中，浓缩 +concentrated adj.全神贯注的 +concentration n.专心，浓度 +concept n.概念 +conception n.想法，概念 +conceptive adj.概念的 +concern v.涉及，关心 n.商行 +concerned adj.有关的 +concerning prep.关于 +concert n.音乐会 +concerted adj.齐心协力的 +concess v.让步 +concession n.让步，减免，租界 +concise adj.简明的，简要的 +conclude v.结束，缔结，断定 +conclusion n.结束，结论 +conclusive adj.结束的，结论性的 +concrete n.混凝土 adj.具体的 +concur v.同地发生 +concurrence n.合作，并发 +concurrent adj.同时发生的 +condemn v.谴责，判刑 +condemnation n.谴责，判决 +condensation n.凝聚 +condense v.凝结，冷凝，精简 +condenser n.冷凝器，聚光器 +condition n.状态，情形，条件 +conditional adj.有条件的 +conduce v.导致，有益于 +conducive adj.有助于...的 +conduct n.行为，管理 v.为人 +conduction n.传导，传热 +conductor n.(乐队)指挥，售票员 +cone n.锥体，锥形 +confer v.授予，颁布，商议 +conference n.会议 +confess v.坦白，供认 +confession n.供认，自由 +confide v.委托，吐露秘密 +confidence n.信任，信心 +confident adj.确信的，自信的 +confidential adj.机密的 +confine v.限制 +confinement n.限制 +confirm v.证实，确认，批准 +confirmation n.确认 +conflict v.,n.冲突，斗争 +conform v.遵守，使...一致 +conformity n.遵照，一致 +confront v.面对，与...相对 +confrontation n.面对，对峙 +confuse v.混淆，弄糊涂，搅乱 +confusion n.混乱，糊涂 +congestion n.阻塞，消化不良 +congratulate v.祝贺 +congratulation n.祝贺，贺辞 +congress n.(代表)大会，国会 +congressman n.国会议员 +conjunction n.连词，联结 +connect v.连接，联想 +connection n.联系，社会关系 +conquer v.征服，战胜 +conqueror n.征服者，胜利者 +conquest n.征服 +conscience n.良心，良知 +conscientious adj.有良心的 +conscientiously adv.认真地 +conscious adj.意识到的，自觉的 +consciousness n.知觉，意识 +consecutive adj.连续的，连贯的 +consent v.,n.同意，允许 +consequence n.后果，重要性 +consequently adv.因而，所以 +conservation n.保护，保存 +conservative adj.保守的，稳健的 +consider v.考虑，以为，体谅 +considerable adj.相当的，可观的 +considerably adv.相当 +considerate adj.考虑周全的 +consideration n.考虑，照顾 +consign v.委托，托运货物 +consignment n.委托，货物 +consist v.由...组成 +consistency n.一致(性) +consistent adj.始终如一的，符合 +console v.安慰 +consolidate v.团结 +consolidated adj.加固的，统一的 +consolidation n.团结 +consonant adj.响亮的 +conspicuous adj.显眼的，出众的 +conspiracy n.阴谋 +constable adv.警官 +constant adj.不变的，恒定的 +constantly adv.经常地 +constituent adj.组成的 n.成分 +constitute v.组成，构成，设立 +constitution n.宪法，章程 +constitutive adj.宪法的，章程的 +constraint n.强制，拘束 +construct v.建设，建立 +construction n.建设，建筑 +construe v.翻译，解释 +consul n.领事 +consulate n.领事馆 +consult v.咨询，磋商 +consultant n.咨询顾问(公司) +consultation n.咨询 +consume v.消费，消耗 +consumer n.消费者，用户 +consumption n.消费，消耗量 +contact n.,v.接触，联系 +contain v.含有，容纳，抑制 +container n.容器，集装箱 +contemplate v.沉思 +contemplation n.苦思冥想 +contemporarian n.同时代人 +contemporary adj.当代的，同时代的 +contempt n.轻视，蔑视 +contemptuous adj.轻视的 +content n.含量，内容 v.满足 +contest n.,v.争夺，比赛 +contestant n.参赛人 +context n.上下文，语境，环境 +contextual adj.上下文的，环境的 +continent adj.节制的 n.大陆 +continental adj.大陆的 +contingency n.事故，意外 +continual adj.连续的，频繁的 +continuance n.连续 +continue v.继续，连续，依旧 +continuous adj.持续的，不断的 +continuously adv.连续不断地 +contract n.契约，合同 v.订 +contracted adj.合同所规定的 +contractual adj.合同的，契约的 +contradict v.反驳，与...矛盾 +contradiction n.矛盾，反驳 +contrary adj.相反的 n.反面 +contrast n.,v.对照，对比 +contribute v.捐献，贡献，投稿 +contribution n.贡献，捐献物 +control v.,n.控制，管理 +controversy n.论战，论争 +controversial adj.有争议的 +convenience n.方便，便利 +convenient adj.便利的，方便的 +convention n.大会，协定，惯例 +conventional adj.传统的，常规的 +conversant adj.精通的，有交情的 +conversation n.会话，谈话 +converse v.谈话，对话，交往 +conversely adv.相反地 +conversion n.转变，转化，换算 +convert v.转换，改变信仰 +convey v.运输，传达 +conveyance n.运送，传达 +convict n.罪犯 +conviction n.定罪，确信 +convince v.使...确信，信服 +convinced adj.信服的 +cook v.烹调，烧 n.厨师 +cooker n.厨具，厨灶 +cool adj.凉的，冷静的 +coolness n.凉爽，冷淡 +cooperate v.合作，协作 +cooperation n.合作，协作 +cooperative adj.合作的 n.合作社 +coordinate v.协调，配合 +coordination n.协调，配合 +cope v.应付，对付 +copper n.铜 +copy v.抄写，复制 n.副本 +cord n.细绳，电线 +cordial adj.诚恳的，亲切的 +cordially adv.亲切地 +core n.核，核心 +cork n.软木塞 +corn n.谷物，玉米 +corner n.角落，拐角 +corporate n.有限公司 +corporation n.公司 +correct adj.正确的，恰当的 +correction n.修改，校正 +correctly adv.正确地 +correlate v.相关，关联 +correlation n.相互关系 +correspond v.符合，通信，相当于 +correspondence n.相应，通信 +correspondent adj.对应的 n.记者 +corresponding adj.相应的，通信的 +corridor n.走廓 +corrode v.腐蚀 +corrosion n.腐蚀 +corrupt adj.腐败的，腐化的 +corruption n.腐败，腐化 +cosmetics n.化妆品 +cosmic adj.宇宙的 +cosmos n.宇宙 +cosmopolitan n.大都市 +cost n.成本，费用 v.花费 +costly adj.昂贵的 +cottage n.村舍 +cotton n.棉花，棉布，棉纱 +couch n.躺椅 +cough v.,n.咳嗽 +council n.理事会，委员会 +counsel n.劝告，辩护律师 +counsellor n.顾问 +count v.计算，数，认为 +countable adj.可计算的 +countenance n.容貌，支持 +counter n.柜台 adj.相反的 +countermand v.撤回，取消 +countermeasure n.对策 +counter-offer n.还价，还盘 +counterpart n.同类的人或物 +countersign v.副署，会签 +countersignature n.副署，会签 +countless adj.无数的 +country n.国家，乡间，故乡 +countryside n.乡下 +county n.县，郡 +couple n.一对，几个，夫妇 +courage n.勇气，胆量 +courageous adj.勇敢的 +course n.过程，路线，课程 +court n.法庭，宫廷，球场 +courteous adj.有礼貌的 +courtesy n.礼貌，礼仪，好意 +courtyard n.院子 +cousin n.堂(或表)兄弟姐妹 +cover v.盖，掩盖 n.盖子 +coverage n.覆盖率 +covering adj.包括的 +cow n.母牛，奶牛 +coward n.懦夫 +cowardly adv.胆小地 +crab n.蟹 +crack v.使...破裂 n.裂缝 +cracker n.苏打饼干，克力架 +cradle n.摇篮，发源地 +craft n.工艺，手艺，飞机 +craftsman n.手艺人 +craftsmanship n.手艺 +crane n.鹤，起重机 +crash v.碰撞 n.坠毁 +crate n.一箱，篓，筐 +crave v.渴望，恳求 +crawl v.爬行，徐徐行进 +craziness n.疯狂 +crazy adj.疯狂的，迷恋的 +cream n.乳脂，奶油 +creamy adj.奶油的，奶黄色的 +create v.创造，创作，造成 +creation n.创造，创造物 +creative adj.有创造力(性)的 +creature n.家伙，生物 +credit n.信誉，信用 v.相信 +creditworthy adj.有信誉的 +creditworthiness n.商誉 +creek n.小川，小湾 +creep v.爬行，蔓延 +crew n.(飞机等的)全体人员 +cricket n.板球，蟋蟀 +crime n.罪，罪行 +criminal n.罪犯 adj.犯罪的 +crimson adj.,n.深红色(的) +cripple n.跛子 v.使残废 +crisis n.危险，危险期 +crisp adj.松脆的，鲜嫩的 +critic n.评论家，爱挑剔的人 +critical adj.批评的，危急的 +criticism n.批评 +criticize v.批评，评论 +crook n.钩子 +crooked adj.弯曲的，歪的 +crop n.作物，庄稼 +cross n.十字，交叉 v.横过 +crossing n.交叉，十字路口 +crossroads n.交叉路口，十字路 +crouch v.蹲下，缩着 +crow n.乌鸦 v.鸦啼 +crowd n.人群 v.挤满 +crown n.王冠 v.加冕 +crude adj.未加工的，粗糙的 +cruel adj.残酷的，残忍的 +cruelty n.残忍，残酷行为 +cruise v.巡游，巡航 +crumb n.面包屑 +crumble adj.粉碎，崩溃 +crush v.压榨，粉碎 +crust n.面包皮，硬的表面 +crutch n.拐杖 +cry v.,n.叫喊，哭泣 +crystal n.水晶，晶体 +cube n.立方体，三次方 +cubic adj.立方的 +cubism n.立体主义 +cuckoo n.布谷鸟，杜鹃 +cucumber n.黄瓜 +cultivate v.耕作，栽培，培养 +cultivation n.耕作，培养 +cultural adj.文化的 +culture n.文化，养殖 +cunning adj.狡猾的，狡诈的 +cup n.杯子，一杯 +cupboard n.碗橱 +curb v.制止，束缚 +cure v.,n.治疗，矫正 +curiosity n.好奇心，古玩 +curious adj.好奇的，爱打听的 +curl v.卷曲，缭绕 n.卷发 +curly adj.卷曲的，波浪式的 +currency n.通货，货币 +current adj.现令的 n.流 +currently adv.当前，广泛地 +curse n.,v.诅咒，咒骂 +curtail n.削减，剥夺 +curtain n.窗帘，幕布 +curve n.曲线，弯曲 +cushion n.垫子，靠垫 +custody n.保管，监护 +custom n.风俗，习惯 +customary adj.习惯的，通常的 +customer n.顾客，主顾 +customs n.海关 +cut v.割，切，削减，切断 +cutlery n.刀具，餐刀 +cutter n.刀具，裁剪者 +cutting n.切片，剪辑 +cycle n.周期，循环，自行车 +cyclist n.自行车运动员 +cylinder n.圆筒，柱，汽缸 +d/a n.(缩)承兑交单 +dacron n.涤纶 +dad n.爸爸 +dagger n.匕首 +daily adj.每日的 adv.天天 +dainty adj.优雅，考究 +dairy n.奶牛场，乳品商店 +dam n.坝 +damage v.,n.损害，破坏 +damn v.,n.诅咒 +damp adj.潮湿的 n.潮气 +dance v.跳舞 n.舞蹈 +dancer n.舞蹈者，舞蹈演员 +danger n.危险，威胁 +dangerous adj.有危险的 +danish adj.,n.丹麦人(的) +denmark n.丹麦 +dare v.敢，挑战，竟敢 +daring adj.大胆的，勇敢的 +dark adj.黑暗的 n.暗处 +darken v.变黑，转暗 +darkness n.黑暗 +darling n.爱人 adj.心爱的 +dart n.飞标游戏 +dash v.猛冲,泼溅 n.破折号 +data n.(复数)资料，数据 +date n.日期 v.注日期 +dating n.约会 +daughter n.女儿 +daughter-in-law n.儿媳 +dawn n.黎明，开端 +day n.一天，白天 +daybreak n.破晓 +daylight n.日光，白昼 +daytime n.日间 +daze v.耀眼，使迷乱 +dazzle v.使...眼花缭乱 +dazzling adj.令人目眩的 +dead adj.死的 n.死者 +deadline n.期限 +deadly adj.致命的，死一般的 +deaf adj.聋的 +deafen v.使...聋，震聋 +deal v.处理，交易 n.买卖 +dealer n.商人，贩子 +dealing n.交往，生意 +dean n.系主任 +dear adj.亲爱的，敬爱的 +death n.死，死亡 +deathly adj.致死的 +debate v.,n.辩论，讨论 +debit n.借方 +debt n.债，债务 +decade n.十年 +decay v.,n.腐烂，衰败 +deceased adj.已死的 +deceit n.欺骗，欺诈行为 +deceive v.欺骗 +deception n.欺诈 +deceitful adj.欺骗性的 +december n.十二月 +decency n.体面 +decent adj.体面的，象样的 +decide v.决定，判决 +decided adj.明确的，果断的 +decidedly adv.明确地，果断的 +decimal adj.十进制的，小数的 +decision n.决定，决议 +decisive adj.决定性，明确的 +deck n.甲板 +declaration n.宣布，宣告 +declare v.宣布，声明 +decline v.婉谢，推辞 n.衰落 +declining adj.下降的，衰落的 +decompose v.分解，腐烂 +decorate v.装饰 +decoration n.装饰物 +decorative adj.装饰的，装璜的 +decrease v.,n.减少 +decree n.法令 v.判决 +dedicate v.奉献，致力 +deduce v.演绎，推断 +deduct v.减 +deduction n.推断，减少 +deed n.行为，契据 +deem v.以为，认为 +deep adj.深的，深远的 +deepen v.加深，深化 +deeply adv.深深的，深切地 +deer n.鹿 +default n.,v.不履行，不负责 +defeat v.击败 n.失败 +defect n.缺点，缺陷 +defective adj.有缺点的 +defence n.保卫，防御 +defend v.保卫，为...辩护 +defer v.拖延 +defiance n.蔑视，挑战 +defiant adj.无礼的，挑战的 +deficiency n.缺乏 +deficient adj.缺乏的，不足的 +deficit n.赤字 +define v.下定义，界定，规定 +definite adj.明确的，限定的 +definitely adv.明确地，肯定地 +definition n.定义，解释 +definitive adv.定义的 +deflate v.收缩，紧缩 +deflect v.偏斜 +deflection n.偏转，偏斜 +deform v.使变形，使残废 +deformation n.变形 +defray v.支付 +defy v.反抗，蔑视，使不能 +degradation n.降低，恶化 +degrade v.败低，下降，堕落 +degree n.程度，度，学位 +delay v.,n.耽搁，延误 +del credere n.保付 +delegate n.代表 n.委派 +delegation n.代表团 +delete v.删除 +deletion n.删除 +deliberate adj.故意的，审慎的 +deliberately adv.故意地，从容地 +deliberation n.慎重，故意 +delicacy n.精致 +delicate adj.优雅的，精致的 +delicious adj.美味的 +delight n.快乐，乐事 n.喜爱 +delightful adj.令人高兴的 +delinquency n.轻微犯罪 +delinquent adj.拖欠的 +deliver v.交付，递送，讲述 +deliverance n.救助 +delivery n.交付，递送，讲述 +delusion n.错觉 +delusive adj.令人产生错觉的 +demand v.,n.要求，需求 +demanding adj.对人要求严格的 +democracy n.民主，民主政体 +democrat n.民主党人 +democratic adj.民主的 +demolish v.拆除 +demolition n.拆除 +demonstrate v.论证，演示，表明 +demonstration n.示范，表演，示威 +demurrage n.滞期费 +den n.窝 +denial n.拒绝，否定 +denominate v.为...命名 +denomination n.命名 +denote v.表示 +denounce v.谴责，斥责 +dense adj.稠密的，浓厚的 +density n.密度，稠密 +dent n.牙，槽，凹陷 +dentist n.牙科医生 +deny v.否认，拒绝 +depart v.离去，出发，违反 +department n.部，部门，系 +departure n.离开，违背 +depend v.依靠，依赖 +dependability n.可依赖性 +dependable adj.可依赖的 +dependant n.受赡养者 +dependence n.依靠，依赖 +dependent adj.依靠的，随..而定 +depict v.描述，描画 +depiction n.描述 +deplete v.减少，耗尽 +deposit v.存放，储蓄 n.存款 +deposition n.免职，罢官 +depreciate v.降价，贬值，折旧 +depreciation n.折旧，贬值 +depress v.抑制，使人抑郁 +depressed adj.情绪低落的 +depression n.沮丧，萧条 +deprive v.剥夺，丧失 +depth n.深度 +deputy n.代表 adj.副职的 +derivation n.起源，衍生物 +derive v.从...而来，得来 +derrick n.钻塔，井架 +descend v.降临，下来，遗传 +descendant n.子孙，后裔 +descent n.下降，血统 +describe v.描写，作图 +description n.描述，形容 +desert v.遗弃，擅离 n.沙漠 +deserve v.应受，值得 +design v.设计，旨在 n.设计 +designate v.指明，指定 +designation n.指定，委派 +designer n.设计者 +desirable adj.合乎要求的 +desire n.欲望，要求 v.要求 +desk n.课桌，写字台 +desolate adj.荒芜的，凄凉的 +desolation n.荒凉，凄凉 +despair n.,v.绝望 +desperate adj.不顾一切的 +desperation n.绝望 +despise v.鄙视，看不起 +despite prep.不管，任凭 +dessert n.(最后一道)甜食 +destination n.终点，目的地 +destine v.注定，预定 +destiny n.命运，定数 +destroy v.破坏，摧毁，消灭 +destruction n.破坏，毁灭 +destructive adj.破坏性的 +detach v.分离，拆开 +detail n.细节 +detailed adj.详细的，详尽的 +detain v.留住，阻止 +detect v.发现，侦察 +detection n.发现，侦查 +detective n.侦探 +deteriorate v.恶化，败坏 +deterioration n.退化 +determination n.决心，决定 +determine v.决心，决定，测定 +detour v.绕道，绕开 +detract v.降低 +detriment n.损害 +detrimental adj.有害的 +devaluation n.贬值 +devalue v.贬值 +develop v.发展，开发，成长 +developing adj.发展中的 +development n.进展，发展 +deviate v.背离 +deviation n.背离，偏向 +device n.装置，方法 +devil n.魔鬼，恶人 +devise v.设计，计划 +devote v.奉献，贡献 +devoted adj.献身于...的 +devotion n.献身，专心 +devour v.吞吃，吞没 +dew n.露水 +diagnose v.诊断 +diagnosis n.诊断 +diagram n.图表，图解 +dial n.钟盘 v.拨电话 +dialect n.方言 +dialog n.对话，对白 +diameter n.直径 +diamond n.钻石，金刚石 +diary n.日记 +dictate v.口授，命令 +dictation n.口授，听写 +dictator n.独裁者 +dictatorship n.独裁，专政 +diction n.措辞 +dictionary n.词典，字典 +die v.死，消亡 +diesel n.内燃机，柴油机 +diet n.饮食，节食 +differ v.不同，相异 +difference n.差异，差别 +different adj.不同的，各种 +differential adj.有差别的 +differently adv.不同地 +difficult adj.困难的 +difficulty n.困难，难题 +dig v.挖，采掘 +digest v.消化 n.摘要 +digestion n.消化 +digit n.数字 +digital adj.数字的 +dignity n.尊贵，尊严 +dike n.堤 +dilute v.稀释 +diligent adj.勤奋的，用功的 +dim adj.暗淡的，模糊的 +dime n.(美元)一角 +dimension n.维，方面，尺寸 +dimensional adj.尺寸的 +diminish v.减少，缩小 +dine v.用餐 +dining-room n.餐厅 +dingy adj.肮脏的 +dinner n.正餐，晚餐，宴会 +dip v.,n.蘸，浸 +diploma n.毕业文凭，学位证书 +diplomacy n.外交 +diplomat n.外交人员 +diplomatic n.外交的 +direct v.支配，指挥，对准 +direction n.方向，指示，说明 +directive n.命令，指令 +directly adv.直接地，立即 +director n.指导者，导演，领导 +directory n.目录，地址录 +dirt n.尘埃，灰尘，泥土 +dirty adj.肮脏的 +disable v.使残废 +disabled adj.残废的 n.残疾人 +disadvantage n.不利之处 +disadvantageous adj.不利的 +disagree v.意见不合，不符 +disagreement n.不和，不一致 +disallow v.不允许 +disappear v.失踪，消失 +disappearance n.消失 +disappoint v.使...失望 +disappointed adj.失望的，扫兴的 +disappointment n.失望 +disapproval n.不批准 +disaster n.自然灾害，祸患 +disastrous adj.灾难性的 +disburse v.支付 +disbursement n.支付 +disc n.圆盘，唱片 +discard v.,n.丢弃，扔掉 +discern v.操作别，辨明 +discharge v.解除，放出，卸货 +disciplinary adj.纪律的，学科的 +discipline n.训练，纪律 n.锻炼 +disclaim v.放弃，不承认 +disclose v.揭开，透露 +discomfort n.不安，不舒服 +discomfortable adj.不舒服的 +discontinue v.中断 +discount n.,v.折扣 +discourage v.使...泄气，阻止 +discourse n.演说，谈话，话语 +discover v.发现 +discovery n.发现，发现物 +discreet adj.周到的，慎重的 +discreetly adv.慎重地 +discrepancy n.单货不符 +discretion n.慎重 +discriminate v.区别，岐视 +discrimination n.辨别，岐视 +discuss v.讨论 +discussion v.讨论，商议 +disdain v.轻视 +disease n.疾病 +disgrace n.耻辱 v.使受辱 +disgraceful adj.耻辱的，受辱的 +disguise v.,n.伪装，掩饰 +disgust n.厌恶 v.使讨厌 +disgustful adj.令人生厌的 +dish n.盘子，碟子 +dishonorable adj.不名誉的 +dishonor n.耻辱 v.凌辱 +disillusion v.使觉醒，幻灭 +disinclined adj.不愿意的 +disinfectant n.消毒剂 +disintegration n.分散，解体 +dislike v.,n.厌恶 +disloyal adj.不忠的 +disloyalty adj.不忠 +dismal adj.阴郁的，沉闷的 +dismay v.使沮丧 n.沮丧 +dismiss v.解散，开除 +dismissal n.解散，开除 +disobey v.不服从 +disorder n.紊乱，骚乱，失调 +disparity n.不同，悬殊 +dispatch v.迅速派遣 n.快件 +dispel v.驱散 +dispense v.分配，施予 +disperse v.驱散，散布 +displace v.置换，取代 +displacement n.置换，替换物 +display v.,n.陈列，表现 +displease v.使生气，惹怒 +displeasure n.不快 +disposal n.处置，对付 +dispose v.处置，对付，解决 +disposed adj.有...倾向的 +disposition n.布置，处置 +dispute v.争论，质疑 n.争论 +disregard v.,n.无视，不顾 +dissatisfaction n.不满 +dissatisfy v.使不满 +dissimilar adj.不同的 +dissipate v.驱散，消耗，浪费 +dissolve v.溶解，使终结 +distance n.距离，远处 +distant adj.远方的，疏远的 +distillation n.蒸馏 +distinct adj.不同的，明显的 +distinction n.差别，非凡 +distinctly adv.明晰地，清楚地 +distinguish v.辨别，认出 +distinguished adj.尊贵的，尊敬的 +distort v.扭曲，歪曲 +distortion n.曲解，失真，变形 +distract v.分神，迷惑 +distraction n.分心 +distress n.苦恼，不幸 +distribute v.分配，分布，分销 +distribution n.分配，分布 +distributor n.分销商 +distributorship n.分销权 +district v.区，区域，地区 +disturb v.打扰，打乱，使烦恼 +disturbance n.干扰，动乱 +disunite v.使分裂 +disuse v.,n.废止 +ditch n.沟，渠，下水道 +ditto n.同上 +dive v.潜水，跳水，俯冲 +diver n.潜水员，跳水运动员 +diverge v.分歧，离题 +divergence n.分歧 +diverse adj.不同的，分歧的 +diversion n.转移，消遣 +diversity n.多样化 +divert v.使转向，消遣 +divide v.分开，分享，分裂 +divine adj.神的，神圣的 +division n.划分，部分 +divorce v.离婚，使脱离 +dizzy adj.晕眩的 +do v.做，干，足够，制作 +dock n.码头 +doctor n.医生，博士 +doctrine n.教义，学说 +document n.文件，公文 +documentary adj.文化的 +documentation n.提供文件 +dodge v.躲避 +dog n.狗 +doggedly adv.顽固地 +doll n.玩偶，娃娃 +dollar n.元，美元 +domain n.领土，领域 +dome n.圆顶，穹窿 +domestic adj.家里的，国内的 +dominant adj.统治的 +dominate v.统治，支配，占优势 +donate v.捐献 +donation n.捐献 +donkey n.驴，笨蛋 +doom n.命运，判决 v.命定 +door n.门，(一户)人家 +doorway n.门口，门道 +dormitory n.集体宿舍 +dose n.剂量，一服药 +dot n.点，圆点 +double adj.两倍的，双重的 +doubt v.,n.怀疑，疑惑 +doubtful adj.怀疑的，可疑的 +doubtless adv.无疑地，大约 +dough n.面团 +dove n.鸽子 +down adv.向下，下降 +downstairs adv.在楼下 +downtown n.闹市 adv.去市里 +downward adj.向下的，下坡的 +downwards adv.向下，以下 +doze v.打瞌睡 +dozen n.一打 +draft n.草案，草稿，穿堂风 +drag v.拖，拽 +dragon n.龙 +drain v.排水，耗竭，泄 +drainage v.排水系统，污水 +drama n.戏剧，剧本 +dramatic adj.戏剧性的，显著的 +dramatist n.戏剧家 +dramatize v.使戏剧化 +drastic adj.激烈的，严厉的 +draw v.画，拉，吸引 +drawback n.不利，欠缺 +drawer n.抽屉 +drawing n.素描，绘画，图样 +dread v.,n.恐惧，担心 +dreadful adj.可怕的，糟糕的 +dream n.梦，梦想 v.做梦 +dreary adj.疲劳的 +drench v.浸泡，充满 +dress n.服装 v.穿衣 +dressing n.打扮，调味品 +drift v.漂流，游荡 +drill n.钻头，操练 v.训练 +drink v.喝，饮 n.饮料，酒 +drip v.滴下，流下 +drive v.驾驶，乘车 n.车道 +driver n.司机 +droop v.下垂 +drop v.落下 n.滴，下降 +dropout n.中途退出者 +drought n.旱灾 +drown v.淹死 +drug n.药物，麻醉剂 +drugstore n.零食店 +drum n.鼓 v.敲鼓 +drunk adj.喝醉的 +drunkard n.醉鬼 +dry adj.干的，枯燥的 +dubious adj.怀疑的 +duck n.鸭子 +due adj.到期的，预定的 +duke n.公爵 +dull adj.沉闷的，钝的 +duly adv.按期地 +dumb adj.哑的 +dummy n.傀儡 +dump v.倾倒 n.垃圾堆 +dumping n.倾销 +dung n.粪 +dungeon n.地牢 +duplicate adj.二重的，复制的 +durable adj.持久的，耐用的 +duration n.期间，待续时间 +during prep.在...期间 +dusk n.黄昏 +dust n.尘土，粉末 v.掸土 +dustbin n.簸箕 +dusty adj.沾满灰尘的 +duty n.责任，义务，关税 +duty-free adj.免税的 +dwarf n.矮子，侏儒 +dwell v.居住 +dweller n.居住者，住客 +dwelling n.住宅 +dye n.染料 v.染色 +dynamic adj.动力的，动态的 +dynasty n.朝代，王朝 +each adj.,adv.名，每个 +eager adj.热切的，渴望的 +eagle n.鹰 +ear n.耳朵，穗 +earl n.伯爵 +early adj.早的，初期的 +earmark n.标记，特征 +earn v.挣钱，赢得 +earnest adj.认真的，诚恳的 +earnings n.收入，赚得的钱 +earphone n.耳机 +earth n.地球，地上，泥土 +earthly adj.世俗的 +earthquake n.地震 +ease n.安逸，轻易 +easily adv.容易地，安逸地 +east adj.东方的 n.东方 +easter n.复活节 +eastern adj.东的，朝东的 +eastward adv.向东 +easy adj.容易的，轻松的 +easy-going adj.逍遥自在的 +eat v.吃 +eccentric adj.性格怪僻的 +eccentricity n.怪僻 +echo n.回声，反响，共呜 +eclipse n.(日、月)食，蚀 +ecology n.生态学 +economic adj.经济的，经济学的 +economical adj.节省的，经济的 +economically adv.经济上 +economics n.经济学 +economize v.节省 +economy n.经济，节约 +ecstasy n.狂喜 +edge n.边，边缘，刀刃 +edit v.校订，编辑 +edition n.片(本) +editor n.编辑，编者 +editorial n.社论 +educate v.教育 +education n.教育，训练 +educational adj.教育的 +eel n.鳝鱼 +effect n.后果，效力 v.导致 +effective adj.有效的 +effectively adv.有效地 +effectiveness n.有效 +efficiency n.效率，功效 +efficient adj.效率高的 +effort n.努力，尽力，成果 +e. g. (缩)例如 +egg n.卵，蛋，鸡蛋 +eggplant n.茄子 +egypt n.埃及 +egyptian adj.,n.埃及人(的) +eight num.八 +eighteen num.十八 +eighth num.第八，八分之一 +eighty num.八十 +either adj.二者之一 adv.也 +eject v.喷射 +ejection n.喷射 +elaborate v.,adj.详尽阐述 +elaboration n.详尽阐述 +elapse v.(时间)消逝 +elastic adj.弹性的，灵活的 +elasticity n.弹性 +elbow n.肘，弯管 +elder adj.年长的，资格老的 +elect v.选举 adj.当选的 +election n.选举 +electric adj.电的，电力的 +electrical adj.电的 +electrician n.电工 +electricity n.电 +electrify v.充电，电气化 +electron n.电子 +electronic adj.电子的 +electronics n.电子学 +elegance n.优雅 +elegant adj.优雅的，典雅的 +element n.成分，元素 +elemental adj.自然力的，基本的 +elementary adj.基础的，初步的 +elephant n.象 +elevate v.提升，抬高 +elevation n.海拔，提高，崇高 +elevator n.电梯 +eleven num.十一 +eleventh num.第十一 +eliminate v.消灭，删除 +elimination n.消灭，删除 +elliptical adj.椭圆的，省略的 +ellipsis n.省略 +eloquence n.雄辩，口才 +eloquent adj.雄辩的，有口才的 +else adj.别的 adv.否则 +elsewhere adv.在别处 +elusive adj.躲闪的 +email n.電子郵件 +emancipate v.解放 +emancipation n.解放 +embargo n.禁运 +embark v.登陆 +embarrass v.使窘，使为难 +embarrassing adj.令人尴尬的 +embarrassment n.窘迫，尴尬 +embassy n.使馆 +embody v.体现，包含 +embrace v.拥抱，接受，包括 +embroider v.绣 +embroidery v.刺绣(品) +emerge v.出现，暴露 +emergency n.紧急情况，急诊 +emigrant n.移居国外的人 +emigrate v.移居国外，移民 +emigration n.向国外移民 +eminent adj.杰出的，突出的 +emission n.发射，散发 +emit v.发射，散发 +emotion n.感情，情绪 +emotional adj.感情的，激动的 +emperor n.皇帝 +emphasis n.强调，重点，重读 +emphasize v.强调，着重 +emphatic adj.强调的，着重的 +empire n.帝国，财团 +empirical adj.经验的 +employ v.雇用，使用，从事 +employee n.雇员 +employer n.雇主 +employment n.职业，就业 +emptiness n.空虚，空白 +empty adj.空的，空虚的 +enable v.使能够，使可能 +enchant v.迷住，陶醉 +encircle v.环绕，包围 +enclose v.围住，圈起，封入 +enclosure n.围绕，附件 +encounter v.面临，遭遇 +encourage v.鼓舞，鼓励，助长 +encouragement n.鼓舞，鼓励 +encyclopaedia n.百科全书 +end n.结尾 v.终止，结束 +endanger v.危及，危害 +endeavor v.,n.努力，尽力 +ending n.结局 +endless adj.无穷无尽的 +endorse v.背签 +endorsement n.背书 +endow v.资助，赋予，授予 +endurance n.忍耐力，耐用 +endure v.忍受，容忍，持久 +endures n.最终用户 +enemy n.敌人，对手 +energetic adj.精力旺盛的 +energy n.精力，活力，能量 +enforce v.实施，强制 +engage v.从事，雇用，吸引 +engaged adj.占用的，从事..的 +engagement n.约束，约会，婚约 +engine n.发动机，火车头 +engineer n.工程师 +engineering n.工程 +england n.英格兰，英国 +english n.,adj.英国的，英语 +englishman n.英国人 +engrave v.刻上，牢记 +engraving adj.雕刻 +engulf v.吞没 +enhance v.提高，增加 +enhancement n.提高 +enjoy v.欣赏，享有，享受 +enjoyable adj.愉快的 +enjoyment n.享受，乐趣 +enlarge v.扩大，扩展，放大 +enlargement n.扩大 +enlighten v.启发，教导 +enlightening adj.给人启发的 +enormous adj.巨大的，庞大的 +enough adj.,adv.足够(的) +enquire v.询问 +enquiry v.询问 +enrich v.使富裕 +enroll v.登记，招收 +enrolment n.招收 +en route adv.在途中 +ensure v.保证，担保，保护 +entail v.遗留给，引起 +enter v.进入，加入 +enterprise n.事业，企业 +entertain v.招待，使欢乐 +entertainment n.招待，娱乐 +enthusiasm v.热情，热心 +enthusiastic adj.热情的，热心的 +entire adj.完全的，全部的 +entirely adv.完全地，彻底地 +entirety n.全部 +entitle v.给...权利，资格 +entrance n.进入，入口 +entreat v.恳求，请求 +entrust v.委托 +entry n.进入，入口，词条 +enumerate v.列举 +envelop v.包，围绕 +envelope n.信封 +envious adj.嫉妒的 +environment n.环境 +environmental adj.环境的 +envy v.,n.嫉妒，羡慕 +epidemic adj.传染的 n.传染病 +episode n.事件，情节，插曲 +epoch n.时代，纪元 +epoch-making adj.划时代的 +equal adj.相等的，胜任的 +equality n.平等，相等 +equally adv.相等地，相同地 +equation n.等式，方程式 +equator n.赤道 +equilibrium n.平衡，均衡 +equip v.装备，配备 +equipment n.设备，器材，装置 +equivalence n.相等，等值 +equivalent adj.相等的，等值的 +era n.时代，年代 +eradicate v.根除 +eradication n.根除 +erase v.擦掉，抹去 +erasure n.抹去 +erect v.树立，建立，竖立 +erection n.竖立，建立 +erosion n.腐蚀，侵蚀 +err v.犯错误 +errand n.差事，差使 +error n.错误，过失 +erupt v.喷发，爆发 +eruption n.喷发，爆发 +escalator n.电动扶梯 +escape v.逃跑，避免，被遗忘 +escort v.护送 n.护卫队 +especial adj.特别的，专门的 +especially adv.特别地，专门地 +essay n.散文，论文，小品文 +essayist n.散文作家 +essence n.本质，情髓，香精 +essential adj.必需的，本质的 +essentially adj.本质上，实质上 +establish v.建立，设立，确立 +established adj.已建立的 +establishment n.建立，组织 +estate n.房地产，财产 +esteem v.,n.尊重 +estimate v.,n.估算，预算 +estimation n.估算，估计 +etc. (缩)等等 +eternal adj.永恒的，无休止的 +europe n.欧洲 +european n.,adj.欧洲人(的) +evaluate v.估价，评价 +evaluation n.估价，评价 +evaporate v.蒸发，脱水，消失 +evaporation n.蒸发，升华 +eve n.前夕，前夜 +even adj.平坦的，均匀的 +evening n.傍晚，晚上 +evenly adv.平坦地，均匀地 +event n.事件，场合，比赛 +eventful adj.多事的 +eventually adv.最终，终于 +ever adv.曾经，总是，究竟 +everlasting adj.永久的，持久的 +every adj.每个，所有的 +everybody pron.人人，每人 +everyday adj.每日的，日常的 +everyone pron.人人，每人 +everything pron.事事，一切 +everywhere adv.处处，到处 +evidence n.证据，迹象 +evident adj.明显的，明白的 +evidently adv.明显地，显然 +evil adj.坏的，邪恶的 +evolution v.发展，渐进，进化 +evolve v.发展，进化 +ex prep.在...交货 +exact adj.精确的，精密的 +exactly adv.确切地，正是 +exaggerate v.夸张，夸大 +exaggerated adj.言过其辞的 +exaggeration n.夸张 +exalt v.抬高，发扬 +exalted adj.高贵的，得意的 +exam n.考试 +examination n.检查，考试 +examine v.检查，细看，考试 +example n.例子，榜样 +exasperate v.激怒，恶化 +exasperation n.愤慨，加剧 +exceed v.超过，过度 +exceedingly adv.非常，极端地 +excel v.胜过，优于 +excellence n.优秀，卓越 +excellent adj.优秀的，卓越的 +except prep.除...外 v.除外 +exception n.除外，例外 +exceptional adj.异常的，例外的 +excess n.过量，过剩 +excessive adj.过分的，极度的 +exchange v.交换，兑换 n.交易 +excite v.刺激，使兴奋 +excited adj.兴奋的 +excitement n.兴奋，激动 +exciting adj.令人激动的 +exclaim v.呼喊，感叹 +exclamation n.呼喊，感叹 +exclude v.排除，拒绝考虑 +exclusion n.排除 +exclusive adj.独有的 +exclusively adv.独占地 +exclusivity n.独家经营权 +excursion n.短途游览 +excuse v.原谅 n.借口 +execute v.执行，实施，处决 +execution n.执行，处决 +executive adj.执行的 n.执行者 +exemplify v.举例说明 +exempt v.免除 +exercise n.锻炼，练习，运用 +exercise-book n.练习簿 +exert v.尽(力)，发挥 +exertion n.尽力，竭力 +exhaust v.竭尽，用完 +exhausted adj.精疲力竭的 +exhaustion n.用尽，详述 +exhaustive adj.详尽的 +exhibit v.展出,显示 n.展览品 +exhibition n.展览会，表现 +exile v.放逐 n.流亡者 +exist v.存在，生存 +existence n.存在，生存 +existing adj.现存的，已有的 +exit n.出口，安全门，离开 +exonerate v.昭雪，解除 +exoneration n.免罪，免除 +expand v.扩张，膨胀，扩充 +expansion n.扩张，扩大 +expect v.盼望，期待，预料 +expectation v.期待，前程 +expedience n.便利，权宜之计 +expedient adj.方便的，临时的 +expedite v.加快，急送 +expedition n.探险，考察队 +expel v.驱逐，开除 +expend v.花费，消耗 +expenditure n.支出，费用 +expense n.支出，开支 +expensive adj.昂贵的，高价的 +experience n.,v.经历，经验 +experienced adj.有经验的 +experiment n.,v.实验，试验 +experimental adj.实验的 +experimentation n.实验 +expert n.专家，能手 +expertise n.专家队伍(总称) +expiration n.期满 +expire v.到期，断气 +expiry n.逾期 +explain v.解释，说明 +explanation n.说明，解释 +explanatory adj.说明的 +explicit adj.清楚的，明晰的 +explicitly adv.清晰地 +explode v.爆炸，激增 +exploit v.开发，利用，剥削 +exploitation n.开发，利用 +exploration n.勘探，考察 +explore v.勘探，考察 +explorer n.勘探者，探险家 +explosion n.爆炸，爆发，激增 +explosive adj.爆炸性的 n.炸药 +export v.,n.输出，出口 +exportation n.出口 +exporter n.出口商 +expose v.暴露，揭露，陈列 +exposition n.展览会，说明 +exposure n.揭露，曝光 +express v.表达，快递 n.快车 +expression n.表达，措辞，表情 +expressive adj.有表现力的 +expressly adj.明确表示的 +expressway n.高速公路 +exquisite adj.精致的 +extend v.延伸，扩大，给予 +extension n.延伸，电话分机 +extensive adj.广泛的，密集的 +extensively adv.广泛地 +extent n.范围，限度，一大片 +exterior adj.,n.外部(的) +external adj.外部的，对外的 +extinct adj.绝灭的，熄灭的 +extinction n.绝灭，熄灭 +extinguish v.扑灭，熄灯 +extra adj.额外的，外加的 +extract v.取出，榨出，摘录 +extraction n.出身，摘要 +extraordinary n.特别的，格外的 +extravagance n.奢侈，浪费 +extravagant adj.奢侈的，浪费的 +extreme adj.极度的，极端的 +extremely adv.极其，非常 +eye n.眼睛，孔眼，视力 +eyeball n.眼球 +eyebrow n.眉毛 +eyeglass n.眼镜 +eyelid n.眼睑 +eyesight n.视力 +fable n.寓言 +fabric n.织物，结构，组织 +fabricate v.制作，捏造 +fabrication n.制作，虚构 +face n.脸，正面 v.面对 +facilitate v.使便利，使容易 +facility n.方便，设施，便利 +fact n.事实，真相 +faction n.宗派，派别 +factor n.因素，因数，要素 +factory n.工厂，制造厂 +faculty n.本领，学系 +fade v.褪色，枯萎 +fahrenheit n.,adj.华氏(的) +fail v.失败，不及格，不能 +failing adj.缺点 +failure n.失败，疏忽，破产 +faint adj.软弱的，模糊的 +fair adj.公平的 n.交易会 +fairly adj.公平地，相当 +fairy n.妖精，仙女 +faith n.信任，信念 +faithful adj.忠诚的，可靠的 +faithfully adv.忠诚地 +fake adj.冒片的 n.冒牌货 +fall v.落下，跌倒 n.瀑布 +false adj.假的，假造的 +fame n.名声，声誉 +familiarity n.熟悉，相似 +familiar adj.熟悉的，亲近的 +family n.家庭，家属 +famine n.饥荒，饥饿 +famous adj.著名的 +fan n.扇子，...迷 v.扇 +fanatic adj.狂热的，入迷的 +fancy n.幻想，爱好 v.想象 +fantastic adj.奇异的，荒谬的 +far adj.遥远的 adv.远 +fare n.车费 v.饮食 +farewell int.再见 adj.告别的 +farm n.农场，农庄 +farmer n.农夫，农场主 +farmhand n.农工，农场工人 +farmhouse n.农舍 +farming n.农业，种植业 +farther adv.较远，更进一步 +fascinate v.吸引，入迷，蛊惑 +fascination n.入迷 +fascism n.法西斯 +fascist n.法西斯分子 +fashion n.方式，时髦，时装 +fashionable adj.流行的，时髦的 +fast adj.快的 adv.快 +fasten v.捆紧，钉牢 +fat n.脂肪 adj.肥胖的 +fatal adj.致命的 +fate n.命运，厄运，宿命 +father n.父亲，神父，始祖 +father-in-law n.岳父，公公 +fathom v.领会，推测 +fatigue n.,v.(使)疲劳 +fault n.缺点，过失，断层 +faultless adj.完美的 +faulty adj.有缺点的 +favor n.帮助，偏爱 v.宠爱 +favorable adj.赞成的，有利的 +favorably adv.有利地，顺利地 +favorite n.adj.最喜爱的人或物 +fbi 國際刑警 +fear n.,v.害怕，担忧 +fearful adj.可怕的，吓人的 +fearless adj.毫不畏惧的 +feasibility n.可行性 +feasible adj.可行的，做得到的 +feast n.,v.宴会，宴请 +feat n.功绩 +feather n.羽毛 +feature n.相貌，特征，特写 +february n.二月 +federal adj.联邦的 +federation n.联邦 +fee n.费用，酬金 +feeble adj.虚弱的，无力的 +feed v.喂养，吃东西 +feedback n.反馈 +feel v.感到，摸，意识到 +feeling n.知觉，感觉，感情 +fell v.砍到 +fellow n.家伙，同事 +fellowship n.交情，会员资格 +female adj.女性的，雌的 +feminine adj.女性的，妇女的 +fence n.围栏，篱笆 +ferocious adj.凶猛的，野蛮的 +ferrous adj.铁的，含铁的 +ferry n.渡船 v.渡运 +ferryboat n.渡船 +fertile adj.肥沃，多产的 +fertilizer n.肥料，化肥 +fervent adj.强烈的，热烈的 +festival n.节日 adj.喜庆的 +fetch v.去取来，去请来 +feud n.纠纷，封地 +feudal adj.封建的 +feudalism n.封建主义 +fever n.发烧，狂热 +few adj.少的 n.少数 +fiber n.纤维，质地 +fiction n.小说，虚构 +fictional adj.虚构的 +fiddle n.提琴 +field n.田野，战场，场 +fierce adj.凶猛的，猛烈的 +fiery adj.火的 +fifteen num.十五 +fifth num.第五，五分之一 +fifty num.五十 +fig n.无花果 +fight v.打仗，战斗，作斗争 +fighter n.战士 +figurative adj.比喻的，修饰的 +figure n.数字，图形，人物 +file n.档案，纵列，锉刀 +filing n.档案管理 +fill v.装满，充满，补缺 +filling n.充填物，馅 +film n.胶片，电影，薄膜 +filter n.滤器 v.过滤 +filth n.污秽，污物 +filthy adj.污秽的 +final adj.最终的 n.决赛 +finalize v.落实，定下来 +finally adv.最终，终于 +finance n.金融 v.资助 +financial adj.金融的，财政的 +financier n.金融家 +financing n.金融业，财政学 +find v.寻找，找到，发现 +finding n.发现，发现物 +fine adj.好的，精细的 +finger n.手指 +finish v.,n.结束，抛光 +finished adj.制成的 +finite adj.有限的，限定的 +fir n.裘皮 +fire n.火，火灾 v.开火 +fire-engine n.消防车 +fireman n.消防队员 +fireplace n.壁炉 +firework n.焰火 +firm adj.坚固的 n.商号 +firmly adv.坚定地，坚固地 +firmness n.坚定，坚固 +first adj.第一的 adv.首先 +first-rate adj.第一流的 +fish n.鱼 v.捞取，探听 +fisherman n.渔夫 +fishery n.渔业 +fission n.裂变，分裂 +fist n.拳头 +fit adj.适合的，健康的 +fitness n.适合，健康 +fitting adj.适当的 +five num.五 +fix v.固定，确定，修理 +fixed adj.固定的，已确定的 +fixture n.固定物，固定装置 +flag n.旗 +flake n.片，片状物 +flame n.火焰，热情 +flank n.侧面，胁腹 +flannel n.法兰绒 +flap v.拍打 n.垂下物 +flare v.,n.闪烁 +flash n.,v.闪光，闪现 +flask n.瓶，烧瓶 +flat adj.平的，平淡的 +flatten v.弄平，变平 +flatter v.奉承，谄媚 +flavor n.滋味，风趣 +flaw n.裂缝，瑕疵，缺点 +flee v.逃走，消散 +fleece n.羊毛 +fleet n.船队 +flesh n.肌肉，骨肉，果肉 +fleshy adj.肉的 +flexibility n.柔韧，灵活性 +flexible adj.柔韧的，灵活的 +flicker v.闪烁 +flight n.飞，航班，逃走 +fling v.抛，掷 +float v.浮，漂 n.彩车 +flock n.群 v.群集 +flood n.洪水，大量 +floor n.地板，(楼)层 +flour n.面粉 +flourish v.茂盛，兴旺 +flow v.流动 n.流动，流量 +flower n.花，盛期 +flu n.流感 +fluctuate v.波动，起伏 +fluctuation n.波动 +fluency n.流利，流畅 +fluent adj.流利的 +fluid n.液体 adj.流动的 +flush v.(脸)发红 n.红晕 +flute n.长笛，笛子 +flutter v.飘动，振翼 +flux n.流动，变迁 +fly v.飞，驾机 n.苍蝇 +foam n.泡沫 v.起泡 +fob (缩)离岸价 +focus n.焦点，中心 v.集中 +fodder n.饲料 +foe n.敌人，宿敌 +fog n.雾，翳 +foggy adj.有雾的，雾蒙蒙的 +fold v.折叠 n.折痕 +foliage n.叶子(总称) +folk n.人们，乡亲，亲属 +follow v.跟随，听懂，遵循 +follower n.追随者，信徒 +following adj.下列的，其次的 +follow-up n.,adj.后续(的) +fond adj.喜爱..的，慈爱的 +food n.食物，食粮 +foodstuff n.食品 +fool n.蠢人，傻瓜 v.愚弄 +foolish n.愚蠢的，笨的 +foot n.脚，英尺，最下部 +football n.足球 +footing n.立足点，立场 +footstep n.足迹，脚步声 +for prep.给，作...用的 +forbid v.禁止，不许 +forbidden adj.禁止的 +force n.力，力量 v.强迫 +fore adj.前面的adv.在前面 +forecast n.,v.预测，预报 +forefather n.祖先，先辈 +forefinger n.食指 +foregoing adj.先行的，上述的 +forehead n.前额 +foreign adj.外国的，对外的 +foreigner n.外国人，异乡人 +foreman n.领班 +foremost adj.最初的，第一流的 +foresee v.预见，预知 +forest n.森林 +forestry n.林业 +foretell v.预告，预言 +forever adv.永远，总是 +forge v.打铁，锻造，伪造 +forgery n.锻炉，锻造厂 +forget v.忘记，疏忽，没想到 +forgive v.饶恕，原谅，豁免 +fork n.餐叉，岔口 +form n.形状，类型，表格 +formal adj.形式上的，正式的 +formality n.礼节，正式 +format n.格式，样式 +formation n.形成，构成 +former adj.以前的，前者 +formerly adv.从前，以前 +formidable adj.可怕的，难对付的 +formula n.公式 +formulate v.系统阐述 +formulation n.确切表述 +forsake v.遗弃，抛弃 +fort n.堡垒，要塞 +forth adv.向前，向外 +forthcoming adj.即将到来的 +fortitude n.坚毅 +fortnight n.两星期 +fortress n.堡垒，城堡 +fortuity n.偶然事件 +fortunate adj.幸运的，侥幸的 +fortunately adv.幸运地，幸而 +fortune n.运气，财富 +forty num.四十 +forum n.讨论会，座谈会 +forward adj.向前的 adv.向前 +fossil n.化石，守旧者 +foster v.养育，抚养 +foul adj.肮脏的，邪恶的 +found v.创办，使有根据 +foundation n.建立，基金，基础 +founder n.创办人，奠基人 +fountain n.泉，源泉，喷泉 +four num.四 +fourteen num.十四 +fourth num.第四，四分之一 +fowl n.家禽，鸡，禽肉 +fox n.狐狸，狡猾的人 +fraction n.片断，分数 +fractional adj.零碎的，不足的 +fracture n.断裂 v.折断 +fragile adj.易碎的，脆的 +fragment n.碎片，片断 +fragrance n.芬芳，香气 +fragrant adj.香的，芬芳的 +frail adj.脆弱的，虚弱的 +frame n.框架，骨骼 v.构造 +framework n.构架，机构 +france n.法国 +franchise n.特许权 +frank adj.坦率的，真诚的 +frankly adv.坦率地 +free adj.自由的，空闲的 +freedom n.自由，免除 +freely adv.自由地，随意地 +freeze v.结冰，楞住，冻结 +freezer n.冷冻箱 +freight n.货运，货物，运费 +french adj.法国的 n.法语 +frenchman n.法国人 +frequency n.频繁，频率 +frequent adj.频繁的，经常的 +frequently adv.时常，往往 +fresh adj.新鲜的，崭新的 +freshen v.使新鲜，使振作 +freshman n.新人，新生 +fret v.使烦恼 n.烦燥 +friction n.摩擦，摩擦力 +friday n.星期五 +friend n.朋友 +friendly adj.友好的，和气的 +friendship n.友谊，友好 +fright n.恐怖，惊吓 +frighten v.惊吓，吓唬 +frightening adj.令人害怕的 +frightful adj.可怕的 +fringe n.边缘，花边，穗子 +frock n.女上衣，童上装 +frog n.蛙 +from prep.自，从...来 +front n.正面，前线 v.面对 +frontier n.边界，国境，新领域 +frost n.霜，霜冻 +frosty adj.霜的 +frown v.皱眉头，厌恶 +frugal adj.节俭的 +fruit n.果子，水果，成果 +fruitful adj.果实累累的 +frustrate v.阻挠，使灰心 +frustration n.挫折，灰心 +fry v.油煎，炸 +frying-pan n.煎锅 +fuck 渾蛋，辱駡 +fuel n.燃料 +fulfil v.完成，满足要求 +fulfillment n.完成，成就 +full adj.满的，完全的 +fully adv.完全，彻底 +fumble v.摸索 +fun n.娱乐，玩笑，乐趣 +function n.作用，集会，函数 +functional adj.功能的 +fund n.基金，资金，蕴藏 +fundamental adj.基本的，根本的 +funeral n.葬礼 +funny adj.有趣的，好笑的 +fur n.毛皮，裘衣 +furious adj.狂怒的，狂暴的 +furnace n.熔炉 +furnish v.供应，装备，摆家具 +furniture n.家具(总称) +furrow n.犁沟 +further adv.更远，进一步 +furthermore adv.而且 +fury n.狂暴，狂怒 +fuse n.保险丝，导火线 +fuss n.忙乱，大惊小怪的 +fussy adj.爱大惊小怪的 +future n.将来，前途 +futures n.期货 +gain v.获得，赢得 n.收益 +gale n.大风，定期交付 +gallery n.美术馆 +gallon n.加仑 +gallop v.奔驰，飞跑 +gamble v.,n.赌博，投机 +gambler n.赌徒 +game n.游戏，比赛，猎物 +gang n.一群，一帮 +gangster n.匪徒，歹徒 +gaol n.监狱 +gap n.空隙，隔阂，山口 +garage n.车库，汽车修理站 +garbage n.垃圾 +garden n.花园，菜园 +gardener n.园丁 +gardening n.园艺 +garlic n.大蒜 +garment n.衣服，服装 +garrison n.要塞，警备队 +gas n.气体，煤气，汽油 +gasoline n.汽油 +gasp v.,n.喘息，喘气 +gate n.大门，门票收入 +gather v.聚集，收集，采集 +gathering n.集会，聚集 +gauge n.规格，计量表 +gay adj.快活的，快乐的 +gaze v.,n.凝视，注视 +gear n.齿轮，用品 +gem n.宝石 +general adj.一般的，总的 +generalization n.概括 +generalize v.总结，归纳 +generally adv.通常，大概 +generate v.产生，发生，生殖 +generation n.世代，一代人 +generator n.发电机 +generosity n.慷慨，大方 +generous adj.慷慨的，丰盛的 +genius n.天份，才华，天才 +gentle adj.温柔的，温和的 +gentleman n.绅士，先生，君子 +gently adv.轻轻地，温柔地 +genuine adj.真正的，道地的 +geography n.地理学，地形 +geology n.地质学 +geometry n.几何学 +germ n.萌芽，起源，细菌 +german adj.德国的 n.德语 +germany n.德国 +gesture n.姿势，手势，姿态 +get v.获得，记住，到达 +get-together n.集会，聚会 +ghost n.鬼魂，幽灵 +giant n.巨人 adj.巨大的 +gift n.礼品，天赋 +gigantic adj.巨大的 +giggle v.咯咯地笑 +ginger n.姜 +girl n.少女，姑娘 +giver v.给予，付出 n.让步 +glad adj.快乐的，高兴的 +glance v.看一眼 n.一瞥 +glare n.,v.闪耀，瞪眼 +glass n.玻璃，镜子 +glassware n.玻璃制品 +gleam n.微光，闪光 +glide v.,n.滑行，溜 +glimpse v.,n.瞥见 +glisten v.闪光 +glitter v.闪闪发光 +global adj.全世界的，总的 +globalization n.全球化 +globalize v.使...全球化 +globe n.地球，球体，地球仪 +gloom n.黑暗，忧郁 +gloomy adj.阴沉的，忧郁的 +glorious adj.光荣的，辉煌的 +glorify v.颂扬，赞美 +glory n.光荣，壮丽，荣誉 +glossary n.词汇表 +glove n.手套 +glow v.发光，发红 +glue n.胶水 n.粘贴 +glut n.供过于求v.狼吞虎咽 +gnaw v.啃，咬 +gnp n.(缩)国民总收入 +go v.去，进行，打算 +goal n.目标，目的，球门 +goat n.山羊 +god n.神，上帝 +goddess n.女神 +gold n.黄金，金币，金色 +golden adj.黄色的，金黄色的 +golf n.高尔夫球 +good adj.好的，善良的 +good-bye int.再见 +good-looking adj.好看的 +goodness n.优良，天哪 +goodself n.你方 +goods n.货物，商品 +goodwill n.商誉 +goose n.鹅 +gorge n.咽喉，峡谷，山口 +gorgeous adj.绚丽的，了不起的 +gorilla n.大猩猩 +gossip n.闲谈，聊天 +govern v.统制，支配，决定 +government n.编制，政体，政府 +governess n.女家庭教师 +governor n.州长，总督 +gown n.长袍，法衣 +grab v.抓住，攫取 +grace n.优美，文雅，恩惠 +graceful adj.优美的，文雅的 +gracious adj.亲切的，客气的 +grade n.等级，年级 +gradual adj.逐渐的，逐步的 +gradually adv.逐渐地，逐步地 +graduate v.毕业生 v.毕业 +graduation n.毕业 +grain n.谷物，颗粒，一点点 +gram n.克 +grammar n.语法 +grammatical adj.语法的 +gramophone n.留声机 +grand adj.雄伟的，重大的 +grandchild n.(外)孙儿、女 +granddaughter n.孙女，外孙女 +grandfather n.祖父，外祖父 +grandmother n.祖母，外祖母 +grandparent n.(外)祖父(母) +grandson n.孙子，外孙 +granite n.花岗石 +grant v.答应，授予，承认 +grape n.葡萄 +graph n.图象，图解 +grasp v.,n.抓住，领悟 +grass n.草，禾本植物 +grasshopper n.蚱蜢 +grateful adj.感激的，致谢的 +gratify v.使满足，使高兴 +gratifying adj.可喜的 +gratis adj.免费的 +gratitude n.感激，感谢 +grave adj.严肃的，庄重的 +gravel n.砂砾，石子 +gravity n.引力，严肃 +graze v.吃草，擦碰 +grease v.润滑油脂 +great adj.大的，伟大的 +greatly adj.大大地，非常地 +greatness n.伟大，大 +greece n.希腊 +greed n.贪婪，贪心 +greedy adj.贪婪的 +greek n.,adj.希腊人(的) +green adj.绿的，没有经验的 +greengrocer n.蔬菜商 +greenhouse n.温室 +greet v.打招呼 +greeting n.问候，致意 +grey adj.灰色的，阴郁的 +grief n.悲哀，悲伤 +grieve v.使悲伤，伤心 +grim adj.冷酷的，不祥的 +grin v.露齿而笑 +grind v.碾碎，磨快，折磨 +grip v.,n.紧握，吸引 +groan v,,n.呻吟 +grocer n.杂货铺 +grocery n.杂货店 +groove n.槽，沟，常规 +grope v.摸索，探索 +gross adj.总的，粗糙的 +ground n.地面，场，根据 +groundless adj.无根据的 +group n.群，组，团体 +grove n.林子，树丛 +grow v.增长，成长，种植 +growl v.,n.咆哮，嗥叫 +grown adj.已长成的 +grown-up n.成人 adj.成人的 +growth n.增长，发展，生长 +grudge v.嫉妒，吝啬 +grumble v.抱怨，咕哝，发牢骚 +grunt n.,v.(作)呼噜声 +guarantee n.,v.保证，担保 +guard v.警卫，提防 v.哨兵 +guardian n.保护人 +guess v.,n.猜想，推测 +guest n.客人，宾客，旅客 +guesthouse n.宾馆 +guidance n.向导，指导 +guide v.向导，指引 n.导游 +guilt n.犯罪，过失 +guilty adj.有罪的，内疚的 +guitar n.吉它，六弦琴 +gulf n.海湾，鸿沟 +gulp v.吞下 +gum n.树胶，口香糖，牙龈 +gun n.枪，炮 +gunpowder n.火药 +gust n.一阵(大风) +gutter n.街沟 +guy n.家伙 +gymnasium n.体育馆，健身房 +gymnastics n.体操 +gymnast n.体操运动员 +habit n.习惯 +habitual adj.习惯的，惯常的 +haggard adj.消瘦的，憔悴的 +haggle n.争论，讨价还价 +hail v.欢呼 n.冰雹 +hair n.头发，毛发 +haircut n.理发 +hairdress n.美发 +hairpin n.发卡 +hairy adj.毛发的，多毛的 +half n.一半 adv.一半 +halfway adv.半途 +hall n.大厅，会堂 +hallmark n.标志 +halt v.,n.停住 +halve v.对分，减半 +ham n.火腿 +hamburger n.汉堡包 +hammer n.锤子 v.锤击 +hamper v.妨碍 +hand n.手，人手，指针 +handbag n.手袋，手提包 +handbook n.手册 +handful adj.一把，少量 +handicap n.障碍 v.妨碍 +handicapped adj.有残疾的 +handkerchief n.手帕，手绢 +handle v.处理，对待 n.把 +handling n.处理，管理 +handsome adj.漂亮的，得体 +handout n.分发物(印刷品等) +handwriting n.手写，书法，笔迹 +handy adj.方便的，近便的 +hang v.挂，垂，绞死 +hanger n.衣架 +haphazard adj.偶然的 +happen v.发生，碰巧，出事 +happening n.事件 +happily adv.幸运地 +happiness n.幸福 +happy adj.高兴的，幸运的 +harbor n.港口，停泊处 +hard adj.硬的 adv.努力 +harden v.硬化，变硬 +hardly adv.刚刚，几乎不 +hardness n.坚硬，硬度 +hardship n.困苦，艰难 +hardware n.硬件 +hard-working adj.勤劳的 +hardy adj.耐劳的，耐寒的 +hare n.野兔 +harm n.,v.损害，伤害 +harmful adj.有害的 +harmless adj.无害的，无恶意的 +harmonious adj.和睦的，和谐的 +harmony n.融洽，和谐 +harness v.支配，治理 +harsh adj.刺耳的，严厉的 +harvest v.,n.收获 +haste n.急忙，急速 +hasten v.赶紧，加快 +hasty adj.急促的，草率的 +hat n.帽子 +hatch v.孵化，策划 +hate v.恨，憎恶，不愿意 +hateful adj.可恨的，可憎的 +hatred n.憎恶，敌意 +haughty adj.傲慢的 +haul v.拉，拖 n.获得量 +haunt v.萦绕，作崇 +have v.有，不得不，拿 +hawk n.鹰隼 +hay n.干草 +hazard n.危险 +he pron.他 +head n.头，领导 v.率领 +headache n.头疼，头疼的事 +heading n.标题 +headline n.通栏标题 +headlong ad.头向前地，卤莽地 +headmaster n.(中、小学)校长 +headquarters n.司令部，总部 +heal v.治愈，医治 +health n.健康(状况) +healthy adj.健康的 +heap n.一堆，许多 v.堆积 +hear v.听见，听取，听说 +hearing n.听力，审讯 +heart n.心，心肠，中心 +heartfelt adj.衷心的 +hearth n.壁炉，炉边 +heartily adv.精神饱满的 +hearty adj.衷心的，热诚的 +heat n.热，热烈 v.加热 +heated n.激烈的，热烈的 +heating n.取暖，供热 +heave v.起伏，举起，叹气 +heaven n.天空，天堂 +heavily adv.重，沉重的 +heavy adj.星的，繁重的 +hedge n.树篱，套期保值 +hedgehog n.刺猬 +heed v.,n.注意，留心 +heel n.后跟 +height n.高度，顶点 +heighten v.加高，增加 +heir n.继承人 +heiress n.女继承人 +helicopter n.直升飞机 +hell n.地狱，苦境 +hello int.喂，你好 +helmet n.头盔 +help v.,n.帮助，有助于 +helpful adj.有用的 +helpless adj.无用的，无效的 +hemisphere n.半球，领域 +hen n.母鸡 +hence adv.因此，由此 +henceforth adv.今后 +her pron.她的，她(宾格) +herald n.先兆，先驱 +herb n.药草 +herbal adj.草药的 +herd v.放牧 n.(牲畜)群 +here adv.这里，在这里 +hereafter adv.此后 +hereby adv.以此 +herein adv.在此 +hereinafter adv.以下 +hereof adv.在本文件中 +hereto adv.对此 +herewith adv.与此一道 +hero n.英雄，男主角 +heroic adj.英雄的，英勇的 +heroine n.女英雄，女主角 +herself pron.她自己 +hesitant adj.犹豫的 +hesitate v.犹豫，不想 +hesitation n.犹豫，踌躇 +hey int.嗨 +hi int.嗨，你好 +hide v.躲藏，隐瞒，掩盖 +hideous adj.骇人听闻的 +high adj.高的，高度的 +highland n.高地 +highly adv.十分，赞许地 +highway n.公路 +hijack v.拦路抢劫 +hijacker n.栏路抢劫者 +hike n.,v.徒步郊游 +hill n.小山，丘陵 +hillside n.山坡，山腰 +him pron.他(宾格) +himself pron.他自己 +hind adj.后面的，后部的 +hinder v.妨碍，阻止 +hinterland n.内地 +hindrance n.障碍(物) +hinge n.合页，绞链 +hint n.暗示，迹象 v.暗示 +hip n.臀部 +hire v.租，雇佣 +his pron.他的 +hiss v.,n.(发)嘶嘶声 +historian n.历史学家 +historic adj.历史性的 +historical adj.历史的 +history n.历史 +hit v.打，碰，打击 +hitchhike v.搭车旅行 +hitherto adv.迄今，到那时 +hoarse adj.嘶哑的，沙哑的 +hobby n.嗜好，业余爱好 +hoe n.锄头 v.锄 +hoist v.升起，扯起 +hold v.握住，容纳 n.控制 +holder n.持有人，支架 +holding n.支持，控股 +hold-up n.停顿，耽误 +hole n.洞，孔穴 +holiday n.节日，假日 +hollow adj.空心的，凹陷的 +holy adj.神圣的，圣洁的 +home n.家，故乡 adv.回家 +homeless adj.无家可归的 +homely adj.家常的，简便的 +homesick n.思乡的 +homework n.家庭作业 +homogenous adj.同质的，同类的 +honest adj.诚实的，正直的 +honesty n.诚实，正直 +honey n.蜂蜜 +honeymoon n.蜜月 +honor n.荣誉，名誉 v.尊敬 +honorable adj.可尊敬的，体面的 +hook n.钩 v.钩住 +hop v.跳跃 +hope v.,n.希望，愿望 +hopeful adj.有希望的 +hopefully adv.可以指望 +hopeless adj.无望的，绝望的 +horizon n.地平线，视野 +horizontal adj.水平的，横的 +horn n.角，触须，号角 +horrible adj.可怕的，糟透的 +horrify v.使恐惧 +horror n.恐惧，恐怖 +horse n.马 +horsepower n.马力 +hose n.软水管，长统袜 +hospital n.医院 +hospitable adj.好客的 +hospitality n.好客，款待 +host n.一大群，男主人 +hostage n.人质 +hostel n.廉价旅馆 +hostess n.女主人，女主持人 +hostile adj.怀敌意的 +hot adj.热的，辣的 +hotdog n.热狗(面包) +hotel n.旅馆 +hotelling n.旅馆业 +hour n.小时，点钟 +hound n.猎狗 v.追逐 +house n.房子，剧场，家 +household n.户 adj.家庭的 +housekeeper n.看门人，保姆 +housewife n.家庭主妇 +housework n.家务 +hover v.翱翔，盘旋，徘徊 +how adv.如何，多么，怎样 +however adv.可是，然而 +howl v.,n.嚎叫，嚎哭 +hug v.,n.紧抱 +huge adj.庞大的，巨大的 +hull n.豆荚，外壳，船壳 +hum v.哼，嗡嗡叫 +human adj.人的，人类的 +humane adj.人慈的 +humanism n.人道主义 +humanitarian n.慈善家 +humanity n.人类，人性 +humble adj.谦卑的，卑贱的 +humid adj.湿的，潮湿的 +humidity n.湿度，湿气 +humiliate v.使受辱 +humiliation n.羞辱，耻辱 +humor n.幽默(感)，心情 +humorous adj.幽默的，诙谐的 +hundred num.一百 +hundredth num.第一面，百分之一 +hunger n.饥饿，渴望 +hungry adj.饥饿的，渴望的 +hunt v.打猎，搜索，寻找 +hunter n.猎人，搜索者 +hurl v.猛掷，猛投 +hurrah int.好哇 n.喝彩声 +hurry v.赶紧，急忙，急运 +hurt v.使受伤，使痛，伤害 +husband n.丈夫 +hush int.嘘 n.沉默 +hustle v.奔忙 +hut n.小屋 +hydraulic adj.水力的，液压的 +hydroelectric adj.水电的 +hydrogen n.氢，氢气 +hygiene n.卫生 +hymn n.赞美诗，赞歌 +hypocrisy n.伪善 +hypothesis n.假设，前提 +hypothetical adj.假设的 +hysteria n.歇斯底里，癔病 +hysteric adj.亢奋的 +i .我 +ice n.冰，冰块 +ice-cream n.冰淇淋 +ice-bound adj.冰封的 +iceland n.冰岛 +icy adj.冰冷的，结了冰的 +idea n.思想，主意，打算 +ideal adj.理想的 n.理想 +idealism n.理想主义 +idealize v.使理想化 +identical adj.同一的，相同的 +identification n.识别，身分 +identify v.认出，认为...一致 +identity n.认同，同一性 +idiom n.习语，成语 +idiomatic adj.习语的，惯用的 +idiot n.傻子，白痴 +idle adj.空闲的，懒的 +idleness n.闲散，无所事事 +idol n.偶像，被崇拜的人 +i.e. (缩)即，也就是 +if conj.如果，虽然,是否 +ignite v.点燃 +ignorance n.无知，不知道 +ignorant adj.不知道的，无知的 +ignore v.忽视，不理睬 +ill adj.患病的，坏的 +illegal adj.不合法的，非法的 +illegible adj.字迹不清的 +illiteracy n.文盲 +illiterate adj.文盲的 n.文盲 +illness n.疾病，生病 +illuminate v.照亮，启发 +illusion n.幻想，幻觉 +illusive adj.幻觉的 +illustrate v.图解，用图说明 +illustration n.阐明，实例 +image n.图像，影像，形象 +imaginary adj.想象的，虚构的 +imagination n.想象力，想象 +imagine v.想象，猜想 +imitate v.模仿，仿造，模拟 +imitation n.模仿，仿制品 +immaterial adj.无形的，不重要的 +immature adj.不成熟的 +immediate adj.立即的，最近的 +immediately adv.立即，马上 +immense adj.巨大的，极大的 +immerse v.浸泡，埋头于 +immigrant n.移民 +immigrate v.移入 +immigration n.移居入境 +imminent adj.迫切的，危急的 +immoral adj.不道德的 +immortal adj.不朽的 +impact n.冲击，影响 +impart v.给予，告诉 +impartial adj.公证的 +impatience n.不耐烦 +impatient adj.急切的，不耐烦的 +imperative adj.绝对必要的 +imperfect adj.不完善的 +imperialism n.帝国主义 +imperialist n.帝国主义者 +implement v.实行 n.工具 +implementation n.实行，执行 +implication n.暗示，含义 +implied adj.暗含的，暗示的 +implore v.恳求，哀求 +imply v.暗示，意味 +import v.进口,引进 n.进口货 +importance n.重要性，意义 +important adj.重要的，重大的 +importation n.进口 +importer n.进口商 +impose v.征(税)，强加 +imposition n.强迫接受 +impossibility n.不可能性 +impossible adj.不可能的，不妥的 +impost n.进口税，关税 +impractical v.不可行的 +impress v.印，铭刻，产生印象 +impression n.印象，影响，印迹 +impressive adj.给人深刻印象的 +imprison v.关押，监禁 +imprisonment n.监禁，徒刑 +improper adj.不适当的 +improve v.改善，提高 +improvement n.改善，好转 +impulse n.冲击，冲动，脉搏 +impurity n.不纯，杂质 +in prep.在...内，穿戴 +inability n.无能 +inaccessible adj.很难得到的 +inaccurate adj.不准确的，不确切 +inadequate adj.不充足的，不足以 +inasmuch adv.因为，由于 +inaugural adj.开幕的 +inaugurate v.举行开幕、就职典礼 +inauguration n.开幕、就职典礼 +incapable adj.不能的，不会的 +incense v.使发怒 n.香 +incentive n.刺激的，鼓励的 +inch n.英寸 +incident n.事件，事变，插曲 +incidentally adv.偶然地，另外 +inclination n.倾斜，倾向 +incline v.低头，喜欢，倾斜 +inclined adj.倾向于...的 +include v.包括 +inclusion n.包括在内 +inclusive adj.包括在内的 +income n.收入，所得 +incompatibility n.不兼容 +incompatible adj.不相容的 +incomplete adj.不完全的，没完成 +inconsistency n.不一致 +inconsistent adj.不一致的 +inconvenience n.不便，不利 +inconvenient adj.不方便的 +incorporate v.合并，体现 +incorporated adj.有限的 +incorrect adj.不正确的 +incoterms n.(缩)国际贸易术语 +increase v.,n.增加，增长 +increasing adj.不断增长的 +increasingly adv.日益，越来越 +incredible adj.不可信的，惊人的 +incredulous adj.表示怀疑的 +increment n.增值 +incur v.招致，承受 +indebted adj.感激的，感恩的 +indebtedness n.感激 +indeed adv.的确，实际上 +indefinite adj.不明确的，不确定 +indefinitely adv.不明确地 +indemnify v.赔偿，保护 +indent v.(书写)缩行 +independence n.独立，自主 +independent adj.独立的 +independently adv.独立地 +index n.索引，标志，指数 +india n.印度 +indian adj.,n.印度人(的) +indicate v.指明，表示 +indication n.表示，迹象 +indicative adj.表示...的 +indifference n.冷淡，不关心 +indifferent adj.冷淡的，不在乎的 +indigestion n.消化不良 +indignant adj.气愤的，愤慨的 +indignation n.愤慨，气愤 +indirect adj.间接的，侧面的 +indirectly adj.间接地 +indispensable adj.必不可少的 +individual adj.个人的，各自的 +indoor adj.室内的 +indoors adv.在户内，在屋里 +induce v.诱使，引起，归纳 +inducement n.诱导，动机 +induction n.感应，归纳 +indulge v.放纵，放任，纵容 +industrial adj.工业的 +industrialize v.使工业化 +industrialization n.工业化 +industrialized adj.工业化的 +industrious adj.勤劳的，勤奋的 +industry n.工业，产业，勤奋 +ineffective adj.效率低的 +ineffectiveness n.低效率 +inefficiency n.无效力 +inefficient adj.无效的 +inertia n.惯性，惰性，不活动 +inevitable adj.必然的，不可避免 +inevitably adv.必然地 +inexpensive adj.便宜的 +infant n.婴儿，幼儿 +infantry n.步兵 +infect v.感染，传染 +infection n.感染 +infectious adj.传染的 +infer v.推断，推论 +inference n.推断，推论的结果 +inferior adj.低级的 n.下级 +inferiority n.劣势 +infinite adj.无限大的，无穷的 +infinitely adv.无限地，无穷地 +infinitive adj.不定式的 +infinity n. 无限，无数，极多 +inflammable adj.不易燃的 +inflation n.充气，通货膨胀 +inflict v.打击 +influence n.影响，势力(范围) +influential adj.有影响的 +influenza n.流行性感冒 +inform v.通知，告诉，告密 +informal adj.非正式的 +information n.通知，情报，资料 +informative adj.提供资料的 +infrequent adj.不经常的 +infringe v.侵权 +infringement n.侵权 +ingenious adj.灵巧的，精巧的 +ingenious adj.独创的，机智的 +ingenuity n.灵巧，机灵，巧妙 +inhabit v.居住，栖身 +inhabitant n.居民 +inherent adj.生来俱有的 +inherit v.继承，遗传 +initial adj.最初的 +initially adv.最初 +initiate v.发动，开始，使入门 +initiative n.积极性，首创精神 +inject v.注射 +injection n.注射 +injure v.伤害，损害 +injury n.伤害，损害 +injustice n.不公正 +ink n.墨水，油墨 +inland n.内地的，内陆的 +inlet n.水湾，入口 +inn n.客栈 +inner adj.里面的，内心的 +innocence n.清白，天真 +innocent adj.无罪的 +innovate v.革新，变革，创始 +innovation n.革新，创新 +innumerable adj.无数的 +inorganic adj.无机的 +input n.输入，投入 +inquire v.询问 +inquiry n.询问，查询，调查 +insane adj.疯狂的 +insect n.昆虫 +insert v.插入，嵌入 +insertion n.插入 +inside n.里面 adj.里面的 +insider n.知情者 +insight n.洞察力 +insignificant adj.无足轻重的 +insist v.坚持，坚决要求 +insistent adj.紧迫的，坚持的 +insofar adv.在...范围内 +insolvent adj.无偿付能力的 +inspect v.检查，视察，审查 +inspection n.检查，视察 +inspector n.检查员，视察者 +inspiration n.灵感 +inspire v.鼓舞，激励，受启发 +instable adj.不稳定的 +install v.安装，安置 +installation n.安装，装置 +installment n.分期付款 +instance n.例子 +instant adj.立即的，速溶的 +instantly adv.立即，立刻 +instead adv.代替，而是 +instinct n.本能，直觉，天性 +instinctive adj.本能的，天性的 +institute n.(专科)学院 v.建立 +institution n.机构，制度 +instruct v.指导，指示，告知 +instruction n.指导，指示 +instructive adj.指示的，教育的 +instructor n.教员，教练 +instrument n.仪器，乐器，手段 +instrumental adj.仪器的，工具的 +insufficient adj.不充足的 +insulate v.绝缘，隔离，使孤立 +insulation n.隔离，绝缘 +insult v.,adj.侮辱 +insurance n.保险(业)，保障 +insure v.保险，确保 +intangible adj.无形的 +integral adj.组成的，整体的 +integrate v.整合，结合 +integration n.结合，整体 +integrity n.完整性，诚实 +intellect n.理智，才智 +intellectual n.知识分子 +intelligence n.智慧，情报 +intelligent adj.聪明的，明智的 +intend v.打算 +intense adj.强烈的，极度的 +intensity n.强烈，强度 +intensive adj.强化的，密集的 +intent n.意图 adj.专心的 +intention n.意图，目的 +intentional adj.有意的，故意的 +interact v.相互作用，相互影响 +interaction n.相互作用 +intercourse n.交流，往来 +interest n.兴趣，利息，利益 +interested adj.感兴趣的 +interesting adj.有趣的 +interface n.交界，接口 +interfere v.妨碍，干涉 +interference n.干涉，干扰 +interior n.内部，内地，内政 +intermediate adj.中间的 +internal adj.内部的，国内的 +international adj.国际的 +internationalization n.国际化 +internationalize v.使国际化 +interpret v.解释，当...译员 +interpretation n.解释，口译 +interpreter n.译员 +interrupt v.打断，中断 +interruption n.中断，打扰 +interval n.间隔，中间休息 +intervene v.介入，调解 +interview n.,v.会见，面谈 +intimate adj.亲密的，熟悉的 +intimation n.亲密，熟悉 +into prep.到...里面，..成 +intonation n.语调，声调 +introduce v.介绍，引进，采用 +introduction n.介绍，引言 +introductory adj.介绍的，入门的 +intrude v.侵入，强加于 +inundate adj.使充满 +invade v.入侵，侵犯 +invader n.入侵者 +invalid adj.伤残的，无效的 +invalidate v.使无效 +invaluable adj.非常宝贵的 +invariably adv.不变地，总是 +invasion n.侵略，侵袭 +invent v.发明，创造，编造 +invention n.发明，创造 +inventor n.发明者 +inverse adj.相反的，倒转的 +inversely adv.相反地 +invest v.投资，花费 +investigate v.调查，研究 +investigation n.调查 +investment n.投资(额) +invisible adj.看不见的 +invitation n.邀请(信) +invite v.邀请，招致，征求 +invoice n.发票，装货清单 +involve v.使卷入，忙于 +involved adj.涉及的，复杂的 +involvement n.卷入，涉足 +inward adj.里面的，内心的 +inwards adv.向内的 +ireland n.爱尔兰 +iIrish n.,adj.爱尔兰人(的) +iron n.铁，熨斗 v.熨平 +ironical adj.反讽的，讽刺的 +irony n.反讽，讽刺 +irregular adj.不规则的 +irregularity n.不规则 +irresistible adj.不可抗拒的 +irrespective adj.不论，不考虑 +irrevocable adj.不可撤消的 +irrigate v.灌溉 +irrigation n.灌溉 +irritate v.使生气，刺激 +irritation n.刺激，恼怒 +islam n.伊斯兰教，回教 +island n.岛屿 +isolate v.隔离，孤立 +isolation n.隔离，孤立状态 +issue v.发行,发布 n.发行物 +it pron.它 +italian n.,adj.意大利人(的) +italy n.意大利 +itch v.,n.痒，热望 +item n.条款，项目 +itemize v.分列 +its pron.它的 +itself pron.它自己 +ivory n.象牙，象牙色 +jack n.千斤顶，船首旗 +jacket n.短外套，茄克衫 +jail n.监狱 v.监禁 +jam n.果酱，阻塞 +january n.一月 +japan n.日本 +japanese n.,adj.日本人(的) +jar n.罐子，坛子，刺耳声 +jaw n.下颚，下巴 +jazz n.爵士乐 +jealousy n.妒忌 +jealous adj.妒忌的 +jeans n.牛仔裤 +jelly n.果冻 +jeep n.吉普车 +jeopardize v.危及 +jerk n.颠簸，猛推 +jesus n.耶稣 +jet v.喷射 v.喷气发动机 +jettison n.投弃货物 v.抛弃 +jew n.犹太人 +jewel n.珠宝，宝石 +jewelry n.珠宝(总称) +jewish adj.犹太人的 +jingle v.,n.(发)叮当声 +job n.工作，活儿，差使 +jobless adj.失业的 +jog v.慢跑 +join v.连接，加入，参加 +joint n.接着，关节 +joke n.笑话 v.开玩笑 +jot v.匆匆记下 +journal n.刊物，日志 +journalism n.新闻体 +journalist n.记者 +journey n.旅行，旅程 +joy n.高兴，乐事 +joyful adj.令人高兴的 +judge n.法官，裁判 v.审判 +judgement n.判决，意见，判断 +jug n.大壶，罐 +juice n.汁，液 +juicy adj.多汁的 +july n.七月 +jumble n.搞乱，混乱 +jump v.,n.跳跃，跳动 +junction n.连接，结合处，接头 +june n.六月 +jungle n.密林，热带丛林 +junior adj.年少的，低级的 +jupiter n.木屋 +jury n.陪审团，评奖团 +just adv.只，刚才 +justice n.公正，正直 +justifiable adj.有理由的 +justification n.辩护，正当理由 +justify v.认为...有理 +juvenile adj.青少年的 +kangaroo n.带鼠 +keen adj.锋利的，敏捷的 +keep v.保持，保留，防止 +keeper n.保管人，管理员 +keeping n.一致，协调 +kernel n.核(仁)，核心 +kerosene n.煤油 +kettle n.水壶 +key n.钥匙，关键，答案 +keyboard n.键盘 +keyhole n.钥匙孔 +kick v.,n.踢 +kid n.小孩 v.哄骗 +kidnap v.绑架，诱拐 +kidnaper n.绑架者 +kidney n.肾，腰子 +kill v.杀死，杀害 +killer n.杀人者，杀手 +kilo n.(缩)公斤，公里 +kilogram n.公斤 +kilometer n.公里 +kilowatt n.千瓦 +kind n.种类 adj.仁慈的 +kindergarten n.幼儿园 +kindle v.点燃，激发 +kindly adv.仁慈地，好心地 +kindness n.仁慈，好意 +king n.国王 +kingdom n.王国 +kiss v.接吻，亲嘴 +kit n.全套工具、装备 +kitchen n.厨房 +kite n.风筝 +knee n.膝 +kneel v.跪下 +knife n.小刀 +knight n.骑士，爵士 +knit v.编织，皱(眉) +knob n.球形把手 +knock v.敲，击倒 n.敲门声 +knot n.结，树节 v.打结 +know n.知道，认识，懂 +know-how n.专项技术，诀窍 +knowledge n.知识，学识 +knowledgeable adj.博学的 +lab n.(缩)实验室 +label n.标签 v.标明 +laboratory n.实验室 +labor n.劳动，劳动力 +laborer n.劳工，劳动者 +labor-intensive adj.劳动密集型的 +lace n.花边，鞋带 +lack v.,n.缺少 +lad n.少年，小伙子 +ladder n.梯子，阶梯 +lady n.女士，贵妇人，夫人 +lag v.,n.落后，滞后 +lake n.湖，湖泊 +lamb n.羔羊，小羊肉 +lame adj.跛的，站不住脚的 +lamp n.灯 +land n.陆地，土地 v.着陆 +landed adj.卸货的 +landing n.楼梯平台，着陆 +landlady n.女房东 +landlord n.房东，地主 +landscape n.风景(画)，地形 +lane n.小巷，跑道，行车道 +langkap 冷甲(馬來西亞,霹靂洲内一地方名) +language n.语言 +lantern n.灯笼 +lap n.膝盖 +lapse v.(时间)流失 +large adj.大的，巨大的 +largely adv.大部分，基本上 +lark n.云雀，百灵鸟 +laser n.激光 +last adj.最后的 adv.上次 +lasting adj.持久的，持续的 +late adj.迟到的，晚的 +lately adv.近来，最后 +latent adj.潜伏的，潜在的 +later adv.更晚，以后，过后 +lateral adj.横向的，侧向的 +lathe n.车床 +latin n.,adj.拉丁语(的) +latitude n.纬度，活动余地 +latter adj.后面的，后者的 +lattice n.结构，点阵 +laugh v.笑，嘲笑 +laughter n.笑，笑声 +launch v.发射，发动，开始 +laundry n.洗衣店，送洗的衣物 +lavatory n.盥洗室，厕所 +law n.法律，定律 +lawful adj.合法的，法律的 +lawn n.草地，草坪 +lawyer n.律师，法学家 +lay v.放，安排，打基础 +layday n.装卸日期 +layer n.层，层次 +layout n.设计，规划，图案 +laziness n.懒惰 +lazy adj.懒惰的 +l/c n.(缩)信用证 +lead v.引导，领先，率领 +leader n.领导，领袖 +leadership n.领导 +leading adj.领先的，一流的 +leaf n.叶子，页 +leaflet n.传单，单页宣传品 +league n.同盟，协会 +leak v.漏，泄漏 +leakage n.渗漏 +lean v.俯身，倚 adj.瘦的 +leap v.,n.跳跃 adj.闰年的 +learn v.学习，获悉 +learned adj.有学问的 +learner n.学习者，学生 +learning n.学问，学习 +lease v.租凭，出租 n.租约 +least adj.最少的 +leather n.皮革 adj.皮革制的 +leave v.出发，离开 n.休假 +lecture n.,v.演讲，讲课 +lecturer n.演讲者，讲师 +leeway adj.活动余地 +left adj.左的 adv.向左 +left-handed adj.左手的，左侧的 +leftover n.剩余物 +leg n.腿，裤脚 +legal adj.合法的，法律的 +legend n.传说，传奇 +legendary adj.传说的，传奇的 +legislation n.立法，法规 +legitimate adj.合法的，合理的 +legitimation n.合法 +leisure n.闲暇，闲空 +lemon n.柠檬 +lemonade n.柠檬汽水 +lend v.出借，贷款 +lending n.贷款，借款 +length n.长度，期限 +lengthen v.延长，变长 +leninism n.列宁主义 +lens n.透镜，镜片，晶体 +leopard n.豹 +less adj.更少的 adv.较小 +lessen v.减少，变小，变弱 +lesson n.功课，课程，教训 +lest prep.唯恐，以免 +let v.让，使 +letter n.字母，信，函件 +level n.水平，级 v.弄平 +lever n.杠杆 +levy v.征税 n.关税 +liability n.责任，义务，债务 +liable adj.有责任的 +liar n.说谎者 +liberal adj.思想开放的 +liberate v.解放，释放，使自由 +liberation n.解放 +liberty n.自由 +librarian n.图书管理员 +library n.图书馆，藏书 +license n.许可(证)，执照 +lick v.舔 +lid n.盖，脸 +lie v.躺，位于 v.,n.说谎 +lieutenant n.中尉，副职 +life n.生活，生命，一生 +lifetime n.一生 +lift v.举起，吊 n.电梯 +light n.光，灯 adj.明亮的 +lighten v.发亮，使...愉快 +lighter n.打火机 +lighthouse n.灯塔 +lightly adv.轻轻地，轻易地 +lightning n.闪电 +like v.喜欢 prep.像 +likelihood n.可能，相似性 +likely adj.可信的adv.很可能 +likeness n.相像，类似 +likewise adv.同样，照样 +liking n.兴趣，嗜好 +lily n.百合，睡莲 +limb n.肢，树枝 +lime n.石灰 +limestone n.石灰岩 +limit n.界限，限度 v.限制 +limitation n.限制，局限 +limited adj.有限的，限定的 +limousine n.豪华轿车 +limp adj.柔软的 v.跛行 +line n.行，线条，界线 +linear adj.线性的，线状的 +linen n.亚麻(织物) +liner n.班轮，班机 +linger v.徘徊，逗留，拖延 +linguist n.语言学者 +linguistics n.语言学 +lining n.夹里，衬里 +link v.联系，连结 n.纽带 +lion n.狮子 +lioness n.母狮子 +lip n.嘴唇 +lipstick n.口红，唇膏 +liquid n.液体 adj.液体的 +liquor n.烈性酒 +list n.表，名单 v.列表 +listen v.听，听从 +listener n.听者 +literacy n.识字 +literal adj.字面的，不夸张的 +literally adv.简直，字面上 +literary adj.文学的 +literate n.有文化的 +literature n.文学，文献 +litre n.公升 +litter v.乱丢废物 n.废物 +little adj.小的，一点，少的 +live v.居住,生存 adj.活的 +livelihood n.生活 +lively adj.活跃的，热闹的 +liver n.肝 +livestock n.牲畜 +living adj.活着的 n.生计 +living-room n.客厅，起居室 +load n.负载，负担 v.装载 +loaf n.面包 v.游荡 +loan n.贷款 v.出借 +lobby n.前厅 v.游说 +lobster n.龙虾 +local adj.地方的，当地的 +locality n.地点，现场 +locate v.找出，确定地点 +location n.地点，位置 +lock v.锁上 n.锁，绺 +lock-up n.锁，固定资本 +locomotive n.火车头，机车 +locust n.蝗虫 +lodge v.寄宿 +lodging n.住处，住房 +lofty adj.崇高的，高耸的 +log n.原木，航海日志 +logic n.逻辑，论理学 +logical adj.逻辑的 +loneliness n.孤独，寂寞 +lonely adj.孤独的，寂寞的 +lonesome adj.寂寞的 +long adj.长的 adv.长久 +longevity n.长寿 +longing n.渴望，思慕 +longitude n.经度，经线 +long-term adj.长期的 +look v.看，看上去 n.外表 +loom v.隐隐出现 n.织布机 +loop n.环，回路 v.环绕 +loose adj.松的，自由自在的 +loosen v.解开，放松 +lord n.君主，贵族，上帝 +lorry n.卡车，载重汽车 +lose v.失去，丢失，输 +loss n.丧失，失利，损失 +lost adj.失去的 +lot n.许多，地 adv.相当 +lottery n.抽彩，抓阄，彩票 +loud adj.响亮的，大声的 +loudness n.响亮 +loudspeaker n.扬声器，扩音器 +lounge n.休息室 +lovable adj.可爱的 +love v.爱，喜欢 n.爱情 +lovely adj.好看的，可爱的 +lover n.爱人，情人，爱好者 +low adj.低的，低廉的 +lower v.降低，减弱 +loyal adj.忠诚的，忠贞的 +loyalty n.忠诚，忠贞 +lubricate v.润滑 +lubrication n.润滑 +luck n.运气，幸运 +lucky adj.幸运的 +luggage n.行李 +lumber n.木材，木料 +luminous adj.发光的，明晰的 +lump n.块，肿块 +lumpsum n.总数 +lunar adj.月亮的，阴历的 +lunch n.午饭，便餐 +luncheon n.午餐，午宴 +lung n.肺 +luxurious adj.豪华的，奢侈的 +luxury n.奢侈(品) +machine n.机器 +machinery n.机械(总称) +mackintosh n.雨衣 +macroeconomics n.宏观经济学 +mad adj.疯狂的，狂热的 +madam n.夫人，太太，女士 +madman nn.疯子 +madness n.疯狂，疯病 +magazine n.杂志，期刊 +magic n.魔法，魔术，魅力 +magician n.魔术师 +magistrate n.地方法官 +magnet n.磁性，磁铁 +magnetic adj.磁性的 +magnetism n.磁性，磁力，吸引力 +magnificent adj.壮丽的，宏伟的 +magnify v.放大，扩大 +magnitude n.宏大，重要(性) +maid n.女仆，侍女 +maiden n.少女 adj.未婚的 +mail n.邮件 v.邮寄 +mailbox n.信箱 +main adj.主要的 +mainland n.大陆，本土 +mainly adv.主要地，大部分 +mainstream n.主流 +maintain v.维持，保养，坚持 +maintenance n.保养，维修 +maize n.玉米 +majesty n.陛下，雄伟，庄严 +major adj.主要的，多数的 +majority n.多数，过半数 +make v.做，制造 n.种类 +maker n.制造者，制造商 +make-shift adj.临时的n.权宜之计 +make-up n.气质，化妆品 +malady n.病 +malaria n.疟疾 +malaise n.马来西亚 +malaysia n.马来西亚 +male adj.男性的，雄的 +malice n.恶意，恶感 +malicious adj.恶意的 +man n.人，男人，人类 +manage v.管理，处理，设法 +management n.管理(人员)，经营 +manager n.经理 +managerial adj.管理的 +manhood n.男子气 +manifest v.表明 adj.明白的 +manifestation n.表明 +manifesto n.宣言 +manipulate v.操纵，操作，摆布 +manipulation n.操纵，操作 +mankind n.人类 +manly adj.大丈夫的 +manner n.方法，方式，礼貌 +mansion n.宅第，官邸，大厦 +manual adj.用手的 n.手册 +manufacture v.,n.制造 +manufactured adj.制成的 +manufacturer n.制造商 +manuscript n.手稿，原稿 +many adj.许多的 n.许多 +map n.地图 v.筹划 +maple n.枫树 +marble n.大理石，弹子 +march n.三月 +march n.,v.行进，行军 +margin n.余地，边缘 +marginal adj.边缘的，边际的 +marine adj.海的，海生的 +mariner n.海员，水手 +mark n.痕迹，符号，标记 +marked adj.有标记的，标明的 +market n.市场，销路 +marketable adj.有销路的 +marketing n.市场学，营销学 +marketplace n.市场，集市 +marking n.唛头，标记 +marriage n.婚姻，婚礼 +married adj.已婚的 +marry v.娶，嫁，为...主婚 +mars n.火星 +marsh n.沼泽 +marshal n.元帅 +martyr n.烈士，殉道者 +marvel n.奇迹 v.惊奇 +marvellous adj.奇异的，绝妙的 +marxism n.马克思主义 +marxist n.马克思主义者 +masculine adj.男性的，阳性的 +mask n.假面具 v.掩饰 +mass n.堆，大量，群众 +massacre n.,v.屠杀，残杀 +massage n.按摩，推拿 +massive adj.粗大的，厚重的 +mass media n.传媒工具，新闻界 +mast n.桅杆 +master n.主人，大师，硕士 +masterpiece n.杰作 +mat n.垫子，席子 +match n.火柴，对手，比赛 +mate n.伙伴 v.配对 +material n.材料，资料，原料 +materialism n.唯物主义 +materialize v.使具体化，物质化 +mathematical adj.数学的 +mathematics n.数学 +mathematician n.数字家 +maths n.(缩)数学 +matinee n.日场演出 +matter n.事情，物资，毛病 +mattress n.床垫 +mature adj.成熟的，到期的 +maturity n.成熟，到期 +maximize v.增加到最大程度 +maximum n.最大量，极限 +may n.五月 +may v.可以，也许，祝愿 +maybe adv.或许，大概 +mayor n.市长 +me pron.我(宾格) +meadow n.牧场，草地 +meal n.膳食，一顿饭 +mean v.打算，意指 +meaning n.意义，意图 +means n.手段，财力 +meantime adv.同时，在这期间 +meanwhile adv.,n.在这期间 +measure n.尺寸，量具，措施 +measurement n.测量(结果) +meat n.肉 +mechanic n.技工 +mechanical adj.机械的、机动的 +mechanically adv.机械地 +mechanics n.力学，机械学 +mechanism n.机制，机械装置 +medal n.奖章，勋章，纪念章 +medical adj.医学的，医务的 +medicine n.药，医学 +medieval adj.中世纪的 +meditate v.考虑，沉思 +meditation n.考虑，沉思冥想 +mediterranean n.地中海 +medium n.中间，媒介，中庸 +meek adj.温顺的 +meet v.遇到，会见，迎接 +meeting n.会议，集会 +melancholy n.,adj.忧郁(的) +melody n.旋律，曲调 +melon n.瓜，甜瓜 +melt v.熔化，融解 +member n.成员，会员 +membership n.会员资格，全体成员 +memo n.备忘录 +memoir n.回忆录 +memorial adj.纪念的，追悼的 +memorize v.记住，记忆 +memory n.记忆(力)，回忆 +menace v.,n.威胁，恐吓 +mend v.修理，修补，好转 +mental adj.心理的，精神的 +mentality n.心理，意识 +mention v.,n.提及，讲到 +menu n.菜单 +merchandise n.商品，货物 +merchant n.商人 adj.商业的 +mercantile n.商品 +merciful adj.仁慈的，宽大的 +mercury n.水星 +mercury n.汞，水银 +mercy n.宽大，慈悲，怜悯 +mere adj.仅仅的，起码的 +merely adv.仅仅，只 +merge v.合并 +merit n.价值，功绩 v.应得 +mermaid n.美人鱼 +merry adj.欢乐的 +mesh n.网孔，筛眼 +mess n.肮脏，凌乱 v.弄脏 +message n.音讯，消息 +messenger n.通讯员，使者 +metal n.金属 +metallic adj.金属的 +metallurgy n.冶金学 +meter n.量器，仪表 +method n.方法 +methodology n.方法(论) +meticulous adj.小心翼翼的 +meticulously adv.胆小地 +metre n.米，公尺 +metric adj.公制的，米的 +metropolitan n.大都市 +mexican n.,adj.墨西哥人(的) +mexico n.墨西哥 +microeconomics n.微观经济学 +microphone n.扩音器，话筒 +microprocessor n.微处理机 +microscope n.显微镜 +microwave n.微波 +midday n.正午，晌午 +middle n.当中 adj.中部的 +middleman n.中人，中间人 +middling n.中等的，第二流的 +midnight n.午夜 +midst n.中间，中部 +might v.或许，可以 n.力 +mighty adj.强有力的 +migrant adj.迁移的，候鸟的 +migrate v.迁移(海外)，移栖 +migration n.迁移，移居海外 +mild adj.温和的，味淡的 +mile n.英里 +mileage n.里程 +milestone n.里程碑 +military adj.军事的，好斗的 +militia n.民兵(组织) +milk n.奶，乳夜 v.挤奶 +milkman n.送奶人 +milky adj.加奶的，乳白色的 +mill n.磨坊，工厂 v.滚乱 +miller n.磨坊主 +millimetre n.毫米 +million n.百万 +millionaire n.百万富翁 +mince v.切碎，绞碎 +mincer n.粉碎机 +mind n.头脑，智力 v.介意 +mine pron.我的 n.矿山 +miner n.矿工 +mineral n.矿物 adj.矿物的 +mingle v.混合，混入 +miniature n.雏形，缩影，袖珍 +minicomputer n.微型计算机 +minimize v.使减到最小 +minimum n.最少量 adj.最小的 +minister n.教士，部长，大臣 +ministry n.(政府)部 +minor adj.较小的，次要的 +minority n.少数，少数民族 +mint n.造币厂，薄荷 +minus prep.减去 adj.减的 +minute n.分钟，片刻 +miracle n.奇迹，令人惊讶的事 +miraculous adj.奇迹(般)的 +mirror n.镜子 v.反映 +miscarriage n.未到目的地 +miscarry v.未运到(目的地) +mischief n.伤害，恶作剧 +miser n.吝啬鬼，守财奴 +miserable adj.悲惨的，糟糕的 +misery n.痛苦，悲惨，苦难 +misfortune n.不幸 +misgiving n.疑虑，担心 +mishandle v.装卸不慎 +mishap n.事故 +misinterpret v.误解 +mislead v.引入岐途 +miss v.未击中,错过 n.小姐 +missile n.导弹，发射物 +missing adj.丢失的，缺少的 +mission n.使团，使命，天职 +missionary n.传教士 +mist n.薄雾 v.使迷糊 +mistake n.错误，误解 v.搞错 +mistaken adj.搞错了的，误解的 +mister n.先生(缩写为Mr.) +mistress n.女主人，情妇 +misty adj.雾蒙蒙的，有雾的 +misunderstand v.误解，误会 +misunderstanding n.误会，曲解 +mitten n.连指手套，露指手套 +mix v.混合，配料，交往 +mixer n.混合器 +mixture n.混合物，混和 +moan v.,n.呻吟，悲叹 +mob n.暴民，乌合之众 +mobile adj.机动的，流动的 +mobilize v.动员 +mock v.嘲笑，愚弄 +mode n.方式，方法 +model n.模范，模型，模特儿 +moderate adj.适度的 v.缓和 +moderately adv.适度地，适中地 +modern adj.现代的，时髦的 +modernization n.现代化 +modernize v.使...现代化 +modest adj.谦虚的，质朴的 +modesty n.谦虚 +modification n.修改，缓和 +modified adj.改良的，改进的 +modify v.修改，减轻，修饰 +modulate v.调整，改变 +module n.模量，模件 +moist adj.潮湿的 +moisture n.潮气 +molecular adj.分子的 +molecule n.分子 +moment n.时刻，瞬间 +momentary adj.片刻的，瞬间的 +momentous adj.重要的，重大的 +monarch n.君主，王室 +monastery adj.修道院，寺院 +monday n.星期一 +monetary adj.货币的，金融的 +money n.金钱，货币，财富 +monitor n.班长,监视器 v.监视 +monk n.和尚，修道士 +monkey n.猴子 +monopolize v.垄断，独占 +monopoly n.垄断，独占 +monotonous adj.单调的，枯燥的 +monotony n.单调，枯燥 +monster n.怪兽，怪物，魔鬼 +monstrous adj.可怕的，极恶的 +month n.月份 +monthly adj.每月的 n.月刊 +monument n.纪念章，不朽之物 +monumental adj.纪念碑式的 +mood n.心情，心境，情绪 +moon n.月亮 +moonlight n.月光 +moonlighting n.业余干活 +moor v.系泊，把船栓定 +mop n.拖把，墩布 +moral adj.道德的 n.教训 +morale n.士气，斗志 +morality n.道德品质 +more adj.更多的,更 adv.更 +moreover adv.此外，而且 +morning n.早晨，上午 +mortal adj.致命的 +moslem n.,adj.穆斯林 +mosque n.清真寺 +mosquito n.蚊子 +moss n.苔藓，地衣 +most adj.最多的 adv.非常 +mostly adv.主要地，大多 +motel n.汽车旅馆 +moth n.蛾 +mother n.母亲 adj.出生地的 +mother-in-law n.岳母，婆婆 +motion n.运动，议案 +motionless adj.不动的 +motivate v.促进，激发 +motivation n.动机 +motive n.动机 +motor n.发动机 +motorcar n.汽车 +motorcycle n.摩托车 +motorist n.摩托车手 +motorway n.汽车道，高速公路 +motto n.座右铭 +mould n.模子，型，霉菌 +mount n.山，岳 v.登上 +mountain n.山 +mountainous adj.多山的，山一般的 +mourn v.悲悼，哀痛 +mournful adj.悲悼的，哀痛的 +mourning n.哀痛 +mouse n.老鼠 +moustache n.胡子，须 +mouth n.口，嘴巴，河口 +mouthful n.一口，满口 +move v.移动，推动，搬家 +movement n.活动，运动，动作 +movie n.电影(院) +mr. n.(缩)先生 +mrs. n.(缩)夫人，太太 +ms. n.(缩)女士 +much adj.许多的 n.许多 +mud n.泥浆 +muddy adj.泥泞的 +muffle v.裹住，捂住 +muffler n.围巾，消音器 +mug n.(有柄)大杯 +mule n.骡子 +multiple adj.复合的，多次方的 +multiplication n.乘法，增加 +multiply v.乘，增加，繁殖 +multifunction n.多功能的 +multitude n.大批，大群 +municipal adj.市的，市政的 +mumble v.咕哝，嘟囔 +mumps n.腮腺炎 +murder v.,n.谋杀(案) +murderer n.凶手，杀人犯 +murmur v.低声说 +muscle n.筋，肌肉 +muscular adj.肌肉发达的 +muse v.沉思，默想 +museum n.博物馆，陈列馆 +mushroom n.“蘑菇 +music n.音乐，乐曲 +musical adj.音乐的 n.歌舞片 +musician n.音乐家，作曲家 +must v.必须，准是 n.必须 +mustard n.芥末 +mute adj.缄默的 n.哑巴 +mutter v.咕哝，抱怨 +mutton n.羊肉 +mutual adj.相互的，共同的 +my pron.我的 +myriad n.,adj.无数(的) +myself pron.我自己，我亲自 +mysterious adj.神秘的，玄妙的 +mystery n.神秘，奥妙，秘事 +mystic adj.神秘的 +myth n.神话 +mythology n.神话(学) +nail n.钉子，指甲 v.钉 +naive adj.天真的 +naked adj.裸体的，赤裸裸的 +name n.姓名，名称 v.命名 +nameless adj.无名的 +namely adv.即，也就是 +namesake n.名义 +nap n.打盹，小睡 +napkin n.餐巾(纸) +narrate v.叙述 +narration n.叙述 +narrator n.叙述者 +narrow adj.狭窄的，勉强的 +nasty adj.肮脏的，下流的 +nation n.国家，国民，民族 +national adj.民族的，国家的 +nationality n.国籍 +native adj.本国的，出生地的 +natural adj.自然的，通常的 +naturally adv.自然地 +nature n.自然，本性，性质 +naughty adj.淘气的，顽皮的 +nausea v.恶心，讨厌 +naval adj.海军的 +navel n.脐，中心 +navigable adj.可航行的 +navigation n.航行，航海，航空 +navy n.海军 +near adv.近 adj.近的 +nearby adj.,adv.附近(的) +nearly adv.几乎，差不多 +neat adj.整洁的，简洁的 +necessarily adv.必然，当然 +necessary adj.必要的，必然的 +necessitate v.使需要，强迫 +necessity n.必要性，必须品 +neck n.颈，脖子 +necklace n.项链 +need n.需要，贫困 v.需要 +needful adj.必要的 +needle n.针，指针，针叶 +needless adj.不必要的，无用的 +needy adj.贫穷的 +negate v.否定 +negation n.否定 +negative adj.否定的 n.负片 +neglect v.,n.疏忽，忽视 +negligence n.疏忽，过失 +negligent adj.粗心大意的 +negligible adj.微不足道的 +negotiable adj.可谈判的 +negotiate v.谈判，交涉 +negotiation n.谈判 +negro n.黑人(贬义) +neighbor n.邻居，邻国 +neighborhood n.邻里，街坊 +neighboring adj.邻近的，相邻的 +neither conj.既不...又不... +nephew n.侄子，外甥 +nerve n.神经，胆量 +nervous adj.神经(质)的， +nest n.巢，窝 +nestle v.安顿，建巢 +net n.网 adj.净的，纯的 +network n.网络，网状组织 +neutral adj.中立的，中和的 +neutrality n.中立 +neutron n.中子 +never adv.从不，永不，未曾 +nevertheless adv.还是，然而 +new adj.新的，重新的 +news n.新闻，消息 +newspaper n.报纸，新闻纸 +next adv.下一次，然后 +nice adj.令人愉快的 +nickel n.镍，镍币 +nickname n.绰号，诨号 +niece n.侄女，外甥女 +night n.夜，黑夜 +nightgown n.睡衣 +nightingale n.夜莺 +nightmare n.恶梦 +nine num.九 +nineteen num.十九 +ninety num.九十 +ninth num.第九，九分之一 +nitrogen n.氮 +no adv.不,毫不 adj.没有 +no. n.(缩)...号，号码 +nobility n.高贵，庄严 +noble adj.高尚的，贵族的 +nobody prep.谁也不 +nod v.,n.点头 +noise n.噪音，吵嚷声 +noisy adj.吵闹的 +nominal adj.名义上的，票面的 +nominate v.提名，推荐，任命 +nomination n.提名，任命 +none prep.没人，毫无 +nonsense n.废话，谬论 +noon n.中午，正午 +nor conj.也不，也没 +norm n.标准，规范，定额 +normal adj.正常的，标准的 +normalization n.正常化 +normalize v.使正常，使标准化 +normally adv.正常地，通常 +north n.北，北方 adj.北的 +northeast adj.,n.东北(的) +northern adj.北方的，北部的 +northward adj.,adv.向北(的) +northwest adj.,n.西北(的) +nose n.鼻子 +nostril n.鼻孔 +not adv.不 +notable adj.值得注意的 +notably adj.尤其，值得注意地 +note n.笔记，注释，便条 +notebook n.笔记本 +noted adj.著名的 +note-taking n.笔记，笔录 +nothing n.没有东西 adv.毫不 +notice v.留意 n.注意，通知 +noticeable adj.显而易见的 +notification n.通知(书)，布告 +notify v.通知，通告，报告 +notion n.概念，意见，看法 +notorious adj.臭名昭著的 +notwithstanding prep.,conj.尽管 +nought n.零 +noun n.名词 +nourish v.养育，提供养分 +nourishment n.食物，补品 +novel adj.新颖的 n.小说 +novelist n.小说家 +novelette n.中篇小说 +novelty n.新奇，新颖 +november n.十一月 +now adv.n.现在 conj.既然 +nowadays adv.现今，目前 +nowhere adv.哪儿也不 +nuclear adj.核的，原子核的 +nucleus n.(原子)核，核心 +nuisance n.令人讨厌的人或事 +null n.无 +nullify v.使无效，取消 +number n.数字，若干，号码 +numerical adj.数字的 +numerous adj.众多的，大量的 +nun n.修女，尼姑 +nurse n.护士，保姆 v.护理 +nursery n.托儿所，苗圃 +nut n.坚果，螺母 +nylon n.尼龙 +oak n.橡树，栎树 +oar n.橹，桨 +oath n.誓言，誓约 +obedience n.服从，顺从 +obedient adj.服从的，顺从的 +obey v.服从，遵守 +object n.物体，目的 v.反对 +objection n.反对，异议，不愿 +objective n.目标 adj.客观的 +obligation n.义务，责任 +oblige v.责成，使感激 +obliterate adj.删去，抹掉 +oblong adj.椭圆形的 +obscure adj.无名的 v.遮蔽 +observance n.仪式，习惯 +observation n.观察，评述 +observe v.观察，遵守，注视 +observer n.观察员 +obstacle n.障碍(物) +obstinate adj.固执的，顽强的 +obstruction n.堵塞，妨碍 +obtain v.获得 +obtainable adj.可得到的 +obvious adj.明显的 +obviously adv.明显地，显然 +occasion n.场合，盛事，机会 +occasional adj.偶然的，有时的 +occasionally adv.偶而，有时 +occident n.西方 +occidental adj.西方的，西洋的 +occupation n.职业，占有 +occupy v.占据，占领，担任 +occur v.发生，出现，想到 +occurrence n.发生，出现，事件 +ocean n.海洋，大洋 +oceania n.大洋洲 +oceanography n.海洋学 +o'clock adv.点钟 +october n.十月 +odd adj.古怪的，奇数的 +odour n.气味 +of prep..的(表示领属等) +off adv....去 prep.离开 +off-duty adj.不当班的 +offence n.过错，冒犯，攻击 +offend v.冒犯，得罪 +offensive adj.冒犯的，攻击的 +offer v.,n.提供，报盘 +offering n.报盘，提供的货物 +off-grade adj.等外的，质差的 +office n.办公室，事务所 +officer n.军官，警官，官员 +official n.官员 adj.官方的 +offset v.抵消，弥补 +offspring n.子女，子孙 +often adv.经常，常常 +oh int.哦，嗬 +oil n.油，石油 +o.k. adj.,n.(缩)对，行 +old adj.老的，...岁的 +olive n.橄榄(树) +omen n.前兆 +ominous adj.不祥的 +omission n.省略 +omit v.省略，遗漏 +on prep.在...上，关于 +once adv.一度，一次 +one num.,n.一，一个 +oneself pron.自己，自身 +onion n.洋葱 +only adj.唯一的 adv.仅仅 +onset n.攻击，着手 +onto prep.到...上 +onward adv.,adj.向前(的) +opal n.蛋白石 +opaque adj.不透明的 +open adj.开的 v.打开 +opener n.开罐器，起子 +opening n.开始，通路，孔 +opera n.歌剧 +operate v.运转，操作，开刀 +operation n.操作，生效，手术 +operational adj.业务上的，操作的 +operative adj.有效的 +operator n.操作人员，接线员 +opinion n.意见，评论，看法 +opium n.鸦片 +opponent n.对手，敌手 +opportune adj.及时的，凑巧的 +opportunity n.机会，机遇，时机 +oppose v.反对，反抗 +opposite adj.对立的，对面的 +opposition n.敌对，反抗 +oppress v.压抑，压迫，压制 +oppression n.压迫 +optical adj.视觉的，光学的 +optimal adj.最佳的 +optimism n.乐观(主义) +optimistic adj.乐观(主义)的 +optimize v.最佳化 +optimum n.最佳条件 +option n.选择，可选择的东西 +optional adj.可任选的，随意的 +or conj.或者，即，否则 +oral adj.口头的，口的 +orange n.柑桔，橙色 +orbit n.轨道 +orchard n.果园 +orchestra n.管弦乐队，交响乐 +order n.命令，订货，次序 +orderly adj.整齐的 n.勤务员 +ordinarily adv.通常 +ordinary adj.普通的，一般的 +ore n.矿石，矿物 +organ n.器官，风琴 +organic adj.器官的，有机的 +organism n.有机体 +organization n.组织，团体 +organizational adj.组织的 +organize v.组织，筹备，编排 +orient n.东方 v.定方针 +oriental adj.,n.东方的(人) +orientation n.定向，倾向性 +origin n.起源，产地 +original adj.原始的 n.原物 +originality n.独创性 +originally adv.原来，当初 +originate v.起源，首创 +ornament n.装饰(品) +ornamental adj.装饰的 +orphan n.孤儿 +oscillation n.摆动，振动 +other adj.其他的，别的 +otherwise adv.另外的 conj.否则 +ought v.应该，大概 +ounce n.盎司 +our pron.我们的 +ourselves pron.我们自己 +out adv.出外，向外，完 +outbreak n.爆发，发作 +outcome n.结果 +outdoor adj.野外的，露天的 +outdoors adv.在外的，在野外的 +outer adj.外部的，外面的 +outermost adj.最外的 +outland n.偏僻地区 +outlandish adj.外国的 +outlaw n.逃犯，歹徒 +outlay n.费用，支出 +outlet n.出口，销路 +outline n.轮廓，略图，大纲 +outlook n.看法，景色，展望 +output n.出产，产量 +outrage n.暴行 +outrageous adj.残暴的 +outright adj.公然地，直率地 +outset n.开头，起初 +outside n.外部 adv.在外面 +outsider n.局外人 +outskirts n.郊区 +outstanding adj.杰出的，未付款的 +outturn n.卸货情况 +outward adj.,adv.向外(的) +oval adj.椭圆(形)的 +oven n.烤炉，锅灶 +over prep.在...上方，越过 +overall adj.总的，全面的 +overcast adj.多云的 +overcharge v.,n.多收(的)钱 +overcoat n.外套，大衣 +overcome v.征服，克服，压倒 +overestimate v.估计过高 +overextend v.使..承担过多的义务 +overflow v.泛滥，溢出，满怀 +overhead adv.,adj.头上(的) +overhear v.偶然听到，偷听 +overjoy n.使大喜 +overlap v.重叠 +overlapping adj.相互重叠的 +overload v.,n.超载 +overlook v.视察，俯瞰，宽容 +overnight adv.,adj.终夜(的) +overpayment n.多付的款项 +overseas adv.,adj.海外(的) +oversight n.监视，疏忽 +overtake v.赶上，压倒 +overthrow v.推翻，颠覆 +overtime n.超时，加班 +overwhelm v.压倒，淹没 +overwhelming adj.压倒的 +owe v.欠，归功于 +owing adj.该付的 +owl n.猫头鹰 +own adj.自己的 v.拥有 +owner n.物主，所有人 +ownership n.所有权，所有制 +ox n.公牛 +oxide n.氧化物 +oxygen n.氧，氧化 +oyster n.牡蛎，蚝 +pace n.步，速度，步调 +pacific n.太平洋 +pack v.包装，挤满 n.背包 +package n.包裹 v.打包 +packaging n.包装 +packet n.一盒，小件包裹 +packing n.装箱，收拾行李 +pad n.垫，便笺本 +page n.(书)页 +pail n.提桶 +pain n.疼痛，悲痛 v.作痛 +painful adj.痛苦的 +paint n.涂料，油漆 v.刷漆 +painter n.画家，油漆匠 +painting n.画，绘画(艺术) +pair n.对，双，夫妇 +palace n.宫殿 +pale adj.苍白的，淡的 +palm n.手掌，掌心，棕榈树 +pamphlet n.小册子 +pan n.平底锅 +panda n.熊猫 +pane n.窗(门)玻璃 +panel n.镶板，仪表盘，小组 +panic n.,v.恐慌，惊慌 +panorama n.全景 +panoramic adj.全景的 +pant n.,v.喘气 +panther n.豹，美洲豹 +pantry n.配膳室，食品室 +pants n.长裤，衬裤 +paper n.纸，报纸，文件 +papercut n.剪纸，刻纸 +papercutting n.剪纸艺术 +papers n.文件，证书 +par n.(跟)原价相等 +parachute n.降落伞 +parade n.,v.游行 +paradise n.天堂，天国 +paragraph n.段落，节 +parallel adj.平行的，类似的 +paralyse v.使麻痹，惊呆 +parameter n.参数，参量 +parasite n.寄生虫，寄生物 +parcel n.包裹，邮包 +pardon n.,v.原谅，赦免 +parent n.父或母亲，母体 +paris n.巴黎 +parish n.教区 +park n.公园 v.停放车辆 +parking n.停放车辆 +parliament n.议会，国会 +parlimental adj.国会的，议会的 +parlor n.客厅 +parrot n.鹦鹉 +part n.部分，零件，角色 +partial adj.局部的，偏颇的 +partially adv.局部地，部分地 +participant n.参加者，参与者 +participate v.参与，分享 +participation n.参加，参与 +particle n.颗粒，微粒，虚词 +particular adj.特殊的 n.项目 +particularly adv.特别地 +partition v.,n.划分，隔开 +partly adv.部分地 +partner n.伙伴，合伙人，搭档 +partnership n.伙伴关系，合伙 +part-time adj.计时(干活)的 +party n.聚会，政党，一方 +pass v.经过，传给 n.关口 +passable adj.过得去的 +passage n.一段，通过，通道 +passenger n.旅客，乘客 +passion n.激情，热衷 +passionate adj.多情的，热烈的 +passive adj.被动的，消极的 +passport n.护照 +past adj.过去的 n.过去 +past-due adj.过期的 +paste n.浆糊，糊状物 +pastime n.消谴，娱乐 +pasture n.牧场 +pat n.,v.轻拍，抚摸 +patch n.补丁，眼罩 +patent n.专利权，专利证 +path n.小径，路线 +pathetic adj.凄婉动人的 +patience n.耐心，忍耐力 +patient adj.耐心的 n.病人 +patriot n.爱国者 +patriotic adj.爱国的 +patriotism n.爱国主义 +patrol v.巡逻 n.巡逻队 +patron n.赞助人，保护人 +patronage n.保护人身分 +pattern n.模式，式样，图案 +pause v.,n.暂停，中止 +pave v.铺路，为..铺平道路 +pavement n.人行道 +paw n.脚瓜 +pawn v.产卵 +pay v.支付 n.工资 +payable adj.支付给...的 +payment n.支付，付款 +pea n.豌豆 +peace n.和平，平静，和约 +peaceful adj.和平的，平静的 +peach n.桃子 +peacock n.孔雀 +peak n.顶点，巅，山峰 +peanut n.花生 +pear n.梨 +pearl n.珍珠 +peasant n.农民 +peasantry n.农民(总称) +pebble n.鹅卵石 +peck v.啄 +peculiar adj.古怪的，独特的 +peculiarity n.特性，怪癖 +pedal n.踏板 v.骑车 +pedestrian n.行人 +pedlar n.小贩 +peel n.果皮 v.削、剥皮 +peep v.偷看，窥视 +peer n.同行 v.盯，凝视 +peg n.桩 v.(汇率)钉住 +pen n.钢笔，栏，圈 +penalty n.刑罚，处罚，罚款 +pencil n.铅笔 +pending adj.未决的，紧迫的 +penetrate v.贯穿，穿透，弥漫 +penetration n.贯穿，洞察力 +penicillin n.青霉素，盘尼西林 +peninsular n.半岛 +penny n.便士 +pension n.养老金，年金 +people n.人们，人民，人员 +pepper n.胡椒 +per prep.每，由，按照 +perceive v.知觉，觉察，领悟 +percent n.每百，百分之 +percentage n.百分率 +perception n.感觉，理解力 +perch v.栖息 +perfect adj.完美的，完备的 +perfection n.完成，完善 +perfectly adv.完全地，完美地 +perform v.执行，表演 +performance n.执行，演出 +performer n.执行者，表演者 +perfume n.香味，香水 +perhaps adv.也许，多半 +peril n.危难，巨大危险 +perimeter n.周长 +period n.时期，句号 +periodic adj.周期的，定时的 +periodical n.期刊 +peripheral adj.边缘的，周边的 +perish v.死亡，枯萎 +permanence n.永久，持久 +permanent n.永久性的，持久的 +permanently adv.永久地 +permission n.允许，许可 +permissive adj.允许的，许可的 +permit v.允许 n.许可证 +perpendicular adj.垂直的 +perpetual adj.永久的，永恒的 +perplex v.迷惑，难住 +persecute v.迫害 +persecution n.迫害 +persevere v.坚持 +perseverance n.坚持 +persist v.坚持，固执，持续 +persistence n.坚持，持续 +person n.人，人称，身体 +personal adj.私人的，个人的 +personality n.人格，个性，人物 +personally adv.亲自，就个人而言 +personnel n.全体人员，人事部门 +perspective n.展望，观点，透视 +persuade v.说服，劝导 +persuasion n.说服，信念 +pertain v.属于 +pertinence n.中肯 +pertinent adj.中肯的，恰当的 +perturb v.扰乱 +perturbed adj.烦燥不安的 +perusal n.细读 +peruse v.仔细阅读，审查 +pessimist n.悲观(主义) +pessimistic adj.悲观的 +pest n.害虫 +pet n.爱畜，宠儿 +petition v.,n.请愿(书) +petrol n.石油，汽油 +petroleum n.石油 +petty adj.细小的，不重要的 +phase n.阶段，时期，侧面 +phenomenon n.现象，非凡的人 +philosopher n.哲学家 +philosophical adj.哲学上的 +philosophy n.哲学，基本原则 +phone n.电话 v.打电话 +phonetics n.语音学 +photo n.照片 +photograph n.照片 v.拍照 +photographer n.摄影师 +photography n.摄影术 +photostatic adj.静电复印的 +phrase n.词组，短语 +physical adj.身体的，物质的 +physically adv.物质上，身体上 +physician n.内科医生 +physicist n.物理学家 +physics n.物理学 +pianist n.钢琴家 +piano n.钢琴 +pick v.拣，采 n.精华，镐 +pickle n.腌渍品，泡菜 +pickpocket n.扒手，小偷 +picnic n.,v.郊游，野餐 +pictorial n.画报 +picture n.图片，画，照片 +picturesque adj.风景如画的 +pie n.馅饼 +piece n.件，片段，张 +pier n.码头，栈桥 +pig n.猪 +pigeon n.鸽子 +pigment n.色料 +pile n.堆 v.堆积 +pilferage v.偷窃 +pilgrim n.香客，朝圣者 +pilgrimage n.朝圣 +pill n.药片，药丸 +pillar n.柱子 +pillow n.枕头 +pilot n.飞行员，领航员 +pin n.别针，发卡 v.别住 +pinch v.捏，掐，挤痛 +pine n.松树 +pineapple n.菠萝 +pink adj.,n.桃色，粉红色 +pint n.品脱(容量单位) +pioneer n.先驱者 v.倡导 +pioneering n.先驱的 +pious adj.虔诚的 +pipe n.管子，烟斗 +pipeline n.管道，管线 +pirate n.海盗 adj.盗版的 +pistol n.手枪 +piston n.活塞 +pit n.坑，洼，煤矿，桃核 +pitch v.搭帐篷，投掷 +pitcher n.水罐 +pity n.怜悯，惋惜，憾事 +place n.地方，位置 v.放置 +plague n.瘟疫 +plain adj.明白的，朴素的 +plan n.计划,平面图 v.打算 +plane n.水平，平面，飞机 +planet n.行星 +plant n.植物，工厂 v.栽培 +plantation n.种植园 +plaster n.灰泥 v.粘贴 +plastic n.塑料 adj.可塑的 +plastics n.塑料(制品) +plate n.盘子，金属牌 +plateau n.高原，高地 +platform n.讲台，站台，政纲 +platinum n.白金 +play v.玩，扮演，演奏 +player n.选手，演奏者 +playground n.运动场，操场 +playmate n.游伴 +playwright n.剧作家 +plea n.请求，恳求，辩解 +plead v.恳求，辩解 +pleasant adj.令人愉快的 +please v.使高兴，喜欢，请 +pleased adj.高兴的，乐意的 +pleasure n.快乐，乐事，乐趣 +pledge n.暂约，抵押 v.保证 +plenary adj.完全的 +plentiful adj.大量的，丰富的 +plenty n.大量，丰富 +plight n.保证，困境 +plot n.阴谋，情节 v.密谋 +plough n.,v.犁 +pluck v.拔，摘 n.勇气 +plug n.塞子，插头 v.堵住 +plumb v.测锤，垂直 +plumber n.管子工 +plume n.羽毛，羽饰 +plump adj.丰满的 +plunder v.,n.掠夺，抢劫 +plunge v.插进，跳入 +plural adj.复数的 +plus prep.加 n.加号，正号 +ply v.出力，努力从事 +p.m. (缩)下午 +pneumatic adj.气体的，空气的 +pneumonia n.风湿病 +pocket n.衣袋 adj.袖珍的 +poem n.诗歌 +poet n.诗人 +poetry n.诗，诗意，诗艺 +point n.尖，点，分 v.指 +pointed adj.尖的 +poison n.毒，毒药 v.放毒 +poisonous adj.有毒的 +poke v.戳，刺 +poker n.扑克 +polar adj.极的 +polarity n.极性，极端 +pole n.柱，杆，极 +police n.警察(局) +policeman n.警察 +policy n.政策，方针，保险单 +polish v.擦亮，磨光，润色 +polite adj.有礼貌的，客气的 +politeness n.礼貌，客气 +political adj.政治的 +politician n.政治家，政客 +politics n.政治学，政治活动 +poll n.选举投票，民意测验 +pollute v.污染，弄脏 +pollution n.污染 +polymer n.聚合物 +pond n.池塘 +ponder v.考虑，沉思 +pony n.小马 +pool n.水塘，游泳池 +poor adj.穷的，差的 +pop v.,n.砰的一声，爆裂 +popcorn n.爆米花 +pope n.教皇 +popular adj.受欢迎的 +popularity n.名望，知名 +popularize v.普及，宣传 +population n.人口 +porcelain n.瓷，瓷器 +porch n.门廊 +pore n.毛孔 +pork n.猪肉 +porridge n.粥，麦片粥 +port n.港口，港 +portable adj.手提的，经便的 +porter n.搬运工 +portion n.一份，部分 +portrait n.肖像，画像，描写 +portray v.描写，给...画像 +portugal n.葡萄牙 +portuguese n.,adj.葡萄牙人(的) +pose v.作姿态，提供考虑 +position n.位置，地位，处境 +positive adj.明确的，肯定的 +positively adv.断言地，绝对地 +possess v.占有，拥有，控制 +possession n.所有，财产 +possessive adj.所有(格)的 +possibility n.可能性 +possible adj.可能的 +possibly adv.可能，或许 +post n.柱，职位 v.邮寄 +postage n.邮资 +postal adj.邮政的 +postcard n.明信片 +posterity n.子孙，后代 +postman n.邮递员 +post-office n.邮局 +postpone v.推迟，延迟 +postponement n.推迟 +postulate v.假定，主张 +pot n.罐，壶，锅 +potato n.马铃薯，土豆 +potent adj.有效的 +potential adj.潜在的 n.潜力 +potentiality n.潜在性 +poultry n.家禽 +pound n.英镑，磅 v.重击 +pour v.注，灌，倒，涌出 +poverty n.贫穷，缺乏 +powder n.粉末 +power n.力，动力，权力 +powerful adj.有力的，强的 +practicable adj.可行的 +practical adj.实用的，可行的 +practically adj.实际地，几乎 +practice n.练习，习惯，实施 +practise v.练习，习惯于做 +prairie n.大草原 +praise v.,n.赞美，称颂 +pray v.祈祷 +prayer v.祷告，祷文 +preach v.说教，鼓吹，布道 +preacher n.鼓吹者，宣教士 +precaution n.预防，防备 +precede v.在前，高于 +precedence n.领先，优先权 +precedent n.先例，惯例 +preceding adj.前面的，上述的 +precious adj.宝贵的，珍爱的 +precise adj.精确的，严格的 +precisely adv.精确地 +precision n.精确，精度 +predecessor n.前任，原有物 +predict v.预言 +prediction n.预言，预报 +predominance n.优越，杰出 +predominant adj.主要的，有势力的 +preface n.序言，开场白 +prefer v.较喜欢，宁愿 +preferable adj.更喜爱的 +preferably adv.更好地 +preference n.偏爱(之物) +preferential adj.优惠的 +prefix n.前缀 +pregnancy n.怀孕 +pregnant adj.怀孕的 +prejudice n.偏见，成见 +preliminary adj.初步的，预备的 +prelude n.序言，前兆，序曲 +premature adj.早熟的 +premier n.首相，总理 +premises n.建筑物 +premium n.津贴 +preoccupy v.使迷住，专心于 +preparation n.准备，预备 +prepare v.准备，配制 +prepared adj.准备好的，预制的 +preposition n.介词 +prescribe v.命令，规定，开处方 +prescribed adj.规定的 +prescription n.药方 +presence n.出席，在场 +present adj.在场的 n.现在 +presentation n.提出，演出 +presently adv.不久，目前 +preservation n.保藏，保存 +preserve v.保护，保藏，保持 +preset v.预先安排 +preside v.主持 +president n.总统，总经理，校长 +presidential adj.总统的 +press v.压，榨，按 n.印刷 +pressing adj.急迫的 +pressure n.压力，繁忙，紧迫 +prestige n.威望，声望 +presumably adv.也许，大概 +presume v.假定，推测 +pretend v.假装，佯称 +pretense n.借口 +pretentious adj.自负的，虚伪的 +pretty adj.精致的，漂亮的 +prevail v.获胜，流行 +prevailing adj.占上风的 +prevalence n.流行 +prevalent adj.流行的，普遍的 +prevent v.防止，阻碍 +prevention n.防止，预防 +previous adj.早先的，先前的 +previously adv.预先，先前 +prey n.猎物，牺牲品 +price n.价格，代价 v.定价 +price-list n.价格表 +pricing n.定价 +prick v.刺穿 n.刺痛 +pride n.骄傲，自豪，自负 +priest n.教士，神父 +primarily adv.首要地，主要地 +primary adj.首要的，初级的 +prime adj.首要的，第一的 +primitive adj.原始的，简朴的 +prince n.王子，诸侯 +princess n.公主，王妃 +principal adj.重要的，主要的 +principally adv.主要地 +principle n.原则，原理，主义 +print v.印刷，出版 n.字体 +printer n.印刷者 +prior adj.较早的，在前的 +priority n.优先，居先 +prism n.棱镜 +prison n.监狱，牢房 +prisoner n.囚犯 +privacy n.私事，隐私 +private adj.私人的，秘密的 +privilege n.特权 v.给特权 +privileged adj.有特权的 +prize n.奖品，奖赏 +probability n.可能性，概率 +probable adj.很可能的 +probably adv.或许，大概 +probe v.细察，查究 +problem n.课题，难题，问题 +problematic adj.有问题的 +procedure n.手续，程序 +proceed v.前进，继续向前 +proceeding n.进行，诉讼 +proceeds n.收益 +process n.程序，过程 v.处理 +processing n.,adj.加工(的) +procession n.行列，仪仗 +proclaim v.宣布，公布 +procure v.采购 +procurement n.采购 +produce v.生产，制造，创作 +producer n.生产者 +product n.产品，作品 +production n.生产，制造 +productive adj.能生产的，多产的 +productivity n.生产力，生产率 +profess v.表白 +profession n.职业，专业，表白 +professional adj.职业的n.专业人员 +professor n.教授 +proficiency n.熟练，精通 +proficient adj.熟练的，精通的 +profile n.侧面，轮廓 +profit n.利润 v.获益 +profitable adj.有利可图的 +proforma adj.形式的 +profound adj.深奥的，深深的 +program n.节目，规划，项目 +programer n.项目，程序制定者 +programing n.程序编排 +progress n.,v.进步，进展 +progressive adj.前进的，进步的 +prohibit v.禁止，阻止 +prohibition n.禁止，禁令 +prohibitive adj.禁止的 +project n.计划 v.设计，射出 +projection n.射出，投射 +projector n.电影放映机 +proletarian adj.,n.无产阶级 +prolong v.延长 +prominence n.显著，突出 +prominent adj.著名的，显著的 +promise v.允诺，预示 n.诺言 +promising adj.有希望的 +promissory adj.约定的 +promote v.提升，促进，宣传 +promotion n.晋级，提高，促销 +prompt adj.及时的，迅速的 +promptly adv.及时地，敏捷地 +prone adj.俯伏的 +pronoun n.代词 +pronounce v.发音，宣布 +pronunciation n.发音 +proof n.证明，证据，实验 +propaganda n.宣传 +propagate v.繁殖，传播，宣传 +propagation n.繁殖，传播 +propel v.推进，推动 +propellent adj.推进的 +propeller n.推进器，螺旋桨 +proper adj.合适的，本来的 +properly adv.合适地 +property n.财产，地产，特性 +prophesy n.预言 +prophet n.预言家 +proportion n.比例，部分 +proportional adj.成比例的 +proposal n.建议，计划 +propose v.建议，打算，求婚 +proposition n.建议，提议 +proprietor n.所有者，业主 +proprietorship n.业主资格 +prose n.散文 +prosecute v.迫害 +prosecution n.迫害 +prosecutor n.检查官 +prospect n.前景 v.勘探 +prosperity n.繁荣，兴旺 +prosperous adj.繁荣的，兴旺的 +protect v.保护，警戒 +protection n.保护，警戒 +protectionism n.贸易保护主义 +protective adj.保护的 +protein n.蛋白质 +protest v.,n.抗议，反对 +protestant n.清教徒，新教徒 +protocol n.协议，议定书 +prototype n.原型 +protracted adj.延长了的 +proud adj.骄傲的，得意的 +prove v.证明，表明是 +proverb n.谚语，格言 +provide v.供给，提供，准备 +provided conj.只要 +province n.省份，领域 +provincial adj.省级的，省的 +provision n.准备，条款，辎重 +provisional adj.临时的 +provocation n.刺激，煸动 +provoke v.激怒，引起 +proximo adj.下月的 +prudence n.谨慎 +prudent adj.谨慎的 +psychological adj.心理(上)的 +psychologist n.心理学家 +psychology n.心理学，心理状态 +public adj.公众的，公共的 +publication n.出版物，发表 +publicity n.公开 +publicly adv.公开地 +publish v.出版，发表，公布 +publisher n.出版商 +pudding n.布丁 +puff n.一阵 v.喘气 +pull v.拖，拔， 扯 n.牵引 +pulley n.滑轮 +pulse n.脉搏 v.跳动 +pump n.泵 v.抽水，打气 +pumpkin n.南瓜 +punch n.,v.用拳击，冲孔 +punctual adj.准时的，守时的 +punctuality n.准时 +punctuation n.准时 +punish v.处罚，惩罚 +punishment n.处罚，刑罚 +pupil n.小学生，瞳孔 +puppet n.木偶，傀儡 +puppy n.小狗 +purchase v.,n.购买 +purchaser n.买主 +pure adj.纯洁的，纯净的 +purely adv.全然，纯然 +purify v.净化 +purity n.纯粹，纯净 +purple n.紫色 adj.紫色的 +purpose n.目的，用途，意图 +purse n.钱包 +pursuance n.追求，实行 +pursuant n.追逐者 +pursue v.追逐，从事，追求 +pursuit n.追逐，追求，职业 +push v.推，推动 n.推力 +put v.放置，估价，表达 +puzzle v.使困惑 n.难题,谜语 +pyjamas n.睡衣 +pyramid n.金字塔 +qualification n.资格，条件 +qualified adj.有资格的 +qualify v.使合格，使胜任 +qualitative adj.质量的，定性的 +quality n.特性，属性，质量 +quantitative adj.数量的，定量的 +quantity n.量，大量 +quarrel v.,n.争吵 +quart n.夸脱(容量单位) +quarter n.四分之一，一刻钟 +quarterly adj.季度的 n.季刊 +quartz n.石英 +quay n.码头 +queen n.王后，女王 +queer adj.奇妙的，古怪的 +quench v.抑制，熄灭，淬火 +query v.,n.询问 +quest n.寻找，搜索 +question n.问题，疑问 v.询问 +questionnaire n.调查表 +queue n.辫子，队 v.排队 +quick adj.快的，灵敏的 +quicken v.加快，加速，刺激 +quickly adv.快，迅速地 +quiet adj.安静的，轻声的 +quietly adv.安静地，静静地 +quietness n.平静，安定，安静 +quilt n.被子 +quit v.停止，放弃，退出 +quite adv.完全，十分，相当 +quiver v.颤抖 +quiz n.测验，问答比赛 +quota n.定额，配额 +quotation n.引语，语录，报价单 +quote v.引用，引证，报价 +rabbit n.兔子 +race n.种族，竞赛 v.赛跑 +racial adj.种族的，人种的 +rack n.搁班，行李架 +racket n.喧闹，球拍 +radar n.雷达 +radial adj.放射的，辐射的 +radiant adj.发光的 +radiate v.辐射，放射，发光 +radiation n.辐射，发射 +radical adj.基本的，激进的 +radio n.无线电，收音机 +radioactive adj.放射性的 +radioactivity n.放射性 +radish n.萝卜 +radium n.镭 +radius n.半径，活动范围 +rag n.抹布，破衣服 +rage n.盛怒，流行 v.大怒 +raid v.袭击，搜查 +rail n.栏杆，钢轨 +railroad n.铁路 +railway n.铁路，铁路公司 +rain n.雨 v.下雨 +rainbow n.虹 +raincoat n.雨衣 +rainfall n.下雨，降雨量 +rainy adj.有雨的 +raise v.举起，提高，唤起 +rake n.,v.耙 +rally n.,v.集会 +ramble n.漫步 +ranch n.牧场 +random adj.胡乱的，随便的 +range n.射程，范围，一系列 +rank n.军衔，等级 v.排列 +rapid adj.快的，急速的 +rapidly adv.迅速地，急速地 +rapture n.狂喜 +rare adj.稀有的，罕见的 +rarely adv.难得，少有 +rascal n.无赖，恶棍 +rash adj.轻率的，鲁莽的 +rat n.老鼠，耗子 +rate n.比率，速度，费率 +rather adv.相当，颇，宁愿 +ratification n.批准，认可 +ratify v.批准，认可，追认 +ratio n.比，比率 +ration n.理性 +rational adj.合理的，有理性的 +rattle v.,n.嘎吱响 +ravage n.破坏，暴力 +raw adj.生的，未加工的 +ray n.光线，射线，辐射 +razor n.剃须刀 +re prep.关于 +reach v.到达，伸手，够到 +react v.反应，起反应，反抗 +reaction n.反应，反动 +reactionary adj.反动的 +reactor n.反应堆 +read v.读，阅读，朗诵 +reader n.读者，读本 +readily adv.容易地，乐意地 +reading n.读书，读数，读本 +ready adj.准备好的，乐意的 +real adj.真的，纯粹的 +realism n.现实主义，写实主义 +realist n.adj.现实主义者(的) +realistic adj.现实的，实在的 +reality n.现实，真实性 +realization n.实现 +realize v.认识到，实现，执行 +really adv.真正地，果然 +realm n.王国，领域 +reap v.收割，收获 +rear n.后部 adj.后面的 +reason n.原因，理由 v.推论 +reasonable adj.有理的，讲理的 +reasonably adv.合理地，适当地 +reassure v.使...放心 +rebate n.回扣，折扣 +rebel v.起义，反叛 +rebellion n.叛乱，起义 +rebuke v.斥责 +recall v.想到，召回，取消 +recede v.归还，撤回 +receipt n.收到，收据 +receive v.收到，接待， 接见 +receiver n.受领人，听筒 +recent adj.近来的，新近的 +recently adv.近来，最近 +reception n.招待会，欢迎会 +receptionist n.接待员 +recession n.衰退 +recipe n.菜谱，配方 +recipient n.接受者 +reciprocal adj.相互的，互易的 +recitation n.朗诵 +recite v.背诵，朗诵，讲述 +reckless adj.鲁莽的 +reckon v.数，计算，认为 +reclaim v.收回，开垦 +recognition n.认出，承认 +recognize v.认出，识别，承认 +recollect v.回忆，追想 +recollection n.回忆 +recommend v.推荐，介绍，劝告 +recommendation n.推荐(书) +recompense v.,n.回报，赔偿 +reconcile v.使和好，调停 +reconnaissance n.探索，勘查 +record v.记录，录音 n.记录 +recorder n.记录员，录音机 +recourse n.求助 +recover v.寻回，恢复，复原 +recovery n.寻回，恢复 +recreation n.消遣，文娱活动 +recruit v.招募，征兵 +recruitment n.招募 +rectangle n.长方形，矩形 +rectification n.纠正 +rectify v.纠正，订正 +recur v.再发生，复发 +recurrence n.再发生 +red adj.红的 n.红色 +redeem v.买回，赎回 +redound v.增加，促进 +reduce v.减少，贬为 +reduction n.减少，缩减 +reed n.芦苇，芦笛 +reef n.礁石 +reel n.卷，线轴 v.卷绕 +reexport v.再出口 +refer v.查阅，提及 +referee n.裁判员 +reference n.参考(书)，推荐书 +referent n.被谈到的事 +refine v.精炼，精制 +refined adj.精炼的，精的 +refinement n.精炼 +refinery n.精炼厂 +reflect v.反射，反映，反省 +reflection n.反射，映象，反思 +reform v.,n.改革，改造 +refrain v.抑制 +refresh v.使清醒，使振作 +refreshment n.茶点，饮料 +refrigerator n.冰箱 +refuge n.藏身处，避难所 +refugee n.难民 +refund v.再投资,归还 n.退款 +refusal n.拒绝，谢绝 +refuse v.拒绝 n.渣，废物 +refute v.驳斥，反驳 +regard v.认为，尊重，关于 +regarding prep.关于 +regardless adj.,adv.不顾的(地) +regime n.政体，制度 +regiment n.团，大量 +region n.地区，地域，地带 +regional adj.地区的，区域的 +regionalization n.区域化 +regionalize v.使区域化 +register v.登记，注册，挂号 +registered adj.登记的，注册的 +registration n.登记 +regret v.懊悔 n.遗憾 +regretful adj.遗憾的 +regretfully adv.遗憾地 +regrettable adj.可遗憾的 +regular adj.正常的，有规律的 +regularity n.整齐，规律 +regularly adv.整齐地，有规律地 +regulate v.管理，调整 +regulation n.管理，规则，法令 +rehearsal n.排练，彩排 +rehearse v.排练 +reign n.统治 v.统治，盛行 +reimburse v.偿还 +reimbursement n.偿还，还款 +rein n.缰绳 v.驾驭，约束 +reinforce v.增援，加强 +reinforcement n.加强，援兵 +reiterate v.重申 +reject v.拒绝 +rejection n.拒绝 +rejoice v.欢欣，使喜悦 +relate v.叙述，关联，涉及 +related adj.与...有关的 +relation n.关系，得害关系 +relationship n.关系，联系 +relative n.亲戚 adj.有关系的 +relatively adv.比较地，相对地 +relativity n.相关性，相对论 +relax v.松弛，舒张，休息 +relaxation n.放松，松弛 +relay v.转播，中继 +release v.释放，透露，发行 +relevant adj.相关的 +reliability n.可靠性 +reliable adj.可靠的，可依赖的 +reliance n.依靠，信赖 +relief n.解除，减轻，安慰 +relieve v.解除，减轻，换班 +religion n.宗教(信仰) +religious adj.宗教的，信教的 +relinquish v.放弃 +relish n.味道，风味 +reluctance n.不愿，勉强 +reluctant adj.不愿的，勉强的 +rely v.依靠，依赖 +remain n.依旧的，剩余，逗留 +remainder n.剩余部分 +remains n.剩余，遗迹，遗体 +remark v.说起，留意，评论 +remarkable adj.显著的，异常的 +remedy n.药品，治疗(方法) +remember v.记得，想起，记住 +remembrance n.记得，记忆 +remind v.提醒，使想起 +reminiscence n.回想，回忆，怀念 +reminiscent adj.使想起...的 +remit v.汇款，汇出 +remittance n.汇款 +remnant n.残余，残迹 +remote adj.遥远的，疏远的 +remoteness n.遥远，疏远 +removal n.移开，除去，移居 +remove v.移开，除去，罢免 +remuneration n.列举 +renaissance n.(文艺)复兴 +render v.使得，给予，翻译 +renew v.更新，续期 +renewable adj.可续期的 +renewal n.更新，续订 +rent n.租金 v.租 +rental adj.租借的，租金的 +repair v.修理，纠正 +repairmen n.修理，修补，纠正 +repay v.偿付，报答 +repeal v.,n.撤消，废除 +repeat v.重复，背诵 +repeatedly adj.重复地，一再地 +repel v.驱逐，推开 +repent v.后悔，悔悟 +repetition n.重复，反复，复制 +repetitive adj.重复的，反复的 +replace v.归还原处，代替 +replacement n.归回，代替(物) +replenish v.补充 +replenishment n.补充(货物) +reply v.,n.回答，答复 +report v.报告，报导，报道 +reportage n.报告文学 +reporter n.报告人，记者 +represent v.表示，表现，代表 +representation n.表示，代表 +representative adj.代表 +reproach v.,n.责备，指责 +reproduce v.复制，再造，繁殖 +reproduction n.复制(器) +reptile n.爬行动物 +republic n.共和国 +republican n.,adj.共和(派)的 +repudiate n.拒绝接收，拒付 +reputable adj.声誉好的 +reputation n.名声，声誉 +repute n.声誉 v.看作，评价 +request n.请求 +require v.需要，请求 +requirement n.要求，需要 +requisite adj.必要的，需要的 +rescind adj.退还，取消 +rescue v.,n.救援，救出 +research v.,n.调查，研究 +researcher n.调查者，研究人员 +resemblance n.相仿，类似 +resemble v.象，类似 +resent v.不满于，愤恨 +resentful adj.不满的，怨恨的 +resentment n.不满，愤恨 +reservation n.贮存物，预定 +reserve v.贮备，保存，预定 +reservoir n.水库 +reside v.居住，存在 +residence n.住宅，住处 +resident n.居民 +residual adj.剩余的 +resign v.辞职 +resignation n.辞职 +resist v.抵抗，忍住 +resistance n.抵抗，阻力，反感 +resistant n.抵抗的，反对的 +resolute adj.坚决的，果断的 +resolution n.决议，决定，决心 +resolutely adj.坚决地，果断地 +resolve v.决定，解决，分解 +resort v.诉诸，求助 n.胜地 +resource n.资源，机智，策略 +respect v.尊重，重视，尊敬 +respectable adj.可敬的 +respectful adj.恭敬的，尊重的 +respectfully adv.恭敬地 +respective adj.各自的，各个的 +respectively adv.各自，分别地 +respond v.答复，反应，响应 +response v.答复，反应，响应 +responsibility n.责任，职责 +responsible adj.负责的，尽责的 +rest v.休息 n.休息，休止 +restaurant n.饭馆，餐厅 +restless adj.没休息的，不安的 +restock v.重新进货 +restore v.恢复，复原，归还 +restrain v.抑制，制止 +restraint n.抑制，自制 +restrict v.限制，约束 +restriction n.限制，约束 +restrictive n.限制的 +result n.结果，效果，后果 +resultant adj.结果的，合成的 +resume v.继续，再度 +resume n.个人简历，摘要 +retail v.,n.零售 +retailer n.零售商 +retain v.保留，记忆，雇 +retell v.复述 +retire v.退休，退隐，就寝 +retirement n.退休，隐居 +retort v.反驳，回嘴 +retreat v.,n.退却，撤退 +retroactive adj.可追溯的 +return v.回归，归还 n.归来 +reveal v.揭露，透露，显示 +revenge n.,v.报仇，报复 +revenue n.岁入，收入 +reverence n.尊敬，崇敬 +reverse adj.颠倒的，相反的 +revert v.回复到，重议 +review v.,n.检查，复习 +revise v.修改，校订，复习 +revision n.修改，修订 +revival n.复苏，再生 +revive v.苏醒，复苏 +revoke v.废除，取消，撤回 +revolt n.,v.起义，反抗 +revolution n.革命，变革 +revolutionary adj.革命的 +revolve v.旋转，绕行 +reward n.报酬，酬金，报答 +rewarding adj.有收获的 +rheumatism n.风湿病 +rhyme n.韵，脚韵 +rhythm n.韵律，节奏 +rib n.肋，肋骨 +ribbon n.带子，缎带 +rice n.稻子，大米，米饭 +rich adj.富的，富饶的 +richness n.富饶，富有 +rid v.使摆脱，使除去 +riddle n.谜语，谜 +ride v.乘坐，骑 n.乘车 +ridge n.山脉，岭，屋脊 +ridicule n.,v.嘲笑，挖苦 +rediculous adj.可笑的，荒谬的 +rifle n.步枪，来福枪 +right adj.正确的，右的 +righteous adj.正直的，公正的 +rigid adj.僵硬的，严厉的 +rigidity adj.僵硬，严厉，死板 +rigor n.严格，严肃 +rigorous adj.严厉的，酷热的 +rim n.边缘，眼镜架 +ring v.鸣，打铃，打电话 +rinse v.漂洗，润丝 +riot n.,v.骚乱，闹事 +riotous adj.骚乱的，喧扰的 +rip v.撕破，扯碎 +ripe adj.熟的，成熟的 +ripen v.成熟，变热 +ripple n.波纹，涟漪 +rise v.起立，晋级，增长 +risk n.,v.冒险，风险 +risky adj.有风险的，冒险的 +rival n.对手 adj.竞争的 +rivalry n.竞争，对抗 +river n.河，江 +road n.道路，路 +roam v.漫步，漫游 +roar v.,n.吼，怒号，轰鸣 +roast v.烤，炙 adj.烘烤的 +rob v.抢劫，偷 +robber n.强盗 +robbery n.抢劫(案) +robe n.长袍 +robot n.机器人 +robust adj.强壮的，粗壮的 +rock n.岩石 v.摇摆，摇晃 +rock-bottom n.adj.(价格)最低(的) +rocket n.火箭 +rod n.小棒，竿 +role n.角色，作用 +roll v.滚，卷，转动，压平 +roller n.滚筒，压路机 +roman adj.古罗马的n.罗马人 +romance n.浪漫文学，浪漫故事 +romantic adj.浪漫的，好幻想的 +romanticism n.浪漫主义 +rome n.罗马 +roof n.屋顶 +room n.房间，室，空间 +rooster n.公鸡 +root n.根，根源 +rope n.绳，索 +rose n.玫瑰，蔷薇 +rosy adj.玫瑰红的，幻想的 +rot v.腐烂，枯朽 +rotary adj.旋转的 +rotate v.旋转，循环，转流 +rotation n.旋转，更替 +rotten adj.腐烂的，发臭的 +rough adj.粗糙的，粗野的 +roughly adv.大约地，粗略地 +round adj.圆形的adv.在周围 +roundabout adj.迂回的，转弯抹角 +rouse v.唤醒，惊起 +route n.路线，航线 +routine n.日常事务 +row v.划船 n.排，列 +royal adj.王室的，皇家的 +royalty n.皇家，皇族 +rub v.擦，摩擦，涂抹 +rubber n.橡胶，橡皮 +rubbish n.垃圾，废物，废话 +rude adj.粗鲁的，下流的 +rug n.小块地毯 +ruin n.废墟 v.毁坏，破坏 +ruinous adj.毁灭性的 +rule n.法规，常规，统治 +ruler n.统治者，直尺 +ruling adj.统治的 +rumor n.,v.传闻，谣言 +run v.跑，竞选，行驶 +runner n.奔跑者，赛跑运动员 +running adj.连续的 n.经营 +rural adj.农村的 +rush v.,n.冲，冲进 +russia n.俄罗斯，俄语 +russian n.,adj.俄国(人)的 +rust n.锈 v.生锈，衰退 +rusty adj.生锈的 +ruthless adj.无情的，冷酷的 +sack n.麻袋 v.解雇 +sacred adj.神圣的 +sacrifice n.,v.牺牲(品) +sad adj.悲哀的，可悲的 +saddle n.马鞍 +sadly adv.悲哀地，可惜 +sadness n.悲哀 +safe adj.安全的，无风险的 +safely adv.安全地，平安地 +safety n.安全 adj.保险的 +sag v.下跌 +said adj.上述的，该 +sail n.帆 v.行驶，开航 +sailing adj.启航的 n.航行 +sailor n.水手，海员 +saint n.圣人，圣徒 +sake n.缘故，利益 +salad n.色拉，拌凉菜 +salability n.适销性 +salable adj.有销路的，适销的 +salary n.工资，薪水 +sale n.出售，贱卖 +sales n.销售 adj.出售的 +salesman n.售货员，推销员 +salmon n.鲑，大马哈鱼 +salt n.盐 +salty adj.咸的 +salute v.行礼，致敬 +salution n.致敬 +same adj.同样的 +sample n.样品 v.抽样 +sampling n.抽样 +sand n.沙子 +sandwich n.三明治 v.夹入 +sandy adj.沙的，沙色的 +sanitary n.疗养院 +santa Claus n.圣诞老人 +sarcasm n.讽刺，挖苦 +sarcastic adj.讽刺的 +sardine n.沙丁鱼 +satellite n.卫星 +satire n.讽刺作品 +satisfaction n.满足，满意 +satisfactorily adv.圆满地 +satisfactory adj.令人满意的 +satisfy v.满足，使满意，偿还 +saturation n.浸透，饱和 +saturday n.星期六 +saturn n.土星 +sauce n.调味汁，酱油 +saucer n.茶碟 +sausage n.香肠，腊肠 +savage adj.野蛮的，残暴的 +save v.救，拯救，储蓄 +savings n.存款，储蓄额 +saw v.,n.锯 +say v.说 n.发言(权) +scale n.刻度，等级，秤 +scaly adj.鱼鳞状的 +scan v.浏览，细察，扫描 +scandal n.丑闻 +scar n.疤，疤痕 +scarce adj.缺乏的，罕见的 +scarcely adv.几乎没有，将近 +scarcity n.缺乏，不足 +scare v.惊吓 n.惊恐 +scarf n.围巾，头巾 +scarlet adj.n.猩红的，鲜红的 +scatter v.散布，撒播 +scene n.现场，情景，一场戏 +scenery n.风景，布景 +scenic adj.风景如画的 +scent n.气味，香味 +schedule n.时间表 v.排定 +scheme n.计划，方案，图谋 +scholar n.学者 +scholarship n.奖学金，学问 +school n.学校，上学，学系 +schooling n.学校教育 +science n.科学，学科 +scientific adj.科学的 +scientist n.科学家 +scissors n.剪刀 +scoff v.嘲笑，嘲弄 +scold v.,n.训斥，责骂 +scope n.范围 +scorch v.烧焦 +scorching adj.灼热的 +score n.得分，成绩，二十 +scorn n.,v.蔑视，不屑 +scornful adj.蔑视的，轻视的 +scotch n.苏格兰 +scotsman n.苏格兰人 +scottish adj.苏格兰的 +scotland n.苏格兰 +scout n.侦察员，童子军 +scramble v.爬，攀，争夺 +scrap n.碎片，废品，屑 +scrape v.擦，刮，凑集 +scratch v.抓破，挠 n.抓痕 +scream v.,n.尖叫声 +screech v.,n.尖叫(声) +screen n.屏，帘 v.甄别 +screw v.拧 n.螺钉 +screwdriver n.螺丝刀，改锥 +script n.临时单据 +scrub v.擦洗，刷 +scrutiny n.细看，复查 +sculptor n.雕塑家 +sculpture n.雕塑，雕刻 +sea n.海，海洋 +seal v.封 n.图章，封条 +seam n.接缝 +seaman n.海员，水手 +seaport n.海港，港口 +search v.,n.搜查，寻找 +seashore n.海滨 +seaside n.海边 +season n.季节 v.调味 +seasonal adj.季节性的 +seat n.座位，席位 v.就座 +second num.第二 n.第二，秒 +secondary adj.第二的，次要的 +secondhand adj.二手的，间接的 +secondly adv.第二，其次 +secrecy n.秘密(状态) +secret adj.秘密的 n.秘密 +secretariat n.秘书处 +secretary n.秘书，部长，书记 +section n.部分，区域 +sector n.部分，部门 +secure adj.安全的，可靠的 +security n.安全，有价证券 +see v.看见，明白，查看 +seed n.种子 v.播种 +seek v.寻觅，企图获得 +seem v.好象，似乎 +seemingly adv.表面上 +segment n.部分，节，片 +seize v.抓住，夺取，占领 +seizure n.强占，没收 +seldom adv.难得，不常 +select v.挑选 adj.精选的 +selection n.选择，选集 +self n.自己，自身，品质 +selfish adj.自私的，利己的 +sell v.卖，出售 +seller n.卖方 +seminar n.研讨会，学术讲座 +semiconductor n.半导体 +senate n.参议院 +senator n.参议员 +send v.派遣，送，寄出，请 +sender n.寄信人 +senior adj.年长的，老资格的 +sensation n.感觉，感动 +sensational adj.轰动的 +sense n.感官，感觉，见识 +senseless adj.无意义的 +sensible adj.明智的，感知的 +sensitive adj.敏感的 +sensitivity n.灵敏度 +sentence n.句子 v.判决 +sentiment n.感情，情绪 +sentimental adj.多愁善感的 +separate v.分离，分隔，分手 +separately adv.分别地 +separation n.分离，分开 +september n.九月 +sequence n.一连串，顺序 +serene adj.清澈的，晴朗的 +serenity n.晴朗 +series n.系列，从书 +serious adj.慎重的，严重的 +seriously adv.严肃地，严重地 +sermon n.布道，说教 +serpent n.大蛇 +servant n.仆人 +serve v.服务，任职，服役 +service n.服务，公共设施 +serviceable adj.有用的，耐用的 +session n.会议，会期，市，盘 +set v.放，指定 n.全套 +setting n.安置，背景，环境 +settle v.解决，安置，支付 +settlement n.解决，结算 +seven num.七 +seventeen num.十七 +seventh num.第七，七分之一 +seventy num.七十 +several adj.几个 +severe adj.严厉的，苛刻的 +severely adv.严厉地，苛刻地 +sew v.缝纫 +sewing-machine n.缝纫机 +sex n.性，性别 +sexual adj.性的，性感的 +sexuality n.性欲 +shabby adj.褴褛的，不体面的 +shade n.阴影，遮光物，浓淡 +shadow n.影子，阴影 +shadowy adj.有阴影的，模糊的 +shady adj.遮阴的，背阴的 +shaft n.柄，竖井 +shake v.摇动，发抖，握手 +shall v.将 +shallow adj.浅的，浅薄的 +sham n.赝品 v.假冒 +shame n.羞耻，耻辱 +shameful adj.可耻的，丢脸的 +shampoo n.洗发香波 +shape n.形状，轮廓 v.形成 +shapeless adj.不定形的 +share n.份，股份 v.分配 +shark n.鲨鱼 +sharp adj.锐利的，明显的 +sharpen v.削尖，磨快 +sharpener n.铅笔刀，磨石 +sharply adv.尖锐地，敏锐地 +shatter v.粉碎，毁坏 +shave v.剃，修脸 +she pron.她 +shear v.剪毛，切割 +shed v.流下 n.棚子 +sheep n.绵羊 +sheepish adj.胆怯的 +sheer adj.全然的，极薄的 +sheet n.被单，张，大片 +shelf n.架子，搁板 +shell n.壳，英，炮弹，外壳 +shelter n.躲避处，庇护 +shepherd n.牧羊人 +sheriff n.郡长，警官 +shield n.盾牌 v.防护 +shift v.转变 n.转移，轮班 +shilling n.先令 +shine v.发光，照射，照耀 +shiny adj.耀眼的 +ship n.船，舰 v.船运 +shipbuilding n.造船业 +shipmail n.随船带交 +shipment n.船运，一船货 +shipowner n.船主 +shipping n.船运，装运 +shipwreck n.(船只)失事 +shipyard n.船坞 +shirt n.衬衣 +shiver v.发抖 +shock n.震惊，电击 v.震动 +shoe n.鞋 +shoemaker n.鞋匠 +shoot v.射击，发芽 n.嫩芽 +shop n.商店，车间 +shopkeeper n.店主 +shopping n.购物 +shore n.岸，滨 +short adj.短的，矮的 +shortage n.缺少，不足 +shortcoming n.短处，缺点 +shortcut n.捷径 +shorten v.缩短 +shorthand n.速记 +shortly adv.立刻，不久 +shorts n.短裤 +short-weight n.短装，短重 +shot n.射击，弹丸 +should v.应该，会 +shoulder n.肩膀 +shout v.,n.叫喊 +shove v.推，推开 +shovel n.铲子 +show v.显示，表明 n.演出 +shower n.阵雨，淋浴 +showroom n.展室，陈列室 +shrewd adj.机敏的，精明的 +shriek v.,n.尖叫(声) +shrill v.刺耳的 v.尖叫 +shrine n.神龛 +shrimp n.虾 +shrink v.收缩，畏缩 +shroud n.遮蔽物 +shrub n.灌木 +shrug v.,n.耸肩 +shuffle v.拖脚走 +shun v.躲避，躲开 +shut v.关闭，合拢 +shutter n.百叶窗，快门 +shuttle n.梭 v.穿梭 +shy adj.害羞的，腼腆的 +sick adj.有病的，厌恶的 +sickness n.病 +sickle n.镰刀 +side n.边，面，侧面，一方 +sidewalk n.人行道 +sideways adv.侧面地 +siege v.包围，围攻 +sieve n.筛子 +sift v.筛，细查 +sigh v.,n.叹息，叹气 +sight n.视力，情景 +sightseeing n.观光，游览 +sign n.告示，迹象，符号 +signal n.信号 v.做手势 +signature n.签字 +significance n.重要性，意义 +significant adj.重要的，有意义的 +signify v.表示，意味 +signpost n.路标，广告柱 +silence n.寂静，沉默 +silent adj.寂静的，沉默的 +silicon n.硅 +silk n.丝，绸 adj.丝的 +silky adj.丝绸般的 +silly adj.糊涂的，愚蠢的 +silver n.银，银餐具 +similar adj.类似的，相象的 +similarity n.类似，相似 +simple adj.简单的，朴素的 +simplicity n.简单，简朴，单纯 +simplify v.简单化 +simply adv.简单地，仅 +simulate v.假装，佯伪 +simultaneous adj.同时(发生)的 +simultaneously adv.同时地 +sin n.罪，罪恶 +since prep.自从 conj.既然 +sincere adj.真诚的，诚挚的 +sincerely adv.真诚地 +sincerity n.真诚，诚挚 +sinful adj.有罪的，罪恶的 +sing v.唱 +singer n.歌手 +single adj.单个的，单身的 +singular adj.非凡的，单数的 +sink v.沉，下落 n.水槽 +sir n.先生 +siren n.汽笛，报警器 +sister n.姊，妹 +sit v.坐，栖息 +site n.场所，场地 +sitting-room n.起居室 +situate v.位于，坐落在 +situation n.形势，局面 +six num.六 +sixteen num.十六 +sixth num.第六，六分之一 +sixty num.六十 +sizable adj.相当大的 +size n.大小，规模，尺寸 +skate n.冰鞋 v.滑冰 +skating n.滑冰，溜冰 +skeleton n.骨架 +sketch n.素描，速写，草图 +ski n.雪撬 v.滑雪 +skiing n.滑雪 +skill n.技能，技艺 +skillful adj.熟练的 +skim v.撇去，掠过，略谈 +skin n.皮，皮肤 v.剥皮 +skip v.跳过，遗漏 +skirmish n.小冲突 +skirt n.裙子 +skull n.颅骨 +sky n.天，天空 +skyrocket v.猛涨 +skyscraper n.摩天大楼 +slack adj.松驰的，不景气的 +slam v.砰地关上 +slander n.,v.诽谤，污蔑 +slang n.俚语 +slap v.掌击，掴 +slaughter v.,n.屠宰，屠杀 +slave n.奴隶 v.做苦工 +slavery n.奴隶制，奴役 +slay v.屠杀 +sleep v.,n.睡眠 +sleepy adj.欲睡的 +sleet n.雨加雪 +sleeve n.袖子 +slender adj.细长的，苗条的 +slice n.薄片 v.切成薄片 +slide v.滑，溜 +slight adj.轻微的，纤瘦的 +slightly adv.轻微地，稍稍 +slim adj.苗条的 +slip v.滑，滑行，溜走 +slipper n.便鞋，拖鞋 +slippery adj.滑的 +slit v.割裂 n.狭口，裂缝 +slogan n.标语，口号 +slope v.倾斜 n.坡，坡度 +slow adj.慢的，迟钝的 +slowdown n.放慢，迟缓 +slowly adj.慢慢地 +slum n.贫民窟 +slumber n.睡眠，微睡 +slump n.暴跌，不景气 +sly adj.狡猾的 +smack n.滋味 v.劈啪地响 +small adj.小的，不重要的 +smart adj.聪明的，漂亮的 +smash v.打破，粉碎，猛撞 +smell v.嗅,发出气味 n.气味 +smile v.,n.微笑 +smog n.烟雾 +smoke v.冒烟，抽烟 n.烟 +smoker n.抽烟者 +smoking n.抽烟 +smooth adj.平稳的，光滑的 +smoothly adv.顺利地，安稳地 +smuggle v.走私，夹带 +smuggler n.走私者 +smuggling n.走私 +snack n.快餐，小吃 +snail n.蜗牛 +snake n.蛇 +snap v.,n.折断(声) +snatch v.,n.抢夺，攫取 +sneak v.偷偷地逃走、做 +sneakers n.旅游鞋 +sneer v.,n.嘲笑，讥笑 +sneeze v.打喷嚏 +sniff v.嗅，闻 +snob n.势利小人 +snobbery n.势利 +snobbish adj.势利的 +snore v.打鼾 +snow n.雪 v.下雪 +snowman n.雪人 +snowstorm n.暴风雪 +snowy adj.有雪的，下雪的 +so adv.这样，也一样 +soak v.浸，吸水，湿透 +soap n.肥皂 +soar v.急速上升，暴涨 +sob v.,n.呜咽，啜泣 +sober adj.清醒的，冷静的 +so-called adj.所谓的 +soccer n.足球 +sociable adj.善交际的，社交的 +social adj.社会的，社会性的 +socialism n.社会主义 +socialist n.adj.社会主义者、的 +society n.社会，协会，社交界 +sociologist n.社会学家 +sociology n.社会学 +sock n.短袜 +soda n.苏打，碱，苏打水 +sodium n.钠 +sofa n.沙发，软椅 +soft adj.柔软的，温和的 +soften v.使柔软，变软 +softly adv.柔软地，温和地 +softness n.柔软，温和 +software n.软件 +soil n.土壤，国土，污秽 +solar adj.太阳的 +soldier n.士兵，兵 +sole adj.唯一的，单独的 +solely adv.唯一地，只 +solemn adj.正式的，严肃的 +solicitor n.律师 +solid adj.固体的，牢固的 +solidarity n.团结 +solitary adj.独自的，孤独的 +solitude n.寂寞，独居 +solo n.独唱，独奏 +solution n.解决，溶液 +solve v.解答，溶解 +solvency n.偿付能力 +solvent adj.有偿付能力的 +some adj.若干，某一 +somebody pron.某人，重要人物 +somehow adv.以某种方式 +someone pron.有人，某人 +something pron.某事，某物 +sometime adv.日后，曾经 +sometimes adv.有时，不时 +somewhat adv.稍微，有点 +somewhere adv.某地，到某处 +son n.儿子 +song n.歌，歌词，鸟鸣 +son-in-law n.女婿 +sonnet n.十四行诗 +sonyericsson n.索尼愛立信通訊手機公司 +soon adv.不久，很快，早 +soot n.油烟，煤烟 +soothe v.安慰，使镇定 +sophisticated adj.复杂的，先进的 +sophistication n.世故 +sore adj.疼痛的，恼火的 +sorrow n.伤心，悲哀，忧患 +sorrowful adj.悲哀的，忧愁的 +sorry adj.难过的，遗憾的 +sort n.种类 v.分类，拣 +soul v.灵魂，心灵，人 +sound n.声，声音 v.听起来 +soup n.汤 +sour adj.酸的，不高兴的 +source n.来源，出处，源泉 +south n.南,南方 adj.南方的 +southeast n.东南(部) +southern adj.南的，南方的 +southward adj.,adv.向南 +southwest n.西南(部) +souvenir n.纪念品 +sovereign n.君主 adj.主权的 +sovereignty n.主权 +sow v.播种，散布 n.母猪 +soy n.酱油 +space n.空间，太空，空地 +spacecraft n.宇宙飞船 +spaceship n.太空船，宇宙飞船 +spaceshuttle n.航天飞机 +spacious adj.广阔的，宽敞的 +spade n.铲子，铁锹，黑桃 +spain n.西班牙 +span n.跨度；指距 v.跨越 +spanish adj.,n.西班牙人(的) +spare v.腾出时间adj.备用的 +spark n.火花，火星 +sparkle v.发火花，闪耀 +sparrow n.麻雀 +spatial adj.空间的 +speak v.说话，发言，讲 +speaker n.说话者，发言人 +spear n.矛，枪 +special adj.特别的，专门的 +specialist n.专家 +specialize v.专攻，专门研究 +specialized adj.专业的，专门的 +specially adv.特地，专门地 +specialty n.专业，专长 +species n.物种，种类 +specific adj.特殊的，明确的 +specification n.规格，明细表 +specify v.详细说明，指定 +specimen n.标本，样本 +spectacle n.眼镜，场面，壮观 +spectacular adj.壮观的 +spectator n.观众，旁观者 +spectrum n.光谱 +speculate v.推测，投机 +speculation n.推测，投机 +speculator n.投机商 +speech n.演说，语言能力 +speed n.速度 v.飞驰 +speedy adj.快速的 +spell v.拼写，咒语 +spelling n.拼音，拼写 +spend v.花费，消耗 +sphere n.球体，范围，领域 +spice n.香料，调味品 +spicy adj.辛辣的 +spider n.蜘蛛 +spill v.溢出，流出 +spin v.自转，纺 +spiral adj.,n.螺旋(的) +spirit n.精神，心灵 n.酒精 +spiritual adj.精神上的，心灵的 +spit v.吐，倾吐 n.唾液 +spite n.恶意，怨恨 +splash v.溅，泼 +splendid adj.辉煌的，灿烂的 +split v.劈，分割 +spoil v.损坏，宠坏 +spokesman n.发言人 +sponge n.海绵 +sponsor n.发起人，主办者 +sponsorship n.发起，主办 +spontaneous adj.自发的 +spoon n.汤匙 +spoonful adj.一匙的量 +sport v.运动，嬉戏 +sportsman n.运动员 +sportsmanship n.体育精神 +spot n.点，斑，污点，场所 +sprain v.,n.扭伤 +spray n.水雾 v.喷射 +spread v.伸开，散布，传播 +spring v.跳跃，萌芽 n.春季 +sprinkle v.洒，撒，不细雨 +sprout n.幼芽 v.出芽 +spur n.,v.刺激，鼓舞 +spy n.间谍 +square n.正方形，广场，平方 +squash v.压碎 n.果子汁 +squat v.蹲 +squeeze v.压，榨，挤 +s. s. n.(缩)轮船 +squirrel n.松鼠 +stab v.,n.刺，戳 +stability n.稳定性 +stable adj.稳固的，稳定的 +stack n.,v.推放，垛 +stadium n.露天运动场 +staff n.工作人员，棒子 +stage n.舞台，阶段 v.上演 +stagger v.蹒跚 +stagnation n.停滞 +stain n.污点，瑕疵 v.弄脏 +stainless adj.无瑕的，不锈的 +stair n.楼梯 +staircase n.扶手楼梯 +stake n.桩，赌注 +stale adj.陈旧的 +stalk n.主茎，叶柄 +stall n.厩，货摊 +stammer v.,n.口吃，结巴 +stamp n.邮票，图章 v.盖章 +stand v.站立，坐落，忍受 +standard n.标准 adj.标准的 +standardize v.标准化 +standing adj.常务的 n.地位 +standpoint n.立场，观点 +standstill n.停顿 +staple n.钉书钉，主要产品 +stapler n.钉书机 +star n.星 v.主演 +stare n.,v.凝视 +start v.开始，着手，发动 +starting n.出发，开始 +startle v.惊吓，使吃惊 +starvation n.饥饿 +starve v.挨饿，渴求 +state n.状态，国家，州 +statement n.声明，陈述 +statesman n.政治家，国务活动家 +static adj.静止的，静态的 +station n.站，台 v.驻扎 +stationary adj.固定的，稳定的 +stationery n.文具 +statistical adj.统计的 +statistics n.统计(学) +statue n.雕像，铸像 +status n.形势，身分 +statute n.法令，章程，条例 +stay v.停留，暂住，保持 +steadily adv.稳固地，稳步地 +steady adj.平稳的，稳健的 +steak n.牛排，排骨 +steal v.偷窃 +steam n.汽，蒸汽 v.蒸 +steamer n.汽船 +steel n.钢 +steep adj.陡峭的 +steer v.驾驶，行驶 +stem n.茎 +stencil n.复写纸，蜡纸 +step n.脚步，台阶，步骤 +stereo n.立体声 +sterling adj.英镑的 +stern adj.严厉的，坚决的 +stevedore n.码头工人 +stew v.炖，煮 n.炖菜 +steward n.乘务员，男仆 +stewardess n.女乘务员，空姐 +stick n.枝，杆，手杖 v.扎 +sticky adj.黏的 +stiff adj.僵硬的，生硬的 +still adj.静止的 adv.仍旧 +stillness n.寂静，静止 +stimulate v.刺激，使兴奋 +stimulation n.刺激 +sting n.刺痛 v.刺，叮 +stink adj.臭的 +stipulate v.合同规定，约定 +stipulation n.规定 +stir v.搅拌，激起 n.骚动 +stirring adj.动人的 +stitch n.一针 v.缝合 +stock n.存货，股份 v.贮存 +stocking n.长袜 +stomach n.胃 +stone n.石头，石料，宝石 +stony adj.石头多的 +stool n.凳子 +stoop v.弯腰，屈从 n.俯身 +stop v.停止，终止 n.停止 +storage n.贮藏，货栈 +store n.商店 v.贮藏，储备 +storey n.楼层 +storm n.暴风雨，暴怒 +stormy adj.有暴风雨的 +story n.故事，小说，经历 +stout adj.肥胖的，结实的 +stove n.炉子，火炉 +stow v.装载，理舱 +stowage n.装载 +straight adj.直的 adv.笔直地 +straightforward adj.直爽的 +straighten v.弄直 +strain v.拉紧，扭伤，使紧张 +strait n.海峡 +strand n.(绳)股，缕 +strange adj.奇怪的，陌生的 +stranger n.新人，陌生人 +strap n.带，皮带 +strategic adj.战略的 +strategy n.战略，策略，计谋 +straw n.麦杆，稻草，吸管 +strawberry n.草莓 +stray v.迷路 adj.走失的 +streak n.纹理，条纹 +stream n.小溪，流 +streamline n.流线型 v.精简 +street n.大街 +streetcar n.有轨电车 +strength n.力气，力量，强度 +strengthen v.加强，巩固 +stress v.,n.强调，压力 +stretch v.伸展，拉长 n.伸展 +strict adj.严格的，精确的 +strictly adv.严格地，绝对 +stride adv.阔步走 n.阔步 +strife n.冲突，争斗 +strike v.打，攻击，罢工 +striking adj.引人注目的 +string n.细绳，弦，一串 +strip v.剥 n.窄条 +stripe n.条纹 +strive v.努力，奋斗 +stroke n.敲，笔划 v.抚摸 +stroll v.,n.散步，闲逛 +stroller n.散步者 +strong adj.强壮的，强烈的 +strongly adv.强烈地，强有力地 +stronghold n.堡垒，要塞 +structural adj.结构的，组织上的 +structure n.结构，构造，组织 +struggle v.,n.斗争，奋斗 +stubborn adj.顽固的，倔强的 +student n.学生，研究人员 +studio n.画室，工作间 +study v.,n.学习，研究 +stuff n.材料，东西 v.塞满 +stuffy adj.闷热的，不透气的 +stumble v.绊跌 +stump n.树桩，残茬 +stupid adj.愚蠢的，迟钝的 +stupidity n.愚蠢 +sturdy adj.健壮的 +style n.风格，时尚，作风 +stylist n.时装设计师 +subdivide v.细分，再分 +subdue v.战胜，征服 +subject n.题目，学科，主语 +subjective adj.主观的 +subjunctive adj.虚拟的 +submarine adj.海底的 n.潜水艇 +submerge v.浸没，淹没 +submit v.服从，呈交 +subordinate adj.下级的，辅助的 +subordination n.服从 +subscribe v.订购，订阅 +subscription n.预订，订购 +subsequence n.后果 +subsequent adj.以后的，后起的 +subsequently adv.后来，其后 +subsidiary adj.辅助的，次要的 +substance n.物质，实质 +substantial adj.可观的，实质的 +substantiate v.证实 +substitute n.,v.代替，代用品 +substitution n.代替 +subtle adj.敏锐的，微妙的 +subtract v.减去 +subtraction n.减法，减去 +suburb n.郊区，郊外 +suburban adj.郊区的 +subway n.地铁 +succeed v.成功，后继 +success n.成功 +successful adj.成功的 +successfully adv.成功地 +succession n.接连，继任 +successive adj.接连的，连续的 +successor n.继承人，继任者 +such adj.这样的，如此的 +suck v.吮，咂 +sudden adj.突然的，意外的 +suddenly adv.突然，忽然 +suffer v.遭受，受苦，忍受 +suffering n.苦难 +suffice v.足够，满足需要 +sufficient adj.充足的，充分的 +sufficiently adv.充分地，足够地 +suffix n.后缀 +sugar n.糖 +suggest v.建议，暗示 +suggestion n.建议，示意 +suicide n.自杀 +suit n.一身西服，起诉 +suitable adj.合适的，适宜的 +suitcase n.手提箱 +suite n.随员，一套(房间) +sullen adj.板着脸的 +sultry adj.闷热的 +sum n.总数，会计 v.总结 +summarize v.概括，总结 +summary n.概要 adj.概括的 +summer n.夏季 +summit n.顶峰，最高点 +summon v.,n.召唤，召集 +sun n.太阳，阳光 +sunburn v.晒黑 +sunday n.星期日 +sunflower n.葵花 +sunlight n.阳光 +sunny adj.向阳的，晴朗的 +sunrise n.日出 +sunset n.日落 +sunshine n.日照，日光 +super adj.特级的，超级的 +superb adj.华丽的，超等的 +superficial adj.表面的，肤浅的 +superinrtendent n.管理人，负责人 +superior adj.优良的，上级的 +superiority n.优越(性) +supermarket n.超级市场 +supersede v.代替 +supersonic adj.超音速的 +superstition n.迷信 +superstitious adj.迷信的 +supervise v.管理，监督，监考 +supervision n.监督 +supervisor n.监考人，监查 +supper n.晚餐 +supplement n.,v.增补，补充 +supplementary adj.补充的 +supplier n.供应商 +supply v.供应，供给 +support v.支持，资助，支援 +supporter n.支持者 +suppose v.猜想，假设 +supposing conj.假使 +suppress v.镇压，压制，遏止 +suppression n.镇压，压制 +supreme adj.最高的 +surcharge n.附加费，超载 +sure adj.有把握的，一定的 +surely adv.一定，肯定，谅必 +surface n.表面 adj.表面的 +surge n.,v.汹涌，波动 +surgeon n.外科医生 +surgery n.外科(学) +surmise v.,n.猜想，推测 +surname n.姓 +surpass v.超过，胜过 +surplus n.过剩 adj.剩余的 +surprise v.使惊诧 n.惊奇 +surprising adj.惊人的 +surrender v.放弃，交出，投降 +surround v.包围 +surroundings n.环境，周围事物 +survey v.视察，测量 n.调查 +surveyor n.调查人，检验人 +survival n.幸存，遗风 +survive v.幸免于，幸存 +survivor n.幸存者 +suspect v.怀疑 n.嫌疑犯 +suspend v.吊，悬，暂停，停学 +suspense n.暂停，中止 +suspicion n.怀疑，嫌疑 +suspicious adj.可疑的，猜疑的 +sustain v.支撑，遭受 +swallow n.燕子 v.吞咽 +swamp n.沼泽 +swan n.天鹅 +swarm n.群 v.云集 +sway v.摇晃，影响 +swear v.宣誓，诅咒 +sweat v.出汗 n.汗水 +sweater n.运动衫，毛衣 +swede n.瑞典人 +sweden n.瑞典 +swedish adj.,n.瑞典人(的) +sweep v.扫除，席卷 +sweet adj.甜的，甜蜜的 +sweeten v.变甜，加糖 +sweetheart n.心肝，宝贝 +sweetness n.甜味 +swell v.膨胀，肿 +swift adj.快的，迅速的 +swim v.游泳，游 +swing v.摇摆 n.秋千 +swiss n.瑞士人 +switch v.转换 n.开关 +switzerland n.瑞士 +sword n.剑 +syllable n.音节 +symbol n.象征，符号 +symbolize v.象征 +symmetric adj.对称的，匀称的 +symmetry n.对称 +sympathetic adj.同情的，有共鸣的 +sympathize v.同情 +sympathy n.同情，同感，共鸣 +symphony n.交响乐 +symposium n.座谈会，学术讨论会 +symptom n.症状，征兆 +synonym n.同义词 +synthesis n.综合，合成 +synthetic adj.合成的，人造的 +system n.系统，体制，制度 +systematic adj.系统的，有组织的 +systematically adv.有系统地 +table n.桌子，表格 +tablet n.药片 +tabulate v.制表，将...列表 +tack n.图钉 +tackle n.用具，辘轳 v.抓住 +tact n.机敏，圆滑 +tactful adj.机智的，老练的 +tactics n.战术，策略 +tag n.标签，货签 +tail n.尾巴，尾部 +tailor n.裁缝 v.缝制 +take v.拿，带，吃，乘 +take-off n.起飞 +tale n.故事 +talent n.人才，天资 +talk v.谈话 n.讲话，会谈 +talkative adj.罗嗦的 +tall adj.高的 +tally v.吻合，符合 +tame v.驯养，制报 +tan n.黄褐色 v.鞣草 +tangle v.缠绕，纠缠 +tank n.油箱，水箱，坦克 +tanker n.油轮 +tap v.叩击 n.轻敲 +tape n.条，带，磁带 +tape-recorder n.录音机 +tape-recording n.录音 +tar n.沥青，柏油 +target n.目标，对象，靶 +tare n.皮重 +tariff n.关税 +task n.工作，任务 +taste n.味道，趣味 v.品尝 +tasteful adj.有滋味的，好吃的 +tax n.税 v.征税 +taxation n.税(总称)，税务 +taxi n.出租汽车 +tea n.茶，茶叶 +teach v.教，教书，教导 +teacher n.教员，老师 +teaching n.教学，教导 +teacup n.茶杯 +team n.小队 v.协同工作 +teapot n.茶壶 +tear n.眼泪 v.撕，拔 +tease v.取笑，逗乐 +technical adj.技术的，技能的 +technician n.技术员，技师 +technique n.技术，技巧 +technological adj.技术的，工艺的 +technology n.技术，工艺 +tedious adj.腻烦的，乏味的 +teenager n.(十几岁的)少年 +teens n.十多岁 +telefax n.传真 v.发传真 +telegram n.电报 +telegraph n.电报 +telephone n.电话 v.打电话 +telescope n.望远镜 +television n.电视，电视机 +telex n.电传 v.发电传 +tell v.告诉，讲，说出 +teller n.出纳 +temper n.情绪，脾气 +temperature n.温度，体温 +temple n.庙，寺院，太阳穴 +temporary adj.暂时的，临时的 +tempt v.引诱，诱惑 +tempatation n.诱惑，引诱 +ten num.十 +tenant n.房客，承租人 +tend v.趋向，照料，投标 +tendency n.趋势，倾向 +tender n.投标人 adj.温柔的 +tenis n.网球 +tenor n.(支票)限期 +tense adj.紧张的 v.拉紧 +tension n.紧张状态，张力 +tent n.帐篷 +tentative adj.试探性的 +tenth num.第十，十分之一 +term n.期限，学期，术语 +terminable adj.可终止的 +terminal n.终点 adj.末端的 +terminate v.终止，结束 +termination n.终止，结束 +terminology n.术语(总称) +terrace n.平台，台阶 +terrible adj.可怕的，极度的 +terribly adv.可怕地，极 +terrific adj.了不起的，极好的 +terrify v.惊吓，使恐怖 +territory n.领土，领域，地区 +terror n.恐怖，令人恐怖的事 +terrorism n.恐怖主义 +terrorist n.恐怖分子 +test v.,n.测验，试验 +testify v.证明，证实 +testimony n.证据 +text n.正文，课文，原文 +textbook n.课本，教科书 +textile n.纺织品 +textual adj.课文的，正文的 +than conj.比，除...外 +thank v.谢谢，感谢 +thankful adj.感谢的，欣慰的 +thanks n.感谢 int.谢谢 +thanksgiving day ]n.感恩节 +that adj.那,那个 adv.那么 +the (定冠词)那，这 +theatre n.剧场，戏剧，舞台 +theatrical adj.戏剧的 +theft n.偷盗 +their adj.他们的，它们的 +them pron.他(她)们，它们 +theme n.主题，题目 +themselves pron.他们、它们自己 +then adv.当时，然后，那么 +theoretical adj.理论的 +theory n.理论，学说 +there adv.那里，到那里 +thereafter adv.此后，其后 +thereby adv.因此，由此 +therefor adv.为此 +therefore adv.因而，所以 +therefrom adv.由此 +therein adv.在那里，其中 +thereof adv.及其，由此，它的 +thereon adv.关于那 +therewith adv.对此 +thermometer n.温度计 +these pron.这些 +thesis n.论文 +they pron.他(她)们，它们 +thick adj.厚的，浓的 +thicken v.加厚，变浓 +thickness n.厚，厚度，浓 +thief n.窃贼，小偷 +thigh n.大腿 +thin adj.薄的，瘦的 +thing n.东西，事情 +think v.想，相信，认为 +thinking n.思想 +thinker n.思想家 +third num.第三，三分之一 +thirst n.渴，渴望 +thirsty adj.渴的，渴望的 +thirteen num.十三 +thirty num.三十 +this adj.,pron.这，这个 +thorn n.刺，荆棘 +thorough adj.充分的，彻底的 +thoroughly adv.充分地，彻底地 +those pron.,adj.那些 +though conj.虽然，可是 +thought n.想法，思想，关怀 +thoughtful adj.深思的，体贴的 +thoughtless adj.轻率的，粗心的 +thousand num.千 +thrash v.抽打 +thread n.线，思路 +threat n.恐吓，威胁 +threaten v.恐吓，威胁 +three num.三 +threshold n.开端，门槛 +thrift n.节俭 +thrifty adj.节俭的 +thrill v.发抖 n.激动 +thriller n.惊险小说，电影 +thrive v.兴旺，繁荣 +throat n.咽喉 +throne n.王位 +throng n.一群人 v.挤满 +through prep.通过，借助 +throughout prep.贯穿 adv.全部 +throw v.,n.投，扔，抛 +thrust v.强推，插入，刺 +thumb n.拇指 +thumbtack n.按钉，图钉 +thunder n.雷 v.隆隆响 +thunderstorm n.雷雨 +thursday ]n.星期四 +thus adv.如此，这样，因而 +tick n.滴答声 v.打勾号 +ticket n.票，标签，价目单 +tickle v.挠，搔，逗乐 +tide n.潮汐，潮流 v.度过 +tidy adj.整齐的，整洁的 +tie v.捆，打结 n.领带 +tie-up n.(资金)占用，冻结 +tiger n.虎 +tight adj.紧的，密封的 +tighten v.拉紧 +tightly adv.紧紧地，紧密地 +tigress n.母虎 +tile n.瓦，瓷砖 +till prep.直到 +tilt v.,n.倾斜 +timber n.木材 +time n.时间，时候，次数 +timely adj.及时的 +timetable n.时刻表，时间表 +timid adj.胆怯的，害羞的 +tin n.锡，锡器 +tiny adj.微小的 +tip n.梢，尖，小费 +tiptoe v.用脚尖走 +tire v.疲劳，厌倦 +tired adj.疲劳的，厌倦的 +tiresome adj.使人厌倦的 +tissue n.组织，卫生纸 +title n.标题，题目，称号 +to prep.向，到 +toad n.蟾蜍，癞蛤蟆 +toast n.烤面包，祝酒 v.烘 +tobacco n.烟草 +today adv.今天,现在 n.今日 +toe n.脚趾，鞋头 +together adv.共同，一起，同时 +toil v.苦干 +toilet n.卫生间，便桶 +token n.象征，纪念章 +tolerable adj.可容忍的 +tolerance n.宽容，容忍 +tolerant adj.宽容的，宽大的 +tolerate v.容忍，宽容 +toll n.税 +tomato n.蕃茄，西红柿 +tomb n.坟 +tombstone n.墓碑 +tomorrow n.明天 adv.在明天 +ton n.吨 +tone n.语气，腔调，市况 +tongue n.舌，语言 +tonight n.今晚 adv.在今晚 +tonnage n.吨位，吨数 +tonne n.公吨 +too adv.也，非常 +tool n.工具，手段 +tooth n.牙齿 +toothache n.牙疼 +toothbrush n.牙刷 +toothpaste n.牙膏 +top n.顶，盖子 v.高于 +topic n.课题，主题 +torch n.火炬，手电筒 +torment v.,n.折磨，虐待 +torpedo n.鱼雷 +torrent n.激流，山洪 +tortoise n.龟 +torture v.,n.拷打，折磨 +toss v.向上扔，颠簸，辗转 +total adj.总 n.总和，合计 +totally adv.统统，完全地 +touch v.碰，接触，触动 +tough adj.坚韧的，难嚼烂的 +tour n.,v.旅行，周游 +tourism n.旅游业 +tourist n.旅游者，游客 +tow v.,n.拖，牵引 +toward prep.向，对于，将近 +towel n.毛巾 +tower n.塔 v.高耸 +town n.市镇，城市，闹市 +toy n.玩具 +trace n.痕迹，微量 v.追踪 +track n.径赛，轨道，路径 +tractor n.拖拉机 +trade n.贸易，交换 v.经商 +trader n.商人 +trademark n.商标 +tradesman n.商人 +tradition n.传统，惯例 +traditional adj.传统的 +traffic n.交通，交易，运输 +tragedy n.悲剧，惨事，灾难 +tragic adj.悲剧的，悲惨的 +trail v.拖曳，尾随 n.踪迹 +train n.列车，一列 v.训练 +trainee n.受训练者 +trainer n.教练 +training n.训练 +traitor n.叛徒 +tram n.有轨电车 +tramp n.跋涉，流浪者 +trample v.践踏，蹂躏 +tranquil adj.平静的，安宁的 +transact v.交易 +transaction n.交易 +transfer v.转移，转让 +transferable adj.可转让的 +transform v.转变，转化 +transformation n.转化，转变 +transformer n.变压器 +transcient adj.短暂的，瞬时的 +transistor n.晶体管(收音机) +transit v.运输，转运 +transition n.过渡，转变 +translate v.翻译 +translation n.翻译，译文 +translator n.译音 +transmission n.传送，播送 +transmit v.传播，传导，发射 +transparent adj.透明的 +transplant v.移植 +transport v.运送 v.运输 +transportation n.运输，交通 +transship v.转运，转船 +transshipment n.转运 +transverse adj.横向的，横断的 +trap n.陷井，圈套 v.诱捕 +traverse n.,v.横断，横过 +travel v.旅行，传导 +traveler n.旅行者 +tray n.托盘 +tread v.踩，践踏 +treason n.谋反，叛国 +treasure n.财宝，珍宝 v.珍藏 +treasurer n.司库 +treat v.对待，医治，论述 +treatment n.待遇，疗法 +treaty n.条约 +tree n.树 +tremble v.哆嗦，发抖 +tremendous adj.巨大的，惊人的 +trench n.沟，壕 +trend n.走向，趋势 +trial n.审讯，尝试，试验 +triangle n.三角(形) +triangular adj.三角形的，三方的 +tribe n.部落 +tribute n.颂词，献礼 +trick n.诡计，骗局，伎俩 +trickle v.滴下，流下 +tricky adj.巧妙的，狡猾的 +trifle n.小事，琐事 +trigger n.扳机 v.触发 +trim v.修剪，修整 +trip n.旅行，远足 +triple adj.三倍的，三重的 +triplicate n.一式二份 +triumph n.胜利 v.战胜 +triumphant adj.得胜的，得意的 +trivial adj.琐碎的 +trolley n.手推车，电车 +troop n.队，军队 +tropic n.回归线，热带 +tropical adj.热带的 +trot v.,n.小跑，快步走 +trouble n.,v.麻烦 +troublesome adj.讨厌的，麻烦的 +trousers n.裤子 +truck n.卡车，载重汽车 +true adj.真实的，真正的 +truly adv.真正地，确实 +trumpet n.喇叭 +trunk n.树干，躯干，皮箱 +trust n.v.委托，信任，信托 +truth n.真相，真理 +truthful adj.诚实的，真正的 +try v.尝试，审讯 n.尝试 +tub n.浴 缸，木盆 +tube n.管子，试管 +tuberculosis n.结核，肺结核 +tuck v.卷起，塞进 +tuesday ]n.星期二 +tug v.,n.用力拖，拖船 +tuition n.学费 +tulip n.郁金香 +tumble v.跌倒，摔跤，打滚 +tumult n.骚动，暴动，吵闹 +tuna n.金枪鱼 +tune n.调子 v.调谐 +tunnel n.隧道，地道，坑道 +turbine n.汽轮机，涡轮机 +turbulent adj.骚动的 +turk ]n.土耳其人 +turkey n.火鸡adj.,n.土耳其 +turn v.转向，旋转 n.轮流 +turning n.拐角 adj.旋转的 +turnip n.萝卜 +turnover n.周转，营业额 +turtle n.海龟 +tutor n.辅导教师 +twelfth num.第十二 +twelve num.十二 +twentieth num.第二十 +twenty num.二十 +twice adv.两次，两倍 +twig n.细枝 +twilight n.黎明，黄昏，微亮 +twin n.,adj.孪生(的) +twinkle v.,n.闪烁，眨眼 +twist v.拧，扭，搓，歪曲 +two num.二 +type n.类型，典型 v.打字 +typewriter n.打字机 +typhoon n.台风 +typical adj.典型的 +typist n.打字员 +tyranny n.暴政，暴行 +tyrant n.暴君，专制 +tyre n.轮胎 +ugly adj.丑恶的，丑陋的 +ulcer n.溃疡 +ultimate adj.最终的，极限的 +ultimately adv.最后，终究 +ultimo adj.上月的 +ultrasonic adj.超声速的 +ultraviolet adj.紫外的 +umbrella n.伞，保护伞 +unable adj.不能的，不会的 +unacceptable adj.不能接受的 +unaccommodating adj.不青通融的 +unaffordable adj.买不起的 +unanimous adj.一致的 +unavoidable adj.不可避免的 +unbearable adj.不可忍受的 +uncertain adj.不确定的，易变的 +uncertainty n.不定，易变 +uncle n.伯、叔、舅、姑父 +uncomfortable adj.不舒服的 +uncommon adj.罕见的，不常见的 +unconditionally adv.无条件地 +unconscious adj.无知觉的 +uncover v.揭开 +under prep.在...下面 +underestimate v.低估 +undergo v.经受，经历 +undergraduate n.本科生 +underground adj.地下的，秘密的 +underline v.在...下划线，强调 +underlying adj.根本的，在下面的 +undermentioned adj.下述的 +undermine v.破坏 +underneath prep.,adv.在...下面 +undersigned adj.在...下面签名的 +understand n.了解，懂，熟悉 +understanding n.理解，谅解 +undertake v.从事，承担 +undertaking n.事业，许诺 +underwear n.内衣 +underwriter n.保险商，承购人 +undo v.解开，取消 +undoubtedly adv.无容置疑地 +undue adj.过分的，不适当的 +unduly adv.过分地，不适当地 +uneasy adj.不自在的，担心的 +unemloyment n.失业 +unexpected adj.意外的，未料到的 +unfair adj.不公平的 +unfit adj.不合适的 +unfold v.展示，摊开 +unfortunate adj.不幸的，遗憾的 +unfortunately adv.不幸地，不凑巧 +unhappy adj.不幸福的 +uniform adj.均匀的，统一的 +uniformly adv.单调地，一样地 +uninterested adj.不感兴趣的 +union n.联合，联盟，联合会 +unique adj.唯一的 +unit n.单位，个体 +unite v.统一，联合，团结 +united adj.联合的 +united kingdom n.英国，联合王国 +united nations n.联合国 +united states n.美国，合众国 +unity n.统一，团结 +universal adj.宇宙的，普遍的 +universally adv.普遍地 +universe n.宇宙 +university n.大学 +unjust adj.不公正的 +unkind adj.不仁慈的，冷酷的 +unknown adj.未知的 n.未知物 +unlawful adj.不合法的，违法的 +unless prep.除非 +unlike adj.不同的 +unlikely adj.未必的，不象的 +unlimited adj.无限的 +unload v.卸货，卸除 +unlock v.开启，揭开 +unlucky adj.不幸的，倒霉的 +unmerchantable adj.无销路的 +unnecessary adj.不必要的 +unobtainable adj.无法得到的 +unpaid adj.未付的 +unpleasant adj.令人不愉快的 +unprecedented adj.前所未有的 +unprecedentedly adv.空前地 +unreasonable adj.不合理的，贵的 +unsalable adj.不好销售的 +unsatisfactory adj.不令人满意的 +unstable adj.不稳定 +unsuitable adj.不适宜的 +untie v.解开 +until prep.,conj.到...为止 +unusable adj.无法使用的 +unusual adj.不寻常的 +unwarranted adj.无根据的 +unwelcome adj.不受欢迎的 +unwilling adj.不愿意的 +unworkable adj.行不通的 +up adv.向上，起床 +upcreep n.(价格)上涨 +uphold v.支持，维持 +upon prep.在...之上 +upper adj.上部的，较高的 +upright adj.直立的，正直的 +uproar n.喧闹，轰鸣 +upset v.倾覆，打乱，使心烦 +upside n.上面，上部 +upside-down adj.颠倒的，倒置的 +upstairs adv.在楼上，往楼上 +up-to-date adj.时新的，最近的 +upward adv.,adj.向上(的) +uranium n.铀 +urban adj.都市的，城市的 +urge v.敦促，推动 n.冲动 +urgent adj.紧迫的，紧急的 +urgently adv.紧急地 +us pron.我们(宾格) +usage n.使用，惯用法 +use v.使用 n.用途，利用 +useful adj.有用的，有益的 +usefulness n.用处，有效性 +useless adj.无用的 +user n.使用者，用户 +usual adj.通常的，习惯性的 +usually adv.通常，平常 +utensil n.用具，器皿 +utility n.效用，公用事业 +utilization n.利用 +utilize v.利用 +utmost adj.最大的，最高的 +utter v.说,发声 adj.完全的 +utterance n.说话 +vacacy n.空缺，空位 +vacant adj.空的，闲置的 +vacation n.假期 +vaccinate v.接种疫苗 +vaccination n.接种 +vacuum n.真空 +vague adj.含糊的，不清楚的 +vain adj.徒然的，自负的 +vainly adv.徒劳地 +valian n.坏蛋 +valid adj.正当的，有效的 +validity n.有效，确实 +valley n.山谷 +valuable adj.宝贵的，有价值的 +value n.价值 v.评价，估价 +valued adj.宝贵的 +valve n.阀门 +van n.小货车，面包车 +vanish v.消失，消散 +vanity n.虚荣心，浮华 +vapor n.水汽，蒸汽 +variable adj.可变的 n.变量 +variance n.分歧，不一致 +variant adj.不同的，不一致的 +variation n.变化，变更 +varied adj.不同的 +variety n.多样(性)，品种 +various adj.各种各样的 +varnish n.清漆 +vary v.变化，使多样化 +vase n.花瓶 +vast adj.巨大的，宏大的 +vault n.拱顶 +vegetable n.蔬菜，植物 +vehicle n.运载工具 +veil n.面纱，账，托辞 +vein n.静脉，矿脉，脉 +velocity n.速度，速率 +velvet n.丝绒 adj.柔软的 +vender n.商贩 +vengeance n.报复，复仇 +ventilate v.换气，自由讨论 +ventilation n.通风 +venture n.,v.冒险 +venus n.金星 +verb n.动词 +verbal adj.文字的，口头的 +verge n.边缘，界限 +verification n.检验 +verify v.检验，证实 +versatile adj.多才多艺的 +verse n.诗，韵文 +version n.译文，译本，看法 +versus prep.对 +vertical adj.垂直的 +very adv.很，非常 +vessel n.船只，容器，血管 +vest n.背心，汗衫 +veteran n.老手，老兵 +veto v.,n.否决(权) +vex v.使烦恼 +via prep.经由，取道 +vibrate v.振动，战栗 +vibration n.振动，颤动 +vice n.坏事，恶习 +vicinity n.邻近，附近，接近 +vicious adj.邪恶的，不道德的 +victim n.受害者 +victorious adj.胜利的，成功的 +victory n.胜利 +video adj.电视的，视频的 +view n.视域，景色，见解 +viewer n.观察者，电视观众 +viewpoint n.观点，看法 +vigor n.活动，精力，元气 +vigorous adj.精力旺盛的 +villa n.别墅 +village n.村庄 +villain n.坏蛋 +vine n.藤，葡萄树 +vinegar n.醋 +violate v.违犯，违背 +violation n.违犯，侵犯 +violence n.猛烈，暴力，暴行 +violent adj.猛烈的，暴力的 +violet n.紫罗兰，紫色 +violin n.小提琴 +virgin adj.处女的 n.处女 +virtual adj.实质上的 +virtually adj.几乎，差不多 +virtue n.善，美德，优点 +virus n.病毒 +visa n.签证 +viscous adj.粘的 +visible adj.看得见的 +vision n.视觉，视力，想象力 +visit v.,n.访问，参观 +visitor n.客人，来宾，来访者 +visual adj.视觉的 +vital adj.必不可少的 +vitamin n.维生素 +vivid adj.鲜艳的 +vividly adv.生动地 +vividness n.生动(性) +vocabulary n.词汇，词汇表、量 +vocation n.职业 +vogue n.时尚，时髦 +voice n.声音，嗓音 v.吐露 +voiceless adj.无声的 +void adj.空的，无效的 +volcano n.火山 +volley n.,v.齐射 +volleyball n.排球 +volt n.伏特 +voltage n.电压 +volume n.卷，册，量，体积 +voluntary adj.自愿的，志愿的 +volunteer n.志愿者 v.志愿 +vote n.投票(权)，得票数 +voter n.投票人，选举人 +voting adj.有投票权的 +vouch v.担保 +voucher n.凭证，收据 +vow v.,n.许愿，发誓 +vowel n.元音 +voyage n.,v.航行 +vulgar adj.低级趣味的 +vulnerability n.易损性 +vulnerable adj.晚受损害的 +wade v.消，跋涉 +wag v.摇，摆 +wage n.工资 v.进行 +wagon n.货车 +waist n.腰(部) +wait v.等候，伺候 +waiter n.服务员，侍者 +waitress n.女服务员 +waive v.放弃(要求、权利) +wake v.醒来 +waken v.唤醒，使觉醒 +walk v.步行，走 n.散步 +walker n.步行者，散步者 +wall n.墙壁 +wallet n.钱夹 +walnut n.核桃 +wander v.徘徊，离题，迷失 +want v.想要，通辑 n.缺乏 +war n.战争，斗争 +ward n.病房，牢房 +wardrobe n.衣柜 +ware n.货物 +warehouse n.仓库，货栈 +warehousing n.仓储 +warfare n.战争(状态) +warm adj.温暖的，热情的 +warmly adv.热烈地，热情地 +warmth n.温暖，暖和，热烈 +warn v.警告，预先通知 +warning n.警告 +warrant n.许可证，正当理由 +warranted adj.担保的 +warranty n.担保，保证 +warrior n.勇士，战士 +warship n.军舰 +wash v.洗，冲走 +washing-machine n.洗衣机 +wasp n.黄蜂，马蜂 +waste v.浪费 n.垃圾，废料 +wasteful adj.浪费的，挥霍的 +watch v.观看，看过 n.手表 +watchful adj.注意的，警惕的 +water n.水 v.浇水，垂涎 +waterfall n.瀑布 +waterfront n.水边，滩 +waterproof adj.防水的 +watertight adj.不透水的 +watery adj.水汪汪的，淡的 +watt n.瓦特 +wave n.波浪，波 v.挥手 +wavelength n.波长 +waver n.晃动，动摇 +waving adj.波浪状的 +wax n.蜡 v.打蜡 +way n.方法，路，方向 +we pron.我们 +weak adj.弱的，差的 +weakness n.弱点，软弱 +wealth n.财富，丰富 +wealthy adj.富裕的，富庶的 +weapon n.武器 +wear v.穿，戴，磨损，耐久 +weary adj.疲倦的 +weather n.天气 v.经受住 +weave v.编织 +weaver n.织布工，编织者 +web n.网，蛛网，圈套 +wedding n.婚礼 +wedge n.楔子，起因 v.楔住 +wednesday n.星期三 +weed n.杂草 v.除草，清除 +week n.星期，周，工作周 +weekday n.工作日 +weekend n.周末 +weekly adj.每周的 n.周刊 +weep v.哭泣，哀悼 +weigh v.重...，称，权衡 +weight n.重量，重担，重物 +welcome adj.受欢迎的 v.欢迎 +weld v.焊接 +welfare n.福利 +well n.井 adv.好，充分 +well-known adj.有名的，著名的 +west n.西方 adj.向西的 +western adj.西的，西方的 +westerner n.西方人，欧美人 +westward adj.,adv.向西(的) +wet adj.湿的，多雨的 +whale n.鲸 +whaling n.捕鲸(业) +wharf n.码头，停泊处 +what pron.什么 adj.什么的 +whatever pron.无论什么 +wheat n.小麦 +wheel n.轮，车轮 +when adv.何时 +whenever conj.无论何时 +where adv.哪里 +whereabouts n.下落 +whereas conj.而，却 +whereby adv.借此 +wherein adv.在何处 +wherever adv.无论哪里 +whether conj.是否，还是... +which pron.,adj.哪个，那个 +whichever pron.无论哪个 +while n.一会儿 conj.当..时 +whilst conj.当...时，尽管 +whip v.抽打，搅 n.鞭子 +whirl v.,n.旋转，飞转 +whisker n.络腮胡子 +whisky n.威士忌洒 +whisper v.,n.耳语，发飒飒声 +whistle v.吹哨，鸣笛，啸叫 +white adj.白的 n.白色,蛋清 +whitewash v.粉刷，掩饰 +who pron.谁 +whoever pron.无论谁 +whole adj.全部的 n.全部 +wholesale n.,v.批发 +wholesaler n.批发商 +wholesaling n.批发 +wholesome adj.卫生的 +wholly adv.完全，一概 +whom pron.谁(宾格) +whose pron.谁的 +why adv.为什么 +wicked adj.坏的，不道德的 +wide adj.宽的，广阔的 +widely adv.广泛地，非常 +widen v.加宽，扩大 +widespread adj.流传广泛的 +widow n.寡妇 +widower n.鳏夫 +width n.宽度 +wield v.挥动，行使 +wife n.妻子，夫人 +wild adj.野生的，狂暴的 +wilderness n.荒原 +will v.aux.将，愿 n.意志 +willing adj.乐意的，自愿的 +willingly adv.乐意地，自愿地 +willingness n.乐意，自愿 +willow n.柳树 +win v.赢得，成功 +wind n.风，风声 v.绕 +winding adj.弯曲的，蜿蜒的 +windmill n.风车 +window n.窗户 +windowsill n.窗台 +windy adj.刮风的 +wine n.酒，葡萄酒 +winery n.酿酒厂 +wing n.翅膀，翼，派别 +wink v.眨眼，使眼色 +winner n.得胜者，获奖者 +winter n.冬季 +wipe v.擦，抹掉 +wire n.金属线，电线 +wireless adj.,n.无线电 +wisdom n.智慧，明智 +wise adj.智慧的，博学的 +wish v.希望，祝愿，想要 +wit n.机智，才智 +with prep.同...一起，用 +withdraw v.撤消，退出，提款 +withdrawal n.撤退，取款 +wither v.枯萎，凋谢，衰弱 +withhold v.坚持 +within prep.,adv.在...内 +without prep.没有，在...外部 +withstand v.抵挡，顶住 +witness n.目击者,证人 v.目睹 +witty adj.机智的，风趣的 +woe n.悲痛，苦恼 +wolf n.狼 +woman n.妇女，女人 +wonder v.想知道,诧异 n.奇迹 +wonderful adj.奇妙的，精彩的 +wood n.木，木材 +wooden adj.木制的 +woodpecker n.啄木鸟 +woods n.树林 +wool n.羊毛，毛线 +woollen adj.羊毛的，毛织的 +word n.字，词，诺言，音讯 +wording n.措辞 +wordy adj.冗长的，罗嗦的 +work n.劳动，工作，作品 +workable adj.可行的，起作用的 +worker n.工人 +workman n.工作者 +workmanship n.工艺，手艺 +works n.工厂 +workshop n.车间，工场，学习班 +world n.世界，...界，世间 +worldwide adj.,adv.全世界的 +worm n.蠕虫，幼虫 +worry v.,v.烦恼，担心 +worse adj.更坏的，更差的 +worship v.,n.崇拜，礼拜 +worst adj.最坏的，最差的 +worth n.价值 adj.值...的 +worthless adj.不值钱的 +worthwhile adj.值得做的 +worthy adj.值得的，配...的 +wound v.受伤 n.伤口，创伤 +wounded adj.受伤的 n.伤员 +wrap v.包，裹 +wrapper n.(饺子)皮，包装用品 +wrath n.暴怒 +wreath n.花圈，花环 +wreck v.毁坏 n.失事 +wrench v.拧，扭伤 n.扳手 +wrestle v.,n.摔交，搏斗 +wretched adj.可怜的，可耻的 +wring v.拧，扭 +wrinkle n.皱纹 v.折皱 +wrist n.腕 +write v.写，写信，写作 +writer n.作者，作家 +writing n.写作 +written adj.写作的，书面的 +wrong adj.错误的，有毛病的 +wrongly adv.错误地，不正当地 +xerox n.,v.复印 +x-ray n.X射线 v.X光检查 +yacht n.游船，快艇 +yard n.码，庭院，场 +yawn v.,n.打呵欠 +year n.年，年度 +yearly adj.,adv.每年的 +yearn v.向往 +yeast n.酵母 +yell v.,n.叫嚷 +yellow n.,adj.黄色(的) +yes adv.是，好 +yesterday n.昨天 adv.在昨天 +yet adv.仍然，还，尚 +yield v.生产，屈服 n.产量 +yoke n.轭 +yolk n.蛋黄 +you pron.你，你们 +young adj.年轻的 n.青年人 +youngster n.少年 +your pron.你的，你们的 +yourself pron.你(们)自己 +youth n.青春，青年 +youthful adj.年轻的 +zeal n.热情，热忱 +zealous adj.热情的，热心的 +zebra n.斑马 +zero n.零，零度 +zinc n.锌 +zip n.活动，尖啸声 +zipcode n.邮政编码 +zipper n.拉链 +zone n.地带，区域，区 +zoo n.动物园 +zoology n.动物学 \ No newline at end of file diff --git a/homeworks/B20769/homework1/data2/2016.01.02.TXT b/homeworks/B20769/homework1/data2/2016.01.02.TXT new file mode 100644 index 0000000..117b193 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.01.02.TXT @@ -0,0 +1,3974 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +The world this week + +KAL's cartoon + + + + + +Articles Sections Next + +The world this week + +Jan 2nd 2016 | From the print edition + +Iraq’s armed forces recaptured Ramadi, the capital of Anbar province, which fell to Islamic State in May and is just 100km from Baghdad. The country’s prime minister, Haider al-Abadi, said that IS would be driven from his country by the end of 2016. IS also suffered fresh reverses in Syria; on December 26th it lost the important power-generating Tishreen dam to a mainly Kurdish force. See article. + +Saudi Arabia’s stockmarkets fell sharply after it announced swingeing spending cuts to close a gaping budget deficit. Saudi public finances have been hurt by declining oil revenues. In the middle of 2015 Brent crude was trading at $65 a barrel; now it is under $38. + +An outbreak of Ebola that rampaged through three African countries officially ended when the World Health Organisation declared that Guinea was free of the disease. The outbreak, which started two years ago, killed some 11,000 people, most of them in Guinea, Liberia and Sierra Leone. + +Stockmarkets responded positively to the Federal Reserve’s decision on December 16th to raise interest rates for the first time since 2006. After months of dithering the central bank lifted the range for its benchmark rate by a quarter of a percentage point to between 0.25% and 0.5%. + +Martin Shkreli was arrested by the FBI on December 17th and charged with securities fraud. Mr Shkreli made the headlines in 2015 when a drugs company he ran bought the rights to a medicine and raised its price by 5,000%. The (unrelated) charges against Mr Shkreli, which he denies, pertain to his time as a hedge-fund manager. + +Poland’s right-wing government passed a law requiring the constitutional court to approve decisions by a two-thirds majority, and with at least 13 of the 15 judges present. The law will force the court to accept disputed new judges whom the government has appointed. It will also make it much harder to strike down new laws. The opposition staged furious demonstrations. See article. + +Spain held an election before Christmas, which resulted in no stable majority. The ruling People’s Party of Mariano Rajoy came first and the Socialists second. Two smaller parties took seats, breaking the traditional two-party system. + +Brazil’s finance minister, Joaquim Levy, resigned on December 18th. He came into office in January 2015 with a mandate to slash the budget deficit but was thwarted by a severe recession and political turmoil. His successor is Nelson Barbosa, who was the planning minister. + +A group of Central American countries plus Mexico reached an agreement to allow some of the 7,000 migrants from Cuba who are stuck on Costa Rica’s border with Nicaragua to travel to the United States. Nicaragua had blocked their entry. The migrants will now be airlifted to El Salvador and continue by bus. The number of migrants from Cuba has increased since a diplomatic thaw with the United States began in 2014. Many fear that the rapprochement will end the United States’ policy of accepting émigrés from Cuba if they reach American soil. + +Argentina lifted exchange controls and allowed the peso to float freely, days after the inauguration of its new president, Mauricio Macri. This forms part of a liberalisation programme to reverse populist policies of the outgoing government of Cristina Fernández de Kirchner. See article. + +Carlos Rosales Mendoza, the founder of La Familia Michoacana, a Mexican drug gang, was found dead along with the bodies of three other people near a motorway in western Mexico. He was on the most-wanted list of the Drug Enforcement Agency in the United States. + + + +A landslide in the southern Chinese city of Shenzhen killed seven people and left dozens of others missing. Officials called it an “industrial safety accident”, caused by a collapsing heap of construction waste. An official who had once overseen the site committed suicide. + +The chairman of one of China’s largest state-owned mobile operators, China Telecom, is being investigated by anti-graft officials. The businessman, Chang Xiaobing, is among several senior executives who have been targeted in an anti- corruption campaign being waged by President Xi Jinping. + +Japan and South Korea agreed to settle a long-standing dispute over women forced to work in Japanese brothels during the second world war. Japan apologised and said it would pay ¥1 billion ($8.3m) to help victims. + +The bodies of six American troops killed by a Taliban suicide-bomber near Bagram air base in Afghanistan were flown home. It was the deadliest attack on American personnel in the country in years. A sizeable contingent of troops is to remain in Afghanistan until at least the start of 2017. + +The season of goodwill extended to America’s House of Representatives, which passed a $1.8 trillion spending measure before Christmas with little argument and thus avoided a government shutdown. Paul Ryan, the new Speaker, was commended for his adroit handling of the bill. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21684815-world-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Jan 2nd 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21684817-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Latin America: Brazil’s fall + +Travel visas: Sticker shock + +Republican tax plans: Be serious + +Global inflation: Low and behold + +Internet security: When back doors backfire + + + + + +Articles Sections Next + +Latin America + +Brazil’s fall + +Disaster looms for Latin America’s biggest economy + +Jan 2nd 2016 | From the print edition + + + +AT THE start of 2016 Brazil should be in an exuberant mood. Rio de Janeiro is to host South America’s first Olympic games in August, giving Brazilians a chance to embark on what they do best: throwing a really spectacular party. Instead, Brazil faces political and economic disaster. + +On December 16th Fitch became the second of the three big credit-rating agencies to downgrade Brazil’s debt to junk status. Days later Joaquim Levy, the finance minister appointed by the president, Dilma Rousseff, to stabilise the public finances, quit in despair after less than a year in the job. Brazil’s economy is predicted to shrink by 2.5-3% in 2016, not much less than it did in 2015. Even oil-rich, sanction-racked Russia stands to do better. At the same time, Brazil’s governing coalition has been discredited by a gargantuan bribery scandal surrounding Petrobras, a state-controlled oil company. And Ms Rousseff, accused of hiding the size of the budget deficit, faces impeachment proceedings in Congress. + +As the B in BRICS, Brazil is supposed to be in the vanguard of fast-growing emerging economies. Instead it faces political dysfunction and perhaps a return to rampant inflation. Only hard choices can put Brazil back on course. Just now, Ms Rousseff does not seem to have the stomach for them. + +Dismal Dilma + +Brazil’s suffering, like that of other emerging economies, stems partly from the fall in global commodity prices. But Ms Rousseff and her left-wing Workers’ Party (PT) have made a bad situation much worse. During her first term, in 2011-14, she spent extravagantly and unwisely on higher pensions and unproductive tax breaks for favoured industries. The fiscal deficit swelled from 2% of GDP in 2010 to 10% in 2015. + +Brazil’s crisis managers do not have the luxury of waiting for better times to begin reform (see article). At 70% of GDP, public debt is worryingly large for a middle-income country and rising fast. Because of high interest rates, the cost of servicing it is a crushing 7% of GDP. The Central Bank cannot easily use monetary policy to fight inflation, currently 10.5%, as higher rates risk destabilising the public finances even more by adding to the interest bill. Brazil therefore has little choice but to raise taxes and cut spending. + +Mr Levy made a game attempt to renovate the building while putting out the fire. He trimmed discretionary spending by a record 70 billion reais ($18 billion) in 2015 and tightened eligibility for unemployment insurance. But it was not enough. The recession dragged down tax revenues. Ms Rousseff gave her finance minister only lukewarm support and the PT was hostile towards him. The opposition, intent on ousting the president, was in no mood to co-operate. + +Although he was a senior treasury official during Ms Rousseff’s disastrous first term, Nelson Barbosa may be able to accomplish more as finance minister. He has political support within the PT. He also has bargaining power, because Ms Rousseff cannot afford to lose another finance minister. One early test will be whether Mr Barbosa persuades a recalcitrant Congress to reinstate an unpopular financial-transactions tax. + +A central target should be pensions. The minimum benefit is the same as the minimum wage, which has risen by nearly 90% in real terms over the past decade. Women typically retire when they are 50 and men stop work at 55, nearly a decade earlier than the average in the OECD (a club of mostly rich countries). Brazil’s government pays almost 12% of GDP to pensioners, a bigger share than older, richer Japan. + +If Brazil is to fulfil its promise, much, much more is needed. A typical manufacturing firm spends 2,600 hours a year complying with the country’s ungainly tax code; the Latin American average is 356. Labour laws modelled on those of Mussolini make it expensive for firms to fire even incompetent employees. Brazil has shielded its firms from international competition. That is one reason why, among 41 countries whose performance was measured by the OECD, its manufacturing productivity is the fourth-lowest. + +To reform work and pensions, Ms Rousseff must face up to problems that have been decades in the making. Some 90% of public spending is protected from cuts, partly by the constitution which, in 1988, celebrated the end of military rule by enshrining generous job protection and state benefits. Because it is so hard to reform, Brazil’s public sector rivals European welfare states for size but emerging ones for inefficiency. Long a drain on economic vitality, Brazil’s overbearing state is now a chief cause of the fiscal crisis. + + + +Waxing and waning: Brazil's economic woes, in charts + +Overcoming such deep-rooted practices would be hard for any government. In Brazil it is made all the harder by a daft political system, which favours party fragmentation and vote-buying and attracts political mercenaries who have little commitment either to party or to programme. The threshold for a party to enter the lower house of Congress is low; today 28 are represented, adding to the legislative gridlock. Congressmen represent entire states, some as populous as neighbouring Latin American countries, which makes campaigning ruinously expensive—one reason why politicians skimmed off huge amounts of money from Petrobras. + +It is therefore hard, despite Mr Barbosa’s advantages, to feel optimistic about the prospects for deep reform. Voters hold politicians in contempt. The opposition is bent on impeaching Ms Rousseff, a misguided battle that could dominate the political agenda for months. The PT has no appetite for austerity. Achieving the three-fifths support in both houses of Congress needed for constitutional reforms will be a tall order. + +Reckless Rousseff + +And if Ms Rousseff fails to bring about change? Most of Brazil’s borrowing is in local currency, which makes default unlikely. Instead, the country may end up inflating away its debts. Brazil’s achievement has been to lift tens of millions of people out of rag-and-flip-flop poverty. Recession will halt that, or even begin to reverse it. The hope is that Brazil, which has achieved hard-won economic and democratic stability, does not lapse once again into chronic mismanagement and turmoil. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21684779-disaster-looms-latin-americas-biggest-economy-brazils-fall/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Travel visas + +Sticker shock + +They have their uses, but the burden visas impose on travellers and recipient countries is too high + +Jan 2nd 2016 | From the print edition + + + +VISAS are necessary evils. They offer governments a way to control their borders, whether to regulate the flow of immigrants or to pick out threats to security. But the paperwork and fees they entail also deter legitimate tourists and business travellers. Researchers at the Cato Institute, a libertarian think-tank, reckon that eliminating all travel visas to the United States would add between $90 billion and $123 billion in annual tourist spending. By one estimate, introducing visa restrictions can lower trade and foreign direct investment between a pair of countries by as much as 25%. + +The job of policymakers is to strike the right balance between such costs and benefits. On short-term business and tourist visas, they have failed. Take security. Visas, proponents say, keep countries safer by controlling who is able to enter. That is true, but they are not very efficient. Terrorists can be home-grown as well as foreign, qualify for visas (as the 9/11 attackers did) or slip across borders illegally. Imposing restrictions on the basis of nationality is the bluntest of instruments, scooping up legions of ordinary tourists and travellers as well as the occasional suspect. America’s decision to tighten the rules for anyone who has recently been to Iran, Iraq, Sudan and Syria will affect aid workers and plotters alike. + +It is a similar story with unauthorised migration. Identifying visitors who might overstay their welcome is a core duty of visa officers. Western countries often require several months’ bank statements, pay slips, proof of financial and property holdings, tax returns and letters from bosses promising that their employees will return (see article). These strictures also put off legitimate travellers. When Canada lifted visa requirements for Czech citizens in 2007, the number of Czech tourists jumped by a third; when restrictions were reintroduced in 2009, after a rise in asylum applications, arrivals fell by 70% over three years. Rather than gumming up all travel, it made more sense to process asylum claims faster. The rules have subsequently been relaxed again. + +Governments can take three steps to ease the burden of visas without simply throwing borders open to all-comers. The first is to slash the length of their forms. Britain, a grave offender when it comes to high fees and piles of paperwork, requires visa applicants to fill in a ten-page form, provide a list of every foreign trip over the past decade and declare that they have never incited terrorism to boot. This is absurd. Schengen-area bureaucrats in continental Europe manage to screen visitors in just two pages. America’s visa-waiver programme allows citizens of 28 countries to visit by filling out a simple online form with basic personal information. + +Second, government departments need to get better at sharing that information, both within borders and across them. Most big receiving countries now demand biometric data such as fingerprints and retinal scans. Many also require “advance passenger information” before a traveller is allowed to board an aeroplane. Cross-checking these data against intelligence and criminal databases will usually obviate the need for lengthy inquisitions. + +La visa loca + +Usually, but not always. Countries will want to investigate some applicants in greater detail. So the third step is to grant longer visas to those people who have easily cleared the necessary hurdles. America routinely grants ten-year visas; Europe routinely grants ten-day ones. That means travellers to the Schengen area must repeatedly prove their good intentions, leading to more otiose paperwork, and fewer visits. Necessary as they are, visas need not be so evil. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21684782-they-have-their-uses-burden-visas-impose-travellers-and-recipient-countries-too/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Republican tax plans + +Be serious + +The Republican candidates’ tax plans are welcome for their detail, but not their contents + +Jan 2nd 2016 | From the print edition + + + +A MONTH before the first primary contest in Iowa, the Republican race is more warlike than wonkish. Yet the candidates have found time to write sometimes intricate plans to reform America’s taxes (see article). Though no one blueprint will become law, if America chooses a Republican president, he may well have a Republican Congress to work with. At that point, the winner’s tax plan will seem less like a campaign gimmick and more like a promise to be kept. + +Republicans are right to seek to reform America’s incoherent, tangled-up tax system. America’s corporate tax is a toxic combination of a high rate—the highest in the OECD—and a series of complex distortions, which encourage bad behaviour such as gorging on debt and stashing cash in foreign subsidiaries. Republicans rightly want to cut the rate and put an end to most of the distortions. Marco Rubio and Jeb Bush would also let businesses deduct the cost of their investments from their taxes immediately, rather than as their assets deteriorate and lose value. This would encourage investment and boost economic growth. + +The candidates have interesting ideas for helping low earners, too. Mr Bush and Donald Trump want to raise the standard deduction (the amount Americans can earn before paying income tax). That would be a simple way to encourage work and to help low- and middle-income households: a similar policy has proved a success in Britain. Mr Bush would also double the earned-income tax credit, a wage top-up for low-earners, for childless workers. Mr Rubio wants to replace the standard deduction with a universal payment to those in work, which would help even those who earn too little to benefit from an increased tax allowance. + +These ideas, though, are mere footnotes to the plans’ central chapters: huge tax cuts for high earners. At 39.6%, America’s top federal income-tax rate is hardly high by global standards. Yet the candidates are racing to see who can promise to cut it most. Mr Bush aims for 28%; Mr Trump 25%. Ted Cruz wants to replace income tax entirely with a 10% flat tax and a value-added tax. Mr Rubio, whose promise of a 35% top rate seems timid by comparison, serves up largesse elsewhere by promising to abolish levies on capital gains and dividends. + +The first problem with these schemes is their cost. On today’s growth forecasts, even Mr Bush’s relatively moderate plan would reduce revenues by $715 billion, or 13.5%, a year by 2026—more than the projected national defence budget. Paying for Mr Trump’s plan with reduced day-to-day spending (as opposed to mandatory spending on things like pensions and health care) would require cutting budgets by a staggering 82%. + +The candidates claim that tax cuts will spur the economy, filling the government’s coffers with new revenue. But the pace of any economic acceleration is uncertain. The evidence that income-tax cuts for high earners boost growth is thin at best. Predictions that tax cuts in the early 2000s would cause enough growth to pay for themselves look foolish today. + +This is no time to be taking chances with America’s budget. Retiring baby-boomers are increasing the cost of providing pensions and health care for the old. There is no appetite among Republicans for defence cuts, and other day-to-day spending has already been cut by 22% in real terms since 2010. If tax cuts were paid for with more borrowing rather than lower spending, they would end up as deadweight for the economy rather than as fuel. + +The plans would also greatly exacerbate inequality, which has increased in the 15 years since George W. Bush cut taxes for high earners. Under Mr Trump’s plan, for instance, the top 1% of earners would receive a windfall worth 18% of their after-tax income. Middle-earners have to settle for a 5% boost; the bottom fifth, just 1%. This belies Mr Trump’s claim to champion the cause of ordinary working people. The other plans are little better; Mr Rubio’s plan is probably more generous at the bottom than at the top, but he gives middle-income Americans little to cheer about. + +The Republicans have spent much of Barack Obama’s presidency denouncing debt and deficits. Yet their proposals to introduce unaffordable tax cuts for the rich would send both ballooning. So long as such schemes are a prerequisite for winning the Republican nomination, a party that prides itself on economic management will lack a credible policy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21684780-republican-candidates-tax-plans-are-welcome-their-detail-not-their-contents-be/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Global inflation + +Low and behold + +Another year of low prices will create strains in the world economy + +Jan 2nd 2016 | From the print edition + + + +ECONOMISTS don’t forecast because they know, said J.K. Galbraith; they forecast because they’re asked. A question that is increasingly put to them is whether inflation, which has been remarkably quiescent for years, will spring a surprise in 2016. After all, the debt troubles that have weighed down rich economies since 2007 are fading; labour markets in America, Britain and Germany are increasingly tight; housing markets are gathering steam; and the Federal Reserve has just raised interest rates for the first time in almost a decade. + +Inflation in America and Europe should indeed pick up from its present, near-zero state as the big declines in energy prices at the turn of 2015 drop out of the headline rate. But a glut in the supply of crude means that oil prices are falling again. If debt is receding as a problem in rich countries, it looms larger in emerging markets, where overcapacity brought on by binge-borrowing exerts a downward force on prices. There is inflation in commodity-exporting countries, such as Brazil, whose currencies have been trashed. But global inflation is a tug-of-war between bottlenecks in parts of the rich world and imported deflation from emerging markets, and the enduring fall or stagnation of prices looks set to dominate for a while yet (see article). Indeed, this “lowflation” means that three aspects of the world economy are worth watching in 2016. + +Start with Saudi Arabia. The falling price of crude is in part a consequence of its commitment (reiterated by OPEC ministers on December 4th) to produce at full tilt. The idea is to flush out the weaker producers in America’s shale-oil industry and elsewhere. This is proving a costly gambit. Saudi Arabia needs a barrel of oil to fetch around $85 to finance public spending and around $60 to keep its current account in balance. Yet the oil price recently fell below $36, to an 11-year low, before rebounding a little. America has sustained oil production of above 9m barrels a day, despite a sharp fall in the number of oil rigs, suggesting that shale firms are becoming more efficient. + +This week Saudi Arabia said that it would cut local subsidies on petrol, electricity and water in order to chip away at a budget deficit that reached 367 billion riyals ($98 billion), or 15% of GDP, in 2015. The Saudis are burning through their (ample) foreign-exchange reserves to pay for imports while maintaining the riyal’s peg with the dollar. But the cost of this strategy has already forced two other oil exporters, Kazakhstan and, more recently, Azerbaijan, to abandon their dollar pegs. The public finances of other big oil producers, such as Russia and Nigeria, are also under pressure. No wonder a devaluation of the riyal this year is a favoured tail-risk for currency forecasters. + +A second place to watch is China. A construction boom has left it with a mountain of debt and excess capacity in some industries—notably steel, whose falling global price has claimed jobs in Europe’s industry and led to growing complaints of Chinese dumping. Factory-gate prices have fallen in China for 45 consecutive months. Further fiscal and monetary stimulus should help to boost demand, but will also hinder the management of China’s exchange rate, which is already under pressure from an outflow of capital. + +As with the riyal, the yuan has just about kept pace with the dollar’s ascent over the past two years, leaving it looking expensive. Beijing has signalled that it wants to benchmark the yuan against a basket of currencies, and some forecasters expect a gradual decline in its value against the dollar in 2016. But there is an understandable fear that the yuan may slip anchor, potentially touching off a round of devaluations in Asia. + +A third outcome from continued lowflation will be increasingly lopsided economies in the rich world, particularly in America, where recovery is more advanced than in Europe. If productivity stays as weak as it has been recently, unemployment is likely to fall still further. At the same time, slow growth in emerging markets is likely to keep downward pressure on commodity prices and on their currencies. A strong dollar has already driven a wedge between the performance of America’s manufacturing and service industries. Further appreciation would make it harder for the Federal Reserve to push through more increases in interest rates. + +Strong on jobs, weak on prices + +All this would make for a strangely configured economy by the end of the year. An unemployment rate of 4%, a Fed Funds rate below 1%, an overvalued dollar, a strong housing market and inflation below the Fed’s target of 2% is a plausible, if very odd, mix, which could portend either a sudden burst of inflation or enduringly feeble demand (see article). An honest economist will admit the uncertainties in any forecast. But another year of lowflation will surely tax policymakers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21684781-another-year-low-prices-will-create-strains-world-economy-low-and-behold/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Internet security + +When back doors backfire + +Some spy agencies favour “back doors” in encryption software, but who will use them? + +Jan 2nd 2016 | From the print edition + + + +WITHOUT encryption, internet traffic might as well be written on postcards. So governments, bankers and retailers encipher their messages, as do terrorists and criminals. + +For spy agencies, cracking methods of encryption is therefore a priority. Using computational brute force is costly and slow, because making codes is far easier than breaking them. One alternative is to force companies to help the authorities crack their customers’ encryption, the thrust of a new law just passed in China and a power that Western spy agencies also covet. Another option is to open “back doors”: flaws in software or hardware which make it possible to guess or steal the encryption keys. Such back doors can be the result of programming mistakes, built by design (with the co-operation of the encryption provider) or created through unauthorised tinkering with software—or some combination of the three. + +The problem with back doors is that, though they make life easier for spooks, they also make the internet less secure for everyone else. Recent revelations involving Juniper, an American maker of networking hardware and software, vividly demonstrate how. Juniper disclosed in December that a back door, dating to 2012, let anyone with knowledge of it read traffic encrypted by its “virtual private network” software, which is used by companies and government agencies worldwide to connect different offices via the public internet. It is unclear who is responsible, but the flaw may have arisen when one intelligence agency installed a back door which was then secretly modified by another. The back door involved a faulty random-number generator in an encryption standard championed by America’s National Security Agency (NSA); other clues point to Chinese or British intelligence agencies. + +Decrypting messages that involve one or more intelligence targets is clearly within a spy agency’s remit. And there are good reasons why governments should be able to snoop, in the interests of national security and within legal limits. The danger is that back doors introduced for snooping may also end up being used for nefarious ends by rogue spooks, enemy governments, or malefactors who wish to spy on the law-abiding. It is unclear who installed Juniper’s back door or used it and to what end. + +Intelligence agencies argue that back doors can be kept secret and are sufficiently complex that their unauthorised use is unlikely. But an outsider may stumble across a weakness or steal details of it. America, in particular, has a lamentable record when it comes to storing secrets safely. In the summer it became known that the Office of Personnel Management, which stores the sensitive personal data of more than 20m federal employees and others, had been breached—allegedly by the Chinese. Some call that the biggest disaster in American intelligence history. It is rivalled only by the data taken by Edward Snowden, a former NSA contractor now living in Moscow. (The authorities responsible for airport security also let slip the details of master keys that can open most commercially available luggage—a form of physical back door.) + +Push back against back doors + +Calls for the mandatory inclusion of back doors should therefore be resisted. Their potential use by criminals weakens overall internet security, on which billions of people rely for banking and payments. Their existence also undermines confidence in technology companies and makes it hard for Western governments to criticise authoritarian regimes for interfering with the internet. And their imposition would be futile in any case: high-powered encryption software, with no back doors, is available free online to anyone who wants it. + +Rather than weakening everyone’s encryption by exploiting back doors, spies should use other means. The attacks in Paris in November succeeded not because terrorists used computer wizardry, but because information about their activities was not shared. When necessary, the NSA and other agencies can usually worm their way into suspects’ computers or phones. That is harder and slower than using a universal back door—but it is safer for everyone else. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21684783-some-spy-agencies-favour-back-doors-encryption-software-who-will-use-them-when-back/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On business, species, elections, whistleblowers, plurals, Donald Trump: Letters to the editor + + + + + +Articles Sections Next + +On business, species, elections, whistleblowers, plurals, Donald Trump + +Letters to the editor + +Jan 2nd 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + +Changing gears + + + +It is true that businesses need to make deliberate decisions about clock speed, and therefore strategy, according to their individual circumstances (“The creed of speed”, December 5th). Research for our recent book, “Your Strategy Needs a Strategy”, showed that competitive conditions overall have accelerated in some important respects. For example, the volatility of competitive rankings has increased several fold in many industries, and the five-year mortality rate for public corporations has increased from around 5% to over 30% in recent decades. + +However, a more important finding is that there has been a marked divergence in competitive conditions, requiring companies to adopt very different approaches to strategy according to what they face. Although short-term adaptive strategies are appropriate for some fast-moving, unpredictable businesses, others will be best served by more classical plan-based approaches. Furthermore, large companies will need to master the art of running strategies with different clock speeds in different parts of their business. + +One might say that businesses need not only an accelerator pedal, but a gearbox too. + +MARTIN REEVES + +Director + +BCG Henderson Institute + +New York + +I am amazed that your leader (“Hyperactive, yet passive”, December 5th) cited lengthening maturities of company bonds as evidence against corporate short-termism. Rather, that is evidence of companies locking-in historically low interest rates driven down by governments’ monetary policies. The proceeds of this low-cost debt have been used to repay high-cost debt, or to fund share buy-backs, both enhancing earnings per share in the short term. This is hardly value-creating for the economy at large. + +FRANK KNOWLES + +Clavering, Essex + +The data you presented to challenge the widely held view that the speed of business is increasing are not convincing. The measures chosen, such as years of job tenure, bond durations and length of shareholdings, merely capture the churn of business, not its speed. They capture how fast the engine of business is revving, but not its velocity. + +For time-based competition, the critical measures of speed are the response time to customers and the development time for new products and services. In most industries these dropped dramatically in the 1970s and 1980s. + +JOSEPH BLACKBURN + +Professor of operations management, emeritus + +Vanderbilt University + +Nashville, Tennessee + + + + + +Invasive species + + + +Although eradicating invasive species is indeed difficult (“Day of the triffids”, December 5th), the primary goal of most management efforts is to reduce their damage. In the case of invasive brown tree snakes on Guam, the economic and ecological damage is clear. Only two of the 12 native forest-bird species remain, $4m is lost a year in productivity from the snakes electrocuting themselves on power lines and one out of 1,000 emergency-room visits is from a snake bite. If the snakes were to colonise Hawaii, the estimated damage could be as high as $2 billion a year. + +It is important to note the difference between exotic and invasive species. The latter cause great harm ecologically and economically. But there are numerous exotic species, such as rainbow trout, which are not considered invasive. We agree that a knee-jerk reaction to all exotic species is not the best policy. However, when an exotic species becomes injurious and its costs high, investing in control measures is justified. + +LARRY CLARK + +Director + +USDA National Wildlife Research Centre + +Fort Collins, Colorado + + + + + +Legitimacy at the polls + +Venezuela’s Bolivarian revolution was “resoundingly rejected” in the recent parliamentary election, you say (“A democratic counter-revolution”, December 12th). Yet the defeated party of President Nicolás Maduro got 41%. That was a larger share of the vote than the 37% that the victorious Conservatives gained in Britain’s election last May. + +JULIA BUXTON + +Professor of comparative politics + +Central European University + +Budapest + + + + + +Rewarding whistleblowers + + + +Whistleblowing has increased because of the success of American whistleblower-reward programmes (“The age of the whistleblower”, December 5th). These programmes offer monetary awards, confidentiality and job protection. In 2015 British regulators failed to enhance their anti-fraud efforts in the financial industry when they decided against introducing such incentives. My law firm has been contacted by dozens of people in Britain hoping to participate in American whistleblower programmes. + +In instances where their claims did not fall under American jurisdiction, every one of them chose to keep quiet rather than contact British regulators. Without the potential for financial rewards, not one was willing to risk his livelihood by stepping forward. + +In the financial world, it’s all about risk versus benefit. For whistleblowers, it’s the same calculation. + +ERIKA KELTON + +Phillips & Cohen LLP + +Washington, DC + + + + + +Plural sex + +According to Dennis Baron’s Web of Language Distinguished Usage Panel, singular “they” is the word of the year. + +But I may not be the only one of your readers to be troubled by the ambiguity of a proposition in “Pot luck”: + +“I have to be closely attached to someone before I am comfortable having sex with them” (December 12th). + +RONALD MACAULAY + +Claremont, California + + + + + +Better than the primaries + +The qualities associated with strong leadership are well known. Potential business leaders are often evaluated on their verbal and non-verbal IQ, communication skills, temperament, physical fitness and health, and the ability to handle stressful situations. + +Rather than dwelling on the buffoonery of Republican candidates for president (“The greatest show on earth”, December 5th), why not call for formal leadership testing? Those who are likely to excel will relish in brandishing their credentials. Those who refuse testing would be branded cowards. Those who are tested and perform poorly would be exposed and humiliated, giving the voting public a picture of their true calibre. + +GOUTHAM RAO + +Clinical associate professor + +Pritzker School of Medicine + +University of Chicago + + + +I was relieved to read of Nate Silver’s calculation that only about 6-8% of the electorate—roughly equal to the proportion who think the moon landings were faked—really support Donald Trump. + +Can I assume we are talking about the same 6-8%? + +JOSEPH FRAZIER + +Yachats, Oregon + +* Thank you, thank you, thank you. Despite repeated scrutiny, the cover of The World in 2016 does not reveal a likeness of Donald Trump. The future looks brighter already. + +CLIFF FELDWICK + +Columbia, Maryland + +* Letter appears online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21684762-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Brazil’s crisis: Irredeemable? + + + + + +Articles Sections Next + +Brazil’s crisis + +Irredeemable? + +A former star of the emerging world faces a lost decade + +Jan 2nd 2016 | RIO DE JANEIRO | From the print edition + + + +THE longest recession in a century; the biggest bribery scandal in history; the most unpopular leader in living memory. These are not the sort of records Brazil was hoping to set in 2016, the year in which Rio de Janeiro hosts South America’s first-ever Olympic games. When the games were awarded to Brazil in 2009 Luiz Inácio Lula da Silva, then president and in his pomp, pointed proudly to the ease with which a booming Brazil had weathered the global financial crisis. Now Lula’s handpicked successor, Dilma Rousseff, who began her second term in January 2015, presides over an unprecedented roster of calamities. + +By the end of 2016 Brazil’s economy may be 8% smaller than it was in the first quarter of 2014, when it last saw growth; GDP per person could be down by a fifth since its peak in 2010, which is not as bad as the situation in Greece, but not far off. Two ratings agencies have demoted Brazilian debt to junk status. Joaquim Levy, who was appointed as finance minister last January with a mandate to cut the deficit, quit in December. Any country where it is hard to tell the difference between the inflation rate—which has edged into double digits—and the president’s approval rating—currently 12%, having dipped into single figures—has serious problems. + +Ms Rousseff’s political woes are as crippling as her economic ones. Thirty-two sitting members of Congress, mostly from the coalition led by her left-wing Workers’ Party (PT), are under investigation for accepting billions of dollars in bribes in exchange for padded contracts with the state-controlled oil-and-gas company, Petrobras. On December 15th the police raided several offices of the Party of the Brazilian Democratic Movement (PMDB), a partner in Ms Rousseff’s coalition led by the vice-president, Michel Temer. + +Brazil’s electoral tribunal is investigating whether to annul Ms Rousseff’s re-election in 2014 over dodgy campaign donations. In December members of Congress began debating her impeachment. The proceedings were launched by the speaker of the lower house, Eduardo Cunha (who though part of the PMDB considers himself in opposition) on the grounds that Ms Rousseff tampered with public accounts to hide the true size of the budgetary hole. Some see the impeachment as a way to divert attention from Mr Cunha’s own problems; Brazil’s chief prosecutor wants him stripped of his privileged position so that his role in the Petrobras affair can be investigated more freely. Mr Cunha denies any wrongdoing. + + + +Brazil is no stranger to crises. Following the end of two decades of military rule in 1985, the first directly elected president, Fernando Collor, was impeached in 1992. After a “lost decade” of stagnation and hyperinflation ended in the mid-1990s the economy was knocked sideways by the emerging-markets turmoil of 1997-98. In the mid-2000s politics was beset by the scandal of a bribes-for-votes scheme known as the mensalão (“big monthly”, for the size and schedule of the payments), which eventually saw Lula’s chief of staff jailed in 2013. + +Yet rarely, if ever, have shocks both external and domestic, political and economic, conspired as they do today. During the original lost decade global conditions were relatively benign; in the crisis of the late 1990s the tough measures to quell inflation and revive growth taken after Mr Collor’s departure stood Brazil in moderately good stead; when scandal rocked the 2000s commodity markets were booming. + +A sad convergence + +Now prices of Brazilian commodities such as oil, iron ore and soya have slumped: a Brazilian commodities index compiled by Credit Suisse, a bank, has fallen by 41% since its peak in 2011. The commodities bust has hit economies around the world, but Brazil has fared particularly badly, with its structural weaknesses—poor productivity and unaffordable, misdirected public spending—exacerbating the damage. Regardless of what she may or may not have done with respect to the impeachment charge, Ms Rousseff’s cardinal sin is her failure to have confronted these problems in her previous term, when she had some political room for manoeuvre. Instead, that term was marked by loose fiscal and monetary policies, incessant microeconomic meddling and fickle policymaking that bloated the budget, stoked inflation and sapped confidence. + +Poor though her record has been, some of these problems have deeper roots in what is in some ways a great achievement: the federal constitution of 1988, which enshrined the transition from military to democratic rule. This 70,000-word doorstop of a document crams in as many social, political and economic rights as its drafters could dream up, some of them highly specific: a 44-hour working week; a retirement age of 65 for men and 60 for women. The “purchasing power” of benefits “shall be preserved”, it proclaims, creating a powerful ratchet on public spending. + + + +Since the constitution’s enactment, federal outlays have nearly doubled to 18% of GDP; total public spending is over 40%. Some 90% of the federal budget is ring-fenced either by the constitution or by legislation. Constitutionally protected pensions alone now swallow 11.6% of GDP, a higher proportion than in Japan, whose citizens are a great deal older. By 2014 the government was running a primary deficit (ie, before interest payments) of 32.5 billion reais ($13.9 billion) (see chart). + +Mr Levy tried to live up to the nickname he had earned during an earlier stint as a treasury official—“Scissorhands”—with record-breaking cuts of 70 billion reais from discretionary spending. But Mansueto Almeida, a public-finance expert, points out that this work was more than countered by constitutionally mandated spending increases; government expenditure as a share of output rose in 2015. On top of that, a new scrupulousness in government accounting surely not unrelated to the impeachment proceedings has seen 57 billion reais in unpaid bills from years past newly recognised by the treasury. + +Nor could Mr Levy easily fill the fiscal hole by raising taxes. Taxes already consume 36% of GDP, up from a quarter in 1991. And the recession has hit tax receipts hard. On December 18th, days after Fitch, a rating agency, followed the lead of Standard & Poor’s in downgrading Brazilian debt, Mr Levy threw in the towel. His job went to Nelson Barbosa, previously the planning minister, who insists he is committed to following the same policies. But before his elevation Mr Barbosa made no secret of favouring a more gradual fiscal adjustment—for example, a primary surplus of 0.5% of GDP in 2016, against Mr Levy’s preferred 0.7% (and an original promise of 2% a year ago). The real and the São Paulo stockmarket tumbled on news of his appointment. + +Analysts at Barclays, a bank, expect debt to reach 93% of GDP by 2019; among big emerging markets only Ukraine and Hungary are more indebted. The figure may still seem on the safe side compared with 197% in Greece or 246% in Japan. But those are rich countries; Brazil is not. As a proportion of its wealth Brazil’s public debt is higher than that of Japan and nearly twice that of Greece. + +Unable to increase taxes, Ms Rousseff’s government may prefer something even more troubling to investors and consumers alike: inflation. Faced with the inflationary pressure that has come with the devalued real, the Central Bank has held its nerve, increasing its benchmark rate by three percentage points since October 2014 and keeping it at 14.25% since July in the face of the recession. But despite this juicy rate the real continues to depreciate. + +There is a worry that the bank may be unable to raise rates further for fear of making public debt unmanageable—what is known as “fiscal dominance”. This year the treasury spent around 7% of GDP servicing public debt. What is more, raising rates may have the perverse effect of stoking inflation rather than quenching it; an increasing risk of default as borrowing costs grow is likely to see investors dumping government bonds, provoking further currency depreciation. + +A handful of economists, including Monica de Bolle of the Peterson Institute for International Economics, believe that Brazil is on the verge of fiscal dominance. And once interest rates no longer have a hold on inflation, she says, it can quickly spiral out of control. Forecasts by Credit Suisse warn that prices could be rising by 17% in 2017. Three-quarters of government spending remains linked to the price level, embedding past inflation in future prices. That said, the economy as a whole is much less indexed than it was in the hyperinflationary early 1990s. That leaves the government a bit more time, thinks Marcos Lisboa of Insper, a university in São Paulo. But not much more: perhaps a year or two. + +Despite this pressing economic need for speed there seems to be no political capacity for it. Members of Congress are consumed by Ms Rousseff’s impeachment. By February they must decide whether to send her case to the Senate, which would require the votes of three-fifths of the 513 deputies in the lower house. To fend off such a decision Ms Rousseff is rallying her left-wing, anti-austerity base. + +Gently doesn’t always do it + +These efforts are meeting with some success: in December pro-government rallies drew more people than anti-government ones for the first time all year. It looks unlikely that the impeachment will indeed move to the Senate (which would trigger a further six months of turmoil). But this hardly provides a political climate conducive to belt-tightening, let alone to the amendment of the constitution which Mr Barbosa has said is needed to deal with the ratchet effect on benefits. Fiscal adjustment is anathema to the government workers and union members who are Ms Rousseff’s core supporters. + +Like the country’s economic problems, its political ones, while specific to today’s particular scandals and manoeuvring, can be traced to the transition of the 1980s. History reveals a consistent tendency towards negotiated consensus at Brazil’s political watersheds; it can be seen in the war- and regicide-free independence declared in 1822, the military coup of 1964, which was mild compared with the blood-soaked affairs in Chile and Argentina, and the transition that created the new constitution. One aspect of this often admirable trait is a resistance to purging. The mid-1980s saw a lot of institutions—the federal police, the public prosecutor’s office, the judiciary, assorted regulators—overhauled or created afresh. But many of the old regime kept their jobs in the civil service and elsewhere. The transition was thus bound to be a generational affair. + + + +So it is now proving, with a retiring old guard being replaced by fresh blood often educated abroad. In 2013 the average judge was 45 years old, meaning he entered university in a democratic Brazil. Civil servants are getting younger and better qualified, says Gleisson Rubin, who heads the National School of Public Administration. More than a quarter now boast a postgraduate degree, up from a tenth in 2002. Sérgio Moro, the crusading 43-year-old federal judge who oversees the Petrobras investigations, and Deltan Dallagnol, the case’s 35-year-old lead prosecutor, are the most famous faces of this new generation. + +Unfortunately, this rejuvenation does not extend to the institution most in need of it: Congress. Its younger faces typically have family ties to the old guard. “Party politics is a market for lemons,” says Fernando Haddad, the fresh-faced PT mayor of São Paulo and a rare exception to the dynastic rule, nodding to George Akerlof’s classic analysis of adverse selection in the market for used cars: it attracts the venal and repels the honest. Consultants who have advised consecutive Congresses agree that each one is feebler than the last. + +Brazilians have noticed the decline, and are transferring their hopes accordingly. “Judges and prosecutors are becoming more legitimate representatives of the Brazilian people than politicians,” says Norman Gall of the Braudel Institute, a think-tank in São Paulo. Everyone wants a selfie with Mr Moro and, disturbingly, nearly half of Brazilians think that military intervention is justified to combat corruption, according to a recent poll. Barely one in five trusts legislators; just 29% identify with a political party. + +Monthly, oily, deeply + +That last fact is perhaps particularly impressive given that they have so many parties to choose from. Keen to promote pluralism the constitution’s framers set no national cut-off below which a party’s votes would not count. It is possible to get into Congress with less than 1% of the vote: in principle, it could be done with 0.02%. As a result the number of parties has grown from a dozen in 1990 to 28 today. The three biggest—the PT, the PMDB and the opposition centre-right Party of Brazilian Social Democracy (PSDB)—together account for just 182 of 513 seats in the lower house and 42 out of 81 senators. + +One of the causes of the mensalão scandal was corruption that provided Lula’s government with a way to get the votes it needed from the disparate small parties. The petrolão (“big oily”, as the Petrobras affair is widely known) apparently shared a similar aim. Such ruses may have helped PT governments pass some good laws, such as an extension of the successful Bolsa Família (family fund) cash-transfer programme. But the party was not able to do all that it had said it would; potentially helpful reforms in which it was less invested fell by the wayside. Raphael Di Cunto of Pinheiro Neto, a big law firm in São Paulo, points to many antiquated statutes in need of an update, such as the Mussolini-inspired labour code (from 1943) and laws governing foreign investments (1962) and capital markets (1974). + + + +A Congress in which dysfunction feeds corruption which feeds further dysfunction is not one likely to take the hard decisions that the economy needs. But this is the Congress Brazil has: though there will be local elections in October 2016, congressional elections, like the next presidential poll, are not due until 2018. Can Brazil’s public finances hold out that long? + +Many prominent economists think they just about can. They forecast a “muddling-through” in which Ms Rousseff holds on to her job, Congress passes a few modest spending cuts and tax rises, including a financial-transactions levy, the Central Bank continues to fight inflation, the cheap real boosts exports and investors don’t panic. After three years of this, the theory goes, an electorate fed up with stagnation and sleaze will give the PSDB a clear mandate for change. Ms Rousseff narrowly defeated the party’s candidate in 2014 by deriding his calls for prudence as heartless “neoliberalism”, only to propose a similar agenda (through gritted teeth) immediately after winning. If proposed by a PSDB in power that actually believed in them, such measures might receive cross-party support—though given the PSDB’s spiteful unwillingness to support Mr Levy’s measures in 2015 this would not be without irony. + +Such a scenario is possible. Figures for the third quarter of 2015 show exports picking up. Price rises could slow down as steep increases in government-controlled prices for petrol and electricity put in place in 2015 run their course. Politicians and policymakers are keenly aware that Brazilians are less tolerant of inflation than in the 1980s and 1990s, when rates of 10% would have seemed mild. + +Investors are staying put, at least in aggregate. Yield-hungry asset managers are taking the place of pension and mutual funds that left in anticipation of Brazil’s inevitable demotion to junk status. The real has fallen 31% since the start of 2015 and the stockmarket is down by 12.4%; but though battered they are not knocked flat. The banking system is well capitalised and, observers agree, diligently monitored by the Central Bank. The $250 billion in foreign-denominated debt racked up by Brazilian companies during the commodity-price-fuelled binge has ballooned in local-currency terms and remains a worry. But much of it is hedged through the firms’ own dollar revenues or with swaps—though settling some of those swaps has cost the government, which sold them, some 2% of GDP this year. + + + +Waxing and waning: Brazil's economic woes, in charts + +The sardonic Mr Lisboa observes with uncharacteristic optimism that “at last people are talking seriously about Brazil’s structural problems”. Fiscal dominance has left arcane discussions among economic theorists and burst onto newspaper columns. Mr Barbosa is openly discussing pension reform and the constitutional change that would have to go with it. In October the PMDB, which tends to lag behind public opinion more than to lead it, published a manifestothat talked about privatising state businesses and raising the retirement age. Even the famously stubborn Ms Rousseff has begun to listen rather than to hector, says a foreign economic dignitary who met her recently. + +But the fact that muddling through may be possible does not mean it is assured. It hinges on the hope that politicians come to their senses more quickly than they have done in the past (witness the lost decade begun in the 1980s). It also assumes that Brazil’s penchant for consensus will hold its people back from social unrest on the sort of scale that topples regimes in other countries. The anti-government protests of 2015 were large, drawing up to a million people in a single day. But they were middle-class affairs which took place on sporadic Sundays, causing Ms Rousseff more annoyance than grief. As wages sag and unemployment rises, though, tempers could flare. If they do there will be every chance of a facile populist response that does even deeper economic damage. + +Should Ms Rousseff be booted out—through impeachment, annulment of the election or coerced resignation (none of which looks likely just now)—chaos would surely ensue. Her core supporters may be less numerous than they once were, but she has many more than Mr Collor had in 1992. They would close ranks against the “coup-mongers”. + +The strength of Brazil’s institutions suggests something shy of the failed populist experiments of some South American neighbours. And the fact that voters in Argentina and Venezuela rebuffed that populism in the past few months has not escaped the notice of Brazil’s politicians. But every month of dithering and every new petrolão revelation chips away at Brazil’s prospects. The 2010s are already certain to be another lost decade; GDP per person won’t rebound for years to come. + +It will be a long time before a president can match the pride with which Lula showed off his Olympic trophy. But if Brazil’s politicians get their act together, the 2020s could be cheerier. Alas, if they do not, things will get a great deal worse. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21684778-former-star-emerging-world-faces-lost-decade-irredeemable/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Republican tax plans: Indecent disclosure + +Race on campus: Of slavery and swastikas + +Rating police officers: Revenge of the nerds + +Election forecasting: Prediction 2016 + +Lexington: Pitchfork politics + + + + + +Articles Sections Next + +Republican tax plans + +Indecent disclosure + +The Republican candidates’ tax proposals are exorbitant + +Jan 2nd 2016 | WASHINGTON, DC | From the print edition + + + +ASK Republicans how best to reform taxes, and they will inevitably mention Ronald Reagan. In 1986 the Gipper slashed levies on earnings; the highest income-tax rate tumbled from 50% to 28%. At the same time, Reagan simplified taxes by closing loopholes and killing off exemptions. Today’s Republican presidential contenders would dearly love to repeat the trick. But they have given up a key ingredient in the recipe. The 1986 reform cost nothing, mainly because taxes on businesses went up. In stark contrast, today’s Republican tax plans are jaw-droppingly expensive. + +American taxes are a mess. There are seven different rates of federal income tax, up from three after Reagan’s reform (in Canada there are four; in Britain, three). Endless exemptions and deductions cost just over 7% of GDP. These distort incentives and benefit mainly richer folk, but are hard to keep track of because their cost stays off the government’s books. Filling in tax returns takes the average non-business filer eight hours and costs $110 every year. By one recent estimate, the inconvenience costs of filing add up to 1.3% of GDP. + + + +Business taxes are no better. At 39%, the tax on corporate profits is the highest in the OECD. In reality, businesses pay less because of a whirlwind of incentive-distorting exemptions. Want to invest in America? Issue shares to finance your project, and your marginal tax rate ends up at 38%. Load up on risky debt and the rate plummets—in fact, you will benefit from a 6% subsidy. Across industries, average tax rates range from 40% for making software to 15% for building mineshafts. The World Bank and PricewaterhouseCoopers, an accounting firm, ranks America’s tax system 53rd in the world, wedged between Jordan and Vanuatu. It takes American businesses 87 hours, on average, to pay their taxes; in France it takes just 26 hours. + +Tax reform, then, is essential, and Republicans have embraced the cause. Among the presidential candidates, Jeb Bush has proposed the most detailed plan, and is cheered on by a crew of right-leaning economists. One thing keeping the plan on the shelf is that Mr Bush lags behind in the polls. But thanks to its detail—and the scrutiny poured on it as a result—it is a useful benchmark. + +Mr Bush rightly wants to reduce the number of income tax bands, to three. In doing so, though, he calls for a whopping reduction in the top rate of income tax to 28%, from 39.6% today. Mr Bush would slash the corporate tax rate to 20% and all but abolish the tax incentive to borrow. Today, if a firm buys a new computer or piece of machinery, it can knock the cost off its tax bill only incrementally as the new equipment loses value; but under Mr Bush’s plan it could deduct the full cost up-front. That should encourage investment. + +The plan is hugely expensive. Before accounting for its economic effects, it would cost $6.8 trillion, or 2.6% of GDP, over a decade, according to the Urban-Brookings Tax Policy Centre, a think-tank. About two-thirds of the bill comes from income-tax cuts. Cuts for high-earners are costly, because the highest-earning 1%—who would see a 12% increase in after-tax income under the plan—produce almost half of income-tax revenues. By 2026 the $715 billion annual cost of the plan exceeds the projected budget for national defence. + +The plan would wrench on purse-strings that are already stretched. By 2025 government health-care and pensions programmes will have nearly 60% more beneficiaries than in 2007. Mr Bush, like most Republicans, wants to increase rather than cut defence spending. And non-defence day-to-day spending has already been slashed by 22% in real terms since 2010. + +Mr Bush’s plan, then, looks unachievable. Incredibly, though, it is one of the most modest in the pack. Donald Trump, who tops opinion polls, wants to cut income taxes still further; under his plan, the top rate of tax falls to 25%. Whereas Mr Bush would nearly double the standard deduction, the amount that can be earned before paying income tax Mr Trump would quadruple it. The Donald would cut business taxes more aggressively, too. Though he talks about raising taxes on hedge-fund managers by removing the “carried interest” provision, Mr Trump’s cuts to income tax are so deep that the provision barely matters. In all, reckons the Tax Policy Centre, Mr Trump’s plan is almost 40% more expensive than Mr Bush’s. + +Must be funny + +Where to look for realism? Marco Rubio offers more modest income-tax cuts, but would eliminate most taxes on capital gains and company dividend payments. Many economists view these taxes as inefficient. Yet capital is mostly the preserve of the well-off: only a fifth of adults who earn less than $30,000 tell pollsters they have stockmarket investments, compared with nearly nine in ten who earn more than $75,000. Citizens for Tax Justice, an advocacy group, reckons Mr Rubio’s plan would make the pockets of the top 1% of earners bulge more than Mr Bush’s would. + + + +Teflon Trump: Donald Trump’s gravity-defying poll ratings + +Ted Cruz has the boldest plan. The Texan senator promises to replace all income taxes—including payroll taxes which fund Social Security and Medicare payments—with a 10% flat tax. Business taxes would be replaced with a value-added tax of 16%. This plan is roughly as expensive as the Bush plan, before accounting for its economic effects, according to the Tax Foundation, a right-leaning think tank. But it would be still more generous to the highest earners, as value-added taxes are less progressive than income tax. + +The candidates all say their plans will increase economic growth, boosting tax-revenues and dramatically bringing down costs. Mr Bush’s cheerleaders say his plan will add 0.5 percentage points to growth each year, knocking two-thirds off the so-called “static” cost. Mr Trump claims—with a straight face—that his plan is revenue-neutral. + +Done right, reforming and simplifying taxes would boost growth. Yet the gargantuan cost of the plans comes from tax cuts for high earners, and the evidence that these help the economy is patchy. Crucially, whether tax cuts boost growth depends on how they are paid for. If they cause deficits to gape larger, tax cuts will weigh on growth rather than support it, by gradually pushing up interest rates. + +There is better evidence that tax cuts for businesses help the economy. But that does not mean they would pay for themselves—as Mr Trump suggests—or make up for expensive giveaways elsewhere. The best evidence suggests that taxes on dividends, which Mr Rubio would abolish, have no effect at all on investment. More than most proposals, Republican tax plans are articles of faith. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21684808-republican-candidates-tax-proposals-are-exorbitant-indecent-disclosure/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Race on campus + +Of slavery and swastikas + +The University of Missouri’s efforts to placate protesters have created a backlash + +Jan 2nd 2016 | COLUMBIA, MISSOURI | From the print edition + +Where intersextionality meets microaggressive adultism + +WISHING for his death “in a fiery car accident” was only one of many messages directed at Chuck Henson when he became the University of Missouri’s new interim vice-chancellor for inclusion, diversity and equity. Mr Henson does not follow social media, but his wife does. Recently she agreed to stop reading the death threats and other missives intended for her husband, and instead to help him focus on his task, which is to end the racial turmoil that has made the university the centre of a nationwide campus protest movement over race for the past three months. + +“We have a unique history and we have a unique problem,” says Mr Henson, a law professor. Missouri was a slave state until 1865; its first public university was founded in 1839 by James Rollins, an owner of slaves. It first admitted black students only in 1950 (Yale’s first black student graduated in 1857, Harvard’s in 1870). The relations of African-Americans both with other students, and with the overwhelmingly white faculty, have frequently been uneasy. Anger boiled over in November, leading to the resignation of Tim Wolfe, the university’s president and chancellor, after weeks of protests by students outraged by what they saw as Mr Wolfe’s failure to deal with racism on campus. + +Offensive incidents last year included a swastika smeared with faeces on the wall of a dormitory bathroom and racial epithets hurled at black students, including Payton Head, the president of the student body. Cynthia Frisby, a member of faculty, recounted in a Facebook post how, when jogging along a road, a white man in a lorry flying the Confederate flag stopped, spat at her, delivered racist abuse, gave her the finger and drove off. “I have been called the N-word too many times to count”, she wrote, including, she says, by other members of faculty. The student protests gained momentum when Jonathan Butler, a graduate student, staged a hunger strike to force Mr Wolfe to resign. Yet the turning point was the announcement by members of the football team that they would not play or practise and boycott a game against Brigham Young University (BYU) unless Mr Wolfe stepped down. The footballers’ boycott of the game would have cost the university around $1m. + +Mr Wolfe was replaced as president of the university, temporarily, by Michael Middleton, a long-standing member of the law faculty and graduate of the university, who founded its Legion of Black Collegians in 1968. Mr Middleton promises to meet all the demands of “Concerned Student 1950”, the group of black students leading the protests, which include the creation of a “comprehensive racial awareness and inclusion curriculum” and an increase in black members of faculty to 10% from around 3%. Mr Middleton cautions, however, that some demands will be tricky to meet by the deadline the student group proposes, adding that he will explain why. + +Mr Middleton insists that racism at the University of Missouri, nicknamed Mizzou, is no worse than at other big universities. He calls the often inadvertent “micro-aggressions” against minority students a “national problem” that is embedded in American history, and adds: “We are the first in finding effective solutions.” So far that has meant a clean-out of the university’s leadership. Seven temporary officials, in addition to Mr Middleton, are now running the university, including Mr Henson and Hank Foley, Mizzou’s new interim chancellor. + +Yet while the university is making changes, the student protests have also set off a different kind of reaction. Kurt Bahr, a Republican state representative, says some of his constituents have told him that they regret attending Mizzou and do not want their children to go there, because they do not trust the new leadership of the university. One of his constituents even said that he feared for the safety of his daughter on campus thanks to the “instability” there. + +Mr Bahr co-sponsored a bill in December that would strip scholarships from any athlete who “calls, incites, supports or participates in any strike”, and would require colleges and universities to fine coaching staff who encourage them. The bill has been withdrawn since because its author, Rick Brattin, another Republican state lawmaker, realised that the state could not mandate the revocation of privately funded athletic scholarships such as the football scholarships at Mizzou. But Mr Bahr insists that the proposed bill “made its point”, which is that a strike is not a good way to cope with a possible systemic problem. “Are we promoting anarchy within our university system?” he asks. + +The backlash against the changes at Mizzou is likely to continue, led by self-styled defenders of the First Amendment (which protects free speech). Yet the First Amendment does not give people a free pass to go round saying hateful things, points out Mr Henson. To help students and faculty realise this, Mizzou has developed a new guide to “inclusive terminology” which ensures a healthy level of respect for all minority groups. It includes terms such as “adultism” (prejudice against the young), “minoritised” (when under-represented groups are made to feel inferior) and intersextionality (obscure). Some will see this stuff as movement in the right direction. But it is also likely to increase the ire of those who watched the protests and thought they saw a group of privileged college students complaining about how terrible their lot is. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21684819-university-missouris-efforts-placate-protesters-have-created-backlash/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Rating police officers + +Revenge of the nerds + +How one family of high-school students is policing the cops + +Jan 2nd 2016 | From the print edition + +Steve McGarrett, awaiting feedback + +THE Christian siblings were doing their homework when the police arrived. Two officers entered the house, guns drawn, pursuing what was evidently a prank tip-off about a captive being held at their address. The guns stayed out even when the mistake became apparent. The officers ran the details of the children’s father—who, like them, is black—through the police system on the off-chance of turning something up. + +The family was traumatised. The incident, in 2013, brought home to Ima Christian, now 18, that Americans could be vulnerable to rough policing “no matter where you live, or who you are”; her sister Asha, who is 16, says it is “not until you are face to face with an officer that you realise what the deal is.” The sisters—from Stone Mountain, just outside Atlanta—didn’t get even, exactly. Instead, with their brother Caleb (now 15), they developed an app, called Five-O, intended to help improve police behaviour and community relations. It lets citizens rate their experiences with officers, record both parties’ race and sex and the purpose of the interaction, and find aggregate scores for county forces. + +Five-O (a slang term for cops) was launched in 2014, but will get a boost this spring from the €20,000 ($22,000) prize it won at an international contest for justice-related initiatives, organised by a think-tank in the Netherlands. The money will go towards marketing the tool in Baltimore and Chicago. Attracting input from broad cross-sections of such communities is one of the ways the Christians believe they can neutralise an obvious potential bias—ie, that the ratings will be skewed by the aggrieved, legitimate as those grievances may sometimes be. That composite picture, combining good and bad feedback, is, they reckon, one of the ways their product differs from other police-related apps, which concentrate on uploading video. They also want to extend its availability from Android to iPhones. The long-term plan is to include Britain, Brazil, Canada and Russia, making Five-O, as Asha puts it, “a global repository of unbiased police data”. + +That is an ambitious goal for teenagers who mostly taught themselves to code. (Their parents used to work for an internet start-up and, Caleb recalls, noticed youngsters “getting paid insane amounts of money” for programming.) In 2016 they aim to launch another app through their firm, Pinetart Inc: this one, Coily, lets women rate hair-care products, and so avoid shower-stall accumulations of half-empty bottles. Studies permitting, that is. Ima is a freshman at Stanford University; Asha—who is finishing high school online, to free up time for enterprise—hopes to join her or go to Columbia. “I’m very proud of them,” says their mother Karen. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21684818-how-one-family-high-school-students-policing-cops-revenge-nerds/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Election forecasting + +Prediction 2016 + +How Jesse Jackson inadvertently revived political betting + +Jan 2nd 2016 | NEW YORK | From the print edition + + + +IF YOU believed the pollsters, America’s 2012 presidential election looked like a nail-biter. Most national surveys had Mitt Romney and Barack Obama tied; Gallup, the country’s oldest scientific polling outfit, had the challenger ahead, 49% to 48%. When the votes were counted, however, Mr Obama won by four percentage points. To many political pundits, as to Mr Romney, Mr Obama’s margin of victory came as a shock. Among bettors, however, it barely elicited a shrug: prediction markets, in which punters wager on the outcomes of elections, had always considered the incumbent a heavy favourite. An Irish bookmaker, Paddy Power, was so confident of his chances that it paid out £400,000 ($640,000) two days before the election to people who had bet on Mr Obama. Will this trick be repeated in 2016? + +Though now a fringe asset class, prediction markets are in fact among the oldest exchanges in America. In the 1820s prominent supporters of candidates frequently offered public wagers on them as a demonstration of their conviction. Punters who could not afford to pony up cash would compensate with offers of public humiliation: one common wager made losers trundle winners around in a wheelbarrow; another required them to roll peanuts up and down streets with toothpicks. Some losers had to eat real crow. + +Half a century later, these expressions of bravado had evolved into semi-formal financial markets. Trading volume began to approach that of actual shares: in 1916 $10m ($218m in today's prices) was wagered on the photo-finish race between Woodrow Wilson and Charles Hughes. The markets were wrong that year, predicting a win for Hughes. But in 11 of 12 elections between 1884 and 1940 when bettors had identified a clear favourite by mid-October they were vindicated, despite operating in an era without any reliable polling. Newspapers diligently reported presidential betting odds: according to Paul Rhode and Koleman Strumpf, the economists who unearthed the records of these markets, the press published prices five days a week in the month before an election. + +The death knell for the electoral markets of yesteryear sounded in 1936, when George Gallup of the American Institute of Public Opinion stationed pollsters on street corners and asked passers-by whom they would vote for, thus obtaining a random sample. The well-known Literary Digest survey, which relied on readers mailing in postcards, had over-sampled the well-off and called the election for the Republican Alf Landon, while Gallup accurately predicted an easy victory for the incumbent, Franklin Roosevelt. Punters were not fooled by the Digest’s “poll”, and also forecast that Roosevelt would win. But the dawn of scientific polling made gambling odds look amateurish, and allowed newspapers to publish campaign updates without having to cite markets of dubious legality and (in their view) morality. + +Nonetheless, the markets might have soldiered on had history not conspired against them. The industry was centred in New York, and during the second world war Fiorello La Guardia, the city’s mayor, launched a crackdown on unauthorised gambling. His raids drove political bookmakers deep underground or out of town. At the same time, competing forms of wagering began to offer alluring substitutes. In 1939 the state legalised betting on horse races, allowing punters to slake their thirst for action dozens of times a day rather than once every four years, without any risk that a bookie would fail to pay out. + +By the late 1940s, what was once an eight-figure marketplace had all but vanished. Electoral betting would not make a comeback until 1988, when Jesse Jackson defied expectations to win Michigan’s Democratic presidential primary. His victory highlighted how unreliable polls could be, and led a group of professors at the University of Iowa to hunt for an alternative. Though unaware of prediction markets’ pre-war history, they reinvented the idea by setting up an “Iowa Political Stock Market”, in which students and faculty could wager modest sums on the upcoming general election. Four years later, America’s Commodity Futures Trading Commission (CFTC) authorised the Iowa Electronic Markets to take money from the public because they were at heart an academic enterprise, though the regulators capped bets at $500 to prevent speculation with meaningful sums. + +For the next 20 years the IEM consistently out-performed polls in various executive, legislative, national and local elections in a dozen different countries. But the logistical difficulty of placing bets on the exchange (particularly before internet access became widespread), along with the low wagering ceiling, limited it to trivial volumes of a few hundred thousand dollars a year. It was not until 2008, after the internet had globalised both information and financial flows, that pre-war prediction markets found a worthy heir. + +During the 2004 presidential campaign an Irish sports-betting site called Intrade started taking bets without the low limits of the IEM. Even though credit-card companies in America would not process deposits to the site, punters flocked to it. A whopping $230m was wagered on the 2012 election—an even greater sum in constant dollars than on the Hughes-Wilson contest of 1916. And like its predecessors, Intrade was deadly accurate. Its markets correctly predicted the results of 47 of the 50 states in the election of 2008, and 49 of 50 in 2012. + +But just like the street-corner action of the 1930s, Intrade soon came under legal scrutiny. In November 2012 the CFTC ordered the site to stop offering contracts on the price of goods under the agency’s oversight, such as oil and gold. Four months later, the risks of investing in Intrade’s unregulated marketplace were laid bare when the site abruptly shut down after it dipped into its clients’ funds to transfer money to its late founder. It took months for account-holders to be made whole. The site’s untimely demise provided fresh ammunition for those who regard prediction markets as unsavoury speculation. + +The collapse of Intrade did not annihilate prediction markets, though. The IEM is alive and well, and in late 2014 PredictIt, an online exchange sponsored by Victoria University of Wellington in New Zealand, entered the fray with an $850 wager cap and official authorisation from the CFTC. But these operations still fall far short of realising prediction markets’ full potential. Their low betting limits prevent investors with extremely valuable information—say, a looming scandal—from cashing in on the value of their knowledge and incorporating it into the market price. + +At the time of writing, PredictIt reckons that the fight for the Republican nomination is between Ted Cruz and Marco Rubio, and that Hillary Clinton has a 54% chance of becoming the next president. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21684798-how-jesse-jackson-inadvertently-revived-political-betting-prediction-2016/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Pitchfork politics + +A pioneer of Trump-style populism wonders if it can succeed in today’s America + +Jan 2nd 2016 | From the print edition + + + +BEFORE Donald Trump, there was Patrick Buchanan. More than two decades before Mr Trump kicked over the Republican tea table, Mr Buchanan, a former speechwriter and White House aide to Presidents Richard Nixon and Ronald Reagan, launched his own revolt against Republican grandees. He made bids for the Republican presidential nomination in 1992 and 1996, the first of which challenged a sitting president, George H.W. Bush. Like his billionaire successor, Mr Buchanan ran against free trade and called for restrictions on immigration. As early as 1991 he called for a fence on the border with Mexico (talk of a “great, great” wall would have to wait for Mr Trump). + +On foreign policy, the end of the cold war turned him into a non-interventionist. Mr Buchanan—who in 1972 accompanied Nixon on his trip to Maoist China—now concluded that America should shun foreign entanglements and defend only vital national interests. In January 1991 Mr Buchanan found himself speaking in New Hampshire during the American-led operation to expel Iraqi forces from Kuwait, which he opposed. Stepping from the podium, he was given a message: America had just started bombing Baghdad. There goes my non-interventionist line, he recalls telling the watching governor of New Hampshire, Judd Gregg: it is “all over once the bombs begin to drop”. Mr Bush’s approval ratings rose to 90%. Yet by the time of the 1992 election the president was not saved by victory in the Gulf. + +Timing matters—a political lesson that Mr Buchanan learned early. He was one of the first aides to describe a new voter coalition that Nixon might assemble. This would unite business bosses with doctrinaire conservatives, southern whites, socially conservative Roman Catholics and middle Americans who liked such government safety nets as pensions for the old, but despised Democrats for seeming to condone social unrest—whether race riots, campus radicals or flag-burning protesters opposed to the war in Vietnam. In a memo of 1968 Mr Buchanan spoke of a “silent majority” to be won. Nixon made the phrase his own. + +Today Mr Trump calls his own supporters a “silent majority”, though his borrowing comes with a twist. In the late 1960s Nixon asked the “great silent majority” for their support. In 2015 the businessman assumes he has already sealed the deal. Printed signs handed out at his rallies declare: “The silent majority stands with Trump”. Asked about the slogan’s Nixonian overtones by the Washington Post, Mr Trump denied the connection, scoffing: “Nah. Nobody remembers that.” + +Speaking in his home in northern Virginia, Mr Buchanan does not grumble about Mr Trump’s swiping of his phrase. He is too interested in a new question of political timing. As a candidate, he was less successful than as an adviser. His high point was his win in the 1996 New Hampshire primary, after a populist surge that saw him declare: “The peasants are coming with pitchforks.” A full-size silver pitchfork (a gift from campaign aides) hangs in his wood-panelled study, alongside a souvenir mug that asks: “What would Nixon Do?” + +Back in the 1990s moderate Republicans agreed that Candidate Buchanan was doomed by his ferocious opposition to abortion, homosexuality and feminism: in 1992 he told his party’s national convention that America faced a “cultural war”. He also caused alarm with intemperate talk about Israel’s clout in Washington. Today, though, he argues that his timing was off when it came to three big issues: immigration, globalisation and non-interventionism. “Those issues are mature now,” says Mr Buchanan, rattling off statistics on undocumented immigrants in America (their numbers have more than tripled since 1991) and factory closures since such pacts as the North American Free Trade Agreement (NAFTA) was signed. At 77, Mr Buchanan writes newspaper columns and is a frequent public speaker. He reports that people “constantly” voice the same complaint to him: “This isn’t the country I grew up in.” He lists reasons why he thinks they are right: immigrants have reached even small communities, factory jobs have vanished and interventionist wars launched by George W. Bush left Americans “with ashes in our mouths”. + +Mr Buchanan was called a fringe candidate, a protectionist and an isolationist in the style of the America First Committee, which argued against declaring war on Nazi Germany. Now today’s frontrunner, Mr Trump, echoes his scorn for free-trade pacts and nation-building overseas, and praises Vladimir Putin (Mr Buchanan has long admired the Russian president’s ethno-nationalism). Senator Ted Cruz of Texas, Mr Trump’s big rival on the hard right, recently said: “I believe in an “America first” foreign policy.” + +The silent majority, outnumbered + +Yet Mr Buchanan cannot conceal a thought that grieves him. Evidence to support his beliefs is, to him, now irrefutable. But if he was early in the 1990s, demographic and cultural shifts now make it too late to rally the conservative majorities that elected Nixon or Reagan. If given $100 to bet on the Republican nomination, Mr Buchanan would put at least $40 on Mr Trump and at least $30 on Mr Cruz, whom he compares to an earlier “down-the-line” conservative, Barry Goldwater (who lost the 1964 presidential election by a landslide). If he were Mr Trump, he would attack Hillary Clinton over free trade in rustbelt states such as Ohio, Pennsylvania and Michigan that are key to winning the White House. He would tell voters that “she and her husband” backed NAFTA and deals that “sent your jobs overseas”. No other Republican has Mr Trump’s potential to win some blue-collar Democrats, he says: “It is hard to see how Cruz, for example, takes Ohio.” For all that, he thinks the odds probably favour Mrs Clinton to win the election. Either way he sees a country “at war with itself ideologically and politically, culturally”, triggering a measure of foreign policy “paralysis”. If even half-right, it is a bleak prediction: America first nationalism, in a divided America. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21684799-pioneer-trump-style-populism-wonders-if-it-can-succeed-todays-america-pitchfork/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Human rights in El Salvador: Digging for justice + +Argentina’s new president: A fast start + + + + + +Articles Sections Next + +Human rights in El Salvador + +Digging for justice + +Survivors of wartime atrocities are questioning the country’s amnesty + +Jan 2nd 2016 | EL MOZOTE | From the print edition + + + +ONE afternoon eight months ago in the mountains of eastern El Salvador, Rosario Sánchez peered into a pit where forensic experts were at work. They were unearthing human remains—two skinny leg bones, several ribs and two halves of a skull. One held up a thin chain hardened with blood and soil. Ms Sánchez gasped. “My sister loved that necklace,” she said. + +Over three days in December 1981 soldiers from the Salvadorean army, who had been trained by the United States, machinegunned hundreds of unarmed men, women and children in the village of El Mozote and surrounding hamlets. It was the worst atrocity committed during the 12-year-long war between leftist guerrillas and El Salvador’s right-wing government, in which some 75,000 Salvadoreans died. No one has been punished for the massacre, and almost no one has been held to account for any other human-rights crime committed during the conflict. An amnesty law in 1993 shielded perpetrators on both sides from prosecution, and helped make a political settlement possible. + +As the exhumations in La Joya, near El Mozote, show, the amnesty is being called into question. El Salvador’s Supreme Court is considering a constitutional challenge to it. The court ruled in 2000 that the amnesty does not apply to violations of “fundamental” rights, but left it to judges and prosecutors to decide which crimes are grave enough to qualify. + +Some human-rights advocates argue that impunity for war crimes is one reason why El Salvador has the world’s highest murder rate, although other factors, such as the lack of economic opportunity, undoubtedly also play a role. “The same system that was incapable of investigating human-rights violations has found itself incapable of confronting post-war violence and crime,” says David Morales, El Salvador’s Human Rights Ombudsman. + +The country’s post-war reconciliation was in many ways exemplary. Both sides disarmed, the army shrank and the security forces were transformed into a civilian police. After the war’s end in 1992, a UN Truth Commission spent six months investigating “serious acts of violence”. It registered 22,000 complaints, 85% of them against the armed forces, paramilitary groups and right-wing death squads. Their left-wing foe, the Farabundo Martí National Liberation Front (FMLN), was accused in 5% of the cases. The commission’s report blamed the army’s elite Atlacatl battalion for the murder of six Jesuit priests in 1989 and for the El Mozote massacre, among other findings. + +For the leaders of post-war El Salvador, the commission’s revelations were justice enough. Five days after its report was published the government enacted the amnesty law. It is one of the few things on which both leftist and conservative politicians agree. “We chose peace over justice,” says Mauricio Vargas, a retired general who represented the army in the peace process. Without the amnesty, “the whole building comes crashing down.” Salvador Samayoa, who represented the guerrillas, warns that if the left demands trials of former military officers the right will go after ex-guerrillas, including the president, Salvador Sánchez Céren. He was a commander of the FMLN, which became a political party after the war. + +Other countries in Latin America, perhaps surer that their democracies are stable, are testing whether justice in the courts will jeopardise peace. In Guatemala, a UN–backed commission to investigate corruption has strengthened the justice system. That helped make it possible for prosecutors to bring several human-rights cases, including against the former dictator, Efraín Rios Montt. Colombia, which is close to a peace agreement with leftist FARC guerrillas, whom it has been fighting for more than 50 years, will not offer a general amnesty, although just how criminals will be punished has yet to be decided. + +Not even past + +The United States, once a haven for criminals from Latin America’s wars, has changed its stance. It is seeking to deport José Guillermo García, a former Salvadorean defence minister, on charges that he bears responsibility for the El Mozote massacre and the murder in 1980 of three American nuns and a lay worker. A proposed $750m aid package for three Central American countries sets as one condition that governments must prosecute soldiers and police officers suspected of human-rights violations, including past war crimes. + +In El Mozote daily reminders of the atrocity keep alive the demand for an accounting. One farmer, digging the foundation for a new house, recently uncovered skeletons of 15 of his relatives. He recognised his mother’s skull from the crown on a tooth. Still isolated and poor, the village trades on its tragedy: locals sell mementos of the massacre at stalls near the site and jostle to relate the story to tourists in exchange for small tips. + +The demand for justice is chipping away at El Salvador’s amnesty. In 1990 relatives of the victims, helped by Tutela Legal, a human-rights group, filed a suit at the Inter-American Court of Human Rights. Twenty-two years later the court ordered El Salvador’s government to investigate the massacre, punish the culprits and compensate victims’ relatives. El Salvador’s then-president, Mauricio Funes, admitted the state’s responsibility and, weeping publicly, begged forgiveness. A trickle of aid to El Mozote followed: a clinic, computers for the school and road repairs. + +But the messy conduct of the exhumation shows how little official enthusiasm there is for investigation and punishment. The human-rights unit of the attorney-general’s office, which promised in 2013 to investigate El Mozote and seven other massacres, put in charge of the dig a systems engineer with no formal training in excavation. Work started in the rainy season, when floods threatened to damage DNA evidence. The villagers received no advance notice, and at first no counselling from psychologists. Instead of healing wounds, the investigation reopened them, their lawyers said. + +The intervention of the government’s forensics agency, the Legal Medicine Institute, improved matters, and showed that the government’s apparent hostility to the investigation is not uniform. The agency assigned three Canadians—two anthropologists and an archaeologist—to help with the excavation. The attorney-general’s office sought to undermine the three women, claiming that they were unqualified. The director of the human-rights unit, Mario Jacobo, declined to comment on the conduct of the excavation. He recently lost responsibility for it. A judge suspended it after two weeks of digging, and said it should resume under the direction of the Legal Medicine Institute. Work is likely to restart in early 2016. + +Although opinion may be shifting, many Salvadoreans are loth to unpick an amnesty that has served the country well in many ways. There is speculation that the Supreme Court will strike a compromise: uphold the amnesty law, but compel prosecutors and judges to pursue violations of fundamental rights, rather than leaving the decision to them, as its earlier ruling did. On November 23rd six members of the United States House of Representatives sent a letter to legislators in El Salvador urging them to choose a “new attorney-general focused on defeating corruption and organised crime”. This was widely interpreted as a slap at the incumbent, Luis Martínez, who hopes to be re-elected by El Salvador’s Congress. + +The families of El Mozote hope that pressure to investigate and punish today’s crimes will lead to prosecutions for past atrocities. In December laboratory tables in the San Salvador headquarters of the Legal Medicine Institute were covered with the bones of Ms Sánchez’s murdered relatives. Brittle and brown, they lay among bundles of tattered clothing and stacks of rusted coins. Other tables displayed larger, lighter-coloured bones. They belonged to unidentified victims of recent gang violence. The government—and probably still most Salvadoreans—think going after today’s murderous gangs should be the priority: 95% of murders are unsolved. To the survivors of El Mozote, both groups of victims are entitled to the same justice. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21684820-survivors-wartime-atrocities-are-questioning-countrys-amnesty-digging-justice/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Argentina’s new president + +A fast start + +Mauricio Macri’s early decisions are bringing benefits and making waves + +Jan 2nd 2016 | BUENOS AIRES | From the print edition + +Nice sash, horrible inheritance + +MAURICIO MACRI, who took office as Argentina’s president in December, has wasted little time in undoing the populist policies of his predecessor. On December 14th he scrapped export taxes on agricultural products such as wheat, beef and corn and reduced them on soyabeans, the biggest export. Two days later Alfonso Prat-Gay, the new finance minister, lifted currency controls, allowing the peso to float freely. A team from the new government then met the mediator in a dispute with foreign bondholders in an attempt to end Argentina’s isolation from the international credit markets. + +This flurry of decisions is the first step towards normalising an economy that had been skewed by the interventionist policies of ex-president Cristina Fernández de Kirchner and her late husband, Néstor Kirchner, who governed before her. They carry an immediate cost, which Mr Macri will seek to pin on the Kirchners. Some of the new president’s other early initiatives are proving more controversial. + +The economic reforms seem to be working. Farmers who had hoarded grain in the hope that the tariffs would be lifted are now selling, replenishing foreign-exchange reserves that had been drained to defend the artificially strong peso. The newly freed currency fell by more than 30%, a further boost to exporters. It has stabilised at around 13 pesos to the dollar. “Substantive” talks with holdout bondholders starting in early January could lead to a return to credit markets in 2016. + +But the devaluation has pushed up the inflation rate, already more than 25% when Mr Macri took office. To rein it back, on December 15th the central bank raised interest rates on short-term fixed deposits by eight percentage points to 38%. The government hopes to persuade business and trade-union leaders to keep tight control of prices and wages. But that may prove difficult: the unions are fragmented and little disposed to help Mr Macri, a centre-right politician; businesses may balk at holding down prices. Barclays, a bank, expects the economy to contract by 1.1% in 2016. But increased foreign investment should lead to renewed growth of 3.5% in 2017. + +Mr Macri’s attempts to bring fresh talent into institutions dominated by Ms Fernández’s kirchneristas have run into resistance, from both foes and allies. On December 14th, with the Senate in recess, Mr Macri temporarily appointed by decree two Supreme Court judges. He then booted out the chief of the media regulator, Martín Sabbatella. + +In both cases his motives were worthy. He wants independent jurists in the courts. Mr Sabbatella had clashed with Grupo Clarín, a big media group. Mr Macri thinks his removal will strengthen press freedom. But critics say he misused his authority. On the judges, at least, he has relented. He will now wait for the Senate’s approval. + +Touring northern Argentina, where 20,000 people have been displaced from their homes by floods, Mr Macri blamed the former president, saying she had failed to invest in flood defences (see article). For now, Argentines are likely to believe their new president. However, if the economic slowdown is prolonged, the honeymoon will not be. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21684823-mauricio-macris-early-decisions-are-bringing-benefits-and-making-waves-fast-start/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Japan, South Korea and their history wars: Saying sorry for sex slavery + +Family planning in Vietnam: Running deer + +Thailand’s southern insurgency: No end in sight + +Simplifying Indian taxes: One country, but no single market + + + + + +Articles Sections Next + +Japan, South Korea and their history wars + +Saying sorry for sex slavery + +A surprise deal over forced prostitution during the war may soothe troubled relations between two democratic neighbours + +Jan 2nd 2016 | TOKYO | From the print edition + + + +THE bronze statue of a teenage “comfort woman” in Seoul, South Korea’s capital, is intended as a daily rebuke to the Japanese embassy opposite. The figure represents one of many thousands of Korean women who were forced to serve as prostitutes in wartime military brothels catering to imperial Japanese soldiers. Citizens’ groups paid for the figure to be erected in 2011 when relations between Japan and South Korea were at a nadir. Well-wishers bring her flowers, shoes and, in stormy weather, even a hat and raincoat. Yet now the statue is meant to move elsewhere as part of a landmark agreement struck between the two countries on December 28th to try to settle their dispute over comfort women once and for all—and transform dangerously strained relations. + +Of former sex slaves who have come forward in South Korea, only 46 survive. Under the deal, South Korea will set up a fund for them into which the Japanese government will pay $8.3m for their medical and nursing care. The Japanese prime minister, Shinzo Abe, has expressed “sincere apologies and remorse” for their suffering, which was appalling. In all, there were tens of thousands of comfort women. Many were raped dozens of times a day, beaten and infected with venereal diseases. + +It is a big change for Mr Abe, who has in the past questioned whether the comfort women were coerced at all. But he hopes to have found what the two countries’ foreign ministers called a “final and irrevocable” resolution to an issue that has poisoned the relationship for years. South Korea’s president, Park Geun-hye, hailed the deal—hastened by the two leaders’ first bilateral meeting in November—as a key to improved relations. + +The administration of Barack Obama is cock-a-hoop that its two closest Asian allies are making up. It had long pressed South Korea to do so. Better relations between the two should help America’s strategy to balance China’s rise. + +But some South Korean policymakers had also grown uneasy that relations with Japan were at a dead end and—though they would not say it out loud—that Ms Park sometimes seemed to hew too closely to China. Meanwhile, a stronger trilateral relationship with Japan and America would help in dealing with dangerous North Korea. It has taken time for Ms Park to see all this, and her family history helps explain why. Her late father, Park Chung-hee, was a star officer in the Japanese imperial army, and later the South Korean dictator who normalised relations with Japan. These were liabilities for the cautious Ms Park as anti-Japanese hysteria grew. + +A question now is whether a deal will hold. Some of Japan’s loony ultranationalists will feel betrayed by Mr Abe. But he is too politically dominant at home to be worried by that. Besides, the government can argue that saying sorry does not imply legal responsibility, which was settled in Japan’s normalisation treaty with South Korea in 1965. “We didn’t give an inch,” says a government adviser. Indeed, one observer critical of Japan’s attitudes towards history, Tessa Morris-Suzuki of the Australian National University, says that the agreement rows back from the landmark Kono statement of 1993, Japan’s first official acknowledgment of wartime coercion. For it refers only to the imperial army’s “involvement” in the recruitment of comfort women, while excluding references to the use of deception or force. + +The agreement is more likely to face problems in South Korea. Groups representing the survivors say that the women were not consulted, and at least one of them has already railed against it as a betrayal. South Korean activists will oppose moving the statue, something Japan cares deeply about. Calls may grow for Mr Abe to come and make a personal apology to survivors, rather than through Ms Park. Whether he would swallow his pride to do so is unclear. Chung-in Moon of Yonsei University in Seoul says it is a fragile deal born of diplomatic necessity. + +Make it work + +Yet both sides have good reason to try to make it stick, for the bilateral relationship could quickly improve, on military matters as well as others. For instance, an agreement to share military intelligence that was scuppered in 2012 could be revived. The benefits could also show in trade diplomacy, with Japan and America working together to bring South Korea into the Trans-Pacific Partnership, a free-trade grouping recently agreed among a dozen countries. With luck, the idea of two democracies in a dangerous corner of the world not talking to each other will soon look too absurd to go back to. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21684758-surprise-deal-over-forced-prostitution-during-war-may-soothe-troubled-relations-between-two/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Family planning in Vietnam + +Running deer + +A draft population law looks ill-considered and discriminatory + +Jan 2nd 2016 | HANOI | From the print edition + +Voiding the topic ain’t gonna stop it + +BRIGHTLY coloured plastic flowers greet patients at the reception desk of Nguyen To Hao’s abortion clinic. Yet the mood in her waiting room is grim. Ms Hao, an obstetrician and gynaecologist, says that many of her patients are teenagers who know shockingly little about sex or its consequences. Some young women with late-term pregnancies are sent to a nearby hospital for abortions; others carry their pregnancies to term and leave their newborn babies in the care of Buddhist monks. + +Unwanted pregnancies could be avoided if only Vietnam had better sex education in secondary schools. A Vietnamese adage claims that avoiding discussions of sex is the surest way to “prevent the deer from running”. Yet the deer are “already running”, Dr Hao insists, and the government is failing to guide them. + +Vietnam’s abortion rate is not known for certain, but is thought to be among the world’s highest. According to researchers at the Central Obstetrics Hospital in Hanoi, the capital, two-fifths of all pregnancies in Vietnam end in abortion—double the government’s tally. + +Ignorance about sex and contraception is one glaring factor. Some women who have abortions never meant to get pregnant. Others desperately wanted a boy, since male children keep the family bloodline going and are traditionally expected to look after their elderly parents. Sex-selective abortions have been illegal since 2003, but the ban is hard to enforce. Ultrasounds are widely available. Nguyen Thi Hien, a mother of two in Hanoi, says that for $75 doctors at the capital’s private clinics are happy to tell couples the sex of their fetus. + +So for every 100 girls, 111 boys are born in Vietnam, according to the UN Population Fund—a sex ratio at birth nearly as lopsided as neighbouring China’s. Vietnam’s Communist Party worries that this sex imbalance will leave a generation of men struggling to find a mate. As in other societies with lots of frustrated single men, that may mean more trafficking and prostitution, more rape and a greater risk of political instability. + +Vietnam’s reproductive and demographic policies are in flux. China’s recent decision to relax its one-child policy may prompt Vietnam to reconsider its own (more loosely enforced) two-child policy, says a former official from Vietnam’s health ministry. The ministry is now soliciting public comments for a revision of that law, and the National Assembly may take it up this spring. + +It is not a moment too soon. A whopping two-thirds of the country’s 90m people are of working age. That gives Vietnam a chance to boom economically over the next three decades. But the “demographic dividend” may then stop abruptly. Fertility rates in some Vietnamese cities have fallen to below the population replacement rate, a trend that could eventually lead to a shortage of workers, as Japan and other rich countries have learnt to their cost. The difference is that Vietnam risks growing old before it grows rich. + +The new population law, in its current wording, would not help. It proposes to leave the two-child policy in place and ban abortion after 12 weeks, down from the current limit of 22 weeks, except in cases of rape. That may send even more pregnant Vietnamese into shadowy abortion clinics. In September some 17 public-health professionals complained about the proposed law in a letter to the health minister. Such pressure may prompt the government to extend the proposed 12-week limit. + +However, the population-control measures being mulled by the ministry contain another troubling feature: a pre-natal focus on “population quality”. That sounds harmless enough, but the underlying idea, according to a foreign health-policy expert in Hanoi, is that health officials could encourage mothers to abort fetuses showing signs of disability. + +Some in the ministry have also proposed lifting the two-child policy in cities while continuing to enforce it in the countryside—ie, encouraging the better-educated and better-off to have more children while denying the same right to poor folk, including ethnic minorities, who view their children and grandchildren as their only social safety net. That would allow the bureaucrats in charge of the two-child policy to keep their jobs. But the idea is regressive, unfair and needs to be junked. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21684813-draft-population-law-looks-ill-considered-and-discriminatory-running-deer/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Thailand’s southern insurgency + +No end in sight + +A southern village tries to remain united as divisions elsewhere grow + +Jan 2nd 2016 | TOH CHUD | From the print edition + +He’s backed by a fat budget + +SITTING on the floor with neighbours, Sakariya uses a mobile phone to flick through photos of his son. In one, Kholid stands dressed in his school uniform. In another he sits hunched over his university work. In a third he is dead—lying cold on a mortuary slab. The picture was taken in March, only hours after soldiers surrounded a group of men at a construction site in Toh Chud, their home in Thailand’s restive south. Seven bullet holes perforate his chest. + +Kholid was one of four to die that day—victims of a botched operation seeking to collar murderous separatists who for years have dreamed of resurrecting an independent sultanate in Thailand’s southern borderlands. Nearly two dozen villagers were detained and interrogated but later released. The men who were shot may have tried to run, perhaps for fear of being found with soft drugs on them. A fact-finding panel says the killings were an error. Compensation is promised. But what the families want is justice, says Mohammad, another parent whose son is among the dead. + +Toh Chud up in the hills had mostly managed to escape the nightmares suffered by so many communities in Thailand’s southernmost provinces. Of 2m-odd people in the region, over four-fifths are ethnic-Malay Muslims. Hotheads among them have long agitated against the Thai government in Bangkok and its policies of assimilation—denying the region autonomy, for instance, and even recognition of the local Malay language. In 2004 secretive insurgent groups began a campaign of exceptionally violent attacks on security forces as well as on their own Buddhist neighbours. + + + +Since then about 6,500 people have died in this lush coastal strip, most of them civilians. Terrorists have bombed shops and restaurants and murdered scores of schoolteachers, who are seen as agents of the state; victims’ bodies are sometimes beheaded or set alight. Moderate ethnic-Malays considered to be collaborators are also targets. On December 13th an ethnic-Malay Thai soldier and his father were blown up in a graveyard, where they had gone to bury his mother. + +State violence has done much to boost the body count. The apparent legal immunity enjoyed by trigger-happy soldiers and pro-government vigilantes continues to radicalise new generations of combatants. Kholid’s family say his killers placed an assault rifle next to his body to make him look like an insurgent. + +Over the past decade seven Thai governments, swept in and out of power by broader political problems, have grasped for a resolution. Officials say that regional autonomy of the type that has soothed Islamist insurgencies in Indonesia and the Philippines is off the table. But so are smaller concessions, such as formal recognition of the region’s odd Malay language. Some argue that the fat budget the security forces get to prosecute the conflict gives them little incentive to end it. Three checkpoints clog the road out of Pattani, a seaside town, each manned by a different force. + +Some energy has gone into boosting the deep south’s economy, which depends greatly on its rubber trees. Though it remains far poorer than Bangkok, the region is not as hard-up as some other far-flung parts of Thailand. But locals tend to compare their fortunes with those of ethnic kin across the border in Malaysia, where laws grant the Malay majority a host of advantages over ethnic-Chinese and Indian minorities. Christopher Joll, an academic, says the region is like “meat in a sandwich”, squeezed by inflexible nationalisms from either side. + +Thailand’s ruling junta, which had said it would try to fix the conflict by the end of 2015, trumpets progress. Lured by the promise of fresh peace talks, a gaggle of once-shadowy separatist groups has formed a common political wing. The violence has ebbed markedly in recent months. But Don Pathan, a local security analyst, speculates that militants may be swapping frequent small assaults for better planned and more lethal ones. As for dialogue, hardliners within BRN, the most powerful rebel group, say they will play no part in the junta’s proposed talks. + +Peace-builders on the ground complain that it is getting harder to discuss unpopular solutions. The army has long refused to countenance international mediation, one of the separatists’ principal demands, for fear of legitimising separatist claims. And it is hardly likely to consider devolving powers when it is busily recentralising the state, in part to neuter the government’s opponents in other provinces and in part to keep a lid on the dissent which may follow a looming royal succession. + +Matt Wheeler of the International Crisis Group, a research outfit, thinks the generals are simply “kicking the can down the road”. Yet that carries two risks. Although the insurgents have largely rejected international jihadism, some people fret that Islamic State’s flashy propaganda may yet find an audience among the region’s unhappy young. Lately someone in cyberspace has been adding Thai subtitles to the jihadists’ video-nasties. + + + +In graphics: Explaining Thailand’s volatile politics + +A deeper worry is that the bubbling southern war may fuel Buddhist chauvinism. Perhaps a tenth of Thais are Muslim, most of them living well-integrated lives far from the conflict zone. On a recent public holiday girls in black headscarves cycled cheerfully around the Haroon mosque, one of Bangkok’s oldest, which was festooned with royal flags. Yet Thailand’s Muslims are gradually growing more conservative under the influence of Middle Eastern doctrines, which unnerves their Buddhist compatriots. And some people think that Buddhist authorities are growing more strident as the influence of Thailand’s royal establishment, which has traditionally checked them, begins to wane. In October a senior Buddhist monk said that Thais should set fire to a mosque every time southern “bandits” kill a monk. + +The locals gathered at the house in Toh Chud worry that outsiders are seeking to sow division. Unlike nearby ghettos, their village of 300 households includes 30 Buddhist families, and the tragedy in March has tightened their village bonds. On the day of the raid local Buddhists helped to conceal one young man who had escaped the soldiers’ cordon. + +As lunch approaches, Somkhuan, a Buddhist who once served as village headman, joins the group for a smoke. When his daughter got married he threw two parties, his neighbours recall enthusiastically, one of them halal. Such good relations are not a big deal, Somkhuan says: it has always been this way. But what if Toh Chud started to become the exception? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21684829-southern-village-tries-remain-united-divisions-elsewhere-grow-no-end-sight/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Simplifying Indian taxes + +One country, but no single market + +India’s excitable politics is blocking the best chance of promoting growth + +Jan 2nd 2016 | DELHI | From the print edition + + + +NARENDRA MODI likes to make a splash abroad. On December 25th he turned up in Pakistan, the first visit by an Indian prime minister in more than a decade, for an impromptu summit with his counterpart, Nawaz Sharif. At home, though, Mr Modi appears less impressive. Despite his Bharatiya Janata Party (BJP)’s thumping general-election victory in 2014, his promises of business-friendly reforms are stuck. + +The passage of an all-embracing value-added tax, known as the goods and services tax (GST), has become the litmus test of his liberalising credentials. It is the one reform that both the BJP and the opposition Congress party ostensibly agree on. Raising funds for both the federal government at the centre and the states, it is meant to replace a monstrous excrescence of taxes, duties, surcharges and cesses levied by the centre, the states and local authorities—a system that fragments the economy and gives huge scope for corruption by officials and politicians. Replacing most taxes with a GST would, for the first time, create a single market in India—of 1.3 billion people. + +The latest and perhaps most promising attempt to pass the necessary constitutional amendment failed with the closing of the winter session of parliament in December. Mr Modi will try again in the budget session, which opens in February. But if he is to succeed, he will have to overcome India’s cynical politics. + +The economy grew at a pleasing annualised rate of 7.4% from July to September—faster than China’s. Yet many economists cast doubt on the official figures, and Mr Modi’s attempt to boost manufacturing is not making much progress. Indeed, the best chance of turning his slogan of “Make in India” into reality is through a single market—“Make in India by Making One India”, as a recent government report put it. + +The existing system, senior officials say, taxes production more than consumption and, in effect, subsidises importers at the expense of domestic producers. Perversely, trade between states is taxed, through a central sales tax of 2%. Some states also impose duties on products entering from elsewhere in India. Lorries are held up at internal checkpoints (see picture). + +An executive from a prominent Indian firm explains that, because trade between one state and another is subject to the central sales tax while the transfers of inventory are not, his company has set up warehouses in every state to avoid the tax. And because duties paid on inputs often cannot be claimed back, there is a “cascade” of taxes levied upon previous ones. Among other things, it discourages investment in machinery. “The entire ecosystem”, he says, “works to optimise tax, not productivity.” + +One study suggests that a “flawless” GST—with a single rate for all goods and services, and minimal exemptions—could boost Indian growth by anything between 0.9 and 1.7 percentage points a year. Another benefit would be to create a paper trail and an incentive for firms to declare transactions in order to claim tax credits, so reducing overall tax evasion. + +Attempts to streamline indirect taxes date back to liberalisations in the 1990s, yet moves towards forms of value-added taxes have been partial at best. A version of a more encompassing GST bill was passed by the lower house in May. Unwisely, it postponed imposing the tax on oil products (a vital input) till an unspecified future date. It exempted alcohol entirely. That these two categories currently account for a large share of states’ revenues (and of illicit party funding) is no coincidence. The bill also still stipulates a temporary central sales tax, of 1%, on interstate trade. + +Even this watered-down law has been stuck in Parliament’s upper house, where the BJP lacks a majority. When Congress was in office, its own attempt to introduce a GST was blocked by the BJP. Now it acts as the spoiler. Congress rightly objects to the central sales tax. But its demand that the constitution should enshrine a maximum rate for the GST of 18% makes little sense. (A third demand is for a different mechanism to resolve disputes over the working of the tax.) + +For more than a year Mr Modi haughtily ignored the opposition. He no doubt hoped that the momentum from his general-election victory would carry him to wins in subsequent state elections, automatically sending delegates to the upper house and giving him a majority there, too. But lately the BJP has been defeated in key places, most recently in Bihar, the third-most-populous state. + +So Mr Modi has become a bit humbler. He belatedly invited Sonia Gandhi, president of Congress, and Manmohan Singh, his predecessor as prime minister, to tea in the hope of finding a deal on a GST. A committee led by the finance ministry’s chief economic adviser, Arvind Subramanian, offered some concessions: scrapping the central sales tax and setting two bands for the GST (a standard rate of 17-18% and a lower 12% rate for certain sensitive goods) which are within Congress’s declared ceiling. The committee also proposed that alcohol as well as property transactions should be subject to the GST; in return, states could levy “sin taxes” on things like alcohol and tobacco of up to 40%. + +Taxing times + +The committee’s report appeared to bring a much-improved GST bill within reach. But Congress took to disrupting the upper house. The cause of its rowdy outrage at first was the government’s “intolerance” of minorities (especially Muslims); then a minister’s allegedly derogatory remarks about low-caste dalits; then the BJP’s supposed “vendetta” in a court wrangle involving Mrs Gandhi, her son Rahul, and the allegedly corrupt disposal of a failed party newspaper; and lastly the party’s demand that the finance minister, Arun Jaitley, should step down over claims of corruption in cricket. + +Congress might have claimed victory in forcing Mr Modi to see sense over the GST, even as it challenged his excesses. Instead it chose obstructionism. If he is to secure any economic legacy, Mr Modi may now have to spend more time on the art of buttering up opponents at home rather than fellow leaders abroad. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21684824-indias-excitable-politics-blocking-best-chance-promoting-growth-one-country-no-single/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Social media: Weibo warriors + +Economic ideology: Reagan’s Chinese echo + + + + + +Articles Sections Next + +Social media + +Weibo warriors + +The Communist Party’s battle with social media is a closely fought one + +Jan 2nd 2016 | From the print edition + + + +ON DECEMBER 25th, some three years after taking over as China’s leader, Xi Jinping posted his first tweet. For a man clearly rattled by the rapid spread of social media, and grimly determined to tame them, the venue was fitting. Uniformed military officials stood around as he typed his message into a computer in the office of an army-run newspaper (see picture). His new-year greeting was not to China’s more than 660m internet users, but to the armed forces—most of whose members are banned from tweeting. + +It was clearly in part to intimidate feistier members of the country’s online community that the authorities arrested one of the country’s most prominent civil-rights activists, Pu Zhiqiang, in 2014 and eventually put him on trial on December 14th. On the basis of seven messages posted on Weibo, China’s heavily censored version of Twitter, Mr Pu was charged with “picking quarrels and stirring up trouble” as well as “inciting ethnic hatred”. The court handed down a three-year suspended prison sentence, which means that Mr Pu will not be allowed to continue his widely acclaimed work as a lawyer (less than three years ago, he was the subject of a laudatory cover story in a state-controlled magazine). “It was not the worst outcome, but it set the most odious of precedents,” said a Weibo user in Beijing in a message to his nearly 57,000 online followers. + +Mr Xi is the first Chinese leader to come to power amid the rapid growth of a middle class whose members are equipped with a powerful means of airing dissent and linking up with like-minded malcontents. He inherited an army of internet censors, but despite his efforts to give them more legal muscle (the country’s first counter-terrorism law, passed on December 27th, includes restrictions on the reporting of terrorist incidents), Mr Xi is still struggling. Support for Mr Pu both online and off has shown the scale of the challenge he faces. Some had feared that Mr Pu would be jailed for years. It is possible, in the face of huge support for the activist and a lack of strong evidence, that officials blinked. + +Napping net nannies + +Social-media messages relating to Mr Pu were quickly purged from the internet. Yet it is likely that some were seen by many people before disappearing. Some sensitive postings were retweeted by users with large followings before they were eventually deleted, suggesting that censors occasionally failed to keep up. “If you can be found guilty on the basis of a few Weibo postings, then every Weibo user is guilty, everyone should be rounded up,” wrote a Beijing-based journalist to his more than 220,000 followers. “I don’t understand the law, but I do know that [handling Mr Pu this way] was absolutely against the spirit of rule by law,” said Zhang Ming, a politics professor in Beijing, to his following of nearly 790,000 people. + +Mr Pu’s prosecutors also provided evidence of the censors’ weaknesses. They said one of his allegedly criminal messages, which suggested that a terrorist attack in 2014 may have reflected failings in the government’s policies in the western region of Xinjiang, had garnered 1,930 retweets—remarkable given Mr Pu’s well-known propensity to criticise officialdom. + +Outside the court, dozens of Mr Pu’s supporters defied a heavy police presence, which included the deployment of thuggish men in plain clothes (oddly wearing smiley badges during the trial). Several protesters were dragged away, some after chanting “Pu Zhiqiang is innocent”. + +Internet users showed similar disdain for the censors on the anniversary on December 26th of the birth of Mao Zedong (“He wreaked greater destruction on human civilisation than any other villain,” one businessman told his more than 106,000 followers). They piped up, too, after an avalanche of construction waste on December 20th in the southern city of Shenzhen that killed at least seven people and left more than 70 others missing. One Weibo user with nearly 75,000 followers lamented how effective a modern city like Shenzhen was at downplaying such news. “What’s frightening is that this is the way China as a whole will be,” he said. + +Mr Xi need not worry about his own social-media pulling power. By the time The Economist went to press, his first post on Weibo—sent through the account of an unnamed journalist at the newspaper he visited—had been retweeted more than 380,000 times and had garnered more than 50,000 comments. Most of these are fawning—of those still visible, at least. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21684793-communist-partys-battle-social-media-closely-fought-one-weibo-warriors/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Economic ideology + +Reagan’s Chinese echo + +The mystery of Xi Jinping’s supply-side strategy + +Jan 2nd 2016 | SHANGHAI | From the print edition + + + +RONALD REAGAN, a sworn enemy of communism, and Xi Jinping, a doughty defender of Communist rule in China, ought to have little in common. Lately, though, Mr Xi has seemed to channel the late American president. He has been speaking openly for the first time of a need for “supply-side reforms”—a term echoing one made popular during Reagan’s presidency in the 1980s. It is now China’s hottest economic catchphrase (even featuring in a state-approved rap song, released on December 26th: “Reform the supply side and upgrade the economy,” goes one catchy line). + +Reagan’s supply-side strategy was notable, at least at the outset, for its controversial focus on cutting taxes as a way of encouraging companies to produce and invest more. In Xiconomics, the thrust of supply-side policy is less clear, despite the term’s prominence at recent economic-planning meetings and its dissection in numerous articles published by state media. Investors, hoping the phrase might herald a renewed effort by the leadership to boost the economy, are eager for detail. + +Mr Xi’s first mentions of the supply side, or gongjice, in two separate speeches in November, were not entirely a surprise. For a couple of years think-tanks affiliated with government ministries had been promoting the concept (helped by a new institute called the China Academy of New Supply-Side Economics). Their hope is that such reforms will involve deep structural changes aimed at putting the economy on a sounder footing, rather than yet more stimulus. Since Mr Xi gave the term his public blessing, officials have been scrambling to fall in line with supply-side doctrine, designing policies that seem to fit it or, just as energetically, working to squeeze existing ones into its rubric. + +Mr Xi’s aim may be to reinvigorate reforms that were endorsed by the Communist Party’s 370-member Central Committee in 2013, a year after he took over as China’s leader. They called for a “decisive” role to be given to market forces, with the state and private sectors placed on an equal footing. But Mr Xi lacked a catchy phrase to sum up his economic vision. The one he most commonly used was simply that the economy had entered a “new normal” of slower, more mature, growth. That phrase had its detractors, for it seemed to imply passive acceptance of a more sluggish future. “Supply-side reform” is being made to sound like a call to action. Xinhua, a state news agency, neatly tied the two phrases together: “supply-side structural reform is the new growth driver under the new normal.” + +But what does it mean? Those who first pushed supply-side reform onto China’s political agenda want a clean break with the credit-driven past. Jia Kang, an outspoken researcher in the finance ministry who co-founded the new supply-side academy, defines the term in opposition to the short-term demand management that has often characterised China’s economic policy—the boosting of consumption and investment with the help of cheap money and dollops of government spending. + +The result of the old approach has been a steep rise in debt (about 250% of GDP and counting) and declining returns on investment. Supply-siders worry that it is creating a growing risk of stagnation, or even a full-blown economic crisis. Mr Jia says the government should focus instead on simplifying regulations to make labour, land and capital more productive. Making it easier for private companies to invest in sectors currently reserved for bloated state-run corporations would be a good place to start, some of his colleagues argue. + +There are plenty of differences between China’s supply-siders and those who shaped Mr Reagan’s programme, not least in their diagnosis of their respective economies’ ills. The Americans thought that production bottlenecks were fuelling inflation and stifling growth. Their Chinese counterparts worry about the opposite: excessive production causing deflation and unsustainably rapid growth. Still, the language used in China can sound just as radical. “We can no longer delay the clean-up of zombie corporations,” Chen Changsheng of the Development Research Centre, a government think-tank, wrote recently. “Taking painkillers and performing blood transfusions is not enough. We need the determination to carry out surgery.” + +There may be another similarity as well: a revolution that falls short of its hype. Reagan had to work with a Congress controlled by his political opponents, and the policies he enacted were more moderate and muddled than supply-side purists had hoped. Mr Xi faces no such democratic checks, but China’s ruling party is split between rival interest groups, and economic policy is often implemented in fits and starts as party leaders try to reconcile their competing demands. + +Supply us with a slogan + +Mr Xi’s adoption of the supply-side mantra marks the start of protracted tiptoeing. Over the past two months, party propagandists have asked economists at top universities and research institutions to expound on their views of what supply-side reforms should entail, according to insiders. It is a slogan in search of content. + +In the recent proliferation of articles and speeches about supply-side reforms, there are clearly differences over what the emphasis should be. The National Development and Reform Commission, a powerful planning agency, argues that China needs to become more innovative and efficient in making the kinds of things its consumers want to buy. But its version of “supply-side reform” would look more like stimulus than surgery. Tax cuts since 2014 on purchases of electric cars offer a taste of what may lie ahead; sales of these vehicles have surged nearly fourfold this year. + +Some fret that the supply-side talk is a dangerous distraction. As Yao Yang of Peking University puts it, the economy’s main ailment now is a lack of demand, not a problem with supply. The cure for that, he believes, is a short-term burst of monetary easing, the very thing that ardent supply-siders have been hoping to banish. + +For all the recent debate, early signs are that the supply-side shift may not amount to a serious change of course. Measures proposed by the government in late December include lower corporate borrowing costs, an easing of entry barriers in underdeveloped sectors such as health care and a reduction of excess capacity in sectors such as property. It just so happens that all these policies have already been in place for months or even years. If nothing else, Mr Xi’s supply-side reforms will prove that China is among the world’s most accomplished suppliers of slogans. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21684804-mystery-xi-jinpings-supply-side-strategy-reagans-chinese-echo/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Iraq: Reclaiming the ruins from Islamic State + +Christians in the Middle East: And then there were none + +Enforcing morality: No sex please, we’re Middle Eastern + +Ethiopia: What if they were really set free? + + + + + +Articles Sections Next + +Iraq + +Reclaiming the ruins from Islamic State + +By retaking Ramadi, Iraq’s security forces have won a morale-boosting victory + +Jan 2nd 2016 | From the print edition + + + +IT HAS been a long time in coming. But on December 27th Iraq’s security forces announced they had recaptured the city of Ramadi from Islamic State (IS), with only pockets of resistance remaining. This followed a week of heavy fighting by the Iraqi army, local police and Sunni tribal fighters, all backed by American air strikes. + +The expulsion of jihadists from the capital of Anbar, a mainly Sunni province, is a morale-boosting victory for the beleaguered government of Haider al-Abadi in Baghdad. It will go some way towards expunging the memory of the humiliating flight of the army from the city seven months ago, when a numerically inferior IS force launched a stunning assault, spearheaded by at least 30 vehicular suicide-bombs, some of them armoured bulldozers packing enough explosive to demolish entire streets. Outflanked and outgunned, even the army’s Golden Division, a highly regarded American-trained special-forces unit, succumbed to panic. + +The carefully orchestrated campaign to recover Ramadi, which saw much closer co-ordination between troops on the ground and coalition air power than in the past, is an indication of how other battles to expel IS from Iraqi cities may be conducted. Air strikes are claimed to have killed at least 350 IS fighters in the days before the ground offensive began in earnest. + +While it is true that Iraqi forces some 10,000 strong were needed to defeat no more than 1,000 IS fighters, the difficulties should not be underestimated. IS had time to construct a multilayered defence based on booby traps and a network of tunnels that allowed shooters and suicide-bombers to move around the town unseen by surveillance drones. The Iraqi army had to spend months encircling the city and slowly cutting IS off from outside help. This allowed Iraqi units to move cautiously into the ruined city, street by street. + +Significantly, Iranian-backed Shia militias, who have often been in the vanguard of the fight against IS during the past 18 months, were largely excluded from the battle. This was at the insistence of the Americans, who want to encourage a Sunni uprising against IS, like the one they fomented against its predecessor, al-Qaeda in Iraq, in 2006. But the results have been patchy, because the promised supply of American weapons to Anbari Sunni tribes has been blocked by the predominantly Shia government in Baghdad. + +Next stop, Fallujah + +Given the deep sectarian divisions, limiting the role of the Shia “Popular Mobilisation Forces” in Anbar remains a priority for the Americans. Most are backed and financed by Iran—and Mr Abadi has little influence over such groups. + +If the government is to build on its success in Ramadi, it must show displaced Sunni inhabitants that it can both hold the city and start rebuilding it. That means providing material support for the Sunni tribes and local police to garrison Ramadi, while freeing up the overstretched Iraqi army to take on IS elsewhere in Anbar. The jihadists still control not only Fallujah, but also Ana, Rawa, Hit and al-Qaim, towns which between them have (or had) a population of over 700,000. + +The Iraqi army will have little choice but to work with the Shia militias in the continuing attempt to recapture Fallujah, which has seen only intermittent progress in the past year. The tactics used in Ramadi—encirclement and air strikes—are being applied to the city, which is now more or less completely cut off. But Fallujah, which was al-Qaeda in Iraq’s first stronghold and the scene of bitter fighting with American troops in 2004, will be much harder to crack. + +Mr Abadi promised on December 28th that IS will be driven from his country by the end of 2016. “We are coming to liberate Mosul, which will be the fatal blow to [IS],” he said. A concerted attempt to retake Iraq’s second city (seized by IS 18 months ago) does now appear more likely, although it will have to wait until Fallujah is restored to government control and the Iraqi army can field more effective units to join with Kurdish Peshmerga fighters. + +Estimates differ as to how many IS combatants there are in Mosul. IS says it has 30,000. Iraqi government sources put the number at a more modest 1,500. But IS has had a long time to dig itself in to the northern city, and at least some of the people there are said to prefer the so-called caliphate, for its all brutality, to rule from Baghdad. Mosul is a huge source of funding for IS, because it has so many people for the jihadists to tax. If it should fall, IS’s pretensions to being a state will fall with it. But there is still quite a way to go. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21684689-retaking-ramadi-iraqs-security-forces-have-won-morale-boosting/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Christians in the Middle East + +And then there were none + +Fed up and fearful, Christians are leaving the Middle East + +Jan 2nd 2016 | BEIRUT, BETHLEHEM AND CAIRO | From the print edition + +Cryin’ Christmas tears + +FAR from spreading cheer this holiday season, Pope Francis has been in a Grinch-like mood. “There will be lights, parties, Christmas trees and Nativity scenes,” he said in late November. “It’s all a charade.” As the Vatican unveiled its own giant spruce, he sounded downright depressed: “We should ask for the grace to weep for this world, which does not recognise the path to peace.” + +It is easy to see why the pope is so downhearted. Look no further than Bethlehem, where young Palestinians throw stones at Israeli soldiers manning the wall separating the West Bank from Israel. From afar, the Israeli tear gas looks like the smoke from frankincense, of the sort that pilgrims burn when visiting the Church of the Nativity. But there were few pilgrims this Christmas—they were too scared. + + + +Most victims of war and terrorism in the Middle East are Muslims, since they are by far the majority of the population. But the tiny Christian minority often feels singled out. Their numbers are declining where the fighting is worst (see chart). Overall, the proportion of Middle Easterners who are Christian has dropped from 14% in 1910 to 4% today. Church leaders and pundits have begun to ask whether Christianity will vanish from the Middle East, its cradle, after 2,000 years. + +An exodus is under way. Many Christians feel more at home in the West and have the means to get there. Some are leaving because of the general atmosphere of violence and economic malaise. Others worry about persecution. A recent video of three Assyrian Christians in orange jumpsuits being made to kneel before being shot in the head by Islamic State (IS) jihadists fuelled this fear—though IS treats many other groups equally badly. + +Fewer births, virgin or otherwise + +The Christians who remain tend to have fewer babies than their Muslim neighbours, according to the Pew Research Centre. Regional data are unreliable, but in Egypt the fertility rate for Muslims is 2.7; for Christians it is 1.9. + +Mosul, in northern Iraq, was once home to tens of thousands of Christians. Perceived as supporting the Americans, they were targeted by insurgents after the invasion. A wave of killings in 2008, including that of the local Chaldean archbishop, seemed to mark the low point for the community. Then came IS. When the jihadists entered the city in 2014, they reportedly tagged Christian houses with an “N” for “Nazarene”, and gave their occupants a choice: convert, pay the jizya, a tax on non-Muslims, or face possible death. Most fled. In July 2014 IS announced that the city was free of Christians. + +Many who left Mosul went to Erbil, the Kurdish capital of northern Iraq, where they have trouble finding work or obtaining public services. Even there, some refugees chafe at the enforcement of Muslim customs. “You wouldn’t want to live there,” says Samir, a Christian refugee now in Lebanon. In general, Christians complain that their Muslim neighbours are growing increasingly intolerant. + +Some retort that Westerners exaggerate tales of Christian persecution to justify interventionist policies. “There is talk as if the West is genuinely interested in Christians, but most of the time they only use them for their own political ends,” says Mitri Raheb, pastor of a church in Bethlehem. He says that the Israeli occupation hurts Palestinian Christians far more than persecution by Muslims, but provokes less outrage in the West. + +Christian leaders are in a tough spot. “I cannot preach to people: ‘Do not leave,’” says Father Raheb. But other priests have. In an open letter published in September one of Syria’s most senior Catholic leaders, Melkite Patriarch Gregory III, wrote: “Despite all your suffering, stay! Be patient! Don’t emigrate! Stay for the church, your homeland, for Syria and its future!” Rankling many, he then urged Europe not to “encourage Syrian Christians to emigrate”. Haitham, a refugee from Mosul, says the pleas go “in one ear, out the other”. + +In the decades before the Arab spring, many Christian leaders lent their support to authoritarian rulers in return for the protection of Christians—and their own lofty status. But the deals broke down when the dictators fell or wobbled, leaving Christians in a predicament. “In Iraq, when Saddam Hussein was removed, we lost a million Christians,” said Bechara Boutros al-Rahi, Lebanon’s Maronite Christian Patriarch, to AFP in 2012. “Why? Not because the regime fell, but because there was no more authority, there was a vacuum. In Syria, it’s the same thing, Christians do not back the regime [of Bashar al-Assad], but they are afraid of what may come next.” + +Christian leaders have often supported whichever strongman is in power. The late Pope Shenouda III, head of the Coptic church, the largest in the Middle East, backed Hosni Mubarak, Egypt’s former dictator, and discouraged Copts from joining the protests that would eventually topple him. In 2012 Shenouda was succeeded by Tawadros II, who supports the current strongman, Abdel-Fattah al-Sisi. He has described the Arab spring as being more like a “winter, plotted by malicious hands” in order to break up the region into smaller states. + +Yet the Copts have gained little from their leaders’ loyalty. Mr Mubarak stood by as relations between Christians and Muslims deteriorated and sectarian violence increased. Mr Sisi is seen as better than the Islamist government that he toppled. A draft law would make it easier to build churches. But Copts are still expelled from villages for such crimes as falling in love with a Muslim. + +Even in Lebanon, where Christians were once a majority and still hold considerable power, their political leaders have disappointed. Under the country’s unique system, government posts are shared out based on sect. The presidency goes to a Maronite, the largest group of Christians. But in recent decades many Christians have left. Muslims are now a majority, and want power to match their numbers. Christian political leaders complain of persecution, but many seem more concerned with enhancing their own power. Bickering between politicians has left the presidency vacant for 18 months. + +Oddly enough it is the Gulf, home to the most conservative brand of Islam, which has welcomed the largest number of Christians recently, though not from Iraq or Syria. A wave of migrant labourers from the Asia-Pacific has dramatically increased the share of Christians in countries such as Saudi Arabia and the United Arab Emirates (UAE), which had few before. Tolerance varies between countries. Saudi Arabia, for example, bans the practice of Christianity (though many Christians worship in private). The UAE restricts proselytisation, but has otherwise supported its Christians. The number of churches in the country has grown from 24 in 2005 to 40 today. The emirate’s rulers often provide churches with free land, water and electricity. But these new Christian enclaves may not last. Migrant workers in the Gulf cannot easily become citizens or put down roots. + +In any case it is the loss of ancient communities that most concerns church leaders. “Christians are not guests in the Middle East,” says Father Paul Karam, the president of Caritas, a Catholic charity, in Lebanon. “We are the original owners of the land.” But none of the Christian refugees who spoke with your correspondent plans to return home. “We don’t belong there,” says Samir, who expects Iraq soon to be empty of Christians altogether. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21684795-fed-up-and-fearful-christians-are-leaving-middle-east-and-then-there-were/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Enforcing morality + +No sex please, we’re Middle Eastern + +The bossiness of the vice police + +Jan 2nd 2016 | BEIRUT | From the print edition + +Endangered pleasures + +IT WAS a disquieting announcement. On November 25th Egypt’s President Abdel-Fattah al-Sisi approved a committee tasked with “improving the morals and values” in his country. Efforts to reduce littering or sexual harassment, both plagues in Egypt, might be welcome. But experience in the Middle East suggests that the boot will be put into more harmless activities. + +In September, for example, Egypt locked up two belly-dancers for “inciting debauchery” after they showed a little skin in online videos; one of the dancers, known as “Egypt’s Shakira”, is most famous for a video which features much suggestive use of a pestle and mortar, but no more flesh than is revealed by a low-cut blouse and an above-the-knee skirt. A young Egyptian couple tells of police accusing them of being together without being married, something that is not banned in the country. Across the region gay people, atheists and dissidents are punished for their supposed moral transgressions. + +Saudi Arabia and Iran, regional and religious rivals, are the bossiest. Both regimes claim to be Islamic. Both have vice squads. In Iran they berate women for showing too much fringe; in Saudi Arabia, for wearing too flirty an abaya, the big, usually black, cloak that is mandatory for females there, or being in the company of unrelated males. They enforce bans on alcohol, parties and other things that normal people, even the most morally upright, enjoy. Saudi media recently reported that female bureaucrats wearing too much make-up would be fined 1000 riyals ($266). + +Police in Algeria, Morocco and Sudan, too, have powers to stamp out immorality. Sudan’s criminal code, which outlaws adultery and women wearing trousers, is particularly harsh. Vague laws across the region such as causing offence and encouraging indecency are broad and open to abuse. Violators can be flogged. + +In November Saudi Arabia sentenced Ashraf Fayadh, a poet, to death. He was accused of apostasy and of having illicit relations with women, whose images he stored in his phone. He denies the charges. He had previously posted a video showing the religious police whipping a man; his supporters think the police are taking revenge. Saudi Arabia beheads people for moral transgressions. Iran hangs them. + +Since the 1970s Arab populations have grown more devout. This makes it easier for rulers to use “morality” to keep them in line. Women, especially, are told how to dress and under what circumstances they may have sex. In Morocco and Algeria, women who are raped are sometimes made to marry their rapist. + +Social censure is pervasive, and can be deadly. Even in moderate countries such as Jordan, men sometimes kill women to uphold family “honour”. The murderers—usually a father or brother—often escape with light sentences. “If I go out with a boyfriend in Beirut it’s fine,” says a Lebanese Christian woman. “But in the villages, people will say, ‘Look, she’s seeing him and they’re not married’.” + +Some among the region’s ever more globalised young are pushing back. Grindr and Tinder, two hook-up apps for gays and straights respectively, have a fair number of users in the Middle East. Men and women mix and, more and more, choose their own partners. When parts of films are cut, such as an explicit scene in “The Wolf of Wall Street”, people go online to watch the full version. In Jeddah, if not Riyadh, colourful abayas swing open as unrelated men and women mingle in cafés. + +A few leaders say they want to give people a break. Hassan Rohani, Iran’s relatively moderate president, has talked about stopping the religious police from fining women for failing to conceal their hair, wrists and bottoms. Such small freedoms, so far only very partially implemented, would be popular. + +Some of the region’s moral arbiters do not practise what they preach, as bartenders and madams in posh parts of Europe can attest. Imagine if the vice police cracked down on hypocrisy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21684801-bossiness-vice-police-no-sex-please-were-middle-eastern/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Ethiopia + +What if they were really set free? + +If the government let people breathe, they might fly + +Jan 2nd 2016 | ADDIS ABABA AND LALIBELA | From the print edition + + + +THE Ben Abeba restaurant is a spiral-shaped concrete confection perched on a mountain ridge near Lalibela, an Ethiopian town known for its labyrinth of 12th-century churches hewn out of solid rock. The view is breathtaking: as the sun goes down, a spur of the Great Rift Valley stretches out seemingly miles below in subtly changing hues of green and brown, rolling away, fold after fold, as far as the eye can see. An immense lammergeyer, or bearded vulture, floats past, showing off its russet trousers. + +The staff, chivvied jovially along by an intrepid retired Scottish schoolmarm who created the restaurant a few years ago with an Ethiopian business partner, wrap yellow and white shawls around the guests against the sudden evening chill. The most popular dish is a spicy Ethiopian version of that old British staple, shepherd’s pie, with minced goat’s meat sometimes replacing lamb. Ben Abeba, whose name is a fusion of Scots and Amharic, Ethiopia’s main language, is widely considered the best eatery in the highlands surrounding Lalibela, nearly 700km (435 miles) north of Addis Ababa, the capital, by bumpy road. + +Yet the obstacles faced by its owners illustrate what go-ahead locals and foreign investors must overcome if Ethiopia is to take off. Electricity is sporadic. Refrigeration is ropey, so fish is off the menu. So are butter and cheese; Susan Aitchison, the restaurant’s resilient co-owner, won’t use the local milk, as it is unpasteurised. Honey, mangoes, guava, papaya and avocados, grown on farmland leased to the enterprising pair, who have planted 30,000 trees, are delicious. All land belongs to the state, so it cannot be used as collateral for borrowing, which is one reason why commercial farming has yet to reach Lalibela. Consequently supplies of culinary basics are spotty. Local chickens are too scrawny. The government will not yet allow retailers such as South Africa’s Shoprite or Kenya’s Nakumatt to set up in Ethiopia, let alone in Lalibela, a UNESCO World Heritage site. + +Bookings at Ben Abeba are tricky to take, since the internet and mobile-phone service are patchy. Credit cards work “about half the time”, says Ms Aitchison. Imports for such essentials as kitchen spares are often held up at the airport, where tariffs are sky-high: a recent batch of T-shirts with logos for the staff ended up costing three times its original price. Wine, even the excellent local stuff, is sometimes unavailable, because transport from Addis, two days’ drive away, is irregular and private haulage minimal. The postal service barely works. Fuel at Lalibela’s sole (state-owned) petrol station runs out. Visitors can fly up from Addis on Ethiopian Airways every morning, but private airlines are pretty well kept out. + + + +Many of these annoyances could be removed—if only the government were brave enough to set the economy free. “The service sector here is one of the most restrictive in the world,” says a frustrated foreign banker. The government’s refusal to liberalise mobile-telephone services and banks is patently self-harming. Ethiopians have one of the lowest rates of mobile-phone ownership in Africa (see chart); the World Bank reckons that fewer than 4% of households have a fixed-line telephone and barely 3% have access to broadband. + +The official reason for keeping Ethio Telecom a monopoly is that the government can pour its claimed annual $820m profit straight into the country’s grand road-building programme. In fact, if the government opened the airwaves to competition, as Kenya’s has, it could probably sell franchises for at least $10 billion, and reap taxes and royalties as well; Safaricom in Kenya is the country’s biggest taxpayer. + +Moreover, Kenya’s mobile-banking service has vastly improved the livelihood of its rural poor, whereas at least 80% of Ethiopians are reckoned to be unbanked. For entrepreneurs like Ms Aitchison and her partner, Habtamu Baye, local banks may suffice. But bigger outfits desperately need the chunkier loans that only foreign banks, still generally prevented from operating in the country, can provide. A recent survey of African banks listed 15 Kenyan ones in the top 200, measured by size of assets, whereas Ethiopia had only three. + + + +Land reform is another big blockage, though farmers can now have their plots “certified” as a step towards greater security of tenure. Given Ethiopia’s not-so-distant feudal past and the dreadful abuses that immiserated millions of peasants in days of yore, especially in time of drought, the land issue is sensitive; the late Meles Zenawi, who for 21 years until his death in 2012 ran the country with an iron fist and a fervent desire to reduce poverty, was determined to prevent a rush of landless or destitute peasants into slums edging the big towns, as has happened in Kenya. But the increasing fragmentation of land amid the rocketing increase in population is plainly unsustainable, even though productivity has risen fast through government-provided inputs such as fertiliser and better seed. (Ethiopia is Africa’s second-most-populous country after Nigeria; by some estimates it has nearly 100m people.) Most women still have four or five children. The standard family plot has shrunk to less than a hectare. + +Yet, despite these self-imposed brakes, Ethiopia’s economic progress has been spectacular. Its growth rate, if the latest official figure of 11% is true, is the fastest in Africa; and even the lower figure of around 8%, which the IMF and many Western analysts prefer, is still very perky. Social and economic indices are reckoned to have improved faster than anywhere else in Africa, albeit from a low base. Extreme poverty, defined as a daily income of under $1.25, afflicted 56% of the population in 2000, according to the World Bank, but had fallen to 31% by 2011 and is thought to be dipping still. The average Ethiopian lifespan has risen in the same period by a year each year, and now stands at 64. Child and infant mortality have dived. Protection for the rural poor in time of drought, which presently afflicts swathes of the north and east, is more effective than before. The government has “the most impressive record in the world” in reducing poverty, says a British aid official. (Britain gives its fattest dollop of largesse to Ethiopia.) + +Nonetheless, at least 25m Ethiopians are still deemed to be “extremely poor”. A waitress at Ben Abeba, a university graduate in biology, seems happy to get a monthly wage of $26. A labourer earns a lot less. + +How they made a miracle + +The core of the government’s economic policy is to improve agriculture, nurture industry and build lots of infrastructure. This includes a series of huge dams on the Blue Nile (which provides most of the water that flows into Egypt via Sudan) and on the Omo river, which flows south into Kenya’s Lake Turkana. The mass electrification that is expected to ensue should eventually help Ms Aitchison’s kitchen and communications in Lalibela. + +Roads and railways are also being built apace. Driving east from the town on a dirt track to join a paved road 80km or so away, your correspondent saw not a single other vehicle in two hours. The government puts its hope in industrialisation and light manufacturing, spurred on by investment and also by mass education (more than 32 universities have been created since 2000). It promotes industrial parks, which are supposed to boost their share of GDP from 5% today to 20% within a decade—and create millions of jobs for a population whose median age is only 19. + +Though the government invokes no precise model, it has various Asian ones in mind, most obviously China’s system of state capitalism under the strict control of a dominant political party. Meles rose to power at the head of the Tigrayan People’s Liberation Front, a revolutionary regional party that originally drew its inspiration from Enver Hoxha’s Albanian brand of communism and which, after years of guerrilla warfare in the mountains, overthrew a vicious Soviet-backed Marxist regime, known as the Derg, in 1991. + +Meles gradually began to open the country’s economy, but he also felt obliged to close down an experiment in multiparty democracy after an assorted opposition made big advances in a general election (which it claimed to have won) in 2005. The two main opposition parties, which both want to liberalise the economy and privatise the land, were eventually allowed to keep 161 seats in the 547-strong parliament. In the post-election fracas, about 200 people were killed and at least 20,000 are reckoned subsequently to have done stints in prison. In the next two rounds of elections, in 2010 and again in May 2015, the tally of opposition MPs, after a government campaign of outright repression, slumped to one and now none. + +The opposition is crushed, fragmented and feeble. Prominent dissenters have fled or are behind bars. Human Rights Watch, a monitoring group based in New York, reckons there are “thousands” of political prisoners. Torture is routine. “Ethiopians are cowed,” says a longtime analyst. It was notable, at a recent Economist conference in Addis, that virtually no businessman, Ethiopian or foreign, had the nerve to disparage any of the government’s policies. In public Ethiopians tend dutifully to echo the government line; in private, though, they can be franker. + +After Meles’s death, Hailemariam Desalegn emerged as prime minister. In September of 2015 he was confirmed as head of the ruling Ethiopian People’s Revolutionary Democratic Front, itself a coalition whose key component is still Meles’s Tigrayan front. But Mr Hailemariam, a southern Pentecostalist from a small ethnic group outside Meles’s circle of revolutionaries from the north, has yet to achieve his predecessor’s authority. + +Just take the plunge + +He says he favours a loosening of economics and politics. But so far he has been tentative. “He’s a compromise guy encircled by old-guard Leninist ideologues, the Tigray boys,” says Beyene Petros, a veteran leader of the opposition. One of Mr Hailemariam’s close advisers, Arkebe Oqubay, a reformist who promotes industrial policy (especially the creation of industrial parks) and craves foreign investment, cagily suggests that banking will open up “in five years”. Yet the ruling front still reflects a deep wariness of foreigners who, in the words of a long-standing expatriate, remain widely suspected of plotting to “get rich at the expense of Ethiopians”. + + + +Most independent observers feel that, overall, Ethiopia is on the rise, and may even emerge as an African powerhouse alongside South Africa and Nigeria—and ahead of Kenya, its regional rival. It is proud of having the African Union’s headquarters and of providing more UN peacekeepers than any other African country. It is a leading mediator in the region, especially in war-torn South Sudan, and has won plaudits from the West for its fierce stand against jihadism. It also caters for more refugees than any other African country—some 820,000 at last count. + +On the home front, Ethiopia’s infrastructure plans have attracted the interest of potential investors from across the globe. Yet unless the government gets a move on frustration will grow, at home and abroad. If the ruling party had the courage to open up the economic and political system, the pace of Ethiopia’s progress towards prosperity and stability would quicken. Even lovely, remote Lalibela would gain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21684816-if-government-let-people-breathe-they-might-fly-what-if-they-were-really-set/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Russia’s Far East: Snow job + +Vladivostok’s new casino: Russian roulette + +Spanish politics: The chore of the Spanish succession + +Poland’s religious politics: Courting disaster + +Educating refugees: Learning the hard way + + + + + +Articles Sections Next + +Russia’s Far East + +Snow job + +Russia’s much-ballyhooed turn towards China is less than it seems + +Jan 2nd 2016 | VLADIVOSTOK AND KHABAROVSK | From the print edition + + + +DOWN a bumpy two-lane road through the hills north-west of Vladivostok, the Pogranichny border crossing is where Russia meets China. Bilateral relations are blossoming, and trade should be booming. Yet lorries loaded with timber idle on the roadside, as obstructive bureaucrats keep them waiting for days. On a recent visit, the electricity was out; candles flickered in the truck stop’s lavatories. “Nothing new here,” said a shopkeeper. + +Over the past two years, as its relations with the West have soured, Russia has proclaimed a “pivot to the East”. Officials envisioned China replacing Western capital markets and hoovering up Russian exports of oil, minerals and food. Vladimir Putin and Xi Jinping, the countries’ presidents, visited each other’s capitals for ceremonies commemorating the end of the second world war; Western leaders stayed away. Big deals in energy, transport and arms seemed to augur a new friendship. In September Mr Putin declared that Sino-Russian relations had “probably reached a peak in their entire history”. + +That was the official story, at least. “The turn to the east is happening, but in a characteristically Russian way: slowly, foolishly and with unrealistically high expectations,” says Alexander Gabuev, the chairman of the Russia in the Asia-Pacific programme at the Moscow Carnegie Centre, a think-tank. The Russian recession and China’s slowdown have put a damper on grand plans. With oil prices low and the rouble weak, bilateral trade shrank by around 30% in the first half of 2015. Corruption, bureaucracy and the rickety infrastructure of Russia’s Far East cloud the business climate. + + + +Mr Putin is not the first Russian leader to turn towards Asia. Chinese and Soviet communists feuded during the cold war, but by the time of perestroika Mikhail Gorbachev was calling Vladivostok a “window to the East” and declaring the Soviet Union “an Asian and Pacific country”. Nor is Mr Putin’s interest in the Pacific Rim new: when Vladivostok hosted the Asia-Pacific Economic Co-operation (APEC) conference in 2012, he poured resources into the city, building two bridges and a sprawling campus for the talks. “In the 21st century, the vector of Russia’s development will be the development of the East,” Mr Putin said, in a rare echo of Mr Gorbachev. + +But after the conference, Moscow’s attention shifted and funds dried up. Development projects fell by the wayside. Two five-star Hyatt hotels went unfinished. The government says funds allocated to rebuild the Pogranichny border area were stolen (by contrast, a shopping mall and a Holiday Inn await on the Chinese side). + +The clash with the West over Ukraine turned Russia’s focus eastward again. In May 2014, two months after the annexation of Crimea, Mr Putin met Mr Xi and announced a 30-year, $400 billion gas deal, ending a decade of talks. Russia’s rail monopoly awarded a tender to the state-controlled China Railway Group to design a high-speed train between Moscow and Kazan. Moscow agreed to sell Beijing sophisticated S-400 anti-aircraft missiles and Su-35 fighter jets. China extended a yuan currency-swap agreement. + + + +In the autumn of 2015 Russia declared several Far Eastern regions priority development zones. Investors will enjoy a five-year break on most taxes and streamlined bureaucracy. Foreigners arriving through Vladivostok will be allowed in without visas. Some firms have moved in: En+ Group, an energy holding company controlled by Oleg Deripaska, a Russian oligarch, has signed a deal with China’s Huawei to build data centres in Siberia. + +But it has not exactly been a gold rush. Western sanctions have made Chinese lenders cautious about Russian firms. Chinese foreign direct investment in Russia more than doubled in 2014, but collapsed during the first half of 2015. Gas export volumes are up, making Russia China’s largest supplier, but falling oil prices have slashed revenues. And although China is now Russia’s largest trading partner, Russia does not crack China’s top five—a fact not lost on Chinese businessmen. “They believe, and not without good reason, that they can dictate the conditions,” says the boss of a Vladivostok-based shipping firm. + +Russia, meanwhile, frets about being exploited. The desire to get closer to China is offset by a fear of becoming dependent, says Victor Larin of the Russian Academy of Sciences in Vladivostok. Russia imposes tough restrictions on businesses because of unfounded fears that the Chinese will take over its sparsely-populated Far East. Chinese businessmen complain about restrictions on hiring foreign labourers. Deals to lease farmland draw the ire of Russian nationalists. + +Even innocuous projects can incur the wrath of Russian apparatchiks. In November Cai Shangjun, an internationally acclaimed Chinese film director, brought more than 50 cast and crew to Khabarovsk to shoot a new movie, but customs officials held his camera equipment at the border. The frustrated cinéaste was left cooling his heels in his hotel for over a week. “It’s a tragedy,” said Mr Cai, as his crew lingered aimlessly in the lobby. His film “Under the Ice”, about two Chinese lovers who meet in Russia, has since resumed production. But like most things under ice, and Russia’s eastern pivot itself, it is moving slower than hoped. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21684809-russias-much-ballyhooed-turn-towards-china-less-it-seems-snow-job/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Vladivostok’s new casino + +Russian roulette + +How to lure rich Chinese to take a chance on Russia + +Jan 2nd 2016 | VLADIVOSTOK | From the print edition + +A billion on Siberia, please + +THE shiny new Tigre de Cristal casino looks like a black glass and steel spacecraft that has landed in the Siberian forest. A neon sign advertises “Seafood delicacies from the Sea of Japan”. Inside, Russian ladies deal out baccarat cards to Chinese gamblers. The casino itself represents a bit of a bet: that Russia can tap some of the cash from rising Asian economies to help develop its own Far East, a territory larger than the European Union that is home to just 6m people. + +Though the Far East is staunchly Russian, it has grown dependent on its Asian neighbours. Some regions do 85% of their foreign trade with China. Europe feels a world away. When Russia’s economy was booming, locals took their holidays at Chinese resorts and popped over the border for cheap massages and shopping. + +Since the collapse of the rouble the flow has reversed. Chinese shoppers come to buy Russian food, which they think safer than their own chemical-ridden produce. Others come for a bit of Europe. Li Tsang, a hairdresser from Fuyuan, raves about Khabarovsk, just across the Amur river: “It’s so clean!” + +At Tigre de Cristal, the brainchild of Lawrence Ho, son of the Macao mogul Stanley Ho, investors are banking on an influx of gamblers from north-east China, South Korea and Japan. “Within a two- or three-hour radius, you have 200m-300m people under-served from a gambling perspective,” says Craig Ballantyne, the casino’s upbeat Scottish manager. + +The fate of such foreign-backed projects depends on Russia providing the conditions for success. For Tigre de Cristal, little went smoothly. A bizarre legislative oversight means that it is illegal to advertise the casino: with the exception of a handful of special gaming zones, gambling is banned in Russia. The launch was postponed because of bureaucratic hassles. Even with the delay, the local government failed to revamp the main road from the airport in time for the grand opening, much to the chagrin of casino staff. “When Disneyland opened,” Mr Ballantyne notes pointedly, “the Santa Ana highway was finished.” + +Correction: In “The gauge of history” in our Christmas issue, a portrait was wrongly described as showing Fyodor Shekhtel, a Russian architect. The subject was in fact Savva Mamontov, a Russian industrialist and patron of the arts. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21684806-how-lure-rich-chinese-take-chance-russia-russian-roulette/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Spanish politics + +The chore of the Spanish succession + +A fissiparous electorate makes for difficult coalition negotiations + +Jan 2nd 2016 | MADRID | From the print edition + + + +IN MOST places, when 3,030 people take an up-or-down vote, some sort of decision will probably emerge. But one should never underestimate the contentiousness of the Catalans. On December 27th an assembly of the far-left Popular Unity Candidacies (CUP) party deciding whether to back Catalonia’s acting president, Artur Mas, split the vote evenly—1,515 on each side. The deadlock means that, three months after elections, Mr Mas still cannot form a government to carry out his programme of moving steadily towards secession from Spain. + +The Catalan impasse is part of a wider Spanish gridlock. Elections on December 20th splintered the political landscape. The duopoly of the conservative People’s Party (PP) of the prime minister, Mariano Rajoy, and the opposition Socialists (PSOE), who have traded turns in power for the past 33 years, has been upended. The insurgent left-wing Podemos and liberal Ciudadanos parties grabbed a third of the parliamentary seats between them, making a coalition or minority government a necessity. But Spain has little culture of coalition-building, and forming a government is a tall order. Fresh elections are also possible. + +After losing over a third of the PP’s seats, Mr Rajoy’s attempts to form a new government seem destined to fail. Meanwhile Pedro Sánchez, the Socialist leader, led his party to a historic low with barely one in five votes. A “grand coalition” between them, possibly backed by Ciudadanos, would be the most stable option. But decades of enmity make that unlikely. + +Instead Mr Sánchez fancies himself as the next prime minister. He would need to include the far-leftists of Podemos, which would be a triumph for southern Europe’s anti-austerity rebellion. But Podemos demands that Catalonia be granted a referendum on independence, which the Socialists refuse to accept. Mr Sánchez himself may soon face a leadership challenge, especially if party heavyweights, led by Susana Diez, the president of Andalusia, think he is selling them out. And even if Mr Sánchez and Podemos reach agreement, they do not have enough deputies; they would need the backing of either Ciudadanos or Catalan separatist parties. + +Podemos and Ciudadanos would make strange bedfellows. One party rails against neoliberalism; the other backs liberal reforms. The leaders of Podemos, Pablo Iglesias, and of Ciudadanos, Albert Rivera, have good personal chemistry, and both see themselves as crusaders ridding Spanish politics of corruption. They agree on the need to depoliticise the judiciary and some regulatory agencies. Yet a government of the Socialists, Podemos and Ciudadanos would lack the votes to change the constitution, making it hard to resolve Spain’s biggest looming problem: Catalonia’s threat to secede. + + + +Spanish election results + +Mr Mas and his Catalan Democratic Convergence party have been plodding towards secession for years. To secure the CUP’s backing, the once business-friendly leader is now dabbling in anti-austerity populism, promising to scrap a privatisation programme and commit his indebted region to an extra €270m ($296m) of social spending. His next steps towards independence are likely to clash with Spain’s constitution and may prod the new government to employ legal force against him. After four years without dialogue between Madrid and Barcelona, however, the two new governments may both be too weak to sort the problem out. + +Spain’s economy grew by an estimated 3% in 2015, but the recovery remains fragile and inadequate. Unemployment is 21% and GDP is still lower than in 2007. The most recent report by Fitch, a ratings agency, stated the obvious: a long period of political uncertainty and reversals of reforms will damage business confidence. Spain could use a strong government. It looks likely to get a weak one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21684827-fissiparous-electorate-makes-difficult-coalition-negotiations-chore-spanish/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Poland’s religious politics + +Courting disaster + +An attack on judicial independence reveals the government’s ideology + +Jan 2nd 2016 | TORUN | From the print edition + +Communists, communists everywhere + +WHEN the far-right Law and Justice (PiS) party won Poland’s parliamentary elections on October 25th, it was clear that the country was headed for change. But few expected anything like what has followed: purges of senior security officials, threats against public broadcasters, a police raid on a NATO–affiliated office and a deepening crisis over the constitutional court. On December 28th President Andrzej Duda (nominated by PiS, though technically non-partisan) signed a law that would, among other things, require Poland’s constitutional tribunal to approve all verdicts by a two-thirds margin, crippling its ability to review legislation. PiS has appointed five additional judges to the tribunal, in a move the standing judges ruled unconstitutional. PiS politicians refer to the court as a bastion of the previous Civic Platform government that must be subdued. Liberals and centrists have taken to the streets in protest. + +Observers wondering why a stable EU member with a growing economy has suddenly plunged into such turmoil might do well to visit Torun, a small city in northern Poland. Torun is home to Radio Maryja, an ultra-conservative radio station run by Father Tadeusz Rydzyk, a Roman Catholic priest. From its gated headquarters, guarded by silver-haired devotees, it broadcasts warnings against “gender ideology” (an umbrella term for feminism and gay rights) and the “Islamisation” of Europe. The station’s audience is small, under 2% of all listeners. Yet its political ideology is close to that of the new government. PiS would not have won without Radio Maryja, said Jaroslaw Kaczynski, the party’s leader, at the broadcaster’s 24th anniversary celebration in December. + +The 70-year-old Father Rydzyk does not think much of the way Poland has evolved since the end of communism. The country needs a spiritual renaissance, or it will become a “republic of bandits, thieves and perverts”, he said in an October interview with Nasz Dziennik, the daily newspaper he publishes. Like PiS, Radio Maryja propounds social conservatism, suspicion of Brussels and hostility towards refugees from the Middle East. The station’s listeners are sympathetic to conspiracy theories positing that the parties that have ruled Poland since the 1990s (apart from PiS) are secretly controlled by communist apparatchiks. Right-wing demonstrators (see picture) often demand that the constitutional court be “decommunised”, a request that leaves its moderate justices bemused. + +Radio Maryja’s listeners are not so much religious fanatics as the socially vulnerable. It speaks to Poles alienated by economic and cultural change. Religious symbols are their means of showing discontent, says Tomasz Szlendak, a sociologist at the University of Torun; Radio Maryja is the only media outlet that “speaks their language”. PiS, too, blends religious and nationalist symbolism with a focus on social injustice; a new monthly child benefit crowns the government’s list of election promises. Some term PiS the “pious left”. The party castigates its critics as heathen liberals. “Every hand raised against the Church is a hand raised against Poland,” said Mr Kaczynski in December. + +Like Father Rydzyk, Mr Kaczynski speaks of PiS’s election as the first step in a spiritual renaissance that will remake the Polish state. But his party’s interference with the constitutional tribunal has raised hackles in Brussels. The European Commission had asked the Polish government to put the process on hold; Mr Duda ignored the request. On January 13th the commission will meet to discuss the statute and whether it infringes EU treaty commitments to the rule of law. + +Meanwhile, Father Rydzyk, too, is disappointed in the new government. After a spat over access to the president, he threatened to break off co-operation, saying he expected his media outlets to be “treated differently”. It remains to be seen whom Mr Kaczynski and his party fear more: the EU, or Radio Maryja. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21684826-attack-judicial-independence-reveals-governments-ideology-courting-disaster/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Educating refugees + +Learning the hard way + +Integrating migrants into schools will not be easy + +Jan 2nd 2016 | STOCKHOLM | From the print edition + +That’s an ä not an å + +AFTER Aida Hadzialic’s parents fled war-torn Bosnia for Sweden in the early 1990s, they put their five-year-old daughter in a school full of native Swedes and made sure she studied hard to get ahead. It worked. Today Ms Hadzialic, 27, is Sweden’s minister for upper secondary education. Like her counterparts across Europe, she faces a new challenge: ensuring that a fresh wave of refugee children can integrate as successfully as she did. + +Even before this year’s surge, western Europe had lots of immigrant students. According to the Organisation for Economic Cooperation and Development (OECD), the proportion of 15-year-old schoolchildren in Spain who are foreign-born rose from 3% to 8% from 2003 to 2012 (though in Germany it fell by about the same amount). The new wave of migrants from Syria, Afghanistan, Iraq and elsewhere has redoubled the strains on school systems. + +In the countries accepting the most refugees—Sweden and Germany—lack of space is not a problem. Before the migrant surge, both countries faced declining numbers of pupils because of low birth rates. In Sweden the number of children in ninth grade fell from 120,000 in 2005 to 96,000 in 2015. “We have places for a hundred more pupils,” says Henrik Ljungqvist, the headmaster of Ronna School in Sodertalje, a city near Stockholm. (His school admits two to four new refugee pupils a week.) In Germany, without the new migrants, the number of students was projected to decline by 10% over the next decade, says Ludger Woessmann of the University of Munich. + +The biggest problem for education systems is that refugee children tend to be concentrated together. Many attend schools near refugee centres or in immigrant neighbourhoods. In Norway, Denmark and Sweden about 70% go to schools where at least half of the pupils are immigrants. This means they are partially segregated and less likely to learn the local language. + + + +Moreover, immigrants tend to find housing in poor areas with lower education standards. Schools where more than a quarter of students are immigrants usually perform worse than those with no immigrants (see chart), although the gap shrinks when economic status is accounted for. At Mr Ljungqvist’s school, where about 350 of the 750 students were born abroad, many of the brightest pupils have left. + +Swedish schools faced problems well before the latest migrants began arriving. From 2002 to 2012 Sweden’s rank in the OECD’s Programme for International Student Assessment (PISA) fell more than any other country’s, to 28th out of 34 countries in mathematics and 27th in reading and science. Pupils in Sweden are more likely to arrive late to school than in any other rich-world country. The government has responded to declining scores by increasing teachers’ pay, but it still does little or no inspecting of schools. The OECD’s Andreas Schleicher says the system lacks a culture of accountability. + +Germany’s PISA rankings remain high, but its school system is “almost the worst you could pick” for migrants, says Maurice Crul, an expert on immigrant youth at Erasmus University in Rotterdam. Unlike France or Sweden, where most children start preschool before age three, German children tend to start school at four or five. Many schools have only half-day classes. + +Moreover, the German system streams pupils at 10 into either vocational or academic systems—and immigrant children are 44 percentage points more likely than natives to be sent to vocational courses. Unlike other vocational systems such as that in the Netherlands, Germany’s makes it hard to move from a vocational track to an academic one. Lack of native language skills can steer bright immigrant children away from a university education. The system’s inflexibility also makes it harder to integrate older immigrant children. Germany has one of the world’s biggest gaps in reading proficiency between those who arrive aged between six and 11 and those who arrive aged 12 or over. + +The German system has its strengths. In less than a decade, Germany has improved the mathematics grades of second-generation migrant children by the equivalent of over a year of schooling. In some German states school days are being extended, and the government has made a big investment in preschool education. In Sweden, meanwhile, older refugees are being trained as teaching assistants to speed integration. Ronna School and others scrapped separate “introductory lessons” for refugees after realising they led to immigrants being segregated and bullied. + +But far more could be done. Pupils could be distributed throughout the school system more effectively. In Aarhus, a city in Denmark, the proportion of pupils from migrant backgrounds cannot exceed 20% in each school; a similar distribution in Germany and Sweden could help fight ghettoisation. And refugee children should be getting more preschool. According to the OECD, 15-year-old immigrant children are 20% less likely to have attended pre-primary education than the native-born, but those who have score 49 points higher in reading than those who have not. + +Most important, European governments need to treat refugee children as an opportunity rather than a problem. Driven by a desperate desire for a better life, they and their parents tend to be hard-working and ambitious. Europeans worried about migrants studying beside their children should take comfort: the most important predictor of pupils’ school results is their parents’ level of education, and about half of the refugees reaching Europe from Syria have university degrees, according to UNHCR, the UN refugee agency. “Sometimes I joke that Syrian children may help reverse [our decline in] PISA results in maths,” quips Ms Hadzialic. If they are integrated properly, she may be right. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21684830-integrating-migrants-schools-will-not-be-easy-learning-hard-way/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Funding the police: Counting up the coppers + +Floods: Northern waterhouse + +Bagehot: Bring on the tempest + + + + + +Articles Sections Next + +Funding the police + +Counting up the coppers + +As the police get more control over their budgets, different forces are taking very different approaches to fundraising + +Jan 2nd 2016 | BEDFORD | From the print edition + + + +ON A recent Sunday night in Bedfordshire, north of London, a damp-looking officer enters police headquarters. He has been fishing a possible murder victim out of the river, he says, but “had nothing to fish him out with”. Under the gaze of throngs of Christmas shoppers, he found he also had no tent with which to cover the body, and “embarrassingly” had to borrow one from an ambulance. + +Following big increases in spending on the police in 2000-10, the past five years have been austere. Police spending per person has been remorselessly trimmed back to roughly where it was in 2003, accounting for inflation. Further cuts were expected to be imposed in 2015, but after intensive lobbying by officers, and the jolt of the Paris terrorist attacks, on November 25th the government announced that the police would be protected from cuts for the next five years. + + + +Amid rises and falls in police funding there has been one constant trend. The police in England and Wales long received almost all their money in the form of a grant from the central government. But over the past two decades they have been raising more and more of their money locally. Whereas in 1995 only 12% of police funding was local, by 2014 30% of it was earned in this way (see chart). Tweaks announced in November mean that in five years’ time the proportion will be higher still. Britain’s police forces are slowly gaining real control of their finances—and they are using this power in very different ways. + +The shift began in 1995, when forces gained the ability to raise money by adding a supplementary “precept” to council tax, a local property levy. Police precepts were small at first: about £70 ($100) per household in today’s terms. They crept up in the 1990s, before soaring in the 2000s: in the decade to 2010, forces increased local charges by an average of 98%. + +There was wide variation. Whereas some forces increased their precepts by just a few percent each year, others went for broke: in North Yorkshire the police more than trebled the amount raised from local taxation in 2000-10. In the main, according to an analysis by the Institute for Fiscal Studies, a think-tank, those forces that increased their local funding most were those that had done least well under the old system of direct grants, which favoured populous places with high crime rates. Forces covering England’s largest cities—Greater Manchester, Merseyside, West Midlands and London’s Metropolitan Police—all raised their local taxes less than average. The most enthusiastic taxers were small or rural forces: after North Yorkshire, the biggest increases were in Durham, Cambridgeshire and Cleveland. + +After entering office in 2010, the Conservative-led coalition put a brake on local fundraising, forbidding police bosses from raising taxes by more than 2% without holding a referendum, a feat none has yet managed. (Only one force, Bedfordshire, has tried it; Surrey considered it, but backed down in 2015 after a Conservative minister branded it a “lazy option”.) Yet the government has increased reliance on local funding in another way, by reducing the central grant. Central funding for the police was cut by one-fifth across the board in 2010-14. The forces that suffered least were those that had plenty of local income. The differences are stark: overall, North Yorkshire’s total budget is now 30% higher in real terms than in 2000, whereas in Northumberland, which increased its local precept the least, it is 8% lower. + +The devolution of funding allows locals to decide for themselves how much to spend on security. But it may lead to more being spent in wealthy areas—an odd way to approach crime, which is strongly correlated with poverty, points out Tom Kirchmaier, a policing expert at the London School of Economics. The reliance on raising money from households also punishes districts that combine sparsely populated rural areas with troublesome urban patches. Bedfordshire falls into this category: of the 43 forces in England and Wales, it ranks 32nd in the number of police officers per person, yet the presence of Luton, a rundown town with an international airport, gives it the fourth-highest rate of gun crime per head, as well as what local officials believe to be a high terror threat. There are sometimes so few officers on duty, says Kate Rowley, a local copper, that she knows that if she pressed her emergency panic-button no one would come. + +Police forces are finding new ways to supplement their incomes. In April the Home Office raised the modest fee charged by police for licensing firearms for the first time in 14 years. More controversially, the police make money by sending dangerous drivers on remedial “speed awareness” courses costing £85. Between 2010 and 2014, as forces’ central funding was squeezed, twice as many motorists were sent on such courses. Some police bosses have threatened to raise money by fining motorists who stray only fractionally above speed limits. + +Like doctors, police officers report that they are increasingly “dumped on” by social services, whose budgets have been drastically cut. In November the government announced that social services, too, would be supplemented in future by an optional local levy, to be determined by councils. Increasingly, it will be for local people to decide what sort of services they are willing to pay for. With a round of elections of police commissioners due in May, voters will get a chance to say just how thin a blue line they want. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21684822-police-get-more-control-over-their-budgets-different-forces-are-taking-very-different/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Floods + +Northern waterhouse + +Anger rises as fast as the water across inundated northern cities + +Jan 2nd 2016 | YORK | From the print edition + + + +EARLY on December 27th, residents of Huntington Road in York were woken by cries warning them of torrents of water gushing down the street; the River Foss had burst its banks. The flooding was the worst in the neighbourhood since the last great inundation in 1982, says one local, John. With his house situated on a slight rise, the waters lapped at his front steps but rose no further. Most of his neighbours were less fortunate: by the afternoon most of the houses had to be evacuated. Here and there a few car tops were still just visible poking above the muddy waters. + +York was one of several northern cities to be swamped by the latest round of floods in Britain’s wet winter. By December 29th at least 6,700 properties had been inundated in northern England. At the time of writing (with more storms forecast), no one had died; the floods pale in comparison with recent disasters in other parts of the world (see article). But the rampaging waters, and the limp official response to them, are a problem for David Cameron, who has put the project of creating an economic “Northern Powerhouse” at the centre of his second term. “A Northern Powerhouse is nothing when it is under several feet of mucky water,” thundered the Yorkshire Evening Post. Splashing around York on December 28th, the welly-shod prime minister was heckled. + +He deserved it. After entering office in 2010, he reduced flood-protection spending by one-fifth, and in spite of a splurge in 2014, after severe floods in Somerset, it has dropped back to below its level when he entered Downing Street. The cuts have resulted in hundreds of relatively cheap flood-defence schemes being cancelled, including one that could have prevented Leeds city centre flooding this week. + + + +The Environment Agency, which administers most flood-defence spending in England, funds only defences against sea and river flooding, not surface or groundwater, which cause more than 60% of the damage done by water to houses. A “complete rethink” is needed, the agency’s acting head said this week (his unfortunate boss was found on holiday in Barbados). Climate change has increased the frequency of the intense rains that cause severe flooding; some parts of Cumbria with a one-in-100-years chance of it have been inundated three times in the past decade. + +Yet if central government was found wanting, the local response was little better. “It was a poor show,” complains Ken Heald, a York hairdresser, with obvious understatement. He phoned a council helpline to request sandbags for his salon, Mamselle, as soon as he saw water seeping under the front door. Nobody got back to him, nor replied to two more pleas. Overall, the council was “no help at all”, he says. And for all the talk of e-government, the online response was glitchy, too: requests for sandbags on Leeds council’s website were met with error messages. + +Hard-up local authorities have struggled to do much beyond leading search-and-rescue efforts. In Leeds and York, the council response mainly consisted of organising evacuations. The stripped-down service is part of a wider trend of councils “becoming more like emergency services”, says Simon Parker of the New Local Government Network, a think-tank. Forced to make deep cuts to their budgets in the past five years, they have sacrificed long-term investment: in 2010-15 councils’ capital spending fell by 25% in real terms, and their outlay on planning and development by 50%. Saving so much money without seriously denting voter satisfaction has been a marvel, but the apparently thin preparation on display this week suggests how the trick has been pulled off. + +In the absence of much help from government, people have helped each other. “The spirit round here has been very good,” says Mr Heald, whose neighbours have rallied to help him out; one spent hours scooping water out of his salon. Groups such as Bingley Flood Support, near Bradford, have been organising clean-up operations, using Facebook to co-ordinate efforts: in Bingley members of a local mosque have brought food, a local newspaper has donated old newsprint to soak up water, and a bouncy-castle firm has lent its van to run errands. + +Social media have also eclipsed the conventional sort. Twitter and Instagram have provided updates and advice quicker than the local press, whose skeleton staff were caught on the hop over Christmas. Mr Cameron has long wanted to encourage a “Big Society” of volunteers. The floods have provided it—though perhaps not in quite the way he wanted. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21684825-anger-rises-fast-water-across-inundated-northern-cities-northern-waterhouse/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Bring on the tempest + +Britain’s interlocking political dramas may be just what the country needs + +Jan 2nd 2016 | From the print edition + + + +BRITONS have much to look forward to in 2016. Street parties will take place on the queen’s 90th birthday. The English, Welsh and Northern Irish football teams will all contest the European Championship. The Royal Shakespeare Company is promising the biggest-ever celebration of the Bard’s work to mark the 400th anniversary of his death, and the Globe theatre will stage a new production of “The Tempest”. + +Yet in politics, as in the skies, storms loom. Jeremy Corbyn, the far-left leader of the Labour Party, is consolidating his grip on the opposition. In an imminent shadow-cabinet reshuffle he will show moderates the business end of his proverbial ice-axe. North of the border, the pro-independence Scottish National Party will consolidate its political hegemony at elections in May. Another vote on separation is now only a matter of time. London’s mayoral election, also in May, will accentuate the growing divide between the rich, worldly capital and the rest of Britain. And with its EU referendum expected to take place as early as June, the country’s status as a leading European power hangs by a thread. + +Small wonder, then, that its allies are perturbed. Barack Obama privately talks of Britain’s “mid-life crisis”. As a commentary in the New York Times in 2014 put it: “Britain is having a kind of nervous breakdown, and its friends aren’t sure whether to say something or just look away.” Such observers are right to imply that the traumas were long in the making; more than freak intrusions on a country that has been calm and stable for decades. + +Why? Each polity has its pathology and Britain’s, as Walter Bagehot noted, is muddling through. Just as its people pride themselves on their—only partly imagined—“mustn’t grumble” stoicism, its leaders possess the institutional equivalent of the stiff upper lip: a preference for patching and fudging over abolishing and remaking. It has no written constitution; its union is the messy product of years of tweaks; its political bodies, from local councils to the Lords, are great mounds of sticking plasters. + +This predilection has its pros and cons. On the one hand, Britons’ mistrust of wide-eyed ideas (“Don’t you know it’s gonna be all right”, the Beatles sang in their sceptical hit, “Revolution”) explains their historical aversion to political extremism. It steers the country away from risky ventures like, some would argue, the euro. Thomas Kielinger, a veteran German correspondent in London, claims Britain’s seafaring history has made it flexible but cautious; more comfortable tacking with the winds than its uncompromising continental neighbours. + +On the other hand, a penchant for the zigzag and the gentle curve over the straight line comes at a cost. Consider the Palace of Westminster. Bombed during the war, it was quickly repaired and is now crumbling. A rolling programme of restoration struggles to keep up with its decay. Muddling through, in other words, can leave big problems unresolved. It stores up contradictions that occasionally unleash thoroughly un-British political earthquakes: the Labour landslide of 1945 would have been unthinkable without the hemming and hawing of pre-war governments, just as Margaret Thatcher’s economic revolution would have been without her predecessors’ procrastinations. + +The same pattern is in evidence now. Thatcherism created doubts about Britain’s place in Europe, divided England from other parts of the union, propelled London towards vast wealth and presented socialists with an existential challenge. Labour inherited these tensions when it came to power in 1997, but a combination of political skill and benign economic circumstances allowed it to fudge them. It sought European integration without convincing voters of the need for it; devolved powers to Edinburgh, Cardiff and Belfast without reforming the architecture of the union; encouraged the capital to boom without building up a counterweight and made its peace with markets without finally defeating anti-capitalists on the left. Today’s crises are, in other words, Tony Blair’s unfinished business. + +O brave new world + +Thus Britain’s current period of upheaval is not just overdue. It is necessary. The EU referendum forces pro-Europeans to make the gutsy case for continental co-operation. If they succeed, the vote should give British leaders a fresh mandate to build and wield influence in Brussels. Scotland’s swerve towards independence, and the accompanying grievances in England, should push politicians to transform Britain into a federation, at last putting the union on a stable footing. This should also precipitate the long-overdue decentralisation of England (a process that has already begun; Manchester will run its own health service from April). Lastly, Mr Corbyn’s leadership should force his moderate MPs to take on a reality that even Mr Blair ducked: Labour has always been two parties, one social democratic and the other anti-capitalist. Over the years it has muddled through, as concessions, feints and tactical battles have postponed a decisive confrontation. No longer: as Mr Corbyn bears down on the moderates, they will have to decide whether to push back, concede the party to him or quit—en masse, not in a dribble, as did their predecessors in 1981 when Labour last swung left—and form a new party. + +Britain’s crises may yet go to waste. But today’s flux gives the country a rare chance: to forge happier relations with continental Europe, to federalise the union and to update creaky institutions (asked to vote on a painfully expensive renovation of the Palace of Westminster in the spring, MPs should demand that Parliament move to a new, modern building). It is a test not just of Britain’s ability to evolve, but also of the very practice of muddling through. A political entity can only be sceptical and incremental most of the time if, when events demand it, it can bring about a sea-change. So let Britain’s leaders take in “The Tempest” and heed its wisdom: storms may be destructive, but they can also bring redemption. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21684803-britains-interlocking-political-dramas-may-be-just-what-country-needs-bring-tempest/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +The unexplored world: A new age of discovery + + + + + +Articles Sections Next + +The unexplored world + +A new age of discovery + +The glory-seeking adventurer of old is giving way to explorers who want to understand the planet rather than dominate it + +Jan 2nd 2016 | From the print edition + + + +TWENTY years ago this newspaper published an essay that hailed a coming “golden age of discovery”. Great expanses of the Earth were beckoning the intrepid to put their footprints on untrodden ground, scale unclimbed mountains, peer into unscrutinised forest canopies, plumb unvisited caves and dive into unfathomed seas. + +Many such challenges remain. But exploration for the sake of being the first, and testing willpower, nerve and endurance, has been giving way to a higher-minded thirst to preserve the planet for future generations. As technology advances, especially in photography and telecoms, it is getting easier for ordinary citizens to play a part. Exploration is becoming both more scientific and more democratic. + +All the same, vast unknown chunks of the world still tempt the purely adventurous. The most obvious are mountains: thousands remain unconquered. Then there are caves: speleologists, as cavers are more grandly known, reckon that a good half of them have never even been poked into. Antarctica, larger than the United States and Mexico combined, and Greenland still offer vast, untouched icebound stretches for the ultra-hardy. (The picture above shows a crevasse on Ross Island, Antarctica.) Millions of hectares of forest canopy in the Amazon Basin and in Africa and East Asia, especially Borneo and New Guinea, are yet to be inspected. Least charted of all is the seabed. Oliver Steeds, a leading British ocean explorer and film-maker, reckons that barely 1% of it has been explored. Lastly, there are still isolated peoples who have never been in contact with the outside world, and whose languages remain untranslated and unclassified. + +Start with mountains. All 14 higher than 8,000 metres have been scaled; the tallest of all, Mount Everest, has been climbed more than 7,000 times. But many thousands of peaks across the world are still unconquered, including hundreds in the Himalayas rising to 6,000-7,000 metres. Only 200-odd of the 2,800 Nepalese mountains that are higher than 6,000 metres may have been climbed, guesses Glyn Hughes, the archivist of the London-based Alpine Club. The highest unscaled mountain is Gangkhar Puensum, in Bhutan, near the border with China: the authorities have closed it to climbers to respect local beliefs. Muchu Chhish, in Pakistani Kashmir, is thought to be the highest unscaled mountain that it is still possible to get a permit to climb. It defeated a British team in 2014. + +Shifting geopolitics have opened some new ranges to Westerners wanting to display their derring-do, especially in the former Soviet republics but also in Chinese-run Tibet. Kyrgyzstan and Kazakhstan offer many challenging virgin peaks. And of course mountaineers are for ever seeking new “lines”, as they call routes, up mountains whose tops have already been reached. The sheer faces of the range of table-top mountains known as tepuis, near where Venezuela, Brazil and Guyana meet, offer a host of staggeringly hard tests. Even in Europe’s Alps new lines still beckon. + +Mountains apart, Antarctica is the continent we know least about, says Julian Dowdeswell, director of the Scott Polar Research Institute in Cambridge, England. It is the coldest, driest and windiest, and probably offers the greatest opportunity for old-style glory-seekers wanting to secure a “first”—if they can find a sponsor rich enough. In the past 20 years numerous new feats (crossings and climbs by new routes, “unsupported” by mechanical devices, for instance) have been achieved, but many more are still to be tackled. + +The most impressive endurance champion is probably Rune Gjeldnes, a Norwegian. Already the first person to cross the Arctic Ocean bringing all his provisions with him, in 2006 he became the first person to cross the Antarctic continent on skis without being resupplied. He is reckoned to be the only person to have traversed the North Pole, the South Pole and Greenland without resupplies. + +Caving offers explorers opportunities to test themselves that until recently were not even known to exist. Speleology “has changed massively” in the past two decades, says Andy Eavis, widely considered the world’s foremost caver. The Krubera cave in Georgia, near the Black Sea, down which a Ukrainian team descended in 2004, is twice as deep, at more than 2,000 metres, as the Pierre St Martin cave in the French Pyrenees, which had been reckoned the deepest when Mr Eavis plumbed it in 1971. A new technique of laser scanning can measure such “chambers” far more accurately than before. Mr Eavis still marvels at the great chambers still being found in the Malaysian state of Sarawak, on the island of Borneo. In 1981 he was the first to explore a cave there that is still the largest by area in the world—it could enclose the Hollywood Bowl. Now South China, among other places, is offering new opportunities for cavers. Its Miao Room, penetrated in 1989, is 852 metres long, and the largest by volume. + +Access to forest canopies is also being transformed by technology. Towers, balloons, inflatable rafts, light aerial walkways, drones and even giant cranes that have been helicoptered into place allow scientists to see what is going on under once-inaccessible foliage. A new remote-sensing technology known as lidar can illuminate objects high up under the canopy and analyse them through reflected light. + +The world’s most extensive unexplored place is undoubtedly the seabed. At first the aim was to get to the ocean’s very bottom. In 1960 Jacques Piccard, a Swiss oceanographer, and Don Walsh, an American, touched the floor of the Mariana Trench, the ocean’s deepest point, off the Pacific island of Guam. It is nearly 11,000 metres down; for comparison, Mount Everest rises 8,848 metres. Since then only one other person, a film-maker, James Cameron, has achieved the feat, in 2012. + +Lastly, there is one of the old-school Western explorers’ oldest quests: to find people who have never made contact with other human beings. The richest area in this respect is the Amazon Basin, mainly in Brazil but also extending into Bolivia, Colombia, Ecuador, Peru and Venezuela. (Paraguay, though not Amazonian, may also host an uncontacted people.) Estimates of the number of uncontacted groups are rising, says Fiona Watson of Survival International, an organisation that seeks to protect tribal peoples and their lands, and to help them determine their own future. Ten years ago the Brazilian government department that deals with the country’s indigenous people reckoned there were between 20 and 30 such groups. Ms Wilson now thinks there are between 70 and 80. + +The other last bastion of uncontacted people (or isolated people, as some anthropologists prefer to call them) is New Guinea, an immense island whose western chunk, West Papua, is part of Indonesia and whose eastern side comprises a country of its own, Papua New Guinea (PNG). Half a century ago, many of its people lived in complete isolation from the rest of the world: even, often, from nearby groups. In the 1990s, says Sophie Grig of Survival International, missionaries made contact for the first time with at least 40 distinct groups in West Papua. But recent experiences in Amazonia lead the group to believe that there are still isolated people in various areas of West Papua. It would generally be best for them if they stayed that way, Ms Grig thinks. + +“All of the tribes in PNG have had contact with the modern world to one degree or another,” says Jonathan Claussen, an American linguist-cum-explorer who roams PNG. But many have seen only one or two visitors in the past 40 years, he adds; many outlying regions have yet to be visited. “The last uncontacted people are usually clans and families of a tribe that live on the fringes in isolated valleys, sub-ranges and forests,” he says. A tribe may be labelled as contacted, but “perhaps only 20% of the villages have actually been visited…Whole sections of mountain ranges and valleys have had no recorded visits by researchers or travellers.” + + + +Finding and saving endangered languages is yet another challenge. Early this century Tom Headland, an expert on tribal languages in the Philippines at SIL International, a non-profit organisation formerly known as the Summer Institute of Linguistics, reckoned there were 6,809 known languages, but half had fewer than 6,000 speakers each; a quarter, fewer than 1,000. Five hundred, he wrote, had no more than 100 speakers, 200 had fewer than ten. Two languages every month were reckoned to be dying out. Yet previously unknown and not properly deciphered languages are still, he reckons, occasionally found. The Ethnologue, a scholarly compendium published by SIL, has recently put the tally of “living languages” at 7,102, but says that 2,447 are “in trouble” or “dying”. + +Don’t just show off + +While the prospect of reaching new places and even people still tantalises the adventurous, explorers have become far more conscious of a duty to preserve the environment and less keen to be seen as no more than frostbitten action heroes. Even mountaineers, still often obsessive individualists seeking to pit themselves against the forces of nature, now tend to stress their role in advancing science and protecting the environment and local people. Mr Gjeldnes took regular samples of his blood as he crossed the Antarctic to help research into the functioning of the immune system under extreme conditions. Community Action Nepal, a charity founded by a British mountaineer, Doug Scott, who in 1975 was the first Briton to scale Mount Everest, is supported by thousands of climbers across the globe. It works to improve education, health care and living conditions in the Middle Hill Regions of Nepal, the home of most of the porters who assist Himalayan climbing expeditions. + +Krubera, the world’s deepest known cave + +Today’s ocean explorers, too, think at least as much about scientific progress as about being the first to reach the bottom of another seabed. Considering its vast expanse, remarkably little is known about it. “Only 0.05% of the ocean floor has been mapped in detail,” says Mr Steeds, who has switched from desert and jungle to the ocean. The “blue economy”, he reckons, could provide a wealth of minerals such as cobalt and manganese, and new plant and fish life. He talks poetically about the five watery zones: “sunlit” means down to 200 metres; “twilit”, descending to 1,000; “midnight” to 4,000; “abyssal” to 6,000; and finally “hadal”, meaning the deepest trenches, where (not being immune to the lure of being first) he has filmed a fish at a deeper level than anyone else. + +Virtually all today’s leading explorers stress climate change. “We’ve learnt a totally new way of presenting rainforests to the world,” says Andrew Mitchell, a British zoologist who runs the Global Canopy Programme. “It’s like understanding the lining of your lungs.” Forest coverage, he reckons, hosts 40% of the world’s terrestrial biodiversity. Mr Eavis says that caving offers climatologists “an incredibly detailed history of the planet” in terms of the composition of water and the atmosphere. Bertrand Piccard, son of the late Jacques, is trying, with a British balloonist, Brian Jones, to achieve the first around-the-world trip in a solar-powered aircraft—“to promote clean technologies”. + +“The key word nowadays is discovery rather than exploration,” says John Hemming, a former director of Britain’s Royal Geographical Society and an expert on the Amazon. “The term ‘explorer’ has been diminished and debased by headline-grabbing stuntmen and adventurers.” The RGS now gives grants almost solely for research. Mr Hemming quotes Robert Ballard, an American oceanographer famous for discovering the wrecks of the Titanic and the German battleship Bismarck—but who is far prouder of his work on hydrothermal vents. “Science gives legitimacy and worth to exploration,” wrote Mr Ballard. “You see lots of stunts today, but if you’re not doing worthwhile science, you’re not an explorer.” + +Most good research, Mr Hemming continues, involves patient observation, often in the same spot, under concealment and for a long time. “It is near-impossible to do that if you’re doing it solo or travelling by some awkward method.” He notes hopefully that many countries that once took less interest in the environment, including China and Brazil, along with smaller countries, such as Oman and various African ones, are becoming keener on conservation. Brazil has improved its once-dismal treatment of indigenous peoples. Mr Mitchell says the world should be grateful to them for helping to preserve the rainforest, which in turn provides the Earth with so much of its potable water. + +Exploring an underwater cave off Fiji + +Nigel Winser, another British explorer-scientist and long-time RGS luminary who more recently worked for the Earthwatch Institute, a charity founded in the United States to study and protect the environment, praises what he calls “citizen’s science”. Advances in technology, particularly in photography and the internet, make it possible for far more people to carry out valuable research. What he calls “the revolution of the camera trap” means images of animals can be captured seemingly with no interference by humans. Drastic improvements in nocturnal and underwater photography have opened whole new vistas of knowledge. Apps nowadays make it possible to identify the species of a bird by its chirp, often on the spot. Shane Winser, another RGS stalwart (and wife of Nigel), points also to the benefits of television, since it brings the best aspects of exploration into the public domain, not least thanks to sponsorship; witness David Attenborough and Alastair Fothergill, creators of “Planet Earth” and more recently “The Hunt”, two BBC television series. + +Nigel Winser, another British explorer-scientist and long-time RGS luminary who more recently worked for the Earthwatch Institute, a charity founded in the United States to study and protect the environment, praises what he calls “citizen’s science”. Advances in technology, particularly in photography and the internet, make it possible for far more people to carry out valuable research. What he calls “the revolution of the camera trap” means images of animals can be captured seemingly with no interference by humans. Drastic improvements in nocturnal and underwater photography have opened whole new vistas of knowledge. Apps nowadays make it possible to identify the species of a bird by its chirp, often on the spot. Shane Winser, another RGS stalwart (and wife of Nigel), points also to the benefits of television, since it brings the best aspects of exploration into the public domain, not least thanks to sponsorship; witness David Attenborough and Alastair Fothergill, creators of “Planet Earth” and more recently “The Hunt”, two BBC television series. + +Not that the new zest for scientific discovery has quenched the desire to see what is over the horizon, behind the tree, up the mountain or under the sea. What Robin Hanbury-Tenison, another British explorer, who is president of Survival International, calls “the gosh factor”—that rush of amazement and catharsis when a pinnacle is reached or a mad exploit in some jungle or desert achieved—still motivates many an explorer. + +There is still no limit to the feats of endurance that people seek to achieve without a tangible scientific purpose—though often for a charitable one. Just after Christmas a 53-year-old Briton, John Beeden, became the first man to row solo non-stop across the Pacific Ocean (from San Francisco to Cairns in Australia). As Ranulf Fiennes, a British explorer, once said, people are still trying to cross the oceans “in ever tinier gin-bottles”, claiming firsts that have no bearing on science. Mountaineering still offers the same thrills it always has done. Even Everest has an almost endless list of feats yet to have been achieved. In 2006 Mark Inglis, a New Zealander, became the first double amputee to scale it. + +But, however admirable, this is not exploration or discovery. The gosh factor has been overtaken by the “do-good factor”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21684786-glory-seeking-adventurer-old-giving-way-explorers-who-want-understand/print + + + + + +Articles Sections Next + + + + + +Business + + + + +Travel visas: A strange sort of welcome + +Companies’ investment plans: From diggers to data centres + +Activists and resources companies: Icahn, you can’t + +Cruise lines: Eastward ho! + +Schumpeter: Social saints, fiscal fiends + + + + + +Articles Sections Next + +Travel visas + +A strange sort of welcome + +Governments are deterring business travellers and tourists with cumbersome visa requirements that do little to make their countries more secure + +Jan 2nd 2016 | From the print edition + + + +THE rise of big emerging economies like China and India, and the steady march of globalisation, have led to a surge in the numbers of people wanting to travel abroad for business or tourism. As a result, demand for visas is at unprecedented levels. In the fiscal year to the end of September 2014 the United States granted just under 10m visas—up from around 6m in 1997, despite blips in the wake of the terrorist attacks of September 11th 2001 and the global financial crisis of 2007-08 (see chart 1). + + + +Citizens of America, Britain and some other rich countries can travel to most places without a visa. Chinese and Indian travellers are far more likely to have to apply for them. And citizens of a few benighted places, such as Iraq and Afghanistan, have to submit to the cost and bureaucracy—and often the humiliation—of the visa-application process to get to most places (see chart 2). + + + +The most sensible response to this surge in demand for short-term visas would be for governments to streamline the application process and scrap the most onerous requirements. But governments are often not sensible about such things. The 26 European countries with a common visa policy—the “Schengen group”—require tourists from India and other developing countries to provide several months’ worth of bank statements and pay slips. Visitors to Britain often have to fill in a ten-page application form, including details of every trip abroad for the past ten years. Business travellers to India must provide two references. Mexico has scrapped a rule requiring visa applicants (including women) to submit a description of their moustaches. But in 2016 America will start requiring visas for some travellers who currently do not need them—if, for example, they have visited Iran, Iraq, Syria or Sudan in the previous five years. + +In many cases, instead of simplifying the visa process, governments have offloaded it to private contractors. Travellers may now have to pay a service fee to the company handling their application on top of the standard visa fee. The biggest firm in this growing business is VFS Global, which is part of Kuoni, a Swiss tourism company. Starting from a single premises in Mumbai in 2001, handling applications for American visas, VFS now has more than 1,900 visa centres in 124 countries, processing paperwork for 48 governments. + +Of the 113m visa applications made worldwide in 2013, one in three went through a contractor, reckons VFS, which has about half the market. Its main rivals are CSC, with around 10% of the market, and TLScontact, with around 7%. Dozens of smaller firms make up the remainder of the market. The private contractors collect and verify the applicant’s paperwork, ensure that forms are filled in properly, take fingerprints and other biometric information and collect the fees. The consular staff of the destination country simply decide whether to grant the visa, and slap a sticker in the passport of successful applicants. + +For the contractors, it is a nice little earner. VFS probably enjoys operating margins of 20%, reckons Kathleen Gailliot, an analyst at Natixis, a French bank. The companies are given a free hand to pad their earnings with pricey “premium” services. In Mumbai, for example, VFS offers Indians applying for British visas a text on their mobile phones to notify them that their passports are ready for collection, at 128 rupees ($2) a shot. For an extra 2,548 rupees, applicants can use a special “lounge” area while submitting their documents, and have their passports posted back to them. + +VFS accounts for just 5% of Kuoni’s revenues but more than 60% of its operating profits. So bright are the division’s prospects that its parent company is getting out of the tour-operator business, which it has been in since 1906, to concentrate on visa-processing and a few other specialist travel services. + +Until VFS opened its Mumbai office, applicants had to queue for an average of five hours in the sweltering heat outside the American consulate. After the job was handed to the contractor, the typical waiting time fell to one hour. However, applicants still have no choice but to submit to whatever petty demands contractors make—such as, say, banning them from using mobile phones while they sit waiting for their appointments. If the staff are rude, the queues are badly managed or the “extras” extravagantly priced, travellers can hardly take their business elsewhere. + +The application-processing firms are profiting both from travellers’ lack of choice and from governments’ failure to consider the economic damage caused by their visa requirements. There is scant evidence that making all travellers submit the same documents every time they want to travel, or provide extensive financial details, protects countries from terrorists or illegal immigrants. In contrast, there is evidence of how liberal visa regimes bring in the bucks. A report in 2014 from the European Parliament, “A Smarter Visa Policy for Economic Growth”, estimated that over-strict visa rules probably cost the EU economy 250,000 jobs and €12.6 billion ($13.8 billion) a year in lost output. It recommended requiring fewer documents from applicants, handing out longer visas and simplifying the whole process. + +Since Britain is not part of the Schengen group, Chinese people taking a tour of Europe have to apply for a second visa to cross the Channel. Only 6% of them do so, says Euromonitor, a research firm. The British Tourist Authority has complained that the country’s visa policies cost it £2.8 billion ($4.1 billion) a year in lost revenue. + +However, amid worries about the wave of asylum-seekers from Syria and elsewhere, governments in Europe and beyond will face pressure to keep making life hard for tourists and business travellers—even as other departments of those same governments spend heavily on promoting tourism and foreign investment. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21684791-governments-are-deterring-business-travellers-and-tourists-cumbersome-visa-requirements/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Companies’ investment plans + +From diggers to data centres + +Computers, research and software will be the big-ticket items in 2016 + +Jan 2nd 2016 | From the print edition + +THERE have been three great waves of corporate investment in the past two decades. First came the dotcom splurge of 1997-2001, when cash was poured into building mobile-phone networks and the internet’s backbone. Then there was the emerging-market frenzy of 2003-10. Western firms threw about $2 trillion into factories and other facilities in places like China and India. In 2005-13 there was a craze for commodities, partly driven by insatiable Chinese demand. Global energy and metals firms spent $6 trillion digging in the Australian outback and drilling for oil in North Dakota and deep beneath Brazil’s coastal waters. + + + +The dotcom boom turned to bust, emerging markets are now in poor shape and commodity prices have slumped in the past year (costing some firms’ bosses their jobs—see article). So where are companies looking to invest now? A new study by Hugo Scott-Gall, of Goldman Sachs, a bank, crunches the numbers for capital investment at more than 2,500 firms worldwide, forecasting how things will look in 2017 compared with 2014. It finds a startling divergence across industries (see chart). + +Energy, mining and chemicals firms are expected to slash their capital-investment budgets by 20-50%. Property firms are cutting back too, in part reflecting the end of China’s building boom. This has a knock-on effect on those capital-goods firms that supply equipment to these industries. For example, Caterpillar, which makes diggers used by mining and construction firms, expects its capital investment in 2016 to be half the level of 2012. + +In contrast, internet, software and other tech firms are on a high, with their budgets expected to expand by a quarter or more. Though some tech firms have gone asset-light, renting their processing power and data storage in the online “cloud”, others—including cloud-providers themselves—are splurging on hardware. In 2016 the combined capital spending of Google and Apple will be $24 billion, almost equal to Exxon’s $28 billion budget. + + + +Measured in dollars, the overall picture is of a 15% fall in corporate capital spending by 2017. Allowing for the greenback’s big rise since 2014, the fall will be just 5% or so in local-currency terms. And the figures exclude research-and-development (R&D) spending. That is rising quickly. America’s national accounts, for example, show an economy-wide decline in investment in physical plant being offset by a rise in R&D and software spending. + +However you slice the numbers, growth in capital investment is unusually concentrated. Of the industries that Goldman studied, 22 are forecast to have shrinking budgets in dollar terms and 12 are expected to grow. The top 20 spenders on R&D—firms such as Samsung, Roche, Novartis and Microsoft—account for 25% of worldwide R&D spending by listed firms, according to Bloomberg, an information provider. The corporate world seems mostly destined to stagnation, with only a few hotspots of investment and growth. + + + +So investors might hope that an elite of investment-intensive, technology-based firms will conquer new markets and increase profits faster than all others. That is certainly what Silicon Valley’s boosters think will happen. They cheer each time tech firms unveil some new area of expansion—smart watches, driverless cars, virtual-reality goggles, delivery drones. + +Yet history suggests that whenever there is a near-unanimous view on what to invest in, disaster follows as firms in those industries lose their spending discipline. The shares of Western firms exposed to energy and emerging markets have lagged the S&P 500 index by over 50% in the past two years. In 2016 it should become clearer whether the present funnelling of investment into tech-based industries reflects a step change in the way the economy works, or is just a symptom of a stagnant climate in which pockets of opportunity are hyped beyond their true potential. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21684796-computers-research-and-software-will-be-big-ticket-items-2016-diggers-data/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Activists and resources companies + +Icahn, you can’t + +Swashbucklers of the commodities boom meet their match + +Jan 2nd 2016 | From the print edition + + + +“PEOPLE call us pioneers. Well...some people say pioneers end up with arrows in their back.” So James “Jim Bob” Moffett, one of the great wildcatters of the past half-century, presaged his fate in 2012. On December 28th Freeport-McMoRan, the firm he founded and built into a global mining and oil giant, said he was stepping aside as executive chairman. + +He seems to be the latest casualty of the “Icahn effect”, the toppling of larger-than-life entrepreneurs of the commodities boom after Carl Icahn, a veteran activist investor, buys stakes in their firms and seeks to shift their focus to cost-cutting. Though Mr Moffett, a geologist, found one of the world’s largest copper and gold mines, Grasberg, in the mountains of Indonesia, in 1988, his costly pursuit of the appropriately named Davy Jones gasfield in the Gulf of Mexico, as well as controversial takeovers, upset many shareholders. So did a 70% drop in Freeport’s share price during 2015. + +Since it invested in Freeport in August, Mr Icahn’s firm has acquired two seats on the board, and the miner has halted the dividend and shrunk operations to stabilise its debt. Mr Icahn has not commented on Mr Moffett’s removal, but the defenestration fits a pattern. + +In mid-December Mr Icahn increased his stake in Cheniere Energy, which is preparing to export the first-ever shipment of liquefied natural gas (LNG) from America’s lower-48 states. After he did so, Cheniere’s board pushed out Charif Souki, its co-founder and chief executive, because it opposed his strategy of betting even bigger on LNG, despite a global glut. Acknowledging the changing times, Mr Souki displayed no hard feelings: “Am I the best person to manage a quasi-utility? I’m a builder, not a cost-cutter,” he told Forbes magazine. + +Two years earlier one of the biggest mavericks of the shale boom, Aubrey McClendon, also came a cropper after Mr Icahn invested in his firm, Chesapeake Energy. Other commodities chiefs with an overdeveloped risk appetite, such as Ivan Glasenberg of Glencore, a debt-ridden mining and trading firm, should keep looking over their shoulders. + +Mr Icahn’s victories can be pyrrhic, though. Almost all his energy investments were deep in the red in 2015. And Mr Moffett’s arrow in the back comes with a painkiller. He will become “chairman emeritus”, on $1.5m a year. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21684792-swashbucklers-commodities-boom-meet-their-match-icahn-you-cant/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cruise lines + +Eastward ho! + +The biggest cruise operators are sailing full steam ahead to China + +Jan 2nd 2016 | From the print edition + +Sailing and shopping, the perfect mix + +EVERY New Year, cruise lines brace themselves for “wave season”—the first three months of the year, in which nearly a third of all holidays at sea are booked. They will do well to improve on their 2015 results. On December 18th Carnival, the world’s largest operator, with more than 40% of a global market worth nearly $40 billion a year, announced a record $2.1 billion in full-year earnings, 40% up on 2014, thanks to buoyant demand and cheap fuel oil. Along with Royal Caribbean Cruises (RCL) and Norwegian Cruise Line (NCL), the trio now control around 80% of the industry. + +Amid worries that demand for cruises may be peaking in some rich countries, the big three are now piling into the biggest potential market of all, China. Although Carnival based its first ship—the Costa Allegra—at a mainland Chinese port back in 2006, only in the past year have the big three got serious about moving capacity there from America and Europe. + +In 2016 Carnival plans to increase the number of its ships in China from four to six. In October it announced the launch of a joint venture with a Chinese shipbuilder and China Investment Corporation, a sovereign-wealth fund, to establish the first new cruise brand aimed at the domestic Chinese market. RCL, which had three ships based in China in 2014, now has four and will add a fifth in the next few months. NCL, which has hitherto stayed away, plans to enter the Chinese market in 2017. + +Carnival and RCL no longer send elderly cast-off hulks from America and Europe to China. Now they send their newest and best, such as RCL’s Quantum of the Seas, a megaship that can carry 4,180 holidaymakers, which has been based in Shanghai since June 2015. + +Such are Carnival’s hopes for the Chinese market that it recently moved its chief operations officer, Alan Buckelew, to Shanghai to oversee the firm’s expansion there. The number of Chinese households earning over $35,000 a year—the figure the industry sees as the point at which foreign travel takes off—has increased from 6m to more than 27m over the past decade, according to Oxford Economics, a consulting firm. The number of mainland holidaymakers going on cruises—a comparatively fuss-free way of travelling abroad for the first time—has been growing by around 80% a year, and is expected to keep doing so despite China’s slowing growth rate. The government wants to promote the cruise-lines business together with the building of the ships it uses, as part of a rebalancing of the economy towards consumption in its latest five-year plan. + +The Chinese market is also very profitable. This is partly because higher daily rates can be charged for the short, four-to-six-night cruises that are more popular in China, but also because the Chinese spend far more onboard. They are less interested than Americans or Britons in boozing and spa treatments, but keener on gambling, and really go to town in the onboard shops, buying such things as foreign-made appliances. One recent shopping craze on Carnival’s Chinese ships was for Japanese rice cookers, Mr Buckelew says. + +If China’s economic slowdown intensifies, or if consumer interest in cruises turns out to be a fad, the operators risk being left with excess capacity and having their margins squeezed. Even so, betting on the rise of the Chinese holidaymaker looks more attractive than sticking to the main Western markets. + +In Europe bookings have been hit by recent terrorist attacks in France and north Africa, according to Greg Badishkanian, a cruise-line analyst at Citigroup, a bank. And in Britain cruise-passenger numbers have been falling since 2013 because newly retired people, staple customers, have less disposable income than the previous generation of pensioners, who are now too old to travel. The future plans of the big three operators suggest they have concluded that the American market is saturated and has poor growth prospects. In 2017 there could be the first fall on record in North American cruise-ship capacity, according to Robin Farley, an analyst at UBS, another bank. For the moment, the decision by the big three to sail for China is a choice. But it could become a necessity. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21684800-biggest-cruise-operators-are-sailing-full-steam-ahead-china-eastward-ho/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Social saints, fiscal fiends + +Opinions vary on whether firms can be “socially responsible” while avoiding taxes + +Jan 2nd 2016 | From the print edition + + + +PFIZER has always prided itself on its commitment to corporate social responsibility (CSR). The drugs giant talks loftily about “embracing our responsibility to society”. It insists that it does as much as it can to make sure that the world’s poor can gain access to its products. It is particularly proud of the work that it does with NGOs and “other global health stakeholders” to strengthen and improve health-care systems. But this has not deterred it from seeking a gargantuan “tax inversion”. The company intends, as part of a $160 billion takeover of Allergan, to shift its tax domicile from America to Ireland, where Allergan is domiciled, and where corporate-income taxes are considerably lower. Pfizer’s shareholders no doubt rejoiced: in 2014 the company would have saved $1 billion of the $3.1 billion it paid to the US Treasury. But many Americans were outraged: Hillary Clinton, the front-runner for the Democratic presidential nomination, promised to impose an “exit tax” on companies that engage in such tactics. + +A paper in the January issue of the Accounting Review suggests that Pfizer is far from unusual in trying to perform this pro-CSR, anti-tax straddle. David Guenther of the University of Oregon’s Lundquist College of Business and his co-authors compared the effective tax rates paid by a sample of American firms between 2002 and 2011 with a measure of those companies’ CSR programmes compiled by MSCI, an index provider. It found that the companies which do the most CSR also make the most strenuous efforts to avoid paying tax—and that those with a high CSR score also spend more lobbying on tax. + +The most obvious explanation for this inverse relationship is hypocrisy. Surely CSR depends on the idea that firms have an obligation to society, not just to shareholders? And surely the most basic obligation to society is to pay the taxes that support the poor and vulnerable? Another explanation is that firms are not monoliths but collections of rival fiefs with different priorities. The department that oversees the CSR programmes, and thus has an interest in boosting their budgets, may never talk to those in the finance department who are paid to minimise the tax bill. + +Mr Guenther and his colleagues suggest two more intriguing explanations. The first is that companies intentionally embrace CSR for exactly the same reason they try to reduce their taxes—to maximise their profits. There is some evidence that companies with large CSR programmes find it easier to attract talented workers (particularly among the millennial generation) and to generate a buzz around their products. Baruch Lev of New York University has found that companies with higher CSR scores have higher revenue growth. Yet the more vigorous companies are in reducing their taxes, the more they destroy any social capital that they have accumulated through CSR. Starbucks recognised how much damage its British operation had done to its reputation when the extent of its tax planning was exposed in 2012, and promised to pay around £10m (then $16m) a year in each of the following two years, whether or not it was profitable. + +The second possible explanation is that companies regard CSR and taxes as substitutes for each other: the less you pay in taxes, the more you have left over for good works. Firms might even convince themselves that they have a moral obligation to reduce their tax bills: they have no control over what governments do with their taxes, whereas they can select their CSR projects and ensure they are run efficiently. + +These rival theories reflect conflicting ideas on what counts as a socially responsible company. The view put forward by various international bodies that seek to set standards for corporate behaviour, and accepted by many big European firms, is that responsible firms should pay a fair share of taxes while privately sponsoring some do-gooding on top of this. The Global Reporting Initiative, which issues guidelines on how companies should report their “sustainability” efforts, recommends that they provide detailed information on their tax payments, since the public wants to know what they are contributing to the sustainability of “a larger economic system”. The UN Global Compact, a body that presses firms to align themselves with universal social goals, encourages them to collaborate with governments and other organisations to “generate more taxes”. + +The business of business: discuss + +However, many CEOs, particularly in America, take a different view: that the best way for companies to contribute to the common good is to succeed as businesses. Furthermore, they argue, the more money they can keep from the government’s clutches, the more they can invest in new plants (which create jobs in the short term) or research (which creates jobs in the longer term). And the more money they will have left over for good causes as well: thus Intel’s 2011 CSR report stated that the company “believes in promoting tax policies that encourage innovation and competition around the world”, while 3M’s sustainability report for the same year stated that its top public-policy objective was “To make the case for tax reform and lower US corporate-tax rates for a more level global playing field”. + +The CEO school of corporate responsibility has something going for it. Such bosses are right to argue that a business’s main contribution to society is to provide jobs and income. They are also right to argue for tax harmonisation: America has only itself to blame if firms revolt against its high corporate-tax rate. But they should recognise that there is a big difference between moving to a place like Ireland because it has made a more sensible trade-off between collecting taxes and promoting business, and indulging in contortions such as the “Double Irish with a Dutch Sandwich”, whose only aim is to avoid paying taxes anywhere. They also need to recognise that there is a big difference between worrying that government is inefficient and pretending that it is irrelevant, and thus that contributing to its upkeep is unnecessary. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21684770-social-saints-fiscal-fiends-opinions-vary-whether-firms-can-be-socially-responsible/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Global inflation: Low for longer + +The first venture capitalists: Fin-tech + +Buttonwood: Tales of the unexpected + +European insurance firms: One rule to bind them all + +South-East Asian integration: More hat than cattle + +Free exchange: Exit, pursued by bear + + + + + +Articles Sections Next + +Global inflation + +Low for longer + +Inklings of inflation in the rich world are outweighed by downward pressure on prices elsewhere + +Jan 2nd 2016 | From the print edition + + + +EVER since the financial crisis of 2008, forecasters have scanned the horizon for the next big disruption. There are plenty of candidates for 2016. China’s economy, whose might acted as a counterweight to the slump in the rich world in the years after the crisis, is now itself a worry. Other emerging markets, notably Brazil, remain in a deep funk. The sell-off in the high-yield-debt market in December has prompted fears of a broader re-pricing of corporate credit this year. + +Yet one worry is absent: financial markets are priced for continued low inflation or “lowflation”. A synthetic measure, derived from bond prices, puts expected consumer-price inflation in America in five years’ time at around 1.8%. That translates into an inflation rate of around 1.3% on the price index for personal-consumption expenditure (PCE), the measure on which the Federal Reserve bases its 2% inflation target. Ten-year bond yields are just 2.3% in America, and are below 2% in Britain and below 1% in much of the rest of Europe. The price of an ounce of gold, a common hedge against inflation, has fallen to $1,070, far below its peak in 2011 of $1,900. Yet market expectations are often confounded. Economic recoveries are maturing. Labour markets are tightening. Could inflation be less subdued than expected in 2016? + + + +Rich-world inflation is currently depressed because of temporary influences. In America the PCE index rose by just 0.4% year on year in November—but that is in large part because of a sharp fall in consumers’ energy prices in early 2015, which will soon drop out of the annual comparison. The core measure, which excludes food and energy prices, has been stable at 1.3% for months. It might also be somewhat suppressed by the sharp fall in oil prices, which has held down the cost of producing other sorts of goods and services. An analysis by Joseph Lupton of J.P. Morgan finds that core inflation worldwide has crept up to 2.3%, a rate that has rarely been exceeded in the past 15 years. In biggish emerging markets, including Brazil, Russia and Turkey, core inflation is above the central bank’s target (see chart). + +A low blow + +In the view of some, lowflation is a relic of the past. Even the euro zone is recovering from its prolonged recession; the business cycle in other rich economies is more advanced. The debt hangover that has troubled them for almost a decade has faded. Job markets are also a lot tighter than a few years ago, when deflation was a serious concern. Unemployment in America has fallen to 5%, a rate which is close to many estimates of full employment. The jobless rate in Britain is 5.2%. In Germany it is 6.3%. If the recent trend of low productivity growth in these economies continues, bottlenecks in the jobs market will emerge and higher inflation may not be far behind. For instance, if America’s GDP grows by 2.3% in 2016, its recent average, and growth in output per worker also matches its recent sluggish trend, the unemployment rate would decline further, to around 4%, reckons Mr Lupton. The lower the jobless rate goes, the more likely it is that wages—and eventually inflation—will pick up. + +As rich countries were wrestling to reduce their debts, emerging markets went on a credit binge for which the reckoning is just beginning. Debt in China in particular has risen sharply relative to GDP since 2008. Some of the resulting stimulus went into factories, leading to overcapacity and falling global prices for various goods, from steel to solar panels. But a lot of China’s debt went on financing housing and infrastructure, rather than its export capacity. Moreover, the Chinese authorities’ desire to avoid big lurches downwards in the yuan ought to minimise the risk that it exports lowflation to the rest of the world. + +Nonetheless, the expectations projected by bond markets—that lowflation will persist—have sound underpinnings. For a start, the price of oil and other commodities does not yet seem to have reached bottom. The price of a barrel of oil fell to an 11-year low of under $36 before Christmas, before rallying a little on hopes of renewed stimulus in China. Saudi Arabia is pumping at close to capacity, in an effort to force out high-cost producers such as America’s shale-oil firms and thus grab a bigger slice of the global market. The strategy has had some success. For instance, the number of oil-rigs operating in America has fallen from around 1,500 a year ago to just 538, according to Baker Hughes, an oil-services firm. But oil production in America remains above 9m barrels a day, and Iran’s exports are likely to increase in 2016, thanks to the lifting of Western sanctions. For the time being, the oil market heavily favours buyers over sellers. + +Where inflation can be found in the world, it is not obviously a function of capacity constraints. The biggish economies in which core inflation is above the central bank’s target tend to be commodity exporters that have suffered big falls in their currencies. That, in turn, has stoked domestic inflation. Core inflation is typically well below target in countries that are importers of raw materials. And despite tighter labour markets in rich countries, wages are not rising very fast. That might in part be because of low expectations of inflation. + +It seems likely, also, that the debt burden in emerging markets, and the slower growth that usually comes after a credit binge, will bear down on global prices for a while. Even if China’s spare capacity is not fully exportable, plenty of other emerging markets have built mines and factories in expectation of higher Chinese growth that will now prove redundant. As nervous investors creep back to the comparative safety of developed markets, the upward pressure on big currencies, notably the dollar, will increase—adding to downward pressure on local prices. + +As was the case in the late 1990s, rich-world policymakers will find that they have to keep their domestic economies primed with low interest rates to offset disinflation from abroad. The strong dollar has already caused a split in American industry between strong services and weaker manufacturing. Lopsided economies may prove as hard for policymakers to steer as deleveraging ones. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21684802-inklings-inflation-rich-world-are-outweighed-downward-pressure/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The first venture capitalists + +Fin-tech + +Before there were tech startups, there was whaling + +Jan 2nd 2016 | NEW BEDFORD | From the print edition + + + +FEW industries involve as much drama and risk as whaling did. The last voyage of the Essex, which inspired Herman Melville’s classic, “Moby Dick”, and is the subject of a new film, “In the Heart of The Sea”, gives a sense of the horrors involved. The ship left Nantucket in 1819 and sailed for over a year before being destroyed by a whale it was hunting. The 20 crew members survived the sinking, but found themselves adrift in the Pacific in three longboats, with little food and no water. Three opted to stay on a desert island, from which they were rescued three months later, on the verge of starvation. The others sailed on, hoping to reach South America but dying one by one. At first the survivors buried the dead at sea; then they resorted to eating the corpses of their crewmates. When they ran out of bodies, they drew lots to decide whom to shoot and eat. Only five of the 17 were eventually rescued. By then, they were so delirious that they did not understand what was happening. + +The only reason that anyone could be induced to take part in such a dangerous business was the fabulous profit that could be made. Gideon Allen & Sons, a whaling syndicate based in New Bedford, Massachusetts, made returns of 60% a year during much of the 19th century by financing whaling voyages—perhaps the best performance of any firm in American history. It was the most successful of a very successful bunch. Overall returns in the whaling business in New Bedford between 1817 and 1892 averaged 14% a year—an impressive record by any standard. + +New Bedford was not the only whaling port in America; nor was America the only whaling nation. Yet according to a study published in 1859, of the 900-odd active whaling ships around the world in 1850, 700 were American, and 70% of those came from New Bedford. The town’s whalers came to dominate the industry, and reap immense profits, thanks to a novel technology that remains relevant to this day. They did not invent a new type of ship, or a new means of tracking whales; instead, they developed a new business model that was extremely effective at marshalling capital and skilled workers despite the immense risks involved for both. Whaling all but disappeared as an industry after mineral oil supplanted whale oil as a fuel. But the business structures pioneered in New Bedford remain as relevant as they ever were. Without them, the tech booms of the 1990s and today would not have been possible. + +Most historians trace the origins of the modern company back to outfits like the Dutch East India Company and its British equivalent. These were given national monopolies on trade in certain goods or with certain places. This legally buttressed status allowed them to fund themselves by selling shares to the public, helping to get stockmarkets off the ground. The managers of these multinational enterprises were professionals with only small ownership stakes. Lower-level employees generally had no shareholding at all. + +By eliminating dependence on individual owners or managers, these entities became self-perpetuating. But their monopolies also embroiled them in politics and led inevitably to corruption. Both the British and Dutch versions ended up requiring government bail-outs—a habit giant firms have not yet kicked. + +The whaling industry involved a radically different approach. It was one of the first to grapple with the difficulty of aligning incentives among owners, managers and employees, according to Tom Nicholas and Jonas Peter Akins of Harvard Business School. In this model, there was no state backing. Managers held big stakes in the business, giving them every reason to attend to the interests of the handful of outside investors. Their stakes were held through carefully constructed syndicates and rarely traded; everyone was, financially at least, on board for the entire voyage. Payment for the crew came from a cut of the profits, giving them a pressing interest in the success of the voyage as well. As a consequence, decision-making could be delegated down to the point where it really mattered, to the captain and crew in the throes of the hunt, when risk and return were palpable. + +The investors often ended up underwater too + +At the top of the New Bedford hierarchy was an agent or firm of agents like Gideon Allen, responsible for the purchase and outfitting of the ship, the hiring of the crew and the sale of the catch. To give them an incentive to cut the best deals possible, the agents put up a big share of the investment. Those with the best reputation received better terms from the other investors. Captains, who ran the show while the ship was at sea, often put up capital as well. A similar system of incentives is used in the riskier reaches of the investment-management business today, notes Mr Nicholas. + +Investors received half to two-thirds of the profits. The rest was divided among the crew in what was known as the “lay” system. A captain might get a 12th lay (one-twelfth of the remaining profit). In Melville’s novel, Ishmael, who was new to the business, was originally offered a 777th lay but managed to haggle a 300th. Although that would probably have proved a paltry amount, it was a stake nonetheless, and set a benchmark for future pay. Ishmael’s friend Queequeg, a cannibal from the South Sea islands, got a 90th lay because he had experience with a harpoon. Demand for experienced crewmembers was so high that the Essex’s ill-fated captain, George Pollard, was immediately given a second command on the ship that rescued him (which sank as well). + +Every participant wanted to bring in returns quickly, but there were no artificial deadlines—nothing resembling what is now called “quarterly capitalism”. When whales became rare in accessible places, the crews from New Bedford extended their search to every corner of every ocean, however many years that took. + +Safety in numbers + +To ensure that they were not ruined by a few disastrous voyages, the whaling firms invested in multiple expeditions at the same time, much as the venture capitalists of today “spray and pray”. A study published in 1997 concluded that, of the 787 boats launched from New Bedford during the 18th century, 272 sank or were destroyed. The firm that belonged to George Howland was not atypical: of its 15 ships, between four and nine were at sea at any given moment. One was sunk by a whale, three lost at sea, two burned by their crews, one destroyed by a Confederate gunboat during America’s civil war and five abandoned in Arctic ice. Yet Howland died a millionaire in 1852. + +It helped that most of the whalers of New Bedford were strict Quakers, who prized frugality and shunned ostentation. This helped them not only husband their own capital, which was needed to finance voyages, but also to win over other investors. Hetty Howland Green, one of the richest agents, was said to have made her own shoes and to have owned only one dress. + +It also helped that they were open-minded: they readily employed anyone who could contribute to their ventures. Perhaps the single most important technological innovation used by New Bedford’s whaling fleet was the “Temple Toggle”, a harpoon tip devised by Lewis Temple, a former slave from Virginia. + +But the whalers’ main asset was their business model. In the 1830s, the legislatures of six American states approved charters for whaling corporations giving them the right to raise capital by selling shares to the public—much the same corporate structure as the Dutch and British East India Companies. None of the six survived the 1840s. “The diffuse ownership structure of the corporations, and the reduced stakes held by their managers, likely diminished the incentives for the managers to perform their role diligently,” concludes Eric Hilt of Wellesley College. Given the expense of buying, outfitting and launching a boat into the perilous ocean, the link between risk and reward needed, it seems, to be tighter. + +The lay system could work to the crew’s disadvantage, however. In an effort to reduce claims on the crew’s share of the profits, ruthless captains were said to abandon men on the trip home. (Similar shedding of employees is not unheard of at contemporary tech startups before a big payout.) Other schemes existed to cheat crew members, such as forcing them to buy clothing at inflated prices or to pay usurious interest on advances on their pay. And open-mindedness went only so far: although black sailors were not discriminated against in terms of pay, they were treated less well in other respects, receiving less food and worse quarters. + +Yet the New Bedford system was undeniably effective. It soon emptied the oceans of whales, even as other lucrative opportunities emerged for daredevils determined to strike it rich, such as the California gold rush. “The same industrial growth that initially supplied markets and profits for whaling activity ultimately yielded opportunities more attractive than whaling to local capital,” wrote David Moment, a student at Harvard Business School, in 1957. In short, with returns dwindling, the crews and the capitalists turned to other ventures. But the business practices they developed are used in high-risk, high-return industries to this day. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21684805-there-were-tech-startups-there-was-whaling-fin-tech/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Tales of the unexpected + +Five potential surprises for 2016 + +Jan 2nd 2016 | From the print edition + +INVESTORS often start the calendar year in a buoyant mood, only to be caught out by unexpected events. It is almost inevitable that the consensus will be proved wrong in some respects, not least because the views of most investors will already be reflected in market prices. + +So this column would like to suggest five potential surprises for 2016. The definition of a surprise is something that the consensus (as judged by betting sites or polls of fund managers) does not expect. + +The first surprise may be that the dollar weakens, not strengthens. The consensus view is that the Federal Reserve, having pushed up rates before Christmas, will tighten monetary policy two or three more times in 2016. Higher rates will make investors eager to buy the dollar, especially as both the European Central Bank and the Bank of Japan will keep their rates near zero. However, the dollar has already had a very good run, so higher rates may already be priced into the currency. As it is, investors seem to doubt that the Fed will tighten as much as the central bank currently projects. The actual outcome may be feebler still (see article). + +The second surprise may be too familiar to deserve the name. Commentators have been calling an end to the bull market in government bonds for many years now, and the pundits are expecting much the same in 2016. But persistently low inflation and the support of central banks have kept yields low to date, and may keep doing so. It is all reminiscent of Japan: since 2000, so many investors have failed to profit from betting on higher Japanese yields that the trade is known as the “widowmaker”. In the developed world, pension funds, insurers and retired workers are all eager buyers of fixed-income assets. Perhaps bond yields will edge higher in 2016, but not by very much. + +These two surprises may have a common cause: the failure of the global economy to grow as rapidly as some hope. In turn, economic sluggishness seems likely to drive voter discontent. And that may lead to the third and fourth surprises. + +American political risk could dog the markets in late 2016. At the start of 2015, investors probably anticipated a dynastic clash between Jeb Bush and Hillary Clinton. But the Republican candidate seems more likely to be either Donald Trump or Ted Cruz. The former has argued for a ban on Muslims coming to America and a wall on the southern border; the latter’s proposals include a flat income tax, a sales tax and a monetary system linked to gold. Although Mrs Clinton would be the favourite in a race against either man, she is a flawed candidate, mistrusted by many voters. The prospect of a Cruz or Trump presidency would lead to considerable uncertainty in the markets: should either man be elected, would they try to stick to their campaign pledges and would Congress let them? Indeed, this uncertainty might be another reason why the dollar may struggle in 2016. + +Political risk might also be a problem in Britain, which is likely to hold a referendum on leaving the European Union in 2016. It is widely assumed that Britons will vote for the status quo: that outcome has a 78% probability on the PredictIt website. But opinion polls show that the “remain” and “leave” camps are almost deadlocked and the press is fairly Eurosceptic. Voters might use the referendum as a means of protesting against high levels of immigration, which the government has promised, but failed, to reduce. + +If Britain votes for exit, there will be much uncertainty about the country’s attractiveness to foreign investors. Scottish voters are much more pro-EU than English ones, and Brexit would prompt calls for a second independence referendum so Scotland could stay in the single market. David Cameron, Britain’s prime minister, would surely have to resign if his referendum gamble backfired. All this might be good reason to sell the pound. + + + +The final surprise might be more benign: emerging markets could perform rather better than investors expect. A poll of fund managers in December by Bank of America-Merrill Lynch found that pessimists on emerging markets outnumbered optimists by 27 percentage points. There is plenty of bad news: China’s slowdown, falling commodity prices and recessions in Brazil and Russia, for example. But this may have been built into prices; the MSCI emerging-market index has fallen by 20% over the past six years while the S&P 500 index is up by 40% (see chart). It may be time for a rebound. + +Not all of these surprises will come to pass, of course. But it seems likely that at least one or two will. Predicting which ones may mark the difference between success and failure for investors in 2016. + +Economist.com/blogs/buttonwood + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21684807-five-potential-surprises-2016-tales-unexpected/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +European insurance firms + +One rule to bind them all + +New regulations will give a better sense of the soundness of Europe’s insurers + +Jan 2nd 2016 | From the print edition + + + +LIKE banks, insurers need a cushion of capital to ensure that they can meet customers’ claims in the event of unexpectedly big payouts or poor investment performance. As at banks, these cushions have at times proved woefully thin. In theory, all that changes on January 1st—in the European Union, at least—when a new set of regulations known as Solvency 2 comes into force. After more than ten years of negotiation, all European insurers will have to follow uniform rules on capital that are designed to make the firms more robust and allow investors and customers to assess their strength much more easily. + +Not everyone is thrilled at this prospect. Mention “upcoming regulatory changes” to an insurance executive and a tirade inevitably follows about ambiguities and inconsistencies within the new rules, discrepancies in enforcement and the mountains of paperwork involved. Some firms have had to bolster capital in anticipation: Delta Lloyd, a Dutch insurer, announced in November that it would raise €1 billion ($1.1 billion). The rules favour diversified firms, so those that offer just one form of insurance are under pressure to merge. That impetus contributed to several deals involving specialist insurers in 2015, including Fairfax’s purchase of Brit in February and XL’s takeover of Catlin in May. Anxious bosses have trimmed the industry’s own debts to relatively low levels. + +Some of the disgruntlement is legitimate. Regulators themselves seem to agree that the current risk weightings unduly penalise investments in long-term debt tied to infrastructure; some government bonds, in contrast, may be considered too safe. European firms with big international operations say it is not clear to what extent Solvency 2 applies to their non-European subsidiaries. Transitional rules designed to make life easier for German life insurers in particular will shield them from some elements of the new rules for up to 16 years. + +Then there is the question of how many insurers will be allowed to substitute internal models for the standardised formulae used to calculate capital requirements. Some big firms, including 19 in Britain, have persuaded their national regulator that their own calculations are at least as good as the prescribed ones. More firms will apply in 2016, in the hope of trimming the amount of capital required and thus increasing profits. + +To some extent that undermines the logic of a uniform system, by making insurers using internal models and those using the standard one hard to compare, says Jim Bichard of PwC, an accounting firm: “The solvency ratios will be all over the place and there’s a high risk of misinterpretation.” It also raises the concern that some of the national regulators charged with applying the new rules will be more lenient than others. The British and Dutch ones, for example, are thought to be more exacting than their Italian counterpart. + +Yet whatever Solvency 2’s failings, the new regime will still provide a continent-wide benchmark for the first time. “It will confirm who is strong and who is weak,” says David Prowse of Fitch, a rating agency. The strong will presumably start to put their excess capital to work, making acquisitions or returning cash to shareholders. The weak, meanwhile, will have to boost their capital, trim their liabilities by offering stingier policies, sell capital-intensive parts of the business or fall into the arms of one of their brawnier counterparts. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21684810-new-regulations-will-give-better-sense-soundness-europes-insurers-one/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +South-East Asian integration + +More hat than cattle + +A seamless regional economic bloc is just around the corner—as always + +Jan 2nd 2016 | SINGAPORE | From the print edition + +Opening up, ASEAN-style + +GRANDIOSE statements from the Association of South-East Asian Nations (ASEAN) are the region’s Christmas crackers: they appear at regular intervals, create a commotion but contain little of substance. In November the leaders of the club’s ten members declared that the ASEAN Economic Community (AEC)—a single market around which goods, services, capital and “skilled labour” are supposed to flow freely—would come into being on December 31st. So will South-East Asia’s 622m people wake up in a new world in 2016, or will the AEC prove another paper crown? + +The answer probably lies somewhere in the middle. For one thing, much of the work towards economic integration has been done: by ASEAN’s reckoning, 79.5% of the measures the AEC involves have already been implemented. ASEAN already attracts large amounts of foreign investment, and its leaders have been talking up integration and regionalism since the organisation was founded in 1967. So the AEC represents less a radical change than an attempt to accelerate existing trends. + +But anyone hoping that ASEAN is about to turn into an Asian version of the European Union will be disappointed. European integration is fundamentally a political project with an inward focus, argues Jayant Menon of the Asian Development Bank, which has led to a mushrooming of institutions. The AEC, in contrast, is an economic project, with almost no institutional heft—just a small secretariat—devoted to “outward-oriented regionalism”. It is designed to make the region an easier and more attractive place for foreign companies to do business and thus to boost trade and investment. + +Those missions are helped by ASEAN’s economic dynamism. Between 2007 and 2014 regional GDP doubled, from $1.3 trillion to $2.6 trillion, and GDP per person grew from $2,343 to $4,135. Total internal and external trade grew from $1.6 trillion to $2.5 trillion, and foreign direct investment rose from $85 billion to $136 billion. Viewed as a single economy, ASEAN is the world’s seventh-largest and Asia’s third-largest, behind China and Japan. And while China and Japan are ageing rapidly, ASEAN remains young, with more than half its population under 30. China’s slowdown has taken its toll on the region—particularly on commodity exporters such as Malaysia and Indonesia—but its young workforce, improving infrastructure and rising incomes leave it poised for strong future growth. + +Behind those aggregate figures, though, lie vast differences, not all of which are conducive to economic integration. Vietnam and Laos are communist dictatorships; Brunei an absolute monarchy; the Philippines and Indonesia rowdy democracies. Singapore was founded as a trading entrepot in 1819; Indonesia has a history of protectionism. Perhaps inevitably, the commitment of such a diverse bunch to regional integration, and the pooling of sovereignty it implies, is not as strong as ASEAN’s triumphant statements suggest. There is no mechanism to enforce the group’s many agreements and treaties. Regional banking systems and capital markets remain unintegrated. Tariffs may vanish, but non-tariff barriers pop up in their place. Members continue to set their own intellectual-property, land-use and immigration policies. + +The rules regarding the free movement of “skilled labour” provide a good illustration of the AEC’s limitations. Under its mutual-recognition arrangements (MRAs), certain professional qualifications from any member are deemed valid in all the others, allowing holders of them to work throughout the region. But the AEC’s MRAs cover only eight professions, accounting for just 1.5% of ASEAN’s total workforce. Moreover, even in these fields, other domestic regulations inhibit foreign workers. Nursing, for instance, is among the eight professions subject to an MRA, but to work in Thailand nurses still must pass a qualifying exam in Thai. As Mr Menon points out, this is short-sighted: English-speaking Filipino nurses would be a boon to Thailand’s burgeoning medical-tourism sector. + +Knitting South-East Asia together economically sounds appealing, but the political will to make it happen is hard to find. For the moment, ASEAN seems more focused on the letter than the spirit of regional integration. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21684811-seamless-regional-economic-bloc-just-around-corneras-always-more-hat/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Exit, pursued by bear + +The Fed has at last raised rates. What happens next? + +Jan 2nd 2016 | From the print edition + + + +IT IS more than two weeks since the Federal Reserve raised interest rates for the first time in over nine years, and the world has not (yet) ended. But it is too soon to celebrate. Several central banks have tried to lift rates in recent years after long spells near zero, only to be forced to reverse course and cut them again (see chart). The outcome of America’s rate rise, whatever it may be, will help economists understand why zero exerts such a powerful gravitational pull. + +Recessions strike when too many people wish to save and too few to spend. Central banks try to escape the doldrums by slashing interest rates, encouraging people to loosen their grip on their money. It is hard to lower rates much below zero, however, since people and businesses would begin to swap bank deposits for cash or other assets. So during a really nasty shock, economists agree, rates cannot go low enough to revive demand. + +There is significant disagreement, however, on why economies become stuck in this quagmire for long periods. There are three main explanations. The Fed maintains that the problem stems from central-bank paralysis, either self-induced or politically imposed. That prevents the use of unconventional monetary policies such as quantitative easing—the printing of money to buy bonds. The intention of QE is to buy enough long-dated debt to lower long-term borrowing rates, thereby getting around the interest-rate floor. Once QE has generated a speedy enough recovery, senior officials at the Fed argue, there is no reason not to raise rates as in normal times. + +If the Fed is right, 2016 will be a rosy year for the American economy. The central bank expects growth to accelerate and unemployment to keep falling even as it lifts rates to 1.5% or so by the end of the year. Yet markets reckon that is wildly optimistic, and that rates will remain below 1%. That is where the other two explanations come in. + +The first is the “liquidity trap”, an idea which dates back to the 1930s and was dusted off when Japan sank into deflation in the late 1990s. Its proponents argue that central banks are very nearly helpless once rates drop to zero. Not even QE is much use, since banks are not short of money to lend, but of sound borrowers to lend to. + +Advocates of this theory see only two routes out of the trap. The government can soak up excess savings by borrowing heavily itself and then spending to boost demand. Or the central bank can promise to tolerate much higher inflation when, in the distant future, the economy returns to health. The promise of higher-than-normal inflation in future, if believed, reduces the real, or inflation-adjusted, interest rate in the present, since money used to repay loans will be worth less than the money borrowed. Expectations of higher future inflation therefore provide the stuck economy with the sub-zero interest rates needed to escape the rut. + +Governments pursued both these policies in the 1930s to escape the Depression. But when they reversed course prematurely, as America’s did in 1937, the economy suffered a nasty and immediate relapse. The liquidity-trap explanation suggests the Fed’s rate rise was ill-advised. The American economy, after all, is far from perky: it is growing much more slowly than the pre-crisis trend; inflation is barely above zero; and expectations of inflation are close to their lowest levels of the recovery. If this view is correct, the Fed will be forced by tumbling growth and inflation to reverse course in short order, or face a new recession. + +Stuck in a glut + +There is a third version of events, however. This narrative, which counts Larry Summers, a former treasury secretary, among its main proponents, suggests that the problem is a global glut of savings relative to attractive investment options. This glut of capital has steadily and relentlessly pushed real interest rates around the world towards zero. + +The savings-investment mismatch has several causes. Dampened expectations for long-run growth, thanks to everything from ageing to reductions in capital spending enabled by new technology, are squeezing investment. At the same time soaring inequality, which concentrates income in the hands of people who tend to save, along with a hunger for safe assets in a world of massive and volatile capital flows, boosts saving. The result is a shortfall in global demand that sucks ever more of the world economy into the zero-rate trap. + +Economies with the biggest piles of savings relative to investment—such as China and the euro area—export their excess capital abroad, and as a consequence run large current-account surpluses. Those surpluses drain demand from healthier economies, as consumers’ spending is redirected abroad. Low rates reduce central banks’ capacity to offset this drag, and the long-run nature of the problem means that promises to let inflation run wild in the future are less credible than ever. + +This trap is an especially difficult one to escape. Fixing the global imbalance between savings and investment requires broad action right across the world economy: increased immigration to countries with ageing populations, dramatic reforms to stagnant economies and heavy borrowing by creditworthy governments. Short of that, the only options are sticking plasters, such as currency depreciation, which alleviates the domestic problem while worsening the pressure on other countries, or capital controls designed to restore monetary independence by keeping the tides of global capital at bay. + +If this story is the right one, the outcome of the Fed’s first rises will seem unremarkable. Growth will weaken slightly and inflation will linger near zero, forcing the Fed to abandon plans for higher rates. Yet the implications for the global economy will be grave. In the absence of radical, co-ordinated stimulus or restrictions on the free flow of capital, ever more of the world will be drawn, indefinitely, into the zero-rate trap. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21684797-fed-has-last-raised-rates-what-happens-next-exit-pursued-bear/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Aircraft engines: Flying’s new gear + +The future of the Nobel prize: Throw caution to the wind? + +Meteorology: Barmy weather + + + + + +Articles Sections Next + +Aircraft engines + +Flying’s new gear + +A quieter, more economical jet engine, fitted with a gearbox, is about to arrive + +Jan 2nd 2016 | From the print edition + + + +EVERYONE remembers the Wright brothers, who made the first powered, heavier-than-air flights by human beings on a beach in North Carolina in 1903. Few, by contrast, remember Charlie Taylor, a mechanic at the brothers’ bicycle business in Dayton, Ohio. Yet it was Taylor who, by building an internal-combustion engine out of aluminium castings rather than iron ones, created a device both light enough and powerful enough to lift Orville and Wilbur into the sky. + +Engine design has always been crucial to aviation. To start with, more powerful versions of the piston-driven motor pioneered by Taylor ruled the roost. Then, a radical, new approach emerged as the designs of Frank Whittle, a British engineer, ushered in the jet age. The jet has since evolved into the turbofan, whose gaping intakes have—as seasoned air travellers will have noticed—grown larger and larger over the years, to accommodate ever bigger and better fans. And now, as 2015 turns into 2016, another new design is being rolled out. This is the geared turbofan, which is available as an option on the A320neo, the latest product of Airbus, Europe’s biggest aerospace group. + +Geared turbofans, as their name suggests, include a gearbox as part of the mechanism. Those on the A320neo are the brainchildren of engineers at Pratt & Whitney, a division of United Technologies, an American conglomerate. Designing and building geared turbofans, which Pratt & Whitney brands “PurePower”, is a gamble. The firm has spent two decades and more than $10 billion developing them. Connecting an engine’s inlet fan to the compressor and turbine in its core through a gearbox should give better fuel economy and make the thing quieter—both desirable outcomes. But the bigger the engine the bigger the forces on the gearbox and the more likely it is that something will go wrong. So, though gearboxes are found in turboprops (jet engines that turn a propeller) and in a few executive jets, no one had until now managed to scale one up to cope with the 30,000 horsepower delivered by the core of an airliner’s engine. + +Pratt & Whitney has persevered because it thinks the conventional, ungeared turbofan is reaching its limits, and that only by adding a gearbox can airlines achieve the performance and economy which will be required of them in the future. Airlines, though, are notoriously conservative, and are wary of new, complicated kit like gearboxes, which are yet one more thing that can go wrong. So Pratt & Whitney has had its work cut out to persuade them. + +Meshing it together + +A jet engine works according to Newton’s third law of motion: to every action there is an equal and opposite reaction. The reaction is forward movement. The action which provokes that is the ejection from the back of the jet of fast-moving gas. This gas generates thrust in proportion to its mass and to the speed with which it is being ejected. In the early, ear-splitting jet engines designed by Whittle and his contemporaries, the thrust came from air that entered the engine’s core at the front (see diagram) where it was squeezed by a compressor, mixed with fuel and ignited to produce hot gases that rushed out of the rear. Though the mass of this exhaust gas was small, its velocity was high, so the resulting thrust kept an aircraft fitted with such an engine aloft. The compressor, meanwhile, was turned by a turbine propelled by the exhaust gases. + + + +A turbofan works in a broadly similar way, but with a fan also turned by the turbine to push some of the air around, rather than through, the core. Though this core-bypassing air is not moving as fast as the exhaust gases, there is a lot of it—so it, too, produces a great deal of thrust. The upshot is a system that is more efficient and quieter than earlier jet engines. + +The proportion of air going around the core compared with that going through it is known as the bypass ratio. Some of the latest turbofans have bypass ratios as high as 9:1. It is to achieve this that fans (and therefore inlets) have increased in size. But as fan blades get longer, their tips travel faster—and now those tips are going at close to the speed of sound. Accelerating them any further would cause shock waves, and these might result in dangerous vibrations. + +A gearbox gets around this by letting the fan turn more slowly than the compressor and the turbine. This means the fan can be made bigger (and can thus accelerate a greater volume of air) without slowing everything else down to its rev rate. This arrangement permits all parts to be engineered for optimal performance. As a result, PurePower has a bypass ratio of 12:1. + +Doing all of this does, though, require an utterly reliable gear box. Pratt & Whitney uses advanced nickel-based alloys for the components of the box itself. The fan blades are made from a lightweight alloy of aluminium and lithium. And the turbine is composed of titanium aluminide, a substance developed in collaboration with MTU, a German firm, that has twice the strength of the conventional cast alloys used to make turbines. + +The upshot is that a pair of PurePower engines slung under an A320neo’s wings promise to reduce fuel consumption by 15% compared with a standard A320. This could save an airline more than $1.5m a year per aircraft in fuel costs. Geared turbofans also give the plane a longer range and are markedly less noisy. + +There have, inevitably, been teething problems. Industry reports suggest that the geared turbofan needs a slightly longer period to cool down than was expected, to avoid uneven wear when it is restarted. This might sound trivial, but at a busy airport it could cost a plane its take-off slot. For that reason Qatar Airways, which had been expected to be the first to take delivery of the A320neo, is believed to have postponed receipt. The honour of being first now looks like going to Lufthansa, a German carrier. Pratt & Whitney says the geared turbofan meets or exceeds all its performance requirements. During routine flight testing, ways to improve the engine were identified, but the company adds that any modifications will be minor. + +Whether geared turbofans will sweep all before them remains to be seen—and depends, at least in part, on the response of Pratt & Whitney’s two big rivals in the jet-engine business, General Electric (another American firm) and Rolls-Royce (a British one). These companies are also working on more efficient aircraft engines. Both, though, think improvements can still be squeezed from the conventional turbofan design without resorting to a gearbox. General Electric, in partnership with Snecma, a French firm, is offering a rival engine, called the CFM Leap, for the A320neo. This will be available later in 2016 and is claimed by the partners to provide fuel savings similar to those of a geared arrangement. The Leap is a conventional turbofan, but it is made using some unconventional techniques. These include new composite materials and also additive manufacturing (popularly known as 3D printing). Rolls-Royce, too, aims to get greater efficiency from its turbofan designs, though it does also have a gearbox-development programme, with a view to making a geared turbofan that might enter service on large passenger aircraft in around a decade’s time. + +As to PurePower itself, so far the opinion of airlines is divided. Airbus has taken orders for more than 4,400 A320neos. About a third of these will sport PurePower, a third Leap, and in the cases of the remaining third, the customer has yet to make up his mind. + +Pratt & Whitney, though, does not plan to be tied only to Airbus. It is also offering versions of PurePower to firms trying to break the duopoly enjoyed on short-to-medium-range aircraft by that firm and Boeing. Bombardier of Canada is one such. Its competitor to the A320 is called the CSeries. The Mitsubishi Regional Jet, from Japan, is another plane which Pratt & Whitney hopes might use PurePower. And there are also the MC-21, a 180-seat airliner from Irkut, a Russian aerospace company better known for its Sukhoi fighter jets, and the E-Jet from Embraer, of Brazil. Whether Pratt & Whitney’s PurePower play will pay off remains to be seen, but as Charlie Taylor knew over 100 years ago, gearing up for success does mean taking risks. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21684775-quieter-more-economical-jet-engine-fitted-gearbox-about/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The future of the Nobel prize + +Throw caution to the wind? + +For everything to stay the same, everything may need to change + +Jan 2nd 2016 | Stockholm | From the print edition + + + +FEW events exceed the splendour of the Nobel ceremony and gala dinner held every December in Stockholm. After champagne toasts to Sweden’s king, and to the memory of Alfred Nobel, 1,300 guests sitting in the city hall cheer the latest crop of laureates in chemistry, physics, physiology or medicine, literature and economics. (The peace prize is awarded at a separate shindig, in Oslo.) For many of the winners, perhaps more used to sporting white coats than white ties, the occasion is a career-defining moment of glamour. No other prize has anything like the stature of a Nobel. In scientific circles it is known simply as “the trip to Stockholm”. But some do whisper the question, “for how much longer?” + +Nobel, who made his money by inventing dynamite, set things off with a bang. In 1895 he bequeathed 31m kronor (roughly $200m at today’s values) to create a foundation, the income from which would pay for the prizes. The endowment is now worth 4 billion kronor (some $500m). That sounds like a lot, but it hardly represents a spectacular return after 120 years. + + + +As a result, the prizes have suffered. Today, an individual award—which can be split up to three ways—is worth 8m kronor in addition to the 18-carat gold medal each recipient receives. A handy sum, but one whose lavishness has fallen as cautious investing has failed to increase the pot as fast as economic growth has increased people’s incomes. According to the foundation’s boss, Lars Heikensten, who was once governor of Sweden’s central bank, when the first prizes were awarded, in 1901, they represented 25 times the annual salary of a professor at a typical university in Europe or America. Now, the ratio is more like ten. Meanwhile rivals, such as the Kavli and Breakthrough prizes, are being endowed by more recent plutocrats. Many of these (see chart) pay out more than the Nobel Foundation—in the case of the Breakthrough prize, three times as much. The Nobel brand may thus be in danger of erosion, as the foundation itself admits in its most recent annual report. This says that “ensuring the importance of the Nobel prize in the long term continues to pose a significant challenge”. + +Mr Heikensten is trying to take matters in hand. He has overseen a big awareness-raising push on social media, and through conferences and debates that carry the Nobel name. And, sometime in the next 12 months, work will start on a Nobel visitor centre and conference venue in the heart of old Stockholm. This controversial cube of glass, costing 1.2 billion kronor, will be paid for by private donors, with much of the money coming from two families of Swedish billionaires, the Wallenbergs and the Perssons. Which is all well and good, but does not really get to the heart of the matter—that the whole Nobel proposition needs dragging into the 21st century. + +One ticklish question is whether the prize categories are still relevant. The science prizes—the core of the foundation’s fame—reflect the academic priorities of the founder’s era. Things have changed. Galling though it is to the memory of Nobel, a chemist, pure chemistry is largely worked out as an academic discipline. These days, most of the winners of the chemistry prize could have fitted just as easily into the physics or physiology-or-medicine categories. Meanwhile, biology has hypertrophied. Shoe-horning it into “physiology or medicine” seems bizarre, and excludes important fields such as ecology. + +Rivals have prizes for categories such as neuroscience and nanoscience. Changing or adding to the Nobel list, though, has not found favour. Even the economics prize, introduced in 1969, is looked down on by traditionalists as not being a proper Nobel. + +Then there is the question of replenishing the coffers. A praiseworthy desire to preserve independence by not taking donations into the endowment has become something of a drawback. This, as much as overcautious investing, is responsible for the prizes’ diminished financial value. A more welcoming attitude to donations (even if these are restricted to the personal, rather than the corporate, and perhaps to legacies rather than lifetime gifts that might be seen as involving some quid pro quo) might be sensible, to boost the prizes’ value. For reputation is a funny thing. Scandal can destroy it overnight, of course, and the foundation’s trustees might fairly argue that their cautious approach has avoided that fate. But reputation can also slip away, unnoticed, as the world’s attention shifts elsewhere. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21684774-everything-stay-same-everything-may-need-change-throw-caution/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Meteorology + +Barmy weather + +The rain gods have brought a dreadful Christmas + +Jan 2nd 2016 | From the print edition + + + +THE year 2015 was probably the hottest since meteorological records began. It certainly ended with a flourish. On North America’s east coast, dreams of a white Christmas were banished by springlike temperatures. In New York, for instance, the mercury hit 22°C (72°F) on Christmas Eve. Europe, too, enjoyed unseasonal warmth. But this was no festive gift, for the warm, moist air that caused it also brought humungous storms. + +In South America flooding has forced 130,000 Paraguayans from their homes. In the United States tornadoes before and after Christmas have killed at least 29 people. Thirteen more have drowned in floods caused by a storm that this week tracked across the Atlantic (see map), where it may add to the misery of people in large parts of northern England, who have already been inundated several times this year, the Christmas period included (see article). + +As The Economist went to press, forecasters were warning that this storm, dubbed Frank by British meteorologists, may develop into what is known as a bomb cyclone, undergoing a sudden, drastic drop in air pressure at its centre in a way that will suck warm air from the tropics and funnel it northward. If these predictions prove correct, the temperature at the North Pole is likely to rise a little above freezing. Though that is still chilly by most people’s standards, it is an extraordinary 30°C above the average for this sunless time of year. + +One explanation for the weird weather, at least in the Americas, is El Niño—a phenomenon in which a slackening of trade winds over the Pacific allows warm water to slosh back eastward, increasing the amount of heat and moisture in the atmosphere in a way that has various predictable effects across the tropics. The floods in South America are part of a typical Niño pattern, and the tornadoes in the United States tend to fit, too. + +Another factor is that the polar vortex, which traps cold air in the Arctic, has taken a form which permits balmier than normal weather in much of the northern high latitudes. This week’s bomb cyclone may change that, though. Bits of Europe could be in for a cold new year. + +Climate change is a contributor too. The greenhouse effect warms the oceans as well as the atmosphere, and they have stored up quite a lot of heat in recent years. The oceans are therefore unusually warm—not just the eastern Pacific, but the Indian and Atlantic, too. + +Kevin Trenberth of the National Centre for Atmospheric Research, in Boulder, Colorado, points out that a lack of hurricanes—which most people would welcome—may explain some of the effects around the Atlantic at the moment as heat normally released by summer hurricanes stayed in the ocean. As ever, connecting weather patterns across the seasons and across the globe is difficult. But learning how to do so is becoming ever more important. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21684773-rain-gods-have-brought-dreadful-christmas-barmy-weather/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +The Great War at midpoint: A most terrible year + +China and India: Clash of the titans + +Ukraine’s war-torn history: Keeping hope alive + +Non-Western classical music: Voyages of discovery + +New film: Bearing down + +New film: Correction: Whatever should I do? + + + + + +Articles Sections Next + +The Great War at midpoint + +A most terrible year + +Two long battles of attrition engulfed the European powers in 1916, a year crammed both with horrors and with consequences, many of which still endure + +Jan 2nd 2016 | From the print edition + + + +BOOKS that focus on what happened in a particular year have become a publishing phenomenon. So Keith Jeffery, a British academic historian whose last work was a fascinating, if slightly plodding, official history of Britain’s secret intelligence service, MI6, must have thought it a clever idea to go for 1916, the midpoint of the first world war. Mr Jeffery’s purpose is to show that not only was it a year of tremendous events, but one in which the effects of the war spread across most of the world, often with consequences that can still be felt a century later. + +By 1916, the war that some had believed would be over by Christmas 1914 had become an attritional slog on both the largely static Western Front and on the rather more fluctuating front in the East. To break the deadlock, the general staffs of all the main belligerents continued to work on new tactics, such as the creeping artillery barrage, and to seek new technologies, including the tank, which first saw action in September 1916. Contrary to a widely held view, the second half of the war was a period of unprecedented military innovation. + +The idea that sheer offensive élan could overcome well-entrenched defences equipped with modern weaponry, in the form of accurate artillery and the machine- gun, had died during the appalling bloodletting of late 1914. In the four months before the war of movement in the West ground to a halt, France and Germany had between them suffered over 1.5m casualties—a loss rate that was not exceeded until manoeuvre returned to the battlefield in the final months of fighting. By 1916 most of the soldiers on both sides had not only lost faith in imminent victory, but had become fatalistically resigned to the war as permanent crucible for their generation which civilians and politicians at home could not begin to comprehend. + +The last hope that the war might be brought to a swift conclusion by a stroke of strategic brilliance had faded with the abject failure of the Gallipoli campaign to deal the expected blow to the Ottoman Empire. Just a few days before the close of 1915, the Allied forces withdrew stealthily from the beaches at Suvla Bay and “Anzac” Cove (the acronym for the Australian and New Zealand Army Corps, which fought there with great gallantry, but, contrary to national myths, did not suffer the bulk of the casualties). The withdrawal, in contrast to the rest of the shambolic campaign, was rather brilliantly conducted. But the lesson was still a painful one: although “sideshows” continued to exercise the imagination of those with an imperialistic mindset, the grim reality for Britain and France was that the war would be won or lost on the Western Front. + +That realisation fed into something else. By 1916 sentiment had hardened into a widespread feeling on both sides that the sacrifices had already been so great that the possibility of a negotiated peace had ceased to be politically conceivable. The only way forward, it seemed, was to prevail in a fight to the finish whatever the cost. That was one reason why 1916 saw two of the most terrible confrontations of the war: the battle of Verdun, which began in February, and the battle of the Somme, which was launched on July 1st. + +During the whole of 1915 there were 1.8m casualties on the Western Front; in just eight months of 1916, thanks to those two epic struggles, France, Britain and Germany together sustained 2.2m casualties. For the German chief of staff, Erich von Falkenhayn, the fortress at Verdun was chosen as the place where “the forces of France will bleed to death”. Verdun, writes Mr Jeffery in “1916: A Global History” (Bloomsbury, $32 and £25) “became a byword for the manifest horrors of industrialised, ‘total’ war”. But for France, the defence of Verdun in the face of Germany’s greatest onslaught of the war so far became the ultimate symbol of national heroism. For the British, the battle of the Somme came to represent something less noble. At the outset, the British army suffered its greatest-ever loss in a single day (more than 57,000 casualties). The shock of July 1st 1916 came to stand for not just the suffering and courage of the soldiers, but, later, anger over the human cost of flawed tactics and supposedly callous military leadership. + +Yet at the time the battle, which continued until November, was not regarded as a disaster. The French made significant gains during September, which, William Philpott, author of “Bloody Victory” (2009), believes was the “tipping point” of the war. He argues that the Somme “relieved the pressure on Verdun, restored the initiative of the Allies, wore down the enemy’s manpower and morale and…stretched German resources dangerously thin”. With their superior manpower and resources, the Allies believed the Somme was “a strategic victory in a war of attrition” which they would eventually win. + +Paradoxically, the great naval battle of Jutland, two months before the Somme offensive, looked at best like a costly draw for the Royal Navy, which lost more ships and men than Germany’s High Seas Fleet, but was in fact a strategic success. Although, as Mr Jeffery points out, contrary to myth, it was not the last time the High Seas Fleet ventured out of Wilhelmshaven, the damage done to its smaller naval force at Jutland underlined the risks of seeking a definitive engagement. As a result, there was no further real threat to Britain’s naval blockade of Germany which, according to German apologists for their eventual military defeat, led to deteriorating conditions on the home front (malnutrition and sickness if not actual starvation) and the myth of the “stab in the back” by treacherous republican politicians. + +A further consequence of Jutland was that with waning appetite for another major fleet action and its attendant risks, German U-boats went back to a largely commerce-raiding role. It was the fateful decision early in 1917 to expand into unrestricted warfare that led directly to America’s entry into the war a few months later, in April. A thread thus leads from Jutland to the single event that perhaps did most to ensure that Germany would lose the war. + +The attritional struggles on both the main fronts were directly connected to the wider impact of the war as the fragile regimes of three of the belligerents, Austria-Hungary, Russia and the Ottoman Empire, began to crack under the strain. Austria-Hungary, whose attempt to chastise rebellious Serbia fuelled the initial descent into war, was by 1916 buckling at the seams. Neglecting the struggle against Russia in the East, Austria-Hungary’s chief of the general staff, Franz Conrad von Hötzendorf, had sent his best troops to fight the Italians, but had still got bogged down. Things turned from bad to worse when the Russian general Aleksei Brusilov launched a brilliantly conceived offensive in June. The Russian advance put intolerable pressure on the fragile loyalties of the multi-ethnic Habsburg armies. There were mass defections of Czech, Ukrainian, Croat and Slovenian units who were deeply reluctant to fight fellow Slavs. + +Brusilov eventually ran out of steam when German divisions arrived to stiffen Habsburg resistance. But his offensive proved to be another major turning point. Austria-Hungary was more or less destroyed as a military power, increasingly dependent on Germany to stay in the fight. Less obviously, exhausted by the inconclusive effort of its greatest feat of arms in the war, the Russian army turned in on itself, creating the conditions for the revolution the next year that was hijacked by Lenin with help from Germany. + +The battles on the Eastern Front in 1916 “crucially accelerated the political and social destabilisation of both the Russian and Habsburg empires”, as Mr Jeffery notes. Nearly all the areas where the fighting took place were in the colonised spaces of eastern Europe: that is to say, in places where “the population felt itself under the domination of a foreign power”. The war encouraged people to challenge the imperial status quo and assert their right to national self-determination, still a relatively new concept and one that has remained a source of conflict and controversy. + +With every major belligerent by 1916 in extremis, it was not just in eastern Europe and the Balkans that nationalist movements surfaced to exploit the distraction of the colonial power. Ireland saw the Easter Rising when 1,400 armed republicans seized a number of Dublin landmarks, including the GPO building, only surrendering when British artillery was used to shell their positions. The subsequent execution of 15 of the rebels and the imposition of martial law increased opposition to Ireland’s role in the war and gave a boost the republican cause that led to the establishment of the Irish Free State six years later. + +In the Middle East, the British and French pursued a policy of fomenting Arab nationalism as a means of undermining the Ottoman Empire and staving off German attempts to promote a pan-Islamist jihad against the two older colonial powers. In May 1916 two rather obscure diplomats, François Georges-Picot and Sir Mark Sykes, reached an agreement that divided Arab Ottoman provinces into areas of future British and French control or influence. The baleful results of their insouciant map-drawing are still being felt today, notably in the turmoil of Syria and Iraq. + +That 1916 was an extraordinary year is not in doubt. It was the pivotal year of the Great War, which as Fritz Stern, a German-American historian, rightly observed, was “the first calamity of the 20th century, the calamity from which all other calamities sprang”. The intensity and scale of the fighting was the trigger for a wave of political, economic and social upheavals that destroyed empires and forged national identities, sometimes for the better, very often for the worse. Historians have been hard at work teasing out the threads; readers can expect a deluge of new books in the coming months. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21684766-two-long-battles-attrition-engulfed-european-powers-1916-year-crammed-both/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +China and India + +Clash of the titans + +The war that echoes down the decades + +Jan 2nd 2016 | From the print edition + +Kennedy and Nehru step out + +JFK’s Forgotten Crisis: Tibet, the CIA and the Sino-Indian War. By Bruce Riedel. Brookings Institution Press; 256 pages; $29. + +IN THE autumn of 1962 Chinese troops invaded Indian-held territory, attacking across the 1,800-mile (2,880km) border that stretches along the Himalayas between the two giants of Asia. Mao Zedong instructed his army to expel Indian soldiers from territory that China claimed in Kashmir. In Washington the Chinese offensive was seen as a serious communist move in the cold war. + +It was an inconvenient moment for the White House. President John Kennedy was absorbed in an even bigger crisis with communism closer to home: the flow of Soviet missiles to Cuba which threatened a nuclear conflict. Luckily for Kennedy, he had his own man in New Delhi. His friend from Harvard, John Kenneth Galbraith, was the American ambassador. So in a relatively easy act of delegation, Galbraith was put in charge of the “other” crisis. + +Galbraith proved up to the task, in part, as Bruce Riedel writes in “JFK’s Forgotten Crisis”, because he had access to the president and his aides. Most ambassadors report to the State Department, but the blunt Galbraith told the president that going through those channels was “like trying to fornicate through a mattress”. + +The border war did not last long. The Chinese crushed the Indians. Mao declared a unilateral ceasefire a month later and withdrew Chinese forces. He had prevailed over his Asian rival, humiliating the Indian prime minister, Jawaharlal Nehru. + +But victory was not just about Chinese might. At Galbraith’s urging, the Americans had quickly backed the distressed Nehru. An emergency airlift of supplies was sent to Calcutta and a carrier battle group was dispatched to the Bay of Bengal. In the end, Mao judged that the Americans might actually come to the help of India. He did not want to suffer huge losses of Chinese soldiers so soon after the Korean war. Thus American deterrence worked, and a confrontation between America and China was avoided, Mr Riedel writes. + +The actual war is just one facet of this high-wire story of the geopolitics of the period, with its outsized characters and decisions that still reverberate today. Mr Riedel puts his experience as a former CIA analyst and a senior adviser on the National Security Council to canny use, uncovering details about an American covert operation in Tibet that has been mostly forgotten, though not by China. + +Between 1957 and the early 1970s America spirited young Tibetans out of their homeland through Bangladesh (then East Pakistan), trained them in Colorado, and parachuted them back into Tibet, where they fought the Chinese army. Galbraith described the covert effort as “a particularly insane enterprise”. But the CIA prevailed. In 1961 the Americans were so starved for information about China that the CIA bragged about the ambush of a Chinese army truck by the Tibetan rebels. Mr Riedel describes how a bloodstained satchel of Chinese documents from the truck was taken to the White House as prized bounty. The Americans were so ignorant about the early years of communist China, he writes, that the operation was deemed worth the risk because of the documents’ descriptions of the status of Sino-Soviet relations, and the grim conditions in the Chinese countryside. + +The current alliances on the subcontinent and the unsettling arms race between Pakistan and India hark back to the war of 1962. Kennedy’s decision to help India drew Pakistan closer to China. India started down its path to becoming a nuclear power after its defeat by China. When India tested a nuclear weapon in 1998, the rationale was the threat from China. + +Today China and India are competitors, not enemies. But more than 50 years after the war, the border dispute remains unresolved. The two countries account for more than a third of the world’s population. In July 2014 at the first meeting between the Chinese leader, Xi Jinping, and Narendra Modi, India’s prime minister, Mr Xi said: “When India and China meet, the whole world watches.” This superb history shows why. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21684764-war-echoes-down-decades-clash-titans/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Ukraine’s war-torn history + +Keeping hope alive + +Why the struggle for Ukraine is the key to Europe’s future + +Jan 2nd 2016 | From the print edition + +Remembering the revolution + +The Gates of Europe: A History of Ukraine. By Serhii Plokhy. Basic Books; 395 pages; $29.99. Allen Lane; £25. + +ROWS over inheritances are bitter—within families and between countries. At the heart of the conflict between Russia and Ukraine is the contested legacy of a long-forgotten superpower: Kievan Rus. Both Vladimir Putin’s Russia and post-Soviet Ukraine lay claim to the mantle of Vladimir the Great, a prince who just over 1,000 years ago accepted Christian baptism for his unruly tribes of Slavs and Vikings. To patriotic Russians, that was the founding action of their statehood. For Ukrainians, the story is the other way round: their country, so often wiped off the map by its neighbours, is the true descendant. + +That dispute underlies today’s smouldering war. Many Russians find it hard to accept that Ukraine is really a state; moreover, Ukrainians (especially if they speak Russian as a first language) are essentially Russians. The territory they inhabit is therefore part of Moscow’s patrimony. + +Ukraine’s identity and its enemies over the past ten centuries are the central threads of Serhii Plokhy’s admirable new history. He eschews polemic—almost to a fault, given the horrors he describes. The subject material could seem dauntingly dense: few readers will be familiar with the twists and turns of the history, and unfamiliar names and places abound. But Mr Plokhy—a Harvard historian whose previous book, “The Last Empire”, was a notable account of the Soviet Union’s downfall—treads a careful path. + +The story is not just of high politics, gruesome and enthralling though that is. Even when Ukraine did not exist as a state, he writes, “language, folklore, literature and, last but not least, history became building blocks of a modern national identity”. He pays particular attention to the linguistic complexities. Ukrainians may speak Russian yet also identify profoundly with the Ukrainian state. The real linguistic divide is with Polish: western Ukraine was for many decades under Polish rule. Memories of massacres and oppression are recent and vivid, making the reconciliation between those two countries all the more remarkable. + +The epilogue to “The Gates of Europe” rightly describes the Ukraine crisis as central to Russia and Europe as a whole. It is widely known that the Ukrainian national anthem begins: “Ukraine has not yet perished”. Mr Plokhy points out that the Polish one begins in similarly mordant style. The question for Ukrainians—and for Europe—is whether the country can summon up the determination that Poland has shown to tread the hard road which history has set before it. + +The stakes are high: a successful, stable Ukraine would be a strong candidate to join and strengthen the European Union. It would also be a devastating refutation of the Putin regime’s contention that bellicose autocracy is the best way of running a large ex-Soviet Slavic country. + +But the odds are uncomfortably long. Ukraine returned to statehood in 1991 shorn of its elites, thanks to famine, repression and Russification. The creeps and cronies who have so signally misruled the country since then have acquired great riches, and put down deep roots. Two democratic upheavals—the Orange revolution that began in late 2004 and the Maidan protests of 2013—have failed to dislodge this parasitic ruling class. + +Yet belief in Ukraine’s history of tolerance and legality, rooted in European Christian civilisation, keeps hope alive. In his elegant and careful exposition of Ukraine’s past, Mr Plokhy has also provided some signposts to the future. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21684765-why-struggle-ukraine-key-europes-future-keeping-hope-alive/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Non-Western classical music + +Voyages of discovery + +Classical music that no one talks about + +Jan 2nd 2016 | From the print edition + + + +The Other Classical Musics: Fifteen Great Traditions. Edited by Michael Church. Boydell Press; 426 pages; £25. + +ANY self-respecting arts-lover living in America or Europe is familiar with a smattering of writers, painters and sculptors from outside the West. But few cultural buffs could name a single composer from, say, China or Turkey, let alone give any detail about them. A collection of essays, entitled “The Other Classical Musics”, shows how much they are missing. + +Intelligently edited by Michael Church, a British critic, the book looks at the canons of different parts of the world (India and China are deemed worthy of two chapters each, though Latin America is ignored). Written by different scholars, each chapter has a common structure, with a concise outline of the instruments, the style and the social relations behind the music. Lots of beautiful pictures and extracts of musical notation break up the text. + +The chapters on Indian classical music will be of particular interest to many readers, who may already have a vague understanding of it through the works of Ravi Shankar, a sitar-player (pictured). The book shows important differences between north (Hindustani) and south (Carnatic) Indian styles. For instance, tablas—drums with heads usually fashioned from goat skin—are more commonly used in Hindustani music; Carnatic melodies tend to contain more flourishes. (Shankar played largely Hindustani music.) + +Such characterisations are helpful for the lay reader; but the contributors also show a keen eye for historical nuance. Many of them question the usefulness of the term “classical”, arguing that what people may now perceive to be traditional has in fact constantly changed over time. In the chapter on classical Japanese music there is a wonderful illustration of two sheets of musical notation, one from 1303 and the other from the present day; their different styles hint at how the form has evolved. + +Classical Iranian music has likewise seen much change. During the 1950s it fell under the sway of European musical practices, but as the government grew concerned about Westernisation it sponsored efforts to reassert a Persian flavour. As for India, before the 20th century the country’s music was no more than “a variety of musical traditions performed in different places by different social groups”. Some historians argue that Indian “classical” music was really a cobbling together of different traditions by 20th-century nationalists. + +Alongside other chapters on places like Tajikistan, north Africa and Java, the book has one on European classical music. For many readers this chapter will be rather familiar; but for those who know little about composers like Pérotin (who was born in Paris and active in the late 12th century, when he came to be known as Pérotin the Great) or John Dunstable (c.1390-1453), a celebrated English composer of polyphonic music, it will be just as interesting as the others. And in fewer than 30 pages it offers as good a summary of the Western canon as can be found anywhere. + +Readers should not try and digest the whole book in one go; far better to use it for reference. Indeed, the best way to appreciate it is to read it while listening to the music under discussion (your reviewer searched for the relevant compositions on YouTube and played the extracts of notation on the piano). There is a treasure trove of underappreciated music out there; this book will convince many to explore it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21684767-classical-music-no-one-talks-about-voyages-discovery/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +New film + +Bearing down + +“The Revenant” comes so close to being an action classic. Why does it fail? + +Jan 2nd 2016 | From the print edition + +Dealing with the wildlife + +WHEN one online reviewer misinterpreted a key sequence in “The Revenant”, Alejandro Iñárritu’s harrowing wilderness-survival drama acquired a nickname: “The Bear Rape Movie”. It is important to clarify, then, that Leonardo DiCaprio’s character, a shaggy-bearded 19th-century frontiersman called Hugh Glass, is not raped by a bear, although ursine sexual assault is just about the only ordeal he is spared. + +At the start of the film, Mr Iñárritu’s first since his Oscar-winning Broadway farce, “Birdman”, Glass is a member of a fur-trading party that is ambushed by Arikara natives. The ensuing forest battle has the nerve-shredding immediacy of the D-Day set piece in “Saving Private Ryan” (1998), Steven Spielberg’s second-world-war drama. Shortly afterwards, Glass is bitten, clawed, trodden on and flung around (but not raped) by a hulking grizzly, and then left for dead by a treacherous colleague (Tom Hardy). But he forces himself to trek for hundreds of miles to his associates’ fort, via frozen landscapes as hostile and beautifully strange as the surface of an alien planet. + +Mr DiCaprio has said that his notoriously gruelling experiences on the set of “Titanic” nearly 20 years ago were a breeze compared with making “The Revenant” on location in Canada and Argentina. But his tribulations have paid off. Like Mr Hardy’s recent hit, “Mad Max: Fury Road”, “The Revenant” is a thunderous riposte to those blockbusters in which digitally rendered cities are flattened, but the violence never registers as anything other than what it is: the reorganising of pixels on a computer screen. Watching Mr Iñárritu’s visceral film, the viewer feels Glass’s pain. Every plunge into an icy river, every mouthful of twitching raw fish, every arrow through the throat seems excruciatingly real. + +It is unfortunate, then, that the director has given in to his fatal weakness for distracting subplots and mystical hallucinations. If Mr Iñárritu had not fallen for padding out his primal revenge yarn to an unnecessary 156 minutes, the overpowering scenes of Glass struggling against the bear, his human enemies and nature itself would have made “The Revenant” into a classic of the action-movie genre. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21684768-revenant-comes-so-close-being-action-classic-why-does-it-fail-bearing-down/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Correction: Whatever should I do? + +Jan 2nd 2016 | From the print edition + +In a piece on historical agony aunts in our Christmas issue ("Whatever should I do?"), we described a British bigamist as having been transported to Australia before Captain Cook "discovered" the place. The two-timer may well have been shipped to another colony, such as America. Thanks to an alert reader for spotting this. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21684769-correction-whatever-should-i-do/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Elsie Tulead: From missionary to firebrand + + + + + +Articles Sections Next + +Obituary: Elsie Tulead + +From missionary to firebrand + +Elsie Tu, campaigner for the people of Hong Kong, died on December 8th, aged 102 + +Jan 2nd 2016 | From the print edition + + + +HAD you visited the squatter slums of Kai Tak in Kowloon, Hong Kong, in the 1950s, a curious sight might have met your eyes. Among the thousands of tiny dilapidated wooden huts, crammed with refugees from newly communist China, threaded with muddy paths where adults clopped in wooden sandals and children splashed in storm-drains, a prim Englishwoman would be picking her way with care. Her fair hair was brushed in an immaculate shape, her flowered dress suitable for Cheltenham; a large handbag was on her arm. Her large eyes and prominent teeth gave her a look of keen concern. + +Her name then was Elsie Elliott. Later she was Elsie Tu. Under both names she was a formidable advocate for the rights of the downtrodden in Hong Kong, shaming and tormenting the police, the Legislative Council and successive British governors for more than 30 years. Wherever second-class citizens—that is, Chinese—lacked transport, housing, education, fair wages or a voice, she would be there, on their side. + +This transformation surprised even her. She had arrived in the colony in 1951 as a meek missionary’s wife from the north of England, ready to support her husband, Bill Elliott, in the saving of souls. The merry notes of her piano accordion rang out then over the huts of Kai Tak, inviting everyone to be washed in the blood of the Lamb. Otherwise she made no noise, for women in the Plymouth Brethren were consigned to silence. But gradually, surrounded by such privation, she grew restless. Eventually she left both the Brethren and her husband. Christian witness, to her, meant being “good and useful”, the motto she had adopted as a timid, studious schoolgirl. It meant speaking out, too—even, as her pacifist father had hoped, getting into politics. + +Hong Kong in those days had no social welfare. It was run by British officials and rich businessmen for themselves alone. The poor Chinese who wandered into her tiny church had boils from malnutrition and fungus-encrusted feet; she set up a clinic to treat them. Children, desperate to learn, sat in the street devouring cheap comics; in 1954 she set up Mu Kuang Middle School, which grew from a 30-desk army tent, flapping in winds and summer downpours, to a seven-storey block with 1,300 pupils by 2015. Buying land and buildings, hurdling regulations and dealing with the Education Department introduced her to Hong Kong’s subculture of corruption, in which the ba wong, or triads, extorted protection money from every hut-dweller and even from street hawkers; in which everyone expected backhanders; and where the police were up to theirkhaki shorts in the narcotics trade. + +Her relentless exposure of the police, in reports and letters to the South China Morning Post (her favourite, “restrained” modus operandi), became an all-out war, especially when after 1963 she sat on the Urban Council. In 1966, when she campaigned against a fare rise on the Star Ferry linking Hong Kong island and Kowloon, the police accused her of inciting violence among the protesters; she proved them liars and became wildly popular, as well as later winning the CBE for her anti-corruption efforts. To her backers she was invaluable, a British gadfly with pretty good Mandarin and passable Cantonese, who could intercede easily with those in power and could neither be silenced nor deported. + +Love and politics + +The authorities themselves, in the governor’s office and on the Legislative Council (where she also sat, from 1988 to 1995), were less certain what to make of her. She had no stated ideology, beyond “justice for the people”, but was scornful of the favours shown to Taiwanese and would not censure China. In the run-up to the handover of the colony to China in 1997 she attacked the “disgraceful” reforms belatedly introduced by the British, and belittled the self-styled democrats who attacked the Basic Law agreed on, with some input from her, with the Chinese. In 1995 she lost her seat at the age of 82 to a “pro-democracy” candidate whose hand she refused to shake. + +Her motivations were in fact rather simple. She hated colonialism, believing that it brought out the worst sort of arrogance in the British. She championed the Chinese because, to her, they were its victims. But she embraced them, too, because she fell in love with—and, in 1985, married—a Chinese patriot from Inner Mongolia, Tu Hsueh-kwei. He had joined her church and co-founded her school; they had taught each other their respective languages. She called him “Andrew” after the apostle who cared for the needy. Through him she absorbed the philosophy and poetry of China, the songs of the Beijing Opera, the habit of patience and an enhanced sense of racial injustice. In return he supported her in every way he could—except publicly, which might have meant deportation. + +With him she experienced a strange reversal of her first role in Hong Kong. Then, as a missionary wife, it was she who had been silent and second-class, reduced to making the refreshments at meetings. Now it was Andrew who would greet her, after another rowdy day on the Legislative Council, with a cup of tea just as she liked it. But then, reverting to the natural shyness she always felt she had, she would say “Thank you, husband,” and sip demurely, as if the order of things were not inverted; and as if she posed no threat to anyone. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21684754-missionary-firebrand-elsie-tu-campaigner-people-hong-kong-died-december/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +GDP forecasts + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Jan 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21684852/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Jan 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21684790-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Jan 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21684785-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Jan 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21684787-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +GDP forecasts + +Jan 2nd 2016 | From the print edition + + + +WORLD GDP is forecast to grow by 2.7% in 2016, according to the Economist Intelligence Unit (in 2015 the economy is estimated to have expanded by 2.4%). This moderate outlook reflects the fact growth is still lacklustre in the euro area, Japan and emerging market economies as a whole. + +The picture is particularly gloomy for commodity-exporting nations such as Venezuela, which is in deep economic recession. The outlook for Brazil is not positive either: falling oil prices combined with the implications of the Petrobras scandal will affect investment in oil and gas. War-torn countries also feature in the projected worst performers of 2016. Libya’s GDP has been contracting since 2013; continued fighting and political uncertainty means that it will continue to shrink this year. + +There are a few bright spots however. Although GDP growth in Turkmenistan is slowing, the construction of a new branch of the Central Asia-China gas pipeline will support exports until the end of 2016. A few emerging Asian countries make a notable appearance in the top-ten: growth in the region is buoyed by rising private consumption, and in particular a revitalised tourism sector in Laos. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21684788-gdp-forecasts/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Jan 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21684789-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 01 Jan 2016] + +The world this week + + + +The world this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Latin America: Brazil’s fall + + + + + +Travel visas: Sticker shock + + + + + +Republican tax plans: Be serious + + + + + +Global inflation: Low and behold + + + + + +Internet security: When back doors backfire + + + + + +Letters + + + +On business, species, elections, whistleblowers, plurals, Donald Trump: Letters to the editor + + + + + +Briefing + + + +Brazil’s crisis: Irredeemable? + + + + + +United States + + + +Republican tax plans: Indecent disclosure + + + + + +Race on campus: Of slavery and swastikas + + + + + +Rating police officers: Revenge of the nerds + + + + + +Election forecasting: Prediction 2016 + + + + + +Lexington: Pitchfork politics + + + + + +The Americas + + + +Human rights in El Salvador: Digging for justice + + + + + +Argentina’s new president: A fast start + + + + + +Asia + + + +Japan, South Korea and their history wars: Saying sorry for sex slavery + + + + + +Family planning in Vietnam: Running deer + + + + + +Thailand’s southern insurgency: No end in sight + + + + + +Simplifying Indian taxes: One country, but no single market + + + + + +China + + + +Social media: Weibo warriors + + + + + +Economic ideology: Reagan’s Chinese echo + + + + + +Middle East and Africa + + + +Iraq: Reclaiming the ruins from Islamic State + + + + + +Christians in the Middle East: And then there were none + + + + + +Enforcing morality: No sex please, we’re Middle Eastern + + + + + +Ethiopia: What if they were really set free? + + + + + +Europe + + + +Russia’s Far East: Snow job + + + + + +Vladivostok’s new casino: Russian roulette + + + + + +Spanish politics: The chore of the Spanish succession + + + + + +Poland’s religious politics: Courting disaster + + + + + +Educating refugees: Learning the hard way + + + + + +Britain + + + +Funding the police: Counting up the coppers + + + + + +Floods: Northern waterhouse + + + + + +Bagehot: Bring on the tempest + + + + + +International + + + +The unexplored world: A new age of discovery + + + + + +Business + + + +Travel visas: A strange sort of welcome + + + + + +Companies’ investment plans: From diggers to data centres + + + + + +Activists and resources companies: Icahn, you can’t + + + + + +Cruise lines: Eastward ho! + + + + + +Schumpeter: Social saints, fiscal fiends + + + + + +Finance and economics + + + +Global inflation: Low for longer + + + + + +The first venture capitalists: Fin-tech + + + + + +Buttonwood: Tales of the unexpected + + + + + +European insurance firms: One rule to bind them all + + + + + +South-East Asian integration: More hat than cattle + + + + + +Free exchange: Exit, pursued by bear + + + + + +Science and technology + + + +Aircraft engines: Flying’s new gear + + + + + +The future of the Nobel prize: Throw caution to the wind? + + + + + +Meteorology: Barmy weather + + + + + +Books and arts + + + +The Great War at midpoint: A most terrible year + + + + + +China and India: Clash of the titans + + + + + +Ukraine’s war-torn history: Keeping hope alive + + + + + +Non-Western classical music: Voyages of discovery + + + + + +New film: Bearing down + + + + + +New film: Correction: Whatever should I do? + + + + + +Obituary + + + +Obituary: Elsie Tulead: From missionary to firebrand + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +GDP forecasts + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.01.09.TXT b/homeworks/B20769/homework1/data2/2016.01.09.TXT new file mode 100644 index 0000000..5f18fef --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.01.09.TXT @@ -0,0 +1,4994 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Jan 9th 2016 | From the print edition + + + +Saudi Arabia executed 47 people on terrorism charges, including Sheikh Nimr al-Nimr, a prominent Shia Muslim cleric. Many Shias around the world reacted angrily. In Iran protesters stormed the Saudi embassy. The Saudi government, along with allies in Bahrain and Sudan, cut diplomatic ties with Iran, although it said talks this month on the Syrian civil war would not be affected. In Yemen Saudi fighter jets intensified their bombardment of Iranian-allied Houthi forces. Iran said they had bombed its embassy in Yemen. + +Burundi’s government refused to join peace talks with the opposition. Sporadic violence continued in the capital, Bujumbura. Around 400 people have been killed since April, when President Pierre Nkurunziza said he would seek a third term in office. + +Two former prime ministers were set to face off in the second round of a presidential election in the Central African Republic. The first vote on December 30th was peaceful, but militias still control most of the country, which has suffered Christian-Muslim violence since 2012. + +Another poke in the eye + +North Korea claimed to have detonated a thermonuclear, or hydrogen, weapon underground. It was the rogue country’s fourth nuclear test since 2006, though international experts questioned the claim, arguing that it may have been a smaller “boosted-fission” explosion instead. Reports that the North had fired a missile from a submarine for the first time also surfaced. China, North Korea’s supposed ally, expressed anger at the test. + +In Bangladesh the Supreme Court upheld the death sentence for Motiur Rahman Nizami, who heads Jamaat-e-Islami, the largest Islamic party. He was convicted last year for war crimes committed during the independence war against Pakistan in 1971, when he helped the Pakistani army identify and kill pro-independence activists. Critics claim he did not receive a fair trial. + +A French journalist left China after the government refused to renew her press credentials. She was the first foreign journalist resident in China to be forced to leave the country since 2012. The government objected to her reporting on the suppression of ethnic Uighurs, a mostly Muslim minority in the west of China. + +Hong Kong’s chief executive, Leung Chun-ying, said his government was very concerned about the disappearance of Lee Bo, the owner of a shop selling books about Chinese politics. There are widespread suspicions that he was abducted from the territory by mainland Chinese agents. Four others connected with the shop disappeared last October while visiting Thailand and mainland China. + +China announced it was building an aircraft-carrier entirely from domestic technology. It has only one such ship, which was built in the Soviet Union. + +A terrible start to the year + +Gisela Mota, the mayor of Temixco, a town south of Mexico City, was murdered less than a day after her inauguration. The killers are thought to have links to Los Rojos, a drugs gang. See article. + +Police in Guatemala arrested 18 former military and government officials on charges that they committed human-rights abuses during the country’s civil war, which lasted from 1960 to 1996. Prosecutors said that the accused commanded forces that were responsible for massacring civilians. + + + +Venezuela’s newly elected parliament, the first to be controlled by the opposition to the country’s populist regime in 16 years, was sworn in. Four MPs were barred from taking their seats pending the outcome of an investigation into electoral fraud. The opposition Democratic Unity alliance defiantly swore three of them in, restoring the two-thirds majority it won in December’s election. The new head of the National Assembly called for the removal of President Nicolás Maduro within six months. See article. + +Bad tidings + +Germany’s chancellor, Angela Merkel, vowed to prosecute the men who formed mobs that molested women during new-year celebrations in Cologne. Over 100 women filed complaints claiming they had been groped, robbed and in one case raped. Police described the perpetrators as having “north African or Arab” appearances, further inflaming tensions over Germany’s acceptance of over 1m Middle Eastern refugees. See article. + +Sweden introduced border controls on the Oresund bridge that links it to Denmark as part of an effort to slow down the influx of Middle Eastern asylum applicants. Denmark responded by bringing in checks at its border with Germany. Business leaders warned that the controls threaten to undo the region’s economic integration. + +Catalonia’s president, Artur Mas, announced that he will schedule new elections, after failing to form a government to carry out his programme of declaring independence from Spain. + +The far-right government in Poland passed a media law that dismisses the heads of the public broadcasters and puts them under the control of the treasury minister. It is the latest in a series of steps by the Law and Justice party to gain control over the country’s courts, intelligence services and public media. + +David Cameron, Britain’s prime minister, confirmed that the government will take a clear position in a referendum, expected this year or next, on whether to leave the European Union, but that he would let ministers hold a “different personal position”. + +Jeremy Corbyn, the leftist leader of Britain’s opposition Labour Party, tightened his grip on the party in a reshuffle of the shadow cabinet, promoting an opponent of Trident nuclear weapons to defence. The big surprise was that Hilary Benn, who gave a stirring speech in favour of air strikes in Syria, to the obvious displeasure of Mr Corbyn, kept his job in foreign affairs. + +Tears, it seems, are not enough + + + +Citing the long list of mass shootings in America Barack Obama said he would use his presidential powers to bypass Congress and ensure that most people who sell guns are registered. Even this very limited gun-control measure was met with stiff resistance from the National Rifle Association. Gun sales are expected to soar, as they have each time Mr Obama has spoken of gun restrictions. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21685517-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Jan 9th 2016 | From the print edition + +Global stockmarkets started the new year with a bad hangover, induced by more turbulence in China’s markets. The Shanghai and Shenzhen Composite index fell heavily during the week, causing trading to be automatically suspended at least twice, after the release of more dismal data on manufacturing and other gloomy economic news. Investors were also unnerved by the looming end of a ban on share sales by big investors; the authorities quickly drafted permanent restrictions on such sales. + +How low can it go? + +Oil prices also weighed on market sentiment. Brent crude traded at under $35 a barrel, the lowest in more than a decade, after figures showed oil stockpiles increasing in America. Any lingering expectations that OPEC would agree to cut production in order to raise prices were dashed by the diplomatic row between Saudi Arabia and Iran. + +Annual headline inflation in the euro zone remained unchanged at 0.2% in December. Markets had expected it to rise after months of stimulus policies that the European Central Bank had brought in to try to lift inflation to its 2% target. + +In Sweden, which is also battling persistently low inflation, the board of the central bank gave the governor the power to intervene directly in currency markets if the krona continues to strengthen. The Riksbank has already lowered its benchmark interest rate to -0.35% and expanded its quantitative-easing programme. + +Some MPs in Britain’s Parliament called for a hearing into the decision, announced on New Year’s Eve, by the Financial Conduct Authority to drop its inquiry into banking pay and culture. The regulator said that rather than pursue an industry-wide investigation, it would work with individual banks to promote “the delivery of cultural change”. The FCA’s critics claim it has bowed to pressure from the government. + +Vroom! Vroom! + + + +Carmakers sold 17.47m light vehicles in the United States in 2015, their best year ever, beating a record that had stood since 2000. This was driven mostly by surging sales of light trucks at the expense of mid-size and compact cars, in part because the lower price of petrol has reduced the cost of running larger vehicles. The car industry is confident that 2016 will be another record year, though with so many changes afoot in the business some wonder if sales will now hit a plateau. + +Underlining how incumbent carmakers are having to adapt to the challenges posed by new technologies, General Motors said it was investing $500m in Lyft, a ridesharing firm and Uber’s main rival. GM and Lyft will work together on projects to develop self-driving taxis and to create hubs across America where people who want to work for Lyft as drivers can rent a car from GM. + +Tesla Motors had its best quarter in the last three months of 2015, delivering 17,400 cars to customers, some of whom had placed orders three years ago. However, the electric-car company’s share price fell sharply, mainly over worries that it will not be able to ramp up production to meet the growing backlog of orders for its new Model X. + +Volkswagen’s troubles deepened in America, where the Justice Department filed a civil lawsuit seeking damages for its installation of software in cars designed to cheat emissions tests. The penalties from the various complaints lodged in the suit potentially amount to $48 billion. See article. + +Sainsbury’s, a British supermarket chain, revealed that it had made a takeover offer for Home Retail Group, but had been rejected. HRG owns Argos, which used to sell its wares primarily through a hefty shopping catalogue but has beefed up its online and same-day delivery business. Those operations would benefit Sainsbury’s as it and others face increased competition from Amazon’s entry into Britain’s online groceries market. It is considering whether to pursue its bid. + +Marc Bolland said he would step down as chief executive of Marks & Spencer. He has spent six years in the job trying to turn around the struggling British high-street retailer, which had a bleak Christmas trading period. + +Twitbook + +Twitter’s share price dipped amid reports that it is contemplating extending the maximum limit of characters in tweets from 140 to 10,000. The Twittersphere lit up upon news of the possible change, with many tweeters griping that it would end the short, pithy comments for which Twitter is known and turn the service into something more akin to Facebook. That may be what Twitter’s executives are hoping for as they look for ways to boost revenue. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21685516-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Jan 9th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21685518-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Saudi Arabia: The Saudi blueprint + +North Korea’s nuclear weapons: Another bombshell + +Puerto Rico: The bill will come due + +China’s market meddling: The control quagmire + +The EU’s rotating presidency: Stop the music + + + + + +Articles Sections Next + +Saudi Arabia + +The Saudi blueprint + +The desert kingdom is striving to dominate its region and modernise its economy at the same time + +Jan 9th 2016 | From the print edition + + + +FOR years Saudi Arabia seemed inert, relying on its vast oil wealth and the might of its American patron to buy quiet at home and impose stasis on its neighbours. But oil prices have tumbled, America has stood back from leadership in the Middle East, the region is on fire and power has shifted to a new generation—notably King Salman’s 30-year-old favoured son, Muhammad bin Salman. A sandstorm of change is rousing the desert kingdom. + +The visible result is the brutal treatment of dissent at home and assertiveness abroad that has just been on chilling display. On January 2nd Saudi Arabia executed 47 people. Most of them were terrorists linked to al-Qaeda but some, including a prominent Shia cleric, simply called for the fall of the ruling House of Saud. After Iranians set fire to the Saudi embassy in Tehran in protest, the kingdom cut diplomatic, trade and air links, a grave and foolish escalation in a febrile region. + +Away from the headlines, however, a different assertiveness could prove equally consequential. Prince Muhammad has drawn up a blueprint designed to throw open Saudi Arabia’s closed economy and government—including, he says, the possible sale of shares in the national oil firm, Saudi Aramco. + +Coupling geopolitical swagger with sweeping economic change is a gamble. The outcome will determine the survival of the House of Saud and shape the future of the Arab world. + +What is Arabic for Thatcherism? + +The plunge in the price of oil, from $110 a barrel in 2014 to less than $35 today, was partly because Saudi Arabia seems determined to protect its share of the oil market. Nevertheless, low prices are a time-bomb for a country dominated by oil and a government that relies on it for up to 90% of its revenues. The budget deficit swelled last year to a staggering 15% of GDP. Although the country has $650 billion of foreign reserves, they have already fallen by $100 billion. + +When oil prices fell in the 1990s, the Saudis simply borrowed heavily. They were saved when China’s boom sent commodity prices soaring again in the 2000s. This time no one, including the Saudi rulers, expects a return to triple-digit oil prices. Instead, they acknowledge that the economy must change. Speaking to The Economist this week (see Briefing), Prince Muhammad laid out a blueprint for reform that amounts to a radical redesign of the Saudi state. + +The first step is fiscal consolidation. The goal is to eliminate the budget deficit in the next five years, even if the oil price stays low. Though there is much flab to cut, that is still a perilous undertaking which means dismantling the system according to which petro-cash, not taxes, pay for free education and health care as well as highly subsidised electricity, water and housing. More than money is at stake: this largesse has disguised how far the economy is chronically unproductive and dependent on foreign labour. It has been too easy for Saudis to avoid working, or to snooze away in government offices. + +The new leadership has made a start. Spending cuts in the last months of 2015 stopped the deficit from soaring to more than 20% of GDP. The 2016 budget includes steep rises in the prices of petrol, electricity and water (though they remain heavily subsidised). The prince pledges to move to market prices by the end of the five-year period. He is also committed to new taxes, including a value-added tax of 5%, sin taxes on sugary drinks and cigarettes, and levies on vacant land. + +Recalibrating taxes and subsidies is only the first step. Roughly 70% of Saudis are under 30. At the same time, two-thirds of Saudi workers are employed by the government. With the workforce projected to double by 2030, the country will prosper only if the sleepy statist economy is turned on its head, diversifying from oil, boosting private business and introducing market-driven efficiencies. + +The government plans to do this by getting the state out of all but its essential functions. From health and education to state-owned companies, the new Saudi leadership is looking for privatisation and the private provision of public services. It has plans for charter schools and an insurance-based, privately provided health-care system. It is looking at the complete or partial privatisation of more than two dozen agencies and state-owned companies, including the national airline, telecoms firm and power generator. The biggest fish of all is Aramco, a national icon and almost certainly the world’s most valuable firm. The prince favours floating a minority stake in Aramco and opening its books to the world. He is urging his team to come up with a plan within months (see article). + +Could such a blueprint become reality? Words are cheap and the obstacles huge. Saudi Arabia has promised reform before, only for its efforts to fizzle into insignificance. Its capital markets are thin and the capacity of its bureaucracy thinner. The investment that it needs in its young people, its non-oil industries, its tourism infrastructure and much else will not come cheap. It will not happen unless investors believe in the country’s future. That confidence will be hard to build. + +The best-laid plans + +One reason is that austerity on an almost Greek scale will be difficult and unpopular (though the examples of Syria and Libya are a deterrent against outright rebellion—see page 41). The state has provided generously partly to make up for the lack of political rights. Yet the royal family is reluctant to open the pressure valves that might make cuts more palatable. For all its economic urgency, the new regime shows no interest in political reform. Recent elections in which women were allowed to vote and to stand for (largely powerless) municipal councils were the idea of the late king. Nor is there a sign that the religious absolutism Saudi Arabia shares with its enemy, Islamic State, will soften. Even before the latest round, executions were at a 20-year high. Prince Muhammad waxes lyrical about the new generation. But he has little appetite to take on the conservative clergy over, say, the ban on women driving. + + + +An interactive guide to the Middle East's tangled conflicts + +The other obstacle is geopolitics. As Iran has become more assertive, the Saudis have stepped in as the champion of Sunni Muslims. They have confronted Iranian-supported allies such as the Houthis in Yemen and Bashar al-Assad in Syria, as well as Shia malcontents at home and in neighbouring Sunni-ruled countries like Bahrain. + +The new leadership argues that stability requires it to send a signal to terrorists (hence the executions). It feels obliged to defend its interests by resisting Iran which, it says, is bent on recreating a Persian empire. The argument is flawed: Saudi Arabia instead risks leading one side in a Muslim sectarian struggle it can neither win nor afford. The war in Yemen is a morass; support for Egypt and other Sunni allies is a drain. Defence and security already take over 25% of government spending and will eat up a growing share of a shrinking budget. Regional tensions will also deter private investment. Who would put trillions into an isolated economy in a region in turmoil? + +The new regime seems to regard boldness at home and abroad as signs of a strong Saudi Arabia. Yet, though a muscular foreign policy plays well among Saudis, the economy will not thrive if the royal family ends up inflaming its region and blocking social reform at home. If Prince Muhammad is to remake his country, not wreck it, he needs to understand that. + +Correction: the original version of this article stated that the country had 29m-plus Saudis. This has been corrected. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21685450-desert-kingdom-striving-dominate-its-region-and-modernise-its-economy-same/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +North Korea’s nuclear weapons + +Another bombshell + +After Pyongyang’s fourth nuclear test, China must change its tune towards its outrageous ally + +Jan 9th 2016 | From the print edition + + + +THE declaration on January 6th that North Korea had detonated its first hydrogen bomb was met with a show of joy on the streets of Pyongyang, its capital, and with despair in most others. America, Japan, South Korea and even China protested. Outsiders picked up the magnitude-5 earthquake caused by the blast, and put its epicentre at Punggye-ri, site of an underground complex in the north-east, near China, where three previous tests, in 2006, 2009 and 2013, took place. + +A fourth nuclear test had been expected. But most experts dismiss the claim that this was a hydrogen bomb of the sort found in advanced nuclear arsenals. Thermonuclear weapons, far more powerful than the atomic kind, are almost certainly beyond the North’s know-how. The explosion was roughly as big as the atom bomb detonated in 2013; even a failed detonation of an H-bomb would be more powerful. At a push, the North may have tested a “boosted-fission” weapon that uses a fusion additive to achieve a bigger bang. If so, it would mark a next step in the North’s nuclear programme—and a serious one. + +Come on, China, change North Korea + +A second nuclear test only four years into the rule of Kim Jong Un, the odious young head of the mafia family that controls North Korea, is a sobering reminder of the progress that three generations of Kims have made in expanding their nuclear capability—despite outside efforts to curb it. This week South Korea suggested that the North had also tested a submarine-launched ballistic missile in December. Such developments pose little immediate threat to the outside world. Few think that North Korea has yet managed to miniaturise its nuclear weapons to fit them onto missiles. But the indications are that its capabilities are growing faster than outsiders expected. + +The UN Security Council rushed to meet this week, condemning the test. Prodded by America, it is expected to pass a resolution calling for a fresh round of sanctions. Many will think this is just for show. After all, earlier sanctions following tests have hardly deterred a regime that seems set on possessing nuclear weapons. Indeed, they have allowed the Kim regime to claim that North Korea needs nukes to defend itself against enemies, led by America, that are bent on its destruction. The North’s state news agency said this week that the test had “guaranteed the eternal future of the nation”. + +When dealing with North Korea, it is easy to despair. Dramatic remedies, such as trying to remove Mr Kim by force, are off the table because the risk is too great. Barely 50 kilometres from North Korea, 25m South Koreans live in greater Seoul, one of Asia’s most dynamic megalopolises. On the other side of the border are 1m North Korean troops and countless artillery pieces, with which the North has threatened to turn the southern capital into a “sea of fire”. + +Even so, fresh sanctions should be just the start in confronting North Korea’s nuclear-tipped threats. Not enough has been done to stem the flow of hard currency to a regime that even uses its diplomats to ferry illicit cash to Pyongyang. Financial sanctions can be made to bite deeper by more closely monitoring banking transactions. And the Vienna convention should not give cover to envoys engaged in criminality. + + + +Peninsula of provocation: A timeline of clashes between North and South Korea + +Under Barack Obama, America has let its North Korea policy drift. But the country that can do most is North Korea’s big neighbour and supposed friend, China. Its banks are the main conduit for North Korean money. More worryingly, China does next to nothing to stop the flow of nuclear technology between rogue states and North Korea. China’s sway over its neighbour is sometimes exaggerated, yet it is an economic lifeline, providing the regime with aid and trade. China is unhappy at the prospect of a nuclear-armed North Korea; but it is even more worried that the regime might collapse, possibly leading to a takeover by South Korea and America and the flight of millions of desperate North Koreans across its border. + +Ideally, China would abandon the murderous Mr Kim. But even if it is unwilling to go that far, it can use the billions in aid and subsidised trade that it gives North Korea to press change upon the young dictator. Some may argue that squeezing the subsidies could hurt the poor, many of whom go hungry; it would also undermine the country’s budding class of private traders and entrepreneurs, who are its best hope for the future. But the aid and subsidised trade it has extracted have mainly enriched the Pyongyang elite and financed the nuclear programme. They would be the main victims of Chinese pressure—especially if the elite could no longer travel to China. + +For decades North Korea has been adept at shaking down outsiders: first the Soviet Union, sometimes America and now China. Before it is too late, Beijing should stop subsidising a vile dynasty that gives nothing but headaches in return. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21685451-after-pyongyangs-fourth-nuclear-test-china-must-change-its-tune-towards-its-outrageous/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Puerto Rico + +The bill will come due + +Congress should allow Puerto Rico to declare bankruptcy + +Jan 9th 2016 | From the print edition + + + +FEW words raise as many hackles in America as “bail-out”. To left and right alike, it speaks of waste and corruption: the exploitation of hardworking taxpayers by the rich and the feckless. That is bad news for Puerto Rico, a small, broke American territory in the Caribbean which missed payments on some of its debt this week (see page 33). + +Barack Obama wants Congress to amend its laws to let Puerto Rico declare bankruptcy and to stump up some money to help it through a transition that will inevitably be painful. Righteous lawmakers harrumph that this sort of bail-out would reward the island’s profligacy. Its tattered accounts stem in part from a bloated public sector, unaffordable pension promises, unduly restrictive labour laws and a tax code that is full of holes. They fret, too, that it would set a bad precedent. Many of America’s 50 states have big debts and even bigger unfunded pension liabilities. There is no bankruptcy procedure under American law either for states or for territories like Puerto Rico. If Congress throws Puerto Rico a lifeline, the theory goes, spendthrift places like Illinois will soon request one. + +These arguments are unfair. Congress itself lumbered the island’s economy with its biggest burdens. It is Congress, after all, that imposed America’s minimum wage on Puerto Rico, even though local workers are less productive than those on the mainland. Congress has also set some welfare payments at relatively high levels. And, again, Congress imposed costs on Puerto Rico by banning foreign vessels from carrying goods between American ports, making it unnecessarily expensive to ship anything to or from the island. + +The rights and wrongs of write-downs + +Opponents’ arguments are also impractical. One way or another, the federal government will end up on the hook for the disarray in Puerto Rico. In the past decade the territory’s economy shrank by 14%. Employment is down by 12%. Workers have responded by moving to the mainland, where jobs are easier to find. Over the past decade the population has dwindled by 9%, and the exodus is accelerating. The big spending cuts and tax rises still needed to balance the books would lead even more Puerto Ricans to emigrate, shrinking the tax base yet further. + +A write-down, accompanied by measured spending cuts and reforms, would right the island’s finances. Yet unless Congress allows both the territory’s government and its agencies to declare bankruptcy, that will almost certainly not happen. The island’s constitution, which Congress can override, guarantees that certain categories of bonds will be paid in full. Meanwhile, the constitution also protects government pensions—a potential contradiction. Without Congress’s help, a long and messy court battle, accompanied by worsening economic conditions, widespread hardship and mass emigration, seem inevitable. At some point, the federal government would surely have to step in. + +As for the argument about precedent, it is not clear that Congress has the power to create a bankruptcy regime for states, which are sovereign entities. Puerto Rico’s laws, by contrast, are more at Congress’s disposal. + +Changing them would not just spare the island’s economy grievous harm. An orderly bankruptcy would allocate some losses to bondholders—as should happen when a jurisdiction cannot pay its bills—but might still enable them to recover more money than a protracted legal wrangle. And it would save Congress from shelling out more in federal aid later. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21685453-congress-should-allow-puerto-rico-declare-bankruptcy-bill-will-come-due/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +China’s market meddling + +The control quagmire + +A desire to limit volatility is giving rise to even bigger risks + +Jan 9th 2016 | From the print edition + + + +“LOVE is like war: easy to begin but very hard to stop,” observed H.L. Mencken, an American writer. Less poetically, he might have added market meddling to the mix. China had planned this week to dismantle some of the rescue measures put in place when the stockmarket crashed last summer. That prospect helped to spook investors: stocks fell by 7% on January 4th, the first trading day of 2016, their worst-ever start to a new year. Chinese regulators are once again wading in, however haplessly—on January 7th, shares dropped by another 7%. + +So what, you might ask. The unruliness of China’s stockmarket is not news. And for all the headlines generated by its tumult, it is a poor indicator of the economy’s health. Growth was already slowing early last year when share prices raced to vertiginous heights. Parts of the economy—the property market and consumer spending—have actually improved since stocks cratered by more than 40% during the summer (although manufacturing remains weak). Companies raise little financing from the market and savers store little wealth in it. + +Yet the stockmarket is the clearest expression of the fragile state of financial reform in China. The government has declared that it will relax its grip on the economy and give more sway to market forces. Doing just that, first in agriculture and then in manufacturing, is an important reason for the remarkable growth of the past 35 years. But in finance, the desire for the more efficient allocation of capital clashes with the Communist Party’s reflexive instinct for control. + +It seems that a falling stockmarket sends too transparent a signal of negative sentiment for officials to bear. The fingerprints of the “national team”—a motley crew of state-owned financial institutions—were all over the buy orders that swooped in when the market tumbled. The regulator was supposed to end a ban this week on share sales by big investors. Now it has drafted permanent restrictions, in effect telling investors that they are welcome to buy shares, but not to sell. It would be hard to conceive of a better plan for scaring money away. The poor design of circuit-breakers, trading halts ostensibly designed to calm the market, has added fuel to the fire. + + + +Daily dispatches: China's stockmarket mess + +The tension between reform and control is also evident in the currency market. The central bank has started to back away from obsessive management of the yuan’s exchange rate. But the more leeway that it creates for trading the currency, the bigger its headache. The central bank judges that the yuan is more or less at fair value; the market disagrees and has pushed it steadily lower. Selling dollars to prop up the yuan so as to make for an orderly depreciation, China has run down its foreign-exchange reserves by some $300 billion over the past half-year. The government still has a plump cushion, but its reserves are not limitless. Accepting more volatility, even if that means a sharper depreciation now, would be better. + +Control peak + +The government’s hunger for control is now clouding the broad economic picture. Burdened by the mountain of debt that it has accumulated over the past decade, China needs to begin deleveraging. That in turn means tolerating slower growth, at least for a while. Instead, all indications are that the government will set its annual growth target at 6.5% for the next five years in a plan to be unveiled in March. That is above what most analysts think it can credibly achieve without piling on yet more debt and bringing closer a real economic crisis. China has reached a point in its development where it needs to move faster in ceding power to the market—over shares, its currency and the growth rate. Unless the government gives up more control now, it risks some day losing it altogether. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21685452-desire-limit-volatility-giving-rise-even-bigger-risks-control-quagmire/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The EU’s rotating presidency + +Stop the music + +Every six months the Council of the European Union gets a new president. This is a recipe for dysfunction + +Jan 9th 2016 | From the print edition + + + +MOBUTU SESE SEKO, the late dictator of Zaire, used to reshuffle his cabinet every six months or so to show ministers who was boss. (To reinforce the point, he sometimes also slept with their wives.) Brussels is no Kinshasa. Yet it shares Mobutu’s love of musical chairs. The presidency of the Council of the European Union, the forum where national governments discuss and negotiate EU laws, rotates every six months. On January 1st the Netherlands took the chair from Luxembourg (see Charlemagne). Brussels creates a song and dance about each handover, but the system makes no more sense than Mobutu’s. + +Each country that assumes the presidency sends lots of civil servants to Brussels, plus various nationally flavoured goodies and trinkets. (The Cypriots gave away 650kg of halloumi cheese.) But the greater cost is to the quality of EU lawmaking. Some countries that take up the presidency lack the diplomatic experience and political clout to broker agreements. And the six-month term is typically too brief for the tortuous process of European consensus-building. + +Worse, a recalcitrant president can slow down or derail talks. During its presidency Luxembourg, eager to protect its financial-services industry, shelved critical moves to implement regulations on Europe’s shadow banking that had been drawn up by the G20 group of big economies. Spain delayed discussions on banking supervision to avoid exposing the flaws of its national supervisor; it was only after Belgium took over that a deal was quickly sealed. The Dutch, who want to grapple with the refugee crisis, will have precious little time to do so. After them come the Slovaks, whose prime minister, Robert Fico, opposes any Europe-wide deal on migrants. + +Defenders of the status quo make a couple of arguments. National governments, they say, gain a greater sense of responsibility for EU affairs when they are periodically placed in charge of them. Their civil servants get a chance to become familiar with the machinery of Brussels. These points were valid when the EU had just six members. They no longer hold in a union of 28 where each country must wait 14 years to take the reins. Enlargement has made the old system unworkable. + +The EU’s Lisbon treaty, which came into force in 2009, recognises this. It has sensibly taken away some of the tasks that used to be handled by the rotating presidency. The European Council, the gathering of the EU’s national leaders, now elects its own president (currently Donald Tusk). It also appoints the EU’s foreign-policy chief. Still, from home affairs to finance, energy, telecommunications and the budget, plenty of areas are left to the rotating presidency’s wheel of dysfunction. + +Cure the hangover + +The rotating presidency is one of several stubborn relics of the EU’s past. Like the European Parliament’s wasteful second chamber in Strasbourg, scrapping it would require a treaty change. Some new member states have yet to enjoy presidential status, but by 2020 only Croatia will remain, and it should get a turn soon enough. Europeans are sure to tweak the treaties again; they do so every five years, on average. Ending this self-defeating system will then be possible. + +A better alternative would be for each council working group to elect its own chairman. The European Parliament’s committees pick their heads this way, as does the Eurogroup of euro-zone finance ministers. Council bosses with mandates from their peers and direct lines to European capitals would have greater clout, and be more accountable. The inevitable horse-trading might mean that the best candidate would not always win. But, although Mobutu was no fan of elections, they work better than any plausible alternative. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21685454-every-six-months-council-european-union-gets-new-president-recipe/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On the death penalty, Italy, Myanmar, capitalism, antiques, RCTs, South Africa, SuperBosses, populism: Letters to the editor + + + + + +Articles Sections Next + +On the death penalty, Italy, Myanmar, capitalism, antiques, RCTs, South Africa, SuperBosses, populism + +Letters to the editor + +Jan 9th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Finish the sentence + +As a former prosecutor, I found your story on the ongoing demise of the death penalty in America to be spot-on (“Who killed the death penalty?”, December 19th). The practice is barbaric, and the United States should simply not be in the small club of countries that executes its citizens. You noted the traumatic effect that imposing the death penalty can have on jurors. I have had conversations with a Swedish friend who considers it unimaginable that he would be asked to sit in a room with other Swedes to determine if a fellow Swede lives or dies. + +Indeed, the European Union could hasten the demise of death row by refusing to admit Americans who are involved with the death penalty. A travel ban would extend to judges who sentence convicts to death, as well as the prosecutors who sought the sentence and even the staff in prisons where executions are carried out. + +A ban of this magnitude would affect those who feel they have no role, or a limited one, in the death penalty, but who are all either active participants or enablers in the process. It would cause them to think through their role in that process, perhaps for the first time. Is a person truly more morally pure if he, as a prosecutor, files legal papers to seek and obtain the death penalty because he has nothing to do with the ultimate application of the sentence? + +MICHAEL BRAUTIGAM + +Cincinnati, Ohio + + + + + +Evading the question + +Your article on a proposal to triple the limit on cash transactions in Italy was welcome (“Show me the money”, December 5th). The current limit of €1,000 ($1,090) is meant to discourage tax evasion. Riparte il futuro, the largest non-political anti-corruption group in Italy, with over 1m users, has launched an online campaign to ask the government not to raise it. Our petition has gained 50,000 signatures and received the endorsement of many experts. + +When he presented his proposal, Matteo Renzi, the prime minister, asked for contrary evidence. We published a detailed report with unequivocal data supporting our view. The government has not yet responded. + +FEDERICO ANGHELÉ + +Riparte il futuro + +Rome + + + + + +The problem with Myanmar + +I am appalled that you chose Myanmar as your country of the year (“Most favoured nation”, December 19th). You celebrated Myanmar holding an election at which people freely elected their leaders. Yet the Rohingya weren’t allowed to vote or run for office. Putting a remark in parenthetical comment that the Rohingya are treated “disgracefully” is an insult to the thousands who have perished at the hands of government-sponsored violence. They are one of the most persecuted minorities anywhere in the world. Persecuted, by the way, by those who claim to be followers of Buddhism, a religion mostly associated with peace. + +M.Y. DADANI + +Plano, Texas + + + + + +The wealth of nations + +* Your article on anti-competitive practices in Latin America highlights that in that region the private sector talks of the virtues of free markets but too often practises the vices of monopolies and cartels (Bello, December 5th). This is of course absolutely right, but it is not solely a Latin American phenomenon; it is in fact inherent in the capitalist economy. + +It was none other than Adam Smith who denounced the fallacy of regarding the free market and private enterprise as one and the same thing. His superb prose on the topic is well worth recalling at some length: “The interest of the dealers ... in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To ... narrow the competition, is always the interest of the dealers... The proposal of any new law or regulation of commerce which comes from this order, ought always to be listened to with great precaution ... It comes from an order of men ... who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.” + +CARLOS FORTIN + +Research Associate + +Institute of Development Studies + +University of Sussex + +Brighton + + + + + +Antiques treasured + +I disagree with your take on the antiques trade (“Out with the old”, December 19th). It is not dying, merely changing, and its future is bright. The traditional definition of an “antique” being at least 100 years old is restrictive and outmoded. The New York Armory Winter Antique Show now allows items from as late as 1969. + +You implied that the popularity of mid-century modernism explains why antiques are out of fashion. However, one may see in this a sign that the younger generation still appreciates old things, just different things from the ones that their parents appreciated. Thirty-somethings are expanding their tastes; the heavy hand of mid-century is lifting and early 20th-century modernism and Art Deco styles are creeping in. + +A more eclectic use of styles in interiors is indeed returning. In the Architectural Digest 2016 forecast, several interior designers noted a trend away from mid-century period rooms towards more traditional styles mixed with the modern. Robert Stilin, a designer, even used the term “brown furniture” in a positive light. Not quite the definitive death that many old-guard dealers are predicting. + +CHRISTA PIRL + +Christa Pirl Interiors & Furniture + +New York + + + + + +Medicine v public policy + +* Your recent leader (“In praise of human guinea pigs”, December 12th) argues strongly in favour of using randomised controlled trials (RCTs) in public policy as they are used in medicine. You are insufficiently cautious in pointing to the serious methodological concerns around using RCTs as a basis for public policy analysis and formation. Rather, scanting the many serious issues raised by scholars, you conclude that “the biggest problem with RCTs is that they are not used nearly often enough”. + + + +We would argue that the biggest problem is the difficulty in applying a methodology developed in medicine, where test subjects share the same genetic blueprint and new treatments are developed at the molecular level, to the social sciences, where our models are nowhere close to the precision of theories in the natural sciences and where there are many unobserved and unobservable differences between human beings that can confound the best designed RCT. + + + +In the language of statistics, this is known as the problem of “generalisability” or “external validity”. In layman’s terms, how and to what extent can one use the results of a randomised trial to inform policy in another place or at another point in time? This question is at the frontier of research, and preliminary findings by one of us (Rajeev Dehejia and co-authors) suggests strongly that extreme caution must be exercised in this regard. + + + +What is more, unlike the natural sciences, social scientists have an array of increasingly sophisticated data-based methods and data sets with which to address public policy questions. By all means add RCTs as a new tool in our kit, but in our enthusiasm to embrace what is currently fashionable, not lose light of their limitations, nor discard classical tools of analysis already at our disposal. + + + +RAJEEV DEHEJIA + +Robert F. Wagner Graduate School of Public Service + +New York University + +National Bureau of Economic Research + +Cambridge, Massachusetts + + + +VIVEK DEHEJIA + +Carleton University + +Ottawa, Canada + +IDFC Institute, Mumbai, India + + + + + +Teaching language + +Much of what you say about South Africa’s Stellenbosch University is true and uncontroversial (“The ivory tower is too white”, December 5th). There has been a campaign to replace Afrikaans as the main teaching language on campus with English. But this could disadvantage poor Afrikaans-speaking people in higher education, especially the coloured population. + +The irony is that by wishing to move away from the European culture that pervades South Africa’s ivory towers, having English as the lingua franca makes it more likely that European cultural and intellectual hegemony will remain. + +PROFESSOR DAVID COLDWELL + +Johannesburg + + + + + +Is it a bird? Is it a plane?… + + + +I enjoyed Schumpeter’s musings on the rise of the SuperBoss (December 19th). Not only are senior executives hyperactive, but almost everybody that works for them has been infected by the SuperBoss virus. Underlings such as myself are constantly bombarded by “tips” from our bosses about how to be just like them. If I were to follow even a tenth of these suggestions, which always seem to have a passive-aggressive threat buried within them, I would get no work done. Even weeding through them and exploring one or two eats up 60% of my day. It is as though every executive in the 15 or so layers of management is competing to be the SuperBoss. A lot of people are to blame for this. Publications like The Economist play a role in promoting it. I applaud you for now taking a stand against it. + +As an addendum to Peter Drucker’s quote, I’ve discovered this to be true: in battles and unpredictable disasters we need heroes. In business a hero is a single point of failure. + +MARK MARTINO + +Kirkland, Washington + +In “Elizabeth”, a film from 1998 about Elizabeth I, Sir Francis Walsingham says that “All men need something greater than themselves to look up to and worship. They must be able to touch the divine here on Earth”. The cult of overperforming is not a new fad, even if it has a new disguise. + +ANNA PIETKA + +Warsaw + + + + + +Mencken on populism + +The spate of fear-mongering from populist politicians in America and Europe is an old political strategy (“Enough said”, December 19th). H.L. Mencken put it succinctly almost a century ago: “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety), by menacing it with an endless series of hobgoblins, all of them imaginary.” + +GENE TINELLI + +Janesville, New York + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21685429-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Saudi Arabia: Young prince in a hurry + +Saudi Aramco: Sale of the century? + + + + + +Articles Sections Next + +Saudi Arabia + +Young prince in a hurry + +Muhammad bin Salman gambles on intervention abroad and radical economic change at home. But forget about democracy + +Jan 9th 2016 | DIRIYA | From the print edition + + + +THE Al Sauds once again hold court in Diriya, their ancestral capital that was laid waste by the Ottoman empire and is being lovingly restored as a national tourist attraction. This is where the Al Sauds forged their alliance in the 18th century with a Muslim revivalist preacher, Muhammad Ibn Abdel-Wahhab—a pact that to this day fuses the modern Saudi state with the puritanism of Wahhabi Islam. And this is where Muhammad bin Salman (pictured), the 30-year-old deputy crown prince who is the power behind the throne of his elderly father, King Salman, receives foreign guests in a walled complex. + +One side of his reception room is decorated with the spears, swords and daggers of tradition. The other is dominated by a large television, showing the casual horrors of the Middle East and the repercussions of his own actions play out on rolling news: the execution of a prominent Shia cleric, Nimr al-Nimr, (and 46 others accused of terrorism and sedition, mostly linked to al-Qaeda jihadists) led to a mob ransacking the Saudi embassy in Tehran and, in retaliation, to the kingdom severing diplomatic relations with Iran. + +Talking late into the night with the news left on throughout, Prince Muhammad discusses his country’s interventionist foreign policy and its uncompromising response to terrorism and sedition. Asked whether the kingdom’s actions were stoking regional tensions, he said that things were already so bad they could scarcely get any worse. “We try as hard as we can not to escalate anything further,” he says; and he certainly does not expect war. But for his entourage, Saudi Arabia has no choice but to stop Iran from trying to carve out a new Persian empire. + +If his defence of Saudi foreign policy was unrepentant, even more striking was his ambition to remake the entire Saudi state by harnessing the power of markets. No economic reform is taboo, say his officials: not the shedding of do-nothing public-sector workers, not the abolition of subsidies that Saudis have come to see as their birthright, not the privatisation of basic services such as education and health care. And not even the sale of shares in the crown jewel: Saudi Aramco, the secretive national oil and gas producer that is the world’s biggest company (see article). + +At 80, the newish King Salman is part of the same gerontocracy that has run the country for decades. But he has entrusted much of his realm to Prince Muhammad, who is in a hurry to awaken it from its torpor. He knows that, for all its ostentatious luxury, the country faces huge problems. The oil price has plunged. Arab states all around have collapsed. In the vacuum, Iran, the Shia power that has long alarmed Sunni Arabs, has spread its influence across the region, particularly through the militias it grooms—in Lebanon, Iraq, Syria and most recently in Yemen, Saudi Arabia’s underbelly. The Arab world is confronted not just by a Shia Crescent, “but by a Shia full moon”, says one confidant of the prince. As well as Shia militants, Saudi Arabia also faces resurgent Sunni jihadists: a revived al-Qaeda in Yemen to the south, and Islamic State (IS) in Iraq and Syria to the north. Both seek to lure young Saudis raised on the same textbooks and homilies that the jihadists use. + +Pillars of the House of Saud + +The Al Sauds have survived by making three compacts: with the Wahhabis to burnish their Islamic credentials as the custodians of the holy places of Mecca and Medina; with the population by providing munificence in exchange for acquiescence to absolutist rule; and with America to defend Saudi Arabia in exchange for stability in oil markets. + +But all three of these covenants are fraying. America is semi-detached from the Middle East. The plummeting price of oil, which provides almost all of the government’s revenues, means the old economic model can no longer sustain the swelling and unproductive population. And the alliance with obscurantists brings threats, because they provide intellectual sustenance to jihadists, and form an obstacle even to modest social reforms that must be part of any attempt to wean the country off oil and create a more productive economy. + +Not surprisingly, Saudi Arabia’s many critics have dusted off their obituaries of the House of Saud. But for Prince Muhammad the lesson of the Arab spring, and of history, is that regimes that lack deep roots are doomed to be swept away; by implication the Al Sauds are here to stay. + +Yet he knows that change must come, and fast. He has injected new energy into government, and is taking huge gambles. What he lacks in experience and foreign travel, he compensates for with confidence, focus and a battery of consultants’ reports. He reels off numbers and policies with ease, pausing only to take a call from John Kerry, America’s secretary of state. He speaks in the first person, as if he were already king even though he is only second in line. Over five hours King Salman is mentioned once; his cousin, the crown prince, Muhammad bin Nayef, does not figure at all, though he is in charge of internal security and may be biding his time. + +No crisis wasted + +Such is Prince Muhammad’s frenetic activity that officials reel and outsiders regard him as a bullock in a china shop. Just weeks after his father made him defence minister, fighter jets from Saudi Arabia, the Arab world’s richest state, led a coalition into action against the Houthi militias of its poorest, Yemen. To critics who say he was rash to intervene in a land that has bloodied foreign armies before, Prince Muhammad says the action, if anything, came too late: the Shia Houthis, with Iran’s help, had taken the country and sophisticated weapons, such as jets and Scud missiles. Scuds are occasionally fired at Saudi targets; thousands of Saudis living near Yemen have been evacuated to avoid rockets and artillery fire. In Syria he plans to send special forces against IS. (The crown prince is said to be more cautious, fearing blowback from jihadists). + + + +Prince Muhammad’s most dramatic moves may be at home. He seems determined to use the collapse in the price of oil, from $115 a barrel in 2014 to below $35, to enact radical economic reforms. This begins with fiscal retrenchment. Even after initial budget cuts last year, Saudi Arabia recorded a whopping budget deficit of 15% of GDP. Its pile of foreign reserves has fallen by $100 billion, to $650 billion. Even with its minimal debt of 5% of GDP, Saudi Arabia’s public finances are unsustainable for more than a few years (see chart). + +His budget, unveiled in December, cuts subsidies on water, electricity and fuel. These were aimed mostly at big consumers, including the myriad royal princes. “I don’t deserve these subsidies,” he says. Even so, Saudis witnessed the rare sight of people queuing to buy petrol before the prices rose by 50% on January 1st. This month Saudis accustomed to leaving on the air-conditioner when going on holiday will receive dearer electricity and water bills. Within five years, the plan is that Saudis should be paying market prices, probably with compensation in the form of direct payments for poorer citizens. + +Ministries have halted expenditure on cars, furniture and showcase projects. The government is scrutinising allowances and overtime claims to save money. Soon Saudis will for the first time pay value-added tax of 5% on non-essentials, in a move co-ordinated with other members of the six-country Gulf Co-operation Council. Prince Muhammad is adamant that there will be no income or wealth taxes, but he plans to balance the budget in five years. + + + +Under his “Transformation Plan 2020”, set for publication by the end of the month, the prince wants to develop alternatives to oil and drastically to cut the public payroll, which acts as a form of unemployment benefit. To do so he wants to create jobs for a workforce that will double by 2030. Ministers speak of doubling private education to cover 30% of students, establishing charter schools and transforming public health care into an insurance-based system with expanded private provision. In addition to Aramco, the prince wants to sell stakes in state assets from telecoms to power stations and the national airline. The government is to sell land to developers, such as the 4m square metres it owns around Mecca, the most expensive real estate in the world. The prince sees huge promise in developing Islamic tourism to the holy sites; he hopes to boost the 18m annual visitors to 35m-45m in five years. + +Sceptics abound. Reform has long been talked about but never implemented. Prince Muhammad’s ministers are astute, have PhDs from Western universities and speak the jargon of key performance indicators, but much of the government is deadweight. Even the unemployment figures are subject to doubt. “Few bits of the bureaucracy actually function at a high level,” says a Western diplomat. Even senior advisers question the kingdom’s capacity to find and absorb the trillions of dollars on which the plan is predicated. + +In Jeddah, the commercial capital on the Red Sea, some businessmen remain sceptical, and speak more of exporting their wealth than investing it in the country. There is also suspicion of hidden motives. With each new elderly monarch, they say, favoured sons have indulged in self-aggrandisement, leaving courtiers to disguise their acquisitions as privatisations and economic reforms. Media reports of Prince Muhammad’s lavish parties in the Maldives and the crown prince’s house-hunting for a Sardinian villa worth half a billion euros are fodder for social media, of which Saudis are keen users. + +As the man who ultimately controls the Public Investment Fund, the destination for many assets to be sold, and who has taken direct oversight of Aramco, the prince is already the subject of some muttering. What is true is that, for all his talk of transparency, his government continues to treat royal and state expenses as one and same; the royal component is a state secret. + +A bigger challenge for the reformers is the fact that the prince’s dizzying changes amount to, in effect, a rewriting of the Saudi social contract. Why, mutter some Saudis, should we tighten our belts when the princes continue to enjoy untold riches? And for all his boldness in economic matters, he remains obtuse when it comes to political liberalisation that might help secure consent for the economic revolution. A tiny number of women have recently campaigned for and won seats in municipal elections, under changes brought in by the late King Abdullah; who more than a decade ago had promised Saudis “true democracy” in 20 years. It is nowhere in sight. + + + +Government repression has intensified. “It has never been this bad,” says one campaigner for women’s rights. Indeed, counter-terror legislation passed in 2014 makes virtually all dissent a terrorist offence. The evidence is all around: lawyers representing troublesome clients have found themselves behind bars; preachers who used to pronounce against corruption stick strictly to their anodyne scripts; and stand-up comedians have stopped poking fun at royals. Tellingly, more people have been executed in King Salman’s first year in office than in any of the previous 20. + +In a country where concerts, public movies and female performances are banned, the prince talks of the “entertainment crisis”, and about his own children lacking things to do. Here and there, he seems ready to try to loosen the grip of the clerics. His latest education minister, Ahmed al-Eissa, is an academic whose book on the dreadful state of Saudi schools, which he blames in part on the restrictions placed by “religious culture”, remains banned in the kingdom. Private schools, still barred from teaching evolution, would have a freer hand to set their curriculum and choose pedagogic materials beyond those designed by the clerics. + +The prince says that he supports women working, not least to reduce the fertility rate: “A large portion of my productive factors are unutilised,” he says. “I have population growth reaching very scary figures.” These days Saudi Arabia has more women in the workplace, but female labour-force participation is still very low, at 18%. Prince Muhammad thinks women are not taking full advantage of the opportunities they already have: “A large percentage of Saudi women are used to the fact of staying at home. They’re not used to being working women.” Still, he is in no mood to challenge the ban on women driving—even though some might want to lay off their chauffeurs in such straitened times. “I do not want to get involved in this issue as it is Saudi society that will decide whether to accept it or not.” + +The country’s regional assertiveness also presents a threat to the planned transformation. Spending on defence and security, has grown from 7% of GDP in 2012 to 10% in 2015, and is set to rise again in 2016. + + + +An interactive guide to the Middle East's tangled conflicts + +Drumming up allies, including the 34-country counter-terrorism coalition that the prince announced in December (to the bemusement and surprise of some of its putative members) is proving costly. It has recently promised $8 billion for Egypt. Saudi Arabia is financing a proxy war in Syria and waging a full-scale one in Yemen, which has dragged on longer than initially flagged. Nevertheless for some, the sight of Saudi Arabia standing up forcefully for Sunnis against Iran is part of the antidote to the jihadists’ poisonous ideology. + +Uncle Sam, we need you + +Surprisingly, perhaps, for a Saudi royal with no Western education, Prince Muhammad speaks about America passionately. “The United States has to realise that they are the Number One in the world, and they have to act like it,” he says; the sooner America steps back into the region—even with boots on the ground—the better. + + + +Prince Muhammad’s schemes do not appear to be inspired by ideology. Many of the ideas he is pursuing have lurked in ministers’ drawers for years. Others follow examples from elsewhere, be it charter schools in America, public-private partnerships in Britain or the abolition of fuel subsidies in Egypt (and Iran). Instead they are born of necessity. The conjunction of a fall in oil prices, a geopolitical crisis and a hyperactive prince afford a once-in-a-generation chance to modernise the country. + +The Arab spring has shown time and again that post-colonial Arab states are singularly dysfunctional (see page 41). That raises serious doubts about Saudi Arabia’s ability to reform. But the regime has little choice: its survival may depend on it. + +For a transcript of the formal interview with the prince, see Economist.com/saudi_interview + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21685467-muhammad-bin-salman-gambles-intervention-abroad-and-radical-economic-change-home/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Saudi Aramco + +Sale of the century? + +A possible IPO of Saudi Aramco could mark the end of the post-war oil order + +Jan 9th 2016 | DIRIYA | From the print edition + + + +“THE amounts of oil are incredible, and I have to rub my eyes frequently and say like the farmer: ‘There ain’t no such beast.’” So wrote an American oilman in the Persian Gulf a few years after the discovery in 1938 of a gusher of oil from Saudi Arabia’s Well Number Seven, 4,727 feet (1,440 metres) below the desert floor. + +You could say the same today about Saudi Aramco, the state-owned firm that for decades has had exclusive control of Saudi Arabia’s oil and is the world’s biggest, most coveted and secretive oil company. On January 4th the kingdom’s deputy crown prince, Muhammad bin Salman, told The Economist that Saudi Arabia was considering the possibility of floating shares in the company, adding that personally he was “enthusiastic” about the idea. + +It was a stunning revelation. Officials say options under preliminary consideration range from listing some of Aramco’s petrochemical and other “downstream” firms, to selling shares in the parent company, which includes the core business of producing crude. The staggered nationalisation of the Arabian American Oil Company (Aramco), made up of four big American firms, in the 1970s was emblematic of a wave of “resource nationalism” that has helped define the industry (see chart 1). + + + +Aramco is worth, officials say, “trillions of dollars”, making it easily the world’s biggest company. It says it has hydrocarbon reserves of 261 billion barrels, more than ten times those of ExxonMobil, the largest private oil firm, which is worth $323 billion. It pumps more oil than the whole of America, about 10.2m barrels a day (b/d), giving it unparalleled sway over prices. If just a sliver of its shares were placed on the Saudi stock exchange, which currently has a total market value of about $400 billion, they could greatly increase its size. + +Prince Muhammad says a listing would not only help the stockmarket, which opened to foreigners last year. It would also make Aramco more transparent and “counter corruption, if any”. A final decision has yet to be taken. Yet the prince has held two recent meetings with senior Saudi officials to discuss a possible Aramco listing and diplomats say investors are being sounded out. The talk is of at first floating only a small portion of the company in Riyadh, perhaps 5%. In time that could rise—though not by enough to jeopardise the kingdom’s control of decision-making. + +The aim would be to foster greater shareholder involvement in Saudi Arabia; a senior official said there was no intention of surrendering control of Aramco or its oil resources to foreign firms. But it is part of a frenzy of reforms proposed by the prince that his government is rushing to keep pace with. “Everything is on the table. We are willing to consider options we were not willing to get our heads around in the past,” an official says. + + + +For many investors, a listing of Aramco, however partial, would be a prize even at today’s low oil prices. Its “upstream” business is mouth-watering. Rystad Energy, a Norwegian consultancy, says no other country except Kuwait can produce oil at a lower break even cost (see chart 2). + +By the standards of national oil monopolies, analysts say that Aramco is well run. In the 1940s and 1950s, when the American consortium recruited young Saudis, it was an “unlikely union of Bedouin Arabs and Texas oil men, a traditional Islamic autocracy allied with modern American capitalism”, writes Daniel Yergin in “The Prize”. Under American ownership, it built towns with schools, wiped out malaria and cholera, and helped farmers become entrepreneurs, officials recall, explaining why it was popular with Saudis. + +It was a different story in Iran and elsewhere, where citizens grew sick of the colonial-era concessions taken by British and French firms, and a wave of nationalisation began. The Saudis, having declared their first 25% stake in Aramco in 1973 “indissoluble, like a Catholic marriage”, were unable to resist the tide. Full nationalisation of Aramco came in 1980. But an American business ethic survived. Just over a decade ago Matthew Simmons, an American banker, argued that Saudi wells were past their prime and that production would soon peak. Yet Aramco has increased output by more than 1m b/d in the past five years, reaching record highs. “They’ve proven their resilience,” says Chris DeLucia of IHS, a consultancy. + + + +INTERACTIVE: Explore how oil prices affect OPEC and non-OPEC production and viability + +Questions surround the company, though. Mr DeLucia says 87% of its output is oil; it needs to develop more gas to satisfy the country’s needs for cleaner, cheaper power. Some argue that its reserves, which have barely budged since the late 1980s, are overstated. Internal documents about them are “phenomenally closely guarded secrets” says a local observer. + +The company does not report its revenues. Its fleet of eight jets, including four Boeing 737s, and a string of football stadiums suggest that it is not run on purely commercial lines. It is the government’s project manager of choice even for non-oil developments, and runs a hospital system for 360,000 people. A listing would require it to become more transparent. + +But even with greater disclosure, minority shareholders may play second fiddle. The company is integral to the social fabric of Saudi Arabia and the survival of the ruling Al Saud dynasty, providing up to nine-tenths of government revenues. Cuts in its output have been a foreign-policy lever through which OPEC, the producers’ cartel, has often sought to rescue oil prices. + +Investors in Russia’s Gazprom, another national champion, have watched in frustration as the company has been used as an arm of the Russian foreign ministry. Elsewhere, selling stakes in national oil companies has had mixed results. + +Prince Muhammad’s desire for reform fits a pattern that some consider reckless. Saudi Arabia has recently forced OPEC to maintain production despite oil falling from a peak of $120 a barrel to below $35. Its decision on January 3rd to suspend diplomatic relations with Iran, a fellow OPEC member, makes it harder for both to agree on production cuts, though Saudi officials are in any case adamant that they have no intention of rescuing prices. + +Others believe Saudi Arabia’s strategy makes sense. They think it wants to protect its share of the global oil market by driving high-cost producers to the wall at a time when unconventional forms of oil, such as American shale, have had gushing success. + +Another threat is alternative forms of energy, such as wind and solar, which may well challenge fossil fuels. Selling shares in Saudi Aramco could thus be intended to cash in before the “decarbonisation” of the economy starts to gain credibility. It would also fit with a trend that has started to transform the oil industry for the first time in half a century—denationalisation. + +Paul Stevens of Chatham House, a British think-tank, says a cadre of well-educated technocrats from oil-producing nations are wondering whether their national oil companies are “ripping us off”, through corruption or inefficiency. Brazil’s corruption-plagued Petrobras proves that public markets are no guarantee of probity. But as in Mexico, which is opening up its oil industry for the first time since 1938, many want to impose market-based checks and balances, so that no company can operate as a state within a state. If that happens to Saudi Aramco, the biggest of them all, it will have global repercussions. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21685475-possible-ipo-saudi-aramco-could-mark-end-post-war-oil-order-sale/print + + + + + +Previous Articles Sections Next + + + + + +United States + + + + +Puerto Rico defaults: When the salsa stops + +Gun laws: Talking up arms + +The Oregon stand-off: They the people + +Floods in the Midwest: Disaster foretold + +Police in schools: Arresting developments + +Lexington: Franklin Graham’s promised land + + + + + +Articles Sections Next + +Puerto Rico defaults + +When the salsa stops + +The commonwealth has run out of wealth. Will Washington save it? + +Jan 9th 2016 | SAN JUAN | From the print edition + + + +PUERTO RICO’S creditors have plenty to complain about, but they can’t claim they weren’t warned. Last June Alejandro García Padilla, the governor of America’s Caribbean outpost, announced that its $72 billion public debt was “unpayable”, and that a “unilateral and unplanned non-payment of obligations” loomed. Half a year later, he has fulfilled that threat: on January 4th the government missed a $36m coupon on paper issued by its Infrastructure Financing Authority. “There were those who said I was bluffing,” he says. “I told the truth. To avoid a new default, [bondholders] have to sit down and negotiate.” + +Unlike fiscal crises elsewhere, the decision did not set off pot-banging protests or queues at cashpoints. On the contrary, the governor was all smiles the next day as he welcomed children into La Fortaleza, his colonial-era palace in the capital of San Juan, for the eve of Three Kings’ Day, which Puerto Ricans (boricuas, as they call themselves) celebrate as much as Christmas. Plaza las Américas, the city’s mega-shopping mall, was packed as parents finished shopping for gifts to put under their children’s beds overnight, and waiting times at popular restaurants were over an hour. The contrast between the island’s dire public finances and its holiday spending binge was surreal, and impossible to sustain. + +Only in a territory as unconventionally governed as Puerto Rico could this through-the-looking-glass economy persist. America conquered the island from Spain in 1898 and granted its residents citizenship in 1917, just in time to draft 20,000 of them for the first world war. In 1952 the island became a self-governing “commonwealth”, subject to American law but excluded from federal income taxes and from voting representation in Washington. + +Federal investment and tax breaks helped Puerto Rico develop from a sugar-based economy to a pharmaceutical-manufacturing hub. But once producers like Ireland and Singapore began to compete and the tax preferences expired, the island did not develop a new comparative advantage. As part of the United States, Puerto Rico could not devalue its currency, and the national minimum wage inflated its labour costs. But being American offered benefits as well. Residents could move to the States to find work, and were eligible for federal welfare payments if they stayed. Meanwhile, the government could issue tax-exempt municipal bonds, prized by mainland investors. + +As a result, the economy slowly hollowed out. The population has fallen from 3.9m to 3.5m during the past decade, with young workers accounting for much of the exodus. Those who stayed tended either to depend on the state—as students, public employees, pensioners or recipients of federal largesse—or to fall into the sprawling underground economy and bustling drug trade. Candidates from across the political spectrum have won office by keeping the gravy train running: more than a third of Puerto Rican schoolchildren are classified as having special needs, inflating the teacher-to-pupil ratio, and the island’s health plan for the poor would be the envy of any American state. A paltry 40% of working-age boricuas are in the labour force, and just 57% of personal income in Puerto Rico comes from formal private jobs, compared with 76% for the 50 states, according to José Villamil, an economist. Investment has collapsed, from 27% of GNP in 2001 to 13% today. Yet retail sales have held steady since 2008. The only way to maintain consumption was via massive borrowing: during the past 15 years, the government’s nominal debt load has tripled. + +This system worked as long as mainland investors retained their appetite for Puerto Rico’s high-yielding bonds. But after Detroit went bust in 2013, municipal creditors fled to safety and the commonwealth lost market access. That forced Mr García Padilla to cut spending and raise taxes. The island’s only children’s hospital, whose budget has been cut by 14% in the past two years, lacks CT and MRI machines. Overall spending has dropped by 6.2% since 2013, while tax increases have raised revenues by 8%. This has exacerbated the island’s decade-long recession. The government’s audited 2014 financial statements are long overdue, but according to Mr Villamil GNP shrank 0.9% that year and a further 1.7% in 2015. The sharpest decline is forecast for 2017. + +“The numbers don’t add up in Puerto Rico’s books,” Mr García Padilla says. Only by reducing and delaying the government’s liabilities, he argues, can the island resume growth and generate enough tax revenue to maximise repayment to creditors. However, the commonwealth’s awkward status within the United States has stymied his efforts. + +If Puerto Rico were either an independent country or the 51st state, it could abrogate its central-government debt, because states cannot be sued in federal court. As an “unincorporated territory”, it may not enjoy this privilege. Similarly, in 1984 Congress excluded Puerto Rico from Chapter 9 of the federal bankruptcy code, which covers “instrumentalities” of states such as local governments and state-owned enterprises. In 2014 the territory passed its own version of Chapter 9, but it was struck down in federal court (though the Supreme Court is to hear its appeal). Mr García Padilla is desperate for Congress to change this. But the hedge and mutual funds that hold large swathes of its debt oppose the idea vigorously, and so far the legislature has failed to act. “The bottom line is our political status,” says Juan Torruella, a Puerto Rican federal judge who voted to reject the territory’s home-grown bankruptcy law. “Any way you put it, Puerto Rico is a colony. What happens in Puerto Rico is decided in Washington.” + +Unless and until the law changes, the government will keep juggling liabilities to stave off default. After 17 months of talks, the Puerto Rican power company recently struck a deal with its creditors. But with 18 different issuers and the treasury running dry, such an agreement will be hard to replicate at scale. To conserve cash, Mr García Padilla is taking his sweet time to pay tax refunds and public contractors. Guillermo Martínez of GM Group, which provides security guards, says $4.5m of his firm’s bills to the commonwealth are over 90 days past due. Just like its bondholders, the government has these suppliers over a barrel. “If we stop providing services, will they pay me, or the people who will replace me?”, he asks. “Puerto Rico has been good to us. We have to help the government—until we can’t afford it any more.” + +After exhausting such gambits, Puerto Rico is now resorting to payment prioritisation. In August it failed to pay a legally unenforceable “moral obligation” bond. And last month it “clawed back” rum taxes originally destined to pay infrastructure bonds in order to make good on its constitutionally guaranteed “general-obligation” bonds. That left the lower-ranked securities to default. Mr García Padilla says that if he must pick between servicing debt and paying police, nurses or teachers, he will choose the latter, which would set off a constitutional crisis. Without a reprieve from the federal government, a cascade of lawsuits appears inevitable. + +Fortunately, a solution could be forthcoming. The Treasury Department has proposed a mechanism that would allow a restructuring of the constitutionally guaranteed debt. Paul Ryan, the Republican Speaker of the House, has promised a “responsible solution” by March. What would be life-changing sums of money for the commonwealth are rounding errors in the federal budget. Rescuing Puerto Rico might prove a relatively cheap way to curry favour with Latino voters in this year’s congressional and presidential elections. And the Supreme Court may yet rule that state-owned companies can enter Chapter 9. Three Kings’ Day may have already passed. But Mr García Padilla has reason to hope that the camels will soon bring a belated gift. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21685460-commonwealth-has-run-out-wealth-will-washington-save-it-when-salsa-stops/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Gun laws + +Talking up arms + +Texans have a solution for gun violence: more guns + +Jan 9th 2016 | AUSTIN | From the print edition + +A new year celebration + +BARACK OBAMA began the new year, the last of his presidency, with a tearful plea for gun control. He explained that he was compelled to take action because Congress has failed to. Mr Obama announced executive actions that included a modest expansion of background checks and an exhortation to federal agencies to enforce existing laws. He was confident, he added, that Ronald Reagan would have supported the idea. Meanwhile, in Texas, some gun owners were exercising a newly acquired right: to carry firearms openly in public. The collision of these two events shows how the rival sides in the gun debate can see the same outrages—the shootings at San Bernardino being the most recent example—and draw opposing conclusions. + +Texas is now the largest state where gun owners can carry firearms openly. Since the mid-1990s, Texans who wanted to carry guns in public places have had to acquire concealed-weapons permits and hide their guns under layers of clothing (which can be sticky in a Texas summer). Thanks to a law passed by the legislature in 2015, gun owners with permits can now carry them undisguised. This was a popular move: in Texas, as elsewhere in America, the number of people who think the best response to gun violence and fear of terrorism is for upstanding citizens to arm themselves has risen in the past eight years, just as the sales of guns have risen with each rumour of restrictions on sales. + + + +In graphics: America's guns + +While the president was addressing the nation (his speech causing the share prices of some notable arms manufacturers to spike), Texas was at the tail-end of a week of confusion and distemper. Many of those celebrating their new gun rights had found themselves at odds with those enjoying their long-standing property rights. One of the provisions of the law is that business owners can ban open carrying on their own property, and many had decided to do so. This caused confusion in some places: H-E-B, a grocery chain, already had a policy of allowing shoppers to carry concealed weapons, but decided to keep openly toted guns out of its stores. + +There is little evidence that such laws have a discernible effect on gun-crime rates, or even gun-ownership rates. Based on the number of concealed-carry licences that have been issued in Texas in the past 20 years, the number of people who support the right to carry vastly exceeds the number who actually want to do so themselves. That has not deterred Dan Patrick, the lieutenant-governor of Texas, who told Meet the Press that: “Everywhere that we have more citizens carrying guns, crime is less.” Several days later, Mr Patrick was among the Republicans attacking the president’s efforts to tweak gun laws. He dismissed Mr Obama’s announcement as “simply political posturing and more propaganda.” The hard edge of the pro-gun movement considers Mr Patrick a bit soft. Having won, it has already moved on and is now agitating for open carry with no permits or other limitations or, as its backers poetically call it, constitutional carry. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21685456-texans-have-solution-gun-violence-more-guns-talking-up-arms/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Oregon stand-off + +They the people + +The Western roots and meaning of an anti-government stunt + +Jan 9th 2016 | From the print edition + + + +“UNCLE SAM is rich enough to give us all a farm.” So runs the refrain of a popular song of the mid-19th century, when America’s government began dispensing homesteads in the newly opening West. Sometimes, impatiently, the settlers took the land, or its resources, without permission: their families’ sweat and guts entitled them to, and there was more than enough to go round. This outlook combined fierce individualism and egalitarianism; as Patty Limerick, of the University of Colorado, puts it, the pioneers were at once advancing civilisation and rejecting it. + +That romanticised past is the backdrop of a seemingly eccentric stand-off that began on January 2nd when armed militiamen seized the Malheur National Wildlife Refuge near Burns, Oregon. The pretext was the plight of two local ranchers, Dwight and Steven Hammond. Convicted for setting fires that ignited federal land and endangered firefighters, the pair were harshly resentenced and returned to prison after the government appealed against their original punishments. But the real issue is the land itself: specifically the fact that the federal government still controls so much of it in the West, including most of Idaho, Nevada, Oregon and Utah. + +For the occupiers, this territorial stranglehold unjustly restricts grazing, mining, logging and hunting; moreover, according to their quirky jurisprudence, it is unconstitutional (courts have tended to disagree). They want to force the feds out of the refuge—run by the US Fish & Wildlife Service—the county and ultimately the rest of the government’s Western holdings. In milder form, this cause is espoused by others: some western politicians also want territory to be transferred to the control of states, costly as that might prove for them. + +Before the mission, one of the crew, Jon Ritzheimer, released an almost-touching farewell video in which he vows to “die a free man”. Only almost, because, after all, the plan was to seize a nesting habitat for migratory birds in a remote, frigid desert. The mystique is further undercut by Mr Ritzheimer’s record of Muslim-baiting in his home state of Arizona. That points to another interpretation of such activism: less agrarian and romantic than a combustible form of anti-government extremism, fuelled by conspiracy theories and sharing ideological roots, and some personnel, with white supremacism. + +Both of these spread dramatically after Barack Obama’s election in 2008, says Ryan Lenz of the Southern Poverty Law Centre, an advocacy group. Antics such as those in Oregon may seem circus-like; but, says Tom Gorey of the Bureau of Land Management (BLM)—which, as the steward of much government land, is viewed by the zealots as an instrument of tyranny—they are “not funny by any stretch of the imagination” to the officials sometimes confronted by gun-toting fanatics. + +To some, the identity of the putschists’ leader, Ammon Bundy, suggests an even less grandiose motive: the desire to make a buck using public assets. Ammon is a son of Cliven Bundy, who in 2014 rallied militiamen to his ranch in Nevada after the BLM rounded up some of his cattle; he alienated some sympathisers by speculating that black people in America had been better off as slaves. The animals were grazing on public land; Mr Bundy had long refused to pay the (heavily subsidised) fees. + +On that occasion, with rifles trained on its officials, the BLM backed down. Critics think that capitulation was mistaken, though when paranoia and conspiracy-theorists are involved, it is hard to find an approach that does not either embolden them or—as in the siege at Waco, Texas in 1993—make them martyrs. So far the police and FBI have been patient in Oregon, too. + +Any private claim to personify the “We” in the constitution’s “We the people” is ominous. In the case of the Bundys and their sort, it is also spurious, and not only because locals in Oregon want to be rid of them. Other citizens—including, in an increasingly urban region, hikers and tourists—have claims to the public domain; so, for all the ranchers’ rage against environmentalists, do other species, such as, in Nevada, an imperilled tortoise. Clumsy as they can be, federal agencies can moderate these conflicts, and, indeed, save ranchers from themselves: part of their purpose has always been to prevent overgrazing. Gung-ho individualism is only compatible with egalitarianism, that old Western brew, when resources are infinite and the individuals are few. + +How the West has won + +Professions of divine guidance are similarly alarming: Ammon Bundy, whose family are Mormons, thinks he is doing “what the Lord asked me to”. And the idea that disputed lands should be “returned” to the people, as he maintains, is absurd. As John Faragher of Yale University says, they were conquered or acquired by the federal government in the first place, often from native Americans. Yet though these agitators may be crackpots, criminals, terrorists or all three—and only a handful are holed up in Oregon—it would be wrong entirely to dismiss them as unrepresentative. + +Through pulp novels, Buffalo Bill’s spectacles and the cinema, the ideal of the dauntless, self-reliant westerner quickly trickled east to inform the whole country’s self-perception. Likewise, these days, a conviction that America’s economy is rigged, distrust of the government and faith in the redemptive power of guns are hardly fringe opinions. The frontier may have shrunk, but rhetorically it is spreading. This is how the West has won. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21685469-western-roots-and-meaning-anti-government-stunt-they-people/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Floods in the Midwest + +Disaster foretold + +Measures to make life near the Missouri flood plain safer have done the opposite + +Jan 9th 2016 | CHICAGO | From the print edition + +Two men in a boat + +ROBERT CRISS does not relish his role as Cassandra of the Mississippi. For years the geologist at Washington University in St Louis has warned policymakers about building houses and businesses on flood plains, walling off rivers with dams, locks, dykes and levees, disregarding the consequences of global warming on weather patterns and the use of outdated statistics for calculating the risk of a major flood. “The devil could not have come up with a better plot,” he says. + +Torrential rain started on December 26th and lasted three days, during which 9-14 inches (23-35cm) of rain deluged much of Missouri and parts of Illinois, according to the National Weather Service. Thousands had to evacuate their houses; businesses abandoned shops and stock. Amtrak stopped its local train service for four days and long stretches of the I-44 and I-55 interstate highways, as well as 200 state highways, were shut off. Twenty-five people died, mostly because they drove onto a swamped road and their cars flipped over. It will take months to rebuild what has been lost. Yet the bigger question is whether enough was done before the rains came to mitigate the impact of flooding. + +For Mr Criss the answer is no. He does not understand why the development of commercial and residential property was allowed on flood plains near St Louis, in particular as both the city and the county are losing population. The area should have been kept as farmland, which can absorb water, he argues, and should not be paved over: when the floods come, lost crops are far less costly than lost houses and businesses. + +Nicholas Pinter at the University of California, Davis adds that the Missouri and the Mississippi are flooding so severely because the middle stretch of the Mississippi (which joins the Missouri at St Louis) has more navigational dykes than any other river reach he knows. It has become a largely man-made construct that bears little resemblance to the river of 200 years ago, which changed shape with the volume of water flowing through it. Yet the statistics used by the Army Corps of Engineers and the Federal Emergency Management Agency (FEMA) to define flood risk are based on the average weather patterns, flooding and the changing shape of the river during the past 100 years. Unless the corps and FEMA update their statistical methods, they will continue to underestimate the flood risk for the region. + +Missouri policymakers have largely ignored the geologists’ warnings about floods. After the Great Flood in 1993, which destroyed around 100,000 homes and caused nearly $20 billion in damage along the Missouri and upper Mississippi, the Galloway Report, written by a group of experts appointed by the White House, called for federal flood-insurance programmes to discourage development in flood plains. It said that taxpayers should stop bailing out areas that flood regularly. And it recommended that the basins of the Missouri and Mississippi should be managed as one watershed. Very little of this has happened. “This misery will repeat itself,” predicts Mr Criss. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21685491-measures-make-life-near-missouri-flood-plain-safer-have-done-opposite-disaster/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Police in schools + +Arresting developments + +Too many American schools use police officers to enforce classroom discipline + +Jan 9th 2016 | From the print edition + +Corridor patrol + +OFFICER Craig Davis reckons 2015 was a fairly peaceful year at Furr High School, on the hardscrabble east side of Houston. True, five of its pupils died violently, including the school’s first-pick quarterback, Michael Davis, who was murdered in a gang fight, and two schoolgirls who were killed in a bus crash. In the state that executes more people than any other, a recent old boy was also charged with three murders. Yet Mr Davis, one of the school’s two police officers, with a revolver, canister of pepper foam and a truncheon hanging from his belt, says he has known worse over his eight years at Furr: “It’s a tough place.” + +It was with violent schools like Furr in mind that Texas began stationing police officers in its schools in the early 1990s, which helped start a national trend. It proceeded to accelerate on the back of persistent concerns over law and order during the decade; in 1999, after 13 people were massacred at Columbine High School, in Colorado, the federal government launched a supportive funding programme, Cops in Schools. By 2007 an estimated 19,000 school policemen, known as School Resource Officers, were plodding the corridors of America’s schools, in addition to many regular police and private security officers. + +How many there are now is unclear; there has been little study of the phenomenon, a gap the Department of Education is struggling to fill. But there may be as many as ever, encouraged by yet more federal largesse in the form of a scheme launched under Barack Obama, in response to yet another school shooting, in Connecticut in 2012, in which 20 children were killed. Most American public high schools now have a permanent police presence. + +It is not clear why. Over the same 25-year period juvenile violent crime rose through the early 1990s but, like the overall crime rate, has since collapsed. Juvenile arrests are also at their lowest level for three decades and juvenile murders at a 30-year low. Gone, too, are excited apprehensions of a feral underclass of pre-teenage “superpredators”, a discredited phrase coined by John DiIulio, a Princeton political scientist. + +When asked in a national survey, in 2005, why they had brought police onto their campus, only 4% of school principals and the cops themselves cited violence as the main reason. About a quarter of the teachers instead cited media reports of violence elsewhere; a quarter of the cops said the school was unruly. The most popular response was “other”, a category that included the availability of federal funds (what school would not take free money?) or a belief that the policy had something to do with community policing. + +Preventing school shootings hardly registered; it is a rare sort of calamity, which, as it happens, the presence of armed officers does not prevent. There was a police officer at Columbine during its massacre. Moreover, such shootings tend to happen in schools dominated by middle-class whites, and according to researchers at the American Civil Liberties Union (ACLU), cops are far more likely to be placed in schools dominated by poor non-whites. + +The result, because police like to keep themselves busy, has been a disproportionately high number of arrests in such schools, pitching black and Hispanic juveniles into the criminal-justice system. Of 260,000 pupils referred to the police in the 2011-12 school year, 27% were black, though blacks represented only 16% of the student population. And those who become entangled in the justice system are likely to remain so. The opening of a juvenile criminal record—which may not be scrubbed clean until the age of 21—is an augury of further arrests, further convictions and eventual imprisonment, a spiral known to researchers as the “school-to-prison-pipeline”. “What started as an effort to keep guns out of schools has become a way of getting kids out of school,” says Harold Jordan of the ACLU. + +There are several reasons why the policy has gone bad, which vary from place to place. One is uncertainty about who is in charge, police or principals. Sometimes the cops answer to the school board, sometimes only to the police chief. Often the balance of power is contested in an ill-tempered battle between principals and police. The eagerness of weak, or ill-equipped, teachers to outsource classroom discipline to the cops is another part of the problem. This allegedly contributed to a recent much publicised case of police abuse in South Carolina, where a 16-year-old girl was thrown to the floor and dragged from the classroom by a police officer after she had refused to stop using her mobile phone. The internet has plenty more such horrors; including footage of a sobbing 5-year-old girl in Florida, handcuffed after she threw a tantrum. + +Draconian laws, inflexibly applied, make matters worse. Until recently in Texas it was a criminal offence to cause a rumpus on a school bus; in South Carolina, it still is one to cause a disturbance in school. In Pennsylvania, among other states, it is a criminal offence to take a weapon, including an almost-harmless pair of nail-scissors, into school, for which even a ten-year-old would face arrest. “It’s the stupidest, craziest thing I’ve ever seen, says Kevin Bethel, Philadelphia’s newly retired deputy-commissioner of police. + +After arrest—a fate until recently experienced by around 1,600 students in Philadelphia each year—the arrested child is taken to the district police headquarters for fingerprinting and processing, which takes about six hours, much of it spent in a prison cell. Minor offenders, including weeping ten-year-old scissors-carriers, are then let off with the sort of punishment a teacher might have demanded in the first place, such as lines or chores—though if they fail to carry these out, they may wind up in court, alongside more serious offenders. “What does it mean when we take a ten-year-old child into a cell block and we don’t really know why?” asks Mr Bethel. + + + +In graphics: America's guns + +There are patches of progress, however, typically where police chiefs, such as Mr Bethel, have responded to pressure from activists. In 2014 he instructed his officers to stop making arrests over relatively minor infringements, such as schoolyard fights or small amounts of cannabis possession, which accounted for around 60% of the total. Instead he developed an alternative procedure, whereby officers report the miscreants to their parents and then force them to attend lessons in how to behave. This brought arrests in Philadelphia schools down by 54% in 2014 and by another 60% in 2015. Mr Bethel’s aim was that there should be no more than 400 arrests each year. The biggest resistance to his changes comes from teachers. “I advised them I would no longer be their disciplinarian, and they were kind of shocked for a while,” he says. “Some balked, but many are getting on board.” + +Similar progress is apparent in Houston. As in Philadelphia, this has involved the local police chief responding constructively after his district’s juvenile-arrest record was highlighted by NGOs. When Bertie Simmons, Furr’s octogenarian principal, took charge in 2000, the school’s cops were running amok. “They were doing things with kids that you’d not believe,” she says. “Like grabbing them, shoving them against walls, cuffing them. I was appalled. You shouldn’t treat schoolkids like criminals.” Despite efforts to improve matters, by 2009 Houston was still arresting over 4,000 school students, more than any other school district in Texas. + +In 2013 Texas passed several laws to make that harder: it raised the qualifying age of some offences and, in effect, decriminalised relatively trifling ones, such as rowdy behaviour on buses. This, in turn, has helped the school district’s police chief, Robert Mock, to make his officers more forbearing; though spitting on the pavement remains a criminal offence, it rarely leads to arrests. Mr Mock says that the 210 school cops under his direction will probably carry out no more than 500 arrests a year—and Houston’s schools have grown no more violent as a result of this restraint. In a generally grim context, that is hopeful. + +CORRECTION: An earlier version of this story gave officer Craig Davis the wrong name. Sorry. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21685204-minorities-bear-brunt-aggressive-police-tactics-school-corridors-too-many/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Franklin Graham’s promised land + +The Christian right sees 2016 as a chance to elect one of its own to the White House + +Jan 9th 2016 | From the print edition + + + +WITH its stone tower, Gothic arches and half-timbered walls, the Harvest Bible Chapel in Grimes, Iowa, would make a fine setting for an Agatha Christie murder. But on the religious right the church is notorious as the scene, in 2013, of a different crime. Back then the chapel was being used as a commercial wedding hall when its owners, Betty and Richard Odgaard, declined to host a gay marriage, citing their religious beliefs. Because the building was not legally a church at that point, the Odgaards fell foul of discrimination laws and—rather than celebrate gay unions—closed their wedding business. + +Today the building is a church again after its sale to a group of Christians—members of the 60m-strong community of Americans who call themselves born-again or evangelical Protestants. Its young pastor, Ryan Jorgenson, calls the Odgaards “heroes”. Like many evangelicals, he sees a pattern of bullying by secular foes and their allies in government. He worries about Christian employers having to fund health insurance that covers birth-control methods targeting fertilised eggs, and wonders if religious colleges will one day have to admit unrepentantly gay students. + +Mr Jorgenson enters 2016 in a fighting mood. Iowa is a good place to make such a stand. The Midwestern state hosts the first nominating contests of each presidential election cycle. Evangelical Christians typically make up 60% of the activists who brave ice and snow to attend Iowa’s Republican caucuses, which this year fall on February 1st. Most are also very conservative, and Iowa often hands victory to candidates who sound like fire-and-brimstone preachers. Yet their born-again champions seldom go on to win the nomination. A new book, “The Four Faces of the Republican Party” by Henry Olsen and Dante Scala, calculates that only about one in five Republican voters nationwide are “very conservative evangelicals”. In the past the religious right has also struggled to unite around a single, plausible candidate. + +This year, religious conservatives are determined to maximise their clout. Mr Jorgenson has done his bit. Like several other pastors he has endorsed Senator Ted Cruz of Texas, a hardliner who has wooed Iowans with Bible-infused oratory and promises to fight for religious Americans. On January 5th Mr Jorgenson urged church-members to attend “Decision America”, a rally on the steps of the state capitol in Des Moines, launching a 50-state tour by the evangelist Franklin Graham, son of Billy. + +Mr Graham is no stranger to temporal power. He has backed ballot initiatives opposing gay marriage. He led prayers at the first inauguration of President George W. Bush. But this is the first election in which he will spend months urging Christians to register to vote. The country is in “big-time trouble”, he told a crowd of 2,600 hardy Iowans. The history of American Christianity is full of prayer meetings in which the faithful bewail a nation adrift, and vow—like the tribes of Israel before them—to stand fast in the face of tyrannical rulers. Mr Graham did not disappoint. As his audience murmured “Amens” and softly stamped feet against the cold, he recalled the prophet Nehemiah, who overcame exile and a wicked pagan king to return to Jerusalem and rebuild its walls. Mr Graham drew parallels with the present, telling Iowans: “The moral and political walls of our nation are crumbling.” + +Mr Graham will not be endorsing any politician or party. Other Christian bigwigs have held meetings with the aim of agreeing on a single candidate, to make best use of a primary calendar which sees early contests in a string of rural and southern states with lots of religious voters. A big Iowan evangelical organisation, the Family Leader, has endorsed Mr Cruz. So has James Dobson, the founder of Focus on the Family, a conservative pressure-group. Other candidates have not given up hope. Ben Carson, a retired neurosurgeon who has spent years on the Christian lecture circuit, has supporters—though fewer since his slight grasp of foreign policy was exposed. Senator Marco Rubio of Florida stresses his faith and stern views on abortion. Even Donald Trump, a much-married casino-builder, talks of his love for the Bible, and enjoys significant support from evangelicals. + +Steve Deace, a conservative talk-radio host from Iowa, suggests that evangelical Trump-voters are “frustrated with wimpy politicians and want a bad-ass”. Mr Deace describes listeners who want a president to stand up for religious liberty (or as he puts it, fight against the “rainbow jihad” of the gay-rights movement), and to prevent illegal immigration and terrorism. Mr Deace, a Cruz backer, asserts that religious conservatives in 2016 all want the same question answered: “Who is willing to fight?” + +Et in Iowa + +Yet even in Iowa, evangelicals are not monolithic. Jeff Dodge is a pastor at Cornerstone Church, a Southern Baptist mega-church in the college town of Ames. Mr Dodge is a conservative: he opposes abortion and would not conduct a gay marriage. But he is “frustrated” by pastors who endorse politicians and “froth” flocks up about issues like tax rates, about which the Bible has little to say. He puzzles over “Chicken Little” talk of persecution, noting that he preaches to 2,500 Christians each Sunday: “I don’t feel my culture is trying to muzzle me.” Most of all, church-members trust him as a guide to the Bible’s truths, he says: it would be presumptuous to offer his views as a private citizen. “I cringe” when candidates claim God’s support, he adds, noting that one of the ten commandments is: “Don’t take the name of the Lord in vain”. + +Born-again voters in the general election will be still more diverse: millions of evangelicals are black or from fast-growing Hispanic churches, and worry about government safety nets, poverty or immigrants’ rights as much as about abortion or gay weddings. Too many white evangelicals seem blind to that diversity, and sound like the chaplain corps of the Republican right. If they pick a champion who panders to that narrow identity, they will condemn themselves to irrelevance. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21685457-christian-right-sees-2016-chance-elect-one-its-own-white/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Venezuela: The coming confrontation + +Crime in Mexico: Death and the mayor + +Millennials in Canada: First, the good news + + + + + +Articles Sections Next + +Venezuela + +The coming confrontation + +A dangerous stand-off looms between the government and the newly elected parliament + +Jan 9th 2016 | CARACAS | From the print edition + + + +IT WAS rowdy and disorganised. At one point it nearly degenerated into a brawl. But the opening on January 5th of Venezuela’s parliament, the first to be elected with an opposition majority in 17 years of autocratic rule, had the feel of a velvet revolution. The portraits of the late Hugo Chávez, the founder of the populist movement that still governs the country, and Simón Bolívar, the 19th-century liberator whom the chavistas claimed as inspiration, had been taken down. Speeches by opposition deputies, once routinely cut short by the bullying former president of the National Assembly, Diosdado Cabello, were heard in full. Dozens of police guards around the building leaned into their car radios to hear politicians rail against the authoritarian and incompetent rule of the current president, Nicolás Maduro. “This is a wake-up call,” said a soldier as he listened raptly to the proceedings. + +The chavistas did not put up with the harangues for long. After less than an hour they walked out—in protest at supposed procedural errors by the new president of the assembly, Henry Ramos. Even then they could not escape interrogation. Parliament’s new masters had opened its doors to all journalists, not just pro-government ones as before. The normally cocky Mr Cabello, who led the walkout, looked distinctly uncomfortable when confronted by reporters who asked mildly testing questions on live television. Cilia Flores, Venezuela’s first lady, who is one of 54 chavistas in parliament, icily refused to answer one about two nephews who are facing narcotics charges in the United States. + +Chavismo has been wounded, but it is far from defeated. Parliament aside, all the main institutions of government remain under its control. The setback to the regime has made it more authoritarian. Before parliament’s opening Venezuela’s Supreme Court had ruled that four of the incoming MPs from the state of Amazonas, three of them from the opposition Democratic Unity alliance (MUD), could not be sworn in. They are the subjects of investigations into possible electoral fraud. This ruling threw into doubt the two-thirds majority the MUD appeared to win in the election on December 6th. Such a “supermajority” would allow the opposition to begin the process of appointing and dismissing Supreme Court judges and to convene a convention to rewrite the constitution. The day after its opening parliament defiantly swore in the three MUD deputies, restoring the opposition’s two-thirds majority. + +Supreme weapon + +In the battle that now looms with parliament, the Supreme Court may become the regime’s main weapon. One of the last acts of the outgoing assembly was to stuff the court with 13 new pro-government judges. Mr Maduro has already suggested that all legislation that he disagrees with, including a proposed amnesty to secure the release of scores of political prisoners, will be deemed unconstitutional by the Supreme Court. “It is difficult to imagine that congress can have an institutional conflict against the Supreme Court and win,” says Luis Vicente León, a pollster. + +The government may hope to provoke divisions within the MUD. Its representatives in the National Assembly are from a hotchpotch of 13 parties, united in their desire to defeat chavismo but often divided over the best means to do so. Mr Ramos, a cantankerous veteran from the Democratic Action party, which governed Venezuela before Chávez, was the choice of smaller parties within the MUD. They fear domination by the younger Justice First party, led by Henrique Capriles, who nearly won a presidential election in 2013. + +Mr Ramos is himself a divisive figure. Ahead of parliament’s opening session he confirmed that he would seek the constitutional removal of Mr Maduro from the presidency within six months, presumably by launching a referendum to recall him from office. Moderates in the coalition have resisted issuing such a clear challenge to the executive so soon. + +Time is working against the regime. The price of Venezuela’s heavy oil, virtually its only export, dipped to under $30 a barrel in December, its lowest since February 2004. Default on some of its $98 billion of foreign debt is “becoming hard to avoid,” says Barclays Bank. Over 2015 and 2016 the economy is likely to shrink by nearly 15%. Shortages of basic consumer goods will get worse. In the absence of official figures, analysts reckon that inflation is nearly 200%, the highest rate in the world. A decree by Mr Maduro, enacted before the new parliament opened, shows that the regime has little intention of doing anything new about the dire state of the economy. It strips the assembly of its right to appoint directors of the Central Bank, or even to question them. + +As the confrontation between president and parliament worsens, Venezuelans wonder what role the army will play. On the night of the parliamentary election in December, the country’s defence minister, Vladimir Padrino López, declared in an unscheduled appearance on state television that the army would “uphold the constitution”. Some analysts saw that as a warning to government hardliners to accept the results. The night before parliament opened, General Padrino López went public again. “The Bolivarian Armed Forces is not a means to subvert the constitutional order,” he tweeted, somewhat cryptically. + +The government’s eccentric claims about what is constitutional put the armed forces in an awkward position. “The military says it is going to defend the law, but what is the law?” wonders Mr León. Venezuela’s looming struggle is largely about the answer to that question. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21685522-dangerous-stand-looms-between-government-and-newly-elected-parliament-coming/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Crime in Mexico + +Death and the mayor + +Governing is a dangerous job + +Jan 9th 2016 | MEXICO CITY | From the print edition + +Mayor, and martyr + +POLITICS is a risky business in Mexico. Seven candidates in mid-term elections last June were murdered and 70 were attacked. In the past eight years, 40 mayors have been killed, says the National Federation of Municipalities. The latest murder is among the most shocking: on January 2nd Gisela Mota, mayor of Temixco, about 85km (53 miles) south of Mexico City, was killed in her home by several assassins just one day after her inauguration. + +It is fairly clear who killed Ms Mota, but not why. The suspects are thought to have links to Los Rojos, a drug gang. Police killed two and captured three. Ms Mota, a former congresswoman from the left-wing Party of the Democratic Revolution, had vowed to fight drug trafficking. Temixco is an important way-station on one of the main routes for moving drugs to Mexico City. But after only a day in office she hardly had time to threaten the region’s drug dealers. + +Graco Ramírez, the governor of Morelos, the state to which Temixco belongs, offers a different theory. He thinks Ms Mota was killed because she supported the state’s takeover of local policing, a policy known as mando único (single command). Mexico has 2,000 local police forces, in addition to state and federal constabularies. Many of them are short of funds and badly managed. Some, and the mayors who run them, are in league with the criminals. + +The state takeover of local policing was the big crime-fighting idea that Mexico’s president, Enrique Peña Nieto, came up with after the disappearance in 2014 of 43 students in Iguala in the southern state of Guerrero. That appears to have been the work of local police acting in concert with a drug gang. The town’s ex-mayor has been charged with engaging in organised crime. + +Advocates of mando único claim that states can modernise police forces, co-ordinate them better and give them more money. Mayors will face less risk if they are not directly involved in police work. And the corrupt ones will have less opportunity to subvert it. The day after Ms Mota’s murder Mr Ramírez imposed mando único on 15 municipalities, saying the measure was necessary to keep order. If Ms Mota was killed by gangsters as punishment for supporting mando único, the murder triggered the action they sought to prevent. + +Critics of the policy say there is no proof that it modernises policing. Forces under state command are not immune to corruption. Two ex-governors of the state of Tamaulipas are wanted by the United States Drug Enforcement Administration. + +Before Ms Mota was slain, other mayors seemed to face greater risks. In the past decade more have been killed in the poor southern states of Michoacán and Oaxaca than anywhere else. Several mayors in northern Mexico, where drugs are dispatched to the United States, are afraid to work in the towns that elected them, says Bernardo Gómez of Misiones Regionales de Seguridad, a security consultancy. Mando único may offer them less protection than more and better bodyguards would. When a mayor is murdered, police should pursue not just the killers but their bosses, says Alejandro Hope, a security analyst. “If you kill a mayor and nothing happens, the next mayor will just give in.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21685521-governing-dangerous-job-death-and-mayor/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Millennials in Canada + +First, the good news + +Why young adults are better off north of the border + +Jan 9th 2016 | OTTAWA | From the print edition + + + +CANADIANS obsessively compare their country with a certain neighbouring superpower. Often, the contrast is reassuring. Few Canadians would want the United States’ lax gun laws or its ridiculously expensive health care. Economic comparisons are usually more sobering. Canadians are less rich than Americans and have fewer globally famous brands. Silicon Valley exports high-tech disruption; Alberta’s tar sands produce pollution. + +For Canadians who feel economically inferior, a recent report comparing millennials on both sides of the border had cheering news. Canadians born in the 1980s are better off than their American peers. The study by TD Bank, called “Canadian and US Millennials: One of These Is Not Like the Other”, was headline news when it was published in December. + +Canadians aged 25 to 34 are more likely to have jobs than Americans of the same age (nearly 80% are employed, compared with less than 75% of Americans). American millennials are worse off than their compatriots from Generation X (the cohort that came just before them). In Canada millennials’ household incomes are 16% higher. Just over half are homeowners, compared with 36% in the United States. + +Much of the millennial advantage can be traced to Canadian paternalism—that of the state and that of the youngsters’ indulgent parents. Canada’s public universities charge much lower tuition fees than their largely private American rivals, so students graduate with less debt. More important is the contribution of millennial women, whose employment rate is seven percentage points higher than that of their American sisters. Their greater willingness to work has a lot to do with laws that oblige employers to give new parents paid leave of up to 50 weeks. The United States, by contrast, is one of the few countries that do not mandate paid maternity leave. + +Canada avoided the housing-market crash that struck the United States in the late 2000s, thanks to prudent banking regulation. That enabled parents to help their children buy their first homes. But this points to another factor, which is less cause for self-congratulation: a big part of Canadian millennials’ wealth is explained by the barely interrupted rise in house prices. Although banks are still prudent, low interest rates have encouraged house-buying and prices are reaching scary levels. If they drop, so will millennials’ spirits. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21685520-why-young-adults-are-better-north-border-first-good-news/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Politics in Taiwan: A Tsai is just a Tsai + +Tsukiji, the world’s biggest fish market: So long, and thanks for all the fish + +The war in Afghanistan: A bloody year of transition + +Banyan: Modi-fied but not transformed + + + + + +Articles Sections Next + +Politics in Taiwan + +A Tsai is just a Tsai + +The election of an independence-leaning president would put Taiwan back in the international spotlight + +Jan 9th 2016 | TAIPEI | From the print edition + + + +UNDETERRED by the rain, the crowd leaps to its feet shouting “We’re going to win” in Taiwanese as their presidential candidate, Tsai Ing-wen, begins her stump speech. Some rattle piggy banks to show that their party, the Democratic Progressive Party (DPP), relies on, and serves, the little guy—as opposed to the ruling Kuomintang (KMT), backed by businesses and fat cats and one of the world’s richest political institutions. Taiwan’s voters go to the polls on January 16th in what is likely to prove a momentous election both for the domestic politics on the island and for its relations with the Communist government in China that claims sovereignty over it. Eight years of uneasy truce across the Taiwan Strait are coming to an end. + +Since taking office in 2008, the outgoing president, Ma Ying-jeou, has engineered the deepest rapprochement between Taiwan and China ever seen, signing an unprecedented 23 pacts with the mainland, including a partial free-trade agreement. It culminated in an unprecedented meeting in November between Mr Ma and Xi Jinping, China’s president, in Singapore. But if the rapprochement under Mr Ma was a test of whether closer ties would help China’s long-term goal of peaceful unification, it failed. For the past six months Ms Tsai, whose party leans towards formal independence for Taiwan, has been miles ahead in the polls, with the support of 40-45% of voters. The KMT’s Eric Chu has 20-25% and another candidate, James Soong, a former KMT heavyweight, about 15%. Taiwanese polls can be unreliable, and many voters are undecided. But if Mr Chu were to win, it would be a shock. + +Taiwan elects its parliament, the Legislative Yuan, on the same day. That race is closer. But the DPP’s secretary-general, Joseph Wu, thinks his party can win it too, either outright or in coalition with two smaller parties—and the polls suggest he may be right. If so, it would be the first time any party other than the KMT has controlled the country’s legislature since the KMT fled to the island at the end of the Chinese civil war in 1949. + +The election result will have regional consequences, but the campaign itself is being fought on livelihood issues. The economy appears to have grown by only 1% in 2015, less than in 2014. Taiwan is doing worse than other export-oriented Asian economies such as South Korea. Salaries are stagnant, youth unemployment is up and home ownership is beyond the reach of many. One study found that the capital, Taipei, has become one of the world’s costliest cities relative to income, with the ratio of median house prices to median household income rising from 8.9 in 2005 to 15.7 in 2014—nearly twice the level of London. Concerns like these have dented the KMT’s reputation for economic competence. + +Self-inflicted wounds have not helped either. Most of the KMT’s bigwigs refused to run for president, fearing defeat. So its chairman, Eric Chu, put forward Hung Hsiu-chu, whose pro-China views proved so extreme that they nearly split the party. Mr Chu ditched her just months before the poll and ran for president himself. Ms Hung’s backers, many of them old-guard KMT voters, may abstain in protest. The party which for decades has dominated politics faces humiliation. + +That would have profound implications for China. For years, the Chinese Communist Party’s policy towards Taiwan has been based on patience and economic integration. But the election campaign suggests that integration is a liability and that time may not be on China’s side. In 1992, according to the Election Studies Centre at National Chengchi University in Taipei, 18% of respondents identified themselves as Taiwanese only. A further 46% thought of themselves as both Taiwanese and Chinese. Today 59% call themselves Taiwanese, while 34% identify as both—ie, very few consider themselves Chinese first and foremost. + +Patience doesn’t pay + +Among 20- to 29-year-olds, three-quarters think of themselves as Taiwanese. For them China is a foreign country, and the political ripples of this change are now being felt. In early 2014 students occupied parliament for three weeks in a protest against a proposed services deal with China. This proved to be a turning point: the KMT went on to be thrashed in municipal elections in late 2014. Some of the student leaders have formed their own party to contest the legislative election, joining 17 other groups and 556 candidates, who range from a heavy-metal front man to a former triad crime boss. + +The last time Taiwan chose a DPP president, Chen Shui-bian, in 2000, cross-strait tensions escalated. Given China’s increasing assertiveness in the region under Mr Xi, things could be even more dangerous now. China has been piling pressure on Ms Tsai. Mr Xi says he wants a “final resolution” of differences over Taiwan, adding that this is not something to leave for the next generation. China is demanding that Ms Tsai approve the “1992 consensus”, a formula by which China and the KMT agreed there was only one China—but disagreed about what that meant in practice. Ms Tsai has long said no such consensus exists, though when asked about it in a presidential debate, she called it “one option”. + +Ms Tsai is a very different figure from Mr Chen, who delighted in provoking China (and was later jailed for corruption). She is a low-key, English-educated lawyer schooled in international trade rather than in the rhetoric of Taiwanese nationalism. She has gone out of her way to assure China and America, Taiwan’s guarantor, that she backs the status quo and will be cautious. Many of her proposals, such as that Taiwan should expand its soft power through non-governmental organisations, seem designed to be uncontroversial. If her party takes control of the legislature, that would remove a source of instability: conflict with lawmakers made Mr Chen’s presidency even more unpredictable than it otherwise would have been. + +Yet whatever Ms Tsai’s intentions, a lot could go wrong. Taiwanese politics is famously raucous, and the DPP’s radicals seeking formal independence might yet cause problems. Mr Xi, in turn, could come under pressure from military diehards arguing that China has been too patient. In one of the last foreign-policy vestiges of the “one China” idea, China and Taiwan have similar claims in the South China Sea, a nerve-racking part of the globe. If a new government in Taiwan starts tinkering with its stance on the sea, China might easily take offence. The election of an independence-leaning president comes at a dangerous moment. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21685507-election-independence-leaning-president-would-put-taiwan-back-international/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Tsukiji, the world’s biggest fish market + +So long, and thanks for all the fish + +Jan 9th 2016 | TOKYO | From the print edition + +Next for the chopping block: Tsukiji itself + +ON JANUARY 5th, in a pre-dawn ritual going back decades, a handbell rang to mark the year’s first auction at Tsukiji, Tokyo’s sprawling fish market. The star attraction was a glistening 200kg tuna, sold to a sushi restaurant chain for ¥14m ($118,000). But the sale was tinged with nostalgia and even bitterness. This time next year the wholesale market, the world’s busiest, will be gone. + +Squeezed between the Sumida river and the Ginza shopping district, Tsukiji is creaking at the seams. Some 60,000 people work under its leaky roof, and hundreds of forklifts, carrying everything from sea urchins to whale meat, careen across bumpy floors. The site’s owner, the city government, wants it moved. + +That is unpopular. Traders resent being yanked to a sterile new site to the south. The new market is being built on a wharf whose soil is contaminated by the toxic effluent from a former gasworks. The clean-up and negotiations delayed the move for over a decade. + +The final blow was Tokyo’s successful bid to host the 2020 Olympics. A new traffic artery will cut through Tsukiji, transporting visitors to the games’ venues. Part of the site will become a temporary press centre, says Yutaka Maeyasui, the executive in charge of shifting the market. Our time is up, he says, glancing around his decrepit office. The site has become too small, old and crowded. An earthquake could bring the roof down. + +Many traders below Mr Maeyasui’s office belong to families that have been here since the market opened in the 1930s, after the Great Kanto earthquake of 1923 levelled its predecessor. “You won’t find anyone here who supports the relocation,” says Chieko Oyoshi, who runs the tuna business her grandfather founded. Big supermarket chains and wholesalers already eat into her business by dealing directly with the ports and fish farms that supply Tsukiji. The move will kill whatever trade is left, she laments. + +One of the last links to the city’s mercantile past, Tsukiji has changed little in decades. Men lick pencil stubs before writing on scraps of paper. A new computer would die of loneliness. One of the few modern devices is a digital clock counting down the days till November, when most of the activity will fall silent, along with Tsukiji’s beautiful bedlam. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21685510-so-long-and-thanks-all-fish/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The war in Afghanistan + +A bloody year of transition + +A resurgent Taliban is winning territory, but all is not lost + +Jan 9th 2016 | KABUL AND ISLAMABAD | From the print edition + +Police patrol, Helmand-style + +IT IS just over a year since NATO formally ended its combat mission in Afghanistan. It left behind 13,000-odd soldiers to “train, advise and assist” Afghan security forces taking the lead in the fight against the Taliban. Of the foreign troops, America has provided about half (with a further 3,000 deployed on counter-terrorism operations against what remains of al-Qaeda). Twelve months on, the results of the so-called “transition” look grim. Both Afghanistan’s political condition and its security have sharply deteriorated. + +Determined to exploit the departure of Western forces, in 2015 the Taliban maintained their usual spring offensive much longer into the winter than in the past. The insurgents now control more territory than at any time since American forces kicked the Taliban out of power in 2001. Among recent blows were the short-lived but still shocking fall of the northern city of Kunduz to the Taliban in September; a raid last month on the south’s Kandahar airport, one of the most heavily defended bases in the country, that killed at least 50 people; and the deaths of six Americans near Bagram air base on December 21st. + +Worst of all has been the steady erosion of government control in Helmand province in the south. It had been recaptured from the Taliban in 2009-11, at considerable cost, including American and British casualties. Recently the Taliban have closed in from the south and north towards the provincial capital, Lashkar Gah. Of 13 districts in Helmand, five, including the key districts of Musa Qala and Sangin, are now controlled by the Taliban, with another five or more being contested. This week American special forces in the Nad Ali district came under heavy fire; one man was killed. Retaking Helmand, the heart of Afghanistan’s opium country, is a priority for the Taliban, who desperately want the money that drug-peddling generates. Out of nearly 400 districts across Afghanistan, the Taliban controls a tenth and contests another tenth. + +The growing intensity of the fighting is taking its toll on the 352,000-strong Afghan army and police. Last year they sustained 28% more losses than in 2014: 16,000 casualties, about 7,000 of them fatal. Some 6,500 civilians are also thought to have died. Insurgent casualties have shot up, too. The current Taliban fighting strength is believed to be between 40,000 and 60,000. + +The backdrop to the escalating violence is a largely dysfunctional government in Kabul, the failure of diplomatic attempts last year to start a peace process, splits within the Taliban and America’s lack of a long-term strategy for Afghanistan. + +The national-unity government that emerged 15 months ago has in many ways been an improvement on its predecessor, led by the erratic Hamid Karzai. President Ashraf Ghani and the “chief executive”, Abdullah Abdullah, the runner-up in a disputed election, get on reasonably well. In security matters, they welcome Western support. At home they have taken useful steps to curb corruption. But the fight for key government posts among rival supporters and ethnic groups has meant rudderless ministries and provinces without governors. Not least, the post of permanent defence minister still remains vacant. + + + +In government, a division appears to be opening up over Mr Ghani’s attempts to engage Pakistan. Many Afghans have long considered their southern neighbour to be a destabilising force. Even today it plays host to Taliban leaders. Mr Ghani wants Pakistan to help push the Taliban to the negotiating table, thus paving the way for peace and economic reconstruction. But after he received red-carpet treatment in Islamabad, the Pakistani capital, in early December, his chief of the national security directorate resigned in disgust (though possibly before he was pushed out for a string of security failures). A new “Protection and Stability Council”, headed by a former warlord, Abdul Rasoul Sayyaf, has been set up as a rallying point against Mr Ghani’s emollience towards Pakistan. + +After Mullah Omar + +Yet despite promises from the Pakistani prime minister, Nawaz Sharif, and the powerful head of the army, General Raheel Sharif, that they will urge the Taliban to kill less and negotiate more, there is scant sign of progress. That may be because the spymasters of Pakistan’s “deep state” still prefer a weak, chaotic Afghanistan, or because Pakistan, itself locked in an existential fight with the Taliban’s sister outfit, the Tehreek-e-Taliban Pakistan, may not have the control it once had. + +Meanwhile, a power struggle has been under way within the Afghan Taliban. When Mr Ghani’s government declared last July that the Taliban’s leader, Mullah Omar, had died in a Karachi hospital over two years earlier, it triggered a challenge to the authority of Mullah Omar’s deputy and de facto successor, Mullah Akhtar Mansour. While Omar was believed to be still alive, Mullah Mansour was able to crush dissent, while reportedly earning a fortune from the opium trade. But his part in the cover-up of the leader’s death, his perceived closeness to Pakistan and his interest in opening up a dialogue with the Afghan government before the news about Omar broke have all undermined his legitimacy. Others have challenged his leadership, while in some pockets Islamic State (IS) has been able to poach Taliban fighters and take root. To show that he is neither going soft on the government in Kabul nor a tool of Pakistan’s military spy agency, Mullah Mansour has had to redouble the ferocity of the insurgency. And so long as the Taliban think they are winning, they have no incentive to talk peace. + +Yet even after the departure in the past year of what Michael O’Hanlon of the Brookings Institution in Washington calls 100,000 of “the world’s best soldiers”, the Taliban have not made the breakthrough they were hoping for. Their recent victories in Helmand have been small. They rule over a mere 5% more of the country’s population than before. They threaten few cities of any size. And despite heavy losses, Afghan forces are mostly holding their own. It is, says Mr O’Hanlon, a “stalemate with a slight edge to the insurgency”. + +Meanwhile, President Barack Obama has been forced to break his ill-considered promise to remove all American troops from Afghanistan by the end of the year. Yet, to the dismay of his military advisers, he is still talking about cutting the force there to 5,500 before he leaves office in January 2017. That decision too is quite likely to be reversed. + +Mr Obama needs to consider how to help the Afghan government get through what is certain to be another tough year. He should give Afghan forces air support of the kind which, in Iraq, government forces are getting in the fight against IS. And, Mr O’Hanlon says, he should expand the training mission by providing another 3,000 mentors to work with the army. One reason for the setbacks in Helmand province is that there are too few trainers. + +What America cannot do is to improve the atrocious local governance that creates the grievances the Taliban exploit. At best, stabilising the security situation will allow more time for the well-intentioned Mr Ghani and Mr Abdullah to get their act together. That may seem a faint hope, but it is much better than the alternatives. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21685515-resurgent-taliban-winning-territory-all-not-lost-bloody-year-transition/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Modi-fied but not transformed + +Yet again, terrorist attacks jeopardise reconciliation between India and Pakistan + +Jan 9th 2016 | From the print edition + + + +IN THE recent history of relations between India and Pakistan, it has seemed an immutable law: that any apparent political breakthrough will be followed by a terrorist atrocity in India blamed on agents of the Pakistani state. The bloodiest of these—a murderous assault on Mumbai in 2008—brought a chill that has yet to thaw. And just last July, after India’s prime minister, Narendra Modi, had met his Pakistani counterpart, Nawaz Sharif, at a regional summit in Russia and agreed that their national-security advisers should hold talks, terrorists attacked a police station in the Indian state of Punjab. + +The latest turn in this cycle is remarkable both for the drama of the breakthrough and for the daring of the terrorist response. On December 25th Mr Modi, en route from Kabul to Delhi, made an impromptu stopover in Lahore in Pakistan. He dropped in on Mr Sharif, who was celebrating both his own birthday and his granddaughter’s wedding. No Indian prime minister had set foot in Pakistan since 2004, and much hugging, hand-holding and bonhomie ensued. It formed part of a series of diplomatic contacts intended to be followed by the launch of a “comprehensive bilateral dialogue”, with the details to be discussed at a meeting on January 15th in Islamabad, the Pakistani capital, between the two countries’ most senior diplomats. + +That meeting is now in jeopardy. On January 2nd six gunmen in Indian army uniforms infiltrated a big Indian air base at Pathankot, near the Pakistani border, again in Punjab. Killing them all took over three days and cost seven Indian soldiers their lives. Indian analysts saw the hands of Pakistan-based Islamist groups with ties to the Inter-Services Intelligence, the ISI, Pakistan’s military spy agency. On January 3rd India suffered another attack, on its consulate in the city of Mazar-e-Sharif in Afghanistan. Again, many Indians blamed groups friendly with the ISI. + + + +The talks this month would in effect resurrect a “composite dialogue” pursued fitfully under Mr Modi’s predecessor, Manmohan Singh. Mr Modi presents himself as a very different sort of statesman from Mr Singh, who was cerebral, bureaucratic and mild-mannered to the point of diffidence. Mr Modi is both a chest-thumping nationalist and a compulsive hugger and hand-holder, whose diplomacy emphasises, quite literally, the personal touch. When in opposition, Mr Modi and his colleagues were fierce critics of Mr Singh’s alleged softness towards Pakistan. But in office he gives the impression of having inherited one of Mr Singh’s foreign-policy ambitions: to go down in history as the leader who made lasting peace with India’s neighbour. Mr Modi has boasted of “engaging Pakistan to try and turn the course of history”. Like Mr Singh, however, he now has to deal with the propensity of parts of the Pakistani state to dabble in terrorism as a way of disrupting talks or of furthering their own agenda. + +The United Jihad Council, an umbrella for militant groups fighting Indian rule of part of the divided and disputed state of Kashmir, said that it had organised the Pathankot attack. Many commentators were sceptical, blaming instead Jaish-e-Muhammad, a notionally banned Pakistan-based outfit nurtured by the ISI to harass India. It has a history of spectacular attacks, including one on Parliament in Delhi in 2001 that brought India and Pakistan to the brink of war. It was also guilty of the kidnapping and murder in 2002 of Daniel Pearl, an American journalist, and in 2003 even tried to blow up Pervez Musharraf, Pakistan’s military dictator. Yet its leader, Masood Azhar, is a free man. The fact that he and other leaders of terrorist groups are not in detention is proof, to India, of official Pakistani connivance in terrorism against it. + +It is Pakistan’s army, not Mr Sharif, that sets the country’s foreign and security policy. Yet under its present chief, General Raheel Sharif (no relation to the prime minister), it seems to have realised that it is not India that poses an existential threat to Pakistan; rather the greatest danger stems from the militant groups it has fostered itself to wage proxy wars in Kashmir and Afghanistan. To focus on quelling the Pakistani Taliban, in its strongholds in Pakistan’s western, Afghan borderlands, the army, too, has an interest in peace with India and a stable eastern front. Yet it is hard to imagine that extremists can cook up and execute elaborate plans such as the Pathankot attack without some level of official help. This suggests either that General Sharif is playing a double game, and that the army still wants to prevent rapprochement with India; or, perhaps, that the army and the ISI are internally divided. + + + +Our interactive map demonstrates how the territorial claims of India, Pakistan and China would change the shape of South Asia + +Now Mr Modi faces a dilemma familiar to Mr Singh and his predecessors. To proceed with talks in the face of such provocations looks weak and may encourage others. Yet conventional military options are limited, and nuclear ones unthinkable. And to call off dialogue gives the terrorists what they want. + +Not much to talk about + +In fact, initial reactions by Mr Modi and his colleagues to Pathankot were restrained. Mr Modi blamed not Pakistan but “enemies of humanity”. The foreign-secretary talks were not called off at once. Maybe Mr Modi calculated that India had more to gain internationally from appearing accommodating than from acting the victim, and that the domestic political cost would be small—after all, he is known as a “Hindu nationalist” who will not yield to Muslim-majority Pakistan. His political allies still talk about the eventual “unification” of India, Pakistan and Bangladesh. Yet all that is at stake at the moment is, in effect, talks about talks. Mr Modi, with his impeccable patriotic credentials, can make the concessions needed to hold them. But nobody expects issues festering since India’s partition in 1947—notably the status of Indian-administered, Muslim-majority Kashmir, which at times seemed tantalisingly close to resolution under Mr Singh—to be solved soon. Hard as it is, getting back to the table is the easy part. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21685488-yet-again-terrorist-attacks-jeopardise-reconciliation-between-india-and-pakistan-modi-fied-not/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Hong Kong-mainland relations: Publish and be abducted? + +Liberal economists: Three wise men + + + + + +Articles Sections Next + +Hong Kong-mainland relations + +Publish and be abducted? + +TThe disappearance of booksellers raises questions about Hong Kong’s autonomy + +Jan 9th 2016 | HONG KONG | From the print edition + + + +DISCRETION is not a trait often associated with the glitzy shopfronts of Hong Kong’s Causeway Bay, but the low-key entrance to a small bookshop belies the store’s recent notoriety. Tucked between a chemist and a clothes shop, Causeway Bay Books (pictured) has become the centre of a mystery involving alleged kidnappings by Chinese secret agents, and of a fierce debate in Hong Kong about the former British colony’s autonomy under Chinese rule. + +The door to the shop, up two flights of stairs, is now locked. The trickle of people going up are journalists and passers-by curious for news about five men connected with the shop who have disappeared in recent months. Many Hong Kongers fear that agents from China’s mainland may have been involved, and that the men were targeted because of the shop’s gossipy books. Titles recently on sale include “The Collapse of [President] Xi Jinping in 2017” and “Xi Jinping and the Elders: War at the Top”. + +When China took Hong Kong back from Britain in 1997, it agreed to give the territory a “high degree of autonomy”. Outspoken critics of the Communist Party remained free to air their views without fear of being “disappeared” by police, as commonly happens to their counterparts on the mainland. Hence huge public interest in this case. “The midnight knock on the door is not something we have had to worry about in Hong Kong,” wrote a columnist in the territory’s leading English-language newspaper, the South China Morning Post (recently bought by a mainland businessman). “But if we do now, that would be the end of our way of life.” + +Worries about skulduggery by the mainland’s agents have been growing since October, when four of the men disappeared. One of them was Gui Minhai, the owner of Mighty Current, a publishing house which controls the shop. Mr Gui, a Swedish citizen of Chinese birth, went missing while staying in Thailand. Three members of the shop’s staff—Lam Wing-kei, Lui Bo and Cheung Jiping—disappeared during visits to China’s mainland. + +Ominous clues + +But it was the disappearance of Lee Bo, a shareholder in the shop, that aroused the biggest concern because it occurred in Hong Kong itself. Mr Lee, who is a British citizen, failed to return home after visiting his warehouse on December 30th. His wife told a television news channel that Mr Lee had later telephoned her to say that he was “assisting in investigations” relating to the other disappearances. She said he had sounded harried, and, unusually for him, had spoken in Mandarin—the official language of mainland China—rather than in Hong Kong’s Cantonese tongue. Mrs Lee said her husband had called from Shenzhen, a mainland city adjoining Hong Kong. Yet police in Hong Kong said they had found no record of him having crossed the border. Mr Lee did not take his mainland travel permit, his wife said. + +The authorities in Beijing have done little to dampen speculation. Wang Yi, the foreign minister, told journalists that Mr Lee was “first and foremost a Chinese citizen”—implying that Mr Wang’s British counterpart, Philip Hammond, who happened to be visiting China this week, had no right to poke his nose in (Mr Hammond said British diplomats had “urgently inquired” about Mr Lee’s whereabouts). A newspaper published in Beijing, Global Times, accused the bookshop of sellin g works that “viciously attacked” the mainland’s politics and said Mr Lee was “well aware” of the “harm” these books were causing across the border. “Hong Kong cannot be a special base for hostile forces to carry out activities [aimed at] subverting the country’s political system,” it said. + +Officials in Beijing have long worried about Hong Kong’s role as a safe haven for outspoken critics of the Communist Party, and those who try to expose its secretive inner workings. There is speculation that the mainland authorities may have finally lost patience having got wind of reported plans by Mighty Current to publish a book about President Xi’s private life. + +Even the Hong Kong authorities—usually reluctant to hint at any disagreement with the mainland—are sounding a bit anxious. On January 4th the chief executive, Leung Chun-ying, told a hastily arranged press conference that any unauthorised encroachment by mainland agents would be an “unacceptable” breach of the Basic Law, the territory’s mini-constitution. But he said there was “no indication” of outside involvement in the case. + +On January 5th a Taiwanese news agency published a faxed letter purportedly from Mr Lee saying everything was “normal” and that he had gone to the mainland “using his own method”. His wife said the letter appeared genuine, and that she had withdrawn her request for police help in finding her husband. Many commentators believe that the letter was written under duress, however, and that it hinted at the abnormality of his crossing into the mainland. Mr Leung said investigations would continue into Mr Lee’s case. + +Mr Leung’s popularity has already badly suffered as a result of his endorsement of the mainland government’s refusal to grant full democracy in Hong Kong. He would risk even greater opprobrium if it became evident that he was turning a blind eye to mainland snatch-squads. Despite his efforts, he will find it hard to dispel the territory’s fears. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21685287-disappearance-staff-hong-kong-book-store-raises-questions-about-territorys/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Liberal economists + +Three wise men + +Ageing reformists diagnose the economy’s ills + +Jan 9th 2016 | SHANGHAI | From the print edition + + + +WHATEVER image you may have of the reformists hoping to shake up China’s creaking economic system, it is probably not one of octogenarians who fiddle with their hearing aids and take afternoon naps. But that is a fair description of three of the country’s loudest voices for change: Mr Market, Mr Shareholding and the most radical of all, the liberal. With growth slowing, the stockmarket once again in trouble and financial risks looking more ominous, their diagnoses of the economy, born of decades of experience, are sobering. + +Wu Jinglian, Li Yining and Mao Yushi—their real names—were born within two years of each other in 1929 and 1930 in Nanjing, then China’s capital. Whether it was that or pure coincidence, all three grew up to demand an end to Soviet-style central planning and to propose, to varying degrees, capitalism in its place. Their influence has waned with age, but their powers of analysis remain sharp. And they do not much like what they see. + +Mr Wu is in some ways the most important of the group. He advised the government from the earliest years of China’s “reform and opening” in the 1980s, through the 1990s when the great China boom got under way (see timeline). He proposed that the Communist Party should declare China a “socialist market economy”, a twist of words (and a hugely controversial one—conservatives abhorred any positive mention of markets) that opened the door to private enterprise. + +But Mr Market, as he came to be called, thinks this kind of linguistic ruse has outlived its usefulness. Imprecise concepts have led to flawed actions, he warns. Though the private sector has flourished over the past couple of decades, the state still looms large, controlling financial flows and acting as gatekeeper for virtually all important decisions, from land deals to mergers. “Even a low-level bureaucrat can decide the life or death of a company. You need to listen to the party,” says Mr Wu, who now teaches at the China Europe International Business School in Beijing. + +Mr Wu notes contradictions in the official blueprint for reforming state-owned firms. The party promises to empower their boards, but still wants to retain authority over the appointment of top executives. “If you can’t solve this problem, it will be very difficult to develop effective corporate governance,” he says. Mr Wu argues that political change is now needed to shore up the economy: the government must stop meddling in markets and instead focus on developing the rule of law. Holding up a copy of his recent book, he chuckles softly. “All my ideas are in here. No one pays them much attention.” + +Getting heard is less of a problem these days for Li Yining, who has spent his entire academic career at Peking University. His former pupils include Li Keqiang, China’s prime minister. His big idea in the 1980s was that selling partial stakes in state-owned companies to the public would improve their performance—hence his nickname, Mr Shareholding. The party eventually took his advice, though the companies remain hugely inefficient. + +In diagnosing the problems of today, Li Yining is blunt: the previous few years of ultra-high-speed growth “did not accord with economic laws”. China wasted natural resources, damaged its environment, piled up excess capacity and missed opportunities to fix its economic model. Yet perhaps because of his connections to those in power, Mr Li is by far the most sanguine of the old guard of reformers. “The new normal”—President Xi Jinping’s favourite economic slogan—is shifting the economy in the right direction, by aiming for lower growth and structural changes. + + + +China's growth is slowing. A detailed look at what is behind the slowdown + +Mao Yushi disagrees. And unlike many economists cowed by a frostier political climate, he is unafraid to say so. Mr Mao started his career in the railway system, including a spell driving trains, before retraining as an economist in the 1970s. Always on the margins of Chinese academia, he founded the Beijing-based Unirule Institute of Economics in 1993, an independent think-tank (a rarity in China). He champions deregulation and courts controversy in his criticism of Mao Zedong’s disastrous rule. Some diehard Maoists call the softly spoken economist “Mao Yu-shit” online, playing on a homonym of his name. + +In Mr Mao’s view it is already too late for the economy. China has too many empty homes and its banks have too much bad debt. “A crisis cannot be averted,” he says. Mr Mao allows himself some optimism, however. The young generation is educated and open-minded. The waste of capital and resources of recent years implies that China still has good potential for growth, if it can operate more efficiently. But he believes that Mr Xi, while espousing reform, is strengthening the state’s economic grip. “He has the power and the determination to fix problems, but in many cases he does not properly understand the problems,” says Mr Mao. + +Such unvarnished, open criticism of Mr Xi is rare in China these days. Speaking in the living room of his apartment, its walls stacked high with books and yellowing newspapers, Mr Mao says that his age and experience give him, and the other elderly reformists, a bit of leeway. “If it was someone else speaking, they would probably be arrested. But to me, the government is polite.” If only it would pay more heed to the elders’ advice, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21685511-ageing-reformists-diagnose-economys-ills-three-wise-men/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Politics in the Middle East: The Arab winter + +South Africa’s next president: After Zuma, another Zuma? + +Nigeria’s federation: A house divided + +Electricity in Africa: Power hungry + + + + + +Articles Sections Next + +Politics in the Middle East + +The Arab winter + +Five years after a wave of uprisings, the Arab world is worse off than ever. But its people understand their predicament better + +Jan 9th 2016 | CAIRO | From the print edition + + + +“I AM the free and fearless. I am secrets that never die. I am the voice of those who will not bow…” The voice in question, raised in song amid the crowds packing Avenue Bourguiba, a promenade in Tunis, at the beginning of 2011, was that of Emel Mathlouthi. For a moment of calm in a month of clamour, she gave voice to the aspirations of hundreds of thousands of her compatriots. + +On January 14th those protesters forced Zein al Abidine Ben Ali, Tunisia’s dictator for the previous quarter-century, from office. What followed was not easy. Terrorism hindered both economic progress and deeper political reform. But in 2015 the country became the first Arab state ever to be judged fully “free” by Freedom House, an American monitor of civil liberties, and it moved up a record 32 places among countries vetted by the Vienna-based Democracy Ranking Association. In December Ms Mathlouthi sang before another spellbound audience—this time in Oslo, as part of celebrations surrounding the award of the Nobel peace prize to four civil-society groups that shepherded in the new constitution of 2014. + +Sadly, that outcome remains a stark anomaly. There were six Arab countries in which massive peaceful protests called for hated rulers to go in the spring of 2011. None of the other uprisings came to a happy end. Libya and Yemen have imploded, their central states replaced in whole or part by warring militias, some backed by foreign powers, some flying the flags of al-Qaeda or Islamic State. Egypt and the island kingdom of Bahrain are now yet more autocratic, in some ways, than when the protests began. And Syria has descended into an abyss. Half its cities lie in ruins, much of its fertile land has been abandoned; millions have been displaced within the country, millions more have fled beyond it; hundreds of thousands have died; there is no end in sight. + +With the exception of its far east and west—the oil-rich Gulf and quietly prospering Morocco, aloof behind a border with Algeria that has been sealed for 21 years—the rest of the Arab world does not look much better. Iraq’s Shia south and Kurdish north and north-east are, in effect, separate countries, while in the war zone of its Sunni-dominated west the fearsomely brutal rule of the so-called Islamic State has taken root. The Algerians and Sudanese have emerged from civil wars to find themselves still beholden to opaque and predatory army-backed cliques. Palestinians, divided into rival cantons, are weaker and more isolated than ever. Jordan remains an island of calm preserved through fear: both the kingdom’s own people and the donor countries that prop it up are too spooked by the chaos buffeting its borders and flooding it with refugees to talk much of political reform. + +Change it had to come + +In short, Arabs have rarely lived in bleaker times. The hopes raised by the Arab spring—for more inclusive politics and more responsive government, for more jobs and fewer presidential cronies carving up the economy—have been dashed. The wells of despair are overflowing. + +The wealthy Gulf states have seen their incomes slashed by collapsing oil prices. The tighter immigration rules they have set up to replace expatriate labour from other Arab states with natives, or Asians, have hit the remittance flows through which they subsidised their poorer brethren. Demographic pressures are unyielding. Some 60% of the region’s population is under 25. Figures from the International Labour Organisation show that youth unemployment in the Middle East and north Africa, already a terrible 25% in 2011, has risen to nearly 30%, more than double the average around the world. Rent-seeking remains rampant, and standards in both public education and the administration of justice are still dismal. Economic growth is slow or stagnant; the hand of the security forces weighs heavier than ever, more or less everywhere. Sectarian divisions and class rivalries have deepened, providing fertile ground for radicals who posit their own brutal vision of Islamic Utopia as the only solution. + + + +The Arab spring seems therefore to have brought nothing but woe. It has become fashionable in some circles to ape Russia and Iran in blaming this failure on supposedly “naive” Western policymakers. Had Western powers not abandoned old allies such as Egypt’s Hosni Mubarak; had they not intervened in support of Libyan rebels; had they not presumed that the Syrian dictator Bashar al-Assad was just another domino waiting to topple; had they not turned a blind eye to the danger of Islamist fanatics: then all would be well. + +This is tosh. To frame the uprisings of 2011 as a sequence of isolated events, each of which had a unique and optimal policy response, is to deny the historical reality of what happened. Such hindsight belies the actual experience of seeing an entire region—and the world’s most politically torpid region, at that—whirl into sudden, synchronised motion. It also denies agency to the actors themselves: to the crowds whose cries of “Enough!” reached critical mass; to the paranoid rulers whose responses exacerbated the protests. + +This is not to say that the events of 2011 had no precursors. Algeria’s Islamist uprising in 1991, two intifadas in Palestine, the “Independence revolution” that ousted Lebanon’s government in 2005, even the short-lived “Green revolution” in non-Arab but nearby Iran, all signalled the region’s desire for change. But the world’s democracies were, by and large, correct in judging that what they were seeing in 2011 was something broader, more potent and more difficult to steer than a set of national crises that happened to coincide. Nor were they naive to think that an empowered “Arab street” would seek to move its countries closer to global norms of good governance. That was the demand the demonstrators made in protest after protest, from the Gulf to the Atlantic. + +In judgment of all wrong + +The West’s naivety, which was shared—and paid for—by those hopeful demonstrators, lay in underestimating two things. One was the fragility of many Arab states, too weak in their institutions to withstand such ructions in the way that, say, South Africa did when apartheid fell. The other was the vicious determination with which established regimes would seek to retain or recapture control. Who could believe that a soft-spoken leader such as Mr Assad would prefer to destroy his country rather than leave his palace? Those were the truths that brought hope to the ground. + +Just as the spring itself was more than just a set of national events, so the current period of counter-revolution is an international matter. Conservatives across the region have received powerful backing from the Gulf. One early and stark example of this was Bahrain, where the ruling family called on fellow Sunni monarchs to help it crush a pro-democracy movement championed by its Shia majority. Last year’s intervention in Yemen by a Saudi-sponsored coalition can be seen in the same light. The Saudis are seeking not only to thwart Houthi rebels, whose Iranian backing they revile. They are trying to force a return to the status quo. + +The most internationalised conflict is the bitter civil war in Syria, where powers from the region and beyond contend through proxies. The war has long since metastasised into a monumental free-for-all involving dozens of belligerents. But it remains at its core a fight between aggrieved citizens and a narrowly based—and in Syria’s case largely sectarian—elite intent on keeping its hold on power. + + + +In Egypt, a nation-state of longer standing and greater stability, the ancien régime’s fight has—again with help from the Gulf—been won, for now. Egypt has long been seen as the region’s bellwether, and for good reason. Over the past five years it has provided the Arab spring’s most revealing story of failure; today it highlights the degree to which the tensions persist that brought about the uprisings. + +The world looks just the same + +In 2010, six months before the protests in Tahrir Square turned into the uprising (even Egyptian enthusiasts are now shy of calling it a revolution) that ousted Mr Mubarak, this newspaper warned of looming change in Egypt and suggested that there were three ways in which it might play out. The country might, like Iran in 1979, experience a popular revolution which would then be hijacked by Islamists. Like Turkey in the 2000s, it might become a genuine, if shaky and flawed, democracy, one with the power needed to tame the military-backed “deep state”. Or, like Russia, it might suffer a Putinist putsch, with the deep state reasserting control under a new strongman. + +We were too parsimonious. Egypt has, in a jumbled fashion, experienced not just one but all three of these outcomes. Its revolutionaries did overcome, if briefly, the security forces that underpinned Mr Mubarak’s rule. Egyptians then voted in a government headed by the Muslim Brotherhood—a government which, rather than shrinking the deep state, tried instead to insert party loyalists into its depths. (As it happens, this is also what Turkey’s Islamist-leaning government has been doing since 2011, with rather more success.) Popular anger against the Islamists, stoked and nurtured by the deep state, then brought Egypt to the Russian option in a soft coup that saw Abdel-Fattah al-Sisi, a general and the minister of defence, installed as president in June 2013. + +Two and a half years later, Mr Sisi’s counter-revolution appears all but complete. Mr Mubarak and his cronies, not to mention the police responsible for killing and maiming hundreds in the clashes of 2011, are out of jail. Tens of thousands of Muslim Brothers, along with hundreds of secular revolutionaries, are imprisoned, in exile, or dead. Nearly 1,000 Islamists were killed when anti-coup protests were crushed in 2013. The police have killed scores more since then; others have died from torture or neglect in prison. + +Mr Sisi’s men have taken particular care to harass the technically adept young people whose social-media skills made the revolutionary experiment possible. And the state has made an unprecedented effort to control the courts, universities and media. A tailor-made constitution that grants sweeping powers to the president and the army, and electoral rules designed to produce a fragmented parliament, furnish it with the trappings of democracy. But it is a sham. The Mukhabarat (secret police) intervened in 2015’s elections to ensure supine legislative loyalty to the president. Not surprisingly, turnout was dismal, particularly among the young. Their disdain proved further justified when the government abruptly cancelled the results of December’s student-council elections in the country’s universities. Pro-revolution candidates had won across the board. + +Many Egyptians praise Mr Sisi for delivering the country from both Islamists and revolutionary hotheads. Many more now shun politics altogether, which from the autocrats’ point of view is almost as happy a result. The Muslim Brotherhood remains in shattered abeyance and more radical Islamists, who have mounted terror attacks and grabbed a chunk of territory in north-east Sinai, have not made broader inroads among the general public. Another uprising on the scale of 2011 is unlikely in the near future. + +But the effort to build a bigger, stronger “wall of fear” has further alienated Egypt’s people from a state that is not just cruel, arbitrary and unaccountable, but also both too incompetent and too broke to buy their acquiescence. Investors are put off by erratic policymaking, the overweening power of the army and Mukhabarat, and unpredictable, often vindictive courts. Egypt’s government debt remains colossal. The budget deficit has topped 10% every year since 2011; in mid-2015 Egypt’s combined domestic and foreign liabilities pushed past 100% of GDP. The currency is in decline—and so is tourism. Incidents such as the killing of a group of Mexican tourists mistaken for terrorists by the air force, or the government’s farcical handling of what appears to have been the bombing of a Russian civilian airliner on Egyptian territory in October, show the state to be inept. Mr Sisi’s benefactors in the Gulf, who have propped up his regime with perhaps $30 billion in cheap loans, central-bank deposits and fuel, are reputedly running out of patience and risk running out of money. Repeatedly bailed out in the past, Egypt has no more saviours-in-waiting. + +Tip my hat to the new constitution + +A recent tweet—“Has anyone tried switching Egypt off and turning it on again?”—sums up the despairing mood of this broken country’s people. For lack of an alternative, or an on-off switch, most have adopted a wait-and-see attitude, praying that Mr Sisi will lighten his grip or hoping for a palace coup to install a less military-minded ruler. “The cheapest option is internal change inside the regime,” says Abdel Moneim Abul Fotoh, a former Muslim Brother whose centrist platform captured 4m votes in the 2012 presidential election. “Revolutions are cumulative, and it will take time for pressure to accumulate.” + +But if the uprising changed little in the way things work, it changed much in how they are perceived. Hani Shukrallah, an Egyptian commentator, likens memories of Tahrir Square to King Hamlet’s ghost, a presence that may be intangible yet remains the driving force of the drama, and which mutely insists that something is rotten in the state of Egypt. + +What underlies the rot, in Egypt and elsewhere, is the failure of generations of Arab elites to create accountable and effective models of governance, and to promote education. After some 60 years of essentially fascistic rule—the forced rallying behind a bemedalled patriarch, pomp and parades and propaganda disguising the reality that the people have no voice—it was perhaps not surprising that the backlash, when it came, was inarticulate and lacked direction. The Arab revolutions produced few leaders, few credible programmes for action, and few ideas. But they did produce much-needed clarity about such things as what political Islam actually means in practice, where the Arabs stand in the world and with each other, and what the weaknesses and strengths of Arab states and societies are. + +Before it came to brief and inglorious power in Egypt, the Muslim Brotherhood attracted believers with the simple but vague slogan “Islam is the solution”. Experience now prompts many more Arabs to ask, which Islam? If it is the arm-twisting, head-lopping version proclaimed by Islamic State (IS), which dismisses all Muslims but its own ardent followers as shirkers and sinners, there are few takers. If it means giving political power to more mainstream religious figures who cannot agree on points of doctrine, this does not look appetising either. Nor do the Muslim Brothers, who revealed themselves to be conservatives bent on capturing rather than reforming the state, hold much more of an appeal. + + + +Grid of grievances: Enemies, alliances and animosity in the Middle East + +For decades Arab opinion-makers have ascribed a host of regional ills to Western—and particularly American—meddling, even as its leaders turned habitually to the West for aid or military protection. And the West is hardly innocent; the biggest regional debacle until recent years was America’s spectacularly inept occupation of Iraq. But the morass left by that unforced error, along with the West’s ineffectual response to the Arab spring, have convinced all but a conspiracy-addled fringe that there is not much substance to talk of Western omnipotence, American hegemony or even a Zionist conspiracy. The West’s capacities have been revealed as limited and seldom effectively exercised. It is the region’s own weakness, rather than malign Western intent, that keeps sucking in outside powers. + +At the same time many Arabs have also seen, not for the first time but perhaps now more clearly than ever, how weak the links between Arab states actually are, despite decades of slogans proclaiming Arab unity. And they have seen how weak the states themselves are, and more sadly how weak many of their own societies are. Iraqis and Syrians are fond of saying that before the American invasion or the 2011 uprising there were no tensions between Sunnis and Shias. If this is true, though, such solidarity was very easily shattered. + +History ain’t changed + +If states’ weaknesses stand exposed, so do their workings. In Egypt and Tunisia, and even more so in Mr Assad’s Syria, no one used to know who in which of the many competing security agencies really controlled what, or how. They could not put their finger on the way that, say, a compliant judiciary fitted in to the overall shape of things. Now they can. In Egypt the current crop of thoughtful young revolutionaries shuns the street in favour of drawing up quiet plans for overhauling the police or reforming the judiciary. If another uprising starts, its demands will go beyond the removal of a figurehead and the election of a legislature kept well away from the levers of real power. + +Mr Sisi and Mr Mubarak: meet the new boss… + +And what else may be on the agenda for change? One place to look is to IS—which, in ghastly irony, is the only truly new model of government that the wave of revolutions has thrown up. The group is monstrous. Its “state” is in many ways a far nastier reproduction of previous autocratic regimes, overlaid with a brutal “Islamic” veneer that most Muslims find repulsive. Yet the fact that this ugly experiment survives at all, despite the world’s semi-united efforts to abort it, holds lessons for the region. + +Although IS’s laws are grotesque, other Arab states should take note that its emphasis on quick and firm justice appeals not only to Syrians and Iraqis desperate for order amid chaos. It responds to a burning public need to right decades of perceived wrongs. So does IS’s intolerance of corruption within its own ranks and its focus, even with limited means, on providing services such as health, education and social welfare. Unlike other Arab states, which tend to be hyper-centralised, IS grants broad powers to local administrators. These officials seek to regulate and tax commerce rather than to control it. Instead of assuming ownership of the oil industry, as nearly all other Arab states do, it sells the crude oil in its territory at the wellhead, subsequently exacting taxes from the people who go on to refine and transport it. + + + +An interactive guide to the Middle East's tangled conflicts + +The missing ingredients in this formula are obvious: a basic respect for human rights and for diversity, systems of accountability, a method of lawmaking that pays heed to the will and interest of the public and not simply religious texts or the whims of a so-called caliph. Such essential components of good governance are often lazily bundled together as part of a grab-bag labelled democracy. The Arab spring showed that it may be these constituent elements, more than such theatrics as toppling tyrants or holding noisy elections, that are the key to success. + +In the tense calm that has settled over countries such as Tunisia and Egypt, in the brittle peace that will no doubt eventually prevail across Iraq, Syria and Yemen, and during the continuing, ever-expectant pause endured by other Arabs as they wait for change, it is these kinds of institutional building blocks that need attending to. Arabs may take heart from the fact that in Europe, the supposedly revolutionary years of 1848 and 1968 produced little forward motion; indeed their immediate effect was to prompt a conservative backlash. A.J.P. Taylor, a historian, described 1848, a year of continent-wide insurrection against autocracy, as a moment when “history reached a turning point but failed to turn.” + +But in both cases revolutionary change did come, in protracted form, in the next generation. It was brought about less by street action than by quiet evolutions in culture, society and the economy, and by the building of new and stronger institutions. It is not as intoxicating as mass action in Tahrir Square. But if some future season of rebirth is to lead to a lasting summer, there needs to be some thoroughgoing climate change first. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21685503-five-years-after-wave-uprisings-arab-world-worse-ever/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +South Africa’s next president + +After Zuma, another Zuma? + +Jacob Zuma wants to start a dynasty + +Jan 9th 2016 | JOHANNESBURG | From the print edition + +Who has custody of the country this weekend? + +DIVORCING couples usually squabble over custody of the children. Jacob Zuma seems to be wondering how to share custody of the country with his ex-wife. Mr Zuma must retire as South Africa’s president in 2019. He appears to favour Nkosazana Dlamini-Zuma, to whom he was married until 1998, as his successor. The couple often appear on stage together at political events, as they did during the African Union (AU) summit in Johannesburg in June. + +A quiet race is under way to pick the next president of the ruling party, the African National Congress (ANC). The winner will inevitably become president of the country, too. For Mr Zuma, there is much to commend his ex-wife. For a start, she has not been accused of trying to poison him (unlike one of the current crop of first ladies, whose lawyers issued a statement in which she denied being part of a plot to do so). Furthermore, Ms Dlamini-Zuma has plenty of political experience. She currently chairs the AU. She has served as South Africa’s health minister (under Nelson Mandela), foreign minister (under Thabo Mbeki) and home affairs minister (in her ex-husband’s cabinet). + +She is also loyal. Mr Zuma faced 783 charges of corruption, fraud, money-laundering and tax evasion before he became president. (He denies them all.) These charges were dropped, but the opposition Democratic Alliance is doggedly trying to reinstate them. Mr Zuma’s critics speculate that he wants his ex-wife at the helm as an ally to argue that the charges—which he claims are politically motivated—should never see the light of day. + +The odds of another Zuma running South Africa are hard to gauge. There is no open, formal campaigning within the ANC. Candidates maintain the fiction that they are “deployed” by the party. + +The other strong contender is Cyril Ramaphosa, a union-leader-turned-tycoon who is now deputy president. He has the tacit support of the Congress of South African Trade Unions (COSATU), a part of the ruling alliance. At the COSATU national congress in late November several unions openly backed Mr Ramaphosa, saying that the deputy president of the ANC should succeed as party president, as in the past. + +Mr Ramaphosa stands to benefit from the mess Mr Zuma has made of the country’s credit rating. In December the president replaced a respected finance minister with an unknown backbencher, spooking the markets. He soon relented and appointed a third finance minister, whom investors trust, but the episode solidified his reputation for capricious decision-making. Even so Mr Ramaphosa, who has a sober, Mr Fix-It reputation, will have to build support softly-softly, in the ANC style. + +Ms Dlamini-Zuma received a boost in November when Sihle Zikalala beat a candidate who supported Mr Ramaphosa to be elected as ANC chairman in KwaZulu-Natal province, the party’s biggest support base. Three provincial premiers, known as the “Premier League,” are drumming up support for her. Ms Dlamini-Zuma’s fans often say that “South Africa is ready for a woman president.” + +Would she be any good? Her record in government is not exactly impressive. As health minister, she extended health services to black South Africans but also promoted a quack “cure” for AIDS based on a toxic industrial solvent, and purged South Africa’s drug-safety authority when it objected. As foreign minister she failed miserably to address the implosion of next-door Zimbabwe. Some argue that, as home minister, she cleaned up a dysfunctional ministry; others say the reforms were under way before she took over. + +On January 8th the ANC will celebrate the anniversary of its founding. It is customary for the president to set out the party’s agenda on such occasions, but all eyes will be on the succession struggle behind the scenes. Not long afterwards, probably in May, South Africa will hold municipal elections. If the ANC does poorly, the Zumas will be weakened. + +Ms Dlamini-Zuma has said nothing publicly about what she might do if she becomes president. Susan Booysen, author of the book “Dominance and Decline: The ANC in the Time of Zuma”, predicts that she would be much like her ex-husband. That worries liberals, who fret that Mr Zuma has undermined institutions that check presidential power and tolerated widespread corruption. “I think Zuma is going to be with us long after he has actually left office,” says Ms Booysen. + +Mr Zuma may not be able to name his own successor, however. He is unpopular, even among ANC supporters. A recent Afrobarometer survey found that public distrust of him had increased from 37% in 2011 to 66% in 2015. “A majority of citizens believe that he routinely ignores both the legislature and the judiciary,” the pollster said. Public approval of his performance dropped from 64% in 2011 to 36% this year. + +Mr Zuma giggled throughout his last day of questions in Parliament for the year, despite the serious issues before him: a severe drought, an economy close to recession and reports that taxpayers are to fork out for a brand-new, 4 billion-rand ($251m) presidential jet. After a younger opposition MP scolded him Mr Zuma responded: “I don’t know how to stop my laughter.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21685324-giving-presidency-his-ex-wife-might-be-jacob-zumas-best-shot-avoiding/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nigeria’s federation + +A house divided + +How a toxic blend of identity politics and cheap oil hurts Nigeria’s states + +Jan 9th 2016 | LAGOS | From the print edition + + + +NIGERIA’S 37 governors cannot have expected cheers when they declared late in 2015 that they could no longer pay a minimum wage of just $3 per day to their employees. Politicians are seldom brave enough to cut civil servants’ pay but Nigeria’s governors are desperate. + +Low oil prices have slashed government revenues. Nigeria, which nowadays is comprised of 36 states and Abuja, the capital territory, operates as a federation in which most decisions over spending take place in the various state capitals. Every month the central government collects money from oil sales (which still account for more than 50% of its total revenues) and hands over just under half to the states. But that sum has plummeted since the price of crude declined. BudgIT, a Lagos-based analysis group, reckons that the states got a bit less than $7 billion between January and September 2015 compared with almost $14 billion over the same period in 2013. That led to a crisis in June when, having not paid their workers for months, 27 state governments begged President Muhammadu Buhari for a bail-out. + +By December 2015 several states were again failing to pay civil servants on time, provoking strikes. Although the fiscal crisis came to a head when the oil price collapsed, its origins are much older. + +At independence in 1960 the country was made up of just three regions. Since then it has been divided and subdivided. There are perhaps 250 ethnic groups in Nigeria. The big ones all want states where they are in a majority, so they can divvy up oil money and government jobs among their kin. “Some states were created by military leaders just to look after friends and businesses partners,” says Adigun Agbaje, a professor at the University of Ibadan. + + + +In charts: Explore Nigeria’s economy and politics + +This balkanisation of Nigeria has spawned a poisonous kind of politics. At the ballot box, religion and ethnicity matter far more than a candidate’s ideas. Politicians often win votes by stirring up animosity against the ethnic group next door. This can turn violent. More than 8,000 people were killed in ethnic or religious clashes in 2015. + +Few states gather much revenue themselves. Borno, a state in the north-east, collected about $3 per head from its 5m people in the whole of 2014. To be fair, it is besieged by Boko Haram insurgents. Still, other more peaceful states such as Osun are scarcely doing better yet hire civil servants by the busload. + +Some financiers think the federal government should provide conditional lending to troubled states. It probably won’t, given its own ballooning budget deficit. States could cut wages, but workers will howl. Some governors have hit on the original idea of trying to collect more tax. Lagos, the nation’s most self-sufficient state, thinks it can tax another 4m people, doubling the number who pay. Many states, however, are simply “hoping that future residents will pay off today’s costs”, says BudgIT’s Oluseun Onigbinde. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21685506-how-toxic-blend-identity-politics-and-cheap-oil-hurts-nigerias-states-house/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Electricity in Africa + +Power hungry + +Electrification plans are stalling because distributors won’t pay + +Jan 9th 2016 | DAR ES SALAAM | From the print edition + + + +AT THE edge of Dar es Salaam, Tanzania’s commercial capital, in a space roughly the size of a football field, stands hope for Africa’s industrial future: the Ubungo power plant. Gleaming pipes emerge from the ground; five modern generators hum quietly. This was where, in 2013, Barack Obama announced his Power Africa plan to electrify the continent. + +The trouble with plants such as Ubungo is that there are not enough of them. Opposite the power plant, young men sell charcoal to burn for cooking and heat. At night in the city centre the streetlights are turned off. South of the Sahara there are only seven countries—Cameroon, Gabon, Ghana, Ivory Coast, Namibia, Senegal and South Africa—in which more than 50% of people have access to electricity. In a typical year the whole region generates less electrical power than Canada, and half of that supply is in South Africa. + +Generating power in Africa ought to be a good business. Africans tend to pay extraordinary prices for electricity. Businesses rely on dirty and expensive diesel generators. Tanzanian mines are powered by generators burning diesel that has been trucked across the country; a kilowatt-hour can cost as much as $1. Grid power at an American mine, by way of comparison, costs less than a tenth as much. + +So there ought to be a rush to invest in African power plants. But there is not. Tanzania, a country of 50m people with substantial recent discoveries of natural gas, illustrates some of the bottlenecks. + +Tanzania has about 1,500MW of installed electricity-generation capacity—about as much as a small American city. More than a third comes from hydroelectric power stations. Because of drought in recent years, these rarely run at full capacity. In early October, at the end of the dry season, the country had to shut down all its hydroelectric plants. Tanzania is not alone in relying heavily on hydropower. In Malawi and Zambia almost all power comes from water, when it flows. + +Tanzania wants to build new gas-fired plants, connected via a new pipeline from a newly discovered gasfield in the south. Plants such as the one at Ubungo ought to generate lots of extra power cheaply. But that is not happening as quickly as it should. The Ubungo plant, which is owned by an American firm, Symbion, did not begin running at full capacity on local gas until last September. Before that, shortages meant that production often relied on imported liquid fuels such as kerosene. + +Gas is relatively clean, reliable and inexpensive. Indeed, the Ubungo power station could easily add capacity, says Magesvaran Subramaniam, Symbion’s local boss. It is just a matter of buying more mobile generators. The trouble is neither a lack of gas to power the plant nor a shortage of demand for the juice it sends down the wire; it is that the only customer does not pay its bills on time. Tanesco, which has a monopoly on distributing power in Tanzania, is severely cash-strapped. Its outgoings are inflated by the need to buy expensive emergency backup fuel to keep the lights on when the supply from dams falters. In practice, payments to independent power producers such as Symbion often come last on its list. + +On December 2nd SonGas, a private-equity owned firm that runs another gas-powered plant in Dar es Salaam, and which contributes as much as 20% of Tanzania’s grid power, threatened to stop generating electricity unless it is paid money is it owed by Tanesco. SonGas, like other firms investing in power plants across Africa, has a guarantee from Tanzania’s government that it will be paid—something financial backers generally insist on before investing in private power producers. But this does not help its short-term cashflow. Tanesco’s arrears do not mean that SonGas can refuse to pay for the gas it buys. + +For many, then, the best hope of getting the lights on is to bypass the grid entirely. M-Kopa, a Kenyan firm, is expanding across east Africa selling its solar-powered battery systems, which contain a torch and a mobile-phone charger. Customers are effectively given loans to buy them; repayments are made through mobile money. + +Generating power at home may transform life in rural areas for the better, but factories, mines and mills need a reliable, large-scale power supply. If Africa is to industrialise, it needs power plants. These will not be built unless customers start paying their electricity bills. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21685504-electrification-plans-are-stalling-because-distributors-wont-pay-power-hungry/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +France’s fight against terror: Après Charlie + +Bavaria’s Christian Social Union: Kabuki in the Alps + +Sexual assaults in Cologne: New year, new fear + +Italy’s economy: Mezza mezza + +European nightlife: Less than ecstatic + +Charlemagne: Early adopters + + + + + +Articles Sections Next + +France’s fight against terror + +Après Charlie + +After a year of far-reaching security measures, the left thinks the latest one is a step too far + +Jan 9th 2016 | PARIS | From the print edition + + + +FOR the French left, SOS Racisme, an anti-discrimination group founded in the 1980s, is a cherished treasure. With its rock concerts and slogans, it was a training ground for Socialist politicians, and remains a nostalgic reminder of multi-racial aspiration. But today, as France marks the first anniversary of the Charlie Hebdo terrorist attacks, SOS Racisme has turned its protests on its old Socialist friends: President François Hollande’s government and its latest counter-terrorism measures. + +As part of a package that will go before parliament next month, Mr Hollande plans to write into the constitution the power to strip nationality from French-born dual citizens convicted of terrorism. French law already allows this for dual citizens who have acquired French nationality. And some other European countries, such as Britain, can deprive even native-born dual citizens of nationality on grounds of national security. But France’s tradition of droit du sol, or the right to citizenship for those born on its soil, makes such a measure particularly sensitive. + +“It’s a huge betrayal,” says Marouane Zaki, an official at SOS Racisme, who has dual French and Moroccan citizenship. “It gives the impression that dual citizens are not really French, and that terrorism is not a problem among the children of the French republic, only those who come from somewhere else.” Over a third of French-born citizens with North African origins have dual nationality, according to the National Institute of Demographic Studies. This week SOS Racisme staged a protest outside the Socialist Party’s headquarters in Paris, accusing the government of trying to “write discrimination into the heart of the constitution”. + +Until now, Mr Hollande’s hard-line security policy has drawn broad cross-party support, which will only grow after police foiled an apparent terror attempt in Paris on January 7th. After the attacks in Paris on November 13th, the president stepped up bombing in Syria and adopted a muscular counter-terrorism approach. A state of emergency, which gives the police sweeping powers to make house arrests and raid premises, lasts until February 26th. Yet the citizenship-stripping proposal, backed by 85% of French people and long defended by the xenophobic National Front (FN), is seen by many on the left as a step too far. + +Revolt of the foreign-born + +Anne Hidalgo, the (Spanish-born) Socialist mayor of Paris, tweeted her “firm opposition” to the proposal. “There cannot be different categories of French citizens,” argued Samia Ghali, a Socialist senator born to Algerian parents. Perhaps the most crushing reproach came from Thomas Piketty, a left-wing economist and best-selling author, who accused the government of “running after the National Front”. + +The prospect of losing a French passport is unlikely to deter suicide-bombers. Better intelligence and policing, which the French are also strengthening, matter far more. Manuel Valls, the (Spanish-born) Socialist prime minister, has acknowledged that the proposal is a “symbolic measure”. France’s opposition broadly supports it, but Alain Juppé, a centre-right former prime minister, described its likely effectiveness as “feeble, if not zero”. + + + +In charts: Terror in western Europe + +The political outcry exposes the fragility of Mr Hollande’s standing on the left. Elected in 2012 to squeeze the rich and end austerity, Mr Hollande has shifted to a more business-friendly economic policy, to the dismay of his party’s left wing. He has presided over a painful three-year increase in joblessness. But his bellicose rhetoric after the November 13th attacks, in which 130 people were killed, earned Mr Hollande a big bounce in the polls. Now he seems to hope that public opinion will lend him the legitimacy to face down dissent on the civil-liberties left. + +As Europe grapples with the terrorist threat, the row may also reflect a new centre of gravity on matters of national security. The French have been remarkably tolerant of the constraints imposed by the state of emergency, even though few of the 2,700 police raids carried out so far have uncovered evidence that might thwart terrorists. Under Marine Le Pen, the FN has surfed a wave of fear. “The rise of the FN weighs heavily on the political debate,” says Augustin Grosdoy of the Movement against Racism and for Friendship between People, a watchdog, “and the left is not immune.” A year after Charlie Hebdo, France may be better patrolled and more alert. But the fleeting unity of “Je suis Charlie” feels a long time ago. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21685487-after-year-far-reaching-security-measures-left-thinks-latest-one-step-too/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Bavaria’s Christian Social Union + +Kabuki in the Alps + +How to interpret the theatre of German coalition politics + +Jan 9th 2016 | MUNICH | From the print edition + +Please direct your complaints to my colleague + +NOMINALLY they are allies. But Angela Merkel, the German chancellor and leader of the centre-right Christian Democratic Union (CDU), and Horst Seehofer, the premier of Bavaria and boss of the conservative Christian Social Union (CSU), have been at loggerheads for months over the refugee crisis. Mr Seehofer demands fixed “upper limits” on the number of migrants that Germany admits. Mrs Merkel, given the 1.1m refugees who arrived in 2015, agrees that a “reduction” is desirable but rules out limits as unconstitutional. At an annual CSU gathering on January 6th-8th, Mr Seehofer expanded his attack. With Mrs Merkel present as an uncomfortable guest, he put a low-ball number on his “limit”: no more than 200,000 a year. + +The refugee crisis strains not only Germany’s governing coalition (which also includes the centre-left Social Democrats) but also the “Union”, as the CDU and CSU are jointly called because they form one group in parliament. Yet their fight must be seen in context. The CSU has always been prone to elaborate displays of dissent—without which it would have no reason to exist as a separate party from the CDU. + +Start with the setting. The latest showdown took place at Wildbad Kreuth, a historic former spa near an Alpine lake where guests once included emperors and tsars. Every winter for four decades the CSU’s members of parliament have gathered there against a picture-perfect Bavarian backdrop. One meeting in 1976 took place amid a power struggle between two swaggering silverbacks, the CSU’s Franz Josef Strauss and the CDU’s Helmut Kohl. It was in Kreuth that Mr Strauss declared war, when the CSU formally abandoned its partnership with the Christian Democrats. The split was mended only a month later—but with appropriate utterances from both sides about the CSU’s prized autonomy. + +Ever since, the CSU’s attitude towards its sister party has been described as “the spirit of Kreuth”. The party thus has three jobs. The first is to rule Bavaria, which it does competently. The second is to ensure, as Mr Strauss put it, that “there must never be a legitimate democratic party to the right of the CSU”: the party must be populist enough to appeal to conservative voters and keep them from drifting to the extreme right. The third job is to make enough trouble in national politics, especially for the CDU, for Bavarians to feel important—but without actually toppling a Christian Democrat chancellor (without whom the CSU would also be powerless). + +By this definition, as of last summer Mr Seehofer was looking weak. The CSU appeared irrelevant in the governing coalition, and was widely ridiculed for both its signature policies. (One is to subsidise parents who keep their toddlers at home rather than sending them to a crèche. The other is to introduce a road toll which, cunningly, would hit only foreign drivers.) Meanwhile, a new xenophobic party, the Alternative for Germany (AfD), was growing to the right of the CSU, making Mr Strauss turn in his grave. + +The refugee crisis has allowed Mr Seehofer to tap into the spirit of Kreuth again. Since September he has been needling Mrs Merkel for her liberal asylum policy. That does not mean he wants to oust her. He only wants to signal to Bavarians that the CSU remains the conservative backstop inside the Union. This also applies when the topic is Brussels. In terms of Euroscepticism, the “Bavarians are the Brits of Germany”, as one analyst puts it. To get that message out, Mr Seehofer also invited David Cameron to attend this year’s meeting at the spa in Kreuth. All in the spirit. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21685513-how-interpret-theatre-german-coalition-politics-kabuki-alps/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sexual assaults in Cologne + +New year, new fear + +Attacks on women by mobs of young men inflame Germany’s refugee debate + +Jan 9th 2016 | BERLIN | From the print edition + + + +AS THE New Year’s fireworks went up in German cities, a brief panic seized Munich, which had information about planned terrorist attacks at two railway stations. Those never occurred. But, much less noticed at first, a different sort of crime was occurring in Cologne and, to a lesser extent, in Hamburg and Stuttgart. + +While partiers gathered on the square between Cologne’s cathedral and railway station, a large group of young men, later described by the police as “looking North African or Arabic”, also massed there. Some threw fireworks into the crowd to cause panic. Then the men formed rings around individual women, so that police and onlookers could not see inside each huddle. According to over 100 women who subsequently filed complaints, the men groped the women sexually, while others stole their mobile phones, wallets or purses. One woman was raped. + +Oddly, the Cologne police reported the following day that the festivities had been relaxed and peaceful. Only after scores of women came forward did the country react with rage. The interior and justice ministers promised to bring down the full force of the law—even as the police had to admit that they as yet had no information to make individual arrests. Angela Merkel, the chancellor, called the assaults “disgusting” and demanded justice “without regard to origin or background”. + +The assaults tapped into deep fears at a tense time, as Germany struggles with record numbers of refugees—more than 1m in 2015, largely from Arab countries. Populist politicians were quick to infer a connection. Frauke Petry, boss of the xenophobic Alternative for Germany, blamed the outrage on the “terrible consequences of a catastrophic asylum and migration policy”. + +There is no evidence yet that any of the criminals were refugees, as Cologne’s mayor, Henriette Reker, emphasised. Ms Reker personifies the conflicts straining German society. She ran for office as a non-partisan candidate with a liberal and welcoming stance toward migrants. For that, a neo-Nazi extremist stabbed her at a campaign event in October. (She was elected the next day, while still in a coma.) If it is confirmed that some of the muggers, molesters and rapists were asylum-seekers, the damage to what is left of Germany’s Willkommenskultur could be severe. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21685512-attacks-women-mobs-young-men-inflame-germanys-refugee-debate-new-year-new-fear/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Italy’s economy + +Mezza mezza + +As other peripheral economies take off, Italy’s is just so-so + +Jan 9th 2016 | ROME | From the print edition + + + +IT SEEMS that some PIIGS can fly. During the euro crisis Portugal, Ireland, Italy, Greece and Spain looked wobbly and, because of their initials, earned an unflattering porcine label. Yet three of the five grew robustly in 2015 (see chart). The laggard was Greece, still labouring under the terms of its bail-out. + +Italy, too, performed disappointingly. In December the bosses’ association Confindustria downgraded its estimate of growth in 2015 to 0.8%. No one is expecting a big surge in 2016. The EU expects Italian GDP to rise 1.5%, but last year’s quarter-on-quarter figures suggested growth was slowing (from 0.3% in the first two quarters to 0.2% in the third). “There is a recovery,” the finance minister, Pier Carlo Padoan, told business leaders in December. “But it is weak.” Advisers to the prime minister, Matteo Renzi, worry that the world economy will enter a cyclical downturn before Italy regains the ground it lost in the financial and euro crises. + +Confindustria’s researchers called Italy’s lacklustre recovery “a real puzzle”. The prime minister is energetic and reform-minded. His left-right coalition has done good things. It has begun to reform the civil-justice system and the bureaucracy; the sluggishness of the first and the complexity of the second are long-standing obstacles to investment. It has overhauled labour laws, offsetting easier dismissal with gradually enhanced job security and welfare entitlements for newly hired workers. Francesco Giavazzi, a professor at the Bocconi University in Milan who has fiercely criticised previous governments on free-market grounds, calls it “the most important reform in this country in the past 50 years”. Unemployment has shrunk encouragingly since June. There has also been a modest improvement in private consumption. + + + +Traditionally, however, it has been surging exports that have pulled Italy out of recessions. Despite a weak euro, export growth this time has been disappointing. That is due in part to the slowdown in emerging markets and the mediocre performance of German industry, which absorbs more than a sixth of Italy’s exports. But it is also consistent with low competitiveness. On that score, Italy’s performance since the euro crisis has been unimpressive when compared with that of other former porkers (see chart). + +So far, the government’s main response has been to insert tax breaks in the budget for 2016, aimed at encouraging corporate investment. The budget also includes €3.6 billion ($3.9 billion) of cuts to taxes on primary homes. These are more likely to win votes than to stimulate growth. And Mr Renzi’s largesse may be short-lived. The budget deficit, though shrinking, is still forecast to be around 2.4% of GDP, prompting a warning from European fiscal authorities in Brussels, who had expected a faster decline. + +Luigi Zingales, an Italian economist at Chicago’s Booth business school, notes that slow growth plagued Italy long before the euro crisis. He fears the latest slowdown may show how little the economy has responded to the challenges it faced when it joined the euro and lost the ability to boost exports by devaluing its currency. “When I go to a young entrepreneurs’ group in America, I meet young entrepreneurs,” he says. “In Italy, I primarily meet trust-fund kids who are there thanks to their parents, not their accomplishments. We need a change of mentality.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21685509-other-peripheral-economies-take-italys-just-so-so-mezza-mezza/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +European nightlife + +Less than ecstatic + +The lights are going out in night clubs all over Europe + +Jan 9th 2016 | BERLIN | From the print edition + + + +AT HALF past two in the morning a dozen people queue in the freezing cold to get in to Tresor, a night club in a former power station in Berlin. In the sweaty, dimly lit interior, about 100 people are dancing to repetitive beats. Others sprawl on seats near the bar, clutching drinks or other people. The club, one of the first places in Germany to play techno music, seems as popular as when it was launched in 1991. But clubbing itself is on the wane. + +After the fall of the Berlin Wall night clubs sprang up in that city in a moment of “cultural anarchy”, says Dimitri Hegemann, one of Tresor’s founders. They took over disused banks, warehouses and power plants. In the rest of Europe several “superclubs” had already opened in the 1980s, and more followed. In London, Fabric opened in 1999 in a former cold store; in Amsterdam, one started in a former print works. Smaller venues proliferated, too. + +Since then, however, the party seems to be winding down. Between 2001 and 2011 the number of discotheken in the Netherlands fell by 38%. In Britain there were 3,144 clubs in 2005 but only 1,733 ten years later, says the Association of Licensed Multiple Retailers; in 2015 revenues were £1.2 billion ($1.7 billion), down from £1.5 billion in 2010. In Berlin, although the number of music venues has been stable at about 350 (120 of which are clubs), several long-established night spots have closed their doors. + +Partly this is because most European cities are becoming nicer to live in. “Even in Berlin it is harder to find an unused space in the inner city,” sighs Sven von Thülen, a DJ who has compiled an oral history of clubbing. Clubs are being pushed farther out. Increasing rents are also a problem, says Lutz Leichsenring of the Club Commission, a German industry body, especially in places such as London where property values have soared. + +Gentrification can muffle the high-decibel economy. “If there’s one complaint, then the whole circus starts,” says Eelko Anceaux of De Marktkantine, one of the handful of clubs that bucked the trend and opened in Amsterdam in 2014. It is possible to build good relations with neighbours, he says; his night club, like many new ones, doubles as a restaurant and hosts vintage markets, which makes it more acceptable to nearby yuppie families. Even so, middle-class residents’ complaints about noise and drunk or stoned revellers make the life of a club-owner far trickier. + +As cities gentrify, local politicians are getting stricter about clubs. Madame JoJo’s, a burlesque bar in London’s Soho, had its licence revoked in 2014 after two bouncers brandished a baseball bat at a rowdy crowd. In December the owners of Fabric at last won a year-long court battle against Islington Council, the local borough, which wanted to introduce drug-sniffing dogs. Last year in Berlin two clubs were closed down for fire-code violations. + +Increasingly, anyone who wants to open a club must have a business plan, says Mr von Thülen, rather than just an enthusiastic bunch of friends willing to party. Patience is also useful: it took Mr Anceaux four years to get his club open and another year to get a full licence. + +This is boring. Let’s go to a gig + +Two big social changes are squeezing club owners still further. The first is that the youth of today are surprisingly abstemious. In Germany, Britain, Denmark and Spain the use of MDMA, or ecstasy, which makes bonding with strangers and dancing to repetitive thumping sounds far more enjoyable, has fallen among 15-34-year-olds (see chart). (Trends in the use of drugs less closely linked to clubbing, such as cannabis and cocaine, vary by country.) + +Heavy alcohol consumption has also fallen slightly among young people. Excessive drinking in Britain has seen a particular decline: between 2005 and 2013 the proportion of 16-24-year-olds who were frequent drinkers (defined as drinking alcohol on five days in the previous week) fell from 7% to 2%. Buying a drink in a club is “really expensive”, gripes Amanda, a university student from America in London. (In certain clubs “guys are douchebags”, she adds.) + + + +The second trend is that big outdoor music festivals are replacing clubs. In 2014 around 130 festivals took place in Amsterdam alone. In Britain some 250 take place annually, up from 80 in 2004. Many people are saving up to go to two big festivals a year, rather than clubbing each month, thinks Iason Chronis, a DJ. The economies of scale of big festivals, in which a captive audience splurges on food and drink, make it easier for festival organisers to book big DJs such as Calvin Harris or Jamie xx. This, in turn, makes it harder for clubs to afford them. + +The night mayor’s nightmares + +Some cities are trying to halt the decline. In 2002, after a stricter pole-dancing law was introduced in Amsterdam, the post of a voluntary “night mayor” was created to lobby on behalf of the night-time club and entertainment industry. “Small events are like small business schools,” claims Mirik Milan, a self-proclaimed “rebel in a suit” who has held the post of night mayor since 2014. In London last year a “music venues task-force” set up by the fun-loving mayor, Boris Johnson, recommended that local authorities should take a more “balanced” approach to dealing with noise and that a night mayor should be appointed. In Germany Mr Leichsenring of the Club Commission sits on a working group for the Berlin chamber of commerce. These night-time champions may be able to achieve better relations between governments, neighbourhoods and clubs. But there is little they can do about the decline of 24-hour party people. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21685519-lights-are-going-out-night-clubs-all-over-europe-less-ecstatic/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Early adopters + +In their coolness towards the EU and multiculturalism, the Dutch were ahead of Europe’s curve + +Jan 9th 2016 | From the print edition + + + +CALL them the hipsters of European neurosis. Take any of the anxieties that have lately beset Europe’s politics and you find the Dutch got there first. Concerns over fiscal waywardness in the euro zone? They were fuming at German and French profligacy over a decade ago. Asylum and immigration? The Dutch were agonising over multiculturalism while Angela Merkel was still plotting her ascent to the Bundeskanzleramt. The threat from anti-European populists? The Dutch have seen several come and go. + +Such worries have now gone mainstream across Europe. So it is an interesting time for the Netherlands to take over the rotating six-month presidency of the Council of the European Union (the forum for national ministers). As one of the six founding EU members the Dutch are practised at steering the machinery, even if the presidency is not the force it once was (see article). But they are taking charge at a tricky moment. The EU was supposed to be a “fair-weather union”, says Bert Koenders, the foreign minister. Now it must prove itself in a storm. + +The refugee crisis and the Paris attacks have threatened the EU’s passport-free Schengen area. Migration and security will therefore be at the top of the Dutch in-tray. Mark Rutte, the competent if plodding prime minister, should make a decent fist of the job, so far as Europe’s squabbling governments allow. But he has his own difficulties at home. The first is a bizarre referendum in April on an EU association agreement with Ukraine. The vote, triggered by a satirical website that gathered the necessary signatures, will inevitably turn into a simple test of the voters’ mood. + +That could mean trouble for Mr Rutte, for like many of his EU peers he has a populist problem. Geert Wilders, a Dutch Donald Trump (with equally striking hair), is way ahead in opinion polls. His anti-Islam, anti-EU PVV outfit has dragged every party rightward on immigration. Some figures in Mr Rutte’s liberal VVD now take an eye-wateringly tough line; their coalition partner, the centre-left Labour Party, frets about refugees undermining support for the welfare state. The PVV has not always translated its poll numbers into votes. But the Netherlands’ complex party system could leave future governments with an awkward choice: bring Mr Wilders into office (or rely on his support), or form an unwieldy coalition designed solely to keep him out of it. + +This dilemma is hardly unique to the Netherlands. But Dutch Euroscepticism has certain peculiarities. Small and highly dependent on trade (exports contribute 32% to GDP), the Netherlands does not have the luxury of British-style Euro-contempt, as is apparent at any of its hundreds of land border crossings. Indeed, when the political winds have been favourable the Dutch have been among the more enthusiastic members. Two EU treaties—Amsterdam and Maastricht—bear the names of the Dutch cities in which they were signed. The uppermost ranks of EU policymaking are dotted with Dutchmen, from Jeroen Dijsselbloem, head of the Eurogroup of finance ministers, to Frans Timmermans, first vice-president of the European Commission. + +But two things seem to have turned the Dutch. The first was a growing gap over Europe between ordinary voters and the cosy elites who have traditionally run the show: in 2005 many politicians were shocked when over 60% of voters rejected a proposed EU constitution in a referendum. (Mr Wilders continues to mine this anti-elitist seam.) The second was the discovery that not every European country can uphold its duties as responsibly as the Dutch—and that in an increasingly integrated club, a failure to behave in a Dutch fashion has painful consequences for others. + +Dutch patience has been tested on two counts. First, badly run economies in the euro-zone’s periphery have obliged the Netherlands to pay for half a dozen bail-outs (for which they have insisted on extremely tough conditions). Second, over 50,000 asylum-seekers made their way to the Netherlands in 2015, waved through by negligent Mediterranean countries that fail to register migrants properly. This influx, noteworthy if much smaller than the ones that reached Germany or Sweden, has even led some Dutch politicians to call for a revision of the 1951 Refugee Convention, the cornerstone of global asylum law. + +The Dutch approach should not be mistaken for an ideological reluctance to integrate. It is rather the frustration of the small, rich country that follows the rules and cannot abide those that don’t. Rather than walk away from the club, the Dutch want it to work better. From here spring ideas like a shrunken “neuro”, a currency shared by responsible northern Europeans shorn of southern fecklessness, or a “mini-Schengen”, an idea floated by Mr Dijsselbloem in which the current 26 members are reduced to a rump of five: the three Benelux countries plus Germany and Austria. Neither proposal was ever likely to pass. The hope was that they might spook other countries into shaping up. + +Euroscepticism with Dutch characteristics + +Two lessons can be drawn from the Dutch experience. The first is that the nasty brand of populism represented by Mr Wilders is here to stay, and not only in the Netherlands. It will poison public debate, complicate efforts to manage the migrant crisis and cause headaches for politicians trying to assemble governments. Such is the tortured terrain of European politics these days. + +But there is a second lesson that may act as a mild corrective to Euro-gloom. As border controls pop up across Europe, Schengen looks gravely imperilled. Yet the wealth and dynamism of the Dutch economy show the value of an open-border regime in an integrated continental club. The Netherlands will not be alone in battling for its future. Today’s border checks are troublesome but manageable. But Europeans will not tolerate complete border closures or 50-mile traffic jams. Charlemagne therefore ventures a prediction: forecasts of Schengen’s imminent collapse will prove no more accurate than those of the demise of the euro zone so often heard in 2011-12. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21685498-their-coolness-towards-eu-and-multiculturalism-dutch-were-ahead-europes-curve-early/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +The Church of England: Resurrection? + +Global Anglicanism: Rowing, not rowing + +The Labour Party: Trident wars ahead + +Foreign aid: Strings attached + +Statues and racism: Running out of Rhodes + +Household debt: Down to earth + +Jobs and ethnic minorities: Irish lessons + +Bagehot: Battlefields of the mind + + + + + +Articles Sections Next + +The Church of England + +Resurrection? + +Parts of the established church are learning from their immigrant brethren + +Jan 9th 2016 | From the print edition + + + +TO SEE the future of Christianity in Britain, go on a Sunday morning to an old Welsh Congregational chapel off the Pentonville Road in Islington. The building has been bought by a Pentecostal Ethiopian church; the congregation raises its hands in a show of unEnglish ecstasy to praise God in Amharic. A few hours later, something unexpected happens. A congregation of mainly white members of the Church of England start their service. This group, known as King’s Cross Church, or KXC, has grown from a handful in 2010 to 500 now. + +The first service reflects a well-documented phenomenon: an immigrant-led surge in London churchgoing. Weekly participation in Christian services in the capital has grown by 16% since 2005. Most devout Londoners (88%) worship outside the ranks of the established church whose spires pierce the skyline; about a third are Pentecostal. But the second service shows that even some Anglican churches are bucking the downward trend in membership. London is one of several dioceses within the Church of England that are growing, if only a little (see chart). + + + +Overall the drift down in church attendance continues, as new figures later this month will show. The proportion of people calling themselves Christian fell from 72% in 2001 to 59% in 2011. Those saying they have no religion rose from 15% to 25% in that period (including 177,000 claiming to be Jedi). The number of churchgoing Anglicans fell by 12%, and in 2013 stood at 1m. Some 19m baptised Anglicans do not attend church. + +Hints of revival in parts of the Church of England point to broader changes. Traditionally, the established church has had an obligation to serve everyone who lives in a parish. Its churches have been the centrepiece for local and national events. But many Anglican churches that are growing, as in King’s Cross, are “network” churches. They meet in pubs and offices outside the parish system. Most are evangelical, emphasising a personal faith based on conversion rather than a cultural affiliation to a denomination. They believe in tithing—giving a tenth of their income to the church—which increases their influence as other congregations shrink and expectations of financial giving fall. + +Nick Spencer of Theos, a religious think tank, says the Church of England is switching from a broad-based organisation, characterised by affiliation more than commitment, to a smaller grouping of more committed worshippers. Some observers suggest the parochial system, which has helped shape English life for centuries, needs to change. They also question the Church of England’s position as the state church, established by law. Should it cling to its old role of thinly spread universal provision or abandon it to foster smaller pockets of exuberance? + +Papists and puritans + +For centuries, the Church of England has been a broad one. With a low bar for membership—being born usually suffices—it has been there to hatch, match and dispatch anyone who wanted its services, a sort of religious public utility whose moderation has formed the English character and provided a glue for English society. + +As in the worldwide Anglican Communion (see article), tensions remain. For liberals, the reasons for decline are obvious. “English society and the Church of England have gradually drifted apart in terms of values,” says Linda Woodhead, professor of the sociology of religion at Lancaster University. “This was true over issues like remarriage and the ordination of women, and it’s true of same-sex marriage.” Evangelicals say the church is right not to be swayed by changing social mores. They emphasise being counter-cultural and point out that many churches which are growing run against the liberal flow. “What is dying in England is not Christianity but nominal Anglicanism,” says David Goodhew of Durham University, author of “Church Growth in Britain”. The share of evangelicals in the Church of England rose from 26% to 34% between 1989 and 2005, says Peter Brierley, a church demographer, and could now be nearly 50%. + +Not all growth is evangelical. Attendance at cathedrals rose by 35% between 2002 and 2012. But four of the five most senior bishops in the Church of England, including the Archbishop of Canterbury, Justin Welby, are from the evangelical tradition. They differ from their American counterparts, says Mr Spencer. “They are less focused on creationism and abortion and less right-wing politically.” Archbishop Welby and Nicky Gumbel, vicar of Holy Trinity, Brompton (HTB), London’s most influential evangelical church, both have Cambridge law degrees. HTB has planted many churches in London and is doing so in the rest of England. They are conservative on issues like gay marriage, prompting accusations by liberals of bigotry. + +To be fair, there is not much sign of bigotry at King’s Cross Church’s weekly drop-in for prostitutes, nor its programme to keep kids on rough housing estates away from gangs. Many evangelicals want to restore the tradition of conservative social engagement set by William Wilberforce. They sigh at their characterisation as hateful homophobes. “Everyone thinks they know what the church is against,” says Pete Hughes, the church’s youthful pastor. “We want to be known for the things we are for: proclaiming the love of God and showing it in our actions.” + +The declining importance of denominational affiliation continues to put pressure on the parish system. With 9,000 of its 16,000 churches in rural villages, “it is not fit for purpose”, declares David Voas of Essex University. Network churches are “like a virtual community”, he says, better suited to the modern era. + +The church is trying other models. One is Fresh Expressions, a mixture of new congregations such as Messy Church for children and Café Church for grown-ups, trying to reach the unchurched. Many have lay leaders. Another bottom-up initiative is the “minster model”. A prototype in rural Buckinghamshire, Latimer Minster, has grown from eight people in 2010 to 350. It is financially independent, thanks to tithing. Frog Orr-Ewing, the vicar, calls minsters the “ecclesiastical equivalent of academies” (state-run schools outside local-authority control). + +Much of this is difficult for liberals to take. “What about the people who would rather stick their head in a food mixer than become an evangelical?” asks Alan Wilson, the bishop of Buckingham, who openly supports gay marriage. He worries that the increasing number of people who affiliate only loosely or not at all with the Church of England will be alienated. Many do not hold liberal Christian beliefs, let alone evangelical ones. Mr Voas calls them “the fuzzies”, epitomised by a 2011 survey that found only 47% of 18- to 34-year-olds declared a religious affiliation, but 67% said they occasionally or regularly pray. + +As to the possibility of disestablishment, most think it is unlikely to happen. Politicians are barely involved any longer in choosing bishops. A majority of people say they want a Christian coronation for the next monarch, and no government would tie up parliamentary time unpicking the links between canon and civil law. So the Church of England will probably struggle on. Yet if it is to survive, this most traditional of English institutions must do more to adapt to a post-Christian world. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21685473-parts-established-church-are-learning-their-immigrant-brethren-resurrection/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Global Anglicanism + +Rowing, not rowing + +The Archbishop of Canterbury tries to save the Anglican Communion + +Jan 9th 2016 | From the print edition + +WHEN he was an undergraduate at Cambridge, Justin Welby, the Archbishop of Canterbury, was cox of a Trinity College rowing eight. Perhaps coincidentally, rowing metaphors flowed in September when he announced that he had invited all 37 global Anglican primates to Canterbury for a conference starting on January 11th, in what some see as a last-ditch attempt to save the Anglican Communion. One aide suggested that bishops should not spend so much time “trying to placate people and keep them in the boat, without ever getting the oars out and starting to row”. Frustrated that bickering is keeping Anglicans from their primary mission, the archbishop will need all his powers as a cox to head off a collision, or even the sinking of the global Anglican boat. + +The problem is a row between liberals, mainly North American, who want the church to allow same-sex marriage, and conservatives, who think it must not. Some leaders from each side are not on speaking terms. Archbishop Welby is said to want a looser affiliation, so that both groups can keep relations with Canterbury and continue to call themselves Anglican but not have to deal with each other. He has no “papal” powers to kick out any provinces; previous attempts to discipline those who defy traditional Anglican teaching have been stopped from below. The archbishop is “not so much trying to get closer unity”, says one informed cleric; “he is trying to prevent greater disunity.” + +The biggest danger is that some African conservatives, who take a traditional view of sexual ethics, will walk out and lead a breakaway movement. But liberal North Americans are also angry that Archbishop Welby has invited Foley Beach. He heads a group that has split off from the Episcopal church (the official American wing of Anglicanism) in opposition to its consecration of sexually active gay bishops, which the church first did in 2003. Mr Beach and others have formed alliances with conservative African leaders. + +The archbishop’s pragmatic risk-taking represents a change from his two predecessors, who tried to encourage the two sides to work together. One way he has managed to get all the primates to attend (at the last big meeting in 2011 a third were absent) is to invite them to set the agenda. Used to spats in the Church of England at home, he has emphasised the need for “good disagreement”. + +He has also made clear to conservative Africans that, although he supports the church’s traditional stance on marriage, it must not translate into homophobia. In June he expressed deep concern about “the stress for the Anglican Communion” after the American Episcopal church started the procedure to enable its clergy to solemnise same-sex marriages. But he has also admonished bishops who support the criminalisation of gays. If he can steady the boat, says the cleric, it will be a miracle. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21685472-archbishop-canterbury-tries-save-anglican-communion-rowing-not-rowing/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Labour Party + +Trident wars ahead + +A reshuffle points to a party shift against renewing Britain’s nuclear deterrent + +Jan 9th 2016 | From the print edition + +Corbyn against the bomb + +AS RESHUFFLES go, Jeremy Corbyn’s of his shadow cabinet this week was small—certainly a lot smaller than his aides had led the press to expect. Yet it was still momentous. In a marathon of meetings spanning three days, the Labour leader tightened his grip on the party and prepared the ground for a big fight over the renewal of the Trident nuclear deterrent. + +He did all this in four moves. First, he sacked Michael Dugher, the shadow culture secretary, apparently for criticising leftist groups close to the Labour leader and warning against a “revenge reshuffle”. Second, Mr Corbyn fired Pat McFadden, his capable and well-liked shadow Europe minister. Mr McFadden’s crime was to invite the prime minister, in a debate on the Paris terrorist attacks, to stress that the blame did not lie with the West (highlighting Mr Corbyn’s own ambivalence). Third, he chose to keep Hilary Benn as shadow foreign secretary, but to clip his wings. Unlike Mr Corbyn, Mr Benn was in favour of British military intervention against Islamic State in Syria. He reportedly kept his job only by promising not to break overtly with the leadership again. + +Mr Corbyn thus made clear his intent to fight on the territory of foreign and security policy, where in his decades as a backbencher he was mostly at odds with the party. This was made even plainer in his fourth, and most significant, move: switching Maria Eagle from the defence portfolio to Mr Dugher’s former job, and replacing her with Emily Thornberry, a known critic of Trident. + +All this belies two assumptions in the aftermath of Mr Corbyn’s election as Labour leader in September: that being so far to the left of most of his MPs, he would have to compromise frantically to keep his job, and that even so he would be ousted. Today things look different. The absence of a strong rival is clear. So is the reluctance of moderate MPs to cause trouble, although Mr Corbyn’s reshuffle did trigger the damaging resignations of three junior shadow ministers. And so are the size, the organising ability and the determination of Labour’s Corbynite wing to seize control of the party, greatly swollen by tens of thousands of new, left-wing members. An unexpectedly resounding victory in the Oldham by-election in December has also put Mr Corbyn’s critics on the defensive. + +That will not help Labour’s electoral prospects. But it also means that a force increasingly sceptical of Western defence and security policy has taken hold at the heart of British politics at a time when such matters are newly sensitive. Parliament will soon debate new measures to combat terrorism. British fighter aircraft are operating over Iraq and Syria. And MPs are due to vote later this year on renewing Trident. + +Mr Corbyn is evidently set on reinstating his party’s 1980s stance in favour of unilateral disarmament. His reshuffle suggests that, having been forced by his shadow cabinet to offer a free vote on Syria, he now wants to overrule his mostly pro-renewal MPs’ views on Trident. He will not do this without a fight, as the party is still formally committed to the nuclear deterrent. But the battle over Trident is one that Mr Corbyn looks increasingly capable of winning. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21685483-reshuffle-points-party-shift-against-renewing-britains-nuclear-deterrent-trident-wars/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Foreign aid + +Strings attached + +Changing how Britain disburses its foreign aid will be a challenge + +Jan 9th 2016 | From the print edition + + + +BRITISH foreign aid has never been entirely altruistic. In the interwar years, it was often aimed at promoting growth in the colonies partly so as to boost industry at home. Margaret Thatcher’s government used aid to help British companies, with recipients encouraged to buy Leyland buses and Westland helicopters. So the recent announcement that aid would be used to promote British interests was hardly a ground-breaking one—but it was significant, nevertheless. + +Aid policy tends to be produced in a largely piecemeal fashion. There has been no big statement of intent since 2009. The new strategy is notable for two changes, besides a greater focus on the national interest. First, at least half of aid spending will go to fragile and war-torn countries. And second, the share disbursed by the Department for International Development (DFID) will fall from 86% to around 70% by 2020, with the rest being spent by other government departments and specialist funds. + +As Kevin Watkins, of the Overseas Development Institute, a think tank, notes, “the idea that you can have an aid policy that is totally ring-fenced from domestic politics is a bit of a fiction.” Acknowledging this is sensible, given public opposition to high spending on foreign aid. Other departments have much to bring to international development. And although aid is unlikely to bring quick improvements in conflict-ridden states, such countries undoubtedly deserve help. + +But making the changes will be tricky. The promotion of British interests in the 1980s led to projects that made little sense in economic or development terms, says Owen Barder of the Centre for Global Development, a think tank. There is a danger that, to make clear that aid benefits British interests, it could end up duplicating global programmes. Although short-term political interests can coincide with the needs of poor countries—funding for research into climate change and public health, for instance, can be funnelled to British universities and firms—greater transparency and oversight are needed to stop spending on projects simply because they are politically expedient. The government has confirmed that the Independent Commission for Aid Impact (ICAI), an official watchdog, will have responsibility for scrutinising all departments, not just DFID. + +Working in fragile countries provokes other worries. Corruption is more entrenched. Changing conditions often undermine projects, as near-empty refugee camps in Jordan show. DFID will have to be more willing to experiment, says Alison Evans of ICAI. “The government has been a bit silent on the costs of pushing more resources into fragile environments. Doing so will require a risk appetite not seen before,” she adds. + +Increasing aid spending via other government departments will also be challenging. There is a danger that mixed motives could undermine aid, says Richard Manning of Oxford University. DFID has greater expertise in project management and evaluation than other departments. And it is more transparent: Publish What You Fund, a charity that campaigns for aid transparency, rates DFID as very good, the Foreign Office as poor and the Ministry of Defence as very poor. + +Scrutiny by parliamentary committees and ICAI should help. The government has promised that all aid-dispensing departments will be rated at least “good” by 2020. But an aid strategy that was largely written by the Treasury will also require DFID to adapt. Although there are so far few details on exactly how its funds will be divided among departments, it is no surprise that many in DFID now see helping these other departments to spend aid well as a key part of their job. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21685486-changing-how-britain-disburses-its-foreign-aid-will-be-challenge-strings-attached/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Statues and racism + +Running out of Rhodes + +Where statues are under threat + +Jan 9th 2016 | From the print edition + +A man on a high street + +STATUES may fall victim to two types of event. One is the overthrow of a regime. In 2003, when American troops toppled Iraq’s leader, Saddam Hussein, jubilant Iraqis pulled down his statue in the main square in Baghdad. Similarly, in 2011 Libyan rebels broke the head off a statue of Muammar Qaddafi after taking one of his compounds in Tripoli. Both events were watched by millions, and are now seen as part of history. + +The second cause of statue-toppling is when a new young movement asserts itself, as early Roman Christians did. Rome was once filled with statues of pagan emperors. Many were melted down during the empire’s conversion to Christianity (a now prized statue of Marcus Aurelius, lightly brushed in gold, remains only because it was mistaken for one of Constantine, the first Christian emperor). This can be controversial. Last summer Islamic State terrorists smashed what they called idolatrous statues in the ancient ruins of Palmyra in Syria. Ukraine’s conflict with Russia has provoked a backlash against the country’s Soviet past: more than 500 statues of Lenin were dismantled between February 2014 and April 2015. + +Now a statue of Cecil Rhodes, a Victorian imperialist in South Africa, is under threat at Oriel College, Oxford. In the past two years, a movement in British, American and South African universities has campaigned to remove statues redolent of colonialism and slavery. Last year a statue of Rhodes was toppled at the University of Cape Town. In America, Jefferson Davis, the Confederacy’s president, has gone from the University of Texas in Austin; students at the University of Missouri are now taking aim at Thomas Jefferson. + +Yet Oxford students calling for the removal of Rhodes have received little support from academics, who argue that efforts to wipe out history are damaging to education. Nor are the protesters consistent. Rhodes may have been an imperialist and racist, but the Oriel statue reflects a large charitable donation. Nobody in Oxford has objected to the Codrington Library at All Souls College, named after a slave trader, or to Rhodes House itself, home of Rhodes scholars from around the world, who are paid for by the businessman’s estate. How ironic that the lead campaigner against the Oriel statue should be a black South African on a Rhodes scholarship. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21685496-where-statues-are-under-threat-running-out-rhodes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Household debt + +Down to earth + +Worries about rising British household debt are overblown + +Jan 9th 2016 | From the print edition + +SINCE 2010 the British economy has grown by some 10% in real terms, faster than the rich-world average. Most economists reckon growth will stay strong in 2016. But is this all built on the shaky foundations of ever-rising debt? Recent data from the Bank of England found that outstanding household debt—including mortgages and credit-card lending—hit a record £1.5 trillion ($2.2 trillion) in November. Lending to households increased by 3.2% over a year earlier, the largest rise since late 2008. Some commentators fret that, as so often before, a debt-fuelled binge could come to a jarring halt. But dig deeper, and things seem more reassuring. + + + +What counts for sustainability is the debt stock relative to the incomes out of which repayments are made. After this adjustment the picture looks rosier (see chart). Britons’ household debt as a percentage of income peaked at 160% just before the 2008 crash, when average inflation-adjusted debt was roughly £64,000 per household. By 2014 that figure had tumbled to about 130%. Only in recent months has the household-debt ratio started inching up again. + +Borrowing may now be rising again, but those taking on new debt also seem to be the most able to repay it. The number of households struggling to service debt is falling, according to another report from the Bank of England. In 2008, 13% of Britons spent a hefty 30% or more of their pre-tax incomes on mortgage and unsecured debt repayments; now only 10% do. Other measures of financial distress—eg, how many people say they have difficulty paying their rent or mortgage—have also improved in recent years. + +Britons’ balance-sheets are looking healthier for several reasons. Worries about the economy may have encouraged some people to pay down debt rather than take out new loans, says Ruth Miller of Capital Economics, a consultancy. Interest rates have fallen to historical lows. Strict rules that came into force in 2014 have curbed excessive mortgage lending; for the country as a whole, house prices are still below their pre-crisis peak. Growth of mortgage debt has also been restrained, as banks increasingly insist on repayment mortgages, not interest-only ones, says Michael Saunders of Citi, a bank. In 2015 just 1% of new mortgages were interest-only, down from a third in 2007. And Britain’s recovery has been job-rich; unemployment is down to 5.2%, so fewer households are likely to find themselves suddenly unable to service their debts. + +Some borrowers would still be vulnerable in the (unlikely) event that interest rates rise suddenly. However, even then a financial crisis would not be inevitable, argues Simon Wren-Lewis of Oxford University. In 2007-08 British banks did not get into difficulties because of lending too much at home. Ben Broadbent of the Bank of England has estimated that British-owned banks lost 15 times as much on foreign mortgages as they did in the domestic market. The story seems similar now: the bank’s stress tests, which simulate a fall in house prices of 20%, suggest that the financial system would cope. + +It remains unsustainable for household debt to rise relative to incomes indefinitely. At some point, people will have to cut spending to pay it back. But for the time being rising debt may not be a bad thing, says Tony Yates of Birmingham University. It suggests that the banks have recovered (lending to small and medium-sized enterprises is looking perky as well). And with exports struggling, the government still cutting public spending and monetary policy already ultra-loose, he says, the last thing anyone needs is for consumers to embrace austerity as well. The British economy may be somewhat unbalanced, but at least it is growing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21685499-worries-about-rising-british-household-debt-are-overblown-down-earth/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Jobs and ethnic minorities + +Irish lessons + +What Britain can learn from Northern Ireland about jobs for minorities + +Jan 9th 2016 | BELFAST | From the print edition + + + +WHEN Ashok Sharma was called by the police early one morning in September 1993, he feared the worst. This was central Belfast at the height of the Troubles, more than two decades of conflict between nationalists and loyalists in Northern Ireland. Sure enough, on rushing to the site of his Indian restaurant on Dublin Road, he could see only “a big hole in the ground; it was completely gutted”. A huge IRA car bomb had exploded outside, aimed at a nearby loyalist building. It cost Mr Sharma £80,000 ($120,000) to do the place up again, less than half of which he got from the government in compensation. + +After opening in 1985, the Archana restaurant suffered bomb damage nine times. Yet Mr Sharma and his family, who came to Belfast in 1977, have stayed, even as many young people have moved away. His persistence is one reason why a new report from the Resolution Foundation on employment rates for people from ethnic minorities finds Northern Ireland the only region where such minorities outperformed the average, at 72% of their working-age population. (Ethnic minorities in Scotland, outside Glasgow, do better on employment rates, but still worse than the regional average.) In other areas of Britain, the disparity is far bigger; in the north-east outside Newcastle, for instance, only 48% of working-age Britons from ethnic minorities are employed (see chart). + +Minority report + +Researchers from the Resolution Foundation point out that the gap between the best- and worst-performing subregions for all working-age people is just 11 percentage points, but it more than doubles to 26 for the black, Asian and minority ethnic (BAME) group. If Britain is to achieve full employment, as the government hopes, this inequality must be put right, argues Laura Gardiner at the foundation. So can Britain learn from Northern Ireland? + +Certainly, Northern Ireland is somewhat anomalous. Its working-age BAME population is small, at about 20,000, or just 2% of the total. That may be only slightly less than in rural Britain, but the share rises to fully 40% in inner London. Moreover, the Troubles shaped immigration in a specific way. Many Indians and Pakistanis who came to Belfast in the 1970s and 1980s were professionals, taking up health-service and other jobs that were hard to fill because of the violence. That means they are probably better educated than their mainland equivalents. And many are entrepreneurs like Mr Sharma. + +Yet analysts maintain that laws passed in Northern Ireland to help end the Troubles, and specifically to bridge the sectarian divide between Catholics and Protestants, have helped ethnic minorities. They point to fair-employment legislation from 1989. This made applying for jobs a more “formalised process”, says Eileen Lavery of the Equality Commission, to make the workforce more representative of the population. “This should act in favour of those from ethnic minorities,” she argues. There is anecdotal evidence that it helps the 40,000 or so from eastern Europe, particularly Poland, who have come to the province to find work since 2004. + +Brenda Skillen, a Catholic convert to Islam who works in a local Muslim support group, says that section 75 of the 1998 Good Friday Agreement has also made a difference in promoting equality of opportunity for all, not just for Catholics. Reforms to policing and the criminal-justice system have made them fairer for everybody, she adds. There is still racism against ethnic minorities. But Northern Ireland’s particular history has meant that the authorities, having neglected diversity for so many decades, now take it more seriously than their counterparts in mainland Britain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21685495-what-britain-can-learn-northern-ireland-about-jobs-minorities-irish-lessons/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Battlefields of the mind + +To defeat Islamic extremism in the intellectual arena, Britain must understand it better + +Jan 9th 2016 | From the print edition + + + +“THIS is a message to David Cameron,” begins the unmistakably British-accented rant, “oh slave of the White House, oh mule of the Jews”. Waggling a gun, his features obscured by a balaclava, the man calls the prime minister an “imbecile” for deploying armed forces against Islamic State (IS). His melodramatic, almost adolescent conniptions would be laughable were it not for what follows: the execution of five kneeling men in orange jumpsuits, accused of being British spies. The video, released on January 3rd, ends with a cherubic boy aged perhaps four proclaiming, in a southern English accent: “We will kill kuffar.” + +Amid speculation about the man’s identity—newspapers named Siddhartha Dhar, a British-Indian—the tape elicited comparisons to earlier execution videos fronted by Mohammed Emwazi, a Briton known as “Jihadi John” who was apparently killed by a drone strike in November. Theresa May, the home secretary, told MPs this week that 800 Britons have now travelled to Syria and Iraq and about half have returned. + +Britain’s anti-terrorism strategy is evolving. Despite new powers to monitor suspects and seize their passports, exit checks at borders and dollops of money, the spooks are having to set priorities. The state’s capacity to restrain every individual minded to kill for an idea has natural limits. So the government is turning its attention to the sort of non-violent extremism that creates conditions for the violent kind. In the process it is tacitly conceding an awkward point: most British Muslims abhor extremism, but a distinct minority is ambivalent. One poll in November suggested that one in five had at least some sympathy with young Muslims fighting in Syria (although, as many reports omitted to add, the question did not specify for whom). + +Such thinking has been circulating in Whitehall for a decade, but the radicalising effect of IS and the exit of civil libertarian Liberal Democrats from the government in May have given Mr Cameron the impetus and political freedom to pursue it more forcefully (in Downing Street this is seen as one of the four main issues that will define his second term). So last July the anti-extremism “Prevent” programme was expanded to give public bodies like schools, universities and prisons a statutory duty to shield their charges and monitor them for signs of radicalisation. In a speech a month later Mr Cameron pledged more, adding: “Let’s not forget our strongest weapon: our own liberal values.” + +This sleeves-up, ideological onslaught on Islamism is so sensible that other European countries want to emulate it. Yet it faces problems. Grandstanding by the government (blimpishly labelling as “British values” principles like tolerance that are in no sense autochthonous), as well as by some Islamic bodies (the Muslim Council has railed unhelpfully against Prevent) and the press (prone to lazy talk of “the Muslim community” as an indivisible monolith) steers British Muslims away from anti-extremism initiatives. Figures from the National Police Chiefs Council suggest that less than 10% of Prevent tip-offs in the first half of 2015 came from Muslims. Jahan Mahmood, a former government adviser, knows this mistrust: “People think: ‘Shit, who is this guy?’” + +Suspicion among Muslims is matched by bewilderment among public servants. London teachers whom Bagehot asked about their new role said they felt overwhelmed; the complexity of modern British Islam is such that non-Muslim staff must resort to crude methods such as listening out for deaths in pupils’ families that might betoken youngsters on a foray to the Middle East. But often radicalisation happens online or outside the home (“If it is him, bloody hell am I shocked? I am going to kill him myself,” Mr Dhar’s sister said of reports that he might be the new Jihadi John). The authorities told one head that some pupils were at risk—but gave no names. Very little apart from ideology unites the jihadists, notes Innes Bowen, an analyst of British Islam. + +The answer is for schools and councils to work with Muslim leaders. But which? Sifting out those energetically committed to fighting radicalism can be beyond well-meaning but strained local branches of the British state. Consider the Prevent grants that end up in the hands of ideologically contentious groups. Or the revelation in November that a community centre in north London was inadvertently hosting proselytising sessions for IS. Or the blind eye turned by local authorities to the recent infiltration of some Birmingham schools by Islamists. + +Many of the more exciting anti-radicalisation initiatives are led by Muslims themselves and take place outside the Prevent framework. Mr Mahmood, wary of its brand, independently mentors young men. Alyas Karmani, a Bradford imam who has aptly compared the psychological function of IS guns to penis extensions, is similarly sceptical of Prevent. Abu Khadeejah, a Birmingham-based Salafist, posts theologically justified critiques of IS on his blog. Yet such types face intimidation and even physical danger. One anti-jihadist Muslim activist tells how a critic threatened him by drawing a finger across his throat. + +Of pens and swords + +What to do? In the short term the government should consider renaming and relaunching Prevent, a good programme with a bad reputation. But a generational struggle over ideas and minds requires a generational answer: a dramatic improvement in mutual understanding between different parts of an increasingly diverse society. That means more briefing on the nuances of British Islam for local authority figures (Ms Bowen’s book, “Medina in Birmingham, Najaf in Brent”, is a good start), arm’s-length liaison bodies for Muslim moderates uncomfortable about engaging with the state, efforts to reverse the decline of religious studies and better policing of fashionable but often unaccountable “faith schools”. One Prevent officer in London jokes that more students should be encouraged to study theology. Why not? In a battle of ideas, knowledge is the most powerful of weapons. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21685474-defeat-islamic-extremism-intellectual-arena-britain-must-understand-it/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Racial segregation: The great melting + +London's population: White shuffle, not white flight + + + + + +Articles Sections Next + +Racial segregation + +The great melting + +Cities are becoming less racially segregated. For that, thank suburban sprawl, extortionate house prices and immigrants + +Jan 9th 2016 | CHICAGO AND NEWHAM | From the print edition + + + +OAK PARK, just outside Chicago, is known to architecture aficionados as the home of Frank Lloyd Wright, who built some fine houses there. This small suburban village also has another distinction: it is racially mixed. In the 1970s it vigorously enforced anti-segregation laws; today the “People’s Republic of Oak Park”, as it is sardonically known, is 64% white, 21% black and 7% Hispanic. “Oak Park stands out so much,” says Maria Krysan at the University of Illinois at Chicago. But it does not stand out quite as much as it used to. + +America remains a racially divided country, and Chicago is one of its most segregated cities. The south side is almost entirely black; northern districts such as Lincoln Park are golf-ball white; a western slice is heavily Hispanic. Yet the Chicago metropolis as a whole—the city plus suburban burghs like Oak Park—is gradually blending. For several reasons, that trend is almost certainly unstoppable. + +When it comes to race, appearances often deceive. Streets can appear black or Asian when they are actually full of black or Asian shoppers who live somewhere else. Statistics are more reliable, and the best measure is known as the dissimilarity index. This reflects the proportion of people of a given race who would have to move out of their census tract—an area of a few thousand inhabitants—and into another one in order to spread themselves evenly. In 1970 the black-white dissimilarity index for Chicago was above 90, meaning that more than 90% of blacks would have had to move in order to become integrated with whites. By 2000 the figure had fallen to 81. William Frey, a demographer at the Brookings Institution, a think-tank, calculates that it now stands at 76. + + + +In 45 of 52 big American metropolises with sizeable black populations, black-white segregation has fallen since 2000, according to Mr Frey. Southern cities, which many blacks fled in the first half of the 20th century, are now less segregated than northern ones such as Chicago and New York; sunbelt cities such as Las Vegas and Phoenix are more mixed still. In 1980 the average black urbanite lived in a district that was 61% black. Now he or she lives in a place that is 45% black (see chart). Asians and Hispanics are neither more nor less segregated than they were, probably because two trends are cancelling each other out: as some members of those fast-growing groups move out of ethnic enclaves, they are replaced by new immigrants. Still, both groups are far more integrated than blacks: the Hispanic-white index of dissimilarity was 44 in 2010, and the Asian-white score just 40. + +America is unusual, both for its obsession with race and for its superb statistics. Poor countries lack the means to collect precise data, and many rich ones choose not to. Some, like France, are so high-minded that they hold race to be irrelevant; in others racial censuses smell uncomfortably like fascism. A few countries distinguish foreigners from natives, though, and there the trend is mostly the same as in America. + +In Sweden migrants from outside Europe have become less segregated since the 1990s, calculate Bo Malmberg and others at the University of Stockholm. By one measure, desegregation is happening fastest in Malmo, a city with lots of immigrants. In the Netherlands Sako Musterd, a geographer, calculates that foreigners have become less segregated from the native Dutch in Rotterdam. Amsterdam grew more segregated until the late 2000s, but now seems to be going the other way. + +The European country that stands out is Britain. Like America, Britain collects excellent data on race and ethnicity; also like America, it is becoming steadily more mixed. Gemma Catney at the University of Liverpool has shown that every ethnic minority became less segregated between 2001 and 2011 (the two most recent British census years). Black Africans, who had been among the most clustered, are spreading out especially quickly. + +Yet Britain’s streets are often quite different from America’s. Around West Ham football ground, in the east London borough of Newham, is a ward called Boleyn. Once largely white and British, it is now something else entirely. In the Ercan fish-and-chip shop, on the Barking Road, the managers complain that whites have moved to the suburbs, to be replaced by immigrants and ethnic minorities who have not developed a taste for fish fried in batter. “Only on match days you see English people around here,” says one. The supermarket next door has 27 national flags above the entrance. + +Ethnic Pakistanis, who may be immigrants or British-born, are now the biggest group in Boleyn. That is not saying much, though. Of the ward’s 16,000 inhabitants, just 2,500 were Pakistani at the time of the 2011 census, making them 16% of the population. Most of the remainder belonged to Britain’s largest ethnic groups—white Britons (who are 13% of the population), Indians, Bangladeshis, black Africans, black Caribbeans and white eastern Europeans. Boleyn also contains mixed-race people and members of groups that are rare in Britain as a whole, such as Filipinos and Sri Lankans. + +Newham has become astonishingly diverse, as have other working-class parts of London (see map). That has shaped its politics. Newham not only lacks powerful ethnic blocks; its politics is actually anti-ethnic. In Newham’s old town hall Sir Robin Wales, the mayor of the borough, talks proudly about removing ethnic newspapers from local libraries and refusing to subsidise street parties if they are designed to attract only one group. Sir Robin, who is a white Briton (specifically a Scot, and thus a rarity thereabouts), was easily re-elected in 2014, winning 61% of the vote. + + + +INTERACTIVE: Click/tap here to explore further with our ward-by-ward breakdown of each ethnic group. + +Perhaps Britain and America will become more segregated over time, with ghettos in new places. Perhaps many cities in countries that refuse to collect race data are quietly dividing. Perhaps—but probably not, because the forces driving integration are both powerful and widespread. + +The first is the drift of non-whites from city centres to suburbs and commuter towns. British and American suburbs are still mostly white, but less so than before. In 1990 just 47% of American Hispanics and 37% of blacks lived in suburbia; by 2010, 59% of Hispanics and 51% of blacks did. Cook County, which includes the city of Chicago, has lost 140,000 black inhabitants since 2000, while the surrounding rural and suburban counties all gained them. Whites are moving into some cities, including Chicago, though rarely as quickly as blacks are leaving. + +Some old suburbs have become heavily black or Hispanic—or, in Britain, south Asian. But for the most part suburbanisation leads to mixing. Ethnic minorities who leave city centres tend to be better-off and neither need nor want to live in enclaves. If they choose to move to a newly built suburb, as they often do in America, they will be blocked neither by racist housing laws, which have been abolished, nor by bigoted assumptions about the character of the neighbourhood. That is why the swelling, sprawling cities of the American south and west are so mixed. + +A second force for integration is immigration. In Newham the churn caused by immigrants arriving and then moving to better districts has thoroughly dissolved old colour lines. The same is true of parts of America, too. John Logan of Brown University says that whites often stay when Latinos and Asians move in to a district. After a while blacks move in too, taking advantage of the path paved by the Latinos and Asians—and whites mostly continue to stay. Logan Square, a handsome district in north Chicago with wide boulevards and big, stylish houses, seems set to become such a “global neighbourhood”. Its population is 42% white and 46% Hispanic. + +A powerful third force is love, which integrates families as well as places. In London whites and black Caribbeans marry or cohabit in such numbers that there are now more children under five who are a mixture of those two groups than there are black Caribbean children. Marriages between whites and Asians are growing, too. America is mixing just as quickly. In 2014, Mr Frey calculates, 19% of new American marriages involving whites and 31% involving blacks were mixed-race. The share for both Hispanics and Asians was 46%. The children of such unions can be hard to deal with statistically. So in the future the numbers will probably underestimate the speed of desegregation. + +All this is most welcome. But there is a fourth driver of racial and ethnic integration in cities, which is not so benign. Because big cities are such desirable places to live, and have failed to build enough new homes, they are now so expensive that people can barely afford to segregate themselves. In London property prices have risen so steeply that the average first-time buyer needs to raise a deposit equivalent to about 120% of annual income, according to Neal Hudson of Savills, an estate agent. In the 1980s it was enough to raise just 20-30%. + +Increasingly, people just buy property where they can. And along with the great weight of evidence showing that countries are becoming less segregated by race and ethnicity, there is also growing proof that they are becoming more segregated by income. One kind of separation might be replaced by another. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21685481-cities-are-becoming-less-racially-segregated-thank-suburban-sprawl-extortionate/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +London's population + +White shuffle, not white flight + +Jan 9th 2016 | From the print edition + + + +When, three years ago, it was revealed that white Britons had become a minority group in London, with just 45% of the population, there was much hand-wringing over “white flight”. The release of more fine-grained data since then has shown what is really happening. White Britons have abandoned almost no part of London. They remain the biggest ethnic group in huge swathes of the capital, partly because non-whites are themselves so diverse. But their numerical dominance is eroding, and in some places it is barely noticeable. White Britons are the biggest group in West Thornton, in south London, with just 17% of the population. This is not white flight—it is more a lazy shuffling of white feet away from the most immigrant-dominated areas. How British. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21685490-white-shuffle-not-white-flight/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +The future of personal transport: The driverless, car-sharing road ahead + +VW's scandal: The cost of cheating + +Biotechnology: Cutting remarks + +Facebook in India: Can’t give it away + +Off-price fashion retailing: To the Maxx + +Jollibee: Acquired tastes + +Startups in Australia: From lucky to plucky + +Japanese entrepreneurship: Thinking inside the box + +Schumpeter: Toy story + + + + + +Articles Sections Next + +The future of personal transport + +The driverless, car-sharing road ahead + +Carmakers increasingly fret that their industry is on the brink of huge disruption + +Jan 9th 2016 | From the print edition + + + +THE whizzy gadgets for geeks to goggle at during CES, an annual consumer-electronics show in Las Vegas, have typically been small enough to pick up. But they been joined in recent years by an increasing number of cars. The Detroit motor show, America’s biggest and glitziest, starts later this month, but many in the car industry now regard CES, which opened on January 5th, as a more important event. Mary Barra, GM’s boss, unveiled a new production version of its Bolt electric car at Las Vegas this week. + +Incumbent manufacturers are recognising the double threat posed by technology, as car-sharing takes off and driverless vehicles come closer. First, some people who might hitherto have wanted to own a car may no longer do so, cancelling out the growth the motor industry might otherwise have expected from the rising middle classes in developing countries (see chart). Second, technology firms may be better placed than carmakers to develop and profit from the software that will underpin both automated driving and vehicle-sharing. Some of these firms may even manufacture cars of their own. + + + +In a report ahead of the Las Vegas and Detroit shows, Morgan Stanley, an investment bank, said the motor industry was being disrupted “far sooner, faster and more powerfully than one might expect.” It predicted that conventional carmakers would scramble in the coming year to reinvent themselves. As if to demonstrate this, shortly before CES opened, GM announced a $500m investment in Lyft, a ride-sharing service. + +A rumoured tie-up between Ford and Google to produce driverless cars failed to materialise at the show, but even the rumours underlined the disruption that tech firms are bringing to the motor industry. And other partnerships were announced: Ford is teaming up with Amazon to connect its cars to sensor-laden smart homes. It was also revealed at CES that Toyota would adopt Ford’s in-car technology, which is a competitor to Apple’s CarPlay and Google’s Android Auto, to access smartphone apps and other features. + +That is not the only example of carmakers joining forces to avoid being beholden to the tech giants. In August BMW, Daimler and Volkswagen’s Audi division jointly bought Here, a mapping service, from Nokia, to ensure that carmakers have an independent provider rather than having to depend on Google Maps. Nevertheless, carmakers are also teaming up with tech firms because each has something the other needs. Building and marketing cars, and dealing with safety and emissions regulators, is tricky. Tech firms could copy Tesla, which has built its own electric cars for more than a decade. Apple, which is said to be planning an electric car, may try to have them made in the same way as it does its iPhones, outsourcing to a contract manufacturer. But a more obvious route is to ally with an established carmaker. + +Carmakers also have lots to learn. Most are working on making their vehicles either fully or partly self-piloting, and a number are running their own car-sharing experiments. But Google remains the leading exponent of autonomous driving. Its robotics, drones and search engine all contribute expertise that helps to guide a driverless car down the road avoiding pedestrians, obstacles and other vehicles, using computing power and sophisticated software to interpret masses of data received both from the car’s on-board sensors and from external sources through wireless connections. + +Yet if the tech firms have much to gain as they muscle in to the motor business, the carmakers are wary of what they have to lose. Profits may seep away towards the producers of the software and the owners of the data, and away from the makers of the hardware. Hitherto, new cars—even quite modest ones—have tended to be bought as status symbols and expressions of personal style, but if consumers become more interested in what software and entertainment systems a car can run, rather than what it looks like, the industry’s whole business model may come apart. + +Ride-sharing, car clubs and other alternatives to ownership are already growing fast. Young city-dwellers are turning their backs on owning a costly asset that sits largely unused and loses value the moment it is first driven. Carmakers insist that such consumers are merely deferring buying a vehicle, pointing to the fact that people continue to drive at an older age than they used to. But the pronouncements of motor-industry bosses suggest that doubts are creeping in. At CES Mark Fields, Ford’s CEO, said that it would in future be “both a product and mobility company”. + +Membership of car clubs, which let people book by app for periods as short as 15 minutes, is growing by over 30% a year, according to Alix Partners, a consulting firm, and should hit 26m members worldwide by 2020. Competition is intense. ZipCar, owned by Avis Budget, a conventional car-hire firm, is thriving. More carmakers are copying Daimler’s Car2Go and BMW’s Drive Now apps. Earlier this year Ford began testing both a car-sharing service in America and a car club in Britain. Daimler reckons its scheme is profitable. But such services are unlikely ever to match the returns, especially for premium makers, from selling vehicles. + +At the same time, app-based taxi services such as Uber and its Chinese counterpart Didi Dache, which are often cheaper and more efficient than conventional cabs, are also growing quickly. Once these are able to dispense with drivers for their vehicles, the taxi, car-club and car-sharing businesses will in effect merge into one big, convenient and affordable alternative to owning a car. + +So when will the fully autonomous car hit the showrooms? Google, whose cars have done 1.3m test miles (2.1m km) on public roads, once promised 2018, whereas most analysts reckoned the 2030s more plausible as carmakers introduced automated-driving features in stages. Now, Mr Fields is talking about autonomous cars being ready to roll by 2020. More conservative car bosses add five years. + +Barclays, another bank, forecasts that the fully driverless vehicle will result in the average American household cutting its car ownership from 2.1 vehicles now to 1.2 by 2040. A self-piloting car may drop off a family’s breadwinner at work, then scuttle back to pick up the kids and take them to school. The 11m or so annual sales of mass-market cars for personal ownership in America may be replaced by 3.8m sales of self-driving cars, either personally owned or part of taxi fleets, Barclays thinks. + +Driverless cars still have problems in bad weather. They may struggle to recognise that light shining off a puddle is harmless or guess that a pedestrian is about to step into the traffic without looking. But sophisticated systems for hands-free driving on motorways, and for automated parking, are already available on a number of manufacturers’ models. Fully driverless cars will ferry workers round GM’s technical centre in Detroit in late 2016. + +Convincing regulators to allow fully driverless cars onto the streets is the next hurdle. Insurers and consumers also need to be won round. If self-driving cars can be introduced first on private roads or designated areas of cities to prove their worth in avoiding accidents and reducing congestion, that might help. Within the industry, the big question is not whether this future will arrive, but whether tech firms or carmakers will grab the spoils. Will the sign on the dashboard say Ford (powered by Google) or Google (powered by Ford)? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21685459-carmakers-increasingly-fret-their-industry-brink-huge-disruption/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +VW's scandal + +The cost of cheating + +Jan 9th 2016 | From the print edition + + + +Volkswagen’s hopes that it was getting on top of the emissions-test cheating scandals that emerged in September were short-lived. European regulators have accepted its proposals to fix affected cars. The damage to sales in America was less than feared—they fell by 9% year on year in December. But now VW faces a civil action by the Department of Justice that could cost it up to $48 billion. Criminal charges and more fines may follow. Investors shuddered, fearing a repeat of BP’s colossal Deepwater Horizon payouts. Exane BNP Paribas, a bank, reckons VW will end up paying a fraction of that sum. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21685458-cost-cheating/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Biotechnology + +Cutting remarks + +A gene-editing company files for an IPO + +Jan 9th 2016 | From the print edition + + + +AS DIFFICULT sales pitches go, this one is hard to beat. This biotech company has burned through $75m in the past few years and has not yet started clinical work on a drug candidate. It says it will be many years, “if ever”, before it has something ready to commercialise. If this were not enough, not only is there a thorny patent thicket to manage but the firm must fight and win a case seeking to overturn its own intellectual-property claims on the ground that it was not the first to invent them. + +Despite all this, shares in Editas Medicine, which filed on January 4th for an initial public offering, look set to draw great interest from investors. It will be an opportunity to buy into a revolutionary new technology called CRISPR-Cas9, which allows DNA to be cut and edited almost as easily as one might rewrite a document on a computer. Editas, spun out of the work of geneticists at the Broad Institute in Cambridge, Massachusetts, has already raised $163m from private investors and is seeking a further $100m from the markets. Its initial aim is to begin trials by 2017 on a possible treatment for a rare form of blindness. + +Editas is not alone in pursuing the CRISPR-Cas9 technology. Others include Caribou Biosciences, CRISPR Therapeutics and Intellia Therapeutics. There are also firms such as Bluebird Bio and Sangamo, which are further ahead with drug candidates developed using older, and clunkier, forms of gene-editing. + +In the past two years about $1 billion of venture-capital financing has been invested in new gene-editing technologies, reckons the Boston Consulting Group. This reflects the promise the technology offers for producing treatments, and even cures, for a wide range of conditions—and not just those linked to mutated genes, such as haemophilia or sickle-cell anaemia. An early move to go public will help Editas stand out from the crowd, and perhaps help it recruit and retain good scientists. + +CRISPR Therapeutics says it is also thinking about going public, given investors’ interest. Although enthusiasm for biotech IPOs as a whole may have cooled in the second half of 2015, Eva Haas of Hume Brophy, an investor-relations firm, says the Editas IPO is happening because it is “in a hot area and because it can.” Editas is also helped by having a stellar list of private investors, including Google, Bill Gates and Fidelity Investments, as well as three venture-capital backers, Polaris Partners, Third Rock and Flagship Ventures. (A number of other biotech companies filed to go public this week, including Corvus Pharmaceuticals, which is working on small-molecule drugs for cancer, and Audentes Therapeutics, a gene-therapy firm.) + +Some startups in other areas of technology have chosen in recent years to delay going for IPOs and to raise money privately instead. However, Sam Zucker of Sidley Austin, a law firm that manages corporate transactions in biotech, says that early-stage firms in this area may be keen to go public because they want to be free from dependence on a small network of venture-capital firms. The pool of public capital they will then be able to dip into is often faster to materialise, as well as larger, than private capital, he says. Wherever the money comes from, however, Editas and other gene-editing firms will need to show results eventually. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21685464-gene-editing-company-files-ipo-cutting-remarks/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + + + +Facebook in India + +Can’t give it away + +Mark Zuckerberg’s internet-access programme hits a roadblock + +Jan 9th 2016 | From the print edition + +Sorry, I’m just talking to my Facebook friends + +“WHO could possibly be against this?”, Mark Zuckerberg, Facebook’s boss, asked in an editorial in the Times of India on December 28th. The “this” in question is “Free Basics”, a programme that gives its users free access to Facebook and a handful of other online services on their smartphones in 36 poor countries. According to Mr Zuckerberg, Free Basics acts as a gateway drug to the internet: half of those who first experience going online through the service start paying for full internet access within a month. Though the programme is promoted by Facebook, its costs are borne by the mobile-telecoms operators it works with—in the case of India, Reliance Communications, the country’s fourth-largest. + +As it turns out, plenty of people are against Free Basics. They include everyone from India’s internet-and-mobile-industry body (of which Facebook is itself a member) to a ragtag group of volunteer activists who mustered almost 400,000 people to write to the Telecom Regulatory Authority of India (TRAI) as part of a public consultation on whether mobile operators should be allowed to charge different amounts for different forms of data. At stake is one of the world’s largest and fastest-growing internet markets outside China, which bars foreign digital services such as Facebook from entering. Around a quarter of the Indian population—or 300m people—were online at the end of 2014, and the number is expected to double by 2020. + +Critics of the programme say that Facebook’s generosity is cover for a landgrab. They argue that Free Basics is a walled garden of Facebook-approved content, that it breaches consumer privacy by sucking up all the data generated by users of the service, and that it is anticompetitive to boot. Moreover, critics fear that if new internet users are merely Facebook users, other online businesses will have no choice but to operate within Facebook’s world. Nandan Nilekani, an Indian tech luminary opposed to Free Basics, suggests that, instead, the government subsidise a monthly allowance of free mobile data for each user. + +Facebook counters that the programme is open to all-comers that meet certain technical requirements, that user data are stored for only 90 days, and that there is no profit motive: the service does not include advertising. As for suppressing local competition, Facebook argues, “there is no greater threat to local innovation than leaving people offline.” If, as Mr Zuckerberg says, Free Basics users quickly graduate to paying for full internet service, India’s ferociously competitive mobile operators should provide it cheaply. And if Free Basics proved popular there would be little to stop India’s big media and e-commerce groups from creating rival services to attract new surfers to their web offerings. + +Over the past few weeks, Facebook has run an extensive campaign with full-page ads in Indian newspapers touting Free Basics. Newspapers, blogs and television channels have presented arguments and counterarguments every day. Even All India Bakchod, a popular comedy collective, got into the act. The group’s video arguing against Free Basics has been watched 800,000 times on YouTube—and another 350,000 on Facebook itself. + +Activists in India won early victories in 2015, leading Facebook to change the name of its service from internet.org, which they said was misleading, and forcing the company to accept more services than those it handpicks. In December the TRAI suspended Free Basics in India pending the results of its consultation. The TRAI has received 1.4m notes of support for Free Basics as part of this process, driven largely by an automated response tool Facebook used to gather support from its Indian users. But the regulator says it may have to disregard them, since they do not answer the question it is asking. The TRAI itself will deliver its verdict at the end of this month. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21685292-critics-argue-mark-zuckerbergs-generosity-cover-landgrab-facebooks-free-internet/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Off-price fashion retailing + +To the Maxx + +Clothes shops that sell famous brands at big discounts are thriving + +Jan 9th 2016 | NEW YORK | From the print edition + + + +THE downtown Manhattan store of T.J. Maxx, with its dreary fluorescent lighting and haphazard displays, is about as glamorous as the average petrol station. Yet to retail analysts, and bargain-hunters, it is thrilling. At the end of one bedraggled rack, a red jacket offers a hint of the store’s appeal. The coat, from Michael Kors, an American designer, is on sale at $99.99. A comparable coat would cost $140 elsewhere, the label boasts. + +Using discounts to shift clothes is no novelty in fashion retailing. Indeed, in the current climate, with competition fierce and consumers hesitant, it is hard to avoid. But what marks out T.J. Maxx and other “off-price” retailers is that most of their stock is from habitually pricey designer labels, at drastic reductions. TJX, the parent company of T.J. Maxx and a handful of other off-price chains, rarely gives interviews, like its closest competitor, Ross. But their model is essentially as follows: when the designer labels produce more clothes than normal shops will sell at full price, TJX and Ross buy them at a deep discount, then resell them. As a strategy for global domination, it sounds underwhelming. But TJX and Ross are booming. + +TJX has become the top seller of clothing not just in America but, according to some measures, the world. Ross is smaller but, given its room to grow, has become an investor darling. The Dow Jones United States Apparel Retailers Index fell by 6% during 2015 but the shares of Ross and TJX rose by 15% and 4% respectively. + + + +Other American fashion chains are having a harder time. Shoppers are snubbing once-beloved names like Gap, J.Crew and Abercrombie & Fitch. Department stores’ habit of ordering their stocks of clothes months in advance leaves them vulnerable to ever-faster changes in tastes and to unpredictable weather. This autumn’s mild temperatures, for example, left them stuck with unwanted coats and scarves. All are threatened by more agile foreign “fast fashion” retailers, such as Inditex of Spain and H&M of Sweden. + +In contrast, the American off-price chains are continuing to expand. In 2014 TJX’s sales overtook those of Macy’s, a famous department-store chain (which this week announced big job cuts and store closures). They are not at the cutting edge of high-street fashions: many of their lines are last season’s. Their skill lies in hunting down surplus batches of stock from well-known brands and negotiating steep reductions. But the wind is at their backs. According to Bryan Gildenberg of Kantar Retail, a consulting firm, it is getting harder for shops to predict which clothes will sell at full price. “If the apparel industry is harder to forecast, there’s more inventory at risk, and if there’s more inventory at risk, the opportunity for this sort of buying goes up astronomically,” he says. + +Off-price retailers do not try to offer every size in every colour in every outlet. They buy whatever is available, so their shops have a constantly changing, seemingly random assortment. Ross says its stores typically get fresh stock three to six times a week. They therefore appeal to the sort of shopper who loves to rummage, hoping to stumble across the perfect item at an irresistible price. “It looks like a jumble, but actually it’s a very deliberate jumble,” says Neil Saunders of Conlumino, another consulting firm. + +The shops are spartan and thinly staffed, since customers are happy to hunt for bargains without help, and understand that if it isn’t on display, the store doesn’t have it. As a result, the overheads at TJX and Ross are, as a percentage of sales, about half those of Macy’s or Nordstrom, another department-store chain. The experience of shopping in an off-price store is hard to replicate online, notes Oliver Chen of Cowen and Company, a financial-services firm, so TJX and Ross are less threatened by the rise of internet retailing than other clothing chains. + +It may all sound simple, yet some off-price chains have flopped. The company that owned Filene’s Basement, for example, filed for bankruptcy in 2011. Ross and TJX now have the benefits of scale as well as, analysts say, strong management. TJX is spreading across Europe, where it trades as T.K. Maxx. + +The two chains are not just admired by industry analysts. They are also appreciated, albeit more discreetly, by the designer labels. An elite brand dare not damage its image by flooding off-price retailers with its products. But TJX and Ross have become an essential part of the retail ecosystem, offering a way for brands to clear their excess stock quickly. The off-price chains may drive a hard bargain but are otherwise easy to deal with. Department-store chains often demand sale-or-return clauses, or retrospective discounts for stock that they were forced to reduce. + +The risk for the fashion brands is that they end up a bit like American carmakers before their bail-outs, habitually overproducing and dumping their growing surpluses on the off-price chains and thus gradually losing their ability to sell at full price. As for TJX and Ross, one long-term worry, says Mr Gildenberg, is that younger consumers expect ever less expensive clothes. Forever 21, which specialises in cheap, trendy wear, has grown quickly. Primark of Ireland, which opened its first American branches last year, boasts fashionable clothes for Walmart prices. + +For now, though, both of the big off-price chains have room for further expansion. It is no surprise then, that some rivals are seeking to muscle in to the business: Macy’s is expanding a new off-price chain, Macy’s Backstage, and Nordstrom is opening more branches of its one, Nordstrom Rack. Off-price is in fashion. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21685461-clothes-shops-sell-famous-brands-big-discounts-are-thriving-maxx/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Jollibee + +Acquired tastes + +A tenacious Filipino burger chain tries a different way to conquer the world + +Jan 9th 2016 | SINGAPORE | From the print edition + +Filipinos’ fave + +DESPITE coming from a region full of celebrated cuisines, the food of the Philippines has a grim reputation among foreigners. Among its delicacies is the balut—a duck egg containing a two-week-old embryo, which is eaten straight from the shell. A more representative picture of local tastes is painted by the menu of Jollibee, a fast-food chain that peddles sugary burgers, noodles and fried chicken. + +At home, Jollibee is much loved and highly profitable. But its attempts to conquer foreign markets have had only modest success. After decades of trying, the Jollibee chain has only 133 foreign branches (compared with 890 back home), catering mainly to clusters of expat Filipinos in places such as the Gulf and California. + +Jollibee’s roots lie in a pair of ice-cream parlours opened in 1975 by Tony Tan Caktiong, the company’s founder and chairman. At home Mr Tan and his burger joints are feted for having survived the arrival of McDonald’s, which entered the Philippines in 1981. Today Jollibee far outsells its great rival there. It catered better to the whims of locals, who prefer dishes such as Jollibee Spaghetti—an odd Bolognese mixed with chopped frankfurters—to Western chains’ more savoury offerings. And it has marketed itself cannily as a family firm and a store of national pride. + +Over the years Jollibee Foods, the parent company, has expanded to include restaurants run under a handful of other brands, including Chowking (which sells Chinese-style dishes) and the local Burger King franchise. Since 2010 the parent’s sales and net profits have increased by around 70%, to 118 billion pesos ($2.5 billion) and 5.4 billion pesos respectively, as the growth of Filipino call-centres and other outsourcing businesses has boosted overall consumer spending. The parent group’s total number of outlets has grown to more than 3,000 (of which 630 are abroad). The firm still has a lot of room to expand in fast-growing provinces beyond the densely populated main island of Luzon, which is home to only about half the country’s 100m people. + +However, Mr Tan has long aspired to make Jollibee Foods a global champion. His current target is for the company’s foreign revenues eventually to be half of the total, up from less than one-quarter now. Managers talk of it becoming one of the world’s five most valuable fast-food operators. There are still substantial pockets of expats unable to feast on an Amazing Aloha Champ Burger (a bacon-cheeseburger with a wodge of pineapple), and in 2016 the company will open new branches of its eponymous chain in places such as Britain, Italy and Canada to reach them. But the company has gradually come round to the view that to reach its goal, it needs to buy foreign restaurant chains with menus better suited to the tastes of non-Filipinos. + +A trio of chains acquired since 2004, offering Chinese cuisine, have given Jollibee Foods a sizeable foothold in mainland China. They now generate about 12% of its sales, though collectively they have taken a decade to turn consistently profitable. In January 2015 the company announced that it was part of a joint venture which plans to bring at least 1,400 branches of Dunkin’ Donuts to China in the next two decades, which will mean tussling with such fellow invaders as Starbucks and Costa Coffee. + +America is the next frontier. In October Jollibee Foods said it would fork out a little under $100m—its biggest investment to date—for a 40% stake in Smashburger, an American “fast-casual” burger joint. That should allow it to benefit from America’s increasing fondness for slightly finer on-the-go nosh, which is shaking McDonald’s grip on its home market. Mr Tan said in November that he was looking for one or two further foreign acquisitions of the same size or bigger. + +There is no guarantee that venturing into new markets with unfamiliar menus will succeed any better than its forays under its own brand. In America as in China, the market for all sorts of low-cost dining is getting ever more competitive. It will be vital to avoid unforced errors such as Jollibee’s shambolic overhaul of its IT systems in 2014, which briefly closed more than 70 of its branches and which is still weighing on its performance. + +Some analysts back home are, however, confident it is up to the task. Creating a national brand in the Philippines, a disparate archipelago with distinct local cultures, will have been good practice for venturing abroad, reckons Ghia Yuson of First Metro Securities, a stockbroker in Manila. She thinks the relentless market research which has kept Jollibee in tune with Filipino food fads will also serve it well overseas. Furthermore, its strategy seems to be to buy food chains that are already well established and have capable managers, rather than buying weaker businesses and attempting to turn them around. + +Several other cash-rich Philippine firms, such as Universal Robina, a food manufacturer, and Emperador, a distiller, are now spreading their wings across South-East Asia, says Hazel Tañedo of CLSA, another broker. But none has made so direct a beeline for the world’s biggest markets. If Jollibee’s American venture succeeds and its profits in China keep growing, it should boost ambition among other Filipino firms, even if it doesn’t change foreigners’ minds about the country’s cuisine. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21685465-tenacious-filipino-burger-chain-tries-different-way-conquer-world-acquired-tastes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Startups in Australia + +From lucky to plucky + +An entrepreneurial prime minister calls for a culture of innovation + +Jan 9th 2016 | SYDNEY | From the print edition + +WHEN people call Australia “The Lucky Country”, they often do not realise that Donald Horne, the writer who coined that phrase in a book of the same name in 1964, meant it as a criticism. “Australia is a lucky country run mainly by second-rate people who share its luck,” he wrote. “It lives on other people’s ideas…” Horne intended the phrase as a warning to Australians, and a plea for more curiosity from its leaders. + +The country’s good fortune has long rested on wealth from its mineral resources and farmland. Now, however, with the prices of the commodities it exports hitting rock-bottom, Australians are beginning to realise that more must be done to encourage the formation of innovative businesses. Instead of living on other people’s ideas, in other words, it needs to generate its own. + +Among Australia’s 2.6m registered businesses, the survival rate compares well with America’s and Canada’s, and is better than New Zealand’s. But a study published last month by the government’s Productivity Commission found that few young Australians start their own firms; that only about 0.5% of newly formed businesses are startups as commonly understood (innovative, ambitious and with high growth potential); and that only 1-2% of existing businesses can be described as innovating. This puts Australia on a par with Canada, say, but behind America and Britain. The commission concluded that one reason why Australia lags is that entrepreneurs need “other entrepreneurs nearby to connect and work with.” + +Fortunately, Australia now has both a shining example of a tech startup becoming a global success, and a former tech entrepreneur as prime minister. Atlassian, a software firm whose products are used by developers and project managers, listed on the NASDAQ exchange in America last month, making its founders, Scott Farquhar and Mike Cannon-Brookes, Australia’s first tech billionaires. And in September Malcolm Turnbull, a lawyer and investor turned politician, unseated Tony Abbott as prime minister and leader of the Liberal Party. In the 1990s Mr Turnbull had made a fortune investing in OzEmail, an Australian internet-service provider. + +Atlassian’s blunt slogan befits its Australian roots: “Open company, no bullshit”. Though it has offices in San Francisco, its headquarters remain in Sydney. Its founders, two university friends, started it in 2002 with a A$10,000 (then $5,400) credit-card loan. Fourteen years later, Atlassian’s customers include NASA, Netflix and Facebook and the company is valued at $5.6 billion. “When we began, there was no startup culture in Australia to follow,” says Mr Farquhar. “The attitude, fear of failure, was a problem.” Some say it still is. + +Three days before Atlassian’s listing, Mr Turnbull gave a speech that Australian business leaders hailed as a welcome change in official attitudes to promoting innovation. Mr Abbott had cut a backward-looking figure, stopping public funding for wind energy and describing coal as “good for humanity”. Mr Turnbull called for an “ideas boom” to replace mining booms as the country’s new growth source, and told Australians they were falling behind most other rich countries in turning their ideas into commercial ventures. He promised about A$1 billion ($720m) in incentives, including tax breaks for investors in startups and venture-capital partnerships. + +Mr Turnbull’s pitch to brand himself as the leader of the future, and to get his compatriots to rethink their “Lucky Country” attitudes, may take more than tax breaks. To begin to create the sort of community of entrepreneurs and innovators the Productivity Commission called for, Atlassian tried to buy a 19th-century former railway workshop near Sydney’s business district. In November, however, the New South Wales state government sold the site instead to a consortium led by Mirvac, a property company. + +Mirvac plans to use much of the site for new offices for the Commonwealth Bank, though it will convert a former locomotive shed into spaces for tech firms and other startups. Even so, Mr Farquhar laments the sale as a lost opportunity to build a larger tech ecosystem that could help spawn more companies like his. Australia, he says, must decide if it wants to be a software producer for the world or a consumer, “missing this whole revolution and left wondering how we are going to pay for it”. + +Mr Turnbull is putting his faith in a strengthening of links between science and business. He has restored a A$111m budget cut that Mr Abbott made to the Commonwealth Scientific and Industrial Research Organisation (CSIRO), Australia’s chief science agency, the outfit that invented the technology behind Wi-Fi. + +Larry Marshall, the CSIRO’s head, was struck by Australia’s somewhat timid approach to business risk when he returned to his home country in 2015 after working as an entrepreneur for 26 years in Silicon Valley. He suggests would-be tech pioneers could find a model in Australia’s “incredibly risk-tolerant” frontier economy. Facing enormous distances and tough terrain, miners and farmers have survived only by innovating. The CSIRO has, for instance, collaborated with BHP Billiton, Newcrest Mining and others on better ways to drill ores, detect their grades and raise productivity. Cotton farmers now mainly use varieties the CSIRO has developed, which need less water and pesticides to deliver high yields. The challenge, Mr Marshall argues, is to channel the old economy’s risk-taking into new industries in which Australia has a good chance to excel: high-value food and biotechnology. + +Some are already following in Atlassian’s wake. Alec Lynch and Adam Arbolino launched DesignCrowd in Sydney eight years ago after an earlier startup failed. Undeterred, Mr Lynch saw a chance to change the “slow, risky and expensive” way people procure projects from local graphic designers. DesignCrowd lets customers set budgets and receive ideas from designers around the world. After self-funding at first, capital came in from local angel investors and Starfish Ventures, a Melbourne venture-capital firm. DesignCrowd now has revenues of almost A$20m a year, four-fifths from outside Australia, and has opened offices in San Francisco and Manila. + +Mr Lynch foresees a “mini startup boom” emerging in Australia. And he is optimistic that the interventions of the tech-friendly prime minister can only help Australia go from being the Lucky Country to one that makes its own luck. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21685462-entrepreneurial-prime-minister-calls-culture-innovation-lucky-plucky/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Japanese entrepreneurship + +Thinking inside the box + +Furniture for the introverted + +Jan 9th 2016 | TOKYO | From the print edition + +Now all we need is a tiny popcorn-seller + +IT STARTED in a cosy izakaya, or pub, in Fujieda, in Shizuoka prefecture, when a gathering of furniture-makers dreamed of marking out some space for themselves in their cramped family homes. The result was an otoko no kakureya, or “hiding place for men”, a tiny, cockpit-like wooden room with a desk, shelves and reclining chair. Sales are taking off. + +Another popular Japanese product offering the illusion of personal space is the Solo Theatre (pictured), a cardboard box that users put over their heads, which has a slot for Apple’s iPhone. Inside there is a black cut-out of a row of heads, as if the user is at a cinema. + +The product’s surrealism has tickled thousands of Japanese social-media users. It is a selfish product that appeals to the need to get into a small womblike space of one’s own and watch films and other content, explains Satoshi Aoyagi, of Lucy Alter Design, who fashioned it with a colleague. + +Another factor is shrinking living-space. The average Japanese apartment has dwindled from 70 to 60 square metres over the past decade, so that people are even more on top of each other. Cultural forces are powerful too, notes Masahiro Abe, a sociologist at Konan University. Japanese must don a public mask for their hierarchy-bound, open-plan offices, and a second face for their families. Turning to small, private boxes at home is their way of searching for a “third space”, he says. + +Hayato Kasai, a subculture expert at Bibi Lab, a design firm, went so far as to bring a tent to the office as a way of tucking himself away and avoiding interaction with colleagues. His company quickly spotted a new product in it, and designed an indoor “Bocchi Tent”. Bocchi is a sarcastic word for “alone”, but now it is becoming a brand. + +There is also a new “Danbocchi” soundproofed cardboard box for karaoke from Bandai Namco Entertainment, a video-game company, so that singers no longer have to record under blankets at home. Bibi Lab’s tent for loners now far outsells the firm’s regular ones for camping outdoors. + +Despite the success of such products at home, it remains unclear if there is much demand outside Japan from people hankering for privacy. They are also examples of the introversion of Japanese product designers, who nowadays tend to think more of the home market, and struggle to create world-beating ideas like the Sony Walkman. They are also often unwilling to compromise. One enthusiastic customer asked the makers of the Solo Theatre to produce a double-sized cardboard box so that he could watch films in it with another person. The answer was a firm “no”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21685466-furniture-introverted-thinking-inside-box/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Toy story + +What the fad for the non-hovering hoverboard tells us about business + +Jan 9th 2016 | From the print edition + + + +THAT was quick. A couple of months ago hoverboards were the next big thing. Today they are a bad joke. It turns out that they sometimes burst into flames, pitch their riders onto the floor and otherwise cause mayhem. In his boxing career, Mike Tyson was knocked out only five times. A YouTube video shows him felled by a hoverboard in a matter of seconds. + +This is more than a story of a short-lived fad. It is a parable of business life under what Jeremy Corbyn, the hard-left leader of the British Labour Party, would probably call “late capitalism”. “This is the modern economy in a nutshell,” says Josh Horwitz on Quartz, a news website: “viral trends, massive manufacturing hubs, IP disputes, weak regulation, immensely powerful businesses, and global ripple effects.” The big question is whether it is a prophecy as well as a parable: a growing number of analysts think that 2016 will be the year in which the new economy falls back to earth. + +The hoverboard craze exemplifies three facets of modern business. The first is its propensity to blur the boundaries between fantasy and reality. Many modern high-tech devices started life in science fiction: think of “Star Trek” characters consulting clever hand-held devices and talking to their computers. Elon Musk wants to shoot people across California in vacuum-sealed tubes. Jeff Bezos wants to deliver packages by drone. Hoverboards themselves were introduced to the world by Hollywood in “Back to the Future Part II”. + +One problem with hoverboards is that they don’t blur the line between fantasy and reality far enough. Rather than hovering above the ground, they trundle along it on a couple of wheels (although someone has now invented one that really hovers; see our Science section). Hoverboard entrepreneurs dealt with this problem by pulling another rabbit from the fantasist’s hat—pretending that hoverboarding is part of the celebrity lifestyle. The trick was to put the product in the right places—at the MTV awards ceremony and under the feet of Justin Bieber. The fad gained momentum as the B-list celebs followed the A-listers, and the wannabes aped the B-listers. Kendall Jenner, a reality-TV starlet, posted a video of herself on one. More than a million people “liked” it on Instagram. Wiz Khalifa, a rapper, was stopped and handcuffed for riding on one in Los Angeles airport. A Filipino priest sang to his congregation while gliding around on one. + +The craze for hoverboards also exemplifies the agility of modern business, from the prowess of China’s manufacturing cluster in Shenzhen to the reach of e-commerce platforms in both China (Alibaba) and America (Amazon). China’s manufacturers have a long record of churning out cheap knock-offs at high speed. But they are more efficient than ever thanks to the arrival of internet platforms. Alibaba allows Chinese manufacturers to place bulk orders for components and lets wholesalers place bulk orders for finished products. Amazon completes the picture by allowing Western consumers to have their hoverboards delivered rapidly with just the click of a mouse. + +And the hoverboard fad points to a third characteristic: the difficulty of regulating a global supply chain that starts with a fantasy, ends with an Amazon package and takes in a bustling Chinese assembly plant in the middle. Everything in the product’s supply chain emphasised speed over competence. Britain’s National Trading Standards agency found that 15,000 of the 17,000 hoverboards it examined were unsafe because of problems with their plugs, cabling, chargers, batteries or cut-off switches. It is frustratingly hard to hold the various producers of the gadgets accountable for these problems: manufacturers subcontract as much as they can and internet retailers are often simply electronic shopfronts with no influence over product quality. The regulation of hoverboards was complicated further by a legal battle between three separate entrepreneurs over who has the rights to them. Even so, this still does not explain why retailers in the United States were able to sell the products apparently without even rudimentary health-and-safety tests. + +Hovering on the edge of legality + +The problem may have solved itself: so many hoverboards have burst into flames that Amazon has either dramatically restricted the number of models it sells, as in America, or banned them entirely, in the case of Britain. Several Chinese firms have stopped producing them. But, for a remarkable number of new-economy businesses, the regulatory problem remains unresolved. + +Many tech startups have tended to adopt the same approach as the hoverboard industry—exploiting legal grey areas on the ground that, if they build enough momentum, legislators and judges will simply adjust the law to take into account new commercial realities. That is a big bet: many of today’s biggest firms are like hoverboard riders heading for bumpy ground. Uber may be forced to reclassify its drivers as employees rather than contractors, rendering it liable for millions of dollars in back pay and upending its business model. Airbnb may be forced to abide by the health-and-safety and licensing rules that apply to hotels. + +The threat of adverse regulation animates the question of whether the hoverboard fiasco is a prophecy as well as a parable. Silicon Valley has long displayed some of the classic characteristics of a bubble: companies vying to build the most eye-catching headquarters and CEOs competing to produce the most extravagant ideas to “change the world”. There are growing signs that private valuations of tech “unicorns” will not hold up when they are subjected to the rigours of the public market. Some unicorns have shied away from going public at the last moment and others such as Good Technology, a mobile-device security firm, have sold themselves at lower valuations than they had hoped. If regulators alter the landscape further, 2016 might be the year that such firms follow the hoverboard and go up in a puff of smoke. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21685455-what-fad-non-hovering-hoverboard-tells-us-about-business-toy-story/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +The Big Mac index: After the dips + +Retail banking: Blunt elbows + +Oil benchmarks: Crude measure + +Buttonwood: Loathe thy neighbour + +The market for economists: The right match + +Banking for immigrants: Far-sighted + +Room rentals v hotels: Buffett’s revenge + +Free exchange: A mean feat + + + + + +Articles Sections Next + +The Big Mac index + +After the dips + +Big currency devaluations are not boosting exports as much as they used to + +Jan 9th 2016 | From the print edition + + + +MIGHT “Made in Russia” labels become common? If currency depreciation alone could boost exports, then yes. According to our latest Big Mac index, the Russian rouble is one of the cheapest currencies around, 69% undervalued against the dollar. The index compares the cost of the famous burger at McDonalds outlets in different countries by converting local prices into dollars using market exchange rates (as of January 6th, see chart 1). It is based on the idea that in the long-run, exchange rates ought to adjust so that one dollar buys the same amount everywhere. If a burger looks like a bargain in one currency, that currency could be undervalued. + +Americans hunting for cut-price burgers abroad are spoilt for choice: the index shows most currencies to be cheap relative to the greenback. This is partly owing to the Federal Reserve’s decision to raise interest rates when the central banks of the euro zone and Japan are loosening monetary policy. The euro is 19% undervalued against the dollar, according to the index, and the yen 37%. Another force weakening many currencies, including the rouble, has been the ongoing slump in commodity prices since mid-2014. Shrinking demand from China and a glut of supply have sapped the value of exports from Australia, Brazil and Canada, among other places, causing their currencies to wilt, too. By the index, they are respectively 24%, 32% and 16% undervalued. If commodity prices continue to fall, they could slide even further. + +These large currency devaluations can hurt, by raising the price of imports and spurring inflation. But although devaluations may not be pleasant, they are meant to be nutritious. Pricier imports should encourage consumers to switch towards domestic products and stimulate local production. A cheaper currency should also boost growth by spurring exports. + +Between 1980 and 2014, according to an analysis of 60 economies by the IMF, a 10% depreciation relative to the currencies of trading partners boosted net exports by 1.5% of GDP over the long term, on average. Most of the improvement came within the first year. + + + +But devaluations do not seem to have provided quite the same boost recently. Japan is the best example. The yen has been depreciating rapidly. A Big Mac was 20% cheaper in Japan than in America in 2013; now it is 37% cheaper. Yet export volumes have barely budged (see chart 2). This is a surprise: the IMF calculates that Japanese exports are around 20% lower than it would have expected, given how the yen has weakened. Devaluations in other countries, including South Africa and Turkey, have also disappointed. + +A global contraction of trade in dollar terms may be obscuring devaluation’s benefits. Although exports from countries with weakening currencies may look limp, many of them are still securing a bigger slice of the shrinking pie. The collapse in commodity prices is also masking some signs of life. Take Brazil, where the volume of exports rose by 10% in 2015 even as their value plunged by 22%. Some of that is caused by commodity exporters compensating for falling revenue by selling ever more minerals and oil. But not all of it. In Australia, for instance, exports of goods other than raw materials jumped by around 6% in mid-2015, according to the Commonwealth Bank of Australia. + + + +Track global exchange rates over time with The Economist's Big Mac currency index + +But there are also signs that “Dutch disease” has taken a toll on the capacity of commodity-producing countries to ramp up other exports. When prices were high, capital flowed in, pushing up their currencies and thus making their other exports less competitive. Labour and investment flowed mainly to commodity firms. That has left other industries too weak to pick up the slack now that these once-soaring currencies have fallen back to earth. + +Russia is a good example. Non-energy exporters appear to be struggling despite the rouble’s plunge. Over the first half of 2015, as the volume of energy exports surged, non-energy exports fell, according to Birgit Hansl of the World Bank. She points out that it is not enough to have a price change: “First you have to produce something that someone wants to buy.” The rouble’s weakness is an opportunity for industries that already export, such as chemicals and fertiliser. But boosting other exports requires investment in new production, which takes time. + +Both the IMF and the World Bank have highlighted another possible explanation for the weak performance of exports in countries with falling currencies: the prevalence of global supply chains. Globalisation has turned lots of countries into way-stations in the manufacture of individual products. Components are imported, augmented and re-exported. This means that much of what a country gains through a devaluation in terms of the competitiveness of its exports, it loses through pricier imports. The IMF thinks this accounts for much of the sluggishness of Japan’s exports; the World Bank argues that it explains about 40% of the diminished impact of devaluations globally. That leaves many manufacturing economies in a pickle. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21685489-big-currency-devaluations-are-not-boosting-exports-much-they-used-after/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Retail banking + +Blunt elbows + +There is less competition among banks than first meets the eye + +Jan 9th 2016 | From the print edition + + + +HERE’S a puzzle: in bustling Manhattan, where bank branches abound, people pay much more for the privilege of stashing their cash than in sleepy Kansas. Greater competition should reduce charges and fees. Yet there is no sign of such a relationship. That is because much of the competition is phoney, according to a new working paper*. + +Antitrust authorities typically gauge competition by looking at how many different banks operate in a given area. But the authors argue that this ignores the fact that a handful of big asset-management firms have large holdings in many of these “competing” banks (see chart). An investor who owns shares in two rival banks would naturally be reluctant for them to compete away profits. To please their shareholders, the banks might keep charges and fees high. + +The authors calculate the extra degree of market concentration implied by American banks’ common ownership. In 2013 this additional concentration was so great that it would typically be associated with an increase of 11% in fees on current accounts, and a rise of 20% in the minimum balance at which banks stop levying fees. Where common ownership rose the most in 2002-13, charges were also most prone to rise. + +These findings may seem implausible to those who see asset managers like Vanguard and BlackRock as purely passive investors. But even passive funds can be actively involved as shareholders. And firms may themselves decide not to compete in order to keep common owners happy. At any rate charges and thresholds crept steadily upwards during the 2000s, at the same time as index funds expanded their shareholdings in banks. + +Banking is not the only industry in which the authors have found evidence that common ownership saps competition: a working paper published in March found that the concentration of ownership at airlines in America had boosted ticket prices by 3-5%. Common ownership has never really been on the radar of competition authorities. That may need to change. + +*Ultimate Ownership and Bank Competition” by José Azar, Sahil Raina and Martin Schmalz + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21685482-there-less-competition-among-banks-first-meets-eye-blunt-elbows/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Oil benchmarks + +Crude measure + +American oil exports have boosted the WTI benchmark, for now + +Jan 9th 2016 | From the print edition + + + +FORTY years ago America, still reeling from the 1973 oil crisis, banned most exports of crude oil. That prohibition was lifted by Congress in mid-December. The first shipment under the new rules set sail on December 31st from the Texan port of Corpus Christi. The renewed flow of crude is already changing how oil is priced. + +Not all barrels of oil are alike. Crudes can be viscous like tar or so “light” they float on water. Their sulphur content ranges from the negligible (“sweet”) to the highly acidic (“sour”). Though hundreds of grades are bought and sold, traders use a handful of benchmarks to make sense of the market. Brent, from the North Sea, is the current international standard. Americans prefer to use a similar grade known as West Texas Intermediate (WTI). + +WTI was once the main global benchmark. It has a number of advantages over Brent. For one thing, it arrives at the delivery point—Cushing, Oklahoma—by pipeline, and so can be sold in batches of variable size. Brent, in contrast, can only be sold by the tankerload. As Brent sees fewer, bigger transactions, generating continuous prices is tricky. The ever-shifting price of WTI can be observed directly, making it more transparent. And Brent is umbilically connected to a declining oil province. It comes from only a handful of oilfields, whereas a WTI contract can be satisfied by any suitable oil delivered to Cushing. + +WTI had one vital flaw, though. The export ban meant that it could detach from world oil prices if America produced more crude than expected, since the surplus could not be exported. For most of the late 20th century that risk was hypothetical, as America’s output steadily declined. But in recent years the shale-oil boom revived American production. A glut of crude emerged, first at Cushing and then by the cluster of refineries on the Gulf of Mexico. That pushed American crude prices below Brent. The spread peaked in 2011 at $28 a barrel. As the price of WTI began to say less and less about the state of the world market, traders spurned it in favour of Brent. Trading in contracts linked to Brent overtook those linked to WTI in early 2012. + +The resumption of American exports has changed all that. The two benchmarks now trade at more or less the same price. WTI has duly regained its position as the most traded oil benchmark. This back-and-forth, however, may prove a distraction compared with another shift in the oil market: its centre of gravity is moving inexorably eastwards. OPEC, a cartel of oil exporters, expects demand in Asia to grow by 16m barrels a day by 2040. If that happens, Asia would end up consuming more than 46m barrels a day—four times as much as Europe. As Asia grows, it will become the dominant force in the world market. + +A good benchmark has to reflect supply and demand for oil wherever it is used. WTI may continue to be influenced by bottlenecks in the American market. Brent reflects the market for oil in north-west Europe. That was once a positive, but as Europe’s share of global demand for oil declines, proximity to the continent is no longer the advantage it was. + +That suggests that an Asian benchmark will rise to the fore. The Shanghai International Energy Exchange plans to launch its own yuan-denominated contract this year. The new benchmark will have trouble getting off the ground. For one thing, China’s capital controls make it difficult for foreigners to buy the yuan needed to trade the contracts. The wild swings in China’s equity markets set an unnerving example for investors. But time is on its side. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21685485-american-oil-exports-have-boosted-wti-benchmark-now-crude-measure/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Loathe thy neighbour + +Politics is making international co-operation harder + +Jan 9th 2016 | From the print edition + + + +POLITICS is local but most problems are international. That is the fundamental problem for national governments caught between the twin forces of globalisation and voters’ anger. + +The European refugee crisis, for example, seems to cry out for a continent-wide solution. But the tide of migrants has been so vast that national governments have been tempted to put up barriers first, and answer questions later. The latest example saw Sweden introduce checks on those travelling from Denmark, leading the latter country, in turn, to impose temporary controls on its southern border with Germany. Anti-immigration parties have been gaining in the polls; with the exception of Angela Merkel, mainstream politicians want to head off the threat. + +The current system combines unchecked movement within the Schengen area (which does not include all members of the European Union) with external borders patrolled by national governments. There is no Schengen border force, but once inside, refugees can go anywhere within the Schengen countries. + +In a way, this looks like the same mismatch that has plagued the euro: a single currency without a unitary fiscal and political authority. Many economists have advocated much greater integration of the euro zone in the wake of the bloc’s crisis. The European banking system would be stronger if there was a comprehensive deposit-insurance scheme; the economy would be more balanced if there were fiscal transfers from rich to poor countries. But such plans are unpopular with voters in rich countries (who perceive them as handouts) and in poor countries (who worry about the implied loss of local control that reforms would require). + +All that the EU’s leaders have managed so far is to cobble together solutions (such as the Greek bail-outs) at the last minute. The impression of indecisiveness in Brussels has done nothing to make the EU more popular with voters—surging anti-immigrant parties are also Eurosceptic. + +At the global level, co-operation also seems more difficult. Gone is the unity of the G20’s summit in London in 2009, when leaders agreed on a co-ordinated stimulus in response to the financial crisis. The appetite for fiscal stimulus seems to have completely disappeared. + +Central banks are now heading in different directions: the Federal Reserve has just tightened monetary policy while the European Central Bank and the Bank of Japan are committed to easing. The euro zone, which has a big trade surplus, seems happy to let its currency depreciate, adding to deflationary pressures elsewhere. + +Trade creates tighter links between countries, but global trade growth has been sluggish in recent years. The OECD thinks that trade grew by only 2% in volume in 2015. No longer is trade rising faster than global GDP, as it was before the crisis. In a widely expected but still depressing development, the Doha round of negotiations on a new global trade agreement has been abandoned, although the trans-Pacific deal did make it through. + +International agreements require compromise, which leaves politicians vulnerable to criticism from inflexible opponents. Voters are already dissatisfied with their lot after years of sluggish gains (or declines) in living standards. When populist politicians suggest that voters’ woes are all the fault of foreigners, they find a ready audience. With the global economic pie growing more slowly, the temptation is to try and grab a bigger slice of it—at the expense of everyone else. + +Furthermore, economic woes can lead to much more aggressive foreign policy. It is hard to believe that the fall in oil prices—and the effect on national budgets—has not played some part in the current turmoil in the Middle East. + +In the developed world, demographic constraints (a static or shrinking workforce) may limit the scope for the kind of rapid growth needed to reduce the debt burden and make voters happier. Boosting that sluggish growth rate through domestic reforms (breaking up producer cartels, making labour markets more flexible) is very hard because such reforms arouse strong opposition from those affected. + +The danger is that a vicious cycle sets in. Global problems are not tackled because governments fail to co-operate; voters get angrier and push their leaders into more nationalistic positions. And it is hard to see things changing this year, with no country likely to take the lead. America will be consumed by its presidential election, Europe by refugees and fear of terrorism, China by its adjustment to slower growth. No one is in charge. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21685484-politics-making-international-co-operation-harder-loathe-thy-neighbour/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The market for economists + +The right match + +America’s biggest economic conference doubles as a jobs fair + +Jan 9th 2016 | SAN FRANCISCO | From the print edition + +THE American Economic Association’s annual conference, held each January, is ostensibly a gigantic teach-in, with lots of seminars featuring famous economists. But the three-day event, held this year in San Francisco with 13,000 attending, is also a big jobs fair. More than 500 employers—both universities and companies—were tied up in hotel rooms holding marathon interview sessions with freshly minted PhDs. The ballroom of the Marriott was set aside for a hundred more. + +It is a gruelling three days for candidates: one exhausted PhD likened it to speed-dating. It is also arduous for recruiters. Towards the end of the first day Alan Green and Christopher de Bodisco of Stetson University, a small private college in Florida, review the candidates they have seen so far. They are looking for someone with an interest in health and development. They plan to grill a dozen candidates each day before inviting the most promising ones to visit its campus and meet the rest of the faculty. + +The grandest universities use suites for comfort but also as a display of prestige. Plausible candidates are given a code to exchange for the hotel-room number in order to deter gatecrashers. The leading institutions speak to the best candidates; the rest to anyone they think they can get. “There’s no point in talking to someone who’s going to end up at Harvard,” says a professor at a British university. + +Yet the hierarchy can be disrupted. A star European PhD from a leading American school may have a homesick spouse or an ailing parent. Events may conspire in your favour. When the AEA conference was last held in San Francisco, in 2009, fiscal turmoil left American state universities cash-strapped. Universities in Europe took full advantage. They could hire—and perhaps keep—someone who would otherwise have gone to Iowa or Michigan State, says the professor. + +The financial crisis created shortages as well as opportunities. The IMF, which a year previously had planned to lay off staff because of the paucity of crises, swept up many of the PhDs in macroeconomics in 2009. Recruiters say the shortage of macro and finance experts has lingered: central banks and government agencies are keen hirers of these types. + +There are other bidders for talent. More than a dozen of the Marriott’s tables were reserved for Chinese universities, which increasingly follow an American-style economics curriculum and will pay the going global rate. Tech firms want the best number-crunchers for their big-data projects, and PhD economists have the right skills. Liberal-arts colleges like Stetson want faculty who can teach and do research across disciplines. They believe economics is the best grounding. + +The market for economists appears to be tightening as a result. Economics is one of two departments at Stetson (the other is engineering) in which hiring has become noticeably dearer, its recruiters say. University deans may gripe, but that is good news for the tired-looking PhDs trudging the corridors of San Francisco’s big hotels. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21685500-americas-biggest-economic-conference-doubles-jobs-fair-right-match/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banking for immigrants + +Far-sighted + +Catering to foreign-born customers is a growing niche in finance + +Jan 9th 2016 | NEW YORK | From the print edition + +Bankers will also ask to see an ID + +MOST banks wouldn’t lend to Roberta. She arrived in New York from Mexico with papers but no credit history. But Neighborhood Trust Federal Credit Union, which specialises in lending to immigrants, gave her advice and a $2,000 loan. She started out selling Mexican food from a cart. She now runs a food truck, employs five people and has plans to expand. + +Many immigrants, like Roberta, want to save or start a business. But they struggle to get finance. In America 23% of households headed by a non-citizen, and 35% of households where only Spanish is spoken, have no bank accounts—compared with 8% for the population as a whole. There are multiple barriers: not just low incomes, which make it hard to meet minimum-balance requirements, but also trouble with language, identification and trust. + +Neighborhood Trust is trying to change that. More than half its members are Latino, largely from the Dominican Republic, and many are undocumented. Most of the staff are themselves immigrants, and know their members well: they visit borrowers’ businesses often and offer workshops on financial literacy. The hands-on approach keeps default rates low. + +Other financial firms, in both America and Europe, are also finding new ways to serve immigrants. Some are like Neighborhood Trust—small and community-minded. Others are startups hoping for big profits. Oportun is a good example: the American lender has made loans of $1.9 billion since 2006, mostly to Latinos, using big data and clever algorithms to lend to those without a credit history. + +These firms have several tactics in common. The first is to make it easy to open an account—a process that is often unnecessarily slow and intimidating. Monese, a startup based in London, allows European migrants to open an account by phone with just a photo of a passport and a selfie. + +A second shared tactic is to make life easier for those, such as illegal immigrants, who may struggle to prove their identity. Banks can be fussy: in one survey half of unbanked Mexican immigrants in New York said a lack of documentation prevented them opening an account. But many American banks will accept taxpayer identification numbers and consular ID cards, which can be obtained irrespective of immigration status. In New York 12 financial firms, including Neighborhood Trust, accept a new card launched by the city government to help undocumented migrants access services—though no big banks do. + +Third, instead of waiting for immigrants to come knocking, these firms seek them out. Oportun, for instance, has branches inside shops in Latino neighbourhoods. Mission Asset Fund, a Californian non-profit group, assists informal savings groups in immigrant communities. As members make small, regular payments into a common pot from which they take turns to borrow, they are also able to develop a formal credit history. + +A final tactic is to tailor services to meet the particular needs of migrants. Extrabanca, in Italy, explicitly markets itself as a bank for immigrants. Many of its customers are from China, the Philippines and eastern Europe. It helps them deal with the red tape involved in renting a house or starting a business. Many American credit unions offer “citizenship loans” to cover the costs of naturalisation. Some offer illegal immigrants loans to pay the fees for amnesty schemes. + +Larger banks can be put off, at least in part, by regulation. Many have stopped offering international transfers in response to tighter rules on money-laundering and terrorist financing. In Britain, new laws bar banks from opening accounts for illegal immigrants. But some big banks are catching on. Scotiabank, in Canada, allows Chinese migrants to start opening an account before leaving home, through a partnership with three banks in China. Deutsche Bank woos Turkish customers in Germany with a service called Bankamiz (“Our Bank”), which offers bilingual tellers, free withdrawals at ATMs in Turkey and five free transfers to Turkey each year. + +Catering to immigrants can be profitable in the long run, suggests Sherief Meleis of Novantas, a consultancy. Banks can win customers who will be loyal for years to come. As Rafael Monge-Portaro, the boss of Neighborhood Trust, says of Roberta: “We trust her and she trusts us.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21685501-catering-foreign-born-customers-growing-niche-finance-far-sighted/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Room rentals v hotels + +Buffett’s revenge + +Services like Airbnb are altering the economics of the hotel business + +Jan 9th 2016 | From the print edition + + + +FOR those exhausted by the festive season, now is the time to book a holiday. Hotels in New York’s Times Square cost four times more on New Year’s Eve than they do just a week into 2016; a room at the cheapest four-star property in Cancún in Mexico on December 31st was half as dear by January 7th. + +The economics behind this price crash are simple: hotels are expensive to build and staff, and demand for them is seasonal. Only by ramping up prices at peak times can they be run profitably. But seasonality inflicts wider economic costs than eye-watering bills. Tourists find other destinations because rooms are full on their desired dates and, despite lower prices, inventory goes unused during the off-season. One-off events like sports tournaments, concerts and conferences can exacerbate the problem of mismatched supply and demand, by flooding cities with visitors for just a few days. + +The advent of the “sharing economy” should offer a solution. Just as Uber’s surge pricing draws part-time taxi drivers onto roads at rush hour, room-rental services like Airbnb, HomeAway and Onefinestay should allow a city’s supply of temporary accommodation to expand when more people want to stay there. Airbnb recently released data to support this hypothesis, showing that many of the site’s hosts list their homes specifically to cash in on periods of high demand (see chart). + +The shareholders’ meetings in Omaha, a Midwestern American city, of Berkshire Hathaway, a financial conglomerate, provide a good illustration. In 1980 12 people showed up to the first one, including the firm’s boss, Warren Buffett. These days, the gathering draws some 40,000, the equivalent of nearly 10% of the city’s population. Omaha’s few hotels have built their business models around this surge, jacking up prices to as much as $400 a night and imposing three-day minimum stays around the one-day event. This has outraged the frugal Mr Buffett, who has threatened to move the conference to Dallas. + +Happily, home-sharers have begun to offer some competition. In the three weeks before the 2015 meeting, 1,750 Omaha residents added new properties to Airbnb—the equivalent of three Omaha Hiltons, the city’s biggest hotel. That brought the number of Airbnb listings in the city to 5,000, of which 76% were occupied on May 1st at an average price of $209. Moreover, Airbnb hosts only charged 60% more during the meeting than in days before and after. The surge at hotels was 200% or more. + +Omaha may be an exceptional case, but it reflects a trend. Across the 31 specific events for which Airbnb shared data, the number of listings rose by 19% in the three preceding weeks. Three times as many stays occurred during the period of the events as in the weeks before and after. Even cities where supply has expanded slowly are seeing more stays. Airbnb bookings during the Volta art fair in Basel, Switzerland, last year were 268% higher than during the neighbouring weeks, even though listings rose by only 6%. + +The Airbnb figures do not spell the end of extortionate hotel prices. Spare-room rentals and hotels are not perfect substitutes: many visitors want the service and convenience of a hotel. Room rentals, naturally, have more of an impact in smaller cities than in big ones, which can more easily absorb an influx of visitors. Airbnb’s turnover in Paris during the 2015 French Open tennis tournament rose by a mere 4%. + +But by easing temporary supply squeezes, room rentals may change the economics of the hotel business, at least in smaller cities. If hotels can no longer double their prices when demand peaks, that could drive weaker properties out of business. Those that stay afloat may need to increase rates at other times of year, which could further depress off-season travel and hurt complementary businesses such as restaurants and taxis. Conversely, more room rentals should also mean that more money flows directly to residents every time small cities stage a tourist-magnet event. (Airbnb passes on around 85% of guests’ total payments to hosts, whereas hotels spend just 30-35% on labour.) At the margin, that might increase municipal governments’ appetite to host such events. Omaha 2024, anyone? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21685502-services-airbnb-are-altering-economics-hotel-business-buffetts/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +A mean feat + +Despite forecasters’ best efforts, growth is devilishly hard to predict + +Jan 9th 2016 | From the print edition + + + +“THE only function of economic forecasting is to make astrology look respectable,” John Kenneth Galbraith, an irreverent economist, once said. Since economic output represents the aggregated activity of billions of people, influenced by forces seen and unseen, it is a wonder forecasters ever get it right. Yet economists cannot resist trying. As predictions for 2016 are unveiled, it is worth assessing the soothsayers’ records. + +Forecasters usually rely on two different predictive approaches. One is theory-based, shaped by how economists believe economies behave. The other is data-based, shaped by how economies have behaved in the past. The simplest of the theoretical bunch is the Solow growth model, named for Robert Solow, a Nobel-prize winning economist. It posits that poorer countries should generally invest more and grow faster than rich ones. Central banks and other big economic institutions use far more complicated formulas, often grouped under the bewildering label of “dynamic stochastic general equilibrium” (DSGE) models. These try to anticipate the ups and downs of big economies by modelling the behaviour of individual households and firms. + +The empirical approach is older; indeed, it was the workhorse of government forecasting in the 1940s and 1950s. Data-based models analyse the relationship between hundreds or thousands of economic variables, from the price of potatoes to snowfall in January. They then work out how zinc sales, for example, affect investment and growth in the years that follow. + +Both strategies have faced withering criticism. DSGE models, for all their complexity, are typically built around oversimplifications of how markets function and people behave. Data-based models suffer from their own shortcomings. In a paper* published in 1995 Greg Mankiw of Harvard University argued that they face insurmountable statistical problems. Too many things tend to happen at once to isolate cause and effect: liberalised trade might boost growth, or liberalisation might be the sort of thing that governments do when growth is rising, or both liberalisation and growth might follow from some third factor. And there are too many potential influences on growth for economists to know whether a seemingly strong relationship between variables is real or would disappear if they factored in some other relevant titbit, such as the wages of Canadian lumberjacks. + +In practice, most forecasters combine the two approaches and inject, when necessary, a dose of common sense. The IMF, for instance, relies on a global model, built in part on economic theory and in part on data analysis. The global projections generated by that hybrid model are combined with country-specific details to produce country-level forecasts. The country forecasts are then checked for consistency against the global projections and adjusted when necessary—to make sure, for example, that most countries do not show strong trade growth when the global projection heralds a decline in trade. A recent analysis of the IMF’s forecasts by the organisation’s Independent Evaluation Office concluded that their accuracy was “comparable to that of private-sector forecasts”. But how accurate is that? + +Not very, Lant Pritchett and Larry Summers of Harvard University argued in 2014. Forecasters overestimate the extent to which the future will look like the recent past, they reckon. It is assumed that fast-growing countries will keep speeding along while the economic tortoises continue crawling. The IMF, for instance, reckons that China’s GDP growth will decline gently to 6% a year by around 2017, and then accelerate slightly. That is highly unlikely, say Messrs Pritchett and Summers: “Regression to the mean is perhaps the single most robust and empirically relevant fact about cross-national growth rates.” In other words, booming countries slow down and slumping ones speed up. + +The IMF publishes forecasts for 189 countries twice a year, in April and October, for the year in question and the following one. The Economist has conducted an analysis of them from 1999 to 2014, and compared their accuracy with several slightly less sophisticated forecasting methods: predicting that a country will grow at the same pace as the year before, guessing 4% (which is the average growth rate across all countries during the period) and picking a random number from -2% to 10%. For each method, the absolute difference between the actual and predicted growth rates is calculated and then averaged. The lowest average is taken to be the best performance. + +Encouragingly, the guesses produced by our random-number generator performed worst (see chart); it yielded predictions that were off by 4.4 percentage points on average. Predicting the previous year’s growth rate came last-but-one, as Messrs Pritchett and Summers might have foreseen. The projections the IMF made in October of the year being forecast, which were off by an average of 1.5 percentage points, unsurprisingly did best; by that point plenty of actual economic data are available. Yet the quality of the IMF’s forecasts deteriorates surprisingly quickly the further from the end of the year in question they are made. Those from April of the preceding year are only slightly more accurate than those generated using the average growth rate. + +No one expects the Spanish recession + +An important caveat is in order. Forecasts of all sorts are especially bad at predicting downturns. Over the period, there were 220 instances in which an economy grew in one year before shrinking in the next. In its April forecasts the IMF never once foresaw the contraction looming in the next year. Even in October of the year in question, the IMF predicted that a recession had begun only half the time. To be fair, an average-growth prediction also misses 100% of recessions. One model does better, though. Our random-number generator correctly forecast the start of a recession 18% of the time. + + + +Sources: + +"The growth of nations", Gregory Mankiw, Brookings Papers on Economic Activity, 1995. + +"Asiaphoria meets regression to the mean", Lant Pritchett and Lawrence Summers, NBER Working Paper 20573, 2014. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21685480/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Astronomy: Now there’s a look in your eyes, like black holes in the sky + +The search for ET: Cluster analysis + +A real hoverboard: Skating with McFly + +Bugs from the belfry: Zoonotic disease + +Bugs from the belfry: The Richard Casement internship + + + + + +Articles Sections Next + +Astronomy + +Now there’s a look in your eyes, like black holes in the sky + +The universe’s darkest denizens are being dragged into the light + +Jan 9th 2016 | KISSIMMEE, Florida | From the print edition + + + +IN 1783 John Michell reasoned they must be out there. In 1916 Karl Schwarzschild calculated how big they would be. In 1930 Subrahmanyan Chandrasekhar showed that big enough stars were doomed to become them. Yet it took until the 1970s to convince holdouts among astronomers that black holes actually exist. That was when studies of a celestial X-ray source called Cygnus X-1 revealed an object so massive that it could be nothing else. + +Even before that, though, black holes had caught the imagination of astronomers and public alike. The idea of something so dense that its gravitational attraction can stop light (or anything else) escaping from its surface is mind-boggling. Yet such holes are crucial building blocks of the universe. Most, if not all galaxies have one at their centre. Meanwhile, on Earth, the idea that something or someone has “fallen into a black hole” and thereby, from the speaker’s point of view, vanished, has become proverbial. + +In fact, black holes—or, rather, their surroundings—are often not black. The process of attracting and swallowing matter acts like a giant particle accelerator as the matter spins around the hole. As with such accelerators on Earth, this generates electromagnetic radiation, from radio waves to X-rays. A big black hole’s neighbourhood, with lots of spinning matter, can thus be very bright indeed. That neighbourhood is also a place where space and time themselves are warped more intensely than anywhere else in the observable universe. + +This chaos, and black holes’ restricted dimensions (even the “supermassive” ones in galactic cores are mere millions of kilometres rather than light-years across), makes studying them hard. But not impossible, as delegates to this week’s meeting of the American Astronomical Society (AAS) in Kissimmee, Florida, have heard. + +Blown on the steel breeze + +Whether galaxies formed around pre-existing black holes or the holes formed after those galaxies had come into being is not yet known. It is suspected, though, that their central black holes help regulate galaxies’ rates of star formation. Eric Schlegel of the University of Texas, San Antonio, brought some evidence to bear on this question. His instrument of choice is Chandra, a space telescope named after Chandrasekhar which detects X-rays. The object of Dr Schlegel’s interest is NGC 5195, a small companion galaxy of the Whirlpool, a well-known spiral galaxy (see above; NGC 5195 is on the right, dangling from one of the Whirlpool’s spiral arms). + +Looking at X-rays from NGC 5195 Dr Schlegel and his colleagues spotted two bright, arc-shaped features in the gas opposite the point where the Whirlpool’s arm reaches into NGC 5195 and material is pulled from it towards the galaxy’s central black hole. The shapes and orientations of these arcs suggest the hole has undergone a pair of explosive events caused by the overwhelming amount of material the Whirlpool is dumping on it. The shock waves from such explosions would sweep away dust and gas that are the raw material from which new stars are built. And NGC 5195 is indeed noticeably bereft of new stars—in contradistinction to the Whirlpool, which is rich in them. Dr Schlegel may thus have found a mechanism by which black holes can switch off star formation in their vicinities. + +Julie Comerford, of the University of Colorado, Boulder, described another such mechanism. She observes that galaxies often bash into one another and merge. The result of such a merger will have, at least for a time, two central black holes. + +Dr Comerford used data from Chandra and also from the Hubble space telescope, which sees visible light, rather than X-rays, to study such galaxies. She found that, on average, galaxies with two black holes in their cores put out more than ten times as much light as those with one. This extra light is created by the extra quantities of material sucked into their twinned cores. One consequence of all this light is to ionise (ie, to strip the electrons from) much more of the surrounding galaxy’s gas than would usually be the case, and then push this ionised gas out of the way. That provides a second way that the behaviour of a galaxy’s black-hole-inhabited core can switch off star formation in the rest of the star system. + +Working out how black holes affect galactic growth, though, is not the same as finding out what is happening in the vicinity of the holes themselves. Here, matter is circling close to a black hole’s point of no return, the “event horizon” whose radius was described by Schwarzschild’s calculations. And next month, JAXA, Japan’s space agency, will launch Astro-H, a telescope that will help to do this. It can detect X-rays of exceptionally high energies. As material slips ever closer to the event horizon, the precise details of its X-ray output are a signal of how it is moving. Astro-H will be able to measure this radiation, and thus infer that motion with unprecedented precision. This will permit researchers to measure unambiguously, for the first time, how fast a black hole is spinning. That, in turn, permits tests of Einstein’s general theory of relativity—the very theory that Schwarzschild used to put black holes on solid mathematical ground—that have remained out of reach until now. + +Shadows at night + + + +There is, though, a fundamental limit to such pursuits; there can be no way to peer within the event horizon. The best astronomers can hope for is to snap a detailed picture which shows not only the shadow cast by the horizon—an actual black void within the picture—but also the violent environment just outside it. + +That will require yet another bit of kit, and another spiral galaxy: the one that plays host to Earth. Feryal Ozel of the University of Arizona told the meeting about progress on the Event Horizon Telescope (EHT). This is designed to capture an image, built up from radio waves, of the Milky Way’s own supermassive black hole, dubbed Sagittarius A* because it is the brightest radio source in that constellation. + +Making such an image is hard. Sagittarius A* (or, rather, its event horizon) should be about 12m km across. That sounds big, but it is a twenty-billionth of the black hole’s distance from Earth. A telescope’s resolving power depends on the width of its aperture. The resolving power needed to see at that distance something even of the enormous size of Sagittarius A* therefore requires an extraordinarily large telescope. + +As a result the EHT is not a single facility but rather a collaboration between existing radio telescopes scattered across the world (see map). Together, these instruments perform a trick called very long baseline interferometry. At times when they are acting as part of the EHT, they will be pointed simultaneously at Sagittarius A*. The data thus gathered will then be shipped to a central facility in Cambridge, Massachusetts, on enormous disk drives, and there carefully combined in a way that makes it seem as if they had been collected by a single radio telescope with an aperture nearly as wide as the Earth itself. + +This should, if the EHT works as advertised, solve a number of outstanding mysteries about black holes: precisely how material falls into them, what causes the jets of material that sometimes squirt from near their polar regions, and just how good Einstein’s equations are at describing the most warped spacetime it is possible to see. That would be a rich haul of facts for a phenomenon that took two centuries to be taken seriously. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21685444-universes-darkest-denizens-are-being-dragged-light-now-theres-look/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The search for ET + +Cluster analysis + +A good place to look for little green men + +Jan 9th 2016 | KISSIMMEE, FLORIDA | From the print edition + +Ripe for colonisation + +ONE of astronomy’s biggest changes of perspective in recent years has been the realisation that planets are abundant in the cosmos. But not everywhere. Collections of stars called globular clusters seem bereft of them. + +Globular clusters are roughly spherical collections of hundreds of thousands of stars. These, in turn, are among the oldest stellar inhabitants of galaxies. But though the Milky Way, the Earth’s home galaxy, has more than 150 globular clusters, so far only a single planet has been spotted in one: Messier 4 (see picture). + +Nothing daunted, Rosanne Di Stefano of the Harvard-Smithsonian Centre for Astrophysics and Alak Ray of the Tata Institute of Fundamental Research, in India, told the 2016 meeting of the American Astronomical Society why they think globular clusters are a good place to go hunting for advanced civilisations. + +First, the clusters’ very age means that life will have had the best chance of coming into existence and then climbing the ladder of complexity to the point where it can travel from star to star. Second, that age also means clusters have stopped being disrupted by life-destroying stellar explosions like supernovae and gamma-ray bursts. Third, the proximity of a cluster’s stars to one another means interstellar travel is not nearly as onerous as it would be for humanity. A spacefaring cluster-inhabitant would have to travel, on average, only about 1,000 times the distance from Earth to the sun to get to its nearest stellar neighbour. For humans, that distance is 275,000 times the Earth-sun distance. Not only does this make travel easier, it also makes communication practical. Messages between a home planet and its outposts could be sent and received with the same sort of delay as those between European countries and their colonies before the invention of the electric telegraph. + +This speculation does, of course, require the existence of many more globular-cluster planets than the lone example so far discovered. But Dr Di Stefano and Dr Ray are optimistic about that. Their models suggest that such planets will often be in stable orbits in the “Goldilocks” zones (not too hot and not too cold) of their host stars. It may be, then, that the galactic empires dreamed of by science-fiction writers were wrong only in scale, rather than concept. Colonising an entire galaxy was always going to be a big ask. Annexing a cluster, though, looks eminently doable. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21685439-good-place-look-little-green-men-where-look-aliens/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A real hoverboard + +Skating with McFly + +Rocket scientists have come up with a hoverboard that works + +Jan 9th 2016 | From the print edition + + + +EVER since Marty McFly arrived in 2015 in “Back to the Future Part II” and discovered a levitating skateboard, people have tried to make one for real. But the film’s prediction, made in 1989, never quite came true. Although so-called hoverboards have created quite a public splash this Christmas (see Schumpeter) they do not really count. They use a wheel (or wheels) to do their “hovering”, with fancy electronics and stabilisers keeping them upright. A few boards that really do hover, employing magnets for the task, have been demonstrated—but these work only over appropriate metal surfaces. Various lash-ups, including one powered by four leaf-blowers that seems more hovercraft than hoverboard, have also appeared. Film of hoverboarders gliding across a car park in Los Angeles turned out to be an elaborate YouTube hoax. + +As 2015 turns into 2016, however, something resembling the real thing is going on sale. The ArcaBoard (pictured) does, admittedly, look like a giant iPhone case rather than a skateboard. But it truly does hover. It is 145cm long by 76cm wide (57x30 inches), is built from composite materials and contains 36 high-powered electric ducted fans of the type used to fly model jet aeroplanes. The fans are run by a pack of 72 lithium-polymer batteries, which provide just over 200 kilowatts of power. That, the manufacturers claim, is sufficient to lift and carry someone weighing 82kg (180lbs). In the ArcaBoard’s current configuration it can do this for six minutes. A beefed-up version is able to lift heavier people, but its flight duration drops to three minutes. + +The ArcaBoard has been developed by ARCA Space, a Romanian aerospace company founded in 1999 that recently moved its headquarters to Las Cruces, New Mexico. The firm has built a number of rockets and high-altitude drones, and has worked with the European Space Agency. The hoverboard arose from a discussion among the firm’s engineers about whether such a machine was possible, says Dragos Muresan, one of ARCA Space’s vice-presidents. They built a prototype and successfully rode on it. As enthusiasm for the idea grew, the company decided to put the device into production. The first hoverboards should be delivered in April. + +The rider steers the board by shifting his body weight to provide yaw, but a built-in stabilisation system makes things easier. This uses a gyroscope and an accelerometer, connected to a computer, to keep the board level. It adjusts the thrust of individual fans in order to control the other two degrees of freedom of movement, pitch and roll. A proximity sensor on the board’s underside ensures it stays 30cm above the ground and a speed-limiter keeps its rate of progress below 20kph (12mph). + +Before adding such a hoverboard to next Christmas’s wish-list, however, you will want to consider the price: $19,900, plus an extra $4,500 for a fast-charger that can top up the batteries in 35 minutes rather than the six hours it would otherwise take. The gold-plated tag is hardly surprising, considering the hoverboard is made by rocket scientists using what they readily admit is pricey aerospace technology. Nevertheless, they hope to get the price down. The first mobile phones, after all, began as clunky, costly devices with limited performance. Now they are cheap enough for billions to own one. Imagine if (genuine) hoverboards went the same way. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21685441-rocket-scientists-have-come-up-hoverboard-works-skating-mcfly/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bugs from the belfry + +Zoonotic disease + +Jan 9th 2016 | From the print edition + + + +This map, just published in the American Naturalist by Kate Jones of University College, London, and her colleagues, shows, for any given part of the world, how many viral diseases bats and people share. That bats are reservoirs of illnesses which also affect people was brought to general attention by the recent outbreak of Ebola fever in west Africa. Ebola is spread by bats and, as the map shows, tropical Africa is the place with the greatest number of shared diseases. Dr Jones and her team used these data, culled from 453 studies carried out since the beginning of the 20th century, as the foundation of a model that also looked at things like population density and farming practices to pick out those areas at greatest risk of interspecies transmission. Adding these other factors in showed that a second risky place is south-eastern Asia, including south China. This was the point of origin of another disease outbreak, that of SARS (severe acute respiratory syndrome) in 2002. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21685440-zoonotic-disease/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Richard Casement internship + +Jan 9th 2016 | From the print edition + +We invite applications for the 2016 Richard Casement internship. We are looking for a would-be journalist to spend three months of the summer working on the newspaper in London, writing about science and technology. Applicants should write a letter introducing themselves and an original article of about 600 words that they think would be suitable for publication in the Science and Technology section. They should be prepared to come for an interview in London or Washington, DC, at their own expense. A stipend of £2,000 a month will be paid to the successful candidate. Applications must reach us by January 29th. These should be sent to: casement2016@economist.com + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21685442-richard-casement-internship/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +American economic history: G force + +Understanding Africa: Clear-sighted + +Britain and America: The slog of war + +20th-century history: The cold war’s first chill + +Mathematics: The master of them all + +Illustrations from the edge: When anger turns to ink + + + + + +Articles Sections Next + +American economic history + +G force + +Why economic growth soared in America in the early 20th century, and why it won’t be soaring again any time soon + +Jan 9th 2016 | From the print edition + + + +The Rise and Fall of American Growth: The US Standard of Living since the Civil War. By Robert Gordon. Princeton University Press; 762 pages; $39.95 and £27.95. + +ON JANUARY 20th those who see themselves as the global elite will gather in the Alpine resort town of Davos to contemplate the “fourth industrial revolution”, the theme chosen by Klaus Schwab, the ringmaster of the circus known as the World Economic Forum. This revolution will be bigger than anything the world has seen before, he says. It will be a tsunami compared with previous squalls. It will be more disruptive. It will be more interconnected; indeed, the revolution will take place “inside a complex ecosystem”. Not only will it change what people do, it will change who they are. + +Anybody who is tempted by this argument should read Robert Gordon’s magnificent new book. An American economist who teaches at Northwestern University, Mr Gordon has long been famous in academic circles for advancing three iconoclastic arguments. The first is that the internet revolution is hyped. The second is that the best way to appreciate the extent of the hype is to look at the decades after the civil war, when America was transformed by inventions such as the motor car and electricity. The third is that the golden age of American growth may be over. + +In “The Rise and Fall of American Growth” Mr Gordon presents his case for a general audience—and he does so with great style and panache, supporting his argument with vivid examples as well as econometric data, while keeping a watchful eye on what economic change means for ordinary Americans. Even if history changes direction, and Mr Gordon’s rise-and-fall thesis proves to be wrong, this book will survive as a superb reconstruction of material life in America in the heyday of industrial capitalism. + +The technological revolutions of the late 19th century transformed the world. The life that Americans led before that is unrecognisable. Their idea of speed was defined by horses. The rhythm of their days was dictated by the rise and fall of the sun. The most basic daily tasks—getting water for a bath or washing clothes—were back-breaking chores. As Mr Gordon shows, a succession of revolutions transformed every aspect of life. The invention of electricity brought light in the evenings. The invention of the telephone killed distance. The invention of what General Electric called “electric servants” liberated women from domestic slavery. The speed of change was also remarkable. In the 30 years from 1870 to 1900 railway companies added 20 miles of track each day. By the turn of the century, Sears Roebuck, a mail-order company that was founded in 1893, was fulfilling 100,000 orders a day from a catalogue of 1,162 pages. The price of cars plummeted by 63% between 1912 and 1930, while the proportion of American households that had access to a car increased from just over 2% to 89.8%. + +America quickly pulled ahead of the rest of the world in almost every new technology—a locomotive to Europe’s snail, as Andrew Carnegie put it. In 1900 Americans had four times as many telephones per person as the British, six times as many as the Germans and 20 times as many as the French. Almost one-sixth of the world’s railway traffic passed through a single American city, Chicago. Thirty years later Americans owned more than 78% of the world’s motor cars. It took the French until 1948 to have the same access to cars and electricity that America had in 1912. + +The Great Depression did a little to slow America’s momentum. But the private sector continued to innovate. By some measures, the 1930s were the most productive decade in terms of the numbers of inventions and patents granted relative to the size of the economy. Franklin Roosevelt’s government invested in productive capacity with the Tennessee Valley Authority and the Hoover Dam. + +The second world war demonstrated the astonishing power of America’s production machine. After 1945 America consolidated its global pre-eminence by constructing a new global order, with the Marshall Plan and the Bretton Woods institutions, and by pouring money into higher education. The 1950s and 1960s were a golden age of prosperity in which even people with no more than a high-school education could enjoy a steady job, a house in the suburbs and a safe retirement. + +But Mr Gordon’s tone grows gloomy when he turns to the 1970s. Economic turbulence increased as well-known American companies were shaken by foreign competition, particularly from Japan, and as fuel prices surged thanks to the OPEC oil-price rise. Economic inequality surged as the rich pulled ahead of the rest. Productivity growth fell: having reached an average of 2.82% a year between 1920 and 1970, output per hour between 1970 and 2014 grew by an annual rate of no more than 1.62%. America today faces powerful headwinds: an ageing population, rising health-care and education costs, soaring inequality and festering social ills. + +What chance does the country have of restoring its lost dynamism? Mr Gordon has no time for the techno-Utopians who think that the information revolution will rescue America from such “secular stagnation”. His attitude to the IT revolution is much the same as that of Peter Thiel, a venture capitalist, who famously said: “We wanted flying cars but instead we got 140 characters.” America has already harvested the fruits of the IT revolution. The growth rate increased each year in the decade after 1994, but the spurt did not last and it has since fallen back since. + +Now Mr Gordon thinks that Moore’s law is beginning to fade and the new economy is turning into a mirage. He can be forgiven for giving such short shrift to Davos types who have no sense of history: driverless cars will change the world less than the invention of cars in the first place. He is also surely right that America faces unusually heavy challenges in future. + +But he goes too far in downplaying the current IT revolution. Where the first half of the book is brilliant, the second can be frustrating. Mr Gordon understates how IT has transformed people’s lives and he has little to say about the extent to which artificial intelligence will intensify this. He also fails to come to terms with the extent to which, thanks to 3D printing and the internet of things, the information revolution is spreading from the virtual world to the physical world. Mr Gordon may be right that the IT revolution will not restore economic growth rates to the level America once enjoyed. Only time will tell. But he is definitely wrong to underplay the extent to which the revolution is changing every aspect of our daily lives. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21685437-why-economic-growth-soared-america-early-20th-century-and-why-it-wont-be/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Understanding Africa + +Clear-sighted + +A sharp-eyed look at contemporary Africa + +Jan 9th 2016 | From the print edition + + + +The Rift: A New Africa Breaks Free. By Alex Perry. Little, Brown; 448 pages; $30. Weidenfeld & Nicolson; 320 pages; £20. + +FEW African leaders arouse such divided opinions as Paul Kagame, president of Rwanda since 2000 but its de facto leader since 1994, when his Rwandan Patriotic Front (RPF), a rebel group, seized power and ended the country’s genocide. For many observers Mr Kagame is an ascetic, an austere moderniser who has pulled his country back from its descent into barbarism and overseen reforms aimed at improving its governance and boosting the economy. + +Critics contend that his forces have killed thousands of people and that his government ruthlessly suppresses opposition, murdering dissidents both at home and abroad. For Alex Perry, who spent time with Mr Kagame while he was Africa bureau chief for Time magazine, neither of these Manichean views is quite right; nor are they quite wrong. After confronting Mr Kagame with allegations that his rebel forces had killed 25,000 people in reprisal massacres after the genocide, the president “growled that the real story was how many people the RPF didn’t kill,” Mr Perry writes. “We had to battle extreme anger among our own men,” he quotes Mr Kagame as saying. “So many had lost their families and they had guns in their hands. Whole villages could have been wiped out. But we did not allow it.” + +Mr Perry’s ability to capture the complexities of stories in which there are no clear heroes nor outright villains echoes again and again through his latest book, “The Rift”. Written with a clear eye after criss-crossing the continent, he offers telling glimpses of an Africa that defies stereotyping. The author is at his strongest when he describes just how many people have done Africa a disservice, even when setting out to help. He stands in the ruins of the Somali capital, Mogadishu, talking to a mother whose child dies of malnutrition before his eyes; the famine was largely caused by Western governments blocking the flow of food aid to Somalia in the belief that this would weaken the grip of the Shabab, a jihadist group. + +In another chapter Mr Perry describes how United Nations (UN) peacekeepers working in South Sudan shuffle paperwork in air-conditioned bungalows or jog around their sprawling camps wearing Lycra, while outside the gates large bulldozers are shovelling bodies into mass graves. “They saved our lives late,” says one refugee who described repeated rebel attacks on a refugee camp just a few minutes away from a large UN base whose peacekeepers did not venture out. “They did not risk until it became peaceful.” + +Yet the clarity of Mr Perry’s reporting, which is reason enough to read his book, is not matched by the metaphor of “The Rift”. The book revolves around the idea that, much as a new continent is slowly cleaving itself away from the rest along the Rift Valley, so too a new Africa is being born from the old. Aside from a few pages at the end where Mr Perry writes of African innovations, including ways of reversing desertification, the book does not quite live up to its promise. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21685433-sharp-eyed-look-contemporary-africa-clear-sighted/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Britain and America + +The slog of war + +Triumph and rivalry in the second world war + +Jan 9th 2016 | From the print edition + + + +Eisenhower’s Armies: The American-British Alliance during World War II. By Niall Barr. Pegasus; 544 Pages; $35. + +MANY writers have explored the relationship between Franklin Roosevelt and Winston Churchill. Just as rich, but sometimes overlooked, are the complexities of British and American military co-operation during the second world war. Niall Barr, a military historian at King’s College London, sifts through the squabbles and triumphs; his is an authoritative and highly readable account. + +It was, he writes, the first time that two armies had worked together so closely in wartime. During the first world war, America’s top general had irked Britain and France by insisting on maintaining a separate army. In the second world war the British and the Americans adopted a unified command structure, clearing the way for the appointment of Dwight Eisenhower (pictured) in 1943 as Allied Supreme Commander. However, one lingering benefit of the earlier structure, Mr Barr notes, is that it gave American officers like George Marshall and George Patton an independence and authority that would prove invaluable in the strike against Hitler. + +The transatlantic military alliance did not restart auspiciously. As Hitler rolled through Europe, some Americans wondered if Britain could hold out. One military observer questioned whether the British army could handle the “high centralisation and co-ordination demanded by the machine age.” Britain urgently sought American aid, which often fell short. Even before Lend-Lease, America sent Britain rifles leftover from 1919, still packed in grease, with bullets of the wrong calibre, which made them useless. + +“Eisenhower’s Armies” is packed with such nuggets. When cultures mixed, the British came across as snobby, the Americans as braggarts. Tensions grew in England as better-paid American soldiers arrived ahead of the cross-Channel invasion, depressing local troops. “Morale is a psychological problem like sex, and therefore the Britisher is almost ashamed to talk about it,” said one anxious British general. + +On the battlefield, British troops often shaved daily; Americans grew stubble. British drinks baffled the Americans. “All they seem to be doing is brewing tea,” stormed one American officer in the Netherlands, incredulous that British troops had been made to pause rather than push forward to aid another division. + +Among the generals, rivalries ran deep. Commanders from both nations wanted to be the first to grab big prizes such as Berlin. America’s swaggering General Patton disliked Brits, including Field Marshall Bernard Montgomery, a vital but flawed commander. Montgomery in turn scorned Eisenhower, who for his part had the unenviable task of soothing egos and balancing political concerns with military ones. Eisenhower had to deal with Churchill, who nosed into military affairs more than American politicians did. Disagreements arose over strategy, most prominently over whether to make the first big joint operation a cross-channel invasion (the Americans’ choice) or a strike into the Mediterranean (Britain’s choice). + +The rise of America is a prominent theme. Before the war, its army was smaller than Romania’s. But as the nation rearmed and GIs poured overseas, Britain felt its standing begin to wane. British brass felt “pipped at the post”, Mr Barr writes, by their huge, ever-more-powerful ally. In August 1944 Eisenhower was forced to reassure Churchill that America had no desire to “disregard British views, or coldbloodedly to leave Britain holding an empty bag in any of our joint undertakings”. + +Tensions were clearly rife. But in the end, Mr Barr offers high praise for the fundamentals of the partnership. The “sheer depth, scale and scope of the alliance between Britain and the United States during the second world war is hard to comprehend, even now,” he writes. Seven decades into the special relationship, no test as grave as a world war has resurfaced; but on countless vital matters, from Afghanistan to Syria, the alliance endures, made stronger by discussion and debate. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21685436-triumph-and-rivalry-second-world-war-slog-war/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +20th-century history + +The cold war’s first chill + +The year it all began + +Jan 9th 2016 | From the print edition + + + +1946: The Making of the Modern World. By Victor Sebestyen. Pantheon; 438 pages; $30. Macmillan; 456 pages; £25. + +IT WOULD be hard to imagine a more depressing moment than the first year after the end of the second world war. The guns had mostly fallen silent, but millions were still dying from famine, disease or civil strife. Large areas of Europe and Asia lay in ruins. Vast numbers of refugees were on the move. Many people wondered how their economies could ever be revived. + +Britain was, in effect, broke; Berlin’s water supply was still polluted by corpses. Japan, an island nation vitally dependent on trade, had lost 80% of its merchant marine. The Marshall Plan, which would use funds provided by America to coax European industries back to life, lay in the future. As Victor Sebestyen points out in his new book, “1946”, optimists were in short supply. “Very few people at the end of 1946 believed that recovery was around the corner, or even that it was possible,” he writes. + +The main change that year was the start of the cold war. As Mr Sebestyen argues, it was a Soviet-sponsored coup in an obscure corner of Iran at the beginning of the year that first prompted policymakers in the West to question Moscow’s motives. Stalin stepped up his campaign against internal dissent; the Gulag camps began to fill again. Civil wars in Greece and China pitted communists against defenders of the old order, reflecting global tensions as much as internal ones. All this helps to explain why 1946 was the year when Winston Churchill, by then out of office, gave a speech in America that made “Iron Curtain” a household phrase. + +Mr Sebestyen would have been well advised to shape his narrative around this theme. Instead he bombards the reader with short, staccato chapters, in rough chronological order. One moment he is in Japan, as Emperor Hirohito renounces his divinity (on the orders of General Douglas MacArthur, supreme commander for the Allied powers). The next he is in Calcutta, where sectarian riots are hastening British withdrawal from the subcontinent and foreshadowing the horrors of the partition to come. The author would have done better to spend more time on moments that deserve sustained analysis (like the resumption of hostilities between China’s communists and nationalists) and less on events that had little lasting significance (such as the first American nuclear tests on Bikini Atoll in the Pacific). + +But these are quibbles. Mr Sebestyen deserves praise for illuminating a low point in modern history. Mass shootings in America are a scandal, but the number of gun-related homicides (a little over 12,000 in 2015) would have excited little notice amid the hardship of the immediate post-war world; 6,000 people died and a further 15,000 were injured in communal riots in Calcutta in just three days in the summer of 1946, itself a drop in the bucket compared with the bloodletting of the Chinese civil war. Terrorist attacks have a huge impact thanks to the power of modern media, yet the number of deaths they cause is modest in comparison with previous eras of violence. In Lwów,” Mr Sebestyen notes, “the story that a mother driven mad with hunger killed and ate her two children barely made the newspapers.” + +The one place that approaches the levels of despair experienced in 1946 is Syria, where nearly five years of civil war have resulted in 250,000 deaths and millions more being forced to flee. Inter-state wars have become more rare, but civil conflict, proxy battles and genocide still cause great misery. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21685438-year-it-all-began-cold-wars-first-chill/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Mathematics + +The master of them all + +An impressive life of an impressive man + +Jan 9th 2016 | From the print edition + + + +Leonhard Euler: Mathematical Genius in the Enlightenment. By Ronald Calinger. Princeton University Press; 669 pages; $55 and £37.95. + +LEONHARD EULER is hardly a household name. Born in Switzerland in 1707, he was one of the most productive and influential mathematicians ever, yet surprisingly little has been written about him. Ronald Calinger’s major new biography aims to set this right. + +Sir Isaac Newton (and independently Gottfried Wilhelm Leibniz) had introduced calculus a generation or so earlier. But it was Euler whose work really established calculus as the basic tool of the mathematical sciences. Euler also carried forward another aspect of Newton’s legacy, by showing that Newtonian theories of motion and gravitation gave incredibly accurate predictions of the motions of the Moon and other planetary phenomena. He made advances across an astonishing range of subjects, from the very pure to the very applied, in a way that would be impossible today. His publications covered physics, astronomy, acoustics, ballistics and gunnery, cartography, navigation and shipbuilding, optics and the theory of music, as well as number theory and the foundations of calculus. + +Euler’s gifts were remarkable. He had great energy and an exceptional memory; he could recite the entire text of Virgil’s “Aeneid” by heart. His productivity was equally amazing. Over his career, he wrote more than 850 publications, including 18 books. His collected works run to more than 80 large volumes, and have been appearing steadily since 1910 (a few volumes remain to be published). + +Euler was born in Basel, but his career followed the great royal powers of Europe. At the age of 19, he made the seven-week journey to Russia to take up a post at the St Petersburg Imperial Academy of Sciences, which the emperor, Peter the Great, had set up as part of his plan to modernise Russia. Euler was heavily involved in practical scientific matters, such as the construction of accurate maps of the Russian Empire and studies of floods, fire and shipbuilding. But he also pursued interests including number theory, infinite series and the shape of the Earth. A notable breakthrough happened in 1735, when he announced his solution to the famous Basel Problem. This asked for the sum of the infinite series 1 + 1/4 + 1/9 + 1/16 +... and had resisted the efforts of mathematicians for nearly a century (the answer is pi²/6). + +While in St Petersburg, Euler married. He and his wife had 13 children, though only five made it past early childhood. Euler also started suffering from headaches, and his eyesight deteriorated steadily. He lost the sight of one eye in his early 30s, and was nearly blind by the age of 60. + +In 1741 he was hired away to Berlin. Frederick the Great wanted to build a new Royal Prussian Academy, populated by the superstars of science and philosophy. Euler had hoped to lead it, but he did not fit in. His scientific reputation was undeniable, but he had neither the refined manners nor the sparkling wit that flourished at Frederick’s court. Writing to Voltaire, Frederick played both on Euler’s eminence and his disability, calling him the “great Cyclops of geometry”. + +As relations with Frederick soured, Euler decided to move again. In 1766 Catherine the Great (it was an age of Greats) hired Euler back to St Petersburg. Despite being almost blind, he became a central figure in the academy there, publishing more than 400 articles, a major three-volume work on lunar motion and “Letters to a German Princess”, one of the earliest and most successful popularisations of science for a general audience. + +Mr Calinger’s book is an impressive work of scientific biography. It is long, but it gives a fascinating portrait of Euler, his work and the world around him. For the reader who seeks more, a huge array of Euler’s writings can be found online at the Euler Archive. As Pierre-Simon Laplace, another 18th-century mathematician, reportedly said: “Read Euler, read Euler, he is the master of us all.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21685435-impressive-life-impressive-man-master-them-all/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Illustrations from the edge + +When anger turns to ink + +A coming-of-age memoir by an artist enraged + +Jan 9th 2016 | From the print edition + +Rewriting history + +Drawing Blood. By Molly Crabapple. Harper; 352 pages, $29.99 and £20. + +MOLLY CRABAPPLE is an angry young woman. The 32-year-old American illustrator is a cross between a photojournalist chasing hot spots and a 19th-century écrivain engagé who champions causes with art. Her drawings of the Occupy Wall Street protest in 2011 became the visual anthem of the movement. She has applied her dark, curvy illustrative style to document Guantánamo prisoners, Libyan snipers, gay refugees in Beirut and protesters of police violence in Ferguson, Missouri. + +Ms Crabapple has already published two volumes of her artwork. “Drawing Blood” is a personal narrative of her maturation as an artist. Born Jennifer Caban in Far Rockaway, Queens, she always sought to shed childhood. At 17 she gathered every photo of her younger self, burned them, and the next day left for Europe and north Africa with pen and pad. Her adopted name comes from a character modelled after her in a play written by a friend. + +In New York in the 2000s she could not sell her art, so she sold herself. She worked as a nude for clubs, private parties, music videos, art classes and amateur “photographers” (essentially, live porn). Her proximity to the steamier parts of the city eventually got her into the Box—a Manhattan nightclub infamous for its secretive, highly sexualised burlesque—where Ms Crabapple became the in-house artist; a modern-day Henri de Toulouse-Lautrec. + +The Box was Ms Crabapple’s artistic boot camp, not simply to depict the surreal, but to capture the asymmetries of power: bankers quaffing pricey champagne while the true gods, in her view, were the naked performers. In time, she grew disillusioned with her decadent, sexualised art that in effect prostituted her talents. She burned to put her nib to political and social issues. When the Occupy movement sprang up, she became its unofficial chronicler. Since then she has journeyed into dark corners to document people’s plights for Vice, Fusion and the New York Times—giving victims not just a voice, but a face. + +“Drawing Blood” sparkles as an artistic coming-of-age memoir of an artist who represents her generation as much as depicts it. Some readers may be shocked by her walk on the wild side. Like Joan Didion, another American writer, Ms Crabapple’s toughness comes from her willingness to accept her vulnerability as much as from her talent and unique eye. “Drawings, like photojournalism, [can] distil the essential,” she writes. “Unlike photography, though, visual art has no pretence of objectivity. It is joyfully, defiantly subjective. Its truth is individual.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21685434-coming-age-memoir-artist-enraged-when-anger-turns-ink/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Lemmy: Live fast, die old + + + + + +Articles Sections Next + +Obituary: Lemmy + +Live fast, die old + +Ian “Lemmy” Kilmister, epitome of the rock lifestyle, died on December 28th, aged 70 + +Jan 9th 2016 | From the print edition + + + +IT WAS never hard to pick out Lemmy in a crowd. First, that black hat, vaguely cowboy in style, with silver medallions round it and crossed Confederate swords. Then very long hair (eventually dyed, or else he looked like Willie Nelson), and matching moustache. A black shirt, often open to a jungle of chest hair, with very tight black jeans. And, to complete the look, cowboy boots. Around the mid-1970s many rock bands and their fans spent Saturday night in something similar. Lemmy, founder in 1975 and frontman of Motörhead, wore that outfit, all the time, for 40 years. + +He played the same music, too: fundamentally pure rock and roll, rooted in Buddy Holly and Jerry Lee Lewis, sent through two 100-watt black stacks and classified by the Guinness Book of Records as the loudest rock music ever. Bass was his instrument, but bashed in big up-down chords like the rhythm guitar on which he’d started: the effect was sometimes compared to crushed razor blades, sometimes to showers of gravel. Over this, through a mic tilted perilously over his head, he would rasp out vocals that were hard to hear and usually absurd, he admitted, once you’d made them out: songs about war, drugs, sex, rich people, kicking ass and broken glass, with titles like “Die, You Bastard”, “Antisocial” and “Overkill”, scrawled mostly by him in a few chortling minutes on the back of a cigarette packet. + +Motörhead’s selling point was not high culture. It was that, in a scene encompassing heavy metal, punk, psychedelia, rockabilly and all the rest, the band played reliable, raw, ear-splitting rock and roll of the old style, and went on doing so round the world—or at least round the M1, M6 and M4—as long as Lemmy lasted. He led the band through 22 studio albums, the latest released in August. Guitarists and drummers came and went, sometimes by falling offstage or through bathroom mirrors they mistook for windows. The black hat with silver bits was a constant. + +Surprisingly, the body inside the clothes also stayed much the same, despite serial abuse from chain-smoking, a bottle of Jack Daniel’s every day (no health-food shit for him!) and handfuls of acid crammed down like dolly mixtures when, for a while, he was roadie for Jimi Hendrix. Acid, he claimed, made him a better person. It gave you a new angle—several new angles—on things. His shift to amphetamines (“motorhead” was American slang for “speed freak”) came when he joined Hawkwind, a dreamy psychedelic band, in 1972. The pills kept him functional through tours from then on, though he was fired from Hawkwind when he was busted for possession in Canada; and though for one show he had to be propped up, his bass hung on him, and pointed in the rough direction of the audience, which he couldn’t see. A doctor once told him that a transfusion would kill him, because his body no longer contained any human blood. + +Yet he couldn’t imagine a better life than this, and certainly couldn’t have foreseen it as a troubled, bullied English boy in north Wales—fiddling to catch Bill Haley on the wireless, messing around with short-lived useless bands, slaving at the Hotpoint factory. In the end he spent his entire career making the music he loved, thrilling fans, trashing hotel rooms, instigating riots with firehoses or squirty cheese, and taking restricted substances. (“If we moved in next door to you,” he remarked, “your lawn would die.”) He was a hedonist son of a bitch whose age seemed very nicely stuck at around 25. + +Laid today, gone tomorrow + +Meanwhile, girls desperate to bed him formed a disorderly queue at every stage door. The best part of any gig was getting laid afterwards; he estimated his conquests in the thousands, because chicks loved men intent on the wandering life, and it suited him, too, to be here today and gone tomorrow. Nowhere was home (though LA, with its “paradise” palm trees, came closest) and marriage wasn’t his style. The one girl he deeply loved died from heroin, making him even more determined not to touch that stuff, at least. + +His other regret was that after Motörhead’s greatest hit, “Ace of Spades”, had soared to number 15 in the charts in 1980, even the band’s fans seemed deaf to the equally good music that came next. Though he was on the road most of the year for 40 years, playing to packed houses, he seemed to be always broke. On the fringes of venues he would loiter by the slot machines (his favourite form of that addiction), hoping someone would buy him a drink. + +The big time, however, never came any closer, because he refused to change a thing he did. He wore his usual gear, including the Iron Cross necklace from his treasured collection of Nazi memorabilia, even to the Grammy awards. Nor would he kowtow to any asshole, record company or manager. He remained stubbornly his own man, and not always at full volume. On the road he bought dozens of chocolate Kinder eggs for the little toys inside. He enjoyed pondering the beauty and randomness of Nature. And at lights-out on the tour bus he would settle down to P.G. Wodehouse, quietly happy in his own company. He hoped to be remembered as “an honourable man”. But then, with a throaty laugh, he had to admit there wasn’t really any question of that. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21685309-ian-lemmy-kilmister-epitome-rock-lifestyle-died-december-28th-aged-70-live-fast/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +The Economist poll of forecasters, January averages + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Jan 9th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21685468/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Jan 9th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21685470-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Jan 9th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21685527-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Jan 9th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21685471-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist poll of forecasters, January averages + +Jan 9th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21685476-economist-poll-forecasters-january-averages/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Jan 9th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21685477-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 08 Jan 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Saudi Arabia: The Saudi blueprint + + + + + +North Korea’s nuclear weapons: Another bombshell + + + + + +Puerto Rico: The bill will come due + + + + + +China’s market meddling: The control quagmire + + + + + +The EU’s rotating presidency: Stop the music + + + + + +Letters + + + +On the death penalty, Italy, Myanmar, capitalism, antiques, RCTs, South Africa, SuperBosses, populism: Letters to the editor + + + + + +Briefing + + + +Saudi Arabia: Young prince in a hurry + + + + + +Saudi Aramco: Sale of the century? + + + + + +United States + + + +Puerto Rico defaults: When the salsa stops + + + + + +Gun laws: Talking up arms + + + + + +The Oregon stand-off: They the people + + + + + +Floods in the Midwest: Disaster foretold + + + + + +Police in schools: Arresting developments + + + + + +Lexington: Franklin Graham’s promised land + + + + + +The Americas + + + +Venezuela: The coming confrontation + + + + + +Crime in Mexico: Death and the mayor + + + + + +Millennials in Canada: First, the good news + + + + + +Asia + + + +Politics in Taiwan: A Tsai is just a Tsai + + + + + +Tsukiji, the world’s biggest fish market: So long, and thanks for all the fish + + + + + +The war in Afghanistan: A bloody year of transition + + + + + +Banyan: Modi-fied but not transformed + + + + + +China + + + +Hong Kong-mainland relations: Publish and be abducted? + + + + + +Liberal economists: Three wise men + + + + + +Middle East and Africa + + + +Politics in the Middle East: The Arab winter + + + + + +South Africa’s next president: After Zuma, another Zuma? + + + + + +Nigeria’s federation: A house divided + + + + + +Electricity in Africa: Power hungry + + + + + +Europe + + + +France’s fight against terror: Après Charlie + + + + + +Bavaria’s Christian Social Union: Kabuki in the Alps + + + + + +Sexual assaults in Cologne: New year, new fear + + + + + +Italy’s economy: Mezza mezza + + + + + +European nightlife: Less than ecstatic + + + + + +Charlemagne: Early adopters + + + + + +Britain + + + +The Church of England: Resurrection? + + + + + +Global Anglicanism: Rowing, not rowing + + + + + +The Labour Party: Trident wars ahead + + + + + +Foreign aid: Strings attached + + + + + +Statues and racism: Running out of Rhodes + + + + + +Household debt: Down to earth + + + + + +Jobs and ethnic minorities: Irish lessons + + + + + +Bagehot: Battlefields of the mind + + + + + +International + + + +Racial segregation: The great melting + + + + + +London's population: White shuffle, not white flight + + + + + +Business + + + +The future of personal transport: The driverless, car-sharing road ahead + + + + + +VW's scandal: The cost of cheating + + + + + +Biotechnology: Cutting remarks + + + + + +Facebook in India: Can’t give it away + + + + + +Off-price fashion retailing: To the Maxx + + + + + +Jollibee: Acquired tastes + + + + + +Startups in Australia: From lucky to plucky + + + + + +Japanese entrepreneurship: Thinking inside the box + + + + + +Schumpeter: Toy story + + + + + +Finance and economics + + + +The Big Mac index: After the dips + + + + + +Retail banking: Blunt elbows + + + + + +Oil benchmarks: Crude measure + + + + + +Buttonwood: Loathe thy neighbour + + + + + +The market for economists: The right match + + + + + +Banking for immigrants: Far-sighted + + + + + +Room rentals v hotels: Buffett’s revenge + + + + + +Free exchange: A mean feat + + + + + +Science and technology + + + +Astronomy: Now there’s a look in your eyes, like black holes in the sky + + + + + +The search for ET: Cluster analysis + + + + + +A real hoverboard: Skating with McFly + + + + + +Bugs from the belfry: Zoonotic disease + + + + + +Bugs from the belfry: The Richard Casement internship + + + + + +Books and arts + + + +American economic history: G force + + + + + +Understanding Africa: Clear-sighted + + + + + +Britain and America: The slog of war + + + + + +20th-century history: The cold war’s first chill + + + + + +Mathematics: The master of them all + + + + + +Illustrations from the edge: When anger turns to ink + + + + + +Obituary + + + +Obituary: Lemmy: Live fast, die old + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +The Economist poll of forecasters, January averages + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.01.16.TXT b/homeworks/B20769/homework1/data2/2016.01.16.TXT new file mode 100644 index 0000000..6b9756c --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.01.16.TXT @@ -0,0 +1,4952 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Jan 16th 2016 | From the print edition + + + +Mexican marines recaptured Joaquín Guzmán, also known as El Chapo (Shorty), the boss of the Sinaloa drug gang, who had escaped from a high-security prison last July. Security forces raided a house, fought a gun battle in which five people died and tracked down Mr Guzmán after he had slipped away through a tunnel. Mexican officials said a meeting in October between El Chapo and Sean Penn, an American film star, in a jungle hideout had helped them trace the fugitive. See article. + +Venezuela’s Supreme Court ruled that actions by the National Assembly, the first with an opposition majority in 17 years, will be “absolutely null” because the legislature had sworn in three opposition MPs in defiance of an earlier court judgment. The three MPs duly stood down, reducing the opposition’s majority to below the two-thirds needed to summon a convention to rewrite the constitution. + +Meanwhile Venezuela’s president, Nicolás Maduro, reshuffled his cabinet. Luis Salas, a left-wing sociologist who does not think that printing money causes inflation, will be in charge of economic policy. + +The first of 8,000 Cubans stuck on Costa Rica’s border with Nicaragua resumed their journey to the United States. Under an agreement, 180 migrants were flown to El Salvador and will proceed north by bus. In November Nicaragua, a friend of the Cuban government, blocked the migrants’ progress. See article. + +The man who fell to earth + +Barack Obama used the last state-of-the-union speech of his presidency to lament the rise of political bickering and to call on his successor to build a “clear-eyed, big-hearted” America. He also defended his domestic record, pointing to the 14m jobs that have been created since he took office in 2009 at the outset of the financial crisis. See article. + +The Supreme Court overturned Florida’s system of letting juries advise a judge about whether murderers should be sent to death row, ruling that under the constitution the jury itself must impose the death penalty. + +Iran arrested ten American sailors who had strayed into its waters in two boats. They were rapidly released, thus averting any threat to the deal between Iran and six world powers over its nuclear weapons. The UN is expected soon to certify that Iran has dismantled its programme, leading to a relaxation of sanctions. See here and here. + +Changes + +Tunisia’s moderate Islamist Ennahda party became the biggest in parliament after lawmakers in President Beji Caid Essebsi’s secular party resigned over the role of his son in the party. The secular party, Nidaa Tounes, rules in coalition with Ennahda. + +Ten people were killed in an attack by two female suicide-bombers on a mosque in Cameroon. The attack in a town near the border with Nigeria is thought to have been orchestrated by Boko Haram, a jihadist outfit. + +A UN aid convoy reached the Syrian town of Madaya, where 40,000 people have been cut for the second time from food supplies for months. + +It ain’t easy + +In China police detained a Beijing-based Swedish human-rights activist, Peter Dahlin. He is thought to be the first foreigner arrested in China in a crackdown that has seen about 300 defence lawyers and human-rights experts apprehended since July. Several are said to have been charged with “subversion”. + + + +A group of gunmen attacked Jakarta, also setting off bombs in a shopping district close to the presidential palace. Security forces battled the attackers in the streets, shooting several of them dead. Islamic State had recently threatened to carry out an assault on the Indonesian capital. + +Pakistan said that it had arrested several Islamist militants from Jaish-e-Mohammad, believed by India to be responsible for a deadly recent assault on an air base in the Indian state of Punjab, in which seven troops were killed. India may view the arrests as a conciliatory gesture by Pakistan to revive fledgling peace talks between the two. + +Sorrow + +Germany said it would make it easier to deport asylum-seekers who commit criminal acts, after hundreds of women reported being sexually assaulted by migrants in Cologne on New Year’s Eve. The city’s police chief was sacked over his forces’ failure to intervene and for reporting that the festivities had been “relaxed”. Some 1.1m asylum-seekers entered Germany in 2015, and similar numbers are expected in 2016. See here and here. + +A suicide-bombing near Istanbul’s Blue Mosque killed ten German tourists. Turkish authorities said it had been carried out by an IS terrorist recently arrived from Syria. Turkey has stepped up its participation in NATO operations against IS. In a move likely to further hurt Turkish-Russian relations, Turkey arrested three Russian citizens it said were linked to IS. + +The European Union launched an investigation into whether new laws in Poland that aim to muzzle the media and the courts are legal under rules introduced in 2014 to protect the EU’s values. The prime minister in the recently elected government headed by the conservative Law and Justice party insisted that “democracy is alive and well” in Poland. See article. + +Artur Mas stepped down as president of Spain’s Catalonia region, after five years in the job during which he pushed for independence. His successor is Carles Puigdemont, an even more ardent secessionist who refused to swear allegiance to Spain’s constitution. See article. + + + +In Britain junior doctors walked out in a dispute over new contracts, which are intended to improve out-of-hours care for patients. The health minister has threatened to impose the new terms if no agreement is reached. It was the first strike by doctors in 40 years and was supported strongly by the public, according to polls. The disruption led to the cancellation of one in ten operations scheduled on the day and many more before and after the strike. See article. + +The leader of Northern Ireland’s Democratic Unionist Party, Arlene Foster, was confirmed as the new first minister, replacing Peter Robinson following his resignation. She is the youngest person to hold the province’s most senior political job, and also the first woman. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21688452-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business + +Jan 16th 2016 | From the print edition + +Anxiety over the global economy weighed heavily on world stockmarkets, which have not had a good start to the year: the S&P 500 is down by more than 7% since January 1st. Market volatility in China is the source of much of the concern; the People’s Bank of China has heavily intervened to prop up the yuan in the offshore market. Officials gave assurances that the financial system was stable, after a circuit-breaker mechanism that automatically halts trading when stockmarkets plunge was abandoned just a week after it was introduced. See article. + +China’s exports fell by 1.4% in December from the same month in 2014 and imports dropped by 7.6%. The figures were less bad than had been expected, though at $4 trillion, total trade for all of 2015 was 8% lower than in 2014. + +Under pressure + +Oil prices touched 12-year lows of $30 a barrel, which also soured market sentiment. With oil-industry margins under strain, BP shed another 4,000 workers. Petrobras, Brazil’s state-owned oil company, which is mired in a corruption scandal, cut its five-year investment programme by 25%. One analyst forecast that oil would drop to $10 a barrel. Nigeria’s oil minister called on OPEC to hold an emergency summit. But the energy minister for the United Arab Emirates said there was no need for a meeting, as OPEC’s strategy is working. See article. + +Having relied on oil exports for a big proportion of its revenue, Russia’s government was reportedly reworking its budget to reduce spending by a further 10% and ordering state departments to carry out “stress tests” in which they assume a further fall in oil prices. + +GoPro, a maker of wearable action-cameras and a wannabe media company, reported disappointing quarterly results following disastrous sales of its Hero4 Session camera, the price of which has been slashed by half. As its share price nosedived, GoPro said it was cutting 7% of its workforce. + +Golden years + +Five months after it launched a hostile bid, Shire secured a deal to buy Baxalta, for $32 billion, the latest big acquisition in the drugs industry. Last year the value of takeovers in the health-care industry amounted to $673 billion. + + + +Shipments of personal computers fell to 276m last year, the first time the figure has dropped below 300m since 2008, according to IDC. PCs are losing out to mobile devices, but the strong dollar and a slowing Chinese market were two other factors that hurt sales in 2015. The bright spot was Apple, which this week also said that 10m people have signed up to the music-streaming service it launched six months ago. It took Spotify six years to attain that number of subscribers. + +Airbus took 1,036 in net orders for aircraft last year, beating Boeing’s tally of 768. But following several years of robust growth, orders were down significantly compared with 2014 for both companies. Although it trailed in sales, Boeing delivered more jets to customers: 762 to Airbus’s 635. See article. + +In its latest broadside against “sweetheart” tax deals, the European Commission ordered Belgium to recoup €700m ($760m) in illegal tax breaks given to at least 35 companies. One of them is Anheuser-Busch InBev, a global brewer which has its headquarters in Belgium and is in the process of taking over SABMiller. Last October the commission ruled against the tax arrangements accorded to Starbucks in the Netherlands and Fiat in Luxembourg. + +America’s Treasury said that it will require title-insurance companies to identify the individuals behind all-cash purchases of luxury homes in New York and Miami made by shell companies. This is in response to reports that the upper reaches of the property market are awash with illicit foreign money. + +Greece recorded annual inflation of 0.4% in December (using the EU’s calculations), ending 33 months of deflation. + +Steven Cohen reached a settlement with the Securities and Exchange Commission over a charge of failing to supervise an employee at his hedge fund who was convicted of insider trading. Mr Cohen is barred from investing clients’ money for two years, ending a lengthy government investigation. He neither admits nor denies wrongdoing. + +Sound and vision + +Proving that it is no dinosaur when it comes to snapping up American film companies, Dalian Wanda, a Chinese conglomerate, agreed to buy Legendary Entertainment, which produced “Jurassic World” and other recent box-office hits, for $3.5 billion. Later this year Legendary will release “The Great Wall”, which was shot entirely in China with a budget of $135m. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21688450-business/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Jan 16th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21688453-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Immigration and asylum: Migrant men and European women + +China’s economy: The yuan and the markets + +The Iran nuclear deal: Big day imminent; big problems ahead + +The battery era: A plug for the battery + +Cohabitation and the law: When unmarried parents split + + + + + +Articles Sections Next + +Immigration and asylum + +Migrant men and European women + +To absorb newcomers peacefully, Europe must insist they respect values such as tolerance and sexual equality + +Jan 16th 2016 | From the print edition + + + +FOUR months ago, the body of three-year-old Aylan Kurdi washed up on a beach in Turkey after he, his brother and his mother drowned while trying to reach Greece. A photograph of Aylan quickly became the defining image of the masses of refugees fleeing Syria’s civil war. The picture helped cement a brief consensus that the Middle Eastern migrants risking death to get to Europe should be allowed in to apply for asylum. Angela Merkel, Germany’s chancellor, announced that her country would accept asylum applications from any Syrians who reached its borders. Much of Europe seemed on the verge of joining the project. + +But Europe never joined. The task of absorbing the migrants has been left to Germany and Sweden, with a bit of help from the Netherlands and a few other countries. German and Swedish eagerness to welcome so many refugees has gradually been worn down. Now the events of New Year’s Eve in Cologne and other German cities may have buried it for good. + +That night, gangs of young men, mainly asylum-seekers, formed rings around women outside Cologne station and then robbed and sexually assaulted them. More than 600 women reported to the police that they had been victimised. After Cologne, when Europeans think of refugees, many no longer picture persecuted families or toddlers. Instead they see menacing young men imbued with the sexism that is all too common across the Middle East and north Africa. + +Sex and the citadel + +Such fears, though overblown, are not absurd, and will not be allayed by pointing out that the alleged attackers in Cologne so far identified are mostly Moroccan or Algerian, not Syrian. There really is a cultural gulf between rich, liberal, secular Europe and some of the countries from which recent migrants come. It is impossible to conduct surveys in Syria right now, for obvious reasons, but a 2013 Pew poll of Muslims around the world makes sobering reading. More than 90% of Tunisians and Moroccans believe that a wife should always obey her husband. Only 14% of Iraqi Muslims and 22% of Jordanians think a woman should be allowed to initiate a divorce. And although Arab societies take a harsh view of sex crimes, women who venture alone and in skimpy clothing into a public space in, say, Egypt can expect a barrage of male harassment. + + + +Seeking safety: A flow diagram of asylum applications and rejections + +Migrants are no more likely to commit crimes than natives. But it would be otherworldly to pretend that there is no tension between the attitudes of some and their hosts. European women cherish their rights to wear what they like, go where they like and have sex or not have sex with whom they please. No one should be allowed to infringe these freedoms. + +However, it does not follow from this that Germany was wrong to offer a haven to Syrian refugees. The moral imperative has not changed since Aylan washed up on that beach. Half of Syria’s cities have been blasted to rubble, hundreds of thousands of people lie dead and tens of thousands are starving in towns under siege. Thousands more refugees arrive in Greece every week. Those who would shut them out must explain where they should go instead. + +Rather than succumbing to moral panic, Europe needs to work out how to manage the flow of refugees and help them assimilate. A good place to start would be to insist that they obey the law. Police in Cologne clearly failed to take on the harassers. Perhaps they did not recognise what was going on quickly enough, or were afraid of being accused of racism. Or it may have been simple incompetence. Women have complained for years that German police are slow to stop sexual harassment in the drunken crowds at the Munich Oktoberfest. + +Whatever the precise nature of the failure, it needs to be fixed. Security cameras in public places would make it easier to convict those who hide in crowds—Germans should overcome their queasiness about such surveillance. With luck, the police will learn from their mistakes and work out how to prevent such incidents. Molesters should be punished. Asylum-seekers who flout the law should face prison or deportation. No one can be sent back to Syria, but Mrs Merkel is right to argue that Morocco and Algeria are safe enough (see article). + + + +Europe's safe lists: Which countries does Europe consider safe for migrants to return to? + +Work and family + +When it comes to assimilating new arrivals, Europe could learn a thing or two from America, which has a better record in this regard. It is not “culturally imperialist” to teach migrants that they must respect both the law and local norms such as tolerance and sexual equality. And it is essential to make it as easy as possible for them to work. This serves an economic purpose: young foreign workers more than pay their way and can help solve the problem of an ageing Europe. It also serves a cultural one: immigrants who work assimilate far more quickly than those who are forced to sit around in ghettos. In the long run most children of migrants will adopt core European values, but the short run matters too. + +Migrants who take the most hazardous routes into Europe, for example by crossing the Mediterranean in leaky boats, are disproportionately young men (see article). Overall they make little difference to Europe’s sex ratio, but in some areas and age brackets they may skew it. This is a problem—districts with more young single men than women are more prone to violence, especially if those men are jobless. That is why it is daft to restrict the ability of refugees to bring their spouses and other family members to join them, as Denmark’s government is now doing. + +The process of absorbing refugees will be neither quick nor easy, but it is the right thing to do and will ultimately benefit Europe. Ideally, all European countries would do their part. It is scandalous that so few have agreed to take more than a handful of Syrians, and that European governments have yet to agree on a beefed-up border agency to police the EU’s external frontiers. Even in Germany, there is a risk that Mrs Merkel will be forced to abandon her policy of compassion. If she is to salvage it, she must take the lead again, spelling out how Germans can make Willkommenskultur work—and how the newcomers themselves must adapt to basic European values. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21688397-absorb-newcomers-peacefully-europe-must-insist-they-respect-values-such-tolerance-and/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +China’s economy + +The yuan and the markets + +Strains on the currency suggest that something is very wrong with China’s politics + +Jan 16th 2016 | From the print edition + + + +“WHAT if we could just be China for a day?” mused Thomas Friedman, an American columnist, in 2010. “…We could actually, you know, authorise the right solutions.” Five years on, few are so ready to sing the praises of China’s technocrats. Global markets have fallen by 7.1% since January 1st, their worst start to the year since at least 1970. A large part of the problem is China’s management of its economy. + +For well over a decade, China has been the engine of global growth. But the blistering pace of economic expansion has slowed. The stockmarket has been in turmoil, again. Although share prices in China matter little to the real economy, seesawing stocks feed fears among investors that the Communist Party does not have the wisdom to manage the move from Mao to market. The rest of the world looks at the debts and growing labour unrest inside China (see article), and it shudders. Nowhere are those worries more apparent—or more consequential—than in the handling of its currency, the yuan. + +Faulty forex + +China’s economy is not on the verge of collapse. Next week the government will announce last year’s rate of economic growth. It is likely to be close to 7%. That figure may be an overestimate, but it is not entirely divorced from reality. Nevertheless, demand is slowing, inflation is uncomfortably low and debts are rising. The bullish case for China depends partly upon the belief that the government can always lean against the slowdown by stimulating consumption and investment with looser monetary policy—just as in any normal economy. + +Yet China is not normal. It is caught in a dangerous no-man’s-land between the market and state control. And the yuan is the prime example of what a perilous place this is. After a series of mini-steps towards liberalisation, China has a semi-fixed currency and semi-porous capital controls. Partly because a stronger dollar has been dragging up the yuan, the People’s Bank of China (PBOC) has tried to abandon its loose peg against the greenback since August; but it is still targeting a basket of currencies. A gradual loosening of capital controls means savers have plenty of ways to get their money out. + +A weakening economy, a quasi-fixed exchange rate and more porous capital controls are a volatile combination. Looser monetary policy would boost demand. But it would also weaken the currency; and that prospect is already prompting savers to shovel their money offshore. + +In the last six months of 2015 capital left China at an annualised rate of about $1 trillion. The persistent gap between the official value of the yuan and its price in offshore markets suggests investors expect the government to allow the currency to fall even further in future. And, despite a record trade surplus of $595 billion in 2015, there are good reasons for it to do so, at least against the dollar, which is still being propelled upwards by tighter monetary policy in America. + +The problem is that the expectation of depreciation risks becoming a self-fulfilling loss of confidence. That is a risk even for a country with foreign-exchange reserves of more than $3 trillion. A sharply weaker currency is also a threat to China’s companies, which have taken on $10 trillion of debt in the past eight years, roughly a tenth of it in dollars. Either those companies will fail, or China’s state-owned banks will allow them to limp on. Neither is good for growth. + +The government has reacted by trying to rig markets. The PBOC has squeezed the fledgling offshore market in Hong Kong by buying up yuan so zealously that the overnight interest rate spiked on January 12th at 67%. Likewise, in the stockmarket it has instructed the “national team” of state funds to stick to the policy of buying and holding shares. + +One step back, two forwards + +Yet such measures do nothing to resolve a fundamental tension. On the one hand, the state understands that the lack of financial options for Chinese savers is unpopular, wasteful and bad for the economy. On the other, it is threatened by the ructions that liberalisation creates. For Xi Jinping, the president, now in his fourth year in charge, that dilemma seems to crop up time and again (see Briefing). He needs middle-class support, but feels threatened by the capacity of the middle class to make trouble. He wants state-owned enterprises to become more efficient, but also for them to give jobs to the soldiers he is booting out of the People’s Liberation Army (see article). He wants to “cage power” by strengthening the rule of law and by invoking the constitution, yet he is overseeing a vicious clampdown on dissent and free speech. + + + +Daily dispatches: China's stockmarket mess + +It is easy to say so now, but China should have cleaned up its financial system and freed its exchange rate when money was still flowing in. Now that the economy is slowing, debt has piled up and the dollar is strong, it has no painless way out. + +A sharp devaluation would wrong-foot speculators. But it would also cause mayhem in China and export its deflationary pressures. The poison would spread across Asia and into rich countries. And because interest rates are low and many governments indebted, the world is ill-equipped to cope. + +Better would be for China to strengthen capital controls temporarily and at the same time to stop stage-managing the yuan’s value. That would be a loss of face for China, because the IMF only recently marked the yuan’s progress towards convertibility by including it in the basket of currencies that make up its Special Drawing Rights. But it would let the country prepare its financial institutions for currency volatility, not least by starting to scrub their balance-sheets, before flinging their doors open to destabilising flows. Mr Xi could embrace more complete convertibility later, when they were less vulnerable. + +One reason the PBOC is rushing towards convertibility, despite the risks, is that it feels that it must seize the chance while it has Mr Xi’s blessing. But better to retreat temporarily on one front than to trigger a global panic. That might also lead to some clearer thinking. There is a contradiction between liberalisation and party control, between giving markets their say and silencing them when their message is unwelcome. When the time is right, China’s leaders must choose the markets. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21688396-strains-currency-suggest-something-very-wrong-chinas-politics-yuan-and/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Iran nuclear deal + +Big day imminent; big problems ahead + +Iran has complied with the nuclear undertakings that trigger a lifting of sanctions. That was the easy bit + +Jan 16th 2016 | From the print edition + + + +IN HIS valedictory state-of-the-union address Barack Obama devoted only a few lines to his main foreign-policy achievement: the accord with Iran to restrain its nuclear programme. The words he chose, however, could almost be a summary of the Obama doctrine, if there is such a thing. Contrasting his record with that of predecessors who got bogged down fighting unwinnable wars, Mr Obama said that there was a “smarter approach” based on “patient and disciplined strategy” and mobilising “the world to work with us…that’s why we built a global coalition, with sanctions and principled diplomacy, to prevent a nuclear-armed Iran.” + +Mr Obama is justified in hailing the Iran deal as a diplomatic triumph. Some time next week “Implementation Day” is almost certain to be declared. That is the moment when Iran is deemed to have complied with all its obligations in dismantling those parts of its nuclear programme that would soon have put it only weeks away from being able to build a bomb. All nuclear-related sanctions will be lifted or suspended (see article). + +The speed with which Iran released two US Navy patrol boats and their crews, after they had unintentionally entered Iranian waters on January 12th, was a measure of how America’s relationship with Iran has changed. A call from John Kerry, America’s secretary of state, to his Iranian opposite number, Mohammad Javad Zarif, defused an incident that would once have escalated into an international crisis. The co-operation that Iran has shown in decommissioning its enrichment centrifuges, removing the core of its heavy-water reactor and shipping out most of its low-enriched uranium stockpile has surprised arms controllers. + +Yet, just as critics of the deal are wrong to describe it as a disaster in which Iran got everything it wanted, its supporters (including this newspaper) need to be realistic about it, too. The smooth progress towards Implementation Day is largely because the president, Hassan Rohani, and Mr Zarif are desperate to get sanctions lifted. They want to see $100 billion of Iranian assets unfrozen before parliamentary elections next month, in which they hope their faction will oust some of the hardliners who oppose them. Although both back greater engagement with the West for economic reasons (and appear to have the conditional support of the supreme leader, Ali Khamenei), nothing else about Iran’s behaviour shows the slightest sign of change. It still hangs gay people, locks up dissidents and stokes sectarian conflict around the Middle East, most destructively in Syria. + + + +Long time coming: Iran's atomic agreement + +A dose of reality + +Supporters of the nuclear deal must also recognise that the smiling Mr Rohani sees it in purely transactional terms: by renouncing the pathways to a bomb, Iran gets cash and trade. Hardliners in the regime still loathe the deal. Iran remains committed to expanding its nuclear programme to “industrial scale”, which it will be able to do, even if the agreement holds, after 15 years. It continues to lie about the military aspects of that programme, which lasted until 2009. And there is every chance that, with the $100 billion in its pocket, Iran will start to test the resolve of Mr Obama and whoever comes after him. + +It is understandable that Mr Obama sees the deal with Iran as a vindication of his approach to foreign policy. At worst, it helped avoid a war and bought some time, though it is still unclear how much. At best, the deal may help strengthen forces in Iran that favour limited reform. But it will require constant policing and it is not a solution to the Iranian nuclear problem, let alone a reset of Iran’s fraught relationship with the West. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21688391-iran-has-complied-nuclear-undertakings-trigger-lifting-sanctions-was/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The battery era + +A plug for the battery + +Virtual reality and artificial intelligence are not the only technologies to get excited about + +Jan 16th 2016 | From the print edition + + + +IT IS more than two-and-a-half centuries since Benjamin Franklin grouped a number of electrically charged Leyden jars together and, using a military term, called them a “battery”. It is 25 years since Sony released a commercial version of the rechargeable lithium-ion battery, which now sits snugly in countless smartphones, laptops and other devices. In an era of robots and drones, artificial intelligence and virtual reality, the lithium-ion battery lacks futuristic glamour. Its deficiencies are quotidian and clear: witness the scrum of people around charging stations at airports. Yet few areas of technology promise as great an impact in as short a time. + +Increasingly, lithium-ion batteries are vaulting out of pockets into power tools, vehicles, homes and even power stations. Carmakers in America, China and Japan are rushing to secure supplies of lithium to prepare for a more electric future (see article). Such is the scramble, that the metal, used in small quantities in each battery cell, today is one of the world’s only hot commodities. The price of lithium carbonate imported to China more than doubled in the last two months of 2015. + +Until now, the limits on the use of batteries have been storage capacity, cost and recharging times. But large-scale production is overcoming these hurdles. The head-turner at this week’s Detroit motor show was not a car but a battery—that of the 2017 Chevrolet Bolt, which General Motors’ boss, Mary Barra, said had “cracked the code” of combining long range with an affordable price. Tesla, an electric-car maker, is promising to start mass production of lithium-ion batteries this year in a giant “gigafactory” in Nevada. BYD, a Chinese rival, is hot on its heels. In ten months last year Chinese firms sold more electric vehicles than Tesla has since 2008. A further emphasis on batteries is a big part of China’s 2016-20 five-year plan. + +Rising power + +Electric cars are not the only source of demand. Batteries are also playing an increasingly important role in providing cleaner power on and off electricity grids. In South Africa, Australia, Germany and America, Tesla this year will start selling a $3,000 Powerwall for homeowners to store the solar energy from their roofs. Utilities are going even further. They are installing millions of lithium-ion battery cells into power plants to regulate supply at times of peak demand, and when it fluctuates because of intermittent wind and solar energy. California has ordered its electricity firms to offer 1.3 gigawatts (GW) of non-hydroelectric storage capacity within five years. That compares with total American power generation of more than 1,000GW, but is still more than double the 0.5GW of batteries plugged into grids around the world today. In 2016 a solar plant equipped with batteries will be installed in Hawaii, promising power after sunset at prices cheaper than diesel. + +There is still a long way to go. As yet lithium-ion batteries do not have the capacity to store grid-scale power for more than a few hours. Costs are still too high; and the recent price spike in lithium will encourage researchers beavering away on other types of battery. Yet the more cells that are made, the more understanding and performance improve. Rising demand and higher prices will eventually also generate more lithium supply. Increasingly, lithium is becoming to batteries what silicon is to semiconductors—prevalent, even among worthy alternatives. In one form or another, the lithium-ion battery is the technology of our time. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21688394-virtual-reality-and-artificial-intelligence-are-not-only-technologies-get-excited-about/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cohabitation and the law + +When unmarried parents split + +Family law has not kept up with the changes in families + +Jan 16th 2016 | From the print edition + + + +IN MUCH of the world, ever fewer couples are marrying before having children. Two out of five births in the OECD club of rich countries—and two out of three in Latin America—are now outside marriage. The way the law treats the children of unmarried parents varies hugely. In some Islamic states they are turned into orphans when their mothers are executed for fornication. In China they enjoy so few rights (to public services or even an identity card) that nearly all are aborted. Even in countries that no longer discriminate directly against children of unmarried parents, laws that distinguish between married and cohabiting couples may harm them (see article). + +Some places, such as England and much of America, offer couples a binary choice: get married or the law will treat the two of you as unrelated. Others, such as France and the Netherlands, allow couples to choose from a range of “marriage-lite” contracts that incorporate some aspects of marriage, such as tax breaks or asset-sharing after splitting up. In a third group, including Australia and New Zealand, couples are automatically given many of the rights and duties of marriage after they have lived together for a certain number of years. + +The advantage of the first option is simplicity. Either you make a formal commitment to each other or you don’t. The snag is that many people don’t, and some are left high and dry if they split up or one partner dies. If one cohabiting partner dies intestate in England, for example, the other may inherit nothing. Any legacy will be subject to inheritance tax, unlike bequests between spouses. If only one partner’s name is on the deeds of the family home, the other may be thrown out. + +These problems suggest that option two—offering couples a wider choice of legal contracts—makes more sense. In France the pacte civil de solidarité is popular. It is much like a marriage but easier to end: either partner can dissolve it with a registered letter or by marrying someone else. Similarly, more than half of unmarried Dutch couples formalise their relationship with a “cohabitation agreement”, which can be tailored to specify how assets and expenses will be shared after a break-up. + +Alas, even in countries with several marriage-like options, many couples pick none. If they split up or one dies, they are then treated as legal strangers, just like unmarried English couples. So some governments plump for option three: if a couple lives together long enough, the law treats them almost as if they were married—unless they explicitly choose another option. When a long-term cohabitation ends in Australia or New Zealand, rules for alimony, property-sharing and inheritance mirror those when a marriage is dissolved. + +Pushing people into a contract without their consent sounds troublingly illiberal. Unfortunately, many cohabiting couples are oblivious to the risks when they fail to regularise their union. In countries where long-term cohabitation confers none of the rights and duties of a marriage, many people mistakenly believe that it does. Polls suggest that more than half of Britons believe that long-term cohabitees are in a “common-law” marriage; no such institution exists. Many Americans think that seven years together gives a relationship legal standing; it does not. + +Children have rights, too + +Where no children are involved, the state should not second-guess the decisions—or non-decisions—of adults. But to avoid harming children, it is reasonable to set a default that offers more stability. So couples should be allowed to choose from several options to suit their circumstances. If they make no choice, and there are children, the default should change. This paper would treat long-term cohabiting parents like married ones for the purposes of inheritance and post-breakup maintenance and asset-sharing—unless they explicitly opt out. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21688395-family-law-has-not-kept-up-changes-families-when-unmarried-parents-split/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On free speech, broadband, Oregon, obesity, Israel, animals: Letters to the editor + + + + + +Articles Sections Next + +On free speech, broadband, Oregon, obesity, Israel, animals + +Letters to the editor + +Jan 16th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Free speech on campus + +Judges have long ruled that the First Amendment of the American constitution protects many forms of hateful speech. So the official at the University of Missouri who thinks that “the First Amendment does not give people a free pass to go around saying hateful things” is mistaken (“Of slavery and swastikas”, January 2nd). In 1973 the Supreme Court ruled against the official’s very own university in Papish v University of Missouri Curators. In that case it overturned the university’s disciplining of a graduate student for using profane language and depicting policemen raping the Statue of Liberty. + +The court declared that the “dissemination of ideas, no matter how offensive to good taste, on a state university campus may not be shut off in the name alone of ‘conventions of decency’.” In 1993, a federal appeals-court ruling applied this principle to overturn the punishment given to a fraternity at George Mason University for a racist, sexist “ugly woman” skit. It decided that the First Amendment generally protects even racist speech on college campuses. + +HANS BADER + +Senior attorney + +Competitive Enterprise Institute + +Washington, DC + +The First Amendment gives the right to the Westboro Baptist Church to say hateful things at the funerals of troops killed in action. And the Ku Klux Klan to rally in Atlanta. What is not protected is incitement to violence or threatening speech. + +PATRICK O’LEARY + +Wayne, Pennsylvania + + + + + +Faster is not better + +Envying South Korea’s 100 megabits per second (Mbps) internet connections when talking about the future of broadband in Britain is an irrelevant distraction (“Battle of the wires”, December 12th). There is no economic benefit to superfast broadband over a basic 10Mbps service. The only advantage is that a high-definition film can be downloaded in two minutes instead of 20. It is a luxury. + +But living in areas in Britain where the connection is slower than 5Mbps is, these days, like not having access to reliable running water. It makes people’s lives difficult and distorts the housing market, as no one wants a house with slow internet. Areas with broadband of 10Mbps or more should not be upgraded until everyone else has reached this basic level of service. Until then, the only decision to make is whether it would be better value for rural areas to leapfrog straight to fibre-to-the-home, or whether a cheaper fibre-copper hybrid would benefit more people more quickly. Only then can we truly reap the benefits of the information age. The movement of people into cities could reverse as people leave overcrowded and expensive cities to live and work in an interconnected countryside. + +KIERAN MADDEN + +Milton Keynes, Buckinghamshire + + + + + +History repeating + +* The great irony of the current occupation of the Malheur National Wildlife Refuge by Ammon Bundy and his supporters (“They the people”, January 9th), is that this is Northern Paiute Indian land. Not so long ago this land, about 1.7m acres of it, was called the Malheur Indian Reservation. The Paiutes had occupied the land since 1000AD, and were illegally removed from it in 1879 in a brutal forced march to Yakima, Washington. Scratch the surface of many land rights issues in the American West and you will uncover yet greater and older unresolved legal and ethical issues. One can easily speculate what would have happened had the Paiute Tribe decided to re-occupy the Malheur National Wildlife Refuge in the manner of its current occupiers. History is clear on that point. + +TED MONIAK + +St Louis, Missouri + + + + + +Food for thought + +* Your map of obesity (“Mapping obesity”, December 19th) shows a great irony in our financial access to healthy food. A large area of Lincolnshire and the Fenlands—where much of our five-a-day is actually grown—has some of the highest obesity levels in the country. This is probably due to low agricultural wages. Strange that we force the workers who produce our healthy produce to live on such low wages meaning that they can scarcely afford the good stuff. + +HILLARY SHAW + +Director and Senior Research Consultant + +Shaw Food Solutions + +Newport + +Shropshire + + + + + +Christians in Israel + +“And then there were none” (January 2nd) quoted a pastor in Bethlehem who claimed that the Israeli occupation “hurts Christians far more than persecution by Muslims”. Yet when the Palestinian Authority retained control of the area, thousands of Arab Christians applied for Israeli citizenship. When Israel pulled out of southern Lebanon in 2000 it granted refuge to Christian Maronites, saving them from Hizbullah militants. + +Some 160,000 Israelis are Christian. They live in a democratic country, free to worship as they please and with equal rights to non-Christian Israelis. Father Gabriel Naddaf, a prominent Christian Arab, encourages Christian youth to join the Israel Defence Forces. During the second intifada in 2002, Palestinian terrorists fired at Israeli troops from within Bethlehem’s Church of the Nativity. That same year, a Muslim mob attacked churches and Christian shops in Ramallah. + +There may be some Orthodox extremists in Israel who burn churches, but they are fewer in number than anti-Christian Palestinians. + +DMITRI SHUFUTINSKY + +Philadelphia + + + + + +Existence and being + +My one criticism of your essay on animal minds (“Animals think, therefore…”, December 19th) is that it did not mention the many new studies showing sentience and theory of mind in the animals whom we commonly consume—the chickens, pigs and cattle. We extend our wonder and interest to iconic wild species, but perhaps it requires more honesty and courage to admit that the steak or bacon on one’s plate comes from another sentient being. + +Charles Darwin was open to the emotional capacities of a vast range of creatures. Science is catching up. Let’s hope human interactions with domestic and farmed animals catch up too. + +JOYCE D’SILVA + +Ambassador for Compassion in World Farming + +Godalming, Surrey + +For several years the Nonhuman Rights Project has been bringing this new understanding of animals into the courtroom in its quest to win legal personhood and fundamental rights for chimpanzees, among other species. In most legal systems one can be either a “person” or a “thing”. Animals are considered to be things, but so have many humans in the past (slaves, women, children, indigenous peoples). On the other hand, entities such as corporations, religious idols and a river have been declared persons. + +The Nonhuman Rights Project does not demand human rights for animals. Rather, it wants chimpanzee rights for chimpanzees, orca rights for orcas, elephant rights for elephants. As we learn more about the cognitive capacities of animals, we cannot simply go on regarding them as mere “things”. To fail to grant them rights would disregard scientific reality and make a mockery of our evolving notions of justice. + +KEVIN SCHNEIDER + +STEVEN WISE + +Nonhuman Rights Project + +New York + + + +The impressive exploits of an African grey parrot named Alex, after the Avian Learning Experiment, are not unique. During my time on HMS Lancaster during the late 1990s, I became acquainted with a marvellously vocal African grey parrot called Jenny who lived in the officers’ mess. Trained by members of the crew over the years, her repertoire consisted mainly of foul-mouthed expletives and the opening bars of the theme from “The Great Escape”. Such was the concern over a visit by the queen that Jenny was strangely absent for the lunch. + +She was particularly fond of the dashing navigating officer. Sadly, the relationship came to a sticky end when Jenny made a dash for freedom and was promptly set upon by two of Portsmouth’s finest seagulls and ended up in the harbour, no doubt spluttering her last four-letter tirade. + +The navigator’s vain attempt to rescue her, the call out of the local search-and-rescue, the delay to the sailing of an aircraft-carrier, the headlines in a national tabloid newspaper and her replacement (Sunny), are another story. + +COMMANDER JEFF SHORT + +Muscat, Oman + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21688366-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Chinese politics: A crisis of faith + + + + + +Articles Sections Next + +Chinese politics + +A crisis of faith + +In their response to wobbly markets, China’s leaders reveal their fears + +Jan 16th 2016 | From the print edition + + + +THERE should be something comforting, during uncertain times, in the sight of the boss solidly seated behind his desk, working away at the business of the day. And that was the image China’s official state media presented when broadcasting Xi Jinping’s annual new-year message to the Chinese people on December 31st—though it has to be said, if that impressive expanse of wood really is the presidential desk, Mr Xi must find it hard to reach his impressively red but implausibly far-off telephones. + +From this confidence-inspiring position Mr Xi told his audience that 2016 was going to mark “the beginning of the decisive phase” of the country’s efforts to build a “moderately prosperous society”, a goal that the Communist Party says it hopes to reach by the end of the decade. Not mentioning that the economy’s rate of growth was at a quarter-century low, he maintained that the country’s future prospects were “encouraging”. + +Recent events, however, suggest that Mr Xi’s managerial confidence is not widely shared. Jitters emanating from China’s equity and currency markets have exposed widespread fears that the way ahead will be rocky indeed—and that Mr Xi and his colleagues are ill-equipped to navigate it. Evidence from their handling of a broad range of political and economic policy suggests that the worriers may prove right. + +Four days after Mr Xi’s broadcast, the Shanghai stockmarket reopened after a new-year break. With 90 minutes to go before the close of business, transactions were halted for the rest of the day: the index had fallen by 7% and a newly introduced “circuit-breaker” kicked in. The sell-off has deepened since then: the index is now down by about 15% so far in 2016, its worst-ever start to a new year. At the same time, China’s once-placid currency has turned stormy. The central bank believed it could nudge the yuan down, offering a little help to weary exporters without grave repercussions. Instead, it has triggered an exodus of capital and alarmed investors around the world, who braced themselves for bigger falls. As fears of a meltdown in China rippled across global markets, the government scrapped the ill-conceived circuit-breaker, and scrambled to shore up the yuan and the markets by telling its banks and brokers to buy. + +Panic about China’s ability to maintain steady growth is unwarranted. True, its debt is worrisome: government and private debt was about 160% of GDP eight years ago and now stands at more than 240% (about $25 trillion). But the government still expects the economy to grow by an average of 6.5% a year for the rest of the decade. That may be difficult, and it could entail a lot more wasteful investment. But it should be achievable. + + + +The problem is thus not an economic one, per se. It is that a government once widely thought of as all-powerful—even over markets—may be losing its grip. The recent ructions, after all, are not the first mess of this sort; the markets went haywire last August (see chart 1). China’s leaders are now grappling with hugely complex reforms of their financial system, their currency policy and of their state-owned enterprises and, apparently uncertain how to proceed, they are thrashing around and making mistakes. At home and abroad, people risk losing faith in them; such a loss would be felt well beyond the markets. + +Mr Xi and his colleagues appear frightened of losing their grip on the economic levers that they have used to help keep the party in power. Party bosses like state-owned banks: they can be relied on to direct lending to favoured companies and loyal officials’ projects. They worry about loosening the party’s grip on the state-owned industries that control vital areas of the economy such as energy, transport and telecommunications—can anyone but party loyalists be trusted to run them? + +If the party drags its feet on reform, though, China will fall back on unsustainable stimulus measures, and may eventually slide into economic stagnation, as Japan did in the 1990s. That would bring with it the risk of social and political turbulence. A full-blown economic crisis cannot be ruled out. Once admired by authoritarian governments elsewhere, not to mention some commentators in the West, for its canny balancing of free markets and party control, China’s style of leadership may be about to lose its shine. + +Though he may lack a sophisticated understanding of how to handle stockmarkets, Mr Xi was quick to grasp the dangers facing China when he took over in 2012. Some foreign commentators were still, even then, mesmerised by what they regarded as a winning combination of a technocratic government with a good sense of the country’s needs and how to fulfil them, and a disdain for the endless debates that can bog down good policy in democracies. But Mr Xi and his colleagues realised that the foundations of the model that the late Deng Xiaoping began to develop in the late 1970s, and that in the 1990s came into its own, was in need of an overhaul. + +Trouble at the top + + + +The model’s surge of success had been sustained by two forces: the rapid spread of prosperity and, since the bloody suppression of the Tiananmen Square protests in 1989, an unusually protracted truce among the often fractious party elite. Consistent growth underlay both, providing fabulous dividends for the elite as well as prosperity for hundreds of millions of people. But in 2012 China’s GDP was growing at its slowest pace in 13 years (see chart 2). To make matters worse, Mr Xi’s assumption of power occurred amid the most vicious struggle within the leadership that China had seen since Tiananmen. Not content with enriching his family to a phenomenal degree, Bo Xilai, the party boss of Chongqing, a south-western region, also made a bid for a job at the very top. Mr Xi resented this; other powerful politicians backed it. Mr Bo is now serving a life sentence for corruption and abuse of power. + + + +Although economic growth and peace at the pinnacle of the party kept the country stable, they did not keep it static. Under Mr Xi’s predecessor, Hu Jintao, the middle class grew phenomenally (see chart 3). And its desire for a stable environment in which to get ever better off was a vital bulwark of party rule. But some of its members were increasingly fed up with the party’s caprices and its manifest corruption. What was more, this middle class had a powerful new weapon: information. + +The rapid spread of the internet opened up a nationwide forum for dissent. Sina Weibo—China’s equivalent of Twitter—was founded just three years before Mr Xi took office; but by that time it had 46m daily users. Social media allowed the party to monitor public opinion and identify problems before they became threats to the party’s grip on power. But they also spurred the development of a civil society: NGOs, house churches and independent legal firms ready to take up the cases of the downtrodden and dispossessed in their battles with officialdom all made extensive use of social media. Groups independent of party control—albeit small and scattered—sprang up everywhere. + +Events abroad seemed to underscore the instability of authoritarian states. The Arab spring began unfolding in 2011, a year before Mr Xi took over, and though it hardly amounted to a democratic breakthrough—far from it—it showed that authoritarian governments could prove unexpectedly brittle. The police in China worked hard to prevent any copycat unrest. At the same time, the Tibetan plateau and Xinjiang, which cover about 40% of China’s land area, were seething with anti-party sentiment following the government’s ruthless response to unrest in 2008 and 2009. + +A demographic crisis was also beginning to loom. Plunging birth rates were stripping China of the surplus of working-age people that had constituted its “demographic dividend”: it was fast growing old. Young people were beginning to worry about a future weighed down by the burden of caring for the elderly—not to mention sky-high property prices and, among graduates, rising unemployment. To cap it all an environmental catastrophe was unfolding: the industrialisation that had brought growth was choking cities with smog; one-fifth of rivers were too toxic for human contact, let alone to drink from. Even party leaders had taken to describing China’s economic model as “unstable, unbalanced, unco-ordinated and ultimately unsustainable”. + +Faced with a need to reshape, or even fundamentally restructure, China’s economic and political model, Mr Xi has tried to present himself as a reformer in the mould of Deng Xiaoping. He has acquired more power than any leader since Deng, putting himself in charge of all the most important portfolios and abandoning the system of “collective leadership” Deng brought in. Indeed in many ways Mr Xi’s grip on the country’s mechanisms of control appears stronger than Deng’s was, and second only to that of Mao Zedong. + +Thus empowered Mr Xi talks of reform that goes yet further than Deng’s did—as when, in 2013, he asked a meeting of the party’s 370-member Central Committee to endorse his call for market forces to be given a “decisive” role in the economy. (It did.) Recently Mr Xi has taken to calling for “supply-side reform”, implying that structural changes in the economy, rather than massive state-led investment, are to be the new order of the day. The party’s main mouthpiece, the People’s Daily, calls these reforms the “China Model 2.0 Edition”. + +A crucial aim of this approach is to ensure that the middle class remains on side, even as what Mr Xi likes to call a “new normal” of slower growth sets in. Hence his signature exhortations to build the “Chinese dream”. It is an ambiguous term, partly designed to evoke thoughts of American-style middle-class prosperity, and of a life unfettered by interfering government. But the slogan was also designed to foster patriotic pride, including a “dream of a strong army”. Mr Xi’s revamped China model leans even more heavily on nationalism than earlier models did. + +Constitutionally inept + +Mr Xi’s style of rule, though, has proved an impediment to his ambitions. His anti-corruption campaign—the longest and most far-reaching of its kind since the party seized control in 1949—has been welcomed not just by the middle class but also among those less well off, who feel that China’s economic miracle has unfairly rewarded the powerful. But along with specific injunctions not to question party policy the anti-graft drive has made officials even more afraid than usual to take the risks needed to carry out reform. + +In the political realm Mr Xi talks of making the legal system fairer and more effective. Just a month after he took over, he took up a cause that had long been dear to liberal intellectuals: that of giving the constitution more clout. “No organisation or individual has the privilege to overstep the constitution and the law,” he said. He was trying to instil some discipline into the authoritarian model, reining in abuses of power and privilege within the party that had enraged the middle class and people aspiring to join it. + +Those who saw this as licence to push for deep reform, though, were quickly disabused. When a party-controlled newspaper in Guangdong province, Southern Weekend, tried to argue the case for constitutional government in an editorial titled “The Chinese Dream: A Dream of Constitutionalism”, the censors shut it down. Journalists at the paper went on strike; dissidents gathered outside its offices in Guangzhou. Tolerated for a couple of days, the sight of crowds on big-city streets listening to speeches calling for freedom of the press and even a multiparty system proved too much. The police rounded up the dissident orators. Late last year three of them were sentenced to terms of between two-and-a-half and six years in jail. The episode ushered in a crackdown on civil society of greater duration and intensity than any since the dark days that followed the Tiananmen protests. + +Mr Xi still talks up the constitution. At a meeting in 2014 the party’s Central Committee decided to make officials swear loyalty to it, ordered schools to teach students about it and decreed that December 4th would be celebrated henceforth as Constitution Day. But Mr Xi’s talk of constitutionalism rings hollow to liberals, just as his talk of reform fails to calm markets. And its impact within the party remains unclear. + +One way Mr Xi hopes to prolong the party’s life is by proving that it can govern effectively. His anti-corruption chief, Wang Qishan, raised eyebrows in September when he said that “the legitimacy of the ruling party” rested partly on “the mandate of the people”. It was the first public use of the word legitimacy by a Chinese leader in connection with the party’s rule, and seemed to imply a recognition that the party could not take it for granted. + + + +Mr Xi has built on a system, developed by his post-Deng predecessors, of grading officials according to their fulfilment of “responsibility targets”. In the past the targets that mattered most were those seen as maintaining social stability and promoting economic growth. Now the environment is getting a much higher billing. In 2012 the government made the reduction of PM2.5 air particles, the worst kind, a “hard target” in Beijing and other heavily polluted cities. State media have reported that the mayor of Beijing, Wang Anshun, has been ordered—metaphorically—to “submit his head” if he fails to meet this target. + +Sensing that China’s development has entered uncharted territory, China’s leaders are turning to foreign gurus. In November Mr Xi met Francis Fukuyama, an American political scientist whose claim to fame is a thesis that would seem to run against everything Mr Xi wants to protect: that the march to liberal democracy is an unstoppable one. Mr Fukuyama has tweaked this “end of history” line somewhat since first espousing it, emphasising that, even in the absence of democracy, a state’s ability to enforce laws and provide basic services such as education, health and infrastructure can matter a lot. + +Harder tasks + +Can Mr Xi’s model—with all the flaws in its implementation—continue to keep the end of the party’s history at bay? David Shambaugh of George Washington University, a career-long observer of China, was an early champion of the idea that the party had learned useful lessons from the collapse of the Soviet Union and changed its methods of ruling accordingly. It had, for example, allowed the development of NGOs that could help fill in the cracks of an overstretched welfare system. It had recruited more businesspeople into its ranks and experimented on a small scale with elections for party posts. + +But in a forthcoming book, Mr Shambaugh says he has changed his mind; he thinks the reforms of which he spoke have run their course and a new era of “hard authoritarianism” has begun. And he points out that there has been no example of an authoritarian country making the transition to high-income status that Mr Xi seeks without at least a partial democratisation. + +The 100th anniversary of the party’s founding will come in 2021, just before Mr Xi’s years in power are due, if he follows the example of his predecessors, to come to an end. If China’s reforms continue to disappoint over the next few years, it is unlikely to be the joyous celebration Mr Xi must be hoping for. Nationalist chest-thumping may help to rally some support for the party. But it comes with risks—China’s history since the 19th century is studded with examples of nationalist fervour turning against the government because of leaders’ perceived failings. + +Mr Xi may feel inclined to step up economic pressure on Taiwan, which is likely to elect an independence-leaning president on January 16th after eight years of rule by one who favoured closer ties with China. But there is little sign of public appetite for a return to the military tensions of the mid-1990s, when China lobbed unarmed missiles close to the island. + +There is every reason, therefore, for Mr Xi to worry. Job losses in manufacturing will stoke tensions among blue-collar workers, which is why the party has started rounding up labour activists (see article). The loyalty of the middle class, long accustomed to unremitting growth, will become increasingly difficult to secure as growth slackens further. Both the middle class and the equally large cohort of rural migrants that dreams of joining it are vital to the country’s economic success, and both are capable of mobilising regime-threatening opposition. Mr Xi talks a good reform, but has yet to follow through, and has shown that his preferred way of dealing with any threat is to resort to time-honoured tactics of cracking down ever harder. Chinese authoritarianism has been at times surprisingly deft. Just now, it does not look so. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21688399-their-response-wobbly-markets-chinas-leaders-reveal-their-fears-crisis-faith/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Barack Obama: A voice in the wilderness + +Vice-presidential contenders: Haley’s comet + +New York’s grands projets: Thinking big + +The Supreme Court: Labour pains + +Detroit’s public schools: Of rats and debts + +Subsidising NFL teams: Sacking the taxpayer + +Lexington: The centre cannot hold + + + + + +Articles Sections Next + +Barack Obama + +A voice in the wilderness + +The president’s final state-of-the-union showed his virtues and his weakness + +Jan 16th 2016 | WASHINGTON, DC | From the print edition + + + +TO HEAR most of the contenders for this year’s presidential election tell it, America is in a horrible state. Republicans both mainstream and whacko, from Jeb Bush to Donald Trump, describe a country enfeebled militarily, ailing economically and culturally corrupted by seven years of Democratic rule; on the left, Bernie Sanders describes an economy rigged against ordinary Americans. In his last state-of-the-union message to Congress on January 12th, Barack Obama delivered a rebuke to that miserabilism—and to the ugly nativism it is fuelling among voters. + +During his first presidential campaign, Mr Obama promised Americans a lot of change they would like. In what is likely to be his last major speech before the process of electing his successor begins in Iowa on February 1st, he talked more of the historic change globalisation is making, to the workplace, pay packets and complexion of American society, in turn creating much of the anxiety and resentment his would-be successors are pandering to. “It’s change that promises amazing medical breakthroughs, but also economic disruptions that strain working families,” he said. “It promises education for girls in the most remote villages, but also connects terrorists plotting an ocean away.” + +It is not certain that America will master the turbulence. “Progress is not inevitable,” he warned, disabusing those conservative critics who accuse him of holding a Pollyanna-ish view of history. “It’s the result of choices we make together. And we face such choices right now. Will we respond to the changes of our time with fear, turning inward as a nation…? Or will we face the future with confidence in who we are, in what we stand for?” + +This was genre-busting stuff. The annual presidential address to Congress is traditionally a wishlist of legislative business for the coming year, with, in the final year of a presidency, an additional trumpeting of the incumbent’s record. Mr Obama’s speech contained some of that. He exhorted Congress to approve the recently concluded Pacific trade agreement, pass legislation to authorise the ongoing American operations in Syria and Iraq and work on criminal-justice reform, one of the few remaining causes that has bipartisan support. He also noted many of his achievements; in presiding over impressive job creation, health-care reform and America’s first national effort at mitigating carbon emissions, for example. Yet the main thrust of his speech was in a way more audacious: an effort to stake out, ahead of Iowa, the ground for legitimate debate in a civilised society. + +America has not, Mr Obama ventured to suggest, gone to the dogs. Its economy is the envy of the world. Its armed forces are unrivalled. So is its global leadership. “When it comes to every important international issue, people of the world do not look to Beijing or Moscow to lead—they call us.” On that basis alone, anyone promising extreme solutions to America’s problems should be mistrusted. And where they threaten the principles of fairness and rule of law, the basis of America’s strength, they must be disdained. “We need to reject any politics that targets people because of race or religion,” said Mr Obama, in a nod to Mr Trump’s promise of mass deportations and a blockade of Muslims. “This isn’t a matter of political correctness. It’s a matter of understanding just what it is that makes us strong.” + +The job of politics is to settle finer debates, about the role of the state in apportioning wealth (“The American people have a choice to make”) and the exercise of America’s undimmed power. It was in this didactic spirit that Mr Obama defended his record. On the state, he argued that it was reasonable to worry about overburdening business with regulation, but illogical to reduce welfare payments, as most Republicans want, at a time of wage stagnation and rising insecurity for millions of workers. On national security, he protested, in a tacit response to his many critics, that escalating the wars in which America is already embroiled will not make it safer; “That’s not leadership; that’s a recipe for quagmire…It’s the lesson of Vietnam; it’s the lesson of Iraq.” + + + +Stats of the Union: An interactive guide to the United States + +This was vintage Obama, disdainful of the tribal emotions that have subsumed American politics, cerebral, unrelentingly reasonable. No doubt, it reminded many of his critics, who represent around half of Americans, why they abhor him. Mr Obama said the one big regret of his presidency was that partisan divisions had got worse during the course of it; but America is in no mood for healing. Sitting behind Mr Obama, Paul Ryan, the Republican Speaker of the House of Representatives, wore the impassive expression of a man who dared show no flicker of approval for a president his party despises—even when Mr Obama denounced the business-throttling red tape it should hate even more. When Mr Obama claimed that America was not enfeebled militarily, many Republican congressmen emitted a scandalised gasp. Yet mainstream Republicans candidates such as Chris Christie and Mr Bush, none of whom has denounced Mr Trump’s vile politics half as effectively as Mr Obama, must quietly hope Republican voters imbibe his moral lesson, and reject the rabble-rousers. While he himself must pray that Democratic voters, 30-40% of whom are currently tempted to vote for Mr Sanders, will instead rally to Hillary Clinton who, because more electable, is much likelier to protect his legacy. + +That, in turn, points to Mr Obama’s weakness, the other political context in which he spoke. The president’s decision not to recite the customary legislative to-do list—as notable by its absence as the victims of gun violence symbolised by a seat left empty next to Michelle Obama—was partly enforced. After a burst of bipartisan co-operation last year, including the overdue passage of a federal budget, he can expect little additional help from Congress. Whatever extra measures he hopes to burnish his record with, for example, to equalise pay between the sexes or increase the modicum of gun control he attempted this month, will probably have to be enacted by executive decree. + +Wite-Out and the White House + +So were many of his existing achievements, including changes to how laws on immigration are enforced. Although Mr Obama has not used his presidential powers half as profligately as his critics claim—his immediate predecessors, George W. Bush and Bill Clinton, both issued many more orders—his inability to get much legislation passed since the Democrats lost control of the House in 2010 has made his record unusually dependent on them. And given that most Republicans candidates vow to erase many of those orders, his legacy is one bad election result away from looking rather thin. + +In his peroration, Mr Obama alluded to that frailty. In the absence of much enthusiasm for electoral reform in Congress, he promised to “travel the country” making his case for it. That desirable change, which he himself once promised to bring about, “will only happen when the American people demand it”, he concluded. As so often, he is right and admirable in his diagnosis. Still, it is hard not to be dismayed by the image he left hanging in the divided House, of the president, once the change politician, reduced to wandering America like a mendicant preacher, appealing forlornly to its better nature. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21688406-presidents-final-state-union-showed-his-virtues-and-his-weakness-voice/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Vice-presidential contenders + +Haley’s comet + +The governor of South Carolina auditions for the Republican ticket + +Jan 16th 2016 | ATLANTA | From the print edition + + + +THE most instructive part of Nikki Haley’s memoir, “Can’t is Not an Option”—beyond the fact of its publication, a tell-tale sign of national ambitions—is not the oft-cited anecdote about a beauty pageant in Bamberg, South Carolina: Mrs Haley and her sister, the daughters of Indian immigrants, confounded the judges’ plan to pick black and white winners, and were disqualified. It is rather the passage about how she kept the books of her mother’s shop from the age of 12. Like Margaret Thatcher, another shopkeeper’s daughter and an acknowledged influence, Mrs Haley’s upbringing bequeathed an extreme watchfulness about overheads and a sharp aversion to government intrusion. + +Those instincts—developed, in Mrs Haley’s case, on the shop floor rather than in a think-tank or boardroom—have guided her stint as governor of South Carolina, in which recruiting jobs and businesses has been her main preoccupation. Debt and spending, taxes and big government, duly featured as villains in her response to Barack Obama on behalf of the Republicans on January 12th. But she alluded, too, to the racist massacre at a church in Charleston last June, in which nine people were killed. Though she modestly omitted her own role, Mrs Haley’s subsequent leadership led to the lowering of the Confederate flag in the statehouse grounds, a gesture that was emulated across the South. In a different sort of compromise, she acknowledged in her speech that Republicans shared the blame for America’s political dysfunction. + +That combination—fiscal ferocity and a capacity for conciliation—has led to chatter, now intensifying, about Mrs Haley as a contender for vice-president. Then there is the potential of her biography. She is South Carolina’s first female governor, and first from an ethnic minority; five years into her tenure, she is still the country’s youngest (she will be 44 on January 20th). If the Democrats plump for Hillary Clinton, Mrs Haley could attack her in ways that might seem ungallant for a male nominee. She might help salve the rebarbative xenophobia of the Republican primary. + +To her opponents at home, all this is somewhat ironic. Her burgeoning reputation for sensitivity would be better deserved, they say, if she had aided struggling South Carolinians by expanding her state’s Medicaid coverage under Obamacare (a programme she dutifully whacked this week). Hers is plainly the sort of up-by-the-bootstraps immigrant story that leaves little patience for special pleading: her family’s mantra was “Deal with it”. But another way of putting that is that Mrs Haley is, at heart, an orthodox, even hardline, Republican. For example, like many Republican governors, she has resisted the resettlement of Syrian refugees in her state. She once posted a snap of the Beretta she got for Christmas on Facebook. + +Indeed for someone who, by her own account, was unsure which party to represent when she first stood for political office, she picked up the art of positioning quickly. In 2010, when she first ran for governor, she saw off three better-known rivals with the backing of the then-surging Tea Party, which liked her excoriations of some pork-happy Republicans as insufficiently conservative. Mitt Romney supported her, as, in her most prized endorsement, did Sarah Palin. So did the outgoing governor, Mark Sanford, then mired in the scandal that introduced “hiking the Appalachians” to the lexicon of political euphemism; Mrs Haley herself faced down unsubstantiated allegations of adultery, plus innuendos about her religion (she grew up Sikh but converted to Christianity). + +The Tea Party connection points to a potential weakness: an outlook that, beneath the patina of tolerance, can seem both doctrinaire and parochial. Her views on international issues are less assured than those on business taxes. She is a formidable campaigner, but her toughest fights have been against members of her own party: hers is a state in which, for would-be governors, the main challenge is the Republican primary, rather than, as in a presidential contest, persuading waverers. + +The Hippocratic oaf + +If Donald Trump is the nominee—which the primary in South Carolina on February 20th will help to determine—he is unlikely to choose Mrs Haley. She previously called his plan to keep out Muslims “absolutely un-American”; her speech this week, with its plea for resistance to “the angriest voices”, was a response to him as well as to Mr Obama. It is hard to see Ted Cruz enlisting her, either. But another nominee would probably not be deterred by her limitations, since most voters, when they tune in, would register the basics of Mrs Haley’s background, her graceful handling of the flag issue, and little else. + +For the requirements of a presidential running-mate are rudimentary. Ideally he or she might capture a constituency, demographic or geographical, which the candidate struggles to reach. But that is only an aspiration—Paul Ryan failed to deliver Wisconsin for Mr Romney in 2012—and the main task is a simpler, Hippocratic one: not to damage the campaign, as, four years earlier, Mrs Palin’s gaffes hurt John McCain’s. Mrs Haley did no harm this week, certainly not to her own prospects—unlike, say, Bobby Jindal, the former governor of Louisiana and once the country’s most starry Indian-American politician, who botched the same job in 2009. Except among those Republicans for whom any hint of moderation is anathema, her turn was widely applauded. On this evidence, voters would not recoil at the idea of her sitting a missed heartbeat from the Oval Office. + +Even Mrs Haley’s critics concede that she has grown into her governorship, performing robustly during South Carolina’s recent floods. But they complain that she is more opportunistic than decisive. She tolerated the Confederate flag for years, they say, while others agitated for its removal; her vaunted record of job-creation owes as much to the wider economic recovery as to her leadership. Likewise her name might not be touted for the ticket were it not for the complexion of the race. On the other hand, in politics, seizing your moment is more a talent than a form of cynicism. Timing, after all, is everything. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21688410-governor-south-carolina-auditions-republican-ticket-haleys-comet/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +New York’s grands projets + +Thinking big + +New York’s governor has imperious plans for his state + +Jan 16th 2016 | NEW YORK | From the print edition + + + +IT WAS demolished more than 50 years ago, but New Yorkers still miss the old Penn Station. The beaux-arts style building boasted vaulted glass windows 46 metres high and a waiting room inspired by the Roman Baths of Caracalla. It was replaced by a soulless high-rise and Madison Square Garden, a sports arena and theatre neither square nor verdant. Since then commuters from Long Island and New Jersey and passengers using Amtrak’s regional rail lines have had to navigate an outdated, cramped, subterranean labyrinth. Now Andrew Cuomo, New York’s governor, has a plan to give America’s busiest transit hub a belated makeover. + +The $3 billion scheme builds on one first proposed by Daniel Patrick Moynihan, a senator who died in 2003. It involves moving Amtrak across the road to a near empty, but very grand, post office. The two buildings would be connected underground. Penn station’s 650,000 daily passengers would enjoy decreased congestion, increased train capacity and natural light. Mr Cuomo says most of the work for the new “Empire Station” would be paid for by private developers. + +The expanded station is one of more than a dozen proposals Mr Cuomo announced in the run-up to his combined State of the State and budget address on January 13th. They ranged from the badly needed (a new line for the Long Island Railroad) to the fanciful (a tunnel under the Long Island Sound connecting New York to Connecticut). They also include redesigning 30 subway stations, a $1 billion expansion of Manhattan’s Javits convention centre and upgrades on buses and trains. The governor intends to revitalise several airports as well as investing $22 billion in bridges and roads upstate. He has pledged $5 billion toward a new train tunnel under the Hudson River, the first new rail tunnel connecting New York and New Jersey in a century. Altogether the plans will cost around $100 billion. + +“It was Christmas in January,” says Doug Muzzio, a political scientist at Baruch College. Mr Cuomo is yet to specify where all the money will come from, but if that small detail is settled the plans would amount to the biggest statewide investment in infrastructure in decades. Tom Wright of the Regional Plan Association, a think-tank, reckons that, while not all the ideas are good, it is both novel and welcome to have a governor planning on this scale. Since Nelson Rockefeller, who began the original World Trade Centre in the 1960s, New York’s governors have largely been timid developers. Before then, New York had a long history of thinking big and building for the future (see table). Manhattan’s street grid was designed for 1m people at a time when the population barely topped 100,000. The subway began operating a century ago when much of the city was still farmland. More recently, Michael Bloomberg, a former mayor, introduced PlaNYC, a 25-year blueprint for enlarging the city, in 2007. Under his watch, more than a third of the city was rezoned (ie, reallocated for alternative uses). + + + +Constructive one-upmanship: The tallest skyscrapers in each year since 1885 + +The infrastructure plan comes at a time when only half of voters view Mr Cuomo favourably. He has been in a public fight with Bill de Blasio, New York’s mayor, for months. He was under federal investigation for over a year. Mr Cuomo had set up an anti-corruption panel staffed by prosecutors that was supposed to look into the abuse of expense accounts by local politicians. Before this body had done its work, Mr Cuomo shut it down, a move that attracted the interest of the feds. On January 11th Preet Bharara, New York’s federal attorney, announced that he would not be prosecuting the governor. + +Mr Cuomo wants to leave a lasting impression, says Nicole Gelinas of the Manhattan Institute, a think-tank, “but there’s a danger in announcing too many things at once.” The splurge could raise construction costs and mean skimping on maintenance. Existing projects, such as the Second Avenue subway line need funding; the replacement for the Tappan Zee Bridge is not yet complete. Mr Cuomo has lately taken to invoking the spirit of Robert Moses, a planner who both shaped and scarred 20th-century New York. One of Moses’s talents was an ability to find money for his schemes. Mr Cuomo needs some of that. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21688411-new-yorks-governor-has-imperious-plans-his-state-thinking-big/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Supreme Court + +Labour pains + +The justices are poised to deliver a blow to public-sector unions + +Jan 16th 2016 | WASHINGTON, DC | From the print edition + + + +THE labour movement in America has seen better days. In the 1960s, about a third of American workers were union members. Today, with “right-to-work” laws in place in 25 states, the figure hovers at 10%. In June, when the Supreme Court issues a decision in Friedrichs v California Teachers Association, the decline may well accelerate. Rebecca Friedrichs, a public-school teacher in California who left a union she disagreed with, is challenging a rule that says non-members must pay “fair-share fees” to cover the costs of collective bargaining. It violates the First Amendment right to freedom of speech, she and nine other teachers say, to be forced to subsidise an organisation whose politics they reject. Since unions form an important part of the Democratic coalition, the ruling will resonate beyond the world of union members and their bosses. + +In 1977, in Abood v Detroit Board of Education, the court ruled that while unions could not charge non-members for political activities, states could allow unions to collect compulsory fees to support negotiations over workplace matters like wages and benefits. In oral arguments on January 11th Michael Carvin, the plaintiffs’ lawyer, argued that negotiating teachers’ contracts is an essentially political endeavour, because they involve controversial questions of “public concern”. The fair-share or “agency fee” model forces his clients to espouse an “ideological viewpoint which they oppose”, and violates “basic speech and association rights”. + +The tenor of the hearing suggested that a majority of the justices are keen to abandon Abood and end the mandatory fees—freeing Ms Friedrichs and millions of public-sector workers from the duty of writing cheques to the unions who negotiate on their behalf. Justice Samuel Alito sent strong hints of this willingness in two recent cases, calling Abood “something of an anomaly” in 2012. This view earned the apparent endorsement of Justice Anthony Kennedy, who noted that, under the current regime, teachers who oppose seniority-based salaries must nevertheless fund a union’s “public-relations campaign to protest merit pay”. It “makes no sense”, Justice Kennedy complained, to tell teachers who “strongly, strongly disagree with the union position on teacher tenure, on merit pay, on merit promotion, on classroom size” that they must pay to support those positions but are otherwise “free to go out and argue against” them. + +The defence of Abood by the court’s left wing had the ring of a somewhat desperate rearguard action. Justice Stephen Breyer suggested that the plaintiff’s complaint is “pretty far removed from the heart of the First Amendment”, since employees “can say what they want” outside the bargaining room. For Justice Elena Kagan, the disgruntled teachers have a “heavy burden” in “ask[ing] us to overrule a decision” as “there are tens of thousands of contracts with these [agency-fee] provisions” affecting “millions of employees”. Justice Breyer wondered “what happens to the country thinking of us as a kind of stability” if the court votes to “overrule a compromise that was worked out over 40 years”. + +That point may have been designed to appeal to Chief Justice John Roberts who, according to Elizabeth Wydra of the Constitutional Accountability Centre, “cares about the public’s perception of the court and does not want it to be seen as an institution easily swayed by changing political winds”. But if Mr Roberts is to be the fifth vote to save agency fees, he masked that well. Allocations to public education always compete with other budget areas such as “public housing [and] welfare benefits”, he said. “It’s all money.” + +What would happen if agency fees disappear? The unions, along with a host of agency-shop states, including California, argue that their membership rolls would thin and finances would wither. This is not necessarily the case: several European countries with higher rates of union membership than America do not allow unions to compel non-members to pay dues. Even if the ruling against California Teachers did accelerate the decline of unions, that would not necessarily be bad for Democrats. Unions can exercise a disproportionate influence on candidate selection, particularly in House and statehouse races. A party in which they had less influence might succeed in adopting more popular positions on subjects like merit pay and charter schools. In the long run, those alarming right-wing justices may just end up doing the left a favour. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21688405-justices-are-poised-deliver-blow-public-sector-unions-labour-pains/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Detroit’s public schools + +Of rats and debts + +The school system needs bailing out + +Jan 16th 2016 | LANSING, MICHIGAN | From the print edition + +School-free drug zone + +SOME schools have black mould creeping up the walls; at others, mushrooms sprout from them. At Palmer Park Preparatory Academy, pieces of the ceiling are falling on pupils’ heads while rats run around. Jerry L. White Centre High School has no heating. Western International High School does not have enough books for its pupils, who are crammed into classes of up to 45 children. One reason for this is that of the $7,450-per-pupil grant the school district will receive this year, $4,400 will be spent on debt servicing and benefits for retired teachers, according to the Citizens Research Council, a Michigan think-tank. + +Listening to the complaints of Detroit’s public-school teachers, it is hard not have some sympathy for those who staged a “sickout” (calling in sick) on January 11th, closing 64 schools. Galvanised by the teachers’ strike, Mike Duggan, the mayor of Detroit, visited some public schools and admitted that he was disturbed by what he saw in some of them, which included four-year olds sitting in their coats in a classroom because it was so cold. Mr Duggan implored lawmakers in Lansing, Michigan’s state capital, to do something. + +Michigan is different from other states, such as neighbouring Illinois, where the largest single source of funding is local property taxes. Since 1994 it has funded its state schools mainly through state sales and income taxes. This gives the state a big say on how schools are run. Detroit’s public schools have been on life-support since 2009, when the state appointed the first of four emergency managers. The latest one, Darnell Earley, is now battling with a Detroit Public Schools (DPS) debt of over $3.5 billion, which includes nearly $1.9 billion in employee legacy costs (such as unfunded pension liabilities) and cash-flow borrowing, as well as $1.7 billion in multi-year bonds and state loans. For the fourth time since 2009, the DPS last year ranked last among big cities for fourth- and eighth-graders (children aged 8-9 and 13-14) in the National Assessment of Educational Progress, a school-evaluation programme mandated by Congress. + + + +The school system has been haemorrhaging pupils at an alarming rate. Pupil numbers fell from 141,000 in 2005 to 46,000 this year. Many of them have moved to charter schools: the majority of Detroit’s schoolchildren now attend state-funded but privately managed charter schools. With its students leaving in droves, the DPS cut staff from 15,700 in 2005 to 6,000 last year and closed scores of schools. But the system’s fixed costs remain high because of its former size. With its monthly debt-service payments about to jump by millions, Michelle Zdrodowski of the DPS recently warned that the system will run out of cash in April. + +Lawmakers in Lansing have failed to agree on a rescue plan. Governor Rick Snyder, a Republican, has a draft bill that would create a debt-free DPS, run by a board appointed mainly by him, and a shell that assumes the debt. He also wants to shut down poorly performing charter and traditional schools. His plan has not been popular with bail-out-weary lawmakers, as it would come at a cost of at least $715m. And the governor’s fellow Republicans in Lansing are not keen on his plans to mess with charter schools. Michigan’s constitution proclaims primary and high-school education to be a right: 50,000 children are about to find out what that actually means. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21688413-school-system-needs-bailing-out-rats-and-debts/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Subsidising NFL teams + +Sacking the taxpayer + +The Rams’ move to Los Angeles does not mean the boondoggle is over + +Jan 16th 2016 | NEW YORK | From the print edition + + + +LOS ANGELES is by far the biggest market missing a team from one of America’s three major sports: football, baseball and basketball (see chart). Having gone 21 years without a National Football League (NFL) team, it has suddenly been graced with three suitors: the St Louis Rams, the San Diego Chargers and the Oakland Raiders, though it will have to settle for just two. The Rams and Raiders used to call it home, but left in 1995 when the cities of St Louis and Oakland offered them taxpayer money to help cover their stadium costs, an act of generosity they must now be regretting. On January 12th the NFL announced that the first team headed for Los Angeles would be the St Louis Rams. + +According to The Tax Payers Protection Alliance, an NGO, 29 out of 31 NFL stadiums have received public subsidies to help cover construction and renovation costs since 1995. NFL teams argue that this is justified because their presence drives consumer spending, but the academic literature says otherwise: economists argue that in the absence of sports teams, consumers would simply spend their money on other forms of entertainment. Any public subsidies for football stadiums are effectively transfers of wealth from taxpayers to NFL owners and athletes. Professional football teams don’t need the help: according to Forbes, a magazine, the average NFL team makes $76m a year in profit, with a very healthy 22% operating margin. + +One tactic commonly used by NFL owners to extort local governments is threatening to move to another city. That a city as desirable Los Angeles was without a football team made the threats all the more credible. One team, the Minnesota Vikings, managed to extract $500m of taxpayer money to build a new stadium based in part on such methods. Because the NFL has a fixed number of teams, cities wishing to serve as hosts have had to bend over backwards to accommodate them. + +That was certainly the case with the city of St Louis, which tried to entice the Rams to stay by offering $477m of public money towards building a new stadium. What was different this time around was that the Rams never had any intention of staying. Stan Kroenke, the Rams’ owner, has made far more ambitious plans, purchasing 300 acres of land in Los Angeles. In addition to a new football stadium, Mr Kroenke also plans to build a hotel, housing, retail and office spaces, all without taking public money. + +The Rams’ privately funded move to Los Angeles is a positive sign for those worried about wasteful public spending, and certainly reduces the amount of leverage that NFL owners will have over city governments in future. It does not, however, signal an end to the ruse. Neil deMause, co-author of “Field of Schemes”, notes that large, rich markets like Los Angeles are few in number. Smaller cities have less leverage. Assuming the Chargers decide to join the Rams in Los Angeles, the Raiders will be left in the lurch. Will they move to another city like San Antonio, or will they shake down Oakland city government? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21688415-rams-move-los-angeles-does-not-mean-boondoggle-over-sacking-taxpayer/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +The centre cannot hold + +Two moderate members of Congress explain why they are leaving + +Jan 16th 2016 | From the print edition + + + +MOST Americans do not hate government. Nor do they trust it to reverse all misfortunes. Instead, suggests Richard Hanna, a centrist Republican in the House of Representatives, they want government to be like their plumber. “They just want the damn toilet to flush. You know: ‘I don’t want to marry you, I don’t want to see you, I just want your bill and then go home’.” + +Congressman Hanna’s pragmatism is a good fit for his district, an unflashy swathe of upstate New York, best known for factories that make Remington guns and Chobani yogurts, and which has split its votes 49-49% between the two main parties in recent presidential elections. A successful builder before his election to Congress in 2010, Mr Hanna worries about the national debt and the over-regulation of business. He likes the Republican focus on personal responsibility (Democrats are all about victimhood, he grumbles). But he is not anti-government. Unlike many party colleagues, he supports federal investment in crumbling roads and bridges, expanded early-childhood education for the poor and policies to tackle climate change. In 2015 he was one of just three House Republicans to defend federal funding for Planned Parenthood, a health-care organisation that offers abortions. He backs gay marriage: a Catholic of Lebanese descent, he cites Jefferson’s tolerance of moral and religious beliefs that “neither pick my pocket nor break my leg”. + +Trumpeting his willingness to work across party lines (“Compromise is not treason,” he likes to say), Mr Hanna won re-election rather handily in 2012. He looked so safe in the 2014 general election that Democrats did not run a candidate. Yet this year he will retire from Congress. His reasons are partly personal: he is about to turn 65 and has two young children. Mostly, he is discouraged by how little his centrist voice counts in Congress—not least because his party has moved “far to the right”. + +Musing in his Capitol Hill office—a fridge of Chobani samples humming in one corner—Mr Hanna blames several forces. First, gerrymandering: the drawing of district boundaries by both parties to create a House in which more than nine in ten members glide to re-election. Then comes such technology as micro-targeting, giving campaigns the ability “to reach into everybody’s mind and figure out exactly what it takes to get them down to the polls”—rather than craft policies with broad appeal. Lastly comes “crazy” campaign spending, notably by anonymously funded outside groups that “carpet bomb” candidates with attack ads. + +Mr Hanna is not, as it happens, a martyr to this system. In 2014 he beat off a primary challenge by a Tea Party hardliner with the help of a gay-rights group that spent hundreds of thousands of dollars on his race. Throwing fairness to the winds, that group, American Unity PAC, ran ads falsely calling Mr Hanna’s rival a high-tax lefty. It worked, even after conservative talk-radio stars endorsed Mr Hanna’s challenger: the congressman narrowly won a primary in which just 30,000 party loyalists voted. + +Nonetheless, Mr Hanna regrets what the system has wrought. Too many Republicans and Democrats have safe seats, so fear only primary contests, in which activists select party candidates for the general election. And with deep-pocketed ideologues on the loose, he charges: “Local communities don’t elect their representatives sometimes. These outside groups come in and do it.” + +Though Mr Hanna is not a big fish, his decision set off ripples. On January 5th a centrist Democrat, Steve Israel, announced that he is retiring after eight terms representing a district stretching from the New York borough of Queens to affluent suburbs on Long Island. Mr Israel caused a splash: he is a former chairman of the Democratic Congressional Campaign Committee, overseeing House races nationwide. Mr Israel says he is leaving to write novels—he earned acclaim for his first book, “The Global War on Morris”, a satire in which Morris Feldstein, a timid Long Island nebbish, is mistaken for a terrorist. But he admits to frustration at the “relentless grind” of fundraising, and a lack of colleagues open to cross-party deals. In that, he was influenced by the departure of Mr Hanna, “one of the last moderate Republicans”. + +The flight from the District + +Like Mr Hanna, Mr Israel sees a system that disenfranchises the moderate middle. He calls money “corrosive” to democracy. He is good at fundraising, collecting nearly $20m for Democrats over the years. He spent thousands of hours dialling for dollars from stuffy cubicles a few blocks from Congress (federal property may not be used for fundraising), working from call-sheets with personal details about his prey: past donations, their spouses’ names, or where he last met them. A single House race may now easily cost $1.5m. The effects are straightforward: politicians must devote time and access to special interest groups, donors and lobbyists when they should be serving constituents. + +Gerrymandering is not inevitable. Mr Israel notes that his state has many swing districts after non-partisan maps were imposed on New York by a court in 2012. The old campaign chief adds a partisan point about unintended consequences. Once a decade state legislatures redraw most congressional districts. Republicans set out to control that process in 2010. It was a plan they carried out “almost to perfection”, he concedes. But he argues that Republican success has come to haunt them, as incumbents in super-safe seats spend time warding off primary challenges from the right, with policies that he calls “largely irrelevant to swing voters”. Lurking within his partisan jibe is a nugget of wisdom for both parties. Lots of Americans worry more about paying bills and their children’s futures than ideological purity. Parties can grow by wooing them. + +Congress used to be full of members like Mr Hanna and Mr Israel: moderates who reflected the middle-class, middle-of-the-road districts that elected them. They are an endangered species, and worth heeding. Congress will not be saved without them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21688393-two-moderate-members-congress-explain-why-they-are-leaving-centre-cannot-hold/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Cuban migrants: The last wave + +Crime in Mexico: From Penn to pen + + + + + +Articles Sections Next + +Cuban migrants + +The last wave + +The urge to leave is strong, but the opportunity is diminishing + +Jan 16th 2016 | HAVANA AND LA GARITA, COSTA RICA | From the print edition + + + +“HE’S probably the youngest Cuban in Costa Rica,” reckons Elisabet, as her son nuzzles close for an afternoon feed. With some 8,000 Cubans in the country, many camped near the border with Nicaragua, that would be quite a distinction. She and her husband are typical of the throng. They flew from Havana to Quito in February 2015 when she was six months pregnant. When their son was strong enough, they journeyed north by bus, lorry and boat. Nicaragua, a friend of Cuba’s communist government, blocked their further progress. Now Elisabet, who would not give her surname, waits with about 100 compatriots in the village of La Garita—watched over by three laid-back policemen and a couple of horses—for news of how and when they can resume their journey to the United States. + +It should not be much longer. On January 12th 180 Cubans were flown from Liberia in northern Costa Rica to San Salvador, the capital of El Salvador. They are to proceed by bus to Mexico, and thence to the United States (see map). This disjointed itinerary is the result of an agreement among several Central American countries and Mexico to allow the migrants through while discouraging new arrivals. + + + +If the first trip goes well, the rest of the Cubans in Costa Rica will be airlifted out. A similar arrangement may be made for about 1,000 stuck in Panama after Costa Rica shut its southern border in December. Future arrivals will get no such help, say the countries involved. + +The journey of Elisabet and her fellow migrants is the latest in a series of exoduses that began with the Cuban revolution in 1959. More than 43,000 made it to the United States in the year to September 2015, a rise of 80% over the previous 12 months. The latest wave could be the last big one. + +Two forces propel them. The first is Cuba’s well-known deficit of prosperity and freedom, which in some ways is getting worse. Most Cuban workers are still employed by the government, which pays an average salary of about $30 a month. Even with nearly-free housing, education and health care, “el salario no alcanza” (the pay’s not enough), Cubans are wont to say. The libreta (ration book) once gave families access to enough food, drink and tobacco; now it covers less than a quarter of their basic needs. In a lucky month a sliver of chicken or fish may appear in the bodegas where the ration books are accepted. In December Raúl Castro, Cuba’s president, gave a speech warning Cubans to brace for more hardship in 2016. + +Cuba’s modest economic liberalisation and the unfreezing of relations with the United States since December 2014 have provided some with the wherewithal to leave. The government recently allowed citizens to sell their homes, enabling some to pay the $7,000 or so needed for tickets, bribes and transport to the United States. Others have money from American families and friends. Such high costs mean that most of the recent migrants are better off than average. An exodus of doctors prompted the government in December to reimpose a requirement that they ask for permission to leave the country. + +The second push factor is the fear that, as relations improve with the United States, the American welcome to émigrés will cool. The Cuban Adjustment Act of 1966 gives Cubans a one-year route to residency in the United States. Many have taken up the offer. In 1980 125,000 Cubans joined the mass evacuation known as the Mariel boatlift, after the harbour where the voyages started. A later agreement with the Cuban government introduced the “wet foot/dry foot” policy, under which Cubans reaching American soil may stay, but those picked up at sea are sent back. + +The Cubans parked on the Nicaraguan border fear that door may soon close. With reason. The American government has no plans to change the policy. But, points out Marc Rosenblum of the Migration Policy Institute, a think-tank, attitudes are hardening. Cubans who came in earlier waves were seen as refugees from tyranny. Newcomers flourishing Green Cards travel back and forth between the two countries, taking advantage of looser restrictions on travel introduced by Barack Obama. The contrast with the rejection of migrants from countries such as Honduras and El Salvador, who are fleeing appalling crime and poverty, is becoming harder to defend. + +Cuba’s neighbours are slamming their doors. In December Ecuador, bowing to pressure from Cuba’s government, imposed a visa requirement on Cubans, in effect closing off the most popular route to the United States. The decision triggered rare protests by hundreds of Cubans near the Ecuadorean embassy in Havana. Costa Rica cracked down on people-smugglers in November; Nicaragua repelled border-crossers with truncheons and tear gas. + +The airlift to San Salvador is supposed to clear out the last group of migrants, not encourage new ones. The $555 they will have to pay the company arranging the trip would cover the cost of plane tickets directly to the United States. But no country wants to make things easy for people passing through their territories without valid visas. Those who cannot afford the fare say they expect help. Costa Rica’s foreign ministry has said their poverty will not be an obstacle, but warns that it will send new arrivals back home. + +Once the Cubans arrive at Guatemala’s border with Mexico they are on their own. They will be regarded as “illegal foreigners”, says Mexico’s National Institute of Migration, just like migrants from El Salvador and Honduras. In practice, they will be treated very differently. To reach the southern state of Chiapas Cubans cross the Suchiate river openly by bridge; those from Central America swim furtively across. The difference, say Mexican officials, is that Central American governments demand their citizens’ return, whereas Cuba does not. Another reason, no doubt, is that the United States lets the Cubans in but turns away the others. The Cubans will be given 20 days to leave Mexico, plenty of time to reach the border. + +Those awaiting passage in Costa Rica doubt they are among the last. “If America changes its law,” says Generoso Machado, who was caught by Costa Rican agents after trying to cross the frontier illegally, “Cubans will go somewhere else.” At midnight on New Year’s Eve it is customary for Cubans to walk about their neighbourhoods carrying suitcases, a sign of yearning to travel in the year ahead. As long as Cuba stays poor and despotic, the tradition will thrive. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21688425-urge-leave-strong-opportunity-diminishing-last-wave/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Crime in Mexico + +From Penn to pen + +El Chapo’s recapture heralds closer co-operation with the United States + +Jan 16th 2016 | MEXICO CITY | From the print edition + +Unfree at last + +ON THE evidence of Sean Penn’s interview with him, published in Rolling Stone magazine, Joaquín Guzmán, Mexico’s most successful exporter of narcotics to the United States, is not a thoughtful man. If he were, he would reflect on the many ironies that attend his recapture on January 8th, after two escapes in 15 years from high-security prisons. + +Mr Guzmán knew he had a good story to tell, which is why in October he met Mr Penn, a Hollywood actor, in his jungle hideout in Mexico’s drug-producing “Golden Triangle”. His first escape, in 2001, was reportedly in a prison laundry cart; his second, in July 2015, was through a mile-long tunnel, built by engineers whom he had sent to Germany to learn the craft, he told Mr Penn. Between relatively brief spells in prison Mr Guzmán, better known as El Chapo (Shorty), bloodily built his Sinaloa drug gang into Mexico’s most powerful. He was apparently hoping that his showbiz contacts would lead not just to an article but to a film. + +In an unintended plot twist, El Chapo’s contacts with Mr Penn and Kate del Castillo, a Mexican actress, helped the Mexican authorities get a fix on his position. Eventually, they closed in on him in a safe house in Los Mochis, a coastal town. Five of his henchmen were killed in a shootout with marines. Mr Guzmán fled the fight through another tunnel, but was apprehended on the town’s outskirts. That will make for an even better movie. + +Mexico’s president, Enrique Peña Nieto, and American law-enforcement authorities, which are keenly interested in El Chapo, must now decide how to make the most of his downfall. The signs are that they will do so together. + +Mr Guzmán’s second escape, not much more than a year after his recapture, was a low point for Mr Peña. It came after the president’s tone-deaf response to the killing of 43 students from Ayotzinapa, in the southern state of Guerrero, and allegations of a conflict of interest, denied by the president, connected to a house purchase by his wife. His approval ratings fell to levels lower than those of any recent president. The officials in charge of the prison from which Mr Guzmán escaped were arrested; Mr Peña’s security chief lost his job. + +The recapture in Los Mochis will help accelerate a revival of the president’s fortunes that was already under way. The government has avoided disasters recently. Mr Peña’s economic reforms are beginning to help ordinary people. Mobile-phone charges have fallen thanks to measures to increase telecoms competition, for example. His poll ratings are climbing. + +El Chapo’s arrest should also encourage closer co-operation between Mexican and American law-enforcement authorities. That relationship suffered after Mr Peña became president in 2012. He drastically scaled back his predecessor’s policy of extraditing drug bosses to the United States, and imposed centralised control on contacts between Mexican law-enforcement agents and American ones. + +After El Chapo’s second escape, Mr Peña changed tack. Extraditions were stepped back up. Among the deportees was Edgar “La Barbie” Valdez Villarreal, who is nearly as notorious as Mr Guzmán. He pleaded guilty to narcotics charges in a court in Atlanta this month. The two countries’ attorneys-general, both appointed last year, are co-operating. Mexican authorities say El Chapo will be extradited to the United States, beyond reach of his collaborators and Mexico’s corruptible prison guards, although it could take years. + +For most Mexican crime victims the drug lord’s capture will not provide much relief. The influence of the Sinaloa gang, a traditional drug-distributing operation, may well wane. But that is likely to open opportunities for more dangerous groups, such as the Zetas and the Jalisco New Generation gang, which make their money largely from extortion and kidnapping, says Alejandro Schtulmann of EMPRA, a political-risk consulting firm. El Chapo was an American obsession, but the priority for Mexican authorities should be groups that terrorise the locals, he says. + +Mr Peña, who tweeted “mission accomplished” after Mr Guzmán was nabbed, deserves his moment of celebration. Now he must press ahead with the fight against lawlessness and corruption. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21688110-sean-penn-sees-el-chapos-good-side-mexican-drug-lord-and-american-actor/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Vietnam’s Communist Party: Changing of the guard—but then again, perhaps not + +North Korea’s awful economy: A Kim in his counting house + +Feral cats in Australia: Felicitous felicide + +Urban pollution in India: Particular about particulates + + + + + +Articles Sections Next + +Vietnam’s Communist Party + +Changing of the guard—but then again, perhaps not + +The country is in a hurry; its leaders less so + +Jan 16th 2016 | HANOI | From the print edition + + + +THE sign above the door at Cong Caphe, a hip coffee shop in downtown Hanoi, the Vietnamese capital, bears a bright-red communist star. Inside, the brick walls are covered in memorabilia from the era of the Vietnam war: rusty canteens, an old transistor radio and snapshots of Viet Cong soldiers trudging off to fight the Americans. Yet the aesthetic is not so much patriotic as a cheeky send-up of communist ideology. The 20- and 30-something Vietnamese who drink here, spending the fruits of an increasingly capitalist economy, feel far removed from the hardships suffered by their parents and grandparents, while they applaud ever-closer ties with America. + +With its scooter-driving young and an economy growing at nearly 7% a year, Vietnam seems like a country in a hurry. In many ways, the ruling Communist Party is trying to keep up. Not far from the coffee shop, windows the size of a cathedral’s illuminate the new building housing the National Assembly, Vietnam’s parliament. Sunbeams pour from skylights into the marble foyer. In a one-party state where symbols matter, the building’s airiness suggests that the rulers are trying to project an image of modernity and transparency. Yet as Nguyen Vu Nam, a manager at Cong Caphe, points out, young Vietnamese do not pay much heed to who runs the party. Personnel changes among a generally grey and faceless collective leadership have never seemed to matter much. + +This month party bigwigs will make a fresh bid for relevance. On January 20th they convene for a five-yearly congress, the highlight of Vietnam’s political calendar. More than half of the 16-member Politburo, the party’s ruling council, are meant to retire, to be replaced by younger officials. The country’s three most senior jobs—of state president, prime minister and party general secretary—are all up for grabs. That so much remains mysterious so close to the event suggests that this year’s negotiations are unusually tense. + +The man to watch is Nguyen Tan Dung, Vietnam’s prime minister for ten years and probably its shrewdest and least uncharismatic politician. At 66, Mr Dung is past the party’s usual retirement age. But he is said to want to remain in high office by taking the role of party secretary, while perhaps relinquishing his current office to an ally. Mr Dung would doubtless reinvigorate a job which has lately begun to look dusty. He may wish to carve out an authority that begins to approach the dominance enjoyed by Xi Jinping in China. But such a move would be unusual. It would rattle a political system which, until now, has discouraged domineering personalities and has valued consensus. + +Mr Dung’s backers say that Vietnam’s present challenges call for strong and consistent leadership. The economy is much mended after bad debts from cosseted state enterprises threatened the banking system. The country stands to gain from a sheaf of trade agreements negotiated in 2015, including the American-led Trans-Pacific Partnership. Yet progress towards many essential reforms, including the privatisation of state firms, has been slow. The economy is overdependent on commodities, especially coffee and rice, as well as on foreign investors. It will be essential to broaden and deepen Vietnam’s economy before its biggest present advantage, a young and cheap workforce, is spent. + +As for politics, managing the country’s tricky relations with China is the biggest challenge. Vietnam is economically dependent on its northern neighbour, with which it has a big and growing trade deficit. At the same time, China’s assertive claims to islands and underwater resources in contested parts of the South China Sea have outraged even moderate Vietnamese. Those born since the country ditched its planned economy in the 1980s are growing more outspoken, for example on social media. Vietnam cannot afford to have bad relations with China, but at the same time its leaders must be seen to be defending Vietnamese territory. + +Fighting ferrets + +Most intellectuals paying attention to the party congress would like to see Mr Dung retain some authority, since he has been the strongest voice against Chinese bullying. He is also the clear choice among local and foreign business folk, though for different reasons. They see Mr Dung as behind the flurry of trade deals and recent efforts to lift caps on foreign ownership. They say he is unusually knowledgeable about industry, well-advised by Western-educated staff and knows what investors want to hear. + +Yet whiffs of cronyism taint the prime minister as much as they do other comrades. His son’s political career has seen suspiciously swift advancement, while a flashy Vietnamese-American son-in-law owns the country’s McDonald’s franchise. Scandals have sprouted at state enterprises that Mr Dung had championed. Nor do civil libertarians think that he is more inclined than other leaders to unshackle the censored press or end the thuggish treatment of dissidents. + +As the party congress approaches, its outcome appears ever less certain. Mr Dung was once thought a shoo-in for party leader. Yet a loose-knit faction opposed to him may even manage to oust him entirely from the leadership. + +The fighting springs partly from competing networks of patronage, and partly from modest ideological differences between conservatives and the prime minister’s relatively reformist pals. Some officials worry that Vietnam’s growing chumminess with America will only make China more confrontational. A handful of them even seem to fret that Mr Dung’s liberalising instincts could end up threatening the party’s hold on power. But that would be conjecture. For all the light streaming into the new parliament building, Vietnam’s Communist Party remains a dark sack full of ferrets. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21688438-country-hurry-its-leaders-less-so-changing-guardbut-then-again-perhaps-not/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +North Korea’s awful economy + +A Kim in his counting house + +The regime suffers none of the consequences of its misrule + +Jan 16th 2016 | SEOUL | From the print edition + +Another day in the People’s Paradise + +A POWERFUL army usually depends on a strong economy. Not in North Korea. Per head, the country has more soldiers than any other: 1.2m out of a population of 25m. As well as a huge conventional arsenal, it also has a dozen nuclear warheads and spends perhaps $3 billion a year on a nuclear programme that involves rocket launches and nuclear tests—the latest took place last week, the fourth since 2006. Yet the performance of the economy over the past four decades has been little sprightlier than that of the Great Leader, Kim Il Sung, since he was embalmed in 1994. + +North Korea suppresses most economic data. But as far as we know, from the 1950s to the 1970s its economy outgrew capitalist South Korea, as a Stalinist state marshalled all resources towards production. Today the North’s per capita GDP is only one-40th of the South’s—a wretched $600 a year or so, by UN estimates. The blame rests squarely with the Kim dynasty’s ruinous policies. Yet the regime of Kim Jong Un, the third Kim on the throne, pays no penalty for the people’s suffering. Rather, it funnels money to itself, the elites and the nuclear programme. + +In a recent paper for South Korea’s Asan Institute, Nicholas Eberstadt of the American Enterprise Institute in Washington, DC tries to estimate the scale of North Korea’s economic catastrophe. Given the paucity of data, Mr Eberstadt used “mirror statistics”: estimates of the country’s trade divined from other countries’ records. He then made adjustments for population growth and inflation. It is no straight proxy for output, but useful nonetheless. + +Mr Eberstadt found that North Korea’s per-capita exports last year were no higher than at their peak in the late 1970s, while per-capita imports were two-fifths lower. North Korea’s economic underperformance is remarkable for a country that is neither a failed state nor at war, he says. + +What went wrong? The collapse of the Soviet Union, upon which the North had long relied for cheap machinery and oil, certainly hit it hard in the 1990s. Weakened by bad weather, centrally run agricultural production collapsed in the 1990s, leading to a famine in which hundreds of thousands of people died. International sanctions in response to North Korea’s nuclear bomb-testing have also hurt. + +But the biggest problem, Mr Eberstadt argues, is that North Korea has the worst business environment of any functioning state: worse even than Cuba, Venezuela or Zimbabwe. It has no property rights or rule of law, no legal private trade and a currency prone to confiscation: in 2009 the government wiped out small traders’ savings by declaring old banknotes invalid and swapping only a few for new ones. + +A striking feature of the North’s economic decline is the quantities of foreign aid that accompanied it. North Korea has a long history of shaking down donors—first the Soviet Union, then, after 1991, America and South Korea, and most recently China. The total amount of transfers is impossible to quantify. But Mr Eberstadt estimates the sum from the North’s two biggest historical backers, Russia and China, by taking its balance of trade deficits with each of them as an approximation of net resource flows into the North—assuming that the surplus is a debt that will not be repaid. That surplus amounts to $45 billion, in today’s money, between 1960 and 2013. + +The money seems to have helped the Kims live like god-kings and still have enough left over to pay the army, the secret police and various suppliers of nuclear materials. Yet Rüdiger Frank, an economist at the University of Vienna, thinks that increased supplies of hard currency may also have helped the informal markets for food and basic supplies that burgeoned as a response to the famine. These black markets are the single most benign transformation in North Korea in the past few years. Most North Koreans now depend on them for their livelihoods. The state usually turns a blind eye, since its central planning system, which is supposed to apportion goods, has broken down. Besides, the elites demand their cut. + + + +Fantasy reunification: What the two Koreas would gain from each other if Kim Jong Un's regime fell + +Some see in such markets the seeds of deeper economic reform. And Mr Kim seems keener than his father to promise prosperity to his people, and even a modicum of leisure. North Korea’s capital, Pyongyang, now boasts a dolphinarium and a water park, and even a ski resort to its east. As high rises go up, the capital’s fashionable sip espressos in upmarket bars. + +Yet the regime’s old habits are unchanged. Anecdotal evidence suggests that the state is squeezing the donju, North Korea’s new successful class of traders. According to DailyNK, a news source with informants in the North, donju are worried that they will be forced to hand over hard-currency savings to make up for the “massive dollar bomb”—ie, the expensive nuclear test—that was detonated last week. + +In the absence of direction from the top, there are limits to how much can change. A new policy that seems to have been quietly rolled out from 2013 allowed farmers to retain 30% of a new production target, plus any excess over the target, to sell on informal markets. Yet local officials are not distributing the promised shares, perhaps to make up a shortfall at co-operatives, according to a report by Radio Free Asia. + +Meanwhile, the few foreign investors brave enough to enter North Korea must contend with an unpredictable and predatory state. In November the biggest such, Orascom, an Egyptian telecoms company that set up the North’s first 3G mobile network, said that it thought it had lost control of its joint venture, and has not been able to repatriate its profits. + +China remains North Korea’s lifeline. Most products for sale in the North’s informal markets are from China. Last year North Korea sold over $1 billion of minerals to China, chiefly coal. As China’s economy slows and the price of coal falls, the North will suffer. But the regime has a solution: putting its scant resources into military power. This serves as a “battering-ram for international extortion”, as Mr Eberstadt puts it. Alas, it seems to work. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21688445-regime-suffers-none-consequences-its-misrule-kim-his-counting-house/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Feral cats in Australia + +Felicitous felicide + +To save the numbat and other native mammals, Australia culls cats + +Jan 16th 2016 | SYDNEY | From the print edition + +Whose side are you on? + +MOST Australians have heard of wombats, but few could place the numbat. Both marsupials are among 315 mammal species that roamed Australia at the time of the first European settlement in the late 18th century. The wombat has thrived. The smaller numbat, once widespread, clings on in only a few colonies in Western Australia. There it is listed as endangered, because of predation by feral cats. At least it survives. Australia has one of the world’s highest rates of mammal extinctions—29 have been recorded over more than two centuries. Feral cats are reckoned to be culprits in 27 of those disappearances: among them the desert bandicoot, the crescent nailtail wallaby and the large-eared hopping mouse. + +Cats probably arrived in Australia on British ships carrying convicts. Unlike the convicts, their descendants have grown wilder and more menacing. The feral-cat population today is estimated at between 4m and 20m, most of them prowling outback habitats. They are often huge, weighing 15 kilograms. And they eat perhaps 75m Australian animals a day. + +A parliamentary inquiry and a scientific report on mammals called for governments to step in. Last year Greg Hunt, the federal environment minister, launched a “threatened species strategy” to stop mammals’ decline. Fire, loss of habitat and foxes, another alien predator, have played a part. But, Mr Hunt says, feral cats are “the number-one killers”. + +Ten cat-free sanctuaries are planned across Australia over the next four years. The Australian Wildlife Conservancy, an NGO, is to start fencing 650 square kilometres (250 square miles) in April to create the biggest one at Newhaven, in the desert in Northern Territory. Atticus Fleming, the outfit’s head, calls this region the “epicentre of the extinction crisis”. His colleagues aim to reintroduce several threatened mammals there, including the mala, a winsome creature resembling a tiny wallaby, which disappeared from mainland Australia 25 years ago. The project will also give jobs to the local Ngalia Warlpiri aboriginal clan. Its senior women, says Mr Fleming, are “extremely good cat hunters”. + +The government wants 2m feral cats culled across Australia by 2020. It is funding trials on cat-specific baits, as well as an app allowing humans who venture into the outback to report cat sightings. Mr Hunt insists the baits would work “humanely”. If they eventually killed even half the cat population, “it would be the most important action for Australian wildlife in 100 years.” + +The planned felicide has greatly upset some cat people, notably Brigitte Bardot, a French former sex goddess, and Morrissey, a miserable British singer. But conservationists say killing cats and fencing enclosures have already saved several species from extinction, including the Gilbert’s potoroo in Western Australia and the bridled nailtail wallaby in New South Wales. Mr Fleming admits an Australia free of feral cats is a long way off: “But the fence strategy can buy time until a silver bullet is found.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21688436-save-numbat-and-other-native-mammals-australia-culls-cats-felicitous-felicide/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Urban pollution in India + +Particular about particulates + +A bold experiment has improved Delhi’s air. But Indians want more + +Jan 16th 2016 | DELHI | From the print edition + +India Gate: one day your children may be lucky enough to see it + +IF A fine powder combining arsenic, black carbon, formaldehyde, nickel, sulphur dioxide and nitrogen oxide sounds unpleasant, imagine how it would be if 200 tonnes of it were dumped on your town every day. Imagine, too, that it was proved to be cancerous, with most of it coming in the shape of particles small enough to lodge in the deepest, most tender parts of your lungs. Such is the woe of India’s capital. With a count of “respirable suspended particulate matter” that is roughly double that of China’s notoriously smoggy capital, Beijing, Delhi is ranked by the World Health Organisation (WHO) as the world’s most polluted big city. Several other Indian cities are nearly as atrocious (see table). + + + +Perhaps 25,000-50,000 of greater Delhi’s 25m people die prematurely every year because of air pollution. The number is growing: admissions for respiratory ailments at a busy teaching hospital soared fourfold between 2008 and 2015 according to an investigation by the Indian Express, a newspaper. And the trouble is not confined to the capital. In the country as a whole the number of early deaths caused by toxic air could exceed 600,000 a year. The largest cause is not cars or factories: it is smoke from home cooking, while in northern India stubble-burning in the countryside is also a factor. But vehicles play a big part, and it is to this source that the keenest attention is now being paid. + +Ashes to Ashes + +On January 15th Delhi wrapped up a drastic two-week experiment to reduce car emissions by restricting road use to odd- or even-numbered licence plates on alternate days (a method occasionally used in Beijing, São Paulo and a dozen other cities). When the local government announced the scheme in December, many predicted failure. Proud car-owners would ignore it. Police would be too few or too corrupt to enforce compliance. And anyway, in a city with 2.9m cars but some 7m motorbikes and motorised rickshaws, and with many exempt from the ban such as taxis and other public vehicles, the effects would be minimal. + +Yet it seems to have been a striking success. With teams of volunteers manning corners to shame would-be shirkers into parking their cars, and police out in force to slap on fines, few flouted the ban. Nor can anyone now claim to be unaware of a problem to which residents had become so inured that it has hardly featured in elections to date. Public transport was more crowded, but passengers were delighted to find traffic markedly lighter. + +True, by the measure of the nastiest element in Delhi’s toxic cocktail, ultrafine particles, the drop in emissions was not drastic. The first days of the new year even saw a discouraging spike in concentrations of PM10 and PM2.5, as the diameter of two sizes of particles are commonly defined in thousandths of a millimetre. In parts of the city, PM2.5 (the more harmful of the two sorts, because it penetrates the lungs more deeply) exceeded 500 micrograms per cubic metre. That is 20 times the WHO’s guideline for safe air. + +Still, notes Anumita Roychowdhury of the Centre for Science and Environment, a think-tank in Delhi, those highs were largely due to winter weather, and were lower and shorter-lasting than previous peaks. The odd-even test not only showed that such emergency measures can limit dangerous pollution; it showed how much more efficient public transport can be when road space is freed up to let it move. + +The positive response has jolted politicians and India’s courts into action. In December the country’s Supreme Court slapped a citywide ban on the registration of luxury diesel cars. Soon afterwards, the national government declared that it would speed up the introduction of stricter emissions standards for new passenger cars. It is now considering a similar move for two- and three-wheelers. The government is also hurrying to improve the quality of fuel. + +If both new sets of regulations come into effect by 2020, as is planned, new vehicles will emit only a fraction of the pollution they do today. Other initiatives include the expansion of Delhi’s metro, measures to maintain roads better (the dust kicked up from these accounts for a big proportion of breathable particulates), restrictions on lorries entering the city, and plans to enforce the replacement or retrofitting of older vehicles. If all this is done, Delhi may get acceptable air in a few years’ time. + +It is not the first time the central government has acted against air pollution. Over a decade ago it introduced a battery of pollution controls, such as requiring most buses, taxis and auto-rickshaws to convert to natural gas. It banned the burning of rubbish and shut down heavily polluting industries as well as power plants. Those measures worked too, getting rid of the coarsest grit. People noticed that their shirt collars were no longer dirty, says Sumit Sharma of Delhi’s Energy and Resources Institute, another NGO. “They thought the problem was solved.” + +Wild is the Wind + +Two things then intervened to undermine progress. One was a tripling of the number of vehicles on India’s roads between 2002 and 2013. The other was misguided government policy. By subsidising diesel in a bid to woo farmers who rely on it to power water pumps and tractors, successive governments encouraged a massive shift in Indian vehicle markets. Between 2000 and 2013 the proportion of new cars with diesel engines rose steeply, from one in 20 to one in two. + +California’s environmental regulatory agency—the body that recently exposed cheating on diesel emissions tests by the German car firm Volkswagen—says diesel exhaust poses the highest cancer risk of any toxic air contaminant it has evaluated. Luckily, the Indian government’s mistake has already been corrected. In October 2014 it scrapped diesel subsidies; sales of diesel vehicles have already dropped. This month a supreme-court judge had this to say to lawyers from a carmaker who argued against the ban on diesel-guzzlers: “So are your vehicles emitting oxygen?” The horrors of Delhi’s air are sinking in. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21688447-bold-experiment-has-improved-delhis-air-indians-want-more-particular-about-particulates/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Military reform: Xi’s new model army + +Lego lets go: An artist celebrates + +Confucian cuisine: Just add sage + +Banyan: Two-systems failure + + + + + +Articles Sections Next + +Military reform + +Xi’s new model army + +Xi Jinping reforms China’s armed forces—to his own advantage + +Jan 16th 2016 | BEIJING | From the print edition + + + +CHINA’S biggest military shake-up in a generation began with a deliberate echo of Mao Zedong. Late in 2014 President Xi Jinping went to Gutian, a small town in the south where, 85 years before, Mao had first laid down the doctrine that the People’s Liberation Army (PLA) is the armed force not of the government or the country but of the Communist Party. Mr Xi stressed the same law to the assembled brass: the PLA is still the party’s army; it must uphold its “revolutionary traditions” and maintain absolute loyalty to its political masters. His words were a prelude to sweeping reforms in the PLA that have unfolded in the past month, touching almost every military institution. + +The aim of these changes is twofold—to strengthen Mr Xi’s grip on the 2.3m-strong armed forces, which are embarrassingly corrupt at the highest level, and to make the PLA a more effective fighting force, with a leadership structure capable of breaking down the barriers between rival commands that have long hampered its modernisation efforts. It has taken a long time since the meeting in Gutian for these reforms to unfold; but that reflects both their importance and their difficulty. + +The PLA itself has long admitted that it is lagging behind. It may have plenty of new weapons—it has just started to build a second aircraft-carrier, for instance—but it is failing to make effective use of them because of outdated systems of command and control. Before any substantial change in this area, however, Mr Xi felt it necessary to strengthen the party’s control over the PLA, lest it resist his reforms and sink back into a morass of money-grubbing. + +The reforms therefore begin with the main instrument of party control, the Central Military Commission (CMC), which is chaired by Mr Xi. On January 11th the CMC announced that the PLA’s four headquarters—the organisations responsible for recruiting troops, procuring weapons, providing logistics and ensuring political supervision—had been split up, slimmed down and absorbed into the commission. Once these were among the most powerful organisations in the PLA, operating almost as separate fiefs. Now they have become CMC departments. + +Power to the party + +The political headquarters was the body through which the party kept an eye on the ranks and ensured they were up to speed on Maoist texts and the party’s latest demands. The loss of its autonomous status may suggest that the party’s role is being downgraded. Far from it. Now the party’s CMC (there is also a state one, which exists only in name) will be better able to keep watch. The body’s 15 new departments will include not only departments for politics but also for logistics, personnel management and fighting corruption. Mr Xi has already turned his guns on graft, imprisoning dozens of generals. + + + +The second reform has been to put the various services on a more equal footing. The land forces have hitherto reigned supreme. That may have been fine when the PLA’s main job was to defend the country against an invasion across its land borders (until the 1980s the Soviet Union was considered the biggest threat). But now China has military ambitions in the South China Sea and beyond, and wants the ability to challenge American naval and air power in the western Pacific. A recent editorial in the Liberation Army Daily, a PLA mouthpiece, berated the armed forces for their “army-centric mindset”. + +In addition to those for the navy and air force, a separate command has now been created for the army, which had previously run everything. On December 31st the CMC also announced the formation of a command responsible for space and cyberwarfare, as well as one for ballistic and cruise missiles (previously known as the Second Artillery Force, part of the army). There is also a new joint command with overall control of the various services, a little like America’s joint chiefs of staff. + +Big changes are also afoot in regional command structures. China used to be divided into seven military regions. These were powerful and relatively self-contained; sharing or swapping troops and equipment was rare. Now, according to reports in the South China Morning Post, a newspaper in Hong Kong, the number will be reduced to five. Troops will be recruited and trained by the various services before regional deployment. This will ensure greater central control over the regions. + +China has been talking about military reform for decades, but change has been glacial. Opposition within the armed forces has been intense. “If [reform] is not done properly,” wrote Sun Kejia and Han Xiao of the PLA National Defence University last month, “it could affect the stability of the armed forces or even all of society.” (The article was promptly removed from the Liberation Army Daily website.) Demobbed soldiers could make trouble—Mr Xi wants the number of troops to be cut by 300,000. State firms have been ordered to reserve 5% of jobs for laid-off veterans. + +The recent reforms are more extensive than most Western observers had expected after the Gutian conference. But even so, they are incomplete. The army still holds sway over some appointments (all five chiefs of the new regional commands are army generals, for instance). The PLA has traditionally given higher status to combat units than to those providing communications, logistics, transport and the like, a misplaced emphasis in an age when information and communications are crucial in warfare. The reforms do little to correct that bias. Moreover, many details about them remain unclear. No one knows, for example, where the troop cuts will come from or what units will go into the new space and cyberwarfare command. + +The first result of the reforms is likely to be confusion in the ranks, until the new system settles down. Dennis Blasko, an American observer of the PLA, says no one can be sure of the results until they are tested in battle. Amid the murk, only one man clearly seems to have got his way: Mr Xi. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21688424-xi-jinping-reforms-chinas-armed-forcesto-his-own-advantage-xis-new-model-army/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Lego lets go + +An artist celebrates + +Jan 16th 2016 | From the print edition + + + +Lego produced its first interlocking bricks in 1949, the year the Chinese Communist Party founded the People’s Republic. While the former has generally inspired creativity, the latter is typically more fearful of it. But last year Ai Weiwei (pictured), a Chinese artist, accused Lego of censorship when it refused his large order because it could not approve of using bricks “for political works”. He planned an artwork on dissidents. On January 12th Lego backed down, saying it would no longer query a buyer’s purpose. The reversal comes too late for Mr Ai: members of the public have already donated millions of bricks, many of them dropped into second-hand BMWs set up by the artist as collection points. He must have enough by now to build a Great Wall. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21688428-artist-celebrates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Confucian cuisine + +Just add sage + +The regime is trying to preserve a cuisine few people have heard of + +Jan 16th 2016 | BEIJING | From the print edition + +Great brain, great prawns + +A GIANT wooden bust of Confucius greets visitors to the Luweifang restaurant in Beijing, where diners may feast on “literary ginkgo”, braised hog rectum and other delicacies said to be part of a centuries-old culinary tradition developed by the ancient philosopher’s family. The restaurant, set up in 2011, is one of dozens across the country purporting to offer such delights. Now China is preparing to bid for UNESCO to register Confucius’s family cuisine as part of the “intangible cultural heritage of humanity”. + +China has already logged Mongolian throat singing, mathematical calculations on the abacus and a form of puppetry with UNESCO, as well as more prominent arts such as Peking opera and acupuncture. Confucian cookery would not be the first culinary entrant: washoku, traditional Japanese cuisine, attained this status in 2013, and North and South Korea have each separately listed kimchi, the seasoned, fermented vegetables beloved on both sides of the demilitarised zone. Even the “Mediterranean diet” is catalogued. + +Confucian gastronomy was included in China’s list of cultural treasures in 2011 (joining Chinese yo-yos, some folk tales and roast duck). Yet even within China Confucian fare is rarely considered distinctive. Foodies variously divide Chinese cookery into four, eight or ten regional schools, but the philosopher’s tradition is not among them. “The Analects”, a book of his sayings, praises the scholar who “does not seek the gratification of his appetite” and abjures indulgent banquets. The culinary tradition reportedly emerged from entertaining visiting emperors and high-ranking officials to the sage’s birthplace—rather than feeding his own gluttony. + +Registering Confucius’s family tradition coincides with a wider attempt to standardise national cuisine. Last summer the government in Inner Mongolia, a northern province, published the official method for cooking 100 local dishes. Xi’an, home to the famous terracotta warriors (a UNESCO world heritage site), wants to publish recipes for the city’s five most famous foods, to guard against distasteful rip-offs. They follow a 19th-century tradition for codifying French haute cuisine. + +The appeal of Confucian fare is more political than gastronomic. Mao vilified the sage as a reactionary, but Communist Party leaders have since rehabilitated him. President Xi Jinping has stressed Confucius’s emphasis on order and hierarchy. But the culinary tradition—whatever its provenance—may prove of limited use. Since Mr Xi’s anti-corruption campaign has choked the demand for fancy banquets and pricey delicacies, Confucius’s disciples could yet again fall on the wrong side of history. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21688433-regime-trying-preserve-cuisine-few-people-have-heard-just-add-sage/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Two-systems failure + +China’s promise of autonomy for Hong Kong is ringing hollow + +Jan 16th 2016 | From the print edition + + + +THE lugubrious Leung Chun-ying, Hong Kong’s chief executive, was never the man to cheer you up. This was a handicap as he made his fourth annual policy address to the Legislative Council (Legco) this week. The mood in the chamber and the territory as a whole was sour. Business frets about the slowdown in China. Political life remains scarred by the failure of the pro-democracy “umbrella” movement of 2014. To protests, Mr Leung plodded through a speech on economic issues, with a special emphasis on China’s regional plans. He did not even try to allay rekindled fears that Hong Kong’s freedoms are in jeopardy. + +Looked at in a certain light, such fears can seem overblown. Hong Kong still debates politics with no holds barred. Groups banned elsewhere in China freely proselytise. And any perceived encroachment on the territory’s freedoms provokes loud protests. Yet the alleged abduction since October of five Hong Kong residents by the Chinese authorities has cast a dark shadow. Three vanished in mainland China and one in Thailand. The disappearance on December 30th of the fifth man, Lee Bo, has caused particular alarm. He appears to have been snatched from Hong Kong itself and spirited across the border to the mainland, without his travel documents or any record of his leaving. His fate remains unknown. Like the other four, he was associated with a publisher and bookshop specialising in one of Hong Kong’s more esoteric niche businesses: scurrilous tales of intrigue, infighting, corruption and sex among China’s Communist leaders. A forthcoming title purports to uncover the love life of President Xi Jinping. Many have assumed that the Communist Party’s displeasure with the firm’s output explains the mysterious disappearances. China has not denied it. + +The implications would be grim. Under the Joint Declaration of 1984 with Britain over Hong Kong’s future, China promised that “one country, two systems” would apply after China resumed sovereignty over the territory: ie, that Hong Kong would enjoy autonomy in all but its defence and foreign relations. Hong Kong’s mini-constitution, the Basic Law, guarantees among other things freedom of speech and judicial independence. The suggestion that Hong Kong’s people, should they displease the sovereign master, might simply be kidnapped makes a nonsense of this. + +A torrent of outrage has gushed from China’s usual critics in Hong Kong: Martin Lee, a veteran barrister, legislator and pro-democracy campaigner, called the apparent kidnapping “the most worrying thing” to have happened in Hong Kong since British rule ended in 1997. Even the Communist Party’s loyalists in Hong Kong are at a loss. The local government usually sees its role as justifying the central authorities’ ways to Hong Kong, rather than the other way round. Yet this week the justice secretary, Rimsky Yuen Kwok-keung, called the fears the incident had evoked “totally understandable”. Legco’s president, Jasper Tsang Yok-sing, founding chairman of the biggest pro-Communist party, insisted that China should reassure Hong Kong about its autonomy. And many businessmen, even those who usually advocate placating the central government in the interests of political stability, think that extrajudicial rendition would cross a red line. + +China also faces international scrutiny. Britain, hoping to position itself as China’s best friend in Europe, did little to show support for the pro-democracy protesters in 2014. But the missing Mr Lee holds a British passport, and Philip Hammond, Britain’s foreign secretary, has said that his abduction to the mainland would be an “egregious breach” of the Joint Declaration. Gui Minhai, who vanished in Thailand, is a Swedish citizen; the European Union has called the events “extremely worrying”. They were also widely watched in Taiwan. China hopes that island will also eventually accept Chinese sovereignty under the promise of “one country, two systems”, but Taiwan is likely on January 16th to elect an independence-leaning president. + +Since the disappearances look disastrous for China’s image, many in Hong Kong believe that they cannot have been a deliberate policy by the central leadership. They speculate that lower-level officials overstepped the mark, or even that Communist Party factions hostile to Mr Xi are trying to embarrass him. China is left with a headache. It will have to cook up some plausible-sounding explanation for the mystery and coax, cajole or coerce the missing men into playing along. That, the theory goes, explains the prolonged silence. + +For pessimists, however, the snatching of Mr Lee is just the most outrageous instance of the mainland’s increasing interference in Hong Kong. They see other examples, including the purchase of the South China Morning Post, Hong Kong’s main English-language newspaper, by Alibaba, China’s e-commerce goliath; and the decision by Mr Leung to appoint a pro-government ally to chair Hong Kong University’s governing council, rather than the university’s own nominee. + +Notes from the underground + +Pessimists also point out that China has wielded enormous influence in Hong Kong since long before 1997. Bizarrely, though, the Communist Party is even now an underground organisation there. The secrecy may encourage subterfuge, rumour-mongering and even lawlessness. Some officials may well sanction illegal snatch-squads, to show that Hong Kong’s autonomy does not extend to anti-party activity. That this also proves the emptiness of the “one country, two systems” promise would be a small price to pay. Presumably having nothing useful to say on the issue, Mr Leung ignored it in his speech. A legislator from the pro-democracy camp, Lee Cheuk-yan, was expelled from the chamber for interrupting him to demand information about the Lee Bo case. Later he accused the chief executive of trying “to turn Hong Kong into the mainland”. Nearly two decades after its reversion to China, few in Hong Kong want that. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21688423-chinas-promise-autonomy-hong-kong-ringing-hollow-two-systems-failure/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Water politics: Sharing the Nile + +Botswana: Losing its sparkle + +The nuclear deal with Iran: The end of the beginning + +Political tweeting in Africa: What’s trending in Tanzania? + +The war in Yemen: Getting closer + +The West Bank: The doomsday settlement + +Utilities in the Middle East: Sun and sea + + + + + +Articles Sections Next + +Water politics + +Sharing the Nile + +The largest hydroelectric project in Africa has so far produced only discord + +Jan 16th 2016 | CAIRO | From the print edition + + + +WHEN Egyptian politicians discussed sabotaging the Grand Ethiopian Renaissance Dam in 2013, they naturally assumed it was a private meeting. But amid all the scheming, and with a big chuckle, Muhammad Morsi, then president, informed his colleagues that their discussion was being broadcast live on a state-owned television channel. + +Embarrassment apart, it was already no secret that Egypt wanted to stop the largest hydroelectric project in Africa. When Ethiopia completes construction of the dam in 2017, it will stand 170 metres tall (550 feet) and 1.8km (1.1 miles) wide. Its reservoir will be able to hold more than the volume of the entire Blue Nile, the tributary on which it sits (see map). And it will produce 6,000 megawatts of electricity, more than double Ethiopia’s current measly output, which leaves three out of four people in the dark. + + + +This boon for Ethiopia is the bane of Egypt, which for millennia has seen the Nile as a lifeline snaking across its vast desert. The river still provides nearly all of Egypt’s water. Egypt claims two-thirds of that flow based on a treaty it signed with Sudan in 1959. But even that is no longer enough to satisfy the growing population and sustain thirsty crops. Annual water supply per person has fallen by well over half since 1970. The UN warns of a looming crisis. Officials in Egypt, while loth to fix leaky pipes, moan that the dam will leave them high and dry. + +Herodotus, an ancient Greek historian, called the fertile land of Egypt the Nile’s gift. Countless Egyptian leaders have rattled their sabres in defence of the water supply. This has soured relations with the eight other countries that share the Nile basin. Most of them have agreed to co-operate with each other, dismissing another old treaty which, Egypt claims, gives it a veto over upstream projects. + +Only recently has the Egyptian government adopted a more conciliatory tone. In March of last year Abdel-Fattah al-Sisi, who ousted Mr Morsi in a coup, joined Hailemariam Desalegn, Ethiopia’s prime minister, and Omar al-Bashir, Sudan’s president, to sign a declaration that tacitly blesses construction of the dam so long as there is no “significant harm” to downstream countries. The agreement was affirmed in December, when the three countries settled on two French firms to study the dam’s potential impact. + +That step is long overdue. The impact studies were meant to be completed last year, but bickering over the division of labour, and the withdrawal of one firm, caused delays. Many Egyptians believe that Ethiopia is stalling so that the dam becomes a fait accompli. Already half-finished, experts worry that it may be too late to correct any problems. Representatives of the three countries are now meeting to discuss “technical” issues. The contracts for studying the dam are not yet signed. + +A sense of mistrust hangs over the dam’s ultimate use. Ethiopia insists that it will produce only power and that the water pushing its turbines (less some evaporation during storage) will ultimately come out the other side. But Egypt fears it will also be used for irrigation, cutting downstream supply. Experts are sceptical. “It makes no technological or economic sense [for Ethiopia] to irrigate land with that water,” as it would involve pumping it back upstream, says Kenneth Strzepek of the Massachusetts Institute of Technology. + +A more reasonable concern is over the dam’s large reservoir. If filled too quickly, it would for a time significantly reduce Egypt’s water supply and affect the electricity-generating capacity of its own Aswan Dam. But the Ethiopian government faces pressure to see a quick return on its investment. The project, which is mostly self-funded, costs $4.8 billion. + +Some experts say filling the reservoir could take seven years. But “having a fixed time to fill it may not be the best way to do it, because there can be extremely dry years and extremely wet years,” says Kevin Wheeler of Oxford University. He recommends releasing a fixed amount of water from the dam each year, leaving the reservoir to fill at a pace set by nature. + +A potential wild card in the negotiations is Sudan, which long sided with Egypt in opposition to the dam, some 20km from its border. But as the potential benefits to Sudan have become clear, it has backed Ethiopia. + +Short on energy itself, Sudan will receive some of the power produced by the dam. By stabilising the Nile’s flow, it will also allow Sudan to prevent flooding, consume more water and increase agricultural output (once old farming methods are updated). Currently much of the country’s allocation of water under the 1959 treaty is actually consumed by Egyptians. To their chagrin, the river will no longer gush past their southern neighbours during monsoon season and end up in Lake Nasser, the huge reservoir behind the Aswan Dam. + +How much water Sudan uses in the future, and other variables such as changes in rainfall and water quality, should determine how the dam is operated. That will require more co-operation and a willingness to compromise. Disagreement between Egypt and Sudan over such things as the definition of “significant harm” bodes ill. But all three countries will benefit if they work together, claims Mr Strzepek, citing the dam’s capacity to store water for use in drought years and its potential to produce cheap energy for export once transmission lines are built. + +The Renaissance Dam is merely the latest test of countries’ willingness to share water. There may soon be more difficulties. Ethiopia plans to build other dams on the river, which could further affect downstream supply. Sudan has promised foreign investors an abundance of water for irrigation. If Egypt is made to feel at the mercy of its neighbours, it may not have finished rattling its sabre. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21688360-largest-hydroelectric-project-africa-has-so-far-produced-only-discord-egypt/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Botswana + +Losing its sparkle + +Africa’s exemplar of good governance faces rockier days + +Jan 16th 2016 | GABORONE | From the print edition + + + +TWO gleaming new towers rise from the dry savannah of Gaborone, Botswana’s capital. The country’s tallest buildings are billed by their developers as offering the city’s residents “their first true glimpse into the benefits of inner-city dwelling”. No doubt these stylish apartments make comfortable pads—particularly for the mistresses of wealthy businessmen who are installed in quite a few—but building upwards rather than outwards seems rather odd: at four people per square kilometre, Botswana is one of the world’s least densely populated countries. Yet Gaborone’s small city centre—originally designed for 20,000 people, a tenth of the current number—is hemmed in by communally owned tribal land that is almost impossible to buy and develop. It must grow up or not at all. + +Botswana’s wider economy and polity are similarly constrained by outmoded traditions and laws, even though at first blush the country is doing astoundingly well. Since its independence from Britain in 1966, Botswana has been one of Africa’s most stable and prosperous democracies. Elections are so peaceful, fair—barring a little gerrymandering—and boring that the country is held up as a model for Africa. The Ibrahim Index of governance, for instance, ranks it third among African states. + +More impressive is that this was achieved in the face of a potential “resource curse” from diamonds, which were discovered in 1967. Instead of perverting politics, the riches Botswana has gathered as the world’s second-largest diamond producer (see chart) have paid for infrastructure and development. Income per person has quadrupled over 35 years and the country has tackled challenges including one of the world’s highest HIV rates. + +Yet Botswana’s complacency is being sorely tested. In the short term it faces the worst market in “living memory”, in the words of one diamantaire. Diamond mining accounts for a quarter of Botswana’s economy and it is being hurt by a sharp downturn in demand almost everywhere—particularly in China, where a clampdown on corruption has curbed public displays of wealth. Analysts reckon that De Beers, which digs up most of Botswana’s gems through a joint venture with the government, and Alrosa, a Russian firm, have slashed sales of rough diamonds by as much as half. Despite this brake on supply, diamond prices have still fallen by close to 30%. Botswana’s economy, which has expanded by 5% a year over the past decade, probably grew by half that rate in 2015 and is unlikely to do much better than 3% this year. Having balanced its books for the previous four years, the government ran a small deficit in 2015 and will probably do so again this year. + +This economic shock, mild as it may be, is but a taste of the adjustments that will have to be made as the country runs out of diamonds. That is likely to happen within the next 15-20 years, analysts reckon. Diamond mines are not forever. + +Botswana has made some progress in diversifying its economy, about half of which was directly tied to mining in the early 2000s. Much of this growth has come from poorly-paid service industries, but Botswana manufactures almost nothing and exports little other than diamonds. It needs not only to create manufacturing jobs to reduce an official unemployment rate of almost 20% but also to find new sources of export earnings. + +Yet its efforts to promote new industries are hobbled by labour policies that are meant to promote the employment of locals. Bosses complain that it is almost impossible to get work permits for skilled foreigners. Some talk of firms having to close because their expatriate founders could not renew permits. + +Another test will be for the Botswana Democratic Party (BDP), which has run the country for five decades. In national elections in 2014 it lost its outright majority for the first time, though it was still able to form a government because the opposition was divided. If its rivals were to unite, the BDP could be pushed out of government in 2019, not least because it has failed to deal with water and power shortages in the capital. As its grip on power is weakening, the BDP is beginning to dabble with repression. Journalists complain of arrests and harassment, while the independence of the judiciary is under attack. + +With its well-educated people, Botswana could live up to its promise as a model that combines democracy and good governance. But if it falters, it will struggle to attract the investment it needs to put the sparkle back in its economy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21688387-africas-exemplar-good-governance-faces-rockier-days-losing-its-sparkle/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The nuclear deal with Iran + +The end of the beginning + +Sanctions are about to be lifted + +Jan 16th 2016 | From the print edition + + + +ACCORDING to America’s secretary of state, John Kerry, “Implementation Day” for the Iran nuclear accord could be just “days away if all goes well”. He was not expecting two US Navy patrol boats and their crews to be seized by Iranian Revolutionary Guards on January 12th after unintentionally entering Iranian waters near an island naval base. But with both sides determined to smooth things over, the boats and the sailors were released the following day. + +As long as there are no new shocks, the big day looks set to be announced in the next few days—sooner than was expected when the deal was struck last July. Iran will be judged to have complied with all its obligations in dismantling those parts of its nuclear programme which offered a path to building a bomb. In return the UN, America and the EU will drop or suspend all their nuclear-related sanctions. At the same time, Iran will apply the Additional Protocol of its safeguards agreement (subject to ratification by its parliament, the Majlis) with the International Atomic Energy Agency, a measure which gives the agency’s inspectors access to materials and sites beyond declared nuclear facilities. + +Iran is very near to completing the removal of some 14,000 uranium-enrichment centrifuges. The core of the Arak heavy-water reactor, which had the potential to produce plutonium, was reportedly taken out on January 11th and is being filled with cement. Most of Iran’s stockpile of low-enriched uranium was sent to Russia and Kazakhstan in late December. Nuclear proliferation experts are amazed at the speed with which Iran has acted. Iran’s foreign minister, Mohammad Javad Zarif, and the head of its Atomic Energy Organisation, Ali Akbar Salehi, have appeared determined to navigate all obstacles, even supposed red lines drawn by the supreme leader, Ayatollah Ali Khamenei, to get the job done. + +A priority for them was to get the sanctions lifted before Majlis elections on February 26th. After more than two years in office, President Hassan Rohani will cite the achievement as evidence that his policy of engagement with the West has worked, ending a crisis that had left Iran’s economy in ruins. He will urge voters to back moderate candidates who support him and to weaken hardline factions that were opposed to the negotiations. + +Yet there are still important players in the regime, such as the Revolutionary Guards, who remain hostile to the deal and are prepared to test the West’s commitment to it. The IAEA received minimal co-operation in preparing its report, published in early December, on the possible military dimensions of Iran’s nuclear programme. It concluded that Iran had a parallel clandestine weapons programme until 2003 and that some aspects of it continued until 2009. But there was no admission of this by Iran and no access to the scientists the agency wanted to talk to. It was also unable to carry out verification procedures at the Parchin military complex, where it believes there was an explosives chamber. + + + +In graphics: The implications and consequences of Iran's nuclear deal + +Western diplomats decided that Iran’s obfuscations were predictable and it was time to move on. That raises questions about how much Iran may get away with in the future. Gary Samore, a former White House arms-control adviser now at Harvard, says that the Iranians’ caginess about their past nuclear weapons-dabbling was a reminder that the deal was not a “strategic solution to the nuclear problem but something purely transactional”. + +The response to an Iranian test of a nuclear-capable ballistic missile in October that violated a UN Security Council resolution was also less than resolute. Mr Samore says that it was clearly intended by the Guards to provoke a reaction from America that would give Iranian critics of the deal the chance to stall or kill it. Persuaded by Mr Kerry, who had his ear bent by Mr Zarif, not to rise to the bait, Barack Obama flip-flopped over slapping on new sanctions, first indicating he would, but then withdrawing the threat. + +As for the prospects of the deal holding, Mr Samore thinks the Iranians have an incentive to co-operate for the time being, as they will benefit by up to $100 billion from the unfreezing of assets. But if other benefits, such as increased oil revenues, are slow to come, this might not last. + +A more immediate threat will come from whoever is the next American president. A Republican could choose to sabotage the deal with new sanctions, while even Hillary Clinton, says Mr Samore, will need to show there is a new sheriff in town if Iran’s behaviour in non-nuclear areas (missile tests, the unjustified imprisonment of American citizens, support for the Syrian regime and abuse of human rights) does not change. Getting to Implementation Day has been surprisingly smooth. What comes after will be a lot harder. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21688442-sanctions-are-about-be-lifted-end-beginning/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Political tweeting in Africa + +What’s trending in Tanzania? + +Poking fun at African leaders on social media + +Jan 16th 2016 | NAIROBI | From the print edition + +All work and nothing else makes Magufuli hard to mock + +WITH his campaign slogan “work and nothing else”, you might think John Magufuli, Tanzania’s new president, would be a poor subject for satire. Yet austerity can provide a few laughs. In his first few weeks, the new president cancelled independence day celebrations, went litter-picking and turned up at the ministry of finance to make sure staff were actually coming to work. The result, on Twitter, was a hashtag, #WhatWouldMagufuliDo, full of pictures of money-saving ideas: a wooden cart acting as a wedding limousine; a vanity mirror attached with duct tape to a car to replace a broken wing mirror. + +The joshing was mostly affectionate: Mr Magufuli’s anti-corruption drive is popular. Kenya’s president, Uhuru Kenyatta, comes off rather less well. The joke about Mr Kenyatta—who is known for his many foreign trips—is that when he is in Kenya, he is an important foreign statesman visiting. When the Pope visited Kenya in November, tweeters captioned pictures with jokes about the pontiff welcoming the president. + +Twitter thus illustrates the fortunes of two of east Africa’s rulers, at least in the view of the middle classes in their countries. And just as in the West, the internet is changing political conversations in Africa. Not all the hashtags are humorous. In Kenya anti-corruption campaigners have begun organising on Twitter. When they are arrested or mistreated by police, the world soon knows. The potential for influencing politics is enormous. In Tanzania’s recent election, over 60% of eligible voters were under the age of 35; almost all sub-Saharan African societies are as young. In countries where age is revered, social media allow young people to make themselves heard. + + + +#AfricaTweets: The use of Twitter in Africa + +Sadly, change is not happening everywhere. In democratic Kenya, 37% of the population had access to the internet in 2014, according to the International Telecommunication Union. In autocratic Ethiopia, however, the figure was just 2%. When Barack Obama visited both countries in July, Kenyan Tweeters produced a flurry of commentary, much of it mocking their own government. Ethiopia’s produced barely a trickle. Tweeple need connections to flourish. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21688102-poking-fun-african-leaders-social-media-political-tweeting-africa/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The war in Yemen + +Getting closer + +No end in sight for Saudi Arabia’s southern adventure + +Jan 16th 2016 | NAJRAN | From the print edition + + + +FROM inside his headquarters in the southern Saudi city of Najran, Major-General Saad Olyan, the area commander, looks up at the craggy mountains looming over the city and wonders what Yemen’s rebels on the plateau above will do next. They have pushed Saudi forces out of some border posts, and forced the evacuation of more than 7,000 civilians from Saudi villages near the ill-marked frontier. + +Saudi artillery rhythmically thumps suspected rebel positions. But it has not prevented them from regularly rocketing Najran and other border towns, killing 80 people, 25 of them in Najran. One Katyusha rocket fell a few yards away from General Olyan’s office; the windows were blown out, pitting his walls with shrapnel. Another blew out the glass front of a nearby hotel shortly before it was due to open. A banner with a picture of King Salman and his designated heirs declares forlornly: “We are all soldiers of the homeland.” + +Residents of the area have fled to safer parts of the city. Kindergartens and homes near the military base lie in ruins. Bar the Pakistani workers obliviously playing cricket, the streets feel like a ghost town. + +Saudi Arabia’s young defence minister, deputy crown prince and de facto ruler, Mohammed bin Salman, insists he is winning the war. His coalition has retaken Aden, Yemen’s southern port, and 80% of the country, he claims. But many of Yemen’s largest cities—Sana’a, Taiz and Ibb—remain in rebel hands. And with negotiations stalling (the resumption of talks set for January 14th has been indefinitely postponed), officials talk less of an early victory than a protracted war. “We’re looking at conflict management, not resolution,” says a confidant of the prince. “This problem can go on for years.” + +For all the bluster of Saudi generals who vow to lead their troops into Sana’a if necessary, the campaign now has more limited goals, says the confidant. Saudi Arabia wants to send Iran and its regional clients a message that it will resist their regional push. With Iran holding sway through its proxies in Baghdad, Damascus and Beirut, Saudi Arabia is loth to let a fourth capital, particularly one in its back yard, go Iran’s way. But the campaign is now mostly about blunting the capabilities of the Houthis (a militia of Zaydis, a splinter Shiite sect concentrated in Yemen’s north) and their ally, Ali Abdullah Saleh, who until Saudi Arabia engineered his removal in 2012 was the Arab world’s longest-reigning ruler. + +Together the Houthis and Mr Saleh make a formidable force. Whereas the former are guerrillas who model themselves on Lebanon’s Hizbullah, the latter commands Yemen’s Republican army, which has been fighting wars (including against the Houthis) for 25 years. Together they wield an arsenal of tanks, ballistic missiles and, at one point, even the odd fighter-jet. Houthi fighters head to battle carrying charms, such as keys and visas to paradise. Their preachers on satellite television call for re-establishing Zaydi rule across the border, not just over the three border provinces the Al Sauds seized in 1934 but even over Mecca farther north. + +That is implausible given Saudi Arabia’s air power and network of allies. But some Saudis ask how their overfed armed forces would fare should battle-hardened Houthi fighters make even a limited push across the border. It says much about Saudi trepidation that General Olyan limits himself to defending Saudi territory; he says his troops make no attempt to attack the Houthi heartland of Saada governorate, just across the frontier. + +Allies have offered help. Last month Kuwait sent a battalion to the Saudi side of the border. Pakistan has vouchsafed to come to the kingdom’s rescue, should it come under attack. And at the back of Najran’s airport, the Americans have provided a battery of Patriot air-defence missiles to knock out the score of incoming SCUDs that Mr Saleh has fired at the kingdom’s southern cities. + +But the costs for Saudi Arabia are mounting. Eroding his plans for cutting the budget deficit, Muhammad bin Salman is reinforcing his forces inside Yemen. Yemeni refugees, too, have been spilling into the kingdom, to the tune of over half a million. Cross-border smuggling and infiltration, perhaps of Houthi fighters, says a Saudi officer, is higher than ever. Yemenis do not constitute a fifth column, but they complain that Saudi Arabia is refusing them health care. Some mutter about turning the kingdom into a republic. + +The air campaign in Yemen is denting Saudi Arabia’s reputation. The death-toll of Yemenis is nearly 6,000, a “modest” number says a Gulf official, especially when judged against the carnage elsewhere in the region. Some recall that Yemen, like Afghanistan, has been a graveyard for many an invader. But prominent preachers from Saudi Arabia’s religious establishment egg the Al Sauds to confront, not compromise with, the region’s Shias. Salman al-Ouda, a critical cleric with a strong Wahhabi following, wonders what the point was of spending billions and taking thousands of dead “if it just left us where we started?” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21688437-no-end-sight-saudi-arabias-southern-adventure-getting-closer/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The West Bank + +The doomsday settlement + +Israel eyes a piece of land with alarming implications + +Jan 16th 2016 | E1 | From the print edition + + + +THE desolate hills east of Jerusalem seem insignificant, a barren stretch of scrubland with few buildings or residents. Yet twice in the past few weeks Israel’s supreme court has heard arguments over this small patch of territory. Diplomats have bluntly warned Israel not to build anything here. And thousands of Palestinians have found themselves at the centre of a long battle over the most controversial patch of the occupied West Bank. + +The area in question, known as E1, sits between Jerusalem and the sprawling settlement of Maale Adumim, 7km (4 miles) to the east. Every Israeli prime minister since Yitzhak Rabin has dreamed of building a town on these hills. It would create a salient jutting almost halfway across the West Bank’s narrow waist, slashing the route between Ramallah and Bethlehem, and further encircling Palestinian districts in East Jerusalem. One local activist calls it the “doomsday settlement”, a deadly blow to the idea of a territorially contiguous future Palestinian state. + +Any construction in E1 would oblige Israel to expel 18 Bedouin tribes who live in the area. Last spring several members of these tribes received an unwelcome visitor: an emissary from the Israeli army, calling himself Farid, who urged them to register for plots at a nearby “relocation site”. It sits on the edge of a rubbish dump. + +Forced moves in the past have already destroyed the itinerant lifestyle of the Bedouin. Starting in 1997, Israel evicted more than 100 families to make room for an expansion of Maale Adumim, which now houses 40,000 people. Their new plots of land had little grazing space; most were forced to sell their flocks, and now work for Israeli companies as labourers. Many are unhappy. “We’re like fish in the water,” said Abu Imad, a leader of the Abu Nawwar tribe. “Our lives are in the desert, and we will die if we’re moved.” + +Yet the relocation is moving ahead, if slowly. The army destroyed at least 39 homes in the area last summer. It was the biggest wave of demolitions in three years. Several tribes are now appealing against their pending expulsions in the high court. Israel has also started paving a bypass road that would allow Palestinians to skirt a future settlement in E1. The highway would mitigate one of the consequences of building there—though it will inevitably become a bottleneck for the 1m Palestinians who live in Ramallah and the southern West Bank. + +Nothing has been built yet in E1, which America’s State Department publicly describes as “very sensitive” and privately talks of in much cruder terms. But fears remain rife. On December 28th an anti-settlement Israeli activist group, Peace Now, published a report claiming to have evidence that the housing ministry has quietly commissioned plans for 8,372 housing units in the E1 corridor. The government says nothing is decided, though Uri Ariel, the agriculture minister, visited the site on January 10th with a group of Knesset members and called for the building to start. + +Israel’s prime minister, Binyamin Netanyahu, heads a coalition that depends on support from the settler movement. He also fears the consequences of moving forward. The EU decided in November to slap labels on products made in the West Bank; a recent poll found that 37% of Americans support putting sanctions on Israel over the settlements. International pressure may yet forestall E1. But the issue is sure to keep festering. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21688417-israel-eyes-piece-land-alarming-implications-doomsday-settlement/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Utilities in the Middle East + +Sun and sea + +An environmental proposal with political overtones + +Jan 16th 2016 | JERUSALEM | From the print edition + + + +WIDE-OPEN deserts and sunshine for more than 300 days a year ought to have made countries in the Middle East centres for solar power. Yet with the world’s largest oil- and gasfields nearby there has been little reason to develop renewable energy in the region. Still, much as fossil fuels are plentiful there is another liquid in short supply: fresh water. + +Might the shortage of water now be alleviated through the abundance of sunlight? EcoPeace, a joint Israeli, Jordanian and Palestinian NGO thinks it just might. In December it presented an ambitious, if far from fully developed, $30 billion plan to build a number of desalination plants on the Mediterranean shore of Israel and the Gaza Strip. At the same time, large areas in Jordan’s eastern desert would host a 200 square km (75 square mile) solar-energy plant, which would provide power for desalination (and for Jordan) in exchange for water from the coast. “A new peaceful economy can be built in our region around water and energy” says Gidon Bromberg, EcoPeace’s Israeli director. Jordan and the Palestinian Authority are already entitled to 120 million cubic meters of water a year from the Jordan river and West Bank aquifers but this is not enough to meet demand, particularly in Jordan, which regularly suffers from shortages. + +The main drawback to making fresh water from the sea is that it takes lots of energy. Around 25% of Jordan’s electricity and 10% of Israel’s goes on treating and transporting water. Using power from the sun could fill a sizeable gap, and make Palestinians less dependent on Israeli power. Renewables supply just 2% of Israel’s electricity needs, but the government is committed to increasing that share to 17% by 2030. Jordan, which has long relied on oil supplies from Arab benefactors, is striving for 10% by 2020. + +The plan to make water from sunlight is still at an early stage and similar grand designs in the past have foundered on the rocks of reality. Desertec, a German programme to generate solar energy in northern Africa for use in Europe, has stalled over concerns about the cost of transmitting the electricity over great distances, not to mention the problem of local political instability. Over the past 40 years there has been a series of plans to build a Red Sea-Dead Sea canal that would have irrigated the Jordan Valley and generated power, none of which have been built. + +Beyond many logistical and financial obstacles, the plan’s boosters also have to navigate a political minefield. Although Israel already supplies most of the Palestinian Authority’s electricity, and pipes water from the Sea of Galilee to Jordan, many Arab countries have signed up to boycotts that prohibit them from connecting Israel to their power-grids. Diplomatic tensions could therefore easily stymie any comprehensive energy treaty. “The political problems are the main obstacle” says Yana Abu Taleb, the deputy director of EcoPeace in Jordan. + +The relevant Israeli, Palestinian and Jordanian steering committees each have government representation; but the three committees have yet to hold a single joint meeting. Although regional instability may indeed deter foreigners and investors from backing the project, its authors hope that working together might lessen tensions. Addressing their shared environmental issues could bring the sides closer on other matters too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21688414-environmental-proposal-political-overtones-sun-and-sea/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Refugees in Germany: Cologne’s aftershocks + +Migrant statistics: Oh, boy + +Catalonia’s new president: Rebel, Rebel + +Poland and the EU: On the naughty step + +Fighting French unemployment: Mode d’emploi + +Charlemagne: Referendum madness + + + + + +Articles Sections Next + +Refugees in Germany + +Cologne’s aftershocks + +The ultimate victim of sexual assaults by migrants could be Angela Merkel’s liberal refugee policy + +Jan 16th 2016 | BERLIN | From the print edition + + + +FOR a brief moment at the turn of the year, Angela Merkel seemed to have recaptured control of Germany’s careering debate over refugees. The chancellor’s traditional New Year’s Eve address was acclaimed for striking just the right note. For the first time ever it was broadcast with subtitles, in Arabic and English, so that refugees as well as Germans would get her message. Mrs Merkel reminded the 1.1m asylum-seekers who arrived in Germany in 2015 to respect German rules and traditions. She urged her German viewers not to let themselves be divided, and warned of “those who, with coldness or even hatred in their hearts, lay sole claim to be German and seek to exclude others”. + +Yet even as Mrs Merkel was speaking, about a thousand men, described by police as mainly migrants of north African or Arab origin, began massing between Cologne’s railway station and cathedral, where fireworks were about to begin. Around midnight they broke into clusters and formed huddles around women who had turned out to celebrate. They then set upon the women, harassing and groping them, stripping them of clothing and valuables. One victim was raped. Of the more than 600 women who have since come forward, many described the ordeal as “running the gauntlet”. + +The news took four days to get out. Inexplicably, Cologne’s police initially reported “relaxed” festivities. (On January 8th Wolfgang Albers, the local police chief, was suspended for this and other failings.) The public news networks were also slow to pick up the story, providing grist for the conspiracy mills of populists who denounce the mainstream media as a politically correct “liars’ press”. + +But as the extent of the crimes became clear, it raised questions about Mrs Merkel’s liberal response to the crisis in Syria and the wider Middle East. The chancellor has repeatedly told Germans: “We can handle this.” Now her optimism is being hurled back at her with disdain. One of the Cologne offenders purportedly taunted police: “I am a Syrian, you have to treat me nicely—Mrs Merkel invited me!” + + + +Seeking safety: A flow diagram of asylum applications and rejections + +Growing numbers of Germans worry about the large influx of Muslims. In a survey by INSA, a pollster, 61% of respondents have become less happy about accepting refugees since the assaults; 63% think there are already too many asylum-seekers in Germany, and only 29% still agree with Mrs Merkel that the country can handle it. The sceptics are not only on the populist right. Alice Schwarzer, Germany’s leading feminist, says that Germany is “naively importing male violence, sexism and anti-Semitism”. + +For now Mrs Merkel and her governing coalition have responded by talking tough. At a gathering of her centre-right Christian Democrats, she promised that the offenders will “feel the full force of the law” and suggested that more asylum-seekers who commit crimes would be deported. Even her centre-left coalition partners, the Social Democrats, want to crack down hard. Sigmar Gabriel, their boss, wants offenders to serve their prison time in their home countries to spare German taxpayers. + +Yet the legal hurdles to increased deportation are daunting. First, it is not clear how many of the Cologne offenders can be identified. Second, German judges typically cannot deport criminals with sentences of less than three years; the sexual offences in Cologne mainly fell short of rape, and would carry lighter penalties than that. On January 12th the interior minister, Thomas de Maizière, and the justice minister, Heiko Maas, said they would expand the definition of rape (currently, an assault does not count as rape unless the victim fights back). They also promised to lower the deportation threshold, making it an option even for those on probation. But even with these changes, the Geneva conventions forbid deporting people to a country where they might be executed, tortured or harmed. Finally, home countries must co-operate; many don’t. Mr Gabriel is musing about cutting aid to such states. + + + +Europe's safe lists: Which countries does Europe consider safe for migrants to return to? + +Playing into xenophobes’ hands + +Germany’s legal reaction will therefore be slow and nuanced. But the transformation of its public debate has been swift and blunt. The assaults were a boon to Germany’s xenophobic right—from a movement that calls itself Pegida (short for “Patriotic Europeans against the Islamisation of the Occident”) to the new Alternative for Germany (AfD) party. Predictably, AfD has called on Mrs Merkel to resign. In social media and on the streets, the angry are more audible than the nuanced. In Cologne 1,700 anti-migrant demonstrators faced off against 1,300 pro-migrant demonstrators until the police broke it up. Thugs roamed the streets attacking foreigners, injuring two Pakistanis and one Syrian. + +Among the indirect victims of Cologne are the many migrants who would not dream of assaulting anyone, and who came to Germany seeking safety for themselves and their families. Four refugees have drafted an open letter to Mrs Merkel in which they express their support of women’s rights and their shock at the assaults. They are handing the letter round to collect signatures. Many refugees and German Muslims fear being tarred with the same brush as the offenders. + +In retrospect it is clear that Mrs Merkel’s hopeful New Year’s address coincided with the appearance of immigration’s dark side on German streets, and that her warnings have not been heeded. Some refugees have not respected German rules and traditions. Germans are divided. Germany’s neighbours, from Hungary and Poland to Switzerland and Denmark, have sneered at Mrs Merkel’s “welcome culture”. It now looks tenuous even at home. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21688418-ultimate-victim-sexual-assaults-migrants-could-be-angela-merkels-liberal-refugee/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Migrant statistics + +Oh, boy + +Are lopsided migrant sex ratios giving Europe a man problem? + +Jan 16th 2016 | From the print edition + + + +SINCE the attacks in Cologne several commentators have argued that Europe has a “man problem”. Writing in Politico Magazine, Valerie Hudson, a political scientist, argued that “the sex ratios among migrants are so one-sided...that they could radically change the gender balance in European countries in certain age cohorts”—especially young ones. Is this the case? + +More young men than young women have indeed been coming to Europe. Of the 1.2m asylum applicants in the last 12 months of available data, 73% were men, up from 66% in 2012. Those men skew increasingly young: according to Eurostat, the proportion of male asylum claimants who were 18- to 34-year-olds was 40% in October 2015 (the latest available data), up from 35% in 2012. Males between 14 and 17 years old accounted for 11% of all asylum-seekers, up from 5% in 2012. + +The numbers, however, differ by nationality. Around 60% of all male asylum-seekers from Algeria and Morocco were 18- to 34-year-olds. By contrast just 48% of the Iraqis, 38% of the Syrians and 31% of the Afghans fell into this age group. Proportions of young males also differ by host country (see chart). Sweden took three asylum-seekers for every 1,000 inhabitants in the 12 months to September 2015. That is the highest ratio in Europe. Alongside this, it also has more young male asylum-seekers: in the past 12 months 17% were 14- to 17-year-olds, compared with only 6% in Germany. + + + +Seeking safety: A flow diagram of asylum applications and rejections + +This will alter the sex ratio for some age groups in Sweden. As Ms Hudson points out, the teenage population will become more male: currently there are 106 male 14- to 17-year-olds for every 100 women. If all asylum applications are granted, this will change to 116 men to 100 women, while for those aged between 18 and 34 the male-to-female ratio will go from 105:100 to 107:100. This is worrisome. Skewed sex ratios would mean lots of sexually frustrated young men, which is a recipe for trouble. + +But the example of Sweden does not reflect what will happen across the whole of Europe. (Ms Hudson also conflates asylum applications with asylum granted. Not all of the 20,000 16- to 17-year-olds she says entered Sweden in 2015 will receive full refugee status; on current trends, around 17,000 will.) The countries that will be most affected are small, with populations under 10m. Sweden, Hungary, Austria and Norway would see the biggest sex-ratio changes (and only if they accepted all the asylum-seekers who applied). Germany has less to worry about. If it accepted all the young males who sought asylum in the year to October 2015, its sex ratios would go from 106:100 to 107:100 for 14- to 17-year-olds and from 105:100 to 106:100 for 18- to 34-year-olds. Europe does not have a man problem. Sweden may have. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21688422-are-lopsided-migrant-sex-ratios-giving-europe-man-problem-oh-boy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Catalonia’s new president + +Rebel, Rebel + +A province edging away from Spain gets a radical secessionist leader + +Jan 16th 2016 | MADRID | From the print edition + + + +ARTUR MAS spent five years as president of Catalonia leading its drive for independence but, for the most part, he was a pro-business centrist who embraced the cause of secession because politics demanded it. When Mr Mas stepped down on January 9th after three months attempting to form a government, it was to make way for a more ideologically pure successor, Carles Puigdemont. In a speech in 2013 Mr Puigdemont said, quoting a Catalan journalist executed under the dictatorship of Francisco Franco, that “the invaders will be expelled from Catalonia”—referring to the Spanish government. + +On January 12th Mr Puigdemont became the first Catalan president to take the oath of office while omitting the traditional vows of loyalty to Spain’s constitution and king. Spain’s interior minister looked on in stony silence. + +It was Mr Puigdemont’s long commitment to independence, which much of his centre-right Catalan Democratic Convergence (CDC) party has embraced only recently, that enabled him to form a government where Mr Mas had failed. It won him the trust of the far-left Popular Unity Candidacies (CUP) party, whose members thought Mr Mas a sleazy austerity-monger but apparently consider Mr Puigdemont a more trustworthy radical. + +Three months after the elections, Catalonia’s independence movement now has control of the region’s government. But that control has come at a cost to the secessionists’ image. For years, the separatist movement has successfully sold itself as cool, kind and progressive. Backers of continued union with Spain were scorned as reactionaries, or even the inheritors of Franco’s legacy. Now senior members of the independence movement worry that it will be identified with the CUP, whose raised fists and chaotic assemblies frighten conservative, middle-class Catalans. Mr Puigdemont’s CDC has traditionally stood for order. The small but newly powerful CUP represents radical change. + +Separatism’s squeaky-clean image has found its greatest expression in pro-independence demonstrations on Catalan national day, September 11th. For each of the past four years, at least 600,000 people, or around 10% of the population, have turned out to demonstrate. The good-natured protests pull in entire families, with small children holding grandparents’ hands, banners in the red, gold and blue colours of the independence movement flying—“and not a single piece of litter on the street”, claims Jordi Sánchez, president of the Catalan National Assembly, the group that organises the festivities. + +Unionists complain that separatism’s civilised facade hides an unpleasant sense of moral superiority. “I call it the Kumbaya factor,” moans an anti-separatist Catalan economist. The movement’s righteous aura is aided by the participation of several nuns. One radical crowd-pleaser is Teresa Forcades, a Benedictine with a master’s degree from Harvard who is on leave from her convent on Catalonia’s Montserrat holy mountain. Mr Mas liked to be seen with one of his greatest fans, a Dominican nun named Lucía Caram. + +According to the coalition accord, Mr Puigdemont will now lead the Catalan government on an 18-month “road map” to independence. Yet Spain’s constitution does not allow any move towards secession, nor are there plans for a referendum on it. The acting government in Madrid, led by Mariano Rajoy’s conservative Popular Party (PP), has vowed to apply the full weight of the law as soon as it sees the constitution under threat. + +The question is whether Catalans will support an avowedly confrontational government. Mr Mas billed the regional elections as the referendum on independence that Madrid had refused to call. His Together for Yes coalition and CUP, which both backed the road map, jointly won more than half the seats—but only 48% of the vote. Even many separatists doubt that is enough. The ugly infighting of recent weeks and the radical antics of CUP are unlikely to have boosted support any further. + +The separatists’ ranks have swollen dramatically over the past half-dozen years. This has been the result, in part, of Mr Rajoy’s refusal to concede any Catalan demands for greater self-government. Most important, says Mr Sánchez, it is younger voters who are keenest on independence. That bodes well for the future of separatism. Much depends on how the central government in Madrid responds. Unfortunately, Spain’s general election on December 20th left parliament so fractured that forming a government could take months, or require new elections. Catalonia may have a new president, but the question of its independence is not much closer to being resolved. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21688104-enter-carles-puigdemont-who-has-called-spanish-authorities-invaders-catalonias-new/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Poland and the EU + +On the naughty step + +A slap on the wrist for Poland is a big test for the European Union + +Jan 16th 2016 | WARSAW | From the print edition + +Sticking up for media freedom + +POLAND is in trouble with Brussels. On January 13th the European Commission launched a formal assessment of whether changes to the constitutional tribunal and public media pushed through by Poland’s new government, led by the Eurosceptic Law and Justice party (PiS), violate the rule of law. The commission is wielding new enforcement powers; in the worst case, Poland’s voting rights in the EU could be suspended. The move has “nothing to do with politics”, claimed Frans Timmermans, the first vice-president of the commission. But a big political fall-out looks likely. + +Since coming to power in October PiS has strengthened its grip over the security services and the civil service. In December it passed a law that requires the constitutional tribunal to approve verdicts by a two-thirds majority, crippling its ability to strike down legislation; it also appointed five new judges. A new media law sacked the management of Poland’s public television and radio broadcasters; a former PiS MP is the new television boss. + +Moderates are worried. Jaroslaw Kaczynski, PiS’s divisive leader, is moving like an “elephant in a china shop”, says Ryszard Petru, the leader of Nowoczesna, a new liberal party. Nowoczesna has surged in polls since the election; one recently put it ahead of PiS, with almost 30%. Thousands across Poland took to the streets in protest against the media law. Many see parallels with the illiberal path Hungary has pursued since Viktor Orban became prime minister in 2010. When PiS lost the election in 2011, Mr Kaczynski spoke of one day building “Budapest in Warsaw”. On January 6th Mr Orban and Mr Kaczynski held a secretive six-hour meeting in southern Poland. + +The EU has so far trod carefully. Donald Tusk, president of the European Council and prime minister of Poland between 2007 and 2014, warned that an exaggerated reaction from Brussels could backfire. Indeed, European criticism of PiS’s power grabs has already provoked a backlash from the government that could create political headaches for the EU. + +The relationship between Poland and Germany, which was built up under the previous government and which rests heavily on the fact that Germany buys lots of Polish exports, is coming under strain. One magazine cover depicted Angela Merkel, the German chancellor, as Adolf Hitler under the headline “Again they want to supervise Poland”. On January 10th Witold Waszczykowski, the foreign minister, summoned the German ambassador over allegedly “anti-Polish” comments made by German politicians. In an open letter to the German EU commissioner who first mentioned the rule-of-law procedure, Zbigniew Ziobro, the justice minister, alluded to the second world war and argued that Germans talking about overseeing Poland carry the “worst possible connotations” among Poles. Mr Kaczynski told a gathering of followers that no words, “especially not from German lips,” will stop PiS on its path towards justice. + +The Polish government has downplayed the significance of the formal assessment. Polish matters should be resolved in Poland, Beata Szydlo, the prime minister, said this week. In political terms, the government has little to worry about. It has a solid parliamentary majority, and tough action by the EU will only make it more popular with its own nationalist voters. Sceptics note that Hungary, which is far further down the path of illiberalism than Poland, has never faced serious repercussions in Brussels. This is in part because the EU lacked the rule-of-law monitoring mechanisms it now wields when Mr Orban was cementing his hold. But the Commission is still working out how to use its newfound powers. Its review of Poland’s new government may prove more of a test for the EU than for PiS. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21688426-slap-wrist-poland-big-test-european-union-naughty-step/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Fighting French unemployment + +Mode d’emploi + +François Hollande has one last chance to tackle rising jobless rates + +Jan 16th 2016 | PARIS | From the print edition + +Temp after temp + +IN HIS New Year message President François Hollande declared a double state of emergency in France: one to fight terrorism, the other to tackle unemployment. The image was a stretch, but the self-criticism apt. In 2012 Mr Hollande was elected on a pledge to curb joblessness and make “youth” his priority. Yet unemployment has since climbed from 9.7% to 10.1%; youth unemployment is more than twice this, and still rising. On January 18th the government will unveil new plans to train young job-seekers and encourage job creation. But it looks likely to be too little, too late. + +Neighbouring countries on Europe’s southern fringe have far higher absolute levels of youth unemployment than France. Yet since the start of 2014 a loosening of labour laws has helped to bring down joblessness among the under-25s in both Spain and Italy (see chart). In France, by contrast, over the same period the figure has inched up to 26%—an all-time record. Youth unemployment in France is now over three times the rate in Germany. + + + +Not only do young people in France find it difficult to get work, but when they do it is often short-lived. The labour market is divided into “insiders”, those with permanent, protected, full-time jobs, and “outsiders”, whose work is insecure and temporary. Only 5% of those over 50 are on short-term contracts; but the figure rises to nearly 30% for those under 25, who often drift for years on back-to-back temping. (In France only a fifth of temps are in permanent jobs three years later, compared with almost half in Britain, according to the OECD.) For employers faced with the mind-numbing rules governing permanent jobs (and the need to make a case to a labour tribunal before shedding them), using temps and interns is a way to eke out some flexibility. + +“Psychologically, it can create a real lack of confidence,” says Ange-Mireille Gnao, a young Franco-Ivorian, who has been looking for a permanent job in communications since 2012. “If you don’t have a permanent contract in France, it’s impossible to rent a flat, or get a loan.” The fruitless search for permanent work leads to “a lot of disillusion”, says Kadija James, deputy director of Nos Quartiers ont des Talents, which uses mentors to help get job-seekers from the banlieues (the heavily immigrant outer suburbs) into work. + +For years, the French left refused to link the country’s poor record on job creation to its over-protective labour law. But now, in an important acknowledgment, Manuel Valls, the Socialist prime minister, has called the 3,800-page labour code “unreadable”, and promised to simplify it. (He has ruled out changes to the 35-hour working week, however.) Mr Hollande has vowed to train 500,000 job-seekers through apprenticeships and other schemes. Yet in a pre-election year it is proving difficult for the government’s reformists—such as Emmanuel Macron, the economy minister, who wants bolder deregulation in order to encourage firms to create jobs—to prevail over those who fear upsetting unions and the Socialists’ friends on the left. + +Given the amount of public money that France pumps into subsidising jobs, the wonder is that it has not dented youth unemployment. But French rules on schemes like apprenticeships or subsidised job creation change faster than firms can fill in the forms, or decipher the alphabet soup of acronyms such schemes are known by. The number of apprenticeships fell in 2013 and 2014, in part because apprentices were siphoned into other new aided-job schemes Mr Hollande had devised. + +“Technically we could cut the unemployment rate in half,” says Nicolas Bouzou, a French economist; “the difficulty is political.” Much of the French left regards ideas such as a lower minimum wage for younger workers, as Britain allows, to be exploitation, not a way into the job market—even though, by default, self-employed youngsters work for less than the statutory minimum. There is still a residual snobbery within the education system about vocational training. And France’s biggest unions, for all their revolutionary rhetoric, have become talented and conservative defenders of insider privileges, at the price of shutting too many young people out of decent jobs altogether. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21688429-fran-ois-hollande-has-one-last-chance-tackle-rising-jobless-rates-mode-demploi/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Referendum madness + +Plebiscite-pushers have got Europe’s voters hooked on the cheap rush of direct democracy + +Jan 16th 2016 | From the print edition + + + +ONE dodgy referendum lost Ukraine Crimea. Another threatens to lose it the European Union. On April 6th the Dutch public will vote on the “association agreement” the EU signed with Ukraine in 2014. The deal cements trade and political links with one of the EU’s most important neighbours; the prospect of losing it under Russian pressure triggered Ukraine’s Maidan revolution. But last summer a group of Dutch mischief-makers, hunting for a Eurosceptic cause they could place on the ballot under a new “citizens’ initiative” law, noticed that parliament had just approved the deal. Worse luck for the Ukrainians. + +Unlike the Crimeans in 2014, the Dutch will not be voting under foreign occupation. But nor are they likely to have familiarised themselves with the Ukraine agreement’s 2,135 pages. Jean-Claude Juncker, the president of the European Commission, says a Dutch “No” could unleash a “continental crisis”. That is a stretch: as the referendum is non-binding, the Dutch government could ratify the agreement anyway, and its most important provisions are already in force. But Mr Juncker put his finger on something, because national referendums on EU matters are turning into a throbbing headache. + +Margaret Thatcher once dismissed referendums as “a device of dictators and demagogues”. The opposite was true for the central and eastern Europeans who joined the EU in the 2000s; their accession votes, usually passed with whopping majorities, marked the final rejection of tyranny. Elsewhere most EU referendums have turned on one-off issues, like joining the euro or ratifying an internal treaty. Negative votes, such as the French and Dutch dismissals of an EU constitution in 2005, have at least forced Eurocrats to pause for breath before resuming the march of integration. + +But now the silly season is here. A few months before the Dutch referendum, Danes were asked to vote on whether their government should convert its “opt-out” on EU justice and policing matters to an “opt-in”. They plumped for the status quo, leaving their government with an awkward negotiation in Brussels. A few months earlier Alexis Tsipras, Greece’s prime minister, called a referendum on a euro-zone bail-out agreement that would expire before the vote was held. His mighty oxi (“no”) victory was quickly converted to humiliating assent when his government realised that tough bail-outs were the price of euro membership. + +EU referendums are held for many reasons. The hapless Mr Tsipras hoped to boost his negotiating hand in the euro zone. David Cameron, Britain’s prime minister, is holding an EU membership vote largely as a tool to manage his fractious Conservative Party. Some, more cynically, are called to provide a seal of legitimacy to something a government was going to do anyway. + +But a growing number of referendums serve as brakes on European integration. If voters cannot throw out the bums in Brussels, they can at least lob rotten fruit at them. Politicians, too, find them useful: of the national referendums that have consequences for the entire EU (such as treaty ratifications), a third have been called for partisan rather than constitutional reasons, according to Fernando Mendez at the Centre for Research on Direct Democracy in Switzerland. + +The trouble is that the politics of referendums cuts both ways. Two years ago the Swiss voted to restrict immigration from the EU. That directly contradicted free-movement agreements, and Swiss officials are struggling to square the circle. Brussels threatens to suspend a raft of bilateral agreements if the Swiss go through with it—partly to avoid emboldening the British, who want immigration concessions in their EU renegotiation. In turn, should Britain vote to leave, the EU will have every incentive to take a hard line when the British come back to negotiate their post-EU trade deal. Mr Tsipras’s gambit flopped because the euro zone could not allow the precedent of a debtor state unilaterally changing the terms of its loans. + +No referendum is an island + +The tools of direct democracy are always controversial—at times, they have threatened to make American states like California ungovernable—but they are doubly difficult in the EU. First, in America federal law trumps state law, meaning no state can vex another by placing a lunatic proposal on the ballot. But in the EU, which is not a federal construction, there is nothing to stop one member holding a referendum that causes trouble for the rest. When things go wrong, the usual remedy is to tweak whatever regulation or accord made voters unhappy (usually a treaty) and to seek a second vote that produces the correct answer. + +A second problem is that the EU needs more integration just when many voters are turning against it. The euro zone and EU migration policy are both half-built ships. Each may require changes to EU treaties to allow more centralisation. But extending Brussels’s powers into new areas will fuel the appetite for referendums that could scupper the changes. Moreover, notes Stefan Lehne, a former Austrian diplomat, these days EU politicians test the existing treaties to breaking point in order to avoid triggering referendums. The clamour for direct democracy thus fosters the legalistic jiggery-pokery to which it has been a reaction. + +All this smells horribly undemocratic to some. But joining a club, or striking a deal with it, will always limit governments’ room for manoeuvre. National politicians can shoulder some of the blame for not being clear with voters about what their arrangements with the EU imply. But too often EU officials seem wedded to the views of their founding father, Jean Monnet, who wrote that he “thought it wrong to consult the peoples of Europe about the structure of a community of which they had no practical experience”. That may have worked when Eurocrats restricted themselves to tinkering with agricultural subsidies and fisheries policy. Not any more: the age of referendums is here to stay. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21688416-plebiscite-pushers-have-got-europes-voters-hooked-cheap-rush-direct-democracy-referendum/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Britain and the European Union: Let the campaigners begin + +The National Health Service: Strike one + +The housing market: Can we fix it? + +Social housing: Back to the street + +Banking reform: Culture wars + +Scottish distilling: Gin trap + +MediaCityUK: Not so grim up north + +Bagehot: Don Corbote’s dodgy sally + + + + + +Articles Sections Next + +Britain and the European Union + +Let the campaigners begin + +The Leave side faces stiffer challenges than the Remain side—but it could yet prevail + +Jan 16th 2016 | From the print edition + + + +THE starting gun for the referendum on whether Britain should leave the European Union has yet to be fired. But David Cameron has made clear that he expects to finish renegotiating his set of EU reforms in Brussels by the end of February. Since the referendum act provides for a minimum four-month campaign, some say that the vote could now take place before the end of June—though insiders think late September is still more likely. + +Either way, the pro and anti campaigns are gearing up, starting by raising cash. It is up to the Electoral Commission to designate, for each side, a lead organisation that gets extra money, free leafleting and broadcasting rights in exchange for strict spending limits. The choice is clearer on the Remain side: it will be Britain Stronger in Europe, chaired by Lord Rose, a former boss of the Marks and Spencer retail chain. Its director, Will Straw, says it is a broad cross-party group akin to the Better Together group that won the 2014 referendum on Scottish independence, but intent on making a more positive and patriotic case. + + + +Britain Stronger in Europe had a shaky start, but now looks more effective. Yet it still seems outgunned by its opponents, who have a simple and seductive message about escaping Europe’s chronic mess. This may be why the polls have narrowed (see chart). Alan Johnson, who runs the Labour Party’s In campaign, laments that, although his side has the best lyrics, his opponents have the best tunes. Yet the Leave campaign has problems of its own—starting with the fact that it is divided. + +Leave.eu, financed by Arron Banks, a businessman, is closely linked to the UK Independence Party’s leader, Nigel Farage, and focuses on immigration. Vote Leave, run by Matthew Elliott, is broader based, and includes UKIP’s sole MP, Douglas Carswell, as well as members of other parties. It seems more likely to win official designation, not least because Mr Elliott and his colleague, Dominic Cummings, are veterans of previous successful campaigns, including the defeat of a referendum on electoral reform in 2011 and of plans for a North-East regional assembly in 2004. + +Both sides are keen to draw lessons from previous referendums in Britain and from other countries. Among them are the view that it is important to start early; that basic concerns such as jobs and the economy weigh heavily; that there is a bias in favour of the status quo; and that, although negative messages about the other side can work, they need to be supplemented by positive ones. In the EU case, Mr Cameron’s renegotiation will count for little but his (and his government’s) view will count for a lot. And ever present is the risk of a vote being hijacked by unrelated issues. + +Most of these lessons ought to favour the Remain side. The main business and trade union organisations support Britain’s EU membership on economic grounds, as does most of the British establishment. The status quo or inertia vote will lean towards staying in, though on this Vote Leave is trying to argue that, since the EU is changing so fast and moving inexorably towards closer political union, the real status quo vote should be one to leave. + +Similarly, a negative message is harder for Vote Leave to fend off. As in Scotland, it is vulnerable to the charge that it is not offering a clearly thought-through alternative to EU membership. Would Britain keep full access to the single market, which takes almost half its exports? Might it, like Norway and Switzerland, have to accept most EU rules and even pay money to Brussels in return? The Leave campaign insists that, as a big economy and large market for other EU members, Britain would secure a favourable deal, but it remains vulnerable on the question of alternatives. + + + +In graphics: A guide to “Brexit” from the European Union + +Leaders of all mainstream political parties will campaign to stay in. Mr Cameron will be a formidable asset to the Remain campaign, and he will win over some waverers by trumpeting the results of his renegotiation. Yet the Leave campaign has already dismissed this as “trivial”. And it has strong political backers besides UKIP, especially in the Tory party. Mr Cameron has conceded that cabinet ministers should be allowed to fight to leave the EU without quitting, calling for the party to remain “harmonious”. On January 13th Chris Grayling, the leader of the House of Commons, wrote in the Daily Telegraph that remaining in the EU on current terms would be “disastrous”. Bigger hitters have so far kept quiet. Vote Leave hopes to win over between three and seven ministers. + +A majority of Tory MPs are Eurosceptic, but many will back Mr Cameron. Steve Baker, who works with Vote Leave and runs Conservatives for Britain, reckons to have 147 backbench supporters on his books. A new group called Grassroots Out has been started by Tom Pursglove, a Eurosceptic Tory from the 2015 intake. And although the Labour leader, Jeremy Corbyn, promises to campaign to remain, a dozen backbench Labour MPs may fight to leave. + +The Remain side may be the more vulnerable to extraneous events, such as renewed euro turbulence or more big rows over migration. Mr Cameron gamely insists that, being outside both the single currency and the Schengen passport-free travel zone, Britain has the best of both worlds. But whereas voters in the 1975 European referendum opted to stay in because Britain was in such a mess, many now feel the opposite. + +And then there is the risk from unrelated issues. Danish, Dutch and French voters stroppily used referendums to punish governments (see Charlemagne). Mr Cameron says he would not resign if he lost. But voters may want to send him a message. The result is all to play for—and the campaigns may not be wholly harmonious. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688408-leave-side-faces-stiffer-challenges-remain-sidebut-it-could-yet-prevail-let/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The National Health Service + +Strike one + +Junior doctors walk out over a change in their contracts + +Jan 16th 2016 | From the print edition + +Very junior doctor + +CARS honk cheerily as they pass a line of shivering junior medics, protesting outside the Royal London Hospital in east London during Britain’s first doctors’ strike in 40 years. Inside, most patients support the strike: doctors work hard, they say, and deserve a better deal than the one being offered to them by the health secretary, Jeremy Hunt. Further north, outside University College Hospital, an elderly passer-by goes further. “When the revolution comes,” she tells protesters, “you will have Hunt’s body for your dissection classes.” + +The medics (some of whom, despite the term “junior”, are actually quite senior) are angry at Mr Hunt’s proposal for a new contract, intended to improve out-of-hours care, which he has threatened to impose on them if no agreement is reached. In the strike on January 12th they provided only emergency care, and will do so again in another picket on January 26th. In February a total walkout is planned, which would leave consultants, nurses and temporary staff alone to treat emergencies. + +Round one has gone to the doctors: an Ipsos Mori poll this week found that 66% of the public backed the strike, which led to 3,300 operations being cancelled. But the same poll found that just 44% would support a strike that affected emergency care, as February’s would. + +The details of the dispute are fiddly, concerning working hours, top-up rates of pay and working-time rules. But there are two, quite straightforward, main disagreements. The first is about how much the National Health Service (NHS) should police doctors’ working time. The British Medical Association (BMA), which represents doctors, and the Department of Health have provisionally agreed on rules governing the length of shifts, and on the creation of an independent “guardian” responsible for enforcing them. But the BMA wants stricter limits (for example, for consecutive long shifts to be capped at three rather than the offered five) and argues that enforcement will be weaker than before. + +The second beef is about whether evening and weekend work should command higher pay than that between 7am and 7pm during the week. Assuming it should not, it is hard to disagree with Mr Hunt when he claims his reforms will leave 99% of junior doctors no worse off than before. Assuming it should, more doctors will lose out: although their basic pay will rise, top-ups for antisocial hours will be curbed (moreover, as this will make it cheaper for hospitals to roster doctors during these hours, more will be roped into evening and weekend shifts). The upshot, says the BMA, is that fewer doctors will take jobs in all-hours fields like acute medicine. + +Mr Hunt’s goal of a seven-day NHS is laudable, but he has carelessly wound up medics by implying they do not work hard enough and by over-simplifying research documenting higher death rates at weekends. On the day of the strike he attempted to portray those staffing emergency departments as having “crossed the picket line”. Junior doctors (many already contemplating better paid, more leisurely careers in America or Australia) quickly turned against him. + +The seeds of their resentment have been nurtured perhaps too enthusiastically by the leadership of the BMA, whose rallies resonate to juvenile abuse of a health secretary who, the doctors neglect to acknowledge, has a manifesto commitment to fulfil. That the rhetoric surrounding the strike suggests that the very existence of the NHS is at stake, and not just the pay and protections of a portion of its staff, perhaps concedes that the details of the matter do not match the scale of the action. + +As the dispute goes on, at the Royal London Hospital the accident and emergency (A&E) waiting room is stuffed with runny noses and other non-urgent cases. “People used to go to their local priest for pastoral care; they now come to A&E,” says Chris Uff, a consultant neurosurgeon who recalls a well oiled reveller chasing down an ambulance on New Year’s Eve to ask whether he had money on his bus pass. + +Such gentle grumbling about patients is common, but there is a more serious way in which the public is to blame for the sickness of the health service. The electorate that notionally adores “our NHS” and propels a saccharine song by health workers to the top of the Christmas charts shows remarkably little willingness to pay more in tax towards what remains a relatively cheap system. Without extra money and facing ever wider and wrinklier patients, the NHS must tighten its belt by £30 billion ($43 billion), or about one-fifth, by 2020. It is in this context that Mr Hunt is trying to expand services to evenings and weekends. Pity the well meaning health secretary, pity the hardworking doctors—and blame the sentimental but hypocritical British public. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688407-junior-doctors-walk-out-over-change-their-contracts-strike-one/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The housing market + +Can we fix it? + + + +Building more houses is only part of the remedy for high prices + +Jan 16th 2016 | From the print edition + +WITH Britain’s property market fizzing, the obvious cure for bubbly prices is to ramp up housebuilding. The Conservative government wants to get the country building 200,000-250,000 homes a year, up from the current rate of about 140,000. Reaching that target is seen by many—including the Labour Party, which had an almost identical aspiration when last in government—as the acid test for any government’s housing policy. A bill approved by the House of Commons on January 12th contains a number of measures to boost construction. + +The idea that Britain needs to build 250,000 houses a year comes from an official review of housing supply carried out in 2004. It reckoned that such a level of private building was consistent with “real” (ie, inflation-adjusted) house-price increases of 1% a year. To get Britain up to the magic number of 250,000, the government will loosen planning rules and offer subsidies to boost the construction of “starter homes”, properties costing up to £250,000 ($360,000), or £450,000 in London. The bill also grants central government more power to bulldoze opposition to housing projects from sluggish or NIMBYish local councils. + +Even if these plans succeed in spurring on the builders, prices may continue to gallop upwards. For one thing, Britain is bad at putting houses where they are most needed. Since 2009 prices in the south-east have risen twice as fast as the national average. Land in the south-east is already intensively used, making development particularly difficult. New houses also mean building new infrastructure, such as schools and parks; the “green belts” of protected land that encircle most cities make it hard to squeeze all this in, says Adam Challis of JLL, a property company. Over the next two decades London is expected to require 50,000 new homes a year. Last year the city built less than half that number. + +On January 4th the government announced that it would supply building companies with publicly owned land where planning permission is already in place. Happily, most of the proposed sites are in overheating parts of the country, such as Northstowe, a proposed development near booming Cambridge. Yet some economists suspect that even this may fail to tame prices: a recent paper from the London School of Economics found that new developments may actually increase the value of housing in their surrounding areas, by bringing in new infrastructure and boosting the local economy through extra spending on shops and services. + +What to do? The focus on housebuilding overlooks a bigger potential source of supply in the form of existing homes. Although overcrowding (as measured by the number of people per bedroom) has been drifting upwards for 20 years, more than one-third of households have two or more spare bedrooms. Allocating housing more efficiently—encouraging elderly couples to downsize after their children fly the nest, for instance—would free up some of these 16m or so rooms. + +Turnover in the second-hand housing market, though, is slow. In the late 1980s more than 2m properties were bought and sold each year, twice as many as change hands today. As the population has aged, the average homeowner has become less likely to want to move, says Bob Pannell of the Council of Mortgage Lenders, an industry body. Moreover, with prices rising fast, people are not rushing to sell up. Stamp duty, a tax on housebuyers, has risen steeply over the long term, providing another disincentive to moving: someone buying an average-priced home in London faces an upfront bill of £15,000. + +Abolishing stamp duty would boost transactions by 8-20%, according to different estimates. Mr Challis reckons the government could boost transactions further by supporting bridging loans, in which a bank offers short-term finance to someone to buy a home before they have sold their current one. The government is beginning to act to accelerate the building of new houses. To bring prices into line, it must next free up the supply of old ones. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688352-building-more-houses-only-part-remedy-high-prices-unlocking-britains-16m-empty/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Social housing + +Back to the street + +The prime minister declares war on brutalist housing estates + +Jan 16th 2016 | From the print edition + +High rise or sink? + +“THE street wears us out; it is altogether disgusting!” wrote Le Corbusier, a modernist architect, in 1929. “Why, then, does it still exist?” His question set the tone for much post-war British planning, resulting in the construction of housing estates detached from streets and surrounding communities. They have often been accused of incubating social problems. Now David Cameron has weighed in to the debate, announcing that 100 of them could be demolished to attack poverty and crime. + +In a Sunday Times article on January 10th he denounced the “brutal high-rise towers and dark alleyways that are a gift to criminals and drug dealers”, and pledged £140m ($200m) towards replacing them with lower-rise, better-integrated estates that would help improve social order. Rioters in several English cities in 2011 “came overwhelmingly from these post-war estates”, he wrote. + +Research by Bill Hillier, a professor of architecture at University College London, suggests that the design of housing estates can contribute to social problems. He says there can be too many walkways, resulting in empty spaces where criminals can lurk. In a paper with Ozlem Sahbaz, based on five years of crime data in one London borough, he concludes that a higher density of people helps to deter crime (high-rises are often not as densely populated as medium-rise blocks built closer together), and that integration with streets, even full of strangers, is safer. + +Jeremy Till, another architect at the University of the Arts London believes the opposite is true: that “space arises out of...the social”. He calls Professor Hillier’s conclusions a “cul-de-sac of architectural determinism”, by which social malaise is too conveniently attributed to spatial, not political, causes. A forthcoming report by Create Streets, a research institute, agrees with Professor Hillier’s research, however, using regression analysis to link general well-being with connection to the street and community. + +“If you get the architecture right, you create a virtuous upward cycle that is good for community, for health and for economic vitality,” says Tim Stonor of Space Syntax, a consultancy that helped redesign Heygate, a notorious London estate that has been demolished and replaced with lower-rise housing. + +A report by Savills, an estate agent, suggests the space could be more efficiently used: there is room for up to 500,000 new homes on existing estate land, in addition to the rebuilt social housing, it says. The bigger problem for Mr Cameron may be how the process is funded and managed. In Heygate, residents like the new design, but former social tenants are angry that many of the new flats are being sold to pay for the regeneration. You can reconnect to the street, but it may then be put up for sale. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688409-prime-minister-declares-war-brutalist-housing-estates-back-street/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banking reform + +Culture wars + +Bankers face a behavioural Big Bang—but only if new rules are obeyed + +Jan 16th 2016 | From the print edition + + + +ACCORDING to KPMG, an accountancy firm, Britain’s banks handed over a whopping £38.7 billion ($56 billion) in fines and customer remediation between 2011 and 2014. This represented over 60% of their profits during the period. The scale of these payouts gives some idea of the toll that a succession of scandals took on the industry, from the manipulation of the LIBOR interest rate to the mis-selling of payment-protection insurance (not to mention the banks’ role in the financial crash of 2008). Once “masters of the universe”, bankers are now viewed with the same contempt that people reserve for politicians, and even journalists. + +Particularly after the LIBOR scandal of 2012, a lot of the blame for what went wrong has been attached to a “failure of professionalism and ethics”, to quote the Parliamentary Commission on Banking Standards (PCBS). This was a heavyweight body set up to recommend changes to the industry. Its was one of many investigations into banking culture, launched in the hope that by forcing bankers to behave more ethically, the debacles of the past might be avoided in future. Last year the Banking Standards Board, funded by the banks themselves, started work to improve banks’ practices and new rules were introduced governing bonuses. Those can now be clawed back in misconduct cases; on January 13th regulators suggested that the rules be tightened further. + +One inquiry into banking culture, by the Financial Conduct Authority (FCA), a regulator, was shelved on New Year’s Eve, leading to allegations of political interference by the Conservative government which, the opposition claims, is going soft on bankers. Even if that were true, bankers face an imminent step-change in the way that they have to behave, arising out of recommendations made by the PCBS in 2013. Its supporters hope for a cultural Big Bang, analogous to the deregulatory explosion that liberated financial markets in 1986. But as ever with new regulations, all will depend on how they are implemented. + +The “Senior Managers Regime” and “Certification Regime” will come into force on March 7th, largely the brainchildren of Andrew Tyrie, a Tory MP and chair of the PCBS. The rules for senior managers will introduce, for the first time, a criminal offence of “reckless misconduct” for managers whose actions lead to bank failure. There will also be civil charges for lesser offences. No longer, it is hoped, will bosses merely get a polite grilling before a parliamentary committee as their banks crash around them. Banks will have to submit organisational maps to regulators, to make clear who is responsible for what. In the event of bank failure, managers will have to prove that they took “reasonable steps” to prevent any breaches of rules in their particular areas. + +The Certification Regime requires banks to carry out annual reviews of the fitness and propriety of staff who could cause “significant harm” to the bank or its customers. This will probably cover thousands of jobs. The two schemes will be monitored by the FCA and another regulator, the Prudential Regulation Authority. + +However, much of the responsibility for implementation is left to banks, and as Mr Tyrie warns, “the spirit is willing at the top, but the flesh is weak. Several of these firms are still far too big to manage. The board may will the change and culture, but not enough happens lower down.” Mr Tyrie is also troubled by the effectiveness of the FCA, whose leader was pushed out last year and which has yet to find a replacement. “It required a good deal of prodding to get the FCA to start to implement certification,” he says. “The FCA has been struggling to adapt to the new regulatory environment. It should rely far more on its own judgment rather than on bureaucratic box-ticking and back-covering. For that we need a change in mindset not just at the banks, but also of the regulators. They are on a learning curve too.” + +For the banks, meanwhile, the biggest incentive to implement these new schemes properly is that they might help them to avoid paying out most of their profits in fines in future. That might even leave a bit more money for the bonus pool. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688431-bankers-face-behavioural-big-bangbut-only-if-new-rules-are-obeyed-culture-wars/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Scottish distilling + +Gin trap + +How Scotland is moving with new spirits + +Jan 16th 2016 | METHVEN, PERTHSHIRE | From the print edition + +Just a wee dram + +POPULAR lore has it that the older a distilled spirit, the finer and costlier it will be. But growing numbers of upstart young drinks-makers who are bringing gin back into fashion aim to disprove this. Moreover, they are challenging the mighty Scotch whisky industry. + +In a converted Perthshire farm building, Tony Reeman-Clark, whose career began in brewing before shifting to civil engineering and IT, started a small gin distillery in 2013. Its success means he is now contemplating doubling its capacity to 280,000 bottles a year; he has also moved into whisky production. + +His is one of more than 60 such distilleries to have started in Britain since 2011. Unlike whisky, which must be stored for at least three years, gin can be sold almost as soon as it is made. Although it requires juniper berries, it can also be infused with many herbs to produce a range of tastes and colours, adding to its craft-made appeal. Mr Reeman-Clark’s sales jumped after television featured one of his pale brown gins that turns pink when tonic water is added. + +Like most newcomers, his drink sells at roughly twice the price of big-brand gin. It seeks to cash in on the fad among “millennials” for traceable craft-made products, rather than big-name stuff. The Wine and Spirit Trade Association reckons this is why, although the volume of gin sales in Britain is up only 6% since 2012, their value has risen by 18%. + +Now Mr Reeman-Clark and others plan some novel whiskies. His three-year-old whiskies are being matured in casks made of wood other than the prescribed oak. He says: “I was told ‘You can’t do that.’ Yes, I can, I just won’t call it Scotch whisky.” He claims a lot of Scotch has become bland, produced in vast computer-controlled distilleries supervised by bored process technicians. + +The big distillers may splutter that, from peaty Islay malts to smoother Speysides, Scotch has plenty of variety already. Diageo, a big drinks multinational, is well aware of millennial fashions, unashamedly marketing Johnnie Walker, which sells more than 200m bottles a year, as a craft whisky. It has also created new whisky concoctions with crafty-sounding names such as Smoky Goat and Boxing Hares. The new kids may be tapping a rich new vein in the market, but the big boys are there too—and they have bigger budgets. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688421-how-scotland-moving-new-spirits-gin-trap/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +MediaCityUK + +Not so grim up north + +The BBC’s move north has received much criticism. Only some is fair + +Jan 16th 2016 | SALFORD | From the print edition + +Canal plus + +SALFORD docks were once among the busiest in the country. The city was boosted by the construction of the Manchester Ship Canal at the end of the 19th century. But, unlike neighbouring Manchester, the docks did not bring lasting prosperity. By the 1970s, trade was in decline—and the city was, too. The canal, once the largest navigation in the world, was not big enough for modern container ships. So in 1982 Salford docks closed. + +Television executives have since replaced toiling dockers. Redevelopment of the area began in the early 2000s when the Lowry, an arts centre, and a branch of the Imperial War Museum opened, both clad with striking metallic facades. Then, in 2007, the BBC chose the docks as the site for a new northern base to house departments previously located in the capital. The broadcaster, which has a commitment to be less “London-centric”, was attracted by a proposal from a consortium that included the local council and Peel Group, a property firm, which saw the broadcaster as the centre of a hub of media businesses. + +The move has had plenty of critics. Some cite it as an example of the broadcaster’s profligacy: moving cost £224m ($324m). Southern celebrities complain of the distance from London (one suggested the BBC’s bosses had “lost their marbles” by setting up shop in a “not very nice part of Salford”). One-fifth of BBC staff still commute from outside the north-west; most of those who moved to the area live in Manchester (or its more salubrious suburbs) rather than Salford. Even many locals are miffed. Few work in MediaCityUK, as the hub is now branded, and those who do tend to be cleaners or security workers, says Stephen Kingston of the Salford Star, a community-run newspaper. + +On a cold Friday afternoon, MediaCityUK is quiet; its gleaming buildings (which won Building Design magazine’s annual Carbuncle Cup for ugliness) stand above empty squares. BBC staff complain about the limited number of places to eat. But there are signs of improvement. The number of people employed in MediaCityUK has doubled in the past three years. “We wouldn’t have struggled in here a couple of years ago,” notes one businessman searching for a seat in a local private members’ club. And facilities are improving fast; it took 15 or 20 years for Canary Wharf, an east-London wasteland reborn as a financial-services district in the 1980s, to become a place that “wasn’t bloody awful,” says Mike Emmerich of Metro Dynamics, a consultancy with offices in London and Manchester. + +The pick-up partly reflects the BBC’s success in drawing other businesses to the area. Although some had hoped the hub would be bigger by now, less than half of the 6,100 people who work in MediaCityUK are employed by the BBC. Other employers include the University of Salford, which opened a campus on the site in 2011, and ITV, Britain’s second-biggest broadcaster, which moved some of its operations there in 2013. Smaller offices contain more than 200 media, technology and marketing businesses. + +The aim is to double the amount of office space in the next ten years, says Stephen Wild of MediaCityUK. The number of flats and hotel rooms is also due to grow. This will require better infrastructure. So far, the majority of investment has come from Peel Group, which has spent a total of £750m on the venture (and last year sold half its stake in MediaCityUK to Legal & General Capital, an insurance firm). Public bodies have spent a further £30m, mostly on improving transport links. + +The future of MediaCityUK is still uncertain. “The fact that fewer top decision-makers came up than expected means there is a slight feeling we may be five or six bad decisions away from the BBC creeping back to London,” says Mr Emmerich. The site faces competition from local rivals, particularly Manchester’s trendy Northern Quarter, for media and technology companies. And its growth has hardly come cheap. Nevertheless, it has shown that world-class firms can get on fine outside London—and that when they move, others follow suit. In a country so dependent on its capital, that is a valuable reminder. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688430-bbcs-move-north-has-received-much-criticism-only-some-fair-not-so-grim-up-north/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Don Corbote’s dodgy sally + +Inspired by Spanish radicals, Labour’s leader is forsaking his MPs for his idealistic activists + +Jan 16th 2016 | From the print edition + + + +“WE NEED more Quixotes,” urged Pablo Iglesias, the mass before him hanging on his every word: “We are dreamers, but we take our dreams very seriously.” The rally in Madrid’s central square last January was a milestone in the transformation of Podemos from a gang of professors into the movement that it is today. Last month it polled 21% in Spain’s general election. Like their counterparts in Greece’s Syriza, Mr Iglesias and his comrades take inspiration from the late Ernesto Laclau, an Argentine sociologist at Essex University. He wrote that lefties should embrace populism; combining charismatic, top-down leadership with bottom-up assemblies, marches and occupations. + +To know how much Podemos inspires Jeremy Corbyn is to understand the Labour Party today. Rare is the senior Corbynite who has not visited Madrid. Last summer Mr Iglesias endorsed his British admirer, who had hailed the Spaniard’s “new way of doing politics”. Seumas Milne, now Labour’s head of strategy (and, long ago, a trainee at this newspaper, where he learned of capitalism’s wickedness), wrote of the similarities between the two men. Momentum, the group that agitates for Mr Corbyn in local branches, is partly based on Podemos “circles”. + +The intellectual fingerprints of Laclau and Mr Iglesias are all over the Labour leader’s bid to restructure his party. Founded to secure political representation for the working class, Labour has long been dominated by its MPs and—such is the British system of cabinet government—its front bench. In their efforts to make the party newly electable, Tony Blair and his predecessors prised decision-making powers away from its left-wing members; by creating a loyal National Policy Forum, for example. Mr Corbyn is reversing such reforms in favour of a new, Laclauian vision. + +First, he is tightening his grip on the leadership. He has appointed allies to the most essential and sensitive roles: John McDonnell as shadow chancellor, Mr Milne as chief aide, Ken Livingstone, a former mayor of London, as defence adviser. In a reshuffle finalised on January 13th, Mr Corbyn swapped front-bench critics for loyalists; most notably appointing Emily Thornberry, a fellow opponent of Britain’s Trident nuclear deterrent, as shadow defence secretary. Meanwhile he has nudged Labour’s executive committee further in his direction and is now trying to strengthen it with a review that may give it the final say on big party policies and thus sideline the shadow cabinet. + +Second, and in true Podemos style, Mr Corbyn is shifting his party’s focus from its MPs to its grassroots. Momentum is already threatening heretical backbenchers with deselection. It may make good on the threat when impending constituency boundary changes put seats up for grabs. Meanwhile Labour’s leader is giving members much more say. In October he polled them before a vote on military action against Islamic State in Syria (75% were opposed, like him) and in an interview on January 11th near-confirmed that he would do the same ahead of any vote on the renewal of Trident, which he loathes. Mr Corbyn wants to use regular online consultations of members and registered supporters to set Labour’s policies. + +Tilting at Basildon + +All of which is jolly interesting—but electorally suicidal. Last month one in five voting Spaniards may have backed Podemos. But Britain has a more majoritarian electoral system, a less loathed establishment, a less fiery left-wing tradition and a youth unemployment rate of 14%, compared with 48% in Spain. Basildon is not Barcelona. Nor does Mr Corbyn possess Mr Iglesias’s flair and youthful appeal. + +Moderate MPs are responding to their rolling marginalisation in three ways that broadly map onto their ideological stances. The old Labour right, centred on West Midlands MPs and the Labour First group, is the most active in countering the Corbynite takeover; partly as it has a tradition of machine politics (tough, tribal Brummies were a bastion against the extreme-left in the 1980s) and partly because in Tom Watson, Labour’s deputy leader, it has someone ready to take over if Mr Corbyn falls. + +The soft left, including those around Ed Miliband, Labour’s previous leader, has a gentler strategy: to temper Mr Corbyn, reason with the new members and ultimately guide the party towards some sort of compromise. Meanwhile the liberal, Blairite right is in internal exile; quietly building up its resources, fighting off deselection bids and concentrating on other causes like an In vote at the upcoming EU referendum. It has no obvious figurehead, so is the most reticent of the moderate groups. Here one is most likely to hear the argument that Mr Corbyn must fail on his own terms; that his defeat must be unequivocally his fault. + +Labour’s problem is that none of these responses confronts the fact that its leader is getting stronger. More centrist members are leaving as lefties sign up (over half the party has joined since the election in May). The prospect of a candidate with the infrastructure to beat Mr Corbyn is more remote than ever. Swathes of centrist MPs could lose their seats—if not at deselections then when the party sallies into the next election opposing Trident. + +Joe Haines, who was press secretary to Harold Wilson, the last-but-one Labour leader to win a majority, propounds a fourth, better option. He urges moderate MPs to declare independence from Mr Corbyn and sit as a separate group in the Commons (a “nuclear option” some moderates refuse to rule out). The new party would forfeit Labour’s infrastructure, but would not struggle to attract donations. Some members may defect with their MPs. If larger than Mr Corbyn’s parliamentary caucus, this new social democratic party would be designated the official opposition. The genius of this option is that it would turn Mr Corbyn’s Laclauian strategy against him. He loves to talk of mandates and movements. But together Labour MPs have a mandate of 9.3m to his 250,000 supporters. The masses have spoken. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688404-inspired-spanish-radicals-labours-leader-forsaking-his-mps-his-idealistic/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Unwed parents and the law: Carriage and horse + +Unmarried and ill-informed: The common-law marriage myth + + + + + +Articles Sections Next + +Unwed parents and the law + +Carriage and horse + +Births out of wedlock are becoming the norm. How should governments respond? + +Jan 16th 2016 | From the print edition + + + +BRITAIN is nearly there; America not far behind; France passed the milestone in 2007. As couples wait longer to marry, and fewer eventually do, the number of countries where more births are out of wedlock than in it has risen to more than 20. Rates across the OECD group of 34 mostly rich countries vary hugely, from 2% in Japan to 70% in Chile. But overall the average is 39%—more than five times what it was in 1970 (see charts). + + + +Policymakers wish they could change the trend. Unmarried parents are more likely to split up. Their children learn less in school and are more likely to be unhealthy or behave badly. It is hard to say how much of this difference is due to marriage itself, however, because unmarried parents differ a great deal from married ones. They are poorer, less well-educated and more likely to be teenagers, for example. + +But efforts to persuade people who otherwise would not marry to do so have generally failed. Isabel Sawhill of the Brookings Institution, a think-tank, says that a plethora of policies in America, from tweaking incentives in the benefits system to teaching couples how to be better domestic partners, have had little or no effect on marriage rates. Better, she says, help women to avoid unplanned pregnancies and delay childbearing at least until they finish school and are in a solid relationship, whether married or not. + +Governments must still decide what to do when cohabiting couples break up or one partner dies. They tend to take one of three approaches: to treat unmarried couples like married ones if they have been together more than a couple of years; to treat them as if they were single; or to offer several formal alternatives to marriage and hope that couples will choose the one that suits them best. + +Subscribers to the first approach include Australia, New Zealand, Sweden and some Canadian provinces. For legal purposes, cohabiting couples are almost indistinguishable from married ones after some time living together, usually two or three years. De facto marriage may kick in earlier for parents. Some countries allow couples to opt out of some of the provisions of de facto marriage by signing a contract, for example if one partner wishes to exclude property, or money for offspring from a previous relationship. + + + +In Australia, however, couples rarely draw up opt-outs, says Belinda Fehlberg of the University of Melbourne. So courts still end up dealing with messy separations. One party may dispute the very existence of a relationship. In a property dispute in 2013 a judge ruled that a couple who had lived together for 14 years, holidayed together and had regular sex were not in a de facto marriage. The woman claimed they had been. The man, who had married someone else, said they hadn’t, because one had always paid rent to the other. + +In Brazil, where two-thirds of children are born to unmarried parents, couples whose relationship is “public, permanent and intended to form a family unit” are regarded as being in a “stable union”. They need not live together, and there is no set period before the law kicks in. Foreign clients find this startling, says Carolina Ducci of Mattos Filho Advogados, a São Paulo law firm; she advises those in unmarried relationships to declare a stable union in a notary’s office in case doubts arise. For those with the opposite concern—that a casual fling might demand alimony—there is no such quick fix. Some rich Brazilians insist on “dating contracts” at the start of any new relationship, says Ms Ducci—but these have no legal status. + +Marriages of inconvenience + +Such disputes are surprisingly rare, though, because Brazilians know the risks. Anyone determined not to enter a stable union will do nothing that a judge might take as evidence of one. Pictures together on Facebook show that a relationship was public, for example. Paying bills jointly, sharing a bank account or making loan repayments for a partner can be taken as intent to form a family. More common are legal battles after one partner dies: children from a former marriage, who lose out if their parent enters a new union, may dispute that a partner was a de facto spouse. + +By comparison, recognising only formal marriage has the merit of clarity. But countries that take this approach, such as many American states, England, Italy and much of eastern Europe, have problems, too. The assumption that all those who want the rights and obligations of marriage will wed is often wrong. In many countries lots of unmarried couples mistakenly believe that they have all the rights of married ones after they have lived together for some time (see article). And often, says Robert Wintemute of King’s College London, one partner wants to marry but the other does not. The reluctant party is usually the richer one, most often the man. + +Some people in this situation will leave and look for a less marriage-shy partner; others realise their predicament only after children are born, when keeping the family together trumps unshared marital aspirations. They risk poverty, even homelessness, if they are bereaved or the relationship comes to a bitter end. After a divorce, the parent who does most of the child care usually gets the family home, no matter whose name it is in or who paid for it; without marriage there is no such guarantee. + +In England, bereaved unmarried partners may have to sell the family home to pay inheritance tax that a spouse would have been exempt from—if they are lucky enough to be left it, that is. Without a will, they may be made homeless by blood relatives favoured by the intestacy rules. The British government has done nothing to change these, despite recommendations from the parliamentary law commission and family lawyers’ association that some unmarried partners be given the inheritance rights of spouses. + +Belgium, France and the Netherlands take a third approach, offering a range of formal options short of marriage. A cohabitation agreement, one of the options in the Netherlands, can be drawn up by a notary; more than half of unmarried Dutch couples had one in 2008. Couples can tailor these with details on how assets and expenses will be shared. A popular choice in France is the pacte civil de solidarité (PACS), which confers many of marriage’s rights and duties but is easier to end: one partner can terminate it by a registered letter or by marrying someone else, without giving notice to the (possibly surprised) ex. Couples in a PACS get the same income- and inheritance-tax breaks as married ones. But if they separate neither can claim alimony or the other’s property. About two-thirds as many French couples are in a PACS as are married—a popularity that has spawned a new verb: se pacser (to “get pacs-ed”). + +But even when several options are on offer, many couples choose none. A fifth of French and Dutch cohabiting couples are in no form of registered partnership—the same share as in England, where marriage is the only option. (English same-sex couples can also enter into a civil union, a remnant of the equal-but-separate era before gay marriage became legal in 2014.) In the end governments face a trade-off. Treating long-lasting cohabitation as marriage leads to fewer bereaved and wronged families—but also blurs a once-clear line. Not doing so, though, puts the law out of step with the way families are evolving. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21688382-births-out-wedlock-are-becoming-norm-how-should-governments-respond-carriage-and/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Unmarried and ill-informed + +The common-law marriage myth + +Many cohabiting couples misunderstand their legal status + +Jan 16th 2016 | From the print edition + +IF YOU live together like a husband and wife for a number of years, then in the eyes of the law you are married. It is startling how many people in England believe this. Yet it is a myth. + +Despite an information campaign, over half of unmarried English couples living together in 2006—when the campaign had been running for three years—believed that their legal position was the same as that of married couples. Half the general population did, too. In fact, common-law marriage has not legally existed in England since the 16th century. + +In America, family lawyers push the message that living together for seven years—or any amount of time—does not make you a married couple. Why so many Americans believe in this seven-year cut-off is mysterious. A handful of American states, including Alabama and Colorado, do recognise common-law marriage, meaning that a couple may be legally treated as married if they live as a family and present themselves as a husband and wife. But people all over the country mistakenly believe that this is also the case in their state. + +In Canada, says Robert Leckey of McGill University in Montreal, a similar confusion results from laws that call unmarried couples “legal spouses” for the purposes of tax and benefits. Many assume that they are as good as married for everything else, too. + +Even when unmarried people know what the law says, research shows, optimism may mean they neglect pragmatic measures such as ensuring that they are recognised as co-owner of the house they share. Most couples who move in together, whether they marry or not, believe that they will either stay together for life or separate amicably. Some fear being viewed as gold-diggers or spoiling the ardour if they brandish paperwork that says who gets what if things turn sour. + +Prodding and advice do not help much either. Before gay marriage became legal in America, few gay couples named each other as next of kin or drew up wills in each other’s favour, despite reminders from activists, says Gordon Morris of Unmarried Equality, a lobby group. In England researchers followed up with 102 people in unmarried couples who had visited an official website with information and model agreements about property, next-of-kin wishes and so on. None had gone on to sign one: the most common reason was that they had not got around to it, though they intended to. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21688381-many-cohabiting-couples-misunderstand-their-legal-status-common-law-marriage-myth/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Clean energy: An increasingly precious metal + +Chinese acquisitions abroad: Better than barbarians + +Planemakers: A smoother ride + +E-commerce in India: Local heroes + +The biotechnology industry: Clusterluck + +Schumpeter: The other side of paradise + + + + + +Articles Sections Next + +Clean energy + +An increasingly precious metal + +Amid a surge in demand for rechargeable batteries, companies are scrambling for supplies of lithium + +Jan 16th 2016 | SAN PEDRO ATACAMA | From the print edition + + + +SQM, Chile’s biggest lithium producer, is the kind of company you might find in an industrial-espionage thriller. Its headquarters in the military district of Santiago bears no name. The man who for years ran the business, Julio Ponce, is the former son-in-law of the late dictator, Augusto Pinochet. He quit as chairman in 2015, during an investigation into SQM for alleged tax evasion. (The company is co-operating with the inquiry.) Last month it emerged that CITIC, a Chinese state-controlled firm, may bid for part of Mr Ponce’s controlling stake in SQM, as part of China’s bid to secure supplies of a vital raw material. + + + +The focus of CITIC’s interest appears to lie on a lunar-like landscape of encrusted salt in Chile’s Atacama desert. It is a brine deposit washed off the Andes millions of years ago, containing about a fifth of the world’s known lithium resources. (Even more are in adjacent Bolivia but they are mostly untapped; see chart 1.) Just weeks before, CITIC had bought a stake in a Hong Kong electric-vehicle maker that uses lithium-ion batteries, indicating its growing interest in clean-energy technologies. + +At SQM’s facilities the brine is pumped from an underground reservoir into hundreds of ponds. As it evaporates it turns into shades of blue and green, making the plant resemble a giant artist’s palette. It produces mostly potassium compounds but also a viscous liquid, lithium chloride. This is taken by tanker to a plant near the coast where it is turned into finely powdered lithium carbonate and hydroxide, which are then shipped around the world. + +It is not a big business: lithium accounts for only about 5% of the materials in some car batteries, and for less than 10% of their cost. Worldwide sales of lithium salts are only about $1 billion a year. But the element is a vital component of batteries that power everything from cars to smartphones, laptops and power tools. With demand for such high-density energy storage set to surge as vehicles become greener and electricity becomes cleaner, Goldman Sachs, an investment bank, calls lithium “the new gasoline”. + + + +SQM is part of a global scramble to secure supplies of lithium by the world’s largest battery producers, and by end-users such as carmakers. That has made it the world’s hottest commodity. The price of 99%-pure lithium carbonate imported to China more than doubled in the two months to the end of December, to $13,000 a tonne (see chart 2). + +The spike mostly reflected concerns about the future liquidity of China’s spot market. China gets much lithium from spodumene rock in Australia, an alternative to South American brine. Albermarle, an American miner, and Tianqi, its Chinese joint-venture partner, plan to use spodumene from a big Australian mine to process more battery-grade lithium carbonate and hydroxide. That will mean less ore available on the spot market in China. + +The industry is fairly concentrated, which adds to the worry. Last year Albermarle, the world’s biggest lithium producer, bought Rockwood, owner of Chile’s second-biggest lithium deposit. It and three other companies—SQM, FMC of America and Tianqi—account for most of the world supply of lithium salts, according to Citigroup, a bank. What is more, a big lithium-brine project in Argentina, run by a joint venture of Orocobre, an Australian miner, and Toyota, Japan’s largest carmaker, is behind schedule. Though the Earth contains plenty of lithium, extracting it can be costly and time-consuming, so higher prices may not automatically stimulate a surge in supply. + +Demand is also on the up. At the moment, the main lithium-ion battery-makers are Samsung and LG of South Korea, Panasonic and Sony of Japan, and ATL of Hong Kong. But China also has many battery-makers. Adam Collins of Liberum, another investment bank, talks of an “inflection-point” in Chinese demand for lithium salts. Its government is stepping up the promotion of lithium-ion batteries and electric vehicles, with the biggest emphasis on buses. Sales of “new energy” vehicles in China almost tripled in the first ten months of 2015 compared with the same period in 2014, to 171,000 (though they remain less than 1% of total vehicle sales). + +Tesla Motors, an American maker of electric cars founded by Elon Musk, a tech tycoon, is also on the prowl. It is preparing this year to start production at its “Gigafactory” in Nevada, which it hopes will supply lithium-ion batteries for 500,000 cars a year within five years. J.B. Straubel, Tesla’s chief technical officer, says the firm wants to secure supplies of many battery materials, not just lithium. “There’s so much hype in the lithium market right now...people look at it as this magical element,” he says. Nonetheless, in August Bacanora, a Canadian firm, said it had signed a conditional agreement to supply Tesla with lithium hydroxide from a mine that it plans to develop in northern Mexico. Bacanora’s shares jumped on the news—though analysts noted that shipping fine white powder across the United States border would need careful handling. + +Bigger carmakers also have a growing appetite for lithium. In a recent shift, Toyota has begun offering lithium-ion batteries instead of heavier nickel-metal hydride ones in its Prius hybrid. Mr Collins notes that tougher emissions standards in Europe and America are likely to boost carmakers’ need for lithium. + +Another big source of demand may be for electricity storage. The holy grail of renewable electricity is batteries cheap and capacious enough to overcome the intermittency of solar and wind power—for example, to store enough power from solar panels to keep the lights on all night. Tesla says that next month it will start installing “Powerwall” battery packs in American and Australian homes to store solar energy, at a cost of $3,000. Enel, an Italian utility, is launching similar storage products this year in South Africa, where homes and businesses suffer frequent black-outs. + +Power utilities will increasingly use giant battery packs, charging them at times of low demand and tapping them to provide short bursts of electricity at peak times, an alternative to building a fossil-fuel plant that will sit idle the rest of the time. AES Energy Storage, a big provider of energy storage, won a contract in 2014 to provide a “peaker plant” in Southern California that will provide up to 100 megawatts (MW) of power into the grid at moments of maximum demand. In December, the firm agreed to buy, over several years, enough lithium-ion batteries from LG to provide ten times this level of peak power—that is, 1 gigawatt, or more than the output of an entire, typical-size coal-fired power station. “We’re hybridising the power grid,” says John Zahurancik, its boss. + +Lithium-ion technology nonetheless attracts legions of sceptics—and not just petrolheads. In a paper published last month, researchers linked to the federally-funded Argonne National Laboratory in Chicago wrote that large-scale batteries need to offer hundreds of miles of driving range, be rechargeable in minutes instead of hours, and provide power at costs comparable with natural gas. These demands are “beyond the reach” of lithium-ion technology, they argued. Tesla’s Mr Straubel, however, foresees at least another doubling in the performance of lithium-ion batteries, and thinks lithium will continue to shape the battery of the future. + +The juice still to be squeezed from lithium-ion batteries can be seen at the Angamos power plant on Chile’s northern coastline. It uses 1m lime-green battery cells in ten shipping containers to regulate the electricity grid across the Atacama region at times of peak demand, including at SQM’s lithium-mining operations hundreds of miles away across the desert. For the lithium the power plant uses, it is a homecoming. Extracted at SQM, it was sent to China to be turned into cells, put into battery packs in America, and shipped back to Chile by AES Energy Storage. That is a long journey for a tiny element of a little battery cell—but one that may embody the future of the world’s energy supplies. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21688386-amid-surge-demand-rechargeable-batteries-companies-are-scrambling-supplies/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Chinese acquisitions abroad + +Better than barbarians + +Rich-world firms are warming to the idea of being Chinese-owned + +Jan 16th 2016 | SHANGHAI | From the print edition + +Ren and a piece of his chemicals empire + +DESPITE the anaemic state of the global economy, companies from mainland China are investing abroad like never before. Chinese firms closed overseas deals worth $61 billion last year, according to a new analysis by the Rhodium Group, a consulting firm. This was up by 16% on 2014, and is the highest level on record. What is more, these firms are not all chasing natural resources such as oil and copper, as in the past. + +On January 12th Dalian Wanda, a Chinese property and entertainment conglomerate, confirmed its long-rumoured purchase of Legendary Entertainment for about $3.5 billion. The acquisition of the American film studio behind “Jurassic World”, “The Dark Knight” and other blockbusters fulfils the dream of Wang Jianlin, Wanda’s boss, of becoming a global movie mogul. The same day, news surfaced that Beijing Kunlun Tech, a Chinese online-games firm, has acquired a majority stake in Grindr, an American social network for gay men, for about $93m. + +However, perhaps the most intriguing Chinese foreign purchase of the week is the acquisition by a state-owned chemicals firm of an obscure German maker of machinery to process rubber and plastic. China National Chemical Corp, more commonly known as ChemChina, bought KraussMaffei for about $1 billion. + +ChemChina itself rose from obscurity thanks in large part to Ren Jianxin, its chairman. Three decades ago he borrowed 10,000 yuan (less than $2,000 at today’s rates) to start a solvents factory. In the following years, he forged the ChemChina empire by taking under his wing more than 100 distressed state-owned chemical plants across the country, with the government retaining ownership. He minimised lay-offs by shifting workers to one of the group’s sidelines, Malan Noodle, a restaurant chain. He professionalised management by bringing in outside consultants. Even a foreign chemicals boss who insists that “90% of ChemChina’s assets are rubbish” grudgingly praises Mr Ren’s vision and management style. + +ChemChina is now emerging as the most dynamic globaliser among China’s state enterprises. Already, it has a string of foreign acquisitions under its belt (see table). Most notable among these is its $7.7 billion deal last year to buy Pirelli, an Italian tyremaker, which will be completed shortly. That was the largest Chinese purchase yet seen in Italy, and the KraussMaffei deal will be the biggest foray by a mainland Chinese firm into Germany. ChemChina is also in a bidding war with Monsanto, an American agribusiness firm, for control of Syngenta, a big Swiss rival. If ChemChina prevails with its latest reported bid for 70% of Syngenta, valuing it at $44 billion, it will be the biggest Chinese foreign acquisition yet. + + + +Why are Chinese firms so keen to go abroad? Some pundits suspect that the firms’ bosses, afraid of getting caught up in President Xi Jinping’s anti-corruption purge, are parking assets abroad. Yet there are easier and quieter ways to get yuan through China’s porous currency controls. Anyway, some of the firms buying abroad, such as ChemChina, are owned by the state itself. Others think investment opportunities are drying up on the mainland. But even if Chinese growth is only 5-6% rather than the reported rate of around 7%, it would still be stronger than in the rich countries where Chinese firms are buying. + +The main reason for Chinese firms’ buying spree is to get the brands, technologies and talent they lack, to capitalise on future waves of growth at home. That is not new in itself; what has changed is the warmth of the welcome they get. In the past, ruthless mainland firms, gobbling up resources firms, caused a backlash in the countries they entered. Today’s Chinese globalisers, says Klaus Meyer of the China Europe International Business School, are more sophisticated and hands-off with their acquisitions. + +“ChemChina could be a good owner” of Syngenta, agrees Jeremy Redenius of Sanford C. Bernstein, a research firm, pointing to the success of its earlier acquisition of Adama, an Israeli firm. Some rich-world firms may now find Chinese ownership more attractive than suffering the rules of Western stockmarkets or the meddling of private-equity firms. The marauders from the Middle Kingdom may be more welcome than the barbarians at the gate. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21688389-rich-world-firms-are-warming-idea-being-chinese-owned-better-barbarians/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Planemakers + +A smoother ride + +Why Airbus and Boeing have less to fear than before from the aviation cycle + +Jan 16th 2016 | LONDON AND PARIS | From the print edition + + + +BACK in November 2013 at the Dubai Air Show, the aviation cycle was clearly in full upwards swing. The four big Gulf carriers alone, Emirates, Etihad, Flydubai and Qatar Airlines, bought planes worth more than $170 billion, at list prices, off Boeing and Airbus in one day. Fast forward two years to the most recent Dubai show, in November 2015, and the picture is, at first sight, more worrying for the world’s two biggest planemakers. There was only one big airline order of note, by Vietjet of Vietnam, for Airbus planes worth $3.6 billion. + +Could this signal a downswing in the aviation cycle, and a collapse in demand for planes? That is the question on investors’ minds as Boeing prepares to announce its full-year results on January 27th, with Airbus to follow in February. Although in recent days Boeing and Airbus have revealed record production figures for 2015, new orders net of cancellations fell by almost half at Boeing and a third at Airbus compared with the previous year (see chart). + +With bulging order books that ought to keep them busy into the 2020s despite planned production increases, the planemakers are not panicking yet. Indeed, the fall in orders in 2015 was in part because airlines saw little point in buying planes that might take almost a decade to be delivered. The fear is that, as happened in the past, the order book will unravel, with a wave of cancellations hitting profits. + + + +This time really should be different, analysts believe. Even a global economic downturn should only result in a soft landing for the industry. One explanation is that the reason why airlines buy new planes has changed since the financial crisis, explains Jason Gursky of Citigroup, a bank. In the aviation cycles before 2008, around 70% of demand for new planes was from airlines and leasing companies planning to add capacity, with the replacement of their older jets accounting for just 30%. But since then, demand from customers seeking to replace old planes has risen to more than half of deliveries. Such orders are less affected by the state of the economy than planes being bought to expand the airlines’ schedules. + +The airlines are busy swapping old jets for new because the planemakers have brought out more fuel-efficient versions of the Boeing 737 and Airbus A320, their short-haul models; and introduced new long-haul models, the Boeing 787 Dreamliner and Airbus A350, which are also more efficient than older equivalents. The slump in oil prices means that jet fuel is a lot cheaper than it used to be. But it is still a big part of an airline’s operating costs. And since any given carrier’s rivals are upgrading their fleets, it has little option but to buy new planes itself. + +Fortunately, the falling cost of fuel has boosted airlines’ profits, giving them the money to renew their fleets. And the full effect of the oil slump has yet to be enjoyed: some European airlines hedged their jet-fuel requirements at an equivalent crude price of $90 a barrel in 2015, whereas the spot price had fallen below $40 by the year-end, and is now around $30. + +Another reason why the aircraft market has become less volatile is the rise of no-frills airlines. Since they are more willing than full-service airlines to vary prices to smooth the ups and downs of demand for flights, that means their demand for planes is less bumpy. Budget carriers’ strong position in emerging markets, where demand for air travel is growing fast, is helping. They account for around 60% of seat capacity in India and South-East Asia, compared with about 40% in Europe, according to CAPA, an aviation-consulting firm. + +State-owned planemakers in China and Russia are bringing out rivals to the 737 and A320, but their fuel efficiency is poorer than that of the two Western planemakers’ latest models, says John Leahy, Airbus’s chief operating officer. So their impact is likely to be limited. A Canadian new entrant, Bombardier’s CSeries, has won little interest from airlines. + +So, Boeing and Airbus can continue steadily expanding their output while maintaining a healthy backlog. This will give them plenty of scope for coping with any dips in demand for planes, notes Mr Gursky—and if demand keeps growing, the lack of good alternatives will allow them to put their prices up. + +Although the overall appetite for new planes has become less cyclical, orders for individual models can still be quite volatile, says Thomas Picherit at AlphaValue, a research firm. For example, airlines have held back from buying Airbus’s medium-range A330 until a revamped version, the A330neo, has its maiden flight, expected later this year. The lull in orders has dented the profits of Rolls-Royce, which builds engines for the planes. + +At the big end of the commercial-aircraft market, a lack of new models may be depressing sales. The latest version of Boeing’s 747 jumbo, and Airbus’s even bigger A380, are starting to look dated. Some airlines want to see newer, more fuel-efficient versions before they will place fresh orders. So those planes’ assembly lines, and their suppliers, are going slow, even as the output of smaller planes soars. + +Even if Boeing and Airbus are likely to enjoy more predictable demand than in the past, the airline business will continue to be a turbulent one, with some carriers retreating, and occasionally failing, in the face of rising competition from more efficient upstarts. That will produce some cancellations of aircraft orders. Planemakers will not care, so long as the winners in this battle for the skies simply take the place of the losers in their order books. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21688392-why-airbus-and-boeing-have-less-fear-aviation-cycle-smoother-ride/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +E-commerce in India + +Local heroes + +Online grocers are offering small shops a lifeline in the age of smartphones + +Jan 16th 2016 | MUMBAI | From the print edition + + + +AS PERSONAL service goes, few big retailers can match the tailor-made offerings of India’s 15m or so tiny, family-owned shops known as kiranas. In addition to selling all manner of goods, most are happy to cut and deliver small amounts of fresh food—1kg of onions, say—and let customers buy on credit. + +The steady advance of home-grown supermarket chains has so far done little to dim the kiranas’ prospects; and successive Indian governments have been reluctant to let in foreign grocers, for fear that many households would lose their livelihoods. With more than 200m Indians now able to access the internet on their mobile devices, e-commerce might appear a bigger threat. A clutch of Indian and foreign-owned online grocers has been set up in the past few years. Rather than supplying all their goods from central warehouses, however, most have struck partnerships with kiranas and other physical retailers. They employ an army of young workers to collect orders from kiranas and other local shops, and deliver them to the customer, often within the hour. + +Aniket Moré, aged 18, is one such worker. His employer is Grofers (as in “grocery gofers”), founded in 2013. When a customer uses the firm’s app to order, say, a cake, a bottle of Coke and bag of tomatoes, Aniket hops on his bike, collects the tomatoes from a small depot run by a contractor (this is how it ensures the quality of fresh produce), buys the Coke from a local kirana and then calls in at a nearby cake shop. He has a colleague riding pillion to help him. “The cake needs protection,” he says. + +Grofers also deploys a shopper at some kiranas, who is notified of orders on his smartphone. He buys the necessary items from the shopkeeper and has them ready for when the deliverer swings by. On busy days, just before the shopper runs out of cash, another company man calls at the kirana to top it up. + +Grofers, and other firms trying this labour-intensive model, reckon that by linking with the myriad small shops in Indian cities, they will be spared having to spend heavily on warehousing in a country where urban land is scarce. It will also, they hope, help them to scale up fast, and make deliveries rapidly. For the big foreign firms entering the Indian market, such as Amazon, even if they do build central warehouses, it may also suit to be seen working with small local retailers rather than going all out to squash them. + +Critics such as Arvind Singhal of Technopak, a retail consultant, argue that adding another layer to the supply chain just makes the business inefficient. Customers also need to be won round. Grofers has pulled out of nine cities, blaming “low acceptance of its service in these areas”. LocalBanya, another online grocer that sourced products from local shops, ceased operations in October. Earlier in 2015 Paytm, an Indian e-commerce firm backed by Alibaba of China, shut down a similar grocery app within two months of launch. + +These struggles are not, so far, deterring Grofers’ bosses. They argue that a volume-driven business such as theirs takes time to build. “We are still in the habit-forming stage,” says Saurabh Kumar, one of the firm’s founders. Nor is it putting off Amazon, whose KiranaNow service has a slightly different model, letting kiranas set up virtual stalls and take orders by smartphone app, to be delivered either by the kirana’s own workers or by Amazon’s delivery service. BigBasket, currently the largest among India’s online grocers, offers two levels of service: for a household’s big monthly shop it fulfils orders from a central warehouse. But it also has tie-ups with kiranas so that consumers can order daily top-ups from them. + +None of the online grocers is yet in profit. Last month Grofers reported losses of 39m rupees ($591,000) on revenues of 7.3m rupees in its first full year of operations. Hari Menon, the boss of BigBasket, expects it to break even by 2018, on revenues of more than $1 billion. Investors so far seem patient. Grofers’ backers have provided $166m in the past two years, and BigBasket is about to close a $120m financing round with a consortium of lenders. + +It remains far from certain which, if any, of these attempts to bring kiranas into the age of smartphone shopping will succeed, even though India has a plentiful supply of young deliverers, like Mr Moré, prepared to work hard for modest pay. In the long term, large-scale online retailing, using central warehouses, will surely prove more efficient. Even then there is likely to be a place in Indians’ hearts, and wallets, for the local shopkeeper who knows them by name and for whom no order is too small. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21688388-online-grocers-are-offering-small-shops-lifeline-age-smartphones-local-heroes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The biotechnology industry + +Clusterluck + +Boston’s biotech hub is surviving the challenge from Silicon Valley + +Jan 16th 2016 | CAMBRIDGE, MASSACHUSETTS | From the print edition + + + +DISTANCE is not dead. In biotechnology, as in other tech-based industries, the clustering of similar firms is more important than ever. Some American biotech startups are based in the San Francisco and Silicon Valley area, huddled with its many digital and IT startups. But the Boston metropolitan area—and in particular Cambridge, across the Charles river from central Boston—seems to be holding its own as the world’s pre-eminent biotech hub. + +The San Francisco area’s pool of venture capital is beyond compare; and a biotech-industry body there, the California Life Sciences Association, argues that California is the number one state for biomedical employment. But in part that is simply a reflection of the state’s large population, which means its health-care business is necessarily big. The Massachusetts Biotechnology Council claims that its state employs more people in biotech research and development than any other. + +A study published last month by the Massachusetts Institute of Technology (MIT) found that although, per head, the Boston area had fallen well behind San Francisco and Silicon Valley in creating software and internet startups, it was more or less keeping pace in life sciences. The density of research institutions in Massachusetts means that it receives $351 per head in funding from the National Institutes of Health, well ahead of the Golden State’s $88. This density of research was a reason cited by General Electric, which has a big medical-technology division, in its announcement this week that it will move its group headquarters to Boston. + +The history of the Boston area cluster can be traced to the late 1970s and early 1980s, when Biogen and Genzyme, two biotech drugmakers, were founded by scientists from nearby academic institutions. Other scientists, especially from MIT and Harvard, Cambridge’s two internationally renowned universities, followed suit and created innovative startups of their own. + +This encouraged global pharmaceutical giants, struggling with poor productivity in their existing research facilities, to set up labs in and around Cambridge. Novartis of Switzerland began work on its outpost in 2002, followed by such names as AstraZeneca of Britain and Baxter of Illinois, which in 2015 spun out its Cambridge labs as Baxalta, a specialist in “orphan” diseases. This week Baxalta agreed a $32 billion takeover by Shire, an Irish drugs giant. + +The cluster lacked a clear focal point until 2010, when MIT, the main landowner around Kendall Square—an area about a mile in all directions from the Kendall/MIT subway station in Cambridge—decided to spruce it up. One report suggests the square currently hosts firms that have absorbed about $14 billion in venture-capital investments. Silicon Valley’s overall pool of capital may be deeper, but much of it flows to areas other than biotech. And the global drug giants with outposts in the Boston area provide an alternative source of finance, and of eventual buyers for startups. + +Tom Andrew of Alexandria Real Estate, a property agent specialising in science buildings, notes that the Boston area’s universities, teaching hospitals and other institutions are a sink, as well as a source, of talent. Anyone who accepts a risky job at a startup can be sure that if things don’t work out there are lots of big employers nearby to fall back on. + +The cluster’s promising young firms include four—Editas Medicine, CRISPR Therapeutics, Intellia and Bluebird Bio—that are working on “gene editing”, currently one of the hottest areas of biotech. WuXi NextCODE, another local startup, specialises in analysing genomes. Alnylam concentrates on drugs that interfere with RNA, the messenger molecule through which genes express themselves. Not satisfied with just editing, deciphering or blocking nature’s blueprints, Synlogic is seeking to create medicines through entirely artificial sequences of genes. + +Synlogic’s boss, Jose-Carlos Gutiérrez-Ramos, formerly of Pfizer, has worked around the world and praises the “density of intellectuals” in Boston and the opportunities that come from being able to make easy connections. With little travel time between appointments, it is easier to arrange meetings. Dan Budwick of Pure Communications, a public-relations firm which represents some of the area’s startups, says that “You can jump on a bike and see 30 companies in a mile. You can’t do that in San Francisco or Manhattan.” + +Boston’s tech cluster has a different vibe from Silicon Valley’s in other ways too. Edward Farmer of WuXi NextCODE says Boston’s biotech crowd are a more formal bunch, who wear proper shirts—and tuck them in. They know which fork is for the salad because salad is not the only thing they eat. Beer is the recreational drug of choice, rather than cannabis. + +The cranes sprouting across the skyline suggest more growth ahead. But demand is still running ahead of supply. In the Boston area rents for laboratory space rose by 7% last year to around $47 a square foot ($505 a square metre), compared with $37 in San Francisco. Already, some companies are having to seek space in districts like Alewife or Watertown, on the far side of Harvard’s campus. + +Though it is on a roll, the Boston biotech cluster must keep a nervous eye on its West Coast rival, especially if, in future, biotech ventures come to rely on software, wearable sensors and big-data analysis, areas in which Silicon Valley is strong. At least that is a problem it can try to address. The weather is not. The biggest annual jamboree for investors in biotech, organised by J.P. Morgan, a bank, opened this week in its customary location of San Francisco. The temperature was a balmy 13º Celsius, to Boston’s shivering -1º. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21688385-bostons-biotech-hub-surviving-challenge-silicon-valley-clusterluck/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +The other side of paradise + +Glamorous tech startups can be brutal places for workers + +Jan 16th 2016 | From the print edition + + + +SOFTWARE firms are supposed to be a paradise for “talent”. Not only are their workers fabulously paid, but they are showered with perks as well. They can gorge themselves on free food cooked by Cordon Bleu chefs. They can snooze in nap pods or, if they feel more energetic, work out in on-site gyms or take yoga classes. There are dry-cleaners on the premises to do their laundry and buses to ferry them to and from work. + +There is some truth in this. Such companies have few resources other than their employees’ brains. And the battle for those brains is becoming more intense as the digital revolution reconfigures swathes of the business world. Giants such as Google and Facebook are seeking to reinforce their position at the heart of this new economy by investing heavily in research and expanding into ever more areas. Google’s headcount has grown by 157% in the past five years, to about 60,000. Smaller startups are also scrambling to attract talent; and manufacturers are responding to the digitisation of their industries by hiring coders and other tech geeks. Carmakers such as GM, Ford, Nissan and Toyota have all set up research outposts in Silicon Valley. + +This is producing a pay-and-perks arms race. The biggest companies are building awe-inspiring headquarters: Apple’s “spaceship”, designed by Norman Foster, will cover 2.8m square feet (260,000 square metres) and Google’s new offices will sit under a vast, translucent dome. Some firms, such as Netflix, offer staff “unlimited” holidays. Facebook is offering up to $20,000 to female employees who want to freeze their eggs. Uber and Airbnb, two stars of the sharing economy, have lured away a couple of Google’s top chefs, Alvin San and Rafael Monfort. + +However, a career as a software developer or engineer comes with no guarantee of job satisfaction. A survey last year of 5,000 such workers at both tech and non-tech firms, by TINYPulse, a specialist in monitoring employee satisfaction, found that many of them feel alienated, trapped, underappreciated and otherwise discombobulated. Only 19% of tech employees said they were happy in their jobs and only 17% said they felt valued in their work. In many areas they were even more discontented than non-tech workers: 36% of techies felt they had a clear career path compared with 50% of workers in areas such as marketing and finance; 28% of techies said they understand their companies’ vision compared with 43% of non-techies; and 47% of techies said they had good relations with their work colleagues compared with 56% of non-techies. + +Tech firms that offer lavish perks to their staff do not do so out of the goodness of their hearts. They offer them because they expect people to work so hard that they will not have time for such mundane things as buying lunch or popping to the dry-cleaners. As Gerald Ledford of the University of Southern California’s business school puts it, they are “golden handcuffs” to keep people at their desks. Some of the most extravagant perks are illusions: “take as much holiday as you like” may really mean “take as little as possible, and as much as you dare.” Some have vaguely sinister undertones: might the option for women to freeze their eggs end up becoming the expectation? + +The tech economy is a ruthless meritocracy. “A great lathe operator commands several times the wage of an average lathe operator,” Bill Gates once said, “but a great writer of software code is worth 10,000 times the price of an average software writer.” The most talented workers can command princes’ ransoms. Google reportedly offered a star engineer $3.5m in stock to dissuade him from defecting to Facebook. And Facebook paid $1 billion for Instagram, mainly to hire its 13 employees. But in this business those who are merely good, rather than great, are expendable; they can expect to labour in obscurity while the stars get the credit. + +On top of this merciless meritocracy is a layer of cruel fortune. No amount of talent or effort can make up for having chosen to work at Sidecar, a ride-sharing service which shut down in December, rather than Uber or Lyft, its still-expanding rivals. Moreover, tech startups typically attract talent by offering shares. Employees work like dogs in return for supposedly making a fortune when the firm goes public. However, such firms often use multiple classes of shares that preserve the biggest gains for insiders, leaving the employees with common stock that can easily lose value. In particular, startups have taken to offering later-stage investors guarantees that they will get their money back, if either a subsequent funding round or an eventual initial public offering (IPO) values their shares at a lower price than they are paying. When firms have to pay out on such guarantees, they generally do so by issuing extra shares, which dilute other common shareholders such as their staff. + +Unicorns and unicorpses + +Disappointments of this sort are becoming more common. A succession of startups, such as Square and New Relic, have sold their shares at substantial discounts to their previous valuations on going public. Others have been bought at a discount after abandoning hopes of an IPO: Gilt Groupe, an e-commerce firm, sold itself to Hudson’s Bay Company for $250m, having reportedly enjoyed a “unicorn” valuation of above $1 billion in its earlier fundraising. Michael Moritz, a venture capitalist, talks about “subprime unicorns” and James Clark, an entrepreneur, talks about “unicorpses”. If there is another tech bust, it will be the employees who will be most hurt. + +The tech industry offers fabulous rewards for a fortunate few: almost half of the world’s billionaires aged under 40 are tech types. It offers a wonderful life for many thousands more: they get to make serious money by turning science fiction into reality. But the industry is also rife with disappointments: endless toil that produces meagre returns; and dreams of reinventing the world that turn into just another tough and insecure job. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21688390-glamorous-tech-startups-can-be-brutal-places-workers-other-side-paradise/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +China’s labour market: Shocks and absorbers + +Buttonwood: Picnic for the bears + +Remittances in Central Asia: From Russia with love + +The oil market: $20 is the new $40 + +Lotteries: High stakes + +Poor financial decisions: Anti-choice + +SoFi: So far, so good + +Free exchange: Fight or flight + + + + + +Articles Sections Next + +China’s labour market + +Shocks and absorbers + +Unemployment is rising, but is not always visible + +Jan 16th 2016 | YIZHENG | From the print edition + + + +THE crane that looms over Sainty Marine’s shipyard on the lower reaches of the Yangzi river had been motionless for weeks when a worker climbed it late last year. The struggling company had stopped getting orders and, rather than deal with the headache of laying off its employees, it simply stopped paying them. The man on the crane threatened to jump to get the attention of local officials, coming down only when they promised to help him. Other workers took a somewhat safer, though (in a country where strikes are illegal) no less provocative measure to demand their missing wages: they marched out and blockaded a nearby highway. + +That Sainty Marine workers have resorted to such actions is perhaps not surprising. The global shipping industry is depressed, plagued by oversupply at a time when slowing trade means demand for new ships is shrinking. Chinese firms that rushed to expand are now gasping. Sainty Marine, which overextended itself by buying another shipbuilder, is veering towards bankruptcy. Withholding wages is a common tactic for Chinese companies in trouble; in Yizheng, the gritty town that is home to Sainty Marine’s shipyard, the local government has published statements admonishing employers for doing so. + +Many workers at other hard-hit companies, especially in heavy industry, are facing similar frustrations. The China Labour Bulletin, a watchdog group based in Hong Kong, recorded 2,774 strikes and worker protests nationwide in 2015, double the 1,379 posted in 2014. Police arrested four labour activists last week in the southern province of Guangdong, China’s manufacturing heartland—a sign of the authorities’ unease over the growing protests. + +Although the swooning stockmarket and falling currency have captured global attention in recent days, the effect of slowing growth on employment is a more sensitive problem for the government. The Communist Party has always treated markets and, by extension, investors with a certain disregard. Workers are different: the steady improvement in their living standards over the past three decades has helped to legitimise the party’s rule. + +How worried should it be? The stresses have made only a small dent so far in overall employment figures, at least in the official telling. The jobless rate crept up to 5.2% at the end of September from 5.1% at the start of last year, according to the latest government survey of 31 big cities. Manufacturing firms are clearly cutting jobs: the employment index in the closely watched Caixin survey of the sector dipped to 47.3 in December—its 26th consecutive month below 50, the threshold marking a contraction. But for services, a bigger share of the economy than manufacturing, Caixin’s employment index hit 51.3 in December, above last year’s low of 50.1 in August. That points to an expansion. + +However, the employment data are flattered by two uniquely Chinese shock-absorbers. First, the hukou system of household registration means that some 270m migrant workers who have gone to cities for jobs do not enjoy a permanent right to live in them, let alone collect unemployment insurance there. When they lose their jobs, they are expected to return to their original homes, often in the countryside, and do not count as unemployed. In 2008, at the height of the global financial crisis, tens of millions of migrants simply went back to rural areas, tilling fields or scrabbling for meagre pay in villages. There has been no similar exodus this time, but the countryside remains a safety valve that can help to absorb the unemployed. + + + +Daily dispatches: China's stockmarket mess + +The other buffer is one of the things hobbling the economy in the first place: state-owned enterprises (SOEs). Private firms are better run and more profitable, but SOEs, with their political backing, have far easier access to finance and dominate a series of restricted sectors, from energy to transport. These privileges carry with them political duties, including an obligation to help maintain social stability by refraining from laying off workers. With the army planning to cut some 300,000 positions as part of a modernisation plan, the government reminded SOEs last month that they are required to reserve 5% of vacancies for demobilised soldiers. + +In a working paper last year, analysts at the International Monetary Fund noted signs of “increased labour hoarding in overcapacity sectors”, helping to suppress unemployment at the cost of weaker productivity. But even SOEs do not have infinite resources. Loss-making companies with little prospect of turning round their performance are starting to shed workers. Longmay Mining, the largest SOE in the northern province of Heilongjiang, said in September that it would cut up to 100,000 jobs, nearly half its workforce. + +China’s economy should, in theory, be able to accommodate many of the unemployed. The working-age population peaked in 2012, so all else being equal, there is less competition for jobs. At the same time, the economy’s tilt towards the services sector, which is more labour-intensive than industry, generates jobs even as growth slows. Services probably accounted for more than half of China’s GDP last year for the first time in decades, and their share is growing: in nominal terms, service output grew by 11.6% year-on-year in the first nine months of 2015, whereas manufacturing grew by just 1.2%. + + + +The central bank estimates that as long as the service sector’s share of GDP increased by one percentage point in 2015 (in fact, it did better), the economy could have slowed by nearly half a percentage point and yet still generated the same number of new jobs as it did in 2014. This helps to explain why employment centres around the country still report a shortage of workers: an average of 1.09 vacancies for every applicant (see chart). For those hoping to be hired by accounting firms or restaurants, opportunities are plentiful. + +The problem for shipbuilders and coalminers is that many of the service jobs are destined for younger people with more education, and the jobs they can get, whether as janitors or cooks, often pay less well than their current work. The government has promised to provide retraining for those who lose jobs in industry, but that can only help so much. “Most of these guys can’t just go from making a living by their brawn to making a living by their brains,” says a recruiter at the human-resources centre in Yizheng. + +For the employees of Sainty Marine, the question of what their next job might be is not the most pressing one. They have been showing up to work without getting paid. Mr Wang, 45, a welder, has a note signed by a manager stating that he is owed several months’ salary, money that he needs to pay back relatives who lent him cash to build a house. He joined the group blocking the highway, but that achieved nothing. He has tried to corner his bosses, but that also got him nowhere. Lately, he says, he has been looking at the crane, sizing it up for a climb. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688443-unemployment-rising-not-always-visible-shocks-and-absorbers/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Picnic for the bears + +Fears of deflation and recession hit markets + +Jan 16th 2016 | From the print edition + + + +GLOOM seems to have descended at the start of 2016. Equity markets have had the worst start to the year in at least two decades. The great and the good have queued up to warn of the dangers ahead. + +George Soros, a fund manager, said the Chinese financial environment reminded him of 2008, when the financial crisis was at its height. Larry Summers, a former American treasury secretary, declared in the Financial Times: “The global risk to domestic economic performance in the US, Europe and many emerging markets is as great as any time I can remember.” George Osborne, Britain’s chancellor, spoke of a “cocktail of threats” facing the global economy. + +The chart shows a number of indicators of concern, from rising credit spreads (the interest-rate premium paid by risky borrowers) to slumping stockmarkets in the emerging world. Investors have many worries. The first is that the Chinese economy is weaker than the GDP statistics suggest. Falling commodity prices, the collapse in the Baltic Dry index (which tracks the cost of shipping bulk goods) and the sluggish growth of global trade can all be seen as signs of weakness. Given China’s importance to global growth, this means that 2016 may turn out to be yet another year when growth disappoints. + +Mr Soros sees a parallel with 2008 in the rapid credit growth in China and other emerging markets. If growth slows, borrowers may be unable to repay their debts. Similarly, emerging-market companies that have borrowed in dollars may be in trouble if their currencies depreciate. Asian nations might be forced to devalue if China lets the yuan fall sharply (see Free exchange). + +The second concern is that the Federal Reserve might have miscalculated when it pushed up interest rates in December—the first increase since 2006. The employment numbers in America may still be strong, as December’s muscular payroll numbers showed, but the labour market is a lagging indicator. The Atlanta Fed’s nowcasting model suggests that GDP growth in the fourth quarter was just 0.8% at an annualised rate. Manufacturing looks weak: the purchasing managers’ index has been below 50 (which signals contraction) for two straight months. + +A related worry is that the global economy has become over-dependent on the stimulus provided by low interest rates and quantitative easing (QE). Such policies may have saved the world from another depression, but they have not led to a return to pre-crisis growth rates. Moreover, by pushing up asset prices, they have spurred inequality. Nor has the problem of high debt levels been eliminated; the debt has simply been shifted from the private to the public sector. A swift return to what used to be thought of as “normal” interest rates (3-4%) would prove crippling. + +Martin Taylor, manager of a hedge fund called Nevsky Capital, detailed his concerns in a farewell letter to clients. Despite having earned an average annual return of 18% for 15 years, he is closing the fund. He fears that the global economy has become too dependent on China and India, where he does not trust the economic data. Individual equities have also become riskier, since companies have taken advantage of low rates to borrow more. And the equity market is less transparent, with trading dominated by index funds and computer programs. The risk of sudden, sharp shifts in prices has grown. “We could be caught up in an erroneous market trend, which could then persist for far longer than we could take the pain,” Mr Taylor wrote. + +All this is in stark contrast with the idea of fund managers as “masters of the universe” or the Thatcherite mantra, “You can’t buck the markets”. Since 2008 central banks have shown they can bend the markets to their will, at least for a while. Investors have to devote a lot of their time to poring over every word of central bankers’ speeches and statements for a change in policy emphasis. + +But perhaps this year’s sell-off indicates that central banks are losing their grip or that investors are less confident the authorities know what they are doing. Albert Edwards, an ultra-bearish strategist at Société Générale (SG), a French bank, says: “The Fed and its promiscuous fraternity of central banks have created the conditions for another debacle every bit as large as the 2008 global financial crisis.” He thinks a global recession and widespread deflation are on their way. This may still be a minority view, but more people are listening: SG’s annual bearfest in London this week had 850 attendees, a record audience. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688444-fears-deflation-and-recession-hit-markets-picnic-bears/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Remittances in Central Asia + +From Russia with love + +Remittances are a good thing, except when they stop + +Jan 16th 2016 | From the print edition + + + +DEBT crises, capital flight and corruption are all familiar problems for poor countries trying to finance their development. A bulwark, say some, is remittances: money sent home by migrants, worth $580 billion in 2014. Unlike portfolio flows, which tend to flee at the first sign of trouble, remittances usually increase in tough times. And unlike aid, they go directly into the pockets of ordinary people, bypassing corrupt officials. All this is true, and important. But even remittances, alas, cannot always be relied upon. The experience in 2015 of Central Asia and the Caucasus, regions exceptionally dependent on remittances from Russia, shows why. + +Some countries there export oil or gas. Others export people. In Tajikistan four in ten working-age adults have sought jobs abroad; in 2014 they sent home remittances equivalent to 42% of GDP, proportionally more than any other country in the world received. Armenia, Georgia and Kyrgyzstan also received remittances worth at least 10% of GDP—more than the Philippines, a country famous for its migrant workers. + +Most migrants go north, to Russia, finding work on building sites or in other low-income jobs. But Russia’s economy contracted last year, and remittances have plummeted. In dollar terms, money sent home from Russia by Tajik migrants was down by 44% in the first six months of 2015 compared with the same period in 2014, according to the Russian Central Bank; remittances from Russia to Uzbekistan fell by half, and those to Kyrgyzstan fell by a third. + +These figures partly reflect the weakness of the rouble. Other currencies in the region have also fallen, but not as far: every rouble a Tajik migrant sends home buys 35% fewer somoni than in June 2014, for example. Migrants also have less money to spare. Real wages are falling in Russia: they were 9% lower in November than a year before. And migrant numbers are down too, because of job losses and tighter immigration laws (though not for migrants from Armenia and Kyrgyzstan, which this year joined the Eurasian Economic Union, a Russian-centred economic bloc). + +Lower remittances are contributing to lower growth. The IMF expected GDP to grow at 2.3% last year for oil and gas importers in the region, down from 4.7% in 2014 and 5.7% in 2013. Those numbers understate the real effects. Since GDP is a measure of domestic production, it only captures declines in remittances to the extent that recipients spend less on local goods or services. Purchasing power has dropped by more than 10%, says the World Bank, once the direct impacts of remittances and declining terms of trade are taken into account. Working longer hours or tapping into savings is helping some scrape by, but even so, 40% of households in Tajikistan say they cannot afford enough food. + +As people spend less, governments are spending more to support demand: in the main remittance-receiving countries, fiscal deficits are expected to have widened by about two percentage points of GDP last year. The falling price of regional exports such as aluminium, copper and cotton is adding to economic woes and putting further strain on government finances. + +The Central Asian experience is unusual. Elsewhere, remittances grew in 2015. In South Asia they were up by 6%, according to projections from the World Bank. The region’s remittances come mainly from America and the Middle East; a strong dollar and fiscal expansion in the Gulf have kept the money flowing. + +But small countries such as Nepal, where remittances were equivalent to 30% of GDP in 2014, look vulnerable to future shocks. Central America and some Pacific islands also depend on remittances: they suffered in 2009, the only year this century that global remittances have fallen. + +In the long run, the solution is to diversify. Central Asian countries are trying to improve their infrastructure, supported by Chinese investment; trade with China has increased tenfold in a decade. The lesson of a tough year is obvious: though remittances can finance development, they are not a substitute for it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688441-remittances-are-good-thing-except-when-they-stop-russia-love/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The oil market + +$20 is the new $40 + +Why the oil price has plunged + +Jan 16th 2016 | From the print edition + + + +SINCE the new year, the price of oil has surprised even the most bearish punters, plunging by 18%. On January 12th West Texas Intermediate (WTI), America’s benchmark, briefly dipped below $30 a barrel, its lowest level since 2003. The next day an incipient rally was undone by the news that American stocks of crude oil and petroleum products had reached 1.3 billion barrels, a new record. Firms are hunkering down. BP this week announced hefty job cuts; Petrobras, Brazil’s state-controlled oil firm, slashed planned investment. + +Some blame factors other than supply and demand for turning increasingly bearish. For instance, Standard Chartered, a bank, said oil might need to fall as low as $10 a barrel before speculators concede that “matters had gone too far”. But it’s mostly guesswork. Such is the level of uncertainty that American derivatives contracts tied to deliveries in April imply an oil price of anything from $25 to $56 a barrel, according to official number-crunchers. + +Neil Atkinson of the International Energy Agency (IEA), a forecasting outfit, finds lots in the physical oil market to be bearish about—particularly regarding consumption, which was one of the few factors supporting prices last year. The sell-off in oil in the past fortnight has occurred concurrently with a slide in the Chinese stockmarket and the yuan, which some investors think reflects weakness in China’s economy and hence in demand for oil. Though Mr Atkinson acknowledges that possibility, he thinks this risk is overplayed: figures on January 13th showed China imported a record 6.7m barrels a day (b/d) of oil in 2015. + +The trouble, though, is that apart from India and a wobbly China, demand is not looking promising anywhere this year. Europe is unlikely to see a repeat of its relatively strong oil-demand growth in 2015. Although America’s economy continues to grow, tightening fuel-efficiency standards cap the upside. Drivers in the Middle East, where fuel use rose last year, are more likely to keep their cars off the road after their governments raised petrol prices or eliminated fuel subsidies altogether to shore up public finances. “There are now considerable uncertainties about oil-demand growth globally,” Mr Atkinson says. + +Adding to the gloom, producers are not turning off the taps as fast as people expected. The latest rout stems from an OPEC meeting in early December in which the producers’ cartel abandoned output quotas. Saudi Arabia, which used to curb output to rescue prices, now refuses to play that role, and instead is bent on driving high-cost producers out of business. Saudi officials privately say that they expect the price of oil to rebound late this year or early in 2017 as global output begins to lag behind demand. The natural decline as fields are depleted saps production by at least 5% a year, they argue, even before accounting for the effects of reductions in new drilling by embattled oil firms. + +But there remains huge uncertainty about how much Iran will export when UN sanctions are lifted, possibly in coming weeks. What is more, Mr Atkinson says, production continued to rise last year from high-cost wells in the Gulf of Mexico and Canada’s tar sands because, however much oil prices fell, operating costs were lower. “The habit of the industry is to keep producing for as long as you can. Anyone who blinks first is handing a lifeline to their competitors,” he says. + + + +INTERACTIVE: Explore how oil prices affect OPEC and non-OPEC production and viability + +To be sure, production in America is falling, thanks chiefly to cutbacks by struggling shale-oil producers. With oil prices at $30 a barrel, America’s oilmen will have an even tougher task shoring up output by drilling new wells, and will face further pressure from their bankers to reduce borrowing. AlixPartners, a consultancy that advises troubled firms, says more will go bankrupt this year. It forecasts a funding gap of $102 billion this year between American oil firms’ projected cash flows and their interest payments and capital spending, up from $83 billion in 2015. It said the downturn “could be one of the most severe and prolonged ever”. + +But however big the cutbacks, they are not yet enough to reduce the glut (see chart). Global inventories are at record highs, the IEA says. The Energy Information Administration, an American government agency, predicts they will rise a further 700,000 b/d before supply and demand begin to balance out in 2017. + +It adds that storage at Cushing, Oklahoma, which can hold 73m barrels, is at record highs of 64m barrels. Brian Busch of Genscape, an industry data gatherer, says it’s a similar story in China, with ships carrying oil spotted waiting at anchor out at sea because storage tanks appeared to be full. Based on the high level of stocks, Mr Busch thinks it could take up to a year and a half before the bear market ends. The only certainty is, the quicker the oil price falls, the sooner that day will come. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688446-why-oil-price-has-plunged-20-new-40/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lotteries + +High stakes + +Lotteries pull in punters by making it harder to win + +Jan 16th 2016 | From the print edition + + + +THE billboards advertising Powerball, an American lottery, were not big enough to display the size of the jackpot in the draw that took place on the evening of January 13th: $1.6 billion. That prize will be split among the three winners, who bought their tickets in California, Florida and Tennessee. For several days beforehand, Lotto fever gripped the nation: long queues formed outside shops selling tickets and on the day of the draw sales were ringing up at a rate of $787,000 per minute. Powerball’s website had some advice for its frantic customers: “Swinging a live chicken above your head while wishing for the future numbers does NOT work.” + +A more useful bit of counsel would have been that buying a lottery ticket is fun but financially foolish. A punter buying a Powerball ticket has a 1 in 292m chance of winning the jackpot. Buyers are around four times more likely to be killed by an asteroid impact this year. Lotteries are designed to be a bad deal, hoovering up participants’ money in order to plug state budgets and fund good causes. + +What’s more, the designers are getting better at their jobs. Victor Matheson, professor of economics at the College of the Holy Cross in Massachusetts, explains that sales are much more sensitive to the size of the jackpots than to the likelihood of winning. After a particularly big prize is won, there is a halo effect, whereby ticket sales remain high even though the jackpot has reverted to the norm. So lottery designers go to great lengths to boost the size of the big prize. + +One easy trick is to make the jackpot seem bigger than it is. The sums advertised by Powerball represented the pre-tax value over 29 years of an annuity that winners can opt to receive. If the winners choose a lump sum instead, they get just over 60% of that, on which they would have to pay tax of at least 40%. + +Another approach is to boost the jackpot by expanding a lottery’s geographic scope, and thus its potential pool of participants. Powerball and Mega Millions, the two largest American lotteries, have both taken this tack. By forging alliances among state lotteries, they are both now available to residents of 44 of America’s 50 states. Similarly, EuroMillions, a lottery that covers nine European countries, has twice offered a jackpot of €190m ($206m). + +Powerball’s record-breaking jackpot stems mainly from a riskier strategy, however. If the chances of winning become so slim that no one guesses the right combination of numbers, the prize rolls over, growing to a vast sum. Both Powerball and the British national lottery changed their rules to this effect in October, by increasing the number of balls in the draw. In Britain the change slashed the chance of a winning guess from 1 in 14m to 1 in 45m. In America it fell from 1 in 175m to 1 in 292m. + + + +There is a catch: make it too hard to win a lottery, and punters will lose interest. So even as lottery designers have been lowering the chances of winning the jackpot, they have been boosting the chances of winning lesser prizes, notes David Spiegelhalter of the University of Cambridge. + +As larger jackpots draw more customers, the chance that someone will win shoots up. But so does the chance of multiple winners, which lowers the expected value of a ticket. In the run-up to this week’s draw, Powerball’s organisers expected that roughly 86% of all possible numerical combinations would have been bought, suggesting sales of some 570m tickets. With that many tickets sold, the chance of a winner having to share the pot with others (as indeed happened) was around 68%, compared with just 4% for more typical sales of 25m tickets. + +Only very rarely have so many players piled in that the expected value of the jackpot has fallen, and mostly when there are huge jackpots on offer. But the affliction is set to become more common. Britain’s National Lottery enjoyed unprecedented demand in the run-up to the record £66m ($95m) jackpot won on January 9th. Sales for the 28 Powerball draws since its rule change in October (excluding the draw on January 13th) were 134% higher than for the 28 preceding draws. According to Mr Matheson, the customers who are drawn in by higher jackpots tend to be richer than the average. So while lotteries may be snaffling ever more money for an ever smaller chance of striking it rich, at least the burden is tilting away from the very poorest. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/21688208-lotteries-pull-punters-making-it-harder-win-americans-have-1-292m/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Poor financial decisions + +Anti-choice + +Regulators are keen to stop people making mistakes + +Jan 16th 2016 | SAN FRANCISCO | From the print edition + + + +FOR centuries liberals have argued that people should be trusted to make their own decisions. Regulators increasingly want to protect them from themselves. In the wake of the financial crisis, the administration of Barack Obama established a new agency, the Consumer Financial Protection Bureau. The CFPB has so far focused on regulating mortgages, for example by making their terms more digestible. But it is now weighing stricter curbs in other markets: new rules on payday loans are expected in the first quarter. + +Other new rules are on the horizon, too. The Department of Labor is proposing a “fiduciary rule” for financial advisers who help Americans to invest their pension pots. Currently, many advisers earn juicy commissions by recommending costly products. A study by the White House suggested such “conflicted” investment advice costs consumers roughly one percentage point in returns a year, and that clients are largely unaware of the costs. The new regulations would require that advisers always act in the best interest of clients. Republicans tried, and failed, to kill the proposal in budget negotiations late last year, and the fight isn’t over. + +Economists might once have pooh-poohed the bureaucrats. Most assumed that individuals act rationally when making decisions. But when it comes to head-scratching financial choices—how much to save, where to invest—that assumption looks ever more iffy. + +Take mortgages. Most American home loans last for 30 years, with the interest rate fixed. When rates fall dramatically, most borrowers would be better off if they refinanced. Yet too few do. In 2013 42% of American borrowers paid rates exceeding 5%, when the average rate paid on new mortgages was less than 4%. People make similar mistakes when saving, failing to take advantage of their employer’s obligation to contribute to their pensions, for instance, and stashing money in taxable rather than tax-free accounts. + +In a lecture at the annual conference of the American Economic Association earlier this month, John Campbell of Harvard University asked what liberal policymakers should do in the face of these apparent errors. American financial literacy is very low, he noted, particularly among the young. Over half of American men aged 18-24 and nearly 70% of women of that age cannot correctly answer at least three of five basic financial questions, such as whether it is riskier to invest in a single stock or in a mutual fund (see chart). Savvy increases with age, though so does overconfidence. People who wrongly think that they know what they are doing are particularly liable to make costly mistakes, as they will not seek help. + +Many now worry that firms that exploit the ignorance of such consumers will rack up profits, or use the revenues to subsidise juicy deals for other customers. Financial mistakes can also make inequality worse, if poorer folk are more likely to make them. In “Capital in the Twenty-First Century”, Thomas Piketty speculated that richer investors earn higher returns, and showed that this is true of university endowments. Recent work has uncovered a similar phenomenon among individuals. Mr Campbell and his colleagues analysed returns between 2002 and 2012 for investors with an account at an Indian securities depository. They found that the “Piketty effect”—fatter accounts earning greater returns—accounted for 43% of the variation in investors’ income. + +What to do? One possible solution is financial education. Yet the evidence that this works is surprisingly weak. A recent state-by-state study found that it had no beneficial effect, while using up valuable classroom time. More paternalistic interventions are rightly controversial: a right-wing campaign group recently ran an attack ad against the CFPB, portraying it as a Soviet-style bureaucracy crushing the dreams of hapless borrowers. Some instead prefer the idea of “nudging” people towards better decisions, while preserving their freedom to choose. In weighing up the merits of liberty and protection, it is easy to make a mistake. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688454-regulators-are-keen-stop-people-making-mistakes-anti-choice/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +SoFi + +So far, so good + +A fintech darling offers a new model—one not without risks + +Jan 16th 2016 | From the print edition + + + +WHEN a financial firm boasts of offering the biggest loans at the lowest rates with the slimmest collateral, it has either devised the underwriting equivalent of a better mousetrap or is setting itself up for an almighty fall. At first glance SoFi, a startup based in San Francisco, looks like it is up to the sort of tricks that would make even a pre-2008 banker blush: lending youthful customers $975,000 to buy a $1m house, say. Yet few “fintech” firms seem quite as threatening to America’s incumbent banks. + +Social Finance, as it once was, started life in 2011 as a way to match students who needed money to pay for a degree at Stanford with alumni with lots of dough. Engineering graduates from one of America’s grandest universities, the firm’s founders reasoned, were unlikely to welch on their debts, especially with Silicon Valley booming. That allowed SoFi to price student loans below even the notionally discounted rates available under government schemes, attracting lots of customers. Well-to-do alumni, meanwhile, were happy to lend via SoFi’s platform, understanding what a safe bet the borrowers were. The firm also raised money to invest in its own loans, largely to package them as securities it could then sell on, a variant on “marketplace lending”, a crowded field in fintech. + +SoFi quickly expanded—to borrowers from other prestigious universities, and to other forms of lending. Having provided many of its customers with their first loans, SoFi then worked to cater to their expanding financial needs after graduation, offering them personal loans and mortgages. Again, the firm’s lending algorithms ignore the rigid credit scores used by banks in favour of common-sense indicators of ability to pay. High Earners Not Rich Yet, or HENRYs, are its main customer base. + +To distinguish itself from banks, SoFi smothers customers with personalised service. Its 100,000 or so borrowers are “members”, invited to parties thrown by the firm. Entrepreneurs among them can apply to have their loan repayments suspended, and make use of SoFi’s offices for meetings with investors. Lost your job? Whereas a bank might foreclose, SoFi will tap its network to help you find a new one. Mortgages can be obtained by pecking at a smartphone and sending snaps of required documents. Pen-and-ink signatures are for fuddy-duddies. + +The easygoing branding belies an outfit that can hold its own on Wall Street. Mike Cagney, its founder and boss, is a former trader at Wells Fargo. Like many other fintech lending operations, SoFi obtains the money it lends from hedge funds and investment banks. Its balance-sheet is turned over every two to three weeks; some of the loans it issues get sliced, diced and repackaged in much the same way subprime mortgages once did. + +Most fintech startups aim to do one thing well and sell that service as widely as possible. SoFi is the opposite: its customer base is focused (though it now lends to graduates of over 2,200 schools) but it is busy diversifying its offering. Beyond student loans and mortgages, it aspires to manage its customers’ wealth and offer them insurance. It even wants to launch something akin to a current account, without officially becoming a deposit-taking institution. + +But SoFi faces three obstacles if it is to keep growing fast enough to justify a recent investment that valued it at around $4 billion (it is not listed). The first is growing without lowering its lending standards. Of the $6 billion it has lent in total, more than $4 billion went out the door in 2015. Such rapid growth usually comes with more than a few dud loans. Mortgages seem an obvious concern. Banks like to lend to buyers with a 30% deposit. SoFi is happy with 10%—and now has a scheme to help borrowers raise most of the down payment too, in exchange for a slice of the increase in the value of the house. Can that be sensible, given that its loans are concentrated in pricey property markets, which are likeliest to deflate? + +Mr Cagney says his customers will keep paying even if their houses are worth less than their mortgages. That is placing an awful lot of faith in Americans, who have walked away en masse from underwater mortgages before, and particularly in millennials, a generation often derided for its feckless and unpredictable behaviour. Like other young fintech lenders, SoFi has never had to weather a recession. + +The second obstacle is rising interest rates. SoFi has made a packet by refinancing student loans which were in effect mispriced by government programmes. If interest rates rise substantially, the scope for existing borrowers to save money by refinancing will disappear. Mortgage refinancing will also dry up. Mr Cagney says he assumes much higher interest rates are unlikely anytime soon and that the firm will have diversified enough to handle them by the time they appear. + +The third is regulation. Especially if it starts gathering something resembling deposits, SoFi will have many of the attributes of a bank while insisting it should not be regulated like one. In part it simply wants to skirt the red tape that comes from accepting deposits, along with the government guarantee they attract. But there is also a libertarian bent to the shaggy-haired Mr Cagney, who clearly believes that governments meddle too much in markets. The brief he received from his biggest investor, SoftBank, which led a $1 billion funding round in September, is to reach a valuation of $100 billion or go bust, but not to settle for the status quo. That is the kind of talk that might panic regulators, who prefer financial institutions to be boring. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688439-fintech-darling-offers-new-modelone-not-without-risks-so-far-so-good/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Fight or flight + +China’s leaders face a menu of unappealing exchange-rate options + +Jan 16th 2016 | From the print edition + + + +THE past six months have been hard on the reputations of China’s economic managers. Their attempts to bring troublesome stockmarkets to heel border on slapstick. The uncertain handling of the country’s exchange rate, on the other hand, is no laughing matter. Unexpected wobbles in the value of China’s currency roil global markets. Yet no exchange-rate policy offers a sure and safe route forward. + +Some see a resemblance in China’s predicament to the Asian financial crisis of the late 1990s. Then, fast-growing countries like Indonesia, South Korea and Thailand faced outflows of capital as investor sentiment flipped from bullish to bearish. Governments were forced to abandon currency pegs as their foreign-exchange reserves dwindled. Massive depreciations led to financial havoc, as asset prices tumbled and these countries’ enormous debts ballooned in dollar terms. Painful recessions ensued. + +The lessons of the Asian crisis were not lost on China’s leaders, however. During its great boom, in the 2000s, China maintained tight capital controls, permitting foreign direct investment while eschewing “hot money”. The People’s Bank of China (PBOC) intervened heavily in foreign-exchange markets to keep the yuan cheap, building up $4 trillion in reserves in the process. Where the crisis countries of the 1990s ran persistent trade deficits, China kept its current account in surplus; thus adding to, rather than draining from, its foreign-exchange reserves. + +Despite these prophylactics China now faces its own financial crunch. Its reserves are down by almost $700 billion from their peak, thanks to capital flight and sinking asset values. Determined money has long seeped out of China’s stockade; signs of a bigger leak emerged in the latter half of 2015. In December alone reserves fell by more than $100 billion. Capital slipped abroad at an annualised pace of $1 trillion in the second half of 2015. In the third quarter, China’s outward foreign-direct investment rose from $29 billion to $32 billion while inward investment fell sharply, from $71 billion to $39 billion; at $7 billion, the net flow of inward investment was the lowest since 2000. + +An anti-corruption drive, slowing growth and rising American interest rates are all partly to blame. Once begun, however, capital flight can be hard to control. Chinese citizens can move a maximum of $50,000 abroad each year. If just 5% of the population used its quota, China’s reserves would evaporate. The authorities are desperate to prevent such an outcome, and the severe tightening of domestic credit conditions it would entail, but there is no painless way to do so. + +Many economists reckon China will allow the yuan to fall. After all, the currency has appreciated by 20% against a broad range of currencies since 2012, thanks to rising wages and a peg to the strengthening dollar. Yet a sinking yuan poses threats. Roughly $1 trillion of China’s accumulated debts are denominated in dollars. That is small beer next to $28 trillion in total Chinese debt. But because Chinese firms are so highly leveraged, even a small rise in the cost of servicing dollar-denominated debts could force some into asset sales or bankruptcy. That, in turn, would encourage more capital outflows, depressing the yuan’s value still further. + +The economy could expect only a modest boost to exports for its trouble. Since much of the material that goes into Chinese exports is itself imported, devaluation does not boost exports that much. It also squeezes the purchasing power of Chinese consumers and thus slows the rebalancing of its economy from investment to consumption, while irking America and encouraging competitive devaluations elsewhere. + +Alternatively, China could hold the yuan’s value steady. The big depreciations of the late 1990s were done out of necessity rather than by choice, after all. Investors fleeing from Thailand, for instance, converted their baht to dollars on their way out. When the government ran short of greenbacks, it had no option but to repay investors with many fewer dollars per baht. Yet China still has $3.3 trillion of hard currency in reserve. + +Stability poses its own problems, however. If China resists depreciation and capital outflows continue, the erosion of reserves could puncture the PBOC’s air of invulnerability, leading to faster capital leakage. A commitment to a strong yuan could also constrain China’s monetary policy. Cuts to interest rates tend to diminish a currency’s value. Any attempt to maintain it under such circumstances hastens the depletion of reserves. + +Why not strengthen capital controls, in that case? In 1998 Malaysia imposed controls on fleeing investors and outperformed some other crisis-hit economies, such as Indonesia. The government is cracking down on the underground financiers in Macau and banks in Hong Kong that help sneak Chinese cash past the controls. If ordinary citizens began moving savings abroad in greater numbers, China could reduce the limit on foreign transfers. Yet backtracking on planned reforms would be a huge embarrassment for China’s leaders, who have laboured long and hard to raise the yuan’s status internationally. It would also deter foreign investors, worsening the short-run foreign-exchange picture and long-run growth prospects. + +Faith no more + +Ample reserves, capital controls, a trade surplus and a determinedly interventionist state mean that China is a long way from a full-fledged crisis. Neither is all the apparent capital flight as worrying as it might appear: purchases of foreign securities by Chinese corporates may look like a stampede for the exits, but can serve to hedge firms with foreign-currency debts against depreciation. But there is good reason for nervousness, in China and elsewhere. All the countries afflicted by the Asian crisis combined accounted for a much smaller share of global output in 1998 than China does now. And China seems not to have absorbed the most important lesson of that crisis: that confidence matters. + +Visit our Free exchange economics blog + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688440-chinas-leaders-face-menu-unappealing-exchange-rate-options-fight-or-flight/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Counter-terrorism: Shrinking the haystack + +Illumination: Light-bulb moment + +Climate change: Stopping the big burp + +Bird navigation: Obscure truths + +A fossil parasitoid: Getting to the point + + + + + +Articles Sections Next + +Counter-terrorism + +Shrinking the haystack + +Software is helping the search for guerrillas’ and terrorists’ safe houses and weapons caches + +Jan 16th 2016 | From the print edition + + + +WHEN selecting a base for preparing attacks, jihadists should choose flats that are on the ground floor, hard to peer into, not near government buildings and unsecluded in a newly built neighbourhood. So advises “Declaration of Jihad Against the Country’s Tyrants”, an al-Qaeda manual found in Manchester in 2000. Flats conforming to these specifications make it easier to dig secret storage areas under the floor, to melt away into the city and to avoid attention from neighbours who, were they longtime residents, might take a greater interest in newcomers. + +Thanks to the clever use of software, tips from this and other manuals obtained by intelligence agencies are proving increasingly valuable to counter-terrorist forces deployed both in the West and abroad. Technologists are modifying existing mapping software to produce “geographic profiling” programs that show which areas should be searched or put under surveillance first in the hunt for hideouts, bomb workshops and weapons caches. “Declaration of Jihad Against the Country’s Tyrants”, for example, was a cornerstone of Building Intent, a geoprofiling program developed by Alper Caglayan of Milcord, in Massachusetts, for America’s defence department. + +In addition to terrorist guidelines on which buildings to use, software such as Building Intent is fed the co-ordinates of bombings and other actions thought related to the group of interest. These are useful because such groups are often reluctant to conduct operations far from their bases, be it to save time, to remain in familiar or friendly territory, or to reduce the likelihood of encountering a checkpoint. + +SCARE story + +At the same time, such people also tend not to operate too close to base, in the hope of sparing it scrutiny. Data from years of home-made-bomb (IED, or “improvised explosive device”) attacks and discoveries in Iraq, analysed by Roy Lindelauf of the Dutch Defence Academy, suggest that those planting bombs in urban areas almost always carry the device at least a couple of hundred metres from where it was stored, though rarely much more than a kilometre. Also—suicide missions aside—few IEDs are built, stored or detonated in the territories of rival groups. Data from as few as five IED blasts can thus more or less pinpoint the location of a workshop or cache. + +What is true of IEDs is true also of those places from which insurgents launch mortar rounds and rockets. Taliban fighters in Afghanistan, for example, do not like to tote their weaponry far, lest they be caught or killed before getting a good opportunity to use it. The American army has therefore developed, for use in Afghanistan, geoprofiling software called SCARE-S2. This crunches data on the times and co-ordinates of enemy attacks, analysing these in the context of information about the country’s terrain, road network and ethnic make-up, as well as what is known at the time of the shifting pattern of tribal alliances in the area of interest. The software then identifies a handful of villages that are most likely to host the commander behind the attacks or the weapons cache used to make them. + +Details about SCARE-S2’s performance are, understandably, scarce. But a publicly available analysis by Paulo Shakarian, who led the program’s development, used data on hundreds of earlier Taliban attacks in Kandahar and Helmand provinces to test its effectiveness. The areas this test flagged up as worth searching had an average of 4.8 villages in them, and NATO records of discoveries of Taliban commanders and weapons caches showed that the density of such discoveries in these flagged areas was 35 times that of discoveries in the two provinces as a whole. + +Guerrillas and terrorists are not fools. They are aware they may be under surveillance, and take what they hope are appropriate counter-measures. They are unlikely, for example, to make calls from inside a safe house in which they are living. Instead, they typically make calls from roughly spaced out nearby locations, taking care not to call too often from the same spot. They hope, thereby, that if their activity is being monitored, it will appear random and therefore meaningless. + +Spacing things out like this is, in mathematical fact, anything but random: that, in itself, is suspicious. But true randomness would also be odd. As Ian Laverty, the boss of ECRI, a geoprofiling-software firm in Vancouver, observes, innocent phone calls have geographical patterns, because people have routines. Those who take steps to elude the authorities thus often end up unwittingly creating a profile of where their home base is—a profile that a piece of ECRI’s software called Rigel Analyst can spot. This software is used by more than 90 intelligence agencies around the world. Its applications include searching for Taliban rocket caches in Afghanistan. + +Geoprofiling is thus already an important counter-insurgency tool. It is likely to become more so in the future, because the number of pertinent actions that can be plotted by it is booming, according to a geoprofiler in Denmark’s intelligence apparatus who prefers to remain anonymous. This operative uses geoprofiling software called ArcGIS that analyses Global Positioning System (GPS) data provided unwittingly by insurgents’ growing use of smartphones and other gadgets that are equipped, by default, with GPS kit. For example, simply right-clicking on propaganda images posted online often obtains a GPS “geocode” that reveals where the picture was taken. “I’d like to keep my job, so we won’t say any more,” his colleague chimes in. + +Here I go again + +Other experts are more forthcoming. Geoprofiling software is now being fed the locations of extremist groups’ leafleting and graffiti, says Kim Rossmo, who led the development of Rigel Analyst and also trains intelligence and military geoprofilers in America, Australia, Canada and the Netherlands. The locations of muggings and robberies are also analysed, because many terrorists finance themselves from the proceeds of such crime. + +Even data on income distribution are plugged into geoprofiling software according to Matthew Degn, who was once an adviser to the Iraqi interior ministry’s intelligence directorate. The poorer an area is, he says, the more likely a flat there houses people paid to store weapons or, say, to snip off countless match heads to make bombs. The likelihood increases if there have been lots of violent deaths in that quarter, for bloodletting often spawns extremists, or at least acceptance of them. + +Geoprofiling works especially well in countries like Iraq, in which sectarian splits limit where people are willing to live or work. It is, nonetheless, still a useful tool in places, such as Western countries, where patterns of belief might be thought of as less tied to geography. As Brent Smith, of the University of Arkansas’ Centre for Advanced Spatial Technologies observes, right-wing extremists rarely hole up near gay bars, abortion clinics and other places they consider “pollutants of urban life”. In the matter of politically motivated violence, the ideas thought worth killing and dying for vary. To the geoprofiler it makes no difference. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21688368-software-helping-search-guerrillas-and-terrorists-safe-houses-and/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Illumination + +Light-bulb moment + +A bright idea to save a beloved technology from the dustbin + +Jan 16th 2016 | From the print edition + + + +IT IS getting ever trickier to find incandescent bulbs. Almost all rich countries are phasing them out because they squander so much energy as heat rather than visible light. But they have ardent fans. Unlike many of their would-be successors, such as compact fluorescent lights (CFLs) and light-emitting diodes (LEDs), they cast a full spectrum of colours reminiscent of daylight, need no time to warm up and can be dimmed. Ahead of the European phase-out in 2009, for example, Vaclav Klaus, the Czech president, urged people to hoard a lifetime’s worth. + +Such stockpiling may have been premature. This week, researchers at the Massachusetts Institute of Technology, led by Marin Soljacic, demonstrated a modified incandescent bulb that maintains the technology’s advantages while vastly improving its energy credentials, giving it the potential to trounce CFLs and LEDs. + + + +Incandescent bulbs are so named because their light comes from heating their central filaments up until they glow. The colour of such a glow (ie, the wavelength of the radiation) depends on how hot the glowing object is. The sun, whose light an incandescent bulb attempts to approximate, is hotter than a filament, so radiates more strongly at shorter wavelengths (see chart). But in both cases the visible light produced is accompanied by a lot of infrared—or heat, as it is more familiarly known. Dr Soljacic has therefore sought a way to let the former pass while reflecting the latter. This reflected infrared heats the filament, meaning less electricity is needed to keep that filament at a given temperature and thus at a given visible-light output. + +Prior efforts to accomplish the same thing, stretching back to the 1970s, tried to do so with some kind of coating on the bulb itself. Dr Soljacic and his colleagues realised that the filament would capture more reflected heat if it were flattened out rather than being made from a thin coil of wire, as is now the case, and if the reflection happened nearer to it. + +To design a reflector suitable to the task, the team relied on an idea similar to that used in the anti-reflection coatings applied to spectacle lenses. These coatings are made of thin layers of materials of slightly different refractive indices (that is, light moves at slightly different speeds within them). The layers’ thicknesses and compositions are chosen so as to force light waves to add together or subtract from one another as they are reflected from the various layers. This process of interference is governed by the wavelength of the light in question, so it can affect light of different wavelengths differently. And visible light and infrared light do have different wavelengths (infrared waves are longer). + +Engineering a stack of layers that can pass visible light unchanged and reflect infrared—and do so from all of the angles from which the filament radiates—was no easy task. For that, the team used a computer program which was able to learn from its mistakes to work out what material each layer should be made from, and how thick it should be. Their first attempt involved stacks of 90 alternating layers of silica and tantalum oxide, two common coating materials, of varying thicknesses, from 17 to 426 nanometres (billionths of a metre). As they report in Nature Nanotechnology, a pair of such stacks, arranged on either side of the flat filament, led to a bulb that converted about 6.6% of the electrical energy running through it into visible light. That is far better than the 2% or so of a conventional incandescent bulb, and is comparable with low-efficiency LEDs. Their calculations show that adding layers of aluminium oxide to the mix and increasing the number of layers to 300 should increase that efficiency to 40%, far better than even the most efficient fluorescent lights. + +Whether Dr Soljacic’s process can be industrialised remains to be seen. But if it can, then the likes of Mr Klaus may come to find that their hoards are worthless. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21688375-bright-idea-save-beloved-technology-dustbin-light-bulb-moment/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Climate change + +Stopping the big burp + +Researchers in New Zealand are trying to prevent livestock belching methane + +Jan 16th 2016 | Hamilton | From the print edition + + + +MENTION the phrases “greenhouse gases” and “global warming” in the same breath and most people will think of the carbon dioxide produced by burning fossil fuels such as coal and oil. But CO2 is not the only greenhouse gas and fossil fuels are not the only source of such gases. A surprising and neglected one is the world’s ruminant livestock—cattle, sheep and so on. Ruminants play host to bacteria that digest the otherwise undigestible grass and other cellulose-rich plants those animals eat, making nutrients such as fatty acids available to the beasts the bacteria inhabit. + +But the complicated ecosystem of a ruminant’s stomach includes other creatures, too. Many are methanogens—organisms that react carbon dioxide with hydrogen made by the cellulose-digesting bugs, to create water and methane. A lot of methane. A hundred million tonnes of it a year for all the world’s domesticated ruminants, according to the United Nations’ Food and Agriculture Organisation. And methane is a greenhouse gas 25 times more powerful than CO2. Altogether, according to estimates by Andy Reisinger, of the New Zealand Agricultural Greenhouse Gas Research Centre, methane emitted from livestock is responsible for about 14% of global warming since the beginning of the Industrial Revolution. + +Pardon me for being rude! + +New Zealand is one of the guilty parties. Its 40m head of sheep and cattle mean that a third of its contribution to global warming is ruminant-belched methane. But Peter Janssen of AgResearch, the country’s main farming-science institute, hopes to change this. He and his colleagues are looking for ways to reduce the amount of methane the country’s animals burp up. + +Their first approach is to develop methanogen-specific drugs. Though methanogens look like bacteria, they belong to a completely different branch of life, the archaea. That means their enzymes are different from bacterial ones (and also, of course, from mammalian ones), so there is a reasonable hope of finding chemicals which interfere with methanogen enzymes while leaving those of both bacteria and host animal unaffected. Dr Janssen and his team have thus been screening thousands of compounds that might block the action of enzymes methanogens need to survive. A handful seem to, and are now being put through their paces—firstly in bubbling bottles of rumen contents (the rumen is one of the animals’ stomach chambers), and then in real cattle and sheep. So far, the best of them reduce methane emissions by 20-30%, with no apparent detriment to the animal. + +The problem with this approach is that it requires animals to be treated continuously, to stop the methanogens returning to full strength. This is fine when beasts are being farmed intensively, as is often the case in Europe (indeed, DSM Nutritional Products, a European firm, is working along the same lines). But cattle in New Zealand, and sheep everywhere, are normally put out to pasture, so Dr Janssen has a second string to his bow: vaccination. + +To do this, his team identified and synthesised proteins found on the surface of ruminant methanogens, and injected these into sheep and cattle, to try to raise antibodies to those proteins. In that they have succeeded. The desired antibodies turn up in both the blood and the saliva of injected animals. At the moment, however, these antibodies work against methanogens only in test tubes. The vaccinations that raise them do not seem to reduce methane output. + +A third approach is to breed animals with a lower propensity to burp methane. Among sheep, for example, some animals emit as much as 10% less of the gas than others. These low emitters have smaller rumens, meaning the contents pass through faster. This limits production of the hydrogen that is methanogens’ food source without, apparently, limiting that part of the digestive process which feeds animals—for sheep with small rumens do not grow more slowly than those with large ones. Rumen size, moreover, is heritable. This means that a breeding programme for low-emission sheep is a plausible idea. + +Dr Janssen’s fourth approach is to alter what animals eat. Certain food plants—forage rape and fodder beet, in particular—curb methane emission by as much as 25% compared with the belchings of animals fed on grass and clover. However, though rape and beet are planted by some farmers as supplementary food crops, particularly for winter forage, they do not, unlike grass and clover, keep growing after being grazed. They also have a mixture of nutrients different from grass and clover, and take more effort to establish. Most farmers, therefore, would require quite a lot of persuading to use them more widely. + +It was not me, it was my food... + +In New Zealand, such persuasion is being discussed. Its most probable form would be what is known memorably, though inaccurately, as a fart tax (most ruminant methane is belched, not farted). Whether such a tax could actually pass through the political process of a country so dependent on farming is moot. But if an effective way of dealing with methanogens were developed, farmers might find it in their interests to adopt it anyway. Some microbial ecologists think methanogens exclude other microbes which could produce yet more fatty acids for the host animal to turn into milk or meat. If that were true, and someone such as Dr Janssen were to come up with an effective way to suppress them, no persuasion at all would be needed. + +One of the simplest answers, though, may just be better husbandry. Clever pasture management, and the breeding and victualling of animals so that they produce more milk and meat for less fodder, means New Zealand’s production of milk has trebled since 1990 while methane emissions from dairy cattle have only doubled over that period. Similarly, the number of sheep in the country has almost halved, with a concomitant emissions reduction, yet as much lamb and mutton is produced as ever. Reduced release of methane may only be a by-product of these gains in efficiency, but it is a welcome one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21688374-researchers-new-zealand-are-trying-prevent-livestock-belching/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bird navigation + +Obscure truths + +Air pollution seems to speed birds up, not slow them down + +Jan 16th 2016 | From the print edition + +Lieutenant Pigeon + +HIS was a daunting task. It was October 1918 and, with the 77th Infantry Division cut off from all other American forces, Major Charles Whittlesey sent him to inform allies of the soldiers’ predicament. Shot after shot was fired from the trenches as he made his perilous journey. Then, just as he reached Rampont, the local headquarters, a bullet severed his leg. He died eight months after the war ended, and received the Croix de Guerre posthumously, for the message he delivered had saved the lives of 194 men. He was then stuffed and shipped to the Smithsonian Museum, in Washington, DC, to be remembered as Cher Ami, the bravest homing pigeon of the first world war. + +Being shot at will hasten anyone’s journey. But might the thick smoke of battle have helped Cher Ami on his way too? That, at least, is the suggestion of a study just published in Scientific Reports by Li Zhongqiu of Nanjing University, in China, and Daniel Blumstein and Franck Courchamp, who both work at the University of California, Los Angeles. + +Dr Li and his colleagues have sought to study how air pollution shapes the behaviour of migratory animals by collecting information on homing-pigeon competitions organised by the Chinese Racing Pigeon Association. In particular, they have analysed 415 pigeon races run between the same two points, 300km (200 miles) apart on the heavily polluted North China Plain, during the autumns of 2013 and 2014. They noted rainfall, wind and air quality during each race, and expected to see numerous delays and lost birds on days when the smog was exceptionally thick. But that is not what they found. + +Of the 1,591 pigeons released in the races the team analysed, 715 made it home. This 45% return rate remained the same regardless of whether the air was thick with pollution or not. What did change was the time it took the pigeons to return to their natal lofts. When the sky was a thick soup of noxious smog, with an air-quality index of 500, pigeons returned home at an average speed of 68.2kph. By contrast, when the index value was zero and the air pure, the birds flew at only 55.6kph. + +Why the birds travel faster under terrible conditions is unclear. Homing pigeons are well known to use the sun, magnetic fields and infrasound to navigate but, in recent years, researchers have started speculating that they use odours too. With this in mind, Dr Li and his colleagues suggest that the birds have come to learn what the pollutants common to the biomass boilers and power plants found in different parts of northern China smell like, and are using this information to navigate. + +They do, however, have an alternative hypothesis. This is that the birds are flying faster to get out of the vile conditions as quickly as they can. One reason could be the obvious fact that thick pollution is hard to breathe, but the researchers argue that fear may also be a factor. Thick clouds of haze make it nearly impossible to detect predators, and pigeons may not be smart enough to understand that this lack of visibility works the other way around, too. They thus just want to get the hell out of there as fast as they can—quite possibly the true motive of Cher Ami as well. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21688367-air-pollution-seems-speed-birds-up-not-slow-them-down-obscure-truths/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A fossil parasitoid + +Getting to the point + +An ancient fly whose grubs lived in other insects + +Jan 16th 2016 | From the print edition + +Not all prehistoric monsters were big + +ONE of the nastier ways an insect can make its living is as a parasitoid. Female parasitoids lay their eggs inside other insects, usually at the larval stage of the host’s life cycle. The grub that hatches then eats its host alive, reserving the vital organs until the moment when it is, itself, ready to pupate. Most parasitoids are wasps, but some are flies, and this fossil, dubbed Zhenia xiai by its discoverer, Bo Wang of the Chinese Academy of Sciences in Beijing, is an early example of such an insect. + +The specimen shown, which Dr Bo describes in Naturwissenschaften, was trapped 99m years ago in tree resin that has solidified into amber, in a part of the world now known as northern Myanmar. Its sticky death has preserved features, such as the needle-like egg-laying organ, called an ovipositor, at its rear, and the host-grasping claws on its legs, that are often characteristic of a parasitoid way of life. + +Zhenia xiai belongs to the Eremochaetidae, a family which palaeoentomologists have long suspected were parasitoids, but whose previously known representatives were not well-enough preserved for them to be sure. Now, thanks to Dr Bo’s discovery, they are. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21688373-ancient-fly-whose-grubs-lived-other-insects-getting-point/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Rare metals: Unobtainiums + +Mountaineering: Onwards and upwards + +Love and marriage: It takes grit + +Obituary: L’enfant terrible + +Obituary: Correction: When anger turns to ink + + + + + +Articles Sections Next + +Rare metals + +Unobtainiums + +They are obscure, yet essential. Why rare metals make the world go round + +Jan 16th 2016 | From the print edition + + + +The Elements of Power: Gadgets, Guns and the Struggle for a Sustainable Future in the Rare Metal Age. By David Abraham. Yale University Press, 319 pages; $30 and £20. + +LIKE this reviewer, many parents will have given their children electric toothbrushes for Christmas, hoping that the sensors that buzz after two minutes will keep them brushing longer than their flimsy elbow grease. Both generations may, however, be ignorant of the fact that in that time the toothbrushes produce more than 62,000 strokes; that the power to generate such motion comes from tiny magnets using three rare metals, neodymium, dysprosium and boron; and that some of these metals are so coveted that in 2010 they were at the centre of a dangerous rift between China and Japan. + +In all, an electric toothbrush is made of 35 metals. The journey they take to children’s gums may involve China, the Democratic Republic of Congo, Chile, Russia, South Korea, Indonesia, Turkey and other countries too. They are rare, says David Abraham in “The Elements of Power”, a thought-provoking book that follows the trail of these elements, not because they are necessarily scarce or hard to extract. It is because they are used in tiny yet essential quantities—like yeast in a pizza. + +In terms of amounts consumed, these metals pale compared with base metals such as aluminium and copper. But, as the book argues, they are no less transformative—and possibly just as valuable—as oil and coal. That is a bold claim, but the author backs it up convincingly. Using vivid detail, he injects life and purpose into the story of elements that are so light, strong, heat-resistant and elusive that an American general in the 1950s quipped that they should be called “unobtainium”. + +Indium, part of an iPhone’s screen, is an “invisible link…between the phone and your finger”. Just a pinch of niobium, a soft, granite-grey metal mined mostly in Brazil, greatly strengthens a tonne of steel used in bridges and pipelines. Lithium is so light that it has become essential for rechargeable car-batteries. Dysprosium, as well as making an electric toothbrush whirr, helps power wind turbines. Military technology depends on numerous rare metals. Tungsten, for instance, is crucial for armour-piercing bullets. America’s forthcoming F-35 fighter planes are “flying periodic tables”, Mr Abraham writes. + +As with oil, those who can secure the resources have access to immense power. The problem, the book laments, is that China, Japan and South Korea are more keenly aware of the strategic importance of rare metals than Western countries, including the United States. + +Yet it is not just the rare metals that the book explores. As Mr Abraham follows their extraction, he finds geologists, refiners, traders, smugglers and boffins whose stories add to the intrigue of this shadowy trade. Deals are done in backrooms by likeable mavericks. One, a New Yorker called Noah Lehrman, is described as “likely the only person in history to perform at the Jewish Grateful DeadFest and advise the US Congress on resource security”. + +“The Elements of Power” turns out to be a critic as well as an advocate of the rare-metals trade. One concern is what the author calls the “long tailpipe” of pollution left in the wake of mining and refining, notwithstanding the role of minor metals in creating greener products. + +Supplies are also a worry. In 2010 a Chinese trawler rammed Japanese coastguard vessels in waters near islands called the Senkakus in Japanese and the Diaoyu in Chinese (their ownership is disputed by both countries). After the Chinese captain was detained, supplies of rare metals from the mainland to Japan suspiciously dried up. Though China never acknowledged an export ban, the incident caused rare-metal prices to spike, and unsettled manufacturers around the world. Though Japan quickly released the captain, repercussions of the affair pop up through the book. + +Mr Abraham would have done well to use more such central narratives—the story, perhaps, of dysprosium, which has one of the most fascinating and fragile supply chains. Yet he persuasively explains the danger of underestimating a business that, by one estimate, generates $4 billion of revenues a year and also plays a critical role in systems worth about $4 trillion. China, which develops more rare metals than any other country, understands the calculus. The West, his book suggests, does not. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21688372-they-are-obscure-yet-essential-why-rare-metals-make-world-go-round-unobtainiums/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Mountaineering + +Onwards and upwards + +Why George Ingle Finch, an Australian climber from the 1920s, deserves to be far better known than he is + +Jan 16th 2016 | From the print edition + + + +The Maverick Mountaineer: The Remarkable Life of George Ingle Finch: Climber, Scientist, Inventor. By Robert Wainwright. Allen & Unwin; 409 pages; £17.99. + +PEOPLE are not made to survive at the top of Mount Everest. At 29,000 feet (8,840 metres) above sea level—just below a commercial jet’s cruising altitude—exposure to the elements can be lethal. Lucky climbers miss snowstorms, avalanches and crevasses. But one killer is inescapable: lack of oxygen. Atmospheric pressure at the summit is two-thirds less than at sea level. Breathing, sleeping and eating become nearly impossible; the body pumps more blood to the brain, often causing fatal swelling. Climbers call anything above 8,000 metres the “death zone”. For every 100 people who conquer Everest, four never return to base camp; more than 200 bodies lie amid the ice and rock. + +Those who survive owe much to George Ingle Finch, an Australian chemist who used portable oxygen tanks on the second of three British expeditions to Everest in the 1920s. It was a time when climbers dined on quail and herring, and wore pyjamas under tweed. Finch was different. He wore innovative, custom-made, windproof gear produced from gossamer and down. The oxygen cylinders he designed, although they weighed hefty 16kg for eight hours’ supply, made the death zone a little less deadly. After the original breathing masks were found to be faulty, he saved his expedition by fashioning replacements from bladders of toy footballs halfway up the mountain. Finch was the best technical climber of his time, and he reached farther up Everest than anyone had done before—stopping only to carry a novice companion to safety. + +Few Western climbers have contributed as much. But as Robert Wainwright shows in “The Maverick Mountaineer”, Finch’s achievements have been overshadowed by the legend of George Mallory, who died on the third campaign in 1924. Mallory’s obsession with conquering Everest (“because it’s there”, he once explained) is the mountain’s greatest story, more powerful even than the first ascent by Edmund Hillary and Tenzing Norgay in 1953. Mallory’s status has remained as unblemished as his body, discovered only in 1999. + +Finch’s legacy was downplayed. Mountaineering in the early 20th century was dominated by gentlemen who had been to Oxford or Cambridge and had a hefty supply of family money. Finch, a colonial farm boy who trained in the Alps while studying in Zurich before taking up a teaching post at Imperial College, London, was an outsider. His willingness to challenge received wisdom irked members of the Alpine Club in Mayfair, who barred him from two expeditions to Nepal. They believed that using artificial oxygen supplies was cheating, and their comments reveal their prejudice against Finch. “I always knew the fellow was a shit,” said one. “Anyone who climbs to 26,000 feet with oxygen is a rotter,” sneered another. + +Mr Wainwright’s biography is detailed, at times too much so. Several chapters are devoted to Finch’s unhappy early years: he married three times in six years, and always denied that Peter Finch, who grew up to become an Academy Award-winning actor, was his biological son. The best passages, though, are those that describe the battle of scientific progress against entrenched snobbery—a fight that may have cost Finch the chance to stand on top of the world, but ought to be remembered. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21688370-why-george-ingle-finch-australian-climber-1920s-deserves-be-far-better/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Love and marriage + +It takes grit + +A wise novel about a couple as they face a big test + +Jan 16th 2016 | From the print edition + +What more do you want? + +Couple Mechanics. By Nelly Alard. Translated by Adriana Hunter. Other Press; 307 pages; $16.99. + +ALL marriages are suspense thrillers, in a way. From the outside, any relationship is a mystery. But even from within there is much that is unknown and unsaid; no one really knows how it will all end. Years in, when responsibilities replace the romance and the days all look alike, staying together can feel less a desire than a duty. This is the moment when many marriages fall apart. + +There is “an element of will in love”, writes Nelly Alard in “Couple Mechanics”, the new English translation of her award-winning novel “Moment d’un Couple”. Every relationship forces couples to “decide to love, to keep on loving, or to stop loving.” Such negotiations are invariably tricky, as Ms Alard shows in this elegant and gripping tale about a marriage on the rocks. + +The couple at the centre of this book live in Paris, but they could be any of the countless young-professional duos who are steadily gentrifying outer boroughs in increasingly unaffordable big cities around the world. Olivier is a journalist, Juliette a computer engineer, and they strive for a balance between home and work, juggling their careers and their two children. The novel begins at their moment of rupture: “Okay, so I’m seeing a girl,” Olivier blurts out over the phone. He is hastily explaining to Juliette that he cannot make it to the cinema that night because the “girl”, a socialist politician whom he has known for only a short time, is having a fit. No, he does not want to leave Juliette, he says later, but yes, he may be in love. He promises to extricate himself from his affair, but “it’ll take a bit of time.” + +This book is really Juliette’s story, told in the third person. With a bit of whiplash, she finds herself thrust into a banal “French farce”, assuming a role she had never imagined for herself. Olivier says he intends to stick around, yet he is often distant and discouraging. Juliette tries to play it cool, but she finds herself turning into the kind of “pathetic creature consumed with jealousy” who searches her husband’s phone for evidence of foul play. Suspense builds throughout this months-long saga, as it is never quite clear whose needs, and which union, will win the day. + +Ms Alard tells this tale with admirable restraint. Olivier’s mistress may be a bit too mad, but “Couple Mechanics” shies away from melodrama. Instead, it offers a keen look at the work of love at that point—tough for everyone—when passion must be replaced by will. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21688371-wise-novel-about-couple-they-face-big-test-it-takes-grit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Obituary + +L’enfant terrible + +Pierre Boulez, composer and conductor, died on January 5th, aged 90 + +Jan 16th 2016 | From the print edition + + + +FEW figures were cooler or calmer than Pierre Boulez on the podium. He conducted without a baton, lifting the phrases and flicking them away with long, elegant fingers. The rest of his body did not move, impassive and commanding as a man lightly trimming a hedge; his face was a stone mask, only his darting eyes revealing how he was excavating the music, uncovering the layers and rebuilding them in structures of crystal clarity. Many said he was the finest conductor-composer since Richard Strauss. Every inch of him suggested that he was well aware of that. + +Inside the statue, though, was gelignite. Music, to him, was in permanent revolution; but since there had been no proper upheaval since the Renaissance, he was leading one. For 50 years he was at war, or in a state of uneasy truce, with the musical establishment, fighting to make the deaf, incurious or plain uncultured appreciate the works of their own time. + +The composers of the 20th century—Schoenberg, Webern, Nono, Ligeti, himself—were woefully neglected and unplayed. This he vowed to change, first by challenging the canon known as “popular”. Opera houses, “full of dust and shit”, should be burned down. Original scores should be destroyed and accepted “masterpieces” vandalised, in order to recreate them. He cursed the grim custodians of the standard repertoire, and mocked his teachers at the Paris Conservatoire: Olivier Messaien, who wrote “brothel music”, and René Leibowitz, who dared to “correct”, in red pen, his first piano sonata. + +This was not a war he fought single-handed. He dragged into it, often kicking and screaming, great orchestras, audiences and even governments. Instrumental players were bullied out of their traditional routines, made to interleave their comfortable Haydn and Brahms with works based purely on the pitch of notes and their duration. In New York, where he conducted the Philharmonic from 1971 to 1977, horrified audiences found the Avery Fisher Hall stripped of seats for his “rug concerts”, and programmes spiky with unfamiliar stuff. He could chalk up victories, as at Bayreuth, where his performance of Wagner’s “Ring” in 1976 was booed on the first night and cheered for 85 minutes on the last. More often he left to sighs of relief. + +Music as maze + +In his pocket, primed like bombs, were his own compositions: in germination from his teenage years, when he had fallen under the spell of Stravinsky’s percussive, discordant “Chant du Rossignol”, and tested from 1946, when he was in charge of music for a decade for Jean-Louis Barrault and Madeleine Renard at their avant-garde theatre company. His works ranged from piano sonatas in which the whole keyboard was ravaged, plucked and battered to the delicate teaspoonfuls of notes dispensed in “Le Marteau sans Maître” (The Hammer without a Master, 1955), or the dreamy soprano wanderings of “Pli selon Pli” (Fold following Fold, 1958), his setting of poems by Mallarmé. + +Ever seeking new sounds, he introduced Asian and African timbres, gourd and gamelan, and tried every newly invented electronic device in the hope that computers might play, in real time, with orchestras. When he had made peace with the French government (after telling André Malraux, the culture minister, in 1966 that he was going “on personal strike” against him), he was given his own music department in the Centre Pompidou, where he set up an orchestra, the Ensemble Intercontemporain, to play new works, and collaborated with scientists to try to expand the sounds of music into realms so far unthought of and unheard. + +Paradoxes dogged him. He fought to set music free; but he also longed for order in it. He imagined the answer lay in Schoenberg’s serialism, where melody, harmony and counterpoint vanished, notes were related only to one another, and music “left the world of Newton for the world of Einstein”. But he soon found the dry 12-tone system a burden. The inspiration for “Le Marteau sans Maître” was his urge to weave colour, imagination and spontaneity into it—combining opposites to make music that was more like Debussy’s, and which opened up another world. + +Both composition and conducting—to him an essential pairing, each informing and enriching the other—were explorations. Music was a maze through which listeners should wander freely, stumbling on the unexpected and not knowing the end. His own works were revised constantly; some were deliberately left unfinished, for in writing and making music he was also, he believed, discovering himself. + +Of the private Boulez, almost nothing was revealed; he was a solitary, isolated by choice and cloaking his charm, much of the time, in arrogance. His favourite mental associates were bad-boy poets, Rimbaud and Baudelaire, or abstract painters like Kandinsky, all smashers of boundaries and shockers of the status quo. + +When he composed, he once explained, he dug down through layers of himself towards the “core of darkness” from which, in extraordinary flashes, his music came. Though the music might be wildly radical, this core—another paradox—would never change. Towards that unknown, like Orpheus, he made the most tumultuous and controversial journey of any modern classical musician. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21688369-pierre-boulez-composer-and-conductor-died-january-5th-aged-90-lenfant-terrible/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Correction: When anger turns to ink + +Jan 16th 2016 | From the print edition + +In our review of Molly Crabapple’s book (“When anger turns to ink”, January 9th) we refer to her drawing Libyan snipers. They were Lebanese. Sorry. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21688377-correction-when-anger-turns-ink/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: David Bowie: Starman Jones + + + + + +Articles Sections Next + +Obituary: David Bowie + +Starman Jones + +David Bowie, musician, actor and icon, died on January 10th, aged 69 + +Jan 16th 2016 | From the print edition + + + +IN JULY 1969 men walked on the moon, a technological leap all but unthinkable 50 years before. Three years later they abandoned it, and have renounced all return ever since. What boosters saw as the great opening act of the space age turned out to be, in effect, its culmination. Within a few years presidential corruption, economic stagnation, military ignominy and imagined catastrophe had warped post-war America’s previously impervious belief in progress, a belief that had resonance across the then free world. After Apollo, the future would never again be what it used to be. + +David Bowie’s greatest years began nine days before Apollo 11 touched down in the Sea of Tranquillity, with the release of his single “Space Oddity”; they ended 11 years later, with the single “Ashes to Ashes”. Over that decade he used imagined futures to turn himself into something contradictory and wonderful—an epitome of alienation with whom the alienated flocked to identify. In doing so, he laid bare one of the key cultural shifts of the 1970s: the giving up of past dreams. + +Mr Bowie’s future-fixation was most obvious in his appropriation of the themes of pulp science fiction, of space travel and aliens from other planets, of “Ziggy Stardust” and “Life on Mars”. Other impresarios—most notably L. Ron Hubbard, the founder of the Church of Scientology—had ransacked the genre for mythologies of personal growth. But none did so with Mr Bowie’s sense of dress and theatre, his sexual thrill, his salesmanship and his understanding of what his fans wanted to hear. His alien allegories made the possibility of change—the heart of the future’s appeal, especially for adolescents—a matter not of remaking society or piling up technological progress but of revealing, or remaking, yourself. The difference between the future and the past lay not in it, but in you. + +The proof was in the playing. Mr Bowie grew up as David Jones, a sharp-toothed kid from dull suburban Bromley whose parents held no aspirations for him. Through a talent born of yearning he had transformed himself into Ziggy Stardust: extravagant, flawed and sexually polymorphous, tottering on platform shoes and hiding behind a mask of paint. “Nijinsky meets Woolworths” Mr Bowie called him: a character who ran through 73 different outfits in 21 months. If he could so transform himself, what could make-up and attitude do for you—especially if you had outcast Ziggy, your leper messiah, to sexily show you the way? + +He thinks he’ll blow our minds + +Mr Bowie had taken a while to attract attention. Stuck in 1960s London, he picked up a saxophone and considered jazz, then flitted between bands; he moved from mod to Buddhist, from rocker to folk artist, hanging around London’s Soho with its sex shops and music clubs, exploring sexual ambiguity. Despite the success of “Space Oddity” his early albums drew little attention. It was only with the fifth, “The Rise and Fall of Ziggy Stardust and the Spiders from Mars”, (1972) that millions of teenagers in semi-detached houses just like the one back in Bromley took him to their hearts and turntables. + +Through these years and after Mr Bowie’s focus on the future was clear in his relentless reinvention of himself and his music: always wanting to see what was next, ceaselessly leaving the places he had lived and the music he had played for what was to come. “I can think of no other rock artist” wrote Charles Shaar Murray, a rock journalist, “whose next album is always the one I’m most looking forward to hearing.” + + + +Some called him a chameleon, but he was the reverse. Chameleons change hue to blend in with their background; he changed to stand out, and dared others to mimic him. He was never afraid to murder his darlings. Ziggy was killed off in 1973 as he finished an exhausting worldwide tour at London’s Hammersmith Odeon; he was being too much imitated, and Mr Bowie always had to be one step ahead. One successor was Aladdin Sane, a zigzag of painted lightning across his face; another, the most troubled, was the Thin White Duke, an aristocratic cabaret singer in black trousers, waistcoat and white shirt, needing only a skull to play Hamlet. + +The tragic garb was well judged. As he dashed from persona to persona, station to station, so the worlds he pushed into became darker. Shaped by the threat of nuclear war, the cultural imagination took a catastrophic turn in the 1970s—one ever-present future was no future at all. Mr Bowie was there at the turning point; his song “Five Years” says more about impending annihilation than a shelf full of reports from the RAND Corporation. Spectacular levels of cocaine abuse also shaped this nihilistic trajectory. Settled in Los Angeles from 1975, he stayed up for days on end, sitting cross-legged behind black curtains, surrounding himself with black candles and painted pentagrams. + +His diet was “red peppers, cocaine and milk”; always slender, he became skeletal. He would work madly on a song for a week, only to realise that he had got no further than four bars. Nicolas Roeg had originally been set on Peter O’Toole to play the titular alien in his film “The Man Who Fell To Earth”. But on seeing television footage of Mr Bowie sitting utterly isolated in the back of a limousine he knew he had his not-quite-man. Mr Bowie, true to form, remembered almost nothing of the filming. There is no alienation like drugged alienation, and perhaps no worse place to experience that than “the most repulsive wart on the backside of humanity”, as he described the City of Angels. + +In “Space Oddity” Major Tom, floating in a most peculiar way, had been an isolated spaceman; by “Ashes to Ashes” his isolation was a junkie’s. Mr Bowie later said that this funereal nursery rhyme (only his second British number-one single) served to wrap up the 1970s. In the 1980s he reconnected, refashioning himself into a much more straightforward, and less interesting, pop star and something of a Thatcherite poster-boy; embracing consumerism was another side of his celebration of the individual over all else. He found huge audiences in America with “Let’s Dance” (1983); he sang a camp cover of Martha Reeves & the Vandellas’ “Dancing in the Street” with Mick Jagger for Bob Geldof’s Band Aid. His skills were still there, yet his sense of daring had faded. For the first time since Ziggy, he no longer drove the cultural agenda; like many an ageing rocker, he found himself seen as part of the establishment he had spent his life wrong-footing. + +His better work in the 1990s, 2000s and 2010s, like the late work of many artists, seemed more a response to his own earlier achievement than a reflection of the world outside—but the stature of that earlier work, and the fact that it had done much to shape that world outside, still made the last albums far more interesting than those of most of his peers. Most poignant was his 27th and last, “Blackstar”, released on January 8th. The video for the track “Lazarus” shows him singing “I’ll be free—ain’t that just like me?” before walking backwards, trembling, into a wardrobe, and pulling the door closed. He had choreographed his own death—a step ahead, as usual, and a profound shock for a world that had been unaware of his cancer. Within days “Lazarus” had been watched 17m times, and “Blackstar” topped the charts. His producer, Tony Visconti, confirmed that it was Mr Bowie’s “parting gift”. + + + +INFOGRAPHIC: David Bowie’s genre-hopping career + +Just for one day + +“Blackstar” in fact harked back to his greatest period: the one, in the late 1970s, in which he escaped from Los Angeles to Berlin and laid the future to rest in a grave of strange, powerful sound. He chose Berlin to save money and live in a place where he would be unknown. Despite his fascination with Nietzsche, it was the city’s cultural ferment, not a dalliance with fascism, that induced him to stay. He and Iggy Pop, a drug-addled rocker who was part-muse, part-playmate, part-protégé, shared a flat in Schöneberg. + +In earlier days Mr Bowie had planned his albums meticulously; now he and his collaborators, including Mr Visconti and the remarkable Brian Eno, worked on the fly in the studio, the lyrics assembled with scissors-and-paste montage—or left out altogether. Much of the music was bleak, its synthesisers industrial, its guitars angry, its words disturbing. Take “Breaking Glass”: “Baby, I’ve been breaking glass in your room again. Listen. Don’t look at the carpet. I drew something awful on it”—presumed to be a reference to the pentagrams of Los Angeles. + +But in this darkness there was grace. Freedom and honesty characterise the Berlin recordings, the veneer of masquerade abandoned. He had a sense, he said, “of closing the blinds and saying, ‘Fuck them all’.” And in a city as freighted with history as any in Europe, he felt he had at last captured “a sense of yearning for a future that we all knew would never come to pass”. + +It is no accident that his greatest song of this period, “‘Heroes’”, both celebrates its protagonists’ potential and constrains it: while everything might be possible, it is all “just for one day”. It is an embrace of the present that acknowledges the passing away of future dreams, but in its intimate immensity absorbs the sadness of that loss. It is, like much great art, universal precisely because of its response to a particular place—and time. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21688380-david-bowie-musician-actor-and-icon-died-january-10th-aged-69-starman-jones/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Retail revenue + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Jan 16th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21688379/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Jan 16th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21688398-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Jan 16th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21688400-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Jan 16th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21688401-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Retail revenue + +Jan 16th 2016 | From the print edition + + + +Just like the brands they stock, retailers go in and out of fashion. Sainsbury’s, Britain’s second-largest supermarket chain, recently bid for Home Retail, a multi-chain retailer, in order to pep up its business. Amazon’s revenues have risen by almost 200% in the past five years, highlighting the growing consumer preference for digital shopping over the high street. Costco, a bulk-discount retailer, may not be hip but its revenue-generating membership fee at least protects the bottom line. Sears, one of America’s biggest department stores, is in danger of being permanently off-trend, the victim of weak mall traffic, online businesses and a turnaround plan that has yet to deliver results. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21688403-retail-revenue/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Jan 16th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21688402-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 15 Jan 2016] + +The world this week + + + +Politics this week + + + + + +Business + + + + + +KAL's cartoon + + + + + +Leaders + + + +Immigration and asylum: Migrant men and European women + + + + + +China’s economy: The yuan and the markets + + + + + +The Iran nuclear deal: Big day imminent; big problems ahead + + + + + +The battery era: A plug for the battery + + + + + +Cohabitation and the law: When unmarried parents split + + + + + +Letters + + + +On free speech, broadband, Oregon, obesity, Israel, animals: Letters to the editor + + + + + +Briefing + + + +Chinese politics: A crisis of faith + + + + + +United States + + + +Barack Obama: A voice in the wilderness + + + + + +Vice-presidential contenders: Haley’s comet + + + + + +New York’s grands projets: Thinking big + + + + + +The Supreme Court: Labour pains + + + + + +Detroit’s public schools: Of rats and debts + + + + + +Subsidising NFL teams: Sacking the taxpayer + + + + + +Lexington: The centre cannot hold + + + + + +The Americas + + + +Cuban migrants: The last wave + + + + + +Crime in Mexico: From Penn to pen + + + + + +Asia + + + +Vietnam’s Communist Party: Changing of the guard—but then again, perhaps not + + + + + +North Korea’s awful economy: A Kim in his counting house + + + + + +Feral cats in Australia: Felicitous felicide + + + + + +Urban pollution in India: Particular about particulates + + + + + +China + + + +Military reform: Xi’s new model army + + + + + +Lego lets go: An artist celebrates + + + + + +Confucian cuisine: Just add sage + + + + + +Banyan: Two-systems failure + + + + + +Middle East and Africa + + + +Water politics: Sharing the Nile + + + + + +Botswana: Losing its sparkle + + + + + +The nuclear deal with Iran: The end of the beginning + + + + + +Political tweeting in Africa: What’s trending in Tanzania? + + + + + +The war in Yemen: Getting closer + + + + + +The West Bank: The doomsday settlement + + + + + +Utilities in the Middle East: Sun and sea + + + + + +Europe + + + +Refugees in Germany: Cologne’s aftershocks + + + + + +Migrant statistics: Oh, boy + + + + + +Catalonia’s new president: Rebel, Rebel + + + + + +Poland and the EU: On the naughty step + + + + + +Fighting French unemployment: Mode d’emploi + + + + + +Charlemagne: Referendum madness + + + + + +Britain + + + +Britain and the European Union: Let the campaigners begin + + + + + +The National Health Service: Strike one + + + + + +The housing market: Can we fix it? + + + + + +Social housing: Back to the street + + + + + +Banking reform: Culture wars + + + + + +Scottish distilling: Gin trap + + + + + +MediaCityUK: Not so grim up north + + + + + +Bagehot: Don Corbote’s dodgy sally + + + + + +International + + + +Unwed parents and the law: Carriage and horse + + + + + +Unmarried and ill-informed: The common-law marriage myth + + + + + +Business + + + +Clean energy: An increasingly precious metal + + + + + +Chinese acquisitions abroad: Better than barbarians + + + + + +Planemakers: A smoother ride + + + + + +E-commerce in India: Local heroes + + + + + +The biotechnology industry: Clusterluck + + + + + +Schumpeter: The other side of paradise + + + + + +Finance and economics + + + +China’s labour market: Shocks and absorbers + + + + + +Buttonwood: Picnic for the bears + + + + + +Remittances in Central Asia: From Russia with love + + + + + +The oil market: $20 is the new $40 + + + + + +Lotteries: High stakes + + + + + +Poor financial decisions: Anti-choice + + + + + +SoFi: So far, so good + + + + + +Free exchange: Fight or flight + + + + + +Science and technology + + + +Counter-terrorism: Shrinking the haystack + + + + + +Illumination: Light-bulb moment + + + + + +Climate change: Stopping the big burp + + + + + +Bird navigation: Obscure truths + + + + + +A fossil parasitoid: Getting to the point + + + + + +Books and arts + + + +Rare metals: Unobtainiums + + + + + +Mountaineering: Onwards and upwards + + + + + +Love and marriage: It takes grit + + + + + +Obituary: L’enfant terrible + + + + + +Obituary: Correction: When anger turns to ink + + + + + +Obituary + + + +Obituary: David Bowie: Starman Jones + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Retail revenue + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.01.23.TXT b/homeworks/B20769/homework1/data2/2016.01.23.TXT new file mode 100644 index 0000000..22a1b49 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.01.23.TXT @@ -0,0 +1,5745 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: The young + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Jan 23rd 2016 | From the print edition + + + +Sanctions on Iran were lifted after the regime was found to be in compliance with its obligations to dismantle parts of its nuclear programme. Yet America almost immediately imposed a new set of sanctions on companies and people linked to Iran’s ballistic-missile programme. Iran also freed four Iranian-Americans it had held prisoner, including a reporter from the Washington Post, in exchange for seven Iranians held in America. See article. + +The UN said that Islamic State has enslaved as many as 3,500 people in Iraq. Most of these are women and children from the minority Yazidi community. Speaking in Paris, America’s defence secretary, Ashton Carter, said America and six other countries were stepping up their military campaign against IS in Iraq and Syria. + +Members of the two main factions in Libya’s civil war formed a unity government as part of a peace process brokered by the UN. But several militias in control of different parts of the country, including some in the two main factions, rejected the deal. + +In Burkina Faso jihadists attacked a hotel in the capital, Ouagadougou, killing at least 30 people. The attack, an echo of one last year in neighbouring Mali, was the first by Islamists in the country. + +The letter of the law + +Standard & Poor’s, a rating agency, downgraded Poland’s credit rating from A- to BBB+ over concerns about the rule of law in the country. The agency said changes to Poland’s media law and to the composition of its constitutional court, made by the new right-wing government of the Law and Justice party, implied that institutional checks and balances could be threatened. Poland has been placed under review in a European Commission rule-of-law procedure. + +In Britain a public inquiry into the murder in 2006 of Alexander Litvinenko, a KGB defector, found that Vladimir Putin, Russia’s president, had “probably” approved the killing following a feud. Litvinenko was poisoned by tea laced with radioactive polonium-210 at a restaurant in London. Two Russian men accused of the murder deny any involvement. + +François Hollande unveiled a plan to boost job creation in France, which provides subsidies to small firms if they hire young or unemployed workers and more vocational training. Economists are sceptical of the plan. The French president has promised to bring France’s unemployment rate down before running for a second term in 2017. + +Firsts all round + + + +Taiwan elected Tsai Ing-wen as president, the first female one in the Chinese-speaking world. Ms Tsai’s Democratic Progressive Party (DPP) also won its first majority in the island’s legislature. The DPP favours Taiwan’s formal independence from China, but Ms Tsai says she wants to maintain the status quo. She is likely to be more cautious than was her predecessor, Ma Ying-jeou of the Kuomintang, in pursuing free-trade and other agreements with China. See here and here. + +Gunmen killed 22 people and left 17 others injured in an attack on Bacha Khan University in north-west Pakistan. Four assailants were killed by security forces. It is not yet clear whether they were linked with militants who have carried out other deadly attacks in recent months. See article. + +A Swedish human-rights activist, Peter Dahlin, was shown on Chinese television apparently confessing to crimes. State media said Mr Dahlin, who works for a Beijing-based human-rights group, had “sponsored activities jeopardising China’s national security”. Earlier a publisher from Hong Kong, Gui Minhai, who had gone missing in Thailand, was also shown on Chinese TV saying he had turned himself in to the authorities in relation to a drink- driving conviction 12 years ago. + +China’s leader, Xi Jinping, began his first trip as president to the Middle East. He travelled to Saudi Arabia and Egypt, and is also due to go to Iran. More than half of China’s imports of crude oil come from the Middle East. See article. + +North Korea’s official media said scientists in the country had invented an alcoholic drink that does not cause hangovers. It is said to be made of a type of ginseng and glutinous rice. Implausible claims are a North Korean staple. + +Economic mismanagement + +Venezuela’s president, Nicolás Maduro, declared a state of economic emergency and asked parliament for powers to reform the economy by decree for 60 days. After withholding the release of economic indicators for more than a year, the Central Bank reported that inflation in the 12 months to September 2015 was 141.5% and that GDP shrank by 7.1% over the same period. See article. + +Colombia’s government and the FARC guerrilla army asked the UN to send an unarmed mission to monitor a ceasefire between them after a peace agreement is signed. The joint request is an indication that negotiators in Havana are close to reaching a final agreement to end a conflict that has lasted for more than 50 years. See article. + +Jude Célestin, who came second in the first round of Haiti’s presidential election in October, said he will boycott the run-off on January 24th because of alleged fraud. The leader after the first round was Jovenel Moïse, who has the backing of the current president, Michel Martelly. + +Overstepping his authority? + +America’s Supreme Court took up a case that challenges orders issued by Barack Obama in November 2014 to lift the threat of deportation from up to 5m illegal immigrants and allow them to work. The orders were blocked when 26 states, led by Texas, filed suit in lower courts against the Obama administration. + +Scientists at the National Oceanic and Atmospheric Administration confirmed that 2015 was the hottest year on record. The average global temperature was 0.9{+o}C (1.62{+o}F) above the long-term average for the 20th century. Cold comfort for those living in the northern hemisphere as various cold snaps start to bite. + + + +In an unusually stilted performance, Sarah Palin, John McCain’s running-mate in 2008, endorsed Donald Trump for president. A day earlier Mr Trump was the hot topic in Britain when Parliament debated a voter petition to ban him from the country for making Islamophobic statements. The government said it couldn’t comment on individual immigration cases. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21688942-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Jan 23rd 2016 | From the print edition + + + +Global markets had another rocky week, as rapidly falling oil prices reignited concerns about the health of the world economy. With oil stockpiles rising, partly because mild winter weather has reduced the demand for fuel, Brent crude dropped to below $28 a barrel. Now that sanctions hindering Iran’s oil sales have been lifted, the International Energy Agency has warned that oil markets “could drown in oversupply” if the forecast surplus of 1.5m barrels a day is not cut. + +Oil spillover + +Declining oil prices were the main factor behind a fall in annual profit at Shell; it thinks it made up to $10.7 billion last year compared with $19 billion in 2014. Total said its profit would be 20% lower. In Azerbaijan, where the economy is dependent on oil, the government imposed stiff capital controls amid an economic crisis. It recently abandoned a peg to the dollar. + + + +Markets were also perturbed by news that China’s economy grew at its slowest pace since 1990 last year. GDP increased by 6.9%, compared with 7.3% in 2014. Underscoring the official economic rebalancing that is under way, services accounted for more than half of output for the first time, while manufacturing’s share dropped to 40.5%. Steel production contracted for the first time in 25 years. + +The slowing Chinese economy is not stopping Chinese firms from launching foreign takeovers. In the latest sizeable deal Haier, China’s biggest maker of large electrical appliances, agreed to buy General Electric’s white-goods business for $5.4 billion. GE had tried to sell the division to Electrolux, but the deal fell apart over antitrust concerns. Foxconn, a Taiwanese assembler of gadgets for Apple, was reported to have offered around $5 billion to buy Sharp, a struggling Japanese electronics firm. A fund backed by Japan’s government was also said to be considering a bid for Sharp. + +Hold on, hold on + +Mark Carney, the governor of the Bank of England, suggested that the central bank was not contemplating raising interest rates soon, because the British economy faces repercussions from turbulence in the world economy. This week more cuts were announced in the British steel industry, which has shed 5,000 jobs. The markets now do not expect rates to rise until 2017, but Mr Carney reiterated that any decision would “depend on economic prospects, not the calendar”. The pound sank to its lowest level against the dollar since 2009. + +America’s big banks started reporting their earnings for the final three months of 2015. A legal charge to settle allegations that it mis-sold mortgage securities before the financial crisis reduced net profit at Goldman Sachs to $765m. Morgan Stanley’s profit came in at $908m, despite an ailing debt-trading business. A solid quarter at Bank of America helped boost annual profit to $15.9 billion, its most since 2006. JPMorgan Chase’s profit for 2015 was $24.4 billion, its best year ever. + +Deutsche Bank warned that legal and restructuring charges it has incurred will contribute to a loss for the fourth quarter. Revenue will come in below expectations because of “challenging market conditions”. Its share price, already under pressure amid uncertainty about the bank’s strategy, plunged. + +Separate allegations of wrongdoing at Renault and Fiat Chrysler hurt their share prices (prompting a brief suspension of trading in Fiat’s shares on the Milan exchange). Renault said it would recall 15,000 cars, and offered to fix hundreds of thousands more, because tests showed they exceeded emissions limits. The company’s offices have been searched recently by French authorities investigating the issue. Fiat Chrysler’s shares fell after two car dealerships in Chicago accused it of manipulating sales figures. The carmaker said that the allegations were “baseless” and had been made by “disgruntled” dealers. + +Walmart announced that it would close 269 underperforming stores in the United States and Latin America. These include all its Walmart Express stores in America. It had opened these primarily in urban areas to compete with discount grocers. + +Spanish Onion + +Univision, the largest Spanish-language broadcaster in the United States, bought a 40% stake in the Onion. The company’s digital officer said he expected the satirical news site “to play a key part in the 2016 presidential-election process”. He wasn’t joking. + +At the other end of the media spectrum, WHSmith, a British retailer that used to dominate high-street sales of books and stationery but is now less storied, had its best Christmas in years because of the craze for colour therapy to reduce stress (colouring books and pencils for adults). + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21688944-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Jan 23rd 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21688943-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +The world economy: Who’s afraid of cheap oil? + +Turkey’s war on the Kurds: Futile repression + +Taiwan’s remarkable election: Dear prudence + +Intelligence oversight: Snoopers and scrutiny + +The millennial generation: Young, gifted and held back + + + + + +Articles Sections Next + +The world economy + +Who’s afraid of cheap oil? + +Low energy prices ought to be a shot in the arm for the economy. Think again + +Jan 23rd 2016 | From the print edition + + + +ALONG with bank runs and market crashes, oil shocks have rare power to set monsters loose. Starting with the Arab oil embargo of 1973, people have learnt that sudden surges in the price of oil cause economic havoc. Conversely, when the price slumps because of a glut, as in 1986, it has done the world a power of good. The rule of thumb is that a 10% fall in oil prices boosts growth by 0.1-0.5 percentage points. + +In the past 18 months the price has fallen by 75%, from $110 a barrel to below $27. Yet this time the benefits are less certain. Although consumers have gained, producers are suffering grievously. The effects are spilling into financial markets, and could yet depress consumer confidence. Perhaps the benefits of such ultra-cheap oil still outweigh the costs, but markets have fallen so far so fast that even this is no longer clear. + +The new economics of oil + +The world is drowning in oil. Saudi Arabia is pumping at almost full tilt. It is widely thought that the Saudis want to drive out higher-cost producers from the industry, including some of the fracking firms that have boosted oil output in the United States from 5m barrels a day (b/d) in 2008 to over 9m b/d now. Saudi Arabia will also be prepared to suffer a lot of pain to thwart Iran, its bitter rival, which this week was poised to rejoin oil markets as nuclear sanctions were lifted, with potential output of 3m-4m b/d. + +Despite the Saudis’ efforts, however, producers have proved resilient. Many frackers have eked out efficiencies. They hate the idea of plugging their wells only for the wildcatter on the next block to reap the reward when prices rebound. They will not pack up so long as prices cover day-to-day costs, in some cases as low as $15 a barrel (see article). Meanwhile oil stocks in the mostly rich-country OECD in October stood at 267 days’ net imports, almost 50% higher than five years earlier. They will continue to grow, especially if demand slows by more than expected in China and the rest of Asia. Forecasting the oil price is a mug’s game (as the newspaper that once speculated about $5 oil, we speak from experience), but few expect it to start rising before 2017. Today’s price could mark the bottom of the barrel. Some are predicting a trough of as low as $10. + +The lower the better, you might say. Look at how cheap oil has boosted importers, from Europe to South Asia. The euro area’s oil-import bill has fallen by 2% of GDP since mid-2014. India has become the world’s fastest-growing large economy. + +Yet the latest lurch down is also a source of anxiety. Collapsing revenues could bring political instability to fragile parts of the world, such as Venezuela and the Gulf, and fuel rivalries in the Middle East. Cheap oil has a green lining, as it drags down the global price of natural gas, which crowds out coal, a dirtier fuel. But in the long run, cheap fossil fuels reduce the incentive to act on climate change. Most worrying of all is the corrosive new economics of oil. + +In the past cheap oil has buoyed the world economy because consumers spend much more out of one extra dollar in their pocket than producers do. Today that reckoning is less straightforward than it was. American consumers may have been saving more than was expected. Oil producers are tightening their belts, having spent extravagantly when prices were high. After the latest drop in crude prices, Russia announced a 10% cut in public spending (see article). Even Saudi Arabia is slashing its budget to deal with its deficit of 15% of GDP. + +Cheap oil also hurts demand in more important ways. When crude was over $100 a barrel it made sense to spend on exploration in out-of-the-way provinces, such as the Arctic, west Africa and deep below the saline rock off the coast of Brazil. As prices have tumbled, so has investment. Projects worth $380 billion have been put on hold. In America spending on fixed assets in the oil industry has fallen by half from its peak. The poison has spread: the purchasing managers’ index for December, of 48.2, registered an accelerating contraction across the whole of American manufacturing. In Brazil the harm to Petrobras, the national oil company, from the oil price has been exacerbated by a corruption scandal that has paralysed the highest echelons of government. + + + +INTERACTIVE: Explore how oil prices affect OPEC and non-OPEC production and viability + +The fall in investment and asset prices is all the more harmful because it is so rapid. As oil collapses against the backdrop of a fragile world economy, it could trigger defaults. + +The possible financial spillovers are hard to assess. Much of the $650 billion rise in emerging-market corporate debt since 2007 has been in oil and commodity industries. Oil plays a central role in a clutch of emerging markets prone to trouble. With GDP in Russia falling, the government could well face a budgetary crisis within months. Venezuela, where inflation is above 140%, has declared an economic state of emergency. + +Other oil producers are prone to a similar, if milder, cycle of weaker growth, a falling currency, imported inflation and tighter monetary policy. Central banks in Colombia and Mexico raised interest rates in December. Nigeria is rationing dollars in a desperate (probably doomed) effort to boost its currency. + +There are strains in rich countries, too. Yields on corporate high-yield bonds have jumped from about 6.5% in mid-2015 to 9.7% today. Investors’ aversion spread quickly from energy firms to all borrowers. With bears stalking equity markets, global indices are plumbing 30-month lows (see article). Central bankers in rich countries worry that persistent low inflation will feed expectations of static or falling prices—in effect, raising real interest rates. Policymakers’ ability to respond is constrained because rates, close to zero, cannot be cut much more. + +Make the best of it + +The oil-price drop creates vast numbers of winners in India and China. It gives oil-dependent economies like Saudi Arabia and Venezuela an urgent reason to embrace reform. It offers oil importers, like South Korea, a chance to tear up wasteful energy subsidies—or boost inflation and curb deficits by raising taxes. But this oil shock comes as the world economy is still coping with the aftermath of the financial crash. You might think that there could be no better time for a boost. In fact, the world could yet be laid low by an oil monster on the prowl. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21688854-low-energy-prices-ought-be-shot-arm-economy-think-again-whos-afraid-cheap/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Turkey’s war on the Kurds + +Futile repression + +Turkey’s president must give up trying to crush the Kurds. Instead, he should reopen peace talks + +Jan 23rd 2016 | From the print edition + + + +FOR many years Turkey’s recipe for combating Kurdish nationalism was to pretend that Kurds did not exist. Even as Turkish troops battled the Kurdistan Workers’ Party (PKK), government propaganda maintained that Kurds were a subgroup of Turks and that their language, banned from official use, was a dialect of Turkish. To his credit, Recep Tayyip Erdogan, Turkey’s president, has never indulged in such fantasies. His Justice and Development (AK) party pursued peace negotiations with Abdullah Ocalan, the founder of the PKK, and moderate Kurds. Alas, in recent months, as the world has focused on the tragedy taking place in Iraq and Syria, Mr Erdogan has thrown those achievements away, relaunching Turkey’s war on Kurdish militants with a deadly new ferocity. + +Hundreds are dead, many of them civilians. About 200,000 people have been displaced, adding to Turkey’s burden of millions of Syrian refugees (see article). Districts across the south-east are under curfew. The army is using tanks and artillery against PKK-aligned youth militias dug in behind barricades filled with explosives. Parts of Diyarbakir, the biggest Kurdish-populated town in south-eastern Turkey, resemble the rubble-strewn wastelands of Syrian cities like Aleppo. + +The PKK bears much of the blame. Last summer it began killing Turkish troops and police, supposedly in retaliation for Turkish collusion with Islamic State (IS). The jihadists had sought to annihilate Kobane, a Kurdish enclave in Syria, in full sight of Turkish troops who stood by; and they carried out a suicide-bomb attack against Kurdish activists in the Turkish town of Suruc. By breaking the ceasefire, the PKK has stirred suspicions that it wants to carry the Kurds’ successful fight against IS in Syria back into Turkey. + + + +Grid of grievances: Enemies, alliances and animosity in the Middle East + +Whether the PKK’s action was a rush of emotion or premeditated, Mr Erdogan exploited it to end peace talks with the Kurds and launch a full-scale military campaign. By playing on Turkish nationalism, he propelled his troubled AK party back to victory in the election in November. But the repercussions are dire for Turkey as a whole. Its democracy is under attack. Anyone criticising the war, including moderate Kurdish politicians, is persecuted. What remains of the independent media is being silenced. Turkey, a bastion of stability, is being sucked into the Middle East’s ever-expanding war zone. + +Mr Erdogan may never have peddled the myth that the Kurds do not exist, but he has succumbed to a different fantasy: that he can end Kurdish nationalism by force. Turkey has already wasted decades trying to do so. Returning to suppression is futile, since Kurds form a large minority and control havens in Syria and northern Iraq. Instead Mr Erdogan will be drawn into a familiar vicious cycle, as the attempt to crush insurgents alienates moderate Kurds and creates recruits. + +The PKK, too, is indulging in fantasies. Turkey will never allow the Kurdish chunk of the country to secede or let its fighters take over militarily as they tried to do in the 1990s. Nor will America, however much it may look to the Kurds as the most reliable force against IS in Syria and Iraq, offer them any succour in destabilising Turkey, a vital NATO ally. If anything, America and Europe need Turkey more than ever to help them stop refugee flows and bring peace to Syria. + +Point the guns the other way + +A return to peace talks, on the basis of greater autonomy for Kurds within Turkey, which Mr Ocalan has already accepted, offers the only solution. The West must urge both Turks and the Kurds to see that they should be fighting IS, not each other. It will be impossible to end the civil war in Syria if Mr Erdogan insists on waging a war of his own in Turkey. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21688857-turkeys-president-must-give-up-trying-crush-kurds-instead-he-should-reopen-peace/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Taiwan’s remarkable election + +Dear prudence + +By rights, Taiwan should be a fully sovereign country today; Tsai Ing-wen must accept that it cannot yet be one + +Jan 23rd 2016 | From the print edition + + + +IT HAD been widely predicted, yet the landslide victory for Tsai Ing-wen in Taiwan’s presidential race on January 16th, along with the emphatic performance of her Democratic Progressive Party (DPP) in the legislative election, is nevertheless remarkable (see article). The vibrancy of the campaigning; the engagement of young voters; a smooth expected transfer of power; Asia’s first female leader not to come from a political dynasty: there is much to celebrate. A dictatorship has budded amazingly into a mature democracy, a country with stable institutions and impressive prosperity, ranking 33rd in the world by income per person, richer than Portugal or Greece. + +Rightly, neighbours have been quick to congratulate Ms Tsai. All, that is, except powerful China, which deems Taiwan to be a renegade province that must return to the motherland, and if necessary be forced to. For all that Taiwanese resent being dictated to, and Ms Tsai’s own party leans towards formal independence, the new president must accept that history constrains Taiwanese aspirations, and her options. Not to do so would jeopardise Taiwan’s future—and the region’s peace. + +The Taiwanese, for the most part, voted for Ms Tsai not on the “one-China question” but to improve living standards at home, as voters in mature democracies tend to. A donnish expert on trade law, Ms Tsai picked up a party in tatters in 2008 after its first, disastrous, presidency. Since then the DPP, founded by human-rights activists persecuted during the thuggish days of the Nationalist or Kuomintang (KMT) dictatorship, has shown growing competence in local government. Competence, not political ideology, is how it smashed the KMT’s unbroken lock on the legislature. The KMT’s once-mighty machine, built on cash and cronyism, has hit the buffers; it faces a Herculean task to reinvent itself along more modern lines. + + + +Daily chart: All change in Taiwanese politics + +China’s Communist Party, much happier to deal with its old KMT foe than with the DPP, is displeased. But at least it is not fulminating (see Banyan). Ms Tsai should swiftly demonstrate to President Xi Jinping that her priority is not to seek to upset the balance across the strait but to take on domestic concerns: build more affordable housing, fix the crisis in the pensions system and raise the minimum wage. She should do more to liberalise the economy and remove obstacles to the creation of new businesses. + +Yet she cannot ignore relations with the mainland altogether. Indeed they may yet come to define her presidency. Not least, China is Taiwan’s biggest trading partner. Ms Tsai has promised transparency in trade and investment deals with China. The KMT’s secrecy sparked protests two years ago that greatly undermined Ma Ying-jeou, the outgoing president. His successor must find ways to explain to autocrats, who themselves rule opaquely, why more scrutiny of agreements will lead to their greater acceptance in Taiwan. And when it comes to her promise to seek membership of the American-led free-trade area, the Trans-Pacific Partnership, she should urge China to join the club in tandem, as the two countries did when they entered the World Trade Organisation in 2002. + +Swallow your pride, Ms Tsai + +Sooner or later China will press Ms Tsai to affirm the formula that has guided cross-strait relations: that there is but “one China”, even if both sides disagree as to quite what that means. This will be hard for her, given that such a fudge does not reflect the changing view of compatriots increasingly inclined to think of themselves as Taiwanese, not Chinese. Yet she must continue the reconciliation across the strait that began under Mr Ma. Even before her inauguration in May, she should offer to meet Mr Xi for a meeting of no preconditions. Throughout, her watchword should be patience. Real, de jure sovereignty for Taiwan can probably come only if a thuggish China, today persecuting rights activists, evolves into a more liberal state. Impossible? Taiwan has done it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21688855-rights-taiwan-should-be-fully-sovereign-country-today-tsai-ing-wen-must-accept-it/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Intelligence oversight + +Snoopers and scrutiny + +Britain’s planned law on intelligence oversight could become an example to other countries + +Jan 23rd 2016 | From the print edition + + + +FEW balances are harder to strike than those involved in running a spy agency. After a terrorist attack, voters demand action and politicians respond by granting their spies greater powers to bug and snoop, as with America’s Patriot Act in 2001 and the wide-ranging surveillance law passed after the attacks in France last year. Yet these very powers can, if abused, distort the political system, chill freedom of expression and tilt the scales of justice. When the full extent of clandestine activities come to light, as with Edward Snowden’s revelations about America’s National Security Agency, many feel queasy and demand that the spooks are reined in again. + +The better part of valour + +So a lot is riding on Britain’s attempt to update the law governing the domestic activities of its spy agencies (see article). The draft bill will make explicit how the electronic-intelligence agency, GCHQ, may (with a warrant) plant bugs on computers and other devices, collect and analyse bulk information (such as mobile-phone activity and web-browsing records) and read private messages. Get the details right, and Britain can provide a model of how to balance security and freedom; get them wrong, and centuries of freedom might shrivel. + +The bill’s biggest success is its self-restraint. It does not require firms to weaken the encryption they sell to customers, as politicians in several countries, including Britain, would like. If people want security on the internet, they have no alternative to strong encryption. The agencies have other means of collecting data, including bugging phones and computers. + +The draft bill is also right to require companies to retain, at least for a time, data about mobile-phone and internet activity that may, subject to a warrant, be of use to future investigations. Intelligence agencies need to be able to look back at the history of a suspected terrorist’s contacts and movements. + +Elsewhere, however, the bill could be better. It rightly strengthens GCHQ’s powers to pursue terrorists, gangsters and foreign spies. And it offers extra safeguards: new judicial commissioners will review warrants which, as now, will be issued by the home secretary. Politicians should have ultimate responsibility; if things go wrong, they carry the can. But the bill will work best if it is backed by a consensus. For that reason it needs to reassure those who fear that politicians may abuse their powers. Instead of holding their posts at the prime minister’s behest, the commissioners should be appointed as judges are and their dismissal should require a vote in Parliament. To avoid “capture”, they should serve a single fixed term. + +In addition, the proposed system merely requires the commissioners to check that a warrant has been issued lawfully and reasonably—broadly the same standard applicable to judicial review of other government decisions. But the extra secrecy with which intelligence agencies operate means that is not enough. The commissioners need a reserve power to weigh warrants on their merits. Also missing is explicit protection for lawyers’ communications with their clients. + +Just as important as the nuts and bolts of the new law is its implementation. GCHQ’s demands may be legal, but if they are too costly or intrusive, companies dealing with technology and data will simply move abroad. For all these reasons, other countries should watch Britain closely. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21688853-britains-planned-law-intelligence-oversight-could-become-example-other/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The millennial generation + +Young, gifted and held back + +The world’s young are an oppressed minority. Unleash them + +Jan 23rd 2016 | From the print edition + + + +IN THE world of “The Hunger Games” youngsters are forced to fight to the death for the amusement of their white-haired rulers. Today’s teen fiction is relentlessly dystopian, but the gap between fantasy and reality is often narrower than you might think. The older generation may not resort to outright murder but, as our special report this week on millennials describes, in important ways they hold their juniors down. + +Roughly a quarter of the world’s people—some 1.8 billion—have turned 15 but not yet reached 30. In many ways, they are the luckiest group of young adults ever to have existed. They are richer than any previous generation, and live in a world without smallpox or Mao Zedong. They are the best-educated generation ever—Haitians today spend longer in school than Italians did in 1960. Thanks to all that extra learning and to better nutrition, they are also more intelligent than their elders. If they are female or gay, they enjoy greater freedom in more countries than their predecessors would have thought possible. And they can look forward to improvements in technology that will, say, enable many of them to live well past 100. So what, exactly, are they complaining about? + +These children that you spit on + +Plenty. Just as, for the first time in history, the world’s youngsters form a common culture, so they also share the same youthful grievances. Around the world, young people gripe that it is too hard to find a job and a place to live, and that the path to adulthood has grown longer and more complicated. + +Many of their woes can be blamed on policies favouring the old over the young. Consider employment. In many countries, labour laws require firms to offer copious benefits and make it hard to lay workers off. That suits those with jobs, who tend to be older, but it makes firms reluctant to hire new staff. The losers are the young. In most regions they are at least twice as likely as their elders to be unemployed. The early years of any career are the worst time to be idle, because these are when the work habits of a lifetime become ingrained. Those unemployed in their 20s typically still feel the “scarring” effects of lower income, as well as unhappiness, in their 50s. + +Housing, too, is often rigged against the young. Homeowners dominate the bodies that decide whether new houses may be built. They often say no, so as not to spoil the view and reduce the value of their own property. Over-regulation has doubled the cost of a typical home in Britain. Its effects are even worse in many of the big cities around the world where young people most want to live. Rents and home prices in such places have far outpaced incomes. The youngsters of Kuala Lumpur are known as the “homeless generation”. Young American women are more likely to live with their parents or other relatives than at any time since the second world war. + +Young people are often footloose. With the whole world to explore and nothing to tie them down, they move around more often than their elders. This makes them more productive, especially if they migrate from a poor country to a rich one. By one estimate, global GDP would double if people could move about freely. That is politically impossible—indeed, the mood in rich countries is turning against immigration. But it is striking that so many governments discourage not only cross-border migration but also the domestic sort. China’s hukou system treats rural folk who move to cities as second-class citizens. India makes it hard for those who move from one state to another to obtain public services. A UN study found that 80% of countries had policies to reduce rural-urban migration, although much of human progress has come from people putting down their hoes and finding better jobs in the big smoke. All these barriers to free movement especially harm the young, because they most want to move. + +The old have always subsidised their juniors. Within families, they still do. But many governments favour the old: an ever greater share of public spending goes on pensions and health care for them. This is partly the natural result of societies ageing, but it is also because the elderly ensure that policies work in their favour. By one calculation, the net flow of resources (public plus private) is now from young to old in at least five countries, including Germany and Hungary. This is unprecedented and unjust—the old are much richer. + +The young could do more to stand up for themselves. In America just over a fifth of 18- to 34-year-olds turned out to vote in the latest general election; three-fifths of over 65s did. It is the same in Indonesia and only slightly better in Japan. It is not enough for the young to sign online petitions. If they want governments to listen, they should vote. + +However, the old have a part to play, too. The young are an oppressed minority—albeit an unusual one—in the straightforward sense that governments are systematically preventing them from reaching their potential. + +That is a cruel waste of talent. Today’s under-30s will one day dominate the labour force. If their skills are not developed, they will be less productive than they could be. Countries such as India that are counting on a demographic dividend from their large populations of young adults will find that it fails to materialise. Rich, ageing societies will find that, unless the youth of today can get a foot on the career ladder, tomorrow’s pensioners will struggle. What is more, oppressing youngsters is dangerous. Countries with lots of jobless, disaffected young men tend to be more violent and unstable, as millions of refugees from the Middle East and Africa can attest. + +They’re quite aware of what they’re going through + +The remedy is easy to prescribe—and hard to enact. Governments should unleash the young by cutting the red tape that keeps them out of jobs, and curbing the power of property-owners to stop homes from being built. They should scrap restrictions on domestic migration and allow more cross-border movement. They should make education a priority. + +It is a lot to expect from political leaders who often seem unequal to the task of even modest reform. But every parent and grandparent has a stake in this, too. If they put their shoulders to the wheel, who knows what they might accomplish. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21688856-worlds-young-are-oppressed-minority-unleash-them-young-gifted-and-held-back/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On Saudi Arabia, rating police, tax, David Bowie, investing, Merkel, Poland: Letters to the editor + + + + + +Articles Sections Next + +On Saudi Arabia, rating police, tax, David Bowie, investing, Merkel, Poland + +Letters to the editor + +Jan 23rd 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Saudi Arabia’s problem + +Your briefing on the Saudi regime’s blueprint for survival undervalued the comparative dimension (“Young prince in a hurry”, January 9th). In a globalising world where transnational economic ties, information technologies, migration, awareness of what is going on in different parts of the world and the chipping away of borders affect ever greater parts of societies, authoritarian or “strongman” regimes are vulnerable to rapidly shifting pressures. + +It may appear that such regimes can bring stability to unevenly fragmenting countries, but they become even more dependent on rents, especially from resources (the “resource curse”) and on cheap exports, cheap labour and the like. Maintaining these comparative advantages often requires repression and austerity. They therefore have to deal with vicious cycles of disillusionment, resentment and ethnic divisions that spill across borders. + +When these bottom-up pressures mesh with uneven international trends, of which the falling oil price is but one, these regimes improvise, often making things worse in the medium- to long-term. We have seen this across the world at different speeds and with different ramifications, from Nicolás Maduro’s Venezuela to Vladimir Putin’s Russia to Africa and now China. The developed world is at a loss how to react. International interventionism just seems to exacerbate the process. Saudi Arabia is one such regime, caught between the inside and the outside. + +Democratisation would obviously be the preferred alternative, but democratic regimes historically have usually grown out of long phases of civil war, authoritarianism and breakdown. We are likely to have to go through such a neomedieval phase before the restructuring process can begin. + +PHILIP CERNY + +Professor emeritus of politics + +University of Manchester + +Reading your fascinating piece on Saudi Arabia I couldn’t help but recall a passage from Alexis de Tocqueville’s “The Ancien Régime and the Revolution”: “Experience teaches us that, generally speaking, the most perilous moment for a bad government is one when it seeks to mend its ways.” Tocqueville recognised the statecraft that is needed in order to avoid disaster when embarking on radical reform. + +MICHAEL WILLIAMS + +Letchworth, Hertfordshire + +Although the House of Saud has suffered two catastrophic setbacks during its long dominance, it has managed rebirth in both cases. This is the third Saud dynasty that we are witnessing, the third flower on a vine that is rooted as far into the past as the creation of Britain, that is to say, some 300 years. Characterising the kingdom as a “post-colonial Arab state”, as if its basis is the Sykes-Picot agreement, is not helpful. Given its repeated incarnations, the House of Saud’s foundation appears more likely to be a special resonance with something in the soul of the Arab peninsula. From that more-encompassing perspective, the challenges of reform, regional influence, population, economic diversity and even oil wealth itself cast far less compelling shadows. + +CRAIG MCLANE + +New Carrollton, Maryland + + + + + +RateMyPolice + +The teenagers building an app to rate service from the police have a great idea (“Revenge of the nerds”, January 2nd). The police need not be worried and should get ahead of the game by doing this themselves. There is already well-developed IT on crime reporting to achieve crime prevention, but most police agencies in America have no system at all to understand the reactions of citizens to their efforts. Only a few survey the community regularly. + +Like websites where students rate professors, ad hoc ratings of police will be fraught with problems. But systematic, scientific and regular measures of police services could be subject to review and oversight. The police would benefit from having this information. + +CYNTHIA LUM + +Director + +Centre for Evidence-Based Crime Policy + +George Mason University + +Fairfax, Virginia + + + + + +American tax + +* “Republican tax plans are articles of faith” is how you conclude your analysis of GOP presidential hopefuls’ tax plans (“Indecent disclosure”, January 2nd). While the tax proposals from 2016 candidates have varying degrees of merit and some have problems, others do not, such as Ted Cruz’s call for a European-style VAT and Jeb Bush’s tax hike on investment income: they commendably move toward lower income tax rates. Republican candidates’ belief that reducing individual and corporate income tax rates, as well as lowering the overall tax burden, will promote economic growth is not an article of faith. In fact, it’s supported by social science. + +John Hood, chairman of the John Locke Foundation, a conservative think tank based in North Carolina, analysed 681 peer-reviewed academic journal articles dating back to 1990. Most of the studies found that lower levels of taxes and spending correlate with stronger economic performance. When Tax Foundation chief economist William McBride reviewed academic literature going back three decades, he found “the results consistently point to significant negative effects of taxes on economic growth even after controlling for various other factors such as government spending, business cycle conditions and monetary policy”. + +With a steeply progressive income tax code, the world’s highest corporate tax rate and an uncompetitive worldwide corporate tax regime, America is desperately in need of rate-lowering, complexity-reducing tax reform. Unfortunately, only one of the two major political parties is proposing such. + +PATRICK GLEASON + +Director of state affairs + +Americans for Tax Reform + +Washington, DC + + + + + +A musical child + + + +I was grateful for the insight and sensitivity in your obituary of David Bowie (January 16th). But it is not true that he “grew up as David Jones, a sharp-toothed kid from dull suburban Bromley whose parents held no aspirations for him”. David’s parents, especially his father, “John” Jones, encouraged him from the time he was a toddler. His mother, Peggy, spoke often of our deceased grandfather, who was a bandmaster in the army and played many wind instruments. David’s first instruments, a plastic saxophone, a tin guitar and a xylophone, were given to him before he was an adolescent. He also owned a record player when few children had one. + +When he was 11 we danced like possessed elves to the records of Bill Haley, Fats Domino and Elvis Presley. David’s father took him to meet singers and other performers preparing for the Royal Variety Performance. I remember one afternoon in the late 1950s when David was introduced to Dave King, Alma Cogan and Tommy Steele. “My son is going to be an entertainer, too” he said. “Aren’t you, David?” “Yes, Daddy,” David squeaked in his childish high-pitched voice, his face flushed and beaming with pride. + +Although Uncle John never lived to see David’s huge success, he was convinced it would become a reality. My beloved David fulfilled and exceeded all his father’s dreams. + +KRISTINA AMADEUS + +Cousin of David Bowie + +Romney Marsh, Kent + + + + + +Investing in people + +Free exchange (January 2nd) lamented the lack of attractive options for investing in physical capital. But imagine if investment in human capital was considered on an equal footing. The Brookings Institution has developed the Social Genome Project to examine such options. For instance, it estimates that investing in well-evaluated programmes for poor children will increase their expected income by roughly ten times the costs of the projects and improve their chances of reaching the middle class. + +American companies could return some of the $2 trillion they hold in profits overseas to invest in “human-resource bonds”. Now that’s an attractive option. + +ARNOLD PACKER + +Former chief economist of the US Senate Budget Committee + +San Diego + + + + + +Liberal Merkel + +* Your piece on the mass groping of women in Cologne (“New year, new fear”, January 9th) did not adequately reflect the disturbing connection with Angela Merkel’s open-door policy for migrants. By suspending the Dublin procedures on refugees this summer, trying to solve a humanitarian situation, Mrs Merkel has unleashed a dynamic that she can no longer control. Mrs Merkel has used her time as Germany’s leader to remove potential political rivals, which has has allowed her to take swift decisions, such as in the “Energiewende” energy policy, without being challenged by a robust opposition. The consequences of 2015 will be disastrous for long years. + +I have often read your coverage of German politics with a nod of approval. But I cannot but wonder about the hagiographic touch in your reporting on Mrs Merkel lately. She has become the dominating figure in the EU, which is a bad thing. + +FLORIAN MAURICE + +Munich + + + + + +Taking a wrong Torun + +As a native of Torun I was glad to see my home town earning a mention in The Economist, if for the wrong reasons (“Courting disaster”, January 2nd). Throughout the years, I got used to Torun being mocked as a home of religious zealots and backwardness rather than the birthplace of Nicolaus Copernicus and gingerbread. A popular bumper-sticker stating that Torun apologises for Radio Maryja is here to stay. + +MICHAL KLOS + +Torun, Poland + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21688839-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Oil and the economy: The oil conundrum + + + + + +Articles Sections Next + +Oil and the economy + +The oil conundrum + +Plunging prices have neither halted oil production nor stimulated a surge in global growth + +Jan 23rd 2016 | From the print edition + + + +OIL traders are paying unusual attention to Kharg, a small island 25km (16 miles) off the coast of Iran. On its lee side, identifiable to orbiting satellites by the transponders on their decks, are half a dozen or so huge oil tankers that have been anchored there for months. Farther down Iran’s Persian Gulf coast is another flotilla of similarly vast vessels. They contain up to 50m barrels of Iranian crude—just what a world awash with oil could do without. + + + +The lifting of nuclear-related sanctions against Iran on January 16th puts those barrels at the forefront of the country’s quest to recapture a share of international oil markets that it has been shut out of for much of the past decade. The prospect of Iran swiftly dispatching its supertankers to European and Asian refineries to undercut supplies from Saudi Arabia, Iraq and Russia helped push the world’s main benchmarks, Brent and West Texas Intermediate (WTI), to their lowest levels since 2003 on January 20th; WTI tumbled by 6.7% to under $27 a barrel, its biggest one-day fall since September (see chart 1). + +The slide marks the latest act in a dramatic reversal of fortunes for the oil industry that is, in turn, roiling the global economy. Less than a decade ago the world scrambled for oil, largely to fuel China’s commodity-hungry growth spurt, pushing prices to over $140 a barrel in 2008. State-owned oil giants such as Saudi Aramco had access to the cheapest reserves, forcing private oil firms to search farther afield—in the Arctic, Brazil’s pre-salt fields and deep waters off Angola—for resources deemed ever scarcer. Investors, concerned that the oil majors could run out of growth opportunities, encouraged the search for pricey oil, rewarding potential future growth in production as much as profitability. + +Now the fear for producers is of an excess of oil, rather than a shortage. The addition to global supply over the past five years of 4.2m barrels a day (b/d) from America’s shale producers, although only 5% of global production, has had an outsized impact on the market by raising the prospects of recovering vast amounts of resources formerly considered too hard to extract. On January 19th the International Energy Agency (IEA), a prominent energy forecaster, issued a stark warning: “The oil market could drown in oversupply.” + +Last year the world produced 96.3m b/d of oil, of which it consumed only 94.5m b/d. So each day about 1.8m barrels went into storage tanks—which are filling up fast. Though new storage is being built, too much oil would cause the tanks to overflow. The only place to put the spare barrels would be in tankers out to sea, like the Iranian oil sitting off Kharg, waiting for demand to recover. + +For oil producers that is an alarming prospect, yet for the most part warnings such as those of the IEA have gone unheeded. This poses two puzzles. When, in November 2014, Saudi Arabia forced OPEC to keep the taps open despite plummeting prices, it hoped quickly to drive higher-cost producers in America and elsewhere out of business. Analysts expected a snappy rebound in prices. Though oil firms have since collectively suspended investment in $380 billion of new projects, as yet there is no sign of a bottom. Projections for a meaningful recovery in the oil price have been pushed back until at least 2017. + +The economic impact of the oversupply is another enigma. Cheaper fuel should stimulate global economic growth. Industries that use oil as an input are more profitable. The benefits to consuming nations typically outweigh the costs to producing ones. But so far in 2016 a 28% lurch downwards in oil prices has coincided with turmoil in global stockmarkets. It is as if the markets are challenging long-held assumptions about the economic benefits of low energy prices, or asserting that global economic growth is so anaemic that an oil glut will do little to help. + +Iran is the most immediate cause of the bearishness. It promises an immediate boost to production of 500,000 b/d, just when other members of OPEC such as Saudi Arabia and Iraq are pumping at record levels. Even if its target is over-optimistic, seething rivalry between the rulers in Tehran and Riyadh make it hard to imagine that the three producers could agree to the sort of production discipline that OPEC has used to attempt to rescue prices in the past. + +Even if OPEC tried to reassert its influence, the producers’ cartel would probably fail because the oil industry has changed in several ways. Shale-oil producers, using technology that is both cheaper and quicker to deploy than conventional oil rigs, have made the industry more entrepreneurial. Big depreciations against the dollar have helped beleaguered economies such as Russia, Brazil and Venezuela to maintain output, by increasing local-currency revenues relative to costs. And growing fears about action on climate change, coupled with the emergence of alternative-energy technologies, suggests to some producers that it is best to pump as hard as they can, while they can. + + + +INTERACTIVE: Explore how oil prices affect OPEC and non-OPEC production and viability + +This is not the first time OPEC has overestimated the effectiveness of what, during the era of John Rockefeller’s Standard Oil, used to be called “a good sweating”: attempting to flood the market with cut-price oil to drive competitors out of business. In the mid-1980s the cartel sought to use low prices to undercut producers in the North Sea, but failed. They enacted a policy to recoup market share from their non-OPEC rivals, but ended up trying to defeat each other, further weakening prices. It took several years for oil prices to recover. + +It’s a time-worn miscalculation. In his book “The Prize”, Daniel Yergin quotes an American academic writing as far back as 1926 about the “spectacle” of massive overproduction. “Oil producers were committing ‘hara-kiri’ by producing so much oil,” the scholar wrote. “All saw the remedy but would not adopt it. The remedy was, of course, a reduction in the production.” + +Yet there is also a reason for keeping the pumps working that is not as suicidal as it sounds. One of the remarkable features of last year’s oil market was the resilience of American shale producers in the face of falling prices. Since mid-2015 shale firms have cut more than 400,000 b/d from output in response to lower prices. Nevertheless, America still increased oil production more than any other country in the year as a whole, producing an additional 900,000 b/d, according to the IEA. + +During the year the number of drilling rigs used in America fell by over 60%. Normally that would be considered a strong indicator of lower output. Yet it is one thing to drill wells, another to conduct the hydraulic fracturing (“fracking”) that gets the shale oil flowing out. Rystad Energy, a Norwegian consultancy, noted late last year that the “frack-count”, ie, the number of wells fracked, was still rising, explaining the resilience of oil production. + +The roughnecks used other innovations to keep the oil gushing, such as injecting more sand into their wells to improve flow, using better data-gathering techniques and employing a skeleton staff to keep costs down. The money is no longer flowing in. America’s once-rowdy oil towns, where three years ago strippers could make hundreds of dollars a night from itinerant oilmen, are now full of abandoned trailer parks and boarded-up businesses. But the oil is still flowing out. Even some of the oldest shale fields, such as the Bakken in North Dakota, were still producing at the same level in November as more than a year before. + +The shale industry also benefited from financial engineering. Last year at least half of the firms involved had hedged the oil price to protect revenues. Some went bankrupt, but most have managed to sweet-talk bankers into keeping the credit flowing—at least until the latest crisis. + +It is not just the shale industry that managed to keep its head above water longer than expected. Those extracting in more expensive places, such as Canada’s oil sands and Brazilian pre-salt, have too. Canada, whose low-quality benchmark oil, West Canada Select, is trading below $15 a barrel, giving it the ignominious title of the world’s lowest-value crude, is one of the non-OPEC countries expected to add most to global supply this year. So is Brazil, despite debt and corruption at its state oil company, Petrobras. + +Meanwhile, the oil majors have said they will slash tens of thousands of jobs and billions of dollars in investment, but they too are reluctant to abandon projects that may add to future production. Shell, an Anglo-Dutch company, took the rare decision to abandon exploration in the Arctic and a heavy-oil project in Canada but its current output of 2.9m b/d in 2015 was only just shy of the previous year’s 3.1m b/d. In the industry at large, the incentive is to keep producing “as flat out as you can”, once investment costs have been sunk into the ground, says Simon Henry, Shell’s chief financial officer. He says it is sometimes more expensive to stop production than to keep pumping at low prices, because of the high cost of mothballing wells. + + + +Simon Flowers of Wood Mackenzie, an industry consultancy, says that even at $30 a barrel, only 6% of global production fails to cover its operating costs. It may be uneconomic to drill new deepwater wells at prices under $60 a barrel, he says, but once they are built it may still make economic sense to keep them running at prices well below that (see chart 2). Such resilience is used by some to justify why they expect prices to remain “lower for longer”. + +In theory a long period of low oil prices should benefit the global economy. The world is both a producer and a consumer: what producers lose and consumers gain from a drop in prices sums to zero. Conventionally, extra spending by oil importers exceeds cuts in spending by exporters, boosting global aggregate demand. + +The economies that have enjoyed the strongest GDP growth in the past year have indeed been oil importers: India, Pakistan and countries in east Africa. It is hard to explain the consumer-led recovery in the euro area without assuming a positive impact from lower oil prices. In the IMF’s latest forecast, published on January 19th, the handful of big economies that were spared downgrades to GDP growth—China, India, Germany, Britain, Spain and Italy—were all net oil importers. + +Where are the windfalls? + + + +There are doubts that this holds true everywhere. America is both a large producer and consumer of oil. At the start of 2015, JPMorgan, a bank, reckoned that cheap oil would boost GDP by around 0.7%—a boost to consumers’ purchasing power equivalent to 1% of GDP, offset by a smaller drag from weaker oil-industry investment. It now reckons the outcome was between a contraction of 0.3% and a boost of a measly 0.1%. Consumers may have saved more of the windfall than had seemed likely and the share of oil-related capital spending in total business investment in America, which had steadily risen for years, has fallen by half (see chart 3). + +Add in the indirect effects of the downturn in the oil industry and the net impact of cheap oil may even have been a bigger decline than JPMorgan’s most pessimistic estimate. That has been the experience of the MSC Industrial Supply Company, an American retailer of hinges, brackets, power tools and maintenance equipment to manufacturers. It does not rely directly on orders from oil companies, yet this month its boss, Erik David Gershwind, said that fallout from the oil shock had had a noticeable impact on sales. “The indirect exposure is, I think, what’s taken everybody by surprise, not only at MSC but in the broader economy, and it’s ugly.” + +Unsurprisingly some of the biggest splashes of red ink in the IMF’s latest forecast revisions were reserved for countries where oil exploration and production has played a significant role in the economy: Brazil, Saudi Arabia, Russia (and some of its oil-producing neighbours) and Nigeria. Weaker demand in this group owes much to strains on their public finances. + +Russia has said it will cut public spending by a further 10% in response to the latest drop in crude prices (see article). The oil industry accounts for 70% of tax revenue in Nigeria. When the oil price plunged in 2008-09, it was able to draw on savings it had salted away in an oil-stabilisation fund. But in June the country’s president, Muhammadu Buhari, said the treasury was “virtually empty”. Saudi Arabia has deeper pockets but, with a budget deficit that reached 15% of GDP last year, even it has been forced to cut public spending. + +The old calculus that such countries were able to smooth spending through the oil-price cycle has become less reliable. To a larger degree than in the past, oil producers have spent windfall revenues, and now have been forced to cut back. This compounds the effect on aggregate demand of falling investment in the oil industry. + +Perhaps more worrying is the way the oil-price drop is compounding the effect of financial fragility worldwide. Low interest rates in America and Europe after 2009 drew rich-world investors into emerging markets, creating a lending boom. Corporate debt in emerging markets rose from 50% of GDP in 2008 to 75% in 2014. The lesson of recent history is that a rapid build-up in debt leads to trouble. Along with construction, the oil and gas industry saw a big increase in corporate debt, according to the IMF’s latest Global Financial Stability Report. Lower oil revenues make it harder to service this burden. + +When the oil price slumped in 2008-09 oil-producing countries were able to cut interest rates and borrow abroad to prop up demand. Now investors are charier of risk. The end of the Federal Reserve’s programme of bond buying (“quantitative easing”) in 2014 and the recent increase in interest rates has drawn money back to America, boosting the dollar and tightening global monetary conditions. + +Oil producers, notably in Latin America, are having to tighten domestic monetary policy to tackle inflation, in part caused by big falls in their currencies. Brazil’s central bank has kept interest rates high, even though its economy is deep in recession. Central banks in Colombia and Mexico raised rates in December. The same strains are evident in oil-rich Nigeria and Angola, the largest and third-largest economies in sub-Saharan Africa. The easier financial conditions in the years after 2009 gave policymakers in Africa a false sense of their own resilience, says Stuart Culverhouse of Exotix, a broker. + +Ready for a shock + +Investors appear to be rethinking how risky assets should be priced in rich countries, too. This is as much a response to concerns about the strength of China’s economy as to the damage a sharp fall in oil prices might wreak. Worries about delinquent borrowers in the oil industry triggered a sharp rise in their yields in America’s junk-bond market at the end of last year. The yields on junk bonds issued by other sorts of borrowers rose in apparent sympathy. Even yields on investment-grade bonds are edging up. + +Stockmarket bears are quick to point out that higher real interest rates on corporate bonds make it harder to justify elevated share prices. Central bankers in rich countries say they worry that a long period of near-zero inflation is entrenching beliefs that prices will remain endlessly flat. The real rate of interest rises when expectations of inflation fall and it is hard for policymakers to respond to this as rates are already close to zero. + +Since the start of the year, the supply shock from Iran has also been accompanied by fears of a demand one from China. The bungled handling of China’s stockmarket and currency has raised fears about the economy, which has spilled over into the oil market. As global financial markets have descended into turmoil, there are mounting worries about the resilience of the global economy, too. That, in turn, raises anxiety about future oil demand. + +Macroeconomic concerns are paramount, but there are also microeconomic ones. Lower fuel subsidies in some oil-producing countries, aimed at plugging budget deficits, are encouraging car owners to drive less miles. China has said that it will not allow petrol prices to fall in line with oil below $40 a barrel, which will have the same effect. Even in the United States, the link between cheap petrol and gas-guzzling is less strong than it was. Part of the reason, analysts say, is that vehicles are more fuel-efficient. + +Green and black + +After the Paris summit on climate change in December some pundits reckon that the latest oil crisis reflects a structural change in oil consumption because of environmental concerns—what some call “peak demand”. It is true that as climate consciousness grows, oil companies are developing more gas than oil, hoping to deploy it as an energy substitute for coal. But it may be too early to assume that the era of the petrol engine is coming to an end. + +More likely, the oil price will eventually find a bottom and, if this cycle is like previous ones, shoot sharply higher because of the level of underinvestment in reserves and natural depletion of existing wells. Yet the consequences will be different. Antoine Halff of Columbia University’s Centre on Global Energy Policy told American senators on January 19th that the shale-oil industry, with its unique cost structure and short business cycle, may undermine longer-term investment in high-cost traditional oilfields. The shalemen, rather than the Saudis, could well become the world’s swing producers, adding to volatility, perhaps, but within a relatively narrow range. + +Big oil firms would then face some existential questions. In the future, should they carry on as before, splurging on expensive vanity projects in hard-to-reach places, at the risk of having “unburnable” reserves as environmental concerns mount? Should they reinvest their profits in shale or in greener technologies? Or should they return profits to shareholders, as some tobacco companies have done, marking the beginning of the end of the fossil-fuel era? Whatever they do, the era of oil shocks is far from over. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21688919-plunging-prices-have-neither-halted-oil-production-nor-stimulated-surge-global-growth/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Nuclear weapons: Cruise control + +The changing electorate: No we can’t + +Poisoned water: That Flinty taste + +Wage insurance: Creative compensation + +Grading university teachers: Ratings agency + +Roy Moore: The prophet of decline + +Lexington: Karl Rove’s history class + + + + + +Articles Sections Next + +Nuclear weapons + +Cruise control + +Barack Obama’s administration, which began with a vision to get rid of nuclear weapons, has a trillion-dollar plan to renew them + +Jan 23rd 2016 | From the print edition + + + +TWENTY-FIVE years ago, television viewers around the world were introduced to America’s cruise-missile technology. As journalists stood filing their reports from the roof of the Al Rashid hotel in Baghdad, Tomahawk missiles were caught on camera sweeping through the city’s streets on their way to targets struck with uncanny accuracy. Designed at the height of the cold war as a nuclear missile, subsequently armed with a conventional warhead, the Tomahawk has been in the vanguard of most American air campaigns since the first Gulf war. Yet plans to develop a successor, the long-range stand-off missile (LRSO), before the old ones are retired in 2030—part of the Obama administration’s plan to overhaul America’s nuclear deterrent over the next 30 years at a cost of $1 trillion—are now under attack. + +William Perry (defence secretary from 1994 to 1997, in charge of developing the air-launched cruise missile at the Pentagon during the late 1970s) and Andy Weber (the assistant secretary of defence responsible for nuclear programmes for five years, to 2014) caused a stir in October by calling for the cancellation of plans to build a fleet of 1,000 air-launched, nuclear-armed missiles. This would save $25 billion. + +Their argument is that nuclear-armed cruise missiles are a “uniquely destabilising type of weapon”, because potential foes cannot tell whether they are being attacked with a missile carrying a conventional warhead or a nuclear one. Scrapping the LRSO, they say, “would not diminish the formidable US nuclear deterrent in the least”. Arms-control experts fear that the justifications from the Pentagon for the new missile, and for a highly accurate new nuclear bomb, suggest that cold-war doctrines, controversial at the time, such as escalation control and limited nuclear-war-fighting, are being dusted off. + +Hillary Clinton, who is generally thought to be more hawkish than Barack Obama, was asked while campaigning in Iowa for her take on the “trillion-dollar” nuclear programme. She replied: “Yeah, I’ve heard about that. I’m going to look into that. It doesn’t make sense to me.” Mrs Clinton’s remark betrays the pressure she is under from her left-wing rival, Bernie Sanders. But many Democrats feel a sense of acute disappointment that Mr Obama has not, in their eyes, lived up to the vision of a world free of nuclear weapons, one he described in the speech in Prague in 2009 that helped to win him his somewhat premature Nobel peace prize. + + + +Some of the most expensive parts of the nuclear programme are not disputed, even by liberal Democrats. Few argue against the replacement of the 14 Ohio-class ballistic-missile submarines which will begin to wear out in the late 2020s. The bill for that is likely to be around $140 billion for 12 new boats. More questionable is the air force’s bid last year to replace the 440-strong Minuteman III land-based missile force at a cost of $62 billion. A study in 2014 by the RAND Corporation judged that incremental modernisation might cost only a third as much, and could sustain the missile system for several more decades. Some, like Gordon Adams of the Stimson Centre, a think-tank, argue that land-based missiles are no longer necessary to maintain nuclear deterrence. They are the minority. The counter-argument is that as long as Russia builds all the 700 deployed missiles and bombers it is allowed under the New START treaty, America’s land-based force will still be needed—if only as a “sink” providing targets to absorb a nuclear strike. + +The arguments are therefore focused on the new cruise missile and a $10 billion new version of the free-fall nuclear bomb called the B61-12, which will replace four older variants. The venerable B-52 bomber will be adapted to take the missile and will soldier on until 2040. The stealthy B-2 bomber, which entered service in 1997, will be able to carry both weapons. A nuclear-capable version of the much-delayed F-35 Joint Strike Fighter will be fitted to take the bomb. In addition a new aircraft, the Long Range Strike Bomber, (LRS-B) will be built as the principal carrier for the two weapons. In October the air force awarded Northrop Grumman the $55 billion contract to develop and build around 100 of these bombers, which should enter service in 2025 as the B-3. + +With such an advanced bomber flying into view, the argument for a new long-range missile is now weaker. Besides, the new bombs the B-3 will carry are much more sophisticated than their predecessors. With computerised guidance, manoeuvrable tailfins and a warhead whose explosive power can be dialled up and down from 50 to 0.3 kilotons (from three times the yield of the Hiroshima bomb to 2% of it) to reduce collateral damage, they will be accurate to within 30 metres. + +Yet in nuclear deterrence such technological advantages bring their own problems. Precisely because it is so accurate and its yield can be made so small, the new bomb could make crossing the nuclear threshold a lot easier and therefore more tempting for commanders. Critics see it as encouraging a return to something like “flexible response”, a cold-war concept which many at the time thought risky, because it unsettled the apocalyptic logic of deterrence. + +But advocates of both weapons reckon that it is their detractors who are stuck in the past. Clark Murdock of the Centre for Strategic and International Studies led three other think-tank teams in “Project Atom”, a report on America’s nuclear future published last June. Mr Murdock concluded that if the extended deterrence America offers close allies is to remain credible, it will need smaller, more discriminating weapons as part of its nuclear arsenal. + +That is because, despite the Iran deal, more rogue states may acquire nuclear capability. Russia, too, is placing a greater emphasis on low-yield nuclear weapons as a way of offsetting America’s still-overwhelming conventional military superiority. Mr Murdock and Pentagon strategists fear that if America only has hugely powerful ballistic missiles at its disposal, it will be, in effect, “self-deterred” from responding to limited nuclear attacks (or threats of them) from opponents. + +Other factors, too, suggest that new nuclear weapons will survive the campaign against them. Franklin Miller, a veteran nuclear strategist now at the Scowcroft Group, points out that Mr Obama would never have persuaded the Senate to ratify the New START treaty in 2010 had he not pledged to renew America’s nuclear weapons on land, sea and in the air. That agreement allows for what is known as the “bomber discount”, which counts an aircraft carrying several bombs as a single warhead. The LRS-B will be able to carry internally a payload of cruise missiles, the new B61-12 bombs or a smaller stand-off missile with a conventional warhead. It is improbable that any president would forgo that option while Russia retains it. + +Nor is cost destined to loom as large as some expect. Kori Schake of the Hoover Institution says that with sequestration budgets caps now more or less abandoned, future defence budgets will be under less strain. The Centre for Strategic and Budgetary Assessments estimates that even at its peak in 2027, the complete modernisation plan will claim only 5% of the Pentagon’s budget. Nuclear deterrence follows its own logic. So does paying for it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21688862-barack-obamas-administration-which-began-vision-get-rid-nuclear-weapons-has/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The changing electorate + +No we can’t + +Why 27m Hispanic voters will count for surprisingly little in November + +Jan 23rd 2016 | From the print edition + + + +IF AMERICA had laws making voting compulsory, as Australia and Brazil do, then a new report recording the size of the Hispanic electorate would have Democrats dancing jarabes of joy. The report, based on census numbers crunched by the Pew Research Centre, a non-partisan think-tank, predicts that a record 27.3m Hispanics will be eligible to vote in the elections of 2016. That is good news for the left. Even before Donald Trump decided to build his Republican presidential campaign on a foundation of ugly nativism, accusing Mexico of sending rapists and other criminals to flood America and vowing to build a wall on the southern border, Hispanic voters have strongly favoured Democrats in recent presidential elections. They handed Barack Obama more than 70% of their votes in 2012, in part after the Republican candidate, Mitt Romney, vowed to make life so wretched for illegal migrants that they would “self-deport”. + +On paper at least, the Pew report offers a second reason for celebration on the left. The Hispanic electorate will not just be larger than ever in 2016, it will be astonishingly young. Almost half of all Latinos eligible to vote this year will be “millennials”, or young adults aged 18-35. For comparison, just over a quarter of whites eligible to vote will be millennials. Nationwide, young people are another bulwark of Democratic voting, with three-fifths handing their votes to Mr Obama in 2012. + +Unfortunately for Democrats, America does not have compulsory voting. That fact has an outsize impact among ethnic, racial and socio-economic blocs with low rates of turnout. As the Pew report notes, with each recent election the number of Latinos who can vote hits a new high. But at the same time, the number of Latinos who do not vote also hits a new high. + + + +Hispanic America: Tu casa es mi casa + +America is home to about 57m Hispanics, out of a total population of around 321m. But more than half of them are not citizens or are too young to vote. Add on low rates of turnout, and only just over 11m Latinos voted in 2012. This is something of a chicken-and-egg puzzle. Because Hispanics have influenced few elections, many see no merit in voting, and political parties have often only paid lip-service to wooing them. Though immigration was often in the headlines in 2012, less than half of the 23m Hispanics eligible to vote in that presidential election turned out. The apathy of young Hispanics was striking: in 2012 just 37.8% of Latino millennials who could have voted did so. Half said they were not even registered to vote. + +The causes are many. Youth is a big one, made worse by relatively low levels of education (though Hispanic numbers are improving). Geography is a big piece of the puzzle. Just over half of all Hispanic eligible voters in 2016 will live in California, Texas and New York, and “those aren’t battleground states” says Mark Hugo Lopez, director of Hispanic research at Pew. + +Hispanics are not without clout, though. They live in impressive numbers in three swing states, Florida, Nevada and Colorado. Watch Florida with special care. More than one presidential election was arguably swung by Cuban-Americans, who are traditionally more conservative than other Hispanics and mostly live in Florida. But younger Cuban-Americans are less conservative (though Senator Marco Rubio of Florida, a 44-year-old contender for the presidency, whose parents moved from Cuba, is a flinty Republican). Roughly a million Puerto Ricans now live in Florida, many after fleeing economic misery on their home island. Puerto Ricans are American citizens and can vote as soon they reach the mainland. In Miami, Tampa and Orlando at least, politics this year will have a distinct Hispanic accent. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21688863-why-27m-hispanic-voters-will-count-surprisingly-little-november-no-we-cant/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Poisoned water + +That Flinty taste + +How Michigan’s state government endangered the people of Flint + +Jan 23rd 2016 | LANSING | From the print edition + + + +THOUGH the most abundant supply of fresh water in the world is on their doorstep, the residents of Flint, Michigan cannot drink what flows from their taps. Facing demands for both his resignation and even a criminal prosecution for his part in the poisoning of Flint, Rick Snyder, the Republican governor of Michigan, sounded contrite in his state-of-the-state address on January 19th. “I am sorry, and I will fix it,” Mr Snyder said. “You deserve better.” He pledged to release all his e-mails from 2014 and 2015, so that the public can see how he has handled the crisis. He said he would ask the legislature for $28.5m for Flint’s immediate needs, such as the bottled water and water filters that National Guard troops are distributing to residents. Mr Snyder declared a state of emergency in Flint on January 5th. The federal government followed suit on January 16th. + +The trouble began far earlier, in April 2014. On the watch of a manager, Darnell Earley, who had been appointed by the state to manage the near-bankrupt city, Flint began to draw its water from the Flint river instead of Lake Huron to save money. The gritty rustbelt metropolis, where General Motors (GM) was founded in 1908, has been run by a series of emergency managers since 2011. It has lost half its population since the 1960s, as GM cut its local workforce from 80,000 to around 5,000; fewer than 100,000 people now live there. More than 40% of the city’s mostly black population live below the poverty line. Crime and unemployment rates are sky-high. Around 15% of Flint’s houses are abandoned, making it one of the few towns where college students can buy detached houses. + +“Our children have every imaginable obstacle to leading a successful life, and now they also have lead poisoning,” says Mona Hanna-Attisha, a paediatrician who was one of the first to uncover what was happening in Flint. Dr Hanna-Attisha explains that the water from the Flint river is unusually corrosive, but was not treated to stop it from eating away at the lining of the city’s water pipes, as prescribed by federal guidelines. When pumped through the ageing network it exposed the lead tubes beneath, allowing the metal to leach into drinking water. Treating the water for corrosion would have cost $100 a day—peanuts compared with what Michigan is now spending on mitigating the disaster. + +Residents of Flint complained immediately after the switch to river water that the stuff coming out of their taps had a brownish colour and a strange smell. Their worries were dismissed. The then-mayor of Flint, Dayne Walling, made a point of drinking Flint water on television. Officials stonewalled when a team of researchers, led by Marc Edwards of Virginia Polytechnic Institute and State University, came to Flint in August last year and found elevated lead levels in the water samples they tested. Towards the end of September Dr Hanna-Attisha warned that, after checking hundreds of samples from Flint’s toddlers, she found that the lead levels in their blood had doubled or even tripled since the switch from Lake Huron water. State regulators insisted the water was safe. + +The turning point came at the start of October, when state officials changed their minds and accepted Dr Hanna-Attisha’s findings. For the first time Mr Snyder admitted that lead was a problem. In mid-October Flint’s water supply was switched back to Lake Huron. Yet Flint’s tap water is still not safe: the damage done to the pipes cannot readily be undone, which means lead can still find its way into the water. + +At this stage it is hard to determine how many children under six have been poisoned, but doctors say that all 9,000 children that age in the area must be considered at risk. (The youngest are the most vulnerable to lead poisoning.) “No level of lead is safe,” says Eden Wells, the chief medical executive of Michigan’s Department of Health and Human Services. Lead poisoning can lead to aggressive behaviour, learning disorders, Attention Deficit Disorder, hearing loss, anaemia, kidney damage and lowered IQ. + +According to Mr Edwards of Virginia Tech, relief workers say they are ignored by some of the residents they have been sent to help because they come from the government, which people in Flint no longer trust. “Some people have not taken a bath since October,” he adds. John Austin of the Michigan Economic Centre, a think-tank, believes the debacle is making the state look third-world. Mr Snyder is unlikely to resign, but the lead now lodged in the tissue and organs of Flint’s children will overshadow the rest of his term and calls into question the competence of the Environmental Protection Agency. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21688922-how-michigans-state-government-endangered-people-flint-flinty-taste/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Wage insurance + +Creative compensation + +Insuring workers against lower wages is one of the left’s better ideas + +Jan 23rd 2016 | WASHINGTON, DC | From the print edition + +JOSEPH SCHUMPETER knew that innovation brings some costs. The bank-teller makes way for the cash machine; e-mails push the postal service into decline. Technological advance benefits the economy as a whole by raising incomes and boosting productivity, but it harms the unfortunate few who have built careers in the destroyed industry. On January 16th President Barack Obama unveiled a proposal which seeks to even things out. + +Mr Obama wants the government to provide workers with wage insurance. If a worker blamelessly loses her job and takes a new one which pays less—and less than $50,000 the government would make up half the shortfall for two years, up to a total of $10,000. An estimate from 2007 suggests this would cost $3 billion-4 billion a year. That means it could be financed with a tax, which supporters would describe as an insurance premium, of around $25 per year, per worker. The proposal is likely to remain theoretical for the foreseeable future; it has few takers among Republicans, who control Congress and therefore the budget. Yet as an example of how the American left is thinking about how to respond to globalisation and automation it is worth examining, not least because whomever the Democrats nominate as a presidential candidate in July is likely to borrow it. + +The government already offers the same terms to workers over 50 who lose their jobs as a result of foreign competition. The logic of this proposal is the same: trade benefits all consumers by filling shops with cheap imports, but harms those whose jobs disappear overseas. Why, ask advocates of wage insurance, should this apply only to trade-related job losses? Is a factory worker replaced by a robot any less deserving than one who is displaced by foreign goods? + +The costs of having to switch careers can be severe, because employees lose seniority and firm-specific skills, such as how to use particular tools or software. From 2011 to 2013, 4.3m workers were displaced from jobs they had held for at least three years. Three in five found a job by January 2014; of those, over 20% lost more than a fifth of their income. Transport and utilities workers were hardest hit; 40% of those who found jobs faced losing a big chunk of their income. + +If the wage loss persists over a career, it can total hundreds of thousands of dollars. But whereas Americans can insure themselves against other catastrophes, like a fire or a burglary, they cannot do so against a robot taking their job. That is probably the result of adverse selection: workers in industries where machines are on the march will be especially keen to buy insurance, while those who feel safe will steer clear, leaving insurers with only bad risks. + +Some firms offer top-ups to state-provided unemployment insurance, which is paid during episodes of joblessness. But whereas the government can offer a flat rate, by requiring everyone to participate, premiums in the private market vary with risk. According to IncomeAssure.com, insuring 50% of a $50,000 income sets back a government administrator in Texas less than $2 per month; the same coverage costs a construction worker in Mississippi $76 a month. It does not help that unemployment insurance varies wildly across states—something else Mr Obama would like to change. + +The White House claims that wage insurance would encourage workers to find new jobs quickly, because the insurance payments are limited to two years, and kick in only once the person finds a new job; every month they are out of work is a month they miss out on both wages and wage insurance. A pilot programme in Canada in the 1990s, a rare example of a similar policy in another country, found that insurance increased the proportion of displaced workers finding jobs within six months by four percentage points. Average earnings fell by 5%, though—presumably because insured workers were less likely to hold out for a higher-paying job. + +As a response to worries about robots, apps and immigrants competing away middle-class jobs, wage insurance makes more sense than, say, trade barriers or a steeply higher minimum wage. One benefit of the policy is that once suitably insured, workers might be less inclined to oppose economic liberalisation. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21688921-insuring-workers-against-lower-wages-one-lefts-better-ideas-creative-compensation/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Grading university teachers + +Ratings agency + +Students judge their teachers. Often unfairly + +Jan 23rd 2016 | NEW YORK | From the print edition + + + +STUDENTS may be reluctant to speak up in class, but they are more than happy to express their views of their teachers anonymously online. That provides a potentially useful pool of data. With assistance from Enrico Bertini and Cristian Felix of New York University, The Economist has analysed 1,289,407 reviews of 1,066 professors and lecturers in New York state. + +Most of the commentary is innocuous: professors are praised for their brilliance and generosity, and admonished for being boring or tough graders: “This prof makes u work your butt off but u still won’t get an A”. But the outliers are startling. One student complained of a professor who resembled “one of those worm guys who is always drinkin coffee” from the film “Men in Black”. More flatteringly, an adoring student termed her teacher “a philosophy love-God”, and remarked that her life’s goal was to “become the mother of his million intellectual babies”. + +Students assign grades based on three criteria: “helpfulness”, “clarity” and “easiness” (the diligence and brainpower of the teachers apparently count as less relevant). Professors tend to receive good marks in the first two categories, averaging 3.7 out of 5 for both categories, but slightly lower marks for “easiness”. This is in part because the perceived difficulty of courses varies so much by discipline: in general, academics teaching quantitative subjects tended to receive lower ratings for ease. Sociologists earned an average easiness rating of 3.4 out of 5, notably higher than the 2.9 earned by physicists. Philosophy is boring, but (or therefore) its teachers count as brilliant. + +Teachers could also benefit from a bit more of the scrupulous attention paid on modern campuses to sexual equality. Earlier analysis by Ben Schmidt of Northeastern University showed that the language used to describe professors was heavily gender-dependent. Men were more likely than women to be described as “intelligent” or “funny”, but less likely to be described as “nice” or “mean”. + +Even dire ratings aren’t necessarily condemnations of teaching ability: one study from 2007 found that professors’ overall ratings were significantly correlated with both how easy their courses were and how attractive they were perceived to be, while another study from last year found that mathematics professors with Asian surnames tended to receive poorer reviews because students had difficulty with their accents. Professorial brilliance is too intangible to distil into a single score. Not that anyone would do that to students. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21688924-students-judge-their-teachers-often-unfairly-ratings-agency/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Roy Moore + +The prophet of decline + +It would be a mistake to dismiss Alabama’s chief justice as an outlandish fanatic + +Jan 23rd 2016 | MONTGOMERY | From the print edition + +Justifying the ways of God to men + +IN THE anteroom of Roy Moore’s office hangs a large photograph of the granite slab that once cost him his job. The picture is one of the room’s three depictions of the Ten Commandments, which also include a pair of wooden tablets carved by Mr Moore himself. Those caused a kerfuffle when he was a circuit-court judge in the 1990s—a warm-up for the row in which a federal court ruled that the monument in the photo violated the constitution, Mr Moore refused to remove it from the rotunda of Alabama’s judicial building, and, in 2003, was ousted as the state’s chief justice. The religious memorabilia are now more discreet, but Mr Moore, reinstated in 2012, is not. He has picked a fight over an issue that has assumed apocalyptic proportions for many devout Americans: gay marriage. + +On January 6th he instructed Alabama’s probate judges, responsible for issuing marriage licences, not to grant them to same-sex couples. He argues that a prohibition of the Alabama Supreme Court last year remains in effect—despite the subsequent judgment of the federal Supreme Court, in a case technically involving four other states but universally seen as definitive, and indeed an order of a federal district court regarding Alabama itself. Under a principle of state autonomy Mr Moore calls “parallelism”, he says only a further decision of the Alabama Supreme Court, over which he presides, or a judgment of the national one directly pertaining to Alabama, can reverse the previous ruling. + +Naturally, Mr Moore—who sports miniature crucifixes on his lapel and signet ring—cannot speculate about his court’s eventual response. In the past, though, he has described homosexuality as an “inherent evil”; referring to a 19th-century judge, he reiterates his view that gay marriage means the “destruction of the foundation of our country”. He will vouchsafe that sometimes—as in the case of Dred Scott, a slave whose petition for freedom it denied—America’s Supreme Court mistakenly deviates from the constitution. + +Although most of Alabama’s probate judges ignored his manoeuvre, it “caused a great deal of confusion”, says one. For Richard Cohen of the Southern Poverty Law Centre, an advocacy group, this was another fireable offence. Mr Cohen—who coined Mr Moore’s sobriquet, the Ayatollah of Alabama—reckons that, whereas over the monument Mr Moore merely defied a federal court himself, now he has suborned others to do so as well. His reasoning, says Mr Cohen, is “completely deceptive and legally bogus”. “When you stand up for the truth these days,” comments Mr Moore, “you are going to be attacked.” + +Perhaps he will be defenestrated again. But the real question about Mr Moore is not whether he will get the boot; nor if, morally or legally, he is right about gay marriage, or can stave it off. It is whether, in modern America, he is quite the outlandish gargoyle that his critics suggest. + +O Captain! My Captain! + +The son of an itinerant construction worker, he grew up in poverty but made it to West Point, the elite military academy: he insists the portrait of Jefferson Davis, and busts of Robert E. Lee and Stonewall Jackson, which also decorate his office are tributes to fellow West Pointers rather than to the Confederacy. As a disciplinarian military policeman in Vietnam, he was known as “Captain America” and feared a fragging (ie, being killed by his compatriots). Later he had stints on an Australian cattle station and as a professional kickboxer. + +Military service, self-improvement, faith: Mr Moore’s is an all-American résumé. He is representative in a more literal way, too. He has twice run unsuccessfully in the Republican primary for Alabama’s governor; he is uncharacteristically coy about whether he might try again (“Who knows what I will do in the future?”). In the past he dabbled with a presidential bid, but, he says, didn’t have the money to compete. Nevertheless, he has twice been elected as chief justice, on the second occasion after being forcibly ejected. And while he insists that his opinions are based on law, not popular approval, they undeniably reflect many Alabamians’ views. In a state referendum in 2006, 81% voted to preserve the heterosexual definition of marriage. + +It isn’t just Alabama: Mr Moore’s preoccupations have increasingly become the nation’s, as a glance at the Republican presidential contest attests. His principle of “parallelism”, flimsy as it sounds, is an extreme version of the concern for states’ rights, and claims of overreach by federal authorities, to which many candidates subscribe. They in turn reflect the tensions of an ever more fissiparous nation, including over another of his bugbears: government’s proper relationship with God. + +America, he contends, was founded on “the God of the holy scriptures”. The theocratic implication is that non-Christians live and worship there on sufferance; indeed, Mr Moore has questioned whether Muslims should serve in Congress, since the constitutional protection of freedom of worship “conflicts with Islamic doctrine”. Again, that doubt has been echoed by leading Republicans. Lots of ordinary Americans agree that social change, such as recognition of gay marriage, “is not to be dictated by a court”, and that judges have sometimes “usurped the role of the legislature”. Many agree, too, that the religious freedom of Christians is imperilled—a liberty, Mr Moore says, invoking Thomas Jefferson, granted by God, not government. + +The writings of the Founding Fathers are among those Mr Moore likes to recite, by heart and at length. He celebrates—and mourns—the virtues and values of George Washington and his peers in the poetry he has composed, too: “I’m glad they’re not here with us to see the mess we’re in/ How we’ve given up our righteousness for a life of indulgent sin.” Those lines capture his underlying lament: for America’s moral decline. When pressed, he concedes that the abolition of slavery was a wrinkle in this narrative, but maintains that people can instead be slaves to poverty or tyranny. + +That is a remarkable stance for an official whose building in Montgomery is across the road from a church once led by Martin Luther King. But such nostalgia is hardly unusual. More Americans may yearn for the 1950s than for the 1770s, but the belief that the country’s precepts have been forsaken, and its greatness lost, is widespread, powerful and poisonous. A gargoyle he may be, but Mr Moore is made up of recognisable parts. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21688858-it-would-be-mistake-dismiss-alabamas-chief-justice-outlandish-fanatic/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Karl Rove’s history class + +The mastermind of the past two Republican presidential majorities finds solace in 1896 + +Jan 23rd 2016 | From the print edition + + + +FOR the moment at least, this is not the most frightening election that America’s pro-business establishment has faced. “The Triumph of William McKinley”, a new book by Karl Rove, the campaign strategist who helped George W. Bush to victory in two presidential elections, makes a good case that for captains of industry, Wall Street bosses and Republican leaders, the contest of 1896 felt more perilous. The country was in grim shape then, deep in an economic slump. Hundreds of banks had failed. Armies of jobless men roamed the land. Business owners slept in their shops, guns in hand. Farmers faced ruinous debts. + +Amid such misery arose a populist Democrat of prodigious talents: William Jennings Bryan. This young Nebraskan, who had served two terms in Congress, loathed the bankers of Wall Street, calling “agitation” the “only means” to change the “vicious system of finance”—a system that he vowed to “destroy”. In 1896 a speech to the Democratic National Convention propelled him to the presidential nomination. A blast at tycoons who “corner the money of the world”, Bryan’s address ended with a call to issue dollars unbacked by gold—understood by his audience as a cry to let the dollar depreciate, slashing the real value of debts that, in his words, pressed a “crown of thorns” on workers’ brows. Bryan thundered in closing: “You shall not crucify mankind on a cross of gold.” The response in the hall, Mr Rove records, was a roaring, weeping, hat-throwing frenzy. What followed was the first presidential contest of the modern era. Railways allowed Bryan to travel the equivalent of three-quarters of the way round the world, giving hundreds of speeches to impassioned crowds. By election day he had been seen by between 2m and 3m people—in a country in which just 13.6m cast votes for a president. + +Yet Bryan lost to his Republican opponent—a former soldier and governor of Ohio, William McKinley, who stood for thrift, industry and “sound money”. Business backers gave McKinley the means to distribute 250m pieces of election literature. Special trains brought supporters to hear McKinley speak from the front porch of his house in Canton, Ohio. By the campaign’s end 750,000 people had visited his home town and trampled his flowerbeds to see him, 150,000 of them in a single weekend. + +McKinley, a Republican, had more than rich donors and impressive campaign organisation. He grasped the need to pursue a politics of “addition” that contrasted with Bryan’s divisive rhetoric, which fired up his base but did little to enlarge it. As governor of Ohio, McKinley had defended Catholics from bigoted attacks, earning praise from church leaders. He addressed black Republicans in Georgia. His presidential campaign organised supporters’ clubs for ethnic Germans, Scandinavians and other hyphenated Americans (aides even formed a “Wheelmen” club for daredevil fans of a modern novelty, the bicycle). McKinley thus broadened the electoral battlefield, forcing Democrats to expend resources defending states they had previously taken for granted. + +Mounting McKinley + +He also had credibility with working-class voters, a key voting bloc feeling “jolted by depression and technological change”. He earned that credibility with unblushing economic nationalism, and specifically his support for protectionist tariffs to curb foreign competition. Finally, McKinley accepted that the election would be a fight about whether to have a tight or loose money supply, after a fumbling start in which he attempted to straddle the issue. This was in effect a proxy for class war, pitting—in Bryan’s sweeping words—the “idle holders of idle capital” against “the struggling masses”. In the nick of time McKinley found the language to mount a populist counter-attack, presenting “sound money” as a way to ensure that workers earned dollars of enduring value. + +Jump to 2016, and establishment Republicans long to repeat McKinley’s feat: finding the right populist phrases to sell a broadly conventional, business-friendly policy platform, albeit one fortified with a dose of economic nationalism. Mr Rove is himself a past master at this. But this is not the past. Today’s Republican grandees are grappling with a candidate, Donald Trump, offering something altogether more potent: demagogic language to sell a demagogue’s programme. Mr Rove draws shrewd lessons from McKinley’s win for Republicans fighting the next general election. Should an establishment-friendly, enlarge-the-tent Republican—a Senator Marco Rubio, say—win the presidential nomination, he could do worse than study McKinley, and his successful arguments against bank-bashing, soak-the-rich Democratic populism (if a Bryan can be beaten back, a Bernie Sanders surely can). But such a Republican first has to survive the presidential primary season. For all his experience, Mr Rove seems short of ideas about how his party gets from here to there. + +In an interview, Mr Rove describes a 2016 Republican platform that amounts to the same policies as ever, sold with a bit more nationalist vim and even more scorn for President Barack Obama. He does not share McKinley’s taste for protectionism, instead suggesting that free trade with Pacific nations can be sold as a nationalistic win, by arguing that Asian countries are “scared to death of China” and “want to do a deal with us”. He pushes back at those prominent Republicans wondering whether to join nativists in calling for curbs on all immigration, legal and illegal, in a bid to woo blue-collar voters. “I think most people don’t understand” the difference between 500,000 or 250,000 skilled migrants arriving on work visas, Mr Rove suggests. What really concerns them is a sense of a changing country, so that “you walk in some place and the notices are in English and Spanish.” He thinks Republicans can constructively harness voter anger with Mr Obama and his “seeming unwillingness” to listen to such concerns, without sounding “antagonistic” to immigrants. In short, he hopes that McKinley’s heirs still have time to take their party back. That is true, but may not remain so for much longer. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21688860-mastermind-past-two-republican-presidential-majorities-finds-solace-1896-karl/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Venezuela’s crisis: Heading for a crash + +Bolivian women: Feminism v faith + +Caribbean tourism: No dice + +Bello: A new plan for Colombia + + + + + +Articles Sections Next + +Venezuela’s crisis + +Heading for a crash + +The president and the opposition are talking to each other. That does not mean they will fix the economy together + +Jan 23rd 2016 | CARACAS | From the print edition + + + +VENEZUELA’S opposition-controlled parliament, the first in nearly 16 years, has been sitting for less than a month. It has been an eventful period. The opposition gained and lost its two-thirds majority; the country’s Supreme Court declared that all its acts would be null and void, then relented. Venezuela’s president, Nicolás Maduro, overhauled his government and seeks new powers to tackle an “economic emergency”. The Central Bank published vital economic indicators for the first time in more than a year. What is not clear is whether all this is leading the country away from an economic and political crash or more rapidly towards one. + +Some signs are encouraging. The confrontation between the National Assembly and the Supreme Court ended after three opposition deputies, who had taken their seats in defiance of a ruling by the court, agreed to step aside while an investigation takes place into charges of electoral fraud in their state. This denied the opposition a two-thirds majority, but allowed the regime to recognise parliament’s legitimacy. On January 15th Mr Maduro, a former bus driver, delivered his state of the union speech before a hostile legislature for the first time. The mocking rebuttal by Henry Ramos Allup, parliament’s new president, was broadcast live—another first. + + + +In graphics: A political and economic guide to Venezuela + +Some of Mr Maduro’s recent decisions suggest openness to dialogue. One is the appointment of Aristóbulo Istúriz, a former mayor of Caracas, to be the country’s vice-president. He replaces Jorge Arreaza, the son-in-law of the late Hugo Chávez, the founder of Venezuela’s failing “Bolivarian revolution”. Unlike Mr Arreaza, the new vice-president is respected both by the opposition and within chavismo. Mr Ramos has spoken to Mr Istúriz at least twice. Their conversations helped end the standoff between parliament and the Supreme Court. Mr Ramos expects Mr Istúriz to be a “facilitator” of communication. + +Whether talking will lead to useful action is uncertain. On January 15th the Central Bank partly owned up to the dire state of the economy. It said that in the 12 months to September inflation was 141.5% while GDP shrank by 7.1% over the same period. Even those numbers probably understate the awfulness. The IMF reckons the economy shrank by 10% last year and that inflation is now over 200%. + +Why inflation is a conspiracy + +There is little sign that president and parliament agree on why things are so bad—apart from the collapse in the price of oil, virtually the only export—or what to do about it. In his three-hour speech Mr Maduro once again blamed shortages, inflation and a weak currency on an “economic war” waged by speculators and foreigners. Mr Ramos retorted, with more accuracy, that “the economic model is wrong.” + +Mr Maduro’s economic emergency decree would give him sweeping powers over the economy for 60 days. That could be dangerous. In shaking up his cabinet Mr Maduro gave the job of economic tsar to Luis Salas, a sociologist who comes from the far-left fringes of chavismo. He regards inflation as a capitalist conspiracy against consumers and denies that the Central Bank helps cause it by printing money to finance the budget deficit. Other members of the new economic team, including Rodolfo Medina, the finance minister, and Miguel Pérez Abad, who brings a business background to the industry ministry, are more moderate. But it is not clear how much influence they will have. + + + +Mr Maduro admitted that “the time has come” to raise the price of petrol, which is virtually given away. That is a big reason for the government deficit, which was 24% of GDP last year. Beyond that, it is not clear how he would use the new powers he is asking parliament to grant him. The proposals drawn up by Mr Salas urge businesses to increase production, but without lifting price controls or suggesting a way to raise imports of supplies. There will be no cuts to social spending. + +Some in the opposition suspect the government is laying a trap. If the assembly rejects Mr Maduro’s plan, it risks being accused of denying protection to popular social programmes. If it accepts, it will renounce its power to intervene in the economy. Parliament had still not decided when The Economist went to press. + +Other issues could yet refreeze relations between the legislature and the government. The opposition plans to pass an amnesty law to free scores of political prisoners, which Mr Maduro has already vowed to reject. Mr Ramos has not retreated from his promise to remove the president by constitutional means within six months. A crack-up will be hard to avoid. + +Correction: The former vice-president of Venezuela is Jorge Arreaza (not, as we originally wrote, Jorge Areazza) + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21688865-president-and-opposition-are-talking-each-other-does-not-mean-they-will-fix/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Bolivian women + +Feminism v faith + +María Galindo, a fiery feminist, takes on Christianity + +Jan 23rd 2016 | LA PAZ | From the print edition + +Anti-church lady + +SUMMONED to the prosecutor’s office on December 17th for questioning in an investigation of “damaging public property”, María Galindo was unapologetic. She turned up wearing headgear that mashed up Lady Liberty’s crown with traditional indigenous dress that was itself scrawled with the graffiti that landed her in trouble: “fiscalia rima con porqueria”, or roughly “prosecutor rhymes with crap”. The insult was provoked by prosecutors’ inept handling of investigations into the murders last year of several women in La Paz. Now the prosecutors are going after Ms Galindo and her fellow protesters. + +With her partly shaved pate and theatrical eye shadow, Bolivia’s most prominent feminist stands out in a crowd. Mujeres Creando (Women Creating), the group she founded in 1992, has been daubing walls with graffiti, staging performances and engaging in acts of civil disobedience ever since to protest homophobia and maltreatment of women. Tradition-minded Bolivians call her an anarchist and revile her lesbianism. She describes herself as a rebel. + +Her rebelliousness has not lessened even though Bolivia for the past decade has been governed by leftists who see themselves as champions of the oppressed. Evo Morales is the first Bolivian president to hail from the country’s indigenous majority. A new constitution, enacted in 2009, repeatedly affirms the principle of equality of the sexes. + +To little purpose, argues Ms Galindo, who is polite and soft-spoken despite the fierceness of her views. “The government’s position is utterly incoherent,” she contends. Mr Morales’s party, the Movement To Socialism (MAS), is an “agglutination of caudillos’ interests and does not represent progressive ideas at all”. The underlying problem, she thinks, is Christianity, especially the evangelical sort that has taken root in indigenous communities. No doubt there is some truth in this claim. It also allows activists such as Ms Galindo to blame bigotry and violence on European influences rather than native ones. “Homophobia is not an indigenous idea,” she asserts. “It was introduced by the church.” + +The influence of Catholicism has ebbed but that of newer churches, such as Pentecostalism and Mormonism, has risen (see article). In a survey conducted in 2013 17% of Bolivians described themselves as evangelicals. The MAS has increasingly aligned itself with these churches, says Pedro Portugal, a writer on indigenous affairs. Early results from a survey of attitudes toward homosexuals among lawmakers in parliament show that many are influenced by fundamentalist Christianity. + +Bolivia’s constitution allows indigenous groups to manage their affairs in such matters as justice and land use in accordance with their “customs and practices”. The norms are Christian, not traditional, feminists charge. “Allowing indigenous groups to decide how and whether they apply the law is simply an abdication of the state’s responsibilities,” says Sonia Montaño, a former head of gender affairs at the Economic Comission for Latin America and the Caribbean. She wants ordinary civil and criminal law to apply. + +Activists say Bolivia’s president is part of the problem. Mr Morales calls himself a “feminist who makes macho jokes.” But few activists were amused by his recent response to rumours about the health minister’s sexual orientation: “I don’t want to think that you are a lesbian.” + +Such attitudes make it hard to fight discrimination against homosexuals and abuse of women. Bolivia’s levels of domestic violence are the worst in South America, according to a study in 2013 by the Pan American Health Organisation. More than half of women who have been in a relationship say they have been physically or sexually abused by their partners. + +In politics, there is progress. Under the constitution parties must field as many female candidates as male ones in elections. Half of government ministers must be women. In district elections held in March 2015, the number of women elected surpassed that of men for the first time. Ms Galindo is unimpressed. “Many of them are simply ornaments,” she says. + +Her crusade against churches will continue. Last July, women from Mujeres Creando prepared for the visit of Pope Francis by gathering at the cathedral in La Paz dressed as pregnant nuns. “Every day your church crucifies women,” read a placard denouncing its opposition to abortion. Riot police hauled the demonstrators away. Ms Galindo calls the influence of the church “colonialism’s open wound.” Perhaps, but some of the attitudes she is fighting may also be home-grown. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21688939-mar-galindo-fiery-feminist-takes-christianity-feminism-v-faith/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Caribbean tourism + +No dice + +The bankruptcy of a big resort buffets the Bahamas + +Jan 23rd 2016 | From the print edition + + + +“EMBRACE ocean breezes and stellar views,” coos the website of a hotel at the Baha Mar resort in Nassau, the capital of the Bahamas. Sadly, although the winter tourist season is in full swing, no one will be taking up that tempting offer soon. The Baha Mar’s two 23-storey blocks and its 2,300 rooms stand empty; the Jack Nicklaus “signature” golf course is deserted; in the casino, which sprawls across two acres, the slot machines are silent. + +The Baha Mar missed its first ribbon-cutting in December 2014. It hired 2,000 staff and stocked its casino with $4.5m cash in preparation for a second deadline the following March. But with three days to go the resort was still not quite ready. A long-simmering quarrel between its main investor and the Chinese contractor, which had broken out early on, boiled over. The opening was put off again. It is not clear when, if ever, it will happen. + +Tourists who had booked their rooms vented their rage on Twitter. For the Bahamas the disaster is much bigger. The project’s $3.5 billion cost is two-fifths the size of the country’s GDP. At full strength, its workforce of 5,000 employees would represent more than one in 40 Bahamian workers. The resort was expected to generate more than a tenth of the country’s GDP. + +The archipelago sorely needed the lift that Baha Mar had promised to give it. Although it is the region’s second-richest economy, income from tourism, its biggest industry, has faltered for most of this century. It took a knock after the 9/11 terrorist attacks in 2001, and suffered further from the housing-market debacle in the United States. The number of tourists has dropped from around 1.6m in 2006 to 1.3m in 2015. + +The American embassy has warned its citizens about the country’s high crime rate. Bahamian hoteliers dread the day when Cuba begins to draw American tourists in large numbers. In August, with the opening of Baha Mar in doubt, Standard and Poor’s downgraded the Bahamas’ credit rating. + +The causes of the debacle are murky. Sarkis Izmirlian, the main shareholder, accuses the construction company, China Construction America (CCA), of poor management, missed deadlines and a failure to meet “standards of excellence”. Under the terms of loans from China’s Export-Import Bank, he could not fire the builder. CCA claims that Mr Izmirlian, whose father made a fortune selling African peanuts, drove up costs by demanding changes to the design. + +He filed for bankruptcy at a court in Delaware in June 2015, hoping for protection from creditors while he restructured the company. But a judge rejected the suit, and in September a Bahamian court appointed provisional liquidators. This puts the Chinese creditors in control, and Mr Izmirlian’s $850m investment in grave jeopardy. + +He can expect little support from the Bahamian government, which counts on Chinese investment. CCA owns a former Hilton hotel and has a “master plan” for redeveloping downtown Nassau. Hutchison Whampoa, a conglomerate from Hong Kong, owns a huge container terminal on the island of Grand Bahama and a big hotel, among other things. Mr Izmirlian, a Swiss citizen, has less clout. In August, the immigration and foreign affairs minister threatened to revoke his residency permit. + +The Bahamas’ prime minister, Perry Christie, says it may cost $600m to complete the project, though who will provide that is unclear. There has been talk of a deal involving Sol Kerzner, a South African who built the Atlantis, Nassau’s other big resort. But he is 80 years old; his son, thought to have been his heir, died in a helicopter crash. The Fosun Group, a Chinese conglomerate that owns Club Med, which has a resort in the Bahamas, is said to be interested. Mr Christie hopes that the Baha Mar’s convention centre will open in time to host the annual meeting of the Inter-American Development Bank in April. The stellar views will have to wait. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21688935-bankruptcy-big-resort-buffets-bahamas-no-dice/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +A new plan for Colombia + +Juan Manuel Santos seeks support for peace in Washington + +Jan 23rd 2016 | From the print edition + + + +IT IS rare nowadays to find an American foreign policy that is a clear success. Yet that applies to Plan Colombia. When it was devised in 1999 by the administrations of Bill Clinton and Andrés Pastrana, then Colombia’s president, the country was on the brink of becoming a failed state, with much of its territory at the mercy of guerrillas, paramilitaries and drug traffickers. The plan, under which the United States has provided Colombia with almost $10 billion in mainly military aid, had plenty of critics. Too skewed towards trying to win the unwinnable war on drugs by spraying coca fields from the air, and too compromised by giving money to an army stained by human-rights abuses, they said. + +The critics missed the point. Plan Colombia was sold politically in the United States as a crackdown on drugs, but in reality it was always first and foremost a counter-insurgency strategy. For Colombia to be a viable democracy, it needed a stronger state able to provide security to its citizens and to tame the illegal armies, which were financed by the world’s cocaine habit. It worked. Colombians backed the strategy—American aid was more than matched by increased domestic spending on security. Under Álvaro Uribe, who followed Mr Pastrana as president, the paramilitaries demobilised and the FARC guerrillas were battered so hard that they agreed, in 2012, to start peace talks with the government of Juan Manuel Santos, Mr Uribe’s successor (and his former defence minister). + +All being well, the talks will culminate in an agreement by March 23rd, and the FARC’s demobilisation. So it is appropriate that Barack Obama has invited Messrs Santos, Uribe and Pastrana to Washington on February 4th to commemorate “15 years of bipartisan co-operation through Plan Colombia”, along with George W. Bush and Mr Clinton. Mr Pastrana, a largely forgotten figure, was quick to accept. The election campaign in the United States may make it hard for Messrs Bush and Clinton to do so. According to Semana, a newsweekly, Mr Uribe, too, may stay away, vitiating one of the meeting’s tacit aims—to shore up bipartisanship in Colombia. + +Mr Uribe has become a vitriolic foe of Mr Santos. He accuses the president of “handing the country over to the FARC”. That is a wild exaggeration. But there is indeed plenty to criticise in the 63-page agreement on justice finalised on December 15th. FARC leaders accused of war crimes will go before a special Peace Tribunal. Provided they confess, they will be eligible for alternative penalties that include five to eight years of “effective restriction of liberty and rights” and engaging in projects to help victims of the conflict. At their laxest, the penalties could see FARC commanders working to strengthen their own political base by, for example, helping displaced peasant farmers. And meanwhile, they will be free to take part in politics. + +The agreement offers “worrying levels of impunity” for serious crimes, says Iván Duque, a senator from Mr Uribe’s party. Human Rights Watch, an advocacy group, concurs. It fears that the tribunal, whose composition has yet to be agreed, may not be independent. + +Nevertheless, the agreement does hold the FARC to account. And after three years of hard talking, it is the most the government could extract from the much-weakened, but undefeated, guerrillas. The alternative is years of further conflict and the FARC’s disintegration into criminal bands. That is why the United States is supporting the peace process. + + + +Colombia's peace process, in charts + +Peace is not quite a done deal. The two sides have still to agree on means to put the FARC’s weapons beyond use (this week they agreed to ask the UN to monitor the process). Mr Santos has promised a plebiscite on the final agreement; a bill in Congress would cut the turnout required from 50% to 13% of the electorate. + +And then it must be implemented. Mr Santos will go to Washington with a request for a new Plan Colombia—some $500m or so a year for up to ten years for rural development, public services and justice in former conflict areas. Though there will be a “few voices of dissent” from Mr Uribe’s supporters, there will be “broad bipartisan support” in the United States Congress, according to Michael Shifter of the Inter-American Dialogue, a think-tank in Washington. But at a time of fiscal constraint, the applause may not be backed with much money. + +Plan Colombia thus risks becoming a victim of its own success. That would be a shame. Certainly Colombia, a middle-income country, must put up most of the money for peace. But its public finances have been clobbered by the oil crash. Having come so far, it deserves support on the home straight. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21688936-juan-manuel-santos-seeks-support-peace-washington-new-plan-colombia/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Taiwan’s political landslide: Not trying to cause a big sensation + +East Asia’s talent agencies: Twice bitten + +Security in South-East Asia: After Jakarta + +Terrorism in Pakistan: Shady war, shadow peace + +Fiji’s army-tainted politics: Corking the genie + +Banyan: Hallucinations and fleeting clouds + + + + + +Articles Sections Next + +Taiwan’s political landslide + +Not trying to cause a big sensation + +As much as anything, victory for Tsai Ing-wen and her party represents a generational change + +Jan 23rd 2016 | TAIPEI | From the print edition + + + +SHE had led in the opinion polls for Taiwan’s presidential election for months. Yet the margin of Tsai Ing-wen’s victory surprised many. She won 56% of the votes in a three-way race, with her chief contender, Eric Chu of the Nationalist Party or Kuomintang (KMT), trailing badly (see chart). Ms Tsai will become the island’s first female leader, while Mr Chu has already resigned as party chairman. + + + +The outcome of the election to Taiwan’s parliament, the Legislative Yuan, was more striking still. Ms Tsai’s Democratic Progressive Party (DPP) won 68 of the 113 seats up for grabs, compared with only 35 for the KMT, which has lost its hold on the legislature for the first time since Chiang Kai-shek set up on the island in 1949. The KMT is now in the wilderness even if Ma Ying-jeou, president since 2008, limps on until Ms Tsai’s inauguration in faraway May. + +Already, change is under way. An old guard of national and local figures who have dominated politics for years is shuffling off the stage. Such is the bad blood in the KMT that the prime minister, Mao Chi-kuo, rebuffed Mr Ma’s efforts to persuade him to stay on as caretaker—even leaving the president standing in the cold outside his home while refusing to meet him. Ms Tsai (pictured above with colleagues) says that her transition team will work closely with the KMT and others in the coming months. She is open to non-DPP politicians getting cabinet posts in areas where her party lacks expertise, like defence. But whether the political shock on January 16th can accommodate her promise of a consensual approach is unclear. + +Across the country, the enthusiastic participation of younger and more liberal voters in the election has emphasised a sense of generational change. Activists from the Sunflower Movement of 2014 that opposed Mr Ma’s policy of strengthening economic ties with China are now fresh-minted politicians, accounting for the Legislative Yuan’s third-biggest grouping, the New Power Party. One of them is a front man of a heavy-metal rock group. It would have made old lawmakers’ black-dyed hair stand on end—had the election not pushed so many of them aside. + +But at the crest of the wave is Ms Tsai. At 59, she is of an older generation than many of those who voted for her, and is not a natural guitarist, but she embodies a progressive spirit—supporting gay marriage, for instance. A former legal academic and trade expert, her somewhat mousy, low-key air seems to engender trust—and, no one doubts, conceals an iron will. + +Above all she appealed by wanting to improve livelihoods. Her refrain was a message of generational equity: promising a fairer life for younger Taiwanese who struggle to afford housing, worry about job prospects and think that they will have to pick up the tab for a looming pensions crisis. Her call to boost energy from renewables while promising to make Taiwan nuclear-free within a decade appeals to those worried about the environment being at the mercy of the big energy firms. Yet Ms Tsai, who once helped negotiate Taiwan’s entry into the WTO, is not anti-business. In the face of diplomatic pressure from China, she wants Taiwan, with its huge export machine, to strike more trade deals. She has already announced that she will negotiate a free-trade pact with Japan. Membership of the American-led Trans-Pacific Partnership is also in her sights. Elsewhere, she says that Taiwan must find better ways to encourage innovation, including by removing the barriers to new businesses, and cut its reliance on contract manufacturing, amid cheaper competition elsewhere. A measure of Taiwan’s malaise is that the economy hardly grew last year. + + + +Daily chart: All change in Taiwanese politics + +Be careful what you wish for + +It will be hard to turn things around quickly. Ms Tsai’s plans for incentives to landlords to help provide 200,000 units of social housing are imaginative, and could boost growth. Restructuring industry to place more emphasis on design, marketing, logistics and services will prove much harder. Meanwhile, some of Ms Tsai’s ideas appear questionable. Promising to go after assets that the KMT purloined following the defeat in 1945 of Taiwan’s Japanese overlords may make sense from the point of view of “transitional justice”. But it will hardly help engender the cross-party collaboration she says she seeks. As for scrapping nuclear power without thinking adequately about its replacement, it seems to promise a grave electricity shortage in the future—the kind of crisis that could scupper anyone’s presidency. + +That kind of crisis aside, the hardest part of Ms Tsai’s time in office is likely to be managing relations with China across the Taiwan Strait. Under Mr Ma relations only improved, with 23 cross-strait economic agreements and, in November, an unexpected meeting between him and President Xi Jinping in Singapore. Yet stronger economic ties seemed to many Taiwanese not to benefit them, while the perceived secrecy of the negotiations engendered the Sunflower Movement. + +Ms Tsai will be cooler on China—though not chilly. Mr Xi insists that China continue to endorse the so-called “1992 consensus”, in which China’s Communists and the KMT agreed there was but one China while differing on what that meant (see article). Ms Tsai has resisted endorsing the consensus. But she has rowed her party a long way back from its desire to declare formal independence—an act that would invite a military response against the island of 23m people. In her victory speech, she appealed to China’s leaders, emphasising that both countries should search for an acceptable way to interact “based on dignity and reciprocity”. She says she wants to “set aside differences” and build on the cross-strait dialogue to date. Probably, most Taiwanese approve, as does America, Taiwan’s protector. Now Ms Tsai’s unfiery manner must persuade China, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21688916-much-anything-victory-tsai-ing-wen-and-her-party-represents-generational-change-not/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +East Asia’s talent agencies + +Twice bitten + +Youngsters pay a high price for their stardom + +Jan 23rd 2016 | SEOUL, TAIPEI AND TOKYO | From the print edition + +A sorry spectacle + +MILLIONS in Taiwan woke up on election day to a video of a 16-year-old pop star, Chou Tzu-yu, making an abject apology. Her sin had been to seem to back Taiwan’s independence, by flaunting its national flag on television. “There’s only one China,” she parroted in the video. It smacked of a lynching and did no harm to Tsai Ing-wen with her call for Taiwan to distance itself from China, whose hand many saw in the bullying. + +In fact, a more likely culprit was Ms Chou’s employer, JYP Entertainment, a South Korean talent agency. Its shares plunged after Chinese television cancelled a lucrative booking for Ms Chou’s group, Twice. With more contracts under threat, it seems likely Ms Chou was pushed in front of the camera to smooth ruffled Chinese feathers. + +Like the Japanese companies they mimic, South Korea’s talent agencies have a fearsome reputation for controlling their young stars. In 2014 the government set new rules to protect underage recruits. Many endure years-long boot camps, living in dormitories; many have to undergo plastic surgery. + +Also dragged to say sorry this week were the five, now middle-aged, members of Japan’s most popular boy band, SMAP. They scotched rumours of a split, but the terseness of their apology for “causing trouble” made it clear they were not there entirely by choice. SMAP’s agency, Johnny & Associates, has for years been dogged by accusations that it exploits its young charges, commercially and even sexually. Japanese television depends heavily on the roster of stars it and other entertainment companies provide, and so is suspected of turning a blind eye to their excesses. + +Many young stars are banned from dating. In 2013 Minami Minegishi, of the all-girl group AKB48, shaved her head and made a tear-stained act of contrition after being snapped emerging from a tryst at her boyfriend’s apartment. The Tokyo District Court struck a blow for her and others this week. It rejected a suit by a talent agency against one of its former stars for breaking her contract by dating a fan. The court said the contract “restricted her freedom to pursue happiness”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21688929-youngsters-pay-high-price-their-stardom-twice-bitten/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Security in South-East Asia + +After Jakarta + +The eastern fringe of the Muslim world worries about Islamic State’s influence + +Jan 23rd 2016 | SINGAPORE | From the print edition + +Jakarta’s Syrian shock + +FOR decades, South-East Asia has had two lucky bulwarks against militant Islam: the peaceful, tolerant form of their faith practised by most South-East Asian Muslims; and the relative incompetence of local jihadists. But South-East Asia’s tradition of syncretic Islam has been threatened by stricter forms imported from the Middle East, seen as more modern and correct. Violent jihadism seems to be following the same pattern, if the bloody violence in central Jakarta, Indonesia’s capital, on January 14th, is anything to go by. + +Four civilians and four terrorists died in the bombing of a Starbucks and a traffic-police post, and a long shoot-out with the police, that day. Authorities believe that an Indonesian, Bahrun Naim, planned the attack from Syria. He heads a South-East Asian unit fighting with Islamic State (IS) in Syria and Iraq. Governments in the region have long feared something like this. + +Indonesian police have since arrested at least 13 suspected terrorists, and killed another. In Malaysia the police arrested a man suspected of planning to blow himself up at a bar, and three other Malaysians were sent back by Turkey after allegedly trying to cross into Syria to join IS. This week Singapore said that late last year it arrested and prepared to repatriate 27 Bangladeshi construction workers suspected of plotting terrorism back home. + +Beyond this flurry of activity lie deeper questions about how to respond to the threat. Islamists have long been active in South-East Asia. Members of Jemaah Islamiya (JI), dedicated to establishing a South-East Asian caliphate, were behind the bombing in 2002 of a Bali nightclub that killed more than 200. They are suspected of other bombings of western targets in Indonesia and the Philippines. + +After the Bali bombing the Indonesian police created Detachment 88, an elite counter-terror squad financed and trained by America and Australia. It killed or captured much of JI’s leadership. The Philippines, Malaysia and Thailand also arrested JI higher-ups. The group is weakened. + +But the threat never entirely receded. And some now fear that IS could establish a base in South-East Asia. The region offers plenty of remote areas outside state control in which militants can hide. Both the Philippine island of Mindanao and southern Thailand have endured long-running insurgencies waged by Muslim minorities. + +Just as veterans who fought the Soviets in Afghanistan boosted regional jihadist capacity in the early 1990s, many worry that returning fighters from Syria will do the same today. The Soufan Group, a security consultancy, estimated in a December report that at least 600 South-East Asians had gone to fight with IS. It is unclear how many have returned. The report says 162 people (including women and children) have returned to Indonesia from IS territory. Sidney Jones, who runs the Institute for Policy Analysis and Conflict in Jakarta, believes that the number of trained fighters who have returned is much lower. Some are in custody, but Peter Chalk of the RAND Corporation, an American think-tank, says the Indonesian authorities lack “a good feel about how many have returned…and what they’re doing in terms of radicalising populations.” + +Of course, IS has also proved adroit at radicalising from afar. Thousands of Indonesians have publicly pledged allegiance to the group, and Mr Naim appears to have found local jihadists to carry out the attacks. At least one was said to have been radicalised, like many others, in an Indonesian prison. Ms Jones says Mr Naim used encrypted messages on social media in an effort to inspire attacks in Malaysia. Singapore’s home-affairs minister, K. Shanmugam, warned this week that “It is not a question of ‘if’, but ‘when’,” Singapore will suffer a terrorist attack. He said the government would roll out new measures “covering both the hard and soft aspects of Singapore’s security”. + +Counter-terrorism strategies that worked before may prove less effective against transnational entities such as IS, which inspire online self-radicalisation and lone-wolf attacks. In Indonesia supporting or joining IS is not illegal, though the government is mulling broader counter-terrorism laws with powers of preventive detention. The country’s two biggest Muslim social movements—Muhammadiyah and Nahdlatul Ulama—have been trying to counter jihadist propaganda. + +In Malaysia, however, the government itself has thoroughly politicised Islam, leaving little room for dissent from its harshest rules. A study last year found more than 70% of Malaysia’s ethnic-Malay, Muslim, majority support hudud laws such as stoning for adultery. Another found that 11% of Malays viewed IS favourably. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21688918-eastern-fringe-muslim-world-worries-about-islamic-states-influence-after-jakarta/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Terrorism in Pakistan + +Shady war, shadow peace + +Another attack brings out Pakistan’s conspiracy theorists + +Jan 23rd 2016 | DELHI AND ISLAMABAD | From the print edition + + + +EVERY time India and Pakistan inch towards ending their ancient enmity, something bad seems to happen. On January 2nd it was an attack by armed infiltrators on an Indian air-force base near the border with Pakistan that left seven servicemen dead. On January 20th Pakistan suffered a crueller blow when terrorists invaded Bacha Khan University, a co-ed establishment near Peshawar. Four gunmen killed at least 20 people, most of them students, before being shot dead themselves. It was a ghastly echo of a massacre of 141 people, mainly students, at a school in the same region just over a year ago. With more imagination than evidence, Pakistani conspiracy theorists saw India behind both acts of violence on their soil. + +The attack on the Indian air base at Pathankot followed a surprise visit by Narendra Modi, India’s prime minister, to his Pakistani counterpart, Nawaz Sharif—the first by an Indian prime minister since 2004. They promised to resume long-suspended high-level talks over such vexed questions as disputed Kashmir. When Indian intelligence tied the air-base attackers to Jaish-e-Muhammad (JeM), a Pakistani group with known links to the country’s opaque and powerful security services, it seemed part of a familiar pattern. + +Those services have acted in the past to snuff out similar whiffs of rapprochement. A visit to Pakistan in 1999 by the then Indian prime minister, Atal Bihari Vajpayee, was swiftly followed by a brief but nasty war, provoked by Pakistan, on the “line of control” separating Indian- and Pakistani-held parts of Kashmir. Shortly after peace talks were held in Agra in 2001, the Indian parliament building came under attack by gunmen believed to be from JeM. The terror attacks launched in Mumbai in 2008 by Lashkar-e-Taiba, another group patronised by the Pakistani armed forces, punctured yet another round of peaceful overtures. + +But Pakistan’s security services always whisper a counter-narrative. As with the school attack, they suggest via co-operative voices in the Pakistani press that India had a hidden hand in the attack on Bacha Khan University. In fact, both attacks were claimed by Tehreek-e-Taliban Pakistan (TTP) or the Pakistani Taliban. It has sought vengeance since the army in 2014 launched a fierce campaign against it in North Waziristan near the border with Afghanistan. “Our desi liberals would never believe that India is supporting TTP to destabilise Pakistan,” read a sneering tweet from a prominent Pakistani editor. + +Yet Pakistan offers no evidence of Indian involvement in attacks on its territory, whereas Indian officials have offered “actionable intelligence” linking JeM to the air-base attack, and invited Pakistan to send its own investigators. Indeed, on January 13th Pakistan announced that it had rounded up members of JeM, closed some of its offices and shut down its websites. + +Pakistan’s apparent response to Indian prodding sent an encouraging signal that the Pathankot incident was not simply another case of its army using militants to scupper peace efforts by a civilian government. Optimists note other hopeful signs. India responded with unusual caution to the attack, suggesting that talks with Pakistan should be postponed briefly rather than cancelled. On the Pakistani side the army chief, Raheel Sharif, associated himself personally with the crackdown on JeM—a recognition that Pakistan must bring its Frankensteins to heel. + +Correction: An earlier version of this article mischaracterised the colloquial Urdu/Hindi word "desi" as derogatory. It also wrongly applied it to objects; it can refer to anything South Asian. Sorry. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21688923-another-attack-brings-out-pakistans-conspiracy-theorists-shady-war-shadow-peace/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Fiji’s army-tainted politics + +Corking the genie + +Keeping the peace abroad seems to have a troubling impact at home + +Jan 23rd 2016 | WELLINGTON | From the print edition + +Mr Bainimarama’s lively reform programme + +EARLIER this month in Fiji’s capital, Suva, a convoy of lorries, carrying 25 sealed shipping containers and under a heavy military guard, dodged the potholes along Mead Road and snaked into the Queen Elizabeth Barracks. In the containers were Russian weapons, ammunition and vehicles supposed to be destined for use by Fiji’s international peacekeepers in the Sinai desert in Egypt and along the Israel-Syria frontier on the Golan Heights. The opposition cried foul, claiming that the arms had entered the country illegally, without proper police authorisation. Some dared suggest the weapons might even be for the purpose of threatening the opposition. + +The opposition politicians seem not to have appreciated how firmly the police have been under the control of the army since the (South African) chief of police, Ben Groenewald, resigned in November. He left in protest, accusing the armed forces of undermining his investigation into police brutality—they had even recruited the suspects into the army’s own ranks, despite the allegations hanging over them. Mr Groenewald’s successor is a soldier with a murky human-rights record, Brigadier-General Sitiveni Qiliho. He has set about clearing out the constabulary’s senior officers. + +Fiji appears much more stable than it was in the troubled years after a coup in December 2006. FijiFirst, the party of the coup leader turned prime minister, Frank Bainimarama, obtained a thumping 59% majority in elections in September 2014 and holds 32 of Parliament’s 50 seats. While the opposition is in disarray, the government benefits from an economy growing at 4% a year, as hordes of Australians flock to Fiji’s magnificent beaches. A lively reform programme has won Mr Bainimarama many admirers among his country’s 890,000 citizens. It involves building roads and bridges, delivering free education and legal aid, and providing cash handouts to small businesses. + +Abroad, the prime minister walks taller these days, having once been widely seen as a pariah. In some places he was always welcome. In 2013 in Moscow, Mr Bainimarama brokered a deal with the Russian prime minister, Dimitry Medvedev, for the supply of equipment for Fijian peacekeepers. The next year Fiji abstained in the UN vote on Russia’s annexation of Crimea. + +Beneath the surface, the place looks less happy. The islands’ indigenous people, known as i-Taukei, make up three-fifths of the population and communally own most of the land. Many of them despise the FijiFirst government. That is partly because they particularly hate the 2013 constitution, which describes all the country’s citizens as “Fijians” where before only the indigenes earned that title. A third of the population are ethnic Indians. Some indigenes claim to be suffering the kind of cultural annihilation that befell Australia’s Aborigines and New Zealand’s Maoris. Others dislike Mr Bainimarama’s reliance on his attorney-general, a Muslim, who also serves as finance minister. They divine an Islamic conspiracy to control the country. Paranoia runs rife in Mr Bainimarama’s Fiji. + +Efforts to forge breakaway “Christian states” in the provinces of Nadroga-Navosa and Ra last year echoed indigenous fears. At the time Mr Groenewald said that the movements resembled harmless cults. Mr Bainimarama took the perceived threat more seriously, ordering an army clampdown. + +Though he stepped down as military commander in 2014, he keeps his grip on the armed forces. Last August Brigadier-General Mosese Tikoitoga was pushed aside as armed-forces chief. He showed too much independence by promoting his choice of officers to the senior command and by barring Mr Bainimarama’s personal bodyguards from the officer’s mess at the Queen Elizabeth Barracks. He will now be exiled to Ethiopia, as ambassador. + +Meanwhile, the UN remains hungry for Fiji’s blue helmets. They are a nice little earner for the government, too, but dispatching all those soldiers has repercussions back home. The first peacekeepers set off, for Lebanon, in 1978. Since then Fiji’s armed forces have overthrown the government three times: first in 1987, unleashing the coup genie; then late in May 2000; and then Mr Bainimarama’s coup. You have to give them something to do on home leave. + +In 2014 the Nusra Front in Syria, linked to al-Qaeda, briefly captured 45 of Fiji’s peacekeepers. The incident triggered a call for more modern military equipment—leading to the Russian weapons. Hence the worries that their arrival in Suva may only increase the odds of Fiji’s fragile democracy being overthrown again. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21688925-keeping-peace-abroad-seems-have-troubling-impact-home-corking-genie/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Hallucinations and fleeting clouds + +In responding to an unwelcome election result in Taiwan, China has few good options + +Jan 23rd 2016 | From the print edition + + + +THE first, Long March, generation of Chinese Communist leaders always seemed impatient to see Taiwan “reunified” with the mainland. This unfinished business of the Chinese civil war, which ended in 1949 with the defeated Nationalists, the Kuomintang or KMT, confined to the island as their last redoubt, was too sacred a mission to leave to their callow successors. But the last Long Marchers have died out and Taiwan is still independent in all but name, with no deadline set for its return. In 2013 Xi Jinping, the leader of the current, fifth, generation, suggested China’s patience was wearing thin, and that the issues could not be passed on for ever to the next generation. He called for political talks. + +Yet the results of the elections in Taiwan on January 16th suggest such talks—and unification itself—are farther away than ever. Mr Xi is much the most powerful leader in decades of a country mightier than for centuries; but it is not clear what he can do about this. + +China still threatens to take Taiwan by force, should it declare formal independence. No leader could abandon the aim of eventual reunification. For Mr Xi it is part of the “China dream” of fully restored national pride and prestige. But China’s approach to Taiwan has sometimes been surprisingly pragmatic. In cold-war days, China took to scheduling shelling on alternate days. In better times, the two sides have managed a thriving economic relationship with no official ties whatsoever. + +In recent years China’s Taiwan strategy has relied more on blandishments than bludgeoning. In particular, the eight-year administration since 2008 of President Ma Ying-jeou has seen a flurry of cross-strait agreements to foster greater economic integration. But the perceived failure of the KMT’s China-friendly policy to put fizz into Taiwan’s economy was a big factor in the sweeping election win by the Democratic Progressive Party, or DPP, whose roots are in the Taiwan independence movement. + +So the election result repudiates the idea that Taiwan might ever become truly “part of China”. This puts China in a bind. Its initial official reaction implies no drastic change of course. The state press pointed out that this was not a vote for the “hallucination” of independence. Indeed, the DPP’s president-elect, Tsai Ing-wen, talks of stability and the status quo. So, perversely, victory is portrayed by China as evidence of the success of its policy: even the DPP cannot afford to roll back the advances in cross-strait relations, and its rule will anyway be as transient as a “fleeting cloud”. The DPP’s previous stint in power, under Chen Shui-bian between 2000 and 2008, ended disastrously. He was jailed for corruption after Mr Ma trounced him at the polls. + +For several reasons, however, the apparently rosy Chinese view of the election, presumably intended in part to gloss over an embarrassing setback, may not last long. An early challenge will be finding a form of words that allows China to talk to a DPP government. It insists that the DPP must adhere to the “1992 consensus”, a semi-official agreement that there was but “one China”, albeit defined differently by the two sides. Ms Tsai will find that hard. Though a pragmatist, she is beholden to her party, which has long denied any such consensus. The stakes are raised by Mr Xi himself. In Singapore in November, when he granted Mr Ma the first meeting since 1949 between leaders of Taiwan and China, he stressed the importance of maintaining the one-China fiction. + +So China may feel it has to start punishing Taiwan for its recalcitrance. It has plenty of levers without having to resort to crude military menaces—as it did in 1996, when it lobbed shells across the strait. Diplomatically, for example, only 21 countries (and the Holy See) recognise Taiwan rather than the government in Beijing. Most are small and poor. Recent years have seen a truce in the war of diplomatic attrition, in which countries were induced to switch in return for aid. If China breaks the truce, a number of countries might swiftly abandon Taiwan. China will also keep an eagle eye on how its diplomatic partners adhere to “the one-China principle”. American arms sales to Taiwan, of which a package worth $1.8 billion was approved last month, may again become a big issue in relations between China and America. + +China will also do its best to continue to thwart Taiwan’s attempts to join multilateral organisations and sign free-trade agreements. It did allow Taiwan under Mr Ma to sign FTAs with two countries that have diplomatic relations with China, New Zealand and Singapore, but not to join multilateral talks. It has excluded Taiwan from its new Asian Infrastructure Investment Bank, and could probably exert enough pressure to keep it out of the American-led free-trade area, the Trans-Pacific Partnership, even though China itself is not a party. + +It could also apply direct economic pressure. The mainland is the market for 25% of Taiwan’s exports and the destination for most of its foreign direct investment. Taiwan, on the other hand, accounts for just 4% of China’s total trade. An easy economic sanction would be to cut the quotas for mainland Chinese tourists. More than 4m visited in 2014 (up from 280,000 in 2008), about 40% of all visitors to Taiwan; but numbers fell sharply during the election campaign, perhaps because the authorities did not want people to get a taste for that sort of thing. + +Bully for you + +Yet China knows that turning from suitor to bully is likely to prove counter-productive in winning over public opinion in Taiwan. Increased contacts with the mainland seem to have only heightened a sense among ordinary Taiwanese of their distinct identity. Punishing them for this will hardly help. At least, unlike Mr Chen, Ms Tsai seems determined to try not to raise mainland hackles. So the hope is that both sides get on with improving cross-strait relations, while pretending that they do not have wholly opposed visions of where they are leading. For Mr Xi, however, with a dream to realise, pretending may not be good enough. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21688851-responding-unwelcome-election-result-taiwan-china-has-few-good-options-mainland-and/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Family relationships: Divorce: a love story + +China’s foreign policy: Well-wishing + + + + + +Articles Sections Next + +Family relationships + +Divorce: a love story + +While the government talks up family values, marriage break-ups are soaring + +Jan 23rd 2016 | CHONGQING | From the print edition + + + +YANG YOURONG’s wife kicks him as they walk upstairs and he falls back a few steps, then follows again at a distance up to the cramped offices of a district-government bureau handling divorces in Chongqing, a region in the south-east. After more than 20 years of marriage, Mr Yang’s wife has had several affairs; she is “quick tempered”, he says (she had slapped him earlier, he claims). At the bureau, divorce takes half an hour and costs 9 yuan ($1.40). It is administered a few steps away from where other couples get married and take celebratory photographs. Mr Yang and his wife have second thoughts, however; they return home, still arguing. Most couples hesitate less. + +Divorce rates are rising quickly across China. This is a remarkable transformation in a society where for centuries marriage was universal and mostly permanent (though convention permitted men to take concubines). Under Communist rule, traditional values have retained a strong influence over family relationships: during much of the Mao era, divorce was very unusual. It became more common in the 1980s, but a marriage law adopted in 1994 still required a reference from an employer or community leader. Not until 2003 were restrictions removed. + +The trend reflects profound economic and social change. In the past 35 years, the biggest internal migration experienced by any country in human history has been tearing families apart. Traditional values have been giving way to more liberal ones. Women are becoming better educated, and more aware of their marital rights (they now initiate over half of all divorce cases). Greater affluence has made it easier for many people to contemplate living alone—no longer is there such an incentive to stay married in order to pool resources. + +As long as both sides agree on terms, China is now among the easiest and cheapest places in the world to get a divorce. In many Western countries, including Britain, couples must separate for a period before dissolving a marriage; China has no such constraints. In 2014, the latest year for which such data exist, about 3.6m couples split up—more than double the number a decade earlier (they received a red certificate, pictured, to prove it). The divorce rate—the number of cases per thousand people—also doubled in that period. It now stands at 2.7, well above the rate in most of Europe and approaching that of America, the most divorce-prone Western country (see chart). Chongqing’s rate, 4.4, is higher than America’s. + + + +Helped by the huge movement of people from the countryside into cities, and the rapid spread of social media, the availability of potential mates has grown with astonishing speed, both geographically and virtually. But many migrants marry in their home villages and often live apart from their spouses for lengthy periods. This has contributed to a big increase in extramarital liaisons. Married people previously had limited opportunities to meet members of the opposite sex in social situations, according to research by Li Xiaomin of Henan University. Peng Xiaobo, a divorce lawyer in Chongqing, reckons 60-70% of his clients have had affairs. + +Such behaviour has led to much soul-searching. The notion that “chopsticks come in pairs” is still prevalent; propaganda posters preach Confucian-style family virtues using pictures of happy, multi-generation families. (President Xi Jinping is on his second marriage but this is rarely mentioned.) Many commentators in the official media talk of separation as a sign of moral failure; they fret that it signifies the decline of marriage, and of family as a social unit—a threat, as they see it, to social stability and even a cause of crime. The spread of “Western values” is often blamed. + +But marriage is not losing its lustre. In most countries, rising divorce rates coincide with more births out of wedlock and a fall in marriage rates. China bucks both these trends. Remarriage is common too. The Chinese have not fallen out of love with marriage—only with each other. + +It is tradition itself that is partly to blame for rising divorce rates. China’s legal marriage age for men, 22, is the highest in the world. But conservative attitudes to premarital relationships result in Chinese youths having fewer of them than their counterparts in the West (they are urged to concentrate on their studies and careers, rather than socialise or explore). Living together before marriage is still rare, although that is changing among educated youngsters. People still face social pressure to marry in their 20s. Their inexperience makes it more than usually difficult for them to select a good partner. + +Couples’ ageing relatives are part of the problem too. Yan Yunxiang of the University of California, Los Angeles, says “parent-driven divorce” is becoming more common. As a result of China’s one-child-per-couple policy (recently changed to a two-child one), many people have no siblings to share the burden of looking after parents and grandparents. Thus couples often find themselves living with, or being watched over by, several—often contending—elders. Mr Yan says the older ones’ interference fuels conjugal conflict. Sometimes parents urge their children to divorce their partners as a way to deal with rifts. + +Women are more likely to be the ones who suffer financially when this happens. Rising divorce rates reflect the spread of more tolerant, permissive values towards women, but legislation tends to favour men in divorce settlements. A legal interpretation issued in 2003 says that if a divorce is disputed, property bought for one partner by a spouse’s parents before marriage can revert to the partner alone. That usually means the husband’s family: they often try to increase their child’s ability to attract a mate by buying him a home. + +In 2011 the Supreme Court went further. It ruled that in contested cases (as about one-fifth of divorces are), the property would be considered that of one partner alone if that partner’s parents had bought it for him or her after the couple had got married. In addition, if one partner (rather than his or her parents) had bought a home before the couple wed, that person could be awarded sole ownership by a divorce court. This ruling has put women at a disadvantage too: by convention they are less often named on deeds. + +In practice, if the couple has children the person with custody often keeps the home—more often the mother. Yet the court’s interpretation sets a worrying precedent for divorced women. Their difficulties may be compounded by the two-child policy, which came into effect on January 1st. If couples have two children and both partners want custody, judges often assign parents one child each. Marriage and the family are still strong in China—but children clearly lie in a different asset class. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21688901-while-government-talks-up-family-values-marriage-break-ups-are-soaring-divorce-love-story/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +China’s foreign policy + +Well-wishing + +Xi Jinping’s tour of the Middle East shows China’s growing stake there + +Jan 23rd 2016 | BEIJING | From the print edition + + + +SINCE he took over as China’s leader in 2012, Xi Jinping has been a busy globetrotter. Last year he visited more countries than Barack Obama, America’s president (14 against 11). Heedless of whether his hosts are powerful, puny or pariahs, he has flown everywhere from America to the Maldives and Zimbabwe. Mr Xi wants to project China’s rising power—and his role in promoting that—to foreign and domestic audiences. But until this week, he had not set a presidential foot in the Middle East. + +The trip, under way as The Economist went to press, began in Saudi Arabia (whose king, Salman bin Abdul Aziz, is pictured with Mr Xi). He then visited Egypt and was due to finish his tour in Iran. No Chinese president had toured the region since 2009. China’s leaders had worried about getting embroiled in the region’s intractable disputes. But China has a big stake in the Middle East. It is the world’s largest oil importer and gets more than half of its crude from the region (see chart). Mr Xi’s much ballyhooed “new Silk Route”, aimed at linking China and Europe with the help of Chinese-funded infrastructure, runs across the Middle East. Chinese companies are already building expressways and harbours there. + +The timing of Mr Xi’s tour is tricky. Tensions between Saudi Arabia and Iran are particularly high after Saudi Arabia executed a Shia cleric earlier this month and angry Iranians responded by storming the Saudi embassy in Tehran. But the lifting of Western sanctions on Iran on January 16th (see page 46) allowed Mr Xi to display even-handedness by visiting both countries, without upsetting Western powers. Mr Xi, like his predecessors, likes to present China as a non-interfering champion of peace. (Xinhua, China’s state-run news agency, said this week that the West’s “meddling hands” were “more of a mortal poison than of a magic potion” in the Middle East.) But Mr Xi is not keen to play a central role as peacemaker. China’s first “Arab Policy Paper”, released on January 13th, is a vague, waffly document. It talks of “building a new type of international relations”, but is devoid of new ideas. + +Zhang Ming, a vice-foreign minister, said this week that economic development was the “ultimate way out” of conflict in the region. By expanding its trade and investment links with the Middle East, China hopes discontent and conflict there will gradually dissipate. In addition to crushing dissent, it is trying a similar approach in Xinjiang, a province in western China with a large Muslim population—so far without success. + + + +In the long run, China may find it hard to avoid taking sides. To some extent it has already done so in Syria: it talks to representatives from both the Syrian government and the opposition, but by vetoing UN resolutions on intervention it tilts, in effect, in the government’s favour. The presence of a growing number of Chinese citizens in the Middle East may challenge China’s non-interventionist approach. After a Chinese national was executed by Islamic State in November, China promised to strengthen protection of its citizens abroad. Its new rules of Middle Eastern diplomacy could end up resembling familiar Western meddling. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/21688786-chinese-president-makes-his-first-visit-region-xi-jinpings-tour-middle-east/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Iran’s economy: Waiting for the peace dividend + +Israel and Islamic State: The caliphate eyes the Holy Land + +Egypt’s crackdown: Remember, remember + +Floating armouries: Cruisin’ with guns + +Kenyan politics: Rifts in the Rift + + + + + +Articles Sections Next + +Iran’s economy + +Waiting for the peace dividend + +The economy has great potential, but will it be realised? + +Jan 23rd 2016 | BEIRUT AND TEHRAN | From the print edition + + + +THERE were no street parties. When sanctions relating to Iran’s nuclear programme were lifted on January 16th, it was instead Iranians’ deep cynicism that prevailed. “Quick, prepare the [immigration] forms,” some joked on social media, scoffing at the idea that tourists would suddenly come pouring in. + +Nor was Hassan Rohani, Iran’s president, able to enjoy the moment. Within days of the announcement the Guardian Council, a body of jurists and theologians, barred a majority of reformist candidates from running in parliamentary elections next month. Then on January 18th America slapped new sanctions on those involved in Iran’s missile programme. + +Yet the next few weeks—and the speed of the economy’s response to the lifting of sanctions—will be crucial in determining the direction that Iran takes over coming years. Next month the country also votes for members of the Assembly of Experts, a committee that will choose the next supreme leader, who outranks the president. To keep the hardliners at bay, Mr Rohani, who himself must seek re-election next year, will have to persuade them of the virtues of a more liberal, less state-run, more outward-looking economy. + +To do so he has to hope for a quick turn in the fortunes of the world’s 18th-largest economy (by purchasing-power parity). Yet overcoming the lingering effects of its isolation will be no easy task. “It took years to put the sanctions on, and removing them will be a process,” says Ramin Rabii, who runs Turquoise Partners, an Iranian investment firm. Foreign banks, some of which faced swingeing fines for having facilitated trade with Iran, complain about inconsistencies in official sanctions lists published by different countries and fret they may again face prosecution for violating sanctions still in place, or new ones. + + + +In graphics: The implications and consequences of Iran's nuclear deal + +Iran’s most immediate benefit will be the unfreezing of assets abroad worth at least $32 billion. (American officials put the figure at $55 billion; others give still higher numbers.) Iran plans to spend a chunk of this on railways, airports and aircraft; it is close to clinching a deal with Airbus to buy 114 new planes, and says it needs 400. + +Much of the rest of the cash, say Iranian officials, will help sort out the country’s banks, which were pushed to the brink of insolvency, if not into it, by the previous administration of Mahmoud Ahmadinejad. Up to a fifth of all bank loans are said to be non-performing and several banks are bust, not least because the government instructed them to lend even when they thought it imprudent. Some critics fret that the money will instead be used to fund terrorism and Shia militancy abroad. + +Another quick win will come from Iran’s readmission to the global banking system and payment networks such as SWIFT. This will help drive down the cost of imports since, in recent years, Iranian businessmen have not had access to letters of credit. As a result they had to pay upfront in full for imports. Ending such restrictions could add up a percentage point to annual growth, the IMF reckons. Industry should benefit within months. + +Over the longer run Iran should be able to attract foreign investment, which has fallen in recent years (see chart). Among Iran’s attractions are a young, well-educated and largely urban population of 80m. European delegations have flooded into Tehran in the past 18 months, but they still need convincing that the country is politically stable and friendly to business. + + + +The most attractive industries are food and drink, pharmaceuticals and other consumer goods. Many Iranians want European brands rather than the Chinese ones that dominated the market under sanctions. “We used to sell high-quality Italian washing machines, but our customers have gone elsewhere to buy Chinese imports,” says Ramin Farahi, a salesman near Tehran’s Grand Bazaar. Foreign hotel chains are also poised to invest. + +The biggest prize for investors may be carmaking. The automotive industry employs hundreds of thousands of workers, but output is shoddy. Some expect that production could bounce back by the end of this year to 1.6m vehicles, matching the high point achieved in 2011. Renault and Peugeot, which have a long history in Iran, are already back. + +The government’s priority is probably to increase production of oil—which made up 17% of GDP and 30% of the government’s income in 2014—by 500,000 barrels per day (b/d), to about 1.5m b/d. In time it hopes to get back to the 3m-4m b/d it used to pump before sanctions. But because of the slump in world prices, oil will be less of a cash cow than was once hoped and Iran will struggle to get investment from debt-laden international oil companies. + +Iran’s economy is far more diverse than those of other oil producers in the region, such as Saudi Arabia, its regional rival. By most estimates its GDP could grow by 5-8% a year, despite weak oil prices. + +Quite apart from the lifting of sanctions, Mr Rohani’s team realises that it needs to address a raft of problems in an economy that was sorely mismanaged by Mr Ahmadinejad. Corruption is rife: Transparency International, a Berlin-based watchdog, ranks Iran 136th in its corruption perceptions index. In addition, the World Bank puts Iran at a lowly 118th in its ease-of-doing-business index. Capital markets need developing. Firms need access to finance. Unemployment and underemployment are rife and labour productivity is low. Now that sanctions are being lifted, the regime will no longer be able to blame foreigners for Iran’s woes. Yet unless he can show quick progress, Mr Rohani may well be punished at the ballot box for the sins of his predecessor. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21688899-economy-has-great-potential-will-it-be-realised-waiting-peace/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Israel and Islamic State + +The caliphate eyes the Holy Land + +Israel faces the jihadists in Syria, in Sinai and perhaps even at home + +Jan 23rd 2016 | GOLAN HEIGHTS | From the print edition + + + +FROM the military observation points overlooking the spot where Israel’s frontiers meet those of Syria and Jordan, Israelis can clearly see the positions of Liwa Shuhada al-Yarmouk—the Yarmouk Martyrs’ Brigade. It is only one of many dozens of Syrian rebel groups, yet Israeli officers half-jokingly describe the fighters, mainly Syrians from nearby villages, as “Daesh lite”. The brigade, which may have between 600 and 1,000 men, has sworn allegiance to Abu Bakr al-Baghdadi, the “Caliph” of Islamic State (IS), also known by its Arabic acronym, Daesh. The black flag of IS forms part of its logo. + +So far, at least, the group has concentrated on skirmishing with the Syrian army and with rival rebel groups, and on securing its strongholds on the slopes of the Golan. But the Israelis are worried that, as IS is pushed back in other parts of Syria and Iraq, its leaders may decide to take over the Yarmouk Martyrs’ Brigade and use its bases for attacks on Israel or Jordan. + +IS has yet to attack Israel. Its main forces in southern Syria are about 80km (50 miles) from Israel’s borders. Last month, IS put out a recording, purporting to be the voice of Mr Baghdadi, saying that “with the help of Allah we are getting closer to you every day. The Israelis will soon see us in Palestine.” On January 18th Lieutenant-General Gadi Eizenkot, the chief of staff of Israel’s armed forces, warned that “the success against IS raises the probability we will see them turning their gun-barrels towards us and also the Jordanians”. + +The most direct and likely avenue of attack is across Israel’s frontier with Syria. That is because the situation there is already chaotic; IS bases and civilian villages are close to Israel; and the terrain is mountainous. “A vacuum where no one is in control will always be the most dangerous location we should be looking at,” says a senior Israeli officer. Israel has toughened its border defences on the Golan, with new fences and sensors. It now stations regular forces there instead of reservists. + +But IS may also choose other places from which to attack. Wilayat Sinai, which means the “Sinai province” of IS, has been operating on Israel’s western border for five years. It declared allegiance to IS in late 2014 and claimed responsibility for blowing up a Russian airliner last October, killing 224 people. But it is embroiled in a bloody insurgency against Egypt’s security forces. Israel, which is discreetly providing the Egyptians with intelligence and military help, says that IS shares routes for smuggling arms and other supplies with Hamas, the Islamist group that controls Gaza. These could be used for launching future attacks on Israel. + +The Israelis are also worried that radical Palestinians who are citizens of Israel may be working for IS. So far they reckon that about 50 of them have gone to Syria to join IS. “There are more Swedes than Israelis fighting with Daesh,” says an Israeli intelligence man. Others say they are confident that Israel’s security service is better than its European counterparts at monitoring IS activity in its own territory. Even so, they fret that IS could become popular among young Palestinians in Israel, and in the West Bank and Gaza, where many are disillusioned both with the Palestinian Authority and with Hamas, its rival. + +“IS is here and it’s no secret,” says Reuven Rivlin, Israel’s president. “I’m not talking about the borders of Israel, but about IS within. Research, arrests, witnesses, open and classified analysis all indicate clearly that IS’s popularity is growing and that even Israeli Arabs are actually joining up with it.” Vigilance along Israel’s borders may not be enough. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21688778-israel-faces-caliphate-syria-and-sinaiand-possibly-home-islamic/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Egypt’s crackdown + +Remember, remember + +The government tries to forget an inconvenient anniversary + +Jan 23rd 2016 | CAIRO | From the print edition + +“THEIR main objective is to create fear,” says Mohamed Lotfy of the Egyptian Commission for Rights and Freedoms, a pressure group, referring to a series of arrest of activists as the government intensifies a long-running crackdown on dissent. Indeed, even as Mr Lotfy speaks, his phone rings: the police have arrested three more people. + +A colleague, Ahmed Abdullah, himself sought by the security services, is putting on a brave face. Sitting in a café in Cairo, Mr Abdullah is sure he will be arrested—perhaps worse, he says, implying that the police might shoot him. “It is part of the price that we should pay for freedom.” + +The government, on the other hand, appears nervous. In the months leading up to the fifth anniversary on January 25th of the uprising against Hosni Mubarak, the ousted dictator, the current government led by the strongman Abdel-Fattah al-Sisi has tried to dispel any danger of a repeat. Protests in 2014 and 2015 led to dozens of deaths and hundreds of arrests. Clerics, labour leaders and television hosts have been enlisted in the effort to keep people off the streets. + +Activists claim they have no big plans for protests this year. But the government is rounding up perceived troublemakers with unrestrained vigour, adding to the tens of thousands of political detainees already languishing in Egyptian prisons. Most are accused of associating with outlawed groups, such as the Muslim Brotherhood, or organising protests, which are banned. Journalists and administrators of several Facebook pages have also been targeted. Police have even raided a theatre and art gallery in downtown Cairo. + +A feature of the government’s crackdown is the secrecy surrounding many of the detentions. Mr Lotfy’s group says that between August and November more than 340 people “disappeared” into government custody. That does not count Sinai, where the government has blocked access due to an Islamist insurgency. The total is “not less than 1,000”, says Sherif Mohie Eddin of the Egyptian Initiative for Personal Rights, another pressure group. He says the secrecy is deliberate, a charge denied by the interior ministry. + +Most of the disappeared are liberal activists or Islamists, but the reasons for some disappearances are not at all clear. Mostafa Massouny, a young video editor, was getting food in downtown Cairo when he vanished on June 26th. Through various channels his family learned of his detention and was told he would be released. But now there is no official trace of him. “Egypt has eaten my friend,” says one of his colleagues. + +If there was any hope that the new parliament might act as a check on the regime’s ruthlessness, that has been dashed. Most lawmakers have pledged their support for Mr Sisi. When not mugging up for TV cameras or taking selfies, they found time to pass a terrorism law that is likely to ensnare activists. The crotchety head of the committee on human rights, Mortada Mansour, has called January 25th “the worst-ever day in Egypt’s history”. Some officials hope to reclaim the date by renewing its prior designation as a day for celebrating the police. They have certainly been working hard. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21688902-government-tries-forget-inconvenient-anniversary-remember-remember/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Floating armouries + +Cruisin’ with guns + +A brisk business in safeguarding guns + +Jan 23rd 2016 | From the print edition + + + +IN OCTOBER 2013 the Seaman Guard Ohio, a Sierra Leone-flagged ship, was intercepted just under 11 nautical miles off the coast of India by the local coastguard. The grey-hulled vessel looked like a naval ship—bristling with antennae and radar—but was chartered by AdvanFort, a private security firm based in Washington, DC. It had 35 crew and carried 35 guns and thousands of rounds of ammunition. On January 11th this year all those aboard—among them Britons, Estonians and Ukrainians—were convicted of entering Indian waters with illegal weapons. They were sentenced to five years in prison. + +The case offers a glimpse into a world not often seen by landlubbers. The Seaman Guard Ohio was a “floating armoury”, a ship that loiters semi-permanently in international waters, acting as a hotel and base for private security guards hired to protect ships from Somali pirates. They are typically stationed in waters off Sudan, Sri Lanka or the United Arab Emirates, waiting for their customers—merchant ships in need of protection—to pass by. + +Guards hop aboard a client’s ship with their guns, then ride it through the piracy “high risk area” (HRA). Since armed guards first started protecting ships against Somali pirates about a decade ago, no ship with them aboard has been successfully hijacked. Now about 40% of ships rounding the Horn of Africa carry armed guards, according to IHS Jane’s, a research company. + +Once the ship has passed back into safe waters the guards disembark to another armoury. Then they fly home or jump aboard the next ship going the other way. This arrangement keeps guns out at sea, avoiding bothersome and inconsistent national laws. When they stray too close to land, as the Seaman Guard Ohio allegedly did, they can run into legal trouble. Armoury operators market their services online. Some vessels feature wi-fi, television rooms and gyms to keep guards happy, along with safes to store weapons. + +No official register of floating armouries exists, so it is impossible to count them reliably. But at least 15-20 lurk in and around the Indian Ocean, according to one seasoned guard. He reckons thousands of military-grade weapons are stored aboard the vessels. + +The British government has tried to regulate the industry. It has issued licences for “private maritime security companies” to use certain armouries that it deems safe and professionally run. Tom Frankland, a director at Sovereign Global UK, a firm that runs two floating armouries (but unlike AdvanFort does not itself guard cargo ships) says his firm’s craft are regulated by the governments of Djibouti and Britain, which sets strict rules on how they can be used only in self-defence. + +Armouries have done brisk business since governments and marine insurers first demarked an official HRA in 2010. At the peak of Somali piracy in 2012, shipowners would pay about $45,000 per trip for armed guards. Insurers often insisted they have them, reckoning that this would reduce the risks of them having to pay out millions in ransoms if a ship were hijacked. Yet competition has driven down rates charged by security firms and standards are falling as less highly-regulated companies enter the market. A boss of one British-owned armoury worries that the use of such firms could lead to weapons entering the black market. + +“You used to see teams of Royal Marine Commandos and Navy Seals guarding ships,” says one naval officer involved in patrolling the waters off the Horn of Africa. “Now you get three [untrained men] sharing a rusty AK-47.” Moreover, the industry itself is facing tougher times. On December 1st the HRA was shrunk, thanks to a steep drop in the number of pirate attacks—itself the result of more guards as well as patrols by mainly western navies. That is good news for shipowners, but bad news for their guards. Adding to the uncertainty is a chance that Somali piracy will make a comeback in 2016. IHS says strife in Somalia, coupled with a forecast for months of clement weather, have put Somali pirates in its “top 10 risks” for 2016. If piracy rebounds, some old sea dogs of war may get another lease of life. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21688900-brisk-business-safeguarding-guns-cruisin-guns/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Kenyan politics + +Rifts in the Rift + +Election tensions are already rattling Kenya’s most combustible region + +Jan 23rd 2016 | From the print edition + +Beware the cliff edge + +DRIVE west out of Nairobi and you quickly realise how astonishing the topography around the Kenyan capital is. After an hour or so crawling in traffic past tea fields and farmers selling sheep skins and fresh vegetables, motorists suddenly find themselves on an escarpment from which the land simply drops away. On the horizon, mist clings to the top of Mount Longonot, a dormant volcano. Before it, a patchwork of tiny green farms stretches across the valley floor like a carpet. + +This is the central part of the Rift Valley, a vast depression that stretches thousands of miles. It is Kenya’s breadbasket and its most densely populated region. Its flower farms, tea fields and coffee plantations provide much of the country’s exports, as well as employment for thousands of workers. Its geothermal energy plants provide Nairobi with cheap electricity; its lakes provide water and its farms food. + +In politics, too, the Rift Valley plays a central role. It contains a key constituency that Uhuru Kenyatta, Kenya’s president, needs to win over if he is to be returned to office in an election due next year. Mr Kenyatta, who is from the Kikuyu, Kenya’s largest tribe, won in 2013 by forging an alliance with William Ruto, a politician who is popular among the Kalenjin-speaking people who are numerous in the Rift. Yet with Mr Ruto arraigned at the International Criminal Court (ICC) in The Hague on charges of instigating violence after disputed elections in 2007, and the economic boom slowing across Africa, what happens over the next year in the Rift Valley will be crucial to Kenya’s fate. + +Polling day is more than 18 months away, but electioneering is already under way. In Nakuru, the biggest city in the region, the office of the Kenyan electoral commission buzzes with young workers clutching application forms for jobs as officials. As many as 1.5m voters will be registered over the next few months, says Ezekiel Muiruri, the local administrator. + +On the shore of Lake Naivasha, the election is beginning to worry some. Here, tourist camps sit alongside acres of greenhouses from which, every day, millions of roses are flown to Europe and the Far East. The farms are flourishing: between 1995 and 2014, the annual volume of flowers exported rose from 29,000 tonnes to 137,000, drawing workers from across Kenya. + +Yet this influx of migrants means that the area around Naivasha is no longer so dominated by either the Kikuyu or Kalenjin. Its kaleidoscopic tribal mix has long made Kenyan politics jumpy and sometimes violent. Tribal tension is always liable to boil over during elections and the Rift Valley remains a political cauldron. + + + +For the first decade-and-a-half after independence in 1964 the Kikuyu, led by Jomo Kenyatta (the current president’s father) were on top. Then, under President Daniel arap Moi, the Kalenjin started to call a lot of the shots. In 2002 Mr Moi was succeeded by Mwai Kibaki, who reasserted Kikuyu power. But this was challenged at the polls in late 2007 by an alliance led by Raila Odinga, the head of a particularly aggrieved tribe, the Luo, alongside Mr Ruto, the Kalenjin’s main torchbearer. + +When the results of that election were contested places like Naivasha and Nakuru erupted in violence that shattered the country during the first part of 2008. At least 1,300 people were killed and 300,000-plus displaced. At Karagita, a slum that borders the lake, a group of men fret about the possibility of ethnic violence similar to what happened after the election in 2007. “The way politicians are speaking now makes me nervous,” says Julius, a tailor, hunched over his ageing sewing machine. He fears that politicians will once again whip up ethnic tensions. + +Most Kenyan analysts think Messrs Kenyatta and Ruto could easily win again if they stick together. But that is not assured. One problem is the case at the ICC: for the past two years, Mr Ruto, with the backing of the entire Kenyan government, has been seeking to have the charges thrown out. But instead proceedings have moved slowly. On January 12th, he appeared in The Hague. Many of Mr Ruto’s supporters question why he is still in the dock when charges against Mr Kenyatta have been dropped. If Mr Ruto is convicted, his alliance with Mr Kenyatta may crumble. + +Another problem is that although in 2013 Mr Ruto was able to deliver the crucial Rift Valley votes of the Kalenjin, he is not the only politician representing them. Gideon Moi, a senator and the son of the former president, and Isaac Ruto, a county governor (no relation to William), are two potential challengers. + +The government also faces two further challenges to its popularity. The first is a slowing economy. Despite the fall in oil prices and a weaker currency, flower exporters say their margins are narrowing, mainly because many of their costs are incurred in strengthening dollars. Inflation is surging. So too are interest rates as the central bank tries to stabilise a currency that has fallen sharply. Another issue is that instead of the usual pre-election splurge, the government is having to tighten its belt to deal with a fiscal deficit that reached almost 9% of GDP in 2015. Whatever happens in the run-up to elections, the Rift Valley will be at the centre of it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21688782-kenyas-president-must-win-over-rift-valley-citizens-if-he-win-re-election/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Turkey and the Kurds: Widening the conflict + +Bosnia’s new visitors: Ottoman comfort + +Turkey’s religious diplomacy: Mosqued objectives + +Renzi and the EU: Troublemaker + +Charlemagne: An ill wind + + + + + +Articles Sections Next + +Turkey and the Kurds + +Widening the conflict + +A campaign against the PKK turns the country’s south-east into a war zone + +Jan 23rd 2016 | DIYARBAKIR | From the print edition + + + +THE birds of Diyarbakir are doing very little perching these days. Just when they manage to settle on a satellite dish, a blast of artillery or machine-gun fire sends them dashing skyward. The humans who live here are distraught, too. “We can barely get any sleep,” says a woman walking her son to school just outside the Sur district, the city’s historic centre, where Turkish forces are battling militants aligned with the Kurdistan Workers’ Party (PKK). + +In July the PKK, which has waged a decades-long war for Kurdish self-rule, returned to killing Turkish police and soldiers after a two-year ceasefire. The group accused Turkey of tacitly supporting Islamic State (IS). (The jihadists had tried to wipe out the Syrian Kurdish border town of Kobane as Turkish soldiers looked on, and have killed scores of Kurds in bomb attacks across Turkey.) Turkey responded with air raids on PKK camps and a crackdown in the largely Kurdish south-east. Since then, fighting in Diyarbakir and other Kurdish cities has killed at least 230 Turkish security officers, up to 240 civilians and hundreds of PKK fighters, says the International Crisis Group, a think-tank. Last week a PKK car bomb killed a police officer, three children and two other civilians. + +In Diyarbakir Turkish tanks, along with 2,000 police and soldiers, appear bent on burying in rubble the PKK fighters still holed up in Sur. The region’s governor, Huseyin Aksoy, has heard reports of 50 to 70 militants left in the old city. He insists that the army has trained most of its firepower on the militants’ booby-trapped ditches and barricades: “The heavy weapons are not being used against people.” + +Locals disagree. Residents fleeing Sur say swathes of their neighbourhood have been destroyed by artillery fire. Historical sites, including a 16th-century mosque and a newly restored Armenian church, have been damaged, says Ahmet Ozmen, deputy head of the local bar association. In November the bar’s president, Tahir Elci, was shot dead during a gun battle moments after making a televised plea for peace. + +The local economy, which was just emerging from decades of war, is again reeling. Metin Aslan, of the local chamber of commerce, estimates the cost to Diyarbakir alone at more than $300m; the unemployment rate threatens to climb from 16% last year to over 30%. The city’s gleaming new international airport, a reminder of the faith investors once placed in peace talks between the PKK and the government, is nearly empty. + + + +The PKK, its ambitions fanned by Western support for Kurdish victories over IS in Syria, is facing a reality check in Turkey. Its fighters may hold out for a few more weeks in Sur, Silopi and Cizre, but it stands little chance of wresting territory from a government that boasts NATO’s second-biggest army and has few qualms about using force. Yet the rebels may not care. The longer the fighting lasts, the more recruits are driven into the group’s arms, says Cengiz Candar, a Turkish analyst: “The way they see it, even if they lose militarily…they stand to gain politically.” + +The ruling Justice and Development (AK) party of President Recep Tayyip Erdogan also feels it has little to gain from de-escalation. After a decisive win in November’s election, brought about in part by the fighting and a surge in Turkish nationalist sentiment, Mr Erdogan believes he has a mandate to pummel the rebels. “As unfeasible as it is, Turkish voters are focused on eradicating the PKK,” says Akin Unver, an academic. “That’s the dream the government sold to the electorate.” + +Mr Erdogan, who for years has wanted to change the constitution to grant himself an executive presidency, may even be considering another snap poll after two ballots last year. “He thinks he can get another 5% of the vote,” says Mr Unver. That could be enough to keep the pro-Kurdish Peoples’ Democracy Party (HDP) out of parliament and give AK enough votes to change the constitution. + + + +Grid of grievances: Enemies, alliances and animosity in the Middle East + +AK was once the party that broke taboos by acknowledging the Kurds’ past persecution. Now prosecutors have placed over 1,100 Turkish academics under investigation for writing a letter calling for an end to military operations in the south-east. The producer and host of a TV show are under investigation after a caller pleaded for compassion for bystanders. + +It is civilians who pay the greatest price. Of the roughly 24,000 residents caught in the fighting in Sur, at least 20,000 have fled the district. Yilcan Tas abandoned what was left of her family’s house last month. She, her husband and their six children now live in a pair of cramped rooms next to refugees from Syria. Ms Tas blames PKK militants for packing a ditch next to her house with explosives, putting her family’s lives at risk, and the army for destroying the neighbourhood. “In the end, we are the ones who are wretched,” she said. “We are the ones being ruined.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21688927-campaign-against-pkk-turns-countrys-south-east-war-zone-widening-conflict/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Bosnia’s new visitors + +Ottoman comfort + +Arab tourists and investors are giving Bosnia a new shine + +Jan 23rd 2016 | SARAJEVO | From the print edition + + + +TWO decades ago a small wave of Arabs arrived in Bosnia, jihadists coming to fight on the side of the country’s Muslim Bosniaks. Today another wave of Arabs is coming—this time for skiing, saunas and condos. In 2010 Sarajevo, the capital, registered about 1,000 tourists from the six Arab oil monarchies in the Gulf combined; in the first ten months of 2015, over 19,000 came from Kuwait and Saudi Arabia alone. Arab property investment has ballooned. For a country mired in bureaucracy and political stalemate, the new investments provide a welcome bright spot. + +The thermal baths of the Sarajevo suburb of Ilidza have drawn tourists since Roman times, and took off as a resort under the Austro-Hungarian Empire. After the Bosnian war of 1992-95 the resort seemed doomed. But the past three years have seen an extraordinary renaissance. First came Libyan militiamen, benefitting from Bosnian expertise in therapy for wounded veterans. Other Arabs followed. Now estate agents, restaurants, hotels and dentists all advertise in Arabic. + +In the café of the Hotel Hollywood (where NATO forces snatched two alleged al-Qaeda members in the weeks after the September 11th attacks), Ayyad Salim Al-Ayyad, a Kuwaiti estate agent, says business is “fantastic”. A few tables over, Bosnians working for a Kuwaiti developer are doing the hard sell on their new condominium complex. Another estate agent looks askance when a Bosnian woman asks about buying into a new holiday complex in nearby Hadzici. This is not the place for you, the agent explains; it has been built by a Saudi company for Arabs. The buyer might be better off in a development in Polinje, in the hills above Sarajevo, constructed by the Saudi Al-Shiddi group but marketed to wealthy Bosnians and Arabs alike. + +Information on the Polinje development is available at the Sarajevo City mall—also built by the Al-Shiddi group, in 2014. In summer the mall is packed with Arab families, some of whom may be staying in the company’s alcohol-free Hotel Bristol. This investment will be dwarfed, however, by a project in nearby Trnovo where construction is set to start in April. Buroj, a developer from Dubai, plans to build at least 3,000 villas, flats, a hospital and a sports stadium. The total investment could come to €2.5bn ($2.7bn). + +Arab tourists “feel at home here”, says one travel agent. In mainly Muslim Sarajevo, much of the architecture and heritage is Ottoman, and halal meat is easy to find. There are few other countries where hiking and skiing are within striking distance of a mosque. + +The property market, meanwhile, is targeted at middle-class buyers who would like a bolt-hole far from the war and chaos enveloping the Middle East, but who cannot afford London or Geneva. In Bosnia a new three-bedroom villa can be yours for €200,000. Because Bosnian law requires foreigners to buy property through a local company, data are hard to come by, but property agents’ testimonies confirm that the market is thriving. + +Bosnians are both delighted and worried by all this. The investment is welcome, but locals are wary of Arab visitors bringing with them stricter interpretations of Islam, as Arab religious charities have done over the past two decades. Al-Jazeera Balkans, Qatar’s local-language television station, has been broadcasting from Sarajevo since 2011, and competes with Russian, Western and Turkish news organisations. A Qatari government “friendship fund” for Bosnian small businesses is preparing to open soon. Bosnians do not want to be caught in the middle of an international battle for hearts and minds. + +Even FIPA, the Bosnian foreign investment agency, is curiously reticent about Arab construction projects. Gulf countries do not rank among the top 12 investing in Bosnia, the agency protests. (In part, this may be due to Gulf investments being made through third-country holding companies.) They have “no special relationship” with the country, and invest only “because they can make a profit, and not because they love Bosnia”. One wonders whether investors would be expected to evince a disinterested love for Bosnia, if they were European. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21688928-arab-tourists-and-investors-are-giving-bosnia-new-shine-ottoman-comfort/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Turkey’s religious diplomacy + +Mosqued objectives + +Turkey is sponsoring Islam abroad to extend its prestige and power + +Jan 23rd 2016 | TIRANA | From the print edition + + + +A MEGA-MOSQUE is growing on George W. Bush Street in Tirana, the Albanian capital, near the country’s parliament. When finished, it will be the largest mosque in the Balkans—one in a long string of such projects bankrolled by Turkey. By its own estimate, Turkey’s directorate of religious affairs, known as the Diyanet, has helped build over 100 mosques and schools in 25 countries. In Bosnia, Kosovo, the Philippines, and Somalia, it has restored Islamic sites damaged by war and natural disaster. In Gaza it is rebuilding mosques destroyed by Israeli military operations in 2014. Current projects alone are expected to cost $200m. All of the money comes from private donations, insists Mazhar Bilgin, a senior Diyanet official. + +Critics suspect Turkey’s president, Recep Tayyip Erdogan, of deploying mihrabs and minarets to revive his country’s imperial heritage in former Ottoman lands. Secular nationalists in Albania, which was strictly atheist under communism, bristle at seeing their parliament dwarfed by a mosque, and urban planners complain about the project’s bland, “McOttoman” design. + +But most Albanians are sympathetic. While post-communist governments allowed Catholic and Orthodox Christians to build cathedrals in Tirana, Muslims were left out in the cold. Worshippers regularly found themselves praying outdoors, unable to squeeze into the city’s tiny 19th-century mosque. It is not clear why Albania’s government waited until 2013 to approve a new one. + +Turkey’s role in Albanian Islam goes beyond building mosques. Six of the country’s seven Islamic seminaries are managed by foundations linked to the Gulen community. Turkey’s development agency, TIKA, has completed 248 projects in Albania. Besides the fiscal aid, many Albanians welcome Turkish influence as a counterweight to the spread of Islamic militancy. According to Tirana’s mufti, Ylli Gurra, up to 150 Albanian nationals have joined Islamic State (IS) jihadists in Syria. He blames the zealous salafist foundations from the Gulf monarchies that poured into the region in the 1990s. (Many were expelled after the September 11th attacks.) Mr Gurra says most Albanian Muslims reject such radicalism: “They have more affinity for Turkish Islam.” + +In fact, Muslims in Albania are far less devout and more pro-Western than their Turkish co-religionists. Meanwhile, Turkey’s religious outreach is hobbled by an internecine conflict at home. Mr Erdogan’s ruling Justice and Development (AK) party once worked hand in glove with the Gulen movement. All that changed two years ago, when the AK launched a vendetta against the movement, accusing it of orchestrating a corruption scandal that had tarred senior government figures. Scores of Gulenist bureaucrats remain behind bars. + +During a 2015 visit to Albania for the groundbreaking ceremony of the new mosque, Mr Erdogan asked his hosts to shut down schools run by the Gulenists. Albanian officials turned down the request. Yet in Albania and elsewhere, Muslim communities that benefit from Turkish largesse still face pressure. “Erdogan is forcing them to take sides,” says Kerem Oktem, a Turkish studies professor at the University of Graz. + +The Diyanet, meanwhile, has extended its mosque programme to countries whose connection to Ottoman history is tenuous. In 2014 Mr Erdogan suggested that Cuba had been settled by Muslims long before it was spotted by Christopher Columbus, and unveiled a plan to build a new mosque there. Another mosque is under construction in Haiti. The building spree has become a vehicle for broadcasting Turkey’s religious credentials to Muslim audiences domestic and foreign. The ultimate objective is “claiming new territory,” says Mr Oktem. “It’s about the idea that Turkey should be the leader of the whole Muslim world.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21688926-turkey-sponsoring-islam-abroad-extend-its-prestige-and-power-mosqued-objectives/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Renzi and the EU + +Troublemaker + +Italy’s prime minister is picking fights with Germany and the EU + +Jan 23rd 2016 | ROME | From the print edition + +Talk to the hands + +ITALY, a cabinet minister mused recently, was seen in the past as a country that did not make trouble. But that was in the past. Lately the left-right coalition of the prime minister, Matteo Renzi has provoked a succession of acrimonious disputes with the European Commission and Germany. This week, in the latest sign of Mr Renzi’s determination to be the bad boy of Brussels, he sacked Italy’s permanent EU representative, Stefano Sannino, a former Commission official who was seen as too accommodating. His replacement is the junior trade minister, Carlo Calenda, a member of Mr Renzi’s Democratic Party. + +The conflict burst into the open on January 15th, when Jean-Claude Juncker, president of the commission, accused Mr Renzi of attacking his institution at every turn. Mr Renzi replied that the days when Italy let itself be “remote-controlled” from Brussels were over. Four days later Manfred Weber, the German who leads the centre-right group in the European Parliament, said Italy’s prime minister was jeopardising the EU’s credibility. + +Mr Weber was referring to the sharpest of all the current disputes: Italy is blocking refugee aid funds the EU had promised Turkey as part of a deal to crack down on smuggling of migrants into Europe. Germans are especially bitter because Italy has been accused of failing to process migrants who arrive on its soil, instead hurrying them on to other EU states. Ministers in Rome say they doubt that paying the Turks to hold back Syrian refugees will work. But Mr Weber claimed Italy’s real motive is to secure concessions on other issues. + +Talks with the commission over the sale of Italian banks’ daunting inventory of non-performing loans are also bogged down. The urgency of the issue was underlined by a run on the shares of Monte dei Paschi di Siena, Italy’s third-biggest lender. Rome wants to guarantee minimum prices for the loans. But the commission has yet to rule on whether that would constitute state aid. Here again, an extra ingredient sours the mix: many Italian officials believe the commission applies EU rules less strictly to Germany. + +The bad loans reflect more than a decade of stagnation and Italy’s slower-than-expected recovery from the euro crisis. In December, parliament in Rome approved an expansionary budget aimed at speeding the recovery. But it would also slow Italy’s reduction of its budget deficit and the repayment of its public debt, which in the euro zone is second only to Greece’s as a proportion of GDP. Mr Renzi’s ministers argue they are entitled to flexibility as a reward for structural reform, notably of the labour market. But Brussels may yet ask for adjustments. The budget’s centrepiece, a €3.6 billion ($3.9 billion) cut to taxes on first homes, looks more likely to woo middle-class voters than boost GDP. + + + +The view in Berlin is that Mr Renzi’s belligerence is intended to burnish his image at home. The Italian prime minister’s personal ratings have fallen sharply since mid-2015 and in June he faces mayoral elections in several important cities. After a string of corruption scandals in Rome, there is a chance the capital could fall to the populist Five Star Movement (M5S). + +This is where the issues at stake in Italy’s rows with the EU become fuzzier. Seen from the Italian government’s standpoint, Mr Renzi’s electoral interests and those of the EU are identical. The alternatives to his left-leaning coalition are either the intermittently euro-sceptic M5S, or a conservative government—led this time not by Silvio Berlusconi’s centre-right Forza Italia party, but by the virulently euro-sceptic Northern League and its populist leader, Matteo Salvini. Polls show barely half the population favours the single currency any longer. In an article this week in the Guardian, a British newspaper, Mr Renzi argued that EU austerity fuels the rise of his populist rivals. According to this view, self-interest would counsel the authorities in Brussels and Berlin to do all in their power to help Mr Renzi. That was also the view of Mr Renzi’s predecessor, Mario Monti. But whereas the urbane Mr Monti, a former EU commissioner, opted mostly for quiet persuasion (sweet-talking the German chancellor, Angela Merkel), the swaggering Mr Renzi likes nothing better than a scrap. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21688917-italys-prime-minister-picking-fights-germany-and-eu-troublemaker/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +An ill wind + +In Europe and at home, Angela Merkel’s refugee policy is being blown away + +Jan 23rd 2016 | From the print edition + + + +IN BERLIN they speak of “Plan B”; in Brussels the fear is of the U-turn. Whatever the term, the prediction is the same: that Angela Merkel is on the brink of reversing the generous policy towards asylum-seekers that saw more than a million of them reach Germany last year. For now, Mrs Merkel sticks to her well-worn line: Wir schaffen das(“We will handle this”). Over the past six months she has slowly assembled a hard-headed, coherent migration strategy. But each of its elements is starting to give way. + +First, numbers. The winter weather has dented the refugee flows to Greece from Turkey, but not as quickly as hoped. Over 1,600 a day have reached Greece this month, a higher rate than last July when the crisis was already in full swing. Border controls erected along the migratory route since then complicate the journey, but determined migrants still make it to Germany. Wrong-footed by the explosion in arrivals last autumn Mrs Merkel’s government tightened asylum rules, but few were put off. A growing number of Moroccans and Algerians, hailing from poor but peaceful countries, are coming to Germany, exploiting the trail blazed by Syrians and Afghans. Meanwhile the howls from regional officials who must house and feed the arrivals grow ever louder: last week a mayor bussed 31 Syrians to the federal chancellery in Berlin, saying his small town could no longer cope. + +To cut the numbers reaching Europe, Mrs Merkel has turned to realpolitik. German officials aim to strike deals with countries in the Maghreb and Asia to make it easier to return failed asylum-seekers, and are prepared to use development aid as a weapon. Their main hopes, though, lie in an “action plan” the EU cooked up with Turkey in October, which promised money and other prizes in exchange for efforts to stem the migrant flows. Mrs Merkel believes that Turkey can help by disrupting people-smuggling networks and stepping up coastal patrols. But, despite the incentives, there is little sign of Turkish action so far. Without it, the refugee numbers will start to climb again once spring arrives. + +To deal with the influx Mrs Merkel has backed an EU plan to register asylum-seekers arriving in Italy and Greece and to relocate them around the club, with national quotas calculated in Brussels. A million asylum-seekers should be no great burden for a union of 500m people. But the relocation scheme has flopped too: many countries want nothing to do with refugees, and refugees have no interest in most countries. So the Germans are changing tack, seeking allies willing to help them resettle hundreds of thousands of Syrians directly from Turkey. France is among the countries prepared to take in the same number of resettled refugees it agreed to take under the relocation scheme. But this will work only if the illegal flows fall dramatically, which means the Turkey deal must kick into gear. + +In the meantime, Germany is beginning the difficult work of integrating hundreds of thousands of newcomers. The new-year horrors of Cologne, when hundreds of women were sexually assaulted by marauding groups of men, many of them Muslim asylum-seekers, focused minds on cultural differences. But bringing refugees into the workforce, the main engine of integration, represents at least as big a challenge. The assumption that Germany’s tight labour market was tailor-made for job-hungry migrants has given way to the grim realisation that most are an ill fit for an economy mainly seeking highly skilled workers. The head of one business group reckons almost 80% of refugees have next to no skills at all. + +Mrs Merkel is racing against time. Her Christian Democratic Union and its coalition partners are increasingly restive. Cabinet ministers have openly challenged the chancellor’s position. The anti-immigration Alternative for Germany party is notching up double-digit polling results for the first time. Refugees languish in supposedly temporary accommodation months after arriving in Germany. Mrs Merkel continues to insist that there can be no cap on the number of refugees Germany accepts, and the constitution agrees with her. But increasingly, reality does not. + +Very well, alone + +What if nothing works? Despite the pressure Mrs Merkel is unlikely to shut Germany’s borders, because she wants to preserve the EU’s passport-free Schengen zone. But other plans are being drawn up inside the chancellery, including a sealing of the Greece-Macedonia border across which most refugees travel to reach Germany. Once refugees see that Greece has become a dead end, says one German official, they will think twice about setting sail from Turkey. Other routes will no doubt emerge, perhaps across the Black Sea. But the plan might at least buy time. + +Such schemes show how far Germany has travelled since its “welcome culture” lifted European liberals’ hearts last summer. Back then Mrs Merkel’s model presented an inspiring alternative to the small-minded xenophobia of leaders like Hungary’s Viktor Orban. Now, after the chaos and trauma of the past six months, Mr Orban feels vindicated and the chancellor looks increasingly isolated. Germany has tried to lead in Europe, but others will not follow. To Mrs Merkel’s immense frustration, other EU countries agree to policies like relocation and then ignore them. While German officials try to knit together the geopolitics of the crisis, from Iraq to Turkey and Russia, most other countries would prefer it simply to go away. As for the European Commission, which sometimes looks like the chancellor’s last ally, it has gamely advanced common policies but is too weak to enforce them. “The European dream is vanishing,” sighs one of its senior officials. + +Mrs Merkel, to her credit, is desperate to keep it alive. But time is running out. Germany has perhaps two months to hope that the jigsaw pieces fall into place before the refugee flows pick up again, and each part of the job gets harder every day. Can Germany still handle this? We will continue to make the case, says a government official. “But nobody believes it.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21688896-europe-and-home-angela-merkels-refugee-policy-being-blown-away-ill-wind/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +The snoopers’ charter: Of warrants and watchers + +Petition against Trump: Not welcome + +Pension policy: A tangled web + +The economy: Nice while it lasted + +Labour and Trident: A silly idea + +Manufacturing: The great escape + +Primary schools: Big classes, small problem? + +Social problems: There may be trouble ahead + +Bagehot: An optimistic Eurosceptic + + + + + +Articles Sections Next + +The snoopers’ charter + +Of warrants and watchers + +The law governing the intelligence agencies is being rewritten. Problems abound + +Jan 23rd 2016 | From the print edition + + + +SPIES need secrecy and the public wants privacy. So finding the right legal framework in which the intelligence and security agencies can do their work, including—when necessary—intruding into people’s private lives, is inherently tricky. + +Britain’s laws on bugging and snooping are out of date. Written in a pre-internet era, they give sweeping powers to the home secretary to authorise the interception and collection of electronic information, and the planting of bugs (in spookspeak, “equipment interference”). Without a stronger legal basis, these powers could fall foul of European judges on human-rights and data-protection grounds. + +Moreover, until the revelations by Edward Snowden, a fugitive American intelligence contractor now living in Moscow, most people had no idea of the reach of Britain’s digital spy agency, the Government Communications Headquarters (GCHQ), and how close its ties are with America’s National Security Agency. The Snowden revelations infuriated digital-privacy advocates and also alarmed the technology industry, which feels squeezed between government demands and its customers’ expectations. + +The draft bill on investigatory powers going through Parliament attempts to sort out this mess. It follows the failure two years ago of a previous bill, dubbed the “snoopers’ charter”, and the hurried passage of a stopgap bill that expires this summer. The bill is under scrutiny by a joint committee of peers and MPs, which will report on February 11th. + +Arguments rage over both form and content. Critics say the consultation is too hurried for one of the most important pieces of legislation in recent years. They object to the vagueness of some of the language (including new bits of jargon such as “internet connection records”, which could mean the complete history of somebody’s activity on the internet). The definition of these terms, and of such words as “urgent”, “necessary” and “proportionate”, will be contained in codes of practice, yet to be published. + +For some, the fact that GCHQ has long had the capabilities it now avows is no reason to accept them. The bulk collection of information, they say, breaches privacy. Overly zealous spooks might link databases, and trawl them looking for patterns, drawing conclusions purely on the basis of inference, with no redress for those concerned. The data could be passed to (or pinched by) other countries, notably America, which could then decide, say, to put innocent people on no-fly lists. British Muslims already complain of costly, humiliating and unexplained last-minute blocks on trips to America, apparently based on their behaviour on the internet. Warehouses of sensitive data are magnets for criminals and other malefactors. + +Critics of the bill also worry about a conflict of laws, under which Britain might oblige them to hand over data about their clients even when another country expressly prohibits this. Big technology companies such as Google, Facebook and Apple have written to the parliamentary committee to highlight this danger, though they declined to send their bosses to give evidence in person. + +Some of this is posturing. The bill does not mandate the creation of a central database of everybody’s internet history. Nor, contrary to some claims, will it force technology companies to install back doors in their encryption software to meet requests from GCHQ. Most supposedly encrypted products are already transparent to their providers: it is only by analysing its users’ e-mails and browsing activity, for example, that Google is able to sell advertisements tailored to their tastes. + +The law authorises GCHQ to ask for help. But when it comes across genuinely uncrackable encryption (“end-to-end”, in industry jargon), it has other options, such as planting software on the device concerned. The tech companies, say cynics, are pretending to show how fiercely they resist government requests, while remaining happy to co-operate in private. + +The purported conflict of laws is somewhat overblown as well. GCHQ will not force a company to break other countries’ laws (risking an embarrassing public spat). The bigger worry for the government is how to protect the agency’s intelligence capabilities from judges in Luxembourg and Strasbourg, whose view of espionage is rooted not in the British tradition of royal prerogative and empire, but in continental memories of totalitarianism. + +For this reason the bill introduces a new idea. The home secretary’s warrants will be reviewed by judges, who will check them for lawfulness and reasonableness. The creation of these commissioners was recommended in a report last year by David Anderson, a lawyer who is the independent scrutineer of Britain’s anti-terrorist legislation. The spooks have no objection. Their activities are already scrutinised retrospectively by commissioners. They would also like their warrants to have more legal force in foreign eyes. + +The committee is now debating the commissioners’ hiring, firing and remit. It is also mulling evidence from lawyers and media-freedom campaigners. Communications between lawyers and their clients enjoy almost bulletproof legal protection: spies too should be told explicitly to steer clear of them. Journalists fret that sources (especially whistle-blowers) may have insufficient protection. + +Another issue is a provision in the bill requiring “communication service providers” (ie, internet and telecoms firms) to store customers’ internet records. It is unclear what this will mean in practice, how intrusive it will be, what it will cost and whether, since people get on the internet in many different ways, it can even work. + +The biggest divide is not over the technicalities of intelligence oversight, but in attitudes to what spies do. Some believe the agencies to be overmighty, beguiling politicians with tales of derring-do and lobbying zealously for their cause in the media. Such worries are not groundless. Parliament’s intelligence and security committee was surprised and annoyed by a drooling series of articles that resulted after GCHQ gave the Times unprecedented access to its headquarters in Cheltenham. + +Yet nobody has evidence that GCHQ acts unlawfully or menacingly under the existing system. Most Britons—and most politicians—think the spooks do a good job and, beset by fears of terrorism, crime, child abuse and foreign spies, want a legal structure that lets them keep at it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688864-law-governing-intelligence-agencies-being-rewritten-problems-abound-warrants-and/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Petition against Trump + +Not welcome + +Jan 23rd 2016 | From the print edition + + + +Donald Trump has topped another ranking, this time in Britain. An e-petition started by a woman from Aberdeen, where Mr Trump owns a golf club, suggested banning the Republican candidate from Britain for hate speech. It amassed a record 576,000 signatures, far more than the 100,000 benchmark for debate in Parliament. The debate, held on January 18th, concluded that his views are not welcome. This was noted in America so may have embarrassed the government. Yet e-petitions are meant to foster political engagement. The next two most popular concern migration, one against, one for. A petition not to ban Mr Trump got only 44,000 signatures; a third, for him to address Parliament, just 100. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688859-not-welcome/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Pension policy + +A tangled web + +The state pension system is about to change. Some people will lose out + +Jan 23rd 2016 | From the print edition + +The young and the old + +BEWARE politicians who say they plan to simplify something. The details will often be more complex. That is especially true of the new pensions regime starting in April. The flagship proposal is a “flat rate” pension, fixed initially at £155.65 ($220.35) a week. It will replace the confusing mix of a basic pension of £119.30, an earnings-related supplement and means-tested benefits. However, the term flat rate is a misnomer. Some retired people will get more than £155.65 because they will carry over earnings-related benefits from the old system. But others will get less. + +Qualifying for the full rate requires a history of 35 years of national insurance contributions (NICS), with a minimum of ten years to get anything. There will be exceptions. Those who spend time caring for children or elderly relatives can count such years for qualification, although proving what they have done may be tricky. There will be means-tested benefits to ensure that those without any other income get at least £155 a week. But the means tests apply to couples, not individuals, so married people without the right NICS record may get less than the flat rate. + +Many will find the new “simple” system as confusing as the old. In the first 20 years or so of the scheme, most retiring workers will be better off. But by 2040, the majority (those aged 40 or less now) will be worse off. That is because, under the old system, the earnings-related bit of their pension would have been higher than the flat-rate payment. This is another example of the older generation benefiting at the expense of the young. + +Nor is this the only complication. Workers in salary-linked pension schemes have “contracted out” of the earnings-related element of the state pension, so they paid lower NICS. But the new pension will stop contracting out, so employees’ NICS will rise. That will translate into a pay cut in April. Worse, employers’ NICS will go up too, and private-sector employers may try to recoup the cost by cutting pension benefits or raising employee contributions. For workers, that means a choice between cutting future or current pay. + +The government is also under attack over a change to equalise the state pension age. From 1940, the state pension age was set at 65 for men and 60 for women; since husbands tended to be older than wives, the idea was that couples would retire together. But the European Court of Human Rights deemed this gap discriminatory, so the government legislated to equalise the pension age at 65, with the change being phased in between 2010 and 2020. + +The cost of providing pensions has been rising as people have been living longer. So in 2011, the government decreed that the state pension age for both men and women should rise to 66 by 2020. For women born between 1953 and 1958, this means a big increase in retirement age, with very little warning. A group called Women Against State Pension Inequality has launched an e-petition to protest, especially against the failure to give individuals sufficient notice. Older women are less likely to be working than men and less likely to have private pensions. After getting more than 100,000 signatures, the petition will be debated in Parliament (see article), but change is unlikely. + +This government has treated pensioners better than other benefit recipients, notably by maintaining the “triple lock” under which pensions rise by the bigger of wage rises, price inflation or 2.5%. But in the world of pensions, any change, however simple, will make some unhappy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688861-state-pension-system-about-change-some-people-will-lose-out-tangled-web/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The economy + +Nice while it lasted + +Recent strong growth in Britons’ pay packets proves short-lived + +Jan 23rd 2016 | From the print edition + + + +UNEMPLOYMENT in Britain is just 5.1%, the lowest since 2006. Economists expect that when joblessness falls, wages will rise as employers must compete more fiercely for staff. After a long slump brought on by the recession, by mid-2015 wages were growing nicely (see chart). But as unemployment has continued to decline, the economists have been left scratching their heads. In November three-monthly average growth in pay was just 1.9% year on year, far below levels in the years leading up to the 2008-09 global crisis. + +The shaky world economy is partly to blame. The oil-price slump is biting: wages in the oil-and-gas industry, which are about 50% above the average, have fallen by 12% in the past year. Cheaper oil also prompted a flirtation with price deflation in the middle of 2015, making workers less inclined to demand pay rises. In the year to December 2015 the pound appreciated on a trade-weighted basis by 7% as nervous investors hoarded British assets (it has since been falling back). As exporters’ competitiveness suffered, they tried to cut costs, including pay. The manufacturing sector, which is heavily export-oriented, has seen especially low earnings growth in recent months. + +A more pessimistic view is that wages were bound to come down to earth. In the latest figures a strong rise in August fell out of the rolling three-month average. Mark Carney, governor of the Bank of England, pointed out on January 19th that long-term unemployment is still 50% higher than in 2007 (though it is falling). In addition, Mr Carney noted that Britons have in recent months reduced the number of hours they work, which is also suggestive of weak demand for labour. + +Yet talk of labour-market “slack” is hard to reconcile with businesses’ complaints (which are growing, according to surveys by the Bank of England) about finding labour—especially the skilled sort. Firms may be sating their desire for skills without paying full whack, argues Doug Monro of Adzuna, a job-search website. Mr Monro reckons that, instead of hiring people with experience, more businesses are choosing to hire youngsters, whose wages crashed in the crisis, and train them up. Penguin Random House, a publisher, has announced that it will no longer require job applicants to have a degree. + +In recent months the workforce has thus become younger, pushing down average wages. However, with youth unemployment now lower than in mid-2008, firms may struggle to continue this practice for much longer. On top of this, flows of people moving from one job to another, which fell sharply during the recession as workers clung on to whatever position they could find, have picked up and are now back at pre-recession levels, says Samuel Tombs of Pantheon Macroeconomics, a consultancy. A year ago there were slightly more vacancies than jobseekers, according to data from Adzuna; now there are twice as many openings. Those workers happy to flit between jobs ought to be able to drive a harder bargain on pay. + +Add in the new “national living wage”, which is coming into force in April and is worth £7.20 ($10.20) an hour for workers who are 25 or older, and wage growth may pick up again in the coming months. The biggest threat to workers realising these gains, though, is home-grown. Thanks to worries over the forthcoming referendum on membership of the European Union, business investment is slowing, say economists at Barclays bank. If investment shrinks, productivity will suffer. Britons could then once again face measly pay growth, just as the economy was picking up speed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688886-recent-strong-growth-britons-pay-packets-proves-short-lived-nice-while-it-lasted/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Labour and Trident + +A silly idea + +Jeremy Corbyn might send submarines to sea without their missiles + +Jan 23rd 2016 | From the print edition + +WHEN Jeremy Corbyn, the Labour Party’s hard-left leader, was asked about his policy on renewal of Britain’s Trident missiles submarines by an interviewer on January 17th, he brought down ridicule. It is unlikely to trouble him. Mr Corbyn, a veteran campaigner for unilateral nuclear disarmament, is determined to end Labour’s commitment to maintaining the nuclear deterrent. Most of the new party members who elected him as leader agree. His problem is that a large part of his shadow cabinet, possibly most Labour MPs and two of the most powerful trade unions on which Labour depends for its funding, strenuously do not. Yet Mr Corbyn seems likely to get his way. + +The answer he gave to the BBC’s Andrew Marr was aimed at trying to win over the unions, who are mainly concerned about the impact on their members’ jobs if the £31 billion ($44 billion) programme to build replacements for the existing four Vanguard-class submarines is scrapped. Mr Corbyn said his priority was to protect jobs; to that end, the submarines might still be built, but they could go on patrol without nuclear missiles aboard. + +This, he said, was one of the proposals being looked at in a review of defence policy conducted by his impeccably unilateralist new shadow defence secretary, Emily Thornberry. Ms Thornberry, who is likely to produce an interim report by June, says she is interested in what she calls “the Japanese option”, by which she appears to mean that Britain would keep its nuclear expertise, but develop a nuclear weapon only if and when circumstances made it necessary. + +This may sufficiently placate the unions to secure for Mr Corbyn the votes he needs to overturn existing Labour policy at the party conference in September. But it will do nothing to win over MPs and shadow cabinet members who believe that keeping Trident is essential to Britain’s national security. The government is planning a Commons vote on Trident renewal this year, possibly within weeks. Without an agreed policy on the nuclear deterrent, it seems likely that Mr Corbyn will have to give his MPs a free vote. But with Ms Thornberry at the dispatch box he will at least avoid the embarrassment of the vote on Syrian air strikes in December, when Labour’s front bench was conspicuously split. + +What is curious is what Mr Corbyn has not suggested: scrapping the Vanguard replacements and building in their place more Astute-class nuclear-powered attack submarines and additional frigates and destroyers that the navy actually needs. This would not win over those fundamentally opposed to unilateral nuclear disarmament; but nor would it sound as ludicrous as sending expensive ballistic-missile submarines to sea without their ballistic missiles. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688887-jeremy-corbyn-might-send-submarines-sea-without-their-missiles-silly-idea/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Manufacturing + +The great escape + +What other makers can learn from the revival of Triumph motorcycles + +Jan 23rd 2016 | HINCKLEY | From the print edition + + + +MARLON BRANDO rode one, as did James Dean. Steve McQueen famously jumped across the wire on a Triumph in the prisoner-of-war epic “The Great Escape”. Together, they helped to make the British-built motorbike the coolest on the road in the 1960s, by which time it was a bestseller in its range (over 500cc) in America as well as in Britain. But success bred complacency, and by the mid-1970s the company, together with most of the rest of Britain’s motorcycle industry, was on its knees, unable to compete with more reliable, technically more advanced and often cheaper Japanese imports. After several disastrous mergers and bail-outs, Triumph was moribund, no longer cool but more of a byword for oil leaks and trade-union militancy. + +This, unfortunately, is the story of much of British manufacturing. Entire sectors failed to keep up with the competition, and collapsed in the 1970s and 1980s. The steel industry has staggered on, a shadow of its former self, but it seems set on a relentlessly downward trajectory: this week saw over a thousand new job losses. Despite lots of investment, steel has never managed adequately to reinvent itself. + +Triumph, however, has. Indeed, it announced recently that it sold a record 55,000 bikes in 2015. It is thus a rare example of a successful industrial salvage operation. And there are useful lessons in its story for the rest of Britain’s “makers”, as George Osborne, the chancellor of the exchequer, likes to call them. + +Triumph was saved from the scrap-heap in 1983 by a property developer, John Bloor. He bought the rights to the marque for £150,000 ($240,000). Instead of trying to plough on with the old ways, he took several years out to study the Japanese production lines that had humbled the British. “We learned a lot,” says Nick Bloor, the developer’s son, who is now boss of Triumph. When the first new model was launched in 1990, it combined the styling that made Triumph’s name with better engineering and reliability, partly the result of using Japanese machinery. + +A new factory was built at Hinckley, in Leicestershire, and a couple more in Thailand, where most components are made as well as some complete models. The company has stuck to its core market of making bigger and touring bikes, and has accordingly carved out a global niche. America is, once again, its biggest customer, helped by the enthusiasm of a new generation of Hollywood stars such as Tom Cruise. About 90% of the 114,000 bikes sold in Britain each year are still imported, but Triumph has built up a 16% share of the more valuable big-bike market. + +Steve Kenward, head of the Motorcycle Industry Association, argues that Triumph has used its name cleverly. Classic photos of Brando and McQueen adorn the walls of its Hinckley factory. For a younger generation, the mud-spattered bike that David Beckham used to slither through the Brazilian jungle in 2014 stands in reception. Similarly, “styling cues” on the bikes, such as the distinctive shape of their exhaust pipes, are a reminder of Triumph’s heritage. Yet the company has also responded to new trends and markets, says Mr Kenward, epitomised by the new “adventure-tourism” of Mr Beckham. + +Others are trying a similar trick. Ariel, founded by the man who invented the modern spoked wheel in 1874, was another best-selling motorcycle firm in the 1950s before virtually disappearing. Simon Saunders bought the name in 1999, and today produces about 70 bikes a year, mainly to order, allying the lustre of the brand to high-performance engines. His market is “niche of niche”, he jokes. But, like Triumph, at least he’s still in business. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688868-what-other-makers-can-learn-revival-triumph-motorcycles-great-escape/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Primary schools + +Big classes, small problem? + +Teachers and parents fret over larger classes + +Jan 23rd 2016 | From the print edition + + + +ONE primary school has bought a double-decker bus on eBay, an online marketplace, to use as a classroom. Others have built playgrounds on their roofs to increase space for school buildings. Many have made more mundane adaptations, including restricting use of communal areas, staggering play times or using Portakabins as temporary classrooms. All face a common problem: growing numbers of pupils. + +Despite a 10% increase in primary-school pupils since 2010, the number of classes has risen by only 7%. Consequently British primary-school classes, already the sixth-biggest in the OECD club of mostly rich countries, have grown even larger. The average class size is now 27.4, up from 26.7 in 2010. And, since the government relaxed restrictions in 2012, more pupils are now being taught in “super-size” classes of more than 30. This, argues Lucy Powell, Labour’s shadow education secretary, shows that “the current system of planning new places is essentially broken”. + +Many teachers share her disquiet. Teaching large classes can be difficult and frustrating, says Sally Bates, head of Wadsworth Fields primary in Nottingham. Teachers and schools can adapt, she adds, but young children need individual attention to learn how to get on with others, to listen and to be polite. + +Yet the evidence on the effect of class size on academic performance is not so clear. A 2003 study carried out by the Institute of Education at the University of London suggested that smaller classes boost the literacy and numeracy of pupils, especially those from poor backgrounds, in the early years of education, but found no evidence of any correlation between academic performance and class size beyond the age of seven. + +“Slightly older children are used to the nature of school, of conforming to what’s expected of them and they’re still enthusiastic…they’re not yet know-it-all teenagers,” says Ms Bates. Low pupil-teacher ratios are no guarantee of success in international comparisons: Japan, one of the OECD’s best performers, has far more pupils per teacher than Spain, one of the stragglers (see chart). + +Crowded classrooms may not be a good idea. Stressed teachers are a poor advertisement for a profession already struggling to attract recruits. Parents prefer children to be taught in small groups. And head teachers need more help in planning for varying numbers. But the limited benefits from reducing class size come at a cost; there are many cheaper and more effective ways to improve educational performance. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688867-teachers-and-parents-fret-over-larger-classes-big-classes-small-problem/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Social problems + +There may be trouble ahead + +Jan 23rd 2016 | MANCHESTER | From the print edition + +Troubled or troublesome? + +SITTING in her cramped council house on the edge of Manchester, Nicola, a 45-year-old mother, relates how in 2011 social services took her three children into care because of their chaotic home life and failure to attend school. She accepts that she could not cope and was grateful for the help she received from the state. Five years on, the children are at home with their parents, back in school and unlikely to be taken away again, she claims. Before then, it felt like the social services “were waiting for us to fail”, says Nicola. “Now it’s as though they are trying to help us cope.” + +The change is largely due to a controversial project called the troubled families programme (TFP), set up in 2012 to try to deal with difficult and vulnerable families whose lives can lead to social problems that cost the state a lot of money. Families within the programme have an average of nine serious troubles, including domestic violence and debt. TFP advocates a method called “family intervention”, whereby one key worker helps to give intensive support to such families, and to co-ordinate their interaction with different government agencies. + +In 2013 the government launched the second phase of the programme, expanding the number of families from 120,000 to 400,000. Greater Manchester is at the forefront of the changes, expanding its own work to deal with more families who need early help. “For too long we’ve been mopping up the floods, and not turning off the taps,” says one senior official. + +The Labour government began similar work on a smaller scale before 2010. But after riots in several cities in 2011, the new Tory prime minister, David Cameron, set up the TFP, claiming that “a relatively small number of families are the source of a large proportion of the problems in society”. He called them “people with a twisted moral code” and promised that the programme would deal with the 120,000 families that he said cost the state £9 billion ($14 billion) a year. The tough love rhetoric contrasted starkly with the more supportive approach adopted by key workers. + +Critics have rounded on the programme, saying that troubled families are a symptom of social problems not their cause. They accuse Mr Cameron of demonising the vulnerable poor. “Troubled does not mean troublesome,” says Stephen Crossley of Durham University. “Nowhere did Mr Cameron mention structural issues such as poverty, inequality or injustice that are the main causes of these families’ problems.” Indeed, a government report found that, belying the usual “neighbours from hell” image, among the families being worked with in a six-month period, 85% had no adults with a criminal offence, 97% had children with one or no offences and 84% had children who were not permanently excluded from school. + +Whitehall allows localities flexibility in delivering the programme. There are no specific professionals being financed. “It’s not really a programme,” says Harriet Churchill of Sheffield University. “It’s more a framework for funding and encouraging local authorities in how they monitor and invest in services.” + +Turning them around + +Payment is “by result”—an extra fee is paid for every family deemed to have been “turned around” according to the TFP referral criteria. “This risks encouraging authorities to choose families that can be helped most easily,” says Janet Boddy of Sussex University. Last year, Mr Cameron claimed that almost all the initial 120,000 families had been turned around. But, says Professor Boddy, a family might show change in one of the criteria (school attendance at 85% or better, adults back in work for six months), meaning support is stopped even if family members are still struggling with other complex problems. + +In the second phase, the government is also broadening the criteria for eligibility (and for the extra payment by result) to cover more cases of physical- and mental-health problems, neglected children and domestic abuse. It has also adapted the measure of success to include a “significant and sustained change” in the lives of family members. Critics point to a lack of independent data to show if the project is succeeding. Results of a recent evaluation are expected this year. + +Jacob Botham of the TFP in Greater Manchester claims the national programme is helping to make complex families productive again as well as preventing others getting into trouble. It is also, he says, helping to propel a broader transformation of the whole system. This has involved establishing several “early help” hubs to bring different agencies—including mental-health, police, probation and family intervention workers—together, sometimes in one room, to facilitate engagement with families, prevent duplication and save money. Their statistics show some success, with 85% of families involved in anti-social behaviour seeing improvement, an 83% reduction in total repeat calls to the police and 66% of families with domestic violence seeing it resolved. The programme has moved on, claims Mr Botham, while critics have got bogged down in the details of the first phase. + +A big problem will be trying to do all this even though local-authority spending per person on social care has been cut by 17% in real terms in 2010-15, including mental-health services for children and adults, substance abuse clinics and children’s centres to help with parenting. As some families are helped out of their problems, more are taking their place, says Professor Boddy, thanks partly to other welfare cuts. “It is clear that a family-centred approach is very valuable,” she says. “But one of the key things it does is help families to access other forms of assistance. Where can they go when those areas are cut?” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688873-there-may-be-trouble-ahead/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +An optimistic Eurosceptic + +For Dominic Cummings, leaving the European Union is a first step in a British renaissance + +Jan 23rd 2016 | From the print edition + + + +IN 2002 senior Conservatives met to stroke their beards after a second defeat to Tony Blair’s mighty electoral machine. Somebody suggested a “Save The Pound day” to spotlight the prime minister’s sneaky plan to adopt the euro. The Tories had held precisely such an event before the election, but Iain Duncan Smith, their new leader, reckoned it worth another shot. Dominic Cummings, his head of strategy, clutched his head in despair. “Just about the only thing less popular than the euro is the Tory party,” he later observed, in the typically direct manner that infuriates right-wing Conservatives. After eight months in the job he quit, pronounced Mr Duncan Smith “incompetent…a worse prime minister than Tony Blair” and retired to an underground bunker in Durham to study Russian literature and Thucydides. + +Today Mr Cummings—hair a chaotic thatch, speech brisk with a hint of the north-east—is again at the heart of politics. His focus is the EU, or rather getting Britain out of it. From a humming, glass-walled complex overlooking the Palace of Westminster he leads the campaigning efforts of Vote Leave, the largest of the outfits vying to be designated the official Out campaign in the impending referendum. Together with Matthew Elliot, its chief executive and a fellow libertarian veteran of anti-euro wars, he wants to create the biggest political upset in decades. + +Mr Cummings was never a typical politico. He is “someone for whom the phrase ‘doesn’t suffer fools gladly’ was invented”, observes Tim Bale, a historian of the Conservative Party. He sees politics less on a Labour-Tory spectrum and more as part of a Herculean struggle between brilliance and mediocrity (how he and the pooterish Mr Duncan Smith ever thought they would get on is unclear). Unequivocally idealistic and about as silky-smooth as sandpaper, he found his calling as chief of staff to Michael Gove, first in opposition and then, despite efforts by Downing Street to block him, at the education department. There he bluntly informed civil servants of their shortcomings, fired off hectoring e-mails written in capitals, took a bulldozer to Mr Gove’s softly-softly Liberal Democrat coalition partners and agitated to prise the state’s fingers off schools, inject the exam system with new rigour and boost the teaching of science and maths. + +If he demonstrated verve, it was because for him the Gove reforms were the method; the object was to change the soul. How? By transforming Britain into a meritocratic technopolis. That much Mr Cummings outlined in a 240-page essay in 2013, shortly before he left the education department. Between detours through nanotechnology, robotics and military strategy, he adumbrated a resilient society of “Odyssean” citizens capable of working across the sciences and arts and adapting to complex technology. Britain’s post-imperial role should be as the world’s “leading country for education and science”. In this scheme Brussels, like corporatist Lib Dems and education bureaucrats, is a barrier to be knocked down. “Dom’s Euroscepticism is an expression of his Nietzschean world view,” says a former colleague. + +The audacity of nope + +Yet for Mr Cummings, the EU is not just another obstruction. Leaving it is nothing less than the key to a bold new Britain. Sitting down with Bagehot, he starts by comparing post-renaissance China with post-renaissance Europe; the first mandated harmonisation and declined, the second accommodated competitive differences and advanced. The EU, he posits, is making the old Chinese mistakes by regulating things like drug trials and olive-oil containers. This predilection, combined with a lack of democratic scrutiny, makes it “extraordinarily opaque, extraordinarily slow, extraordinarily bureaucratic” and utterly ill-suited to a fast world of “gene drives, lethal autonomous robotics, you name it”. So Britain should leave, paving the way for a more dynamic, supple state; freeing British entrepreneurs from stultifying rules cooked up with the help of monopolistic conglomerates; and releasing cash that could seed a British version of DARPA, the American government’s emergent-technology arm. + +His problem is that many Outers prefer a more nostalgic vision of a post-EU Britain, one involving cream teas, birching and church on Sundays. Indeed, Mr Cummings finds himself on the front line of a battle between Vote Leave and Leave.eu, its main rival (backed by the UK Independence Party), which pushes a more socially conservative brand of Euroscepticism. On January 18th Arron Banks, the boss of Leave.eu, wrote to Mr Elliott describing Mr Cummings as “a liability and a danger” and “the only person apparently standing in the way of a formal merger” of the groups. + +Vote Leave rebuffed the flirtation, but Mr Cummings undoubtedly carries risks. His liberal idealism (he is pretty unfussed about immigration, for example) does not chime with the small-c conservative voters on whom Out relies. He will struggle to work harmoniously with whichever cabinet ministers come out against the EU (Mr Duncan Smith is one). And he can be impractical. He once set up an airline linking Samara, in south-west Russia, with Vienna; it had one passenger, whom it somehow left behind when its first and only flight took off. + +And yet. Mr Cummings inspires intense loyalty among those with whom he works closely. He had the political nose to advocate Tory modernisation years before David Cameron and George Osborne made it trendy. He is appealingly imaginative and original. In a profession in which shoehorning a reference to Uber into a speech passes for serious analysis, it is refreshing to come across somebody who thinks hard before he speaks. And he is genuinely optimistic—about human potential, democratic government and the power of science. Bagehot hopes he loses the battle over Britain’s EU membership. But he wishes Mr Cummings well in his bigger war. + +Full interview online: www.economist.com/blogs/bagehot + + + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21688866-dominic-cummings-leaving-european-union-first-step-british-renaissance/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Global Pentecostalism: Ecstasy and exodus + +Pentecostalism in Brazil: From modesty to ostentation + +Pentecostalism in South Korea: Coming down the mountain + + + + + +Articles Sections Next + +Global Pentecostalism + +Ecstasy and exodus + +Charismatic Christianity thrives among people on the move + +Jan 23rd 2016 | LETTERKENNY, IRELAND | From the print edition + + + +TEJU HASSAN has come far, and so have most of his flock. Born near Lagos 50 years ago, he converted to Christianity as a young man and now ministers in the far north of Ireland to a multinational congregation. Like many a “reverse missionary” from the devout developing world to the secular north, he sees his task as repaying the lands that exported Christianity. “The Gospel was brought to Africa by English and Irish priests. White people also did bitter things, but we are still grateful for the faith and we are bringing it back.” + +His 100 followers are an outpost of Christendom’s fastest-growing segment: people who seek an ecstatic experience described as “baptism in the Holy Spirit” and insist that biblical feats, from healing to exorcism to speaking in tongues, should be part of present-day worship. They are sometimes described as “charismatic” or “renewalist”. Within this category are Pentecostal churches that stem from a revival begun in America over a century ago; subgroups within established churches, which after 1960 began worshipping in a similar way; and newer churches that use Pentecostal style and language, with a fresh stress on prosperity. This can mean offering business tips, involving the faithful in ventures or telling them that God will enrich them if they donate money. + + + +Todd Johnson of America’s Centre for the Study of Global Christianity reckons that as of 2010, these charismatic worshippers amounted to a quarter of the world’s 2.3 billion Christians; by 2025 he expects their number to reach 800m (see chart). It is often noted by religion-watchers that Christianity globally is becoming more southern and exuberant. But the success of Pentecostalism and its imitators also highlights a more subtle point: the need for a kind of religion that is flexible enough to suit people in transit, whether between the southern hemisphere and the northern, between the countryside and the city, or between poverty and wealth. + +Speaking in tongues + +For uprooted peasants, too, coping with the anonymity of a megacity slum, charismatic churches provide a paradoxical blend of social support, discipline and emotional release. As Don Miller of the University of Southern California puts it: “Pentecostal worship is joyous, ecstatic and offers a sense of self-transcendence that fills a void in the lives of migrants—and exorcising demons, literally or metaphorically, can be a way of gaining control over individual or family problems.” Migrants travelling between countries need the same balance of solidarity and catharsis, and are well served by the loose structure of charismatic churches, which can spring up quickly wherever the need arises. + +Pastor Teju’s is a typical tale. His chance to migrate came when the multinational firm he worked for as an accountant sent him from Lagos to England for training. Hearing that Ireland’s economy was booming (in 2000), he got a job there. As his career progressed, so did his spare-time role as a pastor with another successful multinational concern, the Redeemed Christian Church of God (RCCG), a Nigeria-based organisation that ministers to the country’s diaspora and all other comers. + +His flock includes people from across Africa, and a few Irish looking for an alternative to Catholicism. His church claims to have thousands of communities worldwide. Though a prolonged slump means the pool of recruits in Ireland’s northwestern tip may be drying up, globally it seems on track. In Nigeria its Redemption Camp attracts millions to its annual meetings. A 10,000-seat stadium in Texas acts as a hub in America and last year David Cameron paid a pre-election visit to its London gathering, where the faithful cheered the prime minister as he lauded the family, the Bible and self-improvement. + +“Our people are very practical,” says Pastor Teju. So too is his brand of religion. Like migrants in search of safety and prosperity, charismatic Christianity has proved adaptable, almost chameleonic. To people whose lives are in flux, it offers a mix of ecstasy, discipline and professional and personal support. In Brazil an initially sober kind of Pentecostalism has been replaced by a brasher kind (see article). In South Korea (see article), a style of worship that suited a poorish, insecure country has been replaced by one that flaunts success. + +Whatever their style, Pentecostal pastors are culturally closer to their flock than are the learned clerics of the Catholic or Lutheran churches; and they are numerous. A study in 2007 found that in Brazil Pentecostal churches had 18 times more clerics per believer than the majority Catholics. As Mr Miller points out, older churches move slowly because they are lumbered with hierarchies and rules; the Pentecostal world is one of quick startups, low barriers to entry and instant reaction to change. + +At worst, this flexibility shades into opportunism. In every country where Pentecostalism has thrived, its leading practitioners have faced investigations of their finances. In 2011 Forbes magazine estimated the combined worth of five Nigerian pastors as at least $200m. In Brazil the faithful seem tolerant of pastors who are light-fingered with their tithes; many see giving as a virtuous act, regardless of the money’s ultimate destination. Estevam Hernandes, one of Brazil’s best-known preachers, cheerfully resumed his career after returning, in 2009, from five months in an American jail for smuggling undeclared cash. + +Some, though, have emerged unscathed. Last year Britain’s Charity Commission gave a clean bill of health to the British branch of one of Nigeria’s richest churches, the Winners’ Chapel. Or take Sunday Adelaja, a Nigerian-born cleric who is a player in the affairs of Ukraine. His Embassy of God church claims 25,000 followers (almost all white) in Kiev and outposts in over 20 countries. In 2009 he was questioned over the collapse of an investment firm which had touted for business in his church; he satisfied the police that he was not responsible. + +In the past migrating religious groups either merged into their host societies or else pickled the culture of the old country in aspic. Thanks to technology, today’s roaming worshippers have no such dilemma; a Nigerian or Brazilian in transit can adapt while maintaining contact with home. Globally dispersed Pentecostal churches meet both those needs. An outlying branch of the RCCG can offer job advice and a way to keep links with home. Global charismatic movements act as transmission belts along which ideas and worship styles can travel quickly. “A hymn can be composed in one continent and sung in another a few days later,” says Allan Anderson of Birmingham University. + +Like water, charismatic religion takes the path of least resistance. Philip Jenkins, a scholar of global Christianity, cites several little-noticed examples. Dubai is now a bastion of Pentecostal-style worship, among migrants; the Muslim authorities do not mind as long as local Emiratis are not proselytised. Thanks to a shared language, Brazilian neo-Pentecostal churches do well in Angola and Mozambique. And though Filipino Christianity is almost entirely Catholic, the export variety, adapted to the diaspora’s needs, is intensely charismatic, offering a combination of mysticism and practical advice. One movement, El Shaddai, claims 8m members across the world. Worshippers at its Manila base wave their passports in the air as they pray for successful travels. + +Politically, too, Pentecostal churches tend to be pragmatic rather than consistently conservative. Brazil’s globally successful Universal Church of the Kingdom of God (UCKG) initially resisted the rise of the centre-left Workers’ Party, but went on to back its presidential candidates, including Dilma Rousseff, the incumbent. In Ukraine Mr Adelaja was close to the 2004 Orange revolution but also wooed the pro-Russian president, Viktor Yanukovych. Peru’s right-wing authoritarian leader, Alberto Fujimori, enjoyed Pentecostal support, but in El Salvador, Pentecostal preachers strike a leftist tone. In America Latino Protestants (mostly charismatic) are contested electoral terrain. Almost all Pentecostal churches are anti-abortion and anti-gay, but the UCKG has made statements that are pro-choice and comparatively gay-friendly. + +Predicting the future of such a volatile phenomenon is difficult. But wherever people are on the move, and are culturally receptive to Christianity in some form, charismatic religion will surely follow. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21688880-charismatic-christianity-thrives-among-people-move-ecstasy-and-exodus/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Pentecostalism in Brazil + +From modesty to ostentation + +How waves of migrants bring waves of religious change + +Jan 23rd 2016 | SÃO PAULO | From the print edition + + + +BRÁS, a dowdy part of central São Paulo, has welcomed many newcomers. A century ago labourers came from Italy; from the 1950s to the 1980s migrants turned up from poor drought-prone parts of north-east Brazil, seeking work. Bolivians and Haitians are the latest arrivals. This churning mix has created the compost for charismatic worship, sprouting churches which have grown from a single congregation to embrace millions. Today Brás is a showcase of Brazilian faith, including several old and new kinds of Pentecostalism. + +Data about religion in Brazil are inexact. According to the census, between 1980 and 2010 the number of Pentecostals rose from 3.9m to 25.4m. As a share of the population, it rose from 3.2% to 13.3%. But many of the 8% calling themselves “without religion” flit between Pentecostal churches. Meanwhile, the Catholic share has dropped from 89% to 65%. Pentecostals are poorer, blacker, less educated and younger than the average Brazilian, in contrast with traditional Protestant sects like Lutheranism. But they are generous. One study found that in 2002-03, when they made up 13% of Brazilians, they gave 44% of tithes collected by churches in Brazil; Catholics, then 74% of the population, paid less than a third. + +The seeds of this charismatic expansion were sown just over a century ago when two movements were started in Brazil, both by Europeans coming from Chicago where Pentecostal fire was crackling. The better known is the main Brazilian branch of the Assemblies of God, which counts nearly 70m followers around the world. The other, the Christian Congregation of Brazil, was founded in this part of São Paulo in 1910 by Luigi Francescon, a migrant originally from Italy. Though it has not spread beyond Brazil’s borders, it now boasts 2.8m followers. As Pentecostals go, it is discreet. It refrains from proselytising; Francescon believed that God would lead people to church. Members dress conservatively; women eschew masculine or revealing clothes. Its services are orderly, and it shuns politics. + +All that is in contrast to Brazil’s most famous home-grown Pentecostal group, the newish but ultra-confident Universal Church of the Kingdom of God (UCKG). The church was started in 1977 by Edir Macedo, an ex-lottery official, coinciding with a wave of urbanisation and the spread of new communications technology. Mr Macedo shuns the asceticism of early Pentecostals: Forbes magazine estimates that his assets exceed $1 billion, and he owns 16 broadcasting stations. In 1992 he was jailed for 12 days on charges of embezzlement and charlatanism, all later dropped. + +The church’s grandest building, the Temple of Solomon, stands in Brás and is modelled on the original, in ancient Jerusalem. Opened in 2014, it houses 10,000 worshippers and oozes confidence, rising 50 metres above low-rise houses and cheap hotels. Flags flutter for 200 countries where UCKG claims a presence. One recent Saturday, before a women-only service, its stadium-sized forecourt swarmed with sleek ushers. Keeping order were members of Uniforça, the church’s youth wing, in yellow-and-black polo shirts. Hostesses in white gowns and golden sashes welcomed the worshippers. + +A few hours earlier worship began at another UCKG church; the slightly smaller Brás Cathedral. Thousands of believers have been praying for “impossible” causes. “Make your wishes now!” their black pastor, with a boxer’s build but a sweet tenor, intones. “God is listening!” Reinaldo, a 50-year-old labourer, sighs that his list of requests is long; he commends the Monday job-seekers’ service to your needy-looking correspondent. + +Not everybody in Brás is Pentecostal. The modest Catholic church of Saint John the Baptist sits in the Temple of Solomon’s shadow. By comparison it is shabby; its ethos reflects altruism, not pomp. Billboards offer help with beating alcohol or avoiding dengue fever. “We feed 50 homeless each week,” says Hevilaine Pereira da Silva, the parish secretary. Playing down the outflow to rival churches, she insists: “Those who left were never the true faithful.” But they are very numerous. + +Read more on Pentecostalism around the world and Pentecostalism in South Korea. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21688878-how-waves-migrants-bring-waves-religious-change-modesty-ostentation/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Pentecostalism in South Korea + +Coming down the mountain + +From hillside vigils to gleaming megachurches + +Jan 23rd 2016 | SEOUL | From the print edition + +Happy, clapping in Yoido + +TO UNDERSTAND Pentecostalism’s changing face in a country where it is thriving, take two snapshots of religious practice in Seoul. The first shows a once-common form of prayer that is now in decline, the second a style of worship that has grown hugely in popularity. + +Start one night by joining a reverent band of 30 worshippers in the freezing darkness of a mountainside south of Seoul. These hardy faithful come to Mount Cheonggye once a week, arriving around 9pm and staying until midnight. Prayers, they say, work better in the dark, though points of light appear as some follow lyrics on phones. Each sits alone on the damp forest floor, praying loudly or singing softly, occasionally exclaiming. + +The practice of praying on high ground began in the 1950s, after the division of the peninsula and a war which sent Pyongyang’s once-lively Protestant community fleeing south. Back in the 1980s, says the group’s leader, Kim Hyon-min, up to 30,000 people would pray, often for the country, on Samgak mountain north of Seoul. But this sort of service has lost its appeal, as some Koreans have switched to glitzier Pentecostal churches and others have fallen away altogether. This is one of the few mountainsides still open to late-night prayer near Seoul, says Mr Kim. Sometimes a few hundred come on a Friday, but that hardly matches the old days when “this mountainside was packed, [and] it was difficult to find a spot”. + +People are not as hungry as before, financially or materially, says Mr Kim. “We are blessed by God but…we have moved away from God. When the first Christians came down from Pyongyang they had nothing and experienced God’s blessing. Now we have it all.” Only the toughest continue to worship in high places: “We follow what Jesus did, he prayed…on the mountain. So we do, too.” + +Next, visit the Yoido Full Gospel Church, which has come a long way since 1958, when it was started by David Yonggi Cho in his mother-in-law’s living room. It claims over 700,000 members, including daughter churches and online followers. Its main building holds 12,000—enough to make a big noise. Members seem untroubled by the founder’s suspended three-year jail sentence 2014 for a scam in which church officials were urged to buy overpriced shares from his son. + +Even on a weekday morning, the basement lobby is nicely full for an hour-long act of prayer. Elderly men hand service sheets to worshippers, mostly middle-aged women. A minister and some worshippers speak in strange tongues, raising their arms to the sky, some crying. Then crooners with microphones lead the congregation in song. Lyrics appear on screens flanking a colossal wooden cross. Most hymns laud the Holy Spirit; cameras swerve to the strongest singers. + +An elder, Chang Ing-won, prays for the country’s president and protection from North Korea’s nuclear arms. Other dangers to be averted include Islamist terrorists—and homosexuals. Another pastor explains his country’s prosperity and North Korea’s poverty with reference to the story in Genesis of how Joseph helped Egypt avert famine. Then he recalls Jeong Jae-hoon, an emigrant to America who became boss of an aerospace company, and used divine help to solve engineering problems. The service is translated into English, Japanese and Chinese; at weekends, 17 languages are available. + +For an aspiring urban community, this style of worship allows people to bring their yearnings and celebrate their achievements. In the wealthy Seoul suburb of Gangnam, there are megachurches for higher earners; Yoido represents an intermediate step on the ladder of success. + +In one respect, the two congregations, one on a deserted mountain, the other in a crowded church, are similar. Among the people they dislike are shamans, practitioners of folk religion. Some see a paradox there; shamanism and Korean Pentecostalism both invoke invisible forces and believe in clairvoyance; Korean shamanists also practise night prayer on shelter-less peaks. But Mr Kim, the night-vigil leader, says commonality does not imply friendship: “They have their own mountains.” + +Some sociologists see things differently. As Kim Sung-gun of Seowon University puts it, Korean Pentecostalism has managed to appeal to both the middle class and the poor: the former with its happy mix of Christianity with modernity and the latter with its resemblance to shamanism. If he is right, this was clearly a winning recipe. + +Read more on Pentecostalism around the world, and Pentecostalism in Brazil. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21688879-hillside-vigils-gleaming-megachurches-coming-down-mountain/print + + + + + +Previous Articles Sections Next + + + + + +Special report: The young + + + + +The young: Generation Uphill + +Jobs: The walled world of work + +Education: Train those brains + +Mobility: High hopes meet high fences + +Family: Smaller, smarter families + +Violence: Of men and mayhem + +When the young get older: Their time will come + + + + + +Articles Sections Next + +The young + +Generation Uphill + +The millennials are the brainiest, best-educated generation ever. Yet their elders often stop them from reaching their full potential, argues Robert Guest + +Jan 23rd 2016 | From the print edition + + + +SHEN XIANG LIVES in a shipping crate on a construction site in Shanghai which he shares with at least seven other young workers. He sleeps in a bunk and uses a bucket to wash in. “It’s uncomfortable,” he says. Still, he pays no rent and the walk to work is only a few paces. Mr Shen, who was born in 1989, hails from a village of “mountains, rivers and trees”. He is a migrant worker and the son of two migrants, so he has always been a second-class citizen in his own country. + +In China, many public services in cities are reserved for those with a hukou (residence permit). Despite recent reforms, it is still hard for a rural migrant to obtain a big-city hukou. Mr Shen was shut out of government schools in Shanghai even though his parents worked there. Instead he had to make do with a worse one back in his village. + +Now he paints hotels. The pay is good—300 yuan ($47) for an 11-hour day—and jobs are more plentiful in Shanghai than back in the countryside. His ambition is “to get married as fast as I can”. But he cannot afford to. There are more young men than young women in China because so many girl babies were aborted in previous decades. So the women today can afford to be picky. Mr Shen had a girlfriend once, but her family demanded that he buy her a house. “I didn’t have enough money, so we broke up,” he recalls. Mr Shen doubts that he will ever be able to buy a flat in Shanghai. In any case, without the right hukou his children would not get subsidised education or health care there. “It’s unfair,” he says. + +There are 1.8 billion young people in the world, roughly a quarter of the total population. (This report defines “young” as between about 15 and 30.) All generalisations about such a vast group should be taken with a bucket of salt. What is true of young Chinese may not apply to young Americans or Burundians. But the young do have some things in common: they grew up in the age of smartphones and in the shadow of a global financial disaster. They fret that it is hard to get a good education, a steady job, a home and—eventually—a mate with whom to start a family. + +Companies are obsessed with understanding how “millennials” think, the better to recruit them or sell them stuff. Consultants churn out endless reports explaining that they like to share, require constant praise and so forth. Pundits fret that millennials in rich countries never seem to grow out of adolescence, with their constant posting of selfies on social media and their desire for “safe spaces” at university, shielded from discomforting ideas. + + + +This report takes a global view, since 85% of young people live in developing countries, and focuses on practical matters, such as education and jobs. And it will argue that the young are an oppressed minority, held back by their elders. They are unlike other oppressed minorities, of course. Their “oppressors” do not set out to harm them. On the contrary, they often love and nurture them. Many would gladly swap places with them, too. + +In some respects the young have never had it so good. They are richer and likely to live longer than any previous generation. On their smartphones they can find all the information in the world. If they are female or gay, in most countries they enjoy freedoms that their predecessors could barely have imagined. They are also brainier than any previous generation. Average scores on intelligence tests have been rising for decades in many countries, thanks to better nutrition and mass education. + +Yet much of their talent is being squandered. In most regions they are at least twice as likely as their elders to be unemployed. Over 25% of youngsters in middle-income nations and 15% in rich ones are NEETs: not in education, employment or training. The job market they are entering is more competitive than ever, and in many countries the rules are rigged to favour those who already have a job. + +Education has become so expensive that many students rack up heavy debts. Housing has grown costlier, too, especially in the globally connected megacities where the best jobs are. Young people yearn to move to such cities: beside higher pay, they offer excitement and a wide selection of other young people to date or marry. Yet constraints on the supply of housing make that hard. + +For both sexes the path to adulthood—from school to work, marriage and children—has become longer and more complicated. Mostly, this is a good thing. Many young people now study until their mid-20s and put off having children until their late 30s. They form families later partly because they want to and partly because it is taking them longer to become established in their careers and feel financially secure. Alas, despite improvements in fertility treatment the biological clock has not been reset to accommodate modern working lives. + +Throughout human history, the old have subsidised the young. In rich countries, however, that flow has recently started to reverse. Ronald Lee of the University of California, Berkeley, and Andrew Mason at the University of Hawaii measured how much people earn at different ages in 23 countries, and how much they consume. Within families, intergenerational transfers still flow almost entirely from older to younger. However, in rich countries public spending favours pensions and health care for the old over education for the young. Much of this is paid for by borrowing, and the bill will one day land on the young. In five of 23 countries in Messrs Lee and Mason’s sample (Germany, Austria, Japan, Slovenia and Hungary), the net flow of resources (public plus private) is now heading from young to old, who tend to be richer. As societies age, many more will join them. + +Politicians in democracies listen to the people who vote—which young people seldom do. Only 23% of Americans aged 18-34 cast a ballot in the 2014 mid-term elections, compared with 59% of the over-65s. In Britain’s 2015 general election only 43% of the 18-24s but 78% of the over-65s voted. In both countries the party favoured by older voters won a thumping victory. “My generation has a huge interest in political causes but a lack of faith in political parties,” says Aditi Shorewal, the editor of a student paper at King’s College, London. In autocracies the young are even more disillusioned. In one survey, only 10% of Chinese respondents thought that young people’s career prospects depended more on hard work or ability than on family connections. + +All countries need to work harder to give the young a fair shot. If they do not, a whole generation’s talents could be wasted. That would not only be immoral; it would also be dangerous. Angry young people sometimes start revolutions, as the despots overthrown in the Arab Spring can attest. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21688591-millennials-are-brainiest-best-educated-generation-ever-yet-their-elders-often/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Jobs + +The walled world of work + +Youth unemployment is a massive waste of resources + +Jan 23rd 2016 | From the print edition + + + +CRISTINA FONSECA CAUGHT pneumonia a week before her final exams. “I thought I would die,” she recalls. When she recovered, she reassessed her priorities. As a star computer scientist, she had lots of job offers, but she turned them all down. “I realised that I didn’t want to spend my life doing anything that was not really worthwhile.” + +She decided to start her own business. After a year of false starts she co-founded a company called Talkdesk, which helps other firms set up call centres. By using its software, clients can have one up and running in five minutes, she claims. + +Ms Fonseca’s success helps explain why some people are optimistic about the millennial generation in the workplace. At 28, she is providing a completely new service in support of another service that did not exist until quite recently. She lives in Portugal but does business all over the globe. + +She sounds very much like several other young entrepreneurs your correspondent met while researching this report, such as a Russian who set up a virtual talent agency for models (castweek.ru); an Asian-American electric cellist who teaches people how to make new sounds using a laptop (danaleong.com); and a Nigerian starting a new publishing house for African romantic novelists (ankarapress.com). + +Elite youth today are multilingual, global-minded and digitally native; few can remember life before the internet or imagine how anyone coped without it. The best-known of them changed the world before they turned 30, including Facebook’s Mark Zuckerberg, Google’s Sergey Brin and Larry Page, and Instagram’s Kevin Systrom. The global economy works well for such people. Digital startups require far less capital than, say, building a factory, and a brilliant piece of software can be distributed to millions at minimal cost. So today’s whippersnappers of great wealth have made their money much faster than the Rockefellers and Carnegies of old. + +But the world of work has been less kind to other young folk. Florence Moreau, a young architect in Paris, had the double misfortune to leave university in 2009, when the world economy was on its knees; and to be French. “I really need a full-time, permanent job,” she says. Under France’s 3,800-page labour code, workers on permanent contracts receive generous benefits and are extremely hard to get rid of. So French firms have all but stopped hiring permanent staff: four-fifths of new employees are on short-term contracts. Ms Moreau has had eight jobs, none lasting for longer than 16 months. With a small child at home, she has to keep looking for the next one. “It’s tiring,” she sighs. One employer suggested that she should become an “entrepreneur”, doing the same job as before but as a contractor, so that the firm could keep her on indefinitely without incurring heavy ancillary costs. She refused. + +Insiders v outsiders + +Youth unemployment in France (using the ILO definition of youth as 15-24-year-olds) is 25% and has been scandalously high for three decades. Occasionally the government tinkers with labour rules, but voters have little appetite for serious reform. Ms Moreau rejects the idea that insiders enjoy too many legal protections, and that this is why outsiders find it so hard to break in. She blames exploitative employers, and doubts that any government, left or right, will fix the problem. + + + +Rigid labour rules are tougher on young workers than older ones. People without much experience find it harder to demonstrate that they are worth employing. And when companies know they cannot easily get rid of duds, they become reluctant to hire anyone at all. This is especially true when the economy is not growing fast and they have to bear the huge fixed cost of all the older permanent employees they took on in easier times. + +France is not alone in having such problems. In the euro area, Greece, Spain and Italy all have rules that coddle insiders and discourage outsiders. Their youth unemployment rates are, respectively, 48%, 48% and 40%. Developing countries, too, often have rigid labour markets. Brazilian employees typically cost their employers their salary all over again in legally mandated benefits and taxes. South Africa mixes European-style labour protections with extreme racial preferences. Firms must favour black job applicants even if they are unqualified, so long as they have the “capacity to acquire, within a reasonable time, the ability to do the job”. Some 16% of young Brazilians and a stunning 63% of young South Africans are unemployed. Globally, average youth unemployment is 13% compared with the adult rate of 4.5%. Young people are also more likely than older ones to be in temporary, ill-paid or insecure jobs. + +The first ten years are essential. They shape careers in the long term. This is when people develop the soft skills that they do not pick up at school + +Joblessness matters for several reasons. First, it is miserable for those concerned. Second, it is a waste of human potential. Time spent e-mailing CVs or lying dejected on the sofa is time not spent fixing boilers, laying cables or building a business. Third, it is fiscally ruinous. If the young cannot get a foot on the career ladder, it is hard to see how in time they will be able to support the swelling number of pensioners. Fourth, joblessness can become self-perpetuating. The longer people are out of work, the more their skills and their self-confidence atrophy, the less appealing they look to potential employers and the more likely they are to give up and subsist on the dole. + +This “scarring” effect is worse if you are jobless when young, perhaps because that is when work habits become ingrained. Thomas Mroz of the University of North Carolina, Chapel Hill, and Tim Savage of Welch Consulting found that someone who is jobless for a mere six months at the age of 22 will earn 8% less at 23 than he otherwise would have done. Paul Gregg and Emma Tominey of the University of Bristol found that men who were jobless in their youth earn 13–21% less at age 42. And David Bell of the University of Stirling and David Blanchflower of Dartmouth College found that people who were unemployed in their early 20s are less happy than expected even at the age of 50. + +“The first ten years are essential. They shape careers in the long term,” says Stefano Scarpetta of the OECD, a think-tank for mostly rich countries. This is when people develop the soft skills that they do not pick up at school, such as conscientiousness, punctuality and teamwork. + +Over the next decade more than 1 billion young people will enter the global labour market, and only 40% will be working in jobs that currently exist, estimates the World Bank. Some 90% of new jobs are created by the private sector. The best thing for job creation is economic growth, so policies that promote growth are particularly good for the young. Removing regulatory barriers can also boost job creation. Mr Scarpetta applauds recent attempts in Spain, Italy and Portugal to make labour rules a bit more flexible, but argues that such laws should generally be much simpler. For example, it would be better to scrap the stark distinction between temporary and permanent contracts and have only one basic type of contract in which benefits and job security accumulate gradually. Denmark shows how a labour market can be flexible and still give workers a sense of security. Under its “flexicurity” system companies can hire and fire easily. Unemployed workers are supported by the state, which helps them with retraining and finding new jobs. + +Trade unions often favour a minimum wage. This can help those who already have jobs, but if it is set too high it can crowd out those with the fewest skills and the least experience, who tend to be young. It makes more sense to subsidise wages through a negative income tax, thus swelling take-home pay for the lowliest workers without making them more expensive for the employer. But this costs taxpayers money, so many governments prefer to raise the legal minimum wage, passing the cost on to others. America’s Democratic Party is pushing to double the federal minimum wage, to $15 an hour—a certain job-killer. + +Putting the tyke into tycoon + +Making it easier for young people to start their own business is essential, too. They may be full of energy and open to new ideas, but the firms they create are typically less successful than those launched by older entrepreneurs. The young find it harder to raise capital because they generally have a weaker credit history and less collateral. They usually also know less about the industry they are seeking to enter and have fewer contacts than their older peers. A survey by the Global Entrepreneurship Monitor found that businesses run by entrepreneurs over the age of 35 were 1.7 times as likely to have survived for more than 42 months as those run by 25-34-year-olds. + +Young sub-Saharan Africans show the greatest enthusiasm for starting their own business: 52% say they would like to, compared with only 19% in rich Western countries. This is partly because many have little choice. There are fewer good jobs available in poor countries, and in the absence of a welfare state few people can afford to do nothing. + +Bamaiyi Guche, a Nigerian 17-year-old, is a typical example of a poor-country entrepreneur. He goes to school from 8 to 12 every morning, then spends the afternoon in the blazing sun selling small water sachets to other poor people without running water in their homes. He makes $1 a day, half of which goes on his school fees. He wants to be a doctor one day. + +Some youngsters from well-off families forge careers as “social entrepreneurs”, seeking new ways to do good. Keren Wong, for example, recognises that she was “born into privilege”. (Her parents were prosperous enough to support her at Cornell University.) A Chinese-American, she now runs a non-profit called BEAM which connects teachers in rural Chinese schools so they can swap ideas for teaching more effectively. + +Alas, there is a huge mismatch everywhere between the skills that many young people can offer and the ones that employers need. Ms Fonseca says she cannot find the right talent for Talkdesk. “I need very good engineers, very good designers and people who speak very good English. But there aren’t enough of them,” she says. As economies grow more sophisticated, demand for cognitive skills will keep rising. The world’s schools are not even close to meeting it. + +The first ten years are essential. They shape careers in the long term. This is when people develop the soft skills that they do not pick up at school + +The first ten years are essential. They shape careers in the long term. This is when people develop the soft skills that they do not pick up at school + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21688588-youth-unemployment-massive-waste-resources-walled-world-work/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Education + +Train those brains + +Practically all young people now go to school, but they need to learn a lot more there + +Jan 23rd 2016 | From the print edition + +Sure beats media studies + +JASCHA DÖKER IS a big man with a big beard, a nose ring and tattoos. His father is Turkish, his mother Austrian. He works as an electrician at the Salzburg Festival, a celebration of classical music in Mozart’s home town. He is not an opera fan—he likes the orchestra but not the singing—yet he does his bit to bring Austrian high culture to a global audience. + +As well as working, Mr Döker, who is 18, attends the Landesberufsschule, a vocational school. Classes mix theory with hands-on practical work. One classroom has an oven and a dishwasher; another has a mock-up of part of a production line; another lets students control an imaginary “smart building”. + +The school moves with the times. “We used to train lots of television and radio repair men, but now people just throw these things away,” says Eberhard Illmer, the director. The basic philosophy, though, remains the same: the school works closely with local employers, who send their apprentices there to ensure that they acquire skills that are in demand. Asked if he fears unemployment, Mr Döker says: “I’m not worried about that.” + +Vocational schools in Germany and Austria have a fine reputation, and for good reason. They recognise that not every young person will benefit from a purely academic education. “When I was at school I got bored,” says Mr Döker, “but the technical education here is great.” Youth unemployment in both countries is half the average for the euro area. + +Not all education systems serve the young so well. At a village meeting in the Indian state of Uttar Pradesh, parents were told that after attending the village school for five years, most of their children could not read a simple story. Many could not even recognise the letters of the alphabet. + +This came as a shock. One parent stood up and said to the headmaster: “You have betrayed us. I have worked like a brute my whole life because, without school, I had no skills other than those of a donkey. But you told us that if I sent my son to school, his life would be different from mine. For five years I have kept him from the fields and work…only now I find out that he is 13 years old and doesn’t know anything. His life won’t be different. He will labour like a brute, just like me.” The headmaster retorted: “It is not our fault. We do what we can with your children. But you [are] right, you are brutes and donkeys. The children of donkeys are also donkeys.” + +One of the people at the meeting was Lant Pritchett, an American economist now at Harvard. He argues that Indian public schools are wretched because they are unaccountable. They have to meet government targets for enrolling pupils, but they do not have to demonstrate to parents or anyone else that the children are learning anything. Barely half the teachers bother to show up on any given day. A study cited in Mr Pritchett’s book, “The Rebirth of Education: Schooling Ain’t Learning”, found that after eight years of school, 60% of Indian children could not use a ruler to measure a pencil. + +Sure beats media studies + +The good news is that in recent decades all countries, rich or poor, democratic or despotic, have made huge strides in getting young people into classrooms. In 1950 the average adult over 15 had received just three years of schooling; by 2010 the figure had risen to eight. In rich countries it went up from six to 11 years over that period, and in poor ones it shot from two to seven. These are remarkable figures. Modern Zambians or Haitians spend longer in school than the average Italian did in 1960. Furthermore, university, once the preserve of a tiny elite, has become a rite of passage for the global middle class. Some 41% of 25-34-year-olds in rich countries now have tertiary education, up from 26% in 2000. Developing countries are catching up fast. + +The bad news is that how much people actually learn in classrooms and lecture halls varies widely. In developing countries, which account for the majority of pupils, many schools are atrocious. PISA, the OECD’s international benchmark for 15-year-olds’ attainment in science, maths and reading, does not cover the poorest nations, but results in several low-to-middle-income countries are disappointing. A Finnish student is 170 times more likely than a Mexican one to be a “top performer” in the PISA science test. In the maths test, more than 60% of the Brazilians would be among the bottom 10% in South Korea. In most developing countries ranked by PISA, more than half the students achieved only very basic competence in maths. In rich countries only a fifth did this badly. + +Those who cannot read or manipulate numbers earn less. Robert Barro of Harvard and Jong-Wha Lee of Korea University estimate that, on a global average, the wages of those who have completed secondary school are about 77% higher than of those with only primary schooling, and college graduates make 240% more. If developing countries are to realise the “demographic dividend” from a young, energetic population, those young people will have to be educated better. + +Since the biggest gaps in test scores are between rich countries and poor ones, you might think that money played a big part. Yet “resources per se have little to no statistically significant impact” on how much pupils learn, concludes Mr Pritchett. Rich countries have doubled or tripled spending on schools since around 1970, to little effect. America spends twice as much as Poland, yet both countries’ 15-year-olds get similar results on PISA. South Africa spends more than Kenya but does much less well. + +Many educational fads are harmful. One survey found that 85% of American parents thought they should praise their children to bolster their self-esteem, but studies suggest that undeserved praise makes children complacent. Amanda Ripley, the author of “The Smartest Kids in the World”, describes how an American student visiting one of Finland’s outstanding schools was surprised to see so few gleaming trophies on display. + +What works + +Good school systems come in many shapes. Sweden and the Netherlands have voucher-like systems, where parents can spend public money on the private or public schools of their choice. South Korea has a centralised system in which public-school students also use private crammers to get through a high-stakes exam at 18. Finland went from also-ran to world-beater by insisting that only the brightest graduates could become teachers, whereas in America “almost anyone who claim[s] to like children” can find a place on a teacher-training course, says Ms Ripley. And what works in one country may not travel easily to another. For example, Dieter Euler of the University of St Gallen found that Teutonic vocational schools cannot easily be replicated in other countries where governments, firms and unions do not have the same close relationship. + +The quality of teachers clearly matters, and in countries with great schools they tend to be well paid. But if the system is dysfunctional, offering them more money is pointless. In parts of India teachers’ pay is so high that people who have no interest in teaching pay large bribes to be hired. + +Nearly all systems, public or private, produce some excellent schools. To improve results across the board, Mr Pritchett urges decentralisation. Central governments should set standards and make sure that private schools are not preaching jihad, but headmasters should have the power to hire and fire teachers and good schools should be allowed to drive out bad ones. Crucially, performance should be independently measured. Brazil’s education reforms after 1998 loosened federal control and let the money follow the child. As a result, Brazilian students achieved the largest gain on PISA maths tests in 2003-2012. + +Overall, young people are better educated than ever before. But as H.G. Wells once put it, history is “a race between education and catastrophe”. No nation can afford to slow down. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21688592-practically-all-young-people-now-go-school-they-need-learn-lot-more/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Mobility + +High hopes meet high fences + +Moving around is good for young people, but governments stand in their way + +Jan 23rd 2016 | From the print edition + + + +WHEN TENG PENGFEI was 16, he asked his parents for money to travel around China. They refused, so he threatened to get on his bike and pedal hundreds of miles to Beijing anyway. “You can’t stop me,” he told them. They paid up. + +After school he went to Griffith University in Australia. He was an only child, and at first his parents provided financial support. Eventually he earned enough from part-time jobs to pay his own bills. He imported exercise machines from China and sold them on eBay, making “quite a lot of money”. + +He moved back to China because his parents were unwell—a common reason for returning—and found a job in a bank, but did not enjoy it. So he left and started his own company. He now manages TNT Partners and CareerFrog, firms that help Chinese who study abroad find jobs back in China. + + + +Young adults like Mr Teng are more mobile than any other age group. They are old enough to leave the parental home but have not yet acquired a family of their own to tie them down. They can fit their lives into a small bag—especially now that their book and music collections are stored in the cloud—and catch the next bus to adventure. A global Gallup poll found that 19% of 15-29-year-olds wanted to move permanently to another country—more than twice the proportion of 50-64-year-olds and four times the share of over-65s who felt the same way (see chart). + +Young adults are more footloose within their own country, too. The average American moves house 6.4 times between the ages of 18 and 45 but only 2.7 times thereafter, the census shows. And in developing countries, young people are 40% more likely than their elders to migrate from the countryside to a city. + +Such mobility is a good thing. In the absence of a war or flood, it is voluntary. People move because they think they will be better off elsewhere. Usually they are right. If they are wrong, they can always return home. + +Moving tends to make people more productive, especially if it is from a poor country to a rich one. Michael Clemens of the Centre for Global Development, a think-tank, estimates that if a typical migrant from a poor to a rich country is allowed to work, he can earn three to five times more than he did at home. (And this assumes that he learns no new skills, though he probably will.) To win such a prize, migrants will take huge risks. A study by Linguère Mbaye of the African Development Bank found that those heading from Senegal to Europe were prepared to accept a 25% chance of dying in the attempt. + +Moving tends to make people more productive, especially if it is from a poor country to a rich one + +If all international borders were completely open, global GDP would double, Mr Clemens estimates. For political reasons, that is very unlikely to happen. In America, liberal immigration bills die in Congress. In Europe, the surge of refugees from Syria and the Paris terror attacks have reinvigorated xenophobic political parties and jeopardised free movement within the EU. + +Voters fret that some immigrants might be terrorists, which very occasionally turns out to be true. They also fear that the incomers will poach jobs from the native-born. Some studies find that unskilled migrants depress pay by a tiny amount for unskilled locals. But overall immigrants bring complementary skills, new ideas and entrepreneurial zest, so they tend to boost growth. Also, because they are mostly young, healthy and working, they typically pay more in taxes than they receive in benefits. + +Movement within countries follows a similar pattern. Migrants, again mostly young, go where the best jobs are. This has led to rapid urbanisation. Today 54% of the world’s people live in cities, up from 30% in 1950. The UN predicts that by 2050 the proportion will rise to 66%. Poor countries are urbanising fastest because they started off more rural. In sub-Saharan Africa 64% of young people who work scratch a living from the soil; in South Asia it is 45%. Almost any city job pays better than work on the land: in developing countries, non-farm workers add four times as much value as agricultural workers. In China, urban wages are three times rural ones. + +Westerners looking at the crowded shantytowns around Manila or Nairobi cannot imagine why anyone would leave a picturesque village to live there. Migrants see it differently. They are giving up lives of back-breaking toil, stifling tradition and periodic hunger. They are moving to places with bright lights, better wages and infinite variety. Victor Daniel left Yobe, a cotton-growing state in Nigeria, and moved to Lagos, the country’s commercial capital, when he was 18. Now he works in a bar for $110 a month plus a bed. “I needed to find my own freedom,” he says. “Life is better in Lagos.” + +In rich countries young people—especially the brightest—are clustering in big, vibrant cities. A quarter of Londoners are aged 25-34, for example, nearly twice the share in the rest of England. A survey of students at Harvard found that only 26% planned to return to their home state after graduation; 64% planned to work in New York, California, Massachusetts or Washington, DC. + +Networks and soulmates + +In the knowledge economy, it pays to be close to lots of other bright people to bounce ideas off. It also pays to be plugged into global networks—and the cities that are most attractive to native youngsters are often also the most attractive to immigrants. Nearly half of Canada’s immigrants live in Toronto, for example, and 40% of America’s live in New York, Los Angeles, Miami, Chicago or San Francisco. Another attraction of big cities is that they house vast numbers of single adults, so they are great places to meet a soulmate. + +Both internal and cross-border migration are often temporary. Migrants may stay for a few years and then take their savings, experience and contacts home with them, as Mr Teng did. But governments try to discourage them from moving in the first place. Most obviously, they erect barriers at national borders to keep foreigners out. More surprisingly, they try to deter internal migration, too. China’s hukou system is the most egregious example, but there are many others. When the UN surveyed 185 countries in 2013, it found that 80% of governments had policies to reduce migration from the country to the cities. + +Some such policies—such as promoting rural development—are benign. Others are not. India makes it hard for poor people to obtain public services if they move to a new state. Indonesia used to move inhabitants from densely populated Java to more remote islands, stopping only in June 2015. + +More subtly, onerous planning rules in almost all countries block the construction of new homes in the cities where young people most want to live. Property owners, who tend to be older, favour these rules because they make their homes more valuable. (Christian Hilber and Wouter Vermeulen estimate that they double the cost of property in Britain, for example.) + +Hence the refrain heard from young people everywhere: that housing is unaffordable. Hence, too, the large number who still live reluctantly with their parents. American women aged 18-34 are more likely to live with parents or relatives now than at any point since 1940. “I don’t know anyone my age who lives in central London without [parental] support,” says Peter Fuller, an intern at a bank. “I’m 24. I need a sense of independence. It’s hard to get that when you’re living at home.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21688584-moving-around-good-young-people-governments-stand-their-way-high-hopes-meet/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Family + +Smaller, smarter families + +Love and marriage have become more individualised + +Jan 23rd 2016 | From the print edition + +HO YI JIAN sits in a trendy café in Kuala Lumpur, swiping through images of single women on Tinder, a dating app created by millennials. On the balcony outside, models in Islamic headscarves are taking part in a fashion shoot. + +Malaysia, like much of the world, is a confusing mixture of piety and tradition on the one hand and secular individualism on the other. In the countryside sharia courts sentence adulterers to canings. City people are more liberal. Mr Ho, who works from home as a freelance researcher, uses his smartphone to find single women who live nearby. But he observes that unlike Westerners, Malaysians use the app to arrange dates, not hook-ups. + +Young people’s experience of sex, love and marriage is undergoing gigantic shifts. The most visible one is that dating apps allow them to fish in a larger pond than their parents did. Three other trends are less obvious but more important. First, puritanical attitudes to sex (and the variety of human yearnings) are mostly in retreat. Second, marriage is evolving from a contract between families into a contract between individuals. And third, couples are having fewer children, later. + +In some parts of the world the traditional approach to all these things remains dominant. Sex before marriage is still frowned upon or even outlawed. Gay people are persecuted. Marriages are arranged between families, sometimes without the bride’s (or, less commonly, the groom’s) consent. Women give birth early and often. + +Consider the story of Aisha Abdullai. She lives in north-east Nigeria, where women have on average 6.3 babies. Ms Abdullai was forced to marry young. “My stepmother did not like me,” she recalls, “so they thought it was better to marry me off. He was 50 and I was 13. I kept running away but they brought me back to him. He was lying with me when I was 13. I didn’t start my period until I was 14, and at 15 I got pregnant.” Her education ended abruptly. She spent all day cooking, cleaning and caring for her stepchildren. + +Her husband eventually divorced her for refusing to sleep with him any more. Her child died. Her parents made her marry another man, with whom she had two more children. His family did not like her and he, too, divorced her. She is angry at her parents for making her marry men she disliked. Had she remained in school, she says, she “could have done something” with her life. She is 28. + +Not now, darling + +Stories like Ms Abdullai’s are growing rarer. The proportion of young women who married before they were 15 fell from 12% worldwide in 1985 to 8% in 2010, according to UNICEF. The share who wed before their 18th birthday fell from 33% to 26%. Women are becoming more educated, which makes them less likely to put up with forced or early marriages. + + + +Arranged unions are declining, too. At the beginning of the 20th century at least 72% of marriages in Asia and Africa were arranged by the families. That figure has fallen by 40% or more, estimates Gabriela Rubio of the University of California, Los Angeles. In some countries, such as China, Japan and Indonesia, they have all but vanished. “It’s my marriage, not my family’s,” says Lu Xinyan, a Chinese student. + +In other places, such as India, Pakistan and Bangladesh, arranged marriages (defined broadly) are still at least 95% of the total. But they are evolving. In India, parents used to suggest a suitable match and their children could say no. Now, at least among educated urbanites, the children are more likely to find their own partners, whom the parents may veto. This is not yet Western-style individualism, but it is a big step towards it. + +An argument often advanced for arranged marriages is that parents can make a more clear-headed choice, unfogged by lust, so they can filter out the charming drunkard or the selfish beauty. Yet the institution has always had an economic rationale, too. Marriages cement ties between families. This can act as a kind of insurance, Ms Rubio argues. If one family raises pigs and the other grows rice, the pig farmers can help the rice-growers in years when the rice crop fails, and vice versa. + +As societies grow richer, the calculation changes. Economic security comes from staying longer in school, not forming alliances with pig farmers. So young people are marrying later, in order to complete their own education, and having fewer children, so they can lavish more education on each of them. + + + +A preference for smaller families has taken hold nearly everywhere, even in poorer countries. The global fertility rate has halved since 1960, from five babies per woman to 2.5. The pressure to educate children is bound to intensify further as technology advances, so families will keep getting smaller. “I’d like to have two children eventually. I’m not sure I could afford more and still give them a good education,” says Hiqmar Danial, a student in Malaysia, where the fertility rate has fallen from six to two since 1960. + +The spread of liberal attitudes to love and marriage empowers individuals, especially young women, but it causes its own complications. One is the increasing fragility of the nuclear family, especially in the rich world. The proportion of children born outside marriage in OECD countries tripled between 1980 and 2007, from 11% to 33%, and divorce rates doubled between 1970 and 2009. Many women can now walk out of disagreeable or abusive marriages, so men have to treat their wives better. But the lack of a stable family can be disastrous for children. Those who do not live with two biological parents do worse at school, earn less as adults and raise less stable families of their own. In rich countries, working-class families have grown far more fissile than middle-class ones. Only 9% of births to American women with college degrees are outside marriage; for high-school dropouts the figure is 57%. + +The most educated and ambitious couples delay having children the longest. Some leave it too late and find they cannot have any. The only way for young women to combine high-powered careers with parenthood is for men to share domestic tasks equally, says Cristina Fonseca, the young founder of Talkdesk, the Portuguese technology firm. Men her age, she explains, “are clearly adapting. They cook and do laundry.” Surveys bear this out. American fathers who live with their kids do 2.6 times as much child care and housework as they did in 1965, according to the Pew Research Centre. + +Some scholars fret that young Westerners are so self-absorbed that they find parenting harder than their own parents did. Keith Campbell, Craig Foster and Jean Twenge analysed data from 48,000 respondents and found that once children arrive, young American couples today suffer a greater drop in marital satisfaction than previous generations did. “When you’re used to calling the shots, and then the baby dictates everything, it’s hard to keep your sanity, much less get along with your spouse,” writes Ms Twenge, a professor at San Diego State University. + +Another possibility is that middle-class parents are stressed because they set themselves such high standards. They invest more time in their children than their own parents did, shuttling them to extra maths and flute lessons in the hope that they will get into a good university. Bryan Caplan, the author of “Selfish Reasons to Have More Kids”, argues that middle-class parents in rich countries would be happier, and do their children no harm, if they let them run wild a bit more. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21688585-love-and-marriage-have-become-more-individualised-smaller-smarter-families/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Violence + +Of men and mayhem + +Young, single, idle males are dangerous. Work and wedlock can tame them + +Jan 23rd 2016 | From the print edition + +A bad day in Nigeria + +IN AUGUST 2014 Boko Haram fighters surged through Madagali, an area in north-east Nigeria. They butchered, burned and stole. They closed schools, because Western education is sinful, and carried off young girls, because holy warriors need wives. + +Taru Daniel escaped with his father and ten siblings. His sister was not so lucky: the jihadis kidnapped her and took her to their forest hideout. “Maybe they forced her to marry,” Mr Daniel speculates. Or maybe they killed her; he does not know. + +He is 23 and wears a roughed-up white T-shirt and woollen hat, despite the blistering heat in Yola, the town to which he fled. He has struggled to find a job, a big handicap in a culture where a man is not considered an adult unless he can support a family. “If you don’t have money you cannot marry,” he explains. Asked why other young men join Boko Haram, he says: “Food no dey. [There is no food.] Clothes no dey. We have nothing. That is why they join. For some small, small money. For a wife.” + +Some terrorists are born rich. Some have good jobs. Most are probably sincere in their desire to build a caliphate or a socialist paradise. But material factors clearly play a role in fostering violence. North-east Nigeria, where Boko Haram operates, is largely Islamic, but it is also poor, despite Nigeria’s oil wealth, and corruptly governed. It has lots of young men, many of them living hand to mouth. It is also polygamous: 40% of married women share a husband. Rich old men have multiple spouses; poor young men are left single, sex-starved and without a stable family life. Small wonder some are tempted to join Boko Haram. + +Beware the youth bulge + +Globally, the people who fight in wars or commit violent crimes are nearly all young men. Henrik Urdal of the Harvard Kennedy School looked at civil wars and insurgencies around the world between 1950 and 2000, controlling for such things as how rich, democratic or recently violent countries were, and found that a “youth bulge” made them more strife-prone. When 15-24-year-olds made up more than 35% of the adult population—as is common in developing countries—the risk of conflict was 150% higher than with a rich-country age profile. + +If young men are jobless or broke, they make cheap recruits for rebel armies. And if their rulers are crooked or cruel, they will have cause to rebel. Youth unemployment in Arab states is twice the global norm. The autocrats who were toppled in the Arab Spring were all well past pension age, had been in charge for decades and presided over kleptocracies. + +Christopher Cramer of the School of Oriental and African Studies in London cautions that there is no straightforward causal link between unemployment and violence. It is not simply a lack of money that spurs young men to rebel, he explains; it is more that having a job is a source of status and identity. + +Throughout history, men have killed men roughly 97 times more often than women have killed women. The reasons are biological. In all cultures, the appetite for mayhem peaks in the late teens or early 20s, “just when males are competing more fiercely for mating opportunities, as in other mammals”, notes Matt Ridley in “The Evolution of Everything”. In “Homicide”, Martin Daly and Margo Wilson put it like this: “Any creature that is recognisably on track towards complete reproductive failure must somehow expend effort, often at risk of death, to try to improve its present life trajectory.” Wars, alas, give young men a chance to kill potential rivals (ie, other men) and seize or rape women. From Islamic State to the Lord’s Resistance Army in Uganda, rebel forces often let their troops treat females as spoils. + +In some parts of India and China, where girl babies are routinely aborted, millions of young men are doomed to eternal bachelorhood. Mr Urdal found that Indian states with surplus males were more likely to suffer armed conflict—and by 2050 India could have 30% more single men hoping to marry than single women. In China, too, areas with extra men tend to have higher rates of rape and forced prostitution. + +The polygamy powder keg + +Any system that produces a surplus of single men is likely to be unstable. Polygamous societies suffer “higher rates of murder, theft, rape, social disruption, kidnapping (especially of females), sexual slavery and prostitution,” note Joseph Henrich, Robert Boyd and Peter Richerson in “The Puzzle of Monogamy”. The Mormon church banned polygamy in 1890 but some breakaway enclaves still practise it. They solve the problem of surplus males by expelling teenage boys from their isolated communities for minor infractions. In southern Utah your correspondent met Kevin (he would not give his surname), who was thrown out of such a sect at 17 for playing video games. He said it was odd how the elders almost never expelled girls. + +Nigeria’s new president is determined to crush Boko Haram militarily. Meanwhile, other organisations such as the American University of Nigeria are trying to prevent young people from turning to violence. Previously radical imams preach peace; others teach job skills. Will this work? + +A study by Christopher Blattman of Columbia University and Jeannie Annan of the International Rescue Committee offers hope. They looked at more than 1,000 ex-fighters in Liberia, where a civil war had just ended. This was not a promising group. Besides knowing how to kill people, they had few skills. Only 27% of its members were literate, even though they had spent an average of six years at school. All were making a living from crime: mining illegally or stealing rubber from plantations. And war was beckoning them again. A conflict had broken out across the border in Ivory Coast, and both sides were recruiting Liberian veterans with signing bonuses of $500-$1,500—a fortune for men who were making an average of $47 a month. + +There was every reason to expect that these men would soon dig up their buried AK-47s. But a non-profit called Action on Armed Violence offered half the men a package of agricultural training, counselling and farming kit (such as seeds, piglets and tools) worth $125, in two instalments. The results were striking. The ex-fighters who were helped to farm got better at it, so they spent more time farming and less on illicit work. They made $12 a month more than the control group and showed less interest in going to fight in Ivory Coast. They were 51% less likely to say they would sign up as mercenaries for $1,000 and 43% less likely to say they had met with recruiters. + +As the world ages, it is becoming more peaceful. Since medieval times the murder rate in most Western countries has fallen by a factor of nearly 100, estimates Stephen Pinker in “The Better Angels of Our Nature”. The past decade has seen the fewest war deaths of any in recorded history. Hard though it is to believe in the age of Islamic State, the world is heading for what Mr Urdal calls a “geriatric peace”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21688587-young-single-idle-males-are-dangerous-work-and-wedlock-can-tame-them-men-and-mayhem/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +When the young get older + +Their time will come + +Ignore the moral panic about lazy, self-obsessed millennials. The world will be fairer when they run it + +Jan 23rd 2016 | From the print edition + +They’re so vain; I bet they think this article’s about them + +SOME PEOPLE DESPAIR of the young. Books such as “Generation Me” by Jean Twenge and “The Road to Character” by David Brooks describe young Americans as deluded narcissists. Having constantly been told they are special, they are now far more likely than their elders to believe that “if I ruled the world, it would be a better place” or that “somebody should write a biography of me.” + +They are materialistic, too. About 65% of American college students expect to become millionaires, and some are not too fussy about how they get to the top. In one study of high-school students, 95% admitted to having cheated in tests. The millennials’ expectations of life are so out of kilter with reality that “they will probably get less of what they want than any previous generation,” frets Ms Twenge. + +Moral panic is not confined to America. Chinese parents worry that their “little emperors” have grown up lazy, spoiled and promiscuous. When a video of a young couple having sex in the fitting room of a trendy clothes shop in Beijing went viral last year, officials vowed to arrest the culprits, spluttering that their behaviour was “against socialist values”. Young Beijingers just laughed; a number made pilgrimages to the store to take defiant selfies outside. + + + +Where some see a generation in crisis, others think the young are adapting quite well to the challenges of a changing world. They flit from job to job not because they are fickle but because job security is a thing of the past. They demand flexible hours and work-life balance because they know they don’t have to be in the office to be productive. They spend six hours a day online because that is how they work, and also how they relax. Their enthusiasm for new ideas (and lack of spare cash) has kickstarted money-saving technologies from Uber to WhatsApp. They take longer to settle down and have children, but so what? They will also be working far later in life than their parents did. + +What will the world be like when today’s young people are in charge? Some worry that it will be more cynical. In China, for example, eight out of ten students say they want to join the Communist Party, but of those who do, only 4% are motivated by a belief in the system, observes Eric Fish in “China’s Millennials: The Want Generation”. Party membership opens doors, and millennials grab opportunities where they can. + +Others take a cheerier view. When the millennials rule, society will be “more meritocratic and better governed,” says a young journalist in Malaysia, where the 62-year-old prime minister has given a confusing explanation of why nearly $700m was found in his bank accounts. (He denies wrongdoing.) When the millennials rule, the world may also be greener. They have shown great ingenuity in using resources more efficiently by sharing cars, bikes and spare rooms with strangers. + +The world will surely grow socially more liberal. Young people nearly everywhere are more comfortable with homosexuality than their elders, partly because they are less religious but mostly because they know more openly gay people. In rich countries the debate is practically over; in developing nations the liberals are winning. A Pew poll in 36 countries found the young to be more tolerant than the old in 30 of them, often dramatically so: 18-29-year-old South Koreans were four times likelier to be gay-friendly than those over 50. Most millennials in China and Brazil now approve of same-sex marriage, an idea unheard of a generation ago. Even more agree that “people are exploring their sexuality more than in the past.” + +The young are less racist than the old, too. In a survey by JWT, an advertising agency, 86% of youngsters in Brazil, Russia, India and China agreed that “my generation is accepting of people from different races,” and 76% said they differed from their parents on this topic. American students are so sensitive to any hint of racism that they sometimes see bigotry where there is none. When a professor at Yale suggested that students should be free to choose their own Halloween costumes, activists furiously protested that without strict rules, someone might wear an offensive one. Still, today’s oversensitivity is vastly preferable to the segregation of yesteryear. + +Tolerance is unlikely to erode as the millennials grow older. They may grow more fiscally conservative as they earn more and notice how much of their pay is gobbled up by tax. They may move to the suburbs and buy a car when they have children. But they will not suddenly take against their friends who look different or love differently. + +In several countries the young are warier than their elders of their governments using military force, partly because they are the ones who get drafted. Young Chinese are less likely than their parents to favour sending in troops to settle territorial disputes, despite the Communist Party’s efforts to fire them up with an aggrieved nationalism. American millennials see global warming as a bigger threat than China or Islamic fundamentalism; for older Americans it is the other way around. + +In every generation, the young are the first to take to the streets to demand reform. Sometimes their fury leads nowhere, but autocrats still fear it. That is why China’s government rolled tanks over the Tiananmen Square protesters, and why it censors social media today. Young Africans, for their part, may not put up indefinitely with gerontocrats such as 91-year-old Robert Mugabe of Zimbabwe and 82-year-old Paul Biya of Cameroon. + +In democracies, young people will some day realise that signing online petitions is no substitute for voting (just as their elders started voting when they acquired grey hairs and mortgages and sent their children to government schools). When the young show up at polling stations, democratic governments will heed their views. And when the millennials start calling the shots more widely in society, they will do so for a long time. For thanks to steady advances in medical technology, they will remain healthy and able to work for longer than any previous generation. Indeed, if scientists’ efforts to crack the “ageing code” in human genes bear fruit, many of them will live past 120. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21688583-ignore-moral-panic-about-lazy-self-obsessed-millennials-world-will-be-fairer/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Semiconductors: Chips on their shoulders + +Airlines in America: A cosy club + +Low-cost airlines in Europe: Don’t get carried away + +Engineering conglomerates: Hanging loose + +Vietnamese companies: Gold stars + +Media: Easy on the ears + +Schumpeter: The collaboration curse + + + + + +Articles Sections Next + +Semiconductors + +Chips on their shoulders + +China wants to become a superpower in semiconductors, and plans to spend colossal sums to achieve this + +Jan 23rd 2016 | SHANGHAI | From the print edition + + + +THE Chinese government has been trying, on and off, since the 1970s to build an indigenous semiconductor industry. But its ambitions have never been as high, nor its budgets so big, as they are now. In an earlier big push, in the second half of the 1990s, the government spent less than $1 billion, reckons Morgan Stanley, an American bank. This time, under a grand plan announced in 2014, the government will muster $100 billion-$150 billion in public and private funds. + +The aim is to catch up technologically with the world’s leading firms by 2030, in the design, fabrication and packaging of chips of all types, so as to cease being dependent on foreign supplies. In 2015 the government added a further target: within ten years it wants to be producing 70% of the chips consumed by Chinese industry. + +It has a long way to go. Last year China’s manufacturers, both domestic and foreign-owned, consumed $145 billion-worth of microchips of all kinds (see chart). But the output of China’s domestic chip industry was only one-tenth of that value. And in some types of high-value semiconductor—the processor chips that are the brains of computers, and the rugged and durable chips that are embedded in cars—virtually all of China’s consumption is imported. + + + +To help them achieve their dream, the authorities realise that they must buy as much foreign expertise as they can lay their hands on. In recent months, state-owned firms and various arms of government have been rushing to buy, invest in or do deals with overseas microchip firms. On January 17th the south-western province of Guizhou announced a joint venture with Qualcomm, an American chip designer, to invest around $280m in setting up a new maker of specialist chips for servers. The province’s investment fund will own 55% of the business. Two days earlier, shareholders in Powertech Technology, a Taiwanese firm that packages and tests chips, agreed to let Tsinghua Unigroup, a state-controlled firm from the mainland, buy a 25% stake for $600m. + +Officials argue that developing a home-grown semiconductor industry is a strategic imperative, given the country’s excessive reliance on foreign technology. They can point to the taxpayers’ money that politicians in America, Europe and other parts of Asia have lavished on their domestic semiconductor industries over the years. + +China’s microchip trade gap is, by some estimates, only around half of what the raw figures suggest, since a sizeable proportion of the imported chips that Chinese factories consume go into gadgets, such as Apple’s iPhones and Lenovo’s laptops, that are then exported. Even so, a policy of promoting semiconductors fits with the government’s broader policy of moving from labour-intensive manufacturing to higher-added-value, cleaner industries. + +Morgan Stanley notes that profit margins for successful semiconductor firms are typically 40% or more, whereas the computers, gadgets and other hardware that they go into often have margins of less than 20%. So if Chinese firms designed and made more of the world’s chips, and one day controlled some of the underlying technical standards, as Intel does with personal-computer and server chips, China would enjoy a bigger share of the global electronics industry’s profits. + +In the government’s earlier efforts to boost domestic manufacturing of solar panels and LED lamps, it spread its largesse among a lot of local firms, resulting in excess capacity and slumping prices. This time it seems to be concentrating its firepower on a more limited group of national champions. For instance, SMIC of Shanghai is set to be China’s champion “foundry” (bulk manufacturer of chips designed by others). And HiSilicon of Shenzhen (part of Huawei, a maker of telecoms equipment) will be one of a select few champions in chip design. + +Most intriguing of all, Tsinghua Unigroup, a company spun out of Tsinghua University in Beijing, has emerged in the past year or so as the chosen champion among champions, a Chinese challenger to the mighty Intel. Zhao Weiguo, the firm’s boss, started out herding goats and pigs in Xinjiang, a remote province in north-western China, to where his parents had been exiled in the 1950s, having been labelled as dissidents. After moving to Beijing to study at the university, Mr Zhao made a fortune in electronics, property and natural resources, before becoming chairman and second-largest shareholder (after the university itself) at Tsinghua Unigroup. + +The company’s emergence from obscurity began in 2013 when it spent $2.6 billion buying two Chinese chip-design firms, Spreadtrum and RDA Microelectronics. In 2014 Intel bought a 20% stake in its putative future rival, for $1.5 billion, as part of a plan for the two to work together on chips for mobile devices, an area in which Intel has lagged behind. In May last year Tsinghua spent $2.3 billion to buy a 51% stake in H3C, a Hong Kong subsidiary of Hewlett-Packard that makes data-networking equipment. And in November it announced a $13 billion share placement to finance the building of a giant memory-chip plant. + +Shopping for silicon savvy + +Other Chinese firms have also been splashing out. Jiangsu Changjiang, a firm that packages chips, paid $1.8 billion in 2014 to gain control of STATS ChipPac, a Singaporean outfit in the same line of business. In 2015 state-controlled JianGuang Asset Management paid a similar sum for a division of NXP of the Netherlands, which makes specialist chips for cell-phone base stations. A group led by China Resources Holdings, another state enterprise, has made a $2.5 billion takeover bid for Fairchild Semiconductor International, an American firm. But the undisputed leader of the “national team” buying up foreign chip know-how is Tsinghua. + +“Many people suspect I’m a ‘white glove’ for the government,” Mr Zhao declared recently, “but we’re really just a very market-oriented company.” That somewhat understates the official backing that it clearly enjoys: without this, it is hard to imagine the company affording the 300 billion yuan ($45 billion) that Mr Zhao says Tsinghua plans to spend on further deals over the next five years. + +Zhao: Chinese chip champion + +Chinese approaches to foreign semiconductor firms—unlike its firms’ acquisitions of foreign consumer brands—have not always met with a warm reception. Tsinghua reportedly made a $23 billion bid last year for Micron, a big American maker of DRAM—the type of memory chips used to store data on desktop computers and servers. But the bid faltered because of political opposition. The firm’s overtures to SK Hynix, a South Korean maker of DRAM and flash-memory chips (as used in USB sticks and smartphones), were rebuffed in November. In December Tsinghua bought a 25% stake in Siliconware Precision Industries (SPIL), a Taiwanese chip packager and tester. The resulting political backlash prompted Advanced Semiconductor Engineering (ASE), a bigger Taiwanese chip packager, to launch a takeover bid for SPIL in December. Tsai Ing-wen, the main opposition candidate in Taiwan’s presidential election, declared China’s investments in the island’s chip firms a “very big threat”—and on polling day, January 16th, she emerged the victor. + +As to whether China will realise its ambitions, or whether it will continue to be dependent on foreign chip technology, Taiwan’s own experience is instructive. From the 1980s, it was highly successful in developing world-class chip foundries, such as TSMC, and in cultivating sparky designers of processor chips such as MediaTek. But in part that was because of good timing: the chip industry was moving towards a model of separating the design and the fabrication of chips, and Taiwan successfully rode that trend. But its more recent attempt to be big in memory chips was a disaster. Mark Li of Sanford C. Bernstein, a research firm, reckons that despite $50 billion in capital expenditure during the late 1990s and 2000s, mostly financed by the government, Taiwanese firms met with “en masse failure in memory.” + +These firms lost further fortunes chasing market share. From 2001 to 2010, the global memory-chip business made $8 billion in aggregate profits—but subtract the two successful South Korean makers, Samsung and SK Hynix, and everyone else lost nearly $13 billion. Despite their vast outlays, reckons Mr Li, Taiwanese firms spent too little to reach the technology frontier and were expecting profits too early. + +Douglas Fuller of Zhejiang University in Hangzhou argues that the maturing of the global semiconductor industry in recent years will make it harder still for China to crack. The incumbents in memory chips have become entrenched, especially after recent consolidation; and the chips themselves, with their associated software, are becoming much more complex, making it harder for Chinese firms to master them. ASE’s chief operating officer, Tien Wu, adds that Taiwanese firms were entering the chip market at a time when it was enjoying heady expansion; it will be more difficult for Chinese firms to succeed at a time of slow growth. + +If China’s putative chip champions are to succeed, they must accomplish three hard things. Lee Wai Keong, head of ASM Pacific Technology, a Hong Kong-listed supplier of equipment to the industry, believes that, first, Chinese firms must shift from “a culture of cost to a culture of innovation.” He laughs when asked if firms like Tsinghua can buy in cutting-edge research through acquisitions, insisting there are “no short cuts in semiconductors.” His scepticism is justified: export controls and other policy barriers in Taiwan, South Korea and America inhibit the transfer of the latest technologies to Chinese firms. + +The mainland’s chip firms mostly lag far behind global leaders in invention (though HiSilicon is a notable exception). Intel alone spends about four times as much on research and development as does the entire Chinese chip industry, calculates Christopher Thomas of McKinsey, a consulting firm. Besides pumping more into research, Chinese firms also need to attract many more experienced scientists and engineers. This is not impossible, given that Silicon Valley is teeming with brilliant people of Chinese extraction. But if firms like Tsinghua are to attract them, they must learn how to innovate globally, for example by running multiple R&D centres around the world. + +That points to the second challenge: the need to shift to a global frame of mind. So far Chinese firms have been mostly catering to booming local consumption. But they must prepare for demanding global markets. Even Chinese firms, especially those serving foreign markets, are unlikely to remain satisfied with subpar chips just because they are made at home. + +The final challenge may be the most daunting. Investors in China’s chip firms need to get ready for a long, hard slog. Analysis by McKinsey reveals that across the global semiconductor industry, in memory or processor chips, and in design, fabrication or packaging, the top one or two firms in each area account for all profits—with the rest losing money. + +A positive example China could follow, if it wants to avoid wasting its $150 billion, is that of Samsung. It has become a semiconductor colossus by investing heavily in R&D, amassing an array of technical talent and accepting low returns for many years. Boosters argue that Chinese firms could pull this off, given that the government will be the main investor, and is in it as a strategic priority rather than for profit. + +However, there is a potential contradiction in the way the government is implementing its latest plan. Burned by the poor outcome of previous efforts to promote microchips, solar panels and LEDs, officials are funnelling a large chunk of their initial investment—around $30 billion—through a handful of state-backed investment funds. The hope is that these intermediaries will make more market-minded investments than bureaucrats did in the past. However, managing these funds so that they achieve this objective, even though outside investors will want a profitable exit before the government’s 2030 target, will be no mean feat. + +Even so, Morgan Stanley’s analysts think Chinese firms have a fair chance at becoming world-class in certain parts of the industry. Local chip firms may have a strong hand in product areas such as televisions, mobile phones and computers, in which China dominates both production and consumption. Regulators may be tempted to tilt the playing-field further in their favour by dictating indigenous standards or imposing local-content requirements, though the risk is that China ends up with firms that are strong at home but lack global competitiveness. + +In memory chips of either the DRAM or flash variety, Chinese firms’ chances would be bolstered if they could persuade some of the largest foreign firms to form technology-sharing alliances, enlisting those firms to help overcome their home governments’ curbs on technology transfer. In this, having deep pockets will be a great help. In September an offshoot of Tsinghua agreed to pump $3.8 billion into Western Digital, an American maker of hard-disk drives. Its balance-sheet bolstered, Western Digital soon afterwards spent $19 billion buying SanDisk, another American firm, which is among the world leaders in flash memory. + +China’s efforts to develop national champions in what it calls “pillar industries” have a decidedly chequered record. In carmaking, its attempts to make foreign firms share their technology through compulsory joint ventures with domestic makers have only entrenched local firms’ dependence on their foreign partners. In commercial aircraft, a state aerospace conglomerate, COMAC, has spent years, and huge sums, developing planes that are still not ready for the market, and will be outdated by the time they arrive. + +In the various parts of the microchip business, Chinese firms may eventually catch up technologically, but in the process undermine the industry worldwide, as happened in solar panels, through excessive capacity-building. As Bernstein’s Mr Li puts it, China “will not stop until it dominates the market, with value and economics being destroyed.” Tsinghua’s boss, Mr Zhao, is unabashed about his ambitions. “The chip sector is entering the era of giants, with accelerating integration,” he declared recently, making it clear that he intends his firm to be one of the few surviving giants. The coming shakeout will separate the sheep from the goats, which is an area in which Mr Zhao happens to have some experience. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21688871-china-wants-become-superpower-semiconductors-and-plans-spend-colossal-sums/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Airlines in America + +A cosy club + +A lack of competition means high air fares + +Jan 23rd 2016 | From the print edition + + + +THE slumping oil price has cut the cost of petrol, making it a lot cheaper for Americans to drive. Yet although the price of jet fuel—which makes up around 30% of airlines’ costs—is down by more than half since January 2014, domestic air fares in America have barely budged (see chart). + +Unsurprisingly, then, the country’s four biggest airlines—Southwest, Delta, American and United—are coining it. On January 19th Delta kicked off the results season for the airlines, announcing record fourth-quarter profits and forecasting that first-quarter margins in 2016 would be twice as high as in 2015. Analysts also expect its rivals to report bumper earnings for the most recent quarter. In July the US Department of Justice launched an investigation into allegations of collusion over pricing and capacity between the big four (which they deny). But arguments abound on why air fares are so high in America—and what regulators should do to cut them. + +Some think the fact that America’s five biggest fund managers happen to be among the largest shareholders in each of the big four airlines discourages the carriers from competing vigorously. Together, for example, the five investors own around 17% of both American and Delta. In a paper published in April José Azar, an economist, and two co-authors looked at the data and concluded that this common ownership means ticket prices may be up to 11% higher than they would otherwise be. Mr Azar was the lead author of another study, published this month, which found similar effects from overlapping shareholders in American banks. + +In Europe the industry’s falling costs will translate into cheaper tickets (see article). Low-cost carriers such as easyJet and Ryanair compete fiercely with older airlines such as BA and Air France, and young upstarts such as Norwegian Air Shuttle and Wizz Air of Hungary are muscling into the market. The overlap among institutional shareholders in all these carriers is much smaller than in America. It is clear, to say the least, that the same economic forces are not present in North America as they are in Europe, says Jonathan Wober at CAPA, an aviation-research firm. Operating margins for North American carriers are likely to exceed 14% this year, around double those of airlines from Asia and Europe, reckons CAPA. + + + +One reason for American carriers’ fat profits is a rule banning foreigners from owning more than 25% of voting shares in a domestic carrier in America. Besides preventing the likes of Ryanair and AirAsia from creating wholly-owned American subsidiaries, the rule starves domestic challenger airlines of foreign capital. Analysts say Virgin America would have attacked the domestic incumbents more vigorously if Virgin Group, a British firm that holds an 18.6% stake, were able to inject more capital. Even an increase in the limit to 49.9%, as in the European Union, might encourage more foreign carriers to enter America in joint ventures with locals. + +Perhaps a greater problem is that a shortage of take-off and landing slots at America’s busiest airports makes it hard for challengers to achieve a decent share of the market. At 40 of America’s 100 biggest hubs, a single carrier now operates more than half of the seat capacity. This pushes up prices. For instance, the merger of American and US Airways in 2013 increased American’s market share at Philadelphia’s airport to 77%, resulting in fares there rising from 4% below the national average in 2013 to 10% above it now. + +The Department of Justice has started to wake up to this. In November it blocked the sale of 24 slots at Newark airport to United, already its biggest operator. But so far there have been few other signs that the authorities are ready to brave the wrath of the incumbents and take the sort of vigorous action that is needed to make American air travel a competitive market. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21688875-lack-competition-means-high-air-fares-cosy-club/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Low-cost airlines in Europe + +Don’t get carried away + +Falling fuel prices will soon be passed on to passengers + +Jan 23rd 2016 | From the print edition + + + +IN 2013, Europe’s two largest low-cost carriers, Ryanair and easyJet, were having an annus horribilis. EasyJet’s executives were battling its founder and biggest shareholder, Stelios Haji-Ioannou, over the airline’s strategy. Ryanair issued two profit warnings, its first in ten years. Three years on, things look better. The two—which make up 47% of the low-cost market in Europe— are expected in the coming days to reveal strong results for the October-December quarter. + +Both airlines say this success is a result of making their flights more attractive to businesspeople. Previously, their customers were mainly price-conscious holidaymakers who did not mind an uncomfortable flight as long as it was cheap. The big untapped market, easyJet and Ryanair’s bosses twigged, was the short-haul business market, which was still dominated by pricey full-service airlines. + +EasyJet led the way, reintroducing allocated seating in November 2012, as well as introducing add-ons such as airport-lounge access, to appeal to businesspeople not wanting to turn up to their meetings in a mess. In September 2013 Ryanair followed, when Michael O’Leary, its abrasive boss, announced plans to improve its customer service. In 2014 it also introduced “Business Plus”, an option that charged extra for bundling back in some services corporate customers need, such as flexible ticketing and a hold-baggage allowance. + +There are other, less obvious ways that the two carriers are making their schedules more attractive to businesspeople, says John Strickland, an aviation expert at JLS Consulting. Ryanair, for instance, is moving flights to airports much closer to the cities they serve, such as in Brussels and Paris, to appeal to people for whom time is money. And flights to some lesser destinations are being dropped in order to increase capacity on popular business routes. + +But the extent to which these changes have boosted bottom lines is easily overstated, says Douglas McNeill of Macquarie, a bank. EasyJet has struggled to increase its business-traveller numbers as a share of the total. Rising margins are more the result of falling oil prices. + +As its hedging of fuel prices last year unwinds, Ryanair’s margins will be lifted further by cheaper oil into 2016. But for both carriers and their rivals, the European market is so cut-throat that their excess profits will soon be competed away, especially since Ryanair and easyJet plan to keep expanding their capacity by up to 10% a year. RBC, a bank, forecasts that revenue per passenger will fall by 9% at Ryanair in 2016. Expansion by other budget carriers, such as Norwegian Air Shuttle, Wizz Air of Hungary and Vueling of Spain, will add to the downward pressure on fares. + +In a race to the bottom, Ryanair will win: it still has the lowest unit costs in the industry. But with rivals snapping at its heels, its shareholders should enjoy the temporary windfall from falling oil prices—before customers grab it all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21688870-falling-fuel-prices-will-soon-be-passed-passengers-dont-get-carried-away/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Engineering conglomerates + +Hanging loose + +Indutrade points to the benefits of being hands-off + +Jan 23rd 2016 | STOCKHOLM | From the print edition + + + +WILLIAM HEATH ROBINSON would have felt at home at one of Indutrade’s many factories. The English cartoonist, who drew outlandishly elaborate machines that performed simple tasks, could have made imaginative use of the endless variety of valves, hydraulic hoses, couplings and other parts churned out by the Swedish engineering group. + +The illustrator—and indeed his American counterpart, Rube Goldberg—would also have admired how Indutrade structures itself. The parent firm, listed in Stockholm, sits atop 200 varied subsidiaries, so loosely bound together that little more than twine is involved. Disparate businesses have their own management, staffing policies and brands. Indutrade is no minnow, employing around 5,000 people, but it does so without a central personnel department, for example, trying as much as possible to leave its firms to set strategy and run operations. Its bosses have resisted the modern management fad for making their underlings collaborate incessantly (see Schumpeter). + +The group is thriving. In the past five years Indutrade’s shares have almost doubled, whereas the OMX Stockholm 30 Index has risen by just 15%, despite it being packed with other Scandinavian engineers. Recently it posted annual net sales of 11 billion Swedish krona (about $1.3 billion), up by 26% on the year before. In the past 35 years annual sales growth has averaged 17%—and most of it has come from northern Europe, not from emerging markets. The group’s operating margins have been reliably decent, usually over 10% (compared with, say, last year’s 6.5% at Airbus, Europe’s largest engineering group). + +That pays for lots of shopping. Last year it bought 13 smaller manufacturers—for an average of about $10m each—most of them Nordic or British. More will follow in 2016, as Indutrade also sniffs for targets in America, Canada and Germany. + +The group’s targets are typically a couple of decades old, and owned and run by their founders. Even when they sell, they often care deeply about the firm’s future survival and growth, not just about getting the best price. Indutrade’s reputation as a hands-off parent, its easy-going culture and its promise not to resell, all help to charm business owners. Some keep working for Indutrade long after selling up. + +Indutrade is not unique. A bigger Nordic engineering group, AssaAbloy, has reached annual sales of 57 billion krona by mopping up firms that make assorted devices for opening and locking doors. Its total return to shareholders in the past five years, 25% a year on average, beats even Indutrade’s 18%. A British engineering conglomerate, Melrose, is also a serial buyer of businesses, though it looks for ones it can fix up and sell on. It most recently did so last month, completing the £2 billion ($2.8 billion) sale of a maker of water, gas and electricity meters to Honeywell of the United States. More usual is the Indutrade approach, holding what you buy. The challenge then is for bosses to keep a proper eye on a potentially sprawling business. + +Growing by buying is not necessarily the best strategy for an engineering conglomerate, but it helps to spur bosses to think hard about competition and emerging threats to their markets. Engineering firms are alert to the risk that, as more of the value attached to their products derives from software and the gathering and analysis of data, they risk losing profits to the digital firms that provide such services. Johnny Alvarsson, Indutrade’s quietly spoken boss, argues that having a loose governance model that allows for experimentation means the group is more likely to adapt to this new age. + +Roland Haslehner of the Boston Consulting Group says what matters is less the chosen model of governing, and more whether it is applied consistently by capable managers. The centre might leave subsidiaries free to be entrepreneurial, or it might become an “integrator”, setting strategy, overseeing operations and offering support services to all its companies. + +Whereas the looser approach has the benefit of being more flexible, the integrators ought in principle to be more efficient. However, ThyssenKrupp, a massive German conglomerate that controls 670 engineering companies, shows that this is not always the case. It has a strong headquarters but does not allow small firms’ spirit to flourish, says an analyst. Its boss, Heinrich Hiesinger, admitted in his most recent annual report that the firm’s situation is unsettled, noting that it had just turned a tiny profit, the first in a decade. + +Indutrade could surely cut costs by getting its many businesses to share more operations but it prefers them to preserve the advantages of being small, which include the fact that workers and customers like it that way. Mr Alvarsson says a number of people have noted the similarities with Warren Buffett’s Berkshire Hathaway, a compulsive buyer and holder of a far broader variety of businesses. E-mails and meetings are kept to a minimum; bureaucracy is discouraged; the head office is small. The manager of the best-performing subsidiary gets a small award at the group’s annual party. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21688874-indutrade-points-benefits-being-hands-hanging-loose/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Vietnamese companies + +Gold stars + +Foreign firms and investors are cheerful once more about Vietnam’s prospects + +Jan 23rd 2016 | HO CHI MINH CITY | From the print edition + +A whole lot of sauce + +WHEN he left a job in banking to join a “company that sells fish sauce” in Vietnam, Michael Nguyen’s parents wondered if he was throwing away a lucrative career. Now a big cheese at Masan Group, one of the country’s largest listed companies, the Vietnamese-American seems happy with his gamble. Masan’s brands meet a big chunk of the local demand for pungent sauces, noodles and freeze-dried coffee—and in December the firm accepted a $1.1 billion investment from Singha, a Thai brewer, to help finance an assault on Vietnam’s frothy beer market. + +Singha’s purchase of a 25% stake in Masan’s consumer-goods arm and 33% of its brewery capped a busy 12 months for mergers and acquisitions in the country. Their combined value in 2015 is reckoned to have been around $10 billion (see chart). Overall foreign direct investment into Vietnam began to pick up, after a slump following the financial crisis. More big deals are “percolating”, reckons Fred Burke of Baker & McKenzie, a law firm. This month All Nippon Airways of Japan said it would pay $108m for an 8.8% stake in Vietnam Airlines. The government may soon sell a $1 billion chunk of Sabeco, the country’s biggest brewer, and a stake of around $2.5 billion in Vinamilk, a dairy firm. + + + +All this reflects renewed optimism for Vietnam, a country of 93m people with a median age of around 30 and an economy expanding by nearly 7% a year. Its consumer sector is particularly appealing. Vinamilk’s revenues have been growing more than 20% annually; per-capita beer consumption is the highest in Asia after China and Japan, and rising. Masan’s latest wheeze is animal feed, as it hopes to gain from the rising consumption of fresh meat. + +In part the country has benefited from its neighbours’ weaknesses. Despite lower productivity and limited local supply chains, Vietnam’s manufacturers are gradually taking business from China, where wages are higher. Elsewhere in the region, Indonesia is shrinking back into protectionism; political scandals are unsettling Malaysia. And Thailand’s companies are keen on tie-ups in Vietnam, to flee low growth and irascible military rule at home. + +But foreign enthusiasm has also been greatly boosted by a barrage of trade agreements which the government negotiated in 2015—not just the American-led Trans-Pacific Partnership but also a hodgepodge of treaties with places including Europe, South Korea and Japan. Meanwhile a new law on investment and enterprise, passed in 2014 but only implemented last summer, has cut red tape. Vietnam ranks mid-table in the World Bank’s ease-of-doing-business index, but is inching upwards. Foreigners often find it easier to operate in Vietnam than in China, and its recent reforms compare favourably with those elsewhere in South-East Asia, says Alberto Vettoretti of Dezan Shira, a consulting firm. + +There are plenty of frustrations, nonetheless. The unusual esteem which has accrued to Vinamilk—praised at home and abroad as a paragon of corporate governance—says as much about the grimmer standards among other Vietnamese firms. Even many well-run ones have a disconcerting taste for adventurism: Mr Nguyen promises that Masan will be picky with its investments, after its bet on a tungsten mine turned sour. + +There is also more for the government to do. Despite a few recent exceptions, reform of the flabby state sector has been a let-down, with many state firms selling only tiny slivers of equity. A promise to lift caps on foreign ownership of listed firms—for the moment limited to 49% in most industries—is bogged down in bureaucratic twaddle. Kevin Snowball of PXP Vietnam Asset Management says the representatives of foreign institutional investors who turned up “in droves” late last year were disappointed at the limited liquidity of, and restricted access to, Vietnam’s stockmarkets that they encountered. + +All this makes more important the decisions to be reached at the five-yearly congress of the Vietnamese Communist Party, which began in Hanoi on January 21st. By the time it concludes, on the 28th, some or all of the country’s top officials could be replaced. Most of Vietnam’s local and foreign businesspeople would like to see Nguyen Tan Dung, its prime minister for the past ten years, retain high office. He holds some blame for leading Vietnam into a deep banking crisis from which it is only now emerging, but he is also credited for a competent clean-up and for the many pro-business policies which have followed. Yet the latest rumour is that Mr Dung, and perhaps some of his younger allies, will be sidelined by a conservative faction loyal to Nguyen Phu Trong, the present party leader. + +That would somewhat dampen spirits among businesspeople and investors. But it need be no disaster. Analysts worry that the pace of liberalisation could soften, but few expect the direction of reform to reverse. For one thing, Mr Dung’s trade deals mean that once-vague party promises have now been written into international treaties, notes a Vietnamese economist and government adviser. “The only way is forward,” he insists. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21688876-foreign-firms-and-investors-are-cheerful-once-more-about-vietnams-prospects-gold-stars/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Media + +Easy on the ears + +Podcasts are gaining audience, but have yet to attract the biggest advertisers + +Jan 23rd 2016 | NEW YORK | From the print edition + + + +IT IS hard to identify the moment when podcasting took off, because it keeps having them. In June last year Barack Obama showed up at a Californian man’s garage to tape a podcast (“WTF with Marc Maron”), while “Serial”, a podcast series about disputed real-life stories that was launched in 2014, has surpassed 100m downloads. + +Listeners will be forgiven if they feel they have heard this story before. Podcasts were meant to have arrived a decade ago. But they remain a tiny market for advertisers—$50m to $80m annually in America compared with $16 billion on terrestrial radio. Can podcasts finally hit the big time as a business? + +There are reasons for optimism. The audience has grown quickly. In 2006 11% of Americans aged 12 or over had listened to a podcast; by 2015 that had tripled, according to Edison Research and Triton Digital (an ad-technology firm). Technology is pushing podcasts into listeners’ ears. In 2014 Apple put a podcast app on the iPhone that is all but indelible. In 2015 Spotify and Pandora added podcasts to their music-streaming services. As increasing numbers of cars get wireless-internet connections, that will give podcasts another fillip. + +An industry to support podcasting is developing. In 2015 two former bosses of Westwood One, a broadcaster, launched DGital Media, which hosts and monetises podcasts. In July E.W. Scripps, another broadcaster, bought Midroll, a firm which connects podcasts to advertisers, for $50m. Firms like Art19 allow advertisers to update and insert ads into podcasts, including back catalogues. + +For presenters, podcasting can be lucrative. In October Bill Simmons, a sports pundit who had a popular podcast at the ESPN network, launched one under his own name with multiple sponsors. With 20m downloads in the first three months, Mr Simmons could gross more than $5m in his first year. In December Gimlet Media, a podcast network started by Alex Blumberg, a radio journalist, raised $6m at a valuation of $30m. + +Still, most podcast ads are for smallish niche businesses. There are two obstacles to attracting big-budget advertisers. One is that it is hard to know who is listening to podcasts, rather than just downloading them. The second is that, so far, few podcasts have a big enough audience. “You’re either buying a premium podcast or you’re not buying,” says Teddy Lynn of Ogilvy, an ad agency. However, Mr Lynn believes podcasts will one day be “bundled” for sale as TV shows are, and that the audiences will prove attractive for advertisers because they are “highly engaged”, not passive listeners. + +That is surely true of “The Nerdist Podcast”, a chat show started in 2010 by Chris Hardwick. In its first year it had no revenues. In 2012 Legendary Entertainment, a film studio, bought it. Now it grosses millions of dollars a year. Mr Hardwick says the show helped dispel the myth that podcasts were “just this thing you did in your mom’s basement.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21688740-handful-successful-presenters-are-dispelling-myths-about-medium-podcasts-are-gaining/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +The collaboration curse + +The fashion for making employees collaborate has gone too far + +Jan 23rd 2016 | From the print edition + + + +IN MODERN business, collaboration is next to godliness. Firms shove their staff into open-plan offices to encourage serendipitous encounters. Managers oblige their underlings to add new collaborative tools such as Slack and Chatter to existing ones such as e-mail and telephones. Management thinkers urge workers to be good corporate citizens and help each other out all the time. + +The fashion for collaboration makes some sense. The point of organisations is that people can achieve things collectively that they cannot achieve individually. Talking to your colleagues can spark valuable insights. Mixing with people from different departments can be useful. But this hardly justifies forcing people to share large noisy spaces or bombarding them with electronic messages. Oddly, the cult of collaboration has reached its apogee in the very arena where the value of uninterrupted concentration is at its height: knowledge work. Open-plan offices have become near-ubiquitous in knowledge-intensive companies. Facebook has built what is said to be the world’s biggest such open space, of 430,000 square feet (40,000 square metres), for its workers. + +Hitherto, knowledge workers have largely suffered in silence or grumbled in private because their chances of promotion have come to be influenced by their willingness to collaborate. But a backlash is setting in: the current Harvard Business Review (HBR) has a cover story on “collaborative overload”; and Cal Newport of Georgetown University has just brought out a book called “Deep Work: Rules for Focused Success in a Distracted World”. + +A growing body of academic evidence demonstrates just how serious the problem is. Gloria Mark of the University of California, Irvine, discovered that interruptions, even short ones, increase the total time required to complete a task by a significant amount. A succession of studies have shown that multitasking reduces the quality of work as well as dragging it out. Sophie Leroy of the University of Minnesota has added an interesting twist to this argument: jumping rapidly from one task to another also reduces efficiency because of something she calls “attention residue”. The mind continues to think about the old task even as it jumps to a new one. + +A second objection is that, whereas managers may notice the benefits of collaboration, they fail to measure its costs. Rob Cross and Peter Gray of the University of Virginia’s business school estimate that knowledge workers spend 70-85% of their time attending meetings (virtual or face-to-face), dealing with e-mail, talking on the phone or otherwise dealing with an avalanche of requests for input or advice. Many employees are spending so much time interacting that they have to do much of their work when they get home at night. Tom Cochran, a former chief technology officer of Atlantic Media, calculated that the midsized firm was spending more than $1m a year on processing e-mails, with each one costing on average around 95 cents in labour costs. “A free and frictionless method of communication,” he notes, has “soft costs equivalent to procuring a small company Learjet.” + +Mark Bolino of the University of Oklahoma points to a hidden cost of collaboration. Some employees are such enthusiastic collaborators that they are asked to weigh in on every issue. But it does not take long for top collaborators to become bottlenecks: nothing happens until they have had their say—and they have their say on lots of subjects that are outside their competence. + +The biggest problem with collaboration is that it makes what Mr Newport calls “deep work” difficult, if not impossible. Deep work is the killer app of the knowledge economy: it is only by concentrating intensely that you can master a difficult discipline or solve a demanding problem. Many of the most productive knowledge workers go out of their way to avoid meetings and unplug electronic distractions. Peter Drucker, a management thinker, argued that you can do real work or go to meetings but you cannot do both. Jonathan Franzen, an author, unplugs from the internet when he is writing. Donald Knuth, a computer scientist, refuses to use e-mail on the ground that his job is to be “on the bottom of things” rather than “on top of things”. Richard Feynman, a legendary physicist, extolled the virtues of “active irresponsibility” when it came to taking part in academic meetings. + +What gets measured… + +Why have organisations been so naive about collaboration? One reason is that collaboration is much easier to measure than “deep work”: any fool can record how many people post messages on Slack or speak up in meetings, whereas it can take years to discover whether somebody who is sitting alone in an office is producing a breakthrough or twiddling his thumbs. The more junior the knowledge worker is, the more likely he is to spend his time doing things that are easy to measure rather than engaging in more demanding but nebulous work. A second reason is that managers often feel obliged to be seen to manage: left to their own devices they automatically fill everybody’s days with meetings and memos rather than letting them get on with their work. + +What can be done to restore balance in a world gone collaboration-mad? Few people have the freedom of a Franzen or a Feynman to unplug themselves from the world. But employees—particularly young ones—need to recognise the long-term costs of working in a constant state of distraction. The HBR article points out that there is an overlap of only 50% between “the top collaborative contributors in any organisation and those individuals deemed to be the top performers.” About 20% of company stars keep themselves to themselves. So organisations need to do more to recognise that the amount of time workers have available is finite, that every request to attend a meeting or engage in an internet discussion leaves less time for focused work and that seemingly small demands on people’s time can quickly compound into big demands. Helping people to collaborate is a wonderful thing. Giving them the time to think is even better. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21688872-fashion-making-employees-collaborate-has-gone-too-far-collaboration-curse/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Stockmarkets: The bear necessities + +Russia’s economy: Phase two + +The economic impact of refugees: For good or ill + +Investment fraud: The cockroaches of finance + +Buttonwood: Watch what they pay + +China’s P2P lending boom: Taking flight + +American banks: Not yet out of the woods + +Free exchange: All at sea + +Free exchange: Award: Philip Coggan + + + + + +Articles Sections Next + +Stockmarkets + +The bear necessities + +Stockmarket woes worsen + +Jan 23rd 2016 | From the print edition + + + +BEAR markets are triggered, by convention, when share prices fall by more than 20%. So the widespread stockmarket declines on January 20th took Tokyo’s Nikkei 225, London’s FTSE 100 and France’s CAC-40 into bear-market territory (see chart), since all had declined at least that much since their highs of last year. Mind you, another old saw is that bear markets do not end until prices pass their previous peak; on that measure, the Nikkei 225, which is less than half its 1989 high, is still caught in a 26-year-long bear run. + + + +The rich world is not alone in its ursine infestation. China’s CSI 300 index is more than 40% below last year’s high. The FTSE All-World Index, having breached the 20% mark, ended down 19% on January 20th. Indeed New York, although hit hard that day (the Dow Jones Industrial Average fell more than 500 points at one stage, before rebounding a bit), is one of the few big markets not to have entered bearish territory. + +Among the primary causes of the sell-off is worry about China’s economic health, despite the latest GDP numbers, published this week, that were in line with forecasts of 6.9% growth. Investors fear that the real numbers are worse than the official data suggest, and see the sharp fall in commodity prices, particularly oil (see article), as evidence for the hypothesis of weaker Chinese demand. + +In a sense, equity markets are only catching up with the bearish implications of moves in other markets, such as the rise last year in corporate-bond spreads (the interest-rate premiums paid by riskier borrowers). Higher spreads usually reflect fears that more borrowers will default in the face of adverse economic conditions. Investors have also been rushing for the perceived safety of government bonds, with the yield on ten-year American Treasuries falling back below 2%. In June it was nearly 2.5%. + +Forecasts for global growth this year are being revised down, as they have been for the past few years. The IMF has cut its estimate from 3.6% to 3.4%. World trade has also been worryingly sluggish, with volumes falling in the first half of 2015. + + + +Daily dispatches: China's market mess + +So far manufacturing appears to have been hit harder than services, with industrial production in America falling in each of the last three months of 2015. But a wide range of companies are facing a squeeze in profits. Macy’s, a retailer, IBM, a computer-services company, and Shell, an oil giant, all recorded big declines in their latest results. Overall, the profits of the constituent companies of the S&P 500 index in the fourth quarter of 2015 are expected to be down by almost 5% on the same period a year earlier. + +Part of the sell-off in global equities may reflect this reduced outlook for profits. In a recent survey of fund managers by Bank of America-Merrill Lynch, more than half expected profits to decline further over the next 12 months. Cash now makes up 5.4% of portfolios, the third-highest level since 2009. But fund managers are not as bearish as they might be: a net 21% of them have a bigger weighting in equities than usual and only 12% expect a global recession in the next year. + +Some also blame the Federal Reserve for pushing up interest rates in December. To the extent that monetary policy, via both low rates and quantitative easing, has pushed up asset prices since 2009, the fear is that tighter policy may drag those prices back down. But the stockmarket decline may be altering the outlook for monetary policy, too. + +Back in September, when the markets were suffering another tumble, the Fed stepped back from a rate rise, citing fears about a slowing global economy. Judging by the futures market, investors think the Fed will take fright again: they are now expecting it to raise rates only once this year, when previously they had been expecting three increases. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688884-stockmarket-woes-worsen-bear-necessities/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Russia’s economy + +Phase two + +Russia’s economic problems move from the acute to the chronic + +Jan 23rd 2016 | MOSCOW | From the print edition + + + +DMITRY MALIKOV, a wavy-haired crooner, normally sings schmaltzy love tunes. But his latest clip, which he calls “A New Year’s Appeal to the Rouble”, captures the zeitgeist in Russia. “Sure, it’s a bit tough, but happiness is ahead,” he belts. “Just wait, just wait, don’t fall.” Despite his plea, the rouble is falling: on January 21st it dropped to more than 85 to the dollar, a record low. References to the economic “crisis” pepper daily conversation; news broadcasts lead with breathless coverage of the oil markets, and even the patriarch of the Russian Orthodox church was asked his thoughts on the exchange rate during his annual Christmas interview. + +Russia’s economy had a torrid 2015. As the oil price tumbled from its mid-2014 peak of over $100 a barrel, Russia’s exports and government revenues, heavily dependent on oil and gas, collapsed. GDP shrank by nearly 4%; inflation ran close to 13%. Having lost half its value against the dollar in the second half of 2014, the rouble dipped a further 20% in 2015. But in the autumn the contraction slowed. Vladimir Putin, Russia’s president, triumphantly declared that “the peak of crisis” had passed. + +Recent turbulence in the oil market has put hopes of a speedy recovery to rest. The IMF reckons GDP will contract again this year, by 1%. Senior officials speak morosely of a “new reality”, acknowledging that their energy-driven growth model has exhausted itself. Yet Russia is unlikely to see a repeat of the acute problems that befell it in late 2014. For one thing, Russian businesses have much healthier finances. Their foreign debt has fallen by a third since 2014. From now until May, firms and banks are due to repay less than they did in December 2014 alone. The second half of the year will be about as easy. + + + +INTERACTIVE: Explore how oil prices affect OPEC and non-OPEC production and viability + +The banking sector is looking better, thanks to a raft of measures from the central bank to recapitalise it and to allow greater forbearance on souring debts. The big oil companies, meanwhile, have coped with a weak currency. Their operating expenses are priced in roubles but most of their revenues come in dollars. Progressive oil and gas taxes have also helped: when prices fall, the state budget absorbs much of the pain. Total oil production grew by 1.4% in 2015, reaching record highs. The profitability of beasts like Rosneft, Lukoil and Bashneft is higher than it was in 2014, according to Moody’s, a rating agency. + +The government’s finances, however, are shaky. The budget for 2016 assumes an average oil price of $50 a barrel, which was to have produced a deficit of 3% of GDP. However, the arithmetic of Russia’s public finances is unforgiving: the budget deficit rises by roughly 1% of GDP for every $5 drop in the oil price. At the current $30 a barrel (and assuming no change in spending plans or the exchange rate), the deficit would probably hit 7%. + +Yet Mr Putin has decreed that the deficit should not exceed 3%. In response, the finance ministry has called for cuts of 10% (defence and social spending are largely exempt). Officials have also suggested privatising state assets. All this, though, is unlikely to yield enough to plug the growing deficit. Filling the gap by issuing bonds would be expensive: yields are high. Moreover, Russia’s default in 1998-99 left its elite with an aversion to debt. + + + +Oil price and Russian politics: a history + +The government can always tap its rainy-day fund, but it holds only $50 billion, down from $90 billion a year ago. If the budget deficit hits 6% of GDP the fund will be empty by the end of the year, says Timothy Ash of Nomura, a bank. A second fund, which is supposed to finance pensions, holds a further $70 billion, but many of its assets are illiquid. + +If the government runs out of ready cash, Mr Putin may be tempted to repeat a well-worn trick—printing roubles. But that would boost inflation and hasten the rouble’s decline, further sapping the purchasing power of Russian firms and families. Deep cuts to government spending, on the other hand, will also add to the travails of the non-oil economy. + +Russians face a fundamental degradation of their quality of life, says Natalia Zubarevich of the Independent Institute for Social Policy, a think-tank. Real wages fell by 9% in 2015 and 4% in 2014, the first dip since Mr Putin came to power in 2000 (see chart). GDP per person is down from a post-Soviet peak of close to $15,000 in 2013 to around $8,000 this year. While official unemployment is just 6%, wage arrears are up. More than 2m people fell into poverty in 2015, and the share of families that lack funds for food or clothes rose from 22% to 39%. Pensions are normally indexed to inflation, but in 2016 they will rise by just 4%. + + + +In turn, consumer spending, once the engine of Russia’s economy, has withered. Retail sales dropped by 13%, year on year, in November. Foreign travel during the recent holiday season dipped by 30% compared with a year ago. Even those seeking darker escapes are finding them ever less affordable: the price of heroin (mainly smuggled from Afghanistan) has doubled in roubles over the past year. + +In theory the 25% fall in the inflation-adjusted exchange rate in the past year provides a golden opportunity to diversify away from hydrocarbons. To a foreign buyer, labour is now cheaper in Russia than in China. However, foreign investment is wilting too. FDI inflows, which were sliding before the crisis, fell from a quarterly peak of $40 billion in early 2013 to $3 billion in the second quarter of 2015. Foreigners are likely to become net divestors soon. Small wonder that manufacturing production was down by 5% year on year in the first half of 2015; agricultural output is stagnant. The first, most dramatic phase of Russia’s crisis may indeed be behind it, as Mr Putin claimed. But for ordinary Russians, phase two will not seem much better. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688932-russias-economic-problems-move-acute-chronic-phase-two/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The economic impact of refugees + +For good or ill + +Europe’s new arrivals will probably dent public finances, but not wages + +Jan 23rd 2016 | From the print edition + +Good for pensions + +THE welcome accorded the 1.1m refugees arriving in Germany in 2015 is cooling fast. On January 19th 44 members of parliament in the governing coalition sent a cross letter to their boss, Angela Merkel, who is the refugees’ chief advocate. “Our country is about to be overwhelmed,” they complained. Yet more migrants may be on their way: there are 8m displaced people within Syria, and 4m more in neighbouring countries. + +Humanity dictates that the rich world admit refugees, irrespective of the economic impact. But the economics of the influx still matters, not least because it colours perceptions of the new arrivals. One fear is that immigrants will compete for work and drag down wages. Another is that they will pinch the public purse. + +When it comes to their pay packets, Germans need not fret. Evidence suggests that immigration has only a small impact on employment or wages. Unskilled workers and existing migrants are most vulnerable, as they are the closest substitutes for the new arrivals. But the effects are still measly. For example, a recent paper by Stephen Nickell of Oxford University and Jumana Saleheen of the Bank of England found that a ten-percentage-point rise in the share of migrants working in menial jobs, such as cleaning, depressed wages for such positions by just 2%. + +This wage-dampening can even have positive side-effects. Mette Foged and Giovanni Peri studied refugees arriving in Denmark between 1991 and 2008, and found that they did nudge low-educated natives out of lowly jobs. But rather than sulking on the dole, the displaced natives switched to jobs that involved less manual labour, sometimes with higher salaries. + +The evidence on the likely fiscal impact of refugees is murkier, as adding up the tax paid and benefits received by any individual or group is tricky. Those who try tend to find only small differences between immigrants and natives. The OECD, a club of mostly rich countries, assessed the effect of immigrants on its members’ finances in 2007-09. It found they made a net fiscal contribution of around 0.35% of GDP on average, with relatively little variation from country to country. + + + +But the experience of past immigrants may not be much use in assessing the impact of the new lot. Immigrants were a fiscal burden in Germany in part because lots of them are pensioners, who tend to drain the public finances. The new arrivals, in contrast, are young, with a long working life ahead of them. + +There are also differences between refugees and other legal migrants. A new paper from the IMF uses existing immigrants to Europe from Afghanistan, Eritrea, Iran, Iraq, Somalia, Syria and the former Yugoslavia as proxies for the latest wave of refugees, since most of them come from those countries. Relative to other immigrants, people from those countries who have been in Europe for less than six years are 17 percentage points more likely to rely on benefits as their main source of income and 15 percentage points less likely to be employed, even after controlling for things like age, education and gender. This gap does shrink the longer the migrants have been in Europe, but it is still there for refugees who have been in residence for more than 20 years. + +These barriers suggest that it will be a while before refugees pay more in tax than they receive in state support. A study of Australian refugees found that they paid less tax than they received in benefits for their first 15-20 years of residency. Of course, the newest arrivals in Europe could be very different. Information on their education is scarce, but there are some glimmers of evidence that they are relatively skilled. Still, given that most European countries redistribute income from rich to poor, as long as they are poorer than the average native, they will probably receive net transfers. + +The influx will not be bank-breaking, however. In the very short run, the IMF estimates that refugees will add around 0.19% of GDP to public expenditure in the European Union (0.35% in Germany) in 2016. This will add to public debt, and given higher joblessness among refugees, unemployment will rise. But looking only at their fiscal impact is too narrow a focus. Later on, as the new arrivals integrate into the workforce, they are expected to boost annual output by 0.1% for the EU as a whole, and 0.3% in Germany. They should also help (a little bit) to reverse the upward creep of the cost of state pensions as a share of GDP, given their relative youth. + +Of course, these figures are highly uncertain, and depend on how many more refugees arrive, how quickly their asylum applications are processed and how soon they find jobs. Governments can make their impact more benign by accelerating all those steps. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688938-europes-new-arrivals-will-probably-dent-public-finances-not-wages-good-or/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Investment fraud + +The cockroaches of finance + +Boiler-room scams remain common and are evolving + +Jan 23rd 2016 | From the print edition + +WHEN Thomas Guerriero came knocking, pulses quickened at Oxford City, a club in the sixth tier of English football. The snappily dressed American appeared to be building a thriving conglomerate that included sports teams and private universities. He bought a 50% stake and talked of propelling the club into the big time. + +The tie-up appears to have been an own-goal. Mr Guerriero’s stake has been frozen as he awaits trial in America on ten charges, including fraud and witness-tampering. (He denies wrongdoing.) Oxford City has lost face, but little money: its assets are safely parked with the charity that owns the other 50%. Others have fared worse: prosecutors allege that Mr Guerriero ran a “boiler room”—a brokerage that uses high-pressure tactics to sell shares and other investments of little or no value to unwary individuals over the phone—which bilked 150 American investors out of $6.5m. + +Boiler rooms trade on coercion and intimidation, and this one was no exception, say prosecutors. Victims were told that their conversations had been recorded and were legally binding agreements to buy, and that if they reneged they would face late fees and property liens. It is alleged that one even liquidated an annuity to hand over $250,000. + +The heyday for boiler rooms was the dotcom boom of the 1990s, when Jordan Belfort, the “Wolf of Wall Street”, strutted his stuff. Today, online and e-mail-based fraud is seen as a bigger problem. But the steady stream of convictions suggests that old-style boilers remain common. The Guerriero case is one of dozens of its type brought by the SEC in recent years. + +Crime-busters worry that scams are evolving. While stock fraud has waned, says a regulator, there has been a “significant rise” in boiler-room tactics being used to sell things like carbon credits, fine wine, rare earth metals and even bogus Ebola treatments. + +America remains the world’s investment-fraud capital, but police in Britain—where investors lost an estimated £1.7 billion ($2.8 billion) to such scams in the 12 months to September 2014—fret that the City of London could become infested with financial cockroaches. They are leading a multi-agency crackdown. Britain’s Financial Conduct Authority runs a website, ScamSmart, that lists more than 1,000 dodgy operators. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688934-boiler-room-scams-remain-common-and-are-evolving-cockroaches-finance/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Watch what they pay + +Dividend income has become harder to find + +Jan 23rd 2016 | From the print edition + + + +DIVIDENDS provide the vast bulk of long-term returns from equities. Work by Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School shows that the real annual total return from American shares since 1900 has been 6.4%. Capital gains supplied just a third of that figure; reinvested dividends accounted for the rest. + +So the outlook for dividends ought to be crucial for equity investors. They should be concerned that, in some markets, dividend income is concentrated in a small number of stocks (see chart). In Australia, Britain, France, Germany and Switzerland, more than 70% of the dividends come from just 20 companies. + +That leaves investors’ income dependent on the fortunes of just a few industries. Banks were big dividend-payers until the financial crisis of 2008; energy and mining companies have been good sources of income since then. But falling commodity prices are leading energy companies to reduce their payouts. Last year 504 American companies cut their dividends, according to Standard & Poor’s, a credit-rating agency, compared with 291 in 2014. Energy companies made up nearly half of the dividend-cutting group in the fourth quarter. + +As a result of these cuts, dividends are growing more slowly than before. In the fourth quarter of 2015, dividends rose by $3.6 billion in cash terms, compared with a $12 billion increase in the same period of 2014. Investors who need income are now relying on the pharmaceutical and health-care sectors; research by Andrew Lapthorne of Société Générale, a bank, shows that the three largest stock holdings of global income funds are Pfizer, Roche and Johnson & Johnson. + +The narrow base of dividend provision is important when it comes to judging the attractiveness of equities. In some markets, dividend yields are higher than government-bond yields; in Britain, for example, the FTSE All-Share index yields 4% whereas 10-year gilts offer just 1.7%. For some, this makes equities a bargain. + +Until the 1950s it was the norm for equities to have a higher yield than bonds. Shares were perceived to be riskier than government bonds so investors demanded higher payouts for owning them. But opinion changed as the market began to be dominated by institutional investors—pension funds and insurance companies. Their size allowed them to own diversified portfolios, in which the consequences of the failure of an individual firm were much reduced. Thus hedged, they piled into equities to capitalise on the tendency of dividends to grow over time. Interest payments on bonds, in contrast, are fixed, which was a particular problem in the inflationary environment of the 1960s and 1970s. As a result the dividend yield dropped below the government-bond yield in most markets and stayed there. + +Since the financial crisis of 2008, the ratio seems to have undergone another fundamental shift. Government bonds are valued for their safety, particularly in a world of low inflation. A high yield on an equity, meanwhile, may simply suggest that investors expect the dividend to be cut. Shares in BHP Billiton, a mining group, have plunged along with commodity prices. That makes their yield, calculated using last year’s dividend, look extremely high, at 12%. But analysts expect the dividend to be cut in half this year. Investors may also be seeking a higher overall dividend yield on equities to reflect the riskier nature of the income stream now that dividends are more concentrated among fewer companies. + +What about share buy-backs? They are an alternative source of income for investors; for some, they are a more tax-efficient way of receiving cash. But buy-backs are much more variable than dividends: the amount spent on them by non-financial companies in the S&P 500 index fell from over $400 billion in 2007 to under $70 billion in 2009, according to Deutsche Bank. Companies can quietly trim their buy-back programmes; a dividend cut is a public sign of trouble. And, of course, investors who sell their shares in a buy-back need to find some other asset to replace that source of income. + +Investors ignore dividends at their peril. In more than a century of data, across 19 countries, the LBS academics found that annual returns from the markets with the highest dividend yields were eight percentage points higher than those from the lowest-yielding markets. So during the current reporting season, smart investors will be looking not just at notional earnings (which can be a highly subjective measure) but at the cold, hard cash that companies are shelling out. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688933-dividend-income-has-become-harder-find-watch-what-they-pay/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +China’s P2P lending boom + +Taking flight + +The allure and the peril of Chinese fintech companies + +Jan 23rd 2016 | SHANGHAI | From the print edition + + + +ONE of the supposed virtues of peer-to-peer lenders—websites that connect borrowers to people with money to lend—is transparency. They often publish a range of information about those seeking loans (credit history, employment status, income), so that the investors stumping up the money know what they are getting into. So it is fitting that Imperial Investment, a Chinese P2P firm, is impressively transparent about its own circumstances. Earlier this month it published four separate notices from police, employees and family pleading for its runaway founder to return. “Our faces are bathed in tears,” the employees wrote. + +Chinese media were far more phlegmatic about the woes of Imperial Investment, which has facilitated 935m yuan ($142m) in loans since its launch in 2013. “Runaway P2P bosses are no longer newsworthy,” declared the Jinling Evening News. At the end of 2015, nearly a third of all Chinese P2P lenders (1,263 out of 3,858) had run into difficulties, according to Online Lending House, an industry website. It classifies them according to the nature of their troubles: halted operations, disputes, frozen withdrawals or, as in the case of Imperial, bosses who have absconded. Running away may sound rather extreme but it turns out to be popular: 266 P2P bosses have fled over the past six months, by Online Lending House’s count. Although most of the firms in trouble are small, a few bigger ones have also come unstuck: Ezubao, China’s biggest P2P lender, which has arranged $11 billion-worth of loans, is one of the firms with frozen accounts. + +Chinese P2P lenders’ many and varied problems might be expected to deter investors. Yet some of the bigger, better-run firms are still attracting serious money. In December Yirendai, the consumer arm of P2P lender CreditEase, became the first Chinese “fintech” firm to go public abroad, listing on the New York Stock Exchange with a valuation of around $585m. Earlier this month Lufax, a platform for a range of products including P2P loans, completed a fundraising round that valued it at $18.5 billion, setting it up for a keenly anticipated IPO. Both companies pride themselves on their risk controls. + + + +Daily dispatches: China's market mess + +The optimistic scenario is that well-managed fintech firms will bring much-needed competition and efficiency to China’s sclerotic banking system, and profit handsomely while at it. The biggest lenders in China are mammoth state-owned banks, which tend to favour lending to state-owned enterprises over lending to private firms. That cedes plenty of space to P2P firms to build up their customer base and deliver credit to previously overlooked segments of the economy. + +The worry, though, is that the sudden rush of money into P2P could push even good firms into bad lending decisions. Outstanding P2P credit rose more than tenfold over the past two years, from 31 billion yuan at the start of 2014 to 439 billion yuan at the end of last year. Average lending rates, meanwhile, fell from nearly 20% to 12.5%. Should inflows to P2P firms slow, lending rates will not be the only thing to spike higher: so too will the incidence of runaway bosses. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688940-allure-and-peril-chinese-fintech-companies-taking-flight/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +American banks + +Not yet out of the woods + +The good times are ending before they had really begun + +Jan 23rd 2016 | NEW YORK | From the print edition + + + +FOR a spell last year American banks seemed poised to reattain the sort of double-digit returns that have largely eluded them since the financial crisis. A robust market for takeovers and public offerings was producing a flurry of fees. Credit quality, which had collapsed in the crisis, was “pristine”, according to Jamie Dimon, the boss of JPMorgan Chase, America’s biggest bank by assets—something that was allowing banks to reduce the provisions they had made to cover soured loans. The rash of swingeing fines that had been disfiguring profits had largely dissipated (although Goldman Sachs recently agreed to pay $5 billion to settle charges that it knowingly peddled dodgy mortgage-backed securities). And then there was the Federal Reserve’s decision to raise interest rates in December for the first time in nearly a decade, which held out the prospect of a growing margin between the rates banks pay depositors and those they charge borrowers. + +Glimmers of that sunnier outlook can still be seen in the big American banks’ annual results. JPMorgan Chase reported a record annual profit on January 14th of $24 billion. Bank of America and Citigroup posted their biggest profits since 2006 (although the return on equity at both is a fraction of what it once was). Yet share prices in the banking sector have fallen by more than 20% since July, with half of the decline coming in the first weeks of 2016. + +In part, the poor performance of bank shares stems from the broader gloom in global markets. But investors have also noticed that the growth in banks’ profits comes more from falling costs than from rising revenue. Worse, the trends that propelled profits upwards in 2015 appear to be reversing. Analysts have cut their forecasts for profits in the coming year (see chart). + +The worsening outlook for the world economy has made markets much more sceptical that the Fed will continue raising rates. Whereas members of the Fed’s rate-setting committee predicted in December that rates would rise by a full percentage point this year, markets now expect an increase of only a quarter of a point. The prospect of higher lending margins, in other words, is evaporating. Yet December’s increase has curbed the hugely profitable business of refinancing mortgages. + +The volatility in markets, meanwhile, is causing takeovers and issuance of shares and debt to atrophy. There is supposed to be a bright side to the turmoil, since volatility typically boosts trading revenues. But many investment banks have curtailed their trading operations under regulatory pressure. That has left them ill placed to capitalise on the turmoil. Banks have been beefing up wealth-management arms even as they curb trading, in the hope they will provide steadier profits at less risk. But falling markets also harm these, since costs are fixed but revenues come in the form of a percentage of the shrinking value of assets under management. + +In addition, instead of reducing provisions, banks are now adding to them. The main culprit is the collapsing oil price, which is crushing energy firms. JPMorgan Chase, for example, set aside $124m in the final quarter of last year to cover any losses in its loans to energy firms. + +None of these problems is fatal. According to Goldman Sachs, Citi has the biggest exposure to energy firms among banking behemoths, at a modest 3.3% of its loan book. Recent years have been lean in part because banks have been building up their buffers rather than racking up big profits. Although many banks struggle to earn a decent return, the number that are failing or in trouble is near a record low, according to the Federal Deposit Insurance Corporation, a regulator. For investors, however, that is scant consolation. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688937-good-times-are-ending-they-had-really-begun-not-yet-out-woods/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +All at sea + +Ideological divisions in economics undermine its value to the public + +Jan 23rd 2016 | From the print edition + + + +DISMAL may not be the most desirable of modifiers, but economists love it when people call their discipline a science. They consider themselves the most rigorous of social scientists. Yet whereas their peers in the natural sciences can edit genes and spot new planets, economists cannot reliably predict, let alone prevent, recessions or other economic events. Indeed, some claim that economics is based not so much on empirical observation and rational analysis as on ideology. + +In October Russell Roberts, a research fellow at Stanford University’s Hoover Institution, tweeted that if told an economist’s view on one issue, he could confidently predict his or her position on any number of other questions. Prominent bloggers on economics have since furiously defended the profession, citing cases when economists changed their minds in response to new facts, rather than hewing stubbornly to dogma. Adam Ozimek, an economist at Moody’s Analytics, pointed to Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis from 2009 to 2015, who flipped from hawkishness to dovishness when reality failed to affirm his warnings of a looming surge in inflation. Tyler Cowen, an economist at George Mason, published a list of issues on which his opinion has shifted (he is no longer sure that income from capital is best left untaxed). Paul Krugman, an economist and New York Times columnist, chimed in. He changed his view on the minimum wage after research found that increases up to a certain point reduced employment only marginally (this newspaper had a similar change of heart). + +Economists, to be fair, are constrained in ways that many scientists are not. They cannot brew up endless recessions in test tubes to work out what causes what, for instance. Yet the same restriction applies to many hard sciences, too: geologists did not need to recreate the Earth in the lab to get a handle on plate tectonics. The essence of science is agreeing on a shared approach for generating widely accepted knowledge. Science, wrote Paul Romer, an economist, in a paper* published last year, leads to broad consensus. Politics does not. + +Nor, it seems, does economics. In a paper on macroeconomics published in 2006, Gregory Mankiw of Harvard University declared: “A new consensus has emerged about the best way to understand economic fluctuations.” But after the financial crisis prompted a wrenching recession, disagreement about the causes and cures raged. “Schlock economics” was how Robert Lucas, a Nobel-prize-winning economist, described Barack Obama’s plan for a big stimulus to revive the American economy. Mr Krugman, another Nobel-winner, reckoned Mr Lucas and his sort were responsible for a “dark age of macroeconomics”. + +As Mr Roberts suggested, economists tend to fall into rival camps defined by distinct beliefs. Anthony Randazzo of the Reason Foundation, a libertarian think-tank, and Jonathan Haidt of New York University recently asked a group of academic economists both moral questions (is it fairer to divide resources equally, or according to effort?) and questions about economics. They found a high correlation between the economists’ views on ethics and on economics. The correlation was not limited to matters of debate—how much governments should intervene to reduce inequality, say—but also encompassed more empirical questions, such as how fiscal austerity affects economies on the ropes. Another study found that, in supposedly empirical research, right-leaning economists discerned more economically damaging effects from increases in taxes than left-leaning ones. + +That is worrying. Yet is it unusual, compared with other fields? Gunnar Myrdal, yet another Nobel-winning economist, once argued that scientists of all sorts rely on preconceptions. “Questions must be asked before answers can be given,” he quipped. A survey conducted in 2003 among practitioners of six social sciences found that economics was no more political than the other fields, just more finely balanced ideologically: left-leaning economists outnumbered right-leaning ones by three to one, compared with a ratio of 30:1 in anthropology. + +Moreover, hard sciences are not immune from ideological rigidity. A recent study of academic citations in the life sciences found that the death of a celebrated scientist precipitates a surge in publishing from academics who previously steered clear of the celebrity’s area of study. Tellingly, papers by newcomers are cited far more heavily than new work by the celebrity’s former collaborators. That suggests that shifts of opinion in science occur not through the changing of minds so much as the displacement of one set of dogged ideologues by another. + +Agree to agree + +But even if economics is not uniquely ideological, its biases are often more salient than those within chemistry. Economists advise politicians on all manner of important decisions. A reputation for impartiality could improve both perceptions of the field and the quality of economic policy. + +Achieving that requires better mechanisms for resolving disputes. Mr Romer’s paper decried the pretend “mathiness” of many economists: the use of meaningless number-crunching to give a veneer of academic credibility to near-useless theories. Sifting out the guff requires transparency, argued John Cochrane of the University of Chicago in another recent blog post. Too many academics keep their data and calculations secret, he reckoned, and too few journals make space for papers that seek to replicate earlier results. Economists can squabble all they like. But the profession is of little use to anyone if it cannot then work out which side has the better of the argument. + + + +Sources: + +"Mathiness in the theory of economic growth", Paul Romer, American Economic Review, Papers and Proceedings, 2015. + +"The macroeconomist as scientist and engineer", Gregory Mankiw, Journal of Economic Perspectives, 2006. + +"The moral narratives of economists", Anthony Randazzo and Jonathan Haidt, Econ Journal Watch, 2015. + +"Political language in economics", Zubin Jelvah, Bruce Kogut and Suresh Naidu, Columbia Business School Research Paper Number 14-57, 2015. + +"How politically diverse are the social sciences and humanities? Survey evidence from six fields", Daniel Klein and Charlotta Stern, Academic Questions, 2004. + +"Does science advance one funeral at a time?", Pierre Azoulay, Christian Fons-Rosen and Joshua Graff Zivin, NBER Working Paper 21788, 2015. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688885-ideological-divisions-economics-undermine-its-value-public-all-sea/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Award: Philip Coggan + +Jan 23rd 2016 | From the print edition + +Award: Philip Coggan, our Buttonwood columnist, was named “Journalist of the Year” by the CFA Society of the UK for his article “What’s Wrong with Finance”. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21688920-award-philip-coggan/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +The origin of coal: The rock that rocked the world + +Zika fever: Virus chequers + +Medicine: Curing multiple sclerosis + +Social science: Done, bar the counting + +Planetary science: And then there were nine + +Planetary science: The Richard Casement internship + + + + + +Articles Sections Next + +The origin of coal + +The rock that rocked the world + +More than any other substance, coal created modern society. But what created coal? + +Jan 23rd 2016 | From the print edition + + + +FOR 60m years of Earth’s history, a period known to geologists as the Carboniferous, dead plants seemed unwilling to rot. When trees expired and fell to the ground, much of which was swampy in those days, instead of being consumed by agents of decay they remained more or less intact. In due course, more trees fell on them. And more, and yet more. The buried wood, pressed by layers of overburden and heated from below by the Earth’s interior, gradually lost its volatile components and was transformed into a substance closer and closer to pure carbon. + + + +The result was the coal that fuelled the Industrial Revolution, providing power for factories and railways, gas for lighting, a reducing agent for turning ore into iron and steel, the raw ingredients for drugs, dyes and other chemicals, and the energy that has generated most of the world’s electricity. Yet the abundance of Carboniferous coal is a puzzle. Forests began in the Devonian, the period before the Carboniferous, and have existed ever since. Not all coal is Carboniferous but, as the chart shows, the spike in coal accumulation then was far higher than anything which happened subsequently. Indeed, the very name Carboniferous alludes to this fact. + +So why, the curious ask, was it then in particular that so much coal was created? The swamps certainly helped. Lacking oxygen, they would have slowed the activities of wood-destroying micro-organisms. But swamps are not uniquely Carboniferous. To explain the special boost coal got in this period, it has been suggested that the micro-organisms around at the time were not up to the job of rotting wood. Changes in plant chemistry which let trees grow tall, this hypothesis goes, stymied these micro-organisms, making much plant material indestructible. It is an intriguing idea. But a paper just published in the Proceedings of the National Academy of Sciences, by Kevin Boyce of Stanford University and his colleagues, takes issue with it. Instead, Dr Boyce thinks abundant Carboniferous coal, swamps and all, is an accident caused by the movement of the continents. + +Reach for the skies + +The idea that Carboniferous micro-organisms could not properly digest wood depends on a hypothetical evolutionary time lag. The first vascular plants (those with internal channels to move water around) evolved in the Silurian, the period before the Devonian. Vascularisation meant a plant could suck water up its stem, and thus grow tall. This led to a race, conducted throughout the Devonian, to be tallest and thus able to capture light without being overshadowed. The consequence was trees—and therefore forests. + +Trees have to be strong, though, otherwise they will collapse. Part of their strength comes from cellulose, an ancient material composed of long chains of sugar molecules, which forms the walls of plant cells. But what really encouraged trees’ evolution was the advent of a second molecule, lignin. This is made of phenols, and phenols are much harder to digest than sugars—so hard, the thinking goes, that it took until after the Carboniferous was over for organisms that could do so to evolve. Meanwhile, the fallen forests simply piled up in the swamps. Though some of their cellulose was consumed, their lignin hung around and became coal. + +That thought is supported by analysis of the evolution of fungi. Molecular clocks, which measure rates of genetic change, suggest lignin-digesting enzymes did indeed first appear in this group (which are the main agents of rotting) in the Permian, the period immediately following the Carboniferous. Dr Boyce and his colleagues, however, do not believe it. + +Their disbelief is based on a painstaking analysis of Macrostrat, a database of all that is known about the stratigraphy of North America, together with an examination of which types of plant dominated the floras of stratigraphic units containing a lot of coal. + +The trees of the Carboniferous were not like those of today. Moreover, which types of tree predominated varied over the vast span of time that it covered. One pertinent observation Dr Boyce and his team make is that the peak of coal formation coincided with the dominance of a group called the lycopsids. Yet lycopsid trunks were composed mostly of tissue called periderm, which corresponds to modern bark and contains little lignin. Forests that existed both before and after these lycopsid woods (but before the supposed evolution of lignin-digesting fungi) had many more lignin-rich species in them, but have yielded far less coal. + +Moreover, though Permian rocks in North America do not contain much coal, those in China do. That does not seem consistent with idea that lignin-consumption rates suddenly increased. And, although the fossil record cannot show which enzymes were present in fungi in the past, it does show that fungi were just as diverse and active in the Carboniferous as in the Permian. Altogether, then, the abundant coal of the Carboniferous does not seem to be the result of lackadaisical fungal effort. So, in Dr Boyce’s view, the evolutionary-delay hypothesis simply will not do. + +Destroying a hypothesis is one thing. But it also helps if you have something to put in its place. And Dr Boyce and his colleagues have one on offer. They think the Carboniferous coal measures were a consequence of continental drift. + +During the Carboniferous, the continents were moving around quite a bit. Such movement, particularly when it involves continents colliding (which it did), warps them. That causes mountains and basins to form. It is the basins which interest Dr Boyce. The downwarping that created them meant they would have flooded regularly, bringing sediment that buried the tree-laden bogs, preserving them not so much from micro-organisms as from erosion. + +That local subsidence happened during the Carboniferous is not news. Geologists of the 19th century concluded as much—though they knew nothing of continental drift. But previous explanations for abundant coal, such as the evolutionary-lag one, have tended to concentrate on biology. Dr Boyce is suggesting that the actual cause was geological. Buried by subsidence, the coal could not be eroded, and thus survived to the present day. + +During the Permian, however, continental movement ceased for a time, as all of the world’s landmasses came together in a single supercontinent, known as Pangaea. Not only did this stop the downwarping, it also dried the climate out (for the average point on land is farther from the ocean’s moist air in a supercontinent than in a group of smaller ones), meaning there were fewer swamps. Less coal was created, and more eroded than before. It was not until the Cretaceous, some time after Pangaea had broken apart again, that coal formation and preservation resumed. According to Dr Boyce’s hypothesis, it is therefore no coincidence that the second-most abundant source of coal today is rocks of the Cretaceous and the subsequent Caenozoic. + +If his hypothesis is correct, then, it is the grinding movement of the continents that is ultimately responsible for the Industrial Revolution. No continental drift, no coal. No coal, and humanity, if, indeed, such a species had evolved at all, might still be tilling the fields. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21688700-more-any-other-substance-coal-created-modern-society-what-created/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Zika fever + +Virus chequers + +A newly emerging disease is threatening the Americas + +Jan 23rd 2016 | São Paulo | From the print edition + + + +ZIKA, a mosquito-borne virus that arrived in Brazil last May, is an avid traveller—and an increasingly feared guest. It has since found its way into 17 other countries in the Americas. Until October, Zika was not thought much of a threat: only a fifth of infected people fall ill, usually with just mild fever, rash, joint aches and red eyes. Since then, though, evidence has been piling up that it may cause birth defects in children and neurological problems in adults. On January 15th America’s Centres for Disease Control and Prevention (CDC) advised pregnant women not to travel to countries where Zika is circulating. + +The virus was first isolated in 1947, from a monkey in the Zika forest in Uganda. Since then it has caused small and sporadic outbreaks in parts of Africa and South-East Asia. In Brazil, for reasons yet unclear, it quickly flared into an epidemic after its arrival—by official estimates infecting as many as 1.5m people. + +Alarm bells started ringing in October, when doctors in Pernambuco, one of Brazil’s north-eastern states, saw a huge increase in babies born with microcephaly: an abnormally small head, often with consequent brain damage. In the next four months more than 3,500 cases of microcephaly were reported in Brazil. That compared with fewer than 200 a year in the five years before 2015. None of the known causes of the condition—which include genetic abnormalities, drugs, alcohol, rubella infection and exposure to some chemicals during pregnancy—seemed a plausible culprit. + +Last week, CDC scientists announced the best evidence so far that Zika can pass from mother to fetus: they found the virus in four Brazilian babies with microcephaly who had died in the womb or shortly after birth. Previously, Brazilian researchers had found Zika in the amniotic fluid of women carrying fetuses with microcephaly. + +There is another fear. After Zika arrived in Brazil, and also in El Salvador, both saw a sharp increase in severe neurological and autoimmune problems, including Guillain-Barré syndrome, which can lead to paralysis. These also surged in French Polynesia after Zika broke out there in 2013. + +Working out the extent to which Zika, alone or combined with other things, is to blame for any of this is tricky. Dengue and chikungunya—mosquito-borne viruses with similar symptoms—are common where Zika is making the rounds. According to Scott Weaver of the University of Texas, tests that spot Zika work only during its infectious phase, which lasts just a few days. After that, they are often useless if the patient has had dengue or been vaccinated against yellow fever. And only laboratories that can do sophisticated molecular tests are in the game in the first place. All of which means that most cases of Zika are missed, and many are misdiagnosed. + +Bearing these caveats in mind, researchers are mining the available surveillance data for answers. More solid results will come from prospective studies, set up recently, which are tracking pregnant women in Brazil, looking at whether those who catch Zika are more likely to have babies with birth defects. + +Researchers in America and other countries have begun work on a vaccine. Unlike the one for Ebola, though, which had been in the pipeline for a decade when the epidemic in West Africa began, a Zika vaccine is “at ground zero”, says Alan Barrett, also of the University of Texas. That is where potential antiviral drugs are, too. + +The spread of Zika makes attacking disease-carrying mosquitoes all the more important. Mostly, Zika is transmitted by Aedes aegypti, which is also the vector of dengue and yellow fever. This insect lives in tropical climes, but Aedes albopictus, found as far north as New York and Chicago, and in parts of southern Europe, can also do the job, though it is not clear how efficiently. A paper published last week in the Lancet shows where Zika could become endemic (see map). But places where air-conditioning, screened windows and mosquito control are the norm are unlikely to see outbreaks flare up. + +In December, Brazil decreed a national public-health emergency. This has removed bureaucratic hurdles to the purchase of insecticides for mosquito larvae, equipment for health workers and the like—and prompted speculation about whether this bureaucracy was necessary in the first place. It also enabled the deployment of the army to help 310,000 health workers in the mosquito-eradication drive. Brazil was declared free of A. aegypti in 1958, after a campaign that included regular fumigation and visits to ensure households got rid of standing water, where mosquitoes like to breed. Since then, the insect has bounced back. Might the fear of Zika help finish the job properly this time? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21688849-newly-emerging-disease-threatening-americas-virus-chequers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Medicine + +Curing multiple sclerosis + +Stem cells are starting to prove their value as medical treatments + +Jan 23rd 2016 | From the print edition + + + +THIRTY years ago a young haematologist called Richard Burt was training at Johns Hopkins University, in Baltimore. He noticed that after leukaemia patients had received a treatment to wipe out their immune systems, they needed to be re-immunised against diseases such as measles and mumps. Although the patients in question had been vaccinated as children, the therapy for their blood cancer had erased this cellular memory. Dr Burt turned to his teacher, William Burns, and ask whether the same might be possible in autoimmune diseases. “I could see a light go on in his eyes. ‘You should try it in multiple sclerosis’ he said.” Thus began decades of painstaking work. + +Multiple sclerosis (MS) happens when the body’s immune system learns to attack its own nerve fibres in the same way that it learns to attack invading pathogens. Nobody really understands what causes this misplaced learning. But Dr Burt’s idea did not depend on knowing that. He just wanted to wipe the memory out, in the way that the memory of a vaccination is wiped out by chemotherapy. By 2009 Dr Burt, now at Northwestern University, in Chicago, had proved that his treatment worked in patients with the most common form of the disease, relapsing remitting MS. The treatment involves using lower-dose chemotherapy to kill the white blood cells that are responsible for attacking nerve fibres, and then rebooting the immune system using stem cells collected from the patient before treatment began. + +Stem cells are the source from which more specialised cells develop. Those found in bone marrow, known as hematopoietic stem cells, produce the many different cells found in blood, including the white cells implicated in MS. In Dr Burt’s therapy such stem cells are extracted from a patient, stored until after the chemotherapy, and then infused back into him. Ten days later, he can go home. + +It is effective. Although there is a relapse rate of around 10% within five years, many who have been treated in randomised trials in Brazil, Britain and Sweden feel as though they have been cured. Proving they actually have been means waiting for the results of the trials, and watching how participants fare over many years. Already patients have been seen to improve for two years after treatment. + +This work should give drug companies some pause for thought. They are already facing criticism for the high prices of MS drugs. Moreover, though such drugs can slow the progression of the disease, they cannot do what the stem-cell therapy seems able to, which is to reverse it and improve patients’ quality of life—for example by allowing them to walk again. + +Last year a study published in Neurology found that the cost of MS drugs had risen five to seven times faster than the general inflation rate for prescription drugs. Medicines that cost $8,000 to $11,000 20 years ago were between $59,000 and $62,000 in 2013. On top of this come bills for doctors, MRI scans, blood draws and lab work. By contrast, Dr Burt reckons, a stem-cell transplant in America costs, all in, $120,000—and that sum would be lower in countries with less-expensive health-care systems. Indeed, doctors in Britain think the treatment should cost hospitals about £30,000 (just over $40,000). At those sorts of prices, stem cells are set to give MS drugs a real run for their money. + +More broadly, this is good news for proponents of stem-cell therapies in general. Leukaemia is mostly treated these days with hematopoietic stem cells. Delete Blood Cancer, a British charity, is encouraging people around the world to register to donate stem cells. Registration can be done with a cheek swab, to show the genetic make-up of the potential donor’s immune system. The cells themselves, if needed, are collected via a blood donation. And other conditions, too, seem susceptible to the stem-cell approach. Mesoblast, an Australian company, received approval last September for a stem-cell treatment for graft-versus-host disease, in which the immune system rejects a transplanted tissue. It has a number of other products in advanced trials, in areas such as chronic heart failure and chronic low-back pain. Stem-cell therapy, so long promised, is starting to become a reality. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21688848-stem-cells-are-starting-prove-their-value-medical-treatments-curing-multiple/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Social science + +Done, bar the counting + +Online social networks do not change the fundamentals of friendship + +Jan 23rd 2016 | From the print edition + +Friends to the end + +HOW many Facebook friends do you have? For some, the answer can be a signal of social success, and the numbers claimed can be enormous: Facebook permits 5,000 of them (though these might include products and companies as well as people). But Robin Dunbar, a psychologist at Oxford University, has long reckoned that claims of vast numbers of Facebook friends do not say much about actual human relationships. This week, as he describes in a paper in Royal Society Open Science, he is even more certain. + +Dr Dunbar is the eponymous originator of Dunbar’s number, a rough measure of the number of stable relationships that individuals can maintain. He came up with it in 1993, when he was studying the brains of social primates. He found a correlation between the average size of each species’s neocortex (a recently evolved part of the brain) and that of their social groups. Extrapolating the results to humans, he reckoned, meant they should have social circles—of close friends and relatives, and frequently seen acquaintances—of about 150 people. And that is what he found. From the sizes of Neolithic villages to the centuries of Roman legions, humans seem to have organised themselves in the past into groups of 100-200. + +Things have changed a bit since Neolithic and Roman times, though, and many wonder what effects modern technology might have on the size of such circles. Perhaps there is indeed a cognitive limit, imposed by the brain’s internal architecture, on how large a social structure can be maintained. But there may also be another limit: time. Maintaining 150 friendships face-to-face consumes a lot of that. Cobbling together many times this number of connections online, though, is a doddle. + +Previous attempts to decide between these possibilities have tended to come down on the cognitive-limit side of the fence. But they have been criticised for looking at unrepresentative groups of people: students (inevitably), scientists and particularly heavy users of social networks. The latest try, in which Dr Dunbar piggybacked on a survey organised by a biscuit-maker, has overcome that. It is the first national-scale, randomly sampled study to investigate the matter. + +The survey asked 2,000 people, chosen because they were regular social-network users, and a further 1,375 adults in full-time employment, who might or might not have been such users, how many friends they had on Facebook. The results showed, to no surprise whatsoever on the part of Dr Dunbar, that the average number of Facebook friends in the two groups were Dunbar-sized numbers: 155 and (when those who did not use Facebook at all were excluded) 187, respectively. + +Other details matched Dr Dunbar’s earlier work, too. This described a pair of smaller socially relevant numbers—a support clique (people you would rely on in a crisis) of about five and a sympathy group (those you would call close friends) of about 15. Such cliques and groups turned up in detailed answers to questions about Facebook users’ relations with others. + +These results, then, confirm that what constrains an individual’s number of friends is neurological. Even though social networks like Facebook could help people handle far more social interactions than Dunbar’s number describes, it seems the human brain simply cannot keep up. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21688846-online-social-networks-do-not-change-fundamentals-friendship-done-bar/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Planetary science + +And then there were nine + +A giant planet may be lurking in the solar system’s outer reaches + +Jan 23rd 2016 | From the print edition + + + +THE past two decades have seen astronomers’ catalogue of planets expand over two-hundredfold, as new techniques and better telescopes have found more than 2,000 of them orbiting stars other than the sun. But in the solar system itself, the list of planets has actually shrunk—Pluto having been downgraded from that status in 2006. The number of the sun’s planetary companions has thus fallen from nine to eight. + +Now, a pair of astronomers from the California Institute of Technology think they have evidence that will restore the sun’s tally to its previous value. Their analysis of objects orbiting in the Kuiper Belt, a ring of frozen asteroids that circle beyond the orbit of Neptune (and of which Pluto is now regarded as the largest member), suggests to them that something about ten times as massive as Earth has distorted those orbits. If you knew where to look, this planet-sized object would be visible through a suitable telescope. And Konstanin Batygin and Michael Brown believe they do know. + +As they write in the Astronomical Journal, they have analysed the orbits of Kuiper-Belt objects and found six that behave in a peculiar way. As the diagram shows, the points of closest approach of these objects to the sun, known as their perihelia, almost coincide. Moreover, these perihelia all lie near the ecliptic—the plane of Earth’s orbit and also, approximately, that of the other planets—while the objects’ orbits are all angled at 30° below the ecliptic. The chance of all this being a coincidence, the two researchers estimate, is about seven in 100,000. If it is not a coincidence, it suggests the six objects have been shepherded into their orbits by the gravitational intervention of something much larger. + +A computer analysis Dr Batygin and Dr Brown performed suggests this something is a planet weighing 5-15 times as much as Earth, whose perihelion is on the opposite side of the sun from the cluster, and which thus orbits mainly on the other side of the solar system from the objects its orbit has affected. This planet’s perihelion would be 200 times farther from the sun than Earth’s, and the far end of its orbit might be as much as six times that distance away. This gives a search zone, and Dr Batygin and Dr Brown are using Subaru, a Japanese telescope, to perform that search. + +Given other demands on Subaru’s time, it might take five years for this search to find (or not find) the hypothetical planet. But looking at some existing data from the Widefield Infrared Survey Explorer, a satellite, might also show it, if it is there to be seen. + +Ironically, it was Dr Brown as much as anyone who was responsible for Pluto’s downgrading, for he discovered Eris, an object almost as big as Pluto, in 2005. That discovery did much to damage Pluto’s planetary credentials. By his own admission, he was sceptical that the anomalies he and Dr Batygin have investigated actually would point to the existence of a replacement ninth planet. He is a sceptic no longer. Whether he is actually right may soon become apparent. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21688843-giant-planet-may-be-lurking-solar-systems-outer-reaches-there-new/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Richard Casement internship + +Jan 23rd 2016 | From the print edition + +We invite applications for the 2016 Richard Casement internship. We are looking for a would-be journalist to spend three months of the summer working on the newspaper in London, writing about science and technology. Applicants should write a letter introducing themselves and an original article of about 600 words that they think would be suitable for publication in the Science and Technology section. They should be prepared to come for an interview in London or Washington, DC, at their own expense. A stipend of £2,000 a month will be paid to the successful candidate. Applications must reach us by January 29th. These should be sent to: casement2016@economist.com + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21688844-richard-casement-internship/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Indonesian literature: Burning bright + +American fiction: Come as you are + +Religion and psychology: In the hands of an angry God + +Central banks: Shifting the burden + +The magic of Diego Velázquez: With brush and eye + +The refugees of Dadaab: Cheek by jowl + + + + + +Articles Sections Next + +Indonesian literature + +Burning bright + +Brash, worldly and wickedly funny, Eka Kurniawan may be South-East Asia’s most ambitious writer in a generation + +Jan 23rd 2016 | JAKARTA | From the print edition + + + +MASSIVE, chaotic, endless and, despite it all, also charming, Jakarta can seem less a city than some sort of organic life form inexorably consuming north-western Java. More people live in greater Jakarta than in Australia; its residents send out more tweets than those in any other city. Yet millions of Jakartans also live in slums with pirated electricity and no running water. Traffic clogs the streets from dawn until well after nightfall—kita tua di jalan (“We grow old in the streets”), complain the city’s eternally harried drivers—and people from every corner of Indonesia cram into every available corner of the city. + +Eka Kurniawan, a young novelist, lives on the outskirts with his wife and daughter. When he sits down for a meeting at one of central Jakarta’s many shopping malls at 4.30pm, he says traffic will make it impossible for him to get back home before 10. Mr Eka may well be glad of the chance to sit still for a while. In the past few months he has appeared at book festivals in Melbourne, Brisbane, Brooklyn and Frankfurt—where Indonesia was the national guest of honour. Last year his American publisher, New Directions, whisked him around the country on a six-city book tour. Benedict Anderson of Cornell University, a luminary of South-East Asian studies who has recently died, called him “Indonesia’s most original living writer of novels and short stories”, and proclaimed him a successor to Pramoedya Ananta Toer, author of the social-realist “Buru Quartet”, and the man many consider to be Indonesia’s greatest-ever novelist. + +Now 40, Mr Eka has published four books of short stories and three novels, only two of which have so far been translated into English: “Beauty is a Wound” (New Directions), which is being published in 27 languages and was included in eight international lists of best books of 2015, and “Man Tiger” (Verso), which has been nominated for the 2016 Man Booker International prize. The English-language rights to his third novel, “Love and Vengeance”, have recently been acquired by New Directions and Pushkin Press; publication is set for 2017. + +If Mr Eka feels burdened by other people’s expectations, he does not show it. Small, slight and bespectacled, with a thoughtful elfin manner and a ready grin, he looks perhaps half his age, and chats freely and easily, without any apparent writerly agony. Mr Eka is Sundanese, and grew up in a small town in West Java which he used in “Beauty” as a model for Halimunda, the fictional setting that acts, as in William Faulkner’s novels, as a prism that filters and refracts Indonesia’s history. For a time he ran a souvenir shop, like Kliwon, the determined, sweet, relentlessly level-headed rebel in “Beauty”. + +When not working on novels Mr Eka blogs and writes for television—“soap operas, and whatever else they order from me”. Like many writers, he says, “I always think about doing something else. But in the end I sit down and write again.” And again and again: he has a book called “O”—a fable, he says, modelled on George Orwell’s “Animal Farm”—coming out later this year in Indonesian. + +The two books available in English are strikingly different. “Beauty is a Wound” is a sprawling work—seen through the eyes of Halimunda’s gangsters, rebels, prostitutes and gravediggers—that obliquely covers the history of Indonesia from the late colonial period onwards, through the 31-year rule of Indonesia’s second president, Suharto. Its opening line is hard to match: “One afternoon on a weekend in March, Dewi Ayu rose from her grave after being dead for 21 years.” The author said he spent much of his youth reading sastra picisan—pulp fiction filled with sex and violence, and his work has plenty of both. + +Mr Eka bristles at the suggestion that “Beauty” is fictionalised history: “I tried to make it a joke about a historical novel,” he says, “and the joke is that you can’t have a historical novel.” “Beauty” is not about Indonesian history; it is about characters buffeted by that history. In its scope and seamless weaving of the fantastical and the quotidian, it owes a hefty debt to Gabriel García Márquez, though Mr Eka’s magical realism is much earthier and less lyrical than his Latin American predecessor’s (in a nifty bit of irony, the only character able consistently to use magic to his advantage is Kliwon, a communist who disavows religion and superstition). + +The second book, “Man Tiger”, is slimmer and a quicker read—a murder mystery of sorts, though the first sentence reveals both murderer and victim. Even the motive is no mystery. Yet it is a testament to Mr Eka’s gift as a storyteller, particularly his skill at ratcheting up and tactically releasing tension, that he keeps readers enthralled nonetheless. Margio, the protagonist, is a sort of Javanese Raskolnikov (Dostoyevsky’s protagonist in “Crime and Punishment”), though technically it is not he, but a white tiger living inside him, that does the killing. Mr Eka calls this his most personal book: “There is a parallelism between me and Margio…In Indonesia we keep our anger, we repress our anger, but in the end…the tiger comes out, and we don’t know how to handle this tiger.” + +Such concern for the personal rather than the political, and his rejection of conventional realism in “Beauty”, exorcises the ghost of Pramoedya’s socialist-realism. Writing towards the end of colonialism, Pramoedya wanted most of all to give Indonesians an identity. If he was the nation’s Zola, Mr Eka is shaping up to be its Murakami: approaching social concerns at an angle rather than head-on, with hefty doses of surrealism and wry humour. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21688833-brash-worldly-and-wickedly-funny-eka-kurniawan-may-be-south-east-asias-most-ambitious/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +American fiction + +Come as you are + +A thoughtful debut from an up and coming young novelist + +Jan 23rd 2016 | From the print edition + + + +What Belongs to You. By Garth Greenwell. Farrar, Straus & Giroux; 194 pages; $23. To be published in Britain by Picador in April. + +A YOUNG American teacher working in post-Soviet Bulgaria encounters a seductive hustler in the men’s room of the National Palace of Culture. Mitko is slender and beautiful, utterly at ease yet achingly remote. What follows is the poignant story of the two men’s unequal dance of need and longing. “What Belongs to You”, a first novel by Garth Greenwell, an American writer with a growing reputation, is a sensitive, almost nostalgic, meditation on desire. + +The strength of this slim book is the vibrant, heartbreaking character Mr Greenwell creates in Mitko: object of the unnamed narrator’s desire, fear, obsession and, ultimately, pity. He is a sweet, increasingly desperate product of a broken country, a child of the East who sells sex to survive. Mitko’s attractiveness stems as much from “a kind of bodily sureness or ease that suggested freedom from doubts and self-gnawing” as from his brazen sexuality. Throughout their brief relationship, the narrator minutely observes both Mitko and his country, as well as his own past. Yet he remains opaque, as estranged from the reader as he is from himself. + +This alienation, the narrator reveals, is rooted in early experiences of rejection for his awakening homosexuality. In the novel’s remarkable central section, told in one unbroken rush of past impressed upon the present, he recalls watching a boy he loved receive fellatio from a girl. “I’ve sought it ever since,” he thinks; “the combination of exclusion and desire I felt in his room.” The central theme of gay identity has led some to liken “What Belongs to You” to powerful coming-out narratives by such writers as James Baldwin and André Aciman. Edmund White, a writer and critic whose novel “A Boy’s Own Story” (1982) is a classic of the genre, has called it a “masterpiece”. (Indeed, Mr Greenwell’s novella, “Mitko”, the seed for this novel, won a novella prize and was nominated for a Lambda award for gay writing.) + +Yet the book is less about gay experience, in all its interpersonal and social dimensions, than it is a study of obsession and the self. Intense introspection makes it feel like a book from another age. Mr Greenwell, a poet, writes in the elaborate, melancholic voice of the mid-century novel of Mitteleuropa. Events are related in long, winding sentences punctuated by asides, filtered through the narrator’s gaze; attention is lavished on landscape, often pregnant with meaning. The tone may be apt for a post-communist world caught in aspic; it can also feel mannered. Still, his language is often beautiful: “How helpless desire is outside its little theatre of heat.” The narrator’s “humiliating need…has always, even in my moments of apparent pride, run alongside my life like a snapping dog”. + +All this self-scrutiny can leave the reader hungry for deeper exploration of the questions raised by the novel’s setting. The theme of the innocent abroad is not new, yet the complex dynamics of Mitko’s precarious existence and the ethics of their transaction are barely addressed. Ultimately, this is a story about chances and the unequal possibilities for escape for those emerging from different forms of wreckage. The Westerner feels regret, but shows startlingly little awareness of his privilege; Mitko is simply the canvas on which he projects his need. A bigger, deeper novel might have remedied this shortcoming, elevating this to a major novel of gay life. As it is, Mr Greenwell offers a tender portrait of the longing for connection and acceptance that inhabits us all, gay or straight. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21688832-thoughtful-debut-up-and-coming-young-novelist-come-you-are/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Religion and psychology + +In the hands of an angry God + +Belief in divine punishment may be inherent and a useful evolutionary adaptation, helping humans overcome selfishness + +Jan 23rd 2016 | From the print edition + + + +God Is Watching You: How the Fear of God Makes Us Human. By Dominic Johnson. Oxford University Press; 286 pages; $27.95 and £18.99. + +MANY people think that religious belief is inherent to human psychology. This does not mean that specific beliefs are wired, but that the brain is predisposed to believe in supernatural agents. Some proponents of this idea argue that supernatural beliefs have hijacked innocent or otherwise useful features of the mind. But Dominic Johnson argues in “God Is Watching You”, belief in God—specifically, in supernatural forces that can punish—is a useful evolutionary adaptation. + +Mr Johnson has doctorates both in evolutionary biology, where most of the research in the belief instinct has been done, and political science. He assembles well-known features of the mind in a tidy case. Human brains have a “hyperactive agency-detector device”, seeing agents (spirits, gods and the like) in natural phenomena and random happenings. This is useful. There is little harm if you overreact to something that turns out not to exist. But underestimating a rustling in the undergrowth, which might conceal a predator, could be fatal, leading to evolutionary selection of a tendency to see agents everywhere. The instinct is easily triggered, even in atheists. Even pictures can set it off: in one experiment, an office honour-system to pay for shared coffee got more contributions when someone taped a picture of a pair of eyes on the collecting tin. + +Another component in the belief instinct is a belief in justice, the idea that most people get what they deserve. (This may be one reason why even 30% of those Americans unaffiliated with any church nonetheless believe in punishment in hell.) A third factor is the tendency in most people to put greater emphasis on punishment than on reward: losing $100 is far more painful than winning the same amount is pleasing. + +Why would belief in an angry god be any use? When humans developed language, they could spread word of cheating, freeriding and the like. Raping your neighbour’s mate might once have made evolutionary sense—spreading your own genes at little cost—but “in a clever and gossiping species, knowledge of selfish actions could spread and come back to haunt us” in the form of a furious husband or a village mob. Since cheating is now costlier, belief in an invisible monitor helps people avoid those costs, and so survive with their reputations intact, and pass on their genes. + +So much for the evolutionary biology. Mr Johnson brings his political science into the picture by arguing that societies which punish cheaters are more likely to survive and grow. He quotes John Locke, a 17th-century English philosopher: “Those who deny the existence of the Deity are not to be tolerated at all. Promises, covenants and oaths, which are the bonds of human society, can have no hold upon or sanctity for an atheist.” Those bonds and covenants allow societies to co-ordinate action and plan for the future. + +Mr Johnson’s own research into 186 preindustrial cultures found that moralising religious beliefs were more prevalent in larger and more complex societies; these were more likely to be policed, use money and pay taxes. Others have noticed that religious kibbutzim in Israel are thriving, whereas secular socialist ones are in decline. The fact that moralising religious beliefs are more prevalent in more complex societies does not prove that one caused the other. But the striking number and variety of examples add credence to Mr Johnson’s theory. + +This book is not a detailed account of religious belief. Nor does Mr Johnson bother grappling with modern theologians’ subtle andabstract ideas of God and hell. His subject is the mind, not the deity, and he finishes by musing how resilient religious thinking has proved to be in the face of science: “Learning religion is part of human nature. Learning science is a battle against human nature.” + +Mr Johnson does not seem a pious man himself. But unlike atheists such as Richard Dawkins and Sam Harris, he is not out to embarrass religious belief and chase its subscribers from the public square. The religious instinct is too deep-seated, he thinks. Instead, critics of superstition are best advised to work with the grain of human psychology rather than against it, finding more benevolent ways to satisfy human yearning for something “out there”. What form such an atheist religion should take, though, God only knows. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21688835-belief-divine-punishment-may-be-inherent-and-useful-evolutionary-adaptation-helping/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Central banks + +Shifting the burden + +Central banks need to do less, and politicians more + +Jan 23rd 2016 | From the print edition + + + +The Only Game in Town: Central Banks, Instability and Avoiding the Next Collapse. By Mohamed El-Erian. Random House; 296 pages; $28. + +THE past seven years have been an extraordinary period for central bankers. Not only have they cut interest rates to zero (and even below) in the developed world; for the first time in their history central banks have greatly expanded their balance sheets, buying government bonds and other assets. Most economists agree that vigorous action was needed in the wake of the financial crisis in 2007-08 in order to head off a repeat of the Great Depression. Nevertheless, the sheer scale and protracted nature of such monetary stimulus is now a cause for concern among some commentators; have the banks permanently distorted the economy? In December the Federal Reserve made the first, tentative step towards normality, with a quarter-point rate increase. + +Mohamed El-Erian, a former IMF economist and executive at the Pimco fund management group, is the latest to sound the alarm. While central banks “averted tremendous human suffering”, he argues that they have failed to generate what the Western world really needs—“the combination of high, durable and inclusive growth together with genuine financial stability”. + +Worse still, politicians have come to rely on central bankers to provide the main source of economic stimulus. As a result, Mr El-Erian asserts, they have failed to force through reforms that were badly needed. The long period of easy monetary policy has pushed up asset prices and thus wealth inequality. It has also meant that the appetite for financial risks (market speculation, in other words) is greater than the willingness of businesses to take economic risks by increasing investment. + +Other problems include high long-term unemployment, a loss of trust in authority and the failure to co-ordinate economic policy. The global economy is rapidly approaching a T-junction, he argues, where the road heads in two diametrically opposite directions. One will lead to higher growth, reduced financial risk and a lessening of inequality; the other will see all those measures head in the wrong direction. + +Mr El-Erian does a good job of describing the problems. But the book falters when he tries to set out his plan for taking the right path away from the T-junction. He cites a number of necessary measures, including revamping the education system, strengthening infrastructure, improving labour competitiveness and flexibility, while simultaneously closing tax loopholes and increasing marginal tax rates on the wealthy in order to reduce inequality. But he only touches on these issues; a lot more detail is needed. Improving education may be a good idea, but it will be a decade or so before today’s schoolchildren have any impact on labour productivity. How will growth be improved in the meantime? + +Instead of answering such questions, he launches into a meandering section about the need for new thinking to deal with “bimodal distributions” (his T-junction metaphor). Just when readers want to get into the meat of the debate on economic policy, they are served a chapter called “Translating Awareness into Optionality, Resilience and Agility”. Mr El-Erian is right that employers need to embrace diversity in hiring, but that subject does not belong in a book on central banking. + +In a sense, however, the disappointing ending symbolises the state of economic debate. Central banks have provided all the help they can, and the burden of improving long-term growth ought to fall on politicians. But no one can agree on precisely what needs to be done. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21688836-central-banks-need-do-less-and-politicians-more-shifting-burden/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The magic of Diego Velázquez + +With brush and eye + +Deconstructing a Spanish master + +Jan 23rd 2016 | From the print edition + +So hard to capture him + +The Vanishing Man: In Pursuit of Velázquez. By Laura Cumming. Chatto & Windus; 304 pages; £18.99. To be published in America by Scribner in April. + +EDOUARD MANET, a French Impressionist artist, considered him “the greatest painter that ever was”. To Laura Cumming, art critic of the Observer, a British Sunday paper, Diego Velázquez, whose precocious talent propelled him to the position of sole portrait painter to Philip IV of Spain at just 24, is something more. Shattered by the death of her father when she was in her late 20s, Ms Cumming retreated to Madrid. It was there she first saw Velázquez’s late masterpiece, “Las Meninas”, an enigmatic group portrait of the long-faced Spanish Habsburgs. She was transfixed. The princess, the dwarf and the artist himself looked out at her, as she looked at them, and in that moment they were alive again. Somehow the painting held back death: “He gave me the consolation to return to my own life.” + +This spiritual experience prompted Ms Cumming to look for historical records of other personal encounters with art. One she found concerned John Snare. In October 1845 Snare, a bookseller, peered closely at the painting he had come 30 miles (48km) to see sold at auction, a supposed Anthony Van Dyck of the young King Charles I. Licking a finger, he rubbed at the grimy varnish: “I never can forget the impression as the tones came alive like magic.” He was sure this was no Van Dyck, but the famous “lost Velázquez” painted while the English prince was in Spain courting the infanta. Snare’s quest to prove this conviction would consume his whole life, leading him from provincial prosperity in Reading to ruin and isolation in a cold-water tenement on Broadway. + +Ms Cumming’s book is thus a double biography, alternating between the life and endeavours of Velázquez and those of this humble man who loved him, framed in a fragment of memoir by a woman who loves them both. Like Snare, Ms Cumming is an evangelist for Velázquez, this book her case for more conversions. Through explorations of his work, she illuminates the innovations with which he would transform painting. His subjects do not inhabit a specific place, but rather a moment in time, which the painting shares with the viewer. From Velázquez’s former slave to the king himself, each is portrayed with respect as he or she fixes the viewer with that unsurpassed intensity of gaze. With almost no preparatory studies, he translated his subjects onto the canvas in a flurry of expressive colour. Up close, they dissolve into what Kenneth Clark, a British historian and one-time director of the National Gallery, once called “a salad of beautiful brushstrokes”; yet step back, and the colours resolve into likenesses of remarkable realism. + +Among the delights in this book are the many vignettes and miniature histories that punctuate the narrative—the socioeconomic significance of the stiff white golilla collar in Philip IV’s bankrupt court, the establishment of the Stuyvesant Institute in New York and the circumstances of the first world boxing title. As compelling and entertaining as a detective novel, this is an engaging book, comparable to C. Lewis Hind’s “Days with Velázquez” from 1906. + +Written in the fluid prose that characterised her first book, on self-portraits, “A Face to the World”, it is a labour of love even if her enthusiasm can be overwhelming; repetitions and occasional hyperbole temper the enjoyment. The densely researched web of pictures and catalogues, receipts, translations and letters, court proceedings and handbills, painters, courtiers and players is at times confusing. + +Ms Cumming, nonetheless, paints a beguiling picture of lives lived for art. When Sir Lawrence Gowing, a British artist and writer, reviewed Jonathan Brown’s seminal biography, “Velázquez: Painter and Courtier”, for the New York Times in 1986, he reflected that “No painting is harder to write about than that of Velázquez, and we must still, I think, await the words that will convey the compassionate integration of vision and paint with human subject that makes [his painting] so noble.” In “The Vanishing Man”, Laura Cumming succeeds in coming close. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21688838-deconstructing-spanish-master-brush-and-eye/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The refugees of Dadaab + +Cheek by jowl + +How the world forgot Dadaab + +Jan 23rd 2016 | From the print edition + + + +City of Thorns: Nine Lives in the World’s Largest Refugee Camp. By Ben Rawlence. Picador; 384 pages; $26. Portobello; £14.99. + +POLICEMEN clutching battered AK-47s stifle yawns in the hot sun outside the Westgate shopping mall in Nairobi. On the road leading up to the entrance cameras flash every few seconds, recording the number plate of each passing car. A city that once was fairly relaxed now feels as if it is under siege, its slumber ended by an attack on the mall in 2013 that left 67 people dead and as many as 175 wounded. The Shabaab, a Somali jihadist group, claimed responsibility. Kenyan politicians quickly blamed Dadaab, the world’s biggest refugee camp, demanding that it should be closed. No connection was found between the attackers and the camp, yet the same demand is made every time Kenya suffers another outrage. + +The sprawling camp was set up in 1992 to provide short-term shelter for refugees fleeing Somalia’s civil war and famine. It kept growing. Today Dadaab is home to about 500,000 people, dwarfing the main towns in the north-east of Kenya. Its economy, including its role as a way-station for a vast sugar-smuggling operation that is worth as much as $400m a year, powers that of the immediate region. Yet Dadaab is a refugee camp that has been largely forgotten by the world. + +A generation of young people have been born and educated in it; now they scrabble to earn a living there. Many are starting families in its confines. Trapped in limbo, they wait for resettlement abroad, too afraid to return to Somalia. Their lives, chronicled in detail by Ben Rawlence in “City of Thorns”, are a constant struggle for dignity and agency in a place that seems determined to deny them both. + +The stories he tells are gripping. A Somali mother takes her five children, a pot, a kettle, a cup and a plate and sets out to walk for more than two weeks to the camp across the Kenyan border. She chivvies the youngest by telling him that a lion is pacing right behind. These tales do not come together in a neat ending, as they might in a novel. Instead the reader is left with a sense of loss and limbo—and the scent of dry wind, brush and sand. Lingering over it all is a strong feeling of lives being wasted by a world compassionate enough only to prevent people starving or being slaughtered in civil war, but not caring enough to resettle its many children and young adults—and make their lives worth living. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21688834-how-world-forgot-dadaab-cheek-jowl/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Tancrède Melet: The artist of the void + + + + + +Articles Sections Next + +Obituary: Tancrède Melet + +The artist of the void + +Tancrède Melet, highliner, rock-climber and circus performer, died on January 5th, aged 32 + +Jan 23rd 2016 | From the print edition + + + +THE slightly leaning point of the Aiguille de la République, in the Mont Blanc range, is just large enough for a nerveless climber to sit and admire the view: 2,300 metres of empty air between his perch and the glacier below. But on September 4th 2014 Tancrède Melet was not sitting on it. He was pirouetting in his wingsuit to display the underarm webbing that would make him swoop down like a bird, and blowing kisses to the camera with which he was filming himself. A moment later, he jumped. It made sense. To go back to his partner and supper in Chamonix the way he had come, by train, hike, 650 metres of rock-climbing and a brief bivouac in the snow, would consume ten hours. It would take three minutes, if he flew. + +Every void and drop seemed to beckon him to throw himself into it, with only a parachute to save him. He couldn’t see a cliff or a building without wanting to jump off: sometimes in his wingsuit, sometimes half-naked, somersaulting or cartwheeling over the edge. Once he was fired from a giant catapult, howling with joy at the speed with which the mountain walls shot past. If clouds or rainbows filled the void, so much the better, because he or others would usually be filming his performance, and the beauty of it—l’esthétique of his body curving and cavorting in space—was almost the most important thing. Foremost, though, was the extraordinary clearing and freeing of his mind. He could seldom hide his slight vexation when the parachute checked his fall. + +Jumping was one route into emptiness. The other was to walk out into it along a thin nylon slackwire, to see if he could get across from safety to safety and what might happen if he failed. He walked across the gorges of the Dourbie in southern France, and between the Tours Mercuriales in Paris; in Kjerag in Norway, in winter, he crossed on a wire between ice-walls 450 metres above a fjord. He walked the line, almost invisibly high, that joined two hot-air balloons. On many highlines he had a leash to save him. On some, he did not. He would step slowly, often barefoot for better grip, arms out, as the wire swayed. If he slipped—and he did slip—he had to grab the wire, with hands or curling feet, and hang limply over the far blue view until he could lever himself back. Sometimes he crossed with an open, but quite useless, umbrella in one hand. + +Wasn’t he scared? Occasionally. Yet he was no closer to death, he thought, than a man who drove too fast on the motorway—or anyone else in this “community of mortals”. With base-jumping, he was mostly just curious to find out what surprises lay in store for his body or his mind if he flew through limits unbreached before; or through the life/death limit everyone crossed, if it came to that. “Who”, his publicity ran, “will be the first to venture into the unknown and reach for the stars?” + +With highlining, he felt more cautious. A slackwire between two trees was a doddle; on a somewhat higher wire, it was still possible to centre himself and focus calmly across the distance. But great heights, with their choppy winds and the loss of visual landmarks, racked both his nerves and his balance. He had to “beat himself up” to do the walk at all—or remember how on his first highline, too scared to go more than three steps, he had felt such an “explosion of sensations” that he was hooked for life. + +The devil’s whisper + +Thin, dark and shy, he did not look like an extreme sportsman and disliked being called one. Nor was he a daredevil; he was more thoughtful than that. There was a dash of the devilish, though: a whisper in his ear that said, “Why don’t you just try…?”, to which, after communing with his laptop and maps for a while, he would grin back, “That should work!” His summer climbing gear was Bermuda shorts, a white straw hat and a “Think Different” T-shirt. Point made: he seemed to think like no one else. + +Essentially he saw himself as an artist of the void, weaving together base-jumping, acrobatics and highlining to make hair-raising theatre among the peaks. Love of wild mélanges had been encouraged by his parents, who took him out of school when he was bullied for a stammer and, instead, let him range over drawing, music, gymnastics and the circus. Though for four years he slaved as a software engineer, he dreamed of recovering that freedom. + +“One beautiful day” he threw up the job, bought a van, and took to the roads of France to climb and walk the slackwire. In the Verdon gorges of the Basses-Alpes he fell in with a fellow enthusiast, Julien Millot, an engineer of the sort who could fix firm anchors among snow-covered rocks for lines that spanned crevasses; with him he formed a 20-strong team, the Flying Frenchies, composed of climbers, cooks, musicians, technicians and clowns. These kindred spirits gave him confidence to push ever farther out into empty space. + +Many thought him crazy. That was unfair. He respected the rules of physics, and made sure his gear was safe. When he died, by holding on too long to the rope of a hot-air balloon that shot up too fast, he had been on the firm, dull ground, getting ready. It looked like another devil-prompted connerie to push the limits of free flight, but this time there was no design in it. He was just taken completely by surprise, as he had hoped he might be all along. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21688840-tancr-de-melet-highliner-rock-climber-and-circus-performer-died-january-5th-aged-32/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +New passenger-car registrations + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Jan 23rd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21688852/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Jan 23rd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21688915-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Jan 23rd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21688910-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Jan 23rd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21688913-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +New passenger-car registrations + +Jan 23rd 2016 | From the print edition + + + +Growth in the global car market was solid, if not spectacular, during 2015. There was strong demand in both Britain and America, in part because of low interest rates and improving consumer confidence. Although volumes are still below their pre-crisis levels, the EU had its best year for new car registrations since 2009, spurred on by good results in Italy and Spain. China, however, is experiencing a slowdown: the world’s biggest car market grew at its slowest pace in three years with luxury cars hit particularly hard due to a corruption crackdown and worries about growth. The falling number of new registrations in Brazil and Russia is no surprise given the abysmal state of their economies. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21688912-new-passenger-car-registrations/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Jan 23rd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21688914-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 22 Jan 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +The world economy: Who’s afraid of cheap oil? + + + + + +Turkey’s war on the Kurds: Futile repression + + + + + +Taiwan’s remarkable election: Dear prudence + + + + + +Intelligence oversight: Snoopers and scrutiny + + + + + +The millennial generation: Young, gifted and held back + + + + + +Letters + + + +On Saudi Arabia, rating police, tax, David Bowie, investing, Merkel, Poland: Letters to the editor + + + + + +Briefing + + + +Oil and the economy: The oil conundrum + + + + + +United States + + + +Nuclear weapons: Cruise control + + + + + +The changing electorate: No we can’t + + + + + +Poisoned water: That Flinty taste + + + + + +Wage insurance: Creative compensation + + + + + +Grading university teachers: Ratings agency + + + + + +Roy Moore: The prophet of decline + + + + + +Lexington: Karl Rove’s history class + + + + + +The Americas + + + +Venezuela’s crisis: Heading for a crash + + + + + +Bolivian women: Feminism v faith + + + + + +Caribbean tourism: No dice + + + + + +Bello: A new plan for Colombia + + + + + +Asia + + + +Taiwan’s political landslide: Not trying to cause a big sensation + + + + + +East Asia’s talent agencies: Twice bitten + + + + + +Security in South-East Asia: After Jakarta + + + + + +Terrorism in Pakistan: Shady war, shadow peace + + + + + +Fiji’s army-tainted politics: Corking the genie + + + + + +Banyan: Hallucinations and fleeting clouds + + + + + +China + + + +Family relationships: Divorce: a love story + + + + + +China’s foreign policy: Well-wishing + + + + + +Middle East and Africa + + + +Iran’s economy: Waiting for the peace dividend + + + + + +Israel and Islamic State: The caliphate eyes the Holy Land + + + + + +Egypt’s crackdown: Remember, remember + + + + + +Floating armouries: Cruisin’ with guns + + + + + +Kenyan politics: Rifts in the Rift + + + + + +Europe + + + +Turkey and the Kurds: Widening the conflict + + + + + +Bosnia’s new visitors: Ottoman comfort + + + + + +Turkey’s religious diplomacy: Mosqued objectives + + + + + +Renzi and the EU: Troublemaker + + + + + +Charlemagne: An ill wind + + + + + +Britain + + + +The snoopers’ charter: Of warrants and watchers + + + + + +Petition against Trump: Not welcome + + + + + +Pension policy: A tangled web + + + + + +The economy: Nice while it lasted + + + + + +Labour and Trident: A silly idea + + + + + +Manufacturing: The great escape + + + + + +Primary schools: Big classes, small problem? + + + + + +Social problems: There may be trouble ahead + + + + + +Bagehot: An optimistic Eurosceptic + + + + + +International + + + +Global Pentecostalism: Ecstasy and exodus + + + + + +Pentecostalism in Brazil: From modesty to ostentation + + + + + +Pentecostalism in South Korea: Coming down the mountain + + + + + +Special report: The young + + + +The young: Generation Uphill + + + + + +Jobs: The walled world of work + + + + + +Education: Train those brains + + + + + +Mobility: High hopes meet high fences + + + + + +Family: Smaller, smarter families + + + + + +Violence: Of men and mayhem + + + + + +When the young get older: Their time will come + + + + + +Business + + + +Semiconductors: Chips on their shoulders + + + + + +Airlines in America: A cosy club + + + + + +Low-cost airlines in Europe: Don’t get carried away + + + + + +Engineering conglomerates: Hanging loose + + + + + +Vietnamese companies: Gold stars + + + + + +Media: Easy on the ears + + + + + +Schumpeter: The collaboration curse + + + + + +Finance and economics + + + +Stockmarkets: The bear necessities + + + + + +Russia’s economy: Phase two + + + + + +The economic impact of refugees: For good or ill + + + + + +Investment fraud: The cockroaches of finance + + + + + +Buttonwood: Watch what they pay + + + + + +China’s P2P lending boom: Taking flight + + + + + +American banks: Not yet out of the woods + + + + + +Free exchange: All at sea + + + + + +Free exchange: Award: Philip Coggan + + + + + +Science and technology + + + +The origin of coal: The rock that rocked the world + + + + + +Zika fever: Virus chequers + + + + + +Medicine: Curing multiple sclerosis + + + + + +Social science: Done, bar the counting + + + + + +Planetary science: And then there were nine + + + + + +Planetary science: The Richard Casement internship + + + + + +Books and arts + + + +Indonesian literature: Burning bright + + + + + +American fiction: Come as you are + + + + + +Religion and psychology: In the hands of an angry God + + + + + +Central banks: Shifting the burden + + + + + +The magic of Diego Velázquez: With brush and eye + + + + + +The refugees of Dadaab: Cheek by jowl + + + + + +Obituary + + + +Obituary: Tancrède Melet: The artist of the void + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +New passenger-car registrations + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.01.30.TXT b/homeworks/B20769/homework1/data2/2016.01.30.TXT new file mode 100644 index 0000000..26627e9 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.01.30.TXT @@ -0,0 +1,5164 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Jan 30th 2016 | From the print edition + + + +Several governments in Latin America and the Caribbean advised women to delay getting pregnant because of an outbreak of Zika, a mosquito-borne virus that may cause birth defects in babies of mothers who are infected. The government of El Salvador suggested that women wait until 2018 to get pregnant. Those of Colombia, Ecuador and Jamaica recommended shorter delays. Brazil, which has more cases than any other country, will deploy 220,000 troops to help battle the epidemic. See here and here. + +Venezuela’s National Assembly rejected a request by the president, Nicolás Maduro, for emergency powers to deal with an economic crisis caused by a combination of low oil prices and the government’s populist policies. The opposition-controlled legislature said that the government already has enough powers to deal with the crisis. The IMF forecast that the economy will shrink by 8% this year and that the inflation rate will be 720%. + +The United States further eased restrictions on trade to Cuba. The new rules allow American banks to finance exports of all products except farm goods. Sales of products to government agencies will be permitted on a case-by-case basis if they benefit ordinary Cubans. + +Harvest doom + +The impact of a drought across large parts of southern Africa became clearer when South Africa forecast a 25% fall in the harvest of maize, its staple crop. Zimbabwe is likely to be particularly hard hit after poor crops in 2015. The 2016 harvest is expected to be even smaller and 16% of its population already gets food aid. + +A panel of experts at the UN recommended that sanctions should be imposed on the leaders in both sides of South Sudan’s bloody civil war, now in its third year. + +Talks aimed at bringing an end to five years of civil war in Syria failed to get under way as planned in Geneva because of arguments about which factions should be invited and whether a ceasefire should precede negotiation. It was hoped that they might start on January 29th. See article. + + + +Iran’s president, Hassan Rohani, visited Rome and Paris hoping to drum up investment in his country, newly liberated from nuclear-related sanctions. In Rome, nude statues were covered up to spare Mr Rohani’s blushes. + +Migration watchers + +Greece was criticised by the European Commission for “seriously neglecting” its obligations during the migration crisis as a member of the Schengen passport-free area. As a result the commission may advise other EU member states to reintroduce temporary migration controls at their frontiers. Austria and Hungary decided to pre-empt this by tightening their borders. + +The Danish government approved a bill which allows policemen to seize valuables worth more than DKr10,000 ($1,460) from refugees, in order to pay for food and accommodation. The measure, which was criticised by human-rights groups, is similar to ones already in place in the Netherlands, Switzerland and in the state of Bavaria in Germany. + +In Chisinau, the capital of Moldova, the poorest country in Europe, 20,000 protesters took to the streets to demand the resignation of Pavel Filip, the prime minister. The protests brought together both pro-European and pro-Russian citizens, with both camps complaining of inequality and corruption in the country. See article. + +Generation no-change + +The Communist Party in Vietnam chose not to endorse the hopes of the colourful reformist prime minister, Nguyen Tan Dung, to accede to the post of party chief. Instead, that position remained with the grey incumbent, Nguyen Phu Trong, whose backers ended Mr Dung’s political career. Meanwhile, the Communist Party in next-door Laos replaced a 79-year-old party head with a 78-year-old. Vietnam’s party wants to steer a delicate course between America and China, while that in Laos needs to balance its two biggest neighbours, China and Vietnam. Bold reform will have to wait. See article. + + + +Akira Amari resigned as Japan’s economy minister, after it was claimed his constituency office had not reported cash it received from a building company seeking favours. He said he had been so busy negotiating Japan’s membership of the Trans Pacific Partnership trade deal that he failed to spot wrongdoing by his aide. Mr Amari is a key architect of Shinzo Abe’s reform programme; his departure is a setback for Abenomics. + +In Malaysia the attorney-general found that no laws had been broken when hundreds of millions of dollars were transferred into bank accounts belonging to the prime minister, Najib Razak, supposedly by members of the Saudi royal family. His decision was met with disbelief. + +China deported a Swedish civil-rights activist after detaining him amid a sweeping crackdown on dissent. After his arrest, the activist, Peter Dahlin, was shown on Chinese television making a “voluntary” confession to having broken the law by helping unlicensed Chinese lawyers. See article. + +During a visit to Beijing (which followed ones to the capitals of Laos and Vietnam), America’s secretary of state, John Kerry, and his Chinese counterpart, Wang Yi, agreed on the need for a new UN resolution on North Korea’s nuclear programme following its test of a nuclear device. But China has not said whether this should include new sanctions, as America wants. Mr Wang warned that a resolution should not provoke tensions. + +He’s got the money + +Rumours swirled that Michael Bloomberg might enter the race for the American presidency as an independent. He is apparently worried by Donald Trump’s dominance in the Republican race, and also by the rise of Bernie Sanders in the Democratic one. A “Draft Bloomberg” movement tried in 2008 and 2012 to get Mr Bloomberg to run. + +Ammon Bundy, a car-fleet manager and anti-government protester who led the armed occupation of a federal wildlife reserve in Oregon, was arrested with four other members of his “militia” 50 miles from the reserve. One of his supporters was shot and killed during the arrest. Mr Bundy said he was following “divine” instructions. His antics have doubtless made it less likely that his complaints about federal over-regulation will be heeded. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21689652-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Jan 30th 2016 | From the print edition + +The World Bank reduced its forecast for the average price of a barrel of oil this year to $37, from the $51 it had projected just last October. In all, price forecasts for 37 of the 46 commodities that the bank monitors were revised lower. The Federal Reserve cited concerns about the world economy at its latest meeting, which suggests it is hesitant about raising interest rates again at its March meeting. + +The Chinese new fear + +China’s stockmarkets had another turbulent week, with the Shanghai Composite index falling by 6.4% over one day to its lowest point in more than a year. The central bank injected $67 billion into the financial system to boost liquidity. It also continued to prop up the yuan, which is under pressure partly because of the large amount of capital that is flowing out of the country. Meanwhile, the government decided to reduce capacity in steelmaking, which could result in 400,000 job losses. + +Italy, which has one of the highest rates of non-performing loans in Europe, struck a deal with the European Commission to help its banks sell off their bad debt. The government will provide guarantees to investors who buy the loans. The agreement comes after a dramatic fall in the share prices of Italian banks in recent weeks. See article. + +Andrew Bailey, who oversees financial stability for the Bank of England, was selected by the government to head Britain’s Financial Conduct Authority, which regulates banks’ behaviour and integrity. His appointment comes after a six-month search for someone to replace Martin Wheatley, who was ousted by the Treasury last summer, in part because of his uncompromising approach towards wrongdoing in the City. Senior bankers generally welcomed Mr Bailey as someone who is tough but fair. + +A jury in London found five former brokers not guilty of conspiring with Tom Hayes to manipulate LIBOR, the benchmark inter-bank interest rate. Mr Hayes was sentenced to prison last August. + +Blasts from the past + +JPMorgan Chase paid $1.4 billion to resolve a claim by Lehman Brothers’ creditors that it unnecessarily siphoned liquidity from the investment bank before it collapsed in September 2008. In a separate settlement the bank agreed to pay $1 billion to Ambac, an insurer, in a dispute over mortgage-backed securities sold by Bear Stearns, a distressed bank that was bought by JPMorgan Chase in a government-backed rescue in March 2008. + +American International Group said it would return $25 billion to shareholders, a move it hopes will rally shareholder support in the face of calls from activist investors, led by Carl Icahn, to split the insurance company in three. + +Johnson Controls, a maker of car parts, agreed to merge with Tyco, which builds electronic security-systems. The $20 billion merger will allow Johnson to move its headquarters to Ireland, where Tyco has relocated its base, in order to lower its tax bill. The American Treasury had introduced rules last year to make such “inversion” deals harder after a political backlash. Tyco, which became entangled in a high-profile corporate scandal in 2002, will lose its name after the acquisition. + +In Britain, where the generous tax arrangements enjoyed by multinationals has created a political kerfuffle, Google reached an agreement with British tax authorities in which it will pay £130m ($186m) in back taxes. This came after a lengthy investigation into whether the internet giant had coughed up all the taxes it should have over the past decade. The inquiry found that Google had not evaded tax, but critics allege that the deal was still too generous to the tech firm. See here and here. + +Facebook posted a quarterly profit of over $1 billion for the first time on the back of strong revenues from its ads on mobile devices. + +DeepMind, a secretive artificial-intelligence company acquired by Google for $400m in 2014, announced that it had hit an AI milestone by developing a computer that can beat the best humans at Go, a complicated board game of East Asian origin. Such a feat had not been expected for years. + +Sorry, wrong number + + + +Apple warned that it expects sharply slower sales of the iPhone, which accounts for two-thirds of its revenues, in the current quarter. It blamed currency fluctuations, uncertainties in the global market and a sluggish China, its biggest market. Sales of iPhones were flat in the last three months of 2015 compared with the same quarter in 2014, and it shifted 25% fewer iPads. Still, its quarterly profit of $18.4 billion was the biggest to date for any listed company. Commenting on the global outlook, Tim Cook, Apple’s chief executive, said the situation is “dramatically different” from a year ago. See article. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21689648-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Jan 30th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21689650-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +America’s presidential primaries: The brawl begins + +Nigeria’s economy: Hope the naira falls + +Foreign students: Train ’em up. Kick ’em out + +Corporate tax: Going after Google + +The Zika virus: Let us spray + + + + + +Articles Sections Next + +America’s presidential primaries + +The brawl begins + +Marvel at the jaw-dropping spectacle. Then worry. American politics has taken a dangerous turn + +Jan 30th 2016 | From the print edition + + + +THE muscle-bound rivals have entered the ring. The verbals are at fever pitch. On February 1st Iowans will caucus in the opening round of America’s presidential tussle. Just over a week later, voters will gather in New Hampshire. From there the contest will move on towards Super Tuesday on March 1st, and beyond that to the conventions in July. It is the world’s greatest electoral tournament. It is not going to plan. + +Across America, political elites and moderate voters are in a state of disbelief. Hillary Clinton, as much part of the establishment as the Washington Monument, is under pressure from Bernie Sanders, a crotchety senator from Vermont who calls himself a democratic socialist. The sensible squad on the right—“Jeb!” Bush, Marco Rubio, John Kasich et al—have been impaled by the gimlet gibes of Ted Cruz and swamped by the sprawling, tumultuous diatribes of Donald Trump. + +The choice was supposed to be between a Bush and a Clinton—more a coronation than an election. Instead, the race for the world’s most powerful office has been more dramatically upended by outsiders than any presidential campaign in the past half-century. America, what on earth is going on? + +Bigger and brasher + +The United States is not the only country where the establishment is on the ropes. Britain’s Labour Party is in thrall to a man well to the left of Mr Sanders. In the first round of France’s recent regional elections, the far-right National Front won the largest vote. Populists are leading the polls in the Netherlands and running the government in Poland and Hungary. In politically correct Sweden, nativists are polling at 30%. + +Like voters across the West, Americans are angry—often for the same reasons. For years a majority of them have been telling pollsters that the country is heading in the wrong direction. Median wages have stagnated even as incomes at the top have soared. Cultural fears compound economic ones: in 2015 a Pew poll found that white Christians had become a minority in America. And in recent months, fears of terrorism have added a menacing ingredient to the populist brew (see pages 19-21). + +Though the trends are common, populism in America is especially potent. Europe has grown used to relative decline. As the sole superpower, America has smarted at the rise of China and the spread of jihadism from parts of the Middle East that it had poured blood and treasure into trying to pacify. When Mr Trump promises to “Make America great again” and Mr Cruz vows that the sand of Iraq and Syria will “glow in the dark”, they are harking back to a moment, after the fall of the Soviet Union, when America enjoyed untrammelled power. + +A second reason is that, in America, outsiders channel popular anger into a political duopoly. In Europe Mr Trump and Mr Sanders would have their own protest parties, which inevitably struggle to win high office. In contrast, America’s two-party system sucked in Mr Sanders, who joined the Democrats last year, and Mr Trump, who rejoined the Republicans in 2009. If they win the primaries, they will control political machines designed to catapult them into the White House. + +And a third, related, explanation is that elites cannot easily manage America’s raucous democracy. Populist insurgencies are written into the source code of a polity that began as a revolt against a distant, high-handed elite. The electoral college devolves power from the centre. Primaries attract the 20% of eligible voters most fired up by politics. Candidates with money behind them—his own in the case of Mr Trump, someone else’s for Mr Cruz—can sneer at their party’s high command. + +Hence populists and anti-establishment candidates make frequent appearances in American presidential races. But as the thrilling spectacle runs its course and voters reluctantly compromise with reality, they tend to fade. That usually happens early (Pat Buchanan, a Republican firebrand who promised a “pitchfork rebellion” in 1996, won the New Hampshire primary, but was out of the race by the end of March). On the rare occasion when insurgents win the nomination, they have collapsed at the general election: Barry Goldwater lost 44 of 50 states in 1964. Those who stand as independents (as Ross Perot did in 1992) have also failed—which would not bode well for a self-financing candidate like Michael Bloomberg. + +For the Democrats, history is likely to be repeated in 2016. Even if he wins Iowa and New Hampshire, it is hard to see Mr Sanders thriving as the race moves to the delegate-heavy South. Mrs Clinton has money, experience and support from black Democrats. National polls put her 15 points ahead. + +But this time really could be different for Republicans. Goldwater’s surge came late; Mr Trump has mesmerised crowds, and been rewarded in the polls since July. Some Republican grandees who detest Mr Cruz even more than they despise Mr Trump have fallen in behind the billionaire. Perhaps on the day people won’t turn up for either man; perhaps the two of them will throw enough vitriol to destroy each other; perhaps what is left of Mr Bush’s $100m war chest will leave the elite time to mount a counter-attack. As of now, both populists have a chance of taking the fight to the convention and even, barring a backroom establishment deal, of winning the nomination. + +The 50:50 nation + +That prospect worries this newspaper. Neither Mr Trump nor Mr Cruz offers coherent economics or wise policy. Neither passes the test of character. Yet, merely by being on the ballot in November either would come close to the presidency. + +General elections have become 50:50 affairs, determined by a few votes in a handful of states. Mrs Clinton is not a good campaigner; Mr Trump and Mr Cruz are. In so far as he has policies, Mr Trump borrows freely from right and left. He could win votes by tacking brazenly to the centre. In a close race, a terrorist attack or a scandal near polling day could be decisive. + +Pessimism about America is misplaced. The economy is in better shape than that of any other big, rich country; unemployment is low; so is violent crime. But mainstream Republicans have pilloried Barack Obama with such abandon that they are struggling to answer Mr Trump and Mr Cruz. If anyone should regret the spectacle about to unfold, it is they. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21689543-marvel-jaw-dropping-spectacle-then-worry-american-politics-has-taken-dangerous/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Nigeria’s economy + +Hope the naira falls + +President Muhammadu Buhari is repeating an economic error he made as dictator 30 years ago + +Jan 30th 2016 | From the print edition + + + +“GIVE me lucky generals,” Napoleon is supposed to have said, preferring them to talented ones. Muhammadu Buhari, a former general, has not had much luck when it comes to the oil price. Between 1983 and 1985 he was Nigeria’s military ruler. Just before he took over, oil prices began a lengthy collapse; the country’s export earnings fell by more than half. The economy went into a deep recession and Mr Buhari, unable to cope, was overthrown in a coup. + +Now he is president again. (He won a fair election last year against a woeful opponent; The Economist endorsed him.) And once again, oil prices have slumped, from $64 a barrel on the day he was sworn in to $32 eight months later. Growth probably fell by half in 2015, from 6.3% to little more than 3% (see article). Oil accounts for 70% of the government’s revenues and 95% of export earnings. The government deficit will widen this year to about 3.5% of GDP. The currency, the naira, is under pressure. The central bank insists on an exchange rate of 197-199 naira to the dollar. On the black market, dollars sell for 300 naira or more. + +Instead of letting the naira depreciate to reflect the country’s loss of purchasing power, Mr Buhari’s government is trying to keep it aloft. The central bank has restricted the supply of dollars and banned the import of a long list of goods, from shovels and rice to toothpicks. It hopes that this will maintain reserves and stimulate domestic production. + +When the currency is devalued, all imports become more expensive. But under Mr Buhari’s system the restrictions on imports are by government fiat. Factory bosses complain they cannot import raw materials such as chemicals and fret that, if this continues, they may have to shut down. Many have turned to the black market to obtain dollars, and are doubtless smuggling in some of the goods that have been banned. + + + +In charts: Explore Nigeria’s economy and politics + +Nigerians have heard this tune before. Indeed, Mr Buhari tried something similar the last time he was president. Then, as now, he resisted what he called the “bitter pill” of devaluation. When, as a result, foreign currency ran short, he rationed it and slashed imports by more than half. When Nigerians turned to the black market he sealed the country’s borders. When unemployment surged he expelled 700,000 migrants. + +Barking orders at markets did not work then, and it will not work now. Mr Buhari is right that devaluation will lead to inflation—as it has in other commodity exporters. But Nigeria’s policy of limiting imports and creating scarcity will be even more inflationary. A weaker currency would spur domestic production more than import bans can and, in the long run, hurt consumers less. The country needs foreign capital to finance its deficits but, under today’s policies, it will struggle to get any. Foreign investors assume that any Nigerian asset they buy in naira now will cost less later, after the currency has devalued. So they wait. + +Those who fail to learn from history... + +Mr Buhari’s tenure has in some ways been impressive. He has restored a semblance of security to swathes of northern Nigeria that were overrun by schoolgirl-abducting jihadists. He has won some early battles against corruption. Some of his economic policies are sound, too. He has indicated that he will stop subsidising fuel and selling it at below-market prices. This is brave, since the subsidies are popular, even though they have been a disaster (the cheap fuel was often sold abroad and petrol stations frequently ran dry). If Mr Buhari can find the courage to let fuel cost what the market says it should, why not the currency, too? You can forgive the general for being unlucky; but not for failing to learn from past mistakes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21689544-president-muhammadu-buhari-repeating-economic-error-he-made-dictator-30-years-ago-hope/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Foreign students + +Train ’em up. Kick ’em out + +Shrewd governments welcome foreign students. Stupid ones block and expel them + +Jan 30th 2016 | From the print edition + + + +YOUNGSTERS have long crossed borders in search of an education. More than 2,000 years ago the Roman poet Horace went to Athens to join Plato’s Academy. Oxford University admitted its first known international student, Emo of Friesland, in 1190. Today more than 4.5m students are enrolled in colleges and universities outside their own countries (see article). Their fees subsidise local students. Their ideas broaden and enliven classroom debate. Most go home with happy memories and valuable contacts, making them more likely in later life to do business with the country where they studied. Those who stay on use what they have learned to make themselves and their hosts wealthier, by finding work as doctors, engineers or in some other skilled career. + +Immigration policy is hard: Europe is tying itself in knots over how many Syrian refugees to admit. But the question of whether to welcome foreign students ought to be much easier. They more than pay their way. They add to the host country’s collective brainpower. And they are easy to assimilate. Indeed, for ageing rich countries seeking to import young workers to plug skills gaps and prop up wobbly pension systems, they are ideal. A foreign graduate from a local university is likely to be well-qualified, fluent in the local lingo and at ease with local customs. Countries should be vying to attract such people. + +Places with the good fortune to speak English have a gigantic head start. Australia is the leader: a quarter of its tertiary students come from abroad, a bigger share than in any other country. Education is now its biggest export, after natural resources. For a while the influx of brainy foreigners was slowed by an overvalued currency and the reputational damage from the collapse of some badly run private colleges. But recently the Australian dollar has weakened, degree mills have been shut down, visa rules have been relaxed—and foreign students have flooded back. Last year their numbers rose by 10%. + +Canada, until recently an also-ran, now emulates Oz. In 2014 it set a goal of almost doubling the number of foreign students by 2022. It has streamlined visa applications and given international students the right to stay and work for up to three years after graduating. Those who want to make Canada their home have a good chance of being granted permanent residence. Its share of the market for footloose students is growing, and numbers have more than doubled in a decade. + +America, by contrast, is horribly complacent. In absolute terms, it attracts the most foreign students, thanks to its size, its outstanding universities and the lure of Silicon Valley and other brainworking hotspots. But it punches far below its weight: only 5% of the students on its campuses are foreign. Its visa rules are needlessly strict and stress keeping out terrorists rather than wooing talent. It is hard for students to work, either part-time while studying or for a year or two after graduation. The government wants to extend a scheme that allows those with science and technology qualifications to stay for up to 29 months after graduating. But unions oppose it, claiming that foreign students undercut their members’ wages. One that represents high-tech workers in Washington state has filed a court challenge, seeking to have the scheme axed. + +The self-harming state + +Britain is even more reckless. It, too, has the huge advantages of famous universities and the English language. But its government has pledged to reduce net immigration to 100,000 people a year, and to this end it is squeezing students. Applying for a student visa has grown slower and costlier. Working part-time to pay fees is harder. And foreign students no longer have the right to stay and work for two years after graduation. Britain’s universities are losing market share: their foreign enrolments are flat even as their main rivals’ are growing strongly. + +Sajid Javid, Britain’s business secretary, says the aim is to “break the link” between studying and immigration. This is precisely the wrong approach. For a country that wants to recruit talented, productive immigrants, it is hard to think of a better sifting process than a university education. Welcoming foreign students is a policy that costs less than nothing in the short term and brings huge rewards in the long term. Hence the bafflement of James Dyson, a billionaire inventor, who summed up Britain’s policy thus: “Train ’em up. Kick ’em out. It’s a bit shortsighted, isn’t it?” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21689545-shrewd-governments-welcome-foreign-students-stupid-ones-block-and-expel-them-train-em-up-kick/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Corporate tax + +Going after Google + +Britain’s tax men struck a poor deal. But the real problem lies with flawed international corporate-tax rules + +Jan 30th 2016 | From the print edition + + + +IT WAS meant to win plaudits for clawing more money out of cunning, tax-shy multinationals. Instead, a deal between Google and the British government, in which the tech giant will pay £130m ($185m) in back taxes covering a ten-year period, has attracted only opprobrium. + +Critics at home and abroad argue that Google has got off lightly. On the European mainland, for example, suspected corporate tax-dodgers face raids and whopping demands: France wants €500m ($550m) or more from Google. Apple could be on the hook for $8 billion if the European Commission, which is investigating its Irish operations, concludes that it got a cushy deal from the Emerald Isle. Britain may well have been too generous to Google. But the bigger problem with the deal is what it says about international efforts to crack down on corporate-tax avoidance. + +Nineteen for me, one for you + +Corporate taxes are a poor way to raise revenue. Since the burden is ultimately borne by people, whether investors, workers or consumers, it would, in theory, be more efficient to tax them directly. But abolishing corporate levies would create its own problems (see article). In poor countries with large informal sectors, big companies are a rare source of reliable tax revenue. In rich countries, wealthy people would doubtless turn themselves into companies to avoid income taxes. For policymakers, therefore, the priority is to make corporate taxes less distorting and less easy to avoid. + +The rules governing the taxation of multinationals are a threadbare patchwork of national laws and bilateral treaties, dating back almost a century and designed for an age of manufacturing, not multimedia. They grow ever more gameable with the spread of e-commerce and companies’ increasing reliance on intangible intellectual property (IP). Technology and drug firms, for instance, routinely move their IP to subsidiaries in tax havens, which can then manipulate the fees they charge other parts of the group for access to it in order to suck their profits into the lower-tax country. + +These manoeuvres may be legal, but their goal is tax avoidance, often in a way that flouts the spirit of the law. In an era of austerity, that offends the public mood, which is why governments around the world are being pressed to implement dozens of anti-avoidance measures proposed last year by the OECD, a club of mainly rich countries. Many of these measures make sense. They seek to tie tax more closely to economic activity and also to limit some arcane but hugely profitable tricks, such as using internal loans to claim tax deductions. Progress at the OECD is spurring action: indeed, as part of its deal with British tax authorities, Google has agreed to pay tax in future on a chunk of its sales to British advertisers. + +The problem is that the OECD approach maintains a damaging fiction which is ingrained in the current system: that a multinational can be seen as a cluster of separate companies to be treated as if they are trading with each other at arm’s length. The “transfer pricing” rules that police this system are complex and flawed. Keeping this approach, but toughening up the policing, means creating yet more rules—and loopholes. + +Better to think of each firm as a single entity. Then countries could either agree to share the tax on companies’ worldwide profits according to a formula that takes account of their sales, employees, assets and so on; or allow the entire worldwide profits to be taxed by the home country, with a tax-credit mechanism for countries where the work actually goes on or revenue is earned—but, crucially, not brass-plate jurisdictions—in order to avoid double taxation. In both cases, the incentives and opportunities to move profits into tax havens would be greatly reduced. + +Instead of this unitary approach, however, the patchwork persists, and with it the likelihood of unco-ordinated national tax policies. This is the context in which Google and the British government forged their deal. The bill presented to the company looks from the outside like a sweetheart deal, but it is impossible to be sure because you cannot know how it was calculated. This lack of transparency will do nothing to increase public confidence that tax avoidance is being curbed. Nor, in the long run, will the Google approach help multinationals. If a lot of countries go their own way, at their own pace, the result could be tax chaos, a bloody battle over countries’ taxing rights in which overlapping claims cause the pendulum to swing back from under- to over-taxation. + +Tax diplomacy, like politics, is the art of the possible. But failing to push harder for a radical overhaul, at a time when the planets were aligned for change, looks like a costly mistake. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21689546-britains-tax-men-struck-poor-deal-real-problem-lies-flawed-international/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Zika virus + +Let us spray + +Don’t panic. Kill mosquitoes + +Jan 30th 2016 | From the print edition + + + +PANDEMICS make for good horror films. Few things are scarier than a dangerous, incurable new disease that spreads quickly. And globalisation means that plagues can travel far, wide and terrifyingly fast. Diseases such as HIV/AIDS, SARS, West Nile virus and Ebola fever were born in places as varied as African jungles and Chinese poultry markets. Then they broke out to spread panic around the world. + +The newest horror is Zika (see article). This mosquito-borne virus, which originated in Africa, was spotted in Brazil last year. It is now moving across Latin America and the Caribbean, with cases in more than 20 countries. Originally, it was thought to cause little worse than a rash and fever. Now, propelling the disease into the realm of nightmares, doctors suspect that when pregnant women catch it, their babies may be permanently damaged. Zika is the prime suspect for a sharp increase in the number of babies with microcephaly in Brazil. Children are born with abnormally small heads and are likely to be brain-damaged. They may suffer severe learning difficulties, seizures and other problems. Many will die young. + +Scientists are trying to confirm the link between Zika and microcephaly. Some suspect that the virus may also occasionally cause serious damage to nerves and the immune system in infected adults. Though a mosquito bite is the main way to catch it, there are fears that it can also be transmitted sexually. Are the risks so high that countries lucky enough to be free of it should advise their citizens to stay away from those known to have it? Will it sweep through entire populations, creating herd immunity? And if so, should women try to avoid getting pregnant until that happens, as governments in some Latin American countries have advised? + +Zika has no cure and a vaccine will not be available for at least a decade. But that is no cause for despair—nor for governments to scare women into not having babies. Two things are known for certain. The first is that the main, possibly only, transmission route is via mosquitoes, which pick up the virus from infected people and pass it on when the pests next take a meal. The second is how to cut the number of mosquitoes—and preferably eradicate them. + +The idea of fighting mosquitoes has a long history. Aedes aegypti, the species that carries not only Zika but dengue, chikungunya and yellow fever, was almost eliminated from much of South America by the early 1960s, after a long anti-dengue campaign. The insects were killed with frequent fumigation. Health workers visited households to urge people to mop up standing water, where mosquitoes breed. But some countries slackened their efforts too soon. After the number of cases fell, politicians’ attention waned. And the mosquitoes returned in their buzzing billions. + +Biting back + +That campaign was led by the American regional branch of the World Health Organisation. It now needs to rally governments for a new push. Brazil is mobilising its armed forces for a nationwide door-to-door information campaign; other affected countries should do likewise. In poorer countries, donors could pay for ad campaigns, new health workers, insect repellents, insecticides and bed nets. If reservoirs of the virus are not to remain, ready to re-emerge, action is needed across the territory where Zika is at large and also in places, such as the subtropical parts of the United States on the Gulf of Mexico, where it is sure soon to arrive. + +Research into novel ways to kill mosquitoes also deserves more funding. Genetic modification, which produces mosquitoes that are sterile but still attractive to other mosquitoes, shows promise. A trial in Brazil suggests that releasing swarms of modified insects can reduce the unmodified population in months. + +All this will be pricey. But it would bring not one, but several, dread diseases under control. Aedes aegypti does not carry malaria, but the methods used to kill it will also kill Anopheles, which does. The moment has come again to take the fight to the mosquitoes—and this time to finish the job. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21689542-dont-panic-kill-mosquitoes-let-us-spray/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +Migrants, India, aid, Jeremy Corbyn, science, Catalonia, banks, clubbing, ageing: Letters to the editor + + + + + +Articles Sections Next + +Migrants, India, aid, Jeremy Corbyn, science, Catalonia, banks, clubbing, ageing + +Letters to the editor + +Jan 30th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Cultural dissonance + +Ayaan Hirsi Ali has long and rightly complained of the West’s dual standards in the way it regards the Muslim mistreatment of women. By highlighting the issue as one affecting “European women”, you are reinforcing that hypocrisy (“Migrant men and European women”, January 16th). The most basic research into what happens inside Muslim communities—within Europe as well as outside—reveals a pattern of discrimination, physical and sexual abuse, and general misogyny that Western women (and hopefully men) would find intolerable. + +The Economist appears to have an idée fixe that immigration is a universal good, regardless of origin and consequences and holds pious hopes that work, time and education will promote integrated communities. Unfortunately, evidence is that even some second- and third-generation immigrants have not integrated successfully: the persistence of FGM; “honour-killing” and forced marriages; the support of terrorism at home and overseas; electoral fraud and malpractice in strongly immigrant areas; all suggest a significant, systemic failure. + +Kipling’s line that “East is East, and West is West and never the twain shall meet” may well be a good starting point for policy. Require all citizens—prospective, newly arrived or settled—to embrace the values of a modern, liberal democracy and for those who won’t, show them the door. + +SIMON DIGGINS + +Rickmansworth, Hertfordshire + +You ask where the migrants from the Middle East and Africa should go if they can’t come to Europe. Surely they should be settled somewhere near their countries so that they can easily return home again one day? Turkey, Lebanon and Jordan have already taken in 4m migrants, four times more than Europe. + +If there was trouble in my country, I would not want to go far away and settle among people with an utterly different culture. Most of the 800,000 Kosovars who fled their country during the war with Serbia went home when the war was over. The Palestinians are still near their country, waiting to go home. I admire their steadfastness and hope that one day the Israelis will abandon Zionism like the South Africans abandoned apartheid, and allow the Palestinians to return home. + +MIKAEL GRUT + +London, England + + + + + +Family values + +The real reason that local, family-owned stores in India are thriving in the face of modern retail chains is because families do not reckon the opportunity cost of the property they occupy (“Local Heroes”, January 16th). They either own the real estate or are paying a decades old, peppercorn rent protected by rent laws. + +As the chairman of the board of directors of a modern retail chain, I asked many such family patriarchs if they had considered this. The majority felt they owed it to their forebears from whom they had inherited the store to keep it going. Additionally, if it were to shut, they would lose their standing in their community. So until their progeny undergo a course in economics, you will continue to see the kiranas beat up the newfangled, tablet-wielding entrepreneurs. + +NAWSHIR MIRZA + +Mumbai, India + + + + + +The case for aid + +* Your article on foreign aid highlights an important risk to the effectiveness of British aid which has received too little attention (“Strings Attached”, January 9th). When Tony Abbott abolished AusAID in 2013 and integrated its functions into those of the Department of Foreign Affairs and Trade, it made aid less effective and project selection and evaluation became influenced by political motives. + + + +Ironically, the move also damaged the promotion of Australian interests; developing country governments are appreciative of external donors when they believe that aid is supporting their own development—they are decidedly cooler towards countries that use aid as a political bribe. One of the reasons that DFID’s work is quite good at promoting British interests is precisely because it is not trying to do so. + + + +NEIL McCULLOCH + +Principal Consultant + +Oxford Policy Management + +Oxford + + + + + +The Labour Party + +Bagehot is right to point out that the 230 Labour MPs in the House of Commons represent a much bigger and wider constituency than Jeremy Corbyn’s self-selected non-parliamentary supporters, who are accountable to no one but themselves (January 16th). + +But he is wrong to suggest that the moderate MPs should form a new “social democratic party”. They have absolutely no need to: all they need do is declare that the leadership of the Labour Party is entirely in the gift of members of the parliamentary party. They should then proceed to elect their own leader and return Mr Corbyn to the backbenches where he performed with such notable lack of distinction for more than 30 years. + +This assertion of their undoubted rights as elected lawmakers will no doubt send Mr Corbyn’s ragbag of political nutters even madder than they already are. It will also set off all sorts of show-trials, expulsions and deselections. In that event, the parliamentary Labour Party should simply endorse its own candidates for all constituencies. But in no circumstances should it relinquish its claim to be the real Labour Party which many millions of British voters support. + +MICHAEL EGAN + +Former Treasurer of New South Wales + +Surry Hills, Australia + + + + + +In the name of science + +* This new preference for “scientific” exploration (“A new age of discovery”, January 2nd) isn’t so new. It brings to mind George Palmer Putnam, the American publisher, writer, and sometime-explorer who famously married Amelia Earhart in 1931. + + + +Putnam described expeditioning as “the greatest fun in the world”. But when it came to planning his own trips to Greenland and Baffin Island in 1926 and 1927, he made sure to partner with reputable scientific organisations. As he put it in his autobiography, “the bright prize of bringing back the bacon of new knowledge lulls any conscience that needs lulling”. So long as discovery remains a matter of money, publicity, and good old-fashioned fun, real high-mindedness might remain a truly unconquered peak. + + + +CAROLINE LIEFFERS + +PhD Student, History of Science and Medicine + +Yale University + +New Haven, Connecticut + + + +* The view that science is, or should be, the raison d'être of exploration is not exclusive to the 21st century. In his book “The Worst Journey in the World”, Apsley Cherry-Garrard describes a five-week journey in Antarctica in the winter of 1911: “We travelled for Science. Those three small [penguin] embryos from Cape Crozier [obtained on the journey]…were striven for in order that the world may have a little more knowledge, that it may build on what it knows instead of on what it thinks…Science is a big thing if you can travel a Winter Journey in her cause and not regret it.” + + + +In describing when, months later he discovered the bodies of his two companions on the Winter Journey with that of Captain Scott in the tent where they died returning from the South Pole, he noted the “great many geological specimens” they had dragged along on their sledge: “It is magnificent that men in such case should go on pulling everything that they have died to gain.” Scott’s last expedition was motivated by more than the “gosh factor.” + + + +HELEN HUGHESDON + +Saint Paul, Minnesota + + + + + +Catalonian politics + +When the new president of Catalonia, Carles Puigdemont, quoted a Catalan journalist, Carles Rahola, who was executed under Francisco Franco’s dictatorship saying “the invaders will be expelled from Catalonia”, he was not referring to the Spanish government, as you incorrectly reported (“Rebel, Rebel”, January 16th), but to the German and Italian fascist army that air-bombed Catalan cities during the Spanish civil war. + +Mr Puigdemont explained when he was sworn in before the Catalan parliament on January 10th how his use of the quote, at a memorial service in 2013, had been distorted and he was in fact using the reference to illustrate that the clutch of fascism doesn’t loom over Catalan lives any more. + +JOSEP SUÁREZ + +Head of the delegation of the Catalan government to the United Kingdom and Ireland + +London + + + + + +The big bank theory + +* The theory that big bank fees are high due to competition being “phoney” would be more convincing if not for the high number of low-fee competitors of the big banks (“Blunt Elbows”, January 9th). For instance, the vast majority of Americans are eligible to join member-owned credit unions, which generally have much lower fees. That the big banks are still huge despite this suggests that a more plausible explanation is that banking relationships are quite “sticky” and that the perceived hassle of switching to a low-fee competitor outweighs the benefits in many consumers’ minds. Indeed, extensive customer research in banking has indicated as such. + + + +CARK SCHWAB + +Arlington, Virginia + + + + + +Another level + +I found your conclusion on the future of European clubbing disheartening (“Less than ecstatic”, January 9th). The most demoralising part comes from the overwhelming statistical data illustrating a decline in the number of European venues. Nightlife is fundamental to the eclectic mixture of urban identity. It offers release, an ability to evade the realities of everyday existence. + +The case for the possibility of festivals overtaking clubbing is compelling. The rise in the number of festival-goers each summer arguably doesn’t have an inversely proportional effect on the allure of dark, grungy club scenes. No matter how financially compelling the economies of scale of big festivals are, there are DJs intent on returning to and retaining the urban scenes from which they came. This gives one hope. Councils may be able to close and regulate the buildings themselves, but the 24-hour party people are here to stay. + +JOSEPH MILLARD + +London + + + + + +Ageing gracefully + +As one of the octogenarians who “fiddles with my hearing aid and takes afternoon naps” (“Three wise men”, January 9th), I wonder what the age limit is in order to avoid being ridiculed by your young reporters? + +Wasn’t it Tom Lehrer who wrote the song: “Make-fun-of-the-handicapped-week”? + +HANS ROTHENBORG + +Hellerup, Denmark + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21689505-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +America’s primary elections: Outsiders’ chance + + + + + +Articles Sections Next + +America’s primary elections + +Outsiders’ chance + +The primary contest is about to get serious. It has rarely been so ugly, uncertain or strange + +Jan 30th 2016 | From the print edition + + + +WHEN Jeb Bush announced he was running for president seven months ago the tutting newspaper commentaries almost wrote themselves. With his famous name and war chest of over $100m, whistled up from Bush family benefactors in a matter of months, the former Florida governor was almost as strong a favourite for the Republican ticket as Hillary Clinton, who had made her inaugural campaign speech two days earlier, was for the Democratic one. Bush against Clinton? The prospect made American democracy seem stale and dynastic, rigged on behalf of a tiny political elite, whose members alone had the name recognition and deep pockets required to win its overpriced elections. + +But now the primary process is about to get serious. In Iowa on February 1st perhaps 250,000 voters will brave icy roads to pick their champion in small groups, or caucuses. And the tutting has given way to real fear. On the Republican side, Mr Bush—or “Jeb!” as his campaign has cruelly styled him—is all but irrelevant. The son and brother of past presidents is clever and has a solid record of cutting taxes and privatising services. But Republican voters have dismissed him as dull and out-of-touch, an emblem of the political class they despise. The Republican front-runner, Donald Trump, is a celebrity builder with no previous political experience. He has raised little money, was once a registered Democrat and still refers derisively to his party as “the Republicans”, as if it is some unpromising acquisition he has been arm-twisted into buying. + +Mr Trump is quick-witted, charismatic and, during years as a reality television star, has built an outrageous public persona around his gargantuan ego. “I’m intelligent,” he likes to say. “Some people would say I’m very, very, very intelligent.” Uncertainty over whether this is self-parody or undiluted egomania is part of the act. Mr Trump is to public service what professional wrestling, which he loves, is to sport: entertaining and ludicrously implausible, a suspension of disbelief for escapists, a crude deception for the gullible. + +The digs he makes at his rivals, often in the form of tweets offering “advice”, can be amusing. A former propagator of conspiracy theories about Barack Obama’s place of birth, Mr Trump is now dishing out the same treatment to his closest challenger, Ted Cruz. A first-term senator from Texas, Mr Cruz was born in Canada, but to an American mother, which puts his eligibility to be president beyond serious doubt. “Ted—free legal advice on how to pre-empt the Dems on citizen issue. Go to court now & seek declaratory judgment—you will win!” Mr Trump tweeted to his nearly 6m followers. Yet his front-runner status is based less on Mr Trump’s wit than on his gift for understanding and pandering to people’s fears. + +The billionaire says that America has been beggared and wrecked by immigrant rapists, venal bankers and idiot politicians, is imperilled by Muslim maniacs, and mocked by the rest of the world. He rages against the Chinese, whom he accuses of inventing global warming to destroy American industry. Announcing his run at Trump Tower, his Manhattan skyscraper, he lamented: “We got $18 trillion in debt… we need money. We’re dying. We’re dying. We need money…Sadly, the American dream is dead.” + +Trumped-up charges + +Fortunately, Mr Trump has a plan to “make America great again”, a Reaganite phrase he has purloined. He wants to deport 11m illegal immigrants and their offspring, impose a 45% tariff on Chinese imports, kill the relatives of terrorist suspects and bar Muslims from entering America. To stanch the influx of “rapists” (never mind that for the past six years there has been a net outflow of people from America to Mexico), he would build a “beautiful wall” along the southern border. This is his signature policy and the subject of a much-anticipated call-and-response moment at the rallies he—descending from the sky in his monogrammed helicopter—has held all over America. “What are we gonna build?” he asks. “A wall!” the crowds holler back. “Who’s gonna pay?” “Mexico!” + + + +The notion of Mr Trump, who is backed by around 35% of Republican voters (see chart 1), as a presidential nominee is alarming. Yet Mr Cruz, who has 20% and is running him close in Iowa, is hardly a reassuring alternative. The self-made son of a Cuban immigrant, he came to national attention in 2013 when he tried to shut down the federal government in a vainglorious bid to defund Barack Obama’s health-care reform, an effort he compared to the resistance against Adolf Hitler. It was an example of the sort of cynical self-promotion for which Mr Cruz is loathed by his colleagues in the Senate. + +He aims to unite the most fiscally conservative part of the Republican coalition with the most socially conservative, evangelical Christians. Offering himself as a no-compromise right-winger and scourge of the party’s elite, Mr Cruz has done well in televised debates, raised more money than most of his ten surviving rivals—including $20m in the last three months of 2015—and covered the ground assiduously in pious Iowa. Hence his new preacherly style. + +“In the days that follow,” Mr Cruz recently declaimed while touring the state’s ultra-devout north-west, “we will send the regulators that descend on farmers like locusts back to Washington!” Raising his nasal voice, he then beseeched his small audience of corn farmers and their wives to pray, “for just a minute every day”, that God would make him president. If He does, Mr Cruz promises to scrap the Internal Revenue Service, institute a 10% flat-tax on income and urge the Federal Reserve to readopt the gold standard. + +Without divine intervention, it is hard to imagine Americans electing either of the Republican front-runners to be president. The lesson the party drew from Mitt Romney’s failure to dislodge Mr Obama in 2012 was that, in an increasingly diverse society, the Grand Old Party needed to widen its appeal. Mr Cruz’s target audience, white Christians, represent less than half the population. The obvious solution was to woo Hispanics, one of America’s fastest-growing electoral groups, who hold some conservative views, though only 27% of them voted for Mr Romney. + +That was why, in 2013, a handful of Republican senators, including Marco Rubio, who is running third in the primary contest, joined a bipartisan, and ultimately fruitless, effort to legalise the status of millions of illegal immigrants. “It’s really hard to get people to listen to you…if they think you want to deport their grandmother,” declared Mr Rubio, a son of poor Cuban immigrants, at the time. It is even harder when you call them rapists. Mr Trump is easily the most disliked candidate of either party; 60% of voters disapprove of him. + +There is a consolation for the Republicans. The Democrats could nominate someone even less electable. In Mrs Clinton’s path stands Bernie Sanders, a 74-year-old “democratic socialist”, who says American capitalism is rigged against the 99% and vows to dismantle banks and build Medicare into a universal health-care system. His claim that this would save $10 trillion over a decade has elicited scepticism. An independent senator from Vermont, Mr Sanders was until recently neither a member nor even an admirer of the Democratic Party, which he has called “ideologically bankrupt”. Yet polls suggest he has the support of 37% of its primary voters and could win in Iowa and at the New Hampshire primary on February 9th. + +From William Jennings Bryan and Huey Long to Ross Perot and Pat Buchanan, populists are as much a part of the American political tradition as tirades against Washington. They have typically thrived at a time of anxiety. Bryan and Long were creatures of depressed economies; Mr Perot went to war with free-trade, which many Americans feared, just as the two big parties decided to embrace it; Mr Buchanan stoked the same nativist fires that have given Mr Trump’s candidacy much of its heat. This time the unease seems to be mainly economic, and it is widespread. + +America has recovered well from the great recession of 2008-09—its unemployment rate is low, at 5%—yet wage growth remains anaemic. Real median household income in 2014 was almost $4,000 below its peak in 2007. That has shaken the national self-esteem; so have unsuccessful wars in Iraq and Afghanistan, and their messy aftermath, including the rise of Islamic State. Asked “Are America’s best days behind us?”, in a recent survey, 49% of respondents said that they were. Black Americans, for whom that is clearly not true, are almost the only hopeful group. + +The squeeze has been hardest for people feeling pre-existing pressures: blue-collar workers, hurt by globalisation, and millennials facing rising college debts and competition for jobs. Last year’s college-leavers are, on average, $35,000 in the red, more than twice the figure of two decades ago. One or both groups are at the forefront of Europe’s many populist insurgencies: including, on the left, Syriza in Greece and the socialist leadership of Britain’s Labour Party; and on the right the French National Front and the UK Independence Party. America is no different. + +Mr Trump’s biggest fans are the most pessimistic Americans, working-class whites. “The country’s spiralling downwards, people are not getting pay rises, we’re not the superpower we think we are,” lamented Todd Winslow, an office-equipment supplier, at a Trump rally in Claremont, New Hampshire. By articulating such fears, Mr Trump has validated them. That is why his supporters love him, whether or not they believe his promises. “He tells us what we all think but are afraid to say,” Mr Winslow declared. Others in the crowd liked Mr Trump’s success in business, his tough-guy style and the fact that he was not a politician. These qualities were evident in the diatribe that followed. + +Ad-libbing as usual, Mr Trump boasted of his “big beautiful brain”, suggested dumping Bowe Bergdahl, an American prisoner-of-war released in a hostage swap with the Taliban, from the air over Afghanistan, and, after inviting questions from the crowd, showed familiarity with none of the issues raised. Asked whether he supported equal pay for men and women, he said: “I love equal pay, I mean I have many women, I was very, very far advanced on women…We’re going to come up with the right answer.” + +Bern brightly + +Mr Sanders’s crowds are similarly fervent, but younger. They are often dominated by bearded, beaded and disgruntled 18- to 29-year-olds, to whom Mr Sanders promises free education in public universities and relief on college debts. The sheer improbability of his assault on American power—he is old, cranky and wears crumpled suits—is to this group part of his appeal. If the humour of Mr Trump’s campaign is WrestleMania burlesque, Mr Sanders’s is college rag. “Feel the Bern” is its unofficial slogan. Yet that gentler tone reflects a big difference between America’s red and blue insurgencies, which is likely to determine how far they go and how much damage they do their respective parties. + +Mr Sanders’s supporters want to undo the accommodation with business that the Democrats reached under Bill Clinton. But they do not hate their party: most strongly approve of Mr Obama, who is much closer politically to Mrs Clinton than he is to the Bern. That she is not doing better is largely down to her shortcomings as a candidate. Her well-funded campaign is being run by veterans of Mr Obama’s brilliant grass-roots operations and aims to emulate it in seeding and revving up networks of autonomous volunteers; but Mrs Clinton, a continuity candidate when the mood is for change, is not doing much revving. Mr Sanders’s campaign, which in 2015 netted over 2.5m donations, resembles the president’s more closely. + +A scandal concerning Mrs Clinton’s foolish use of a private e-mail account while secretary of state has been damaging. It has highlighted her longstanding reputation for being untrustworthy; in a general election, that could hurt her badly. So could the independent run mulled by Michael Bloomberg, a moneybags former-mayor of New York. A free trader who worries about the environment, he would probably take more votes from the left than from the right. + +Yet Mrs Clinton, who is at 52% in the polls, is lucky in her opponent. Had Elizabeth Warren, a senator from Massachusetts and a milder version of Mr Sanders, decided to run, she might now be in Jeb! territory. She is lucky in her party’s residual discipline. And she is lucky that a series of southern states, where black voters, who tend to like her, matter more, will vote shortly after Iowa and New Hampshire (see chart 2). This will present her with an early opportunity to douse whatever fires Mr Sanders may have started. + + + +For the Republican establishment, none of that good fortune applies. Mr Trump and Mr Cruz are more formidable and the Republican voters who like them more mutinous than their Democratic counterparts. In their shadows, a clutch of more electable candidates, of whom Mr Rubio along with two serving governors, John Kasich of Ohio and Chris Christie of New Jersey, are probably the last serious contenders, have meanwhile struggled to distinguish themselves. + +Mr Bush’s spluttering campaign has exacerbated the problem. Its fund-raising drew resources from other mainstreamers; Mr Rubio raised a paltry $6m in the third quarter of 2015, a third of the amount raised by Ben Carson, a former neurosurgeon and momentary front-runner. Now it is hurting them even more, with Mr Bush desperately splurging on attack ads against his establishment rivals, especially Mr Rubio. The result is that the Republicans’ erstwhile centre ground—the “somewhat conservative” vote that constitutes about 40% of the total and usually decides the party’s nomination—is hopelessly split. + +The early results may fix that problem. Whichever of the three surviving mainstreamers does best in Iowa and New Hampshire, a “somewhat conservative” state, could swiftly consolidate the establishment’s share of the vote and take on the front-runners. Mr Rubio, who is clever, fresh-faced, Spanish-speaking and almost the only Republican candidate to beat Mrs Clinton in head-to-head polling, has long looked most suitable for that role. + +He is expected to top the establishment roster in Iowa. Mr Kasich, who has a good governing record, and Mr Christie, an articulate bruiser, have worked harder in New Hampshire and could beat Mr Rubio in that state. But it would have to be by a decent margin to impress the conservative donors and media eagerly waiting to anoint the next establishment champion. Mr Kasich seems too much of a stick-in-the-mud for this election, Mr Christie too moderate for many Republicans. And Mr Rubio—if he can only survive the early states—would probably do better in later-voting, more moderate states, especially his native Florida. In a protracted contest, that could prove decisive + +A three-horse race could even mean that no candidate wins a majority of delegates, which might also argue for Mr Rubio over his mainstream rivals. The candidates would then try to woo each other’s delegates at the party’s convention in July, something that last happened in 1948. And across the Republican coalition Mr Rubio is a popular second choice. + +Yet it is also possible that no candidate of the establishment will do well enough in the early states to rise above the others. Its vote would then remain split. In that case, Mr Trump, if his supporters turn out, or Mr Cruz, whom the early schedule favours, by moving from evangelical Iowa to the southern Bible-belt, could wrap up the nomination while the mainstreamers are stuck squabbling among themselves. + +It is bad luck for Republican leaders. But they have earned it, for having long encouraged the sort of polarising invective that Mr Trump and Mr Cruz spout. Mr Obama’s health-care reform is socialist; climate science is a liberal fraud; Democrats are not just wrong but anti-American: such are mainstream Republican verities. Even before Mr Trump doubled down on it, this sort of rabble-rousing had damaged the party, because its leaders never acted commensurately with their rhetoric, making them seem weak or insincere. + +An uninviting establishment + +Mistrusted by voters, the establishment candidates have found it increasingly hard to offer a positive alternative to Mr Trump’s miserabilism. To some degree, all have emulated it. Invited to condemn Mr Trump’s promised ban on Muslims, at a televised debate on January 14th, Mr Rubio instead praised his rival for having “tapped into some of that anger that’s out there”. Yet if the Republican pitch is about anger, not optimism, Mr Trump should win, because he is best at that. This has probably already made it harder for the party to win a general election; before Mr Rubio could woo many Hispanics, he would have some explaining to do. Naturally, his capitulation to Mr Trump hasn’t won him any favour with the front-runner, either. After Mr Rubio, who is of average height, was recently pictured wearing Cuban heels, Mr Trump commented: “I don’t know, they’re big heels. They’re big heels. I mean those heels were really up there… I just hope it works out fine for him.” + +It still might. But if Mr Trump or Mr Cruz takes Iowa and New Hampshire, the establishment will start to fear the worst. Some Republican grandees are already seeking to build bridges with Mr Trump—including Bob Dole, a former presidential candidate, in a recent article in the New York Times—on the basis that even a narcissistic bully is less awful than Mr Cruz. That is a startling admission of weakness, before any vote has been cast. Yet the leadership’s usual means of influence—money and endorsements—have proved strikingly ineffective in this strange contest. + +Mr Trump has spent less than any other leading candidate; his campaign has received more television news coverage than all his rivals combined. Neither of the front-runners has been endorsed by any serving Republican governor or senator. Their strength is from a different source. “We’re Not Gonna Take It” is the shouty rock anthem that concludes Mr Trump’s seething rallies. Americans, and the world, have a nail-biting few weeks ahead, wondering what that could mean. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21689539-primary-contest-about-get-serious-it-has-rarely-been-so-ugly-uncertain-or/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Walmart and low-wage America: High expectations + +Transgender life: Restroom rumpus + +Dry California: All the leaves are brown + +Ecology: Murre mystery + +Policing and privacy: The StingRay’s tale + +Universities and free speech: Hard to say + +Lexington: Superpower statues + + + + + +Articles Sections Next + +Walmart and low-wage America + +High expectations + +What a big pay rise at Walmart means for the minimum-wage debate + +Jan 30th 2016 | WASHINGTON DC | From the print edition + + + +NO FIRM in the world matches the economic imprint of Walmart. The retailer, based in Arkansas and known across America for its vast “supercentres” and low prices, is the world’s largest company by revenue. Its 2.2m worldwide workforce is about the same size as China’s army, excluding reservists. Sam Walton built his empire with a relentless focus on costs: “Control your expenses better than your competition. This is where you can always find the competitive advantage,” he said. Yet change is afoot at “Wally world”. In April 2015 Walmart abruptly raised the wages of its lowest-paid staff: all now earn at least $9 an hour. On February 1st that will rise to $10 an hour for trained-up workers—fully one-third higher than the federal minimum wage. + +The change is curious, because in the past Walmart has paid notoriously little. In 2014 the average hourly wage of an American cashier was $9.93. According to data from Glassdoor, a jobs website, Walmart’s cashiers then took home $8.62. Retail salesmen made $12.38 nationwide; at Walmart, they earned only $8.53. + +Walmart wages were low, but not pitifully so; for both cashiers and salesmen, average pay at Walmart was close to the 25th percentile nationwide. What has made Walmart look mean is the firm’s enormous size. It employs 1.4m of America’s 16m retail workers. Almost 4.5m others toil in small shops with fewer than 100 employees. Wages there are expected to be low. But, typically, big firms pay more. One study from 2014 found that high-school graduates earn 15% more at retailers with more than 1,000 workers, compared with those who have fewer than ten staff. Not so at Walmart, which paid corner store wages while making megachain profits. + +This—combined with a fierce resistance to unions—made the firm a target for campaigners. One common accusation against Walmart—whose shareholders made a 17% return in the year to January 2015—is that its low wages mean it benefits from hidden government subsidies. Many low-wage workers rely on government programmes to top up their low wages, and on Medicaid for health insurance. Without this support—the argument goes—firms relying on cheap labour would collapse. In May 2013 congressional Democrats produced a report which furiously alleged that a typical Walmart supercentre in Wisconsin, employing 300, costs the taxpayer $900,000 a year in welfare payments to its staff. + +That was hyperbole; it assumes some other employer would be willing to hire Walmart’s workers at higher wages. Looks matter, though, and the benefit of today’s pay rises is partly cosmetic. Other factors are in play, too. “In some ways it demonstrated leadership, in other ways it [was] a market reaction,” Doug McMillon, Walmart’s boss, told investors in October 2015. Recently wage growth has been higher for junior retail staff than for other workers, suggesting that competition for staff may be hotting up (see chart). Walmart’s first pay rise, to $9 an hour, was emulated by Target and TJX, which owns the retailers T.J. Maxx, Marshalls and HomeGoods. + + + +The pay rise is also a strategic investment. Walmart wants to boost its productivity and give its workers more freedom to innovate, as it seeks to make its stores more pleasant and, perhaps, appealing to more affluent customers. That requires motivated staff. It is too soon to judge conclusively whether the rise to $9 an hour has worked, although Walmart says that the number of stores rated as sufficiently “clean, fast, friendly” by customers has increased from 16% in February 2015 to over 70% today. + +That will please advocates for higher minimum wages, who argue that better-paid workers are more productive. Economists call this the “efficiency wage” hypothesis. Opponents of higher minimum wages note that pay rises cannot be free. Some combination of Walmart’s customers, shareholders, suppliers and other employees must be paying for the increase. + +Walmart’s customers are unlikely to feel the pinch soon; low prices are a cornerstone of the brand. But the firm now says that higher wages come before price cuts: “You clean up your house before you invite people over,” argues Mr McMillon. + +Wage rises are certainly denting profits. Walmart’s share price barely moved when they were first announced in February last year, suggesting that investors thought them immaterial at first. But in October the firm warned that it expected profits to fall by 6-12% in 2017, with higher wages responsible for three-quarters of the shortfall. Following that announcement, the share price fell by 10%—its biggest one-day drop since 1988. + +A transfer from capital to labour, though, is precisely what campaigners want to achieve. A more potent criticism of higher wages is that they cause job losses. And on January 15th Walmart announced that it would close 154 stores in America, with the possible loss of 10,000 jobs. + +The firm says that wage costs are not to blame. The closures mostly reflect Walmart’s wholesale abandonment of its small “Walmart Express” stores. Elsewhere, Walmart hired 8,000 new department managers at the same time as raising pay. Adding middle-management is hardly the hallmark of a firm set on trimming its labour force (though some say hours have been cut instead). + +Not every firm would find it easy to copy Walmart. Wages only cost retailers 9.5% of their revenues. In the food-and-drink industry—a prime target of the “Fight for $15” campaign to raise the minimum wage—wages amount to 31% of revenues (see chart). A much higher fraction of workers in the food, drink and hotel industries make the minimum wage, so any rise would have a greater effect on those industries. Even within retailing, there are nearly 600,000 small firms with fewer than 20 workers. In Mississippi, half of all cashiers make less than $8.79 an hour; a big increase there would have unpredictable effects. + +Walmart has had some difficulty with the move. Long-serving staff who already earn more than $10 are miffed at missing out on a bumper rise. A section of Reddit, an online message board, for Walmart employees is filled with complaints. “I’m mad at the company...for invalidating 15 years of my hard work,” writes one. + +Incrementally higher wages will not much reduce the welfare bill for Walmart’s workers; campaigners will go on claiming that low-wage firms are subsidised. Whether they are right depends on who bears ultimate responsibility for caring for the poor and sick. Campaigners think it is employers, which implies that government-funded health care in Britain or Canada is primarily a subsidy for businesses. And employers, unlike governments, can disappear in response to regulation. + +It is usually more efficient to let market outcomes play out and leave transfers to the government. Still, minimum wages, set carefully, are beneficial—perhaps even for the firms who pay them. Another piece of Sam Walton’s advice: “High expectations are the key to everything.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21689607-what-big-pay-rise-walmart-means-minimum-wage-debate-high-expectations/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Transgender life + +Restroom rumpus + +A fault line runs through the stalls + +Jan 30th 2016 | CHICAGO | From the print edition + + + +“THESE children have fewer rights than prison inmates,” says Tom Morrison, a Republican state representative in Illinois. Mr Morrison is talking about girls at a high school in his constituency, Palatinate, who share a locker-room with a transgender girl. Late last year the Department of Education ruled that the school had violated anti-discrimination laws by banning a pupil, who was born male but identifies as a girl, from the girls’ locker room. Male prison inmates have successfully argued in court that letting female guards supervise them when they are taking a shower violates their privacy, reasons Mr Morrison, so they now have more rights than Illinois schoolchildren. + +Schools in Illinois, as in many other states, have a patchwork of rules governing where transgender people can pee. Some allow them to use the locker and restrooms (or loos to Brits) of their choice; others make them use designated facilities. This is confusing for parents and children, says Mr Morrison, which is why he introduced a bill in the legislature on January 20th that would require all pupils at high schools in Illinois to use loos and changing rooms that correspond to the gender on their birth certificate. The bill would require schools to provide separate facilities for transgender pupils. + +The debate in Illinois is part of a national discussion that pits those who think of gender as something a person is born with against those who argue that being male or female can be a choice. Progressives have taken the “choice” side of the argument—in April 2015 the White House added a gender-neutral toilet—prompting conservatives to take the opposing one. In South Dakota a bill similar to Mr Morrison’s is moving forward in the legislature. Last autumn voters in Houston, Texas, rejected a broad anti-discrimination ordinance because its opponents had depicted it as a “bathroom ordinance” that would enable potentially predatory men and even registered sex offenders to enter women’s loos. In Indiana Jim Tomes, a Republican state senator, introduced a bill last December which would make the use of a facility that does not correspond with a person’s birth certificate a misdemeanour, punishable with up to one year in jail and a fine of $5,000. A spokesman for Mr Tomes says the bill will not be submitted to a vote in the legislature, but that does not mean that “similar language in a different bill couldn’t be considered”. + +Given all the troubles faced by transgender people, who make up just 0.1% of the population according to the least unreliable estimate, why the focus on loos? According to Human Right Campaign, a gay lobby group, in the first ten months of 2015 at least 21 transgender people—nearly all of them black or Hispanic women—were killed, more than in any other year recorded by activists. Unemployment among transgender people is double the national rate and as much as four times that of the general population for non-whites. Fully 90% of those who have a job say they have experienced harassment at work. + +The issue is more pressing than it seems, says Kim Hunt of the AIDS Foundation of Chicago. Some transgender people do not go to the loo all day because they have been harassed, assaulted or kicked out of one. This can result in dehydration, urinary-tract infections and kidney problems. A survey by the Williams Institute, a think-tank, found that 68% of those questioned had been subjected to slurs while using a bathroom. This month San Francisco joined Washington, New York, Philadelphia, Austin, Seattle and Santa Fe in requiring all businesses and city buildings to designate single-stall loos as all-gender. + +The bigger battle, though, is over multi-stall restrooms and locker rooms, especially in schools. Title IX , an amendment tacked on to the Higher Education Act in 1972, says that “no person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education programme or activity receiving federal financial assistance”. The Obama administration has interpreted this as meaning that transgender pupils must be allowed to use facilities for the gender with which they identify. In October it filed a legal brief in a federal appeals court backing the legal challenge of Gavin Grimm, a transgender boy, to the policy of his school in rural Virginia which bans him from using the boys’ toilets. On January 27th the judges will hear oral arguments in GG v. Gloucester County School Board. It is the first time a federal court will have to weigh up the question. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21689610-fault-line-runs-through-stalls-restroom-rumpus/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Dry California + +All the leaves are brown + +Even torrential rain brought by El Niño may not end California’s drought + +Jan 30th 2016 | LOS ANGELES | From the print edition + +Safe and warm in LA + +STILLNESS pervades the South Los Angeles Wetland Park. A turtle floats by, undisturbed by lunch hour at the high school opposite. Tall bulrushes bend around the pool at the centre of the nine-acre (3.6 hectare) site. The water comes from the city’s storm drains, cleaned of oil and rubbish. Completed in 2012 for $26m, the park captures urban run-off after wet weather—vital in a state suffering from severe drought. Water from rain in recent weeks, brought largely by El Niño, the world’s largest climatic phenomenon, now flows through the park’s fountains. More will come. + +El Niño sees warm water, collected over several years in the western tropical Pacific, slosh back eastwards after the weakening, or reversal, of winds that blew it there. This affects atmospheric cycles, and therefore weather patterns, around the world. The current Niño is one of the strongest on record; its rivals in 1982-83 and 1997-98 ushered in two of California’s wettest years after storms between January and March. + +In the first week of this year more than 100mm of rain fell near Lake Tahoe; snow turned the Golden State’s peaks white. At Mount Waterman ski slopes have opened for the first time since 2011. The Los Angeles fire department has prepared more than 200,000 sandbags; churches and shelters have flung open their doors to the 18,000 or so living on the city’s streets. Across the state, the number of people with flood insurance has jumped by 12% in recent months, according to the Federal Emergency Management Agency. + +Such foresight makes sense. El Niño caused more than $500m-worth of damage 18 years ago. Rainfall on dry, cracked ground is likely to run across it, not soak in, causing flooding and mudslides. And the state is truly parched: California has missed more than a year’s worth of precipitation. Three months ago, about 46% of the state was suffering “exceptional” dryness according to US drought monitor, a research tool; now just less than 43% of it is. + +Snow business + +Yet even if California endures ark-worthy deluges, the drought will probably persist anyway, says Noah Diffenbaugh, a professor of earth-system science at Stanford University. Studies published in recent years agree that for the past three winters a region of high atmospheric pressure off the coast has diverted seasonal storms to the north. Underground aquifers, raided mercilessly to compensate, will not recover quickly. They may have provided as much as 65% of the water used in the state in 2014—up from 40% during average years—according to the California Water Foundation, an environmental group. + +Snow, as well as rain, is needed to quench the state’s thirst; it supplies about a third of the water needed by cities and farms. It falls in the Sierra Nevada in the winter; meltwater then flows to reservoirs in the spring, and thence to users. Randall Osterhuber runs a 70-year-old weather station near Lake Tahoe for the University of California, Berkeley. This year the snow is slightly more abundant than usual, while last winter brought “the least amount of snow we’ve ever measured, by a wide margin”, he says. Yet 2011 was among the whitest years for the station. + +Mr Osterhuber frets about the “ever-increasing variation” in the state’s weather. Since the 1980s average temperatures in California have been higher than they were in the 50 years before; 2014 and 2015 were among the hottest on record. A study published last year in Geophysical Research Letters claims that man-made warming can explain 8-27% of the anomalous drought conditions between 2012 and 2014. The rest is natural variability in precipitation levels in a drought-prone state. + +Jerry Brown, California’s governor, told city-dwellers to cut water consumption by a quarter last April; in the second half of 2015 it dropped by just over 26%. Once-lush lawns now crunch underfoot; fields that formerly grew alfalfa, a thirsty crop, now lie fallow in the Central Valley. Felicia Marcus, head of California’s State Water Resources Control Board, says conservation saves money and buys time; better water-use monitoring would help still more, as could more projects to collect run-off. For any Niño rains, “we need every ounce of storage we can get,” she says. To prosper, the state’s primates will have to start living more like south LA’s turtles. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21689612-even-torrential-rain-brought-el-ni-o-may-not-end-californias-drought-all-leaves-are/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Ecology + +Murre mystery + +Thousands of seabirds are washing up dead on Alaska’s shores + +Jan 30th 2016 | From the print edition + + + +AT THE end of the highway, 200 miles from Anchorage, sits a small fishing and tourism town where, in early January, thousands of dead common murres, or guillemots, were washed ashore. These penguin-like seabirds littered the tidal wracks so densely that beach walkers had to be careful where they stepped. And beyond Homer, tens—probably hundreds—of thousands of these birds have drifted in dead along Alaska’s vast coastline or have been found far inland half-dead in the snow. + +Alaska is home to about 3m common murres, which spend most of their lives on the open ocean but come to shore to nest in dense colonies on coastal cliffs. The female lays a pear-shaped egg so pointed at one end that it will roll in a circle, helping to keep the egg from plummeting off the bird’s narrow nest. Murres are renowned divers, using their wings to “fly” down 600 feet (183 metres) under water in search of a meal. + +Around Homer, they are a daily sight all summer. They nest in a raucous crowd on a rocky island a few miles offshore, which becomes a magnet for tour boats during the warm months. But last summer they failed to raise chicks. And they have been dying in large numbers along the Pacific coast, from California to Alaska. The birds appear to have starved. + +The likely cause is warmer ocean waters. Temperatures in the North Pacific have been three to seven degrees Fahrenheit higher than average for the last two years. The “warm blob”, as it has been called, is rattling the marine food chain from bottom to top. “Whole systems are out of whack,” says Heather Renner of the Alaska Maritime National Wildlife Refuge, a federal agency which manages a collection of far-flung islands and remote coastline in Alaska which, if laid over a map of the continental United States, would stretch right across it. The refuge contains nesting colonies for most of the state’s murres, which are a sizeable chunk of the worldwide population. + +In a town that grew up as a collection of homesteads, where people still build their own houses, split wood, tend gardens and put up a winter’s-worth of fish and game, local knowledge is valuable currency. But know-how is not enough to explain what is happening to these birds. + +“I think we’re going to start seeing more events like this that we don’t have the right data to explain,” says Ms Renner. Scientists are starting to understand certain links between climate change, ocean warming and their impact on polar regions. These areas warm at twice the rate of the rest of the world on average; what’s happening now may hint at what more ocean warming would bring. + +Old-timers in Homer have never experienced anything like this. And they are perplexed by a host of other freakish phenomena: humpback whales lingering in local waters months after they typically head south for the winter, toxic algae populations surging, sea otters dying in large numbers, and out-of-this-world king-salmon-fishing. “Global weirding,” the complex impacts of climate change, can be a mixed bag. + +While the sea has taken back many of the dead birds, a robust population of bald eagles has carried other carcasses off the beach, scattering bits and pieces into back yards and parking lots. Ms Renner expects murres to continue to wash ashore for the rest of the winter. They will serve as a constant reminder, as the days slowly lengthen into spring, of mysteries still to be solved. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21689605-thousands-seabirds-are-washing-up-dead-alaskas-shores-murre-mystery/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Policing and privacy + +The StingRay’s tale + +Courts take aim at a technology loved by the police + +Jan 30th 2016 | New York | From the print edition + +IN APRIL 2014, three men were shot when a drug deal turned sour on a tree-lined residential street in Baltimore. The city’s police department quickly linked the crime to Kerron Andrews, a dreadlocked 22-year-old, but could not find him at his registered address. Agents used phone records to determine roughly where he was, but instead of going door-to-door until they found him, they opted for something far more efficient: a Hailstorm. Using this, they tracked Mr Andrews directly to an acquaintance’s sofa, between the cushions of which he had stuffed the gun used in the shooting. + +The Hailstorm is a more advanced version of the StingRay, a surveillance device that operates by mimicking a cellular tower, forcing all nearby mobile phones to reveal their unique identifying codes, known as IMSI numbers. By crosschecking the IMSI numbers of suspects’ phones with those collected by “cell-site simulators” such as Hailstorm and StingRay, police officers can pinpoint people with astonishing precision. The tools have been used to trail suspects to specific rooms in apartment blocks and to find them on moving buses on busy city streets. Developed at first for military and intelligence services, cell-site simulators are now furtively used by federal agencies such as the Federal Bureau of Investigation (FBI) and the Drug Enforcement Administration (DEA) as well as by local police forces across the land. + +Law-enforcement agencies rarely seek explicit court approval to employ cell-site simulators, and rarely admit to using them after the fact. As a condition for purchasing them, state and local police forces must sign strict non-disclosure agreements with the FBI, since the more information is made public about cell-site simulators, the more “adversaries” will adapt to them. The agreements prohibit police from disclosing any information about the technology, even to judges in the form of warrant requests; prosecutors must drop cases if they are pressured to reveal details about them. In one case in Baltimore, a judge threatened to hold a detective in contempt after he refused to testify about the use of StingRay in locating an armed-robbery suspect. Instead of instructing the detective to answer, the prosecution dropped the evidence. In another armed-robbery trial in Tallahassee, prosecutors offered the defendants a generous plea deal rather than demonstrate how the device worked in open court. + +Given this secrecy, it is impossible to identify all the agencies using cell-site simulators. The American Civil Liberties Union (ACLU) has counted 58 agencies that possess the devices, across 23 states and the District of Columbia, but thinks the true number may be much higher. The technology has been used not only to trace murderers and armed robbers, but also to nab car thieves, phone pilferers and, in one case, a woman who made a series of abusive phone calls. The city of Baltimore alone has admitted to using the technology 4,300 times between 2007 and 2015. “I have never seen a tool that is on one hand treated in such a cloak-and-dagger fashion, but on the other used as a bread and butter tool,” says Stephanie Pell of West Point’s Army Cyber Institute. + +The ray and the net + +Civil-liberties advocates claim the secrecy around cell-site simulators is unjustified. According to Christopher Soghoian, a technologist at the ACLU, the wiliest criminals already know to use disposable “burner” phones and, short of forgoing cellular communication altogether, there is no foolproof way for them to evade StingRays and Hailstorms. But their covert use raises worries about privacy, he says. Cell-site simulators often trace phones to pockets, purses, homes and other places protected by the Fourth Amendment’s prohibition on “unreasonable searches”. Moreover, they do not just gather information from the target’s phone, but also from other phones nearby. Brian Owsley, a law professor at Texas Tech University School of Law who, as a judge, rejected several federal requests to use cell-site simulators without a warrant, says there should be laws requiring data inadvertently gathered in this way to be deleted. + +Lawmakers are starting to address such grievances. Washington state, California, Virginia, Minnesota and Utah have passed laws requiring their police forces to seek warrants before using cell-site simulators. Congressman Jason Chaffetz of Utah hopes to pass a bill that would do the same on a federal level, though he is unlikely to prevail in such a politically charged year. + +Movement in the courts may come more quickly, however. After the Baltimore police department grudgingly confessed in a court hearing last summer that it had used a Hailstorm to locate Mr Andrews, the presiding judge suppressed all evidence related to the surveillance operation—including Mr Andrews’s gun. Without a warrant, she held, the police had breached his Fourth-Amendment rights. Civil-libertarians are optimistic about the precedent the case may set. The state of Maryland will appeal against the ruling on February 9th. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21689244-courts-take-aim-technology-beloved-countrys-police-forces-secretive/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Universities and free speech + +Hard to say + +A statement at the heart of the debate over academic freedom + +Jan 30th 2016 | From the print edition + +Chicago’s freedom tower + +WHEN Louisiana State University fired a professor in June 2015 for using rude words in a class designed to prepare teachers for careers in inner-city schools, it was an early skirmish in a conflict between students (one of whom had complained) and faculties over free speech that has since spread across the land. The university’s faculty is now considering something that others in the same position have done: copying the University of Chicago. + +In response to a number of universities cancelling invitations to controversial speakers and challenges to academic freedom, Geoffrey Stone of Chicago’s law school was appointed chair of a committee that would restate its principles on free speech. The statement was issued a year ago, shortly before the murderous attack on Charlie Hebdo, a French satirical publication, for its cartoons of Muhammad. + +Since then the debate over permissible speech on college campuses has only become more contentious. A website, thedemands.org, lists speech-curbing demands from students at 72 institutions. Administrators are tying themselves in knots in an effort to balance a commitment to free expression with a desire not to offend. + +One consequence of this has been to call attention to the Chicago Statement, which has been adopted by Purdue, Princeton, American University, Johns Hopkins, Chapman, Winston-Salem State and the University of Wisconsin system, according to the Foundation for Individual Rights in Education (Fire), a pro free-speech non-profit which is actively promoting it. It is brief (three pages) and emphatic. + +“It is not the proper role of the university to attempt to shield individuals from ideas and opinions they find unwelcome, disagreeable, or even deeply offensive,” it states. “Concerns about civility and mutual respect can never be used as justification for closing off discussion of ideas, however offensive or disagreeable.” The responsibility of a university, it concludes, is not only to promote “fearless freedom of debate”, but also to protect it. + +The committee gave much consideration to concerns about “hate speech” and “micro-aggressions”. Whatever harm such expression caused, it concluded, should be redressed by “individual members of the university…openly and vigorously contesting the ideas that they oppose,” rather than by censorship. + +The widening adoption of the statement came as a surprise, says Mr Stone, because it was built upon the college’s own history, including a controversial invitation by students in 1932 to William Z. Foster, then the Communist Party candidate for president. The proper response to unpopular ideas, responded then-president Robert Maynard Hutchins, “lies through discussion rather than inhibition”. In 1967, during protests over civil rights and the Vietnam war, and demands that the university itself should take a stand, a faculty committee chaired by Harry Kalven, one of Mr Stone’s professors, concluded that would be wrong: “The university is the home and sponsor of critics; it is not itself the critic”. + +This approach was not universal. The most prominent committee to follow Chicago’s was Yale’s, in 1974. It concluded that intellectual growth requires “the right to think the unthinkable, discuss the unmentionable, and challenge the unchallengeable”. When read in full, however, the report is confused, foreshadowing the current debate. Although Yale’s committee was “gratified” to find that most people surveyed supported freedom of expression, a minority “held reservations of various kinds about how much freedom should be tolerated.” One member dissented from the report, calling its support for free speech “too facile and simplistic”. + +Even the Chicago Statement has reservations. Expression that “invades substantial privacy” or “constitutes a genuine threat” can be punished. The university has the right to regulate the “time, place and manner of expression”, so that ordinary activities are not unduly disrupted—though this should never be used to undermine an “open discussion of ideas”. The statement is, in short, written not only to allow speech, but to facilitate protest. When it first appeared, this may have seemed a bit academic. Not any more. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21689603-statement-heart-debate-over-academic-freedom-hard-say/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Superpower statues + +John Kerry’s visit reveals pragmatic, unfriendly relations between America and China + +Jan 30th 2016 | From the print edition + + + +EVERY four years, American presidential candidates pledge to get tough and confront China. Populists promise to bring jobs home, if need be by starting trade wars. Security hawks vow to use every form of American might—from sanctions to the Seventh Fleet—to curb Chinese mischief-making. Yet, in the search for a China policy, it is hard to recall a candidate demanding America return looted Cambodian antiques. + +Yet inspecting newly returned sculptures—including a splendid tenth-century statue of a monkey god, handed back in 2015 by the Cleveland Museum of Art—is how John Kerry, the secretary of state, began a visit to Cambodia on January 26th, a day before he headed to Beijing. It was a striking scene at the National Museum of Cambodia in Phnom Penh, as Mr Kerry was shown carvings looted during the civil war of the 1970s, and traced after they were shown to be perfect matches for plinths unearthed in a jungle-clad temple. Addressing the local press a few hours later, Mr Kerry cited the return of stolen treasures as an example of his country’s commitment to Cambodia and other members of the ten-country Association of Southeast Asian Nations (ASEAN). Mr Kerry also touched on “painful reminders” of the Vietnam war, including unexploded American ordnance that continues to take Cambodian lives and limbs. + +There is in fact a China logic to this approach—though many China-bashing politicians back home would doubtless call Mr Kerry naive and too apologetic for past deeds. To critics, President Barack Obama’s “pivot to Asia”—a move to rebalance American diplomatic and military attention away from the Middle East and towards the Asia-Pacific—has generally been a flop, because it has not stopped Chinese officials from bullying American businesses, building runways on disputed rocks in the South China Sea or setting cyber-spies to steal commercial and state secrets. They would like to see China challenged to behave, or else. + +Mr Obama’s foreign-policy machine sees it differently. To simplify, their Asia policy is built around two ideas. The first is rather bleak: that the China led by Xi Jinping, its assertive president since 2013, has shown itself to be a mercantilist, arrogant and stubborn power, too self-interested and suspicious of American intentions to be swayed by appeals to its better nature. At best, this China can be persuaded to behave as America hopes when it sees that policy as coinciding with its self-interest. Nonetheless, China is too large and too important to the global economy to be taken on frontally as electioneering politicians urge. The second idea is that China’s overbearing behaviour in its neighbourhood is an opportunity for America to strengthen old bonds with such allies as Japan and South Korea, and to forge new ties with ASEAN nations that want an alternative to Chinese regional hegemony. + +ASEAN leaders have been invited to a summit with Mr Obama in February. Mr Obama’s aides have crafted a Trans-Pacific Partnership (TPP), a trade pact with Asia-Pacific countries described as a chance to anchor in place a rules-based order for global commerce, rather than let China set terms (though Congress is unlikely to allow TPP to advance before November’s elections). American generals and admirals are exploring or deepening military co-operation with such countries as the Philippines, Vietnam and even Malaysia, long a critic. Mr Kerry, in an interview in Phnom Penh, calls such moves as the return of looted Cambodian sculptures more than just the “decent” thing to do. To show respect for a country and its culture can be “an important part of diplomacy”, says Mr Kerry, a courtly patrician who as a young naval officer fought in the rivers and marshes of Vietnam. + +To be blunt, dealings with China are not easy. But in the corridors of American power, the case is made that it could be worse. In recent years China has tried to turn relations into a gigantic, unsavoury system of barter. Chinese leaders deliver long lectures about areas of core interest in which they expect no American interference, from policy over Tibet to the South China Sea. China makes clear that it sees the collapse of North Korea’s brutal regime as a greater threat than that country’s nuclear-weapons programme. In return, China dangles the possibility of help on things America wants—assistance in Afghanistan or over the Iranian nuclear deal, or commitments on climate change. + +Confucius meets Brahmin + +Team Obama hotly rejects the idea that the way to get along is to let China do what it wants in sensitive areas, trading Chinese good behaviour for American appeasement. Instead, America’s offer is to seek areas of agreement, while holding frequent, candid talks to manage crises. + +Disagreements marked Mr Kerry’s meetings in Beijing on January 27th. In lengthy remarks at the Great Hall of the People, Mr Xi touted a “new model of major-country relationship” between China and America. Working together, the two powers can achieve “win-win results for both sides,” Mr Xi beamed. Alas the win-win mood was short-lived. As Mr Kerry began to reply, Lexington and the rest of the media were ejected, despite cross remonstrations from American diplomats. + +Mr Kerry had earlier held tense talks in private with the Chinese foreign minister, Wang Yi. Mr Wang resisted suggestions that Chinese leaders could do much more to punish North Korea for its latest test of a nuclear bomb, citing among other things the harm that imposing sanctions might cause to Chinese companies. In the Xi era, the message went, China takes up great-power responsibilities only when it suits it. + +Team Obama is more clear-eyed about China than its critics allow. Some presidential candidates think the answer is for America itself to throw off the constraints of a rules-based global order and match China for self-interested ruthlessness (Donald Trump fancies punitive trade tariffs of up to 45%). That is a competition that America should not aspire to take part in. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21689604-john-kerrys-visit-reveals-pragmatic-unfriendly-relations-between-america-and/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Brazil: Partying on a precipice + +Haiti’s election: Chaos and compas + +The Zika virus: To breed, or not to breed + +Bello: From red tape to joined-up government + + + + + +Articles Sections Next + +Brazil + +Partying on a precipice + +The holiday provides no respite from economic and political woe + +Jan 30th 2016 | SÃO PAULO | From the print edition + + + +JANUARY is a languid month in Brazil. Beyond the hullabaloo at samba schools—practising for their bawdy annual face-off during Carnival, which starts on February 5th—business pauses while Brazilians go on holiday in the scorching southern summer. Fewer cars clog streets; more bodies throng the beaches. + +Politicians customarily switch off along with everyone else. Congressmen return from their Christmas break on February 2nd, but will probably do little until after Mardi Gras a week later. Neither they nor the president, Dilma Rousseff, will be able to relax, though. A frightening mosquito-borne disease has put the health authorities on high alert (see page 42). Meanwhile, Brazil’s political and economic crises are deepening. When politicians return to work they may regret the time they took off from attempting to solve them. + + + +The economic slide continues. The number of jobs in the formal sector fell by 1.5m in 2015, the fastest pace of job destruction since comparable records began in 1992. Another 1m could be lost this year, analysts reckon. Sales of vehicles dropped by a fifth last year. The IMF now predicts that GDP will shrink by 3.5% in 2016, more than three times as much as it expected in October. Despite the recession, inflation has risen to nearly 11%, its highest level since 2002 (see chart). + +Male breadwinners make up a higher proportion of the newly unemployed than in previous downturns, which mainly affected female and young workers, notes Naercio Menezes of Insper, a university in São Paulo. That means that the hardship caused by the current recession will be greater. For the relatively young, joblessness is a novelty. Many entered the formal labour market during the commodity boom of 2003-13. No one knows how they will react to their misfortune, warns Fernando Henrique Cardoso, a former Brazilian president who is also a sociologist. + +As misery grows, the government’s capacity to tackle its causes is diminishing. Prosecutors investigating the vast bribery scandal centred on Petrobras, the state-controlled oil-and-gas giant, are expected to file additional charges against senior figures in Ms Rousseff’s Workers’ Party (PT), which has already been badly tarnished by the affair. An even bigger worry for Ms Rousseff is the threat of impeachment against her on unrelated allegations that she assented to the use of accounting tricks to hide the true size of Brazil’s fiscal deficit. + +Her weakness makes her more dependent on the goodwill of the PT and trade unions aligned with it, which are viscerally opposed to the reforms needed to steady the economy. This month Ms Rousseff dared to acknowledge that Brazilians retire too early (at 55 for men, on average). In effect she admitted that the government cannot stabilise its finances if it continues to devote 40% of (non-interest) spending to pensions. But she backtracked in the face of resistance from her party and the unions. Raising the retirement age would be unacceptable, declared the PT this week. + + + +Waxing and waning: Brazil's economic woes, in charts + +This will make it much harder for Nelson Barbosa, the newly appointed finance minister, to contain the budget deficit, which is close to 10% of GDP. His main idea is to reintroduce a financial-transactions tax, which is loathed by business but popular among Ms Rousseff’s left-wing allies. But this would raise just 10 billion reais ($2.5 billion) in extra revenue, a fraction of net government borrowing, expected to be 500 billion reais this year. Ms Rousseff wants to summon back a council of wise men and women, which she disbanded during her first term, to suggest reforms. That looks like a delaying tactic. + +While fiscal policy wobbles, economists are starting to fret about monetary policy, too. After weeks of hinting that it would raise interest rates to fight inflation, the Central Bank decided on January 20th to hold them steady at 14.25%. The decision may have been justified: higher rates would weaken the economy further and make it still harder to control the fiscal deficit. But it looked like a surrender to political pressure. The Central Bank’s president, Alexandre Tombini, met Ms Rousseff two days before the interest-rate decision. Then he foreshadowed the bank’s U-turn by pointing to the IMF’s gloomier predictions of Brazilian and global growth, which by that point should have been no surprise. Rather than shoring up Brazil’s financial credibility, the Central Bank thus damaged it all the more. + +There is little prospect that congressmen will take measures to repair it when they return to work. Those who are pushing for Ms Rousseff’s impeachment concede privately that they are unlikely to muster the two-thirds majority needed in the lower house to send the motion to the Senate. But they plan to drag out the proceeding as long as the (vague) legal deadlines permit. That will accomplish their goal of undermining the president. It will do nothing to buck up Brazil. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21689617-holiday-provides-no-respite-economic-and-political-woe-partying-precipice/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Haiti’s election + +Chaos and compas + +Before choosing the next president, the country must work out how to do it + +Jan 30th 2016 | PORT-AU-PRINCE | From the print edition + +Martelly’s mind is on merengue + +MICHEL MARTELLY, Haiti’s president, had planned to mark the end of his term in office by going back to his old job as a popular singer of compas, a Haitian form of merengue. The idea was to perform once more as “Sweet Micky” at the Carnival in Port-au-Prince, Haiti’s capital, which begins on February 7th, the day he is due to step down as president. + +The problem is that there is no one to succeed him. The second round of the presidential election, scheduled for January 24th after two postponements, was called off two days before the vote. Jude Célestin, the runner-up in the first round of voting in October, had condemned the ballot as a “ridiculous farce” and refused to campaign further. Thousands of his supporters, and those of candidates who lost in the first round, took to the streets to demand that the run-off be cancelled. Haiti’s electoral council said the danger of violence was too great for it to go ahead. + +This leaves Haiti in limbo. Mr Martelly says he will only hand over to an elected successor, which suggests that he may govern a while longer. It is not clear how the next president will be chosen. One option would be to hold a completely new election, though Mr Martelly will fight to avoid that. He backs the winner of the first round, Jovenel Moïse, a banana grower and businessman who, like Mr Martelly before he became president, has no prior political experience. Polls suggest that he would lose if the election started from scratch. + +Such chaos is typical of politics in Haiti, where parties are weak and candidates often seem to be more interested in dispensing patronage than in implementing policies. In 1990, after 28 years of authoritarian rule by the Duvalier family and four years under transition governments, Jean-Bertrand Aristide won a free and fair election. Since then, “Haiti hasn’t had an election worth calling an election,” says Robert Fatton, a political scientist at the University of Virginia. + +Last October’s vote was typically messy. A commission appointed by Mr Martelly found evidence of widespread irregularities, though it is not clear that they were the cause of Mr Célestin’s second-place finish. + +Many Haitians do not share his sense of outrage. They see the protests, with their burning cars and tyres, as theatre staged by losers of a vote that was flawed but not rigged. The protesters “are not thinking about the real problems of Haiti,” says a student in Pétionville, a prosperous suburb of the capital. + +The most acute of these is inflation, which has risen by six percentage points since last April to 12%. Food prices have been pushed up by a drought and by a ban on 23 imports by road from the neighbouring Dominican Republic, imposed last September in response to the country’s expulsion of Haitian immigrants. Haiti’s currency, the gourde, has lost a quarter of its value in the past year. This adds to the misery caused by poverty, poor education and health care, weak growth and the after-effects of a devastating earthquake six years ago. Those are problems only an effective government can tackle. + +Choosing any sort of government right now would be a feat. “There is no legal body in this country with the legitimacy to get us out of this mess,” says Jacky Lumarque, the rector of Université Quisqueya in Port-au-Prince, who wanted to run for president himself but was disqualified—on spurious grounds, he says. + +Legislative elections, held last year after a delay of three years, produced the beginnings of a functioning parliament, which ended a period of 12 months during which Mr Martelly ruled by decree. This might provide the basis of a solution. There is talk of installing a transitional government, perhaps led by the president of the Senate, Jocelerme Privert, which would oversee the delayed presidential run-off vote. + +For that to work, Haiti would need an electoral council that the main candidates could trust. Mr Martelly would have to step aside. As a consolation, he could be invited back to hand over power formally to his successor—and perhaps to warble a bit of compas. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21689624-choosing-next-president-country-must-work-out-how-do-it-chaos-and-compas/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Zika virus + +To breed, or not to breed + +A fearsome outbreak has triggered a debate about birth control + +Jan 30th 2016 | BOGOTÁ AND SÃO PAULO | From the print edition + +THE mosquito-borne Zika virus, which has spread to 22 countries and territories in the Americas, is terrifying to pregnant women and their partners. The virus may cause birth defects in babies whose mothers were infected during pregnancy. In Brazil more than 4,000 have been born with abnormally small heads since last October, compared with fewer than 200 in a typical year. The response of several governments has triggered a debate about abortion, birth control and sex education which may outlast the outbreak itself. + +It started after a handful of governments advised women to delay getting pregnant. Colombia, which has the second-highest number of infections after Brazil, advised women to wait six to eight months. Jamaica issued a similar recommendation, even though no cases of Zika have yet been reported there. El Salvador’s government suggested that women should delay pregnancy until 2018. Panama warned women from indigenous communities, in which infection rates are high, not to conceive. + +Some women find this advice rather bossy. Others say that governments have done little to help women control their fertility. Paula Avila-Guillen of the Centre for Reproductive Rights, a lobby group in New York, notes that rates of sexual violence and teenage pregnancy in Latin America are among the world’s highest. The Guttmacher Institute, a think-tank, found that 56% of pregnancies in Latin America and the Caribbean are unintended. + +Rates of accidental pregnancy are high because sex education is inadequate and birth control is hard to come by. Health workers are reluctant to prescribe contraceptives to teenagers or to women who have not yet given birth. If women are to avoid pregnancy, say women’s-rights activists, governments must inform them better and provide more access to contraception for both men and women. + +Some argue that the Zika crisis should prompt countries to liberalise policies that severely restrict abortion. In El Salvador, which does not allow abortion even if a woman’s life is at risk, activists are stepping up their campaign for a change in the law. An editorial in Folha de São Paulo, a Brazilian newspaper, argued that Brazil should end its ban on most abortions. + +Rather than calling on women to delay pregnancy, Brazil is sensibly concentrating its efforts on the real culprit, the Aedes aegypti mosquito, which also carries dengue and yellow fever. The country had stamped out the menace by 1958 but let down its guard and allowed it to return. This month the health minister, Marcelo Castro, announced that insect repellent will be distributed to 400,000 expectant mothers who qualify for Bolsa Família, a cash-transfer scheme. Some 310,000 health workers are raising awareness and teaching people how to keep mosquitoes at bay; on February 13th 220,000 soldiers will join them. Following World Health Organisation guidelines, Brazil advises women contemplating pregnancy on how to avoid getting bitten by mosquitoes. Women need facts, not fertility targets. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21689618-fearsome-outbreak-has-triggered-debate-about-birth-control-breed-or-not-breed/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +From red tape to joined-up government + +Latin America’s efforts to improve public policies are often undermined by politicised and obsolete civil services + +Jan 30th 2016 | From the print edition + + + +FOR the past couple of years Bello has lived in Lima, Peru’s capital. The other day he had to do some official paperwork. Assured by the head of the office concerned, a personal acquaintance, that it would be fine to pass by the ministry the following day, he turned up only to be told that the secretary who carries out the necessary task was “on holiday”. The boss was “in a meeting”. In other words, come back another day. Fortunately, after a quick e-mail, the boss appeared and affably arranged for another secretary to wield the rubber stamp. + +This trivial incident is an everyday occurrence in Latin America. Unless a citizen has a contact among the higher-ups, there is normally no happy ending of the sort that Bello enjoyed. The plodding inefficiency and red tape of public bureaucracies has become an unaffordable drag on the region and a source of growing frustration. Despite the economic slowdown, more Latin Americans are middle class than in the past. They are demanding a more sophisticated, efficient and less corrupt state. Decentralisation and the digital revolution pose additional challenges. + +The region’s civil services suffer many vices. One is an obsession with procedures and hierarchies and a disdain for service and outcomes. Many Latin American civil servants must follow thick procedural codes but are not made accountable through performance targets. Organs of control fail to prevent corruption but instil a terror of initiative. For example, Carolina Trivelli, who set up a new social-development ministry in Peru in 2011-13, says she was subjected to an investigation because she allowed publication of a pamphlet that included data whose release required a formal ministerial resolution. That she, the minister, authorised it was not enough. + + + +Another besetting sin is politicisation. Too often the civil service is staffed with political hangers-on, hired for loyalty rather than merit. Mauricio Macri, Argentina’s new president, is sacking thousands of political hacks rewarded with government jobs by his predecessor, Cristina Fernández de Kirchner. Conversely, competent civil servants risk being fired when a new minister or president comes in. And new presidents love to create new agencies without abolishing those they duplicate. + +Political cronyism may explain why public-sector salaries tend to be higher than those in the private sector for low-level jobs but lower for senior grades, according to a study by CAF, a regional development bank. Typically, civil services lack clear career structures. For populist reasons, presidents have sometimes capped the pay of senior civil servants, making it impossible to recruit good, honest people. + +Governments have tended to respond to a dysfunctional bureaucracy by creating islands of excellence, such as central banks and finance ministries. More recently, countries such as Brazil and Peru have improved the management of social ministries. Civil servants are far more likely to have a university degree than in the past. + +Some countries have tried to go beyond such piecemeal improvements to create an integrated professional civil service. Only Chile has had a degree of success. This began with a law, approved with bipartisan support in 2003, which created an elite corps of senior public-sector managers who are chosen in open competition, subject to performance targets and well paid. Elsewhere, progress has been patchy. A study of the region’s civil services by the Inter-American Development Bank found improvement over the decade to 2013 in some of the worst-performing countries, but stagnation in Brazil and Mexico. + +One of the improvers was Peru. It set up a civil-service agency in 2008, which has created a Chilean-style corps of public-sector managers. Under a law passed in 2013, 560,000 civil servants in national and local government will be transferred to a new professional contract, based on merit, evaluations and rewards for performance. This replaces a muddle of different contracts. But no workers have yet transferred, and many oppose the reform. The next government, to be chosen this year, may well lack the political will and the money to implement it. + +Many of the most pressing policy tasks facing Latin American governments today, from tackling violent crime or the Zika virus to boosting productivity, require different state agencies at all levels of government to act in a co-ordinated manner. The region’s civil services have typically found this almost impossible. Islands of excellence are no longer enough. Creating a professional civil service is a slow business, and requires political consensus. If the region is to thrive in a harsher world, it is also essential. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21689625-latin-americas-efforts-improve-public-policies-are-often-undermined-politicised-and/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +The South China Sea: Making a splash + +Politics in Vietnam: Reptilian manoeuvres + +Subhas Chandra Bose: Mystery theatre + +Nepal’s constitutional stand-off: Trouble in the basement + +Superstition in Thailand: Dolls that bring luck—and drugs + +Kazakhstan’s tanking economy: Drift and dissent + +Suicide in Japan: Deep in the woods + + + + + +Articles Sections Next + +The South China Sea + +Making a splash + +Taiwan’s outgoing president further roils troubled waters + +Jan 30th 2016 | From the print edition + + + +AS PARTING gestures go, it was a risky one. Taiwan’s president, Ma Ying-jeou, leaves office in May, having lost an election on January 16th. But rather than slink out quietly, this week he visited Itu Aba, known in Chinese as Taiping, the biggest natural island in the Spratly archipelago in the South China Sea, garrisoned by Taiwan but also claimed by China, the Philippines and Vietnam. The Philippines and Vietnam were incensed, China much less so: it appreciates Mr Ma’s adherence to the fiction that there is but “one China”. From its point of view, Taiwan’s territorial claims in the much-disputed sea are its own. + +Besides reasserting Taiwan’s claim, Mr Ma wanted to rebut arguments made by the Philippines, in a case it has brought before the Permanent Court of Arbitration in The Hague. This argues that under the UN Convention on the Law of the Sea (UNCLOS), Itu Aba is a rock that cannot sustain human life. So it is entitled to 12 nautical miles of territorial waters, but not the 200-mile exclusive economic zone accorded to habitable islands. Mr Ma also possibly hoped to advertise his own “South China Sea Peace Initiative”, which he announced last May but which was largely ignored. + +The risk is that the Philippines and Vietnam may retaliate in some way—perhaps even with high-profile visits to islands they occupy, though this is unlikely—and that this, in turn, provokes China. America is so alarmed that its representative in Taiwan issued an unusually forthright denunciation of Mr Ma’s “extremely unhelpful” day-trip as soon as it was announced. + + + +Tensions over the sea have been rising in any case. China has been building frenetically, turning rocks and reefs in the Spratlys into islands, three of them already bigger than Itu Aba, with airstrips. It has recently landed civilian aircraft carrying “tourists” on one (see picture). And China has again moved a large oil rig into waters claimed by Vietnam—as it did in 2014 when it provoked fatal anti-Chinese riots. + +China derides all criticism. One Chinese official compares rival claimants’ complaints to “smashing the windows of your neighbours’ house and then saying, ‘We are being threatened’.” China believes America is stoking alarm as part of a broader strategy to contain it. It is true that its neighbours are gradually stepping up security co-operation with each other and with America. Just this week Vietnam approved an Indian satellite-tracking centre on its soil to share imagery, including pictures of the South China Sea. + +The worry is that China is steadily expanding its presence until its dominance of the sea becomes an incontestable fact. This also concerns America: the sea is a vital trade artery, and China threatens 70 years of American naval supremacy in the western Pacific. In a report published in January, commissioned by the Pentagon to look at America’s strategic “rebalance” towards Asia, the Centre for Strategic and International Studies, a Washington think-tank, projected that by 2030, on current trends, “the South China Sea will be virtually a Chinese lake, as the Caribbean or Gulf of Mexico is for the United States today.” + +Three approaches are being tried to moderate China’s behaviour—legal, diplomatic and military. The broader aim of the Philippines’ case under UNCLOS is to show that China’s historic claim—a “nine-dash line” on maps encompassing most of the sea—has no legal basis. In October China suffered a setback when the court in The Hague accepted that the case fell within its jurisdiction. But even if the court rules in the Philippines’ favour, China has made clear that it will ignore it. South-East Asian claimants in the sea—the Philippines, Vietnam, Brunei and Malaysia—have hoped that their regional club, ASEAN, can show a united front. But China prefers to negotiate with (and bully) ASEAN members individually. And it skilfully exploits the body’s internal differences. + +As for military deterrence, a marked increase in defence spending across the region in recent years still leaves America as the only power capable of standing up to China. As a reminder of this, in November the American navy conducted a “freedom of navigation operation” in the South China Sea. These operations, conducted around the world, involve sending warships to challenge excessive maritime claims by sailing through the claimed waters. In the South China Sea, America says it takes no position on the sovereignty disputes but does want international law to apply. In this exercise, the USS Lassen sailed close to Subi reef, where China has built an artificial island on what was once a feature submerged at high tide. + +Yet the message was muddied. In January Ashton Carter, America’s secretary of defence, explained that the operation had been conducted as “innocent passage”, ie, under a provision of UNCLOS that allows warships to enter even territorial waters so long as they do nothing that might have a military purpose. So it is not clear quite what point America was trying to make. + +John Kerry, America’s secretary of state, was in China this week (see article), after a trip that took in Cambodia and Laos, which holds the chairmanship of ASEAN this year. He spoke of the need to avoid a “destabilising cycle of mistrust or escalation” in the South China Sea. At a gathering on February 15th and 16th at a ranch in Sunnylands, California, Barack Obama will play host to the leaders of all ten ASEAN countries. The unprecedented summit is a symbolic demonstration of American support for ASEAN. China will probably scent another attempt to rally the region against it. But nothing suggests it will be deterred from trying to turn the sea into its own lake. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21689633-taiwans-outgoing-president-further-roils-troubled-waters-making-splash/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Politics in Vietnam + +Reptilian manoeuvres + +A colourful prime minister goes, as the grey men stay + +Jan 30th 2016 | HANOI | From the print edition + +Carry on, Nguyen Phu Trong + +WHEN Great Grandfather, a revered turtle which had long paddled around Hanoi’s central lake, was found dead on the eve of the Communist Party’s five-yearly congress, many Vietnamese thought it a bad omen for the ruling party. The animal embodied a legend about a 15th-century Vietnamese warrior who presented his sword to a turtle after vanquishing the Chinese. Some wondered whether the party’s leaders, whose dusty Marxism-Leninism feels increasingly out of step with Vietnam’s youthful population of 93m, were also losing their edge. + +As it happens, the congress, which concluded in pomp on January 28th, ended up backing an only slightly more sprightly reptile. After eight days of unusually fierce politicking, party bigwigs forced the charismatic and pro-business prime minister to leave government after his term expires in a few months. Nguyen Tan Dung had hoped to assume the top party post of general secretary. Instead Mr Dung, along with the state president, Truong Tan Sang, failed to get a seat on the party’s new Central Committee, while the septuagenarian incumbent, Nguyen Phu Trong, was asked to carry on as all-important party chief. + +Given term limits and mandatory retirement ages, Mr Dung, who is 66, had every reason to be shown the door. Yet analysts thought he might win promotion to general secretary. His patronage network is extensive, and he enjoyed the support of business types backing a more open economy. Younger Vietnamese liked Mr Dung’s friendly stance towards America and his robust defence of Vietnam’s sovereignty in territorial disputes with China. + +True, whiffs of corruption hung over him, and the bankruptcies of two state firms he championed were a blot. But many Vietnamese could accept these things. Despite the scandals, “he still improved Vietnam’s relations with America”, says Pham Khac Quang, a 33-year-old machine-parts distributor in Hanoi. Had he kept on doing that, all else “would have been forgiven”. In December Mr Dung defended his record in a nine-page memo to colleagues, later leaked to a political blog. + +In the end an opposing party faction loosely grouped around Mr Trong gained the upper hand, in part through skilful management of voting procedures that baffle even some insiders. This group appears to have emphasised Mr Dung’s economic mishaps. His opponents almost certainly pointed out that his self-promotion and his anti-China populism were incompatible with the Communists’ preference for cautious, consensual rule. Some doubtless worried that his rise would undermine their own power. + +As for Mr Trong, party chief since 2011, he is a colourless apparatchik in the twilight of his career. His support owes as much to Mr Dung’s divisiveness as to any personal merits; indeed, with the prime minister out of the picture Mr Trong may soon retire himself, to be replaced by a bland successor—a front-runner is the party’s propaganda chief, Dinh The Huynh. More interesting are the officials the congress appears to have chosen for other top jobs. Nguyen Thi Kim Ngan looks likely to become the first woman to chair the National Assembly; she understands economics and is broadly well-regarded. The probable new state president is Tran Dai Quang, the minister for public security. He would be a worrying choice, given the state’s tendency to lock up and occasionally torture dissidents. Human Rights Watch calls its record “dismal”. + +The next prime minister is expected to be Nguyen Xuan Phuc, who is harder to read. As one of Mr Dung’s deputies he has worked to cut red tape, with the help of some American funding. A foreign businessman calls him a “straight shooter”. Yet Mr Phuc has demonstrated little of Mr Dung’s popularity or vim, and he probably cleaves closer to Mr Trong’s slightly more conservative views. + +The new leaders may slow the pace of economic liberalisation, but they are unlikely to reverse it. Nor will relations with America be set back. It was Mr Trong, after all, who delighted in calling on President Barack Obama in Washington last summer—a big step in attempts to make Vietnam less vulnerable to Chinese bullying. A party plenum recently reaffirmed its support for the Trans-Pacific Partnership, an American-led trade deal which the incoming government will soon have to ratify. Meanwhile, bigwigs at the congress made encouraging noises about shrinking flabby state firms. Investors will welcome this sense of consistency, although the prime minister’s imminent departure has also dashed hopes that grander modernisations might be on the cards. + +More radical changes may have to wait for the next congress, in 2021. Then a mass of Russian-speaking party members, brought up hating America, are due to retire. Their successors may well be Western-educated technocrats who understand that the party’s best hope of survival lies in making the economy more competitive, and in convincing young Vietnamese such as Mr Quang, the machine-parts distributor, that it has their interests at heart. For the moment, though, hammer-and-sickle banners cover the capital. And most people—like subjects in a 15th-century kingdom—have no say in who rules the roost. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21689640-colourful-prime-minister-goes-grey-men-stay-reptilian-manoeuvres/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Subhas Chandra Bose + +Mystery theatre + +A founding father of modern India continues to be a focus of speculation + +Jan 30th 2016 | KOLKATA | From the print edition + +Bose made his bed with the baddies + +IN THE West, regard for the founding fathers of independent India is usually confined to Mohandas Gandhi and Jawaharlal Nehru, the pacifist in a dhoti and the suave Cantabrigian. By contrast Subhas Chandra Bose, or “Netaji” (“revered leader”), took up arms against the British and sided with the Axis powers in the second world war, dying in a plane crash in 1945 in Japanese-occupied Taiwan. The British called him a quisling, but his martial valour still inspires Indians. In his native Bengal most public places seem to be named after him. + +Yet in India the story of Bose’s life remains partially classified—supposedly on grounds of national security. So it made for good drama on January 23rd, Netaji’s birthday (in 1897), when the government of Narendra Modi declassified 100 of its files on Bose and promised more to come. They shed little light, but that is hardly the point. Bose is one of the few heroes of India’s independence movement that the prime minister’s Bharatiya Janata Party (BJP) can hope to claim—Gandhi and Nehru belong firmly to its arch-rival, the Congress party. + +In West Bengal the chief minister, Mamata Banerjee, with her own party, declassified all the state’s files in September. Mainly they confirmed that the government spied on Bose’s family in the 1950s and 1960s. By publishing first, she pipped the BJP. + +Bengalis have been clamouring for more disclosure, many with hopes of solving a mystery about Bose’s death. At one point, he considered disguising himself as a monk in Thailand to evade the Allies. Netaji was already famous for a daring escape in 1941, when he passed as an Afghan to cut a dash from Calcutta to Berlin. He then returned to the Pacific theatre by way of two submarines meeting near Madagascar. In the days after the Japanese surrender, might he have reached China or Russia, plotting a return to India? He could have challenged Nehru for the leadership and changed the course of Indian history. Or maybe he was already in India, hiding as a holy man? Two ashrams claim him. + +All nonsense, says Krishna Bose, a former MP and the widow of Netaji’s favourite nephew—he drove the Bose getaway car in 1941, a German roadster that sits outside the Netaji Research Bureau she runs in Kolkata. There is no mystery, and no assassination—the plane crash was an accident. + +So why have successive governments in Delhi kept the Bose files under seal? Presumably they were unflattering to Nehru and thus to Congress. Campaigning in January 2014, the BJP declared it would declassify all the files. So why only a dribble of information now? Rudrangshu Mukherjee, a historian of Bose and Nehru, says another rare hero of the BJP, Vallabhbhai “Sardar” Patel, loathed Bose. Or perhaps it pays to preserve a certain ignorance about Bose himself. One of Mr Modi’s 100 files, from 1976, finds the Indian embassy in Tokyo under pressure to repatriate Bose’s ashes from the Renkoji temple in Tokyo. At the time bureaucrats concluded that “due to possible adverse reactions from…certain sections of the public, who refused to believe in his death in the plane crash”, it would be wiser to do nothing. + +Mrs Bose has devoted much of her life to collecting and preserving the historical record. She regrets that politicians are still fiddling with the facts. Another historian suspects a third possibility: sheer ineptitude on the part of the archivists. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21689639-founding-father-modern-india-continues-be-focus-speculation-mystery-theatre/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nepal’s constitutional stand-off + +Trouble in the basement + +Amendments to a new constitution fail to appease dissenting lowlanders + +Jan 30th 2016 | JANAKPUR | From the print edition + +A smuggler cove + +EVEN without the Terai plain’s winter fogs that cling to the flat borderlands between Nepal and India, the villages on either side of the frontier look much the same: dusty lanes lined with houses made of mud, bamboo and tin. But the fog has its uses. Since protesters against a new Nepali constitution began blocking roads from India in September, enterprising villagers have risen before the rooster crows, slipped on motorbikes across to India, and returned with a jerry can of fuel or a cylinder of cooking gas before the fog disperses. + +In just four months the smuggling has encroached on a state monopoly to the point of supplying half the fuel for this poor, landlocked country. It is a parable of the mess Nepal is in. Despite being members of the same lowland ethnic groups, known broadly as Madhesis—who make up about a third of the country’s population of 30m and whose leaders agitate for greater constitutional rights—the smugglers have done more than anything to weaken the Madhesis’ hand. In the Nepali capital, Kathmandu, which nestles in the uplands and whose long domination the lowlanders resent, the price of petrol has slid from $5 a litre at the height of the blockade in November to around $2.50 now. The smugglers are subverting the subverters. + +Yet the blockade has had an effect. On January 23rd the three main (and largely upland) parties in Nepal’s ruling coalition abruptly pushed through parliament amendments to a constitution promulgated, over Madhesi objections, only in September. The changes go some way to meeting the lowlanders’ demands for the political representation they feel they were promised. Under the new rules, the Terai region will now get around half of the parliamentary seats. The amendments promise (vaguely) to attach greater importance to population than to geography when fixing constituency boundaries. They also ensure a share of state jobs and favours to politically marginalised groups, in place of a fuzzy promise of “inclusion”. A new process for delimiting electoral districts should also help Madhesis. + +The UN secretary-general, Ban Ki-moon, welcomed the changes. So did India, the regional superpower and Nepal’s lifeline. Its government had encouraged the border blockade, partly out of sympathy with Madhesis, many of whom have kin on the Indian side, but also out of fear that Kathmandu’s obstinate elites might tip Nepal into another round of strife—the country is recovering from years of turmoil, including a long insurgency by Maoist guerrillas. Fragmented by caste, religion and language as well as by region, ethnicity, spectacularly rugged terrain and politics, Nepalese society remains fragile. So does its government: C.K. Lal, an acerbic commentator, describes the ruling alliance as a “fascistic formation consisting of malignant monarchists, malicious Maoists and malevolent Marxist-Leninists—each one masquerading as nationalists.” + +Previous governments have also been inept, but the death and destruction from an earthquake last April have cast the current lot in unflattering relief. Of some $1.9 billion pledged in foreign aid for the current fiscal year, which began last July, the state has not spent even one-twentieth. A special state agency created to organise earthquake relief and reconstruction has yet to choose a logo, let alone begin work. Crucial development projects, including roads and hydroelectric schemes, remain on hold, starved of either bureaucratic approval or supplies. Tourism is at a six-year low, and investment has shrivelled. + +Small wonder that the government turns a blind eye to the smugglers who have kept Nepal afloat. Some Madhesis are not so happy with them; border protesters have on occasion set smuggled fuel on fire. Nor are the main Madhesi parties content. They say the constitutional changes fail to meet their main demand, which is to divide the region into no more than two provinces and grant them more local power. With the blockade less effective, they are looking for other ways to make their point. And with tempers still running high, Nepal’s troubles are not yet over. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21689638-amendments-new-constitution-fail-appease-dissenting-lowlanders-trouble-basement/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Superstition in Thailand + +Dolls that bring luck—and drugs + +A craze for haunted dolls starts a moral panic + +Jan 30th 2016 | BANGKOK | From the print edition + + + +DOWN a buzzing lane in Bangkok’s Chinatown, a child is being born. Payau, a middle-aged lady perched on a stool, has just finished assembling a plastic doll which she has dressed in silk and adorned with pink lipstick. She will take 4,000 baht ($110) for it, she says, while brushing tangles from its hair. + +Payau’s doll is not a toy but a luk thep, or “child angel” —a factory-moulded moppet which some believe can be imbued, through a blessing, with the spirit of a child. Luk thep are increasingly being seen out and about in Bangkok, the capital, with their grown-up owners, who feed, water and dress them in the hope of receiving good fortune in return. The fad has not amused Prayuth Chan-ocha, the former general who leads Thailand’s nannying government, which came to power in a coup in May 2014. He implied on January 25th that adults ought not to waste money on plastic kids. + +Luk thep became fashionable last year, boosted by endorsements from soap stars and other minor celebrities. The trend has burst into the headlines again with Thai Smile, a budget airline, declaring that passengers who object to stewards shoving their little darlings into overhead lockers may now buy them tickets of their own. Child angels are also welcome to their own seats at a forthcoming production of “Disney on Ice”, according to its organiser. A buffet restaurant has announced that luk thep may dine at children’s rates—though patrons must pay for any uneaten food. + +A backlash is brewing, however. Aviation authorities have realised that nervous travellers may not want to sit next to another passenger’s haunted mannequin. Mental-health officials suggest that Thais who seek spiritual comfort would be better off adhering to established religions. Buddhist bigwigs say they are investigating whether monks who bless dolls are breaking religious codes of conduct. And now police warn that the dolls may be being used to smuggle drugs and contraband (with miscreants betting that security guards will be too tactful—or squeamish—to prod and poke them). + +Some wonder whether Thailand’s falling fertility rate—at 1.5 children per woman among the lowest in South-East Asia—explains the strong demand for magic dolls. But even if the craze will soon blow over, no government has succeeded in taming rampant superstition in Thailand, where charm-peddling is a lucrative trade and even the royal family uses soothsayers. Child angels are more palatable than necromantic amulets which were once made from bits of stillborn babies and sometimes still turn up in grim emporia. Given a stumbling economy and the coup leaders’ stifling rule, it is no surprise that some Thais think they deserve a little more luck. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21689637-craze-haunted-dolls-starts-moral-panic-dolls-bring-luckand-drugs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Kazakhstan’s tanking economy + +Drift and dissent + +So much for Nursultan Nazarbayev’s “Kazakh dream” + +Jan 30th 2016 | ALMATY | From the print edition + + + +NOT long ago it all looked so much better: oil prices were high, the middle classes were growing and the autocrat-father of the state, Nursultan Nazarbayev, presided over 17m grateful subjects. Yet today the situation in Kazakhstan looks more troubling than at any time since the country broke free of the Soviet Union to become, against the odds, Central Asia’s most prosperous state. To many, Mr Nazarbayev’s promise of a “Kazakh dream” now seems like a sick joke. + +An overreliance on oil is what makes the Kazakh economy so fragile. Since the price crashed, export revenues have tumbled. The currency, the tenge, has fallen by half since August. That has squeezed wages and savaged household consumption. An economy that grew by over 5% in 2013 may contract this year, for the first time since 1998. It has not helped that growth is stalling in China, Kazakhstan’s second largest trading partner, while Russia, its largest, is now deep in recession. + +All this is hurting ordinary folk. In a rare protest in a closely controlled state, two dozen homeowners gathered outside a bank in Almaty, the commercial capital, last week. They were complaining about their mortgages, and they are unlikely to be the last to do so. Many mortgages are denominated in dollars, so the cost of servicing them has soared. + +The government is dealing with the financial crunch with an odd mix of stimulus and austerity. On the stimulus side is a $9-billion investment package to boost non-oil sectors such as manufacturing, as well as perks for foreign investors as a fire sale of state assets gets under way. Public-sector salaries and pensions have been raised, and schemes introduced to help savers and mortgage holders suffering from the currency’s fall. + +As for austerity, public spending is to be cut in other areas, though in ways supposed to protect the worst-off. Even a swords-and-stallions TV drama about Kazakh history, intended to create a nobler and more accurate image of Kazakhstan than “Borat”, has lost some of its state funding. The budget deficit is likely to balloon despite some help from the sovereign wealth fund. + +As grievances mount, political stability comes into question. The president keeps chanting an all-in-it-together mantra, but the calls for austerity by this head of a fabulously wealthy clan may wear thin. The question is how he might react to signs of greater dissatisfaction. Mr Nazarbayev has run Kazakhstan since before the Soviet Union collapsed, wielding a very personal sort of power even as international statesmen and highly paid public-relations firms have helped to polish a veneer of liberalism and democracy. Last year Mr Nazarbayev promised a “modern state apparatus”, and in the past he has talked of creating a resilient political system. But current conditions can hardly seem to him an opportune time for political change. There has been no move towards proper reform. + +Meanwhile, the regime has kept a heavy lid on dissent ever since dozens of striking oil workers were gunned down by security forces in Zhanaozen in western Kazakhstan in late 2011. An opposition leader, Vladimir Kozlov, is in jail on trumped-up charges of fomenting that turmoil, which prompted a massive crackdown on the political opposition and independent media. Last week two dissidents were jailed on spurious charges of inciting racial hatred, following a Kafkaesque trial sparked by a discussion on Facebook about an unpublished book written two decades ago. + +“Presidents come and go,” one of those dissidents, Serikzhan Mambetalin, said during his spirited defence, “But the people remain.” Tell that to Mr Nazarbayev. He turns 76 in July, but shows no sign of going. Not least—and this spells trouble for the future—he has signally failed to provide for his succession. + +Meanwhile, though Mr Nazarbayev would probably win anyway if presidential elections were free and fair, he takes no chances. He won the last election with 98% of the vote; in the past even other presidential candidates voted for the father of the state. In late January Mr Nazarbayev set a date of March 20th for parliamentary elections. Supposedly, they are in order to provide a fresh mandate to boost growth. In practice they will produce another rubber-stamp legislature to do the president’s bidding. However stage-managed the elections, they may fail to mask the cracks likely to emerge as the economy slows. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21689647-so-much-nursultan-nazarbayevs-kazakh-dream-drift-and-dissent/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Suicide in Japan + +Deep in the woods + +Fewer Japanese are killing themselves + +Jan 30th 2016 | AOKIGAHARA | From the print edition + + + +IT WORRIES the volunteer patroller at one of the entrances to Aokigahara forest that the white car with the Osaka number plates has now been there, empty, for five days. This forest of moss-clad trees covers 30 square kilometres (12 square miles) of a lava plateau near the foot of Mount Fuji. As a place to commit suicide, it is said to be second in popularity only to San Francisco’s Golden Gate Bridge. The car’s owner, the patroller says, is probably already dead somewhere deep inside the forest. His job is to try to spot and turn back those who may be contemplating suicide. + +Folklore holds that the forest was once a site for ubasute, the (possibly apocryphal) practice of carrying the old or infirm to a remote place and leaving them to die, so that they would not be a burden to their families. A 1960 novel by Seicho Matsumoto popularised Aokigahara as a site for suicides, after the heroine took her own life there. When suicides in Japan rose steeply as the country’s financial bubble burst after 1989, several dozen people a year were killing themselves in Aokigahara, mainly by hanging. Signs stand next to the paths, telling passers-by that their lives are precious, a gift from their parents. The number of a suicide hotline is displayed below. Yet much internet chatter talks of the forest as a site for suicides, and its vastness is a lure to many contemplating death. Mobile-phone reception is poor. The volcanic deposits also wreak havoc with compasses; those with second thoughts might struggle to retrace their steps. + +Last year over 23,000 people ended their own lives in Japan. The good news is that the number has fallen for six years in a row—a trend elsewhere, too (see chart). Part of the reason for the decline of Japanese suicides is economic: with business and personal insolvencies at a relative low, fewer people are losing their jobs or going bankrupt—a common motivation for Japanese suicides, along with worries about health. But prevention has also improved. Nearly a decade ago the government adopted policies to stop suicides. They include classes at schools, extra municipal staff trained in suicide-prevention, and better training in mental health among medical staff. Those expressing suicidal urges are now more likely to receive attention—though mental illness still has a powerful stigma attached to it in Japan. + +Most preventive measures are directed at middle-aged men, who are most at risk. Yet the rate at which younger adults kill themselves has not fallen by as much as for older folk—indeed, suicide is the leading cause of death for 15- to 40-year-olds. It is harder to deal with a pervading dejection about the future that prompts many young Japanese to kill themselves than with the practical issues—eg, financial straits—that can push middle-aged people over the edge, says Yasuyuki Shimizu of Life Link, an NGO. + +Meanwhile, Aokigahara continues to swallow its victims. That takes a mental toll on locals too. Recently, the same patrolman wrestled a young man to the ground to stop him vanishing inside. Such incidents haunt him, and he wants talk about them. But the police have told him not to, for fear of bringing more people looking for a stillness deeper even than the silence of the forest. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21689651-fewer-japanese-are-killing-themselves-deep-woods/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Growth targets: Grossly Deceptive Plans + +Mineral water: High-altitude thirst + +Banyan: A confession to make + + + + + +Articles Sections Next + +Growth targets + +Grossly Deceptive Plans + +China’s obsession with GDP targets threatens its economy + +Jan 30th 2016 | BEIJING | From the print edition + + + +ON JANUARY 19th China declared that its gross domestic product had grown by 6.9% in 2015, accounting for inflation—the slowest rate in a quarter of a century. It was neatly within the government’s target of “around 7%”, but many economists wondered whether the figure was accurate. Online chatter in China about dodgy GDP numbers was fuelled a week later by the arrest of the man who had announced the data: Wang Baoan, the head of the National Bureau of Statistics. The country’s anti-graft agency accused him of “serious disciplinary violations”, a euphemism for corruption. But beyond all the (justifiable) doubts about the figures lies another important question. That is: why does China have a GDP target at all? + +It is the only large industrial country that sets one. Normally central banks declare specific goals for things like inflation or unemployment. The idea that a government should aim for a particular rate of output expansion, and steer the economy to achieve that, is unusual. In the case of China, which is trying to wean its economy off excessive reliance on GDP-boosting (but often wasteful and debt-fuelling) investment, it is risky. It is inconsistent with the government’s own oft-repeated mantra that it is the quality of growth that matters, not the quantity. + +In the past, setting a target may not have made much difference. For all but three of the years between 1992 and 2015, China’s growth was above target, often by a big margin. A rare period when targets seemed to affect the way officials tried to manage the economy was from 2008 to 2009, when growth fell sharply (see chart). It would be hard to argue that targets themselves have been responsible for China’s overall (impressive) record of growth in recent decades. + + + +Now, however, the economy is slowing. This is inevitable: double-digit growth is no longer achievable except at dangerous cost (total debt was nearly 250% of GDP in the third quarter of 2015). But the government is worried that the economy may slow too fast, and that this could cause a destabilising surge in unemployment. So it has been ramping up investment again, and goading local governments to do the same by setting a high growth target. + +For a while there were signs that the leadership itself had doubts about the merits of GDP target-setting. In 2013 Xinhua, an official news agency, decried what it called the country’s “GDP obsession”. By the next year, 70 or so counties and cities had scrapped their targets. In 2015 Shanghai joined them, becoming the first big city to break with orthodoxy (each level of government sets its own GDP target, often higher than the national one). Liu Qiao of the Guanghua School of Management at Peking University says the central government ought to follow suit. + +Last year there were hints that it might. The prime minister, Li Keqiang, said the government would not “defend [the target for 2015] to the death”. And in October, talking about the government’s work on a new five-year economic plan (which will run from 2016 to 2020), President Xi Jinping avoided mentioning a number. That raised expectations that targets might at least be downplayed, if not abandoned. + +They have not been, however. An outline of the five-year plan, unveiled in November, contained the usual emphasis on growth. And Mr Xi appeared to change his tune, saying expansion must average at least 6.5% a year until 2020. Many economists believe that will require yet more debt-inducing stimulus. A GDP target for this year is all but certain to be announced, as usual, at the annual session of the legislature in March (when the five-year plan will also be adopted). It will probably be higher than 6%. Speculation that the government might set a target range in order to give itself more policymaking flexibility (as the IMF and the World Bank have urged) has ebbed. In December some national legislators complained that local governments were busting their debt ceilings because there was “still too much emphasis on GDP”. + +So why is there still a target? The reasons are political. In a country so large, central leaders are always fearful of losing their grip on far-flung bureaucrats: setting GDP targets is one means by which they believe they can evaluate and control those lower down. Local officials are also judged by environmental standards, social policies and what the Communist Party calls “virtue”—that is, being uncorrupt and in tune with the party’s latest interpretation of Marxist doctrine. But GDP is usually the most important criterion, having the attraction of being (roughly) measurable. + +A study in 2013 by Deng Yongheng of Singapore National University and Wu Jing of Tsinghua University in Beijing looked at the careers of officials who had worked as mayors in 283 cities. It found that those who presided over higher growth rates in their cities, relative to the rates notched up by their predecessors, had got better jobs afterwards. Since the study was conducted, there has been little sign of any change in this pattern. + +Depressingly, the academics found that the more the mayors had increased investment in environmental protection, the lower their likelihood of being promoted had turned out to be. The government finds environmental targets more difficult to set than growth ones. The environment ministry is trying to create a measure of “green GDP” (roughly, output minus the cost of environmental damage) that could be used to assess the performance of local officials. But it had a stab at this before, in 2004, and got nowhere: the damage proved too tricky to calculate. + + + +Daily dispatches: China's market mess + +At higher levels, promotion is determined in part by which faction an official belongs to. But the lower down the hierarchy a government entity is, the more it is likely to be judged by GDP. When Mr Li, the prime minister, suggested that GDP targets might not be all-important, many people complained. One academic says that without such targets, local officials would not know what they are supposed to be doing. At a time when Mr Xi’s anti-corruption campaign is causing many nervous officials to sit on their hands to avoid graft-busters’ attention, party leaders are all the more unwilling to abandon an appraisal system which—however imperfectly—holds officials to account and can goad them into action. + +As Chinese leaders see it, the target has another use. It provides numerical evidence for their proclaimed efforts to make China rich. Deng Xiaoping set the trend by declaring in 1980 that China would quadruple its GDP of that year by the end of the century (it achieved that goal several years early). Andrew Batson of Gavekal Dragonomics, a research and advisory firm, points out that when Mr Xi unveiled his 6.5% target, he set it in the context of a broader (Deng-like) objective: that of doubling the level of GDP attained in 2010 by the end of the decade. + +Mr Xi apparently believes that a growth target is necessary in order for China to become a “moderately prosperous society” by 2021, the 100th anniversary of the party’s founding. That is one of what the party calls its two “centenary goals” (the other is for China to become “prosperous and strong” by 2049, the 100th anniversary of Communist rule). + +These aims were first proclaimed by Jiang Zemin, who was then president, in 1997—inspired, it appeared, by Deng, who was the first to speak of a need to make China “moderately prosperous”. The paradox is that by fixating on growth targets China may end up badly damaging its economy, rather than fulfilling its goals. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21689628-chinas-obsession-gdp-targets-threatens-its-economy-grossly-deceptive-plans/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Mineral water + +High-altitude thirst + +Bottling Himalayan water could be bad for the region’s environment + +Jan 30th 2016 | BEIJING | From the print edition + + + +CHINA is so vast, it quickly becomes the largest market for almost anything it consumes. Such is the case with bottled water. Chinese drink 40 billion litres (70 billion pints) of the stuff each year, up over 13-fold since 1998. That growth has a long way to go if China ever consumes as much per person as Mexico (see chart). But finding clean supplies is difficult; rivers, lakes and even groundwater in China are often foul. Hence the huge demand for a seemingly inexhaustible source of pristine water that is cheap to extract, sells at a premium and can now, thanks to massive investment in infrastructure, be taken to coastal cities: Tibetan glaciers. + + + +Tibet already sells Qomolangma Glacier water, named after the Tibetan word for Mount Everest. Last year Sinopec, a state-owned energy group, put another brand on sale at its petrol stations: Tibet 5100. It is bottled 5,100 metres (16,700 feet) up in the Nyenchen Tanglha range. The Tibetan government has licensed 28 more companies to increase the province’s bottling capacity 50-fold by 2020. + +Assuming companies do not mine the glacier ice itself, they will bottle only the meltwater that flows out of glaciers in summer. It is true that Himalayan glaciers on the Tibet-Qinghai plateau have retreated over the past 30 years by about 15%. But this is because of climate change. Bottling will not cause them to lose mass any quicker. + +Nor will the bottled-water industry have much impact on the volume of water that flows from Tibet—a crucial source for neighbouring countries as well as China itself. About 1 billion people depend on the giant rivers—the Yellow river, the Brahmaputra, the Indus, the Ganges, the Yangzi, the Mekong and the Salween—that rise in the Himalayas, a region with the largest reserves of fresh water after the north and south poles. The manufacturing of bottled water consumes three times more water than ends up being sold. Yet even the projected expansion of Tibet’s bottled-water output would amount to only a tiny fraction of the region’s runoff. + +More worrying is the possible threat that the industry will pose to the Tibetan environment. China has an atrocious record of looking after its pristine areas. Liu Hongqiao of China Water Risk, an NGO, says no water company has published any environmental-impact study in Tibet. The bottling industry may spawn other, heavy-polluting ones, on the plateau, for the production of bottles and the plastic they use. + +Tibet’s government is bribing bottlers with tax cuts, tax holidays and cheap loans. It charges companies only 3 yuan (50 cents) to extract a cubic metre of water, compared with up to 50 yuan elsewhere. But the government in Beijing may have other plans. Alarmed by water scarcity, it wants to reduce groundwater extraction. It has plans for a nationwide cap in 2020 and wants all provinces—even water-rich ones like Tibet—to set quotas for water use. This may make Tibet’s policies unsustainable (which may be no bad thing). In Jilin province in the north-east, the local government had even more ambitious plans than Tibet’s for ramping up mineral-water production. But it was forced to cut them by half because of mandated quotas. Bubbles, it seems, are an integral part of China’s bottled-water business. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21689627-bottling-himalayan-water-could-be-bad-regions-environment-high-altitude-thirst/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +A confession to make + +What the current vogue for televised confessions and apologies says about Xi Jinping’s China + +Jan 30th 2016 | From the print edition + + + +LOVE, as Ali MacGraw once sobbed, means never having to say you’re sorry. Working in China is the opposite: you have to say sorry quite often. A handwritten sheet of paper, ideally smudged by contrite teardrops, used to do the trick. But these days, it sometimes seems, an apology is worth anything only if it is made on national television. In recent months all sorts of people have unburdened themselves in this way: a leading financial journalist distressed at having helped create the “panic and disorder” in China’s markets; a Hong Kong publisher of muckraking books about Chinese politics, who disappeared from a beach resort in Thailand; a Swede who had for seven years run a group in Beijing offering legal help to Chinese citizens. + +They and many others have confessed their “crimes” to the cameras and apologised for the trouble they have caused. Westerners, even those addicted to reality TV, find these displays on prime-time news shows appalling. America’s State Department expressed concern this month about the growing number who “appear to have been coerced to confess to alleged crimes on state media”. It does indeed look bad—an echo of Mao’s tyranny, when those accused of wronging the Great Helmsman were forced to kneel in dunces’ caps before braying mobs. So it is worth pondering why the Chinese authorities do it. + +Two possible answers can be quickly dismissed: these confessions have nothing to do with justice or truth. The judicial process does not require a public apology or admission of guilt. Indeed, any chance of a fair trial is jeopardised by a verdict decided in advance, delivered by the accused himself and widely broadcast. + +If the concern were to inform viewers of the true facts of a controversial case, then the confessions would be more credible. Instead, however, people are told, for example, a far-fetched story about Gui Minhai, the Hong Kong bookseller who vanished in October from Pattaya in Thailand. In his televised statement Mr Gui said that he had returned to China voluntarily, to answer questions about a hit-and-run road accident in 2003 in the Chinese port of Ningbo in which a young woman had been killed. + +So viewers are asked to believe that Mr Gui, who is a Swedish citizen, was smitten by remorse for an accident that happened 12 years earlier. Perhaps, when the lightning bolt struck, he was parasailing, or merely enjoying his beachfront view over a mai tai. Either way, he abruptly forsook the good life to face the music, apparently smuggling himself out of Thailand without troubling the Thai border authorities. Similarly, Peter Dahlin, another apologetic Swede, this month belatedly realised that his legal-aid activities had broken the law and hurt the feelings of the Chinese people. His apology was followed by expulsion from China. + +A third red herring is the notion that public confession and contrition is something that Chinese, or East Asian, culture demands. Seven decades ago, writing about Japan, Ruth Benedict, an American anthropologist, posited a distinction between “shame” cultures, where the fear of public humiliation helps regulate behaviour, and those, like America and Europe, ruled by “guilt”, and so constrained by the power of individual consciences. The idea is controversial, and in many circles dismissed; but it is true that, across East Asia, public shaming seems an important part of political and even corporate life. Take a Japanese company, Takata, which makes car airbags. After these turned out last year to be defective, its executives faced the press to say sorry, and bowed deeply. Similar rules apply in South Korea: witness the way Chou Tzu-yu, a Taiwanese member of Twice, a Korean pop group, was this month hauled in front of the cameras to apologise for having waved a Taiwanese flag on Korean television—an act her managers fear may damage Twice’s sales in China. + +Some academics have suggested that shame works better in a system, such as China’s, where maintaining harmony is seen as more important than adherence to a notionally objective idea of right and wrong. But the stocks and the pillory were used in Europe for centuries; in Britain they were abolished only in 1837. And today, in much of the West, the most successful part of the media is that specialising in the shaming of public figures. Similarly, nobody suggests East Asians are immune from guilt. It is the theme, for example, of some of the greatest Japanese films. + +The main reason for the spate of confessional television in China is, in fact, political: it is a conscious policy of the regime of Xi Jinping, China’s ruler for the past three years. In an illuminating essay last March, David Bandurski of the China Media Project at the University of Hong Kong pointed out that what he called “China’s confessional politics of dominance” has its roots in the Communist Party’s own history, and in the Soviet influences that helped shape it before it took power. Confession and self-criticism have been part of its ruling strategy since its revolutionary leaders lived in caves in Yan’an and plotted against their neighbouring cavemen. Virtually everybody in China—even Deng Xiaoping and, almost certainly during Mao’s rule, Mr Xi himself—has written at least one piece of self-criticism. At the other end of the scale, even Banyan has done it, when he was a student and later reporter in China, with a few eloquent self-flagellations—now (he hopes) gathering dust in some forgotten archive. + +Imagine a boot stamping on a human face–for ever + +In writing self-criticism, the secret is to ponder not truth, justice or cultural norms, but what your reader wants. As Mr Bandurski put it: “As in the past, today’s culture of confession is not about accountability, clean government or a rules-based system. It is about dominance and submission.” Mr Xi’s revival of this culture is not accidental. It is a reminder that his party’s tolerance for dissent is lower now than at any time since the early 1990s. One symptom of this is its insistence that China’s people—and foreigners working in the country—must accept that, even if they cannot love him, Big Brother is right. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21689620-what-current-vogue-televised-confessions-and-apologies-says-about-xi-jinpings-china/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Nigeria’s economy: Crude tactics + +Child abuse in Kenya: Breaking the silence + +Syrian peace talks: United only by hatred + +Africa’s gym craze: Beerbelly busters + +Trouble in Tunisia: Dying to work for the government + +Saudi Arabia’s financial hub: Castles in the air + + + + + +Articles Sections Next + +Nigeria’s economy + +Crude tactics + +Cheap oil is causing a currency crisis in Nigeria. Banning imports is no solution + +Jan 30th 2016 | LAGOS | From the print edition + + + +MORE than 30 years ago, a young general swept to power in the fifth of Nigeria’s military coups since independence in 1960. The country he inherited was a mess: bled dry by pilfering politicians within and hammered by falling oil prices without. Last year that general, Muhammadu Buhari, became president again—this time in a democratic vote. The problems he has inherited are almost identical. So are many of his responses. + +In the eight months since Mr Buhari arrived at Aso Rock, the presidential digs, the homicidal jihadists of Boko Haram have been pushed back into the bush along Nigeria’s borders. The government has cracked down on corruption, which had flourished under the previous president, Goodluck Jonathan, an ineffectual buffoon who let politicians and their cronies fill their pockets with impunity. Lai Mohammed, a minister, reckons that just 55 people stole $6.8 billion from the public purse over seven recent years. + +Mr Buhari, who—unusually among Nigeria’s political grandees—is said to have just $150,000 and a couple of hundred cattle to his name, abhors such excess. As military ruler he jailed, fired or forced into retirement thousands of bureaucrats whose fingers had been in the till. This time, the Economic and Financial Crimes Commission (EFCC) has arrested dozens of bigwigs, including a former national security chief accused of diverting $2.2 billion. The EFCC has a poor record of securing convictions; but a single treasury account has been introduced to try to stop civil servants siphoning off cash. And agencies which may not be remitting their fair share to the state are having their books trawled by Kemi Adeosun, the finance minister. + +Such measures are doubly important because the economy is swooning along with the oil price. The sticky stuff directly accounts for only 10% of GDP, but for 70% of government revenue and almost all of Nigeria’s foreign earnings. + + + +INTERACTIVE: Explore how oil prices affect OPEC and non-OPEC production and viability + +Oil’s price has fallen by half, to $32 a barrel, in the months since the new government came to power, sending its revenues plummeting. Income for the third quarter of 2015 was almost 30% lower than for the same period the year before, and foreign reserves have dwindled by $9 billion in 18 months. Ordinarily there would be buffers to cushion against such shocks, but Mr Jonathan’s cronies have largely squandered them. Growth was about 3% in 2015, almost half the rate of the year before and barely enough to keep pace with the population. The stockmarket is down by half from its peak in 2014. + +Domestic oil producers are feeling the pinch worst. Many borrowed heavily to buy oilfields when crude was worth more than $100 a barrel, and are now struggling to pay the interest on loans, says Kola Karim, the founder of Shoreline Group, a Nigerian conglomerate. This, in turn, threatens to create a banking crisis. About 20% of Nigerian banks’ loans were made to oil and gas producers (along with another 4% to underperforming power companies). Capital cushions are plumper than they were during an earlier banking crisis in 2009; but, even so, bad debts are mounting and banks that are exposed to oil producers may find themselves in trouble. “It wouldn’t surprise me if one or two went down,” says a senior banker in Nigeria. + +The government’s response to the crisis has been three-pronged. First, it is trying to stimulate the economy with a mildly expansionary budget. At the same time, it is trying to protect its dwindling hard-currency reserves by blocking imports. Third, it is trying to suppress inflation by keeping the currency, the naira, pegged at 197-199 to the dollar. Only the first of these policies seems likely to work. + +The budget, which includes a plan to spend more on badly needed infrastructure, is a step in the right direction. Although government revenues are under pressure from the falling oil price, Mr Buhari hopes to offset that by plugging “leakages” (a polite term for theft) and taxing people and businesses more. That seems reasonable. At 7%, Nigeria’s tax-to-GDP ratio is pitifully low. Every percentage point increase could yield $5 billion of extra cash for the coffers, reckons Kayode Akindele of TIA Capital, an investment firm. Mr Buhari also plans to save some $5 billion-$7 billion a year by ending fuel subsidies—a crucial reform, if he sticks with it. Even so he will be left with a deficit of $15 billion (3% of GDP) that will have to be filled by domestic and foreign borrowing. + + + +Yet his policies on the currency seem likely to stymie that. The central bank has frozen the naira at its current overvalued official rate for almost a year. The various import bans (on everything from soap to ballpoint pens) are supposed to reduce demand for dollars, but have little effect. Businesses that have to import essential supplies to keep their factories running complain that they have been forced into the black market, where the naira currently trades at 300 or more to the dollar. Several local manufacturers have suspended operations. International investors, knowing that the value of their assets could tumble, have slammed on the brakes and some have pulled money out of the country just as their dollars are most needed (see chart). + +Nigeria is fortunate in having low levels of public debt (less than 20% of GDP), but it is not helped by high interest rates, which mean that 35% of government revenue goes straight out of the door again to service its borrowings. It would not take much to push it into a debt crisis. + +Frustratingly, this crunch is one that Nigeria has been through before—under the then youthful Mr Buhari. Then, as now, he refused to let the market set the value of the currency. Instead he shut out imports, causing the legal import trade to fall by almost 50% and killing much of Nigeria’s nascent industry in the process. Between 1980 and 1990, carmaking fell by almost 90%. Today, as in the 1980s, the president is making a bad situation worse. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21689584-cheap-oil-causing-currency-crisis-nigeria-banning-imports-no/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Child abuse in Kenya + +Breaking the silence + +Stopping the men who prey on orphans + +Jan 30th 2016 | MERU | From the print edition + + + +A GROUP of girls are playing catch. They could be ordinary children; but some are cradling babies, and they are surrounded by high walls topped with barbed wire. They are in a refuge, in the city of Meru near Mount Kenya, which houses survivors of sexual abuse. + +Nearly a third of girls and 18% of boys in Kenya suffer some form of sexual violence before they are 18, according to a study published in 2010 by the UN Children’s Fund (Unicef). Though data barely exist in many poor countries and researchers rarely use comparable methodology, surveys in other African countries, including Tanzania and Swaziland, have found similarly high rates. The World Health Organisation (WHO) puts the global prevalence at 20% among girls and 5-10% for boys. + +Assuming the data are correct, why is the problem worse in Africa? In the wake of the HIV/AIDS epidemic that swept across the continent in the 2000s, many researchers at first thought child rape was perpetrated by men who believed the myth that sex with a virgin would cure them. But the evidence suggests otherwise. + + + +A more chilling effect of HIV/AIDS was to leave many children orphaned and vulnerable to predatory adults, a problem exacerbated in many African societies by the strict obedience expected of children. All around the world, poor children are more likely to be physically or sexually abused, says Christopher Mikton of the WHO. Unemployed, uprooted men are also more likely to violate children. In South Africa, where more than half of young adults are jobless, a survey of 15- to 17-year-olds found that 19% of girls and 20% of boys had been sexually abused. “Periods of rapid social and economic change…appear to be at least correlated” with violence against women and children, says Cynthia Bowman of Cornell University. + +As in most of the world, a huge stigma is attached to such crimes in Kenya. But even when children plucked up the courage to tell an adult or go to the police, rather than let their parents take the traditional route of resolving things behind closed doors, the crimes were never investigated properly, says Mercy Chidi, who set up the Meru shelter in 2006. “You had to give them money to even leave their desks,” she says. + +In 2012, helped by a Canadian NGO called the Equality Effect, Ms Chidi filed claims against police in Meru for violating the rights of more than 240 children by not investigating their allegations properly. The high court ruled in the girls’ favour in 2013. Since then, more than 80% of their cases have been successfully prosecuted. Others are still in the courts, or the suspects have fled. + +But in most Kenyan communities where the NGOs operate, people were “somewhat resigned” to having paedophiles in their midst, says Fiona Sampson of the Equality Effect. They wanted to protect the children, but they did not know how. So the two organisations have expanded their training of police in Kenya as part of a six-month pilot programme. During one school session 140 children danced on tables, singing “No, no, no to children rape.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/21689493-stopping-men-who-prey-orphans-breaking-silence-over-sexual-abuse/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Syrian peace talks + +United only by hatred + +Just getting the right people to the negotiating table is proving fraught + +Jan 30th 2016 | From the print edition + +No one at home + +PITY poor Staffan de Mistura, the UN’s special envoy for Syria. Talks aimed at ending the five-year civil war that has claimed more than 250,000 lives and displaced 12m people should have started on January 25th in Geneva. But disagreements over who should come and on what terms could not be resolved in time. As The Economist went to press, it looked as if the talks could at last get under way on January 29th. But as the veteran diplomat ruefully conceded on Monday, threats to pull out should be expected: “Don’t be surprised: there will be a lot of posturing, a lot of walkouts and walk-ins…you should neither be depressed [nor] impressed…the important thing is to keep momentum.” + +Even that limited goal may prove dauntingly hard to achieve. Both of Mr de Mistura’s predecessors gave up after peace conferences they had convened got nowhere. Hopes of some progress this time were raised after a meeting of the 17-country International Syria Support Group (ISSG) in Vienna in November, which was followed by a UN Security Council resolution calling for talks to start in January that would lead to a “credible” transitional government in place by July this year. Fair elections based on a new constitution would be held by the middle of 2017. + +Besides the start of the talks, it will be a miracle if any of those other milestones are met. Mr de Mistura admits that the participants are united only by mutual loathing. At the beginning of what he sees as a six-month process the groups will be kept in separate rooms, while he shuttles between them in a search for something they can agree on. + +The immediate cause of the postponement of the talks was a failure to agree on which groups should be invited as representatives of the Syrian opposition. Gamely, Mr de Mistura sent out formal invitations to his diplomatic dance on January 26th. Hotel bookings have been made and a few TV camera crews have turned up in Geneva, but confusion reigns. + +Under the auspices of Saudi Arabia, a High Negotiations Committee (HNC) has been established to represent the many rebel factions at the talks. But although it excludes both Islamic State and Jabhat Al-Nusra, al-Qaeda’s Syrian affiliate, it includes hard-line Salafist outfits, such as Jaish al-Islam and Ahrar al-Sham, which collaborate with Jabhat Al-Nusra and which explicitly rule out the principles of democratic pluralism outlined in the ISSG’s Vienna communiqué. The military commander of Jaish al-Islam, Zahran Alloush, was killed by an air strike on December 25th, but the group’s political leader, Muhammad Alloush, has been chosen as the HNC’s chief negotiator in Geneva. + +The Syrian government tends to regard any opposition figure who has ever carried an AK47 as a “terrorist”, but it is supported by its allies Iran and Russia in wanting Ahrar and Jaish kept out of the talks. However, Russia is demanding the inclusion of other individuals and groups, such as the Kurdish Democratic Union Party, whose YPG militias are fighting both the regime and Islamic State to carve out an autonomous region in the north-east of the country along the Turkish border. Turkey says it will pull out if the Kurds are at the table because they are allied with a Turkish terrorist group, the Kurdistan Workers’ Party. Bowing to pressure, Mr de Mistura did not invite the Kurds. + +A further problem is that parts of the Sunni Arab coalition say they will not attend unless there is a halt to air strikes by the regime and the Russians and the lifting of sieges in rebel-held territory where civilians are starving. They point out that these are confidence-building measures required by the UN resolution. But although Mr de Mistura bemoans the squabbles over participation as a distraction from more important issues, he is pleading for people to turn up in Geneva without preconditions. + +Hopes for anything more than sporadic local ceasefires are faint, especially since Russia’s air campaign has strengthened the regime of Bashar al-Assad. Russian planes have carried out nearly 7,000 sorties in the four months since they entered the fray, killing many of Mr Assad’s enemies. Government forces last week seized control of Rabiaa, the last big town in western Latakia province held by the rebels, and crucial for their supply lines from Turkey. Intransigent even when faced with imminent defeat last summer, Mr Assad now believes he is winning. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21689582-just-getting-right-people-negotiating-table-proving-fraught-united/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Africa’s gym craze + +Beerbelly busters + +Toning in the townships + +Jan 30th 2016 | JOHANNESBURG | From the print edition + +Sweaty in Soweto + +WHEN South Africa’s biggest fitness chain opened its second gym in Soweto last year, residents of the bustling black township signed up in droves. Within months the Jabulani gym had become the most successful of more than 120 Virgin Active clubs to launch in South Africa, drawing Sowetans for squats, lunges and lifts to DJ beats. + +Virgin Active, a global brand mostly owned by Brait, a South African investment firm, thinks it can replicate this success elsewhere on the continent. It has two gyms in Namibia and has just opened its first in Botswana. A gym in Kenya is due to open later this year, and the firm is looking at Ghana and Zambia as possible future sites. + +Africans are getting fatter, a side-effect of economic growth. The number of obese and overweight children has nearly doubled since 1990, from 5.4m to 10.3m, says the World Health Organisation. Mass migration to cities has allowed some Africans to go from malnourished to overweight in a generation, thanks to sedentary lifestyles and fatty diets. Many Africans still see a fuller figure as a sign of success, not to mention sexy. + +South Africa is the plumpest country on the continent, with a whopping 61% of its people overweight or obese, says the South African Medical Research Council. Other middle-income countries such as the Seychelles and Botswana are close behind. African women are especially prone to putting on extra pounds. Diseases such as diabetes follow. + +As Africa’s economic growth slows, gyms are adjusting. While Virgin Active runs swanky health clubs with fluffy towels and shoeshine services, its popular Jabulani gym is a no-frills branch with lower fees. A rival chain, Planet Fitness, has found success with a similar lower-cost model. In places such as Dakar, where gyms are few and expensive, residents take to the beach for group workout sessions. + +Part of the draw is aspirational: having a gym membership is a token of urban life, like a car and a smartphone. For South Africans posting gym selfies, there is even a hashtag: #MkhabaMustFall, using a slang word for a beer belly, and riffing off the “must fall” hashtags seen in campaigns calling for colonial-era statues to tumble and university tuition fees to be axed. Joy Mokoena, 38, who works in marketing, joined a gym after a friend told her she was looking too chubby. Now she brings her two children along while she takes Zumba classes, explaining: “I don’t want them to be fat like me.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21689581-toning-townships-beerbelly-busters/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trouble in Tunisia + +Dying to work for the government + +Unemployment is undermining Tunisia’s transition + +Jan 30th 2016 | CAIRO | From the print edition + +The ultimate protest + +LIKE his fellow Tunisian, Muhammad Bouazizi, who set himself ablaze to protest against harassment by local officials in 2010, Ridha Yahyaoui was acting impulsively when he died on January 16th. Having just been refused a government job, the unemployed 28-year-old scaled a utility pole in Kasserine, an impoverished town in western Tunisia. He reportedly threatened suicide. Perched in the air, consumed by his grievances, Mr Yahyaoui touched the wires and was electrocuted. + +Bouazizi’s death ignited protests that ended the dictatorship of Zine el-Abidine Ben Ali and inspired the Arab spring. Mr Yahyaoui’s is a reminder that democracy has yet to solve many of Tunisia’s problems. The government has struggled to kick-start an economy that still suffers from past abuse and persistent corruption. Islamist rebels in the west and several big terrorist attacks have added to its woes in the past year. Nidaa Tounes, the dominant political party, has recently fractured. + +But a lack of jobs is the main reason that thousands of Tunisians have returned to the streets. The unemployment rate is over 15%, worse than before the revolution. Around a third of young people are out of work. In rural areas like Kasserine, jobs are extremely scarce. Much of the work available is suitable for low-skilled labourers; it takes graduates, such as Mr Yahyaoui, an average of six years to find a steady job. Half of all graduates are still unemployed at 35, according to the World Bank. + +The unrest has only made things worse. Three British tour operators have cancelled all bookings to Tunisia until November. Tourism, which (directly and indirectly) accounts for about 15% of GDP and 14% of jobs, was already down due to two deadly attacks on foreign tourists last year. Dozens of hotels have closed for lack of guests. + +The government has stepped in as the employer of last resort. Tens of thousands of workers have joined the public sector since 2010, raising the number employed by the government to over 600,000. Another 180,000 or so work for public companies, which have also been on a hiring spree. To placate Tunisia’s powerful unions, the government has raised salaries. The public-sector wage bill almost doubled between 2010 and 2014. It now accounts for over 13% of GDP, one of the highest shares in the world. + +Not only is Tunisia’s public sector big, it is poorly run. A World Bank report notes that “the link between a public employee’s performance and her evaluation, compensation and promotion is weak, particularly since the revolution.” The wounded and other “martyrs of the revolution” are favoured for jobs. So are the unemployed, leading some Tunisians to shun work in the private sector. Public firms, meanwhile, are models of inefficiency. The Tunisian Chemical Group, cited in the report, increased its head count from 5,000 in 2010 to 16,000 in 2012, while production fell from 8m to 2.5m tonnes. + +Despite its wage bill, the government expects the budget deficit to fall to 3.9% this year. That is optimistic. Moody’s, a credit-rating agency, recently cut its growth forecast for Tunisia to 1.5%, and expects a deficit closer to 5%. International donors want Tunisia to prune the public sector and spend its money more wisely. The government is already cutting subsidies on items such as fuel. But there is also concern about the stability of this lone Arab-spring success story. France recently promised €1 billion ($1.1 billion) in aid over the next five years. + +To appease protesters, the government announced on January 20th that it would hire 5,000 young people in Kasserine, though it is actually only offering job training. “We do not have a magic wand to give a job to everyone at the same time,” says Habib Essid, the prime minister. That hard truth has not gone down well in Tunisia. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21689616-unemployment-undermining-tunisias-transition-dying-work-government/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Saudi Arabia’s financial hub + +Castles in the air + +If you build it, they may not come + +Jan 30th 2016 | RIYADH | From the print edition + +THE skyscrapers of the King Abdullah Financial District (KAFD) rise out of Riyadh’s urban sprawl like an emerald city. Pointed glass spears compete for prominence with vast staggered lean-tos, streaked black-and-white like the back of a rearing zebra. A monorail curves past a butterfly dome. Blissfully vehicle-free in a city otherwise designed for cars, not people, KAFD is built around pedestrian precincts shaded by palm trees. Even the rubbish is collected on an underground conveyor belt. After seven years, the first phase of a futuristic financial hub for the Arab world’s largest economy is nearly complete. It has cost more than $10 billion and the lives of 11 building workers. + +Something is missing, however. While decorators install tropical plants in the conference hall, the legal, fiscal and cultural architecture is still on the drawing board. Waleed Aleisa, the CEO, says he is still waiting to hear whether the zone will be free of corporation tax and under what jurisdiction it will operate. + +At the outset, the project managers imagined a city which would be both in Saudi Arabia and apart from it. Visas would be issued at the airport, sidestepping the kingdom’s red tape. They had visions of a big gated community, largely off-limits to the religious police. Anticipating a mixed workplace in a society where segregation is otherwise de rigueur, male and female toilets were installed on all floors. Brochures portrayed men and unveiled women chatting together. “You have to have different rules for KAFD,” pleads Mr Aleisa. + +But last year the kingdom changed rulers, and King Salman and his son, Muhammad, seem loth to upset the religious establishment while they find their feet. The Saudi central bank, its stock exchange and its sovereign-wealth fund have all assured Mr Aleisa that they are moving in; but international finance houses are proving harder to pin down without clarity on the basics, such as whether women can work with men or what jurisdiction it will operate under. “We should hear sometime in 2016,” says Mr Aleisa. + +Saudi Arabia’s loss will be Dubai’s gain. Though its economy is smaller than the Saudi one and bereft of oil, Dubai claims to have attracted 21 of the world’s top 25 banks, drawn by its barely taxed, lightly regulated “free zone” for foreign firms. “It’s about getting the right legal system, not the right architecture,” says a Gulf investment banker, welcoming Dubai’s introduction of English judges handing down English law. Riyadh’s new buildings look good; investors hope they are not built on sand. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21689615-if-you-build-it-they-may-not-come-castles-air/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Illiberal central Europe: Big, bad Visegrad + +Putin’s popularity: Vladimir unbound + +Crisis in Moldova: A republic, if you can steal it + +France’s missing refugees: Non, merci + +Charlemagne: Value shoppers + + + + + +Articles Sections Next + +Illiberal central Europe + +Big, bad Visegrad + +The migration crisis has given an unsettling new direction to an old alliance + +Jan 30th 2016 | BUDAPEST, PRAGUE AND WARSAW | From the print edition + + + +WHEN Middle Eastern refugees began arriving in Europe last year, Martina Scheibova, a consultant in Prague, felt sympathy for them. Now she is less sure. They create a “clash of cultures”, she says anxiously. Such fears are shared by many Europeans. But unlike Germans or Swedes, Ms Scheibova is unlikely to encounter many refugees. Czech public opinion is solidly against taking in asylum-seekers; Milos Zeman, the Czech Republic’s populist president, calls Muslim refugees “practically impossible” to integrate. In the past year, the country has accepted just 520. + +The backlash against refugees can be felt across Europe. Xenophobic parties are at record levels in polls in Sweden and the Netherlands, and even in Germany the Eurosceptic, far-right Alternative für Deutschland party is polling in double digits. But central Europe’s response has been particularly strong. Anti-migrant sentiment has unified the “Visegrad group” of Hungary, Poland, Slovakia and the Czech Republic—normally a disparate bunch who agree on some subjects (like opposing Europe’s climate policies) but are divided on others (like Russia). Rather than noisy opposition groups, it is governments in these countries who trumpet some of the most extreme views. And they are taking advantage of anti-migrant fervour to implement an illiberal agenda on other fronts, too. + +Viktor Orban, Hungary’s prime minister, has been the loudest of the anti-immigrant voices. Mr Orban began inveighing against migrants early in 2015, after the Charlie Hebdo attacks in Paris, when the numbers arriving in Europe were still relatively low. His government now wants to introduce anti-terror laws that worry civil libertarians, though the details are vague. Fidesz, Mr Orban’s party, pioneered Europe’s illiberal wave: when it came to power in 2010 it limited the constitutional court’s powers, packed it with cronies and introduced a new constitution. Fidesz changed the electoral system, helping it win again in 2014, says Andras Biro-Nagy of Policy Solutions, a think-tank. A new media regulator was set up, headed by a Fidesz stalwart. Public television channels were stuffed with pro-Fidesz journalists, while foreign media were taxed more heavily than domestic ones. (The tax was rescinded after criticism from the main foreign channel, RTL Klub.) + + + +For Visegrad, the game-changer was the November election victory in Poland of the nationalist conservative Law and Justice party (PiS). Jaroslaw Kaczynski, the party leader, has admired Mr Orban for years. Konrad Szymanski, the deputy foreign minister for European affairs, says Poland now plans to beef up its co-operation with the Visegrad group. The government is dead against any further European deals to allocate refugees among member states. Meanwhile, since taking power in November, PiS has sacked the heads of the security and intelligence services, weakened the constitutional tribunal (and packed it with its own supporters), and passed a new media law that lets it install loyalists to head the public radio and TV channels. The European Commission is examining whether all this violates Poland’s commitments to the rule of law. + +Politics in Slovakia and the Czech Republic are a bit different, but in both countries politicians have jumped on the issue of refugees. In December Robert Fico, the prime minister of Slovakia (who is seeking re-election in March), launched a legal challenge to the EU’s migration policy, which he describes as “ritual suicide”. (Hungary filed a challenge soon after.) Bohuslav Sobotka, the Czech prime minister, is less bombastic than Mr Zeman, but he too rejects refugee quotas. Conditions for those already in the country are shoddy. + + + +INTERACTIVE: Explore border fences between countries around the world + +These populist politics have been a hit with voters. Last spring Fidesz was falling in the polls, while support for Jobbik, a far-right party, was surging. Today Fidesz would win a majority again. Support for Mr Fico’s Smer party had stalled last year, but since the refugee crisis erupted it has been rising. PiS’s support base is among disgruntled older voters, who are particularly fearful of immigration. This week, at a meeting staged by a conservative group in Warsaw on whether Poland was threatened by a “colour revolution”, the question of what to call refugees came up. A woman in the audience suggested “invaders”. A speaker opted for “Islamists”. + +The newfound unity between the four countries delights populist politicians. “Probably the only good thing in the whole migration crisis is that the V4 [Visegrad group] has found a common voice and strategy,” says Marton Gyongyosi of Jobbik. The group “allows three small countries to punch above their weight”, says Gyorgy Schopflin, a Fidesz MEP. + +The Visegrad group once aimed to accelerate its members’ integration into the EU. Its turn towards illiberalism presents Europe with a problem. Since new rules came into force in 2014, the group no longer has a blocking minority in the European Council. But it can cause headaches, particularly if it influences neighbours such as Romania or Bulgaria. Meanwhile, polls show trust in the EU has fallen in all four countries. In fact, Visegrad countries rely heavily on EU funding—it amounted to 6% of GDP in Hungary in 2013. Yet many are disappointed in Europe. “People thought we would have the same living standards as Austrians or Britons,” says Ferenc Gyurcsany, who served as Hungary’s prime minister from 2004 to 2009. + +Rising Euroscepticism could backfire on the group. Informal talks on the next multi-year EU budget have begun, and Germany has hinted that it will favour countries that share the burden of refugees. Already many European officials are growing impatient with the group. Milan Nic of the Central European Policy Institute recalls the days when Austrian politicians, for example, used to talk about the Visegrad group with respect. “Nowadays”, he says, “Visegrad is like a bad word.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21689629-migration-crisis-has-given-unsettling-new-direction-old-alliance-big-bad-visegrad/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Putin’s popularity + +Vladimir unbound + +Russia’s president is impervious to the woes that afflict normal leaders + +Jan 30th 2016 | MOSCOW | From the print edition + + + +CHANTS of “Russia without Putin!” echoed through Moscow four years ago. Vladimir Putin’s choreographed return to the presidency and vote tampering in parliamentary elections brought thousands to the streets; his approval ratings fell to 63%. But after the annexation of Crimea in 2014, those ratings soared to nearly 90% and have not come back to earth since. Mr Putin became “a charismatic leader of the Promethean type: a demigod, a Titan, who brought the people fire,” says Valery Fedorov, head of the state-financed Russian Public Opinion Research Centre (VCIOM). Even a recession, falling real wages and rampant inflation have barely dented Mr Putin’s numbers. + +For Mr Putin’s fans, his untouchable ratings serve as proof of his righteousness. To some Russian liberals and Western observers, they are evidence that something is wrong with the polling. The practices of state-backed sociologists have been questioned. A fear of sharing political opinions, a legacy of Russia’s totalitarian past, may taint results. But the independent Levada Centre records approval levels for Mr Putin similar to those of state pollsters; so does the in-house sociological service of Alexei Navalny, an opposition leader. + +In fact, the issue is more complicated. In today’s Russia, where the Kremlin controls most media and politics offers no alternative, polls are more ambiguous than in countries where they measure the support of competing politicians. Instead of offering an assessment of Mr Putin’s actions, ratings reflect “the condition of a complex of collective expectations, hopes, and illusions connected with him”, as the late sociologist Yuri Levada said in 2005. + + + +Oil price and Russian politics: a history + +In the long shadow of the Soviet collapse, the desire of Russians for self-respect is just as powerful as their desire to live well, says Lev Gudkov, the Levada Centre’s director. Mr Putin’s overseas adventurism has satisfied this desire. The president has come to embody Russia (as his deputy chief of staff put it, “No Putin—no Russia”); disapproving of him verges on repudiating the country. His approval ratings measure “the respect, trust and pride Russians have in themselves and their country”, says Mr Fedorov. “Putin is just a symbol.” + +Nonetheless, discontent is starting to well up. This month protests forced the Krasnodar region to roll back cuts in travel benefits for pensioners. In Moscow, foreign-currency loan holders have stormed bank branches demanding refinancing in roubles. So far, such protests remain diffuse and apolitical. Russians are more likely to blame the prime minister or local officials than Mr Putin, in keeping with the age-old Russian political myth of the good tsar betrayed by evil boyars. Yet as parliamentary elections loom this autumn, Mr Putin has been quietly distancing himself from his party, United Russia, which enjoys considerably less support than he does. Eventually, the frustration may begin to catch up with Mr Putin too. Mr Fedorov forecasts a 10% dip in his ratings this year: “Everything in this life is finite.” Even Prometheus got tied down eventually. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21689626-russias-president-impervious-woes-afflict-normal-leaders-vladimir-unbound/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Crisis in Moldova + +A republic, if you can steal it + +A year after a $1 billion theft, a country is tottering + +Jan 30th 2016 | CHISINAU | From the print edition + +If I had a hammer + +IN 1918 the then three-month-old Moldovan republic gave up the struggle for survival and united with neighbouring Romania. It is a sign of how dire things are today, says Iulian Fota, a Romanian analyst, that people are talking about doing so again. Ever since 2014, when the embezzlement of about $1 billion from three banks forced a taxpayer bail-out that has crippled the economy, the country has been lurching towards collapse. Opposition supporters are permanently encamped in front of the government building. Maia Sandu, a former education minister who is rushing to build a new party, says the situation could lead to violence. No one seems to disagree. + +On January 20th Pavel Filip, a close associate of Vlad Plahotniuc, the most powerful of the businessman-politicians who dominate Moldova, was voted in as prime minister. His administration is the eighth since 2013. Mr Plahotniuc had wanted the job; the president rejected him, saying there were doubts about his integrity. Mr Plahotniuc’s arch-rival in business and politics, meanwhile, was arrested in October after accusations that he had received $260m in bribes. He denies wrongdoing. + +As Mr Filip was voted in, protesters stormed into parliament, trying to block him from taking office. They failed. On January 24th tens of thousands demonstrated against the new government. Opposition leaders have demanded a new vote. Western leaders, however, fear that elections would be won by pro-Russian parties and return the country, which has an association agreement with the European Union, to the Russian sphere of influence. + +Many Moldovans are incensed by reports in the Western press that the current struggle is one between pro-Russian and pro-European parties. For most protesters, the conflict has nothing to do with geopolitics. As Victoria Bucataru of the Foreign Policy Association of Moldova puts it, they are fed up with elites fighting for power while they grow poorer. + +Still, if a poll were held today, the two parties generally seen as pro-Russian would together get the biggest share. The Socialists’ election posters feature pictures of Russia’s president, Vladimir Putin. Renato Usatii, the leader of the other opposition party, owns a business in Russia. But he says calling him pro-Russian is a slur. “I am pro-Moldovan,” he insists, adding that if he led the country he would not rescind its agreement with the EU. + +One source close to Mr Plahotniuc says he wants to retire from politics. Others say they have heard this before; they believe he wants to succeed the current president when his term expires in March. + +Meanwhile Moldova is cut off from the external financing that it needs. Since the theft of the $1 billion, diagnostic audits are supposed to have been done on the country’s three largest remaining banks. Alex Kremer, the World Bank’s representative in Moldova, says he is concerned about delays in the completion of the reports. If it turns out that yet more money has been stolen from the banks, the anger of Moldova’s 3m exasperated citizens may at last boil over. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21689646-year-after-1-billion-theft-country-tottering-republic-if-you-can-steal-it/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +France’s missing refugees + +Non, merci + +Migrants are streaming into Germany, but few are interested in France + +Jan 30th 2016 | CERGY-PONTOISE | From the print edition + + + +ON A quiet bend of the River Oise, beside a wooded lake, the Ile de Loisirs activity centre usually runs sailing schools and high-wire tree-climbing adventures. Last autumn its dormitories were briefly turned into an emergency welcome centre for 98 Syrian and Iraqi refugees. Today, however, the gardens outside the residential block are empty again, the wooden picnic benches deserted. The refugee families are already gone. Their speedy resettlement shows that France has plenty of capacity to absorb migrants. It also raises the question of why it is that while Germany is coping with a vast flood of Syrian refugees, France is attracting only a trickle. + +The refugees who turned up in this new town, some 40km (25 miles) north-west of Paris, travelled in specially chartered coaches from Munich last September. Officials from the French Office for the Protection of Refugees and Stateless Persons (OFPRA) had gone to Munich in a gesture of solidarity to persuade refugees to settle in France, to help relieve the pressure on the Germans. Less than 48 hours after Cergy offered to take them in, the first coach pulled up outside the activity centre. + +“The welcome in Cergy was really great,” says Ali Tarabein, a former seed trader, who fled Syria via Turkey and the Greek island of Lesbos before making a four-day journey overland to Germany. Dozens of locals brought clothes and toys. “Cergy has always been very welcoming to people who come from elsewhere,” says Jean-Paul Jeandon, the Socialist mayor of the town, which is informally twinned with a village in Palestine and another in Senegal. Within two weeks, all primary-aged refugee children were in a local school. Adults, none of whom spoke French, were given language classes while they awaited official papers. By mid-December all the original refugees had been offered housing, five of them in Cergy and others elsewhere in France. + + + +Asylum applications in France take an average of two years to process, but officials in Cergy cut through the bureaucratic thicket and speeded things up. It helped that the town is no stranger to new arrivals, with a mix of 130 nationalities. Many refugees were skilled, among them a dentist and an engineering student, and the numbers were manageable. “If we’d had hundreds or even thousands it would have been more complex,” says Mr Jeandon. + +Yet it is precisely those low numbers that are puzzling, not just in Cergy but in France as a whole. Overall asylum applications rose last year by 22%, but to just 79,000—nothing remotely close to the million-plus who registered in Germany. In 2015, 158,657 Syrians completed asylum applications in Germany, compared with only 3,553 in France. Last year the European Union agreed on a relocation programme to share 160,000 refugees from Italy and Greece. By mid-January France had taken in only 19; another 43 arrived this week. + +The explanation seems to be a mix of migrants’ relatively weak ties to France, and the limited opportunities in a country with 10% unemployment. “I wanted to go to Sweden, then Germany or England,” says Mr Tarabein, who had friends in those countries and spoke English but not French. He ruled out Britain after friends warned him on Facebook and WhatsApp about the perils of trying to cross from the French port of Calais: “It was too dangerous, I don’t want to die.” As for France, he says he had heard it took months to get papers (France does not allow refugees to work for nine months) and that Syrian refugees there “live on the streets”. It was only when the OFPRA officials promised fast-track settlement that he agreed to take his seat on the coach. Now, relocated to Narbonne, he is trying to bring his wife and three small children from Syria. + +“It’s Germany that is in an extraordinary situation, not France,” says Pascal Brice, director of OFPRA. If the EU redistribution scheme is not yet working, he says, this is simply because refugees prefer to go to Germany. Yet there is no French political appetite to speed matters up. The xenophobic National Front continues to shape the debate. In a recent poll, 60% of French said they do not want more refugees, and terrorism has hardened sentiment. (Two of those behind the November 13th attacks in Paris posed as asylum-seekers.) Manuel Valls, the prime minister, put it bluntly last week: “The first message we need to send now, with the greatest of firmness, is to say that we will not welcome all the refugees in Europe.” Cergy may turn out to be the exception, not the makings of a solution to ease Europe’s migrant crisis. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21689649-migrants-are-streaming-germany-few-are-interested-france-non-merci/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Value shoppers + +Europe promised a principled foreign policy. Now it is desperate for quick deals + +Jan 30th 2016 | From the print edition + + + +NOTHING excites the febrile intellects of Brussels more than analysing the theoretical underpinnings of European foreign policy. Entire tracts are devoted to the security strategy of the European Union, its neighbourhood policy, the countless “tools”, “instruments” and “levers” it has designed to help it advance its global concerns. A keen student can lose himself for hours in strategy papers and advisory memos to the policymakers supposedly shaping Europe’s place in the world. + +When the EU signed a German-inspired deal with Turkey to help stem the flow of refugees late last year, none of this mattered a jot. Presented by European officials as a hard-nosed piece of statecraft, the “action plan” offers Turkey money, the prospect of visa-free travel inside the EU and an acceleration of its membership bid so long as the Turks keep the migrants away. It was one of the most important European foreign-policy initiatives in years, but there was not a sniff of strategy to it. It reeked of desperation. + +Turkey-watchers in Europe and liberals inside Turkey were united in outrage. The Europeans were averting their gaze as Recep Tayyip Erdogan, Turkey’s president, was locking up journalists, harassing the opposition and prosecuting a bloody war against unruly Kurds—in an official EU candidate country, no less. The European Commission even postponed publication of its highly critical annual report on Turkey’s membership bid while Mr Erdogan’s party campaigned in national elections. + +The deal seemed emblematic of a “realist” turn in European foreign policy. Ideas such as slashing aid to countries that refuse to accept the return of failed asylum-seekers are doing the rounds. Officials in international-development agencies tear their hair out as carefully nurtured relationships in Africa are tossed aside to make way for quick-and-dirty deals to ship back rejected migrants. Southern European countries fret that a plan to open EU markets to Middle Eastern exports (to create jobs for refugees) will crowd out their manufacturers. + +This is not the Weltinnenpolitik (global domestic policy) that grand thinkers like Jürgen Habermas thought regional clubs such as the EU were well placed to cultivate. Instead, to borrow from the late American neoconservative Irving Kristol, Europeans have started to resemble liberals mugged by reality. It is easy to bleat about human rights when you are living in a peaceful, postmodern paradise; less so when you have millions of illegal migrants barging through your back door. + +Europeans are hardly new to Realpolitik (the clue is in the word). There has long been a division of foreign-policy labour within the EU, says Michael Leigh of the German Marshall Fund, a think-tank. Larger countries delegated values-based policy to Brussels while they got on with the hard stuff, such as security or access to oil. For every pious expression of support for international justice or condemnation of capital punishment, there was a shabby energy deal or quiet support for a useful dictator. Some feel this category includes the Nord Stream 2 gas pipeline, which would run directly from Russia to Germany under the Baltic Sea and could undermine the EU’s energy policy, but which has the support of Angela Merkel, Germany’s chancellor. + +Tougher than they look + +Even in its soft and fuzzy days, the EU was not toothless. Its strongest tool—the attraction of membership—combined European interests and values in one package. Enlargement to the east brought stability to the region while strengthening the rule of law and democratic institutions inside candidate countries. (Maintaining them once countries have joined has proved harder, as the recent examples of Hungary and Poland demonstrate.) Globally, Europeans have, in their gentle way, sought to bolster a rules-based order that has enabled their exporters to flourish. + +That looked like the future, once. But today’s threats lead down a different path. Europe’s power no longer extends outward; instead, the surrounding countries have turned their pathologies on Europe. Enlargement is off the table—even in the Balkans the EU’s main interest is in keeping order, as millions of migrants tramp through a historically unstable region. Russia’s bloody intervention in Ukraine tore up the European belief that borders may not be changed by force—and Europe initially struggled to respond. It dithered again last year as the stream of migrants coming through Greece swelled, eventually leaving Mrs Merkel with little choice but to shower gifts upon Mr Erdogan in the hope of an agreement to stanch the flow. + +The Turkey deal may yet work (although Charlemagne is struggling to find anyone who believes that it will). If it cuts the number of refugees and the borderless Schengen area survives, a European ideal will have been saved. Optimists think that, even if it flops, the EU’s relations with an important neighbour will have emerged from the deep freeze. Denouncing Mr Erdogan’s power grabs through bloodless progress reports had little effect; now EU politicians can slip their concerns into exchanges on refugees, as some visiting commissioners did this week in Ankara. The crisis may also force the EU to look outward again. Tunisia, notes Jan Techau of Carnegie Europe, another think-tank, is crawling with European diplomats and money, testament to the EU’s desperation to preserve a rare success from the Arab spring. + +But these are slim hopes. Europe’s vulnerabilities are on full display. Some future Qaddafi will be alert to the concessions he might win by threatening to unleash hordes of migrants upon European shores. Finland and Norway fear that Vladimir Putin may decide to do precisely that by waving through a host of Syrians and Afghans. As for Turkey, had the Europeans woken up to the coming danger last spring, they might not have found themselves compromising their values so grubbily in the autumn. That would have been the strategic thing to do. Time to dust off some of those far-sighted think-tank reports. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21689602-europe-promised-principled-foreign-policy-now-it-desperate-quick-deals-value-shoppers/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Black Britons: The next generation + +Punk reaches middle age: God save the punks + +Brexit war games: A rocky rehearsal + +Financial regulation: New face, same problems + +The Labour Party: The elephant in the room + +Slough’s boom: Come, friendly firms + +Regional airports: Ups and downs + +Marriage and migration: For richer, not for poorer + +Bagehot: Death of a Londoner + + + + + +Articles Sections Next + +Black Britons + +The next generation + +A mainly Caribbean community has become a mainly African one—and is poised to become more successful + +Jan 30th 2016 | From the print edition + + + +BLACK British history did not begin in the 20th century. In 1578 George Best, a travelling diarist, wrote of meeting “an Ethiopian as blacke as a cole brought into England”. But it was after the 1940s that Britain’s black population really began to grow, with two waves of immigration. The first, from the 1940s to the 1960s, carried poor Caribbeans to British shores. The second, beginning in the late 1980s, came from Africa, as wealthy Nigerians and Ghanaians arrived alongside rural migrants and refugees from Somalia and Zimbabwe. + +Britain’s black population is now about 2m, or just over 3% of the total. The census divides it into two main categories: “black African” and “black Caribbean”. Until the turn of the century, Caribbeans were in the majority. But in the ten years to 2011, the African population doubled. And that is not the end of the changes: although Caribbean Britons are substantially better off than their African neighbours, demographic and educational trends suggest that the tables may soon be turned. + +Thamesmead, an east-London suburb that is home to Britain’s most-concentrated African population, illustrates the group’s struggles. Its bleak residential towers, where Stanley Kubrick shot “A Clockwork Orange”, are overcrowded, says Mabel Ogundayo, a 24-year-old local councillor. Most of its crammed-in residents are tenants; nationwide, less than one-quarter of Africans are owner-occupiers, compared with nearly one-half of Caribbeans. That is partly why Caribbean households are, on average, much better off: in 2009 the Office for National Statistics (ONS) found that the average one had £76,000 ($109,000) in assets, against £15,000 among Africans. + +Caribbeans also fare better at work. Africans are less likely to be employed, and more likely to toil in low-skilled occupations. Much of this is down to their more recent arrival: although four out of ten have degrees—more than any ethnic group other than Chinese and Indians—many studied at unrecognised foreign universities, and some speak little English. As a result, 41% of African graduates work in non-graduate jobs, compared with 28% of Caribbeans. Their employment rate is dragged down by some groups that have particularly struggled: few from the mainly refugee Congolese or Somali communities are in work, for example. + + + +Yet the fact that much of their disadvantage is owing to their recentness suggests that, with time, it will be overcome. Many are richer than the first wave of Caribbeans. New Nigerian immigrants are less likely to be employed than new Jamaicans, but this stops being the case after five years in the country, according to the ONS. And although Africans are more likely than whites to be in low-paid work, the gap disappears once factors such as age, occupation and language have been controlled for. As new generations are minted and old ones learn English, earnings can be expected to rise. + +There is already progress in schools and universities. In 2014, 68% of Africans got five good grades in their GCSEs, the exams taken at 16, compared with 65% of whites and 59% of Caribbeans. They are far more likely to continue their education—indeed, the poorest Africans are as likely to go to university as the wealthiest Caribbeans. Although there is little difference in performance at primary school, Caribbean children “lack the support that’s needed to deal with the choppy waters of secondary school,” says Tony Sewell, the founder of Generating Genius, a charity. Africans, as newer arrivals, “have the mindset that there’s always something worse [than schoolwork] out there,” he adds. + +And although discrimination remains real, it is less pervasive than when Caribbeans first arrived in Britain. Archived government papers released last month showed that in 1985 Margaret Thatcher was warned by advisers that grants to black entrepreneurs would end up in the “disco and drug trade”. Back then, 50% of Britons admitted to NatCen, a research organisation, that they would mind if a close relative married a black person. Now, the figure is 22%. (Prejudice has found new targets: 44% say they would be bothered by a relation marrying a Muslim.) + +Africans remain less integrated than Caribbeans. Eight out of ten Africans choose an African partner, whereas by comparison less than half of Caribbeans settle down with a fellow Caribbean. A child under ten who has a Caribbean parent is more than twice as likely as not to have a white parent. + +Some believe that Africans’ delay in integrating may actually help to explain their success. West Africans, in particular, have a “separateness and social distance” in areas such as language, dress and religious worship “which seems to carry a protective effect”, says Trevor Phillips, a former head of the statutory Equality and Human Rights Commission. Caribbeans, by contrast, resemble whites in their performance at school—that is, both do pretty badly, after controlling for income. + +Others dispute the value of “separateness”, arguing that minorities benefit more from mixing. That is where official efforts focus. With second-generation Africans already starting to integrate more quickly, the theory will soon be put to the test. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21689606-mainly-caribbean-community-has-become-mainly-african-oneand-poised-become-more/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Punk reaches middle age + +God save the punks + +Jan 30th 2016 | From the print edition + + + +The 40-year journey from anarchy to tourist attraction is almost complete. The place of punk rock’s birth in 1976, the King’s Road in London, is now filled with designer shoe shops; its principal ambassador, John Lydon (aka Johnny Rotten), fronts advertisements for Country Life butter. Nonetheless its “attitude and spirit” survive untouched, insists the mayor of London’s office, which is helping to co-ordinate a year-long punk festival in conjunction with such anti-establishment institutions as the British Library and the Museum of London. God save the queen. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21689609-god-save-punks/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit war games + +A rocky rehearsal + +A mock-up suggests it may be hard for David Cameron to do a deal in Brussels + +Jan 30th 2016 | From the print edition + + + +THE recent messages from Downing Street have been optimistic. Careful diplomacy is paving the way for David Cameron to renegotiate Britain’s European Union membership at a summit in Brussels on February 18th-19th. That should enable the prime minister to call (and win) his EU referendum in late June. Yet the outcome of mock “war games” staged on January 25th by Open Europe, a London-based Eurosceptic think-tank, was less reassuring. + +The games brought together former EU leaders to test what deal Britain might secure. Sir Malcolm Rifkind, a former Tory foreign secretary representing the British side, noted that nobody wanted Brexit. Yet even reforms that had seemed uncontroversial proved less so in debate. Responding to Sir Malcolm’s demand for legal safeguards for countries not in the euro, several ministers said it would be absurd to give Britain a veto over euro-zone countries’ policies. Others called such concerns hypothetical: Aart Jan de Geus, a former Dutch employment minister, said Sir Malcolm was seeking an umbrella when there was no rain. Even Britain’s desire for an exemption from the EU’s goal of “ever closer union” caused some resentment. + +Yet this was mild compared with the response to Sir Malcolm’s demand, echoing Mr Cameron’s, for the right to block in-work welfare benefits for EU migrants for four years. Such discrimination was contrary to the treaty principle of free movement of labour, fumed Karel de Gucht, a former trade commissioner who represented the EU institutions. It would require treaty change that France was not ready for, said Noelle Lenoir, a former French EU minister. There was little hint of compromise, even though Sir Malcolm suggested that as many as 9% of British voters would switch from In to Out without a deal limiting migrants’ benefits. + +The audience’s conclusion was that it may be harder to complete the negotiations in Brussels than Mr Cameron hopes. Many thought his prospective deal could therefore slip beyond February, with the referendum taking place in September or later. Enrico Letta, a former prime minister representing Italy, warned that holding a referendum during the summer, when Europe’s migration crisis will be at its most acute, would help the Out side. + +If this was bad enough, the second part of the war games, a mock-up of how the EU would respond to a vote for Brexit, was worse. Lord Lamont, a former Tory chancellor of the exchequer representing Britain, argued that an “amicable divorce” was in everybody’s interests. Britain could negotiate a trade deal similar to Canada’s, liberating it from EU rules, including free movement of people. He even volunteered to pay something into the EU budget. + +Yet other countries were unimpressed. John Bruton, a former prime minister representing Ireland, said Brexit would be seen as an “unfriendly act” and would threaten the peace process in Northern Ireland (Enda Kenny, Ireland’s real prime minister, made a similar point after meeting Mr Cameron on the same day). Steffen Kampeter, a former deputy finance minister representing Germany, said Britain would not be allowed to cherry-pick the benefits of membership without the costs. Mr de Gucht noted that a new trade deal would be negotiated by the European Commission and national governments with minimal British input. He and others added that they would try to shift Europe’s financial centre from London. + +The starkest warning came from Leszek Balcerowicz, a former deputy prime minister representing Poland. He said the priority would be to deter populists in other countries who wanted to copy Brexit. For this reason Britain would be punished by its partners even if that seemed to be against their interests. Mr Cameron’s negotiations may be hard, but they are a picnic compared with what he would face were he to lose his referendum. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21689235-mock-up-suggests-it-may-be-hard-david-cameron-do-deal-brussels-renegotiating/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Financial regulation + +New face, same problems + +A veteran takes over a troubled banking regulator + +Jan 30th 2016 | From the print edition + +A shot of Baileys for the banks + +A SAFE pair of hands. That was the City’s reaction to news that Andrew Bailey, a veteran of more than 30 years at the Bank of England, had been appointed chief executive of the Financial Conduct Authority (FCA), which oversees the relationship between banks and their customers. His task will be to walk the fine line between rooting out bad practices in the industry and making sure that multinational banks—vital sources of tax for the government—do not take offence and head overseas. HSBC, one of the world’s biggest, is reviewing whether to stay in London or move to Hong Kong. + +Martin Wheatley, Mr Bailey’s predecessor, was forced out of his job last year by George Osborne, the chancellor of the exchequer. Mr Wheatley was perceived as too hostile to the banks and also carried the can for a botched announcement of a review of the life-insurance industry; a parliamentary report said the FCA made a “serious error” and “created a false market in life insurance shares”. + +The FCA’s new head is no stranger to bank regulation. As well as being a deputy governor of the Bank of England, Mr Bailey ran the Prudential Regulatory Authority (PRA), which supervises the health of the financial industry. In layman’s terms, he has moved from making sure that banks don’t go bust to ensuring they don’t rip off their customers. David Buik, a market commentator at Panmure Gordon, a stockbroker, described Mr Bailey as “very steely and a very good listener. I don’t think he will be pushed around.” + +The selection process, which lasted six months, was tricky, with suggestions that Mr Bailey had to be drafted into the job. In a sign of the last-minute nature of the appointment, his successor at the PRA has yet to be found. + +Britain has struggled to create a stable regulatory regime for its banks, stirring the alphabet soup of watchdogs every decade or so. As part of the “Big Bang” reforms of the mid-1980s, the Thatcher government set up the Securities and Investment Board, with sub-regulators covering business activities like life insurance and financial advice. Gordon Brown swept that system away when Labour came to power in 1997, replacing all the old bodies with the Financial Services Authority (FSA), which also took over the Bank of England’s role as bank regulator. + +The FSA’s “light touch” was much trumpeted during the financial boom of the early 2000s but proved wanting when a host of banks ran into trouble in 2007 and 2008. So Mr Osborne rearranged the deckchairs again in 2012, replacing the FSA with the FCA and PRA. The banks have continued to attract scandals, including the fixing of a key interest rate known as LIBOR (five brokers were found not guilty of rigging LIBOR on January 27th; Tom Hayes, a former UBS and Citigroup trader, was convicted of the offence last year). Another long-running saga involves the mis-selling of payment-protection insurance, the fiasco that launched a million unwanted phone-calls. + +Mr Bailey will hope that no new snafus emerge on his watch. Like good football referees, the best regulators keep out of the headlines. If things go well, Mr Bailey might even be in line for a bigger role: Mark Carney’s successor as Bank governor. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21689608-veteran-takes-over-troubled-banking-regulator-new-face-same-problems/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Labour Party + +The elephant in the room + +Labour’s election post-mortems expose a party in denial + +Jan 30th 2016 | From the print edition + + + +“THE Labour Party is a bit like an old stagecoach. If you drive it along at a rapid rate everyone aboard is either so exhilarated or seasick that you do not have a lot of difficulty.” So argued Harold Wilson, a Labour prime minister, adding: “But if you stop, everybody gets out and argues about where to go next.” The mantra has held for much of the party’s history. Yet today, when it is in peril as almost never before, Labour’s problem is not that everyone is arguing but that they are rallying around a flawed consensus. + +That much was made clear by the official account of Labour’s unexpectedly poor result in the general election in May. Written by Margaret Beckett, a former foreign secretary, the report of the Learning the Lessons from Defeat Taskforce (nothing is taken seriously in Labour unless lots of capital letters are involved) pointed to various causes. Party bigwigs duly praised the document. Among the factors it cited were a hostile media and the Conservative Party’s accusation that Labour might do a coalition deal with the secessionist Scottish National Party. + +Both were valid points, yet the report appeared to minimise the two most convincing explanations for Labour’s defeat: the unpopularity of its then-leader, Ed Miliband, and the lack of trust in the party on the economy. The impression of selective accounting was strengthened when Deborah Mattinson, a former Labour pollster, accused Dame Margaret of overlooking polling from marginal seats like Croydon and Nuneaton. + +These polls made it clear that Labour failed to disabuse voters of the notion that the party had caused the financial crash, could not run the economy and had a leader incapable of being prime minister. They stressed that Labour needed to appeal to “middle-class voters, not just down-and-outs”, and that having an apparently “weak and bumbling leader” did not help. Ms Mattinson called the final report, in which such concerns were skated over, a “whitewash”. + +In Jeremy Corbyn the party now has a leader who accentuates both of the weaknesses which, evidence suggests, lost the party the election. Yet it is acting as if Dame Margaret’s ruling was, in fact, rather harsh. MPs remain nominally loyal to Mr Corbyn. Even those who wax suicidal about their predicament refuse to act (for now, at least). Talk of a leadership bid by Michael Dugher, a former shadow cabinet minister, was recently greeted with derision. Labour is a party in denial. Lucky David Cameron. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21689611-labours-election-post-mortems-expose-party-denial-elephant-room/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Slough’s boom + +Come, friendly firms + +An unfashionable town shows the benefits of a bad reputation + +Jan 30th 2016 | SLOUGH | From the print edition + +Time to celebrate + +LOCALS complain that Slough, a town of some 140,000 people just west of London, is known for two things, both miserable. One is John Betjeman’s 1937 poem, “Slough”, which bemoaned the town’s industrialisation: “Come, friendly bombs, and fall on Slough! / It isn’t fit for humans now.” The other is as the setting for “The Office”, an early 2000s television sitcom which portrayed the mindless drudgery of the modern workplace. + +In the January drizzle, the view from Slough train station does little to dispel such negative impressions. Pedestrians are largely absent; the buildings drab and sometimes dilapidated. An empty construction site serves as a reminder that a plan to develop part of the town centre, first outlined five years ago, has not yet begun. But there are also signs of progress. A jazzy new bus station juts out from the terminal, an incongruous dash of silver. The Curve, a large arts centre due to open (belatedly) this year, stands as a promise of more to come. + +And there is reason to think more will come. According to a report by the Centre for Cities, a think-tank, which surveyed Britain’s 63 largest urban areas, over the past five years none has seen faster growth in the number of businesses. Indeed, despite its apparent decrepitude, Slough is a remarkably successful place. The report also found that it had the lowest proportion of young benefit claimants, the best school grades and the third-highest wages. Crossrail, a planned high-speed railway service, will arrive in 2019, making Slough easier to reach from central London. Big property firms are beginning to invest there. House prices have grown by nearly 50% since 2009, according to Knight Frank, an estate agent, albeit from a low base. + +Slough is a town that gets the basics right, says Neil Lee of the London School of Economics. “Lots of people talk about tech cities and creative cities, with entrepreneurs attracted by hipster coffee shops,” he says, “when actually many businesses just need good parking, cheap offices and skilled workers.” Big firms have long been attracted by the town’s rail and road links, as well as its proximity to Heathrow airport. Good local universities and schools provide a skilled labour force; pleasant nearby villages and countryside somewhere unconcreted for senior executives to live. + +The real shift began around 20 years ago, says Ruth Bagley, chief executive of the local council, when multinational firms began to come to the town in large numbers. Many now have their headquarters in Slough, including the British division of Fiat, a carmaker, which is based in a trading estate that houses some 500 businesses. There are also clusters of pharmaceutical and technology firms. “Large American businesses tend to see Slough as part of West London but with much cheaper real-estate costs,” says Jon Gardiner of Savills, a property consultancy. + +Data centres and high-frequency traders are attracted by good fibre-optic connections, an existing pool of IT firms and an extremely reliable power supply. Large companies beget smaller ones, many started by Slough’s immigrant population. In the 2011 census, only 35% of its residents classified themselves as white-British. Slough has been refreshed by each major wave of British immigration—most recently from eastern Europe—as well as a small arrival of Poles and Italians after the second world war. Locals are “very welcoming to migrants,” says Ms Bagley, “but the main drive has always been that Slough is an easy place to get a job.” + +References to Betjeman and “The Office” may bore locals, but a dour reputation has hardly held Slough back. It may even have its benefits: rents are cheaper and more central land is available to develop than in neighbouring towns. Crossrail will probably urbanise the town’s core. One developer reckons he may be able to attract financial-services firms looking to save rent. Moving to Manchester or Birmingham forces staff to relocate, he points out; moving to Slough doesn’t. If he gets his way, local wages could rise yet further. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21689645-come-friendly-firms/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Regional airports + +Ups and downs + +Despite rising demand for flights, small airports are closing + +Jan 30th 2016 | CAMBRIDGE | From the print edition + + + +THE city of Cambridge claims to be one of Britain’s most successful. With near-full employment, a renowned university and the largest biotech cluster outside America, its economy is flourishing. Yet the city’s good fortunes have not helped its airport, which from January 31st will be closing down its last scheduled flights. It is the latest in a line of regional airports to do so, including Plymouth in 2011 and Manston and Blackpool in 2014. In spite of a growing economy, smaller regional airports are having a tougher time than ever before. + +This is not because Britons are staying on the ground. Since the recession, air-passenger numbers have risen by 10% in Britain. A shortage of airport capacity in the London area has forced the government to set up a commission to decide where to build a new runway. But the two front-runners—Heathrow and Gatwick—are unlikely to get theirs ready before 2030 at the earliest. That has given some the idea that regional airports could take some of the extra traffic in the meantime. + +The government has also been trying to promote regional air travel, to help share the proceeds of growth outside London. It set up the Regional Air Connectivity Fund in 2013 to subsidise new domestic and international routes to airports outside the capital to the tune of £56m ($80m) over three years. + +But larger airports have disproportionally benefited. The number of passengers using Manchester airport, Britain’s busiest outside London, has risen by more than one-fifth since 2010, to 23m a year. That level of growth has also been seen at other regional airports carrying 6m passengers a year or more, including Birmingham, Edinburgh and Glasgow International. + +Those carrying fewer than 1m are struggling. Some, like Cambridge and Blackpool, are closing to commercial traffic. Others, like Cardiff and Glasgow Prestwick, have been nationalised by the Welsh and Scottish governments to keep them open. That is because their business models often no longer make sense, says Tim Coombs at Aviation Economics, a consultancy. Airports have high fixed costs, such as air-traffic control and security. They therefore benefit greatly from economies of scale, meaning large ones can undercut smaller rivals by offering airlines lower landing charges. Fast-growing low-cost carriers, such as Ryanair and easyJet, are moving to these larger hubs. Both plan to base more flights at bigger airports in the next few years, worsening the minnows’ woes. + +Britons’ changing travel habits have also hit small airports. Whereas international passenger numbers have soared by 20% over the past decade, domestic travel (small airports’ mainstay) has dropped by one-sixth. That has helped the likes of Manchester, with flights to over 200 foreign destinations including Dubai, its most popular. But it has hurt airports that act as feeders for Heathrow, where the number of domestic connections has fallen by half since the 1990s, owing to its lack of runway capacity. On January 22nd the government announced another delay to the decision on whether to expand Heathrow or Gatwick. That will not help London’s economy—nor Britain’s small airports. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21689632-despite-rising-demand-flights-small-airports-are-closing-ups-and-downs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Marriage and migration + +For richer, not for poorer + +Raising the bar for migrant spouses has worked, at a cost + +Jan 30th 2016 | From the print edition + +Till minimum-income threshold do us part + +THE Conservative Party promised ahead of its election victory in 2010 that it would bring annual net migration below 100,000 a year. As the economy has grown, sucking in foreign workers, the government has conspicuously failed to meet this goal: net migration in the year to June 2015 was 336,000, a record. However, one small but socially significant subsection has declined and remained low: immigration by Britons’ foreign spouses. + +In 2012 the government introduced a new requirement that British citizens and permanent residents meet an income threshold before being allowed to bring in a partner from outside the European Union. The threshold is £18,600 ($26,500), or higher if children are to come too. This gives Britain the strictest policy on family unification of 38 rich countries, according to the Migration Policy Group, an NGO. The rules have been challenged in a case that will be heard by the Supreme Court next month. + +The income threshold is high: the Migration Observatory at Oxford University calculates that 41% of British citizens would not meet it. And its reach is uneven: whereas almost three-quarters of men clear it, most women do not. In poor parts of the country, such as the North East, twice as many are ruled out as in the wealthy capital. And in London white people are twice as likely to be able to import a partner as non-whites. So far the new rules are reckoned to have affected up to 15,000 children, many kept apart from a parent. + + + +The government projected in 2012 that 13,600-17,800 people per year would be prevented from coming to Britain as a result of the changes. Though the true figure is unknowable, the number of spousal visas granted fell by nearly one-third following the rule’s introduction (see chart). Those most affected are Pakistanis, who account for almost one-fifth of such visas. + +The government has not trumpeted it, but the new policy has an additional motive. Some believe that the ability to bring in spouses from overseas has put a brake on integration, especially among Pakistanis. About three-quarters of spousal visas are issued to women. David Goodhart of Policy Exchange, a think-tank, says that the constant replenishment of first-generation wives has been a bar to integration with British society. + +Saira Grant of the Joint Council for the Welfare of Immigrants, which is supporting the appellants at the Supreme Court, argues that “integration is not achieved by an artificial financial threshold”. She says there is no evidence that migrant spouses are a burden to the state. Yet studies suggest family migrants do have lower employment rates than the British average, though more than half work after their arrival. + +A quirk of the income threshold is that it does not apply to citizens of other EU countries, meaning they can bring their non-EU spouses to Britain without satisfying any income requirement. Some Britons get around the rules by moving to a European country where they meet up with their spouse and, after living there for a short period, returning together to Britain under the EU’s free-movement laws. + +One of the issues the Supreme Court may examine is whether the foreign spouse’s income might count towards the threshold. At present, some low-earning British expatriates have trouble moving back from abroad with their foreign spouse, even if that partner is a high earner. The court has the power to declare these rules unlawful, though that is unlikely, believes Ms Grant. In the absence of many other ways of reducing immigration, the government will want to cling on to the strict new rules, for better or worse. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21689634-raising-bar-migrant-spouses-has-worked-cost-richer-not-poorer/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Death of a Londoner + +Appeasing Russia’s kleptocrats harms both Britain’s moral integrity and its hard-nosed interests + +Jan 30th 2016 | From the print edition + + + +ON NOVEMBER 1st 2006 Marina Litvinenko cooked a special dinner for her husband, Alexander, to mark the sixth anniversary of their arrival in Britain from Russia (and their first since becoming citizens). In the early hours of November 2nd the spy-turned-dissident started vomiting. In hospital his condition deteriorated: his hair fell out, his skin turned yellow and he threw up parts of his stomach. After 20 days of agony he composed a statement blaming his poisoning on Vladimir Putin. He died of heart failure shortly afterwards. + +Almost a decade later, on January 21st, a judge-led inquiry concluded that two Russian agents had most likely spiked Litvinenko’s tea with polonium-210, a radioactive isotope, at a meeting in London. They were “probably” acting on Mr Putin’s orders. Sir Robert Owen’s report also indicates that the murder was about more than bumping off an enemy. Its particulars—from the use of a slow-working poison to the trail of radiation through London and the decoration awarded to one of the suspects last year—amounted to an ostentatious sneer at the British state. They sent a message to other opponents: don’t think that Moscow’s jurisdiction is limited to Russia’s borders, or its citizenry. + +In a statement following the report’s publication, Theresa May, the home secretary, told MPs that she had suspended both men’s assets. Ministers are now deliberating over further asset freezes, visa refusals and diplomatic expulsions. Naming those affected is “very much on the table”, says one senior source. Others, including Mrs Litvinenko, call for more: a comprehensive travel ban on Mr Putin’s coterie of politicians, spooks and oligarchs; a boycott of Russia’s football World Cup in 2018; a public inquiry into the mysterious death of Alexander Perepilichny, a Russian whistleblower who collapsed near his home in Surrey in 2012. + +If the decision were just about doing right by the Litvinenko family, the government would do the lot. But the wider national interest is a rival consideration. The Foreign Office is cautious about jeopardising relations with the Kremlin on the cusp of Syrian talks in Geneva, whose outcome will affect both the refugee crisis and the threat from Islamic State terrorism, and which may turn on Russia’s influence over its vassal in Damascus. Meanwhile, as of 2014 rich Russians had some £27 billion ($39 billion) invested in London, where they come to bank, shop, educate their children and sue each other. Such interests are well-represented in Conservative circles; at a pre-election fundraising ball Lubov Chernukhin, the wife of Mr Putin’s ex-finance minister, successfully bid £160,000 for a tennis match with David Cameron (in a moment of exuberance the auctioneer threw in the party chairman as a ball boy). + +Politics is politics. The hard truth is that voters put jobs, investment and counter-terrorist co-operation before the welfare of Russian dissidents. So arguments for a self-interested realpolitik have often prevailed. The government has repeatedly rejected calls by MPs for Britain to emulate America’s “Magnitsky Act”, a public travel ban on Moscow officials connected with the violent death in custody of an anti-corruption lawyer. In 2013 Ms May initially refused a public inquiry into the Litvinenko case, citing “international relations”. The Ukraine crisis, it is true, put some lead in Mr Cameron’s pencil—he was relatively hawkish on the matter of sanctions—but even in 2014 an adviser in Downing Street was snapped holding notes fretting about their effect on the City. Today murky, Kremlin-linked money still sloshes through London’s housing, financial and energy markets, all with the connivance of British bankers, lawyers and estate agents (a government report published in October highlighted “significant” gaps in the country’s offensive against money laundering). + +Yet the trade-off between principle and realism is more illusory than the government’s actions or words allow. Take the fight against Islamic State. Russia has an entirely different agenda in Syria from that of Britain—indeed, it has allegedly been aggravating the fallout in Europe by sponsoring hard-right, anti-refugee parties—and its intelligence agencies are not in the habit of sharing information with foreign counterparts. Where they perceive a shared interest (over security at the World Cup, for example) they will co-operate with Britain regardless of the health of the diplomatic relationship. And even if none of this were the case, tip-toeing around Litvineko’s murder would not be the answer; as one minister points out, Mr Putin routinely defies international norms not because he is offended by the West’s assertiveness, but because he thinks it weak. + +London or Londongrad? + +The hard-nosed case for tough sanctions is even stronger when it comes to the economy. London’s status as a leading financial hub is not reliant on Russian dosh, which according to a study in 2014 by Open Europe, a think-tank, represents 0.5% of international investments there. Moreover, a cynical failure to respond adequately to the killing would damage that status, which depends on Britain’s reputation for straight dealing and rule of law. For this reason the proliferation of obscure holdings and stolen money in London so concerns the government that it has launched an anti-corruption drive (including a new company-ownership register), boosted the budget of the Serious Fraud Office and is considering making “failure to prevent economic crime” an offence. + +Whether Britain now does something to dent the Kremlin’s sense of impunity is thus a measure of whether it believes its own schtick. Panjandrums in Westminster are forever asserting that the country’s role as a global entrepôt gives it hard geopolitical influence; that its “soft power” and knack for fair play are among its greatest assets; that trade and the rule of law go hand in hand. How it responds to Sir Robert’s finding—that a thuggish foreign state seemingly murdered a British citizen on the streets of the capital—is a fine test of how much any of this really means. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21689583-appeasing-russias-kleptocrats-harms-both-britains-moral-integrity-and-its-hard-nosed/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +International students: Brains without borders + + + + + +Articles Sections Next + +International students + +Brains without borders + +As Australia and Canada seek to attract more foreign students, America and Britain could lose out + +Jan 30th 2016 | MIAMI | From the print edition + +They have choices, you know + +MONTANA HIRSCHOWITZ remembers exactly when she decided she would seek her higher education abroad: one night when she was ten, and armed robbers broke in and terrorised her family in Johannesburg. Quang Nguyen dates his decision to no particular moment: he simply did not want to spend a big chunk of his classroom time on communist ideology, as is standard in his native Vietnam. Jehanne Aghzadi, from Morocco, had attended American schools all through her childhood; she wanted to continue her studies in English. Joy Lin was looking for a better course than she could find in China, with more social activities on campus and the chance to gain foreign work experience after graduating. + +All four students ended up at the University of Miami in Florida, for reasons that varied as much as those that pushed them to leave home in the first place: good weather, highly regarded courses in subjects they liked, student aid and in one case a scholarship. But beyond the specifics, they are part of a mass trend. More university and college students than ever are studying outside their home countries. Foreigners now make up a sizeable share of students in some countries and courses—a quarter of all those in Australia, for example, and around a million of those on American campuses. + +There are 4.5m international students globally, up from 2m in 2000, and that is expected to swell to 7m-8m by 2025, driven by population and income growth in developing countries where local provision is poor. Some places that have not traditionally hosted many foreign students are trying to grab market share. Japan has a goal of 300,000 foreign students by 2020, 60% more than now; Malaysia, of almost doubling numbers to 250,000 by 2025. + +Foreign study took off in the 1980s, when several rich countries started to offer large numbers of scholarships as part of their aid programmes. Rising incomes in poorer countries added a financial motive. Universities in rich countries are often constrained by their governments in how many locals they can recruit and how much they can charge them. Foreigners, who can be charged more, help pad out budgets and subsidise local students. But not every country lucky enough to have lots of foreign students is doing what is needed to keep them coming. + + + +Today Anglophone countries take the biggest share, since English is quite a useful language to acquire. France is popular with bits of its former empire and pupils from the French-language schools around the world that France’s government subsidises. Germany, which has started to offer postgraduate courses in English and has abolished all tuition fees, even for foreigners, also takes large numbers. + +America leads in absolute terms, with 975,000 foreign students in 2014-15. Its best universities have long attracted the very brightest foreign minds, especially in the sciences, often luring them with generous scholarships. But for its size its performance is less impressive: just 5% of all students on its campuses are from abroad. + +One reason is tighter visa rules imposed after the terrorist attacks of 2001; another is that students must seek special permission to work off-campus while studying, and it is hard to stay and work for long after graduating. Longer-term employment visas are also hard to get, so many students without deep pockets choose to go elsewhere so they can defray some of the cost. And most American institutes refuse to pay education agents—consultants who help youngsters, particularly in Asia, to choose institutions and apply to them. According to i-graduate, a consultancy, agents rank America as the most attractive destination, but are less likely to recommend American institutions, as they mostly work on commission. + +Students usually choose their target country first and then decide which college to apply to. That means national advertising strategies matter, says Mark Reid of the University of Miami. But America has none, leaving individual institutions to promote themselves overseas. Mr Reid and his staff give presentations at international schools and attend trade fairs in around 65 countries each year. This has paid off: the proportion of Miami’s students who are foreign is three times the national average. Latin Americans like living in a Hispanic-majority city. Chinese students became interested in 2009, when Miami broke into the top 50 of the ranking of American universities produced by US News and World Report. + +Higher learning, down under + +Australia, by contrast, has long seen international students—and their fees—as a national priority. Education is the country’s second-biggest export industry, behind only mining, worth A$18 billion ($15 billion) in 2015. A quarter of all its students—and in business and management courses, close to half—are from abroad. At a couple of particularly enterprising institutions, Australian-born students are a minority. + +Australia’s allure faded between 2009 and 2012, partly because of a strong currency but also because racist attacks against Indian students in Melbourne, and the collapse of some poorly run private colleges, tarnished its image overseas. A government crackdown on visa scams and low-quality courses drew attention to uneven provision and slowed visa-processing times for all students, even those applying to elite institutions. As the currency has fallen and visa rules have been relaxed again, applications have rebounded. The tale offers two morals, says David Hetherington of Per Capita, a think-tank in Sydney. First, foreign students need clear visa rules and the right to work while they study. Second, the national brand matters. + +Canada, where universities until recently had few foreign students, has learned from Australia’s experience. About a decade ago its government decided that universities could bolster their finances by admitting more foreign students paying higher fees, and that after graduation those students would be a valuable source of well-qualified young workers. Immigration rules were always quite favourable, says Paul Brennan of Colleges and Institutes Canada, an industry organisation, but until recently there was no clear path from study to work and then permanent residence. Now, if new graduates can find a job they can automatically stay in Canada for up to three years, depending on the length of their courses. That work experience is then taken into account if they apply for permanent residency. + +A collaboration between colleges, universities and Canada’s immigration office has brought down visa-rejection rates for Indian students, a target market. A quarter of all foreign students—and half of those from India and China—end up being granted permanent residence. Recent growth in international-student numbers has largely come in shorter college and polytechnic courses, says Mr Brennan. These are popular with Indians who already have degrees but cannot find work—and with youngsters from unemployment-plagued Italy and Spain. The number of Indian students arriving for such courses rose from 1,200 in 2008 to 14,000 last year. + +Britain, too, sees policy on international students as intertwined with immigration policy, but has taken the opposite tack. Its universities have a cachet among foreigners. Overall, 14% of students on its campuses come from outside the European Union. Another 5% come from other EU countries (under EU rules they are admitted on the same basis as locals, and pay the same fees). In 2013-14 English universities took in £3.3 billion of non-EU student fees, which are not capped by the government, 13% of revenue. Half of those studying full-time for work-focused master’s degrees are from outside the EU, and research by the British Council shows that in some scientific fields, such as electronic engineering and biosciences, the share is over 80%. + +But in recent years this success story has been threatened by a populist pledge made in 2010 by the Conservative Party, then in opposition, to cut net immigration to 100,000 people a year. With many immigrants entering Britain from bits of its former empire under family-reunion laws, and free movement within the EU, most immigration is outside the government’s power to stop. Non-EU students are the main exception. In power the Conservatives have sought to keep them out by tightening visa rules, raising application costs, restricting students’ right to work part-time during their courses and making it far harder to stay after graduation. + +They have choices, you know + +The result is visible in the figures. In 2014-15 the number of new students from outside the EU fell by 3%, even as the number of foreign students worldwide rose strongly. Britain’s three big English-speaking competitors all saw strong growth. Chinese students, who are often leaving to escape the gaokao, China’s vicious university-entrance exam, rather than because they want to earn money in a richer country or emigrate, are still coming. But applications from Indians and Pakistanis, who typically need to work while studying and for a year or two afterwards to afford the fees, have fallen by half. + +Britain is dangerously exposed to a slackening of demand from China, says Will Archer of i-graduate. He also notes that education agents have become less likely to regard Britain as an attractive destination—even though more of its international students rate their education highly, and more say they are satisfied with their experience and would recommend Britain to other students, than anywhere else. + +Learning’s allure + +The quality of education in some countries that have long sent many students abroad is improving. Local hubs such as Singapore and Hong Kong are growing more popular: of Asians who study abroad, the proportion who do so in Asia rose from 36% in 1999 to 42% in 2007. And more students are plumping for “transnational” rather than international study, says Michael Peak of the British Council: mixing and matching local and foreign provision, for example by starting degrees at home and taking just a final year abroad. + +The trend is most evident in executive education, which is less about the chance to work in a rich country and more about gaining international experience, says Andrew Crisp of CarringtonCrisp, an education-marketing firm. A growing share of MBAs and executive master’s courses are now offered by partnerships or groups of institutions, with students expected to spend time in several different locations. Online education, too, could cut demand for pricey overseas study, if not by replacing it then by allowing students to do part of a foreign institution’s courses more cheaply from home. + +English-speaking countries have benefited hugely from international students. Those students have subsidised locals, kept courses in the hard sciences viable, acted as informal ambassadors on their return—and eased skills shortages when they have stayed. Some countries have seized the opportunity; others have taken it for granted. More fool them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21689540-australia-and-canada-seek-attract-more-foreign-students-america-and-britain-could/print + + + + + +Articles Sections Next + + + + + +Business + + + + +Auction houses: House pride + +Art auctions: Going once, going twice, going online + +Toshiba and Sharp: Coming clean? + +Apple: iPhone, therefore I am + +Car-hailing apps in China: More than mobility + +Steelmaking in rich countries: A corrosive climate + +Schumpeter: Flexible figures + + + + + +Articles Sections Next + +Auction houses + +House pride + +The art world is changing faster than Sotheby’s and Christie’s are adapting their business model + +Jan 30th 2016 | From the print edition + + + +BETWEEN them Sotheby’s and Christie’s, the Western world’s two largest auction houses, have been in business for 522 years. They display many of the characteristics of old men: a gouty gait that makes them slow to adapt; and a fixation on ancient rivalries that leads them to butt heads repeatedly rather than focus on reviving their businesses for the rapidly changing world around them. + +Striving to stay on top is hard work. Christie’s, a private company owned by a French luxury-goods billionaire, François Pinault, gives little away. But in a brief overview of its 2015 results, released on January 26th, it admitted that sales were down by 5% compared with 2014, to £4.8 billion ($7.4 billion). “This is a blip,” its deputy chief executive, Stephen Brooks, insists. More worrying was the news that the slump was not just in Old Master paintings, in which buyers have for some time been losing interest. Sales also slipped in the areas that have been the engines of recent growth: watches, wine, even post-war and contemporary art, which has captured the imagination of the global new rich but which fell by 14% in sterling terms and 20% in dollars. + +Four days earlier, Sotheby’s new chief executive, Tad Smith, told analysts in New York that its sales were flat compared with 2014’s, that the firm would post fourth-quarter losses of up to $19m and that it was scrapping its dividend. Sotheby’s shares have fallen by more than half in the past six months. + +In part the weakness of the big two’s sales is because of the world’s wealthy, Russians especially, drawing in their horns. But in part it is because their business model is looking outdated, leaving them vulnerable to sprightlier rivals. + +Although Christie’s clocked up more auction sales than Sotheby’s, $6.5 billion against $6 billion (the rest comes from private sales they broker), the two firms have broadly similar overheads. Each employs between 1,600 and 2,000 people. Between them they hold nearly 750 auctions a year in more than 80 categories—some significantly less profitable than others. Together they run more than 140 offices in 40 countries, and have 22 salerooms. + +Under pressure from activist shareholders who want to see a better return on capital, Sotheby’s has made a high-profile (if costly) effort to reduce its head count by 5% over the past few months. Christie’s, too, has been quietly shedding staff for over a year. But neither feels it can afford to cut back too far for fear of weakening itself compared with the other. + +Expensive promises + +The high cost of protecting this duopoly is most visible in guarantees that the auction houses make to sellers about the price they can expect if they sell their treasures. In deciding where to consign their works, rich collectors play off one auction house against the other to force up the guarantee. Often they also demand a slice of the buyer’s premium (the fee charged to buyers on top of the hammer price) and a reduction in the commission that sellers have to pay, thereby cutting the auctioneer’s margin. + +Sotheby’s has had its manicured fingers burned by a generous guarantee it gave to the heirs of its late chairman, Alfred Taubman, on the sale of his collection. Christie’s says it pushed up its offer to the Taubman family to well over $400m. So as not to lose face, Sotheby’s, which had estimated the collection’s worth at $500m, offered a guarantee of nearly $515m. On the items sold by the end of 2015, Sotheby’s reckons, it was $12m out of pocket including its marketing expenses. + +On January 27th it auctioned off a batch of the Taubman collection’s Old Masters, reducing its overall loss to $9m, though 17 of the 67 lots on offer, including Ligozzi’s “The Abduction of the Sabine Women” (pictured), did not sell. More than 200 other works will be sold in the spring. + +Sotheby’s is not alone in making foolhardy decisions to win or keep business. Last year Christie’s offered a guarantee of about $45m on a silk-screen by Andy Warhol called “Four Marilyns”, from 1962. The offer caused surprise, as the picture had been knocked down at auction, just two years earlier, at $34m. The deal was complicated. The seller was Kemal Has Cingillioglu, a scion of a prominent Turkish banking family who sits on Christie’s European advisory board. He owed the auction house money for a work by Cy Twombly that he had contracted to buy privately. + +The market was less than impressed. The Warhol picture, it judged, was being “flipped”—returned for sale too quickly—and the auction estimate of $40m-60m was viewed as over-optimistic. In the event its hammer price was $32m, resulting in a considerable loss for Christie’s. + +This is not the only source of pressure on the auction houses. In the past decade the contemporary-art world has ballooned, with new fairs, biennials and exhibition spaces opening everywhere. According to a recent report by Clare McAndrew, a respected art-market analyst, $33.1 billion-worth of art and antiques were sold at auction in 2014, half of all sales. An increasing amount is being traded in undisclosed private deals arranged by brokers. + +Information is power + +Time was when the big auction houses had a near-monopoly on information about the art market, which gave them an edge over customers as well as potential rivals. But now buyers, sellers and dealers are much better informed, and the mystique of the auction room has faded. Many collectors regard their contemporary art as an alternative asset class, which has prompted the launch of new businesses offering market data, tax advice and analysis of the investment potential of art. + +Sotheby’s and Christie’s have been trying to grab a larger slice of this pie. Earlier this month Sotheby’s paid $85m for Art Agency Partners (AAP), which was set up less than two years ago by a former Christie’s specialist, Amy Cappellazzo, and two other founders. Left out of the deal was a $125m art-investment fund AAP had set up with seven of its clients. (“It was clear we could have raised much, much more,” says one partner, Adam Chinn.) + +The fund, now the second-largest in the world, has spent only half of the money it had raised, but has already managed to return an impressive $15m to investors. Such funds, like the burgeoning art-advice business, are a promising area that the big two auction houses have been slow to move into. + + + +The two houses realise there is much that they must do to protect their dominance. They need to consolidate their expansion into growing markets in Asia and elsewhere. They must draw new buyers into the art market by first enticing them to buy watches, wine and other luxuries. They need to improve their online-auction platforms, in the face of rising competition (see article). And they must expand their share of the middle market—lots with a value of up to $2m—where there is no need to offer guarantees or discounts to attract sellers, thus making it more profitable than selling more valuable works. Most important, the auction houses must do more to please buyers, expanding what they call “demand-led curation” by creating more imaginative, well-timed sales, and by collating and digitising the information they hold on sellers, to help buyers find what they want. + +If they do not do all this, others will. Phillips, a smaller auction house, may have been founded in 1796 but it has recently showed the ambitions of a startup. Just over 18 months ago its two owners, Leonid Fridlyand and Leonid Strunin, the founders of Mercury Group, a Russian retailer of luxury goods and cars, appointed a former boss of Christie’s, Edward Dolman, to start snapping at the heels of the big two. + +Phillips’s elegant new headquarters, with its carefully curated contemporary-art exhibitions, in Berkeley Square in London, mask a lean operation: two offices and a staff of just 225 compared with seven or eight times as many at each of the other two houses. The focus is on getting the new rich hooked on buying, first, watches and then contemporary art; and on finding out what such clients want and providing it. + +The strategy is working. From a standing start, Phillips sold $80.3m-worth of watches in 2015. Total auction sales, at $523m (mostly of contemporary art), were 34% higher than in 2014. Mr Dolman expects Phillips to reach $1 billion within three years. Although the bosses of Sotheby’s and Christie’s are telling investors that last year’s weak figures were just a temporary setback, the market is changing fast. The big two need to sharpen up. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21689614-art-world-changing-faster-sothebys-and-christies-are-adapting-their-business/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Art auctions + +Going once, going twice, going online + +Online auctions are changing the art market but not yet upending it + +Jan 30th 2016 | NEW YORK | From the print edition + + + +EVERYONE seems to agree that online auctions are important to the art world’s future. In 2013 Daniel Loeb, an activist investor, seethed over Sotheby’s “inability to even develop a coherent plan for an internet-sales strategy, much less implement one.” Sotheby’s has worked to remedy that, for example by joining forces with eBay and holding five online-only auctions last year. Christie’s holds its own online sales. Add a swarm of startups, and there seem to be ever more web auctioneers selling ever more art. But the ways in which online auctions are not changing art sales are as interesting as the ways in which they are. + +Sales of art online reached €3.3 billion ($3.6 billion) in 2014, about 6% of all worldwide sales, according to the European Fine Art Foundation (TEFAF). Sceptics used to predict that collectors would be highly reluctant to buy online because they would want to inspect prospective purchases in person. However, David Goodman, Sotheby’s digital and marketing chief, argues that online sales will keep growing, with buyers “comfortable buying more and more things at more and more price points online”. + +Influential investors agree. Peter Thiel and Jack Dorsey, the respective founders of PayPal and Twitter, are among the backers of a startup called Artsy. It has an extensive online art catalogue and last year it launched a platform for online auctions. Top gallerists such as David Zwirner of New York and Jay Jopling of London are backing Paddle8, another online auctioneer, which says its sales doubled last year. Auctionata, yet another, reports even faster growth. + +The main effect is to open up the cliquish art world. Any collector who has provided credit-card details in advance can bid in an online Sotheby’s or Christie’s sale. Paddle8 boasts that 39% of visitors to its site are aged 18-34. + +Though online auctions can lure new collectors, they are not yet stealing much business from conventional art firms. Indeed, says Sebastian Cwilich of Artsy, his firm wants to join forces with galleries and auction houses, not compete with them. In October, for example, it held an auction with Sotheby’s. Paddle8 seeks to complement Sotheby’s and Christie’s, by offering mainly works valued at $1,000-100,000. The greatest threat is to smaller, local auction houses. But Anders Petterson of ArtTactic, a research firm, argues that even these may be saved, if they adapt to the online age. Barnebys, launched in 2011, aggregates items for auction, helping smaller auction houses reach a wider audience. + +Overall, online firms are doing little so far to disrupt the art market, says Clare McAndrew, who wrote TEFAF’s report. Indeed, some may be making the market even more opaque than before. Paddle8, for example, does not publish final prices after auctions have ended. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21689621-online-auctions-are-changing-art-market-not-yet-upending-it-going-once-going-twice/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Toshiba and Sharp + +Coming clean? + +A reckoning looms for two troubled corporate giants + +Jan 30th 2016 | TOKYO | From the print edition + +Sharp screens, fuzzy future + +FEW tasks are more urgent for Japan than the clean-up of the stricken Fukushima Dai-ichi nuclear plant. Extracting spent fuel-rods from its toxic reactor buildings calls for a new generation of remote-controlled robots. One gadget broke down last spring after just a few hours’ operating amid intense radiation. This month Toshiba, a conglomerate ranging from semiconductors to nuclear engineering, unveiled a scorpion-shaped robot equipped with multiple live-feed cameras that will go into action at the plant next year. + +That is a reminder of how important the company remains at home, where it is a pillar of the engineering establishment. But its financial plight has deepened following an accounting scandal that began early last year and that obliged Toshiba to restate its profits to the tune of ¥152 billion ($1.3 billion). An investigation ordered by the firm concluded that, under the guidance of Atsutoshi Nishida, its boss from 2005 to 2009, employees began doctoring losses into paper profits and continued doing so under two subsequent bosses. + +Its crisis deepened in December, when Toshiba forecast a ¥500 billion loss for the year to March, due to ill-performing businesses and restructuring costs. Its shares promptly fell by one-fifth and Moody’s, a credit-rating agency, downgraded its debt to junk. Its cash flow has collapsed. Analysts worry that its equity could be wiped out if it is obliged to write down goodwill resulting from its acquisition in 2006 of Westinghouse Electric Company, an American nuclear-industry supplier. + +Investors are watching to see if the authorities’ handling of Toshiba’s fall from grace is consistent with Japan’s of-late more shareholder-friendly climate. Last year Shinzo Abe, the prime minister, brought in a corporate-governance code which mandates firms to listen to outside board directors and requires hitherto supine institutional investors to keep a close eye on firms they invest in. This week the overseer of Mr Abe’s reforms, Akira Amari, the economy minister, resigned over bribery allegations, denying any wrongdoing. + +The government’s professed zeal for corporate reform ought to mean that, in dealing with Toshiba, it departs from old-style industrial policies, says Hidemi Moue of Japan Industrial Partners, a private-equity firm which hopes to snap up some of the stricken firm’s businesses. But it will be hard for the Ministry of Economy, Trade and Industry to resist pressure to lend a helping hand to the group and its 200,000 or so employees. Toshiba was allowed to miss several financial-reporting deadlines and remain listed last year as its accounts were being investigated (though its shares remain “on alert”, which could lead to delisting). Lesser firms would surely have faced tougher sanctions. + +In parallel, Mr Abe’s bid to make Japan more open to foreign investment is being tested by an offer from Foxconn, the Taiwanese assembler of Apple’s iPhones, for Sharp, a once-great but now near-bankrupt electronics firm. It emerged that Foxconn had bid more than $5 billion for Sharp (though some details, including whether the offer includes the firm’s vast debts, have yet to be revealed). + +Shareholder advocates fear that, under official pressure, Sharp’s two Japanese creditor banks will spurn Foxconn and sell the firm to a government-backed fund, the Innovation Network Corporation of Japan (INCJ), for a lower price. One reason for this would be bureaucrats’ fears that Sharp’s liquid-crystal display (LCD) know-how could benefit foreign rivals. + + + +After its scandal, Toshiba urgently needs to shore up its balance-sheet ahead of bank loans coming due. It must sell some businesses, from perennially loss-making ones, like the manufacture of televisions, to jewels such as its medical-equipment division. Some of those businesses may attract foreign bids. But Toshiba may also turn to the INCJ, which may buy its electrical-appliances operations, then perhaps seek to meld them with Sharp’s white-goods businesses and those of Hitachi, another conglomerate that has revived itself through disposals. + +The INCJ’s goal is to consolidate industries that have too many competitors and little profit to go round (five Japanese companies, for example, make fridges). Three years ago the fund cobbled together Japan Display out of the small and mid-size LCD-panel divisions of Sony, Toshiba and Hitachi. It is now thriving as a supplier to Apple. This suggests that the INCJ could succeed in overhauling other industries, says Atul Goyal of Jefferies, a stockbroker. + +Even if the INCJ does a good job in rationalising the troubled businesses of Toshiba and Sharp, shareholders may lose out if this means turning down higher offers for them. And some serious worries about Toshiba’s scandal would linger. The firm already obeyed, on paper, the new governance code’s requirements on outside board directors, which suggests that those at other firms may prove just as toothless. + +Toshiba’s auditor, Ernst & Young ShinNihon, has been fined and suspended from taking new audits for three months, but many Japanese businesspeople agree with Toshiba’s description of its profit-padding as merely “inappropriate” accounting, since executives were not out for personal gain. It was fraud, insists Jamie Allen of the Asian Corporate Governance Association in Hong Kong; and those involved should face prosecution, as they would in any other developed market. It is unclear whether they will. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21689622-reckoning-looms-two-troubled-corporate-giants-coming-clean/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Apple + +iPhone, therefore I am + +Among the firm’s biggest difficulties is its past success + +Jan 30th 2016 | SAN FRANCISCO | From the print edition + + + +STEVE JOBS once visited an apple orchard while on a fruitarian diet, and it gave him the idea for the name of the company that he, Steve Wozniak and Ronald Wayne went on to found. Jobs thought the name would make the company seem quirky, approachable and fun. Its popular, highly profitable products have helped make it the world’s most valuable company for nearly five years. However, questions are growing about its shelf life. + +On January 26th Apple announced profits for its most recent quarter of $18.4 billion, more than any listed firm worldwide has yet made in a three-month period. However, the good news was overshadowed by Apple’s warning of a sharp fall in revenues in the current quarter. In the past six months its shares have fallen by over 20%, more than double the decline in the S&P 500 index, on fears that sales of the iPhone, which provides most of the firm’s revenues and profits, have peaked. Is it only a matter of time before Apple (worth around $550 billion) is overtaken by Alphabet, Google’s parent ($500 billion)? + +In its rise to greatness, Apple has repeatedly shrugged off bouts of panic among investors, who have suddenly convinced themselves that its glory days are over. The most recent was three years ago, amid fears of rising competition from other smartphone and tablet makers. But each time Apple has bounced back and gone on to greater highs, the job of topping its most recent achievement has become harder. + +Beating the 231m iPhones that Apple sold in the fiscal year to the end of September will be a formidable task. The smartphone market is ever more saturated. Worldwide sales of phones costing more than $190 will grow by just 3% this year, reckons Strategy Analytics, compared with 64% in 2011. (The average selling price for the iPhone is $691, although carriers usually help subsidise the cost.) + +Meanwhile, the global economy—and China in particular, upon which Apple depends for a growing share of its sales—is looking more fragile. Recently several Asian suppliers have been sharing stark warnings that orders for iPhone parts, such as chips and cameras, are down. Currency fluctuations have made iPhones significantly more expensive in some markets, like Japan and Australia, which could put them out of reach for new buyers. + +Sales of iPhones are likely to decline by around 10% this year, according to analysts. But then what? Loyalty among its users is high; perhaps 90% go on to buy another one. According to an analysis by Sanford C. Bernstein, another research outfit, if such users upgrade to a new iPhone every two years, in 2017 Apple will sell them another 185m, not including sales to new users. The installed base of iPhone owners (and thus users of iTunes and Apple’s other revenue-earning services) could easily grow to 534m in 2017, up by 13% from 2015. + +The iPhone’s future will depend a great deal on how compelling its next incarnation, expected in September, will be. Cheaper versions can also help boost sales. The lower-priced iPhone 5c, which Apple launched in 2013, enhanced the firm’s appeal in China. Tim Bajarin of Creative Strategies, a research firm, thinks that Apple may offer an even more affordable iPhone for the Indian market. There is currently much excitement in India about Apple’s plans to open shops there. But finding suitable locations, and dealing with the red tape involved in opening them, will not be easy. And only a small fraction of India’s population has the means to buy even a cheap iPhone. + +So, Apple is under pressure to produce another hit product. Sales of iPads have wilted, and Apple’s watch, released last year, has not sold as well as optimists had predicted. Its answer to disrupting television, Apple TV, has proved merely a discretional plaything for wealthy consumers who want a slicker interface and do not mind spending more on films and TV episodes à la carte. Apple faces plenty of roadblocks in making a success of its long-rumoured electric car, which it is reportedly hoping to complete by 2020. Recently the head of that project, Steve Zadesky, left. + +As an investment, Apple is surprisingly inexpensive. Its shares trade at about 10.4 times forecast earnings, excluding cash, compared with Alphabet and Facebook, which trade at 21.4 and 33 times respectively. That is because many perceive it as a hardware company—vulnerable, like Hollywood studios, to product hits and flops. Apple is trying to change that image and become perceived more as a services company, with stable recurring revenue. Its services division, which includes its app store and music offering, has huge sales, of around $20 billion a year. That business will only increase as the number of users expands and spends more in the Apple ecosystem. So long as it stays fresh in the eyes of consumers, Apple will be able to prove the sceptics wrong—again. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21689619-among-firms-biggest-difficulties-its-past-success-iphone-therefore-i-am/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Car-hailing apps in China + +More than mobility + +The ambitions of Didi Kuaidi, Uber’s Chinese rival, go far beyond taxi-hailing + +Jan 30th 2016 | SHANGHAI | From the print edition + + + +FOREIGN internet giants often struggle in China. Facebook, Twitter and Google are largely irrelevant on the mainland. Uber, an American car-hailing app that is conquering markets everywhere else, is also finding China hard to crack. But unlike those other tech titans, the taxi disrupter is not being frozen out by unfair Chinese regulations favouring local firms. Uber’s biggest problem is that it has encountered a world-class local upstart. + +Didi Kuaidi was forged last year by the merger of rival taxi-hailing apps controlled by Alibaba and Tencent, two Chinese internet giants. It now dominates China’s online market for personal transport. Last year it arranged 1.4 billion rides in China, more than Uber has done worldwide in its history. It has perhaps two-thirds of the market for private-car rides (the source of most of its revenues) and provides a taxi-hailing service in several hundred cities. Uber, with a third of the market for private-car service, this week announced plans to expand to cover 55 Chinese cities. Both have spent heavily on subsidies to lure drivers to sign up. + +Unlike Uber, which in China focuses on private-car services, Didi lets users select a taxi, private car, shared car, shuttle van or bus to pick them up. During next month’s Chinese New Year mass migration, when millions of travellers will encounter sold-out flights and trains, Didi will help users share intercity rides at prices comparable to train fares. + +It has also forged alliances with, and invested in, Uber’s rivals elsewhere: GrabTaxi in South-East Asia, Ola in India and Lyft in America. Jean Liu, Didi’s president and a former Goldman Sachs dealmaker, helped Didi raise $3 billion to take on Uber. Soon half of the global market will be on her alliance’s technology platform, Ms Liu says, which will help both Chinese people travelling abroad and foreigners visiting China. + +But getting people from A to B is just the start of Didi’s ambitions. It plans to offer a variety of other services that make the most of its huge base of users and the trove of data it holds on them. On January 26th the firm announced an agreement with China Merchants Bank (CMB). A growing number of Didi’s drivers want to buy a new car, and many have a steady income thanks to the app, but often lack formal credit. Didi and CMB will start offering car loans—first to drivers, but in future perhaps to passengers as well. + +Didi’s app already lets passengers book test drives of new cars on behalf of several carmakers, including Mercedes and Audi. Some 1.4m customers have taken one of 92 models for a spin since this service was launched in October. + +Perhaps Didi’s quirkiest new sideline is that of matchmaker. Hitch, its ride-sharing service, will soon allow drivers and passengers to select each other based on their shared interests. It already has a deal with LinkedIn, to let people join up their accounts on the two networks. The intention of such initiatives is that white-collar workers, who often endure daily commutes of an hour or two, will have more fruitful journeys during which business, friendship and maybe even romance will develop. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21689487-companys-ambitions-go-far-beyond-taxi-hailing-didi-kuaidi-dominating-uber-chinas/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Steelmaking in rich countries + +A corrosive climate + +Overcapacity has worsened the woes of an already unprofitable industry + +Jan 30th 2016 | SCUNTHORPE | From the print edition + +Clouds over Scunthorpe’s future + +FOR 151 years blast furnaces in Scunthorpe, a town in northern England, have been churning out pig iron and steel. In spite of rounds of consolidation, in which employment in the industry in Britain has fallen from more than 200,000 in the 1970s to around 24,000 now, Scunthorpe’s rust-streaked steelworks has survived, specialising in producing steel plates, wire rods and rails. + + + +Now, though, a global crisis of overcapacity is putting the rich world’s remaining producers of low-value bulk steels, and even some specialist producers such as Scunthorpe’s, at risk. Over the past year bulk steel prices have fallen by more than half. This week the World Steel Association (WSA), an industry body, said that global production in 2015 had fallen by 2.8% (see chart). It declined in every large country except India—though even its steelmakers are suffering, and pressing the government for tariffs on Chinese imports. US Steel, America’s biggest producer, said this week that it lost $1.5 billion last year. This month it laid off 1,300 workers. British steelworkers have fared even worse: one in six lost their jobs last year, and Tata Steel announced a further 1,050 job cuts this month. + +The collapse in the steel price is mainly the result of falling demand and, until recently, rising production in China, says Edwin Basson of the WSA. Between 2000 and 2014, global production doubled to around 1.6 billion tonnes a year, mainly driven by rising output in China. But as its construction boom came to an end, demand sagged, prompting the country’s state-owned steelmakers to sell their growing surpluses on foreign markets. + +Chinese exports rose from 45m tonnes in 2014 to 97m tonnes last year—an increase significantly bigger than Germany’s entire output of 43m tonnes. This has triggered demands from rival firms for protection from what they see as dumping. + +American producers have been helped by their government’s willingness to impose anti-dumping duties—of as much as 236% on some forms of corrosion-resistant steel. Although the strong dollar has hurt their competitiveness, cheap gas has kept their costs low. In the euro area, although the European Commission has been slower to increase anti-dumping levies, steel mills have benefited from the euro’s depreciation over the past year. But producers in Britain have faced a perfect storm, suffering from Europe’s high energy costs as well as from a strong pound. Hence the severity of their job cuts. + +Some commentators have predicted that, without government assistance, low prices will soon wipe out almost the entire steel industry in high-cost countries such as Britain. Certainly, for simpler, commoditised steels, production in Europe and America is drawing to a close, says Vladimir Sergievskiy, an industry analyst. In Britain, SSI has closed its Redcar plant, which made cheap steel slabs. Tata Steel and ArcelorMittal, two Indian-owned giants which loaded up on debt to buy much of Europe’s slab capacity when steel prices were high, look vulnerable. + +Not all production can be moved to developing countries, claims Gareth Stace at UK Steel, another industry association. Sophisticated steel products, such as the components that Sheffield Forgemasters makes for the nuclear, oil and gas industries, are harder to shift. And some customers who need costly precision-cut or cast steel want a close-by supplier in case they have to return a part for adjustments. Among high-end producers such as Novolipetsk Steel of Russia and Voestalpine of Austria, demand for what they make is rising. For its part, Tata is hoping that there will be sufficient demand for the specialist products made at its Scunthorpe mill to allow it to sell the plant as a going concern. + +There are even signs that the prices of sophisticated steels are bottoming out in Europe. The price of high-grade steel sheeting in Germany may have already stabilised; French and Italian producers attempted to push through price rises this month. The global picture is also likely to improve later this year, says John Kovacs, a commodities economist at Capital Economics, a consulting firm. Some steel mills in China have started to close, including one, in November, that had previously produced 5m tonnes a year. On January 24th, the Chinese authorities announced plans to cut capacity by a further 150m tonnes, although they did not say when. Low prices are also starting to stimulate demand in some places, such as in India’s booming construction industry and in America, where steel stocks are now unusually low. + +Yet even with a trough for prices in sight, a return to profitability in steelmaking will take time. In 2014 EY, another consultant, said that the global industry’s capacity utilisation would need to rise from below 80% to 85% for it to become sustainably profitable. Instead, that figure has now slid to just 65%. For many plants, survival is going to be hard enough; profitability still seems a distant dream. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21689600-overcapacity-has-worsened-woes-already-unprofitable-industry-corrosive-climate/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Flexible figures + +A growing number of companies are using “dynamic” pricing + +Jan 30th 2016 | From the print edition + + + +IF A cynic is someone who knows the price of everything and the value of nothing, as Lord Darlington observes in Oscar Wilde’s “Lady Windermere’s Fan”, then it is getting progressively harder to be a cynic. A growing number of companies keep their prices in a constant state of flux—moving them up or down in response to an ever-shifting multitude of variables. + +Businesses have always offered different prices to different groups of customers. They offer “matinée specials” for afternoon cinema-goers or “happy hours” for early-evening drinkers. They offer steep discounts to students or pensioners. Some put the same product into more than one type of packaging, each marketed to a different income group. + +Dynamic pricing takes all this to a new level—changing prices by the minute and sometimes tailoring them to whatever is known about the income, location and spending history of individual buyers. The practice goes back to the early 1980s when American Airlines began to vary the price of tickets to fight competition from discounters such as People’s Express. It spread to other airlines, and thence to hotels, railways and car-rental firms. But it only became the rage with the arrival of e-commerce. + +The price of goods and services sold online can be varied constantly and effortlessly, in accordance with the numbers and characteristics of those making purchases, and factors such as the weather. Competitors can be monitored constantly, and their prices matched. Amazon updates its price list every ten minutes on average, based on data it is constantly collecting, according to Econsultancy, a research and consulting firm. + +The practice is spreading to physical retailers, which are installing electronic price displays and borrowing pricing models from e-retailers. Kohl’s, with nearly 1,200 stores in America, now holds sales that last for hours rather than days, pinpointing the brief periods when discounts are most needed. Cintra, a Spanish infrastructure firm, has opened several toll roads in Texas that change prices every five minutes, to try to keep traffic moving at more than 50mph (80kph). Sports teams, concert organisers and even zookeepers have embraced dynamic pricing to exploit demand for hot tickets and stimulate appetite for unwanted ones. + +The dynamic-pricing revolution provides plenty of benefits for businesses. Besides helping them smooth demand (which can spare them the cost of maintaining extra capacity for peak times), it makes it easier for them to squeeze more out of richer customers. Travel websites have experimented with steering users of Apple computers—assumed to be better-off than Windows PC users—towards more expensive options. Airlines have been caught charging loyal travellers more for a ticket than infrequent travellers, on the assumption that they are more likely to be on a work trip, so their employer will probably be paying. The technology is far from perfect: ever since buying a coffee machine online your columnist (who is not good at newfangled tasks such as clearing browser cookies) has been inundated with offers for coffee machines, as if the purchase was proof not of a need that had been satisfied but of an insatiable desire. + +Even if the technology becomes more sophisticated, there are two risks for businesses with dynamic pricing. The first is psychological resistance: companies’ reputations can suffer if they offend customers’ sense of fairness. Uber encountered a backlash when it increased its prices eightfold during storms in New York in 2013. Such “surge” pricing makes perfect economic sense: drivers are more likely to go out in hostile conditions if they get paid more; and many customers would prefer a high-priced ride to no ride at all. But these arguments cut little ice when prices run counter to people’s sense of equity. So, in this week’s snowstorms in New York, Uber capped its surge prices for its regular taxis at just 3.5 times the normal fare. + +Psychological resistance can be fierce when companies use data collected from their customers to charge them more. That is why, in 2000, Amazon quickly dropped a scheme to charge some customers more for DVDs based on their personal profiles, and why it has trodden carefully since. Customers are learning to play the game. Some are searching for flights from an internet café instead of their living-rooms, to get lower fares. Others are piling goods into their online baskets and then failing to click “buy”, hoping this will prompt the seller to offer a better deal. + +Price-fixation + +The second risk with dynamic pricing is that it ends in a race to the bottom. Companies that sell online have long been caught up in a war for the top slot on price-comparison sites: even being cheaper by a penny can make all the difference. Physical retailers are being caught in the same logic: those adopting dynamic pricing are mostly doing so to avoid being turned into mere showrooms by customers who inspect the goods but then buy online. The Nebraska Furniture Mart constantly watches what competitors such as Amazon and Best Buy are charging, and updates its in-store electronic displays each morning to meet its guarantee of offering the lowest price. This is obviously good for customers. But getting fixated on prices can distract businesses from seeking ways to make their products and services so attractive that customers will be less fussy about their cost, as the most successful purveyors of luxury items, from Ferraris to Hermès scarves, do. + +The oldest form of dynamic pricing was practised in ancient bazaars, where merchants would size up their customers before the haggling began. Those retailers might not have been able to compute as many different variables as today’s algorithms. But they still have something to teach today’s dynamic pricers about the importance of establishing trust and playing on desire. Cynical as it sounds, to understand a customer’s underlying willingness to part with their money you need to pay a good deal of attention to values. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21689541-growing-number-companies-are-using-dynamic-pricing-flexible-figures/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Natural gas: Step on it + +Buttonwood: The crazy world of credit + +Fintech and insurance: Against the odds + +Corporate tax: A digital dust-up + +Robots v humans: Machine earning + +Big banks: Chop chop + +The economics of corruption: The wages of sin + +Free exchange: The Italian job + + + + + +Articles Sections Next + +Natural gas + +Step on it + +It will take time, but a fragmented market is on the verge of going global + +Jan 30th 2016 | From the print edition + + + +THE Singapore Sling is a cocktail with such a variety of ingredients that few ever taste exactly alike. So it may seem an odd name to apply to a contract to help standardise the global trade in gas. That has not deterred the Singapore Exchange, a market for stocks, bonds and derivatives. Last year, as part of the city-state’s push to become a global trading hub for liquefied natural gas (LNG), it developed the slightly laboured SLInG, a spot-price index for Asian LNG. On January 25th it complemented this with a derivatives contract. There is a long way to go though. As yet the spot market accounts for only about 5% of volumes traded in Asia, executives say. + +Instead, the international gas market is dominated by long-term contracts linked to the price of oil, both for gas delivered via pipeline and as LNG. This is an anomaly that dates back to the 1960s, when European suppliers developing their first gasfields had no price on which to base long-term contracts, so used oil instead. Since then, supply and demand for these commodities have diverged; oil indexation increasingly fails to reflect the disparities. + +Analysts believe that, as a result, the pricing mechanism for natural gas is on the verge of change, and that a real global market will start to emerge, adding Asian trading hubs to those in America and Europe. This should spur the spread of natural gas, the cleanest fossil fuel and one that should be in the vanguard of the battle against global warming. But producers, who fear any change will lead to a drop in prices, are set to resist. They say long-term oil-linked contracts are still needed to offset the risk of their huge investments in LNG. (Gazprom, a Russian producer, has made the same argument in Europe about pipelines.) + + + +Long-term and cyclical shifts explain why the gap between the two fossil fuels has widened. The LNG trade has grown massively in the past decade (see map). Daniel Lunt of the Singapore Exchange says LNG now rivals iron ore as the world’s second-biggest traded commodity, after oil. In the past 40 years natural gas’s share of the energy mix has grown from 16% to more than 21%. Oil’s has shrunk. Gas generates 22% of the world’s electricity; oil only 4%. It might make more sense to tie the price of natural gas to coal, against which it competes as a power source. + +Moreover, during the current decade, the outlook for gas prices has become even more bearish than for oil. Sanford C. Bernstein, a research firm, reckons global LNG supply will increase by about a third over the next three years, pushing overcapacity to about 10%. (There is far less spare capacity in the oil market.) At least $130 billion of this investment in supply is in Australia, which within a few years will overtake Qatar as the world’s largest LNG producer. America will also add to the surplus. Its first, much-delayed LNG exports are due to be shipped from the Gulf Coast in weeks. + +Investment in the liquefaction trains, tankers, regasification terminals and other paraphernalia needed to ship natural gas was boosted by a surge in demand from Asia. Japan and South Korea scrambled for LNG after Japan’s Fukushima disaster in 2011 forced them to shut down nuclear reactors. China saw LNG as a way to diversify its energy sources and curb pollution from coal. Last year, however, those countries, which account for more than half of global LNG consumption, unexpectedly slammed on the brakes. + +The subsequent supply glut means that the spot price of gas in Asia has plunged. Those buyers who took out long-term oil-indexed contracts when crude was much higher are suffering. Mel Ydreos of the International Gas Union, an industry body, says that Chinese firms saddled with such contracts are urging suppliers to renegotiate them. He notes that a Qatari company recently agreed to renegotiate a long-term contract with an Indian buyer, cutting the price by half. + +The drop in Asian prices has brought the cost of natural gas traded in different parts of the world closer to each other. America is an outlier. Thanks to the vast supplies unleashed by the shale revolution, its Henry Hub benchmark is by far the world’s cheapest, at just over $2 per million British thermal units (MBTU). But add liquefaction and transport costs, and American LNG prices rise above $4 per MBTU. In Europe and Asia they are a dollar or two higher. A few years ago the range would have been much wider, from $5 at Henry Hub to $19 in Asia. More homogenous prices are an important step towards a globalised market, says Trevor Sikorski of Energy Aspects, a consultancy. + +But to get there several more hurdles must be overcome. First, traded markets must become deeper, with a mix of piped gas and LNG, to provide more reliable prices. Asia, in particular, lacks infrastructure and international interconnections. Second, derivatives markets are needed to allow producers to hedge against price swings when investing in expensive new capacity. Third, end-users need deregulated energy markets to encourage competition for the best sources of supply. These, too, are scarce in Asia. Japan is only just starting to free its electricity and gas markets. (In the meantime the likely flood of American LNG into Asia may make Henry Hub a useful reference price.) + +The strongest impetus for reform may be the fear of what happens without it. Few expect the overcapacity in oil markets to last much more than a year or two, after which prices of crude may spike. Yet the glut in the LNG market could last into the 2020s, in which case the disparity between spot and oil-indexed prices could balloon and buyers would rebel. + +Other commodities have gone through similar upheavals when spot prices diverged from long-term contracts. The system of “posted prices” for oil fell apart in the 1970s. The spot iron-ore market got a boost as a result of the collapse in demand during the 2008-09 financial crisis. + +Producers and consumers appear to be lining up for battle. On January 27th shareholders of Royal Dutch Shell, an Anglo-Dutch oil major, gave their approval to the $35 billion purchase of BG (formerly British Gas). The deal will create the undisputed world leader in LNG. On the other side, TEPCO and Chubu Electric, two Japanese utilities, have teamed up to create the world’s biggest LNG buyer, to demand better terms from suppliers, including spot contracts. It will be a long, hard fight. But the days of oil-linked contracts seem to be numbered. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21689644-it-will-take-time-fragmented-market-verge-going-global-step/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +The crazy world of credit + +Where negative yields and worries about default coincide + +Jan 30th 2016 | From the print edition + + + +THERE was much talk at Davos, the global elite’s annual get-together in Switzerland, of wealth inequality: the gap between the haves and the have-nots. The corporate-bond market is currently displaying a similar divide—between the have-yields and the yield-nots. + +According to Bank of America Merrill Lynch (BAML), around €65 billion ($71 billion) of European corporate bonds are trading on negative yields; in other words, investors lose money by holding them. Yet the rates paid by issuers of low-quality or junk bonds have been soaring. + +The spread (the interest premium over government borrowing rates) paid by junk-bond issuers has risen by nearly three-and-a-half percentage points since March last year (see chart). The gap is now nearly as great as it was during the euro crisis of 2011, although it is less than half as wide as it was after Lehman Brothers collapsed in 2008. + +Odd though it may seem, these market movements are part of the same trend. As January’s stockmarket wobbles have shown, investors are very nervous and are looking for safety. Certain corporate-bond issuers, such as Nestlé, a Swiss foods group, are perceived to be very safe. Since the yields on Swiss government bonds (even those with a ten-year maturity) are also negative, it is no great surprise that Nestlé bonds fall into the same camp. + +Similarly, investors are willing to accept negative yields on German and Dutch government bonds with maturities of two and five years. Better to suffer a small loss from owning them than risk a big loss by buying a junk bond, which might default. Historically, the average recovery rate on unsecured bonds that default has been just 40 cents on the dollar. Given that risk, investors are demanding a much higher yield from junk bonds. + +The proportion of junk bonds deemed “distressed” (defined as having a yield ten percentage points higher than Treasury bonds) is 29.6%, up from 13.5% a year ago. That is the highest ratio since 2009, according to S&P. Unsurprisingly, given the fall in energy prices, the oil and gas sector accounts for the biggest share of issuers in distress, at 30% of the total. The default rate, at 2.77%, has virtually doubled from the low of 2014 (although it is still below the historical average of 4.3%). + +Matt King, a credit strategist at Citigroup, thinks the reason for the turmoil is the reduced support that central banks are offering financial markets. For several years the Federal Reserve and the Bank of England used quantitative easing (or QE, the creation of money to buy assets) to drive down yields on government bonds and thus encourage investors to buy riskier assets, both equities and corporate bonds. Both have now stopped using QE (although they have yet to sell their piles of acquired assets); the Fed has also raised interest rates. + +Although the European Central Bank and the Bank of Japan are still buying bonds, their efforts are being offset at the global level by sales by emerging-market central banks, including China. Net asset purchases by global central banks dipped last summer (coinciding with another market downturn) and recent data show they have done so again. + +Given this backdrop, investors are sensitive to bad news. The fall in commodity prices and the slowdown in emerging markets are two adverse developments; those sectors were “where the growth was”, as Mr King points out. Corporate-bond investors have also noticed that profit forecasts have been revised lower in recent months in every industry in America. In short, Mr King concludes: “When monetary stimulus’s effect on markets fails to be matched by a corresponding improvement in the real economy, we are inevitably vulnerable to a correction.” + +The big issue for the corporate-bond markets is whether the sell-off is self-perpetuating. According to BAML, investors in high-yield bonds globally have withdrawn $4.9 billion in the past seven weeks, equivalent to 5% of their assets under management. Those withdrawals force fund managers to sell bonds, creating bigger losses for the remaining investors and encouraging more withdrawals. The impact is exacerbated by the poor liquidity of corporate-bond markets. Banks have reduced their market-making activities in the wake of regulations imposed after the financial crisis of 2007-08. + +The sell-off will be stopped if yields rise to a level where long-term investors (pension funds and insurance companies, for example) think the bonds are a bargain. But those investors probably need a dose of good news to persuade them to open their wallets. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21689631-where-negative-yields-and-worries-about-default-coincide-crazy-world-credit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Fintech and insurance + +Against the odds + +Going where few startups have gone before + +Jan 30th 2016 | New York | From the print edition + +The perfect customer + +INVESTORS have poured billions of dollars into “fintech” startups, creating hundreds of new firms determined to shake up lending, payments, broking and data, among other financial niches. Insurance, however, has not yet been subject to the same melee. That may be changing. + +Insurance is tricky to break into, for two reasons. The most important is regulation. Health insurance—or its American version, at least—may be the most heavily regulated industry in the world. Before a company can even offer a policy, it must have multiple approvals from state and often city agencies and then negotiate agreements with local hospitals. + +Running the gauntlet of these regulations is a costly and time-consuming process. A company that set up shop today could not issue any policies before 2018 at the very earliest, says Mario Schlosser, chief executive of Oscar, a company founded in 2012 to provide health insurance to individuals online. It has attracted attention not least because it has managed to secure all the necessary paperwork. + +The second obstacle is capital. Fintech firms typically receive backing from venture capitalists to pay for salaries, systems, bright and airy offices and an eternal smorgasbord for employees, but not to support a big balance-sheet. Many tend to structure their operations to avoid holding risky assets for any length of time, acting more as intermediaries between creditors and borrowers, investors and investments, or the sender of some money and the recipient. + +This sort of arrangement does not work as well for insurance. Unless a firm serves purely as a broker, it will end up carrying some risk, and the weighty capital requirements that come with it. What is more, customers will not take out policies unless they are confident that the issuer will be around to honour them when a claim is made. But a startup, by definition, does not have the record or reputation that would help bolster that confidence. + +Lemonade, an American startup, plans to offer insurance via a peer-to-peer platform—in effect, acting as a middleman. Others, such as Guevara in Britain and Friendsurance in Germany, try to get groups of friends to pool risks, on the assumption that they know better than the actuaries how accident-prone their nearest and dearest are. This also helps get around the problem of confidence. + +Metromile, a startup car insurer based in San Francisco, takes a different tack. Its policies are underwritten by another insurer, National General, which was spun out of GM after the carmaker’s near-collapse during the financial crisis. For now, that allows it to hone its technology and increase its customer base. But in time retained earnings, reinsurance and debt could enable it to retain more risk, as more mature insurance firms do. + +Like many insurers, Metromile seeks to cherry-pick the least risky customers. For car insurance, that involves working out which are least likely to have an accident. Several big insurance companies, most notably Progressive in America and Aviva in Britain, have begun to use tracking devices or voluntary apps on cars to monitor how safely their customers drive. How fast they go and how hard they brake are just a couple of the factors that can be used to sort the cautious from the reckless. + +Metromile, in contrast, tracks mileage. Customers pay a fee of $45-50 a month and then $0.05 to $0.06 cents a mile. There is a clear correlation, Metromile contends, between miles driven and the likelihood of an accident. It reckons there are 75m vehicles in America that are driven only rarely, but insured at a cost of $73 billion a year. Offering a metered option may not only save their owners some money, but also go some way to disproving the view that insurance and fintech do not mix. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21689641-going-where-few-startups-have-gone-against-odds/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Corporate tax + +A digital dust-up + +The fight against tax avoidance advances, in fits and starts + +Jan 30th 2016 | From the print edition + + + +FEW subjects are as bloodless as the ins and outs of corporate tax—until they provide an opportunity to accuse a politician of coddling big business. George Osborne, the chancellor of the exchequer (Britain’s finance minister), got his critics’ blood up this week by hailing as a “major success” a deal in which Google agreed to cough up £130m ($185m) in back payments for 2005-15, in addition to the roughly £120m it had already paid. Almost everyone else, including bigwigs from his own Conservative Party, was scathing. + +Tax authorities, particularly in Europe, have been stepping up efforts to claw back lost tax amid growing public anger over companies’ energetic tax avoidance. The main targets are technology giants, which have become masters at cutting their tax bills by shuffling intellectual property and profits to tax havens. In addition, governments around the world are implementing a raft of anti-avoidance measures proposed last year by the OECD. But as the Google kerfuffle shows, trying to look tough can backfire. + +A ten-year bill of £250m looks light for a company whose revenue from British advertisers was $6.5 billion in 2014 alone. There may be a good explanation, but if so the taxman has not made it public. Google’s announcement that from now on it will be taxed differently, on a portion of its local advertising revenues, has done little to quell the uproar. This week a parliamentary committee announced an inquiry into corporate taxation, which, its chairman lamented, had become “a piece of elastic”. + +Google won’t be the last firm targeted. Facebook is said to be resisting efforts to recoup back tax from 2010-14. The social-media firm paid just £4,000 in British corporation tax in 2014. The companies argue that they comply with all relevant laws. Maybe so, but only because the laws have failed to keep up with the globalisation of business. The mishmash of national laws and bilateral treaties covering corporate taxation dates back to when manufacturers ruled. + +One question hanging over hard-to-tether digital groups is whether they should be forced to register a “permanent establishment”, tax parlance for a taxable presence, in countries where they make sales. Mr Osborne may not really be up for the fight. He talks tough and has introduced a “diverted-profits” tax, aimed at the most egregious offshore schemes. But Britain remains one of Europe’s most alluring countries in tax terms, offering numerous benefits to multinationals that others view as beggar-thy-neighbour policies. + +The European Commission is trying to get EU members to pull together. It rolled out its latest anti-avoidance proposals this week. These include limits on the use of brass-plate subsidiaries and on tax deductions linked to intra-group loans, an esoteric but lucrative ruse. EU countries have already agreed to be more open about their tax rulings, which in the past often gave large companies an easy ride. The new proposals would be binding, but they have been watered down to increase their chances of becoming law. (EU tax measures require unanimous approval.) + +The commission will unveil more proposals later this year, including a “common consolidated corporate tax base”, which would offer a single set of rules that multinationals could use to calculate their taxable profits in the EU. More investigations into iffy tax arrangements are likely, too. Having already targeted several of these (see chart), the commission plans to scrutinise another 300 tax rulings. + +Governments in low-tax countries are responding to this assault. Luxembourg is moving towards ditching some multinational-friendly exemptions, while lowering its headline corporate-tax rate. Ireland is banning the notorious “Double Irish”, a structure that has helped Google and others shave billions off their tax bills. + +How all these national and regional efforts will fit in with the OECD’s global initiative remains to be seen. In the meantime the triumphant Mr Osborne has been invited to appear before a committee of the European Parliament to discuss how, as its vice-chairman put it, Britain is becoming “a kind of tax haven”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21689643-fight-against-tax-avoidance-advances-fits-and-starts-digital-dust-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Robots v humans + +Machine earning + +Jobs in poor countries may be especially vulnerable to automation + +Jan 30th 2016 | From the print edition + +BILL BURR, an American entertainer, was dismayed when he first came across an automated checkout. “I thought I was a comedian; evidently I also work in a grocery store,” he complained. “I can’t believe I forgot my apron.” Those whose jobs are at risk of being displaced by machines are no less grumpy. A study published in 2013 by Carl Benedikt Frey and Michael Osborne of Oxford University stoked anxieties when it found that 47% of jobs in America were vulnerable to automation. Machines are mastering ever more intricate tasks, such as translating texts or diagnosing illnesses. Robots are also becoming capable of manual labour that hitherto could be carried out only by dexterous humans. + +They’re everywhere + +Yet America is the high ground when it comes to automation, according to a new report* from the same pair along with other authors. The proportion of threatened jobs is much greater in poorer countries: 69% in India, 77% in China and as high as 85% in Ethiopia. There are two reasons. First, jobs in such places are generally less skilled. Second, there is less capital tied up in old ways of doing things. Driverless taxis might take off more quickly in a new city in China, for instance, than in an old one in Europe. + +Attracting investment in labour-intensive manufacturing has been a route to riches for many developing countries, including China. But having a surplus of cheap labour is becoming less of a lure to manufacturers. An investment in industrial robots can be repaid in less than two years. This is a particular worry for the poor and underemployed in Africa and India, where industrialisation has stalled at low levels of income—a phenomenon dubbed “premature deindustrialisation” by Dani Rodrik of Harvard University. + +Rich countries have more of the sorts of jobs that are harder for machines to replicate—those that require original ideas (creating advertising), or complex social interactions (arguing a case in court), or a blend of analysis and dexterity (open-heart surgery). But poorer countries are not powerless. Just because a job is deemed at risk from automation, it does not necessarily mean it will be replaced soon, notes Mr Frey. + +The cheapness of labour in relation to capital affects the rate of automation. Passing laws that make it less costly to hire and fire workers is likely to slow its advance. Scale also matters: farms in many poor countries are often too small to benefit from machines that have been around for decades. Consumer preferences are a third barrier. Mr Burr is hardly alone in hating automated checkouts, which explains why 3m cashiers are still employed in America. + +* “Technology At Work v2.0: The Future is Not What It Used to Be”, by the Oxford Martin School and Citigroup + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21689635-jobs-poor-countries-may-be-especially-vulnerable-automation-machine-earning/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Big banks + +Chop chop + +Why haven’t banking giants got a lot smaller? + +Jan 30th 2016 | From the print edition + + + +BOSSES at big banks would once have cringed at releasing the kind of results they have been serving up to investors in recent days. This week, for instance, Deutsche Bank posted a loss of €6.8 billion ($7.4 billion) for 2015. In the third quarter of last year the average return on equity at the biggest banks, those with more than $1 trillion in assets, was a wan 7.9%—far below the returns of 15-20% they were earning before the financial crisis. Exclude Chinese banks from the list, and the figure drops to a miserable 5.7%. Returns have been languishing at that level for several years. + +In response, the banks’ top brass are following a similar template: retreats from certain countries or business lines, along with a stiff dose of job cuts. Barclays, which earlier this month said it would eliminate 1,000 jobs at its investment bank and shut up shop altogether in Asia, is typical. More radical measures, such as breaking up their firms into smaller, more focused and less heavily regulated units, do not seem to be on the cards. + +In fact, in spite of investors’ frustration at dismal returns and regulators’ insistence that banks that are “too big to fail” will be cut down to size, the world’s mightiest banks have scarcely shrunk at all since Lehman Brothers collapsed. The 11 behemoths considered the most pivotal by the Financial Stability Board (FSB), a global grouping of regulators, had $22 trillion in assets at the end of 2008; they now have $20 trillion. The assets of the wider group of 30 institutions the FSB describes as “global, systemically important banks” have grown, not shrunk, in recent years. + +On the face of it, this is a puzzle. To forestall future crises, regulators have piled on new rules intended explicitly to make life harder for the banks that are thought to present the greatest risks to the stability of the global financial system. All banks must meet higher capital ratios these days, funding a greater share of their activities with money put up by shareholders rather than by borrowing. This crimps returns but ensures a stouter buffer if they run into trouble. But the extra capital requirements are especially severe for the biggest banks. + +Whereas a smaller bank might be required to hold capital equivalent to 7% of its risk-weighted assets, HSBC and JPMorgan Chase, the two institutions the FSB judges to be most systemic, have to hold 2.5 percentage points more. American regulators have imposed a further surcharge on JPMorgan Chase which will push its minimum ratio to 11.5% by 2019. The intention is not just to make sure that big banks are safer, given the expense of bailing them out, but to discourage banks from getting too big in the first place. + +Other bits of regulation also hamper big banks in particular. America has banned “proprietary trading” (a bank making investments with its own money, rather than on behalf of clients); Britain is “ring-fencing” the retail units of big banks to protect their assets in case of disaster in other parts of the business. And whereas regulators used not to make much fuss if the subsidiary of a multinational bank in their country was not brimming with capital, as long as the bank as a whole was, most now require local units to be able to withstand shocks on their own. These rules have little impact on smaller banks, which tend not to sprawl across so many countries or to combine retail and investment banking. + +By the same token, small banks have not been fined quite so heavily by prosecutors in America and elsewhere. The penalties—some $260 billion and counting for big American and European banks—have fallen mainly on commercial and investment bankers who have fiddled markets. Some banks have regulatory staff sitting in on most meetings, even at board level. “For every maker there are four checkers these days,” grumbles one investment banker. + +Such changes have had some impact. Although the 11 banks that most perturb the FSB have not really shrunk, they have at least stopped growing. There has been a marked change since the pre-crisis period. In 1990 the world’s ten biggest banks had just $3.6 trillion of assets ($6.6 trillion in today’s prices)—equivalent to 16% of global GDP. By 2008 they had assets of $25 trillion (40% of global GDP). They now have assets of $26 trillion, or 35% of global GDP. + +The geographical spread of the two “global” banks, HSBC and Citi, has shrunk markedly as they have left many countries. Many investment banks, particularly in Europe, have retrenched to areas of particular strength: UBS has largely abandoned the trading of bonds, currencies and commodities, for example. In general, banks are shifting away from risky and so capital-intensive activities, such as trading financial instruments, towards safer areas such as helping firms raise capital and managing the money of wealthy investors. + +Some of the titans have been more radical. Once the largest bank in the world by assets, Royal Bank of Scotland (RBS) has shrunk by more than half under its new majority owner, the British government. General Electric, once a bank-within-a-firm, shed most of its financial assets over the course of the past year. Credit Suisse is mulling spinning off its domestic retail bank; Deutsche Bank is selling Postbank, a big retail-banking unit in Germany. + +Yet big banks could still go much further. Many of them currently trade below book value, suggesting that they would be more valuable broken up. Richard Ramsden, an analyst at Goldman Sachs, suggested last year that JPMorgan Chase should be split into four units. MetLife, a big American insurer, is splitting itself up in part to reduce its capital requirements and thus boost profits. There is a “gravitational pull” towards being smaller, says the boss of one bank high up the FSB’s list. Competing with non-systemic banks, which have a lower capital ratio, is hard. “If you have a unit competing head-on against a bank that isn’t [systemically important]…that unit is worth more outside than inside.” + +Jamie Dimon, JPMorgan Chase’s boss, claims that having all its units under one roof brings $18 billion a year in synergies. Such claims are basically unverifiable, but researchers have long struggled to find much in the way of economies of scale in finance. Costs tend to rise roughly at the same clip as revenues. Some studies posit that savings peter out above $50 billion in assets—a tiny fraction of the trillions held by really big banks. Others see benefits continuing further up the scale, though these are relatively small. But heft could also carry costs. The creaking IT systems of big banks, some of which run code adapted from the 1950s, certainly suggest that. Smaller banks, let alone “fintech” upstarts, can adapt faster. + +Big banks can borrow more cheaply than smaller ones. In part, that is because they are typically more diversified than smaller banks. But investors have also lent more cheaply to big banks on the assumption that they will get bailed out in case of trouble. New rules should make it easier to force banks’ creditors, rather than taxpayers, to foot the bill if a bank fails. This has undoubtedly shrunk the subsidy—but not eliminated it. An IMF study from 2014, for instance, found that it still amounted to a discount of a quarter of a percentage point on their borrowing in quiet times, and potentially more during times of crisis. + + + +Even so, there is no correlation between size and returns. The most profitable banks appear to be the middling ones, with assets of between $50 billion and $1 trillion. Bigger and smaller ones are markedly less profitable (see chart). + +So if regulators want them to shrink and decent returns are hard to come by, what is holding the big banks together? The risks and costs of breaking up a large bank are one consideration in favour of the status quo. As the boss of another systemic bank puts it: “Breaking up would be a gamble, and we are not paid to gamble.” Byzantine behind-the-scenes plumbing would prove a nightmare to disentangle. That gives regulators pause as well as bankers. + +In all industries, not just banking, few bosses enjoy the prospect of slimming the empires they have built. Banks are both very complex and highly regulated: that puts off activist shareholders. Bondholders, who put up much of the money big banks use to buy assets, may also be reluctant, having contracted a debt against a diversified set of banking businesses rather than just one fragment of it. Tax can be a factor: banks that made large losses in the downturn can still write them off against today’s profits, in a way that might be compromised by a break-up. This argument once blunted calls for Citi to be dismembered. The clearing mechanisms that exist in other markets are jammed in banking: small banks are put off making big acquisitions by capital charges. + + + +All the same, shareholders are growing impatient. Bosses seen as too timid are being sent packing. Anshu Jain, who built up Deutsche Bank’s investment bank over 20 years, was removed as co-chief executive in June after moving too slowly to overhaul his creation. His successor, John Cryan, an avowed cost-cutter, has warned staff of the need for “a fair balance between staff and shareholder interests”. That means less for staff and more for shareholders, reversing a decades-long trend (see chart 2). The big banks may not have changed shape radically since the crisis. But that doesn’t mean life is fun. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21689636-why-havent-banking-giants-got-lot-smaller-chop-chop/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The economics of corruption + +The wages of sin + +In theory, higher pay cuts corruption. In practice, the opposite happens + +Jan 30th 2016 | From the print edition + +WHETHER the miscreants are African policemen, European politicians or American university basketball players, the same remedy for corrupt behaviour is offered: pay people more money. It sounds intuitive. But does legitimate lucre really drive out the filthy kind? New research involving a natural experiment in West Africa suggests that it does not—and that conventional economic theories of corruption are wrong. + +In 2010 Ghana began to move public officials to a new salary structure. The earliest and biggest beneficiaries were police officers, whose pay abruptly doubled. It was hoped that they would start behaving better as a result—and especially that they would stop extorting money from drivers at roadblocks. There was certainly much room for improvement: surveys around that time by Transparency International, a watchdog, found that 91% of Ghanaians believed their police were corrupt, an even higher proportion than thought the same of politicians. + +As it happened, a large survey was already under way of lorry drivers plying the roads of Ghana and its neighbour, Burkina Faso. Drivers with their papers in order were asked to record how many times they were stopped and how much money they paid to police and customs officials along the route. + +Two American economists, Jeremy Foltz and Kweku Opoku-Agyemang, have examined the data on 2,100 long-haul journeys. Oddly, they find that Ghana’s police became more corrupt after their salaries increased, both absolutely and relative to Burkina Faso’s police and Ghanaian customs officers. The cops erected more roadblocks, detained lorries for longer (the average driver was stopped 16 times as he drove through Ghana, for eight minutes each time) and extracted more money. + +Economic theory suggests the opposite should have happened, for two reasons. First, corruption is risky. You might lose your job if you do it, and the more you are paid, the bigger that loss would be. Second, officials are thought to have an income target. If they are underpaid, they will behave corruptly in order to make up the difference. The fact that some British MPs cheated on their expenses a decade ago was put down to the fact that they earned less than similarly qualified people. Ghana’s president, John Mahama, said last year that there was “no justification” for corruption now that salaries were higher. + +Employees in the rich world who suddenly receive more money per hour—when their taxes are cut, for example—tend not to work less, as they might do if they had a fixed income target in mind. They work more. But given that the rewards from corruption had not gone up, this does not explain why Ghanaian police officers engaged in more graft. Mr Foltz and Mr Opoku-Agyemang, whose research was funded by the International Growth Centre at the London School of Economics, suggest that corrupt superiors or greedy relatives might have demanded more money from the officers. Another possibility is that the cops’ expectations went up. The pay rise may have boosted their sense of their own worth, leading them to demand more money. + +It might be that the risk of being caught in Ghana is so low that normal calculations of risk and reward do not apply. Perhaps a combination of higher pay, political leadership and stiff punishments would have stopped corruption: it did in Singapore, for example. But money alone is not enough. In Ghana, some are astonished that anybody could have believed that higher pay would have made cops less greedy. That is just not human nature. As Ransford Van Gyampo, a political scientist at the University of Ghana, puts it: “In spite of how big the sea is, it still receives rain.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21689642-theory-higher-pay-cuts-corruption-practice-opposite-happens-wages/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +The Italian job + +Reviving Italy’s economy will require sacrifices not just from Italians, but also from Europe + +Jan 30th 2016 | Rome | From the print edition + + + +TO LOSE Greece or Portugal may be regarded as a misfortune; to lose Italy looks like carelessness. It is hard to imagine the single currency surviving a showdown with Italy, the currency club’s third-biggest economy (and the world’s eighth-biggest, just ahead of Brazil). Perhaps that explains the recent pugnacity of Matteo Renzi, Italy’s prime minister, regarding European fiscal rules. In an article published in the Guardian newspaper in mid-January, he sounded positively Greek, complaining that the European Union’s “fixation on austerity is actually destroying growth”. His finance minister, Pier Carlo Padoan, has been tangling with the European Commission over how to deal with the €350 billion ($382 billion) of bad loans clogging up the Italian banking system. Mr Renzi is demanding the Eurocrats’ forbearance as he tries to restart Italy’s long-stalled economy. + +Italy’s experience within the euro zone has been miserable. It has been in recession for five of the past eight years. Real (ie, adjusted for inflation) GDP per person is lower than in 1999. Sovereign debt has risen above 130% of GDP. Worse, Italy’s economy is woefully uncompetitive. Since 1998 productivity has fallen steadily. Labour costs, however, have not (see chart). Since Italy joined the euro, exports have ceased to be a driver of growth, which has consequently slowed. A slowdown is not something a country with such daunting debts can afford. + +Mr Renzi came into office at a propitious moment, in early 2014. The tight fiscal and monetary policy that had contributed to the euro zone’s poor performance in the years after the financial crisis was becoming less of a drag. Soon afterwards the ECB began to use quantitative easing to pep up domestic demand, with salutary effects on Italian interest rates. + +But the problem of competitiveness remains. There is no shortage of explanations for Italy’s slump in productivity. Thanks to punitive regulation of labour and product markets, it is one of the most expensive places in the rich world to start a new business. Taxes and red tape strongly discourage productive firms from growing very large. Nearly 70% of Italian workers labour in firms with fewer than 50 employees, compared with about a third in America. The government taxes income from labour far more heavily than consumption, discouraging work (and encouraging evasion). Perhaps most worrying, the share of young Italian workers with a university degree is among the lowest in the rich world. At just under 10%, the share of highly educated Italians living abroad is also among the highest in the rich world. + +The slowdown in productivity occurred just as Italy joined the single currency. Some economists see this as coincidental. The euro was born just as the global economy was undergoing a rapid bout of globalisation. Italy’s small firms did not scale up to capitalise on emerging-market demand, as Germany’s did. By the same token, its under-skilled population could not take advantage of the rising return to trade in professional services, as firms in America and Britain did. + +But such problems were predictable. Whereas many euro-area governments prepared for a world in which they could not depreciate by adopting structural reforms, Italy was a laggard. Once the euro was in place, Italian wages rose as capital flowed in from northern Europe. Exporters grew ever less competitive, and workers and capital shifted from manufacturing to services, where productivity was even lower. + +Rome is where the Hartz is + +Mr Renzi wants to alter this dynamic. He has in mind something truly ambitious—an overhaul of the labour market not unlike Germany’s sweeping Hartz reforms, which are often credited with the rejuvenation of its economy a decade ago. He has taken steps in this direction—adopting rules to make it easier to sack workers, for instance. But even Mr Renzi’s advisers acknowledge that progress has been frustratingly slow. + +The IMF reckons that Italy’s economy will manage growth of just over 1% a year over the next three years. A recent analysis by economists at the European Commission found that a truly ambitious reform plan could boost GDP substantially—by nearly 24% relative to their baseline forecast. But that gain would materialise over the course of half a century, with very little of the benefit coming during the first decade. + +Rather than waiting for productivity to rise, a quicker route to faster growth is to drive down wages. The Hartz reforms succeeded in part because they prompted a decline in real wages in Germany. Real GDP per person has soared in Germany since the introduction of the euro, but workers’ pay has not. Reforms that decentralised collective bargaining in Italy, and that therefore helped to contain wages in less productive regions and firms, would be a step in the right direction, reckons Pietro Reichlin of LUISS, a university in Rome. Indeed, Mr Renzi’s advisers suggest that the government may seek to impose a decentralised wage-setting process if negotiations between trade unions and industry do not yield one. + +Yet even the benefits of wage restraint could be disappointing. Germany’s competitiveness drive occurred during an era of relatively strong global growth and relatively buoyant inflation, which made the suppression of real wages both less painful and less noticeable. Italy will enjoy no such help. Any growth scheme that rests on falling wages is unlikely to endear Italians to Mr Renzi. For his reforms to work, he will need time that voters are unlikely to grant him. Keeping Italy happy enough to stay in the euro zone will, in the short term, take much faster growth across the euro area as a whole, fostered by continued dovishness from the ECB and less finickiness from the European Commission. The deal that Mr Padoan and the commission struck this week to allow a state guarantee for sales of Italian banks’ bad debts is a step in the right direction. If the euro area is to keep Italy on board, it will need to become a bit less austere and a bit more Italian. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21689630-reviving-italys-economy-will-require-sacrifices-not-just-italians-also/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Touchscreens: The moving finger moves on + +Artificial intelligence: Computer says Go + +Winemaking: The perfect pinot problem + +Schizophrenia: Brain gains + +Controlling miniature satellites: Cubism + + + + + +Articles Sections Next + +Touchscreens + +The moving finger moves on + +Researchers find new ways to make touchscreens more responsive + +Jan 30th 2016 | From the print edition + + + +THE only way to operate an increasing number of modern devices, from smartphones to cash machines and cars, is the deft use of a finger on a touchscreen, with a tap for this and a swipe for that. But sometimes such actions do not work all that well. It is easy to miss the required key on a tiny virtual keyboard and produce splling eworrs. Sometimes the screen fails to respond at all. And it can be downright dangerous to take your eyes off the road to flip through myriad air-conditioning options on a vehicle’s control panel. Now help, as it were, is at hand. As touchscreens become ubiquitous on devices, new ways to make and use them are emerging. + +Robert Bosch, a German producer of car parts, among other things, recently displayed a touchscreen with “haptic feedback”. Visual effects, sounds and vibrations are already used with touchscreens to confirm when icons or keys are selected. What the Bosch system does is to add different surface textures to the mix. + +The textures on the screen can be rough, smooth or patterned in various ways to represent the location of different buttons with different uses. The idea is that a driver would be able to feel for the right button without having to look at the screen. To avoid accidentally activating buttons as he feels his way across the screen, the driver needs to press a particular surface more firmly to turn the required function on or off, much like pushing on a mechanical switch. By applying variable pressure, a user can scroll faster or slower through, say, different music tracks or radio stations. + +Because neoSense, as Bosch calls the system, is still under development the company will not say how it works other than that it uses a conventional touch sensor coupled with a sensor that measures the amount of pressure from fingers. That gives little away. Bosch is probably doing something similar to other groups working on such systems: placing under the screen a thin device that generates specially tuned vibrations in the area of the virtual buttons. The pattern of these vibrations would create textured effects that could be felt by the user’s fingers as if they were physical elements on the screen. + +All charged up + +Although research into touchscreens dates back to the 1960s, they did not appear on consumer gadgets until the 1980s. Many of these early screens were the “resistive” type, which in its simplest form relies on a finger pushing against a ductile screen to press two underlying conductive sheets together to complete an electric circuit. The point of contact is measured to provide the co-ordinates of the finger. + +Resistive screens are cheap to make and tough: lots are still used in restaurants to take orders and in factories to control machines. But many devices, particularly smartphones and tablets, now use a system that relies on capacitance. (Capacitance is a measure of an object’s capacity to store an electric charge. The charge builds up if there is no circuit through which the electrons can flow and is dissipated when a circuit is completed—in extreme cases as a jolt when static electricity builds up in the body and is discharged when touching something metallic.) + +There are a number of ways in which capacitive touchscreens can be made. The current favourite uses a grid of tiny wires made from a transparent, conducting material, usually indium tin oxide, just below the surface of the screen. When a finger touches the screen, or is very close to it, an electrostatic field created in the grid is disturbed by a small change in capacitance at the point at which the charge transfers to the finger. The software in a chip which controls the screen detects the position of the change in capacitance and uses it to determine the finger’s location. Capacitive touchscreens are smooth to operate and require only a light touch. They also allow the use of more than one finger, making “pinch and zoom” movements possible. + +Most research now is going into improving capacitive devices and integrating the conducting layers into the screen to make thinner displays, says Jeff Han, a pioneer of multi-touch systems. His company, Perceptive Pixel, developed giant touchscreens used by some news organisations for election coverage and was sold to Microsoft in 2012. Mr Han says users should expect to see more ways to use fingers and gestures to operate touchscreens, along with additional haptic effects. + +More capacitive screens will become pressure-sensitive. Apple’s latest iPhone 6s responds to finger pressure with a process the company calls 3D Touch. The phone has another sensor below the screen which can detect a minute deformation in the glass when a finger is pushed against it. This allows additional actions by the user, such as pressing to preview a message or e-mail before opening it. Apple has also added haptic effects with something it calls a “taptic engine”, in effect a refined tiny vibrator which provides subtle taps in response to certain finger movements. + +To boost the responsiveness of touchscreens, alternatives to indium tin oxide are starting to be used. Although the material is transparent it is only moderately conductive, which can restrict just how responsive a screen is to touch. Metals, particularly gold and silver, are much better conductors, but not being transparent, they can interfere with the displayed image unless deposited in minute quantities—which reduces conductivity. One way around that problem has been developed by Dimos Poulikakos and his colleagues at ETH Zurich, a Swiss technical university. This involves building gold and silver capacitive grids as “nanowalls”, just 80-500 nanometres (billionths of a metre) wide. As the walls are perpendicular to the screen and two to four times taller than their width, the grid is highly conductive but almost invisible. + +Printing walls + +Dr Poulikakos’s nanowalls are made with a new form of 3D printing. The process begins with gold or silver nanoparticles suspended in a solvent. This “ink” is drawn out of a tiny glass capillary tube by an electric field to form a drop which remains hanging onto the tip of the tube. By carefully balancing the composition of the ink and the electric field, the researchers have been able to get an even smaller droplet to form at the base of the attached drop. It is these secondary droplets which are used to print the nano walls. + +Using nanoparticles means the cost of printing grids with precious metals, such as gold or silver, is not a concern, says Dr Poulikakos. Indeed, he reckons the “nanodrip” process would be a lot cheaper than current methods used to produce capacitive grids for touchscreens as these rely on costly clean rooms and vapour-deposition equipment, similar to that used to make computer chips. Nanodrip is now being scaled up for commercial use by a spin-off company called Scrona. + +Other conductive materials that might be used to build touchscreens include graphene, a lattice of carbon atoms which, being only one atom thick, is essentially transparent. Researchers at the University of Manchester in Britain, where graphene was discovered, reckon the material can be used to make touchscreens which are flexible enough to roll up like a newspaper. This is because, unlike indium tin oxide, graphene is not brittle. + +It will also become possible to operate touchscreens without actually touching them. Samsung has already employed tiny infra-red sensors just above the screen on some of its phones to detect hand gestures. Google is developing a miniature radar chip that could be embedded behind the screen itself to do much the same thing. The chip is supposed to be sensitive enough to pick up complex gestures, such as twirling a finger in a clockwise circle to increase the volume on a virtual dial or anticlockwise to reduce it. + +Such technology could work on touchscreens in cars, too, without distracting drivers. BMW has developed a touchscreen that uses a camera in the roof of the car to recognise hand gestures. If the phone rings, say, you can simply point towards the screen to take the call; if it’s the office, swiping your hand to the side will reject it. Add in fast-improving speech-recognition systems, such as Apple’s Siri and Microsoft’s Cortana, and the amount of time people spend jabbing, gesticulating and talking to their devices will only rise. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21689515-researchers-find-new-ways-make-touchscreens-more-responsive-moving-finger/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Artificial intelligence + +Computer says Go + +Beating a Go champion with machine learning + +Jan 30th 2016 | From the print edition + +Did you learn that from AlphaGo? + +IN 1996 IBM challenged Garry Kasparov to a game of chess against one of its computers, Deep Blue. Mr Kasparov, regarded as one of the best-ever players, won—but Deep Blue won the rematch. Two decades on, computers are much better than humans at chess but remain amateurs when it comes to the much tougher, ancient game of Go. Or at least, they did. Now a computer has managed to thrash a top-drawer human player. + +The computer used a program, called AlphaGo, developed by DeepMind, a London-based artificial intelligence (AI) company bought by Google in 2014 for $400m. It took on Fan Hui, European Go champion, beating him 5-0, according to a report in Nature. Beating a champion at Go has long been considered a “grand challenge” in AI research, for the game is far harder for computers than chess. Go players alternately place black or white stones on a grid of 19x19 squares with the aim of occupying the most territory. The size of the board, and the number and complexity of potential moves, make the game impossible to play via brute-force calculation. Demis Hassabis, DeepMind’s founder and one of the paper’s authors, reckons that a typical Go turn offers around 200 legal moves, compared with just 20 or so in chess. + +Whereas a chess-playing computer like Deep Blue was programmed directly by humans, AlphaGo used AI to teach itself about how to play Go and then make its own decisions. This was done with a technique called machine learning, which allows computers to figure out for themselves how to do things, such as to recognise faces, respond to speech and even translate between languages. + +AlphaGo works in two parts. When it is the computer’s turn, the program first suggests moves based on the sorts of general tactics that human players have used in the past—much as Deep Blue would. Then the second part of the system sifts those moves for those that look like they might lead to a win, again based on patterns it has picked up through memorising zillions of previous games. + +The ultimate test of AlphaGo’s capabilities, though, will come in March. DeepMind has persuaded Lee Sedol, a Korean player widely regarded—like Mr Kasparov in his day—as one of the best-ever players, to take on their machine in a series of games in Seoul. If AlphaGo wins—and given its performance against Mr Hui, that seems like a distinct possibility—then human brains, and their possessors, will have to cede another defeat to the machines. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21689501-beating-go-champion-machine-learning-computer-says-go/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Winemaking + +The perfect pinot problem + +When to harvest grapes for a yummy aroma + +Jan 30th 2016 | From the print edition + + + +AS GRAPE varieties go, pinot noir is famously finicky. Got right, the thin-skinned grapes can produce some of the world’s finest wines. Central to that is plucking the grapes from the vine at the right time. Winemakers typically depend upon testing the level of sugar to determine if their berries are ready, but that is not terribly accurate. As pinot noir grapes reach late stages of maturity, the rate at which they gain sugars slows down just as the rate at which they accumulate the aromatic compounds that can grant wine a good “nose” goes up. And in wine, the aroma is a fundamental part of its appeal. Varying rainfall, temperatures and soil conditions all affect the rate at which aromatic compounds enter grapes, making it difficult for wineries to know whether they should harvest their grapes a few days or weeks after the increase in sugar tails off. + +Michael Qian and Fang Yuan of Oregon State University had a local interest in the problem. The prime crop of the vineyards in Oregon’s Willamette Valley is pinot noir. And Oregon’s cool climate, short growing season and periodic heavy rains make determining whether grapes are ready for harvest particularly challenging. Curious to see if they could monitor directly the presence of aromatic compounds, the biochemists set up an experiment. + +They collected ten bunches of grapes from the Stoller Family Vineyard in Willamette Valley on two separate dates, one early season and one late, during 2012 and 2013. The first date from each year was just two weeks after the berries had started to change colour from green to red, while the second was between five and six weeks after this milestone. Aside from monitoring the sugar levels, Dr Qian and Mr Fang also made use of a technique called aroma-extract dilution analysis to study aromatic compounds in the grapes. This was done using a gas chromatograph, in which compounds are separated out from a sample based upon their boiling points and chemical properties. The kit was also fitted with a sniffing port for researchers to smell the compounds as they were released. + +Oh, the damascenone! + +The researchers report in the Journal of Agricultural and Food Chemistry that they detected 49 aromatic compounds in the grapes from the two years during both the early and the late sampling periods. Most of these compounds remained at low levels throughout the growing period. However, four of them (ß-damascenone, which carries a floral and tea-like smell; vanillin, the key compound in vanilla; 4-vinylguaiacol, which smells like cloves, and 4-vinylphenol, which is reminiscent of spicy almonds) were found in much higher concentrations in the mature grapes than in the early-season ones. + +Dr Qian and Mr Fang suggest these four aromatic compounds are commonly associated with a good pinot noir and therefore could provide another way to determine the optimum time to harvest. For their part, wine buffs will keep settling the argument the old-fashioned way, with a sniff straight from the glass. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21689516-when-harvest-grapes-yummy-aroma-perfect-pinot-problem/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schizophrenia + +Brain gains + +Genetics throws open a window on a perplexing disorder + +Jan 30th 2016 | From the print edition + + + +FOR decades scientists have been trying to understand schizophrenia, a distressing disorder that afflicts one in a hundred people. Its destructive symptoms include hallucinations, delusions, muddled thoughts and changes in behaviour. The best drugs offer little more than the ability to target symptoms. There is presently no hope of a cure because its ultimate cause has long been a mystery. + +Schizophrenia is known to run in families, so it has always been thought that genes might shed light on the origins of the disease. But the genetics have proved harder to unpick than anyone imagined. It is only now, 16 years after the human genome was first sequenced, that scientists have homed in on the relevant genes. + +For more than five years researchers led by a group at the Broad Institute in Cambridge, Massachusetts, collected more than 100,000 DNA samples from around the world. They were looking for regions of the human genome that might be harbouring variants that increased the risk of schizophrenia. What they found implicated more than a hundred genes and provided a strong pointer towards a portion of the genome associated with infectious diseases. Many of these genes did not operate independently of each other, and further detective work revealed that the most important source of variation lay within a particular gene known as C4. + +Steven McCarroll, of Harvard Medical School, and his colleagues involved in the study, report in Nature this week that particular forms of the C4 gene led to a greater risk of developing schizophrenia. What makes C4 hard to identify is that it comes in many different forms and has an intriguing function. The gene produces a protein known as a complement factor, which helps to tag pathogens for removal by the body’s immune system. In the brain, however, it appears to be tied to a developmental process known as “synaptic pruning”, in which neurons are continuously eliminated throughout childhood and into early adulthood. + +In other words schizophrenics may be producing too much of a protein that creates a signal that synaptic connections should be removed. During late adolescence the brain undergoes widespread synaptic pruning, particularly in the cerebral cortex. This is also the age at which schizophrenia symptoms tend to begin. + +David Goldstein, director of the Institute for Genomic Medicine at Columbia University, says he is persuaded by the research, but reckons it is important for the medical community to examine the study carefully because the region of the genome under discussion is hard to work on and is “stuffed full of genetic variation”. That makes it difficult to point to a single gene and say “it’s this”, he adds. + +As to whether those with a family history of schizophrenia ought to have their genome sequenced to assess their susceptibility, Dr Goldstein is keen to point out that more work needs to be done on the risks that different forms of the genes bring. Moreover, other factors can be implicated in developing schizophrenia, ranging from taking psychoactive drugs to being exposed to viruses while in the womb. + +Synaptic pruning is so crucial in brain development researchers wonder what other mental disorders might be tied to its aberrant activation or regulation. This study is bound to initiate a flurry of similar work. Alzheimer’s disease, for one, has been tied to, among other things, excessive destruction of synapses. And it is already believed that autistic individuals have a surplus of synapses in the brain, due to a slowdown in normal brain pruning. Indeed, the onset of autism often follows a period when there is a burst of synapse formation. One big step forward in schizophrenia research could have an enormous impact on the way other neurological disorders are viewed and treated. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21689500-genetics-throws-open-window-perplexing-disorder-brain-gains/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Controlling miniature satellites + +Cubism + +How to keep small satellites in orbit for longer + +Jan 30th 2016 | From the print edition + +A square idea goes farther in space + +LITTLE more than ten centimetres across, so-called CubeSats are cheap-to-launch satellites that are able to carry out many scientific and commercial tasks at a fraction of the cost of conventional orbiters. This miniaturisation is mainly thanks to electronics developed for smartphones. + +CubeSats can be launched as additional payload alongside bigger satellites, sent up during deliveries to the International Space Station or put aloft on small, purpose-built rockets like NASA’s new Venture Class. Being cheap means that once their orbits decay and they burn up on re-entering the atmosphere, CubeSats can simply be replaced with newer versions. But it can pay to reposition them, both to operate more effectively and prolong their service life. That, however, is a challenge because for reasons of safety a CubeSat cannot carry conventional rocket fuel. They typically rely for manoeuvrability on heating an inert liquid and ejecting small jets of the resulting vapour, which is a poor substitute for the energetic burning of rocket fuel. So better means of motion are required—and at least two are on offer. + +One, developed by Paulo Lozano and his colleagues at the Massachusetts Institute of Technology, is a miniature version of the ion drives used on larger satellites. An ion drive accelerates charged particles derived from a liquid propellant to very high speeds. This creates thrust more efficiently than ejecting heated vapour, but without the explosive chemical reactions of a conventional rocket. + +At the moment, ion drives are not used on CubeSats because both space and weight are at a premium in such small devices and an ion drive needs pumps to move the propellant around. Dr Lozano, however, has been able to dispense with these large and heavy components. He and his team have developed a porous glass emitter that has hundreds of tiny channels running through it. These suck the propellant up by capillary action, obviating the need for pumps. The propellant itself is a substance known as an ionic liquid, that consists of positive and negative ions which can be separated by passing a current through the liquid and then, because they are electrically charged, accelerated by an electric field. (Both current and field are supplied by a battery on board the satellite.) The ions are then fired from separate thrusters, one for the positive ions and one for the negative ones. + +Individual modules, containing emitter, thrusters and enough propellant for an hour of thrust, are about the size of a sugar cube and weigh less than four grams. Dr Lozano’s team has shown in the laboratory that eight can produce enough impulse to shift a typical CubeSat sufficiently to extend its life in orbit from months to years. Three are now in the hands of NASA, awaiting flight-testing later this year. + +The other approach, that of Young Bae of Advanced Space and Energy Technologies in Tustin, California, is to use light. Dr Bae’s device, which he dubs a photonic laser thruster, was developed with NASA funding. His thruster works because light exerts pressure when it hits something. In theory, it is possible to move an object like a CubeSat by nudging it with a laser beam. In practice, however, the pressure which light exerts is so small that a device able to do a useful amount of nudging would require a laser of unfeasibly large power. + +Dr Bae has overcome this limitation by bouncing light repeatedly between the source laser and the satellite, to multiply the thrust. In his latest experiments, Dr Bae has managed to amplify the thrust imparted by a single nudge of the laser by a factor of 1,500, which is big enough to manoeuvre a CubeSat as well as a conventional thruster would. This brings two advantages. First, since no on-board propellant is required, there is more room for instruments. Second, there being no fuel to run out, a CubeSat’s orbit can be boosted as many times as is desired, and its working life prolonged indefinitely. + +The flip side of these advantages is that a suitable laser is required to provide the thrust. Dr Bae thinks it could be in orbit as well. The laser would be powered by solar cells and shepherd a veritable flock of CubeSats, providing the propulsion needed to move and arrange them as required. That is still some years away so, unlike Dr Lozano’s system, Dr Bae’s is not yet ready to fly. But his vision of an orbiting Bo Peep, cajoling and directing her charges by flashing lights at them, is a pleasing one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21689514-how-keep-small-satellites-orbit-longer-cubism/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Political influence in America: The avengers + +Fiction: Music and memory + +Communists in Britain: Reds under the bed + +Life in London: Beyond the glitter + +Banning alcohol: Stocking filler + +Johnson: What would the doctor prescribe? + + + + + +Articles Sections Next + +Political influence in America + +The avengers + +A network of wealthy donors has a mission to push politics to the right + +Jan 30th 2016 | From the print edition + + + +Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right. By Jane Mayer. Doubleday; 449 pages; $29.95 + +IN 1972 W. Clement Stone, a wealthy businessman, gave $2m to Richard Nixon’s presidential campaign. The cheque, worth $11.4m today, provoked outrage and led to calls for campaign-finance reform. How quaint history seems when compared with the momentous present. In 2016 a group of rich conservative donors will spend nearly $900m to influence the presidential and congressional elections. They avoid public scrutiny by funnelling money into a labyrinthine collection of foundations and anonymous political groups. + +This secret system is the subject of “Dark Money”, an ambitious new book by Jane Mayer of the New Yorker. David and Charles Koch (pronounced “coke”), who inherited an industrial conglomerate based in Wichita, Kansas, which is the second-largest private company in America, are at the heart of the book. Although the company is diverse, with interests in energy, chemicals, commodities and consumer goods, its owners focus on advancing their conservative political agenda. The Kochs deny climate change and oppose government regulation, welfare and taxes. They view the rise of the Democrats and Barack Obama’s election in 2008 in apocalyptic terms, and the counterinsurgency they have funded has changed the face of politics in America. They have exerted their strongest influence at state level, where a lot of business regulation is written. + +Ms Mayer, whose sympathies are with the left and who is a critic of Republican values and motives, does not go so far as to call the source of the Kochs’ fortune “blood money”, but she does claim that it is tainted. This is not the first book to look at their business interests (“Sons of Wichita”, by Daniel Schulman, came out in 2014), but it is the first to allege that the patriarch Fred Koch made part of his early wealth by helping build oil refineries in Soviet Russia and Nazi Germany. The company has faced plenty of public controversy in America, including environmental fines and lawsuits. There have also been family conflicts. There are four Koch brothers, not just Charles and David who are well known. Along with their brother Bill, they allegedly tried in the 1960s to blackmail a fourth sibling, Frederick, to sell his shares in the company. The brothers had concluded that he was gay (which he has denied) and, Ms Mayer suggests, they threatened to expose him to their father, which caused a permanent rift. + +It is the political panorama beyond the Kochs, however, that makes Ms Mayer’s book more than just another feisty corporate critique. Rich conservatives, Ms Mayer argues, set up private foundations, which allow them quietly to divert money to their favourite political causes free of tax. These foundations—including those set up by the Kochs, Richard Mellon Scaife and Harry Bradley—are not subject to much disclosure or oversight. Since foundations were first used by the robber barons as a way to avoid taxes while appearing philanthropic, they have ballooned. In 2013 there were over 100,000 of them, with assets of around $800 billion. Some of these do good for the world’s poor, but their structure also enables them to push money secretly into partisan think-tanks like the Cato Institute, the Heritage Foundation, the American Enterprise Institute and the Hoover Institution. In other words, the wealthy have always used charitable foundations to influence politics at the expense of taxpayers. + +“Dark Money” tracks other attempts to alter public discourse without leaving a trace. The Kochs and other conservatives support academic research that is allied to their political ideologies. They want to take “the liberal out of liberal arts”, as Ms Mayer puts it. For example, the John M. Olin Foundation backed a professor at the University of Chicago, John Lott, to write a book, “More Guns, Less Crime”, calling for concealed weapons to be legalised. The Kochs have regularly held summits to share their free-market, anti-taxation views. Among those invited are federal judges, 185 of whom have attended seminars sponsored by conservative interests, including the Koch Foundation. + +Ms Mayer’s book seethes with distaste for her subjects. The Koch brothers declined to be interviewed for “Dark Money”, and purportedly tried to smear Ms Mayer’s reputation by accusing her of plagiarism after she published a critical article about them in the New Yorker in 2010. + +An author can dislike her subjects. However, the book would have been stronger had Ms Mayer expanded the scope of her scorn. She acknowledges in passing that Democratic donors, including two hedge-fund billionaires, George Soros and Tom Steyer, have funnelled money into their own political causes. But she never dissects whether the left has embraced the deceptive funding mechanisms that she so assiduously has traced for the right. The fact that she does not cast a critical eye across the whole system prevents “Dark Money” from being a comprehensive analysis of how America’s campaign finances are distorted. But it offers a valuable contribution to a subject that requires far greater scrutiny in this election year. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21689522-network-wealthy-donors-has-mission-push-politics-right-avengers/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Fiction + +Music and memory + +Bringing alive love, politics and vodka + +Jan 30th 2016 | From the print edition + +The temptations of hindsight + +The Noise of Time. By Julian Barnes. Jonathan Cape; 180 pages; £14.99. To be published in America by Knopf in May. + +ON THE surface, Julian Barnes seems an unlikely author of historical novels, a genre which often offers a fixed interpretation of a period in history, or characters within that period, albeit one conjured by the writer’s imagination. Yet he returns to them again and again. “Talking It Over”, which came out in 1991, sets its characters’ memories against each other, showing how they overlap and contradict. “Arthur & George”—his recreation of a real-life mystery taken on by Arthur Conan Doyle that was published in 2005—is as much an excavation of biography and identity as it is a detective yarn. “The Sense of an Ending”, which won the Man Booker prize for fiction in 2011, offers a dramatic reassessment of one man’s past. + +The epigraph of “Talking It Over”, “He lies like an eyewitness”, is described simply as a “Russian saying”. It reappears in “The Noise of Time”, Mr Barnes’s brief, compelling inhabiting of the life of Dmitri Shostakovich. For a novelist fascinated by the slipperiness of truth, what richer ground than the Soviet Union under Stalin, where a memory might save your life, or cost another his? Here every action, every thought must be called into question almost as it happens; as when the composer finds himself trying to recall whether he really did, as a ten-year-old schoolboy, see Lenin arrive at the Finland Station. + +This paragraph-long episode of recollection begins in certainty and moves with breathtaking swiftness to incredulity. “These days, he no longer knew which version to trust. Had he really, truly been at the Finland Station? Well, he lies like an eyewitness, as the saying goes.” + +“The Noise of Time” is not narrated by Shostakovich, but in a restricted third-person voice that sits on the composer’s shoulder. Art belongs to the people, is the dictate of the Soviet state, but the narrative voice offers a rebuttal. “Art belongs to everybody and nobody. Art belongs to all time and no time. Art belongs to those who create it and those who savour it.” One could argue that these are platitudes. But in the context of the terrifying control exerted by the party and the state on artists such as Shostakovich, they are radical ideas. “Art is the whisper of history, heard above the noise of time.” + +Just as the music of Shostakovich can be listened to with no knowledge of the historical circumstances out of which it arose, so Mr Barnes’s novel does not depend on a detailed knowledge of history or biography. In any case, doubts that linger over the events of Shostakovich’s life are “highly frustrating to any biographer, but most welcome to any novelist”. Mr Barnes’s imagining of the composer’s life does not stretch to many pages, which makes it a welcome anomaly in an era of 900-page doorstoppers. The skilled novelist here brings alive not just the political turmoil that surrounded Shostakovich, but his love for his wives, his love for his children, a vivid counterpoint of artistic freedom and political oppression—the eloquent conjuring of one glass of vodka clinking against another. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21689517-bringing-alive-love-politics-and-vodka-music-and-memory/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Communists in Britain + +Reds under the bed + +A memoir of mid-20th-century London + +Jan 30th 2016 | From the print edition + + + +Party Animals: My Family and Other Communists. By David Aaronovitch. Jonathan Cape; 309 pages; £17.99. + +WERE those post-war Britons who kept faith in communism, despite the horrors of Stalinism, simply “useful idiots”? In this engaging, witty and beautifully written book, the epithet, usually attributed to Lenin, never occurs. Yet David Aaronovitch must surely have been tempted to apply it to his parents, Sam and Lavender, and their friends, almost all of them fellow-members of the Communist Party. + +Mr Aaronovitch, who ditched the gospel of Marxism years ago and is now a columnist for the Times, obviously has first-hand experience of the cultlike loyalty of the “party animals” in the 1950s and 1960s: “The facts of existence, the assumptions about how the globe turned that we imbibed were not the same as—and often the opposite of—what everyone else deemed normal…There were things that other people did that we didn’t do. We didn’t believe in God, pray, go to church, stand up for the queen in the cinema when they played the national anthem (which in any case, wasn’t our anthem, our anthem being the ‘Internationale’).” Is there a parallel today? “Perhaps there are children of very devout Muslims or evangelicals who will read this and nod along.” + +But Mr Aaronovitch’s memoir is no glib rant against the delusions of sincere party members. Instead, he acknowledges the power of the message from Moscow (the Molotov-Ribbentrop pact was explained away as a delaying tactic to allow Russia to prepare for its heroic role in defeating Hitler). For the true believers, almost anything could be justified, even the evils of Stalinism, the repression of the Hungarian uprising in 1956 and the invasion of Czechoslovakia in 1968. As with any cult, some devotees will never break away. + +Yet most of all, Mr Aaronovitch’s book is a sensitive analysis of his own family—the Jewish Sam, an autodidact from London’s impoverished East End, and the genteel Lavender, rebelling against her middle-class roots in the countryside. Sam’s passion for learning takes him in middle age to Balliol College, Oxford (he later became an economics lecturer at a London polytechnic); Lavender’s passion for the party leads her to overlook not just the flaws—so evident to any outsider—in Soviet behaviour, but also Sam’s energetic womanising. Meanwhile, the young David joins in the party entertainment: marching and demonstrating against any perceived capitalist ill—but willing by 1987 to abandon his parents’ faith in order to work for the BBC. + +As the Soviet Union disintegrated in the early 1990s, Roger Scruton, a conservative British philosopher, called for Westerners who had “promoted and apologised for Soviet communism” to face “their day of reckoning” in the court of public opinion. Mr Aaronovich’s riposte to “the Scrutons, as a class” that had benefited from the British empire, should hit home: “If it was criminal to have been a believer in communism and an apologist for Russia, then why was it less criminal to have been a believer in colonialism and an apologist for racism?” As for Lavender and Sam, “She was a party member through thick and thin because it was a kind of family. He was a party member despite everything because it was his bigger world.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21689521-memoir-mid-20th-century-london-reds-under-bed/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Life in London + +Beyond the glitter + +How the British capital is being remade + +Jan 30th 2016 | From the print edition + + + +This Is London: Life and Death in the World City. By Ben Judah. Picador; 426 pages; £18.99. + +LONDON, a city famous for Hyde Park, Harrods and giddy house prices, has undergone a quiet revolution. So says Ben Judah, a young foreign correspondent now turning his eyes towards his home town. He begins his new book with a confession: “I was born in London but I no longer recognise this city…I don’t know if I love the new London or if it frightens me: a city where at least 55% of people are not white British, nearly 40% were born abroad and 5% are living illegally in the shadows.” “This Is London” is Mr Judah’s journey to rediscover his city. + +The author throws himself in at the deep end, spending anxious nights huddled in an underpass not far from the unimaginable wealth of Mayfair, in the company of homeless Roma beggars. Many of these men, and they are almost all men, are indentured slaves. Having lost their jobs at home, they borrowed money to travel to London and are now forced to beg to pay off their debts. + +From here, Mr Judah grabs hold of London and shakes out its secrets. He has a gift for ingratiating himself into very foreign surroundings and teasing out stories. He meets a bored Middle Eastern princess, who passes her days in a haze of skunk, an Afghan shopkeeper who entered Britain hidden in a lorry, and a Punjabi minicab driver who exhausts himself washing bodies by night at his local mosque. These Londoners achieve varying degrees of success at making a life in the metropolis. + +Most of London’s immigrant population shares the same obsession: the city’s economic hierarchy. Mr Judah meets a Nigerian who had escaped work in a sweaty hotel laundry room to join the police, a rare example of upward mobility. But he still sees race as destiny: “In London you’ve always had the Africans at the bottom of the pile along with the West Indians…Then you get some Afghans. Then the eastern Europeans coming up…Then you get the Asians. Then you get the Irish. Then you get the whites…And at the very top you get the rich…Where there is no race.” + +The perceived failure of London’s many ethnicities to mix has geographical consequences, which add to Mr Judah’s disorientation. He visits Neasden, an area in the north-west of the city that used to be a picture of white suburban contentment. But the English have departed: “They want to be central, they want to cycle—they want the city.” London’s oldest inhabitants are pouring back into the centre, so that former inner-city terraced slums now offer craft beer and organic food, whereas the suburbs with their net curtains have become overpopulated tenements for the city’s migrant labourers. Standing in front of the demolition of a landmark housing estate, Mr Judah realises this migration may also have a political dimension: “Thirty times all over south London I have written down in street interviews that someone thinks the government wants to push poor black people out of the centre.” + +For those without sufficient means to enjoy London’s wealthy and rejuvenated centre—most of the men and women Mr Judah meets—the city is frequently as disappointing as it is difficult. He observes: “They come to London inspired not by a dream of how great things could be, but by the knowledge of how much worse they can be.” + +“This Is London” is not prescriptive; there is nothing here about how to lessen the grinding poverty or improve the rights of low-wage workers. But Mr Judah has done an important service in capturing the voices of those swept to the margins by economic forces beyond their control. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21689519-how-british-capital-being-remade-beyond-glitter/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banning alcohol + +Stocking filler + +How Prohibition reshaped politics and criminal justice in America + +Jan 30th 2016 | From the print edition + + + +The War on Alcohol: Prohibition and the Rise of the American State. By Lisa McGirr. W.W. Norton; 330 pages; $27.95 and £18.99. + +NEARLY a century after America fleetingly banned alcohol, Prohibition seems like a charming absurdity. The rise of moonshine and speakeasies before the Great Depression seems more like Hollywood than history. But Prohibition was no joke for the working classes, writes Lisa McGirr in “The War on Alcohol”, a focused and thought-provoking book. + +When the 18th Amendment banning the sale of alcohol was passed in 1919, it was targeted at the saloons where men gathered after work for beer and conversation. “I believe that alcoholism threatens the destruction of the white race,” said Charles Eliot, the president of Harvard University. Such sentiments were common among the reformers. + +Thus began what Ms McGirr, a professor at Harvard, describes as the “boldest effort to remake private behaviour in the nation’s history”. Neighbourhood saloons closed, home distilleries opened and drinking moved underground, to homes and speakeasies and even athletic clubs. The protests of the working classes—“no beer, no work”—went unheard amid the paternalistic zeal of high-minded (and often wealthy) Protestants. An enormous new federal bureaucracy emerged to enforce the ban, often targeting small family operations rather than the large, politically greased criminal rings like Al Capone’s. + +After the shock wore off, anger ensued. The result, Ms McGirr argues, was political upheaval. Many thirsty working-class Americans, from the Poles to the Germans (whose breweries were targeted), swung behind Al Smith, the Democratic presidential candidate in 1928. African-Americans, long loyal to the Republicans as the “party of Lincoln”, also moved towards the Democrats, not least because the Ku Klux Klan, whose numbers proliferated in the 1920s, had taken on Prohibition-enforcement duties. Smith, the first Catholic presidential nominee, did not win in 1928, but the anger was palpable. + +“The War on Alcohol” is not as dense as Daniel Okrent’s “Last Call”, which came out in 2010. Instead, Ms McGirr’s interest lies in Prohibition’s lasting effects on society. Despite its reputation as a historical oddity, Prohibition was another development in the growing power of the American state in the early 20th century, she argues. Woodrow Wilson’s Progressivism and Franklin Roosevelt’s New Deal also emerged during that period. Prohibition required enforcement, and the prison-staffing apparatus of the 1920s soon became larger than the Bureau of Investigation, the forerunner to the FBI. As one disgruntled newspaper editor put it: “A man’s home used to be his castle. Now, it is the United States government’s castle.” + +Prohibition ended in 1933, during the first year of Roosevelt’s presidency. “It’s time the country did something about beer,” the new president declared. But, as Ms McGirr points out, the lessons of America’s 13-year misadventure with Prohibition have yet to be learned: “Despite a wide consensus that Prohibition of the liquor traffic was a fundamentally flawed crusade with devastating consequences, its spiritual and policy twin—the war on drugs—has gone largely unchallenged.” Much like the war on alcohol, the war on drugs has “far overshot the ills” that it is trying to fix, all the while showing little success in reducing supply or demand for drugs. A little dram of history might do wonders for America’s politicians. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21689518-how-prohibition-reshaped-politics-and-criminal-justice-america-stocking-filler/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +What would the doctor prescribe? + +The Johnson column on language + +Jan 30th 2016 | From the print edition + + + +“A HARMLESS drudge.” Of the definitions in Samuel Johnson’s great English dictionary of 1755, that of “lexicographer”, his own calling, is the most famous, an example of the same wit that led him to define “oats” as “a grain, which in England is generally given to horses, but in Scotland supports the people.” + +Why name a language column after a harmless drudge? Because Johnson, despite the drudgery, knew that language was not harmless. Its power to inform and to lead astray, to entertain and to annoy, to build co-operation or destroy a reputation, makes language serious stuff. The Economist’s “Johnson” column began in 1992 and was later revived online. This week it returns to the print edition, and henceforth will appear fortnightly. + +Many of the topics tackled are fun: swearing and slang, preferences and peeves. Some are more fundamental. Language reveals a lot about human nature: how people reason differently in a foreign language, or to what extent different languages encode a world view, are some of the most exciting and controversial topics in linguistic research. + +People care intensely about their language, and so languages in the wider world sometimes come into conflict. The perceived arrogance of Castilians to Catalan threatens to sunder Spain; “language police” in Quebec tell restaurant owners to change “pasta” and “grilled cheese” to pâtes and fromage fondant. At the extreme, the passage of a law downgrading Russian in Ukraine helped spark war in that country; Vladimir Putin has used it as evidence that Ukrainian nationalists are bent on wiping out Russian culture there. The war has rumbled on since, with language the most obvious symbol of wider identity and sympathy. + +So the Johnson column treats topics light and heavy as well as language both English and international. How does the spirit of Johnson himself come into it? The best way to answer is to see how he would fit into today’s “usage wars” over authority and correctness. A language column is expected to tackle questions of right and wrong. There are roughly two views of how to do this: one top-down, based on authority, prestige, writing and stability; one bottom-up, resting on how most people actually use the language, and open to change. + +The two schools of thought, known as “prescriptivism” (which sets down how the language should be) and “descriptivism” (which tells how it is), have often been at daggers drawn: English teachers and some usage-book writers on one side, and academic linguists, lexicographers and other usage-book writers on the other. In the caricature, prescriptivists are authoritarians with their heads in the sand, insisting on Victorian-era non-rules. The descriptivists are mocked as “anything-is-correct”, embracing every fad, even that Shakespeare should be taught in text-message-speak. To take one example, some prescriptivists say “like” cannot be a conjunction (“tastes good, like a cigarette should”, in a 1950s advert.) Descriptivists point to continuous use since Chaucer. + +Recruiting-sergeants from both sides can bang on Samuel Johnson’s door. An intellectual writing for an elite audience, he did not shy away from “right” and “wrong”, even “barbarity”, “depravity” and “corruption”, in matters of language.But he declared his task was not to “form” but to “register” (that is, describe) the language; trying to stop change was like trying to “lash the wind”. Above all, his years of drudging at the dictionary had taught him humility: he knew he was sure to commit “a few wild blunders, and risible absurdities, from which no work of such multiplicity was ever free”. + +Prescribing is not really the opposite of describing. Lexicographers from Johnson’s day on must describe the language, grounding their definitions in real living English. But that is in order to give stronger roots to a book they know people will use for firm guidance. Academic linguists, the arch-descriptivists, are perfectly willing to call some usages wrong and others plain ugly. + +One can prescribe and preach a high-quality English while accepting variety and change. Stability is not the same as rigidity. And judgment should be empirical, not dogmatic, open to real usage and willing to change when the facts change. Getting things right is worth the effort, just as it is in politics. As Johnson wrote, “We have long preserved our constitution, let us make some struggles for our language.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21689520-johnson-column-language-what-would-doctor-prescribe/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: George Weidenfeld: A world of friends + + + + + +Articles Sections Next + +Obituary: George Weidenfeld + +A world of friends + +George, Baron Weidenfeld, publisher and philanthropist, died on January 20th, aged 96 + +Jan 30th 2016 | From the print edition + + + +THE glittering, hooded eyes captured guests even before they sat down. His apartment high above the Thames was full of paintings of famous men—he had a penchant for popes—but they struggled to compete with George. (He was rarely, after first acquaintance, “Lord Weidenfeld”.) Somewhere in the room would be the guest of honour: Angela Merkel, perhaps, whom he had befriended when she was still a middling Christian Democrat politician, or an Israeli general. He would invite them to take the floor, with an elegant introduction and a couple of probing questions to stimulate discussion. But it was the rotund, courtly son of an Austrian classics teacher who was the dazzler-in-chief, inexhaustibly unearthing facts, analogies, literary allusions and personal connections from his elephantine memory. + +English diffidence tended to elude him; assiduity was more his thing. Yet the conversational flow was not ponderous or one-way; he was just as interested in new people and ideas as in old ones. And, as he had learned when the Nazis turned his comfortable childhood upside down, you could never have enough friends. + +The breadth and depth of his acquaintance were the foundation of his success as a publisher. The ties could be intellectual, cultural or romantic, and sometimes all three. He cultivated them from pre-war Vienna to the heights of the British establishment—and at the best parties in London. They produced publishing coups, donations, diplomatic reconciliations and sometimes, where his many paramours were concerned, scandal. + +Personal loyalty, in his view, trumped narrower or more abstract fealties. Though an adamantine Zionist, he defended his schoolmate Kurt Waldheim, who was embroiled in a war-crimes scandal when he became president of Austria. Waldheim had bravely helped young George evade Nazi curbs on higher education for Jews; that debt had to be repaid. + +Cosmopolitan to his bones, he was patriotically and thankfully British, though for years he did not feel wholly part of the country to which he had come as a penniless teenager. A peerage helped: it was awarded in 1976 by Harold Wilson, the Labour prime minister whose talent he had spotted 30 years before in a dog-eared manuscript about the coal industry. + +Once he was an insider, he revelled in it. He loved intrigue (too much, some said) and excitement. The flair and showmanship of publishing—conceiving a book with mischievous, relentless persuasion of anyone with writerly potential, and showily promoting it—appealed greatly. The dull stuff in the middle appealed a lot less. Business partners sometimes found that tiresome, especially when vagueness about their interests was matched with ruthlessness about his. + +Though not short of enemies, he did not bear grudges. In the ruins of post-war Vienna he tracked down a Nazi student with whom he had duelled and invited him to breakfast. The towering young thug had become an emaciated cripple, and gratefully wolfed down huge sausage sandwiches at the British Officers’ Club. + +His greatest triumph, Lord Weidenfeld reckoned, was outfacing the censors and publishing Vladimir Nabokov’s “Lolita”. Other celebrated authors in his stable included Isaiah Berlin (“The Hedgehog and the Fox”) and James Watson (“The Double Helix”). Among his fiction writers were Edna O’Brien and Saul Bellow. His forte, however, was personal reminiscence. (His own autobiography, a true gossipfest, was called “Remembering my Good Friends”.) He published memoirs and biographies of De Gaulle (whom he met while working in the wartime BBC), Adenauer, Kissinger, Mussolini and even Albert Speer. The fact that his own family had barely escaped the Holocaust made it all the more important to explain how the Nazi empire worked. + +Provincialism and narrow-mindedness were his greatest foes; he had seen the damage they had done to his cherished continent. In the same vein, reconciliation was his paramount cause: chiefly between Germans and their victims and between Jews and Christians. Charm and personal contact could bridge most differences, given a chance. When the Iron Curtain fell he raised money to bring students from the former communist countries to his beloved Oxford. His travels across the Atlantic and the Channel were indefatigable; his hospitality, vigour and erotic energy were legendary to the end of his life. + +Tablets of stone + +Only on Israel was he unbendable. Its return to statehood he saw as the greatest achievement of the modern age (and one in which, when he briefly worked as an adviser to Chaim Weizmann, he had played a direct part). Nothing must jeopardise its security. Though his heart remained with the Israeli left, he said in later life that his head was with Likud. He was buried on the Mount of Olives, the Jewish state’s highest honour for its dead. + +Britons sometimes mistakenly thought him old-fashioned. It was true that he had the manners and polish of a Habsburg literary aristocrat: he was fluent in four languages and could read for pleasure in another three. But that was civilisation, not anachronism. The future enthralled him just as much as the past—especially if there might be a book in it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21689492-lord-weidenfeld-died-january-20th-aged-96-obituary-george-baron-weidenfeld-publisher-and/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Perceptions of corruption + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Jan 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21689524/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Jan 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21689551-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Jan 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21689554-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Jan 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21689555-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Perceptions of corruption + +Jan 30th 2016 | From the print edition + + + +Corruption continues to be a serious issue in the Middle East and North Africa. Transparency International uses surveys of experts and business people to measure perceived levels of public-sector corruption. Only six out of the 18 countries reported on in the region have a score above 50 (anything below, and corruption is deemed to be a serious problem); nine have seen their ratings fall since 2012. The rise of Islamic State has played a part, giving governments across the region a reason to beef up both their powers and the scope for abuse. But Saudi Arabia’s score has risen for the third year in a row, helped by a growing recognition that transparency makes it easier to attract foreign investment. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21689553-perceptions-corruption/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Jan 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21689556-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 29 Jan 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +America’s presidential primaries: The brawl begins + + + + + +Nigeria’s economy: Hope the naira falls + + + + + +Foreign students: Train ’em up. Kick ’em out + + + + + +Corporate tax: Going after Google + + + + + +The Zika virus: Let us spray + + + + + +Letters + + + +Migrants, India, aid, Jeremy Corbyn, science, Catalonia, banks, clubbing, ageing: Letters to the editor + + + + + +Briefing + + + +America’s primary elections: Outsiders’ chance + + + + + +United States + + + +Walmart and low-wage America: High expectations + + + + + +Transgender life: Restroom rumpus + + + + + +Dry California: All the leaves are brown + + + + + +Ecology: Murre mystery + + + + + +Policing and privacy: The StingRay’s tale + + + + + +Universities and free speech: Hard to say + + + + + +Lexington: Superpower statues + + + + + +The Americas + + + +Brazil: Partying on a precipice + + + + + +Haiti’s election: Chaos and compas + + + + + +The Zika virus: To breed, or not to breed + + + + + +Bello: From red tape to joined-up government + + + + + +Asia + + + +The South China Sea: Making a splash + + + + + +Politics in Vietnam: Reptilian manoeuvres + + + + + +Subhas Chandra Bose: Mystery theatre + + + + + +Nepal’s constitutional stand-off: Trouble in the basement + + + + + +Superstition in Thailand: Dolls that bring luck—and drugs + + + + + +Kazakhstan’s tanking economy: Drift and dissent + + + + + +Suicide in Japan: Deep in the woods + + + + + +China + + + +Growth targets: Grossly Deceptive Plans + + + + + +Mineral water: High-altitude thirst + + + + + +Banyan: A confession to make + + + + + +Middle East and Africa + + + +Nigeria’s economy: Crude tactics + + + + + +Child abuse in Kenya: Breaking the silence + + + + + +Syrian peace talks: United only by hatred + + + + + +Africa’s gym craze: Beerbelly busters + + + + + +Trouble in Tunisia: Dying to work for the government + + + + + +Saudi Arabia’s financial hub: Castles in the air + + + + + +Europe + + + +Illiberal central Europe: Big, bad Visegrad + + + + + +Putin’s popularity: Vladimir unbound + + + + + +Crisis in Moldova: A republic, if you can steal it + + + + + +France’s missing refugees: Non, merci + + + + + +Charlemagne: Value shoppers + + + + + +Britain + + + +Black Britons: The next generation + + + + + +Punk reaches middle age: God save the punks + + + + + +Brexit war games: A rocky rehearsal + + + + + +Financial regulation: New face, same problems + + + + + +The Labour Party: The elephant in the room + + + + + +Slough’s boom: Come, friendly firms + + + + + +Regional airports: Ups and downs + + + + + +Marriage and migration: For richer, not for poorer + + + + + +Bagehot: Death of a Londoner + + + + + +International + + + +International students: Brains without borders + + + + + +Business + + + +Auction houses: House pride + + + + + +Art auctions: Going once, going twice, going online + + + + + +Toshiba and Sharp: Coming clean? + + + + + +Apple: iPhone, therefore I am + + + + + +Car-hailing apps in China: More than mobility + + + + + +Steelmaking in rich countries: A corrosive climate + + + + + +Schumpeter: Flexible figures + + + + + +Finance and economics + + + +Natural gas: Step on it + + + + + +Buttonwood: The crazy world of credit + + + + + +Fintech and insurance: Against the odds + + + + + +Corporate tax: A digital dust-up + + + + + +Robots v humans: Machine earning + + + + + +Big banks: Chop chop + + + + + +The economics of corruption: The wages of sin + + + + + +Free exchange: The Italian job + + + + + +Science and technology + + + +Touchscreens: The moving finger moves on + + + + + +Artificial intelligence: Computer says Go + + + + + +Winemaking: The perfect pinot problem + + + + + +Schizophrenia: Brain gains + + + + + +Controlling miniature satellites: Cubism + + + + + +Books and arts + + + +Political influence in America: The avengers + + + + + +Fiction: Music and memory + + + + + +Communists in Britain: Reds under the bed + + + + + +Life in London: Beyond the glitter + + + + + +Banning alcohol: Stocking filler + + + + + +Johnson: What would the doctor prescribe? + + + + + +Obituary + + + +Obituary: George Weidenfeld: A world of friends + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Perceptions of corruption + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.02.06.TXT b/homeworks/B20769/homework1/data2/2016.02.06.TXT new file mode 100644 index 0000000..c803288 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.02.06.TXT @@ -0,0 +1,5763 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: Turkey + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Feb 6th 2016 | From the print edition + + + +The long process to choose America’s presidential candidates got under way, in Iowa. Ted Cruz won the state’s Republican caucuses, upending Donald Trump, who had led recent polling. Mr Trump came second, not far ahead of Marco Rubio, considered to be the viable moderate alternative to the populist front-runners. On the Democratic side Hillary Clinton eked out a win over Bernie Sanders by 0.3 of a percentage point, the thinnest-ever margin of victory in the party’s Iowa caucuses. See article. + +Ash Carter, America’s defence secretary, said the Pentagon would ask for $583 billion in the White House’s forthcoming budget. Spending on fighting Islamic State is to double, to $7.5 billion, and support for central and east European countries in response to Russia’s invasion of Ukraine will quadruple to $3.4 billion. + +Facebook moved to ban the private sale of guns through its network and Instagram, a photo-sharing site it owns. + +Recognising a risk + +The World Health Organisation declared that a rise in birth defects in Brazil, thought to be caused by the mosquito-borne Zika virus, is a global emergency. The virus probably caused more than 4,000 cases of microcephaly among newborn children in Brazil and has been found in more than 20 countries in the Americas. The WHO thinks the virus is spreading “explosively”. It is thought that a case detected in Texas was probably transmitted through sex. + +Guatemala put on trial two former military officers charged with letting their soldiers kidnap and rape 11 Mayan women during the country’s 36-year civil war. This is the first time that anyone has been tried for wartime sex-slavery charges in the country where the crimes were allegedly committed. + +Argentina said it would repay Italian investors who had refused earlier offers of a debt restructuring after the country defaulted in 2001. If Congress approves the deal, the government will pay $1.35 billion, 150% of the face value of the bonds, to 50,000 investors. It hopes this will set a precedent for negotiations with holdout investors in bonds with a face value of $6 billion. + + + +The Cuban government is to allow residents of two districts in Havana, the capital, to have broadband connections to the internet. Cafés, restaurants and bars will also be permitted this huge privilege. + +Siphoned away + +The Swiss authorities said they would ask the Malaysian government to help them investigate claims that as much as $4 billion has gone missing from Malaysian state-owned firms. A small amount of the money had been transferred to bank accounts in Switzerland. Officials in Singapore said they had frozen “a large number” of accounts as part of investigations into transactions linked to 1MDB, a Malaysian state-investment firm. + +North Korea declared that it would launch a satellite sometime between February 8th and 25th. Analysts believe the country’s real aim is to test a long-range ballistic missile. Japan has ordered its armed forces to shoot down any missile that threatens to fall on Japanese territory. See article. + +Police in China arrested 21 people for their involvement in an alleged Ponzi scheme run by Ezubao, an online firm. The company has been accused of defrauding 900,000 investors of 50 billion yuan ($7.6 billion). See article. + +Games of chance + +Talks in Geneva aimed at bringing an end to the civil war in Syria were suspendedonly days after they began. Opponents of the regime of Bashar al-Assad are demanding a ceasefire, but fighting is instead intensifying, especially around the city of Aleppo. The talks may resume in three weeks. A conference on aid to the region began in London, amid warnings that Lebanon and Jordan are almost overwhelmed by the cost of housing Syrian refugees. + +South Africa’s president, Jacob Zuma, agreed to pay back some of the $23m in public money that was spent on his private residence, potentially drawing some of the sting from a scandal that may damage the African National Congress in local elections that are due to take place in May. + +At least 86 people died in the most brutal attack in months by Boko Haram, a Nigerian jihadist outfit. The attack took place close to the regional capital of Maiduguri, which houses the army’s headquarters. Boko Haram lost control of the city in 2014. + +If at first you don’t succeed + +King Felipe of Spain asked the Socialist party, headed by Pedro Sánchez, to form a government. The Socialists control only 90 seats in the 350-seat parliament, which has been deadlocked since an election in December proved inconclusive. In order to become prime minister, Mr Sánchez will have to win the support of Podemos, an anti-austerity movement, and several other parties. It will be tough. + +The EU reached a provisional deal with America about data protection. Last year a ruling by the European Court of Justice abrogated the “Safe Harbour” agreement that let firms store individuals’ private online data in America. European data-protection agencies gave a cautious welcome to the new “Privacy Shield”. + +Aivaras Abromavicius, Ukraine’s economy minister, resigned, complaining that the government was doing nothing about corruption. + +A general election was called in Ireland for February 26th. The governing party led by Enda Kenny, the prime minister, is ahead in the polls. + +David Cameron presented a draft deal to “renegotiate” the terms of Britain’s membership of the European Union. The prime minister’s agitated Eurosceptic critics in his party and the press said he had failed to match the robust promises he made in the party’s election manifesto last year. A former minister said that possibly a quarter of the cabinet are “certain” to campaign to leave the union in a forthcoming referendum. See article. + + + +Another baffling issue, almost as old as Britain’s EU membership, was cleared up this week when a death certificate was issued for Lord Lucan. The enigmatic aristocrat disappeared in 1974 after his children’s nanny was murdered in London. Decades of speculation about his guilt ensued, as did alleged sightings, but Lucan was never seen again. The court ruling means that his son, Lord Bingham, can inherit the family title and become the 8th Earl of Lucan. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21690113-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Feb 6th 2016 | From the print edition + +In by far the largest foreign takeover bid by a Chinese company to date, ChemChina offered $43 billion to buy Syngenta, which is based in Switzerland and is one of the world’s biggest providers of agricultural chemicals and seeds. It is the second big acquisition in the chemical industry in recent months, after the merger announcement of Dow Chemical and DuPont. Syngenta’s board recommended shareholders accept the bid from ChemChina, which is state-controlled. The deal will be scrutinised by antitrust regulators in several countries, especially America, which accounts for a quarter of Syngenta’s sales. See article. + +The decline in oil prices was reflected in a gloomy set of earnings from oil companies. Chevron reported its first quarterly loss since 2002. Exxon Mobil’s annual profit fell by half, to $16.2 billion; it is slashing capital spending by 25% this year. BP posted an annual headline loss of $5.2 billion, its worst ever. See article. + +Positive negative + +The Bank of Japan cut its benchmark interest rate below zero, to -0.1%. Japan has joined the European Central Bank, Switzerland and others by implementing a negative rate, though its policy applies only to new reserves that banks place with the BoJ. + +Credit Suisse reported an annual pre-tax loss of SFr2.4 billion ($2.4 billion), its first since 2008, mostly because it booked a hefty write-down in the fourth quarter related to the restructuring of its business. Pre-tax profit at the Swiss bank’s investment-banking division was down by 90%. + +There was more management turmoil at Luxottica, an Italian maker of eyewear and owner of the Ray-Ban and Oakley brands, as its third chief executive in 18 months resigned. Leonardo Del Vecchio, the company’s 80-year-old founder, will again reassert control by taking the CEO’s job on an interim basis. + +Sumner Redstone stepped down as chairman of CBS, after months of pressure from investors worried about his ability to perform his duties at the American broadcaster. For years questions have been raised about the health of the 92-year-old mogul, whose position as chairman of Viacom, a big media group, has also come into question. + + + +Alphabet, the holding company that Google created last year, reported a bumper set of annual earnings. Revenue at its internet and Android businesses climbed to $74.5 billion, pushing operating profit up to $23.4 billion. Its Other Bets projects, such as self-driving cars and smart thermostats, made a $3.6 billion loss, but that was not as steep as had been feared. Alphabet’s share price rose, briefly nudging it past Apple to become the world’s most valuable listed company. See article. + +The French finance minister, Michel Sapin, dismissed suggestions that he would reach a deal with Google over paying back taxes, saying that France “does not negotiate” over money it is owed. Critics contend that the agreement Google recently struck to pay £130m ($190m) in back taxes in Britain let it off the hook. + +Yahoo announced a strategic review of its core internet business, acknowledging that it might examine the option of selling the unit. Yahoo is to shed a further 15% of its workforce to cut costs. It reported a quarterly net loss of $4.4 billion, mostly because it wrote down the value of some of its assets, including Tumblr, a blogging site. + +Sharp, a struggling Japanese maker of electronics goods, was reportedly holding takeover talks with Foxconn, a Taiwanese firm that assembles the iPhone. Foxconn is one of two suitors to have emerged: a Japanese government-backed fund is also interested in Sharp, though its bid is lower. + +Once lauded for its fresh ingredients, Chipotle Mexican Grill, a fast-food chain, said the publicity from an outbreak of E.coli at some outlets had hit sales in the last quarter of 2015, contributing to a 44% drop in profit. This week federal health authorities in America declared that the E.coli scare appears to be over. + +Ferrari’s share price slid after it issued a disappointing earnings forecast. Despite a strong order book, profits at the Italian maker of luxury cars are projected to be only slightly higher than those it made last year. Ferrari’s share price has fallen by a third on the New York Stock Exchange since its IPO there last October. An announcement of a racy new convertible might turbocharge its share price. + +It’s good to be the king + +A venture capitalist who wrote an open letter online criticising the launch event for Tesla Motors’ Model X said his order for the car has been cancelled by Elon Musk, Tesla’s founder. Mr Musk tweeted that he was surprised at the fuss over “denying service to a super-rude customer”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21690102-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Feb 6th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21690103-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +A plan for Europe’s refugees: How to manage the migrant crisis + +Interest rates: Negative creep + +Libya: The third front + +Britain and the European Union: The accidental Europhile + +HSBC’s domicile dilemma: Asian dissuasion + + + + + +Articles Sections Next + +A plan for Europe’s refugees + +How to manage the migrant crisis + +A European problem demands a common, coherent EU policy. Let refugees in, but regulate the flow + +Feb 6th 2016 | From the print edition + + + +REFUGEES are reasonable people in desperate circumstances. Life for many of the 1m-odd asylum-seekers who have fled Syria, Iraq, Afghanistan and other war-torn countries for Europe in the past year has become intolerable. Europe is peaceful, rich and accessible. Most people would rather not abandon their homes and start again among strangers. But when the alternative is the threat of death from barrel-bombs and sabre-wielding fanatics, they make the only rational choice. + +The flow of refugees would have been manageable if European Union countries had worked together, as Angela Merkel, Germany’s chancellor, has always wished (and The Economist urged). Instead Germany and Sweden have been left to cope alone. Today their willingness to do so is exhausted. Unless Europe soon restores order, political pressure will force Mrs Merkel to clamp down unilaterally, starting a wave of border closures (see article). More worrying, the migrant crisis is feeding xenophobia and political populism. The divisive forces of right-wing nationalism have already taken hold in parts of eastern Europe. If they spread westward into Germany, France and Italy then the EU could tear itself apart. + +The situation today is a mess. Refugees have been free to sail across the Mediterranean, register and make for whichever country seems most welcoming. Many economic migrants with no claim to asylum have found a place in the queue by lying about where they came from. This free-for-all must be replaced by a system in which asylum applicants are screened when they first reach Europe’s borders—or better still, before they cross the Mediterranean. Those who are ineligible for asylum should be sent back without delay; those likely to qualify should be sent on to countries willing to accept them. + +Order on the border + +Creating a well-regulated system requires three steps. The first is to curb the “push factors” that encourage people to risk the crossing, by beefing up aid to refugees, particularly to the victims of the civil wars in Syria and Iraq, including the huge number who have fled to neighbouring countries such as Turkey, Jordan and Lebanon. The second is to review asylum claims while refugees are still in centres in the Middle East or in the “hotspots” (mainly in Greece and Italy), where they go when they first arrive in the EU. The third element is to insist that asylum-seekers stay put until their applications are processed, rather than jumping on a train to Germany. + +All these steps are fraught with difficulty. Consider the “push factors” first. The prospect of ending Syria’s civil war is as remote as ever: peace talks in Geneva this week were suspended without progress. But the EU could do a lot more to help refugees and their host countries. Scandalously, aid for Syrians was cut in 2015 even as the war grew bloodier: aid agencies got a bit more than half of what they needed last year, according to the UN. Donors at a conference on Syria in London this week were asked for $9 billion for 2016—about as much as Germans spend on chocolate every year. Far more is needed and will be needed every year for several years. + +Europe’s money should be used not only to feed and house refugees but also to coax host countries into letting them work. For the first four years of the conflict Syrians were denied work permits in Turkey, Jordan and Lebanon. Recently Turkey has begun to grant them. Donors should press Jordan and Lebanon to follow. European cash could help teach the 400,000 refugee children in Turkey who have no classes. + +Sometimes the answer is no + +The next task is to require asylum-seekers to register and be sorted as close to home as possible, probably Turkey, Lebanon and Jordan. Ideally those who travelled by boat to Europe would be sent back to a camp in one of those three countries—to prove that they had just wasted their precious savings paying people-traffickers to take them on a pointless journey. But that would meet legal and political objections, partly because of Turkey’s human-rights record (see our special report this week). So, there should also be processing camps in the first EU country they reach, probably Greece or Italy. + +The cost of this should fall on the whole EU, since the aim is to establish control over its external borders. Dealmaking is possible. In exchange for hosting large refugee hotspots and camps on its soil, Greece should get help with its debt and budgets which it has long sought to ease its economic crisis. + +Refugees will fall in with this scheme (rather than cross the EU illegally) only if they are confident that genuine applications will be accepted within a reasonable time. So the EU needs to spend what it takes to sort through their claims swiftly. And member states ought to agree to accept substantial numbers of bona fide asylum claimants. Some refugees may prefer Germany to, say, France—and there is little to stop them crossing borders once they are inside the Schengen area. But, if they are properly looked after, most will stay put. + +The crisis needs a bigger resettlement programme than the one run by the UN’s refugee agency, which has only 160,000 spaces. Countries outside the EU, including the Gulf states, can play their part. Priority should go to refugees who apply for asylum while still in Turkey, Jordan or Lebanon—to reduce the incentive for refugees to board leaky boats to Greece. + +Ineligible migrants will have to be refused entry or deported. This will be legally difficult, and it is impossible to repatriate people to some countries, such as Syria. But if the system is not to be overwhelmed or seen as unfair and illegitimate by EU citizens, the sorting must be efficient and enforceable. EU governments should sign and implement readmission agreements allowing rejected migrants to be sent home quickly to, say, Morocco or Algeria. If such agreements are impossible (or if, as with Pakistan, governments fail to honour them), the prospect of waiting indefinitely in Greece will make economic migrants who want to reach Germany hesitate before coming. + +Once these measures are in place, it will become possible to take the most controversial step: halting the uncontrolled migrant flow across Greece’s northern border with Macedonia. It has become clear over the past five months that Europe cannot gain control over the numbers or the nature of the migrant stream while border officials wave asylum-seekers through and bid them safe travel to northern Europe. + +Since the start of the refugee crisis, we have argued that Europe should welcome persecuted people and carefully manage their entry into European society. Our views have not changed. Countries have a moral and legal duty to provide sanctuary to those who flee grave danger. That approach is disruptive in the short term, but in the medium term, so long as they are allowed to work, refugees assimilate and more than pay for themselves. By contrast, the chaos of recent months shows what happens when politicians fail to take a pan-European approach to what is clearly a pan-European problem. The plan we outline would require a big chunk of cash and a lot of testy negotiations. But it is in every country’s interest to help—because all of them would be worse off if the EU lapses into a xenophobic free-for-all. + +There is an encouraging precedent, too. When more than 1m “boat people” fled Vietnam after the communists took over in 1975, they went initially to refugee camps in Hong Kong and other parts of Asia before being sent to America, Europe, Australia and wherever else would take them. They arrived with nothing but adapted astonishingly fast: the median household income for Vietnamese-Americans, for example, is now above the national average. No one in America now frets that the boat people will not fit in. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21690028-european-problem-demands-common-coherent-eu-policy-let-refugees-regulate/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Interest rates + +Negative creep + +The negative-rates club is growing. But there is a limit to how low rates can go + +Feb 6th 2016 | From the print edition + + + +IMAGINE a world in which tax offices harry people who file their returns promptly; where big supermarket chains pay their suppliers before the goods fly off the shelves and not months afterwards; and where a pre-paid annual gym membership is more costly than paying month by month. It sounds fanciful, absurd even. Yet such a world came a step closer on January 29th, when Japan’s central bank cut the interest rate on bank reserves to -0.1% (see article). + +Like its peers in Denmark, the euro area, Sweden and Switzerland, the Bank of Japan will charge commercial banks for holding deposits with it. Almost a quarter of the world’s GDP now comes from countries with negative rates. Though they defy convention, they have proved a useful addition to the central-banking toolkit. The lowest deposit rate set by the central bank acts as a floor for short-term interest rates in money markets and for borrowing rates generally. Borrowing costs across Europe have tumbled, helping the fight against deflation and driving down exchange rates. + +Emboldened, Haruhiko Kuroda, the governor of Japan’s central bank, this week claimed there is no limit to measures to ease monetary policy. On interest rates, at least, that is wrong. The limit may no longer be zero but it does still exist. + +Tiers are not enough + +Not so long ago it was widely thought that, if interest rates went below zero, banks and their depositors would simply switch to cash, which pays no interest but doesn’t charge any either. Yet deposits in Europe, where rates have been negative for well over a year, have been stable. For commercial banks, a small interest charge on electronic deposits has proved to be bearable compared with the costs of safely storing stacks of cash—and not yet onerous enough to try to pass on to individual depositors. + +That has resulted in an unavoidable squeeze on profits of banks, particularly in the euro area, where an interest rate of -0.3% applies to almost all commercial-bank reserves. (As in Switzerland and Denmark, Japan’s central bank has shielded banks from the full effect by setting up a system of tiered interest rates, in which the negative rate applies only to new reserves.) If interest rates go deeper into negative territory, profit margins will be squeezed harder—even in places where central banks have tried to protect banks. And if banks are not profitable, they are less able to add to the capital buffers that let them operate safely. + +That would put pressure on banks to charge their own customers for deposits. Such pressure is already starting to tell. Banks in Europe have started to pass on some of the cost of negative rates to big corporate depositors. Their only ready alternative to stashing large pots of cash is safe and liquid government bonds, whose yields have also turned negative, for terms of up to ten years in Switzerland. Rich personal-account holders are next. The boss of Julius Baer, a Swiss private bank, said this week that if interest rates in Europe go further into the red, it might have to charge depositors. + +Retail customers are more resistant to charges, because small stashes can easily be stored in a mattress or a home safe. Savers might stomach a modest fee for making bank deposits, but as rates go deeper into negative territory, they will find ways to avoid charges. Switching to cash is the obvious solution, which is why some have suggested getting rid of banknotes altogether, but it is not the only one. Small savers would use any available form of prepayment—gift vouchers, long-term subscriptions, urban-transport cards or mobile-phone SIM cards—to avoid the cost of having money in the bank. + +That would be only the start of the topsy-turviness. Were interest rates negative enough for long enough, specialist security firms would emerge that would build vaults to store cash on behalf of big depositors and clear transfers between their customers’ accounts. Firms would seek to make payments quickly and receive them slowly. Tax offices would discourage prompt settlement or overpayment of accounts: one Swiss canton has already stopped discounts for early tax payment and said it wants to receive money as late as possible. Far from being incentivised to lend more, banks worried about shrinking deposits would be warier of extending credit. + +As avenues to avoid negative rates are closed off, human ingenuity will ensure that others open up. It may not be zero, but there is still a lower bound to interest rates. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21690031-negative-rates-club-growing-there-limit-how-low-rates-can-go-negative-creep/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Libya + +The third front + +It is time to take action against Islamic State in Libya + +Feb 6th 2016 | From the print edition + + + +BARACK OBAMA is far from achieving his declared aim to “degrade and ultimately destroy” Islamic State (IS), the self-styled caliphate that straddles parts of Iraq and Syria. But at least it is being rolled back in some places. Ramadi in Iraq was retaken in December. Oil installations controlled by IS have been bombed, sapping the economic and the fighting power of the jihadists. In Libya, though, the picture is more alarming: the caliphate is building a sprawling new “province” on the southern shore of the Mediterranean, just a few hundred miles from Europe. This is the new front in the war against jihadism. + +Unchallenged by Western forces, and exploiting the absence of a functioning state as rival national governments in Tripoli and Tobruk bicker and skirmish, IS has taken control of the city of Sirte and controls roughly 180 miles (290km) of coastline. It already counts 5,000 or so fighters, threatens not just Libya’s duelling governments but also neighbours such as Tunisia, Algeria and Egypt. It has attacked Libyan oil terminals and ports, and raided towns ever closer to Tripoli. The expansion of IS could prompt another flood of refugees from Libya to Europe, with the obvious potential of terrorist infiltration. Libya has burned through most of its foreign reserves—perversely, oil exports are paying gunmen from both the Tripoli and Tobruk alliances—and one-sixth of its 6m people are suffering from malnutrition. This year Libya is predicted to have the world’s fastest-shrinking economy. + +It makes little sense to squeeze IS in one battlefield only to let it grow somewhere else. Belatedly, Italy, France and Britain—and, crucially, America, too—are drawing up plans for military action. If there is one lesson from the interventions of the past, it is the importance of securing a degree of political legitimacy and working with competent forces on the ground who can seize back territory from extremists and hold it. Western forces would, ideally, be invited in by a new unity government. But UN-led talks have dragged on for months, stymied by the refusal of the Islamist-influenced government in Tripoli to accept that it lost an election in June 2014 and to make peace with the winners of that poll, who fled to Tobruk. More recently they are being held up by the refusal of both parliaments to accept the UN’s latest proposal for a unity government. + +More intensive diplomacy is needed to push the two sides into a deal, using whatever leverage is available. As part of that process, the West will have to support the new Libya generously with money, as well as military backing, humanitarian relief and investment to get the oil flowing again. America, which has been negligently absent from Libya since the killing of its ambassador and three others in attacks in Benghazi in 2012, needs to apply its muscle, too. + +The sands of time + +Many in the West still prefer to wait for a political deal. But there are growing dangers in allowing IS to expand. The jihadists must be contained, lest they gain control of Libya’s oil facilities, or destroy them to hasten the break-up of the country by denying it its main source of revenue. + +The West could first help train and stiffen the mostly ineffective 27,000-strong Petroleum Facilities Guard. Second, it could declare no-drive zones around key facilities, and bomb IS units from the air if they get too close. Third, Western air forces could go after IS arms dumps and command-and-control centres, as they have done in Syria. This need not involve large numbers of Western troops, and it might even be possible to gain UN support. None of this will defeat IS but it would buy more time to reach a political deal. Ultimately, that still offers the best chance of shutting down the caliphate’s third front. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21690030-it-time-take-action-against-islamic-state-libya-third-front/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Britain and the European Union + +The accidental Europhile + +David Cameron’s weedy renegotiation makes a muscular pro-European argument + +Feb 6th 2016 | From the print edition + + + +BY CONTINENTAL and even recent British standards David Cameron has long had a Eurosceptic bent. In 2013 this outlook was combined with a growing anti-EU clamour in the Conservative Party, leading him to promise a grand “new settlement” that would put Britons’ Euro-cavils to rest. Three years later, on February 2nd, after an election victory and several months spent bustling about Europe, Mr Cameron sealed a draft offer with the European Council (see article). In a speech the next day he declared it a triumph. The press and Eurosceptic MPs, on the other hand, branded it a joke (“The great delusion!” bellowed one headline). Who is right? + +Both, to some extent. The deal, it is true, was more of a throat-clearing exercise than a roar of reinvention. Mr Cameron did not fulfil his ambition to overturn Europractice on immigration limits, treaty changes and repatriated powers. His “emergency brake” on migration is a graduated restriction of newcomers’ benefits; the “red card” that lets national parliaments block EU decisions will have little effect, because the threshold to do so is high. Yet the prime minister has won some valuable, if mostly symbolic, concessions to the British vision of a plural, open and liberal union. Pledges to cut bureaucracy, respect currencies other than the euro and let members opt out of “ever closer union” are airy but welcome. Non-euro-zone economies can assert their interests, thanks to a mechanism that delays an agreement if they fear being strong-armed by Europe’s core. + +At home the deal will not change any of the minds that are already made up. But it should help Mr Cameron sway a few undecided voters ahead of the in/out referendum (which is likely to take place on June 23rd if this deal clears the European Council later this month). The first, minor reason is that it makes the union work a smidgen better for Britain. The second, larger one is that the very process of renegotiating has neatly shown the force of the pro-Europeans’ arguments. + + + +In graphics: A guide to “Brexit” from the European Union + +It has exposed a series of anti-EU fallacies. A giant governmental audit that Mr Cameron claimed in 2013 would identify areas where powers needed to be repatriated found the balance broadly appropriate. And if, as Eurosceptic campaigners insist, the “emergency brake” will not reduce immigration, that is because EU nationals come to Britain to work, not scrounge. The brake is unlikely to be renewed in the future because Britain will struggle to show that its migrants constitute an “emergency” (far from it: they pay more into the state than they take out in services). Meanwhile the prime minister’s European peregrinations have given the lie to tabloid bluster about almighty Eurocrats. The shape of his deal has been hammered out in Europe’s capitals with the elected leaders of other governments—just like all the most important Eurodeals. + +A seat at the table + +This highlights the unattractive alternative, of leaving the EU. The trials of renegotiating Britain’s membership would pale in comparison with those of securing a favourable Brexit. At least now the EU and most of its members are on the prime minister’s side. An out vote would reverse their incentives: the harsher the terms of Britain’s flounce, the lower the odds of other countries following it out of the door. Being outside the club would exclude Britain, like Norway and Switzerland, from the continental perma-churn of alliance-building and deal-cutting that forges decisions. + +Only partly by design, the Eurosceptic Mr Cameron has thus vindicated what pro-Europeans have been saying for years: some of the popular hostility to Brussels is misplaced and, even where it is not, Britain sits at more tables, sells more stuff and talks more loudly thanks to its EU membership. Time to close the deal and take that conclusion to the country. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21690029-david-camerons-weedy-renegotiation-makes-muscular-pro-european-argument-accidental/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +HSBC’s domicile dilemma + +Asian dissuasion + +Despite Britain’s bank-bashing mood, HSBC should stay in London + +Feb 6th 2016 | From the print edition + + + +LIKE many firms with roots in Hong Kong, HSBC has traditionally consulted a feng shui master on the design of its headquarters’ buildings. The bank’s dilemma today is more serious: in which country should its headquarters be? For the past year HSBC has debated moving its domicile, which in turn determines its tax base, lead regulator and lender of last resort. + +One option is to stay in Britain, with its bank-bashers, latent hostility towards the City of London and ambivalence about Europe. The alternative is to move back to vibrant-but-riskier Hong Kong, where HSBC was founded 151 years ago and was based until the 1990s. It is not an easy choice, but in the end pub grub and stability trump dim sum and political uncertainty. + +HSBC matters. Regulators judge it to be the world’s most important bank, alongside JPMorgan Chase. A tenth of global trade passes through its systems and it has deep links with Asia. (Simon Robertson, a director of the bank, is also on the board of The Economist Group.) Its record has blemishes—most notably, weak money-laundering controls in Mexico. But it has never been bailed out; indeed, it supplied liquidity to the financial system in 2008-09. It is organised in self-reliant silos, a structure regulators now say is best practice. + +For Britain, the departure of its best bank would be perverse (if only it could deport Royal Bank of Scotland instead). But HSBC is fed up with Blighty. A levy charged on its global balance-sheet cost 10% of last year’s profits; rules on ring-fencing its retail arm will cost $2 billion. Both are meant to protect Britain from global banks blowing up, but they duplicate other measures aimed at the same problem—silos, capital surcharges, “bail-in” bonds and liquidity buffers. Britain says it will lower the levy. But over time Asia, which accounts for 60% of the bank’s profits, will grow faster than Britain, and so HSBC will too. The tension between HSBC’s ambitions and Britain’s suspicion of giant banks is not going away. + +Hong Kong is keen for the bank’s return, which would boost confidence after a torrid time for Chinese markets. HSBC’s biggest subsidiary is already based in the territory and supervised by the Hong Kong Monetary Authority (HKMA), its impressive regulator. By moving, HSBC would not ease its tax bill or capital levels by much. But it would avoid the levy, butt heads with Western regulators less and be closer to its biggest markets. + +From a dirty old river to a fragrant harbour + +Time to pack the bags? One objection is that HSBC is already thriving in greater China: it does not need to be domiciled there to succeed. Nor would moving to Hong Kong insulate HSBC from a British exit from the European Union (see article). But the biggest worry is that Hong Kong is small and a territory, not a country. The HKMA has $360 billion of foreign reserves but it lacks the crisis toolkit of a central bank. It cannot print an infinite amount of money without undermining its currency peg and it lacks a credit line from America’s Federal Reserve to supply it with dollars, HSBC’s operating currency. + +With a balance-sheet nine times bigger than Hong Kong’s GDP, HSBC’s ultimate backstop would be mainland China’s government, whose approach to finance is as transparent as Victoria Harbour. That might deter some customers. It would also annoy America, which might not be keen on HSBC playing a big role in the dollar-clearing system, a privilege that is vital for HSBC’s business. For an Asia-centric bank to be based in London is an anomaly. But, for now, one worth keeping. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21690032-despite-britains-bank-bashing-mood-hsbc-should-stay-london-asian-dissuasion/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +Economics, American politics, immigration, diamonds, Venezuela, divorce, oil, Donald Trump: Letters to the editor + + + + + +Articles Sections Next + +Economics, American politics, immigration, diamonds, Venezuela, divorce, oil, Donald Trump + +Letters to the editor + +Feb 6th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Science v politics + +Your perceptive Free exchange on the ideological divisions in economics (January 23rd) put its finger on key factors in the unsettled status of economics today. It is hard to think of a Nobel prize in natural sciences being shared between two recipients of opposing views, as has often been the case in economics. Nor does it boost the credibility of the Nobel prize in economics if two joint econometric recipients subsequently precipitate the Long Term Capital Management collapse and its derivative consequences based on their model. + +Economists are indeed fortunate to have avoided the fate that befell three Italian seismologists a few years ago, when they were jailed for having failed to forecast an earthquake in their region! + +There were acrimonious debates following the financial crisis of 2008: one plausible explanation for economists’ misreading was that, given the growing dominance of mathematics in economics, it became difficult to detect economic fallacies. Another is that the traditional division between positive and normative economics has been allowed to deteriorate to the point at which ideological bias has become more salient, raising the risk of error. + +John Maynard Keynes still best describes the challenge facing the discipline today: “Economics is the science of thinking in terms of models joined to the art of choosing models which are relevant to the contemporary world.” + +RAYMOND PARSONS + +North West University + +Mahikeng, South Africa + +It was comforting to see your column addressing the ideological dimensions of a profession that too often takes its own “scientific” aspirations too seriously. As the story indicates, economics lies somewhere between science and politics—victim to the same shifts in language and framework that Thomas Kuhn identified, as well as to the whims and agendas of political ideology. + +Economics is both a policy tool and a political weapon. Its reach is too central to political visions, and its hypotheses are too dependent on the incalculable crooked timber of humanity for it ever to be a “hard” science. But we can at least be more honest about its theoretical foundations. A “reputation for impartiality” could actually aggravate the controversy, obscuring and masking economists’ biases. A thorough and transparent solution would look more interdisciplinary: presenting empirical findings alongside the economist’s larger policy goals and ideas of a just polity. + +CONNOR STRANGLER + +Kansas City, Missouri + +You reminded me of one my father’s favourite quotes: “If all the nation’s economists were laid end to end, they would point in all different directions.” He also often said: “The devil can cite scripture to his purpose.” For economists it is statistics they cite. + +VIC ARNOLD + +Westerly, Rhode Island + + + + + +Because because because… + + + +Lexington missed the opportunity to mention Henry Littlefield’s popular thesis that L. Frank Baum’s “The Wonderful Wizard of Oz”, was inspired by the 1896 Bryan v McKinley electoral face-off (January 23rd). Dorothy, or Everyman, wearing silver shoes—ruby in the 1939 film version—(Bryan’s pro-silver stance) travels the yellow brick road (the gold standard), witnesses the oppressed munchkins (citizens), and discovers that the supposedly omnipotent Wizard (a president like McKinley) is nothing more than a fancy façade. Lest the author’s leanings were in doubt, his main character is aided by the Cowardly Lion (Bryan) and has to evade the Wicked Witch of the East (eastern industrialists). + +The way the current campaign is going we voters mostly still hope that a Sanders v Trump contest is just a figment of our imagination. + +YACOV ARNOPOLIN + +New York + + + + + +The sex discrepancy + +The gender imbalance among asylum-seekers and potential migrants to Sweden is unusual in Europe, but is far from extraordinary by international comparison (“Oh, boy”, January 16th). Although in the EU, there are 1.06 men for every woman, in Qatar and the United Arab Emirates men outnumber women by two to three times, largely because of immigration (and the heavy reliance of these countries on migrant labour). + +The solution to Sweden’s predicament may be closer to home: Ukraine, Belarus and Russia, with 0.85-0.86 man for every woman, have the lowest male/female ratios in Europe. The citizens of each of these countries would have good reasons to seek better and safer livelihoods abroad. + +Is there a case for a targeted refugee-recruitment policy? + +JAN FIDRMUC + +Department of Economics and Finance + +Brunel University + +Uxbridge, Hillingdon + + + + + +Shine bright like a diamond + +* In your article about Botswana’s decline in diamond revenues you neglected to mention that it has had a textbook approach to managing capital inflows from its diamond industry for more than two decades (“Losing it sparkle”, January 16th). It has maintained a steady fiscal strategy and invested the peaks in diamond revenues offshore to prevent “Dutch disease”. Botswana has accumulated substantial reserves which has provided it a significant cushion to deal with revenue shortfalls arising from the current decline in diamond exports. + + + +The prudent folks at the Ministry of Finance and the Bank of Botswana will probably encourage the government to spend on infrastructure. Its tourism sector—in spite of being, as you called it, a low paid service sector—has tremendous potential for the long run. The Kalahari desert and the Okavango Delta are unique natural resources on which it can rely for future employment by extracting rents from such uniqueness. The shortfall in diamond revenues may be a blessing in disguise and one for which Botswana is very well-prepared. + +DAVID FRANKLIN + +Sigma One Corporation + +Charlotte, North Carolina + + + + + +Bad examples + +* You stated that Venezuela has put in charge of its economy a left wing sociologist who does not think that printing money causes inflation ("Heading for a crash", January 23rd). Why should he? Over the past 7 years, America and Europe have printed almost three trillion dollars and inflation is nowhere in sight. + + + +DAN KRAVITZ + +Harpswell, Maine + + + + + +A bicycle built for one + +I read with interest your article about divorce in China becoming increasingly in vogue, with the corresponding chart showing its incidence per thousand individuals, which also highlighted the decreasing divorce rates in America and Britain (“Divorce: a love story”, January 23rd). Surely a more compelling graph would show the rate per thousand people who are married? Having read your recent analysis on the decline of marriage as an institution, it is possible that Western couples loathe their partners just as much as do the Chinese but simply don’t need to fill out the analogous paperwork to remedy the situation. + +MATTHEW McBRYAN + +London + + + + + +Crude calculations + +As your excellent overview on oil states, the rivalry between Saudi Arabia and Iran makes it seem unlikely that they and OPEC can agree on production cuts needed to rebalance supply and demand and raise oil prices (“Who’s afraid of cheap oil?”, January 23rd). As an old Texan, I suggest restoring the past pro-ration action of the Texas Railroad Commission (TRC) whose main function from the 1930s until the 1960s was to keep production constrained in Texas so that American and world oil markets were in balance and price stability was achieved. + +Texas currently produces about 3.5m barrels per day. If the TRC were to force Texas producers collectively to cut this in half (as they did in the 1950s), this would just balance world markets. The net result could double the total revenue of Texas oil companies, mineral-right owners and the state’s treasury—plus better employment for the strippers you mentioned—all because the world oil price might rise from $30 back to $120. + +PHILLIP HAWLEY + +La Jolla, California + + + + + +Rather you than me + +I was glad to see that Parliament refused to ban Donald Trump from Britain (“Petition against Trump”, January 23rd). It leaves open the possibility he might end up over there with you instead of over here with us. + +STUART BEAL + +Annandale, Virginia + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21690005-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Europe’s migrant crisis: Forming an orderly queue + +Schengen’s economic impact: Putting up barriers + + + + + +Articles Sections Next + +Europe’s migrant crisis + +Forming an orderly queue + +Europe desperately needs to control the wave of migrants breaking over its borders. This is how to go about it + +Feb 6th 2016 | BERLIN, BRUSSELS, GEVGELIJA, IZMIR AND LESBOS | From the print edition + + + +SYRIA’S five-year civil war has killed hundreds of thousands of people and displaced millions more. It has sucked regional powers into a geopolitical vortex. It has inspired terrorists and fanatics, and exported violence to a historically volatile region. It has also given rise to Europe’s worst refugee crisis in recent times. + +The numbers are, in themselves, not overwhelming: the European Union, with a population of 500m, received 1m illegal migrants last year, slightly fewer than the number of Syrian refugees accepted by Lebanon, which has only 5m people. But the chaos of the flows and the determination of migrants to reach a handful of wealthy countries has set governments against each other and opened cracks in Europe’s piecemeal approach to asylum. No country can resolve the problem alone. But most have responded by unilaterally closing borders and tightening asylum rules, leaving migrants to endure dangerous journeys at the hands of criminal smuggling networks—which elude every attempt at disruption. + +An ever-growing number of border controls undermines the EU’s supposedly border-free Schengen area, hampering trade, commuting and tourism (see article). Political pressure at home may yet force Angela Merkel, Germany’s chancellor, to close her country’s doors, setting off border closures across the continent. Jean-Claude Juncker, the president of the European Commission, says the end of Schengen could cause the collapse of the euro and even the single market, one of the EU’s outstanding achievements. That is an exaggeration, but it would threaten European co-operation in other areas and knock back a club already beset by crises. + +More broadly, the migrant crisis is fuelling the rise of right-wing populist parties across Europe. Anti-immigrant violence is growing in countries that have shouldered the largest burden: this week a German police chief spoke of a “pogrom atmosphere” after a spate of attacks on asylum centres. The Paris killings and sexual assaults by asylum-seekers in Cologne have added terrorism and cultural neuralgia to a toxic brew. Xenophobic nationalism has already set parts of eastern Europe against Germany. The resentments that it creates are a threat to the EU, too. + +While Europeans bicker, the migrant situation remains grave. The death rate in the Aegean Sea has soared in wintry conditions: 365 migrants crossing from Turkey to Greece died or went missing last month (see chart 1). Registered daily arrivals in the Greek islands fell to just under 2,000 in January compared with almost 7,000 last October. But Germany is taking in 3,000 migrants a day, suggesting that the true number reaching Europe is somewhat higher. When spring arrives the flows will surely return to their autumn peaks. + + + +Most proposed solutions look unfeasible, repugnant or pointless. A settlement in Syria is more remote than ever. This week the latest attempt to start peace talks were suspended without making progress. Libya, the gateway to Italy, has no functioning government. Inside Europe, the fences built by politicians like Hungary’s prime minister, Viktor Orban, merely displace the problem. Yet EU governments are bound by law to provide refuge to those fleeing war. They cannot push back migrant-laden boats from Greece (as a Belgian politician reportedly suggested). Ejecting Greece from Schengen, as some urge, would deter nobody, for it shares no land borders with other Schengen countries. + +Plans cooked up in Brussels, meanwhile, are too ambitious, leaving governments to squabble while the migrants pour in. A quota scheme to relocate asylum-seekers across Europe has succeeded only in reviving an east-west split in the EU. Mutual recognition of positive asylum decisions across the EU, which would give refugees the freedom of movement that ordinary citizens enjoy, is years away. + +Instead, the priority must be to restore a sense of order to the migrant flows. That will help overburdened countries like Germany plan for arrivals and reassure worried citizens who see no end in sight. Europe also needs to get much better at distinguishing refugees with a genuine claim for international protection from migrants fleeing hardship, a growing number of whom have started to join the highway to Europe. + +These immediate measures should buy time for Europeans to provide protection for those who need it, to work out how to share the asylum burden more equitably and ultimately to accept more refugees in an orderly fashion. But for that to happen, all the pieces in the puzzle need to fall into place, and in the right order. + +The work begins in Turkey, partly because it hosts 2.7m refugees, most of them Syrian, and partly because it has become a gathering ground for refugees and migrants from elsewhere. There are two parts to the European strategy. The first is a deal hastily assembled last year that rewards Turkey for reducing the migrant flows—including a pledge of €3 billion ($3.3 billion) to help refugees and visa-free access to the EU for Turks in exchange for the implementation of a plan to take back migrants. + +The grand bargains envisaged in the deal are probably too ambitious in the limited time Europe has; all EU governments will have to approve the visa deal, which seems unlikely. The EU dithered before finding the cash this week—and then it is only a fraction of what is needed. The agreement has had some effect: Turkish police targeting smugglers have made 3,700 arrests. But the number of migrants landing on Greek shores has not fallen by as much as the Europeans had hoped. + +Other elements of the deal might prove more fruitful. Turkey recently introduced a limited work-permit scheme for Syrian refugees. Freeing tens of thousands of them from the grip of the country’s vast grey economy could help keep some in place. It has also slashed the number of Syrians arriving from Jordan and Lebanon, many of whom were travelling onwards to Europe, by imposing visa requirements. + +Unburdening the poor + +Much more must be done to ensure that the burden on those countries does not become intolerable. This is the second part of Europe’s approach. Together, Turkey, Jordan and Lebanon host over 5m refugees, including 2m children. Most are poor. Under huge strain, governments are now doing their best to keep refugees out. Some 20,000 Syrians languish in the desert next to Jordan, which refuses to let most in. Lebanon has closed its borders. + +Conditions inside these countries are bad and getting worse, making the hazardous journey to Europe seem more appealing. Half the Syrians in Jordan say they want to leave. Up to 150,000 Syrians sailed from Lebanon to Turkey last summer, seeking to join the migrant trail to Europe. + + + +A donors’ conference in London on February 4th, as we went to press, aimed to secure nearly $9 billion of funding for the region. Britain this week pledged £1.2 billion ($1.75 billion) of new money. Cash is needed for schools and overburdened infrastructure, such as Lebanon’s strained water supply. One idea is for donors to press Jordan and Lebanon to ease restrictions on refugees seeking jobs. European countries can help by ensuring that markets are open. If refugees have reasons to stay, fewer will risk the trek to Europe. + +Stemming the flow across the Aegean saves lives and dents the smugglers’ profits. But the clamour to reach Europe will continue: routes are too well established, smuggling networks too strong and demand too robust. Perhaps two-thirds of Syrians reaching Greece are fleeing the country directly rather than upping sticks from Turkey, Jordan and Lebanon. + +Large numbers will therefore continue to land in Greece. In response the EU has tried to establish “hotspots” on the five islands where most migrants land. But only one of these processing and registration centres, on Lesbos, is fully functional. (Of the six in Italy, one is reportedly working well.) Here, migrants are screened, fingerprinted and interviewed. Interpreters test the claims of self-identified Syrians; many other Arabs claim to come from Syria to improve their chances of getting asylum. Identity cards are checked for fraud under ultraviolet lights. At the end, confirmed north Africans are taken to Athens, from where they are supposed to lodge an asylum claim or face deportation. Most others are given a document that allows them to move on to the Greek mainland independently. Most do so immediately. + +On other Greek islands locals have held up the establishment of hotspots, fearing the impact on tourism. The army is now responsible for opening the remaining four; officials say all will be operational by mid-March. But a spring surge could still overwhelm the hotspots, and there is plenty of anecdotal evidence of migrants evading registration or gaming the system. + +A bigger problem is that registering immigrants will not stop them moving on if they have no fear of being sent back. Since November officials on Greek-Macedonian border have only let through Syrians, Iraqis and Afghans, who have good grounds for asylum (see chart 2). Other countries on the route are starting to do the same. The idea is that word of stricter controls will spread, deterring some from making the journey in the first place. Sub-Saharan Africans, once a common sight in the Serbian border town of Presevo, are almost entirely gone, bar the odd Somali. North Africans are trying to get across, but must use smugglers or act alone, traipsing through woods or ripping up fences. Some are robbed or beaten. Many freely admit that they are coming to Europe for a better life. + + + +Making borders harder to cross is one thing. But Germany and the European Commission are considering sealing Macedonia’s border with Greece altogether. Nikola Poposki, Macedonia’s foreign minister, says that is not feasible, and that the priority is clamping down on illegal routes. But border closures farther up the line would leave Macedonia with no choice, if it wanted to avoid a vast build-up of migrants on its own soil. + +Sealing the border to asylum-seekers could create huge bottlenecks in Greece. The EU’s relocation scheme, which aims to move 66,400 asylum-seekers from Greece (and 39,600 from Italy), is supposed to tackle this problem. For Brussels bureaucrats the plan holds much promise: it turns unpredictable flows of asylum-seekers into orderly distribution and shares the burden equitably across Europe. “It is not for migrants or refugees to choose where to go,” says Dimitris Avramopoulos, the EU’s migration commissioner. + +But fewer than 500 asylum-seekers have been moved so far. EU countries have refused to play their part, smothering the process in red tape. The migrants who agree to move are often woefully ill-informed. One group of Eritreans, preparing to leave Rome for Sweden, remarked to journalists that they were looking forward to leaving Italy’s cold weather behind. + +The EU is sticking to its guns, but even the most optimistic projection will not cope with the short-term build-up in Greece should its northern border close. The government expects to have 40,000 reception places ready in a few months, but may need many more. The UNHCR and EU governments are preparing support. In exchange for Greek co-operation some in Berlin and Brussels have murmured about treating Greece’s vast public-debt pile more leniently when the issue comes up later this year. + +If there is an iron law of illegal migration, it is that border closures shift routes—even fewer people take them. Anticipating a sealing of Greece’s northern border, criminals in neighbouring Albania are sniffing out smuggling opportunities. Officials have observed more flows through Bosnia via Serbia. Italy fears the re-emergence of the central Mediterranean route, which is more dangerous than the Aegean crossing. More could cross into Norway or Finland via Russia. It is harder than ever to predict what sort of diversion will emerge, says Elizabeth Collett of the Migration Policy Institute Europe, a think-tank. + +Europe’s hardening mood appears to be inspiring many to move now, before it is too late. “You can feel the fear,” says a UNICEF worker on the Macedonian border. “They want to get through as fast as possible.” It is only that rapid flow that stopped Greece from collapsing under the weight of migrants last year. No one can be sure that this year will be better. “We may be talking about millions of people,” says a Greek official. “No matter what contingency we put in place, it will overtake us.” + +Too hot to handle? + +One way to alleviate Greece’s burden would be to hasten the return of some migrants to Turkey from Greece. “Hot returns” of migrants whose asylum bids fail, or who choose not to lodge one, are controversial. But an existing deal between Greece and Turkey to send back asylum-seekers could work if Greece declares Turkey a safe place for third-country nationals and Turkey upgrades its rules to allow them to apply for full asylum (currently only Europeans are eligible). In theory returns could take place in days; in practice it is often more complicated. The aim should be to convince nationals with little chance of protection, such as Moroccans or Pakistanis, that there is no prospect of moving on if they reach Greece. Sources say Turkey may be willing to take such people back, though not the far larger numbers of Syrians or Afghans. + +But deporting failed asylum-seekers once they have reached their chosen destination is hard. Some disappear; others exploit generous legal systems. In Germany three-quarters obtain temporary permission to stay after their asylum bids fail, often on dubious grounds like the absence of a passport or self-diagnosed post-traumatic stress disorder. Sweden’s recent announcement that 80,000 of its asylum-seekers were probably eligible for deportation is more a cry of despair than a plan for action. Countries are often reluctant to accept the return of their nationals, not least because they can be a useful source of remittances. No wonder just 40% of failed asylum-seekers across the EU are returned. + +So what will work? Not simply dumping people on planes, as Greece learned in December when most of the 39 Pakistanis it returned home were sent straight back by the authorities in Islamabad on spurious administrative grounds. Similarly, there has been a misguided focus on the bureaucratic fictions of readmission agreements cooked up by the EU with sending countries. Instead European governments must build partnerships with their developing-world counterparts that go far beyond migration policy. The success stories in Europe involve bilateral relationships with long and deep histories: Britain and Pakistan, Spain and Morocco, Italy and Tunisia. + + + +INTERACTIVE: Explore border fences between countries around the world + +The focus should thus be political, not legal. The Germans are thinking about how trade and aid may be used as diplomatic leverage and a source of jobs, particularly with countries that rely on remittances. Improved channels for legal labour migration would help. Governments might also club together to forge return deals with sending countries. The EU is working on a common list of “safe countries”, to which it is assumed most asylum-seekers can be returned. Last year Germany slashed claims from Kosovars and Albanians by placing their countries on its own such list. This week it did the same for Morocco, Algeria and Tunisia. + +Let’s get resettling + +Rich countries should not rely on poor ones to shoulder as much of the refugee burden as they have. Once flows have started to fall, Europe could begin a much more ambitious attempt to resettle refugees directly from the region around Syria. A starting point might be 250,000 a year, with the bulk coming from Turkey. To reach this number countries may need to be less picky about who they take in. Some may want to work with Turkey directly, bypassing the UNHCR, which usually brokers resettlements. EU countries could join forces in identifying and screening candidates to save time and money. Reuniting divided families will be a priority. + +Countries such as Germany and Netherlands will have to be in the vanguard of resettlement; with luck, others will follow. The failed attempt to impose relocation by diktat from Brussels shows that quotas inspire only rancour. But some of the huge unused relocation numbers (from within Europe) can be shifted to the politically easier task of resettlement (from outside). Britain and France can do much better. + +A series of international refugee conferences this year, culminating with a summit in New York in September, will offer a chance to do more. European action might inspire rich countries like Canada and Australia to chip in. The Gulf states could add to their informal share of Syrians by formally resettling more. The presidential campaign may rule out any contributions from America before November, but after that, if there is international momentum, even a Republican president might help. + +The consequences of inaction look clear: tighter borders, more people-smuggling, misery for refugees. Crucially, if the numbers do not fall Germany may lose its appetite for a European solution and follow the unilateral course charted by others. Yet there is an astonishing lack of real urgency among Europe’s leaders. Only Mrs Merkel appears to think beyond the constraints of national politics. + +That may not change. But even self-interest demands a more pressing approach. Otherwise governments that value Schengen may find themselves locked out of it, and countries that thought themselves immune to migration may see their territory turned into refugee marching grounds. Failure to contain the crisis would be a terrible outcome for Europe as it battles to hold itself together. It would be worse still for the refugees it has a duty to care for. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21690066-europe-desperately-needs-control-wave-migrants-breaking-over-its-borders-how/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Schengen’s economic impact + +Putting up barriers + +A permanent reintroduction of border controls would harm trade in Europe + +Feb 6th 2016 | From the print edition + +LONG lines of lorries once blotted the chocolate-box alpine landscape of the Brenner Pass, an important road link between southern and northern Europe. The Schengen agreement, which came into effect in 1995 and has now abolished border controls between 26 European countries, kept those lorries moving. But where trucks go, so do refugees. To stem the flow Austria, Denmark, France, Germany, Norway and Sweden have temporarily reintroduced controls. Others have increased spot checks in border regions. + +Open borders ease the flow of exports as well as individuals. Every year people make 1.3 billion crossings of the EU’s internal borders along with 57m trucks carrying €2.8 trillion ($3.7 trillion) of goods. As well as speeding the passage of Greek olives and German dishwashers, borderless travel allows hotels in the east of Germany to have their sheets cleaned in Poland, where wages are lower, and workers in Italy to commute to Switzerland (also in Schengen though not in the EU), where wages are higher. + +Reintroducing controls such as checking passports and searching lorries is mostly an irritation, though the costs are mounting. A strategy unit of the French government estimates that in the short term border checks within Schengen would cost France €1 billion-2 billion a year by disrupting tourism, cross-border workers and trade. If Schengen collapses the economic consequences would be more serious, it says: curtailing the free passage of goods permanently would amount to a 3% tax on trade within Schengen. The overall effect of hampering cross-border activity would reduce output in the Schengen area by 0.8%, or €110 billion, over the next decade. + +Not only will money have to be found to patrol long-abandoned frontiers. Around 1.7m Europeans cross a border to get to work and in some regions as much as a third of the workforce makes this trip daily. Malmo in Sweden and Copenhagen, the Danish capital, have in effect become one big city. Border controls at the bridge that connects them add around 30 minutes each way. A nuisance could become a deterrent to cross-border employment, reducing job opportunities and the pool of labour employers can draw upon. + +The greatest pain will be felt by exporters. Over a third of road-freight traffic in Schengen crosses a border. Delays are creeping up. Around Salzburg in Austria lorries now sit for up to three hours before getting into Germany. Strict EU rules dictate that such waiting times still count as hours behind the wheel for drivers, who are obliged to rest when they hit an upper limit. If waiting becomes a permanent feature DSLV, a German association of shippers, puts the direct costs at €3 billion a year for the EU as a whole, based on a one-hour delay for every lorry. + +Businesses likely to suffer most include those with perishable goods, such as fruit, vegetables and fish. Others will pass on costs. Suppliers will need to store extra inventory across the continent to ensure customers get deliveries on time. The German chamber of commerce says that once indirect costs, such as renting storage and the impact on transit-trade with non-EU countries, are taken into account the extra costs for Germany alone could run to €10 billion per year. + +Calculations of potential costs depend on what happens if Schengen disappears: will spot-checks merely increase or will countries reintroduce border posts with barriers and barbed wire? Many firms, particularly those used to sending goods to non-Schengen countries such as Britain, may adapt swiftly to stricter border checks. Far worse than the direct costs to trade, says Guntram Wolff from Bruegel, a Brussels-based think-tank, would be the signal that European integration can go into reverse. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21690065-permanent-reintroduction-border-controls-would-harm-trade-europe-putting-up-barriers/print + + + + + +Previous Articles Sections Next + + + + + +United States + + + + +Ted Cruz: The man in the ostrich-skin boots + +Iowa and beyond: Trump bumped + +The campaigns: Heard on the trail + +Election spending: Green grass roots + +Campaigning: A bit MEH + +School choice: A lottery to lose + +Confederate monuments: Recast in stone + +Lexington: Falling towards Hillary + + + + + +Articles Sections Next + +Ted Cruz + +The man in the ostrich-skin boots + +Who is the victor of Iowa, and what sort of president might he make? + +Feb 6th 2016 | CENTERVILLE, IOWA AND AUSTIN, TEXAS | From the print edition + + + +OF THE top two Republicans in Iowa, one is a universally recognisable type. Short on policy, long on ego and bombast, promising to redeem a nation he disparages through the force of his will, Donald Trump’s strongman shtick is familiar from Buenos Aires to Rome, inflected though it is by reality TV and the property business. The other, Ted Cruz, champion of the caucuses, is the scion of a particular version of America and of a peculiar era in its history; a politician who repels or baffles many of his compatriots, even as others rally to his godly standard. + +Superficially the senator from Texas is a classic overachiever, whose ability to surmount Himalayan obstacles—such as winning that office in his first-ever political race—bespeaks and fuels an adamantine self-confidence; the sort whose warp-speed ascent is powered by strenuous calculation and fearsome intelligence. Don Willett, a judge and long-term acquaintance, describes Mr Cruz as a “freakishly gifted” lawyer; watching him argue at the Supreme Court, during his stint as Texas’s solicitor-general, was “like watching Michael Jackson unveil the moonwalk.” + +Like many modern politicians, if not Mr Trump, he is uncannily disciplined. On the trail he tells the same jokes, accompanied by the same gestures and self-satisfied chuckles, reproducing chunks of his book, “A Time for Truth”, verbatim. In good lawyerly fashion, he stretches the bounds of taste and honesty rather than blatantly violating them. + +Yet for all these formulaic talents, in his outlook and appeal Mr Cruz is an idiosyncratic product of the convulsions that followed the financial crisis and Barack Obama’s election, and of his upbringing. Like many of his core beliefs, his evangelical faith—“To God be the glory”, began his victory speech in Iowa—came from his father Rafael, a Cuban refugee who fled to Texas, turned to drink, then found God and is now a zealous preacher. By all accounts, Mr Cruz’s Christianity is profound and sincere: Chip Roy, formerly his chief of staff, recalls visiting his condo to pick up his suit and spying a Bible and other devotional texts at his bedside. It is audible in his cadences and susurrations, his frequent references to scripture, disgust at the Supreme Court’s defilements, and injunctions to prayer: “Father God, please”, he asks supporters to murmur, “continue this spirit of revival, awaken the body of Christ.” + +In Iowa, some were plainly impressed. “He’s a man of faith,” purred a cheering woman at a restaurant that poked from the snow of Manchester into the milky sky. Mr Cruz would be the most insistently religious Republican nominee in decades. + +He would also be the most ardently devoted to the constitution, a fervour itself influenced by his creed—for him, as for the Founding Fathers, Americans’ rights are bestowed by God—and by his background. Before he fled Cuba, Rafael Cruz was tortured, which helps to explain why, for his son, freedom is always imperilled and government constantly on the verge of despotism. To hear him tell it, Obamacare is not just regrettable but tyrannical; gun controls are the high road to the gulag. That vigilance over liberty is widespread in Texas, where he spent most of his childhood (he was born in Canada, which Mr Trump says might disqualify him). He was among a group of teenagers who learned a mnemonic version of the constitution and regurgitated it at clubby lunches. Daniel Hodge, a former colleague and now the governor’s chief of staff, reckons Mr Cruz is a Texan “from his head to his boots”. His lucky pair are made of ostrich skin. + +Defying Reagan + +Calling him a demagogue overlooks the authenticity of these convictions. Better to say that his beliefs, skilfully angled and promoted, have fortuitously chimed with the evolving mood of conservative voters, especially with the emergence of the Tea Party and the backlash against Mr Obama’s agenda and the bail-outs that followed the crash. The fights Mr Cruz picked as solicitor-general—for religious liberty, the death penalty and states’ rights, against abortion and gun control—both reflected his philosophy and set up his long-shot campaign for the Senate. (He is said to have relaxed by playing several chess games at once.) His hardline antics in Washington—most strikingly, his flamboyant effort to “defund” Obamacare, which helped to bring about a partial shutdown of the government in 2013—both served his instincts and laid the ground for a presidential run. + +Critics say the Obamacare stunt tarnished the Republican brand, jeopardised America’s economy, and had just one beneficiary: Mr Cruz. Yet distancing himself from his fellow Republicans is as central to his pitch as excoriating Hillary Clinton. In his book Mr Cruz quotes Ronald Reagan’s 11th commandment: “Thou shalt not speak ill of another Republican.” Despite Reagan’s status in his personal pantheon, alongside God and the constitution, he does not observe it. In 2013 he likened those who eschewed his kamikaze tactics to appeasers of Nazism; now, on the stump, he lambasts mainstream Republicans as corrupt and pusillanimous. + +This push to portray himself as the lone ranger of true conservatism seems to be working. “Talk doesn’t do it for me,” said a man wearing an NRA jacket at Bogie’s Steak House in Albia, where, positioned beneath a stuffed deer, Mr Cruz made his usual, casually thuggish attack on the mainstream media: “You’ve got to look at what somebody’s done.” Not surprisingly, however, it has incurred a cost. + +Politicians often get on better with the public than with people they actually know; to label one ambitious—especially a 45-year-old junior senator running for president—is tautological. But the antipathy inspired by Mr Cruz transcends the routine gripes. It has followed him through the litany of elite institutions in which, for all his digs at the establishment, he has spent his adult life: from Princeton, to Harvard Law School, to a clerkship on the Supreme Court and his bumptious spell on the campaign for George W. Bush in 2000. (His wife, whom he met on the campaign, is a managing director at Goldman Sachs.) He went back to Texas, later to criticise Mr Bush’s bloated conservatism, only after being passed over for jobs in the administration he felt he deserved. He became an outsider, at least rhetorically, after flopping as an insider. As both Bob Dole and Mr Trump recently put it, “Nobody likes him.” + +Father, son and the ghost of holiness + +In fact that isn’t altogether fair. David Panton, his room-mate at both Princeton and Harvard, describes him as “a loyal friend” and “extremely polite, kind and respectful”. At least some of his former colleagues like as well as admire him, speaking fondly of his wit, impersonations of characters from “Scarface” and “The Princess Bride” and generosity to underlings. In Texas Mr Hodge remembers him as “the guy who came with his wife to my mother’s 60th birthday party”. But the damning judgment does seem to hold for one influential subset of Mr Cruz’s acquaintances: his Republican colleagues in the Senate. Not one has endorsed him. + +As he must, Mr Cruz strives to make a virtue of this unpopularity. His strategy rests on mobilising alienated conservatives, in particular the millions of white evangelical Christians who, his team believes, can swing elections when they are galvanised to vote. Conversely his appeal to moderates is limited. He has had little to say to or about the poor, beyond his perpetual gratitude that, when his father was washing dishes for 50 cents an hour, no one was sent by the government to help him. His flagship economic policy is a regressive flat-rate income tax of 10%. Black Americans, anyone concerned about climate change (which he denies) and non-Christians should look elsewhere. Ditto homosexuals: “This shall not stand,” Mr Cruz declares of gay marriage. That grandiloquent but fuzzy pledge exemplifies his gambit: making impossible vows to disoriented voters which are all, at bottom, a promise to reverse history and revive a fairy-tale idea of America. + +His game-plan may itself betray a form of cognitive dissonance—because, beyond Iowa and parts of the South, those elusive evangelical legions may not exist. If the bet comes off, though, the rest of the world is in for a period of abrasive unilateralism. Mr Cruz demonstrates little more interest in foreign alliances than he does in domestic ones; the only foreign leader he namechecks approvingly is Binyamin Netanyahu. He evinces an unholy relish for “carpet-bombing” Islamic State and making the desert glow. Indeed, the violence of his language might interest a psychoanalyst. He says he would “rip to shreds” the nuclear deal with Iran; after introducing his flat tax, he would abolish the IRS, along with numerous other agencies. His insurgent approach to government mostly involves destroying things. He denounces Mr Trump as a man others in Washington can do business with, and, compared with Mr Cruz, he may well be. + +One of the scriptural aphorisms Mr Cruz likes to cite is: “You shall know them by their fruits.” He deploys it to support the claim that he would conduct himself in the White House as he has in the Senate. His supporters believe that. “He’ll do what he says he’s going to do,” said a woman holding a baby and wearing a Cruz football shirt at a campaign event in Centerville. If so, the fruits of a Cruz presidency would be confrontation and rancour. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21689978-iowa-what-sort-president-might-ted-cruz-make/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Iowa and beyond + +Trump bumped + +Ted Cruz may have won, but Marco Rubio came out on top + +Feb 6th 2016 | DES MOINES | From the print edition + +The winner came third + +DONALD TRUMP, flanked by his thoroughbred offspring and wife, showed admirable qualities in Des Moines on February 1st. Acknowledging his defeat by Ted Cruz in the Iowa caucuses, which polls had suggested he would win, the Republican front-runner congratulated “Ted and all the incredible candidates”, thanked his activists, expressed his love for Iowans and said he was “honoured” with second place. He was gracious, touching even. But humility was not what the visibly deflated crowd wanted from Mr Trump. + + + +Understanding Iowa’s caucuses + +Boastfulness is his schtick. Just hours before the caucuses, he delighted a crowd in Cedar Rapids with a promise that, under his presidency, Americans would get so bored of winning they would beg him to lose for a change. No wonder his supporters were downcast at his loss to Mr Cruz, by 24% to 28%—and almost to Marco Rubio, whose 23% surpassed expectations. Mr Trump’s balloon has not popped. Iowa, where 60% of Republican voters are evangelical Christians, had always seemed an awkward fit for an irreligious divorcee. But he now has to win in New Hampshire on February 9th. Campaigning there this week, he was back to his old self in no time: he accused Mr Cruz of having stolen the caucuses and demanded a rerun. + +Mr Trump lost in Iowa because the contest was more normal than anticipated, as politics usually is. The Republican turnout was high; first-time voters represented 45% of the total and, as expected, many backed Mr Trump. But that effect was mitigated by a big turnout of evangelicals for Mr Cruz. His assiduous effort to get them out on an icy evening made Mr Trump’s campaign look dilettantish. + +On the Democratic side, similarly, Bernie Sanders, a leftist outsider, hoovered up support from 20-somethings. Yet Hillary Clinton’s superior organisation rallied enough middle-aged voters to foil him—just. Mrs Clinton was adjudged the winner by a handful of votes, which represented an indignity of sorts. Her rival is a dishevelled septuagenarian with, according to the Committee for a Responsible Federal Budget, a hole of at least $3 trillion in his health-care plans. But given that Mrs Clinton has a poor record in Iowa and little prospect of winning in New Hampshire, it was still a good result for her. + + + +America’s primary agenda: our interactive 2016 election calendar + +Mr Rubio’s support came mainly from members of the “somewhat conservative” Republican mainstream. Many had previously vacillated between the first-term senator and several like-minded rivals—including Jeb Bush, who won only 3% of the vote. The establishment field is even more split in New Hampshire, between John Kasich and Chris Christie, governors of Ohio and New Jersey, as well as Mr Rubio and Mr Bush. But Mr Rubio is now the favourite to consolidate it and leave New Hampshire as the establishment’s man. + +If Mr Trump recovers, that augurs a protracted three-horse race—because Mr Cruz is unlikely to fizzle as previous Republican winners in Iowa often have. In New Hampshire he will go easier on the preaching, make the constitution his lodestar and hope for a top-three finish. That this is a realistic ambition also suggests the extent to which the contest remains far from normal. Anti-establishment sentiment is running high; Mr Cruz, Mr Trump and Ben Carson, who are all dedicated to stirring it, took over 60% of the vote in Iowa. + +So there will be more rabble-rousing, perhaps especially from Mr Cruz. Before Iowa, he had launched an appeal for establishment support, arguing that he alone could stop Mr Trump. The tycoon’s wobble and Mr Rubio’s good result make that seem less plausible. Increasingly, then, Mr Cruz will try to appeal to Mr Trump’s disaffected ranks; he will argue that he alone can foil the establishment. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21690043-ted-cruz-may-have-won-marco-rubio-came-out-top-trump-bumped/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +Feb 6th 2016 | From the print edition + + + +Banana Republican + +“Ted Cruz didn’t win Iowa, he stole it. That is why all of the polls were so wrong and why he got far more votes than anticipated. Bad!” + +Donald Trump’s humility did not last long + +Aw shucks + +“What the team […] should have done was send around the follow-up statement from the Carson campaign clarifying that he was indeed staying in” + +Mr Cruz sort-of apologises for suggesting on voting day that Ben Carson was quitting + +It’s not brain surgery + +“Dr Carson needs to go home and get a fresh set of clothes.” + +Ben Carson’s campaign after Iowa + +Best official campaign item + +“Make America Great Again” + +Trucker hats sold by Donald Trump’s campaign became a hot item for hipsters + +Best unofficial campaign item + +“Make America Gay Again” + +From the Human Rights Campaign, a gayrights group endorsing Hillary Clinton + +Burning Bush + +$2,800 + +Jeb Bush’s campaign expenditure in Iowa divided by the number of votes he won + +Participation trophy + +“If I get one vote, frankly, in Iowa, I’ll consider it a victory.” + +Jim Gilmore got 12 votes out of the 180,000 cast in the Republican caucuses + +They really love me + +“I have the most loyal people, did you ever see that? I could stand in the middle of 5th Avenue and shoot people and I wouldn’t lose voters.” + +Mr Trump on his fans. + +Kill or cure + +“Voters are sick of me.” + +Mike Huckabee ends his campaign + +Too much information + +“I’m a Catholic, but I’ve used birth control, and not just the rhythm method.” + +Governor Chris Christie, August 2015 + +Bad to the bone + +“You may have seen I recently launched a Snapchat account. I love it. I love it. Those messages disappear all by themselves.” + +Hillary Clinton, August 2015 + +Heads it’s Hillary + +“In a case where two or more preference groups are tied for the loss of a delegate, a coin shall be tossed to determine who loses the delegate.” + +The Iowa Democratic caucus guide + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21690040-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Election spending + +Green grass roots + +Ben Carson’s campaign is doomed and its governance tawdry + +Feb 6th 2016 | DES MOINES | From the print edition + + + +AN INTERESTING sideshow in Iowa on February 1st was the demise of Ben Carson’s campaign. In the state most susceptible to his Bible-infused right-wingery, the former neurosurgeon, who in October and November surged to a double-digit lead in Iowa and briefly led the Republican field, came fourth, with 9%. Polling in New Hampshire puts him in eighth place behind Carly Fiorina, a businesswoman with a patchy record and hypertense style of oratory. He says he is not quitting; he would save himself some bother if he did. + +Iowans did not underrate Dr Carson. His surge was fuelled by a remarkable life story—brought up by a semi-literate single mother, he was a medical pioneer—and his reputation as a high-achieving outsider. He fell after both attributes lost their sheen. He was revealed to have embellished parts of his biography: he claimed to have been offered a non-existent “full scholarship” to West Point. He meanwhile revealed himself to be confused by foreign policy, which mattered after a terrorist attack, inspired by Islamic State, in California. Dr Carson’s ignorance of the Middle East was so marked, someone suggested that he thought the Kurds were a variety of Wisconsin cheese. + +His campaign is also notable for something else. That is the novel and opaque ways in which it has been burning through a war-chest of nearly $54m, mostly raised in small gifts from the doctor’s fellow devout social-conservatives. + +For much of the contest, it has had one of the highest “burn rates” of any campaign—by the end of December, Dr Carson had spent 88% of what he had raised. For a political greenhorn, needing to build campaign infrastructure, that is perhaps understandable; but it was striking how little of his expenditure went on hiring staff and how much on raising more money. In the third quarter of last year over half of every dollar raised went on fund-raising, chiefly through expensive, pre-digital methods such as mailshots and telephone marketing largely eschewed by Dr Carson’s rivals. + + + +It was also striking that much of the cash went to companies linked to Dr Carson’s associates. The biggest marketing contracts went to firms with ties to his senior adviser on fund-raising, Mike Murray, including contracts worth $5.6m to a company called TMA Direct of which he is chief executive. A spokesman for Dr Carson acknowledged that raising money from small contributions was expensive, but said the campaign’s contracts represented good value. Others doubt that. “It’s probably fair to say that the vendors that were used and the activities undertaken were not as qualified or efficient as in many other campaigns,” suggests Anthony Corrado, a campaign-finance expert at Brookings Institution, a think-tank. + +There is nothing illegal about that. Campaign-finance laws place tight restrictions on whom cash may be collected from, but not on how it can be spent. “You cannot make yourself rich from your campaign funds,” notes Paul Ryan, of the Campaign Legal Centre. “There is no law against making your friends rich.” It is harder to see what Dr Carson’s 700,000 benefactors, fans of his modest demeanour and scathing attacks on evolution and homosexuality, stand to gain. + +After his campaign is over, the companies that served it will likely retain access to the lists of donors they have compiled, which they may then rent to other campaigns. For their donation, in short, Dr Carson’s fans may have stored up years of begging letters and nuisance calls. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21690010-former-neurosurgeons-campaign-has-been-burning-through-its-war-chest-unusual/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Campaigning + +A bit MEH + +Does political advertising work? + +Feb 6th 2016 | From the print edition + +And would you like ribs with your propaganda? + +CHANNEL-SURFING was no escape. In late January presidential campaigns bought up almost all the advertising on every television channel in Iowa, turning everything from “Sunday Night Football” to “The Big Bang Theory” into brief intermissions between rounds of political WrestleMania. On January 29th, three days before the state’s caucus, 20 hours’ worth of election propaganda saturated Iowa’s airwaves. By January 25th campaigns had spent $53m advertising there; that number will climb once figures for the contest’s final days become available. + +For all the talk of data-driven outreach and micro-targeted get-out-the-vote efforts, television advertising is still the staple on campaign shopping lists. Yet proof that candidates are getting a return on this investment has long been hard to find. Study after study has shown that few voters are motivated or persuaded by advertising—a finding political scientists have repeated so often that it is now known as the “minimal-effects hypothesis” (MEH). + +To measure the impact of advertising so far in the 2016 campaign, The Economist divided the Republican field into pairs of candidates in Iowa and New Hampshire. For each of the days in which both politicians scored above 10% in either the state or national polling averages published at RealClearPolitics (RCP), we counted how many ads, both positive and negative, had been aired in that state about each candidate during the previous week. We then compared this ratio with the two contenders’ relative positions in the state’s RCP polling average. If there were any pay-off to media spending, then candidates who appeared in lots of positive ads and few negative ones should have gained ground when compared with their rivals. + +Polls can be influenced by too many factors to identify the causes of their fluctuations with precision. We tried to control for the impact of news events—such as the revelation of Ted Cruz’s failure to disclose loans he received from Goldman Sachs, or Sarah Palin’s endorsement of Donald Trump—by conducting the study on the difference between each candidate’s national polling average and their polling in Iowa or New Hampshire (where the adverts aired). Even after this, however, the numbers are still affected by campaign rallies, local media coverage and a healthy dose of random variation. + +We found that paid TV airtime did matter, accounting for a modest 13% of the week-to-week changes in polling. In some cases it was more significant: from January 24th to 30th, TV viewers in Iowa saw 866 more positive spots and 220 fewer attack ads about Mr Rubio than they did about Mr Trump. After adjusting for their standing in national polls, the front-runner’s advantage over the Florida senator duly shrank by 5.1 percentage points. Overall, holding nationwide polls constant, we found that candidates could expect to gain a one-point edge over their rivals in the next week’s early-state polling for roughly every 200 net positive ads about them, or every 500 net negative ones about their opponents. + +So do these results vindicate the ad men after all? Not entirely. First, the effects of paid media tend to be short-lived: during the current Republican campaign, the impact of positive ads on polling has been 4.4 times greater during the week they aired than in the subsequent week. This suggests that candidates may do well to imitate Mr Trump and skimp on their media purchases until shortly before the election. Moreover, just because adverts seem to have some persuasive power doesn’t make them the best bang for a campaign’s buck. Political scientists have generally found that “ground game” investments, like knocking on doors and get-out-the-vote efforts, deliver a superior payoff. The victory in Iowa of Mr Cruz, who was heavily out-advertised there but was widely considered to have the best caucus-day operation in the state, shows that ruling the airwaves is not the only way to win. + +A summary of our methodology, along with the underlying code and data, is available here. + +CORRECTION: A previous version of this story mistakenly referred to a comparison of advertising totals between Marco Rubio and Donald Trump in New Hampshire. The figures were actually taken from Iowa. The article has been updated. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21689887-does-political-advertising-work-bit-meh/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +School choice + +A lottery to lose + +An enlightened scheme to benefit poor children seems to do the opposite + +Feb 6th 2016 | From the print edition + + + +IN THEORY it works perfectly. Rather than oblige parents to send their children to the nearest state-run or –funded school, give them a voucher to be spent at a private school of their choice. “The adoption of such arrangements”, argued Milton Friedman in 1955, “would make for more effective competition among various types of schools and for a more efficient utilisation of their resources.” As part of its recovery from Hurricane Katrina, which destroyed many schools in New Orleans, Louisiana undertook one of America’s largest school-choice schemes. According to a new paper by Atila Abdulkadiroglu of Duke University, Parag Pathak of MIT and Christopher Walters of Berkeley, it has not gone well.* + +Increasing school choice is a favourite policy of Republican governors and state legislatures. Since the party’s bumper election year in 2010 the number of voucher schemes has increased from 25 to 59, according to the Friedman Foundation for Educational Choice. The thinking behind this is sound: the well-off already exercise school choice by moving into neighbourhoods with better schools. Why not allow poorer families to do the same? Yet the evidence from the voucher programmes that have been evaluated has been underwhelming: parents like them, but they often do little for their children’s test scores. + +Louisiana’s scheme, brought in by a conservative governor, added a feature that ought to delight progressives: a lottery to assign the vouchers. In 2014 12,000 students from low-income families applied for more than 6,000 vouchers to attend 126 private schools. Lotteries are loved by social scientists because the winners and losers, distinguished by chance alone, are statistically identical. That means differences in outcomes can reasonably be attributed to the programme rather than, say, differences in family circumstances. + +It turned out that this was a lottery to lose. The three economists found that those who received vouchers and moved to private schools had worse test scores in maths, reading, science and social studies than those who missed out. Hunting for an explanation, they wondered whether the weakest private schools had mopped up voucher pupils to fill their seats. But this hypothesis did not stand up. + +Schools in New Orleans have improved dramatically since Hurricane Katrina: high-school-graduation rates have risen from 55% to 73% and drop-out rates have fallen by half. But this has been a victory for central control rather than the market: bureaucrats at the state’s powerful Recovery School District have closed many schools and presided over the opening of many more. More parental school choice seems to have had little to do with it. + +* “School vouchers and student achievement: first-year evidence from the Louisiana Scholarship Programme” by Atila Abdulkadiroglu, Parag A. Pathak and Christopher R. Walters, NBER. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21690052-enlightened-scheme-benefit-poor-children-seems-do-opposite-lottery-lose/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Confederate monuments + +Recast in stone + +A middle way between complacency and destruction + +Feb 6th 2016 | ATLANTA | From the print edition + +Ben Tillman, lyncher on a plinth + +A STATUE’S fate might seem a binary issue: it is either up, like that of Cecil Rhodes, a British imperialist, at Oxford University, or down, like those of Lenin recently toppled across Ukraine, or the Confederate leaders soon to be ousted from their perches in New Orleans. The Atlanta History Centre, however, thinks there is a middle way between iconoclasm and inaction—an approach that might help to salve historiographical rows raging across the South and beyond. + +Since Sheffield Hale, a thoughtful former lawyer, took charge in 2012, the museum has become a lively propagator of regional history. Mr Hale himself comes from on old southern family—many of his ancestors fought for the Confederacy—and says that, in the past, he didn’t appreciate how painful tributes to slavery’s defenders could be for black Americans. He still believes the likenesses of Robert E. Lee and the rest should stay on their plinths, but not quite as they are: educational panels should be added to explain their backgrounds, with scannable codes that link to more information, such as encyclopedia entries, in the ether. + +Wisely, Mr Hale thinks these blurbs should focus as much on the memorials’ origins—many were demonstratively set up 100-odd years ago, serving to buttress segregation—as on their subjects, detailing when, why and by whom they were erected. Thus they would become “artefacts, not monuments”; instruments of education rather than objects of veneration, and more striking in town squares than they would be “in safe places” like museums. Mr Hale points out that relics of the segregation era have mostly disappeared; in time the indomitable generals scattered across the South could commemorate that injustice, instead of their supposed gallantry. + +Some historians endorse this additive approach, already used in Colorado to clarify that a legendary battle against native Americans was actually a massacre. The obvious question, though, is who writes the text? Lots of exposition accompanies the giant Confederate carving at Stone Mountain, for example: it demonises Abraham Lincoln and ignores slavery. (A plan to place a memorial to Martin Luther King on the mountaintop, another sort of compromise, has foundered.) Mr Hale says communities should negotiate their own panels, though the centre offers a template, internet links and an even-handed commentary on the war’s legacy. “The more you take out of the landscape,” he reckons, “the more you diminish it.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21690047-middle-way-between-complacency-and-destruction-recast-stone/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Falling towards Hillary + +Even among her supporters, there was no great enthusiasm in Iowa for Mrs Clinton + +Feb 6th 2016 | From the print edition + + + +OF THE checks on executive power in the constitution, perhaps the least needed is the amendment limiting presidents to two terms. Americans often invest sky-high hopes in those they send to the White House, choosing someone they believe will correct the flaws of a now-despised predecessor. After their first terms, presidents seeking re-election are frequently helped by the trappings of office. But after eight years the mood sours: Americans then long for change, and for someone younger, more competent or less mired in scandal. + +The rules of presidential politics have never been applied to someone quite like Hillary Clinton. In the public eye for decades as a First Lady, senator, unsuccessful presidential candidate and then secretary of state, she is neither a serving world leader nor a fresh face. Mrs Clinton risks finding herself an unhappy hybrid: a candidate weighed down by all the disadvantages of incumbency, while enjoying rather few of the benefits. + +The Iowa caucuses on February 1st—the first electoral contest of the 2016 presidential cycle—saw Mrs Clinton held to a virtual tie by her populist rival for the Democratic nomination, Senator Bernie Sanders of Vermont. Iowa is a state that holds horrid memories for Mrs Clinton: it is where Barack Obama beat her in 2008, halting what had seemed her almost regal progress to the Democratic nomination. This year, addressing supporters in Des Moines on caucus night, Mrs Clinton voiced “a big sigh of relief” after her razor-thin win, before rushing to catch a plane for New Hampshire, scene of the next nominating contest. + +Iowa is not very like most of America. It is 90% white. Many of its Democrats are deep-dyed lefties huddled in college towns surrounded by conservative, God-and-guns farm country. Yet Iowa’s caucuses still offer lessons that will last, starting with the double-edged nature of Mrs Clinton’s strongest suit: her experience. + +In 2008 Mrs Clinton was thumped by Mr Obama in the eastern county of Poweshiek, notably in the handsome Victorian college town of Grinnell. This time Poweshiek gave her almost half its votes. That improvement was hard won. Mrs Clinton and her husband both visited. Caucus day saw volunteers fanning out from a field office to knock on supporters’ doors. A poster in the office asked volunteers why they backed their heroine. At the top, someone had neatly written: “Because she is the best qualified non-incumbent to run since George Washington.” + +David Leitson is the head of “Grinnellians for Hillary”, a campaign group at Grinnell College, a campus gripped by Bernie-mania. Ahead of the caucus he made three main arguments to classmates. First, that Mrs Clinton is ready to serve as president “on day one”. Second, that her plans to make college more affordable or regulate big banks overlap with the Sanders agenda but are more feasible. Lastly, that she has been “battle-tested” by years of ferocious conservative attacks—a trial that Mr Sanders would surely face as a nominee, as a self-described democratic socialist who wants to raise taxes, hugely expand the government and break up big banks. Unbidden, many Iowa Democrats describe a tussle between their heads, which tell them that pragmatic, centrist Mrs Clinton offers their best shot at beating the Republicans, and their hearts, which sing when Mr Sanders growls that America is a corrupt oligarchy. Mr Leitson sees no reason why electability cannot co-exist with excitement. Explaining his passion for the Clinton campaign, the undergraduate said: “My heart is in it because my head is in it.” He is a rarity, though: across Iowa, pollsters estimate, Mr Sanders won eight in ten caucus-goers under the age of 30. Mrs Clinton’s salvation was her support among older Iowans, who turned out in larger numbers than the young. + + + +Gender specific: Hillary Clinton and female primary voters + +Not all Poweshiek Democrats found striking the balance between excitement and electability so easy. Rebecca Petig, a mother of four and an elected prosecutor, was surprised to find herself undecided hours before welcoming fellow party members to her own home, which was to serve as an official caucus precinct (unsure about the etiquette of feeding voters, she thought she might offer banana bread and coffee). Ms Petig sighed that Mr Sanders describes politics “as I’d like it to be, but realistically it’s not going to be that way”. She admires Mrs Clinton’s achievements, and expects her to become the Democratic nominee. But unexpectedly, she finds that she cannot hold Mrs Clinton up as a role model for her teenage daughter. The problem is Mrs Clinton’s “baggage”, involving years of alleged scandals and charges of dishonesty. + +There isn’t anyone else, alas + +Talk of baggage was rife at the Democratic caucus in Poweshiek’s 8th precinct, held in a Grinnell elementary school. Iowa Democrats caucus in public, showing their preferences by standing in corners of the room assigned to each candidate. Seeking to lure undecided voters to their corner, Sanders supporters did not cite the specific misdeeds of which Republicans accuse Mrs Clinton (most recently involving her alleged mishandling of top-secret government e-mails). Instead Sanders backers called Mrs Clinton part of a sleazy and unequal status quo, especially as the recipient of donations and speaking fees from billionaires and “banks that bankrupted the middle class”. + +Mrs Clinton has “been around so long, you sort of get fatigued”, conceded Catherine Rod, a wavering voter at the caucus. She listened as a fellow Democrat urged her to cross to the Sanders corner so that “his ideas can get momentum”. But Ms Rod, a retired librarian, worried about the harm that defeat in Iowa might do to Mrs Clinton, fretting: “I don’t want to trash Hillary.” + +Lots of Democrats feel similarly trapped. They have only one plausible general-election candidate, Mrs Clinton, and understand why lots of Americans are unexcited by her. Assuming that she survives her latest legal woes involving classified e-mails, Mrs Clinton will be the nominee. But Iowa was an early warning. A long, grinding slog awaits. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21690017-even-among-her-supporters-there-was-not-much-enthusiasm-victor-iowa-hillarys/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Mining in Latin America: From conflict to co-operation + +Miners and aboriginals in Canada: I’ll see you in court + +Bello: The endgame in Venezuela + + + + + +Articles Sections Next + +Mining in Latin America + +From conflict to co-operation + +Big miners have a better record than their critics claim. But it is up to governments to balance the interests of diggers, locals and the nation + +Feb 6th 2016 | COCACHACRA, PERU | From the print edition + + + +A COUPLE of hours drive south of Arequipa, Peru’s second city, the Pan-American highway drops down from the high desert of the La Joya plain and threads its way through tight defiles patrolled by turkey vultures before reaching the green braid of the valley of the river Tambo. The river burbles past fields of rice, potatoes and sugar cane. It is a tranquil, bucolic scene. The only hint of anything untoward is the five armed policemen guarding the bridge at the town of Cocachacra. + +Last April the valley was the scene of a month-long “strike” that saw pitched battles between the police and hooded protesters hurling stones from catapults (see picture). Two protesters and a policeman were killed; 150 police and 54 civilians were hurt. The protest was over a plan by Southern Peru Copper Corporation, a Mexican-owned company, for a $1.4 billion copper and gold mine, called Tía María, on the desert bluffs overlooking the valley. Southern, as Peruvians know the firm, says the mine would generate 3,000 construction jobs and 650 well-paid permanent posts and would add more than $500m a year to Peru’s exports. Local farmers insist it would kill their livelihoods by polluting the river. The company denies this: after a previous round of protests in 2011 in which three people died, it redesigned the project to include a $95m desalination plant as a way to avoid drawing water from the river. + +So far the farmers are winning. Because of the protests, Southern suspended the project. Although his government approved Tía María, Ollanta Humala, Peru’s president, gave it only lukewarm support. Southern is waiting for a new government to take office in July. Even then it will be difficult to win local consent. “The conditions will never exist for the company to operate,” declares Jesús Cornejo, the president of the water-users’ committee in Cocachacra. Nearly all the houses in the valley are adorned with flags saying “Farming Yes, No to the Mine”. + +Tía María is just one of many conflicts in Peru between mining, hydrocarbons and infrastructure companies and communities. In September three people were killed in a protest over last-minute changes to the design of Las Bambas, a giant copper mine bought in 2014 for $7 billion by MMG, a Chinese group, from Glencore, a Swiss commodities company, and which began production last month. In February 2015 in Pichanaki, in the eastern Andean foothills, one person was killed and 32 were injured when police opened fire on a mob opposed to natural-gas exploration by Pluspetrol, an Argentine firm. In 2012 protests halted Conga, a copper and gold mine in which an American-Peruvian consortium had invested $1.5 billion. + +In all 53 people have been killed and almost 1,500 injured in social conflicts in Peru, mostly related to extractive industries, since Mr Humala took office in 2011. Peru has foregone investment of $8.5 billion in mining projects blocked by such conflict over the past 15 years, according to Semana Economica, a magazine. + +Battles over the exploitation of natural resources have become common throughout Latin America. The Observatory of Mining Conflicts in Latin America, a coalition of NGOs, logged 215 of them in 19 countries in 2014, led by Mexico, Peru and Chile (see map). In 2013 Chile’s Supreme Court suspended Pascua-Lama, a gold mine straddling the border with Argentina, over fears that it would pollute rivers; Barrick Gold, its Canadian developer, had already spent $5 billion on the mine. Colombia’s Constitutional Court has blocked exploration of a copper and gold deposit at Mandé Norte, north of Medellín, at the request of Embera Indians and Afro-Colombians in the area. + + + +Oil drilling, too, has sparked protests in Ecuador and Peru; so have big infrastructure projects such as hydroelectric dams in Brazil and a proposed road through a nature reserve in Bolivia. But it is mining that has become the biggest source of strife. + +Slicing off the mountain tops + +In the 1990s Andean countries opened their economies to private investment. The result was a boom, featuring vast open-cast mines. These often involve slicing the tops off mountains or drying up lakes. In the past people in the Andes tended to welcome mining; disputes were over labour relations. Modern projects have met growing resistance, partly because democracy has taken root in the region. People are more conscious of the projects’ impact on their environment, of the big money that is at stake and of their rights. + +Opponents of mining often claim it brings no benefit to Latin America, just “poverty…serious environmental harm and…human-rights violations”, as a report by a group of Canadian NGOs put it. Some left-wingers argue that Latin America should abandon large-scale extractive industries altogether, saying they are inimical to development. + +Modern mining is capital-intensive and generates relatively few jobs (though these tend to be skilled and well-paid). Yet the reality is much more nuanced than critics allow. By providing foreign exchange, tax revenues and investment, mining has helped to speed economic growth and poverty reduction in several South American countries over the past 15 years. In Peru, for example, where poverty fell from 49% in 2005 to 23% in 2014, mining exports amounted to $27.4 billion at their peak in 2011, or 59% of the total. In Chile and (to a lesser extent) in Peru, industries have sprung up to supply mines with equipment, spare parts, software and other services. Tellingly, left-wing governments in Bolivia and Ecuador have backed mining and hydrocarbons projects, in the latter case riding roughshod over opposition. + +The latest conflicts come as the mining boom has turned to bust. Faced with plunging prices and profits, miners are slashing investment and suspending projects. That in turn has contributed to an economic slowdown in the region. + +Despite the slump, it remains vital for Latin American countries to find ways of reconciling the interests of diggers, local people and the nation as a whole. This is not easy. Unlike in the United States, minerals in Latin America belong to the state, rather than the private owners of the land under which they lie buried. The state grants mining concessions to companies, which must then reach agreement with the communities whose lives will be disrupted. Most of the benefits accrue to the nation; many of the costs, such as pollution, are borne locally. + +There is a huge asymmetry of power, resources and information between big miners and peasant farmers and herders high in the Andes. Expectations, which may be unrealistic, are aroused. Modern mines often operate as near-enclaves: local people lack the skills to work there and the scale to supply food and other provisions. + +Disputes can arise over land purchases, relocation of the population and compensation payments. Water is increasingly a flashpoint. Mines insist that they clean up waste water—and this is usually true. But sometimes things can go badly wrong. In Brazil in November 17 people were killed and thousands of tonnes of mud released into the river Doce when a tailings dam burst at an iron-ore mine that is a joint venture between Vale and BHP Billiton. In Mexico in 2014, 40m litres of copper sulphate from a mine owned by Southern’s parent company leaked into a river. + +In remote areas of the Andes, companies have come under pressure to supply basic services that the state fails to, such as electricity, schools and clinics. Outside actors, such as political movements and NGOs, may fan conflicts—or help to resolve them. + +Over the past two decades the balance of power has shifted in favour of local populations. Fourteen Latin American countries are among only 22 to have signed the International Labour Organisation’s Convention 169 on the rights of indigenous and tribal peoples. This requires governments to ensure that these groups are consulted about projects or laws that may affect them. Many governments did not foresee the impact the convention would have, says Carlos Andrés Baquero of Dejusticia, a think-tank in Bogotá. Several countries, including Chile, Colombia and Peru, have written the requirement of prior consultation into law. + +There is debate as to whether this gives locals a right of veto. In Colombia mining bosses complain that prior consultation has become a means to extort money from companies. Peru has decided that it doesn’t confer a veto, and has applied the law only to Amazonian tribes and not to Quechua-speaking people in the Andes. There the new system has worked to prevent conflicts in most, though not all, of the oil and gas projects over which it has been invoked. The convention has encouraged people to self-identity as indigenous. But many conflicts involve mestizos. + +The second big change is in regulation. In Peru and Chile all projects are required to submit an environmental impact assessment (EIA). In Peru, this was supervised by the Ministry of Energy and Mines, whose main job is promote investment. “People don’t believe in the rigour of EIAs,” says José de Echave of CooperAcción, an NGO that works with communities affected by mining. Only this year has an autonomous environmental certification agency begun work. Peru devolves half a mine’s corporate income tax to regional and local governments in the area. This has showered some mining districts with more money than they can spend, often fostering corruption. + +Third, spurred by activists in their home countries as well as by changes in host-country laws and politics, some multinational miners nowadays take environmental and social responsibilities much more seriously than in the past. In many cases mutually beneficial agreements can be struck between miners and communities, provided there is trust and goodwill. Communities “are not necessarily against mining but they are very concerned that their decision-making capacity about their land not be taken away from them,” says Tim Beale of Revelo Resources, a Vancouver-based exploration company. If the mining firm understands that, “it will have a much bigger chance of success.” + +One example is Gold Fields, a South African company, which developed a medium-sized gold mine in Hualgayoc in northern Peru. The circumstances seemed unpropitious: the project began in 2004, just when mass protests stalled an expansion by Yanacocha, a big gold mine nearby. Gold Fields began by holding many meetings with local people, at which managers explained the project and listened to concerns. The company promised to employ some locals and train others to use the money they received from the sale of their land to set up service businesses. It brought in an NGO to work with herders to improve pastures, dairy cattle and cheese production. It worked with local mayors to install electricity and drinking water. + +Shut up and listen + +People protest “because they want things rapidly, they fear missing a golden opportunity,” says Miguel Incháustegui, a Gold Fields manager. He says the keys to achieving social consent were to listen more than talk and to ensure that living standards improve for people in the surrounding area. + +Mitigating social and environmental risks is not expensive: it typically adds about 1% to a company’s total costs, estimates Janine Ferretti, head of the Inter-American Development Bank’s environment division. But that is not always true. At the Quellaveco copper project in Peru, Anglo American, a British firm, made an expensive offer to pay upfront to restore a river to its original course after the mine closed. The project is now in limbo. + +Some miners find it hard to change. They see their strengths as understanding geology and managing projects, not engaging in grassroots politics. Others apply best practice in some countries but not in others, notes Mr Beale. + +Southern seems to be in that group. Pinned to the wall of Mr Cornejo’s office in Cocachacra is a decree issued by Peru’s government in 1967 that gave Southern six months to halt emissions of sulphur dioxide from its nearby smelter and compensate local residents for air pollution. Only in 2007 did it stop the emissions. Tía María is not a stereotypical conflict: Cocachacra is one of the 300 least poor of Peru’s nearly 2,000 districts; it has basic services; and its people are mestizo commercial farmers, not indigenous peasants. Guillermo Fajardo, Southern’s manager for the project, blames outsiders for the violence. Nobody in the area agrees. Certainly, the community is divided, and those who support the mine have faced intimidation; the opponents have the support of a far-left party. + +The underlying problem is a lack of trust. “The company might be right but the population feels unprotected,” says Helar Valencia, the mayor of Cocachacra. Tía María only has a chance of going ahead if local peoples’ concerns are addressed “with concrete confidence-building measures” such as the government building a reservoir to ease water shortages, says Yamila Osorio, the regional governor. + +Despite the headlines, more mines go ahead than don’t in Peru, points out Anthony Bebbington, a geography professor at Clark University in Massachusetts. Mainly because it has cheap energy and high-grade ores, many of Peru’s mines are competitive even at today’s prices. Thanks to Las Bambas and other new mines, the country’s copper output is forecast to rise from 1.7m tonnes in 2015 to 2.5m tonnes this year, second only to Chile’s. + +Ironically, the end of the boom may increase both government and public support for mining. In Arequipa, for example, the regional government’s revenue from mining will fall this year to a tenth of its peak, says Ms Osorio. Although low prices have halted some projects, they potentially offer more time for consultations. + +Reconciling the national benefits and local costs of mining is ultimately a problem of democracy. The days when big mines could simply be imposed are over. In that regard, something has been learned from the conflicts of the past two decades. Complaints about pollution are “a means of demanding a better state presence”, argues Vladimir Gil, a Peruvian anthropologist, in a study of Antamina, a big copper mine developed in the 1990s. The opposition such projects arouse can be seen “as a petition to achieve greater participation in national affairs”. In some areas governments might reasonably decide that big mining should not be allowed because of its impact on the environment or on farming. That is what Costa Rica has decided; El Salvador is close to doing so. + +When a project does serve the national interest, it is important that the government backs it. That does not always happen. Carlos Gálvez, the president of SNMPE, a mining-industry lobby in Peru, points out that after this year’s new copper mines and one other project, the pipeline is now empty. To remedy that, he says the next president should defend mining more robustly. + +Mining is a long-term business. Exploration can take ten years, development of a project another five and construction from three to five, says Mr Galvéz. The minerals bust is a reminder that governments should invest the windfall gains from extractive industries in areas such as infrastructure and education to try to develop less cyclical economic activities. But it is not a reason to put off the institutional changes needed to give mining a sustainable future in Latin America. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21690100-big-miners-have-better-record-their-critics-claim-it-up-governments-balance/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Miners and aboriginals in Canada + +I’ll see you in court + +Indigenous groups are suing loggers, miners and pipeline-builders + +Feb 6th 2016 | OTTAWA | From the print edition + +Don’t mess with my rainforest + +“YOU want certainty? Knock at our door and ask our permission.” Dean Sayers, chief of the Batchewana First Nation of Ojibways, a Canadian indigenous group, delivered this blunt advice to a room packed with mining executives last year. He came to the industry’s annual convention because he was tired of “the hillbilly attitudes” of developers “who want to do business in our neck of the woods”, on the north-eastern corner of Lake Superior. In 1849 Ojibways fired a cannon into a copper mine that had gone ahead without their approval. + +These days Canada’s aboriginal groups use public pressure, backed by legal action, to protect their lands against exploitation by outsiders. This month the government of British Columbia reached agreement with forest companies, environmental groups and 26 First Nations communities to protect from logging an area on the Pacific coast larger than Belgium—newly dubbed the Great Bear Rainforest. The deal, which allows logging and mining in areas aboriginals have agreed to, is the culmination of a long public-relations campaign (choosing the Kermode bear as its mascot was a masterstroke). It would have got nowhere without centuries of treaty-making and decades of case law to back it up. + +Aboriginals’ rights were outlined in a royal proclamation of 1763, when European settlers needed their help to survive, and restated in Canada’s 1982 constitution. As they became savvier, and resource companies grew more ambitious, litigation increased. The federal aboriginal affairs agency is party to 554 proceedings involving such rights (not all of which concern resource firms). That does not include disputes between aboriginal groups and firms. Projects as diverse as seismic testing for mineral deposits in Arctic waters and fracking in the west face challenges. Until 1951 such lawsuits were barred. + +They are expensive and can drag on for years; the outcome is never assured. The Tsilhqot’in, who filed suit in 1998 against logging on their ancestral lands in British Columbia, finally won in 2014 and now have title to 1,750 square km (1,100 square miles). But the Innu of Ekuanitshit in Quebec last year lost their bid to stop the Muskrat Falls hydropower project, which they say will affect caribou herds. + +Some big projects are caught in legal limbo. The Northern Gateway pipeline, which is to bring crude oil from Alberta to Canada’s west coast, has been stalled for more than a decade, largely because of opposition from First Nations groups along its route, some of them parties to the Great Bear agreement. The Pacific Northwest liquefied natural gas project, backed by Petronas, a Malaysian state-owned firm, has offered C$1 billion ($726m) in benefits over 40 years to the Lax Kw’alaams nation of northern British Columbia. That has not allayed fears that the project would destroy salmon fisheries. + +When such disputes are unresolved, the price can be high. The Northern Gateway pipeline would add C$300 billion to Canada’s GDP over 30 years. Aboriginals are finding ways to share gains from such projects while minimising the damage they cause. The courts “are getting closer to what we want”, says Mr Sayers. “But they are not there yet.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21690096-indigenous-groups-are-suing-loggers-miners-and-pipeline-builders-ill-see-you-court/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +The endgame in Venezuela + +The country is on the brink of a social explosion that only a negotiated transition can prevent + +Feb 6th 2016 | From the print edition + + + +AT 9.30am on a Thursday six Venezuelans wait for a guided tour of the former military museum that is now the mausoleum of Hugo Chávez, the country’s populist president of 1999-2013. Across the road around 120 people are queuing for food at government-controlled prices from a state-run supermarket. The food queue starts at 3am. “Sometimes there’s food and sometimes there isn’t,” one would-be shopper says. + +In this district of Caracas, once a Chávez stronghold, his aura is fading amid the struggle for daily survival. Long gone are the days when he used a massive oil windfall triumphantly to impose his “Bolivarian revolution”, a mishmash of indiscriminate subsidies, price and exchange controls, social programmes, expropriations and grand larceny by officials. The collapse in the oil price has exposed the revolution as a monumental swindle. + +The government has admitted that in the 12 months to September 2015 the economy contracted by 7.1% and inflation was 141.5%. Even Nicolás Maduro, Chávez’s hapless heir and successor, called these numbers “catastrophic”. The IMF thinks worse is in store: it reckons inflation will surge to 720% this year and that the economy will shrink by 8%, after contracting by 10% in 2015. The Central Bank is printing money to cover much of a fiscal deficit of around 20% of GDP. + +The government has run out of dollars—liquid international reserves have fallen to just $1.5 billion, thinks José Manuel Puente, an economist at IESA, a business school in Caracas. While all oil-producing countries are suffering, Venezuela is almost alone in having made no provision for lower prices. + +This spells misery for all but a handful of privileged officials and hangers-on. Real wages fell by 35% last year, calculates Asdrúbal Oliveros, a consultant. According to a survey by a group of universities, 76% of Venezuelans are now poor, up from 55% in 1998. Drugmakers warn that supplies of medicines have fallen to a fifth of their normal level. Many pills are unavailable; patients die as a result. In Caracas food queues at government stores grow longer by the week. Shortages will get even worse in March, worries a food-industry manager. Violent crime is out of control. + +Rising discontent brought the opposition victory in an election for the National Assembly in December. Stalemate has followed. Chávez turned the institutions of state—including the Supreme Court and the electoral authority—into appendices of the presidency. The court, packed by the legally dubious naming of 13 new justices by the outgoing assembly, threw out four legislators, depriving the opposition of the two-thirds majority needed to change the constitution. Mr Maduro shows no sign of changing course. Last month he issued an “economic emergency” decree, rejected by the new assembly, that mainly offered more controls. His government seems paralysed by indecision and infighting. + + + +In graphics: A political and economic guide to Venezuela + +Henry Ramos, the speaker of the assembly, has given the president six months to solve the economic crisis or face removal by constitutional means. On paper these include a recall referendum, an amendment to shorten his six-year term or a constituent assembly, which could rewrite the constitution. In practice, the rigged court and the chavista electoral authority can block or stall all of these. So the first step, says Mr Ramos, is for the new assembly to replace the 13 justices. That, too, would be vetoed by the court. + +Stalemate is costly. Violent scuffles in food queues and localised looting are everyday occurrences. “We are seconds away from situations that the government can’t control. It’s a very thin line,” says Henrique Capriles, a moderate opposition leader who narrowly lost to Mr Maduro in the 2013 presidential election. + +Most in the opposition and some chavistas believe a negotiated transition is the only way to prevent a descent into bloodshed. The outlines of such a deal are clear. The regime would concede an amnesty for political prisoners and agree to restore the independence of the judiciary, the electoral authority and other powers. In return the opposition would support essential, but doubtless unpopular, measures to stabilise the economy. + +Mr Ramos says that there are “some conversations” but no formal dialogue. On the street, time is running out. Many in the opposition want Mr Maduro’s resignation as the price for such a deal, and either a fresh election or his replacement by Aristóbulo Istúriz, his new and moderate vice-president. But would Mr Maduro go along? He seems transfixed by the thought that resignation would be a betrayal of Chávez’s legacy. In fact, what remains of chavismo would be better off without him. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21690098-country-brink-social-explosion-only-negotiated-transition-can/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Democracy in Myanmar: A strange new world + +Asian nuclear weapons: What lurks beneath + +North Korean missiles: Satellite of Kim + +Politics in Japan: Negative rates, positive polls + +Banyan: Old shoes and duckweed + + + + + +Articles Sections Next + +Democracy in Myanmar + +A strange new world + +Myanmar awakes to new order: a parliament with a freely elected majority + +Feb 6th 2016 | NAYPYIDAW | From the print edition + + + +IT FELT like the first day of school. On February 1st freshly sworn-in legislators belonging to the National League for Democracy (NLD), the party led by Myanmar’s Nobel peace-prize winning campaigner for democracy, Aung San Suu Kyi (pictured, in pink), walked uncertainly through the parliament’s cavernous corridors in Naypyidaw, Myanmar’s capital. Some looked bewildered. Others smiled and chatted with old friends, brimming with excitement. A small kiosk selling souvenirs did brisk business as new MPs bought key rings, fridge magnets and postcards depicting their unfamiliar new workplace. It is part of a sprawling complex of official buildings built by an unelected junta to withstand a popular uprising. Now, for the first time, it is about to be controlled by an elected government. + +For some, getting to parliament on that opening day had involved an arduous trek. It took two of the MPs 15 days by foot, on horseback and by bus just to reach the airport nearest their village, high up in the mountains near Tibet. Others had endured greater hardship: more than 100 of the NLD’s MPs served time in prison for the crime of belonging to the party. One, Bo Bo Oo, spent 20 years in jail for supplying medicine to students who had fled to a remote area after a failed uprising in 1988. While in prison, he says, he remained convinced that one day the NLD would form a government. Tin Thit, a poet, environmental activist and ex-prisoner, said the day felt “like a dream”. + +With its promise to transform impoverished Myanmar after more than 50 years of control by the army, the NLD won 80% of contested seats in November. That has created high expectations—unrealistic ones, some fear. “People expect that the NLD will solve all their problems,” says Mr Bo Bo Oo. “But it will take at least ten years before we see real change.” This view is echoed by Tin Oo, a co-founder of the NLD. The 88-year-old ex-general calls parliament’s opening just “a first step” in a long struggle. + +Behind the throne, or on it + +So far, procedural issues have dominated the new parliament’s agenda: the swearing-in of new members and the election of speakers for the upper and lower houses. A bigger task looms: choosing the country’s president. The NLD’s victory gives it comfortable majorities in both houses, despite the 25% of seats reserved by law for the army. Each house selects one presidential candidate, as does the army. The winner is chosen by parliamentary vote, with the two others automatically appointed as vice-presidents. The president-elect then chooses a cabinet. The new administration will officially begin work at the end of March, when the term of the current president, Thein Sein, ends. + + + +Given the NLD’s bicameral majority, there is no doubt which party will determine who becomes president. But it is still a mystery who that person will be. It is unlikely to be Miss Suu Kyi: the constitution bars anyone with a foreign spouse or children from the job (her sons are British). But she may try to get the constitution changed in her favour. Speaking to journalists on February 3rd, she noted that parliament had until March 31st to choose a president, prompting speculation that she may even be looking for a way to get the constitution revised before then. Whoever ends up getting the job, she has been clear about who will call the shots: she will. + + + +Myanmar in graphics: An unfinished peace + +Miss Suu Kyi’s power will be restrained, however. Despite the NLD’s landslide, the army is still powerful. It controls the home, defence and border-affairs ministries, as well as the country’s security forces and civil service. It can thus frustrate the NLD’s attempts at reform. Revising the constitution may prove even more difficult. That would require a parliamentary supermajority exceeding 75%. The army’s reserved seats give it a veto. Its newspaper said this week that the constitutional provisions regarding the presidency should remain unchanged “for the good of the mother country”. In a national crisis, as defined by the generals, the army can still legally seize control again. + +Many expect that Miss Suu Kyi will try to avoid confrontation with the army, and that she will even appoint ministers who worked in the outgoing administration. She is likely to focus first on ending conflicts involving ethnic minorities living in border areas. As Khin Maung Myint, an ethnic Kachin MP from northern Myanmar, puts it: “Everything that parliament will do is worthless without peace.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21690062-myanmar-awakes-new-order-parliament-freely-elected-majority-strange-new-world/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Asian nuclear weapons + +What lurks beneath + +A nuclear arms race at sea + +Feb 6th 2016 | From the print edition + + + +FIGHTER jets roar overhead, spitting out decoy flares. Helicopters clatter past, bearing commandos rappelling down ropes. Warships lurk in the waters beyond. All week the crowds on the beaches of Visakhapatnam, a coastal Indian city, have been thrilled by the dress rehearsal for the Indian navy’s great martial show: the International Fleet Review between February 4th and 8th. The extravaganza will draw ships from more than 50 countries. + +The last review took place 15 years ago in Mumbai, on the west coast. This time it is being held on the east side—a signal to another rising naval power in that direction: China. India wants to show that in the Indian Ocean, it is supreme. Still, for the sake of good-neighbourliness, China has agreed to participate in the review. + +Many will be looking out for one vessel in particular: the INS Arihant, India’s first nuclear-powered submarine armed with ballistic missiles (SSBN, in military jargon). The 6,000-tonne boat will provide India with the third leg of its nuclear “triad”—it already has land- and air-launched nukes. But in doing so, it will also risk accelerating a nuclear arms race in Asia (see chart). + +Arihant has been undergoing sea-trials and weapons tests. Naval chiefs had hoped formally to commission it during the review. But as The Economist went to press, it was not clear whether this would happen. The SSBN programme has suffered delays. Indian submarines have been plagued by accidents. + +India believes SSBNs are a vital part of its nuclear strategy, which forswears the first use of nuclear weapons. The Indian navy’s latest statement of maritime strategy, published in October, says the country’s nuclear-deterrence doctrine involves having a “credible minimum deterrent” that can deliver “massive nuclear retaliation designed to inflict unacceptable damage” in response to a nuclear strike against India. Because they can readily avoid detection, SSBNs can survive a surprise attack and thus ensure India’s ability to launch a retaliatory “second strike”. + +Some nuclear theorists argue that submarine-based deterrents promote peace by making the other side more frightened to attack first. But the extension of the nuclear arms race to Asia’s seas may still have worrying implications—all the more if North Korea gets in on the act. It appears determined to find a way of sticking nuclear warheads on the end of its erratic missiles (see article). + +China is ahead of the game. It has a fleet of four second-generation Jin-class SSBNs and is testing JL-2 missiles to install in them. These weapons have a range of 7,400km (4,600 miles)—too short, for now, to reach the American mainland from the relative safety of the South China Sea. Pakistan, for its part, is in the early stages of a lower-cost approach. This involves arming diesel-powered subs with nuclear-armed cruise missiles with a range of 700km. + + + +Interactive graphic: A complete history of the world's nuclear weapons + +A report for the Lowy Institute, an Australian think-tank, predicts “a long phase of initial instability” as China and India start deploying nuclear missiles on submarines without adequate training or well-developed systems for communicating with them. It says the build-up may aggravate maritime tensions, as China and India seek to dominate local waters in an effort to turn them into havens for their SSBNs. And the submarines may not even provide the security the two countries are looking for. The institute says the Chinese and Indian submarines are noisy. This makes them easier to detect. + +A more immediate worry to India is Pakistan’s development and deployment of smaller “tactical” nuclear weapons for use on the battlefield. These may make it more likely that any war between India and Pakistan will go nuclear. They also increase the risk of Pakistan’s weapons being used accidentally—or falling into the hands of extremists (such weapons are under the control of lower-level commanders whose professionalism and loyalty may be dubious). Pakistan says tactical nukes are needed because of an Indian doctrine known as “cold start”. Though never formally adopted, “cold start” foresees Indian units being ready to respond to Pakistani provocation (eg, a terrorist outrage) with little or no notice, by seizing parts of Pakistani territory to use as a bargaining chip. + +India says it will not develop battlefield nukes of its own. Instead, it will rely on the threat of massive retaliation against any use of nuclear weapons by Pakistan. Still, it may be another decade before India has a fully-fledged sea-based deterrent. Arihant’s Russian nuclear-power generator is unsuited to long patrols. Initially, the sub is due to be armed with the K-15 missile, with a range of 750km—not enough to reach big cities in northern Pakistan. Striking Chinese ones would be harder still. From the beaches of Visakhapatnam the world will witness not only India’s ambition, but also the many gaps it has yet to fill in order to achieve it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21690107-nuclear-arms-race-sea-what-lurks-beneath/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +North Korean missiles + +Satellite of Kim + +North Korea prepares another provocation + +Feb 6th 2016 | From the print edition + + + +IN ITS quest for nuclear weapons, North Korea is a master of braggadocio. On January 6th the dictatorship of Kim Jong Un declared that it had detonated its first-ever hydrogen bomb, and had thus “guaranteed the eternal future of the nation”. But even its more low-key announcement this week that it now intends to launch an “earth observation satellite” some time between February 8th and 25th has caused global jitters. + +It is the oldest trick in the nuclear book to pretend that the testing of intercontinental ballistic missiles (ICBMs) is nothing but a satellite launch. A rocket that can place a large satellite into orbit can just as easily propel a nuclear warhead to the other side of the world. + +Japan has placed its forces on high alert. Its defence minister, Gen Nakatani, said they had orders “to shoot down any ballistic missile threat”. South Korea has warned the North that it will “pay a harsh price” if it goes ahead with the launch. America is calling even more loudly for fresh UN sanctions against the North. Even China, North Korea’s ally, said it was “extremely concerned”. + +Experts are unsure how much progress North Korea is making with its nuclear-weapons project. North Korea’s boasting is certainly no guide. For example, it is highly unlikely that the detonation in January involved a hydrogen bomb, which is more powerful than the atomic sort. The seismic signature of the test, in an underground complex near the border with China where earlier ones were conducted, suggested the device was similar in size to the one used in the previous test in 2013. At most, experts say, North Korea tested a “boosted-fission” device that uses an additive to achieve a bigger bang. + +There are also big doubts about the missiles. North Korea’s tests of ICBM-type rockets have a patchy record—despite its claims to the contrary. In October North Korea paraded what looked like a scary ICBM: the KN-08. Some analysts believe this is designed to have a range of about 9,000km (5,600 miles), which means it could reach America’s western seaboard. Whether it works is another matter. North Korea probably does not yet have the ability to fire nuclear weapons reliably at America—though every test will bring it closer to that objective. + +For all the chorus of international outrage, the only country that can realistically divert Mr Kim from his ruinous nuclear quest is China: it provides North Korea with fuel and food, and is the main conduit for its financial transactions. But it is reluctant to endorse America’s demands for tougher sanctions. However much China may be embarrassed by its wayward ally, it fears the collapse of the North Korean regime more than Mr Kim’s headlong quest for nukes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21690071-north-korea-prepares-another-provocation-satellite-kim/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Politics in Japan + +Negative rates, positive polls + +Shinzo Abe weathers the exit of a scandal-hit minister with surprising ease + +Feb 6th 2016 | TOKYO | From the print edition + +Sorry + +RECENT days have witnessed unusual phenomena in Japan. On January 29th, for the first time in its history, the central bank adopted negative interest rates as a way of dealing with the threat of deflation. Then came the public’s equally striking response to a bribery scandal involving Akira Amari (pictured), the economy minister, who had resigned a day before the bank’s move. The government was braced for a drop in its approval ratings, but instead public support for it rose in three polls, to over 50%. Shinzo Abe, the prime minister, may be wondering at his luck. + +The Democratic Party of Japan (DPJ), the biggest opposition party, had been preparing to make hay from Mr Amari’s departure—the fourth such scandal in Mr Abe’s cabinet. But the DPJ is still floundering following its defeat in a general election in 2012. It has yet to find a new message that appeals strongly to voters. Its campaign for an election this summer for the parliament’s upper house is not inspiring. “I do not like the DPJ,” one of the DPJ’s posters imagines a voter musing, “but I want to protect democracy.” + +Mr Abe’s skilful handling of the Amari affair helped to minimise the damage. After the scandal broke in the Shukan Bunshun, a conservative weekly magazine, Mr Amari appeared confident of the prime minister’s backing. He was mistaken. Money scandals have been rife in Japanese politics due partly to vague rules on reporting political donations. But the magazine’s allegations that Mr Amari’s office accepted ¥12m ($100,000), including envelopes of cash, from the representative of a construction company seeking favourable treatment from a government agency, proved too much. Within a week, he announced his resignation. In his first, disastrous term as prime minister between 2006 and 2007, Mr Abe had allowed ministerial scandals to drag on with damaging effect. + +Mr Amari’s exit came at an awkward time for Mr Abe as he tries to boost a stubbornly lacklustre economy (though it may get a lift thanks to the Bank of Japan’s interest-rate decision). The scandal has delayed debate in the Diet (parliament) over the government’s budget for the coming financial year, which starts on April 1st, though there is little doubt this will be approved eventually. + +One of Mr Abe’s boldest attempts to promote structural economic reform (there are not many of them), namely getting Japan into the Trans-Pacific Partnership (TPP)—an ambitious 12-country free-trade agreement that includes America—may also suffer delays. Mr Amari was Japan’s chief negotiator for TPP entry. Without his guidance, it will be far harder for the government to get the terms of accession ratified by the Diet during its current session (due to end on June 1st), says Heizo Takenaka, a former economy minister. Even though farmers are to receive some ¥110 billion ($890m) to help them adapt to lower tariffs, opposition to TPP from the farm lobby is expected to be strong. + +Mr Amari’s successor is Nobuteru Ishihara, who leads the second-smallest faction of Mr Abe’s Liberal Democratic Party (he is the son an ultranationalist former governor of Tokyo). Backers of economic reform bemoan the younger Mr Ishihara’s relative lack of economic-policy experience and his proneness to gaffes . + +But apart for his enthusiasm for TPP, Mr Amari was hardly a gung-ho promoter of reform himself. And Mr Abe has his eye on other goals. Such is the opposition’s disarray that there is now even speculation that he may call a snap election for the Diet’s lower house as early as this spring. Though the economy is weak, voters tend to blame China’s slowdown rather than Mr Abe’s policies, says Koichi Nakano of Sophia University in Tokyo. + +Mr Abe may use his political strength not so much to push for economic reforms, but to change the constitution to make it easier for Japan to operate as a normal military power, instead of being bound by its post-war commitment to pacifism. For this he would need the support of two-thirds of legislators in both houses of the Diet (never mind that he lacks it with the public). With the help of like-minded parties, that may be thinkable if the LDP does well in both the upper-house election and a snap poll for the lower house. A strangely resilient Mr Abe may decide that now is the time to try. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21690108-shinzo-abe-weathers-exit-scandal-hit-minister-surprising-ease-negative-rates-positive/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Old shoes and duckweed + +Singapore’s ruling party plans for its next half-century in power + +Feb 6th 2016 | From the print edition + + + +IT SEEMS odd for Lee Hsien Loong, Singapore’s prime minister, to tamper with the political system. His country’s style of government has many admirers. Europeans and Americans envy how efficient and clean it is. Authoritarians, not least in China, gaze in awe at the ruling People’s Action Party, in power since 1959 despite facing regular, unrigged elections. The most recent, last September, returned the PAP with some 70% of the votes. One of the world’s best-paid political leaders, Mr Lee is also one of its most successful. Why fix a machine that ain’t broke? + +Three simple reasons explain why Mr Lee, in a speech to Parliament last month, outlined a set of political reforms. First, this is a tinkering at the edges of the Singapore system, not an overhaul. He borrowed a metaphor from his father, Singapore’s first prime minister, Lee Kuan Yew. Constitutions, he said, are like a fine old pair of shoes: “Stretch them, soften them, resole them, repair them.” They will always be better than a brand-new pair. + +Second, the PAP’s landslide last September means Mr Lee is proposing change from a position of strength. He cannot be accused of panic measures to shore up PAP rule, as he might have been after the previous election in 2011, when the party recorded its worst performance since independence (a mere 60% of the popular vote). And third, Mr Lee, like his father, thinks for the long term. These, he said, are not changes for the next five or ten years but for the decades to come. What he did not say is that the reforms will help the PAP extend its rule far into that misty future. + +All involve further refinement of the Westminster-style parliamentary system Singapore inherited from Britain. The first covers “non-constituency members of parliament” (NCMPs). These posts date back to 1984. As Mr Lee told it, the PAP, having faced no parliamentary opposition at all from 1965 to 1981, when it lost a by-election, decided to its surprise that it was good for government to have opposition voices represented. (This might also have surprised the late J.B. Jeyaretnam, that solo voice of dissent, who was hounded into bankruptcy, and was dismissed by the elder Mr Lee as a “dud”.) So the government mandated a minimum number of opposition seats—at present nine. Since the opposition never wins enough at elections, the others go to its best-performing defeated candidates. But NCMPs have not been allowed to vote on money bills, for example, or constitutional changes, or on motions of no-confidence (not that such a heresy is on the cards). + +Now Mr Lee proposes increasing the minimum number of opposition MPs to 12 (Parliament currently has 89 elected members), and to give NCMPs full voting rights. Yet the opposition’s reaction has been churlish. Low Thia Khiang, of its biggest group, the Workers’ Party, said NCMPs were like “duckweed” in a pond—ie, they lacked roots (in a constituency) and were merely ornamental. A greater cause for worry is that the reform may actually reduce the opposition vote. Many Singaporeans want to see the government held more fiercely to account, but are wary of the inexperienced opposition coming anywhere close to office. Indeed, the Workers’ Party campaigned last year not to form a government but to be a stronger opposition. If that outcome is guaranteed, why not vote for the government? + + + +Lee Kuan Yew's Singapore: An astonishing record + +The second proposed change is to so-called “group representation constituencies” (GRCs). These ostensibly ensure that the ethnic-Malay and -Indian minorities are represented. The public-housing estates where most Singaporeans live are subject to ethnic quotas, so everywhere probably has an ethnic-Chinese majority. Much of Singapore is now divided into four-, five- or six-member electoral constituencies, with parties compelled to include minority candidates on their slates. But these winner-take-all GRCs have had other uses: it is hard for small parties to find enough qualified candidates; weak PAP candidates can be swept into parliament on the coat-tails of a cabinet minister; and the distorting effect of Singapore’s first-past-the-post system is magnified, increasing the PAP’s majority. It was only in 2011 that the opposition first won a GRC. It barely clung on to it last year. Now Mr Lee wants to create more single-member constituencies and to reduce the size of GRCs; the opposition still wants them abolished. + +The third proposed reform is to the largely ceremonial presidency, which since 1990 has been an elected post, with important powers of veto over government appointments and the spending of its vast financial nest-egg. The idea was to introduce a check on the government. Now, however, the worry is probably about the possibility of a rogue president. In the most recent election, in 2011, in a four-horse race, the government’s favoured candidate only scraped home. The election, inevitably, had become political—a contest between the government and its critics. So Mr Lee announced the formation of a constitutional commission to review, among other things, the qualifications a presidential candidate needs—and, presumably, to tighten them. + +Checks and fine balances + +Singapore’s leaders like to attribute their country’s phenomenal economic success in part to the political system: one just contested enough to keep the government honest; but not so much that it risks losing power, meaning it can withstand populist temptations and plan for the future. Mr Lee’s proposed reforms are in that vein—making sure that the system has checks and balances, but only ones the government can control. As opposition leaders were quick to point out, they do not even touch some of the main sources of the PAP’s electoral magic: its public-housing programme; a pliant mainstream press; an election commission that is under the prime minister’s office; and a political climate, even now, where dissent seems a terrible career choice. That Singapore has thrived with so little real restraint on the government is also a tribute to the incorruptibility of the Lee family and their colleagues. Whether it can continue to thrive without them, and without more far-reaching political reform, is a gamble. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21690063-singapores-ruling-party-plans-its-next-half-century-power-old-shoes-and-duckweed/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Financial fraud: Ponzis to punters + +Television news: No news is bad news + +Diplomatic insults: A world of hurt + + + + + +Articles Sections Next + +Financial fraud + +Ponzis to punters + +Financial scams may pose as big a political problem for Xi Jinping as the stockmarket crash + +Feb 6th 2016 | BEIJING | From the print edition + + + +IN 1997 the collapse of several large Ponzi schemes in Albania precipitated mass disorder, the overthrow of the government and the deaths of 2,000 people. The failure, in another country lacking robust financial regulation, of a huge Ponzi scheme is not going to lead to the overthrow of its president, Xi Jinping. But it could cause the government political problems. And it shows that China is as vulnerable as anywhere else to the chaos that can result from financial shenanigans. + +The company that failed was Ezubao, China’s largest peer-to-peer (P2P) lender (one of its now sealed-up offices is pictured). P2P websites connect borrowers and lenders without a bank’s intermediation. Founded in 2014 by Ding Ning, who, according to state media, had done well for himself manufacturing can-openers, Ezubao quickly became one of China’s best-known new financial firms. Mr Ding spent millions on an advertising blitz, ordered employees to sport luxury brands or glitzy jewellery and was interviewed on the government’s web portal about his company’s contribution to Chinese growth. + +But it was dodgy from the start. One executive said that “95% of investment projects on Ezubao were fake”. Another called it, accurately, a Ponzi scheme: instead of paying investors out of revenues from business projects, it was paying long-standing investors with the money deposited by new ones, meaning liabilities exceeded assets and the firm was permanently insolvent. When the police arrested its bosses on January 31st Ezubao had over 900,000 investors who had lost about 50 billion yuan ($7.6 billion) between them. No known Ponzi scheme has had so many victims. To evade scrutiny, managers had buried their account books deep underground. Police took 20 hours to dig them out with excavators. + +Ponzi schemes abound in China. Between 2007 and 2008 the founder of the great ant-farm scam stole $400m from investors in the supposed health benefits of the insects before he was arrested and sentenced to death. Last year in Kunming, a city in the south-west, Fanya Metals Exchange, which mostly traded rare earths, froze $6.4 billion of funds. The chairman disappeared in December (he is thought to have been arrested). Meanwhile police in Guangzhou, according to a newspaper in the southern city, are looking into what has happened to 40 billion yuan deposited with GSM, a firm that no longer exists at its registered place of business. + +China is probably no more prone to financial fraud than other emerging markets (in 2012 the Reserve Bank of South Africa said it had investigated 222 suspicious schemes). But its scams are larger in absolute terms—and reflect its financial system’s distortions. Chinese banking is dominated by state-owned firms that offer depositors artificially low interest rates and make most of their loans to other big state-owned enterprises. P2P lending (of the sort Ezubao pretended to offer) has rushed into the gaps, matching depositors who want higher rates of return with small firms that cannot get credit from big banks. Total P2P loans quadrupled in 2015, to 980 billion yuan, more than in America. + +But the business is very poorly regulated. Realising this, the authorities in December proposed a strict set of rules, including banning P2P companies from financing their own projects or guaranteeing a rate of return. But this comes very late. About a third of the 3,600 P2P sites were classed as “problematic” by the China Banking Regulatory Commission at the end of 2015. Many are doubtless proper businesses but financial information in China is not reliable enough to help investors tell pyramid schemes from ventures that are honest. + +Foiling the phoney pharaohs + +One of the big questions is whether financial fraud will have a political impact. China’s stockmarket meltdown caused ructions worldwide, but relatively few demonstrations in China itself. The opposite has been true for pyramid schemes. Investors in Fanya staged a “citizen’s arrest” of the chairman at a hotel in Shanghai and drove him to the police station. Protests about Ezubao have broken out in 34 cities and the police were told to prepare for the occupation of official buildings in Beijing. Investors think financial firms are regulated by the government, even when they are not, and blame the state accordingly. “My question is simple,” wrote “Mexican man” on Weibo, a microblogging site. “What on earth were the regulators doing?” Mr Xi might ponder that, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21690095-financial-scams-may-pose-big-political-problem-xi-jinping-stockmarket-crash-ponzis/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Television news + +No news is bad news + +How the Communist Party creates the world’s most-watched TV news show + +Feb 6th 2016 | BEIJING | From the print edition + + + +EACH night at 7pm, many of China’s television channels beam the state broadcaster’s flagship news programme into Chinese homes: a remorseless half-hour diet of where Xi Jinping went today, how well the economy is doing and (for a few minutes at the end) a look at all those people in foreign countries killing each other. Despite China’s transformation over the past 40 years, the evening news has changed very little. Around a tenth of the population still watch it—a remarkable number given the profusion in recent years of livelier news sources in print and online. + +News Simulcast, usually known by its Chinese name, Xinwen Lianbo, has chronicled the country’s extraordinary metamorphosis with almost unremitting leadenness since it was first aired in 1978. The same opening tune has been used for nearly 30 years (though the orchestra has improved). News is chosen not for its importance or human interest but for its political value in bolstering the Communist Party. It is translated into eight minority languages, just to be sure its message is understood by as many people as possible. + +The fare has barely changed in decades. A typical programme in the 1980s highlighted the development of a self-opening umbrella and a contest in which happy only children (China had recently introduced a one-child-per-couple policy) performed household chores. Today the backdrop is just more high-tech. Scenes of bullet-trains and microchip makers have replaced those of dreary state-owned factories. Now, as then, reports featuring Chinese leaders—no matter how trivial their activities—nearly always take precedence over other news. A popular rhyming ditty accurately describes the format: “The leaders are always busy, the people are perfectly healthy, the world outside China is extremely chaotic.” + +Early newscasters—almost always one man and one woman—were chosen for their standard Mandarin pronunciation and stolid demeanour; the same few read the news for decades. These have been replaced with younger, more glamorous presenters (though they still need official permission to change their hairstyles). To make broadcasts seem more newsy, banks of TV screens flicker in what appears to be a newsroom behind. But live reports are rare; they create too big a risk of something embarrassing making it to air. + +A fraction of households had TV sets when Xinwen Lianbo started broadcasting. But as China entered the age of mass consumption a few years later, TV news became the perfect vehicle for the party to try to guide public opinion. Xinwen Lianbo’s ratings peaked in the mid-1990s, when 200m-250m tuned in. Now the audience is 130m-140m, though the fall is not as big a worry for the party as it might seem: in 2003 China Central Television launched a 24-hour news channel, giving viewers complete freedom to choose when to catch up with the latest propaganda. Xinwen Lianbo still has more viewers than any other TV news on Earth. + +For many, the programme provides useful clues to the party’s latest thinking, and a chance to see leaders who rarely appear in public. Propagandists have used the news to try to demystify President Xi, says Chang Jiang of Renmin University in Beijing. The president is shown as a man of the people, drinking tea with villagers or kicking footballs. His voice is often heard, notes Mr Chang—perhaps because, unlike his predecessors, he speaks standard Mandarin and is therefore widely understood. Ratings apparently rise when his elegant wife, Peng Liyuan, appears. But such cosmetic innovations are as far as the party will go in tinkering with a brand they consider successful. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21690099-how-communist-party-creates-worlds-most-watched-tv-news-show-no-news-bad-news/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Diplomatic insults + +A world of hurt + +Poor China: so vast and so sensitive + +Feb 6th 2016 | BEIJING | From the print edition + + + +“I’VE hurt the feelings of the Chinese people.” So said Peter Dahlin, a Swedish citizen, in a televised “confession” after his arrest in Beijing in January. There were several disturbing aspects about the admission, including the likelihood that it was made because of pressure exerted on Mr Dahlin, who ran a Beijing-based legal-advice group (he has since been expelled). But why would the government put those particular words into his mouth? + +Other countries, especially authoritarian ones, also like to express outrage about the state of their citizens’ emotions. But China is a world leader in this specialised form of righteous indignation. David Bandurski of the China Media Project at the University of Hong Kong has counted 143 instances of the phrase “hurting the feelings of the Chinese people” in the People’s Daily, the Communist Party’s mouthpiece, since 1959, when India became the first to be accused by the party of doing it—during a border dispute. + +Since then, Japan has upset China most often, with 51 offences, followed by America, with 35. But you do not have to be a rival or neighbour to do it: the tiny Caribbean nation of St Lucia hurt the feelings of China’s 1.3 billion people by reopening diplomatic ties with Taiwan in 2007. How many of them had heard of St Lucia is not clear. + +Albanian insults aimed at Mao Zedong in the 1970s; the defection of a tennis player to America in 1982; the accidental bombing of China’s embassy in Belgrade in 1999: all have caused emotional scarring. But three things are particularly offensive: being nice to Taiwan (28 occasions of bruised feelings); sympathy with the plight of Tibet (12); and failure to come to terms with the second world war (hence Japan’s multiple offences). Oddly, general complaints about China’s human-rights abuses are usually shrugged off—the People’s Daily has reported only two cases of hurt feelings relating to those. + +The public’s supposed outrage is a useful tool: it enables the party to put aside its principle of non-interference in the internal affairs of other countries. For example, it often complains about Japanese politicians’ visits to the Yasukuni shrine in Tokyo, where war criminals are among those honoured. But the party is rarely keen on letting people express their feelings for themselves. It regards spontaneous public outbursts as a potential threat to the party’s control, loss of which would truly hurt. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21690097-poor-china-so-vast-and-so-sensitive-world-hurt/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Jihadists in Libya: The next front against Islamic State + +Jordan: At boiling point + +Algeria: Who is in charge? + +The International Criminal Court: Africa’s leaders protect each other + +Kenya’s flower trade: Leaving on a jet plane + + + + + +Articles Sections Next + +Jihadists in Libya + +The next front against Islamic State + +Libya’s civil war has given the “caliphate” fresh opportunities. Western military intervention will be needed sooner rather than later + +Feb 6th 2016 | CAIRO | From the print edition + + + +FIVE years after Western air power helped remove Muammar Qaddafi, the chances of another intervention in Libya are steadily increasing. Islamic State may be retreating in Iraq and under pressure in Syria, but in Libya it is a growing menace. At a meeting in Rome on February 2nd of the international coalition against Islamic State (IS), Libya was high on the agenda. That followed talks in Paris on January 22nd in which General Joe Dunford, the chairman of America’s Joint Chiefs of Staff, agreed with his French opposite number that they were “looking to take decisive military action” against IS in Libya. It has since been confirmed that American and British special forces are already on the ground there in small numbers, making contact with local militias. + +Unsurprisingly, the same conditions that have made Libya such fertile territory for IS are also making it hard to plan an intervention that would have a good chance of success. The spread of IS has been helped by a 20-month-long civil war in which it has been happy to attack both sides. In the west it faces Operation Dawn, a cobbled-together alliance of Misratan, Berber, Islamist, and other militias that back the so-called National Salvation Government in Tripoli. In the east it faces Operation Dignity, an equally loose-knit coalition of militias and regular military forces that includes some former regime supporters. Operation Dignity is led by General Khalifa Haftar, who backs a rival parliament, the internationally recognised House of Representatives, which is based in the eastern city of Tobruk. + +It has not all been plain sailing for IS. It suffered a setback in mid-2015 when its attempt to take over the eastern town of Derna met resistance from local tribes, repelled by its brutality, and rival Islamist militias. But since absorbing the most militant members of a powerful local jihadist group, Ansar al-Sharia, it has succeeded in establishing an area of control spreading out about 100 miles (160 km) on either side of Sirte, Qaddafi’s old coastal stronghold, which sits between Tripoli and Benghazi. + + + +The Arab spring, five years on + +From Sirte, now described as the new Raqqa (IS’s capital in Syria), IS is expanding east and attacking oil installations at Sidra and Ras Lanuf. The militia-based Petroleum Facilities Guard, although hugely outnumbering the 5,000 or so IS fighters in the area (the UN estimates 3,000, which may be on the low side), appears unable or unwilling to prevent IS from doing further damage to an industry that has seen output fall to less than a quarter of the 1.6m barrels a day being pumped in 2011. + +The mounting concerns about IS in Libya have spurred diplomatic efforts to end the civil war through the creation of a government of “national accord”. Hopes were raised by a peace deal brokered by the UN that was signed in Morocco on December 17th by delegates from the rival parliaments. Lacking broad support, the agreement was premature. Both assemblies insisted that the signatories represented only themselves. Nevertheless, the UN appointed a presidential council, which in turn named a new government under prime minister Fayez Sarraj, a member of the Tripoli-based parliament, that is now waiting in a hotel in Tunis. + +On January 25th the parliament in Tobruk rejected the proposed government, while affirming the peace plan, if changes were made. The most important demand is for the removal of Article 8 of the agreement, a provision that would give the presidential council the right to appoint the heads of the armed forces and the security services. That would threaten the position of General Haftar, who harbours ambitions to be Libya’s next strongman. Supported by outside powers, including Egypt, General Haftar still holds much sway in the east, where his forces have cracked down on dissent. But he has a growing number of critics. + +Deal or no deal + +The UN has said that it will not reopen the deal. The parliament in Tripoli has not voted, but its prime minister, Khalifa al-Ghawi, has threatened to arrest the new government’s guards if they enter western territory. It does not help that Tripoli is also the location of the Libyan state’s only functioning institutions: the national bank, the state oil firm and the sovereign wealth fund. “The entire plan is looking pretty forlorn and anaemic,” says Frederic Wehrey of the Carnegie Endowment for International Peace, a think-tank. + +Divisions within the army may ultimately undermine General Haftar in the east. He is already despised in the west, where he is seen as a scourge of the Islamists. But for now Libya is no closer to a unified command that could bring together its various combatants and ally with Western powers to fight IS. Much of the public distrusts the UN, not least because its former envoy to Libya, Bernardino León, took a job with an official think-tank in the United Arab Emirates, which supports Mr Haftar, after stepping down last year. But they have also grown tired of the fighting. Nearly half the population needs humanitarian assistance, says the UN. Over 1m Libyans are thought to be suffering from malnutrition, and 500,000 have been forced from their homes. + + + +Where does this leave the plans for a Western intervention against IS? In Rome John Kerry, America’s secretary of state, suggested that once the unity government is formed outside powers will respond to any request for military help, not least because they want to defeat IS. That assumes, however, that the international pressure on the two parliaments in Tobruk and Tripoli is close to yielding a deal that sticks. But as Claudia Grazzini of the International Crisis Group says, Article 8 is the “cornerstone” of the agreement. Tobruk’s opposition to it, she says, means that all the other guarantees contained within it, such as consensual government based on a separation of powers, “just crumble”. + +Meanwhile, by targeting oil and petroleum infrastructure, the jihadists of IS are trying to destroy any chance that anyone will be able to put the Libyan state back together. The central bank has burned through much of its foreign reserves paying salaries and subsidies to both sides, while the Libyan Investment Authority’s funds remain frozen. If oil production falls even further, the humanitarian disaster will only get worse. + +Nobody has any illusions that, on their own, Western air strikes can do more than contain IS. But Ms Grazzini says putting large foreign forces on the ground would be “unwise and risky”, and efforts to pick militias deemed worthy partners might just mean strengthening them in their battles against other local groups. Mr Wehrey agrees on the need to proceed carefully, but says that “we can’t wait” for a unity government to be “pushed over the line”. He is more hopeful that special forces on the ground can work with local militias, such as the Misratans, who have repeatedly asked for military assistance from America as “co-ordinator, broker and referee”. Air strikes, he believes, can play an enabling role and disrupt IS operations. In a situation where there are no good options, doing nothing may be the worst. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21690057-libyas-civil-war-has-given-caliphate-fresh-opportunities-western-military/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Jordan + +At boiling point + +The country is stable, but it will not be easy to keep it that way + +Feb 6th 2016 | AMMAN | From the print edition + +Barely coping + +IT IS sometimes dubbed “the Hashemite Kingdom of Boredom”. That may not be very flattering. But while Jordan will never be an economic or political powerhouse, you can do a lot worse than be boring in the Middle East these days. + +Jordan, after all, shares frontiers with both Syria and Iraq. From its foothold there, Islamic State (IS) has ambitions to expand the borders of its “caliphate”. Jordan itself has bred many a jihadist. Some have climbed to the top ranks of al-Qaeda or inspired it; 2,000 or so have joined IS; others are biding their time at home. Jordan is already home to roughly 1.3m Syrian refugees, not to mention hundreds of thousands of Iraqis and long-term Palestinian residents, many of whom are keen to head to Europe. + +Moreover, the Hashemite Kingdom is no stranger to the problems that sparked turmoil in other Arab states. People took to the streets in 2011 demanding that the royal court relinquish some of its powers, calling for corruption to be stamped out and protesting about the dire state of the economy. Little has improved since then. But Jordan’s King Abdullah has so far managed to ward off disaster through a combination of skill and good fortune. + +Abroad, he has managed to keep friends in a divided region. He has resisted pressure from Saudi Arabia, his bulky neighbour and regular grant-giver, which wanted Jordan to let weapons flow across its border to Syria. Instead, he is trying to create a sort of buffer zone to stop the refugee flow from southern Syria by quietly arming some of the rebels there, but not forcefully enough to incur Bashar al-Assad’s wrath. He manages to have relations with Iran, Saudi’s nemesis, too. + +At home, Jordan has gained from a fear that set in across the region as countries fell apart. The criticisms remain, but “now people just want a safe haven in Amman, a weekend retreat at the Dead Sea and tourists to come to Petra,” says a foreign resident. To be fair, Jordan is doing more than most countries to meet some of its citizens’ demands. For one, its security forces do not shoot at protesters. There is more lip service than real reform, but a new election law has made some people keener on polls, which must take place by the end of next January, says Jumana Ghneimat, the editor of Al Ghad, a local paper. + +This uneasy peace will not be easy to keep. The king is warning that his country is at “boiling point”. Jordan is refusing to take any more refugees unless foreign donors, gathering in London on February 4th, give more. Angst towards (and despair among) refugees is growing. Jordanians, like the Lebanese and Turkish, have become more and more annoyed at the presence of so many Syrians. They are blamed for a host of ills, from a rising rate of child marriage (for which there is some evidence) to increased crime rates (for which there is none) and unemployment. + +Though Jordan’s Azraq camp is only a third full, some 20,000 Syrians are stranded at the north-eastern border of the country near Iraq, waiting to cross. Jordan is letting in only a few dozen every day. The government is in a bind, but could help itself. Until very recently it had not allowed any Syrian refugees to work for fear they would stay for good. Rather than see them as a burden, Jordan could look at how they could contribute to economic growth, says Andrew Harper, who heads the UN’s refugee agency in Amman, Jordan’s capital. + +Improving the economy would ease Jordanians’ gripes. The regional crises have, unsurprisingly, deterred tourists and investors. Only half the number of people visit Petra today as in 2010. The economy depends on charity from the Gulf rather than what it produces itself: unemployment is around 30%. The debt-to-GDP ratio reached 91% last year from 67% in 2010. As prices go up, people are feeling the pinch. + +Youngsters, who are a majority of the country’s people, are almost absent from politics. The prime minister, Abdullah Ensour, is 77. “The politicians come from a museum,” says Amer Sabailah, a local analyst. “Jordan has taken for granted the people’s fear of the regional situation to keep business as usual.” + +Muslim Brotherhood types are sidelined too, despite making up the bulk of the opposition. “Elections are a decoration,” says Nimr al-Assaf, a Brother, who says the king has met party members only once since taking power in 1999. The parliament is still fairly toothless. + +Jordan’s biggest worry is an attack by IS or its sympathisers. But Ms Ghneimat thinks the focus on security alone is misguided. She regularly runs articles criticising the state’s inattention to ideology and radicalisation. The government has only recently started to overhaul religiously intolerant schoolbooks; too many preachers in mosques whip up hatred. Even though 2% of Jordan’s 6.5m people are Christian, around Christmas many imams declared the festival haram (forbidden). “The problem is IS has offered a vision to our young, disenfranchised people,” says Ms Ghneimat. “Jordan will not survive unless our leaders offer the same.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21690003-anxiety-over-refugees-and-struggling-economy-puts-pressure/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Algeria + +Who is in charge? + +Rumours swirl around an ailing president + +Feb 6th 2016 | CAIRO | From the print edition + +Anyone seen this man? + +IT SOUNDS like a missing-person notice: 78-year-old man, wheelchair-bound, not seen in public for over two years. But this is a description of Algeria’s president, Abdelaziz Bouteflika, whose ill health, including two strokes in recent years, has led to rumours of a palace coup. + +Mr Bouteflika can hardly speak and is said to communicate by letter with his ministers, who nevertheless insist that the old man is compos mentis and in charge. But several close associates of the president aren’t buying it. Having not seen Mr Bouteflika for over a year, they have demanded a meeting with him—so far to no avail. Missing person is right, they say. + +Algerian politics is nothing if not murky. For decades a cabal of unelected power brokers has run the show. Known as le pouvoir (the power), the shadowy clique is composed of members of the economic, political and military elite. But with Mr Bouteflika’s health in decline, there appears to be a struggle within the group over who will succeed him. + +The divide has manifested itself in changes to the security services ostensibly enacted by Mr Bouteflika since his re-election in 2014. Several top figures have either been pushed out or arrested, most notably General Muhammad “Toufik” Mediène, who was sidelined after leading Algeria’s intelligence service, known as the DRS, for 25 years. With a file on nearly everyone, Mr Mediène was a political kingmaker (and a brutal foe of Islamist rebels). + +In January the DRS was dissolved and replaced by three new directorates under the president. The moves seem aimed at clearing out independent figures, such as Mr Mediène, from le pouvoir. More power now rests with Ahmed Gaid Saleh, the army chief of staff, who is a close ally of Mr Bouteflika, and with the president’s younger brother, Said, who some say is calling the shots. But experts say Said does not have the support of the army, or the public. + +Algerians have grown accustomed to mystery. Few knew that Houari Boumédiène, Algeria’s second president, was even ill until he died in 1978. At the time, Mr Bouteflika was seen as a potential successor, only to be passed over by the army. Two decades later the generals finally tapped him for the job. + +But today’s uncertainty comes at a bad time for Algeria, which largely avoided the tumult of the Arab spring. The government has been able to buy peace at home with subsidies, social housing and big pay rises for state employees. But collapsing oil revenues make this system unsustainable. Protests over rising prices and stagnant incomes are now common. Unrest in neighbouring Libya and Tunisia, and the spectre of jihadism, have added to the anxiety. + +Revisions to the constitution, promised during the Arab spring and handed to parliament only last month, are meant to appease the public. They would limit presidents to two terms, reversing a move by Mr Bouteflika who, if alive, is currently serving his fourth term, and make the Berber language official. Otherwise, they mostly maintain the status quo. There was some debate over creating a post of vice-president to grease the succession process. This was rejected. By whom is unknown. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21690070-rumours-swirl-around-ailing-president-who-charge/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The International Criminal Court + +Africa’s leaders protect each other + +As a former president faces trial, his incumbent colleagues vilify the court + +Feb 6th 2016 | From the print edition + +The plague in The Hague + +ON JANUARY 28th the Ivory Coast’s Laurent Gbagbo became the first former head of state to go on trial before the International Criminal Court (ICC) at The Hague. Three days later the African Union (AU) resolved, among other rude comments about the court, to support Sudan’s President Omar al-Bashir in his determination to ignore the warrant for his arrest on charges of genocide in Darfur. It also expressed “deep concern regarding…the wisdom of the continued prosecution” of African leaders including Kenya’s deputy president, William Ruto, who faces charges of orchestrating violence after an election eight years ago. Kenya’s President Uhuru Kenyatta, who faced similar charges which the ICC dropped in 2014, is urging African members of the ICC to withdraw from it. + +That may not happen soon, if at all, and it is unclear how many African countries may wish to bunk out of the court’s jurisdiction: not, presumably, the Ivory Coast, whose current president delivered Mr Gbagbo to The Hague. But the episode stirs yet more bad blood between the continent’s rulers and governments of the rich world, most of which back the court, and makes it harder to promote the notion that no leader who commits atrocities should enjoy impunity anywhere. + +Unlike the elusive Mr Bashir, Mr Gbagbo, now 70, was unable to prevent his enemies from landing him in the ICC’s dock. Having lost a presidential election in 2010 after a decade in office, he refused to step down—and is now accused of egging on his militias and security forces to commit a string of atrocities in a bloodily vain effort to stay in power. In April 2011 he was captured, and seven months later sent to The Hague, where he has been accused of prompting his henchmen to commit murder, rape and other heinous crimes. + +The court is vulnerable to the charge of exercising victors’ justice, because militiamen who backed the Ivory Coast’s current president, Alassane Ouattara, against Mr Gbagbo also committed atrocities—but none of them has been indicted. The court’s doughty chief prosecutor, Fatou Bensouda, a Gambian, says she will investigate all sides. But Mr Ouattara seems loth to co-operate with her over crimes committed by his friends. + +In any event, the court must still refute the more damaging charge of bias against Africa. When it began to operate, in 2002, African leaders were among its keenest backers, mindful of recent horrors in such places as Rwanda, Congo and South Africa under apartheid. Most African governments signed the statute that led to the court’s creation. And though it is true that the first nine “situations” (as the court calls its sets of cases) to be put before the court have all been African, six were brought to it by the relevant African governments themselves; two were referred to it by the UN Security Council; and the cases to do with Kenya were taken to it with the co-operation of Kenya’s then government, after Kofi Annan, a Ghanaian former head of the UN, had mediated an end to the dreadful post-election violence and endorsed the ICC’s involvement. The latest situation to be investigated by the ICC prosecutor concerns atrocities committed in Georgia during its war with Russia in 2008. + +Moreover, the African leaders who castigate the court for tackling their peers sound less protective of smaller African fry who fall into the ICC’s net. Niger’s government was happy to send a Malian jihadist to The Hague last year. The Democratic Republic of Congo has allowed the ICC to send back a warlord, Germain Katanga, to face further charges at home after serving a sentence handed down at The Hague. And Uganda’s President Yoweri Museveni, a vehement critic of the ICC, was no doubt content when Dominic Ongwen, a leader of the murderous Lord’s Resistance Army that has blighted northern Uganda, stood before the court in The Hague at the end of last month. But unlike Mr Gbagbo he plainly wasn’t “one of us”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21690072-former-president-faces-trial-his-incumbent-colleagues-vilify/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Kenya’s flower trade + +Leaving on a jet plane + +The long journey of those special stems + +Feb 6th 2016 | NAIVASHA | From the print edition + +Roses are green + +IF YOU come home to a vase full of roses on Valentine’s Day in Europe there will be a good chance they were picked a few days earlier on the shores of Lake Naivasha in Kenya. The fertile Rift Valley soil, warm days and cool nights make for perfect flower-growing conditions. + +The Netherlands still dominates the global horticulture industry, but Kenya is digging itself a growing niche. Its cut-flower exports increased 12-fold to 137,000 tonnes between 1988 and 2014 as buyers realised it was cheaper, and counter-intuitively greener, to fly blooms thousands of miles than to heat Dutch greenhouses. More than 30% of the European Union’s cut-flower imports now come from Kenya. Most are roses. + +After being cut from inside the pale, plastic greenhouses crouched by the lakeside, the thorny stems are stripped of excess leaves and packaged to customers’ specifications. The bunches are then shepherded into 5°C cold rooms by workers in quilted boiler suits before being driven to Nairobi airport, landing at Amsterdam’s auction or with in-country agents around 48 hours after being plucked. + +For many farms this is the busiest time of year—Britain’s Mother’s Day and Women’s Day in Russia come just three weeks after Valentine’s. Maridadi Flowers in Naivasha, for instance, will sell around 10.5m roses over the period, 15% of its annual harvest. Others opt to keep production steady. Cultivating plants for such a short spurt of demand is “a dangerous game”, says a farmer: a cold snap could mean flowers take longer to bloom and miss the bouquet-giving season. + +The industry is one of Kenya’s biggest foreign-exchange earners, alongside tea, tourism and remittances. After a series of exposés of poor conditions, most farms now abide by health-and-safety standards and pay for workers’ medical care. Wages have fallen in real terms over the past decade, thanks to rampant inflation, but the jobs are still sought after: around 150 men and women recently queued up to apply for 20 posts at Nini, a 44-hectare farm employing over 500 people. + +Flower farms are also managing and recycling water better after being accused of draining and polluting Lake Naivasha. It makes sense for overseas buyers to demand high standards: there’s nothing romantic about environmentally unfriendly roses harvested by miserable workers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21690077-long-journey-those-special-stems-leaving-jet-plane/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +France’s Socialists: Beardless youth + +German youth: Girl, not abducted + +German Russophiles: Bear-backers + +Russia and Chechnya: Putin’s Chechen enforcer + +Charlemagne: Swords and shields + + + + + +Articles Sections Next + +France’s Socialists + +Beardless youth + +Manuel Valls was the iconoclast of the left. Then came Emmanuel Macron + +Feb 6th 2016 | PARIS | From the print edition + + + +SELDOM has facial hair become an object of such frenzied political debate. When France’s popular young economy minister, Emmanuel Macron, returned from his Christmas break sporting a hip beard, it set off political chatter. Was it an attention-grabbing gimmick? A visual symbol of the outspoken minister’s defiance? An appeal to the metrosexual high-tech crowd? Mr Macron, feigning surprise at the fuss, insisted that he had just wanted a break from shaving, and soon after dropped the beard. But the impact lasted: at a time of disillusion with most politicians, there is one dynamic nonconformist leader whom the French find fascinating. + +The 38-year-old Mr Macron has become the most popular politician on the left, and the second-most popular of any stripe. Yet 18 months ago he was unknown outside the corridors of government. A one-time investment banker and product of the elite civil-service college, the Ecole Nationale d’Administration, Mr Macron became economic adviser to François Hollande after the Socialist’s election as president in 2012. His efforts to coax the president away from his dafter ideas did not always succeed. Mr Macron once called Mr Hollande’s promised 75% top income-tax rate “Cuba without the sun!”; it was implemented, for two years, all the same. + +It was only after being propelled into government, in 2014, that Mr Macron began to capture the French imagination. His predecessor, Arnaud Montebourg, specialised in irking foreign investors by declaring that France had no need for them. Mr Macron turned on the charm. At ease in Davos or Silicon Valley, and a champion of French high-tech start-ups, he can claim a fair share of the credit for France’s improved image among foreign investors. + +The great mystery, however, is not that Mr Macron appeals abroad. It is that he has won over the French. Many of Mr Macron’s ideas rub against everything that the French left and its union friends have traditionally stood for. They defend the 35-hour working week; he urges flexibility for firms to negotiate longer hours. They consider Sunday trading an assault on workers’ right to rest; he wants employees to choose. They want to protect incumbents, such as taxi drivers; he knows that consumers like Uber. They are suspicious of wealth (Mr Hollande once said he didn’t like rich people); he urges young French to aspire to become billionaires. “We need to move beyond the conservative left that is afraid of change,” says Mr Macron. + +This line may offend the orthodox left, but it appeals to France’s broad middle. Mr Macron, who is no longer a member of the Socialist Party and has never been elected, draws as many, if not more, admirers outside his camp. One poll finds that he is the second-most popular politician on the centre-right, ahead of Nicolas Sarkozy, leader of Les Républicains, the centre-right opposition party (see chart). + + + +In contrast to the grey heads who populate parliament, Mr Macron also understands his generation: those who use Uber, hold business meetings on Skype in co-working cafés, and shun hotels in favour of Airbnb. “He is in sync with society, not political parties,” says one French tech boss. Mr Macron’s can-do political energy stands out in morose France, home to 10% unemployment and growth last year of just 1.1%. Since the double terrorist attacks of 2015, Mr Hollande now wears a calcified frown. Manuel Valls, the prime minister, declares that “history is fundamentally tragic.” Mr Macron smiles, a lot. + +This insolent popularity is not to everybody’s liking, especially within government. “He oversteps the mark, because he lacks a political sense,” says one source. Most awkwardly, Mr Macron’s rebelliousness is showing up Mr Valls, who before becoming prime minister in 2014 was himself an insubordinate Socialist moderate. Like Mr Macron, Mr Valls has used his popularity to legitimise charges against Socialist orthodoxy, calling the party “backward-looking” and “haunted by a Marxist super-ego”. As prime minister, Mr Valls has made economic policy more business-friendly, forcing a deregulation bill drafted by Mr Macron through parliament last year (against Socialist rebels). Yet high office has tempered his iconoclasm. + +For now, it is more useful for Mr Hollande, whose post-terrorism poll bounce has vanished, to have the popular duo inside government. But with presidential elections coming up next year, it also suits him to maintain some tension between them. Mr Hollande is France’s least popular modern president, but still hopes to run for re-election. Managing his would-be rivals will feed into the calculation for an upcoming government reshuffle, when Laurent Fabius, the foreign minister, is expected to move to the constitutional council. + +The Macron phenomenon suggests something more important too: that there may be a far broader centre ground in France than is usually visible under its polarising two-round presidential system. Last year, for example, Socialist deputies resisted the government’s deregulation bill. Yet 54% of the public now want reforms to accelerate, and one poll says 69% want to loosen the 35-hour working week rules. Hard-line unions are still blocking Sunday opening for some shops. Yet many employees, promised generous overtime pay on Sundays, are in favour. Mr Valls and Mr Macron have helped nudge French public opinion towards the centre. The question is how, politically, to harness the energy of this quiet but emerging French consensus. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21690048-manuel-valls-was-iconoclast-left-then-came-emmanuel-macron-beardless-youth/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +German youth + +Girl, not abducted + +An adolescent’s fib blows up into an international incident + +Feb 6th 2016 | BERLIN | From the print edition + +The wisdom of crowds + +LISA F. is a 13-year-old Russian-German girl who lives in Berlin. On January 11th she disappeared for about 30 hours. When she resurfaced, she claimed to have been abducted and raped by a group of migrants. Russian media pounced on the story, whipping their audiences into a frenzy. Even the Kremlin got in on it. On January 26th Sergei Lavrov, Russia’s foreign minister, accused Germany of hushing up the case in order “to paint over reality with political correctness”. The charge was that Germany, a victim of Western decadence and the naive refugee policy of its chancellor, could not or would not protect “our Lisa”. + +In the current political climate, many people in Russia and Germany are eager to believe such a message. Among them are many “Russian-Germans”: ethnic Germans who lived for centuries in Russia but in recent decades have moved back to Germany, where they number about 2m. Many watch Russian television. Thousands of them took to German streets to protest for Lisa. They were joined by German nationalists and some supporters of the NPD, a neo-Nazi party eager to spread any negative rumour about refugees. + +Berlin’s police, ever conscientious about upholding the law and exercising discretion, kept their initial statements matter-of-fact. They had no evidence of any abduction, but were investigating the possibility that Lisa had engaged in consensual sex earlier on (which might constitute statutory rape). Of two suspects, neither was a migrant. + +Undaunted, the Russian media continued to peddle conspiracy theories. Germans gradually became outraged by their failure to respect due process. Even Germany’s foreign minister, Frank-Walter Steinmeier, who usually displays an embarrassing eagerness to accommodate Russian vanity, called Moscow’s statements “political propaganda”. Mr Lavrov replied that he interpreted that as an admission of guilt. + +On January 29th the police explained what had actually taken place. Lisa F. spent the night of January 11th with her 19-year-old boyfriend. She had had problems at school, the prosecutor’s office says, and didn’t dare to go home. Crises of trust wherever one looks. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21690050-adolescents-fib-blows-up-international-incident-girl-not-abducted/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +German Russophiles + +Bear-backers + +Nostalgia for “Ostpolitik” is fouling up German diplomacy + +Feb 6th 2016 | BERLIN | From the print edition + + + +THIS week Horst Seehofer, the premier of Bavaria and an unruly ally of Chancellor Angela Merkel, ruffled German diplomatic feathers by visiting Vladimir Putin, Russia’s president. Mr Seehofer’s trip carried no official weight. But hugging a leader whom Mrs Merkel treats warily further confused Germany’s muddled “eastern policy”, or Ostpolitik. + +The term dates back to the rapprochement with the communist bloc begun in 1969 by Willy Brandt, West Germany’s first Social Democratic chancellor. It set in motion the normalisation of relations with East Germany and other Warsaw Pact nations, as well as easing tensions with the Soviet Union. Today Social Democrats still credit Ostpolitik for the eventual fall of the Berlin Wall. After German reunification, which required Soviet blessing, the conciliatory spirit spread to the centre-right Christian Democrats, led today by Mrs Merkel. It has also spawned the notion of Russlandversteher (“Russia-understanders”), Germans who mix sympathy for Russia with antipathy for America. + +The chancellor suspended her belief in Ostpolitik’s underlying principle of “change through rapprochement” after Mr Putin seized Crimea and sent Russian troops to back separatists in Ukraine. She has orchestrated a firm European response that combines tough economic sanctions with dialogue to avoid further escalation. + +But a ten-minute taxi ride away from Mrs Merkel’s office, in Germany’s foreign ministry, the old Ostpolitik lives on. Frank-Walter Steinmeier, the foreign minister, is a Social Democrat. He was also chief of staff for Gerhard Schröder, the Social Democrats’ last chancellor. After losing to Mrs Merkel in 2005 Mr Schröder, a friend of Mr Putin, became chairman of the board of Nord Stream, a German-Russian pipeline that carries Russian gas under the Baltic Sea to Germany. Today Mr Steinmeier reliably plays dove to Mrs Merkel’s hawk. + +Social Democratic fingerprints are all over plans for a second Baltic pipeline, Nord Stream 2, which is to be built even though the existing one is operating at only half capacity. A deal between Russia and Germany was announced in Moscow last autumn by Sigmar Gabriel, the economics minister and the Social Democrats’ boss. + +Nord Stream 2 has few friends outside Russia and the Social Democrats. Poland, Slovakia and the Baltic countries are aghast at what they see as a sinister pact to boost German business at the expense of their energy security. Russia could junk its pipelines that run through Poland and Ukraine, leaving them gas-strapped and at the mercy of powerful (and historically unfriendly) neighbours. The European Commission sees it similarly. In 2014 it blocked another pipeline project, under which Russian gas was to run through the Black Sea and central Europe. America, worried that Nord Stream 2 would deprive Ukraine of transit fees, is also opposed. + +So are many Germans. Norbert Röttgen, a Christian Democrat who leads parliament’s foreign-policy committee, finds the government’s line that Nord Stream 2 is a commercial, not a geopolitical, matter “indefensible”. No doubt this formulation has been forced on Mrs Merkel to keep the peace with her Social Democratic coalition partners. But Mr Röttgen says that Germany’s interests—be it energy independence from Russia or solidarity with the EU—would be better served by opposing Nord Stream 2. Germany’s relations with Poland and Hungary are already troubled by nationalist governments there. By clinging to an Ostpolitik focused on Russia, the Social Democrats are rendering relations with the wider east increasingly fraught. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21690055-nostalgia-ostpolitik-fouling-up-german-diplomacy-bear-backers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Russia and Chechnya + +Putin’s Chechen enforcer + +The alarming world of Ramzan Kadyrov + +Feb 6th 2016 | From the print edition + +99% of voters can’t be wrong + +RAMZAN KADYROV has few inhibitions. Last week, just before the first anniversary of the murder of Boris Nemtsov, a liberal Russian opposition leader, by a member of Mr Kadyrov’s security services, the Chechen strongman posted a video on his Instagram page. It depicted Mikhail Kasyanov, a former prime minister, in the crosshairs of a sniper rifle. “Kasyanov is in Strasbourg to get money for the opposition,” Mr Kadyrov commented under the video, in a clear warning to opposition politicians. “Whoever still doesn’t get it, will.” + +Mr Kadyrov has been ratcheting up the invective for a while. Last month he called liberals “vile jackals” who should be treated as “enemies of the people”. In an article in the pro-Kremlin newspaper Izvestia, Mr Kadyrov offered psychiatric treatment to opponents of President Vladimir Putin. He also staged a large rally in Grozny, Chechnya’s capital, lest anyone doubt his popular support. + +For many Russians, and not only opposition figures, Mr Kadyrov’s latest antics went too far. Ella Panfilova, a human-rights ombudsman in the Kremlin, said his statements should be examined for signs of “extremism”. The Levada Centre, an independent pollster, found 60% of Russians thought Mr Kadyrov’s threats unacceptable. Konstantin Senchenko, an independent politician from Krasnoyarsk, called Mr Kadyrov “a disgrace to Russia” on his Facebook page. The next day, after threatening calls from Chechnya, Mr Senchenko was forced to apologise profusely. + +Kirill Rogov, a Russian political analyst, says Mr Kadyrov’s threats epitomise a transformation of Russia’s regime in the face of a shrinking economy. “This is a new type of repression. In the past the regime dealt with its opponents by charging them with economic crimes. Now the stakes have been raised,” he says. + +Russian repression is unlike that of the Soviet regime, which had a monopoly on violence. Mr Putin outsources his terror to thugs like Mr Kadyrov, who ensures that Mr Putin routinely draws over 99% of the vote in elections in Chechnya. In December 2014 Mr Kadyrov paraded some 20,000 of his own well-armed troops through Grozny, Chechnya’s capital. “Kadyrov can do the dirty work for [the Kremlin] and say things which they cannot yet afford to utter,” says Ekaterina Sokiryanskaya of the International Crisis Group, a think-tank. + +Mr Kadyrov’s threats arrived just as the Russian government completed its investigation into Nemtsov’s murder. Once groomed for the job of Russia’s president, Nemtsov was assassinated near Red Square in February 2015 by Zaur Dadaev, the former deputy head of a battalion controlled by Mr Kadyrov. The investigation sheds little light on who ordered the killing, or why. The investigator ignored requests from Nemtsov’s lawyers to question Mr Kadyrov or his entourage. The Chechen leader defends Mr Dadaev as a Russian patriot. + +Rank-and-file security officers resent Mr Kadyrov, seeing him as one of the rebels they fought during the first Chechen war. But Mr Kadyrov enjoys protection from Mr Putin, who responded to his protégé’s latest provocations by calling him an effective worker. The Kremlin awarded Mr Kadyrov a medal the day after Nemtsov’s murder, and he continues to receive ample funding from Moscow. Last year, while overall budget transfers to Russia’s regions declined by 3%, funding for Chechnya rose by 8%. Mr Putin has ordered his cabinet to transfer ownership of a large oil and gas company in Chechnya from federal control to that of Mr Kadyrov’s government. + +Ever since the Soviet collapse, Chechnya has divided Russian society. Ironically, in the early 1990s when Mr Kadyrov was fighting against Moscow, Russian liberals—including Nemtsov—campaigned against Russia’s Chechen war. Nemtsov collected a million signatures in support of stopping it. Conversely, the rabid nationalists who once cheered Russia’s brutal campaign against the Chechens now see Mr Kadyrov as their hero in a battle against liberals and Westernisers. + +Mr Kadyrov has turned Chechnya into a caricature of Russian authoritarianism, with his own personality cult and system of extortion, torture and killings to keep the population in line. As Alexander Baunov of the Moscow Carnegie Centre argues, Mr Kadyrov appeals to Russians who consider the current regime too soft. They see in Chechnya a model for Russia’s future. Mr Kadyrov’s impunity brings that one step closer. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21690046-alarming-world-ramzan-kadyrov-putins-chechen-enforcer/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Swords and shields + +America and the European Union have reached a deal on data protection + +Feb 6th 2016 | From the print edition + + + +NAIVETY and paranoia mark the European Union’s attitude to espionage. The EU does not have a spy agency, nor does it have access to the intelligence collected by its members and their allies. That has advantages: EU decision-makers need not worry about keeping secrets (because they do not know any); nor must they grapple with the legal and political practicalities of intelligence oversight—such as what access spooks have to private data. The downside is that they do not see the benefits of espionage, and have a lurid fear (mixed perhaps with envy) of what spy services, particularly American ones, get up to. + +Yet it is the European Parliament which votes on data-protection rules, the European Commission which negotiates agreements with other countries, and the judges of the European Court of Justice (ECJ) who have the final say on whether those deals meet the right standards. And in October 2015 the ECJ, on the advice of the Commission and to the applause of many parliamentarians, upended the “Safe Harbour” agreement which for the past 15 years had allowed foreign companies to store Europeans’ personal data on American computers. + +The arrangement had been extremely useful, both for the giants of the internet economy, which could market their services seamlessly on both sides of the Atlantic, and for much smaller businesses—for example those which outsource payroll and other services to American contractors. But it rested on the idea that America protected privacy to European standards. After the revelations of Edward Snowden, an American intelligence contractor who has fled to Moscow, many found that hard to believe: “mass surveillance”—to use the Orwellian term favoured by Mr Snowden’s supporters—of all data held in America seemed a fundamental breach of Europeans’ right to privacy. + +From an American point of view, that looked like self-indulgent posturing. The Snowden material was grossly misinterpreted. All foreign-intelligence outfits spy on foreigners: the clue is in the name. “Bulk collection” (to use the spooks’ preferred term) is a necessary part of modern intelligence work: all spy agencies that can collect and sieve information from the internet will do so. But America’s spies operate under a level of legislative and judicial oversight that no European country can match. Indeed, since a presidential directive in January 2014, America, uniquely, puts foreign and domestic personal data on the same footing as far as bulk collection is concerned. + +Moreover, European countries’ spy agencies benefit hugely from intelligence-sharing with America about terrorism, organised crime and the activities of countries such as Russia and China. That politicians fail to acknowledge this to their own voters smacks of timidity and ingratitude. There may be disguised protectionism involved too: European privacy worries mask a degree of envy of America’s digital dominance. Europe has signally failed to develop rivals to Amazon, Apple, Facebook or Google. + +Against that difficult background, this week’s outline deal on a new agreement to replace Safe Harbour looked like something of a triumph. Under heavy pressure from internet and technology companies on both sides of the Atlantic, and with the prospect of a transatlantic trade war on data looming, both sides have moved. In the new “Privacy Shield”, America has offered to institute safeguards and limits on its surveillance programmes. Europeans will be able to complain individually or at an institutional level about breaches, including to a new ombudsman in the State Department. The new deal will be reviewed annually. + +Many obstacles lie ahead. Europe’s national data-protection agencies welcomed the deal but said they wanted more details—to be provided by the end of the month. If any one of these regulators is unhappy, it can ban its country’s companies from sending data to America. That would prompt another long legal battle, probably ending in the ECJ. + +Even if the bureaucrats give grudging approval, privacy campaigners find the Privacy Shield farcical. Given that intelligence agencies operate in secret, how will anyone know—unless another Snowden blows the whistle—that their data are being snooped on unlawfully? The next administration may change the rules. And in any case, why should anyone believe what American spymasters say? A legal challenge to the new deal looms. But once the Commission has issued a beefed-up “adequacy decision”, it will be harder for the ECJ to strike it down. In the meantime, the transatlantic data economy can keep humming. + +Control all, delete + +For all its real and imagined flaws, the new deal shows that transatlantic negotiations still work. It gives hope for the ailing Transatlantic Trade and Investment Partnership (TTIP), a counterpart to the Trans-Pacific Partnership which America and 11 Pacific-rim countries signed on February 4th. It also shows a realistic grasp on both sides of the importance of transatlantic ties. European neuroses madden America just as American swagger intimidates and annoys Europeans. But each side needs the other. Europe is America’s biggest trade partner. America is the keystone of European security. (That was highlighted this week by America’s announcement that it will quadruple defence spending on deterring Russia in NATO’s eastern frontline states.) + +Perhaps even more important, the Privacy Shield may stop the slide towards the fragmentation of cyberspace along national lines. Since its inception, the internet has struggled to stay a borderless space for ideas and commerce. Countries such as China have established what they see as sovereignty over their computers and networks, protecting themselves from threats such as “information weapons” (also known as “news”). Others are itching to follow. If America and the EU, with their shared history, interests and values, could not reach agreement over safeguarding their citizens’ data, there would be little hope for anyone else. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21690035-america-and-european-union-have-reached-deal-data-protection-swords-and-shields/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Britain and the EU: Slings and arrows + +The elderly: Shades of grey + +Social housing: Estate of flux + +Mobile telecoms: Three’s a crowd + +Teaching religion: OMG + +Exports: More buyers wanted + +Bagehot: Sadiq Khan’s road to power + + + + + +Articles Sections Next + +Britain and the EU + +Slings and arrows + +The renegotiation of Britain’s EU membership is mainly theatre, but it may be enough for David Cameron’s domestic audience + +Feb 6th 2016 | From the print edition + + + +“TO BE, or not to be together, that is the question,” tweeted the president of the European Council, Donald Tusk, on February 2nd as he published a draft plan offering Britain new terms of membership of the European Union. David Cameron, who had hammered out the bargain with Mr Tusk, was clearly feeling less lyrical. Rather than face questions in the House of Commons, the prime minister jumped on a train to visit a German-owned factory in Wiltshire, while his Europe minister took the parliamentary brickbats. Newspaper headlines the following day were hardly poetic. “Who do EU think you are kidding, Mr Cameron?” demanded the Sun. + +Liam Fox, a Eurosceptic former defence minister, said none of the changes in Mr Tusk’s plan “even come close to the fundamental changes promised to the public”. Mr Cameron, however, claimed that he had got the concessions he promised in 2013 when he sought to close down Britain’s never-ending debate about EU membership by offering an in/out referendum. + +The proposed deal has four main features. Most prized by Mr Cameron is an “emergency brake” that would allow Britain (with other EU governments’ permission) to restrict EU migrants’ in-work benefits, such as wage-boosting tax credits and housing benefit, for their first four years in the country. Mr Cameron insisted this would “make a difference” to net immigration from the EU, which currently stands at around 180,000 a year and is many voters’ main reason for wanting to leave. + +Second, a “red card” mechanism would allow national governments to block some EU legislation if 15 or more joined forces. Eurosceptic Tories had wanted a straight veto for Britain, a deliberately implausible demand. In practice, the red card is a red herring: it is hard to imagine circumstances in which 15 countries could be rallied against a plan that had not already been voted down. + +Britain and other non-euro countries will be allowed to slow some European legislation, as a safeguard against their steamrollering by single-currency members. Finally, Mr Cameron secured a commitment to limit the legal force of the phrase “ever closer union”, a goal enshrined in EU treaties which many Britons do not share. Under the new plan, Britain would be recognised as “not committed to further political integration”. Again, this was in effect already assured by earlier declarations to the same effect. + +The changes are insubstantial, but the negotiation’s importance is symbolic. Mr Cameron, who has said he would vote to leave an unreformed EU, needed to secure concessions of some sort to justify campaigning to stay in; the deal also aimed to show swing-voters that he could influence Brussels (though some may share the Sun’s take). The European Commission has played along, agreeing that Britain’s migration situation constitutes an “emergency”, though it is no such thing. + + + +In graphics: A guide to “Brexit” from the European Union + +Together with Mr Tusk, the prime minister must now convince the other 27 EU countries to approve the deal at a summit in Brussels on February 18th-19th, before persuading Britons to vote to stay in the union, in a referendum now likely to be held in late June. Mr Cameron’s chances of victory improve the sooner he holds it. He does not want another terror attack or more refugee chaos to turn the referendum into a vote on immigration. + +His job will be easier if he can win the backing of his cabinet. Theresa May, his Eurosceptic home secretary and one of several would-be successors, indicated her support for the In camp following the deal. Boris Johnson, London’s mayor and her rival, harrumphed that the prime minister was “making the best of a bad job” and was promptly promised a juicy cabinet post. Mr Cameron is also expected to pass a law to state the primacy of Britain’s Parliament over European institutions. These concessions will not stop a few mainly junior cabinet members joining the Outs. + +But the campaign to leave the EU is divided, and in danger of being hijacked by the right-populist UK Independence Party, which most voters consider faintly loony. The economy is improving (hence all the immigration). Polls suggest Mr Cameron is narrowly on course to win. + +Poles could prove more troublesome. Though they fear Brexit, eastern European governments do not want a precedent of their people being treated as second-class citizens in western Europe. Mr Cameron booked a ticket to Warsaw on February 5th for a diplomatic push. Now he must avoid a renegotiation of his renegotiation. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21690053-renegotiation-britains-eu-membership-mainly-theatre-it-may-be-enough-david/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The elderly + +Shades of grey + +Pensioners’ incomes are now higher than those of working households. But some are doing much better than others + +Feb 6th 2016 | From the print edition + + + +BRITAIN has a long and undistinguished history of treating its elderly badly. In the 1960s about 40% of pensioners were living in poverty, compared with less than 10% of working-age folk. In an influential study published in 1979 Peter Townsend, a sociologist, argued that pensioners were systematically ignored by politicians and the public, with “barbarous effects” on their standard of living. + +These days, the elderly are living it up. In 2000-14 spending by the over-75s on dining in restaurants rose twice as fast as similar spending by the under-30s; on cinema and theatre tickets, it rose five times as fast. Over-65s currently account for less than one-fifth of overall consumer spending; this will rise to one-quarter within two decades, says Vicky Redwood of Capital Economics, a consultancy. Businesspeople smell opportunities. A complex billed as London’s first luxury retirement community will open in the spring, with a swimming pool and views over Battersea park from penthouses that are on the market for up to £3m ($4.3m). + +At first glance it is difficult to see how Britain’s 12m pensioners can afford all this high living. The country’s replacement rate—what public pensions pay compared with pre-retirement earnings—is near the bottom of a 34-country ranking calculated by the OECD, a rich-country club. The basic state pension is just £116 a week, compared with the median full-time salary of £530. Relative to what those of working age earn, it was on a sharp downward trend in 1980-2009 (though it is now rising). + +State pensions may look measly but oldies have other sources of income. In the past 30 years other welfare benefits, such as those related to housing and disability, have increased by 14% in real terms for the average retired household, against 7% for the non-retired. Private pensions have also done well, since for much of the 20th century stockmarket returns were high. For a retiree in the top income quintile, a private pension now pays out 2.5 times as much as one from the state, up from less than 1.5 times in the early 1980s. After accounting for private pensions, Britain sits at the OECD average for incomes in retirement. + +Yet even this underestimates the prosperity of the elderly. When measuring incomes, economists often subtract the cost of rent or mortgage payments, to give a better idea of the person’s disposable resources. In a country where housing is particularly expensive—by one estimate only Monaco is pricier—owning a home amounts to a big implicit income boost. Over-65s own 60% of the houses in Britain whose mortgage has been paid off. + +Into extra time + +After subtracting housing costs, pensioners’ incomes surpassed those of the non-retired in 2011, finds the Institute for Fiscal Studies (IFS), a think-tank (see chart). Poverty among pensioners is now below that of working-age people without children (and far below those with them). + +The rise of swanky retirement homes hints at another trend: that the wealthiest pensioners’ incomes are soaring away from those of others. The modern labour market favours workers with brains, not brawn. Across the world pay has risen for the highly educated, who continue to reap rich rewards into old age. Today’s educated elderly are more productive than their predecessors. The skills that complement computers, like creativity and management, do not necessarily decline with age. + +This is particularly evident in Britain, which relies on the service sector more heavily than almost any other country. With plenty of jobs in finance, the media and the like, 27% of 65- to 69-year-olds with degrees are employed, compared with 14% of those in that age group with only secondary-school education or below. Indeed, retirees are now putting in longer hours than many youngsters: in Britain someone over the state-pension age but under 70 who has a degree is now more likely to be in the labour force than a 16- to 24-year-old with no qualifications. + +With the growth of the post-retirement labour market, oldsters’ incomes have diverged. Between 1984 and 2014 the gap in disposable income between the richest and poorest retired households grew by one-third, a similar increase to that seen in working households. Pensioners in the top income quintile have seen their earnings from salaries and self-employment rise in real terms by 60% in the past 30 years. The strong performance of private pensions has topped up these earnings. + + + +The brainy will continue to benefit. Businesses’ complaints about finding labour are growing, according to surveys by the Bank of England, especially when it comes to skilled workers. Demand for the educated—of whatever age—will keep rising. And so inequality will widen. The IFS forecasts that in 2010-22 the income gap between a pensioner in the 90th percentile and the median one will double. + +Inequality between older pensioners and new retirees may also be rising. Ian Tonks of the University of Bath reckons that, with low equity returns in recent years (and, with the current market turmoil, no sign of that improving soon), people retiring today will have more meagre pensions than those who hung up their boots at the turn of the millennium. The number of private-sector “defined benefit” pension schemes—in which the worker receives a juicy payout based on his earnings—that are open to new members has fallen by 90% in the past two decades. Wages are still below their pre-crisis peak; as workers struggle to save, pension pots will not grow much. + +Small wonder then that nearly half of working-age Britons doubt they will save enough money for a “comfortable” retirement; three-quarters believe they will be worse off than their parents. Today’s pensioners are living in a golden age, but the spending spree may not last for long. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21690060-pensioners-incomes-are-now-higher-those-working-households-some-are-doing-much/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Social housing + +Estate of flux + +Who lives in Britain’s social housing? + +Feb 6th 2016 | From the print edition + +The new neighbours + +IN 1997, in his first speech as prime minister, Tony Blair visited the Aylesbury estate in south London and promised to help its “forgotten people”. In 2005 Michael Howard, the leader of the Conservative opposition, went to the estate, by then widely referred to as “hell’s waiting room”, and declared that nothing had changed. Since then Aylesbury has been a barometer for how well governments are tackling urban squalor. In 2016, improvements are not obvious. Graffiti covers much of the estate; rubbish blows past kicked-in doors. + +Although some things have changed little, the make-up of estates’ tenants has shifted dramatically. Shrinking stock (in the 1970s almost one-third of Britons lived in social housing, whereas now under one-fifth do), along with policy tweaks which prioritise those most at risk, mean that vulnerable people feature more largely. The sick or disabled made up 8% of social renters in 1993-94; they reached 15% in 2013-14. + +More surprisingly, social tenants have got younger: retirees made up around 40% in 1993-94, but 20 years on the proportion had shrunk to 30%. One explanation is that Margaret Thatcher’s “right to buy” policy, enacted in 1980, allowed residents who would now be of retirement age to acquire their council homes at knock-down prices. Another, according to Mark Clapson of the University of Westminster, is that young people, facing a hard job market and soaring rents, are now more likely to qualify for social housing, whereas pensioners have been getting wealthier (see article). + +This may also help to explain why social tenants increasingly live alone. In 1994-95 the proportion of one-person households in the social-rented sector was very close to that in the private sector (39% and 38% respectively), whereas by 2013-14 41% of social renters lived by themselves, compared with 26% of private renters. + +Another change is that a greater proportion of social tenants are now in work: 37% in 2013-14, up from 27% two decades earlier. Alan Murie of Birmingham University thinks it might be explained by newly exacting social landlords, some of whom, he says, exclude people who have been in arrears with rent. Waiting lists for social housing lengthened in 1997-2012 (though they have since fallen back); those on the economic margins may have end up renting privately as an emergency measure, rather than face a long wait. A 2011 law allows councils in effect to force those in need of housing to rent privately rather than join the waiting list for social homes. + +These demographic changes have had more impact in some places than others, says Mr Murie, who divides Britain’s social housing into three types. The more desirable, modern flats, he says, are probably absorbing some of the new crowd of young, single workers. Pre-war estates—low-rise, spacious and suburban—are still filled with retirees who do not wish to move out. So unpopular post-war estates like Aylesbury—badly maintained high-rise blocks in city centres—are where the poorest and most vulnerable concentrate. + +Some worry that putting the most marginalised in the same place will lead to worse outcomes than social mixing. The Fabian Society, a think-tank, cites evidence from the British Household Panel Survey that a person’s chances of leaving poverty are reduced if they live in a poor area. + +A new government policy accelerating the right to buy is likely to change estates’ demography again. Whereas people who buy council stock in suburban estates generally stay there, those who buy in 1960s inner-city estates tend to sell up quickly, often to buy-to-let landlords. Aylesbury residents claim that these landlords fail to maintain their properties; their tenants leave rubbish out to rot and “bring the whole tone down”, says one. Developers who complained about problems on the Lee Bank estate in Birmingham were surprised to find they were caused by private renters, not social ones. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21690059-who-lives-britains-social-housing-estate-flux/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Mobile telecoms + +Three’s a crowd + +Consumers could lose out in a proposed merger of mobile-phone operators + +Feb 6th 2016 | From the print edition + + + +IN MANY respects Britain’s mobile-phone market is one of the most successful in the world. About 30 operators compete for business, ensuring that prices are among the lowest for rich countries (see chart). A number of retailers offer an almost infinite variety of bundles of services, and coverage is relatively good too. All of which helps to explain why regulators in Britain and Europe are so opposed to a proposed £10.5-billion ($15.3-billion) merger between the second-largest operator, O2, owned by Spain’s Telefónica, and the fourth-largest, Three, owned by Hutchison Whampoa, based in Hong Kong. + +On the face of it, such a deal would continue a long-standing trend towards consolidation among mobile operators, both in Britain and other rich countries. It is a mature market, and since 2008 revenues have generally been falling. It has thus made sense for companies to merge, freeing up capital for investment in costly infrastructure and new technology, such as speedy “4G” networks. In Britain, T-Mobile and Orange merged to create the biggest operator, EE, in 2010. EE, in turn, has been taken over by BT, the former state-run monopoly, in a £12.5-billion deal that creates a behemoth covering mobile, fixed-line phones, broadband and television. + + + +But enough is enough, apparently. On February 1st Sharon White, the head of Britain’s telecoms regulator, Ofcom, laid out why she opposes the O2-Three merger. The main reason, she said, was that the removal of one of these would so diminish competition that it “could mean higher prices for consumers and businesses”. + +The concern is that although there are about 30 operators overall, there are only four—EE, O2, Three and Vodafone—that run and maintain the physical infrastructure for mobiles. These are known as Mobile Network Operators (MNOs) in the jargon. The other players, such as Lycamobile, are merely Mobile Virtual Network Operators (MVNOs); they rent the infrastructure from the MNOs. Virgin Mobile was created as the world’s first MVNO in 1999. Ofcom contends that the reduction of network providers from four to three will allow them to drive a harder bargain with the MVNOs, perhaps putting some out of business and driving up prices. By contrast, the BT-EE deal was acceptable because the two companies—one primarily fixed-line, one mainly mobile—complemented each other, and the new entity should not harm competition in either the mobile or fixed-line markets. + +Mergers of this size are automatically referred to the European competition commissioner, Margrethe Vestager, who shares Ms White’s worries about the O2-Three case. Ms Vestager was due to send out private “statements of objections” to the two companies this week; her office should make a final decision on the matter by April 22nd. + +She also shares the broader concern that consolidation from four to three network operators leads to higher prices, although there is a fierce debate about this (some say that the case of Austria, for example, which downsized so in 2012, does not bear the theory out). Ofcom’s own research in 25 countries shows that average prices were up to one-fifth lower in markets with four network operators than in those with three. On February 4th Hutchison promised to freeze prices for five years if the O2-Three merger went ahead. + +Another reason for preferring the four-network model is that the smallest operator of the gang usually operates as the disrupter and innovator. This has been the case with Free Mobile in France and T-Mobile in America. Three has played a similar role in Britain. It was the first to launch a 4G service at no extra cost than 3G, in 2013, as well as a “Feel at Home” service, scrapping roaming charges in 16 countries. As Sam Paltridge, a telecoms expert at the OECD, argues, in the rapidly evolving world of the “internet of things”, companies that innovate will be more important than ever. In this particular case, four’s company and three’s a crowd. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21690067-consumers-could-lose-out-proposed-merger-mobile-phone-operators-threes-crowd/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Teaching religion + +OMG + +Religious education is being squeezed off the timetable + +Feb 6th 2016 | From the print edition + +Pilgrims in search of a teacher + +LAST year in one large London school, all 200 pupils taking their GCSE exams—standard tests sat at age 16—were entered for a qualification in religious education (RE), and emerged with results as good as in the other humanities. Yet, according to a teacher there, the school has just announced that its GCSE course in RE will be scrapped and replaced with a one-hour class every fortnight. + +More schools are smiting their RE lessons. Nearly 1,200 put forward no pupil for an RE qualification in 2014, five times as many as in 2010. Some cite increased pressure on the timetable from other subjects; the fact that RE does not count towards the “English Baccalaureate”, a newish measure for assessing schools, also reduces the incentive to offer it. Two reports by Ofsted, the education regulator, have criticised schools’ attitudes. The quality of the RE curriculum was rated “good” or better in fewer than two-fifths of secondary schools; teaching of Christianity was one of the weakest aspects, it said. + +This represents a turnaround. For centuries the church ran most education in England, with the state getting involved only in the 19th century. In 1944 the government brought church schools into the state system and began funding them. In return, RE was made compulsory. + +Since then, the RE syllabus has been set by local religious advisory councils. In 1988 a single national curriculum for schools was introduced, but RE, with its special status, was not included. Alone among school subjects, it is still set by those councils. This means that, in principle, there are 152 different RE syllabuses around England, though in practice many overlap. The subject is still obligatory until the age of 18, though in reality this requirement is ignored, or watered down. + +The change in schools’ attitudes partly reflects shifts in Britain’s demographic and religious make-up, which is unrecognisable from 1944. Fewer than half the population now calls itself Christian and almost half follows no religion, according to NatCen, a social-research outfit. RE teachers say that where pupils get the chance, they enjoy studying the subject: the number taking it for A-level at age 18 has risen by 110% since 2003, more than for any other arts, humanities or social-science subject. + +Some further argue that better understanding of different religions helps in the development of social cohesion and opposition to extremism. “The way religion is being dealt with in schools is not meeting the needs of our time,” says Linda Woodhead of the University of Lancaster who, with Charles Clarke, a former home secretary, has co-authored a paper proposing a “new settlement” on the teaching of religion. The government should establish a national RE syllabus or include it in the national curriculum, and drop the widely ignored requirement of a daily act of “broadly Christian” collective worship, they say. + +Fiona Moss of the National Association of Teachers of Religious Education believes it would be better if the study of RE remained a legal requirement, only better enforced by Ofsted. The government should also include the subject in schools’ performance measures, she says. She points out that a majority of state schools are now independent “academies”, which need not follow the national curriculum. “If they ignore [RE] when it is a law, they are not likely to change just because it is part of the national curriculum,” she says. + +Meanwhile, it is getting harder to find RE teachers. Last year their recruitment fell 37% short of the number required; more than half have no post A-level qualification in the subject, twice the proportion among history teachers. It is not the only subject facing such a scarcity, but the government seems keener to deal with the shortages elsewhere. Bursaries to entice graduates with masters degrees to teach physics are worth £25,000 ($36,500) a year; for RE they are worth just £4,000. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21690068-religious-education-being-squeezed-timetable-omg/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Exports + +More buyers wanted + +Exports continue to disappoint, even in sectors where Britain should do well + +Feb 6th 2016 | From the print edition + +The shipping forecast: gloomy + +THE prime minister summed up Britain’s trade dilemma when he said last year: “We’re still selling more to Hungary than to Indonesia—even though Indonesia’s population is 25 times bigger. We still do more trade with Belgium than we do with Indonesia, Malaysia, Singapore and Vietnam combined.” At which point David Cameron got on a plane, accompanied by a delegation of businessfolk, and jetted off to South-East Asia to try to do something about this glaring imbalance. + +Plenty of ministers have been criss-crossing the world during the course of Mr Cameron’s governments with the same aim in mind. Mr Cameron himself has been to India three times. The government has been banqueting the likes of China’s president and India’s prime minister in London, all to improve trade. Yet for all the ministerial airmiles and silver goblets, the country’s exports have remained fairly flat, and have been getting worse since 2012, certainly compared with those of the other big rich economies in the G7. The value of Britain’s exports fell by 1.5% in 2014 from 2013—the only G7 country where exports dropped—and last year’s figures were hardly inspiring, with a 1.5% fall in the three months to November compared with a year earlier. “It has been a disappointment, especially after the devaluation of sterling in 2008-09,” says John Van Reenen, head of the Centre for Economic Performance at the London School of Economics (LSE). + +Sterling fell by 15% against the euro and 24% against the dollar during the 2008 financial crisis, and this did help exports in the short term. But since 2012 Britain has been struggling, even in the sectors it usually does well in. Thus the government’s hopes of recapturing some of Britain’s past trading glories and doubling exports in goods and services to £1 trillion ($1.5 trillion) by 2020 will remain exactly that. These trends also have ramifications for the argument raging over whether Britain should leave the European Union. + +On the positive side, at least one rebalancing has been relatively successful. Britain’s trade with the rest of the world has been ahead of its trade with the EU since 2008 (see chart). To Eurosceptics, this is evidence that Britain could flourish outside Europe. But although Britain’s exporters have been getting a foothold in the emerging markets, they have not been as successful as they might have been. With the exception of China, which takes about 5% of Britain’s exports, trade in goods and services remains pedestrian. + + + +For although nobody expected Britain, where manufacturing has shrunk to around one-tenth of GDP, to export many manufactured goods to emerging markets in the way that Germany does, the country was predicted to do much better in services such as banking, accountancy and education. This is where Britain has its main competitive advantages, such as the English language. Its trade in services with the EU has been growing at just over twice the rate of EU growth, but elsewhere the picture is less rosy. Although Britain’s services trade with emerging economies rose fast in 1998-2012, as the Centre for European Reform, a think-tank, points out, only in the case of Brazil did Britain’s exports “grow significantly faster than the economy concerned”. + +Thus, as Paul Hollingworth of Capital Economics, a consultancy, argues, Britain has not been gaining market share in emerging economies. Indeed, its exports of services probably slowed in 2014 compared with 2013. Partly for this reason, trade with big countries like India remains small, and minuscule in the case of populous, fast-growing (if poor and distant) Indonesia. It has become a mantra among boosters of British trade to India and other emerging markets that as they become richer so they will need more of Britain’s bankers and fewer of Germany’s machine-tools. But, warns Swati Dhingra, a trade economist at the LSE, there is little evidence to support that theory so far. India, for instance, is not much in need of British expertise in business services, in which it has already developed its own industry. + +There are other reasons for what the British Chambers of Commerce (BCC) has called this “missed opportunity” in emerging markets, aside from the strengthening pound. Simon Walker, the head of the Institute of Directors, another big business-association, fingers the government’s lacklustre support for exporters on the ground, despite all the ministerial jet-setting. “Britain is bad at focusing on specific business opportunities and identifying market gaps, especially in less sexy areas,” he says, adding that France and Germany do this much better. Rather feebly, British exporters struggle with language and culture outside the Anglosphere, according to surveys by the BCC of its members; it argues that too many mid-sized companies, in particular, have no ambition to export. + +Then there is the question of red tape and access to markets. Trying to satisfy all 28 of its members means that the EU often takes years to negotiate free-trade agreements; Eurosceptics argue that if Britain were unencumbered by the lumbering EU it would more easily cut its own bilateral deals with countries and boost trade. But economists warn that Britain’s bargaining position would be so much reduced on its own that it would be hard to get any very beneficial deals. And as Ms Dhingra points out, it is Britain itself that has contributed to holding up the India-EU free-trade deal, on the issue of immigration. + +Exporters will get a short-term boost in the immediate future as sterling has weakened over the past weeks. But recent history suggests that in the longer term there are no shortcuts to boosting exports—it’s just more of the old slog of flogging a product that people want at the right price. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21690080-exports-continue-disappoint-even-sectors-where-britain-should-do-well-more-buyers-wanted/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Sadiq Khan’s road to power + +A cosmopolitan Muslim is set to become London’s next mayor + +Feb 6th 2016 | From the print edition + + + +ASK Sadiq Khan for a case study and he gives you seven. Having casually inquired of London’s would-be mayor whether he draws on any particular international example, Bagehot was bombarded with the municipal merits of Detroit, New York, Chicago, Houston, Paris, Berlin and Los Angeles (“The previous mayor wanted to green LA and expand the port, but Barack Obama couldn’t get it through Congress or the Senate...so he jumped in a plane and went to China to get the funding.”). For such is Mr Khan: frenetic, keen to show that he is on top of his brief and—every bit the politician—even keener to say what he thinks his interlocutor wants to hear. + +His selection last September as Labour’s candidate for the mayoralty and his subsequent success in the opinion polls have defied expectations. Tessa Jowell, a doyenne of the party’s liberal right (and a member of The Economist Group’s board) had appeared better equipped to win over the centrist suburbs of Britain’s left-wing capital in its election on May 5th, but fell short. Mr Khan’s campaign has since proven too thin-skinned; howling that (admittedly unfair) Conservative accusations that he is a “radical” and a “lab rat” for Labour’s leadership were respectively anti-Islam and anti-London. His bid has been weakened by Jeremy Corbyn, the party’s hard-left leader who in his victory speech last September—horror flitting across Mr Khan’s face—proclaimed: “Sadiq, we’re going to be campaigning together.” + +Nonetheless, it seems the MP for Tooting is comfortably ahead of Zac Goldsmith, his thoughtful but posh Tory rival—by 45% to 35%, according to a recent poll by YouGov. It helps that the hard-left Mr Corbyn is driving moderate Labour activists towards Mr Khan, even though he is on the party’s soft-left. And Labour’s candidate has worked hard to distance himself from his leader, pledging to be London’s most pro-business mayor ever and decrying Mr Corbyn’s policies on tax and finance. + +Mr Khan’s main strength is that he exemplifies the city he wants to run. His parents moved there from Karachi, in Pakistan. The son of a bus driver, he grew up in a council flat in south London and lived out of a bunk-bed there until he was 24. He trained as a lawyer and subsequently ended up in Gordon Brown’s cabinet (by contrast, Mr Goldsmith was gifted the editorship of the Ecologist, an environmental magazine, by his uncle). “London gave me and my family the chance to fulfil our potential,” argues Mr Khan convincingly. Firmly pro-European, comfortable with immigration and a model of liberal Islam (he backed gay marriage and fought to keep a local pub open), he encapsulates the city’s contradictions: internationalist and parochial, swaggering and insecure, original and clichéd, socialist and capitalist. + +Would he make a good mayor? His programme, which he launched on February 2nd, is mixed. He has promising plans to improve Londoners’ skills and to accelerate the construction of Crossrail 2, a new subterranean railway that will run from London’s south-west to its north-east. Most excitingly, he wants to expand the debilitatingly meagre scope of the city’s mayoralty, pledging to lobby for new tax-raising abilities and local health powers to rival those which Manchester will acquire, ahead of the capital, in April. + +On the other hand, his “pro-business” programme seems to be more about what firms can do for the mayor (building infrastructure and houses, raising wages, advising on policies) than what the mayor can do for firms (beyond vague talk of the “jobs of tomorrow” and “engines of growth”). Meanwhile his housing policy—introducing rent controls, bolstering tenants’ protections and mandating a larger proportion of “affordable” homes while refusing to countenance building on the often ugly and mostly pointless green belt—does not match the scale of the task (40% of Londoners experience damp and the average house price could reach £1m, or $1.5m, in 2030). His stance on airport expansion is similarly disappointing: London’s probable next mayor opposes new runways at Heathrow, its only hub airport. + +London’s turning + +The good news is that Mr Khan will probably abandon these commitments if he wins office. When pushed, he struggles to justify his views on either Heathrow or the green belt. Mr Goldsmith may have had a point when he called his rival’s stance on the former “as authentic as Donald Trump’s hair”. That need not be a bad thing: if this, as is often asserted, is the age of mayors, it is thus also the age of pragmatism and ideological flexibility. Youthfully energetic despite his grey streaks, punchily ambitious (he boxes to keep fit) and hyperactive, Mr Khan—who even talks too fast, slamming one word into another—may just be the real deal. “I have heard him speak a number of times and he gets better and better,” says a senior Labourite close to Ms Jowell. + +The best argument for him is that, by all accounts, he is a good and likeable manager, aware of his weaknesses and (as his monologue about London’s rival cities suggests) open to external ideas. Unlike Boris Johnson and Ken Livingstone, London’s previous mayors, he is a team player. Unlike Ed Miliband, the former Labour leader whose campaign to run the party he led in 2010, he can take criticism. “If there’s a good idea I’ll replicate it; I’m not precious if it’s a Labour idea, a British idea, or not,” he insists. There is one caveat. If—as seems likely—Mr Khan wins on May 5th he will need to build a team that can anchor his mayoralty and give it public-policy ballast. Andrew Adonis, the Labour peer obsessed with detail and currently leading the government’s infrastructure commission, would be an excellent choice of policy chief. With someone like that on board, Mr Khan could prove a fine mayor indeed. + +Read a transcript of Bagehot’s interview with Sadiq Khan: Economist.com/blogs/bagehot + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21690058-cosmopolitan-muslim-set-become-londons-next-mayor-sadiq-khans-road-power/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Call centres: The end of the line + +Night shifts and health: I’ll sleep when I’m dead + + + + + +Articles Sections Next + +Call centres + +The end of the line + +Call centres have created millions of good jobs in the emerging world. Technology threatens to take those jobs away again + +Feb 6th 2016 | MANILA | From the print edition + + + +WHETHER in Nairobi or Albuquerque, a shopping centre is not really a shopping centre unless it has at least two anchor tenants. These can be department stores, cinemas or bookshops—anything that will fill a large space and lure customers past smaller boutiques. The idea is that a cinema-goer might pause to buy a leather jacket; and, in a lovely symbiosis, the monied youngsters who shop for clothes and sunglasses might decide to catch a film. + +Take a lift to the top floor of the new SM Aura shopping centre in Manila, and you will find not a cinema or a Neiman Marcus but an enormous call centre. In the Philippines, the arrangement makes perfect sense. Like shops, call centres need young, middle-class people—but as workers, not customers. This one, run by Teleperformance, a multinational based in France, expects to get about 100 walk-in job applicants a day. Yet Manila’s call centres do not just need monied youngsters. They also produce them, in huge quantities. Were there no call centres in the Philippines, there would be many fewer middle-class people, and hence fewer shopping centres. + +Seldom has any country been so transformed by one industry as the Philippines has by call centres. The first “businessprocess outsourcing” jobs appeared in the 1990s: the term covers tasks from answering phones to processing invoices and animating TV shows, mostly for rich-world firms and governments. This loosely defined industry now employs some 1.2m people and accounts for about 8% of the Philippines’ GDP. The country is especially strong in call centres: it has already overtaken India, even though India has about 12 times as many people (see chart). + + + +Yet the Philippines is also, probably, the end of the line. New technologies are poised to abolish many call-centre jobs and transform others. At best, jobs will be created more slowly in the Philippines and India; at worst they will vanish. And it is likely that nowhere else will be able to talk its way out of poverty as they have done. There might never be another Manila. + +Companies put call centres in the Philippines for three reasons, says Alfredo Ayala of the Ayala Corporation, a conglomerate, who set up one of the first ones. The country’s telecoms market had been deregulated, holding costs down. The government designated call centres, or “contact centres”, as they are formally known, an export industry and cut their taxes. And firms wanted to diversify beyond India. A fourth reason, which Filipino businessfolk discuss rather delicately, is their customers’ prejudice. Americans, in particular, simply prefer talking to Filipinos than to Indians. + +Filipinos often describe their accents as “neutral” or deny that they have one. This is mostly the charming human delusion that everybody except oneself talks funny; yet there is something to it, says David Rizzo of Teleperformance. When American callers hear Indian accents, they know they are talking to a call centre in India. But they cannot quite place the Filipino accent. To add to the confusion, Filipinos are experts on American culture, a legacy of military occupation in the early 20th century. American football and basketball fill the sports pages of Manila newspapers. + +The relative preference for Filipino accents has become so strong that large Indian outsourcing firms such as Infosys and Tata Consultancy Services have moved some of their “voice work” to Manila. Yet it creates a problem. Late morning in New York is midnight in the Philippines. So a Filipino serving the American market—as about 70% do, in business-process outsourcing as a whole—will probably have to work through the night. The night shift has become so common that some karaoke bars in Manila stay open around the clock. Jobs with more civilised hours tout the fact as though it were a novelty. “Wake up when the sun rises and sleep after it sets!” promises one advertisement. + +Night work is tough, say a dozen call-centre workers who have come off their shift at 7.30am, and are sipping coffee in Manila. They find it hard to sleep by day (see article) and see too little of their families. And the job makes those who do it “toxic”, says one woman. For all that Americans prefer Filipino accents to Indian ones—which these Filipinos can impersonate, amusingly if not accurately—they still suspect they are talking to foreigners, and may be angry and rude. What do Americans say? “Fuck you,” chime these polite young people, in unison. + +Some officials and politicians claim that call-centre workers are behind a rise in HIV infections (albeit from a low base). Workers often cram into shared flats, and their odd hours unmoor them from ordinary life. A report by the University of the Philippines in 2009 found that call-centre workers in Manila were slightly more likely than other young people to take drugs, and were much more sexually active. More than half of the men reported having had casual sex—a quarter of those with other men. Only 44% said they had used condoms on the last occasion. Women said the share was even lower. + +Overall, though, the call-centre explosion has been a colossal boon for Filipinos who speak good English. With so many employers to choose from, they can demand gyms, cafés and computer-games rooms, as well as higher pay. Experienced workers can often find managerial jobs. And though the night shift is hard, it is far better than being a maid in Saudi Arabia. The Philippines has long exported workers: remittances are worth around 10% of GDP. But business-process outsourcing is catching up fast. Many of the 1.2m people who found jobs in outsourcing in recent years would otherwise have gone abroad, reckons Mr Ayala. + +So it is no surprise that other places would like to repeat Manila’s trick. Outsourcing firms are already building call centres in provincial cities in the Philippines, where employees are less picky. And other countries, some of them in better time zones, are trying to grab a share of the business. South Africa is especially keen. But they are likely to be disappointed, because the call-centre industry is on the verge of profound change. + +Operator, what’s wrong? + +Much of the call-handling and data-processing work sent overseas is basic and repetitive, says Pat Geary of Blue Prism, a British technology firm. When somebody challenges a gas-meter reading or asks to move an old phone number to a new SIM card, many databases must be updated, often by tediously cutting and pasting from one to another. Such routine tasks can often be done better by a machine. Blue Prism makes software “robots” that carry out such repetitive tasks just as a person would do them, without requiring a change to underlying IT systems—but much faster and more cheaply. The firm has contracts with more than 100 outfits. + +Increasingly, Western companies prod customers to get in touch via e-mail or online chat. Software robots can often handle these inquiries. The cleverest systems, such as the one Celaton, another British firm, has built for Virgin Trains, refer the most complex questions to human operators and learn from the responses. The longer they run, the better they get. Software is also making call-centre workers more efficient. It can quickly retrieve and display customer data on their screens, reducing the need to transfer callers to other departments (where, irksomely, they will have to prove their identity yet again) or log on to a creaky IT system (“I’m sorry, our computers are down at the moment”). + +Software robots are only going to become faster, cleverer and cheaper. Sarah Burnett of Everest, a research firm, predicts that the most basic jobs will vanish as a result. Call-centre workers will still be needed, not for repetitive tasks, but to coax customers into buying other products and services. That is a harder job, demanding better language skills. So automation might mean fewer jobs, or at least less growth, in India and the Philippines, but more jobs in America and Europe. + +This might already be happening. Between 2013 and 2014 America’s share of global contact-centre employment rose slightly, from 19% to 21%, according to Everest. Outsourcing contracts that move work overseas have become rarer. Western banks are especially keen on repatriating work, says Arie Lewin of Duke University, an expert on outsourcing. That is partly because of America’s stringent but vague Dodd-Frank Act, which has made them paranoid about their suppliers’ activities. + +This might work well or badly for the Philippines. Perhaps software robots will wipe out the dullest jobs, freeing Filipinos for more interesting conversations. Lately, for example, qualified nurses have been in demand to advise American patients on whether their sneezes and rashes might be serious—one result of cost-cutting inspired by Obamacare. Or it is possible that computers will learn to handle almost all simple inquiries, leaving humans to deal with the most incoherent, irate customers. If that happens, Filipinos will widen their repertoire of Anglo-Saxon insults. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21690041-call-centres-have-created-millions-good-jobs-emerging-world-technology-threatens/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Night shifts and health + +I’ll sleep when I’m dead + +Working through the night probably shortens your life + +Feb 6th 2016 | From the print edition + +It’s been a hard day’s night + +WORKING all night to answer American phone calls does not sound healthy. “You’re seated much of the time, and then you binge on junk food,” says Jose Mari Mercado, head of the main outsourcing association in the Philippines. Call-centre workers try to catch up on lost sleep during the day, but often fail, and then flop at the end of the week. + +New research suggests that night work is very unhealthy indeed. One study found that the longer nurses in South Korea had worked the night shift, the more likely they were to be obese. Another study, of retired car workers in China, found that shift work was associated with high blood pressure and diabetes. A French study in 2014 found that ten years of shift work was associated with cognitive decline equivalent to an extra six-and-a-half years of ageing. + +People who work at night suffer in two ways, says Derk-Jan Dijk of the University of Surrey. First, a new schedule throws the body’s “circadian clock”—the inbuilt mechanism that regulates waking and sleeping—out of alignment. Night workers eat when their bodies are not ready for food and try to sleep when they are not tired. That leads to the second problem: night-shift workers simply do not sleep enough. + +It is hard to know whether sleep disruption or exhaustion causes ill-health—or both together. A link between night work and type 2 diabetes, for example, might be because eating at the wrong times leads to more free fatty acids or because exhausted people eat more, or even because it can be hard to get wholesome food in the middle of the night. + +In theory, night workers could avoid health problems by completely switching to a night-time schedule. But weekends, social obligations and sunlight make that impossible for most. Mr Dijk says the only people who seem to manage it are shift workers on offshore oil rigs, who labour in windowless rooms and do not take weekends off. But they suffer from jet lag when they return home. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21690042-working-through-night-probably-shortens-your-life-ill-sleep-when-im-dead/print + + + + + +Previous Articles Sections Next + + + + + +Special report: Turkey + + + + +Turkey: Erdogan’s new sultanate + +Politics: Getting off the train + +The AK party: Softly, softly + +The economy: Erdoganomics + +Identity: Proud to be a Turk + +Urban development: The lure of the city + +Foreign policy: Alone in the world + +Looking ahead: A melancholy mood + + + + + +Articles Sections Next + +Turkey + +Erdogan’s new sultanate + +Under Recep Tayip Erdogan and his AK party, Turkey has become richer and more confident. But the party’s iron grip is becoming counterproductive, says Max Rodenbeck + +Feb 6th 2016 | From the print edition + + + +SEEN IN SILHOUETTE from a commuter ferry bustling across the Bosporus, parts of Istanbul seem to have changed little from centuries past. Looking to the west, towards Europe, the old walled city is still capped by multiple domes and spiky minarets. But turn to the east, towards Asia, and a different picture unfolds. + +Standing as sentries to the narrow strait, giant gantry cranes heave containers onto waiting ships. Beyond them, along the low-slung Marmara shore, march soaring ranks of high-rise buildings. To the north, the hills on the Asian side of the Bosporus prickle with a metallic forest of communications towers. And on the highest of those hills rises a startling mirror to the old Istanbul: the giant bulbous dome and six rocket-like minarets of a colossal new mosque (pictured). When finished later this year, this will be Turkey’s biggest-ever house of prayer. + +The scale and symbolism of the mosque, like so much of the frenzied construction that is reshaping this city, reflect the will and vision of one man: Recep Tayyip Erdogan. After over two decades in power, from 1994 as mayor of Istanbul, from 2003 as Turkey’s prime minister and since August 2014 as president, Mr Erdogan towers over his country’s political landscape. To detractors he is a would-be sultan, implacable, cunning and reckless in his ambition. To admirers he is the embodiment of a revived national spirit, a man of the people elevated to worldly glory, a pugnacious righter of wrongs and a bold defender of the faith. + +Mr Erdogan has presided over some startling transformations. In two short decades his country, and most dramatically its long-neglected Anatolian hinterland, has moved from relative poverty and provincialism to relative wealth and sophistication. An inward-looking nation that exported little except labour has become a regional economic powerhouse, a tourist magnet as well as a haven for refugees, and an increasingly important global hub for energy, trade and transport. + +In many ways Turkey’s 78m people have never had it so good. Since the 1990s the proportion of those living below the official poverty line has declined from the teens to low single digits, and the share of the middle class has doubled to over 40%. By every measure of living standards, the gap between Turkey and fellow members of the OECD, a club of mostly rich countries, has shrunk markedly. + +Under the subtle but relentless Islamising influence of the Justice and Development (AK) party, co-founded and led by Mr Erdogan until he became the nation’s (theoretically non-partisan) president, the Sunni Muslim component of Turkey’s complex national identity has strengthened. The long shadow of Kemal Ataturk, the ruthless moderniser who 90 years ago built a secular republic on the ashes of the Ottoman Empire, has faded. The AK party has marched the army, long given to ejecting elected governments from power, back to its barracks. Turkey has resumed its role as turntable between east and west. + +When the AK party stumbled badly in parliamentary elections in June 2015, pundits were quick to herald an end to Mr Erdogan’s long winning streak. Whiffs of corruption and abuse of power had tainted his party, and terrorist acts by Islamic State (IS) and the influx of more than 2m Syrian refugees into the country had made Turks question his judgment. + +Who dares, wins + +Shorn of a parliamentary majority for the first time since 2002, the AK party should have sought a coalition partner, but instead Mr Erdogan boldly gambled on a new election on November 1st. To everyone’s astonishment his party surged back, trouncing a trio of rival parties. With 317 seats in the Grand National Assembly, Turkey’s unicameral 550-seat parliament, the party can now again legislate at will. + + + +However, its majority is insufficient to allow it to revise Turkey’s 1982 constitution on its own. That was what Mr Erdogan had been trying to achieve in the June election, in the hope of creating a presidential system that would greatly widen his ostensibly limited (but in fact extensive) powers as president. In the absence of a two-thirds majority, he must work in tandem with his hand-picked prime minister, Ahmet Davutoglu, who is a less divisive figure. + +Ahead of the November election Mr Erdogan wisely toned down rhetoric about expanding his own powers but quietly strengthened his control over the party. At a party meeting last September he engineered the replacement of 31 members (out of 50) of the party’s politburo with people personally loyal to him. One of these, his son-in law, is now also a cabinet minister; and one of the party’s new members of parliament is Mr Erdogan’s former chauffeur. + +Today there is no doubt about who is boss. Bureaucrats in Ankara, the capital, respond to the merest whisper from the saray (palace), the grandiose 1,000-room presidential complex, built atop a hill on the city’s outskirts at a reported cost of $615m and opened in 2014. The famously short-fused Mr Erdogan will almost certainly continue to dominate Turkish politics until the end of his term in 2019, and very possibly beyond: some say he has set his sights on 2023, the 100th anniversary of the Turkish republic. By then he would have served at the helm of the Turkish state for far longer than Ataturk himself. + +To his party’s pious core constituency, that is something to rejoice in. Much of the country’s urban working class, as well as those living in the stretch of central Anatolia sometimes known as Turkey’s Koran belt, share this cult-like devotion to the former food vendor and semi-professional footballer turned statesman. Other AK voters, such as small businessmen and property developers, may be warier of Mr Erdogan. They support the party mainly because of its record of economic growth and relative stability after decades of turbulence. The AK’s swift comeback between the June and November polls reflected fear of a return to political volatility as much as enthusiasm for its policies. + + + +The collapse last summer of peace talks between the government and the Kurdistan Workers’ party (PKK), an armed rebel group, raises the spectre of more bloodshed. The talks had made little progress but did much to calm the restless south-east, a region dominated by ethnic Kurds, who make up 15-20% of Turkey’s population nationwide. Fighting in the region in the 1980s and 1990s had left some 40,000 soldiers, rebels and civilians dead and displaced perhaps 1m Kurds from their homes. Soon after the June election, clashes between security forces and Kurdish activists, which had been suspended for two years, resumed. In the months since, heavily armed police have clamped curfews on Kurdish towns. The clashes have left well over a hundred civilians dead, in addition to scores of Turkish security men and, says the Turkish army, more than 400 alleged PKK guerrillas. + +At the same time Mr Erdogan faces rising economic headwinds. Between 2002 and 2007 Turkey’s GDP grew at an annual average of 6.8% and its exports tripled, but since then GDP growth has settled at around 3.5% a year and exports have remained virtually flat. Income per person, which the AK party four years ago rashly promised would rise to $25,000 a year within a decade, is stuck at around $10,000. + +None of this is disastrous, and Turkey’s economy is far more robust than it used to be. The trouble is that Mr Erdogan’s government has continued to behave as if the good times had kept rolling. Although the country’s chronic current-account deficit has narrowed lately, thanks to falling energy prices, Turkey relies heavily on foreign capital and is finding it increasingly difficult to attract money from abroad. Yet in recent years its government has shied away from reforms to boost the meagre domestic savings rate or promote industry, even as a consumer credit binge and heavy infrastructure spending have crowded out private investment. Rigid labour and tax rules remain a burden. Mr Erdogan himself has shaken confidence further by bullying his central bank to keep money cheap and by hitting the business interests of political rivals. Without a serious policy shift, including an effort to deal with concerns about institutional independence and the rule of law, Turkey’s economy will continue to underperform. + +Darker scenarios have less to do with the country’s domestic market than with geopolitics. Because of the way it straddles cultures and continents, Turkey has always held a complicated hand. In recent years the mayhem on its southern borders, coupled with renewed tension pitting its NATO and European allies against an expansionist Russia, have made its position all the more delicate. Yet Mr Erdogan’s government has failed to show much diplomatic finesse. + +Everyone agrees that Turkey has been immensely generous in accommodating well over 2m refugees from Syria’s civil war. It has also worked hard to resolve long-standing squabbles with neighbours such as Greece, Bulgaria, Cyprus and Armenia. But it has often appeared aloof and suspicious, failing to communicate effectively or to work with allies. + +The most important of these, and Turkey’s dominant trading partner, is the European Union. Fear of a continuing tidal wave of migrants has lately prompted Europe to proffer aid and a resumption of stalled talks on Turkish membership in exchange for tighter border controls. But there is little warmth in the relationship. Most European governments still see Turkey as a buffer more than a partner. And Mr Erdogan’s government has appeared more concerned to extract concessions than to adopt European norms as a good thing in their own right. + +The danger of isolation was sharply underlined in November when Turkish jets shot down a Russian fighter over Syria that had briefly entered its air space. The Russian president, Vladimir Putin, swiftly responded with a broadside of sanctions. The Russian measures could trim up to 0.7% from Turkish GDP growth this year, according to the European Bank for Reconstruction and Development. + +With lukewarm support from its allies, Turkey has tried to calm the excitement. But given its support for militias fighting against Syria’s president, Bashar al-Assad, and Russia’s growing military commitment to his survival, there could well be more clashes. Turkey seems in danger of stumbling into an unplanned but potentially costly fight. It imports most of its gas from Russia, and Turkish construction firms have well over $10 billion-worth of Russian contracts on their books. + +Worried voters in November rallied behind Mr Erdogan, backing a strong, tested government + +Now Turkey faces a new threat. A double suicide-bombing in Ankara on October 10th last year aimed at a march by leftist trade unions and Kurdish activists killed more than 100 people. In January suicide-bombers struck again, this time in the heart of Istanbul, killing ten tourists. Both attacks were attributed to Islamic State. In a country that has long seen itself as insulated from Middle Eastern turmoil, the intrusion of violent radical Islam came as a particular shock. Worse, it partly reflected Mr Erdogan’s slowness to recognise the danger of blow-back from his own policies in Syria, where Turkey for too long indulged radical Islamists so long as they opposed the Assad regime. + +Rather than blame the party in power for such setbacks, worried voters in November rallied behind Mr Erdogan, backing a strong, tested government rather than risk rule by a possibly weaker coalition. It helped that the ruling party, in effect, controls Turkey’s mainstream media, which pumped up nationalism in the face of danger. Mr Erdogan had carried the 2014 presidential election with a slim majority of 52%, and his AK party, for all its success, enjoys the support of just half the Turkish public. Many of the rest remain sceptical or even bitterly opposed to him. + +This special report will argue that Turkey’s leaders, with their ambitions still set on mastery, are not doing nearly enough to heal such internal rifts. The Kurdish issue looms as one big danger, and so does the Turkish economy’s growing vulnerability to external shocks. Mr Erdogan’s blustering, bulldozing style, together with his party’s growing intolerance for dissent, portends trouble. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21689871-under-recep-tayip-erdogan-and-his-ak-party-turkey-has-become-richer-and-more-confident/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Politics + +Getting off the train + +Mr Erdogan’s commitment to democracy seems to be fading + +Feb 6th 2016 | From the print edition + +What Koza Ipek supporters thought of the state takeover + +FOR 400 YEARS, says a founding myth common to Turkic peoples from China to the Aegean sea, forebears of the Turks were trapped in the rocky valley of Ergenekon. But one day an ingenious blacksmith learned to melt stone, and a grey she-wolf appeared to lead the tribe from its mountain fastness into the rich plains. Similarly, Kemal Ataturk has for generations been depicted in Turkish schools as a hero who after the first world war rallied a beaten people, repulsed a swarm of invaders and forged a strong new nation. In some ways the story of the rise of the Justice and Development party echoes those tales, with Recep Tayyip Erdogan presented as leading Turkey from a dark era of Kemalist faithlessness into a bright Islamic future. + +But now that the party has risen, the story is getting darker. Early in his career Mr Erdogan made a telling remark he was later to regret. Democracy is like a train, he said; you get off once you have reached your destination. Now many of his party’s critics fear that Turkey’s president may be getting close to that goal. + +It is not just that Mr Erdogan wants to rewrite the constitution to award himself executive presidential powers. The trouble is that he hardly needs them. Sometimes overtly, but often by stealth and dissimulation, the AK party has spread its tentacles across Turkish society. The courts, the police, the intelligence services, the mosques, the public education and health systems and the media are all, in one way or another, subject to the party’s overweening influence. + +The judiciary makes an instructive example. Turkish courts and state prosecutors have never enjoyed a sparkling reputation for neutrality. Mr Erdogan’s own spell in jail in the 1990s, for the “crime” of reciting a poem, represents one of the milder perversions of justice that prevailed before the AK party’s rise. Most Turks cheered as the party undertook a series of reforms, billed as raising Turkish justice to European standards. These changes concerned both the shape and the size of judicial bodies. + +In the name of democratising a board that oversees judicial appointments, the AK party expanded its membership, and in the fine print also increased its own powers to select those members. A subsequent move to expand the number of state prosecutors, with the ostensibly laudable aim of speeding up the creaky justice system, enabled the party to appoint thousands more loyalists. The result is a judicial apparatus that, except for the highest courts, increasingly dances to the AK party’s tune. + +One example is the use of legislation that penalises insults to the head of state. Turkey’s criminal code has contained such a law since 1926, but it was rarely applied before Mr Erdogan was elected president in August 2014. Opposition MPs say that since then state prosecutors have investigated more than 1,500 people for insulting the president, a crime that can carry a sentence of more than four years. In the first ten months of 2015 nearly 100 people were held in custody on such charges, including cartoonists and journalists, but also teenage boys who had defaced campaign posters or posted Facebook messages. A woman in Izmir was recently sentenced to 11 months in prison for a rude hand gesture directed at Mr Erdogan. + +An illuminating case of a different kind is that of Sevan Nisanyan, a 59-year-old linguist and author of an etymology of modern Turkish. Mr Nisanyan is also known for his work to restore a semi-derelict village near Turkey’s Aegean coast, a rare example of careful conservation in a region better known for rampant tourist development. Since January 2014 he has been in prison, sentenced to an astonishing 16 years for various minor infractions of building codes, in a country where illegal construction is commonplace; even Mr Erdogan’s new presidential palace violates zoning laws. Mr Nisanyan is of Armenian extraction, as well as being an outspoken atheist and a critic of the AK party. + +Education is another field in which the party’s ideological bent is increasingly evident. As mayor of Istanbul, Mr Erdogan once said he would like every state school to become an imam hatip, a vocational high school with an emphasis on religious training. When such schools first opened in the 1950s, the idea was to supply mosques with preachers. When the AK party took power, they accounted for barely 2% of Turkey’s students. Following a series of reforms, that proportion has risen fivefold, to more than 1m students. Some 1,500 non-religious schools have been converted to imam hatips. Thanks to a well-endowed charity run by Mr Erdogan’s son, these schools are often better equipped than ordinary state ones. Some parents now find they have no choice. + +Keep your mouth shut + +The most glaring example of the AK party’s creeping annexation of the public sphere, however, are Turkey’s media. By putting pressure on private owners and making vigorous use of laws against incitement, defamation and the spread of “terrorist propaganda”, the party has come to exercise control over all but a handful of broadcasters and news publishers. “I don’t remember any time when it was like this,” says Erol Onderoglu of Reporters Without Borders, a watchdog group. “Hundreds of journalists have been fired or arrested in the past five years, and we expect more every day.” + +In recent months the assault on press freedom has involved not just threats and spurious judicial procedures but outright violence. In September mobs attacked the offices of Hurriyet, one of Turkey’s few remaining independent newspapers, after Mr Erdogan criticised its editors on national television. Soon afterwards thugs, several of whom were later found to be AK party members, beat up a popular television presenter, Ahmet Hakan, in front of his Istanbul home, breaking his nose and several ribs. In December Mr Hakan found himself threatened with an investigation for “propagating terrorism” after a guest on his programme said it was a mistake to dismiss the PKK as a terrorist organisation. + +A particularly dramatic case of state interference in the press involved the takeover by the government, days before the November election, of Koza Ipek Holding, an industrial group. One of Koza Ipek’s television stations, already confined to the internet after Turkish satellite carriers were asked to drop its broadcasts, showed live footage of law enforcers invading its Istanbul headquarters before abruptly going off air. So far 74 of Koza Ipek’s employees have lost their jobs. Since the takeover the group’s flagship newspaper has typically featured a large picture of Mr Erdogan above the fold. + +Figures released by an opposition representative on the board that monitors the state broadcasting service show that the AK party enjoyed overwhelming dominance of air time during the election campaign. Mr Erdogan personally got 29 hours of coverage in the first 25 days of October and the AK party 30 hours. By contrast, the Peoples’ Democratic party, or HDP, was given a grand total of just 18 minutes on air. Even so, it attracted 5.1m votes. + +Turkey’s private channels are little better. As the biggest street protests in Turkey’s history erupted in Istanbul in the summer of 2013, the country’s most popular news channel, CNN Turk, ran a documentary on penguins. Like the parent companies of other media outlets, its owner, Dogan Holding, feared government retribution. + +According to one media expert in Istanbul, the takeover of Koza Ipek has left just three news channels out of Turkey’s top 40 that are critical of the AK party. Reporters Without Borders now ranks Turkey 149th out of 180 countries on its World Freedom Index, just three places above Russia and 51 down on 2005. + +Turkey’s increasingly beleaguered liberals debate among themselves just when the AK party reached a turning point. Some point to 2007, when the army ineptly tried to stop the party from installing its own man (then Abdullah Gul) as president, prompting the AK party to adopt a harder line. Others say the Arab Spring of 2011, which saw the emergence of powerful like-minded Islamist movements in Tunisia and Egypt, may have emboldened the party. And some suggest May 2013, when the violent police response to a campaign against plans for a shopping mall in Istanbul’s Gezi park sparked drawn-out protests across the country. This coincided with the overthrow in Egypt of Muhammad Morsi, whose Muslim Brotherhood government the AK party had loudly cheered. + +Mr Erdogan’s furious response to the Gezi protests, say critics, reflected paranoia about a plot to undermine Islamist regimes. He repeatedly blamed the protests on a nebulous “interest-rate lobby,” supposedly bent on weakening the Turkish economy. Other AK party officials hinted at a global Jewish conspiracy. The Gezi protests petered out by the end of that summer, but prosecutions of troublemakers continued. In October last year 244 people received jail sentences of up to 14 months for their part in the protest movement. They included four doctors accused of “polluting” a mosque. The court ignored testimony that they had entered the mosque at the invitation of its imam, using the sanctuary to treat injured people. + +The most commonly cited tipping point in both the AK party’s and Mr Erdogan’s stance, however, is December 2013, when financial police arrested 47 members of an alleged corruption ring, including businessmen, state officials and the sons of several AK party cabinet ministers. Recordings of embarrassing personal calls, including some apparently with Mr Erdogan—who has denied their authenticity—soon appeared on the internet. They painted a picture of nepotism and influence-peddling, much of it involving lucrative construction contracts handed to party favourites. Dozens of officials were forced to resign. + +The motive for the arrests and the leaks was not hard to find. For several years trouble had been brewing between the AK party and Hizmet, a shadowy religious-nationalist movement founded by Fethullah Gulen. a charismatic prayer leader who preaches a mild, Sufism-inspired and public-service-oriented form of Islam. Mr Gulen has lived in self-imposed exile in America since the 1990s, but his influence in Turkey, created over decades, has remained strong. + +In the AK party’s early years Hizmet was a powerful ally. Its media outlets boosted the Islamist cause, and graduates from its universities provided a useful pool of white-collar talent for the AK party. Not unlike the Freemasons, the movement had followers throughout Turkey’s government, but particularly in the police and the judiciary. After the AK party’s election victory in 2002 they were seen as key to the dismantling of Turkey’s “deep state”, and particularly to the show trials of military officers. The leaking of tapes that damaged the reputation of secular rivals to the AK party was also linked to Hizmet. + +The Gulenists may have been prompted to air the AK party’s dirty laundry by Mr Erdogan’s decision in late 2013 to close hundreds of Gulen-affiliated schools. Whatever the reason, the AK party’s response has been ferocious, amounting to a witch hunt against Hizmet supporters and sympathisers. Since January 2014 some 6,000 police officers have been transferred or fired on suspicion of ties to the group. Waves of arrests have targeted journalists, lawyers and academics, among others. + +The enemy within + +In December 2014 Mr Gulen, who is 74, was officially declared the head of a terrorist organisation bent on establishing a “parallel state”. That has allowed prosecutors to charge alleged associates, including newspaper editors, with terrorism offences. The government also reversed earlier convictions that had been secured with the Gulenists’ help. Nearly all military officers who had been subjected to show trials were released. + +Some of the charges of attempted Gulenist infiltration may well be justified. Yet most Turks other than core supporters of the AK also feel that the allegations of corruption against the ruling party cannot be dismissed out of hand. To many, Mr Erdogan’s furious persecution of this “enemy within” is a way of deflecting attention from the AK party’s own plans for capturing the state. “They are not just crushing what exists,” says Mr Onderoglu of Reporters Without Borders. “They are building new media, a new civil society and a new deep state.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21689877-mr-erdogans-commitment-democracy-seems-be-fading-getting-train/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The AK party + +Softly, softly + +How the AK party gained power by stealth + +Feb 6th 2016 | From the print edition + + + +WHEN THE AK party was founded in 2001, few would have predicted its success. Just four years earlier the army had intervened, for the fourth time since 1960, to depose an elected government, on this occasion an Islamist-led coalition. The Islamists were then banned, but the squabbling secularists that succeeded them proved ineffective and corrupt. The economy was in tatters. + +At its birth the AK party represented a mixed bag of interests. Its supporters ranged from hard-core Islamists to members of more traditional religious fraternities, Islamist modernisers, socially conservative businessmen and even secular reformists and Kurds. Some of its founders had made their name in local politics; in 1994 Mr Erdogan was elected mayor of Istanbul, where he was seen as energetic and effective. He gained extra glory among Islamists in 1998 by being briefly imprisoned for “inciting hatred based on religious differences”, having publicly recited a nationalist poem. + +The party’s surprise triumph in national elections in 2002 owed much to Mr Erdogan’s formidable powers of oratory and organisation, but also something to luck. Its 34.3% share of the vote translated into a whopping two-thirds of all parliamentary seats, ironically because Turkey’s generals, intent on keeping Islamists and Kurds out of the legislature, had set the threshold for any party to enter parliament at a steep 10% of the national vote. Of 16 quarrelling secular parties, only one, the Republican People’s party (CHP), founded by Ataturk himself, won any seats, leaving the AK party with little opposition. It also benefited from economic reforms introduced in 2001, which caused short-term pain but produced long-term gains for which it took the credit. + +With both the economy and politics stable for the first time in years, Mr Erdogan seized the opportunity to push Turkey’s bid to join the European Union. His overture to the West assuaged fears that the AK party harboured an unstated Islamising agenda. The 2001 terrorist attacks on America also helped persuade the West that the democratically elected, mild-mannered and pro-business AK party was worth supporting. + +Leftists in Turkey were seduced by Mr Erdogan’s populist rhetoric and his ambitious social agenda that quickly produced better housing, health care and education. Conservatives liked the AK party’s economic policy, which promoted growth but kept taxes low. Traditionalist Turks were pleased that women could now wear headscarves. + +Voters of many political stripes also cheered as the party took on the country’s “deep state”, the matrix of military, security, judicial and even criminal bodies that had for decades exerted control behind a veneer of democracy. Through a series of massive trials, the influence of these unaccountable agents was slowly punctured. + +“We all honestly wished them well,” says a Turkish professor of the AK party’s early years. “It was a quietly revolutionary movement, a corrective to so many years of bullying.” Many of his secular friends were soon voting for and even joining the party. + +Over the past decade the AK party has notched up some remarkable electoral victories. In the 2007 general election its share of the vote rose to 47% and in 2011 to 49%. In 2007 the party’s candidate, Abdullah Gul, won a parliamentary vote to become president. Following two referendums to approve constitutional changes, Mr Erdogan succeeded him as directly elected president in 2014. And after the brief hiccup of the parliamentary election last June, the AK party surged back in November with 49.5% of the vote. + +Political analysts put the party’s core constituency of pious Muslims and Islamist ideologues at 20-30% of the electorate. A similar-sized but less committed group is made up of conservative nationalists and businesspeople. The AK party has shown great skill at keeping both groups happy. Yet as it becomes more powerful, it is relying less on charm and persuasion and more on threats and rewards. That is making even some party stalwarts uncomfortable. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21689878-how-ak-party-gained-power-stealth-softly-softly/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The economy + +Erdoganomics + +Turkey is performing well below its potential + +Feb 6th 2016 | From the print edition + + + +“THE PEOPLE HAVE voted for stability,” proclaimed President Erdogan after his party’s electoral landslide in November. The markets applauded, too. Istanbul’s stock index jumped and the Turkish lira rose against the dollar, both reversing long slides. Year-end indicators showed an upward trend in GDP growth, from a rate of around 3% to nearer 4%. But business euphoria quickly faded. Stability certainly beats chaos or months of coalition haggling, the markets seemed to say, but if stability means “more of the same”, we are not so sure. + +That may seem a churlish reaction. Turkey has made great economic strides in the past 15 years. It has become a trusted supplier of high-quality consumer goods and is now Europe’s biggest manufacturer of television sets and light commercial vehicles. Its capital goods pass muster in Germany for their precision. Turkey is also the world’s eighth-biggest food producer and sixth-most-popular tourist destination. Forty-three of the top 250 international construction firms are Turkish. + +Moreover, Turkish business has often proved nimble. Ten years ago the country’s textile industry was foundering, priced out by East Asia, but it has since discovered a lucrative niche supplying higher-quality goods to Europe on shorter time scales. As prospects in the Middle East have dimmed, Turkish contractors have switched to markets such as Russia and Africa. + +The AK party is justly proud of having presided over plunging inflation, shrinking sovereign debt and a jump in exports (by a whopping 325% in the ten years to 2012). However, most of those things were achieved a while back. Between 2002 and 2007 Turkey’s economy expanded by an average of 6.8% a year, but since then it has been more volatile. Over the past decade, annual average growth has been a modest 3.5%. Income per person has barely been rising for the past four years. The same is true for exports. Average inflation has been above the central bank’s target in all but one of the past ten years. + + + +Much of the slowdown is due to the vagaries of the global business cycle. Around 60% of Turkey’s trade is with Europe, which also accounts for three-quarters of foreign direct investment in the country. The continent’s recent economic troubles are not Turkey’s fault. Nor is the mayhem in the Middle East, which a decade ago was Turkey’s fastest-growing export market. A deep recession in Russia, a big supplier of energy and tourists and a market for farm exports, has also hit growth prospects. Turkey’s recent political spat with Russia has made things worse. + +Other external events have been more helpful. Thanks to a sharp fall in the oil price, Turkey’s current-account deficit narrowed to around $35 billion in the 12 months to November, the lowest in over five years. Even so, the loans piled up to fund the big external deficits of the past have left the economy vulnerable. Much of Turkey’s foreign debt, notably to its companies, is in dollars, which have become more expensive to service as the lira has steadily weakened. + +From know-who to know-how + +The economy also suffers from a range of home-grown troubles. Onerous regulations make it hard for small businesses to grow bigger and more efficient. The World Economic Forum, a think-tank, ranks Turkey 131st out of 144 countries by labour-market efficiency. Most economists agree that without substantial structural reform, weak growth is here to stay. “Our new normal seems to be 3-3.5%,” says Emre Deliveli, a columnist on economic affairs. “For America or the EU that would be fine, but with our demographics we need 3.5% as a minimum just to keep unemployment flat.” + +Turkey is a classic case of what economists call the “middle-income trap”: the difficulty encountered when countries that have recently emerged from poverty try to move up into the club of rich countries. They may, like Turkey, have learned how to assemble cars or washing machines, boost agricultural productivity or mobilise capital and labour, but they find it harder to add value through research, design, branding and marketing. According to World Bank data, the share of high-tech goods in Turkish manufactured exports has been stuck at 2% since 2002. + +Martin Raiser, until recently Turkey director for the World Bank, has described the kind of shift required as a move from the “know-who” to the “know-how” economy. The key, he believes, is to develop institutions that are resilient to changing regimes and can sustain long-term growth. This is where Turkey has fallen short. Connections all too often still outweigh competence. Big privately held holding companies dominate many sectors, squeezing out smaller, more innovative firms. + +“We are not in a middle-income trap, we are in a reform trap,” says Zumrut Imamoglu, chief economist of TUSIAD, a think-tank funded by Turkey’s biggest private firms. She sees the AK government drifting away from a pro-growth agenda towards a programme that more narrowly serves the party’s own interests. Consumer and business confidence have taken a knock. + +When the Turkish economy crashed in 2001, an IMF-enforced remedial programme provided useful discipline, reinforced by hopes of EU membership. Turkey’s subsequent boom owed much to stringent controls on state spending, increased budget transparency, more independence for the central bank and moves towards more open and better-regulated markets. But once the IMF’s cure had worked and the EU became cooler about Turkish accession, the impetus for reform waned. + +In a recent paper two Turkish economists, Daron Acemoglu of MIT and Murat Ucer of Koc University in Istanbul, point out that although AK governments have maintained laudable fiscal discipline, in other respects their economic management has been less impressive. “The AK government that had supported the economic opening made an about-face once it became sufficiently powerful,” they write. “Gradually, the de jure and de facto control of the ruling cadre intensified, amplifying corruption and arbitrary, unpredictable decision-making.” + +A paper by two other economists, Esra Gurakar of Okan University and Umut Gunduz of Istanbul Technical University, illustrates the point. The adoption of a law in 2001 to regulate government procurement at first improved transparency, it says. With time, however, the number of exceptions to the law grew and the share of public contracts awarded via open auction shrank. By 2011 some 44% of government contracts were being awarded by unaccountable bureaucrats. + + + +Businesses without friends in government have suffered. One of Turkey’s most successful construction conglomerates, with a fat international order book and an annual turnover of close to $6 billion, has not won a big Turkish government contract since the AK party took power. Some say this is because it is seen as too close to Western governments that have been critical of the party. Similarly, companies that own media outlets have been cut out of business in other fields if they fail to toe the line. The share price of Dogan Holding, which owns some of the few remaining independent newspapers and TV channels, fell by 16% on news of November’s election results. + +Firms with the right contacts, say critics of the government, have done well, winning not just direct state contracts but privileged access to deals involving state-owned land and getting early warning of regulatory and zoning changes. One example is TOKI, the state agency for affordable housing, which the AK has turned into a partner for private developers. “There is a cycle,” says Mustafa Sonmez, an economist: “I give you public land, you build, we share—it’s a great way to reward friends.” + +Slippage is also in evidence over the independence of Turkey’s central bank, or TCMB. The bank is generally held in high regard, but in recent years it has failed either to rein back inflation, currently around 9%, or to prevent a steady decline in the value of the Turkish lira, which has fallen by half against the dollar since 2010. Many economists and businessmen pin the blame on Mr Erdogan, who has publicly badgered the bank to keep interest rates down. On one occasion he accused its governor, Erdem Basci, of being a traitor to the nation for championing a higher rate. A recent analysis of TCMB policies by economists at the Centre for Financial Studies at the Goethe University in Frankfurt reckons that between 2010 and 2014 Turkey’s central bank on average set the official interest rate about 7 percentage points too low, judging by its own policy responses in the previous decade. + +It is not clear why Mr Erdogan is so concerned about interest rates. Speculation about possible motives ranges from trying to woo voters with cheaper money to religious concerns about usury. His economic advisers have often hinted at a shadowy global “interest-rate lobby” seeking to damage Turkey’s economy. + +Mr Basci is due to leave his job in April, perhaps with some relief. Turkish businessmen want his successor to be given more leeway to set credible policies. They reckon that the country’s politically determined loose monetary policy has been partly responsible for a surge in consumer debt, which grew from an average of about 5% of household income in 2002 to 55% in 2013. The credit binge made Turkish consumers feel rich: nominal household wealth has tripled in the past decade. But the cheap money has also steadily eroded Turkey’s savings rate. At just 12.6% of GDP in 2014, it was the lowest in any big emerging market. + +Artificially low interest rates have also directed investment away from industry into sectors with quicker returns, such as consumer imports and property speculation. According to the IMF, between mid-2012 and mid-2014 the proportion of bank credit earmarked for construction rose from less than 50% to over 70% of all loans. Across the country, fancy new housing estates, office complexes and shopping malls are far more in evidence than new factories. Since 2012 property prices have risen smartly, helped in part by looser rules on foreign ownership. In July 2015 the average price of a house in booming Istanbul was 20% up in real terms on a year earlier. + +The fall in domestic saving has also made Turkey even more dependent on foreign finance. Its foreign debt is approaching $400 billion, or about 50% of GDP. Much of this is short-term, and the vast bulk of it is private. Last July Fitch, a ratings agency, singled out Turkey as the large emerging market most vulnerable to the effects of a long-expected rise in American interest rates. The Fed’s initial move, in December, was smaller than expected, but Turkey still gets poor marks from ratings agencies. Moody’s and Fitch both put its sovereign debt at the lowest investment grade, and Standard & Poor’s rates it as junk. + +Foreign direct investment, which reached a peak of about $22 billion in 2007, has been on a downward trend ever since, sliding to around $12.5 billion in 2014 and probably staying at the same level last year. Foreign firms have made no major acquisitions in Turkey in recent years and have launched no big greenfield projects, notes Mr Sonmez, the economist. This is due partly to a general wariness of emerging markets, but partly also to Turkey’s perceived political volatility, a weak currency, relatively high inflation, proximity to a turbulent Middle East and questions about the rule of law. “This is a government that has a habit of changing rules after the match has started,” says a prominent economic columnist. “If a foreign company fears it cannot defend itself in court, why should it invest?” + +Since the AK party’s success at the polls, the signs from the new government have been only partly reassuring. It is already committed to costly election promises such as a higher minimum wage, bigger pensions and more social spending, and ministers have also spoken of boosting infrastructure investment to promote growth. A senior adviser to Mr Erdogan hints that in future the party might be less fiscally prudent than in the past, aiming to create more jobs and increase competitiveness. + +Outsiders such as the EU, the IMF, the World Bank and the OECD, along with Turkish economists and businesses, suggest different priorities. A tighter monetary policy would strengthen savings and reduce inflation, which would have a useful knock-on effect across the economy. Labour markets need to become more flexible and education must be geared more closely to their needs. Most importantly, sustained growth will require a change of attitude, beginning at the top. A sophisticated market economy cannot be run by offering favours for loyalty. “They used to be giving, sacrificing for the public good,” says an Istanbul news editor. “Now they are taking, using all the redistributive power of the state.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21689874-turkey-performing-well-below-its-potential-erdoganomics/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Identity + +Proud to be a Turk + +But what does it mean? + +Feb 6th 2016 | From the print edition + +Another day, another Kurdish funeral in Diyarbakir + +“I AM A Turk, honest and hard-working.” So began the oath of allegiance to their country chanted by generations of schoolchildren before the practice was scrapped three years ago. This proud, flag-waving nation takes it as read that Turkishness goes beyond nationality. But what does it mean to be a Turk? Labels of ethnicity, language, religion and social class overlap in complex patterns. As a result, some citizens consider themselves more Turkish than others. + +The modern Turkish republic emerged from a crucible of war, as the waning Ottoman empire between 1908 and 1922 fought in succession against Bulgarian nationalists and Italian colonisers in Libya, then against the British Empire, Russia and Arab nationalists during the first world war, and lastly against Greece. Genocide or not, awful things happened to Anatolia’s Armenians in 1915-17. There were many, and now there are few; nearly all of Turkey’s remaining 50,000 ethnic Armenians live in Istanbul. After the Greco-Turkish war of 1921-22 Turkey lost some 1.5m Greeks too, in a population exchange that brought half a million ethnic Turks “home” from Greece. More ethnically Turkish or Muslim refugees poured into the new nation, fleeing from Russian revolution or from persecution in the Balkans, the Crimea and the Caucasus. + +Most of those incomers were quickly assimilated, but not the Kurds, indigenous Muslims whose presence in Anatolia far predates the Turks (who arrived from Central Asia a mere millennium ago). In the 1920s and 1930s the new Turkish republic crushed successive rebellions in the country’s south-east, where Kurds predominate not only within Turkey’s own borders but in adjacent parts of Syria, Iraq and Iran. Repeated counter-insurgencies, accompanied by aerial bombing and widespread pillage, left the region impoverished and depopulated. Yet even though hundreds of thousands were killed, ethnic Kurds still make up 15-20% of Turkey’s people. + +The young republic was mostly Turkish-speaking and overwhelmingly Sunni Muslim. Assimilation and urbanisation have made it even more so. Yet Turkey retains more of the ethnic and religious diversity of the Ottoman empire than is generally realised. Some 10m-15m of its citizens are Alevis, adherents to a syncretic offshoot of Shia Islam that is unique to Turkey. Other religious minorities include Jaafari Shia Muslims, Jews, Christians and Yazidis. Among the ethnic minorities, apart from Kurds and Armenians, are large numbers of Arabs, Albanians, Azeris, Bosniaks, Circassians, Georgians, Laz and Roma. Turkey is now also home to well over 2m refugees, mostly from Syria but also from Iraq, Iran, Afghanistan, Egypt and elsewhere. + +To Kemal Ataturk and his immediate successors, whose formative experience was Ottoman implosion and foreign invasion, the paramount need was to forge a strong nation from these disparate parts. For long periods and until quite recently, the public use of Kurdish languages was strictly banned. The government encouraged religious uniformity by creating a powerful agency, Diyanet, to oversee the mosques, which preached a single version of Sunni Islam. Other versions and other faiths got no support from the state; indeed, it outlawed the mystical Sufi orders that had heavily inflected Ottoman-era Islam. + +In their determined push for modernisation, Ataturk’s followers imposed customs and ways of thought that came easily to sophisticates in Istanbul or Izmir but were resented further east. The superior airs of secular, cosmopolitan Kemalists have rankled ever since, particularly with country folk and with immigrants to the big cities. Some speak half-jokingly of a lingering divide between “white” Turks and “black”, marking the gap between those who cherish Ataturk’s legacy and those who resent it as an imposition. + +Mr Erdogan has capitalised brilliantly on the deep grudge felt by “black” Turks. His credentials include his origins as the son of rural immigrants to a tough, working-class part of Istanbul, having worked as a pushcart vendor of simit, Turkey’s sesame-sprinkled progenitor of the bagel, and a pithy, populist style of delivery. On Republic Day last year, which handily fell just before November’s election, he made a speech evoking times when some people celebrated the holiday “with frocks, waltzes and champagne” while others gazed at this scene “half-starved, with no shoes and no jackets to wear”. Now, he concluded, Turkey is united. Even after two decades of such rhetoric, it goes down well with many voters. + +Not quite united + +Yet a look at Turkey’s political map suggests a less than complete picture of unity. The half of the electorate that votes for Mr Erdogan does include some minority groups, but mostly represents the narrower, ethnically Turkish and Sunni Muslim mainstream. Of the three rival parties that make up the parliamentary opposition, the Nationalist Movement, or MHP, is also “properly” Turkish but represents the extreme right. Its most distinctive trait is reflexive hostility to all non-Turks, especially Kurds. “We don’t call it a peace process, we call it a terror process,” says Zuhal Topcu, a party vice-chairman, of the government’s on-off talks with Kurdish rebels. “You cannot sit at a table with them, they have to surrender and be tried.” + +The largest opposition party, the CHP, sees itself as the direct heir to Ataturk. Pro-Western and centre-left, it embraces secularists of all stripes and has sought to focus on issues rather than identity politics. Yet to the dismay of its own leadership the CHP’s core constituency, as well as most of its MPs, are Alevis. Many in this headscarf-shunning, alcohol-tolerant minority remain strident Kemalists, seeking refuge from what they see as the uncomfortable encroachment of Islamism. + +The third component of the opposition, the People’s Democratic party, or HDP, is outwardly an alliance of small parties and leftist groups that recently joined forces to cross the 10% threshold for entering parliament. But for all its inclusiveness, most of the HDP’s supporters and candidates are Kurds. The party gets the bulk of its votes in the chronically troubled south-east and few in the rest of Turkey. “It’s a problem,” admits Ayse Erdem, an HDP party leader in Istanbul who is herself an ethnic Turk. “A lot of people can’t bring themselves to vote for a Kurd, they just don’t see them as equal.” + +Yet to many the problem with the HDP lies not with its ethnic profile but with what they see as its too-cosy relationship with the PKK, a Kurdish guerrilla group that has fought a sporadic insurgency against the state since the 1980s and is officially deemed a terrorist organisation. Plenty of Kurds are also wary of the PKK, both because of its vaguely Maoist ideology and its violent intolerance of rival Kurdish groups. Yet the brutality of Turkish security forces, which in the 1990s destroyed hundreds of villages to flush out rebels, has repeatedly recharged Kurdish nationalism. + +The PKK’s stated aims have changed over time, and particularly since the capture, trial and imprisonment in 1999 of its charismatic founder, Abdullah Ocalan. PKK leaders now say they seek not an independent Kurdistan but a form of autonomy that Mr Ocalan has described as democratic confederalism. To its credit the AK party has eased away from the Kemalists’ uncompromising rejection of Kurdish claims, loosening official strictures on Kurdish languages, opening a dialogue with Mr Ocalan and agreeing to indirect peace talks with the PKK. + +A ceasefire during the most recent round, from 2013 until last spring, prompted a construction and investment mini-boom in the still-poor south-east. Hopes rose further last February, when leaders of the AK party and the HDP—which the PKK had tacitly appointed as its interlocutor—announced a ten-point road map for peace. In essence, this required the PKK to lay down its arms and affirm respect for Turkish sovereignty, in return for an amnesty, formal recognition of the Kurds as a distinct people and mutual commitments to resolve issues democratically. + +There is much finger-pointing about what happened next. AK party supporters maintain that the agreement was merely an informal understanding. Their critics contend that Mr Erdogan, sensing resistance from the army and from diehard nationalists and with elections looming in June of last year, made a calculated decision to scupper the deal. + +Events in neighbouring Syria, with 2m Kurds scattered thinly along the open plain abutting the Turkish border, also played a part. Five years of appalling civil war provided a chance seized by the PKK’s Syrian affiliate, which ruthlessly crushed rival Kurdish groups and took control of Kurdish areas. Its success at fighting Islamic State impressed Western powers, which provided support last year to relieve the besieged Kurdish city of Kobane. + +But as the PKK’s Syrian branch carved out an autonomous canton, Turkish officials grew fearful of its growing power. As tens of thousands of Kurdish civilians poured into Turkey to escape IS’s assault on Kobane, the government in Ankara dithered for weeks before allowing in aid. Turkish Kurds were outraged. “We found that Ankara is still so blinkered that it could not see it faced a simple choice: would you rather have Kurds as neighbours or Islamic State?”, laments a Kurdish intellectual. + +From the government’s perspective the success of Syria’s Kurds is a worrying precedent. The fear is that the PKK, by virtue of its tacit alliance with the West in Syria, will have gained international legitimacy. + +Back to battle stations + +For now, talk of peace between Turks and Kurds is over. In June the Turkish air force resumed bombing raids on PKK targets in Iraq. Paramilitary police have clamped curfews on restive Kurdish towns and arrested hundreds of alleged PKK supporters; guerrillas have struck back with roadside bombs and shootings. Well over 600 people have died so far in this round of violence. + +In electoral terms Mr Erdogan’s switch in tactics has paid off. With pro-AK party television relentlessly showing funerals of slain policemen, patriotic Turks voted for his party in droves in November. Even many conservative Kurds abandoned the HDP. They had seen it as a democratic alternative to the PKK, but felt the party was not distancing itself enough from the guerrillas. + +Many Kurds, as well as Turkey’s allies, still cling to hopes that the two sides will resume talks. But attitudes among ordinary Turks, which had softened towards the idea of some kind of expanded Kurdish autonomy, are now hardening under the government’s barrage of bellicose rhetoric. With Mr Erdogan’s men apparently convinced that they can win by force, the Kurdish issue seems to be moving into another cycle of despair. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21689879-what-does-it-mean-proud-be-turk/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Urban development + +The lure of the city + +Turkey’s urban centres are modernising at the double + +Feb 6th 2016 | From the print edition + + + +NAPOLEON WAS IMPRESSED with Istanbul. If all the world were a single state, he said, this city should be its capital. A generation ago, when it looked musty and neglected, that would have seemed far-fetched, but now this great metropolis at the confluence of Europe and Asia pulses with trans-global traffic. Some 50,000 ships a year traverse the narrow waterway that bisects the city. A colourful mix of Polish package tourists, Indonesian pilgrims, Ghanaian textile traders, Kazakh students and honeymooning Saudis passes through its snaking airport immigration queues, and a polyglot crowd ceaselessly throngs Istiklal Street, attesting to Istanbul’s growing magnetism. + +In 2010, the city’s Ataturk International airport ranked as the world’s 37th-busiest by number of passengers. By 2014 it had vaulted to 13th place. Istanbul already has a second airport and is furiously building a third, scheduled to open in 2018. When fully operational, it will be the world’s largest, ready to handle 150m passengers a year. + +The project, worth around $30 billion, has caused plenty of controversy. It is rising amid protected wetlands and faces charges of cronyism in awarding construction contracts. But few Istanbullus doubt the need for a giant new air hub. Measured by “international connectivity”—the frequency of flights to foreign destinations—the city comes fifth in the world, but it is advancing faster than its rivals. London, the leader, became 4% more “connected” between 2009 and 2015, according to Mastercard; over the same period Istanbul’s connectivity grew by a roaring 111%. + +The city is racing ahead in other ways, too. It already has about 16m people, compared with barely 2m in 1975, and between now and 2018 it will overtake both London and Moscow as the most populous urban area in Europe. According to Euromonitor, a research firm, six of Europe’s ten fastest-growing cities are in Turkey (see chart). + + + +Countries such as India and China have witnessed similar urban explosions, but Turkish cities stand out for also offering an impressive quality of life. The proportion of Turks living in cities has swollen from about half the population 30 years ago to 75% today. Between 2000 and 2015 its major urban areas absorbed 15m new residents. Yet despite their rapid growth, Turkish cities are by and large admirably free of squalor and crime. Middle-class parts of Istanbul, Ankara or Izmir, in Turkey’s relatively prosperous west, are indistinguishable from their far wealthier West European counterparts. Yet even the slums in big eastern cities such as Gaziantep and Diyarbakir have proper sanitation, tidy paved streets, parks and well-maintained schools. + +It was not always thus. Thirty years ago the hills around Turkish cities looked much like Brazil’s, stacked higgledy piggledy with unlicensed shantytowns appropriately known as gecekondu (built overnight). Istanbul had worse public transport, worse water quality and worse pollution than shambolic Cairo; the cheap lignite used for home heating clouded its winter skies in a perpetual acrid fug, and the soupy waters of the Golden Horn, a sea inlet that bisects the European side of the city, were too polluted to sustain fish. + +A better place to live + + + +Istanbul’s skies are now notably clear, and the fishermen who crowd the railings of the Galata Bridge into the wee hours hoist up sardines by the bucketful. The radical change is not just a result of better sewerage and cleaner heating fuel in the form of natural gas piped from Russia. Starting in the 1980s, Turkey made a series of important legislative changes. Various amnesties granted legal title to gecekondu dwellers, making them stronger stakeholders and allowing them to leverage property assets. A sweeping reform in 1984 consolidated big urban areas into powerful municipalities with elected mayors. Further reforms in the 2000s did the same thing at district level. Cities now generate their own revenues, make their own deals with private firms and start their own businesses, though the central government keeps enough of a hold on the purse strings to ensure fiscal discipline. + +Cumulatively, these undramatic changes have had a remarkable effect. “Local democracy really seems to have worked in this sense,” says Yasar Adanali, an urban planner in Istanbul. “To climb up the ladder in their party or be seen at the national level, municipal managers have to shine.” Mr Erdogan himself rose out of local Istanbul politics, and many of his closest associates came to prominence in the same way. The city’s 39 districts are showcases for their mayors, who compete to provide better services. In most of the city, streets are swept and rubbish collected at least once a day. + +The Greater Istanbul Municipality, for its part, has the resources to build or sponsor big investments in infrastructure, with notable results. The first underground line of its metro system opened only in 2000, but progress has been rapid, with an underground linking the Asian side of the city to the European one completed in 2013. + +Yet the picture is not all rosy. Despite all the investment, only 15% of journeys in Istanbul are made by public transport; the city has more congested roads than any other in Europe. Increasingly, too, the growth of Turkish cities has been driven less by careful planning than by business interests, often backed by powerful politicians. + +Istanbul’s new airport is a case in point. The municipality’s own 2009 master plan provided for it to be built to the west of the city, in flatter lands already connected to Istanbul’s main traffic axis. Ministers in Ankara intervened to move it to the north, amid forested hills that were meant to be preserved for recreation and as the main catchment for Istanbul’s water supply. The giant site was largely public land, but to attract private builders much of it will be turned over to commercial use for hotels, shops and airport services. Connecting the airport to the city will require millions more trees to be felled: as part of the project a new motorway will cut through forests to link to a new, third bridge across the Bosporus. + +A new motorway will cut through forests to link to a new, third bridge across the Bosporus + +Environmentalists and urban planners argue that the purpose of the motorway is not so much to relieve traffic as to open new areas to property development. Already, Istanbul’s once-green northern reaches are being covered over by gated luxury communities and shopping centres. “With the current planning structure we know there is no way to stop the building,” says Akif Burak Atlar of the Turkish Union of Urban Planners. “The incentives for business and government are too strong.” + +The consortium of Turkish developers that won the build-own-operate lease for the new airport includes firms thought to be close to the AK party. Foreign financiers, not least the World Bank, have kept away, partly because of a corruption investigation involving several of the firms’ senior executives, launched in 2013 but suspended after the government intervened. + +Across the country vast areas of state lands, and in some cases city parks, have been handed to private developers. The one that caught the most public attention was Istanbul’s Gezi Park, a rare patch of green in the heart of the city. A century ago this had been the site of an army barracks where Ottoman soldiers protested against encroaching secularism. For symbolic reasons Mr Erdogan strongly backed a project to recreate the long-demolished structure as a faux-Ottoman shopping centre. But the green space held equally strong symbolism for many Istanbullus. The scheme was blocked by a massive urban protest, an eruption of the cumulative anguish felt by many locals about runaway development in which dozens of skyscrapers rose and more than 90 other shopping malls sprouted between looping motorways. “Gezi was just one too many of the crimes that have been committed against Istanbul,” says Mr Adanali. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21689875-turkeys-urban-centres-are-modernising-double-lure-city/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Foreign policy + +Alone in the world + +The consequences of not talking to the neighbours + +Feb 6th 2016 | From the print edition + +A haven for Syrian refugees + +FEW COUNTRIES OCCUPY a geopolitical space of such sensitivity as Turkey, or have played such a range of critical and overlapping international roles. It has been a gateway and a bridge to Europe, most dramatically in recent months for hundreds of thousands of Syrian refugees, as well as a conduit for energy supplies. It has been a buffer to revolutionary Iran, and a barrier to Russia’s southward ambitions since long before it joined NATO in 1952 (and even more so since Vladimir Putin decided to leap into Syria’s maelstrom). It has been an anchor to the ever-turbulent Middle East, and in some ways also a model to other Muslim countries of a relatively tolerant, relatively democratic and economically quite successful government. + +Yet the country has all too often failed to show both strength and responsibility at the same time. For decades after the second world war Turkey stuck to its own business and remained a staunch ally of the West, both in NATO and as a founding member of the OECD, yet it was not strong. Its economy was doing badly, and under the generals it mostly avoided putting much effort into foreign affairs—with rare exceptions, such as when it invaded and partitioned Cyprus in 1974. Troubles with neighbours such as Greece, Bulgaria and Armenia were allowed to fester, and ties with Europe and America remained formal and cool. With Israel, it maintained a tacit, businesslike alliance. As for its Muslim backyard, Turkey shunned it altogether. + +This aloofness, mirroring a national penchant for mistrusting outsiders, came to an abrupt and welcome end when the AK party took power. Under the guidance of Ahmet Davutoglu, who served as a foreign-policy adviser and then foreign minister before becoming prime minister, the country proclaimed a policy of “zero problems with neighbours”. The sudden wave of warmth from Ankara produced immediate results. Old quarrels, even with such once bitter foes as Armenia or the Kurds of northern Iraq, were set aside. Europe seemed ready to open its doors to Turkey, if only by a crack. Russia became an important trading partner. Turkey’s Arab neighbours welcomed back their former Ottoman master with enthusiasm. Exports to the Middle East boomed. For a time the forthright Mr Erdogan was the most popular leader in the region. Turkey looked strong. + +Don’t mention the EU + +As for being responsible, in many ways it has performed less well. That is not entirely Turkey’s fault. Part of the reason its accession to the EU has got nowhere has been the EU’s muddled, many-headed set of policies. In the wake of the recession and the debacle over Greece, Europe also looks less attractive now than when talks began in 2005. Yet the AK party’s leadership has been irresponsibly quick to take offence. Even if the EU did unilaterally freeze negotiations on about half the 33 “chapters” that have to be completed before accession, Turkey need not have relaxed its efforts to comply with what the EU calls its acquis (its common set of rules). By doing so, the AK government signalled that it sees things like freedom of the press, judicial independence and fighting corruption as part of the price of membership rather than as valuable goals in their own right. + +Such legacies have lately put Mr Erdogan and his European counterparts in an uncomfortable spot. Faced with the deluge of refugees passing through Turkey on their way to western Europe, they have horse-traded stronger Turkish border controls and security measures for European cash, travel concessions for Turks and promises to revive Turkey’s stalled plans for EU entry. Neither side has come out looking good. Turkish officials have indicated that they regard Europe’s €3 billion aid package for the refugees as merely a first instalment. The EU, for its part, has voiced growing concern over issues of civic freedoms and human rights, and in particular Turkey’s renewed suppression of the Kurds. + +There are bright spots: the accession process is moving again, and growing pragmatism from all parties to the Cyprus conflict, including Turkey, bodes well for a peace deal. Still, Mr Erdogan’s hope to take Turkey into the EU by 2023, when it will celebrate 100 years as a republic, looks as forlorn as ever. + +But it is in the Middle East, and in particular over the civil war in Syria, that responsibility comes most into question. Instead of being a wise friend and mentor to troubled neighbours, Turkey has been in turn overly naive, overly indulgent and overly stubborn. Above all, it has shown that it does not have much of a grasp of the region’s combustible complexity. “Frankly, I don’t know what they are trying to achieve,” says an exasperated UN official closely involved with Turkey and Syria. + +That may be partly because of its aloofness. Between the Ottoman defeat in the Middle East in 1918 and Mr Erdogan’s arrival in office, Turks had scarcely glanced at the place. As the Arab Spring erupted in 2011, the government chose to view events through the prism of Turkey’s own story: the true people, which is to say the pious Sunni Muslim working class, were at last casting out their Westernised military elites. The AK party warmly embraced the region’s newly emerging Islamists and suddenly turned a cold shoulder to the autocrats it had only recently wooed as customers for Turkish goods. + +In Iraq, Turkey voiced support for Sunni parties as protests mounted against discrimination by the Shia-majority government, only to be blindsided when Islamic State exploited Sunni grievances to carve out a caliphate. In Egypt, say well-informed Turks, Mr Erdogan’s people advised the Muslim Brotherhood during its brief stint in office to replicate such AK party tactics as flooding the supreme court with their own loyalists. The military junta now in power is furiously hostile to Turkey. + +In Syria Mr Erdogan, who had only recently spent time on the beach with the Assad family at a Turkish resort, lent full support to the uprising against the Syrian dictator. Like many Western intelligence agencies, his own was convinced that the country’s 70% Sunni majority would quickly prevail. It seriously underestimated the tenacity and viciousness of a minority regime with its back to the wall. “What were we thinking? We are not a mukhabarat country,” says a critical columnist, using the Arabic word for secret police. “And here we were marching into a place with the meanest mukhabarat on the planet, backed by two mukhabarat superpowers, Iran and Russia.” + +Thanks two million + +To its immense credit, Turkey has offered a haven from the fighting to refugees from the Syrian civil war. “In Europe we’ve had no concept of just how generous the Turks have been,” says a diplomat in Ankara. Well over 2m Syrians have sought shelter in Turkey. Its government has spent perhaps $10 billion building spotless camps and providing free schools, health care and food. The vast majority of Syrian refugees live outside the camps but receive the same benefits and are free to move inside Turkey. + +Yet Turkey has been prickly about guarding its sovereignty. Foreign agencies say their money is welcome, but their programmes and supervision are not. The UN has not been allowed to register or process refugees, and refugee camps are strictly off-limits to visitors, including members of Turkey’s own parliament. Although Syrians are grateful for Turkey’s help, few want to live on handouts. As “guests” of the country, they have not been allowed to work, though under new rules introduced in January they can now apply for work permits after six months. + +Most worrying is Turkey’s role in the war itself. Having excommunicated the brutal Assad regime, it has found itself sucked ever deeper into the Syrian swamp. Together with Western and Arab allies it has aided rebel factions. It has also—sadly to deaf ears in the West—repeatedly called for the creation of a zone to protect civilians inside Syria. But its secretive military aid, say Western observers, was for too long handed out with little discrimination, and its volume was never enough to turn the tide. + +Nor did Turkey back up its diplomatic pleas with firm offers or action. Despite being a NATO member, and despite the evident nastiness of Islamic State, it did not let the American-led coalition fighting IS use its air bases, or even its air space, until about nine months after air strikes against IS began in September 2014. Since then its role in the coalition has mostly involved bombing not IS but the Kurdish rebels of the PKK. + +The Turkish security establishment’s wings may have been clipped at home, but its obsessive view of the Kurdish issue as the country’s pre-eminent threat has been allowed to prevail abroad. This has increasingly entangled the country in both Iraq and now Syria, whose Kurdish minority has carved out an enclave along Turkey’s border. To Turkey’s horror, the West has praised it as the most effective force on the ground against IS. + +Perversely, when suicide-bombers ripped apart a peaceful anti-government protest by mostly Kurdish groups in Ankara in October, killing over 100 people, AK party spokesmen pointed fingers at the PKK. Yet it quickly became clear that the perpetrators of Turkey’s worst-ever terrorist atrocity in modern times were members of a Turkish IS cell. + +Until stricter controls were imposed last year, Turkey allowed virtually unhindered transit to anyone heading to or from the war in Syria. Within Turkey hundreds of suspected Islamist radicals were released from police custody after cursory investigation. At the same time the government has slapped charges of terrorism on police and journalists exposing the supply of weapons to Syrian rebel groups by Turkey itself. And until recently Turkey had suspended security co-operation with France, out of pique over French statements on Armenian genocide. + +Since the Ankara bombing, and even more since an IS suicide-bomber killed ten tourists in Istanbul on January 12th, Turkey’s government has begun to take the internal threat from IS radicals far more seriously. Shocked by Russia’s forceful intervention in Syria, Turkey has also begun to reassess its relationship with that country. At the end of November Turkish jets shot down a Russian warplane which they claimed had strayed into Turkey’s airspace, causing a storm of Russian indignation. Despite threats of sanctions and a spike in Russian air strikes against Turkish-backed rebels in Syria, Turkey held its ground. + +Further afield, Turkey has quietly eased strains with Israel, edging away from its aggressive reaction to an Israeli attack on a Turkish aid ship destined for Gaza in 2010. Mr Erdogan’s government also appears to be sincere about wanting to get its EU agenda back on track. Rather than throwing its weight behind Saudi Arabia, a fellow Sunni power, in its struggle against Shia Iran, Turkey has kept doors open to both sides. Perhaps in foreign affairs at least, it has begun to balance power with responsibility. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21689872-consequences-not-talking-neighbours-alone-world/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Looking ahead + +A melancholy mood + +To regain momentum, Turkey needs more freedom + +Feb 6th 2016 | From the print edition + +Time to lighten up + +“WE HAVE A saying that raki is different in the glass,” says Fatih Okumus, noting that Turkey’s colourless national spirit turns milky white when you add water. It is a surprising way for a top adviser to Diyanet, the government’s overseer of mosques, to illustrate the difference between Turkish and what he calls “Arab” Islam. He goes on to explain: “We believe that the Koran is not the same in life as in the book; it needs mediation. In small doses religion is beneficial, but in big doses it’s a hazard.” + +Mr Okumus says this explains why so few Turks have embraced radical jihadism. Yet his advice should also be taken to heart by Turkey’s current leaders. The rule of the AK party is an example of how you can have too much of a good thing. + +The repressed voice of Turkey’s conservative working class needed to be heard. The overweening influence of its military had to be contained. The entrepreneurial energy of its businessmen had to be unleashed. And the Kemalists’ obsessive preoccupation with the West, once described by the writer Nuri Pakdil as a national “pain in the neck” caused by looking in only one direction, needed to be redressed. “The Turkish state used to have two phobias, Islam and the Kurds,” says Mr Okumus. “The main thing we owe to the AK party is having normalised Islam.” + +Overcorrecting the course + +Alas, under the guidance of Mr Erdogan, Turkey now risks leaning too far in the opposite direction. By propagating a culture of grudge and grievance, Turkey’s president has widened the many cleavages of an unusually complex society. By relentlessly pursuing suspected enemies, he has undermined the rule of law. And by whipping up ethnic Turkish nationalism, he is dashing the hopes of Turkey’s 20m Kurds. + +On the economic front, the AK party failed to shift strategy when leaner times arrived. It has also grown addicted to kickbacks from cronies that feed the party machine. And Mr Erdogan’s own ambition and disdain for the law are draining confidence. “Big Turkish firms are quietly investing abroad to get their money out,” says a Western consultant who has long been resident in Turkey. “Rich people all have their escape plans.” + +Turkey’s foreign relations, too, are a story of serial overreach followed by remorse. The AK party allowed wishful thinking about Islamic brotherhood, pan-Turkic ties and cocking a snook at the West to outweigh pragmatism. It turned to the east too suddenly and too hard. It got mired in Syria and entangled with a Russian bear. When it needed friends, there were few to be found. + +The country’s malaise is partly cultural. Orhan Pamuk, Turkey’s best-known writer, has written eloquently on the national predilection for hüzün, or melancholy. Even the current triumphalism of Mr Erdogan’s hard-core followers is tinged with wary mistrust. + +Yet not so long ago Turkey was a far more ebullient place, with a purring economy and plenty of friends. There is a reason for the darkening mood. “People are too quick to use the F-word, but honestly I think we can now speak of creeping fascism,” says Mustafa Akyol, a Turkish writer whose early enthusiasm for the AK party has increasingly soured. “We have the cult of a demigod, the labelling of dissidents as traitors and saboteurs, and the mobilisation of the party base against everyone else.” The Western consultant agrees. “I am more worried now than in the 26 years I have lived here,” he says. “There is much more latent violence here than many people realise, the rule of law is breaking down, and it’s getting scary.” + +In early January, police in Izmir raided a sweatshop where they found Syrian child labourers making fake life jackets. Stuffed with packaging rather than flotation material, the cheap copies were more likely to kill than save anyone. Yet Turkey’s prime minister, Ahmet Davutoglu, jarringly blamed the UN Security Council for the migrants’ deaths. + +Turkeyis a nation of enviable potential, packed with cultural treasures, natural beauty, energy and talent. If only Mr Erdogan and his cohorts could see that strength comes from diversity, and from the freedom to express it, that potential might be realised. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21689873-regain-momentum-turkey-needs-more-freedom-melancholy-mood/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +The consumer v the corporation: The big fight + +Oil companies: In the dark ages + +The chemicals industry: Bad romance + +Agribusiness: Feeding the dragon + +Alphabet: Of profits and prophesies + +Corporate hegemony: A select group + +Pilot Flying J: If the game goes against you + +Schumpeter: Succession failure + + + + + +Articles Sections Next + +The consumer v the corporation + +The big fight + +The handling of disputes between companies and their customers is done better in Europe than in America + +Feb 6th 2016 | From the print edition + + + +T-MOBILE touts itself as America’s mobile-phone “Uncarrier”, having vowed to shake up its industry with customer-friendly ideas like ditching annual service contracts. In January, though, a complaint was lodged with regulators alleging that the firm generated unauthorised fees by placing customers on services they hadn’t requested, such as handset-insurance plans. In Britain, broadband providers stand accused of hitting customers with whopping cancellation fees, even when they move to an address outside the area of service. One study found the average early-termination fee to be £190 ($317). + +Small-value disputes between consumers and companies over contract terms are a fact of life. Ofcom, a British regulator, handles 70,000 telecoms complaints a year; how many are fought over or resolved without recourse to the regulator is anyone’s guess. Colin Rule of Modria, a dispute-resolution technology firm, reckons that 1-3% of e-commerce transactions worldwide generate a dispute (though many of those are between private buyers and sellers on online marketplaces). + +How bust-ups are handled is evolving. Small-claims courts are ubiquitous, but, as the saying goes, you have to be “a lunatic or fanatic” to use them for a $100 claim. Recent years have seen the rise of the industry ombudsman, particularly in heavily regulated sectors like finance; and the growth of “alternative dispute-resolution” (ADR) bodies, which offer mediation, often online, in an effort to avoid disputes reaching court. “The emphasis is moving from judicial protection to building out-of-court structures that provide effective redress,” says Pablo Cortés of Leicester University. + +Mr Rule reckons there are 130 outfits hawking dispute-resolution technology and related services. Resolver, a free-to-use website, provides details of thousands of companies’ dispute-handling systems and helps channel complaints to them. Other services batch identical customer claims, for instance over airline delays, and negotiate on their behalf as an informal class. + +Class action or concealed clauses + +There remain differences in approach, however. Consumer rights in Europe have grown steadily stronger, and ADR enjoys official support. America offers less encouragement of new approaches, and there the legal pendulum has swung away from the consumer towards business. + +America is the home of the class-action lawsuit. Though this is a useful way to batch together lots of small, similar claims, businesses have long moaned that class actions are driven by fee-hungry lawyers rather than harmed consumers (who typically get only a small share of any settlement). Firms started to push back by adding into contracts, often deep in the small print, clauses that block participation in a class suit and make private arbitration binding in the event of a dispute. The Supreme Court has sided with this rearguard action. Today such clauses are the norm. + +The corporate lawyers behind this shift argue that arbitration is cheaper, quicker and more flexible than court action, and that those who prevail get bigger payouts ($5,000 on average). But there are problems with it. It is done behind closed doors; it sometimes costs a lot more than the basic filing fee ($200 and up); and arbitrators have an in-built bias towards corporate defendants, because they bring repeat business. Perhaps not surprisingly, then, arbitration is little-used. A New York Times investigation found that in 2010-14 only 505 consumers went to arbitration over a dispute of $2,500 or less (it’s not known how many saw it resolved to their satisfaction before reaching that stage). The leader in the field, the American Arbitration Association, handles just 2,000-3,000 consumer cases a year, compared with over 10,000 business-to-business cases. + +Regulators are now pushing back. Having studied the issue, as required by the Dodd Frank act of 2010, the Consumer Financial Protection Bureau is likely to propose a rule which would ban class-action-blocking arbitration clauses in businesses the agency oversees, such as credit cards and payday loans. Business would challenge any such rule in court, says Alan Kaplinsky of Ballard Spahr, the lawyer who came up with the idea of arbitration clauses. They are “not a conspiracy”, as plaintiff lawyers contend, but “a way to level the playing field”, he argues. The problem is education, he says: consumers shy away from arbitration because they don’t understand the benefits. + +Europe, where class actions are rare, has taken a different tack. Consumer-protection laws are generally stronger: arbitration clauses are not banned but courts have greatly restricted their use, and the customer can always sue as a last resort. A reasonableness test is applied to the fine print in contracts. Under Britain’s Consumer Rights Act, for instance, key terms, including price, can be subjected to a “fairness test” unless they are both written in plain language and displayed prominently. (Clarity alone used to be sufficient ground to claim exemption from the test.) + +This more consumer-friendly stance did not just evolve in the courts but was to a large degree the result of a decision by the European Commission more than 20 years ago to make all small print subject to being examined and potentially overturned by the courts. This was set in stone in an EU directive of 1993. More directives have followed. The most recent, approved last year, gives a shot in the arm to ADR, by for instance forcing businesses to inform complaining customers of their dispute-resolution options, such as ombudsmen and private ADR services, and setting minimum standards for how these operate. Firms won’t be forced to sign up to an ADR scheme, but the hope is that most will feel obliged to do so as the directive takes hold. Consumer surveys point to much greater satisfaction with ADR than with courts. + +Europe also leads the way in developing online mechanisms for mediating the millions of cross-border e-commerce disputes that arise each year. (One estimate puts their number at 750m.) Your Europe, an EU portal, will be launched in each of the bloc’s official languages later this month. This will serve as a hub to receive complaints. Firms operating in the EU will have to provide a link to it on their websites. “The aim is to hold your hand through the process, like TurboTax [a tax-return-filing software],” says Amy Schmitz of the University of Colorado. + +For all these efforts, some cases will inevitably end up in court. Here, too, new thinking is percolating. In Britain there is growing political and judicial support for replacing the clunky small-claims courts with a new type of quasi-court, dubbed Her Majesty’s Online Court (HMOC). Each case would move through as many as three stages. Only at the third stage, if it could not be resolved by mediation and case officers, would it go before a judge. + +This triage-before-trial approach would be easier and less costly than the current set-up: documents could be posted electronically, and cases brought without having to hire a lawyer. HMOC is already being touted as a model for other countries. As one lawyer (who may soon have less work) puts it, most consumers would rather be faced with a clearer and cheaper process, and lose quickly, than a victory that is painful, protracted and pyrrhic. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21690054-handling-disputes-between-companies-and-their-customers-done-better-europe/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Oil companies + +In the dark ages + +Supermajors suffer from self-inflicted wounds as well as falling oil prices + +Feb 6th 2016 | FLORENCE | From the print edition + + + +FLORENCE is a city more associated with oil on paintings and salads than the stuff that comes out of the ground. Yet every February GE, an engineering conglomerate that makes machinery in the city, gathers oil executives there to discuss the industry. This year there was more than a touch of mea culpa in the air. “The oil and gas industry is in need of its own renaissance,” admitted Harry Brekelmans, head of technology at Royal Dutch Shell, an Anglo-Dutch oil major. + +A spate of gloomy year-end earnings reports underscored how bad things already were in the final quarter of 2015, in the good old days when oil prices averaged $44 a barrel (on February 2nd they hovered around $30 a barrel). Britain’s BP reported an unexpected loss of $6.5 billion in 2015, one of its worst on record. That followed news of a fourth-quarter loss by Chevron, an American counterpart. Exxon Mobil, America’s biggest oil major, made a relatively healthy $16.2 billion in 2015, but that was still half the prior year’s profit (like Chevron it is losing money drilling for oil in America). Shell’s profits also dived. In Florence an executive quipped that the industry had turned into “a giant non-profit”. + +Companies are slashing jobs, costs and capital spending to maintain promised dividend payouts. But the lower prices go, the more they borrow to honour those pledges. Exxon Mobil and Chevron piled on $9.6 billion and $10.8 billion of debt respectively during 2015, and BP added $4.6 billion. Standard & Poor’s, a rating agency, downgraded Chevron and Shell this week and is reviewing BP and Exxon Mobil, partly because of their rising debts. A downgrade of the latter would be significant: Exxon Mobil is one of only three American companies whose AAA rating is higher than the government’s. + +Falling oil prices may have upended the industry but it also has itself to blame for its troubles. Returns of private global oil companies peaked a decade ago, well before crude hit record highs, indicating that they squandered the boom on vanity projects aimed at increasing production, with little thought for profitability (see chart). + + + +INTERACTIVE: Explore how oil prices affect OPEC and non-OPEC production and viability + +In Florence the engineers and geologists who run the rigs, wells and pipelines admitted that costs soared uncontrollably as high prices led them to search for increasingly hard-to-access oil. Shell’s Mr Brekelmans says that between 1996 and 2014 capital costs per barrel quadrupled, clobbering productivity. Partly this was because equipment costs mounted as prices of steel and other commodities rose. But Thierry Pilenko, chief executive of Technip, a French engineering firm, says it was also due to “pure inefficiency”. He says the number of man-hours to operate a piece of equipment doubled in a decade despite computerisation, and even simple valves come with documents 80 pages long. + +Energy firms have failed to embrace digital systems to improve performance along the supply chain. The industry is riddled with unplanned shutdowns that raise costs. Standards vary so much that one firm ended up with 127 different colours for subsea equipment that only fish would ever see. Tech advocates like GE naturally hope that the latest crisis will spur a “technological revolution”. For now, though, survival is the priority. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21690045-supermajors-suffer-self-inflicted-wounds-well-falling-oil-prices-dark-ages/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The chemicals industry + +Bad romance + +Big mergers may give only temporary relief in an industry under pressure + +Feb 6th 2016 | From the print edition + +Another cost to cut? + +SHAREHOLDERS cheered in December when Dow Chemical and DuPont, the world’s fourth- and fifth-most-valuable chemicals companies, worth a combined $130 billion, announced plans to merge. Their share prices each shot up by nearly 12% in one day. In the hope of persuading competition regulators not to block the merger, Dow and DuPont said that within two years they would split their combined operations into three listed firms, concerned with agriculture, materials science and “specialty” products. But doubts have since grown as to how much this rationalisation will help the resulting firms cope with the pressures the industry is under. + +Since markets first got wind of the deal, the shares of Dow have dropped by 18%, and DuPont’s by 21%. The S&P 500 fell by 7% over the same period. Deteriorating performance at DuPont, which on January 26th revealed a $253m loss in the fourth quarter of 2015, has shaken Dow’s shareholders. They now fear the tie-up could be too generous to the other company’s investors: on February 2nd Dow said that its profits had increased fivefold, to $3.5 billion, in the same quarter. + +Hammered out under pressure from activist investors, most notably Trian Partners, a New York hedge fund, the merger is designed to boost investors’ returns by combining the competing businesses of the two, cutting costs in the process. The deal is, in part, a response to the sharp falls in the prices of many chemicals over the past few years (see chart). Although raw materials, such as those derived from crude oil, have also got cheaper, the chemicals firms’ margins have been squeezed. Those on polyethylene have fallen by a third since 2014, with another 25% tumble forecast for 2016. + + + +The market for agricultural chemicals is also shrinking, in dollar terms, mainly due to low crop prices and weak currencies in big markets such as Brazil and Russia, says John Kovacs at Capital Economics, a consulting firm. DuPont’s agricultural-science division, which is a big draw for Dow, suffered an 11% drop in sales last quarter. + +Jeffrey Zekauskas, an analyst at J.P. Morgan, an investment bank, thinks Dow and DuPont may be too optimistic in forecasting $3 billion in cost savings by 2018, particularly given the restructuring costs they will incur. And if the resulting three specialist companies do not continue to shift into higher-value-added products, there is a risk that any increased profits from economies of scale will be competed away, as rivals also strengthen through mergers, says Dave Witte, head of IHS Chemical, a research firm. + +Indeed, there are already signs that this is happening. The Dow-DuPont tie-up was in part a reaction to merger talks between Monsanto, an American agrichemicals giant, and Syngenta, a Swiss rival. They got nowhere but on February 3rd ChemChina offered $43 billion to buy Syngenta, forming the world’s largest maker of pesticides and fertilisers, a formidable competitor to even the merged agrichemicals businesses of Dow and DuPont (see article). + +Under this pressure, the most sustainable way to boost margins is to focus on higher-tech niches where competition is more limited. Other firms in the industry have already undergone this transition over the past decade. For instance, AkzoNobel, a Dutch group, has concentrated on highly specialised paints and coatings; and Bayer, a German firm that used to be a broad chemicals conglomerate, has specialised in pharmaceuticals. Dow and DuPont were heading in this direction before their proposed tie-up. DuPont has, for instance, sold divisions making relatively low-end stuff like titanium dioxide and Teflon; and last year Dow spun off its chlorine operations in a deal worth $5 billion with Olin. + +The high-end markets with the best growth prospects are for specialty chemicals used in industries that are doing relatively well, such as health care and aerospace, according to analysts at UBS, a bank. Yet ChemChina’s hunger for more deals will make life tougher for Western firms in these areas, too: China’s latest five-year plan instructs its chemicals industry to focus its expansion efforts on specialty products. Dow, DuPont and others need to focus on climbing up the value chain to deal with this threat. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21690079-big-mergers-may-give-only-temporary-relief-industry-under-pressure-bad-romance/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Agribusiness + +Feeding the dragon + +ChemChina, an acquisitive state enterprise, buys Switzerland’s Syngenta + +Feb 6th 2016 | SHANGHAI | From the print edition + + + +WITH roughly a fifth of the world’s population but less than a tenth of its arable land, China has had to look outside its borders to feed itself. In the past, clumsy and sometimes corrupt state enterprises foraged in Africa and Latin America for farmland and commodities. Now, savvier Chinese firms are looking abroad for advanced technologies that can boost yields and efficiency at home. + +This week, China National Chemical Corp pulled off a coup that advances China’s national goal of “food security”. ChemChina, as the state group is known, has already made a string of acquisitions in Europe, including Pirelli, an Italian tyremaker. On February 3rd it persuaded the board of Switzerland’s Syngenta, a big maker of pesticides and seeds, to accept its takeover bid. When completed, the $43 billion deal will be the biggest Chinese foreign takeover ever. + +In accepting its Chinese suitor, Syngenta spurned a rival offer from Monsanto, an agribusiness giant. Syngenta was reluctant to fall into the arms of the American firm, whose aggressive attempts to promote genetically modified foods have caused a backlash in Europe. The combination of two of the industry’s giants would also have met with harsh regulatory scrutiny. + +The Sino-Swiss deal should see smoother sailing. ChemChina has a much smaller presence in agribusiness than Monsanto. Because Syngenta has operations in America, officials there will probably review the deal for national-security implications. Last month the Committee on Foreign Investment in the United States blocked the sale by Philips, a Dutch group, of part of its lighting business to a consortium that included Chinese firms. Even so, it may approve this deal, as it did the controversial acquisition in 2013 of Smithfield, a pork producer, by Shuanghui Group. + +Ren Jianxin, the politically connected boss of ChemChina, said the right things this week. He vowed that the running of Syngenta would remain in Swiss hands, with Michel Demaré, Syngenta’s chairman (who will be vice-chairman of the new group) cooing that the deal would “minimise operational disruption”. Mr Ren also promised the “highest corporate governance standards” and even hinted that a public flotation of the unlisted ChemChina may be in the offing “in the years to come”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21690076-chemchina-acquisitive-state-enterprise-buys-switzerlands-syngenta-feeding-dragon/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Alphabet + +Of profits and prophesies + +Google’s parent company is riding high + +Feb 6th 2016 | SAN FRANCISCO | From the print edition + + + +A GOOGLY is a ball bowled in cricket with unexpected spin. For years, Google was similarly hard to read, sharing only basic figures about its business. Alphabet, Google’s newly formed parent company, is bowling a bit straighter. When it reported earnings on February 1st, Alphabet disclosed for the first time how much it was spending on its “moonshot” projects, including self-driving cars, fibre internet and space exploration. In 2015 Alphabet lost around $3.6 billion on these ambitious initiatives—a large sum, but less than some had feared. Meanwhile Google, its core business, saw revenues and profits rise. + +As a result, Alphabet’s shares surged this week, helping it, albeit briefly, overtake Apple to become the world’s largest listed company by market value (see article). Today Alphabet is a giant advertising company with the potential to become a giant in other sectors as well—although exactly which ones, no one is yet sure. Almost all of the $75 billion in revenue it made last year came from advertising, most of it search advertising, where Google places ads relevant to what someone is looking for online. The firm has around 70% of the global search market. + +Google has profited handsomely from foreseeing two important trends: the rise of mobile phones and online video. It now has seven products that claim a billion or more users each, including search, maps, Gmail, YouTube, the Google Play store, the Android operating system and the Chrome browser. That is more than any other internet company. As users spend more time with Google’s services, the company learns more about them and sells more ads. Other firms have struggled to profit as much from users’ engagement. On February 2nd Yahoo, a struggling rival, announced it was cutting 15% of its workforce and suggested it would consider selling its core internet business, which could put its boss, Marissa Mayer, out of a job. + + + +A timeline of Alphabet, the world’s new largest listed company + +Alphabet fans argue that it is set to go from strength to strength. The firm has started to look like a conglomerate, with interests in areas such as cars, health care, finance and space, as it tries to find the next big thing. Although most of its projects outside its advertising business do not make any money, some are showing tentative signs of promise. + +Last year its moonshots claimed some $450m in revenue. Although Alphabet did not spell out the source, it probably comes from Google Fibre, a high-speed internet business in several American cities, and Nest, a maker of smart household devices that Google bought in 2014 for $3.2 billion. But most of Alphabet’s investments are likely to take years to pay for themselves, and some almost certainly never will. Like the high-altitude balloons that Alphabet is using to blanket the world with internet access as part of an initiative called Project Loon, its startup projects will either fly high or crash. + +For the time being, Alphabet can do as it pleases. Investors and analysts do not seem overly concerned about how much the firm is spending. Last year Alphabet set aside a whopping $5.2 billion for stock-based compensation, and expanded its headcount to nearly 62,000, an increase of more than 15% on the year before. Mark Mahaney, an analyst at RBC Capital, an investment bank, thinks that many internet companies, such as AOL and Yahoo, faltered in the past by skimping on investments to shore up their businesses while they were still thriving, and therefore does not mind seeing Alphabet invest with its future in mind. Such tolerance is common during winning streaks, but it can quickly disappear. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21689995-worlds-largest-listed-company-has-earned-patience-investors-googles-parent-company/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Corporate hegemony + +A select group + +Google joins a rarefied club + +Feb 6th 2016 | From the print edition + + + + + +When Cisco was crowned as the world’s biggest company by market value in April 2000, its boss hoped it would go on to become the first firm worth over $1 trillion. But its reign was to prove short-lived: deposed by Microsoft two days later, it never regained top spot. It is now in 53rd place. + +Cisco may be a cautionary tale for Alphabet, Google’s parent, which on February 2nd usurped Apple to become the world’s most valuable listed company, only to slip back behind the Cupertino-based firm the next day. Come what may, however, Alphabet is now a member of a select club of firms that have led the league over the past quarter-century (see chart). + +What do these companies have in common? Age doesn’t appear to be a significant factor in determining dominance. Among the dozen are the old and established (like Exxon Mobil, founded as Standard Oil in 1870), and the new and innovative. Apple was 35 years old when it reached the summit in 2011. Google turned 17 in September. + +Just two non-American firms have claimed the title. Nippon Telegraph and Telephone, a Japanese utility, was the world’s most valuable quoted firm between 1992 and 1996. The other, PetroChina, beat Cisco to that $1 trillion valuation in 2007. + +Some companies claim their crowns thanks to irrational exuberance: Cisco’s share price was 230 times earnings at its peak. Alphabet currently trades at 34. Apple, meanwhile, has a price-earnings ratio of just 10, which suggests that investors doubt its remarkable run of profits will last. Were it to trade in line with the S&P 500 p/e ratio, it would be worth $900 billion. + +Tech-boosters would doubtless love to see a prolonged bout of jostling for top spot between Alphabet and Apple (which before this week had held on to its crown for 653 consecutive days). But an obvious threat to both comes from a company that isn’t even listed yet: Aramco, Saudi Arabia’s state-owned oil giant, which is almost certainly the world’s most valuable firm and is toying with an initial public offering. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21690074-google-joins-rarefied-club-select-group/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Pilot Flying J + +If the game goes against you + +A giant, reclusive private firm recovers from a scandal + +Feb 6th 2016 | CHICAGO | From the print edition + + + +IT IS one of America’s biggest family firms, with revenues last year of more than $30 billion. Yet unlike peers such as Mars, a maker of confectionery, Pilot Flying J is all but unknown overseas. And it is more reclusive than other private family groups such as, say, Koch Industries, a conglomerate headed by Charles and David Koch. + +Pilot Flying J’s business, operating filling stations on America’s highways, focuses mainly on a narrow group of customers: lorry drivers. It has little need to make itself known except among those knights of the road. Furthermore, the company has been recovering from the biggest scandal in its history, making it more taciturn than ever. + +In 2013 the FBI raided its headquarters in Knoxville, Tennessee. An affidavit unsealed by a federal judge accused individuals at the firm of running a scheme for at least five years to swindle small haulage firms out of millions of dollars in rebates on purchases of fuel. (For small firms, discounts were calculated manually, which facilitated the cheating.) According to the affidavit, an informant told the FBI that Jimmy Haslam, Pilot Flying J’s chief executive, knew about the scheme. Mr Haslam has steadfastly denied any knowledge of fraudulent practices. The company did not respond to our repeated requests for an interview or to e-mailed questions. + +The accusations shook the Haslam family. Until then it had been a textbook example of the American dream come true. Its patriarch, “Big Jim” Haslam, the father of Jimmy, founded Pilot in 1958 when he paid $6,000 for a filling station in Virginia. The firm grew rapidly over the years, mainly through acquisitions of smaller truck-stop chains and independent operators. Its biggest deal was the takeover in 2010 of the bankrupt Flying J chain, for $1.8 billion. + +Today Pilot Flying J is the biggest in an industry dominated by three firms that together have around two-thirds of the market: the others are Travel Centers of America, a public company based in Ohio, and Love’s, another family firm, from Oklahoma. Jimmy Haslam and his brother Bill, who is the governor of Tennessee, appear regularly on lists of America’s richest. Thanks to their philanthropy the clan has made many friends, especially in Tennessee, where even the lion cubs at the Knoxville zoo were named after Haslams. + +In the 1970s the company realised that its roadside sites could lucratively double up as convenience stores. Today a typical Pilot stop in Michigan, for instance, still in retro brownish decor, sells anything from sweets and toys to DVDs and mugs. More than 400 of the firm’s 678 stops also house a fast-food franchise, such as Subway or Arby’s. The margins of the non-fuel businesses are higher than those from selling diesel and petrol, but it’s the pumps that pull in the punters. Around 90% of Pilot’s revenue comes from fuel, but close to half of its gross profit is generated by non-fuel sales. Pilot is also meticulous about the cleanliness of the stops’ showers, which encourages truckers to stay loyal. + +On the rare occasions when the Haslams speak about their business, American-football metaphors tend to come up. Big Jim, once an avid football player at the University of Tennessee, has said that he used his university coach’s maxims to beat his business rivals. One of them is that “The team that makes the fewest mistakes will win.” Another is “If the game goes against you…put on more steam.” Jimmy is even more football-obsessed. In 2012 he spent a chunk of his fortune to buy the Cleveland Browns, a successful team. + +When the game went against him in 2013 he needed his father’s maxims more than ever. After the FBI raid, the firm’s lenders and suppliers were nervous about the potential for gargantuan penalties, compensation payments and an exodus of clients. However, Pilot put on more steam, and cleaned up its mess relatively quickly. In November 2013 it paid $85m to settle a class-action lawsuit launched by more than 5,500 hauliers who had been short-changed on their rebates. A few companies continued to pursue separate lawsuits, of which one is still pending. In July 2014 Pilot accepted responsibility for the criminal conduct of its employees and paid the Justice Department a fine of $92m. + +Its prompt actions to put things right meant that most of Pilot’s users stayed loyal to the company, says Ben Bienvenu, an analyst at Stephens, a financial-services firm. The same was true for most of its suppliers and lenders. “They are on a stable financial footing now,” says Manoj Chadha of Moody’s, a credit-rating agency. The company also made lots of changes to prevent a repeat of the rebate scandal. According to Samantha Stone at Standard & Poor’s, another rating agency, the sales team at head office was largely replaced, all transactions have been automated and customers can now demand that an independent auditor review their rebates. + +As it has cleaned up after the scandal, Pilot has also benefited in the past couple of years from the slowly recovering economy and the slump in oil prices, both of which have lifted demand for fuel. The firm will remain on the lookout for smaller rivals that it can swallow. It costs on average $9m to take over and renovate an existing filling station at a good location, but between $14m and $20m to build one from scratch, explains Bryan Maher of FBR, an investment bank in Virginia. Greenfield developments are slow and tricky because of environmental and safety regulations. + +Pilot Flying J was lucky that the rebate scandal did not erupt during the recession, when fewer lorries were on the road and the company, like its main rivals, was suffering losses. Its efforts to rebuild its reputation coincided with a boom in its business. The firm seems to have turned the page. Today the headlines about Jimmy Haslam are mostly related to the changing fortunes of the Cleveland Browns. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21690064-giant-reclusive-private-firm-recovers-scandal-if-game-goes-against-you/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Succession failure + +Family businesses in the Arabian Gulf need to address the problem of succession planning + +Feb 6th 2016 | From the print edition + + + +THE grand mufti of Saudi Arabia recently added a surprising new item to the familiar list of worries plaguing his region. Chess, he pronounced, is “a waste of time and money and a cause for hatred and enmity between players.” Without disputing the mufti’s judgment, Schumpeter would like to add a different worry: succession in family businesses. Like chess, poorly planned succession is a “waste of time and money and a cause for hatred and enmity”; unlike chess, it has the potential to undermine some of the country’s foremost economic institutions. + +Succession is a problem for family businesses the world over. The Family Business Institute calculates that only 30% of such businesses survive into the second generation, only 12% into the third generation and only 3% into the fourth. But the problem may be bigger in the Gulf than anywhere else. Around 80% of the companies in the region, producing more than 90% of its non-oil wealth, are family-owned or controlled. The number of relatives clamouring for a job in these firms is surging, partly because the population is so young (the average age of citizens in the Middle East and north Africa is well below the global average) and partly because governments are desperate to shift workers from the public to the private sector (in the United Arab Emirates 90% of employed citizens work for the state). + +These family firms are mostly fairly recent creations—the products of the oil and property booms of the 1970s and 1980s that turned people who were lucky or well-connected enough to own prime bits of land into moguls. Over the next decade up to half the region’s business families, controlling assets worth perhaps a trillion dollars, will hand the reins to the next generation. + +That is a worrying prospect. A proper succession requires good governance. Yet too many of the region’s businesses blur the line between what belongs to the firm and what belongs to the family: they spend company money as if it were their own and employ family members without subjecting them to proper vetting. And if disputes occur, the region’s courts are not equipped to cope. The World Bank reports that they take an average of 575 days to resolve a commercial dispute. An estimated 70% of Saudi families have at least one succession problem tied up in court. + +The two most obvious results of a botched succession are incompetent leaders and feuds. Family tradition often conspires against merit: families routinely favour the eldest son regardless of his ability. Locals say there are examples of incompetents “all around”, though they are reluctant to name names. The scope for feuds is increased by the complexity of family structures, thanks to high fertility rates and occasional polygamy. Abdulaziz Al Ghurair, chairman of the Family Business Network, a regional body, predicts that more than half the businesses will split over succession. A less obvious consequence is what might be called “functioning dysfunction”: companies get around incompetent heads by creating parallel structures so that the real power is held by people with minor titles, or by avoiding naming a CEO at all. + +One of the most famous family disputes was reportedly solved by royal intervention. Two relatives, Abdullah and Majid, inherited joint control of Al-Futtaim Group, a Dubai-based empire, part of which now operates the Mall of the Emirates with its famous ski slope. The dispute proved so damaging that Sheikh Mohammed bin Rashid al-Maktoum, then crown prince and now emir, stepped in, locking them in a room and refusing to let them out until they had divided up the empire. But even the most enlightened royal intervention is no substitute for reliable rules. + +Badr Jafar, the 36-year-old head of Crescent Enterprises, a conglomerate, is leading a campaign to provide just such rules. He argues that regulators should compel companies to make a clearer distinction between corporate property and family property. But he adds that companies need to change from within. They should borrow mechanisms that are popular with family companies around the world—such as family constitutions, family meetings and family offices—and adapt them to local traditions. + +Mr Jafar is the perfect man to make this pitch: his company is based in Sharjah, one of the most conservative emirates, but he was educated at Eton and Cambridge. He has helped establish a pressure group, the Pearl Initiative, to support the case for better corporate governance. He has secured the support of global organisations, including the World Economic Forum. + +Capitalism with Gulf characteristics + +Mr Jafar can also point to several notable advances in the region, some of which predate his activities. W.J. Towell, an Omani company that employs 150 family members, has introduced regular family gatherings to promote family cohesion. The Zamil Group, a Saudi conglomerate with more than 100 family members on the payroll, demands that both family and non-family executives go through a “future leaders programme”, which uses psychometric tests to assess their abilities. The Abdullatif Alissa Group, another Saudi conglomerate, has gone even further, replacing all family members with professional managers and limiting the family’s role to board membership. A growing number of companies are creating family offices to help make the distinction between family and corporate resources. Ten years ago almost nobody was talking about this subject, says Mr Jafar. Today 50% of business families “have it on their minds, 30% in their mouths and 20% on paper.” + +With luck, even more companies will put it on paper soon. Corporate governance might sound like an ineffective way to take on serious problems such as Islamist extremism and state breakdown. But the region has no chance of escaping from these conflagrations without improving its economy and creating jobs for the young. The last thing it needs is for companies to be ruined by incompetent heirs or torn apart by pointless disputes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21690027-family-businesses-arabian-gulf-need-address-problem-succession/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +HSBC: London v Hong Kong: East is Eden + +Buttonwood: False comfort + +Argentina’s disputed debts: Feeding the vultures + +Klarna: Getting more ambitious + +The American economy: Still kicking + +Finland’s economic winter: Permafrost + +Free exchange: Trade in the balance + + + + + +Articles Sections Next + +HSBC: London v Hong Kong + +East is Eden + +Banking’s longest, and most successful, identity crisis + +Feb 6th 2016 | From the print edition + + + +HSBC—one of the two most pivotal banks in the global financial system, according to regulators, alongside JPMorgan Chase—exudes permanence. Its buildings are guarded by lions cast in bronze which passers-by touch for luck. HSBC has never been bailed out, nationalised or bought, a claim no other mega-bank can make. It has not made a yearly loss since its foundation in 1865. While its peers took emergency loans from central banks in the crisis of 2008-10, HSBC, long on cash, supplied liquidity to the financial system. + +Yet behind that invincible aura lurks an insecurity: where is home? When Western and Indian merchants founded the bank in Asia in 1865, they considered basing it in Shanghai before settling on Hong Kong. Faced with wars, revolutions and the threat of nationalisation, the bank has chosen or been compelled to move its headquarters, or debated it, in 1941, 1946, 1981, 1986, 1990, 1993, 2008 and 2009. + +HSBC believes its itinerance explains its survival. Countries and regimes come and go. The bank endures. Now it’s decision time again. The results of a ten-month review of its domicile are likely to be announced on February 22nd. The main choice is between staying in London—where HSBC shifted its holding company in 1990-93, in anticipation of the return of Hong Kong to Chinese sovereignty in 1997—or going back to its place of birth. + +The decision is partly about technicalities: tax, regulation and other costs. But it also reflects big themes: London’s status as a financial centre, the dominance of the dollar and Hong Kong’s financial, legal and political autonomy from mainland China, which is supposedly protected until 2047 under the pledge of “one country, two systems”. HSBC’s most recent move, from Hong Kong, was announced on the radio by China’s premier of the day, Li Peng. Its return would be news too, a coup for China when its economic credibility is low. For Britain, the departure of its largest firm would be an embarrassment. + +That HSBC is considering moving at this moment may seem astonishing; it is knee-deep in a restructuring. Since taking the helm in 2011 Stuart Gulliver has reversed the empire-building that took place in the 2000s to refocus the bank on financing trade. He has sold 78 businesses and almost halved the bank’s exposure to America. Vast sums have been spent on compliance systems after the bank was fined for money-laundering in Mexico. + +The group’s return on equity hovers at 8-11%—poor by its standards but on a par with JPMorgan Chase. Outside Asia, returns are about 5%. To raise them, Mr Gulliver is inflicting a new dose of austerity, with big cuts at its investment bank. Retreat from the Western hemisphere has freed resources for Asia, where risk-weighted assets have soared by half since 2010. + +HSBC’s seesawing skew towards Asia is one of four factors that explain its 151-year quandary over where it should be based. The others are the ethnicity of its managers, Britain’s love-hate relationship with finance and the status of Hong Kong. + +In the 1980s all four pointed to London. The bank was diversifying into America and Europe (by 2004 Asia yielded just a third of profits). London felt natural to the cadre of expatriate Brits that ran it. Britain was welcoming, particularly after HSBC bought Midland, a local lender. And HSBC was cushioned from the danger that China would rip up the agreement over Hong Kong. “As night follows day...we would become a Chinese bank,” the bank’s chairman at the time said about keeping its domicile in the territory after 1997. + + + +Three of the four factors now point back towards Asia. Asia yields 60% of profits. This could rise to 75%. Mr Gulliver plans a big push in the Cantonese-speaking Pearl River delta. Rising interest rates would boost lending margins most in Asia, which has a surplus of deposits, which need not be repriced as quickly as debt. HSBC is far more Asian than its Western rivals (see chart). Not even a hard landing in China, a banking crisis there or a devaluation of the yuan would alter that. + +HSBC’s management is now multi-national, although its board has too few Asians on it. (Simon Robertson, its deputy chairman, is also a director of The Economist Group.) AIA, an insurance firm, moved to Hong Kong after it was spun out of American International Group in 2010. It shows it is possible to domicile a big finance firm there that is not Chinese-run. + +And Britain has got hostile. Briefly after the crisis public and elite opinion distinguished between the British banks that blew up and those that did not. Having a bank so plugged into emerging markets was seen as strategically helpful. But now HSBC (cumulative profits of $101 billion since 2007) is often lumped in with the likes of Royal Bank of Scotland (cumulative losses of $80 billion), a target of attacks from foaming parliamentary committees and a hatchet-wielding media. + +Critics worry that British depositors and taxpayers subsidise the bank by funding its foreign operations and implicitly guaranteeing its liabilities. This is the rationale behind Britain’s levy on banks’ global balance-sheets, which costs HSBC $1.5 billion a year, or about a tenth of profits. It also underpins the requirement that banks ring-fence their British retail arms, which will cost HSBC $2 billion. + +Yet these policies duplicate others designed to tackle the same problem, including capital surcharges, stress tests, living wills and a push to “bail in” bondholders when disaster strikes. And they ignore HSBC’s safety-first structure. It has more cash than it owes in debt (bonds and loans from other banks). It is already run in self-reliant geographic silos. And 68% of its deposits are raised outside Britain. Arguably the subsidy flows in the other direction, from Asian savers who are providing cheap funds to Britain’s financial system. + +George Osborne, Britain’s chancellor, has belatedly turned on the charm. In July he tweaked the levy and the tax regime—although not by enough to make much difference to HSBC over the next five years. The financial watchdog has been shaken up, and Mark Carney, the boss of the Bank of England, which has ultimate responsibility for the banks, has hinted that they have enough capital. + +But unless the government concedes that the size of HSBC’s global balance-sheet is not a gauge of its risk to Britain, HSBC will worry that its size is capped. Asia will grow faster than Britain, and thus so will the bank’s assets. If the bank is too big for Britain today, with assets equivalent to 89% of GDP, what will it look like in 2030? A British exit from the European Union would complicate things further, requiring HSBC to beef up operations in France or Germany (although it would have to do this whether based in London or Hong Kong). + +What about the fourth factor, Hong Kong? It has changed a lot since Mr Gulliver first lived there in the 1980s. The skyscrapers of China’s opaque lenders, Bank of China and ICBC, now loom over HSBC’s building, beneath which pro-democracy protesters camped during the Occupy Central movement in 2012. + +Hong Kong’s government would welcome the bank back, as would its regulator, the Hong Kong Monetary Authority (HKMA). Moving to Hong Kong would probably cut HSBC’s tax bill and capital requirements a bit and the degree of regulatory and political friction a lot. It might also help HSBC’s ambitions on the mainland, although it already has a privileged spot there—the largest presence of any foreign bank. Like Hong Kong, HSBC wants to be close to China but not integrated with it. Head-to-head competition with the coddled mainland banks would be suicidal. + +The logistics of a move would be less daunting than you might think. Half of HSBC’s business already sits in a subsidiary in Hong Kong that the HKMA regulates. HSBC’s shares are listed in Hong Kong as well as London. + +But how could the territory safely host a bank nine times as big as its GDP? Hong Kong officials say there are three lines of defence. First, they set more store than Britain on HSBC’s innate strength: its culture, capital and vast pot of surplus cash. Second, they believe that in a crisis its geographical silos would get assistance from the local central bank: the Bank of England would help the British arm, the Federal Reserve the American one, and so on. + +Last, there are the HKMA’s foreign reserves of $360 billion. They exist to protect the currency peg with the American dollar and “the stability and integrity” of its financial system. Were HSBC ever to cock up as badly as, say, Citigroup has, it might take $50 billion to re-capitalise it—within Hong Kong’s capacity. A liquidity run so bad that it drained even HSBC’s cash pile could be harder for the HKMA to manage. It runs a currency board so cannot print Hong Kong dollars in unlimited quantities. HSBC largely operates in American dollars, which the HKMA cannot create, and unlike the Bank of England, the HKMA does not have a dollar swap line from the Fed. + +Wrinkles like this mean that HSBC would ultimately rely on the unspoken backing of mainland China, with its vast financial resources. Speaking anonymously in August, a mainland official formerly in charge of financial matters said Chinese regulators would expect to have a say over HSBC. China desperately wants a global bank to represent its interests. Mainland officials might be tempted to meddle. + +That might annoy American officials, who have become chauvinistic about access to their financial system since the 9/11 attacks and the 2007-08 crisis. HSBC manages about 10% of the world’s cross-border dollar payments. Its ability to do so is essential to the bank’s operations. In the event, say, of a military skirmish between America and China, it is not impossible there would be a backlash from Congress and New York’s populist regulator against a “Chinese” bank having such a privileged role in the dollar system. In 2014 regulators briefly prevented BNP Paribas, a French bank, from clearing dollar transactions. + +A move to Hong Kong is thus a risk for HSBC. It is a bet that China will grow, but that its legal and financial systems will remain backward enough that Hong Kong will still have a vital role as the mainland’s first-world entrepot. It is a bet that even as they meddle in Hong Kong’s politics and on occasion break its laws, mainland officials will ultimately respect the principle of “one country, two systems”. It is a gamble that America will resist its worst urges. In Hong Kong HSBC would be a catastrophic mistake away from losing its independence—but then the bank has never made a catastrophic mistake. Viewed from an insular Britain, Hong Kong is dangerous and alluring, just as it was 151 years ago. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21690101-bankings-longest-and-most-successful-identity-crisis-east-eden/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +False comfort + +Low bond yields don’t always help equity returns + +Feb 6th 2016 | From the print edition + + + +MANY a gloomy pundit, Buttonwood included, has been tut-tutting about equity valuations in America for the past year or two. After all, by historical standards, they are high. Yet there is no shortage of cheerleaders to explain why equities are not such a bad deal after all. A notable one now is Olivier Blanchard, until recently the chief economist of the IMF. He and Joseph Gagnon, a colleague at the Peterson Institute for International Economics, a think-tank, have published a blog post* arguing that American equities are not overvalued, in particular compared with the values seen ten years ago. + +Alas, there is reason to quibble with the data underpinning the post. It refers to the cyclically adjusted price-earnings ratio compiled by Robert Shiller of Yale University, which averages profits over ten years. Mr Shiller has calculated the ratio back to 1881. The average since then is 16.7, so the current ratio, 24, suggests shares are 44% overvalued by historical standards. But the Peterson post compares current valuations with the 60-year average of 20, arguing that accounting and tax changes and the impact of the Depression make earlier numbers a poor guide. This makes equities look only 20% overvalued. + +Then there is the way that the post estimates future returns. One approach is based on dividends; the authors assume future dividend growth of 2.2%, matching real GDP. But why assume that real dividends keep up with GDP? The London Business School keeps a database on the actual growth rate of dividends over time. Since 1900 American dividends have grown at 1.67%, well below real GDP growth (of around 3% a year). And America is an outlier: the dividend growth rate for all the countries covered is just 0.57%. + +Why the shortfall? Economic growth does not arise entirely from quoted companies; many fast-growing firms have yet to list. And then there is new share issuance. Research shows that earnings have long been diluted by around 2% a year before existing shareholders get their hands on them. Despite the rise of buy-backs this is still happening, thanks to the use of share awards as incentives for managers. Assume the dilution effect is only three-quarters of what it was (ie, 1.5 points off the assumed GDP growth rate). That still brings future dividend growth down to 0.7%, making equities less alluring than Messrs Blanchard and Gagnon think. + +The authors also use a valuation approach based on the relationship between the earnings yield (the inverse of the price-earnings ratio) and the real bond yield. Cliff Asness of AQR, a fund-management group, examined this issue in a paper about the “Fed model”, a similar method which bulls used during the internet bubble to argue that equities were cheap. Mr Asness found the model was a poor guide to the subsequent performance of equities. What really matters is the p/e ratio. “Long-term expected real stock returns are low when starting p/es are high and vice versa, regardless of starting nominal interest rates,” he wrote. + +Worries about growth have prompted central banks to keep rates near zero since 2009. If future growth prospects are poor, then estimates of future profits and dividends need to be revised lower. Equity valuations, in other words, do not have to rise just because rates are low. + +Japan provides a good illustration of all this. Its government-bond yields have been low for two decades. Has this made Japanese equities a great investment, as the reasoning of Messrs Blanchard and Gagnon would imply? Not a bit of it. By the mid-1990s, there had been a big shift in the relative valuation of equities and bonds (see left-hand chart). But over the past 20 years, the return on Japanese bonds has easily outstripped returns on equities (see right-hand chart). America is not Japan, but its foundering stocks and falling bond yields look eerily familiar. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21690104-low-bond-yields-dont-always-help-equity-returns-false-comfort/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Argentina’s disputed debts + +Feeding the vultures + +The government has struck one deal with holdout creditors. Others will be harder + +Feb 6th 2016 | Buenos Aires | From the print edition + +One man’s vulture is another man’s victim + +IT MAY have taken 14 years, but the holders of $900m of bonds on which Argentina defaulted in 2001 should soon be repaid. On February 2nd Alfonso Prat-Gay, Argentina’s new finance minister, announced a deal with Italian bondholders worth $1.35 billion, or 150% of the principal. The “pre-agreement” (it still has to be approved by Argentina’s Congress) is fairly small: it covers only 15% of the “holdouts” who rejected restructurings in 2005 and 2010. But it sets an important precedent. The creditors had been seeking $2.5 billion, including outstanding interest payments, and Argentina hopes to persuade the remaining 85% to accept a similar write-down. The omens for a wider deal, however, are not promising. + +Argentina’s $82 billion sovereign default in 2001 was the largest-ever at the time. Some 93% of bondholders subsequently agreed to exchange their defaulted debt for new securities, accepting a write-down of 65%. But the original bonds had not included “collective-action clauses”, under which a restructuring could be forced on all bondholders if a certain proportion of them agreed. The remaining creditors rejected the offer, with some pursuing full payment through the courts instead. A group of them, led by Elliott Management, a hedge fund, has secured a number of victories in courts in New York, under whose law the original bonds were written. One of those rulings barred Argentina from paying interest on the restructured debt unless it also paid the holdouts in full. The court also forbade banks with operations in America from facilitating such payments. + +As a result, Argentina defaulted on the restructured bonds in 2014. (An attempt to get around the ruling by making payments to the restructured bondholders in Argentina, beyond the reach of New York’s courts, fizzled.) The defaults upon defaults have restricted Argentina’s access to international credit markets and hampered efforts to resuscitate its ailing economy. In December Mauricio Macri, Argentina’s new president, took office promising to strike a deal with the holdouts and return the country to economic health. It helps that a clause in the restructuring deals obliging Argentina to extend any improved deal it strikes with the holdouts to all the original bondholders has expired. + +After preliminary meetings in December and January, Argentine officials opened formal negotiations with Daniel Pollack, a court-appointed mediator, and a number of the holdout bondholders in New York on February 1st. The first day of meetings lasted only four hours; Argentina conceded that it was “still working” on a new offer. + +Mr Pollack estimates that the holdouts’ claim, including accrued interest, now amounts to 400% of the principal, a figure which equates to $9 billion. The holdouts have disdained discounted offers from Argentina in the past, and would presumably turn their noses up at 150%. + +But Argentina has worked hard in recent weeks to strengthen its negotiating hand. After meeting Mr Prat-Gay on January 21st in Davos, Jack Lew, America’s treasury secretary, pledged that the United States would no longer oppose lending to Argentina at the World Bank and Inter-American Development Bank. Argentina has also persuaded private banks to lend it money. On January 29th Argentina’s central bank announced that it had secured a $5 billion bridging loan from a group of international banks, including HSBC, JPMorgan Chase and Santander. + +That eases the immediate pressure on Argentina. But Mr Macri’s political programme still hinges on a return to international capital markets. Argentina’s fiscal deficit is an estimated 7% of GDP. The government will need $30 billion in financing this year, according to Miguel Kiguel, director of EconViews, a local consultancy. The central bank, for its part, has only $30 billion of foreign-exchange reserves. “Argentina is in a race against time,” he says. “It would be very difficult to raise that kind of money in Argentina.” + +Any deal with holdout creditors will have to be approved by Congress, where Mr Macri’s party is in a minority. It will take skill to sell an accord to opposition politicians who have spent years resisting a compromise with “vulture funds” like Elliott Management, which bought the debt in question at a hefty discount. + +During the first round of restructuring in 2005 Argentina introduced the “Ley Cerrojo” (Padlock Law) which was intended to prevent negotiations from being re-opened at a later date. It was suspended for a year to enable a second restructuring in 2010, but remains on the books. The law under which Argentina attempted to steer money to the holders of the restructured bonds could also impede the ratification of any new deal. “Congress will have to repeal them,” says Mr Kiguel. + +Many Argentines dislike the idea of rewarding the holdouts for their obstinacy. But Mr Macri may like the idea of a distracting feud with them even less. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21690109-government-has-struck-one-deal-holdout-creditors-others-will-be/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Klarna + +Getting more ambitious + +A payments unicorn seeks to become a dray-horse bank + +Feb 6th 2016 | Stockholm | From the print edition + +Caution: reimagining under way + +THERE is a through-the-looking-glass quality to the blue-lit tunnel that leads into the headquarters of Klarna, a Swedish online-payments firm. And there is something back-to-front about the company itself. It is a startup firm that grew up in Europe, and is now seeking to expand into America—the reverse of the usual pattern. Unlike most tech unicorns galloping to expand their market share, it already makes a profit. Even more strikingly, it plans to move from an area of financial ferment—mobile payments—into the sterile old business of retail banking. Investors are giddy about its plans, however unusual: a funding round last year valued the firm, whose name is Swedish for “getting clearer”, at $2.25 billion, up by almost a billion on the year before. + +Klarna’s business “is quite basic”, says Sebastian Siemiatkowski, its founder and boss. Some 65,000 online merchants have so far hired it to run their checkouts. Its main appeal, for both retailers and their customers, is the simplicity of its system. Shoppers do not have to dole out credit-card details or remember a new password. Instead, they can simply give an e-mail and a delivery address, and leave the payment to be sorted out later. (Klarna pays the retailer in the meantime, and bears the risk that shoppers will not stump up in the end—something few other payment firms do.) Customers who have previously used one Klarna-run checkout are recognised when they visit another, further reducing the need to fill out online forms. All this hugely increases the “conversion” rate—the proportion of customers who actually make a purchase after putting an item into their online “basket”. + +Like many fintech firms, Klarna believes that its algorithms do a better job of identifying creditworthy customers than the arthritic systems used by conventional financial firms. It relies on the e-mail and delivery addresses supplied, as well as the size and type of purchase, the device used, time of day and other variables. This not only allows it to bear the risk that customers fail to pay when Klarna bills them, but also to offer them extended payment plans, for a fee. These loans have higher margins than the cut-throat online-payment business—although the giants of the industry, such as PayPal, are experimenting with similar offerings. + +Klarna handled sales of roughly $10 billion in 2014 (compared with PayPal’s $235 billion), generating $300m in revenue, all in Europe. (It has not yet made public figures for last year.) It handles 40% of online payments in Sweden. In 2014 it bought a German firm, Sofort, expanding its presence there. It thinks it can continue to grow in Europe, but its main focus now is America, where it launched in September. + +Klarna has not been signing up American retailers as quickly as it had anticipated. But it hopes two global trends will speed its expansion. The more that online shopping moves to phones, the more pressing it is for all online traders to make their checkouts quick and easy to use, but still safe. Customers particularly detest typing in credit card numbers on their phones, especially if asked to do so in public—while riding a busy bus, say. Klarna reckons over 60% of its business today involves mobile shopping, compared with less than 10% two years ago. Some retailers, such as sellers of shoes and clothes, report an especially rapid shift to mobile. + +The other broad trend is for shopping across national borders. Online markets, such as Wish.com, connect bargain-hungry consumers in rich countries to producers of clothes, watches, toys or jewellery in, for example, China. Klarna works with Wish on European sales, letting customers pay for goods ordered cross-border only after getting them, which can take weeks. That reassures shoppers not ready to trust an anonymous Chinese T-shirt firm to deliver. Many sellers are appalled by the prospect of having to comply with different countries’ financial laws, say on extending credit, so they readily outsource payments. + +Klarna, in contrast, is a glutton for regulatory punishment. In fact, it is entering the most regulated bit of finance: retail banking. It is licensed as a bank in Sweden, which allows it to collect deposits from all over Europe. Mr Siemiatkowski sees this as a cheap source of financing, but also as a big opportunity. Just like online shoppers, he argues, bank customers are desperate for a safe-but-simple mobile interface like the one Klarna offers in payments. The firm’s 45m users provide it with a big and growing pool of potential banking customers who already have an inkling of the sort of service it can provide. “In the longer term we need to reimagine what banks really are,” he says, sounding like a typical fintech boss at last. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21690106-payments-unicorn-seeks-become-dray-horse-bank-getting-more-ambitious/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The American economy + +Still kicking + +Reports of the death of the American consumer are greatly exaggerated + +Feb 6th 2016 | WASHINGTON, DC | From the print edition + +WHAT are America’s consumers up to? When the plunging oil price made petrol (gasoline) cheap, economists expected them to head to the shops and spend more. But growth failed to pick up, causing a rethink. Data released on January 29th showed that the economy grew by just 0.7% (annualised) in the final quarter of 2015, with slowing consumption partly to blame. + +Now many analysts are claiming that consumers have saved the fuel-price windfall. The reality, though, is more nuanced. Americans—though more cautious since the financial crisis—have spent most of their recent income gains. And consumer spending continues to drive growth. + +In 2014 consumers spent an average of $2,500, or 4.2% of their income after tax, on petrol. A year later refilling the tank had become almost a third cheaper. That gave households a windfall of about $650, or 1.1% of their 2014 income. Rising employment and modest wage growth chipped in to boost their real (ie, inflation-adjusted) income by 2.7%. + + + +Consumers did put some of those gains in their piggy-banks. The savings rate rose from 4.8% in 2014 to 5.2% in 2015. In December it was 5.5%, the highest level in three years (see chart). But most of the 2.7% rise in real incomes was spent. In October the JPMorgan Chase Institute, a think-tank attached to the bank, compared the accounts of customers in gas-guzzling areas with those of customers in places where people drive less. They found that for every dollar consumers saved on petrol, they spent up to 89 cents elsewhere. + +That means they saved 11 cents—enough to push up the savings rate, but not enough to undermine the dictum that cheap petrol boosts consumption. Overall GDP growth—which clocked in at 2.4% for the year—has disappointed because of two other factors. The first is sluggish investment, thanks to the sickly oil industry. The second is the strong dollar, which has dragged down exports. Consumption contributed 1.5 percentage points to growth in the final quarter of 2015; but investment and trade knocked off 0.9 percentage points. If consumers had not spent most of their savings from petrol, in other words, growth would have been lower still. + +In general, Americans do save more than before the financial crisis. From 2005-07 the savings rate hovered around 3%, which pushed debt to unsustainable heights. Thanks in part to their newfound prudence, Americans now have much healthier finances. Household net worth stands at 630% of income—only just shy of its high point in 2007. But unlike then, household debt has been falling. Lower debt and lower interest rates have reduced households’ debt-service costs from 13% of income on the eve of the crisis to 10% of income today, close to an all-time low. + +Consumers remain optimistic about the economy. The University of Michigan’s consumer-confidence index remained largely unchanged in January, despite the turmoil in financial markets. It helps that Americans are not much exposed to shares: only 14% of household wealth is invested in the stockmarket and 45% of Americans do not own shares at all. Spending might fall if consumers are spooked by gloomy headlines from Wall Street, but the bigger threat is if wages and job growth stall at the same time as the one-off gain from cheaper oil dries up. + +As for the slight slowdown in consumption at the end of 2015, December was both the warmest and the wettest on record. The warmth reduced spending on heating; the wet may have kept people indoors. Spending at restaurants fell by 1.7%, notes Paul Ashworth of Capital Economics, a consultancy. Now that the heavens have closed, wallets should reopen. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21690105-reports-death-american-consumer-are-greatly-exaggerated-still-kicking/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Finland’s economic winter + +Permafrost + +The euro zone’s only Nordic member struggles to thaw its economy + +Feb 6th 2016 | HELSINKI | From the print edition + + + +THE harbour may be frozen, but that does not stop a ferry with a few intrepid tourists on board from making its way through the ice to Suomenlinna, a former fortress and popular sightseeing spot near Helsinki. Finns, whose country stretches from the Baltic Sea to the Arctic, are inured to hostile conditions, but their economy seems less hardy. It is stuck in an unrelenting freeze. A centre-right coalition government formed last spring is trying to break the ice, but has not yet got far. + +After thriving for several years both before and after joining the euro in 1999, Finland ran into trouble after the financial crisis of 2007-08. Output plunged by 8.3% in 2009. Although GDP grew in 2010 and 2011, it then declined for the following three years—and may have contracted again in 2015. Short-term data suggest that the economy will be flat in early 2016, says Jussi Mustonen, chief economist at the Confederation of Finnish Industries. + +Erkki Liikanen, governor of the central bank, explains that Finland has suffered an extraordinary combination of adverse shocks. The most important of these was the decline of Nokia, once Finland’s biggest company and the world’s biggest maker of mobile phones. Just as the rise of Nokia did much to propel the Finnish economy in the decade before the financial crisis—accounting for nearly a quarter of growth—so its fall in the smartphone era has contributed to subsequent weakness. Another problem was that wages carried on rising despite sagging productivity: unit labour costs are 10-15% higher than those of Finland’s trading partners. + +Meanwhile the workforce is shrinking as an especially pronounced post-war baby boom and subsequent bust takes its toll. The number of Finns aged 15-64 is falling by almost 0.5% a year. Markku Kotilainen of ETLA, an economic think-tank, reckons that potential growth has halved from around 3% a year before the financial crisis to less than 1.5% now. On top of all of this, exports to Russia have plunged by a third in the past year, owing to an economic slump there as well as trade sanctions. Russia now buys just 5.8% of Finland’s exports, down from 10% in 2012. The Finnish economic and social model is being challenged, says the OECD in a new survey. + +Faith in Finn tech + +Finland is well-placed to find new sources of growth. According to a report on competitiveness from the World Economic Forum, it ranks second globally for innovation. Startups are an ideology among young Finns, says Mr Kotilainen. Encouraging them is a priority of the government. Much of a €1.6 billion ($1.8 billion) initiative to promote growth over the next three years will foster the use of new technology. + +Overall, however, the government, which has been running a deficit of around 3% of GDP, is administering the same medicine of austerity and structural reforms that countries in southern Europe have had to swallow. The austerity programme, only partially offset by the temporary growth package, will eventually realise savings of €4 billion—around 2% of GDP—in 2019, mainly through spending cuts. Even then, further parsimony will lie ahead for a country whose public expenditure is 58% of GDP, the highest in the European Union (the average is 47%). + +The most important reform is an overhaul of the labour market, says Olli Rehn, the economy minister, who as a former European commissioner used to prescribe similar treatment elsewhere in the euro area. Finland’s system of national collective bargaining was once a strength, enabling wage agreements to take into account overall economic constraints, but it is now keeping wages too high. The government advocates a more flexible system, in which firms will have greater freedom to reach their own deals with workers. + +This should help to restore Finland’s lost competitiveness by ensuring that wage increases stay below those in the rest of the euro area and through higher productivity at individual firms. A more immediate boost should come from reforms that bring down costs by increasing working time—for example, by scrapping two national holidays and curbing public-sector leave. The government wants employers and unions to agree upon such a package, but they have failed four times. If they cannot reach a deal, the government will impose measures in the spring, warns Alexander Stubb, the finance minister. + + + +One obstacle to Finland’s revival goes largely unmentioned. Had the country retained its own currency, the long, hard adjustment that it is now seeking to achieve by lowering domestic costs could have been attained much more easily by allowing the markka to depreciate. Finland’s economic woes stand in contrast with the robust performance of its neighbour, Sweden, which kept the krona. Finland’s output is now 7.3% lower than at its previous peak—worse than in Spain or Portugal (see chart). Sweden’s, in contrast, is 8.6% higher. + +But there is more to the outperformance of Sweden, whose economy is twice as large and more diversified, than keeping its own currency. And lamenting the constraints of the euro is not much help to the Finnish government. If one thing has been learnt during the euro crisis, it is that leaving the single currency would be hazardous and costly. The only path for Finland is to regain lost ground within the monetary union, however painful that may be. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21689751-nordic-laggard-can-forge-ahead-reforms/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Trade in the balance + +Globalisation can make everyone better off. That does not mean it will + +Feb 6th 2016 | From the print edition + + + +THE past two decades have left working-class voters in many countries leery of globalisation. Donald Trump, the billionaire television star who promises to slap a 45% tariff on Chinese goods if elected president of America, has partly based his candidacy on this angst. Economists tend to scoff at such brash protectionism; they argue, rightly, that trade does far more good than harm. Yet new research reveals that for many, the short-term costs and benefits are more finely balanced than textbooks assume. + +David Autor of MIT, David Dorn of the University of Zurich and Gordon Hanson of the University of California, San Diego, provide convincing evidence that workers in the rich world suffered much more from the rise of China than economists thought was possible. In their most recent paper*, published in January, they write that sudden exposure to foreign competition can depress wages and employment for at least a decade. + +Trade is beneficial in all sorts of ways. It provides consumers with goods they could not otherwise enjoy: without it only Scots would sip lovely Islay single malts. It boosts variety: Americans can shop for Volvos and Subarus in addition to Fords. Yet its biggest boon, economists since Adam Smith have argued, is that it makes countries richer. Trade creates larger markets, which allows for greater specialisation, lower costs and higher incomes. + +Economists have long accepted that this overall boost to prosperity might not be evenly spread. A paper published by Wolfgang Stolper and Paul Samuelson in 1941 pointed out that trade between an economy in which labour was relatively scarce (like America) and one in which labour was relatively abundant (like China) could cause wages to fall in the place that was short of workers. Yet many were sceptical that such losses would crop up much in practice. Workers in industries affected by trade, they assumed, would find new jobs in other fields. + +For a long time, they appeared to be right. In the decades following the second world war, rich countries mostly traded with each other, and workers prospered. Even after emerging economies began playing a larger role in global trade, in the 1980s, most research concluded that trade’s effects on workers were benign. But China’s subsequent incorporation into the global economy was of a different magnitude. From 1991 to 2013 its share of global exports of manufactured goods rocketed from 2.3% to 18.8%. For some categories of goods in America, Chinese import penetration—the share of domestic consumption met through Chinese imports—was near total. + +The gain to China from this opening up has been enormous. Average real income rose from 4% of the American level in 1990 to 25% today. Hundreds of millions of Chinese have moved out of poverty thanks to trade. A recent NBER working paper suggests Americans will benefit too: over the long run trade with China is projected to raise American incomes. In parts of the economy less susceptible to competition from cheap Chinese imports, the authors argue, firms profit from a larger global market and reduced supply costs, and should also gain—eventually—from the reallocation of labour away from shrinking manufacturing to more productive industries. + +But those benefits are only visible after decades. In the short run, the same study found, America’s gains from trade with China are minuscule. The heavy costs to those dependent on industries exposed to Chinese imports offset most of the benefits to consumers and to firms in less vulnerable industries. Economists’ assumption that workers would easily adjust to the upheaval of trade seems to have been misplaced. Manufacturing activity tends to be geographically concentrated. So the disruption caused by Chinese imports was similarly concentrated, in hubs such as America’s Midwest. The competitive blow to manufacturers rippled through regional economies, write Messrs Autor, Dorn and Hanson, battering suppliers and local service industries. Such places lacked growing industries to absorb displaced workers, and the unemployed proved reluctant (or unable) to move to more prosperous regions. Labour-market adjustment to Chinese trade was thus slower and less complete than expected. + +As a result, the authors found in a 2013 paper, competition from Chinese imports explains 44% of the decline in employment in manufacturing in America between 1990 and 2007. For any given industry, an increase in Chinese imports of $1,000 per worker per year led to a total reduction in annual income of about $500 per worker in the places where that industry was concentrated. The offsetting rise in government benefits was only $58 per worker. In a paper from 2014, co-written with Daron Acemoglu and Brendan Price, of MIT, and focusing on America’s “employment sag” in the 2000s, the authors calculate that Chinese import competition reduced employment across the American economy as a whole by 2.4m jobs relative to the level it otherwise would have enjoyed. + +The costs of Chinese trade seem to have been exacerbated by China’s large current-account surpluses: China’s imports from other countries did not grow by nearly as much as its exports to other countries. China’s trade with America was especially unbalanced. Between 1992 and 2008, trade with China accounted for 20-40% of America’s massive current-account deficit; China imported many fewer goods from America than vice versa. + +Sub-Pareto + +Trade generates enormous global gains in welfare. Generous trade-adjustment assistance, job retraining and other public spending that helps to build political support for trade are therefore sound investments. To make any of these policies work, however, economists and politicians must stop thinking of them as political goodies designed to buy off interest groups opposed to trade. They are essential to fulfilling trade’s promise to make everyone better off. + + + +Sources: + +“The China shock: Learning from labour market adjustment to large changes in trade”, David Autor, David Dorn and Gordon Hanson, NBER Working Paper 21906, 2016. + +“Protection and real wages”, Wolfgang Stolper and Paul Samuelson, Review of Economic Studies, 1941. + +“The impact of trade on labour market dynamics”, Lorenzo Caliendo, Maximiliano Dvorkin, Fernando Parro, NBER Working Paper, 21149, 2015. + +“The China syndrome: Local labour market effects of import competition in the United States”, David Autor, David Dorn and Gordon Hanson, American Economic Review, 2013. + +“Import competition and the great U.S. employment sag of the 2000s”, Daron Acemoglu, David Autor, David Dorn, Gordon Hanson and Brendan Price, NBER Working Paper 20395, 2014. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21690073-globalisation-can-make-everyone-better-does-not-mean-it-will-trade/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Organ preservation: Wait not in vain + +Guinea-worm disease: Going, going... + +Voice-powered medical devices: Good vibrations + +Doping: No more horsing around + +Winging it: Convergent evolution + +The scientific method: Let’s just try that again + + + + + +Articles Sections Next + +Organ preservation + +Wait not in vain + +After decades of piecemeal progress, the science of cryogenically storing human organs is warming up + +Feb 6th 2016 | From the print edition + + + +OVER the course of an average winter North American wood frogs, Rana sylvatica, may freeze solid several times. They are able to get away with this by replacing most of the water in their bodies with glucose mobilised from stores in their livers. That stops ice forming in their tissues as temperatures drop. When things warm up again, the frogsicles thaw out, with no evident ill effects. + +What frogs do without thinking, human researchers are trying, with a great deal of thinking, to replicate. The prize is not the freezing and reanimation of entire people—that idea is somewhere between a fantasy and a fraud—but the long-term preservation of organs for transplant. According to the World Health Organisation, less than 10% of humanity’s need for transplantable organs is being met. The supply has fallen as cars have become safer and intensive-care procedures more effective, and part of what supply there is is lost for want of an instantly available recipient. Cooled, but not frozen, a donated kidney might last 12 hours. A donated heart cannot manage even that span. If organs could be frozen and then thawed without damage, all this would change. Proper organ banks could be established. No organs would be wasted. And transplants that matched a patient’s requirements precisely could be picked off the shelf as needed. + +The problem is that water expands when it freezes. If that water is in living tissue, it does all sorts of damage in the process. But an alliance of experts, ranging from surgeons and biochemists to mechanical engineers and food scientists, is attempting to overcome this inconvenient fact. And, after years of labour, many of them think they are on the threshold of success, and that cryopreservation will soon become a valuable technology. + +In from the cold + +Some human tissue is already cryopreserved. The trick was managed with sperm and red blood cells six decades ago and three decades ago with early-stage embryos. But these are special cases. Spermatozoa and blood corpuscles are single cells, and also have little water in them. Frozen embryos have a couple of hundred cells, but are still tiny structures. Freezing full-sized organs has proved more problematic. + +Mehmet Toner of Harvard Medical School is following the wood frogs’ approach. Surprising as it sounds, these amphibians survive the winter by turning their insides into glass, not ice. Though a layman may not realise it, glasses are technically liquids, not solids. The crucial difference is that when a glass cools it does not form crystals, with the sudden, tissue-damaging change in volume this entails. + +Wood-frog “glass” is a concentrated glucose solution. Dr Toner uses a different sugar, trehalose, as the vitrifying “cryoprotectant”. The advantage of trehalose over glucose is that it is less reactive, and thus less likely to damage tissue in high concentrations. Its disadvantage is that it is not so readily absorbed into cells. Dr Toner has overcome that, though, by decorating it with molecular titbits called acetyl groups. These act as chemical keys, granting entrance to otherwise inaccessible places. This seems to work. In June 2015 he and his colleagues showed that their acetylated trehalose could allow frozen rat cells to be revivified, just as they had hoped. + +Revivification brings its own dangers, though. Warming cryopreserved tissue must be done rapidly—otherwise, paradoxically, it can cause ice to form where once there was only glass. This is because the non-aqueous part of the glass melts into a proper liquid before the water does, and thus separates out. The now-pure water then crystallises, with all the destructive consequences that follow. + +This rapid warming must, though, be done uniformly—lest, in the words of John Bischof of the University of Minnesota, “the organ crack like an ice cube dropped into water”. Dr Bischof has hit on a novel solution to the problem. He and his colleagues propose adding tiny particles of magnetite, a form of iron oxide, to the cryoprotectant. Put the organ in a rapidly fluctuating magnetic field and the magnetite will heat up fast. If the particles are scattered uniformly through the tissue, this heating should also be uniform. And recent experiments Dr Bischof has conducted on heart valves and arteries suggest it is. + +Ido Braslavsky, of the Hebrew University in Jerusalem, is taking a different tack. Many species of cold-resistant fish, insects and plants employ proteins that actively inhibit the formation of ice crystals, even though they do not lower water’s freezing point. Dr Braslavsky has spent a long time studying such proteins, and he has built a special microscope to do so. By attaching fluorescent tags to individual protein molecules, he can see exactly where they go and how they stymie the growth of ice crystals by attaching themselves to incipient crystals in ways that stop them extending themselves. (He applies this knowledge too, to the way ice formation influences the texture of ice-cream.) + +Researchers have also devoted much effort to avoiding the deep freeze altogether, by perfusing organs with a cooled cocktail of preservatives, oxygen, antioxidants and the like. In a sense this is tantamount to keeping an organ on its own dedicated life-support system. Last year Korkut Uygun of Harvard Medical School, in collaboration with Dr Toner, demonstrated that a combination of cooling and perfusion could preserve a rat liver for four days. + +All of these approaches, though, are quite intrusive. Kenneth Storey, of Carleton University in Canada, thinks a better tack is to try to understand and emulate the underlying molecular biology of cold-resistant creatures. He has studied in detail the changes to cell proteins and genes that go on in such organisms, including the actions of “micro-RNAs”—small molecules that can interrupt a cell’s gene-expression or protein-making machinery. + +In December he published a catalogue of 53 micro-RNA changes that occur in wood frogs as they freeze. Hibernating mammals, insects and even nematode worms all seem to turn off their cells in similar ways to frogs. He therefore thinks there may be an overarching molecular signal which, if it could be found, would prepare organs for the freezer. + +Leapfrog + +There are, then, many cryopreservationist ideas around—so many that some think a little co-ordination is in order. That is the purpose behind the Organ Preservation Alliance (OPA), an American charity which was set up in 2014. It has enjoyed some success. A year ago it held a hackathon—a kind of DIY-tinkering party to find novel solutions. The winner, Peter Kilbride of University College, London, devised an ingenious vitrification method that uses tiny particles of silicon dioxide—sand, in essence—in lieu of the usual, potentially toxic cryoprotectants. It is a potentially transformative idea that has already been submitted for patent. + +The OPA is also good at lobbying. Last year it persuaded America’s defence department, an organisation with an obvious interest in transplants, to seed seven cryopreservation-research teams with money. In January the department expanded the project with three new streams of money. The National Institutes of Health, the American government’s medical-research arm, is also paying for work on cryopreservation. + +Venture capitalists, charities and individual philanthropists are queuing up to add to the rising pile of cash. The XPRIZE Foundation, for example, is considering offering an award to any team that can transplant into five animals organs that have been cryopreserved for a week. The research-funding arm of the Thiel Foundation, started by Peter Thiel, who helped launch PayPal, has given a grant to Arigos Biomedical, a firm working on high-pressure vitrification. New firms abound: Tissue Testing Technologies is working on ways of warming organs uniformly; Sylvatica Biotech is perfecting recipes for cryoprotectants; X-therma is attempting to mimic cryoprotective proteins. The cryopreservation race is on, then. And the winning post is the organ bank. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21690025-after-decades-piecemeal-progress-science-cryogenically-storing-human/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Guinea-worm disease + +Going, going... + +An awful infestation has nearly been wiped out + +Feb 6th 2016 | From the print edition + + + +IT LOOKS like something out of a Gothic movie: a metre-long monster that emerges slowly through blistered human skin, its victim writhing in agony. No one is spared. It can creep out from between the toes of a child or from the belly of a pregnant woman. In the mid-1980s Dracunculus medinensis, the Guinea worm, as this horror is called, afflicted 3.5m people a year in 20 countries in Africa and Asia. But last year that number was down to just 22, all of them in Chad, Ethiopia, Mali and South Sudan. Dracunculiasis is thus poised to become the second human disease to be eradicated, after smallpox. + +This blessed state of affairs is thanks to a 30-year campaign led by the Carter Centre, a charity set up by Jimmy Carter, a former president of America. Mr Carter picked his target well. Most Guinea worms grow in human beings, and their only other host is the domestic dog. Both humans and dogs can be monitored closely, in ways wild animals cannot. This means, in principle, that every case of dracunculiasis can be tracked and the worm involved prevented from reproducing. The task the Carter Centre set itself was to turn this principle into reality. + +The worm releases its larvae as it emerges, a process that takes about ten weeks. These larvae normally become infectious only if swallowed by copepods, tiny crustaceans which live in stagnant water. If someone drinks such water, the larvae then migrate to his skin to grow, emerging about a year later. About 90% of worms emerge from the lower part of the leg. Sufferers spread the larvae when they dip their feet in water to relieve the pain. + + + +Breaking this cycle of transmission means doing two things: stopping the larvae reaching copepod-inhabited water, and stopping people ingesting infested copepods. To do so, local volunteers trained by the Carter Centre and its partners spread the message and tend the wounds of those with worms hanging out of them. They also distribute filters of cloth-like mesh for households’ drinking-water buckets, and straw-like filters equipped with a string, so that they can be worn around the neck for people to use when drinking away from home. These filters strain copepods from the water. They, as well as larvicide used for treating water sources suspected of contamination, are all donated by their manufacturers. + +These measures—and meticulous surveillance—have brought the Guinea worm close to extinction. Mr Carter’s star power has helped, too. He and his wife, Rosalynn, have travelled to dozens of affected villages, bringing the attention of health ministers and wealthy benefactors to an otherwise neglected disease. In 1995 Mr Carter negotiated the longest humanitarian ceasefire in history: the six-month “Guinea worm ceasefire” in Sudan, which was used to distribute filters, and also medicines and vaccines for other diseases. + +Mr Carter says he hopes to outlive the last Guinea worm. Though he is now 91, that is a plausible ambition. All 22 of the worms that were recorded last year have now emerged, and are dead. It is therefore likely that Mali, Ethiopia and South Sudan are now rid of the awful creature, though there needs to be a worm-free period of three years to be sure. + +That leaves only Chad, where an unusual development is keeping eradicators on their toes. There, disease detectives found that the worm’s nine human victims last year had ingested the larvae by eating raw fish, rather than by drinking unfiltered water. Worryingly, hundreds of dogs were infested this way, too. Measures to prevent new cases were swiftly deployed. Eradication teams have been urging people to make sure the fish they eat is fully cooked, to bury raw fish entrails (to prevent dogs from eating them) and to tether infested canines. + +The Carter Centre’s field workers reckon people are 70-80% compliant with the second and third measures on this list. Compliance with the first is harder to estimate, since it would mean a mass invasion of people’s kitchens. Whether these measures will be enough to break the chain of transmission remains to be seen. But those workers’ vigilance is such that any new cases, whether human or canine, are likely to be noticed quickly. With luck, it will not be long before the world’s last Guinea worm becomes a celebrity—preserved for posterity in a formalin-filled jar at the Carter Centre’s headquarters, in Atlanta. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21689999-guinea-worm-and-havoc-wreaks-has-nearly-been-wiped-out-world/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Voice-powered medical devices + +Good vibrations + +A generator that runs off the vocal cords may improve the efficacy of implants + +Feb 6th 2016 | From the print edition + +Ring my chimes + +IMPLANTED devices, such as heart pacemakers, are a valuable part of modern medicine’s armamentarium. Their use, however, is limited by the need to renew their batteries—and this is a particular problem for those, such as cochlear implants (which improve hearing), that are inside the wearer’s head. + +For obvious reasons, surgeons do not like opening heads up unless it is strictly necessary. Sometimes, therefore, the battery packs that power head implants are put in the wearer’s chest. But this means running a wire up through the patient’s neck, from the one to the other, which is scarcely satisfactory either. A way to power such implants without replacing their batteries at all would thus be welcome. And Hyuck Choo of the California Institute of Technology and his colleagues think they have one. They plan to scavenge the necessary energy from the vibrations of the vocal cords that occur when someone is talking. + +Dr Choo’s power plants are small sheets of lead zirconate titanate, a substance that is piezoelectric—meaning it generates electricity when it vibrates. He knew from past work that sheets of the size he chose (just under 1cm2) resonate at around 690Hz. This is close to the F in the octave above middle C, and thus well above the normal range of the human voice. Using larger sheets would lower the resonant frequency, just as long organ pipes produce lower notes than short ones. Larger sheets, though, would be less deployable inside the body. So, instead, he sought to lower a sheet’s resonant frequency without increasing its area by carving a sinusoidal shape out of it (see picture). Such a shape must inevitably be longer than its parent rectangle’s longest sides, albeit that its length is now zigzagged. A sinusoidal sheet should thus have a lower resonant frequence than its rectangular parent. + +It worked. When Dr Choo and his colleagues tested the carved sheets by exposing them to a range of frequencies and monitoring the amount of electricity generated, they found that the voltage spiked at between 100Hz and 120Hz (approximately the dominant frequencies of adult male voices), and also between 200Hz and 250Hz (the female voice’s dominant frequencies). And, although the amount of power produced is not huge, it seems adequate for the task proposed. + +As Dr Choo reported on January 26th, to the International Conference on Micro Electro Mechanical Systems in Shanghai, he and his team were able to harvest a tenth of a milliwatt per square centimetre of lead zirconate titanate from the voice of a man talking at 70 decibels, which is normal speaking volume, and three-tenths from someone shouting at 100 decibels. Implants usually require a tenth of a milliwatt or less to function, so this prototype’s performance suggests a practical device might be within reach—especially as the vibrations produced by the voice travel efficiently up through the skull, meaning the generator could be integrated into an implant, rather than having to be separate from it. + +Since most people are not chatterboxes, talking all the time, a practical system will still need batteries to build up charge so that the surplus can be used when needed. Intriguingly, this might even be possible when someone is asleep. Part of the sound of snoring is in the experimental device’s sweet spot. That may not be much consolation for the partners of snorers. But at least their bedmates will no longer be able to turn a deaf ear to their complaints. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21690024-generator-runs-vocal-cords-may-improve-efficacy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Doping + +No more horsing around + +A way to tell if geldings are having their testosterone boosted + +Feb 6th 2016 | From the print edition + + + +THE murky world of sports doping has been in the news recently, as accusations fly concerning the use, on a scale previously unacknowledged, of performance-enhancing drugs in athletics. But human beings are not the only animals doped to enhance their performance. Racehorses are similarly afflicted. Catching cheats in the world of horse-racing has, however, proved hard. Human and equestrian biology are different, and techniques developed for the one do not necessarily transfer to the other. Terence See Ming Wan, of the Hong Kong Jockey Club’s Racing Laboratory, hopes to change that. As he explains in a paper in Analytical Chemistry, he has developed a technique for spotting doped horses that should make it easier to catch cheats. + +These days, artificial anabolic steroids are easily detected, so athletes (male ones, anyway) are turning instead to compounds like luteinising hormone to bulk up their muscles. This hormone does not act directly. Rather, it stimulates a man’s testes to produce natural testosterone, which then does the muscle-bulking. For those doping male racehorses, though, this option is often not available, because many such horses are geldings. Instead, gelding-dopers tinker with another source of testosterone, the adrenal glands—their weapons of choice being drugs that enhance the effect of this more meagre testosterone supply. + +In the natural course of events, testosterone levels are regulated by an enzyme called aromatise, which converts the hormone into oestrogens. There are, however, two drugs—androstanediol and androstadienedione—that block aromatase’s action, increasing testosterone levels, and therefore muscle mass. Using androstanediol and androstadienedione is particularly desirable from the doper’s point of view because their levels become undetectable two to four days after administration. + +Dr Wan suspected, however, that these aromatise inhibitors might not affect just testosterone levels; they might also alter concentrations of other steroids, such as androstane, androstadien and androsterone. That would be a sign that a horse had been dosed with them. + +To test this, he and his colleagues ran a study that monitored 31 naturally produced steroids in the urine of 32 thoroughbred geldings over the course of nine days. Before the study started, four of the animals were deliberately doped with the two aromatise inhibitors. Dr Wan, however, did not know which four. + +As he and his colleagues had hoped, they were able to pick the doped horses from the others on the basis of the creatures’ steroid profiles. Seven steroids differed significantly in concentration between doped and control animals. Most important, these differences were detectable for between four and nine days after the horses had been given the inhibitors. Even though the drugs themselves were no longer present, the impressions they had left behind were—which is good news for those who believe that racecourses should also be level playing fields. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21690021-way-tell-if-geldings-are-having-their-testosterone-boosted-no-more-horsing/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Winging it + +Convergent evolution + +Feb 6th 2016 | From the print edition + + + +The fossil on the right-hand side of this picture is not, as comparison with the modern insect on the left might suggest, a butterfly. It is a lacewing called Oregramma illecebrosa. It and its relatives, the kalligrammatids, flew in the forests of the Jurassic and Cretaceous periods between 165m and 125m years ago, dying out 69m years before the first-known butterfly fossil. They are thus, as Conrad Labandeira of the Smithsonian Institution in Washington, DC, and his colleagues describe in the Proceedings of the Royal Society, examples of convergent evolution: the emergence in unrelated groups of similar bodies, to permit the pursuit of similar ways of life. Just as ichthyosaurs (marine reptiles contemporary with the kalligrammatids) and dolphins evolved basically the same shapes, in order to hunt fish and other sea creatures, so kalligrammatids seem to have evolved “butterfly-ness”, complete with large, scale-covered wings, eye spots to distract predators and mouth parts formed into a proboscis. They acted, Dr Labandeira thinks, as pollinators for the gymnosperm trees that preceded modern angiosperms, now the food plants of real butterflies. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21690022-convergent-evolution/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The scientific method + +Let’s just try that again + +Reproducibility should be at science’s heart. It isn’t. But that may soon change + +Feb 6th 2016 | From the print edition + + + +THE Journal of Irreproducible Results is a long-running satirical magazine, designed for the amusement of scientists. If the title were not already taken, though, it would be a good one for another, more serious publication that is being launched on February 4th. The Preclinical Reproducibility and Robustness Channel, an electronic rather than a paper journal, is dedicated to the task, found tedious by most academic researchers, of replicating and testing the experiments of others. Professional egos, the exigencies of career-building and the restricted sizes of grants and budgets all conspire against the rerunning, in universities, of old studies instead of the conducting of new ones. + +Commercial researchers cannot afford to be so choosy. If they pick an idea up from academia, they have to be sure that it works. Often, it doesn’t. For example, when staff at Amgen, a Californian drug company, attempted to reproduce the results of 53 high-profile cancer-research papers they found that only six lived up to their original claims. + +This figure is probably typical. What was not typical was that Amgen actually offered it for publication, and it was, indeed, published (in 2012, by Nature). Mostly, journal editors, like academic scientists, are more interested in new work than in the refutation of old stuff. Amgen’s submission was spectacular, because so many papers were involved at one go. This may have been what got it over the bar. If each refutation had been written up and submitted separately, the outcome would probably have been different. As for the six successful replications it included, why would anyone bother to publish work confirming what was already known? + +Yet knowing which previous research is and is not correct is crucial to the progress of science, and a repository of such information would be useful. Hence the Preclinical Reproducibility and Robustness Channel. Its publishers, Faculty of 1000, based in London, hope to provide an outlet for the accumulated replications gathering dust in commercial laboratories (Amgen has promised its trove to the venture), and also to stimulate academic scientists to follow suit and provide more. + +The problem, though, is not restricted to medicine. An analysis of 98 psychology papers, published in 2015 by 90 teams of researchers co-ordinated by Brian Nosek of the University of Virginia, managed to replicate satisfactorily the results of only 39% of the studies investigated. Again, it was the very size of this project that got it into print, as smaller studies languished. + +Things may now be changing. Both reproducibility and the whole openness of the scientific process are discussed much more than once they were. An entire institute dedicated to the matter, the Meta-Research Innovation Centre at Stanford, in California, opened for business in 2014. + +If this institute flourishes—and even more so if it is emulated—it may even become possible to make a career out of being a buster of others’ questionable efforts: a forensic scientist of science, as it were. That is by no means certain, and there will probably be few Nobel prizes in it. But mopping up messes is an honourable activity, and this week’s launch of a new outlet for the publication of duplication is part of the clean-up. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21690020-reproducibility-should-be-sciences-heart-it-isnt-may-soon/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Chamber music: Four into one does go + +Egypt’s uprising: Reading Piketty on the Nile + +Classical literature: Once upon a time + +A memoir of the 20th century: England, my England + +A neurosurgeon examines his life: As he lay dying + +Art and the internet: When new grows old + + + + + +Articles Sections Next + +Chamber music + +Four into one does go + +A life spent at the summit of chamber music—playing Beethoven’s string quartets + +Feb 6th 2016 | From the print edition + + + +Beethoven for a Later Age: The Journey of a String Quartet. By Edward Dusinberre. Faber & Faber; 262 pages; £18.99. To be published in America by University of Chicago Press in May; $30. + +THE string quartet is an invention of the classical age, brought to perfection by Mozart and Haydn. Goethe once defined it as “four rational people conversing with each other”, which suggests that a book on the subject might not be very exciting. But that would do an injustice to Edward Dusinberre’s memoir “Beethoven for a Later Age: The Journey of a String Quartet”. Mr Dusinberre is the lead violinist of the Takacs Quartet, one of the world’s most highly regarded string ensembles, and he has written a fascinating book about the musical life of this group of players. Interwoven with that is the story of Beethoven’s 16 string quartets, works of extraordinary power written over a quarter-century that moved the genre on from the earlier masters and are now regarded as the apogee of the chamber-music repertoire. + +In Beethoven’s day many of them met with incomprehension and dismay, which the short-tempered composer had to learn to accommodate. When his now famous “Grosse Fuge”, originally the last movement of one of his late quartets, was shredded by critics, Beethoven grudgingly wrote a new ending. At a performance of another quartet he got his musicians to play the whole thing twice over, hoping that the audience might gain a better insight into the music the second time. And when a player complained in the composer’s hearing that the quartets were “not music” at all, he replied: “Oh, they are not for you; they are for a later age.” + +A century later, Igor Stravinsky still judged the quartets “contemporary”, and thought they always would be. Another century on, Mr Dusinberre clearly feels the same way. He links each chapter in his memoir to a particular quartet, moving back and forth between the story of the composition (and the personal, social and political context it was written in) and the life of his quartet. + +Founded in 1975, the Takacs Quartet still retains two of its original members. Mr Dusinberre joined more than 20 years ago to replace the founding first violinist, Gabor Takacs-Nagy. Even the most recent arrivals have been around for more than ten years, so all four musicians know each other very well, both musically and personally. The book is admirably kind about every one of the players, but at times the constant enforced proximity must become claustrophobic. When the four are on tour together they generally try to keep away from each other as much as possible. + +When Mr Dusinberre auditioned for the part in 1993 he was only 23, almost a generation younger than the rest. He was English, everyone else was Hungarian, and he soon realised that he was being put to the test not so much for his prowess on the violin—given his training, that was taken for granted—but for his musical ideas, his personal qualities and his ability and willingness to work with colleagues. He felt green and rather nervous about playing with such a cohesive and experienced group, and also conscious that the others came from a different and somewhat more laid-back culture. But they offered him the job, or so he thought; it was only later that one of them told him that what he was taking on was not a job but a family and a life. + +A lot of the time the work is just hard grind. The Takacs Quartet plays about 100 concerts annually, does a lot of recording and tours for around half the year. This is hard on spouses and children (who barely get a mention). When not touring, the players practise on their own and then rehearse together for hours every day. They endlessly debate their different approaches to the music, often argue, and try out each other’s ideas even if they don’t think they are very good. Every time they play they try to do something new, which may help explain why they have been so successful. + +Anyone who has ever watched a good string quartet in concert will be familiar with the subtly effective way the players communicate—here a raised eyebrow, there a glance or a nearly imperceptible nod. It is almost as though they were a single instrument, not four working in harmony. And at its best, the experience of playing in a quartet can be sublime. In a performance of Beethoven’s quartet in A minor, Mr Dusinberre explains: “We were taken far out of ourselves, liberated from the confines of individual personalities as we surrendered to the music, a blissful state.” An achievement that makes all the grind worthwhile. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21690016-life-spent-summit-chamber-musicplaying-beethovens-string-quartets-four/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Egypt’s uprising + +Reading Piketty on the Nile + +Feb 6th 2016 | From the print edition + + + +They’ve had enough of patriarchs and patronising + +The Egyptians: A Radical Story. By Jack Shenker. Allen Lane; 528 pages; £15.99. + +AFTER nearly three decades in power and 18 days of unrest, it seemed as if Hosni Mubarak was finally ready to relinquish his grip on Egypt. But as the old dictator took to the microphone on the night of February 10th 2011, it became clear that he was not willing to go quite yet. “I am addressing you all from the heart, a father’s dialogue with his sons and daughters,” he said, before offering a few worthless concessions. Mr Mubarak was merely the latest Egyptian ruler to claim the mantle of national patriarch. For once, the people refused to play the role of deferential children. He resigned the next day. + +Jack Shenker, a reporter for the Guardian, was in Tahrir Square, the heart of the uprising, as Mr Mubarak lost control of Egypt. What distinguishes his account from others is his presence in the slums, factories and homes where Egyptians first began to question their relationship with rulers who, under the pretence of economic reform, enriched only themselves and a small elite. To many in the West, the hip, young liberals who made up a portion of the protesters in Tahrir are the embodiment of Egypt’s uprising. But it was seasoned labourers in obscure cities who struck the first and biggest blows against authoritarian rule. + +That is fitting. Over 3,000 years ago the craftsmen of Ramses III, while building the tombs of pharaohs in the Valley of the Kings, laid down their hammers and demanded more food. Labour unrest was so common by the end of Mr Mubarak’s reign that it is difficult to mark a turning-point. But Mr Shenker highlights disputes over compensation at the enormous textile plant in Mahalla, a “cauldron of rebellion”, in 2006. Nothing exposed the state-labour relationship more than the seating arrangement during talks between the parties. On one side of the table sat the head of the company and local politicians. Next to them was the appointed president of Egypt’s official trade-union federation, facing the elected leaders of the striking workers, whom he ostensibly represented. + +Most of Egypt’s problems can be traced back to the market reforms of its leaders, claims Mr Shenker, who often sounds as if he is quoting passages from Thomas Piketty’s “Capital in the Twenty-First Century”. Egypt, he laments, suffers from the “deep-rooted international patterns of privileged accumulation and mass dispossession” that are a direct result of neoliberal capitalism. You can hardly blame Mr Shenker for thinking as he does. Facing economic crisis in the early 1990s, Egypt signed on to the standard IMF stabilisation plan that called for cutting budgets, slashing subsidies and privatising public enterprises. Mr Mubarak moved at a breakneck pace, with little regard for average Egyptians, who depended on government handouts. International financial institutions, impressed by the country’s strong GDP growth, lauded the president. + +But the benefits did not trickle down, and the public became disillusioned. Mr Shenker uses Egypt’s woes to discredit neoliberalism, yet he describes vividly how Mr Mubarak’s reforms were a fraud, creating only the “façade of competition and pluralism”. Egypt replaced public monopolies with private ones, and the story is better understood as an indictment of abusive rent-seeking than of free markets. + +Mr Shenker’s despair at the economic zeitgeist is matched at least by his hope for the future. “A significant proportion of the Egyptian population no longer think about themselves and about politics in the same way, and are no longer prepared to put up with the old crap,” says one of the tired young revolutionaries who fill his book. Western journalists have tried hard to take something—anything—positive away from the failed uprising. In this regard, Mr Shenker is more convincing than most. But for now Abdel-Fattah al-Sisi, the current strongman, has “rebooted” the patriarchy—and been embraced by a large number of Egyptians. “I love Egypt’s youth and consider them my children,” he says. On the surface, Egypt looks and sounds much as it did before the uprising in 2011. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21690012-reading-piketty-nile/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Classical literature + +Once upon a time + +The adoption of Greek literature by the Romans was more unlikely than it appears in hindsight + +Feb 6th 2016 | From the print edition + +Homer, a father of Latin literature + +Beyond Greek: The Beginnings of Latin Literature. By Denis Feeney. Harvard University Press; 377 pages; $35 and £25. + +IN RECENT years there has been a revival of interest in the classics. Still, things are not what they were. In the 1930s Latin might consume almost half of a 12-year-old boy’s lessons at a British private school. Today, university classics courses accept students with little Latin and no Greek. + +It takes “a good classics undergraduate” to tell you what every child used to know, that the Minotaur was “the half-brother of Ariadne, and that he was killed by Theseus”. With over 120 pages of notes and references, Denis Feeney’s study of the beginnings of Latin literature is not designed to attract more first-year students. It is written by the professor of Latin at Princeton University for other academics. However, his bold theme and vigorous writing render “Beyond Greek” of interest to anyone intrigued by the history and literature of the classical world. + +With hindsight—since the Romans followed the Greeks, as even today’s schoolchildren know—it can seem obvious that the Latin works of Cicero, Virgil and Horace would succeed those of Homer, Sophocles and Aeschylus. Not so, says Mr Feeney. It was “one of the strangest…events in Mediterranean history” that the Romans began producing Greek-style tragedies, comedies and epics before developing a fresh vernacular literature of their own. After all, other powers such as Persia and Egypt, also in contact and conflict with Greece, did nothing of the sort. + +It probably started in 240BC when the Ludi Romani, the great annual festival, allowed a Greek play to be staged in Latin translation. The Romans were no strangers to other cultures. With their defeat of Carthage and emergence as the dominant power, they were confident and suffered no “cultural cringe”. But it was the translations, in a Latin metre, of Homer and Attic drama by Livius Andronicus, “not a natural or inevitable thing to happen”, that paved the way for later literature. They were helped by Greeks accommodating the rising power. Whereas translators today mostly convert texts into their first language, Livius was a Greek, a native speaker of the source language, and Naevius, who followed him, though born in Italy, had Greek as a childhood language. Only later did it become the norm for a Roman such as Cicero to translate into Latin. + +A colonising power tends to impose its language on a subject land. However, for several generations, the relative status of Greek and Latin was in flux: to Romans, “Greek” was both the vernacular of slaves and the classical Attic standard of revered literature. But by the time Ennius, considered the father of Latin poetry, died in 169BC, Latin literature “had achieved escape velocity”. Self-assured Roman elites had become happily bilingual and biliterate, and in time this helped them rule a widespread and polyglot empire. + +Mr Feeney contrasts the Romans with the Etruscans and the Carthaginians, neither of whom appear to have possessed a literature; and he provides interesting comparisons, for example with Japan’s borrowing of Chinese characters, first to write in Chinese and only later adapted to write Japanese. What was astonishing about Ennius’s “Annales” is that he superimposed Roman history upon that of the Greeks, “in a Homeric epic written in a language that was not Homer’s”. By now the growth of Latin literature was as certain as the expansion of Roman power. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21690015-adoption-greek-literature-romans-was-more-unlikely-it-appears/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A memoir of the 20th century + +England, my England + +Feb 6th 2016 | From the print edition + + + +Their Promised Land: My Grandparents in Love and War. By Ian Buruma. Penguin Press; 320 pages; $26.95. To be published in Britain by Atlantic Books in March; £18.99. + +IAN BURUMA begins his biography of his grandparents Win and Bernard with a recollection of picture-book Christmases in the English countryside. As a child he, his parents and various aunts and uncles would descend upon their Berkshire vicarage to indulge in “a day-long feast of Edwardian gluttony”. Later the reader is told that Mr Buruma’s grandparents, and almost everyone else present, were Jewish. + +This tension between an Englishness embraced with an immigrant’s touching fervour, but also with the immigrant’s anxiety, is at the heart of this affectionate, well-told memoir. It is a tension most acutely felt at moments of crisis, when dual loyalties can be hard to maintain. At the end of the first world war, Win wrote to her future fiancé how pleased she was that “the two countries to which we both owe all that we have, are no longer enemies.” + +A distinguished historian, Mr Buruma approaches his subject with the loving eye of a grandchild and an awareness of the larger forces that shaped their lives. His sensitive portrayal of the immigrant’s divided loyalties and divided identity is timely in light of Europe’s current struggle with colliding national, religious and ethnic identities. While the Schlesingers’ story does not directly parallel today’s refugee crisis, it does shed light on the fault-lines that remain even in the most successful of cultural mergings. As Mr Buruma puts it, “a Jew in a society of mostly Gentiles, a Muslim in Europe, a black in a predominantly white country, or a homosexual, especially in places where love of your own sex is unaccepted, is forced to consider his or her place more deeply, to make up his or her own story.” + +The ability of these Jews to thrive in their adopted land represents something of a storybook ideal. Grandpa Bernard was the rugby-playing, Cambridge-educated son of a prosperous London stockbroker who had emigrated from Germany. Despite battles with persistent antiSemitism—described euphemistically in letters as “the old, old story”—Bernard became a successful doctor, taking time off from a busy career to serve king and country in two world wars. After marrying his childhood sweetheart, Winifred Regensburg—from an almost identical background—the two embarked on a long, happy life together, filled with more joy than loss, united in love of family and country. Win spells out her creed in a letter written to Bernard in 1940 while he was serving in the Norway campaign. “Next to you,” she declared, “I love England more than anything else in the world.” + +For all their fervent Britishness, they admirably refused to deny their heritage, often at great personal cost. Marking Yom Kippur, Judaism’s holiest day, Bernard told Win, “is only a matter of policy on my part in which ‘I tell the world’, as the Yank would say, that I am by birth a Jew, a Jew still and proud of it too.” He maintained this stance even in the face of prejudice that shut him out of many of London’s best hospitals. And in 1938, shortly after Kristallnacht, they rescued 12 German-Jewish children, whom Win cared for while Bernard went off to war. + +“Their Promised Land” is about love and loyalty, to family and to country, even when that country fails to reward that devotion as fully as it should. As Mr Buruma concludes, “For many Jews, Israel is the ultimate safe haven…This was not true for Bernard and Win…England was their safe haven, England and the Family.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21690013-england-my-england/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A neurosurgeon examines his life + +As he lay dying + +An intimate, essential memoir on meaning + +Feb 6th 2016 | From the print edition + + + +When Breath Becomes Air. By Paul Kalanithi. Random House; 238 pages; $25. Bodley Head; £12.99. + +MANY people avoid discussing death. Doctors face it daily, reading scans blotted by tumours the way others scour market data. But years of training cannot dull the pang when, glancing at a scan and seeing a patient’s dim chances, those prospects happen to be his own. Paul Kalanithi died at 37. He had spent years training to be a neurosurgeon; his doctor first ascribed his sharp pains and dwindling frame to the demands of residency. But instead it was cancer, which had spread from his lungs to his spine and liver. Faced with such news, Kalanithi said, a person’s understanding of time changes. In his last months of life he chose to become a father. He also chose to write. His essays were published by Stanford University, where he worked, and by the New York Times. “When Breath Becomes Air” is a deeper exploration of the themes he raised, less a memoir than a reflection on life and purpose. It is an unusual little book, written by an unusual man. + +Kalanithi was a doctor by training and a philosopher by temperament, the type of person who, inspired by Aldous Huxley, used his university-admissions essay to argue that happiness was not the point of life. As a 20-year-old camp counsellor, he read a book called “Death and Philosophy” while using his inert body in a children’s game. At university he studied literature, “the richest material for moral reflection”, and human biology, for laying out “the most elegant rules of the brain”. This was a person obsessed by the way people find meaning. + +Kalanithi writes about the small events that are the meat of human experience: his wanderings through the Arizona desert as a boy, his joy at reading Thoreau and Camus, conversations with his wife and the strange sense of normality felt while dissecting a cadaver. At work he faced not intimations of mortality but the constant reality of it. He describes his mild shame when, having abandoned an ice-cream sandwich to treat a dying patient, unsuccessfully, he gingerly reclaims the melting dessert. He writes about what science can explain and “its inability to grasp the most central aspects of human life: hope, fear, love, hate, beauty, envy, honour, weakness, striving, suffering, virtue”. + +Most interestingly, he writes about language, about the parts of the brain that control it and its centrality to what makes us human. This is an urgent missive, the power of words revered by a man whose words were leaving him. He describes the birth of his daughter movingly—frail, he lay swaddled as his wife laboured beside him—and the soul-filling love for his new baby. This vital book is dedicated to her. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21690011-intimate-essential-memoir-meaning-he-lay-dying/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Art and the internet + +When new grows old + +Artists working with technology struggle to stay current + +Feb 6th 2016 | From the print edition + + + +IN 1968 the Institute of Contemporary Arts in London held an exhibition called “Cybernetic Serendipity”, Britain’s first show exploring connections between art and new technology. It was hugely popular and in hindsight, well timed. It coincided with two crucial developments in the relationship between art and technology: the pop-art movement, which was demolishing boundaries between high art and everyday life, and ARPANET, the computer-to-computer network which would become the internet. + +The internet has continued to erode established notions of what qualifies as art, and who can claim to be an artist. New categories flourish: net.art, new media art, the New Aesthetic, internet art, post-internet art. Online-only sales and exhibitions are increasingly common, as is art existing solely in digital form, bought and sold through websites such as Electric Objects (on a mission “to put digital art on a wall in every home”). Successful careers and expensive collections are built using social media, such as Instagram, the image- and video-sharing app that has users posting 80m photographs a day. + +“Electronic Superhighway (2016-1966)”, a new show at the Whitechapel Gallery in London, looks at how artists have responded to technology and change. The exhibition, which takes its name from a phrase coined in 1974 by Nam June Paik, a video artist, to describe the potential of telecommunication systems, is arranged in reverse chronological order. This calls particular attention to how quickly technologies become obsolete, and how art tied to those forms ages with it. + +The first room, which looks at the period from 2000 to 2016, is a cacophony of art made using the technologies and visual language of social media, gaming, 3D printing, computer-generated imaging, browser interfaces and smartphones. In subsequent rooms the technology becomes, like the bulky wall of analogue TV monitors that comprise Paik’s “Internet Dream” (1994), nostalgic for older visitors, and a mere historical curiosity for younger ones. + +Artists working with technology today are acutely aware that their work is ageing. To reflect—or deflect—the inevitable outdating of their material, some, such as Cory Arcangel or Petra Cortright, use low-tech graphics, outmoded software and retro hardware as an ironic aesthetic. Others take the internet’s visual vocabulary to extremes. They include Ryan Trecartin, who populates video and installation work with hyper-real, extravagantly costumed characters; or Camille Henrot, whose film “Grosse Fatigue” layers video clips, photographs and internet screen-grabs over one another as proliferating browser windows. + +Harun Farocki, a German film-maker who made “Parallel I-IV” just before he died in 2014, predicted of online culture that “Reality will soon cease to be the standard by which to judge the imperfect image. Instead, the virtual image will become the standard by which to measure the imperfections of reality.” Amalia Ulman recently provided a literal illustration of this in a social-media performance piece called “Excellences & Perfections”, using her Instagram and Facebook profiles to create a fake approval-seeking persona, and to stage her body having hoax plastic surgery. Douglas Coupland’s portraits (of which one is shown above) respond to the automatic face-recognition technology used by security services and Facebook. Geometric shapes in primary colours over their features highlight how, to a computer, a face is just a series of abstractable properties. + +“Every large online corporation (Facebook, Twitter, Amazon, eBay) is optimising you,” Jonas Lund, an artist, has said. “So why shouldn’t an artist also use the same techniques?” His work incorporates analysis of viewer behaviour itself. “VIP (Viewer Improved Painting) 2014” contains an algorithm that creates a fluctuating, abstract composition based on where the viewer looks. In effect handing over the creative prerogative, Mr Lund sardonically gives the same impression as Instagram seeks to give: everyone is an artist. Indeed, it is a problem that plagues the Whitechapel show: it is often difficult to find any sense of individual identities or even real human feeling. Breaking down barriers between technology and art can raise technology to the level of art, but it also risks working the other way round, reducing art to the banality of an algorithm. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21690014-artists-working-technology-struggle-stay-current-when-new-grows-old/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Henry Worsley: In Shackleton’s shadow + + + + + +Articles Sections Next + +Obituary: Henry Worsley + +In Shackleton’s shadow + +Henry Worsley, soldier and Antarctic adventurer, died on January 24th, aged 55 + +Feb 6th 2016 | From the print edition + + + +THE compass did not belong to him. But when he felt it in his trouser pocket—and with every stride of his skis over the Antarctic ice, he felt it—it powered him on. When the light was flat, crevasses lurking and nothing before him but “white darkness”, he remained aware of it, his silent companion. If team morale was low in the tent in the evenings, with socks drying at head-height and the winds hurling outside, he would pass it round. It was not much bigger than an old penny, but alive, spinning and jittering, as excited as he was to be so close to the South Pole. For it had been there before, a century earlier. Inside the lid the owner had scratched his initials: EHS, for Ernest Henry Shackleton. + +On his three expeditions to Antarctica, in 2008-09, 2011-12 and 2015-16, Henry Worsley went equipped with GPS, video cameras, satellite phones, solar panels, energy bars. No item was more important than the compass. It accompanied him physically only on his first trip, a centenary recreation of Shackleton’s march towards the Pole in 1908-09 which, at 88.23ºS, he had been forced to abandon for weakness and lack of food. On that journey Colonel Worsley took the compass into Shackleton’s hut, from which the trek had started, placing it back among the blankets, boots and golden-syrup tins all perfectly preserved by the dry polar air; and he later also placed it ceremonially at the South Pole, completing what Shackleton had always hoped to do. + +Yet there was a Shackleton compass in his head in any case. He collected anything to do with him: books, autographs, cigarette cards. At Grytviken whaling station, in South Georgia, he slept beside his grave. His family gamely encouraged him, accepting that the white continent held him fast. Other loves, such as cricket, paled beside it; even his unusual liking for sewing, which he taught to inmates of Wandsworth prison, seemed part-inspired by the “ditty bags” of needles, buttons and thread that were vital gear on polar expeditions. + +Stirrup of patience + +It was easy to pinpoint when the obsession had started: at prep school, in the library, as he read of the great explorers and stared, with amazement, at Frank Hurley’s photographs of Shackleton’s ship Endurance listing, like the ghost ship in “The Ancient Mariner”, among towering pack-ice in the Weddell Sea. That third attempt on the Pole had been abandoned, in 1916, almost before it had begun; a distant relative, Frank Worsley, had been the ship’s captain. There lay another reason for the haunting. + +For decades, though, he doubted that he was bold enough for the Antarctic. How could he be as decisive as Shackleton, as intrepid and optimistic? Could he, to quote his hero, “Put footstep of courage into stirrup of patience”? Throughout his long and distinguished army career, including commands in Bosnia, “special duties” in Northern Ireland and tours with the SAS in Afghanistan, he would keep comparing himself. Trapped in a café by a violent mob in Bosnia, he psyched himself up for a breakout by asking “What would Shacks do?” Meeting, unarmed, with tribal elders in Helmand to lay the trail for the British army in 2005, he would start by making them laugh at his lamentable Pushtu; Shacks had always believed in the power of laughter. In Afghanistan, camping out in wadis in desert camouflage, he was reading “The Heart of the Antarctic”. + +As an army officer, he was deeply impressed by Shackleton’s leading of his men. Nothing, even reaching the Pole, had meant more to him than their welfare; in return, they had trusted “the Boss” completely. It was in Shackleton’s footsteps that “General” Worsley, as his teams called him, insisted on regular hot meals on polar treks and berated himself, as well as them, for idle slips. And the same loyalty to comrades impelled him on his third journey, starting last November, to raise money for “my wounded mates”: the soldiers who had not, like him, returned whole from active duty. + +That journey he made alone, intending to be the first to pull a 148kg sledge for 1,100 miles right across the continent, unaccompanied and unassisted, in honour of Shackleton’s abortive bid a century before. He did not mind being solitary. On his two previous expeditions, both heading for the Pole, he had made a point of wandering off each evening to commune with the land and with ghosts. For he did see ghosts, in that extraordinary, mesmerising panorama of blue ice and white peaks: a pair of snow petrels, which he thought might be Shackleton and Scott, and a solar parhelion that might, perhaps, contain their safeguarding spirits. He imagined his hero murmuring advice beside him. + +The Antarctic, though, turned on him as fiercely as it had ever turned on them. Whiteouts blinded him. Storms kept him pinned in his tent. The sheer scale of the challenge began to daunt him. Day by day, his audio diary for his website stayed chirpy; but the selfies showed a face increasingly exhausted. Eventually, like Shackleton with his “astonishing decision” at 88.23ºS, he had to admit he had “shot his bolt” and, 30 miles from success, could not go on. Unlike his hero, he left it too late, and died in a Chilean hospital. + +In a whiteout, he radioed on Day 24, “one’s head is always bent downwards in reverence to the compass.” It might have been his epitaph. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21690006-henry-worsley-soldier-and-antarctic-adventurer-died-january-24th-aged-55-shackletons/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +The Economist poll of forecasters, February averages + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Feb 6th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21690036/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Feb 6th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21690034-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Feb 6th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21690039-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Feb 6th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21690038-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist poll of forecasters, February averages + +Feb 4th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21690093-economist-poll-forecasters-february-averages/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Feb 6th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21690037-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 05 Feb 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +A plan for Europe’s refugees: How to manage the migrant crisis + + + + + +Interest rates: Negative creep + + + + + +Libya: The third front + + + + + +Britain and the European Union: The accidental Europhile + + + + + +HSBC’s domicile dilemma: Asian dissuasion + + + + + +Letters + + + +Economics, American politics, immigration, diamonds, Venezuela, divorce, oil, Donald Trump: Letters to the editor + + + + + +Briefing + + + +Europe’s migrant crisis: Forming an orderly queue + + + + + +Schengen’s economic impact: Putting up barriers + + + + + +United States + + + +Ted Cruz: The man in the ostrich-skin boots + + + + + +Iowa and beyond: Trump bumped + + + + + +The campaigns: Heard on the trail + + + + + +Election spending: Green grass roots + + + + + +Campaigning: A bit MEH + + + + + +School choice: A lottery to lose + + + + + +Confederate monuments: Recast in stone + + + + + +Lexington: Falling towards Hillary + + + + + +The Americas + + + +Mining in Latin America: From conflict to co-operation + + + + + +Miners and aboriginals in Canada: I’ll see you in court + + + + + +Bello: The endgame in Venezuela + + + + + +Asia + + + +Democracy in Myanmar: A strange new world + + + + + +Asian nuclear weapons: What lurks beneath + + + + + +North Korean missiles: Satellite of Kim + + + + + +Politics in Japan: Negative rates, positive polls + + + + + +Banyan: Old shoes and duckweed + + + + + +China + + + +Financial fraud: Ponzis to punters + + + + + +Television news: No news is bad news + + + + + +Diplomatic insults: A world of hurt + + + + + +Middle East and Africa + + + +Jihadists in Libya: The next front against Islamic State + + + + + +Jordan: At boiling point + + + + + +Algeria: Who is in charge? + + + + + +The International Criminal Court: Africa’s leaders protect each other + + + + + +Kenya’s flower trade: Leaving on a jet plane + + + + + +Europe + + + +France’s Socialists: Beardless youth + + + + + +German youth: Girl, not abducted + + + + + +German Russophiles: Bear-backers + + + + + +Russia and Chechnya: Putin’s Chechen enforcer + + + + + +Charlemagne: Swords and shields + + + + + +Britain + + + +Britain and the EU: Slings and arrows + + + + + +The elderly: Shades of grey + + + + + +Social housing: Estate of flux + + + + + +Mobile telecoms: Three’s a crowd + + + + + +Teaching religion: OMG + + + + + +Exports: More buyers wanted + + + + + +Bagehot: Sadiq Khan’s road to power + + + + + +International + + + +Call centres: The end of the line + + + + + +Night shifts and health: I’ll sleep when I’m dead + + + + + +Special report: Turkey + + + +Turkey: Erdogan’s new sultanate + + + + + +Politics: Getting off the train + + + + + +The AK party: Softly, softly + + + + + +The economy: Erdoganomics + + + + + +Identity: Proud to be a Turk + + + + + +Urban development: The lure of the city + + + + + +Foreign policy: Alone in the world + + + + + +Looking ahead: A melancholy mood + + + + + +Business + + + +The consumer v the corporation: The big fight + + + + + +Oil companies: In the dark ages + + + + + +The chemicals industry: Bad romance + + + + + +Agribusiness: Feeding the dragon + + + + + +Alphabet: Of profits and prophesies + + + + + +Corporate hegemony: A select group + + + + + +Pilot Flying J: If the game goes against you + + + + + +Schumpeter: Succession failure + + + + + +Finance and economics + + + +HSBC: London v Hong Kong: East is Eden + + + + + +Buttonwood: False comfort + + + + + +Argentina’s disputed debts: Feeding the vultures + + + + + +Klarna: Getting more ambitious + + + + + +The American economy: Still kicking + + + + + +Finland’s economic winter: Permafrost + + + + + +Free exchange: Trade in the balance + + + + + +Science and technology + + + +Organ preservation: Wait not in vain + + + + + +Guinea-worm disease: Going, going... + + + + + +Voice-powered medical devices: Good vibrations + + + + + +Doping: No more horsing around + + + + + +Winging it: Convergent evolution + + + + + +The scientific method: Let’s just try that again + + + + + +Books and arts + + + +Chamber music: Four into one does go + + + + + +Egypt’s uprising: Reading Piketty on the Nile + + + + + +Classical literature: Once upon a time + + + + + +A memoir of the 20th century: England, my England + + + + + +A neurosurgeon examines his life: As he lay dying + + + + + +Art and the internet: When new grows old + + + + + +Obituary + + + +Obituary: Henry Worsley: In Shackleton’s shadow + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +The Economist poll of forecasters, February averages + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.02.13.TXT b/homeworks/B20769/homework1/data2/2016.02.13.TXT new file mode 100644 index 0000000..3ad23ac --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.02.13.TXT @@ -0,0 +1,5351 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Essay + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Feb 13th 2016 | From the print edition + + + +North Korea declared that it had launched a satellite into space, violating UN sanctions. The launch is likely to have been a cover for testing a long-range ballistic missile. Days later reports surfaced that the army chief of staff, Ri Yong Gil, had been executed. He was one of several bigwigs to have been purged recently by the dictator, Kim Jong Un. Meanwhile, South Korea, displeased at the launch and at an earlier underground nuclear test, shut the industrial park at Kaesong that it operates with North Korea. See article. + +A “fishball riot” broke out in Hong Kong following reports that officials were trying to clear unlicensed food-hawkers from a working-class neighbourhood. More than 120 people were injured, including 90 police. Members of a political group called Hong Kong Indigenous, which wants the territory to be more separate from China, played a prominent role. See article. + +Celebrations in Beijing of the lunar new year were somewhat quieter than usual. At the start of the holiday, workers swept away 400 tonnes of firework debris from the streets, down by more than a third compared with last year. Worries about pollution, as well as a slowing economy, may have dampened sales. + +The prime minister of Australia, Malcolm Turnbull, admitted that attempts to improve the lives of Aborigines were falling short. Infant mortality has fallen and the proportion of Aboriginal students who finish high school has nearly doubled. But Aborigines die younger and are more likely to be unemployed than non-indigenous Australians. + +Show of force + +Ahead of a two-day meeting of NATO defence ministers in Brussels, Germany and Turkey proposed that the alliance set up patrols in the Aegean Sea to police refugee flows. Meanwhile the European Commission drew up a list of steps it expects Greece to take to improve the situation of asylum-seekers. + +The lower chamber of the French parliament voted on a proposal to write into the constitution the power to strip French nationality from dual citizens who are convicted of terrorism. The amendment was adopted but divided both the majority and the opposition. This was not the final vote, but it was a test for François Hollande, the French president, who needs three-fifths of the votes in both chambers. + +Two trains crashed in Germany leaving ten people dead and more than 80 injured. + +Five years on… + + + +Fears grew of a new humanitarian catastrophe in Syria, as forces loyal to Bashar al-Assad, backed by heavy Russian bombing, came close to encircling Aleppo, where 300,000 people are in danger of being cut off and starved. UN investigators accused the Syrian government of a crime against humanity, after a report found that detainees are being killed on a massive scale, amounting to a state policy of civilian “extermination”. See article. + +A grandson of Ayatollah Khomeini, who led Iran’s Islamic revolution, will not be allowed to stand in this month’s election in Iran, the body charged with vetting candidates reaffirmed. Hassan Khomeini is seen as a reformist. + +A plane leaving Mogadishu, the capital of Somalia, survived what appears to have been a blast that killed only the suspected suicide-bomber. The bomb exploded after take-off, blowing a hole above the wing of the plane out of which the bomber was sucked. No one else died. + +Encouraging peace + +Barack Obama said he would ask Congress for $450m to help Colombia implement a peace agreement with the FARC, a guerrilla group with which Colombia’s government has been at war for more than 50 years. Among other things, the “Peace Colombia” aid package will help pay for clearing mines. Colombia’s government and the FARC have set March 23rd as a deadline to sign a peace deal. + +Haiti’s president, Michel Martelly, left office as scheduled, but without handing power to a successor. A run-off vote in the presidential election was postponed until April after several candidates complained of irregularities in October’s first round. Parliament is to select an interim president. + +Anabel Flores Salazar, a crime reporter for a newspaper in the Mexican state of Veracruz, was kidnapped from her home by at least eight uniformed men and murdered. Her body was found on a road in the neighbouring state of Puebla. Six journalists who lived or worked in Veracruz have been killed since 2011. + +The government of Argentina offered a partial repayment to bondholders whose refusal to accept a debt restructuring prompted the country to default in 2014. It is offering $6.5 billion to bondholders, who are claiming $9 billion. + +Fulfilling an election promise, Canada’s prime minister, Justin Trudeau, said that the country will stop bombing Islamic State in Iraq and Syria by February 22nd. It is to withdraw six jets but will continue to refuel aircraft flown by its allies, keep two surveillance planes in the region and triple its number of troops training Kurdish fighters. + +Bern, baby, Bern + + + +In the New Hampshire primary Bernie Sanders won on the Democratic side, beating Hillary Clinton by a stonking 60% to 38%. Donald Trump came first in the Republican contest with 35%. The winning margins for both men were bigger than had been forecast. John Kasich came second in the Republican primary on 16%, followed by Ted Cruz, Jeb Bush and Marco Rubio. Support for the party’s mainstream challengers to Mr Trump was split. See article. + +After their poor placing in the primary Chris Christie and Carly Fiorina pulled out of the Republican race. + +America’s Supreme Court temporarily halted the implementation of the Clean Power Plan, the backbone of Barack Obama’s policy to cut emissions from power plants. The plan gives states leeway over achieving this, but some contend it is too burdensome. + +The White House sent its budget to Congress. The document was deemed dead on arrival, as Republican leaders are this year forgoing the traditional charade of even pretending to listen to the administration’s budget director at public hearings. See article. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21692943-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Feb 13th 2016 | From the print edition + +It was another jittery week for stockmarkets. As well as general worries about the state of the world economy, investors fretted about the health of European banks, causing wild swings in their share prices. Some of the concerns were over Deutsche Bank’s restructuring programme and its capacity to make payments on a specific type of debt. The bank’s chief executive, John Cryan, gave assurances that its position was “absolutely rock solid”. Its share price rebounded on reports that it would buy back several billion euros worth of its debt. See here and here. + + + +Tech stocks also fared badly, none more so than those of LinkedIn, a social network for businesspeople, and Tableau, which produces cloud-based software for data visualisation. Both companies released sales forecasts for the year that came in well below analysts’ expectations; LinkedIn’s share price plummeted by 43% in a day and Tableau’s by 49%. + +Going cheap + +Twitter’s share price dropped to a new low after it released its fourth-quarter earnings, which showed no growth for the first time in its user base (compared with the previous quarter). It posted another net loss, of $90m. The results were the first since Jack Dorsey returned on a permanent basis as chief executive. See article. + +Japanese ten-year bonds joined a lengthening list of government securities with a negative yield, offering -0.04% a year. Nearly 30% of the global government bond market now trades on a negative yield. Sweden, meanwhile, pushed its main interest rate further into negative territory, to -0.5%, Janet Yellen, who chairs the Federal Reserve, hinted that the central bank was less inclined to raise interest rates again at its meeting in March. + +China’s foreign-exchange reserves fell again last month, as the central bank tapped its pile of dollars to prop up the yuan. The reserves dropped by $100 billion to $3.2 trillion, the lowest in nearly four years. + +Believe it or not + +The release of GDP figures in India for the last three months of 2015 raised more questions than it answered. The economy officially grew by 7.3% compared with the same quarter a year earlier, making it the world’s fastest-growing large economy. But since last year’s rejig of GDP statistics, doubts have been raised about the accuracy of the data. Economists point to other numbers, such as weak exports and a lack of investment, which suggest a less rosy outlook. + +India’s telecoms regulator introduced a ban on differential pricing for access to internet content, in effect blocking Facebook’s Free Basics service in the country. Free Basics is a collection of apps and resources made for people in developing countries and distributed without charge, which Facebook says offers the poor a portal to the internet through their phones. But critics of the scheme contend that it ties people to Facebook’s network, giving it an unfair market advantage. + +Asahi, a Japanese brewer, presented a €2.6 billion ($2.9 billion) offer to Anheuser-Busch InBev to buy the Peroni and Grolsch beer brands that are currently owned by SABMiller. AB InBev is in the process of taking over SABMiller and has to offload some assets to satisfy antitrust regulators in Europe. It would be Asahi’s biggest acquisition to date. + +Weaker demand for transporting goods on Asia-Europe sea routes was a factor behind A.P. Moller-Maersk reporting a fall in underlying profit for last year, to $3.1 billion. The Danish shipping company also took a big write-down on its oil-exploration business because of “low oil-price expectations”. + +Volkswagen delayed the publication of its annual report. It is struggling to determine the full cost of last year’s emissions scandal, when it admitted to cheating in tests of nitrogen-oxide levels emitted by its diesel cars. The German carmaker has yet to satisfy regulators in America that it has a viable plan for fixing the 600,000 diesel vehicles that have been recalled. + +The squabble raged on between London’s black-taxi drivers and app upstart Uber. This week Uber offered free access to its taxi-hailing app to the cabbies, but this was rejected as a publicity stunt. Rival apps, such as Hailo and Gett, count two-thirds of the capital’s black-cab drivers among their ranks. + +Boys and girls + +Merchandise tied to “Star Wars: The Force Awakens” helped boost profits at Hasbro. The American toymaker said that sales in the last quarter of 2015 were 13% higher than in the same three months of 2014. Revenue in its “boys” division, where it parks its Star Wars-related business, was up by 35%. Hasbro, like other toymakers, faced a storm of criticism when it initially omitted products that feature Rey, the film’s female lead character, from its range. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21692940-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Feb 13th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21692941-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Regulating cannabis: The right way to do drugs + +Hong Kong: Wounded society + +European banks: Borrowed time + +Travel in Africa: Let Africans fly + +The Mekong river: Damned if you do + + + + + +Articles Sections Next + +Regulating cannabis + +The right way to do drugs + +The argument for the legalisation of cannabis has been won. Now for the difficult bit + +Feb 13th 2016 | From the print edition + + + +IT IS like a hash-induced hallucination: row upon row of lush, budding plants, tended by white-coated technicians who are bothered by the authorities only when it is time to pay their taxes. Cannabis once grew in secret, traded by murderous cartels and smoked by consumers who risked jail. Now, countries all over the world have licensed the drug for medical purposes, and a few are going still further (see article). Four American states have so far legalised its recreational use; little Uruguay will soon be joined by big, G7-member Canada in the legal-weed club. Parliaments from Mexico to South Africa are debating reforms of their own. + +Those (including this newspaper) who have argued that legalisation is better than prohibition will welcome the beginning of the end of the futile war on weed. Cannabis accounts for nearly half the $300 billion illegal narcotics market, and is the drug of choice for most of the world’s 250m illicit-drug users. Legalising it deprives organised crime of its single biggest source of income, while protecting and making honest citizens of consumers. + +Yet the repeal of prohibition marks the start of complex arguments about how to regulate cannabis. What sound like details for bureaucrats—how to tax it, which varieties to allow, who should sell it and to whom—are questions that force policymakers to decide which of legalisation’s competing aims they value most. Trailblazers like Canada are writing rules that the rest of the world will copy; once laid down, they will be hard to uproot. Getting these decisions right will ultimately determine whether legalisation succeeds or fails. + +Have your hash cake and eat it + +Legalisation’s proponents are an odd mix of libertarians, who want to maximise personal and commercial freedom, and conservatives, who grasp that prohibition is less effective than pragmatic legalisation and regulation. The hippies and hardliners created a powerful alliance for legalisation. But when asked to say exactly how the cannabis trade should work—at what rate to set taxes or whether to place limits on consumption, for instance—they can find themselves at odds. + +Libertarians may ask why cannabis, which has no known lethal dose, should be regulated at all for adults who can make free, informed decisions. There are two reasons for care. First, cannabis appears to induce dependency in a minority of users, meaning the decision whether to light up is not a free one. Second, cannabis’s illegality means that the research on its long-term effects is hazy, so even the most informed decision is based on incomplete information. When decisions are neither always free nor fully informed, the state is justified in steering consumers away, as it does from alcohol and tobacco. + +Hence the libertarians must cede ground. States can tax users to deter consumption—though not so much as to make consumers turn first to the untaxed black market. The “right” level of tax will depend on a country’s circumstances. In Latin America, where abuse is rare and the black market is bloody and powerful, governments should keep prices low. In the rich world, where problem use is more common and drug-dealers are a nuisance rather than a threat to national security, prices could be higher. One model is the United States after Prohibition: alcohol taxes were set low at first, to drive out the bootleggers; later, with the Mafia gone, they were ramped up. + +A similar trade-off applies when determining what products to allow. Cannabis no longer means just joints. Legal entrepreneurs have cooked up pot-laced food and drink, reaching customers who might have avoided smoking the stuff. Ultra-strong “concentrates” are on offer to be inhaled or swallowed. Edibles and stronger strains help put the illegal dealers out of business, but they also risk encouraging more people to take the drug, and in stronger forms. The starting-point should be to legalise only what is already available on the black market. That would mean capping or taxing potency, much as spirits are taxed more steeply and are less available than beer. Again, the mix will vary. Europe may be able to ban concentrates. America already has a taste for them. If the product were outlawed there the mob would gladly step in. + +In one respect, governments should be decidedly illiberal. Advertising is largely absent in the underworld, but in the legal world it could stimulate vast new demand. It should be banned. Likewise, alluring packaging and products, such as cannabis sweets that would appeal to children, should be outlawed, just as many countries outlaw flavoured cigarettes and alcohol-spiked sweets. The state should use the tax system and public education to promote the least harmful ways of getting high. The legal market has already created pot’s answer to the e-cigarette, which reduces the damage done by smoke to lungs. + +In America the federal ban on cannabis means the task of writing its first regulations has fallen to overstretched civil servants in a few small states. Testing potency, setting safe-driving limits and solving a hundred other puzzles is no easier when the federal agencies that would normally advise them (such as the Food and Drug Administration, the world’s most advanced pharmaceutical regulator) are sitting on their hands. And the absence of federal curbs on pot advertising means that the drug is more widely promoted than tobacco, by companies pleading the First Amendment. The federal government’s wait-and-see policy sounds prudent; in fact it is irresponsible. + +Be cautious, but be bold + +Campaigners for and against legalisation need to adjust to the new reality, too. Those who would rather ban the drug should stop flogging the dead horse of prohibition and start campaigning for versions of legalisation that do the least harm (just as the temperance movement these days lobbies for higher taxes on booze, rather than a ban). Legalisers, meanwhile, should open their eyes to the fact that the legal marijuana industry, which until now has only had to prove itself more worthy than organised criminals, now needs as much scrutiny as the other “sin” industries that defend their turf jealously. Rather than one day having to take on Big Cannabis, it would be better to get policy on pot right from the start. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21692881-argument-legalisation-cannabis-has-been-won-now-difficult-bit-right/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Hong Kong + +Wounded society + +Violent unrest in Hong Kong suggests a need for political cures + +Feb 13th 2016 | From the print edition + + + +ON SOCIAL media the rioting that erupted in Hong Kong on February 8th has been dressed up as a righteous political protest: “#FishballRevolution” is the hashtag used to discuss the violence that racked a working-class district of the city for ten hours, resulting in injuries to 124 people, including 90 police officers (see article). The mayhem was triggered by reports that officials were trying to clear away illegal food stalls selling fishballs, a local delicacy. + +In no sense was the violence righteous. Most Hong Kong residents were appalled. Their city is renowned for the peacefulness of its many protests. In an unusually prolonged outbreak of unrest late in 2014, known as the Umbrella Movement, pro-democracy protesters mostly remained on good terms with police. Not since the 1960s, during the madness of Mao’s Cultural Revolution in mainland China, have the territory’s streets seen such bloodshed. + +Nonetheless, #FishballRevolution was undeniably political. Activists from a group called Hong Kong Indigenous, which stresses Hong Kong’s separateness from mainland China, were involved in the mêlée. Their pretext was the protection of a cherished tradition—eating from food stalls during the Chinese new-year holiday—from zealous officialdom. + +Hong Kong Indigenous is a fringe group. Officials will be tempted to dismiss its resort to violence as an aberration over a triviality. In fact the central government in Beijing, and that of Hong Kong, should see what happened as evidence of social and political discontent. They have a role in putting it right. + +When the Umbrella Movement eventually sputtered to an end in December 2014, both governments hoped that the public’s misgivings would abate. China had refrained from leaning on Hong Kong’s government to follow up its tear-gas assaults on the Umbrella protesters with even tougher measures and the tactic was quickly abandoned. But China also turned a deaf ear to the demonstrators’ demands for fully democratic elections for the territory’s leadership. Leung Chun-ying, the unpopular chief executive, showed no willingness to explain the protesters’ anxieties to his overlords in Beijing. + +As a result, resentment towards officials has grown. The emergence of radical groups such as Hong Kong Indigenous is an extreme manifestation of the simmering discontent. Fears of China’s influence are evident even in debates about building transport links with the mainland (see article). Anxieties have been fuelled by the apparent abduction in recent months of five Hong Kong booksellers by Chinese agents—three while visiting mainland China, one from a resort in Thailand and another from Hong Kong itself. Many suspect that the men were “disappeared” because of plans to publish a tell-tale book about China’s president, Xi Jinping. + +A fine kettle of fishballs + +The months ahead in Hong Kong will not be calm. Elections will be held this year for the Legislative Council; and there will be a (rigged) election in 2017 for the chief executive. Mr Leung could help reduce tensions by launching a thorough investigation of the recent violence, including its social causes. Young people are concerned not just about high politics, but also about everyday issues such as unemployment and house prices. But it is China’s government that most urgently needs to act: by releasing the booksellers, apologising for their treatment and heeding calls for political reform. Above all, it needs to recognise that its “one country, two systems” formula depends on preserving Hong Kong’s freewheeling way of life. It should seek to persuade the people of Hong Kong to see themselves as Chinese through attraction, not intimidation. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21692880-violent-unrest-hong-kong-suggests-need-political-cures-wounded-society/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +European banks + +Borrowed time + +It has been a traumatic week for European banks. Their problems run deepest in Italy + +Feb 13th 2016 | From the print edition + + + +FOR those who worry that a repeat of the crisis of 2007-08 is imminent, this week brought fresh omens. Shares of big banks tumbled; despite a mid-week rally, American lenders are down by 19% this year, European ones by 24% (see article). The cost of insuring banks’ debts against default rose sharply, especially in Europe. The boss of Deutsche Bank felt obliged to declare that the institution he runs is “absolutely rock solid”; Germany’s finance minister professed to have no concerns (thereby adding to the concerns). This is not 2008: big banks are not about to topple. But there are reasons to worry, and many of them converge on one country. + +Start with the better news. Banks are more strongly capitalised than they were. Even in Europe, where lenders have been slower than their American counterparts to raise capital, banks have plumped up their core equity cushions from an average of 9% in 2009 to 12.5% in 2015. Managers at European banks are making a renewed effort to adjust to the post-crisis landscape. New rules on everything from capital to liquidity are forcing them to change. John Cryan, Deutsche’s newish co-chief executive, was brought in to trim its investment bank. He is jettisoning whole divisions, and suspended the dividend this year and last. Credit Suisse is undergoing similar surgery. Just now, this is weighing on the banks’ share prices. Yet, however painful for investors, the sensible goal is ultimately to create slimmer, safer, more profitable outfits. + +Also salutary, if painful, is how investors in bank debt are coming to understand that they bear greater risk than they did. New European rules that came fully into force at the start of this year stipulate that troubled banks must deal with capital shortfalls by “bailing in” holders of bank bonds before any call is made on the taxpayer. The chance that bondholders might lose money suddenly seems more real. The turmoil at Deutsche this week stemmed partly from fear that the bank might struggle to pay interest next year on a type of bond that is designed to act as a buffer in a crisis (see article). There are some design flaws in the bail-in regime, but the possibility that European banks are at last repairing themselves at a cost to their investors is the silver lining to this week’s spasms. + +The clouds, alas, still loom. One source of anxiety is the health of the world economy. The factors that spook markets more broadly—the slowdown in China, plunging commodity prices and indebted energy firms, political upheaval from Greece to New Hampshire—all weigh heavily on banks in particular. Banks do well when the economies they serve are growing, and miserably when they are not. + +The receding prospect of higher interest rates leaves American banks with less hope of widening the margin between the rates they pay depositors and what they charge for loans. In Japan, where bank shares have fallen by 24% this month, and Europe central banks have imposed negative rates, in effect levying a fee on some reserves—one that banks have not yet been able to pass on to depositors. With the economic outlook growing gloomier, margins being squeezed and restructuring costs still hitting profits, investors have good reason to fret. + +Worse, some countries appear to have taken so long to deal with their banks that they will now struggle to clean them up at all. The IMF reckons that the total amount of non-performing debt in Europe was around €1 trillion ($1.13 trillion) at the end of 2014. Bail-in is an especially ugly prospect in countries where bank debt is owned not only by diversified financial institutions but also by local retail investors. Under such conditions, politicians may find that they cannot force the cost of cleaning up balance-sheets on voters without causing uproar. + +Rome is where the hurt is + +No country is more impaled on this dilemma than Italy. The gross value of non-performing loans makes up a whopping 18% of their total lending; retail investors own some €200 billion of bank bonds, equivalent to 12% of GDP. A government plan to buy bad debts from the banks at close to face value would fall foul of European rules against “state aid”. But selling the loans at a significant discount would force Italian banks to recognise losses, some of which could be borne by retail investors. The prime minister, Matteo Renzi, headed down this road late last year, when the efforts to save four small banks clobbered the savings of individual Italians and seemingly resulted in a high-profile suicide. He will not want to do so again. + +The European Union and the Italian government recently agreed on a half-baked alternative to bail-in, though few think it will cleanse banks’ balance-sheets. Instead Italy seems trapped between the rock of hurting small savers and the hard place of a banking system strangled by bad debts. If Mr Renzi cannot negotiate his way round the new rules on bail-in, Italy’s banks and economy risk years of more stagnation, poisoning relations with the EU. Behind this week’s banking headlines is the threat of something very bad coming out of Italy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21692879-it-has-been-traumatic-week-european-banks-their-problems-run-deepest-italy-borrowed/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Travel in Africa + +Let Africans fly + +Air travel in Africa is needlessly hard and costly. Open skies would make it cheaper + +Feb 13th 2016 | From the print edition + + + +FEW places still capture the romance (and frustration) of the early days of flight quite as Africa does. Although air travel in the continent is safer and more common than ever before (see page 53), it still has some charming anachronisms. In Nigeria everyone applauds when the plane touches down. On tiny propeller-driven planes in Botswana the cabin attendants hand you a little bag of biltong, the dried meat that once fed people on long overland treks. In Tanzania, where on some flights almost half the passengers are taking to the skies for the first time, many of the faces in the cabin betray a sense of wonder tinged with fear. + +Yet African airlines feel like a prop-blast from the past in regrettable ways, too. In most places, schedules are about as reliable as they were when planes could take off or land only in clear weather. Tickets are costly. Routes are convoluted: a passenger wanting to fly from Algiers to Lagos may have to go via Europe, turning a four-and-a-half-hour journey into one that takes at least nine hours. Most airlines are state-owned and protected from competition. Like a lot of national carriers elsewhere, they tend to be chronically unprofitable and to need frequent bail-outs from taxpayers. + +Across Africa, airlines wanting to fly new routes from one country to another need the agreement of both governments first. Getting this can take years of lobbying and, in some cases, bribes. If the airline is not owned by one of the two states, its chances of winning permission nosedive. Fastjet, a London-listed low-cost carrier with operations across Africa, had to wait three years for a green light to fly between Tanzania and neighbouring Kenya. Zimbabwe recently announced that it would not let any airline besides its national carrier fly from Harare to London—although Air Zimbabwe does not currently service this route, for fear that as soon as its planes land they will be impounded by creditors. + +Closed markets carry jumbo-sized costs. It is not just that badly run African state airlines lose money ($300m last year, or $3.84 for every airline ticket sold on the continent). Far bigger are the opportunity costs. Lousy air links inhibit trade, exports and investment. In many parts of the world air travel grows about twice as fast as GDP. In Africa it has been expanding by about 5% a year, which is slower than the 6% or so that economic growth has averaged over the past decade. + +The lesson from other parts of the world is that when markets are freed, fares fall. This stimulates a huge increase in air travel and gives a boost to all the businesses that depend on mobility. In African countries that have liberalised a bit, this has indeed happened: after a bilateral open-skies deal, fares between South Africa and Zambia fell by almost 40% and passenger numbers rose nearly as much. After Morocco opened its market to European airlines in 2005, the number of passengers jumped by 160% and the number of routes more than tripled, from 83 to 309 in eight years. + +A study commissioned by the International Air Transport Association (IATA), a club of big airlines, estimates that if just 12 of Africa’s bigger economies opened their skies to one another, fares would fall by more than a third and traffic between them would soar by 81%, to roughly 11m passengers. More than 155,000 new jobs would be created, and $1.3 billion would be added to GDP. This may well be an underestimate, given Africa’s vast size and sparse, shoddy road network, which is about a fifth as dense as the world average and mostly unpaved. Where air travel expands, so do unexpected new industries, such as growing roses in Kenya for export to Europe. + +Fly freedom + +In 1988 most African governments signed up to the Yamoussoukro Declaration, pledging to open their skies. To date not one has done so fully (although some, such as South Africa, have opened up a lot). Rather than encouraging competition, most African leaders seem more concerned with mollycoddling their bust national carriers. This provides jobs for pals and jets that can be commandeered for presidential shopping trips to Paris. But it is terrible for Africa. The continent will struggle to take off economically while its people are stuck on the runway. Time to let Africans fly. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21692882-air-travel-africa-needlessly-hard-and-costly-open-skies-would-make-it-cheaper-let-africans/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Mekong river + +Damned if you do + +Governments should stop building dams on the mother of rivers + +Feb 13th 2016 | From the print edition + + + +THE greatest of all South-East Asia’s waterways and the world’s 12th-longest river, the Mekong, is a natural wonder that ties together the destinies of half a dozen countries. Born from snowmelt at over 17,000 feet (5,200 metres), it bolts off the Tibetan plateau like a runaway horse; by the time it leaves China it is starting to slow and spread. When it reaches Cambodia, via Laos, it is tropical and ample and, with the monsoon rains, parts of it curiously change the direction of their flow. Farther down, it reaches the South China Sea through a filigree delta. The Mekong watershed nurtures extraordinary biodiversity, with new species of plants and animals discovered every year. It has also nurtured humans. Tens of millions of people—much of the population of Laos, Cambodia, Thailand and Vietnam—depend on the Mekong. Its fish are their protein and its delta is the world’s rice basket. No wonder its name, in Thai or Lao, means “mother of rivers”. + +Planners think the mother has one more gift to give: hydropower. China has 14 dams planned or under construction on its stretch of the Mekong in Yunnan province, joining six already built. Today the river is undammed below China, but that will soon change. Laos has nine dams planned or under way; Cambodia has two. Dozens more dams for tributaries are on the drawing board. + +To the planners, the case for building dams is obvious: they generate electricity and much-needed cash. Poor, landlocked Laos wants to become the dynamo of South-East Asia, selling its energy to Thailand and others; it dreams of hydropower becoming its biggest earner in just a decade. Long wretchedly poor, the Mekong region is now booming. Hydropower will help meet its energy demands, which are expected to double over the next ten years. + +Yet there are flaws in the planners’ case. For one, they overestimate the river’s potential. At most, says the Mekong River Commission (MRC), the intergovernmental body charged with co-ordinating the river’s management, dams will meet just 8% of the lower Mekong basin’s projected power needs. + +Worse, the planners underestimate the harm that dams will do to ecosystems as well as to food security. As our essay on the Mekong points out (see article), dams threaten the stocks of migratory fish on which many South-East Asians depend. Farmland will either become less productive because less sediment reaches it from upstream, or disappear under rising river levels or, in the delta, suffer incursions of salt water. The dams, in other words, come at a high environmental cost, imperil food security and, far from increasing overall prosperity, promise to aggravate the poverty of millions of people. They may also increase regional tensions. China and Laos will reap most of the hydropower benefits, while downstream Cambodia and Vietnam pay most of the price. + +The biggest problem with the dam-building schemes is their lack of co-ordination. An individual dam, high up the river system, would not be a big worry, especially if it was fitted with ladders for migrating fish and the like. But the question is not what one dam will do. It is what 25 of them will do, and how each will affect the next. The dams’ sponsors are not thinking about that. + +Just keep it rollin’ along + +Isn’t this the MRC’s task? Well, yes, and it tries to do its job. But it has no enforcement power, struggles to promote good river management and is woefully short of cash. Besides, China, the Mekong’s biggest threat, refuses to be a member. The MRC proposes a ten-year moratorium on dam-building, and has urged studies of hydropower projects, such as run-of-the-river schemes, that would not block the Mekong’s flow. That is prudent advice; but few governments are listening. The scale of the harm that damming the Mekong might cause is huge, and would be irreversible. Without giving enough thought to what they are about to undertake, governments are messing dangerously with the mother of all rivers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21692885-governments-should-stop-building-dams-mother-rivers-damned-if-you-do/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +Arab investment, electricity, restrooms, batteries, citizenship, gas, dedicated subscriber, punk, collaboration: Letters to the editor + + + + + +Articles Sections Next + +Arab investment, electricity, restrooms, batteries, citizenship, gas, dedicated subscriber, punk, collaboration + +Letters to the editor + +Feb 13th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Property deals in Bosnia + +I’d like to add some points to your article on Arab investment in Bosnia (“Ottoman comfort”, January 23rd). Land-development deals are being made in a completely non-transparent manner. Officials with the necessary party and foreign ties are making favourable deals with Arab investors without input from the broader community. Some of the land being sold is public, and municipal officials are playing fast and loose with zoning regulations to clinch deals. There are reports that private landowners (often non-Muslims who remained after the war in what are now majority-Muslim areas) are being pressured to sell as foreign buyers seek large land holdings. + +Beyond the value of developments catering to other Arab buyers, the aim of these investments is seemingly less about profit and more about longer-term presence and influence. The only Bosnians “delighted” about these deals are the elites who directly profit from them. The residents in this still-divided society are troubled by opaque terms that will result in gated communities, catering to thousands of foreign nationals. There is a marked difference between favourable globalisation and open markets, and the narrow economic fruits of poor governance, weak rule of law and corruption. + +VALERY PERRY + +Democratisation Policy Council + +Sarajevo + + + + + +African energy + +Regarding your article on stalled electrification plans in Africa (“Power hungry”, January 9th), electricity-distribution companies across the continent are generally state-owned and governments are usually the largest electricity consumers. They are the main culprits for either late or non-payment. What does a state-owned electricity company do when its owner and biggest customer doesn’t pay? The generators of that energy are then not paid or paid in arrears. The shortfall in generation is plugged using emergency diesel generators at four times the cost of grid power. + +This is symptomatic of a greater failure in sub-Saharan energy markets. Schemes such as Barack Obama’s Power Africa plan are welcome, but the focus should be on reforming markets and recapitalising and privatising distribution companies under qualified, accountable management. A functioning power market will attract foreign capital for expansion, which is vital for broader economic growth and poverty alleviation in Africa. + +DIARMUID TWOMEY + +Chief executive + +EMPower + +Dublin + + + + + +The battle of backwater loos + +The debate over making restrooms inclusive to transgender people is too narrow (“Restroom rumpus”, January 30th). Rethinking restrooms for all genders would better serve families by, for example, letting a father with a daughter or a caregiver looking after someone from the opposite sex take them to the toilet. Public restrooms don’t meet modern society’s needs in many ways. + +JENNIFER GEREND + +Wiltingen, Germany + + + + + +Batteries not included + +* I was surprised that you cited lithium-ion batteries as the “technology of our time” (“A plug for the battery”, January 16th). A consensus is emerging within the industry that electricity storage will require a number of complementary technologies. Where there is no one dominant technology, the suitability of a storage system depends on how and where it is going to be used. You highlighted the limitations of lithium in storing grid-scale power which alternatives can address. Flow batteries, for example, store energy in tanks of liquid electrolyte and so neatly sidestep this problem, since more energy can be stored through a simple increase in tank size. Vanadium, the most commonly used metal in flow battery technology, is a significantly more plentiful element, and therefore does not suffer from the supply restrictions which you rightly noted are driving up prices. Based upon US Geological Survey resource data and current usage, we have 1000 years supply of vanadium. Whilst lithium has enjoyed success in short duration applications, it is longer duration services that will drive the de-carbonisation agenda and smooth imbalances between generation and consumption. I would suggest that the flow battery is the real “technology of our time” and that it should not be eclipsed by its younger, and often noisier, cousin. + + + +SCOTT McGREGOR + +CEO, redT Energy + +London + + + +Natural-born thriller + +Although Ted Cruz is an American citizen by virtue of his mother, it is simply not the case that “his eligibility to be president is beyond serious doubt” (“Outsiders’ chance”, January 30th). Mr Cruz was born in Canada. The phrasing in Article II of the constitution requires that “No person except a natural-born citizen… shall be eligible for the office of president.” Neither the constitution nor statutory law defines “natural born”. + +As a former foreign-service officer, I point you to volume seven of the “Foreign Affairs Manual”, section 1131.6-2: “It has never been determined definitively by a court whether a person who acquired US citizenship by birth abroad to US citizens is a natural-born citizen within the meaning of Article II of the constitution and, therefore, eligible for the presidency.” Thus, “the fact that someone is a natural-born citizen pursuant to a statute does not necessarily imply that he or she is such a citizen for constitutional purposes.” + +HOWIE MUIR + +Nevada City, California + + + + + +In the pipeline + +* Regarding the global market for natural gas (“Step on it”, January 30th) one area to watch is the development of a liquid wholesale natural gas in China. Domestic consumption is growing and there is diversity and competition of supply sources. Important policy changes are forthcoming from the National Development and Reform Commission, including third-party access to gas pipelines and potential pipeline sales. The infrastructure is being restructured. China could finally be the answer to the “Asian Gas Index”, providing a long awaited reference for LNG contracts in the region, and playing the role of the Henry Hub index in the West. + + + +CHUNG YEN WONG + +Strategy manager + +Accenture Trading + +Singapore + + + + + +An Economist reader passes + +I am writing to tell you of the death of Martin Bud, possibly The Economist’s longest-ever subscriber. He received his subscription on his 18th birthday in January 1938, and his last copy was delivered after more than 78 years of uninterrupted readership. His life was in many ways a mirror of the 20th century. + +Born Jewish in Weimar Berlin to the family of a self-made economist and banker, his mother died of appendicitis when he was four, in the age before antibiotics. Returning from school one day he found himself between a great crowd and a motorcade, face to face with Hitler. His family escaped as refugees to England in 1935, where he qualified as an accountant with PriceWaterhouse. His father stopped him from joining the Republicans in the Spanish civil war and later the British army. + +At the family firm, ENM, he developed sophisticated research tools for sales forecasting, which would later form the basis for some celebrated work by the music industry on modelling the long tail of digital consumption. In the 1960s he pioneered the use of microelectronics by British industry. + +The years after ENM’s purchase were difficult, as this heir to the German industrial tradition chafed at what he felt was the plutocratic, lax and irrational management of the new owners. He later supplied equipment to many of the world’s state lotteries, and enjoyed working in an industry which thrived by applying rational reasoning to the irrational. His wife of 58 years, Hanna, was a research chemist with Margaret Thatcher at J. Lyons Research. In 2009 the producers of Harry Potter wanted to use his house as a location. He conducted negotiations for the complex contract entirely in verse. + +ANDREW BUD + +London + + + + + +Pioneers of punk + +More than a few elderly New Yorkers would dispute whether the “place of punk rock’s birth in 1976” was the King’s Road in London (“Punk reaches middle age”, January 30th). The Ramones, were playing punk rock in New York in 1974. When I lived in London in 1978 my landlady complained that punk was an evil American influence. + +PETER WEVERKA + +San Francisco + + + + + +Death to the collaborators! + +Schumpeter is one smart dude for capturing the destructive underbelly of technology’s tidal wave of collaboration and consequent disruption (January 23rd). He would do well to read “The Circle” by Dave Eggers, a chilling story that would leave him even more despondent. + +RICHARD HETKE + +Hinsdale, Illinois + + + + + +Collaboration also allows ineffective employees to skirt responsibility. As the saying goes, meetings are the practical alternative to work. + +TIMOTHY KLAAS + +Winnipeg, Canada + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21692846-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Legalising cannabis: Reeferegulatory challenge + + + + + +Articles Sections Next + +Legalising cannabis + +Reeferegulatory challenge + +A growing number of countries are deciding to ditch prohibition. What comes next? + +Feb 13th 2016 | DENVER | From the print edition + + + +IN AN anonymous-looking building a few minutes’ drive from Denver International Airport, a bald chemotherapy patient and a pair of giggling tourists eye the stock on display. Reeking packets of mossy green buds—Girl Scout Cookies, KoolAid Kush, Power Cheese—sit alongside cabinets of chocolates and chilled drinks. In a warehouse behind the shop pointy-leaved plants bask in the artificial light of two-storey growing rooms. Sally Vander Veer, the president of Medicine Man, which runs this dispensary, reckons the inventory is worth about $4m. + +America, and the world, are going to see a lot more such establishments. Since California’s voters legalised the sale of marijuana for medical use in 1996, 22 more states, plus the District of Columbia, have followed suit; in a year’s time the number is likely to be nearer 30. Sales to cannabis “patients” whose conditions range from the serious to the notional are also legal elsewhere in the Americas (Colombia is among the latest to license the drug) and in much of Europe. On February 10th Australia announced similar plans. + + + +Now a growing number of jurisdictions are legalising the sale of cannabis for pure pleasure—or impure, if you prefer. In 2014 the American states of Colorado and Washington began sales of recreational weed; Oregon followed suit last October and Alaska will soon join them. They are all places where the drug is already popular (see chart 1). Jamaica has legalised ganja for broadly defined religious purposes. Spain allows users to grow and buy weed through small collectives. Uruguay expects to begin non-medicinal sales through pharmacies by August. + + + +Canada’s government plans to legalise cannabis next year, making it the first G7 country to do so. But it may not be the largest pot economy for long; California is one of several states where ballot initiatives to legalise cannabis could well pass in America’s November elections. A majority of Americans are in favour of such changes (see chart 2). + +Legalisers argue that regulated markets protect consumers, save the police money, raise revenues and put criminals out of business as well as extending freedom. Though it will be years before some of these claims can be tested, the initial results are encouraging: a big bite has been taken out of the mafia’s market, thousands of young people have been spared criminal records and hundreds of millions of dollars have been legitimately earned and taxed. There has so far been no explosion in consumption, nor of drug-related crime. + +To get the most of these benefits, though, requires more than just legalisation. To live outside the law, Bob Dylan memorably if unconvincingly claimed, you must be honest; to live inside it you must be regulated. Ms Vander Veer points to a “two-inch thick” book of rules applicable to Medicine Man’s business. + +Such rules should depend on which of legalisation’s benefits a jurisdiction wants to prioritise and what harms it wants to minimise. The first consideration is how much protection users need. As far as anyone has been able to establish (and some have tried very hard indeed) it is as good as impossible to die of a marijuana overdose. But the drug has downsides. Being stoned can lead to other calamities: in the past two years Colorado has seen three deaths associated with cannabis use (one fall, one suicide and one alleged murder, in which the defendant claims the pot made him do it). There may have been more. Colorado has seen an increase in the proportion of drivers involved in accidents who test positive for the drug, though there has been no corresponding rise in traffic fatalities. + +The chronic harm done by the drug is still a matter for debate. Heavy cannabis use is associated with mental illness, but researchers struggle to establish the direction of causality; a tendency to mental illness may lead to drug use. It may also be the case that some are more susceptible to harm than others. + +Jonathan Caulkins of Carnegie Mellon University has found that cannabis users are more likely than alcohol drinkers to say the drug has caused them problems at work or at home. It is an imperfect comparison because most cannabis users are, by definition, lawbreakers, and therefore perhaps more prone to such problems. Nonetheless it is clear that pot is, in Mr Caulkins’ words, a “performance-degrading drug”. + +What’s more, some struggle to give it up: in America 14% of people who used pot in the past month meet the criteria by which doctors define dependence. As in the alcohol and tobacco markets, about 80% of consumption is accounted for by the heaviest-using 20% of users. Startlingly, Mr Caulkins calculates that in America more than half of all cannabis is consumed by people who are high for more than half their waking hours. + +To complicate matters, the public-health effects of cannabis should not be looked at in isolation. If taking up weed made people less likely to consume cigarettes or alcohol it might offer net benefits. But if people treat cannabis and other drugs as complements—that is, if doing more pot makes them smoke more tobacco or guzzle more alcohol—an increase in use could be a big public-health problem. + +No one yet knows which is more likely. A review of mostly American studies by the RAND Corporation, a think-tank, found mixed evidence on the relationship between cannabis and alcohol. Demand for tobacco seems to go up along with demand for cannabis, though the two are hard to separate because, in Europe at least, they are often smoked together. The data regarding other drugs are more limited. Proponents of the Dutch “coffee shop” system, which allows purchase and consumption in specific places, argue that legalisation keeps users away from dealers who may push them on to harder substances. And there is some evidence that cannabis functions as a substitute for prescription opioids, such as OxyContin, which kill 15,000 Americans each year. People used to worry that cigarettes were a “gateway” to cannabis, and that cannabis was in turn a gateway to hard drugs. It may be the reverse: cannabis could be a useful restraint on the abuse of opioids, but a dangerous pathway to tobacco. + +More bong for your buck + +Danger and harm are not in themselves a reason to make or keep things illegal. But the available evidence persuades many supporters of legalisation that cannabis consumption should still be discouraged. The simplest way to do so is to keep the drug expensive; children and heavy users, both good candidates for deterrence, are particularly likely to be cost sensitive. And keeping prices up through taxes has political appeal that goes beyond public health. Backers of California’s main legalisation measure make much of the annual $1 billion that could flow to state coffers. + +Setting the right level for the tax, though, is challenging. Go too low and you encourage use. Aim too high and you lose one of the other benefits of legalisation: closing down a criminal black market. + +Comparing Colorado and Washington illustrates the trade-off. Colorado has set its pot taxes fairly low, at 28% (including an existing sales tax). It has also taken a relaxed approach to licensing sellers; marijuana dispensaries outnumber Starbucks. Washington initially set its taxes higher, at an effective rate of 44%, and was much more conservative with licences for growers and vendors. That meant that when its legalisation effort got under way in 2014, the average retail price was about $25 per gram, compared with Colorado’s $15. The price of black-market weed (mostly an inferior product) in both states was around $10. + +The effect on crime seems to have been as one would predict. Colorado’s authorities reckon licensed sales—about 90 tonnes a year—now meet 70% of total estimated demand, with much of the rest covered by a “grey” market of legally home-grown pot illegally sold. In Washington licensed sales accounted for only about 30% of the market in 2014, according to Roger Roffman of the University of Washington. Washington’s large, untaxed and rather wild-west “medical” marijuana market accounts for a lot of the rest. Still, most agree that Colorado’s lower prices have done more to make life hard for organised crime. + +Uruguay also plans to set prices comparable to those that illegal dealers offer. “We intend to compete with the illicit market in price, quality and safety,” says Milton Romani, secretary-general of the National Drug Board. To avoid this competitively priced supply encouraging more use, the country will limit the amount that can be sold to any particular person over a month. In America, where such restrictions (along with the register of consumers needed to police them) would probably be rejected, it will be harder to stop prices for legal grass low enough to shut down the black market from also encouraging greater use. Indeed, since legalisation consumption in Colorado appears to have edged up a few percentage points among both adults and under-21s, who in theory shouldn’t be able to get hold of it at all; that said, a similar trend was apparent before legalisation, and the data are sparse. + +If, starved of sales, the black market shrinks beyond a point of no return, taxes could later go up, restoring the deterrent. There is precedent for this. When the prohibition of alcohol ended in 1933, Joseph Choate of America’s Federal Alcohol Control Administration recommended “keeping the tax burden on legal alcoholic beverages comparatively low in the earlier post-prohibition period in order to permit the legal industry to offer more severe competition to its illegal competitor.” After three years, he estimated, with the mob “driven from business, the tax burden could be gradually increased.” And so it was (see chart 3). + + + +Those taxes reflected the strength of what was for sale; taxing whiskey more than beer made sense as a deterrent to drunkenness. Here, so far, the regulation of cannabis lags behind. The levies on price or weight used by America’s legalising states are easy to administer, but could push consumers towards stronger strains. In the various lines sold by Medicine Man, for example, the concentration of tetrahydrocannabinol (THC), the chemical compound that gets you high, varies from 7% to over 20%. The prices, though, are mostly the same, and there is no difference in tax. Some like it weak, but on the whole, Ms Vander Veer says, the stronger varieties are what people ask for. If they cost no more, why not? The average potency on sale in Denver is now about 18%, roughly three times the strength of the smuggled Mexican weed that once dominated the market. + +Barbara Brohl, the head of Colorado’s Department of Revenue, says THC-based taxation is something the state may try in the future. But the speed with which the regulatory apparatus was set up—sales began just over a year after the ballot initiative passed in November 2012—meant that they had to move fast. “We’re building the airplane while we’re in the air,” she says. Uruguay, clear that it wants to be “a regulated market, not a free market”, as Mr Romani puts it, plans a more direct way of discouraging the stronger stuff. Dispensaries will sell just three government-approved strains of cannabis, their potencies ranging from 5% to 14%. + +Another issue for regulators is the increasing number of ways in which cannabis is consumed. The star performer of the legalised pot market is the “edibles” sector, which includes THC-laced chocolates, drinks, lollipops and gummy bears. There are also concentrated “tinctures” to be dropped onto the tongue and vaping products to be consumed through e-cigarettes. Foria, a California company, sells a THC-based personal lubricant (“For all my vagina knew, I was laying on one of San Diego’s fabulous beaches!” reads one testimonial). + +The popularity of these products looks set to grow; users appreciate the discretion with which they can be consumed, producers like the ease with which their production can be automated (no hand-picking of buds required). But edibles, in particular, make it easy to take more than intended. A hit on a joint kicks in quickly; cakes or drinks can take an hour or two. Inexperienced users sometimes have a square of chocolate, feel nothing and wolf down the rest of the bar—only to spend the next 12 hours believing they are under attack by spiders from Mars. + + + +The three cannabis-related deaths in Colorado all followed the consumption of edibles. Hospitals in the state also report seeing an increasing number of children who have eaten their parents’ grown-up gummy bears. In response the authorities have tightened their rules on packaging, demanding clearer labelling, childproof containers, and more obvious demarcation of portions. + +A second concern about new ways of taking the drug is that they could attract new customers. Ms Vander Veer says that edibles offer a “good way to get comfortable with how THC makes you feel”; women, older people and first-timers are particularly keen on them. If you see cannabis as a harmless high, this is not a problem. If you want to keep usage low, it is. + +The innovation seen to date is just a taste of what entrepreneurs might eventually dream up. On landing in Denver—which, uncoincidentally, is now the most popular spring-break destination for American students—you can call a limo from 420AirportPickup which will drive you to a dispensary and then let you smoke in the back while you cruise on to a cannabis-friendly hotel (some style themselves “bud ‘n’ breakfast”). You can take a marijuana cookery course, or sign up for joint-rolling lessons. Dispensaries offer coupons, loyalty points, happy hours and all the other tricks in the marketing book. + +Legalisation has also paved the way for better branding. Snoop Dogg, a rap artist, has launched a range of smartly packaged products called “Leafs by Snoop”. The estate of Bob Marley has lent its name to a range of “heirloom marijuana strains” supposedly smoked by the man himself. + +Roll up for the mystery tour + +Branding means advertising, which may itself promote use. Many in America would like to follow Uruguay’s example and ban all cannabis advertising, but the constitution stands in their way. When Colorado banned advertising in places where more than 30% of the audience is likely to be under-age cannabis companies objected on the grounds of their right to free speech, though the suit was later dropped. + +As well as moving into advertising, the industry is growing more professional in its lobbying. In legalisation initiatives the “Yes” side increasingly outspends the “No” side: in Alaska by four to one, in Oregon by more than 50 to one. Rich backers help—in California Sean Parker, an internet billionaire, has donated $1m to the cause. In some states, ballot initiatives have been heavily influenced by the very people who are hoping to sell the drugs once they are legalised. In November 2015 voters in Ohio soundly rejected a measure that would have granted a cannabis-cultivation oligopoly to the handful of firms that had backed it. + +Worries about regulatory capture will increase along with the size of the businesses standing to gain. Big alcohol and tobacco firms currently deny any interest in the industry. But they said the same in the 1960s and 1970s, a time when Philip Morris and British American Tobacco, it has since been revealed, were indeed looking at the market. Brendan Kennedy, the chief executive of Privateer Holdings, a private-equity firm focused on the marijuana industry, says that several alcohol distributors have invested in American cannabis firms. + +Even without such intervention big companies are likely to emerge. Sam Kamin, a law professor at Denver University who helped draft Colorado’s regulations, suspects that eventual federal legalisation, which would make interstate trade legal, could well see cannabis cultivation become something like the business of growing hops, virtually all of which come from Washington, Oregon and Idaho. Big farms supplying a national market would be much cheaper than the current local-warehouse model, driving local suppliers out of the market, or at least into a niche. + +The industry has so far been helped by the fact that many on the left who might normally campaign against selling harmful substances to young people are vocal supporters of legalisation. That could change with the growth of a business lobby that, although understanding that an explosion in demand would trigger a backlash, may have little long-term interest in restraint. The prospect of such a lobby could also serve as an incentive for states to take the initiative on legalisation, rather than waiting for their citizens to demand it. Fine-tuning Colorado’s regime, Mr Kamin says, has been made harder by the fact that the ballot of 2012 enshrined legalisation in the state constitution. Other states “might want [their rules] to be defined instead by legislation, not citizens’ initiative,” suggests Ms Brohl, the Colorado tax chief. + + + +Different places will legalise in different ways; some may never legalise at all; some will make mistakes they later think better of. But those that legalise early may prove to have a lasting influence well beyond their borders, establishing norms that last for a long while. It behoves them to think through what needs regulating, and what does not, with care. Over-regulation risks losing some of the main benefits of liberalisation. But as alcohol and tobacco show, tightening regimes at a later date can be very difficult indeed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21692873-growing-number-countries-are-deciding-ditch-prohibition-what-comes/print + + + + + +Articles Sections Next + + + + + +United States + + + + +New Hampshire and beyond: Trumped and Berned + +Bernie Sanders’ economic policy: A vote for what? + +Trump’s German roots: Kallstadt’s king + +The campaigns: Heard on the trail + +Libertarians: Live free, or try + +Climate change: Supreme emissions + +The defence budget: Mr Carter places his bets + +Lobsters: Shell shock + +Lexington: Rush-ing around + + + + + +Articles Sections Next + +New Hampshire and beyond + +Trumped and Berned + +A tycoon selling snake-oil and an aged leftie won the first primary. Oh dear + +Feb 13th 2016 | NASHUA, NEW HAMPSHIRE | From the print edition + + + +THE nativist rage Donald Trump is whooping up across America translates into actual votes—lots of them. So does the left-wing populism with which Bernie Sanders is thrilling an expanding chunk of the Democratic Party. These were the messages of the New Hampshire primary held on February 9th; and their repercussions, blown from the icy New England state down south and out west, where America’s quarrelsome primary contest moves to next, could be tremendous. + +Mr Trump hoovered up 35% of the vote in New Hampshire. John Kasich, the governor of Ohio, came second with 16%. That means the Republican establishment still has no answer to Mr Trump’s assault on conservative ideology and their party’s good name; or to Ted Cruz, an ultra-conservative troublemaker who won in Iowa and came third in New Hampshire. Mr Kasich is too pragmatic and, in a fraught time, too genial for most Republican primary voters. Marco Rubio, a likelier establishment champion who was widely expected to surge from the mainstream pack, did abysmally. He won less than 11%, which put him fifth behind Jeb Bush, the ridiculed scion of a divisive dynasty. + +Democratic Party bosses were similarly confounded. They think Mr Sanders could not win a general election; they are probably right. The veteran senator vows to break up banks, make college education free, squeeze the pips out of rich people, then squeeze them again. He calls himself a democratic socialist; most Americans hear only the second word, and shudder. Yet he won 60% of the vote in New Hampshire, which represented one of the biggest victories in a contested Democratic primary—and trouble for Hillary Clinton. + +Mr Sanders trounced the Democratic front-runner in almost every voter group. Exit polls suggested he won over 80% of younger voters, which was startling, if predicted, given how college crowds love to “feel the Bern”. He also beat Mrs Clinton among men and women, college graduates and non-graduates, those with guns and those without. The only voters who mainly stayed loyal to Mrs Clinton were high-earners and those aged 65 and over. + +At an almost-hysterically upbeat defeat rally, Mrs Clinton acknowledged that she needed to do more to win the love of youngsters. But it is the votes of Hispanics and, especially, blacks that will now concern her most. African-Americans, who have hitherto favoured Mrs Clinton over Mr Sanders by 3:1, represent half of all Democrats in South Carolina, which will hold its primary on February 27th. So long as Mrs Clinton can keep them onside, she will probably win the nomination. Yet, given the immensity of Mr Sanders’s victory, that seems a bit less certain than it did. + +He had a couple of big advantages in New Hampshire. It is crammed with white lefties, his main target audience, and next-door to Vermont, which he has represented in Washington for a quarter of a century. Yet the result also showed how fundamental Mrs Clinton’s weaknesses are. She represents continuity, and voters want change; exit polls in New Hampshire suggest that 42% of Democrats want a more left-wing president than Barack Obama. They, naturally, are another group Mr Sanders swept. He promises a “political revolution”; Mrs Clinton pledges to secure Mr Obama’s legacy. With a little tinkering, that should not be a losing promise; the president is extremely popular among Democrats. The trouble for Mrs Clinton is that, despite her cool head, tough streak and ironclad grip on policy, she lacks the subtlety and easy charisma that lesser politicians would deploy to change gears. + +She has charm, but of a programmatic sort. Having failed, so far, to fire up many women with the promise of America’s first woman president, she is struggling even to get them to like her. A persistent controversy over her use of a private e-mail account as secretary of state has made that harder, by playing to her reputation for being rather shifty. Her supporters decry both, reputation and scandal, as malicious Republican slander, of which there has been plenty aimed at Mrs Clinton. But the impression endures, and there is little reason to think black and Hispanic voters, whom Mr Sanders is about to lovebomb with revolutionary promises, will be immune to it. “I worry that Hillary is dishonest,” said Reina Rodriguez, a retired teacher emerging from a polling station in the New Hampshire town of Nashua, after casting her vote for Mr Sanders. She thought the senator “a beautiful politician, a true democrat”. Ominously for Mrs Clinton, she was speaking in Spanish. + +If Mrs Clinton must rethink, her old New York buddy, Mr Trump, can rejoice. In Iowa, the property tycoon performed less well than opinion polls suggested he should. That implied his support was flaky, because the working-class whites who flock to his rallies, to hear him crack jokes, insult people and promise border walls, do not flock to vote. Mr Trump did little to salve that concern. He campaigned less in New Hampshire than almost any of his rivals, spending only 30 days in the state and little money. Much of what he spent went on aviation fuel and red baseball caps emblazoned with his Reaganite slogan, “Make America Great Again”. His campaign had the look of a Potemkin effort, cobbled together in a half-hearted bid to show journalists he was serious. Mr Bush, by comparison, spent 57 days in the state; he and the super-PAC supporting him, Right to Rise, spent $30m on television advertising there, chiefly to attack his mainstream rivals, Mr Rubio, Mr Kasich and Chris Christie, the governor of New Jersey. + + + +America’s primary agenda: our interactive 2016 election calendar + +For Republican patricians and moneymen, Mr Rubio’s failure was an even bigger shock than Mr Trump’s win. Had the senator from Florida merely repeated his performance in Iowa, by beating his mainstream rivals convincingly, he would have been saluted as the man to foil Messrs Trump and Cruz—and his campaign deluged with money. That could still happen. Mr Rubio is suffering from a perception that he is too green to be president. An ill-timed gaffe in a televised debate on February 6th, in which Mr Rubio responded to Mr Christie’s accusation that he was rote-learned and untested by robotically repeating a rehearsed attack on Mr Obama, appears to have reinforced that. Yet he remains clever and attractive—and if he is not to be the mainstream Republican champion, it is not at all clear who is. + +Mr Bush has money, but seems as alien to the Republican mood as Mr Kasich. Mr Christie, who won a pathetic 7% of the New Hampshire vote, has dropped out. Worse for the patricians, the identity of the putative anti-Trump, anti-Cruz candidate, for whom about 40% of the primary vote is available, now cannot be settled until after the party’s South Carolina primary on February 20th. That is excellent for Mr Trump and Mr Cruz, who spent similar time and less money in New Hampshire than the Donald. They can concentrate on building their campaigns and racking up delegates. Mr Rubio and the rest are meanwhile locked in a mutually enfeebling brawl. + +Not that any of them is likely to do particularly well in South Carolina. Opinion polls put Mr Trump just as far ahead there as he was in New Hampshire, with 36% of the vote. They put Mr Cruz, with 20%, securely in second place. All the mainstreamers are lagging far behind. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21692893-tycoon-selling-snake-oil-and-aged-leftie-won-first-primary-oh-dear-trumped-and/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Bernie Sanders’ economic policy + +A vote for what? + +Health-care costs and high taxes would sink the Sanders economic plan + +Feb 13th 2016 | WASHINGTON, DC | From the print edition + +Power to the tax planners + +HOW radical is Bernie Sanders? The self-declared socialist likes to remind voters that many of his policies—say, on health care, or on paid family leave—simply copy most of the rest of the rich world. Compared with left-wingers there—Jeremy Corbyn in Britain, for instance—Mr Sanders is no socialist. It is freewheeling America which puts Mr Sanders on the far-left. The truly socialist thing about Mr Sanders’s admirably detailed economic plan is not its goals. It is that it is completely unworkable. + +Under President Sanders taxes, particularly on high earners, would soar. Mr Sanders wants to make public universities free, increase infrastructure spending and expand Social Security (pensions). His most ambitious policy calls for the government, rather than private insurers, to pay health-care bills. That would cost $14 trillion over a decade, requiring new taxes on most workers worth 8.4% of their income. + +Expanding Social Security means a further big tax rise for those making more than $250,000. Income-tax rates would become more steeply progressive, too. Totting up all the levies, the top marginal rate of federal tax—which would be levied on households earning more than $10m—would rise to about 67%. (Adding in state taxes would take it higher still.) + +That is not without precedent: in the 1970s, the top rate was around 70%. This would probably dent growth, and it is at the high end of estimates of the rate which maximises revenue. Taxes might have to go higher still. Mr Sanders plans to tax capital gains as ordinary income. High earners can decide whether or not to sell assets, making this tax easy to dodge. Partly because of this, the Committee for a Responsible Federal Budget, an advocacy group, reckons Mr Sanders has highballed his revenue estimates by $3 trillion over a decade. + +Mr Sanders knows that soaking the rich can get him only so far. He is also banking on health-care costs tumbling. Health spending per person is two-and-a-half times the average for the OECD, a club of mostly rich countries. The immense bargaining power of a government buyer could help to control waste. Medicare, government-funded health insurance for the over-65s, already provides care at a lower cost than private insurers. Mr Sanders predicts $6.3 trillion of savings over a decade. + +That looks like wishful thinking. A costing of Mr Sanders’s plans by Kenneth Thorpe of Emory University, using more conservative assumptions, found that the plan was underfunded by nearly $1.1 trillion (or 6% of GDP) per year. If Mr Thorpe is right, higher taxes will be required to make the sums add up. In 2014 Mr Sanders’ own state, Vermont, abandoned a plan for a single-payer system on the basis that the required tax rises would be too great. + +Getting health-care costs down is easier than it sounds. Mr Sanders hopes to save a bucketload on administration. But 20% of health spending flows to doctors, nurses and the like. A study published in Health Affairs, a journal, in June 2015 found that the average nurse earns about 40% more, and the average doctor about 50% more, than comparably educated and experienced people in other fields. To bring costs down to British or Canadian levels, these salaries would have to fall. Half a million Americans work in the private health-insurance industry, which would shrink or disappear if Mr Sanders had his way. His plan is “radical in a way that no legislation has ever been”, argues Henry Aaron of Brookings, a think-tank. + +Mr Sanders has bold plans for monetary policy and banking, too. He supports a movement headed by Rand Paul, an erstwhile Republican runner, to get politicians more involved in decisions on interest rates, because he thinks Fed policy is too tight. To loosen it, he would bar the Fed from raising rates when unemployment is above 4%. + +Mr Sanders’ plans tend to suffer from a fallacy of composition. Although the average American might not mind paying higher taxes instead of a health-insurance premium, some—such as firms that do not provide health insurance—would face big losses. With such concentrated costs, Mr Sanders’s plans would have no chance of making it past Congress, even an improbably friendly one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21692895-health-care-costs-and-high-taxes-would-sink-sanders-economic-plan-vote-what/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trump’s German roots + +Kallstadt’s king + +How the German heritage he has hidden shaped Donald Trump + +Feb 13th 2016 | CHICAGO | From the print edition + + + +MANY ingredients went into making Donald Trump. An under-appreciated one is the distinctively German, or rather Kallstadtian, tinge to his family history. Mr Trump is descended from German immigrants who arrived in America penniless and succeeded quickly through hard work, a free relationship with the truth, opportunism, shrewd business tactics and a great sense of family loyalty. Fred Trump, Donald’s father, who was a strict taskmaster with all his five children, told his three sons to be “killers”. + +Fred Trump’s father, Friedrich Trump, came to America in 1885 as a 16-year-old from Kallstadt, a village in Rhineland-Palatinate, a region known for wine and stuffed pig’s stomach. After working for a few years as a barber in New York, he headed west and opened a restaurant in a mining town in Washington state where workmen were treated to hearty food, liquor and assignations with women in the back rooms of the establishment. Having amassed a nest-egg, Friedrich returned to Kallstadt to marry Elisabeth Christ, the girl next door, whom he took with him to America. Elisabeth was homesick, so they soon went back to Germany. Yet the authorities refused to let them repatriate because they said Friedrich, who was an American citizen by then, had dodged his military service. The young Trumps were thus forced to emigrate to America. In 1905 their first son, Fred, was born in New York. + +When Fred Trump was 11 America entered the first world war and a period of intense anti-German sentiment followed, abating in the interwar years and then flaring up again during the second world war. German books were burnt, sauerkraut was renamed “liberty cabbage” and frankfurters became “hot dogs”. Friedrich died of Spanish flu in 1918 at the age of only 49 and left Fred and his mother a tidy sum of money, which they used to set up a company, E. Trump & Son, and invested in property. After graduation from high school in 1923, Fred started to work full-time in construction. He realised quickly that his German origins could be a hindrance, so he pretended that his parents were Swedish, though his mother spoke English with a thick German accent and baked Apfeltorte for family reunions. + +Donald was Fred Trump’s favourite child, and followed him into the building business. “Fred taught Donald a lot and he was a very good student,” says Gwenda Blair, the author of a book on three generations of Trumps. Part of Donald Trump’s success in the casino and property business was down to his early understanding of the power of branding. “Trump” lends itself to big lettering on buildings because it suggests luck and success. Like his father, though, he thought his German origins might not endear him to possible backers. He stuck to Fred’s tale and wrote in his autobiography, “Trump: The Art of the Deal”, that his father was of Swedish descent. Challenged on this point in an interview with Vanity Fair in 1990, he replied: “My father was not German; my father’s parents were German…Swedish, and really sort of all over Europe.” + +The Trumps were typical of German-Americans, the country’s biggest single ethnic group, in trying so hard to assimilate and obscuring their origins. Yet Donald Trump has occasionally changed his story. Simone Wendel, a filmmaker from Kallstadt, visited him at Trump Tower a few years ago for her documentary “Kings of Kallstadt”, a portrait of this village of 1,200 inhabitants, which also produced the Heinz family, founders of the Ketchup empire. He was rather reserved at first during the meeting, says Ms Wedel, but he warmed to the topic when she showed him photographs of his grandparents and of his grandfather’s modest house. “I love Kallstadt,” says Mr Trump in her documentary. “Ich bin ein Kallstädter.” + +The braggadocious Mr Trump has probably more Kallstadt in him than he knows. The people of Kallstadt are affectionately known as Brulljesmacher, meaning braggart in the regional dialect. Were he to become president, Mr Trump would not be the first occupant of the White House of German descent. Dwight Eisenhower’s family was originally called Eisenhauer and hailed from Karlsbrunn, close to the German-French border. Herbert Hoover’s ancestors were called Huber and came from Baden in southern Germany. They both made little of their origins—but they did not go so far as to invent new ones. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21692909-how-german-heritage-he-has-hidden-shaped-donald-trump-kallstadts-king/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +Feb 13th 2016 | From the print edition + + + +Valentine’s day + +“I still love New Hampshire.” + +Hillary Clinton after her loss. + +Girls just wanna have fun + +“When you’re young, you’re thinking, ‘Where are the boys?’ The boys are with Bernie.” + +Feminist icon Gloria Steinem dismisses millennial women who support Bernie. HBO, “Real Time with Bill Maher” + +Fourth is the new first + +“This campaign is not dead.” + +Jeb Bush hits 11% in New Hampshire. + +Déjà vu all over again + +“There it is. There it is. The memorised 25-second speech. There it is, everybody.” + +Chris Christie points out that Marco Rubio has used the same line four times during the debate. + +50 Shades of Christie + +“I’ll beat her rear end on that stage.” + +Mr Christie wanted to debate Mrs Clinton too, before he dropped out. + +The Invisible Man + +“I could drop my pants. Moon the whole crowd. Everybody would be aghast, except the press…would never notice.” + +Mr Bush would like some more coverage, please. Boston Globe + +Cicero it ain’t + +“She said a terrible thing. You know what she said? Shout it out, because I don’t want to say…OK, you’re not allowed to say and I never expect to hear that from you again…She said: ‘He’s a pussy.’ That’s terrible.” + +Donald Trump exploits to the full a shouted comment from a female supporter that Ted Cruz is soft on torture. + +Go ahead, make my day + +“Please run.”Rick Tyler, Ted Cruz’s spokesman, reckons Michael Bloomberg’s still-being-mulled-over candidacy would help his man. The Financial Times + +Animal House + +“And then somebody complains when, you know, a terrorist gets waterboarded, which quite frankly is no different than what happens on college campuses and frat houses every day.” + +Eric Trump, a Georgetown alumnus, defends his father’s enthusiasm for waterboarding. Fox News + +A blessing + +“Sometimes when I am on a stage like this, I wish that we weren’t married, then I could say what I really think...I don’t mean that in a negative way. I’m happy.” + +Bill Clinton. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21692896-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Libertarians + +Live free, or try + +New Hampshire’s Free State Project reaches critical mass + +Feb 13th 2016 | From the print edition + +Porcupining for freedom + +AFTER successful careers in engineering, Dan and Carol McGuire could have pursued retirements of highbrow ease—the couple’s interests range from American history to collecting modern art. Instead they moved across the country from Washington state in response to an essay by a young libertarian, Jason Sorens, arguing that if enough believers in limited government moved to a single state (ideally one with a small population and a “live and let live” ethos), they could exert real influence. + +That essay spawned the “Free State Project” (FSP), whose early members voted to make New Hampshire their testbed. This was a nod to the state’s modest scale, its culture of Yankee self-reliance and low taxes, and its unusually accessible political system, starting with the state’s House of Representatives, whose 400 members answer to a few thousand constituents each, and are paid $100 a year. The FSP devised a pledge for activists to sign, by which they agreed to move to New Hampshire if 19,999 other libertarians made the same commitment. Once that critical mass was reached, FSP members pledged to make their own trek within five years. The FSP announced on February 3rd that the 20,000 target has been reached. + +In the past decade 2,000 pioneers could not wait and moved anyway. A total of about 40 Free Staters have been elected to New Hampshire’s statehouse at various points, among them the McGuires, husband-and-wife Republican legislators who represent overlapping districts. Free Staters have helped to legalise gay marriage and ease rules on everything from home schooling to selling unpasteurised milk. + +Some wins were easy. A repeal of all state knife laws passed in 2010: Mr McGuire shows off a now-legal switch-blade that can be opened with one hand, noting that such knives are handy tools for paramedics. Mrs McGuire is proud of a law making it simpler for farmers to slaughter their own chickens and rabbits. The couple credit Free Staters with making New Hampshire juries more aware of their right to throw out cases that seem to offend natural justice, under the centuries-old principle of nullification. Future battles loom over school choice and over using public money to send children to private schools. + +Free Staters are yet to overcome national partisan divisions. In 2015 New Hampshire’s Democratic governor vetoed a law making it legal to carry a gun without a licence, backed by conservatives of all stripes, some of them libertarians. Interviewed at her suggestion in a smoke-filled Manchester cigar bar, the FSP’s president, Carla Gericke, stresses that some Free Staters have run for office as Democrats (though they are a small minority). One Democratic Free Stater is currently trying to legalise prostitution. Others are moved by internet privacy and alternative currencies such as bitcoin. + +Ms Gericke would like to see New Hampshire become a “mix between Alaska and Amsterdam on personal freedoms, and Hong Kong on economic freedoms”. That is a stretch. As a fine place to live New Hampshire attracts lots of newcomers, many of them more conventional than the FSP’s shock-troops. Still, Ms Gericke hopes that are allies on the way. Pledge-signers have e-mailed to say that their homes are on the market, she says. New Hampshire boasts a property firm founded by a Free Stater (and former member of the state House) to help project members move. It is called Porcupine Real Estate, after a favourite libertarian animal, honoured as a beast which is dangerous only when attacked. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21692908-new-hampshires-free-state-project-reaches-critical-mass-live-free-or-try/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Climate change + +Supreme emissions + +The nine justices press pause on one of the president’s proudest achievements + +Feb 13th 2016 | From the print edition + + + +AMERICA’S bold effort to cut carbon-dioxide emissions from power plants is on hold. On February 9th the Supreme Court, divided five to four along partisan lines, putting the brakes on Barack Obama’s flagship environmental policy, pending a possible ruling this summer. The plan forms the core of America’s recent commitments to cut emissions, made at the UN climate talks in Paris. + +Power plants are America’s largest source of greenhouse gases, accounting for just under a third of all emissions. The Clean Power Plan, under the authority of the Environmental Protection Agency (EPA), gives orders to each state which, considered together, should amount to removing 870m tonnes of carbon dioxide from power-station emissions by 2030 (as measured against 2005 levels). The regulations give states some flexibility over how and when to cut emissions. But each one is required to submit plans by 2018 and to show some progress on them by 2022. If the goals are met, the reduction by 2030 will be equivalent to taking 80m cars off the road. + +The legal basis for the regulation was thought to lie in a ruling by the Supreme Court in 2007, which declared CO2 a pollutant, thereby placing it under the EPA’s remit. The court upheld most of an agency rule requiring new or rebuilt factories and power plants to use the “best available technology” to limit their emissions of greenhouse gases in 2014. That year the justices also supported the EPA’s regulation of pollution that drifts over state lines. But the agency was rebuked for its overreach in 2015: the Supreme Court reprimanded it for regulating mercury, arsenic and other substances emitted by power plants without taking proper account of the costs. The Court’s new order suggests it may eventually conclude that the president has again exceeded his authority. + +States, utilities and mining companies have declared the plan to be too much, too soon. The attorney-general of West Virginia, one of the states opposing it, said he was “thrilled” after the court issued its stay. Richard Lazarus, from Harvard Law School, calls the intervention “extraordinary”. Although compliance with the regulation is not required until 2022, the deadline for submitting first plans to cut back on emissions was supposed to be September. (States also had the option then to ask for more time.) That date will now almost certainly need to be pushed back. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21692907-nine-justices-press-pause-one-presidents-proudest-achievements-supreme/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The defence budget + +Mr Carter places his bets + +New technology, deterring Russia and fighting Islamic State go hand in hand + +Feb 13th 2016 | From the print edition + + + +ASH Carter may be one of the most formidably qualified defence secretaries to preside over the Pentagon, but the $582.7 billion 2017 budget request sent to Congress on February 9th is likely to be his only shot at creating a lasting legacy. After December’s two-year budget deal there will be less squabbling over funding levels than in recent years. But because this defence budget will not become law until after the election of a new president, it will need bipartisan support for Mr Carter’s vision to survive intact. + +Last week Mr Carter outlined the strategic thinking that had informed his decisions. Seen from the Pentagon, the world, he says, looks “dramatically different” from how it has for the past 25 years. He identifies five challenges: the return of great power competition with Russian aggression in Europe and China’s rise threatening the stability of the Asia-Pacific region; North Korea as a nuclear-armed rogue state; the continuing malign intentions of Iran despite the nuclear deal; and the “tumour” of jihadist terrorism, above all in the form of Islamic State (IS), “metastasising” around the world. + +There is nothing controversial about that list, but it means that the Pentagon must be able to deter sophisticated armed forces who are striving (quite successfully) to erode America’s traditional technological superiority; it must credibly reassure those allies who feel vulnerable to regional bullies; and at the same time it must relentlessly counter a variety of ever more potent threats posed by non-state groups. + +Even with rising spending that would be daunting. But this budget is already $22 billion below what had been projected last year, so money will be tight (in a half-trillion-dollar sort of way). Mr Carter’s biggest bet is on the Pentagon’s ability to deliver the future technologies that will maintain America’s military advantage. + +To that end, research and development is to be boosted by 4% over the previous year, to $71.8 billion. In the shorter term, the Strategic Capabilties Office, created by Mr Carter in 2012, is tasked with getting cutting-edge kit into the field as fast as possible. Mr Carter is particularly excited about all kinds of “swarming autonomous vehicles” to overwhelm opponents and inexpensive “hypervelocity smart projectiles” that can be fired from existing artillery to shoot down incoming missiles. + +In the meantime, current threats have to be addressed. The European Reassurance Initiative, a response to Russia’s invasion of Ukraine, is getting $3.4 billion, a fourfold increase over last year to rotate more combat brigades in and out of Europe and position a lot more tanks and armoured fighting vehicles. + +The campaign to destroy Islamic State is getting $7.5 billion, a 50% bump from last year. In addition, because of the rate at which smart bombs and laser-guided rockets are being used against the jihadists, $1.8 billion will buy 45,000 more of them. The fight against IS has also earned the venerable A-10 “tankbuster” a popular reprieve. So devastating is it against low-tech enemies that it will soldier on until 2022. + +Aside from politics, the threat to Mr Carter’s budget comes less from the things he wants to do—which include spending $7 billion on cybersecurity—but from the difficulty of finding cuts elsewhere needed to pay for them. He proposes small reductions in a raft of legacy programmes with the some further savings from big-ticket items, such as the navy’s controversial Littoral Combat Ship (one fewer next year, down from 52 to 40 in total) and the air force’s F-35A Joint Strike Fighter (down by five next year, but 45 over five years). + +One solution to the funding gap suggested by congressional Republicans is to raise the $58.8 billion Overseas Contingency Operations budget, a useful slush fund, by about $15 billion. A deal between the next president and Congress to lift the 2011 Budget Control Act caps before 2021 is also likely. If a successor with more money endorses this plans he has set out, Mr Carter will be happy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21692892-new-technology-deterring-russia-and-fighting-islamic-state-go-hand-hand-mr-carter/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lobsters + +Shell shock + +Maine’s lobster industry is booming. It is fearful of hot water + +Feb 13th 2016 | From the print edition + + + +NOT all that long ago, “You could set your watch to when the first lobsters would start moulting,” says Carl Wilson, head of Maine’s bureau of marine science. When the forsythia bloomed, spring lobsters would soon move offshore. Lobster boats have radar, sonar and other electronic aids, but Steve Train, a lobsterman for more than 30 years, still likes to keep an eye on apple and cherry blossoms. “And if we start catching mackerel off the dock, then usually we get shedders,” he says. (Lobsters grow by shedding their shells.) “New-shell lobsters come between two weeks and 20 days later”. Those natural patterns are starting to break down. + + + +Early moulting in 2012 caused a glut in lobsters and a drop in prices. At the same time, there was a decline in cod and other natural predators of the lobster larva. This allowed the lobster population to flourish. Big hauls, or landings, are now the norm. To accommodate the larger volume, dealers began looking in earnest at overseas markets, especially Asia. Maine’s lobster exports to China have tripled since 2012. Chinese new year in February is an especially busy time for shippers. In Chinese lobster is called long xia, or dragon prawn, which has an auspicious ring to it. Tom Adams, owner of one of the larger live-shippers to China, says the critters must be carefully packed to survive the long journey. + +But Mr Adams, as bullish as he is on lobsters, is worried about the long term. The lobster industry collapsed in southern New England and the Long Island Sound because of warming waters. The state’s 6,000 lobstermen, most of whom work on family-owned boats, are already protective of their lobsters. In 1872 they stopped catching egg-bearing females. They notch tails to identify good breeders. The state has minimum and maximum size restrictions to protect the young and the robust. Diving and dragging was banned in the 1960s. Only traps are permitted, which must have escape hatches for tiddlers and be biodegradable. The industry is mostly self-regulated. “I throw ten to 20 back for every one I keep,” said Mr Train. This is as well-managed as fisheries get. But if ocean temperatures rise, that may not be enough. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21692897-maines-lobster-industry-booming-it-fearful-hot-water-shell-shock/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Rush-ing around + +To understand the Republican race, turn on the radio + +Feb 13th 2016 | From the print edition + + + +TO MAKE sense of the Republican race for the White House, here is a short cut: get in a car, turn on the radio and drive. On the face of it, the conservative activists tasked with choosing the Republican Party’s next presidential candidate are in a confounding mood. Until about five minutes ago, the received wisdom was that grassroots Republicans prize ideological purity above all—yet in the New Hampshire primary on February 9th they handed a thumping win to Donald Trump, a New York billionaire who invited Hillary Clinton to his most recent wedding and thinks government should play a much bigger role in providing health care. + +The same wisdom holds that in a time of anti-establishment rage, voters are desperate for plain-spoken authenticity. But on February 1st activists handed victory in the Iowa caucuses to Senator Ted Cruz of Texas, a Princeton and Harvard-educated lawyer whose wife works for Goldman Sachs, and whose highly polished campaign speeches lurch from sermonising—“Father God…awaken the Body of Christ, that we might pull back from the abyss”—to Ivy League pomposity, as when he tells crowds that this election represents an “inflection point” in history. + +Mr Cruz did well in New Hampshire too, coming in third even though the state’s Republicans are less pious and more live-and-let-live than most. At snow-buffeted campaign rallies, a surprising number of New Hampshire conservatives said they liked both Mr Trump and Mr Cruz, two very different candidates who between them eventually scooped nearly half the state’s Republican primary vote. + +A key to this puzzle can be found on conservative talk radio. It is a world of its own, built around codes of tribal identity, grievance and scorn for The Other. Each day such radio stars as Rush Limbaugh, Mark Levin or Glenn Beck describe a simple world, in which good guys would win and America’s foes tremble if only its rulers were braver (talk radio is keen on Mr Trump’s plan to bar Muslims from America, and likes Mr Cruz’s talk of carpet-bombing Islamic radicals). On talk radio Barack Obama is an America-hating, anti-white racist, and Republican Party bosses his collaborators. Even the advertisements seethe with paranoia, promoting gold coins as a hedge against economic collapse, or ammunition and survival provisions for those wishing to prepare themselves for civil unrest. + +In recent elections, notably in 2008 and 2012, talk-radio hosts could not prevent the nomination of candidates whom they considered traitors. For Republicans, that was a relief: hewing to talk radio’s sour, chauvinist world view is no way to win a general election (for all their clout, even the top-rated talk-radio hosts pull in just 13m listeners a week, most of them older white men). + +One way of summing up the crisis facing Republicans in 2016 is this. Mr Trump and Mr Cruz are each, in their own way, tribunes of talk-radio America. Mr Trump has the medium’s temperament down pat—one minute playing the snarling demagogue, and the next gleefully hurling schoolboy insults at rivals. Mr Cruz is a master of talk radio’s politics of insinuation, suggesting that Mr Obama has yet to defeat Islamic State not because that fight is complicated and hard, but because he is an “apologist for radical Islam”. No plausible candidate with a broader, sunnier message has yet emerged from the Republican pack. + +Talk radio despises the Republican who came second in New Hampshire, Governor John Kasich of Ohio. Mr Kasich may have balanced budgets and put forward conservative priorities. No matter. Along with such figures as Jeb Bush, the former governor of Florida, Mr Kasich is derided as a quasi-Democrat. His crime is to defend the pragmatic business of governing. Worse, Mr Kasich often expresses empathy for the poor and those who “live in the shadows”, and says that conservative hardliners lack Christian compassion. Mr Kasich is an interesting man, but he lacks a clear path through the mostly southern states up next. + +Beck and call + +Not every Trump or Cruz voter is a Rush Limbaugh fan. Mr Trump, in particular, offers (false) hope to many Americans buffeted by such large forces as globalisation, automation, female emancipation, civil rights and cultural change. But talk-radio’s power in this cycle is real. Just consider Senator Marco Rubio of Florida, a young Cuban-American raised by working-class migrants, with the knack of advancing sternly conservative policies while expressing personal sympathy for underdogs. + +News reports focused on the gaffe that hurt Mr Rubio just before New Hampshire’s primary: a stilted performance in a TV debate when he used the same line on Mr Obama four times. The attack line causing Mr Rubio such trouble was a sop to talk radio. His stump speech used to be about the future, and how 21st-century America needs to equip its citizens to compete with workers anywhere in the world and with machines at home. + +More recently, though, to reassure the hard right (who think him soft on immigration) and to quash the idea that as an inexperienced first-term senator he is a second Obama, Mr Rubio has started painting the president as a malign super-villain. On the home-front, he accuses Mr Obama of deliberately transforming America’s “identity”. Turning to foreign policy, he says that Mr Obama sees America as “an arrogant country that needed to be cut down to size, so he guts our military and betrays our allies.” Mr Limbaugh duly praised Mr Rubio this week for saying what other Republicans “do not dare say”. + +The coming weeks of gruelling campaigning will show whether Mr Rubio can survive as a candidate. If you watch the senator work a rope-line, his sympathy for The Other—as when he praises the family values of some undocumented migrants—suggests he could be a champion for a more generous, open-minded conservatism. But in this race just now the loudest voices belong to the pinched demagogues. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21692906-understand-republican-race-turn-radio-rush-ing-around/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Economic data in Argentina: An Augean stable + +Bello: A time to heal + +How the White House race looks from Cuba: The Havana primaries + +Latin American currencies: Border bazaar + + + + + +Articles Sections Next + +Economic data in Argentina + +An Augean stable + +The government is rebuilding its discredited statistics institute + +Feb 13th 2016 | BUENOS AIRES | From the print edition + + + +GOVERNMENT bean-counters do not, in most countries, have a reputation for derring-do. But in Argentina some have proved to be martyrs and heroes. Statisticians whose findings displeased Cristina Fernández de Kirchner, the country’s president from 2007 to 2015, were sacked and then prosecuted for their effrontery. “Teams were decimated,” says Jorge Todesca, who has been appointed by the new president, Mauricio Macri, to clean up and repair the government’s statistics institute (INDEC). If they were not fired, independent-minded statisticians “just resigned and left”, or were banished to back rooms without equipment. In 2011 Mr Todesca’s economic-consulting firm was fined 500,000 pesos ($123,000) for publishing an inflation index that contradicted the one put out by INDEC. + +It is not the only Augean stable Mr Macri discovered when he succeeded Ms Fernández in December. In addition to an economy in disarray, she and her late husband, Néstor Kirchner, who governed before her, left a state apparatus bloated by patronage and weakened by fiscal incontinence. Some 5-7% of public-sector employees do not bother to show up to work but collect roughly 20 billion pesos ($1.4 billion) in wages, estimates KPMG, an auditing firm. Even Tango 01, a 23-year-old Boeing 757 that serves as the presidential jet, is in disrepair. To get to Davos for the World Economic Forum last month, Mr Macri flew Air France. + +The mess at INDEC is one of the worst. That is because Ms Fernández took great pains to hide the consequences of her economic policies. The political appointees who oversaw INDEC leaned on statisticians to manipulate their results, especially the inflation rate. Graciela Bevacqua, a 24-year INDEC veteran, reckoned that consumer prices in January 2007 rose 2.1%. Her superiors demanded a number between 1.2% and 1.5%. They told her to take a holiday, and sacked her when she returned. + +INDEC appeared to respond to criticism by devising a new index, the IPCNu, which monitored prices nationally rather than just in Buenos Aires and its suburbs, as the earlier index had done (see chart). But it, too, swerved from reality, reporting inflation rates 50% lower than independent estimates. The Economist stopped publishing INDEC’s data in 2012. A year later Argentina became the first country to be censured by the IMF for misreporting GDP and prices. With poverty rising, in part because of high inflation, INDEC simply stopped reporting the poverty rate in 2014. + + + +Mr Todesca, who appealed successfully against his fine, arrived to find the institute denuded and demoralised. Just 25% of its staff hold university degrees, he says. The team that gathered data on inflation was “destroyed”. On December 30th Mr Macri declared a “national statistical emergency”, a decree that gives Mr Todesca a free hand to appoint new directors and allows INDEC to suspend publication of data on GDP, inflation, poverty and unemployment until the end of 2016. Mr Todesca has rehired boffins who were ousted by the old regime, including Cynthia Pok, who will resume responsibility for poverty and employment data, and Ms Bevacqua, who is overseeing the construction of a new consumer-price index. + +By May Ms Pok intends to put together a “basic food basket” and publish its price, a step towards calculating the level of extreme poverty. She will also create a broader measure of poverty, using a bigger basket of goods and services, including transport. And she hopes to have a “multidimensional poverty index”, which is likely to include such things as access to health care and education, by early 2017. + +Putting together a new consumer-price index is expected to take until September, even though it will probably be based on the widely-used methodology of the International Labour Organisation and, much like the series used until 2014, on prices just in Buenos Aires and its suburbs. The national samples used in the IPCNu may not be reliable enough. Ms Bevacqua says she needs the time to rebuild the teams that collect and analyse the data. Until a new consumer-price index comes out, INDEC advises Argentines to consult two in which it has some confidence: those published by the city of Buenos Aires and by the province of San Luis. Data on GDP and employment will take longer. + +This will complicate the government’s efforts to steady the economy. Its early reforms, including a devaluation of the peso and a reduction in electricity subsidies, are pushing up inflation. To contain it, the government hopes to strike a deal on pay with trade unions. In the absence of reliable inflation data, it is “going into the negotiations blind”, says Juan Luis Bour, chief economist of FIEL, a think-tank. Union leaders want pay rises of at least 30%, their forecast of inflation this year. The government hopes to hold the rate to below 25% but may be forced to offer more. + +In the medium term, the statistical overhaul will help to normalise the economy. On February 5th Argentina took a step towards normalisation when the government made an offer to pay foreign bondholders who rejected a debt restructuring proposed by Ms Fernández’s government, which prompted the country to default in 2014. The government plans to submit to economic monitoring by the IMF; that is normal for members of the fund, but Argentina has refused it since 2006. Mr Todesca hopes the IMF will soon lift its statistical censure. “Argentina was once a pioneer in Latin America” in publishing data, he points out. Now, just being one of the crowd would be an achievement. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21692915-government-rebuilding-its-discredited-statistics-institute-augean-stable/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +A time to heal + +The promise and pitfalls of health care for all + +Feb 13th 2016 | From the print edition + + + +ZIKA, a mosquito-borne virus, is the kind of epidemic that Latin America hoped it had put behind it. Yet in the past nine months Zika has spread to 23 countries in the Americas, infecting some 3m-4m people. The disease, which probably causes babies of infected mothers to be born with small brains, will put primary health providers and hospitals in the region under strain. Yet thanks to a complex but hugely positive transition towards universal health care, they are increasingly capable of coping with it. + +Historically, health systems in Latin America have been marked by fragmentation and gross unfairness. The rich have private health insurance and patronise private hospitals, some world-class and others merely overpriced. Workers with formal jobs are enrolled in contributory social-security systems. Unusually, these do not just provide health insurance but also run hospitals. As for the poor, who tend to work in the uninsured informal sector, they have had to rely on the patchy services provided by health ministries, often having to pay for drugs and even for syringes and sheets. Serious illness often bankrupted poor families. + +Over the past 30 years this picture has begun to change. Under democracy, many countries have written a right to health care into their constitutions. Latin Americans are living longer and are more in need of treatment for ailments such as cancer and diabetes that were once more prevalent in rich countries. In response, governments are stumbling towards universal health systems. There is no single route to that destination. But most have expanded both the coverage and quality of health care for poorer citizens. On many measures they are succeeding. + +One model is that of a tax-financed system with government as sole payer (as in Britain’s National Health Service). That applies, of course, to the famed health service in communist Cuba, as well as in Costa Rica. It also applies in Brazil, where the 1988 constitution set up the Sistema Único de Saúde, merging the health schemes of the Social Security Institute and the health ministry. It has delivered improvements. The problem has been how to finance and staff it in a country where nearly everyone turns to public hospitals for treatment after retirement, even though 25% of the population has private insurance. + +Other countries, including Mexico and Peru, have bolted on a subsidised insurance system for the poor. Colombia has taken insurance-based reform further, though not without problems. A new constitution in 1991 proclaimed universal care; a law separated purchasers from providers. The expectation was that two-thirds of the population would be covered by an expanded contributory scheme, says Alejandro Gaviria, the health minister. In practice, half are in a government insurance system in which they pay little or nothing. That encourages workers to remain in the informal economy. + + + +The longevity gap: Does big health care spending pay off + +The Constitutional Court ruled in 2008 that the benefit plans offered by each system have to be the same, even though the government scheme has less money. Drug companies got the courts to mandate prescription of expensive pills. Mr Gaviria, an economist, arrived in 2012 to find that many health-management companies, which rely in part on reimbursement from local governments in their role as insurers, were bankrupt. + +He has adjusted judicial aspiration to financial reality. He has set up an equivalent of Britain’s National Institute for Health and Care Excellence to decide which drugs offer value for money. He is defining benefit plans more tightly, requiring more payments by patients who can afford them. He accepts there are still “a lot of inequities”, but argues that a poorer Colombian who lives in a big city gets better health care than her peer anywhere else in Latin America. + +Many health experts think the single-payer system is fairer and more cost-effective. But such radical reform faces resistance from vested interests. So it may be easier to merge contributory and non-contributory schemes into a single system, as France and Colombia have done. + +According to Daniel Cotlear, a health specialist at the World Bank, Latin America offers lessons in its acknowledgment that the poor cannot pay for health care, in improvements such as benefits packages covering specified treatments, even if these entail “implicit rationing”, and in making public providers more efficient by giving managers more autonomy. With the economic slowdown putting pressure on budgets, he urges governments to continue to give priority to enrolling the poor in health schemes and to small-town clinics. To that list must be added caring for victims of those insidious mosquitoes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21692919-promise-and-pitfalls-health-care-all-time-heal/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +How the White House race looks from Cuba + +The Havana primaries + +Cubans are not keen on a president from the diaspora + +Feb 13th 2016 | HAVANA | From the print edition + +At least Cuban-Americans can vote + +NEITHER Ted Cruz nor Marco Rubio fared as well in the hills of New Hampshire on February 9th as they did in the plains of Iowa a week earlier. Even so, the two Republicans (pictured) are both closer to winning the White House than any Cuban-American has come before. You might expect the citizens of the country from which their parents emigrated to take an interest in their political fortunes, and they do. But it is not a friendly one. “I’d rather vote for Donald Trump,” harrumphs a professor in Vedado, part of Havana. + +To judge from informal conversations and press chatter (nobody is systematically canvassing opinion) Cubans are underwhelmed by the prospect of a Cuban-American president. A big part of the reason is that both Mr Cruz and Mr Rubio are hardliners on the subject of Cuba, the traditional stance of émigrés and their families. Mr Rubio, who is the better known because he is a senator from nearby Florida, would roll back the rapprochement between Cuba and the United States initiated by the countries’ presidents in 2014. He has threatened to put Cuba back on the State Department’s list of state sponsors of terrorism. Mr Cruz is no friendlier to the new policy. The Obama administration is “being played by brutal dictators”, among them Cuba’s president, Raúl Castro, he thunders. + +Mr Rubio “is the one who represents interests associated most with the politics of Bushiana,” wrote a commenter on the state-controlled Granma website, blackening him with George W. Bush’s reviled name. Some Cubans express pity for the Cuban-American duo, seeing them as dupes of the Miami-based diaspora, which is traditionally hostile to Cuba’s government (though it is warming to the idea of better relations). The candidates’ ideas are based on outdated stories that their exiled parents told them, says the professor. + + + +America’s primary agenda: our interactive 2016 election calendar + +Several habaneros summed up their sense of betrayal with a well-worn expression: No hay peor astilla que la del mismo palo (“There is no splinter worse than one from the same stick”). Messrs Cruz and Rubio, in other words, spurn their own kind. “Unfortunately, it’s kind of a Cuban trait,” laments a rueful doctor. + +Of all the front-runners, the one whose philosophy is closest to that of Cuba’s leaders is Bernie Sanders, a Democratic senator from Vermont, who calls himself a “democratic socialist”. Cubans, who live with undemocratic socialism, seem to find this baffling rather than attractive. “Has anyone told him that socialism is a bad thing?” whispers a secretary in her office on the Malecón, Havana’s oceanfront esplanade. + +Donald Trump gets the most press coverage, as in the United States, but does not enrage Cubans as he does Mexicans. When Mr Trump fumes about immigrants, Cubans sense he does not mean them. + +The clear favourite to win the Havana primary is Hillary Clinton, who has promised to continue Barack Obama’s opening toward Cuba. When it comes to rooting for a candidate to be the next occupant of the White House, Cubans seem to want continuity, not change. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21692929-cubans-are-not-keen-president-diaspora-havana-primaries/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Latin American currencies + +Border bazaar + +The weak peso draws Ecuadorean shoppers to Colombia + +Feb 13th 2016 | LA HORMIGA, COLOMBIA | From the print edition + +THE backwater Colombian town of La Hormiga near the border with Ecuador has experienced many booms and busts. In the 1990s there was coca, the raw material for cocaine. That frenzy ended when herbicide-spraying aeroplanes destroyed the crops. In the 2000s a pyramid scheme made many townsfolk rich, then ruined them. The government shut it down in 2008. + +Today La Hormiga, a sweltering town surrounded by pasture in the department of Putumayo, is experiencing a somewhat more salubrious sort of boom. Merchants are cashing in on the sharp depreciation of the Colombian peso against the United States dollar, which Ecuador uses as its currency. The peso lost a quarter of its value in 2015 and continues to slide this year. This has been a windfall for Ecuadorean shoppers living near—and sometimes not so near—the border, and for Colombian shopkeepers who serve them. + +“We can buy things 50% cheaper here than at home,” says Juan Carlos Andrade, who on a recent weekend drove for four hours from Coca in Ecuador to Putumayo with his family. They returned in a car laden with clothes and nappies for their two small boys. In Ecuador a pack of 50 Huggies nappies costs $18; the Andrades bought one in La Hormiga for the equivalent of $7. + +As well as selling more, merchants in La Hormiga are charging higher prices. The price of clothes has doubled over the past year while that of fruit and vegetables has risen by 30-40%, according to Fernando Palacios, the town’s mayor. Shops and bakeries are diversifying by providing pop-up currency-exchange services. A ticket seller at a roadside bus terminal moonlights as a money changer, buying dollars at 2,800 pesos and selling them to banks at a rate of around 3,200, making a handsome profit for little effort. + +Not everyone is happy. Residents of La Hormiga accuse shopkeepers of price-gouging. Mr Palacios has urged local merchants to show restraint. “I told them that if they keep raising prices the Ecuadoreans will shop elsewhere and locals will, too,” he says. + +Retail tourism is also a worry for Ecuador’s government. The country adopted the dollar as its currency in 2000 to escape from hyperinflation. Its current strength, along with weak productivity and low prices for oil, Ecuador’s biggest export, helped make the economy contract by an estimated 0.6% in 2015. Colombia, by contrast, grew by around 3% last year and should grow by more than 2% in 2016 despite the oil slump, in part because its weaker currency is expected to boost non-oil exports. + +To fight the downturn, Ecuador’s government is calling on its citizens to shop at home. “Prefer what’s ours,” pleaded a government statement issued in September. As long as the dollar is strong, many Ecuadorean shoppers will prefer Putumayo. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21692931-weak-peso-draws-ecuadorean-shoppers-colombia-border-bazaar/print + + + + + +Previous Articles Sections Next + + + + + +Essay + + + + +The Mekong: Requiem for a river + + + + + +Articles Sections Next + +The Mekong + +Requiem for a river + +Can one of the world’s great waterways survive its development? + +Feb 13th 2016 | From the print edition + + + +GUO, the driver, pulls his car to a merciful halt high above a crevasse: time for a cigarette, and after seven hours of shuddering along narrow, twisting roads, time for his passengers to check that their fillings remain in place. Lighting up, he steps out of the car and dons a cloth cap and jacket: sunny, early-summer days are still brisk 3,500 metres above sea level. Mr Guo is an impish little dumpling of a man, bald, brown-toothed and jolly. He is also an anomaly: a Shanghainese in northern Yunnan who opted to stay with his local bride rather than return to his booming hometown. + +The ribbon of brown water cutting swiftly through the gorge below is rich with snowmelt. With few cars passing, its echoing sound fills the air. In the distance, the Hengduan mountains slump under their snowpack as if crumpled beneath its weight. Mr Guo recalls the drivers who have taken a switchback too quickly and fallen to their deaths in the valley below. He tells of workers who lost their footing or whose harnesses failed while building a bridge near his home town of Cizhong, 20 or 30 kilometres south. He pulls hard on his cigarette. “This river”, he says, “has taken so many lives.” + + + + + +It has sustained many more. From trickles of meltwater in arid Qinghai, the river grows quickly as it passes through Tibet and Yunnan. Leaving China, and in doing so changing its name from the Lancang to the Mekong, it descends through a landscape ripening into jungle. Swollen by rainforest tributaries, it defines the Myanmar-Laos border and most of the Laos-Thailand border. It cuts Cambodia in two, and then splits into distributaries in south-western Vietnam, the lush, claustral delta landscape opposite in every way to the craggy austerity where it began. + +The Mekong region is Asia’s rice bowl: in 2014 lower Mekong countries (Myanmar, Laos, Cambodia, Thailand and Vietnam) produced more than 100m tonnes of rice, around 15% of the world’s total. The region’s fertile soil depends on nutrient-rich sediment that the Mekong carries downriver, mainly during the rainy season from June to October; more than half the sediment in central Cambodia comes from China. The river and the nutrients it brings also support the world’s biggest inland fishery, accounting for a quarter of the global freshwater catch, feeding tens of millions of people. + +The region boasts remarkable biodiversity; only the vast basins of the Congo and the Amazon compare to or surpass it. There are more than 20,000 types of plant and nearly 2,500 animal species; freshwater dolphins and giant catfish; spiders 30 centimetres across and, in a limestone cavern in Thailand, a day-glo pink, cyanide-secreting millipede. The human diversity is striking, too: Tibetan monks pray; Burmese traders buy and sell; Cambodian fishermen cast nets; Thai farmers reap; Vietnamese markets float. The history is as rich as the soil. The Buddha smiled while resting at the northern Lao city of Luang Prabang. Angkor Wat on the Mekong-fed Tonle Sap lake was among the biggest cities of the preindustrial world. The Khmer empire that built it dominated South-East Asia for longer than there have been Europeans in the Americas. + +Since its French colonial days the Mekong has been more of a backwater. But the life-changing development seen elsewhere in Asia is spreading into this mostly rural world. Pickup trucks are replacing bullock-carts, karaoke bars dot lonely two-lane roads, fishermen can catch up on soap-operas at night. People are getting richer, and their lives longer. + +And as modernity comes into the region, it also seeks to take something out. Countries see a new resource in the Mekong: not the support it offers rich networks of life, but the simple fact of its flow. The hydroelectric dams now built on and planned for the Mekong amount to one of the largest-ever interventions in a river’s course. As its currents are rechannelled down copper conduits to power far-off cities the river itself will be trapped behind a series of concrete walls. Its fisheries, agriculture and biodiversity will suffer; the lives lived on its banks will be reshaped with scant regard for the feelings of those who lead them + +In teaching his students that change was the one true constant, the philosopher Heraclitus told them that no one ever steps in the same river twice. At the second step both man and river are not what they once were. In space and in time, from narrow gorges to salty seas and from great empires to impoverished peasantry, the river at Mr Guo’s feet encompasses more change than most. These new developments, though, feel like something more profound. Flow means change, but it also brings identity, because it embodies continuity. As the river is stilled, precious identities risk being lost for ever. + + + +THE scent of woodsmoke from Mr Guo’s cast-iron stove hangs heavy in the brisk evening air. The household generatoris switched off for the night, and the low kitchen in which his family and two guests gather is made cozy by the light of kerosene lamps. His wife brings a succession of bowls to the table: steamed rice, chunks cut from a salted pig’s leg that hangs above the stove, lettuce braised with garlic, scraps of beef sautéed with chilies, and tsampa, a roast barley powder favoured by his ethnically Tibetan family. His mother-in-law serves a medicinal-tasting infusion made from local leaves and berries, as well as eggshell cups of local wine. The wine tastes as though it was made by someone who knew only two things about wine: it is supposed to be red, and it is supposed to get you drunk. + +French missionaries brought grapes and the Gospel to Yunnan in the late 19th century; wine has been made in Cizhong ever since. They left a more enduring monument too: a sombre stone church with a charmingly incongruous Tibetan-style roof that sweeps skyward at its edges. A priest from Inner Mongolia holds masses there for ethnic-Tibetan Catholics. Cizhong spreads out from the church like the bottom half of a Chagall painting: donkeys wander the stone streets; ramshackle houses squat along alleyways; vineyards and rice paddies frame the view. + +But that is about to change. A little way downriver, a state-owned power utility is building the 990-megawatt Wunonglong dam. In 1995 the Manwan dam, some 600km farther downstream, became the first to stem the river’s flow. Since then five more dams have been finished along its Chinese reach; the Wunonglong dam is one of a further 14 being planned or built there. + +China’s Communist Party has long been keen on dams. At least 86,000 have been built over the past six decades, providing 282 gigawatts (GW) of installed hydroelectric capacity by 2014. The government is building yet more to curb the country’s greenhouse-gas emissions. By 2020 it wants an astonishing 350GW of installed hydropower capacity; in the European Union that would be enough to meet about three-quarters of total electricity needs. The dam at Wunonglong, about 300 metres long and more than 100 metres high, will provide a smidgen less than one of those extra gigawatts. The other 13 are expected to add 15.1GW more. + +Downriver countries intend to build another 11 large dams on the Mekong, with dozens more planned for its tributaries. In 20 years the Mekong could well be dammed from Tibet to just above Phnom Penh, where the delta begins. In no other large river basin in the world is the planned rate of growth of hydropower as great. + +The dams will change the quality of the water in the river and the rate at which it flows. Some of this change could be for the better. Dams can prevent flooding by regulating the flow of water downstream. But some Mekong riverbank agriculture would not welcome too steady a flow. Increasing water in the dry season would shrink riverbeds, leaving less space for crops—millions of Mekong-basin dwellers grow vegetables on riverbanks. Reducing water in the rainy season produces smaller floodplains with less sediment deposited in them, impoverishing the soil. + +According to International Rivers, an environmental NGO, the full cascade of dams planned for the Lancang would trap nearly all of the sediment coming from China, cutting the water’s sediment load in half. That will be bad for soils and bad for fish; the sediments provide the river’s nutrients. And the dams lower down could worsen the problem; the clear, “hungry” water that flows from them in spates will carry away existing sediment in riverbanks and riverbeds. Some of that will be deposited farther still downstream; some will wash uselessly out to sea. + +Those lower dams will also make things yet harder for the nutrient-deprived fish. The 11 proposed in Laos and Cambodia could block the migration of around 70% of the Mekong’s commercial fish catch. Interfering with the fish’s feeding and reproduction to that extent would imperil the food security of populations across the lower Mekong basin, where the average person eats some 60kg of freshwater fish per year, more than 18 times what is on the menu in Europe or America. Considering how poor many of the people here are, replacing fish as a primary protein source is virtually impossible. + +Dams restrict the movement of fish; they force movement on people. Along the road leading out of Cizhong, past the dormitories housing the construction workers for the Wunonglong dam, He Zhenghai, a friend of Mr Guo, points to a denuded spot where a village used to be. A few kilometres farther on he points out the resettlement: rows of squat, charmless concrete structures plonked down along the side of the road, near nothing. + +Estimates by NGOs of the total number of Chinese people resettled because of dam projects exceed 20m. Dams on the Lancang have already added thousands more, mostly poor rural farmers, to the total. In 2013 the compensation received on relocation was about 80,000 yuan ($12,500). Some farmers complain that they have been resettled on sheer hillsides ill-suited to farming and, to add insult to injury, chronically short of water. + +The Wunonglong dam will inundate Yanmen, a nearby village whose residents will be resettled on Cizhong’s rice paddies. And this means that, in a way, Cizhong, too, will vanish. Brian Eyler, deputy director of the South-East Asia programme at the Stimson Centre, an American think-tank, says Yanmen sits above Cizhong in China’s administrative league tables, meaning that after resettlement Cizhong will be renamed Yanmen, losing its name along with much of its charm. + + + +AT HUAY XAI on the Thailand-Laos border, around 1,000km downriver from Mr Guo’s house in Cizhong, a sampan’s tubercular engine kicks in with a wheeze, a gag and a violent sneeze of black smoke. As the motor stammers a tiny conductor terrorises the boat, calling brusquely for tickets, chastising people for where and how they sit, shouting at the pilot to get a move on. As the boat pulls away she jumps off, smoking and yelling the whole time. Some of the locals immediately set about the business of napping, using rice sacks as pillows. Others spread bolts of fabric to picnic on, pulling out plastic bags of grilled chicken, sticky rice, bamboo shoots and tiny, floral South-East Asian oranges. The tourists, meanwhile, open cans of beer—except for the Brits, who open bottles of rotgut Thai whiskey. Tourists and locals alike start the journey staring at their phones. Eventually reception wanes and they are forced to gaze out at the wonder on all sides. + +By the time it reaches Huay Xai the Mekong has already run more than the entire length of the Rhine and descended more than 3,000 metres—handily more than the Rhine manages. It still has almost two Rhine-lengths to go—but along that journey it will only drop a further 400 metres. It is a lowland river now, lush and steady. The evening chill of Mr Guo’s kitchen has been replaced by ripe, vaguely fetid South-East Asian warmth. + +About two hours into the two-day journey east from Huay Xai to Luang Prabang, the boat pulls over to a muddy shore, distinguished only by a concrete staircase cut into the side of a mountain. As the boat approaches people suddenly appear out of the jungle at the top of the stairs. The scene repeats itself with minor variations throughout the journey: a muddy path rather than a staircase, a rickety little jetty or two. A couple of hours before the boat pulls in to regally sleepy Luang Prabang, it passes the Pak Ou caves: two caverns in a mountainside from which hundreds of Buddha statues brought by devotees stare down at passing boats. + +Just downstream from Luang Prabang, the $3.5 billion, 1.3GW Xayaburi dam is rising—one of nine this country of 6.8m mostly rural, mostly poor people plans for the Mekong mainstream. Laos wants hydropower to be its main source of revenue by 2025: it plans to sell its capacity to neighbouring countries. The Thai government has agreed to buy 95% of Xayaburi’s power. Six Thai banks have financed the dam and a Thai construction firm is building it. + +Laos’s downstream neighbours are far less enthusiastic. Cambodia (two dams of its own planned) and Vietnam (no suitable sites for dams at all), worried about the impacts that the Xayaburi dam will have on fisheries and water flow, have lodged objections with the Mekong River Commission that was set up by Cambodia, Laos, Thailand and Vietnam in 1995. The MRC is meant to facilitate co-operation among the countries that share the watershed; China and Myanmar have the status of “dialogue partners”. + +Environmental groups warn that by turning a free-flowing river into a series of reservoirs the upstream Lao dams could wipe out the Mekong’s two largest freshwater species: the giant catfish and the giant pangasius. Similar warnings have been raised about the Don Sahong dam—which would span the Mekong across the breathtakingly beautiful Si Phan Don (Four Thousand Islands) region near Laos’s border with Cambodia—and about Cambodia’s giant Sambor dam, which may destroy one of the last remaining habitats of the Irrawaddy dolphin. + +The Xayaburi dam’s builders have redesigned its sluice gates to allow more nutrient-rich sediment to flow downstream, and widened its fish pass to accommodate more fish of different species. The Lao government says these tweaks will alleviate the worst harms. Environmentalists are less certain. Fish passes in dams have been repeatedly found not to live up to promises made for them, particularly when fish must pass through multiple sets, as they would if Laos builds all its planned dams. + +The Mekong might survive a few big mainstream dams, but a dozen—plus dozens more on its tributaries—present a qualitatively different sort of threat. This highlights a recurring theme of Mekong development: dam-builders tend to assess the impact of each dam individually; NGOs pay more attention to the cumulative effect of multiple dams. The NGOs also worry that with every new dam built, further dam-building becomes more normal, and the next project thus becomes easier to justify. + +Environmentalists think both that such synergies make the harm done by dams greater than governments claim, and that the benefits are overestimated. Touting hydropower as “green” because it can be used in the place of fossil-fuel derived electricity overlooks external costs such as compensation and relocation, lost agricultural productivity and biodiversity and lowered water quality. And although benefits may be large (especially for electricity exporters), they are hardly overwhelming, especially in the context of broader development. Power demand in the region is expected to more than double between now and 2025—having already doubled from 2005. According to Richard Cronin, a Mekong specialist at the Stimson Centre, an American think-tank, the nine Lao and two Cambodian dams currently discussed would provide just 6-8% of the total electricity needs of the lower Mekong basin by 2030, with most of the power going to Thailand. “For that,” Mr Cronin asks, “you’re going to kill the river?” + +Pressure from downstream countries and international NGOs has slowed Laos’s progress on its next two dams, the Don Sahong and the Pak Beng, and has forced developers to spend more money studying potential downstream harms. But Laos is a poor country with few natural resources that sees hydropower as its route to development. In the absence of better options, concerned citizens and the governments of the downstream neighbours may be able to do little more than delay Laos. + +For now the Mekong remains blissfully unobstructed as it passes from Laos into Cambodia—except for the bloom of tiny islands that give Si Phan Don its name. People live on just a few of these islands. Some cater to tourists happy to spend a few days rafting the occasional rapids and listening to the Mekong rush past. But many are little more than a clump of rock and mud on which sprays of rivergrass and shrubs have taken root, still green against flowing brown. Past the waterfalls roiling the water into spume the river relaxes again. On clear days it becomes a hazy mirror, the stark blue above turning to indistinct brightness below. + + + +CHANG NAA stands up on the prow of his narrow wooden canoe and casts a small net into the water under the watchful eyes of his son Chang Thung, a four-year-old as solid and sombre as his father is lithe and placid. Beneath the canoe’s tattered fabric roof his wife stirs a pot of samlaa macchu, a sour soup. Before serving it she rinses the dishes in the murky water. + +The Tonle Sap river is a two-way tributary which joins the Mekong about 800km downriver from Xayaburi, at Phnom Penh. In drier seasons it drains South-East Asia’s biggest freshwater lake, also called the Tonle Sap, into the Mekong; during the monsoon it flows the other way, bringing water and sediment from the Mekong to the lake. Mr Chang Naa and his family live in one of the river’s floating villages. He is 33 years old; he has been fishing the Tonle Sap for 15 years. His father fishes these same waters. In time, says Mr Chang Naa, so will Chang Thung: “With us, what the father does, the son will also do.” + +Mainly he catches what he calls chkok and onpun—small, silvery fish. Some are destined for his wife’s soup pot. The rest—he catches between two and three kilos per day—he sells for prahok and tuk trey, a chunky paste and clear brown liquid both made from salted, fermented fish. Some fishermen supplement their meagre income with rice farming, but Mr Chang Naa and his family own no land. Like most people he knows, he is working off a perpetual debt incurred by money borrowed at extortionate rates for food, fuel and equipment. A fisherman from a village near Mr Chang Naa’s says he spends four or five months a year paying off local moneylenders. + +The Tonle Sap lake yields around 300,000 tonnes of fish a year, accounting for most of Cambodia’s freshwater catch. In all, the MRC estimates that the Mekong yields around 2.6m tonnes of wild fish each year, worth at least $2 billion in dockside sales. Add in secondary industries such as fish processing, markets, fuel and equipment sales and boat building, and the total value of the Mekong’s fisheries is between $5.6 billion and $9.4 billion. + +Small-scale fishing predominates along the Mekong—most boats in Cambodia weigh less than five tonnes and use engines with less than ten horsepower. Mr Chang Naa’s livelihood is not that different from his father’s or the vast majority of his peers. But that is starting to change with the rise in aquaculture. Production in the fish farms of Vietnam’s delta is now larger than that from its other freshwater and seawater fisheries combined. Prices for wild-caught fish are rising—Khai Ratana, who fishes a little way upriver from Mr Chang Naa, says he gets 12,000 riel ($3) per kilo, up from 3,000 riel five years ago—but that is because they have grown scarcer in recent years. + +At this point in the river’s descent to the sea, its potential as a power generator has been used up. The lowest lying of the dams under discussion, Cambodia’s dam at Sambor, lies around 300km upriver. Cambodia’s fisheries thus illustrate the fundamental political tension at the heart of the region’s development: upstream economies overwhelmingly reap the benefits of changes to the river’s regime, while those downstream bear the cost. + +This is the way with all rivers, but all the more so with the Mekong, because the geographical hierarchy reflects the geopolitical one. China, the most powerful nation, has the high ground and the most hydropower potential. It is also least dependent on the river’s water for other purposes (though it has plans to divert some of it away to its thirsty east anyway), the least susceptible to civil-society pressure and the least interested in binding itself to an international order. + +This worries everyone downstream. China and Thailand have long enjoyed good relations, and China has bought goodwill in Laos and Cambodia with massive infrastructure investments. But Myanmar has opened up to the West in the past five years in part to counterbalance Chinese influence. Vietnam fears its powerful northern neighbour—China invaded as recently as 1979, and the two countries contest territory in the South China Sea—and anti-China sentiment has been rising in Laos. As China has grown more regionally assertive, Laos and Vietnam have sought to deepen their relations with America. Yet that will probably do very little to dissuade China from building more dams, any more than the objections of Laos’s vastly richer and more populous neighbour Vietnam deterred it from building its dam at Xayaburi. + +These tensions will be kept in check by the general desire for a commodity quite as valuable as water: peace. For a long time it was in short supply, with decades of war, political division and the spiralling horrors of the Khmers Rouges perversely protecting the Mekong from exploitation. Nobody wanted to put up the capital for a dam that would be bombed, nationalised or left to rack and ruin. Those days are over; none would wish them back. The problem is managing equitably, and without permanent environmental degradation, the prosperity peace brings + +A hundred kilometres or so south-east of Mr Chang Naa’s fishing grounds, tourists in Phnom Penh sip mojitos in front of cafés as an endless parade of late-model sedans and smoke-spitting tuk-tuks jostles for space along Sisowath Quay. It is Cambodia’s one big, bustling city, with a sleazy edge to its tattered colonial elegance. Away from the river tens of thousands live in crowded slums—mainly rural Cambodians yearning for a bit of urban prosperity. Chang Naa expects his son, Chang Thung, to fish in his footsteps; he may want it so. But like all sons Chang Thung will step into a different river—or perhaps, in this case, onto a different shore. Phnom Penh was a city of just 189,000 in 1980. It could be home to 2.5m by 2030, and Chang Thung may choose to be one of them. His choice may be a free one. People in backwaters, both figurative and literal, choose cities all the time. But it may not be. By the time he reaches working age, the fears of dam sceptics may have been realised. There may be no more fish for him to catch. + + + +FIVE waitresses work the busy rooftop bar, ferrying drinks to the bright young things of Can Tho, the Mekong delta’s biggest city. Melodic, minor-key Vietnamese pop blares from the speakers as smartly turned-out young men and women sip lurid drinks, their faces lit by their phones. In the early evening the Hau river, a broad Mekong distributary, has taken on the same blue-grey cast as the sky, reflecting rows of quayside lamps as it flows into the distance, reaching for the sea. + +Can Tho has the feel of a minor boomtown: scooters still outnumber motorcycles which still outnumber cars; there is plenty of commerce but few chain stores; tourists remain rare enough that a wedding party will invite a passing foreigner to eat, drink and toast with them. It is a gentler, friendlier place than Phnom Penh, but with an underlying sadness that one does not feel further upstream: Phnom Penh will grow more crowded and unmanageable in the coming decades; Can Tho may vanish. + +To drive the four hours from Phnom Penh to Can Tho is to witness an increasingly blurry line between land and water. Narrow, glittering streams bisect rice fields. Rills, canals and other waterways flow deep into lush jungle, while the river itself wanders lazily toward the sea. Cambodians like to remind visitors that much of this delta region was theirs before the French partitioned the territory in 1949. The Vietnamese dispute this. The delta’s fertile soil has long been worth arguing over—or fighting for. + +The famous floating markets of the delta are a little way south of Can Tho; their products abound on the city’s streets. Older women preside over rainbow mounds of dragonfruit, pomelo, durian and jackfruit, while young men tend grills of muddy-tasting snakehead fish. Of the Mekong delta’s 18.6m people, about a fifth of Vietnam’s population, more than three-quarters work in agriculture; on its roughly 4m irrigated hectares, the average farm size is just 1.2 hectares. From only 12% of Vietnam’s surface area the region provides most of the country’s fish and fruit, as well as half its rice; farmers can get seven crops in two years. Dang Kieu Nhan, a researcher at Can Tho university, points to an old Vietnamese saying: “If you want to make a good living, go to the Mekong delta: it’s hard to be hungry there.” + +The worry is that some of what the region enjoyed in the past may now be beyond purchase. Few places in the world are as threatened by climate change as the Mekong delta. A brief stroll around Can Tho already leaves you coated in sweat, and the city is set to grow much sweatier. Average temperatures in Can Tho rose by 0.5ºC between 1979 and 2009. Vietnam’s natural-resources ministry predicts that temperatures will rise by a further 1.1-3.6ºC by 2100. It also expects more severe storms, wetter wet seasons and drier dry ones; all those effects, it says, will be greatest in the south. + +Though rice thrives in wet, warm climates, it cannot stand too much of either. Rice fails when submerged underwater for long periods. Flooded fields can also hinder planting, and therefore harvesting. Rice yields may decline by an average of 10% for every 1ºC rise in average night-time temperatures. A changing climate may also lead to a flourishing of weeds and pests in rice fields. + +Rising sea levels threaten not just the crops, but also the fields themselves. A report from the International Centre for Environmental Management, a consultancy, projects a 28-33cm rise in Vietnam’s seas by 2050, and 65-100cm by 2100—levels exacerbated, in the delta, by declining sediment flow from upstream. A sea-level rise of one metre could flood more than a quarter of the delta, and leave five million homeless. Can Tho is just 80cm above sea level. + +The ocean could make farming impossible well before it finally swallows the land. Rising seas cause saline intrusion: seawater moving into places unaccustomed to it, such as wetlands and freshwater aquifers. Salt in a rice field can ruin the crops. Up to 70% of the delta’s agricultural land could be subject to saline intrusion this century. Some delta farmers have responded by switching from rice farming to aquaculture: shrimp, in particular, thrive in brackish water. But they fare poorly when the water gets as salty as the sea proper, meaning rising sea levels will eventually render shrimp farming just as impossible as rice farming. + +Mangroves once provided a healthy buffer against both salinity intruding into the water table and the heavy winds that drive seawater inland, but population pressure and aquaculture have put paid to a lot of Vietnam’s mangrove forests. That leaves the delta reliant on dykes and hydraulics to mitigate saline intrusion, and these are expensive to build and maintain. Less intensive agriculture could relieve the stress on the delta, but Vietnam has a growing population to feed, and makes billions of dollars from exporting rice, fish, shrimp and fruit. Sediment carried downstream can help repair coastal erosion, but not if dams trap it in reservoirs. Mr Nhan mentions the prospect of shifting crops: cultivating rice and shrimp in the brackish lowlands, fruit and vegetables in the centre and high-value export rice in the upper delta. This makes sense—it may be the best that can be done until drought ruins the rice and rising seas reach the fruit. + +For now the Mekong, which began as a trickle of snowmelt high up in Tibetan cloud-country, slices through riots of tropical green to meet the South China Sea in a network of river mouths known as the “nine dragon river delta” in what appears to be much the same way as it always has. Tourists who watch women haggling in floating markets over baskets of mangosteen and fresh fish, or who see peasants in conical hats farming paddies by hand, imagine that they are witnessing something timeless—life as it always has been, its rhythms dictated by seasons, land and sea. But though it seems they are witnessing a pastoral, what they are seeing is in fact the opening scene of a tragedy: the part where the characters act as they always have, but their fate looms large. + +Eventually, all rivers empty into oceans; water comes together with other waters. But for this river, at this delta, the sense of an eternal return is lessened, that of an ending heightened. The seas, driven by a century of global industry, rise higher, while for the sake of a little more industrial power, the gifts of the river are being squandered. Life as it has been is not life as it will be. The days of stepping into the river are numbered. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21692854/print + + + + + +Articles Sections Next + + + + + +Asia + + + + +China, North Korea and America: Between Punxsutawney and Pyongyang + +Tasmania charts a new course: Water into wine + +Tasmania’s forests: Saving the swift parrot + +Banyan: Of Yorkies and Great Danes + + + + + +Articles Sections Next + +China, North Korea and America + +Between Punxsutawney and Pyongyang + +The Hermit kingdom is becoming a bigger cause of contention between China and America + +Feb 13th 2016 | BEIJING | From the print edition + + + +NORTH KOREA sent its latest satellite into orbit on February 7th, five days after Groundhog Day. Much of the world could be forgiven for thinking that, like the protagonist in the 1993 film of that name, they are stuck in a time loop. They wake up, North Korea tests a nuclear weapon, other countries condemn its actions and the UN Security Council descends into bickering until the cycle begins again. But just as in the film each day is subtly different, so with North Korea now: the latest test may actually mark the end of a period in which China was prepared to get tougher on its unruly client. From now on, China and America may disagree more strongly about how to deal with the nuclear risks that North Korea poses. + +In 2012, after Kim Jong Un, the North’s third-generation dictator (pictured above), last tested a satellite, China endorsed a UN resolution that tightened sanctions against his regime and even sounded a warning, via Global Times, a Communist Party newspaper, that if the North “engages in further nuclear tests, China will not hesitate to reduce its assistance”. + +Three years on, a Chinese spokeswoman merely expressed “regret” at the new launch, while the foreign minister, Wang Yi, sounded a warning that any UN resolution “should not…destabilise the Korean peninsula”. In contrast to such mildness, South Korea said it would shut down the Kaesong industrial complex that it runs jointly with the North. That is a big step. The factory park just on the north side of the two countries’ border employs 54,000 North Koreans working for dozens of South Korean companies. It is the first time the South has shut the park—previous closures were initiated by the North, when it wanted to apply pressure on the filthy capitalists running the South. + +South Korea’s move over Kaesong is an indication of how seriously it takes both the satellite launch, which was really a cover for testing a long-range missile, and the test of a nuclear device, the fourth such, which took place on January 6th. + +The three fatties + +A change in China’s attitude does not reflect greater friendliness towards the regime in Pyongyang. Leaders are exasperated with Mr Kim. Ordinary Chinese deride him online as “the third fatty”. (The previous two were his grandfather, Kim Il Sung, and his father, Kim Jong Il.) Junior’s insistence on the satellite test made China’s president, Xi Jinping, look ineffectual. Mr Xi had sent a veteran diplomat, Wu Dawei, to Pyongyang, presumably to persuade Mr Kim to postpone or scrap the trial. + + + +All the same, after a period in 2012-14 when Chinese officials engaged in a lively and sometimes public debate about whether North Korea really was a strategic asset, China’s government has reasserted its traditional support for its troublesome neighbour. According to diplomats, Mr Xi took the decision last summer: a domestically stable North, he ruled, was preferable to an unstable one, even if the country is building a nuclear arsenal. China will keep the North afloat. + +And so China has done little to shut off the flow of goods to the North. That matters. The $7 billion-odd a year in bilateral trade is nine-tenths of North Korea’s total trade. Nearly half of the North’s food, seven-tenths of its oil and four-fifths of its consumer goods come from China. + +China has long feared that upheaval in the North could cause a refugee crisis. But the clinching argument for Mr Xi may have been that he saw relations with the North in the context of deteriorating relations with America. “It is impossible to co-operate fully on the Korean peninsula,” one official told a visiting professor from South Korea, “so long as the United States continues to engage in provocative behaviour in the South China Sea.” It may be doubted who is really being provocative there. But China’s calculation is that North Korea is a buffer between itself and South Korea, a staunch American ally and host to American forces. At a time when China sees itself as a rival in Asia to the United States, that buffer grows more important. + +Yet the cost of keeping the buffer may be going up for China. Jonathan Pollack of the Brookings Institution, a think-tank in Washington, DC, sees “tangible changes in the tone and substance” of American policy since North Korea’s satellite and nuclear tests. John Kerry, America’s secretary of state, called the nuclear test “reckless and dangerous…an overt threat”. He demanded more UN sanctions, just as America’s House of Representatives passed a bill to allow America to punish firms from third countries, such as China, if they help the North evade American sanctions. + + + +Fantasy reunification: What the two Koreas would gain from each other if Kim Jong Un's regime fell + +Further, after the satellite launch South Korea began talks with America on deploying an advanced missile-defence system, the Terminal High-Altitude Air Defence platform (THAAD), meant to destroy missiles from the North. China thinks the system could be used against its own weapons; for years it has tried to stop deployment. It has expressed more concern about THAAD than North Korea’s satellite. + +Perhaps that is not surprising. South Korea’s decision to adopt THAAD is a big setback for Mr Xi. He has met Park Geun-hye, his South Korean counterpart, six times (in contrast, he has never met Mr Kim). If he had hoped to tempt South Korea to downgrade its alliance with America, he has failed. In addition to talking about THAAD, the two countries said they would hold larger joint military exercises this year. In short, and to China’s dismay, North Korea has provided America with the justification for increasing military deployments in North-East Asia. Mr Kim may one day test Mr Xi’s patience to destruction. For now, the gap is widening between America and China as they try to rein in Mr Kim’s nuclear ambitions. At least until the next Groundhog Day. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21692932-hermit-kingdom-becoming-bigger-cause-contention-between-china-and-america-between/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Tasmania charts a new course + +Water into wine + +An island state bets on water to revive its fortunes + +Feb 13th 2016 | LAUNCESTON | From the print edition + + + +FOR 27 years Yvonne and Noel Gerke ran a transport business, hauling logs from Tasmania’s forests to mills grinding woodchips for customers in Japan and elsewhere in Asia. Then came the global financial downturn as well as campaigns to protect Tasmania’s native forests (see article). It clobbered the timber industry. “We employed 45 people until it crashed and burned,” says Ms Gerke. Four years ago the Gerkes took a payout from Australia’s federal government to quit logging. They are now gambling on another commodity: water. + +Australia is the world’s driest continent. Climate change is expected to make its droughts even more frequent. The country is still paying for years of overexploitation of its biggest river system, the Murray-Darling basin. The federal government in Canberra is spending A$3.2 billion ($2.2 billion) buying up and cancelling farmers’ water entitlements in a bid to reduce salinity and repair other environmental damage stretching back a century. + +While mainland farmers are being paid to give up water, those in wetter Tasmania are being enticed to buy more. The island state accounts for just 1% of Australia’s land mass and 2% of its population. Yet it receives 13% of the country’s rainfall. Tasmania may be blessed with water, but most of it falls in the mountains of the west, making it useless to farmers elsewhere. + +So the island has embarked on a project to capture more water for its drier east and north, shifting it through pipes to these regions’ farms. Almost 800 farmers have already bought into ten irrigation schemes that are up and running. They will allow farmers to do more than graze sheep and cattle; they will be able to grow fruit and vegetables, including more of Tasmania’s exotic stuff: cherries, grapes for the island’s increasingly fashionable wines and even poppies (the island is a big opium supplier for legitimate pharmaceuticals). + +If another five planned schemes involving 200 farmers go ahead, Tasmania’s investment in shifting its water around the island will be almost A$1 billion. The federal and Tasmanian governments are putting up some of the money. But that comes with conditions. Farmers and other investors must first agree to meet at least two-thirds of the costs of each irrigation project before governments commit the rest. + + + +The Gerkes have bought into one of the newer projects near Scottsdale in northern Tasmania (see map). Pastures in this dairy region are parched after Tasmania’s lowest spring rainfall on record. In recent years two timber mills and a vegetable-processing factory have closed. Jeremy Rockliff, Tasmania’s deputy premier, says the region is among those “most devastated” by the forest industry’s downturn. He reckons the irrigation projects will “future-proof” Tasmania against drought. Perhaps. But the prospect of water prompted the Gerkes to swap the known risk of timber for the unknown one of farming. + +They bought 445 hectares (1,100 acres) of grazing land north of Scottsdale. “It was run down,” says Ms Gerke. A creek was its only water source, “and that dried up.” When Tasmanian Irrigation (TI), the public company that operates the irrigation schemes, proposed one for Scottsdale, the Gerkes and 91 other farmers offered to buy in. But that was not quite enough to secure public money for the scheme. So Dorset council, the region’s local-government authority, said it would invest A$1.7m in the water. Greg Howard, the mayor, argued it would help bring back jobs. TI designed a storage dam on a rivulet near Scottsdale, with pipes to start pumping water to each of the participating farmers’ gates in two years. It will flow through about 70 kilometres of pipes before it reaches the Gerkes’ farm. + +Joining the scheme will cost them A$189,000. This entitles them to 135 megalitres of water a year; if other farmers want more, they will have to pay more. The irrigation company will charge the Gerkes another A$11,000 a year towards maintaining the network’s pipes and pumps. By the time they pay for their own infrastructure to distribute the water on their farm, they estimate their total investment in obtaining water at almost A$500,000. + +They plan to use the water to turn some grazing land into vegetable plots. On the rest of their land, they hope to grow lusher grass for livestock. So they will probably make more money. And once the water reaches them, they can trade some of it each year with other irrigators in their scheme who need more. The Gerkes’ water will not be fixed at A$1,400 a megalitre, the price they paid: the market will find the new price. “Everyone in the area is quite excited,” says Ms Gerke. “We’ve taken such a hit recently.” + +Tasmania’s new water market has already been kind to one of its biggest investors. David Williams, a Melbourne banker, owns no Tasmanian farms. But he put A$10m into two central Tasmania irrigation schemes after local farmers had bought in. Mr Williams likens the arrival of reliable water in such regions to technological change: “I punted that it would change the way land is used.” He calculates that trading his water entitlement with farmers in both schemes could turn his investment into A$16m. + +Mr Williams compares water management on Australia’s eastern mainland, where he lives, unflatteringly with Tasmania’s approach, which looks more efficient. Small hydroelectricity systems have been designed to power three of Tasmania’s schemes. This will cut farmers’ energy costs, and even raise revenues from sales to the public grid. + +In some mainland states Tasmania’s public-private partnership approach is seen as a model for mending old improvident ways with water. In Tasmania there are hopes that a water boom could make people think differently about the state’s economy. A mainland mining bonanza, linked to trade with China, enriched the rest of Australia but bypassed Tasmania. Instead, it boosted Australia’s currency and hurt Tasmanian exporters of timber and farm products. + +Now that the mining bonanza is over, signs of a Tasmanian upturn are emerging. Attracted by a cheaper currency, more than 1m people visited Tasmania in the latest fiscal year, a record. Tourists are drawn to Tasmania’s clean air, natural beauty, good food—and increasingly hip image. A huge and provocative underground gallery, the Museum of Old and New Art, or MONA, opened five years ago just outside Hobart, the capital. With installations that include a machine that makes excrement, it has proved a hit with visitors. + +Among the foreign tourists coming to sample Tasmanian Riesling, oysters and marbled beef are plenty of Chinese. When China’s president, Xi Jinping, visited Hobart in late 2014, he sent signals that China wanted more seafood, beef and other costlier food exports from Tasmania. China’s relentless pursuit of reliable food supplies is likely to do Tasmania a lot of good. Lu Xianfeng, a Chinese businessman, is bidding to buy a big dairy producer, Van Diemen’s Land, in north-west Tasmania. Mr Lu says he wants to tempt China’s newly affluent class with top-quality food from Tasmania. + +In a recent report to the Tasmanian chamber of commerce, Saul Eslake, an economist, pondered a large gap that has opened between Tasmania’s economic performance and the rest of Australia’s. Tasmania’s gross state product per person was 27% below the national average last fiscal year. Mr Eslake reckons that making more niche goods of the type that attract Mr Lu (he highlights wool, wine and wagyu beef) offers Tasmania a better chance of closing the gap than the “bulk, undistinguished products” of old, like woodchips. Water can be turned not only into wine, but also into wealth. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21692945-island-state-bets-water-revive-its-fortunes-water-wine/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Tasmania’s forests + +Saving the swift parrot + +A critically endangered bird suggests the logging wars are not over + +Feb 13th 2016 | HOBART | From the print edition + +The race is not always to the swift + +BRUNY island, off south-eastern Tasmania, is a home to the swift parrot. Small and green, with patches of red and blue, it breeds only in Tasmania, feeding on nectar from the blue gum tree, a eucalypt, and migrating to south-eastern Australia for the winter. But the logging of Tasmanian forests has destroyed its habitat. (And the parrots’ habit of crashing into office windows of Hobart, Tasmania’s capital, does them no favours.) Only 2,000 individuals may survive. + +In November the state government stopped logging on Bruny Island after an outcry over the parrot’s plight. An earlier study by Dejan Stojanovic, of the Australian National University, and colleagues had revealed how logging and land-clearing for farms in Tasmania had left swifts, which breed in the trunks of old gum trees, vulnerable to predation by sugar gliders, an introduced possum. + +Unlike the swift parrot’s other Tasmanian breeding grounds, Bruny Island has no sugar gliders. But the Wilderness Society, a conservation group, says that the birds will still be harmed if logging goes ahead. It estimates that the logging planned on Bruny Island for the next two years would destroy almost 40% of the parrots’ habitat there. + +Loggers and environmentalists have long disagreed on what should be allowed in the forests that cover about half of Tasmania. Both sides signed a peace deal four years ago under a former Labor state government that protected more forests and bought off loggers. A UNESCO-listed world heritage wilderness area was expanded to embrace the Styx valley west of Hobart, thick with eucalyptus trees thought to be 600 years old. The listed region now covers almost a quarter of Tasmania. + +But the truce did not last. On becoming premier two years ago, Will Hodgman of the conservative Liberal party said he was tearing up the deal, concerned that his state’s growth lagged the rest of Australia. He now proposes opening up some protected areas for logging. + +UNESCO wants commercial logging in the listed forests banned. It will soon report to the federal government, also Liberal, which is responsible for protecting Australia’s world heritage regions. Meanwhile, as it promises a “management plan” for the swift parrot, Mr Hodgman’s government seems keen to expand logging outside Bruny Island. Protesters against plans to log in Lapoinya, in north-western Tasmania, were arrested last month. Some predict that Tasmania could be heading back to the old days of greens and lumberjacks at loggerheads. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21692939-critically-endangered-bird-suggests-logging-wars-are-not-over-saving-swift-parrot/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Of Yorkies and Great Danes + +For closer ASEAN-American relations, thank China + +Feb 13th 2016 | From the print edition + + + +FOR two days next week Barack Obama will lay on a party for an unlikely club at Sunnylands, a Californian estate used for bigwig retreats. Among his guests are: a recent coup leader; Asia’s longest-serving autocrat; a prime minister who thinks there is nothing untoward in having several hundred million dollars paid into his bank accounts; two superannuated communist leaders; and a hereditary sultan with 420,000 loyal subjects and 257 bathrooms. Oh, and there are even a couple of democrats. The club is ASEAN, the ten-member Association of South-East Asian Nations. It is the first time an American president has played host to all South-East Asia’s leaders at once. + +Why the summit? Businesswise, ASEAN matters to America. Taken together, which increasingly it wants to be, its members would be the world’s seventh-biggest economy. American foreign investment in ASEAN was $226 billion in 2014, more than in China, South Korea and Japan combined. South-East Asia is young and economically vibrant. + +Second, democracy in South-East Asia needs the kind of boost Mr Obama’s attentions will provide. Myanmar’s extraordinary democratic transition remains fragile. In Thailand politics has lurched backwards since Prayuth Chan-ocha’s coup of May 2014 suspended democracy. This irks America, Thailand’s chief ally. As the annual Cobra Gold military exercises, involving Thailand, America and 25 other countries, began this week, the American ambassador in Bangkok called for a return to elected government. Meanwhile, in Malaysia the money scandals and racial politics of the prime minister, Najib Razak, are undermining democratic institutions. A little lecturing by Mr Obama behind closed doors would not hurt. + +But, above all, American officials boast that the gathering underlines the success of Mr Obama’s “pivot” or “rebalancing” towards Asia. That is disingenuous, given the scant material evidence of a pivot. Certainly, Mr Obama has attended to South-East Asia more than his predecessors did. No president has made more trips to the region, with unprecedented visits to Cambodia and Myanmar and, later this year, to Laos and perhaps Vietnam, once America’s nemesis. Mr Obama has also appointed America’s first ambassador to ASEAN and has regularly attended ASEAN leaders’ meetings. And having spent four happy childhood years in Jakarta, Indonesia’s capital, he has a personal link with the region that is shared by no previous president. + +Yet leaders are coming to Sunnylands less because of Mr Obama’s engagement than because of China and its recent assertiveness. China’s once-vaunted “smile diplomacy” in the region has seemed to turn to scowl. Its expansive claims in the South China Sea have greatly strained relations with neighbours with overlapping claims. In 2014 China dragged an oil rig into Vietnam’s territorial waters, provoking confrontations at sea and violent anti-Chinese protests on land. Chinese aggression towards the Philippines in disputed waters near the Spratly Islands emboldened the government of Benigno Aquino to ask an international tribunal in The Hague to adjudicate on the nature of China’s South China Sea claims, which are as legally vague as they are grabby. Meanwhile, ASEAN members have boosted naval co-operation and defence ties with America, Australia, Japan and India. There is even talk of tensions driving a naval arms race. + +Some now divine a softening on China’s part. Perhaps it sees the public-relations damage. Perhaps it remembers how, in 2010-11, Myanmar plopped out of China’s orbit and into the West’s. At any rate, some of the smiles are being turned back on. Under its “one belt, one road” initiative of building globe-girdling trade links, China is promising to invest in ports and railways across South-East Asia, assisted by another Chinese-led venture, the new Asian Infrastructure Investment Bank. (Besides the diplomatic payoff, this is intended to provide an outlet for goods from half-idle Chinese factories.) China has always welcomed South-East Asian autocrats such as Mr Prayuth and Hun Sen of Cambodia. Now even democrats with Nobel peace prizes are going to Beijing. Last year President Xi Jinping received Myanmar’s Aung San Suu Kyi, who had long been shunned. + +American policymakers sneer that, with its chequebook diplomacy, China is crudely attempting to buy influence across the region. Perhaps that is true. But if so, it hints that China understands the damage its sabre-rattling has done and is trying to make amends. ASEAN members no doubt appreciate its largesse. However, they remain suspicious of its intentions. So they turn to America as a counterweight to Chinese influence. Much like a Yorkshire Terrier sharing its bed with a Great Dane, small countries bordering big ones tend to be nervous: even if the big dog is inclined to be good-natured, it could still roll over and crush the Yorkie. Just ask Canada or Mexico. + +Hedges make good neighbours + +So the Sunnylands summit cannot have pleased China—especially since it was there that Mr Obama welcomed Mr Xi for a groundbreaking love-in in 2013. South-East Asian diplomats crow that the choice of place shows that America considers ASEAN to be just as important as China. Yet the meeting between the two presidents was an introduction. This one will be more like a valediction. At least five of the 11 leaders gathering in California, including Mr Obama, are on their way out of office. And among those who will remain, Mr Prayuth and Mr Hun Sen preside over dangerously fragile polities. + +The summit is unlikely to yield much more than the promise of future summits. But for ASEAN, obsessed with process more than with destinations, that may be just fine, with America remaining a hedge against China. If China really wants the region more firmly in its orbit, it will have to do a better job of speaking softly and concealing the stick. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21692870-closer-asean-american-relations-thank-china-yorkies-and-great-danes/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Hong Kong-mainland relations: Over troubled water + +The fire-monkey stirs: Street violence and politics + +Corruption: Portrait of a purge + + + + + +Articles Sections Next + +Hong Kong-mainland relations + +Over troubled water + +Cross-border transport links are overshadowed by political fears + +Feb 13th 2016 | HONG KONG | From the print edition + + + +IN HONG KONG, public trust in both the central government in Beijing and the territory’s own administration is stretched perilously thin. A seemingly routine event on February 8th—food-hygiene patrols targeted at illegal street vendors—triggered hours of rioting. Activists suspicious of the mainland’s influence in Hong Kong were among those who piled into the rampage (see article). Anxieties about the Communist Party’s sway in the territory have been whipped up recently by the disappearance of five booksellers; many believe they were arrested by agents from China’s mainland to stop the publication of a book about President Xi Jinping. It is widely thought that one of those detained was seized by a snatch squad in (supposedly autonomous) Hong Kong itself. + +Resentment of the mainland is aggravated by the party’s refusal to grant the territory full democracy, as well as by a hotch-potch of other fears and prejudices. It is even affecting debate about such matters as building transport infrastructure. Work is under way on two huge projects: one of the world’s longest bridges and a high-speed railway. These are intended to improve transport links with the mainland, but critics of the schemes are legion. Some of their objections are coloured by disgruntlement with the mainland and with Hong Kong’s own government, which tends to do what the party says. + +This was evident on January 1st at an annual march by anti-government groups. Protesters focused on the 40-kilometre (25-mile) road, tunnel and bridge structure linking Hong Kong with the gambling enclave of Macau and the mainland city of Zhuhai, as well as on the high-speed rail project (see map). Leading their procession was a life-size likeness of Hong Kong’s chief executive, Leung Chun-ying, sitting on a model of a white elephant. This symbolised the protesters’ view of the infrastructure projects: wasteful sops to the party’s fondness for grandiosity and for symbols of national unity. + + + +Officials say the bridge—paid for jointly by Hong Kong, the mainland and Macau—will cut the journey time from Hong Kong to Zhuhai, a manufacturing centre in Guangdong province, from three hours to just 30 minutes. The high-speed rail service, also partly paid for by Hong Kong, will put Guangzhou, the capital of Guangdong, within 50 minutes’ reach of Hong Kong, compared with the present two-hour journey by conventional rail (pictured is an artist’s impression of the high-speed rail terminus being built in Hong Kong’s Kowloon district). + +The projects, however, are hugely expensive and technically challenging. The bridge across mainland waters will be reached from Hong Kong by a new 19km stretch of road, part of it under the sea. Beset by engineering difficulties and rising costs, the government in November said that completion would be delayed by a year to 2017. That may be optimistic. + +The bill for Hong Kong’s contribution to the bridge and the link to it had been set at HK$83 billion ($10.7 billion). Last year the government asked the Legislative Council (known as Legco) for approval to spend a further HK$5.5 billion on it. Pro-democracy legislators, who tend to be the ones least keen on close links with the mainland, tried filibustering. But the government’s supporters hold a majority in Legco. On January 30th, ahead of a government-imposed deadline, it approved the extra funds—much to the anger of pro-democracy politicians, who accused the pro-government camp of violating procedures in order to force the issue to a vote. + +The rail project has already passed its target date of 2015 for completion. A new one has been set for 2018. The government also wants approval to increase the budget for this scheme by 30%, to HK$84.4 billion. If it fails to secure this by the end of the month (unlikely, given the majority backing it enjoys), work may have to stop. + +As with the bridge, pro-democracy legislators are complaining. One downside they see to the rail link is that it may bring yet more mainland tourists to Hong Kong (as may a planned third runway for Hong Kong’s airport, which is also mired in controversy). Many in the territory resent the influx, blaming it for congestion on buses and subways, as well as shortages in shops, where the tourists strip shelves of lower-priced household goods. The rail project has also raised hackles because of plans to allow mainland police to check the documents of Guangzhou-bound passengers in Hong Kong itself. Especially following the disappearance of the booksellers, many in Hong Kong worry about allowing mainland security personnel to work in the territory, even in such an innocuous role. + +Objectors say there are economic reasons to worry, too. Original plans for the projects did not anticipate the extent of China’s economic slowdown. This may affect the growth of demand for the new links. Tourist arrivals from the mainland are already falling, partly because the Hong Kong currency’s peg to a strengthening US dollar has made goods in the territory more expensive for mainlanders to buy. A clampdown on corruption on the mainland (see article) has also made it riskier to spend money on luxury items. + +Mainland officials appear unfazed. Their dream is to create a “megacity” of more than 40m people in Guangdong’s Pearl river delta, partly by improving connections between urban centres (plans have been announced to link Guangzhou and Shenzhen, which borders on Hong Kong, by subway by 2020). They are too diplomatic to talk of folding Hong Kong into a border-spanning megalopolis: that would be too open an assault on the territory’s autonomy. But they do hope the new bridge and railway will bind the region more closely together. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21692935-cross-border-transport-links-are-overshadowed-political-fears-over-troubled-water/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The fire-monkey stirs + +Street violence and politics + +Feb 13th 2016 | From the print edition + + + +February 8th began as a day of celebration in Hong Kong: it was the start of the Chinese new year (this one influenced by the “fire-monkey”, according to Chinese astrology). It ended in the worst outbreak of rioting since the 1960s. The violence flared amid rumours that officials were trying to clear away unlicensed hawkers selling local delicacies, including fishballs. Reports that some rioters shouted “establish Hong Kong as a country!” suggest that it was about more than fried food. Ninety police were among more than 120 people injured. More than 60 alleged participants were arrested, including a leader of an anti-China group called Hong Kong Indigenous. Members of it had used social media to rally support. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21692930-street-violence-and-politics/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Corruption + +Portrait of a purge + +Who is being investigated for corruption and why? + +Feb 13th 2016 | BEIJING | From the print edition + + + +BEIJING in the winter of 2016 is a bit like Moscow in the winter of 1936: every day brings news of more purged officials and you never know who will be next. On February 4th four more high-ranking party members were kicked out, bringing to 67 the number known to have been investigated, expelled or sentenced this year alone. Among prominent establishment figures who have been dealt with in such ways recently are the head of the National Bureau of Statistics; a former chairman of Wuhan Iron and Steel, a large state-owned firm; and a former deputy chief of the country’s police. + +Observers trying to understand the campaign’s complexities now have a bit more help, thanks to a database compiled by ChinaFile, part of the Asia Society, an American NGO. It includes everyone known to have been targeted: 1,496 of them, which is double the number of people who had been outed as suspects a year ago (thousands of others have been investigated but not identified publicly). + +Only 151 people on the list are those who might be called “tigers”—a term used by President Xi Jinping to describe errant senior officials. The vast majority are those whom Mr Xi calls “flies”, or wayward low-level ones. Tigers and flies named as having been rounded up so far have been accused of stealing a total of 6.3 billion yuan (nearly $1 billion), 50% more than investigators were saying had been misappropriated by named suspects a year ago. + +By occupation, the biggest number of targets come from state-owned firms and the armed forces (see chart). Of the military officials, 44 are tigers—an exceptionally high proportion. The property sector, however, produces the most swag. There are just ten property magnates on the list, but they are said to be responsible for stealing 40% of all the money. + +Geographically, corruption tends to be patchy—or perhaps the investigation of it is. Shanxi, a northern province, has seen almost twice as many tigers arrested than any other region outside Beijing. They include five members of a so-called “Shanxi group” linked to another tiger, Ling Jihua, who was chief of staff to Hu Jintao, Mr Xi’s predecessor (the authorities would love to get their hands on his brother, Ling Wancheng, who is reported to be in America and spilling valuable secrets to officials there). Two provinces where Mr Xi served before becoming president—Fujian and Zhejiang—have got off relatively lightly. + +A big puzzle is whether the campaign is a genuine attempt to clean up or mainly a cover for political vendettas. The database lends some support to the idea that the purge began by concentrating on politically influential groups. But by tracking whether someone under investigation is connected to others on the list, it appears to show that the focus has changed. Of the first 100 people named as suspects when the campaign began, 25 had links with other targeted officials, including to Bo Xilai, a fallen rival to Mr Xi. Among the most recent 100 cases, however, only seven are members of identifiable networks. + +Those in the database who have ties with one another are often members of a group suspected of opposing Mr Xi. The shift from targeting such officials to tackling individuals without apparent connections may be a sign that eliminating corruption—rather than simply getting rid of rivals—is becoming a more important objective. Or it may be that Mr Xi has run out of rivals in need of crushing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21692928-who-being-investigated-corruption-and-why-portrait-purge/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Aviation in Africa: Departure delayed + +Saving Africa’s rhinos: Pooches v poachers + +The veil in west Africa: Banning the burqa + +Syria’s war: Assad on the offensive + +The Mosul dam: A watery time-bomb + + + + + +Articles Sections Next + +Aviation in Africa + +Departure delayed + +Africa is ripe for air travel. A pity its governments are holding it back + +Feb 13th 2016 | 30,000 FEET ABOVE THE SAHARA | From the print edition + + + +SEASONED air travellers who criss-crossed Africa a decade or more ago usually have no shortage of hair-raising tales. One mining executive tells how on take-off in an old Russian jet one of the engines burst into flames. An imperturbable crewman stepped out with an extinguisher, sprayed down the engine and then announced the plane would leave as planned, trying to block the mass exodus of passengers. Another traveller recalls the amusement in the eyes of fellow passengers when he boarded an ancient plane in west Africa. Soon after take-off, as clouds billowed into the cabin, they had a good laugh at the panic on his face until one explained that this always happened when the air-conditioning was turned on. + +It is not just the tales that were hair-raising. Hard statistics alone might have grounded all but the most daredevil of travellers (except for the fact that shoddy roads continue to make driving in Africa even more dangerous than flying). In 2011, for instance, Africa accounted for almost a third of all deaths in air crashes around the world, even though it accounted for less than 3% of all air traffic. + +The European Union (EU) has banned no fewer than 108 airlines from 14 African countries from its airspace because of safety concerns. These include all airlines registered in, among other countries, Zambia, Sierra Leone, Mozambique and both of the Congos. A recent accident in South Sudan underscores the EU’s worries. In November a 44-year-old Antonov crashed on take-off in Juba, the capital. Its Ukrainian manufacturer said it should never have been allowed to fly, because it had not been maintained. + +Yet on the whole safety has improved vastly in recent years. Although headline accident rates are still sky-high—in 2014 aircraft in sub-Saharan Africa had a crash rate about 8-11 times higher than those in America and Europe—most of the accidents involved small propeller-driven planes. Look only at jets and the rate falls sharply. Flying on a passenger jet in Africa is now about as safe as it would have been to board a European or American one about two decades ago. And the best African airlines are almost as safe as their global counterparts, says the International Air Transport Association (IATA). + +Safety concerns force travellers to make some unusual compromises. Many international corporations forbid their staff from flying on one Nigerian airline because they think its rival—which is notoriously tardy—is maintained better. Passengers must choose between being late or being less safe. + + + +Another big change is in the number of flights and destinations knitting Africa together. The number of air travellers in Africa has almost doubled over the past decade. New routes have also opened, most visibly linking east and west Africa. But routes are often still convoluted, taking long detours via Europe. This is because most African states still regulate flights as if they were in the 1970s. Airlines hoping to open a new route between two countries have to ask their governments to negotiate a bilateral treaty. Approvals can take years, if they are granted at all, as governments try to protect their state-owned carriers. + +In instances where African governments have taken steps to liberalise their markets, as Europe and America did from the late 1970s, fares plunge. That, in turn, makes flying affordable to more people, so the number of passengers soars. Fastjet, a London-listed low-cost airline with operations across Africa, says fares charged by the existing carriers flying between Tanzania and Kenya dived 40% overnight when it got permission to fly the same route. + +Yet few governments seem willing to open up to competition for fear it would harm their national carriers. “The benefits would be huge,” says Andrew Charlton, head of Aviation Advocacy, a Swiss-based consultancy. “But you would almost certainly see some African airlines disappear.” Protectionism raises fares without making African airlines profitable. They probably lost a collective $300m in 2015, and are likely to lose another $100m this year, IATA reckons. When given a choice of airlines on international routes, passengers almost always opt for foreign carriers over African ones. The African Airlines Association laments that the continent’s own airlines only carry 20% of passengers to or from it. + +Simply opening up the skies to more competition will not, in itself, allow African aviation to reach its full potential. One barrier is that jet fuel costs about 20% more in Africa than it does elsewhere. This is partly because of antiquated infrastructure but also because governments tax it heavily. There is also little competition between airports, allowing some to charge outrageous landing fees. Countries such as the Central African Republic are unable to control traffic in their airspace, leaving pilots to chat directly with one another to avoid collisions. That works in uncrowded skies but gets riskier as they fill up. + +Still, some airlines are innovating in the face of adversity. Many of Fastjet’s customers don’t have credit cards, so it accepts mobile money sent from their phones instead. One Nigerian airline seems to have hit upon a subscription model of ticket sales: after your correspondent bought a single flight on a credit card, the airline proceeded to charge him again every month for the flight until an employee, aptly named Amicable, put a stop to it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21692871-africa-ripe-air-travel-pity-its-governments-are-holding-it/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Saving Africa’s rhinos + +Pooches v poachers + +In the struggle to save the rhino, dogs still beat drones + +Feb 13th 2016 | KRUGER NATIONAL PARK | From the print edition + + + +THE stench of rotting flesh hangs heavy over the half-eaten carcass of a rhino, killed by poachers who hacked off its horns and left the rest to the lions. Barricade tape marks out the gruesome discovery in the South African bush: this is a crime scene. Two young women search for bullet fragments and casings with a metal detector, and use a chef’s knife to cut away tissue samples and a toenail. The evidence is bagged and carefully logged in a database. It is grim work but these women, wildlife crime investigators with the South African parks service, are used to it. + +Kruger National Park was home to 826 of the 1,175 rhinos killed last year in South Africa. This was a slight dip from 2014, but the number of rhinos killed by poachers increased in neighbouring Namibia and Zimbabwe. Overall, 2015 saw the most rhinos killed since the poaching crisis began nearly a decade ago, fuelled by demand from Vietnam and China, where many people wrongly believe it will cure everything from hangovers to cancer. + +Some firms have promoted drones as a sophisticated (and pricey) way to monitor the Kruger park and detect gangs of poachers. “They come with drones promising they will solve everything,” says one park official. But the drones have so far failed to impress the rangers. The Kruger park is huge (about the size of Israel or Wales) and drones have had technical problems with its harsh climate and rugged landscape. Heat-seeking drones, meant to spot poachers hiding in the bush, get confused, because large stones absorb heat during the day and then release it at night. Rangers were being dispatched to hunt rocks. + +A low-tech solution still works better. Tracker dogs, working alongside their human handlers, are responsible for more than 70% of arrests of suspected poachers in the Kruger. The powerful nose of a Belgian Malinois called Killer has led to 115 arrests over the past four years. Although the park is continuing to test drones in a project with Denel, South Africa’s state-owned arms manufacturer, the goals now are more modest. “They’re not the game-changer they have been portrayed to be,” says Julian Rademeyer, author of “Killing for Profit”, a book about the illegal rhino-horn trade. + +The real problem is that although South Africa tries fairly hard to catch poachers, no one is doing much to tackle the Asian crime syndicates that buy the horns. Unless Asian and African police work together better, the rhino’s future looks grim. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21692823-saving-africas-rhinos-struggle-save-rhino-dogs-still-beat-drones/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The veil in west Africa + +Banning the burqa + +Why more countries are outlawing the full-face veil + +Feb 13th 2016 | LAGOS | From the print edition + + + +LAST June, a few months after Chadian forces had crossed into Nigeria to fight the Islamist insurgents of Boko Haram, two suicide-bombers detonated their belts in N’Djamena, Chad’s capital, killing more than 30 people. Two days later Chad’s government banned the wearing of the burqa, the Muslim woman’s covering that hides even the eyes. Henceforth, said the prime minister, security forces could “go into the markets… seize all the burqas on sale and burn them”. Those spotted in such “camouflage” would be “arrested, tried and sentenced after summary proceedings.” Heavy-handed as that sounds, several other sub-Saharan governments have followed suit. A month after Chad’s ban, Cameroon did the same in its northernmost region following suicide-bombings by people clad in burqas. Now the ban has been extended to five of Cameroon’s ten provinces, including its two biggest cities. Niger’s government has banned the garment in Diffa, a southern region that has also been hit by Boko Haram. And late last year Nigeria’s President Muhammadu Buhari, a Muslim, said that a ban even on the hijab, which shrouds a woman’s head and chest but leaves her face on show, may be necessary if bombings persist. + +Even countries unharmed by Islamist terror are banning the burqa. Last year Congo-Brazzaville barred it in public places to “prevent any act of terrorism”. And Senegal, which the French security service says is vulnerable to an attack, is pondering a ban, too. Only one west African country seems to be moving in the other direction. The Gambia’s eccentric dictator, Yahya Jammeh, who recently declared his nation to be Islamic, told all female government workers to cover their hair. + +For decades Muslim countries outside the Gulf (where the garb is common) have discouraged the full-face veil—and the strict form of Islam it denotes. In recent years some governments in Europe, notably France and Belgium, have ruled against the full covering of the face, arguing that it allows terrorists to disguise themselves and violates European notions of secularism and sexual equality. Now many African governments have similar fears. + +Bar Congo-Brazzaville, all those that have banned various types of religious covering for women have been threatened by suicide-bombers with a record of hiding explosives under loose-fitting clothes. Many locals feel nervous if they cannot identify a figure in a mosque or market. “Banning burqas is not a fail-safe, but at least it allows security forces to identify suspects,” says Martin Ewi of South Africa’s Institute for Security Studies. + +Across the region around Lake Chad such rules have accompanied a stream of new security measures, including curfews, embargoes on motorbikes (the attackers’ vehicle of choice) and checks on cars with tinted windows. People in Congo-Brazzaville have been banned from sleeping in mosques. Last year Nigeria even outlawed horse-riding in the north-east, because Boko Haram, short of fuel, has occasionally made its lethal raids on horseback. + +Most people in Chad, Senegal and Niger are Muslim, as are nearly a quarter of Cameroonians. Islam expanded south of the Sahara in the tenth century and most of its adherents have opposed the most puritanical versions of Islam. Many Muslims in the region are Sufis, who wear colourful clothes, practise a mystical kind of Islam, and tend to see the full-face veil as drab and unAfrican. “Sometimes people don’t want the black [material] to touch them,” says a burqa-wearer at an Islamic school in a poor bit of Lagos, Nigeria’s commercial capital. “They think it signifies death.” An imam in Yola, a north-eastern Nigerian town hit by Boko Haram, says, “Even Muslims think [the burqa] is an extremist thing, or it’s linked to Boko Haram.” + +Ultra-austere forms of Islam, in particular the Wahhabist version, sprung up in sub-Saharan Africa only in the past few decades, as traders and students travelled to the Gulf and Saudi Arabia poured money into Islamist institutes and mosques.Though a small minority, fundamentalists are growing in number. A tenth of Muslims in Cameroon may now be Wahhabists. Sufis in Chad fear they will soon be outnumbered by them, says Thibaud Lesueur of the International Crisis Group. “We thought it would never be part of the culture in Senegal, but more and more people are following these rituals,” says Aliou Ly, a Senegal-born assistant professor at Middle Tennessee State University. + +Yet it is not clear that banning the burqa, let alone the hijab, will help the fight against extreme groups such as Boko Haram. Some fear it could play into their hands. A few weeks after Chad banned the burqa, a veiled man blew himself up in N’Djamena’s main market. In Cameroon police have pulled the hijab off women in the street. That enrages ordinary Muslims. In Chad, 62 women were arrested for wearing burqas and told that if they did so again they would be charged with complicity in terrorism. If Mr Buhari penalises women for wearing the burqa, there could be a backlash. “There would be a war bigger than Boko Haram,” says an imam in Lagos, as his wife and daughters sit silently in the corner, under veils. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21692902-why-more-countries-are-outlawing-full-face-veil-banning-burqa/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Syria’s war + +Assad on the offensive + +The encirclement of Aleppo consolidates the regime’s comeback + +Feb 13th 2016 | BEIRUT AND KILIS | From the print edition + + + +HOW the tables have turned. In February last year Bashar al-Assad’s forces launched an offensive to take back Aleppo, once Syria’s most populous city but divided between the regime and rebel fighters since 2012. Not only were Bashar’s battalions pushed back from the city; the rebels then turned west and routed them from Idlib too. A year on, Mr Assad is attacking Aleppo again. This time he is succeeding. + +Almost five years since the war started in Syria, the regime is making a comeback. Unlike previous ebbs and flows in the brutal conflict, this one looks as if it may prove decisive. In what has long since become a proxy war, Mr Assad’s allies are simply more dedicated to their cause than the backers of those fighting to oust him; and there is little sign that this will change. + + + +Aleppo is now almost encircled by the Syrian army and Shia fighters from Iraq and Afghanistan under Iranian command. They have taken back Zahraa and Nubl, two Shia towns north-west of Aleppo (see map), and have cut off the rebels’ last supply route into Aleppo from the Turkish border. Russian airstrikes cleared the way. They are bombing civilian areas at least as heavily as front lines. Ezz al-Din Attar, a refugee from Aleppo now in Kilis, says that includes hospitals, schools and markets. + +It is likely the regime intends to move onto villages around the city, and then towards Idlib to Aleppo’s west. The road to Idlib is the only one out of rebel-held Aleppo still open, through a 5km (three-mile) corridor separating two regime positions in the north-western corner of Syria. And it may not last long. The regime, which has a column only 3km from it, is shelling this road too. Hizbullah and Shia fighters are only 20km from two towns in Idlib province that, if captured, would help the regime to advance in the province. + +The UN reckons 300,000 people in the eastern part of Aleppo under rebel control are in danger of being cut off and starved, as Mr Assad has deliberately done to other towns and villages. Aleppo town councillors have sent a detailed list to donors of the food, fuel and medical supplies they will need to survive the siege, which could last many months since the city is too big to fall quickly. Thousands of others have fled towards Turkey’s border. “People are beginning to panic,” says Bahaa Jabali, a photographer in Aleppo. + +Iran has long been sending thousands of Iraqi and Afghan Shia militiamen to Syria. But it is Russia’s intervention in the autumn last year that has made the difference. Sold as being against Islamic State (IS), Russia has mainly set about bombing the more mainstream Sunni rebels. Despite yet another report this week accusing Mr Assad of crimes against humanity for “exterminating” prisoners, Russia knows that his regime is more palatable to the West than IS. + +America, focused on fighting IS, has continued to hope, without any real evidence, that Russia will help force Mr Assad to the negotiating table. Not surprisingly peace talks fell apart in Switzerland last week almost as soon as they had begun, over the assault on Aleppo. Mr Assad and his allies appear to see the only point of the talks as being a place to consolidate their gains, in hope of receiving a stamp of approval from a weary UN. + +The opposition’s backers are at odds, too. The Gulf states are angry with America for focusing on IS instead of Mr Assad. On February 10th Turkey lashed out at America for working with the Kurdish PYD, Syria’s offshoot of the Turkish PKK, which Turkey considers a terrorist group. + +The PYD is in tacit alliance with the regime. Its fighters are moving in to hold some of the areas taken by the regime around Aleppo, on the border with Turkey. The silent agreement may soon become formal. Word is that Russia has promised the Kurds what Western backers would not: a continuous Kurdish area in the north-east of Syria that is their stronghold. + + + +An interactive guide to the Middle East's tangled conflicts + +The rebels say their last hope is a promise from Gulf states to send ground troops to help them out, though the Gulf states say their main aim is to fight IS. About 30,000 fighters from various groups have joined an umbrella group, Jaish Haleb (the Army of Aleppo), to defend the city. Elsewhere the choice is harder: in the town of Tel Rifaat, near the border, the rebel fighters are local men tempted to flee to safety with their families. What any Gulf force would consist of is unclear, but even if it materialises, it is unlikely to do much in the face of the regime’s firepower. + +Even in the south of Syria, where the rebels are in better condition thanks to more consistent and organised support by the opposition’s backers, the regime, once again with Russia’s help, has made advances. In January it took Sheikh Miskeen, a rebel stronghold. “Russia, Iran and Assad know that this year America is weak because of the election and that Obama will not do any more so they are using this time to destroy the opposition,” reckons Fabrice Balanche, a scholar at the Washington Institute, a think-tank. + +Jordan is unlikely to do much to help, wary of Mr Assad and of more refugees. The Turks say they will not intervene directly in Syria unless the Americans do; but they are setting up an informal buffer zone. Rather than allow in the thousands camped out in the open between Aleppo and the border, Turkish relief organisations have been crossing over to the Syrian side and building new camps there. But it is unclear who will protect the area should the regime decide to attack. Any action at this point risks direct conflict with Russia. Aleppo may determine what happens in Syria, the region and beyond. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/21690203-city-was-once-syrias-largest-faces-siege-assadu2019s-grip-tightens/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Mosul dam + +A watery time-bomb + +The most dangerous dam in the world + +Feb 13th 2016 | BAGHDAD | From the print edition + +It seemed a good idea at the time + +“FIRE or flood” goes an old saying about the turbulent history of Iraq; and just now flood is the one to fear. American officials are ringing alarm bells over a potentially catastrophic collapse of the country’s biggest dam, 50km (30 miles) upstream from Mosul, Iraq’s second city, currently held by Islamic State (IS) + +“What we do know is this—if this dam were in the United States, we would have drained the lake behind it,” said Lieutenant-General Sean MacFarland, who commands American forces in Iraq, to reporters last month in Baghdad. Sensors installed by American army engineers in December show widening fissures in the fragile gypsum base underneath the dam, though no one can predict when a breach might occur. + +Iraqi authorities have downplayed the danger, in part because they have not had the money to fix it. But after repeated warnings from American experts and an infusion of $200m from the World Bank for urgent repairs, the Iraqi government has now contracted with the Trevi Group, an Italian firm, which it hopes will offer a more advanced and permanent method of plugging cavities in the stone base than the constant maintenance it has required for the past 30 years. That maintenance came to an abrupt halt after IS seized the dam in August 2014, and has continued only intermittently after it was seized back three weeks later. Essential equipment went missing then, and half its staff decided not to return to work. + +One study says that if the dam collapses, Mosul would be submerged within hours. Another warns that half a million Iraqis could be killed by floodwaters, and more than a million forced from their homes. Disease and looting as the floodwaters raced through Baiji, Tikrit, Samarra and even parts of Baghdad would complete that dreadful scenario. + +The dam was built by an Italian-German consortium and started operating in 1986. Because of the high proportion of gypsum in the area, the construction included a grouting tunnel to allow almost constant injection of cement and drilling mud into crevices in the base that are widened by the water flowing through them. America’s Army Corps of Engineers warned in 2005 that the “extraordinary engineering measures” needed to maintain its structural integrity made the structure potentially the most dangerous in the world. But taking the dam out of commission is not an attractive option. Emptying the reservoir would leave Iraqis seriously short of drinking and unpolluted irrigation water in the summer. + +What is clear, according to Iraqi military leaders and engineers, is that if the Mosul dam collapses, the city below it would be flooded so quickly that it would not stand much of a chance. “Downstream we can do many things” in co-operation with the UN and other Iraqi ministries, says Mehdi Rasheed of Iraq’s water ministry in Baghdad. “In the current situation that is not possible for the people in Mosul city.” The Italians had better get moving. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21692903-most-dangerous-dam-world-watery-time-bomb/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Corruption in Ukraine: Dear friends + +Smoking in France: Between a puff and a Kalashnikov + +Spanish politics: Back to the bullring + +Germany and refugees: Is the welcome culture legal? + +Russians in London: Government in exile + +Charlemagne: Special privileges + + + + + +Articles Sections Next + +Corruption in Ukraine + +Dear friends + +Ukraine’s grace period for tackling cronyism may have run out + +Feb 13th 2016 | KIEV | From the print edition + + + +IN TSARSKOE SELO (“Tsar’s Village”), a smart district in Kiev, Ukraine’s president, Petro Poroshenko, owns a swathe of desirable land. Across the street sits a sprawling compound belonging to Ihor Kononenko, the president’s friend and deputy head of his parliamentary faction. The two men met during their Soviet army service. After Ukraine gained independence they rose together in business and politics. Last week Ukraine’s economy minister, Aivaras Abromavicius, resigned, accusing Mr Kononenko of obstructing reform. Mr Abromavicius said he refused to cover for officials who, “very much like the old government, are trying to exercise control over the flow of public funds”. + +Ukraine’s Maidan revolution was supposed to roll back corruption and cronyism. Mr Abromavicius, a Lithuanian-born investment banker, was one of several foreigners invited into government to change the old ways. He ran up against vested interests in the circles of both the president and the prime minister, Arseniy Yatsenyuk (pictured, being uncomfortably hoisted during a brawl in parliament). Mr Abromavicius is the second economy minister since the revolution to quit for similar reasons, and the fifth minister to resign from the current government. Western ambassadors lamented his departure. In unusually blunt language, Christine Lagarde, the head of the International Monetary Fund (IMF), threatened an end to Ukraine’s $18 billion bail-out programme “without a substantial new effort to invigorate governance reforms and fight corruption”. Following Ms Lagarde’s comments, Mr Poroshenko pledged to do more. + +Yuri Lutsenko, the head of Mr Poroshenko’s parliamentary bloc, says the country now faces a “full-blown political crisis”. A cabinet shake-up is inevitable. A collapse of the ruling coalition and early parliamentary elections look increasingly likely. Ukraine’s Western allies argue that elections would be destabilising and open the door to radicals and populists. Yet an exasperated public may demand them. At stake is Ukraine’s chance of moving past its history of post-Soviet misrule. + +Mr Abromavicius’s problems mounted last year after his ministry was given control over Naftogaz, the state gas firm, and the power to appoint chief executives at the 60 top state-owned enterprises (SOEs). Ukraine’s SOEs exemplify the crooked relationship between business and government: interest groups in parliament install “loyal” managers who funnel cash to oligarchs and political parties. Mr Abromavicius says he was pressured to let these appointments go through. His security detail was abruptly cut off for several weeks. The “tipping point” came when Mr Kononenko demanded that he appoint a crony as his deputy minister. (Mr Kononenko declined to comment.) + +Figures like Mr Kononenko abound in Ukraine’s parliament; locals call them “grey cardinals” or lyubi druzi (“dear friends”). The lines between friends, business partners, relatives and political allies are blurred, says Mr Abromavicius, and reforms have stalled. “It’s not a technical problem, it’s a political problem,” says one foreign adviser to the government. + +Dissatisfaction with the country’s direction is rising and trust in the authorities is falling (see chart). Not a single government institution has a positive trust rating, according to the Kyiv International Institute of Sociology. Investors are worried, says Tomas Fiala, the head of Dragon Capital, Ukraine’s largest investment bank. Bond yields have spiked in the past week. + + + +On February 16th Mr Yatsenyuk is set to present his yearly progress report to parliament. A vote of no confidence may follow. Political stakeholders have been scrambling to prepare. Mr Poroshenko summoned the ambassadors of the G7 nations for a meeting, hoping to regain their trust. Mr Yatsenyuk gathered his cabinet to push for a last-ditch attempt at unity. Young reform-minded deputies are holding cross-party strategy sessions. The central bank chief summoned the heads of the top 40 banks for a dour meeting earlier this week. Western diplomats have been urging calm, concerned that instability could derail both Ukraine’s reforms and the Minsk peace process. Sensing weakness in Kiev, the Kremlin may be rocking the boat: last week saw an uptick in ceasefire violations and snap drills by the Russian army along the border with Ukraine. + +The crucial question is the fate of Mr Yatsenyuk, who is reviled but controls a large faction in parliament. Although he and Mr Poroshenko are partners in public, insiders say the president wants the prime minister out. About 70% of Ukrainians also want Mr Yatsenyuk gone, but there is no consensus on who should take his place. The American-born finance minister, Natalie Yaresko, is favoured by some reformers, including Mr Abromavicius, yet she has expressed no interest. Two old hands, Yulia Tymoshenko, a former prime minister, and Mikheil Saakashvili, the ex-president of Georgia who is now governor of the Odessa region, do have designs on Mr Yatsenyuk’s seat. + +There is a circular quality to Ukraine’s reforms. Mr Poroshenko was among the lyubi druzi of a previous president, Viktor Yushschenko, after the 2004 Orange Revolution. This time, many had hoped that real work on reforms would begin after local elections last autumn. The opposite has proved true. Mr Yatsenyuk has focused on saving his job, despite approval ratings in single digits. Mr Poroshenko, facing a backlash over his support for an incompetent prosecutor general, has seen his credibility steadily eroded. For some activists his failure to demand Mr Kononenko’s resignation is the last straw. “R.I.P. Poroshenko,” says Daria Kaleniuk, the head of Ukraine’s Anti-Corruption Action Centre. “He’s digging a political grave for himself and for the country.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21692917-ukraines-grace-period-tackling-cronyism-may-have-run-out-dear-friends/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Smoking in France + +Between a puff and a Kalashnikov + +Fighting for the right to smoke at school + +Feb 13th 2016 | PARIS | From the print edition + +A national sport + +WHEN France imposed a state of emergency in November, following the terror attacks in Paris, it implied some constraints on liberty. But the freedom to smoke was probably not one many observers had in mind. Fully 32% of French 17-year-olds admit that they smoke daily, and by law pupils can do so only outside school premises. Yet head teachers now fret that, by letting them out of the school gates during the day to light up, they face a greater threat: terrorism. + +Improbable as it seems, the country’s biggest head-teachers’ union, SNPDEN-Unsa, wrote last month to the prime minister, Manuel Valls, demanding clarification. Did the ban still apply under the state of emergency, as the health ministry insisted? Or, given the security risk of gathering on the pavement, could head teachers make an exception, as the education ministry seemed to suggest, and allow smoking on school grounds? This, argued some, was the lesser danger. “Between a cigarette and a Kalashnikov, the risk is not the same,” said Michel Richard, a head teacher at the union. + +Nobody seems to have thought of banning young people from smoking altogether. Smoking, like café culture, seems embedded in French life. Every year 350 tonnes of cigarette butts, the equivalent in weight to two blue whales, are cleared off the streets of Paris alone. Most European countries have curbed smoking over the past decade, thanks to sales taxes, public-health campaigns and stricter rules. The proportion of people who smoke has dropped by six percentage points to 20% in Britain; by 13 points to 13% in Norway, and an average of eight points across the OECD rich countries. In France, however, the figure has remained stable, at around 25%, and since 2008 rates for teenagers have gone up. Tobacco is the leading cause of preventable death in France, far ahead of alcohol or road accidents. + +Successive French governments have tried to discourage the habit. Although cigarette taxes were not raised last year, as the state auditor noted disapprovingly this week, smoking has been banned in cafés and offices. In May, after years of resistance by the tobacco lobby and tabac-sellers, Marisol Touraine, the health minister, will impose “neutral packaging”. A manufacturer’s brand name will still be visible. But all packets will be henceforth sold in “unattractive” shades of mud-brown and khaki, with lurid health warnings. + +The French do not exercise much. But they don’t snack, eat much junk food, or binge-drink like British teenagers. And they live longer, stay slimmer, and suffer lower rates of cardiovascular disease than most other rich countries. Yet they seem ready to ignore health warnings when it comes to smoking. Teenage girls say it keeps them from getting fat. “If you want to be with the cool kids, you hang out with the smokers outside the gate,” says one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21692913-fighting-right-smoke-school-between-puff-and-kalashnikov/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Spanish politics + +Back to the bullring + +Does Spain need a government? Apparently, yes + +Feb 13th 2016 | MADRID | From the print edition + + + +WHEN Spaniards voted at a general election in December, they chose to change the way politics works. What they did not expect was that it would stop working altogether. Yet eight weeks later, they have no government and, with a fractured parliament, might not have one until the summer. The question that quickly arose was: does it matter? + +Surprisingly, many thought the answer was no. Luis De Guindos, the finance minister, estimated that Spain could hold out for six months with the current caretaker government led by Mariano Rajoy of the Popular Party (PP). A 2016 budget was passed last year. “In the short run political uncertainty is likely to have limited impact on fiscal policy,” noted Fitch, a ratings agency, after the elections. Much of the spending, on services like health and education, is done by regional governments. More important, the economy is recovering, unemployment is falling and growth looks set to continue at about 3% this year. Spanish newspapers, recalling Belgium’s 589 days without a government in 2010-11, predicted everything from an economic boom to less corruption. + +But with jittery financial markets now threatening to upset Spain’s fragile recovery, attitudes are changing. “The assumption in Spain was that it didn’t matter because in an environment with benign financial conditions and growth and employment being created, who cared?” says Fernando Fernández, an economist at the IE Business School in Madrid. Yet it would be foolish to forget that the Spanish economy is still vulnerable, he adds. Spain is heavily in debt, as are many Spanish families. The deficit remains high and unemployment, although falling, is still sky-high at 20%. If the current market turmoil provokes a large hike in bond yields, then the provisional government may have to make tricky spending decisions. And the problems are not just domestic. In Europe, too, Spain may have to take a stance on everything from Brexit to immigration. + +With a weak government, any major decisions risk being viewed as ephemeral, warns José Fernández-Albertos, a political scientist at Spain’s National Research Council. Unlike Belgium, Spain is not used to consensus-based coalition politics. It is more like the United Kingdom, where a change of government can bring a big shift in policy. Any decision Mr Rajoy takes could be reversed by a new government within weeks or months. + +All this could be avoided if Spain’s political parties could agree on a new government. That is unlikely to happen soon, if at all. Mr Rajoy has run out of options and the socialist leader, Pedro Sanchez, is now trying to see if he can piece together a coalition. His two main potential partners are either the centre-right insurgent party Ciudadanos or the new left-wing radicals of Podemos. Yet both coalitions would result in unstable minority governments. + +If Mr Sanchez fails, new elections must be called. Whether that will resolve things is unclear. Polls show that the distribution of seats would be fairly similar. This might lead to a coalition with Podemos, a thought that frightens many investors. If that happens, Spaniards may look back on this period of political uncertainty fondly, says Lorenzo Bernaldo de Quiros, an economist. “A caretaker government,” he says, “is better than a bad one.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21692922-does-spain-need-government-apparently-yes-back-bullring/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Germany and refugees + +Is the welcome culture legal? + +Under pressure to reverse her refugee policy, Angela Merkel faces a court case + +Feb 13th 2016 | BERLIN | From the print edition + +Tying her hands + +OF ALL the people stoking the pressure on Germany’s chancellor these days, the most relentless is Horst Seehofer, Bavaria’s premier and leader of its governing party, the Christian Social Union (CSU). Angela Merkel’s refugee policy, he said this week, amounts to a “reign of injustice”—or “illegality”, depending on the translation. This month he will decide whether Bavaria will sue the federal government in the constitutional court in Karlsruhe. + +The argument that Mrs Merkel’s “welcome culture” is not only naive but downright illegal is popular among German conservatives. Proponents include eminent jurists such as Hans-Jürgen Papier, a former president of the constitutional court (and a member of the CSU). Claiming asylum in Germany is technically impossible for anybody arriving on a land route, he points out. Under the German constitution, since an amendment in 1993, protection is not available to people entering from “safe” states, a description that fits all nine of Germany’s neighbours. + + + +European Union law brings him to the same conclusion. The EU’s so-called Dublin agreement stipulates that refugees must claim asylum in the first member state they reach. Geographically, this cannot be Germany, unless refugees take an aeroplane or ship. Mr Papier concedes that Dublin has broken down. But while it allows Germany to process asylum claims voluntarily, it does not oblige it to. Given the magnitude of the crisis—with 1.1m refugees arriving in Germany last year—such a decision would have to be made by parliament rather than Mrs Merkel. Since the Bundestag has never yet voted on her overall policy, Mr Papier calls it “quasi-legal”. + +Another former judge on the constitutional court, Udo di Fabio, goes a step further. Approached by Bavaria for a legal opinion on the suit, he concluded that it could win. His argument—which will sound more familiar to Americans than to citizens of more centralised states—is based on German federalism. + + + +How do Angela Merkel's 10 years in office compare to other European heads of state? + +In the Federal Republic of Germany, the nation, its 16 states and its municipalities all have their own forms of “statehood”, as well as obligations to one another. In the refugee crisis, these divisions and responsibilities have become muddled. Federal agencies control the external borders and decide on asylum claims. But the states provide accommodation and social services, as well as deporting rejected applicants. If the federal government neglects its role by allowing chaos on the borders and an uncontrolled inflow of people, this could undermine the statehood of Bavaria, say, by compromising its ability to provide public safety and other functions. + +Germany’s constitutional court, unlike America’s, does not make a habit of resolving political disputes, and may not take such a hot-potato case even if Bavaria files it. But spelling out the legal logic exerts great political force. Mrs Merkel governs in a partnership between her Christian Democrats, the centre-left Social Democrats and the CSU. Mr Seehofer’s legal threat amounts to “a declaration of breaking the coalition”, says a top Social Democrat. At a pinch, Mrs Merkel could govern without the CSU. But given her waning popularity (see chart), she may not wish to. In fact, she has already been tightening asylum law piecemeal. Should she decide to close Germany’s borders to refugees for political reasons, her critics’ legal argument might serve as a handy excuse. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21692916-under-pressure-reverse-her-refugee-policy-angela-merkel-faces-court-case-welcome/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Russians in London + +Government in exile + +A new generation of émigrés has plans for the homeland they never wanted to flee + +Feb 13th 2016 | LONDON | From the print edition + + + +LAST week Vladimir Ashurkov, a former executive at Russia’s Alfa Bank, stood at the front of a tour bus full of journalists and academics threading its way through London’s Whitehall district, lecturing into a microphone as he pointed out an £11m ($16m) apartment belonging to a senior Russian official. Mr Ashurkov is a close ally of Alexei Navalny, a Russian anti-corruption campaigner and opposition politician, and the event was one of a series of “kleptocracy tours” organised by émigré activists to publicise how corrupt regimes launder their fortunes in London’s property market. + +Mr Ashurkov fled Moscow in 2014 after prosecutors, in the midst of a crackdown on Mr Navalny, targeted him in an investigation that he says was politically motivated. He was granted asylum in Britain, where he joins a growing community of exiles who have left or been pushed out of Vladimir Putin’s Russia. + +The first Russian to inquire about political asylum in Britain may have been Tsar Ivan the Terrible, who wrote to Queen Elizabeth I in 1570 asking whether she would take him in if things got too hairy in Moscow. (Elizabeth replied that he could come if he paid his own way.) Ivan never came, but England has since offered refuge to generations of Russian political exiles. Alexander Herzen, Russia’s first socialist, came to London in the 1850s and published his newspaper Kolokol (Bell), which was smuggled back into Russia. Lenin lived briefly in Bloomsbury, and is said to have met Stalin at a pub in Clerkenwell. Today London is home both to Mr Putin’s cronies and to opponents of his regime trying to lay the groundwork for the day it vanishes. + +Putin or the Ritz + +The most prominent political exile is Mikhail Khodorkovsky, who was one of Russia’s most powerful oligarchs until the government seized his companies and jailed him in 2003. Freed in 2013, Mr Khodorkovsky now calls London “the second-best place to be after Moscow, if you follow Russia”. From his Mayfair office he runs Open Russia, a civil-society group that sponsors discussions between Russian experts, journalists and artists, streamed to Russia via the internet. He has also launched an online university project that looks at Russia’s modern history, in particular the 1990s, not as a period of chaotic weakness (as Mr Putin describes it) but one of cultural vitality and opportunity. + +Unlike many earlier dissidents, Mr Khodorkovsky is not directly working to hasten the regime’s end. Instead he aims to nurture a new Russian political elite, so that when the transition comes “we don’t end up in the same place as we did when the Soviet Union collapsed”, lacking leaders with democratic experience. As for what might bring about that change, Mr Khodorkovsky does not think it will be elections. Either Mr Putin will anoint a successor, or there will be “a revolution, with luck a bloodless one”. He has no illusions about how long that might take. “Putin may stay till 2024. This is why I am not working with anyone who is over 40.” + +Mr Ashurkov, too, is thinking about the future: “We want to have a seat at a virtual round table about what Russia would look like after Putin.” As a first step, he has launched a project to analyse all the repressive laws passed by the Russian parliament in recent years that would need to be revoked by a future democratic Duma. + + + +A timeline of Vladimir Putin’s unshakeable popularity + +One obstacle to building a post-Putin elite is that many of the young people who might form one are leaving the country. The Soviet Union of the 1970s and 1980s prevented its citizens from defecting, forcing young, independent-minded people to sit tight and hope for change. In contrast, Russia has kept its borders open, letting the steam escape. + +The result has been one of the largest brain drains in Russian history. Leonid Bershidsky, a former editor of Vedomosti, a business daily, has called the latest exodus an “emigration of disappointment”. Mr Bershidsky himself moved to Germany in 2014, after his hopes that Russia would become a normal European country were dashed by the annexation of Crimea and the war in Ukraine. Shortly before leaving, he wrote on his Facebook page that he did not wish to “pay a single kopeck for Crimea. Stolen goods are stolen goods.” + +Most young Russians in London are neither exiles nor oligarchs, but professionals in search of the careers and intellectual fulfilment they can no longer find at home. Eduard Uraskulov, 30, who works at the London office of Goldman Sachs, was born in the small North Caucasus republic of Karachavo-Cherkessia. He considers himself a globalised Russian, wearing his nationality as lightly as his German, French or Brazilian peers. His road to London’s City started with a degree at Moscow’s prestigious New Economic School, then headed by Sergei Guriev, one of the country’s top economists. In 2013 Mr Guriev, who had advised Mr Navalny and testified in favour of Mr Khodorkovsky, was forced to flee himself. (Now a professor in Paris, he has just been appointed chief economist at the European Bank for Reconstruction and Development.) + +Like many of his friends, Mr Uraskulov was at the protests in Moscow’s Bolotnaya Square in the winter of 2011 that sparked off Russia’s latest saga of oppression and exile. “There was a really good atmosphere then. It is very sad that nothing came of it,” he says. Mr Uraskulov does not consider himself an émigré. “As soon as I see that things are starting to change, I will go back,” he says. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21692934-new-generation-migr-s-has-plans-homeland-they-never-wanted-flee-government/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Special privileges + +In shaping a deal to suit British interests, the EU may be storing up trouble for itself + +Feb 13th 2016 | From the print edition + + + +IF BRITAIN adhered to Groucho Marx’s dictum of never joining a club willing to have him as a member, it would be on its way out of the European Union. The “renegotiation” of Britain’s EU membership pursued by David Cameron, the prime minister, has been a fanciful exercise designed to keep his Conservative Party in check. But it has at least forced Britain’s EU partners to accept that, if pushed, they are better off with the infuriating islanders as part of the family. The EU, said Bild, an exuberant German tabloid, would be “spiritually” poorer after a Brexit (even if that may be read as a plea not to be left with the French and Italians). + +The paper was responding to a draft settlement for Britain sent to EU governments last week by Donald Tusk, president of the European Council. Mr Cameron aims to convert Mr Tusk’s paper into a deal during a summit of EU leaders on February 18th-19th, and then put Britain’s membership to a referendum, probably in June. There is plenty of time for hiccups before then. The Poles and others are grumbling about an “emergency brake” that allows Britain to restrict benefit payments to working EU immigrants. France is suspicious about safeguards for non-euro members. Last week Martin Schulz, president of the European Parliament, warned an audience in London that Britain had tested Europe’s patience. He and his fellow lawmakers could hold up the legislation needed to implement parts of the deal. Mr Tusk himself admits that the situation is “fragile”. + +But broadly, although Mr Cameron has taken a hammering at home over the draft, the signs in Europe look good. Few seem in the mood for a showdown; even the Poles are less obstreperous than expected. Mr Cameron’s peers decided that they needed to give him enough goodies for him to make his case to voters. And the prime minister secured some victories that many had argued were beyond his reach, even if they hardly amount to the fundamental change in Britain’s membership that he once promised. + +For that Mr Cameron can thank the litany of woes afflicting Europe. Next to security fears, euro-zone sclerosis and the worst migrant crisis the EU has ever known, Britain’s little problem looks eminently solvable—and the departure of an economic and foreign-policy heavyweight an accident best avoided. Mr Cameron helped by steadily restricting the scope of his demands (see article). And the dread prospect, should Britain vote to leave, of spending years in painful negotiations over an exit settlement probably did Mr Cameron no harm. When everything else is falling apart, says a European official, at least the Britain talks give us a chance to get something right. + +Where does this leave the rest of Europe? Mr Tusk’s great fear was that other countries would seek their own special treatment during the renegotiation: a carve-out from climate rules for the Poles, say, or a more lenient fiscal regime for the periphery. So worried were the deal’s brokers that they explicitly warned some governments not to try any funny business during the talks. + +And by and large, apart from Catalonia’s chancer of a president (who mused that he could exploit the flexibility the EU showed with Britain in his bid for independence from Spain), they did not. Indeed, the most contentious elements of the Tusk deal seem designed to avoid such antics. Much of the package consists of clarifications of existing law designed to soothe British anxieties without upsetting the workings of the EU (or tampering with its treaties). A “red card” granting groups of national parliaments the right to block legislation, for example, gives Mr Cameron something to boast about. But the threshold of 55% of parliaments means it will rarely, if ever, be used. + + + +In graphics: A guide to “Brexit” from the European Union + +Most strikingly, the legislation that will satisfy Mr Cameron’s obsessive demand to deny in-work benefits to migrants for four years will be crafted to limit its application beyond British shores. The European Commission, which will draft the law once the governments have struck their deal, has even stated that Britain satisfies the criteria for pulling the emergency brake before specifying what they are. Downing Street could not resist crowing about this concession before it was announced. + +Then everyone will want one + +Thus does the circle look squared. Mr Cameron will probably win a deal that he feels able to sell to British voters. Assuming there are no nasty accidents at referendum time, the rest of the EU reduces its list of crises by one without fatally damaging itself in the process. Could this turn out to be that rarest of beasts: a European diplomatic triumph? + +Not quite. Mr Cameron says other countries can enjoy the fruits of his renegotiation, but few will. Apart from a rule allowing governments to pay lower child benefits to parents with children abroad (which migrant-worker magnets such as Germany may exploit), most EU countries do not care about the provisions Mr Cameron negotiated. This is a deal to satisfy British concerns. + +Alas, that may be the problem. A package designed as an improvement for the whole machine might be presented as a one-off. But special treatment for the British sets a precedent. The Italians might cite it to pursue their vendetta against the fiscal limitations of the Stability and Growth Pact. Easterners could call for exemptions from refugee-sharing schemes. Previous special deals (such as the Danish opt-outs of the Maastricht Treaty of 1992) did not have this effect, but they were struck in happier times. Today the EU is under siege from populists looking to bring the edifice down, and joint projects like the passport-free Schengen zone are in grave danger. + +Still, before all that British voters will have to be seduced by their prime minister’s diplomatic dance. So far, despite the EU showing Britain that it wants it inside the club, many Britons still seem distinctly unimpressed. Mr Cameron, hoisting his renegotiation prize triumphantly, does not want to follow Groucho’s example. But there is no guarantee that the electorate will agree. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21692894-shaping-deal-suit-british-interests-eu-may-be-storing-up-trouble-itself-special/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Britain’s tax code: Spaghetti junction + +The Brexit debate: The budget that didn’t bark + +Intelligence oversight: Snoopers scolded + +The energy business: Switched off + +Problem-solving courts: Smart justice + +Sugar taxes: Do as I say, not as I chew + +Refugees: Marginal benefits + +Bagehot: Britain’s new ambassadors + + + + + +Articles Sections Next + +Britain’s tax code + +Spaghetti junction + +The chancellor promised to rationalise the tax code, but he has done the opposite + +Feb 13th 2016 | From the print edition + + + +GEORGE OSBORNE sees himself as a reformer. The chancellor promised that, unlike his Labour predecessors, he would take tough decisions to improve the economy, whether this was liberalising planning to boost housebuilding, promoting competition between energy firms, or cutting red tape for businesses. When in opposition, Mr Osborne also set his sights on the tax code. In 2008 he proclaimed (with some hyperbole) that Britain’s code was “the longest [and] probably the most complex in the world”, promising “long-term thinking on simplification” if he got into power. He even mulled the idea of a flat income tax, where everyone pays the same rate regardless of their earnings. + +Yet eight years on, the tax system looks as fiddly as ever. In 2010 Mr Osborne set up an Office of Tax Simplification (OTS) to hold the government to account, rather as the Office for Budget Responsibility (OBR) acts as a watchdog over fiscal policy. The OTS identified 1,042 tax reliefs in Britain. Plenty were ripe for reform. People could even get relief for the first 15p of “luncheon vouchers”, an idea dating from a time of rationing in 1946. + +Relief on luncheon vouchers is no more, but other wheezes have proliferated. In 2012 oil firms charged with decommissioning old rigs were given relief on corporation tax. A year later Mr Osborne allowed workers to cede employment rights, such as the ability to claim unfair dismissal, in exchange for tax-free shares in their firms. From March children under 16 will not have to pay air-passenger duty (only in economy class, mind). By March 2015, the OTS found, the number of reliefs had risen to 1,156. From 2009 to 2015 the number of pages in the tax code grew by about a third. + +Not all tax reliefs are foolish or damaging. The largest, costing roughly £80 billion ($115 billion) a year, is the personal allowance for income tax, a simple and progressive policy whereby people pay no tax at all on the first £10,600 of their earnings. So Adam Corlett of the Resolution Foundation, a think-tank, tries to capture the underlying complexity by adopting a restrictive definition of tax reliefs, which covers measures designed to “promote economic and social objectives”. Such reliefs resemble public spending. The state could, for example, give selected small firms either a grant or a tax break; the effect on the recipient (and on taxpayers) is practically identical. By this measure, the cost of tax reliefs rose in 2010-15 from 5.5% to 6% of GDP. + +All this has made life no easier for business. A report on the coalition government’s tax policies from Oxford University’s Centre for Business Taxation found “little evidence of real simplification”. According to the World Bank, since 2010 the time taken by the average firm to pay corporate, value-added and labour taxes has remained unchanged, at 110 hours a year (though, happily, this remains relatively low by international standards). + +On top of this, a failure to eliminate or simplify tax reliefs also hits the public finances. They encourage tax avoidance, which official estimates put at around £3 billion a year. And in a world of tight budgets, with spending by departments under ruthless scrutiny, many seem to offer poor value for money. Tax reliefs for film-makers, for example, whereby a production company can claim a rebate of 25% of film-production spending, has boosted the number of British flicks (“Last year alone we saw eight British-made films nominated for an Oscar,” Mr Osborne enthused in 2015). But it is not clear that this is worth the £2 billion cost to the government over the period from 2007 to 2015. + +Meanwhile, relief on capital-gains tax for entrepreneurs costs £3 billion a year, three times more than official forecasts predicted. Yet a report commissioned by the tax office found “few cases where [it] appeared to have a major influence on the business behaviour and tax planning of claimants”. At £100 billion a year, according to Mr Corlett’s calculation, revenue forgone in tax reliefs is roughly equal to the NHS budget; but few have been assessed to see whether they are worth the cost. + +The first year of a new parliament is when big decisions on tax are best made. Mr Osborne will have to announce some in next month’s budget, not least because the fiscal outlook has deteriorated since his autumn statement in November. The Bank of England has cut its forecast of GDP growth in 2016 to 2.2%. The Institute for Fiscal Studies (IFS), a think-tank, reckons that receipts from income tax and national insurance in 2020 may be £5 billion lower than expected in November. So Mr Osborne will be looking for ways to make up the shortfall. He could choose a 33% flat rate on pension tax relief, yielding about £5 billion a year, according to Capital Economics, a consultancy. A more modest possibility is cutting tax relief on claims for travel expenses, which would yield £300m. + +Such reforms could even make the tax system a mite simpler. But the direction of travel is, as ever, towards greater complexity. The Treasury has never published an overall strategy for the tax system, complains Paul Johnson of the IFS. Instead, chancellors pick tax policies for reasons of political expediency. In July Mr Osborne raised the threshold for inheritance tax from £650,000 for a couple to £1m. The increase applied only to housing wealth, not financial assets. The effect is perverse, encouraging people to funnel yet more cash into Britain’s bubbly housing market. + +The OTS might have acted as a check on such wheezes. But it has little power. Unlike the OBR, few people have heard of it. It has had a small budget and has not been sufficiently independent of government, argues Julian McCrae of the Institute for Government, a think-tank. The Treasury fiercely guards its tax prerogatives. So far the OTS has not even been involved in pre-budget discussions about new tax measures, says Tracey Bowler of the IFS. + +In an ideal world the Treasury would ditch its long-standing practice of keeping policies under wraps until the chancellor presents them in his annual budget, argues Mr McCrae. Consulting in advance would encourage officials to consider fully the impact of proposed changes, thus dissuading economically damaging political grandstanding. It is getting better at this, consulting on changes to corporate taxation, for instance. But that is tinkering around the edges. Unless Mr Osborne changes course and revives the idea of simplification, the unfortunate reality is that the tax system is likely only to become more byzantine. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21692884-chancellor-promised-rationalise-tax-code-he-has-done-opposite-spaghetti/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Brexit debate + +The budget that didn’t bark + +Why Britain’s EU budget burden is no longer a valid Eurosceptic gripe + +Feb 13th 2016 | From the print edition + +Hey small spender: Tusk and Cameron + +DAVID CAMERON is frantically working to secure agreement at next week’s European Union summit to proposals recently set out by Donald Tusk, president of the European Council, to satisfy British demands for reform of the EU. The prime minister hopes a deal will allow him to hold his planned referendum on Britain’s EU membership in late June. + +One striking contrast with past British rows over Europe is the lack of any fuss over money. In Harold Wilson’s renegotiation of 1975, and again when Margaret Thatcher asked for her money back in 1979, Britain’s budget contribution was the central issue. Its absence this time may seem surprising, since it is an article of faith among Eurosceptics that Britain pays too much for its membership: some £20 billion ($28 billion) a year gross, or about half that net of receipts (roughly 0.5% of GDP). + +There are three explanations. The first is that, contrary to myth, the EU budget is modest, less than 1% of GDP. And it has been shrinking, not growing. The budget is smaller as a share of GDP than in the 1990s, even though the club has taken in ten poor countries from eastern Europe. Thanks partly to British parsimony, the multiyear budget in 2014-20 will also cut spending. + +The second reason is that it is hard to assert that Britain now bears an unfair burden. In the 1980s, before the Thatcher rebate, Britain came next to West Germany as a net contributor; without some corrective action it would have become the biggest, despite being one of the poorest members of the club. Thanks to the rebate, which refunds some two-thirds of its net contribution, Britain ranks eighth out of the ten net payers per head (see chart). This is despite surrendering part of the rebate after 2005 to ensure that Britain paid a fair whack to new members from central and eastern Europe. + + + +As the chart suggests, indeed, several other countries have a stronger case than Britain for complaining about their EU budget contributions. It is partly because of this that no fewer than four—Germany, the Netherlands, Austria and Sweden—have secured special reductions in their share of the British rebate. That means the burden of repaying Britain falls most heavily on France and Italy. + +The third answer is that a post-Brexit Britain would almost certainly go on paying into the budget, even as it lost EU funds for farmers, universities and scientific research. This is because the EU exacts cash in exchange for access to its single market. Norway, which has access via the European Economic Area, pays roughly 90% of Britain’s net contribution per head. Switzerland, which is not in the EEA but has bilateral trade deals, pays around 50%. Both countries subsidise their farmers even more lavishly than the EU, so the idea that Brexit would save taxpayers from supporting British farmers is also questionable. + + + +In graphics: A guide to “Brexit” from the European Union + +Eurosceptics insist that Britain could get a better deal than Norway and Switzerland. Or it might forgo full access to the single market and do a free-trade deal like Canada’s, ending budgetary payments. Yet the first seems unlikely in a bitter post-Brexit atmosphere: a country that walks out of the EU can hardly expect better terms than ones that might join one day. As for a Canadian deal, not only would it be hard to negotiate but it would exclude most services, including financial services, a key component of British exports. + +The EU budget has many faults: too much goes on agriculture, plenty of spending in Mediterranean and east European countries is wasted, Eurocrats’ pay is excessive, and fraud and misappropriation are distressingly common. But the dream that Brexit would yield a pot of gold by saving the Treasury a huge and unfair contribution to Brussels is mostly just that. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21692883-why-britains-eu-budget-burden-no-longer-valid-eurosceptic-gripe-budget-didnt-bark/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Intelligence oversight + +Snoopers scolded + +A parliamentary committee blasts government surveillance plans + +Feb 13th 2016 | From the print edition + + + +“SUPINE” and “deferential” have been some of the adjectives applied to the Intelligence and Security Committee, the nine-member body of MPs and peers which oversees Britain’s spy agencies. Unlike its counterparts in America’s Congress, it has a small staff, and it has failed to make much impact on issues such as the alleged participation of British officials in torture or rendition of suspected terrorists. + +Not any more. The committee’s report this week on the government’s draft bill on investigatory powers—termed the “Snoopers’ Charter” by critics—adopted a tone of blistering disdain. It accused the government of hurrying the bill through, said its language was in places “incomprehensible” and that the powers it authorised were far too sweeping. It bemoaned the lack of explicit protection for journalists’ sources and lawmakers. In particular, it said that the protection of individual privacy, not the promotion of spookdom, should be the centrepiece of the bill. + +The report echoes strong criticism from another parliamentary committee, dealing with science and technology, which complained that the bill did not explicitly rule out forcing companies to create back doors in the encryption they provide for customers. That, and the new burdens placed on internet companies to collect and, if required, hand over records of their customers’ activity online, risked damaging Britain’s competitiveness, it argued. + +A third joint committee, created to scrutinise the central measure in the bill—a new system of judicial oversight, under which warrants will be issued not by the home secretary alone, but by new commissioners—reported on February 11th. It broadly welcomed the new measures but said the government had “further work to do” in allaying worries about the necessity and cost of collecting internet records, and in justifying so-called “bulk powers” (bugging and snooping en masse). + +The criticism is directed chiefly at the government, not at spooks. Britain’s spymasters insist that they are happy to work within any legislative framework, and note that nobody has shown any evidence that they abuse their snooping powers under the existing one. None of the committees disputes the idea that the intelligence and security agencies should have the right, in some circumstances, to get hold of people’s private data, bug their phones and trawl databases in search of patterns and connections. The question is under what authority this happens, on what grounds, with which exemptions in case of urgency, and with what retrospective scrutiny. + +The government is now in difficulty. It needs to pass the new bill: the existing laws are barnacled, vague and out of date, and are liable to fall foul of judges in Luxembourg (at the European Court of Justice) and in Strasbourg (at the Court of Human Rights). Both are due to rule this year on cases which could rattle Britain’s intelligence agencies, particularly GCHQ, which deals with electronic surveillance and code-cracking. The new system of judicial authorisation for warrants should help reassure outsiders that Britain’s spooks are under control. Moreover, a stopgap law, which gives them temporary authority to bug and snoop, expires this year. + +But it is hard to see how, given the withering criticism it has received, the draft bill can proceed in its current form. A hurried rewrite risks running into the same difficulties as the current version. The fundamental problem is that the government has not been able to define the meaning of vital terms such as “necessary”, “proportionate” or “urgent” in a way that even sympathetic lawmakers find convincing. + +Despite the government’s pickle, the bigger point is a positive one, about Britain’s system of intelligence oversight. The same privacy advocates who once derided the Intelligence and Security Committee as a poodle are now cheering its resolve. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21692918-parliamentary-committee-blasts-government-surveillance-plans-snoopers-scolded/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The energy business + +Switched off + +What to do with a market in which consumers ignore the cheapest prices? + +Feb 13th 2016 | From the print edition + +Small print, big bill + +IN JANUARY the “big six” energy companies, which dominate the retail markets in gas and electricity, began their winter ritual of lowering prices. E.ON kicked off, cutting its standard gas tariff by 5.1%; Npower, SSE and Scottish Power then made similar reductions. On February 11th British Gas, owned by Centrica, and EDF followed suit. Rejoicing all round, surely, especially for anxious consumers awaiting their winter heating bills. + +Not a bit of it. Instead the reductions were met by angry complaints. It was “too little, too late”, said many; after all, the wholesale price of gas plunged by one-third last year. And only gas prices have been cut; electricity is not coming down. So, as usual, the big six are in the doghouse. + +The high price of energy was an election issue last year. Now energy firms have to worry about the Competition and Markets Authority (CMA). Responding to the continuing public outcry over high prices, the CMA launched an inquiry into the energy market two years ago; its final report is due at the end of March. As the CMA has already stated that too many customers are paying too much, it is expected to recommend some intervention in the market, maybe even a price cap in the short term. Unsurprisingly, the big six are against this, and insist that the market is competitive. + + + +Many customers are caught out by the high price of the standard variable tariff (SVT) relative to those of the fixed one-year or two-year deals that are available if they shop around. The SVT is the default option, rolled over unless a customer actively switches to another tariff. And whereas the fixed deals have fallen in line with the wholesale price of gas, the average SVT has not (see chart). Switching has got easier, but still about 70% of the big six’s customers cling on to their SVTs, thereby forking out about £160 ($230) a year more than if they switched to a cheaper deal, even within the same company, according to the CMA. + +Why so few customers switch when it is clearly in their interest to do so is the matter of greatest controversy, and the focus of the CMA investigation. Critics argue that switching remains too difficult, and that firms still do not do enough to alert their customers to the lower fixed-rate tariffs. Edmund Reid, an analyst at Lazarus, a consultancy, says that the big six have “generally focused on maximising the profitability of their disengaged customers”, as they make much less money on the other tariffs. This is a risky strategy politically, as these non-switching customers also tend to be those who are least able to afford the higher prices. + +The big six say that they are caught in a squeeze. There is now an unprecedented number of suppliers—about 30—and the market share of smaller companies has risen rapidly, from about 2% in 2012 to over 10% today. The big six are thus haemorrhaging customers, while their fixed costs, of transmission and regulation, will rise this year from April 1st when a new round of so-called Renewable Obligations comes into effect. Companies such as SSE argue that, according to the CMA’s own surveys, most customers know they can switch, but many prefer to avoid the hassle. + +Nigel Cornwall, an energy consultant, suggests that the CMA should scrap the limit on the number of tariffs that companies can offer, now four, to introduce more price differentiation. But whether that would induce the big six to reduce their SVTs is an open question. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21692921-what-do-market-which-consumers-ignore-cheapest-prices-switched/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Problem-solving courts + +Smart justice + +The government once again tries to make courts more caring + +Feb 13th 2016 | From the print edition + + + +IN A speech on February 8th David Cameron set out what he claimed was “the biggest shake-up of prisons since the Victorian era”. The package included more freedom for governors, league tables for jails and measures to improve ex-cons’ job prospects. But Mr Cameron also announced a proposal which could reduce the number of people who end up behind bars in the first place: the introduction of “problem-solving courts”. + +Such courts were established in Miami in 1989 to deal with drug offenders. First- and second-timers were sent to treatment programmes, rather than prison, and their progress was overseen by a judge who could send them to jail if they relapsed. Other states soon began to copy the idea, which was cheap (or at least cheaper than prison) and added a hint of tough justice to rehabilitation. By 2012 there were 1,122 problem-solving courts in America, dealing with everything from school truancy and gambling addiction to gun crime and domestic abuse. + +Mr Cameron is not the first British politician to be inspired by the model. In 2005 the Labour government set up a pilot court, the North Liverpool Community Justice Centre (NLCJC), which was billed as a one-stop shop for tackling crime. It was run by a single judge, bringing together justice agencies and services such as housing and domestic-violence support. Problem-solving meetings were often held after a guilty plea (someone steered towards crime by their homelessness might get help finding housing, for example). And some offenders could be dragged back to court to have their progress reviewed. + +The early signs were good. Visitors enthused and staff spoke of the innovation made possible by different services sharing a home. But in 2012 a report by the Ministry of Justice found that criminals who had been through the NLCJC were no less likely to reoffend, and were more likely to break court orders, than a control group. Partly as a result, the Ministry of Justice closed the NLCJC in 2014. + +Many still defend the project. Some argue that the outcomes for the toughest cases were good, even if the average results were no better than regular courts; others say that it struggled because it was largely forgotten by central government, after strong support in the early stages. + +The family courts, which deal with disputes over divorce, custody of children and so on, have been more successful in introducing problem-solving. A study by Brunel University in 2014 found that 40% of mothers with drug or drink problems who went before the London Family Drug and Alcohol Court (which involves fortnightly meetings with the same judge, regular drug-testing and the threat of removing children) kicked their habit, compared with 25% of those going through the normal family courts. Specialist domestic-violence courts and Miami-esque drug courts have also proved effective, though to varying degrees. + +What lessons can be learnt from these mixed results? First, that regular meetings with a familiar judge who can review sentences in light of offenders’ behaviour are crucial (by contrast, the NLCJC only occasionally assessed progress). A wide range of services must be consulted on the best approach in each case: much of the success of the family drug courts is due to the work of social services, says Penelope Gibbs of Transform Justice, a charity. And costs must be kept low. The NLCJC was so expensive that it was unlikely ever to be copied. + +Michael Gove, the justice secretary, has worked hard to win over judges, some of whom are sceptical of an approach they see as infringing their independence. The potential of problem-solving courts makes such efforts wise. As well as reducing reoffending, says Andrew Neilson of the Howard League, another charity, they could bring about a valuable cultural shift. “The criminal-justice system currently makes sentencing decisions on very little evidence about what works,” he says. Regular contact between judges and the people they sentence might provide an incentive for that to change. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21692920-government-once-again-tries-make-courts-more-caring-smart-justice/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sugar taxes + +Do as I say, not as I chew + +MPs are united against sugar consumption—except in their own canteen + +Feb 13th 2016 | From the print edition + + + +THE drumbeat of war reverberates around the House of Commons. The enemy, deadlier than al-Qaeda or Islamic State, lurks in every home: sugar. In January the National Health Service announced plans for a “sugar tax” on sweet drinks and snacks in hospital canteens. The same month Boris Johnson, the mayor of London, introduced a levy of 10p ($0.15) on cans of drink sold in City Hall. Later this month the government will launch a strategy to combat childhood obesity, perhaps including a tax on soft drinks and sweets, as imposed in countries such as France and Mexico. + +Yet MPs decrying sugar’s impact on the nation’s health should first examine their own diets. A freedom of information request by The Economist to the House of Commons canteen shows that employees of Britain’s lower chamber have a sweet tooth of their own. + +In 2014-15 Commons caterers ordered confectionery and soft drinks containing 4.8 tonnes of sugar, equivalent to 1.2m sugar cubes, or 680 cubes per full-time equivalent staff member. (Sugar content was available for only three-quarters of the items ordered, so the real total will be higher.) During the last parliament, from 2010 to 2015, 625,464 cans and bottles of Coke were chugged, and 659,470 chocolate bars and packets of sweets guzzled. KitKats are Parliament’s choc of choice, accounting for one in six snacks. Each contains 26% of an adult’s recommended daily sugar intake. + +At least Commons staffers are tightening their belts. The number of chocolates and sweets ordered dropped from 150,572 in 2010 to 99,412 last year; staff have cut their soft-drink consumption by 10% and prefer Diet Coke to the full-fat variety. Their intake is much less than that of the average British child, who consumes 22kg of sugar per year. Still, the sugar gobbled by MPs and their aides during working hours is two-thirds their recommended daily intake (and they may not eat only salad at home). That, says Jennifer Rosborough of Action on Sugar, a lobby group, is too high. She suggests fruit, unsalted nuts and water. + +One item in the saccharine census stands out. Perhaps unsurprisingly given the amount of time MPs spend shouting at each other over the dispatch box, 480 packets of throat lozenges were ordered last year. Sugar tax or no, some sweets are likely to remain popular. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21692923-mps-are-united-against-sugar-consumptionexcept-their-own-canteen-do-i-say-not-i-chew/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Refugees + +Marginal benefits + +Asylum-seekers are sent to the poorest parts of Britain. What happens next? + +Feb 13th 2016 | From the print edition + + + +ONCE, Britain’s asylum-seekers could live where they pleased, but since 1999 they have been sent to a few places, mostly on Britain’s margins. These districts tend to be poor: Middlesbrough, which has the country’s highest number of asylum-seekers per person, also has its largest proportion of deprived neighbourhoods. Since most of Britain takes almost no asylum-seekers, officials in “dispersal areas” often complain this is unfair. Simon Danzuck, MP for Rochdale, which has Britain’s second-highest concentration of asylum-seekers, recently grumbled that his constituency is being used as a dumping ground. + +In some ways the policy is a good one. It sends asylum-seekers to places where housing is cheap and plentiful (houses in Middlesbrough sold for less than half Britain’s average in December 2015; many of the houses asylum-seekers now live in were previously boarded up). And the habit of concentrating refugees in the same places over many years may actually help integration. One theory goes that fellow ex-countrymen have a protective effect on new migrants; and, although tensions remain, locals tend to become more welcoming after years of new arrivals, says Heather Petch of the Joseph Rowntree Foundation, a think-tank. + +This can be seen in Stockton, in north-east England, which has Britain’s fourth-highest number of asylum-seekers per person. Teatime drop-ins have grown into dedicated asylum-support groups; charity workers reminisce proudly about refugee children who are now at university. Growing groups of migrants have created demand for particular food and clothing: some refugees have set themselves up in the catering businesses. Bini Arai, who arrived in Middlesbrough from Eritrea 15 years ago and now runs a basement drop-in centre for asylum-seekers, says the community has become more supportive. + +The main problem is that these areas have higher-than-average unemployment rates, and that people tend to stay there once granted asylum, rather than finding work elsewhere. According to Kath Sainsbury, who works for a refugee charity in Stockton, it is almost impossible to move on unless you already have a job lined up. Local authorities are obliged to provide refugees with welfare only if they have already been living in the area. There is also often a gap between the end of asylum assistance and the start of state benefits, meaning that people cannot afford to travel and must fall back on local shelters to avoid homelessness. + +Few have jobs lined up. And although local businesses have learned to value industrious new refugees, says Ms Petch, it is hard to make connections with employers elsewhere if you don’t speak much English. English teaching is both patchy and in the wrong patches. One refugee charity in Bolton says it is the district’s only service offering formal English lessons, and the waiting list is around six months. + +Asylum claims also take a long time to be processed, which means that claimants get rooted in a place. Gulwali Passarlay, an Afghan refugee originally placed in Kent, says it took a friend 15 years to gain refugee status from a dispersal area near Birmingham, and by that time he had seven young children in a local school. + +Alexander Betts of Oxford University believes the Home Office could start placing asylum-seekers according to skills shortages in local areas. This might not be enough. Britain’s history of refugees includes stories of great success, such as the Ugandan Asians and the Vietnamese boat people. But these involve free movement and have city backdrops. The IMF found that Europe’s current crop of refugees could raise economic growth if integrated well into the job market. Britain’s restrictive policy may mean it loses out. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21692914-asylum-seekers-are-sent-poorest-parts-britain-what-happens-next-marginal-benefits/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Britain’s new ambassadors + +The EU renegotiation has made an unlikely diplomat of David Cameron + +Feb 13th 2016 | From the print edition + + + +ALMOST a decade ago a new, ruddy-faced Conservative Party leader urged his comrades to stop “banging on about Europe”. David Cameron was right: his party’s neurosis was making it look clammy and xenophobic. He tried to kill the subject by marginalising it and, whenever his MPs became restless, flashing some Eurosceptic ankle. Hence in 2009 he pulled his party out of the European People’s Party (the EPP, the continent’s main centre-right grouping); in 2011 he tried to block a pact to save the euro zone; and in 2013 he pledged to renegotiate Britain’s membership and put the result to a referendum within four years. Thanks to this last gambit, Mr Cameron must now switch positions: having long played footsie with Eurosceptics and confronted his continental partners, today he must take on the former and flirt with the latter, especially in the build-up to the summit on February 18th at which the 27 other members of the European Council will discuss the draft renegotiation published on February 2nd. + +This all amounts to a morality play about the risks of short-termism. Take the domestic picture. Though once mocked as a Tory replica of Tony Blair, Mr Cameron ditched his predecessor’s quest to put Britain at the “heart of Europe”, redefining the EU as a necessary evil. That was risky. As Ken Clarke, a pro-EU former chancellor, warned: “If you want to go feeding crocodiles then you’d better not run out of buns.” Today the prime minister’s bun store looks sparse, his talks having extracted some decent but, to many, paltry concessions. Perhaps 150 of 330 Conservative MPs remain undecided on EU membership, the merits of which were once party orthodoxy. “The mood is hardening,” reports one eminently pro-leadership Conservative MP surprised to find himself contemplating an Out vote, despite the angry civil war raging between different would-be Brexit campaigns. Meanwhile commentators are debating whether Margaret Thatcher would have backed an In vote, none of them having had the common decency to pay for a séance. + +Questions swirl about the cabinet. So far five members have come out for Brexit. A larger number, including George Osborne, the chancellor, seem committed to membership. But three especially big Tory names are awaiting Mr Cameron’s deal. Theresa May, the home secretary, has indicated but not confirmed that she will back In. Michael Gove, the justice secretary and a quietly snappy crocodile, is torn between his ideals and his loyalty to the prime minister. Meanwhile Boris Johnson, the pro-EU mayor of London, is torn between his ideals and his loyalty to his own ambitions. He will back membership only at the last possible moment, as this will mean doing his three least favourite things: hitching his lurching wagon to someone else’s steady train, admitting that Mr Cameron is right and revealing his cards in any future leadership contest. + +All of which has forced Mr Cameron and his allies at last to come out with a hearty case for the EU. In a speech hailing the draft deal the prime minister asserted: “Britain is better off, more secure, more prosperous…inside the European Union.” The following day, to some grumbling, he invited his MPs to make up their own minds rather than bow to their local associations. Meanwhile Ms May boasts of her close links with her French and German counterparts and Nick Herbert, the Eurosceptic now running the Conservative pro-EU campaign, phones MPs stressing the case for membership. + +In a similar fashion, Mr Cameron’s dealings with his European partners have evolved from tactical raids into relationship-building (see article). By quitting the EPP he cut himself off from the EU’s most powerful information-sharing network. His veto in 2011, for example, was not a bold heresy but a misreading of the European mood (the prime minister had expected to trade it away for a change in voting rules). Likewise, in 2014 he alienated partners by ignoring diplomatic advice and mooting a cap on the number of migrants from the EU to Britain. In bilateral meetings last year he even threatened to lead the Out campaign. + +But in the past months he has backed out of these positions, partly at Angela Merkel’s behest. Both he and Mr Osborne have toured Europe wooing their counterparts. One adviser claims the prime minister now gets on better with some—especially Mrs Merkel and Mark Rutte, the Dutch prime minister—than with many in his own party. “He got diplomacy pretty late in the day, but better late than never,” agrees Charles Grant of the Centre for European Reform. This has not gone unnoticed in Brussels. “He has rediscovered the art of building relationships with people,” says a European Commission insider, crediting the moderating influence of Tom Scholar and Ivan Rogers, Mr Cameron’s two top advisers on European matters. + +Vanitas vanitatum, omnia vanitas + +What does this say about Britain’s prime minister? It is clichéd (and worse, unfair) to claim Mr Cameron is just a breezy toff, an “essay crisis” incumbent. In fact he has strong views about how society should look, works at a rate that would exhaust most and is well aware of his political mortality. He is a versatile and astute chancer. His renegotiation is the product of these traits—and two fundamentals in particular. First, of the many things Mr Cameron has long known and cared a lot about, the EU is not one. Second, his faith in his ability to devise and execute canny manoeuvres exceeds the (albeit impressive) reality. So on matters continental, the PM is a powerful car with a wobbly steering wheel. The result is tactical short-termism from a prime minister otherwise capable of being long-termist—but endowed with the wit and charm to extricate himself from the ensuing scrapes and to keep the show, albeit chaotically, on the road. Expect the coming months to bring theatre, brinkmanship, clever-clever flourishes and ultimately, in all likelihood, an In vote. Whether this circus will have merited the drama and risk is another matter. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21692886-eu-renegotiation-has-made-unlikely-diplomat-david-cameron-britains-new-ambassadors/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Marine conservation: Rejuvenating reefs + +Corals in the South China Sea: A thousand cuts + + + + + +Articles Sections Next + +Marine conservation + +Rejuvenating reefs + +Though pollution and overuse are damaging corals, their biodiversity offers hope for their future + +Feb 13th 2016 | COCONUT ISLAND, KANE’OHE BAY, HAWAII | From the print edition + +More fish to fry + +THE waters off the Hawaiian island of Oahu are visited each winter by migrating marine mammals such as humpback whales. All year round they are home to much smaller animals that form vast reefs: corals. Intricate pink structures stand out amid contortions of vegetable-green ones; dark-striped fish flit among them and turtles hover above. Corals lay down limestone skeletons of different shapes and sizes: branching types like small trees; ground-huggers spreading squat. + +The colours that lure snorkelling and scuba-driving tourists are produced bysingle-celled algae that grow symbiotically in corals’ tissue. These use carbon dioxide respired by their host to make oxygen and carbohydrates through photosynthesis, giving corals most of the energy they need to form their skeletons. But this delicate balance is threatened by humans, both in the short term and over the coming years. + +Overfishing, tourism and pollution are the most immediate perils, disrupting reefs’ ecosystems and the ability of corals’ algae to photosynthesise. In the longer term, rising levels of greenhouse gases in the atmosphere will hit reefs in two ways. Oceans absorb about 30% of carbon dioxide emitted into the atmosphere, which makes them more acidic; as concentrations of carbon dioxide in the water rise, it will be harder for coral skeletons to calcify. And as oceans warm, corals will lose their colourful algae, which can only cope within a narrow range of temperatures. Reefs will be reduced to bleached-looking skeletons, vulnerable to disease. + +Only twice before has such bleaching occurred worldwide. The first time coincided with El Niño in 1997-98, the world’s largest climatic phenomenon, which causes surface temperatures to soar in the Pacific Ocean. The second was in 2010. A third is now under way. About 16% of corals died in the 1997-98 disaster. The current bleaching event, once more occurring alongside a Niño, may have affected 38% of the world’s corals. Conditions now may offer a foretaste of the damage climate change could wreak on these already vulnerable ecosystems. + +The harm before the storm + +Coral reefs are found from the Middle East to Australia and America. They cover less than 0.1% of the ocean floor. But their importance is far greater than that figure suggests. They protect 150,000km (93,000 miles) of shoreline in more than 100 countries and territories by acting as coastal buffers, enduring the brunt of high waves and rough weather. They also support perhaps a quarter of all marine species, and act as nurseries for many others. In South-East Asian waters, the richest reefs are in the “coral triangle” (see map). This area of 86,500 square km holds two-thirds of the world’s coral species and more than 3,000 species of reef fish—twice as many as are found anywhere else. + +More fish to fry + +In the past half-century, though, these beautiful, biodiverse structures have been put under pressure by human activity. About a quarter of all coral cover has died. The reefs that are in worst shape are those off the most crowded beaches. “People don’t leave enough time for their sun cream to soak in, so it gets in the water,” says one deckhand with Eo Wai’anae Tours, which organises boat trips off Oahu. + +More damage is caused by fertiliser-rich run-off from farms, leading to algal blooms which block light the corals need. Fishing near reefs cuts the number of herbivorous fish, allowing vegetation to grow out of control. Some fishing methods are particularly harmful: for example, blast fishermen in Colombia, Tanzania and elsewhere use dynamite to stun and kill fish without regard to the harm done to nearby reefs. + +Crown-of-thorns starfish, coral-chompers that have proliferated in some areas, including Australia’s Great Barrier Reef, add to the stress. In the South China Seaisland-building and fishing for giant clams are crushing some reefs beyond the possibility of recovery (see article). The World Resources Institute, a think-tank, estimates that about 60% of reefs face such immediate threats. + +The bounty that reefs provide accrues to those living near them, and in the short term. Without strong property rights, the result is an unfolding tragedy of the commons, in which fishermen and tour operators destroy the resources they rely on. + +Tourism generated by the Great Barrier Reef is worth about $4.6 billion annually to nearby Queensland alone. Australian bigwigs bent over backwards last year to keep the UN from listing the reef, a World Heritage Site, as “in danger”. Estimates suggest that the economic value of Martinique and Saint Lucia’s corals comes to $50,000 per square km each year, thanks largely to tourism. But overdevelopment threatens the reefs the visitors come to gawp at. Sediment from construction clouds waters, burying corals and blocking the light they need. Hotels close to the shore may be convenient for tourists, but the process of building them can kill the reefs that snorkellers like to swim over. + +The mix of problems varies from place to place, meaning policies must be locally tailored to tackle them. But even when governments and environmentalists focus on the long term, the need to limit fishing means they often struggle to craft policies that do not cause immediate harm to poor people. The three countries with the largest numbers of people who fish on reefs are all in the coral-triangle region: Indonesia, Papua New Guinea and the Philippines. In Indonesia and in the Philippines, up to 1m people’s livelihoods depend on reefs. + +Averting a tragedy of the commons means agreeing which activities should be restricted and enforcing the rules. For coral reefs—and other biodiverse marine environments—the usual approach is to give ecologically sensitive areas special status under local or regional laws. In such “marine protected areas” (MPAs), activities that are deemed harmful, such as fishing, drilling and mining, can then be restricted or banned, with penalties for rule-breakers. + +Command and conquer + +The Aichi targets, agreed in 2010 under the UN Convention on Biological Diversity, seek to reduce “anthropogenic pressures” on coral reefs to “maintain their integrity and function”. The aim is to have at least 17% of inland water and 10% of coastal and marine areas under conservation by 2020. Most countries have signed up. But the targets are far from being met. Less than 3% of the ocean’s surface is within an MPA. + +The most urgent action is needed close to shore. The nearer humans are to reefs, the worse their effect on the fragile ecosystems. A global register of fishing vessels, long under discussion, would also help identify wrongdoers. And beefing up the UN law of the sea could inspire further action. Decades old, it has little to say about biodiversity. + +But simply declaring an area protected does not make it so. In 2009 George Bush junior, then president of America, established three national marine monuments in the Pacific, including nearly 518,000 square km of coral islands and surrounding areas. Their remoteness makes it hard to stop vessels entering illegally; Hawaii’s coastguard is already stretched. + +Satellites are sometimes used to police MPAs, but they pass over infrequently. In the future, sailing robots could play a larger role. America’s National Oceanic and Atmospheric Administration (NOAA) has been working with a private firm, Saildrone, on hardy models equipped with carbon-fibre fins. They cost less than $500,000 each and can roam remote ocean regions for months, making them far cheaper than manned boats. + +Such drones could photograph rogue fishing vessels, obtaining hard-to-gather evidence for any criminal proceedings. And they could carry out other useful work at the same time, such as monitoring ocean temperature and acidity or tracking tagged members of endangered species. Saildrone plans to provide its robots as a service, so that universities and other cash-strapped organisations do not have to buy one outright. + +Richer countries are better able both to administer and to enforce MPAs. Three-quarters of coral reefs in Australian waters are in MPAs, but only 16% of those within the coral triangle. “It is difficult to ensure systematic monitoring,” says Rusty Brainard of NOAA, who has advised marine scientists in the region. Indonesia has more than 17,500 islands, he points out. + +In poor parts of the world, low-tech methods of surveillance are needed. Just 0.09% of Malaysia’s territorial waters, and those within its exclusive economic zone, are protected by an MPA. But a national programme requires fishermen to paint their vessels according to how far out they have permission to fish within the nearshore area. Other fishermen can then spot when a rogue vessel has strayed, even if they cannot read. And as boats require regular painting anyway, little extra cost falls on their owners. + +Public-private partnerships could also help. A pilot project in Barbados, supported in part by local hoteliers and tourism organisations, will charge visitors to enter a coastal MPA managed by Blue Finance, an alternative-investment outfit with support from the UN Environment Programme (UNEP). About $1m was needed to set up the area; its upkeep will require half that each year. “We find private investors who don’t mind if their returns are a little below market rates because they are benefiting Barbados,” says Nicolas Pascal, an environmental economist who directs the company. + +Other pilots are under way in Colombia and Martinique. But more backers are needed. According to research conducted under the Convention on Biological Diversity, investment will need to quintuple for the Aichi targets and other conservation goals to be met. + +The effectiveness of marine reserves is hard to measure. Reefs are complex, ancient systems, and the effects of better policies will become known only gradually. “You can’t manage ecosystems: you can only manage the impact of humans upon them,” says Jerker Tamelander, the head of the reef unit at UNEP. + +Even if the right policies are adopted to keep corals healthy in the immediate future, longer-term threats loom. Neither oceanic warming nor acidification can be kept out by an MPA. And both may be happening too fast for corals to adapt, especially as recent global climate deals will not slow them much. Back slaps and handshakes accompanied the inclusion of an aim to limit global warming to just 1.5°C above pre-industrial levels in the Paris Agreement last year. But only an incorrigible optimist would bet on that aim being achieved. And even if it is, that much warming could breach the environmental limits within which most reefs can thrive. + +Nurture, not nature + +So researchers are turning their attention to ways to help corals cope. Their global diversity, scientists hope, may hold the key. The same coral will grow differently under different conditions: corals of the western Pacific near Indonesia, for example, can withstand higher temperatures than the same species in the eastern Pacific near Hawaii. Such disparities can be found even quite locally. In Kane’ohe Bay, where the Hawaii Institute of Marine Biology lies, 70% of some reef patches has been bleached in the current event. Others, less than 200 metres away, suffered bleaching to just 40% of their corals. + +The characteristics that help some reefs survive unusual conditions could allow others to endure climate change. But tough corals from one place cannot simply be transplanted to another. So a team at the Hawaii Institute of Marine Biology is in the early stages of engineering reef ecosystems, with $4m from the Paul G. Allen Foundation, a charity set up by Bill Gates’s former business partner. + +Organisms respond to environmental changes through both genetic processes (adaptation) and non-genetic ones (acclimatisation). With corals, the nature of their symbiotic relationships can also alter. So selectively breeding and conditioning them, and investigating whether certain types of algae confer resistance to heat or acidity, could create hardier varieties faster than they would develop naturally. + +These could then be used to repopulate ravaged reefs—once more is known about how and where to transplant them. “We’re assisting evolution,” explains Ruth Gates, who leads the research. Her team aims to help corals withstand changing ocean temperature and chemistry. Despite all her effort, she says: “if the tools we develop are never used, I would be the happiest person in the world.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21692868-though-pollution-and-overuse-are-damaging-corals-their-biodiversity-offers-hope-their/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Corals in the South China Sea + +A thousand cuts + +Greed and politics are destroying some of Asia’s most valuable coral reefs + +Feb 13th 2016 | From the print edition + +Illicit cargo: a clam-laden Chinese fishing vessel + +THE giant clams that lurk in the coral reefs of the South China Sea can live for more than a century and grow more than a metre wide. Their shells are coveted by China’s rich as swanky furnishings or cut into trinkets, such as jewellery. Large specimens can sell for thousands of dollars. The trade is damaging some of the world’s most important ecosystems. + +China’s giant-clam industry operates from the port of Tanmen on the southern Chinese island of Hainan. There skippers load rickety wooden fishing vessels with provisions for a month. Barrels of water are lashed down at the stern and pigs led to pens at the bow. On the sidedecks sit crude open boats with single-cylinder engines and long propeller shafts. Once the mother ship reaches distant reefs, these are lowered and the propellers used to chew up submerged coral. When the murk clears divers bring up any giant clams that are revealed. The plunder is illegal in China, and trade in giant-clam shells is banned under international treaties. But in Tanmen it operates in broad daylight. + +Recently the fleets have pushed deeper into the South China Sea and into waters claimed by neighbouring countries, including Vietnam and the Philippines. Satellite photos collated by Victor Robert Lee, an analyst, show that tell-tale scarring from clam-harvesting is now visible on more than two dozen reefs. + +Enforcement has become laxer since China stepped up its claim to all the islands, reefs and rocky outcrops contained within a “nine-dash line” that encompasses most of the South China Sea. In some places the build-up of Chinese naval and coastguard vessels has made it less likely that clam-harvesters will be chased off by foreigners. Many Chinese feel that fishermen help to project sovereignty, and should be allowed to secure for China a bounty which “poachers” from abroad might otherwise seize. Three years ago President Xi Jinping even visited fishing boats on Tanmen’s quay, though the offending shells were hidden from photographers. + +If this were not enough, reefs are also suffering from efforts to build new islands in the sea, mainly but not only by China. Seeking a stable base for runways, weather stations and other installations which might help promote territorial claims, dredgers have been sucking debris from the sea bed and spraying it over reefs which sit just beneath the surface. Such muck-spreading not only kills many square kilometres of coral, but obliterates any chance that it will regrow. + +Ecologists fret that the tense security situation prevents them from measuring the extent of the vandalism. Chinese authorities are not entirely deaf to their complaints; since last year they seem to have tightened restrictions on clam-harvesting somewhat (and an anti-corruption drive led by Mr Xi may be lowering demand for the showiest shells). But China’s stance on island-building is uncompromising. In January one Chinese bigwig promised that any damage being done to reefs was “recoverable”. Almost no one outside China agrees. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21692869-greed-and-politics-are-destroying-some-asias-most-valuable-coral-reefs-thousand-cuts/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Railways in America: Doing the locomotion + +France’s almighty bosses: In praise of the splits + +Twitter: Clunky Dorsey + +Corporate governance in Japan: Sharp elbows + +Foxconn: Pointed questions + +Indian business: Crossing the desert + +Turkish wine producers: Sour grapes + +Drone-racing: Whizz kids + +Schumpeter: Diversity fatigue + + + + + +Articles Sections Next + +Railways in America + +Doing the locomotion + +The second golden age of American railroads is drawing to a close. Consolidation may follow + +Feb 13th 2016 | NEW YORK | From the print edition + + + +DURING the crisis of 2008-09, Warren Buffett made two big bets in the midst of the panic. He bought a slug of preferred stock in Goldman Sachs. And he took over BNSF, a huge railway. Goldman’s 32,500 bankers and BSNF’s 32,000 miles of tracks, stretching from the Pacific to Texas, had nothing in common, except that it was impossible to imagine American capitalism without them. “It’s an all-in wager on the economic future of the United States,” declared Mr Buffett when he bought the railway company, which, naturally, was advised by bankers working for a certain “vampire squid”. + +How right Mr Buffett was. The last decade has been a golden one for shipping goods around the world’s biggest economy (each citizen’s consumption of goods and power requires the movement of 36 tonnes of freight a year). American railways have been a rare example of capitalism working well, with a virtuous cycle of demand, giant profits and vast investment in rolling stock and tracks. + +Foreigners who snipe at America’s late-Brezhnev-era airports, smelly subways and rutted roads should, as the Proclaimers sang, take a look up the rail tracks from Miami to Canada. Fixed assets at North America’s six biggest freight-rail firms rose by 58% between 2004 and 2014, to $250 billion (see chart). Private firms have been spending almost as much each year on modernising American locomotives and tracks as the federal government has on roads. The infrastructure splurge has helped the environment, too, since trains are about four times as fuel-efficient as lorries. America’s freight railways are more efficient and far busier than their counterparts in Europe. + + + +But now this privately fuelled locomotive has been derailed. In the last quarter of 2015 the combined earnings of the big American and Canadian freight-rail firms fell by a fifth, compared with a year earlier, mainly because of the commodity-price crash. The industry has tried to shrug this off as a temporary blip. But if the downturn persists, the investment extravaganza will be over. + +Tougher times also raise the spectre of rail mergers, a phenomenon that has vexed America ever since the first transcontinental line was hammered together in the Utah desert in 1869. Dealmaking is already in the air, with Canadian Pacific (CP) pursuing a reluctant Norfolk Southern. This week CP said it would propose a shareholder resolution calling on Norfolk’s board to negotiate a merger. The deal is backed by Bill Ackman, an activist investor. It has thrilled Wall Street, peeved rival firms and put regulators on red alert. + +Before asking how the industry’s fortunes could go wrong, however, how did it all go right? Since being deregulated in 1980, American railways have gradually got their acts together. Plenty of tailwinds are behind them. Freight volumes typically grow with GDP. And rail, with a market share of about 40%, should take business from road haulage, now with over 50% of traffic, which faces tightening emissions rules and a struggle to recruit drivers. + +Greasing the tracks in the past decade was the commodity bubble. Newly drilled shale oil needed to be shipped from remote basins, and coal moved to power stations and ports—American coal exports doubled between 2005 and 2011, thanks to demand from East Asia and Europe. Intermodal transport (containers moved from ship to rail to lorry) rose rapidly, too, and now accounts for a fifth of sales. + +Rail managers discovered their inner rottweilers. Hunter Harrison, who runs CP (and before that was at CN, Canadian National), is eulogised by investors for his ruthless scheduling—he is said to monitor individual trains as they chug across the continent. Most important of all, after declining steadily since the 1980s, freight prices were jacked up stealthily, rising by 42% in real terms since 2004. + +Railroads could be accused of gouging their customers: pre-tax return on capital for the big six firms rose from 10% in 2004 to 19% in 2014. But that misses the bigger point. For every dollar of gross cashflow in 2014, 67 cents was reinvested. The industry’s appetite for capital spending is all but unique in America, where most firms spend bumper profits on share buy-backs to boost their stock price. Rail firms’ resistance to this corporate crack cocaine is hard to explain, but may reflect the lingering presence in their boardrooms of gnarled railmen with a love of horn blocks and glad-hand connectors, rather than earnings-per-share enhancement. + +What is clear is that the investment spree is now under threat from slumping profits. The shale industry is reeling. Coal volumes have fallen, as domestic power generators switch to dirt-cheap natural gas and the strong dollar hurts coal exports. The industry has solid enough balance-sheets to weather a storm, with net debt of 1.8 times gross operating profit. But an age of austerity beckons. Capital investment fell by 15% in the last quarter of 2015 compared with a year earlier. In 2016 it could drop by 20%. + +The industry’s unspoken plan is probably to keep raising prices while investing less and returning more cash to shareholders to keep them happy. This approach is likely to enrage everyone else. Customers such as carmakers, energy utilities and shipping firms will complain of being squeezed. Regulators will fret that the pace of modernisation has slowed. Despite a decade of huge investments there are still pressing congestion problems, particularly in Chicago, a bottleneck through which much of America’s freight is rammed. + +So how can the industry continue to satisfy both investors and society if demand and profits are lower and the need for capital spending is just as high? Perhaps by turning the big six railways into four, or even two. How big the rewards would be from mergers is fiercely contested. Mr Harrison says he could cut $1.8 billion a year from Norfolk’s costs (equivalent to a quarter of the total), although most of those gains would come from running it better, not from synergies through bolting it onto CP. Norfolk says he is exaggerating. + +Take your hands off my train set + +Train mergers have been an explosive subject for over a century, with a dread of isolation or exploitation at the hands of railway robber-barons lodged deep in America’s subconscious. The last round of deals was permitted in the 1990s, when the number of big train firms fell by half. The antitrust apparatus today is clunky. The federal Surface Transportation Board (STB) has had broad powers to block rail mergers on public-interest grounds since 2001. But it struggles to articulate a logic for assessing what it thinks makes a system better—does it want choice, modest returns on capital, lots of operators, lots of route combinations, or low prices? + +The industry already consists of three geographical duopolies—the West (where BNSF and Union Pacific dominate), the east (Norfolk and CSX) and Canada and its links to the United States’ industrial north (CP and CN). It is not obvious why linking two non-overlapping rail networks would make any area less competitive. + +But even saying that is taboo, and a giant head of steam is building up across the country against the CP-Norfolk deal. The Alabama State Port Authority is sceptical, Ohio’s soyabean farmers are livid, western Kentucky’s coal miners are perturbed, and the Brotherhood of Locomotive Engineers and Trainmen foresees a “death spiral”. Most are worried about services and jobs being slashed. Both Union Pacific and CSX have said they oppose a deal. On February 4th nine members of Congress from Indiana asked the STB to be vigilant. The regulator itself is likely to be worried about the short-term disruption dealmaking could create. Consolidation in the 1990s caused chaotic delays. + +So Mr Harrison’s proposed deal looks likely to struggle. Yet the near-universal hostility to consolidation reflects a complacency born of the golden years. Now that cash is no longer raining down it will be harder to satisfy investors, customers and the long-term national interest all at once. Perhaps a rationalised rail system will ultimately be seen as the best solution for congestion. It may, however, take someone with Mr Buffett’s legendary patience to witness it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21692867-second-golden-age-american-railroads-drawing-close-consolidation-may/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +France’s almighty bosses + +In praise of the splits + +Pressure to separate the roles of chairman and chief executive is growing + +Feb 13th 2016 | PARIS | From the print edition + +Kocher and Mestrallet: a double act from now on + +LETTING go is hard, especially for a French boss. Consider Gérard Mestrallet, who for 15 years has run Engie, a giant energy utility formerly known as GDF Suez. Under him the firm has prospered: it gathers annual revenues of around €75 billion ($84 billion) from 70 countries. At 66 the wily baron no doubt believes he has the vim to keep building his empire. + +In fact he will be replaced as CEO in May by his deputy, Isabelle Kocher, letting Engie celebrate something rarer than a badly dressed Frenchman: a female leader of a company in the CAC 40 index, which has only happened once before. (Continental Europe lags on corporate sexual equality: none of Germany’s DAX 30 firms has a female CEO or chairman.) + +However, a report in the French press on February 4th, citing a senior official, suggests that Ms Kocher will not have the run of the place. Her predecessor may hang on for two more years as chairman. Engie’s board meets this month and may confirm the news then. Since the government owns over one-third of the firm, it is said to be a done deal. But Ms Kocher will be able to put a positive spin on her situation. Assuming she remains just CEO, and does not in time become chairman too, Engie is joining a growing club of French firms that split their main leadership roles. + +That is something shareholders increasingly demand, arguing that having two leaders reduces risks in times of crisis, complexity and increasing regulation. The CEO runs the company while the chairman leads the board’s oversight of the management. In Britain it is the norm, and in Germany a legal obligation, to split the two roles. European Union rules force banks to do so, to reduce financial risk, so French banks are among the splitters. + +A big institutional investor reckons that shares in firms which have yet to split the roles suffer discounts of perhaps 5-10% as a result. Yet firms resist, mostly for cultural reasons. Since the Vichy government in the second world war, corporate France has concentrated clout in an over-mighty Président Directeur Général, “le PDG”, just as in politics power has been centralised in the president’s hands. “We have a cultural bias, we love having one person at the top, we love to personify power,” admits the chairman of a large French firm. + +“The PDG was God,” adds the chairman of another, who says conservative corporate culture makes quick change impossible. “People need to get used to the idea that becoming chairman and CEO is not the only goal in life, which will take a lot of maturing,” he says. Guy Sorman, a rare liberal commentator on French business, says shareholders have long lacked influence over such matters, but may be gaining ground now. + +Engineering a split + +One model is Safran, a big aerospace firm, which appointed a separate CEO and chairman after its last PDG, Jean-Paul Herteman, retired just over a year ago. Things have gone peacefully since, with shareholders, the board and managers content. The government, a big shareholder, favoured the split. Emmanuel Macron, the reformist economy minister, appears influential in pressing for change at firms in which the state has a stake. Other big firms to have done the splits include Valeo (car parts), Michelin (tyres), Unibail-Rodamco (property) and Danone (food). + +However, there have been examples of backsliding. AXA, a big insurer, split the two top jobs for a while until Henri de Castries, who had become chairman, also grabbed the CEO’s job in 2010. Total, an energy firm, divided the roles after its boss died in an accident in 2014; but in December his successor as chief executive, Patrick Pouyanné, also became chairman. + +Firms with a globalised share register—foreigners hold roughly half of the stock traded in CAC 40 companies—may change sooner than others. “When I talk with my colleagues, this is the kind of discussion we have,” says the boss of a big French firm, noting that Medef, the main business chamber, has been weighing up whether to recommend that companies divide up the top jobs. + +One chief executive, who has experienced having both a unified and a split role, says it is “much, much better if there is a dual structure”, as long as the chairman and CEO co-operate, especially in public, and exchange advice without meddling. Most importantly, he says, boards are getting used to the idea, so more firms are destined to become splitters. If so, whatever happens at Engie, the days of “le PDG” look numbered. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21692866-pressure-separate-roles-chairman-and-chief-executive-growing-praise/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Twitter + +Clunky Dorsey + +The firm’s returned boss has yet to turn it around + +Feb 13th 2016 | SAN FRANCISCO | From the print edition + +The trials of St Jack + +FAITHFUL followers of Twitter believe that Jack Dorsey, one of the social network’s founders, is the only person capable of turning around the struggling firm. Mr Dorsey (pictured below, during a recent Old Testament beard experiment) returned as its boss last year, taking over from Dick Costolo, who had led the company during a chaotic round of executive departures and strategic changes. True believers hope Mr Dorsey will be a reincarnation of the late Steve Jobs, who returned from exile to restore Apple to greatness. + +So far, however, Mr Dorsey has yet to perform miracles. On February 10th Twitter reported lacklustre earnings for the first full quarter that he has been back in charge. It now has 320m monthly users, no more than it had in the previous quarter, and it is unlikely to turn a profit until 2019. + +When Twitter went public in 2013, some believed it could become larger than Facebook, an older rival. Mr Costolo promised to build the “largest daily audience in the world”. Its prospects looked bright. Unlike Facebook, which began as a service on desktop computers, Twitter has always been popular on mobile devices, so it did not have to cope with a difficult transition. + +However, it has become clear that Twitter will never become the giant it was supposed to be. The pace at which it is adding users has slowed far sooner than it did at Facebook (see chart). Mark Zuckerberg’s outfit, which now has 1.6 billion monthly users, has grown swiftly by buying potential competitors such as Instagram, a photo-sharing site. One sign of Twitter’s ill health is that its number of users in America has stayed flat, at around 70m, for a full year, suggesting that it is approaching a ceiling in the world’s most important advertising market. + + + +Three problems have been hampering Twitter’s growth. First, there has been too much turnover of executives. At least 20 have left in the past two years. This has made it impossible to decide and act on a consistent strategy. Second, the reports about management turmoil have heightened an impression among some potential advertisers that the platform is not as mature as Facebook or Google, and thus is not worth taking as seriously. Third, new users find Twitter too fiddly compared with the alternatives (including Instagram and messaging services such as WhatsApp), which discourages them from continuing to use it. + +That said, many users and advertisers do still value Twitter. It is one of the best ways to reach people who influence the public’s conversations about brands, says Laura Desmond of Publicis Groupe, a giant advertising firm. However, to expand its audience, Twitter is in the difficult position of needing to keep long-time users happy while it makes changes that will increase its appeal to new ones. Mr Dorsey’s changes so far include “moments”, a new function which offers users a selection of the day’s top stories; and giving more prominence to tweets that Twitter’s algorithm judges more relevant. But more radical steps will be needed. + +Twitter is not the only tech firm with which investors, concerned by rich valuations and a gloomy economic outlook, are losing patience. In this volatile market, being a listed company with slowing growth is as bruising an experience as being attacked by trolls on social media. Yahoo and Yelp, two other struggling internet firms, have also been battered by the market. On February 4th LinkedIn, a professional networking site, beat analysts’ expectations for its quarterly earnings but forecast that its growth rate would slow significantly. This sent its shares down 44% the next day, wiping nearly $11 billion off LinkedIn’s stockmarket valuation. + +The sagging share prices of Twitter and other fallen internet stars have inevitably prompted takeover speculation. Twitter’s market capitalisation is now around $10 billion, less than a third of what it was a year ago. That makes it affordable for quite a number of firms. News Corporation, whose boss, Rupert Murdoch, is an active tweeter, recently denied rumours it might bid. Mr Dorsey is unlikely to want to sell up yet: he wants his flock to keep the faith, and still hopes to pull off a miracle. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21692858-firms-returned-boss-jack-dorsey-has-yet-turn-it-around-twitter-flatlines/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Corporate governance in Japan + +Sharp elbows + +New twists in the battle for control of an ailing electronics firm + +Feb 13th 2016 | TOKYO | From the print edition + + + +IT IS surely a promising sign for Terry Gou, the boss of Foxconn, that Japan’s largest business newspaper, the Nikkei, is reporting unflatteringly on his efforts to buy Sharp, a near-bankrupt electronics firm. At first the Innovation Network Corporation of Japan (INCJ), a government-backed fund, had seemed certain to snap up the company, and the Nikkei said little. But now the paper is calling Mr Gou a domineering, wilful “warlord of business” with close ties to China who it says has antagonised Sharp’s management with its tactics. So he must be getting somewhere. + +Mr Gou scored a coup on February 5th when he appeared to secure Sharp’s agreement to favour Foxconn’s bid of ¥660 billion ($5.6 billion) for the firm, rather than that of the INCJ, which is offering about half as much. Mr Gou says the two firms are set to strike a deal this month. If so, it would be one of the biggest foreign takeovers of a Japanese firm (see article). Sharp says it is still talking to the INCJ. + +Many foreign buyers have failed before. Japan Inc effectively slammed the door shut to overseas takeovers in 2007 when, backed by the Ministry of Economy, Trade and Industry (METI), Bull-Dog Sauce, a venerated condiment brand, cooked up a poison-pill defence to rebuff the advances of Steel Partners, an American hedge fund. Four years ago the INCJ, which has ¥2 trillion to invest, prevailed over KKR, an American private-equity fund, in buying Renesas Electronics, a chipmaker. + +An all-Japanese deal for Sharp would be awkward for Shinzo Abe, the prime minister, given his flagship policy of seeking to revive the economy via reforms. One element of his programme is to attract more foreign investment. Mr Abe’s advisers may even have had a say in Sharp’s abrupt change in attitude to Foxconn. + +Last year Mr Abe brought in a corporate-governance code that emphasises shareholder rights and the duty of outside board directors to promote them. Sharp’s external directors are said to have feared being sued by shareholders if they opted for the INCJ’s much lower bid. It was also difficult for Sharp’s two main banks, Mizuho Financial Group and Bank of Tokyo-Mitsubishi UFJ, to shun Foxconn’s offer to assume some of Sharp’s debts. + +Losing Sharp to Foxconn would be a singular humiliation for the INCJ and METI. The INCJ had aimed to merge Sharp’s LCD-panel business with that of Japan Display, a firm whose creation it oversaw in 2012 and which is now Japan’s main maker of smartphone screens. Another scheme was to meld Sharp’s domestic-appliances business with those of other Japanese firms, including Toshiba, another troubled industrial group. + +The INCJ’s leaders are incensed at, and baffled by, the way the Taiwanese firm inched ahead. They argue that their plan is far tougher on Sharp and its banks. (As well as relieving the banks of much of Sharp’s debts, Mr Gou has hinted that he will keep the firm’s management and says he will not fire employees under 40.) “The biggest difference between the two bids is that we are asking Sharp’s Japanese main banks to cancel some of the firm’s debts and take a loss on them, since they are responsible for the company’s difficulty,” says Tetsuya Hamabe, chief strategy officer of the INCJ. That argument should go down well with reformers, who criticise the banks for propping up failing firms, if not with the banks’ own shareholders. + +The INCJ may fight to the last, but a deal with Foxconn would show that Japan is changing its attitude to outsiders. One reason it may come off is that as a failing firm, Sharp matters less for national pride. A foreign takeover of a more successful firm would be different. If, say, Tata Steel of India were allowed to buy Nippon Steel & Sumitomo Metal Corporation, imagines a government adviser, that would really signal that Japan is open to foreign buyers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21692900-new-twists-battle-control-ailing-electronics-firm-sharp-elbows/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Foxconn + +Pointed questions + +Foxconn’s bid for Sharp is a risky attempt to reinvent its business model + +Feb 13th 2016 | SHANGHAI | From the print edition + +AT FACE value, there is little sense in the $5.6 billion proposal by Foxconn, the world’s largest contract electronics manufacturer, owned by Hon Hai of Taiwan, to buy Sharp of Japan. It seems an extravagant price for a debt-laden firm that is bleeding red ink and squandered two previous bail-outs. Terry Gou, Hon Hai’s frugal boss, had the sense to walk away from a previous deal for his firm to invest $800m in Sharp in 2012, after the target’s finances deteriorated sharply. + +Why is he now so keen to spend lavishly on something that may prove a millstone around his neck? Mr Gou is not saying, but there are several possible explanations. Hon Hai surely wants to gain bargaining power over Apple, which provides around half its revenues. Foxconn, which has more than 1m workers on the Chinese mainland, has long been the biggest assembler of iPhones and other devices for the Californian firm. Since Sharp, which makes display panels, is also a big supplier to Apple, the combination would have more clout in negotiations over margins—which, at barely 3%, are now meagre at Hon Hai. + +Another factor might be Mr Gou’s desire to diversify Foxconn away from the grinding business of making devices for other firms, which profit nicely from owning the brands. About two-fifths of Foxconn’s revenues come from making networking equipment and servers for just a handful of Western firms, such as Cisco and HP. Foxconn assembles handsets for many firms, including Xiaomi, an ambitious Chinese company (although the mainland’s market for smartphones is reaching saturation). The rise of handheld devices has severely dented sales of desktop and laptop computers, which Foxconn also assembles. If Foxconn could design and sell its own devices under Sharp’s globally recognised name, it could at least keep the brand owner’s margin for itself. + +The desire for a low-margin assembler to move up the value chain is understandable. Foxconn has been making great efforts to become more inventive. A study in 2014 by the United Nations’ World Intellectual Property Organisation rated it as one of the most prominent filers of high-quality patents among firms officially resident on the Chinese mainland (as the company is, despite its Taiwanese parent). Foxconn also files its patents in America, whose standards are more demanding than China’s, and files lots of full “invention” patents as opposed to less important “utility” patents. Sharp has a proud history of technological advances, so perhaps that is why Mr Gou is ready to pay top dollar—especially if, having made a personal investment in one of Sharp’s display divisions a few years ago, he believes it has an important breakthrough in the works. + +If so, buying Sharp may help Mr Gou with his grand “eleven screens” strategy, by which he hopes his firm will become the dominant maker of displays for all sorts of devices, from computers to cars to smart watches. All this may explain his willingness to pay dearly for Sharp. But it will not make it any easier to turn around a broke and battered firm, should he end up owning it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21692901-foxconns-bid-sharp-risky-attempt-reinvent-its-business-model-pointed-questions/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Indian business + +Crossing the desert + +The climate for Indian corporate “promoters” has become arid + +Feb 13th 2016 | MUMBAI | From the print edition + +Subrata Roy smiles on through adversity + +FOR businessmen scrambling to raise money in a bid to stave off bankruptcy, conference rooms can feel like little more than gilded prison cells. Few will feel this more acutely than Subrata Roy, the boss of Sahara, an Indian conglomerate: over the past 23 months he has worked out of a conference suite in a suburban Delhi jail. Held on charges of contempt of court relating to the sale of dodgy small-deposit plans to the masses—which the Supreme Court has ordered to be repaid, and whose proceeds he invested in property and other trophy assets—he has struggled to raise 100 billion rupees ($1.5 billion) in bail despite claiming his business is worth several times that. + +The ignominy of having to sell assets—Sahara is reportedly trying to flog the Grosvenor House hotel in London, four aircraft and a stake in a Formula One team, among other things—was once unthinkable for a “promoter”, the Indian term for founders and majority owners of businesses. A class unto themselves, the most flamboyant feature on the same glossy pages as Bollywood stars and cricketers in the national team (which Sahara once sponsored). Not all promoters are rogues, but the term is often used somewhat as “oligarch” is in Russia. Though life can hardly be described as tough for these plutocrats, they no longer enjoy impunity. + +Many thrived in industries where political connections mattered. They have found the new climate parching. At the top levels of Narendra Modi’s government, in power since May 2014, there are no longer the chummy relations that helped promoters secure precious permits, concessions and tax breaks. “Planes from Mumbai to Delhi used to be full of these guys heading to see ministers, you don’t see that any more,” says an investment banker. + +Political connections also meant access to credit. India’s public-sector banks, which make up 70% of the banking system, have made enough dud loans in recent years to prompt some to worry about financial stability. Most of the soured loans were made by state-bank officials to crony-infested industries such as infrastructure, metals and mining. + +In most countries, the banks would clear up the mess by seizing a defaulting company’s assets. India’s overburdened legal system and antiquated business legislation make that impractical. Promoters can credibly threaten to scupper a company before the creditors can get their hands on it, perhaps a decade down the line. With no fear of loans being foreclosed, the bigwigs have been able to flaunt their wealth even as their creditors fume. + +Worse, bureaucrat-bankers keen to avoid embarrassment have kept throwing good money after bad to avoid fessing up to earlier mistakes. However, all this looks likely to end. Raghuram Rajan, India’s central-bank chief since 2013, is on a mission to clear the banks of their non-performing loans: at the very least, the flow of money to some promoters will be stemmed. A bankruptcy law is snaking its way through the legislature, which would make it easier to remove over-indebted promoters from their businesses. + +Mr Rajan has spoken out against “connected wrongdoers” abusing the system. Throwing subtlety to the wind, he recently railed against promoters who “flaunt [their] birthday bashes even while owing the system a lot of money,” as guests were still recovering from the lavish 60th birthday bash thrown by Vijay Mallya, a drinks baron behind the Kingfisher brand (and a partner of Sahara’s in the Formula One team). Lenders to his group have been warning since 2012 that they are facing multi-billion dollar losses. + +In part thanks to the new regime, cracks are starting to appear in the promoters’ finances. Ever more are having to put up their personal assets (not just their shares in the companies they control, but also houses and the like) as collateral to raise fresh financing. Such pledges reached a seven-year high in 2015: 46% of promoters’ equity is tied up in this way, estimates Prime Database, a data provider, up from 27% in 2009. + +Whether Mr Roy gets to leave his prison conference room soon is in doubt. The reported value of the assets Sahara is flogging is well below the amount he needs to post bail, and they seem to be heavily borrowed-against anyway. The Indian securities regulator has rejected Sahara’s claim that it has made whole the vast majority of its small-scale creditors; it is after 400 billion rupees. On February 1st Mr Roy brought out a book detailing his life philosophy as seen from prison. A further two tomes are planned, suggesting he may have doubts over his judicial prospects. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21692905-climate-indian-corporate-promoters-has-become-arid-crossing-desert/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Turkish wine producers + +Sour grapes + +The government represses the industry at home while helping it to sell abroad + +Feb 13th 2016 | ISTANBUL | From the print edition + +Grapes of governmental wrath + +THE region around Diyarbakir, in Turkey’s conservative south-east, has a long but faded tradition of wine production. “Suleiman”, an amateur oenologist from the city, dreams of reviving it. His biggest obstacle is not the renewed clashes between security forces and Kurdish insurgents, which are battering the region’s economy; nor even the conservatism of its Muslim majority. It is red tape. “The bureaucracy and the laws are the hardest to live with,” he says, preferring not to give his real name for fear of being denied his alcohol licence. + +Turkey, a secular but mainly Muslim country of 75m people, is not a nation of big drinkers. At an average of 1.6 litres a year, consumption per head (excluding bootleg booze) is the second-lowest among the 40 member and partner countries of the OECD. Among these, the only drier place is Indonesia, another secular but Muslim-majority country. + +In keeping with its Islamist roots, Turkey’s ruling Justice and Development Party (AKP) has been doing its best to keep it that way. The party’s leader, President Recep Tayyip Erdogan, urges Turks to stop drinking or at least do so only at home. Yesilay (Green Crescent), a temperance movement founded in 1920, cheers him on. Big tax rises since 2004 have more than trebled in real terms the price of raki, an anise-flavoured spirit that was the preferred tipple of Kemal Ataturk, the nation’s founding father. Sales of bootleg alcohol, some of it deadly, are rising. According to the OECD, perhaps 29% of the booze consumed in Turkey is sold illegally. + +The tax rises on wine have not been so drastic, but winemakers are suffering from the same strong curbs on marketing as other producers of alcohol. A law pushed through by the AKP in 2013 prohibits any sort of promotion of alcohol, including ads, sponsorship deals, product placement or even wine tastings. “If someone comes to your vineyard, you can’t offer him a glass, because it’s against the law,” says Selim Zafer Ellialti, the boss of Suvla, a winery in the Gallipoli peninsula. “For new wines, it’s almost impossible to create an awareness around your brand.” + +As a result, a wine industry that had seemed on the verge of a breakthrough is now plateauing. Production, having more than doubled between 2006 and 2010 to 58m litres, has since stalled, as has domestic consumption. Some firms have given up on winemaking, turning instead to grape juice. Turkey is the world’s sixth-biggest producer of grapes, ahead of Chile and Argentina. Only about 3% of them are used to make wine. + +The good news for Turkish wines is that quality has improved markedly in the past decade. Producers, having invested in new technology and outside consultants, have begun to win awards in international competitions. Upstarts have prised a share of the market from the country’s five leading winemakers. “The new boutique companies have pushed the big ones to make better wine,” says Sabiha Apaydin, a sommelier at one of Istanbul’s leading restaurants. + +Reined in at home, wine companies are seeking a bigger share of foreign markets. About 30 of them have locked arms as Wines of Turkey, a group that promotes exports. Having slipped from about 3m litres in 2004 to 2.2m litres in 2010, the country’s wine exports revived to 2.6m litres in 2014. Although the government has banned all marketing to domestic customers, it subsidises the promotion of wine to foreigners. The top destinations for Turkish wine include Belgium, Germany and Britain, each of which has sizeable Turkish minorities and numerous Turkish restaurants. Gozdem Gurbuzatik of Kayra, another wine producer, sees big opportunities in America and China too. + +Yet for the likes of Suleiman, who has spent years accumulating the paperwork needed to get an alcohol licence, the prospect of running a legitimate, profitable wine business in Turkey remains bleak. “What’s the point of investing if you can’t advertise?” he asks. “It’s a big risk. No wonder people are reluctant to get into this.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21692904-government-represses-industry-home-while-helping-it-sell-abroad-sour-grapes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Drone-racing + +Whizz kids + +A fledgling sport is ready for lift-off + +Feb 13th 2016 | SAN FRANCISCO | From the print edition + +SOME sports, such as wrestling and sprinting, claim long histories. They were portrayed in cave paintings thousands of years ago. Others are just lifting off. The racing of drones is, thus far, a niche activity, but several firms are betting on it. “Every person under the age of 13 either has a drone or wants one,” says Nick Horbaczewski of the Drone Racing League (DRL), a startup. “We are going to raise a generation of pilots.” The DRL has gathered in $8m from investors, including Stephen Ross, the owner of the Miami Dolphins, an American-football team, and CAA, a big agency that represents film and sports stars. + +Drone-racing began as an amateur sport in Australia only a couple of years ago, and spread with the aid of social media as pilots shared videos of their contests. Racers navigate at speeds of up to 100mph (160kph) through a course of illuminated checkpoints, getting a drone’s-eye view of their aircraft’s position through video goggles. + +The sport has had to work out some technological kinks, such as eliminating the “latency” that delays the live video feed to the pilot, which could cause a drone to miss a turn and crash. Races require special drones that are swifter than those mass-produced for consumer use by firms like DJI of China. DRL makes its own. + +As drones have become more affordable, the sport has gained enthusiasts. This year perhaps 3m drones will be sold in America, generating around $950m in revenue, according to the Consumer Technology Association, an industry group. Once people buy one they want something more exciting to do than just hovering it over their houses, says Scot Refsland of RotorSports, which organises drone races and is in talks with a broadcast network to air a championship race later this year. Drone races, sometimes called “rodeos”, are becoming more frequent: in January events were staged in Las Vegas and Ontario. + +The big money will come in once people get into the habit of watching rodeos on television or over the internet. Optimists believe that drone-racing could follow the trajectory of e-sports, in which increasing numbers of people watch other people play video games. However unlikely it may sound, e-sports have turned into a large business, earning $194m in revenues worldwide in 2014, according to Newzoo, a research firm. Amazon validated the sport’s financial prospects in 2014 when it bought Twitch, a startup that streams people playing video games, for $1.1 billion. + +If it succeeds, the DRL will be a prime example of how the money to be made in drones may largely come not from manufacturing them but from services associated with them. It is also possible that drone-racing fails to capture the imagination of enough punters—and ends up like robot combat, which was briefly popular in the 1990s and 2000s on television. Drones may be in the ascendant, but not every sport flies. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21692774-if-video-games-can-be-spectator-sport-why-not-racing-drones-turning-drone-races/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Diversity fatigue + +Making the most of workplace diversity requires hard work as well as good intentions + +Feb 13th 2016 | From the print edition + + + +RONALD REAGAN once said that “The nine most terrifying words in the English language are, ‘I’m from the government and I’m here to help’.” Today they are run a close second by 12 words: “I’m from human resources and I’m here to organise a diversity workshop.” Most people pay lip service to diversity in public. But what they think in private can be very different. Some HR consultants have even started to worry about “diversity fatigue”. + +The arguments in favour of diversity are powerful. The most obvious is that diversity is simply a fact about the modern world. Women have entered the workforce in huge numbers. Mass immigration has transformed Western societies: even in once-homogeneous countries such as Sweden, foreign-born people make up 14% of the population. Gay men and women increasingly feel no need to stay closeted, in or out of the workplace. Companies that ignore this may starve themselves of talent, as well as be out of touch with their customers. Adding to the evidence for diversity’s benefits, a study published this week by the Peterson Institute for International Economics found that the more female executives firms have, the more profitable they seem to be. + +There is also evidence to support the commonsense idea that encountering people with different ideas and different perspectives can boost creativity. Ronald Burt, a sociologist at the University of Chicago, has produced several studies which suggest that people with more diverse sources of information consistently generate better ideas. Sara Ellison of the Massachusetts Institute of Technology has shown that mixed-sex teams can produce more creative solutions than those dominated by either men or women. And internal surveys at Google have found that diverse teams are often the most innovative. + +Given all these benefits, why the talk of diversity fatigue? David Livermore provides some interesting thoughts on this question in his new book, “Driven by Difference: How Great Companies Fuel Innovation through Diversity”. As president of the Cultural Intelligence Centre, a consulting firm, Mr Livermore is a card-carrying member of the diversity industry. But over the years he has been struck by how many companies complain that they are not getting much return for their investment in diversity. “Tomorrow I have to go to a diversity-training workshop,” he heard one man say to another in the gym. “Oh God!” came the reply. “That’s right up there with getting a root canal.” + +Mr Livermore says that one reason for this is that talk of diversity often comes accompanied with a faint air of menace. Managers are dragooned into sitting through lengthy seminars on equal opportunities. They are fearful of saying anything that departs from the “correct” line on any diversity-related matter. And they feel under pressure to hit their recruitment quotas. The more important reason, however, is that proponents of diversity often fail to acknowledge that there can be a trade-off: to get the benefits, employers must be prepared for, and deal with, some problems. Diversity does not produce better results automatically, through a sort of multicultural magic. It does so only if it is managed well. + +The biggest challenge is to do with trust. Employees need to trust each other if they are to produce their best work. This is particularly true if that work involves tackling creative projects that have a high risk of failure and a circuitous path to success. But it is easier to establish trust with those you have a lot in common with. Mr Livermore notes that diverse teams have a higher degree of variance in their performance than homogeneous teams. They are more likely to produce truly innovative ideas, but they are also more likely to fail completely. He suggests that managers of diverse teams need to work hard at establishing bonds of trust. They need to set lots of short-term goals so that teams can see the benefits of working together. They also need to recognise that different groups forge trust in different ways. Westerners tend to think that getting straight down to the task at hand is the best way to do this, whereas South Asians believe in establishing rapport over cups of tea first. + +A second challenge is to do with culture. Too many companies fail to rethink their management styles as they open their doors to new groups. They issue ambiguous instructions which presume that everyone comes from the same background. For example, one Western company urged its employees to “act like an owner” without realising that, in some cultures, acting like an owner means playing golf all day. They evaluate people on their willingness to speak up without realising that some people—women especially, in many countries—are brought up to hold their tongues and defer to authority. Mr Livermore argues that managers need to work harder at getting members of silent minorities to speak up and, failing that, give them other ways of contributing to the collective effort. + +Beyond box-ticking + +Your columnist would add a third challenge: distinguishing between genuine cultural diversity and the box-ticking sort. It is easy for companies to think that they have embraced diversity if they appoint the right number of people with the right biological characteristics. That can be hollow if they all come from the same backgrounds—if, say, all the black people a firm promotes to management are Harvard-educated sons of diplomats. + +The growing diversity of the workforce should be a cause for celebration. Getting rid of discrimination against minorities represents a triumph for natural justice as well as a chance to make society as a whole stronger. But the celebration needs to be mixed with hard work and clear thinking. Companies will find it hard to make a success of diversity if they refuse to recognise that it brings challenges as well as opportunities. And they will find it impossible to confront these challenges if they dismiss any reasonable question that is raised about diversity policies as if it were a plea to go back to the age when white men ruled the roost. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21692865-making-most-workplace-diversity-requires-hard-work-well-good-intentions-diversity/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Falling bank shares: A tempest of fear + +Buttonwood: Slaves of the markets + +Gold: A hedge against ignorance + +Deutsche Bank’s unappetising cocos: Discomforting brew + +Lesbians’ wage premium: Girl power + +Sri Lanka’s economy: Taxing times + +Free exchange: Optimising romance + + + + + +Articles Sections Next + +Falling bank shares + +A tempest of fear + +European banks are in the eye of a new financial storm + +Feb 13th 2016 | From the print edition + + + +IF THE start of the year has been desperate for the world’s stockmarkets, it has been downright disastrous for shares in banks. Financial stocks are down by 19% in America. The declines have been even steeper elsewhere. Japanese banks’ shares have plunged by 36% since January 1st; Italian banks’ by 31% and Greek banks’ by a horrifying 60% (see chart). The fall in the overall European banking index of 24% has brought it close to the lows it plumbed in the summer of 2012, when the euro zone seemed on the verge of disintegration until Mario Draghi, the president of the European Central Bank (ECB), promised to do “whatever it takes” to save it. + + + +The distress in Europe encompasses big banks as well as smaller ones. It has affected behemoths within the euro area such as Société Générale and Deutsche Bank (see article)—both of which saw their shares fall by 10% in hours this week—as well as giants outside it such as Barclays (based in Britain) and Credit Suisse (Switzerland). + +The apparent frailty of European banks is especially disappointing given the efforts made in recent years to make them more robust, both through capital-raising and tougher regulation. Euro-zone banks issued over €250 billion ($280 billion) of new equity between 2007, when the global financial crisis began, and 2014, when the ECB took charge of supervising them. Before taking on the job, it combed through the books of 130 of the euro zone’s most important banks and found only modest shortfalls in capital. + +Some of the recent weakness in European banking shares arises from wider worries about the world economy that have also driven down financial stocks elsewhere. A slowdown in global growth is one threat. Another is that the negative interest rates being pursued by central banks to try to prod more life into economies will further sap banks’ profits. A retreat in Japanese bank shares turned into a rout following such a decision in late January. Investors in European banks fret not just about lacklustre growth but also a possible move deeper into negative territory by the ECB in March. On February 11th Sweden’s central bank cut its benchmark rate from -0.35% to -0.5%, prompting shares in Swedish banks to tumble. + +But the malaise of European banking stocks has deeper roots. The fundamental problem is both that there are too many banks in Europe and that many are not profitable enough because they have clung to flawed business models. European investment banks lack the deep domestic capital markets that give their American competitors an edge. Deutsche, for instance, has only just resolved to hack back its investment bank in the face of a less hospitable regulatory environment following the financial crisis. + +And there are still too many poorly performing smaller banks within national markets. Although this year’s share-price declines have been steepest in Greece, these largely reflect renewed political tensions over implementing the country’s third bail-out. The banks arousing fresh concern are those in Italy, whose troubles go beyond an excess of them. One specific worry is the dire state of the country’s third-biggest (and the world’s oldest) bank, Monte dei Paschi di Siena, which has long been in intensive care and whose share price has fallen by 56% this year. Its woes reflect poor governance, a problem that plagues Italian banks, many of which are part-owned by local, politically connected foundations. + +A more general worry is that Italy’s banking sector as a whole is weighed down with bad loans which have built up during recent years. Although Italian GDP has been expanding since the start of 2015, it is still around 9% lower than its pre-crisis peak in early 2008. This has hurt Italian firms—and their pain has been transferred to the banks that lent to them. Gross non-performing loans amount to €360 billion (18% of the total), of which €200 billion are especially troubled. + +There is nothing new about Italy’s high level of non-performing loans; if the recovery can be sustained they should eventually start to come down. Moreover, over half of the sourest loans are covered by provisions, which means that the potential bill is more manageable, at around €90 billion rather than €200 billion. What has changed this year is a new European approach to tackling troubled banks, which shifts the burden for bail-outs from taxpayers to creditors who are “bailed in” when big losses arise. These rules, which have come fully into force this year (a few countries applied them in 2015), mean that senior bondholders and depositors with balances above €100,000 can be stung when banks are resolved. + +Bank bonds are generally held by institutional investors who can look after themselves, but in Italy around €200 billion are in the hands of retail customers who were lured to invest in them until 2011 by favourable tax treatment. These retail bonds would be vulnerable if banks run short of capital after big write-downs. + +This danger was highlighted late last year when four small banks were rescued in a rush to avoid this year’s more stringent bail-in provisions. That process ensnared retail bondholders holding junior debt, who could already be bailed in under the previous rules. One committed suicide. The furore has unnerved Italians. Ignazio Visco, governor of the central bank, has said that a less abrupt transition to the new bail-in regime would have been better. + +The strict rules have also curtailed the ability of the Italian government, led by Matteo Renzi, to calm nerves by excising the bad loans from the banking system. Instead of setting up a state-backed “bad bank” to remove them, Mr Renzi has had to adopt a feebler approach in which the government will guarantee the senior tranches of securitised bundles of the bad loans. Investors plainly doubt this scheme will help much, to judge by the performance of Italian bank shares. + +Frustration with European constraints on Italy’s attempt to sort out its banks is one reason why Mr Renzi has been making barbed attacks on the German way of running the euro area. Such political tension is adding to jitters about Italian banks. Portuguese banking shares have also tumbled, in part because a new left-of-centre coalition government alarmed international investors by its decision to impose heavy losses on some senior bank bonds late last year. In seeking to transfer the risk of failing banks away from taxpayers to creditors, European policymakers may have thought they were depoliticising the banks. In the euro-zone periphery, however, politics is never peripheral. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21692863-european-banks-are-eye-new-financial-storm-tempest-fear/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Slaves of the markets + +New evidence on what drives central banks to decide to change rates + +Feb 13th 2016 | From the print edition + + + +CENTRAL banks are supposed to target inflation and in some cases, economic growth or full employment. As the “lender of last resort”, they also have responsibility for safeguarding the financial system. But do they in fact target asset prices as well? + +That has been the suspicion from the late 1980s onwards, when the Federal Reserve began cutting interest rates when equity markets wobbled. This approach became known as the “Greenspan put” (Alan Greenspan was the chairman of the Fed from 1987 to 2006, and the put option is a form of insurance against falling prices). The implicit guarantee from central banks became a bit more explicit in the era of quantitative easing (QE)—the creation of new money to buy assets. Central banks hoped that QE would have a “portfolio rebalancing effect”, with investors being forced out of low-yielding government bonds and into corporate debt and equities. + +However, the relationship between market movements and central banks may have an even longer history. That is the implication of new research by Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School for the latest Global Investment Returns Yearbook, published by Credit Suisse. They looked at the historical relationship between movements in interest rates and in financial markets, with particular reference to America and Britain. + +Unsurprisingly, they found that markets performed much better when rates were falling than when they were rising. Since 1913 (when the Fed was founded) American equities have returned an average of 9.3% a year in real terms during easing cycles, defined as the period between the first cut and the first increase. In contast, real returns during tightening cycles were just 2.3% a year. Government bonds returned 3.6% during easing cycles and 0.3% in tightening ones. + +This rule applied in most of the 21 countries covered by the trio’s data, going back to 1900. On average, equities earned 8.4 percentage points more in real terms in the year after a rate cut than in one following an increase. Alternative assets such as houses, art and gold also did better when rates were falling. + +That is how the markets reacted to central banks. Perhaps the more interesting finding is how central banks have responded to the markets. The chart shows the changes in volatility for equity and bond markets before and at the time of rate increases and rate cuts. Although stockmarkets (and the British bond market) were a lot more volatile after a rate rise, there was little sign of increased volatility before a rise. + +In contrast, both the British and American stockmarkets were almost as volatile before a rate cut as after one. The academics suggest central banks are following a rough rule of thumb. They postpone rate increases when volatility is high, for fear of causing further upset, but respond to high volatility with rate reductions. + +Investors may thus have learned that if they throw the equivalent of a toddler’s tantrum, central banks will eventually come to their rescue. Over the long run this might have encouraged risky behaviour of the kind that was common in the run-up to the crisis of 2007-08. + +The power of tantrums may still apply. In September the Fed postponed a rate increase in part because markets seemed to point to a slowdown in the global economy. The latest turmoil—the Vix measure of stockmarket volatility has risen from 15 to 26.5 over the past three months—may have induced another bout of caution. Before the start of the year the markets expected several rate increases in 2016; now there is a marginal consensus in favour of unchanged rates. This week’s comments by Janet Yellen, the Fed’s current chairman, to Congress about less supportive financial conditions will bolster that view. + +Whether central banks should be so sensitive to the whims of financial markets is another matter. There are wealth effects that reverberate in the broader economy when asset prices fall, although housing (where prices are still rising on both sides of the Atlantic) has more impact than equities. And market turmoil may be an indicator of trouble in the global economy: figures out this week showed sharp falls in British, French, German and Italian industrial production in December. Then again, central banks ought to be able to work out the economic outlook on their own. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21692927-new-evidence-what-drives-central-banks-decide-change-rates-slaves/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Gold + +A hedge against ignorance + +Investors are cautiously returning to a fickle market + +Feb 13th 2016 | From the print edition + +Fuelled by economic uncertainty + +THE Valentine Day’s special at Sharps Pixley, London’s first high-street bullion showroom, is a £115 ($166) rose dipped in gold. But what that special someone would really want is the £27,000 “kilobar”, smaller than a slab of chocolate but reassuringly weighty in this time of turmoil in financial markets. Both have sold well since the shop opened last month, says Ross Norman, the boss. Yet he is struck by how “apologetic” his British clients are about buying gold. It suggests many are novices, gingerly placing their first bets against the global economy. + +They are not alone. From libertarians in America to Indian housewives, gold’s fans have helped push spot prices up sharply this year, defying the rout in global commodity markets (although gold also defied the prior boom in commodities—see chart). In early trading on February 11th gold surged above $1,200 an ounce, its highest level in more than eight months, amid a big sell-off in global stockmarkets. Mr Norman notes that January rallies in the past two years quickly petered out, partly for seasonal reasons: retail buying in the biggest markets, India and China, starts with the Hindu Diwali festival in late autumn and ends at this time of year with Chinese new year. He says the rally is still tentative, though this year “it has a bit more oomph.” + + + +Fear is one source of oomph. One Swiss-based bull likes to call gold “a hedge against ignorance”, noting the myriad question-marks hanging over the global economy. They include the strength of China’s economy, the impact of falling oil prices on emerging-market producers, the debt woes in America’s shale-oil industry and the fragility of global banks. What’s more, the dollar—which rivals gold as a haven—has also weakened recently. + +Other factors have been on gold’s side. Its recent rally has coincided with falling oil prices and renewed fears of deflation that have pushed down interest rates. Because gold offers no yield, the lower the returns offered by alternative investments such as bonds, the more attractive it looks. The move by big central banks to impose negative interest rates on commercial-bank deposits makes gold an even more attractive store of value—the shiny equivalent of cash under the mattress. + +Supply may also help the bulls’ case. The World Gold Council said on February 11th that the amount of gold mined in the fourth quarter of 2015 was down by 3%, its first quarterly drop since 2008. It expects the trend to continue as cash-strapped mining firms trim investment. + +The demand picture is more nuanced. Overall, global demand dipped slightly in 2015. But Indians vastly increased their holdings of gold jewellery in the second half of last year, befitting one of the world’s fastest-growing economies. In China, shoppers bought fewer gold trinkets but more gold coins and bars as investments, perhaps reflecting concerns about their falling currency and stockmarket. + +This year the latest data suggest there has been a net inflow of funds into gold-related exchange-traded funds, which are investment vehicles that account for about a tenth of global gold demand, says the World Gold Council’s Juan Carlos Artigas. He expects buying by central banks in the developing world, which surged in the fourth quarter, to continue as they diversify their assets. + +Sceptics—among them Goldman Sachs, an investment bank—nonetheless argue that gold will fall for a fourth straight year in 2016, largely because of higher interest rates in America. On February 10th Janet Yellen, chair of the Federal Reserve, offered a downbeat assessment of the American economy in testimony to Congress. Though she still left the door ajar to further rate rises, stockmarkets and the dollar reacted negatively, while gold rallied. The more pressing financial fears become, the higher it is likely to go. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21692942-investors-are-cautiously-returning-fickle-market-hedge-against-ignorance/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Deutsche Bank’s unappetising cocos + +Discomforting brew + +Investors are reassessing yet another complicated financial instrument + +Feb 13th 2016 | From the print edition + + + +WHEN governments bailed out banks during the financial crisis, they tended to insist that shareholders suffer big losses. Most bondholders, however, got off scot-free. In theory, bondholders should have lost money too—but working out just how bankrupt the banks were, apportioning the losses and risking contagion among bondholders elsewhere seemed too risky to contemplate as the financial system was seizing up. + +Regulators have since pushed banks to fund their activities with less debt and more loss-absorbing capital. The simplest form of capital is equity—the money raised by selling shares or retaining profits. But trimming dividends or increasing the number of shares reduces the value of the existing ones. So bankers and regulators dreamt up a new financial instrument that would act like debt, thus sparing shareholders dilution, unless capital was urgently needed. These instruments are called contingent convertible bonds, or “cocos”, also known as additional Tier-1 securities. In exchange for annual interest of around 6-7%, investors take on the risk that, if the going gets tough, the bank may suspend interest payments, convert the bond into equity or write it off altogether. + +Cocos have proved popular, given how low most bond yields are: about €91 billion ($103 billion) of them have been issued since 2013. But this week analysts at CreditSights, a financial-research firm, questioned whether Deutsche Bank would have enough “available distributable items” (ADI, a subset of earnings from which interest on cocos must be paid) to cover the €350m due on its cocos next year. Their price promptly slumped to 70 cents on the euro (see chart). Other European banks’ cocos also suffered, although not quite as badly. + +It is not unreasonable for investors to be nervous about Deutsche. It made a record loss last year. Its newish boss, John Cryan, has suspended the dividend for last year and this. Its big investment bank is a perennial underperformer. Many risks still lie ahead, from the costs of restructuring and regulatory infractions to potential losses on loans to energy firms. + + + +Explore our interactive guide to Europe's troubled economies + +If all this proves more expensive than imagined, it may exceed ADI, which has already been diminished by the bank’s recent losses. The problem is more acute at Deutsche than at other banks, both because it has performed especially poorly in recent years and because the German definition of ADI is narrower than in most other European countries. (Deutsche insists it will meet the payments with ease.) + +The hullabaloo at Deutsche, along with the poor performance of European banks more broadly, seems to have prompted a broader reassessment of the riskiness of cocos, argues James Chappell of Berenberg, a bank. “People have misunderstood them,” he says. On top of everything else, the market for them is relatively illiquid, which makes prices more susceptible to sudden jolts. + +The irony is that even those shunning Deutsche’s cocos accept that its cushion of capital is relatively thick, at 11%. The problem is its profits, or rather the lack of them. In other words, its cocos appear to have been poorly designed, at risk of taking money away from investors before the bank truly faces calamity. It would not be the first time a financial innovation did not work as advertised. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21692933-investors-are-reassessing-yet-another-complicated-financial/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lesbians’ wage premium + +Girl power + +Lesbians tend to earn more than heterosexual women + +Feb 13th 2016 | From the print edition + + + +LABOUR markets are hotbeds of inequality. For every dollar a white American man in full-time work earns, the average white woman earns 78 cents and the average Latina only 56 cents. Marriage is a boon for male earnings; motherhood drags female earnings down. Likewise, gay men earn about 5% less than heterosexual ones in Britain and France, and 12-16% less in Canada and America, even after controlling for things like education, skills and experience. Yet one minority appears immune to this scourge: lesbians. + +Marieka Klawitter of the University of Washington looked at 29 studies on wages and sexual orientation last year.* On average, they found a 9% earnings premium for lesbians over heterosexual women, compared with a penalty of 11% for gay men relative to straight men. This discrepancy has been borne out by research on America, Britain, Canada, Germany and the Netherlands. Even after adjusting for the fact that lesbians are on average more educated than straight women, and less likely to have children, the gap persists. + +Research on this topic should be taken with a pinch of salt. Some studies rely on direct questions about sexual orientation. But around half of the 29 studies surveyed by Ms Klawitter were based on surveys in which respondents were not asked directly whether they were gay. Instead, they were asked who they live with and what their relationship with them is. Both methods tend to find a wage premium. But they may both miss some gay women in a way that distorts the results. + +If getting good data is tough, pinning down why there might be a wage premium for lesbians and a penalty for gay men is even tougher. Perhaps lesbians who are “out” are more competitive than their heterosexual peers. After all, studies tend to find that men are more competitive than women, which could explain some of the wage gap between the sexes. But a working paper published last year found that whereas gay men behaved less competitively than straight men (accounting for roughly two-fifths of their earnings penalty), there was no such difference between lesbians and other women. + +Lesbians may not need to behave differently to be treated differently. They could face positive discrimination, if employers promote them on the assumption that they will not have children and so devote more time to work than straight colleagues. A study Ms Klawitter published in 2011 found that gay men working in the public sector suffered a smaller penalty than those in the private sector, whereas lesbians enjoyed a premium in the private sector but none in the public sector. One interpretation could be that discrimination of all sorts is more fiercely policed in government offices, dampening prejudice against gay men and in favour of gay women. + +Lesbians’ higher earnings could also be a function of the gender of their partner. Men earn more than women, straight or gay; lesbians, deprived of the extra earnings a male partner would bring, may work harder to compensate. At any rate, they work more hours per day and weeks per year than straight women, on average (see chart). Over time this could translate into more experience and better chances of promotion. There is a clue in a paper from Nasser Daneshvary, C. Jeffrey Waddoups and Bradley Wimmer of the University of Nevada, which finds that lesbians who have previously been married to men receive a smaller premium than those who have not. + +Finally, it could be that in same-sex couples women do not feel obliged to do as much childcare or housework, giving them more freedom to fulfil their potential in the workplace. Lesbian couples tend to work more equal hours, even when they have children, and several studies find that same-sex households share chores more evenly than heterosexual ones. + +Whatever the reason for lesbians’ wage premium, it does not make them a privileged group. There is evidence that they face discrimination in hiring relative to straight women, even though their pay is better. Poverty rates among lesbian couples are 7.9%, compared with 6.6% among heterosexual ones. And for boosting earnings, as in so many realms, nothing beats being a straight, white, married man. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21692938-lesbians-tend-earn-more-heterosexual-women-girl-power/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sri Lanka’s economy + +Taxing times + +The island turns to the IMF despite strong growth + +Feb 13th 2016 | COLOMBO | From the print edition + +If only the budget were as finely balanced + +SRI LANKA ought to be sitting pretty. Its growth has averaged 6% a year over the past decade. Seven years after a protracted civil war ended, its economy is still reaping a peace dividend. It is also a beneficiary of the collapse in commodity prices, which has trimmed its hefty bill for imports of fuel. Yet last week, after long debate, its leaders requested a loan from the IMF. + +If so much is so rosy, why is Sri Lanka going cap in hand to the IMF? The immediate concern is the capital flight that has buffeted emerging markets around the world. Although Sri Lanka’s current-account deficit had been declining steadily over the past few years, the country suffered big capital outflows last year as foreign investors sold down their holdings of government bonds. + +The central bank fought against the tide for a while, using up some $2 billion, or more than a fifth, of its foreign-exchange reserves to defend the rupee. After it relented in September, the currency fell to a record low against the dollar and has since weakened further. To hear it from Ravi Karunanayake, Sri Lanka’s finance minister, the country is a victim of the woes that have beset other emerging markets: “If China devalues and India devalues, little Sri Lanka gets caught in between.” + +Yet the main source of Sri Lanka’s fragility is its own fiscal mistakes, not external turbulence. A combination of cumbersome debts and a rickety tax system has made it vulnerable to the withdrawal of foreign funding. At nearly three-quarters of GDP, its public debt is large for a developing country. It does not help that a chunk of that debt was borrowed from China under the previous president, Mahinda Rajapaksa, to pay for infrastructure built by Chinese firms, including several expensive but pointless vanity projects. The principal on these loans will not fall due until the early 2020s, but the interest on them is high, adding to Sri Lanka’s already weighty debt-servicing costs. + +That points to what many in Colombo see as the root cause of their headache: a threadbare tax system. Revenues amount to a paltry 13% of GDP. Countries with similar levels of income typically take in 20%. The new administration, in power for just over a year, has made things messier. It slashed corporate and income taxes, introducing flat rates of 15%, hoping to lure investors to Sri Lanka. To make up for some of the shortfall, it has relied largely on one-off measures such as an extra levy on a few dozen highly profitable companies. Anushka Wijesinha, chief economist of the Ceylon Chamber of Commerce, says businesses are not asking for tax breaks but rather for a more predictable tax regime. + +The government has also driven up its costs by awarding public servants a big pay rise to make good on an election promise. It had initially aimed to keep the fiscal deficit to 4.4% of GDP last year. Instead it hit 7.2%. Even so, calling on the IMF does not mean that Sri Lanka faces a crisis. Arjuna Mahendran, the governor of the central bank, is careful to point out that Sri Lanka has not missed a debt payment in years and is not about to do so. Instead, the government views the IMF loan as a buffer, which it thinks will help it gain credibility with foreign investors. + +Bringing in the IMF is not cost-free, however. It will want to see the government strengthen its fiscal system. That may be the point: a stern external force should help catalyse fiscal reforms. It could also pave the way for an additional loan from the World Bank. + +Sri Lanka still has much going for it. It is working to position itself as a trading hub for South Asia. Sitting about midway on shipping lanes between Singapore and Dubai, it offers deepwater ports, easy access to India and some of South Asia’s best highways. Sorting out the infrastructure of its tax system is far less glamorous but just as critical. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21692944-island-turns-imf-despite-strong-growth-taxing-times/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Optimising romance + +To find true love, it helps to understand the economic principles underpinning the search + +Feb 13th 2016 | From the print edition + + + +DATING is a treacherous business. There may be plenty of fish in the sea, yet many are unhygienic, self-absorbed, disconcertingly attached to ex-fish, or fans of Donald Trump. Digital dating sites, including a growing array of matchmaking apps, are meant to help. Their design owes more to hard-nosed economics than it does to the mysteries of the heart. + +In a sense, searching for a mate is not so different from hunting for a job. Jobs, like prospective partners, have their strengths and weaknesses, which makes finding the right one a matter of complicated trade-offs. Such exchanges are different from other transactions, in that both parties must be enthusiastic about the match for it to happen. A supermarket, in contrast, does not particularly care whose wallet it is draining, nor does the power company agonise about whether a customer is worthy of its watts. + +Alvin Roth, who won a Nobel prize in economics for his work on market design, made a career of studying such “matching markets”, where supply and demand are not balanced by price. Instead, people transact based on information. An apple-seller can nudge down his prices until the whole cart is sold. Yet if Apple were looking to hire two workers, it would not set a salary so puny that only two people applied. The quality of new hires often matters at least as much as their salaries. + +Mr Roth, who won the prize jointly with Lloyd Shapley in 2012, found that the structure of matching markets made a significant difference in determining who wound up with whom. Systems designed to elicit people’s true preferences generated better matches between hospitals and doctors, for example. But the entire medical profession has an interest in improving matches, and so can set up a national clearing house to do just that. The lovelorn must instead rely on an array of digital matchmakers. + +Good matches depend on good information. Even without digital help, people usually have some inkling of how much they have in common. Cosmopolitan strivers move to New York, say, rather than sleepier cities, in part because they will meet other ambitious types with similar interests. Within New York, the places people choose to spend their time—whether Yankee Stadium or a yoga studio—determine which sorts of people they come into contact with. Because it is expensive to live in New York, and to spend time sweating in a yoga studio or swearing in the stands, people in such settings can be reasonably confident those around them are in some sense like-minded. + +But one critical bit of information is missing: whether there is mutual interest. The act of asking someone out is fraught. In the non-digital world, approaching a potential partner brings the risk of awkwardness or humiliation. Digital dating reduces this cost dramatically. Apps like Tinder and Happn, for example, reveal that a user likes another only when the feeling is mutual. + +The best matching markets are those that are “thick”, with lots of participants. The more people there are seeking digital dates, the greater the chance of finding a good match. Odds improve that another person in the crowd also enjoys Wagner, Thai food, or discussions about the economics of matching markets. + +The wealth of information many dating sites request may help to home in on the perfect match, but if the effort involved is enough to deter potential mates from joining in the first place, then it does more harm than good. When Tinder first launched, largely to facilitate casual sex, users assessed one another based only on looks, age and gender. Simplicity worked wonders; there are 26m matches made between Tinder users each day. + +The advantages of thick markets are lost, however, if they become too “congested”, with users overwhelmed by the number of participants and unable to locate a good match among them. One response is to specialise. JSwipe, for instance, caters to Jewish singles while Bumble, an app where women must initiate contact, is meant to attract feminists. + +But the most popular apps seek to help their users filter possible mates using clever technology. Tinder, for example, only provides users with profiles of fellow Tinderites who are nearby, to make it that much easier to meet in person. It has also introduced a “super like” feature, which can be deployed only once a day, to allow smitten users to signal heightened interest in someone. In addition, last year it started allowing people to list their jobs and education, to help users to sort through the crowds. Users get the benefits both of a big pool of potential partners and various tools to winnow them. + +Sext and the city + +The emergence of matching apps, for those seeking love or theatre tickets or a lift, has certainly made once-onerous tasks more convenient. They may also contribute to more profound economic change. Dating apps could strengthen the trend toward “assortative mating”, whereby people choose to couple with those of similar income and skills. By one estimate, the trend accounts for about 18% of the rise in income inequality in America between 1960 and 2005. A recent study of online dating in South Korea found that it boosted sorting among couples by education. + +Better matching may also mean bigger cities. Metropolitan goliaths have long been melting-pots, within which those early on in their adult lives link up with jobs, friends and mates. Matching apps, romantic or not, make it easier to navigate the urban sprawl and sample all it has to offer. That, in turn, should make the biggest cities relatively more attractive to young people. + +Apps cannot yet make break-ups less painful. And love remains mysterious enough that even the most refined algorithms cannot predict mutual attraction with confidence. But they clearly help, judging by their legions of users. After all, it is better to have super-liked and lost than never to have super-liked at all. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21692926-find-true-love-it-helps-understand-economic-principles-underpinning/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Merger and acquisition: Gravitational waves have been detected for the first time + +Neanderthals and human disease: A Parthian shot + +Livers, bacteria and alcohol: Bugs in the system + +Bacterial vision: Go towards the light + +Air quality: Something in the air tonight + + + + + +Articles Sections Next + +Merger and acquisition + +Gravitational waves have been detected for the first time + +Signs of black holes merging arrive a century after Albert Einstein predicted them + +Feb 13th 2016 | From the print edition + + + +TWO black holes circle one another. Both are about 100km across. One contains 36 times as much mass as the sun; the other, 29. They are locked in an orbital dance, a kilometre or so apart, that is accelerating rapidly to within a whisker of the speed of light. Their event horizons—the spheres defining their points-of-no-return—touch. There is a violent wobble as, for an instant, quintillions upon quintillions of kilograms redistribute themselves. Then there is calm. In under a second, a larger black hole has been born. + +It is, however, a hole that is less than the sum of its parts. Three suns’ worth of mass has been turned into energy, in the form of gravitational waves: travelling ripples that stretch and compress space, and thereby all in their path. During the merger’s final fifth of a second, envisaged in an artist’s impression above, the coalescing holes pumped 50 times more energy into space this way than the whole of the rest of the universe emitted in light, radio waves, X-rays and gamma rays combined. + +And then, 1.3 billion years later, in September 2015, on a small planet orbiting an unregarded yellow sun, at facilities known to the planet’s inhabitants as the Advanced Laser Interferometer Gravitational-wave Observatory (LIGO), the faintest slice of those waves was caught. That slice, called GW150914 by LIGO’s masters and announced to the world on February 11th, is the first gravitational wave to be detected directly by human scientists. It is a triumph that has been a century in the making, opening a new window onto the universe and giving researchers a means to peer at hitherto inaccessible happenings, perhaps as far back in time as the Big Bang. + +Finger on the pulsar + +The idea of gravitational waves emerged from the general theory of relativity, Albert Einstein’s fundamental exposition of gravity, unveiled almost exactly 100 years before GW150914’s discovery. Mass, Einstein realised, deforms the space and time around itself. Gravity is the effect of this, the behaviour of objects dutifully moving along the curves of mass-warped spacetime. It is a simple idea, but the equations that give it mathematical heft are damnably hard to solve. Only by making certain approximations can solutions be found. And one such approximation led Einstein to an odd prediction: any accelerating mass should make ripples in spacetime. + +Einstein was not happy with this idea. He would, himself, oscillate like a wave on the topic—rescinding and remaking his case, arguing for such waves and then, after redoing the sums, against them. But, while he and others stretched and squeezed the maths, experimentalists set about trying to catch the putative waves in the act of stretching and squeezing matter. + +Their problem was that the expected effect was a transient change in dimensions equivalent to perhaps a thousandth of the width of a proton in an apparatus several kilometres across. Indirect proof of gravitational waves’ existence has been found over the years, most notably by measuring radio emissions from pairs of dead stars called pulsars that are orbiting one another, and deducing from this how the distance between them is shrinking as they broadcast gravitational waves into the cosmos. But the waves themselves proved elusive until the construction of LIGO. + +As its name states, LIGO is an interferometer. It works by splitting a laser beam in two, sending the halves to and fro along paths identical in length but set at right angles to one another, and then looking for interference patterns when the halves are recombined (see diagram). If the half-beams’ paths are undisturbed, the waves will arrive at the detector in lock-step. But a passing gravitational wave will alternately stretch and compress the half-beams’ paths. Those half-beams, now out of step, will then interfere with each other at the detector in a way that tells of their experience. The shape of the resulting interference pattern contains all manner of information about the wave’s source, including what masses were involved and how far away it was. + + + +To make absolutely certain that what is seen really is a gravitational wave requires taking great care. First, LIGO is actually two facilities, one in Louisiana and the other in Washington state. Only something which is observed almost, but not quite, simultaneously by both could possibly be a gravitational wave. Secondly, nearly everything in the interferometers’ arms is delicately suspended to isolate it as far as possible from distant seismic rumblings and the vibrations of passing traffic. + +Moreover, in order to achieve the required sensitivity, each arm of each interferometer is 4km long and the half-beam in it is bounced 100 times between the mirrors at either end of the arm, to amplify any discrepancy when the half-beams are recombined. Even so, between 2002 when LIGO opened and 2010, when it was closed for upgrades, nary a wave was seen. + +Holey moly + +Those improvements, including doubling the bulk of the devices’ mirrors, suspending them yet more delicately, and increasing the laser power by a factor of 75, have made Advanced LIGO, as the revamped apparatus is known, four times as sensitive as the previous incarnation. That extra sensitivity paid off almost immediately. Indeed, the system’s operators were still kicking its metaphorical tyres and had yet to begin its official first run when GW150914 turned up, first at the Louisiana site, and about a hundredth of a second later in Washington—a difference which places the outburst somewhere in the sky’s southern hemisphere. Since then, the team have been checking their sums and counting their lucky stars. As they outline in Physical Review Letters, the likelihood that the signal was a fluke is infinitesimal. + +When one result comes so quickly, others seem sure to follow—particularly as the four months of data the experiment went on to gather as part of the first official run have yet to be analysed fully. A rough estimate suggests one or two other signals as striking as GW150914 may lie within them. + +For gravitational astronomy, this is just the beginning. Soon, LIGO will not be alone. By the end of the year VIRGO, a gravitational-wave observatory in Italy, should join it in its search. Another is under construction in Japan and talks are under way to create a fourth, in India. Most ambitiously, a fifth, orbiting, observatory, the Evolved Laser Interferometer Space Antenna, or e-LISA, is on the cards. The first pieces of apparatus designed to test the idea of e-LISA are already in space. + +Together, by jointly forming a telescope that will permit astronomers to pinpoint whence the waves come, these devices will open a new vista on the universe. As technology improves, waves of lower frequency—corresponding to events involving larger masses—will become detectable. Eventually, astronomers should be able to peer at the first 380,000 years after the Big Bang, an epoch of history that remains inaccessible to every other kind of telescope yet designed. + +The real prize, though, lies in proving Einstein wrong. For all its prescience, the theory of relativity is known to be incomplete because it is inconsistent with the other great 20th-century theory of physics, quantum mechanics. Many physicists suspect that it is in places where conditions are most extreme—the very places which launch gravitational waves—that the first chinks in relativity’s armour will be found, and with them a glimpse of a more all-embracing theory. + +Gravitational waves, of which Einstein remained so uncertain, have provided direct evidence for black holes, about which he was long uncomfortable, and may yet yield a peek at the Big Bang, an event he knew his theory was inadequate to describe. They may now lead to his theory’s unseating. If so, its epitaph will be that in predicting gravitational waves, it predicted the means of its own demise. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21692851-gravitational-waves-at-LIGO-century-after-Albert-Einstein-predicted-them/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Neanderthals and human disease + +A Parthian shot + +Neanderthals’ parting gifts to Homo sapiens were disease-causing genes + +Feb 13th 2016 | From the print edition + + + +UNLESS creatures such as yeti and Bigfoot turn out to be real, the only kind of human in the modern world is Homo sapiens. But that is only recently true. For most of Homo sapiens’s 200,000-year history, it shared the planet with several cousins. The most famous were the Neanderthals, who were larger and heavier and who lived in Europe and Central Asia. + +Neanderthals died out 40,000 years ago. Whether they were killed off directly by modern humans or were out-competed is a perennial topic of debate. But, either way, there was more to relations between the two species than just inter-hominid rivalry. In the past decade researchers have found that between 1% and 4% of the DNA of modern Europeans and their descendants on other continents is of Neanderthal origin. There must, in other words, have been a certain amount of interbreeding going on back in the day. + +What is less clear is the effect today of the DNA so acquired. Neanderthal DNA is not easy to come by (it must be garnered from fossils that have been particularly well preserved), and doing extensive genetic testing on large numbers of modern humans, which is necessary to untangle the influence of even a relatively small chunk of their genomes, is expensive. Nevertheless, as they report in Science, exactly such a comparison has just been made by a team lead by Corinne Simonti of the Vanderbilt Genetics Institute, in Tennessee. + +Rather than doing the genetic tests themselves, Dr Simonti and her colleagues used data from the Electronic Medical Records and Genomics Network. This gave them both the medical histories and the genotypes of thousands of people. They picked out 28,416 people of European descent and compared the genomes of these individuals with genetic information recovered from the toe-bone of a Neanderthal woman that was found in a cave in Russia, in 2010. They found 135,000 bits of modern human DNA which they thought were probably of Neanderthal origin. + +Previous research had found such Neanderthal DNA to be especially common near parts of the genome associated with illnesses like depression, heart disease and seborrheic keratosis, a complaint in which scaly lumps form on a sufferer’s skin. Because Dr Simonti’s data included people who actually suffer from such conditions, she was able to check those associations. When she did so, she found that particular chunks of Neanderthal DNA were indeed correlated with the presence of all three complaints. And the team found a clutch of other phenomena for which Neanderthal genes seemed to put their carriers at additional risk. These ranged from obesity and blood-clotting disorders to certain types of malnutrition, and even smoking. + +At first blush this seems to suggest Neanderthal DNA is a curse. But that is almost certainly not the case. Forty millennia is plenty of time for evolution to get to work. This means that unfavourable traits should have been weeded out, while beneficial ones spread. There is evidence of exactly this. Some parts of the human genome are unusually free from Neanderthal influence, suggesting natural selection has removed harmful genes. Other parts, where Neanderthal DNA presumably offers benefits, are full of the stuff. + +And just because something is bad for modern humans does not necessarily mean it was bad for their hunting-and-gathering ancestors. Some genes might put their bearers at risk of obesity in the modern world of fatty, sugary snacks. But in a world where food is scarce (as it presumably was in the northern latitudes where modern humans and Neanderthals mixed), those same genes might help their owners through lean periods. + +Neanderthal DNA seems to put modern humans at risk of a specific sort of malnutrition caused by a lack of thiamine, a B vitamin that is vital for carbohydrate metabolism. But, says Dr Simonti, that same genetic variant may also make it easier to digest fats. Millennia ago, when people obtained less of their energy from refined carbohydrates, the trade-off may have been worthwhile. In a world where grain crops have become a staple food, it may not be. + +Finally, and most prosaically, Dr Simonti and her colleagues were looking at medical records. These, by definition, will contain information only about diseases. Evolution is often a trade-off, and for Neanderthal DNA to have survived as long as it has, it must offer some advantages to those carrying it. For the time being, exactly what those advantages are is a mystery. But more research will surely illuminate them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21692847-neanderthals-parting-gifts-homo-sapiens-were-disease-causing-genes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Livers, bacteria and alcohol + +Bugs in the system + +What really causes hepatic cirrhosis? + +Feb 13th 2016 | From the print edition + + + +LIVERS and alcohol do not get on well together. That is well known. But precisely how alcohol destroys the liver of someone who drinks too much has been a mystery. Though alcohol (technically, ethanol—the type of alcohol that has two carbon atoms and is produced by yeast fermentation) wreaks some damage directly, experiments suggest this is by no means the whole explanation. The serious and irreversible harm of cirrhosis seems to have another cause, hitherto unknown. Now, though, perhaps it has been unmasked. For a team of medical researchers led by Bernd Schnabl of the University of California, San Diego suggest the culprit is alcohol’s effect on the gut, and the bacteria therein. + +Fortunately for those who like a pint or a dram, the liver is a regenerative marvel. New cells constantly take the places of old ones. Indeed, huge chunks can be cut from the organ, only to grow back within days. This is just as well, for one of the liver’s tasks is to deal with the stream of toxic chemicals people ingest as part of their food and drink. Ethanol is one of these. Though large quantities may induce a build-up of hepatic fat known as steatosis, abstinence will often reverse this. But even the liver can stand only so much. The scarring involved in cirrhosis is a one-way trip that ends in the organ’s failure. + +One curiosity is that certain antibiotics seem to ameliorate alcohol’s effect on the liver. The livers of mice given antibiotics which clear their intestines of bacteria before they are dosed with ethanol suffer far less damage than those of similar animals not so dosed. Five years ago that knowledge prompted Dr Schnabl to start looking into the relationship between alcohol and gut bacteria. His latest findings have just been published in Cell Host and Microbe. + +Over the course of his research Dr Schnabl found that heavy consumption of alcohol hampers the intestine’s antibacterial defence system. In particular, it suppresses production of two proteins called REG3B lectin and REG3G lectin. These keep the number of bacteria in the gut under control, so their sudden absence leads to a population explosion. And that, Dr Schnabl hypothesised, lets bacteria escape through the intestinal wall to the liver. + +To test this idea he designed an experiment. For eight weeks, he and his colleagues fed ethanol both to ordinary mice and to mice genetically engineered to lack the two pertinent lectin molecules. They also engineered some of the rodents’ gut bugs to make the bacteria in question fluoresce. This let them track these bugs, and see if any left the intestines. + +They did. As the mice were exposed to more and more alcohol, the glow-in-the-dark bacteria underwent population explosions that let them escape the intestines. Once out, they migrated to the liver, where they triggered strong immune reactions. These drew large numbers of white blood cells into the liver, causing inflammation. The white cells themselves engulf and consume bacteria, but prolonged inflammation also damages host tissue. Both groups of mice were affected, but the effect was more intense in the lectin-deficient animals. In both their livers and their intestines, their bacterial populations were 50% larger than those of the control mice. As a consequence, they ended up with livers that were much more badly damaged. + +The researchers then tried things in reverse. They ran the experiment with mice engineered to produce more lectins than normal, and found these animals could endure extensive exposure to alcohol without developing large bacterial populations or showing any signs of liver damage. + +All this suggests that tinkering with the gut bacteria of alcoholic people might help. Dr Schnabl has started to look into the matter by studying the bacterial populations of eight alcoholics and comparing them with those of five non-alcoholics. Preliminary results indicate that the findings from mice apply to human beings, too. Finding a way to boost REG3-lectin production in those who drink too much might thus do them a power of good. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21692850-what-really-causes-hepatic-cirrhosis-bugs-system/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bacterial vision + +Go towards the light + +Some species of bacteria, it turns out, are in and of themselves, eyes + +Feb 13th 2016 | From the print edition + +The shadows are Synechocystis cells. The arrows indicate the direction of illumination + +SCEPTICS of evolution often point to the human eye and ask how such a complex object could have evolved when the imperfection of any part of it would cause the whole thing to be useless. It is a silly argument, confusing imperfection with simplicity. Simpler eyes than a human’s can work perfectly well, even if they do not produce such sophisticated images. And now what is probably the simplest eye imaginable has been described. It consists of a single cell—and a bacterial cell, to boot. But because it is a bacterium, this simplest-possible eye is also an entire organism. + +The organism in question is Synechocystis. It belongs to a group called the cyanobacteria which, like plants, can photosynthesise. (Indeed, the photosynthetic elements of plant cells, known as chloroplasts, are thought by most biologists to be the descendants of cyanobacteria that teamed up symbiotically with the first single-celled algae.) + +Cyanobacteria have been known for over a century to be phototactic, meaning they can orient in the direction of, and travel towards, light sources. Synechocystis, whose cells are spherical and three microns across, is among these phototactic species. It propels itself across surfaces using protuberances called pili. Nils Schuergers of the University of Freiburg, in Germany, and his colleagues wanted to find out how it knows where to go and, as they write in eLife, they think they have the answer. + +Their first thought was that pigmented structures inside Synechocystis cells were acting as shades, meaning the illuminated side of a cell would receive more light than the far side. That would tell the bacterium which direction to travel in. But this turns out not to be the case. In fact, as the picture shows, the side of a cell opposite the light source actually lights up. Like a glass bead, the entire bacterial cell acts as a lens, focusing light on the point on the cell wall farthest from the source. From the image thus formed (though by a mechanism as yet unelucidated) Synechocystis can thus work out which direction the life-sustaining light is coming from, and travel towards it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21692849-some-species-bacteria-it-turns-out-are-and-themselves-eyes-go-towards/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Air quality + +Something in the air tonight + +Tackling atmospheric pollution is hard. More data will help + +Feb 13th 2016 | LOS ANGELES | From the print edition + +SINCE the 1940s, southern California has had a reputation for smog. Things are not as bad as once they were but, according to the American Lung Association, a health group, Los Angeles is still the worst city in the United States for levels of ozone, nitrogen oxides, hydrocarbons and carbon monoxide. Gazing down on the city from the Getty Centre, an art museum in the Santa Monica Mountains, haze can blot out the view of the Pacific Ocean. Nor is the state’s bad air restricted to its south. Fresno, in the central valley, comes top of the list in America for year-round particulate pollution. Residents’ hearts and lungs are strained as a consequence. + +All of which, combined with California’s reputation as the home of technological innovation, makes the place ideal for developing and testing systems designed to monitor pollution in detail. And that is just what Aclima, a fledgling firm in San Francisco, has been doing over the past few months. It has been trying out arrays of monitoring stations, some of them mobile, that are intended to yield minute-to-minute maps of outdoor air pollution. Such stations will also be able to keep an eye on what is going on inside buildings, including offices. + +The stations in Aclima’s arrays are triangular and measure 20cm along a side. Each contains 12 off-the-shelf sensors that detect pollutants such as ozone, carbon monoxide and methane, as well as the small particles of which smog is composed. They also monitor basic data such as temperature and humidity, which affect how pollution forms and lingers. The elements of an array may be fixed and spaced according to what exactly they are trying to measure. Or they can be attached to vehicles, so that entire roads can be sampled routinely. + +To this end, Aclima has been collaborating with Google’s Street View system, resulting in maps such as the one below. Davida Herzl, Aclima’s boss, says they have, as expected, revealed pollution highs on days when San Francisco’s transit workers went on strike and the city’s inhabitants were forced to take to their cars. Conversely, “cycle to work” days have done their job by creating pollution lows. + + + +Aclima has already, at Google’s expense, mapped 20,000km (12,000 miles) of roads in the Bay Area this way. It plans to produce a detailed map of the air quality of California’s most populous regions—those around Los Angeles, San Francisco and the Central Valley—sponsored by the Clinton Global Initiative, a large philanthropic organisation, before the year is out. It will then move on to the rest of America and (Ms Herzl hopes) beyond. For such outdoor work, most of its customers are likely to be charitable foundations or governments. But Aclima hopes to make money from the private sector as well, by measuring pollution levels indoors. + + + +INTERACTIVE: From CO2 to GHG, which countries have the highest emissions? + +Again, Google has acted as a guinea pig. It has been testing Aclima’s technology in its offices for the past two years, crunching through more than half a billion data points a day on the air quality within them. The result, according to Ms Herzl, is the world’s largest pollution-related database on indoor environments. + +Without wind and other weather to move them on, these data show, indoor levels of many nasties can be between two and five times those outside. The Googleplex is in Silicon Valley—a relatively clean part of the state. If such ratios also apply on a smoggy day in LA, watch out. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21692848-tackling-atmospheric-pollution-hard-more-data-will-help-something-air/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Infectious diseases: Passing through + +Marcel Proust as graphic novel: A second bite of the madeleine + +The art of the confidence game: Fool me once + +Johnson: Double-edged words + +Life in the ocean: 50 shades of grey whales + +The Holocaust in France: Dear father + + + + + +Articles Sections Next + +Infectious diseases + +Passing through + +Mankind knows a lot about diseases and how they spread. It still has a lot to learn + +Feb 13th 2016 | From the print edition + + + +Pandemic: Tracking Contagions, from Cholera to Ebola and Beyond. By Sonia Shah. Sarah Crichton Books; 288 pages; $26. + +ZIKA, the world’s newest pandemic, arrived down a well-trodden path. Between 1940 and 2013, more than 300 contagious diseases, including HIV/AIDS, SARS and antibiotic-resistant tuberculosis, were identified for the first time, appeared in populations that had never seen them or reappeared after having been eliminated (see map). Sonia Shah explains how human missteps can mesh with biological happenstance to turn harmless microbes into global disease monsters. + +Ms Shah is an American science journalist and broadcaster who gave a TED talk in 2013, offering three reasons why malaria still had not been eradicated. It has since been viewed more than 1m times. In her new book, “Pandemic”, she combines history with reporting from disease hotspots around the world. She frames the narrative around the journey of cholera, “an old hand at pandemics”, which terrorised London, New York and Paris in the 19th century, to draw out worrying parallels between the mistakes of the past and today’s treatment of pandemic threats. + +New pathogens often arise as a result of making the jump from animals to humans, as Ebola is likely to have done from bats in the jungle. The scariest among them learn to spread easily from one human to another, which is luckily still tricky for bugs like H5N1, the avian influenza virus that kills more than half the people it infects. But newcomers may be getting craftier and opportunities are plentiful, as Ms Shah finds out in poultry markets and pig farms in China and state fairs in America. Climate change and felled forests bring together species that have never crossed paths, which lets microbes mutate among them and make their way into humans. + + + +Epidemics stand little chance without crowds and filth. “Pandemic” contains vivid descriptions of the tenements of New York in the 1850s, when nearly six times as many people were packed into one square mile (2.6 sq km) as there are in Manhattan today, and sewage covered the streets, seeping into the drinking water. Slums in developing countries are more crowded now, and with appalling sanitation. + +Corrupt politics is often to blame when disease spreads. In the past, quarantines were sometimes shunned for the sake of trade. A convention negotiated in 1903 obliged countries to report disease outbreaks to each other, only to be flouted shortly after by the Italian authorities, who bullied and bribed doctors and journalists to deny a cholera outbreak. Ms Shah lists recent similar cover-ups, including SARS in China in 2002, an antibiotic-resistant bacterium in India in 2010 and MERS, a respiratory virus, in Saudi Arabia in 2012—all of which spread around the world. + +Pandemics have shaped human evolution and society, argues Ms Shah. People pick, through smell, mating partners who have the pathogen-recognition genes that others lack, for example. The book brims with anecdotes. In 1892, for one, 28 doctors disputed Robert Koch’s discovery of the cholera bacterium by drinking, publicly, the watery stool of a cholera patient. (Despite the telltale diarrhoea, they still disagreed—because none died.) + +Whether the world can forestall the next, unknown pandemic threat is uncertain, although serious efforts are being made. (The book was written before Zika erupted.) Hotspots where new pathogens are most likely to hatch, such as factory farms, urban slums and wild habitats that are rapidly invaded, are being watched. New ways of spotting outbreaks include vigilance about what is trending on social media or selling in pharmacies (thermometers in flu’s off-season can be one alert). But fewer than half the world’s countries have proper surveillance systems—which is why Ebola, and probably Zika too, had a long head-start on epidemic fighters. + +The world’s ability to put the lid on pandemics has come a long way since the days when the plague, cholera and smallpox ravaged unchecked. Ms Shah’s book is a superbly written account of how we got here and what might await us. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21692843-mankind-knows-lot-about-diseases-and-how-they-spread-it-still-has-lot/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Marcel Proust as graphic novel + +A second bite of the madeleine + +How to illustrate Proust + +Feb 13th 2016 | From the print edition + +Memories are made of this + +In Search of Lost Time: Swann’s Way. By Marcel Proust. Adapted and illustrated by Stéphane Heuet. Translated by Arthur Goldhammer. Gallic; 206 pages; £19.99. + +MARCEL PROUST is a tough read. His seven-volume “In Search of Lost Time”, published between 1913 and 1927, is known for its long, winding prose and its many ruminations on time and the slipperiness of memory. For those who have never plucked up the courage to give it a go, Stéphane Heuet’s adaptation of the first volume into a graphic novel is welcome. + +Mr Heuet’s illustrations are simple, on the whole. The narrator’s face is reduced to a dozen or so lines, the grass a single shade of green. The text is translated from the French by Arthur Goldhammer, a Harvard academic who will be known to many readers for his translation of Thomas Piketty’s “Capital in the Twenty-First Century”. Mr Goldhammer’s text is concise and unfussy. A child could read this book. + +Just occasionally, Mr Heuet lets his pen run wild, to dramatic effect. The most famous scene in the original book—when the narrator’s eating of a madeleine cake dipped in tea provokes a rush of memories of his childhood in the village of Combray—is afforded a wonderful two-page spread, with images of waterlilies in a river, his Aunt Léonie sitting up in bed and the waft of the steam from the tea superimposed on top of it all. + +Clever the comic may be, but can it match the richness of ideas that Proust achieves in the original text? It is only just over 200 pages long, after all, and the story zips along at quite a pace. On these grounds Mr Heuet’s work has received mixed reviews in France. + +Still, even diehard Proustians will enjoy many parts: the face of Charles Swann, a wealthy womaniser, as his opinion of one particular lover gradually slides from indifference to helpless infatuation; or the nervous posture of the young narrator as he tries to befriend Gilberte, Swann’s daughter, in a public garden. Mr Heuet also provides a map of Paris, pinpointing important landmarks—Swann’s residence, the Opéra Garnier and the house of the Verdurins, who host salons for the well-to-do bohemian bourgeoisie. + +On top of this, the layout of the pages often makes it difficult to know the order in which the drawings are supposed to be read—from left to right, or up to down? As in the original book, the reader is thus encouraged to view the plot not as something that evolves chronologically, but as an experience of fleeting, sometimes confused images. A graphic novel this may be, but it captures the essence of Proust beautifully. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21692844-how-illustrate-proust-second-bite-madeleine/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The art of the confidence game + +Fool me once + +Why people are so easily had + +Feb 13th 2016 | From the print edition + +The Confidence Game: The Psychology of the Con and Why We Fall for It Every Time. By Maria Konnikova. Viking; 321 pages; $28. Canongate; £12.99. + + + +HONOURED for his charitable works, Mervyn Barrett was ready for a change. He decided to run for police commissioner of Lincolnshire, encouraged by a trusted new employee who offered not only to manage his campaign but also to fund it with help from his mother. The man took on everything from pamphlets to social media, and swiftly delivered evidence of Mr Barrett’s rising popularity. So no one raised an eyebrow when he asked for access to Mr Barrett’s private bank account, to cover expenses when his mother was unreachable. Alas, Mr Barrett suddenly had to end his candidacy, having discovered that his so-called campaign manager had drained his account of £84,000 ($135,000), and left bills worth another £16,000. + +Humans are a trusting sort. This is largely a good thing, as progress requires co-operation, and co-operation demands trust. Countries with higher levels of trust grow faster and have more stable public institutions. Trusting citizens are healthier, happier and more likely to start their own businesses. People can be bad at spotting deception because, ultimately, very few are downright deceptive. This is great news for humanity. It is also a boon for crooks. + +Confidence artists are the “aristocrats of crime”, writes Maria Konnikova in “The Confidence Game”, a fascinating look at the psychology behind every hustle, from Bernie Madoff’s Ponzi scheme to a three-card-monte game. The beauty of a good con is that it relies solely on persuasion: victims give willingly, and many never discover that they have been had. + +The stories are juicy. Well before Mr Madoff there was William Franklin Miller, a boyish-looking chap who convinced some friends in 1889 that his “inside information” at the New York Stock Exchange guaranteed a 10% weekly return. The news spread swiftly. By the year’s end Miller had nearly $1.2m in deposits from over 12,000 subscribers. Even as newspapers questioned his good fortune, new investors sent him letters filled with cash. Only after a trial did the extent of his deceit become plain. Miller was no trader, but a man who found that it is not too hard to sell a story that seems too good to be true. + +Almost everyone is a sucker for a good yarn. Because stories appeal to emotion rather than reason, a good one can help fill in gaps. Studies show that juries are often more swayed by compelling narratives than by hard evidence. Swindlers know this. Ms Konnikova tells of hucksters masquerading as doctors, royals or moguls, all armed with a gifted imagination, a silver tongue and an ability to size people up. Con artists also know that nearly everyone wants to hear about how they are special, lucky, clever or destined for great things. With a little insight into someone’s hopes and dreams, it is possible to make him or her believe almost anything. + +Circumstances matter. People are more inclined to trust someone who seems a bit like them, or to like someone they want to be associated with. The isolated or lonely are especially susceptible, particularly during a difficult transition, such as a job loss, divorce or serious injury. Debt makes people more prone to fraud of any sort, perhaps because a mix of desperation and anxiety encourages wishful thinking. + +Cons thrive during wars and political upheavals, as swindlers try to exploit feelings of uncertainty. This helps explain why the “advance of technology heralds a new golden age of the grift,” Ms Konnikova writes, as it has upended everything from dating to shopping. Consumer fraud in America has risen by more than 60% since 2008; online scams have more than doubled. The most common con involves fake weight-loss products, but some ploys are more ambitious. The book includes the sad tale of Paul Frampton, a distinguished physics professor who was convicted of drug smuggling in 2012 after he was caught with a suitcase he believed was for his beloved—a supermodel he had met only online—but which had cocaine stashed in the lining. + +Big hustles are relatively rare, but low-level fraud is fairly common: a little more than one in ten Americans has fallen victim to some consumer scheme, according to the Federal Trade Commission. Yet few con artists are ever brought to trial, and many scams go unreported. Some victims are wary of looking like a chump. Those same psychological quirks that make humans so gullible also make many wonderfully adept at dismissing failures. Instead of learning from errors of judgment, many spin new stories about dumb luck, and continue to believe they are special in some way. This self-deception is quite useful. It often makes people happier, more productive, more creative and more empathetic. It also, alas, makes it easier for swindlers to strike again. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21692840-why-people-are-so-easily-had-fool-me-once/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +Double-edged words + +The secret meaning of “feisty” + +Feb 13th 2016 | From the print edition + + + +WOMEN and men face double-standards. That this should show up in the language is no surprise. Men who put themselves forward at work are “assertive”, women who do the same are more often “pushy” or “bossy”; men are “persistent” whereas women are “nagging”; men are “frustrated”, women “upset”. A man has a lot to say; a woman is “chatty”. A man discusses the doings of his colleagues and rivals; a woman “gossips”. + +Readers tempted to doubt can check for themselves. For an impressionistic survey, type “gossip” into Google, click on “images” and see who appears to be doing it; then try the same with “nagging” and “bossy”. For hard data, try Google’s “Ngram” viewer, which shows the frequency of words and phrases among the hundreds of billions of words in the books scanned by Google, spanning centuries. One of the most common words following “gossiping” is “old”. And the most common words to follow “gossiping old” are, in this order: “women”, “woman”, “men”, “lady” and “ladies”. + +Some words are trickier than mere double-standards: those using them may think they are paying a kind of compliment, whereas what is heard is something between condescension and insult. A case in point is “feisty”. Those who use it might think that the word connotes “spirited”. It is often heard by women, though, as carrying a whiff of surprise that a woman would show such spirit. + +“Nonsense”, some will reply. The Economist has used “feisty” recently to refer to Greece’s leftist government, a South African tabloid, a (male) Argentinian presidential candidate and Singaporean opposition bloggers. But it is also used fairly frequently with female figures. The common thread seems to be a sense of smallness or underdog status: nobody calls a jowly dictator or heavyweight boxer “feisty”. Google’s book data say much the same. “Little” is one of the most common words to follow “feisty”, and the most common words to follow “feisty little” are “girl”, “man”, “thing”, “guy”, “woman” and “lady”. Rounding out the top ten words following “feisty little”, intriguingly, are “Irishman” and “bastard”. This closes the case on whether you should call anyone “feisty”, and especially a woman, if you want to pay a sincere compliment. In fact, because of the word’s feminine associations, it can be especially condescending to a man, belittling and feminising at the same time. For an unmixed compliment, try “passionate” or “outspoken”. + +Other words carry a compliment and an unwelcome sideswipe at the same time. Those who are “spry” are not just lively, but “lively for their advanced age”. Those who are “jolly” or “jovial” are more often pot-bellied than stick-thin. “Statuesque” women may or may not appreciate the reminder that they are tall or full-figured. “Bubbly” and “vivacious” go beyond cheerful to imply a lack of seriousness. And if there is a compliment that black Americans resent above all, it is “articulate”, which is heard carrying a note of surprise. + +A widespread habit of lightly taking offence can be a burden on everyone. Take the debate over “microaggressions” on American university campuses, defined as the small humiliations minority students endure. These might be described as too small for the speaker to notice, yet too big for the hearer to ignore. On one hand, some insults are clearly real—a student from California being asked where she is “really” from, because of an Asian-American face. + +On the other hand, two sociologists, Bradley Campbell and Jason Manning, argued in a paper published in 2014 that a “culture of victimhood” is replacing the “culture of dignity”. Harvard is currently seeking to rename the faculty members who oversee student halls because their traditional title—“house masters”—reminds some of slavery. Steven Pinker, a psychologist and language scholar at Harvard, tweeted drily that: “1) All words have more than one meaning. 2) Mature adults resist taking pointless offence.” + +One need not score this debate entirely in favour of the microaggressors or their victims. In any case, it always pays to choose words well. The case against calling an opinionated woman “feisty” need not be made in the newfangled language of microagression; it is often just lazy. Thoughtfully searching for the right word, free of off-notes, does more than avoid offence. It makes speakers and writers scour their minds for original and arresting language—a good thing in itself. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21692842-secret-meaning-feisty-double-edged-words/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Life in the ocean + +50 shades of grey whales + +Sex in the sea is not easy to get right, and is getting more complicated + +Feb 13th 2016 | From the print edition + +Livin’ it up at the Hotel California + +Sex in the Sea: Our Intimate Connection with Sex-Changing Fish, Romantic Lobsters, Kinky Squid, and Other Salty Erotica of the Deep. By Marah Hardt. St Martin’s Press; 257 pages. $26.99. + +IN THE Olympics of extreme sex, the gold medal, says Marah Hardt, goes to fish and other saltwater species. Sea life depends on sophisticated strategies honed over millennia to meet and mate. The ocean covers 71% of the Earth’s surface, so hooking up in a singles bar spread over 1.3 billion cubic kilometres (0.3 billion cubic miles) is no easy task. Reproduction and survival of the sexiest is what it is about. + +Though it finishes on a more sombre note, Ms Hardt’s book, “Sex in the Sea”, starts as a voyeuristic romp (“Oceanic Orgies: Getting It On in Groups” is one chapter title). Cuttlefish are cross-dressers, the male argonaut (a pelagic octopus) has a detachable, projectile penis, dolphins are in flagrante acrobats, and group sex erupts (where else?) on the California coast twice a year when tens of thousands of grunions disport themselves on the beach. Led by the moon and tides, the small fish fling themselves ashore. The female digs a hole in the sand with her tail, backs in, lays eggs, and waits while up to eight males snuggle up and release their sperm. Kama Sutra, meet Jacques Cousteau. + +Oceanpornography-cute aside (the last section, is, predictably, “Post Climax”), there is a sober moral to the story. Because of the heavy human footprint, even the cleverest underwater sex strategy struggles to succeed. The sea is becoming unsustainable. A recent World Wildlife Fund report warns that the mammals, birds, reptiles and fish that rely on the sea have been reduced by half in the past 40 years, mostly because of overfishing. According to the UN’s Food and Agriculture Organisation, consumption per person has nearly doubled from 10kg (22lbs) in the 1960s to more than 19kg in 2012. Other insults include global warming, plastic rubbish (which kills marine mammals by strangulation or ingestion of debris) and acid rain. The undersea reproductive race is sometimes lost before it has begun. “It is tough to perform under pressure,” Ms Hardt says. + +Still, she is heartened by the number of countries willing to create protected areas. Last March the British government set aside 834,000 square km (322,000 square miles) of ocean for the Pitcairn Islands Marine Reserve—the largest single marine protected area anywhere. Other moves include implementing no-take zones, developing underwater ecotourism, recycling ocean trash and insisting on sustainable fishing. Even so, some scientists worry that it may be too late. To ensure that undersea sex is not subverted by overfishing and environmental degradation will require global co-operation. Otherwise, we are in for a very sad love story. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21692839-sex-sea-not-easy-get-right-and-getting-more-complicated-50-shades-grey/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Holocaust in France + +Dear father + +A haunting memoir of a young Holocaust survivor + +Feb 13th 2016 | From the print edition + + + +But You Did Not Come Back. By Marceline Loridan-Ivens. Translated by Sandra Smith. Faber; 100 pages; £12.99. + +THIS is a small book with a big voice. It took Marceline Loridan-Ivens, a French film-maker, 70 years before she felt able to write it. At the age of 15, in April 1944, she and her father, Solomon Rozenberg, were captured in their garden in Nazi-occupied France and deported: he to Auschwitz, she to Birkenau. She returned; he never did. This is her tender, anguished, remorseful letter of love to him. + +The memoir is structured around the author’s failing effort to recall the words her father wrote to her in a letter, smuggled to Ms Loridan-Ivens when they were both held in the extermination camp. At the time, she was assigned to dig trenches into which gassed bodies would be dumped. His words “probably spoke to me of hope and love,” she muses: “but there was no humanity left in me…I served death. I’d been its hauler. Then its pickaxe.” + +In tight, unsparing prose, she confronts the delusions her father held, and the lies she told herself. He thought owning a château in France would make him no longer a Jew in French eyes. “You didn’t really die for France,” she says to him. “France sent you to your death.” She pretended to herself for decades that the ditches she had dug were near the kitchens, not the gas chambers. Now, she confesses, wincing, she helped build a railway line that brought children to their death there. One day, an SS officer clubbed to death a young female prisoner when she and the author struggled to carry a crate of potatoes. “I think she was Greek, and I killed her,” she writes. She shut down, to keep going: “You freeze inside so you don’t die.” + +In the camp, she fought to stay alive. A free woman, she tried to end her life, twice. Her family, fatherless, fell apart. Her brother and a sister later killed themselves. Ms Loridan-Ivens could not face bringing children of her own into the world. She ended up in a second marriage to a film-maker old enough, she now recognises, to be her father. Punctuated by moments of humanity, affection and even humour, there is a dreadful, cramped feel to this book, as if to reflect both the experience itself, and the author’s recollections of it. It is shot through with bleak restraint. “Surviving makes other people’s tears unbearable,” she observes. Now 87 years old, the author is still haunted by her father’s absence. Had he survived, she writes, “we could have divided our memories in two.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21692841-haunting-memoir-young-holocaust-survivor-dear-father/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Marvin Minsky: Mind and machine + + + + + +Articles Sections Next + +Obituary: Marvin Minsky + +Mind and machine + +Marvin Minsky, pioneer of artificial intelligence, died on January 24th, aged 88 + +Feb 13th 2016 | From the print edition + + + +WHEN he was doing something—simulating on paper how a computer might solve one of Euclid’s theorems, say—Marvin Minsky often found himself improvising a nice little tune. He could only do that, though, if his hands were open. Why was that? Sometimes he could just sit down at the piano and play, out of his head, an original fugue. How? If he merely wanted to rearrange the imposing row of stuffed cows, dinosaurs and Ninja Turtles behind his sofa, his brain would whirr through millions of anecdotes, analogies, histories, possibilities and smidgens of common sense before settling on the line-up he perceived as “best”. + +Nothing was so fascinating as human intelligence. Physics, which he excelled at, was quite profound, but intelligence struck him as “hopelessly” so, an immense realm of the imperfectly understood. Neuroscientists scratched at bits of it, psychologists at others, but he had little time for them; as a trained, if easily bored, mathematician, he started from the proposition that logic governed the whole thing. Every thought, hence all intelligence, was the result of cascades of pulses rippling through networks of semi-autonomous agents, the neurons, each connected to countless others. Since men thought like machines, it should be perfectly possible to build, with simulated neurons, a machine that could think like a man. + +Other dabblers in artificial intelligence wanted it to do things humans found hard, such as calculus or chess, but Mr Minsky was more interested in apparently going backwards. He dreamed of programming a machine which, in reasoning by analogy and learning from experience, would approximately reach the level of a three-year-old child; for that was much more difficult. + +First steps were slow. For his doctorate at Princeton in 1954 he analysed a “learning machine” he had built as an undergraduate to simulate the neural networks of the brain: primitive information in, primitive information out. When he went to MIT to teach in 1958 he set up the Artificial Intelligence Group, later Laboratory, which became the live core of all AI research, though it was still focused on building machines as much as on using computers. (He remained keen on building, especially on the merits of giving children Tinker Toys rather than Lego, which enabled them to build triangles and think flexibly in threes, rather than in Lego’s relentless rectangles.) + +Even as computing power increased, though, he could not build networks beyond a few hundred neurons in a single layer: a micro-fraction of the brain’s complexity. And, not least because real neurons were arranged in columns of apparently hierarchical layers, he had to find a way of working top-down as well as bottom-up. He needed to find ways of saying what sort of high-level aims an artificial intelligence might have, and towards what goals it might be programmed. The search for that soon obsessed him. + +Disrupting Mozart + +He also, almost by the way, did other things, such as inventing a confocal scanning microscope and robotic “seeing hands” for surgery. His own intelligence continually leapt between postulations and speculations, all delivered with an endearing smile: what a thinking machine would have to notice when it drove down the highway, whether robots could be made tiny enough to beat up aphids or dexterous enough to put a pillow in a pillowcase, what would happen if you wrote “Eine Kleine Nachtmusik” to a different rhythm. Students flocked to his evening classes, never quite knowing what mental challenge he would toss out next. + +His searching flowed in two main directions, and these were complementary. As he built his thinking machine, he hoped the machine would illuminate how the human brain worked. Mystery annoyed him, but he’d gradually clear it up. Emotions, for example (as he explained in “The Emotion Machine” in 2006), were just as mechanistic as any other action of the brain. They could all be reduced to defence mechanisms, information retrieval, and so on. Even consciousness was the result of “possibly 16” processes like those. As for pleasure, that too was a piece of machinery, and one you had to learn to turn off before you got addicted. + +What about his own pleasures? Questioned about his “love” of this or that, he wondered what that meant. Science fiction he enjoyed, because it was full of human transformations. Literary novels, though, were “all the same”. His life was his own ideas and those of intellectual strivers even brighter than he was, from Bronx Science high school onwards. No time, in all that fizzing seriousness, for “social stuff”. + +He lived just long enough to see the re-emergence of his theory of neural networks, as the data-crunching capabilities and “deep learning” of modern computers began at last to approximate to the workings of the brain. In the very week he died, a computer beat a human at the ancient, infinitely complicated game of Go. The key to making a machine that could think like a man (or, as he hoped, far better) evidently lay in one of his “third ways”: a combination of the top-down, symbolic approach and the bottom-up simulation of the ever-pulsing neurons. It would still be a devil of a job, though, to make a machine that thought like him. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21692845-marvin-minsky-pioneer-artificial-intelligence-died-january-24th-aged-88-mind-and/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Defence budgets + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Feb 13th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21692874/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Feb 13th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21692875-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Feb 13th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21692876-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Feb 13th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21692878-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Defence budgets + +Feb 13th 2016 | From the print edition + + + + + +Global defence spending as a proportion of GDP rose marginally last year, according to the latest “Military Balance” report published by the International Institute for Strategic Studies (IISS). Although the ratio of spending to GDP is on a downward trajectory in America, its budget in 2015 was still some $100 billion more than its inflation-adjusted cold war average. Some European states may have increased defence spending in real terms since the onset of the conflict in Ukraine in 2014, but only four out of the 26 European members of NATO met the alliance’s 2%-of-GDP spending objective last year. Saudi Arabia far outstripped that target, spending a staggering 13% of its GDP on defence last year. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21692877-defence-budgets/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Feb 13th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21692864-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 12 Feb 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Regulating cannabis: The right way to do drugs + + + + + +Hong Kong: Wounded society + + + + + +European banks: Borrowed time + + + + + +Travel in Africa: Let Africans fly + + + + + +The Mekong river: Damned if you do + + + + + +Letters + + + +Arab investment, electricity, restrooms, batteries, citizenship, gas, dedicated subscriber, punk, collaboration: Letters to the editor + + + + + +Briefing + + + +Legalising cannabis: Reeferegulatory challenge + + + + + +United States + + + +New Hampshire and beyond: Trumped and Berned + + + + + +Bernie Sanders’ economic policy: A vote for what? + + + + + +Trump’s German roots: Kallstadt’s king + + + + + +The campaigns: Heard on the trail + + + + + +Libertarians: Live free, or try + + + + + +Climate change: Supreme emissions + + + + + +The defence budget: Mr Carter places his bets + + + + + +Lobsters: Shell shock + + + + + +Lexington: Rush-ing around + + + + + +The Americas + + + +Economic data in Argentina: An Augean stable + + + + + +Bello: A time to heal + + + + + +How the White House race looks from Cuba: The Havana primaries + + + + + +Latin American currencies: Border bazaar + + + + + +Essay + + + +The Mekong: Requiem for a river + + + + + +Asia + + + +China, North Korea and America: Between Punxsutawney and Pyongyang + + + + + +Tasmania charts a new course: Water into wine + + + + + +Tasmania’s forests: Saving the swift parrot + + + + + +Banyan: Of Yorkies and Great Danes + + + + + +China + + + +Hong Kong-mainland relations: Over troubled water + + + + + +The fire-monkey stirs: Street violence and politics + + + + + +Corruption: Portrait of a purge + + + + + +Middle East and Africa + + + +Aviation in Africa: Departure delayed + + + + + +Saving Africa’s rhinos: Pooches v poachers + + + + + +The veil in west Africa: Banning the burqa + + + + + +Syria’s war: Assad on the offensive + + + + + +The Mosul dam: A watery time-bomb + + + + + +Europe + + + +Corruption in Ukraine: Dear friends + + + + + +Smoking in France: Between a puff and a Kalashnikov + + + + + +Spanish politics: Back to the bullring + + + + + +Germany and refugees: Is the welcome culture legal? + + + + + +Russians in London: Government in exile + + + + + +Charlemagne: Special privileges + + + + + +Britain + + + +Britain’s tax code: Spaghetti junction + + + + + +The Brexit debate: The budget that didn’t bark + + + + + +Intelligence oversight: Snoopers scolded + + + + + +The energy business: Switched off + + + + + +Problem-solving courts: Smart justice + + + + + +Sugar taxes: Do as I say, not as I chew + + + + + +Refugees: Marginal benefits + + + + + +Bagehot: Britain’s new ambassadors + + + + + +International + + + +Marine conservation: Rejuvenating reefs + + + + + +Corals in the South China Sea: A thousand cuts + + + + + +Business + + + +Railways in America: Doing the locomotion + + + + + +France’s almighty bosses: In praise of the splits + + + + + +Twitter: Clunky Dorsey + + + + + +Corporate governance in Japan: Sharp elbows + + + + + +Foxconn: Pointed questions + + + + + +Indian business: Crossing the desert + + + + + +Turkish wine producers: Sour grapes + + + + + +Drone-racing: Whizz kids + + + + + +Schumpeter: Diversity fatigue + + + + + +Finance and economics + + + +Falling bank shares: A tempest of fear + + + + + +Buttonwood: Slaves of the markets + + + + + +Gold: A hedge against ignorance + + + + + +Deutsche Bank’s unappetising cocos: Discomforting brew + + + + + +Lesbians’ wage premium: Girl power + + + + + +Sri Lanka’s economy: Taxing times + + + + + +Free exchange: Optimising romance + + + + + +Science and technology + + + +Merger and acquisition: Gravitational waves have been detected for the first time + + + + + +Neanderthals and human disease: A Parthian shot + + + + + +Livers, bacteria and alcohol: Bugs in the system + + + + + +Bacterial vision: Go towards the light + + + + + +Air quality: Something in the air tonight + + + + + +Books and arts + + + +Infectious diseases: Passing through + + + + + +Marcel Proust as graphic novel: A second bite of the madeleine + + + + + +The art of the confidence game: Fool me once + + + + + +Johnson: Double-edged words + + + + + +Life in the ocean: 50 shades of grey whales + + + + + +The Holocaust in France: Dear father + + + + + +Obituary + + + +Obituary: Marvin Minsky: Mind and machine + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Defence budgets + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.02.20.TXT b/homeworks/B20769/homework1/data2/2016.02.20.TXT new file mode 100644 index 0000000..baa76e7 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.02.20.TXT @@ -0,0 +1,5120 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Feb 20th 2016 | From the print edition + + + +Tributes were paid to Antonin Scalia, one of the justices on America’s Supreme Court, who unexpectedly died while holidaying in Texas. The political bickering over replacing him was less dignified. Barack Obama said he would nominate a successor to the conservative Mr Scalia. That person would need to be confirmed by the Senate. Republicans argued for a delay until the next president takes office in 11 months’ time, undoubtedly in the hope that he will be one of their own. See here and here. + +A federal judge in California ordered Apple to help unlock the iPhone used by one of the Islamists who attacked an office party in San Bernardino last December, killing 14 people. The FBI wants Apple to disable the password feature. But the company is not complying, arguing that building the software to unlock the phone “would undeniably create a backdoor” to its encryption protocols and give the government “power to reach into anyone’s device to capture their data”. See article. + +Wait and see + +Trucks carrying aid entered several besieged towns in Syria, including the rebel-held town of Muadhamiya, near the Syrian capital, Damascus. This came ahead of a planned “cessation of hostilities” in Syria’s war, thrashed out by America and Russia in Munich. No one expects the ceasefire to take hold. See here, here and here. + +Members of opposition parties in the Democratic Republic of Congo went on strike to protest against efforts by Joseph Kabila, the president, to run for a third term in office. + +Crunch time + +Britain was on the brink of agreeing on new terms for its membership of the EU at a summit on February 18th and 19th, clearing the way for a referendum in June. David Cameron, the prime minister, was confident of securing a deal in Brussels, but Eurosceptics back home were poised to criticise whatever emerged from the talks. + +The European summit would also tackle the refugee crisis. Austria set a daily cap of 3,200 migrants whom it will allow to cross its borders. It also tightened border controls with countries in the Balkans that migrants cross to reach Austria. Many then travel on to Germany and Sweden. + + + +Turkey’s prime minister, Ahmet Davutoglu, cancelled a visit to Brussels after a bomb in Ankara, the Turkish capital, killed at least 28 people. The device was detonated close to the defence ministry as an army bus was passing by. Turkey blamed Kurdish rebels. + +Russia filed a lawsuit in a court in London to try to get Ukraine to repay a $3 billion bond. Ukraine says that Russia has refused to take part in negotiations over restructuring the debt. Meanwhile Ukraine’s prime minister, Arseniy Yatsenyuk, survived a vote of no confidence in parliament after the country’s president, Petro Poroshenko, called on him to step down, ostensibly over the slow pace of reforms. The economy minister recently resigned and blamed Mr Poroshenko for hindering reform. + +Obama to Havana + +Barack Obama is expected to visit Cuba in March. His visit will be the first by an American president to the island since Calvin Coolidge went in 1928. Since December 2014 the United States has eased its embargo on Cuba and the two countries have restored diplomatic relations. This week they signed an agreement that will allow scheduled flights between the two countries to resume after an interruption of more than 50 years. + +In Mexico 49 inmates at the Topo Chico prison in Monterrey, the capital of the state of Nuevo León, were killed in fighting between factions of the Zeta drug gang. The jail was overcrowded and understaffed, but in some cells investigators found portable saunas, air conditioners and other luxuries. + +Pope Francis paid a visit to Mexico. He ended his trip in Ciudad Juárez, near the United States border, where he highlighted the plight of migrants and visited a jail. + +Nicolás Maduro, Venezuela’s president, raised petrol prices—the first time they have gone up in 20 years—devalued one official exchange rate for the bolívar and said another would be allowed to float. Even after a 60-fold increase in its price, Venezuela’s petrol will still be the cheapest in the world. Meanwhile, Luis Salas left his job as Venezuela’s economic tsar after just six weeks. He had unconventional views, such as holding that inflation is caused by unscrupulous capitalists. See article. + +Sea power + +Both America and Taiwan alleged that China has placed surface-to-air missiles on the South China Sea’s Woody Island, which is claimed also by Taiwan and Vietnam. If true it would heighten military tensions in the disputed sea, through which a third of world trade passes. China’s foreign minister, Wang Yi, called the allegation an invention of the Western media. See article. + +China decided to move more than 9,000 people to prevent electromagnetic interference with the world’s largest radio telescope, which will start to operate later this year in the south-western province of Guizhou. Chinese scientists involved in the project told the country’s state-owned news agency that the instrument would help in the search for intelligent life elsewhere in the universe. + +Britain said that the disappearance of a bookseller in Hong Kong, presumed to have been abducted by Chinese security agents, amounted to a “serious breach” of an agreement reached between China and Britain in 1984 on the handover of the colony to Chinese rule. The bookseller, Lee Bo, is a British citizen. Four of his colleagues are also believed to have been snatched while visiting Thailand and the Chinese mainland. China has confirmed it is detaining them. + + + +In India a student leader, Kanhaiya Kumar, who was arrested after protesting in 2013 against the hanging of a Kashmiri militant, was charged with sedition under a colonial-era law. Academics, students and others staged demonstrations, saying the charges were unreasonable. A former university lecturer has also been arrested for sedition. + +Sindh became the first ever province in Pakistan, an Islamic republic, to give Hindus the right officially to register their marriages. The aim is to protect the country’s 3m Hindus. Women of that faith have been vulnerable to forced conversions and abductions, with widows left especially unprotected. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21693272-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Feb 20th 2016 | From the print edition + +In a surprise accord, Saudi Arabia and Russia said they would freeze oil production at January’s levels in an effort to boost prices, which fell to below $30 a barrel last month. It was the first pact between OPEC and non-OPEC oil producers for 15 years, but it is contingent upon other large suppliers agreeing to do the same. Kuwait, Qatar, the United Arab Emirates and Venezuela signed up to the deal, but there were doubts that Iraq and Iran, which has only just returned to international oil markets after sanctions were lifted, would join in. Oil stockpiles are at record levels, and producers are still pumping out over 1m barrels of oil a day more than the world wants. See article. + +Staying power + +After months of holding out the threat of moving its headquarters to Hong Kong, HSBC decided to remain in London following a review. The bank makes most of its profit in Asia, and like other British banks it is subject to a tax on its global balance-sheets. But London’s political stability, plus a recent easing of the regulatory burden, kept HSBC in Britain. + +Investors responded positively to the announcement by Crédit Agricole that it will simplify its corporate structure, which has hitherto been criticised for dragging down its market valuation. The French bank is to sell the 25% stake it holds in its regional lenders back to them, reduce its retail-banking business and focus on asset management and investment banking. Philippe Brassac, its chief executive, said the plan would end the “unbearable paradox” of lingering doubts about the bank’s structure, despite its sufficient capital. + +China’s exports fell by 11% in January (in dollar terms) compared with the same month last year; imports were down 19%. Both figures were much worse than had been expected and underscored worries about the extent of the slowdown in China. + +Performance review + + + +Japan’s economy contracted again in the fourth quarter of 2015, shrinking by an annualised 1.4%. It grew by just 0.4% for the whole year. The government blamed a warm winter for a sharp decline in consumption, but economists point to anaemic wage rises for the spiritless spending and investment. The central bank has embarked on a big programme of stimulus, recently introducing negative interest rates for the first time. + +Britain’s headline annual inflation rate rose slightly to 0.3%, still well below the Bank of England’s 2% target, which it now thinks won’t be reached until early 2018. Greece, meanwhile, slipped back into deflation, as consumer prices fell by 0.1% in January (on the European Union’s harmonised measure). + +Apple launched a $12 billion sale of bonds to help fund its share buy-back programme. Among the tranches of debt it is selling is its first seven-year “green” bond, the proceeds of which will go towards reducing the company’s “impact on climate change” and other environmental projects. + +Anglo American presented a restructuring plan. The mining company is to sell assets in coal and iron ore—the prices of which have slumped as demand in China has dropped—and concentrate on copper, diamonds and platinum. Its workforce will shrink from 130,000 to 50,000 (the bulk of the jobs will be transferred to the new owners of the assets). Last year the company suffered a $5.5 billion pre-tax loss and debt rose to $13 billion. The day before Anglo announced its strategy, Moody’s cut its credit-rating to “junk”. Fitch did the same the day after the announcement. + +Bombardier is to shed 7,000 jobs. The Canadian maker of planes and trains has struggled to find buyers for its CSeries passenger jets and has needed funding from the government in Quebec, where it is based. On the day it announced the job losses it said it had signed a “letter of intent” to build 45 aircraft for Air Canada, with options for an extra 30. See article. + +In one of the biggest leveraged buy-outs in recent years, Apollo, a private-equity firm, said it would take over ADT, which provides security and fire-safety systems to homes and small businesses, in a transaction valued at $15 billion. Until 2012 ADT was owned by Tyco, which recently announced that it is to merge with Johnson Controls in a $20 billion deal. + +A tender moment + +The demise of high-denomination banknotes drew ever closer. Larry Summers, a former secretary of the US Treasury, this week called for the $100 bill to be withdrawn from circulation. In Europe Mario Draghi, the president of the European Central Bank, told lawmakers there was a clear case for getting rid of the €500 ($560) note, colloquially known as “the Bin Laden” because of the proclivity of criminals and terror groups to use them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21693264-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Feb 20th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21693267-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +The world economy: Out of ammo? + +The South China Sea: Sunnylands and cloudy waters + +America’s Supreme Court: After Scalia + +War in Syria: The peril of inaction + +Reforming FIFA: SEC as a parrot + + + + + +Articles Sections Next + +The world economy + +Out of ammo? + +Central bankers are running down their arsenal. But other options exist to stimulate the economy + +Feb 20th 2016 | From the print edition + + + +WORLD stockmarkets are in bear territory. Gold, a haven in times of turmoil, has had its best start to a year in more than three decades. The cost of insurance against bank default has surged. Talk of recession in America is rising, as is the implied probability that the Federal Reserve, which raised rates only in December, will be forced to take them back below zero. + +One fear above all stalks the markets: that the rich world’s weapon against economic weakness no longer works. Ever since the crisis of 2007-08, the task of stimulating demand has fallen to central bankers. The apogee of their power came in 2012, when Mario Draghi, boss of the European Central Bank (ECB), said he would do “whatever it takes” to save the euro. Bond markets rallied and the sense of crisis receded. + +But only temporarily. Despite central banks’ efforts, recoveries are still weak and inflation is low. Faith in monetary policy is wavering. As often as they inspire confidence, central bankers sow fear. Negative interest rates in Europe and Japan make investors worry about bank earnings, sending share prices lower. Quantitative easing (QE, the printing of money to buy bonds) has led to a build-up of emerging-market debt that is now threatening to unwind. For all the cheap money, the growth in bank credit has been dismal. Pay deals reflect expectations of endlessly low inflation, which favours that very outcome. Investors fret that the world economy is being drawn into another downturn, and that policymakers seeking to keep recession at bay have run out of ammunition. + +Bazooka boo-boo + +The good news is that more can be done to jolt economies from their low-growth, low-inflation torpor (see Briefing). Plenty of policies are left, and all can pack a punch. The bad news is that central banks will need help from governments. Until now, central bankers have had to do the heavy lifting because politicians have been shamefully reluctant to share the burden. At least some of them have failed to grasp the need to have fiscal and monetary policy operating in concert. Indeed, many governments actively worked against monetary stimulus by embracing austerity. + +The time has come for politicians to join the fight alongside central bankers. The most radical policy ideas fuse fiscal and monetary policy. One such option is to finance public spending (or tax cuts) directly by printing money—known as a “helicopter drop”. Unlike QE, a helicopter drop bypasses banks and financial markets, and puts freshly printed cash straight into people’s pockets. The sheer recklessness of this would, in theory, encourage people to spend the windfall, not save it. (A marked change in central banks’ inflation targets would also help: see Free exchange.) + +Another set of ideas seek to influence wage- and price-setting by using a government-mandated incomes policy to pull economies from the quicksand. The idea here is to generate across-the-board wage increases, perhaps by using tax incentives, to induce a wage-price spiral of the sort that, in the 1970s, policymakers struggled to escape. + +All this involves risks. A world of helicopter drops is anathema to many: monetary financing is prohibited by the treaties underpinning the euro, for example. Incomes policies are even more problematic, as they reduce flexibility and are hard to reverse. But if the rich world ends up stuck in deflation, the time will come to contemplate extreme action, particularly in the most benighted economies, such as Japan’s. + +Elsewhere, governments can make use of a less risky tool: fiscal policy. Too many countries with room to borrow more, notably Germany, have held back. Such Swabian frugality is deeply harmful. Borrowing has never been cheaper. Yields on more than $7 trillion of government bonds worldwide are now negative. Bond markets and ratings agencies will look more kindly on the increase in public debt if there are fresh and productive assets on the other side of the balance-sheet. Above all, such assets should involve infrastructure. The case for locking in long-term funding to finance a multi-year programme to rebuild and improve tatty public roads and buildings has never been more powerful. + +A fiscal boost would pack more of a punch if it was coupled with structural reforms that work with the grain of the stimulus. European banks’ balance-sheets still need strengthening and, so long as questions swirl about their health, the banks will not lend freely. Write-downs of bad debts are one option, but it might be better to overhaul the rules so that governments can insist that banks either raise capital or have equity forced on them by regulators. + +Deregulation is another priority—and no less potent for being familiar. The Council of Economic Advisors says that the share of America’s workforce covered by state-licensing laws has risen to 25%, from 5% in the 1950s. Much of this red tape is unnecessary. Zoning laws are a barrier to new infrastructure. Tax codes remain Byzantine and stuffed with carve-outs that shelter the income of the better-off, who tend to save more. + +It’s the politics, stupid + +The problem, then, is not that the world has run out of policy options. Politicians have known all along that they can make a difference, but they are weak and too quarrelsome to act. America’s political establishment is riven; Japan’s politicians are too timid to confront lobbies; and the euro area seems institutionally incapable of uniting around new policies. + +If politicians fail to act now, while they still have time, a full-blown crisis in markets will force action upon them. Although that would be a poor outcome, it would nevertheless be better than the alternative. The greatest worry is that falling markets and stagnant economies hand political power to the populists who have grown strong on the back of the crisis of 2007-08. Populists have their own solutions to economic hardship, which include protectionist tariffs, windfall taxes, nationalisation and any number of ruinous schemes. + +Behind the worry that central banks can no longer exert control is an even deeper fear. It is that liberal, centrist politicians are not up to the job. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21693204-central-bankers-are-running-down-their-arsenal-other-options-exist-stimulate/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The South China Sea + +Sunnylands and cloudy waters + +China’s bullying in the South China Sea must not be allowed to pay off + +Feb 20th 2016 | From the print edition + + + +THAT China has lifted so many out of poverty and become so powerful so quickly is remarkable. No less remarkable is how America, the incumbent superpower, has mostly treated China’s rise less as a threat than an opportunity. However, in the South China Sea, through which about 30% of the world’s trade passes, China risks jeopardising this benign arrangement. Its behaviour there disdains international law, scares its neighbours and heightens the danger of conflict with some of them and with America itself. Recalling its own slogans about stability and peace, it should back off. + +The latest provocation is the apparent installation on Woody Island in the Paracel archipelago, south of Hainan, of two launch batteries for surface-to-air missiles. China has not clearly denied this dangerous military escalation, talking instead of its right to “limited and necessary self-defence facilities”. The Paracels are also claimed by Vietnam and Taiwan. China insists that virtually all the sea belongs to it, citing historical apocrypha. + +It has been building frenetically in the Spratly islands, to the south, creating artificial land on rocks and reefs also claimed by the Philippines, Taiwan and Vietnam. The construction, like the missiles, flouts the spirit of a declaration China signed in 2002 with the Association of South-East Asian Nations (ASEAN), in which the parties promised to “exercise selfrestraint” in the sea. China has also refused to accept the jurisdiction of a tribunal in The Hague which is adjudicating a case on its claims brought by the Philippines under the UN Convention on the Law of the Sea. If, as seems likely, the tribunal later this year finds in the Philippines’ favour on some counts, China will ignore it. This is not the global “responsible stakeholder” that America had hoped China would become. + +Two factors may have prompted China to deploy missiles. News of them came as Barack Obama was playing host at the Sunnylands ranch in California to an unprecedented summit of leaders from all ten ASEAN members, four of which dispute land features in the sea with China. The summit was intended in part to show America’s solidarity with them. China sees this as a ruse to embolden its neighbours to stand up to it, and so as part of a broader American strategy to contain it. + +Second, America late last year resumed “freedom of navigation” operations in the South China Sea, twice sending warships to sail through waters claimed by China. This seemed a belated attempt to show that, whoever owns the specks of land and rock in the sea, most of its waters under international law belong to no country and are open to navigation of all types. Regrettably America has muddied this message, by confirming that both operations were conducted as “innocent passage”, ie, under a provision of the Law of the Sea allowing even warships to sail unthreateningly through another country’s territorial waters. China seems to find the exercises provocative enough to try to deter America from further sorties—or perhaps they provide a useful pretext. + +The campaign season + +China may calculate that now is the time, in the final months of an American presidency it sees as weak and averse to confrontation, to create facts in the water that will give it an irreversible grip on the sea. So rather than yield to Chinese intimidation, America should continue to assert the freedom of navigation and overflight, and do so less ambiguously. Its friends in the region, habitually scared of upsetting China, should give it more full-throated support. It is in none of their interests to see the South China Sea, with its important shipping lanes, become a South China Lake. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21693207-chinas-bullying-south-china-sea-must-not-be-allowed-pay-sunnylands-and-cloudy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +America’s Supreme Court + +After Scalia + +The Senate should give Barack Obama’s nominee for the Supreme Court a fair hearing + +Feb 20th 2016 | From the print edition + + + +THE death of Antonin Scalia deprives America of a brilliant legal mind and a puckish wit (see our obituary). He poked fun not only at lawyers arguing before him, but also at himself. Asked for the secret of his long marriage, the father of nine quipped how his wife had made it clear “that if we split up, I would get the children.” The debate about how to replace Justice Scalia, by contrast, looks set to be crass, intellectually dishonest and not even slightly amusing. + +The departure of a Supreme Court justice is always momentous; Mr Scalia’s is doubly so. He was the court’s conservative heavyweight, whose eloquence and logic inspired his allies and forced his opponents to sharpen their arguments. His absence leaves the court balanced between its conservative and liberal wings. His replacement will tilt it one way or the other, perhaps for many years. And this is election season. Small wonder that a power struggle has erupted over the process of picking a new justice (see article). + +Barack Obama has promised to nominate a successor soon. That person would need to be confirmed by the Senate, but Mitch McConnell, leader of the Republican majority, says that no one should be appointed until after the inauguration of the next president in January 2017. He argues that voters should have their say—meaning that he hopes there will be a Republican president. It is a nakedly partisan and irresponsible argument. Following it would leave the court deadlocked for a whole year, at a time when many urgent cases are pending. It would also set a terrible precedent: if the Senate can refuse to hear a nominee almost a year before a president’s term is up, then why not two years before? Or longer? + +Mr McConnell’s party is in the grip of a fever, whose symptoms include Donald Trump, which attacks any Republicans who play by the old rules. This is the opposite of conservatism, which holds that long-established customs and institutions are likely to be superior to anything that could be drawn up from scratch. Mr McConnell would no doubt reply that he is defending America from a lawless president, who rides roughshod over the legislature by issuing executive orders. Republicans dispute, among other things, the legality of two of the president’s proudest recent achievements: stays to the deportation of illegal immigrants and the regulation of power stations to reduce carbon-dioxide emissions. Both actions would doubtless be upheld if Mr Obama were allowed to put whomever he liked in Mr Scalia’s vacant seat. But even if the Republicans are right about these cases, that would still not justify the Senate refusing to consider any nominee at all. + +The text of the constitution is admirably clear. The president has the power to nominate federal judges, with the “advice and consent” of the Senate. In other words, Mr Obama should pick a candidate, the Senate should grill him and, if it dislikes what it finds, it can demand that someone else be put forward, until the vacancy is filled. If Mr Obama is wise, he will propose someone sufficiently moderate for at least some Republicans to back his choice. If a qualified jurist appears reasonable during televised hearings and Republicans reject him willy nilly, voters can punish them for it in November. + +A court with too much power + +So much for the process. What about the court itself? You do not have to take Mr Scalia’s “originalist” view of the constitution to be troubled by the power wielded by the modern court. Its influence has grown partly because judges have substituted their own policy preferences for the written law, but more often because legislators have failed to do their job. Sometimes they write incomprehensible laws which the courts must unscramble (eg, Obamacare). Sometimes they hand hard questions over to judges because they would rather not take responsibility for resolving them (eg, gay marriage). + +If judges are to have such power, they should not enjoy life tenure. Rather, they should be appointed for fixed terms, staggered so that a single president cannot pack the court. Under today’s rules, good nominees are routinely passed over if they are over 60, incumbents never retire while a president they oppose is in office and confirmation battles are needlessly ideological. Alas, term limits require a constitutional amendment, which will not happen. So this fight over Mr Scalia’s replacement will only make the next one more brutal. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21693215-senate-should-give-barack-obamas-nominee-supreme-court-fair-hearing-after-scalia/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +War in Syria + +The peril of inaction + +Russian daring and American weakness have changed the course of the war—for the worse + +Feb 20th 2016 | From the print edition + + + +IN A war as ugly as the one in Syria, several bleak lessons stand out: the longer it goes on, the bloodier it gets, the more countries are sucked into the vortex and the more unpalatable become the options to stop, or at least contain, the fighting. But perhaps the biggest lesson is how America’s absence creates a vacuum that is filled by dangerous forces: jihadists, Shia militias and now an emboldened Russia. + +Syria is a nasty complex of wars within a war: an uprising against dictatorship; a sectarian battle between Sunnis and Alawites (and their Shia allies); an internecine struggle among Sunni Arabs; a Kurdish quest for a homeland; a regional proxy war pitting Saudi Arabia and Turkey against Iran; and a geopolitical contest between a timid America and a resurgent Russia. + +Into this blood-soaked mess, Vladimir Putin has thrust himself on the side of Bashar al-Assad and the Shia axis. His air power has transformed the battlefield. Pro-Assad forces have cut off a vital corridor that resupplied rebel-held parts of Aleppo from Turkey. Mr Assad is on the point of encircling what was once Syria’s biggest city. Refugees are again pressing on Turkey’s borders, but many will stay put. In the diplomatic dance over ceasefires, humanitarian relief and a political settlement, Russia is now setting the terms, much as America did after intervening in the Balkan wars of the 1990s. Barack Obama’s policy in Syria—to wish that Mr Assad would go, without willing the means to get him out—has been wretched. Mr Assad, it seems, will outlast Mr Obama. But the war will not end. Indeed, it has taken a turn for the worse. + +Turkey is being sucked deeper into the maelstrom. It has started systematically shelling Syrian Kurds. It bundles them together with the Turkish Kurds, who have rashly resumed their decades-old insurgency inside Turkey. Yet the Kurds have been America’s best allies against the “caliphate” of Islamic State (IS). Recently they have tilted towards Russia and Mr Assad, helping sever the corridor to Aleppo in an attempt to merge the two Kurdish enclaves along the border with Turkey. + +In support of Turkey, Saudi Arabia has deployed military aircraft. It has announced war games at home involving Sunni partners such as Egypt, Morocco and Pakistan. The Saudis have offered to send special forces into Syria with American ones, ostensibly to fight IS. Diplomats talk of a return to “Charlie Wilson’s War”, the operation by America, Saudi Arabia and Pakistan to give Stinger missiles to Afghan groups fighting Soviet forces in the 1980s. Would Saudi Arabia now give Sunni groups anti-aircraft weapons to neutralise Russian air power? + +Most alarming is the risk of war between Turkey and Russia. In November Turkey shot down a Russian jet; Russia wants revenge and an opportunity to split the irascible Turkish president, Recep Tayyip Erdogan, from his NATO allies. It has conducted “snap exercises” in southern Russia (see article). + +So Syria poses growing dangers to the West: that anti-aircraft missiles will proliferate, allowing jihadists to use them on Western planes; that countries such as Lebanon and Jordan will falter; that another flood of refugees will destabilise the European Union; that NATO could stumble into a war with Russia; that Mr Putin will be spurred to challenge the West elsewhere; and that he will inspire autocrats everywhere. + +Reaping the whirlwind + +The West should urge restraint on the Turks and Saudis: the risks of war with Russia and of jihadist blowback are too high. America should try to persuade its Turkish and Kurdish friends to accommodate rather than fight each other. For its wishes to carry weight, though, America must do more in Syria. If Mr Assad and Russia succeed in turning the war into a choice between the regime and the worst jihadists, it would be a disaster. Most Syrians are Sunni and many of them will never be reconciled to Mr Assad. If mainstream groups are crushed, they will be driven either into Europe or into the arms of the jihadists. Non-jihadist Sunnis therefore need support. + +The tragedy of Mr Obama’s feebleness is that actions that were once feasible—establishing a no-fly zone or creating safe areas—now carry the risk of a clash with Russia. Undeclared humanitarian zones may still be possible. Mr Obama’s best response would be to take his own policy seriously: create a moderate force to push back the caliphate in eastern Syria. This would involve Sunni states; it would give moderate rebels a hinterland from which to establish the nucleus of an alternative government under existing American air cover; and it would call Russia’s bluff about fighting the jihadists. + +The West will have to press Russia, starting with the renewal of EU sanctions this summer. Mr Putin has made canny use of force. The West’s response need not be limited to Syria. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21693208-russian-daring-and-american-weakness-have-changed-course-warfor-worse-peril/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Reforming FIFA + +SEC as a parrot + +Clean up football’s governing body with a dose of stockmarket scrutiny + +Feb 20th 2016 | From the print edition + + + +EVERY so often, organisations become bywords for something else. Apple means elegance, Berkshire Hathaway loyalty and BlackBerry decline. Alas, FIFA, the governing body of world football, spells corruption. Sprucing up this most tarnished of brands will take more than a bit of tinkering with the way FIFA is run. + +On February 26th FIFA’s member associations will hold a secret ballot—what else?—in Zurich to choose a new president who will replace Sepp Blatter. The omens are not good. Mr Blatter bequeathed his successor an organisation in crisis. His fifth term was cut short after the indictment last year of several of the game’s biggest-wigs for alleged money-laundering. He has since been suspended from football for eight years for making an undocumented SFr2m ($2.1m) payment to Michel Platini, then head of Europe’s football body. (Mr Platini, once a favourite to succeed Mr Blatter, has also been suspended from the game; both men deny wrongdoing.) + +The five candidates left to vie for the top job talk warmly of the need for term limits and better disclosure. But a radical reform would start with an idea put forward by Stefan Szymanski, a sports economist, among others—turning FIFA into a public company. For good measure, the new, cleaner FIFA would be listed in New York. + +A public listing would have several benefits. The first is that the level of transparency would shoot up. Scandals afflict listed firms too, but one thing you do not hear from executives at public companies is complaints about the absence of scrutiny. + +For FIFA to be under the referee’s beady eye would be precisely the point. According to its annual report, an organisation with just 474 employees spent an impressive $115m on personnel expenses in 2014. A listing would require FIFA to break out how much its executives get. They might expect to face questions from shareholders about the $35m they spent on meetings expenses that year, too. + +Opening FIFA to America’s justice system would also have a salutary effect. The reach of the Department of Justice and the FBI is already long: they were behind indictments in 2015 that eventually dethroned Mr Blatter. But a listing in America would bring some of the world’s most enthusiastic law-enforcers to the organisation’s door. In particular, it would make FIFA subject to the Foreign Corrupt Practices Act. Given the allegations that still swirl around the award of the 2018 and 2022 World Cups to Russia and Qatar, seeking a home with a punitive anti-bribery regime would send a clear statement. + +Becoming a public company would also formalise and sharpen FIFA’s incentives to make as much money as it can through legitimate means. Of the $5.7 billion in revenue that FIFA pulled in between 2011 and 2014, the biggest chunk was from the sale of television rights for the 2014 tournament in Brazil. More revenue—from the sale of broadcasting, marketing and licensing rights to World Cups—and tighter cost control ought to be enough both to keep shareholders happy and also to raise money to foster grassroots initiatives worldwide. The profit motive would also encourage faster development of the women’s World Cup. + +Fantasy football + +The beautiful game should not be handed to Wall Street without safeguards. To protect FIFA’s mission to develop football, a portion of revenues would have to be ring-fenced for distribution to its member associations, perhaps by a separate charitable arm (which would also be responsible for the rules of the game). To ensure that some private-equity baron doesn’t take FIFA over and load it up with debt, this charitable arm would need to retain majority voting rights over the listed firm. That would still leave plenty of scope for shenanigans as money sloshed between FIFA and football’s member associations. But it would also ensure that FIFA received harsher scrutiny. + +Sadly, not one of the candidates vying to take over from Mr Blatter is likely to countenance a listing in New York. But when you judge their promises to restore FIFA’s integrity, that should be the yardstick. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21693210-clean-up-footballs-governing-body-dose-stockmarket-scrutiny-sec-parrot/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On refugees, Europe, brains, China, Bernie Sanders, the Cleveland Browns, millennials: Letters to the editor + + + + + +Articles Sections Next + +On refugees, Europe, brains, China, Bernie Sanders, the Cleveland Browns, millennials + +Letters to the editor + +Feb 20th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Coping with refugees + +Together with Sweden and Germany, Austria is shouldering most of the burden in Europe’s refugee crisis (“How to manage the migrant crisis”, February 6th). There are 8.5m people living in Austria. Last year alone, 90,000 refugees came here. This year Austria has established a ceiling of 37,500 refugees. As responsible politicians we are tasked with keeping our social system alive. This system will be put at risk if we do not establish parameters. In 2016 we will probably spend over €1 billion ($1.1 billion) on refugees. + +Austria has a long tradition of humanitarian assistance. Our country was exemplary in its willingness to help after the second world war and has offered protection to those who were forced to flee wars and political persecution. In 1956, in the wake of the uprising in Hungary, 180,000 people found shelter in our country. In the course of the Prague Spring in 1968, we took in 162,000 refugees. In 1992, 90,000 people from the former Yugoslavia sought security in Austria. The current refugee situation however, presents this republic with the most difficult task it has had to cope with. + +REINHOLD LOPATKA + +Chairman of the Austrian People’s Party in parliament + +Vienna + +In Denmark most migrants from the Middle East and Africa are unemployed and live in parallel communities that are predominantly Muslim. Many would be willing to work for less than the minimum wage, but this is not acceptable to the powerful cartel of Danish employers and unions. Economists have calculated that migrants make a negative contribution of DKr11 billion ($1.6 billion) a year. To make the migrant contribution neutral, we would have to create 46,000 jobs by 2020. This is completely unrealistic given the Danish tradition of putting migrants on the dole. + +ANDRÉ ROSSMANN + +Copenhagen + +The Economist has persistently championed Angela Merkel’s position. But it is her unilateral action of accepting 1m refugees in Germany without consulting her EU neighbours, her own voters, or her own governing coalition, that has prompted this negative reaction. The enormous sums of money now being promised to Turkey should have been spent long ago in building border controls and screening systems in Greece and Italy. + +“The situation today is a mess”, you argue. It is worse than that; it has discredited EU ideals of co-operation, and strengthened those who say it is an undemocratic, out-of-touch bureaucracy, incapable of governing efficiently in the interests of its citizens. + +IAN GLOVER-JAMES + +London + + + + + +* I agree that Europe “needs to get much better at distinguishing refugees with a claim for international protection from migrants fleeing hardship”. Making this distinction is the key to crafting a European asylum policy with broad popular support. In public discourse and policymaking the categories of refugees and economic migrants are too often conflated. Even your own article alternates between “refugees”, “asylum-seekers”, “migrants”, “illegal migrants” and “immigrants”. The result is that where sympathy for the plight of real refugees is warranted, in many countries people instead see an unceasing flow of illegal migrants and fear the potential consequences. + +This is unnecessary and morally undesirable. People who have gone through hardship to rescue themselves and their children ought to be able to count on getting the support that they are entitled to. Full stop. How Europe deals with economic migrants is an altogether different matter. + +Making this distinction would do justice to the thousands of people who have come and settled in Europe through legal channels. It is difficult enough to obtain residence in the European Union, and it would be unjust towards these economic migrants if standards were seen to be lowered for those who crossed into Europe riding the wave of refugees. + + + +WILLEM OOSTERVELD + +Strategic analyst + +The Hague Centre for Strategic Studies + + + +* As your leader on the migrant crisis rightly points out, a well-managed and EU-wide approach is the only way Europe will be able to respond to the current situation. It would be worth reconsidering your suggestion that sending those travelling by boat back to camps in the region would persuade others not to risk their lives on a similar journey. New research by the Overseas Development Institute finds that deterrent migration policies from European governments designed to directly control flows and send anti-migration messages make little difference to people’s decisions to move to Europe. Our findings, based on interviews with recently-arrived migrants, show that access to good schooling and employment are more likely to influence a migrant’s decision on where to go. + + + +We urge European governments to manage migration better in three ways—make journeys to Europe safer; build an effective regional response by creating a faster, fairer EU asylum system; and make the most of migration by capitalising on its positive aspects. + + + +JESSICA HAGEN-ZANKER + +RICHARD MALLETT + +Overseas Development Institute + +London + + + + + +You’ve got to be in it to win it + +Fifteen hundred years of history can tell us what Britain’s European policy ought to be (“The accidental Europhile”, February 6th). The United Kingdom should stay in the EU and share in the power of 500m people. Britain should lead a beautiful revolution (to quote Karl Marx in a good mood) to make the EU become what it could be. + +PHILIP ALLOTT + +Professor emeritus of international public law + +University of Cambridge + + + + + +Storing brains + +We read your piece on cryogenically storing organs with interest (“Wait not in vain”, February 6th), but thought it contradictory to say that organ banking is within reach whereas preserving a brain is “fantasy”. There is a growing body of evidence that today’s technology may preserve a brain, though without future technology it cannot yet be revived. Importantly, the remaining challenges of brain preservation such as ice and cryoprotectant control are the same as for cryobanking other organs. + +There has always been an initial bias against unconventional concepts. In vitro fertilisation, heavier-than-air flight and interplanetary space travel were all thought impossible. Organ transplantation itself was at first perceived as something out of “Frankenstein”. We should not arbitrarily curb the progress in preserving organs. Scientific inquiry should be critical while also receptive and non-judgmental. + +RAMON RISCO + +Director of the CryoBioTech Lab + +University of Seville + + + +PROFESSOR DAVID CRIPPEN + +Departments of Critical Care Medicine and Neurological Surgery + +University of Pittsburgh + + + + + +Sanders go marching in + +* You wrote that New Hampshire “is crammed with white lefties” (“Trumped and Berned”, February 13th). This is a gross exaggeration. I live in a small town, populated by a large number of affluent professional people, in the otherwise mostly redneck northern county of the state. Even in my “liberal” town, where Democrats outnumber Republicans by two to one (statewide the ratio is closer to one to one), Sanders received only 65% of the Democratic vote and Clinton 35%. That doesn’t appear to me “crammed” with liberals, although I am certainly a “leftie” myself. Although Sanders’ proposals are impractical, they point in the direction the country must go in order to live up to its ideals. + + + +ROBERT KRUSZYNA + +Randolph, New Hampshire + + + + + +Nothing more than feelings + +“A world of hurt” (February 6th) described how easily the rulers of China takes offence. But this is not only the case in diplomacy; the Chinese people are oversensitive, too. Decades of propaganda have instilled an impervious sense of nationalism. Many still believe almost everything the party says, especially when it comes to history, sovereignty, human rights, etc. The “hurt feelings” in response to actions by America and Japan may be a government invention, but the people have internalised those same feelings. + +JIM JIANG + +Hong Kong + + + + + +Always waiting for next year + +Even the most casual American-football fan would find it amusing to describe the Cleveland Browns as “a successful team” (“If the game goes against you”, February 6th). The Browns haven’t advanced to the playoffs since 2002. If the NFL had a European-style relegation system, they would have been banished to the lower divisions long ago. + +CHAD PANKRATZ + +Seattle + +The Browns play in a stadium known as the Factory of Sadness. Their struggles are so mighty that their entire history has been summed up in just three words: God hates Cleveland. Your article on its owners’ woes adds a sardonic log to the epic dumpster fire of a team whose home city’s biggest river once caught fire from toxic waste. Cleveland is the only city that we native Detroiters can legitimately pity. + +JULIAN SWEARENGIN + +New York + + + + + +Political millennials + +Your leader on young people (“Young, gifted and held back”, January 23rd) laid out the difficulties we face today. But by calling on the young to vote because “it is not enough for the young to sign online petitions” you fall into the trap of preaching to “apathetic” youth. The young have never been so politically engaged. They boycott products, support referendums on issues they care about and, yes, they are very active online. The reason they don’t vote is a lack of trust in politics, which they see as unresponsive. Only 0.5% of MPs among Europe’s parliaments are under 30. For us, the political system is outdated. We want a more participative form of democracy. + +JOHANNA NYMAN + +President + +European Youth Forum + +Brussels + +I am reminded of a greetings card our daughter once sent to us, which read “Be nice to your kids—they choose your nursing home”. + +RICHARD SLADDEN + +St Aubin Le Monial, France + +*Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21693170-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Fighting the next recession: Unfamiliar ways forward + + + + + +Articles Sections Next + +Fighting the next recession + +Unfamiliar ways forward + +Policymakers in rich economies need to consider some radical approaches to tackling the next downturn + +Feb 20th 2016 | From the print edition + + + +AT THE start of most years in the past decade, the list of worries about the world economy has seemed longer than that of reasons for hope. The first few weeks of 2016 have upheld this new tradition. Many emerging markets are wrestling with excessive debts, slow growth, plunging currencies and rising inflation. China, the world’s second-largest economy, is a source of a peculiarly intractable anxiety. If its growth falters, it stokes worries about the prospects for other emerging markets; if activity holds up, though, concerns shift to the ever-rising debt that makes such feats possible, but not necessarily sustainable. The euro area’s troubles are no longer acute; but a chronic condition with an uncertain prognosis is a hard thing from which to take much cheer. + +The one big hope has tended to be the American economy. Some indicators there remain robust. The housing market shows few signs of weakness. New jobs are still being added. But despite this, signs of impending recession are now piling up. Economic growth seems to have stalled in the final quarter of 2015. Corporate profits are falling. Stock levels are above normal. Lending standards on bank loans to big firms have tightened, according to the Federal Reserve. A closely watched index from the Institute for Supply Management (ISM) shows that activity in manufacturing fell for the fourth consecutive month in January (see article). The malaise is not confined to factories: the ISM non-manufacturing index is at its lowest for almost two years. + +The growing anxiety is mirrored in financial markets. Stockmarket indexes have fallen, dragged down in particular by bank stocks, which have lost 16% of their value (in America) since the start of the year. America’s economy is not strong enough to buoy the world economy up; it may not even be strong enough to keep itself afloat. + +Pessimism among investors reflects not just the indicators pointing towards recession. There is a deeper concern that, if or when that recession comes, policymakers will have very few options for dealing with it. Short-term interest rates are close to zero in most of the rich world. The scope for adding further pep through quantitative easing, (QE, the purchase of government bonds using central-bank money) is limited. Long-term interest rates are already low; driving them lower with another round of QE is unlikely to invigorate aggregate demand much more. Tax cuts or increases in public spending could still be effective in fighting recession. But investors worry that there is little scope or appetite for financing a fiscal stimulus with yet more debt. Public debt in America rose from 64% of GDP in 2008 to 104% by 2015; in the euro area, it rose from 66% to 93%; in Japan, from 176% to 237%. + +If policymakers appear defenceless in the face of a fresh threat to the world economy, it is in part because they have so little to show for their past efforts. The balance-sheets of the rich world’s main central banks have been pumped up to between 20% and 25% of GDP by the successive bouts of QE with which they have injected money into their economies (see chart 1). The Bank of Japan’s assets are a whopping 77% of GDP. Yet inflation has been persistently below the 2% goal that central banks aim for. In America, Britain and Japan, unemployment has fallen close to pre-crisis levels. But the productivity of those in work has grown at a dismal rate, meaning overall GDP growth has been sluggish. That limits the scope for increases in real wages and in the tax receipts needed to service government debt. + + + +It is tempting to put this disappointing return down to the untested policy instruments wielded by central banks which played so prominent a role in the response to the previous recession. But this prominence, as Mohamed El-Erian, an economist, argues in his new book, “The Only Game in Town”, was forced upon them by inaction elsewhere. “This was not a power grab,” Mr El-Erian writes; central banks had to buy time until the political system got its act together—which by and large it didn’t. Far too little effort went into economic policies to work with the grain of monetary easing, and thus to amplify its effects. Such policies would require governments to make decisions that they would rather duck, either with an eye to reforming the structure of the economy—and thus removing some entrenched privileges—or to increasing deficit spending. + +If that remains the case, central bankers will have to reach yet further up their sleeves for radical new tricks with which to respond to the recession to come. But even if they do so, they will still require additional help—some of which, in a world of low interest rates, governments could more easily afford to offer. And if the problem runs deeper than a single recession—if, as Larry Summers, a Harvard economist, and others fear, rich nations are condemned to a long period of weak growth because of a persistent shortfall in demand—the need for bold new policies will become even greater. + +Accentuate the negative + +The menu of policy options comes in two parts. The first covers efforts to ensure that central-bank actions give their economies a bigger jolt. Second come well-targeted and flexible fiscal measures. Carefully chosen structural reforms can both complement such stimuli in the short term and sustain their good effects in the longer term by helping the recovery sustain itself. All these measures can be given more oomph if they are co-ordinated with similar efforts in other countries. + +Start with monetary policy. The scope for asset purchases by central banks is, in theory, unlimited. In a crisis such as that of 2008 the Federal Reserve can buy commercial paper issued by banks and companies or mortgage-backed securities. But it, or any central bank, could also buy an even broader range of assets, including high-yield bonds or stocks or even buildings, should financial markets go into free fall. + +Textbooks will tell you that, because they create new money, such purchases will eventually give central banks the inflation rates they want. But the experience of QE since 2008 suggests that this is too slow a road to reflation to justify the way that it distorts asset prices and upsets currency markets. Critics of QE argue that its main effect has been to boost shares and to flood emerging markets with cheap money, driving a debt cycle the downward leg of which is now hurting rich-world economies. + +Perhaps other unconventional monetary policies might work better. Last month Japan’s central bank joined its peers in Switzerland, Sweden, Denmark and the euro area by setting a negative interest rate—in Japan’s case, levying a 0.1% charge on a portion of the reserves that commercial banks deposit with it. In Europe, where the lowest deposit rate set by central banks acts as a floor for interest rates in money markets, and thus for rates on loans more generally, the benchmark for borrowing rates has never been so low. In Germany government-bond yields have turned negative for terms of up to eight years (see chart 2). + + + +Yet even if the boundary for interest rates is not zero, as people once tended to assume, it is not all that much less than zero. If interest rates were to go deep into negative terrain, depositors would switch to cash, which pays no interest but doesn’t charge any either. And negative rates are not good for banks; deposit rates cannot be pushed down as hard as lending rates for fear that small savers might switch to cash, an effect which is squeezing bank profits in Europe. Such a squeeze hurts the banks’ ability to rebuild the capital buffers that make them safe. + +Since the existence of cash is a limit on how low interest rates can go, Andy Haldane, the chief economist of the Bank of England, and Ken Rogoff of Harvard University have proposed abolishing it altogether. But even if such radicalism were to prove feasible in a few countries, its effects might be limited. Savers would find alternative stores of value, such as precious metals or foreign banknotes, or pass on the cost of having money in the bank to others by making payments early. + + + +One reason central-bank policy has been less effective than the bankers would like is that low interest rates have not led to more borrowing and spending. Credit growth outside America has been feeble (see chart 3). The central banks have tried to deal with this. The Bank of England’s funding for lending scheme of 2012 made the provision of cheap central-bank financing conditional on banks writing more loans to companies and householders. The European Central Bank (ECB) has come up with similar wheezes to try to induce banks to lend more freely. But their attempts have seen little success. + +Bigging up the banks + +As long as banks in the euro area face worries about their strength, they will be constrained in how much they can lend, no matter how cheap central-bank money is. Their record of raising fresh equity is worse than that of their counterparts in America and their profitability poorer, too. Despite this, capital has been allowed to leak from banks, notes Hyun Song Shin, head of research at the Bank for International Settlements, a clearing house for central banks. Most European banks still pay some dividends and have not cut costs enough. This combination means that they struggle to build up more capital on their own. + +American banks are performing better because in 2009 they were required either to raise capital for themselves or to have it forced upon them by government—in which case it would come with restrictions such as bonus caps for senior executives. This had a striking effect (see chart 4). Luigi Zingales, of the Chicago Booth School of Business, advocates a similar approach for the euro area. The European Stability Mechanism, an emergency euro-area fund, could be used to raise the money; the ECB could act as referee. An alternative is to free capital by taking bad loans off the banks’ books, or by forcing banks to write their value down. But that would be messier, slower and—if governments overpaid for the bad loans—fall foul of European Union rules on state aid. + + + +Healthier banks would be better able to supply loans; lower interest rates would make punters more willing to take them out. It is the essence of the current quandary that nominal interest rates can’t go much lower than they already are. But real rates could fall: all it takes is for borrowers to be persuaded that future inflation will be higher than they currently expect. Unfortunately, gauges of such expectations derived from bond prices—admittedly imperfect measures—are falling, not rising. The past two years have seen those expectations slump from 2.2% to 1.3% in America. One way to get them back up might be to set a higher inflation target. But when inflation sits so persistently below today’s targets, persuading people that higher targets would produce higher rates will require action, not just words. + +One way to raise expectations of inflation and boost aggregate demand is for a central bank and its finance ministry to collude in printing money to pay for public spending (or tax cuts). Such shenanigans are not possible in the euro zone, where the ECB is forbidden by treaty from buying government bonds directly. Elsewhere they might work as follows: the government announces a tax rebateand issues bonds to finance it, but instead of selling them to private investors swaps them for a deposit with the central bank. The central bank proceeds to cancel the bonds, and the government withdraws the money it has on deposit and gives it to citizens. “Helicopter money” of this sort—named in honour of a parable told by Milton Friedman, a famous economist—is as close as you can get to raining cash from a clear blue sky like manna from heaven, untouched by banks and financial markets. + +Such largesse is, in effect, fiscal policy financed by money instead of bonds. It is conceivable that a bond-financed fiscal tax cut might in fact be cheaper to finance: although cash has a zero yield, medium-term bonds in Japan and in much of Europe have negative yields. But the unaccustomed drama—indeed, the apparent recklessness—of helicopter money could increase the expected inflation rate, encouraging taxpayers to spend rather than save. It is not something to rush into, or to try prophylactically; but in the midst of a global financial crisis, or a deep recession, it would have much to recommend it. If it were co-ordinated by a group of rich countries, all the better. + +A related idea is to cancel a portion of the sovereign bonds purchased by central banks, ostensibly cutting public debt at a stroke. It would have the drawback, as would helicopter money, of leaving the central bank technically bankrupt, since its liabilities (money) would exceed its assets (bonds). But since most central banks are backed by national treasuries, this ought not to matter much. A bigger worry is that it is hard to know in advance what effect monetisation would have. Bond markets could panic about an inflationary surge, driving yields through the roof. Or they might just shrug the whole thing off. After all, the central bank could issue fresh bonds to soak up the excess money if things eventually got out of hand. + +Not the only game in town + +In places stuck in deflationary quicksand it may be necessary to be more radical still. Olivier Blanchard and Adam Posen of the Peterson Institute for International Economics have argued that Japan would benefit from an incomes policy. Under their proposal the state would mandate an across-the-board 5-10% increase in salaries in order to jump-start a spiral in which high wages drive up prices that drive up wages, thus soon leaving deflation behind. + +Such a radical idea would meet stiff opposition. The Bank of Japan would have to allow for a temporarily higher inflation target. Bondholders would be very unhappy. But as Mr Blanchard and Mr Posen point out, years of deflation have enriched Japanese bondholders at the expense of the country’s taxpayers. Putting the boot on the other foot for a while does not seem entirely unreasonable. In more open economies like America’s, where companies face more overseas competition and bondholders are more likely to turn to other markets, the obstacles would be harder to surmount—supposing that the idea of the government raising wages could be stomached in the first place. + +Those with memories of the dismal failure of incomes policies in the 1970s (aimed then at capping, rather than spurring, inflation) will be aghast that the idea might be considered at all. For one thing, employers back then often found ways to escape the mandate. Advocates argue that companies would be encouraged to meet the costs of the pay rises through higher prices—indeed that is the whole point. In the 1970s low real interest rates undermined the income policies’ wage caps; today monetary policy and incomes policy would be pushing in the same direction. + +The alternative to having treasuries and central banks working in ever more complex cahoots, or having governments fix pay rises, is to turn to the second part of the menu and deal with the shortfall in demand with straightforward fiscal policy. Increasing spending or cutting taxation is likely to be more effective than shaving interest rates a hair’s-breadth more or having central banks buy more bonds. Loosening fiscal policy has drawbacks, though, both political and economic. + +Fiscal policy is by its nature rather less fleet-footed than monetary policy: in normal times interest rates can be raised or lowered according to the ups and downs of the business cycle. Tax policy is a lot less flexible, but it can still be responsive, with changes introduced and reversed as needed. Spending plans are less easily changed. Once current spending on things like wages and pensions goes up, it is hard to cut; capital spending on public infrastructure requires planning, so is difficult to mobilise quickly. + +Tax cuts are thus the better tool for boosting demand quickly. But they need to be carefully designed to maximise their impact. Income-tax cuts or increases in tax credits should be skewed towards those (typically the low-paid) who are more likely to spend them. In general, taxes should not overly influence decisions on what to buy or produce; better rely on the signals that the market provides. But in a recession, this principle might be suspended. It is discretionary spending that recessions hit hardest. So a temporary cut in the taxes on durable goods—cars, kitchens, televisions, and so on—can be expected to have greater impact on overall spending than a smaller cut in taxes on all goods, including necessities such as clothing and utilities. + +At the same time as they tweak tax rates to stimulate the economy, governments would be well advised to overhaul the whole basis on which they are set. An ideal tax system has three aspects: it should be simple; it should be progressive, placing a greater burden on the rich; and it should not overly influence choices about how hard to work, what to produce or what to consume. Few rich-country tax codes match up to this ideal. Getting them closer to it would help both boost economic growth and government finances in the long run. + +All the bridges rusting + +There are useful ways to increase current spending in a recession. Some countries, such as Denmark and Australia, run state-funded schemes to retrain those who have lost jobs and match them with available vacancies. Others might usefully follow their lead: “active labour-market policies” of this kind are all the more urgent in Europe, because of the influx of refugees from Syria. But the most effective fiscal boost comes from capital spending on new infrastructure or on the upkeep of that which is already there. Unlike tax cuts, which may be saved or spent on imports and thus have less effect on GDP, money sunk into roads, schools, hospitals and the like stays put. And capital spending induces complementary spending elsewhere in the economy more than any other intervention. + + + +Despite the benefits of spending on public infrastructure, governments find it notoriously hard to deploy as an effective stimulus. For one thing, when public finances are under pressure during a recession the reflex response is to cut capital spending. For another, such cuts are sometimes quite good ideas: a lot of infrastructure spending is indeed wasteful. China has pristine highways that few wish to drive on. Alaska has bridges to nowhere. Governments tend to choose projects that make a political splash but have little underlying logic. That is in part why decades of capital spending in Japan have not done more to boost the economy. + +Yet there is a painful need for more and better public infrastructure in a lot of countries, especially America. Mr Summers often gives the example of John F. Kennedy Airport, a rundown gateway to New York where the air-traffic control system is from another era. Last year a study by Trip, a transport think-tank, found that the potholed roads in 25 American cities were pushing up citizens’ annual car-maintenance costs by more than $700 per vehicle. In 2013 a study by the American Society of Civil Engineers found that a third of America’s main roads were in a poor or mediocre state, and that one in nine of its bridges was not structurally sound. + +In 2010 Barack Obama tried to move things along. He proposed a public infrastructure bank, to be staffed by technocrats who would appraise the costs and benefits of capital projects and put some money behind the ones they approved. The proposal failed to clear the Senate, which at the same time blocked a scheme to spend $50 billion on improvements to roads, railways and airports. In principle a public-infrastructure bank has had bi-partisan support for decades. Hillary Clinton is only the latest of many politicians to back the idea. But all previous plans have foundered amid partisan squabbling. + +An Australian initiative that combines infrastructure spending with privatisation shows promise. In 2013 New South Wales sold the ports of Botany and Kembla for A$5 billion ($5.3 billion), a handsome multiple of their earnings. The proceeds went to a state fund for reinvestment in other infrastructure. This model of “social privatisation” is a template for others to copy, says Brett Himbury, the boss of IFM, a big fund that invests in infrastructure assets on behalf of pension funds. The cash-strapped states that own airports in America might usefully follow it to fund much-needed road repair. In private hands the condition of the airports would improve, too. + +Make no small plans + +Mr Himbury also has ideas on how to organise greenfield infrastructure projects. Involving private-sector partners in public infrastructure projects has often proved something of a sham. Rather than bringing hard-nosed business sense into the game, it can often both hide and escalate a scheme’s true cost: think of the debacle of the upgrades to the London tube. But pension funds around the world are crying out for long-lived assets that will generate the inflation-linked income they have promised to those who retire. The specialist funds that manage these assets have expertise in appraising projects: they will often, for instance, take a more sober view than government officials on forecasts of traffic on a proposed toll road. + +Mr Himbury suggests bringing these sources of patient capital in at the outset of a project to advise on its merits and to exert cost discipline on construction firms. The chosen builders should be rewarded for getting things right but should have deep enough pockets to pay the penalties when projects overrun. The private-capital partners in a project should agree on a range of returns and then share any extra profits or losses with government. + +The precise choice of policies, and the degree of radicalism, will vary from country to country and according to the nature of the threat. A garden-variety recession in which output falls as existing stocks are run down would require a less drastic response than a bigger systemic shock, such as a Chinese hard landing. It would be wise for governments to work harder on improving public infrastructure or reforming taxes even in less uncertain times. + +But the growing constraints on monetary policy mean that fiscal fixes and structural reforms that work with the grain of stimulus policies are more urgent than ever. Big and long-running programmes of public capital spending would give private firms greater confidence about future demand and make a sustained recovery more likely. Simpler tax codes would provide a sounder basis for the sort of shifts in tax rates that will be needed in future to counter the business cycle. Central banks have done their bit. Although more work from them will be vital, it is now time for governments to be bolder. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21693205-policymakers-rich-economies-need-consider-some-radical-approaches-tackling-next/print + + + + + +Articles Sections Next + + + + + +United States + + + + +The Supreme Court: Courting controversy + +George W. Bush in South Carolina: Bush land no more + +Sanders and the black vote: Slow Bern + +The campaigns: Heard on the trail + +Analysing Trump Inc: From the Tower to the White House + +Lexington: Michael Bloomberg’s moment + + + + + +Articles Sections Next + +The Supreme Court + +Courting controversy + +The death of Antonin Scalia comes as the Supreme Court has never been so neatly divided on ideology. The battle over replacing him will reflect that + +Feb 20th 2016 | From the print edition + + + +WHEN Ronald Reagan tapped Antonin Scalia to fill a vacant seat on the Supreme Court in 1986, America’s highest tribunal was a very different place. So was the Senate. Mr Scalia had solidly conservative credentials as a judge on the US Appeals Court for the District of Columbia, and made no bones about his opposition to busing, affirmative action and abortion choice, among other liberal priorities. Yet the Senate did something no one could imagine happening in today’s hyper-partisan climate: in a matter of weeks, it confirmed him by a vote of 98-0. + +Mr Scalia’s successor will not have such a quick and easy vetting. And she or he will join a court that has never been so neatly sorted along ideological lines, with the wrinkle of the Reagan-appointed Anthony Kennedy, who joins the four liberal justices in gay-rights decisions and occasionally in cases involving racial justice. All the justices, in nearly all the biggest cases, vote in line with the party of the presidents who nominated them. All the justices resist the charge that they are, in the words of one liberal justice, Stephen Breyer, “nine junior varsity politicians”. Earlier this month, Chief Justice John Roberts lamented how badly the court is misunderstood. The justices “don’t work as Republicans or Democrats”, he insisted. “We often have no policy view on the matter at all.” + +The public could be forgiven for thinking otherwise, given recent party-line votes on campaign-finance reform, voting rights, same-sex marriage and environmental regulation. Thirty years ago the court was less predictable. It was also, perhaps as a result, more popular: last September Americans’ disapproval of the court reached a new high of 50%. When Mr Scalia joined the bench in 1986, only 10% of Americans told Gallup they had “very little confidence” in the institution; today, that figure stands at 23% and is bound to keep rising with the particularly bloody confirmation battle now in view. + +Mr Scalia’s “originalism”, which aims to strip politics out of judging, may bear part of the blame for the court’s decline in public estimation. Originalists strive to interpret the constitution in the light of how it was understood when it was written. They decry the opposing “living constitution” approach as shot through with bias. Such a view, Mr Scalia wrote two years into his tenure as a justice, is incompatible “with the very principle that legitimises judicial review”. A judge who looks at the constitution this way is bound to find his own values lurking there. “It is very difficult for a person to discern a difference”, Mr Scalia wrote, “between those political values that he personally thinks most important, and those political values that are ‘fundamental to our society’.” + +In his magisterial, biting dissents, Mr Scalia echoed this theme time and again. In 1992 he dissented from a ruling that prayer has no place in public-school graduation ceremonies. The majority opinion was “conspicuously bereft of any reference to history”, he wrote, and undertook a “psycho-journey” to reach its conclusion that prayer coerces graduates and thus violates the First Amendment’s rule against establishing religion. “Today’s opinion shows,” Mr Scalia warned, “why…that fortress which is our constitution, cannot possibly rest upon the changeable philosophical predilections of the justices of this court, but must have deep foundations in the historic practices of our people.” + +Accusing his fellow justices of substituting their views for the true meaning of the constitution was a typical Scalia move. Yet the same charge was levelled at him, to his irritation, for his majority opinion in 2008 finding an individual right to own guns in the Second Amendment, or his vote two years later to regard corporations as bearers of free-speech rights. + + + +In last year’s dissent to the gay-marriage ruling, Mr Scalia issued a scathing review of the five justices who had widened marriage laws. The judges were not interpreting the constitution, but changing it: “This practice of constitutional revision by an unelected committee of nine, always accompanied (as it is today), by extravagant praise of liberty, robs the people of the most important liberty they asserted in the Declaration of Independence”. After scores of similar dissents, no wonder that the public has a low opinion of the court. The justices regularly condemn each other as opportunistic ideologues. + +Clarence Thomas, a fellow conservative, called Mr Scalia’s death “untimely”; and indeed, for the court’s right wing, this is a bad moment for the 30-year veteran to go. The docket is packed with opportunities to roll back liberal gains involving voting rights, abortion, immigration, affirmative action and public unions. + +With the court now stymied 4-4, expect a lot of ties for the time being. Deadlocks reward the victor in the court below, though no binding precedent is set. This means that public-sector unions, whose financing looked doomed after the Friedrichs v California Teachers hearing last month, will eke out a win, and that in Evenwel v Abbott, Republicans are unlikely to get a chance to improve their odds by changing the way people are counted in drawing election maps. But since the Obama administration lost its battle over executive orders on immigration in the lower courts, a tie at the Supreme Court will be bad news for the nearly 5m immigrants the president had hoped to protect from deportation. And if the justices tie 4-4 in the abortion case being heard next month—the biggest for a decade—the Texas regulations will stand, forcing half the clinics in the state to close. + +All of which explains why filling Mr Scalia’s chair has turned into a titanic political battle that will overshadow the 2016 presidential campaign and quite possibly outlast it. The first response of Senate Republicans was to warn Mr Obama against even nominating a replacement, chiding him as a “lame-duck” president with no right to make such an enduring decision. + +Amid a backlash at this obstructionism, Republican leaders began to hint that they may allow hearings on an Obama nominee; Charles Grassley, chair of the judiciary committee, says he would “wait until the nominee is made before I would make any decisions”. Mr Obama’s shortlist includes a number of talented candidates in their late-40s and early 50s, including Loretta Lynch, the attorney-general; Sri Srinivasan, a judge on the DC circuit court; and Paul Watford, a judge on the ninth circuit court. None carries much ideological baggage. But in this election year all face partisan scrutiny (not to mention stonewalling) that would be unrecognisable to both the framers of the constitution and to a young Antonin Scalia. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693209-death-antonin-scalia-comes-supreme-court-has-never-been-so-neatly-divided/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +George W. Bush in South Carolina + +Bush land no more + +The former president drags himself away from his oils to give Jeb a push + +Feb 20th 2016 | NORTH CHARLESTON | From the print edition + + + +TO SEE George W. Bush on stage in Charleston on February 15th, exuding that old aw-shucks charm, as he told corny jokes and wisecracked about his supposed lack of intelligence, was to recall the presidential standup act that disappeared so suddenly, back to Texas, almost as if his eight years in the White House had never happened. A few in the South Carolinian crowd marvelled that they ever had; even among Republicans Mr Bush is divisive. Around a quarter rate his presidency highly; a third say it was “poor”. + +That is one reason why this was his first public appearance, alongside his wife Laura and brother Jeb, in Jeb’s presidential campaign. Another was to mitigate the unpleasant whiff of dynasticism that clings to it; Jeb’s campaign coffers were filled by friends of the Bush brothers’ daddy, President George H.W. Bush, as were George W.’s coffers before him. A third reason was that George W., now happily retired to paint bad pictures and grow trees on his ranch, has become even more contentious during the primary contest, as his legacy, of military fiasco, lavish spending and a failed stab at immigration reform, has come under attack from Jeb’s rivals. At a Republican debate in South Carolina on February 13th Donald Trump accused George W. of wittingly invading Iraq on a false prospectus and failing to “keep America safe”—the phrase apologists for the former president are most likely to use when defending his record. + +But if his appearance in Charleston was in that sense inauspicious, it was justified as an act of desperation. Trounced in Iowa, only slightly redeemed in New Hampshire, Jeb!—as image consultants have branded him—needs at least to beat Marco Rubio, his main rival for the establishment vote, in South Carolina on February 20th if he is to avoid humiliation and abandonment by his father’s friends. His advisers believed that George W., whose own presidential ambitions were once saved by South Carolina and who is liked by its many ex-servicemen, might be the filip he needs. “Bush country,” they call the state. + +There was noisy enthusiasm for the former president in the crowd—of a thousand or so white-haired pensioners, servicemen with buzz-cuts and proper-looking professionals, some with children. Most said they had come, on Presidents’ Day, mainly to see George W., not his brother. “He was my president when I enlisted,” said Joseph Beaudeg, a 30-year-old marine, who had brought his six-year-old daughter to “see a president.” “This is why we’re here,” said Rutledge Young, a lawyer, pointing to his discreet “W” lapel badge. Only a handful volunteered much enthusiasm for Jeb. Miranda Dobbins, a college administrator and Ted Cruz fan, was one of several who said they had not given him much thought. + +What accounts for the brothers’ contrasting political fortunes? It is not all Mr Trump’s doing—though his ridiculing of Jeb as a “low-energy” dolt has been relentless and brilliant. (“I said, Why don’t you use the last name, you’ll do better—believe me, it’s better than exclamation points,” Mr Trump chipped in this week.) One explanation is that George W. is a much better retail politician than the wonkish former governor of Florida will ever be. + + + +America’s primary agenda: our interactive 2016 election calendar + +When “W” told an execrable joke about being a tree farmer (“It helps me practise my stump speech!”), it was almost funny; the crowd loved it. When Jeb! cracked a better gag—he claimed to have vetoed so much regulation in Florida that they called him Veto Corleone—no one laughed. In a rare serious remark, in a speech in which he did not deign to name any of his brother’s rivals, George W. declared himself proud to be a member of the reviled establishment. Yet with his blokeish manner, accident-prone English and earnest religiosity, he never seemed particularly like one. By contrast stiff, proper Jeb, though in some ways, including his bilingual household, less conventional than George W., seems like a man prone to wear chequered golfing slacks to unwind. That makes him, metaphorically speaking, not well-suited to America’s distempered electorate. + +There was little reason, with the primary vote looming, to suppose George W.’s return from obscurity would fix that. The Bush brothers’ first instincts were right: if Jeb’s famous relatives may boost him with some voters, they will turn off others. Moreover, South Carolina is not really Bush country these days. The mixture of social conservatism and pro-business posturing that won the state for George W. in 2000 did not work for Mitt Romney, the Republican nominee in 2012. He lost South Carolina to the more acerbic Newt Gingrich, whose attacks on Washington found favour with anti-government Tea Partiers and disaffected working-class whites. + +That both groups had suffered a crashing loss of confidence in steady-as-she-goes establishment conservativism was chiefly because of the economic and foreign-policy calamities George W. presided over. And the suspicion and contempt they engendered endures, which is why all the mainstream Republican candidates—even more compelling ones than Jeb!—are now struggling. It was rather heart-warming to hear the nostalgic, faintly defiant cheers for George W. from a crowd of cautious, quietly prosperous Republicans who do not want a thuggish property tycoon to rip America up and make it great again. But the evidence suggests that W. played his main hand in this race years ago, and it has not turned out well. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693174-former-president-drags-himself-away-his-oils-give-his-brother-push-george-w/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sanders and the black vote + +Slow Bern + +The senator is making new friends, perhaps belatedly + +Feb 20th 2016 | From the print edition + +Swipe right for socialism + +THE thousands of Atlantans at Bernie Sanders’s rally at Morehouse College on February 16th heard some top-notch oratory. Danny Glover, the senator’s impressive point man in the historically black universities he is touring—of which Morehouse is among the most venerable—fired up the young, largely black crowd. Killer Mike, a charismatic rapper and Morehouse alumnus, declared that Mr Sanders’s social platform closely matched Martin Luther King’s. “We ain’t nobody’s firewall!” thundered Nina Turner, a politician from Ohio, referring to the notion that black southern voters will shore up Hillary Clinton’s queasy bid for the Democratic nomination. It was heart-soaring stuff. + +Then Mr Sanders spoke. He loped to the podium, incongruously rickety in this lithe company, and in his croaky New York whine rattled off his idealistic policies, some reasonable, most unachievable. He revelled in his strong showing so far, a Trump-style touch he has adopted, along with critiques of the media and the corruption of campaign finance. He railed against racism in the criminal-justice system; he earned a roaring ovation for noting that America could afford to rebuild Iraq’s infrastructure but not Flint, Michigan’s. + +The crotchety routine seemed to work—as it must, and quickly, if Mr Sanders is to win over the black voters who will be decisive in the string of imminent southern primaries, beginning with South Carolina’s on February 27th. Two young women studying at Clark Atlanta University, adjacent to Morehouse, said they were switching to Mr Sanders from Mrs Clinton; she, one said, was “a people-pleaser”, whereas he was “more adamant” in his convictions. A trickle of black politicians are also flipping. Vincent Fort, a prominent Georgian state senator, this week came out for Mr Sanders, citing his concern for inequality and social mobility. Given Barack Obama’s victory, Mr Fort says he is “not going to listen to anybody who says ‘can’t’ or ‘won’t’ or ‘shouldn’t’.” + + + +US primaries: The voting power of blacks and Hispanics + +Still, most of the black political establishment remains in Mrs Clinton’s camp, a bond forged during her husband’s presidency. John Lewis, an influential loyalist, congressman and hero of the civil-rights movement, recently appeared to question Mr Sanders’s record in it. “I never saw him,” said Mr Lewis, later insisting that he intended no disparagement. Kasim Reed, Atlanta’s mayor, is another outspoken Clintonista. Polls suggest most black voters still share this old allegiance: Mrs Clinton retains a big lead in South Carolina, and an even bigger one among blacks. + +One student at Morehouse, recounting mistreatment by police, said he would urge his parents to vote for Mr Sanders. His young fans had better hurry up if he is to oust Mrs Clinton in the South. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693218-senator-making-new-friends-perhaps-belatedly-slow-bern/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +Feb 20th 2016 | From the print edition + + + +Government by the people + +“Is Jeb Bush related to George W. Bush?” + +The most-asked question about Jeb in South Carolina during the Republican debate, according to Google Trends. + +Fight night + +“Ted Cruz is a totally unstable individual. He is the single biggest liar I’ve ever come across…and I’ve seen some of the best.” + +Donald Trump on his rival. + +The calming Mr Kasich + +“I’ve gotta tell you, this is just crazy, huh? This is just nuts, OK? Jeez, oh, man.” + +John Kasich speaks for the viewers as the debate becomes a shouting match. + +Off-roading + +“Gentlemen, we’re in danger of driving this into the dirt.” + +John Dickerson, moderator, does his best. + +Adviser of the week + +“I’m not an expert in a lot of things, but I’m pretty knowledgeable about what it takes to be a president, since I were one.” + +George W. Bush backs Jeb! Fox News + +The South will rise again + +“38% of Trump voters…wish the South had won the civil war to only 24% glad the North won and 38% who aren’t sure.” + +Public Policy Polling in South Carolina. + +Truther + +“It’s a horrible topic, but they say they found a pillow on his face, which is a pretty unusual place to find a pillow. I can’t give you an answer.” + +Mr Trump considers whether Antonin Scalia was murdered. “The Savage Nation” + +Troll-in-chief + +“I stayed out of it…a young man named Marco Rubio was deeply involved in it.” + +Barack Obama discusses the failed Senate immigration bill. LA Times + +Expanding the base + +“[…] it’s not just some old, white Christian bigot…it could be, maybe, a cool kind of open-minded woman like me.” + +Amy Lindsay, star of a Cruz campaign ad withdrawn after BuzzFeed discovered she had also acted in soft-porn films. + +Dark money + +“I took his money for my foundation where I used it better than he’s using it now, I guarantee you.” + +Bill Clinton on receiving donations from Mr Trump. + +Perks of the job + +“It’s said to be a very good B&B, so we’ll take advantage of it.” + +Larry Sanders, brother of Bernie, anticipates visits to the White House. AP + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693224-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Analysing Trump Inc + +From the Tower to the White House + +The enigma of the presidential candidate’s business affairs + +Feb 20th 2016 | NEW YORK | From the print edition + + + +WHEN Donald Trump announced that he was running for the White House, there was only one venue for his speech: Trump Tower on Fifth Avenue. The skyscraper has been central to Mr Trump’s business life. Built between 1979 and 1984, it was a triumph for a young property mogul whose father rented out mere apartments in Brooklyn. Nearby is the Plaza Hotel, which a middle-aged Mr Trump sold in 1995 after his casino operation folded. Today half his wealth is still tied up in buildings within a four-mile radius of this spot. The Tower’s bar exemplifies Mr Trump’s late-life pivot to the business of celebrity, with cocktails named after his TV show The Apprentice, which was filmed there. A gift shop stocks Trump aftershave that “captures the spirit of the driven man”. + +Mr Trump’s drive and ownership of Trump Tower are among the few clear and consistent features of his 40-year business life. Much else is opaque, volatile and contested. Mr Trump sees himself as a largely self-made man whose global career qualifies him to be president: “Nobody in the history of the presidency has been nearly as successful as I have,” he says. Rivals in the Manhattan property game think he has taken his eye off the ball. His enemies say he inherited a fortune and built upon it an empire of defaults and exaggeration. To others Mr Trump is a mere celebrity playing a dangerous political game: a cross between Mussolini and the Kardashian clan. + +Which version is right? A review of Mr Trump’s career, his filings with regulators and third-party estimates of his wealth, suggests four conclusions. First, his fortune is in the billions of dollars. Second, his attempt to shift away from debt-heavy property and to create a global brand has been a limited success. About 93% of his wealth sits in America and 80% is in real estate (including golf courses). Third, Mr Trump’s performance has been mediocre compared with the stockmarket and property in New York. Lastly, his clannish management style suggests he might be out of his depth if he ran a larger organisation. + + + +“I’ve been through cycles, I’ve been through a lot,” admits Mr Trump. His career can be split into three stages. The era of debt-fuelled expansion was in 1975-90. Mr Trump’s big break was the renovation of a site at Grand Central Station, which is now occupied by the Hyatt Hotel. He raised cash, found a tenant, secured permits and completed a complex building job, according to his biographer, Michael D’Antonio. Buoyed by success he went on a long spree, buying buildings in a depressed Manhattan (including the site of Trump Tower), expanding into casinos in Atlantic City and picking up a small airline. His investments over this period were worth perhaps $5 billion in today’s money, with four-fifths of that debt-financed. + +The era of humiliation came in the 1990s, as the casino business faltered and two of his gambling entities defaulted (two other related casino enterprises defaulted in 2004 and 2009). This destabilised the whole of Mr Trump’s operation, which may have had as much as $6 billion of debt in today’s prices. Through asset sales, defaults and forbearance from his creditors, Mr Trump clung on and avoided personal bankruptcy. As property prices in Manhattan rose he recovered his poise, and by the early 2000s he was doing small deals again, for example buying the Hotel Delmonico on New York’s Upper East Side. + +The final stage, of celebrity, came with his starring role in the The Apprentice in2004. The success of the TV show, which had 28m viewers at its peak and ran until 2015, led Mr Trump to create a flurry of ventures to cash in on his enhanced fame. He is now involved with 487 companies, up from 136 in 2004. They span hotel licensing in Azerbaijan and energy drinks in Israel. At face value Mr Trump has turned his name into a global brand that prints cash. + +The numbers of the beast + +Information about Mr Trump’s business is sketchy. He doesn’t run a publicly listed firm, and does not appear to have a holding company into which his assets are grouped. He releases a one-page, unaudited, estimate of his wealth. He has also made a filing on his finances with the Federal Election Commission (FEC), although this does not specify the value of assets worth over $50m and may not include all kinds of income. Estimates of his wealth have been made by Forbes magazine and Bloomberg, a financial-data provider. + +In the New York property world Mr Trump is perceived to have gone off the boil in the past decade—“He’s been distracted,” says one broker—with other developers doing bolder projects, such as the Fisher and Durst families, and Gary Barnett. But there is not too much disagreement about the value of Mr Trump’s existing buildings and golf-resorts. The contentious bit is his branding operation. According to his FEC filings, this generated about $68m of income in 2014. Valued on a multiple of ten to reflect the fact contracts are finite, this is worth $680m. Based on a composite of figures from the FEC, his estimates, real-estate brokers and Forbes, Mr Trump is worth $4.3 billion. + +Whether he has transcended the business of property to become a global brand is debatable. His appeal is strong in golf, where Trump-flagged resorts are well regarded. Mr Trump’s name carries less cachet in hotels or consumer goods, and does not travel well beyond the country he says he wants to make great again. + +Of his wealth, only an estimated 7% is outside America and 66% is made in New York. Only about 22% of his worth is derived from assets that he actively created after 2004, when he became a reality TV star. Some 64% is from conventional property and a further 17% from resorts and golf clubs. His biggest recent deal has been in real estate: buying the Doral hotel in 2012 out of bankruptcy. Only 11 of the licensing and branding companies created since 2004 make more than $1m of income. Mr Trump says there are 38 more deals in the pipeline but it is hard to know their worth. + +Mr Trump’s performance is tricky to gauge, too, because early estimates of his wealth may have been overstated. We take three starting points and use Forbes’s data (see chart 2). The best long-term starting point is 1985, when Mr Trump first appeared in the rankings without his father. The most generous starting point is 1996, when Mr Trump had just clawed his way back from the abyss. The final starting point is a decade ago. + + + +Judged from the low point in 1996, he has outperformed the S&P 500 index of big firms and the New York property market. Judged by his long-term record, he has done poorly. And over the past decade Mr Trump has lagged both benchmarks. His ranking among American billionaires has fallen from a peak of 26 to 121—by the standards of the country’s oligarchy, he is small beer. His property empire is a seventh the size of America’s biggest real-estate firm. + +Mr Trump was sensible enough to get out of casinos in Atlantic City. But he missed out on the industry boom in Macau that propelled erstwhile rivals such as Sheldon Adelson of Las Vegas Sands into a different league. Mr Adelson is worth $26 billion, according to Forbes. When considering Mr Trump’s performance, one should also spare a thought for outside investors in his projects. Many have made money. But roughly $5 billion of equity and debt (at current prices) from outsiders sat in Trump vehicles that went bust. + +What of Mr Trump’s management style? His attributes are charisma, spontaneity, frequent communication and quick decision-making. He is a fine negotiator, grinding down the other side with charm and relentless tweaks of the fine print. “He is incredibly charming and deeply frustrating,” says someone who has acted for him. A former top executive at the Trump organisation says, “People think he is running everything from 30,000 feet, but it is the opposite. He knows if the carpets were cleaned and every clause in the contract.” + +The flip side of Mr Trump’s personality is volatility, with explosive outbursts and unpredictable behaviour. “He’s not stable. He has a nuclear temper,” says the same source, who recalls spittle flying and desks being swept empty. Throughout his life Mr Trump has pursued energy-sapping feuds. + +Just as his campaign machine is improvised, he appears to have a puny apparatus to support his business. The Trump organisation has a dozen key executives, including Mr Trump’s three eldest children, Donald, Ivanka and Eric. Based on the FEC documents, the structure of the Trump organisation is crude, with most of the legal vehicles owned directly by Mr Trump, rather than being grouped together. + +Put your hair up pretty + +He thus has a healthy dislike of bureaucracy but no real experience of a big, complex organisation. “Every company is small compared to the United States,” argues Mr Trump, who says he will appoint business figures to run his administration. He is a veteran of publicity but not of scrutiny. He was in charge of a publicly listed company in 1995-2004. It defaulted. + +If Mr Trump becomes president he insists that he will “have zero to do with” his business, which he will put in a trust. Mitt Romney, who ran in 2012, and Ross Perot, who ran in 1992 and 1996, took similar approaches. Mr Trump’s children would run the show. They are well thought of, but might struggle to make a leap forward. The organisation has only $200m-300m of cash in hand, and it would be hard to sell the buildings without his consent. + +If Mr Trump fails to become president, he will go back to his business, although he admits, “it will be much less exciting than what I’m doing now”. Perhaps a bonanza will beckon as he launches another flurry of branding efforts, similar to the push after 2004. The election would have been the ultimate marketing campaign. + +Heir, tycoon, apprentice, candidate + +Yet his initiatives over the past decade have not been a wild financial success. Mr Trump says his candidacy is boosting his brand. But he has lost some business, for example a deal with Univision, a media firm, to broadcast the Miss USA pageant, which he owned. The room rates charged by Trump hotels are on average 10% below other luxury hotels (taking figures from Expedia for eight Trump-branded hotels on March 1st and comparing them with other five-star hotels in the same cities). Being, to use his phrase, a “loser”, might hurt his appeal. Bob Dole resorted to advertising Viagra after missing out on the White House. + +With Mr Trump’s 70th birthday approaching in June, the jury is still out on his business career. He has great wealth, much of it made well over a decade ago from a few buildings he has retained in Manhattan, including his favourite on Fifth Avenue. But he has not yet created a great company, raised permanent capital on public markets, gone global or diversified very successfully. Something to think about when you are sipping an $18 “You’re Fired” Bloody Mary at the Trump Tower—or voting in a presidential election. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693230-enigma-presidential-candidates-business-affairs-tower-white/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Michael Bloomberg’s moment + +Can a pragmatic billionaire and ex-mayor reform two-party politics? + +Feb 20th 2016 | From the print edition + + + +LEXINGTON once asked America’s most successful centrist to explain the strength of the two-party system, in a country that views those same parties with scorn. The problem is tribal loyalties, replied Michael Bloomberg, then in his final days as mayor of New York, in late 2013. Running for national office as an independent is “just not practical”, explained Mr Bloomberg, a technocratic billionaire who looked into, then decided against, a non-party presidential run in 2008. Such a big share of the population “will vote the party line no matter what your policies are”, he sighed. “That may not be good, but that is true.” + +Now the Michael Bloomberg of early 2016 hears calls to think again. For the main parties may be about to pick presidential nominees who repel all but the most tribal voters. The chances are rising that Republicans will choose either Donald Trump, a snarling demagogue, or Senator Ted Cruz of Texas, a glib and calculating tribune of the hard-right. The presumed Democratic front-runner, Hillary Clinton, is struggling to hold off her leftist rival Senator Bernie Sanders of Vermont, whose plans would by his own admission require a political revolution. + +Bloomberg-boosters see a chance to remake national politics. In a true three-way race, they reason, winning the White House does not require a majority of voters: about 38% of the electorate in the right states would do. Mr Bloomberg, who is 74, does not have long to decide: he must launch a campaign by early to mid-March to get his name on the presidential ballot in all 50 states. Allies see a path ahead for him if Republicans pick Mr Trump or Mr Cruz and Democrats choose Mr Sanders. They also see a way to win if Mrs Clinton looks like prevailing, but has been weakened and driven to the left (or if she faces the real danger of an indictment for mishandling government e-mails as President Barack Obama’s first secretary of state). The din and fury of this year’s presidential primary season actively encourages Bloomberg-backers. They argue that most Americans abstain from such party contests. Studying polls, they spy a “new silent majority” that is fed-up with the status quo, but is not ready to burn it down. + +Mr Bloomberg certainly breaks the two-party mould. He served at first as the Republican mayor of a mostly Democratic city, then became an independent. A Republican could not be elected president with Mr Bloomberg’s record. Raised Jewish in a blue-collar suburb near Boston, he is a secular big-city liberal on social issues, backing gay marriage and abortion rights. He tried to ban the sale of large sugary drinks and backed government action to curb climate change. The right loathes him for funding gun-control campaigns across the country. But Mr Bloomberg would also struggle to run as a Democrat. He clashed with teachers’ unions over school reforms. He angered the left by defending “stop-and-frisk” police searches which often involve non-whites. Such searches cut crime, he argued as mayor, in part by “scaring the kids to not carry guns”. When he defended the ultra-rich as valuable taxpayers those livid about inequality fumed. + +Mr Bloomberg can be cranky. Asked by pollsters if they would want to spend Thanksgiving dinner with their then-mayor, nearly 60% of New Yorkers said no. Supporters say that Mr Bloomberg need not be loved: he just needs to be an acceptable third option for voters facing an otherwise appalling choice. The idea of Mr Bloomberg in a presidential television debate fills fans with nerdish joy. The self-made founder of a financial-data empire, he is worth an estimated $40 billion, or nine times more than Mr Trump, a rich man’s son—indeed, as a philanthropist, Mr Bloomberg has given away almost as much money as Mr Trump is thought to possess. Most of all, supporters say, he would stand out for knowing how the global economy actually works. + +Frank Luntz, a Republican messaging guru (who is not working for any presidential candidate), says Mr Bloomberg offers voters a unique combination. He funds all his political campaigns from his own pocket, unlike Mr Cruz, Mr Sanders and Mrs Clinton. Unlike Mr Trump, he has a governing record. Lastly, he can appeal to both Democrats and Republicans, unlike any of his rivals. A poll taken by Mr Luntz in January saw Mr Bloomberg drawing more than a quarter of all votes in hypothetical matchups against Mr Trump, Mr Cruz and Mrs Clinton—though it is true that Democrats view him more favourably than Republicans do. + +Steve Schmidt, a senior adviser to Senator John McCain’s Republican presidential campaign in 2008 (but unaffiliated this time) describes the two traditional parties as in a “state of collapse”. He sees in that a chance for innovation, as Mr Bloomberg would have the funds to invest in high-tech targeting of voters, driving tactical voting in his favour, including in the 30-odd states that usually have no impact on White House races. + +Still a long shot + +Alas for Bloomberg-boosters, there are reasons to be sceptical, too. The ex-mayor is a defender of free trade and immigration in a time of haul-up-the-drawbridge populism. Moreover, America’s established parties will fight hard to defend their duopoly. Democratic leaders have already urged Mr Bloomberg to stay out, fearing that he will mostly hurt their party. Republicans gleefully agree, and are urging him to run. Even the electoral rule-book helps traditional parties. Presidential contenders win by securing 270 or more electoral-college votes. If no candidate reaches 270, then the president is chosen by the House of Representatives. The next House will almost certainly be Republican-held. Especially with a Supreme Court vacancy at stake after the death of Justice Antonin Scalia, it can be expected to vote on party lines. + +Mr Bloomberg may run anyway, drawing the support of millions of reasonable people. Yet if after some months it becomes clear that he will lose and help elect a President Trump, hope that he drops out. Being a true moderate is a responsibility, as well as an opportunity. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693206-can-pragmatic-billionaire-and-ex-mayor-reform-two-party-politics-michael-bloombergs/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Bolivia’s presidential referendum: They think it’s all Evo + +Jamaica’s election: Let them eat goat + +Venezuela’s economy: Praying to pay + +Bello: Rigging Peru’s election + + + + + +Articles Sections Next + +Bolivia’s presidential referendum + +They think it’s all Evo + +The longest-ruling president wants to carry on. Enthusiasm for that idea is ebbing + +Feb 20th 2016 | LA PAZ | From the print edition + + + +EVO MORALES, an avid footballer in his spare time, enjoys scoring goals and breaking records. As Bolivia’s president, he has recently broken a couple. In October he overtook Andrés de Santa Cruz, a founding father who governed from 1829 to 1839, as the country’s longest-serving leader. In January Mr Morales, the country’s first president of indigenous origin, marked ten years in power—with a speech nearly six hours long extolling his own achievements. + +This is merely half-time, he hopes. On February 21st Bolivians are to vote in a referendum on whether to allow Mr Morales to run for re-election in 2019. If they vote yes, and then elect him to a fourth term in office, he will serve until 2025, by which time most Bolivians would remember no other president. If the people vote no, Mr Morales’s grip on power will begin to loosen. The vote is expected to be close. + +He needs the extra time, say his supporters, to complete a “democratic and cultural revolution” whose goal is to give more power and better lives to the country’s indigenous majority. The vote is being closely watched outside Bolivia as a sign of whether Latin America’s “pink tide” will continue to recede after recent election defeats for leftist governments in Venezuela and Argentina. A victory for “yes” would hearten depressed left-wingers. + +Mr Morales has scored some successes. The extreme-poverty rate has fallen from 38% to 17% during his tenure. The proportion of voting-age Bolivians who are registered to vote has risen from about half in the 1990s to 86%, says Soledad Valdivia of Leiden University in the Netherlands. + +Unlike other some other Latin American leftists, Mr Morales did not trash the economy to achieve his social goals. Helped by exports of natural gas, GDP grew at an average rate of 5.1% in 2006-14, among the highest in Latin America. Foreign-exchange reserves of $13 billion are the largest in the region as a share of GDP. Mr Morales’s “patriotic agenda” for 2025, the 200th anniversary of independence, promises still lower poverty and a public-works programme that will cost $49 billion over ten years, about 15% of GDP. + +O tempora! O Morales! + +That sales pitch is proving less convincing than he thought it would be. The electorate is evenly split between the “yes” and “no” camps, though polls may underestimate the president’s rural support. Scandals have shaken voters’ faith in Mr Morales and the movement he leads. Several indigenous leaders have recently been charged with stealing money from a fund that is supposed to finance development in rural areas. People blame the government for failing to monitor the fund, says Carlos Cordero, a political scientist at Universidad Mayor de San Andrés in La Paz. + +Bolivians are digesting revelations that Mr Morales, who is unmarried, had a secret relationship with a law student, Gabriela Zapata, who gave birth to a son in 2007. Mr Morales claims that the child died and that the relationship ended soon after, but many people do not believe him. Ms Zapata is now a manager in a Chinese firm that has won government contracts worth more than $500m, fanning suspicions that something improper is going on. The gossip seems to be hurting the “yes” campaign, at least in the cities. + +Some voters have deeper misgivings. Mr Morales both extended democracy and constricted it. Bolivia’s constitution, adopted in 2009, gives indigenous and other grassroots groups a bigger role in electoral politics and decision making, especially at the local level, alongside political parties. It is a “real attempt to combine universal values and democracy with more indigenous traditions”, says Ms Valdivia. + +But conventional democracy has not prospered under Mr Morales. Political parties have atrophied. The president’s Movement to Socialism (MAS) is a fractious coalition of groups ranging from coca growers to miners, united mainly by their loyalty to the president; anyone who criticises him is branded a libre pensante (free thinker), and ostracised. The opposition is led by a discredited old guard. The government has undermined the independence of the judiciary and the central bank. Much of the media has been tamed by its dependence on government advertising. + +Mr Morales owes his longevity as president to the constitutional court, which conveniently ruled in 2013 that, because his first term started before the enactment of the new constitution, he could run for a third. The prospect of a fourth frightens Bolivians who think democracy demands alternation of power. The government will “clamp down even harder on its critics and independent news media”, warns Ricardo Paz of Xtrategia Política, a consultancy that advises political campaigns. + +Even if the “yes” camp wins, Mr Morales’s luck may be running out. The global slump in energy prices is pulling down exports and economic growth. After years of budget surpluses, the government has run deficits for the past two years, which makes Mr Morales’s ambitious spending plans look unaffordable. His fan base may shrink by the next election. + +A “no” would speed up the erosion. It would damage Mr Morales’s aura of invincibility and shift voters’ attention to the MAS, which suffered humiliating defeats in local and regional elections last year. Its search for a new leader “could lead the party to unravel”, believes Mr Paz. Mr Morales would limp on, but his goal-scoring and record-setting days might be over. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21693271-longest-ruling-president-wants-carry-enthusiasm-idea-ebbing-they-think/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Jamaica’s election + +Let them eat goat + +A populist opposition challenges government austerity + +Feb 20th 2016 | From the print edition + +IN THE heart of Montego Bay, his country’s tourist capital, on the night of February 7th Andrew Holness, the leader of the opposition Jamaica Labour Party (JLP), was outlining his election plan to a throng of supporters when a burst of gunfire left three people dead. He and his supporters scurried for safety. Two days later, a bystander was killed and three were injured when a JLP motorcade drove through Flanker, a poor area of the town close to the airport. + +The police were quick to blame the killings on feuding between local criminal gangs, rather than on party rivalries. “We asked specifically that no motorcade should come through Flanker,” said the chief of the local police. Nevertheless, the gunshots were an unpleasant echo of Jamaica’s 1980 election, when gang warfare linked to cold-war ideology and a crumbling economy pitted a Cuban-influenced People’s National Party (PNP) against a pro-American JLP. + +The last whiffs of ideology have long since evaporated. Both of the main parties competing in the election, to be held on February 25th, are pragmatic, but the economy remains stagnant. Jamaica was once a regional powerhouse. Its income per head is now the lowest among Britain’s former Caribbean island colonies. Gang-linked gun crime continues unabated. Last year Jamaica suffered 1,207 murders, giving the island a murder rate almost ten times that of the United States. + +The debt-ridden economy has been in the IMF’s care for years. Under Portia Simpson Miller, the prime minister since 2012, the PNP government has doggedly stuck to an austerity programme. Peter Phillips, the finance minister, has won praise for that. The fall in the price of oil, which Jamaica imports, has given him a little wriggle room. But next month’s budget is expected to contain another round of cuts in public-sector jobs, which may be why Mrs Simpson Miller called the election for 14 months before the deadline. + +She is 70 but looks younger and radiates infectious energy on the stump. In the previous election, in 2011, she took 95% of the poll in the inner-city seat she first won almost 40 years ago. + +Mr Holness, who was briefly prime minister before losing the 2011 election, is almost 30 years younger (she once called him her “son”). He is a Seventh-Day Adventist, as are one in eight Jamaicans. His Ten-Point Plan is generous: he would exempt from income tax three-quarters of those who pay it and promises 250,000 new jobs in a country where only 188,000 are unemployed. He plays to Jamaicans’ homophobia: he wants a referendum to sustain the buggery laws. + +The prime minister calls Mr Holness’s plan “a Ten-Point Con”. It would certainly mean forfeiting the IMF’s support. He counters that she welshed on promises to end the tax on electricity bills and to make Jamaicans prosperous enough to eat ox tail and curried goat. That prompted a peevish Mrs Simpson Miller to threaten to sue, and to pull out of three planned debates. + +The PNP has been in office, with only one four-year break, since 1989. Pollsters and pundits give it a slight edge this time, too. But a big slice of voters remain undecided, or say they will not vote. Mrs Simpson Miller still has work to do. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21693274-populist-opposition-challenges-government-austerity-let-them-eat-goat/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Venezuela’s economy + +Praying to pay + +A default is becoming hard to avoid + +Feb 20th 2016 | CARACAS | From the print edition + + + + + +WHENEVER someone questions Venezuela’s creditworthiness, the country’s president, Nicolás Maduro, retorts that his government has never missed a debt payment and never will. His predecessor and mentor, the late Hugo Chávez, said the same thing. Creditors are demanding a handsome reward for their trust in that promise. The yield on Venezeula’s dollar bond that matures in 2020 is 37%. + + + +Bondholders’ faith will soon be tested. On February 26th Venezuela is due to pay $2.3 billion, mainly to hedge funds and investors that specialise in emerging-market debt. There is little doubt that it will make the payment. After that, the risk of a default on Venezuela’s remaining $64 billion of foreign-currency denominated bonds will rise sharply. In the second half of 2016 the government of Venezuela and PDVSA, the state-owned oil company, are due to pay $6 billion to creditors (see chart). With Venezuela’s heavy oil, virtually its only export, selling for as little as $25 a barrel, the country’s main source of foreign currency is drying up. “It now is a question of when they default, not if,” says Russ Dallen of Latinvest, an investment bank. + +At the recent low price for its oil, Venezuela would earn $22 billion from exports this year, a drop of 77% from 2012. The government has so far responded by restricting imports to half of what they were that year. That, combined with price controls and a bizarre system of multiple exchange rates, has led to shortages of such necessities as rice and toilet paper. It is hard to see how imports could be further squeezed without provoking a social explosion. + +Even with imports at rock-bottom levels, Venezuela is expected to have a financing gap of more than $30 billion this year. Its $52 billion-worth of sellable assets are shrinking fast. A hefty chunk of its reserves is in the form of gold held in the vaults of the central bank, a cumbersome means of payment. Chávez, in a nationalistic gesture, brought 160 tonnes to Venezuela from storage abroad. Now at least 27 tonnes are thought to have been shipped back to service debt. + +About half of Venezuela’s foreign debt is explicitly owed by the sovereign; the rest is owed by PDVSA. There are important differences. Most of the sovereign-debt contracts have collective-action clauses (CACs), under which a restructuring, if accepted by holders of an agreed proportion of debt, can be imposed on all of them. + +PDVSA, Venezuela’s main source of foreign exchange, would have a harder time restructuring its debt. Its bond contracts do not have CACs; if all bondholders are not satisfied by a restructuring offer, a few could hold PDVSA to ransom. But a default would be messy. Unlike Venezuela itself, the oil monopoly owns big assets outside the country, including Citgo, an oil company in the United States. The risk that creditors might seize these is one of the main reasons that Venezuela is so eager to avoid a default. PDVSA may seek to delay payments due later this year, but that will require the agreement of all creditors. + + + +In graphics: A political and economic guide to Venezuela + +Mr Maduro now admits that Venezuela faces an economic catastrophe; he may be inching towards realism about how to confront it. On February 15th the far-left economics tsar, Luis Salas, was dismissed after just six weeks in the newly created job. His replacement is Miguel Pérez Abad, a leftist businessman who holds more moderate views. + +Mr Maduro followed that up by raising the price of petrol 60-fold and tinkering with exchange rates: he reduced the number of official rates from three to two and allowed one to float. The strongest rate for the bolívar has been set at ten to the dollar rather than 6.3. That still leaves Venezuela’s petrol the cheapest in the world, and the strongest exchange rate wildly at variance with the black-market rate of around 1,000 bolívares to the dollar. + +And it leaves Venezuela without a plan to pay its debt, apart from praying for a recovery in the oil price. In 2007 Venezuela stopped co-operating with the IMF, one possible source of assistance. It could turn to China, which has already lent it more than $50 billion and accepts repayment in oil. There is speculation that Venezuela will seek to delay the oil payments. China might agree, in return for access to Venezuela’s oil and minerals on favourable terms. With Chinese help, and a more benign oil market, it is just possible that Venezuela will avoid defaulting on its bonds. But that help may come at a high price. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21693273-default-becoming-hard-avoid-praying-pay/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +Rigging Peru’s election + +A court puts Julio Guzmán’s presidential campaign on ice. Bad idea + +Feb 20th 2016 | From the print edition + + + +A COUPLE of years ago Julio Guzmán decided he wanted to run for president of Peru. On the face of things, that was implausible. He had never been a candidate for political office before. His experience of government was confined to two short stints as a deputy minister in the administration of the current president, Ollanta Humala. An economist, he had spent much of his working life abroad as an official at the Inter-American Development Bank. + +A small and dormant political party called Everyone for Peru (TPP in Spanish) agreed to field him as its candidate. For months he made no perceptible impact on the campaign for the election due on April 10th. But by street leafleting and through social media he gained support, especially among young people. This year he has surged in the opinion polls to 17%, behind only the long-standing front-runner, Keiko Fujimori (35%). In a run-off ballot, which would take place in June, he is the only candidate who might come close to beating Ms Fujimori. + +So it matters greatly that on February 16th the electoral court in effect stalled Mr Guzmán’s campaign. By three votes to two, it refused his appeal against an administrative ruling that TPP had broken its own statutes in the way that it organised the meeting in October that chose him as its candidate. Confusingly, the court’s decision does not in itself annul his candidacy: a separate tribunal must now decide on that. But in practice the court has disabled it. Unless the court quickly reverses itself, weeks of legal argument may lie ahead. + +“It’s the political system [uniting] against a new option,” declared Mr Guzmán, though he insisted he would carry on campaigning. It is part of his pitch that he represents a middle-class insurgency against an entrenched reactionary “establishment”, a word he uses a lot. + +The court’s majority deployed pettifogging legalism, giving more value to secondary regulation than to Mr Guzmán’s constitutional right to run and the right of the people to choose whomever they please—the essence of democracy. Even in narrow terms, the decision is questionable: the dissenting two pointed out that TPP later held a congress which endorsed the choice of Mr Guzmán and that no party member had complained. + +The underlying problem is that Peru is a democracy in which hardly any of the 25 registered political parties is worthy of the name. “They are shells,” says Fernando Tuesta, a political scientist and former electoral official. “No party conducts an internal election as it should be done.” César Acuña, the owner of three private universities who is accused of serial plagiarism and vote-buying (which he denies), remains in the race. + +The absence of parties is both a cause and an effect of the general contempt in which Peruvians hold their politicians. It injects unpredictability into elections and explains why Mr Guzmán could come from nowhere. Aged 45, he is slim, short, articulate and relaxed. He presents himself as a post-ideological candidate situated firmly in the political centre. “What’s demanded today is accountability, authenticity and effectiveness,” he told Bello earlier this month. + +He reeled off his priorities for government: pre-school education, promoting innovation and a higher-tech economy, reform of the state and so on. He stresses policies to help the middle class. Many of these are sensible but not especially novel, as he admits. He gives the sense of making some things up as he goes along, and sometimes contradicts himself. That hasn’t halted his surge. For it is Mr Guzmán himself, as a fresh face and political outsider, who provides the novelty that Peruvians crave. + +Peru has fared well for most of the past 15 years, as faster economic growth has slashed poverty and paid for social progress. But growth has slowed, crime has risen and corruption scandals have proliferated. Peruvian democracy has been held together not so much by parties as by economic success and a consensus that the government should be run by technocrats (such as Mr Guzmán). But are these still enough? + +It is ironic that the only semi-serious party is that of Ms Fujimori, whose father spurned political parties when he ruled the country as an autocrat in the 1990s. To her credit, she has been firmer than other rivals in defending Mr Guzmán’s right to run. In the short term, she may be the main beneficiary if he is disqualified: she might then win without a run-off. But it is in no one’s interest that the electoral court has disrupted Peru’s election and potentially undermined the legitimacy of its eventual winner. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21693275-court-puts-julio-guzm-ns-presidential-campaign-ice-bad-idea-rigging-perus-election/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Coup politics in Thailand: Twentieth time lucky? + +Politics in the Maldives: Archipelago of ire + +Alcohol in India: Taxing tipplers + +Media freedom in Japan: Anchors away + +South Korea and its neighbours: The poor relations + + + + + +Articles Sections Next + +Coup politics in Thailand + +Twentieth time lucky? + +Some generals come up with a new plan for saving Thailand from democracy + +Feb 20th 2016 | BANGKOK | From the print edition + + + +THE job of “returning happiness” to Thailand has put Prayuth Chan-ocha (pictured) in a foul mood. In January the irascible leader of the junta that seized power in May 2014 said he had resolved to “talk less, be less emotional and quarrel less with reporters.” Yet this month he was again apologising, through a spokesman, for flashes of anger at two press events. The cause of his ire was impertinent questioning about a proposed new constitution. His temper may only get worse. + +Mr Prayuth, a former general, this week reassured President Barack Obama at a summit for South-East Asian leaders in California that he is preparing the country for fresh elections. But first the junta wants to pass a new constitution which would keep the hands of elected politicians firmly tied. Mr Prayuth’s coup suspended the previous constitution, itself drawn up during another period of military rule following an earlier coup that also unseated a democratic government, in 2006. A draft for a new constitution that was presented last year proved too illiberal even for lackeys who sit in the army’s rubber-stamp councils. The generals ordered a rewrite. Their latest blueprint looks nearly as bad. + +True, it abandons much-derided plans for an army-led “crisis panel”, empowered to topple elected governments at will. But otherwise it reflects the army’s view that popular politics is a form of corruption, and that bickering politicians are the source rather than a symptom of Thailand’s deep social divisions. (The biggest one is between a wealthy, royalist establishment in Bangkok, the capital, and poorer, less deferential classes in the north and north-east.) The new draft would produce weak coalition governments, presumably in order to erode the dominance of Thailand’s most successful party, Pheu Thai, versions of which the army has twice kicked from power. The prime minister need not be an MP, a loophole that could allow soldiers to keep bossing elected politicians around. + +New power will also flow to watchdogs such as the electoral commission, anti-corruption outfit and courts. On the face of it, that looks good. But these bodies have traditionally reflected the interests of Thailand’s monied elites. It is progress that the draft makes the constitutional court the final arbiter in times of crisis—that role had previously fallen to King Bhumibol Adulyadej, now old and frail. But the change probably reflects fears among the Bangkok establishment that the next monarch, the crown prince, may go too easy on Pheu Thai and other perceived enemies. + +All this has dismayed Thais of many stripes. Politicians note that Mr Prayuth will retain his authority until the moment the next government is sworn in, perhaps allowing him to influence their election campaigns. They fret that more surprises may be stuffed into subsections which the drafters have yet to scribble (a process that may delay an election promised for mid-2017). Sensing revolt, the junta has started warning that critics of the draft will be hauled away for “attitude adjustment”. The government insists that the constitution will be put to a national referendum at the end of July. The election commission says it is already preparing plans for that ballot, an operation it has considered calling the “65m Blooming Flowers” (forgetting, presumably, that a similarly named campaign in Mao Zedong’s China ended in bloody repression). It wants penalties for people who misrepresent the draft in the media. Meanwhile, a general says cadets will be sent to polling stations to help people vote for the right outcome. It may be in vain: the few opinion polls suggest that Thais will throw the new draft out. + +The attitude adjusters + +What would happen then is anyone’s guess. Mr Prayuth insists that a general election will take place in 2017 no matter what—though the junta’s timetable for a return to elected government has shown a tendency to slip. Perhaps he will seek to resurrect a constitution from Thailand’s past (he has 19 to choose from). Perhaps he will impose an electoral system of his own making. Meechai Ruchuphan, a lawyer who led the latest drafting panel, has warned that Thais who vote to abandon his council’s creation might end up with rules they like even less. + + + +In graphics: Explaining Thailand’s volatile politics + +Some wonder whether the draft is designed to fail, so that the junta can remain in power. The generals are presumed to want to be around to manage King Bhumibol’s succession (he is 88). Noxious censorship laws even prevent the matter of the succession from being openly discussed—though it will be the most significant moment for the national polity in decades and seems likely to inflame the country’s smouldering class wars. + +Yet the longer the generals hang around, the more problems they will have to contend with. On February 12th Yingluck Shinawatra, pushed out as prime minister just before the coup, invited foreign journalists to tour her vegetable garden—an outing seemingly designed to skirt the ban on overt politicking. She is probably hoping that foreign pressure on the junta will lessen her chances of a long jail term at the end of her show trial for corruption. Perhaps more pressingly, the junta also finds itself caught up in a bitter dispute inside Thailand’s powerful religious establishment over who should succeed the late patriarch of the Buddhist faith. Thousands of monks gathered near Bangkok on February 15th, urging the government to endorse their faction’s favourite. There were scuffles with soldiers. + +It is a febrile mood, and no end of conspiracy theories posit what a scheming junta intends to do next. Yet the debacle surrounding the constitution may hint at something more worrying still: that Thailand’s self-chosen leaders have no real strategy at all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693251-some-generals-come-up-new-plan-saving-thailand-democracy-twentieth-time-lucky/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Politics in the Maldives + +Archipelago of ire + +Beset by scandal, the islands’ hardline president may be losing his grip + +Feb 20th 2016 | MALE | From the print edition + +Nasheed and Clooney charmed Number Ten + +THE low-lying Maldives may be inundated by a political storm. At the centre stands the archipelago’s president, Abdulla Yameen, scion of a powerful clan. The jailing this week of a former ally, and questions about missing money, are bringing the crisis to a head. + +One agent of Mr Yameen’s troubles is Mohamed Nasheed, the first democratically elected president, who was ousted in what was in effect a coup in 2012. He then contested (and eventually lost) the last election, before facing overblown charges of terrorism. But foreign pressure recently secured his passage to London for medical treatment. There he has loudly highlighted his country’s democratic shortcomings. + +He is supported by a high-profile lawyer, Amal Clooney, who has helped strengthen the backing of Britain’s prime minister, David Cameron, for the cause of Maldivian democracy. The islands’ government is furious with Mr Nasheed. Ministers have come to London to prevent the Commonwealth from suspending the Maldives’ membership and to fight off European calls for targeted sanctions unless political prisoners are freed and a deal reached with the opposition. + +But the 12-year sentence handed down on February 17th to Imran Abdulla, head of an Islamist party, has undone their work. He also was charged with terrorism for a speech at a rally last May in support of Mr Nasheed—even though he used it to call for calm. Officials more readily rail against Mr Nasheed than explain how $79m disappeared from the state tourism body. Mr Yameen’s former vice-president, Ahmed Adeeb, has been arrested for that, as well as for an explosion on the president’s yacht. But questions remain. It seems improbable, as ministers with a taste for flash watches insist is the case, that Mr Adeeb is the only senior politician to have benefited. + +The opposition alleges that Mr Yameen is implicated in the tourism scandal, as well as in an alleged money-laundering scheme involving the central bank. With outside pressure growing, the president, who denies any wrongdoing, has shrinking room for manoeuvre. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693256-beset-scandal-islands-hardline-president-may-be-losing-his-grip-archipelago-ire/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Alcohol in India + +Taxing tipplers + +India’s governments struggle with their addiction to booze + +Feb 20th 2016 | DELHI | From the print edition + +Blind faith needed + +IN LUCKNOW they call it “evening medicine”. In Bangalore the slang is “oil”. Among Tamils it is “water”. The Indian government is less poetic. It classes the stuff as IFL, IMFL or IML, terms that stand for imported foreign liquor, Indian-made foreign liquor and Indian-made liquor. But in all its many layers the Indian government remains just as addicted to, and sometimes just as confused by, the demon alcohol as any wine-drenched Urdu bard. + +Most Indians do not drink at all, and per person Indians are far more abstemious than others elsewhere (see chart). Yet those who do drink show a preference for the strong stuff. By fast-growing volume India is the world’s third-biggest consumer of alcohol, and far and away the biggest consumer of whisky. Such IMFL brands as Royal Stag and Officer’s Choice, unknown in other markets, rank among the world’s top ten best-selling whiskies. Even in beer Indians exhibit a taste for the bracing. Draught beers high in alcohol make up four-fifths of the local market. + + + +Governments everywhere tax booze and control its sale, but few do so as heavily or as capriciously as India’s. It is not just that the federal government imposes a tariff of 150% on imported spirits. Local licensing fees and taxes, along with a range of gouging state controls on the alcohol trade, stick consumers with end prices that are often five or six times those at the distillery gate. Granted, cheaper, less palatable alternatives exist to real whisky. In Delhi a plastic 0.6-litre bottle of brown liquid whose wonky label proclaims “Star Deluxe 80 Proof” retails for just 140 rupees, or $2. Unlicensed hooch, widely available in India, costs a fraction of that. Sadly it sometimes also kills or blinds. In 2014, 1,700 Indians died after imbibing toxic home brew—mainly as a result of lethal methanol unwittingly being manufactured rather than ethanol. + +India’s 29 states and seven union territories have adopted wildly different approaches to alcohol. In the west prim Gujarat has banned it entirely since 1961. By contrast the little territory of Puducherry on the Coromandel coast earns two-fifths of its revenue from an excise tax on booze. Some states auction wholesale and retail licences, or apportion them to friends of the party in power. Others operate their own monopolies. Tamil Nadu’s state monopoly employs 30,000 people and runs more than 6,000 outlets. + +Officially tipplers in Mumbai need a licence to consume alcohol. A lifetime pass costs 1,000 rupees and a day ticket five rupees. In theory failing to have one can incur a five-year jail sentence. In Delhi the minimum legal age is a silly 25. Recently police, at the behest of the national government, raided a municipal official’s home to embarrass the local government with the shock discovery that he owned two bottles more than the 12 allowed by local law. + +In a bow to Gandhian austerity, India’s constitution lays down the aim of reducing alcohol consumption. Like America in the 1920s, many Indian states have tried prohibition before abandoning it. The odd thing is that some keep trying. Kerala imposed stiff controls last year, and Bihar plans to do so in April. But Manipur and Mizoram, hill states in the north-east, are giving up their bans. They cite rising criminality, the danger of poisonous hooch, loss of state revenues and an inability to control the flow. + + + +A continent masquerading as a country: Explore India in our interactive map + +Meanwhile other states are simply seeking better ways to milk India’s passion for drink. Andhra Pradesh, whose 51m people already hand over nearly $2 billion a year in alcohol taxes, recently lowered duties on the cheapest Indian-made alcohol and raised them on higher-end potions. It was a carefully calculated bid to earn more from bigger volumes. Revenues have indeed soared, not only from higher local consumption but also because of a surge of smuggling into neighbouring states. Karnataka, dependent on alcohol for nearly a quarter of state revenue and already struggling to plug smuggling from cheaper Goa, has stiffened border checks to stem this new tide. To the north, the state of Punjab actually slaps higher taxes on alcohol “imports” from the rest of India to protect its own distillers. + +Taken together, it is an ungainly mix of prudishness and excess, of tangled laws and hefty profits. It says much about the state of India today. In some sectors of the alcohol industry, order is beginning to prevail. For instance, after years of trying to slash a way through thickets of bureaucracy and vested interests, big multinational firms now manage the bulk of the beer industry. Yet despite promoting the idea of a unified national goods and service tax to replace India’s current plethora of federal and state taxes as a key objective of its reform programme, the government of the prime minister, Narendra Modi, has explicitly stated that alcohol will still be taxed the old way. It is too rich a brew for state governments to give up. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693258-indias-governments-struggle-their-addiction-booze-taxing-tipplers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Media freedom in Japan + +Anchors away + +Criticism of government is being airbrushed out of news shows + +Feb 20th 2016 | TOKYO | From the print edition + + + +FOR a decade, millions of Japanese have tuned in to watch Ichiro Furutachi, the salty presenter of a popular evening news show, TV Asahi’s “Hodo Station”. But next month Mr Furutachi will be gone. He is one of three heavyweight presenters leaving prime-time shows on relatively liberal channels. It is no coincidence that all are, by Japanese standards, robust critics of the government. + +Last year another anchor, Shigetada Kishii, used his news slot on TBS, a rival channel, to question the legality of bills passed to expand the nation’s military role overseas. The questioning was nothing less than what most constitutional scholars were also doing—and in private senior officials themselves acknowledge the unconstitutionality of the legislation, even as they justify it on the ground that Japan is in a risky neighbourhood and needs better security. But Mr Kishii’s on-air fulminations prompted a group of conservatives to take out newspaper advertisements accusing him of violating broadcasters’ mandated impartiality. TBS now says he will quit. The company denies this has anything to do with the adverts, but few believe that. + +The third case is at NHK, the country’s giant public-service broadcaster. It has yanked one of its more popular anchors off the air. Hiroko Kuniya has helmed an investigative programme, “Close-up Gendai”, for two decades. NHK has not said why she is leaving, but colleagues blame her departure on an interview last year with Yoshihide Suga, the government’s top spokesman and closest adviser to Shinzo Abe, the prime minister. + +Mr Suga is known for running a tight ship and for demanding advance notice of questions from journalists. In the interview Ms Kuniya had the temerity to probe him on the possibility that the new security legislation might embroil Japan in other countries’ wars. By the standards of spittle-flecked clashes with politicians on British or American television, the encounter was tame. But Japanese television journalists rarely play hardball with politicians. Mr Suga’s handlers were incensed. + +It all shows how little tolerance the government has for criticism, says Makoto Sataka, a commentator and colleague of Mr Kishii’s. He points out that one of Mr Abe’s first moves after he returned to power in 2012 was to appoint conservative allies to NHK’s board. Katsuto Momii, the broadcaster’s new president, wasted little time in asserting that NHK’s role was to reflect government policy. What is unprecedented today, says Shigeaki Koga, a former bureaucrat turned talking head, is the growing public intimidation of journalists. On February 9th the communications minister, Sanae Takaichi, threatened to close television stations that flouted rules on political impartiality. Ms Takaichi was responding to a question about the departure of the three anchors. + +Political pressure on the press is not new. The mainstream media (the five main newspapers are affiliated with the principal private television stations) are rarely analytical or adversarial, being temperamentally and commercially inclined to reflect the establishment view. Indeed the chumminess is extreme. In January Mr Abe again dined with the country’s top media executives at the offices of the Yomiuri Shimbun, the world’s biggest-circulation newspaper. Nine years ago, when Mr Abe resigned from his first term as prime minister, the paper’s kingpin, Tsuneo Watanabe, brokered the appointment of his successor, Yasuo Fukuda. Mr Watanabe then attempted to forge a coalition between ruling party and opposition. Oh, but his paper forgot to alert readers to all these goings-on. The media today, says Michael Cucek of Temple University in Tokyo, has “no concept of conflict of interest.” + +It has all contributed to an alarming slide since 2011 in Japan’s standing in world rankings of media freedom. Mr Koga expects a further fall this year. He ran afoul of the government during his stint as a caustic anti-Abe commentator on “Hodo Station”. On air last year he claimed that his contract was being terminated because of pressure from the prime minister’s office. His aim, Mr Koga insists, was to rally the media against government interference. Yet TV Asahi apologised and promised tighter controls over guests. Now Mr Furutachi is quitting too. The government is playing chicken with the media, Mr Furutachi says, and winning. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693269-criticism-government-being-airbrushed-out-news-shows-anchors-away/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +South Korea and its neighbours + +The poor relations + +The South’s “trustpolitik” towards North Korea has unravelled + +Feb 20th 2016 | SEOUL | From the print edition + +Last orders + +WHEN, in a hissy fit, North Korea shut down the Kaesong industrial zone almost three years ago, pulling out its workers and expelling their South Korean managers, many were puzzled as to why the conservative administration of Park Geun-hye, South Korea’s president, would work so hard to restart it. A product of the “sunshine policy” of her left-leaning predecessors, the factories just north of the border kept alive a few of South Korea’s twilight industries, producing low-grade shoes and clothes with subsidies from the South and cheap labour from the North. + +The joint zone opened again five months later, after seven rounds of talks. But on February 10th it was South Korea’s turn to pull the plug on the complex, for the first time since it opened in 2004. Ms Park announced a complete suspension of operations. Few expect it to reopen during her presidency, which ends in December 2017. The North swiftly cut hotlines, expelled businesses and put its army in charge of the area. The last real point of contact between the two Koreas is no more. + +If earlier efforts to save Kaesong tried to show Ms Park’s “trustpolitik” at work—a mixture of carrot and stick to try to get North Korea to engage with South Korea—the zone’s closure suggests that this policy has been ditched. Those dismayed by the move point out that the deal in 2013 involved a pledge to shield Kaesong from lurches in inter-Korean relations. But Ms Park is no longer in the mood for appeasement. In a notable speech to the National Assembly in Seoul, she did not mince words: it had become “indisputably clear”, she said, “that the existing approach and good intentions” would “only lead to the enhancement of the North’s nuclear capabilities” under Kim Jong Un. + +The tests of a nuclear bomb on January 6th and a long-range missile a month later were the last straw. Since Kaesong opened, the North has conducted four nuclear tests and five long-range rocket launches. The hard currency that flowed into Kaesong from the South went straight to the state, which returned as little as a fifth to the 54,000 North Korean workers there. The flow amounted to about $130m a year—not much by South Korean standards, but a fortune for the North and enough to help underwrite its nuclear dabbling. + +A harder line towards the North is only one change in Ms Park’s foreign-policy outlook. Another is disappointment with China, North Korea’s only friend, largest trading partner and principal donor. It is just possible that China is now getting tougher on the North. In a recent editorial, China Daily, a state-controlled newspaper, said that new UN sanctions, currently being drafted, “must truly bite”. Yet China is unlikely to want to do anything to rock Mr Kim’s regime, for fear of the instability that might ensue. It has responded to the tests with studious restraint. + +That is a blow for Ms Park, who had worked hard to woo Xi Jinping, China’s president. The two have met half a dozen times. Ms Park attended a Chinese military parade in September, the only leader of an Asian democracy to do so (much to America’s irritation). Yet Mr Xi did not take a call from Ms Park for over a month after the North detonated its bomb. Downplaying the North’s tests, says Evan Medeiros, formerly a member of Barack Obama’s National Security Council, has been Mr Xi’s weakest foreign-policy step. Among other things, it has hastened South Korea’s rapprochement with Japan after a protracted spat over history. And now Ms Park has agreed to adopt an American advanced missile-defence system that China has long agitated against. + +So shutting Kaesong was probably also a show of determination put on for the United States. Military drills that take place annually in the spring between the two countries are planned to be among the biggest yet. And South Korea, America and Japan are likely to become more public about their three-way co-ordination against the North Korean threat. South Korea is recalibrating its foreign policy: unambiguously hugging its American ally and mending ties with Japan as those with China fray. Ms Park’s legacy may yet be made in the dusk of her presidency. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693265-souths-trustpolitik-towards-north-korea-has-unravelled-poor-relations/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Dementia: State of minds + +Trees in Hong Kong: Fragrant arbour + +Left-behind children: A slow awakening + +Banyan: Core values + + + + + +Articles Sections Next + +Dementia + +State of minds + +China is ill prepared for a consequence of ageing: lots of people with dementia + +Feb 20th 2016 | BEIJING | From the print edition + + + +ON A stage decorated with tinsel and fairy lights, Liu Changsheng is singing “The East is Red” into a microphone, wearing a yellow and grey tracksuit. For Mr Liu, the Maoist anthem of the 1960s may arouse memories more vivid than those he has of his immediate past. Now in his seventies, he has dementia, an incurable brain disease that is often revealed by a loss of short-term memory. For two years Mr Liu has lived at the Qianhe Nursing Home in northern Beijing in a facility for around 75 dementia patients. They are among the few sufferers of this condition in China who receive specialist care. + +Dementia has mostly been a rich-world sickness, because it becomes more common as people live longer. China is fast catching up. Life expectancy increased from 45 in 1960 to 77 now, and the population is ageing rapidly: one person in six is over 60 now; by 2025 nearly one in four will be. Factors that increase the (age-adjusted) risk of developing dementia are also on the rise, including obesity, smoking, lack of exercise and diabetes. + +Already about 9m people in China have some form of dementia. In absolute terms, that is more than twice as many as in America. It is also more than double the number in India, a country with a population similar in size to China’s but a much younger one. Nearly two-thirds of China’s sufferers have the form known as Alzheimer’s, cases of which have tripled since 1990. The number of Alzheimer’s patients may increase another fourfold between now and 2050. + +China’s government is woefully unprepared for this crisis, with a severe lack of health-care provision for sufferers. So too is the public. Despite recent public-information campaigns, many Chinese regard dementia as a natural part of ageing, not as a disease, and do not know that it is fatal. Others see it as a psychological ailment rather than a degeneration of the brain itself. It carries a stigma of mental illness, making sufferers and their relatives reluctant to seek help. This compounds the suffering caused by dementia: active management can sometimes slow its progress. + +Even at the Qianhe Nursing Home, where Mr Liu lives, some aspects of the care appear crude. A shared “activity” space for dementia sufferers has no games or toys to entertain them; relatives are discouraged from visiting more than once a week for fear of “disturbing” their kin (in the West, care homes encourage visits, which can be stimulating and provide a sense of warmth and familiarity). Some dementia patients end up in psychiatric wards, which cannot deal effectively with their specific requirements. There is an acute shortage of medical workers qualified to treat sufferers. One reason is that few are attracted to the work. Zhang Xiurong, 50, a care assistant at Qianhe, is paid less than 3,000 yuan ($450) a month, close to the average national migrant wage, to provide all patients’ basic needs 12 hours a day, with only four days off a month. “No Chinese parent wants their one daughter to work in a hospital cleaning bedpans,” says Michael Phillips of the Shanghai Jiao Tong University School of Medicine. + +In the West most patients go to a care home for the final brutal stages of the disease, which can last more than a year. In China families carry most of the burden from beginning to end. The government has long underinvested in social care, assuming that adult children will take responsibility. But this is unsustainable. Plunging birth rates since the 1970s, exacerbated by a one-child-per-couple policy, mean that the number of working-age adults per person over 65 will fall by 2050 from ten to 2.5. Migration into cities (see article) is leaving some elderly people in the countryside without family members to care for them. + +Need for new thinking + +The government has been slow to recognise the scale of the problem. It funds some dementia research, but the money goes to scientists looking for a cure, rather than to those trying to find ways of alleviating the suffering of patients who have no chance of one. “People don’t get Nobel prizes or grants for developing a strategy for community care,” says Dr Phillips. + +In any country care can be expensive, both for families and governments. In China the government will find itself having to spend much more as relatives prove unequal to the task. Because family members rarely understand the condition, more than 90% of dementia cases go undetected, according to a study led by Ruoling Chen of King’s College in London. Sufferers will benefit when the government at last realises it has to step in. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21693241-china-ill-prepared-consequence-ageing-lots-people-dementia-state-minds/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Trees in Hong Kong + +Fragrant arbour + +Thieves are destroying the tree that gave Hong Kong its name + +Feb 20th 2016 | HONG KONG | From the print edition + +A copse in need of cops + +YEUNG SIU YU points to where a large, old tree has been hacked with a blade. Villagers have erected a metal fence around the trunk to prevent further attacks, but they fear there will be more: low-hanging limbs are still exposed. “The thieves will come back for this piece,” says Mr Yeung, pointing to the stump of a branch just above his head. + +Mr Yeung forsook city life to keep bees on the carefree (and car-free) island of Lamma, a couple of miles from the main island of Hong Kong where the territory’s government and financial centre lie. Lamma’s tropical gardens and verdant jungle are magnets for nature-lovers like Mr Yeung. They worry, however, that one of the most cherished species, the incense tree (Aquilaria sinensis), faces a growing threat to its survival. + +The evergreen tree is endemic to southern China. Its lightly scented timber is used to make incense sticks. When damaged, the tree’s aromatic resin may develop into a dark, dense substance known as agarwood, which is prized for its supposed medicinal properties. Trade in the tree’s produce was once so important locally that a port handling such business was named “fragrant harbour”. The British later applied that name—“Hong Kong”—to the colony they founded around the port. The commercial harvesting of incense trees ended in the territory more than a century ago. Nowadays most specimens are growing in the wild, including in woodlands preserved by ancient villages. + +To protect incense trees, the Convention on International Trade in Endangered Species of Wild Fauna and Flora restricts trading in agarwood. But Hong Kong does not single out those who destroy or damage the trees for harsh treatment. If an incense tree is on government-managed land, the maximum sentence for cutting it down is the same as it is for felling any other kind of tree on such property: a fine of HK$25,000 ($3,210) and a year in prison. + +Such penalties do little to deter thieves from mainland China, who are encouraged by growing demand for exotic medicines among members of the mainland’s fast-growing middle class. Professor C.Y. Jim of the University of Hong Kong reckons that in 2013 high-grade agarwood was worth $1,600 a gram on the black market. That is more than gold. According to Mr Jim, Hong Kong may be the “last refuge” of the tree, so it has become a “honeypot” for tree-snatchers. + +Most of the thieves work for criminal gangs based across the border in mainland China. In recent years a relaxation of restrictions on travel from the mainland to Hong Kong has made their work easier. They often pretend to be hikers, sometimes camping out for weeks while gathering the timber. A local NGO has produced a map showing about 200 sites from which it says around 500 trees were stolen in the past year. Ho Pui Han, who runs the group, says there may be only 100 mature trees left in the territory. She is incensed. + +Very few incense trees form agarwood, so they are often destroyed indiscriminately. On Lamma, a plaque marks a spot where three young trees were uprooted. A short scramble up a steep slope reveals a gorier scene: splintered woodchips are all that remain of an aged tree. Mr Yeung, the beekeeper, says “hunters” felled and butchered it in situ. As supplies diminish, the gangs are becoming more desperate. Thieves are raiding private gardens; some residents have begun organising patrols to frighten the thieves away. Alarms and monitoring cameras are being installed. + +Ms Ho says the “sacred” relationship between villagers and woodlands is a vital part of Hong Kong tradition. “Their ancestors told them they must not cut down one single tree,” she says. Several thieves have been arrested recently (including on Lamma). But conservationists say the government has to try much harder. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21693263-thieves-are-destroying-tree-gave-hong-kong-its-name-fragrant-arbour/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Left-behind children + +A slow awakening + +The government recognises a huge problem. Now it must tackle it + +Feb 20th 2016 | BEIJING | From the print edition + + + +AROUND 270m people have left China’s countryside to work in urban areas, many of them entrusting their children to the care of a lone parent, grandparents, relatives or other guardians. By 2010 there were 61m of these “left-behind children”, according to the All-China Women’s Federation. In a directive released on February 14th, the government has at last shown that it recognises the problems caused by the splintering of so many families. The document acknowledges that there has been a “strong reaction” from the public to the plight of affected children. It describes improving their lot as “urgent”. + +That is clearly right. There have been numerous stories in recent years revealing the horrors some of these children endure. Last year four siblings left alone in the south-western province of Guizhou apparently committed suicide by drinking pesticide. Numerous sex-abuse cases involving left-behind children have come to light. + +The new proposals look sensible enough: minors may not be abandoned entirely; local institutions such as schools and hospitals must do more to notify the authorities of cases of abuse or neglect; social workers should monitor the welfare of left-behind children. Sadly, however, the government’s suggested remedies will achieve little. They largely replicate recent laws and policies designed to protect children (not just left-behind ones), which have been almost universally unenforced. It is already illegal to allow minors to live alone, for example. There is no indication that the new recommendations will be made law or implemented any more rigorously. + +The new scheme mentions the importance of giving migrants urban hukou, or household-registration certificates, which are needed to gain access to public services such as education and health care. Most migrants leave their children in the countryside because they do not have such papers. In December the government announced plans to make it easier for migrants to gain urban hukou privileges. But few casual labourers are likely to fulfil the still-onerous conditions that must be met to qualify. + +A study published last year by researchers at Stanford University found that among more than 140,000 children assessed in areas such as education, health and nutrition, left-behind ones performed as well as or better than those living in the countryside with both parents. But both kinds of children lagged far behind those who grow up in cities. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21693268-government-recognises-huge-problem-now-it-must-tackle-it-slow-awakening/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Core values + +A rotten new flavour of Chinese propaganda + +Feb 20th 2016 | From the print edition + + + +IT WAS by some distance the year-to-date’s biggest television event. Some 690m people in China are estimated to have watched (or snoozed through) the four-and-a-half-hour extravaganza screened nationwide on state television on February 7th, the eve of the Chinese new year. It was a stultifying procession of patriotic songs (“Forge ahead, beautiful China”; “Iron and blood loyalty”), insipid skits and bald propaganda. “Without the Communist Party, there would be no new China” is a jolly enough tune, but hardly festive fare. The gala even included a parade of soldiers strutting about the stage in combat fatigues. + +On the same day, 112m Americans tuned in to the Super Bowl, a big American football game with more than its share of flag-waving, too. But at least that event was bone-crunchingly exciting, and its half-time show intriguingly subversive (Beyoncé appeared in a Black Panther outfit). By contrast, the live broadcast in China was politically correct to a mind-numbing extreme. The year of the monkey was ushered in by a show that many citizens decried as a turkey. Moaning about the chunwan, as the programme is commonly called, is as much a tradition as the entertainment itself, an annual event since 1983. This year was different, however: the show was seen as having plumbed new depths. Worse, even saying so was, in effect, banned. + +On the state broadcaster’s account on Weibo, a microblogging service, the comments section was temporarily shut down as viewers bombarded it with complaints. Since then censors have been busy deleting posts about the surfeit of political puffery. Peidong Yang, a sociologist at the National Technological University in Singapore, who has followed the shows closely, says this year’s was more than usually full of it. Many viewers joked that it was like watching the news. + +What passed for new-year entertainment on television this year formed part of a revival of another of the party’s traditions: the political campaign. This never died out entirely. But under Xi Jinping, the party’s leader since 2012, it has gathered new momentum. For over a year, the press has urged people to study his obscure doctrine of the “Four Comprehensives” (getting richer, reforming the economy, enforcing the law and cleaning up the party). This featured, inevitably, in the chunwan, and also in a cartoon by the official news agency, using rap, zippy animation, Mr Xi’s own voice and even Beethoven’s “Ode to Joy” to convey the message that the Four Comprehensives will bring China close to realising the “Chinese Dream” (another of Mr Xi’s slogans). + +The gala was graced by vast images of Mr Xi, the object of an inchoate personality cult. This year the fawning has acquired a new feature, with references to him as the hexin, or “core”, of China’s leadership. Local leaders have taken to professing their loyalty to Mr Xi, using this word. It recalls the campaign in the early 1990s to boost the party leader at the time, Jiang Zemin, through constant references to the “third generation of revolutionary leaders”, with Mr Jiang as their “core”—ie, as Mao Zedong had been to the first generation and Deng Xiaoping to the second. Back then, Mr Jiang seemed to need the help. Unexpectedly picked to lead the party after the turmoil of the Tiananmen protests and the killings that ended them in 1989, he was seen by some as a powerless cipher for a bunch of gerontocrats who still called the shots from their bath-chairs and bridge tables. + +When the party managed its first smooth leadership transition to the fourth generation in 2002, that feat was also hailed as a shift to a new style of collective leadership. It became taboo to use the word hexin to describe the status of Hu Jintao, Mr Xi’s predecessor; among his party colleagues, Mr Hu was always simply known as “general secretary”. Mr Xi, however, wants to be seen as more than a first among equals. Chinese media are playing along. One of their new fads is the use of the word “Xiconomics” to describe the president’s professed zeal for “supply-side” economic reforms. That the prime minister, Li Keqiang, is notionally in charge of running the economy is conveniently ignored. + +Mr Xi has already succeeded in ousting his most prominent rivals and instilling fear throughout the party with his anti-corruption campaign. Moreover, by strengthening the role of high-level party committees, led by himself, he has his hands on most of the levers of power. So it is not obvious why his status needs further enhancement. One possibility is that the revived usage of “core” is a product of feverish politicking in Beijing. Next year the party will hold a five-yearly congress. According to party rules, five of the seven members of its highest body, the Politburo Standing Committee, should stand down because of their ages. Only Mr Xi and Mr Li are due to stay. So intense jockeying is already under way for the vacancies. Officials may see expressions of loyalty to Mr Xi, and acknowledgment of his supreme power, as a way of improving their career prospects. + +It may also be that Mr Xi demands such homage as a way of stifling resistance to his policies, his accumulation of power and his purge of the corrupt. Economic growth is slowing, and markets are turbulent. Leaders may calculate that pre-emptive repression is safer than waiting to see if China’s myriad malcontents coalesce into something resembling an opposition. + +Confidence tricks + +Repression carries costs of its own. In one deleted post on the gala, for example, Ren Zhiqiang, a property tycoon with 37.5m Weibo followers, asked sarcastically whether stopping criticism showed self-confidence. In another, Wu Wei, a liberal former official, approvingly reposted a comment that the worst thing about the gala was not how lousy it was but how the right to say so was gradually vanishing. The censorship looks petty, silly and, worse, panicky. But the party has never been as concerned with how things look as with keeping an iron grip on power. If it were a corporation, that would be its core business. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21693242-rotten-new-flavour-chinese-propaganda-core-values/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Vladimir Putin’s war in Syria: Why would he stop now? + +Counting the dead: Quantifying carnage + +Elections in Iran: The great candidate cull + +Student protests in South Africa: Whiteness burning + +Elections in Uganda: No jam today + + + + + +Articles Sections Next + +Vladimir Putin’s war in Syria + +Why would he stop now? + +Russian bombers have brought the regime of Bashar al-Assad within sight of victory, but the bloodshed and dangers are growing + +Feb 20th 2016 | BEIRUT, KILIS AND MOSCOW | From the print edition + + + +IT MIGHT have been a moment of hope: an internationally negotiated ceasefire that would lead to a political deal to end a war that has probably killed nearly half a million people and turned millions more into refugees. The accord was thrashed out by America and Russia on February 12th in the wings of the annual Munich Security Conference, endorsed by the 17-nation International Syria Support Group—a cruel misnomer if ever there was one. Its chances of success were never good. + +Humanitarian aid to besieged towns was supposed to be the first part of the deal, followed by a “cessation of hostilities” within a week. There are some signs of the former—the UN announced an agreement with the regime on February 16th for access to seven towns, perhaps including air-drops into Deir al-Zor, a city largely held by Islamic State (IS). On February 17th some aid convoys began to roll out of Damascus. But there remains virtually no prospect of a ceasefire. + +Nobody should be surprised, given the cheerful assertion by Sergei Lavrov, Russian’s foreign minister, that, despite signing the agreement, Russia would continue its air strikes against those it regards as “terrorists”. That is an elastic term. Jabhat al-Nusra (JAN), al-Qaeda’s powerful Syrian arm, fights alongside many other forces, both jihadist outfits and less extreme ones supported by the West, so Russia feels justified in bombing just about any rebels it chooses. + +Since Russia’s intervention at the end of September, supposedly to attack IS and JAN, the dynamics on the ground have been transformed. Once close to collapse, the regime of Bashar al-Assad is now confident of its survival and intent on regaining control of more territory. Pro-Assad forces are encircling the rebel-held parts of Aleppo, once Syria’s biggest city. Why should he and Mr Putin stop now? + +The only puzzle is what John Kerry, America’s secretary of state, thought he could achieve through his agreement with Mr Lavrov—except, perhaps, to expose Russian cynicism. As John McCain, the chairman of the Senate armed services committee, put it: “This is diplomacy in the service of military aggression. And it is working because we are letting it.” + +In the few days since the Munich agreement, the war has, if anything, widened and intensified. On February 15th nearly 50 civilians were killed when missiles hit rebel-held areas of Syria. At least 14 were killed in the northern town of Azaz when missiles hit two hospitals and a school where refugees were sheltering. Missiles also struck a hospital in Marat Numan, in Idlib province, south of Aleppo (see map). In all, five medical facilities were targeted. The UN condemned the attacks as a violation of international law. Turkey’s foreign ministry accused Russia of “an obvious war crime”. + + + +The animosity between Moscow and Ankara is further fuelled by the advance of the Syrian Democratic Forces (SDF), an alliance of Kurdish and Arab fighters under the umbrella of the PYD, the main Syrian Kurdish force. This had been America’s most reliable ally on the ground against IS. But now, aided by Russian planes and weapons deliveries, it is fighting in tacit alliance with Mr Assad’s regime. On February 2nd the SDF severed the corridor between Aleppo and the Turkish border that is critical for rebel supplies. On February 15th it seized control of Tel Rifaat, one of the first towns to rise up against Mr Assad, squeezing the “Azaz pocket”, a rebel bastion on the border with Turkey. + +The rush to Rojava + +The Kurds want to carve out a continuous autonomous area by linking up the two enclaves they control along Syria’s border with Turkey. In the recently opened PYD office in Moscow, there is a map of a future Syrian Kurdistan, called “Rojava”. It covers a lot of territory. + +Turkey is determined to stop the Kurds and has been shelling them for the past week. Its prime minister, Ahmet Davutoglu, says that Turkey “will not let Azaz fall” and threatens a “severe response” if the Kurdish-led forces try to take the town. + +Tens of thousands of refugees are flowing out of Aleppo, heading both north towards the Turkish border town, Kilis, and west into mainly rebel-held Idlib. The regime seems all too happy to let the city’s population flow out through its siege lines. + +Noah Bonsey of the International Crisis Group, a think-tank, believes that there is nothing indiscriminate about the bombing of civilian areas and infrastructure, including schools and hospitals. Both Aleppo’s main hospitals were systematically destroyed by Russian air strikes last week. The aim is twofold: to terrify civilians into leaving, so that even more ruthless tactics can be used against the fighters who remain; and to raise the price of resistance to the point at which communities will put pressure on fighters to accept whatever ceasefire terms the regime is prepared to offer, as happened in Homs two months ago. + +Western diplomats accuse Russia’s president, Vladimir Putin, of “weaponising” refugees to threaten Europe and punish Turkey, which supports the rebels and in November shot down a Russian plane that had crossed into its airspace. Turkey is doing everything it can to hold back the exodus from Aleppo by building big refugee camps on the Syrian side of the border. It is not yet clear whether it is prepared to defend these new camps against Russian or regime attacks. If it is, it could be the prelude to establishing an informal safe zone along the border—something the Turks have long demanded, but which America has refused to do, even when it would have been a lot less dangerous than it is now. Shooting down stray regime helicopters is one thing; risking a direct military confrontation with Russia is quite another. Syrian opposition leaders see it only slightly differently. One says: “It looks like Turkey is trying to create a humanitarian crisis. They think that maybe it could make the West finally act.” + +In fact, there is little prospect of Western intervention. Even if Russia and Turkey come to blows in Syria it is not at all clear that NATO, of which Turkey is a member, would be obliged to come to its aid unless Turkey’s own territory were under attack. The desperate diplomatic floundering of Mr Kerry suggests that President Barack Obama, with only a year left in office, will not adopt a more hawkish approach unless events force him to. + +In the absence of direct Western military intervention, most military analysts doubt that much can be done to stave off further rebel defeats. The Saudis are thinking of supplying them with shoulder-fired anti-aircraft missiles. But America rejects this idea because of the danger that they would be used by terrorists to shoot down passenger airliners around the world. + +None of this means that Aleppo will fall quickly to regime forces. There are about 40,000 battle-hardened rebel fighters from more than 50 opposition groups still in the city. Most have remained relatively independent of JAN. As a recent analysis by the Institute for the Study of War, a think-tank in Washington, DC, argues, they are a resilient bunch. However, the think-tank warns that the pressure of the coming siege will be used by JAN and its Salafi-jihadist ally, Ahrar al-Sham, to get moderate groups, who feel betrayed by the West, to merge with them. That would play into the regime’s account of the opposition being composed only of “terrorists”. + +Without Russian air support the pro-regime forces ranged against them would look a lot less formidable. There are relatively few units of the Alawite-led Syrian army left. By the middle of last year it was on the brink of disintegration. It is now being retrained and rearmed by the Russians, but it is largely deployed close to the regime’s heartland in Damascus and Latakia. Most of the forces around Aleppo are Iranian-led Shia militias, from Lebanon and Iraq, with some fighters from Afghanistan and Pakistan. Western intelligence sources put their number at about 15,000, not including around 5,000 from Hizbullah, the powerful Lebanese Shia militia. Some Russian Spetsnaz special forces are working on the ground, co-ordinating air strikes. One rebel commander said: “We can beat them on the battlefield. Our men have been fighting them for five years and this is their terrain. But the Russian bombings make the difference.” + +The West agonises over its self-inflicted impotence, while Turkey and its Gulf allies flail and threaten. But Mr Putin has a clear strategy that appears to be succeeding on almost every level. A newly confident Mr Assad talks about retaking the country bit by ruined bit. + +Vlad the victor + +Mr Putin’s immediate aim is to return Aleppo to government hands, allow the Kurds to create at least a semi-autonomous region in the north and then to use the suspended UN-sponsored peace process to lock in these gains. Underpinning this plan is his belief that a European Union bickering about refugees is desperate for the war to end at almost any cost, while Mr Obama has already given up trying (not very hard) to get rid of Mr Assad. + +As a juicy carrot, Mr Putin will hold out the promise of a genuinely concerted attack on IS in eastern Syria to bolster the apparently feeble efforts of Mr Obama’s coalition. He may get a deal; he may even be prepared to offer up Mr Assad as well, as long as he is replaced by someone Russia finds acceptable. + +From a wider perspective, Mr Putin’s strategy is paying dividends. His overarching reason for sending bombers to Syria, so soon after annexing Crimea and stirring up a separatist war in east Ukraine, is to force the West to take Russia seriously as a great power. In both cases the Kremlin portrays its action merely as a response to the provocative behaviour of America and its allies. In Mr Putin’s mind the revolution in Kiev in February 2014 was the result of a Western plot to claw Ukraine away from Russia. Similarly, the war in Syria was fomented by the West with the aim of dislodging Mr Assad. It is now getting its comeuppance, he believes. + +The flow of refugees into Europe, increased by Russian air strikes, is another bonus. Mr Putin has for several years been giving material support to populist and nativist parties in Europe that oppose the EU. They have been boosted by the union’s floundering response to the migrant crisis. A weakened EU, Mr Putin calculates, should make it easier to keep the likes of Ukraine, Georgia and Belarus within Russia’s sphere of influence. + +Not least, the Syrian campaign is helping to maintain Mr Putin’s approval ratings at home, which remain steady at more than 80% despite a painful recession in Russia, caused by cheap oil, Western sanctions and Mr Putin’s own misgovernment. Russian television depicts the war as an action blockbuster to cheering viewers. After Russian bombs hit hospitals in Aleppo, it shifted the blame onto America by showing footage of US Air Force A-10s allegedly operating in the skies over the city. America’s weary denial only confirmed its guilt. According to the Levada Centre, a pollster, nearly 60% of Russians support the war in Syria. + +Yet however successful Mr Putin’s strategy appears now, it is fraught with risk. Saudi Arabia, as the leader of a newly formed Islamic coalition, is conducting large-scale exercises, possibly in preparation for a ground campaign against IS. Turkey, to which the Saudis have recently sent planes, could become a partner. If they were to go ahead (and it remains a very big “if”), matters would be unlikely to stop there: regime forces could also come under attack, directly or indirectly. Russia would then either have to insert substantial ground forces of its own or back down, while America might have little option other than to support its allies. + +At best Mr Putin will have to contend with an incomplete triumph. Even with the help of Russia, Iran and Shia mercenaries, Mr Assad can at most retake the populous western end of the country. He will continue to face a large, radicalised insurgency. Mr Putin may find it as difficult to withdraw from Syria as the West has from Afghanistan. Nor will his promise of working with America to defeat IS be honoured unless Sunni Arabs are prepared to take and hold IS’s stronghold in Raqqa and the surrounding area can be taken and held by Sunni Arabs—in other words, those Russia now describes as “terrorists”. Mr Putin and Mr Assad may feel like winners for now. But in Syria “winning” and “victory” are slippery terms. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693280-russian-bombers-have-brought-regime-bashar-al-assad-within-sight/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Counting the dead + +Quantifying carnage + +How many people has Syria’s civil war killed? + +Feb 20th 2016 | From the print edition + + + +THE fog of war frustrates statisticians: knowing for sure how many Syrians have died can seem as difficult as brokering a lasting peace. The last precise death toll published by the UN was 191,369 in August 2014, followed by an estimate of more than 250,000 in August 2015. But it then stopped updating the figure because of dwindling sources of good information. On February 11th the Syrian Centre for Policy Research (SCPR), a non-profit group, claimed that the true figure is now almost double that estimate at about 470,000. + +This number may seem large, but even the UN emphasised that its figures were conservative. It erred on the side of rigour rather than completeness, and only counted people whose names it knew and whose deaths were confirmed by more than one source. + +Extreme conditions have forced more approximate approaches. The SCPR divided Syria into 700 regions, and asked three local experts in each to give detailed information. If one gave an answer more than 10% apart from the others, they were replaced with two different “informants”. Rabie Nasser, an author of the report, says resampling happened in only about 10% of cases. The figure of 470,000, which comes with a 5% margin for error either side, is the sum of the average answers across regions. + +Relying on people to estimate the body count in large areas rent by civil war is bold. All sorts of biases could have crept in, not to mention the risk that the “informants” will have tweaked their figures to suit their own political agenda (though Mr Nasser says his team tried to find independent sources). + +Nonetheless, 470,000 could be close to the true figure. Since mid-2015 Russian bombs have added to the casualties. And whereas the UN figure only included deaths directly caused by fighting, the SCPR figure includes indirect deaths (about 15% of the total). The war has blasted hospitals and ruptured supplies of clean water, allowing disease to spread. Over time, Mr Nasser expects indirect deaths to climb as a proportion of the total. + +No one really knows how many have died in Syria; the 470,000 figure is only one estimate. The UN’s approach is that with such decay in the underlying data, it is better to be cautious than to risk losing credibility. Mr Nasser takes a different line. “If you’re in a conflict where people die, then you don’t give up.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693279-how-many-people-has-syrias-civil-war-killed-quantifying-carnage/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Elections in Iran + +The great candidate cull + +Choose any candidate you like—after the mullahs have excluded reformers + +Feb 20th 2016 | TEHRAN | From the print edition + +THE Islamic Republic of Iran, as its name suggests, has been a curious amalgam of people-power and theocracy from the start. For most of its 37 years clerics have firmly dominated. But as its revolutionaries age and a new generation of leaders courts a warm relationship with the West, the theologians seem to be growing fearful about where the country’s elected politicians are leading it. In the run-up to parliamentary elections, scheduled for February 26th, they have clamped down more harshly than ever on candidates. + +Were the vote a straight test of Hassan Rohani’s popularity, his allies would surely win. The moderate president secured a deal with world powers last month that set aside the long crisis over his country’s nuclear programme. Crushing economic sanctions have been lifted. Iran has gained access to tens of billions of dollars of assets previously frozen overseas. Oil exports have resumed and a $27 billion contract with Airbus for 118 planes, signed when Mr Rohani visited the French president, François Hollande, at the Élysée Palace, has provided a glimpse of the potential riches on offer to a nation long isolated. Yet voters, and their representatives, also have to contend with the ruling clergy. + +The Council of Guardians, a constitutional watchdog of backers of Ayatollah Ali Khamenei, the supreme leader, that vets contenders for their supposed loyalty, disqualified about 60% of the 12,000 people who came forward as parliamentary candidates, about twice the rate of previous elections. Roughly a quarter of those kicked off the list won appeals but, even so, half of those who had wanted to stand for office were prevented from doing so. + +Nor were the Guardians even-handed. Reformists were hit hardest. In the first cut only 30 of about 3,000 were approved, leaving large parts of the country without even a single reformist candidate. “They want an Islamic Re- without the public,” quipped one observer. + +The stacked vote means that Mr Rohani may have to stomach a parliament that will continue to resist his social and political programme. For almost three years he has contended with conservatives who have bridled at his outreach to the West, even impeaching one of his ministers, and have stymied his economic, political and cultural initiatives. + +That said, the popular Mr Rohani is not yet finished. Iran’s naysayers look more rudderless than its reformists. Pragmatic conservatives know that without finance from the West the Islamic republic could collapse. Iran aspires to be a bubbly BRIC economy, but growth was sluggish last year. The government is saddled with debt, and with a crashing oil price and weak production (down from 5.8m bpd in 1978 to 2.8m today), its budget deficit is around 2.2% of GDP and growing. Prominent conservatives, including Ali Larijani, the speaker of parliament, have promised to support some of Mr Rohani’s economic policies. “The parliament should legislate to remove obstacles to raising production and improve the business climate,” Mr Larijani told an economic conference in Qom, the country’s religious centre, on February 14th. A large number of independent candidates might sidle up to Mr Rohani, anxious to secure the funding his government dispenses. “While a pro-Rohani parliament looks in doubt, he should at least hope for one he can work with,” says a veteran Iran hand. + + + +In graphics: The implications and consequences of Iran's nuclear deal + +That may not be enough to satisfy discontented Iranians to the left and the right. Many reformists remain bitter, not just about their electoral exclusion, but also at what they see as Mr Rohani’s failure to keep his promises. During his 2013 election campaign he held up a key, vowing to release political prisoners, including many arrested in protests that followed a disputed election in 2009. Yet they remain behind bars. Initiatives to open sports stadiums to women and execute fewer people have similarly fallen foul of conservatives. After repeated humiliations in parliament Mr Rohani has suspended political and cultural reform to focus on the economy. + +Also at stake in this election is the power to choose who will succeed Mr Khamenei, whose authority exceeds that of the president. On the same day that voters select MPs they will also choose members of the Assembly of Experts. This is a committee of clerics that will elect Mr Khamenei’s successor should he die during its eight-year tenure. Given that the 76-year-old is frequently said to be suffering from prostate cancer, the committee may indeed be called upon to do so. + +Although his succession was once a forbidden topic in Iran’s media, life after Mr Khamenei has been openly discussed in the run-up to the elections. All this has made the Guardians even more guarded than usual: they disqualified almost 80% of potential candidates vying for the 88 seats, including all the women who applied. The rejects included Hassan Khomeini, a reformist cleric who is the grandson of the founder of the revolution, Ayatollah Ruhollah Khomeini. The 43-year-old, who plays football, posts pictures on Instagram and has criticised the Revolutionary Guards for meddling in politics, was deemed unsuitable for the assembly by the conservative Guardians. + +Little effort has yet been made to court ordinary voters. With such a short campaign, there are as yet no billboards or signs of electioneering in Tehran. The only poster so far shows Mr Khamenei casting a ballot, signalling his desire for a strong turnout. Mr Rohani’s hopes rest in a single list called the Alliance of Reformists and Government Supporters. The group’s leader, Mohammad Reza Aref, a university professor whose withdrawal from elections in 2013 paved the way for Mr Rohani’s victory, is its main candidate in Tehran. Yet with so many candidates barred from running, voters may simply stay at home. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693277-choose-any-candidate-you-likeafter-mullahs-have-excluded-reformers-great/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Student protests in South Africa + +Whiteness burning + +Students are throwing “colonial” art on the pyre + +Feb 20th 2016 | JOHANNESBURG | From the print edition + + + +FIRST they came for the statues. Last year students in Cape Town sparked national protests by calling on the University of Cape Town (UCT) to remove a statue of Cecil Rhodes, a Victorian imperialist who, like most Englishmen of his time, held racist views. The statue was removed but students were still angry. Many marched on South Africa’s parliament to complain about high college fees, among other things. That prompted a cash-strapped government not to raise fees after all. + +Protests about statues of dead racists soon spread around the world. Students demanded that Oriel College, Oxford take down its statue of Rhodes. (It refused.) The University of Texas at Austin has moved a bronze of Jefferson Davis, the Confederacy’s president, and will put it in a museum. + +Meanwhile, back in Cape Town, UCT students starting a new academic year after the long summer break were quick to resume protests, this time over gripes such as not having enough spaces in university dormitories. They stormed through the campus grabbing artworks and burning them. Most of the paintings they heaped on a bonfire were portraits of white historical figures. They were, declared one protester, “symbols of the coloniser”. + +Another protester proudly posted pictures of the bonfire on Twitter, showing flames licking at the edges of a plaque commemorating Jan Smuts, a British-educated general who was twice South Africa’s prime minister and helped write the preamble to the UN’s founding charter. The tweet accompanying it proclaimed: “Whiteness is burning”. + +Some of the art-burners might usefully have spent more time in the library studying South African history. Among the works they turned to ashes was a 1993 oil painting by a black anti-apartheid artist, Keresemose Richard Baholo. It was called “Extinguished Torch of Academic Freedom”, one of a series of paintings depicting protests at the university. + +Students defaced a statue of Smuts and a bust of Maria Fuller, one of the first four women to attend the university. She enrolled in 1886, when most courses were open only to men. She went on to play a role in opening a women’s hall of residence. She was, however, white. + +The protests are symptomatic of a resurgence of racial antagonism in South Africa, fanned by frustration over a slowing economy and high unemployment. More than two decades after apartheid ended black South Africans are still worse off than whites. Mostly, this is because they are less well educated, a result of apartheid’s legacy and the government’s failure to fix it. Bad education is a problem that starts long before students reach college. + +Among the protesters’ complaints at UCT was the implausible claim that whites were given preferential access to university accommodation. The protesters erected a corrugated tin shack on UCT’s stately grounds as a symbol of how rough life is in black townships. They added a portable loo and overturned milk crates as chairs. + +Some started a shisa nyama, grilling sausages and chops over charcoal. The flames spread. The small band of students refused to remove the shack, which university officials said was blocking traffic, and went on a rampage. They burned a car, a bus and the office of Max Price, the university’s vice-chancellor. “It is utterly regrettable that a movement that began with such promise and purport to be fighting for social justice matters has now deteriorated into a group that engages in criminality,” Mr Price said. + +Little seems left of the lofty aims that prompted students to take to the streets last October, when they garnered widespread support for their argument that high tuition fees put a university education out of reach for black students from poor families. The shortage of housing at UCT is partly due to the success of those protests: enrolment has increased thanks to lower fees and measures to reduce student debt. Also, some university rooms are still occupied by students whose exams were delayed by last year’s protests. + +Students arrested for damaging property at UCT included several who are not obviously poor, such as the son of the chief executive of Eskom, the state power utility. Other universities have seen violent protests, too, largely over fees and overcrowding. A student leader at Walter Sisulu University told the Daily Sun, a tabloid: “We’re going to destroy everything.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693278-students-are-throwing-colonial-art-pyre-whiteness-burning/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Elections in Uganda + +No jam today + +The president of Uganda looks likely to hold on for another term + +Feb 20th 2016 | KAMPALA | From the print edition + +Mr Besigye, still in the back seat + +UGANDA’S president likes to keep people waiting. In a marquee in the grounds of a swanky hotel in Kampala, about 150 smartly dressed bigwigs were treated to a buffet breakfast. It helped pass the time until 12.30pm, when Yoweri Museveni finally turned up to launch a partly solar-powered electric bus. The Kayoola bus, designed by Kiira Motors, a state-owned firm, trundled around the hotel car park in front of a pack of cameras. Mr Museveni, clad in his trademark bright yellow shirt and wide-brimmed hat, then ambled back to the marquee to listen to tributes. + +The photo opportunity, two days before the country’s presidential election on February 18th, presented a contrast to events a few miles down the road the previous night. There police had fired tear gas and rubber bullets at supporters of Mr Museveni’s main electoral rival, Kizza Besigye (pictured riding pillion). One person was killed and Mr Besigye, who had been briefly detained earlier that day, was taken home before he could address a rally. + +Mr Museveni, who is running for a fifth term after 30 years in power, is facing what observers say is his most competitive election yet (voting was taking place as The Economist went to press). A poll released in January put Mr Museveni at 51% of the vote, exactly what he needs to avoid a run-off. Mr Besigye, the president’s doctor during the bush wars in the 1980s, was on 32%. Amama Mbabazi, a former prime minister who split with Mr Museveni over his succession plans, languished at 12%. + +Polls are unreliable, however, so Mr Museveni is taking no chances. Policemen are not the only ones disrupting opposition rallies: the government has recruited hundreds of thousands of unemployed young men as “crime preventers”. These militias have harassed opposition politicians and supporters, says Human Rights Watch, a watchdog. On February 13th police arrested a radio talk-show host mid-broadcast. He was charged with defacing posters of Mr Museveni. + +Mr Museveni and his National Resistance Movement (NRM) also have far more money to hand. The 27 billion Ugandan shillings ($7.9m) splurged on his campaign in November and December accounted for 91.6% of spending by all candidates in those months. The Alliance for Campaign Finance Monitoring, the local lobby group that collected the data, says the NRM has bribed voters with hoes, saucepans, seeds, sugar and salt. Meanwhile, Uganda’s press made much of people giving Mr Besigye cash, fruit and even cows, suggesting widespread support for his fourth campaign. + +Change was the watchword among the opposition leader’s blue-clad supporters on the last day of official campaigning, as his convoy inched through cheering crowds in eastern Kampala. More than one unemployed young man said he both expected Mr Besigye to win and would take to the streets to “fight” if the 71-year-old Mr Museveni triumphed. + +The Electoral Commission is widely viewed as subservient to Mr Museveni, along with the police, army and judiciary. It didn’t help matters by banning mobile phones from polling booths (limiting voters’ ability to document irregularities). Mr Besigye has urged his supporters to cast their votes before midday on Thursday and stay until voting closes to make sure “nobody steals your victory”. If, as is likely, Mr Museveni triumphs outright in the first round, his rivals’ supporters will probably take to the streets. + +If that were to happen, a heavy-handed response is likely. The police and army have not shown themselves gun-shy in dealing with protests in the past. Nor should Mr Museveni expect much criticism from Western governments, which have little leverage—Western aid has been suspended or cut in recent years after a corruption scandal and outrage over the treatment of Ugandan homosexuals. + +In any case Mr Museveni has new friends. He spoke admiringly of the Chinese and Soviet models of state-led development as he launched the costly state-funded Kayoola bus—which reportedly broke down shortly afterwards. A spokeswoman denied the report, saying the bus was towed away to avoid a traffic jam. Meanwhile, Uganda continues to putter along in the slow lane. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693266-president-uganda-looks-likely-hold-another-term-no-jam-today/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Anti-austerity politics: Fudging the revolution + +French politics: Comeback skid + +Russia’s lawless economy: Night of the long scoops + +Europe’s civil courts: The wheels of justice grind slow + +Charlemagne: A graveyard of ambition + + + + + +Articles Sections Next + +Anti-austerity politics + +Fudging the revolution + +Italy and Portugal are leading a revolt against EU austerity, sort of + +Feb 20th 2016 | LISBON, ROME AND MADRID | From the print edition + + + +AUGUSTO SANTOS SILVA, the foreign minister of Portugal’s three-month-old Socialist government, is a mild-mannered sociologist, not a firebrand. But this month he found himself swept up in the defiant anti-austerity mood that has been spreading across southern Europe. Portugal had just been chastised by the European Commission for submitting a budget that missed the 3% of GDP deficit limit the euro zone imposes on its members (the commission projected it would hit 3.4%). + +In an interview on Portuguese television, Mr Santos Silva struck back against northern Europe’s austerity preachers: “There are no professor-states or student-states in the EU.” In turn Angela Merkel, Germany’s chancellor, warned Portugal to maintain “solid finances”. + +Portugal and the commission quickly compromised on a new budget with an extra €1 billion in tax increases and spending cuts. But the tussle showed that Europe’s war over austerity economics is back. Portugal’s prime minister, António Costa, was elected on a pledge to “turn the page on austerity”, and his government is backed by big-spending far-left parties. Meanwhile Italy’s prime minister, Matteo Renzi, has been challenging Brussels budget hawks at every opportunity. In Spain, where coalition talks have been deadlocked since elections in December, the Socialists are considering a Portuguese-style alliance with the populists of Podemos. + +In Greece the radical Syriza party remains in power, though its anti-austerity fire has dimmed. Even in Britain, the leader of the opposition, a leftist called Jeremy Corbyn, sees Mr Costa paving the way for a multinational “anti-austerity coalition”. The Portuguese leader’s supporters say he is the harbinger of an EU-wide shift. + +This turn is not one that anyone would have predicted a year ago. Under its previous centre-right government, Portugal was the prize pupil of the EU’s austerians. During the euro crisis, in exchange for a €78 billion ($87 billion) bail-out, the government slashed public-sector wages and benefits, raised taxes and liberalised the labour market. A sharp recession was followed by a modest recovery for the past two years. + + + +But after an inconclusive election in October, Mr Costa struck a deal with the radical Left Bloc and the Portuguese Communist Party to back a minority Socialist government. In return he promised to undo cuts to pensions and public-sector wages. That irked Brussels. On February 2nd the commission said the budget risked violating euro-zone rules. It was anxious to discourage other euro-zone members from seeking flexibility, too. + +If any country were to lead such a charge, it would be Italy. Mr Renzi’s 2016 budget forecasts a deficit of 2.4% of GDP, but that is too high for the commission. Italy’s public debt is an immense 130% of GDP; countries with debt over 60% of GDP are supposed to aim for surpluses. Yet Mr Renzi sees tight budgets as a drag on Italy’s economy, which grew just 0.1% in the last quarter of 2015. Mr Renzi says he is fed up. “Europe cannot just be a grey technical debate about constraints, but must again be a great dream,” he declared in January. + +Mr Renzi now faces an added danger from proposals floated in Germany. These would impose stiffer obligations on banks in the euro zone and shift to government bond holders part of the cost of any future bail-out. Critics fear that implementing the proposals could spark another debt crisis that would engulf the countries on the EU’s southern flank. Italy’s banks are already burdened with around €350 billion of non-performing loans. + +All of this encourages Mr Renzi’s vision of leading a southern European anti-austerity rebellion. In a post on his website on February 1st, he said Italy’s job was “to lead Europe, not to take orders in some palace in Brussels.” But Italy’s tremendous national debt leaves it little credibility to demand the freedom to spend more and tax less. And apart from Mr Renzi’s vague calls for a “more socially oriented Europe”, his alternative to the current EU remains frustratingly unclear. + + + +Portugal’s anti-austerity protests, too, may be more bark than bite. After the government announced its higher-deficit budget, its ten-year bond yields spiked scarily, from under 3% to 4.5%. Under pressure from the commission and markets, it backed off; besides the €1 billion in tax rises and spending cuts, it added further “Plan B” cuts in case of need. Pierre Moscovici, the commission’s economics chief, said Portugal had been persuaded that EU budget rules “must be complied with”. Mr Costa said the deal showed that governments can be fiscally responsible and still “follow their vision”. + +Yet the facts undercut both Mr Costa’s claim to have turned back the clock on austerity and the EU’s pretence of fiscal discipline. Several promised tax cuts have been scrapped. Without those boosts to domestic consumption, Portugal has cut its 2016 growth estimate from 2.1% to 1.8%. In 2015 Portugal promised the commission to cut its underlying structural deficit by 0.6 percentage points; the new budget realises only half that. Euro-zone finance ministers declared that the budget targets meant Portugal was not “in particularly serious non-compliance” with EU rules. The commission maintains that it has held the line on deficits, and Portugal claims to be the vanguard of an anti-austerity revolution. In fact, Europe is functioning as it always has: through compromises and fudge. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21693250-italy-and-portugal-are-leading-revolt-against-eu-austerity-sort-fudging-revolution/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +French politics + +Comeback skid + +Nicolas Sarkozy’s campaign for president hits a finance scandal + +Feb 20th 2016 | PARIS | From the print edition + + + +FRENCH politicians are better at avoiding retirement than avoiding the courtroom, or so it sometimes seems. The race is now on for the centre-right nomination in the country’s presidential elections next year. The front-runners are a 61-year-old former president, Nicolas Sarkozy, who first won elected office in 1977, and a 70-year-old who served as prime minister two decades ago, Alain Juppé. Mr Juppé was once convicted of political corruption and banned from public office for a year. Now it is Mr Sarkozy’s turn to be hauled before the judges. + +On February 16th Mr Sarkozy was formally placed under investigation for breaching campaign-finance limits during his failed 2012 re-election bid. These fix the maximum a candidate can spend at €22.5m ($25.1m). Investigators are looking into whether Mr Sarkozy was aware that a system of false invoices charged to the party were in fact used for his own campaign. (He denies any knowledge of the subterfuge.) Over a dozen party officials have already been placed under investigation in connection with the affair, including Jérôme Lavrilleux, Mr Sarkozy’s deputy campaign director, who first acknowledged the false invoices. + +Mr Sarkozy’s new brush with the law is plainly a set-back. He is already under formal investigation in a separate job-for-favours inquiry. An investigative judge must have good reason to believe that a suspect has breached the law before placing him under formal investigation. An inquiry can then take months, if not years, before a decision is taken as to whether the suspect is sent for trial. Yet investigative judges often enough pursue cases that end up being shelved. Mr Sarkozy, for instance, was put under formal investigation in 2013 for allegedly taking advantage of an elderly donor in connection with another campaign-finance case, linked to his successful bid for the presidency in 2007. The case against him was later dropped. + +French voters are mindful of this, even to the point of sympathy for those ensnared by the law. Mr Juppé, who was convicted in connection with a fake-jobs scandal under Jacques Chirac at the Paris town hall in the early 1990s, is a good example. A decade ago, after a year spent teaching in Canada while he was struck off the electoral register, he returned triumphantly to politics and served as Mr Sarkozy’s foreign minister. Voters have warmed to the patrician leader, whom they once regarded as unforgivably stiff and technocratic. In 2014 Mr Juppé was re-elected mayor of Bordeaux with an ample majority. + +Indeed, Mr Juppé is now favoured in the presidential primary which the Republicans, the centre-right opposition party, will hold in November. Among those who say they are certain to vote, he leads Mr Sarkozy by 44% to 32%, according to Ipsos, a pollster. Mr Juppé, who has moderate views on immigration and nationality, appeals more to the centre, and to those fatigued by the frenetic former president. Yet the pugnacious Mr Sarkozy, whose recent book about his mistakes in office shot to the top of the bestseller list, retains star appeal and support from the hard-core party faithful. Among Republican voters, he leads Mr Juppé by 42% to 37%. + +In short, the more people turn out to vote at the primary, which is open to anybody who professes to share centre-right “values”, the greater the chance that Mr Juppé will win. The contest promises to be tough and crowded, with a scattering of outsiders now piling in. Mr Sarkozy’s fresh legal troubles will reinforce pre-existing negative views of him, says Federico Vacas, an analyst at Ipsos. But, he adds, “it would be a mistake to think that these will prompt his candidacy to collapse.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21693259-nicolas-sarkozys-campaign-president-hits-finance-scandal-comeback-skid/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Russia’s lawless economy + +Night of the long scoops + +Smashing the little capitalists in Russia’s capital + +Feb 20th 2016 | MOSCOW | From the print edition + +I think they’re closed + +MUSCOVITES awoke last week to scenes of destruction. Shops and cafés lay in ruins. The perpetrators were not terrorists, but the city government, which dispatched excavators to destroy nearly 100 buildings that allegedly posed a danger to the public. For shopkeepers like Stanislav, who had manned a flower shop near a metro station in central Moscow, the demolition came as a shock: “Our owners called at lunch and said, ‘Gather your things, they’re coming tonight’.” Locals dubbed it the “Night of the Long Scoops”. A city government gazette, perhaps not spotting the Hitler reference, used the phrase in a headline. + +Moscow’s mayor, Sergei Sobyanin, wants to cleanse the city of street vendors. “One cannot hide behind property papers,” he says. He claims that the businesses had obtained their title documents illegally. The owners deny that; many had successfully appealed to Moscow’s courts to recognise their leases as legitimate. The city had even allowed them to hook up to utility grids. “For 25 years, nothing, then suddenly this,” says Marzhana Gadzhieva, a saleswoman at a bakery slated for demolition later this month. Delovaya Rossiya, a business lobby, estimates the damages at around 22 billion roubles ($290m). + + + +A timeline of Vladimir Putin’s unshakeable popularity + +Private merchants first cropped up in the 1990s on the plazas around metro stations and in Moscow’s ubiquitous underground passageways. Over the years, their makeshift kiosks evolved into more formal pavilions. The shops were ugly but convenient, offering everything from shawarma to mobile phones, often late into the night. Mr Sobyanin, who took office in 2010, quickly cleared out the informal street vendors; last December, the city council ordered a list of formalised pavilion owners to shut down, too. But few expected the demolition crews that arrived late on February 8th. Some shopkeepers hung up portraits of Vladimir Putin, Russia’s president, hoping his image would keep the excavators at bay. + +Critics of the mayor, such as Alexei Navalny, an opposition leader, suggest the authorities wanted to clear space for bigger businesses that can pay fatter bribes. But they also sent a message to stubborn landowners: any challenge to the government can be crushed. Property rights can be “declared ‘a piece of paper’,” writes Andrei Kolesnikov of the Moscow Carnegie Centre—hardly a good incentive to invest in an economy already struggling with sanctions and low oil prices. + +Only last month Mr Putin told a business forum that small and medium-sized enterprises should be “the real foundation for our country’s economic development.” On paper, Russia’s business climate has improved recently. But when paper rights meet steel scoopers, the paper tends to tear. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21693253-smashing-little-capitalists-russias-capital-night-long-scoops/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Europe’s civil courts + +The wheels of justice grind slow + +Especially in southern Europe. This is not exceedingly fine + +Feb 20th 2016 | From the print edition + + + +ALBERTO MUNNO, a judge in the southern Italian city of Taranto, believes he is being oppressed by his country’s justice system. He has a rather good case. “I produce 160 verdicts per year—and the European Convention on Human Rights bans slavery,” he complains. With a backlog of over 500 cases, the overworked judge recently postponed a civil hearing by three years. The owner of the firm involved, who filed a claim for €200,000 ($220,000) in 2014, will now have to wait until 2019 to have his case heard. It takes on average 1,210 days for Italy’s judges to resolve a typical commercial dispute. + +Though notorious for their lethargy, Italy’s courts are not Europe’s worst offenders. Slovenia’s take even longer. Cyprus’s can take over three years, more than thrice the wait in Germany and France. Italy’s government has at least accepted that it has a problem. Matteo Renzi, the country’s energetic prime minister, has made judicial reform a priority. + +The European Commission is anxious to speed up Europe’s courts. During the depths of the euro crisis, it introduced rules intended to harmonise the euro area’s economies. Those included a chapter on justice. Greece’s creditors even made changing the country’s court procedures a precondition of its most recent bail-out. Dealing with cases quickly is, of course, not the only measure of a good legal system. (If it were, Russia’s courts would outperform England’s; and Islamic State’s death-penalty jurisprudence would be a model for the world.) Nonetheless, the commission is right to worry. Long delays make it harder to do business; Italy estimates that legal sloth shrinks its GDP by 1%. Delays also damage the single market. + +Litigation in Europe often crosses borders. In the absence of a system of federal European courts, the judges from one member state must take the lead. The thicket of rules that decide which state will take a particular case are known as the Brussels regulation. For many years, this system held that the first court to receive a lawsuit should decide whether to hear it. That gave rise to a range of manoeuvres devised by clever lawyers. One, the so-called “Italian torpedo”, involves a plaintiff filing a claim in Italy in a bid to delay proceedings. (A manufacturer might file a frivolous patent infringement claim to fend off a real one.) Even deciding to pass the case to another country could take several years. The regulations were reformed last year, and courts are now supposed to respect contracts that specify which country has jurisdiction. But where the choice is ambiguous, the torpedo may still be armed. + +Several things slow down European civil justice, says Giuliana Palumbo, a researcher at Italy’s national bank and the author of a paper on the subject. First, procedure matters. Slow jurisdictions, like Italy, let lawyers adduce new evidence whenever they want, allowing them to prolong a case with new submissions. Quicker ones, like France, give judges the power to impose strict deadlines. Second, how judges get promoted is important. Some countries ignore judges’ managerial prowess when deciding whom to promote. That gives ambitious younger judges no incentive to clear their dockets. A third factor is how lawyers are paid. Some countries limit the hourly fee they can charge for a given service. That can make stretching out a case the only way to earn more. Most jurisdictions have some of these problems. Italy has all three, Ms Palumbo sighs. + +Some remedies are both obvious and cheap. Binning the fax machines and shifting to the internet can speed up cases. Estonia lets plaintiffs file a claim, submit evidence and even appeal a court decision online. Judges and clerks should also think like managers, Ms Palumbo says. Promoting judges based on their case-management skills, and getting them involved in budgeting, can help to focus their minds. + +Lawyers are also to blame, though. One problem is that southern Europe simply has too many of them. Greece and Italy have almost 400 lawyers per 100,000 residents. (That is about the same outlandish ratio that prevails in notoriously litigious America.) France makes do with only 85. Jean-Paul Jean, a French judge who chairs the Council of Europe’s justice committee, notes that there is a “strange overlap” between the countries where trials take a long time and those with lots of lawyers. (Luxembourg is a notable exception.) Numerous, eloquent and organised, they form a powerful lobby in most southern European countries. + +That makes reform difficult. Greek lawyers showed their political muscle last month, going on strike to protest against cuts to their pensions. Since Greek courts already take more than four years to enforce a contract, the striking lawyers’ clients may not notice the difference. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21693252-especially-southern-europe-not-exceedingly-fine-wheels-justice-grind-slow/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +A graveyard of ambition + +Turkey is where European foreign policy went to die + +Feb 20th 2016 | From the print edition + + + +ONE of Turkey’s more forlorn sights is tucked down an Ankara side street inside the EU affairs ministry. At the top of a small staircase lurks a poster depicting a sprawling tree, its lower branches bereft and leafless but its top half a lush burst of greenery. A caption explains the symbolism: “Let’s bring a dynamic industry, young workforce and unique cultural diversity to freshen and revive the European Union. By welcoming Turkey.” + +This relic speaks of a happier time, when Turkey was confident enough in its bid for EU membership to present itself as a tonic to a tired continent. Travel around the country today, as Charlemagne did last week on a trip organised by the European Council on Foreign Relations, a think-tank, and you encounter a different mood. For many Turks opposed to the ruling Justice and Development (AK) party, the EU’s name means betrayal. + +In Istanbul liberals lament that Europe turns a blind eye to the authoritarian habits of Recep Tayyip Erdogan, a president with a penchant for beating up journalists and tampering with the judiciary. Refugees in Gaziantep, near Syria, do not understand why Germany worries more about the migrants reaching rich Europe than the hundreds of thousands of Syrians facing death at the hands of Bashar al-Assad and his Russian enablers. Kurds in the south-east say that Angela Merkel, Germany’s chancellor, ignores the plight of towns like Cizre, besieged by Turkish troops. + +Little wonder they feel let down. Turkey’s south-east is a simmering cauldron of violence. Since last summer Turkish forces and young rebels affiliated with the Kurdistan Workers’ Party (PKK) have been locked in a spiral of violence that has left hundreds of civilians dead. Cities are in lockdown; in Diyarbakir the air is thick with tear gas and the crump of artillery. Locals warn of further escalation in the spring, when battle-hardened fighters of the PKK leave their winter redoubts in northern Iraq. + +Elsewhere Mr Erdogan continues his authoritarian march. Beset by allegations of corruption in AK and opposed by former allies, he is single-mindedly pursuing a constitutional change that would extend the powers of his presidency. Terrified journalists censor themselves before government goons do it for them. Public contracts reward friends; foes are fined for supposed tax violations. Turkey’s political and ethnic cleavages grow ever wider. + +Meanwhile the region is aflame. The fighting around Aleppo (see article), over the Syrian border, has created a fresh stream of refugees. Desperate to stop Syrian Kurds from expanding their territory along the border, Turkey has begun shelling their positions. Russia’s escalation, and its alliance of convenience with the Kurds, has weakened Turkey’s hand. Mr Erdogan’s war of words with Vladimir Putin is dangerously heated. Meanwhile America, a NATO ally, rejects Turkish demands that it disown the Syrian Kurds, who are useful in fighting Islamic State (IS). A car bomb which killed at least 28 people in Ankara on February 17th showed that the violence is spreading to Turkey’s heartland. + +It is easy to see why Europe’s refugee problem might not be at the top of Turkey’s in-tray. Europeans optimistically say that Turkey’s troubles present them with an opening, for Mr Erdogan needs friends. But that misreads the view from Ankara. In Syria Mr Erdogan wants to smash the Kurds and hold the line against Mr Assad; at home he seeks to consolidate his rule and squeeze the opposition. The EU is not able to help him achieve these goals. And so, while leaders like Mrs Merkel (rightly) praise Turkey for welcoming 2.5m Syrians onto its soil and express sympathy for its strategic predicament, Mr Erdogan responds with insults and threatens to bus millions of refugees to Greece and Bulgaria. + +The Europeans will have to accept such tough talk in their bid to secure Turkish help to reduce the migrant flow. The EU’s promise of visa-free travel for Turks in exchange for a cut in the number of migrants, agreed on late last year, is a genuine prize for the Turks (“Visiting Germany is harder than buying land in heaven,” says one). But Europe is in a rush, and Mr Erdogan is not. Hence Mrs Merkel’s endless meetings with Turkish officials. Hence the EU’s willingness to overlook Mr Erdogan’s excesses. And hence the sense of betrayal among his domestic antagonists. “We need pressure from outside,” says Firat Anli, the co-mayor of Diyarbakir. “Otherwise we see where the state’s reflexes lead.” + +An insincere invitation + +In this telling, the Europeans might be able to blunt Mr Erdogan’s sharper edges if only they were brave enough to shed their hypocrisies. Certainly the EU was once a force in Turkish politics. In the early years of AK rule it was a useful anchor for Mr Erdogan’s economic and legal reforms, and an ally in his battle against Turkey’s old secular elite and their friends in the army. + +Yet the EU lost its clout years ago. Soon after membership talks began in 2005, Turkey fell victim to the sharp tongue of Nicolas Sarkozy, a former (and possible future) French president who once dismissed Turkey as part of “Asia Minor”, and the veto-wielding Cypriot government, which was let into the EU before solving its own Turkish problem. When Turkish citizens realised that accession was going nowhere, they lost interest. And once Mr Erdogan had got what he wanted from the process, he discarded it and moved on. Pro-EU Turks were left adrift. + +They have not lost hope. Support for membership is climbing as Mr Erdogan tightens his grip, and at least Turkey and Europe are talking again. Turkey’s local troubles have left it more dependent on EU markets and investment. Even the stand-off on Cyprus may be near a solution. Had Europe pledged a decade ago to allow Turkey’s application to go forward, and convinced Ankara (and itself) that membership was a realistic prospect, it might not find itself so helpless today. Last year’s deal may have been grubby and it may turn out to be pointless, but by the time it was signed, the EU had nothing left to lose. It is hard to think of a stronger indictment of Europe’s foreign policy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21693243-turkey-where-european-foreign-policy-went-die-graveyard-ambition/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Wales: Full steam ahead? + +Hotels v Airbnb: Build them and they will come + +The newspaper business: Papers without paper + +University housing: Flat out + +An energy find: Oil be damned + +Premier League football: Golden tickets + +Cornwall’s economy: Winter sun + +Bagehot: A tale of two cities + +Bagehot: Internship + + + + + +Articles Sections Next + +Wales + +Full steam ahead? + +An early trailblazer of devolution is setting a rather sedate pace + +Feb 20th 2016 | EBBW VALE | From the print edition + + + +IT IS nearly 20 years since Wales was granted its own National Assembly, a historic devolution of power from London that the then British prime minister, Tony Blair, later said had given “a lead to the rest of the UK—and to Europe”. Since that reform, triggered by a referendum in 1997, further rounds of devolution have given Welsh politicians control over policy areas including housing, health and education. Yet today in Ebbw Vale, a former steel town in the country’s deep south, few locals seem enthusiastic about their national government. “It’s a waste of money and a waste of time,” says Wayne Grist, a butcher, who is among the more diplomatic of the government’s critics. + +Undeterred, the Conservative government plans to devolve more powers from Westminster to the Welsh capital, Cardiff. It is part of a promised “devolution revolution” in which English cities will get more powers over transport, planning and, in some cases, health care, and Scotland will, from next year, get the right to set some taxes and welfare payments (the result of panicky promises made by English politicians ahead of a referendum on Scottish independence in 2014, which at the time looked too close to call). + +In Wales the latest proposed round of devolution has proved no more enticing than previous ones. Its unpopularity hints at why devolution there has, so far, not been a huge success—and how other places could encounter similar problems. + +Independence has never set Welsh hearts beating as it does Scots’. Only half the electorate voted in the referendum of 1997; the measure to create a National Assembly passed by a margin of just 0.3% of the vote. Another referendum in 2011, to give the Assembly more powers, was passed with a turnout of 35%. + + + +The latest proposals, which were put before the Assembly in October and must later be passed by Parliament, would change from a “conferred powers” model, where the areas in which the Assembly can legislate are laid out, to a “reserve powers” model, where the areas in which the Assembly cannot legislate are listed, as in Scotland. That would mean Welsh ministers getting control of a few more policy areas, including transport (regulating ports, setting road speed-limits, licensing taxis and so on) and marine licensing. The bill would formally declare the Assembly to be permanent. And it would create a “funding floor” for Wales, at 115% of comparable spending per head in England, its richer neighbour. + +It has been roundly criticised by Welsh politicians, many of whom suspect the new settlement could end up being more restrictive than the current one. The “reserve powers” list is longer and more complex than Scotland’s, and details over tax devolution and the funding floor are vague. Carwyn Jones, the Labour first minister of Wales, has warned that it could create an “English veto” by requiring the Assembly to get permission from Westminster to pass certain laws that until now it has been able to pass freely (the British government disputes this). + +Although the bill has fired up Welsh politicians, few ordinary people are interested. A poll by ICM in 2015 found that only 40% thought the Assembly should have more powers, down from 49% the previous year (at the time of the Scottish referendum). Fully 13% thought the Assembly should be scrapped and Wales governed from Westminster. Partly this reflects the piecemeal approach of Welsh devolution, which could put off even the most diehard constitutional nationalist. “It has been a string of pretty comprehensive failures in terms of constitution-building,” says Richard Wyn Jones of Cardiff University. + +But is also reflects the fact that many of the policy areas under Welsh control have fared rather badly. Health care is one. A report from the Nuffield Trust, a research group, found that in 2012-13 patients in Wales waited about 170 days for a hip or knee replacement, compared with 70 days in England and Scotland. One reason is that spending on health was not protected, as it had been in England. Indeed, it fell in real (inflation-adjusted) terms by 4.3% between 2009-10 and 2012-13. Wales has also done less than England to increase competition between health providers. People in Ebbw Vale complain of a “postcode lottery”; some cross the border to England in order to get a better service. + +Education is similarly mediocre. Welsh schools’ poor results are partly explained by the country’s relative poverty, but not entirely: looking only at those children who qualify for free school meals (a measure of poverty), 26% of those in Wales get five good GCSE qualifications at age 16, compared with 38% in England. Some believe that Wales’s opting out of the “academies” programme, under which most English schools have been made independent of local authorities, has held them back. And although many hoped that subsidising university for all would encourage more youngsters to apply, that does not seem to have happened: Welsh entry rates this year were 32%, compared with 37% in England, where rich students pay steep fees in order to subsidise the poor ones. + +Part of the problem is a lack of political competition. Apart from a brief surge of support for the nationalist Plaid Cymru in 1997 and some Conservative backing in better-off areas, Wales overwhelmingly votes Labour. The party holds half the Assembly’s 60 seats (and would hold more, were it not for the Assembly’s proportional voting system). Polls suggest it may lose a few seats in elections in May, but there is no danger of it failing to come top. + +The resulting governments have distanced themselves from English Labour and the Tories alike, without coming up with many innovations of their own. “They say you could put a donkey up here [for Labour] and it would get elected,” says a retired schoolteacher in Ebbw Vale. + +This presents a paradox for the “devolution revolution”. Often the areas keenest to take on new powers are those with entrenched, well organised local politicians—and often this means they are dominated by one-party politics. Many of the English cities preparing to take on new powers, for instance, are as solidly Labour as Wales is. Some are itching to experiment and innovate. But, as Wales shows, devolution can also be used to keep things standing still. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693231-early-trailblazer-devolution-setting-rather-sedate-pace-full-steam-ahead/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Hotels v Airbnb + +Build them and they will come + +Why the room-booking app has had so little impact in the capital + +Feb 20th 2016 | From the print edition + +There isn’t an app for that + +A VISIT to the London Trocadero was once the highlight of many a tourist trip to Britain. Opened in 1896 just off Piccadilly Circus, it was one of the largest and grandest restaurants in the world. After a long decline it closed in 1965 and was gutted, before its formerly palatial interior was filled with tacky video arcades and tourist shops selling cut-price knick-knacks. Yet soon the Trocadero will be on the London tourist-map once again: surrounded in construction hoardings, a 583-room hotel is under development behind the grand frontage. + +It is a symbol of the hotel boom currently under way in the capital. The number of hotel rooms has risen from 129,000 in 2013 to 149,000 today, according to PwC, a consultancy. There is still no sign of overcapacity. Last year occupancy rates reached their highest in a decade and average prices were higher than ever. + +The hotels’ resilience is surprising, given the onslaught from sharing-economy websites and apps that allow people to rent out their spare rooms to travellers. According to researchers at Boston University, Airbnb, the biggest such service, has forced down hotel revenues in some American cities by as much as 10%. + +By comparison, the impact of room-booking apps has been muted in London, says Marie Hickey of Savills, an estate agent. Only 0.5% of Londoners advertise their properties on Airbnb, compared with 2.4% of Parisians. One reason is that there is a shortage of reasonably priced residential stock near London’s main tourist attractions, which are hemmed in by offices and mansions. And according to a recent report by Citi, a bank, the growth of Airbnb listings in London and other big European cities is already slowing, meaning that Londoners’ spare rooms are unlikely to be able to soak up much more demand. + +Hotels have also benefited from a change in the type of visitor coming to Britain. Whereas the strong pound has persuaded many tourists to divert to cheaper destinations (€1 now buys about 15% fewer Princess Diana postcards than it did five years ago), business travellers cannot avoid London so easily. So while tourist spending stagnated in 2015, businessfolk splashed out 7% more in Britain than the previous year, according to the Global Business Travel Association, an industry body, which forecasts further growth of 6% this year. + +Unlike budget-conscious holidaymakers, who are willing to book a room in a stranger’s home on Airbnb to save a few pounds, most businesspeople are travelling on expense accounts and happy to splash out. Meanwhile their employers, citing a duty to ensure safety, remain wary of booking spare rooms, which they fear conceal slippery stairs, dodgy electrics and other hazards. This suits hoteliers nicely. + +But not all of them. Business travellers may not yet be switching to Airbnb, but they are trimming their costs. More than half the new rooms built in London this year will be operated by two- or three-star budget brands. Even the once-glitzy Trocadero cannot escape that trend. Having made its name a century ago selling nine-course meals to the aspiring upper classes, in 2017 it will re-open—but as an Ibis budget pod hotel. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693232-why-room-booking-app-has-had-so-little-impact-capital-build-them-and-they-will-come/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The newspaper business + +Papers without paper + +The loss-making Independent ditches ink, banking on pixels + +Feb 20th 2016 | From the print edition + +Independent’s day: the founding fathers + +IN ITS heyday the Independent, Britain’s youngest national newspaper, was a scrappy place to do journalism—a startup before there were startups. Young reporters worked long hours, drank hard and engaged occasionally in physical tussles that, as one alumnus puts it, were somehow not at all “career-limiting” (unless one counts moving on to The Economist, as did several, including one of the Independent’s founders). At its peak in 1989, three years after its founding, it had a daily circulation of more than 420,000 and turned a healthy profit. + +Those days are gone. A price-war started by Rupert Murdoch’s Times in the early 1990s claimed many of the Independent’s readers; lately the internet has tempted more away. On March 26th the last print edition of the newspaper will roll off the presses, its circulation down to a loyal rump of 55,000. Its Sunday sister’s last run will be on March 20th. More than half the titles’ roughly 200 journalists will lose their jobs as the Independent becomes a digital-only publication. + +The most profitable bit of the company, the i, a millennial-oriented cheapsheet spun off from the Independent in 2010, is to be sold to the Johnston Press, a regional publisher, for £24m ($35m). Fifty or so Independent hacks are expected to move with it. The i’s success, establishing a circulation of more than 200,000, had put the Independent closer to breaking even. But its owners, a Russian KGB-man turned banker, Alexander Lebedev, and his son, Evgeny, came to see paid-for, general-interest daily print titles as a losing proposition. In the long run, such newspapers are “toast”, says Amol Rajan, the Independent’s editor. + +The data support that grim view. The total circulation of British newspapers has fallen by 36% since 2009, and their share of the national advertising market has dropped even more sharply, from 25% in 2009 to less than 10% last year, according to Jim Chisholm, a media consultant. Since 2005 the country has lost more than 200 local newspapers. + + + +The survivors are banking on the web. The online editions of the Daily Mail and the Guardian are among the world’s most popular English-language news sites. But digital ad revenues have yet to make up the steep declines in print-ad sales. The Guardian’s owner said in January that it expected to post a loss of £53m in the year to March 31st; it is aiming to cut costs by 20% in order to break even within three years. The Guardian and other titles are trying to increase revenue from innovations like dating sites, events and sponsored content. + +The Times is trying another tactic. It maintains one of the strictest online paywalls in journalism, and has managed to stabilise its daily paid circulation at more than 400,000. As a result it is a virtual nonentity online, a seemingly precarious position (Mr Murdoch’s tabloid, the Sun, dropped its paywall in November). + +A few prestigious and specialist dailies, such as the Financial Times, can get away with charging online readers, most often via a “metered” paywall that allows a few free clicks. (The Economist does this too.) By contrast, general-interest news sites struggle to extract money from their readers, who can easily find free news elsewhere, notably from the licence-fee funded BBC. + +Mr Rajan believes a lean, advertising-supported model can work. He will stay on as editor-at-large of the Independent’s digital operation, with a staff of 75. The Independent is a startup once more. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693254-loss-making-independent-ditches-ink-banking-pixels-papers-without-paper/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +University housing + +Flat out + +Digs are getting less squalid, but some students are being priced out + +Feb 20th 2016 | From the print edition + + + +STUDENT accommodation has changed beyond recognition in the past decade. As the number of people in higher education has risen, private providers of purpose-built digs have stepped in to make up the shortfall in housing, tempting students away from crumbling halls of residence by offering en-suite bathrooms, fast Wi-Fi and modern decor. But the new flats are not cheap and, as universities raise rents in their old halls, too, poor students, especially in London, are being squeezed. + +A little over one in four students lives in purpose-built halls of residence. In 2006, 82% of them were in halls owned and run by a university or college, according to Unipol, a non-profit provider of student housing. Now, following a rise in the number of fancier private halls, the figure is 59%. + +Partly because they tend to have a longer letting year—that is, they charge students rent during the holidays as well as during term time—private halls are a pricey option. They charge about 40% more than university-run halls, which means, on average, an extra £2,200 ($3,100) a year. As with anything to do with housing, London is in a class of its own: average weekly rent in halls in the capital was £220 last year, over 50% more than the average rent in halls outside the capital, according to GVA, a consultancy. + +Landlords report that students are pickier than they used to be. The tripling in 2012 of the maximum tuition fees for undergraduates to £9,000 a year has contributed to rising expectations among students of both their courses and their living conditions, believes Martin Blakey of Unipol. “The rite of passage of living in a dump is over,” he says. Nonetheless, many balk at the prices on offer. On average, private halls have increased their rents by one-fifth since 2012. For one-quarter of students, the new rite of passage is spending the university years living with mum and dad. + +That option is not available to overseas scholars, whose numbers have risen by one-third in the past decade. They are a big part of the market for private halls: in London, more than half the students living in halls owned by Unite, the largest private provider, are foreign. + +Even those halls run by universities are getting more expensive. Many have increased their rents to pay for modernisation in order to keep up with the private sector. This has provoked rent strikes in some places. Students at University College London, who are withholding rent, say it has risen by 56% since 2009 (UCL puts the figure at 40%). The university says it ploughs rent into upkeep of the buildings. + +Meanwhile, investors continue to pile in to private student housing. It was once part of an asset class called “alternatives”, which includes hotels and health care. But investment in private halls jumped from around £1.5 billion in 2014 to at least £4.5 billion last year—more even than in the far bigger (though more mature) American student-housing market. “It’s not ‘alternative’ any longer: it’s core,” says Philip Hillman of JLL, a property adviser. + +The growth may slow, especially if student numbers start to plateau. Last year a cap on the number of students able to attend British universities was lifted, with the government expecting an extra 60,000 students a year. But in September only 20,000 more enrolled, and applications for next year have hardly risen at all. + +Nonetheless Nick Hillman of the Higher Education Policy Institute in Oxford thinks the market for new student digs will continue to grow. “There is no developed country where demand for higher education has fallen,” he says. “In Britain, even tripling the tuition fees didn’t dent it.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693257-digs-are-getting-less-squalid-some-students-are-being-priced-out-flat-out/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +An energy find + +Oil be damned + +Claims of black gold under southern England may hold some water + +Feb 20th 2016 | From the print edition + + + +PROSPECTORS used to taste the stuff to determine its quality, and the oil tapped on February 16th in the Surrey countryside sounded delicious: light, sweet and less than 1% water. UK Oil & Gas (UKOG), the firm operating the exploratory well at Horse Hill, just north of Gatwick airport, says its first two tankers-worth are already being refined and will be in petrol stations within a fortnight. + +The company announced that it had struck oil a year ago, to some scepticism. But its test this week extracted nearly 500 barrels of good-quality crude from a depth of 900m (3,000 feet) in the Lower Kimmeridge limestone zone. The oil flowed to the surface under its own pressure, known in the parlance as a gusher. This is good news for UKOG, as it ought to mean fewer costly, dirty mechanical interventions and no need for unpopular “fracking” (which is legal in Britain only below 1,000m anyway). That, of course, is unlikely to shift the dogged environmental campaigners camped out at the site, who would rather the oil stayed in the ground. + +Still, it is one thing to know oil is there and quite another to extract it profitably. As only part of a reserve is usually recovered (the permeability of rock precluding extraction of the rest), prospectors need to be sure there is enough to make the effort pay. And the oil price has been tumbling: Brent crude now trades at just over $30 a barrel, perilously close to the $18-25 range that UKOG says is needed to break even in Britain’s onshore industry. + +UKOG is encouraged by analyses by Nutech and Schlumberger, a pair of energy-research firms, that suggest Horse Hill could contain between 9 billion and 11 billion barrels of oil. With the right investment the Weald Basin, the surrounding area to which the company has access, could produce 10-15% of Britain’s daily oil demand in a decade or so, says Stephen Sanderson, UKOG’s boss. + +That is a somewhat lower estimate than the company gave last year, and others are more cautious still. “So far, it’s not so much the Gatwick gusher—more the Dorking dribbler,” says Richard Selley, a geologist at Imperial College London. It is notoriously difficult to predict when the natural fractures through which oil flows will close, he warns. Tests lasting many months are required. Mr Sanderson complains that getting permission to drill takes two years in Britain, compared with two months in Texas. + +Still, oilmen point to the Wytch Farm field on Dorset’s Jurassic coast as an example of environmentally responsible and profitable extraction. Sited in protected countryside and surrounded by woodland, it is barely known to locals. UKOG hopes that its sites across the Weald Basin will be similarly invisible—and profitable. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693249-claims-black-gold-under-southern-england-may-hold-some-water-oil-be-damned/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Premier League football + +Golden tickets + +Is the “people’s sport” too expensive? + +Feb 20th 2016 | From the print edition + + + +FANS of Liverpool Football Club are a loyal bunch. So it caused a stir when around one-quarter of the 44,000 people in Anfield stadium on February 6th left with 15 minutes of the game to go, in protest against high ticket prices. (Liverpool promptly lost their two-goal lead.) Many have since spoken out in support of the exodus. “Football is not an elite sport for VIPs like polo or even golf. Football is the people’s sport,” said Slaven Bilic, manager of West Ham United, a London club. + +The protest scored its goal: Liverpool abandoned a plan to charge £77 ($110) for its most expensive tickets. It also spooked others. Sunderland said it would cut season-ticket prices; the Football Association reduced prices for the final rounds of the knockout FA Cup. Supporters’ clubs will gather on February 19th to decide whether to organise wider protests. + + + +Daily Chart: The world's richest football clubs + +Ticket pricing is tricky for clubs. Supporters say a multi-billion-pound television deal coming next season should allow clubs to cut prices. But growing television revenues have inflated players’ wages and transfer costs. And with strong demand for tickets—last season 96% of Premier League seats were sold, a higher percentage than in any other big football league—there is little reason to make them cheaper. Clubs have something of a monopoly, says Michael Brunskill of the Football Supporters’ Federation: “I’m not going to go and support someone else just because my team decides to put their prices up.” + +Given this, some fans get a rather good deal. Season-ticket prices at Manchester United have been frozen for the past five seasons, and those at several other clubs have risen slower than inflation. Some other sports’ tickets are much dearer: American-football fans, for instance, frequently pay over $100, a price very few Premier League sides ask. “Dynamic” pricing, which rises and falls with demand, has been resisted so far by clubs in England. + +Why don’t they charge fans more? A noisy home crowd confers an advantage (last season clubs were 50% more likely to win at home than away), which a more genteel clientele might reduce. In 2013 falling away-attendances prompted seven clubs to introduce perks for travelling fans, including drink tokens and even subsidised tickets. Leaving in the 77th minute won Liverpool fans some concessions. Not turning up in the first place would have more impact still. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693255-peoples-sport-too-expensive-golden-tickets/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cornwall’s economy + +Winter sun + +The tourists’ summer favourite is finding new ways to survive the winter + +Feb 20th 2016 | ST IVES | From the print edition + +Doing swell + +ALMOST all economies are influenced by the seasons. Britain’s GDP tends to grow faster in the final quarter of the year than in the first, as people splurge on Christmas shopping and hit end-of-year deadlines. But Cornwall’s economy is notoriously up and down. After its mining industry was exhausted—the last tin mine closed in 1998—the south-western county came to rely more on its beaches, which pull in more overnight tourists than anywhere in Britain outside the capital and its surroundings. But this emphasis on tourism had a cost: as bellboys and barmaids lost their jobs in the bleak midwinter, unemployment would soar (see chart). Few parts of Britain were so afflicted by seasonal worklessness. + + + +Recently, though, things have been looking up. In the three months to December, when few would dare attempt a British beach holiday, the unemployment rate in Cornwall was about 4%, below the national figure of 5.1%. More surprising, it is barely higher than it was in the summer. Unemployment among 18- to 24-year-olds, the group most likely to work in tourism, is lower than it was six months ago. As seasonal unemployment has become less acute, so annual earnings have risen. Though it is still one of Britain’s poorest areas, in 2003-13 Cornwall’s disposable income per person was the fifth-fastest-growing in the country. + +What explains the turnaround? St Ives, a picturesque coastal town popular with artists, is hardly bustling on a rainy Thursday in February, but locals insist that winters are nowhere near as dead as they used to be. The arrival of a branch of the Tate art gallery in 1993 has drawn tourists in the winter; an extension will open in May. Padstow, a fishing village that has become a seafood Mecca with the help of a TV chef, attracted more than 50,000 visitors to a food festival in December. The Eden Project, a cluster of giant tropical domes which opened in 2001, keeps visitors warm in winter; nearly 1m come each year. + +In recent years the difference between summer and winter spending in Cornwall by British tourists seems to have narrowed, and more foreigners are braving the cold months: in the first quarter of 2015 spending by overseas visitors in the south-west was 15% higher than two years before. People do still lose work in the winter, says Ron Tulley, a local councillor; but with the proliferation of part-time and temporary work in recent years, many Cornish now hold two or three jobs in the summer. Those people may simply work less in the winter months, rather than not at all. + +Another factor in ironing out the seasonal imbalance is demography. Lots of people retire to Cornwall: 22% of its population is over 65, compared with 16% across the country. Britain’s oldies are a well-heeled bunch (after subtracting housing costs, their incomes are higher than those of working folk), and in Cornwall their spending has boosted the economy. Together with rich out-of-towners looking for second homes, they have pumped up the property market, which has generated about one-fifth of the increase in the county’s gross value added (a measure of economic activity) since 2003. + +The council has allowed builders to respond to the demand. It approves a higher proportion of planning applications than the average planning authority, helping Cornwall’s housing stock to grow by about 5% since 2008, a rate above the national average. In the summer a converted tin plant was put on the market for £700,000 ($1m). The council does not just cater to rich folk, though: besides a couple of London boroughs, in the past four years nowhere has put up more “affordable” housing, defined as those sold or let below market rates. + +Cornwall is still one of the poorest parts of the country, and so it benefits from largesse from Brussels. In 2000-13 the European Union ploughed £750m into the county. The money went towards things like improving internet connections and transport. Some industries seem to have benefited from these upgrades: the pharmaceuticals business, for instance, has been on a spurt. Still, an official report found that £200,000 of investment was required to create a single additional job in “research and development”, hardly a good return. + +Cornwall’s half-million residents are thinly scattered: the biggest town, St Austell, has 35,000 souls, scarcely enough to fill a football stadium. This makes it hard for the county to develop a hub of economic activity. Mobile-phone reception is often poor and there are no motorways. And although the high-rolling pensioners help to boost spending, an exodus of youngsters makes it hard for firms to hire new talent. All this means that Cornwall will struggle to develop a sophisticated economy. But for a place long seen as good only for bucket-and-spade holidays, the past few years have been pretty good. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693262-tourists-summer-favourite-finding-new-ways-survive-winter-winter-sun/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +A tale of two cities + +Britain’s great European divide is really about education and class + +Feb 20th 2016 | From the print edition + + + +BEING a Eurosceptic in a university city is a lonely business. In the drizzle outside the Cambridge Union a student in a roll-neck is trying to hand anti-EU leaflets to the cliques hurrying past. Most ignore him. One, having taken a folded piece of card, glances at it and sighs “nah”, shoving it back into the campaigner’s hand. Inside, in the neo-Gothic chamber, pro-EU luminaries ply their arguments to cheers. When Richard Tice, an anti-EU campaigner, delivers his speech students bob up and down, machine-gunning him rebarbative questions. Did regulation not exist before Britain joined the union? Why do so many firms support membership? If Britain doesn’t control its borders why do foreign students struggle to get visas? When Mr Tice quotes “the highly respected economist, Tim Congdon” (a notorious Eurosceptic) the chamber resounds to laughter and sarcastic applause. + +This attitude is not limited to Cambridge’s student population. A recent debate among residents produced an even more overwhelming pro-EU vote: about 300 to six, reports Julian Huppert, a former local MP. The city’s exceptionalism is borne out by a ranking, produced by Chris Hanretty and other political scientists using polling and demographic data, of parliamentary seats in England, Scotland and Wales by their level of Euroscepticism. Cambridge came 619th of 632 with an estimated Out vote of merely 27%. Compare that with Peterborough, a similarly sized city at the other end of Cambridgeshire. At a public debate there locals voted decisively in favour of Brexit. “I asked rhetorically what the audience would put at risk to leave the EU,” recalls Mr Huppert. “They shouted back: ‘Everything’.” Sure enough, it came 49th on the ranking, with a projected 62% voting Out. + +Which is curious and especially relevant today (as The Economist went to press David Cameron was in Brussels, hoping to finalise his EU renegotiation ahead of an in-out referendum). Cambridge and Peterborough are in the same part of the country. Both are about an hour by train from cosmopolitan London, are growing fast, have younger-than-average populations and mostly white-collar workforces. Both benefit from EU funds. And according to the census in 2011 they have a near-identical share of residents born in other EU countries—around one in ten. Yet one is a bastion of Europhilia, the other of Euroscepticism. + +The walk outwards from both cities’ centres adumbrates the difference. In Cambridge the route cuts through Victorian terraces housing academics, floor-to-ceiling bookshelves glimpsed through bay windows. It skirts the city’s airport, where a near-daily flight from Gothenburg ferries in AstraZeneca executives. And it ends in a belt of commercial labs and high-tech business parks. In Peterborough, the stroll takes in new middle-class suburbs serving the city’s booming retail and logistics industries, streets where betting shops, pubs and hair salons mingle with Polish delis and supermarkets and finally vegetable fields (often worked by eastern European migrants) stretching out into the flat, big-skied fenland. Thus just as Cambridge bears the hallmarks of an economy in which one in two has gone to university, Peterborough is visibly a city of school-leavers. + +When it comes to the EU, this difference is everything. Education levels are “an extremely strong predictor” of an individual’s views on the subject, stresses Robert Ford, an expert on public opinion: the more qualifications someone has, the more pro-European he or she is likely to be. According to polls by YouGov, those educated only to 16 oppose EU membership by 57% to 43%, but among graduates it is 38% to 62%. When education is controlled for, other factors affecting an individual’s views on Europe—like income, choice of newspaper and even age—diminish. + +What is it about those five years of study between 16 and 21? The answer has two parts. First, the self-interested one. “Having a degree is increasingly a prerequisite of getting on in life,” observes Mr Ford, adding: “Both sides are aware that there is a drawbridge called university and that those who don’t get across it are disadvantaged.” In other words, the mighty churn of global economic integration, of which the EU is both cause and symptom, disproportionately benefits the well educated and can leave those in unskilled jobs feeling left behind. + +The second, cultural driver mostly concerns immigration. Whereas many in Cambridge see incomers as highly educated Germans and Swedes bringing their expertise to research projects, startups and product-development meetings, in Peterborough they are Lithuanian potato-pickers who, if not competing with locals for unskilled work, are at least nipping at their heels. Anyone who expresses “intense concern” about immigration is 15 times more likely to back Brexit, notes Matthew Goodwin, a political scientist. This spills into questions of identity. People without higher education are more likely to call themselves English than British; the former label—much stronger in Peterborough than Cambridge—functions as a badge of perceived exclusion. + +Two-nation Britain + +In the long term, this bodes well for pro-Europeans. University attendance has exploded, which suggests that Britain will become more internationalist and comfortable with EU co-operation. Yet in the meantime it seems the country will be increasingly polarised: liberal, Cambridge-like places on the one side; nationalist, Peterborough-like ones on the other and an ever-shrinking middle ground between the two, as the population bifurcates into those whose skills make them globally competitive and those who must compete with robots and the mass workforces of the emerging economies. Democracy—especially in a system as centralised and majoritarian as that of Britain—assumes some common premises and experiences, a foundation that thanks to the great educational-cultural divide is now at risk. Eventually Britain will look more like Cambridge than it does today. But until then decades of division and mutual alienation await. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693223-britains-great-european-divide-really-about-education-and-class-tale-two-cities/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Internship + +Feb 20th 2016 | From the print edition + +The Britain section is looking for an intern to work for several months in The Economist’s London offices this summer. Applicants should send a CV and an original article of 600-700 words, suitable for publication in the section. A salary of £2,000 per month will be paid. Applications must reach us by March 20th at britainintern@economist.com + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693217-internship/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Financial transparency: The biggest loophole of all + +Tax evasion in Panama: The problem child + + + + + +Articles Sections Next + +Financial transparency + +The biggest loophole of all + + + +Having launched and led the battle against offshore tax evasion, America is now part of the problem + +Feb 20th 2016 | From the print edition + + + +DEVIN NUNES raised eyebrows in 2013 when, as chairman of a congressional working group on tax, he urged reforms that would make America “the largest tax haven in human history”. Though he was thinking of America’s competitiveness rather than turning his country into a haven for dirty money, the words were surprising: America is better known for walloping tax-dodgers than welcoming them. Its assault on Swiss banks that aided tax evasion, launched in 2007, sparked a global revolution in financial transparency. Next year dozens of governments will start to exchange information on their banks’ clients automatically, rather than only when asked to. The tax-shy are being chased to the world’s farthest corners. + +And yet something odd is happening: Mr Nunes’s wish may be coming true. America seems not to feel bound by the global rules being crafted as a result of its own war on tax-dodging. It is also failing to tackle the anonymous shell companies often used to hide money. The Tax Justice Network, a lobby group, calls the United States one of the world’s top three “secrecy jurisdictions”, behind Switzerland and Hong Kong. All this adds up to “another example of how the US has elevated exceptionalism to a constitutional principle,” says Richard Hay of Stikeman Elliott, a law firm. “Europe has been outfoxed.” + +The Foreign Account Tax Compliance Act (FATCA), passed in 2010, is the main shackle that America puts on other countries. It requires financial institutions abroad to report details of their American clients’ accounts or face punishing withholding taxes on American-sourced payments. America’s central role in global finance means most comply. + +FATCA has spawned the Common Reporting Standard (CRS), a transparency initiative overseen by the OECD club of 34 countries that is emerging as a standard for the exchange of data for tax purposes. So far 96 countries, including Switzerland, once favoured by rich taxophobes, have signed up and will soon start swapping information. The OECD is also leading efforts to force multinationals to reveal more about where and how profits are made, and the deals they cut with individual governments, in order to curb aggressive tax-planning. + +Because it has signed a host of bilateral data-sharing deals, America sees no need to join the CRS. But its reciprocation is patchy. It passes on names and interest earned, but not account balances; it does not look through the corporate structures that own many bank accounts to reveal the true “beneficial” owner; and data are only shared with countries that meet a host of privacy and technical standards. That excludes many non-European countries. + +All this leads some to brand America a hypocrite. But a fairer diagnosis would be that it has a split personality. The Treasury wants more data-swapping and corporate transparency, and has made several proposals to bring America up to the level of the CRS. But most need congressional approval, and politicians are in no rush to enact them. Some suspect that their reluctance, ostensibly due to concerns about red tape, has more to do with giving America’s financial centres an edge. + +Meanwhile business lobbyists and states with lots of registered firms, led by Delaware, have long stymied proposed federal legislation that would require more openness in corporate ownership. (Incorporation is a state matter, not a federal one.) America will often investigate a shell company if asked to by a foreign government that suspects wrongdoing. But incorporation agents do not have to collect ownership information. This is in contrast to Britain, which will soon have a public register of companies’ beneficial owners. + +America the booty-full + +No one knows how much undeclared money is stashed offshore. Estimates range from a couple of trillion dollars to $30 trillion. What is clear is that America’s share is growing. Already the largest location for managing foreign wealth, it has picked up business as regulators have increased information-exchange and scrutiny of banks and trust companies in Europe and the Caribbean. Money is said to be flowing in from the Bahamas and Bermuda, as well as from Switzerland. + +A recent investigation by Bloomberg, a news provider, found several wealth managers whose American arms have benefited, including Rothschild, a British firm, and Trident Trust, a provider of offshore services. New business has been booked through subsidiaries in states with strong secrecy laws and weak oversight, such as South Dakota and Nevada. Another investigation, by Die Zeit, a German newspaper, concluded that for the tax cheat looking to pull money out of Switzerland, America was now the safest bet. “It’s going nuts. Everyone is doing it or looking into it,” says a tax consultant, speaking of the American loophole. Some transfers are being requested for legitimate reasons of confidentiality—for instance, by Venezuelans who fear extortion or kidnap if their wealth is known. But much is of dubious legality. + +America is much safer for legally earned wealth that is evading taxes than for lucre that was filthy from the start. It has shown little appetite for helping enforce foreign tax laws and, unlike some other countries, does not count the banking of undeclared money as money-laundering. “Foreigners looking to evade tax in America are usually safe because of its secrecy,” says Jason Sharman of Griffith University in Australia. “But for those with dirtier money there is a small though real risk the US will investigate and apply the full force of the law, which is a scary prospect.” + +Dividing the spoils + +Foreign banks losing business to America can sometimes share in the profits, explains one tax consultant. A Swiss bank, say—generally a smaller one, as big ones are too scared—tells its client to close an account and open one with an American custodian bank. The client then appoints the Swiss bank as investment manager on the custodian account, and that bank instructs the custodian which funds to buy, often the Swiss bank’s own products. The Swiss bank earns fees for advice and fund-management; the custodian picks up business; and the account is deemed for regulatory purposes to be American, meaning it avoids the disclosure rules that apply only to countries signed up to the CRS. + +Only a few other financial centres have declined to commit themselves to the CRS, among them Bahrain and Nauru. Hong Kong has signed but will implement it one tax-treaty partner at a time rather than using a multilateral shortcut; some regard this as a delaying tactic. Undeclared Asian and Middle Eastern money is moving to Taiwan and Lebanon, respectively, both of which are outside the club. Panama, which vies with Miami for Latin American money, looks set to back out of its tentative commitment to the CRS, using America’s double standards as an excuse (see article). + + + +Frustration with America has grown in Europe, which forms the core of the CRS. A group in the European Parliament argues that, if America refuses to reciprocate fully, it should be hit with a reverse FATCA: a levy on payments originating in the EU that flow through American banks. “We don’t want a tax war, but nor can the US have it all its own way,” says Molly Scott Cato, one of the MEPs. One obstacle is that tax measures must be approved unanimously by the EU’s 28 member states. + +Others point out that the CRS itself has flaws. It was drafted in a rush, and one expert thinks it would fail to catch 80% of tax-dodging. Financial firms have been calling to report loopholes that could benefit less scrupulous rivals, most of which will be closed before it comes into force or soon after, promises the OECD. (Keeping banks’ compliance costs within reasonable limits means that some will inevitably remain.) + +America deserves great credit for taking on Switzerland and other long-standing tax havens. And a Treasury official insists that stashing undeclared loot there will not remain possible for long: “This is something that will be fixed.” Until it is, America will be the biggest tax loophole of all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21693219-having-launched-and-led-battle-against-offshore-tax-evasion-america-now-part/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Tax evasion in Panama + +The problem child + +A tax haven professes to stand on principle, risking pariah status + +Feb 20th 2016 | From the print edition + +PANAMA’S most notorious moment as a haven for tainted cash came with the nationalisation of money-laundering in the 1980s under Manuel Noriega, a military strongman. It has since clamped down on egregious financial criminality, but remains home to thousands of secretive firms and famous for the discretion of its bankers and lawyers. The Central American microstate is the financial and incorporation centre of choice for many Latin Americans and Europeans—and, critics say, many financial ne’er-do-wells. + +It is also holding out against global tax-transparency plans known as the Common Reporting Standard (CRS) being championed by the OECD club of rich nations. It says it will develop its own standard, which will probably mean less information, exchanged with fewer countries. Small financial centres, it huffs, are being bullied into accepting competitiveness-sapping rules shunned by some bigger countries, in particular America. “We’ll move at the same speed as the slowest,” says one of its leading lawyers. “Otherwise our financial centre faces a death sentence.” + +Some suspect a delaying tactic rather than a principled stand. The many conditions Panama has set for joining in the automatic exchange of tax information were crafted to ensure it never will, they say. But it has, to its credit, made some important reforms. A new law requires bankers, lawyers and professionals in 30 other industries to know the names of client firms’ real owners and to pass them to law enforcement on request. It hopes this will help get it removed from a list of countries with poor safeguards against money-laundering, compiled by more scrupulous governments. + +That will depend partly on how strictly the law is enforced. And there are other concerns, such as Panama’s fondness for anonymous bearer-share companies, widely regarded by other countries as a favourite vehicle of criminals. They must now be registered with a custodian. But the listed owner can be another firm. + +And Panama’s biggest law firms are giant offshore-company incorporation factories. Many wield power of attorney to conceal ownership. Some market their services to financial firms serving Latin American clients, “guaranteeing” that the country will not sign agreements to exchange information with their home countries, such as Argentina and Mexico. + +According to a Brazilian prosecutor, there is evidence that Mossack Fonseca, one of Panama’s largest law firms, laundered money for some of those implicated in a vast bribery scandal centred on Petrobras, Brazil’s state-controlled oil giant. The law firm, one of whose senior partners, Ramon Fonseca Mora, is a “minister counsellor” in Panama’s government, says it always does the required due diligence on clients. It says it has been a victim of a smear campaign by political opponents and is “certain that our name will be cleared very soon”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21693221-tax-haven-professes-stand-principle-risking-pariah-status-problem-child/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Mobile telecoms: Wireless: the next generation + +Mining: Core ores + +Apple’s encryption battle: Tim Cook, privacy martyr? + +Breakfast cereals: Soggy sales + +Bombardier: Plane truths + +Greek businesses: An actual Grexit + +Schumpeter: The measure of a man + + + + + +Articles Sections Next + +Mobile telecoms + +Wireless: the next generation + +A new wave of mobile technology is on its way, and will bring drastic change + +Feb 20th 2016 | NEW YORK | From the print edition + + + +THE future is already arriving, it is just a question of knowing where to look. On Changshou Road in Shanghai, eagle eyes may spot an odd rectangular object on top of an office block: it is a collection of 128 miniature antennae. Pedestrians in Manhattan can catch a glimpse of apparatus that looks like a video camera on a stand, but jerks around and has a strange, hornlike protrusion where the lens should be. It blasts a narrow beam of radio waves at buildings so they can bounce their way to the receiver. The campus of the University of Surrey in Guildford, England, is dotted with 44 antennae, which form virtual wireless cells that follow a device around. + +These antennae are vanguards of a new generation of wireless technologies. Although the previous batch, collectively called “fourth generation”, or 4G, is still being rolled out in many countries, the telecoms industry has already started working on the next, 5G. On February 12th AT&T, America’s second-largest mobile operator, said it would begin testing whether prototype 5G circuitry works indoors, following similar news in September from Verizon, the number one. South Korea wants to have a 5G network up and running when it hosts the Winter Olympics in 2018; Japan wants the same for the summer games in 2020. When the industry holds its annual jamboree, Mobile World Congress, in Barcelona this month, 5G will top the agenda. + +Mobile telecoms have come a long way since Martin Cooper of Motorola (pictured), inventor of the DynaTAC, the first commercially available handset, demonstrated it in 1973. In the early 2000s, when 3G technology made web-browsing feasible on mobiles, operators splashed out more than $100 billion on radio-spectrum licences, only to find that the technology most had agreed to use was harder to implement than expected. + +The advent of 5G is likely to bring another splurge of investment, just as orders for 4G equipment are peaking. The goal is to be able to offer users no less than the “perception of infinite capacity”, says Rahim Tafazolli, director of the 5G Innovation Centre at the University of Surrey. Rare will be the device that is not wirelessly connected, from self-driving cars and drones to the sensors, industrial machines and household appliances that together constitute the “internet of things” (IoT). + +It is easy to dismiss all this as “a lot of hype”, in the words of Kester Mann of CCS Insight, a research firm. When it comes to 5G, much is still up in the air: not only which band of radio spectrum and which wireless technologies will be used, but what standards makers of network gear and handsets will have to comply with. Telecoms firms have reached consensus only on a set of rough “requirements”. The most important are connection speeds of up to 10 gigabits per second and response times (“latency”) of below 1 millisecond (see chart). + + + +Yet the momentum is real. South Korea and Japan are front-runners in wired broadband, and Olympic games are an opportunity to show the world that they intend also to stay ahead in wireless, even if that may mean having to upgrade their 5G networks to comply with a global standard once it is agreed. AT&T and Verizon both invested early in 4G, and would like to lead again with 5G. The market for network equipment has peaked, as recent results from Ericsson and Nokia show, so the makers also need a new generation of products and new groups of customers. + +On the demand side, too, pressure is mounting for better wireless infrastructure. The rapid growth in data traffic will continue for the foreseeable future, says Sundeep Rangan of NYU Wireless, a department of New York University. According to one estimate, networks need to be ready for a 1,000-fold increase in data volumes in the first half of the 2020s. And the radio spectrum used by 4G, which mostly sits below 3 gigahertz, is running out, and thus getting more expensive. An auction in America last year raked in $45 billion. + +But the path to a 5G wireless paradise will not be smooth. It is not only the usual telecoms suspects who will want a say in this mother of all networks. Media companies will want priority to be given to generous bandwidth, so they can stream films with ever higher resolution. Most IoT firms will not need much bandwidth, but will want their sensors to run on one set of batteries for years—so they will want the 5G standard to put a premium on low power consumption. Online-gaming firms will worry about latency: players will complain if it is too high. + +The most important set of new actors, however, are information-technology firms. The likes of Apple, IBM and Samsung have a big interest not only in selling more smartphones and other mobile devices, but also in IoT, which is tipped to generate the next big wave of revenues for them and other companies. Google, which already operates high-speed fibre-optic networks in several American cities and may be tempted to build a wireless one, has shown an interest in 5G. In 2014 it bought Alpental Technologies, a startup which was developing a cheap, high-speed communications service using extremely high radio frequencies, known as “millimetre wave” (mmWave), the spectrum bands above 3 gigahertz where most of 5G is expected to live. + +To satisfy all these actors will not be easy, predicts Ulf Ewaldsson, Ericsson’s chief technology officer. Questions over spectrum may be the easiest to solve, in part because the World Radiocommunication Conference, established by international treaty, will settle them. Its last gathering, in November, failed to agree on the frequencies for 5G, but it is expected to do so when it next meets in 2019. It is likely to carve out space in the mmWave bands. Tests such as the one in Manhattan mentioned above, which are conducted by researchers from NYU Wireless, have shown that such bands can be used for 5G: although they are blocked even by thin obstacles, they can be made to bounce around them. + +For the first time there will not be competing sets of technical rules, as was the case with 4G, when LTE, now the standard, was initially threatened by WiMax, which was bankrolled by Intel, a chipmaker. Nobody seems willing to play Intel’s role this time around. That said, 5G will be facing a strong competitor, especially indoors: smartphone users are increasingly using Wi-Fi connections for calls and texts as well as data. That means they have ever less need for a mobile connection, no matter how blazingly fast it may be. + +Evolution or revolution? + +Technology divides the industry in another way, says Stéphane Téral of IHS, a market-research firm. One camp, he says, wants 5G “to take an evolutionary path, use everything they have and make it better.” It includes many existing makers of wireless-network gear and some operators, which want to protect their existing investments and take one step at a time. On February 11th, for instance, Qualcomm, a chip-design firm, introduced the world’s first 4G chip set that allows for data-transmission speeds of up to 1 gigabit per second. It does the trick by using a technique called “carrier aggregation”, which means it can combine up to ten wireless data streams of 100 megabits per second. + +The other camp, explains Mr Téral, favours a revolutionary approach: to jump straight to cutting-edge technology. This could mean, for instance, leaving behind the conventional cellular structure of mobile networks, in which a single antenna communicates with all the devices within its cell. Instead, one set of small antennae would send out concentrated radio beams to scan for devices, then a second set would take over as each device comes within reach. It could also mean analysing usage data to predict what kind of connectivity a wireless subscriber will need next and adapt the network accordingly—a technique that the 5G Innovation Centre at the University of Surrey wants to develop. + +One of the most outspoken representatives of the revolutionary camp is China Mobile. For Chih-Lin I, its chief scientist, wireless networks, as currently designed, are no longer sustainable. Antennae are using ever more energy to push each extra megabit through the air. Her firm’s position, she says, is based on necessity: as the world’s biggest carrier, with 1.1m 4G base stations and 825m subscribers (more than all the European operators put together), problems with the current network architecture are exacerbated by the firm’s scale. Sceptics suspect there may be an “industrial agenda” at work, that favours Chinese equipment-makers and lowers the patent royalties these have to pay. The more different 5G is from 4G, the higher the chances that China can make its own intellectual property part of the standard. + + + +Whatever the motivation, Ms I’s vision of how 5G networks will ultimately be designed is widely shared. They will not only be “super fast”, she says, but “green and soft”, meaning much less energy-hungry and entirely controlled by software. As with computer systems before them, much of a network’s specialised hardware, such as the processor units that sit alongside each cell tower, will become “virtualised”—that is, it will be replaced with software, making it far easier to reconfigure. Wireless networks will become a bit like computing in the online “cloud”, and in some senses will merge with it, using the same off-the-shelf hardware. + +Discussions have already begun about how 5G would change the industry’s structure. One question is whether wireless access will become even more of a commodity, says Chetan Sharma, a telecoms consultant. According to his estimates, operators’ share of total industry revenues has already fallen below 50% in America, with the rest going to mobile services such as Facebook’s smartphone apps, which make money through ads. + +The switch to 5G could help the operators reverse that decline by allowing them to do such things as market their own video content. But it is easier to imagine their decline accelerating, turning them into low-margin “dumb pipes”. If so, a further consolidation of an already highly concentrated industry may be inevitable: some countries may be left with just one provider of wireless infrastructure, just as they often have only one provider of water. + +If the recent history of IT after the rise of cloud computing is any guide—with the likes of Dell, HP and IBM struggling to keep up—network-equipment makers will also get squeezed. Ericsson and Nokia already make nearly half of their sales by managing networks on behalf of operators. But 5G may finally bring about what has been long talked of, says Bengt Nordstrom of Northstream, another consulting firm: the convergence of the makers of computers and telecoms equipment, as standardisation and low margins force them together. Last year Ericsson formed partnerships first with HP and then with Cisco. Full mergers could follow at some point. + +Big, ugly mobile-phone masts will also become harder to spot. Antennae will be more numerous, for sure, but will shrink. Besides the rectangular array that China Mobile is testing in Shanghai, it is also experimenting with smaller, subtler “tiles” that can be combined and, say, embedded into the lettering on the side of a building. In this sense, but few others, the future of mobile telecoms will be invisible. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693197-new-wave-mobile-technology-its-way-and-will-bring-drastic-change-wireless-next/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Mining + +Core ores + +The metals crunch is forcing miners to reconsider the merits of diversification + +Feb 20th 2016 | From the print edition + + + +AT THE pinnacle of the mining industry sit two Anglo-Australian companies, BHP Billiton and Rio Tinto, which are to iron ore what Saudi Arabia is to oil: the ones who call the shots. Their mines in Pilbara, Western Australia, are vast cash cows; with all-in costs below $30 a tonne, they still generate substantial profits even though prices have slumped from $192 a tonne in 2011 to about $44. They have increased iron-ore production despite slowing demand from China, driving higher-cost producers to the wall—an echo of the Saudis’ strategy in the oil market. + +But whereas Rio Tinto has doubled down on iron ore, BHP also invested in oil and gas—in which it has nothing like the same heft—at the height of the shale boom. Their differing strategies are a good test of the merits of diversification. + +The China-led commodities supercycle encouraged mission creep. Many companies looked for more ways to play the China boom, and rising prices of all raw materials gave them an excuse to cling on to even those projects that were high-cost and low-quality. Now the industry is plagued with debts and oversupply. + +On February 16th Anglo American, a South African firm that was once the dominant force in mining, said it would sell $3 billion of assets to help pay down debt, eventually exiting the coal and iron-ore businesses that it had spent a fortune developing. That would leave it with a core business of just copper, diamonds and platinum. The day before, Freeport-McMoRan, the world’s largest listed copper producer, was forced to sell a $1 billion stake in an Arizonan copper mine to Sumitomo of Japan, to help cut debts racked up when it expanded into oil and gas. With Carl Icahn, an American activist investor, agitating for a shake-up, analysts say its energy assets could follow—if there are any buyers. + + + +When BHP reports half-yearly results on February 23rd its misadventure in American oil and gas will be of particular concern because it has put the world’s biggest mining firm in the shadow of Rio for the first time. Since BHP merged with Billiton in 2001, its share price has outperformed Rio’s (see chart); it made an unsuccessful bid to merge with its rival in 2007. Yet in the past year its shares have done worse. Analysts expect that next week it will cut its annual dividend for the first time since 2001, thereby breaking a promise to raise the dividend year by year. Though Rio ended a similar “progressive dividend” policy this month, it did not cut the 2015 payout. + +BHP’s dividend yield began to soar relative to Rio’s in late 2014 so a payout cut should not be a surprise. But shareholders, especially those in income funds that depend on mining-industry returns, will be kicking themselves. They could have diversified their own portfolios, putting more money into oil majors like Exxon Mobil, whose payout is considered more secure, rather than have BHP expose itself to oil and gas on their behalf. + +Paul Gait of Sanford C. Bernstein, a research firm, says that because of BHP’s weak position in oil, it is suffering from the same cost pressures that it is inflicting on its competitors in iron ore. He calls it “nemesis to their hubris. They are in oil what they are attempting to destroy in iron ore.” + +BHP argues that its strategy enhanced shareholder returns during the good times, and that no one expected oil and metals prices to collapse with such synchronicity. It says its business mix is no stranger than that of an oil company like Exxon Mobil, which is into the refining and marketing of oil products as well as the exploration and production of crude. Its underperformance against Rio has also been the result of a mining accident in Brazil in November. Rating agencies worry that a big fine could put further strain on its balance-sheet. “We just have to be patient. Cycles are an inherent part of the business,” an executive says. + +BHP’s long-held belief is that by strengthening its oil and copper businesses it enjoys a longer cycle than if it were more exposed to iron ore and coal. In China, for example, demand for steel, and thus for iron ore and coking coal, has been central to the country’s building boom. But as it grows richer, it will need more copper for electric cables, and petrol for its growing fleet of cars. + +Such arguments were more compelling when Chinese growth seemed unstoppable. But Konrad von Szczepanski of the Boston Consulting Group says the downward leg of the supercycle has eroded the case for diversification, pushing firms to reconsider strategies last used in the 1990s: focusing on single commodities in which they have the cheapest, best-quality ores. + +Whatever they do, mining companies will now be required to demonstrate that the assets they have are high quality and capable of generating cash even in hard times. The trouble is that as they attempt to focus, as Anglo American is doing, there is no guarantee they will be able to sell their non-core assets for a high price. Acquirers, as one analyst puts it, only want the family silver, not the dross. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693212-metals-crunch-forcing-miners-reconsider-merits-diversification-core-ores/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Apple’s encryption battle + +Tim Cook, privacy martyr? + +The firm’s boss may have to choose between his principles and his liberty + +Feb 20th 2016 | SAN FRANCISCO | From the print edition + +Protector of passwords + +MARTIN LUTHER pinned his treatise to a church door. Tim Cook posted his on Apple’s website. On February 16th Mr Cook published a harsh critique of the government, which has clashed with his firm repeatedly over providing information on suspected criminals—most recently in the case of Syed Rizwan Farook, who, with his wife, murdered 14 people at a holiday party in San Bernardino last year. This week a federal court sided with the FBI, which had requested Apple’s help in accessing the contents of Mr Farook’s iPhone, and ordered the tech firm to comply. Mr Cook says the “chilling” situation represents “overreach by the US government” that calls for a “public discussion”. + +A debate started immediately, with Donald Trump, the Republican presidential front-runner, asking why Apple should consider itself above the law. It is a sentiment others may share, but Apple has legitimate reasons for not wanting to comply with the court’s order. The court is trying to force Apple to create a way to deactivate the password-protection feature (which erases the device’s contents after ten failed attempts at guessing the password) on this one iPhone. However, Mr Cook warns that designing this tool, even for one particular case, could put other users at risk, because the federal government would always have the key and could use it in future instances. Other governments will watch the outcome of the case, and might compel Apple to build them a similar tool. + +This is not the first time that Mr Cook and American law enforcers have clashed, but the case may become “the epicentre of the debate over privacy and encryption,” says Alan Cohn, a lawyer at Steptoe & Johnson who previously worked at the Department of Homeland Security. Past requests for data have focused on lower-level criminals; Mr Farook is being investigated for terrorism, which heightens the urgency of the government’s request. + +Mr Cook has cast himself as a reformer on the side of justice. Might he be held in contempt of court and go to jail? It seems unlikely in the near term, especially since Apple will probably appeal against the ruling. But putting Mr Cook or another Apple executive behind bars for a few days would be no bad thing for the firm’s image. It has gone to great lengths to persuade its users that it respects their privacy and is doing what it can to protect them. So have other tech firms, such as Microsoft, which are fighting lawsuits demanding that they turn over customer data. In its stand-off with the government Apple and other tech firms have a lot to prove, as well as much to lose. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21693189-apples-boss-may-have-choose-between-his-principles-and-his-liberty-tim-cook-privacy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Breakfast cereals + +Soggy sales + +Consumers are going off some cereals, but not the right ones + +Feb 20th 2016 | NEW YORK | From the print edition + + + +IN RECENT years breakfast cereals seem to have lost their snap, crackle and pop. Many contain things that anxious consumers shun, from carbohydrates and gluten to artificial flavours and genetically modified (GM) grain. Add to this a rising disdain for big brands and adoration of small, “authentic” ones, and large cereal-makers have been suffering soggy sales. The market for “ready-to-eat” cereals shrank by 9% in America between 2012 and 2015, according to Euromonitor, a data firm. In Britain, the second-biggest cereal market, sales fell by 6%. + +Now, the manufacturers are trumpeting a turnaround. On February 16th General Mills told investors that its American cereal sales were stabilising. Kellogg is equally chipper, reporting on February 17th that it expects its American cereal sales to grow this year. But it will take hard work to revive breakfast’s flakiest business. + +Cereal firms have tried many ways to cope with waning appetites. They have diversified. Post Holdings, which sells Honey Bunches of Oats and Grape-Nuts, now also sells eggs and protein shakes. Some firms have acquired trendier brands, with mixed results. After Kellogg bought Kashi in 2000, many of its oat-munching customers fled. Kellogg is now trying to win them back, returning Kashi’s headquarters to California. A new Kashi cereal features popped sorghum, crispy yellow peas and smashed red beans. Pet hamsters will love it. + + + +Makers are also spending to revive their main brands. Kellogg has put more fruit in its Special K Red Berries cereal. General Mills has stripped GM ingredients and gluten from Cheerios. It plans to remove all artificial flavours and colours from its cereals by 2018. Some analysts question whether the changes are worth the extra costs. But Robert Moskow of Credit Suisse, a bank, reckons that cereal-makers can compensate by cutting overheads and streamlining supply chains. + +Retailers do not want cereal to enter terminal decline—it is too profitable for them. Jim Holbrook, who led Post’s cereal business and is now boss of Daymon Worldwide, a retail consultant, says grocers might boost sales by placing milk or bananas in the cereal aisle. + +For now, cereal-makers can take comfort that at least some brands are still thriving. Sales of Kellogg’s Froot Loops and General Mills’ Cinnamon Toast Crunch have risen in recent years, points out Alexia Howard of Sanford C. Bernstein, a research firm, even as more virtuous brands such as Fiber One, All-Bran and (until recently) Special K were waning. Health-conscious shoppers may or may not be lured back to their cereal habit by smashed red beans. But cereal’s most reliable customers are those who don’t mind heaps of sugar, or “red #40” food colouring, in their breakfast bowls. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693211-consumers-are-going-some-cereals-not-right-ones-soggy-sales/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bombardier + +Plane truths + +A wounded Canadian planemaker may get another bail-out + +Feb 20th 2016 | From the print edition + + + +IN SPITE of booming demand for jetliners across the world, North American planemakers have had a miserable few months. So far this year Boeing, America’s biggest aerospace group, has suffered the two biggest daily falls in its share price yet seen, caused by downgrades to its production forecasts and news that regulators were investigating its accounting methods. + +But its woes look as nothing compared with those of Bombardier, a Canadian maker of planes and trains. On February 17th it announced net losses of $5.3 billion in 2015, mainly due to write-downs, and a $10 billion shrinking of its order book since 2014. Many are asking if the company will run out of cash. + +The trainmaking division is doing fine. But Bombardier’s aerospace division, which made only $138m in profit in 2015 before $5.4 billion of write-downs, is giving its executives nightmares. Those parts that used to generate good profits are stalling. The market for business jets, particularly large ones, is suffering from slower growth in emerging economies, says Stephen Trent of Citigroup, a bank. Bombardier has also been losing ground against more specialised competitors such as Textron and Embraer in the market for small and medium-sized business jets. + + + +The company’s biggest problem, though, is the CSeries, its project to develop a 100- to 150-seater plane to break the duopoly of Airbus and Boeing in this area (see table). Three years late and costing $5.4 billion to develop instead of the $3.5 billion originally forecast, the project has been soaking up cash. Although the plane’s entry into service is planned for later this year, it still has not been awarded safety certification by authorities in America and Europe. Ruthless pricing by Airbus of its A320neo and Boeing of its 737 MAX, as well as fears over Bombardier’s financial viability, have made the company’s cashflow situation worse by discouraging new orders. Until Air Canada announced the purchase of up to 75 of the plane’s larger CS300 variant, on February 17th, there had been no orders since 2014. + +It will be a long haul before Bombardier recoups its costs on the project, says Bjorn Fehrm at Leeham Company, an aviation consultant. The first 15 planes produced this year will cost Bombardier $60m each to make, he says, but will sell for just $30m or so. The programme will not become cashflow positive until around 200 planes have been delivered. The CSeries’ fuel efficiency may bring it more orders if the oil price goes back up. But so far, including Air Canada’s order if it is confirmed in full, it has sold only 318. + +To keep it going in the meantime, Bombardier needs cash. Last year it offered Airbus a majority stake in the CSeries project, but was rebuffed. Instead, the company’s home province, Quebec, offered C$1.3 billion ($1 billion) for 49.5% of the CSeries venture and a further C$1.5 billion from its pension fund for a stake in the rail division. + +This is unlikely to be enough. So the question is, where will the next cash injection come from? Airbus is unlikely to change its mind, and Boeing is busy sorting out its own problems. An investment from COMAC, a Chinese state-owned planemaker which is also trying to bust in on the Airbus-Boeing duopoly, and with which Bombardier signed a co-operation agreement in 2011, seems too politically toxic to be feasible. The Canadian electorate would not want to see a national champion fall into Chinese hands. + +So a further bail-out from either the Canadian federal or Quebec provincial government, in return for a stake in the CSeries, is most likely. This week Bombardier announced 7,000 job losses; the fear of even bigger cuts may force politicians’ hands. If so, taxpayers will not see a return on their investment for years, if ever. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693188-wounded-canadian-planemaker-announces-big-losses-and-job-cuts-bombardier-course/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Greek businesses + +An actual Grexit + +Big tax rises are driving companies out of the country + +Feb 20th 2016 | From the print edition + +Closing in Athens, opening in Sofia, Tirana and Nicosia + +WHEN Panagiotis Korfoksyliotis set up a business in Athens in 2011, ferrying tourists around by car, he hoped to do his bit to help Greece emerge from its deep recession. He says he paid his staff a decent wage and declared all his earnings. Unfortunately, the taxman did not repay the kindness. Sharp increases in business taxes have prompted Mr Korfoksyliotis to pack his bags and move his company and his life to Bulgaria. Now he employs drivers to take foreign visitors around that country’s tourist spots instead. + +He is part of a growing trend. In recent years Greek governments desperate for cash have sought to squeeze it from companies, despite evidence that this is driving them away to places like Bulgaria, Cyprus and Albania. The combination of a deep recession and rising taxation has meant that by some estimates more than 200,000 businesses have closed or in some cases left Greece since then. Between 2009 and 2014 the taxable profits declared by the country’s businesses fell by more than €5 billion ($5.6 billion) to €10 billion. + +Precise figures are hard to find, but accountants, lawyers and businesspeople reckon that perhaps as many as 10,000 Greek-owned firms have moved abroad. In a recent survey of 300 firms, Endeavor Greece, a non-profit organisation that helps entrepreneurs, found that more than a third had either left or were thinking about going. Venetis, a bakery chain, recently said that, because of high taxes and capital controls, it will focus more on opening shops abroad than in Greece. + +Even if they have kept their Greek operations going, some multinationals have moved their headquarters. Fage International, a dairy firm, said in 2012, when taxes started to rise, that it would move its base to Luxembourg. That year Coca-Cola Hellenic, which distributes the American giant’s soft drinks in 28 mostly European countries, moved its base from Athens to Zug in Switzerland. In 2013 Viohalco, a metals-processor, moved its head office to Brussels. The latter two firms say that the main reason was to improve their access to capital. But Greece’s sharp tax rises were hardly an inducement to stay. + +Other euro-crisis countries, such as Portugal and Ireland, cut business taxes or kept them low, to encourage investment and growth. (Portugal’s corporation-tax revenues are only slightly below where they were, as a share of GDP, before the global financial crisis.) But Greece has raised its corporation-tax rate from 20% in 2012 to 29% in 2015, even though international lenders such as the IMF will surely have advised against this. Greece’s tax rise makes Bulgaria’s rate of just 10% even more alluring; likewise Cyprus’s 12.5% rate and Albania’s 15%. + +The country’s neighbours are delighted that it is sending business their way. Panagiotis Pantelis, an accountant in Athens, says he has been busy in recent weeks meeting officials from neighbouring countries on behalf of clients looking to move out. Alexandros Ziniatis of Viva Trust, a firm that advises businesses seeking to relocate within Europe, reports similarly brisk interest from Greek companies. + +The new leader of Greece’s conservative opposition, Kyriakos Mitsotakis, has condemned the tax rises on business as counterproductive. But the left-wing ruling coalition is not listening. It is now proposing a 20% rise in a levy on companies’ profits that goes toward pensions. Carry on in this vein, and there will not be many businesses, or much profit, left to tax. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693213-big-tax-rises-are-driving-companies-out-country-actual-grexit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +The measure of a man + +Reports of the death of performance reviews are exaggerated + +Feb 20th 2016 | From the print edition + + + +IN RECENT months the business press has reverberated with cheers for the end of performance reviews. “Performance reviews are getting sacked,” crows the BBC. They “will soon be over for all of us”, rejoices the Financial Times. Such celebration is hardly surprising. Kevin Murphy, a performance-review guru at Colorado State University, sums up the general feeling about them: an “expensive and complex way of making people unhappy”. The problem is, they are not in fact being scrapped. + +A survey in 2013 by Mercer, a consulting firm, of 1,000 employers in more than 50 countries reported that 94% of them undertook formal reviews of workers’ performance each year and 95% set individual goals for employees; 89% calculated an overall score for each worker and linked pay to these ratings. It is true that a number of big companies have announced that they are abandoning annual performance reviews; this month IBM did so, joining Accenture, Adobe, Deloitte, GE, Microsoft and Netflix. In reality, though, they are no more getting rid of performance reviews than a person who shifts from drinking whisky to wine is becoming teetotal. Employee reviews are being modified, not abolished, and not necessarily for the better. + +Four changes are proving particularly popular. First, companies are getting rid of “ranking and yanking”, in which those with the lowest scores each year are sacked. GE, which practised this system with particular enthusiasm under its previous boss, Jack Welch, has now dropped it. Second, annual reviews are being replaced with more frequent ones—quarterly, or even weekly. Third, pay reviews and performance reviews are being separated. And fourth, some performance reviews are turning into performance “previews”, focusing more on discovering and developing employees’ potential than on rating their past work. + +Is this new system of employee reviews any better than the old? There are good arguments for getting rid of ranking and yanking: the ritualistic decimation of the workforce on the basis of a single number routinely paralysed businesses in the run-up to each year’s reviews, killing creativity and setting workers against each other. Thereafter the picture is murkier. + +Some of the arguments being advanced for the new-style reviews are hoopla. Deloitte says its new system is about “speed, agility, one-size-fits-one and constant learning”. The consulting firm’s employees sit down once a week with their “team leaders”. But good managers should give their charges constant feedback anyway. Adding another regular meeting to everyone’s calendar sounds like a formula for time-wasting. “One-size-fits-one” assessment is meaningless: a vital part of assessing people is measuring them against their peers—particularly when you have to think about who to promote or how to divvy out bonuses. It sounds nice to focus on people’s potential rather than their past performance. But how do you assess the former without considering the latter? And if decisions about pay are not based on performance, what will they be based on? + +Some of the arguments are not just hoopla, but dangerous hoopla. Social scientists have repeatedly demonstrated that performance reviews are distorted by two things: office politics and grade inflation. Managers are susceptible to lobbying. They also have an incentive to put a positive spin on things, often against their own better judgment, because in assessing their subordinates’ performance they are, to a large extent, evaluating their own ability to manage. Deliver a series of damning verdicts on your team and you inevitably raise a red flag about your own leadership. But the more subjective the reviewing process becomes, the more powerful these distortions are likely to be: “instant” feedback sessions can easily become orgies of mutual praise that do not teach anybody anything. + +For purists, such as Samuel Culbert of UCLA’s Anderson School of Management, this is proof that performance reviews are unsalvageable: better to get rid of them entirely than to replace one imperfect system with another. In fact there are good reasons why almost all organisations this side of Utopia use employee reviews of one type or another. + +Insurance against lawsuits + +Companies are always having to make difficult decisions, whether allocating limited resources (such as promotions and bonuses) or sacking people if they hold the organisation back or if the market turns down. It is preferable to make such decisions on the back of robust criteria rather than on the basis of managerial whim. Increasingly, firms also have to defend those decisions in the courts against people who feel hard done by. Firms that embrace more touchy-feely assessment systems, let alone get rid of them entirely, may be setting themselves up for legal nightmares. + +Annual performance reviews can certainly be improved. Companies need to put more effort into guarding the guards—training them in how to conduct reviews and holding them accountable if they are overgenerous or otherwise sloppy. Google wisely encourages its managers to review each other’s assessments. Bosses also need to be more rigorous about acting on what they discover: there is no point in amassing information about weak performers if you only act on it in a crisis. + +However, provided they are carried out consistently, rationally and fairly, and supplemented with more frequent feedback, annual performance reviews have many virtues. They provide a way of measuring an employee’s development over time (it is odd that some of those who criticise annual feedback for being too slow also criticise companies for being too short-term). They also provide a way of measuring all a company’s employees against each other rather than just their immediate colleagues. Bill Clinton once said that the best approach to affirmative action was “mend it, don’t end it”. The same is true of annual performance reviews. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/21693151-employers-are-modifying-not-abolishing-them-performance-reviews-not-dead-yet/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Manufacturing: A hard pounding + +Buttonwood: Liquid leak + +The fallout from low interest rates (1): Nope to NIRP + +The fallout from low interest rates (2): The lowdown + +A Saudi-Russian oil accord: Another Doha merry-go-round + +The gig economy: Smooth operators + +Hedge funds: Not dead, just resting + +Free exchange: Slight of hand + + + + + +Articles Sections Next + +Manufacturing + +A hard pounding + +A vital chunk of the world economy is beset by weakness + +Feb 20th 2016 | From the print edition + + + +CATERPILLAR is one of the most renowned industrial brands. It makes the kind of heavy machinery—loaders, excavators and off-road trucks—that is used in the construction, mining and transport industries when things need to get dug out or shifted somewhere. But the firm’s latest results, released on January 28th, show that it is struggling to shift its own products. “This past year was a difficult one for many of the industries and customers we serve,” it said. Revenues in 2015 were nearly 15% lower than they were in 2014, and 29% below the 2012 peak. + +The company’s woes are emblematic of the problems facing manufacturers worldwide. Although manufacturing is a much smaller part of most developed economies than services—just 12% of output in America, for example—its recent weakness makes many economists nervous about the wider outlook. + +Recent data point to the size of the problem. Big jobs cuts have been announced this year by GE, Tata Steel and Bombardier. In December industrial production fell by 0.7% in Italy, 1.1% in Britain, 1.2% in Germany and 1.6% in France. In China both the official purchasing managers’ index (PMI) of manufacturing activity and that of Caixin, a leading financial magazine, are below 50, the threshold that indicates contraction (see chart). + + + +In America, manufacturing output rose by 0.5% in January but only back to its level in October; it has fallen in four of the past six months. The manufacturing PMI, compiled by the Institute for Supply Management, has been below 50 since October. Services-sector PMIs in most countries, by contrast, indicate continued expansion. + +A slowdown in Chinese economic growth, as the authorities try to switch from an investment-led to a consumption-led model, is blamed by many manufacturers in the developed world for their problems. The steel industry is suffering from the effect of past Chinese investment, which has led to massive overcapacity and plunging prices. China’s demand for raw materials in the first decade of this century also prompted mining companies to step up production, and shipping companies to build more vessels. As Chinese demand has dropped, both industries have taken a pounding. Bloomberg’s commodity index has fallen by 28% over the past 12 months. The Baltic Dry index of shipping rates is down by 98% from its peak. The latest data show that Chinese imports, by value, have fallen by 18.8% over the past year. + +Yet China itself is suffering from weak global demand; the value of its exports has fallen by 11.2% over the same period, including declines of 10% to America and 12% to the EU. Before the financial crisis, global trade used to grow faster than GDP, now it is lagging behind. The OECD, a club of mostly rich countries, estimates that trade volumes last year grew by just 2%. + +The sluggish nature of trade growth has a disproportionate impact on manufacturing. Around 25% of all American manufacturing jobs are linked to trade, compared with just 6% of jobs in services. Even though overall job growth in America has been strong, there were no net gains in manufacturing employment last year. In trade-intensive American industries, Bank of America Merrill Lynch estimates that output was growing at an annual rate of just 0.1% by the end of 2015. + +Falling commodity prices also mean that oil and metals producers are not investing in new plant and equipment, which hurts the companies that produce such goods. Exxon Mobil, an oil giant, has announced a 25% cut in its capital-expenditure plans for 2016, for example. + +American capacity utilisation, a measure of how much productive capacity is not idle, may have peaked at a lower level than in previous cycles (see chart). Firms seem to be struggling to sell what they produce: the inventories-to-sales ratio is higher than at any time since the financial crisis. By the time the fourth-quarter reporting season is over, American industrial companies in the S&P 500 are expected to have reported an annual decline of 5.4% in earnings and 7.3% in sales. + + + +The rising dollar is a problem for American firms, as it makes their wares more expensive. On a trade-weighted basis, the greenback is up by 22% since mid-2014. That is painful for companies that make low-margin commoditised goods such as paper or plastics. But currency movements cannot explain the weakness in European manufacturing; the trade-weighted euro has dropped by 11% over the past five years. + +The best hope for manufacturers is that this weakness is temporary. Falling commodity prices have had a short-term impact on the energy and materials industries. But in the medium term, lower prices should be good for consumer demand in the developed world, and they will step up their purchases of manufactured goods. Carmakers have already shown that it is possible to buck the trend. Low petrol prices encouraged American car buyers last year, with sales hitting a record 17.6m. + +As for China, recent data may be distorted by the effect of the lunar-new-year holiday. Chinese road freight grew last year; officials have started breaking out consumer-focused industries within its official PMI, and those data still seem robust. In a rare interview published this week by Caixin, Zhou Xiaochuan, the head of China’s central bank, dismissed worries on the part of developed-world manufacturers that the Chinese would devalue the yuan to enhance the competitiveness of their exports. He vowed not to pursue a policy of competitive devaluation, and insisted China had more than enough in foreign-exchange reserves to fend off those who were speculating against the currency. His comments sent the beleaguered yuan soaring: it hit its highest level this year on February 15th. + +For the moment, however, pessimism reigns. Even the shares of carmakers have taken a battering in the early weeks of 2016, underperforming the rest of the market. Global fund managers polled by Bank of America Merrill Lynch now have their lowest weighting in industrial stocks since 2011. Perhaps the much-larger services sector will pull manufacturing out of its rut. But investors are not counting on it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693240-vital-chunk-world-economy-beset-weakness-hard-pounding/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Liquid leak + +Can weak markets be explained by changes in bank balance-sheets? + +Feb 20th 2016 | From the print edition + + + +ECONOMISTS have been a bit puzzled by the market turmoil of early 2016. It seems to be driven, in part at least, by fears of either an American recession, or a sharp Chinese slowdown, neither of which looks likely from the data. Perhaps the answer to the conundrum is that market movements are not being driven solely by fundamentals but by recent developments in market liquidity. + +Central banks’ support for markets, via quantitative-easing (QE) programmes, is well known. Emerging-market central banks have also been big buyers of government bonds as they have built up their foreign-exchange reserves. But the Federal Reserve stopped its QE programme in 2014 and, in recent months, Chinese foreign-exchange reserves have fallen by around $700 billion. This means the Chinese authorities are net sellers, rather than buyers, of financial assets. Low oil prices mean that sovereign-wealth funds in oil-producing countries may also be selling assets. + +CrossBorder Capital, a research firm, says that the combined balance-sheets of the Federal Reserve and the People’s Bank of China were growing at more than 10% a year for much of the past decade—and reached a peak of 64.5% growth in 2008. But over the past year, they have actually contracted (see chart). Both the European Central Bank and the Bank of Japan are still adding assets, of course. Nevertheless, CrossBorder’s global liquidity index, which reflects changes in the balance-sheets of a range of central banks, has fallen to 35; a world recession, says the firm, is signalled when the index drops below 30. + +Central banks may not be the only factor affecting market liquidity. Matt King, a credit strategist at Citigroup, highlights a number of oddities in a recent research note. The first is the relationship between government-bond yields and the cost of interest-rate swaps. A swap involves two parties agreeing to exchange a fixed-rate payment for a floating rate based on a variable measure, such as Libor. Since the counterparties to such deals tend to be from the private sector (notably banks), the fixed-rate element of the swap has tended to pay a higher yield than the equivalent government bond, to reflect the greater risk. But the cost of swaps has fallen below Treasury-bond yields, a phenomenon dubbed a “negative swap spread”. + +The other shifts are in the corporate-bond market. Investors with a strong view on where the bond market is heading can buy or sell individual bonds, or they can use a derivative called a credit default swap (CDS). A CDS is a kind of insurance policy, which pays out if the bond defaults; when corporate-bond prices are falling, the cost of a CDS rises. Mr King points out that the cash market has recently, and unusually, underperformed the derivative (ie, the spread, or excess interest rate, on corporate bonds has risen faster than the cost of insuring against default via a CDS). + +In a similar shift, the cost of insuring against the default of individual companies has risen faster than the cost of insuring a corporate-bond index. These changes in relative prices are the opposite of what happened in the crisis of 2008. Back then, the most liquid markets were the quickest to show the pain. + +Mr King’s explanation is that this is all to do with the reluctance of banks to tie up their balance-sheets, thanks to new rules on leverage ratios. Derivatives like swaps require banks to put aside very little capital compared with owning cash bonds, and so reduce demand for the latter. Banks are also unwilling to provide finance to traders who want to arbitrage such price disparities away; profiting from small price differences requires lots of borrowed money. + +Another sign that liquidity is shifting can be seen in the world of exchange-traded funds (ETFs)—portfolios of assets that can be traded on the stockmarket. According to BlackRock, which operates the biggest high-yield ETF, daily trading in the fund was briefly worth a quarter of the value of all American corporate-bond trading in December. Buying and selling an ETF has become a more liquid way of shifting an investor’s asset allocation. + +Since the crisis commercial banks seem to have retreated from their market-making role. The impact of this shift has been disguised by the huge amounts of liquidity injected by central banks. But as central banks scale back their support, the underlying investors (pension funds, insurers, hedge funds and the like) will have to rely on each other to act as willing buyers and sellers. That seems highly likely to result in more volatile markets than in the past, especially when the outlook for the economy is unclear. Buckle up. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693245-can-weak-markets-be-explained-changes-bank-balance-sheets-liquid-leak/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The fallout from low interest rates (1) + +Nope to NIRP + +Feb 20th 2016 | TOKYO | From the print edition + +Kuroda corrodes the banks + +UNTIL this month bond traders were the most voluble complainers about the Bank of Japan’s vast programme of quantitative easing (creating money to buy bonds). The central bank’s interventions had slashed trading volumes in their market. But their gripes had a tiny audience and, understandably, received scant sympathy. Things have changed with the central bank’s new negative interest-rate policy (NIRP), which went into effect on February 16th. It has pummelled banks and spooked Mrs Watanabe, the archetypal Japanese saver. Fans of the new policy are hard to find. + +For around two trading days after the BoJ announced on January 29th that some bank reserves would be charged -0.1%, financial markets responded as intended—the yen weakened and the Nikkei 225 share index rose. Then, with the European Central Bank hinting at an extension of its own negative-rate policy, investors sought safety in the yen, which rose sharply. In turn that dragged down the stockmarket, since Japan’s exporting giants may earn less if their competitive position is eroded. + +Even after a rally on February 15th, when the Nikkei rose by 7.2%, the stockmarket is down by 9.6% since the BoJ’s announcement of negative rates; the yen is 5.9% higher against the dollar. Stocks were not helped by news that GDP contracted by an annualised 1.4% in the fourth quarter, chiefly because of weak consumption. + +The chief surprise for the BoJ was that banking stocks fell even faster than the overall market, with the drop coming close to 24%. The direct effect on banks’ profits is limited. For now, the central bank’s negative-rate policy applies to only ¥23 trillion ($200 billion) out of the ¥253 trillion that banks have parked with it. A further ¥24 trillion will earn 0%, and the rest will continue to earn 0.1%. But the BoJ may not have thought as much about the indirect effect on their business models, says Naohiko Baba of Goldman Sachs. + +Sharply lower long-term interest rates—the ten-year government-bond yield briefly dipped into minus territory (see chart), alongside overnight interbank rates—mean a sharp squeeze on net interest margins for all banks when profits from lending have already gone down. There is little room to shield margins. Deposit rates are wafer-thin; banks are unlikely to charge retail customers for parking their funds. + + + +Standard & Poor’s, a rating agency, expects profits at the five largest Japanese banks to fall by 8% over the next year or so and by 15% at regional banks, which are more dependent on their traditional lending businesses. A profits crisis among Japan’s 100-odd small local lenders may be just what the regulator ordered, since it is trying to consolidate them, but it probably had a smoother process in mind. + +If the BoJ ventures further into negative territory in order to reach its target for sustained inflation of 2%, the impact on big banks could become too pronounced for comfort. The governor, Haruhiko Kuroda, would probably like to bring rates to levels similar to those of some European central banks, at perhaps -0.5% or lower. Negative rates are a potent new means of easing when the BoJ may face limits on expanding its bond purchases from its current ¥80 trillion a year. It now owns around a third of Japanese government bonds. Expanding purchases to around ¥100 trillion is probably as far as it can go. + +Japan’s big banks have the capital and profits to withstand a squeeze. If, as the BoJ wishes, they are prompted to expand bargain-basement loans to companies and consumers, they will help stimulate the economy. Several are already lowering mortgage rates, sparking hopes for further house-price rises. Yet banking chiefs, who have until now supported the BoJ’s monetary easing, are likely to use their considerable influence to lobby against a further descent into the red. + +Many ordinary savers, meanwhile, view the central bank’s move as a portent of unstable times. Elderly deposit customers remember the time, after the second world war, when the government restricted cash withdrawals from banks and taxed deposits to pay off debts, notes Izuru Kato of Totan Research in Tokyo. Shopping malls in the capital are urging the merits of safety deposit boxes just in case commercial banks do impose negative rates, and they are selling well. A handful of local banks, such as Onga Shinkin Bank in Fukuoka prefecture, have defied the central bank with a rise in deposit rates to reassure their nervous customers. + +Given the volatility associated with the introduction of negative rates, the BoJ has indicated that it will gauge the market’s mood before lowering them further. The turmoil is also prompting questions about the policies of Shinzo Abe, the prime minister. If monetary easing is reaching its limits, fiscal policy may be needed to try to revive the economy. Mr Abe’s advisers are once again strongly urging the postponement of a second increase in the consumption tax, or VAT, which is due in April 2017. The rise has already been delayed once. Hawks at the Ministry of Finance are fighting hard against the possibility. But such a step would please almost everyone else, unlike negative rates. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693246-nope-nirp/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The fallout from low interest rates (2) + +The lowdown + +Insurers regret their guarantees + +Feb 20th 2016 | From the print edition + +FINANCIAL markets may be drawing breath after their recent falls, but one industry in particular has little reason to feel calm. The life-insurance industry has deeper problems than just temperamental markets. Years of doling out goodies from a seemingly bottomless sack are now catching up with these actuarial Santa Clauses, who in their worst nightmares did not imagine that the interest income from their investment portfolios could stay so low for so long. + +Insurers tend to be prudent investors who like steady returns, which is why around 80% of their assets are in fixed-income securities. This served them well during the financial crisis, but today—with bond yields at historic lows, and even in negative territory—it hurts their investment income. This is particularly true for life insurers, which own over $21 trillion of the industry’s $28 trillion assets, and rely heavily on this investment income to pay policyholders. + +European insurers are especially exposed. Over two-thirds of life-insurance policies in force in the EU today offer some sort of guarantee. More than half of these policies have promised a higher income to policyholders than insurers can currently earn on newly-issued bonds, according to the European Insurance and Occupational Pensions Authority, a regulator. + +To make matters worse, many of these life insurers have a mismatch between the duration of the promises they have made to policyholders and the shorter time until their assets mature. Although there are big differences between firms, Moody’s, a rating agency, reckons those most at risk tend to be in Germany, the Netherlands, Norway and Taiwan, where average duration gaps are especially large (14 years in Norway) or guaranteed rates are eye-wateringly high (4-5% in Taiwan). + +On the top naughty step sits Germany. In the sunny years around the turn of the millennium most German life insurers gave customers a maximum guaranteed interest rate of 4% per year, both for savings and lifelong pensions. To meet such extravagant promises, insurers bought ten-year bonds at much higher rates than are available today. But when those assets matured, the liabilities remained (the average lifespan of existing German life-insurance policies is 20 years). + +The average returns promised to German policyholders are far higher than the yields on government bonds that insurers can now buy. Corporate bonds offer returns that are barely higher, which leaves two options: invest in riskier assets such as equities (which will require the insurer to put more capital aside), or face the fact that annual payouts to policyholders will outstrip income, a recipe for losses. + +Both outcomes sit uncomfortably with rating agencies, never mind investors. Fitch, another rating agency, warned in 2014 that some insurers might take too much risk in the hunt for yield. But the bigger worry today is that they stick to current policy and become unprofitable. Moody’s fears that if rates stay low for another four years, loss-making insurers will eat into their capital buffers, and some could—eventually—become insolvent. The more an insurer looks like it might struggle to meet future financial obligations, the higher the cost it will face if it eventually seeks to raise capital from investors to shore up its balance-sheet. + +Faced with this prospect, life businesses are doing what they can to push risk back to the customer. In some countries, such as France, the promises made to existing policyholders have the built-in flexibility to be scaled back. But mostly the burden falls on new policyholders, who are no longer sold products with guarantees. + +Ironically this de-risking creates a different danger: that the industry becomes irrelevant. By removing the key selling point of an insurer over a mutual fund—the assurance that a policy will pay out no matter what—the industry risks negating its business proposition to investors looking for security. (It does so, moreover, at a time when pension funds are watering down their long-term financial commitments, says Daniel Hofmann of the Geneva Association, who worries about the consequences for society and the economy.) The big question is whether new customers will buy savings-based insurance products at all in this shaky market environment, says Benjamin Serra of Moody’s. + +To survive, the life-insurance industry will need to address the question of what it is for. Most premium income for life insurers comes from the savings business, where guarantees play a central role. The classic model thrives on short-term interest rates of between 2-6%, government bonds yielding at least 4% and no worries about defaults. “That’s when we can sell policies cheap and generously,” sighs one nostalgic underwriter. + +Change of policy + +But with no prospect of such rate levels returning, life insurers must find a way to change. This could include merging with other (non-life) insurers, or developing new products that are not as dependent on yield but still give customers a long-term return. The transition will be a lot easier for those insurers without significant risks on their balance-sheets already. The unlucky ones with large loss-making policies already in place face a harder road. + +The good news is that they have a bit of time of their hands. Insurers are not as vulnerable to the risk of a run as banks. The assets of insurers are usually liquid and their liabilities tend to be tied to specific events—such as someone getting ill, retiring or dying—whose probabilities can be calculated. Unlike banks, insurers should not become insolvent overnight. A financial reckoning, should it come, can be put off for years, even decades. + +Regulation also helps, says Oliver Steel of Deutsche Bank. Banks were given until 2019 to raise new capital by the Basel 3 rules (and many did so earlier). But under the Solvency 2 regime set up by the EU to govern insurers, firms have generous transition periods of up to 16 years. The German government and regulator have also taken steps in recent years to strengthen the sector, such as forcing insurers to set aside specific reserves (Zinszusatzreserve) and limiting guarantees on new business. + +Such comfort only goes so far, however. In spite of these reforms, Moody’s believes that the German industry will incur losses if interest rates stay at low levels. And that looks likelier than not. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693247-insurers-regret-their-guarantees-lowdown/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A Saudi-Russian oil accord + +Another Doha merry-go-round + +A potential freeze on oil output will do little to buoy prices + +Feb 20th 2016 | From the print edition + + + +QATAR’S capital is an inauspicious place for dealmaking. The Doha round of world-trade talks meandered on for almost 15 years. An agreement there on February 16th between Saudi Arabia and Russia, two of the world’s biggest oil producers, to freeze production at January levels if others join in, may presage a similarly never-ending saga to shore up oil prices. + +That seemed the likely outcome when, on February 17th, Iran’s petroleum minister, Bijan Zanganeh, emerged from a meeting with his Iraqi, Qatari and Venezuelan counterparts in Tehran saying that Iran supported the freeze, but without indicating whether it would take part. Oil prices climbed afterwards, but unless Iran participates fully, a production freeze is likely to be a non-starter. After years of sanctions it, more than anyone, has an incentive to wrest back market share from countries that cap their output (see chart). + +Oil-market bulls say that any sort of discussion about a freeze is a positive surprise. It comes despite tensions between Saudi Arabia and Russia over Russian military intervention in Syria. It coincides with production cuts in America’s shale-oil industry; as one analyst puts it, like central-bank currency intervention, it helps that market forces are heading in the same direction. It could also lead to broader co-operation. Ali al-Naimi, Saudi’s oil minister, called it “simply the beginning of a process”. + +Yet there are plenty of caveats. Saudi Arabia, Russia and Iraq were all pumping at or close to record levels in January. A freeze would do little to curb the oversupply that has pushed up oil inventories around the world—one of the biggest headwinds for prices. Iran has just loaded its first oil shipment to Europe since the lifting of nuclear-related UN sanctions last month, and has insisted it wants oil exports to increase by 500,000 barrels a day before the end of March. + +One Middle East oil expert suspects that the Doha meeting may have taken place only because of a negotiating trick by Qatar. He says both Russia and Saudi Arabia thought the other had agreed to a cut. Once in the room they realised there was no such agreement, but knew the consequences of admitting as much would be so damaging for oil prices that it was better to use a freeze as a figleaf. They also knew that, if the freeze failed, it could be blamed on Iran. + +Even if the big producers do one day decide that prices are so weak that a co-ordinated cut makes sense, it may provide only a temporary respite. Scenting higher prices, American shale producers could quickly try to pick up the slack. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693244-potential-freeze-oil-output-will-do-little-buoy-prices-another-doha/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The gig economy + +Smooth operators + +A new report reveals the scale and purpose of app-based earnings + +Feb 20th 2016 | Washington, DC | From the print edition + + + +HOW important is America’s ondemand economy? Some worry that the likes of Uber, a car-hailing app, and Etsy, which helps workers to sell arts-and-crafts, are destroying traditional employment and with it pensions and health-care benefits. Others hail the flexible hours, low prices and convenience such apps facilitate. Until now not many data have informed this debate. Official statistics track things like part-time working, self-employment and working from home, but the app economy is too small to move those needles. In fact, most indicators suggest it is boring traditional work, rather than app-enabled odd-jobbing, that is on the rise. + +A new report plugs the gap. Researchers from the JPMorgan Chase Institute, a think-tank attached to the bank, studied the incomes of 1m of their customers with active current accounts of three years. They found that, in September 2015, 1% of them earned income through an (identifiable) on-demand platform. Of these, just over half used “capital” platforms, such as Airbnb, to lease stuff they own. The rest—about 0.4%—used labour platforms like Uber. Though small, the supply of ondemand labour and capital has grown rapidly: as recently as the end of 2012 barely 0.1% of the bank’s customers earned through online platforms. Since then, 4.2% have participated at one point or another. + +Is the on-demand economy replacing traditional jobs? Uber drivers are “independent contractors” who must pay their own payroll taxes, buy their own health insurance and save for their own pensions. Some drivers think this is wrong (and have taken their battle to the courts). In December 2015 two economists, Seth Harris and Alan Krueger (who has consulted for Uber in the past), penned a plan for a third category of worker, somewhere between a contractor and an employee, designed for the on-demand economy. The “independent worker” would get some benefits, like contributions towards health-care costs and payroll taxes, but would not be entitled to the minimum wage or unemployment insurance. Messrs Harris and Krueger say that equalising benefits makes it easier to compare earnings between jobs and apps, and that firms can use their bargaining clout to obtain health insurance more cheaply than individuals can. + +Such reforms, though, would be relevant to only a tiny fraction of the workforce. JPM’s data suggest that most ondemand workers use apps to supplement their income, rather than as a replacement for a full-time job. On average, labour platforms provided only one-third of ondemand workers’ incomes. And their participation was often sporadic; almost half of those who start working on a labour platform stop within a month. + +Earnings from Uber and the like are strongly correlated with negative shocks to incomes from other sources (capital platforms are used much more consistently). That suggests people use apps to smooth bumps in their earnings, which are frequent: more than half of JPM’s customers have seen their incomes swing by at least 30% in a month. Volatility in pay is largely responsible. Perhaps conventional jobs are not so great after all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693261-new-report-reveals-scale-and-purpose-app-based-earnings-smooth-operators/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Hedge funds + +Not dead, just resting + +A bunch of hedge funds have closed. Has the industry reached its peak? + +Feb 20th 2016 | From the print edition + + + +IN 1990 hedge funds were still rare birds; 500-odd funds managed around $40 billion, mostly for rich individuals. Few people understood what they did or bothered to find out. By the end of 2015, the sector had mushroomed to include nearly 9,000 funds managing roughly $3 trillion. Along with private equity, the industry was classed as an “alternative asset”, attractive to pension funds and endowments. But a recent wave of fund closures, and the expectation that more will follow, suggest the industry’s era of stratospheric growth may be in the past. + +On the surface, fund closures are the norm in a cut-throat industry: every year hundreds of fund managers call it quits, only to be replaced by yet more would-be masters of the universe. But the gap between closures and launches is narrowing (see chart). In the first nine months of last year 785 new funds were launched and 674 were closed, according to Hedge Fund Research (HFR), compared with figures of 814 and 661 over the same period in 2014. In 2016, for the first time since the worst of the financial crisis, there may be more closures than launches, says Amy Bensted of Preqin, a data provider. + +The main reason for the shutdowns is poor performance. “It’s a performance industry. If you don’t perform people take their money and leave,” says Anthony Lawler of GAM, an asset manager. Last year was the industry’s worst since 2011; HFR’s fund-weighted composite index ended down by 1.09%. In the last quarter of 2015 investors withdrew $8.7 billion from the hedgies, according to Preqin. For the first time since the crisis more institutional investors now plan to cut their hedge-fund exposure than to increase it. + +This year has been no better. With losses of 2.8%, January was the worst month for the industry since September 2011, according to HFR. Market turmoil generated even steeper losses for large funds such as Pershing Square (which was down by 18.6% as of February 9th). + +Many funds that close have no choice but to throw in the towel. A tough macroeconomic environment, pressure to cut fees, increasing cost of regulatory compliance, and some very bad bets on distressed debt and energy assets, have all made it harder to run a hedge fund today than in the good old days of the 1990s. With investors becoming increasingly risk-averse, knee-jerk redemptions have become more common. For a small fund, if just one investor pulls out that can be the end of the business: 75% of the funds that closed in 2015 managed less than $100m. + +But there is a second, more surprising set of fund closures. A number of large high-profile funds, such as BlueCrest, Nevsky Capital and more recently, Standard Pacific and Orange Capital, have chosen to return outside capital to investors. This is puzzling; asset managers normally like to keep money. Disappointing performance, poor ratings and redemptions play a role in many voluntary liquidations, too. But many could have continued. Standard Pacific’s founders wrote to investors two weeks ago that “sometimes there is a logical conclusion to even a good thing.” + +BlueCrest’s Michael Platt, who in December told investors he would return their money, claimed the industry’s fee model was “no longer a particularly profitable business.” Nevsky’s chief investment officer, Martin Taylor, blamed the prospect of another bear market and a change in market structure that meant the fund’s research-heavy approach was less effective than before. + +One London banker thinks managers like Mr Platt were “just sick of investors’ monthly calls every time an asset drops a few percent.” Compared with private equity, hedge funds have short lockup periods, which means investors can redeem their cash relatively easily whenever they feel queasy about China or the oil price. Some managers have responded to this fickleness by running their funds as private family offices, much like George Soros or his old colleague, Stan Druckenmiller. + +A lot comes down to personality. Because the hedge-fund boom happened in such a short space of time, lots of today’s biggest managers come from the same generation. Many are tired and fed up; and with their millions made, they have little need to carry on. Moreover, succession planning has not been an industry strong suit: few fund managers have built organisations that will survive them. (Even those that have can run into trouble: investors in Bridgewater Associates, the world’s largest hedge fund, which manages $154 billion and had a very good 2015, were this month treated to a farcical set of mudslinging letters from the firm’s founder and its heir-apparent, asking them to judge each other’s conduct.) + +Fewer new funds seem likely to appear in 2016. Jonathan Miles, from Wilshire, a pension-fund adviser, thinks the governance and regulatory costs make it harder than ever to start a fund—particularly in Europe, where the regulatory regime has become especially tough (which also helps explain why more European funds closed in 2015 than American ones). + +Despite their sharp trades and sharper elbows, hedge funds have been slow to evolve. The field has become crowded and a natural selection of the fittest might be just what it needs, says Ms Bensted. Others, like Pierre-Edouard Coiffard of Laven Partners, a consultancy, think the business model of large hedge funds will tend to converge towards that of more traditional asset managers. Only the smaller specialist players will remain “pure” hedge funds. Whether investors will reinvest with the survivors or abandon the industry altogether is yet to be seen. But the days when hedge funds endlessly expanded appear to be over. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693260-bunch-hedge-funds-have-closed-has-industry-reached-its-peak-not-dead/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Slight of hand + +Timid central bankers have failed to convince sceptical audiences + +Feb 20th 2016 | From the print edition + + + +IS THE job of central bankers more like that of technicians, carefully turning knobs as they fine-tune the economy, or magicians, manipulating the audience into the suspension of disbelief? Most of the time it is the former. Monetary maestros nudge interest rates up and down with meticulous precision. Yet in extreme cases—such as when economies become trapped in a low-growth rut—central bankers must try to conjure up a change in the public’s economic outlook. Just as uncertain magicians often fail to pull off their tricks, so central banks are finding their audiences in an ever-more sceptical mood. + +Economists have long acknowledged the role of mass psychology in business cycles. In 1936 John Maynard Keynes described the “animal spirits” that could drive swings in spending or investment. The power of an abrupt change in market beliefs came sharply into focus in the early 1980s, when many economies were struggling to clamp down on stubbornly high inflation. Economists at the time worried that using interest rates to rein in inflation would be enormously costly. Because the public had come to expect high inflation, they reckoned, growth-crushing rate rises would be needed to force down prices and create new consumer expectations. A common estimate at the time had it that reducing America’s inflation rate by just one percentage point would cause economic damage of nearly 10% of GDP. + +Thomas Sargent, a winner of the Nobel prize for economics, questioned this logic. In a paper published in 1982 he pointed out that historical episodes of hyperinflation did not end slowly, as central banks subjected economies to grinding recessions, but almost overnight. An abrupt but credible “regime change” in policy could realign popular expectations almost instantaneously, he reasoned. If people believed a government’s promise to halt inflation, and immediately began behaving as if the promise were credible, then in principle the adjustment could occur quickly. + +In a paper published in 1990 Peter Temin, of the Massachusetts Institute of Technology, and Barrie Wigmore, of Goldman Sachs, argued that Mr Sargent’s regime-change hypothesis might just as easily apply in reverse to an economy stuck in a slump. They analysed the American economy in the 1930s. Franklin Roosevelt’s programme of expansion—which included a departure from the gold standard, devaluation of the dollar, and a boost to government spending—was instrumental in bringing America out of depression, they allowed. But the turnaround in America’s fortunes occurred remarkably quickly, before those policies had time to work. As Christina Romer, an economist at the University of California, Berkeley, noted in 2013, the change in expectations in America happened almost immediately on Roosevelt’s arrival. Equity prices jumped by 70% between March 1933 and June of that year. An analysis of market expectations of inflation concluded that traders anticipated deflation of 7% at the beginning of 1933, but inflation of 6% by the end of the year. + +Messrs Temin and Wigmore credit Roosevelt with transforming the public’s beliefs about how the economy would perform in future. During his campaign and after his inauguration, Roosevelt repeatedly pledged to raise prices in the deflation-stricken economy. The choice to leave the gold standard—the centre of monetary orthodoxy at the time—was a powerful signal that the break with the past would be complete. + +When, in 1999, Japan became the first big economy to sink into a world of zero interest rates since the 1930s, economists spotted the parallel. Japan risked becoming stuck in a liquidity trap, they pointed out. When an economy is weak, a dose of bad news can cause people to revise down their expectations for future inflation (since less spending and hiring will mean slower growth in prices and wages). A drop in inflation expectations pushes up the real interest rate, squeezing borrowing and adding to pessimism. + +With the nominal interest rate stuck at zero, the Bank of Japan could not compensate for such increases through further cuts to interest rates; only the credible promise to boost inflation and keep it up could help the economy escape from the trap. In a paper published in 1998, Paul Krugman, another Nobel prizewinner, argued that Japanese central bankers had to issue a credible promise “to be irresponsible”. Ben Bernanke, who later became chairman of the Federal Reserve, mused that it was “time for some Rooseveltian resolve in Japan”. Both argued that Japan should aim for an unusually high target for inflation, of between 3% and 4%, and should promise to print money as needed to hit the target. + +The Bank of Japan instead opted for knob-turning. It eventually created money to buy assets. Yet not until 2012 did it set a firm inflation target, of just 1% (which it raised to 2% in 2013). When other advanced economies joined Japan in the zero-rate world after the financial crisis of 2007-08, they too failed to make a Rooseveltian commitment to regime change by promising, for example, to return the price level to the previous trend. + +Hocus pocus + +In this fraught world, central bankers risk falling into what Mr Krugman has called a timidity trap. The longer that knob-turning fails to get an economy out of the zero-rate rut, the less credible markets are likely to find subsequent attempts at regime change. Recent efforts to push interest rates into negative territory seem to have unnerved markets rather than sparked confidence. Perhaps more importantly, central bankers tend not to adopt major shifts in mandates and targets unless urged to do so by popularly elected governments. It is difficult to muster Rooseveltian resolve without a Roosevelt. Expect growing scepticism about the power of knob-turning until voters choose politicians confident enough to wave a magic wand. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693216-timid-central-bankers-have-failed-convince-sceptical-audiences-slight-hand/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +The American Association for the Advancement of Science: Cassava-nova + +Immunology: Mr T-cell + +Genetic engineering: CRISPR crunch + +Analysing art: Light, relief + + + + + +Articles Sections Next + +The American Association for the Advancement of Science + +Cassava-nova + +The annual AAAS meeting looked at the immune system, Roman portraits and genetic engineering. But first: improvements to a staple African crop + +Feb 20th 2016 | WASHINGTON, DC | From the print edition + + + +Staple foods of the rich world—wheat, barley, rice, maize and so on—have undergone long and sophisticated breeding programmes to increase their resistance to pests and pathogens, and to improve their yields and the convenience of harvesting them. The fruits of such research are found on the tables of the poor world as well, since these crops are ubiquitous. But poor countries often have other staples, and these have not usually been subject to such genetic ministrations. + +For one such staple, things are changing. Cassava, a crop whose starchy roots feed 500m Africans, is in the process of getting a makeover which employs the best that agricultural science has to offer. And Chiedozie Egesi of the National Root Crops Research Institute in Umudike, Nigeria, who leads the NextGen Cassava project, told the meeting of the American Association for the Advancement of Science (AAAS), in Washington, DC, all about it. + +From an African point of view a big problem with cassava is that it is originally a South American crop. It was introduced to Africa by the Portuguese, from their colonies in Brazil, but the strains they brought—or, at least, those that survived transplantation—represent a small fraction of cassava’s genetic potential. African agronomists would like to bring in other New World varieties, to improve their own crops, but they cannot because most such imports fall foul of cassava mosaic disease, a virus that does not exist in South America and which the successful African strains are generally able to shrug off. Dr Egesi and his colleagues are trying to deal with the aliens’ sensitivities by way of a breeding programme based on genomics. + +They started with 6,128 different cassava specimens from all over Africa, and genotyped them using a technique called SNP analysis. The acronym stands for single-nucleotide polymorphism, a place in the genome where a single genetic letter varies from strain to strain. They found more than 40,000 SNPs that they could use to act as markers of genetic variation. Examining and testing full-grown plants from the collection for desirable characteristics, known as phenotypes, permitted Dr Egesi and his team to find correlations between particular patterns of SNPs and particular phenotypes. They then picked out 100 specimens with especially promising SNP patterns and crossed them, to produce nearly 10,000 hybrids. They grew these, checked the SNP patterns of the offspring to see which their computer model predicted would have the desired characteristic (in this case, giving special attention to resistance to cassava mosaic virus), picked, once again, the 100 most promising, and repeated the process. + +They are now in the third cycle of the procedure (each generation of plants takes a year to raise and process) and reckon one more cycle will be required to get to the desired level of resistance. Moreover, what can be done for resistance to the cassava mosaic virus, Dr Egesi thinks, can be done simultaneously for other desirable phenotypes. He hopes SNP-based breeding will double cassava yields from their average value of about 10 tonnes a hectare as well as increase the amount of starch in the plant’s root, increasing its nutritional and economic value. And there are further diseases he hopes to get rid of this way, including brown-streak virus and bacteria blight. + +He hopes, too, to refine the identification of desirable phenotypes. Some physical characteristics of a plant can be judged by eye, or with the aid of a tape measure or scales. Testing disease resistance means challenging plants with the pathogens concerned. But many phenotypes require chemical analysis to detect—ideally, involving plants just plucked from a farmer’s field. The project is therefore experimenting with hand-held infrared spectrometers that need only be held up to the cut surface of a cassava root in order to measure its levels of chemicals such as beta carotene (a precursor of vitamin A). + +The prize for all this effort would be to put cassava on a par with the improved crops of the rich world. It might even become, like them, more of an industrial cash crop than something just grown for the pot, as is often the case now. Dr Egesi thinks his method can be used to improve the yield and quality of flour and starch made from cassava, making it more saleable. And that might have social as well as nutritional consequences. Most African cassava farmers are women. Putting money in their pockets would improve family budgets, and thus the welfare of some of the world’s poorest countries. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21693184-annual-aaas-meeting-looked-immune-system-roman-portraits-and-genetic/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Immunology + +Mr T-cell + +Boosting the immune system to fight cancer + +Feb 20th 2016 | Washington, DC | From the print edition + +A plan comes together + +TO DEFEAT the enemy, you must first know the enemy. In the immune system, that job is done by T-cells, which recognise the molecular signatures of threats to their owner’s well-being. This week, at the AAAS conference, researchers explained how turbocharging these cells can boost the immune system’s ability to fight cancer, and possibly other illnesses, too. + +The technology they use merges gene therapy, synthetic biology and cell biology. First, a batch of T-cells is extracted from the blood. A custom-built virus is used to implant them with new genes. The modified cells are then returned to the body, where their new DNA gives them a fresh set of targets to attack. + +Stanley Riddell, at the Fred Hutchinson Cancer Research Centre in Washington state, creates cells that target a molecule, called CD19, that is found on the surfaces of some cancers. A firm called Juno Therapeutics is exploring whether the technique can be used to treat cancers that affect B-cells, another part of the immune system. + +Dr Riddell has meanwhile been refining the technology. He told the meeting of his attempts to isolate and modify certain types of T-cells that are known to respond best to a given disease. In a trial of 31 patients with acute lymphoblastic leukaemia (ALL), that approach brought about a complete remission in 93% of cases—something Dr Riddell described as unprecedented. + +Another refinement has been dealing with the toxic effects that these treatments can trigger. Sometimes, boosted T-cells can prove too eager for their owner’s good. As their numbers double, roughly every 12 hours, they can trigger a runaway immune reaction called a cytokine storm. This can be fatal: two of the patients in the ALL trial died in that way. + +The biggest cytokine storms, though, seem to come from the patients with the most advanced cancers. Dr Riddell’s solution is to give the sickest patients the lowest dose. This means that the T-cells multiply more slowly, reducing the chances of an immune-system overreaction. + +Although the ALL results are impressive, it is difficult to expand the approach to other cancers. To prime a T-cell to attack, it needs to be given precise co-ordinates. Otherwise it may lock onto, and destroy, something else in the body. But besides CD19, which is found in only a few cancers, scientists know of no other chemical target that is specific to cancer alone. + +In a paper published on January 28th in Cell, Kole Roybal and his colleagues at the University of California, San Francisco propose a solution: tweaking cells to attack when they sense two different target chemicals instead of one. In isolation, neither target may be unique to cancer cells—but the combination might be. That could allow the immune system to be unleashed on tumours whilst sparing healthy tissue. + +It is a long way from the lab to the clinic. But the technology is moving fast, and researchers hope that, one day, engineered T-cells might be used to treat a wide range of diseases, including HIV, immune deficiencies, and autoimmune disorders. Besides the elegance of the idea of boosting the body’s own defences, the technology offers another big advantage over traditional drugs: once they have done their job, the engineered T-cells stick around in the body. That could offer protection against re-infection or the recurrence of a cancer. Chiara Bonini, of the San Raffaele Scientific Institute in Milan, told the meeting she had found that some modified cells were so durable that they might be able to protect their owners for a decade or more. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21693185-boosting-immune-system-fight-cancer-mr-t-cell/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Genetic engineering + +CRISPR crunch + +A row over who invented a new gene-editing technique heats up + +Feb 20th 2016 | Washington, DC | From the print edition + + + +“IT HAS not escaped our notice”, wrote James Watson and Francis Crick in 1953, “that the specific pairing we have postulated immediately suggests a possible copying mechanism.” What they had discovered was the structure of DNA and the way its halves matched up. It was a classic of understatement, for what they had noticed would revolutionise biology. + +With similar self-restraint, results published in Science, in 2012, noted “considerable potential for gene-targeting and genome-editing applications”. In fact, the study revealed a simple method allowing scientists to tinker, at will, with the genomes of animals and plants. It threw open the doors to a new and egalitarian era of genetic engineering—a way to tackle problems ranging from pest control to drug design to the undoing, with military precision, of harmful mutations. What remains to be determined, however, is who can claim to have discovered it. + + + +The CRISPR-Cas9 approach, as it is known, consists of a protein that can cut DNA and a short string of RNA that identifies where to do the cutting. It won two of the authors of the Science paper—Jennifer Doudna, of the University of California, Berkeley, and Emmanuelle Charpentier, of the Helmholtz Centre for Infection Research, in Germany—a $3m Breakthrough Prize in 2014. This week, Dr Doudna told a packed house at the AAAS meeting how it worked. She recounted how a serendipitous discovery about a bit of biochemistry, borrowed from a bacterium, led her team to a transformative technique that is already being put to use. + +In parallel, however, a nasty patent dispute has been unfolding. Although Dr Doudna and her colleagues were the first to file a patent on CRISPR-Cas9, they were not awarded the rights to exploit it commercially. That privilege was granted in 2014 to Feng Zhang, of the Broad Institute and the Massachusetts Institute of Technology (MIT), both in Cambridge, who also claim to have discovered the technique. This decision has been challenged, and in January the United States Patent and Trademark Office (USPTO) said it would begin a process to decide which side could claim ownership. + +Cutting questions + +The nub of the Broad’s argument is that what Team Doudna did is not gene-editing but rather little more than a study of the properties of a purified protein in a test tube. Robert Desimone, head of the McGovern Institute for Brain Research at MIT, has written that their work “involved no cells, no genomes and no editing”. Team Zhang, by this account, really put CRISPR-Cas9 to work by showing it functioned in mammalian cells. This view was reflected in a hackle-raising paper in January in Cell, by Eric Lander, head of the Broad, outlining a history of gene-editing that elevated the work of Team Zhang while marginalising that of Team Doudna. + +Supporters of Dr Doudna and her colleagues argue differently. Although CRISPR-Cas9 is by far the simplest gene-editing technique, it is not the first; others that rely on different nucleases, which do the DNA snipping, have been in use for a number of years. There is a pattern in the development of these other, trickier techniques: the substantive innovation, the one that ultimately leads to a functioning gene-editor, has been the ability to cut DNA at specific locations, something Dr Doudna did in fact show—in a test tube. + +The forthcoming USPTO proceedings must therefore determine who knew what and when. Although these days patents are granted on a simpler “first to file” basis, the dispute will be settled under the older, “first to invent” standard, which was in place when both applications were made. The question for the USPTO in its hearings, which start on March 9th, is which party made the discovery in the lab first—something that is as yet not clear. + +Team Zhang will be the “junior party” in the dispute, so the burden of proof lies with them. To win, Dr Zhang will need to show that he discovered CRISPR-Cas9 editing long before Dr Doudna’s paper in 2012. The Broad may even use as evidence work that was carried out in test tubes. + +None of this seems to have slowed commercial activity surrounding the technique. Editas, a company that currently holds the disputed patent, has said it will go public this year. Firms such as Caribou Biosciences, CRISPR Therapeutics and Intellia Therapeutics are also pursuing commercial applications of the approach; these either hold or license a patent filed by Dr Doudna that is pending. Whoever ultimately lays claim to the power over genomes that CRISPR-Cas9 represents, its “considerable potential” will be realised. + +But some things—including more prizes, and possibly a Nobel—do hang in the balance. When Dr Doudna took questions from the press at the AAAS meeting, there was more interest in legal, rather than scientific, issues. Asked how she was dealing with the furore, Dr Doudna said: “Fortunately there are people who are way above my pay grade dealing with that.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21693183-row-over-who-invented-new-gene-editing-technique-heats-up-crispr-crunch/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Analysing art + +Light, relief + +Revealing the painters and the paints of the ancients + +Feb 20th 2016 | Washington, DC | From the print edition + + + +IN THE West naturalistic portraiture began in classical times. Well-stocked museums in Europe and America are full of busts depicting recognisable individuals. Painting, though, is a more precarious art form. Paint peels. Wood and canvas backings rot. Frescoes crumble and fall. Few painted portraits survive from the classical period, but arid desert conditions have preserved one set: the funerary mummy pictures of the second century AD, from Tebtunis in Egypt. These portraits, affixed to mummies’ bandages, depict the defunct in fresh and lifelike detail. Though neglected when they were rediscovered just over a century ago, they are now subject to intense scientific scrutiny. One of the scrutineers, Marc Walton of Northwestern University, in Illinois, told the AAAS meeting what he and his colleagues have found. + +One conclusion is that they can assign groups of portraits to particular artists. The three shown, for example, seem to be by the same hand. Dr Walton’s method here is to map each picture’s contours by illuminating it sequentially from many directions, building a relief map from the resulting patterns of light and shade. This reveals both the size of the bristles of the artist’s brush and the order in which he has composed the elements of the portrait. For these three, the bristles were 60 microns across, ruling out their being from cattle (160 microns), pigs (120 microns) or cats (30 microns). The best guess is that the artist used squirrel-tail bristles, which are about the right size. On top of this, spectroscopy suggests that in two of the portraits, one mixture of pigments used came from the same batch. + +This scientific analysis is supported by an artistic one which shows, for example, a way of painting hands that is shared by all three pictures. At the very least, then, the portraits came from the same workshop. It seems most likely, though, that the same artist painted all of them. + +These studies also reveal the extent of trade in the Roman empire. The paintings contain haematite and goethite from Keos, in the Aegean Sea, and red lead from Rio Tinto, in southern Spain. The lime-wood plaques on which the portraits are painted are from central Europe. + +The painter was also a shrewd businessman; he mixed indigo and madder to replicate the effect of the period’s most expensive pigment, Tyrian purple, which was extracted from sea snails and worth more than its weight in gold. Determining whether he told his customers of this economy is not, however, within the range of Dr Walton’s instruments. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21693186-revealing-painters-and-paints-ancients-light-relief/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +The Romanov dynasty: Long they ruled + +Travails of a 19th-century feminist: Her truth marches on + +American Utopianism: Short-lived, much loved + +Syrian music: Songs of the city + +Damascus: Love story + +Elisabeth Vigée Le Brun at the Metropolitan Museum: Woman of the world + + + + + +Articles Sections Next + +The Romanov dynasty + +Long they ruled + +A cruel story of hereditary power + +Feb 20th 2016 | From the print edition + + + +The Romanovs: 1613-1918. By Simon Sebag Montefiore. Weidenfeld & Nicolson; 745 pages; £25. To be published in America by Knopf in May. + +RULING Russia was not a tempting prospect in 1613, when the first Romanov reluctantly took the throne. Over the next three centuries the shrunken, war-torn principality of Muscovy became a colossal empire, though at a huge cost to the Romanovs’ long-suffering subjects—and to the family itself, where the currencies of dynastic politics included murder, torture and betrayal (sexual and otherwise), as well as habitual cruelty. + +Simon Sebag Montefiore’s story starts with the miserable, melancholic Michael, dragged to the smouldering ruins of the Kremlin by feuding boyars who were desperate for unity in the face of defeat by mighty Poland. It features the greats: Peter, manically debauched, and Catherine, the “regicidal, uxoricidal German usurper”; and also dismal failures such as Alexander III, who ruled Russia as a “curmudgeonly landowner”. It concludes with the pathetic Nicholas II, the last tsar, deposed and hurriedly murdered alongside his wife and children (pictured) by the Bolsheviks in 1918. His ill-starred reign was redeemed only by the “grace, patience, humour and dignity” which the doomed royal family showed in their captivity. + +The system rested on the idea that only “an all-powerful individual blessed by God” had the clout (the author prefers “effulgent majesty”) to run such a vast state, while also personifying the sacred mission of Orthodox Christianity. The key was delegation. Peter and Catherine, for all their whims and tyrannical ways, were superb at this: Catherine’s favourite, Grigory Potemkin, was an outstandingly gifted administrator; Alexander Suvorov an equally impressive military commander. The other monarchs mostly tried to run Russia themselves, with results ranging from the indifferent to the disastrous. + +The author’s many fans will find much to please them. As with his previous books, notably on Stalin, Mr Sebag Montefiore, a British historical writer, has an eye for the telling detail which lifts an unfamiliar narrative. His mammoth history of Russia’s royal dynasty features many such vivid, amusing and surprising particulars. Indeed it is startlingly lubricious and gory. The abundant mutilations, executions and other horriblenesses which the principal characters inflicted on each other and their subjects are described in nightmarish detail. In particular, the private passions of the Romanov court, preserved in letters and diaries, are on public parade. A fortuitously placed wart on the penis of the “mad monk” Rasputin, whose scandalous behaviour and bad advice helped bring about the dynasty’s downfall, is cited as a possible reason for his success with aristocratic women. + +Gore and sex aside, the author’s pen produces reams of fluent, sometimes sparkling prose. Many of his reflections on the Romanov era apply well to Vladimir Putin’s domains now: the “Russian pattern of behaviour”, he writes, is “servility to those above, tyranny to those below.” The Russian court was an entrepot of power: its role as a broker allowed participants to amass wealth and bonded them in shared loyalty. But it also allowed them to compete without resorting to civil war or revolution. That sounds pretty much like the modern Kremlin. + +However, the complexity of the material is still daunting. Most readers will need to make full use of the family trees and cast lists placed helpfully at the start of each chapter. A great many names make very brief appearances. The colour illustrations help fix the main characters in the reader’s mind; a few more maps might have helped illustrate the ebb and flow of nations. + +The focus is tightly on the intrigues of the court, and on the Romanovs’ role in European high politics. Economics, business, society and culture get only the skimpiest treatment. That is a pity. Alexander Etkind, an émigré historian, has argued that the root of Russia’s misfortunes is its natural wealth, which encourages its rulers to plunder the country, like colonial masters, rather than develop it. Yet despite its mostly dreadful rulers, the vast land did begin to modernise. The tragedy is that the later Romanovs were too scared, and in Nicholas II’s case also too out of touch, to start the reforms that could have saved them. That dilemma is as familiar as it is ancient. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21693175-cruel-story-hereditary-power-long-they-ruled/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Travails of a 19th-century feminist + +Her truth marches on + +The life of Julia Ward Howe, who wrote “The Battle Hymn of the Republic” + +Feb 20th 2016 | From the print edition + + + +The Civil Wars of Julia Ward Howe. A Biography. By Elaine Showalter. Simon and Schuster; 243 pages; $28. + +HISTORY remembers Julia Ward Howe as the author of perhaps the most stirring song America has ever produced. In 1861, at the dawn of the civil war, she awoke with the lyrics to the “Battle Hymn of the Republic” almost fully formed in her head. Every American schoolchild knows the opening: “Mine eyes have seen the glory…” The anthem was sung at Winston Churchill’s funeral in 1965, at his request. + +Yet Howe was far more than a shooting star across America’s literary landscape, as Elaine Showalter makes clear in this delightful biography. She wrote poetry, plays and books, including an unfinished novel about an androgynous character who attracts the love of both men and women. Entitled “The Hermaphrodite” and written in the 1840s, it was vastly ahead of its time. Later, Howe emerged as a tireless speaker for feminist causes, notably women’s right to vote. Her life intersected with Henry Wadsworth Longfellow, the Brownings, Louisa May Alcott and Henry James. + +Howe’s letters and journals may hold the greatest fascination. These recorded with astonishing frankness her often bitter relationship with her husband, Samuel, whom Julia called Chev. The chief source of tension was that he wanted her to concentrate on the family and not a career. “Chev’s sourness of disposition becomes so dreadfully aggravated by any success of mine,” she wrote to her sister Annie. The tension could also emerge in her poetry: “Between us the eternal silence reigneth / The calm and separation of the tomb.” She published some of her writings behind his back. + +Howe, who bore six children, felt suffocated by the enforced focus on family. Early on, she realised that Chev would stay away from her bed when she was breast-feeding, so she extended her nursing, which helped with birth control. She was, she wrote to her sister Louisa, in “a state of somnambulism, occupied principally with digestion, sleep and babies…God only knows what I have suffered from this stupor.” Men, she complained, “think it glorification enough for a woman to be a wife and mother in any way, and upon any terms.” + +These are relatable sentiments, and the author wisely lets them carry the book. However, at times the account feels one-sided. Ms Showalter, a feminist literary critic and professor emeritus at Princeton University, relies heavily on Julia’s perspective, leaving little room for her husband to make his case. Samuel plainly limited Julia, but he was also a committed abolitionist (as was Julia) and a strong if flawed advocate for the blind. Ms Showalter notes Chev’s achievements and acknowledges that he had his defenders, yet still leaves the impression of a tyrant. Perhaps that is inevitable; marriage gripes did not flow prolifically from his pen. + +The “Battle Hymn” itself, which Howe wrote to a tune that Union soldiers were already humming, occupies only a handful of pages. Crucially, however, “its renown gave her the power and the incentive to emancipate herself,” Ms Showalter writes. Samuel died in 1876. Julia lived nearly 35 more years, finally able to embrace the cause of women’s liberation in full. A decade after she died, and thanks in part to the suffrage groups she led, women were able to lay claim to the ballot box. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21693179-life-julia-ward-howe-who-wrote-battle-hymn-republic-her-truth-marches/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +American Utopianism + +Short-lived, much loved + +How American idealists withdrew from the mainstream to create their own paradise + +Feb 20th 2016 | From the print edition + +Movers and Shakers + +Paradise Now: The Story of American Utopianism. By Chris Jennings. Random House; 488 pages; $28. + +UTOPIANISM in politics gets a bad press. The case against the grand-scale, state-directed kind is well known and overwhelming. Utopia, the perfect society, is unattainable, for there is no such thing. Remaking society in pursuit of an illusion not only fails, it leads swiftly to mass murder and moral ruin. So recent history grimly attests. + +Although true, that is just half the story. Not all modern Utopians aim to seize the state in order to cudgel the rest of the world back to paradise. Plenty of gentler ones want no more than to withdraw from the mainstream and create their own micro-paradise with a few like-minded idealists. Small experiments in collective living swept America, for example, early in the 19th century and again late in the 20th. + +Most failed or fell short. None lasted. All were laughed at. Yet in this intelligent, sympathetic history, Chris Jennings makes a good case for remembering them well. Politics stultifies, he thinks, when people stop dreaming up alternative ways of life and putting them to small-scale test. + +Though with occasional glances forward, Mr Jennings focuses largely on the 19th century. At least 100 experimental communes sprang up across the young American republic in the mid-1800s. Mr Jennings writes about five exemplary communities: the devout Shakers, Robert Owen’s New Harmony, the Fourierist collective at Brook Farm, Massachusetts, the Icarians at Nauvoo, Illinois, inspired by a French proto-communist, Etienne Cabet, and the Oneida Community in New York state practising “Bible communism” and “complex marriage”. + +The Shakers’ founder was a Manchester Quaker, Ann Lee, a devout mother worn out by bearing dead or dying children. In 1774 she left for the New World, determined to forswear sex and create a following to share her belief. An optimistic faith in human betterment, hard work and a reputation for honest trading helped the Shakers thrive. At their peak in the early 19th century, they had perhaps 5,000 members scattered in some 20 villages across eight states. They counselled celibacy, to spare women the dangers of child-bearing, made spare, slim furniture, now treasured in museums, and practised a wild, shaking dance that was taken as a sign of benign possession by the Holy Spirit. + +Robert Owen, a British mill-owner and reformer, treated private property, along with organised religion and marriage, as a social scourge. In 1825 he bought land for a farm-and-factory commune in Indiana. It attracted farmers, artisans and intellectuals. Tools, food and housing were free. The commune had mixed-sex schools and a library. It sponsored scientific research. Without a shared faith or purpose, however, the members split into competing groups. By 1827, Owen’s secular community had disbanded. The difficulty of pursuing micro-communism in a capitalist society also dogged Cabet’s American followers. His New World Icarians split into several rival groupings. Shakers, Owenites and Icarians focused, each in their own way, on duties. They sought to tame human selfishness. Gloomy as he looked in portraits, the Frenchman Charles Fourier concentrated on fun. His writings inspired the Brook Farm commune near Boston and, less directly, Oneida. Fourier wanted to free people’s instincts so that everyone, especially women, might lead a life of varied enjoyments and sensual delight. Stripped of emphasis on sex, Fourier’s message that a good life was a cultivated life, not one of striving and work, appealed to New England intellectuals who formed Brook Farm’s core. + +“Paradise Now” is more than a record of failed hopes. Some ideas spread to the mainstream. Fourier’s feminism is a good example. Fourierist communes foundered across the New World and Old; his ideas about gender equality lived on. No society could improve, Fourier believed, until women’s lot improved. “The best countries”, he wrote, “have always been those which allowed women the most freedom.” That is a common thought today. It was radical when Fourier wrote it in 1808. + +Women more generally are at the centre of the Utopian story. Some communes he writes about were democratic, some authoritarian. None was patriarchal. Mr Jennings’s book is rich in fond hopes and improbable ventures. Rather than nudging readers to mock, which is easy, the author reminds them instead to remember that the maddest-sounding ideas sometimes become motherhood. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21693176-how-american-idealists-withdrew-mainstream-create-their-own/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Syrian music + +Songs of the city + +Much is at risk in Aleppo, not least its traditional music + +Feb 20th 2016 | From the print edition + + + +AS THE bombs rain down, it is hard to think of Aleppo in terms of anything other than bloodshed, terror, and destruction. But the massive collateral damage includes the muwashshah, a courtly song-form to which Syria’s second city has been home for 800 years. The style is known as “Andalusian”, because that is where it originated—Al-Andalus, Moorish Spain. In the 12th century muwashshah-singing spread eastward, putting down roots in north Africa and the eastern Mediterranean, with its farthest outpost in Yemen. + +Wherever it settled, it took on local colour, but what it reflected was the unique Andalusian mix of Arab, Jewish, Christian and Berber influences. Its first and greatest celebrity was Ali Ibn Nafi, a charismatic black singer from Baghdad nicknamed Ziryab (Blackbird), court musician to the Emir Abd al-Rahman II in Cordoba. It became the fashion for rich patrons to maintain singing slave-girls whose refined artistry earned them rock-star fees and a life of luxury. + +Love-poetry is the main subject-matter of muwashshah and it may have influenced the poetry of the Provencal troubadours. But whether in the classical Arabic or in the Hebrew style, that love was simultaneously both human and divine. The poem’s typical setting would be a garden where a drinking party was served by a beautiful young cupbearer, but the love would be unrequited. The beloved would be unattainable; the lover would pine away for her (or him). No wonder this poetry and its music became the pabulum for Sufi gatherings, where this human-divine ambiguity was the keynote. + +Until revolution erupted in 2011, Aleppo and Damascus were the focal points for this music’s Syrian variant. The al-Kindi Ensemble—based in Paris, but with Syrian and Turkish musicians—was its highest-profile exponent. In its most recent CD, “Le Salon de Musique d’Alep”, al-Kindi skilfully evokes the atmosphere of this music, and the circumstances in which it was performed in Aleppo. Choral muwashshah are interwoven with instrumental and solo vocal improvisations to create the complex suites of music that are traditional in the Middle East, with a mood that is by turns exuberant and ecstatically devotional. + +The Syrian National Symphony Orchestra still gives occasional concerts of Beethoven and Brahms in Damascus; Western classical music has its own momentum. But when the bombs cease to fall on Aleppo, what will be left of its intimate traditional music? Without the continuity which has nurtured it in the heart of the old city, that music—like so much else in Syria’s traditional culture—is threatened with extinction. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21693178-much-risk-aleppo-not-least-its-traditional-music-songs-city/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Damascus + +Love story + +Two memoirs of falling in love with Syria + +Feb 20th 2016 | From the print edition + + + +Damascus Diaries: Life Under the Assads. By Peter Clark. Gilgamesh; 393 pages; £12.50. + +My House in Damascus: An Inside View of the Syrian Crisis. By Diana Darke. Haus; 282 pages; £9.99. + +WHAT is being lost as Syria bleeds? Not just lives, but a tradition of pluralism and tolerance, all too rare in the Middle East, and a rich cultural treasure-house. That is the message of these two very personal books by Britons who have lived in Syria and fallen in love with it. + +Peter Clark ran the British Council in Damascus for five years in the 1990s. His diaries—quirky, digressive, indiscreet—chronicle his attempts to build cultural relations in a police state filled with fear, corruption and red tape. Even friendly officials are wary of the ruling Baath party. + +When he starts English classes, they are infiltrated by the secret police. He persists, organising an exhibition of photographs of Syria by Freya Stark, a travel writer, in the 1920s and 1930s—and then, more ambitiously, an Anglo-Syrian production of Purcell’s opera “Dido and Aeneas”, which, against all odds, is a great success. In the midst of all this, he somehow finds time to translate a novel by Ulfat Idilbi, a spry old Syrian feminist in her 80s. + +There are political insights into the persecution complex of the Alawites, the heterodox religious minority, historically poor and marginalised, which has come to dominate the ruling civil and military elite. There is a chilling encounter with the president, Hafez al-Assad, whose “cold grey eyes” seemed to “look into your soul”. But the principal characters are the author’s Syrian friends—the writers, lawyers, bank managers and university professors with whom he eats, drinks, dances and gossips. He relishes the odd details of Syrian life: the old khan (or caravanserai) that used to be a lunatic asylum, the tea Syrian migrants have brought back from Argentina, the delightful word gommaji (an amalgam of Italian and Turkish), meaning a man who repairs punctures. + +Diana Darke’s book is set in the Syria of Bashar al-Assad, who succeeded his father in 2000. Ms Darke is a journalist and travel writer, and much of her early time in Syria was spent walking its hills and exploring its mosques, churches, monasteries and fortresses. But in 2005 she took the bold decision to use her life’s savings to buy an 18th-century Ottoman house in the Old City of Damascus. Her book, now in an enlarged third edition, tells the remarkable story of how she did so, despite a succession of legal and bureaucratic obstacles, and the onset of civil war. + +As with Mr Clark and his opera production, Ms Darke’s British and Syrian friends thought she was mad. Like him, she persevered. Interwoven with the story of how she renovated the house are asides on an array of issues—education, women’s rights, Islamic art—and on the Assads, whose regime she clearly detests. When the war forced her to leave, she turned the house into a refuge for Syrian friends escaping the violence. + +Both authors cling to the hope that Syria with its mosaic of communities and traditions, and its unique history and archaeology, will somehow rebuild itself. In the meantime their books serve as moving tributes to the Syria that has been lost. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21693177-two-memoirs-falling-love-syria-love-story/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Elisabeth Vigée Le Brun at the Metropolitan Museum + +Woman of the world + +An overdue tribute to an exceptional painter + +Feb 20th 2016 | NEW YORK | From the print edition + +The look of love + +SOME artists never live to enjoy acclaim. Vincent Van Gogh died in obscurity, having sold only one painting. Elisabeth Vigée Le Brun, a French portraitist working in the decades before and after the French revolution, had the opposite problem. For much of her life she was celebrated and sought out by the rich around Europe; she charged such high fees that few could afford her. Her contemporary, Jacques-Louis David, praised one of her paintings as better than his own. However, after her death in 1842 at the age of 86, she began to be overlooked. Only one previous show in America, at the Kimbell Art Museum in Fort Worth in 1982, has paid tribute to her evocative, graceful artistry. + +Le Brun is now being given her due. A new show of her work has travelled from the Grand Palais in Paris to the Metropolitan Museum of Art in New York, and will make its final stop at the National Gallery of Canada in Ottawa. The exhibition offers two parallel narratives. One is the evolution of Le Brun’s stellar career, which was launched after she began painting France’s queen, Marie Antoinette, when they were both 23. The other is the turmoil of French politics, which changed dramatically over the course of the artist’s long life. The revolution of 1789 caused an exodus among the country’s nobility. Le Brun painted many of them when they were in exile abroad. Her paintings, imbued with lightness and luxury before the revolution, took on a subtly sober tone in the years afterwards. + +Rarely is one afforded such an intimate view into the life of the rich in pre-revolutionary France, but Le Brun’s luscious paintings suggest how good the living was. She became expert at rendering fur, silk, ribbons and lace. The daughter of a hairdresser and a minor portraitist, Le Brun received no formal art training, but her innate talent helped her stand out early on, as did the support of the queen, who intervened on her behalf to make sure she would be accepted to the exclusive Royal Academy. Membership was capped at four women at a time; in its 150 years, just 15 women were admitted to the Academy, compared with 550 men. + +A life-size portrait of Marie Antoinette is on loan from Versailles, the first time it has travelled outside France. Although Le Brun made her name painting the queen, these stately works can feel more stiff than her others. A better picture is of Charles Alexandre de Calonne, the finance minister, who sits on a red chair, holding a letter marked “for the king”. The exhibition suggests how small the world of the French ruling class was during this period. Calonne’s portrait is placed next to one of the Countess du Barry de Cérès, his lover. + +When the revolution broke out, Le Brun worried that her relations with the monarchy would put her in danger and sought refuge in Italy. Leaving was an astute choice. One of her contemporaries, Adélaïde Labille-Guiard, stayed in France but received no commissions and had one of her best paintings destroyed. “Most artists lost a decade of work that they could have done because of the revolution,” says Katharine Baetjer, a curator at the Met. However, Le Brun remade her career several times while abroad, painting the nobility in Italy, Austria and the Russian empire. She was beautiful, socially gifted and an astute businesswoman. Few artists had such a global career and managed to overcome the sexism that hampered women’s artistic rise. + +Seeing Le Brun’s work assembled, it is clear that her early work was her best. She is gifted at painting children, including her daughter, Julie (pictured), to whom she was very close until their relationship shattered in adulthood. Her Russian paintings lack the subtle, introspective humanity of her portraits in France and Italy; many boast dramatic landscape backdrops and mythological elements. The most interesting work of her later years is a self-portrait, shorn of the frills and beauty of her youth. The contrast between it and an earlier, ebullient self-portrait she painted in 1789 for the Uffizi Gallery in Florence is striking. She had thought then that she might soon return to France, but it would be 20 years before she did. + +In all, Le Brun produced around 600 paintings. The Met has about 70 on display; it is half the size of the show at the Grand Palais. This is partly because there are no pictures in the exhibition from Russian museums as a result of a long-standing legal dispute that has raised fears that any loans to America may be seized. But the Met also felt that a new and perhaps untutored audience would have the patience only for a smaller, more tailored show. Those seeing Le Brun’s work for the first time will be impressed by her skill and sensibility and wonder why they have not met her sooner. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21693180-overdue-tribute-exceptional-painter-woman-world/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Antonin Scalia: Always right + + + + + +Articles Sections Next + +Obituary: Antonin Scalia + +Always right + +Antonin Scalia, Supreme Court justice, died on February 13th, aged 79 + +Feb 20th 2016 | From the print edition + + + +IF YOU were bold enough to ask Antonin Scalia questions, you had to be precise. Otherwise the bushy black brows would furrow, the chin would crumple and the pudgy, puckish body would start to rock, eager to get at you. Wasn’t he violently opposed to Roe v Wade, the abortion ruling? “Adamantly opposed, that’s better.” Did he have any guilty pleasures? “How can it be pleasurable, if it’s guilty?” Lesser lawyers who were vague in oral argument faced a barrage of sarcasm or, if he agreed with them, constant chiding to do better. (“That’s your strong point!”) Dissenting colleagues at the Supreme Court had their opinions described as “argle-bargle”, “jiggery pokery” and “pure applesauce”. + +Words had meaning. He revered them and used them scrupulously, even in insult. The law was written in words, and those ideally laid down bright lines for everyone to follow. As a committed textualist, he wasted no time looking to legislative history, the purported purpose of a law or the comments of some egregious congressman. It meant what it said. + +As for America’s constitution, speaking as the court’s originalist-in-chief, all that mattered was what its words meant when it was framed. He was in love with it; he was in awe of the men who wrote it; the late 18th century was a time when genius burst forth on the eastern seaboard, as it had in Periclean Athens. But for him the founding document was not “living”, not some organism endlessly adaptable to society, as Justice William Brennan, a distressingly liberal predecessor, used to think. It couldn’t be found suddenly to contain newfangled “rights” to privacy, as in Roe. It was dead! Dead! (Or perhaps, to be more tender and precise, “enduring”.) Its business was to block change, not advance it, and if it thereby obstructed something he himself, as a very conservative fellow, disliked, so much the better. Death-penalty cases he dismissed in minutes: the penalty was clearly constitutional. Church-and-state cases took no longer: the Framers had built no wall between them, and anyway, didn’t government get its authority from God? He would go home, to a Martini and a large dinner, and sleep like a baby. + +The beloved document, however, never promised perfect outcomes. In 1989 he found himself ruling (joining Brennan!) that it didn’t stop sandal-wearing bearded weirdos burning the American flag. (Personally, he would have clapped them all in jail; he longed to mark his opinion loudly with a rubber stamp, “Stupid but Constitutional!”) In several cases the constitution enhanced, rather than curbed, the rights of criminal defendants and terrorists. He did what he had to do. This made him a less predictable justice than many supposed. + +More often, the document said nothing at all about some modern obsession: torture, abortion, discrimination. But then such matters, as Justice Scalia kept saying, were never meant to be settled by an unelected committee of nine; they were meant to be resolved by the people, through legislation. If he were a king, as his swagger and opera-singing occasionally suggested, he would stretch the constitution any way he wanted. In fact, as he admitted with a grin, it handcuffed him. + +Not nearly enough, some people thought. His colleagues quailed when, in 1986, he first sat on the court as a brash 50-year-old whose experience had been mostly as a combative government lawyer: a justice who, in that sanctum of columns and deep judicial silence, was suddenly firing questions like grapeshot. (As the product of a Jesuit military academy, as well as an originalist, he loved to evoke cannon and muskets, and much enjoyed duck-shooting; he talked of tracking truth like a hunter in the forest, and was pleased to rule, in District of Columbia v Heller, that the Second Amendment did indeed mean that individuals had the right to bear handguns.) Though he was not the only New Yorker on the bench, he was the only spoiled-rotten Italian kid brought up proud and scrapping in Queens and familiar with rude Sicilian gestures. “Come right back at you!” was his motto, robed or not. + +Family-fond (nine children!), gregarious and funny, he got on with his colleagues, and made a surprising best buddy of the court’s chief liberal, Ruth Bader Ginsburg. But he spared no ammunition in dissent. As early as 2003, when Lawrence v Texas struck down sodomy laws, the majority had “signed on to the…homosexual agenda”. In 2015, when the court narrowly saved Obamacare, “We should [call] this law SCOTUScare.” He never tried for consensus, not rating it anyway, and increasingly sat with the minority, though always the most colourful and quotable. + +Facing down the Devil + +He spent three decades on the court, relishing every minute, and liking it even better when he could kick shins in public. Looking back, what pleased him most was to see more attention paid to text, legislative precedent sliding out, and far more questions from the bench: all his doing. He could detect, though, no fading of the fashion to force the constitution ever further into modern life. After abortion and same-sex marriage, why not assisted dying? The stalwart Catholic in him was revolted at the thought. He knew for certain, though, that the Framers were on his side; the Devil was on the other; and that heaven was his portion, for he was always right. + +Dig deeper: Antonin Scalia’s death starts a political battle + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21693161-originalist-chief-devout-and-colourful-end-was-79-obituary-antonin-scalia/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Food Prices + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Feb 20th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21693202/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Feb 20th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21693198-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Feb 20th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21693200-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Feb 20th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21693201-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Food Prices + +Feb 20th 2016 | From the print edition + + + +Food prices have tumbled by 40% from their peak in the summer of 2012, according to The Economist’s commodity-price index. Agriculture is an energy-intensive sector, and since 2014 the plunging oil price has reduced input costs. Although the price of sugar recovered briefly last autumn, years of oversupply have taken their toll. The weak Brazilian real has encouraged exporters in the world’s largest producer to increase their dollar-denominated sales. Small herd numbers explain the healthy price of American beef: 2014 saw the lowest cattle inventory since the 1950s. But prices may have peaked; cheap corn will help increase supply. Hailstorms in Kenya explain the spike in tea prices. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21693199-food-prices/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Feb 20th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21693195-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 19 Feb 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +The world economy: Out of ammo? + + + + + +The South China Sea: Sunnylands and cloudy waters + + + + + +America’s Supreme Court: After Scalia + + + + + +War in Syria: The peril of inaction + + + + + +Reforming FIFA: SEC as a parrot + + + + + +Letters + + + +On refugees, Europe, brains, China, Bernie Sanders, the Cleveland Browns, millennials: Letters to the editor + + + + + +Briefing + + + +Fighting the next recession: Unfamiliar ways forward + + + + + +United States + + + +The Supreme Court: Courting controversy + + + + + +George W. Bush in South Carolina: Bush land no more + + + + + +Sanders and the black vote: Slow Bern + + + + + +The campaigns: Heard on the trail + + + + + +Analysing Trump Inc: From the Tower to the White House + + + + + +Lexington: Michael Bloomberg’s moment + + + + + +The Americas + + + +Bolivia’s presidential referendum: They think it’s all Evo + + + + + +Jamaica’s election: Let them eat goat + + + + + +Venezuela’s economy: Praying to pay + + + + + +Bello: Rigging Peru’s election + + + + + +Asia + + + +Coup politics in Thailand: Twentieth time lucky? + + + + + +Politics in the Maldives: Archipelago of ire + + + + + +Alcohol in India: Taxing tipplers + + + + + +Media freedom in Japan: Anchors away + + + + + +South Korea and its neighbours: The poor relations + + + + + +China + + + +Dementia: State of minds + + + + + +Trees in Hong Kong: Fragrant arbour + + + + + +Left-behind children: A slow awakening + + + + + +Banyan: Core values + + + + + +Middle East and Africa + + + +Vladimir Putin’s war in Syria: Why would he stop now? + + + + + +Counting the dead: Quantifying carnage + + + + + +Elections in Iran: The great candidate cull + + + + + +Student protests in South Africa: Whiteness burning + + + + + +Elections in Uganda: No jam today + + + + + +Europe + + + +Anti-austerity politics: Fudging the revolution + + + + + +French politics: Comeback skid + + + + + +Russia’s lawless economy: Night of the long scoops + + + + + +Europe’s civil courts: The wheels of justice grind slow + + + + + +Charlemagne: A graveyard of ambition + + + + + +Britain + + + +Wales: Full steam ahead? + + + + + +Hotels v Airbnb: Build them and they will come + + + + + +The newspaper business: Papers without paper + + + + + +University housing: Flat out + + + + + +An energy find: Oil be damned + + + + + +Premier League football: Golden tickets + + + + + +Cornwall’s economy: Winter sun + + + + + +Bagehot: A tale of two cities + + + + + +Bagehot: Internship + + + + + +International + + + +Financial transparency: The biggest loophole of all + + + + + +Tax evasion in Panama: The problem child + + + + + +Business + + + +Mobile telecoms: Wireless: the next generation + + + + + +Mining: Core ores + + + + + +Apple’s encryption battle: Tim Cook, privacy martyr? + + + + + +Breakfast cereals: Soggy sales + + + + + +Bombardier: Plane truths + + + + + +Greek businesses: An actual Grexit + + + + + +Schumpeter: The measure of a man + + + + + +Finance and economics + + + +Manufacturing: A hard pounding + + + + + +Buttonwood: Liquid leak + + + + + +The fallout from low interest rates (1): Nope to NIRP + + + + + +The fallout from low interest rates (2): The lowdown + + + + + +A Saudi-Russian oil accord: Another Doha merry-go-round + + + + + +The gig economy: Smooth operators + + + + + +Hedge funds: Not dead, just resting + + + + + +Free exchange: Slight of hand + + + + + +Science and technology + + + +The American Association for the Advancement of Science: Cassava-nova + + + + + +Immunology: Mr T-cell + + + + + +Genetic engineering: CRISPR crunch + + + + + +Analysing art: Light, relief + + + + + +Books and arts + + + +The Romanov dynasty: Long they ruled + + + + + +Travails of a 19th-century feminist: Her truth marches on + + + + + +American Utopianism: Short-lived, much loved + + + + + +Syrian music: Songs of the city + + + + + +Damascus: Love story + + + + + +Elisabeth Vigée Le Brun at the Metropolitan Museum: Woman of the world + + + + + +Obituary + + + +Obituary: Antonin Scalia: Always right + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Food Prices + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.02.27.TXT b/homeworks/B20769/homework1/data2/2016.02.27.TXT new file mode 100644 index 0000000..29fdceb --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.02.27.TXT @@ -0,0 +1,5731 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: Indonesia + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Feb 27th 2016 | From the print edition + + + +After protracted negotiations that ran into the night, David Cameron declared victory in obtaining “special status” for Britain in the European Union. He promptly set a referendum for June 23rd to ask voters if they want to stay in or leave the EU. But London’s mayor, Boris Johnson, attacked him for scaremongering and declared allegiance to the leave campaign. Some cabinet members also took a different position to their leader, including the ministers for justice (Michael Gove), pensions (Iain Duncan Smith) and Northern Ireland (Theresa Villiers). The prime minister will have to rely on the opposition Labour Party to help persuade the public; MPs in his own party are split down the middle. See here and here. + +The potential for an exit from the EU spooked markets, sending sterling into a spiral. The pound dropped from $1.44 to below $1.39 and also tumbled against the euro. + +The migrant crisis sweeping Europe is likely to get worse rather than better, as new figures from the International Organisation for Migration showed that arrivals in Greece and Italy have already breached 110,000 this year. It took until June last year before 100,000 arrived. Greece is bearing the brunt. In February alone nearly 43,000 had arrived, as many as in the whole of 2014. + +Hungary called a referendum on whether or not it should be forced to take in refugees under a resettlement scheme. Viktor Orban’s government has mounted a legal challenge against the relocation of migrants across Europe. A number of countries are restricting the numbers of refugees who cross their borders. + +After two months of deadlock in Spain, the Socialist party agreed to form a government with the centrist Ciudadanos party. However, the parties only make up 130 seats in the 350-seat parliament. This means that the support of either the conservative People’s Party or the far-left Podemos movement will still be needed to form a majority. + +In France trade unions opposed the Socialist government’s proposal to reform the country’s notoriously rigid labour laws. The government wants, among other things, to clarify redundancy rules and weaken the 35-hour work week. The proposal will officially be presented next month and will require the support of the right-wing opposition. + +Thanks, but no thanks + + + +Bolivians narrowly voted against a referendum proposal to allow the left-wing president, Evo Morales, to run for a fourth term. Mr Morales, the country’s first president of indigenous descent, has been in office since January 2006. If he had been allowed to contest the next election in 2019 and won he would have stayed in power until 2025. + +Police in Brazil arrested João Santana, who managed the successful election campaigns of the president, Dilma Rousseff. They say they have evidence that he received money paid in bribes by firms that won contracts with Petrobras, the state-controlled oil giant. Mr Santana says the charges are “baseless”. The electoral court is investigating allegations that bribes were funnelled towards Ms Rousseff’s campaign in 2014. + +Jats your quota + +Rioting by Jats, a caste-like community, in Haryana state threatened the water supply to Delhi, the capital of India. The local government promised to grant “backward” caste status to the fairly prosperous group, guaranteeing Jats a quota of government jobs. See article. + +America and China said they had made progress in their discussions about a UN resolution in response to North Korea’s recent nuclear and missile tests. After meeting in Washington, China’s foreign minister, Wang Yi, and America’s secretary of state, John Kerry, said they had agreed on a draft proposal. Mr Kerry hinted that, if passed, the resolution would “go beyond” previous ones, which have imposed economic sanctions on North Korea. + +Not a vote for change + +Iran was due to hold a parliamentary election on February 26th. Thousands of moderate candidates have been excluded, but hardliners could still take a beating if voters want to show their appreciation of the nuclear deal that has led to many sanctions being lifted. See article. + +A ceasefire in Syria was ready to come intoeffect, though Russian and American strikes on Islamic State and the al-Qaeda-linked group Jabhat al-Nusra will continue. Chances are not high that the ceasefire will hold. See article. + +Ibrahim Sharif, a prominent Bahraini opposition figure, was sentenced to a year in prison for insulting the Gulf state’s monarchical system. + +Saudi Arabia and Bahrain warned their citizens not to travel to Lebanon, and the United Arab Emirates said it was banning its nationals from visiting the country. This was in response to Lebanon’s failure to condemn an Iranian attack on Saudi Arabia’s embassy in Tehran last month. + +Oh Jeb! + + + +Jeb Bush dropped out of the presidential race after finishing a distant fourth in the Republicans’ South Carolina primary. He had outspent all his rivals and a year ago was the favourite to become the party’s candidate, but a lacklustre campaign left him way behind Donald Trump and most of the others. After Mr Bush pulled out Marco Rubio picked up more endorsements from party bigwigs as the candidate best placed to beat Donald Trump, who chalked up another handsome victory, in Nevada. On the Democratic side Hillary Clinton won the party’s caucuses in Nevada. The candidates face a big test on March 1st, Super Tuesday, when a dozen states will vote. + +Barack Obama renewed his call on Congress to close the Guantánamo detention centre, which still houses 91 suspected terrorists. Congress is unlikely to oblige the president, especially as he didn’t say where the prisoners should be relocated. + +Republicans on the Senate Judiciary Committee dashed hopes of holding hearings to confirm a replacement for the late Antonin Scalia on the Supreme Court. Every one of them signed a letter saying it was their “consensus view”. It is unlikely that this will stop Mr Obama from exercising his constitutional right to nominate someone. Reports suggest he is considering Brian Sandoval, the Republican governor of Nevada. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21693641-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Feb 27th 2016 | From the print edition + + + +The London Stock Exchange and Deutsche Börse hoped it would be third time lucky, as the pair confirmed they were in advanced talks about merging. The London and Frankfurt exchanges tried to integrate in 2000 and 2005, but their overtures were rejected by shareholders. Times have changed since then. Only 10% of the LSE’s and Deutsche Börse’s revenues now come from trading in equities; both have expanded into derivatives, clearing houses and other financial services. See article. + +Deposed from office + +China’s government ousted Xiao Gang as head of the securities regulatory commission for failing to prevent the bubble, or manage the bust, in the country’s stockmarkets, which fell sharply again this week. Mr Xiao’s replacement is Liu Shiyu, the chairman of Agricultural Bank of China and a former deputy governor of the People’s Bank of China. See article. + +China, including Hong Kong, has surpassed America as the country with the most dollar billionaires, according to Hurun, a publication, and is home to 568 billionaires compared with America’s 535. The figures for China were based on share prices in January, and take account of tumbling stockmarkets. India came third on the list with 111 billionaires. Britain and Germany were joint fourth with 82 each, followed by Russia on 80. + +Mark Carney, the governor of the Bank of England, again dampened expectations of an interest-rate rise this year when he told a committee in Parliament that, on the contrary, he wasn’t ruling out cutting the bank’s benchmark rate to zero if the British economy worsened. + +Focus on Asia + +A fall in profit in its Asian business helped push HSBC to an $858m quarterly pre-tax loss (pre-tax profit for all of 2015 came in at $19 billion). It also had to put aside money for legal costs as American regulators have now added HSBC to the list of banks they are investigating for employment practices in Asia. Standard Chartered made an annual loss of $2.4 billion, its first since 1989. + +Saudi Arabia’s oil minister surprised energy markets by reiterating that he would be happy to see oil prices fall to $20 a barrel to squeeze out “inefficient, uneconomic producers”. The minister’s remarks somewhat undermine the kingdom’s pact with Russia to freeze oil production in order to boost prices (though only if other big producers do the same). + +BHP Billiton joined the list of mining giants to publish dismal earnings on the back of the slump in commodity prices, when it reported a $5.7 billion six-month loss. Andrew Mackenzie, the Anglo-Australian company’s chief executive, said the mining industry was in a “new era” and needed “a different dividend policy to handle that”. BHP duly slashed its dividend by 74%. + +A proposal that would have seen a Chinese tech company take a stake in an American one fell apart after the Committee on Foreign Investment in the United States, a government body, said it would open an investigation. The $3.8 billion deal would have given Tsinghua Unigroup, which is linked to Tsinghua University in Beijing, a 15% holding in Western Digital, which is based in Irvine, California. + +Sharp, a struggling Japanese electronics company, said it had agreed to a takeover from Foxconn, a Taiwanese firm that assembles the iPhone in China. But Foxconn announced a delay to sealing the bid because Sharp had inserted new terms into their agreement. Foxconn had bid for Sharp against a fund backed by the Japanese government. + +Sysco, an American company that is the world’s largest supplier of catering food, agreed to buy Brakes Group, a food-services firm in Britain with operations in other European countries, in a deal valued at $3.1 billion. Brakes supplies food to pubs as well as hospitals, restaurants and schools. + +The rhetoric intensified between the FBI and Apple over a legal order to get the company to unlock an iPhone used by one of the attackers in last December’s terrorist attack in California. A Department of Justice filing claimed that Apple’s argument—that unlocking the phone would weaken its encryption protections—was a marketing ploy to strengthen its business model. Tim Cook, Apple’s boss, said that what the FBI was asking it to do was the “software equivalent of cancer”. + +Last year’s must-have + +America’s consumer-safety commission deemed that no brand of hoverboard (self-balancing scooters that don’t actually hover) currently on the market is safe. The agency said it had received 52 reports of fires caused by batteries overheating in hoverboards in the past few months, which in two cases caused homes to burn down. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21693642-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Feb 27th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21693643-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +The Republicans: Time to fire him + +Britain and the European Union: The real danger of Brexit + +Making Indonesia work: Open up + +Traffic in megacities: Jam today + +Privacy and security: Code to ruin? + + + + + +Articles Sections Next + +The Republicans + +Time to fire him + +Donald Trump is unfit to lead a great political party + +Feb 27th 2016 | From the print edition + + + +IN A week’s time, the race for the Republican nomination could be all but over. Donald Trump has already won three of the first four contests. On March 1st, Super Tuesday, 12 more states will vote. Mr Trump has a polling lead in all but three of them. Were these polls to translate into results, as they have so far, Mr Trump would not quite be unbeatable. It would still be possible for another candidate to win enough delegates to overtake him. But that would require the front-runner to have a late, spectacular electoral collapse of a kind that has not been seen before. Right now the Republican nomination is his to lose. + +Worse, it might not stop there. Polls show that 46% of Americans of voting age have a “very unfavourable” opinion of Mr Trump, which suggests his chances of winning a general election are slight. But Mr Trump’s political persona is more flexible than that of any professional politician, which means he can take it in any direction he wants to. And whoever wins the nomination for either party will have a decent chance of becoming America’s next president: the past few elections have been decided by slim margins in a handful of states. When pollsters ask voters to choose in a face-off between Mr Trump and Hillary Clinton, the Democratic front-runner wins by less than three percentage points. Mr Trump would have plenty of time to try to close that gap. An economy that falls back into recession or an indictment for Mrs Clinton might do it for him. + +That is an appalling prospect. The things Mr Trump has said in this campaign make him unworthy of leading one of the world’s great political parties, let alone America. One way to judge politicians is by whether they appeal to our better natures: Mr Trump has prospered by inciting hatred and violence. He is so unpredictable that the thought of him anywhere near high office is terrifying. He must be stopped. + +The world according to Trump + +Because each additional Trumpism seems a bit less shocking than the one before, there is a danger of becoming desensitised to his outbursts. To recap, he has referred to Mexicans crossing the border as rapists; called enthusiastically for the use of torture; hinted that Antonin Scalia, a Supreme Court justice, was murdered; proposed banning all Muslims from visiting America; advocated killing the families of terrorists; and repeated, approvingly, a damaging fiction that a century ago American soldiers in the Philippines dipped their ammunition in pigs’ blood before executing Muslim rebels. At a recent rally he said he would like to punch a protester in the face. This is by no means an exhaustive list. + +Almost the only policy Mr Trump clearly subscribes to is a fantasy: the construction of a wall along the southern border, paid for by Mexico. What would he do if faced with a crisis in the South China Sea, a terrorist attack in America or another financial meltdown? Nobody has any idea. Mr Trump may be well suited to campaigning in primaries, where voters bear little resemblance to the country as a whole, but it is difficult to imagine any candidate less suited to the consequence of winning a general election, namely governing. + +With each victory, the voices trying to make peace with Mr Trump’s hostile takeover of the Republican Party grow louder. He has already been endorsed by some Republican congressmen. Some on the left point out that he is less conservative on social and economic questions than some of his rivals (while privately hoping the Republicans nominate him so that Mrs Clinton can give him a shellacking). Some on the right argue that Mr Trump is merely playing a role, blowing chilli powder up the nostrils of the politically correct, and that in essence he is a pragmatic New York property developer who likes to cut deals. Were he to win the nomination, their argument runs, he would be privately intimidated and would appoint sensible advisers to whom he would defer. + +This is wishful thinking by those who want their side to win at any cost. There is nothing in Mr Trump’s career—during which he has maintained close control of the family business he runs, and often acted on instinct—to suggest that he would suddenly metamorphose into a wise chairman, eager to take counsel from seasoned experts. For those who have yet to notice, Mr Trump is not burdened by a lack of confidence in his own opinions. + +Republican in name only + +For too long, the first instinct of Ted Cruz and Marco Rubio, the leading alternatives to Mr Trump, has been to avoid criticising the front-runner in the hope of winning over his voters later. The primaries may at times resemble a circus, but they also provide a place to test candidates for leadership and courage. So far both men have flunked that test. Republicans need to take Mr Trump on, not stand transfixed by what is happening to their party. More than 60m people voted for Mitt Romney in 2012. A big majority are decent, compassionate, tolerant people who abhor political violence, bigotry and lying. Thoughtful conservatives will be heart-broken if asked to choose in November between a snarling nativist and a Democrat. + +If The Economist had cast a vote in the Republican primaries in Iowa, New Hampshire, South Carolina or Nevada we would have supported John Kasich. The governor of Ohio has a good mixture of experience, in Congress and in his home state as well as in the private sector. He has also shown bravery, expanding Medicaid in Ohio though he knew it would count against him later with primary voters, as indeed it has. But this is not Mr Kasich’s party any more. Despite his success in New Hampshire, where he came second, Mr Kasich is the preferred choice of less than 10% of Republican voters. + +If the field remains split as it is now, it is possible for Mr Trump to win with just a plurality of votes. To prevent that, others must drop out. Although we are yet to be convinced by Mr Rubio (see article), he stands a better chance of beating Mr Trump than anyone else. All the other candidates—including Mr Cruz, who wrongly sees himself as the likeliest challenger— should get out of his way. If they decline to do so, it could soon be too late to prevent the party of Abraham Lincoln from being led into a presidential election by Donald Trump. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21693579-donald-trump-unfit-lead-great-political-party-time-fire-him/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Britain and the European Union + +The real danger of Brexit + +Leaving the EU would hurt Britain—and would also deal a terrible blow to the West + +Feb 27th 2016 | From the print edition + + + + + +THE battle is joined, at last. David Cameron has called a referendum on Britain’s membership of the European Union for June 23rd, promising to campaign hard to stay in. What began as a gambit to hold together his divided Tory party is turning into an alarmingly close contest. Betting markets put the odds that Britons opt to leave at two-to-one; some polls suggest the voters are evenly split; several cabinet ministers are campaigning for Brexit. There is a real chance that in four months’ time Britain could be casting off from Europe’s shores. + +That would be grave news—and not just for Britain. A vote to leave would damage the economy, certainly in the short term and probably in the long run. (As financial markets woke up to the prospect, the pound this week fell to its lowest level against the dollar since 2009.) It would imperil Britain’s security, when threats from terrorists and foreign powers are at their most severe in years. And far from reclaiming sovereignty, Britons would be forgoing clout, by giving up membership of a powerful club whose actions they can influence better from within than without. Those outside Britain marvelling at this proposed act of self-harm should worry for themselves, too. Brexit would deal a heavy blow to Europe, a continent already on the ropes. It would uncouple the world’s fifth-largest economy from its biggest market, and unmoor the fifth-largest defence spender from its allies. Poorer, less secure and disunited, the new EU would be weaker; the West, reliant on the balancing forces of America and Europe, would be enfeebled, too. + +Dreams, meet reality + +The Brexiters’ case is that Britain is held back by Europe: unshackled, it could soar as an open economy that continued to trade with the EU and all round the world. That is possible in theory, but as our briefing (see Briefing) explains, it is not how things would work in practice. At a minimum, the EU would allow full access to its single market only in return for adherence to rules that Eurosceptics are keen to jettison. If Norway and Switzerland (whose arrangements with the EU many Brexiters idolise) are a guide, the union would also demand the free movement of people and a big payment to its budget before allowing unfettered access to the market. + +Worse, the EU would have a strong incentive to impose a harsh settlement to discourage other countries from leaving. The Brexit camp’s claim that Europe needs Britain more than the other way round is fanciful: the EU takes almost half Britain’s exports, whereas Britain takes less than 10% of the EU’s; and the British trade deficit is mostly with the Germans and Spanish, not with the other 25 countries that would have to agree on a new trade deal. + +To some Eurosceptics these hardships would be worth it if they meant reclaiming sovereignty from Europe, whose bureaucrats and judges interfere with everything from bankers’ bonuses to working-time limits. Yet the gain would be partly illusory. In a globalised world, power is necessarily pooled and traded: Britain gives up sovereignty in exchange for clout through its memberships of NATO, the IMF and countless other power-sharing, rule-setting institutions. Signing up to treaties on trade, nuclear power or the environment involves submitting to regulations set jointly with foreigners, in return for greater gains. Britain outside the EU would be on the sidelines: notionally independent from, but in fact still constrained by, rules it would have no role in formulating. It would be a purer but rather powerless sort of sovereignty. + +One exception is immigration, the area over which many Eurosceptics most long for control. Half of Britain’s migrants come from the EU, and there is little the government can do to stop them. If Britain left the union, it could. But doing so would have a double cost. Gaining the right to stop immigration from the EU would almost certainly mean losing full access to the single market. And reducing the numbers of immigrants would hurt Britain’s businesses and public services, which rely on French bankers, Bulgarian builders and Italian doctors. + +A global concern + +The longer-term costs would go beyond economics. Brexit might well break up the United Kingdom itself. Scotland, more Europhile than England, is again agitating for a divorce; if Britain decides to leave Europe, then the Scots may at last have a point. Brexit could also dangerously unsettle Northern Ireland, where the peace process over two decades has depended on the fact that both Ireland and Britain are members of the EU. The Irish government is among the most vocal foreign supporters of the campaign for Britain to stay in. + + + +In graphics: A guide to “Brexit” from the European Union + +Ireland is not the only country that would suffer. European leaders know Brexit would weaken a club already in deep trouble over such issues as migration and the euro crisis. And Europe would be poorer without Britain’s voice: more dominated by Germany; and, surely, less liberal, more protectionist and more inward-looking. Europe’s links to America would become more tenuous. Above all, the loss of its biggest military power and most significant foreign-policy actor would seriously weaken the EU in the world. + +The EU has become an increasingly important part of the West’s foreign and security policy, whether it concerns a nuclear deal with Iran, the threat of Islamist terrorism or the imposition of sanctions against Russia. Without Britain, it would be harder for the EU to pull its global weight—a big loss to the West in a troubled neighbourhood, from Russia through Syria to north Africa. It is little wonder that Russia’s Vladimir Putin is keen on Brexit—and that America’s Barack Obama is not. It would be shortsighted for Eurosceptics to be indifferent to this. A weakened Europe would be unambiguously bad for Britain, whose geography, unlike its politics, is fixed. + +A lot thus rests on the tight race now under way. For those who believe, as this newspaper does, in free trade and freedom of movement, the benefits to Britain of its membership of the EU have never been in much doubt. What more sceptical sorts must now recognise is that Brexit would also weaken Europe and the West. The stakes in Mr Cameron’s great gamble are high; should he fail, the losses would be widely felt. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21693584-leaving-eu-would-hurt-britainand-would-also-deal-terrible-blow-west-real-danger/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Making Indonesia work + +Open up + +The next revolution that Indonesia needs + +Feb 27th 2016 | From the print edition + + + +AN INDONESIAN trade minister, Rachmat Gobel, once wanted to ban the import of secondhand clothing because, he said, it could transmit the HIVvirus. He also restricted imports of beef to promote the dubious goal of self-sufficiency; the result was not rendang in every pot, but soaring beef prices, butchers’ strikes and protests. Mercifully, Mr Gobel was shown the door last August, and his replacement, Tom Lembong, seems to believe that a country’s trade ministry should facilitate rather than impede free trade. + +But Mr Gobel’s views remain all too common in Indonesia, and Mr Lembong’s all too rare. The world’s fourth-most populous country is blessed with a natural bounty of coal and oil under ground and, above it, forests and plantations producing rubber and palm oil. But its huge potential in other areas is still unrealised (see our special report in this week’s issue). As with many resource-dependent economies, protectionism and rent-seeking have flourished. The government shields large domestic players at the expense of consumers. In 2007 Indonesia expanded the number of industries in which foreign investment is barred or restricted from 83 to 338, making it South-East Asia’s most hostile country to foreign capital. When commodity prices were high and China was buying, this model appeared to work reasonably well. Indonesia’s economy grew, and if foreign companies wanted what was in Indonesian mines they had to play by Indonesian rules. Now that commodity prices have plummeted, output is sputtering and Indonesia’s weaknesses are apparent. + +Joko Widodo, Indonesia’s president (pictured above), who is widely known as Jokowi, came to power promising reform. He has said a lot of sensible things about boosting infrastructure, reducing subsidies and attracting foreign investment, particularly the sort that brings high-value manufacturing and service jobs. But the kinds of firms that produce these jobs are choosy. If Indonesia does not create the right conditions, they will not invest, and Jokowi’s promise to return Indonesia to 7% growth—a tall order at the best of times—will go unkept. + +Unfortunately, his record has fallen short of the reformist rhetoric. He got a few big things right after taking office, cutting wasteful fuel subsidies and introducing a one-stop shop for business licensing, which simplified a notoriously Byzantine process. More recently he has trimmed Indonesia’s negative investment list, removing barriers to foreign investors in 30 areas of the economy, including cold storage and warehousing, which should help stabilise food prices and help fishermen sell their catches. + +The other Jokowi + +Alas, these reforms have been countered by other policies that smack of the old protectionism. Even as Jokowi lowered some restrictions, he increased barriers to foreign investment in 19 other industries. In July he unveiled a law requiring that at least 30% of components in tablets and smartphones sold in Indonesia should be made in the country—despite lacking the industrial base to produce them. + +This balance-sheet is not good enough. If Jokowi is to be the man to lead Indonesia to sustained prosperity, he needs to toughen his reformist mettle—and quickly. The to-do list is a long one, starting with slashing the negative-investment list and lifting restrictions on agriculture that keep rice prices high. None of this will be easy in a country where powerful vested interests have ensured that protectionism has predominated for decades. But it is not impossible. Indonesians have shown great bravery in their revolutions for independence and freedom. Now the economy needs to be unchained. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21693576-next-revolution-indonesia-needs-open-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Traffic in megacities + +Jam today + +To get the world’s biggest cities moving, stop subsidising driving + +Feb 27th 2016 | From the print edition + + + +CITIES are the world’s economic engines—and the bigger they are, the better. Middle-aged ones like London and New York are booming, and would be doing even better if they were not constrained by green belts, zoning and other NIMBYism. But the real giants are in the emerging world. Fast-growing metropolises like Lagos and Manila, with populations of more than 15m, perform an amazing alchemy by turning poor rural migrants into better-educated, wealthier urbanites. Unfortunately, these engines can barely run. + +Megacities are seizing up. Surveys of São Paulo suggest that half of all adults spend at least two hours a day travelling. Lagos has such epic traffic jams that an army of street hawkers plies the roads, selling peanuts, Christmas trees and puppies to a captive market of drivers. Last autumn the chairman of Manila’s transport authority was an hour late for a live television interview. He was stuck in traffic, of course (see article). + +Residents shake their heads and blame corruption, potholes, undisciplined drivers and growing affluence for the jams. They are partly right, especially about the affluence. More urbanites with more money means more wheels on the road: new-car sales in the Philippines jumped by 91% between 2013 and 2015 alone. But the main reason the megacities are stuck is that their governments are doing almost nothing to reduce traffic, and quite a lot to make it worse. + +Some continue to fix fuel prices at artificially low levels. Others have cut subsidies, although oil prices have been so low that consumers are yet to be convinced that governments will allow costly fuel. And governments favour drivers in other ways. Most megacities have minimum parking rules, which specify how many parking spaces must be provided whenever a new shop, office or block of flats is built. Lagos insists on one parking space for every 40 square metres of “worshipping area” in a church. These laws greatly encourage driving and, in effect, impose a tax on non-drivers, because businesses pass on the cost of building the spaces to all their customers. + +Even megacities that try to force drivers out of their cars often achieve the opposite. The modish method, which is used to tackle air pollution as well as traffic, is to ban cars from the roads on specific days, determined by the last digit of their number plates. Beijing was an early adopter. Delhi tested an odd-even scheme in January and will have another go in the spring. But the history of these schemes, in Mexico City and elsewhere, suggests that they do not cut traffic for long. Instead they are a boon to carmakers: any family that can afford it simply buys a second car with a different number plate. + +Inching forward + +Many big cities are now building “rapid bus” networks, with dedicated lanes. If well designed, these are a cheap, effective form of public transport. But governments that invest in public transport while retaining the inducements to drive are mostly wasting their money. Ideally, all would follow London, Singapore and Stockholm in charging drivers to move around the city at congested times. But cutting subsidies would be a good start. So hats off to the great cities of Latin America, which are doing more than those in Africa or Asia to reform. São Paulo has abolished parking minimums; Mexico City has quietly allowed its number-plate scheme to fade, while building a large rapid-bus network. These cities are still stuck, but the road ahead is clearing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21693577-get-worlds-biggest-cities-moving-stop-subsidising-driving-jam-today/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Privacy and security + +Code to ruin? + +The rights and wrongs of Apple’s fight with the FBI + +Feb 27th 2016 | From the print edition + + + +CITIZENS have a right to both security and privacy. The difficulties arise when these two rights are in conflict, as they now are in the battle between the world’s most valuable company and its most famous law-enforcement agency. Apple has refused to comply with a court order to help the FBI unlock an iPhone used by Syed Farook, one of the terrorists involved in the San Bernardino shootings in December. The company says the government’s request fundamentally compromises the privacy of its users; the feds say that Apple’s defiance jeopardises the safety of Americans (see article). + +Some frame the stand-off in terms of the rule of law: Apple cannot pick and choose which rules it will obey, they say. That is both true and beside the point. The firm has the right to appeal against a court order; if it eventually loses the legal battle, it will have to comply. The real question is whether Apple’s substantive arguments are right. That hinges on two issues. + +The first is whether the FBI’s request sets a precedent. The law-enforcers say not. This is not an attempt to build a generic flaw in Apple’s encryption, through which government can walk as needed. It is a request to unlock a specific device, akin to wiretapping a single phone line. The phone belonged to a government department, not Farook. Apple and other tech firms regularly co-operate with the authorities on criminal cases; this is no different. Yet Apple is being asked to do something new: to write a piece of software that does not currently exist in order to sidestep an iPhone feature that erases data after ten unsuccessful password attempts. Later models of the iPhone than the one Farook used are harder to compromise in this way. But if the court’s ruling is upheld, it signals that companies can be compelled by the state to write new operating instructions for their devices. That breaks new ground. + +The second issue is whether that precedent is justified. And that entails a judgment on whether security would be enhanced or weakened by Apple’s compliance. In the short term, the answer is that security will be enhanced. Farook was a terrorist; his phone is the only one being unlocked; and the device might give up the identity of other malefactors. But in the longer term, things are much fuzzier. + +Security does not just mean protecting people from terrorism, but also warding off the threat of rogue espionage agencies, cybercriminals and enemy governments. If Apple writes a new piece of software that could circumvent its password systems on one phone, that software could fall into the hands of hackers and be modified to unlock other devices. If the capability to unlock iPhones exists, so will the temptation for the authorities to use it repeatedly. And if tech firms are forced to comply with this sort of request in America, it is harder for anyone to argue against similar demands from more repressive governments, such as China’s. This newspaper has long argued against cryptographic backdoors and skeleton keys on these grounds. It is possible to imagine a scenario that might override such concerns: if information is needed to avert a specific and imminent threat to many lives, for example. But in this instance, Apple’s case is the stronger. + +Core arguments + +This battle presages others. If the courts rule against Apple, it will work to make its devices so secure that they cannot be overridden by any updates. In that event (or, indeed, if the tech firm wins the Farook case), legislators will be tempted to mandate backdoor access via the statute book. If Tim Cook, Apple’s boss, is not to hasten the outcome he wishes to avoid, he must lay out the safeguards that would have persuaded the firm to accede to the FBI’s request. Tech firms are at the centre of a vital policy debate (see article). Apple has rejected the authorities’ solution. Now it must propose its own. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21693578-rights-and-wrongs-apples-fight-fbi-code-ruin/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +International students, Trump history, China's economy, monuments, tax reliefs, linguistics, Supreme Court: Letters to the editor + + + + + +Articles Sections Next + +International students, Trump history, China's economy, monuments, tax reliefs, linguistics, Supreme Court + +Letters to the editor + +Feb 27th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Let them in + +Britain should be rolling out the red carpet for the best and brightest foreign students (“Train ’em up. Kick ’em out”, January 30th). The country’s global status in science and innovation is built on the creativity that is sparked when people from different cultures collaborate. + +What do Ernst Chain, Andre Geim and Venkatraman Ramakrishnan have in common, apart from their Nobel prizes? They were all welcomed to Britain from abroad: a world without their pioneering work at British universities on penicillin, graphene and ribosomes would be a much poorer one. + +Foreign students propelled Silicon Valley and now they drive innovation and entrepreneurship in Britain. If we turned our backs on international students, Britain’s economy and society would lose. The cost to the world would be incalculable. + +ALICE GAST + +President + +Imperial College + +London + +Your article explores the many arguments for opening the doors of colleges and societies to international students (“Brains without borders”, January 30th). + +There are many benefits. It can lower costs to host societies in interactions with global communities—as foreign students learn English, America and Britain have to train fewer people in foreign languages to do business with the world. + +As professionals, the skills and systems learned as international students, such as accounting and logistics management, can be transferred to their home countries. Also, when firms from the host country go overseas, foreign students who have returned home are potentially superior recruits because of their knowledge of the language and culture of the employer. Additionally host universities could tap foreign-born alumni for big endowments. + +ANNY WONG + +The Woodlands, Texas + + + + + +The origin of species + +Your article on the origins of the Trump family (“Kallstadt’s king”, February 13th) missed an important event in the story of the young Friedrich Trump. You had him arriving in America and eventually making his financial “nest-egg” in Washington state before returning to Germany. In fact, he, like so many others in 1897, was caught up in the Klondike Gold Rush. He sold his business in Seattle and joined the thousands who travelled by steamer to Dyea and carried supplies over the Chilkoot Pass to the Klondike. Along the way he opened a canteen for hungry miners, and he set up a hotel and restaurant in Bennett and Whitehorse. Mr Trump ran a fine eatery but the bulk of the profits came from liquor and sex (normal for hotels in that area). He was shrewd enough to know that the real money was in “mining the miners”, which is essentially still what the Trump business does today. He left the Yukon after three years when the Mounties began to tighten up on gambling and prostitution and returned to Germany with $582,000 in today’s money: the source of the future Trump property fortune. + +Donald Trump owes other things to Canada too. His first wife, Ivana, lived there before moving to New York. + +ROBERT HOLMES + +Whitehorse, Canada + + + + + +Promoting the economy + +*“Grossly Deceptive Plans” (January 30th) raised the point about local officials in China who are promoted for boosting GDP growth. Local officials often lack the knowledge or capacity to develop and implement polices that achieve the targets set by central government. As in other countries, China’s local officials do not always understand the complicated relationship between social, environmental or poverty alleviation policies. In some cases, gains in one area can be undermined by actions in another. + + + +The fact these areas are managed by a number of different ministries, each with varying degrees of power and agendas, means it is difficult for provincial officials to obtain meaningful data in these fields. Because of this, for many officials GDP is the easiest measure by which to report “progress”. Poverty reduction through economic growth is still seen as the ultimate aim of policy planning. + + + +REBECCA NADIN + +Asia-Pacific Director + +INTASAVE-CARIBSAVE + +Beijing + + + + + +Filling in the gaps + +What to do about Confederate monuments? One suggestion as you reported is to add plaques to them explaining their background (“Recast in stone”, February 6th). Statues and monuments are immediately visual experiences, not reflective mental experiences. Remove the sabre from the hand and put into it a lash and from the other hand a chain that leads to a collar around the neck of some poor miserable wretch. Add one or more statues of slaves to every monument to the Confederacy and the viewer will immediately and viscerally understand what the civil war was about and what Confederate soldiers fought for. Instantly those men will be deprived of the patina of nobility and gallantry that they did not earn and do not deserve to have attributed to them. + +STEPHEN MERRIMAN + +Bang Bua Thong, Thailand + + + + + +Nothing personal + +Although you get much right about the need to simplify tax reliefs (“Spaghetti Junction”, February 13th), your praise for the personal allowance for income tax is undeserved. Far from being a “simple and progressive policy”, continued increases in the allowance primarily benefit the top half of the income distribution, with the lowest-paid 20% of workers not benefiting at all. + +To prevent the policy being even more regressive, it is also withdrawn at £100,000 ($140,000) further complicating the tax code. If you envisage tax relief as public spending, it is a hugely inefficient and wasteful policy compared with other options. The £86 billion that HMRC loses in the personal allowance is almost triple the £30 billion it spends on the entire tax-credit system, which does much more to improve the finances of the low paid, and incentivise work. A first step to creating a better system would be to stop increasing the personal allowance and spend the money on reducing the withdrawal rates of social-security benefits, so that the lowest paid keep more of what they earn. + +DUNCAN EXLEY + +Director of the Equality Trust + +London + +* In your article about the government’s fiscal policy you suggest that the value of the British film tax relief to the British economy is unclear. However, figures on actual film production spend in Britain on production facilities, locations and jobs published by the British Film Institute (BFI) are crystal clear. They show that over £1.4 billion ($1.9 billion) was contributed to Britain’s economy last year alone and over £10 billion since the film tax relief was introduced in 2007. HMRC’s own published statistics state that £1.5 billion has been paid out through the film tax relief directly to film producers since 2007. + +The film tax relief has been a key factor in enabling the British film industry to achieve a leading position in a global industry making films that people in Britain and around the world want to see. + +TINA McFARLING + +Media Advisor, Corporate, Partnerships & Industry, BFI + +London + + + + + +Linguists unite + +The return of the Johnson language column to the print edition is a wonderful offer to your readers (“What would the doctor prescribe?”, January 30th). As a bilingual who has always been fascinated by words, reading such a column is always a pleasure to me. In this digital age of instant messaging where words are contracted and defaced beyond recognition, engaging in some lexicographic exercises has advantages. It will allow us to pause and think about the most important tool of the human race—language. + +Our casual attitude toward the improper usage of words and phrases, which I also notice in my own native tongue, Amharic, the national language of Ethiopia, is developing a culture of carelessness that is reflected in our written and spoken communications. I hope your fortnightly column will continue to raise issues that are relevant to the predicaments that the world’s languages face at present. + +TEWODROS ABEBE + +Washington, DC + + + + + +Order, order + + + +The Republican-controlled Senate will probably deprive Barack Obama of the opportunity to appoint a new Supreme Court justice (“Courting controversy”, February 20th). But the Democrats could have the last word. Hillary Clinton and Bernie Sanders should pledge, prior to the election, that they will appoint Mr Obama to the Supreme Court if they win the presidential election. Mr Obama is brilliant, has the experience of dealing with constitutional-law matters, and he wouldn’t be the first former president to be appointed to the Supreme Court. + +PAUL FEINER + +Greenburgh, New York + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21693550-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Britain and the EU: The Brexit delusion + +Britain’s EU reforms: A change of status + + + + + +Articles Sections Next + +Britain and the EU + +The Brexit delusion + +David Cameron will struggle to win a referendum on Britain’s EU membership. If he loses, the result will be messy at best and at worst disastrous + +Feb 27th 2016 | From the print edition + + + +THE referendum on Britain’s membership of the European Union that David Cameron has called for June 23rd will be not only the most crucial event in this parliament but the most important in Europe in years. It will determine the prime minister’s future, for a start: it is hard to see him staying in office if he fails to win his campaign to remain in the EU. It may be decisive for the future of the United Kingdom, as Scottish Nationalists have said a Brexit would trigger another vote on Scottish independence. And the departure of one of the heavyweight members would have a huge impact on the future of the EU. + +The referendum was called after Mr Cameron completed his promised renegotiation of the terms of Britain’s membership at a marathon EU summit in Brussels that ended late on February 19th. In all four areas where he demanded change, he won concessions that could prove useful, even if they do little to swing the result of the referendum (see article). + +Yet it is hard to portray these relatively small reforms as the fundamental change in Britain’s relationship with Europe that Mr Cameron once promised. Nor did he secure the “full-on” treaty change he once said he needed. As a result, his deal suffered a predictable trashing in Britain’s Eurosceptic press and from many backbench Tory MPs. This was a blow to Mr Cameron. But the referendum will be decided not on the details of his deal but on the far bigger issue of whether voters believe that Britain is better off in or out of the EU. + +On this, a heavier blow for the prime minister came when six of his 29 senior ministers confirmed, after a special cabinet meeting on February 20th, that they would campaign to leave. Besides such usual suspects as Iain Duncan Smith, the work and pensions secretary, their number included Michael Gove, the justice secretary and a close friend of the prime minister. And on February 21st came the biggest setback to Mr Cameron, when Boris Johnson, the popular mayor of London and aspirant to the Tory leadership, announced that he too would campaign to leave (see article). + +Even before these leading Tories had come out, opinion polls suggested the outcome of the referendum would be close. Since Mr Cameron first promised an in/out referendum in a speech at the London office of the Bloomberg news agency in January 2013, there has usually been a clear lead for staying in (see chart 1). As worries have grown over Europe’s economic woes and its migration crisis, the gap has narrowed. The adverse reception of Mr Cameron’s Brussels deal and the decision of Mr Johnson to throw his weight behind the leave campaign may shift opinion further. + + + +Belatedly business and the financial markets have woken up to the rising danger of Brexit. This week sterling slid to its lowest level against the dollar in eight years. Bosses of many of the biggest companies in Britain have come out strongly in favour of remaining in. Yet the chances that Brexit may happen look greater than at any time in the past five years. And that makes it worth dwelling on what Brexit would entail—and how it measures up to the promises of would-be leavers. + +An infernal article + +The merits of the claims of the leavers are hard to judge because nobody can be sure what relationship a departing Britain would have with the EU. There is no precedent aside from Greenland. It left the club in 1985, but it is tiny and remains a dependency of Denmark, which is still in the EU. The assumption, now confirmed by Mr Cameron, is that a vote for Brexit would trigger an application to withdraw under article 50 of the Lisbon treaty. + +Article 50 provides that the EU will negotiate a new agreement with the withdrawing country over two years. That can be extended, but only by unanimous agreement. The article also specifies that, when agreeing a new deal, the EU acts without the involvement of the country that is leaving. To get a feel for the negotiating dynamic, imagine a divorce demanded unilaterally by one partner, the terms of which are fixed unilaterally by the other. It is a process that is likely to be neither harmonious nor quick—nor to yield a result that is favourable to Britain. + +Indeed, the incentive for other EU countries is not to act with generosity. A decision to leave will be seen by many as a hostile and destabilising act for a union that is already in deep trouble. Voters across Europe are disillusioned with Brussels. Populist parties in France, the Netherlands, Italy and elsewhere are watching the Brexit debate closely. The EU will be desperate to show that a decision to leave does not have a painless outcome. + + + +The immediate effects of a Brexit vote are likely to be bad. Prolonged uncertainty over Britain’s new relationship with the EU will discourage investment, especially foreign direct investment, of which Britain is the biggest net recipient in the EU. This is particularly worrying for a country with a large current-account deficit that must be financed by capital inflows. Fears about the current account, Britain’s credit rating and Brexit have been drivers of the pound’s recent fall (see chart 2). + +The longer-term effects of Brexit are also likely to be adverse. Most studies suggest that economic growth would suffer. A detailed analysis from the Bank of England in October found that EU membership had benefited the British economy. Attempts to model the consequences of Brexit point to economic damage. Two American banks, Goldman Sachs and Citigroup, recently warned that growth and the pound would fall further after a vote to leave the EU. + +The trickiest issue for a post-Brexit Britain would be how to maintain full access to the EU’s single market, the world’s biggest. This is crucial since almost half Britain’s exports go to the rest of the EU. It matters greatly for the fastest-growing component of exports, services (including financial services). It will not be simple. + +Norway and Iceland have access to the single market through their membership of the European Economic Area (EEA). But they are obliged to observe all the EU’s single-market regulations without having a say in them, to make payments into the EU budget (in Norway’s case, around 90% of Britain’s net payment per head) and to accept free movement of EU migrants. As a Norwegian minister once put it, “if you want to run Europe, you must be in Europe. If you want to be run by Europe, feel free to join Norway.” + +Switzerland, which is not in the EEA, has negotiated bilateral agreements that give access for goods but not most services. It has to keep to most single-market rules, contribute to the budget and accept free movement of people. The Swiss have been warned that, if they try to implement a 2014 referendum demand for limits on the latter, their trade agreement with the EU will lapse. + +Countries such as South Korea and, now, Canada, have free-trade deals with the EU that do not require observing all its rules, paying into the budget or accepting migrants. But such deals do not circumvent non-tariff barriers, nor do they cover financial services. Moreover, the EU has or is negotiating free-trade deals with America, China and India, from which a post-Brexit Britain would be excluded. The EU has 53 such deals. Britain would have to try to replicate them, a huge challenge given its lack of trade negotiators and the length of time even simple trade talks take. + +Heading for the Brexit + +The Brexit lobby responds with three arguments. The first is to assert that both sides have a strong interest in a free-trade deal. This is true but any deal is unlikely to cover services. The second is to claim that, because Britain runs a big trade deficit with other EU countries, they need the British market more than Britain needs theirs. This is a fallacy: Britain accounts for only 10% of EU exports, while the EU takes almost half of Britain’s. Moreover, most of the British trade deficit with the EU is with just two countries, Germany and Spain—yet a trade agreement must be endorsed by the other 25 members too. + +The third argument is that a post-Brexit Britain could strike new free-trade deals swiftly. Yet experienced trade diplomats are doubtful. Tough negotiators like the South Koreans are unlikely to offer Britain the same deal they gave the EU. America, China and India have made clear that they would be more interested in a deal with the EU than one with Britain alone. When it comes to opening China to more trade, say, the negotiating clout of the world’s biggest market far outweighs Britain’s alone. + +The next issue is regulation. The leave campaign claims that EU red tape hobbles Britain’s firms and strangles growth. Yet studies by the OECD, a rich-country club, find that, despite being in the EU, Britain’s product and labour markets are among the rich world’s least regulated. Moreover, a post-Brexit bonfire of market-unfriendly rules is fanciful. Britain led the charge for environmental rules, for example. The biggest interventions in the market, such as tight planning laws and a new living wage that will reach £9 ($13) an hour by 2020, are home-grown. + +Immigration policy, on the other hand, would surely change post-Brexit. Although libertarians who want to leave favour more, not less migration, most Brexiters do not. Indeed, the big selling-point of their campaign is to restore British control of the frontiers by stopping free movement of people. It will be hard to do this and keep full access to the EU’s single market; it may also compromise the position of 2m British citizens who live in other EU countries. But the bigger point is that immigration curbs would do economic damage. Studies find that immigrants are net contributors to the economy because they pay far more in taxes than they take out in benefits. + +Brexit would also have implications for the survival of the United Kingdom. The Scottish National Party is campaigning to stay in. If the leave side wins thanks to English votes, which is quite possible, the SNP will demand another independence referendum, which it expects to win. Northern Ireland is also troubled by Brexit: Britain’s economic, trade and political relations with Ireland depend heavily on both belonging to the EU. This helped underpin the peace process in Northern Ireland. + +Then there are the implications for the EU’s place in the world. As opinion polls have shown, voters in other EU countries agree with their governments in wanting Britain to stay in. Besides its size, global reach and free-trade instincts, Britain is a useful counter to the dominance of Germany and France. And, as the biggest military power in the EU, it is central to the club’s foreign-policy and security clout. + +Less clout if it’s out + +The growing role of the EU in global diplomacy, ranging from the imposition of sanctions on Russia through a nuclear-weapons deal with Iran to action against piracy off Somalia, would be severely diminished were Britain no longer in the club. The fight against terrorism would also be harder. It may be possible to try to replicate the police, security-service and judicial co-operation built up within the EU to fight terrorism, but it would take time and might not work as well. + +Brexiters answer that NATO, not the EU, is the guarantor of the West’s security. A post-Brexit Britain could still co-operate with the EU on security issues, including the European arrest warrant and exchanges of information. They also see no reason why leaving the EU should upset either Northern Ireland or the union with Scotland. Mr Cameron disagrees. In Brussels he said firmly that Britain would be safer and stronger, not just more prosperous, in the EU. In the coming weeks, he will make domestic and national security a large part of the argument for remaining in. + +The strongest argument for Brexit is that it is the only way to restore sovereignty to Parliament and escape the jurisdiction of the European Court of Justice. Mr Cameron’s plan to counter this with an act that reasserts parliamentary sovereignty will not convince many, for the ECJ would still stand supreme. In a world with a network of international treaties and obligations, sovereignty is not a completely binary matter; as Mr Cameron put it this week, it would be possible to regain the illusion of sovereignty but without real power. + +The conclusion is that the purported benefits from Brexit are uncertain and may prove illusory, while the risks are much greater if voters choose to leave. Similar sentiments led Britons to vote to stay in the European project in 1975, and Scots to remain in the union in 2014. And yet the outcome in June seems more uncertain. + +That is partly because the leave side has had a good few weeks. But it is also because voters will be influenced not by a cool calculation of costs and benefits but by their general view of Europe. And in the midst of a huge refugee crisis and stuck in the economic doldrums, Europe does not look inviting. Referendums are always unpredictable: a sudden shock in the markets, or even a terrorist incident, could swing voters. There is all to play for. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21693568-david-cameron-will-struggle-win-referendum-britains-eu-membership-if-he-loses/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Britain’s EU reforms + +A change of status + +Britain’s prime minister got his deal—but it will make little difference + +Feb 27th 2016 | BRUSSELS | From the print edition + +Have they made Cameron feel special? + +AFTER 48 hours of hard bargaining and little sleep David Cameron, Britain’s prime minister, emerged from a summit meeting of European leaders at midnight on February 19th to announce a deal on his four demands for reforms to the European Union. Donald Tusk, the European Council president, declared the creation of a “special status” for Britain. Whether it will count for much in the referendum is much less certain. + +Agreement came most easily on competitiveness and the promise of more free-trade deals, to which all EU countries pay lip service, even when obstructing them in practice. Mr Cameron’s demands on sovereignty were harder to settle. All agreed to give the EU’s 28 national parliaments a “red card” whereby support from 55% of them could block EU laws. But several leaders were hostile to Mr Cameron’s insistence on an exemption for Britain from the EU’s goal of “ever closer union”. He won it by what he called a “live and let live” approach: Britain will not impede others’ desire for deeper integration so long as it can opt out. + +The most important change Mr Cameron wanted was a guarantee that the bigger euro-zone block could not gang up on non-euro countries. The 19-strong euro area, with votes weighted according to the size of countries, now has the power to legislate for the entire EU. He has secured agreement for enhanced observer status for non-euro countries in euro-zone meetings and an understanding that a non-euro country can appeal to an EU summit if it objects to decisions taken at such meetings. + +The most heated argument came over Mr Cameron’s desire to stop new EU migrants to Britain from claiming in-work benefits for four years, and to cut the level of benefits paid for children whom they have left in their home countries. As a compromise, he secured an “emergency brake” that will let Britain delay paying benefits for a seven-year period and cut child benefits for existing migrants after 2020. East Europeans are unhappy with these changes. Yet they seem unlikely to reduce the numbers of EU migrants, since most come to Britain to work, not to claim benefits. + +Mr Cameron insists his changes are legally binding and irreversible. But though promises were made to change the treaties in future and the European Parliament said it would help with legislation, some may still be challenged either politically or in the European Court of Justice. One proposal he was, however, happy to accept: that if Britons vote for Brexit, the entire deal will lapse. This is meant to bolster Mr Cameron’s insistence that a vote to leave is just that—and not as Boris Johnson, the mayor of London, suggests, merely a prelude to getting a better deal from Brussels. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21693569-britains-prime-minister-got-his-dealbut-it-will-make-little-difference-change-status/print + + + + + +Previous Articles Sections Next + + + + + +United States + + + + +Marco Rubio: The moral of his story + +The Nevada caucuses: Winning big + +The campaigns: Heard on the trail + +The religious left: The least of these + +Fringe movements: Finding Keepers + +Lexington: A Latino firewall totters + + + + + +Articles Sections Next + +Marco Rubio + +The moral of his story + +To some the Republicans’ best hope is a shallow opportunist; to others, an extremist. Might Marco Rubio be both? + +Feb 27th 2016 | GILBERT, SOUTH CAROLINA AND TALLAHASSEE | From the print edition + + + +HIS father Mario, a struggling bartender; Oriales, a hotel maid and devoted mother; Pedro, his garrulous, cigar-smoking grandfather, known to the grandchildren as Papá; an elder brother, also Mario, who became a Green Beret: the supporting cast in Marco Rubio’s back-story is a technicolour pageant of striving Cuban immigrants turned patriotic Americans. If Mr Rubio somehow manages to seize the Republican nomination from Donald Trump—a feat he seems best-placed to achieve—Americans will hear his story often. But what, exactly, is its moral? + +In Mr Rubio’s telling, his biography is a fable of America, which “changed the history of my family”. In no other country could someone who, as a child, was taken by his father to ogle the dreamlike mansions of the rich, rise to the Senate, and possibly beyond. It follows that America must not forsake its rugged individualism: “We don’t want to become like the rest of the world,” Mr Rubio insists, delighting his many fellow exceptionalists. + +It is also, of course, a story about Mr Rubio’s own exceptionalism—as some voters, knowing American meritocracy is often more promise than reality, intuitively understand. “It’s really cool,” said a young man cradling a baby after a rally in Rock Hill, South Carolina, “that he could navigate through all these obstacles—it wasn’t just handed to him on a silver platter.” The contrast with some other candidates, privileged in money, schooling or connections, is plain. As for his difficulties with mortgage payments and ill-advised property dealings, which some have used against him: Mr Rubio adduces them, like his student debt and rueful talk of post-dating cheques in pinched times, as yet more evidence that he alone can “talk to people who are living the way I grew up”. + +With its hardscrabble, Everyman beginning, the tale also has a gratifyingly upbeat pay-off, featuring a photogenic family—his student-sweetheart wife is a former Miami Dolphins cheerleader—as well as success. And, as no other candidate could, Mr Rubio recounts all this as insinuatingly as a Hollywood weepie. Were he not a politician, it has been said, he could have been a televangelist; he might also have made it as a stand-up comic. His scripted jokes are actually funny, and, contrary to the impression created by his robotronic malfunction in the Republican debate in New Hampshire, he ad-libs with an easy charm. He explains complex subjects, such as the national debt, persuasively. He likes hip-hop. + +These attributes bolster his claim that, in a field of Republican gargoyles, he is the likeliest to prevail in November. Yet the longer he remains in the race, the louder two key criticisms will become. They seem contradictory, but both contain elements of truth. One is that, beneath the altar-boy haircut, winning smile, chirpy voice and banter about football, Mr Rubio is as ideologically extreme as anyone in the contest. The other is that the feel-good narrative masks a void. + +“Marco Rubio”, Jeb Bush once said, “makes me cry,” a remark that would have been prophetic had he not added “for joy”. Mr Bush was Florida’s governor during Mr Rubio’s lightning rise through its House of Representatives, from whip, to majority leader, to become, at 34 (he is now 44), its first Cuban-American Speaker. Alongside the portraits of his more grizzled predecessors in the capitol in Tallahassee, his is startlingly boyish. Mr Bush presented him with a sword, symbolising conservatism; at least, that is what it symbolised then. + +The pollster in the sky + +Strikingly, in the face-off that ended with Mr Bush’s withdrawal on February 20th—which, in a saner primary season, might have been the headline drama—most of Florida’s Republican establishment lined up behind the former governor. “They all went in one direction like fish in a tank,” says Johnnie Byrd, a previous Florida Speaker and among the minority who favoured Mr Rubio. Gratitude for Mr Bush’s patronage helps explain the preference; some “Jebbies” may just have jumped too early. But it also reflects a sense, even among the operators in Tallahassee, that the younger man’s breakneck ambition was offputting. Dwelling on polls, fundraising, the mechanics of the game, Mr Rubio’s memoir, “An American Son”, reinforces the image of a pure politician. “Did God read polls?” he asks when, during his long-shot bid for the Senate in 2010, his wife tells him to trust the Almighty. + +Both the resentment, and the air of weightless ambition, have been reinforced by his luck. For if Mr Rubio could not rely on a parental Rolodex, as he puts it, his career has been blessed in other ways: seats opening up at serendipitous moments, money and well-paid jobs magically materialising. Norman Braman, a Miami car-dealing tycoon, took a lucrative shine to him, donating generously and employing his wife. Not long after he secured the Florida Speakership, Mr Rubio landed a $300,000-a-year post at a politically connected legal firm (he once specialised in land-use law). Some of his jobs were not terribly demanding, suggesting, to his critics, a pattern of absenteeism stretching to his poor attendance record in the Senate. + +“He’s just like Barack Obama,” worried a woman in Florence, where Tim Scott, a South Carolinian senator, whooped Mr Rubio onto the stage like a boxing announcer. The implicit concern is that he has more offices to his name than achievements, or, some say, principles. They point, above all, to his gymnastics over immigration: running for the Senate, he opposed a path to citizenship for illegal immigrants, then embraced it as part of a doomed reform in 2013; now, in the xenophobic heat of the campaign, he downplays that idea, arguing that terrorism has upended even unrelated aspects of his policy. (This revision could forfeit some of the Hispanic votes that Republican apparatchiks covet—though given the tensions between Hispanic communities, confidence that he would deliver them may be naive.) + +Still, anyone who thinks Mr Rubio entirely devoid of convictions should watch his farewell speech in Tallahassee in 2008. “God is real,” Mr Rubio passionately declared: “He loves you...whether you are an embryo or behind bars.” God’s providence, and Mr Rubio’s gratitude for it, often feature in his story. His faith is longstanding: as a boy, he would don a sheet after mass and pretend to be a priest. (It is also ecumenical: in Miami, he attends both Catholic and Baptist churches, and during a childhood spell in Las Vegas went to a Mormon one.) + +And for all his pole-climbing, his philosophy has been consistent. A better reading of his flip-flop-flip on immigration may be that his liberal stance was an anomaly. His tougher line today—no Syrian refugees; fewer family-reunion visas—fits into anultraconservative outlook that his story has sometimes camouflaged. + +Smile and smile and be a Tea Partier + +A standard critique of Republican strategy is that it exploits social issues to divide and distract groups whose economic interests lie in more redistributive government. Mr Rubio’s tactic, alleges an old adversary from his days in Florida politics, is to “use [his background] as a shield to push forward his agenda”. Or, as Mr Rubio writes of Mr Obama in his memoir: “His personality and language gave an impression of moderation, but his ideas and voting record” revealed a zealot. + +Take his avowed commitment to helping the little guy. He acknowledges the alienation some members of minorities feel, drawing on his own experiences in cosmopolitan Miami. He speaks warmly of early intervention for disadvantaged toddlers, and of leniency towards mildly straying youngsters. He can be insightful about America’s precarious place in a globalised, post-industrial economy. But when it comes to taxation, his priorities lie elsewhere. One of his favourite lines is that the poor are not made richer by making the rich poorer. Under his plans there is no fear of that: his proposal to scrap taxes on capital-gains and dividends would instead make the rich richer. + +The exigencies of the primaries have sharpened Mr Rubio’s tone. But, in content, he is a veteran hardliner. Dan Gelber, formerly the Democratic minority leader in the Florida house, calls him “the best spokesman that the severe right-wing could ever hope for” (adding that he “was never dishonest or disreputable”). Indeed, while Mr Rubio is more clubbable than his fire-breathing rival Ted Cruz—witness his ongoing stream of endorsements from congressmen and governors—he and Mr Cruz, another Cuban immigrant’s son and devout first-term senator, have more in common than either cares to admit. + +An elegant weapon for a more civilised age + +For example, though Mr Rubio doesn’t deny climate change, as Mr Cruz does, he says, in effect, that America shouldn’t do much about it. He claims gun controls fail wherever they are tried. Like Mr Cruz he wants to abolish the Department of Education; ditto, naturally, Obamacare. He opposes abortion unless the mother’s life is endangered. He wants the legalisation of gay marriage to be reversed. + +His upbringing shaped his global outlook as well as his morality. His focus on foreign affairs may partly be designed to imbue his youthfulness with gravitas. But it can also be traced to the entrepôt of Miami-Dade, which, quips Mr Gelber, may be the only county with a foreign policy. What he somewhat prematurely calls “the Rubio doctrine” reflects the congenital neoconservatism of many exiles: he may not be quite as hawkish as his revered Papá, who thought Margaret Thatcher should invade Argentina as well as the Falklands, but he comes close. He says he would cancel the nuclear deal with Iran on his first day in office, and undo the normalisation of relations with Cuba. He wants to send troops into Syria, and take on Bashar al-Assad and Islamic State at once. He threatens to pack off more terrorists to Guantánamo. + +The final chapter + +“Just because someone is wrong,” Mr Rubio says, “doesn’t mean they are bad.” Wrong is wrong, however, and, beyond the politesse, he shows little appetite for compromise on the neuralgic issues that will continue to divide America under its next president. That might hamstring him in the White House; more immediately, it might prevent him reaching it. His well-honed formula—robust conservatism with a smile—will attract some voters who share his instincts but are repelled by harsher rhetoric. Whether it can convert moderates in sufficient numbers is unclear. + +That is where the story comes in. “It makes him a whole person, a real person,” said a supporter in a barn in Gilbert, as the obligatory country music rolled. Transmuting astringent economics into compassion, promising tolerance without a cost, wreathing jeremiads in sunshine, the story might even do the trick. Mr Rubio’s inauguration is the climax its logic demands. In the end, its meaning is simple. The moral of the story is its teller, Marco Rubio. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693424-some-republicans-best-hope-shallow-opportunist-others-extremist-might/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Nevada caucuses + +Winning big + +Donald Trump hits the jackpot in the Silver State + +Feb 27th 2016 | LAS VEGAS | From the print edition + +It doesn’t stay in Vegas + +MANNING the front desk of the Trump Hotel, where the gold wallpaper and drinking fountains match the building’s mirrored-gold exterior, Gabriel said he would leave work early to vote for his boss at the Republican caucuses on February 23rd. Nataly, who was standing at the entrance of the restaurant on the ground floor to welcome diners, said she didn’t even know that the caucuses were taking place, though in the morning she had glimpsed the blond chevelure of Donald Trump himself, who sometimes stays in his hotel. + +An unrepresentative survey of staff members at Mr Trump’s five-star extravaganza, each of them of Hispanic extraction, reveals that Mr Trump put no pressure, however subtle, on his employees to vote for him. He possibly felt he had no need to. A member of the Trump team, who was sitting by the hotel pool in a blue T-shirt emblazoned with the Trump campaign slogan, “Make America Great Again”, was so confident about the outcome of the vote that she explained matter-of-factly that Mr Trump would speak just after his victory was announced, and that the victory party would be held in the ballroom of Treasure Island, a gargantuan hotel next door which is fronted by two life-size pirate ships. + +After winning the South Carolina primary by around ten percentage points and Nevada by more than 20, Mr Trump looks almost unstoppable. Next comes Super Tuesday, on March 1st, when about a dozen states award delegates. To secure the nomination, a candidate needs to win 1,237 delegates. By March 2nd, half that number will have been awarded. There follow a handful of big winner-take-all states, where all the delegates go to the candidate with the most votes (the states that vote on Super Tuesday award delegates proportionally). Florida, on March 15th, could be the moment of Mr Trump’s coronation. He has a sturdy lead in the polls there. + +The best chance of beating him would be if all but one candidate were to drop out. But which one? Ted Cruz is the only other candidate to have won a contest, and is expecting to do well in Texas and Arkansas. Marco Rubio has come second in the past two contests; John Kasich came second in New Hampshire. + + + +America’s primary agenda: our interactive 2016 election calendar + +At the Trump victory party in Las Vegas, the candidate, flanked by two of his sons, Eric and Donald junior, started his speech graciously, thanking everyone involved. He then promised to “get greedy for the United States” and “grab and grab and grab”, as he has done in his business career. Mr Trump reiterated his promise to build a wall and make Mexico pay for it. “They will be thrilled to be paying for the wall,” he said (rather puzzlingly, exit polls suggested that Mr Trump won a healthy 44% of the 6,000 votes cast by Hispanics in the caucus). The list of things he said he loved included “the poorly educated”, the Second Amendment, Liberty University in Virginia, which was founded by Jerry Falwell, a televangelist, and “the evangelicals”. He promised to keep Guantánamo open and “load it up with bad dudes”. + +Reports of confusion and chaos at caucus sites in Nevada circulated throughout the early evening. At the Ed W. Clark high school, one of the sites in central Las Vegas, proceedings were organised, if casual. Volunteers wore T-shirts or sweatshirts with Trump campaign logos, which seemed odd for a task requiring impartiality. Almost everyone agreed that Mr Trump would win. Many of his supporters were moderate and thoughtful. Bruce Bongardt, a volunteer who used to be an independent, explained that he likes many of the things Hillary Clinton says, but believes that America now needs someone with “a bit of a harder edge”. Mr Bongardt thought Mr Trump would probably back away from extremist views once he wins. He may not have to wait long to find out. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693586-donald-trump-hits-jackpot-silver-state-winning-big/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +Feb 27th 2016 | From the print edition + + + +A day is a long time... + +“Well I like the mandate. OK…I don’t want people dying on the streets.” + +Donald Trump on CNN, February 18th. + +…in politics + +“I was asked about health care…and have been consistent—I will repeal all of Obamacare, including the mandate.” + +Mr Trump on Twitter, February 19th. + +Girls gone wild + +“A lot of people think…we’re just hookers and all we know is how to have sex and we don’t know anything about politics. But that’s not true.” + +Entice Love of Hookers 4 Hillary. Politico + +Thin skin + +“Donald Trump is a very nice person.” + +Mr Trump contradicts Pope Francis. + +Manners maketh man + +“I wouldn’t go that far, sir.” + +Marco Rubio politely rebuffs a supporter who called Hillary Clinton a traitor. + +Go north, young man + +“Hi Americans! Donald Trump may become the president of your country! If …you decide to get the hell out… might I suggest moving to Cape Breton Island!” + +A Canadian island spots a marketing opportunity, from an unofficial website. + +The meaning of “is” + +“You’re asking me to say, have I ever [lied]? I don’t believe I ever have...I don’t believe I ever will.” + +Hillary Clinton, CBS News + +It’s the journey + +“I don’t know if my purpose is to be president. My purpose is to be out here doing what I think I need to be doing…It doesn’t matter the size of the crusade. It’s the fact that you are in a crusade.” + +John Kasich waxes philosophical. + +Born free + +“I’ve never breathed a breath of air on this planet when I was not a US citizen. It was the act of being born that made me a US citizen.” + +Ted Cruz on his birth, again. CNN + +Money pit + +Ben Carson has spent $795 per vote, Jeb Bush $368, Mr Trump $64. + +Washington Post + +Faint praise + +“He’s one of my four favourite sons.” + +Barbara Bush helps Jeb in South Carolina. + +Presidential plumbing + +“The vegan diet is what I like the best…I never clog...And I feel good.” + +Bill Clinton on his diet. Politico + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693585-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The religious left + +The least of these + +Even evangelical Christians are not uniformly right-wing + +Feb 27th 2016 | RALEIGH AND ATLANTA | From the print edition + + + +“SOMETIMES I wonder,” said Doug Long, shivering among the demonstrators in Raleigh, North Carolina, on February 13th, “whether everyone who defines themselves as Christian really believes in the same God.” As a rabbi sharing the interfaith stage blew a shofer, and a protest group called the Raging Grannies denounced restrictions on voting rights, Mr Long, a pastor in the United Church of Christ, explained that, in his view, Jesus would have stood for racial and sexual equality. Another clergyman told the crowd that, since everyone is made in the image of God, legislators should remember that “the harm they do unto others, they do unto [Him].” + +Waving placards celebrating Planned Parenthood and public schools, and proclaiming that immigrants “make America great”, the marchers processed to the state capitol. There they were addressed by the brother of a Muslim murdered in North Carolina last year, the brother of a civil-rights activist killed in Mississippi in 1964, and finally by Reverend William Barber, the star turn and one of the rally’s organisers. He complained that the state’s politicians had “made it easier to get a gun than they have to vote”. Citing the Book of Isaiah, he declared: “Woe unto those who legislate evil and rob the poor of their rights.” + +This is not the sort of politics typically associated with devout Christians these days. Several Republican primaries are said by psephologists to turn on the votes of evangelicals; Ted Cruz, one of the front-runners, has based his strategy on the hunch that they can send him to the White House, endeavouring to motivate them with fire-and-brimstone denunciations of liberal depravities. On the face of it, this perception—of evangelicals as irate ultraconservatives—has some legitimacy. Once left-leaning, many evangelical congregations swung behind the Republicans under Ronald Reagan, shepherded by influential televangelists, and have since, as Jim Guth of Furman University puts it, “come to believe the Republican Bible cover to cover”. Growing majorities of white Protestants, and indeed white Catholics, have since embraced his party. + +That realignment has not been driven by faith alone. Class and (especially in the South) race have also played a role. But Christianity is part of the story, not just in moral concerns about abortion, homosexuality and the church’s place in public life, but in economic attitudes too: for many evangelicals, self-reliance is the corollary of personal salvation, wealth a divine blessing and overweening government anathema. Some, at least, see helping the poor as a private obligation rather than the state’s. Yet another Christian constituency doubts that God would approve of, say, the construction of a wall on the Mexican border, or a squeeze in health-care provision. + +That includes Mr Barber. “We can no longer allow a heretical adaptation of evangelical faith to take centre-stage in this country,” he says, decrying the term “religious right” because “We don’t think they are religiously right.” By his own lights a conservative evangelical, Mr Barber started the Moral Mondays initiative, a multiracial, unobtrusively religious campaign of protests against North Carolina’s skimpy education funding and failure to expand Medicaid, which has spread to other states. An evangelical, he argues, adducing scripture, must bring good news to the poor. After all, he says, Jesus was a radical. + +Part of the trouble with how Christianity is perceived, thinks Jim Wallis, the founder of Sojourners, a Christian social-justice organisation, is that the media is mostly secular-minded and prone to demonising believers. They say “Iowa evangelicals”, for example, when really they mean “old, white people”. The Bible, Mr Wallis points out, contains 2,000 verses touching on poverty, rather more than mention homosexuality; a worldview that neglects “the least of these”, he insists, “makes no biblical sense”. Among the outfits that agree is the PICO Network, an ecumenical alliance of religious communities which, says Reverend Michael-Ray Mathews, feel “compelled by faith” to tackle communal problems such as gun violence. Participants, he explains, use prayer and religious texts to develop “a vision of a better life”. + +In black churches, the tradition of social activism stretches through the civil-rights movement to abolitionists and slave rebellions. Many are evangelical (as are rising numbers of Hispanics); their congregations mostly vote Democratic, invalidating any glib equation between that strand of Protestantism and right-wing ideology. As with American Christians as a whole, the politics of black churches is more nuanced than is sometimes assumed. + +Trials here below + +Consider a recent Sunday service at the Vision Church in Atlanta. Along with sensational music, it featured moving re-enactments of recent police killings of black Americans, scenes counterpoised with members’ own stories of triumph and resilience: alcoholism and deprivation overcome, degrees earned, businesses started. It also, in a largely gay congregation, contained frequent allusions to sexual tolerance and AIDS. “Some of us are not supposed to be here,” intoned a preacher, “but He preserved us.” A fur-clad worshipper rose from his pew to sing beautifully the refrain to “Can’t Nobody do me like Jesus”. + +The presiding minister, Bishop Oliver Allen, founded the Progressive Pentecostal denomination to which the church belongs; it is now a national fellowship of gay-friendly, predominantly black churches. “Civil rights cannot just be for black people,” Mr Allen says. “If we’re not liberating people, what good are we?” Christians of all stripes, he thinks, should not allow their faith “to be hijacked by the loudest political voices”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693555-politics-american-christians-more-nuanced-sometimes-assumed-not-all/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Fringe movements + +Finding Keepers + +Why armed men vowing to defend the constitution keep cropping up + +Feb 27th 2016 | From the print edition + +Watching over the flock in Ferguson + +WHEN anti-federal activists occupied a nature reserve in Burns, Oregon last month, members of the Oath Keepers, an association of current and former soldiers, police officers and other all-action types, grabbed their weapons and flocked to the high-desert town. The group’s leader, an Ivy League-educated lawyer and ex-serviceman called Elmer Stewart Rhodes, opposed the occupation but felt his men could end the stand-off. When one of the occupiers was killed on January 26th, Oath Keepers rushed to evacuate women and children from the scene, fearing an attack by the Feds. + +Beyond the group’s main objective of defending the constitution, Mr Rhodes believes Oath Keepers have a duty to protect those unwilling or unable to protect themselves. “When we hear gunfire, we run towards it,” says Mr Rhodes on the phone from his home in Kalispell, a logging town in Montana. In November 2014, when protests erupted in Ferguson, Missouri after a grand-jury decision not to indict a white policeman for shooting an unarmed black teenager, Oath Keepers hurried there, climbed onto its rooftops and patrolled back and forth, cradling rifles. “If we hadn’t guarded the buildings, they would have burned to the ground. Fact,” says Mr Rhodes. After an attack on a military recruiting centre in Tennessee last July, armed Oath Keepers stood guard outside similar offices across America. + +The Oath Keepers’ size (there are thought to be around 30,000 members) is unusual, but its existence is not. According to Ryan Lenz of the Southern Poverty Law Centre, an advocacy group, the number of what it calls “patriot groups” has grown from 149 in 2008 to 998 in 2015. As well as having a deep mistrust of government, most also subscribe to outlandish conspiracy theories. The Oath Keepers’ website suggests that George Soros, a financier and philanthropist, and the Council on Foreign Relations are exploiting the refugee crisis for their own gain. Other groups believe a shadowy elite is plotting to rule the world through one tyrannical government. + +Mr Lenz attributes the rise in patriot groups to the election of Barack Obama, which spurred those with extreme anxieties about likely government expansion and extra gun controls to band together. After waning for a few years, the number of groups then jumped by 14% from 2014 to 2015—an increase Mr Lenz chalks up to a confrontation in 2014, when the father of two ranchers involved in the Oregon stand-off faced down government officials on public land in Nevada. + +Brian Levin of California State University at San Bernardino thinks deeper forces are at work. Scepticism of centralised government is baked into America, he argues. Now, with the country’s future as a hegemon uncertain and confidence in its institutions eroded, that doubt has intensified. A recent poll by the Pew Research Centre found that only 19% of Americans trust the government in Washington most or all of the time, compared with 73% when they began asking the question in 1958. This inspires more people to support maverick politicians, and motivates others to opt out of the system entirely. + +Beyond the fringe + +It was such disenchantment that prompted Mr Rhodes to start the Oath Keepers. An eloquent if gruff Renaissance man, he has worked as a professional sculptor, once crafting a Minuteman for a Las Vegas hotel, and was a paratrooper before enrolling at Yale Law School. There he is remembered for taking his Bill of Rights class to a shooting range and winning an award for his paper on that document. + +Mr Rhodes’s studies overlapped with the September 11th attacks, and he observed the government’s response with horror. He still gets angry when he talks about the Patriot Act and the Supreme Court’s ruling in Hamdi v Rumsfeld (2004), which held that the constitution does not prevent the government from treating its own citizens as unlawful combatants. “It’s called the treason clause, and it’s right there in front of your face!” he bellows. He is also troubled by many things that worry progressive civil-libertarians: the government’s surveillance of its own citizens, warrantless searches, belligerent police. “I definitely think we’ve crossed the Rubicon. We’re going down the same road as Nazi Germany or Stalinist Russia.” + +Mr Rhodes worked on Ron Paul’s 2008 campaign for the Republican nomination. When Mr Paul ended his bid, he abandoned mainstream politics and started the Oath Keepers. He hoped that by reminding its members to obey the constitution above all else, he and they would help “put the brakes on” creeping authoritarianism. + +When police officers and military servicemen enroll in their respective forces, they pledge to “defend the constitution against all enemies, foreign and domestic”. Mr Rhodes believes that oath should be kept under all circumstances, even if it means flouting the demands of a higher-up. He uses William Calley, a lieutenant in the Vietnam war who claimed he was merely following orders when he killed 22 unarmed civilians at My Lai, to illustrate what can go wrong when individuals stray from that creed. He praises Hugh Thompson, who intervened before more civilians were massacred, as an exemplar. + +Mr Rhodes may be typical only of a fairly small fringe. But even there, concern about political polarisation seems widespread. “When Bush was in power I could get liberals to listen to me,” he explains. “It has a flipside. I can talk to Republicans now because they hate and fear Obama because he’s a nasty Democrat. But once Trump’s elected—God forbid—I think they’ll all go back to sleep. And then you’ll see liberals going ‘Oh my God! He’s violating the Bill of Rights’.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693609-why-armed-men-vowing-defend-constitution-keep-cropping-up-finding-keepers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +A Latino firewall totters + +Hillary Clinton’s once-solid support among Hispanics is being tested + +Feb 27th 2016 | From the print edition + + + +SOME politicians campaign in poetry, others in prose. Too often Hillary Clinton—a lifelong policy wonk—sounds like a set of PowerPoint slides. So it is striking that the best television advertisement of her 2016 presidential campaign to date offers a dose of almost undiluted emotion. Filmed at a recent meeting with Hispanic women in Las Vegas, the spot shows a young girl, Karla Ortiz, tearfully explaining that her parents may soon be deported. Offering the child a hug—“Come here, baby”—Mrs Clinton fixes her with a gaze that is part headmistress, part-grandmother, and promises to do “everything I can” so that Karla need not be scared. “Let me do the worrying, I’ll do all the worrying, is that a deal?” says the former secretary of state, senator and First Lady, as women around them wipe their eyes. + +In the ad Mrs Clinton comes across as a battered-but-unbowed, worldly-but-compassionate matriarch. That is not a bad summary of Mrs Clinton’s image among many Hispanic Democrats, a group that she won by a two-to-one margin when she last sought the presidency in 2008. The spot is credited in Clinton-world with contributing to their candidate’s victory in the Nevada caucus of February 20th over her left-wing challenger, Senator Bernie Sanders, not least by shoring up her support with Latinos (different pollsters disagree as to whether Mrs Clinton narrowly won or lost the Nevada Hispanic vote). The ad is now showing on TV in Colorado, which holds its Democratic caucus on “Super Tuesday”, March 1st, when a dozen states hold presidential contests. Colorado is home to half a million Hispanic voters, and no Democrat can win the state without their help. + +To Hispanic fans the Clintons are family, praised for ties stretching back to 1972, when an owlish Hillary Rodham helped register Mexican-American voters in the wilds of south Texas. Ken Salazar—a former senator, secretary of the interior and Clinton-backer—recalls how Mr Sanders voted against immigration reforms in 2007, shortly after being elected to the Senate from Vermont. Back then Mr Sanders often cast immigration as a threat to American workers. He has since reversed his stance, promising that he will “absolutely” fight to pass comprehensive immigration reform in his first 100 days as president. The Vermont senator “is new to these issues,” says Mr Salazar, tersely. + +A mood of slightly mournful realism hangs over Mrs Clinton’s encounter with Karla Ortiz. The candidate does not promise to save the girl’s mother and father, because she cannot. An executive action by President Barack Obama would have shielded Karla’s parents, but is currently blocked by lawsuits filed by Republican-run states. In contrast with Mr Sanders’s bold (and implausible) talk of passing immigration reforms within weeks, Mrs Clinton says only that she would introduce an immigration bill in her first 100 days, before working to sell it to Congress. That pragmatism resonates with nine Hispanic women gathered for caucus-training at a home in Denver. An elegant group, sipping pink wine and nibbling canapés, the women include retired teachers, school principals and longtime Democratic activists. They are fired up about this election: one prompts tut-tutting as she describes nine year-old pupils who are frightened of Donald Trump, the Mexico-bashing bully running for the White House as a Republican. But they are wary of Mr Sanders’s fiery solutions and calls for revolutionary change. “Revolution is not a word that connects with us,” says Rosemary Rodriguez, a stalwart of the state Democratic Party, noting that many peers have ties to countries racked by instability. “We prefer Hillary, and evolution.” + + + +Hispanic America: Tu casa es mi casa + +The Democratic primary contest has exposed a generational chasm, with Mr Sanders winning younger voters by crushing margins and Mrs Clinton doing best with older, more affluent voters, especially women. Those are good allies to have: older folk are reliable voters. The generational divide especially complicates the contest for Hispanics. Colorado’s Latino electorate is “extraordinarily young,” with more than 40% born since 1981, notes Joelle Martinez of the University of Denver. That should help Mr Sanders, who dominates among such so-called millennial voters. But Hispanic millennials are hard to turn out: in the 2012 presidential election, just 38% cast votes nationwide. + +Talking about a revolution + +The Sanders campaign is working hard. Caucus-training at the University of Colorado in Boulder—a mostly white campus crammed with Sanders-loving hipsters—draws a handful of Hispanics, among them Zurisadai Juarez Delgado. The undergraduate hails Mr Sanders for radical policies that would help all “marginalised” Americans and not just Latinos. She proudly reports that she has converted her mother, a former Clinton-fan. Across the state Mr Sanders has tapped into traditions of radical campaigning by Chicano activists and Hispanic union organisers. In north Denver Lexington watched young activists hit gritty streets bounded by railway lines and a roaring highway, bearing Spanish brochures hailing Mr Sanders as a son of poor immigrants. + +The Clinton camp is working hard, too. Mrs Clinton has a near-lock on a different political tribe: the state’s elected Hispanic Democrats, many of them moderates who needed lots of Anglo votes to win office. Nor is she surrendering millennials to Mr Sanders. Her national Latino vote director, Lorella Praeli, is a young immigration activist who explicitly praises Mrs Clinton for making promises that she can keep. “She is not going to set the community up for failure,” says Ms Praeli. + +Mrs Clinton actually faces two tests in Colorado. Mr Sanders may well win the caucus: Colorado is a proudly anti-establishment state. It is arguably more important for Mrs Clinton to win a clear majority of Latino votes. For the contest for Hispanic hearts and minds is in part a proxy fight: a dispute about how to help the disadvantaged, pitting practicality against idealistic fervour. That is a fight Mrs Clinton can ill-afford to lose. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693587-hillary-clintons-once-solid-support-among-hispanics-being-tested-latino-firewall/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Crime in Mexico: Mean beaches + +Urban architecture: Biography of a building + +Bello: Evo Morales’s fall from grace + + + + + +Articles Sections Next + +Crime in Mexico + +Mean beaches + +After a decline the murder rate is rising. But the president’s crime-fighting plan is making slow progress + +Feb 27th 2016 | ACAPULCO | From the print edition + + + +A TACO seller points to two spots on Acapulco’s beach where people have been shot dead in recent days. An American on a sunbed recalls having a massage within sight, he later realised, of the body of a murdered vendor. The mayhem in Acapulco, the world’s fourth most violent city, is largely confined to its periphery, but tourists are beginning to notice it. Soldiers patrol the beaches, provoking unease rather than inspiring confidence. A Canadian, who started coming to Acapulco in the 1970s, says he will not be returning. + +The bloodshed on the beach does not tell the whole story about crime in Mexico. Many parts of the country are more peaceful than they once were, especially in areas where wars between drug gangs have ended with victory for one side. In Acapulco, in the south-western state of Guerrero, the fight for control of trade in heroin, made from locally grown poppies, is still raging. Some sorts of crime, including kidnapping and extortion, appear to be diminishing. + +But after three years of decline the national murder rate jumped in 2015 and has continued to rise this year (see chart). The number of murders in January was 11% higher than during the same month last year. This does not portend a return to the horrific violence of 2010-12; almost 40% of the recent rise is accounted for by gang-infested Guerrero. + + + +Even so, it greatly increases pressure on the president, Enrique Peña Nieto, who promised to “step up the pace” on security in the second half of his term, which runs until 2018. An astonishing 99% of all crimes are never punished, a level of impunity that encourages criminality of all sorts. Mexico came 58th out of 59 countries in a global impunity index published recently by the University of the Americas in Puebla, south-east of Mexico City. + +Several recent outrages have piled on the pressure for change. So far this year four journalists have been murdered, one more than in all of 2015; the mayor of Temixco, south of Mexico City, was killed after just a day in office; 49 inmates of Topo Chico prison in the northern state of Nuevo León died in a riot in February. In the state of Veracruz five people vanished after their arrest by state police, an ugly echo of the disappearance in September 2014 of 43 students in Iguala, about 220km (135 miles) inland from Acapulco. + +Peña has a plan + +Mr Peña’s response to the public revulsion caused by the students’ disappearance was to announce a ten-point anti-crime programme. It is making halting progress. A law that would allow the federal government to take over local administrations infiltrated by organised crime is stalled in Congress, largely because of fears among opposition politicians that the government could abuse its power. Also stuck is a law that would assign a unique ID number to each citizen, making it easier to track those suspected of committing crimes. + +Political wrangling is holding up a measure that the president considers vital, a federal law that would subject Mexico’s 1,800 or so local police forces to the control of the 32 state governments, a policy known as mando único (unified command). Like his predecessor, Felipe Calderón, Mr Peña relies on the army and navy to combat serious crime, largely bypassing local police forces. Under mando único state police forces, which are supposedly more competent and effective than local ones, could play a more active role. + +Mr Peña’s plan is competing with proposals put forward by opposition parties, one of which would let big towns keep their police forces. Odds are that a federal law will eventually be passed, in part because the interior minister, Miguel Ángel Osorio Chong, is thought to have presidential ambitions. In the meantime mando único is being implemented in piecemeal fashion; more than half the states have introduced a version of it. In Guerrero, just a few towns have agreed so far to let the state government run their police forces. + +The policy is not the cure-all the government seems to think it is. State police forces have not been shown to be less corrupt or more effective than municipal ones. Incompetent officers serve at both levels. Four of the seven state policemen arrested in connection with the recent disappearances in Veracruz had failed tests of their fitness for duty. + +In Guerrero, mando único could “decontaminate” some of the local police forces that have been infiltrated by organised crime, says Gabino Solano of the state’s Autonomous University. But what Guerrero needs more, he says, is a rigorous federal response to such problems as its weak economy, poor health and education and the lethal competition among drug gangs. + +The fragmentation is in part a consequence of the government’s success in hunting down crime bosses. Mr Peña’s administration has so far “neutralised” 99 of the 122 it singled out in 2013. “The government has proved that it can catch capos,” says Alejandro Hope, a security analyst. Now it “needs to show that it can prosecute them and keep them in jail.” + + + +Daily chart: The world's most violent cities + +It must also dismantle their organisations. After beheading the gangs the government has failed to seize assets and to arrest the leaders’ closest accomplices, says José Antonio Ortega of Security, Justice and Peace, an anti-crime NGO. Edgardo Buscaglia of Columbia University calls for states to establish “economic investigative units”, which would work with independent prosecutors to find criminal assets such as factories and trucks. + +A judicial reform, enacted into law in 2008 and due to be fully implemented by June this year, should make justice fairer. This will replace closed-door criminal proceedings, in which judges render verdicts on the basis of written statements, with oral arguments between prosecutors and defendants’ lawyers. The reform strengthens defendants’ rights, including the presumption of innocence, which is inscribed in the constitution but often ignored in practice. It allows perpetrators of minor crimes to be punished with sentences other than jail time. + +If Mr Peña is to entrench the rule of law, corrupt politicians, as well as gun-slinging gangsters, will have to be held to account. His proposal for an “anti-corruption system” of independent watchdog agencies is working its way through Congress. Mr Peña himself has been embarrassed by conflict-of-interest allegations related to the financing of his wife’s house; an investigation cleared him of wrongdoing. If Mexicans are to take seriously their leaders’ crime-fighting credentials, politicians will have to police themselves better. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21693606-after-decline-murder-rate-rising-presidents-crime-fighting-plan-making-slow/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Urban architecture + +Biography of a building + +The changing fortunes of an apartment block, and its city + +Feb 27th 2016 | SÃO PAULO | From the print edition + +World’s tallest tilde + +MASSIVE yet graceful, Edifício Copan partakes of the monstrousness of the city that surrounds it but is shaped by the sensuality of its architect, Oscar Niemeyer. Its curved form is meant to suggest the tilde above the “a” of São Paulo, Brazil’s biggest city. With 5,000 residents in 32 floors of flats stacked atop 72 shops and restaurants, the building has its own postcode. Two framed certificates in the office of Affonso de Oliveira, Copan’s “prefeito” (mayor), attest that in the mid-1990s the apartment block held a Guinness record as Latin America’s biggest residential building. It remains the city’s largest, most recognisable dwelling. + +In its 50-year history (its birthday is in May, if you count from the day city hall issued the first residency permit), Edifício Copan’s changing fortunes have at different times mimicked and diverged from those of São Paulo itself. These days, the building is doing better than its city. São Paulo’s 11m people, who produce a tenth of Brazil’s GDP, are suffering as the country enters its second year of recession, although not as badly as much of the rest of the country. Copan, along with the town’s centre, is thriving. + +Niemeyer’s modernist masterpiece, conceived during a wave of industrialising optimism in the early 1950s, never fulfilled the ambitions of its builders. Its name is short for Companhia Pan-Americana de Hotéis e Turísmo (Pan-American Hotel and Tourism Company). But the developer ran out of money in the mid-1950s and sold the entire plot to a bank, which now occupies the site reserved for the hotel. A planned terrace garden, dividing the residential tower from the shops below, never materialised. The blueprints were erased and redrawn so many times they became translucent, recalls Carlos Lemos, who supervised the construction. + +The first residents arrived in 1962. By the time they held their first condo meeting, in 1971, São Paulo’s elegant centre was in decline. Middle-class paulistanos, now rich enough to buy cars manufactured on the city’s outskirts, forsook the centre’s narrow streets. Businesses followed them to the broad avenues radiating south and east from the inner city. The city’s population swelled—from 6.6m to 9.6m between 1973 and 1991—crowding into favelas (shantytowns) on its periphery. The proportion living in such precarious neighbourhoods expanded from 1% to 9% over that period. + +Industry quit the city altogether in search of cheaper land, cleaner air and a refuge from crime. Between 1980 and 1985, as Brazil’s hyperinflationary “lost decade” was getting started, São Paulo lost 200,000 manufacturing jobs. Services grew, but not enough to compensate fully. By 1999 the unemployment rate had climbed to 18% and the murder rate had reached 69 per 100,000 people, among the world’s highest. Copan’s surroundings assumed a dystopian air of urban decay. Empty offices and flats became squats. Crack dealers and addicts terrorised the neighbourhood. Prostitutes offered quick consolation. + +When Mr de Oliveira assumed his mayoral duties in 1993, after training as a chemical engineer and spending three decades as a bureaucrat, he found a building in physical and financial disrepair. One in four flats stood empty and more than a dozen served as brothels. Mr de Oliveira, or Senhor Affonso, as he is universally known, promptly evicted the prostitutes, fixed the building’s finances and started fining rule-breakers. “Things have got a thousand percent better,” says Antônio Alberto, who brews espresso at the Café Floresta, a Copan fixture since 1972. Daniel Trench, a graphic designer who moved in four years ago, compares Mr de Oliveira to Rudolph Giuliani, New York’s crime-busting mayor in the 1990s. + +Copan and its neighbourhood are now chic. When Mika Lins, an actress, bought a three-bedroom flat in 2001, her friends said she was insane. Today the 28th-floor apartment, with a spectacular view of São Paulo’s concrete sprawl, is worth perhaps 1.1m reais ($280,000), ten times what she paid for it. Property prices have risen by a third as much in São Paulo at large. Now just 14 of Copan’s flats are vacant, and they “won’t be for long”, promises Mr de Oliveira. Even the studio and one-bedroom apartments in “Block B”, long considered the dodgiest of the six, are now thought to be bijou. Ms Lins is renting one for her mother. + +The revived condominium has helped spruce up São Paulo’s centre, and benefited in turn from the area’s new spirit of edgy respectability. Bar da Dona Onça became the building’s first hip restaurant in 2008. Pivô, a contemporary-art gallery, moved in four years ago. Cyclists have replaced streetwalkers in nearby streets. Mr Alberto gripes that he serves just 500 cups of espresso a day, a quarter of what he sold 15 years ago, but that is because Café Floresta is no longer the only source of good espresso in the neighbourhood. + +His fellow paulistanos, worried about recession and angry about corruption in Brasília—the purpose-built national capital that is Niemeyer’s most famous work—are likely to oust São Paulo’s mayor, Fernando Haddad, when local elections are held in October. He belongs to Brazil’s ruling Workers’ Party, which has been tarnished by a massive bribery scandal centred on Petrobras, a state-controlled oil giant. Mr Haddad’s constituents are not keen either on the cycle lanes that have helped revive the city centre, part of his ambitious plans to coax residentsout of their cars. + +Copan’s prefeito is more secure, but he still has plenty of work to do. Niemeyer’s curvaceous façade is crumbling, and is draped in blue netting to protect pedestrians from falling tiles. Restoration will cost 23m reais and will take at least three years. The building’s 1,600-seat cinema has been boarded up since its last occupant, a Pentecostal church, was forced to leave in 2008 because of fears that its structure was unsound. The building of Copan has “never really ended”, muses Mr Lemos. It is in permanent flux, like São Paulo itself. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21693626-changing-fortunes-apartment-block-and-its-city-biography-building/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +Evo Morales’s fall from grace + +Another setback for Latin America’s hard left, and a new political cycle + +Feb 27th 2016 | From the print edition + +ALTHOUGH he has more than three years left of his current term as Bolivia’s president, Evo Morales called a referendum for February 21st to change the constitution to allow him to run for a fourth term in 2020. This excess of forward planning in a region accustomed to last-minute improvisation smacked of nervousness about tougher times ahead in Bolivia. It backfired: with nearly all of the votes counted, the “No” vote stood at 51.3%. Albeit narrowly, Bolivians have inflicted on Mr Morales his first serious electoral defeat since he was elected in 2005. + +This setback for Bolivia’s president will echo around South America. Despite his support for Hugo Chávez’s “Bolivarian revolution” in Venezuela and his unremitting anti-American rhetoric, Mr Morales is the most fiscally responsible of the left-wing leaders in the region. He is also the most popular and was the strongest of them politically, thanks to his ethnicity (he is of indigenous Aymara descent), his stress on social inclusion and recent pragmatic overtures to the private sector. Buoyed by natural gas and mining exports, the economy has grown at around 5% a year for a decade. Now it is slowing. Mr Morales’s government has been rocked by corruption scandals. “Perhaps our support is not what it was,” he admitted to El País, a Spanish newspaper, on the eve of the referendum. + +That goes a fortiori for the left elsewhere in the region. It has suffered electoral defeats in Argentina and Venezuela. In Ecuador Rafael Correa has said he will not run again next year. In Brazil the government of Dilma Rousseff is not certain to survive to the end of its term in 2018. This week João Santana, her campaign guru, was arrested on suspicion that he was paid with money from bribes. If substantiated that could prompt the electoral court to call a fresh election. In Chile, Michelle Bachelet, a once-adored president, languishes in the opinion polls. + +Three things are behind the left’s fall from grace. One is the end of the commodity boom. The governments in Venezuela (especially), Brazil and Argentina made no effort to save the windfall gains from the boom. Impelled by a refusal to risk unpopularity and electoral defeat, they carried on spending even as commodity prices began to fall. That is an old mistake. As Mr Morales says, he advised Chávez that “you can’t carry on subsidising so much”. He added that “to maintain the ideology, you have to guarantee [that people have] food”. The second factor is corruption, especially in Venezuela and Brazil. Of the left-wing governments only Uruguay’s is unscathed by scandal. Third, after a decade or more of left-wing dominance voters want fresh faces and the alternation of power. + +All this means that Mauricio Macri’s victory in Argentina’s presidential election last November may presage further electoral success for the centre-right. After a decade in which much of Latin America looked to China, Barack Obama will be widely applauded when he visits Argentina and Cuba next month. + +But governing has got harder for everyone in the region. True, the difference between well-managed countries, like Colombia and Peru, and those that made mistakes is significant: rates of economic growth of 2-3% and inflation of 2-7% feel much better than recessions and inflation of over 10%. But the days of limitless fiscal revenue and easy popularity are over. And corruption is not a monopoly of the left: witness Otto Pérez, the conservative president of Guatemala, who was toppled by a citizens’ movement last year and is on trial for embezzlement. + +Tackling corruption requires the patient work of building the rule of law. And boosting economic growth demands the hard grind of improving productivity and competitiveness, through investing more in infrastructure, better education, more efficient labour markets and so on. Above all, these tasks need leaner but stronger and more effective states. + +How to get there? “The most important economic problem today is political: that the various spheres of society reach agreement to put much more stress on productive transformation,” counsels Enrique García of CAF, a development bank. + +That is something Latin America has been poor at. In the past the right ignored inequality and poverty. The left can claim credit for placing these issues at the heart of the political agenda, where they belong. But the commodity boom also served to give old ideologies a new lease of life. Too many of the left’s leaders ruled through the politics of confrontation rather than consensus-building. The region is now in for a period of shorter, more volatile political cycles in which the winners will be those who succeed in marshalling support for difficult but overdue changes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21693528-another-setback-hard-left-and-new-political-cycle-last-bolivarian/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Caste in India: Backward ho! + +Individualism in South Korea: Zero to hero + +Politics in Japan: What’s in a name? + +Traffic in the Philippines’ capital: Slowly does it + +Politics in Cambodia: Same old, same old + +Banyan: Taking arms + + + + + +Articles Sections Next + +Caste in India + +Backward ho! + +Higher castes demanding lower status make a mockery of positive discrimination + +Feb 27th 2016 | DELHI | From the print edition + + + +A CITY under siege can resist many things, but not thirst. On February 22nd both the national government and that of Haryana, a state that rings Delhi, the Indian capital, on three sides, crumpled after rioters sabotaged a canal that supplies nearly half the water to the sprawling metropolis. Some 28 people died as police backed by soldiers struggled to control arsonists and looters, as well as more peaceable protesters, who blocked roads and railways into Delhi. But with taps running dry it was easier to capitulate to the rioters’ main demand, which is to allow the Jats, a caste-like community that is powerful in Haryana, to gain “reservations”—that is, a share of state favours formally reserved for the supposedly poor and downtrodden. + +It is not the first time that a relatively privileged group among India’s 3,000-odd castes has resorted to threats and blackmail to win inclusion in an official category known as “other backward classes”, or OBCs. Such protests have become alarmingly frequent. Last August in Gujarat a protest by the Patidars, a caste which, like the Jats, is traditionally composed of yeomen farmers but has increasingly joined the urban middle class, brought a crowd of perhaps 500,000 people on to the streets of Ahmedabad, the state’s main city. Ensuing riots left a dozen people dead. In late January the Kapus of Andhra Pradesh set railway carriages ablaze. The Gujjars of Rajasthan are another ethnic group, many of whose members, no longer wholly rural, are prospering. Accounting for 6-7% of the state’s people, they staged protests in 2008, 2010 and again last May. + +At stake are the spoils from a policy of identity-based benefits, the equivalent of America’s “affirmative action” programmes. India’s elaborate system of positive discrimination stems from the constitution adopted in 1949. Its chief architect, B.R. Ambedkar, a brilliant jurist, was born a Dalit, that is, from one of the castes regarded as “untouchable” and kept wretched by untold generations of discrimination. He envisaged an active role for the new state in righting those wrongs. As the system evolved at state and federal levels, quotas for government jobs and places at universities were reserved for “scheduled castes”, meaning Dalits, along with a smaller portion for “scheduled tribes”, that is, members of poor, remote communities outside the caste system. The quotas have gone some way to relieving social stigmas and materially advancing India’s poorest groups. + +But the constitution left open another, vaguer category. Article 15 mentions “socially and educationally backward classes” that might also become eligible for aid. First in state laws and later in national ones, Indian governments have recognised myriad groups as OBCs, deemed to suffer some disadvantage compared with the uppermost castes, and deserving of a helping hand. + +In 1990 the federal government set national criteria for defining OBCs, fixing their quota at 27% and capping the overall reservations for all three groups at 50%. Further tinkering has created an increasingly elaborate structure of reservations. Some states certify hundreds of caste groupings as OBCs, while others have pushed their quota closer to 70%. Government commissions that vet applications for OBC status have grown increasingly imaginative, uncovering such subcategories as “backward-forward” castes, parts of a caste group that have fallen behind the rising status of other parts, or the so-called “creamy layer”, ie, members of an OBC who are denied benefit because their family income is above a defined maximum (about $10,000). + +Caste down + + + +A continent masquerading as a country: Explore India in our interactive map + +Increasingly castes are clamouring to be recognised as lowly in order to reap whatever benefits accrue from being counted in the bottom half. It has been a boon to a certain kind of politician. The rapid economic growth of recent years, accompanied by growing social mobility, has taken castes from the places or professions that first defined them. Yet caste persists as a source of identity and as a locus for various ill-defined grievances. + +The Jats, who describe themselves as an ethnic group rather than a caste, take pride in a tradition of martial prowess. Spread across northern India and Pakistan, they make up nearly a third of Haryana’s people. With India’s urban economy offering more chances than rural life, those Jats left tilling the soil have suffered a reduction in their status. But they have used their voting strength to push for reservations. Before state elections in late 2014 the state and national governments, then both controlled by the Congress party, granted their wish. The promised inclusion would have reserved around 2,000 state jobs for Jats, who would otherwise have had to compete for them. But then Congress lost power to the Bharatiya Janata Party (BJP). And Indian courts anyway blocked the move, arguing that Jats do not meet the criteria for backwardness. + +What precisely triggered the latest rumpus in Haryana is not clear. Congress supporters point to statements from BJP leaders dismissing Jat demands. The BJP hints instead that Congress may have instigated the riots to embarrass it. Bad as such political wrangling is for India, it is not so bad as the precedent set by caving in to the Jats. Pressed by the government of the prime minister, Narendra Modi, to resolve the embarrassing issue, but wary of angering other OBCs, Haryana’s state government looks set to finesse the problem by granting Jats a special, extra quota of perks. + +At Ambedkar’s insistence, the preamble to India’s constitution included a call for fraternity along with justice, liberty and equality. Its framers envisioned reservations primarily as a weapon to target social exclusion, and saw it as a temporary measure. Their long-term goal was to do away with the iniquity of caste barriers altogether. Instead, by appealing to one category or another for votes, India’s politicians have perpetuated and entrenched a system that fragments the country into jealous islands of class privilege. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693613-higher-castes-demanding-lower-status-make-mockery-positive-discrimination-backward-ho/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Individualism in South Korea + +Zero to hero + +Hobbyists and obsessives, long ostracised, are being celebrated + +Feb 27th 2016 | SEOUL | From the print edition + +Robot Taekwon V comes out + +A GIANT model of Robot Taekwon V, a 1970s South Korean superhero, glares at the salarymen passing Figure Museum W, a cross between a museum and a theme park that opened a year ago in a plush business district of Seoul, South Korea’s capital. It boasts a kaleidoscopic display of 800-odd artefacts mainly from the universe of Japanese manga (comic books) and anime (animation), and American cartoons. Most of its visitors are adult men. + +The museum’s enthusiastic young guide says it is “heaven for deukhu like me”. The term comes from the Japanese otaku, and denotes those who pursue obsessive interests—think a “nerd” or an “anorak” with few social skills and a fetish for some aspect of popular culture. In South Korea, deukhu has long been a slur. Many associate it with a dangerously unpatriotic indulgence in Japanese cultural exports, many of them banned in South Korea from the end of Japan’s imperial rule in 1945 until as recently as the 1990s. More broadly deukhu were assumed to lead idle, unproductive lives, shut away in dingy flats playing video games or scouring the web for their next frivolous curio. + +Now attitudes are shifting. The social-media networks of cool 20-somethings are abuzz with the hashtag deukmingout: coming out as a fanatic. A South Korean daily declared the Figure Museum W to be “a Mecca” for geeks going public. A 28-year-old deukhu, a fan of a South Korean pop star, Kim Jun-su, has started a blog about her coming-out. In it she argues that deukhu pursuits can be highly productive: the example of her idol has inspired her to get fit and to take up the piano and guitar. “I work even harder in my day job to prove a deukhu can be successful,” she says. + +Kim Yong-sub, who has written a book on South Korean trends in 2016, says that as more prominent deukhu have created content from their pastimes—by writing online comics, for example, known in South Korea as webtoons—they have aspired to “a new social standing and role”. Ji Jin-hee, a dashing 44-year-old actor, revealed that he bought piles of secondhand Lego to build models and sell them for a small fortune (he appeared on the cover of Elle Korea surrounded by his creations). Other Korean celebrities have been admitting to their own eccentricities: fans now affectionately refer to Shim Hyung-tak as “Shimdakhu” after the actor disclosed a passion for Doraemon, a Japanese robot-cat cartoon character beloved of East Asian children. A member of a hip-hop group, Block B, revealed that he kept 700 tropical fish. + +Stars are helping to push the idea that geekishness is cool. But beyond that, Mr Kim says, is the growing cachet of not following mainstream taste: a turnaround for South Koreans under powerful social pressure to conform. As more people pursue their individual preferences, they become more accepting of others’ too, for example, of the rise of the samchonpaen (“uncle fans”), middle-aged men who are unabashed groupies of teenage pop bands. Since November “Super-skilled People”, a television show, has invited deukhu, from bread enthusiasts to weapons buffs, to show off remarkable abilities or specialisms. The studio’s audience members all wear smiling paper bags over their heads—representing those who have yet to do their deukmingout. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693640-hobbyists-and-obsessives-long-ostracised-are-being-celebrated-zero-hero/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Politics in Japan + +What’s in a name? + +A lacklustre opposition shows signs of life + +Feb 27th 2016 | TOKYO | From the print edition + + + +WHAT meagre challenges Japan’s prime minister, Shinzo Abe, has faced in office have come not from the opposition but from his own side. So it is a triumph of hope over experience that the biggest opposition grouping, the Democratic Party of Japan (DPJ), thinks that will change. The party that underwhelmed in office from 2009 to 2012 has announced a merger with the third-biggest opposition party, the Japan Innovation Party (JIP). The move is part of the DPJ’s attempts to remake itself after its recent utter defeats and to be better prepared not only for scheduled elections for the upper house of the Diet (parliament) in July but even for a snap general election for the lower house that Mr Abe may call at the same time (or sooner). + +The last time Mr Abe called a snap election, for December 2014, the DPJ failed so much as to get a real campaign going. Fool me twice: this time it has chosen a slate of candidates for the lower house and hammered out co-operation agreements with other opposition parties, including the Japan Communist Party. But it will be an uphill task, given that in opinion polls only a tenth of the public supports the DPJ. A full two-fifths support the ruling Liberal Democratic Party. And even after the JIP’s two-dozen lawmakers are absorbed, the combined group will hold a mere fifth of the seats in the lower house and less than a quarter in the upper. + +The question is what the JIP brings to the party. It had the stuffing knocked out of it when its charismatic right-wing founder, Toru Hashimoto, split away to form an Osaka-based party last year. To many inside the DPJ, it seems too much that their leader, Katsuya Okada, has given in to the JIP’s demand to rename the merged party. A new name could hurt prospects at the polls: in both houses (though differently) a proportion of seats is allocated via party lists, and voters might forget a new name—not that one has yet been agreed. Still, says Akihisa Nagashima, a DPJ heavyweight, much more important to remember is that voters punished the party last time not because they could not remember its name but because of its unconvincing message and lousy campaigning. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693622-lacklustre-opposition-shows-signs-life-whats-name/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Traffic in the Philippines’ capital + +Slowly does it + +Rising car ownership and appalling transport policies block the roads + +Feb 27th 2016 | MANILA | From the print edition + + + +AT SIX o’clock on a Thursday evening the most important road in Manila, known as EDSA, has become a car park. Five lanes heading north and five heading south are clogged with cars and buses, many of them pointlessly honking their horns. “Traffic in Manila is not ordinary”, says a taxi driver, wearily. He means that it is extreme, not that it is rare. + +When people meet in Manila, they talk about traffic. “It rules everything”, says Julia Nebrija, a cycling advocate. Some stories are funny, like the one about the transport official, Francis Tolentino, who missed a live TV interview because he was stuck on EDSA, or the one about the archbishop who was so fed up with one jam that he got out of his car and started directing traffic. Business people tell more worrying tales. As commutes grow longer, productivity is suffering, says Jaime Ysmael of the Ayala Corporation, a conglomerate. + +Filipinos will vote for a new president in May, and the candidates are trying to blame each other for the parlous state of Manila’s roads and public transport. The very fact that one of them, Manuel Roxas, used to be transport secretary was held against him in a televised debate on February 21st. The candidates tout diverse plans, from building more roads to increasing taxes on second cars to moving government offices out of the metropolis. Such is the level of angst that anybody who cracks Manila traffic would have a good shot at the top job. + +Even with a perfect transport plan, Manila would probably have a problem. The population of the entire capital area rose from 18m to 23m between 2000 and 2010. It is dense: Shlomo Angel of New York University, who measures cities, estimates that it crammed 274 people into each hectare a decade ago, compared with 64 per hectare in Paris—and Manila will have got only more squashed since. What is more, the capital has an unfortunate hourglass shape. The middle, which contains the main business districts, is pinched by Manila bay to the west and Laguna lake to the east. Suburbs sprawl to the north and south. So traffic is funnelled, and the funnel often blocks up. + +On top of that, Manila’s transport plans have been terrible—among the most foolish adopted by any great city. The Philippines has a complex history: it was a Spanish colony for four centuries, then an American one. It is as though Manila has taken the worst aspects of American urban planning and applied them to a dense, Spanish-style metropolis before adding not a few mistakes of its own. It has the jams it deserves. + +The city’s first fault is its failure to build an extensive, high-volume public transport system. Seven metropolitan railway lines have been planned but only three have been built since work began in the early 1980s, and the connections between them are poor. At rush hour, the queues just to get into the stations are long. + +If Manila has too few trains, it probably has too many buses. Hundreds of small operators ply the roads—the fruits of a radical liberalisation in the 1990s. EDSA alone is served by 266 bus companies, while 1,122 operate somewhere in Manila. Competition and plentiful supply should be good for passengers, except that drivers are paid partly based on the number of fares they collect. So they race each other to busy stops and then loiter for as long as they can, blocking other drivers. + +Yet the biggest reason Manila’s roads move so slowly is that so many people now drive. The economy of the Philippines grew by 5.8% last year, and a swelling middle class is buying lots more cars (see chart). Driving, nicer and often quicker than public transport, is encouraged by minimum-parking rules, imported from America, which oblige developers to provide lots of parking spaces. Cars are thought to carry about 30% of people in the metropolis but account for 72% of traffic. + + + +Road transport in Manila is commendably diverse. As well as cars and buses it has motorbikes with sidecars and perhaps 50,000 Jeepneys—stretched Jeeps that can hold more than a dozen passengers each. Yet many roads are tightly restricted. Buses are often kept out of the smarter business districts, and some are barred from EDSA at rush hour. Gated housing developments ban all vehicles without residents’ stickers, forcing drivers around the edges. That seems increasingly bizarre, since some of those leafy suburban developments now lie next to booming business districts. Yet the armed guards will probably stay. China’s government announced this week that gated communities should stop blocking traffic, only to retreat following an outcry. And China is not a democracy, unlike the Philippines. + +Belatedly, Manila is trying something sensible. In December the Philippines approved a “rapid bus” route in north-east Manila, with buses travelling along dedicated lanes. Similar systems have worked well in Brazil and China. Karl Fjellstrom of the Institute for Transportation and Development Policy, a New York outfit, says he looks for three things when assessing whether a city is suited for a rapid bus system: traffic congestion, demand and physical infrastructure (that is, wide roads). Manila scores highly on all three. + +So perhaps the city will unblock. But Manila will need to be both clever and quick if it is to start moving again. A combination of fast growth and dismal planning got it into a jam. If the second cannot be changed, the first comes into question. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693631-rising-car-ownership-and-appalling-transport-policies-block-roads-slowly-does-it/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Politics in Cambodia + +Same old, same old + +A young country is saddled with politicians fighting old battles + +Feb 27th 2016 | PHNOM PENH | From the print edition + +They cheered Sam Rainsy in 2013 + +TWO recent college graduates now working for the Cambodia branch of an NGO, the Asia Foundation, spend their free time in typical 20-something ways: watching films, playing video games and hanging out with friends. How different were the lives of the parents of the two graduates when they were the same age as their children are now, under the dark rule of the Khmer Rouge. Those of Menghun Kaing eked out a living farming, with no prospect of university, while the father of Daramongkol Keo spent 18 months in hiding from the brutal regime in the forest, extinguishing his campfire whenever he heard soldiers approaching. Like many from that generation, the parents rarely talk about the past. To survive in those days, Ms Menghun Kaing explains, people had to “work hard and not say anything, just keep everything to themselves.” + +Today about one-third of Cambodians, and a much higher proportion in Phnom Penh, the capital, have internet access, mainly via smartphones. Young Cambodians are coming of age in a still-poor but quickly developing country: with gross national income of $1,020 per person in 2014, Cambodia is on the threshold of the World Bank’s definition of a lower-middle-income country. Two-thirds of Cambodians are under 30 and thus were born long after the Khmer Rouge regime was toppled by Vietnamese forces and Cambodian rebels in early 1979. + +Memories of the horrors of the Khmer Rouge period are fading. Young people’s concerns are coming to resemble those of the young in any other country. They worry about the environment: Cambodia is suffering rapid deforestation, often following illegal land grabs by well-connected businessmen. They want better education and job prospects. And they want clean government. Too bad many of their politicians are stale, often corrupt and mired in battles from the past. + +The country’s central political figure, Hun Sen, the 63-year-old head of the Cambodian People’s Party (CPP), is a former Khmer Rouge commander turned rebel whose early rise to political power was sponsored by the Vietnamese. Recently, even Asia’s longest-serving autocrat has felt the need to woo younger Cambodians by turning more emphatically to social media. Facebook, which he took to in September, shows him not only meeting world leaders—last week he was at a summit for South-East Asian leaders hosted in California by Barack Obama. He is also to be admired playing with his grandchildren, sitting on the ground in a shell suit eating noodles, and padding along the beach in a bathrobe and flip-flops. + +But the velvet glove slips off easily. Mr Hun Sen’s government has locked up opposition politicians on flimsy charges, pursued individuals through the courts for defamation, blocked the websites of NGOs, and introduced draft laws on cybercrime and telecommunications that would criminalise the publication of material “deemed to generate insecurity [and] instability.” The Corruption Perception Index compiled by a pressure group, Transparency International (TI), ranks Cambodia 150th out of 168 countries, and bottom in South-East Asia. + +The government has been either unwilling or unable to clean up Cambodia’s rotten judiciary—the chief problem in curbing corruption, according to Kol Preap, who heads TI in Cambodia. Nor has it stopped land grabs and illegal logging that are wreaking havoc in the countryside. + +Leading the opposition to Mr Hun Sen, as he seems to have done for years, is Sam Rainsy. A cosmopolitan 66-year-old former banker from a political family, he heads the Cambodian National Rescue Party (CNRP). His party has often accused Mr Hun Sen of being too close to Vietnam, Cambodians’ historically overweening neighbour. But to end months of rioting following an election in 2013 that many believe was rigged, Mr Sam Rainsy began a curious rapprochement with Mr Hun Sen, having returned from exile in Paris shortly before. + +It was too unlikely to last. The strains grew until, in November, Mr Hun Sen snapped on hearing Mr Sam Rainsy comparing himself to Myanmar’s Aung San Suu Kyi, with the implication that history was not on Mr Hun Sen’s side. A court dusted off an old arrest warrant for defamation, parliament stripped Mr Sam Rainsy of his lawmaker’s immunity and he has not returned to Cambodia since. + +The pattern has grown familiar: Mr Hun Sen woos his old foe home, only to threaten him with jail, whereupon Mr Sam Rainsy returns to Paris. Some think that Mr Sam Rainsy has carved out a rather too comfortable life for himself as a professional opposition politician. Not all in the CNRP leadership admire him. And though he retains a devoted following, some younger activists are turning away. + +Disappointment among them set in last November when hundreds of protesters got ready, at the height of Mr Hun Sen’s fury, to greet Mr Sam Rainsy at the airport on his return from a trip to East Asia. But he suddenly cancelled his return and flew to France instead. He says he did this to avert bloodshed and deny Mr Hun Sen an excuse to crack down. But younger activists wonder how the opposition can organise around their central figure if he is absent. Some of the energy has therefore gone out of the opposition-centred enthusiasm for political change that was palpable at the time of the last election. + +As for ordinary Cambodians, many still tell opinion pollsters that they approve of their country’s direction and trust that the CPP under its fatherly leader will implement reforms that will spread prosperity, lessen inequalities and entrench the rule of law. That may be taking a lot on faith. Sophal Ear of Occidental College in California says that the chances of the governing party instilling a proper rule of law “are, unfortunately, dismal”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693635-young-country-saddled-politicians-fighting-old-battles-same-old-same-old/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Taking arms + +The Asia-Pacific region is at peace—but it is buying a lot of weapons + +Feb 27th 2016 | From the print edition + + + +THOUGH parts of Asia are racked by long-running insurgencies, terrorist groups, banditry or low-level civil wars, it is striking that the continent has not suffered a full-scale war between countries since China’s brief and bloody punitive invasion of Vietnam in 1979. All the more striking, then, that the region now accounts for almost half of the global market for big weapons—nearly twice as much as the war-ravaged Middle East, and four times more than Europe. + +This week the Stockholm International Peace Research Institute, which maintains a database of arms transfers, published data showing that six of the ten largest importers of heavy weapons are in Asia and the Pacific: India, China, Australia, Pakistan, Vietnam and South Korea. From 2011-15 the region as a whole bought 46% of global arms imports, up from 42% in 2010-14. Asia is not witnessing a classic arms race between two great powers and their allies, of the sort Britain and Germany engaged in before the first world war, or a cold-war contest like that between America and the Soviet Union. But certainly Asian countries are competing to modernise their military forces. The “Military Balance”, an annual report by the International Institute for Strategic Studies (IISS), a British think-tank, noted this month that most have seen “sustained, multi-year increases in defence spending”. + +China’s rise and recent assertiveness are most often cited for the arms build-up. In the East China Sea, tensions have grown between China and Japan over the uninhabited Senkaku, or Diaoyu, islands. Since 2012 China has been sending ships and planes close to the islands in ways designed to challenge Japan’s claim to be administering them. In the South China Sea, China finds itself at odds with a number of South-East Asian countries, especially the Philippines and Vietnam, over even tinier islets, rocks and reefs. By means of massive artificial island-building over the past two years, disregarding the concerns of rival claimants, China seems simply to be taking what it thinks is its own. That helps explain, for example, why Vietnam’s arms imports in 2011-15 were eight times higher than in the previous five years, taking its share of the global total to 2.9%. The country has bought eight combat aircraft, four fast-attack craft and four submarines. A further six frigates and two submarines are on order. + +Even were China not filling in the sea so enthusiastically, its military build-up would probably provoke a reaction. In particular the rapid expansion of its navy, with the apparent intention of eventually upsetting American primacy in the western Pacific, represents a big shift in the strategic order. Other regional navies are also modernising—above all by buying submarines. Besides Vietnam’s purchases, India has ordered six from France, and Pakistan has bought eight from China, which is also providing two to Bangladesh. Germany is to deliver two to Singapore and five to South Korea, which has sold three of its own manufacture to Indonesia. Australia is to buy between eight and 12, with fierce competition for the order between France, Germany and Japan. + +But Tim Huxley, Asia director of the IISS, says it is misleading to see military spending in the region as “all about China”. Rather, it points to a much longer trend reflecting the region’s rapid economic growth and increased wealth. Countries have a range of external and internal security concerns. For example, despite its tiny size, Singapore is much the biggest defence spender in South-East Asia, outspending even Indonesia, with 45 times more people. Yet Singapore has no territorial claim in the South China Sea. Rather, its (unstated) fears have more to do with potential instability in its own immediate neighbours. + + + +Peninsula of provocation: A timeline of clashes between North and South Korea + +Also encouraging continued military spending is that none of Asia’s big strategic fissures, dating back decades, is really narrowing. India and Pakistan have been arguing and at times going to war over Kashmir since 1947. For China, victory in the civil war in 1949 was incomplete, because Taiwan remained outside its grip, and it has never ruled out the eventual resort to military force to achieve “reunification”, if peaceful means run out of steam. The Korean war ended in 1953 with an armistice but no peace treaty; North Korean dictators—three generations of belligerent Kims—have stoked tension ever since. China’s invasion of northern India in 1962 and subsequent withdrawal left the two countries’ competing claims over each other’s territory unresolved. + +At times back-channel talks over Kashmir have led to hints of a breakthrough between India and Pakistan. But none of these disputes—nor those in the South and East China Seas—is subject to anything resembling a peace process, and none is discussed in more than broad-brush terms at any of the various regional security talking shops. Armies, lobbying for a budget to buy the latest kit, can always point to the risk that a dispute might flare up into conflict; and to the need to build up a deterrent capacity. + +THAAD’s the way they don’t like it + +One country’s deterrence, of course, can be another’s threat. In response to North Korea’s nuclear and missile tests this year, for example, conservative politicians in South Korea are again calling on the government to develop its own nuclear deterrent. They are very unlikely to have their way. But the South has been in talks to deploy an American anti-missile system, known as Terminal High-Altitude Area Defence, or THAAD. + +This in turn alarms China, which argues that the associated radar threatens its own security and has lobbied hard to dissuade South Korea from adopting THAAD. Another aspect of China’s assertiveness is its readiness to intervene in other countries’ security policies. It has even suggested to Australia that it should think twice about buying Japanese submarines, because of historical sensitivities over the second world war. This diplomatic expansionism, however, tends to have much the same effect as the sea-filling kind: raising alarm and hackles, and driving China’s neighbours closer to America—and to suppliers of heavy weaponry. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693619-asia-pacific-region-peacebut-it-buying-lot-weapons-taking-arms/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Football: Patriotic goal + +Single parents: Pariahs + +Online dissent: Punching high + + + + + +Articles Sections Next + +Football + +Patriotic goal + +Big spending on foreign football players has a political aim, too + +Feb 27th 2016 | From the print edition + + + +CHINESE demand for the world’s commodities may be sputtering, but not for the most vital ingredient of football: its players. In recent weeks, the country’s football clubs have been on their biggest ever spending spree, signing up foreign talent for sums which, by Asian standards, have been jaw-dropping. One local newspaper in China said anyone who paid attention to Chinese football would conclude that the clubs had “gone mad”. + +Jiangsu Suning, a club owned by an eponymous retail chain, broke a record on January 27th when it paid £25m ($35m) for Ramires, a Brazilian midfielder (known only by his forename) who had been playing for Chelsea, an English team. That was the most an Asian club had spent on a footballer. Seven days later Guangzhou Evergrande Taobao took Jackson Martínez from Atlético Madrid, a big Spanish team, for $45m. Within a couple of days Jiangsu had smashed the record again, paying a Ukrainian team, Shakhtar Donetsk, $53m for Alex Teixeira, another Brazilian midfielder. + +By the time China’s two-month-long winter transfer-period ends on February 26th, its top-division clubs will have spent a net amount of around $300m (the amount spent on buying players minus the amount received for selling them). That is more than the combined net outlay of all the clubs in Europe’s top five leagues during the winter period. The net spending of clubs in the English Premier League was the second highest ($220m); those in China’s second division ranked third, at $55m. + +President Xi Jinping may be less inclined to call this mad. Oddly for someone with so much else to worry about, from reviving a slowing economy to fighting corruption, he has set much store by football. A year ago a committee charged with overseeing wide-ranging economic and social reforms turned its attention to an area of great concern in the football-loving nation: its dismal performance in the game. The committee, headed by Mr Xi, endorsed the Communist Party’s first ever plan for “football reforms” (with “Chinese characteristics”, naturally). These, it said, were aimed at ending the “backward” state of football in China and helping the country realise its “dream of sporting great-powerdom”. The plan says the number of football academies should increase tenfold to 50,000 by 2025. It decrees that football be made compulsory at school. + +Football is particularly important for Mr Xi. He has been a fan since childhood. For a while after he took over as China’s leader his office, or at least the room said to be such in official photographs, featured the above picture of him as vice-president kicking a ball in Ireland. Mr Xi’s reform plan says football can help boost patriotism and a “collective spirit”—attributes Mr Xi is keen to inculcate in a society fractured by rapid economic change. + +Chinese businesses are keen to play along. Four companies have taken over a first-division Chinese football club in the past two years. In October China Media Capital (CMC), a venture-capital firm, agreed to pay $1.3 billion for five years of television rights to the Chinese Super League (CSL), more than 25 times the amount paid by state television for the football season in 2015. (On February 23rd, the firm resold the first two years of rights at a 35% profit.) In December CMC bought a 13% stake in Manchester City, an English club, weeks after CMC’s chairman accompanied Mr Xi on a tour of the club’s facilities. Wang Jianlin, China’s richest man, recently snapped up a 20% stake in Atlético Madrid. Dalian Wanda, a firm owned by Mr Wang, is spending millions of dollars on the coaching of 180 Chinese players at world-class facilities in Spain. + +Money talks + +As well as signing up expensive foreign players, CSL clubs have been recruiting former managers of the English and Brazilian national teams. Guangzhou Evergrande Taobao employs dozens of coaches from Real Madrid to train the 3,000-odd youngsters enrolled at its academy. The drawback of working for a little-known team can be offset by a big pay-packet (Ezequiel Lavezzi, an Argentine forward from Paris St-Germain, a French team, recently joined a provincial squad in China for a reported salary of more than $300,000 a week). The CSL appears likely soon to eclipse Major League Soccer in America as a destination of choice for footballers who are more after money than prestige. + +Mr Xi sees the game as a useful tool of diplomacy (his overseas visits often involve football-related events). But China’s league is still a long way from exerting the kind of soft power that the English Premier League bestows upon Britain (ask any taxi driver in China). Mr Xi has said he dreams of China winning the World Cup. England itself has no blueprint for that. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21693572-big-spending-foreign-football-players-has-political-aim-too-patriotic-goal/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Single parents + +Pariahs + +Single mothers have a tough time in China. So do their children + +Feb 27th 2016 | BEIJING | From the print edition + +AFTER more than three decades of often brutal interference by the government in citizens’ reproductive choices, it seemed something of a breakthrough when, in October, it decided to allow all couples to have two children. Previously, many had been limited to just one. Last month there was a further concession: children born in violation of the erstwhile rules would be given the registration document that is needed for everything from getting a place at school to opening a bank account. For children born out of wedlock, however, the nightmare of bureaucratic non-recognition persists. Attitudes to sex have been changing fast in China, but not the taboo surrounding extramarital births. + +The government imposes stringent penalties on the very few unmarried women brave enough to have children. Giving birth requires permission from family-planning authorities. They will not give it without proof of marriage. Violators usually have to pay the equivalent of several years’ working-class income. + +Then there is the problem of registering the child. Until last month it was impossible for many of those born in violation of family-planning rules to get identity papers. Now it is easier, as long as both parents can prove they are related to the child. But a mother who does not know who the baby’s father is, or who cannot convince the father to submit to a DNA test, is out of luck. The child cannot be registered. Hence it cannot obtain other vital documents such as an identity card (essential, not least, for travel on long-distance transport). + +To avoid such horrors, some unmarried women leave China in order to have their children. Their babies would then have foreign proof of birth, and a chance of growing up normally abroad. + +Xiao Min, a successful 36-year-old businesswoman who lives in Shanghai, decided to stay put. Her relatives acquiesced to her decision two years ago to have a child even though she had not found a husband. “I’m lucky to have so much support and a career that allows me to hire a full-time nanny,” says Ms Xiao. “I do not want to hurry to find someone to marry just so I can have children.” + +Ms Xiao is also lucky because she managed to persuade a friend to donate his sperm and enter into a sham marriage with her. Armed with a marriage certificate, she had a baby daughter without paying a hefty fine, or “social maintenance fee” in official language. (In July, when asked by reporters why single parents were punished this way, a senior family-planning official insisted the fines were needed to maintain “reproductive order”.) + +Most women, however, try their best to avoid extramarital births altogether. Abortions are readily available. Those who do not want to terminate their pregnancies are sometimes forced to do so by officials. Mei Fong, a former Beijing correspondent of the Wall Street Journal who wrote a book about the one-child policy, says the cost of raising a child on one’s own is such that it is usually only rich people who try. + +“I want to make my parents happy and I want to have a baby,” says a 30-year-old woman in Beijing who works as a low-paid office assistant. “But if I’m not married and can’t pay the fines, the child would become like a ghost, without legal standing. How could I do that to my own child?” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21693590-single-mothers-have-tough-time-china-so-do-their-children-pariahs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Online dissent + +Punching high + +An outspoken tycoon challenges Xi Jinping’s views + +Feb 27th 2016 | BEIJING | From the print edition + +Big Gun takes on a big’un + +MOST of China’s rich try to keep their heads down and avoid offending the Communist Party. Ren Zhiqiang (pictured), a retired property developer, is an exception. He is not only wealthy, but also has a microblog account with 38m followers—roughly the number of people living in California—whom he regales with snide comments on the country’s politics. What gives these added sting is that he is a party member. Adoring netizens call him “Big Gun Ren”. + +Despite President Xi Jinping’s onslaught on dissent since he took power in 2012, Mr Ren has kept up his criticisms. This makes him all the more extraordinary. In recent days his microblogs have taken on Mr Xi himself, commenting scornfully on the president’s inspection tour on February 19th of the party’s main mouthpieces: the People’s Daily, Xinhua News Agency and China Central Television. Mr Xi reminded them to toe the party line, or, as he put it, to keep “the surname ‘Party’”. + +Mr Ren took issue. “When all media have surnames and do not represent the people’s interests, the people will be cast aside into a forgotten corner!” he complained on his microblog hosted by Weibo, a Chinese social-media site. In another post Mr Ren asked: “Since when has the people’s government been turned into the party’s government?” He said that taxpayers’ money should not be wasted on things that do not provide them with services. + +Mr Ren’s posts were quickly deleted. A website run by the party committee of Beijing’s city government published a commentary that accused him of displaying “brazen anti-party spirit” and of representing a “capitalist troublemaking faction” trying to create Western-style government in China. + +Mr Ren appears unfazed. Another of his posts hinted that he would like to take the website and its owners to court. Plenty of other bloggers have fallen foul of the law for taking digs at the party. But Mr Ren’s prominence may afford him (and even his Weibo account, to which he has posted more than 90,000 times) some protection. He even remains an adviser to the capital’s government—one of the few worth listening to. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21693588-outspoken-tycoon-challenges-xi-jinpings-views-punching-high/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Trade within Africa: Tear down these walls + +Ethiopia’s drought: On the edge of disaster + +Syria: Russia calls the shots + +Consanguineous marriage: Keeping it in the family + +Israeli politics: An Arab agenda + +Iran’s election: Even hardliners want reform + +Kurdistan: Fin de renaissance + + + + + +Articles Sections Next + +Trade within Africa + +Tear down these walls + +Africa’s internal trade deals look good on paper. A pity that they are rarely followed + +Feb 27th 2016 | SHARM EL-SHEIKH | From the print edition + + + +TWO of the largest regional trade accords in history were agreed on last year. The Trans-Pacific Partnership involves 12 countries in Asia and the Americas, and was the subject of headlines and heated debate. But most people have never heard of the Tripartite Free Trade Area (TFTA), which covers 26 African countries. It will create the biggest free-trade area on the continent, “from Cairo to the Cape”, as its supporters boast. + +Many in the developing world see global trade as rigged in favour of rich countries. But African regional integration is all the rage. The continent features 17 trade blocs. The TFTA aims to join up three of them: the East African Community (EAC), the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA). At a conference on African business on February 20th-21st in the Egyptian resort of Sharm el-Sheikh, several leaders called for a united African market. + +An abundance of borders has long divided the continent’s 54 countries, limiting economies of scale. Fixing common problems such as a shortage of roads takes teamwork—and in turn should lead to more integration. Average transport costs in Africa are twice the world average and are thought to harm trade on the continent more than tariffs and other barriers. + +A shame, then, that regional economic deals are often poorly implemented. An African firm selling goods on the continent still faces an average tariff rate of 8.7%, compared with 2.5% overseas, says the UN Conference on Trade and Development (UNCTAD). That is one reason why intra-African trade as a percentage of total African trade is well below what is seen in other poor regions (see chart). + +Nearly all African countries are party to more than one regional agreement. These overlapping allegiances can tie them in knots. Members of COMESA, for example, impose a common external tariff on goods of non-members. But several members are also in the SADC free-trade area, which requires lower tariffs on goods from some non-COMESA states. The TFTA is meant to iron out these differences, but the details are still to be decided. + +African countries vary in size, geography and resources, so trade deals affect each differently. Manufacturing tends to cluster in powerhouses such as Kenya, Nigeria and South Africa. Small agricultural producers fear being swamped with food from larger neighbours. There are no mechanisms for helping the losers. So it is difficult to convince countries to make sacrifices in order to increase trade. + +Whether to protect their dominance or avoid hardship, most countries revert to protectionism. Take the Economic Community of West African States (ECOWAS). It is meant to be a customs union, but has an extensive list of exceptions. Two decades after it promised free movement of people, goods and transport, implementation is poor. East Africa does better, but Karim Sadek, the director of Rift Valley Railways in Kenya and Uganda, says that not having to stop at the border would make his life easier. “You get used to the inefficiencies.” + +Non-tariff barriers are not only an African problem. Product standards and rules of origin are used by America to block Mexican goods under NAFTA. But evidence cited by UNCTAD suggests that the reduction of tariffs in Africa has led to an increase in the use of other obstacles. In SADC such protectionism has resulted in more imports from non-SADC countries. Clothes, for example, are required to be both manufactured and sourced in SADC countries to qualify for preferences. Since few textiles are produced in the region, the rules have stifled trade in garments. + +Bureaucracy is expensive to overcome. According to research by Nick Charalambides of Imani Development, a consultancy, Shoprite, a South African retailer, spent $5.8m dealing with red tape in 2009 in order to gain $13.6m in duty savings under SADC. Others avoid the hassle of customs: informal trade is thought to provide income to over 40% of Africa’s population. + + + +Why countries are so keen to agree new trade deals + +Some think Africa needs to approach trade differently. “The first question that should be asked is: what can we trade with each other?” says Bineswaree Bolaky of UNCTAD. Often the answer is: not much. Most African countries produce a narrow range of goods and have export sectors geared towards supplying rich countries. Few have significant manufacturing bases and, unlike in developing Asian countries, there is little trade in inputs or services that might lead to African chains of production. + +The volume of intra-African trade is so small that fixing these problems, and upgrading the continent’s infrastructure, may not seem worth the expense to some countries. So UNCTAD recommends creating an integration fund, financed by relatively rich African states, to pave new roads and build export capacity in poorer countries. The African Development Bank handed out over $1 billion in the past two years with the explicit aim of boosting intra-African trade. But that risks becoming an objective in and of itself. “You still need to be flogging stuff to big countries,” says Alan Winters of the University of Sussex. + +In their zeal to integrate, African leaders may also be using the wrong model. Broad and shallow agreements are the norm, but the continent’s most successful economic bloc consists of just five countries. EAC members keep good data, and a public scorecard holds them accountable for non-tariff barriers. “There you have a small group of countries that is taking it seriously and making some progress,” says Jaime de Melo of the University of Geneva. Talk of a common currency in East Africa and even a political federation do not seem far-fetched. It is a stretch to think that the TFTA will lead to anything similar. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/21693562-africas-internal-trade-deals-look-good-paper-pity-they-are-rarely/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Ethiopia’s drought + +On the edge of disaster + +The government’s achievements appear increasingly precarious + +Feb 27th 2016 | ADIGRAT | From the print edition + +A good system, but overwhelmed + +“THE animals die first” is a common refrain from many Ethiopians living in Tigray and Afar, two northern states, as the country experiences its worst drought in decades. Crop production in these regions has dropped by 50% or more in some areas, and failed completely in others. Hundreds of thousands of domestic animals are reckoned to have perished. + +The rapidly changing skylines of Ethiopia’s modernising cities notwithstanding, about 80% of its population still live off the land. Yet despite the drought there are not yet scenes reminiscent of the famine of 1983-84 when as many as 1m people died. + +That reprieve may not last. Those working for NGOs, which are now scrabbling to raise funds for relief, point out that in previous dry spells, hunger intensified from April onwards because by then people have eaten through their last food stocks or what little was harvestable. “The present situation here keeps me awake at night,” says John Graham, the country director for Save the Children, a charity. + +Unlike in 1983, when brutal government policies increased the number of deaths, Ethiopia’s present rulers have done much to mitigate the impact. Their Productive Safety Net Programme provides jobs for about 7m people who work on public-infrastructure projects in return for food or cash. There are also a national food reserve and early warning systems throughout the woredas, local-government districts. Ethiopia even managed to accelerate the building of a new railway line—the country’s only one—to bring food supplies from Djibouti on the coast of the Horn of Africa. + + + +But the country’s ability to help itself may soon reach its limit. Estimates of the number of people affected by drought doubled between June and October in 2015 to 8.2m, and are now pushing beyond 10m (of a population of about 100m). The government faces criticism for not acknowledging sooner that it needs help. + +Ethiopians—both official and lay—are sensitive about their ancient, diverse country’s persistent association with misery and pestilence, while equally proud of its economic turnaround. There is also a sense that the government has not been found wanting with this drought; rather that it has simply encountered events beyond its control. The El Niño phenomenon is causing unusually heavy rains in some parts of the world and drought elsewhere. + +Herein lies a challenge for Ethiopia: it is competing for international funds with other grave humanitarian crises, such as the wars in Syria and Yemen, and the international migrant emergency. Moreover, the international system’s cogs started turning late, after the government initially tried to go it alone. Ethiopia may also be up against donor fatigue. The estimated $1.4 billion needed to combat the drought’s impact remains less than half funded. Further concerns stem from the possibility that El Niño will also affect Ethiopia’s next rainy season. The UN reckons such a situation could result in more than 15m Ethiopians suffering food shortages, acute malnutrition or worse by mid-2016. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693624-governments-achievements-appear-increasingly-precarious-edge/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Syria + +Russia calls the shots + +The timing of a proposed truce locks in the regime’s military gains + +Feb 27th 2016 | From the print edition + + + +PEACE in our time or a cynical diplomatic fudge? The best that can be said of the provisional agreement on a “cessation of hostilities” between at least some of the warring parties in Syria, hammered out (again) on February 22nd between John Kerry, America’s secretary of state, and Sergei Lavrov, his Russian opposite number, is that it appears to have slightly more solid foundations than a similar attempt earlier this month. + +The agreement, which is due to come into force on February 27th, was endorsed by Vladimir Putin in a rare television address after he conferred by telephone with Barack Obama. As The Economist went to press, details of how it would be implemented were still being worked through. It looks likely that at least one of the requirements of the UN peace plan outlined by the UN Security Council late last year may be fulfilled: the lifting of sieges of rebel-held towns by government forces and the delivery of humanitarian aid to their starving populations. Some aid convoys began to roll from Damascus last week and more will follow. Bashar al-Assad, Syria’s president, has also promised to hold (meaningless) parliamentary elections on April 13th. Just about everything else remains unclear. + +The Russians have given themselves and Mr Assad plenty of latitude in the way they wish to interpret the agreement. The Syrian regime refuses to describe it as a ceasefire, instead referring to a mere suspension of combat operations. In practice, it may not even amount to that. + +Islamic State (IS) and Jabhat al-Nusra (JAN), al-Qaeda’s Syrian affiliate, are officially designated as terrorist groups by both Moscow and Washington, and are thus explicitly excluded from the agreement. But JAN, intermingled with other rebel groups, is active on almost every front in the civil war, from Daraa in the far south of the country to Aleppo in the north. JAN is also the leading player in a rebel alliance that includes Ahrar al-Sham, a powerful Salafist outfit, and other less extreme groups. It controls most of Idlib province to the west of Aleppo. Having largely completed the encirclement of Aleppo, the regime’s next priority is to cut off and squeeze Idlib. Fabrice Balanche of the Washington Institute for Near East Policy argues that if Russia continues air strikes against JAN, as the agreement entitles it to, it will be impossible for other groups fighting alongside it to respect the ceasefire. + + + +An interactive guide to the Middle East's tangled conflicts + +Before the assault on Idlib can begin in earnest, regime forces will need to lock in the gains of the Russian-backed assault of the past few weeks. The offensive has retaken swathes of rebel-held territory and cut off supply lines to Aleppo from Turkey with the help of Syrian-Kurdish YPG fighters, whom the Americans regard as their principal ally on the ground against IS. Such has been its speed that Mr Assad’s forces are in need of a breather. The timing of the ceasefire will thus be very convenient if it allows them to construct defensive lines against possible counter-attacks and foments division between those of their enemies abiding by the agreement and those ignoring it. + +Mr Putin’s willingness to use hard power, and the West’s fear of confronting him, are allowing him to call the shots. A ceasefire on his terms, at a moment of his choosing, looks uncomfortably like a version of the Minsk 2 agreement struck a year ago to bring an end to the fighting in eastern Ukraine. Soon after, the town of Debaltseve fell to Russian-backed separatists after a devastating artillery assault. Since then there have been thousands of ceasefire violations by pro-Russian forces. Around 1,000 Ukrainian soldiers have been killed. + +As things stand, the ceasefire meets all of Mr Putin’s diplomatic and military requirements. It confirms the survival of Mr Assad’s regime, potentially divides the rebels, puts Turkey on the back foot and panders to Western concerns by promising a more concerted effort against IS and the possibility of a political settlement that helps staunch the flow of refugees into Europe. From the perspective of Moscow and Damascus, what’s not to like? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693616-timing-proposed-truce-locks-regimes-military-gains-russia-calls/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Consanguineous marriage + +Keeping it in the family + +Marriage between close relatives is much too common + +Feb 27th 2016 | AMMAN AND CAIRO | From the print edition + +Cleopatra married her brothers + +MAHA SAAD ZAKI, a professor of clinical genetics, ushers Ahmed, Fatima and their family into her room at Egypt’s National Research Centre. At least three of their six children have a rare neurological illness that manifests itself around age four, causing mental retardation, loss of the use of their limbs and, later, death. The couple’s nine-year-old daughter slumps, twitching. This congenital illness has appeared because, as well as being husband and wife, Ahmed and Fatima are also first cousins (their names have been changed). + +Cases like these are all too common in the Middle East and north Africa. Marrying a close relative markedly increases the chance that both parents are carriers of dangerous recessive genes, which can then cause disease when a child inherits a copy of the gene from both parents, as will happen in 25% of cases. The gamut of such illnesses runs from known ones such as microcephaly (in which children have unusually small heads) cystic fibrosis and thalassaemia, a blood disorder, to wholly new disorders. “Ninety percent of the cases I see are caused by consanguineous marriages,” says Ms Zaki. + +Statistics on the prevalence of marriages between close relatives today are scarce. Once common practice in Western societies, estimates suggest the Middle East, along with Africa, continue to have the highest levels in the world. In Egypt, around 40% of the population marry a cousin; the last survey in Jordan, admittedly way back in 1992, found that 32% were married to a first cousin; a further 17.3% were married to more distant relatives. Rates are thought to be even higher in tribal countries such as Iraq and the Gulf states of Saudi Arabia, Yemen and Kuwait. + +Today the first reason men and women look to wed within the family is because they know a lot about their relatives: who they are, what they earn, any past blunders. And large families mean they have lots of them. “People are looking for ethics and manners,” says Atef al-Shitany of Egypt’s health ministry. Tying the knot within also ensures property remains in the family. In Upper Egypt, a rural farming area, rates are the highest in Egypt. + +Unlike in the West, there is no social stigma; quite the opposite. A 38-year-old Egyptian woman, who has two sons with micro-syndrome (which causes cataracts, small genitalia and learning difficulties) due to her marriage to a cousin, says relatives nonetheless criticise her for allowing her 18-year-old daughter to get engaged to a “stranger”—the fiancé is not a relation. + +Many wrongly think that maternal cousins are not blood relatives. Prevailing Islamic belief reinforces intermarriage, although it happens among Christians too. The Koran allows marriage to anyone but parents, siblings, aunts and uncles, nephews and nieces. Indeed, Fatima, the daughter of Muhammad, married her cousin, Ali Ibn Abi Talib, notes Ahmed Mamdouh of Al Azhar, an Egyptian university. + +Many in the region, though, simply do not know of the risks of marrying a family member. A small survey in Saudi Arabia found that participants were 50% less likely to view marrying a cousin positively when warned of the problems. “We wouldn’t have married if we had known,” says Ahmed. + +To reduce genetic disorders, some countries have made blood tests mandatory for fiancés, which have helped reduce incidence of diseases such as sickle cell anaemia. In Tunisia, the government mandates premarital counselling for all those betrothed to a relative. + +In Egypt, where education is often rudimentary, there is much more work to be done. Couples that do know of the risks often believe—sometimes because their doctor tells them so—that basic blood tests rule out the risk of any genetic illness. “The only way to avoid the suffering is not to marry relatives,” says Ms Zaki. “But that will be impossible to achieve here.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693632-marriage-between-close-relatives-much-too-common-keeping-it-family/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Israeli politics + +An Arab agenda + +Critics say the prime minister is undermining democracy + +Feb 27th 2016 | JERUSALEM | From the print edition + + + +ON FEBRUARY 23rd, a committee of Israel’s parliament, the Knesset, began debating a new law which will allow it to suspend its own members for “expressing support for terrorism”. While the law is not specifically directed at any political faction, its thrust is clear. It was tabled by the government in response to a meeting three weeks ago between three Israeli-Arab Knesset members and the families of a number of Palestinians who had been killed while attacking Israelis. + +The members of Balad, an Arab-nationalist party, also took part in a moment’s silence in memory of the young Palestinians. By calling them “martyrs”, the MPs enraged many Jews who regard the killers as terrorists; in one incident, assailants killed two Israelis on a bus. While the meeting was undoubtedly provocative, the move by the prime minister, Binyamin Netanyahu, to adopt powers to banish the Arab MPs from parliament is seen by his critics as an assault on Israel’s democracy and an attempt to disenfranchise Israel’s Arab minority, who make up 20% of the population (excluding Palestinians in the territories occupied in 1967). + +The law has been criticised by Israel’s president, Reuven Rivlin, a member of Mr Netanyahu’s right-wing Likud party, who made a rare intervention in the legislative procedure on February 15th, saying that the law “sins against the meaning of the Knesset…. it sins against the voting public.” + +Mr Netanyahu is surely aware that the law is unlikely ever to pass all the necessary legislative stages of the Knesset; if it does, it is liable to be struck down by the Supreme Court; and even if it gets past the court it is unlikely ever to be used because it requires a three-quarters majority of the Knesset to agree to any suspension. + +Yet it is part of a verbal campaign Mr Netanyahu stands accused of waging against Israel’s Arab minority since last year’s general election. In a message broadcast on election day, Mr Netanyahu warned right-wing voters that “Arab voters are flowing in droves to the polls.” + +He later expressed regret over that message but recently he linked an attack in Tel Aviv, in which an Israeli Arab murdered three Israelis, to “lawlessness” in Arab towns. He also instructed two conservative ministers to draw up a list of tough conditions that Arab local councils must adhere to in order to get money from a $3.8 billion programme designed to improve conditions in the Arab sector. + + + +The complete, complex and convoluted history of Israel's Knesset, in one graphic + +Most Israelis take great pride in their democracy, which is committed to equal rights for Jews and non-Jews, and features the representation of Israeli Arabs in such bodies as the Supreme Court. Some argue that the suspension law undermines this; as does another law being proposed by the Netanyahu government, which will force NGOs that receive most of their funding from foreign governments to say so prominently in all their publications. + +This, too, is ostensibly a community-blind law, but in reality targets human-rights and pro-Palestinian groups, as they tend to be the ones receiving such funding. Settlers’ groups are also often funded from outside Israel, by Jewish philanthropists and evangelical Christian movements; but the law will not affect them, as their money does not come from governments. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693494-critics-say-prime-minister-undermining-democracy-israels-proposed-new-law/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Iran’s election + +Even hardliners want reform + +A backlash is taking place against conservatism + +Feb 27th 2016 | MASHHAD | From the print edition + +Protest vote? + +IRAN’S holiest city, and also its second-largest, has long been a conservative bastion. In parliamentary elections in 2012 Iran’s most right-wing party, the Paydari or Stability Front, won all of Mashhad’s five seats. In local elections the year after it won an outright majority and left the reformists with none. But after the nuclear deal and the lifting of sanctions, reformists backed by the city’s businessmen are attracting packed audiences to their hustings for elections due on 26th February. The conservatives may have expanded the complex around the shrine of Reza, Shia’s eighth imam, but only the reformists can attract the foreign investment the city needs to fill it. + +Their demands include a new railway to halve the time of travelling the 900 kilometres (560 miles) from Mashhad west to Tehran, the capital; highways designed to turn the city into Central Asia’s conduit to the Middle East; and leisure centres to diversify a rigidly spiritual form of tourism. Some suggest promoting the city not just as Imam Reza’s burial place, but also Harun al-Rashid’s, the eighth century caliph who presided over the golden age of Sunni Islam. “We have to replace the anti-Westerners,” says a businessman who says the conservatives blocked his joint venture with an Italian company, worth €400m ($440m), for a theme park. + +Economic demands often turn cultural. Several female candidates are campaigning for an end to the glass ceiling on senior government posts. “Stop sanctions on happiness,” cries a local economics professor and reformist candidate, vowing to fight a ban on concerts, upheld by Ayatollah Ahmad Alamolhoda, the city’s main preacher. One rally ends with a band with a female drummer performing renditions of Hafez, the most revered Persian poet, on stage. The more daring supporters don green veils or T-shirts (under jackets they can quickly zip up), harking back to the mass protests, or Green Revolution, that followed a rigged presidential election in 2009. Either as a reminder of or a precaution against a repeat of the violence, organisers distribute sticking-plasters which supporters wear on their index fingers. + + + +In graphics: The implications and consequences of Iran's nuclear deal + +The conservatives have struck back, casting doubt on the reformists’ patriotism and mocking the support they have received from the BBC’s Persian service. “Don’t vote for Britain,” read posters hanging from Mashhad’s lampposts, underlining the widely-held view that perfidious Albion continues to scheme. But in Paydari’s campaign office, the mood is more sombre. A campaign manager insists that, post-sanctions, hardliners also favour foreign investment. He fears the perception, even among the party’s traditional constituency, is that they are out of step with the times. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693637-backlash-taking-place-against-conservatism-even-hardliners-want-reform/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Kurdistan + +Fin de renaissance + +Once booming, the statelet is now in crisis + +Feb 27th 2016 | ERBIL | From the print edition + + + +AS RECENTLY as two years ago the Kurds of Iraq were riding high, at the peak of a well-deserved social and economic recovery following decades of hardship and isolation under Saddam Hussein. The region seemed an island of stability even as the rest of Iraq was convulsed by violence following the American invasion and overthrow of the Iraqi leader. + +But the Kurdish miracle is dissipating. The Kurds have suffered a triple blow: the freezing in 2014 of their take of the federal budget, which constitutes 95% of the Kurdish Regional Government (KRG)’s overall budget; the emergence of Islamic State (IS) which took control of Mosul, just 85km (50 miles) from the capital, Erbil, making travel to Kurdistan’s oil facilities slower and more hazardous; and a steep drop in oil prices. + +Today the skeletons of unfinished buildings and half-empty watering holes bear witness to those once-high hopes. The residents are increasingly unhappy. Although the 70% drop in oil prices or the war against IS could not have been predicted, the severity of the crisis could surely have been mitigated. + +History has been harsh to the Kurds, scattered across several countries without their own state. In the 1980s Saddam used poison gas against them; in the 1990s, though they were protected by a Western no-fly zone, he was determined to cripple them financially. UN sanctions following his invasion of Kuwait had harmed the whole country; and a three-year civil war between Kurdish political factions left them drained. But in 2003, following the removal of Saddam, a Kurdish renaissance began and lasted a decade. + +Even in Iraq’s darkest years, 2006 and 2007, when al-Qaeda battled the Americans in the Sunni heartlands, Kurdistan’s impressive 10% annual growth rate set it apart. Foreign and domestic investment rose. The oil industry and property boomed; tourism, though still small, picked up; and the number of expatriates rose. Foreign businesses flocked to Erbil. Yet during this time, opportunities were squandered. “They entered into the financial crisis with a regional economy that was structurally weak and overwhelmingly reliant on high oil prices,” says Patrick Osgood, Kurdistan bureau chief for Iraq Oil Report, a subscription news service. + +Some 60% of Iraqi Kurdistan’s population is dependent on the public payroll, and most of them have not received their full salaries for months. Though Kurdish officials blamed Baghdad’s budget freeze (which has since been relaxed), the KRG’s inability to make up for it through increasing oil sales played a role. A feather-bedded public sector has also limited the development of a more vibrant private one. The relative security of working for the government has made it much less attractive for public employees to move to the private sector—a carefully crafted strategy, many reckon, by government parties keen to buy loyalty. + +“No party pushed for private-sector development because it was not in their interest,” said Roger Guiu, a research fellow at MERI, a Kurdish think tank. “It’s not a matter of firing people from the public sector, it’s making employment in the private one more attractive.” Less reliance on the public jobs might have led to less dissatisfaction and ultimately prevented the social unrest now rippling through the region as the government has run out of money. + +In the cities of Erbil and Sulaymaniyah, and in other smaller towns, residents have in recent weeks taken to the streets to rail against both government corruption and unpaid salaries. New austerity measures have angered many after the KRG announced in January that it would cut high wages by 75% and lower ones by 15%. Meanwhile official estimates report that the poverty rate has risen to 12%, up from 3% three years ago. A 30% increase in the population brought about by Syrian refugees and internally displaced Iraqis has also caused problems, including an unmanageable increase in demand for water and electricity. + +The continuing war against IS means that despite the collapse of oil revenues and Baghdad’s freezing of the federal budget, military spending has increased, though officials refuse to give numbers. Peshmerga soldiers on the front lines have been exempt from the austerity measures and still supposedly get their full salary. But even Kurdish soldiers have suffered from salary delays—with predictable results. Some fighters are exchanging the front line for boats from Turkey to Greece, in striking evidence of just how depleted the West’s strongest ally in Iraq has become. Deserting soldiers are just some of the 37,000 Kurds who have left Iraq for Europe since 2014. Most of them cite government corruption and financial hardship as their reason for migrating. + +As the battle against IS nears its third year, exasperation is increasing and expatriates are trickling away. The government is offering no reforms that look likely to revive the economy. It does not help that the region is also in constitutional crisis: the president of the KRG, Masoud Barzani, served two terms that came to an end in 2013, and was then granted a two-year extension by the Kurdish parliament. That prolongation expired last August, and yet he remains in office—in the 11th year of an eight-year term. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693615-once-booming-statelet-now-crisis-fin-de-renaissance/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Refugees in Greece: No way out + +German right-wingers: Radikale Rechte + +Organised crime: China nostra + +Happiness in Europe: Hell is other people, for Swedes + +Charlemagne: Ever farther union + + + + + +Articles Sections Next + +Refugees in Greece + +No way out + +Greece starts to fill up as its neighbours restrict the flow of migrants to Germany + +Feb 27th 2016 | ATHENS | From the print edition + + + +HIS sleeping bag around his shoulders, Khaled, a 28-year-old truck driver, sits in a corner of Victoria Square, a gathering point for migrants in central Athens. He is waiting for a smuggler to help him cross Greece’s northern border with Macedonia, closed since February 21st to Afghan migrants like him. Across the square, Mahmud, a restaurant manager who has come from Aleppo with his wife and three children, fears that the route to Germany may soon close for Syrians too. “We mustn’t get stuck in Greece,” he says firmly. + +That may be hard to avoid. Last week Austria restricted arrivals to 3,200 per day, of whom 80 may apply for asylum. Macedonia, Serbia and Croatia are clamping down too. By February 23rd a backlog of 4,000 migrants had gathered at the Greek-Macedonian frontier; Greek police turned back dozens of buses carrying new arrivals. On February 24th ten countries along the migration route met in Vienna to discuss further steps. Greece was not invited. At the port of Piraeus, where ferries bring the migrants who arrive in Greece’s Aegean islands, aid workers urged Afghans to remain in government-run reception facilities rather than attempt the journey north. + +For months experts have warned that if northern Europe restricts refugee flows without an overall plan for handling migration, Greece faces disaster. The United Nations predicts 1m arrivals this year. Alexis Tsipras, the prime minister, worries that Greece will become “a black box” for migrants. As razor wire goes up across the Balkans, his fears may be about to come true. + +The crisis could hardly have come at worse moment for Mr Tsipras. His left-wing Syriza government faces a revolt by lawyers, doctors and farmers against reforms demanded by Greece’s international creditors. Farmers angry at moves to raise their income taxes to the same level as other Greeks blocked highways with their tractors, closing border crossings with Bulgaria and Turkey. A meeting on February 22nd with Mr Tsipras proved fruitless. Two days later the supreme court prosecutor threatened to investigate protest leaders; the blockades were quickly removed. + +While the farmers’ rebellion may have been crushed, lawyers are on strike over a new pension scheme, which they say would force them to pay more than 30% of their income in employee contributions. George Katrougalos, the labour minister, wants to raise employers’ contributions instead, claiming that pensions are among the last income sources for Greek families hit by the country’s long recession. But Greece’s creditors from the EU and International Monetary Fund say the pension system is on the verge of bankruptcy. They want an across-the-board benefits cut of at least 10% before releasing the next tranche of funding from the €86 billion ($95 billion) bail-out Greece concluded last year. + +That leaves the Greek government on the edge of insolvency as the migrant crisis is about to explode. Two decades ago Greece comfortably absorbed almost 1m economic migrants from the Balkans. This time, after six years of recession, the unemployment rate is above 25%. Mr Tsipras’s inexperienced government has struggled to take care of migrants in transit, let alone provide facilities for those who stay longer than a few days. It took a threat of immediate expulsion from the EU’s passport-free Schengen zone before Greece fulfilled its obligation to provide “hotspots” on five islands where migrants could be processed according to EU regulations. With local mayors raising “not-in-my-backyard” objections, nothing happened until the defence ministry took over; army contractors built the facilities in less than a month. + +Greece has already agreed to host up to 60,000 asylum-seekers who enter an official programme to relocate them to other EU countries. So far most have ignored the offer and pressed on with the journey. In any case, according to current plans, EU countries would take in only 13,000 migrants from Greece in the next six months. Some in Syriza used to argue that providing poor facilities for migrants would encourage them to move along. But thousands of Tunisians, Moroccans and Pakistanis blocked at the Macedonian border earlier this month are now settling in. Greece cannot afford to deport them. + + + +One priority, says a Syriza official, is to keep migrants as far as possible from tourist resorts. In Kos, an Aegean island popular with German holidaymakers, summer bookings have collapsed because of fears it will be overrun. Sports facilities and disused military camps on the mainland are being refurbished as temporary refugee camps. But the country’s total capacity is no more than 70,000 (see chart), and more than 2,000 migrants are arriving daily in Piraeus. The numbers will rise as the weather improves. If the northern border closes, Greece will fill very quickly. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21693630-greece-starts-fill-up-its-neighbours-restrict-flow-migrants-germany-no-way-out/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +German right-wingers + +Radikale Rechte + +Feb 27th 2016 | BERLIN | From the print edition + +Willkommen this + +ANTI-MIGRANT violence in Germany has become so severe over the past year that it is a miracle that no refugee has yet been killed. In one case, inebriated thugs threw a Molotov cocktail through a window into a room where an 11-year-old refugee would have been sleeping, had he not crept into bed with his mother in another room. Another xenophobe fired a gun into a refugee home and hit a Syrian man in the leg. Elsewhere, someone lobbed a hand grenade into a processing centre for asylum seekers. It did not go off. + +There were 13,846 “right-extremist” crimes in Germany in 2015, according to preliminary estimates, about 30% more than in 2014. Of those, 921 were violent. This year the pace has accelerated, especially in the former East Germany. On February 18th about 100 people in Clausnitz, in the eastern state of Saxony, tried to block a bus carrying 20 refugees, including children. In another Saxon city a cheering crowd interfered with firefighters dousing flames in a building being converted into an asylum home. One police chief warns of a “pogrom atmosphere”. + +Fears of a xenophobic backlash in otherwise-tolerant societies have been rising since the refugee crisis began, and not only in Germany. Right-wing populism is also growing in the Netherlands, as well as in Sweden, which like Germany entered the crisis with liberal asylum policies that are now being tightened. But Germany has taken by far the most refugees, with 1.1m arriving last year alone. And because of its history, Germany is extra-vigilant about extremism on the far right. The supreme court will soon consider an attempt by the 16 federal states to ban the NPD, a party that looks and smells like a neo-Nazi party. Germany also has a small subculture of violent, explicitly neo-Nazi networks. + +When it comes to less extreme populism on the right, however, Germany is an exception in the European Union: it has no far-right party as firmly established as France’s National Front or Austria’s Freedom Party. Germany’s political mainstream long seemed to have been inoculated by the Nazi past. As recently as 2014, a biannual survey of right-wing attitudes in Germany found that xenophobia, chauvinism, anti-Semitism and authoritarian longings were declining. Rightist worldviews were held by just 2.4% of the population, down from almost 10% in 2002. Yet even at the time, Andreas Zick of the University of Bielefeld, a co-author of the study, said the middle was fragile: xenophobia could increase again in a crisis. + +It probably started growing in 2014, even before refugee numbers surged, when the “Patriotic Europeans Against the Islamisation of the Occident” movement, or Pegida, began weekly marches through Dresden. After waning last spring, it has waxed again with the refugee crisis. Meanwhile the populist Alternative for Germany (AfD) party, founded in 2013 to oppose euro-crisis bail-outs, has veered to the xenophobic right. + +Pegida and the AfD have similar supporters. Pegida marchers tend to be older middle-class men anxious about social decline and cultural alienation, says Hans Vorländer, co-author of a new book on the movement. Pegida and the AfD have not merged, he says, only because their leaders loathe each other. But the AfD has ridden the anti-refugee backlash to score more than 10% in national polls. It is likely to do well in three regional elections on March 13th and to enter the federal parliament in 2017. Mr Zick thinks it has a potential voter share of 20%. Germany seems at last to be like the rest of Europe in having an entrenched populist party on the right. + +Worse, the data Mr Zick is collecting for his next study, due in May, suggest that the middle of society is becoming radicalised. This is most evident in the rise of verbal aggression. A leader of the AfD recently suggested that border guards should “make use of their firearms” to keep refugees out. Facebook and Twitter are abuzz with hate speech. This “radicalisation of rhetoric blurs the boundaries between physical and verbal violence,” says Mr Vorländer. + +Heiko Maas, Germany’s justice minister, is worried. He has invited his counterparts in the 16 states to a summit on March 10th to think up strategies against extremism. But as refugees continue to arrive, Germany’s tolerance and moderation are being tested as never before in its post-war history. The firewall it has built between respectable conservatism and the extreme right may be breaking down. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21693636-radikale-rechte/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Organised crime + +China nostra + +In Italy and Spain, Chinese banks are implicated in money-laundering + +Feb 27th 2016 | ROME | From the print edition + + + +WHEN Liu Wang, the European head of the Industrial & Commercial Bank of China (ICBC), opened its branch in Madrid in 2011, he probably did not imagine that he would one day return to the city as a prisoner. Yet on February 19th Mr Wang was arrested and jailed without bail. He is one of six of the bank’s executives accused of funnelling dubious cash deposited by Chinese expatriates back to China. Some of the money allegedly came from smuggling and illegal exploitation of workers. ICBC said it always respected the law, and threatened to sue “malicious slanderers”. + +The case has parallels with one in Italy involving the Bank of China, which also denies any wrongdoing. Judges in Florence are due to decide next month whether to indict almost 300 people alleged to have illegally sent more than €4.5 billion ($4.9 billion) to China between 2007 and 2010. Much of the money came from businesses in Prato, a textile city in Tuscany, which has a population of around 40,000 Chinese. Many are in Italy illegally and work in semi-clandestine sweatshops. + +Because so many Chinese enter Europe irregularly, guided by traffickers known as “snakeheads”, it is hard to estimate their numbers. A study three years ago concluded that Italy and Spain had the European Union’s third- and fourth-biggest Chinese communities, at 330,000 and 170,000 respectively. Each had grown almost five-fold since the late 1990s. + +Most Chinese in southern Europe work above-board. But others are caught up in a cycle of systematic illegality. At its origin is the importation or smuggling of cheap, often counterfeit goods from the Far East. These are then sold without VAT at prices local firms cannot match. Prato’s sweatshops turn imported cloth into cheap garments with “Made in Italy” labels, easy to sell throughout the EU. The bulk of the proceeds are dispatched to China in defiance of anti-money-laundering controls. + +Not only Chinese are involved. Police in Italy have investigated locals who help supply premises and transfer profits. In Spain police allegedly took gifts from Chinese suspects. The profits are immense: in 2012 police broke up an operation in Fuenlabrada near Madrid, Spain’s best-known Chinatown, claimed to have laundered profits of €200m-300m a year. + +That sort of money inevitably attracts other types of criminal organisations. Already, in 2003, American researchers found evidence of Chinese gangs in southern Europe involved in extortion, prostitution, document forgery, cigarette smuggling and illegal gambling. The same report said Chinese criminals in Naples appeared to have a deal with the local mafia, the Camorra. But later investigations, surprisingly, have uncovered few proven links to Italian organised crime. And how much of a role Chinese mobsters still play is unclear. + +“Western law-enforcement agencies face immense linguistic and cultural barriers when they try to investigate crime committed by Chinese,” notes Wang Peng, an expert on China’s mafias at the University of Hong Kong. Detectives investigating a spate of murders in Prato’s Chinatown in 2010 complained of a total lack of co-operation from the Chinese community. + +A sweatshop fire in 2013 that killed seven Chinese workers may have marked a turning point. Since then several Chinese have reported their employers to the police, and on February 6th around 2,000 staged an unprecedented demonstration in Prato against lawlessness. Bearing torches and carrying Chinese flags alongside Italian tricolori, the protesters were implicitly demanding protection from their own compatriots. + +Yet the biggest threat to Chinese living abroad who skirt the rules may come from China itself. Officials are starting to enforce a rule that expatriates must pay tax on their entire overseas earnings. It may still be lucrative for Chinese to engage in shady moneymaking schemes in Europe. But sending the gains back to the homeland is becoming trickier. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21693633-italy-and-spain-chinese-banks-are-implicated-money-laundering-china-nostra/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Happiness in Europe + +Hell is other people, for Swedes + +What makes Europeans happy? It depends on where they live + +Feb 27th 2016 | From the print edition + + + +EUROPEANS can sometimes seem like a miserable bunch. The continent has produced downbeat writers such as Jean-Paul Sartre (“hell is other people”) and philosophers such as Slavoj Zizek (“What does love feel like? Like a great misfortune”). But although there are many reasons for Europeans to feel gloomy at present—from a migration crisis stretching from Greece to Germany to the possibility that Britain, one of the fastest-growing economies in Europe, may leave the European Union—many, instead, seem to be becoming ever cheerier. + +Most Europeans are, on average, at their happiest since the financial crisis. In 2008 76% of EU citizens said they were satisfied with their lives. That number is now 80%, according to the Eurobarometer survey, which has tracked self-reported happiness for over four decades. Those in northern European countries, such as Denmark and Sweden, are consistently the most content. But some countries have bucked the trend. According to Ruut Veenhoven, a professor at Erasmus University in Rotterdam who has been analysing data on happiness for decades, people in Greece and Portgual have become gloomier over the past three decades (although they have started to perk up over the past few years). + +Some general themes stand out. According to Eurostat, the EU’s statistical office, the only metric consistently correlated with European happiness is relative income. Moving one step up the income ladder increases happiness in every country in the EU; the difference in happiness between the bottom quintile and the second quintile is the largest. European men tend to be slightly happier than women, though not in Britain or Denmark. Those who go to university tend to be happier (not controlling for income). + + + +But some big differences also emerge. Europeans are generally happier when they are younger. However, richer countries see an uptick of joyfulness in old age: Germans are happier when they are over 75 years old than when they are between 25 and 34, and the Swiss are happier when they are over 75 than when they are teenagers. (Britons, Swedes and Danes are happiest when they are between 65 and 74.) The Portuguese seem to have the worst mid-life crises, whereas Greeks, Bulgarians, Romanians and Slovenians all become glummer as they get older. + +Where and how Europeans live also determines their happiness. In all countries, people are least happy if they live on their own. By the same token, in most countries those with children tend to be happier, with the exception of Britain, Denmark, Ireland and Switzerland, where people tend to be happier when childless. Overall, Europeans tend to be most content if they live in towns or suburbs as opposed to cities or rural areas. Northern Europeans tend to be cheerier the farther they are from cities (and hence from other people). In most parts of southern and eastern Europe, however, the opposite is true. + +What makes city-dwellers happier varies from one city to the next. According to the most recent data from Eurobarometer, most city-dwellers have become slightly happier (see map). The highest correlation with life satisfaction in cities is a feeling of safety. But in Stockholm, Amsterdam and Vienna it is those who think foreigners are well integrated who tend to be happiest. Parisians and Berliners who rate their cities’ cleanliness highly are the most content. In Reykjavik, curiously, the telltale sign of happiness is being satisfied with the public transport system. + +Those places which are happiest appear to have good governance. This may suggest a lesson to politicians: reducing unemployment and boosting wages will undoubtedly increase happiness. But clean pavements are important, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21693638-what-makes-europeans-happy-it-depends-where-they-live-hell-other-people-swedes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Ever farther union + +The principle of “ever-closer union” died long before Britain demanded an exemption + +Feb 27th 2016 | From the print edition + + + +OLD habits die hard. So it proved with David Cameron, Britain’s prime minister, after his mini-victory at last week’s European Union summit in Brussels. Bounding energetically to the press-conference lectern after two gruelling days of talks over the terms of Britain’s EU membership, Mr Cameron opened his post-summit remarks not by trumpeting the emergency brake on euro-zone integration he had just secured, nor by crowing over his success in denying benefits to EU migrant workers. Instead, he highlighted the carve-out he had won for Britain from the EU treaty commitment to “ever-closer union”, a golden oldie that has infuriated British Eurosceptics for decades. + +Like a vestigial piece of junk DNA in the genome, this phrase has survived every change to the EU treaties, exerting no influence on its host today but providing a window to its past. The ambition of fostering “ever-closer union among the peoples of Europe,” inserted into the preamble of the 1957 Treaty of Rome, the EU’s founding document, speaks to the post-war need for reconciliation in a scarred continent. Its deliberate ambiguity—defining a journey, not a destination—is well suited to a club that prefers debating the scope of its power to exercising it. Defending the phrase is the last test of the classical Euro-federalist. + +Chief among this dwindling crowd is Belgium, which has long seen a federal Europe as an antidote to its own national and linguistic divisions. Charles Michel, the Belgian prime minister, feared that a British exemption to ever-closer union could kill the idea for the rest, and vowed to defend it to the hilt. Messrs Cameron and Michel therefore disagreed on whether ever-closer union was a good thing, but very much agreed that it mattered. (Angela Merkel, Germany’s chancellor, joked that Mr Michel would be better off pursuing an “ever-closer Belgium”). + +That their theological struggle was quickly solved shows how Europe has changed. Once, Britain would have joined an almighty battle against the perfidious federalisers, as several of Mr Cameron’s predecessors did. Today he is happy for the rest to get on with the job, so long as Britain is left out; indeed, Mr Cameron acknowledges that the euro zone must integrate further to guarantee its survival. Thus did Mr Michel win his tweaks to the text and Mr Cameron his special dispensation for Britain (and a promise that the exception would be inserted into a future EU treaty). + +Some old-timers wrung their hands to see a founding European principle jettisoned so easily, if only for one troublesome member. But the debate left other European leaders confused, and rightly so. “Ever-closer union” has never been more than the weathervane of the European project, whipped about by the prevailing political winds. The grand projects of integration, such as the single currency or the passport-free Schengen area, have sprung from the ambitions of leaders and the mood of the times, not from any mystical force of treaty language. + +If lofty phrases have never driven Europe’s integration, they can scarcely slow its unravelling. The migrant crisis has tugged at European unity like nothing before, and the treaty provides little protection against unilateral border closures or the failure of some European countries to accept refugees from others. It is this, rather than a trio of fine words in an increasingly threadbare document, that should trouble the federalists. Instead, we are left with two peculiar phenomena. The Belgians cling to the comforting maxims of yesteryear just as events render them obsolete. And Mr Cameron brags, as he did to the House of Commons this week, that thanks to his deal Britain will never become part of a “European superstate” that no one is trying to build. + +Back in the real world, the migrant crisis has exposed differences between European countries that will linger long after the immediate danger has passed. The bonds of trust that hold together projects like Schengen have frayed. Governments no longer merely disagree; some seem unable even to understand each other. That could jeopardise the traditional instruments of solidarity inside the EU, such as transfers from rich countries to poor. + +Retreat to the core + + + +In graphics: A guide to “Brexit” from the European Union + +All is not lost, say optimists. There is an old maxim in Brussels that the European project advances only in times of crisis. And such is the despair that the German notion of Kerneuropa, or “core Europe”, is resurfacing, in which those countries willing to forge ahead should not be hamstrung by the reluctance of others. “It has become impossible to work together at 28 [member states],” says one EU diplomat. “Perhaps we have to think about smaller groups.” The foreign ministers of the six original signatories to the Treaty of Rome met recently for a discussion on Europe’s future, and further such gatherings are planned. Some think a departure of the foot-dragging Brits could hasten a process of tighter but smaller integration—although a Brexit seems at least as likely to embolden Eurosceptics elsewhere. + +In any case, the appetite for big steps seems diminished. The euro zone is an obvious candidate for integration. Worries over wobbly lenders, especially in Italy, highlight the need to complete the half-built banking union (although there remain big differences over a common European deposit-insurance fund). There are plenty of other ideas, from a tougher central fiscal authority to common debt instruments. But many are incompatible with one another, and creditor countries like Germany have no desire to increase their liabilities. The migrant crisis, which has made a mockery of borders, looks tailor-made for a common European approach on interior as well as foreign policy. No one wants Schengen to die. But for now those countries affected by the flows are unable to co-ordinate their response and those that are not see no reason to trouble themselves. + +So crises may present opportunities for Europhiles, but they are still crises. Instead of the hoped-for integration and stability, the EU’s troubles might just lead to exhaustion and collapse. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21693620-principle-ever-closer-union-died-long-britain-demanded-exemption-ever-farther/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +The justice system: Law in a time of austerity + +Tories and the EU referendum: Blue on blue + +Nuclear energy: What’s the (Hinkley) point? + +Schools and careers: Posh professions + +European migrants: Tunnels and channels + +Pig farming: Fearing the wurst + +Foreign property-buyers: Mountains and molehills + + + + + +Articles Sections Next + +The justice system + +Law in a time of austerity + +The justice secretary pleases lawyers by overturning his predecessor’s harshest policies—but they may be less happy when he pursues reforms + +Feb 27th 2016 | From the print edition + + + +MINISTERS frequently reverse decisions taken by their predecessors, sometimes wisely, often not. But it usually happens after an election has produced a change of government. What is remarkable about the justice ministry since last May is that the new Tory Lord Chancellor, Michael Gove, has been systematically undoing many signature policies of his Tory predecessor, Chris Grayling. + +The two are now allies in the campaign to leave the European Union (see article). But on matters of justice they seem to disagree on almost everything. The latest example was Mr Gove’s decision to scrap a second round of cuts in legal aid for criminal cases. Mr Grayling wanted to reduce the number of firms of solicitors paid to offer 24-hour help at police stations to suspects from 1,600 to just 527, and to trim legal-aid fees in criminal cases by a further 8.75%. Lawyers fearing a loss of business complained loudly and threatened to sue. Mr Gove has shelved both measures. + +In December he scrapped a mandatory criminal-courts charge that Mr Grayling, arguing that criminals should help pay for the administration of justice, had imposed on guilty defendants. Over 50 magistrates quit, complaining that they were unable to waive the charge even when defendants were unable to pay. Worse, they claimed that in some cases defendants were encouraged to plead guilty even when they were innocent, to avoid the risk of incurring a higher court charge. The House of Commons justice committee condemned the charge for similar reasons. + +Last autumn Mr Gove cancelled a £5.9m ($9m) contract for the justice ministry’s commercial arm to advise Saudi Arabia’s prison authorities. Indeed, he went further, scrapping the commercial operation set up by Mr Grayling, on the grounds that it was allowing prison and judicial systems in authoritarian countries to claim a British seal of approval. He also abandoned plans by Mr Grayling to build a new secure college for teenage prisoners. And he overturned a ban pettily introduced by his predecessor on books for prisoners. + +What is going on? In part Mr Gove’s reversals may reflect some easing of the pressure for more public-spending cuts. But more important is that Mr Gove has taken a less confrontational attitude to the judiciary and the legal profession than did the hardline Mr Grayling, who was the first non-lawyer to be Lord Chancellor in over 400 years (Mr Gove himself is the second). Mr Grayling seemed to go out of his way to make himself unpopular. In contrast Mr Gove has been readier to listen to grumbling by judges and lawyers. + +The changes over the past six years of Tory-led government have been substantial. Judges’ pay has been frozen and their pensions cut, prompting some to sue the government. In spite of Mr Gove’s relative leniency, the legal-aid budget has been slashed by over one-third in real (inflation-adjusted) terms, from over £2.2 billion in 2010 to £1.6 billion in 2015. In many areas, especially of civil and family law, legal aid is no longer available. One result has been a big rise in the numbers choosing to represent themselves, clogging up courts that are ill-designed for litigants in person. Meanwhile spending on the court system has been reduced, many have been closed and court fees have increased. + +Not surprisingly, practitioners have squealed. Last year Justice, a lobby group, pronounced that “our justice system is in crisis”. In his annual report in January the Lord Chief Justice, Lord Thomas, declared bleakly that “our system of justice has become unaffordable to most”. He added that judges’ morale was low, their workload had hugely increased and they were concerned over the adverse effects on access to justice of the recent changes. + +The justice ministry counters such pessimism by pointing out that the legal-aid system in England and Wales is still one of the world’s most generous. Other countries are said to consider the British system to be among the fairest and best of all. But Mr Gove also has an agenda, not of further spending cuts but of something that is more urgently needed: reform. + +The ministry says it is spending over £700m to modernise the courts and tribunal services. As the Centre for Justice Innovation, a think-tank, has put it, “Walking into a court today, it can still feel like the communications revolution never happened.” There is belated talk of online courts to settle disputes, with a judge present but no lawyers. Relate, a charity, is launching an online divorce or separation model based on the pioneering Dutch Rechtwijzer system. Better technology could be used to allow more disputes to be resolved by mediation or arbitration, not in costly courts. + +Although some lawyers resist change, many senior judges do not. Nobody expects a return to the days of more generous public funding. Lord Thomas is eager to make greater use of technology to settle cases. Lord Briggs has called for an online court to start work as a matter of urgency. And Lord Jackson wants the early introduction of a system of fixed costs for all civil claims worth up to £250,000. + +Mr Gove has noted that the justice system divides the country, in effect, into two nations: a rich, international class who like to settle cases in London under the gold standard of British justice; and everyone else, left to put up with a creaking, outdated system. He has even floated the idea that highly paid solicitors in London’s “magic circle” firms might be required to pay a levy towards the cost of the judicial system from which they benefit. + +His biggest challenge will come when he confronts restrictive practices that have long raised costs and diminished competition. At the top end of the market, prices for legal services in Britain are among the highest in the world. The number of qualified lawyers has increased in the past two decades, but outdated restrictions make it hard for new types of provider, including accounting firms, to enter the market. Bodies such as the Law Society and the Bar Council often act as much to protect their members’ interests as to regulate them. + +Mr Gove has experience, as education secretary, in dealing with entrenched interest groups. Lawyers, heavily represented in Parliament, are an even more formidable lobby than teachers. Under Mr Grayling both solicitors and barristers staged walkouts. Mr Gove may have won plaudits for being readier for dialogue than his predecessor. But his popularity with the special interests within the justice system could yet prove short-lived. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693582-justice-secretary-pleases-lawyers-overturning-his-predecessors-harshest-policiesbut-they/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Tories and the EU referendum + +Blue on blue + +It’s off to the Khyber Pass for Tories who play dirty over the next four months + +Feb 27th 2016 | From the print edition + +Boris and Dave, needling each other + +MUCH is at stake in Britain’s referendum on European Union membership on June 23rd, from the health of the economy to the future of the United Kingdom itself, as Scotland threatens to break away following Brexit. Now there are fears that one particularly old and venerable institution might not survive the referendum campaign: the Conservative Party. + +Europe is the issue that has divided the Tories more bitterly than any other over the past 50 years. The referendum, promised by David Cameron in 2013, was supposed to be the safety valve that would stop the party exploding. A united Tory cabinet would allow a passionate debate, win, and move on. But the plan failed to survive first contact with the enemy—and even to anticipate who the enemy would be: one Boris Johnson, the mayor of London, Mr Cameron’s old chum from Eton and Oxford and the Tories’ most effective campaigner. + +Even before Mr Johnson belatedly declared himself an “outer” on February 21st, there was surprise that fully half a dozen cabinet ministers were prepared to defy Mr Cameron and campaign to leave the EU. They include Michael Gove, the justice secretary, Iain Duncan Smith, the work and pensions minister (and a former party leader) and Chris Grayling, the leader of the Commons. The unscripted Mr Johnson will give the campaign some zest; bookies shortened the odds of Brexit on his declaration. Tory MPs campaigning to leave are delighted: “We are a lot closer than we thought we would be at this stage,” says Philip Hollobone, the MP for Kettering. + +More worryingly for Mr Cameron, Mr Johnson will encourage other MPs and party members to defy the government. Some 130-150 of the 330 Tory MPs could join the campaign to leave. In local constituency associations, the bias towards leaving is more pronounced. Mr Hollobone, for instance, believes that about 85% of his own activists will vote to leave. + + + +In graphics: A guide to “Brexit” from the European Union + +This makes the party divided, with the grassroots pitched against the leadership. The Conservatives have a dismal record of splitting on such issues, going back to spats over free trade versus imperial preference in the late 19th century. The party was badly divided again in the 1990s, its own MPs bringing a traumatic end to Margaret Thatcher’s 11-year premiership and then wrangling over Europe throughout that of her successor. One consequence of that fratricidal warfare was to help Labour into Downing Street for the following 13 years. + +This is the fear for Tories as they prepare for months of argument, their divisions highlighted by the relative unanimity of the other big parties in favour of remaining in the EU. Yet as Tim Bale, a historian of the party, points out, the split is now less stark than in the 1990s. Then, the argument within the Tories was between Eurosceptics and those, such as the then-chancellor, Kenneth Clarke, who were fiercely pro-European. Now it is between “hard Eurosceptics and soft Eurosceptics”, the latter arguing to stay on the grounds that they have detached Britain sufficiently from the EU to minimise the damage. + +A Tory leadership contest is due before the next election, which should give both sides a chance to air their differences. Mr Johnson will be well positioned to run: he is the only one of Mr Cameron’s likely successors to be on the Leave side, meaning he may hoover up the votes of Eurosceptic MPs and party members. + +But as John Barnes, a Tory councillor, warns, things could still go “very sour” if either side personalises the debate. The hatred that the Thatcherites reserved for those who conspired against her did much to poison the wells during the 1990s. The party is keen to avoid a repeat: Lord Hague, a former leader, has warned that any minister who criticises a colleague will be sent off as “the new special representative to warlords in the Khyber Pass”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693580-its-khyber-pass-tories-who-play-dirty-over-next-four-months-blue-blue/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nuclear energy + +What’s the (Hinkley) point? + +It would be best if Britain’s French nuclear partner threw in the towel + +Feb 27th 2016 | From the print edition + +Forever the energy of the future + +BRITAIN has been often criticised for the unpredictability of its energy policy. It should take a lesson from Paris. The national utility, Électricité de France (EDF), reliably puts off a final decision on whether to build Britain’s first nuclear-power station in a generation year after nail-biting year. On February 23rd its boss, Jean-Bernard Lévy, clarified that his latest promise to come up with a verdict “very soon” meant “this year”, four years after the initial deadline in 2012. It may now be best for Britain if EDF calls it quits—however improbable that is. + +The stakes are high. The £18 billion ($25 billion) project, Hinkley Point C in Somerset, would be a huge engineering work, bigger than the London Olympic Park and on a par with Crossrail, a railway running under central London. It would provide about 7% of Britain’s electricity, and because nuclear energy generates little carbon dioxide, it is central to the government’s commitment to clean power. + +It is also symbolic of a “nuclear renaissance” after the failure of a state-run industry that limped along from the 1950s to the 1980s, and equally fraught private ownership during the next two decades. It is meant to show how private investment, with a helpful state behind it, is the best model, giving a renewed lease of life to the nuclear industry, says a new book, “The Fall and Rise of Nuclear Power in Britain”, by Simon Taylor, of Cambridge University’s Judge Business School. + +Yet as the book witheringly points out, the result would be “the most expensive power station in history”. The projected costs are comparable to those of the Three Gorges power station in China, which has about seven times the planned generating capacity—albeit non-nuclear. They may rise if EDF’s painful experience of building two of the same reactors in Finland and France is any guide. Both those European Pressurised Reactors are years behind schedule and three times over budget; there is even a possibility that the French one, Flamanville 3, will be dismantled. + +To compensate EDF in case of spiralling construction costs, the government has pledged to pay it up to £92.5 per megawatt hour for 35 years once it starts producing—almost triple current wholesale prices. That, Mr Taylor writes, poses the politically sensitive problem of rewarding the firm with as much as £1 billion a year, funded by higher electricity bills, when all of its risks have been overcome. British taxpayers are also on the hook if things go wrong; the government has guaranteed billions of pounds worth of loans on the project. + +Even more awkwardly, it puts a pillar of British energy security in the hands of firms mostly or wholly owned by foreign governments. EDF, backed by the French state, is a financial mess, with high debts and negative cashflow that this month forced it to cut its 2015 dividend. The strains could become more severe once it starts spending billions of pounds a year on Hinkley Point. The go-ahead also depends on a Chinese state-owned firm taking a one-third stake, amid uncertainty about the health of China’s economy. + +For all its problems, Hinkley Point is not yet doomed. Politics may trump economics; Britain has committed to stringent climate goals, and France would discourage EDF from abandoning Hinkley Point because it would end the dream of a nuclear-export industry. If EDF does pull out, Dieter Helm of Oxford University says the British government has a fallback option: it could float “nuclear bonds” at low interest rates to pay for the project. That, he says, would be cheaper than the 10% annual return that the French would charge. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693602-it-would-be-best-if-britains-french-nuclear-partner-threw-towel-whats-hinkley-point/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schools and careers + +Posh professions + +Feb 27th 2016 | From the print edition + + + +“Education should not be about wealth,” boomed Tony Blair in 1996. Two decades later, it still is. Private schools teach 7% of Britain’s pupils, but account for half the country’s senior civil servants, cabinet ministers and leading journalists. Seven in ten generals and judges went to independent schools, according to the Sutton Trust, a charity. In some jobs the proportion has even increased. A decade ago, half Britain’s senior doctors were privately educated; today the figure is 61%. The share has risen in the law, too. Even pop stars are more likely than average to have a posh education. And what of the fat cats leading FTSE firms and the plutocrats in Parliament? They, it turns out, are among the least privileged of the lot: only one in three went private. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693592-posh-professions/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +European migrants + +Tunnels and channels + +The great migration from the east has entered a second, different phase + +Feb 27th 2016 | From the print edition + + + +EUROPEANS—their footprints fossilised on Norfolk’s coast 800,000 years ago—might be Britain’s oldest immigrants. But, as Britons campaigning for their country to leave the European Union have noticed, they also account for many of its newest. In 2004 Europeans made up 26% of all Britain’s foreign-born incomers; in 2014 they accounted for 48%. And whereas many of the country’s other immigrants slip, inconspicuous, into large cities, the latest generation—largely English-speaking, ever a short plane ride from home—have gone just about everywhere. + +The big recent increase comes from Europe’s east. Eastern Europeans were once scarce in Britain. But in 2004, when it lifted work restrictions on eight central and eastern European countries, Poles entered in large numbers: in 2007 they peaked at 22% of Britain’s foreign inflows, and now number some 850,000, making them Britain’s largest group of foreign citizens. In 2013 Britain granted the same rights to Romanians and Bulgarians, and many predicted a similar “surge”. It did not happen: so far only around 230,000 have come. + +Poles, suddenly and uniquely, had spread themselves across the expanse of the country, settling in improbable market towns, surprising the Northern Irish—who see relatively few immigrants—and going some way to reversing Scotland’s shrinking population. London holds 37% of Britain’s foreign-born population, but only 185,000 Poles live there: fully 80% live elsewhere in Britain (23,000 live in Northern Ireland and 82,000 in Scotland). Half Britain’s Romanians and just under half its Bulgarians, meanwhile, live in London, mostly gathering in Barnet and Brent. + + + +INTERACTIVE: A guide to Europe’s migrant crisis, in numbers + +Poles had arrived at a time when their skills—mainly in agriculture and hospitality—and their willingness to toil for wages and in conditions that British workers spurned, matched the needs of rural employers. Recruiters often went to Poland to seek them out, teach them English and transport them over. + +They settled with little regard for history: earlier generations of Polish migrants, who had come to Britain after the second world war, were at first unwelcoming to the newcomers (“Closed, closed, closed,” says Jakob Krupa, a correspondent for the Polish Press Agency in London). Many of the new bunch came from small towns themselves, so places like Boston in Lincolnshire, which is now home to a lively Polish community, did not feel too strange. In any case, travelling in companionable groups, and planning to stay only a few years, they were prepared to live just about anywhere. + +Bulgarians and Romanians, meanwhile, work mainly in construction. The big cities, especially London, account for much of the industry’s demand, so that is where they have gone, settling in the outskirts where housing is cheaper (see map). The relaxation of employment rules in 2013 made little difference to their numbers, as self-employment, common in the construction industry, had been permitted since 2007, when the two countries joined the EU. (The number of Bulgarian-born in work actually fell in Britain in 2014.) + + + +Unlike the Poles of 2004, who were forbidden from working in most other EU countries, Romanians and Bulgarians may work all over Europe. They also tend to plan to stay longer, says Stephen Drinkwater of the University of Roehampton, “so they are looking for a better fit from the start”. Trickling in ones and twos, people from Bulgaria and Romania have pooled close to their fellow countrymen. + +Many Poles started in basic jobs, but within an average of 18 months, says Heather Rolfe at the National Institute of Economic and Social Research, they found something better. In towns like Wisbech, in Cambridgeshire, Polish businesses have transformed rundown high streets. Some, keen to fit in, diligently take tea (with lemon) at five. In 2004, according to the International Passenger Survey, one in ten intended to stay at least three years. In 2014, nearly half did. + +Romanians and Bulgarians arrived in a country used to eastern Europeans, and face less prejudice. They are on average less educated than Poles. But 74% are in some sort of employment, almost the same rate as Polish migrants, 80% of whom are in work. And between 2013 and 2014 there was a sevenfold increase in national insurance numbers issued to Romanians, and a threefold increase in those given to Bulgarians—a sign they are shifting out of self-employment. Anecdotes of porters becoming managers within a year or two abound. And as Brexit campaigners worry European migrant flows are too high, Britain’s food and drink companies, big migrant-employers, fret they are too low. + +Like migrants from western Europe, those from the east are more likely to be graduates than the British-born. Around three-quarters come for work, nearly half with jobs lined up before they arrive. A new deal limiting benefits for EU migrants is unlikely to make much difference to inflows: fewer will get in-work benefits, but this will be offset by a planned rise in the minimum wage; in any case Britain’s job market, more flexible than the rest of Europe, remains the main attraction. + +Only limits on free movement from the continent would change things. That happened once before in Britain, as a result of rising sea levels more than 200,000 years ago. Now, as the country threatens to leave the EU, it may yet happen again. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693639-great-migration-east-has-entered-second-different-phase-tunnels-and-channels/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Pig farming + +Fearing the wurst + +Cheap European rivals are making mincemeat of the British pork industry + +Feb 27th 2016 | From the print edition + +In a trough + +SUCH was the pressure on pig farmers in the late 1980s, caused by low pork prices, that Cameron Naughton’s father had a nervous breakdown. The younger Mr Naughton took time off college to help his father and then took over the family business in the rolling Wiltshire hills. Thirty years on, he is facing another dive in prices. His own mental health is holding up (even if his knees are not), but the 49-year-old farmer says it has not been this bad since the late 1990s. + +The most recent problem has been a Russian ban imposed in 2014 on EU food products in retaliation for Western sanctions over Ukraine. One-quarter of European pork used to go to Russia; there is now a glut. A year ago British pigs sold for £1.35 per kilo ($0.85 per pound). Today, they sell for £1.13. (EU producers charge, on average, £0.99.) Last week Mr Naughton told his ten employees there may have to be lay-offs. + +The pork industry had problems long before this year. Foot-and-mouth disease hit hard in 2001. More rigorous animal-welfare standards introduced in 1999 raised farmers’ costs. A recent warning by the World Health Organisation that too much processed meat causes cancer has not helped, says Zoe Davies of the National Pig Association, a farmers’ lobby. In 1998 there were 800,000 sows in Britain. Now there are half that number. + +Some people switched to eating pork after a scandal in 2013 when horsemeat was found in French beef. But the British are still not big ham fans: the average Briton eats 24kg of pork per year, less than half as much as the average German. Retail prices are holding up as producers take the hit, receiving only £0.32 of every £1 spent on pork, the lowest since 2002. (Beef producers get £0.50.) + +Ms Davies says that, having legislated for better conditions for pigs, the government should encourage schools and hospitals to buy British meat. And she claims that large imports of cheap European meat increase the chance of another horsemeat-type scandal. British pig farmers squeal that some European rivals enjoy subsidies and have been slower to apply animal-welfare rules. Yet many in Europe are also more efficient, focused on higher productivity for export. + +Farmers like Mr Naughton struggle on. He grows cereals to help when pork prices sink, and sells only to local butchers, who will pay a premium. He knows three pig farmers who have recently folded. As small farms go under, the industry is integrating, with specialist farms handling different stages of production. Mr Naughton thinks he will survive but he says his son, now 19, is unlikely to want to take on the farm when he retires. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693618-cheap-european-rivals-are-making-mincemeat-british-pork-industry-fearing-wurst/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Foreign property-buyers + +Mountains and molehills + +London’s would-be mayors blame foreigners for high prices. Don’t believe them + +Feb 27th 2016 | From the print edition + +Capital spending + +IN THE four previous elections for London mayor, the main issue has been how to improve public transport. Ahead of the fifth, on May 5th, housing is at the top of the agenda. At a meeting on February 23rd with people from the construction industry, the candidates unsurprisingly promised to boost housebuilding if they were elected. But another solution to the capital’s housing crisis is floating around: clamping down on foreign investment. At the meeting Sadiq Khan, the Labour hopeful, promised to compel housebuilders to give Londoners “first dibs” on homes, ahead of overseas-based folk. Zac Goldsmith, his Conservative rival, proposed a similar policy. + +The argument goes that foreign owners drive up prices, bringing down the rate of home-ownership among Londoners. Go to certain parts of the capital and you will be left in no doubt that overseas investment is a scourge. One Hyde Park, a block of plush flats in Knightsbridge, often looks deserted at night. On The Bishop’s Avenue, in Highgate, weeds have grown in empty mansions. Such properties are often owned by rich foreign residents fearful of political unrest or expropriation back home. A London bolthole is a good way of preserving capital. (In recent months demand has tailed off, though: depreciating currencies in countries like Ukraine, Russia and Kazakhstan have made London property more expensive for oligarchs.) + +In 2014 foreigners bought one-third of “prime” homes sold in London (ie, those in the top 8-10% of the market), according to Savills, an estate agent. But this does not mean that the capital is being overrun by absentee investors living abroad. The definition of “foreign” is expansive, including Russian billionaires who never visit Britain, but also someone who has lived in London for years and uses her Canadian passport when buying. The high rate of “foreign” ownership is thus a function of the capital’s cosmopolitanism: about one in four Londoners is a foreign citizen. + +Foreigners who do not live in Britain make up a smaller chunk of the market for London’s prime homes: perhaps 10%, says Lucian Cook of Savills. And outside the poshest neighbourhoods, non-residents are small beer: in 2013 the Bank of England suggested that they may account for just 3% of all property transactions in London. + +The people who make up that 3% are still open to the charge that they push house prices up. If so, it is probably not because they buy properties and then leave them empty (so-called “buy to leave”). There is little evidence that foreigners are more likely than Britons to leave a property empty, suggests a report by the Greater London Authority (GLA). In the past decade the number of houses in the capital left vacant for more than six months has fallen by 50%, a much steeper decline than in the rest of England. + +Most foreign investors instead look to make money. According to Adam Challis of JLL, a property company, 85-90% of Asian buyers living abroad plan to rent out their property. Their buying-to-let may push up house prices, but only marginally: the National Housing and Planning Advice Unit, a now-defunct public body, found that increased lending to landlords (both British and foreign) pushed up prices by 7% in 1996-2007, compared with an overall increase of 150% over the period. Buy-to-letters may reduce the cost of renting by boosting the supply of rooms to let, so in parts they may help housing affordability. + +Other Asian buyers, according to a survey from JLL, want their children to use their British property while at university—no bad thing, since each year international students at London universities directly contribute about £3 billion ($4.2 billion) to the economy. Very few say their London pad will be a second home. + +Foreign investment may even pep up housebuilding. Since the financial crisis of 2008, banks have been stingy. They often refuse to fund a proposed development unless housebuilders can demonstrate its viability by selling around one-third of the dwellings in advance (“off-plan”, in the jargon). Britons have typically shunned off-plan properties, thanks in part to how mortgages are structured: few banks are willing to accept a not-yet-built house as collateral. Overseas investors have no such qualms, however. A report commissioned for the GLA may surprise Messrs Khan and Goldsmith: it found that without foreign money “many London [housing] schemes simply would not commence construction”. In posh parts of London monied foreigners push up the price of property; but by spurring on the builders, in other parts of the capital they may pull it down. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693634-londons-would-be-mayors-blame-foreigners-high-prices-dont-believe-them-mountains-and/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Ending energy poverty: Power to the powerless + + + + + +Articles Sections Next + +Ending energy poverty + +Power to the powerless + +A new electricity system is emerging to bring light to the world’s poorest. The key is persuading customers to pay + +Feb 27th 2016 | From the print edition + + + +IMAGINE a country the size of India without power. No electric lights, mobile phones, radios crackling with cricket or televisions blaring Bollywood hits. Its economy would be medieval: tailors without electric sewing machines; metalworkers without power lathes; farmers without water pumps. Everyone would rush to finish work by sundown. Nights would be lit only by the moon, cooking fires, candles and kerosene lamps. + +This is reality for 1.1 billion people globally—not far short of the population of India. The biggest numbers are in rural southern Asia and sub-Saharan Africa (see chart). According to the UN, 220m people gained electricity between 2010 and 2012. But most of them were in urban areas, particularly in India. In sub-Saharan Africa, a region that, excluding South Africa, uses less electricity than New York state, electrification barely kept pace with population growth. Some 600m of its people are without electricity; demography means that by 2030 the number could be even higher. What would it take to bring all these people into the modern world? + + + +Much as mobile telephony has helped the poor leapfrog landlines and bricks-and-mortar banking services, a handful of tech-savvy entrepreneurs are seeking to provide widespread access to clean, cheap energy with local systems, metered and paid for by mobile phone. They hope to vault electricity grids, harvesting solar energy beamed down onto rooftops rather than using fossil fuels, and connecting it to batteries to store the energy until nightfall. + +Their offerings are likely to be best-suited to private customers in rural areas, whose energy needs are low and who are expensive to connect to grids. But their evolving business models, and innovative marketing and payment methods, also hold lessons for grid firms seeking to provide power to businesses and urban households. + +Beyond the pylons + +Governments and utilities in poor countries are often too cash-strapped to extend their grids. Part of the problem is widespread reluctance among users to pay for electricity. Customers who do not pay their mobile-phone bills can have their connection taken away remotely; electricity is harder to cut off, and easier to steal. This creates a vicious circle in which utilities lose money, reducing the funds available for improving and expanding supply, and further sapping users’ willingness to pay. “The real threat to energy access is that energy is not treated as a private good, but as a right,” says Michael Greenstone, an energy specialist at the University of Chicago. “And the problem with a right is that no one wants to pay for it.” + +Across the world efforts are under way to change such attitudes, using technology and attempts to tweak social norms. In parts of Delhi, a utility has encouraged women to persuade neighbours to pay their bills in order to secure better service for all. Mr Greenstone is part of a project, funded by the International Growth Centre, a global research network with headquarters in London, that is looking for ways to encourage people to pay for electricity in Bihar, where 64m people are without power—the highest share, at 64%, of any Indian state. + +Bihar has plenty of generating capacity, Mr Greenstone says, but gets paid for little more than half the power it provides. The rest is pilfered, unmetered or unbilled. The state power company has promised to provide electricity to “feeder” areas of 2,000-3,000 households that pay at least 60% of their bills. In a few randomly selected areas, it will increase the supply of electricity in proportion to the share of bills that are paid. The aim is to make people more aware of the value of their electricity supply and to encourage payment. + +Mr Greenstone thinks that the results of the trial, due later this year, will underscore the need for pre-paid electricity meters for households. These are similar to coin-fed meters in low-income housing in the developed world, but can be topped up by mobile phone, rather than cash. Uganda, where only 15% of the population is connected to the grid, is an early adopter. Selestino Babungi, the head of Umeme, the sole grid operator, says that half its 800,000 customers use pre-paid meters. Before 2005, when it won the distribution contract, theft was ubiquitous. About 38% of electricity was “lost” because of illegal hook-ups or non-payment; some big businesses went as far as flying in Indian engineers to rig their meters. By making payments easier for clients and installing an automated system that detects when a meter is tampered with, the firm has brought that share down to 18.5%. + +Higher revenues will help the company reach its goal of tripling the size of its distribution network to absorb additional power soon to be generated in Uganda. Most will go to industry and agribusiness, says Mr Babungi, creating jobs that bring more people to the income level where they can afford to connect to the grid and buy household appliances that consume more power. Customers in such areas are likely to be better payers. + +The power of progress + +Though Uganda’s government promises that eventually electricity will be rolled out to everyone, starting with regions where jobs are likely to be created is an idea with a good pedigree. Vietnam launched its post-war electrification in the rice-growing regions of the Red river and Mekong river deltas, helping the country to become one of Asia’s biggest rice exporters. Then it moved on to less immediately profitable areas. Access, which was under 50% in the late 1980s, is now almost universal. Thailand and Costa Rica, which also quickly electrified rural regions, both prioritised areas where the potential for commercial development was higher. + +Such rapid electrification, often using fossil fuels, may look like the cheapest way to bring power to everyone. And replacing fires and wood stoves improves air quality. But overall the environmental damage is severe, in terms both of adding smog to cities and accelerating climate change. Even the poorest countries are increasingly aware of the risks of pollution, says Anita Marangoly George of the World Bank. “Why lock them into choices that will turn Lagos and Nairobi into Delhi and Beijing?” she asks. + +Hence donors prefer to fund power projects that are green as well as profitable. Some worry that this could saddle poor countries with pricey, intermittent energy. For instance a $24m utility-scale solar-energy project in Rwanda generates electricity at 24 cents per kilowatt hour. Industry executives say they could produce it at half the cost using natural gas. + +Brightening the night + +Others fret that solar energy is still not reliable enough to power economic development. On February 22nd Bill Gates, co-founder of Microsoft and now a philanthropist, published an open letter with his wife, Melinda, drawing attention to poor people’s lack of energy around the world, and poor women’s lack of time (in part because they lack powered labour-saving devices). He says that with current technology, solar power and batteries are insufficient to satisfy Africa’s energy needs. The good news, he adds, is that Africa has several other possible sources of fairly clean and reliable energy: geothermal in east Africa, hydro in Ethiopia and central Africa, and natural gas in several countries, including Mozambique and Tanzania. Unlike wind and solar power, these can be used for “baseload” power that operates constantly. “If you want to attract manufacturing jobs you can’t have intermittent energy,” says Mr Gates. “If you want energy at less than 10 cents per kilowatt hour that’s not some battery connected up to intermittent forces.” + +Regional transmission networks are an important part of the solution, says MsMarangoly George, since they allow countries and regions to share power, thus making green energy more dependable. And she notes that in recent wholesale power auctions in South Africa, wind and solar power have been as cheap as other sources of energy. Soon auctions in Zambia and Senegal will show whether the cost of green technologies has fallen as fast in poorer countries. + +Potentially the most promising approach to bringing light to the 1.1 billion divides the task between traditional utilities and smaller, more entrepreneurial firms. The former focus on cities and businesses, and the latter supply “off-grid” power to poorer households in rural areas, individually or via neighbourhood “mini-grids”. + +M-KOPA, which operates in Kenya, Uganda and Tanzania, and Off-Grid Electric, in Tanzania and Rwanda, offer packages of appliances, such as a few LED lights, a mobile-phone charger and a radio, all powered by a solar panel and a battery. Payments are made via mobile phone. An upfront cost of $150-500 would be prohibitive to most of their customers. So the firms charge in instalments, which are spread out enough to bring the monthly cost below that of buying kerosene for lamps. Default rates are negligible; if payments stop, the service is disconnected remotely by disabling the box that links the panel to the appliances. Once the loan is paid off, there are no further payments, until a customer invests in a bigger system with more appliances, such as a flat-screen TV. M-KOPA says it is introducing new customers to electricity at the rate of 500 a day. + +The trick, executives say, is to convince clients that they are buying appliances rather than electricity—and to make the gadgets ever more sleek and efficient so that they can operate on the low voltage generated by rooftop solar panels. The next step is to provide low-energy fridges that could help customers open small restaurants or grocery stores. (Off-Grid Electric says it already powers hairdressers and sports bars.) Meanwhile they seek to convince conventional power providers that they are not in competition. “The main conversation we have with utilities is telling them: ‘We target your non-profitable customers,’” says Xavier Helgesen, the boss of Off-Grid Electric. + +Lighting the way + +Neither of these firms is anywhere near the millions of new subscribers a year needed to make a dent in the 1.1 billion. But they show that if payments are sliced small enough and made via mobile phone—and an army of sales staff is deployed to educate potential customers about the social and economic benefits—poor people will pay for small but life-changing amounts of power. These lessons could make grid-based electricity more accessible, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21693581-new-electricity-system-emerging-bring-light-worlds-poorest-key/print + + + + + +Articles Sections Next + + + + + +Special report: Indonesia + + + + +Indonesia: Jokowi’s moment + +Politics: Lone fighter + +Corruption: The Setya show + +Business and economics: Roll out the welcome mat + +Infrastructure: The 13,466-island problem + +Foreign policy: Less talk, more action + +Forests: A world on fire + +Looking ahead: The country of the future + + + + + +Articles Sections Next + +Indonesia + +Jokowi’s moment + +Joko Widodo was elected to shake up Indonesia’s politics and make his country richer. He needs to hurry up, says Jon Fasman + +Feb 27th 2016 | From the print edition + + + +CROSSING THE QUAYSIDE road in Ambon, the capital of Indonesia’s remote Maluku province, requires care, speed and nerve. The pavement is taken up by a row of food carts, and the road is packed with a motley collection of lorries, minivans and cars. Motorbikes flit dangerously among the larger vehicles. The shortest path between two points may be a straight line, but the safest is usually a corkscrew dance of leaps, backtracks and tight squeezes. + +On one side of the street lies the Banda Sea, which surrounds the scattered Maluku islands. On the other is a row of low commercial buildings, selling the sorts of basic household goods available from any street stall in Indonesia: little packets of coffee, tea, shampoo and Indomie instant noodles, SIM cards, cigarettes and fizzy drinks. + +But from one doorway wafts the incongruous scent of Christmas. In a large concrete-floored warehouse sit waist-high pyramids of cloves, pallets of nutmeg and sacks filled with spices. Merchants weigh their wares on old-fashioned scales. The only concession to the 21st century is their smartphones. + +Four centuries ago these spices were literally worth their weight in gold. Small wonder that the Netherlands, Britain, Spain and Portugal spent two centuries battling for control of the spice trade. The Dutch prevailed, and the Dutch East India Company (VOC)—whose territories would become first the Dutch East Indies and then modern Indonesia—prospered mightily thanks to its monopoly on the spice trade. But eventually the bottom fell out of the market as the VOC lost its monopoly. + +As spices became less lucrative, Dutch colonists turned to other commodities. They mined tin and coal, developed oilfields and created massive plantations to grow tobacco, cocoa, coffee, rubber, tea, sugar and indigo. After gaining independence in 1945, Indonesia retained a commodity-based economy. + +For its entire modern history, money grew on trees, bubbled up from beneath the sea and was dug out of mines. Today Indonesia is South-East Asia’s biggest country by both population (255m) and size of the economy. It produces most of the world’s palm oil, as well as large shares of its rubber, cocoa, coffee, gold and coal. Commodities make up around 60% of the value of its exports. When the world was buying, Indonesia prospered: its GDP, both overall and per person, grew steadily throughout the late 20th century (except during the 1997-98 Asian financial crisis) and well into the 21st, thanks largely to a ravenous China. + +But in recent years, as China’s appetite has waned and the price of commodities plummeted, Indonesia has struggled. Between 2010 and 2014 its overall growth rate fell from 6.2% to 5%. As economic growth slowed, it became clear that the country had persistently failed to invest enough in infrastructure and education. Its political system remained narrow and patronage-ridden. Jakarta, Indonesia’s capital and largest city, boomed and Java grew richer, whereas millions of people in the far-flung east felt they lived, in the words of one Ambonese priest, in “forgotten Indonesia”. In 2004, with great fanfare, Susilo Bambang Yudhoyono became Indonesia’s first directly elected president; in 2014 he practically slunk out of office. + + + +His successor, Joko Widodo (known universally as Jokowi), is different from any previous Indonesian president. He does not hail from the Jakarta elite and has served neither in the army nor in parliament. The eldest son of a poor family from the Javanese city of Solo, he acquired a reputation for pragmatism and—most important to his popular appeal—clean governance, first as mayor of Solo and then as governor of Jakarta. + +Ordinary Indonesians supported him because he was one of them and had shown himself willing and able to act on Indonesia’s endemic corruption. The local business community cheered his victory because he was also one of them: before entering politics he had been a furniture exporter, and thus understood what it was like to be mummified by Indonesia’s notorious red tape. Foreign investors were pleased that he welcomed them, and hoped he would make Indonesia less protectionist. + +Jokowi vowed to return Indonesia to 7% growth and promised a cabinet staffed by technocrats rather than party hacks. He recognised that the era of commodity-driven growth was over. He said he wanted to attract high-value manufacturing and services, and realised that would require massive infrastructure investment and a better business climate. In the World Bank’s Ease of Doing Business index, Indonesia ranks a woeful 109 of 189. + +Jokowi got off to a strong start, trimming his country’s wasteful fuel subsidies after just three months in office. Since then, however, the enthusiasm that greeted his election has begun to curdle. He has promised far more than he has delivered so far. Not only has growth failed to pick up, it has continued to slow: preliminary figures show that GDP last year increased by just 4.8%, the lowest rate since 2009. For all the talk about infrastructure investment, too few shovels have hit dirt. Confused policy guidance and lost fights with his party have made him look weak. His foreign policy initially appeared prickly: he blew up neighbours’ fishing boats and executed foreign drug dealers. Fears of radicalisation and religious intolerance are growing. And after seven years of calm, terrorism returned to Jakarta in January: jihadists struck the centre of town, killing four civilians. Many wonder whether their pre-election confidence in Jokowi was misplaced. + +This special report will argue that it was not. But in office Jokowi has struggled to find the sense of purpose that drove him as a candidate. His often diffident leadership style has caused needless confusion; economic liberalisation has been slow; and he has shown less appetite than expected for taking on vested interests. He promised voters he would change the sytem. The following articles will explain what he must do to fulfill that promise. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21693411-joko-widodo-was-elected-shake-up-indonesias-politics-and-make-his-country-richer-he/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Politics + +Lone fighter + +Jokowi’s independence is a double-edged sword + +Feb 27th 2016 | From the print edition + + + +CAMPAIGN POSTERS AND rallies reveal much about what a politician wants voters to think of him. During Indonesia’s 2014 presidential campaign, two conservative candidates, Prabowo Subianto and Hatta Rajasa, wore buttoned-up white shirts and black songkok caps in many of their posters, recalling Sukarno, Indonesia’s strongly nationalist first president, who always wore a songkok in public. Mr Prabowo also wanted to project toughness; military themes figured heavily in his slogans and posters. As a general in Indonesia’s special forces under Suharto, the first elected president, he was accused of multiple human-rights violations, including the kidnapping, torture and “disappearance” of democracy activists. + +By contrast, Jokowi usually appeared at rallies and on posters wearing a checked shirt, the garb of an ordinary Indonesian. His image, his background and, often, his words implicitly rejected traditional Indonesian politics. He promised to appoint a technocratic cabinet and oversee a “mental revolution” that would drive corruption from politics. As a first step he would strengthen the KPK, Indonesia’s anti-graft body. One short, simple slogan encapsulated his appeal: jujur, bersih, sederhana (honest, clean, humble). + +Some of Jokowi’s supporters are now disappointed. As they see it, the candidate who promised to change the system has—in the words of Marcus Mietzner at Australian National University—“entered into arrangements with elite actors that resemble those made by his predecessor”. He has cut too many compromises and failed to confront Indonesia’s vested interests. But others insist that the president is simply picking his battles, and large-scale change inevitably takes time. + +Both claims have some truth to them. Jokowi came into office already hobbled. First, the party he represents, the Indonesian Democratic Party of Struggle (PDI-P), holds just 105 of 560 parliamentary seats (see chart, next page), forcing him into an awkward coalition with smaller parties, all of which demand concessions in return. Second, unlike almost every other post-Suharto president, he does not head his party. Though he had been widely expected to channel his immense popular support into forming his own party, he instead accepted the PDI-P’s nomination less than four months before the election. The party’s boss is Megawati Sukarnoputri, herself a former president and daughter of Sukarno. Both she and his running mate, Jusuf Kalla, are prime examples of the sort of elite Jakarta politicians Jokowi was widely expected to take on, not accommodate. + +According to Mr Mietzner, Ms Megawati “expected absolute reverence” from Jokowi. In her speech at the 2015 party congress she said that the “president and vice-president naturally enforce a political party’s policy line”. The president was not even invited to speak. Since then, says Mr Mietzner, the two leaders have “settled into an uncomfortable and awkwardly polite truce”. + +Jokowi’s supporters were also disappointed by his initial cabinet, which included more party appointees than many expected. In subsequent reshuffles some of these were swapped for technocrats. Many in the business community were especially happy to see the back of the trade minister, Rachmat Gobel, whose penchant for protectionism led some foreign businessmen to dub him “the minister of no trade”. He was replaced by Tom Lembong, a 44-year-old former investment banker who previously ran a private-equity fund that invested in Indonesia. + +I say I say I say + +The reformists and the traditionalists in Jokowi’s cabinet have often clashed, both with each other and with him. Last August, for instance, the home ministry said it was about to issue a regulation requiring foreign journalists to seek permission from local governments before doing any reporting. A day later Jokowi revoked the plan. The government also considered and then backed away from imposing road-toll taxes, requiring foreigners working in Indonesia to pass a language test and banning some popular ride-sharing apps. These flip-flops illustrate the central problem with Jokowi’s administration to date: the president has the right ideas, but his ministries do not know how to implement them or feel they can ignore orders from the top. + +One reason for that may be Jokowi’s style: he is a poor orator and has proved reluctant to engage in the public arena. He is happiest when solving practical problems. That is an admirable quality in a mayor, but a president set on reforming Indonesia’s immense and powerful administration needs to be more strategic and has to rally his countrymen behind him. + +As far as Jokowi is concerned, “bureaucracy must serve the business community and investors…we have to simplify it, [and] change the mindset of the bureaucrat.” The appointment of business-friendly ministers such as Mr Lembong signals the president’s serious intentions: the question is whether he can put them into effect. + +In one crucial way he has already changed his country’s politics for the better, blazing a path to the presidency from outside the Jakarta elite that others could follow. His much-praised successor as governor of Jakarta, Basuki Tjahaja Purnama, known as Ahok, is the first Chinese Christian to run Indonesia’s biggest city. The mayor of Surabaya has made her city virtually litter-free. The regent of remote Banyuwangi in east Java has built much-needed roads. These jobs now look like viable launch pads for a national political career. + +“Jokowi’s heart is in the right place,” says Andreas Harsono, head of Human Rights Watch in Indonesia. “But he is putting his political capital on the economy.” Taking on vested political interests will have to wait. For now, he will concentrate on improving the country’s infrastructure and business climate. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21693409-jokowis-independence-double-edged-sword-lone-fighter/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Corruption + +The Setya show + +The roots of corruption go deep and wide + +Feb 27th 2016 | From the print edition + + + +FOR SEVERAL WEEKS last December, Indonesians were glued to their televisions and smartphones to follow a series of ethics hearings convened by the House of Representatives, the larger of Indonesia’s two legislative bodies. Setya Novanto, the colourful House speaker, faced allegations of corruption. What happened subsequently shows the progress Jokowi has made in his fight for cleaner government. It also shows how much remains to be done. + +That Indonesia has a longstanding corruption problem is all but undisputed. In the Corruption Perception Index published by Transparency International (TI), Indonesia ranked 88th out of 168 countries last year (see chart). According to TI’s Global Corruption Barometer, 86% of Indonesians thought that their political parties and their judiciary were corrupt. + +The European Union has chastised Indonesia for its “widespread political corruption”, “corrupt judiciary” and “extensive bribery”. Donors providing money for political campaigns expect their generosity to be rewarded. Indonesians also complain about the innumerable “expediting fees” bureaucrats demand for service, and foreign businesses worry that Indonesia’s court system may not serve them well. + +Other presidents before Jokowi have tried to crack down. The KPK, or anti-graft agency, was set up under Ms Megawati, in 2002. It is widely respected, though many complain that it is chronically underfunded and understaffed and brings too few cases. Mr Yudhoyono proclaimed a “zero tolerance” policy towards graft at the start of his presidency in 2004 and made some progress, but was beset by scandals within his own party. + +Jokowi was the first president to take office with a strong anti-corruption record, having earned a reputation for clean governance when he was running Solo and Jakarta. As governor of Jakarta he posted regional budgets in public places to improve transparency. He also made it easier for some taxes to be paid online, which meant fewer opportunities for dishonest bureaucrats. Since he became president, he has overseen a push for online procurement, which he claims has saved his country billions of dollars. + +Mr Setya is the consummate political insider. He has served as a member of parliament for Golkar, the party of Suharto, for 17 years. Last June he requested a private meeting with Maroef Sjamsoeddin, until recently the head of Freeport Indonesia, a local division of Freeport McMoran, an American mining firm. Freeport wants to invest $17 billion in its Grasberg facility in Papua, the world’s largest gold and third-largest copper mine, but only if its mining licence, due to expire in 2021, is extended until 2041. Jokowi has refused to open negotiations on an extension before 2019. + +Mr Maroef secretly recorded a meeting with Mr Setya at which Muhammad Riza Chalid, an oil trader, was also reportedly present. Mr Setya allegedly offered Mr Maroef a deal: in return for a 20% stake in Freeport Indonesia, he would persuade Jokowi to extend the licence, claiming that the stake was not for him but for Jokowi and Mr Kalla, his vice-president. Mr Riza and Mr Setya allegedly boasted that they had bought off Darmawan Prasodjo, an assistant to the president’s chief of staff. + +Jokowi, Mr Kalla and Mr Darmawan have all denied involvement in the plot, which came to light when Sudirman Said, Jokowi’s energy minister, delivered the recording to the House ethics council. When quizzed by the council, Mr Setya claimed he was “joking”. Questioned by the attorney-general, he denied asking for shares in Jokowi’s and Mr Kalla’s names. On December 16th he suddenly resigned the speakership. + +Jokowi and Messrs Kalla and Darmawan are widely believed to be blameless. After all, it was Jokowi’s own energy minister who blew the whistle. And even Jokowi’s detractors have never suggested that he himself is corrupt—only that he has been too accommodating to vested interests. In some ways, his reputation has been enhanced by the affair. For the first time a case of large-scale corruption has been adjudicated in public. Many talk of Indonesia’s “Watergate moment”. + +Even so, Mr Setya has filed a police report against Messrs Sudirman and Maroef for defamation and illegal recording. And not only does he retain his seat in parliament, he is considered a frontrunner in Golkar’s forthcoming leadership election. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21693410-roots-corruption-go-deep-and-wide-setya-show/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Business and economics + +Roll out the welcome mat + +To secure the growth it needs, Indonesia must resist its protectionist urges + +Feb 27th 2016 | From the print edition + + + +AS YOU DRIVE (or more likely, sit and stew in traffic) in any of Indonesia’s big cities, you may see dozens of cyclists in green helmets and jackets zooming past your car windows. They are clad in the uniform of Go-Jek, an Indonesian e-commerce firm. Its name is a play on ojek, the Indonesian word for the country’s omnipresent motorcycle taxis. Its app, launched in January, lets users call a driver for a ride or a delivery. Since then the company has seen, in the words of its young founder, Nadiem Makarim, “crazy growth”. + +Indonesia is in the midst of an e-commerce startup boom, and no wonder. It is the world’s fourth-largest mobile-phone market, with more SIM cards in use than there are people. Two-fifths of its 255m population—half of whom are under 30—have a smartphone. But the very success of this boom hints at a broader failure. The e-commerce sector is vibrant in large part because the government has not yet worked out how to regulate it. Indonesia’s attitude towards business has in general been hostile. Its labour laws are rigid. To start a business takes an average of 47 days, compared with four in Malaysia and 2.5 in Singapore. + +During the long global boom in commodities, firms were obliged to tolerate such red tape, but that no longer holds. Indonesia exports crude oil, natural gas, palm oil, rubber, gold and tin, and is especially rich in coal. Its main commodity exports tripled in value between 2000 and 2010, says Rodrigo Chaves, the World Bank’s country director for Indonesia. As exports boomed, so did the economy. But the value of commodity exports has fallen by more than half from their peak. Bambang Brodjonegoro, Indonesia’s finance minister, laments that coal—which accounts for 11% of exports—now fetches just $50 per tonne, against $150 in 2011. + + + +In the decade to 2014 GDP grew by an annual average of 6%, but the commodity bust has slowed the economy. Last year it grew by just 4.8%, the slowest rate since 2009. This year is unlikely to be much better: the 2016 budget sets a GDP growth target of 5.3%. But compared with many other commodity exporters Indonesia is getting off lightly. + +The value of the rupiah, Indonesia’s currency, against the dollar has fallen by a hefty 30% since mid-2013, but has been stable recently, and other emerging-market currencies have fallen even more steeply over that period. Despite the weak exchange rate, inflation has mostly remained within the central bank’s target range of 3-5%. The main impact of the rupiah’s fall has been to curb imports, helping limit Indonesia’s current-account deficit to around 2% of GDP last year in the face of weaker export earnings. A prudent fiscal policy during the boom years has allowed for a modest fiscal expansion to offset the effects of weak exports and investment. Public debt is just 26% of GDP. + + + +The trouble is that GDP growth of around 5% is far below the 8% which the World Bank says Indonesia requires to create jobs for the 2.5m people entering the workforce each year. Indonesia must reform its economy to capitalise on the dividend from a young and growing workforce. As Mr Chaves cautions, “no country became rich after it became old.” + +Indonesia will never function as seamlessly as Singapore; it is too big, diverse and fractious. But the size of its domestic market gives it an advantage over smaller countries in attracting foreign investment. Encouragingly, it has a track record of liberalising its policies in troubled times. When its “command socialism” collapsed in the 1960s, it opened resource sectors to foreign investment; when oil prices fell in the 1980s, it developed its capital markets and relaxed restrictions on foreign ownership; and after the Asian financial crisis of 1997-98 it abolished many import controls and tariffs. + +To his credit, Jokowi realises that Indonesia cannot lift its long-term growth rate if the economy remains reliant on extractive industries; it needs a broader range of manufacturing and service industries. If new enterprise is to flourish, Indonesia must support local entrepreneurship and woo, rather than merely tolerate, foreign business. + +Last April the president told an audience at a World Economic Forum conference in Jakarta that investing in Indonesia would bring “incredible profits”. On his maiden trip to Washington, DC, last October he brought along an entourage of entrepreneurs and businesspeople, and said he was interested in joining the Trans-Pacific Partnership—a free-trade agreement that would commit his country to significant economic liberalisation. + +Tom Lembong, who took over as trade minister last August, has promised a more liberal approach to economic policy: a regulator’s job, he says, is to “ensure order and get out of the way”, and protection “is for children, the elderly and the vulnerable…not for adults, and certainly not for companies”. Such pronouncements mark a welcome shift. Hans Vriens, who runs a consultancy focusing on South-East Asian businesses, says Indonesian policymakers “have generally viewed foreign investment as a zero-sum game—if the foreigners have it, something is wrong and we have to take it back—instead of thinking, as Singapore does, about how we can thrive together. As a result, many investors have given Indonesia a miss, despite its size.” + +Go-Jek, an Indonesian e-commerce firm offering rides and deliveries, has seen “crazy growth” + +Jokowi has done his bit to improve the business climate. At the beginning of last year he launched a one-stop service for licensing businesses, which cuts out the need to spend days dashing from one ministry to another. And since last September he has unveiled a series of measures to help business, including easing some onerous regulations, cutting industrial energy tariffs, streamlining licensing procedures for firms on industrial estates and providing tax incentives to invest in special economic zones. Mr Bambang says that under Jokowi the average number of days needed to open a power plant has declined from 900 to 200 (“still short of international standards”, he concedes). The government recently revised its “negative investment list” of sectors in which foreign ownership is banned or restricted, fully opening up the rubber, film and restaurant sectors, among others. + +The government’s spending plans have become more ambitious. Soon after taking office, Jokowi’s administration began rolling out programmes to provide poor Indonesians with government-funded health care, free schooling for 12 years and tertiary education for students accepted into university, as well as a scheme to provide each of Indonesia’s 15.5m poorest households with a cash transfer of 200,000 rupiah ($14.37) a month. + +Jokowi says his administration’s health-care programme now covers 88m people, but it already faces a huge shortfall. The government has wisely used savings from cutting fuel subsidies to fund extra capital spending. But the budget deficit still widened to 2.8% of GDP, perilously close to the legal limit of 3%. If public spending is to increase further, the government will need to raise more revenue. + +That will not be easy. Most workers and employers pay little or no tax. Mr Bambang estimates that only 27m of Indonesia’s 255m people are registered taxpayers, and in 2014 just 900,000 of them paid what they owed. Much of the fault lies with Indonesia’s Byzantine tax system. The country’s tax inspectors are poorly paid, which makes them easier to bribe. Last year Indonesia collected just 82% of its targeted tax revenue, leaving it with a tax-to-GDP ratio of around 10%, compared with around 13-15% for its ASEAN neighbours and near 40% in western Europe. + +Government officials claim that they want to broaden the taxpayer base, but big companies say that they are being squeezed harder by the taxman because they are an easier target. A steady stream of new protectionist rules suggests that other business-bashing instincts still hold sway. A law requiring that by 2017, 30% of all parts for smartphones and tablets sold in Indonesia must be locally made took effect last summer. Last August limits on cattle imports sent beef prices soaring. Revisions to the negative investment list eased restrictions on 30 sectors but boosted them in 19 others. Indonesia’s bureaucracy, complains one foreign businessman, remains “oriented towards control rather than facilitation”. + +Where there has been reform, it has not always been well implemented. The one-stop shop for licensing might save a bit of time, but many business folk say that the rules are confusing. Licences are still cumbersome and onerous. Shell, for instance, has around 80 service stations in Indonesia, mostly around Jakarta, for which it needs around 1,500 permits—for safety, water, fire protection, site use and so forth—that must be renewed annually. That takes dozens of people to manage. + +Investors often complain that the welcome message from the president has not reached his ministries or local governments, or has arrived too late to prevent confusing about-turns. Go-Jek got a fright in December when the transport ministry declared that “services that demand payment using a private vehicle are not legal.” A day later Jokowi publicly chastised his transport minister and rescinded the ban. Other sectors have seen similar flip-flops, giving the impression of a chaotic administration with no clear policy direction. + +Yet this has already begun to change following several cabinet reshuffles, and may improve further as the government settles in. And in one important regard, Indonesia has taken a giant step forward. Whereas past governments failed to invest adequately in infrastructure, particularly outside Java, Jokowi has made the biggest push of his young presidency in this field. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21693405-secure-growth-it-needs-indonesia-must-resist-its-protectionist-urges-roll-out/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Infrastructure + +The 13,466-island problem + +After decades of underinvestment, infrastructure spending is picking up at last + +Feb 27th 2016 | From the print edition + +A wealth of coastline + +AS THE LOGISTICS manager walks from his firm’s office trailer to the dockside at Tanjung Priok, Jakarta’s port, he rails against inefficiency. The port’s equipment is outdated, the workers are slow and practices slipshod. Shipping companies want to make a quick buck while stopping their competitors from doing the same, leading to permanent gridlock. + +A few small victories have been won. Shippers at other terminals must slip stevedores and crane operators a few thousand rupiah to get their containers off the ship and onto lorries, but not here. He has trained his workers to “do it now, not five minutes from now”, so they are on track to hit their target of moving 28 containers per crane-hour. But he cannot control what happens outside his terminal. Stevedoring associations, shipping companies and greedy bureaucrats profit from the inefficiency of Indonesia’s ports, block reforms and fiercely guard their own interests, he claims (hence his wish to remain anonymous). + +Too few roads, berths and systems; too many ships, cars and grasping hands, leading to high costs and lost time: that is Indonesia’s infrastructure problem in a nutshell. Jokowi has staked his presidency on solving it, reasoning that improved infrastructure will help bring foreign investment and good jobs to Indonesia as well as helping residents of the poor, far-flung east get their products out. + +His ambition has been widely cheered. In the short term infrastructure spending puts people to work and boosts demand for raw materials; in the longer term his plans offer the chance to make up for decades of neglect and underinvestment. In the mid-1990s Indonesia invested around 8% of its GDP in infrastructure every year. After the Asian financial crisis that share fell to around 3%, then started rising again slowly. But in 2014, at 6.4%, it was still below the steady 7% which China, Thailand and Vietnam had been maintaining. + +That underinvestment has sent Indonesia’s logistics costs soaring. Between 2004 and 2011 they averaged 27% of GDP, compared with 25% in Vietnam, 20% in Thailand, 13% in Malaysia and 8% in Singapore. Logistics bottlenecks force companies either to stock up on supplies, driving up inventory costs, or suffer large price fluctuations, particularly at times of heavy travel. + +In Tanjung Priok in May last year it took an average of 6.4 days for containers to leave the port after being unloaded. Improved systems have brought the time down to just over four days, says Jokowi, but according to the World Bank that is still around four times as long as in Singapore—and this is Indonesia’s busiest and most advanced port. Many of the country’s 1,700 other ports are not even containerised. Such backlogs drive up the cost of basic goods. And once lorries move the goods out of port, they are in the twisted, narrow streets of Jakarta, which has some of the world’s worst traffic. In all, the World Bank estimates that underinvestment in infrastructure cost Indonesia at least one percentage point of GDP growth annually from 2004 to 2014. + +Jokowi plans to increase infrastructure spending throughout his first term, peaking at around 7.7% of GDP by 2017. Indonesia intends to build 24 new seaports and 15 new airports by 2019. Its energy demand could triple by 2030 as it urbanises and its middle class expands, so over the next five years it wants to add 35GW of power, doubling total installed capacity in a decade. + +It also has plans for 65 dams, 16 of which are already under construction. In March last year work started on the Keureuto dam, designed to boost agricultural productivity in Aceh. Last September fields were flooded for the massive Jatigede dam in West Java, after 20 years of delays. Once complete, the dam will irrigate 90,000 hectares of rice paddy, giving farmers two harvests a year instead of one. + +Last April, also after many delays, construction began on the Trans-Sumatra toll road, a $23.1 billion highway that will connect Aceh and Lampung, on the northern and southern tips of Indonesia’s largest island. The Trans-Java toll road, running from east to west across Indonesia’s most populous island, is scheduled for completion in 2017, but some sections are already finished and have cut travel times dramatically. Driving from Jakarta to the town of Subang in west Java, for instance, used to take around six hours, but on the new highway connecting Jakarta and Cikampek it takes less than two. + +It has not been a straightforward job. This particular section of the Trans-Java toll road runs through five regencies, each of which had its own team working on the project. That called for a further team to co-ordinate all the others. It took nine years to build 73 kilometres of highway. + +Jokowi complains that local governments are sitting on trillions of rupiah in unused infrastructure money from the central government, which can neither spend the money on their behalf nor tell them what to do with it. All he can do, he says, is cajole and hector them. + +Ocean view + +His biggest bet, though, is on maritime infrastructure. In his inaugural speech he laid out his ambitions: “We have turned our back on the seas, oceans, straits and bays for too long…[They] are the future of our civilisation…We have to work as hard as possible to turn Indonesia into a maritime nation once again.” + +That makes sense: Indonesia, after all, is the world’s biggest archipelago, with 13,466 islands spanning some 5,000 kilometres. It has the world’s second-longest coastline after Canada, an exclusive economic zone of 200 nautical miles and around 93,000 square kilometres of inland waters. Yet with all those resources it exports just $4.2 billion-worth of fish annually, compared with $5.7 billion for Vietnam and $7.2 billion for Thailand, both of which have smaller coastlines and less territorial water. + +Indonesia claims that this is partly because other countries’ vessels are plundering its territorial waters. Last year the government estimated that 90% of the boats in Indonesian waters were fishing illegally, costing the country around $20 billion annually in lost revenue. Shortly after being sworn in as fisheries minister, Susi Pudjiastuti—a tattooed, chain-smoking divorcee who founded a large charter airline and had never before held political office—seized and blew up (having first removed the crews) around 40 vessels from neighbouring countries found fishing in its waters without permission. Since then dozens more have been sunk. This has proved popular with Indonesians and, according to Ms Susi’s ministry, effective, causing a marked decline in the number of vessels fishing illegally. + +Apart from repelling outsiders, Indonesia also hopes to wring more value from its waters. The government has banned bottom trawling, selling undersized crustaceans and fishing in tuna breeding grounds to keep its fisheries sustainable. It also plans to build salt-harvesting and seaweed-processing facilities, as well as cold-storage units to keep catches fresh longer. These investments will help further another of Jokowi’s goals: spreading prosperity eastwards, to Indonesia’s most far-flung islands. + +Most of Indonesia’s people, wealth and economic activity are concentrated on densely populated Java; the rest of the country, above all the islands past Bali, just east of Java, has felt neglected. GDP per person per year in Jakarta is roughly 41.2m rupiah ($2,890); in Papua, Indonesia’s easternmost province, it is 12.3m, and in Maluku just 2.8m. The hope is that better infrastructure will help bring down the cost of basic goods in the east, generate better jobs—particularly in processing local raw materials—and make it cheaper to get goods out. + +Many Indonesia-watchers turned sceptical in the first half of 2015 after lots of projects had been announced, tendered, and contracts handed out, but little money had been disbursed. But in the second half of last year infrastucture spending picked up. Under Jokowi’s master plan, 30% of infrastructure spending will need to come from the private sector; PwC, a consulting firm, thinks that the private sector’s share may need to rise to as much as 50%. In the current fiscal year the World Bank has approved $800m in infrastructure loans to Indonesia, with another $950m pending. The Asian Development Bank has committed itself to lending $2 billion. In December Japan’s development agency lent Indonesia around $535m for two power stations. + +But ground-breaking has so far been painfully slow, and even if Jokowi can get all the funding he wants, it still may prove inadequate. McKinsey, another consulting firm, estimates that Indonesia will have to spend at least $600 billion over the next decade to meet its infrastructure needs. And much of Indonesia’s bureaucracy has stubbornly resisted Jokowi’s calls for speed, transparency and efficiency. Land-acquisition laws are tortuous, and everything takes an inordinate amount of time. + +Planning for the Jakarta-Cikampek section of the Trans-Java highway, for instance, began in 1997; the concession was signed in 2006; land acquisition began in 2009; construction did begin in 2013; and even now the highway operator and numerous landowners are still fighting each other in court. An amended law passed last year streamlines the acquisition process and opens it up to foreigners, but any improvement will start from a low base. As with everything else, the question is not so much what Jokowi wants to do as what he will be able to do, and how soon. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21693404-after-decades-underinvestment-infrastructure-spending-picking-up-last/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Foreign policy + +Less talk, more action + +Indonesia’s stance towards the rest of the world has become more assertive + +Feb 27th 2016 | From the print edition + + + +IN 2009 SUSILO BAMBANG YUDHOYONO, in his second inaugural speech as president, boasted that Indonesia could “exercise its foreign policy freely in all directions, having a million friends and zero enemies.” Its foreign-policy goals, he said, were “advancing multilateralism through the United Nations and creating harmony among countries”. That may have been a little glowing. Mr Yudhoyono did take a more active role in climate-change talks and within the Association of South-East Asian Nations (ASEAN), and he founded the Bali Democracy Forum, an annual talking-shop for Asian democracies. Yet he seemed to favour multilateralism not as a means of furthering Indonesia’s interests but as an end in itself, and as a way to avoid making difficult decisions. + +His successor has adopted a markedly different stance. Jokowi’s inaugural speech laid out a vision of an “independent and active foreign policy dedicated to the national interest”, an implicit rebuke to his predecessor. And after returning from his first foreign trip as president, to an AsiaPacific Economic Co-operation (APEC) summit, Jokowi asked: “What’s the point of having many friends but we get only the disadvantages?” + +Some saw this remark as evidence of Jokowi’s lack of sophistication: Jokowi had no previous foreign-policy experience and the subject played no part in his presidential campaign, though his foreign minister, Retno Marsudi, has been in the diplomatic service for her entire career. People close to Jokowi say he has little patience for formal summits with their protocols, glad-handing and anodyne statements, preferring focused, practical one-on-one meetings with other leaders. + +Jokowi asked: “What’s the point of having many friends but we get only the disadvantages?” + +The world got a taste of Indonesia’s new assertiveness less than three months after Jokowi took office when he approved the executions of five foreign drug traffickers, despite pleas from their governments. Seven months later Indonesia executed another seven foreign traffickers, including two Australians (members of the infamous Bali Nine trafficking ring). Mr Yudhoyono, who had introduced a partial moratorium on executions, was criticised at home at the time; many felt he was giving in to foreign pressure. Jokowi’s decision to execute the two Australians enjoyed widespread public support in Indonesia. Abroad the move triggered diplomatic protests, but seems to have done little damage to Indonesia’s international relations. + +Ms Retno, the foreign minister, says Jokowi is pursuing a “more concrete” foreign policy, and outlines four priorities. The first is to safeguard Indonesia’s territorial integrity. That could lead to confrontation: for example, Indonesia has at least ten outstanding land-border disputes with Malaysia. + +More pressingly, China’s claims in the South China Sea overlap with waters claimed by Indonesia around the Natuna islands, off the northern coast of Borneo, which are rich in natural-gas deposits. Ms Retno insists the islands “belong to Indonesia. Done. If there is a competing claim, come talk to us.” She says Indonesia wants to develop the regional gasfields. China recognises Indonesian sovereignty over the Natunas themselves but claims the waters around them. Last September the Indonesian defence minister announced plans to upgrade the Natunas’ port and runway to accommodate warships and fighter jets. + +A second foreign-policy priority is to protect Indonesians abroad, including thousands of women working as domestics and men as manual labourers in Malaysia and the Gulf States. Third, Ms Retno makes it clear that its ambassadors are expected to promote Indonesian exports and inward investment. + +The last item on Ms Retno’s list is “international involvement”. That was Mr Yudhoyono’s top priority, but the current government prefers to concentrate on specific instances—notably counter-terrorism, and the risk posed by Islamic State (IS) to the world’s most populous Muslim country. Indonesia is roughly 88% Muslim, mainly Sunni but with some Shias and Ahmadis; the other five officially recognised Indonesian religious groups are Catholics, Protestants, Hindus, Buddhists and Confucians (see chart). By tradition, Indonesians practise a syncretic, tolerant form of Islam, and the country respects religious differences. + +Some complain that this is starting to change. Shias and Ahmadis say they are increasingly being targeted and harassed. Ms Retno insists that Indonesia’s two biggest civil Muslim groups, Nahdlatul Ulama and Muhammadiyah, offer “a counterscript to eliminate terrorism [and] sell the virtues of tolerance and moderation”. Even so, terrorists have recently struck: on January 14th an IS-inspired attack on Western and police targets in central Jakarta killed eight and wounded at least 23. + +Sidney Jones, an expert on South-East Asian security who heads the Institute for Policy Analysis of Conflict, a think-tank, estimates that 250 Indonesian men are currently fighting with IS in Syria. Some 2,000 Indonesians have publicly proclaimed allegiance to the organisation. Jemaah Islamiyah, a militant Islamist terrorist group active in South-East Asia, bombed several Western targets in Indonesia between 2001 and 2009, but in recent years its sporadic attacks have focused on the police and the armed forces. + +Given the size of Indonesia’s population, the number of people involved in terrorism is tiny. For all the country’s flaws, it remains a largely stable, open, tolerant society without a seething reservoir of frustrated, underemployed young men open to radicalisation. If Jokowi’s foreign policy can keep it that way, it may do more to ensure peace at home and in the region than any number of well-meaning summits. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21693407-indonesias-stance-towards-rest-world-has-become-more-assertive-less-talk-more/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Forests + +A world on fire + +Until politicians call a halt, Indonesia’s forests will keep burning + +Feb 27th 2016 | From the print edition + + + +IT WAS ONE of the most important trips of his young presidency. Last October Jokowi and a bevy of advisers and businesspeople went to Washington, DC, to meet Barack Obama. They were due to go on to Silicon Valley to show off Indonesia’s burgeoning startups. But as his team flew west, Jokowi flew east, summoned home by a crisis: Kalimantan and Sumatra were blanketed by the haze of hundreds of thousands of fires. + +Such fires rage every year, but in 2015 a dry spell caused by the El Niño weather pattern made them especially severe. Smoke settled over Singapore for months and even reached Cambodia, Vietnam and the Philippines. At least 2m hectares of forest were burned. Dozens of people were killed and hundreds of thousands sickened. For much of last October greenhouse gases released by those fires exceeded the emissions of the entire American economy. The losses over five months of fires amounted to around 2% of the country’s GDP. + +Last year was worse than usual, but only in degree, not in kind. Between 2001 and 2014 the country lost 18.5m hectares of tree cover—an area more than twice the size of Ireland. In 2014 Indonesia overtook Brazil to become the world’s biggest deforester. + +One of the reasons for those forest fires is economic. The country produces well over half the world’s palm oil, a commodity used in cooking and cosmetics, as a food additive and as a biofuel. It accounts for around 4.5% of Indonesia’s GDP, and demand is still rising. To meet it, Indonesian farmers set fires to clear forest and make way for new plantations. Often these forests grow on peatlands, which store carbon from decayed organic matter; in tropical regions these hold up to ten times as much carbon as surface soil. Draining peatlands releases all of that carbon. The peat also becomes a fuel, so it is not just felled trees that are burning but the ground itself. + + + +But politics also plays a part. The government’s response to last autumn’s haze was no better than it had been under Jokowi’s predecessors. The president declared a moratorium on peatland-development licences and called for peat forests to be restored, even as his agriculture minister pointed out that burned peatland can be used for corn and soyabean planting. Neither set of comments made any discernible difference on the ground in Sumatra and Kalimantan. To cap it all, Jusuf Kalla, the vice-president, came up with a creative response to Singapore’s complaints about the air pollution: “For 11 months our neighbours enjoyed nice air from Indonesia and they never thanked us.” Fortunately for Indonesia (and the planet) the rainy season put an end to the mayhem in late October. + +Why it won’t stop + +Yet the reasons for the fires have not gone away. Slash-and-burn land preparation is cheap. Indonesia’s land-use laws are complex and have been inconsistently interpreted and applied. There is no agreed map showing all plantations and (often competing) claims of ownership. Responsibility for developing and approving plans for forest use is spread among at least three ministries, along with the national parliament, as well as provincial governors and district heads, local parliaments and forestry officials. These groups rarely co-ordinate their plans, and their interests often clash. The president and national ministers may understand the benefits of conservation, but local officials have little interest in curbing their revenues for a nebulous goal such as “sustainability”. + +Directives from the top often go unheeded at the bottom, thanks to corruption and lack of political will. Back in 2010 Norway pledged $1 billion in conditional aid to Mr Yudhoyono to help Indonesia stop deforestation, but the conditions were not met and not much has been paid out. + +Civil-society groups have had some success. At least 188 Indonesian palm-oil companies have made some sort of sustainability pledge, including five large multinational firms that in 2014 signed the Indonesian Palm Oil Pledge (IPOP), which commits them to avoiding deforestation and planting oil palms on peatland. Together those five firms account for 80% of Indonesia’s palm-oil exports. + +All the same, deforestation continues. Perversely, it may even have increased temporarily, as companies cleared as much land as they could before the agreement took effect. Besides, opaque supply chains allow companies to buy palm oil from suppliers not bound by IPOP. + +Glenn Hurowitz at the Centre for International Policy says that when big palm-oil companies are shown evidence of deforesting, they respond. But that kind of monitoring is done only on an ad-hoc basis. It is no substitute for clearer land-use laws, better local governance and more enforcement on the ground. And for those things to materialise, Jokowi will need to give a strong lead and make sure others follow. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21693412-until-politicians-call-halt-indonesias-forests-will-keep-burning-world-fire/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Looking ahead + +The country of the future + +It will take ruthless determination, as well as luck, to realise Indonesia’s potential + +Feb 27th 2016 | From the print edition + +Hurry, time is short + +NINETEEN YEARS AGO the Asian financial crisis left Indonesia in dire straits. Between July 1997 and January 1998 the rupiah lost 80% of its value against the dollar. Shares plunged, banks were nationalised, inflation and unemployment soared. It seemed like a disaster, but in retrospect many Indonesians see it as a blessing. In the wake of the crisis, Indonesia introduced a host of overdue reforms. + +Today there is no crisis, but the country is being held back by a set of interrelated problems that prevent it from doing as well as it might, above all low commodity prices, slow global trade and limp demand from China. Fortunately, Indonesia is in a better position than many other commodity exporters to weather the storm. The World Bank expects its growth to be above 5% both this year and next. + +Rising wages in China are offering Indonesia the chance to pick up some labour-intensive manufacturing for export. But Indonesia’s neighbours also want that business, so Indonesia will have to compete on policy and merit. To prosper in this new environment, it must act faster and more boldly to seize the opportunities on offer. + +Jokowi, to his credit, understands this: “Now is the era of competition,” he says. “Good quality, on-time delivery and competitive prices are all important.” Asked which country’s development models he most admires, he mentions Singapore, the UAE and Vietnam. + +But Indonesia is a different sort of place: huge, diverse and increasingly unwieldy. Residents of Jakarta send out more tweets than those of any other city on earth, yet around one-fifth of the population does not even have access to electricity. In her book “Indonesia Etc”, Elizabeth Pisani writes: “Indonesia’s diversity is not just geographic and cultural; different groups are essentially living at different points in human history, all at the same time.” Travelling from Jakarta to the Maluku islands can seem like going back in time. + +Indonesians have enthusiastically embraced democracy; in each five-year cycle they vote in a dizzying array of separate presidential, parliamentary and local elections. When Suharto resigned, Indonesia had 26 provinces and around 300 regencies and cities; it now has 34 and 514, respectively, and each regency or city has its own parliament or city council. + +Jokowi’s supporters point to the admirable progress he has made in his short time in office: ending fuel subsidies, making it easier and quicker for private buyers to acquire land, opening sectors previously closed to foreign investors and, perhaps most important, setting an example of graft-free leadership for others to follow. Infrastructure spending has recently accelerated and the outlook for growth is positive. + +But not everyone is convinced. Mr Yudhoyono, the doubters say, also showed great promise at the beginning of his decade in office, but it ended in disappointment. They point to the gap between targets and results so far in infrastructure, tax collection and growth rates. “Indonesia is the country of the future,” says one disillusioned foreign businessman, “and it always will be.” That is too cynical. Still, the crucial question is not so much what Jokowi wants to do but what he can deliver. Two main scenarios are emerging. + +Way to go + +In the first, infrastructure investment continues to accelerate. By 2019 Indonesia has highways spanning Java and Sumatra and ports dotted across the east. Messrs Lembong and Bambang press on with deregulation and Jokowi holds out against protectionist measures from parliament, keeps control of his more recalcitrant ministries and maintains his onslaught against corruption. Manufacturing once again becomes the biggest contributor to Indonesia’s GDP. He returns Indonesia to 7% growth, and appreciative voters re-elect him in 2019, endorsing economic liberalism for the first time in the country’s history. + +In a second scenario, things on all these fronts go much less well. Jokowi is unable to push through his reforms and by 2019 growth is below 5%. He loses the election to a candidate favoured by the old guard and Indonesia is back to business as usual—except that nobody even calls it the country of the future any more. + +In real life the outcome will no doubt fall somewhere in the middle. Jokowi has made a career of defying expectations, and he is playing a long game. But raising growth to 7% through export-led manufacturing will be a challenge. Geography puts Indonesia at a logistical disadvantage, and other South-East Asian countries such as Vietnam and Thailand do better on deregulation and infrastructure. By the time of the next election, Indonesia’s demographic dividend will have a scant decade to run. Jokowi has much to do, and little time to get it done. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21693406-it-will-take-ruthless-determination-well-luck-realise-indonesias-potential/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Industry in China: The march of the zombies + +The India-China trade gap: Arrive full, leave empty + +The film business: Fading stars + +Hollywood: Silver-screen playbook + +Natural resources: Flare-up + +German industry: Town and company + +Schumpeter: On the stump + + + + + +Articles Sections Next + +Industry in China + +The march of the zombies + +China’s excess industrial capacity harms its economy and riles its trading partners + +Feb 27th 2016 | SHANGHAI | From the print edition + + + +“OVERSUPPLY is a global problem and a global problem requires collaborative efforts by all countries.” Those defiant words were uttered by Gao Hucheng, China’s minister of commerce, at a press conference held on February 23rd in Beijing. Mr Gao was responding to the worldwide backlash against the rising tide of Chinese industrial exports, by suggesting that everyone is to blame. + +Oversupply is indeed a global problem, but not quite in the way Mr Gao implies. China’s huge exports of industrial goods are flooding markets everywhere, contributing to deflationary pressures and threatening producers worldwide. If this oversupply were broadly the result of capacity gluts in many countries, then Mr Gao would be right that China should not be singled out. But this is not the case. + +China’s surplus capacity in steelmaking, for example, is bigger than the entire steel production of Japan, America and Germany combined. Rhodium Group, a consulting firm, calculates that global steel production rose by 57% in the decade to 2014, with Chinese mills making up 91% of this increase. In industry after industry, from paper to ships to glass, the picture is the same: China now has far too much supply in the face of shrinking internal demand. Yet still the expansion continues: China’s aluminium-smelting capacity is set to rise by another tenth this year. According to Ying Wang of Fitch, a credit-rating agency, around two billion tonnes of gross new capacity in coal mining will open in China in the next two years. + + + +A detailed report released this week by the European Union Chamber of Commerce in China reveals that industrial overcapacity has surged since 2008 (see charts). China’s central bank recently surveyed 696 industrial firms in Jiangsu, a coastal province full of factories, and found that capacity utilisation had “decreased remarkably”. Louis Kuijs of Oxford Economics, a research outfit, calculates that the “output gap”—between production and capacity—for Chinese industry as a whole was zero in 2007; by 2015, it was 13.1% for industry overall, and much higher for heavy industry. + +Scarier than ghosts + +Much has been made of China’s property bubble in recent years, with shrill exposés of “ghost cities”. There has been excessive investment in property in places, but many of the supposedly empty cities do eventually fill up. China’s grotesque overinvestment in industrial goods is a far bigger problem. Analysis by Janet Hao of the Conference Board, a research group, shows that investment growth in the manufacture of mining equipment and other industrial kit far outpaced that in property from 2000 to 2014. This binge has left many state-owned firms vulnerable to slowdown, turning them into profitless zombies. + +Chinese industrial firms last year posted their first annual decline in aggregate profits since 2000. Deutsche Bank estimates that a third of the companies that are taking on more debt to cover existing loan repayments are in industries with overcapacity. Returns on assets of state firms, which dominate heavy industry, are a third those seen at private firms, and half those of foreign-owned firms in China. + +The roots of this mess lie in China’s response to the financial crisis in 2008. Officials shovelled money indiscriminately at state firms in infrastructure and heavy industry. The resulting overcapacity creates even bigger headaches for China than for the rest of the world. The overhang is helping to push producer prices remorselessly downward: January saw their 47th consecutive month of declines. Falling output prices add to the pressure on debt-laden state firms. + +The good news is that the Chinese have publicly recognised there is a problem. The ruling State Council recently declared dealing with overcapacity to be a national priority. On February 25th the State-Owned Assets Supervision and Administration Commission, which oversees big firms owned by the central government, and several other official bodies said they would soon push ahead with various trial reforms of state enterprises. The bad news is that three of the tacks they are trying only make things worse. + +One option is for China’s zombies to export their overcapacity. But even if the Chinese keep their promises not to devalue the yuan further, the flood of cheap goods onto foreign markets has already exacerbated trade frictions. The American government has imposed countervailing duties and tariffs on a variety of Chinese imports. India is alarmed at its rising trade gap with China (see article). Protesters against Chinese imports clogged the streets of Brussels in February. There is also pressure for the European Union to deny China the status of “market economy”, which its government says it is entitled to after 15 years as a World Trade Organisation member, and which would make it harder to pursue claims of Chinese dumping. + +Another approach is to keep stimulating domestic demand with credit. In January the government’s broadest measure of credit grew at its fastest rate in nearly a year: Chinese banks extended $385 billion of new loans, a record. But borrowing more as profits dive will only worsen the eventual reckoning for zombie firms. + +A third policy is to encourage consolidation among state firms. Some mergers have happened—in areas such as shipping and rail equipment. But there is little evidence of capacity being taken out as a result. Chinese leaders are dancing around the obvious solutions—stopping the flow of cheap credit and subsidised water and energy to state firms; making them pay proper dividends rather than using any spare cash to expand further; and, above all, closing down unviable firms. + +That outcome is opposed by provincial officials, who control most of the country’s 150,000 or so publicly owned firms. Local governments are funded in part by company taxes, so party officials are reluctant to shut down local firms no matter how inefficient or unprofitable. They are also afraid of the risk of social unrest arising from mass sackings. + +China’s 33 province-level administrations are at least as fractious as the European Union’s 28 member states, jokes Jörg Wuttke, head of the EU Chamber: “On this issue, increasingly Beijing feels like it’s Brussels.” So Mr Gao’s claim that the problem is not entirely his government’s fault may be true in a sense. But in the 1990s China’s leaders did manage bold state-enterprise reforms involving bankruptcies and capacity cuts, that overcame such vested interests. To meet today’s concerns, the central government could provide more generous funding to local governments to offset the loss of tax revenues arising from bankruptcies, and also strengthen unemployment benefits for affected workers. + +If China’s current leaders have the courage to implement such policies, there may even be a silver lining. Stephen Shih of Bain, another consulting firm, argues that much quiet modernisation “has been masked in many industries by overcapacity”. For example, little of the fertiliser industry’s capacity used advanced technologies in 2011; most of the new capacity added since then has been the modern sort that is 40% cheaper to operate. + +Baosteel Group, a giant state-owned firm, has been forced by Shanghai’s local authorities to shut down dirty old mills in the gleaming city. So its bosses have built a gargantuan new complex in Guangdong province with nearly 9m tonnes of capacity. This highly efficient facility has cutting-edge green technologies that greatly reduce emissions of sulphur dioxide and nitrogen oxides, recycle waste gas from blast furnaces and reuse almost all wastewater. “When the older capacity in China is shut down, we’ll have a much more modern industrial sector,” Mr Shih says. “The question is, how long will this take?” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693573-chinas-excess-industrial-capacity-harms-its-economy-and-riles-its-trading-partners-march/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The India-China trade gap + +Arrive full, leave empty + +India seeks to boost its manufacturing industry and cut the trade deficit + +Feb 27th 2016 | MUMBAI | From the print edition + + + +SHIPS leaving Nhava Sheva port, across the harbour from Mumbai, tend to ride higher on the water than when they arrive. India’s trading statistics explain why: steel and other industrial goods from China weigh down the ships as they come in, to be replaced on the way out by fluffy cotton bales, pills and—given India’s perennial trade deficit in goods—empty containers. + +India’s economy grew by 7.5% last year, cruising past China’s 6.9% growth. Yet the deficit in goods trade with China continues to widen (see chart), to over 2% of GDP last year. For Indian policymakers this is an irksome reminder of the weakness of the country’s manufacturers. Halving the trade shortfall with China would be enough to eliminate India’s overall current-account deficit, and thus the need for external financing. + + + +The government’s ideas for shrinking the shortfall have been sadly predictable. The minimum import prices it imposed earlier this month on various grades of Chinese steel, which it claims are being “dumped” below cost, come on top of other anti-dumping levies and taxes on steel and myriad other products, from raw silk to melamine dinner sets. No country has used such measures as energetically as India over the past 20 years, according to the World Trade Organisation. + +The commerce minister, Nirmala Sitharaman, has called for a devaluation of the rupee to curb imports and boost exports. Yet the rupee has been falling against the yuan for years, with little effect on trade. And a weakening currency could revive inflation, which falling oil prices and sound monetary policy have helped tame. + +The government looks longingly at manufacturing’s 32% share of China’s GDP, roughly double the Indian figure. It sees factories as the ideal way to soak up the million-odd young workers who join the labour force every month. So it is showering sops on various industries. It is handing out subsidised loans to small-scale and labour-intensive industries such as ceramics and bicycle parts. Lightly-taxed “special economic zones”, many of which are set up to benefit a single company, are in line for further handouts. + +A “Make in India” jamboree in Mumbai earlier this month sought to present an image of openness to foreign investment, eliciting promises of multi-billion-dollar plants from firms keen to cosy up to policymakers. But India is trying to emulate China’s export-led manufacturing growth in a global economy that is now drowning in China’s industrial surpluses. It hopes to fill the vacuum left by its larger neighbour as Chinese wages rise, to double those of Indians, and its economy rebalances from exports to consumption. Yet so far it has struggled to seize that opportunity. + +Indian firms grumble, with some justification, about their products being shut out of the Chinese market. Agricultural products, of which India is a net exporter, are largely excluded from China through various phytosanitary rules. Indian pharmaceutical firms complain that China’s growing aid to other developing countries often includes the provision of medicines—Chinese-made ones, of course—which means that the recipient countries buy fewer Indian-made drugs than they used to. + + + +Why countries are so keen to agree new trade deals + +India runs a global surplus in services, mainly by selling them to rich countries. But they are a small component of Indo-Chinese trade. China gets the best of tourist exchanges between the two countries: 181,000 Chinese tourists came to India in 2014, against 730,000 Indians who visited China. All this tortures Indians, for whom China is the biggest source of imports and third-biggest export market, but barely troubles China, for whom India is a second-tier trade partner. Indian policymakers are reflexively sceptical, for example, of China’s plan to build a road linking the countries, worrying it will only widen the trade imbalance. + +If China’s consumers won’t buy Indian goods, perhaps its businesses could build factories in India instead? Some big projects have recently been announced, notably a $10 billion industrial park to be developed by Dalian Wanda, a Chinese property group; and a $5 billion plant proposed by Foxconn, a Taiwanese electronics outfit which mainly manufactures in China. Foxconn said last July that it might employ up to 1m Indians in 10-12 plants by 2020, despite suffering labour strife when it closed an existing factory last year. However, foreign investors’ projects often fall quietly by the wayside when bureaucratic obstacles prove insurmountable. Foxconn is already said to be rolling back its ambitions. + +After years in the doldrums, India is enjoying its moment as the world’s fastest-growing large economy. That in itself will be enough to pique the interest of multinationals: Apple, for example, thinks a sales push in India can help make up for sluggish Chinese demand. Even so, it will be a while before its devices (whose assembly it outsources to Foxconn) are made in India. Instead, they will further weigh down the ships entering its ports. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693583-india-seeks-boost-its-manufacturing-industry-and-cut-trade-deficit-arrive-full-leave/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The film business + +Fading stars + +Hollywood studios can no longer bank on the pulling-power of famous actors + +Feb 27th 2016 | NEW YORK | From the print edition + + + +“DEADPOOL”, which so far has taken more than $500m in cinemas worldwide, is an atypical blockbuster, a foul-mouthed anti-hero film with a mature “R” audience rating. But in one important respect it is typical of many of Hollywood’s most successful movies: it does not rely on a world-famous star to sell it. + +In contrast, two recent “star vehicle” films struggled to attract audiences despite heavy promotion and high-profile openings on Christmas Day in America. “Joy”, with Jennifer Lawrence, and “Concussion”, with Will Smith, both failed to earn back their production budgets at the domestic box office and also fared poorly overseas. What happened? Ms Lawrence is by the reckoning of some the biggest star in Hollywood’s firmament; Mr Smith held that unofficial title for years. Have film stars lost some of their lustre? + +Overall, the cinema business’s health seems as rude as ever. Revenue from the American box office grew by 6.3% in 2015, to a record high of $11 billion. Thanks to droves of new filmgoers in China, where the market grew by 49% last year, global revenues increased by 4% to $38 billion. The industry has held up well against increased competition from streaming services that give people plenty of options to watch films at home. The stars with the biggest global profiles, such as Tom Cruise and Leonardo DiCaprio, are instantly recognisable in lucrative overseas markets. + +But much of the industry’s recent success, at home and abroad, comes from the rise of the big special-effects event film: franchises like “Fast and Furious”, “Avengers”, “The Hunger Games”, “Jurassic Park”, James Bond and “Star Wars” led a group of 14 films with more than $500m each in worldwide box-office takings last year, up from just five such films in 2006. + +Such productions are more likely to make stars than to be made by them. “You really don’t want to have a movie star” in certain big franchises, says a senior studio executive: the films will be hits either way, so why pay more? Jennifer Lawrence was not “Jennifer Lawrence, biggest female movie star in the world” until she made the first “Hunger Games” film. + +An analysis by The Economist of two decades of box-office results in America and Canada does not refute Ms Lawrence’s status as one of the biggest box-office draws (see article). But it is hard statistically to disentangle her singular appeal from the massive success of the franchise films she has been in. By the same token, she should perhaps not be blamed for the poor performance of “Joy”—“without Jennifer Lawrence in it, it would have been a flop, a total flop,” says the executive. + + + +Hollywood executives still want to believe in stars’ power to get bums on seats, so they will bet again on a headliner even after a few flops. There is some risk-aversion in this: if they make a flop with a big name in it, they are less likely to have to defend their decision to green-light the film. + +This conservatism tends to favour the white male actors that have already attained superstar status over the selection of new and diverse talent (as does the fact that the decision-makers are predominantly white males too). The controversy over the lack of any black actor (among other omissions) in the nominees for this year’s Oscars ceremony, on February 28th, is in part the fruit of that mindset. + +Academic studies in recent decades have generally failed to find any conclusive evidence to support studio bosses’ faith in stars’ pulling power. Our own analysis suggests only that a few of them do add a bit to box-office receipts. Number-crunchers at Epagogix, a company in London, use an algorithm to project box-office takings of films based on their story elements—including the use of special effects, a surprise ending or a cool location. And they reckon that as long as the stars look good and can act, they make scant difference, with at best a very few exceptions. It helps to have a damsel in distress, but it does not really matter which damsel. + +Among the few stars who do, by common consent among studio bosses, producers and agents, seem to be guarantors of success are the biggest comedy actors—names such as Kevin Hart and Melissa McCarthy. This is in part because they signal to the audience precisely what kind of entertainment is on offer, and are good at delivering. Our analysis backs this, with a bunch of leading comedy actors strongly outperforming industry averages. But the trajectories of star careers leave a lot of room for guesswork. Bruce Willis was paid $5m to make “Die Hard” in 1988; some in Hollywood were aghast, but the movie was a huge hit. Then Mr Willis made more flops than hits (excepting the “Die Hard” sequels) before hitting it big again with “The Sixth Sense”. But this time, was it the star or the story? + +Prominent among the stars who keep getting hired despite repeated flops is Nicole Kidman, though an algorithm might have predicted that the films she has chosen would fare poorly anyway. “Secret in Their Eyes”, with Ms Kidman and Julia Roberts, once an even bigger star, was the latest example. The film grossed just $20m at American cinemas, the same amount as its modest production budget. STX Entertainment, the studio which released the film, believes that star vehicles can work if the actors’ paydays are lower than the astronomical sums of years past. + +Expensive star showcases, where the featured actor could earn salaries of $20m or more and participate in gross receipts, are now rare. In part that is because fans can get their fill of their favourite actors in so many other, cheaper ways than going to the cinema—through social media, on-demand cable and Netflix. + +Yet there is one arena where stars are as relevant as ever: the international market. Foreign cinemas like to exhibit films with known names in the lead roles. Some old-school stars are still big draws—the likes of Mr Cruise or even, apparently, Arnold Schwarzenegger. The latter’s 2015 film, “Terminator: Genisys”, a flop in America with $90m in takings on a $155m production budget, was a blockbuster overseas, earning $351m, including $113m in China. Even if big names like these have lost some of their lustre at home, abroad they can be “sort of like supernovas”, the studio executive says. “They have flamed out a long time ago but the light shines on past their death.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693591-hollywood-studios-can-no-longer-bank-pulling-power-famous-actors-fading-stars/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Hollywood + +Silver-screen playbook + +How to make a hit film + +Feb 27th 2016 | NEW YORK | From the print edition + + + +IN 1983 William Goldman, a screenwriter, coined the famous saying that in Hollywood, “Nobody knows anything” when it comes to predicting which films will succeed at the box office. To find out how true that remains, we have analysed the performance of more than 2,000 films with a budget of more than $10m, released in America and Canada since 1995, to see which factors help make a movie a hit. + +Crunching information from The Numbers, a website that collects data on film releases, and Rotten Tomatoes, an aggregator of critics’ and punters’ reviews, we found that the strongest predictor of absolute box-office receipts is a film’s budget. Even if it got no boost from its cast, from favourable reviews or other factors, a movie would generate an average of 80 cents at American and Canadian cinemas for every dollar a studio promises to spend on it. A film’s budget is announced while it is in production, to create a buzz and signal its quality—though in practice its true cost may vary from the announced figure. + +The more a studio commits to producing a film, the more it is likely to spend on advertising it. The budget also helps determine how widely a film is shown. Films with a budget of $10m-40m open, on average, in 1,600 of the 6,000-odd cinemas in America and Canada; those with budgets of over $100m open in 3,500. + + + +Sequels and franchise films are another way for studios to limit their risks. Nearly one in five of the films Hollywood pumps out nowadays is a sequel, up from one in 12 a couple of decades ago. All other things being equal, sequels earn $35m more than non-sequels at the box office. Franchise films increasingly depend on superhero characters. Hollywood made just eight superhero films between 1996 and 2000, but 19 in the past five years. A $200m-budget superhero film will earn $58m more at the box-office than a non-superhero film of the same budget. Superhero films (“Deadpool” excepted) tend to be child-friendly, for good reason: films that receive an “R” (restricted) certificate typically earn $16m less in cinemas. + +How a star’s previous films did helps a bit in predicting their next one’s success. Each $1 earned by a leading actor’s previous, non-sequel films in the past five years adds 2 cents to their current one’s takings. The very brightest stars, such as Jennifer Lawrence and Leonardo Di Caprio, whose films have earned more than $500m at the box office in recent years, would add around $10m to ticket sales for a film. + +Do critics play a role in the success of films? Not as much as they would like to think. Between 1996 and 2006 an extra ten percentage points on the aggregate critics’ score on Rotten Tomatoes was associated with just $4m in extra box-office takings. Now it is worth just $1m. The wisdom of crowds matters more these days: the same increase in positive audience reviews on Rotten Tomatoes is associated with an $11.5m increase in box-office revenues. + +Taken together, these factors explain about 60% of the variation in box-office revenues. Adding an estimate of marketing costs increases our model’s accuracy by another 20 percentage points. That leaves about one-fifth down to factors not explained by the model. “John Carter”, a $275m science-fiction extravaganza that was one of the biggest turkeys in Hollywood history, should have earned $235m according to our model. It made just $73m when it was released in 2012. Clearly, no one yet knows everything. + +However, our analysis suggests a formula that maximises the chances of packing them in. First, create a child-friendly superhero film with plenty of action and scope for turning it into a franchise. Set your budget at an impressive but not reckless $85m. Convince a major studio to distribute it on wide release in the summer (when releases earn an average of $15m more than at other times). Lastly, cast two lead actors with a solid but unspectacular box-office history, who are thus not too expensive. With reasonable reviews from critics and the audience alike, your film would make about $125m at the American box office. But do it for the money, not the plaudits: such a film would have just a one-in-500 chance of carrying off an Oscar for Best Picture. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693594-how-make-hit-film-silver-screen-playbook/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Natural resources + +Flare-up + +Tensions run high at an international transparency initiative + +Feb 27th 2016 | From the print edition + + + +THE Extractive Industries Transparency Initiative (EITI) was launched in 2003 as a would-be global standard for managing natural resources, promoting openness in transactions between governments and companies to curb the corruption that was rampant in some places. It has since grown to include 51 countries. But its “multi-stakeholder” model—which gives equal board representation to its three constituencies: governments, companies and civil society—ensures regular bust-ups. As the EITI itself has put it, the process is “by definition loud, difficult and argumentative”. + +The atmosphere was particularly poisonous this week, as the clans gathered in Lima for the EITI’s Global Conference. Most of the NGOs boycotted a meeting on board nominations. They had been spreading “serious and untrue allegations”, wrote Clare Short, the EITI’s outgoing chairman, in a circular to members. Some muttered that the whole enterprise faced a “governance crisis”. + +NGOs were livid that someone they considered to be a rogue candidate for a civil-society board seat—backed by a pugnacious former British politician, Eric Joyce—had been allowed on the ballot. By not moving to strike him from the list, they huffed, the secretariat had broken the rules, written or otherwise, thereby undermining the civil-society contingent’s right to select its own candidates. + +The secretariat denies this charge of interfering by not intervening. It is “always a punch-ball” when tensions rise, says an official. It circulated a legal opinion to counter its critics; the NGOs issued one of their own. Recriminations continued to fly as The Economist went to press (though the offending candidate’s name was eventually withdrawn). + +The civil-society brigade has its critics, too. Some think its latest fit of pique is less a principled stand than an attempt by a clique of powerful NGOs, led by Publish What You Pay, to maintain a tight grip on who speaks for the sandal-wearers. The campaigners “often seem happier yelling than seeking compromise”, says a board member who represents companies. + +The NGOs are not alone in raising concerns over the running of the EITI, however. In December several country and company representatives signed a letter questioning the secretariat’s impartiality and the “very flawed” process for electing the chairman—which, awkwardly for a transparency initiative, they viewed as lacking transparency. (A committee later rejected these complaints.) + +This infighting is an unfortunate distraction from some genuine achievements. Thanks to the EITI, governments in Africa and other corruption-plagued places now disclose a lot more about their dealings in oil, gas and mining. No one doubts that its members, however querulous, have delivered more together than they could have done apart. + +But the ruffling of feathers makes it harder to move forward. The task of smoothing them will now fall to the incoming chairman, Fredrik Reinfeldt. As a former Swedish prime minister and president of the European Council, he might just have the required diplomatic skills. He certainly has his work cut out. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693596-tensions-run-high-international-transparency-initiative-flare-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +German industry + +Town and company + +Company towns are thriving, for now, in western Germany + +Feb 27th 2016 | WALLDORF AND WOLFSBURG | From the print edition + + + +WOLFSBURG has no cathedral, but two glass towers loom over the city. Inside them, robots whisk new Volkswagens into storage racks, an entertaining ceremony akin to a votive offering. The towers also dominate the Autostadt, a sprawling, car-themed entertainment park and VW marketing wheeze, more popular than any other tourist site in Lower Saxony, a big German state. + +Since 2000, 33m car pilgrims have paid homage there; last year brought a record 2.42m visitors. (Even more devotees flock to BMW World, a rival in Munich). Those who tire of gawping at vehicles can refuel with VW–made sausages or ice cream. Many drive home in a new VW. Last year 168,000 cars, 28% of all the firm delivered in Germany, drove through the doors of the Autostadt’s showroom. + +“People in Germany love cars,” says a VW employee. But public trust in VW is being tested by a scandal involving software to cheat emissions tests, installed on 11m cars sold worldwide. Though most other carmakers are reporting buoyant sales, VW’s were down by 9% year on year in January in Germany, and have fallen in other countries. Its shares are down by two-fifths since the scandal broke in September. Its tin-eared bosses have bungled their explanations and apologies. + +The threat to VW goes beyond possible big fines in America—the firm has set aside more than $7 billion for those. Having to come clean about its cars’ true emissions will make it harder to meet ever-stricter curbs being imposed in many countries (though pliant European officials recently eased theirs). VW looks like a reluctant innovator, especially in electric vehicles, of which Germany’s government wants to see 5m on the country’s roads by 2030. + +Wolfsburg’s citizens are not pleased. One describes a recent trip to Japan where his hosts jeered at his home as “the city of liars”. It certainly lacks charm. Founded in 1938 by the Nazis and their industrial friends as “City of the KdF Car” (a reference to the Nazis’ leisure club), its purpose was to house labour, including wartime slaves, for the factory built to produce what became the VW Beetle. “It’s really one of the worst, most artificial, ugliest cities,” says a newish resident, pointing to the grim architecture on Porschestrasse, the main drag. + +But Wolfsburg, renamed by the British after the second world war, is at least prosperous and debt-free, thanks to VW. The firm does not directly provide housing or public services, unlike in some company towns in other countries, but it is pervasive. Its cars crowd the roads—only here could driving a Volvo be deemed rebellious. Estate agents spurn calls not from VW staff. A theatre, galleries, sports teams and small businesses all depend, ultimately, on VW as sponsor, customer, taxpayer or dominant employer. + +There are intimate ties between local politicians, managers and union leaders, as in much of Germany. The last big scandal at VW reflected that: a former personnel chief was convicted in 2007 over a bribery scheme, involving sex parties and prostitutes for leaders of works councils. VW eventually shrugged that off, and may be hoping to do the same again. + +The mayor, Klaus Mohrs, whose office sports a large painting with VW symbols, says politicians enjoy “close co-operation” with car bosses, but rejects any talk of crony capitalism: “35 years ago” he might have thought relations too close, he says, “but we lead a good life this way.” VW employs 60,000 in a town whose working-age population is around 77,000. Firms pay a “municipal-trade tax”, or Gewerbesteuer, at typical rates of 14-18% of profits. That tax, the lion’s share of which is paid by VW, provided 59% of Wolfsburg’s revenue in 2014. The Economist’s analysis of the dependency of some German towns on their principal employers shows that Wolfsburg is extreme, but not unique (see table). + + + +Such reliance on a single employer would once have been familiar outside Germany, too. “Company Towns”, a 2012 book by Marcelo Borges, notes how America had 2m people living in them in the 1930s. George Pullman, pioneer of the luxury rail car, founded a planned community near Chicago, and named it after himself, to house his workers. William Hesketh Lever, the founder of what is now Unilever, created Port Sunlight in the north-west of England, to “socialise and Christianise” workers in his soap factory. + +Such places are still to be found in developing countries: for example, Jamshedpur in India was named for Jamsetji Tata, the founder of Tata Steel, which still dominates the town and provides many public services. In the West, however, many such places have diversified or died. It is in western Germany in particular that towns dominated by a single firm, Arbeitersiedlungen, continue to bloom. + +Henri de Castries, the boss of Axa, a French insurer, lauds how “family-owned global firms keep their roots in small towns” in Germany, spreading wealth more evenly than in his centralised home country. Bill McDermott, the American who runs SAP, a giant software firm, says “I deeply respect all things that Walldorf is,” referring to its home town among the asparagus fields of the upper Rhine valley. + +Walldorf, like Wolfsburg, relies on a firm that has vastly outgrown its nest. For firms, that usually spells a lower rate of municipal-trade tax, but also means they may struggle to lure talented staff to work in semi-rural obscurity. Bertelsmann, a publisher with 112,000 global staff, is based (with about a tenth of its workers) in Gütersloh. BASF, a chemicals giant, has 35,000 in similarly modest Ludwigshafen. + +Such towns also run the risk of their corporate champions stumbling. Residents of Metzingen, a town of 22,000, will have shivered this week when a warning of weak sales by Hugo Boss, the fashion firm that dominates it, sent the company’s shares plunging. Back in Wolfsburg, Mr Mohrs has so far cut this year’s investment budget for the city by one-third, to €120m ($132m). An official at VfL Wolfsburg, a high-flying football club, says locals are anxious—70% of fans in his stadium work in VW’s plant. The club has put off building a youth academy to save a few million euros. Cultural events funded by VW have been scratched. Kevin Nobs, a local journalist, says small businesses expect a tough year, fretting that VW staff will not get their usual bonuses. + +A sausage-making count to the rescue + +Residents recall worse times. In the cold war, Wolfsburg, on the frontier with East Germany, felt like “the end of the world”, says a businessman. Carmaking slumped in the 1990s, sending the local unemployment rate to 18%. The city and VW responded with Wolfsburg AG, a joint venture to encourage startups. Its boss, Julius von Ingelheim, says 600 local firms resulted, notably in health care and IT. “Today the region is much stronger than one company,” he claims. He also lauds Count von der Schulenburg, the former lord of Wolfsburg’s castle, who runs a boarding-house, a music festival and a sausage business. + +In reality, VW crowds out much else. High wages for designers, researchers and financial experts at its headquarters make it hard for others to attract staff, or for anyone else to afford housing. Olaf Lies, economy minister for Lower Saxony, which owns one-fifth of VW, says the entire state is bound to the firm. He worries about the 120,000 VW employees in the state and as many more workers in supply firms. VW also employs 10,000 in Emden, a town of around 33,000 working-age residents. + +But ask Wolfsburgers to imagine a future without VW and you get only glowers. Historians there say no one dares criticise VW, and recall hosting an exhibition in 2014 that urged visitors to “learn from Detroit”, suggesting that the city’s reliance on VW was a “ticking time-bomb”. Locals shunned it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693604-company-towns-are-thriving-now-western-germany-town-and-company/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +On the stump + +Why tech bosses are playing at being statesmen + +Feb 27th 2016 | From the print edition + + + +HE HAS been on-message for months, sharing his tweet-worthy opinions on stage and playing on media interest. On February 16th, after consulting with his cabinet of close advisers, he made a vigorous statement on privacy rights that attacked the government, every politician’s favourite punchbag these days. He vowed to fight government “overreach” and help “people around the country to understand what is at stake”. + +This is not a populist presidential contender, but Tim Cook, Apple’s boss. His views have put him at odds with American law enforcers, who need his company’s help to unlock an iPhone used by a terrorist. The government has dismissed Mr Cook’s letter as a stunt to bolster Apple’s sales. But this charge underestimates the man’s ambition. His campaign is aimed at shaping public policy, not just to favour his firm’s immediate interests but to nurture its global base of technophile supporters. + +Mr Cook is among the latest incarnations of the “CEO-statesman”, a type whose origins stretch back at least to the days when Henry Ford campaigned for world peace and Andrew Carnegie for universal education. The CEO-statesman is not content with just accepting a job in the government; nor does he simply lobby behind the scenes. He is an evangelist, out to persuade the world of the righteousness of his chosen causes. + +Ford and Carnegie were CEO-statesmen by choice. Today’s equivalents often seem to feel it is no longer enough to have admired products and solid financial results. A chief executive needs to have values, and preach them. From Starbucks’ Howard Schultz to Unilever’s Paul Polman, bosses in diverse industries have taken positions on controversies including race relations, climate change and gay marriage. But none has higher profiles than the CEO-statesmen of the technology industry. + +Microsoft’s bruising antitrust case with the Department of Justice, settled in 2001, was the dawning of a realisation by tech bosses that they could not disdain politics, and needed to invest in lobbying. This has evolved into a wider mission to shape public opinion. Mark Zuckerberg, Facebook’s boss, is on a drive to bring internet access to the world’s poor. He speaks of it as a human right, along with education and nutrition (though it would also, conveniently, add Facebook users). Sheryl Sandberg, one of his lieutenants, who has worked in government, travels the world to talk about equality for women. Google’s Sundar Pichai is in Brussels on a “state visit” to meet European Union officials and press his views on data security, privacy and competition. + +One reason for the tech industry’s statesmanship strategy is necessity. By their nature, tech firms are more likely than others to be operating in areas—such as the on-demand economy—in which regulation is dated or inchoate. Another is that, with their huge constituencies, some have started to look less like businesses and more like countries. Facebook has 1.6 billion users, more than the population of China. Apple has sold more than 1 billion devices. Last year it had revenues of $234 billion, which is more than those of most governments. + +Many people feel a closer relationship with tech firms than with their governments; tweaks to their interfaces and algorithms can have an instant impact on users’ lives. People now trust businesses more than their governments, according to surveys by Edelman, a PR agency. Firms like Google and Facebook have taken over the role of disseminators of information that governments once claimed. + +In the 1980s and 1990s the “CEO-celebrity” was more prominent: typified by Jack Welch of GE, such figures penned books on their management philosophies and posed for magazine covers. The CEO-statesman is different, because he is after more than publicity. He wants to craft a legacy, as politicians do in their final terms. Leaving behind a healthy business may not be enough to secure a page in the history books. The Reputation Institute, a think-tank, reckons that perhaps a third of a CEO’s legacy is attributed to financial performance, with the rest being influenced by factors such as perceived leadership and corporate citizenship. + +Being a statesman means trying to control the message, and thus the media. Like the American president, tech bosses are pursued by a press corps which dissects their every move. They scheme like politicians, feeding titbits to friendly journalists and snubbing ones who write unhelpful truths. Or they appeal to the public directly: Mr Cook and Mr Zuckerberg often publish their views in blog posts rather than give interviews, the digital equivalent of reading off of a teleprompter and taking no questions. + +Picking the right pedestal + +The statesmanship strategy—taking lofty stances that enhance their standing among their constituents and trying to house-train the press—carries risks. Public campaigns work best when they are core to a firm’s mission. Last year Mr Schultz discovered the dangers of wading into advocacy unrelated to the coffee-shop business. He was ridiculed over his plan to have Starbucks’ baristas strike up conversations about race relations with customers who just want a quick, no-controversy latte. Corporate statesmanship can also backfire if bosses appear too blatantly self-interested. Recently Mr Zuckerberg suffered a defeat in India, where his plan to bring free internet to the poor was dismissed as a colonialist attempt to impose a corporate agenda. + +It is easy for bosses to miscalculate the public mood and face a backlash. This has partly been true for Mr Cook. He may have won the loyalty of tech progressives, but many Americans are sympathetic to the government and think he should back down and unlock the iPhone used by the terrorist. “Tim Cook has climbed up on a pedestal, but the pedestal is in the corner,” says Jeffrey Sonnenfeld, a professor at Yale University’s School of Management. As any politician knows, and many CEOs are learning, being a statesman is not easy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693574-why-tech-bosses-are-playing-being-statesmen-stump/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Share trading: Complicate, then prevaricate + +Exchange mergers: Stocks exchanged + +Banks and money-laundering: Whoops apocalypse + +Buttonwood: Donald ducks the big questions + +China’s stockmarket: Fail to the chief + +Reshaping banking: Shake your money makers + +BBVA: Digital addition + +India’s budget: Leap of faith + +Free exchange: Gotham on Thames + +Free exchange: Correction:“Chop, chop”, January 30th + + + + + +Articles Sections Next + +Share trading + +Complicate, then prevaricate + +Discontent is rife at the very heart of capitalism: the trading of shares + +Feb 27th 2016 | NEW YORK | From the print edition + + + +THE brokers who traded shares in the Tontine coffee house in 18th-century New York often resorted to stronger drink, leaving them “a little addled”, according to one contemporary account. The technology involved in share-trading has changed a bit since then, and at least some of the participants have sobered up. But more than 200 years later, investors in American equities still wonder whether they are really receiving decent service. + + + +On the face of things, they have little to complain about. The cost of trading has declined sharply over the years (see chart). Explicit commissions, which were once levied in percentage points (0.25% in 1792), have largely disappeared. This is thanks mainly to competition. Whereas the New York Stock Exchange (NYSE) dominated the trading of shares listed on it for most of the 20th century, there are now lots of places where they can be bought and sold. + +The impetus for the fragmentation was “Regulation NMS”, adopted in 2005 by the Securities and Exchange Commission (SEC), Wall Street’s main regulator. This required share-trading orders to be funnelled to the exchange offering the best price. The intention was to boost competition to NYSE and NASDAQ, which had a near-duopoly in share-trading at the time. It succeeded in that: both now have less than a fifth of the market. (In response, firms running exchanges have branched into other markets—see next article.) + +American shares are traded on a dozen exchanges; at least six other exchanges cater to investors in derivatives linked to shares. Shares also change hands on another 40 or so “alternative trading systems”, as well as a number of “single-dealer platforms”. Finally, many trades are now “internalised” by big banks and asset-managers, meaning that they pair up buyers and sellers within their sprawling empires rather than use an outside trading venue. + +Yet investors worry that, in many cases, competition has brought down the visible price of trading by adding hidden costs. Two anxieties stand out. One is the worry that the current set-up of the markets allows high-speed traders to anticipate big orders and “front-run” them, moving prices in an unfavourable direction before an order can be executed. The other is the question of how robust the system is, with regulators still unable fully to explain events like the “flash crash” of 2010, when the Dow Jones Industrial Average plunged by 9% in minutes before rebounding. + +Start with fears of front-running. Many institutional investors complain that ultra-fast traders spot big orders entering the market, and race ahead of them to adjust their prices accordingly. Attempts to hide from the speedsters can go awry. In January Credit Suisse and Barclays, two big banks, agreed to pay $154m in fines for misleading clients about the workings of their “dark pools”, where offers to sell and bids to buy are not published. In theory, that protects investors from front-running; in practice, several of the firms running such venues had concealed the central role that high-frequency traders played on them. (Credit Suisse didn’t admit or deny wrongdoing in the settlement.) + +There is another, less-often-told side to the story. Speed is necessary to knit together a dispersed set of exchanges, so that investors are immediately routed towards the best price available and so that their orders are the first to get filled. And plenty of high-frequency traders are market-makers; it is their job to adjust prices in response to new information. Nonetheless, the idea that markets are rigged is widespread, not least thanks to the publication of “Flash Boys”, a book by Michael Lewis on the evils of high-speed trading. + +One proferred solution is to level the field by slowing things down deliberately. IEX, whose founder is the hero of Mr Lewis’s book, is a trading platform that has applied to the SEC to become an exchange. It uses miles of coiled cable to create a “speed bump” that delays trades to the advantage of institutional investors. The SEC has received more than 400 letters in support of its application, but there is a vigorous debate about whether IEX’s system complies with the requirements of Regulation NMS. Some think that the better solution would be to get rid of Rule 611, which in effect requires orders to be sent to the exchange showing the best price, even though such quotes can sometimes be unobtainable in practice. The SEC will vote on IEX’s application by March 21st. + +Front-running is not the only concern about America’s market structure. The other is the risk of sudden spasms like the flash crash. Glitches are common. In 2012 two public offerings, for Facebook and BATS (“Better Alternative Trading System”, a firm that runs exchanges and other trading venues, ironically enough), suffered disruption. Later that year faulty software toppled Knight Capital Group, a big trading firm, by vomiting orders to exchanges without tracking those that were filled. In 2013 the primary electronic market and the back-up system both failed at NASDAQ thanks to a software bug, and so on. + +Andrew Lo, a professor of finance at the Massachusetts Institute of Technology (MIT), argues that investigations into such events tend to focus on the venue most affected. How they reverberate through the broader system is very little studied or understood. Sometimes, the existence of other venues may help: in July the NYSE briefly went offline and traders barely noticed as other exchanges filled the gap. On other occasions, they may amplify volatility. In August lurches in the future and equities markets caused the value of exchange-traded funds to deviate from the value of the underlying shares they owned. + +Mr Lo proposes a simple reform: the creation of a commission that can subpoena witnesses and evidence to look into the causes of crashes, just as the National Transportation Safety Board investigates air disasters. The commission would look as widely as it liked at what went wrong and then publish its findings. + +The SEC acknowledges that the rules governing share-trading need amending. Mary Jo White, the chair of the SEC, has mused, for example, about monitoring the controls firms use to prevent their algorithms running amok. Another idea is to provide the SEC with the power to curtail otherwise legal trading when the market is convulsing. The risk is that in addressing market complexity, the regulators only add to it. A single SEC proposal, on a facet of a facet of the overall system, is now up for public comment. It runs to 581 pages. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693607-discontent-rife-very-heart-capitalism-trading/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Exchange mergers + +Stocks exchanged + +Frankfurt’s bourse tries to merge with London’s, again + +Feb 27th 2016 | From the print edition + +EVEN as the business of trading splinters across ever more platforms, the firms that run exchanges continue to consolidate. Last year NASDAQ agreed to buy Chi-X Canada, Intercontinental Exchange (ICE) purchased Interactive Data and Deutsche Börse snapped up 360T. The past decade of dealmaking in the industry has given rise to five powerhouses: the London Stock Exchange Group (LSE), Deutsche Börse, CME Group, ICE and HKEX. This week it emerged that, not for the first time, LSE and Deutsche Börse are talking about a merger. + +Organisations like the LSE once made all their money by charging fees to those who traded or listed shares. But as regulators allowed rival trading platforms to encroach on the established exchanges’ turf, those fees came down, pushing them into other lines of business. LSE and others bought up derivatives exchanges, data providers, index compilers and clearing houses. The intention was to serve customers throughout the process of buying a security, from research to clearing and settlement. Only a tenth of LSE’s and Deutsche Börse’s revenues now come from the trading of equities. This strategy has worked well. LSE’s shares have outperformed the FTSE 100 by more than 200% over the past five years. + +The groups have developed slightly different models, though. The German exchange adopted a “vertical silo”, in which customers for one of its products must also use others. Trading on the group’s Eurex derivatives exchange meant using its clearing house, for example. Running a vertical silo made expanding into other areas attractive, as new customers could be steered towards the rest of the group’s offerings. LSE, in contrast, offered open access to its exchanges and its clearing house. + +The EU is now obliging exchanges to open up their silos and let clients mix and match execution and clearing. That leaves Deutsche Börse more exposed. What is more, LSE’s strengths in shares and indices complement Deutsche Börse’s in derivatives. Putting Eurex Clearing and LCH.Clearnet under the same roof would also allow customers of both to clear trades with less collateral. + +Previous attempts to combine London’s bourse and Frankfurt’s failed in 2000 and 2005. The European Commission, which in 2012 blocked a tie-up between Deutsche Börse and NYSE Euronext, could kick up a fuss. Should it happen, Brexit would also complicate matters. But the incentives for exchange groups to join up are not going away. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693611-frankfurts-bourse-tries-merge-londons-again-stocks-exchanged/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banks and money-laundering + +Whoops apocalypse + +American regulators wield a big stick, but not always fairly + +Feb 27th 2016 | From the print edition + + + +LIKE politicians, financial regulators know that late on a Friday is a good time to slip out bad news. The Financial Crimes Enforcement Network (FinCEN), part of America’s Treasury, chose February 19th to announce it had rescinded a devastating finding against a European bank suspected of facilitating money-laundering. The withdrawal, less than a year after the designation, looks like a climbdown. + +In March 2015 FinCEN branded Banca Privada d’Andorra (BPA) as a “primary money-laundering concern”, saying its top managers had moved cash for criminal groups. This so-called “311” measure (after the relevant section of the Patriot Act of 2001) is usually crippling for the bank concerned, because in effect it cuts it off from the American financial system and any banks that participate in it. BPA was no exception: the government of Andorra, a mountainous financial haven nestled between France and Spain, ended up taking over the bank despite objections from its majority shareholders, the Cierco family; its Madrid-based wealth-management arm was liquidated. The Ciercos, insisting there was no legal basis for FinCEN’s move, sued in the American courts. + +FinCEN’s explanation for its reversal was that Andorra had taken steps to protect BPA from money-laundering risks, and the bank therefore no longer poses a threat. The Ciercos are having none of this. They argue that it was instead a “blatant effort to avoid judicial scrutiny” of the 311 measure. They point to the timing: the court was to hear a motion to dismiss the case next month. That would have required much more detailed evidence to be aired in support of the 311 action. + +The Americans wanted to avoid this because their case was flimsy, critics say. The Ciercos have argued from the start that it was based on cases of suspected money-laundering which the bank itself had reported to Andorran regulators and had brought in KPMG, an accounting firm, to investigate. + +If BPA was already cleaning up its act, why go after it at all? Some suspect the bank was a pawn in a tussle between governments: miffed that Andorra was slow to adopt American-style anti-money-laundering rules, including limits on cash transactions, America decided to show who was boss by selecting a bank to pick on. There is some evidence to support this sacrificial-lamb theory. In unscripted comments last year, for instance, an American diplomat suggested that America chose to “use the hammer” on BPA as a way of resolving wider concerns about Andorra. (FinCEN referred questions from The Economist to the Department of Justice, which declined to comment on the ground that lawsuits are under way.) + +The Treasury has been challenged in another 311-designation case. FBME Bank of Tanzania sued it after being accused of servicing all manner of bad guys. Last autumn an American court issued an injunction blocking the government’s action until the bank received more information about why it was deemed a threat to the financial system. The case continues. Meanwhile, FBME’s operations have been severely disrupted: it has sought an injunction to stop the authorities closing an important subsidiary in Cyprus. + +These cases highlight two problems with FinCEN’s money-laundering cudgel. The first is double-standards. It tends to go after only small banks in strategically unimportant countries; its use of 311 has been likened to using a sledgehammer to crack nuts. The second is its lack of openness. It faces no requirement to make detailed evidence public, or even available to a court, at the time of action. By the time any challenge is heard, it may be too late for the bank in question. + +BPA is not dead, but it is seriously wounded. Much of the value may have already vanished from a bank that was worth €600m ($680m) before the debacle—though there are substantial assets left thanks to a freezing order. The Ciercos want the Andorran authorities to halt the disposal of its assets and enter into “remedial negotiations”. They have hailed FinCEN’s about-face as a “momentous victory”. But will it be a hollow one? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693603-american-regulators-wield-big-stick-not-always-fairly-whoops-apocalypse/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Donald ducks the big questions + +Donald Trump’s proposals require implausible spending cuts or 10% growth + +Feb 27th 2016 | From the print edition + + + +VICTORY this week in the Nevada caucuses, on top of recent triumphs in New Hampshire and South Carolina, make Donald Trump the clear favourite to be the Republican nominee in America’s presidential election. Users of Predictit, a gambling website, collectively rate his chances at about 70%. Although many people think that Mr Trump cannot triumph in November, it is worth remembering that Hillary Clinton, the likely Democratic nominee, is hampered by several nagging scandals that could conceivably deepen. + +So investors need to start thinking about what the economy might look like under a President Trump. This is far from easy, because the candidate gives a good impression of making up policy as he goes along. How seriously is one to take his policy on Chinese trade (declaring the country a currency manipulator and eliminating its “illegal” export subsidies)? Is the plan for a border wall contingent on his improbable promise of getting the Mexicans to pay for it? + +And it is not clear whether Mr Trump’s policies would be approved by Congress. A Republican House and Senate would normally follow the lead of their party’s standard-bearer. But Mr Trump has departed a long way from party orthodoxy in some respects, such as declaring the Iraq war a “terrible mistake”. + +On taxes, at least, Mr Trump is not so different from other Republicans, arguing for sweeping cuts. He wants a higher standard income-tax deduction, along with lower bands of 10%, 20% and 25%. Dividends and capital gains would be taxed at 20% at most. The alternative minimum, estate and gift taxes would all be abolished. The corporate-tax rate would be cut from 35% to 15%. The cost of these cuts would be partly offset by limits on certain deductions, and by taxing companies’ global profits, whether repatriated or not. + + + +Part of Mr Trump’s “man of the people” appeal is his apparent divergence from Republicans on some tax breaks for the rich. One example is his promise to end the tax break on “carried interest”, which allows private-equity fund managers to cut their bills substantially. But the Tax Policy Centre (TPC), a think-tank that has analysed Mr Trump’s proposals, points out that although his plan does indeed reclassify carried interest, it would still cause the effective tax rate on it to fall from 23.8% to 15%. The billionaire need not worry about losing the private-equity vote. + +How will all this be paid for? Lower taxes could stimulate economic growth, although the size of the improvement is debatable and it could be offset by higher debt-servicing costs. The TPC estimates the tax cuts would reduce revenues by $9.5 trillion over ten years. The Committee for a Responsible Federal Budget (CRFB), a fiscal watchdog, puts the total cost at $12 trillion-15 trillion. Debt could rise as high as 140% of GDP by 2026. + +Perhaps Mr Trump is a secret admirer of Paul Krugman, a liberal economist, and plans a big Keynesian stimulus? Not so: he has called for a balanced budget. That would mean huge spending cuts, but he has not outlined many. He wants to beef up the armed forces, and to spend more on veterans and immigration controls. He has also promised to protect Social Security (the national pension scheme). + +Mr Trump says he will save $300 billion from Medicare (the government health-care scheme for the elderly) by buying drugs more cheaply. Alas, total Medicare spending on drugs is likely to average $111 billion annually over the next decade. Aggregate American spending on drugs (public and private) is around $300 billion a year, says the CRFB. Perhaps Mr Trump thinks he can persuade the pharmaceutical companies to give their product away: the “art of the deal” in action. + +As the chart shows, the more departments that are protected, the bigger the cuts needed elsewhere. Funding his tax cuts would require spending reductions of 61-78% in the unprotected areas; balancing the budget would be impossible, according to the CRFB, as there is not enough spending left to cut. For those counting on economic growth to eliminate the deficit, the annual increase in GDP required would be more than 10%. + +All politicians promise too much, of course, but Mr Trump’s plans differ in the sheer scale of their implausibility. If investors also factor in the candidate’s unpredictability, the wildness of his foreign-policy rhetoric and a potentially fractious relationship with Congress, it all adds up to considerable uncertainty, something that markets traditionally dislike. If Mr Trump does become the Republican nominee, prepare for a volatile autumn. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-economics/21693538-trumps-proposals-require-implausible-spending-cuts-or-10-growth-donald-ducks/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +China’s stockmarket + +Fail to the chief + +A rare episode of accountability after an almighty crash + +Feb 27th 2016 | SHANGHAI | From the print edition + +Hair today… + +AS LONG as they stay on the right side of political battles, officials who reach the exalted heights of Chinese government can generally count on job security. Firing them in the middle of their term for poor performance is almost unheard of. The removal last week of Xiao Gang, China’s securities regulator (pictured), more than two years before the end of his term, was thus remarkable. + +It was bad enough that a stockmarket bubble had swollen and burst on Mr Xiao’s watch. He became chief of the China Securities Regulatory Commission (CSRC) in early 2013; the stockmarket rally began in mid-2014 and turned into a mania before collapsing in mid-2015, wiping out some $5 trillion in wealth. Worse, his fingerprints were all over the market’s excesses, when it soared and when it fell. + +On the way up, he was an energetic cheerleader. In the months before the crash, when prices were already unsustainably high, Mr Xiao described the rally as a “reform bull”—that is, a fair response to the government’s economic-reform plans, however vague and incremental they actually were. He also missed the dangers in the market, arguing that leveraged buying of shares was under control, when in fact it had reached unprecedented levels. On the way down, he was the guiding force behind the adoption of a circuit-breaker mechanism intended to slow losses. This ended up exacerbating panic-selling and had to be scrapped. + +For months, rumours spread that senior leaders had lost faith in Mr Xiao. Investors took to referring to him as Xiao Rectum, which sounds very similar to his actual name. Reuters reported on January 18th that he had offered to resign. Yet the final decision to remove him from the CSRC is still a risky one for Li Keqiang, the premier. Until now, the bumbling Mr Xiao stood as a buffer between the stockmarket and Mr Li. In the event of more market mayhem, blame will now filter upstairs. + +…gone tomorrow + +Mr Xiao’s successor is Liu Shiyu, who most recently was chairman of Agricultural Bank of China, a big state-owned bank, and previously was a deputy governor of the central bank. He is doubtless hoping that the worst is past: the CSI-300 index of blue-chip shares has shed more than 40% of its value since last June’s peak. Yet even after the sell-off, small-cap shares still trade at nearly 90 times last year’s earnings, which suggests that the correction may have further to run (a multiple of 40 or so would be more reasonable). + + + +Daily dispatches: China's market mess + +What’s more, Mr Liu has the unenviable task of changing the way that initial public offerings (IPOs) are conducted. For years the authorities have mulled shifting from a system in which these are individually authorised to one in which eligible firms simply register their intention to list. Under the former, regulators control which companies get to list, when and roughly at what price. In the latter, these decisions are given over to the market (in effect, to underwriters, firms and investors). + +The authorisation system is prone to corruption because it gives regulators undue power. But in a volatile market with scant legal protection for investors, the fear is that registration will be abused by unscrupulous firms and so could be even more damaging. Mr Xiao handled this dilemma by dragging his feet. Mr Liu will be under pressure to move more boldly. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693608-rare-episode-accountability-after-almighty-crash-fail-chief/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Reshaping banking + +Shake your money makers + +The Swiss government rejects the nationalisation of money creation + +Feb 27th 2016 | From the print edition + +CHILDREN are sometimes reassured that new siblings arrive via friendly storks. The reality is messier. Money creation is much the same. The “stork” in this case is the central bank; many think it transfers money to private banks, which act as intermediaries, pushing the money around the economy. In reality, most money is created by private banks. They generate deposits every time they make a loan, a process central banks can influence but not control. That alarms some, who worry that banks use this power heedlessly, thereby stoking disruptive booms and busts. + +Campaigners in many rich countries want to strip private banks of the power to create money. In Switzerland members of the “Vollgeld Initiative” presented the government with enough signatures in December to trigger a national referendum on the subject. Bank deposits, they point out, make up some 87% of the readily available money in Switzerland, vastly exceeding notes and coins. Since money creation is the main fuel of both inflation and growth, they argue, it should not be in private hands, let alone entrusted to institutions that are prone to binge and purge. + +Under the existing system deposits sit on private banks’ balance-sheets. Under the proposed alternative (a variation on “narrow banking”), accounts would be transformed into something much closer to the safe-deposit boxes nestled in Swiss vaults. Customers would pay the banks a charge for storing their cash. Any loans banks make would have to be funded by shareholders or by borrowing of their own, not by deposits. + +The central bank, meanwhile, would survey the economy and judge how much cash was required to maintain stable inflation. Rather than tweaking interest rates to influence private banks’ lending, it would simply hand out (or siphon away) the necessary cash itself, to the government, the public, or as loans to private banks. + +The system would be safer for depositors, since banks could not lend out and lose their money. That would allow governments to withdraw the implicit protection banks currently enjoy as the guardian of voters’ deposits. Even big banks could be allowed to fail, since the losses would not reverberate through the system so much. That possibility would nudge lenders into behaving more prudently. + +The Swiss government responds officially to every issue to be put to a referendum. On February 24th it released its verdict on the Vollgeld Initiative (the actual vote will not take place until next year at the earliest). It is not a fan. As the central bank issued more money, the government points out, its liabilities (cash) would rise without any increase in its assets. This, the government fears, would undermine confidence in the value of money. + +Those hoping for a simpler, more streamlined system would probably be disappointed. There would need to be heavy-handed rules to make sure that banks did not create “money-like” instruments. The government also worries that the change would hobble Swiss banks, including multinational giants such as UBS and Credit Suisse, which would face mammoth restructuring costs. Finance, a huge part of the Swiss economy, would be turned inside-out, with unpredictable but probably expensive consequences. + +The government also points out that the initiative only guards against one particular form of financial instability. Even once the new system is in place, a bank could still become insolvent or suffer a liquidity squeeze, with potentially disastrous results for those that had backed it and the economy as a whole. Even though it did not accept retail deposits, Lehman Brothers still collapsed, and nearly brought down the global financial system as it did so. Given the limited benefits, the costs the reform would involve look prohibitive, opponents argue. + +Besides, “there are less radical means to achieve financial stability,” according to Serge Gaillard, director of Switzerland’s Federal Finance Administration. Rules on lending, reserves and capital have all been tightened since the crisis. Now that these reforms have been implemented, the government says, such a fundamental overhaul of the system is unnecessary, if not downright dangerous. + +Safe-deposit boxes may be popular in Switzerland, but the public will probably side with the government, disappointing radical economists hoping for a trailblazer to prove that the model can work. The Swiss authorities believe they have recommended the safer option. Campaigners will think them narrow-minded. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693614-swiss-government-rejects-nationalisation-money-creation-shake-your-money/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +BBVA + +Digital addition + +A big Spanish bank’s tech drive prompts some scepticism + +Feb 27th 2016 | MADRID | From the print edition + + + +BANKS love to talk up their tech credentials, but few go as far as BBVA, Spain’s second-biggest. In a surprise move last year, it promoted its head of digital banking, Carlos Torres, to second-in-command despite his lack of experience in retail banking. Digital transformation, the bank said, was its top strategic priority. To that end, it has spent around $200m over the past three years investing in fintech startups such as Atom, a British digital bank, and Simple, an American one. It has also invested in a data-crunching firm, a Bitcoin-trading outfit and a digital-design company, among others. + +The shopping spree is not over yet. In mid-February BBVA injected an extra $150m into its $100m venture-capital arm and transferred it to a new subsidiary called Propel Venture Partners. This outfit, based in San Francisco and London, will operate independently of the rest of the bank, in an attempt to appeal to startups wary of working with a dinosaur. + +BBVA is also trying to turn its existing operations into something resembling a tech firm. Some 600 employees at its headquarters near Madrid now work in small “scrums” incorporating people from IT, marketing, design and other divisions. They take on small projects with short deadlines, gathering daily in front of whiteboards dotted with fluorescent Post-It notes to chart their progress. The aim is to improve apps constantly, based on feedback from customers, including the direct telephone conversations with a personal account manager enabled by the app. BBVA calls it “the revolution of small things” and points to higher customer-satisfaction ratings as evidence of its success. + +Investors are not quite as satisfied. BBVA’s emphasis on technology has not yet translated into any big benefit to the business, says Rohith Chandra, an analyst at Barclays, a British bank. Two years after the purchase of Simple, for example, it remains independently managed and in the red. Its most appealing features, such as clever budgeting software for customers, have not yet been adopted by other units. + +Moreover, most big banks are investing heavily in technology and offering more services via fancy apps as custom at branches dwindles. BBVA’s digital offerings do not seem dramatically different from those of Santander or Caixabank, say, its biggest Spanish rivals. Caixabank recently launched ImaginBank, accessible only through mobile apps and social networks. Many big banks, including Barclays, Citigroup, HSBC, Santander and UBS, have invested in fintech startups. BBVA’s investments are so disparate that they seem driven chiefly by FOMO, as millennials might say, or fear of missing out. + +Teppo Paavola, head of BBVA’s New Digital Business unit and a former executive at PayPal, makes no apologies for that. “Being paranoid is the way to go,” he says. BBVA can afford a digital flutter or two: it earned €2.6 billion ($2.9 billion) last year. Many of its 66m customers are in emerging markets, where few people have ingrained banking habits; that might allow more rapid technological change. Just under 30% of consumer loans at BBVA’s Mexican unit are issued digitally, up from 2% a year ago. If mobile banking can be made appealing enough that it allows BBVA to attract customers in such countries without building lots of expensive branches, then it could make a difference to the bottom line, Mr Chandra speculates. + +For now, however, bricks and mortar are still an integral part of BBVA’s business model. It has no plans to close a big chunk of its 3,800 branches in Spain anytime soon. Transforming the bank is a gradual process which will take a very long time, the bank’s chairman recently said. That, at least, is not the sort of talk you would hear at a tech firm. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693617-big-spanish-banks-tech-drive-prompts-some-scepticism-digital-addition/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +India’s budget + +Leap of faith + +Despite benign economic conditions, India faces tricky budget decisions + +Feb 27th 2016 | MUMBAI | From the print edition + +Economic stimulus and fiscal godsend + +LEAP years are a plus for finance ministers: the extra day bolsters annual output by a sliver and so flatters their record. Arun Jaitley, India’s finance minister, should be especially grateful for any boost to GDP on “leap day”, when he unveils his third budget. Although the Indian economy continues to outpace both richer and poorer rivals, the government’s fiscal options are narrowing. + +Given jittery markets and total public debt of around 65% of GDP, a high figure for an emerging market, the question isn’t whether the government should cut its budget deficit but by how much. It is projected to be 3.9% in the fiscal year that ends on March 31st. The government has pledged to reduce the shortfall to 3.5% in the coming year and 3% the following one. But these targets are already less ambitious than ones Mr Jaitley had set previously, and ministers seem to be preparing the ground to push them back further—to bond markets’ consternation. + +As always, politicians can craft a compelling case for another “one-off” delay in budget-trimming. Civil servants are expecting a mammoth pay bump as a result of a once-a-decade wage negotiation; there is also a boost to military pensions that will cost around 1.1 trillion rupees ($16 billion), or 0.8% of GDP. Fresh funds will have to be found to recapitalise 29 state-owned banks, most of which have books infested with dud loans and so are making heavy losses. State governments, which add a further 2.3% of GDP to the central government’s deficit, are being leant on to bail out bankrupt power-distribution companies. + +There is an economic case for deferring cuts, too, given febrile global conditions. Private investment is at a nadir, due to firms’ heavy debt and weak earnings. Two disappointing rainy seasons in a row have depressed incomes in rural regions, where most Indians live. And though India’s growth, at 7.5% last year, looks buoyant by global standards, it is below the 9-10% the government aspires to. (Many, including some government officials, in any case question the accuracy of the data.) + +There is some debate among economists about whether further public spending is warranted in such circumstances. Unfortunately for Mr Jaitley, one of the most vocal critics is Raghuram Rajan, the central-bank governor. He has compared India’s economy to Brazil’s, which is similarly indebted and shrinking fast—a humiliating rebuke to the government. + +Mr Rajan has argued that there are few investments the government can make that are likely to deliver high enough returns to compensate for adding to India’s debt pile. More public spending risks crowding out the private sort, he thinks. The implicit threat from Mr Rajan is that he will not reduce interest rates from their current 6.75% if the deficit does not shrink. + +After all, India has already received a hearty stimulus, albeit not one of Mr Jaitley’s doing. No other country has benefited quite so much from the tumbling price of commodities, particularly oil, of which it is a huge net importer. When Narendra Modi came to power in May 2014, with crude at nearly $110 a barrel, whatever tax the government levied on petrol and other oil products was largely spent on fuel subsidies for the poor. The subsidy bill has since atrophied, while the government has pocketed much of the benefit of falling prices by raising the tax on petrol. It has received unexpected revenue of 1.5% of GDP, even as consumers’ spending power has risen. + +For a country whose tax receipts total around 11% of GDP, that is a sizeable boon. Economists point out that the oil price, currently hovering near $30, cannot tumble another $80 next year. Worse, it might go up, which could prompt a reversal of the tax increases. If so, a $10 increase in the oil price would cost the government 0.35% of GDP, according to Morgan Stanley, a bank, more or less doubling the cuts needed to meet its current fiscal targets. + + + +Modest rises in other taxes have been mooted, and may be necessary if Mr Jaitley sees public investment or rural handouts as a political necessity. But there is another obvious way of raising money: selling down the government’s stakes in hundreds of Indian companies. Targets for privatisation have been missed in nine of the past ten years (see chart). + +Although many of the government’s holdings have little strategic value—it owns stakes in cigarette-makers, engineering firms and hotels, for instance—it has resisted a sell-off. The reticence should end, argues Sajjid Chinoy of JPMorgan Chase, a bank, who advises government to think of divestments not as asset sales but as asset swaps, trading stakes in companies for the money to build new roads and railways. + +A selling spree would allow Mr Jaitley to stick to his 3.5% target. Yet if anything, he is expected to trim projected revenue from privatisation. The disappointment of bond markets will be blunted by a rule that obliges banks to keep 21.5% of their assets in government bonds. But the price of profligacy is mounting: of the 13.7 trillion rupees the government expects in revenue in the coming year, over a third of it, or 5.1 trillion rupees, will go on interest payments. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693625-despite-benign-economic-conditions-india-faces-tricky-budget-decisions-leap/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Gotham on Thames + +Many Britons think London too big, but it is really too small + +Feb 27th 2016 | From the print edition + + + +LONDON may be Europe’s commercial capital, but not all Britons are thrilled about that. In a poll conducted in 2014, two-thirds of non-Londoners reckoned that London had a positive impact on the British economy as a whole, but fewer than a third thought London’s strength was good for their city. London lures skilled workers and productive companies away from other parts of Britain. It also lures workers and firms from across Europe—something that makes many Britons, both in London and beyond, bristle. Indeed, London’s mop-topped mayor, Boris Johnson, this week joined the campaign to persuade Britons to withdraw from the European Union. + +London dominates Britain, accounting for 23% of its population and about a third of its economic output. The city grew to enormous size in the 19th and early-20th century, when it served as the political and economic hub of a global empire. The post-war decline in its population, a result both of the loss of empire and of policies intended to curb its growth, ended in the 1980s, when the globalisation of finance rejuvenated the city’s main industry. Greater London is the fifth-largest metropolitan economy in the world, according to the Brookings Institution, a think-tank. It is the EU’s largest city, by both population and output. + +Yet London should arguably be bigger than it is. It is Europe’s most important financial centre, and one of its biggest hubs for information industries and professional services—the European analogue to New York city. But London accounts for just 4.5% of the EU’s output, after adjusting for variation in the cost of living, and just 2.9% of its population, whereas New York accounts for 8.1% of America’s GDP and 6.3% of its population (see chart). Were European integration ever to yield something like a United States of Europe (and Britain ever to be part of such an enterprise), London would probably swell in size and importance. + +Why should that be the case? Economists have touted the benefits of cities since 1826, when a German one named Johann Heinrich von Thünen tried to explain why farmers gather in villages rather than living by their fields. Paul Krugman, in a paper published in 1991, homed in on the role of “increasing returns to scale” in driving the growth of cities. Because it is expensive to move people and goods, customers want to be where producers are and vice versa. As cities grow, increasing returns kick in: the more people who live in a particular place, the more attractive that place becomes to others. Mr Krugman focused on clustering in manufacturing. Two trading regions with a slight imbalance in population would naturally evolve into a developed core and an underpopulated periphery, he argued. In the paper, which the Nobel committee cited when awarding him the prize for economics, Mr Krugman pointed as an example to Europe, where industrial activity is concentrated in the north-west. + +Manufacturing no longer drives urbanisation in the rich world. In 2009 Edward Glaeser and Joshua Gottlieb of Harvard University surveyed recent research in order to distil the nature and causes of the “wealth of cities”. Although manufacturing firms have grown less likely to concentrate together in dense areas, thanks to the falling cost and hassle of shipping, firms in knowledge-based industries like technology and finance have become more prone to clustering. In cities with lots of skilled workers, productivity tends to rise with population density. The authors reckon that it is now the advantage of associating with other clever people, and the intellectual stimulation and exchange that results, that gives the biggest cities their magnetism. + +City sticker + +Congestion slows cities’ breakneck growth: housing and transport infrastructure seldom keep pace with demand. As a result, rather than a single metropolitan goliath, economies tend to develop a series of cities distributed by size according to “Zipf’s law” (named after George Zipf, an American linguist). The largest city tends to be twice the size of the second-largest, three times the size of the third-largest, and so on. American cities roughly follow this pattern. In the less-integrated EU, however, there is instead a jumble of big cities and a dearth of medium-sized ones. + +Deeper integration would push Europe toward a more American distribution. London would probably be the main beneficiary, given its particular strengths. Europe’s financial markets remain highly fragmented. Its stockmarkets are about half the size of America’s, despite the similar size of the two economies; European corporate-bond markets are about a third of the size. Few Italian firms, for instance, turn to their country’s relatively small equity or bond markets for funding. Instead, they simply borrow from Italian banks, which tend to have their headquarters in Milan. The EU is currently trying to rectify that by making it easier to borrow, lend and invest across its internal borders, in the hope of reducing funding costs for European firms. If such efforts bear fruit and Britain remains a part of the union, firms based in London would help more foreign companies issue shares or bonds there, at the expense of other European financial centres. Easing the cross-border provision of services, another thing on the EU’s long-term agenda, would likewise prove a boon for London. + +That prospect would naturally discomfit continentals. Just as New York rose head and shoulders above Philadelphia and Boston as the American economy grew and integrated, Paris, Frankfurt and Milan could all expect to cede ground to London in a close-knit EU. But London’s boosters might also blanch at the growth deeper integration might bring. It would mean more building, for starters. Greater London added 23,000 new housing units in the year to September, less than a third of the new units approved in New York last year. Were London to follow the example of New York, its GDP and population could eventually eclipse that of the rest of Britain, lengthening the political and cultural shadows cast across the rest of the country. Mr Johnson is angling for a promotion to prime minister; ironically, a vote to remain could make his current job one of the most desirable in Europe. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693610-many-britons-think-london-too-big-it-really-too-small-gotham-thames/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Correction:“Chop, chop”, January 30th + +Feb 27th 2016 | From the print edition + +Correction: In a recent article on the restructuring of big banks (“Chop, chop”, January 30th), we said Barclays planned to “shut up shop” in Asia. In fact, it is only closing its share-trading business there. Sorry. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693612-correctionchop-chop-january-30th/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Cryptography: Taking a bite at the Apple + +Cancer: A run a day keeps the tumour at bay + +Trachoma: Now is the time to say “goodbye” + +Sexual reproduction: Plucking rubies from the rubbish + +Cuckoldry and song: Fidelio + + + + + +Articles Sections Next + +Cryptography + +Taking a bite at the Apple + +The FBI’s legal battle with the maker of iPhones is an escalation of a long-simmering conflict about encryption and security + +Feb 27th 2016 | From the print edition + + + +“WE FEEL we must speak up in the face of what we see as an overreach by the US government.” With those words Tim Cook, head of Apple, the world’s biggest information-technology (IT) company, explained on February 16th why he felt his firm should refuse to comply with an FBI request to break into an iPhone used by Syed Farook, a dead terrorist. Farook and his wife Tashfeen Malik, who were sympathisers with Islamic State, shot and killed 14 people in California in December, before both were themselves killed by police. The FBI’s request, Mr Cook said, was “chilling”. + +Ever since 2013, when Edward Snowden’s leaks pushed privacy and data security into the public eye, America’s IT firms have been locked in battle with their own government. The issue at stake is as old as mass communication: how much power should the authorities have to subvert the means citizens and companies use to keep their private business private? + +For Mr Cook to choose the Farook case as the line he will not cross seems, on the face of things, baffling. The phone is government property (Farook was a public employee). The FBI wants help unlocking it because it may contain information on the motives or contacts of a dead terrorist. What could be more reasonable? But for Apple, and those security advocates who think the firm is right to defy the government, it is not reasonable at all. Far from being a one-off, they suspect the FBI’s case has been chosen carefully, in order to set a legal precedent that would let policemen and spies break into computers much more easily—and would do so in a way that undermines everyone’s security. + +Cryptoporticus + +The files on Farook’s phone, as on all iPhones, are encrypted. Unless the correct code is entered to unlock the phone, they are meaningless gibberish. By itself such a code provides little security. It is, by default, a mere four digits long, which makes it easy to memorise but means there are only 10,000 possible combinations. This makes it simple to try every combination until by chance the right one is hit, a process called “brute-forcing”. + +Other features, though, are designed to make brute-forcing harder. After six wrong guesses a user has to wait a minute before trying a seventh. That delay rises rapidly to an hour. On average, therefore, brute-forcing a four-digit iPhone passcode will take 5,000 hours—nearly seven months. Yet even that might be a surmountable obstacle, were it not for the fact that iPhones can also be set to wipe themselves clean after ten failed attempts to log in. + +Crucially, both restrictions—the time between attempts, and the wipe after ten failed tries—can, unlike the encryption itself, be circumvented. That is because they are enforced by the phone’s operating system, iOS, and operating systems can be changed. Apple does so regularly, issuing updates that add features and fix bugs. The FBI is, in essence, asking for just such an update, bespoke to the phone in question, that would remove the extra security features so that they can brute-force it quickly. + +In theory the bureau could write such an update itself. But it could not use it without Apple’s help because, precisely to stop such attacks, iPhones will accept an update only if they can be convinced, via a special, cryptographically signed certificate, that it comes from Apple. Only Apple possesses the long, randomly generated number used as the key to that process. + +The FBI has insisted its request is a one-off, and that once the software has done its job Apple can delete it. But many security experts are sceptical: they do not believe that looking inside Farook’s phone is the bureau’s only motive. “They almost certainly won’t find anything of interest on the phone,” opines Nicholas Weaver, a computer-security researcher at the University of California, Berkeley. He points out that Farook and his wife took the trouble to destroy two other phones and a laptop, while leaving the iPhone—which belonged to Farook’s employer—intact. (On the other hand, Farook did disable the phone’s online backup feature, data from which the FBI would have access to—a few weeks before his rampage.) + +Dr Weaver and people like him think the FBI has pushed the case specifically because it is hard, from a public-relations point of view, for Apple to be seen to be refusing to co-operate. They worry that if Apple agrees to build such a system once, it will find similar requests impossible to refuse in future—an argument that was bolstered when it emerged that the Justice Department was demanding Apple’s help in at least nine similar cases (in seven of those, the firm is resisting). Some fret that the FBI might even require the firm to start sending subverted code to specific suspects over the air, using the technology it employs to distribute legitimate updates. + +Viewed narrowly, that might be no bad thing. The FBI has argued many times that encryption can thwart legitimate investigations, leaving vital clues undiscovered. But security researchers point out that what works for the good guys works for the bad guys, too. If a subverted operating system managed to escape into the “wild” even once, then the security of every iPhone would be put at risk. The trade-off, says Kenneth White, a director of the Open Crypto Audit Project, an American charity, is not security versus privacy, but security for everyone versus the police’s ability to investigate specific crimes. And the risk of a leak would rise with every extra person who had access to the nobbled code: defence lawyers demanding to see it; court-appointed experts given the job of checking it works as intended; and so on. + +A second argument against collaboration points out that Apple has governments besides America’s that it must answer to. Deliberately compromising its security for the Americans, says Mr White, will encourage other countries to make similar, perhaps even broader, demands for access. Having conceded the point once, Apple will find it hard to resist in future. In countries less concerned with civil liberties and the rule of law, that could have serious consequences. + +Key decisions + +All these arguments are set to be rehearsed when Apple and the FBI meet in court, on March 22nd. But however the decision goes, it is unlikely to be the last word. Most observers expect appeals to carry on all the way to the Supreme Court. In the meantime IT firms, Apple included, are taking steps to lock themselves out of their own customers’ devices, deliberately making it harder to fulfil official requests for access. + +New versions of the iPhone feature something called the Secure Enclave. This is a separate computer within the phone, whose job is to police access to the rest of the device. Cracking it would require an extra piece of customised software aimed at neutering the Enclave itself. That is doable, for Apple has retained the ability to alter the Enclave so that it can issue updates and fix bugs. But things need not stay this way. The firm has pondered removing its ability to modify the Enclave, which would frustrate official requests for access. + +Even then, a determined policeman has options. It is possible, with expensive equipment and a good deal of skill, to recover cryptographic keys from hardware by poking around physically in the transistors and wiring of the chip itself. Decapping, as this process is known (the first step is to remove the chip’s protective plastic cap) is the stuff of intelligence agencies and a few dedicated laboratories, and carries a risk of destroying the chip for no gain. But, if access were thought crucial, and there were no other options, it is possible to do it. + +Even so, ensuring that phones themselves can be unlocked will not solve all of the authorities’ problems. There are plenty of encrypted messaging apps available for smartphones, many written outside the United States and thus beyond the reach of its government. The most advanced feature a technique called forward secrecy, which uses disposable, one-time encryption keys to ensure that old messages stay scrambled even if those looking manage to get hold of the conversers’ permanent keys. (One such app, called Telegram, which was developed by Pavel Durov, a nomadic Russian, announced on February 24th that it had reached 100m users.) + +All this may sound like an arms race. It is. Silicon Valley has roots in the counterculture of the 1960s, and a potent streak of civil libertarianism. There is a sense there that Mr Snowden’s revelations proved the American government cannot be trusted not to abuse its powers of surveillance. And there are commercial factors, too. Apple has made privacy and security important selling points for its products. + +Cybersecurity types, meanwhile, feel aggrieved that policemen and politicians do not seem to grasp what they view as a fundamental point: weakening security for the police’s benefit inevitably weakens it for everyone. “They keep asking for a ‘Manhattan Project’ to figure this out,” says Mr White. “But that’s like asking for a Manhattan Project to figure out how to divide by zero.” (Attempting to dividing by zero is, by definition, a mathematical folly.) + +It will be left to the courts to decide the right approach in this particular case. But the fight between Apple and the FBI raises very big questions. To answer them will ultimately require the intervention of elected politicians. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21693564-fbis-legal-battle-maker-iphones-escalation/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Cancer + +A run a day keeps the tumour at bay + +Exercise protects against cancer. Researchers now understand why + +Feb 27th 2016 | From the print edition + + + +AMPLE evidence shows that exercising regularly reduces the risk of cancer. Similarly, those who have survived the disease are less likely to see it return if they engage in lots of physical activity after treatment. All this suggests that such activity triggers a reaction in the body which somehow thwarts cancer cells, but the details of the process have remained murky. Now, a team led by Pernille Hojman at Copenhagen University Hospital, in Denmark, has reported in Cell Metabolism that the key to the mystery is adrenalin. + +Dr Hojman began her work by verifying that exercise truly does have beneficial anti-tumour effects. She and her colleagues gave some of the mice in their laboratory activity wheels, which the animals could run around inside as much as they liked. Other mice, meanwhile, were given no opportunity to exercise beyond moving about inside their cages. The researchers then induced mice of both sorts to develop one of three types of cancer. Some, they injected with a substance called diethylnitrosamine, which causes liver cancer. Others, they injected below the skin with melanoma cells, which then set up shop where they had been injected. Others still had their tails inoculated with melanoma cells. In mice, previous experience has shown, this leads to melanomas forming in the lungs. + +The results were instructive. While all mice injected under the skin with melanoma cells developed that cancer, the tumours in animals which had had access to a running wheel were 61% smaller after six weeks than were those in mice that had been unable to exercise. A similar reduction in size (58%) pertained to lung tumours. And, of the mice injected with diethylnitrosamine, only 31% of those with wheels in their enclosures developed tumours at all—in contrast to a 75% tumour-development rate in mice lacking access to a wheel. + +To try to understand why exercise does this, Dr Hojman and her team put under a microscope some of the tumours they had induced. They found that those from well-exercised mice contained more immune cells than equivalent tumours from inactive animals. Specifically, the former had double the number of cytotoxic T-cells, which kill off body cells that are damaged, malfunctioning or infected with viruses. They also had five times more natural killer cells, a type that sounds the alarm and attracts other immune cells. + +In light of these discoveries Dr Hojman repeated the experiment, this time on mice that had been engineered to lack cytotoxic T-cells. Again, she found that mice with access to wheels had smaller tumours. This suggested that the natural killer cells, not the T-cells, were the responsible agents. A third experiment confirmed this. She sabotaged natural killer cells by giving mice an antibody that eliminated these cells while leaving the rest of the immune system intact. With the natural killer cells gone, the tumours of all the mice, regardless of whether or not they could run in a wheel, grew to the same size. + +Dr Hojman knew from past work that epinephrine, a hormone also commonly known as adrenalin, has the potential to mobilise natural killer cells. She knew, too, that this hormone’s levels in the blood rise during periods of physical exertion. That led her to wonder if it is epinephrine which is behind the cancer-thwarting effects of exercise. + +To find out, she ran a fourth experiment, in which mice induced to have cancer were injected either with epinephrine or with saline. The hormone performed well, reducing the growth of tumours by 61% in mice that had no access to a wheel. However, this was not as impressive as the reduction of 74% which the team saw in control mice that got regular exercise. There was, they concluded, something else involved. And they found it in the form of interleukin-6. + +Levels of this molecule also spike during exercise—and it, too, helps immune cells home in on tumours. When Dr Hojman and her colleagues exposed sedentary mice both to epinephrine and to interleukin-6, the rodents’ immune systems attacked the tumours in their bodies as effectively as if those animals had engaged in regular wheel-runs. + +Dr Hojman’s findings, then, suggest that epinephrine and interleukin-6 could be used as anti-tumour drugs. She is not proposing that they should be a substitute for exercise in those who are merely lazy—not least because exercise brings benefits beyond curbing oncogenesis. But people who are too old or too ill to be active might thus gain exercise’s anticancer benefits without the need to get sweaty. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21693419-active-life-protects-against-cancer-researchers-now-understand-why-run-day/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trachoma + +Now is the time to say “goodbye” + +A disease that has robbed 1m people of their sight is under systematic attack + +Feb 27th 2016 | From the print edition + + + +TRICHIASIS, the last stage of an infection called trachoma, rarely hits the headlines. That is because it does not kill. It does, however, blind. More than 2m people suffer, half of whom have lost their vision. The condition, caused by certain strains of Chlamydia trachomatis, a bacterium, makes the eyelid turn inward. That causes the sufferer’s eyelashes to scratch his cornea when he blinks. People blink 15-20 times a minute, so the pain is relentless, and eventually the scarring caused by the scratching results in sightlessness. + +Trachoma is preventable (by regular face washing and general cleanliness) and treatable (by an antibiotic called Zithromax and by surgery to correct deformed eyelids). But, until recently, where such efforts should be concentrated was not clear. This changed with the publication earlier this month, by the Global Trachoma Mapping Project, of an atlas of risk (see above). + +The survey which created this atlas, led by Sightsavers, a British charity, examined 2.6m people over three years to see whether they had the disease. That sample was drawn from a population of 224m in 29 countries reckoned at risk. The project’s methodology was designed to be simple and reliable. Out went pens and paper. In came smartphones. Data could thus not be lost to the rain, and their quality could be checked continuously. Nor was there any doubt about where they were collected from, since the phones were tracked by the Global Positioning System. + +The atlas’s publication brings encouraging news. Malawi, Nigeria, Tanzania and Uganda had much lower levels of trachoma than expected. Laos and Cambodia, unsurveyed since the 1960s, turned out to be virtually free of it. And, for those places that are infected, the full force of antibiotic-distribution and face-washing education programmes can now be brought to bear. The World Health Organisation aspires to eliminate trachoma as a public-health risk by 2020, leaving only sporadic cases that local doctors can clear up. That sounds ambitious. But knowing where to concentrate fire certainly helps. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21693565-disease-has-robbed-1m-people-their-sight-under-systematic-attack-now/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sexual reproduction + +Plucking rubies from the rubbish + +Sex is not just an emotional mystery. Its very existence poses a deep question + +Feb 27th 2016 | From the print edition + + + +GUILT-FREE intercourse may, as Philip Larkin wrote, have begun in 1963, but sexual reproduction has been around a good deal longer than that. Single-celled organisms began exchanging and mixing up genetic information in ways modern biologists recognise as rudimentary forms of sex about two billion years ago. Yet the question of why sex exists at all remains troublesome. A creature which reproduces asexually passes on all of its genes to each of its progeny. One that mates with another, by contrast, passes on only half of them. On the face of things that is a huge selective disadvantage. There must therefore, evolutionary biologists believe, be equally huge compensating benefits. + +Two ideas exist about what these might be. One is that the constantly changing genetic variety sex creates stops parasites and pathogens evolving stable techniques for exploiting a host species. This is the “Red Queen” hypothesis, an allusion to a character in “Through the Looking-Glass” who had to run as fast as she could to stay in the same place. The other idea is that the continual mixing of genes from generation to generation separates good and bad mutations, permitting the bad ones to be purged by natural selection without taking the good ones along for the ride. This process was described by Joel Peck, one of its progenitors, as plucking rubies from rubbish. + +“Plucking rubies” and the “Red Queen” are not mutually exclusive. Both could be true. But, while the queen has experimental evidence to back her up, rubies have had little such validation. Until now. For Michael Desai of Harvard University believes he has demonstrated such plucking experimentally in brewer’s yeast. This is a well-understood experimental organism and one ideal for Dr Desai’s purpose because it can reproduce both sexually and asexually. Studying the switch between the two modes, he hoped, might illuminate the purging process. And, as he and his team write in Nature, it has. + +Despite having two sexes, known as mating-types a and alpha, yeast’s default mode of reproduction is asexual, so Dr Desai’s first task was to work out a way to turn his yeast cells on to sex, as it were. He did this by adding to their DNA genes for resistance to two antibiotics, hygromycin and G418, and arranging for this resistance to be turned on only when the gene for mating was also active. Adding the antibiotics to the yeast’s growth medium meant only sexually active yeast cells could survive. + +This done, he and his team set up 24 lines of this modified strain (12 of mating-type a and 12 of alpha) and let them grow for six months, a period that corresponds to about 1,000 yeast generations. Six lines of each mating type were forced to undergo sexual reproduction every 90 generations, by mixing the sexes together and adding the antibiotics. Others were left to carry on cloning themselves. At these 90-generation break points the researchers also sampled each line to look for any genetic mutations that had arisen in the intervening period. Such mutations are the stuff of evolution, and Dr Desai hoped they might tell the story of why, in an evolutionary sense, sex works. + +They did. The researchers found, as predicted, that when a beneficial mutation appeared in a few of the asexually reproducing cells, it would spread only if its positive effects outweighed the negative effects of any deleterious mutations that appeared in the same cells. Even if a good mutation prospered, it did so slowly, as any bad mutations associated with it came along for the ride when the genome it was in passed from one generation to the next. + +In the sexual yeast population, however, good and bad mutations often went their separate ways when the parent cell’s genome was chopped up and mixed around during reproduction. This permitted different combinations of good and bad mutations to pass to the genomes of different offspring of the same parent cells. That made it easier, in an evolutionary sorting of wheat from chaff, for the good mutations to spread, even if they first appeared in bad company. So, as evolutionary theory predicts, over the course of the experiment genomes containing deleterious mutations disappeared and positive mutations accumulated in the genomes of cells that remained. + +The crucial test, though, came at the end of the experiment, when Dr Desai compared the asexual to the sexual strains. In every case, the descendants of sexually reproducing yeast cells bested their asexual rivals in the competition for food and resources. His experiments thus confirm that the ruby hypothesis works—at least, in a laboratory. That puts it on an equal footing with the Red Queen. What goes on in the wild, though, has yet to be determined. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21693542-it-not-just-emotional-mystery-its-very-existence-poses-deep-question-sex/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cuckoldry and song + +Fidelio + +Birds that sing together, cling together + +Feb 27th 2016 | From the print edition + +Sing up, dear + +THE lovey-dovey monogamy which the untutored eye may perceive in pairs of songbirds, raising their young together in nests constructed by joint endeavour, has long been exposed by zoologists as a fantasy. Even by the adulterous standards of the ornithological world, though, the red-backed fairy-wren, an Australian bird, is a champion. According to a study just published in Biology Letters by Daniel Baldassarre of Cornell University and his colleagues, almost half of fairy-wren nestlings are not fathered by the male that is helping to feed them, and 60% of nests contain at least one such chick. For male fairy-wrens, then, trying to guarantee paternity is a continual struggle, and Dr Baldassarre and his team wondered which strategies worked best. + +Broadly, a male fairy-wren has two options. He can try to discourage interlopers by beating them up, or he can woo his mate to encourage her not to stray. He does this by duetting with her. That both keeps her attention and may suggest to other males that she is, indeed, loyal. + +To see which was the better approach Dr Baldassarre and his team ran some experiments in Queensland. They challenged male fairy-wrens with dummy interlopers who were given voice by recorded songs. They then compared the males’ typical responses to these artificial encounters with the paternities of actual nestlings subsequently raised, as estimated by comparing the youngsters’ DNA with that of their purported fathers. + +In practice, all challenged males responded both by attacking the stuffed rival and by duetting with their mates. They did so, however, with varying levels of enthusiasm for each approach. + +Altogether, in the course of several slightly different experiments, the researchers looked at the adults and offspring in 51 territories. Their results were intriguing. A male’s level of aggression towards the dummy made no perceptible difference to his chance, subsequently measured, of being a cuckold. His level of duetting, by contrast, made a big one. The best duetters had almost no offspring born of adultery inflicted on them. + +Aggression, presumably, brings other advantages, otherwise it is hard to see why it happens. Probably, it serves to protect a territory (and thus its food resources) from predatory neighbours. In the matter of sexual fidelity, though, it seems to be useless. For female fairy-wrens, it is rather a mellifluous mate that is the key to domestic harmony and a loyal partnership. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21693567-birds-sing-together-cling-together-fidelio/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Hieronymus Bosch: Painter of our greatest fears + +British newspapers: Per ardua ad Astor + +Return to nature: Animal instinct + +Free-diving: Blue hole, black hole + +Family ties: In knots + +Johnson: Je suis circonflexe + + + + + +Articles Sections Next + +Hieronymus Bosch + +Painter of our greatest fears + +A major new exhibition shows Hieronymus Bosch to be startlingly modern + +Feb 27th 2016 | From the print edition + +Heavenly bodies + +FOR centuries the received wisdom was that the Renaissance started in Italy. Ever since Giorgio Vasari, one of the first art historians, wrote in 1550 of a new naturalness in painting—as opposed to medieval mannerism—the idea of the Renaissance has been linked with frescoes in Florence or the sinuous forms painted on the ceiling of the Sistine Chapel. Now, an important show of work by Hieronymus Bosch, one of the finest Dutch painters, in his home town of ’s-Hertogenbosch, challenges that view. It shows how an artist usually associated with the medieval was using a naturalist style at least 50 years before Vasari. + +The exhibition, which marks the 500th anniversary of Bosch’s death, has been over a decade in the making, and is the culmination of six years of work by the Bosch Research and Conservation Project, in which experts analysed the paintings of Bosch in piercing detail. It is a remarkable achievement. Of the 24 paintings known to be by Bosch, 17 are on display, while 19 of his drawings are also shown, making it the largest exhibition of his work to date. Managing to get all of these paintings together, often from large and possessive museums in Madrid, New York and Venice, is a coup for a small, regional gallery which owns no Bosch pictures of its own. + +Bosch’s work has inspired many different interpretations: from the idea that he belonged to a sexual sect to the notion that his paintings, often full of fantastical creatures, could have been created only while on psychedelic drugs. This show is blissfully free of heavy-handed interpretation. Instead it presents his work alongside documents (bibles, books of hours and missals) which help put his paintings in context. But the commentary is minimal. The work is allowed to speak for itself. + +The result is outstanding. Bosch came from a long line of artists. His grandfather was a painter, as was his father and three of his uncles. Painting was their way of understanding the world. Bosch’s work is deeply religious: with a few exceptions, his pictures depict moments from the Bible and the lives of the saints, or scenes of heaven, hell and the bits between. Many were commissioned by a local church, St John’s, where in 1487-88 he became a “sworn brother” of the Brotherhood of Our Lady, a religious fraternity. + +The energy of his devotion can be felt in the scathing social commentary of “The Haywain”, where crowds of people, including nuns, grasp at a haystack which is being led to hell by creatures that are half-fish and half-man. Or it can be glimpsed in “The Ascent of the Blessed”, where angels guide people from purgatory up to heaven—their arms outstretched—and jubilantly push these souls upwards (see picture). + +But this exhibition also shows how his work is rooted in the everyday. His drawings, with all their vitality and observed detail, have a special sharpness. His religious works, too, are grounded in reality. In “The Last Judgment” the instruments of torture are crafted out of funnels, barrels, jugs and bells. In “Ecce Homo”, which depicts the moment Christ is condemned to death, in the background a man and a woman peer over a bridge, oblivious to what is going on near them. + +This mix of the extraordinary and the mundane appears even more original when comparing Bosch’s work with that by members of his workshop. This exhibition often invites such comparisons. Bosch’s luminous “The Adoration of the Magi”, on loan from the Metropolitan Museum in New York, hangs next to a work of the same name by one of his followers. Bosch’s painting is full of life and details: daisies sprouting out of the base of a wall and two men warming their hands over a fire in the background. By contrast, although his follower’s work is a later painting it seems stiffly medieval. No such details of life exist in it, while its perspective is skewed. So too with one of the workshop editions of “Ecce Homo”: Bosch presents a Christ who is bowed and lacerated with whippings and dripping with blood, whereas his follower presents Christ standing upright, seemingly unhurt. + +Earthly delights + +Not all of Bosch’s works are on display. “The Garden of Earthly Delights”, perhaps his best-known painting, still hangs in the Prado in Madrid. Two other works from the Prado were withdrawn at the last minute, after the Bosch Research and Conservation Project found they were likely to be by one of his followers instead. This is a shame. But the experience of seeing so many of Bosch’s paintings and drawings together, and in the town where they were first created, mostly makes up for these losses. There are images that run throughout the work: owls, long associated with evil, appear often. + +What is remarkable is how modern Bosch’s work feels. He was “on the brink of the new time,” says Charles de Mooij, the director of the Het Noordbrabants Museum. This feels too modest. Bosch’s scenes of hell and damnation may not have the same spiritual impact on a largely secular society. But there is a sense of urgency to his paintings that demands attention, and which feels distinctly new. His figures, whether saints or mischievous sinners, are depicted with a naturalness which makes them stand apart from those of other painters of his time. This exhibition suggests that half a millennium ago, in a small town once considered an artistic backwater, the Renaissance began with Bosch. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21693549-major-new-exhibition-shows-hieronymus-bosch-be-startlingly-modern-painter-our/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +British newspapers + +Per ardua ad Astor + +The lasting influence of Britain’s great liberal newspaper editor + +Feb 27th 2016 | From the print edition + +Setting the liberal agenda + +David Astor. By Jeremy Lewis. Jonathan Cape; 416 pages; £25. + +DAVID ASTOR, who edited the Observer from 1948 until 1975 (and whose family owned it), belonged to a time when newspapers were Britain’s principal source of information. For well over 20 years, Astor’s Observer was the voice of Britain’s liberal consensus. It campaigned persistently and successfully against the death penalty, theatre censorship and racial discrimination; in favour of the decolonisation of Africa and of tolerance towards homosexuality. The laws that were passed subsequently freed people to make social and moral decisions for themselves. Jeremy Lewis, in a lively, gossipy and affectionate biography, asserts that Astor was “one of the outstanding editors of the last century”, and it is hard to disagree. + +Although Astor never learned to type, he was a good copy editor and headline writer. He hired writers he admired, even if they had not dutifully served the usual three-year journalistic apprenticeship in the provinces. Anthony Sampson, one of his most distinguished editorial acquisitions, thought that the paper was more like a family charity, or an eccentric college, than a commercial newspaper. + +One significant difference between Astor and most Fleet Street editors was his inherited wealth. He was brought up at Cliveden, a great house on the Thames: “a shallow, vapid, cotton-wool life”, he once said, dominated by his obtrusive and overbearing American mother Nancy, Britain’s first female member of parliament. It is no surprise that he sought consolation in Freudian psychoanalysis, in which he never lost his faith. + +His father, Waldorf, (whose own father had bought the paper from Lord Northcliffe in 1911) suggested it might provide David with a suitable occupation. The young man not long out of Eton and Oxford found the idea wearisome, but the outbreak of the second world war piqued his interest. While still on the staff of Lord Mountbatten’s Combined Operations, he persuaded a reluctant Observer editor to run a weekly series that contemplated life after the war. In 1945 he became its foreign editor, nurturing temperamental central European intellectuals such as Arthur Koestler and Isaac Deutscher. + +David Astor’s reputation was made by his violent opposition to the Suez invasion in 1956. The Observer damned it as gangsterism. Although advertising suffered, circulation did not. His paper fought the cold war, was routinely Atlanticist and favoured a federal Europe. But it was the campaigns that defined it. The other crucial ingredient was writing that burnished a golden age of Sunday journalism. Kenneth Tynan’s theatre reviews, the reportorial brilliance of Patrick O’Donovan and Michael Davie, Jane Bown’s photographs, Hugh McIlvanney’s match reports and Terry Kilmartin’s literary pages set standards few journalists could match. + +The problem was money. Waldorf Astor had set up a charitable trust to protect the paper from disagreeable predators, with statutes that prevented it from making a profit or borrowing money. The only legitimate source of new capital was the family, and David Astor himself ploughed at least £1.25m (in late 1960s money) into the paper and leant on his siblings for more. The money was needed to compete with the Sunday Times, but not even the Astors had enough. + +Besides, Astor was not naturally competitive. When the Sunday Times published a magazine, he declined to follow suit, until his commercial department forced him to. Shortage of capital meant the Observer could not rival the size and range of the Sunday Times, and, as an editor, he had little sympathy with the investigative journalism that became the powerful speciality of its rival. + +He was wrong; by the 1970s, the battle for supremacy on Sundays was over. When Astor retired in 1975, Sir Harold Evans, the celebrated editor of the Sunday Times, declared that he no longer thought of the Observer as a rival. The Sunday Times published some memorable journalism; none more so than its determination to win compensation for the victims of thalidomide. But the Observer’s campaigns for social liberalism have profoundly affected the way Britain lives and thinks. So who was the more influential editor? It was David Astor, surely. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21693548-lasting-influence-britains-great-liberal-newspaper-editor-ardua-ad-astor/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Return to nature + +Animal instinct + +How writing about wild animals morphed into trying to become an animal + +Feb 27th 2016 | From the print edition + + + +Being a Beast. By Charles Foster. Profile; 218 pages; £14.99. To be published in America by Metropolitan in June, $28. + +STRIDING around describing plants and animals, often in flowery prose from behind a desk or a camera lens, seems rather old-fashioned. In “Being a Beast” Charles Foster takes a more modern approach, getting down to the animal’s level to see what it is really like to be a badger, an otter, a fox, a red deer and a swift. + +It is an extreme proposition. Mr Foster, a writer and barrister who qualified as a vet and has a PhD in medical law and ethics from Cambridge, doesn’t just investigate the taxonomical differences with humans; he attempts to overcome them. This means eating rubbish from bin bags as an urban fox would do, living in a sett as a badger, cowering naked on a moor as a red deer and launching himself fully clothed into a river pretending to be an otter. + +Mr Foster is a nature writer, but not one you would recognise. There is plenty of shit and blood and dirt and very little description of the beauty of the animals. Because who needs to read that? Readers know that a badger is handsome. What they do not know is what worms taste like. Since you ask, it’s like wine apparently: once you get past the slime, each worm has its own individual terroir. + +Mr Foster shapeshifts with the book. In the badger chapter he is sensuous yet ruthless. As an otter he has ADHD. As a fox he is a canine kind of street smart. And as a swift? Suddenly transcendent. The book contains some very funny moments, usually involving other humans who are confused as to why a man is sleeping under a shed, eating spiders or growling at a dog. + +But to dismiss Mr Foster as an eccentric would be a mistake. In each chapter the reader learns a lot about the animals involved. What does it feel like to sleep by a road, hunt voles or be hunted by hounds? The author hones senses long neglected. As a badger he maps the dark wood by smells alone, as an otter he sees the river through a thousand tiny bubbles, and as a fox he slinks into a new city of London defined by dark corners and rubbish dumps. + +The idea that people should stop managing the landscape and let the wild back into their tired lives has gained so much in popularity it now goes by the buzzword “rewilding” in conservation circles. Mr Foster is the real thing, going truly feral and in the process discovering a whole new world. It is not a midlife crisis so much as a lifelong passion. + +Yet no matter how hard he tries, poor Charles Foster is such a very human homo sapiens. He cannot escape being a middle-aged man. It is like watching a geek with the cool kids at a party, trying to assume the character of a cunning fox or a confident badger. He has moments, like when he discovers the joy of chasing a cat or earthworms emerging after the rain. But in the end, he is too clumsy, too bipedal—and altogether too intellectual. + +A streak of eastern mysticism runs through Mr Foster’s book. In the end he listens to its call and lets rip. This is the moment when he becomes a swift, allowing his writing and his thoughts to fly and “slash the veil”, as he calls it. He believes that the closest he can get to being a swift is to understand the finer details of the planet he shares with the bird: “The velvet flow of a caterpillar’s legs and the grunt of a crocus as it noses out of the earth.” + +Finally, the author accepts that he is human, which is all about being curious and pushing boundaries. This idea is not new. Attempting to connect to animals and even become them has been tested over generations, not least as shamans and through stories, such as “Homeward Bound”. What is new is the modern world that humans have created full of cars and houses and computers, where “sensitivity is impossible”. It would be all too easy to mock the author’s commitment to recognising his atavistic abilities and releasing his inner animal. But curiosity prevails. “Being a Beast” wastes no time telling you how to identify nature or become a better person. It encourages you to get down on your hands and knees and start sniffing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21693553-how-writing-about-wild-animals-morphed-trying-become-animal-animal-instinct/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free-diving + +Blue hole, black hole + +A story of hubris and obsession + +Feb 27th 2016 | From the print edition + +Ray of sunshine + +One Breath: Free-diving, Death and the Quest to Shatter Human Limits. By Adam Skolnick. Crown Archetype; 336 pages; $26. Corsair; £20. + +THE death of Nick Mevoli, an American freediver, on November 17th 2013, while competing at Dean’s Blue Hole—a 202-metre-deep funnel of darkness in the Bahamas—is a litany of “if onlys”. If only the 32-year-old from Brooklyn, tired and in pain, had not attempted a dive that day. If only, sensing trouble, he had turned back to the surface sooner. If only his team’s resuscitation efforts had succeeded. “One Breath”, Adam Skolnick’s dissection of an extreme sport and post-mortem of a dive gone wrong, becomes a morality play of hubris, imprudence and obsession. + +Free-diving, descending as deep as possible on a single breath, is a niche interest that is more dangerous than any sport other than base-jumping (leaping from a bridge or cliff wearing a wingsuit). Perils include punctured eardrums, embolisms, blackouts and “lung squeezes”. Diving at extreme depths brutalises the lungs, which at a depth of 30 metres compress to a quarter of their normal size. At worst, capillaries and pulmonary vessels rupture and a diver drowns in his own blood. + +It took Mevoli, who began his first formal course in free-diving in 2011, slightly more than a year to rocket from being a novice competitor to a record-holder, and that was part of the problem. “The biggest problem with freedivers now is they hurry. They go too deep too fast,” said Natalia Molchanova, possibly the world’s greatest freediver, who drowned last August off the coast of Spain. She was giving a private lesson when she made a dive for pleasure. Not being clipped to a line, she was swept away and never found. Even the best of the best are not immune. + +Mevoli grew up in a broken home with a neglectful, self-absorbed father who gave his son a life-insurance policy for his 18th birthday and made himself the beneficiary. Before his parents’ divorce, Mevoli would plunge into the backyard pool of his boyhood home in Florida, surface to check if the angry voices had subsided, and, if not, submerge again. + +In free-diving he found solace and self-worth. “Each dive”, Mr Skolnick writes, became “a referendum on his own value.” Mevoli-the-friend was caring and large-spirited. Mevoli-the-competitor was reckless—“cowboyish” a friend said—prone to tantrums, sulks and self-excoriation. “I really liked Nick,” a fellow diver observed. “But I didn’t like him as a competitor. He was exorcising demons from his past and using free-diving to do that.” + +It is a haunting tale. To the list of “if onlys” one should perhaps add one more: If only Nick Mevoli hadn’t measured his self-worth in metres. “Numbers infected my head like a virus,” he wrote in a blog post shortly before he died. “The need to achieve became an obsession.” And “obsessions”, he noted, “can kill.” + +At 20 metres, the body loses its buoyancy. Pressure builds, the lungs shrink, gravity exerts its pull. The diver goes into free fall, carried ever deeper away from light and into blackness. One imagines Nick Mevoli, young and beautiful—an undersea Icarus falling from the sun, away from friends, family and life. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21693552-story-hubris-and-obsession-blue-hole-black-hole/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Family ties + +In knots + +A tender novel about an adult daughter’s longing for her mother + +Feb 27th 2016 | From the print edition + + + +My Name Is Lucy Barton. By Elizabeth Strout. Random House; 193 pages; $26. Viking; £12.99. + +“DON’T ever worry about story,” a novelist assures her writing students in “My Name Is Lucy Barton”, Elizabeth Strout’s new novel. “You have only one.” Every writer may indeed be telling the same story over and over, with slight variations. So it is for Ms Strout, who turns every book (including her Pulitzer-prize-winning “Olive Kitteridge”) into a kind of love story. These are not romances, mind you, but yarns about the primal, unwieldy love of family—those unchosen mothers and hapless brothers—and the bonds that can sometimes feel like manacles. + +Ms Strout’s latest book unfurls in retrospect. Lucy Barton, a writer in New York, is recalling a time in the 1980s when a mysterious illness forced her to stay in hospital for nearly nine weeks, away from her husband and young daughters. Her solitude left her aching with loneliness, eager for visits from her doctor (who “wore his sadness with such loveliness”) and nurses, who were too busy to linger. So it is with relief that she wakes up one day to discover her mother at the foot of her bed. “Hi, Wizzle,” her mother says shyly. It has been years since they last saw each other, after a falling out over Lucy’s husband. But suddenly the recognition of her mother using her pet name makes Lucy “feel warm and liquid-filled, as though all my tension had been a solid thing and now was not.” + +This sweet but odd visit by her mother dredges up more complicated memories of Lucy’s impoverished and isolated childhood in rural Illinois, with a father who was never quite right after what he saw in the second world war. Lucy managed to escape this deprivation, first through books and then through a scholarship to university, where she met her husband. After her parents ignore her wedding and then barely acknowledge her daughters, her contact with them is reduced to awkward phone calls on holidays. Not even the thrum of the city can displace the ache of loneliness left by her youth. + +Yet these grievances quietly evaporate in the hospital. For Lucy, the sound of her mother’s voice nattering on with town gossip while she dozes in and out leaves her with an overwhelming feeling of comfort. “I thought: All I want is this.” + +Of course Lucy is alert to what makes her mother so frustrating, too. How is it that her mother never seems to ask her a single question? Or even pay her a compliment? But the older Lucy narrating this slim and compassionate book is too wise to fan the flames of these disappointments. She knows her mother loved her, albeit imperfectly—(“Because we all love imperfectly.”) And there are times in a grown woman’s life when there are few things more reassuring than a flawed mother’s love. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21693554-tender-novel-about-adult-daughters-longing-her-mother-knots/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +Je suis circonflexe + +Why a minor fiddling with French spelling causes such anguish + +Feb 27th 2016 | From the print edition + + + +SOMETIMES it really is the little things that count. France faces high unemployment, a divided political establishment and surging xenophobia. But the issue that has the French particularly outraged is an argument about language. + +Two decades ago the French Academy, a group of 40 greybeards charged with keeping the language pure, decided to reform French spelling. The government took its time with implementing the academy’s decisions. But, starting in the autumn, new school textbooks will at last comply. What has French social media in an uproar? The academy wants to simplify or regularise certain tricky spellings—allowing nénufar for nénuphar (water lily), and ditching a silent “i” in oignon, making it ognon (onion). But one change has symbolised all the others: maîtresse will become maitresse, and many other words will similarly lose the tricky little hat-shaped accent-mark that gives the online protest its name: #JeSuisCirconflexe. + +It should take something serious to make the French repurpose the hashtag used after the massacre in January 2015 of staff at Charlie Hebdo at the hands of jihadist murderers. But the French who have joined the protest might retort that for them, language is serious indeed: a typical criticism on Twitter read “simplification, glorification of mediocrity, sinking to the lowest common denominator”. + +The French take linguistic prowess as a proxy for intellectual agility of all kinds. For many “prowess” is a mastery of the complexity (some of it quite pointless) of the written language. The academy was founded in 1635. Official French spelling, which largely reflected its Latin roots, has changed little. But like every other language, the spoken argot has gone on changing. This has left French with many silent letters. The tricky circumflex, which on many words does not change a vowel’s pronunciation, still had to be there. Top French students prize themselves on taking down dictée in much the same way their American counterparts compete in spelling bees. But plenty of ordinary people hate spelling, just as in English. + +Much of the analysis outside France on the circumflex case has made two related observations. Pointlessly difficult spelling isn’t actually pointless: it shows who has had a fine education. Those howling about mediocrity, under this theory, are really afraid for their expensively acquired status. The second theory is that it is France itself—always closely identified with its language—that is on the decline, and that the need to simplify the spelling just shows that the country isn’t as vigorous as it used to be. + +Both these analyses are working too hard to put France’s peculiarities on the psychoanalyst’s couch. In fact, a glance across the Rhine shows that the circumflex dead-enders are in good company—with their German neighbours. In the 1990s a government-sponsored commission proposed a few sensible reforms, including simplifying a few spellings, much as France is now doing, and removing the distinctive German “sharp S” (ß) from many words with a short vowel sound. + +The result was an almighty pushback. Intellectuals such as Günter Grass, a Nobel-prize-winning novelist who, before his death last April, had been a kind of steward of Germany’s post-war moral self, rejected the reform ostentatiously. Springer, a huge publishing house, and the Frankfurter Allgemeine Zeitung, one of Germany’s main national broadsheets, said they would refuse to observe the reforms. One of the 16 federal states went as far as to hold a referendum against the spelling changes—which passed. (The reforms were slightly modified, and the holdouts gave in in the end.) + +All this took place in a Germany that was much more at ease with itself than France is today. People just have an irrational attachment to spelling. What they associate with hard but successful work as a child—learning to spell—is more precious than the pointy-headed reformers ever realise. The best analogy outside spelling might be the demoting of Pluto from its status as a planet. Many of those who had hardly bothered to think about the icy rock-ball at the far edge of the solar system suddenly found a childhood memory tarnished, mnemonic devices now featuring a superfluous P at the end. Humans, it seems, are natural conservatives: even if Pluto really isn’t a planet, even if the circumflex really is useless most of the time, it is not about the thing itself. Human beings don’t like going back and rewriting old memories. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21693551-why-minor-fiddling-french-spelling-causes-such-anguish-je-suis-circonflexe/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Harper Lee and Umberto Eco: The finger of fame + + + + + +Articles Sections Next + +Harper Lee and Umberto Eco + +The finger of fame + +Harper Lee and Umberto Eco, two unexpected literary celebrities, both died on February 19th, aged 89 and 84 + +Feb 27th 2016 | From the print edition + + + +SHE was a plain, chubby, chain-smoking southern girl, living in a cold-water flat in New York and working as an airline-reservation clerk. He was a paunchy, balding, chain-smoking teacher of semiotics, the study of signs, codes and meanings in language, at various Italian universities. Both enjoyed producing small articles and pastiches, she for the college magazine, he for avant-garde publications, and it was only challenges from friends that induced either to embark on a novel. His first, “The Name of the Rose”, published in 1980, sold 10m copies worldwide. Her first, “To Kill a Mockingbird” (1960), sold more than 40m, and was proclaimed by some to be the best American novel of the 20th century. Umberto Eco rode literary stardom like a plump surfer on a giant laughing wave. Harper Lee was drowned by it. + +“Mockingbird”, set in fictional Maycomb, Alabama, was a story of racial injustice seen through the clear but innocent eye of a small tomboy, Scout, whose father, Atticus Finch, was given the hopeless task of defending a black man accused of raping a white woman. On the eve of the civil-rights era the novel pricked America’s conscience, and reporters raced to photograph Miss Lee in her home town of Monroeville, Alabama, on the porch and in the courthouse, nervously smiling. The book was assumed to be her life in thin disguise. But in a rare interview in 1961 she said it was all fiction, nothing to do with her “dull” real childhood, and (unspoken but implied) would they please now go away. + +Mr Eco would have queried that wished-for divide between fact and fiction. It wasn’t as clear-cut as that. The urge to tell stories, weave myths and simply lie lay deep in the possibilities of human language. But if facts could become fables, fables could lead to facts, just as wild medieval tales of lost kingdoms had inspired Europe’s exploration of America. Besides, any novel pretended to be true, and a good “open” text would spur the reader to judge and interpret that truth for himself. “Mockingbird” and “The Name of the Rose” were both essentially whodunnits, and “Who done it?” Mr Eco said, was the fundamental question of all philosophy. + +His own journey through the labyrinth described an investigation by William of Baskerville and his sidekick, the novice Adso, into a series of gruesome murders in an unnamed abbey in the year 1327. He began with a pleasing idea, that a monk might be poisoned by reading a book, and took it from there, lovingly channelling the Middle Ages and pouring forth everything he knew. Again, though this was fiction, pages covered the theological, philosophical and scientific debates of the time, well-dosed (for those who knew) with his own semiotics in medieval dress. + +Both he and Miss Lee dealt in sealed-off worlds: Maycomb isolated in cotton fields and quiet red dust; the abbey perched on precipices behind high walls. In suchworlds rumours festered and conspiracy theories proliferated, fed by the feverish interpretation of signs. Both featured places (in the abbey, the library; in Maycomb, the tumbledown Boo Radley house) peopled by shadows and littered with symbols. In the abbey, painted phrases from the Apocalypse beckoned towards horror. In Maycomb, Indian-head pennies left in a tree seemed to do the same. + +Despite her protests, Miss Lee’s minute evocation of Maycomb—the talcum scent of white women in the humid afternoons, the smell of Hoyt’s Cologne in the blacks’ church—was evidently drawn from childhood. And she had honed her skills of observation afterwards when Truman Capote, a childhood friend, took her along in 1959 to help with the exhaustive forensic interviews in Holcomb, Kansas that became “In Cold Blood”. Mr Eco, who worked from notebooks, index cards, obscure codices and hand-drawn maps, was seldom autobiographical, save for musing on the seductive symbols and myths of fascism with which he had grown up; and save for reflecting that his omnivorous curiosity, his love of lists and lunatic science (“Ptolemy, not Galileo”) and his analysis of every conceivable cultural artefact, from Thomas Mann to Mickey Mouse, from Snoopy to Avicenna, from TV quiz shows to the “Poetics” of Aristotle, had been fed in boyhood by reading Jules Verne. + +Opening the text + +Sudden fame encouraged him all the more. He travelled the globe, wrote columns for left-wing newspapers and produced six more novels: one, “Foucault’s Pendulum” (1988), about an all-encompassing conspiracy theory; another, “Baudolino” (2000), about webs of lies. All sold well. In his several residences he amassed a collection of 50,000 books; but he still spent five days a week merrily teaching semiotics in Bologna, partly at the university and partly, till late, in the tavernas of the town. + +Harper Lee vanished. The second novel would not come, and she retreated to Monroeville. In 2015 the discarded part of “Mockingbird” was published as “Go Set a Watchman”, to tepid reviews. She too, in confused old age, was indifferent to it. But in Bologna one professor might have noted that “Watchman”, in which the noble Atticus suddenly expressed racist opinions, had opened up “Mockingbird” to new and startling interpretations: which surely should encourage the millions who loved it to read it all over again. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21693524-two-unexpected-literary-celebrities-who-reacted-fame-startlingly-different-ways-harper-lee/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Sovereign-wealth funds + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Feb 27th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21693597/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Feb 27th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21693593-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Feb 27th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21693595-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Feb 27th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21693599-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sovereign-wealth funds + +Feb 27th 2016 | From the print edition + + + +China’s four sovereign-wealth funds have $1.5 trillion-worth of assets between them. None is larger than Norway’s $825 billion government pension fund, according to the Sovereign Wealth Fund Institute (SWFI), a think-tank. Norway’s fund, like many others, is fed by revenues from natural resources: oil-and-gas-based sovereign-wealth funds make up 56% of the market by asset value. The falling oil price means many countries sold assets last year to finance budget deficits. Outflows have mainly been from liquid assets like equities, which may have contributed to stockmarket turbulence this year. The SWFI predicts that another $404 billion could be withdrawn from listed equities in 2016. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21693598-sovereign-wealth-funds/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Feb 27th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21693571-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 26 Feb 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +The Republicans: Time to fire him + + + + + +Britain and the European Union: The real danger of Brexit + + + + + +Making Indonesia work: Open up + + + + + +Traffic in megacities: Jam today + + + + + +Privacy and security: Code to ruin? + + + + + +Letters + + + +International students, Trump history, China's economy, monuments, tax reliefs, linguistics, Supreme Court: Letters to the editor + + + + + +Briefing + + + +Britain and the EU: The Brexit delusion + + + + + +Britain’s EU reforms: A change of status + + + + + +United States + + + +Marco Rubio: The moral of his story + + + + + +The Nevada caucuses: Winning big + + + + + +The campaigns: Heard on the trail + + + + + +The religious left: The least of these + + + + + +Fringe movements: Finding Keepers + + + + + +Lexington: A Latino firewall totters + + + + + +The Americas + + + +Crime in Mexico: Mean beaches + + + + + +Urban architecture: Biography of a building + + + + + +Bello: Evo Morales’s fall from grace + + + + + +Asia + + + +Caste in India: Backward ho! + + + + + +Individualism in South Korea: Zero to hero + + + + + +Politics in Japan: What’s in a name? + + + + + +Traffic in the Philippines’ capital: Slowly does it + + + + + +Politics in Cambodia: Same old, same old + + + + + +Banyan: Taking arms + + + + + +China + + + +Football: Patriotic goal + + + + + +Single parents: Pariahs + + + + + +Online dissent: Punching high + + + + + +Middle East and Africa + + + +Trade within Africa: Tear down these walls + + + + + +Ethiopia’s drought: On the edge of disaster + + + + + +Syria: Russia calls the shots + + + + + +Consanguineous marriage: Keeping it in the family + + + + + +Israeli politics: An Arab agenda + + + + + +Iran’s election: Even hardliners want reform + + + + + +Kurdistan: Fin de renaissance + + + + + +Europe + + + +Refugees in Greece: No way out + + + + + +German right-wingers: Radikale Rechte + + + + + +Organised crime: China nostra + + + + + +Happiness in Europe: Hell is other people, for Swedes + + + + + +Charlemagne: Ever farther union + + + + + +Britain + + + +The justice system: Law in a time of austerity + + + + + +Tories and the EU referendum: Blue on blue + + + + + +Nuclear energy: What’s the (Hinkley) point? + + + + + +Schools and careers: Posh professions + + + + + +European migrants: Tunnels and channels + + + + + +Pig farming: Fearing the wurst + + + + + +Foreign property-buyers: Mountains and molehills + + + + + +International + + + +Ending energy poverty: Power to the powerless + + + + + +Special report: Indonesia + + + +Indonesia: Jokowi’s moment + + + + + +Politics: Lone fighter + + + + + +Corruption: The Setya show + + + + + +Business and economics: Roll out the welcome mat + + + + + +Infrastructure: The 13,466-island problem + + + + + +Foreign policy: Less talk, more action + + + + + +Forests: A world on fire + + + + + +Looking ahead: The country of the future + + + + + +Business + + + +Industry in China: The march of the zombies + + + + + +The India-China trade gap: Arrive full, leave empty + + + + + +The film business: Fading stars + + + + + +Hollywood: Silver-screen playbook + + + + + +Natural resources: Flare-up + + + + + +German industry: Town and company + + + + + +Schumpeter: On the stump + + + + + +Finance and economics + + + +Share trading: Complicate, then prevaricate + + + + + +Exchange mergers: Stocks exchanged + + + + + +Banks and money-laundering: Whoops apocalypse + + + + + +Buttonwood: Donald ducks the big questions + + + + + +China’s stockmarket: Fail to the chief + + + + + +Reshaping banking: Shake your money makers + + + + + +BBVA: Digital addition + + + + + +India’s budget: Leap of faith + + + + + +Free exchange: Gotham on Thames + + + + + +Free exchange: Correction:“Chop, chop”, January 30th + + + + + +Science and technology + + + +Cryptography: Taking a bite at the Apple + + + + + +Cancer: A run a day keeps the tumour at bay + + + + + +Trachoma: Now is the time to say “goodbye” + + + + + +Sexual reproduction: Plucking rubies from the rubbish + + + + + +Cuckoldry and song: Fidelio + + + + + +Books and arts + + + +Hieronymus Bosch: Painter of our greatest fears + + + + + +British newspapers: Per ardua ad Astor + + + + + +Return to nature: Animal instinct + + + + + +Free-diving: Blue hole, black hole + + + + + +Family ties: In knots + + + + + +Johnson: Je suis circonflexe + + + + + +Obituary + + + +Harper Lee and Umberto Eco: The finger of fame + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Sovereign-wealth funds + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.03.05.TXT b/homeworks/B20769/homework1/data2/2016.03.05.TXT new file mode 100644 index 0000000..4eb3039 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.03.05.TXT @@ -0,0 +1,4776 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Mar 5th 2016 | From the print edition + + + +Super Tuesday in America saw a dozen state primary elections in the presidential nominating process. Hillary Clinton reinforced her position as the front-runner in the Democratic race, winning Texas, Georgia, Virginia and Massachusetts. Bernie Sanders took Colorado, Minnesota and two other states, but he remains far behind Mrs Clinton in the delegate count. Donald Trump lengthened his lead in the Republican contest by winning most states on offer. Ted Cruz won his home state of Texas and Marco Rubio chalked up his first win, in Minnesota. But it looks increasingly unlikely that the party establishment will be able to trip Mr Trump. See here, here and here. + +David Duke, a former Grand Wizard of the Ku Klux Klan, backed Mr Trump for president. Never normally lost for words, Mr Trump stopped short of denouncing Mr Duke in a TV interview, prompting another volley of criticisms from Republicans and Democrats. Mr Trump deflected these by saying he hadn’t understood the question. See article. + +Clarence Thomas, a Supreme Court justice, broke his decade-long silence on the bench (thought to be a record) and asked questions in a case on gun rights. The audience gasped. Many theories have been proffered for his failure to speak, but the death last month of the loquacious Antonin Scalia, a close ally, may have left Justice Thomas thinking that the time has come for him to stick up for strict constructionism. + +More than a slap on the wrist + +The UN Security Council adopted tougher-than-expected sanctions on North Korea following its nuclear test and rocket launch earlier this year. They include mandatory inspections of all shipments to the country, a ban on sales of aviation fuel and a halt to exports from the North of iron and coal. But China will need to be the chief enforcer of the sanctions if they are to work. See article. + +Chinese internet companies shut down the microblogs of Ren Zhiqiang, a property tycoon. He had used an account with 38m followers to criticise President Xi Jinping’s efforts to tighten Communist Party control over the media. China’s internet regulator accused Mr Ren of publishing “illegal” messages. + +A court in the coastal Chinese province of Zhejiang sentenced a Christian pastor, Bao Guohua, to 14 years in prison for corruption and inciting people to disturb social order. His wife was jailed for 12 years. Mr Bao’s refusal to remove a cross from his church’s roof had angered the authorities. A Christian lawyer who had supported churches that erect illegal crosses was shown on local TV apparently confessing to having colluded with foreigners to stir up trouble. + +Help is on the way + +The European Union announced that it will provide €700m ($760m) in aid to accommodate migrants in countries overwhelmed by the refugee crisis. Most of the money is expected to go to Greece. Angela Merkel, Germany’s chancellor, scolded Austria and other countries for clamping down on refugee arrivals, and vowed not to abandon Greece. + +The leader of Spain’s Socialist Party, Pedro Sánchez, failed in his first attempt to form a minority government with the upstart centrist Ciudadanos party. Both the centre-right Popular Party and the far-left Podemos party voted against the proposed coalition in parliament. If Mr Sánchez fails again in a second vote planned for March 4th, the caretaker government will probably call new elections. + + + +Ireland’s governing coalition of the Fine Gael and Labour parties suffered a stinging electoral defeat, dropping from a combined 113 seats to 57. The opposition Fianna Fáil party, which came second with 44 seats, vowed not to join a coalition with Fine Gael, leaving no clear direction for forming a new government. See article. + +The EU and America revealed details of their proposed deal for companies to share digital information, which replaces the Safe Harbour agreement that was thrown out by Europe’s courts. Officials said the deal contains measures to protect stricter European privacy guarantees. + +Better than nothing + +Argentina reached an agreement in principle to pay four of the largest creditors whose refusal to accept earlier debt-restructuring offers precipitated a default by the country in 2014. Argentina is to pay Elliott Management, a hedge fund, and three other holdouts $4.7 billion, 25% less than they are claiming. If the deal goes through, Argentina will be able to resume borrowing on international credit markets. See article. + +Police in Colombia arrested Santiago Uribe, the brother of Álvaro Uribe, a former president, for allegedly leading a paramilitary group suspected of murdering criminals and anti-government guerrillas in the 1990s. Santiago Uribe denies the charges; his supporters say his arrest is motivated by politics. Álvaro Uribe, who is now a senator, opposes the government’s plan to end the conflict with the FARC rebels. + +The Jamaica Labour Party won the country’s election, defeating the governing People’s National Party. Andrew Holness, Jamaica’s new prime minister, campaigned against the PNP government’s austerity programme and promised to exempt from income tax 72% of the Jamaicans who pay it. + +Fingers crossed + +A ceasefire in Syria went into effect on February 27th. Despite numerous small violations, it appeared to be holding, allowing a smoother delivery of aid. See article. + +In Iran moderates did well in elections to the parliament, inflicting defeats on hardliners despite their attempts to stop the moderates from standing. The parliament has only limited powers, but reformists were nonetheless cheered. See here and here. + +Jihadists from al-Shabab killed at least 30 people when they detonated two bombs in the Somali town of Baidoa. + +Concerns increased that civil war may break out in Burundi after protests and violence over a decision by Pierre Nkurunziza to run for a third term as president. In the latest escalation of troubles, the government ordered all foreign nationals to give their details to the police. + + + +Robert Mugabe, the president of Zimbabwe and the world’s oldest head of state, celebrated his 92nd birthday with a lavish party and a 92kg cake. Zimbabwe, which is suffering its worst drought in decades, is near economic collapse and unable to pay civil servants. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21693996-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Mar 5th 2016 | From the print edition + +Volkswagen acknowledged that its former boss, Martin Winterkorn, had been handed a memo in May 2014 that mentioned inconsistencies in emissions from its diesel cars. That was more than a year before the German carmaker admitted to cheating on emissions tests in the United States, though VW says it is not known whether Mr Winterkorn read the memo, as it was included in a batch of “extensive weekend mail”. See article. + +Aubrey McClendon, one of the pioneers of America’s shale-gas revolution, died after his car hit a concrete wall in Oklahoma City. A day earlier he had been charged by the Department of Justice with conspiring to fix the price of oil and gas leases between 2007 and 2012, when he was CEO of Chesapeake Energy. He had denied the allegations, insisting he was being “singled out” as the only person in the energy industry to face criminal charges for bidding jointly on leaseholds in the 110 years of the Sherman Act. + +Every little step + +The People’s Bank of China cut its reserve requirement ratio—the amount, relative to deposits, that banks must keep with the central bank—by half a percentage point. It is the fifth reduction in just over a year. By freeing money for lending, the PBoC hopes to stimulate the slowing economy. Manufacturing activity in China fell in February to its lowest level in years. + +The euro zone slipped back into deflation for the first time since September. Consumer prices fell by an annual 0.2% in February; economists had expected the figure to be flat. The European Central Bank will meet on March 10th to weigh more stimulus in order to tackle persistently low inflation. + +Sweden’s economy grew by a respectable 1.3% in the fourth quarter of last year compared with the previous three months, and by 4.1% for all of 2015. Consumer spending, investment and exports all rose faster than expected. Sweden has a negative interest rate of -0.5%; a robust economy makes it unlikely that the central bank will cut it further. + +A potential bidding war for the London Stock Exchange loomed when ICE, which owns the New York Stock Exchange, said it was considering making an offer. The LSE is already in advanced talks with Deutsche Börse about a merger. One of the LSE’s most attractive assets is its profitable clearing-house business in swaps, bonds and other financial instruments. + +Out of Africa + +After a century of doing business on the continent, Barclays said it would leave Africa and focus on its core banking activities in Britain and America. The bank is selling assets in part to boost its capital. It also cut its dividend by half to help shore up its balance-sheet. See article. + +Apple and the FBI took their tussle over accessing the iPhone of a terrorist to Congress. The hearing produced more heat than light, with Apple defending its decision not to help the agency unlock the device on privacy grounds, and the FBI asking “Are we comfortable with technical design decisions that result in barriers to obtaining evidence of a crime?” + +Facebook confronted two legal challenges. Police in Brazil arrested an executive at Facebook because it failed to comply with a court order to turn over messages sent by suspected drug-traffickers through WhatsApp, which is owned by the tech giant. Facebook says it can’t comply as it can’t retain or intercept user messages on the messaging service. In Germany antitrust regulators started an inquiry into whether it abuses its dominance in social networks to collect personal data. + +Amazon made its first proper foray into Britain’s supermarket industry when it teamed up with Morrisons to deliver its produce. Britain, with its densely populated towns, has a vibrant online- shopping market; 27% of Britons buy groceries online at least once a month. + +Another week, another woeful annual earnings release from a mining company, as Glencore reported a net loss for 2015 of $5 billion. Its debt pile remained high, at $26 billion at the end of the year. But Ivan Glasenberg, Glencore’s chief executive, said that the company had “learnt lessons” from the past and was on track to reduce its debt to $15 billion by 2017. + +The parent trap + + + +Disney introduced variable pricing for tickets to its American theme parks. The new system has three pricing bands, with the peak ticket costing about a fifth more than previously. New “value days” will be priced about 5% lower than the old flat rate. Parents with school-age children will feel the market is again working against them, but the changes are similar to those already implemented by other theme parks. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21693979-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Mar 5th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21693986-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +The primaries: Battle lines + +E-commerce in emerging markets: India online + +Iran’s election: Revolt against the reactionaries + +Malaysia’s prime minister: The Najib effect + +Concussion: Schools and hard knocks + + + + + +Articles Sections Next + +The primaries + +Battle lines + +The prospect of Trump v Clinton is grim. But look carefully and 2016 offers a faint promise of something better + +Mar 5th 2016 | From the print edition + + + +HILLARY CLINTON will be the Democratic nominee; the man most likely to face her in November on the Republican ticket is Donald Trump. + +Those are the battle lines after the primaries on Super Tuesday. In many ways this is profoundly gloomy. Mr Trump has said ever more repellent things about immigrants, women and Muslims and declined to condemn white supremacists. But he changes his sales pitch as easily as his socks: in a speech after winning seven out of 11 states, he stopped snarling and tried to sound presidential. It would be unwise to underestimate his ability to feign gravitas and transform himself into an apparent centrist. + +The only obstacle between Mr Trump and the Oval Office would be Mrs Clinton. She is a formidable and in some ways admirable candidate, but flawed. She is unloved by bits of her party’s base and subject to an investigation into whether she mishandled classified information. + +Small wonder that so many who contemplate American politics today sink into despair. But with a large dose of optimism and continued faith in the good sense of American voters, it is just possible to see November’s election in a more positive light. The vote for the presidency could yet yield the reshaping of the two main parties and a political realignment that leads to a less stagnant and gridlocked government. + +Be nice now + +This optimistic scenario depends on converting today’s antagonism into a force for change. The primaries have made clear that a large share of American voters are angry: angry with their own side’s representatives, angry with their opponents and angry with the world. + +So far, that anger has been channelled into divisiveness. On the right, Mr Trump has exploited the discontent by insulting his way to the front of the pack, stirring up racial resentment as he goes, delighting crowds with a list of proposals that run from the unethical to the unworkable. On parts of the left, the rage is more polite but, particularly where it is aimed at Wall Street, no less deeply felt. + +In recent elections partisan fissures have been reinforced by the brutal maths of voter turnout. Polling shows that a majority of Republicans and Democrats believe that the other lot are so depraved as to pose a threat to the nation itself. Because it is hard to persuade people who think like this to switch sides, electoral strategists argue that chasing swing voters is pointless. The easiest extra votes come from the 40% of the electorate who typically stay at home in a presidential poll. Each side therefore concentrates on stirring up people who support it but might not vote. That raises the anger to a new pitch. + +If this desperate logic is repeated in a Clinton v Trump race, the contest could have consequences both ugly and far-reaching, particularly for the Republicans. After winning a race fuelled by anger and led by Mr Trump, the party would almost certainly ditch its attachment to free trade and a muscular foreign policy and retreat into isolationism, xenophobia and economic populism. If it survived that shift (a big if), it would by the middle of the century be a white-nationalist party in a country that will be majority non-white. More likely, it would fracture, parts of the Republican coalition spinning off to find a new home elsewhere (see page 36). + +For Mrs Clinton, going down the angry route might not split the party, but would almost certainly result in defeat. Democrats tend to fare poorly when their anguish overflows and begins to sound like contempt for America. It is hard to imagine Mrs Clinton credibly playing the political insurgent. She has decades of experience when the angriest voters want a novice. Nobody can out-hate Mr Trump. So it is encouraging that Mrs Clinton celebrated her victories on Super Tuesday by calling for more “love and kindness” in politics. + + + +America’s primary agenda: our interactive 2016 election calendar + +The opportunity for a better outcome lies in the asymmetry of the risks. Mrs Clinton has the opportunity to put together a coalition of anti-Trump voters broader than the one that carried Barack Obama to victory in 2008 and 2012. Despair over Mr Trump has reached such an intensity among some Republicans that the usual rules about there being no swing voters may no longer apply. If Mrs Clinton were to combine a high turnout on her own side with a sizeable number of Republican abstentions and spoilt ballots and some voters who are prepared to switch from red to blue, then Democrats could not just win the presidency with a landslide, but also wrest back control of the Senate. + +To form this coalition for stopping the blond Berlusconi, Mrs Clinton would have to woo moderate, business-minded Republicans, and such folk would in turn have to put the national interest ahead of their tribe’s victory in November. Republicans like to talk about the importance of character (see Lexington); Mr Trump offers a chance to show that means something. Mr Trump often insults other Republicans; they owe him no loyalty. Some prominent Republicans have already begun to attack him, including Mitt Romney, the party’s nominee in 2012. More will have to make that move. + +Don’t throw it away + +After the election a broad coalition could melt away as fast as it had formed. Democrats could use their advantage to force through what they can without the support of their opponents while they have the chance. They would then be punished in subsequent elections and the federal government would return to its familiar divided self: unable to pass budgets, trim spending on entitlements or find money to repair roads. + +Or a President Hillary Clinton might argue for the virtues of democratic compromise, and not claim that she can magically give her core voters everything they want all of the time. If she were able to pursue a different kind of politics, one that seeks to deal with some Republican concerns as well as Democratic ones, she might just hold the new consensus together for longer, reshaping the parties, making the country more governable and burying Mr Trump’s offer of an America turned against itself. This is the distant promise that 2016 holds. As the battle lines are drawn, try to bear it in mind. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21693924-prospect-trump-v-clinton-grim-look-carefully-and-2016-offers-faint-promise/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +E-commerce in emerging markets + +India online + +The battle for India’s e-commerce market is about much more than retailing + +Mar 5th 2016 | From the print edition + + + +EVERY second three more Indians experience the internet for the first time. By 2030 more than 1 billion of them will be online. In June last year one in four mobiles used in India was a smartphone, up from one in five just six months earlier. Add in two more facts—India boasts the world’s fastest-growing large economy, and the planet’s biggest population of millennials—and you can see why the likes of Facebook, Uber and Google are falling over themselves to establish footholds there. + +No battle for the online future of India is more intense than the one now being waged in e-commerce (see article). Sales are still tiny, at $16 billion last year, but the country is the world’s fastest-growing e-commerce market and is prized by America’s and China’s internet titans. India has become the biggest test of Amazon’s international ambitions. Jeff Bezos, Amazon’s founder, wants it to be his second-largest market, after America, and has backed his plans with billions of dollars of investment. His opponents are platforms like Flipkart and Snapdeal, founded by locals and funded by some of the biggest names in tech, among them Alibaba, China’s e-commerce champion. + +As these companies jostle for market share, they are spending feverishly on logistics and discounts to lure consumers online. Capital may dry up for some; in February a Morgan Stanley mutual fund sharply lowered the valuation of its stake in Flipkart. But whoever wins or loses in this frenzied contest, the importance of e-commerce stretches beyond individual firms and into the wider economy. In the West e-commerce companies piggybacked on an existing infrastructure of shops, banks and logistics firms. In India the game being played by the e-commerce pioneers is leapfrog. It could become a model for emerging markets around the world. + +Pay as you grow + +Indian e-commerce has such potential because it can bring three changes more profound than convenience and keen prices. The first is faster financial development. China already provides one example. Alipay, an arm of Alibaba, overcomes mistrust between buyers and sellers by holding on to customers’ money until they have safely received their goods. Now run by an affiliate called Ant Financial, Alipay has more than 400m accounts that let consumers buy products, pay bills and transfer money. The torrent of information that Alibaba gathered on merchants and consumers was the basis for a lending business. + +Something similar is under way in India. Paytm, which provides digital wallets and is itself backed by Ant Financial, has 120m accounts, nearly six times the number of credit cards in India. E-commerce companies are also helping small businesses obtain loans that they would otherwise have struggled to raise. Amazon India rolled out such a programme for its sellers last month. In January Snapdeal announced a partnership to streamline loans from the State Bank of India. + +Second, e-commerce firms could help overcome India’s ropy infrastructure and vast geography. Where roads are clogged and infrastructure is decrepit, the rival firms are melding warehouses and local outposts into idiosyncratic distribution networks. About half of Flipkart’s and Snapdeal’s customers are outside India’s biggest cities. Some are still farther afield: Amazon claims to be helping more than 6,000 Indian businesses sell abroad. China again shows what can be done. Alibaba is connecting remote rural areas to the online economy; there are now 780 “Taobao villages”, rural communities in which at least 10% of households are shopping or selling over the internet. + +The third big impact of e-commerce in India is on retailing itself. Shopping malls and chain stores account for only about one-tenth of total retail sales. Already, the combined sales of India’s top three e-commerce sites, Flipkart, Snapdeal and Amazon, surpass those of the ten largest offline retailers. + +Two-thirds of Indians are below the age of 35. For these young people, armed with smartphones, shopping is likely to be very different from what it was for their parents. Malls and chains will not disappear, but they may never be as prevalent as they are in the West. + +That in turn will stimulate the rise of other digital firms. India’s tech scene is thriving. Tiger Global, a Flipkart investor, also backs an Indian online classified business and a messenger app that helps users avoid data costs. SoftBank, which backs Snapdeal, funds a mobile-advertising platform. In 2014 only America, Britain and Israel saw more new tech startups. + +Platform boost + +Simply to assume that e-commerce will conjure up growth—particularly of the labour-intensive sort that India needs—would be a mistake. The market in China had a very different starting-point, for instance. When the likes of Alibaba got going, it helped that China was already home to many manufacturers looking for new ways to sell excess inventory. India’s manufacturing base is much smaller, especially for electronics, e-commerce’s best-selling category. India is also poorer. A smaller share of its population is online—32% last year, compared with 52% in China. Indians speak more than 20 languages, which complicates marketing. The budget unveiled by Narendra Modi’s government this week includes plans to upgrade 50,000km (30,000 miles) of roads, but India is not about to possess a gleaming motorway network to rival China’s. Mr Modi’s continued failure to install a harmonised goods and services tax blunts the benefits of e-commerce. + +Yet in its heft, governance and manufacturing clout, China is also an outlier. India is a better template for the e-commerce battle in other emerging markets. Its logistical woes provide a test of firms’ ingenuity. If they find a way to deliver goods profitably there, they may succeed elsewhere. If they falter, their stumbles will provide lessons. That is all the more likely because India’s e-commerce is so international. Naspers, a Flipkart investor, backs ventures in Nigeria, South Africa and Egypt, among other places. E-commerce in India is a local battle for customers, but it is also a battle for the future. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21693925-battle-indias-e-commerce-market-about-much-more-retailing-india-online/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Iran’s election + +Revolt against the reactionaries + +Voters gave a vigorous thumbs-down to the hardliners. If only voting mattered more in Iran + +Mar 5th 2016 | From the print edition + + + +THE conservatives did everything they could to prevent it, abusing the power of the state to disqualify thousands of candidates they judged too prominent, too moderate or both. But the election on February 26th of Iran’s parliament, the Majlis, was a slap in the face to them nonetheless. Though complete results are not yet in, moderates and centrists look likely to control the new chamber (see article). The hardliners, who won handily in 2012, before Western nuclear sanctions began to bite, were pushed back. They call themselves “principlists” because of their stern promotion of premodern values. Iranian voters, it seems, reject their principles. + +The election is good news for Iran’s reform-minded president, Hassan Rohani. It demonstrates just how solidly the nation’s voters support the deal he negotiated with world powers to roll back the country’s nuclear-enrichment programme in return for relief from sanctions. The principlists in the old parliament had tried, but failed, to block it. + +The poll will also make it easier for Mr Rohani to continue with his economic reforms, which involve opening Iran to more foreign investment and freeing the private sector to compete against inefficient state firms that serve largely to enrich religious and military bigwigs. And it is surely a good omen for his chances of re-election as president next year. + +Still, one should not overstate the significance of the vote. The new parliament is a weaker, less reliable ally than Mr Rohani might have hoped. Due to all the disqualifications, the new moderate list is less impressive and less reformist than it could have been. The parliament itself, though not irrelevant, is not a very powerful body. Its decisions have to be vetted by the Council of Guardians—the reactionary grandees who disqualified so many moderates. And over the whole political edifice—parliament, president and all—stands the Supreme Leader, Ayatollah Ali Khamenei, who wields vast powers, especially over foreign and security policy. + +Even if he wanted to, Mr Rohani could not act as an Iranian Mikhail Gorbachev. Mr Khamenei insists that the nuclear deal has no implications for any other forms of co-operation with the West; and he has set his face against any relaxation of the country’s strict Islamic legal code. Besides, it is not at all clear that Mr Rohani, a member of the old revolutionary elite, is setting out to be anything more than an economic reformer. + +Still stirring up trouble + +Iranians have lived through this before. The election in 1997 of President Muhammad Khatami, who genuinely sought political reform, was followed by the election of a supportive Majlis. But the mullahs’ stifling grip loosened not at all. So do not expect Iran’s dismal record on human rights to improve. (In one village last year, every adult male was reportedly executed on drugs charges.) + +Nor should the West count on a more pliant partner in the Middle East. At the moment, Iran is standing tall in the region. Its support for Bashar al-Assad’s homicidal regime in Syria has been reinforced by Russian bombers. It is the dominant force in Iraq, its mostly Shia neighbour. And it is giving its old Sunni rival, Saudi Arabia, a bloody nose in Yemen. + +Having asked them to dismantle Iran’s nuclear programme, Mr Khamenei will need to placate Iran’s hardliners in other ways. Funding for the Revolutionary Guards, including its Quds Force, which operates in several countries, is likely to go up, not down. Iran’s support for Hizbullah, its battle-hardened proxy in Syria and on Israel’s borders, will probably grow. Free from sanctions, Iran is likely to remain prickly, no matter how moderate its parliament appears. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21693927-voters-gave-vigorous-thumbs-down-hardliners-if-only-voting-mattered-more-iran-revolt/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Malaysia’s prime minister + +The Najib effect + +Not only Malaysians should be worried about rotten politics and a divisive prime minister + +Mar 5th 2016 | From the print edition + + + +ONE of South-East Asia’s richest and hitherto most stable countries, Malaysia ought to be a beacon. Its constitution is liberal, and its brand of Islam generally tolerant. Its diverse, English-speaking population, combining ethnic Malays, Chinese and Indians, gives it zest and vim. Yet under the prime minister, Najib Razak, the country is regressing at alarming speed. Its politics stinks (see article), its economy is in trouble, and there are worrying signs that the government is not above stirring up ethnic and religious divisions. + +For the past year allegations of corruption have swirled around Mr Najib. They centre around hundreds of millions of dollars that made their way into his bank accounts before the most recent general election, in 2013 (see article). Investigators are looking into whether the money is linked to a troubled state investment firm, 1MDB, whose advisory board Mr Najib chairs. He denies wrongdoing. His attorney-general has ruled that the money was a legal donation from an unnamed Saudi royal, and that much of it has been returned. + +For Malaysians, the precise nature of what happened is not the main point. Mr Najib presented himself as a liberal out to remake the sleazy system of money politics by which the ruling United Malays National Organisation (UMNO) has held power since independence. He was to open up a crony economy. And he was to do away with repressive colonial-era laws, such as that for sedition. + +Now Mr Najib’s credibility is in tatters. Facing inquiries around 1MDB, he has engineered the retirement of a pesky police chief, replaced an attorney-general and promoted members of an inquisitive parliamentary committee into the cabinet, where they can do less harm. Far from loosening colonial laws, the government is wielding the sedition law with new zeal. It is blocking news websites and hounding opponents (the opposition leader, Anwar Ibrahim, is in prison on charges of sodomy). Even yellow T-shirts have been outlawed since citizens protesting against corruption took to wearing them. The more Mr Najib cracks down, the more he alienates those who were once inclined to support him. + +Foreign investors and others should be worried. The government is floundering in its responses to a sharp slowdown in the economy and to a falling currency. Cheap oil has hurt Malaysia, but its wretched politics will hold it back more in the long run. The government is now using dog-whistle politics to appeal to its ethnic-Malay, Muslim base, and is refusing to distance itself sufficiently from Islamists seeking the introduction of harsh sharia punishments. Pro-government bigots in the street have told ethnic-Chinese Malaysians to “go back to China”. This is dangerous. Malaysia has seen race riots before, and could see them again. Nearby Singapore, with its different mix of the same ethnic groups, should also be alarmed. + +1 Massive Development Balls-up + +Malaysia’s problems run deep. UMNO is out of ideas and seems incapable of rejuvenating itself. The fractured, rudderless opposition does not have the winning combination to overcome UMNO’s gerrymandering and harassment. And the next election is anyway still two years away. Restoring confidence will be tricky. But for as long as Malaysia is governed in the style of Mr Najib, ordinary Malaysians will suffer and their country will be deprived of the standing that it surely deserves in the world. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21693923-not-only-malaysians-should-be-worried-about-rotten-politics-and-divisive-prime-minister/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Concussion + +Schools and hard knocks + +Children need protection from high-impact sports such as rugby and American football + +Mar 5th 2016 | From the print edition + + + +IMAGINE being asked to take part in an activity that gives you somewhere between a 1-in-5 and 1-in-20 chance of a serious head injury over a four-month period. That could lead to weeks of impaired mental performance and headaches, and, especially if the blows are repeated, the danger of longer-term mental-health problems. Now imagine that your child is the one taking that risk. + +Such are the dangers associated with playing American football. The risks of concussion are higher still in rugby, one of the world’s fastest-growing sports. These concerns have already prompted some changes. Rugby has introduced “head-injury assessment” rules, enabling players who have suspected concussions to be substituted temporarily so that they can be checked by medical staff. All 50 of America’s states have adopted “return to play” laws that require medical clearance before younger athletes who have sustained a concussion can take to the field again. + +Such measures are welcome, but they sidestep the real issue: is it safe to play a game whose rules require people to slam into each other? As understanding grows of what happens in the brain when collisions take place (see article), the answer seems certain to be “no”. + +Adults are able to consent to taking risks of this sort, even if they are not yet fully understood. That does not relieve sports authorities of their duty of care to players—one reason why American-football coaches at Ivy League universities have just agreed to get rid of “full contact” training sessions during the playing season. But liberal principles argue against the most drastic interventions. Boxing; barbarically dangerous though it is, should not be banned, nor should other sports. + +Children are a different case, not simply because they cannot give informed consent but also because their brains are more susceptible to long-term damage. Researchers at the University of Illinois found that children who had sustained a single sports-related concussion still had impaired brain function two years later. + +Some measures to protect children from harm are already in place. Some states in America have introduced rules for American football to restrict full-contact sessions in high schools: incidents of concussion have fallen as a result. Although the risks of brain injury in association football are lower, US Soccer, the governing body for the sport in America, has banned headers for children aged ten and under, and restricted them for 11- to 13-year-olds. + +More should be done. No child should be obliged to play full-contact American football, rugby or ice hockey in schools. And for those who do take to the field or rink, schools should do more to reduce the risks—from recording and monitoring injuries systematically and requiring that children train with players their own size rather than their age, to insisting on non-contact forms of play. Rugby has most to do, particularly given plans to raise the number of child players. This week doctors and academics rightly called for a ban on tackling in rugby games played in British and Irish schools. + +Not tackling it head-on + +None of this is popular. Critics contend that all sports are dangerous. They argue for the benefits of exercise and say that the nanny state is out of control. But other sports do not involve deliberate impact and are just as energetic. And ensuring the safety of children hardly counts as excessive intervention. + +Critics raise another, cultural, objection: that the spirit of games like rugby and American football is in danger of being lost. There is something to that. But an activity that rests on exposing children to long-term neurological damage needs a better defence. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21693926-children-need-protection-high-impact-sports-such-rugby-and-american-football-schools-and/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +Cannabis, freedom of press, US politics, diversity, Brexit, language, Cornwall: Letters to the editor + + + + + +Articles Sections Next + +Cannabis, freedom of press, US politics, diversity, Brexit, language, Cornwall + +Letters to the editor + +Mar 5th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +High ho silver lining + +I was disappointed by “The right way to do drugs” (February 13th). It didn’t go far enough in calling for cannabis to be legalised. There is no lethal dose of cannabis, though there are lethal doses of the government-approved alternatives to cannabis. Getting users off deadly alcohol, say, and towards cannabis will save lives. Marijuana should be as cheap and as accessible as possible. Taxing and restricting it will not fix the problem. There is a functional black market and it is not going to end just because the government “sort of” legalised pot. + +DAN KING + +Sacramento, California + +In my experience a cost calculation drives the preference among occasional users for higher THC content in cannabis. Only one or two tokes are required to give occasional users the desired high, so a little weed goes a lot further. It follows that, to the extent there is price sensitivity, higher prices and taxes would have the perverse effect of pushing your 80% of occasional users towards inhaling more smoke. + +The calculus for the 20% who are heavy users is different. There is an intensity factor. Even though heavy users may be high for longer, they are not nearly as high as the occasional user. They do indeed prefer higher THC content, just to achieve any effect at all. So in their case higher prices and taxes would encourage the continuation of a black market. + +PETER CONROY + +Ottawa, Canada + + + + + +Japanese television + +“Anchors away” (February 20th) submitted that “it is no coincidence” that the three anchors who left their TV programmes in Japan “are robust critics of the government”, implying the government had intervened in their leaving. However, Yoshihide Suga, the chief cabinet secretary, clearly stated at a press conference on February 9th that “freedom of the press and editorial rights must be guaranteed.” The government of Japan has been and will remain fully committed to freedom of expression and freedom of the press. The descriptions in your article have no ground. + +YASUHISA KAWAMURA + +Press secretary + +Ministry of Foreign Affairs of Japan + +Tokyo + + + + + +Small but mighty + +Lexington noted that if no presidential candidate gets 270 electoral-college votes, the contest is decided by the House of Representatives, which will be Republican-held (February 20th). However, in such a circumstance each state gets only one vote in the House, regardless of how many representatives are elected from that state. Presumably, Texas would vote Republican and California would vote Democrat. But numerous smaller states would have an equal weight with the more populous ones. + +RYAN SCHAAP + +Thousand Oaks, California + + + + + +Mix it up + +It is true: diversity undermines trust (Schumpeter, February 13th). But this may be its greatest gift. When ethnically different others are present, people tend to remain cautious, scrutinise information and reach better decisions. Our research, published in the Proceedings of the National Academy of Sciences, showed that ethnically diverse markets are significantly less likely to bubble compared with homogenous ones. The results held for North America and South-East Asia, notwithstanding the differences in culture, history and ethnic composition. + +In homogenous markets, we reason, trust in other people’s reasonableness can cause erroneous beliefs to spread more readily. Diversity makes you better precisely because it makes you less trusting. + +PROFESSOR SHEEN LEVINE + +The University of Texas, Dallas + + + + + +Divide and choose? + +I read Bagehot’s fascinating article on the divergent views of the European Union from people in Cambridge and Peterborough (February 20th). This divergence has little to do with nativism or nationalism or even class. It is a pertinent fact that because of its role as a centre for agriculture, food processing, packaging and logistics, Peterborough has borne a heavy burden in respect of unskilled immigration from the EU: more than 30,000 new migrants from 2004 to 2011. This puts huge pressure on public services, and has arguably kept wages low and entrenched welfare dependency among many indigenous and low-skilled workers. + +Business, and the Treasury, have reaped the economic benefit of this large-scale migration, but local taxpayers have footed the bill and seen the pressures consequent in this unprecedented demographic change. Local people can’t have helped noticing, and are canny enough to understand the role of the EU Free Movement Directive. + +People in Peterborough have seen the cost of unrestricted immigration and, as a result, are more conscious than most of the benefits or otherwise of Britain’s membership of the EU. Is it any wonder that they are more sceptical? + +STEWART JACKSON + +Member of Parliament for Peterborough + +I am not sure about Bagehot’s “educational-cultural divide” over Europe. The Brexit referendum has not come about because of an outcry across the land by ordinary folk or because public opinion has been consistently against EU membership, or because people are calling for an immediate exit. We are having a referendum because of a battle within the educational and political elite. It is symptomatic of the division within the Tory Party, not within the country, yet at least. + +However, with “in” campaigners like Jeremy Corbyn ranting something along the lines of “Workers of the EU, unite!”, the divisions could get very real, very soon. + +LUKE CARR + +London + + + + + +Double entendres + +Johnson, ruminating on the secret meaning of “feisty” (February 13th) would have done well to have provided a whiff, as it were, of etymology. In Mark Forsyth’s marvellous book, “The Etymologicon”, and largely corroborated by the Oxford English Dictionary, feisty, in the sense of “spirited”, is derived from “fist” or “feist”, meaning a small dog. This in turn comes from the phrase “a fisting hound”, where “to fist” means to fart. + +VENKAT ANANTHARAM + +Berkeley, California + + + + + +Catching the wave + +As a resident of next-door Devon I read your article about Cornwall’s post-industrial economy with great interest (“Winter sun”, February 20th). In addition to the demographic, political and infrastructural factors which you identify, advances in affordable wetsuit technology have also played an important role in tourism. As a result, anyone can spend as much time in the sea as they want the whole year round. The effect has been revolutionary, as local surfers know only too well. + +ANTHONY KING + +Exeter, Devon + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21693902-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Online retailing in India: The great race + + + + + +Articles Sections Next + +Online retailing in India + +The great race + +In the next 15 years, India will see more people come online than any other country. E-commerce firms are in a frenzied battle for their custom + +Mar 5th 2016 | From the print edition + + + +IT IS a quiet morning on the outskirts of Mumbai, the air still mild. Dusty streets are dappled with sunlight, a stray dog rummages through some rubbish, the shutters are lifted on a few tiny shops. A man pushes a cart bearing a pyramid of oranges. And a delivery boy named Anil is already racing along his route on a motor bike borrowed from his uncle, his delivery backpack as large as he is. He has been up for hours, planning his route and carefully filling his bag with the packages to be dropped off first stacked near the top. + +Anil enters a block of flats, squeezes his backpack into a narrow lift and delivers a shirt to a 21-year-old taxi driver. In a neighbouring tower he hands a smartphone case to a 16-year-old who uses several apps to do the shopping for his family. A short ride away, a 78-year-old grandmother is a particularly pleased customer—with help from her grandson, she has bought some clay pickling jars that she couldn’t find elsewhere and some high-quality saris at a knock-down price. For Anil, it is gruelling work. But he is betting that e-commerce in India has nowhere to go but up, and he wants to ride up with it. + +In the next 15 years India will see more people come online than any other country. Last year e-commerce sales were about $16 billion; by 2020, according to Morgan Stanley, a bank, the online retail market could be more than seven times larger. Such sales are expected to grow faster in India than in any other market. This has attracted a flood of investment in e-commerce firms, the impact of which may go far beyond just displacing offline retail. + +India’s small businesses have limited access to loans; most of its consumers do not have credit cards, or for that matter credit. The e-commerce companies are investing in logistics, helping merchants borrow and giving consumers new tools to pay for goods. Amit Agarwal, who runs Amazon.in, holds out the hope that “We could actually be a catalyst to transform India: how India buys, how India sells, and even transform lives.” + +The jewel in the crown + +Amazon wants to make India its second-biggest market, after America. For the time being, though, with just 12% of the market, it lags behind the home-grown successes, Flipkart (45%) and Snapdeal (26%). All three, as well as some smaller competitors, are spending at a blistering rate. As global markets dip and Silicon Valley unicorns stumble, the international funding that makes this possible may dry up. Doubts about the sustainability of the companies’ present plans were underlined when, on February 26th, one of Morgan Stanley’s mutual funds marked down the value of its stake in Flipkart by 27%. If the prospect of changing India a billion deliveries at a time is a beguiling one, it is not for the faint-hearted. + +India’s visionaries keep their spirits up by remembering the example of China. Chinese e-commerce grew by nearly 600% between 2010 and 2014, making the country the biggest e-commerce market in the world today. It managed this largely through the growth of indigenous companies: mighty Amazon merely nips at the heels of home-grown giants Alibaba and JD.com; eBay has all but left the stage. And in the process China’s top e-commerce firms came to offer an astonishing range of services. + +Alibaba, founded by Jack Ma in 1999 and now valued at $184 billion, provides the best illustration. To calm anxieties about buying online Alibaba created Alipay, which holds a shopper’s payment in escrow until he receives his order. The tool has evolved into a financial-services company, Ant Financial, which last year serviced more than 400m Alipay accounts and made over 2m loans to small businesses and entrepreneurs. To provide Chinese consumers with access to foreign goods the firm’s services include not just online listings but marketing, shipping and help with customs. + +Alibaba is now building service centres in remote areas where shoppers can order, pick up and sell goods, as well as pay their bills. It is a further step in its attempts not merely to benefit from the growth in Chinese consumption, but to shape and accelerate it. The degree to which it has succeeded suggests that the earlier an e-commerce company arrives in a country’s development, the wider its role might be. + +India is in many ways a tougher market for e-commerce than China. Its population is poorer and its infrastructure worse. But its prospects look remarkable. Income per person, which in 2014 was $1,570, could be twice that by 2025. Two-thirds of Indians are younger than 35, and their phones give a huge number of them access to the internet. In December 2014 smartphones accounted for one in five Indian mobiles, according to Goldman Sachs. Just six months later, they accounted for one in four (see chart 1). Morgan Stanley expects internet penetration to rise from 32% in 2015 to 59% in 2020. By 2030, India is projected to be a one-billion-person digital market. + + + +The prospect of a second market growing to a near-Chinese size attracts those who made a packet the first time round. Bob van Dijk, the chief executive of Naspers, a South African firm that backed JD.com and Tencent, China’s largest social-media company, says he looks for countries with big populations, rising smartphone use and few retail chains. India, where malls, supermarkets and branded chains, or what analysts call “organised retail”, account for just 10% or so of the total market, fits the bill perfectly. + +The middlemen + +Naspers owns a 17% stake in Flipkart; other JD.com investors, including Tiger Global Management, in New York, and DST Global, a Russian fund, have also backed the company. Japan’s SoftBank, a big investor in Alibaba, has backed Snapdeal since 2013, and Alibaba itself followed suit last August. Meanwhile Alibaba’s Ant Financial owns a 20% stake in India’s Paytm, which began as a mobile-wallet company and now competes with Snapdeal and Flipkart as an online marketplace. The three firms have a combined valuation of almost $25 billion. + +In contrast to those investors trying to recapitulate their Chinese success, Amazon is seeking to make up for its failure. Reduced last year to the ignominy of having to open a shop on Alibaba’s Tmall site, Jeff Bezos is determined that this time, with more experience and in a more open market, things will be different. + +When Flipkart was founded, in 2007, Amazon was obviously its model. The company began as a bookseller; the two engineers who started it, Sachin Bansal and Binny Bansal (not related), had worked for Amazon. Mr Bezos, though, is of the opinion that if anyone if going to be the Amazon of India, it should be Amazon. In 2014, shortly after Flipkart announced a $1 billion round of funding, Mr Bezos donned Indian clothes in Bangalore, hopped aboard a rainbow-coloured truck and handed Mr Agarwal a $2 billion cheque. A firm which earned over $100 billion in 2015 and has shareholders content to see more or less nothing by way of profits can afford such largesse. + +Neither Flipkart, Amazon, nor any of the other big competitors are following the retail strategy that led to Amazon’s success in the West. Indian regulations bar foreign-backed e-commerce firms from owning inventory, and so acting as a straightforward retailer is not an option. As a result India’s top e-commerce companies look much more like Alibaba. Flipkart has become a marketplace where sellers offer everything from mobile phones to washing machines to handbags. Snapdeal, Amazon and Paytm run marketplaces too. The firms compete feverishly on price, offering discounts that chomp away their own margins. In the long term, they must differentiate themselves by honing services for sellers and shoppers alike, and offering a better, broader range of products to more Indians than would have them otherwise. + +The first step to that goal is to boost the number of sellers on the company’s platform—it is the sellers, after all, who pay commissions and shipping fees. So companies offer a range of services to lure businesses to their sites. Flipkart’s programmes range from teaching sellers how to manage peak sales during diwali to advising fashion brands on trends and production. In February Amazon announced a travelling studio-on-wheels, offering training, photography and other services to help shop-owners come online. + +But the most important help they offer is in easing access to credit. Small businesses, given their scarce financial statements and limited credit history, have long had trouble obtaining loans from India’s banks. They often rely on expensive loans from neighbours or family. The e-commerce companies have strong incentives to make them better offers—and because they have access to online-sales data they are in a privileged position from which to help lenders judge credit risk. + +Take Sumit Agarwal (no relation to Amazon’s Mr Agarwal), a young entrepreneur who started an online shoe business in 2011. In his warehouse in New Delhi workers pack and scan shipments among towers of shoeboxes. The early days were uncertain; his family’s reaction when the firm started, he says, was “What the hell is this guy doing?” Now it is easier for such entrepreneurs to find the capital with which to grow. When Mr Agarwal logs into his seller’s account on Amazon.in his screen offers a column of short-term loans, their rates calculated using data from his transactions. Other e-commerce firms have similar schemes. In January Snapdeal announced that the State Bank of India would approve loans of up to $37,000 instantly if it liked the look of the data that Snapdeal provided on the borrower. + +Once a site has sellers, the second challenge is to help consumers buy their wares. Anil carries a clunky credit-card reader with him on his rounds, but most people pay cash. The e-commerce sites want to change that. Paytm lets customers add money to a digital wallet that can then be used to shop online, top up a mobile phone, lend money to a friend, pay a bill or use a service such as an Uber taxi. It has 120m digital-wallet accounts, nearly six times India’s number of credit cards. Snapdeal bought its own mobile payments company in April. Amazon purchased an online-payments service in February. + +A fine balance + +If a consumer does buy a product, the next task is delivering it. Delivery itself is nothing new. Indians have long been able to have a delivery boy from the local kirana—the cornershops that dominate Indian retail—bring them a stick of butter. But being able to deliver on a larger scale is a challenge. The country’s mail service, India Post, is ill-equipped to wait while a shopper tries on a kurta and ponders returning it. So newcomers are building networks. But India’s traffic is hellish and its addresses vague. + +A startup named Delhivery has hired more than 15,000 staff, from developers to executives poached from Facebook and posh consultancies. Its headquarters in Gurgaon are so packed that engineers spill onto an outdoor porch, tapping their keyboards furiously. Delhivery, which works with a number of e-commerce firms, is using machine learning to subdivide India’s postcodes, the better to map idiosyncratic descriptions. “We’ll know the house with the yellow door next to the temple,” says Sandeep Barasia, the managing director. The company moves goods to 700 or so small distribution centres overnight to avoid congested main roads during business hours. Thousands of delivery boys then dash to and from the distribution centres throughout the day, bearing more than 20 kilos on their bikes. + +E-commerce companies are devising their own solutions, too. Some investments, such as warehouses, are straightforward. Others are less so. Flipkart last year began using Mumbai’s famous network of dabbawallas, or lunch-delivery men, to drop off packages when they picked up customers’ lunch tins. Amazon has a pilot programme that lets customers order groceries online and have them delivered from the nearest kirana. + +Together, e-commerce firms say, these experiments could create a new truly national marketplace. Neelkanth Mishra of Credit Suisse, a bank, points out that road construction, electrification and mobile phones have stoked big increases in rural wages, and thus demand for goods (see chart 2). Flipkart says that about half its sales come from outside India’s big cities. Snapdeal claims more than 60%. It recently launched seven regional-language versions of its website. + + + +As they build out their markets the firms trumpet their assistance to small businesses. “Some of the big sellers on Amazon only had a shop in a corner of Bangalore; they were happy selling to five kilometres around each shop,” declares Amazon’s Mr Agarwal. “Now they are shipping orders to Kashmir and eastern India.” Amazon is helping more than 6,000 Indian businesses export, as well. Snapdeal’s Kunal Bahl is equally expansive: “Our ambition is to be a great social, economic and geographic equaliser for the small businesses of India as they scale up.” + +All these bold plans are clouded by two obstinate facts. First, spending on discounts, marketing campaigns and new hires means none of the companies has yet made money. Visit any firm’s lobby and you will meet herds of job applicants. Delivery boys like Anil are in hot demand—a top performer in his branch, he earns about 14,000 rupees ($200) each month. + + + +Amazon is, predictably, outspending its competitors. Last year its sales were two-thirds the size of its losses. Mr Agarwal is not bothered by a lack of profit. “The priority is growth,” he explains. Ankit Nagori, Flipkart’s chief business officer, says that the most important metrics for his company are not margins but the number of new customers, how often they shop, how much they buy and the speed of delivery. “If you solve for these four things,” he contends, “then the top line and bottom line will fall in place.” + +A billion deliveries more + +The second problem is regulatory. Forbidding foreign-backed firms from owning inventory has costs. Companies have limited control over the quality of products on their sites, points out Morgan Stanley’s Parag Gupta, and they can do little to streamline the country’s fragmented supply chain. Flipkart has become a tangle of interlinked entities, including a holding company in Singapore, in an attempt to obey India’s rules while maximising profits. + +India’s government may nonetheless come under protectionist pressure. Traditional retailers allege that the online marketplaces flout rules against foreign direct investment. Facebook’s recently scuttled plan to offer Indians free internet services, including its own, sparked a furore over the risks of “digital colonialism”. + +Offline retailers are watching all this intently. Kiranas are relatively protected, thanks to meagre tax bills and limited carrying costs (they store little). Big shops and malls are another story (see chart 3). “What is remarkable for me is that in a very short time, e-commerce has become half of what the organised market is,” says Abheek Singhi of the Boston Consulting Group. “Two years down the line, three years down the line, the e-commerce market could be larger.” + + + +Big foreign retailers—such as Ikea, a Swedish furniture company, which after years of kerfuffle may finally be opening an Indian store—cannot sell directly online. Matters are simpler for Indian retailers, but their course remains cloudy. Reliance Industries, a conglomerate with over 1m square metres of shop floor, is planning its own e-commerce venture. Future Group, which pioneered hypermarkets in the country, is outfitting small shop-owners and entrepreneurs with digital catalogues so that consumers can order Future Group products in places where there will never be a store. However the firm has scaled back some of its more ambitious plans for e-commerce. “The more sales you do, the more money you lose,” muses Kishore Biyani, Future Group’s founder. “You need to have continuous funding and someone to back you.” + +For the time being, the big companies in the sector are having those needs met. “You have at least three, potentially four large players with deep enough pockets,” says Mr Singhi. “It’s going to play out at a very high cost.” Companies like Alibaba and Amazon see that cost as worth paying in part because, just as they applied what they learned in China to India, so they will use their Indian experience in the next markets they move into. Alibaba, not content to back Paytm and Snapdeal, is also courting Indian businesses directly. In December it said it would help Indian firms with financing and logistics so they might use Alibaba’s platforms to export to China and beyond. Eventually, Mr Ma likes to say, any consumer should be able to buy from any seller, anywhere in the world. The more of those purchases go through one of his firms, the better. + +And everywhere these giants go, home-grown entrepreneurs will be hoping that their local acumen will give them an edge and looking for overseas investors to back them. Many of them will fail: India does not yet offer an example of how to make a profit, and it may be a long time before it does. But as long as some of these efforts survive, they will serve to speed progress, and innovation, in developing markets. As Amazon’s Mr Agarwal says, “If millions of small, medium enterprises out there, manufacturers and retailers, can...sell their product anywhere in the world—that’s transformational.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21693921-next-15-years-india-will-see-more-people-come-online-any-other-country-e-commerce/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Super Tuesday: Goodbye, Rubio Tuesday + +Abortion: Back in court + +The campaigns: Heard on the trail + +The primaries: The party declines + +Lexington: The big schmooze + + + + + +Articles Sections Next + +Super Tuesday + +Goodbye, Rubio Tuesday + +Donald Trump and Hillary Clinton win seven states apiece. The Republican and Democratic nominations are theirs to lose + +Mar 5th 2016 | CULPEPER COUNTY, VA | From the print edition + +The unifier + +TWO of the most loathed politicians in America won big on March 1st in the electoral smorgasbord that is Super Tuesday. Hillary Clinton won seven of the eleven states holding Democratic primaries or caucuses, including Massachusetts, Virginia and a clutch of other Southern states, such as Arkansas, Georgia and Tennessee. Donald Trump also won seven of eleven, carving a trail from Vermont to Arkansas that has caused yet more apoplexy among the Republican top brass. Though it is not yet certain that Mrs Clinton and Mr Trump will fight it out for the presidency in November, it is probable. + +The symmetry between the despised front-runners is alarming. Mrs Clinton is mistrusted by 60% of Americans, a legacy of years of scandals and Republican slander. It is possible, though unlikely, that the Democratic front-runner could yet be indicted by the FBI over her allegedly slapdash handling of classified information while secretary of state. Mr Trump, more extremely, is disliked by 60% of Americans, especially non-whites, a contempt he has earned by pandering to white Americans’ ugliest prejudices. + +When announcing his candidacy last year, he described Mexican immigrants as rapists. In the run-up to Super Tuesday, American media were dominated by a furore over his initial refusal to condemn the Ku Klux Klan (KKK), whose former Grand Wizard, David Duke, supports him. A Trump rally in Virginia on February 29th was mobbed by a line of hand-holding black activists, who were herded out by Secret-Service officers and a jeering white crowd. One of the officers manhandled a photographer for Time magazine. With Mrs Clinton and Mr Trump as the nominees, America, which is as repulsed by political mudslinging as it is ghoulishly drawn to it, can expect an extraordinarily ill-tempered and divisive election in November. + + + +Mrs Clinton’s dominance on Super Tuesday, despite four victories for her rival, Bernie Sanders, in his own state of Vermont, in Oklahoma, Colorado and Minnesota, was based on her crushing lead among non-whites. This had been expected. Mrs Clinton trounced Mr Sanders in South Carolina on February 27th by winning over 85% of the black voters who make up over half the state’s Democratic electorate. That was a bigger share than Barack Obama had won in 2008, when campaigning to become America’s first black president. It indicated that Mrs Clinton’s vaunted “Southern firewall” against Mr Sanders was intact. It is the berm that has stopped the Bern. + +Across the Super Tuesday states, Mrs Clinton won 83% of blacks and 67% of Hispanics. She also did better than previously with white women, winning 57% of their votes. “I’m very emotional because today I’m going to vote for a woman, which I find empowering,” said one, Laney Parrot, a teacher entering a polling station in Fredericksburg, Virginia. Mr Sanders’s victories, though impressive for a candidate who launched his campaign last year in front of a few friends, were in smaller states and mostly by smaller margins. + +They were also exclusively in states where blacks, who deliver around a quarter of the Democratic vote, represent less than 10% of the population. That is a guarantee of failure, as Mr Sanders tacitly acknowledged in a speech delivered on friendly Vermont soil. Effecting a political revolution had always been his main aim, the septuagenarian senator said; winning the nomination was a lesser concern. Absent an unlikely collapse, Mrs Clinton has the Democratic nomination in the bag. She leads Mr Sanders by around 200 delegates, excluding her massive lead among super-delegates, the Democratic officers whose votes will count at the party’s convention in July. Given that the Democratic delegates are shared out in proportion to the votes won in primaries and caucuses, this leaves Mr Sanders’s needing an improbable run of thumping majorities to catch up. + +Mr Trump’s wins were based on a now-familiar double whammy: a crowded Republican field, in which his more conventional rivals took bites out of each other’s vote, combined with his knack of tapping the anti-establishment rage evident across the Republican coalition. This looks likely to produce one of the most disliked and unpropitious candidacies in American political history. At polling stations in northern and western Virginia, conservative country, your correspondent was told by many that they had voted “for the lesser evil”, “not for you know who,” that they “knew who they hadn’t voted for.” + +Yet about one in three said they had voted for Mr Trump: “Because politicians are liars”, and he isn’t one; “because he’s a businessman,” and that’s what the country needs to get straightened out; “because he’s funding his own campaign”, and his rivals are on the take. “Because there’s no political mumbo jumbo with him and he’s going to stop everybody, Syria, Iraq, you name it, treating us like a doormat,” said Eileen, a teacher, working herself into a fury on a sunny afternoon in Culpeper County, one of the prettiest, most law-abiding, luckiest places on Earth. She also reckoned Mr Trump was the best man to beat the Democrats, of whom she said she’d never met one she liked; though her daughter, Melissa, standing smiling besides her, had just voted for Mr Sanders. + +Mr Trump won Virginia, an important swing state in general elections, with 35% of the vote. Exit polls suggested a staggering 54% of Republican voters in the state were unhappy with the prospect of having him as their nominee—a pattern repeated in every state he won. Altogether he won about 40% of the available 595 delegates, who were also divvied up on a proportional basis. This gives him 319 delegates in all, which represents a less decisive lead than Mrs Clinton’s, but a strong one. It is above the level Nate Silver, a revered pundit, had predicted Mr Trump would need to be on track to win an outright majority of Republican delegates ahead of the party’s convention. + +His main rivals, the senators Ted Cruz and Marco Rubio, are well below their comparable benchmarks, with 226 and 110 delegates. Yet both did just well enough on Super Tuesday to justify staying in the contest—which should ensure that both Mr Trump’s big advantages endure through a run of delegate-rich primaries, including in Florida, Illinois and Ohio on March 15th, where the winner will take all. + + + +Mr Cruz won his state of Texas and neighbouring Oklahoma, which was probably better than he had expected. But it was much less than the Southern sweep his strategy of appealing to evangelicals and the very conservative was designed to deliver. In his victory speech, delivered at the Redneck Country Club (where else?) in Houston, Mr Cruz derided Mr Trump as a “Washington dealmaker, profane and vulgar,” and appealed to his party’s patricians, who mostly despise both men, to back him as the likeliest anti-Trump candidate. There are signs that some see sense in that. Lindsey Graham, a veteran senator and failed presidential candidate who had previously described a choice between Mr Cruz and Mr Trump as akin to one between being poisoned or shot, suggested it might be time to choose poison. Mr Cruz received another fillip on March 2nd, when Ben Carson, a former neurosurgeon with a Christian following, who has long been cluttering the Republican field, suggested he was about to quit. Yet with the Bible-belt having largely voted, the going could get tougher for Mr Cruz. + +That is why, for those Republicans who do not wish to gift their party to a protectionist rabble-rouser, Mr Rubio’s Super Tuesday results were so shattering. Mr Rubio’s advisers had suggested he could win four states. He won only Minnesota, whose experience of Jesse Ventura, a professional wrestler who was the state’s governor for four years until 2003, was cited by many as a reason not to pick Mr Trump, a former WrestleMania star himself. + +In the days beforehand, the senator from Florida took Mr Trump apart in a televised debate, then ridiculed him on the campaign as a con artist, who quite possibly wet his trousers and whose fondness for fake tan promised to “make America orange again”. It made Mr Rubio look talented and immature, which are the two things unenthusiatic Republicans thought they knew about him already. Mr Trump countered by pulling in a couple of heavyweight endorsements—including from Chris Christie, the governor of New Jersey and former Republican candidate—which made Mr Rubio look even more juvenile. “He could be a good president one day, but now he’s copying Trump,” said Chuck Mullens, a plumber in Culpeper County, as he left the polling station without voting, having disliked everyone on the ballot. + + + +America’s primary agenda: our interactive 2016 election calendar + +Mr Rubio’s path to the nomination now looks vanishingly tight. If he fails to win Florida, where he is trailing Mr Trump by 20 percentage points, he is toast. Much the same is true for John Kasich, the governor of Ohio and fourth somewhat-serious Republican candidate. He has not won a state, though he ran Mr Trump close in Vermont; he must win Ohio, where he is also trailing Mr Trump, to survive. He is meanwhile damaging Mr Rubio’s dwindling prospects. Had he stepped down before Super Tuesday and his votes gone to Mr Rubio, as most would have, the Floridian would have won Virginia and Vermont. + +That would have made him look more credible. It would not have prevented Mr Trump being the big winner on a day in which his appeal stretched from hard-upSoutherners to well-heeled New England moderates, via the Washington D.C. commuter belt of northern Virginia—another place Mr Rubio had hoped to flourish. + +That is why a belated effort by members of the Republican elite, who will now launch a flurry of attack ads against Mr Trump, appears so pathetic. They are trying to save their party from a man who is having great success by identifying them as its biggest problem. In a victory speech delivered in the opulent setting of his seaside pile in Florida (advertised on its website as “the greatest mansion ever built”), Mr Trump tried slightly to allay his party’s concerns. Describing himself as a “unifier”, he said he expected to get along famously with Paul Ryan, the Republican Speaker of the House of Representatives, who had criticised his soft-peddling on the KKK. “And if I don’t,” Mr Trump added, “He’s going to have to pay a big price.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693933-donald-trump-and-hillary-clinton-win-seven-states-apiece-republican-and-democratic/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Abortion + +Back in court + +The justices ponder messing with Texas + +Mar 5th 2016 | WASHINGTON, DC | From the print edition + +Roe’s foes + +IN THEIR four-decade fight against Roe v Wade, the Supreme Court ruling of 1973 that recognised a right to abortion, pro-lifers have taken several tacks. One is to curtail the period during which women may end their pregnancies. Another is to ban particularly grisly-sounding techniques like “partial-birth” abortion. Recently, opponents of Roe have been waging a regulatory war of attrition that makes abortion harder and harder to obtain. On March 2nd, a Supreme Court diminished by the loss of Antonin Scalia, the conservative justice who died in February, asked whether a law of 2013 that, in effect, shuts down more than three-quarters of the 40-odd abortion clinics in Texas runs foul of a 1992 precedent prohibiting states from unduly imposing on a woman’s right to choose. + +Under the law, abortion providers in Texas must have admitting privileges at a nearby hospital and clinics must be expensively fitted out as “ambulatory surgical centres”. Legislators pitch the requirements as a boon to maternal health; detractors decry them as onerous, unwarranted changes that often leave women with nowhere to turn. + +Scott Keller, the Texas solicitor-general, insisted that legislators had women’s best interests at heart. But he faced a barrage of resistance from the court’s energised liberal jurists. The first salvo came from Ruth Bader Ginsburg, 83 this month. She jumped on Mr Keller’s suggestion that the new law left 25% of Texas women more than 100 miles from the nearest abortion clinic, “not including El Paso, where the Santa Teresa, New Mexico facility” is just a few minutes’ drive away. Justice Ginsburg noted that New Mexico law does not require surgical standards or admitting privileges. Doesn’t Texas say that “we need these things […] to protect our women”? Mr Keller repeated that women in El Paso often use the facility to obtain abortions. + +Justice Stephen Breyer probed the law’s justification. “Go back in time to the period before the new law was passed,” he said. “Where in the record will I find evidence of women who had complications” stemming from their abortions and “could not get to a hospital” under the previous regime but would have made it to a hospital under the new law? Mr Keller looked defeated. He grew meeker still when pressed by the three female justices to explain why Texas fretted so about abortion, one of the safest medical procedures, while failing to insist on surgical facilities for far riskier ones, like colonoscopies. + +Despite the fun the liberal justices had with Mr Keller, Texas may not lose Whole Woman’s Health v Hellerstedt when a ruling arrives in June. It would take five justices to overturn the decision upholding the Texas law, and Anthony Kennedy did not seem keen to be the decisive vote. Though he noted that the law served to “increase the number of surgical procedures as opposed to medical procedures, and that this may not be medically wise”, he wondered whether the plaintiffs had presented enough evidence that fewer clinics led to a crisis of abortion supply. + +A 4-4 split would let the Texas law stand, and allow other states in the Fifth Circuit to swipe at abortion access in similar ways (as Louisiana is already doing). But it would not bind the rest of the country. As the US solicitor-general, Donald Verrilli, neatly summed it up before the justices, the question boils down to whether the right to abortion “really only exists in theory” or “in fact, going forward”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693930-justices-ponder-messing-texas-back-court/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +Mar 5th 2016 | From the print edition + + + +Dark ages + +“Hope and change, not so much. More like hate and castrate.” + +David Plouffe, Barack Obama’s campaign manager in 2008, predicts a brutal general election. New York Times + +Love, actually + +“Boyfriend prefers Trump. I’m single now.” + +Sign at a Rubio rally in Oklahoma City + +Lest we forget + +“Can somebody attack me, please?” + +Ben Carson pleads for attention during the Republican debate in Houston. He didn’t get it. The debate transcript sometimes read “Unintelligible yelling” + +True Grit + +“Ted Cruz is not my favourite by any means…But we may be in a position where we have to rally around Ted Cruz as the only way to stop Donald Trump. And I’m not so sure that would work.” + +Lindsey Graham does not like his options. CBS + +Potty humour + +“Then he asked for a full length mirror. I don’t know why, because the podium only comes up to here…maybe to make sure his pants weren’t wet.” + +Marco Rubio improves the rhetoric + +Bored already + +“Get on the plane and go home. It’s over there.” + +An open mic catches Mr Trump dismissing Chris Christie + +How to make friends + +“[The party] ain’t promising him shit! Trust me on that one.” + +Michael Steele, former RNC chairman, explains why Ted Cruz won’t drop out of the race. Bloomberg + +Upside of a downside + +“He is the only man…that stood in front of [the] Jewish community and told them, ‘I don’t want your money’.” + +Louis Farrakhan, leader of the Nation of Islam, finds a reason to back Trump. + +Humpty Dumpty... + +“I’m not going to pay for that fucking wall.” + +Vicente Fox, ex-president of Mexico. + +…had a great fall... + +“Things are negotiable...I’ll make the wall two feet shorter, or something.” + +Mr Trump offers a conciliatory hand. + +and couldn’t be put together again + +“Funny enough, he is bringing us business.” + +Trump piñatas are selling briskly in New Mexico. Associated Press + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693932-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The primaries + +The party declines + +American politics looks so strange right now partly because both Republicans and Democrats are a mess + +Mar 5th 2016 | From the print edition + + + +POLITICAL parties are never monoliths. As those inside them are ceaselessly aware, they are fractious and fractured. And yet, especially in two-party democracies, they endure. A mixture of delivering the goods their voters desire, dividing spoils between internal factions and adapting to external change allows them to overcome their centrifugal pressures. They even manage, much of the time, to look more or less coherent while doing so. For most of the 20th century most Americans knew, more or less, what their two parties stood for. + +These times, though, are out of step. Though political scientists proved slow to pick up on it (see article), America’s parties are more fragmented than usual. The state of the Republicans is particularly parlous. But the contradictions among Democrats, though less obvious, also run deep. + +Donald Trump’s run for the presidency has prospered despite lacking all the things parties usually provide for a front-runner: not least strategists and policies, money. It is hardly surprising that the Republican Party failed to see Mr Trump coming. What is odder, and much more culpable, is its failure to address the mismatch between its grassroots supporters and its policy agenda into which Mr Trump has tapped so effectively. In its subsequent disarray, the party has come to resemble a newspaper that has just discovered that its readers no longer need it to mediate between themselves and the world. + + + +The Republican Party arrived in the 21st century as an alliance of small-state, low-tax, pro-business voters with religiously inspired social conservatives and national-security hawks. It enjoyed a disproportionate popularity among white voters, the result of its successful recruitment of southern whites who disliked the innovations of the civil-rights era and, under Ronald Reagan, of blue-collar workers across the country. This mixture of interest groups had proved pretty successful: it held the White House for 28 of the 40 years from 1969 to 2008. During this time the pro-business lot were the senior partners in the arrangement, not least because they paid for the party’s election campaigns. + +This is the first primary season in 50 years where that has not held true. The Koch brothers, who have built the wealthiest network of political donors in America with the aim of electing Republicans who will cut regulation and taxes, disapprove of Mr Trump. They have said they will not fund his campaign; and yet he thrives. + +Faultlines exposed + +Mr Trump’s ascendancy cannot merely be ascribed to his wealth—though that certainly helps, by allowing him to appeal directly to the concerns of the base rather than those of his donors. He has exposed faultlines within the different camps, as well as between them. Even before his rise, some pro-business Republicans were beginning to despair of the party, the congressional wing of which seemed to enjoy nothing more than shutting down the federal government and playing chicken with the debt ceiling. After the financial crisis, when a Republican-led administration bailed out several large financial institutions, denunciations of crony capitalism became a Republican theme as much as a Democratic one. Mr Trump has deepened the divide on the business wing. In December the head of the national chamber of commerce said he viewed Mr Trump’s candidacy as a form of entertainment. + +He has also spilt the social conservatives. A libertine history and the look of a roué gone to seed would not in themselves preclude the support of evangelical Christians, who are, after all, keen on repentance. But Mr Trump is not very religious and does not go out of his way to seem so; his adoption of pro-life positions seems insincere. Christian Post, the country’s most popular evangelical news website, recently ran an editorial with the headline, “Donald Trump is a scam. Evangelical voters should back away.” Hitherto powerful socially conservative organisations such as the Family Leader have endorsed Ted Cruz, a Texas senator, instead. But such exhortations have had little effect: Mr Trump has won comfortably with self-described evangelicals in most states. + +The reason evangelicals vote for Mr Trump has little to do with faith or specifics of policy. It is more a question of attitude. A study by the RAND Corporation, a think-tank, has found that the most reliable way to tell whether a Republican voter was going to support Mr Trump was whether he agreed with the statement: “People like me don’t have any say about what government does.” Trump voters feel voiceless, and whatever attributes Mr Trump lacks, he has a voice. He lends it to them, to express their grievances and their aspirations for greatness, and they love it. + +It is also a voice that says things which other politicians do not, such as that Mexican immigrants are likely to be drug-dealers and rapists. Such untruths fit into a broader, if largely tacit, racism that has made Mr Trump popular not only with the Ku Klux Klan, but also with the considerably larger number of whites who harbour some racial resentment. Geographically, his support correlates with the frequency of racial epithets in Google searches. + + + +America’s primary agenda: our interactive 2016 election calendar + +The weakest of the three Republican factions, the defence hawks, might even prefer a President Hillary Clinton to a President Trump. Mr Trump’s constant refrain about American troops always losing, his tendency towards isolationism, his insulting of prominent veterans such as John McCain, his attacks on George W. Bush as commander-in-chief and, most of all, his apparent enthusiasm for soldiers committing acts that would have them court-martialled, are a recipe for these Republican voters to the Democratic camp. + +Again, though, part of Mr Trump’s appeal reflects what at least some Republicans like about hawkishness; its association with authority. The Republican Party has spent the past half-century opposing the might of the federal government in every arena other than foreign policy. It now faces the prospect of going into the election led by someone who, surveys suggest, draws his most ardent support from those who would like a more authoritarian president in the White House. At that point it would be hard to say what, if anything, the party stands for. + +A battle of generations + +Mr Trump’s ability to blow Republican cracks asunder is unprecedented. But it has been helped by a long-standing unwillingness to face and fix those contradictions. For years the party has concentrated instead on opposing Barack Obama’s policies and, indeed, his legitimacy. With Mr Obama on the way out, that is moot now. + +He has, however, helped Democrats to know what they must jointly do. As Republicans long to tear down achievements they associate with Mr Obama, Democrats want to protect and uphold them. This has tended to keep the members of the party’s own coalition in agreement. Yet the ties between the voting blocs that favour Democrats—Hispanics, blacks, those with postgraduate degrees, single women, the non-religious, union members and millennials—are subject to change. The primaries have also revealed a powerful urge among activists to move the party leftward. + +Democrats fare exceptionally well with non-whites: in 2012 one in four of those who voted for Mr Obama were in this category, compared with one in ten of those who voted for Mitt Romney. But the interests of blacks do not always align with those of Hispanics. Fearing more competition for low-wage jobs, the congressional black caucus, allied with the unions, was partly responsible for defeating a push for immigration reform under George W. Bush. The party has found ways round this clash, presenting immigration reform as a question of civil rights; when Mr Obama meets caucus members, immigration reform tends to be omitted in a mutual show of good manners. But the division remains. + +The current crop of primaries has also made it clear that Democrats are divided along generational lines. Bernie Sanders has thrashed Mrs Clinton in every contest among voters whose formative political experiences were the Iraq war (which she supported) and the financial crisis (blamed on her Wall Street supporters). For those born before the Reagan years, by contrast, the fact that Mr Sanders honeymooned in the Soviet Union disqualifies him from consideration. Older Democrats remember the party’s move to the centre in the 1990s as pragmatic, correct and fruitful; younger ones consider it a betrayal. + + + +When its members actually turn out to vote, the Democratic coalition is still formidable. Non-whites make up an ever-increasing share of the electorate. Polling by Gallup shows that the number of Americans who describe themselves as liberal has increased over the past 20 years, while those who call themselves conservative has held steady (see chart.) Self-declared moderates lean Democratic. But often—especially in non-presidential election years—the coalition can’t be bothered. + +This has led to a party unable to refresh itself. Were Mrs Clinton (68) to win the nomination and then fall under a bus or an indictment, the names often mentioned as possible replacements are John Kerry (72) and Joe Biden (73). During Mr Obama’s presidency Democrats have lost 900 seats in state legislatures, 11 governors, 69 seats in the House and 13 senators. This helps to explain why Mrs Clinton has had no young pretender to voice the opposition to her from within the party. Mr Obama relied on his own apparatus, separate from the party, in his two presidential campaigns. Mrs Clinton has vowed to rebuild the party if she wins. But that supposes that its constituent interest groups continue to see the Democratic Party as the best way to get what they want. Once the presidential election is over, they may find apathy more attractive again—not least because, now that it has acted on heath-care reform and (to an extent) on climate change, the party has been remarkably poor at setting out new worlds to conquer. + +There is nothing immutable about the way the two parties currently line up. Republicans used to be the big-government progressive party, formed in opposition to slavery and pushing to remodel the South after the civil war; they have also been the small-government party, not only now, but in opposition to the New Deal in the 1930s. Democrats were once the small-government party, opposing those who wanted a more powerful federal government and defending the interests of white southerners against Washington; now they are famous as the big-government party, pushing federal anti-poverty programmes in the 20th century and government involvement in health care in the 21st. + +Furniture-moving + +This election could see the furniture rearranged again. Some Republicans wonder if a Trump candidacy might redraw the electoral map, winning over blue-collar whites who don’t normally vote in rustbelt swing states like Ohio, Pennsylvania, Michigan or Wisconsin. If he loses, the party might still conclude that it needs to pay more attention to the economic anxieties of those who feel left behind. + +For their part Democrats are counting on Mr Trump to energise members of the coalition that voted twice for President Barack Obama, and to put in play moderate Republicans, notably women, who can expect to be bombarded with Democratic messages about the billionaire’s misogyny. If Mrs Clinton marshals a broad anti-Trump coalition that peels off some habitual Republican voters and combines it with high turnout among traditional Democratic supporters, she will have an opportunity to create a new centrist coalition that may long outlast her. + +Nobody yet knows whether what is happening in 2016 is an anomaly caused by the one-off political persona Mr Trump has created, or if it is tracing the outline of the future. Whatever the parties look like after November 8th, though, Mr Trump’s success to date has already changed the system, in part by proving that voters value ideological consistency (and rhetorical restraint) much less than the political classes assumed. That could be liberating, if it allows elected representatives to stray from the party line. It could be damaging if the only lines they can stray towards are brutally populist ones. + +Parties exist to distil a complex set of questions into a binary choice; it is impossible to imagine a big democracy staying healthy without them. Yet in 2020, with Mr Trump in mind, the strongest candidates may start from the assumption that they do not need their parties much at all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21694006-american-politics-looks-so-strange-right-now-partly-because-both-republicans-and-democrats/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +The big schmooze + +Donald Trump poses a character test for Republicans + +Mar 5th 2016 | From the print edition + + + +IN EUROPEAN politics a useful distinction is sometimes drawn between the “clean right”, a group which can include pretty flinty conservatives, and the “dirty right”, meaning those who cross the bounds of democratic decency, whether with race-baiting, threats of political violence or snarling challenges to the rule of law. That distinction has proved powerful in its day. In the French presidential elections of 2002, the main parties of left and right united behind an unprincipled machine politician, Jacques Chirac, to defeat his opponent, Jean-Marie Le Pen, a brutish demagogue. Parisians fondly remember the posters that popped up, urging: “Vote for the crook, not the fascist”. + +Donald Trump, front-runner for the Republican presidential nomination, is of the dirty right. He showed that when he called for a blanket ban on Muslims entering America, and advocated both the use of torture and the punitive killing of terrorists’ families, a war crime. He whips up crowds by lamenting that he cannot punch protesters in the face. He accuses the Mexican government of sending rapists to America, and promises to round up and deport 11m migrants who are in the country without papers (though, like Caesar weighing lives in the Coliseum, as president he would let “good ones” back in). In a television interview on February 28th he declined three times to disavow statements of support from a veteran leader of the Ku Klux Klan (KKK), murmuring that he needed to “research” that white-supremacist group. Bringing history full-circle, the ageing Mr Le Pen sent word from France that, if American, he would vote Trump. + +After months of near-silence, many conservative grandees suggested that Mr Trump had crossed a line. Mitt Romney, the Republican presidential nominee in 2012, called his KKK response “disgusting” and “disqualifying”. Senator Marco Rubio of Florida, a rival presidential contender, offered a rebuke that blended principle with calculation: Mr Trump’s equivocation was not just “wrong”, he explained, “it makes him unelectable”. + +Yet nobody is reviving the spirit of France in 2002, when parties united to keep a bad man out of power. At the time of writing a single Republican senator, Ben Sasse of Nebraska, has declared that if Mr Trump is his party’s nominee, he will back an independent conservative. Many more Republicans have said, queasily, that they will back whoever the party nominates. Others are not even that squeamish. On February 26th Governor Chris Christie of New Jersey endorsed Mr Trump, calling him the strongest candidate against Hillary Clinton. During his own, ill-fated presidential run, Mr Christie called the tycoon’s proposed Muslim ban “ridiculous”. Now he is “proud” to back him. Members of Congress have begun to endorse Mr Trump, and their numbers will grow. + +There is a temptingly simple explanation for this embrace of Mr Trump: that the Republican Party is a consciously racist project, from top to bottom. The backlash against Mr Trump’s half-dalliance with the KKK suggests something more complicated. History matters, for one thing. Nothing scars modern Europe as deeply as memories of fascism, Nazism and collaboration with the Holocaust: many nerves jangle when strutting authoritarians question the loyalties of religious minorities or suggest that undesirable outsiders should be rounded up. In America, nothing casts a darker shadow than slavery and racial segregation, so that overt anti-black racism is uniquely taboo. When Mr Trump seemed to test that taboo, lots of Republicans were sincerely horrified. Even Mr Trump knows he went too far: he now says he misheard questions about the KKK and spurns their support. + +Dismayingly, attacks on Muslims and Mexicans do not set Republican nerves a-jangle to the same extent. In the 2015 American Values Survey, a large poll, 76% of Republicans said that Islam is at odds with American values. Many grassroots conservatives would call a Muslim entry ban an act of self-defence against terrorism, not bigotry. As for immigrants, 80% of Trump voters told the same survey that they are a “burden” rather than a source of strength for the country, by taking jobs, housing and health care. + +At the same time, an unhappy America is more divided than ever along partisan lines. Many Republican politicians think of Mrs Clinton as actively wicked. They see a patriotic duty to keep her out of the White House, not least because the next president will choose at least one Supreme Court justice, after the death of Antonin Scalia. Some hope that Mr Trump may prove malleable. Others suspect that his views will doom their party, but don’t know how to win without his voters. + +Pandering as contempt + +There is one more explanation for all the bigwigs and pundits rationalising Trump-support, while considering themselves good people who deplore racism. Mr Trump’s critics, they contend, show snobbish contempt for the tycoon’s voters—notably older, often less-educated whites who feel left behind by wrenching social and economic changes. One congressman backing Mr Trump, Tom Marino of Pennsylvania, uses a term much in vogue just now, calling Trump voters “the unprotected”. It comforts Trump-endorsers to think they are standing up for underdogs, but they are letting themselves off too easily. Other Republicans seeking the presidency endlessly promise to protect anxious Americans, with everything from air strikes on Islamic State to curbs on work visas. Mr Trump stands out for the savagery with which he vows to frighten, punish and hurt those who he says are doing America down. That’s not protection, but vengeance. + +Conservative grandees preparing to back Mr Trump are arguably the worst snobs of all. For they know that he is making promises to his supporters that are both nasty and impossible to keep. Like every tribune of the dirty right, Mr Trump thinks his voters are dupes: that is why he panders and lies to them without a qualm. If Republican bigwigs have shame or sense enough, there is still time—just—to disown him. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21693928-donald-trump-poses-character-test-republicans-big-schmooze/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Argentina’s debt: At last + +Canadian foreign policy: Trudeaumania 2 + +The Foreign Account Tax Compliance Act: Border babies v the IRS + +Bello: An Olympic oasis + + + + + +Articles Sections Next + +Argentina’s debt + +At last + +A deal with holdout bondholders is expensive, but worth it + +Mar 5th 2016 | BUENOS AIRES | From the print edition + +FOR more than a decade Elliott Management, the hedge fund led by Paul Singer, was the pantomime villain in Argentina’s dispute with its bondholders. Rather than accepting a big write-down of debt on which the country had defaulted, as other creditors did in 2005 and 2010, Elliott, along with several other “holdouts”, pursued full payment through the New York courts. That led to a fresh default in 2014. + +Now the drama is entering its final act. On February 29th Daniel Pollack, the court-appointed mediator, announced that Argentina had reached an agreement in principle with four of the largest creditors, led by Elliott. Argentina’s payment of $4.65 billion will be 25% less than they were demanding. Even so, it is a big pay-off for investors who bought the debt at a fraction of its face value. With this agreement, Argentina has settled with creditors who hold 85% of the disputed debt. + +It is a coup for Mauricio Macri, Argentina’s recently elected president (pictured), and will help end the country’s long isolation from the international credit markets. Together with other steps Mr Macri has taken since assuming office in December, including relaxing exchange controls and removing taxes on some exports, the credit deal helps restore normality to an economy that had been distorted by populist controls during 12 years of rule by his two Peronist predecessors, Cristina Fernández de Kirchner and her late husband, Néstor Kirchner. Addressing Congress, which began its new session on March 1st, Mr Macri blamed his predecessors for Argentina’s weak economy and high inflation. Isolation from credit markets, he declared, had cost the country $100 billion and 2m jobs. + +Argentina’s negotiators paved the way back by reaching deals with smaller groups of holdouts. On February 2nd Argentina agreed to pay a group of Italian bondholders $1.35 billion; two weeks later it settled for $1.1 billion with two of the six largest holdouts, Montreux Partners and EM Ltd. But Mr Singer’s Elliott Management led the most intransigent group; an agreement with them is the real prize. + +Thomas Griesa, the judge overseeing the case, had contributed greatly to Argentina’s predicament in 2012 when he ruled that the country could not pay bondholders who had agreed to a restructuring, or issue new debt, unless it settled with the holdouts. That precipitated Argentina’s default. On February 19th this year the judge in effect switched sides, saying that Mr Macri’s election had “changed everything”. He said he would lift the injunction barring Argentina from paying other creditors from March 1st under certain conditions. That was a severe blow to the holdouts, who had used the injunction to press Argentina for full payment. “The message to non-settling plaintiffs, many of whom have had no opportunity to negotiate with anyone, is unmistakable: settle by February 29th, or else,” wrote their lawyers. + +The deal is not quite sealed. The injunction will not be lifted until Argentina repeals two laws that block agreements with the holdouts. The Ley Cerrojo (Padlock Law), enacted in 2005 during the first round of debt restructuring, was intended to prevent Argentina from offering holdouts a better deal than that accepted by holders of restructured bonds. The Ley de Pago Soberano (Sovereign Payment Law) of 2014 was a failed attempt to circumvent Mr Griesa’s injunction by re-routing payments to bondholders who had accepted a deal through Argentina or France. + +Opening the lock + +The government is confident that it can secure the votes in Congress to repeal the laws. In early February, 13 deputies from the Front for Victory (FPV), Ms Fernández’s party, broke away to form a more moderate “Justicialist Bloc”. The move deprived the FPV of its position as the largest grouping in the lower house. The defectors have said they are willing to work with the new government to repeal the laws. In the upper house the government plans to enlist the support of Peronist governors, who are also keen to tap international credit markets. They are likely to persuade the senators over whom they have influence to support the repeal of the legislation. + +Once the laws have been scrapped, the government hopes to raise up to $15 billion through a bond issue, which it will use to pay the creditors. Some analysts doubt that the market can absorb such a large sum. But Argentina’s finance secretary, Luis Caputo, is bullish. “All the banks we’ve spoken with are confident that we can raise the money we need in the market,” he said. + +The government then plans to return to the market in an effort to finance its budget deficit, which was a daunting 5.8% of GDP last year. Under Ms Fernández’s administration the central bank financed the deficit by printing money, pushing up inflation. The bond issue will help the central bank to end that harmful practice, but the relief from high inflation will not come immediately. Propelled by the devaluation of the peso, the annual inflation rate, already high, has risen to around 30%; the government had hoped inflation this year would be 20-25%. It is trying to persuade trade unions not to demand excessive wage rises, which would drive inflation even higher. The unions are unwilling to make sacrifices, however. On February 25th teachers extracted an agreement from the government for a 30% salary increase; other unions are demanding pay rises at least as big. + +Mr Macri has so far taken a cautious approach to bringing down the budget deficit. Energy subsidies have been cut, but the president is reluctant to slash other spending, which would further rile Argentines already angry about inflation and, he fears, would weaken growth and employment. But until the government brings the deficit substantially down, the central bank will struggle to regain credibility. A return to the bond markets is not enough. + +Nevertheless, the debt deal should boost the government’s confidence. It has until April 14th to repeal the legislation and pay Elliott and its fellow litigators. It must also settle with the holders of the remaining 15% of the debt. But the exhausted negotiators are allowing themselves a moment of satisfaction. “It seemed like a thousand years to me,” Mr Pollack said of the seemingly interminable talks. Mr Macri hopes not to take up much more of his time. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21693786-agreement-victory-countrys-new-president-argentina-reaches-deal-its/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Canadian foreign policy + +Trudeaumania 2 + +Can the new prime minister parlay his celebrity into influence? + +Mar 5th 2016 | OTTAWA | From the print edition + + + +SINCE leading his Liberal Party back to power in Canada last October, Justin Trudeau has been profiled in such glossy magazines as Vanity Fair and Vogue; Hello’s photo spread featured his wife and children. On March 10th he will sit down with Barack Obama at a state dinner in the White House, the first for a Canadian leader in 19 years. “I can’t think of a Canadian politician who has attracted as much attention in the United States,” says Laura Dawson of the Canada Institute at the Woodrow Wilson Centre in Washington. + +Mr Trudeau owes his celebrity to more than glamour. He succeeds Stephen Harper, a prickly Conservative, who in ten years as prime minister conducted an ideologically charged foreign policy at odds with Canada’s multilateralist traditions. His relationship with the United States, by far Canada’s most important, was tense. Mr Trudeau replaces a scowl with a smile. He personally greeted some of the 25,000 Syrian refugees Canada agreed to admit. Such gestures have helped bring back to life the Trudeaumania inspired by the prime minister’s father, Pierre Trudeau, a dashing Canadian leader of the 1960s, 70s and 80s. “But how,” Ms Dawson wonders, “do we translate celebrity into influence?” + +Mr Trudeau’s answer: by returning to Canada’s diplomatic traditions. It is the world’s tenth-largest economy; as a military power, it counts for less. It has historically sought to increase its modest clout by working through international bodies such as the UN and the Commonwealth. Mr Harper spurned them as talking shops for despotic regimes. He refused to support a global accord on climate change (or introduce a credible policy in Canada). + +Co-operation is back in, says Stéphane Dion, the new foreign minister. His “mandate letter” from Mr Trudeau directs him to resume working through the UN. Mr Trudeau signed the global climate agreement reached in Paris in December. He was due to meet Canada’s 13 provincial and territorial leaders on March 3rd to talk about a national climate strategy and may announce a climate initiative with Mr Obama. + +The prime minister intends to re-establish diplomatic relations with Iran and to revive Canada’s relationship with Mexico, its partner, along with the United States, in the North American Free-Trade Agreement. He promised to lift visa restrictions on Mexicans, imposed in 2009 to stem an influx of asylum-seekers and an irritant ever since. + +He is not rolling back all Mr Harper’s policies. Canada is likely to ratify the free-trade agreement with the European Union, which Mr Harper negotiated. It may also join the Trans-Pacific Partnership among a dozen Asian and American countries. “We should not change everything,” said Mr Dion in a recent speech. + +If Mr Trudeau just gets along with Mr Obama, that will be a significant change. The two sporty leaders have engaged in pre-prandial raillery about which country’s ice-hockey teams are better. Mr Obama has taken with equanimity Mr Trudeau’s decision to withdraw Canada’s six fighter planes from the United States-led fight against Islamic State; Canada is increasing humanitarian aid and the number of troops advising Iraqi Kurds instead. The Keystone XL pipeline to carry crude from Alberta to the southern United States, greatly desired by Mr Harper but vetoed by Mr Obama, is unlikely to figure much in the dinner-table conversation. + +That leaves trade and tax. The United States is the market for three-quarters of Canada’s goods exports and the source of two-thirds of its imports, but commerce could flow more freely than it does. The “beyond the border” agenda is supposed to accomplish that but has hit a snag: a disagreement over what law will apply to United States officials stationed in Canada to pre-clear goods for import. A row over Canadian softwood lumber, which the United States says is subsidised, could get worse. Canada objects to a United States law that obliges its banks to hand over information about accounts held by expatriates (see article). + +But the main threat to Canadian-American relations will not come from anything the two leaders feasting in the White House might do. It comes from the loud-mouthed property mogul who aspires to be the building’s next occupant. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21693988-can-new-prime-minister-parlay-his-celebrity-influence-trudeaumania-2/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Foreign Account Tax Compliance Act + +Border babies v the IRS + +Americans in Canada fight back against the taxman + +Mar 5th 2016 | OTTAWA | From the print edition + +WHEN Barack Obama vowed in 2009 to pursue tax cheats abroad, he probably was not thinking of people like Ginny Hillis. Born in Detroit to Canadian parents, the retired lawyer has lived in Canada since she was six. Like many transplanted Americans, she ignored an American law that since 1913 has obliged citizens to file tax returns regardless of where they live. + +With the Foreign Account Tax Compliance Act (FATCA), enacted in 2010, that became harder. It demanded that foreign banks report to the Internal Revenue Service (IRS) details of accounts held by Americans abroad. Banks that fail to comply are subject to a 30% tax on payments they receive from the United States. Some 7m Americans outside the country (1m of them in Canada), along with an unknown number of “US persons”, are now caught in FATCA’s net. + +Unlike most, Ms Hillis is fighting back through the courts. She and Gwen Deegan, an artist who has lived in Canada since she was five, filed a suit claiming that the Canadian government’s co-operation with FATCA violates a tax treaty and constitutional protections against discrimination. In September a judge denied the first claim. The second, that Canada is discriminating against citizens on the basis of their place of birth, may rest on stronger arguments. + +Among the reluctant dual-taxpayers are Americans who dodged the draft during the Vietnam war, academics who went north in 1950-70 and border babies, born in the United States because that is where the nearest hospital was. Half a million “snowbirds”, pensioners who winter in the American South, risk liability for tax. Their biggest gripe: proceeds from the sale of a family home, untaxed in Canada, could be subject to capital-gains tax in the United States. A record 4,279 Americans worldwide renounced their United States citizenship last year. + +If Ms Hillis and Ms Deegan win in court, Canada’s government will face an awkward choice between complying with the decision and exposing Canadian banks to huge penalties. The Alliance for the Defence of Canadian Sovereignty, which is paying the women’s legal expenses, has harvested donations from China, Vatican City and beyond. If FATCA falls Ms Hillis would still owe American tax. The real problem is the extraterritorial demands of the IRS. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21693982-americans-canada-fight-back-against-taxman-border-babies-v-irs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +An Olympic oasis + +Zika will not be much of a threat to the Rio games + +Mar 5th 2016 | From the print edition + + + +BACK in 2009 when the Olympic games were awarded to Rio de Janeiro, the stars seemed to be aligned. Brazil was prospering, thanks to strong global demand for its oil, iron ore, soya beans and other commodities. Federal, state and city governments were working well together as close political allies. Now cariocas (as inhabitants of Rio de Janeiro are known) might well feel that fate has forsaken them. + +The country is suffering its worst recession since the 1930s. The federal government is paralysed by a corruption scandal. The unpopular president, Dilma Rousseff, faces possible impeachment for allegedly breaking budget rules. The collapse of the oil price has hit Rio de Janeiro state, the centre of the oil industry, especially hard, forcing it to slash its budgets. + +Yet the city of Rio resembles an oasis in Brazil’s political and economic desert. Thanks partly to the games and to booming revenue from tourism, the money is still flowing. Eduardo Paes, the city’s mayor since 2009, seized control of venue construction and many transport projects. While stadium-building for the 2014 football World Cup in Brazil was marked by scandal and last-minute rush, the Olympics are on track with five months to go. At the Olympic Park, the venues are all but ready. When Bello visited a fortnight ago a hose was filling the pool at the aquatic centre; at the multipurpose Arena Carioca, a taekwondo contest was about to start. + +There are three worries. The state government has failed to clean up the polluted waters of Guanabara Bay, the venue for yachting. Mr Paes retorts that races will be held at the bay’s mouth, where the water is clean, and that two dummy runs went well. Then there is the new metro line being built by the state government to link Ipanema and Barra de Tijuca, the site of the Olympic Park. A recent leaked memo from the mayor’s office fretted that it wouldn’t be ready in time. The state government insists it will be; it says 90% of the work is already done. School holidays have been moved back to coincide with the Olympics; traffic may be more of a problem for the Paralympics in September. + +The biggest concern is Zika. Since the disease was detected in 2015, 1.5m Brazilians may have caught it. Usually it just involves a few days of mild fever and aches. But it has been linked to microcephaly (brain damage) in the babies of a small minority of women who caught it while pregnant. And a tiny number of Zika sufferers develop Guillain-Barré syndrome, a creeping (though normally reversible) paralysis. + +Zika is hard to test for. Most of Brazil’s 641 confirmed cases of microcephaly are in the poor north-east. But Aedes aegypti, the mosquito that is the main vector, is also responsible for dengue, which Rio has suffered since 1977. The insects breed in stagnant water. + +Across the country, the government has stepped up efforts to control the mosquito. In Gardênia Azul, a favela near the Olympic Park, a team of health agents does house-to-house visits. Geraldo Marques, a mosquito-control specialist, checks that empty beer bottles are dry and covered; he drizzles insecticide into a drain. “The saucers under plants are the greatest villain,” he says. + +The problem, says Rubem César Fernandes of Viva Rio, a big NGO which, among other things, runs health clinics for the city government, is that many urban spaces are beyond public control. “The population knows what to do, but they don’t have the discipline to do it every week. It’s a cultural thing.” It doesn’t help that a third of dwellings in the Rio area lack a proper sewerage connection. + +Mr Paes stresses that the games will take place in the dry season; cases of dengue normally drop in August and September. Part of the worry about Zika is that so much about it is unknown, and therefore scary. Though pregnant women and their sexual partners will need to seek medical advice, for the mass of sports fans the virus should not be a worry. + +There is already much to celebrate about the Rio Olympics, though with their city turned into an obstacle course of road works for the new metro and bus lanes, cariocas may not yet feel like cheering. There has been no obvious waste or corruption. The city has used the games as a catalyst for a wider transformation. Mr Paes tore down an elevated motorway that scarred the old port, burying it in a tunnel. The port area now hosts new museums and public spaces; next month a tramway will open there. Apart from better public transport, the Olympics may bequeath an overdue revival of Rio’s decayed and crime-ridden historic centre. If urban renewal were a sport, that would win a gold medal. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21693983-zika-will-not-be-much-threat-rio-games-olympic-oasis/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Malaysia’s scandals: The art of survival + +Malaysia’s 1MDB affair: Follow the money, if you can + +Sanctions on North Korea: Big bother + +Confronting intolerance in Pakistan: A game of dare + +Banyan: The last refuge + + + + + +Articles Sections Next + +Malaysia’s scandals + +The art of survival + +As Najib Razak digs in, disillusion among Malaysians grows + +Mar 5th 2016 | KUALA LUMPUR | From the print edition + + + +ONLY standing room is left at the civic hall in Petaling Jaya in the western suburbs of Kuala Lumpur, Malaysia’s capital. Inside 1,000-odd middle-class Malaysians have gathered to consider the fallout from a corruption scandal that has buffeted the country since July. “The whole world is laughing at us,” says a retiree watching from the back rows. + +At the heart of the scandal are hundreds of millions of dollars that for unclear reasons entered bank accounts belonging to the prime minister, Najib Razak (see article). You might think such a revelation would unseat Mr Najib and spell ruin for his United Malays National Organisation (UMNO), which has held power since independence. Instead, Mr Najib appears to have strengthened his grip, by purging critics within the cabinet and police. On February 29th the grand old man of Malaysian politics, Mahathir Mohamad, stormed out of the party in disgust. Dr Mahathir was prime minister for 22 years until 2003 and was once a fan of Mr Najib. No more. + +Across the country, dissidents are feeling nervous. Last year at least 15 people, mostly dissenters in politics and civil society, were charged under a noxious colonial-era sedition law that Mr Najib had once promised to repeal. In late February authorities blocked one of Malaysia’s most popular news websites hours after it reported that not all Malaysia’s graft-busters are convinced that the prime minister has committed no crime. A new anti-terror law entitles the prime minister to nominate broad “security zones” in which police powers may be extended—a handy tool for crushing protests, critics say. The attorney-general is mulling stiffer sentences, including caning, for people who leak government secrets. + +It has all appalled many urban and professional Malaysians. It has also made stars of the government’s most vocal critics. At the forum in Petaling Jaya, fans seeking selfies crowd around Tony Pua, an opposition MP whom police have banned from leaving the country; at dinner afterwards people at neighbouring tables insist on paying for his meal. + +Malaysia is “essentially two countries”, says Ben Suffian, a pollster. Outrage is widespread in the cities, with growing numbers of young, liberal ethnic-Malays as well as most of the ethnic-Chinese and ethnic-Indian minorities who make up about a third the population. It is rarer in UMNO’s rural heartlands, where apathy is rife and where the party is trusted to defend racial laws designed to give the ethnic-Malay majority a leg-up. + +Over the decades this rural voter base has helped keep UMNO in power. Indeed party leaders have been more concerned to protect themselves from challenges from within UMNO. Loyalty is prized over ability, while patronage and convoluted party rules discourage upstarts. Mr Najib has been playing the system more ruthlessly than many imagined. Recent sackings of subordinates have sent a signal about who is boss. + +It is surely a relief to UMNO that Malaysia’s opposition has mostly bungled its chance to make hay from the affair. It had formed a loose coalition of three parties, reliant on an unlikely peace between two of them, a secular ethnic-Chinese outfit and a devout Malay-Muslim one. The opposition won the popular vote in a general election in 2013 but fell short of the number of seats required to take power because of gerrymandered constituencies. Yet rather than regroup and build momentum for the election that is due by 2018, it has been consumed by bickering. When tens of thousands of Malaysians rallied last August to demand Mr Najib’s resignation, they did so not under the banner of any political party but at the request of Bersih, an unaligned group that has long campaigned for clean politics and electoral reform. + +Rock solid, or rocky? + +Some people assert that Mr Najib’s hold may be shakier than it appears. Even in the countryside, worries about the economy have made the prime minister unpopular. Low oil prices have damaged Petronas, the state oil firm, slashing the amount of money the government can pour into development projects. A new sales tax has increased prices for many everyday items, while a slump in Malaysia’s currency, the ringgit, which has fallen by more than a fifth in the past 18 months, has put many imports out of reach. It all helps make some poorer Malays more susceptible to populists painting ethnic-Chinese and ethnic-Indian Malaysians as rent-seeking interlopers. But a new suspicion is growing among ordinary Malaysians that goings-on in Kuala Lumpur are affecting their own pocket books. + +As for the party, rivals whom Mr Najib has vanquished may yet bounce back. Dr Mahathir, who has long called for Mr Najib to step down, is scheduled to attend an unusual forum of grandees and politicos from across the political spectrum who are meeting in private later this month to discuss alternatives to Mr Najib. Wan Saiful Wan Jan, of the Institute for Democracy and Economic Affairs in Kuala Lumpur, says that some UMNO bigwigs are backing the prime minister through gritted teeth. He says that a time may come when they say that enough is enough, especially when the party starts considering its strategy for the next election. Perhaps Mr Najib may risk calling a snap election before then, both to pre-empt conspiracy and to catch out the opposition before it can patch up its differences. + +For Malaysia’s rattled liberals, all this seems theoretical. Last year they watched plans evaporate for a parliamentary vote of no-confidence. They are doubtful that the current corruption scandal will ever unseat Mr Najib. + +Back at the civic hall in Petaling Jaya, the mood darkens as the evening wears on. Microphones passed around the floor reveal frustration and anger. One person insists that the opposition draw up a list of government officials who should face trial if the opposition takes power. A second, shaking with rage, frets that the opposition has “no chance” of winning the next poll. This is no time to give up hope, Ambiga Sreenevasan, a prominent lawyer, tells the crowd. Once the crisis is over, she says, “we must make sure this never happens to our country again.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693966-najib-razak-digs-disillusion-among-malaysians-grows-art-survival/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Malaysia’s 1MDB affair + +Follow the money, if you can + +Investigators in several countries are trying to get to the bottom of Malaysia’s growing corruption scandal + +Mar 5th 2016 | KUALA LUMPUR | From the print edition + + + +IT WAS a striking move from a country better known for hiding iffy foreign wealth than for exposing it. Frustrated by a lack of co-operation from Malaysian counterparts, Switzerland’s attorney-general declared in late January that there were “serious indications” that $4 billion had gone astray from Malaysian state concerns, some of it into accounts held by current or former Malaysian and Middle Eastern officials. The announcement fuelled an already combustible scandal that has transfixed Malaysians, battered their prime minister, Najib Razak, and could yet ensnare banks around the world. + +The allegations of misappropriation centre on a Malaysian state investment fund, from which it is suspected that large sums were siphoned by businessmen and officials with links to Mr Najib. It is thought that some of this was used to help his party win an election in 2013; some was spent on buying assets at questionable prices; and some of the remainder was moved to offshore shell companies and bank accounts. All those suspected of involvement, including Mr Najib, deny wrongdoing. None has been charged with a crime. + +The affair spans the globe. Caught up in it are not only Malaysian officials and moneymen but also several big banks and perhaps Saudi royalty. The money trail leads from Malaysia to Singapore and elsewhere in Asia, Abu Dhabi, Switzerland, the Caribbean and New York. Authorities are investigating in Switzerland, America, Singapore, Hong Kong and the United Arab Emirates. They face a daunting challenge in piecing together such a complex case, a task made harder by operators’ widespread use of opaque offshore vehicles. + +The story’s institutional protagonist is 1Malaysia Development Berhad (1MDB). It was originally a regional development fund for Terengganu, an oil-rich Malaysian state, but in 2009 the country’s finance ministry took it over and rebranded it. Mr Najib heads the ministry, as well as being prime minister. The plan was for the fund to suck in investment through tie-ups with foreign firms. Mr Najib chairs 1MDB’s board of advisers. + +1MDB got most of its financing by raising debt. A series of bond issues pushed its borrowings up to $11 billion. By 2014 questions were multiplying about its financial health, spurred by the fact that it had had three audit firms in five years. A flurry of investigations in the media drew on leaked documents. 1MDB denies wrongdoing. + +Malaysian investigators concluded that deposits into a bank account held in Mr Najib’s name came through banks and companies linked to 1MDB. They found that a firm that was once part of 1MDB and is now controlled by the finance ministry, SRC International, paid $13m into the account in 2014-15. The attorney-general, Mohamed Apandi Ali, has said that there is no evidence that Mr Najib was aware of the payment. (We all overlook items on our bank statements.) + +More eye-catching was an earlier payment into Mr Najib’s account, of $681m, from a shell company. This was made only weeks before the general election in 2013, which Mr Najib won narrowly. Some say it was linked to 1MDB. The official explanation is that it was a legal donation from an unnamed member of the Saudi royal family. Mr Najib has denied ever taking public money for personal gain. 1MDB says it has not paid any funds into the prime minister’s personal accounts. + +On March 1st the Wall Street Journal reported that investigators in two countries, whom it didn’t identify, believe that more than $1 billion in total flowed into Mr Najib’s personal accounts, much of it originating from 1MDB. These investigators, it is alleged, reckon that the payments were, in part, routed through a company linked to—or made to look as if it was linked to—a venture involving 1MDB and Middle Eastern interests. + +1MDB had various dealings with an Abu Dhabi-based sovereign fund called IPIC which guaranteed some of 1MDB’s bonds. The dealings included a tie-up with Aabar Investments PJS, an IPIC subsidiary. 1MDB transferred more than $1 billion to what appeared to be a division of Aabar. Yet investigations allegedly suggest the money in fact went to a firm based in the British Virgin Islands (BVI) with an almost identical name to the Abu Dhabi concern. + +This transaction seems not to have been recorded on the books of Aabar’s parent, IPIC. (1MDB says it stands by its own accounts, which show the payment.) The suspicion is that financial sleight-of-hand may have been used to pass off the transfers as legitimate payments between corporate partners. Investigators believe much of this money ended up in Mr Najib’s accounts after being routed through a second company in the BVI, according to sources cited by the Wall Street Journal. + +IPIC is reported to be looking into what happened to the money paid out by 1MDB but not booked as coming into the Abu Dhabi fund. Aabar denies wrongdoing. + +Also in the spotlight is a joint venture between 1MDB and PetroSaudi, an oil firm. 1MDB injected $1 billion into the venture. Two-thirds of this was moved to a Seychelles-based firm shortly afterwards, according to a draft report by Malaysia’s auditor-general. 1MDB later sold its interest in the venture, using some of the $2.3 billion raised to invest in a Cayman-based vehicle. 1MDB then reportedly sacked its auditor, KPMG, after the firm expressed concern over the identity and financial standing of the vehicle’s owners. 1MDB asserts that all the Cayman money is accounted for. PetroSaudi has denied doing anything wrong. + +Investigators are also looking into who drove 1MDB’s complex transactions. Assuming it is genuine, correspondence obtained by Sarawak Report, an investigative website, appears to show that a key figure in the fund’s dealings with PetroSaudi was a Malaysian financier, Low Taek Jho, a family friend of Mr Najib. Mr Low reportedly also helped direct some election spending for Mr Najib’s ruling coalition, Barisan Nasional. 1MDB and Mr Low have insisted he merely advised the fund, unpaid. He denies wrongdoing. + +Banks, too, face awkward questions. Several global banks handled large payments that are under scrutiny, among them arms of JPMorgan Chase and Royal Bank of Scotland. One question is whether there were grounds for the banks to suspect that any of the transactions were questionable—or whether especially rigorous checks on public officials and other “politically exposed persons”, or PEPs, were called for and carried out. + +The role played by Goldman Sachs is also notable. The investment bank led 1MDB’s main bond issues, earning unusually high fees on them (Goldman has said this is because it temporarily held the risk on its own balance-sheet). Goldman’s chairman for South-East Asia, Tim Leissner, grew close to Malaysia’s elite. Last year Goldman put him on leave and now says he has left the firm. + +Mr Najib’s response to the scandal has been to swipe at his critics. Muhyiddin Yassin, a deputy prime minister who wanted investigations stepped up, was sacked from the cabinet last year, and the attorney-general was replaced—supposedly on health grounds, though Sarawak Report has published documents appearing to show that charges were about to be brought against Mr Najib. + +On February 27th Mr Muhyiddin called for the prime minister to resign, saying the outgoing attorney-general had shown him “proof” that Mr Najib acted criminally in connection with 1MDB. The government said this was part of a “politically motivated conspiracy” to topple Mr Najib. + +The new attorney-general, Mr Apandi, has moved swiftly to exonerate Mr Najib, closing a probe into the $681m “donation” and asserting that it had nothing to do with 1MDB. The government says that most of the money was sent back to the donor after the election. Why, some ask, was so much of the payment returned if it was legal? + +Not all Malaysia’s institutions have been supine. Last year the central bank urged the attorney-general to begin a criminal prosecution of 1MDB managers after concluding that the fund had moved $1.8 billion overseas based on inaccurate disclosures. This money was supposed to go to the PetroSaudi joint venture and related loans. Instead, much of it went elsewhere and is unaccounted for, according to the auditor-general’s draft report. (The final report was supposed to be released last December, but has twice been delayed.) The central bank requested a review of the finding by Mr Apandi that 1MDB did not commit any offences. This was rejected. + + + +Malaysia’s anti-corruption commission, an independent agency, investigated the payments into Mr Najib’s account and handed its findings to Mr Apandi late last year. He returned them to the commission in January, requesting more information. The commission has denied reports, based on unauthorised briefings, that it recommended charging Mr Najib. + +It was the haste with which Mr Apandi ruled out criminality that prompted the sharper tone from the Swiss authorities, who are investigating suspected bribery, corruption, misconduct in public office and money-laundering linked to 1MDB. They appear to be unimpressed with the blanket exoneration, though they say Mr Najib is not a suspect. + +Through a brass plate, darkly + +Singapore is also investigating suspected money-laundering and says it has frozen a “large number” of bank accounts. The case is a test of the city-state’s resolve in dealing with financial crime. Like Hong Kong, it has seen big inflows of wealth in recent years, including money of dubious provenance from Switzerland. + +But the sleuths face many hurdles. The corporate secrecy offered by offshore centres makes the task of penetrating structures used to move money slow and difficult. The OECD and others have begun to try to lift this shroud, but transparency reforms are at an early stage. + +Then there is the complex and clunky international system of “mutual legal assistance”, or MLA, under which countries ask each other for help in investigations. Piecing together the jigsaw is all the harder if the country at the centre of the probe is unhelpful. Malaysia has said it will assist the Swiss, but that looks unlikely. Indeed, it is using blocking tactics, for instance by telling Switzerland to file its MLA request through Malaysia’s foreign ministry. That is unusual: such requests would more typically go through the justice ministry, which is viewed abroad as less political. + +Malaysian officials reacted angrily to Switzerland’s announcement about misappropriation, accusing it of spreading “misinformation”. When the Swiss and Malaysian attorneys-general met last year, the Malaysians are believed to have said they would arrange for those caught up in the affair to provide testimony in depositions, but this has not happened. Without Malaysian help, it will be hard for foreign sleuths to complete their probes. For now, though, they seem determined to keep digging, causing anxiety in the Malaysian capital, parts of the Middle East, and some of the world’s largest financial centres. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693970-investigators-several-countries-are-trying-get-bottom-malaysias-growing-corruption/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sanctions on North Korea + +Big bother + +Despite tough-looking new sanctions, punishing the gangster state will remain fiendishly difficult. All eyes are on China + +Mar 5th 2016 | SEOUL | From the print edition + + + +ON MARCH 2nd the UN agreed to the most sweeping sanctions it has yet imposed on North Korea in response to the country’s nuclear and missile tests of the past decade. The measures include inspections of all goods going to or coming from the country; a total embargo on all arms sales to it; and a ban on exports from it of coal, iron and other minerals. They were approved by all 15 members of its Security Council including Russia, after it delayed a vote to negotiate small changes to the text, and China, which opposes its ally’s nuclear programme but has been reluctant to punish it seriously. + +Hopes have been raised before that consensus at the UN might force North Korea to abandon its efforts. “Swift and tough” was how America described a resolution passed by the UN after North Korea’s inaugural atomic test in 2006. Yet despite further such resolutions, the North’s bomb-building programme chugs along. Few expect it to give it up soon. But a toughening of China’s stance—assuming it implements the sanctions rigorously—may give North Korea pause. China is by far the country’s biggest trading partner. Most of the trade covered by the sanctions goes through China. + +The resolution was the product of nearly two months of delicate negotiation between America and China that began after North Korea’s fourth nuclear test on January 6th. That was followed on February 7th by a long-range missile test (in the guise of a rocket sending a satellite into space), after which South Korea and America agreed to begin formal talks about the possibility of installing an American missile-defence system in the South. That prospect may have helped to stiffen China’s resolve: it fears the kit might threaten its own nuclear arsenal. China may hope that America might now abandon its missile-defence ideas. But it has also made clear that UN sanctions are “not an end in themselves”. China recently called for peace talks between the Koreas. It will hope that the sanctions will encourage North Korea to resume discussions on dismantling its nuclear programme, and not simply choke the North Korean economy. + +Chinese enforcement of previous sanctions applied by the UN on North Korea has been poor. Those now being imposed would involve considerably more disruption for China. It receives most of North Korea’s exports of minerals, including coal, gold, titanium and iron ore; in 2014 they made up half of the North’s $2.8 billion worth of sales to the country, according to South Korean figures. Rüdiger Frank of the University of Vienna thinks inspections of goods crossing the border will scare away trading partners and increase transaction costs for all North Korean trade, even the legal sort. But Chinese officials may balk at having to examine every truck. It is possible that they may simply put on a show of doing so. John Delury of Yonsei University in Seoul says that if China thought economic pressure was useful, it would already be applying it unilaterally. + +The sanctions include a more explicit ban on the sale of luxury goods, with which the regime pampers its senior officials: no more snowmobiles or fancy watches. But perhaps the most potent provisions of the UN resolution are those that require, and no longer simply encourage, countries to sniff out suspicious North Korean activity. They must expel North Korean diplomats found to be engaging in criminality and shut down North Korean banks if there is evidence they are helping the nuclear programme. + +Money trees + +But the sanctions do not target China’s vital oil supplies to the North. And North Korea may find ways of mitigating their effects. It has been tapping new sources of cash, such as by sending more workers abroad to earn hard currency at logging camps in Russia and on construction sites in the Middle East—activities that are also not covered by the latest resolution. If the new sanctions deter some traders, others may fill the gap, especially Chinese middlemen attracted by high commissions for riskier dealings on behalf of North Korean state trading companies. North Korea has a thriving black market in everything from computers to fine cognac, oiled by corrupt Chinese customs officials along its 1,400km (870-mile) border with China. The sanctions regime is likely to increase that illegal trade, not crush it. + +North Korean coal shipments, by their size, should be easier to track. Yet a large loophole remains that allows exports for “livelihood purposes”. Kim Byung-yeon of Seoul National University says certifying end-use would be wholly impractical. Proceeds from coal exports and most other trading activities typically remain in China in the form of credit. These are pools of ready cash for North Korean elites to draw on for their trade. And North Korea has proven adept at skirting sanctions by setting up front companies and shuffling ownership—shifting control of a trading company from a blacklisted government agency to one that is not, for example. + +Recent reports by a UN panel have found that North Korea routinely renames firms hit by sanctions and registers its cargo ships under foreign flags (among them, Cambodia, Kiribati and Sierra Leone). States that neglect to enforce sanctions are not penalised. Since the previous resolution in 2013, more than 150 of the UN’s 193 member states have failed to submit required reports on their implementation of those sanctions; last year, four of them were members of the Security Council. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693965-despite-tough-looking-new-sanctions-punishing-gangster-state-will-remain-fiendishly-difficult/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Confronting intolerance in Pakistan + +A game of dare + +A new boldness in challenging religious extremism + +Mar 5th 2016 | From the print edition + +Mumtaz Qadri was no saint + +PEOPLE from many walks of life poured onto the streets of Rawalpindi near Islambad, Pakistan’s capital, on March 1st to honour a convicted murderer. Among the 100,000 or so mourners who crammed into Liaquat Park and surrounding streets were lawyers wearing the black suits of their profession, labourers bused in from around the country and even the odd expatriate businessman who had flown in for the occasion. The crowd was full of fury, directed at the government of Nawaz Sharif, the prime minister, for the hanging the day before of Mumtaz Qadri. A former police bodyguard, he had assassinated his boss, Salman Taseer, the governor of Punjab province, in 2011. + +Taseer was a liberal-minded businessman turned politician who had earned the hatred of religious hardliners by lobbying for a presidential pardon for a poor Christian woman. She had been sentenced to death under Pakistan’s infamous blasphemy law that bans disrespect towards the Prophet and other “holy personages”. It was, Taseer said, a “black law”. It is often invoked against religious minorities on the flimsiest of grounds; evidence can rarely be challenged in court for fear of repeating the alleged blasphemy. + +For killing Taseer, clerics declared Mr Qadri a ghazi or warrior. A mosque in Islamabad was named after him. Support for him among the 500,000-strong armed forces was so strong that the army chief at the time told foreign ambassadors that he was unable to issue a condemnation. + +This week the government was careful to manage the backlash. It ordered broadcasters to downplay news of Mr Qadri’s execution and imposed a news blackout on his funeral. No leading politician dared comment. + +Given the strength of support for Mr Qadri, it was not obvious that the government would dare to execute him. His legal team had exhausted all options. In a bold ruling in October the Supreme Court not only roundly rejected the team’s arguments; it also asserted that the blasphemy law was not beyond criticism since it was man-made. Even so, Mr Sharif’s party, the Pakistan Muslim League (Nawaz), or PML (N), could have sat indefinitely on Mr Qadri’s request for a presidential pardon, so ducking the risk of enraging its religiously conservative base. + +That it did not do so is evidence of a growing readiness to stand up to intolerance and extremism. It follows a firestorm of terror attacks from the late-2000s onwards, culminating in the Pakistani Taliban’s assault on a school in Peshawar in December 2014 that killed more than 130 children. That event galvanised public opinion like nothing before. Since then the army, which in the past has used rabble-rousing Islamists to bash domestic and foreign opponents, has also turned its efforts to curbing extremism. + +Politics no longer favours the hardliners, who tend to flourish during periods of military rule. Religious parties win few seats in a parliament dominated by the PML (N), while hardliners are divided over ideology. Mr Qadri’s sympathisers come from the usually non-violent Barelvi movement, Sunnis heavily influenced by Sufism. Barelvis are locked in competition for adherents with the Deobandi movement, to which the Taliban and most other militant groups belong. With their puritanical outlook and belief in going back to the basics of early Islam, Deobandis are deeply critical of Barelvi enthusiasm for such traditions as worshipping at the shrines of local Sufi saints. Barelvis have largely cheered the crackdown on militant groups, which has targeted Deobandi mullahs and seminaries. A leading Deobandi cleric, Mohammad Khan Sherani, backed the execution of Mr Qadri. + +Mr Sharif cuts a strikingly more liberal figure than during his last stint in power, in the 1990s. Then he attempted to introduce sharia (Islamic law) and have himself declared “commander of the faithful”. Recently his government has pushed for Hindus, who make up 2% of the country’s population of 182m, to be allowed legally to register their marriages for the first time. On February 24th Punjab, which is controlled by PML (N), passed a law to protect women from violence (a move which a constitutionally empowered body of mullahs quickly declared to be un-Islamic). Mr Sharif has also thrown his support behind an Oscar-winning documentary critical of the widespread sanctioning of “honour killings” of women. He has vowed to change the law. + +Much more remains to be done, including reining in a notorious mullah, Abdul Aziz, who has praised the Pakistani Taliban and promotes sectarian hatred from right under the government’s nose in Islamabad’s Red Mosque. And there are still no signs of a crackdown on army-backed jihadists who restrict their activities to Afghanistan and India. + +The blasphemy law also needs to be reformed or, even better, scrapped. But that is unlikely, given how many men may be ready to emulate Mr Qadri. Those who got close enough to Mr Qadri’s garlanded corpse this week reported a face with the beatific glow of a martyr. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693962-new-boldness-challenging-religious-extremism-game-dare/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +The last refuge + +The government of Narendra Modi seeks to define Indian patriotism, and to own it + +Mar 5th 2016 | From the print edition + + + +THE annual budget which India’s finance minister, Arun Jaitley, presented on February 29th would normally have been the big political event of the week. That is not how proceedings in Parliament in the ensuing days made it appear. Both chambers were disrupted by angry exchanges over issues close to the hearts of the more extreme Hindu-nationalist wing of the ruling Bharatiya Janata Party (BJP). Yet again, an ugly strain of BJP politics is distracting attention from what was supposed to be the party’s central agenda in power: ensuring rapid economic growth. + +The party’s own members provoked some of the most heated spats. This week two MPs from the BJP, including a junior minister, Ram Shankar Katheria, attended a rally in Agra, near Delhi, to commemorate a Hindu activist allegedly killed by Muslims. Inflammatory speeches at the rally called Muslims “demons” and warned them of a “final battle”. The two BJP men also spoke, leading to opposition calls for the minister’s resignation. But he was unapologetic, saying that, although he had called on Hindus to unite for their own safety, and for the culprits to be executed, he himself had not named any community. + +The opposition has also been attacking the minister of human resources, Smriti Irani, over her response to two recent incidents at universities. One was the suicide of a scholar at the University of Hyderabad, Rohith Vemula, who left a note that prompted national soul-searching about the discrimination he had suffered because of the “fatal accident” of his birth as a Dalit or “untouchable”, a Hindu at the bottom of the caste hierarchy. The second is the arrest for sedition of students at Jawaharlal Nehru University in Delhi, including the head of the student union, Kanhaiya Kumar. Their alleged crime had been to shout “anti-national” slogans at a protest marking the anniversary of the execution of Afzal Guru, a terrorist from Indian-ruled Kashmir. + +The BJP has blown the incident up into one of national pride and patriotism—especially after opposition politicians came out in defence of the students. Demonstrations for and against the students have taken place in several cities. On February 27th Srinagar, the biggest city in the Kashmir valley, was paralysed by a strike in support of the students and of a Kashmiri professor also charged with sedition over an Afzal Guru commemoration. + +A BJP politician decried the scruffy looks and licentiousness of left-leaning students at JNU, claiming that 2,000 bottles of booze and 3,000 used condoms are found on the campus each day. Since it only has about 7,000 students, that represents quite a feat, and the claim was greeted with derision. But other features of the case prompted justifiable outrage. It emerged that two of the seven videos incriminating the students had been doctored. Mr Kumar was badly beaten up in court by “patriotic” lawyers, who have as yet faced no serious consequences. + +The damage to India’s image is painful. Faith in the police and other institutions has been undermined. Vigilante violence has seemed to win official backing. Street protests have proliferated; on March 2nd the police in Delhi used water cannon against protesters outside Parliament. This is not the outward-looking, investor-friendly image India hopes to project. And it threatens its liberal traditions of free speech. It is not just India-hating traitors who think that the trial of Afzal Guru was unfair and that his execution was used for political ends by the previous administration, led by the Congress party. The BJP’s definition of “sedition” precludes almost any debate on the future of Kashmir—a source of tension within India and with Pakistan since independence. + +All of this looks like bad news for India’s prime minister, Narendra Modi. Yet, beyond tweeting in support of a fiery speech by Ms Irani, his embattled human-resources minister, he has had little to say on the Rohith Vemula suicide and JNU furore. This follows a pattern: he rarely speaks out in ways that might alienate the BJP’s hardliners. He needs them, as his most loyal foot soldiers in looming state elections, including one in West Bengal in May; and Mr Modi is probably already thinking about the next general election, due by 2019. With that in mind, and following failure in an election in the big state of Bihar last November, he and his advisers may calculate that whipping up a chorus of angry Indian nationalism serves them better than talking about touchy issues such as caste—and better than promoting narrow “Hindu” causes such as protecting cows from beef-eating Muslims and Christians. + +It also suits Mr Modi’s style, cultivated in his years as chief minister of the state of Gujarat, to portray himself as an outsider. He complains of plots by the press, NGOs, foreign meddlers and political pundits to destabilise his government. Despite leading India’s first single-party majority government in many years, he still governs as if he is waging an opposition campaign, with big rallies, catchy slogans and a sense of victimhood. + +Hopes that Mr Modi would implement radical economic policies were clearly misplaced. He campaigned in 2014 less as a reformer than as a man who got things done. But ruling India has proved much harder than running Gujarat, and he is constrained by the lack of a majority in Parliament’s upper house. So the optimism of his election campaign, when he sought to represent the aspirational new urban middle classes, has been dented. + +Mother tricolour + +For all that India is the world’s fastest-growing big economy, to many Indians that is not how it feels. It is not creating enough jobs for its swelling workforce. The fresh spending in this week’s budget was aimed not at the middle classes but at the poor in the countryside, the voters whom Congress has long wooed. Last October Arun Shourie, a writer and minister in a former BJP administration, mocked Mr Modi’s government as “Congress plus a cow”. This week’s budget and political battles suggest things have moved on. It has become Congress plus a flag. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21693919-his-bjp-government-seeks-define-indian-nationalism-and-own-it-mr-modis-party-finds-last/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Politics: Loyal to the core + +Hong Kong and the mainland: Fear-jerker + + + + + +Articles Sections Next + +Politics + +Loyal to the core + +Legislators will soon meet to discuss a new five-year economic plan. But China’s leaders are more worried about their own jobs + +Mar 5th 2016 | BEIJING | From the print edition + + + +WITH all the pomp, pageantry and protest-deterring security, which are traditional at such affairs, the annual session of China’s rubber-stamp legislature, the National People’s Congress (NPC), will open on March 5th. Its agenda includes an unusually weighty topic: the discussion (and inevitable approval) of a plan for the country’s economic development in the next five years—the Communist Party’s recipe, in effect, for ensuring that the world’s second-largest economy does not stall. But many of the officials at the meeting will be worrying about a more pressing matter: their jobs. + +The biggest reshuffle in five years of leadership posts at every level of the Communist Party is getting under way. Hundreds of thousands of party bosses and their colleagues will be replaced, in everything from township party committees to state-owned enterprises. These changes will affect a series of other appointments: party leaders at every level are sometimes given concurrent titles such as mayor, CEO, or, in the case of Xi Jinping, whose main job is as the party’s general secretary, the largely honorific role of president. + +The drawn-out process will culminate late in 2017 with sweeping changes at the very top of the party. This will involve the retirement of five of the seven current members of the Politburo’s Standing Committee. The only members of that body who are almost certain to keep their jobs are Mr Xi and the prime minister, Li Keqiang. Six out of the 18 ordinary members of the Politburo are also due to retire. + +For Mr Xi these changes both high and low will be vital to the success of his policies for the rest of the time he has in power. When he took over in 2012, Mr Xi inherited a party bureaucracy stuffed at the highest levels with appointees of his two immediate predecessors as party chief (Hu Jintao, and before him, Jiang Zemin), and at the lower levels by officials used to running their localities in a manner suited to Mr Hu’s priorities. With the upcoming reshuffle, Mr Xi has an opportunity to stack the party hierarchy with his own loyalists. No wonder, then, that foreign dignitaries find Chinese leaders distracted. + +As much as the five-year plan, the five-yearly cycle of job uncertainty and related tension has determined the working rhythm of China’s bureaucracy since the 1980s, when a two-term limit was imposed on most leadership positions. Da huanjie, or “big changeovers” of personnel, occur in the build-up to, and right after, each of the party’s five-yearly congresses, the next of which (the 19th) will take place late in 2017 (not to be confused with the NPC, which is not concerned with party affairs). + +Mr Xi took over immediately after the 18th congress. By party convention, he too is subject to a two-term limit. That makes the 19th congress crucial for the consolidation of his power. It was Mr Hu (with help from a retired but ever-solicitous Mr Jiang) who supervised preparations for the 18th congress. So the build-up to the 19th will be Mr Xi’s first opportunity to make his mark on the appointment of so many officials. It will also be his last such opportunity before he prepares to retire at the 20th congress in 2022, assuming that is his plan. + +Mr Xi will only concern himself with the most important job changes; it is the party’s all-powerful and highly secretive Organisation Department that will decide on most of them, based on his guidelines. These, it would appear, suggest that candidates must be unswervingly loyal to Mr Xi. In recent weeks, several provincial party chiefs have hailed Mr Xi as the “core” of the party leadership, a term that had long been abandoned in favour of language that suggested a more collective style of rule. Mr Xi, it appears, has no scruples about being seen as the pre-eminent strongman. + +Who’s up? + +During the NPC, which normally convenes for about ten days, foreign journalists will have a rare opportunity to see the provincial party bosses who are likely to get jobs in the Politburo after the 19th congress (media are given access to many of the meetings at which delegates, grouped by province, parrot the party line). But it is still far from clear which of them, if any, are being groomed by Mr Xi to replace him and Mr Li after the congress in 2022. At this point ten years ago, there was already speculation that Mr Xi and Mr Li—both then provincial chiefs—were front-runners. + +Today the field looks more open. The party boss of Guangdong province, Hu Chunhua, and that of Chongqing, Sun Zhengcai, are possibles. But they may be handicapped by their lack of strong connections with Mr Xi. Others include Chen Miner, the party chief of Guizhou province who once worked closely with Mr Xi, and various officials in the central leadership including Ding Xuexiang of the Central Committee’s General Office and Zhong Shaojun of the party’s Central Military Commission (which Mr Xi heads). + +Unlike a decade ago, there are rumours that Mr Xi may be thinking of flouting convention and staying on after 2022. If this is so, it has not resulted in any less scrambling for top positions. The confusion this contest has caused among subordinates, says Chongyi Feng of the University of Technology in Sydney, Australia, is slowing down implementation of the market-oriented reforms that Mr Xi has promised. So too is Mr Xi’s campaign against corruption; officials fearful of being accused of graft by rivals prefer to keep their heads down rather than get involved in projects involving large amounts of money. Minxin Pei of Claremont McKenna College in America describes a Chinese bureaucracy “paralysed by fear”. The Organisation Department is looking out for anyone who is at risk of daibing, or “carrying sickness”, meaning transferring a habit of corruption from one job to another. + +One attribute that may help candidates for promotion is being well-versed in the Communist canon. In recent days, official presses have been rolling out copies of an obscure Maoist text: “Work Method of Party Committees”, first published in 1949. Mr Xi has ordered officials to study the tract, which includes an instruction that party bosses must (metaphorically) “learn to play the piano”. This, Mao explains, means they should attend to everything just as a pianist uses all ten fingers. They should not “give all [their] attention to a few problems, to the exclusion of others”. Mr Xi himself, with pressing economic matters to attend to as well as the reshuffle, should perhaps take note. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21693948-legislators-will-soon-meet-discuss-new-five-year-economic-plan-chinas-leaders-are-more/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Hong Kong and the mainland + +Fear-jerker + +A film abhorrent to the Communist Party has proved a hit in the territory + +Mar 5th 2016 | HONG KONG | From the print edition + +Hong Kong’s future will be excellent in parts + +“THE reason why Hong Kong does not have democracy is because no one has died yet,” says a student in the former British colony who thinks it worth shedding blood to win freedom. Fellow supporters of the territory’s independence from China rampage through the streets; a protester self-immolates outside the British consulate. The government in Beijing sends tanks to crush the revolt. + +Such a calamity is unlikely in 2016. But could it happen in Hong Kong within the next decade? That is the question posed by “Ten Years”, a popular local film that has infuriated mainland officials. + +When China took Hong Kong back from Britain in 1997, it agreed to give it a “high degree of autonomy” for 50 years. Each of the film’s five vignettes portrays a dystopia in which China, explicitly or covertly, has taken control much sooner. Released on December 17th in just one cinema, the film went on to play to packed theatres across the territory until its run ended in February. In some cinemas it outsold “Star Wars”, another film about a big, repressive state. On March 10th the film’s overseas premiere will take place in Japan. + +“Ten Years” has appealed to those concerned about China’s efforts to stifle the development of democracy in the territory and to restrict freedom of speech. Anxieties have been fuelled recently by the disappearance of five men who sold gossipy books about China’s leaders. + +At the end of February a Hong Kong-based television channel aired interviews with the men. It said four of them were in custody on the mainland for illegally selling books there. One of them, Lee Bo, said he was helping the mainland police as a witness. Mr Lee’s case has aroused particular interest because he disappeared from Hong Kong itself; the others were visiting the mainland or Thailand when they went missing. In the interview, Mr Lee denied he had been kidnapped by Chinese agents and said he remained “free” on the mainland. But suspicions persist that China has been putting pressure on him to stop publishing scurrilous works. + +Such worries have encouraged the recent rise of a “localist” movement, whose followers emphasise Hong Kong’s separateness from the mainland. On February 8th young localists clashed with police in the city’s worst violence since the 1960s. In a by-election for the legislature on February 28th, a localist candidate charged by police with taking part in the riot took 15% of the vote. “Ten Years” refers to the movement in its depiction of Sam (played by Liu Kai-Chi, pictured), a fictional shopkeeper who is attacked by pro-Communist fanatics for calling his eggs “local”. + +China has made its displeasure clear. A newspaper in Beijing called the film “ideological poison”. Mainland broadcasters have dropped plans to air the Hong Kong Film Awards on April 3rd, the territory’s equivalent of the Oscars (“Ten Years” has been nominated for best picture). + +Hong Kong’s financial secretary, John Tsang, has been trying a more conciliatory approach to localist sentiment. In his budget speech on February 24th, he described films made in the Cantonese dialect (“Ten Years” is one such, though he did not mention it) as a “key component of the local culture”. He announced a doubling to HK$500,000 ($64,300) of the government’s subsidy for each Cantonese film promoted on the mainland, where films use the Mandarin dialect. Not everyone was impressed. One of the directors of “Ten Years” said the government would support only films that could pass China’s strict censorship laws. “Ten Years” would stand no chance. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21693949-film-abhorrent-communist-party-has-proved-hit-territory-fear-jerker/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Iran: Mr Rohani’s complicated victory + +Syria’s fragile truce: Too many holes to last + +Lebanon: When elephants battle + +Egyptian television hosts: Sisi’s foaming mouthpieces + +Electricity in Nigeria: Powerless + +Film-making in Uganda: Lights, camera, no budget + +African migration: To the land of good hope + + + + + +Articles Sections Next + +Iran + +Mr Rohani’s complicated victory + +A boost for reform, but a long way still to go + +Mar 5th 2016 | TEHRAN | From the print edition + + + +THE clerics disqualified the candidates, but they could not disqualify the people. So long were the queues outside many polling stations that Iran’s election commission postponed closing five times. Secular Iranians with pink hairdos stood in line waiting to vote against the mullahs. When a self-important hardline politician tried to queue-jump, they booed him to the back of the line. + +In Jamaran, the Tehran district where Ayatollah Khomeini once berated western Satans, citizens cheered the architects of Iran’s overtures to the West as they came to vote. Muhammad Zarif, the foreign minister who negotiated the nuclear deal, got polite applause. A former president, Muhammad Khatami, who is perhaps Iran’s most popular politician despite being banned from state media, won a hero’s cheer. + +By contrast, the turnout in south Tehran, a poorer, more conservative place, seemed dismal. Voters queued for hours in the north, but registered their ballots in the south within minutes. Organisers in the mosques which doubled as polling stations tried to rally their flock. They pinned posters in their porticos mocking America’s president, Barack Obama, and played nationalist songs over loudspeakers. + +The Council of Guardians, a body packed with the Supreme Leader’s followers, had done its best to rig the results in advance. They had banned most reformist candidates for the Majlis, or parliament, and for a body of Shia clerics, the Assembly of Experts, who select the Supreme Leader. But the reformists outsmarted them. They compiled lists of those who remained, and when they had run out of their own candidates, filled them with the most innocuous of their rivals. They cut deals with pragmatic conservatives, like parliament’s speaker, Ali Larijani, whose deputy appeared on Tehran’s reformist list. + +The upshot was a “List of Hope”, that was reformist in parts. Sometimes voters had a choice only between hardline and moderate conservatives. Many candidates appeared on both the List of Hope and the hardliners’ list. “We didn’t know half the people on the list, and the half we did know we didn’t like,” said a Tehran businessman. “But if you want change in the Middle East, you have two choices—reform what you can, or follow Syria.” + +In the capital the List of Hope won all 30 parliamentary seats and all but one of the 16 Assembly of Experts seats. Ayatollah Hashemi Rafsanjani, who has openly questioned the system of a single Supreme Leader, came first; Hassan Rohani, the president, third. Eight of the 30 were women. The reformist list won majorities in other cities including Isfahan, which hardliners had swept in 2012. In the Assembly of Experts, out went harshly pious hardline icons including Ayatollah Muhammad Yazdi, the current head of the body, and Muhammad Taghi Mesbah Yazdi, the Revolution’s chief surviving theorist. It was, as President Rohani put it, a demonstration of people power. “They said in a loud voice: ‘We want interactions with the world, not confrontation.”’ + +Given the overlap between the lists, the results are not quite so clear-cut. On a rough assessment of the 216 seats that were decided (69 have been pushed to a run-off round in late spring and five are reserved for minorities), the conservatives won just under half, far worse than their tally at the previous election in 2012. The reformists got almost 40%, up from about 10%. So independents, including Mr Larijani, will hold the balance of power. + +That should give Mr Rohani more room for manoeuvre to push through the laws he needs to open Iran for foreign investment and claw back some of the assets Iran’s big conglomerates, controlled by clerics and Revolutionary Guards, amassed when Iran was cut off from the world. Most independents will depend on his budget if they want to bring roads and other goodies to their provinces. + +Democracy’s messy + +But parliament will also be a chaotic place. Having culled each other’s upper tiers, both parliamentary factions look rudderless. Mr Rohani, a consummate centrist, must decide whether to concentrate on the economy, as the Supreme Leader wants, or to pursue social change, as his supporters want. He has yet to keep his promise to release political dissidents incarcerated after the 2009 elections. + +The situation with the new Council of Experts is equally murky, but crucial. It will hold office until 2024. Since Mr Khamenei is 76, it may well have to choose his successor as Supreme Leader. It, too, has shifted in a more moderate direction, which could presage a battle of critical importance to Iran’s future if the time should come for it to perform its task. + + + +In graphics: The implications and consequences of Iran's nuclear deal + +The conservative establishment is far more powerful than the president. The Supreme Leader can veto laws. Judges and Revolutionary Guards do his bidding. Isolation has served the hardliners well, allowing them to muscle into sectors, particularly oil, previously filled by foreigners. While Mr Zarif, Mr Rohani’s foreign minister, was meeting his American counterpart, the hardliners tested a ballistic missile to spoil the mood. Conservative goons have arrested western journalists and businessmen, presumably to undermine Mr Rohani’s diplomacy towards the West. The day Britain reopened its visa section in Tehran they put up a billboard of the Queen in a nearby square, showing her with the snout of a camel. + +But they are a little less rigid than they used to be. Nudged by the Supreme Leader, who prefers to hide behind his president, even some of the hardest-liners approved last summer’s nuclear deal, and many, like Mr Larijani, have tacked to the centre. Muatalifa, a conservative faction, holds senior posts in Mr Rohani’s own staff. The morality police have stopped barging into people’s homes and offices quite so often. + +The difference between the two electoral lists is muddier than it appears. Conservatives may denounce their opponents as western stooges; reformists may mutter that the conservatives are the Shia equivalent of Islamic State. But in reality hardline and softer clerics intermarry, shift positions, and hedge their bets to keep power, says an Ayatollah in Qom who was once Ayatollah Khomeini’s Guardian Councillor, and is now one of the Supreme Leader’s turbulent priests. The views of voters count for far less than they should in Iran, but they do count for something. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693937-boost-reform-long-way-still-go-mr-rohaniu2019s-complicated/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Syria’s fragile truce + +Too many holes to last + +The “cessation of hostilities” has brought some relief, but means different things to different people + +Mar 5th 2016 | From the print edition + + + +IT WAS a brave attempt to generate diplomatic momentum. Four days into the American and Russian sponsored “cessation of hostilities” agreement that came into force on February 27th, Staffan de Mistura, the UN special envoy to Syria, said he was expecting the warring parties to return to the negotiating table in Geneva on March 9th. Mr de Mistura had pencilled in an earlier date for the resumption of peace talks, which were suspended before they could begin a month ago when the Syrian opposition walked out. But he hopes that by allowing a couple of extra days “for the ceasefire to better settle down”, the chances of success will be greater. + +Mr de Mistura’s use of the expression “ceasefire” is itself an indication of hopes likely to be dashed. A cessation of hostilities is more an orchestrated lull in the fighting than a formal ceasefire. Thus far, however, the agreement, although partial and fragile, is holding better than many expected. The intensity of the fighting has dwindled more than during previous attempts. America’s State Department said it had not heard of any “significant” violations of the agreement, though that depends on what is meant by significant. The Syrian Network for Human Rights, a British-based NGO, reported nearly 80 breaches (including the possible use of poison gas) in the first few days, resulting in 13 civilian deaths. + +On the same fairly positive note, Bashar al-Assad’s government has allowed deliveries of humanitarian aid to besieged communities, including some in rebel-controlled areas. The UN was aiming to have reached 150,000 people by the end of the first week. It reckons that there are at least 450,000 people trapped in towns and villages across the country. Mr Assad told a German television station on March 1st that his government would “do our part so that the whole thing works”. + +Some scepticism is warranted. The agreement excludes both Islamic State (IS) and Jabhat al-Nusra (JAN), al-Qaeda’s Syrian branch. It labels them terrorist groups. As such both can be targeted, either by the regime with its Russian and Iranian backers, or by the American-led anti-IS coalition. But JAN, in particular, operates alongside more mainstream rebel groups supported by America and its allies. + +There are thus many potential flashpoints where the regime can say it is attacking designated terrorists, but is actually going after groups supposedly protected by the agreement. In largely rebel-held Idlib province, the Western-backed Free Syrian Army (FSA), Ahrar-al-Sham (a powerful Salafi outfit) and JAN all share control. It is doubtful whether either Russian or Syrian aircraft, equipped only with “dumb” bombs, can target one group without hitting others. The regime also says that JAN and IS are operating in Ghouta and Daraya, suburbs of Damascus that it has long wanted to wrest back. Rebels say this is untrue. + + + +An interactive guide to the Middle East's tangled conflicts + +The biggest test case seems certain to be Aleppo. Russian air strikes in recent weeks have made it possible for regime forces, augmented by the Iranian Revolutionary Guards and various Iranian-backed proxy militias, to come close to a complete encirclement of pre-war Syria’s biggest city. The Russians insist that Aleppo’s defenders are dominated by JAN. FSA sources say that JAN has fewer than 1,000 fighters in Aleppo, a small fraction of the groups in the city that are affiliated to it. + +An all-out attack on Aleppo can probably be ruled out. The regime does not have enough troops to fight street by street against well-prepared locals—the kind of battle that causes heavy casualties. Nor is Russia able to deploy enough precision-guided munitions to make air power count for much in such a densely packed city. The Institute for the Study of War, a think-tank in Washington, DC predicts that the regime and its allies will instead pursue a slow “siege-and-starve” campaign to wear down the city’s defenders without getting so many of their own men killed. + +As part of the plan to isolate Aleppo, the regime is depending on Kurdish YPG fighters and Russian air strikes to cut off all the northern supply routes from Turkey. That is another reason to fear that the cessation of hostilities will be short-lived. The Kurds have said they will abide by that agreement unless attacked. But Turkey’s president, Recep Tayyip Erdogan, says that it has no bearing on his country’s military campaign to prevent the Kurds from controlling Syria’s northern border, which he sees as a threat to Turkey’s own security. + +For now, a pause in the fighting, even if confined only to some areas, suits almost everyone. But the chances are slim that an agreement so rickety will last long enough to provide a platform for serious peace talks in Geneva. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693940-cessation-hostilities-has-brought-some-relief-means-different-things/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lebanon + +When elephants battle + +Saudi Arabia and Iran squabble over Lebanon. The little guy gets hurt + +Mar 5th 2016 | BEIRUT | From the print edition + + + +AS SAUDI ARABIA and Iran jostle for power in the Middle East, Lebanon has managed to maintain an uncomfortable balance between the two. Saudi Arabia has long been chummy with Lebanon’s Sunni politicians and some of its Christians. Iran supports the Lebanese Shia, not least through Hizbullah, a militia-cum-political party. It has also snuggled up to some Lebanese Christian groups. Nonetheless, an uneasy calm prevailed between Lebanon and the two regional powers. Apparently no longer. + +On February 19th Saudi Arabia said it had suspended $4 billion in funding for the French and Americans to train and equip the Lebanese army and security forces. Ostensibly the kingdom objects to Hizbullah, and therefore Iran’s influence, which they see as exemplified by Lebanon’s failure to condemn an attack in January on the Saudi embassy in Tehran. Saudi Arabia then warned its citizens against travelling to the tiny country, and accused Hizbullah of smuggling drugs into the kingdom and sending mercenaries to Yemen and Syria. On March 2nd the six-member Gulf Co-operation Council designated Hizbullah a terrorist organisation. + +Hizbullah and Iran are certainly amassing power in the Middle East, often in unsavoury ways. They have propped up Bashar al-Assad, Syria’s blood-spattered despot, and provided men and weapons to help Iraq fight Islamic State. They are also thought to be helping Yemen’s rebel Houthis. But although in Lebanon Hizbullah has been blocking the nomination of a new president, it has done little new to ignite Saudi anger there. The move probably has more to do with a bolder—and often clumsy—foreign policy under King Salman and his favoured son, Muhammad. Their fear of Iran has bordered on panic, not least since Iran concluded a nuclear deal with America and other powers. + +Saudi Arabia’s moves against Lebanon seem amateurish. Even if the Lebanese parties wanted to, they could do little to diminish the role of Hizbullah, which acts as a state within the state and also dominates the government. “Saudi Arabia sometimes acts with bombast and violence that makes it look like the Donald Trump of the Arab world,” says Rami Khouri of the American University of Beirut. + +The result is likely to be that the Saudis lose influence in Lebanon, possibly to Iran. The squabble risks destabilising a divided nation that is already buckling under the weight of Syrian refugees. Lebanon’s politicians, divided by their attitudes to Saudi Arabia and Iran, among many other things, are already trading accusations. Hizbullah and the Future Movement, the main Sunni party led by Saad Hariri, the son of a revered former prime minister, may call off their regular meetings. + +This probably makes Lebanon less secure. It is facing threats from the war next door in Syria and from terrorists inspired by it at home. Signalling its concern, the UN has called on other countries to make up the $4 billion. Many Lebanese fear that if the row escalates, the economy will suffer. They worry that the Gulf will kick out Lebanese residents, who send home hefty remittances. Saudis and other Gulf spenders may well ignore the travel warnings and still spend their money on holidays in freewheeling Beirut, but far fewer have come since the carnage started in Syria. + +The squall looks unlikely to blow over. Hassan Nasrallah, Hizbullah’s leader, piled on the rhetoric against the Al Sauds on March 1st, accusing them of crimes and massacres. Hussein Shobokshi, a Saudi columnist, does not think the kingdom will back down. “Any rise in Iran’s role will hurt the Lebanese more than us,” he says. + +Hizbullah has even suggested that Saudi Arabia has cut the cash because it is going bankrupt as a result of low oil prices. Loth to miss an opportunity, Iran has offered to make up the money. The Iranians’ aim may be nothing more than to tweak royal Saudi noses; they can barely afford such a sum. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693898-little-guy-gets-hurt-saudi-arabia-and-iran-squabble-over-lebanon/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Egyptian television hosts + +Sisi’s foaming mouthpieces + +The absurdity of Egyptian talk shows + +Mar 5th 2016 | CAIRO | From the print edition + +“THAT precision! Look at that car! Wait for the missile to come down! No one gets away.” Ahmed Moussa, an Egyptian television host, sounded like a kid playing a video game when he showed “satellite imagery” of Russia striking Islamic State in Syria last autumn. Perhaps that is because Mr Moussa was, in fact, showing clips from a video game. “We aren’t making anything up,” said Mr Moussa, as he made it all up. + +Mr Moussa’s programme, called “Ala mas’uliyati” (“My Responsibility”), epitomises the absurdity of Egypt’s popular talk shows. In February a host called Khairy Ramadan was suspended after a guest claimed that women in Upper Egypt are generally unfaithful. Another host, Reham Saeed, was sentenced to six months in prison for airing the private photos of a sexual-harassment victim (whom she also blamed for the attack). + +Most hosts not only support the government, but take direction from it. “I would say anything the military tells me to say out of duty and respect for the institution,” Mr Moussa told the Guardian. Others mix conspiracy and sycophancy, as when Amr Adeeb worried that “[foreign] intelligence officers who are trying to ruin our country” might kill Abdel-Fattah al-Sisi, the president. + +Mr Sisi says back him or stay mum—but some have not. Egypt has locked up more journalists than any country save China. Media outlets that supported the Muslim Brotherhood have been closed down. Most network heads are anyway disposed to self-censor. Nearly all support the regime, which protects their business interests. So critics such as Bassem Youssef, the former host of a satirical news programme, have been taken off the air. + +Egypt is “the target of many conspiracies”, claims Mr Sisi. Hosts detail the plots. In October Tamer Amin interviewed Hossam Sweilam, a former deputy defence minister, who claimed that America was behind the uprising in 2011 and now controls Egypt’s weather. Lyrics from an obscure American hip-hop group were cited as proof. The conspirators vary, but often include America, Iran and Israel, sometimes (oddly) working together. Mr Moussa says he would like to see Barack Obama “impaled”. + +Though their ranting is often nonsensical, talk-show hosts sway opinion in Egypt, where over a quarter of people are illiterate. Fortunately, some hosts have stiffened their spines of late, criticising the government for a poor economy, among other things. The recent murder of a young Italian student prompted a few to ask, obliquely, whether the state was involved, as evidence suggests. Perhaps sensing a shift, Mr Sisi has warned Egyptians, “Don’t listen to anyone but me. I am dead serious.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693939-absurdity-egyptian-talk-shows-sisis-foaming-mouthpieces/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Electricity in Nigeria + +Powerless + +Nigeria has about as much electricity as Edinburgh. That is a problem + +Mar 5th 2016 | LAGOS | From the print edition + + + +OUT in the farthest reaches of Lagos, a bumpy boat ride across the city’s dividing lagoon, Egbin power plant is trying to light up one of the world’s darkest nations. Six turbines growl in its huge belly, watched over by mechanics in a futuristic control room. They say the place is barely recognisable since privatisation in 2013. Output has rocketed since Sahara Group, a Nigerian energy conglomerate, took over. When running at full steam, Egbin generates almost a quarter of the whole country’s electricity. + +That is not a particularly stretching target. Of Nigeria’s many daily headaches, power is perhaps the worst. After years in which state-owned power plants decayed, the government changed course by selling power stations and the distribution grids that carry power to homes and businesses. This bold stroke was meant to turn the lights on, and indeed it has encouraged investors to put millions of dollars into upgrading the battered system. Yet the supply of power has failed to respond as hoped in the two years since privatisation. At the moment the country’s big stations produce a pitiful 2,800MW, which is about as much as is used by Edinburgh. Only just over half of Nigerians have access to electricity, and it is still harder for businesses to hook up to the grid than almost anywhere else. + +One reason why privatisation has failed to improve Nigeria’s power supply is that the process itself was flawed from the start. Even as companies were bidding to buy power stations or distribution companies, striking staff prevented them from looking at what they were buying. Once the deals were done they found they had bought rundown equipment and companies whose books had been systematically cooked. More important, though, was that many could not get the gas they needed to power their plants. Government meddling held down gas prices, which meant that many producers would simply flare it off (while extracting oil) instead of bothering to sell it at a deep loss. Moreover, the pipes meant to carry the flammable stuff are rusting and regularly vandalised by thugs demanding money to protect them. + +The privatisation process was also incomplete and left the transmission grid (which carries electricity from power stations to the local distribution grids) in the hands of the state. It has not invested much, so huge amounts of power fizzle out on its dilapidated lines. Even if power plants could generate more electricity, the grid would not be able to handle it. At Egbin a handful of people employed by the state-owned transmission network sit watching YouTube clips as their private-sector colleagues beaver away. + +Power plants are also owed colossal sums by the agencies that act as middlemen between generation companies and the distributors. Egbin alone is some $225m out of pocket. The intermediaries, in turn, blame distributors, saying they have not been collecting cash from their customers. As for the distributors, they say that the tariffs they are allowed to charge are too low to cover their costs and that, in any case, Nigerians do not pay their bills. Depressingly, the biggest offender is the government, whose various departments and agencies owe almost $300m. “It’s difficult for anyone to go to a military barracks and order them to pay—except if you’ve written your will,” says one insider. + +More than a year ago the Central Bank of Nigeria organised a $1 billion loan to plug the gap and avoid a wave of insolvencies among power generators, but only a fraction has been disbursed. Since then a falling currency and shortages of foreign exchange have made it harder for private power producers to service debts denominated in dollars, a currency many chose because it offered lower interest rates than borrowing in naira. Finding cash (and hard currency in particular) to buy gas, maintain machinery and pay technical partners is a growing strain. Dallas Peavey, Egbin’s chief executive, reckons that without repayment or preferential access to foreign currency he can keep the country’s biggest power station running for just another four weeks. + +Still, there are glimmers of hope. In recent years the government has raised the price of gas, and supplies are growing more reliable. Distribution companies are installing new meters, which are harder to fiddle. Unpaid public electricity bills are being chased up. Most crucially, tariffs were increased in February by as much as 45%. It did not go down at all well with locals. But if Nigerians can be convinced to pay their bills, it ought to get some cash flowing through the system. That would be a start. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693971-nigeria-has-about-much-electricity-edinburgh-problem-powerless/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Film-making in Uganda + +Lights, camera, no budget + +Taking “shoestring” to extremes + +Mar 5th 2016 | KAMPALA | From the print edition + +Warner Bros watch out! + +A PIXELLATED helicopter destroys skyscrapers in Kampala. A shoot-out ensues, with cut-and-paste explosions and blood splats. The special effects in “Who Killed Captain Alex?”, a Ugandan action comedy, resemble a 1990s video game. But what do you expect for a budget of less than $200? + +Isaac Nabwana has written, directed and edited more than 47 films since 2008, featuring everything from flesh-eating zombies to kung-fu kids. His set is the dusty yard outside his home in Wakaliga, a slum that sometimes has month-long power cuts. (Inevitably, the area is now called “Wakaliwood”.) The actors make their own costumes. A local samosa seller, Dauda Bisaso, forges guns and camera tripods from scrap metal. (He has also played villains in 11 of Mr Nabwana’s films.) Make-up artists used to splash on cow blood to simulate wounds. But then someone caught tetanus and they switched to red food colouring. + +Filmgoers in the slums like lots of violence. They also enjoy live commentary from a “ video joker”, who usually stands in the cinema keeping the tension high. On the soundtrack of “Who Killed Captain Alex?” , VJ Emmie plays the same role. “Action is coming, I promise you,” he assures viewers. + +Established Kampala distributors once refused to take Luganda-language films featuring unknown actors. Now they clamour to sell Mr Nabwana’s oeuvre. His sales team hawk DVDs door-to-door for 1,500-2,000 shillings (45-60 American cents), keeping 50% of the proceeds. But they have stiff competition: you can buy a DVD with four American or Nigerian films on it for 1,000 shillings. + +There is also a window of just five to six days in which to maximise sales before pirates copy the work. Harriet Nabwana, Mr Nabwana’s wife and accountant, estimates that 20,000 legitimate copies of a film are usually sold in that crucial first week and around 60,000 in the first month. They still lose money, though. Blank DVDs cost 600 shillings each. Copying equipment, electricity and transport are pricey, too. All the actors have day jobs; Mr Nabwana, a former brickmaker, films music videos. He complains that the police are ignorant or careless of anti-piracy laws. + +Wakaliwood has been on a steadier footing since raising more than $13,000 on Kickstarter a year ago. The trailer for “Who Killed Captain Alex?” has been watched more than 2.5m times on YouTube. Mr Nabwana can now afford hard drives to back up his films, and a scrap-metal helicopter is taking shape in his yard. His dream is to buy land for a studio to teach the next generation of Ugandan film-makers. Mr Bisaso’s dream is “to be Bruce Willis in Uganda”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693938-taking-shoestring-extremes-lights-camera-no-budget/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +African migration + +To the land of good hope + +African migrants head south as well as north + +Mar 5th 2016 | JOHANNESBURG | From the print edition + +Long walk to the detention centre + +SOME African migrants forge across the Mediterranean in flimsy boats. Others take a somewhat less risky (and cheaper) journey, heading for the bright lights of South Africa. Unemployment may be a shocking 34% south of the Limpopo river, but there are still plenty of opportunities for those who are prepared to work hard. + +Many migrants follow in the footsteps of their compatriots. Malawians and Mozambicans are often found tending lush suburban gardens. Somalis run tiny convenience stores, known as spaza shops, in black townships. Johannesburg’s “Little Addis” bustles with Ethiopian traders and the sound of Amharic. Congolese and Cameroonian vendors hawk cassava and plantains in Yeoville, another Johannesburg neighbourhood. Zimbabweans, who are typically better educated than their South African peers, can be found totting up company accounts, working as mining engineers or, failing that, waiting on tables. For many Africans, South Africa seems a stable, functional, prosperous place. It is also a potential stepping stone to the rest of the world. + +Getting there is not easy. Many do it in stages, finding work along the way. Some are arrested and locked up. On South Africa’s border with Zimbabwe migrants must ford crocodile-infested rivers. Happily, the main fence is so tattered that you can simply walk through it. At many posts, border guards demand bribes. + +Some of the greatest dangers for migrants arise after they arrive. Last year seven people were reportedly killed in a spate of anti-foreigner violence, though the real number is probably much higher since most attacks never make the news. Thousands of immigrants fled their homes and businesses. Among them was Salat Abdullahi, 20, who moved from Somalia to Soweto to run a spaza shop with his older brother. They ran away when xenophobic locals looted and destroyed it. “We came here with nothing, and made a business,” Mr Abdullahi said. “They don’t like that.” + +After the violence against migrants came a crackdown on the victims: more than 15,000 immigrants were arrested and deported in a government sweep. Many were held in a detention centre notorious for overcrowding, corruption and abuse. + +Xenophobia has spread since 1994, when the fall of apartheid led to an inflow of black migrants from across the continent. The South African government has discouraged immigration, despite a shortage of home-grown skills, by tightening border controls and laws. It sees foreigners as competing with locals for scarce jobs rather than as boosting the economy with their talent and entrepreneurial nous. Despite a widespread perception among South Africans that their country is packed with immigrants, the latest census found just 2.2m of them, or less than 5% of the population (though people in the country illegally probably don’t confess this to census officers, so the true figure is higher). In Johannesburg, the most cosmopolitan of South African cities, 13% of the population was born abroad. + +Many of those who come seek asylum: the South African government lets refugees work and even obtain some public services while their papers are being processed. Between 2008 and 2012 South Africa received 778,000 asylum applications, in a system that is slow and riddled with corruption. Despite the well-documented hostility and harassment, foreigners are still more likely to be employed than South Africans. Often they work in the informal sector, or do jobs that locals are not willing to take. Enterprising migrants rent shops from South Africans and thereby create jobs. Johannesburg, built on gold mines and migrant labour, is becoming a truly international city. But local elections this year could be the catalyst for more foreigner-bashing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21693972-african-migrants-head-south-well-north-land-good-hope/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +France’s labour reforms: Working nine to four + +The Irish election: Fragged + +Refugees in Greece: Rising tide + +Regulating EU pesticides: Fog of uncertainty + +Charlemagne: The end of Heile Welt + + + + + +Articles Sections Next + +France’s labour reforms + +Working nine to four + +The Socialists are torn over a move to dismantle the 35-hour week + +Mar 5th 2016 | PARIS | From the print edition + + + +IN THE eyes of many foreigners, two numbers encapsulate French economic policy over the past decade or so: 75 and 35. The first refers to the top income-tax rate of 75%, promised by François Hollande to seduce the left when he was the Socialist presidential candidate in 2012. The second is the 35-hour maximum working week, devised by a Socialist government in 2000 and later retained by the centre-right. Each has been a totem of French social preferences. Yet, to the consternation of some of his voters, Mr Hollande applied the 75% tax rate for only two years, and then binned it. Now he has drawn up plans that could, in effect, demolish the 35-hour week, too. + +Mr Hollande’s government is reviewing a draft labour law that would remove a series of constraints French firms face, both when trying to adapt working time to shifting business cycles and when deciding whether to hire staff. In particular, it devolves to firms the right to negotiate longer hours and overtime rates with their own trade unions, rather than having to follow rules dictated by national industry-wide deals. The 35-hour cap would remain in force, but it would become more of a trigger for overtime pay than a rigid constraint on hours worked. These could reach 46 hours a week, for a maximum of 16 weeks. Firms would also have greater freedom to shorten working hours and reduce pay, which can currently be done only in times of “serious economic difficulty”. Emmanuel Macron, the economy minister, has called such measures the “de facto” end of the 35-hour week. + +At the same time, the law would lower existing high barriers to laying off workers. These discourage firms from creating permanent jobs, and leave huge numbers of “outsiders”, particularly young people, temping. For one thing, it would cap awards for unfair dismissal, which are made by labour tribunals. Laid-off French workers bring such cases frequently; they can take years and cost anything from €2,500 to €310,000 ($2,700 to $337,000) by one estimate. + + + +The underlying principle, laid out in government-commissioned reports over the past six months, is simple and radical. The country’s ponderous labour code, currently longer than the Bible, should limit itself to basic protection of workers, and leave bosses and unions within firms to hammer out finer details. This is based on the belief that French employees—only 8% of whom belong to a union—are more pragmatic and flexible than the national union leaders in Paris who supposedly negotiate on their behalf. At a car factory making Smart vehicles in eastern France, for instance, a recent deal to work 39 hours a week was approved by most employees, yet blocked by the firm’s unions. Under the new law, if no deal can be reached with a company’s unions, employees may vote in a binding internal referendum. + +The draft law does not deal with all the rigidities of the French labour code. Nonetheless, “it’s the most important piece of labour-market legislation for 15 years,” says Ludovic Subran, chief economist at Eurler Hermes, a credit-insurance firm. It is the closest France has got to the reformist Jobs Act rammed through in Italy by Matteo Renzi’s government. And it could be the legacy that Manuel Valls, the ambitious centre-left prime minister, seeks as he and Mr Macron try to steer the Socialists in a more market-friendly direction. + +The great difficulty is political. For much of the left, the 35-hour week remains not only a badge of progress but the mark of a preference: for shorter hours, more holidays and higher productivity—even at the price of fewer jobs. French productivity per hour remains far higher than Britain’s and even a touch above Germany’s (though yearly hours worked in France are lower, and the unemployment rate twice as high). In fact, the French already work more than 35 hours a week on average, partly because so many employees get extra holidays to compensate. White-collar employees at EDF, an energy firm, average 39 working hours a week, but until recently got 23 extra days off each year on top of the statutory five weeks’ holiday. (A hard-won deal has reduced this to a mere 16.) Managing so much absence has become an art. “Employees prefer to work less, earn less and have more time,” says Pierre Vauterin, who runs a firm that makes ball bearings on the outskirts of Paris. + +Challenging this doctrine is becoming a stinging headache. Already, Mr Valls has postponed the presentation of his draft law to the cabinet, thanks to an uproar within his own party and the threat of street protests by unions and students. In a barbed article in Le Monde, Martine Aubry, mayor of Lille and architect of the 35-hour week, accused him of selling out socialist ideals. “Who could imagine”, she asked, “that making redundancies easier…will encourage employment?” Mr Hollande is enfeebled. Even France’s more moderate unionists are wary. If Mr Valls waters down the draft, his reformist credentials will be damaged. If he pushes ahead, he could find himself with a choice between unmanageable unrest—or resignation. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21693985-socialists-are-torn-over-move-dismantle-35-hour-week-working-nine-four/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Irish election + +Fragged + +European-style political fragmentation comes to Ireland + +Mar 5th 2016 | DUBLIN AND COUNTY MEATH | From the print edition + + + +WHEN polling stations closed on February 26th, Fine Gael and Labour, the two parties that have governed Ireland since 2011, were hoping for a surprise result like the one Britain’s Conservatives achieved last May. They had come to power with the largest majority in Irish history, but five years of austerity had drained their support. Instead, the result was worse than expected: the political fragmentation seen in recent elections across Europe hit both parties hard. + +Fine Gael, a centre-right party whose leader Enda Kenny has been taoiseach (prime minister) since 2011, lost nearly a third of its vote. Labour, its centre-left partner, suffered worse still, losing two-thirds. The polls had predicted Labour’s rout, but for Fine Gael the shock was greater. Its gaffe-prone campaign was clearly not up to scratch: at one point Mr Kenny managed to insult some of his own constituents as champion “whingers”. Fine Gael relied on broadcast messages aimed at all voters. This proved less effective than the Conservatives’ campaign last year, which targeted swing voters with tailored messages. + +More tellingly, Fine Gael’s slogan, “Let’s keep the recovery going”, which it borrowed from the Conservatives, failed to resonate. As in recent elections in Portugal and Spain, the emphasis on economic competence fell flat with voters, says Dan O’Brien of the Institute of International and European Affairs, a Dublin think-tank. Although Ireland recorded GDP growth of nearly 7% in 2015, one exit poll found that only 26% of voters felt better off than a year ago. The country’s GDP figures include profits of multinational firms headquartered for tax reasons in Ireland, but much of that money never reaches the Irish. GNP, which excludes income earned by foreigners, has been flat in real terms since the end of 2014. + + + +The opposition exploited the feeling that many were being left out of the recovery. Fianna Fail, the populist centrist party that dominated Irish politics before the financial crisis, gained 24 seats. Sinn Fein, a hard-left nationalist party with strong working-class support, gained seats too, though not as many as it had hoped. Smaller left-leaning parties such as the AAA-PBP and a wide range of independents also did well, gaining a record 30% of the vote. + +Because the anti-government vote was split between so many parties, Fine Gael still has the most seats. As in Spain, it is thus unclear who will form the government. Although Fine Gael and Fianna Fail together have a majority of 30, a grand coalition would be difficult. Both parties’ activists are tribal, and have been since their split during the civil war of the early 1920s. Besides, Fianna Fail fears it would lose support if it became Fine Gael’s junior coalition partner, just as the (Irish) Labour party has since 2011. Both have also ruled out any coalition involving Sinn Fein, which they see as fiscally irresponsible and tainted by links to violence and the IRA in Northern Ireland. + +Fianna Fail says it does not want to leave Sinn Fein as the only official opposition party either. That appears to leave one solution: some sort of temporary deal between Fine Gael and Fianna Fail, with another election called after the budget later this year. + +The political uncertainty comes at a bad time. Slowing growth will limit what Ireland can do without breaching its EU deficit targets. And political fragmentation threatens a return to the politics of giveaways, when Ireland should instead be running a surplus to prepare for the next downturn, says Colm McCarthy of University College Dublin. Euro membership puts Irish policymakers under pressure to show much greater fiscal discipline. Whether Irish politics can withstand the pressure is unclear. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21693717-many-people-ireland-are-angry-outgoing-government-they-dont-know-what-replace-it/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Refugees in Greece + +Rising tide + +With the borders closing, Greece starts to fill with migrants + +Mar 5th 2016 | ATHENS | From the print edition + + + +GREECE’S migrant crisis is getting worse. Macedonia has closed its border to all but a trickle of migrants, following the example of Austria and other countries along the so-called West Balkans route to Germany. Yet desperate Syrians and Iraqis continue to arrive at the Idomeni crossing point. On February 29th Macedonian police used tear gas against scores of migrants trying to break down the border fence. As The Economist went to press, more than 12,000 people were crammed into a tent camp with facilities for only 1,500. Food is in short supply. “It’s a tense situation,” says Panagiota Siafaka, a social worker with the UN High Commission for Refugees. + +So long as the border remained open, Greece could manage the flow of arrivals from Turkey. Now almost 30,000 migrants are bottled up in Greece. Nikos Kotzias, the foreign minister, expects the number to reach 150,000; local aid agencies worry that 200,000 people may arrive in March alone. Reception centres around Athens for migrants are hopelessly overcrowded. Half a dozen new ones, mostly refurbished former military camps, are quickly filling up. Local and international charities provide food and medical care. “The state seems absent, but luckily ordinary people are here every day to help,” says Mariana, a paediatrician working at Piraeus port, gesturing towards a group of elderly Greek women handing out bananas and chocolate bars to harassed mothers in headscarves. + +Things will improve, if only gradually. Greece expects to receive a large chunk of the EU’s new €700m ($760m), three-year humanitarian aid package for countries that host a lot of migrants. Of that, €300m would be spent this year. Athens-based aid agencies hope that funds will bypass the slow-moving Greek bureaucracy, going straight to needy migrants in the form of vouchers for food and housing. + + + +INTERACTIVE: A guide to Europe’s migrant crisis, in numbers + +But stemming the flow of migrants from Turkey is proving hard. A NATO naval mission was due to begin monitoring the strait between Greece and Turkey on February 29th, electronically locating smugglers’ boats so Turkish coastguards could nudge them back to shore. But on March 2nd the NATO vessels were still in port. The Greek defence ministry said Turkey had raised “technical problems”. + +EU leaders hope for a breakthrough at a summit on March 7th with Ahmet Davutoglu, Turkey’s prime minister. The Turkish government has yet to crack down on the people-smugglers. Diplomats in Athens believe the Turks will make a deal conditional on EU countries resettling Syrians from refugee camps in southern Turkey. Meanwhile, Turkey has agreed to take back economic migrants who crossed to the Greek islands from Turkey. After weeks of bureaucratic exchanges between the Greek and Turkish police, a first group of 270 Moroccans, Tunisians and Algerians were handed into Turkish custody on March 2nd at the land border in Thrace. A group of 150 Pakistanis will be next. It is a modest start, yet even a small reduction in numbers helps relieve Greece’s migrant burden. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21693987-borders-closing-greece-starts-fill-migrants-rising-tide/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Regulating EU pesticides + +Fog of uncertainty + +Regulators are arguing over the safety of glyphosate, the world’s top weedkiller + +Mar 5th 2016 | From the print edition + + + +MORE herbicides contain glyphosate, a weedkilling chemical, than any other agent. Monsanto, an agricultural giant, first sold Roundup, a product containing the stuff, to farmers in the 1970s. Since then use of glyphosate-based concoctions has increased about 100-fold; gardeners as well as farmers have taken to it for killing weeds and keeping paths clear. The firm’s last patent on it expired in 2000, and farmers from Brazil to Russia spray it as never before. But as larger quantities are used, concerns grow over the harm some say it may cause. On March 7th a European Union (EU) committee will vote on whether to renew approval of glyphosate for the next 15 years. + +Farmers value glyphosate for reasons that have changed since it first appeared. Once a kill-all for unwanted weeds, it was transformed in 1996 when Monsanto developed genetically engineered crops able to withstand it. In 2014 selling Roundup and modified seeds earned the company $5 billion in America alone. It is also useful in drying crops before harvests. Estimates suggest that two-thirds of all the glyphosate ever sprayed in America has been applied in the past ten years. + +Glyphosate’s benefits vary depending on what crop it is sprayed on. But no organisation tracks pesticide use by type across Europe, making comparisons difficult. Monsanto claims that using glyphosate can raise crop yields between 30% and 60%—a huge boost. According to a 2011 estimate by Michael Schmitz, head of the Institute of Agribusiness, a German research organisation, a ban on glyphosate in the EU could cause annual losses of €1 billion-3.1 billion ($1.1 billion-3.4 billion). + +Some scientists claim that dousing crops in glyphosate may be harmful, however. It lingers in soils and water for much longer than studies once suggested. Low levels of the stuff have been detected in products from bread to pantyliners. And as resistance to glyphosate increases in plants, as it has in recent decades, changes to cropping and tillage patterns may be needed—alongside gallons of other pesticides—to ensure good harvests. + +The hottest debate surrounds glyphosate and human health. Last July the WHO’s International Agency for Research on Cancer (IARC) found that the herbicide is “probably” carcinogenic. But six months later the European Food Safety Authority (EFSA), which oversees the assessment of active chemical substances within the EU, cleared glyphosate of causing cancer. + +The two bodies traded furious letters throughout January and February; the spat is unprecedented. IARC argues that the research on which EFSA based its decision, completed by the German Federal Institute for Risk Assessment, ignored an association between non-Hodgkin lymphoma and glyphosate seen in certain research and relied on studies not publicly available, while it denigrated peer-reviewed ones. The furore led France’s Agency for Food, Environmental and Occupational Health and Safety (ANSES) to step in. It concluded that glyphosate “arguably could be classified” as a substance “suspected of being carcinogenic to humans”. + +EFSA plays an active role in the EU’s pesticide-approval process; IARC does not. But the European Ombudsman, Emily O’Reilly, found that process flawed after a long inquiry that ended on February 22nd. She criticised the European Commission for approving chemicals before there was “sufficient information to say that they were completely safe”. The authority now has until 2018 to ensure that those keen to clear a substance provide more data to show that it is harmless. + +The dispute suggests that more research is needed. For one thing, certain ingredients with which glyphosate is mixed to form pesticides are more toxic to humans than the substance itself. But regulators examine only the compound, not the cocktail. For another, traditional toxicological tests could miss the weedkiller’s possible effects on endocrinological, reproductive and developmental systems. + +Others, too, struggle with what to do about glyphosate. The Canadians have little problem with it. America’s Environmental Protection Agency failed to produce a planned risk assessment on it last year. California’s ultra-cautious environmental agency added the herbicide to a list of carcinogens last September. Monsanto is challenging the move in court. + +Robust studies into glyphosate’s effects should be considered carefully alongside better data on the role it plays in feeding the world. The ways farmers use the compound have evolved. The ways regulators evaluate its safety should, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21693984-regulators-are-arguing-over-safety-glyphosate-worlds-top-weedkiller-fog-uncertainty/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +The end of Heile Welt + +Germany’s illusions have been shattered + +Mar 5th 2016 | From the print edition + + + +MORE than 1m refugees arrived in Germany last year, mainly young Muslim men. They entered a society that, relative to other Western countries, has embraced multiculturalism only recently. Suddenly these foreigners are in co-ed schools, discos, swimming pools, hospitals and parks. Some of their interactions with their hosts go easily. Others do not—as epitomised by New Year’s Eve in Cologne, where gangs of North African men sexually assaulted scores of German women who had come to watch the fireworks. + +Germans who only a year ago oozed confidence about their economy and their country are now losing faith that they “can manage”, as Angela Merkel, the chancellor, likes to put it. Many fear the crisis will render Germany unrecognisable. A sense of loss pervades many conversations. + +To grasp this trauma it helps to understand the German zeitgeist that developed (mainly in the former West Germany) in the post-war years, and lingered in the reunited country. Germans call it Heile Welt. The term means something like “wholesome world”, and describes an orderly, idyllic state. It may connote the nurturing environment parents create for their children to protect them from life’s ugliness, or a private oasis of peace amid public chaos. It was a state of mind that Germans clung to after the second world war. + +Because it implies a degree of escapism, the term can be used sardonically. In 1973 Loriot, West Germany’s most incisive humourist, chose it for the title of an anthology of cartoons skewering his country’s bourgeois pretensions. In 1998 it was the title of a novel by Walter Kempowski, set in 1961, in which a teacher moves to an idyllic village but discovers that behind every silence and glance lurks a demon of the Nazi past. + +In the immediate post-war years, with Holocaust, firebombing, mass rape and the carving up of their nation still recent memories, Germans flocked to watch Heimat (“homeland”) films. Usually shot in the Alps or in heaths and forests, they featured clean, simple tales of love and friendship between pure women and men dressed in regional garb. Outside the cinemas, Germans revelled in their “economic miracle”, as they rebuilt a devastated country into a commercial powerhouse. + +Foreigners were allowed into this Heile Welt, but not entirely accepted. To man its assembly lines, Germany invited workers from southern Europe and especially Turkey. The millionth arrived in 1964 and got a motorcycle as a gift. By the time the programme ended in 1973, 4m foreigners lived in West Germany. But they were called “guest workers” rather than immigrants, on the premise that they would ultimately leave again. Unsurprisingly, most stayed. Yet mainstream Germany continued to see itself as ethnically homogenous—a Heile Welt in a tribal sense. + +As part of Heile Welt, West Germans atoned for their past by becoming good democrats, good Europeans and ardent pacifists. But they did so like a teenager who experiments with increasing autonomy, confident that his uncool but protective parents are always standing by. For West Germany, dad was America, which held its aegis over the country throughout the cold war. Mum was France, which despite its nervous vanity gracefully accepted Germany back into the European family. + +The dystopian flip side of Heile Welt was never far away. If the cold war had ever turned hot, Germany would have been vaporised first. (“The shorter the range, the deader the Germans,” missile strategists used to quip.) West Germany even had terrorism. But its terrorists were native white leftists who killed industrial tycoons. Ordinary Germans never felt threatened. + +In their private lives Germans created micro-idylls. They kept garden plots orderly, guarded by the requisite gnome. East Germans seeking refuge from the cynically implausible Heile Welt offered by communism retreated to “the niches”: private book readings among intellectuals, or nude bathing with friends by pristine lakes. East or west, order was paramount. Visitors were impressed (if not intimidated) by how fastidiously Germans separated their white, brown and green glass for recycling. + +One by one, these facets of Heile Welt are becoming brittle. Russia is aggressive again; Germans fret that, when it comes to it, the ageing American dad may not show up. Having cultivated non-violence to the point of pacifism, they now realise that defence of their state and their values may someday require them to fight, kill and die again. The terrorists they now face are not German leftists, but foreigners ready to kill women and children. Globalisation no longer just means exporting BMWs, but also allowing in Muslim refugees, some of them with attitudes on gender and Jews that Germans find offensive. + +Gnomic wisdom + +Some Germans react by fleeing into ever tinier Heile Welten. “We are becoming ever more like our garden gnomes,” says Wolfgang Nowak, one of Germany’s most astute social observers—inward-facing rather than open-minded. Every Monday a movement called Pegida, or “Patriotic Europeans Against the Islamisation of the Occident”, marches through Dresden. For many in the surrounding area of Saxony, these gatherings have become convivial rituals similar to American tailgate barbecues, but to outsiders they appear xenophobic and menacing. Even moderate Germans are turning against globalisation. Many see a free-trade area being negotiated between America and the EU not as an opportunity but as yet another threat to their way of life. + +Above all, the tone of German conversations is changing. Language in the era of Heile Welt was sanitised, with political correctness often taken to ludicrous extremes. Now, in the name of “telling it as it is”, it is becoming coarser and aggressive. It is not clear what kind of world will replace the wholesome one the Germans once dreamed up. But it will be a rougher one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21693942-germanys-illusions-have-been-shattered-end-heile-welt/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Transport infrastructure: Life in the slow lane + +Brexit brief: In, out, find a fib to shout + +Asset sales: The great British sell-off + +Educating the poorest children: Premium grade + +Supermarkets: Fresh from the Amazon + +Cross-channel travel: Allied landings + +Bagehot: Unity in disunity + + + + + +Articles Sections Next + +Transport infrastructure + +Life in the slow lane + +The government trumpets its ambitions for roads, railways and airports. In fact, infrastructure is getting worse + +Mar 5th 2016 | MANCHESTER | From the print edition + + + +IF YOU want to get rich, goes a Chinese saying, first build a road. George Osborne, Britain’s chancellor, seems to agree. He seldom misses a chance to put on a hard hat and proclaim the virtues of more roads and railways. His idea of a “Northern Powerhouse” would boost the north of England with a big new transport network that better connects the region. Certainly, if people are not stuck in traffic jams or can work in peace on a train they can get more done, leading to higher productivity and increased wages. + +Yet for all the rhetoric, in recent years British infrastructure has been deteriorating. Roads are more clogged: the percentage of journeys on main routes that are classed as “on time” has fallen by six percentage points since 2010. Trains are getting more crowded, too: a quarter of trains arriving in London in rush hour are overcrowded, up from a fifth in 2010. Commuters are putting up with creaky carriages: in 2005-15 the average age of the rolling stock rose from 15 to 20 years. The number of local buses has fallen by 2.5% since 2010, even though the population has grown by 3%. + +The World Economic Forum ranks the quality of Britain’s overall infrastructure 24th in the world, down from 19th in 2006, and behind Iceland and America (which is 13th). It is unlikely that things will improve soon. When the coalition government came to power in 2010, Britain was already one of the lowest spenders on infrastructure in Europe. But as Mr Osborne tries to balance the books, public-sector investment is projected to fall from 3.2% of GDP in 2010 to just 1.4% in 2020. + +A small infrastructure budget is not necessarily a bad thing, if the money is used wisely. This often means spending on unsexy things—improving traffic lights and so forth—rather than big, expensive undertakings. In 2006 Sir Rod Eddington, an Australian businessman, published a government-backed review of Britain’s infrastructure provision, warning against grands projets for having cost-benefit ratios that are often worse than other less-exciting transport projects. Politicians like to be photographed at big digs, but the returns from such projects are hard to predict. + +Sometimes there is no option but to build big. On many London Underground lines—which already run as many as 30 trains an hour—it is hard to make incremental improvements; the only sensible way to create new capacity is to build a new line, as the government is doing now with Crossrail, an east-to-west London link. Still, it has mostly ignored the recommendations of the Eddington review, says John Van Reenen of the Centre for Economic Performance at the London School of Economics, instead focusing its energy on larger, shinier projects. + +The addition of a third runway at Heathrow airport, for example, would cost over £20 billion ($28 billion). Transport for the North, the infrastructure arm of the powerhouse idea, envisages building an 18-mile road tunnel, perhaps Europe’s longest, under the Pennine hills, and constructing other expensive new highways. The tunnel alone could cost up to £6 billion. Meanwhile, £1.5 billion is likely to be spent improving a few miles of road between Cambridge and Huntingdon. Government figures suggest that since 2011 the expected cost of the average public infrastructure project has roughly doubled. + +As a result less money is available for smaller upgrades. Funding for local roads has been cut by 20% in real terms since 2010. Analysis by the RAC Foundation, an independent think-tank, found that the number of potholes being filled in per year has increased fourfold since 2005, suggesting that costly, long-term repair is being sacrificed in favour of patching up. Government support for local bus services is down by 20% in five years. + +Not down the tubes + +Another consequence of tighter budgets is that the state relies more heavily on the private sector to fund infrastructure projects. An extension to the Northern Line of the London Underground is a good example. The Greater London Authority is borrowing £1 billion. But that will ultimately be repaid, largely by the scheme’s direct beneficiaries, in the form of an uplift in business rates alongside developer contributions, says Alexander Jan of Arup, a consultancy. Ultimately, the government will pay little towards the project from general taxation. + +Rich cities are most likely to be able to generate big contributions from the private sector and thus better infrastructure, says Mr Jan; poor places may miss out. In recent years, government figures suggest, London has taken up a bigger share of Britain’s overall infrastructure spend. + +Business gripes that, although it may be expected to shoulder more of the cost, it is not always consulted enough. Kate Willard, an executive at Stobart Group, which runs airports and other big projects, argues that politicians do not take sufficient account of future shopping patterns and retail trends when making their infrastructure plans. Andy Clarke, the head of Asda, a supermarket chain, believes that productivity could be boosted as much by getting high-speed broadband as by building HS2, the £50 billion new railway being built between London and the Midlands. + +Stand up for your rights + +Fortunately, as well as building shiny new stuff there are also low-cost ways of improving infrastructure. Transport nerds favour ripping seats out of certain carriages in commuter trains, making them look more like Underground trains and thus increasing their capacity (though with little regard for passengers’ comfort). Those willing to stand could pay less. “Smart motorways”, which were first deployed in 2006, use the hard shoulder as an extra lane at busy times. + +One plan popular with economists is to use “dynamic pricing”—similar to that used by taxi apps—where prices rise at peak times to discourage people from travelling. Thanks to a series of subtle changes, this could soon be a reality across Britain. In 2015 the Highways Agency, which manages motorways, was converted into a free-standing company owned by the state (renamed Highways England), meaning it has secure funding for the foreseeable future. Road tax, which is now largely payable electronically and enforced with cameras that recognise number plates, will be earmarked for Highways England, says Mr Jan. In theory, the stage is set for the government to start charging for using certain roads. Many are hoping that Mr Osborne will make such a change in his budget on March 16th. Dynamic pricing for rail travel seems off the table, though: the government considered a plan for “super-peak” tickets, only to drop it in 2013. + +If, as seems probable, a big boost of public money does not arrive, Britain will have to take such radical decisions. Creaky infrastructure is already weighing on productivity and wages. Without a change of direction, the load will get ever heavier. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693936-government-trumpets-its-ambitions-roads-railways-and-airports-fact-infrastructure/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit brief + +In, out, find a fib to shout + +Voters want facts about Britain and the European Union—but these are elusive + +Mar 5th 2016 | From the print edition + + + +“WHAT I want is facts…facts alone are wanted in life.” Thomas Gradgrind’s grim message in Charles Dickens’s “Hard Times” is echoed in the debate ahead of the referendum on June 23rd about whether Britain should leave the European Union. Voters confused by claims made by opposing sides and in the media are asking for plain facts on Britain’s EU membership so they can make up their minds. Sadly, hard facts are hard to find. + +There is a good reason for this: nobody knows what would happen post-Brexit. That is especially true of the trade deal that Britain would have to negotiate with the EU—and how long that might take (the government this week suggested up to ten years). But there is also a bad reason: that the uncertainty lets all sides distort, exaggerate or simply make up their own facts. + + + +In graphics: A guide to “Brexit” from the European Union + +Three examples illustrate this. The first is an old assertion that 3m jobs in Britain depend on trade with the EU. In fact, because of the close links among European economies, many economists reckon the true figure is higher. Yet the claim sometimes made by pro-EU voices that all these jobs would be at risk post-Brexit is a nonsense. Nobody can plausibly argue that all trade with the EU would cease. Anyway, job creation depends more on demand, wage levels and labour laws than on membership of a trade block. + +The second example concerns the British contribution to the EU budget. Leavers claim that Britain pays an unfairly large amount of almost £20 billion ($28 billion) a year to Brussels, or £55m a day. In fact this is the gross amount before deducting both the rebate won by Margaret Thatcher in 1984 and the money the EU spends in Britain. Adjusting for these, and for the funnelling of some foreign-aid spending via Brussels, the net payment is less than one-third as big, at £17m a day—and Britain is only the eighth-largest contributor per head. + +The third example is competing claims about trade patterns. Remain campaigners say the EU takes 45-50% of British exports, whereas Britain accounts for a tenth or less of the EU’s. Yet Nigel Farage, leader of the anti-EU UK Independence Party, has said Britain takes 20% of EU exports, giving it a stronger hand in future trade talks. + +One issue here is which source to use: Europe’s statistical office, the British government and the IMF all have different figures. Another is whether to cover just goods or to add services. But the biggest question is whether to count the EU as a block, discounting all intra-EU exports. Doing that puts the share of EU exports going to Britain at almost 16%. But John Springford of the Centre for European Reform, a think-tank, points out that, in trade negotiations, individual countries, not the EU as a whole, decide what to accept. Britain’s share of all other EU countries’ exports is only around 8%, he says (our chart, using IMF figures, puts it even lower), and in many individual cases a lot less, leaving it in a weaker bargaining position. + + + +The arguments over facts in these areas are as nothing compared with the differences on migration and sovereignty—nor compared with the bitter rows within the Tory party (see article). What should undecided or poorly informed voters do? + +Fortunately, there are some good sources they can turn to. Two websites, the broadly neutral fullfact.org and the pro-EU infacts.org, both puncture myths in the debate. The House of Commons library produces excellent reports, which are available online. And a group of academics led by Anand Menon of King’s College, London, have set up “The UK in a Changing Europe”, partly financed by the Economic and Social Research Council, which has a lively website. + +The Economist is not neutral in this debate: we believe Brexit would be bad for Britain, Europe and the world. But we also want to explain the issues and present the facts. So over the next four months, we will publish a series of Brexit briefs that seek to do this, as dispassionately as possible—in the hope of satisfying even the Gradgrinds among our readers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693943-voters-want-facts-about-britain-and-european-unionbut-these-are-elusive-out-find-fib/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Asset sales + +The great British sell-off + +The sale of government assets can hurt the public finances as much as help them + +Mar 5th 2016 | From the print edition + +Two-bedroom flats a steal + +“I CAN’T imagine it not being there,” says Kathy Daly, a resident of north London for 64 years, reflecting the feelings of many living around Holloway prison. This summer, the largest women’s prison in western Europe, first built in 1852, will close, to make way for new homes. + +The move is part of a bigger drive to sell off government assets. In its spending review in November, the government encouraged departments to find land and property to vacate and sell, with the aim of raising around £5 billion ($7 billion) up to 2020. Financial and corporate assets are also being flogged to the private sector: this financial year the Office for Budget Responsibility (OBR), the government’s independent forecaster, thinks the Treasury will raise £30 billion from selling assets like shares in Lloyds Banking Group and Royal Bank of Scotland—which were bought during the financial crisis in 2008 and 2009—and Royal Mail, with an extra £47 billion expected over the next five years. These asset sales will provide cash that George Osborne, the chancellor, can use to pay down public debt, which swelled from 37% of GDP in 2007 to 83% this year. + +Selling off state assets can benefit society, if private owners can whip them into better shape. The decision also rests on the difference between the returns to the asset and the government’s own borrowing costs; there is less urgency in paying down public debt while interest rates are so low. Any big improvement in the public finances will usually be largely illusory; debt might drop, but selling will swap a future flow of income for up-front cash. The government balance-sheet will be restructured, not necessarily improved. + + + +In November the government boasted that the land released by departments could free up space for 161,000 new homes, spurring economic growth. The proceeds from selling older prisons will be ploughed back into building nine shiny new ones, which the government hopes will save £80m in running costs each year. The newer prisons will be in cheaper locations; some women in Holloway prison will be relocated to a prison in Sutton, a south-western suburb, where a two-bedroom flat costs £300,000, compared with £600,000 in Holloway. But rows are already brewing; sometimes public services add extra social value by being located in prime spots; some worry about moving prisoners far from their families. And there are questions over how many affordable homes will be built on the Holloway site. Ms Daly is not keen on the idea of luxury flats beyond the means of local residents. + +Language used by senior members of the government indicates that there might be more to gain than just a leaner state. In a leaked letter to the county council in his local constituency, the prime minister, David Cameron, complained that local services were being cut without considering “savings” that could be made in the form of asset sales. In his leaked response, the council leader echoed the words of economists before and since, that “capital income cannot be used to support revenue costs—it is neither legal, nor sustainable, in the long term since they are one-off receipts”. + +Although some dispute whether the government is right to be selling its land, few would argue for holding on to the bank shares for ever. Buying the assets was meant to preserve financial stability, but now things are calmer the case for owning them has weakened. The government is keen to get the most from the sales. After market turmoil, on January 28th Mr Osborne announced that he would delay the sale of a tranche of Lloyds shares. + +Cynics suspect that the chancellor is interested in more than maximising value. One of his fiscal targets is to have debt falling as a share of GDP in every year after 2015–16, but in December the OBR pointed out that this year he would only achieve this because of planned asset sales. And it also pointed out that offering some of the shares at a discount (not to mention giving away some shares in Royal Mail) actually worsens the public finances. + +In some cases the struggle to achieve good value for money has prevented a quick sale. The government announced its plans to sell the student-loan book back in 2013. Currently the OBR predicts that investors would give the government around £12 billion in exchange for student-loan repayments, worth around £1.5 billion each year by 2020–21. It is unclear how much extra value could be squeezed from the asset by a private buyer, though a spokesman for the Department for Business, Innovation and Skills said unfavourable market conditions were the main reason for the delay. + +One worry is that the government will get a poor deal as it unloads treasures onto the private sector. An internal government evaluation of its stake in Eurostar priced it at £305m, and then saw it sold for nearly double that. The Treasury has since set up bodies to manage such sales. + +On February 26th Mr Osborne warned of looming “storm clouds” hurting economic growth and requiring bigger cuts to spending. The government owns £1.3 trillion of assets—the Ministry of Defence alone owns roughly 1% of all land in Britain—so speeding up the sell-off might look tempting. But a fire sale would burn a hole in the public finances, not fix them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693968-sale-government-assets-can-hurt-public-finances-much-help-them-great-british/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Educating the poorest children + +Premium grade + +A pricey education policy looks like money well spent + +Mar 5th 2016 | PORTSMOUTH | From the print edition + + + +AT CHARTER Academy, a small, immaculately kept secondary school in Portsmouth, children who qualify for free school meals—63% of the school’s pupils—are also given a free uniform. Mums are invited in to chat about their children’s progress over a glass of wine; dads prefer watching their children on boxing nights, says Dame Sharon Hollows, the school’s headteacher. “A lot of the parents had a poor experience at school, it’s about making them feel more comfortable,” she adds. If a child is taken into care, someone from the school takes them shopping to make sure they have enough clothes. When a child doesn’t turn up to school, staff head out in a leased car to look for them. The turnaround has been fast: in 2009, the year the school became an academy, 23 children applied for 120 places; last year, 200 applied. During a 2014 visit to the school, the prime minister, David Cameron hailed the “extraordinary achievement”. + +Some of these measures would have been introduced anyway, but many have been made possible by the huge boost to the school’s funding provided by the “pupil premium”, says Dame Sharon. The policy was introduced by the Conservative-Lib Dem coalition in 2011 to improve the academic performance of the poorest children. Schools receive additional funding for every child on free school meals (now £1,320—or $1,850—for primary schools, and £935 for secondary schools) and can spend the money how they see fit, with parents, governors and inspectors keeping tabs. In 2014-15, £2.5 billion was spent on the policy, 6% of the schools budget. Nick Clegg, the former deputy prime minister, called the premium one of his proudest legacies. + +Evidence suggests academic progress may be slow. The gap between children on free school meals and others at GCSE—the exams taken aged 16—has remained high if measured by the percentage of children attaining five A*-C grades. Indeed, the gap between the performance of rich and poor children in Britain is larger than average for the OECD club of mostly rich countries. But there are signs of progress: the gap in exam results taken aged 11 has narrowed, as has GCSE performance if measured by results in eight core subjects. + +Headteachers appreciate the flexibility the funding gives them. “It has allowed us to be much more creative, to take more risks,” says Hazel Pulley of Parkfield Community School in Birmingham. One of the school’s successful interventions was hiring teachers to work solely on communication in early years, since most of its pupils don’t speak English as a first language. Many schools use the money to help individual pupils: one in Sheffield bought a bike for a pupil struggling to care for his siblings and get to school on time. + +Meanwhile, the government has poured funding into studies looking at how best to spend money, providing the Educational Endowment Foundation (EEF), a charity, with £137m. It collates evidence from abroad and funds studies at home: around one-quarter of English schools are involved in randomised control trials run by the charity. + +Schools increasingly turn to the research for guidance: two-thirds now consult the EEF’s advice, up from one-third in 2012, according to a report by the National Audit Office (NAO), which scrutinises government spending. Surveys by the National Foundation for Educational Research, a charity, found that the most common interventions in the first years of the pupil premium were to reduce class sizes and increase numbers of support staff—neither of which are judged to be effective by the EEF. Now schools are more likely to put in place one-to-one tuition and pupil feedback—both of which are highly rated. + +Yet, for some headteachers, “the idea that you turn to evidence is just not part of the culture,” says Sir Kevan Collins of the EEF. A number of cheap, effective approaches, such as using older children to tutor younger ones, are still rarely used. Some 44% of schools have spent part of the pupil premium sprucing up classrooms or the school environment, which has little impact on student performance. Nearly eight in ten schools use the extra money to support activities that benefit all pupils, which makes sense only where there are many pupils on free school meals. + +Some argue that pupil-premium spending should be subject to tighter scrutiny. Others suggest that schools have become too reliant on research by the EEF for evidence of what works. Yet such debates are partly proof of the premium’s success. How to raise the attainment of children from poor backgrounds is now a focus for educators. Before the premium, 57% of school leaders said they aimed support at their most disadvantaged pupils; 94% now do, says the NAO. With such a wide gap in attainment between children from rich and poor families, that is no bad thing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693989-pricey-education-policy-looks-money-well-spent-premium-grade/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Supermarkets + +Fresh from the Amazon + +An American giant moves into online grocery shopping + +Mar 5th 2016 | From the print edition + +BRITAIN’S big supermarkets have had a dismal few years. Aldi and Lidl, two upstart German-owned discounters, have taken huge bites out of their market share, margins have been squeezed and record losses have mounted. + +One refuge, however, was in online shopping, which Aldi and Lidl have been reluctant to embrace, despite the fact that British consumers are Europe’s most enthusiastic e-shoppers. Online grocery sales have been growing strongly, and the likes of Tesco, the biggest supermarket, and Sainsbury’s, have taken full advantage. Tesco, which runs a “Click+Collect” service, has about 40% of the online market. + +Now, however, that refuge is looking less safe. On February 29th Amazon, an American online retailer, announced that it will start selling fresh food and groceries as well, in a tie-up with the fourth-largest British supermarket, Morrisons. Thus Amazon, with deep pockets and a wealth of experience offering food online in American cities, will now go head-to-head with Tesco and others. The move had been expected, but that will be of no comfort to its new rivals. Shares in Tesco and Sainsbury’s were down on the news, while shares in Ocado, an online-only grocer, plummeted by about 10%. + +Shares in Morrisons rose. It has suffered more than most at the hands of Lidl and Aldi, selling, as it does, to the same customers in the same areas of the country. Yet the deal with Amazon gives it a straightforward new sales channel into the online market. Morrisons also makes its own food products, and under the new agreement it will supply fresh and frozen foods to Amazon to sell on its Prime Now and Pantry services. Until now, the Pantry service had offered only household goods such as cleaning products, drinks and pet food. + +Morrisons has an existing arrangement to sell its groceries to Ocado, and there are fears that the Amazon deal could undermine that. But Ocado hopes that the intervention of the American giant will just increase the market instead. For Amazon, this is probably just the beginning of its journey into Britain’s grocery market, which is worth about £180 billion ($254 billion) a year. + +“It is a real race now,” says Ray Gaul, an analyst at Kantar Retail, of the online market. And to add to the competitive pressures, the Amazon move comes only a month after Aldi launched its first British online-shopping service. This is, for the moment, limited to wine, offering hefty discounts on boxes of six, but there will undoubtedly be more to come. The north of England used to be the bastion of Aldi and Lidl, but Aldi is now advertising this service heavily in London, Tesco’s and Sainsbury’s backyard. The two discounters also have ambitious plans to open many more shops in the capital. + +The new competition should be good for online shoppers, but less so, perhaps, for the 3m or so people who work in retailing. The same day as the Amazon announcement, the British Retail Consortium, a trade body, published a report predicting that 900,000 jobs could be lost in the industry by 2025. The authors blame this partly on the cost of the new “national living wage” and apprenticeship levies, but also the rise in online shopping and the increasing costs of running shops on the high street. Avocados and cheese twists straight to the door won’t be helping everyone. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693973-american-giant-moves-online-grocery-shopping-fresh-amazon/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cross-channel travel + +Allied landings + +How ferries from Dover are holding their own + +Mar 5th 2016 | CALAIS | From the print edition + +Less strain than the train + +BULLDOZERS and demolition teams moved into the migrant camp at the French port of Calais on February 29th, part of the latest attempt to resolve the problems that have plagued the port for years. Migrants breaking into lorries and rushing the rail tunnel to England have caused frequent delays to rail services, affecting schedules nearly every week last summer. Yet scenes of burning tents and migrants scaling fences have done little to dampen a little-expected commercial resurgence: for cross-channel ferry firms. + +When the Channel Tunnel opened in 1994 between Folkestone and Calais, many thought that the speed and convenience of rail travel would put ferries out of business. In the late 1990s the tunnel and the advent of cut-price air fares hit the ferry market hard (see chart). But as new figures published last week show, ferry companies sailing to and from Dover, at least, have managed to stay afloat. They have even seen demand grow since 2012. + + + +Operators believe that ferries will always have a role providing extra capacity. This is partly because it is still cheaper, on average, to cross the channel by boat than by train, says Torben Carlsen, chief financial officer at DFDS, a ferry company. The average price of taking a car with two passengers on the ferry from Kent to France is less than £50 ($70), the standard fare for taking the tunnel is £76. Many drivers do not like the shuttle services through the tunnel, either because they fear boarding the train will damage their vehicles or because it is less comfortable: the tunnel often gets very hot and there are no catering services onboard the trains. + +P&O, DFDS’s main rival on the route, has started to emphasise the comparative comfort of ferry travel in their advertising, trying to borrow the glamorous image of cruising for their more mundane voyages. This has also helped boost ancillary revenues. Although the end of duty-free shopping within the EU in 1999 cut profits from onboard shops, new revenue streams, including posher restaurants, Wi-Fi and business-lounge entry, have helped make up the difference. + +Ferry firms have been hit by migrant problems, too. Immigrants have regularly tried to stow away in cars and lorries waiting to board ferries at Calais; in January dozens of them managed to storm the gangway onto P&O’s Pride of Britain. The disruption led to the delay or cancellation of many sailings. Wildcat strikes by workers in Calais also contributed to a dip in ferry services last summer, as did the EU’s decision to close down MyFerryLink, a service owned by Eurotunnel (which also owns the Channel Tunnel) for anti-competitive behaviour last July. The disruptions particularly affected cross-channel freight traffic, some of which was forced to use other ferry routes or air freight. However, the chaos in Calais failed to deter passengers from taking a boat to other destinations. Although numbers on the DoverCalais route fell by 800,000 in 2015, demand grew by a similar amount between Dover and Dunkirk. + +Maintaining their market share helped ferry firms swing back into profit for the first time since the financial crisis. P&O made £13m in profit in 2015 after a loss of £10m the year before. DFDS broke even on its cross-channel routes for the first time ever, on the back of lower fuel costs and higher occupancy rates. Both firms are ramping up capacity in the expectation that clearance of the migrant camps will mean less disruption this summer, for both trains and boats. Two new ships have entered service with DFDS in February to meet the expected demand. It seems it will take more than a tunnel to put an end to Britain’s long-running ferry services. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693991-how-ferries-dover-are-holding-their-own-allied-landings/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Unity in disunity + +Conservative splits on Europe belie the reality: Eurosceptics have already taken over the party + +Mar 5th 2016 | From the print edition + + + +EYES hooded, features blade-sharp and shoulders square, Margaret Thatcher looked every bit her caricature as she addressed the House of Commons on October 30th 1990. Just returned from a European summit in Rome, she sounded it, too. The prime minister took aim at the Commission’s federal ambitions and boomed her dissent: “No. No. No.” So stark was this objection to the continent’s integration that Geoffrey Howe, her former foreign secretary, resigned two days later, triggering her fall from office. Partly because of the drama of those days, Europe has since transfixed and sundered the Conservative Party. + +That seems especially so now, as Britain’s in-out referendum campaign gets rolling. Having promised the vote three years ago in an (apparently vain) attempt to cure the Tories of their neurosis, David Cameron hoped to limit support for Brexit to his party’s margins. But at the latest count a little under half of his 330 MPs are for Out, among them two big names: Michael Gove, the justice secretary, and Boris Johnson, London’s mayor. Merely disappointed in the former (a convinced eurosceptic), the prime minister is incandescent at the latter (a political opportunist). In a statement to the Commons on February 22nd he issued a string of barely veiled attacks on Mr Johnson’s arguments and motives as his target looked on, rather sheepishly, from the back benches. + +The family feud will only intensify in the months leading up to the referendum on June 23rd. Piqued by Mr Cameron’s barbs, the popular mayor is now throwing his full weight behind the Out campaign. On March 1st he dismissed dire government warnings about the risks of Brexit as baloney. Meanwhile otherwise loyal MPs mock the prime minister’s “renegotiation” of Britain’s EU membership with Trump-esque scorn. Out in the country some six in ten Tory members plan to vote to leave the EU according to YouGov. Strategists worry about how to “heal the wounds” after the referendum. + +So it is tempting to see the surprisingly sudden and vitriolic confrontation between parts of the party as the latest chapter in its long history of eruptions over Europe. That story encompasses first Thatcher and her Europhile assassins, then John—now Sir John—Major and the anti-Brussels “bastards”, as he called them, in his cabinet and later the party’s irritable 13 years in opposition. + +But what is happening now is different. Take the comparison with the Major years. In the 1990s the Conservative fringe was calling for Brexit, but a significant section of the party also remained wedded to the European ideal. In 1994, two years after Britain’s humiliating crash out of the Exchange Rate Mechanism, the forerunner to the euro, almost a third of Tory members supported further integration and almost a quarter wanted a federal Europe. Although Sir John insisted that Britain must remain at the “heart of Europe”, in 1996 party bigwigs chided him for being insufficiently pro-European. + +In the intervening years Europe’s economic woes—combined with the drum beat of the anti-EU newspapers, Mr Cameron’s ill-advised Eurosceptic overtures to his base and the rise of the UK Independence Party—have transformed the picture. Look past today’s theatrics and it is clear that almost the whole party has rallied around what, two decades ago, would have counted as its anti-EU pole. On one extreme are hard nationalists who want a complete breach. On the other are a handful of convinced Europhiles. But the vast majority, spanning In and Out camps, agrees that Britain should be in the EU’s outermost orbit: beyond the euro zone and the (notionally) borderless Schengen zone, exempt from as many rules and costs as is practical and under no circumstances subject to further integration. + + + +In graphics: A guide to “Brexit” from the European Union + +The referendum debate, however bad-tempered, merely concerns the most beneficial way to achieve this semi-detachment; it is about procedure more than principle. Most Conservative supporters of membership argue that Britain’s interests are best served by remaining a member and securing opt-outs reinforcing its “special” position on the edge of a multi-speed union. Some on this side (like Oliver Letwin, who runs the Cabinet Office) actually support Brexit but think now the wrong time. Their opponents generally want the country to quit, retain its access to the single market—perhaps at the price of some continued pooling of power—and assume an observer status in the European institutions. “We’re all Eurosceptics now,” reckons Michael Fallon, the defence secretary (and a typically unsentimental In voter). + +The best example of the muddy reality of what at first glance looks like a binary divide is Mr Johnson who, by his own admission, has been “veering all over the place like a shopping trolley” on the subject. Having initially endorsed Out on the grounds that it would enable Britain to demand and secure a bespoke form of half-membership, he switched to admitting “out means out” when Mr Cameron refuted his claim, but still hints at the possibility of some sort of intermediate option. + +Bastards get the last laugh + +The Tory party’s convergence on this territory will continue beyond June. Whatever the result of the vote, London’s mayor stands a good chance of succeeding Mr Cameron (YouGov gives him a 21-point lead among party members) whenever the prime minister chooses, or is forced, to step down. The elevated salience of the EU question means it will dominate candidate selections, propelling the parliamentary party in a yet more Eurosceptic direction. Even if the country votes In there could be talk of a new referendum in the near future. And either way, any notion of Britain being at the heart of Europe will be dead. Thus although today’s campaign will bruise egos and break friendships, the bigger story is of a creeping consensus: over years of squabbling a once keenly pro-European party has gradually embraced a peripheral status in the union. In 1990 Thatcher’s Euroscepticism shocked her party. Now it looks restrained. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21693990-conservative-splits-europe-belie-reality-eurosceptics-have-already-taken-over/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Internet governance: We the networks + +The IETF: Mother of consensus + + + + + +Articles Sections Next + +Internet governance + +We the networks + + + +The organisation that runs the internet address book is about to declare independence + +Mar 5th 2016 | From the print edition + + + +IF A satirist were to create a parody of an international conference, amping up the insularity and tedious intricacies for comic effect, he might come up with something rather like the meeting that will take place this week in Marrakech. The Internet Corporation for Assigned Names and Numbers, known as ICANN, will bring together 1,300 participants for 346 sessions. The gatherings include “NCPH Reception and Informal Meeting: CSG with the NCSG” and “CJK Generation Panels Co-ordination Mtg with Integration Panel”. + +Barring any last-minute hiccups, though, something remarkable will happen at the meeting. After two years of negotiations, ICANN is set to agree on a reform that would turn it into a new kind of international organisation. If this goes ahead, a crucial global resource, the internet’s address system, will soon be managed by a body that is largely independent of national governments. And some of ICANN’s champions reckon this is just a start. In future, similar outfits could be tasked with handling other internet issues that perplex governments, such as cyber-security and invasions of privacy. + +The beauty of the internet is its openness. As long as people stick to its technical standards, anybody can add a new branch or service. For everything to connect, though, the network needs a central address book, which includes domain names (such as economist.com) and internet-protocol addresses (such as 216.239.38.21). Whoever controls the address book can censor the internet: delete a domain name and a website can no longer be found. + +That is why, as the internet grew up, America decided not to hand control to the United Nations or another international body steered by governments. Instead, in 1998 it helped create ICANN, a global organisation that gives a say to everybody with an interest in the smooth running of the network, whether they be officials, engineers, domain-name holders or just internet users. Because few precedents existed, and because of a fear that ICANN would lack legitimacy, America kept it on a long leash. American approval is still required in some areas, including changes to the innards of the internet’s address system. + +Most were happy with the arrangement at first. But American oversight came to seem odd as the internet grew into a vast global resource with much traffic no longer passing over American cables (see chart). Then came revelations that the National Security Agency had spied on internet users in America and elsewhere. The snooping was unrelated to the management of internet addresses. But America’s Department of Commerce, which oversees ICANN, was provoked to announce in March 2014 that it would relinquish its role if it were convinced that ICANN would be truly independent and able to resist power grabs by other governments and commercial interests. + + + +America’s decision to let go triggered much wrangling and some stalling by those who benefit from the status quo. Gradually, though, plans for an independent organisation have come together. The new ICANN will resemble a state, says Thomas Rickert of eco, Germany’s internet association and co-chairman of one of the main negotiation committees. + +It will have a government (the organisation’s board), a constitution (its by-laws, which include its mission and “core values”), a judiciary (an “independent review process”, which leads to binding recommendations) and a citizenry of sorts (half-a-dozen “supporting organisations” and “advisory committees”, which represent the different interest groups). These will have the right to kick out the board and block its budget. + +Even some of ICANN’s harshest critics, such as Milton Mueller of the Georgia Institute of Technology, say the proposals are pretty good on balance—though he would like the citizenry to have more powers. One point, however, could cause trouble in Marrakech. More than a dozen countries, including Brazil, France and Russia, argue that governments will have too little sway in the new structure. ICANN’s board is obliged formally to weigh advice from a government advisory council only if that group has adopted such advice with “full consensus”, meaning no government openly objects. The dissenting countries say that full consensus will be tough to achieve. Governments are being expected to jump over a higher bar than others, complains one representative from a dissenting state. + +Discussions are likely to be heated, if incomprehensible to outsiders, but few expect the reform plans to be derailed in Marrakech. How American politicians will react is another matter. Some Republicans, in particular Senator Ted Cruz, who is running for president, dislike the idea of America letting go of ICANN. Opponents have not managed to pass legislation that would give Congress the right to stop the change: as things stand, a report sent to the relevant committees would suffice. But Republicans have blocked the commerce department from spending any money on the transition. Reform could well become mired in the presidential race, and other hurdles could pop up. Some lawmakers now argue that giving ICANN more independence amounts to the transfer of government property, which requires a vote by Congress. + +Dissenting governments and recalcitrant Republicans notwithstanding, an independent ICANN is not only likely to come to pass but also to become a model for other sorts of internet governance. The network is becoming Balkanised, with each country seeking to control what goes on within its own borders. Without generally accepted global rules, governments are bound to create their own, even if these cannot be implemented. “Multi-stakeholder” outfits like ICANN, where all opinions are aired, might well be the best hope to come up with rules that work. + +The consensual model is hardly perfect. It seems to work well for settling technical questions (see article) but can stumble when things get more political. And it is not clear who would launch other ICANN-like organisations. NETmundial, an initiative created in 2014 to do just that, has only produced some worthy “internet governance principles”. + +Perhaps Fadi Chehadé, ICANN’s president and one of the instigators of NETmundial, will be more successful getting such efforts off the ground in his new job. He will step down after the meeting in Marrakech, to be succeeded by Göran Marby, a Swedish telecoms regulator, and join the World Economic Forum to create all sorts of multi-stakeholder groups. “We need many little ICANNs,” he says. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21693922-organisation-runs-internet-address-book-about-declare-independence-we/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The IETF + +Mother of consensus + +Engineering the internet is too big a task for one outfit + +Mar 5th 2016 | From the print edition + +The wizard of the web + +TODAY ICANN is almost synonymous with internet governance (see article). But spare a thought for the Internet Engineering Task Force (IETF). Without this little-known outfit, which developed many of the internet’s technical standards, the network would not even exist. The IETF just celebrated its 30th anniversary. Will it be around in another 30 years? + +The IETF, which was born at a meeting in San Diego, is known for its pragmatic way of making decisions. Rather than having governments or companies haggle over changes to networking protocols or routing services, “rough consensus and running code” is the rule. “Not everyone has to agree. And no votes are counted,” explains Scott Bradner, one the group’s grey-bearded elders (pictured). If the difference between two options is merely cosmetic, the IETF generally goes ahead with the more popular one if dissenters do not number more than about 20-30% of the total, although there is no firm rule. That proportion shrinks to 5-10% when a more fundamental choice must be made. + +At first IETF meetings were a festival for academics and engineers such as Mr Bradner. But as the internet has grown and become vital to companies’ fortunes, that has changed. First, representatives of big makers of networking gear such as Cisco and Ericsson began to turn up. They were followed by delegates from online giants like Facebook and Google. Now a large Asian contingent is present. When the IETF met in Yokohama last November, Cisco sent around 100 engineers, Google 50 and Huawei, a Chinese hardware maker, about 60. + +Jari Arkko, the IETF’s chairman (who also works for Ericsson) wants it to remain the place where exciting new technologies are discussed. But it seems to be turning into more of a conventional standards body. Commercial interests weigh heavily and issues take ever longer to sort out, says Kieren McCarthy, a longtime observer of internet-governance groups. Increasingly, internet standards are being set by more specialised groups covering the web, mobile technology and the internet of things. + +The pioneers are retiring: Mr Bradner will say goodbye in the next few months. But even if the organisation becomes less relevant, its decision-making standard of “rough consensus and running code” is likely to endure. Most internet-related technical groups follow it. The IETF’s dress code is influential, too. “Many newcomers are often embarrassed when they show up Monday morning in suits,” the official “Tao of IETF” warns, “to discover that everybody else is wearing T-shirts, jeans and sandals.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21693920-engineering-internet-too-big-task-one-outfit-mother-consensus/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Volkswagen: Emission impossible + +Death of a fracking pioneer: A gambler on shale + +Our glass-ceiling index: Still a man’s world + +Road haulage: The appy trucker + +Italian coffee firms: Not so espresso + +Schumpeter: A rust-belt revival + + + + + +Articles Sections Next + +Volkswagen + +Emission impossible + +The German carmaker will escape its emissions scandal largely unscathed. That is bad news for a firm in need of an overhaul + +Mar 5th 2016 | GENEVA | From the print edition + + + +VOLKSWAGEN’S new boss, Matthias Müller, was no doubt hoping that his firm’s launches of new models at the Geneva motor show this week would help it move on from the scandal over its cheating in emissions tests. A British prankster had other ideas. As VW’s sales chief, Jürgen Stackmann, unveiled a new version of the Up city car, Simon Brodkin, a comic whose past targets include FIFA’s former boss, Sepp Blatter, gatecrashed the presentation in overalls, with a spanner and a “cheat box” which he tried to fit to the car (see picture), before being led off by security men. + +Mr Müller can afford to see the funny side of the stunt: he owes his job to the scandal. He was brought in to replace Martin Winterkorn, who was forced out when it emerged last September that 11m of the company’s diesel cars had been fitted with software to cheat tests for nitrogen-oxide emissions. This week VW admitted that Mr Winterkorn had been sent a memo in May 2014 about irregularities in the cars’ emissions, but said he may not have read it. Speaking to The Economist in Geneva, Mr Müller promised “monumental change”. But whatever VW does to make amends, the more far-reaching overhaul that it needs seems unlikely to happen. + +The emissions scandal was a symptom of a corporate culture focused on ramping up output to 10m vehicles a year and toppling Toyota as the world’s biggest carmaker. In the quest for scale, profitability suffered. Operating profits have hovered around €12 billion ($13 billion) for years despite a big expansion in output, with the group’s huge returns from China disguising poor performance in Europe and losses in America and emerging markets. + +Mr Müller says he is determined that VW not be “paralysed” by the emissions affair. Its sales fell in Europe and America in January even as their overall demand for new cars rose. But Mr Müller says 2016 has started well and that he expects little lingering impact from the scandal. He may be right. General Motors’ faulty ignition switches and Toyota’s “unintended accelerations” forced both firms to make huge recalls and generated plenty of bad press. Yet sales recovered within a few months. + +Uncertainty about financial penalties will hang over VW for some time. It has delayed its annual report for 2015 until April, when the picture should be clearer. America’s Department of Justice could in theory levy a fine of €60 billion but it is unlikely to go that far. Some analysts reckon that the cost of settling with the authorities and private litigants, worldwide, and fixing the affected cars or compensating their owners, might come to a grand total of as much as €30 billion—roughly the amount by which VW’s stockmarket value has fallen since the scandal broke. Others think it could be far less: both GM and Toyota escaped with fines of around €1 billion. + +If paying for its perfidy proves painful but not life-threatening, the impetus to overhaul VW will lose some of its force. Change is needed. VW is a sprawl of brands of varying fortunes. Almost two-thirds of its profits come from its premium-car brand, Audi, and performance-car division, Porsche (see chart 1). The main VW brand is a drag on the group: Sanford C. Bernstein, a research firm, reckons that in 2014 the brand’s profits essentially came from parts sales and royalties (paid by its joint ventures) in China, and that it made no money in its core European market. + + + +Mr Müller is making a start by attempting to revamp the culture of a company in which hitherto a strict hierarchy sent decisions, big and small, to the German engineers that ran VW from its headquarters in Wolfsburg. Mr Müller has replaced seven out of ten senior executives. Some are outsiders, though many of the “new” faces are, like Mr Müller, VW insiders ingrained in the firm’s ways. He is, however, trying to speed up sclerotic decision-making by giving the heads of the group’s profusion of brands more responsibility. + +A comprehensive restructuring plan is promised for later in the year, but the firm has said it will concentrate harder on profits. As a start, it will make €1 billion of cost cuts at the VW brand next year. But analysts reckon the company, which alone among big carmakers failed to reduce costs during the financial crisis, has plenty more fat to cut. For no good reason, its administrative expenses have trebled since 2007. + +The firm will also cut the extravagant number of model variations it offers—more than 300 at last count—and its absurdly long lists of options. The choice of steering wheels on the VW Golf is set to fall from 117 to a mere 43. VW will “reconsider all costs”, says Mr Müller, including even its hallowed research-and-development budget. In 2014 it was €13 billion, €5 billion more than Toyota’s. But it is unclear what VW’s huge outlays have yielded. It missed the craze for SUVs, it is lagging its main rivals in electric-car technology and it lacks a cheap platform for budget cars in emerging markets. A project to standardise the underpinnings of many VW group models with a platform called the MQB seems not to be producing the expected cost savings. + +Mr Müller is resistant, however, to disposing of any part of the firm, even a unit that makes marine diesel engines. A gruff “No” is his response when asked if he would consider selling it, though it is unclear that this division, or another that builds lorries, or Ducati, a maker of exotic motorbikes, is a core part of VW. + +The most intractable problem is low productivity, especially at the mass-market VW brand. The group’s labour costs have risen from around 13% of sales in 2007 to almost 17%. Outside China (where it makes cars in joint ventures with local firms), the group’s 520,000 workers made 6.7m vehicles in 2014, or about 13 each. That is about the same productivity as at Daimler’s Mercedes division, which makes only high-margin premium models (see chart 2). + + + +As other carmakers have shifted production to low-wage countries, VW has remained largely stuck in Germany. Some 45% of its employees are based there, many enjoying a four-day work week. The VW brand’s German factories are “among the highest-cost plants in the industry”, says Patrick Hummel of UBS, a bank. + +But VW’s commitment to Germany is absolute. “We are a German company”, says Mr Müller, and will “preserve German jobs”. Powerful unions would be sure to resist job cuts. Mr Müller says that they agree on the need for reform but admits to disagreement over how it might happen. Unions could also prevent a wider rethink that might shift investment from the VW brand to others that are more profitable. The supervisory board, made up largely of union representatives and nominees of the state of Lower Saxony, which holds a 20% stake in VW, has the power to resist most changes of strategy. + +Maybe an outsider with a mandate for change, if backed by the Porsche-Piëch family, which controls the voting shares, could have achieved more. But Mr Müller’s hands seem tied. The good bits of the VW group will continue to prop up the underperforming bits. That burden may get heavier: premium and low-cost carmakers are thriving while the mass market, the core of VW’s business, becomes more competitive. Odd as it sounds, VW could have done with a bigger crisis. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693947-german-carmaker-will-escape-its-emissions-scandal-largely-unscathed-bad-news/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Death of a fracking pioneer + +A gambler on shale + +Aubrey McClendon dies in a car crash a day after a federal indictment + +Mar 5th 2016 | From the print edition + +“To hell with OPEC” + +IT WAS a tragic end to a life that epitomised the winner-takes-all spirit of American capitalism. On March 2nd, the day after he was indicted by a federal grand jury on charges of rigging bids for oil-drilling rights, Aubrey McClendon, a founder of Chesapeake Energy and one of the pioneers of America’s natural-gas revolution, died after driving his car at high speed into a wall. + +Mr McClendon, 56, was one of the high-rollers of the shale boom—and of its bust. He turned a $50,000 investment in 1989 in Chesapeake, based in Oklahoma City, into what became one of the two biggest natural-gas producers in the United States, with an acreage of leaseholds almost the size of West Virginia. He was also one of the champions of natural gas as a relatively clean fuel compared with coal, and an advocate for freeing America from dependence on Middle Eastern oil. “To hell with OPEC”, he was fond of saying. + +Yet his ride was a white-knuckled one even by the standards of America’s oil industry. He quickly seized on the potential of two emerging technologies, horizontal drilling and hydraulic fracturing (fracking), to unlock vast new sources of natural gas and change the face of American energy. But it was his zeal in amassing land by borrowing heavily that gave him his edge—and ultimately brought him down. + +“To be able to borrow money for ten years and ride out boom-and-bust cycles was almost as important an insight as horizontal drilling,” he was quoted as saying in Rolling Stone magazine, in 2012. That was four years after he had lost most of his personal fortune on margin calls during the global financial crisis. A year later he was ousted from Chesapeake for mixing reckless personal bets with those of his publicly traded company. + +Mr McClendon, the great-nephew of a former Oklahoma governor, was not a typical wildcatter. He had preppy, Richard Gere looks. His first career choice was to be an accountant. But with Chesapeake’s other founder, Tom Ward, he was adept at leasing land quickly and quietly to secure the shale resources beneath before others realised their potential, and he was as keen to flip it for a higher price as he was to frack it. + +“Geologists and engineers were the important guys—but it dawned on me pretty early that all their fancy ideas aren’t worth very much if we don’t have a lease. If you’ve got the lease and I don’t, you win,” he once said. + +He became an Oklahoman hero, particularly after bringing a professional basketball team, the Oklahoma City Thunder, in from Seattle. He had a wife and three children, and regularly treated friends to his collection of fine wines. But his brash business tactics also brought him a number of lawsuits. + +His leasing methods eventually attracted the attention of America’s Department of Justice. On March 1st it accused him and an unnamed co-conspirator of lowering the price of leases to drill for oil and gas on land in Oklahoma between December 2007 and March 2012, charges which carry stiff jail penalties if they lead to a conviction. It said “various corporations and individuals” were not charged but were also involved. Chesapeake said it did not expect to face prosecution. + +Mr McClendon swiftly described the charge as “wrong and unprecedented”, saying he was the first person in the oil-and-gas industry in 110 years to face antitrust prosecution under the Sherman Act for joint bidding on leaseholds. His lawyers argued that the “business practices” in question were well-known in the Oklahoman and American energy industries. “Starting today, Aubrey gets his day in court,” they said. He died the next morning. As The Economist went to press, police in Oklahoma City were still unable to say whether the crash, in which he was the only victim, and which involved no other vehicle, was intentional or not. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693951-aubrey-mcclendon-dies-car-crash-day-after-federal-indictment-gambler-shale/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Our glass-ceiling index + +Still a man’s world + +Our index of the climate for working women now includes paternity leave + +Mar 5th 2016 | From the print edition + + + +IT IS still common to see headlines announcing the first woman to occupy some important post or other. Asako Suzuki has just been appointed the first female board member at Honda, a Japanese carmaker. In January the Irish central bank appointed its first female deputy governor. And of course Hillary Clinton could become America’s first female president. But such milestones may not be much of a guide to the opportunities women have to make progress in the workplace. + +So, in 2013, we created a “glass-ceiling index”, ranking countries by how good it is to be a working woman in each of them, to be published each year to mark International Women’s Day (March 8th). Our index now covers 29 countries; our website has a full, interactive version of the adjacent chart. Besides taking into account such things as women’s access to higher education, their labour-force participation, pay, business-school applications, representation in senior management and the cost of child care, this year we have added a new indicator: as well as measuring maternity-leave rights, we now include paternity leave. + +Studies show that where new fathers take parental leave, mothers tend to return to the labour market, female employment is higher and the earnings gap between men and women is lower. Among countries in the OECD, a group mostly of rich countries, paid leave for new daddies generally remains short, averaging just eight weeks. Nine countries, America included, offer them none. Although they fare poorly on a number of other indicators, Japan and South Korea now offer the longest paternity leave in the OECD. In those two countries, fathers (and mothers) are entitled to more than 50 weeks’ paid leave. + +Under Japan’s latest change to the law, in 2010, new mothers and fathers have 14 months from the birth in which to take up to a year’s paid leave, as long as they both take it. The idea is that men have the same career gap as women, and the career slippage among women of childbearing age is reduced. But cultures are hard to change, and so far the uptake has been low. + +Depending on nationality, new parents take home very different proportions of their usual pay while on leave. Turkey and Spain, for example, both offer 16 weeks’ maternity leave, but in Spain new mothers receive 100% of salary whereas in Turkey it is just 66%. Our index takes this into account: it includes a “full-rate equivalent” leave entitlement for Turkey of 10.6 weeks, to reflect the pay difference. + +Unsurprisingly, the Nordic countries—Iceland (a newcomer to our index), Norway, Sweden and Finland—come out top overall. In these countries, women are present in the labour force at similar rates to men. Finland has the largest share of women who have gone through higher education compared with men (49% of women have a tertiary degree, and 35% of men). Norway’s gender wage-gap (6.3%) is less than half the OECD average (15.5%). + +Women have 44% of seats on listed-company boards in Iceland; strong representation in Scandinavian boardrooms is common thanks to quotas. Norway and Iceland also have voluntary political-party quotas, as does Sweden where 44% of parliamentary seats are occupied by women, one of the highest rates in the world. Hungary ranks fifth, having the lowest gender wage gap, of 3.8%. Despite having few women on boards (11%) and in parliament (10%), Hungary has generous paid leave for mothers (71 weeks at 100% of recent pay) and low child-care costs. + + + +INTERACTIVE: Adjust the weightings and create your own “Glass-Ceiling Index” + +At the bottom of the ranking are Japan, Turkey and South Korea, where men are more likely than women to have degrees, to be in the workplace and to hold senior positions. Their pay gap is also wide. In Japan and South Korea the favourable parental-leave system is mainly a response to their ageing populations and shrinking labour forces; but in other respects they are far behind the Nordic countries, whose commitment to sexual equality goes back a long way. + +Even among better-ranked countries though, there is room for improvement. On average, across the OECD women are more likely to have a degree than men, but they are still less likely to be in the labour force and are paid significantly less. This is partly because of career choices (boys tend to choose things like engineering and computing; girls go for education, health care and welfare). But much of the difference also comes from child-bearing. Although the share of women on listed-company boards has increased since last year by 2.5 percentage points to 18.5%, women still hold less than a third of positions in senior management (a pipeline for board membership). Those that are in the higher echelons of management, according to the UN’s International Labour Organisation, are clustered in specific areas: human resources, public relations and communications management, and finance and administration. + +Although American firms have fewer women on boards than European ones, according to MSCI, a financial-data firm, they are more likely to have a female CEO or chief financial officer—the top jobs that bring headlines. But MSCI also found that of the rich-world listed companies where the CEO is a woman, 58% had at least three others on their board. This suggests that once one woman breaks through the glass ceiling, others find it easier to follow. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693952-our-index-climate-working-women-now-includes-paternity-leave-still-mans-world/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Road haulage + +The appy trucker + +Digital help is at hand for a fragmented and often inefficient industry + +Mar 5th 2016 | From the print edition + +The next job is just one click away + +MENTION “logistics” and it may bring to mind shiny FedEx or UPS vans with their neatly uniformed drivers. However, the business of shifting cargo by road, especially larger loads, is far more fragmented and inefficient than the image of its best-known brands would suggest. + +Even the world-famous names in parcel delivery compete with many lesser firms. Likewise, “third-party logistics”—the outsourcing of a business’s transport needs, including running fleets of lorries and vans on its behalf—also has some big firms but lots of smaller ones. There is even more fragmentation in what Americans call the “truckload” part of the industry—one-off deliveries of entire lorry trailers—and in the “less-than-truckload” business—the carriage of a pallet or two of goods. Whereas America’s top five airlines earn around 90% of their industry’s domestic revenues, the equivalent figure for the top five logistics firms is just 20%, reckons Armstrong & Associates, a consulting firm. Official figures show that one in nine American truckers is an independent owner-operator rather than an employee. + +The entire industry is a juicy target, ripe for disruption. Together, road haulage of all kinds is worth around $700 billion a year in America and more than €310 billion ($335 billion) in Europe. The rise of internet shopping and other factors will help the industry to keep growing, by around 3% a year worldwide for the next decade, according to Deloitte, another consulting firm. But it is a wasteful business. Every year American lorries travel empty for 50 billion miles (80 billion km)—28% of their total mileage. In Europe, a quarter of the containers on the road are empty, reckons InlandLinks, a container-tracking service. + +Some moves have been made towards consolidation. Low fuel prices, cheap finance and recovering rich-world economies have given larger companies the means and the motive to buy rivals. Last year FedEx bought TNT, a European parcel-delivery counterpart, for $4.8 billion. XPO Logistics of America, a broker in the truckload and less-than-truckload businesses, bought a French firm, Norbert Dentressangle, for $3.5 billion; and then a domestic rival, Con-way, for $3 billion. European firms have joined in too: SNCF Geodis, a French state-owned logistics outfit, recently bought OHL for $800m, to establish a foothold in America. + +However, there seems little prospect so far of consolidating the multitude of freelance truckers into employees of a handful of big firms. This is because of the comparatively low barriers to entry in their business, says Jack Semple of the Road Haulage Association, a British trade body. The average cost of a lorry-driving course in Britain is less than £1,000 ($1,400). In California it can be as little as $1,100. Lorries can be leased, or bought on cheap credit provided by their makers. Britain nationalised and merged its biggest hauliers in the 1940s, but a state behemoth was outrun by one-man outfits and the business was privatised again in the 1980s. + +The best prospects for efficiency and rationalisation, then, are in improving the creaky system by which large numbers of freight-brokers haggle with even larger numbers of truckers. Deals can take days of telephone calls to organise. And for their efforts, brokers charge hefty commissions—of as much as 45% of the delivery cost per load for short-haul trips. Brokers have an incentive to choose the priciest options for their clients to extract as high a fee as possible. + +Inevitably, a bunch of startups are now seeking to make the business cheaper, quicker and more transparent by replacing the brokers with mobile-app platforms that match shippers’ loads with available trucks and truckers. Cargomatic, based in Los Angeles, lets shippers list local jobs on its app, which are pinged to the smartphones of nearby drivers. When one of them takes on a job, the shipper can track his journey in real time. Trucker Path, already a popular social app that helps around 450,000 registered American drivers find rest-stops and poker partners, is currently testing its Truckloads app, which does something similar to Cargomatic for the long-haul market. + +Other systems automatically match drivers to loads, much as Uber does for taxis and passengers. Transfix, developed by a New York startup, not only scans for nearby lorries, but also rates each driver based on how many miles he would have to drive his lorry empty, how soon he will be available and his past performance. The best match is offered the job first. The whole process takes minutes, says Drew McElroy, a founder of Transfix. And the commission is just 10%, a fraction of what some brokers charge. + +Other apps are attempting to do the same for containers whose journeys do not just involve the roads. Kontainers, based in Britain, aims to be a one-stop-shop for businesses that want their goods moved across the oceans. Now, to shift a load from a shipper in Britain to a customer in Australia typically requires two days, 20 phone calls and 40 e-mails to reach an agreement, says Graham Parker, one of Kontainers’ founders. He wants to make booking a container shipment as easy as buying a plane ticket. Its website does this by dealing directly with truckers and shipping lines, which provide real-time tracking throughout the journey. Mr Parker says one of his clients discovered though Kontainers that shipping from Britain to Australia could be done in 38 days rather than the 55 his broker had always told him. + +Previously Nam Nguyen, of Skyline Steel in Seattle, would call five or six haulage companies whenever he needed to move a load from the company’s yard to a customer. For local jobs he says he now uses the Convoy app, created by another firm in Seattle, which went live in September. The main gains, he says, have been the “huge time savings” and reliability of delivery. Although it was at first assumed that only small businesses would be interested in such apps, big companies have also started to use them too. Barnes & Noble, an American bookshop chain, was one of Transfix’s first clients; Bosch, a German industrial giant, is now one of Kontainers’ best. + +Road to riches + +Drivers’ hours are restricted by law, so anything that helps them cut the time spent behind the wheel with no load (and thus no pay) is a bonus. Apps can help with this, and in generally helping them find more jobs. Mr McElroy says some of his drivers now average five weekly one-way trips between Indianapolis, where several publishers are based, and Barnes & Noble’s warehouse in New Jersey, instead of four. So they earn 25% more, with less waiting around. The apps also arrange payments much more quickly than brokers typically do, another important benefit for drivers. Some platforms, such as Transfix, guarantee payment within 24 hours of a delivery. Others, such as Truckloads, allow drivers to filter for shippers’ credit ratings and thus the likelihood of getting paid. + +Investors have concluded that such platforms have proved their worth, and are ready to take off. Last year $63m was raised for seven of these companies, including $12m for Transfix and $20m for Truckloads. Such sums are small change compared with the huge sums that taxi-app firms like Uber and Didi Kuaidi are raising, but it is in the haulage apps’ favour that they can achieve scale with such relatively modest sums. And they do not need to attract millions of users to turn profitable. Kontainers says it already has more than 100 businesses as customers in Britain, a number which many offline brokers would be more than happy with. + +So far, the big names of road logistics have largely stood back and left the business of “Uberising” the haulage business to the startups. Dan Lewis of Convoy argues that newcomers such as his have an edge, because incumbents would need to integrate new technology into their legacy systems, and “retrofit solutions rarely outperform something built from the ground up.” As for the established brokers, they have an incentive to maintain the status quo and keep the market offline, argues Mr Parker of Kontainers. This will change if the apps begin to eat into brokers’ business and divert a significant share of work from the big parcels and haulage firms towards freelance drivers. + +Brett Parker, a founder of Cargomatic, sees large, asset-heavy logistics firms like UPS and FedEx not as competitors but as future partners, and says many such incumbents are seeking alliances with on-demand-economy firms like his. Others think the incumbents will eventually buy the most successful haulage-broker apps. + +Two other, deep-pocketed names are also casting an eye over the delivery business. Uber itself is testing a service in some cities in which its freelance taxi drivers also collect and drop off parcels; and Amazon is developing an app, “On My Way”, which allows any member of the public to get paid for delivering packages. If these two giants eventually adapted their services to cover larger loads—not much of a technological challenge—then the scale of their resources and expertise would be hard to compete with. + +By then, another wave of upheaval may be in prospect—including for today’s app-based disrupters—as driverless lorries begin taking to the roads. It seems likely that they will be phased in over a number of years, starting perhaps with bigger, longer-distance loads. An industry that has less need for drivers ought to tip the scales away from freelancers and towards large fleet owners. But the advantages of being able to book a shipment quickly and cheaply by app will remain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693946-digital-help-hand-fragmented-and-often-inefficient-industry-appy-trucker/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Italian coffee firms + +Not so espresso + +The country’s roasters have been slow to adapt to a new coffee era + +Mar 5th 2016 | MILAN | From the print edition + +Seeking a caffeine boost + +CAFÉ culture may be quintessentially Italian, but it took an American firm to make it global. Howard Schultz says visiting Milan and its cafés in the 1980s inspired him to develop Starbucks into what it is today. More than three decades later, the Seattle coffee giant is poised to enter the Italian market itself. On February 26th Mr Schultz announced a deal with Percassi, a retail developer, to open the chain’s first location in the country next year, in Milan. + +Starbucks is not the only firm to have stolen a march. An Italian developed the first espresso machine, but a Swiss firm, Nestlé, conquered the market for personal espresso-makers with its Nespresso system. The world’s second- and third-largest coffee groups, which merged in 2015 to create Jacobs Douwe Egberts, were American and Dutch, respectively. + +Italy’s coffee firms are trying to grab more of the global industry for themselves. Italy’s re-exports of beans, mostly roasted, have more than doubled over the past decade, to the equivalent of 3.2m standard 60kg sacks, increasing their share of global trade from 6.7% to 8.9%. + +Last year Lavazza, Italy’s biggest coffee firm, bought Douwe Egberts’ Carte Noire premium brand for €800m ($870m), making it the market leader in France. That followed an initial public offering of 40% of Massimo Zanetti, to raise capital for expansion. Zanetti owns a score of brands, including Boncafé, an Asian roaster; and it is buying a stake in Club Coffee, a Canadian firm with which it has developed compostable capsules. Besides continuing to develop its business-to-business side, Illycaffé is expanding its younger direct-to-consumer arm. It has opened flagship coffee shops in big cities, from Seoul to San Francisco, and plans to open more. + +Jeffrey Young of Allegra World Coffee Portal, a consulting firm, doubts if all this is enough in what has become a highly competitive and consolidated market. Many Italian firms have rested on their laurels, he says, believing their product to be superior. That was once true, but the emergence of coffee-shop chains, and then of craft coffee brands, has changed that. Quality is now a given; branding and the ambience of coffee shops are ever more important. + +The industry is now in the grip of a fad for the “science” of coffee-making—improved grinding methods, better monitoring of water quality, and so on. Illycaffé was an early innovator, having pioneered the use of pressurised cans when most others were still selling coffee in paper bags. More recently it has created an app that lets coffee-lovers design and buy their ideal blend—it will be rolled out in some of the firm’s shops later this year. But if innovation and product development continue to be important routes to growth, even Italy’s biggest firms may be outgunned by global giants with much deeper pockets. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693945-countrys-roasters-have-been-slow-adapt-new-coffee-era-not-so-espresso/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +A rust-belt revival + +New businesses are breathing life into some of America’s old industrial cities + +Mar 5th 2016 | From the print edition + + + +IN 1984 Ronald Reagan ran a re-election ad on the theme of “It’s Morning Again in America”. Today’s presidential hopefuls ought to run a follow-up called “It’s Almost Midnight”. Donald Trump laments the loss of America’s greatness. Bernie Sanders says the country is being wrecked by greedy businesspeople. America’s leading intellectuals are equally gloomy. Charles Murray, a conservative, says that America is “coming apart”; and George Packer, a liberal, agrees that it is “unwinding”. + +Mercifully, not everyone is a doom-monger. In his annual letter to shareholders of Berkshire Hathaway, on February 26th, Warren Buffett noted that “for 240 years it’s been a terrible mistake to bet against America, and now is no time to start.” The March issue of the Atlantic magazine has a cover story by James Fallows on “How America is putting itself back together”. The author undertook a three-year journey across the country in a single-engine plane and saw signs of reinvention and renewal wherever he went—and not just in trendy tech hubs. A new book by Antoine van Agtmael, who coined the phrase “emerging markets”, and Fred Bakker, a Dutch journalist, called “The Smartest Places on Earth”, argues that the rust belts of the rich world, especially in America, are becoming hotspots of innovation. + +Boosterism is as American as apple pie. But this time the boosters can point to some hard data. The Kauffman Index of Startup Activity, which measures business creation, had its biggest increase in 2015 for two decades. Bruce Katz of the Brookings Institution, a think-tank, reckons that America’s 50 most research- and technology-intensive industries have added nearly 1m jobs since 2010. These industries are disproportionately based in cities and, since they pay high wages, have a galvanising effect on local economies. Three powerful forces are breathing life into bits of America that had looked as if they were permanently left behind. + +First, old industrial skills are acquiring new relevance thanks to such things as advances in materials science. As Messrs Van Agtmael and Bakker note, Akron, in Ohio, has capitalised on its heritage as home to America’s four biggest tyremakers by turning itself into America’s capital city of polymers. The University of Akron’s Polymer Training Centre houses 120 academics and 700 graduate students. Companies such as Akron Polymer Systems and Akron Surface Technologies are inventing new ways to commercialise synthetic materials. North Carolina has done the same for textiles. Its state university is home to the Nonwovens Institute, which does research on textiles that can resist heat and chemicals, including ones used in weapons. + +Second, old industrial towns are realising that they have a vital asset: cheap property. Disused mills and warehouses, with their high ceilings and exposed bricks and beams, can make attractive homes and workspaces for knowledge workers. In Watervliet, New York, firms such as Cleveland Polymer Technologies occupy space in an old US Army arsenal. In Manchester, New Hampshire, the old and once-crumbling riverside mill district now buzzes with knowledge businesses and fancy restaurants. + +The hunt for Lebensraum is driving young entrepreneurs to explore the neglected peripheries of big cities, such as Boston’s South Side (“Southie”), Seattle’s South Lake Union Area and San Francisco’s twin city of Oakland. Some entrepreneurs are cutting the cord completely and swapping broom-cupboard-sized premises by the Bay for mansions in flyover territory. Mr Fallows also found older industries reviving in out-of-the-way places, such as in north-eastern Mississippi, where a steel mini-mill was expanding and a $300m new tyre factory was opening. + +The third trend combines elements of the first two: the rise of manufacturing entrepreneurs. Startups are beginning to transform manufacturing just as they transformed service industries like taxi-hailing and short-term room lets. New techniques such as 3D printing, combined with a rapid decline in the cost of computing power, are making it easier for small firms to compete with big ones. Crowdfunding sources such as Kickstarter are making it easier for them to raise capital. And big companies such as GE are trying to crowdsource innovation by providing small manufacturing firms with space and seed-money. Exponents of this “hardware renaissance” frequently locate themselves in old industrial towns such as Pittsburgh and Detroit, in part because there is lots of cheap space available and in part because they can draw on established manufacturing skills. + +Formidable problems, formidable resources + +There are plenty of reasons to be sceptical about rust-belt revivalism. The overall number of jobs in manufacturing has been declining for decades, and is set to continue falling as automation keeps advancing. Brain-intensive manufacturing will not provide many jobs for high-school dropouts. Such rebirths have been heralded in the past, only to come to nothing. The rate of business creation is still 50% lower than it was in the 1980s. + +Still, America’s old industrial cities have formidable resources as well as formidable problems. Akron and North Carolina point to one of the country’s strengths: it has first-rate universities almost everywhere. GE built a factory for jet-engine parts in out-of-the-way Batesville, Mississippi, largely because Mississippi State University is a centre of expertise in the new materials needed for them. America’s success in software also gives it a huge advantage in a world in which ever more software is being embedded into hardware, be it cars or smart watches. American firms also enjoy much cheaper energy than their European and Asian rivals, thanks in large part to an American innovation, fracking. + +It is too early to remake Reagan’s “It’s Morning Again” ad. But it is time for Americans to recognise that, for all its troubles, their country has not lost the ability to remake and revitalise itself. As Hillary Clinton put it, “America has never stopped being great.” Messrs Trump, Sanders et al should take note. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21693944-new-businesses-are-breathing-life-some-americas-old-industrial-cities-rust-belt/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Emerging-market debt: The well runs dry + +Buttonwood: Living off the people + +Russia and sanctions: Toe in the water + +High-denomination banknotes: Cash talk + +Barclays Africa: Capital in fetters + +The euro-zone economy: The new mediocre + +Bilking investors: Rotten advice + +Free exchange: Red ink rising + + + + + +Articles Sections Next + +Emerging-market debt + +The well runs dry + +Why borrowing in dollars is central to the business cycle in developing countries + +Mar 5th 2016 | From the print edition + + + +OIL PRICES have perked up a bit, but producers are still reeling from the slump in crude prices last year. The boss of Pemex, Mexico’s state-owned oil firm, said this week that the company faced a “liquidity crunch”. Malaysia’s state oil firm is laying off workers. Petrobras, Brazil’s troubled oil giant, recently secured a $10 billion loan from the China Development Bank to help it to pay off maturing bonds. The trouble at these firms underlines broader concerns about the burden of corporate debt in emerging markets. A particular worry for resources firms is the rising cost of servicing dollar debts taken out when the greenback was much weaker than it is now. Short-term dollar loans to be repaid with earnings in falling currencies featured prominently in past emerging-market crises. But the concern about the role of dollar lending in the current cycle is different. + +The numbers are startling. Corporate debt in 12 biggish emerging markets rose from around 60% of GDP in 2008 to more than 100% in 2015, according to the Bank for International Settlements (BIS). Places that experience a rapid run-up in debt often subsequently endure a sharp slowdown in GDP (see article). An extra twist is that big emerging-market firms were for a while able to borrow freely in dollars. By the middle of last year, the stock of dollar loans to non-bank borrowers in emerging markets, including companies and government, had reached $3.3 trillion. Indeed until recently, dollar credit to borrowers outside America was growing much more quickly than to borrowers within it. The fastest increase of all was in corporate bonds issued by emerging-market firms. + +Jaime Caruana, the head of the BIS, argues that a global liquidity cycle—the waxing and waning of dollar borrowing outside America—helps to explain the slowdown in emerging-market economies, the rise in the dollar’s value, and the sudden oil glut. When the dollar was weak and global liquidity was ample thanks to the purchase of Treasuries by the Federal Reserve (so-called “quantitative easing”, or QE), companies outside America were happy to borrow in dollars, because that was cheaper than borrowing in local currency. Capital inflows pushed up local asset prices, including currencies, making dollar debt seem even more affordable. + +As long as the dollar remained weak, the feedback loop of cheap credit, rising asset prices and strong GDP growth could continue. But when the dollar started to strengthen, the loop reversed. The dollar’s ascent is tied to a change in America’s monetary policy which began in May 2013, when the Fed first hinted that it would phase out QE. When the Fed’s bond-buying ended in October 2014, it paved the way for an interest-rate increase 14 months later. The tightening of monetary policy in America has reduced the appetite for financial risk-taking beyond its shores. + +The impact of this minor shift on the value of the dollar has been remarkable, particularly against emerging-market currencies (see chart 1). Wherever there has been lots of borrowing in foreign currency, the exchange rate becomes a financial amplifier, notes Mr Caruana. As companies scramble to pay down their dollar debts, asset prices in emerging markets fall. Firms cut back on investment and shed employees. GDP falters. This drives emerging-market currencies down even further in a vicious cycle that mirrors the virtuous cycle during the boom. Since much of the credit went to oil firms, the result has been a supply glut, as producers pump crude at full tilt to earn dollars to pay down their debts. + + + +Mr Caruana’s reading of events has dollar borrowing at its centre. Yet the sell-off in emerging-market currencies has more to it. Rich countries that export raw materials, including Australia, Canada and Norway, have also seen their currencies plummet against the dollar. Falling export income as a consequence of much lower oil and commodity prices is likely to have played a similar role in the slump in other currencies. + +Some analysts think the problem of dollar debt is blown out of proportion. There are countries, such as Chile and Turkey, where dollar debts loom large (see chart 2). But the average dollar share of corporate debt in emerging markets is just 10%. Chinese firms account for more than a quarter of the $3.3 trillion of dollar loans to emerging markets—and since August, when fears surged that the yuan would be devalued, they have been swapping dollar loans into yuan, notes Jan Dehn of Ashmore Group, a fund manager. + + + +Much of the foreign-currency debt taken out by companies elsewhere was long-term: the average maturity of bonds issued last year was more than ten years, for instance. That pushes refinancing, and the associated risk of default, far into the future. In many cases, dollar debt is matched by dollar income—even if, as in the case of oil exporters, it is much diminished by low prices. And there are pots of dollars in emerging-market banks to which indebted companies may have recourse. + +In any event, the dollar’s ascent has stalled because of concerns about America’s faltering economy and doubts that the Fed can raise interest rates again. Yet the cycle of dollar lending nevertheless has implications that may not be fully appreciated. A recent study of firm-level finances by Valentino Bruno and Hyun Song Shin of the BIS found that emerging-market firms with strong cash balances are more likely to issue dollar bonds. That goes against a tenet of corporate finance, that firms only borrow to invest once they have exhausted internal sources of funds. It suggests that financial risk-taking was the motivation for borrowing. On average, 17-22 cents of every dollar borrowed by an emerging-market company ends up as cash on the firm’s balance-sheet. Such liquid funds could go into bank deposits, or be used to buy other firms’ commercial paper or even to lend to them directly. In other words, the authors say, companies seem to be acting as surrogate financial firms. As a result, dollar borrowing spills over into easier credit conditions in domestic markets. + +This is one of the ways the dollar-credit cycle exerts a strong influence over overall lending in emerging markets. The credit cycle took an apparently decisive turn last year. The stock of dollar credit to emerging markets stopped rising in the third quarter, says the BIS, the first stalling since 2009. Dollar credit is much harder to come by than it was. So are local-currency loans. Bank-lending conditions in emerging markets tightened further in the fourth quarter, according to the Institute for International Finance. The dollar may have peaked but, for emerging markets, tight financial conditions are likely to endure. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693961-why-borrowing-dollars-central-business-cycle-developing/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Living off the people + +A history of investment shows how managers have prospered + +Mar 5th 2016 | From the print edition + + + +FOR as long as there have been organised economies, people have been employed to look after the wealth of others. More than 4,000 years ago landowners in Akkad, an early Mesopotamian civilisation, hired local managers to look after their farms. + +In their new book, “Investment: A History”, Norton Reamer and Jesse Downing explain how the industry has changed over time. Their fundamental idea is that investment has become “democratised”, available to a wider range of individuals. + +Early investment was conducted on behalf of the wealthy, often by individuals with low status—current or former slaves in the Roman Republic, for example. In the Biblical parable of the talents, a master entrusts his wealth to a range of servants. Two of the servants doubled the master’s money but the third buried it in the ground, rather than “investing it with the bankers”. For this failure, the poor performer was “cast into the outer darkness” where “there will be weeping and gnashing of teeth”. Today’s clients might welcome the ability to add this penalty clause to their contracts. + +Looking after the assets of the rich—or high-net-worth individuals, as they are known in the jargon—is still big business. But the fund-management industry’s growth has been turbocharged by the evolution of a much wider client base. In the rich world, most people have some money available for savings after they have paid for the necessities of food, clothing and shelter. With a retirement age of, in effect, around 65, they have two decades or so of old age to provide for. In America, retirement savings grew from $368 billion in 1974 to more than $22 trillion by 2014—a fivefold increase in assets relative to income. + +This has transformed the industry. Investment management was once a dull business, consisting mainly of helping trust funds stock up on government bonds. The standard joke was: “Why don’t fund managers look out of the window in the mornings? Because then they’d have nothing to do in the afternoons.” Nowadays fund management is a much more glamorous profession—more masters of the universe than keepers of the paper clips. + +Another key to the change in the industry’s fortunes is its reward system. Fees are linked to the value of the assets, even though the cost of managing $10 billion is little more than the cost of looking after a measly $1 billion. So fund managers have benefited twice over: first, from the expansion of pension and other savings and, second, from the huge rise in asset prices since the 1980s. The latter has been driven by falls in inflation and interest rates which have reduced the yield (and thus increased the price) of financial assets. When markets faltered in the financial crisis, central banks stepped in to buy assets through quantitative easing (QE)—in effect, an indirect subsidy of fund managers’ profits. + +As Messrs Reamer and Downing point out, some fund managers have become very wealthy by looking after other people’s money. A quarter of all American billionaires work in finance and investments, an industry that employs less than 1% of all workers. In ancient times, the poor looked after the assets of the rich; in modern times, it is the other way round. + +Successful managers deserve decent rewards, but a lot of mediocre managers have prospered too. Just because they are rich does not mean they are clever. Their position is slowly being eroded by the emergence of index-trackers and exchange-traded funds, which charge much lower fees. But the transformation is not occurring fast enough. + +A world of low inflation and low nominal returns should prompt clients to pay a lot more attention to fees. Instead, many pension funds and endowments are moving into higher-charging “alternative asset” categories like hedge funds and private equity, a “Hail Mary” strategy that cannot work in aggregate. There may be market inefficiencies that are profitable to exploit, but none large enough to give a big, across-the-board boost to the returns of a $22 trillion industry. + +The authors are right that the democratisation of investment is, on the whole, good news. Millions of people have access to diversified savings vehicles that will deliver, on average, returns that are better than those available from a savings account. But, these days, technology means that such funds can be provided for a fraction of a percentage point a year. This is becoming a utility business, and you don’t get rich by running a utility. Fred Schwed’s question to a pre-war Wall Street mogul—“Where are the customers’ yachts?”—remains as relevant as ever. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693964-history-investment-shows-how-managers-have-prospered-living-people/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Russia and sanctions + +Toe in the water + +Why is Russia tapping international debt markets? + +Mar 5th 2016 | Moscow | From the print edition + + + +RUSSIA last issued a dollar-denominated bond in 2013. Since then it has annexed part of Ukraine, launched a proxy war in another bit and destabilised the rest. That prompted Western financial sanctions on Russia’s banks and oil firms. Its government, though, can still tap foreign debt markets. On March 1st the ministry of finance said it would appoint advisers this month to help it issue a $3 billion bond. + +One explanation might be a need for foreign cash. As Russia’s recession has eased, the government’s cost of borrowing has fallen. It could be planning to filter the dollars to favoured companies. That would help firms struggling to service foreign debt thanks to sanctions and the halving of the value of the rouble since 2014. Alternatively, the government could use the money for itself. The budget assumes an oil price of $50 a barrel and a corresponding deficit of 3% of GDP in 2016. Now the oil price has crashed to $30, the deficit could reach 7% of GDP. + +But the private sector is not as desperate as it was, having reduced its external debt by about a third over the past two years. No big foreign-debt repayments are looming. Many firms still have high levels of foreign assets, according to Liza Ermolenko of Capital Economics, a consultancy. + +Nor is the government in dire straits. The reserves of its sovereign-wealth funds, which Russia is already using to fund the budget deficit, still exceed $100 billion. The finance ministry is expected to propose a new budget in April, which will trim the deficit through spending cuts and tax rises. The government can readily borrow roubles, and the interest rate on dollar borrowing is likely to be high. + +That suggests that the Russian government sees the bond as a long-term, strategic move. It has tapped domestic markets in the past when running budget surpluses, to prove that it could borrow more if it needed to, says Ms Ermolenko. A successful trial would be reassuring to the Kremlin, since Russia’s sovereign-wealth funds are likely to run dry within a few years if oil prices stay low. “There will be much more to come,” says one banker, who reckons that Russia will seek to borrow $6 billion-8 billion next year. + +A successful international bond placement would also be a public-relations coup. Russia must tread carefully, since Western banks are wary of cavorting with the Kremlin—hence the small sum to be raised. Yet all the signs suggest that Russia will find willing partners. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693967-why-russia-tapping-international-debt-markets-toe-water/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +High-denomination banknotes + +Cash talk + +Getting rid of big banknotes is not as easy as it sounds + +Mar 5th 2016 | ZURICH | From the print edition + + + +A SIGN on the door of a Wild Bean café in Zurich shows the nine different cards accepted for payment inside. Below the logos is a picture of a purple bank note, crossed out in red. From behind the counter, Aymen Kandil explains that for everyday transactions, “thousand-franc notes are not so good”. + +Although many merchants will not accept them, the SFr1,000 ($1,000) note makes up over 60% of all Swiss cash in circulation. It is the most valuable banknote issued by a Western country and is worth twenty times its weight in gold. Rather than being a way of paying for things, it is meant to act as a convenient store of value. In 2008, as banks were failing and the value of most assets collapsed, demand for the SFr1,000 note jumped by 16%, having grown by only 1-4% in previous years. + +Yet lawmen suspect that most high-denomination notes are in the hands not of jittery savers, but of criminals. Good data on the use of such notes are scarce—their anonymity is one of their attractions. But a report in 2010 from a British police unit that focuses on organised crime claimed that only 10% of €500 ($542) notes were used for legitimate purposes. A report from Europol recounts how criminals will sometimes pay more than face value for high-value notes because of how convenient they are to transport. And it seems telling that the €500 note accounts for around 30% of euros in circulation, yet 56% of Europeans surveyed by the European Central Bank say they have never seen one. + +David Lewis of the Financial Action Task Force, an international body that co-ordinates efforts to prevent criminals using the financial system, says big notes are used mainly in drug- and people-trafficking, money-laundering and racketeering. Finance for terrorism is another concern. A courier for jihadists caught travelling to Turkey in 2014 with 40 €500 bills (€20,000) in her underwear would have needed knickers of epic proportions to transport the same sum using €100 notes. + +To make life difficult for criminals, Britain has barred banks and money-changing firms from providing €500 notes; the biggest British note is a mere £50 ($70). Canada started withdrawing its C$1,000 note (then worth $670) from circulation in 2000 for the same reason. Singapore is phasing out the S$10,000 note, the world’s most valuable (worth $7,100). The ECB seems to be moving in a similar direction. In early February it announced an investigation into the use of the €500 note. + + + +The ECB will report to euro-zone finance ministers by May 1st, but resistance to scrapping the €500 note is already strong. Some (particularly in Germany) fear that the withdrawal of big notes is a precursor to the eventual abolition of cash, and thus a vast increase in the state’s power to pry and meddle. There are other benefits to the state from getting rid of high-value notes than hitting big-time criminals. Withdrawing them could help fill government coffers, by making tax-avoiding cash payments more awkward. It might even grease the wheels of monetary policy, by making it easier to impose negative interest rates. Yet the “slippery slope” argument need not hold: Canada still has smaller notes, long after it binned the C$1,000 bill. + +A weightier concern is that the process of eliminating big notes has less impact on criminals the more slowly it proceeds. But central banks are reluctant to cancel or even put an expiry date on notes, for fear that this would undermine trust in those left in circulation. Instead, they tend to ask commercial banks to filter out the offending notes whenever they receive any. That is what Canada did in 2000 and, 16 years on, some 20% of C$1,000 notes remain in circulation. + +Moreover, getting rid of one kind of big note will have only limited impact as long as there are others in circulation, points out Peter Sands of Harvard University. He would like to see the ECB scrap the €200 and €100 notes as well, and the Federal Reserve withdraw the $100 bill, which would be a huge inconvenience to drug-traffickers moving money across the Mexican border. + +The Swiss National Bank has stated categorically that it has no plans to get rid of high-value notes, so criminals will have at least one option for the foreseeable future. As Mr Lewis says, “Whatever you do, the problem is going to get pushed somewhere else.” Nonetheless, he continues, “What you’re doing is making it harder for criminals to smuggle cash and easier for authorities to detect them.” That is nothing to sneer at. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693976-getting-rid-big-banknotes-not-easy-it-sounds-cash-talk/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Barclays Africa + +Capital in fetters + +The sale of Barclays’ African unit says more about the bank than the continent + +Mar 5th 2016 | NAIROBI | From the print edition + +A local fixture + +THE chairman of Barclays, a big British bank, was asked in a conference call last year whether the firm might draw back its investment in its listed African subsidiary. Actually, he replied, “we would probably be biased to own more than less.” Yet on March 1st Jes Staley, Barclays’ CEO since December, announced that it hopes to reduce its 62% stake in Barclays Africa over the next two or three years, to focus on its main business in Britain and America. + +On the face of things, the reversal is surprising. Barclays has been in Africa for over a century. Its blue eagle logo can be found in shopping centres from Nairobi to Lagos. Moreover, Barclays Africa made a healthy return on equity of 17% last year. It has grown quickly in recent years and plans to keep doing so. Over the past year it has acquired licences of various sorts in Ghana and Nigeria and part of an insurance business in Kenya. This will continue despite the sale of Barclays’ stake, Maria Ramos, Barclays Africa’s CEO, insisted this week. + +But Barclays is one of the most weakly capitalised big Western banks. As well as the sale of its African division, Mr Staley announced this week that it would cut its dividend by more than half. (The not-so-prescient chairman, John McFarlane, had also suggested last year that the dividend would soon go up.) + +Selling Barclays Africa would help boost Barclays’ capital in two ways. The proceeds of the sale could be retained to bolster the buffers directly. In addition, a sale would make Barclays’ existing capital go further. At the moment, even though Barclays owns less than two-thirds of the business, international rules oblige it to hold enough capital to absorb all its likely losses. If Barclays’ stake falls below 20%, however, it is off the hook, freeing it to use its capital more efficiently. Its capital ratio would rise by a percentage point. + +The heavy capital requirements also make Barclays Africa less profitable for its parent, reducing last year’s 17% return on equity to 8.7%. (That is still better than Barclays’ struggling investment bank, which made a return on equity of just 5%.) Declining currencies—particularly the South African rand—and slowing growth in its main markets have further diminished Barclays Africa’s allure. Its branches outside South Africa are expensive to run and, thanks to falling commodity prices, may get less profitable in the future. And then there is the fear that it may inadvertently abet crime or corruption, earning its parent a swingeing fine in America. + +Unfortunately for Barclays, there is no obvious buyer. In South Africa, its main market, where it is listed, competition authorities would probably prevent a local rival from snapping it up. Atlas Mara, an African investment fund run by Bob Diamond, a former CEO of Barclays, might bid. But with a market capitalisation of roughly $300m, it will struggle to raise the $8 billion or so it would need to buy the whole stake. There is vague talk of Chinese or Japanese buyers. If none appears, Barclays may have to reverse itself yet again. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693977-sale-barclays-african-unit-says-more-about-bank/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The euro-zone economy + +The new mediocre + +The ECB will do something at its meeting next week, but to what effect? + +Mar 5th 2016 | From the print edition + + + +THE launch, a year ago, of the European Central Bank’s programme of quantitative easing (QE—creating money to buy bonds) sparked elation. Growth was picking up, consumers had a spring in their step and stockmarkets were jubilant. A year later spirits are sombre as the recovery flags, stockmarkets languish and deflation returns. After prescribing more medicine in December, the ECB is expected to increase the dose again on March 10th. But there are increasing doubts about its effects. + +Consumer prices fell by 0.2% in the year to February (see chart), reinforcing the case for greater stimulus. Though this fall was driven by a renewed collapse in oil prices, the core inflation index, which excludes volatile items such as energy, is also looking wan. Prices rose by just 0.7% in the year to February, among the lowest readings since the euro was born 17 years ago. Despite a year of QE, during which the ECB has bought €60 billion ($65 billion) of bonds a month, it appears to be no closer to its goal of inflation of nearly 2% than when it started. + +Unemployment has at least carried on falling, to 10.3% in January, reflecting the continuing economic recovery since the spring of 2013. But the upturn has failed to live up to the promise of early 2015, when GDP growth reached 0.5% (an annualised rate of 2.2%). That turned out to be the (not very) high point. Expansion subsequently slowed, to 0.3% (an annualised rate of 1.1%) in the final quarter of last year. GDP in the single-currency club is still below its peak in early 2008, whereas America’s is almost 10% above its pre-crisis high from eight years ago. + +Consumers have sustained the euro-zone recovery as household budgets have stretched further thanks to lower energy prices. But investment growth lacks the vitality of previous upturns. That has left the currency union vulnerable to the recent setback in emerging economies, especially in China, which is hurting exporters. Industrial output fell in December in Germany, France and Italy, the three biggest economies in the euro area. + +Whereas European stockmarkets were buoyant in early 2015, they sank in the first six weeks of 2016, with particularly sharp falls in bank shares. Though they have since recovered some of their poise, the Stoxx Europe 600 index remains 7% down this year; its banking component has fallen by 15%. An index of business and consumer sentiment compiled by the European Commission, which tends to mirror GDP growth, has fallen from a recent high of 106.7 in December to 103.8 in February, with especially big declines among French and Italian consumers. German industry and trade is more worried about business prospects than at any time since late 2012, not long after the euro zone skirted a break-up, according to the latest Ifo survey. + +All this will probably spur the ECB to do more when its monetary-policy council meets this month. In December it extended QE by six months until March 2017, raising the programme’s total size from €1.14 trillion to €1.5 trillion (14% of euro-zone GDP). It also cut interest rates, which first fell below zero in 2014, deeper into negative territory. The deposit rate was lowered from -0.2% to -0.3%. + +At its March meeting, the ECB is likely to keep pulling on more than one lever. The deposit rate looks set to fall again, to -0.4%. The central bank may also extend another programme that it introduced in 2014, in which it has offered ultra-cheap long-term funding (stretching until September 2018) to banks that improve their lending to the private sector. Most important, the ECB may step up the pace of QE for the next six months or so, from €60 billion a month to, say, €75 billion. It may also extend the programme again, until September 2017, a full year after it was first supposed to end. + +The markets had expected more from Mario Draghi, the ECB’s president, back in December. But even if he comes up with the goods on March 10th, they are likely to remain sceptical. The effects of negative interest rates on inflation are hard to discern, but banks and insurers are obviously suffering. The ECB could introduce tiered negative rates, protecting most of banks’ reserves from the lowest rate, but that did not spare Japanese banks from a stockmarket beating. Moreover, twiddling the dials of QE will not have the same impact as its introduction. Mr Draghi won a reputation as a magician when he cast his “whatever it takes” spell to save the euro, but now even he seems to be running out of tricks. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693974-ecb-will-do-something-its-meeting-next-week-what-effect-new/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bilking investors + +Rotten advice + +America’s revolving door for financial advisers who do down their clients + +Mar 5th 2016 | From the print edition + +FINANCIAL markets can seem bewildering to those who don’t have the time and energy to understand them: all that jargon, all those sudden switches in mood. So it is natural that people look for help when trying to find the right products. In America, more than half of all households have sought advice, according to a survey conducted in 2010. They have more than 650,000 registered financial advisers to choose from. + +But how good is that advice? It can be hard to tell. There may be an “information asymmetry” between the advisers and the clients, simply because finance can be so complex. Furthermore, although a diner can instantly tell if wine is corked or steak is tough, it may be many years before the success or failure of a financial tip becomes apparent. + +A new paper* examines the records of American financial advisers between 2005 and 2015, using a database that contains 1.2m individuals. It finds that 7% of the advisers were disciplined for misconduct over the period, resulting in a median payment to customers of $40,000 in compensation. Around one-third of the miscreants are repeat offenders; past transgressors are five times more likely to engage in misconduct than the average adviser. + +What happens to the offenders? Just over half, astonishingly, keep their job. Although the remainder are let go, 44% of them are rehired by another firm within a year. On average, they take a 10% pay cut, but they continue to work as investment advisers. Unsurprisingly, the paper finds that these miscreants tend to move to firms that hire more people with a record of misconduct than is typical. The same firms are less likely to fire their staff if they do something wrong. + +Why don’t such firms lose all their clients? The authors suggest that advisers with a dark past tend to prey on elderly or unsophisticated customers. At any rate, they seem to congregate in relatively wealthy, elderly and less educated counties. In some places in Florida and California, one in five advisers has a record of misconduct. + +It is a sorry tale. But information on advisers’ records is at least readily available at BrokerCheck, a website run by FINRA, an American regulator. Clearly, a lot more investors need to use it. + +* “The Market for Financial Adviser Misconduct” by Mark Egan, Gregor Matvos and Amit Seru + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693975-americas-revolving-door-financial-advisers-who-do-down-their-clients-rotten/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Red ink rising + +China cannot escape the economic reckoning that a debt binge brings + +Mar 5th 2016 | From the print edition + + + +HOW worrying are China’s debts? They are certainly enormous. At the end of 2015 the country’s total debt reached about 240% of GDP. Private debt, at 200% of GDP, is only slightly lower than it was in Japan at the onset of its lost decades, in 1991, and well above the level in America on the eve of the financial crisis of 2007-08 (see chart). Sooner or later China will have to reduce this pile of debt. History suggests that the process of deleveraging will be painful, and not just for the Chinese. + +Explosive growth in Chinese debt is a relatively recent phenomenon. Most of it has accumulated since 2008, when the government began pumping credit through the economy to keep it growing as the rest of the world slumped. Chinese companies are responsible for most of the borrowing. The biggest debtors are large state-owned enterprises (SOEs), which responded eagerly to the government’s nudge to spend. + +State sponsors of error + +The borrowing binge is still in full swing. In January banks extended $385 billion (3.5% of GDP) in new loans. On February 29th the People’s Bank of China spurred them on, reducing the amount of cash banks must keep in reserve and so freeing another $100 billion for new lending. Signs of stress are multiplying. The value of non-performing loans in China rose from 1.2% of GDP in December 2014 to 1.9% a year later. Many SOEs do not seem to be earning enough to service their debts; instead, they are making up the difference by borrowing yet more. At some point they will have to tighten their belts and start paying down their debts, or banks will have to write them off at a loss—with grim consequences for growth in either case. + +An IMF working paper published last year identified credit growth as “the single best predictor of financial instability”. Yet China is not obviously vulnerable to the two most common types of financial crisis. The first is the external sort, like Asia’s in 1997-98. In such cases, foreign lending sparks a boom that eventually fizzles, prompting loans to dry up. Firms, unable to roll over their debts, must cut spending to save money. As consumption and investment slump, net exports rise, helping bring in the money needed to repay foreign creditors. China does not fit this mould, however. More than 95% of its debt is domestic. Capital controls, huge foreign-exchange reserves and a current-account surplus help defend it from capital flight. + +The other common form of crisis is a domestic balance-sheet recession, like the ones that battered Japan in the early 1990s and America in 2008. In both cases, dud loans swamped the banking system. Central banks then struggled to keep demand growing while firms and households paid down their debts. + +China’s banks are certainly at risk from a rash of defaults. Markets now price the big lenders at a discount of about 30% on their book value. Yet whereas America’s Congress agreed to recapitalise banks only in the face of imminent collapse, the Chinese authorities will surely be more generous. The central government’s relatively low level of debt, at just over 40% of GDP, means it has plenty of room to help the banks. Indeed, with the right policies, China could survive a deleveraging without too much pain. + +By borrowing and spending, firms boost demand; when paying down debts they subtract from it. In the absence of new borrowing elsewhere in the economy, growth will atrophy. China’s government could try to compensate by borrowing more itself to finance a fiscal stimulus. It might also use low interest rates to encourage households to borrow more. (This week’s cut in banks’ reserve requirements seems designed to buoy China’s property market.) But orchestrating such a switch in growth engines is not easy. Firms and households might instead be forced to deleverage simultaneously, exacerbating the pain. Household debt in China is low but rising fast, raising the risk of a double crunch in future. + +Moreover, China would have to ensure that existing bad debts are written down and bankrupt SOEs shut—a tall order politically. Reports this week claimed it plans to lay off 5m workers, but big firms will resist a proper reckoning. The bumbling response to the stockmarket and currency wobbles of the past year calls into question the leadership’s competence. The government may be able to prevent an outright banking crisis, but the slump that usually accompanies a deleveraging will be harder to avoid. + +Foreign demand could perhaps help make up for the shortfall in domestic spending. Deleveraging commonly occurs alongside large depreciations; as spending in indebted economies falls the value of the currency declines, giving exports a boost. That, in turn, helps put idle capacity to work and bolsters the income of firms repaying loans. Big depreciations can also boost inflation, helping keep the deleveraging economy out of a debt-deflation trap, in which falling prices and incomes make debts with fixed values more expensive to service. Countries that see big depreciations while deleveraging, as many Asian ones did in 1997-98, typically suffer sharp but short downturns before reverting to growth. In contrast, in countries that resist depreciation, as Japan did in the 1990s and peripheral Europe has done recently, deleveraging is slower and more painful. + +China’s government seems determined to prop up the yuan. But it may struggle to do so while the economy deleverages. The grinding recovery that would imply has political costs. And cutting rates to boost borrowing elsewhere in the economy would place further downward pressure on the yuan, forcing the government either to tighten capital controls yet more, run down its foreign-exchange reserves or let the currency drop. + +With a deft enough touch, China’s debt bomb could fizzle. The rapid pace of credit growth makes a benign outcome ever less likely, however. Given China’s size, a prolonged deleveraging would place a dangerous drag on global demand growth, which the world’s weakened economies would struggle to cope with. The sooner China turns off the credit taps, the better. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21693963-china-cannot-escape-economic-reckoning-debt-binge-brings-red-ink-rising/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Concussion: Bang to rights + +Rogue waves: Incoming! + +Powering the internet of things: Passive voice + +Economics: A far from dismal outcome + +Anthropology: The medium is the messengers + + + + + +Articles Sections Next + +Concussion + +Bang to rights + +Science is taking big steps toward understanding the impact of concussion + +Mar 5th 2016 | From the print edition + + + +FRED McNEILL, an American-football player, died in November at the age of 63. Between 1974 and 1985 he appeared for the Minnesota Vikings. After leaving them he became a lawyer but in later years suffered from dementia and was told that he had signs of chronic traumatic encephalopathy (CTE), a degenerative brain disease. His recent death has become a milestone in the understanding of brain disorders, for post-mortem examination has confirmed this diagnosis—retrospectively making him the first person to be so diagnosed while alive. + +CTE is the physical manifestation in the brain of punch-drunk syndrome—or dementia pugilistica, to give its Latinised, medical name. As that name suggests, this form of dementia particularly affects boxers, who are hit on the head as a matter of course. But doctors now understand that it is also a problem in people like Mr McNeill, who get hit on the head accidentally in contact sports. Mr McNeill, along with several other retired players, volunteered to let researchers at the University of California, Los Angeles (UCLA) use a scanning technique called positron-emission tomography (PET) to look at their brains. + +In his case, and in those of others who had suffered concussion (a form of brain injury that leads to headaches, dizziness and nausea, and causes blackouts in 10% of those who experience it), this revealed a pattern of abnormal protein deposits. Mr McNeill’s death enabled his scans to be compared with the results of an autopsy. That confirmed the PET-based diagnosis. Specifically, PET was recording deposits in his brain of a protein called tau, which is tied to CTE and other neurological disorders, including Alzheimer’s. + +Knocked about + +Until quite recently, according to Julian Bailes, a director of the NorthShore Neurological Institute in Evanston, Illinois, it was thought that concussion from accidents in contact sports such as American football was a temporary malfunction rather than a permanent injury. This view began to change in 2005, when Bennet Omalu, a pathologist at the county coroner’s office in Pittsburgh, wanted to find out why another footballer, Mike Webster, had suffered mental ill-health before dying unexpectedly at the age of 50. Webster had become confused, angry and violent, and even bought a Taser gun to treat his own back pain. Dr Omalu discovered tau-protein deposits in his brain, and proposed that the footballer had died of CTE, something which had previously been recognised as a cause of death only in boxers. This revelation, and his fight with the National Football League, which regulates the game, was the subject of a recent film called “Concussion”. Since then, he and Dr Bailes have been collecting the brains of former athletes, and also of old soldiers who have been exposed to explosions, to try to understand who gets CTE, and why. + +The road to CTE, their research suggests, does indeed start with concussion. One incidence in five of this then leads to post-concussion syndrome, a period of cognitive impairment that may last months, in which patients have headaches, unsteadiness and other problems. And it seems increasingly likely that, in some cases, repeated concussions may lead to CTE. + +In recent years the underlying biology has started to become apparent. Mostly, this relates to the release of certain chemicals when axons, the filamentous connections between nerve cells, are damaged. Concussion is different from blunt-force trauma, such as that which results from getting hit on the head by a rapidly delivered cricket ball. Then, the injury is caused by directly transmitted shock from the impact. Concussion, by contrast, is caused by the internal movement and distortion of the brain as it bounces around inside the cranium after an impact. This bouncing, research has shown, stretches and deforms bundles of axons that connect different regions of the brain. The deformation shears some axons directly, releasing their protein contents, including tau, which with time can form abnormal tangles similar to those found in Alzheimer’s disease. It also causes abnormal inflows of sodium and calcium ions in unsevered but damaged axons. These, in turn, trigger a process which releases protein-breaking enzymes that destroy the axon, further disrupting the brain’s internal communications. + +Concussive injury also damages the blood-brain barrier. This is a system of tightly joined cells surrounding the capillaries that service the brain. Its purpose is to control what enters and leaves the central nervous system. One consequence of damaging it is to release into general circulation a brain protein called S100B. The body mounts an immune response against this protein, and the antibodies it generates can find their way back into the brain and harm healthy brain cells. Researchers propose that repeated damage could set the stage for a continuous autoimmune-type attack on the brain. + +The relationship between brain injury and behavioural symptoms is, nevertheless, unclear. The work at UCLA suggests a characteristic pattern of protein deposits in people who have suffered repeated concussions. The death of Mr McNeill suggests that may lead to CTE and dementia pugilistica. But many uncertainties remain, according to Huw Morris, a clinical neuroscientist at University College, London. + +One challenge is to connect concussion, post-concussion syndrome and CTE itself. The immediate relevance of this will be to help understand whether a particular injury is likely to have long-term consequences. In this context yet another protein released during concussion, SNTF, is of interest. Work on concussed ice-hockey players suggests its level in the blood after a blow to the head predicts the severity of a concussion. A test for this, or for S100B, might provide a way to determine an injured player’s prognosis. + +That is a matter of interest both to sportsmen and—women, and to the clubs they play for. Neither coaches nor athletes tend to be good judges of fitness to play after a head injury. It seems likely that many people return to the field long before the brain’s physical healing is complete. And players tend to underreport symptoms. A survey of American university athletes in 2014 found that 20% believed they had suffered a concussion, but almost 80% of those decided to continue to play rather than seek medical attention. Most felt their concussion was not serious and were concerned that revealing their injury would affect their standing with the team. + +To try to find an objective measure of the damage an episode of concussion has caused, Dr Morris and his colleagues are studying players at Saracens, a rugby club in London. Participants will wear impact sensors to monitor collisions and give blood samples at the end of every game. The study hopes to find chemicals associated with brain injury that could be used to develop a blood test. A similar project is under way at the Translational Genomics Research Institute, in Phoenix, to study American-football players at Arizona State University. + +Brain scanning, too, may have something to contribute. Magnetic-resonance imaging (MRI), a mainstream and widely available technique, can reveal reduced blood flow in the brains of athletes who have had concussions, even long after the injury. An MRI–based test might thus be developed to determine when or whether a player is well enough to return to play. There are also commercially available apps called HeadCheck and Braincheck, which are intended to help athletes work out their baseline brain performance and allow the organ’s health to be tracked. They are not approved as medical devices, so cannot be used to diagnose concussion. But they may let players, especially amateurs, monitor themselves after blows to the head to search for signs that they might need medical advice. + +Suffer the little children + +In the end, adult athletes can make up their own minds about what risks they wish to take. Children, though, cannot. It is therefore children who should attract the greatest attention. Not only are some children obliged to play contact sports at school, but they may also be participating in an environment that encourages a “stiff upper lip” when they are injured. Yet it has been clear since a study published in 2012 by Andrew Mayer at the University of New Mexico in Albuquerque that subtle brain changes in children who have sustained a concussion persist for months after the injury, even when there are no longer any obvious symptoms. + +Work published last December by Charles Hillman of the University of Illinois found that children who had sustained a single sports-related concussion still had impaired brain function two years later. Ten-year-olds with a history of concussion performed worse on tests of working memory, attention and impulse control than did uninjured confrères. Among the children with a history of concussion, those who were injured earlier in life had larger deficits. This study was small (it involved 15 injured participants) but if subsequent research confirms it, that will be great cause for concern. + +Concussion—once an invisible injury—is rapidly being illuminated. Many sports-lovers have been disturbed to learn that injuries on the field have caused their heroes to undergo profound personality changes. And many parents now worry, with good reason, about their children playing sports. Taking one for the team is all very well. But the price of doing so may be paid over a lifetime. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21693906-science-taking-big-steps-toward-understanding-impact-concussion-bang/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Rogue waves + +Incoming! + +A new system that warns of potentially ship-destroying ocean waves + +Mar 5th 2016 | From the print edition + +Peril on the sea + +STORMY seas can wreak havoc on ships and oil rigs, but the damage they do pales beside that which a rogue wave can dole out. These behemoths, which may be up to 30 metres (100 feet) high, can badly damage, and even sink, all but the largest merchant vessels. They form when smaller, harmless waves meld into one. Until now, predicting them has proved impossible. But Will Cousins and Themistoklis Sapsis, two mechanical engineers at the Massachusetts Institute of Technology, think they have cracked the problem. + +Most ocean waves move independently of one another. Sometimes, though, they travel in groups. Waves within a group have the potential to share energy via a phenomenon called modulation instability, in which one wave grows at the expense of the others and all of the group’s power is thus concentrated into it. + +Past teams of researchers who have attempted to predict such rogues have tried monitoring every wave in a region using radar, and then forecasting the behaviour of each of them. This needs a lot of processing power—far more than is carried on board an average merchant vessel. Moreover, it can take hours to run the calculation, which rather diminishes its value. Yet Dr Cousins and Dr Sapsis suspected they could bypass these problems by ignoring most of the waves in an area and homing in on only a tiny, relevant subset of them. + +Their system starts by tapping into statistics collected over the years by instruments such as buoys about a particular part of the ocean surface. Using these data, it works out how that sea area normally behaves. It then analyses this behaviour alongside data on wave heights and movements collected in real time by ships’ radar, looking for groups of waves that might possibly end up forming a rogue. Only when it has identified these does it bring the full power of the computer to bear on them. It thus conserves its resources for those analyses that actually matter. + +The two researchers report in the Journal of Fluid Mechanics this week that because their algorithm is so parsimonious, it runs well on the sorts of laptops skippers often take to sea. They also report that when they tested it on 100 simulations containing 336 rogue waves, it was able to run all of the calculations needed to predict such waves in a matter of seconds. There were false alarms—91 of them. But, crucially, the algorithm successfully flagged up all 336 “real” rogues, and did so an average of 153 seconds before a putative wave would have struck. That is not enough time to get out of a wave’s path. Nor, in the researchers’ view, is reorienting the vessel so that it meets a wave bow first (which would be a natural response to stop a ship rolling and capsizing when hit) of much value in the face of rogues of this magnitude. The system does provide enough time, though, for a crew to batten down the hatches, both literally and metaphorically, and to brace for impact before they are hit, thus increasing the chance that both they and the vessel will survive. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21693903-new-system-warns-potentially-ship-destroying-ocean-waves-incoming/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Powering the internet of things + +Passive voice + +Redesigning Wi-Fi may let devices communicate more easily + +Mar 5th 2016 | From the print edition + + + +MANY prophets of information technology (IT) believe that the next big movement in their field will be the “internet of things”. This, they hope, will connect objects hitherto beyond the reach of IT’s tendrils so that, for example, your sofa can buzz your phone to tell you that you have left your wallet behind, or your refrigerator can order your groceries without you having to make a shopping list. That, though, will mean putting chips in your sofa, your wallet and your fridge to enable them to talk to the rest of the world. And those chips will need power, not least to run their communications. + +Sometimes, this power will come from the electricity grid or a battery. But that is not always convenient. However Shyam Gollakota and his colleagues at the University of Washington, in Seattle, think they have at least part of an answer to the problem. They propose to reconfigure a chip’s communications so that they need almost no power to work. + +Most conceptions of the internet of things assume the chips in sofas, wallets, fridges and so on will use technologies such as Wi-Fi and Bluetooth to communicate with each other—either directly, over short ranges, or via a base-station connected to the outside world, over longer ones. For a conventional chip to broadcast a Wi-Fi signal requires two things. First, it must generate a narrow-band carrier wave. Then, it must impress upon this wave a digital signal that a receiver can interpret. Following Moore’s law, the components responsible for doing the impressing have become ever more efficient over the past couple of decades. Those generating the carrier wave, however, have not. + +Dr Gollakota and his team reasoned that it should be possible to separate the jobs of generation and impression. The system they have designed has a central transmitter (which might be built into a Wi-Fi router) that broadcasts a pure carrier wave. Dr Gollakota’s new chips then impress binary data on this carrier wave by either reflecting it (for a one) or absorbing it (for a zero). Whether a chip reflects or absorbs the signal depends on whether or not its aerial is earthed, which is in turn controlled by a simple switch. + +Not having to generate its own carrier wave reduces a chip’s power consumption ten-thousandfold, for throwing the switch requires only a minuscule amount of current. Moreover, though Dr Gollakota’s prototypes do still use batteries, this current could instead be extracted from the part of the carrier wave that is absorbed. + +The chips in this system, which Dr Gollakota plans to unveil on March 17th at the USENIX Symposium on Networked Systems Design and Implementation in Santa Clara, California can, he claims, transmit data at a rate of up to 11 megabits a second to smartphones or laptops over 30 metres (100 feet) away, and through walls. Though that rate is worse than standard Wi-Fi it is ten times better than the low-energy form of Bluetooth which is the current favourite for the internet of things. + +Dr Gollakota has helped found a company, Jeeva Wireless, to commercialise his research and he predicts that passive Wi-Fi chips, as he calls them, will be in production in less than two years. Eventually, he hopes, the idea behind his system—of generating carrier waves centrally—might be adapted for use in mobile phones. That would mean base stations providing a carrier wave, and phone users making calls, sending text messages and connecting to the internet without constantly having to recharge their handsets. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21693901-clever-way-forward-powering-internet-things-redesigning-wi-fi-may-let/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Economics + +A far from dismal outcome + +Microeconomists’ claims to be doing real science turn out to be true + +Mar 5th 2016 | From the print edition + + + +SCIENCE works for two reasons. First, its results are based on experiments: extracting Mother Nature’s secrets by asking her directly, rather than by armchair philosophising. And a culture of openness and replication means that scientists are policed by their peers. Scientific papers include sections on methods so that others can repeat the experiments and check that they reach the same conclusions. + +That, at least, is the theory. In practice, checking old results is much less good for a scientist’s career than publishing exciting new ones. Without such checks, dodgy results sneak into the literature. In recent years medicine, psychology and genetics have all been put under the microscope and found wanting. One analysis of 100 psychology papers, published last year, for instance, was able to replicate only 36% of their findings. And a study conducted in 2012 by Amgen, an American pharmaceutical company, could replicate only 11% of the 53 papers it reviewed. + +Now it is the turn of economics. Although that august discipline was founded in the 18th century by Adam Smith (pictured above) and his contemporaries, it is only over the past few decades that its practitioners (some of them, anyway) have come to the conclusions that the natural sciences reached centuries ago: that experiments might be the best way to test their theories about how the world works. A rash of results in “microeconomics”—which studies the behaviour of individuals—has suggested that Homo sapiens is not always Homo economicus, the paragon of cold-blooded rationality assumed by many formal economic models. + +But as economics adopts the experimental procedures of the natural sciences, it might also suffer from their drawbacks. In a paper just published in Science, Colin Camerer of the California Institute of Technology and a group of colleagues from universities around the world decided to check. They repeated 18 laboratory experiments in economics whose results had been published in the American Economic Review and the Quarterly Journal of Economics between 2011 and 2014. + +For 11 of the 18 papers (ie, 61% of them) Dr Camerer and his colleagues found a broadly similar effect to whatever the original authors had reported. That is below the 92% replication rate they would have expected had all the original studies been as statistically robust as the authors claimed—but by the standards of medicine, psychology and genetics it is still impressive. + +One theory put forward by Dr Camerer and his colleagues to explain this superior hit rate is that economics may still benefit from the zeal of the newly converted. They point out that, when the field was in its infancy, experimental economists were keen that others should adopt their methods. To that end, they persuaded economics journals to devote far more space to printing information about methods, including explicit instructions and raw data sets, than sciences journals normally would. + +This, the researchers reckon, may have helped establish a culture of unusual rigour and openness. Whatever the cause, it does suggest one thing. Natural scientists may have to stop sneering at their economist brethren, and recognise that the dismal science is, indeed, a science after all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21693904-microeconomists-claims-be-doing-real-science-turn-out-be-true-far/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Anthropology + +The medium is the messengers + +A global study reveals how people fit social media into their lives + +Mar 5th 2016 | From the print edition + +I won’t tell if you don’t + +TO SOME, Facebook, Twitter and similar social-media platforms are the acme of communication—better, even, than face-to-face conversations, since more people can be involved. Others think of them more as acne, a rash that fosters narcissism, threatens privacy and reduces intelligent discourse to the exchange of flippant memes. They might even, these kinds of arguments go, be creating a generation of electronic addicts who are incapable of reflective, individual, original thought. + +A topic ripe for anthropological study, then. And such a study, the “Why We Post” project, has just been published by nine anthropologists, led by Daniel Miller of University College, London. + +The participants in “Why We Post” worked independently for 15 months at locations in Brazil, Britain, Chile, China (one rural and one industrial site), India, Italy, Trinidad and Tobago, and Turkey. They embedded themselves within families and their surrounding communities. That, the team believes, let them form a nuanced view of the roles of social media in their study sites which could not be gained by analysing participants’ public postings. + +These fly-on-the-wall perspectives refute much received wisdom. One of the sceptics’ biggest bêtes noires is the “selfie”—which is often blamed for fostering self-regard and an undue focus on attractiveness. “Why We Post”, however, reveals that the selfie itself has many faces. In Italy girls were indeed seen to take dozens of pictures of themselves before settling on one to post. In Brazil many selfies posted by men were taken at the gym. But at the British site, Dr Miller found, schoolchildren posted five times as many “groupies” (images of the picture-taker with friends) as they did selfies. Britons have also created a category called “uglies”, wherein the purpose is to take as unflattering a self-portrait as possible. And in Chile another unique genre has developed: the “footie”. This is a shot taken of the user’s propped-up feet, a sign of relaxation. + +The often-humorous, marked-up images known as memes have also come in for criticism. They debase traditional forms of public debate, lament some, spreading far and wide with little context. But memes serve different purposes in different cultures. In India they tend to focus on serious and religious issues; Trinidadian memes are more often send-ups of politicians. Yet in all cases Dr Miller sees meme-passing not as limiting what social-media users think and say, but as enabling discourse. Many users happily forward memes laced with strong ideological messages about which they would not dare to comment individually. + +Critics also often view the online personae people create for their social-media postings as false fronts designed for the medium at hand. Trinidadians, however, disagree. They see online profiles as more representative of a person’s true self even than what is seen in real life. And, though the perceived loss through social media of the anonymity that once characterised online life causes much hand-wringing in the West, young boys and girls in Turkey see things differently. Social media permit them to be in constant contact with one another, in full view of their parents, but to keep their conversations and photos to themselves. + +In rural China and Turkey social media were viewed as a distraction from education. But in industrial China and Brazil they were seen to be an educational resource. Such a divide was evident in India, too. There, high-income families regarded them with suspicion but low-income families advocated them as a supplementary source of schooling. In Britain, meanwhile, they were valued not directly as a means of education, but as a way for pupils, parents and teachers to communicate. + +“Why We Post” thus challenges the idea that the adoption of social media follows a single and predictable trajectory. Indeed, the Chinese sites show that the use of such media can vary from place to place within a single country. The study also refutes the idea that social media are making humans any less human. Users are, in Dr Miller’s words, “merely attaining something that was latent in human beings”. + +The sceptics’ reaction to new technology seems equally deep-rooted. New means of communication from railways and the telegraph onwards have always attracted critics. Sooner or later, the doubters either convert, or die. The adopters, meanwhile, chatter on until the next wave of disruption happens, an advance that some of them will reject as unnecessary and possibly dangerous flummery. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21693905-global-study-reveals-how-people-fit-social-media-their-lives-medium/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +America’s presidential election: Pushback + +The art world: African horizons + + + + + +Articles Sections Next + +America’s presidential election + +Pushback + + + +The 2016 campaign is putting the most influential political-science book in recent memory to a stiff test + +Mar 5th 2016 | From the print edition + + + +OF ALL the theories to explain the unexpected success of Donald Trump’s presidential campaign, this, surely, is the most novel. Forget about a disaffected working class buffeted by globalisation and automation, pent-up racial resentments finding an outlet or the advent of the 24-hour news cycle. No: in the assessment of Daniel Drezner, a professor of international politics at Tufts University, it’s the political scientists who are to blame. + +Although clearly tongue-in-cheek, this hypothesis sounds less absurd now than it would have done before 2008, the year that four American academics brought out a book called “The Party Decides: Presidential Nominations Before and After Reform” (TPD). The book’s main thesis is that political parties have formidable power to influence voters in presidential primaries. + +TPD was never a bestseller. Nonetheless, it has gained more attention from journalists than any political-science book in recent memory. According to Google News, 763 articles have cited TPD’s title since the start of 2011. Just over 500 more contain its catchphrase “invisible primary”, which describes how candidates compete for support from party grandees before the first votes are cast. Such coverage is comparable only to that received by bestsellers like “Dreams From My Father” by Barack Obama (758) or Michael Lewis’s “Moneyball” (784). + +During Mr Obama’s presidency, a new generation of young journalists has emerged who are focused on Washington, DC. They eschew the sources, leaks and scoops that are pursued by their more traditionally minded colleagues in favour of the sage counsel of academic political science. Many of these whizz-kids have treated TPD with awed reverence. For much of 2015 they dismissed Mr Trump’s chances in the Republican primaries by relying on the book’s claim that parties usually guide voters towards “acceptable” nominees. But it was precisely by making such overconfident pronouncements, Mr Drezner argued recently in the Washington Post, that the authors sowed the seeds of their own demise. + +Scientists are well acquainted with the “observer effect”, which, in physics, for example, stipulates that the characteristics of a subatomic particle can never be fully known because they are changed by the act of measuring them. Similarly, wrote Mr Drezner, “The Party Decides” has been “the primary theory driving how political analysts have thought about presidential campaigns. It seemed to explain nomination fights of the recent past quite well.” However, in previous elections, there were no crowds of journalists citing TPD. This time, says Mr Drezner, Republican decision-makers “read smart take after smart take telling them that Trump didn’t have a chance…so GOP party leaders didn’t take any action. Except that the reason smart analysts believed Trump had no chance was because they thought GOP leaders would eventually take action.” + +The 2016 primaries are putting political science—as exemplified by TPD—to a very public test. Republicans in Congress have already sought to cut off public funding for research in the discipline. Now, if it is seen to have failed, it will slow down the steady advance into the mainstream media that the field has made over the past eight years—and could possibly bring it to a halt. + +When journalists write about gravitational waves, they talk to scientists. When they write about interest rates, they talk to economists. But until recently, when they wrote about elections, they often pretended that academic expertise did not exist. “In 2005, when I came to Washington,” writes Ezra Klein, a founder of Vox, an “explanatory-journalism” site, “knowing political science wasn’t a legitimate form of knowing about politics, or at least it wasn’t presented as one to young journalists like me.” The numbers bear him out: since 2006 there have been 7.5 references to “economist” in the New York Times for every mention of a “political scientist”. + +A political (journalism) revolution + +Theories abound to explain this imbalance. One hypothesis is self-segregation: journalists with a penchant for numbers are likely to gravitate towards covering obviously quantitative fields, whereas those with a more narrative bent may prefer politics. Another is the availability of sources. There is no one person who can speak for, say, consumers or debtors as a whole, so economic journalists must resort to experts who study aggregate behaviour. In contrast, politics is conducted by a small number of individuals who are usually keen to talk to reporters, making outsiders’ analysis seem redundant. Arthur Lupia of the University of Michigan argues that, whereas fields like economics can seem “objective” and technical, political issues are visceral, emotional and tribal. People hold immovable beliefs about politics, he concludes, and have no inclination to defer to “impartial experts” on such topics. And Mr Drezner thinks that there is little appetite among either reporters or readers for the dispiriting structural analyses that are professors’ stock in trade. + +Throughout George W. Bush’s presidency, most American political reporters were allergic to any numbers more advanced than a cherry-picked poll result. The tide did not start to shift until 2008, when Nate Silver, a baseball writer who developed statistical expertise by predicting how players would perform, began posting forecasts for that year’s topsy-turvy primary elections online as an anonymous blogger. Mr Silver used techniques that any political scientist would find familiar. + +Thanks to rigorous analysis and a sterling track record—he was bullish on Mr Obama’s chances long before the Iowa caucuses, and correctly called 49 of 50 states in the general election—Mr Silver developed a devoted following. Eager to test the audience for what would soon be called “data journalism”, in 2010 the New York Times began hosting his blog, which he called “FiveThirtyEight” for the number of votes in America’s electoral college. Even Mr Silver, who by that point was a well-known forecasting whizz, could not have predicted how big the market for his cleverer-than-thou takes would become: on the eve of the 2012 election 20% of the visitors to the paper’s website read “FiveThirtyEight”. + +Mr Silver’s success set off a modest paradigm shift in political journalism. Perhaps his biggest draw was his thinly veiled disdain for the innumerate punditry that ruled the airwaves. Mr Silver delighted in savaging commentators who relied on vapid clichés like “momentum shifts” and “game-changers”. And unlike any other commentator in Washington, he was willing to put his money where his mouth was. + +In October 2012 Joe Scarborough, a television presenter and former congressman, took aim at Mr Silver, writing: “Anybody that thinks that this race is anything but a toss-up right now is such an ideologue, they should be kept away from typewriters, computers, laptops and microphones for the next ten days, because they’re jokes.” Mr Silver promptly tweeted him an offer of a $2,000 bet that Mr Obama would win, which Mr Scarborough wisely passed up. Mr Silver had brought the rules of political science to Beltway journalism: no longer were all opinions equally valid. Some interpretations were right, some were wrong, and every election provided a new opportunity to put them to the test. + +Like all good businesses, “FiveThirtyEight”—which was acquired by ESPN in 2013—quickly attracted imitators and competitors. Mr Klein started Vox, the New York Times established a new quantitatively minded section, called “The Upshot”, and the Washington Post annexed a blog, called “The Monkey Cage”, dedicated to political science. What was once Mr Silver’s lonely crusade soon became an echo chamber. And although these sites occasionally conducted their own statistical studies, they mostly relied on existing academic work, giving political scientists an audience of unprecedented scale. + +At the same time a movement was developing within political science to expand its reach beyond the ivory tower. In 2013 the American Political Science Association devised a plan to increase the field’s impact. Mr Drezner began advocating loudly for political scientists to publish papers on subjects where a consensus existed among the media and policymakers that was strongly refuted by academic literature. “We got tired of hearing people say things like ‘Values voters determine the outcome of this election’,” says Lynn Vavreck of UCLA. “We got tired of hearing things written into the history books that weren’t true.” + +One group of professors who heard this message were the authors of TPD. Although their writing style does not quite qualify the book as a page-turner, TPD is essentially organised as a chronological narrative that is free of jargon and is sometimes outright funny. For example, it calls the share of delegates a candidate has won when a nomination is decided the “fat lady share”, in homage to the saying “It ain’t over ‘til the fat lady sings.” + +The book’s argument is simple, convincing and provocative. Following the debacle of the Democratic convention in 1968, when police and street protesters clashed violently for days while delegates chose a pro-Vietnam-war candidate against the electorate’s wishes, America’s two major political parties introduced binding primary elections to let the public select nominees. But in the very first election cycle under the new system, Democratic voters made the disastrous choice of an anti-war insurgent, George McGovern, who went on to lose 49 of the 50 states to Richard Nixon. As a result, TPD claims, the parties soon set about undermining their own reforms. After a brief period of trial and error, they succeeded, maintaining a veneer of democratic legitimacy while all-but-inevitably guiding voters towards the preferred choice of party heavyweights and interest groups. “The reformers of the 1970s tried to wrest the presidential nomination away from insiders and to bestow it on rank-and-file partisans,” the authors write. “But the people who are regularly active in party politics have regained much of the control that was lost…Insider control is not unshakable, but it has usually been sufficient to the task at hand for some two decades.” + +The arrow of causality + +TPD backs up this claim with resounding evidence. For every contested primary between 1980, when the authors believe parties recovered their power over the process, and 2004 they measure the relative effect of polls, endorsements, fund-raising and media coverage on candidates’ delegate shares. Although successful candidates tend to fare well on all these indicators, the authors find that endorsements—their preferred measure of party support—are the best single predictor of delegate-winning. More important, early endorsements tend to yield cash, news coverage and popularity later on. In contrast, an early fund-raising push, media bubble or poll surge does not usually produce a flurry of endorsements. They conclude that parties tell the electorate how to vote, rather than voters telling the party whom to support. + +When TPD was first published on the eve of Mr Obama’s election, it had virtually no impact on American politics. It was not until 2011, after Mr Silver cited the book in an article in the New York Times Magazine and the Republicans’ “invisible primary” to challenge Mr Obama was in full swing, that the public began to take notice: a look at Google searches reveals no significant interest for the phrase “invisible primary” before Mr Silver’s article. By May 2012 “invisible primary” had caught up with a well-known term like “efficient markets hypothesis” by search volume. And just when awareness of TPD was growing, its thesis was bolstered by an extraordinary performance. From the summer of 2011 until the Republicans’ South Carolina primary in January 2012, a parade of candidates with no support from the political elite (Michele Bachmann, Herman Cain and Newt Gingrich) took turns leading the polls. In the end it was Mitt Romney—whom many non-quantitative journalists dismissed as too moderate and establishment-friendly for an angry Republican electorate, even though he led the race for endorsements early on—who waltzed to the nomination. + +So three years later, when a clownish insurgent called Donald Trump leapt to the top of the Republican polls, data journalists had their ammunition ready. In a story last July entitled “Here’s Why He Won’t Win”, Andrew Prokop of Vox predicted it would be hard “for candidates like [Mr Trump] to appeal to party elites”. “Dear Media, Stop Freaking Out About Donald Trump’s Polls” was the title of a piece in November by Mr Silver. “Donald Trump…will most likely follow the classic pattern of a party-backed decline,” concurred Nate Cohn of “The Upshot” in July. And we wrote in late September that “Outsiders don’t win presidential nominations any more…barring a stunning reversal of precedent, [Mr Trump’s] failure to impress GOP elders…all but precludes [him] from becoming the party’s flag-bearer.” In a daily reminder to readers that Mr Trump’s bubble was sure to pop, “FiveThirtyEight” has paid homage to TPD by maintaining an “endorsement primary” tracker, which is updated each time a senior elected official announces support for a candidate. After Mr Trump’s poor showing in Iowa, such observers had reason to feel smug. + + + +One month later, however, it seems clear that Mr Trump is no Herman Cain. The first panic bells went off after his dominating performance in the New Hampshire primaries, which occurred in tandem with Bernie Sanders’s trouncing of Hillary Clinton, the establishment favourite. (“Bad Night for ‘The Party Decides’,” Ryan Lizza of the New Yorker tweeted as the polls were closing.) Mr Trump’s thumping win in South Carolina forced Jeb Bush, the original leader in the Republican “endorsement primary”, out of the race, setting off a new wave of sober predictions that the party would now clear the field for Marco Rubio to eviscerate Mr Trump one-on-one. Then came Mr Trump’s 22-percentage-point win in Nevada, his victories in seven of the 11 Super Tuesday states and the continuing division of his opposition. Since late February the very Republican governors and senators who previously swore he had to be stopped have begun to offer him their endorsements. There isn’t much time left for TPD to be proved right. + +What good is political science if it flubs the biggest development in American politics in generations? The authors of TPD themselves are responding cautiously to what might look like humiliation. Martin Cohen, of James Madison University, plaintively maintains that the book’s statistical model has actually held up rather well. TPD did include a crucial caveat in its argument: “The party and not individually powerful candidates decide nominations—but only if the party can make up its collective mind.” + +TPD found that a high share of early endorsements usually leads to the nomination. Although Hillary Clinton was widely considered the insider favourite in 2008, her endorsement totals on the eve of the Iowa caucuses lagged far behind her husband’s at the same stage in 1992 or Al Gore’s in 2000. Meanwhile, TPD’s authors noted that Mr Obama, the eventual victor, had already amassed a healthy share of endorsements from low-level party insiders. This year, Mrs Clinton really has been the overwhelming endorsement leader, and looks set to cruise to victory. In contrast, among the Republicans in 2016, no candidate received significant endorsement support by historical standards. Mr Bush, the endorsement leader, had 30% less backing from the party ahead of the Iowa caucuses than the lowest previous total on that date by an eventual Republican nominee. “The party really didn’t decide,” Mr Cohen says, “and as a result it was left to the voters.” + +Yet Mr Cohen is not hiding behind this technicality. “We think that it’s in the party’s interest to decide, and that they should be deciding,” he says. “The fact that they failed to is a lack of foresight on their part.” Even if TPD’s statistical model is sound, its central claim—that American political parties have successfully “beaten” the reforms intended to entrust nominations to the electorate—is hard to reconcile with Mr Trump’s winning streak. + + + +For political scientists, The Donald’s success paves the way for a host of new questions. What determines which are the elections where a “party can make up its collective mind”? How far can a party stretch the preferences of its voters before they revolt? Within the academy, no one will suggest that the authors of TPD should be muzzled or ignored just because they failed to foresee Mr Trump’s ascent. + +For data journalists, however, the stakes are higher. Mainstream audiences will not be satisfied with excuses or technicalities: the best and the brightest said that Mr Trump could never win, and it looks as if they were wrong. One crucial corrective would be to actually read the original versions of academic political-science texts rather than relying on caveat-free summaries: a close reading of TPD applied to the 2016 Republican race might have been entitled “The Party Hasn’t Decided, So Anything Goes”. Another would be to take a nibble of humble pie and recall that there is a reason “political science” sounds like an oxymoron: there are no iron laws in politics. There is only so much a study of ten primary campaigns between 1980 and 2004 can tell people about a new set of circumstances and candidates in 2016. + +Ultimately, however, popular evangelists for political science need to stand their ground. For years, sceptics cited the failure of baseball teams assembled by Billy Beane (the protagonist of Mr Lewis’s book, “Moneyball”) to win a championship as proof that statistics had no place in baseball. Today, virtually all these flat-earthers have been forced into early retirement. Every statistical model has its flaws, but presidential elections are still far easier to predict months in advance than, say, economic growth or the weather. Just like Mr Beane’s Oakland Athletics, Mr Silver’s disciples need to keep offering wagers to the Joe Scarboroughs of the world. In the long run, they—and therefore the voters who depend on them for information and analysis—will win more often than they lose. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21693910-2016-campaign-putting-most-influential-political-science-book-recent-memory/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The art world + +African horizons + +Why the Armory Show in New York is focusing on Africa + +Mar 5th 2016 | From the print edition + + + +IN OCTOBER 2010 a wealthy South African, bidding at Bonhams in London, bought a portrait of a doe-eyed Indian girl from the island of Zanzibar that had been painted in 1945. The artist was Irma Stern, who was born in the Transvaal, the daughter of German-Jewish émigrés. Sentimental in style, it was not a fashionable work of art. Nevertheless, the bidder paid a record £2.37m ($3.3m) for the picture, more than twice the top estimate. Much has changed since that moment, when homesick white South Africans, grown rich on rising commodity prices, would spend millions on the work of artists who reminded them of their parents and grandparents and the white world they grew up in. Half a decade on, the global art world has discovered a quite different Africa—and in a big way. + +In the course of the 20th century African tribal art was praised by many outsiders, including Henri Matisse and Pablo Picasso, who absorbed what they saw as its “primitive” imagery into their own work. But few collectors on the continent or beyond were interested in Africa’s contemporary art, still less in its artists. One exception was Jean Pigozzi, heir to the Simca motoring fortune, who, starting in the 1980s, amassed a huge collection of contemporary African art, though never by going to the continent himself; instead, he sent a curator with cash, canvasses and paint for encouragement. + +Since then other collectors, both on the continent and beyond, have begun buying. First among them is Sindika Dokolo, a Congolese businessman who is married to Africa’s wealthiest woman, Isabel dos Santos, daughter of Angola’s president. Mr Dokolo owns more than 5,000 pieces of mostly contemporary art, and his foundation plans to build an exhibition space and, later, a museum in Portugal. + +In recent years galleries have been popping up all over the continent. Regional events like Dak’Art Biennale and LagosPhoto Festival are growing bigger. Last year the Venice Biennale appointed its first artistic director from Africa, Okwui Enwezor, a Nigerian curator who lives in New York and Munich. In the latest development, on March 3rd the historic Armory Show (on Piers 92 and 94) in New York unveiled its first show focusing on Sub-Saharan Africa. In 2017 Jochen Zeitz, a German art collector and conservationist, plans to open Zeitz Museum of Contemporary Art in Cape Town to show his art from Africa and the African diaspora. + +Four of the most prominent contemporary artists of African origin move with ease between Africa and the rest of the world. Julie Mehretu was born in Ethiopia and lives in New York, as does Kenyan-born Wangechi Mutu; El Anatsui (whose beer-bottle-top “fabrics”—pictured—are instantly recognisable) was born in Ghana, has worked for much of his career in Nigeria, and has been exhibited all over the world, as has William Kentridge, a white South African. Only the work of Ms Mutu and Mr Kentridge can be said to deal with the African experience directly, though both also address larger themes. Ms Mutu does so through an Afrofuturist exploration of gender and identity. Mr Kentridge is concerned with South African politics. + +The art world zeros in on a new region for two reasons. The first is that young people in fast-growing economies often begin buying art, as well as luxury goods, when they start becoming rich. The second is that local collectors favour local artists, and these are often undervalued. Buying and representing these artists is attractive to international dealers and collectors because, if a home-grown collecting culture does emerge, then prices for art from that region can only go up. + +Africa’s recent economic growth is a factor in its expanding art market. In the past decade the GDP of the 11 largest sub-Saharan countries has increased by roughly half, twice the rate in the rest of the world. “We have ten times as many collectors from South Africa as we did ten years ago,” says Joost Bosland, director of the Stevenson Gallery, which has showrooms in Cape Town and Johannesburg. The leader among the international auction houses, Bonhams, has seen average lot prices for African art increase fivefold, to $50,000, since it decided to hold stand-alone sales of African artists. Half its bidders now originate from within the continent. Bonhams has been so successful that both Sotheby’s and Phillips are thinking of copying their African sales. + +Only eight of the 14 artists featured in the special exhibition at the Armory, “African Perspectives”, are from galleries in Africa. The rest are based in Paris, London, Berlin and Seattle. To Julia Grosse and Yvette Mutumba, the curators of “African Perspectives”, this was a more accurate way of reflecting the world that many contemporary African artists now inhabit. How to classify someone who is born in Lagos, splits their time between there and Brussels, and does residencies in Hong Kong and New York? Everyone lives more globally now; artists are no exception. Another element is that growing interest in colonialism, slavery and the diaspora has expanded the story of Africa into the story of the world. + +Art with African or African-American origins is quickly gaining wider audiences across America. There are now museums of the African diaspora in both San Francisco and New York. In 2014 Harvard University opened the Ethelbert Cooper Gallery of African & African-American Art and the long delayed Africa Centre is being built just north of “Museum Mile” in New York, at Fifth Avenue and 110th Street. Barack Obama, America’s first president with an African father, will step down in 2017, but global interest in Africa’s artists is certainly not about to disappear. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21693909-why-armory-show-new-york-focusing-africa-african-horizons/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Eric “Winkle” Brown: Know your enemy + + + + + +Articles Sections Next + +Obituary: Eric “Winkle” Brown + +Know your enemy + +Eric “Winkle” Brown, test pilot, died on February 21st, aged 97 + +Mar 5th 2016 | From the print edition + + + +AT 17, Eric Brown had flown only once before: on his father’s lap in a one-seater Gloster biplane, when he was eight. This time the biplane was a Bücker Jungmann two-seater, and the pilot strapped him in with particular care. Nice of him, he thought. Minutes later, the aircraft was somersaulting like a performing flea: for the pilot was Ernst Udet, a German flying ace of the first world war. He clapped Eric heartily on the shoulder as he stumbled out and roared “Hals und Beinbruch!” Broken neck, broken legs, but you’re alive! + +The old fighter pilots’ motto summed up Captain Brown’s career. In the course of it he flew 487 different types of aircraft, most of them prototypes. He changed planes so often that he kept a loose-leaf folder, meticulously handwritten, of all the different cockpit layouts, hydraulics and emergency drills, to try to keep on top of things. Many of these craft he operated on aircraft-carriers; he clocked up 2,407 carrier landings and 2,721 take-offs, both world records. He tested the earliest helicopters, jets and rocket-powered machines. His working life took him from the wood-and-canvas craft in which he started with the Fleet Air Arm, to overseeing training on the nuclear strike force at Lossiemouth in the 1960s. The rising arc of power and accuracy was so steep that it astonished him. + +He faced his own demise on a regular basis. His de Havilland 108 once started oscillating so fast that he was blacking out, and just saved himself by pulling both sticks in time. His jet-powered flying-boat crashed into debris off Cowes and trapped him under water; others got him out. In a Tempest V his propeller froze in mid-flight and the engine caught fire. As a Scot, short on words but not confidence, he tended to react with a calm joke or two: “Let’s sort this out,” he would say to himself. This time, with his feet slow-roasting, he jumped. The slipstream was so strong that he had to catapult himself clear, landing in a duckpond. In short, accidents were ten a penny. He survived for two reasons: he was careful, and he was small. Small enough to curl up in a cockpit, rather than get his legs sheared off. Hence “Winkle”. + +In a glamorous trade he cut a neat, practical figure, but there was no lack of dash. He flew Spitfires into the black heart of cumulonimbus clouds to discover why aircraft often emerged from them in bits. He crash-landed aircraft without undercarriages, to see if that was a good idea. On aircraft-carriers he had to contend with too-short flight decks, pitching seas, failing to hook on the arrester wires or crashing into the barrier. He was such a dab hand, though, that he sometimes came in sideways, crab-wise, without a batsman, to glide to a perfect stop. And then he would wander off grinning. When he made the first-ever jet-aircraft landing on the carrier Ocean, screaming down in his favourite Vampire in December 1945, it was just such touch-down perfection, though the sea was so high that he had been ordered not to attempt it. Well, he wasn’t going to let the Americans do it first. + +A bump on landing + +All through the war the Germans kept one step ahead with aviation technology. As each new threat appeared, he had to work out how to counter it. On the aircraft-carrier Audacity in the north Atlantic in 1941 he was pitting fiery, beautiful little Martlets against Focke-Wulf Kurier bombers; he found the only way to dispatch them was to go for them head-on, shattering the windscreen to kill the pilots. When V1 flying bombs appeared he discovered that, by overtaking very close in a Tempest V, he could clip their wings with his own and send them plunging into the Channel. + +It struck him as strange that his life’s obsession had become to beat the Germans. That jaunt with Udet had sealed his passion for flying (though he already loved speed, and was the only boy at Edinburgh Royal High to ride a Norton 500cc motorbike). Udet had also inspired him to learn German and to teach there for a while. He admired the Germans for their industry and ingenuity. A colossal amount of both had been poured into fighter aviation. + +At the Royal Aircraft Establishment at Farnborough after the war he studied and flew many of these experimental machines. German experts helped him. In France he worked with them to fix and fly the Dornier 335, the fastest piston-engine aircraft. He searched for, and found, the top-secret Me 262, the world’s first operational jet fighter, so swift and with such a punch that he felt untouchable. He also test-flew the suicidally dangerous Me 163B, powered with rocket fuel so volatile that a bump on landing could explode the plane; its design became the basis of craft that could attempt supersonic flight. Having tried all these, and survived, he was the natural choice to train a new generation of German test pilots in the late 1950s. + +In those years he came across Luftwaffe aces whom, as a boy, he would have idolised. Having seen the walking dead of Bergen-Belsen, he was not about to repeat that mistake. But his job could be summed up as “Know the enemy” and in a way he had indeed come to know them, in that fellowship of death-defying souls. So when in 1945 he went to interrogate Hermann Goering, and at the end the ex-Reichsmarschall made to shake hands, Winkle cried instead “Hals und Beinbruch!” And they both tentatively smiled. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21693807-mr-brown-regularly-defied-death-humour-and-smile-he-was-97-obituary-eric-winkle-brown/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +The Economist poll of forecasters, March averages + +Output, prices and jobs + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Mar 5th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21693998/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Mar 5th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21693994-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Mar 5th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21693995-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist poll of forecasters, March averages + +Mar 5th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21693997-economist-poll-forecasters-march-averages/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Mar 5th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21693993-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Mar 5th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21693931-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 04 Mar 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +The primaries: Battle lines + + + + + +E-commerce in emerging markets: India online + + + + + +Iran’s election: Revolt against the reactionaries + + + + + +Malaysia’s prime minister: The Najib effect + + + + + +Concussion: Schools and hard knocks + + + + + +Letters + + + +Cannabis, freedom of press, US politics, diversity, Brexit, language, Cornwall: Letters to the editor + + + + + +Briefing + + + +Online retailing in India: The great race + + + + + +United States + + + +Super Tuesday: Goodbye, Rubio Tuesday + + + + + +Abortion: Back in court + + + + + +The campaigns: Heard on the trail + + + + + +The primaries: The party declines + + + + + +Lexington: The big schmooze + + + + + +The Americas + + + +Argentina’s debt: At last + + + + + +Canadian foreign policy: Trudeaumania 2 + + + + + +The Foreign Account Tax Compliance Act: Border babies v the IRS + + + + + +Bello: An Olympic oasis + + + + + +Asia + + + +Malaysia’s scandals: The art of survival + + + + + +Malaysia’s 1MDB affair: Follow the money, if you can + + + + + +Sanctions on North Korea: Big bother + + + + + +Confronting intolerance in Pakistan: A game of dare + + + + + +Banyan: The last refuge + + + + + +China + + + +Politics: Loyal to the core + + + + + +Hong Kong and the mainland: Fear-jerker + + + + + +Middle East and Africa + + + +Iran: Mr Rohani’s complicated victory + + + + + +Syria’s fragile truce: Too many holes to last + + + + + +Lebanon: When elephants battle + + + + + +Egyptian television hosts: Sisi’s foaming mouthpieces + + + + + +Electricity in Nigeria: Powerless + + + + + +Film-making in Uganda: Lights, camera, no budget + + + + + +African migration: To the land of good hope + + + + + +Europe + + + +France’s labour reforms: Working nine to four + + + + + +The Irish election: Fragged + + + + + +Refugees in Greece: Rising tide + + + + + +Regulating EU pesticides: Fog of uncertainty + + + + + +Charlemagne: The end of Heile Welt + + + + + +Britain + + + +Transport infrastructure: Life in the slow lane + + + + + +Brexit brief: In, out, find a fib to shout + + + + + +Asset sales: The great British sell-off + + + + + +Educating the poorest children: Premium grade + + + + + +Supermarkets: Fresh from the Amazon + + + + + +Cross-channel travel: Allied landings + + + + + +Bagehot: Unity in disunity + + + + + +International + + + +Internet governance: We the networks + + + + + +The IETF: Mother of consensus + + + + + +Business + + + +Volkswagen: Emission impossible + + + + + +Death of a fracking pioneer: A gambler on shale + + + + + +Our glass-ceiling index: Still a man’s world + + + + + +Road haulage: The appy trucker + + + + + +Italian coffee firms: Not so espresso + + + + + +Schumpeter: A rust-belt revival + + + + + +Finance and economics + + + +Emerging-market debt: The well runs dry + + + + + +Buttonwood: Living off the people + + + + + +Russia and sanctions: Toe in the water + + + + + +High-denomination banknotes: Cash talk + + + + + +Barclays Africa: Capital in fetters + + + + + +The euro-zone economy: The new mediocre + + + + + +Bilking investors: Rotten advice + + + + + +Free exchange: Red ink rising + + + + + +Science and technology + + + +Concussion: Bang to rights + + + + + +Rogue waves: Incoming! + + + + + +Powering the internet of things: Passive voice + + + + + +Economics: A far from dismal outcome + + + + + +Anthropology: The medium is the messengers + + + + + +Books and arts + + + +America’s presidential election: Pushback + + + + + +The art world: African horizons + + + + + +Obituary + + + +Obituary: Eric “Winkle” Brown: Know your enemy + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +The Economist poll of forecasters, March averages + + + + + +Output, prices and jobs + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.03.12.TXT b/homeworks/B20769/homework1/data2/2016.03.12.TXT new file mode 100644 index 0000000..fbfb14c --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.03.12.TXT @@ -0,0 +1,5615 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Technology Quarterly + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Mar 12th 2016 | From the print edition + + + +Brazilian police detained Luiz Inácio Lula da Silva, a former president, for questioning on suspicion that he had benefited from bribes paid to Petrobras, a state-controlled oil giant. He was released after three hours. In a separate investigation, state prosecutors charged him with concealing his ownership of a seaside property. He denies wrongdoing. The judge investigating the Petrobras scandal sentenced Marcelo Odebrecht, a former chief of Brazil’s biggest construction company, to 19 years in prison for corrupt dealings with the oil company. + +Mexico’s president, Enrique Peña Nieto, described Donald Trump’s rhetoric as a danger, saying, “that’s how Hitler got in.” Mr Peña added that there was “no scenario” in which Mexico would pay for the wall that Mr Trump plans to build on the border if he wins the American presidency. + +The opposition alliance that controls Venezuela’s National Assembly said it will use “all constitutional means” to force the populist president, Nicolás Maduro, from office. These include launching a referendum to recall him, and peaceful street protests against the government. + +Peru’s electoral court barred two candidates from a presidential election, to be held on April 10th. Julio Guzmán, who is second in the polls, was disqualified because his party failed to obey its rules when it nominated him. César Acuña was excluded for giving money to voters while campaigning. + +The Brexit bandwagon + +Mark Carney, the governor of the Bank of England, was accused of promoting pro-European Union views for saying that a British exit from the EU would pose the “biggest domestic risk” to financial stability. Mr Carney tried to re-establish his neutrality by suggesting EU membership brought risks, too. The Sun, a populist newspaper, claimed the queen favours Brexit. An official denial and complaint to the press regulator swiftly followed. Boris Johnson, London’s mayor and a Brexiteer never far from controversy, described an e-mail that sought to gag pro-EU views within his office as a “cock-up”. + +In Slovakia Robert Fico, the prime minister, won a general election but failed to secure a parliamentary majority. Despite Mr Fico’s anti-immigrant rhetoric the far-right People’s Party Our Slovakia won 8% of the vote and 14 seats in the 150-seat parliament. + +Leaders from the EU and the prime minister of Turkey, Ahmet Davutoglu, agreed on the outline of a deal to deport boat people back to Turkey. The terms, which will be confirmed at another summit later this month, have been criticised by international aid organisations and the UN High Commissioner for Refugees. But as more refugees are expected in the spring, it may be the only hope for Europe. + + + +At least 200,000 union-led protesters and students took to the streets of France and railway workers held a national strike for 37 hours. Their main grievance was the French government’s labour-reform bill, which would help companies bypass tricky unions when they want to alter working times and cut the cost of redundancies. + +Junior doctors in England held their third, and longest, strike, walking out for 48 hours. Only emergency cover was provided; 5,000 surgical procedures were cancelled. Last month the health secretary said he would impose new contracts after negotiations with doctors failed. The doctors have the public’s sympathy; two-thirds back their actions. + +Hopes, and fears + +Talks aimed at finding an end to the conflict in Syria were postponed again, but are now set to start next week. A ceasefire, which has been in place since February 27th, is continuing to hold generally, though numerous minor violations have been reported, and aid is getting through to more areas. + +The UN warned that a humanitarian disaster is looming in the western Iraqi city of Fallujah, held by Islamic State but under siege for many months by Iraqi forces. Tens of thousands of people in the city are facing food shortages. + +A survey found that almost half of Israeli Jews think that Israeli Arabs, who make up a fifth of the population, should be expelled or transferred from Israel. + +America launched an air strike at a camp belonging to al-Shabab, a terrorist outfit in Somalia, killing 150 fighters. + +A stinging Bern + +In the biggest upset in America’s primary elections so far, Bernie Sanders proved the pollsters so very wrong by beating Hillary Clinton in Michigan’s Democratic primary by 50% to 48%. Mrs Clinton had been expected to win handily. Her defeat raised questions about the breadth of her appeal outside heavily black electorates in the South (she trounced Mr Sanders in Mississippi and Louisiana), but she remains on course to take the party’s nomination. + +On the Republican side Donald Trump chalked up big wins in Michigan and Mississippi, though he won Louisiana and Kentucky by smaller margins. Marco Rubio’s campaign seemed all but over after another dismal showing. + +Michael Bloomberg, a former mayor of New York, said he would not enter the presidential race as an independent, after months of apparently planning to do so. He is concerned that a three-way race would benefit Mr Trump, whose campaign Mr Bloomberg described as “the most divisive…I can remember”. + +You can clap now + +As the annual session of China’s toothless National People’s Congress got under way, the one-party state forbade the country’s media from reporting on diverse topics including smog, the use of land for burials and delegates’ wealth. They were, however, ordered to “thoroughly report” on the participation of Xi Jinping, the country’s president. + +The son of a liberal Pakistani politician, Salman Taseer, who was assassinated by his bodyguard for opposing harsh blasphemy laws, emerged near Quetta after five years of captivity. Shahbaz Ali Taseer had been kidnapped by Islamic extremists eight months after his father’s killing. + + + +For the first time, a computer beat a world champion at the Asian board game of Go, when Google’s DeepMind AlphaGo outclassed Lee Se-dol of South Korea, who has won 18 championships. Computers have beaten the world’s best chess players, but Go is much more complex. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21694573-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Mar 12th 2016 | From the print edition + +The Volkswagen scandal rumbled on. Prosecutors in Germany expanded the number of employees at the carmaker who are under investigation to 17. But they have yet to find firm evidence that senior executives had knowledge of the rigged software in diesel cars that yielded false readings in emissions tests. In France authorities opened a formal inquiry into “aggravated fraud”. VW’s chief in America, Michael Horn, resigned. Matthias Müller, VW’s chief executive, warned of “substantial and painful” financial damage at the company because of the scandal. + +Pay attention + +Under pressure to hand over more tax in Britain, Facebook reportedly told its larger British advertisers to pay it via its UK subsidiary rather than through its office in lower-tax Ireland. Earlier it was revealed that in 2014 Facebook paid just £4,300 in corporate tax; the next year British tax authorities paid the social-network company £27,000 ($44,000) to place ads reminding people about tax commitments. + +Chevron announced additional cuts to its capital-spending plans on top of the ones it outlined last December. Like its rivals, the oil giant has been hurt by the prolonged fall in oil prices. The further reduction in spending should shore up its dividend to shareholders, which it has paid out continuously since 1926. + +Oil prices have been rallying recently, however. Brent crude rose above $40 a barrel for the first time since early December and at mid-week was priced 47% higher than the 13-year low it had sunk to in mid-January. The price has risen in part because oil production in America, where output from shale fields has boomed in recent years, is dropping. The price of iron ore soared by record amounts after Chinese officials said they would do what it takes to boost growth. + +The prospect of building Hinkley Point C, a proposed nuclear-power plant in Britain, was thrown into turmoil after the chief financial officer of Électricité de France, which is to build Hinkley, quit over concerns that the project threatened EDF’s future. At £18 billion ($25 billion), Hinkley would be the most expensive power plant in history. The British government has promised to pay the French utility company up to £92.50 per megawatt hour (three times the current wholesale price) for its output. Despite this generous offer EDF could still lose out as it is liable for cost overruns. + + + +A vigorous campaign by officials in China to slow the flow of money leaving the country seems to be working. Foreign-exchange reserves dropped by $29 billion in February to $3.2 trillion, a sharply lower monthly amount than the $100 billion that has been the norm recently. Meanwhile, new figures showed that China’s exports plunged by 25% in February compared with the same month last year and imports fell by 14%. + +Mystery shoppers + +News that an investor had accumulated a 5% stake in Burberry prompted speculation that the British luxury-goods company may become a takeover target. The identity of the investor was not known, but Burberry asked HSBC, which is the custodian of the stake, who it was. The bank was reportedly said to be holding it on behalf of multiple investors. + +Three years after the country was bailed out, euro-zone officials confirmed that Cyprus will conclude its €10 billion ($11 billion) rescue programme at the end of this month. + +Supercell, the Finnish mobile-gaming firm behind “Clash of Clans” and three other blockbuster games, reported a 37% rise in sales last year to €2.1 billion ($2.3 billion). Owned by Softbank, a Japanese conglomerate, Supercell also announced that for the first time 100m users were playing its games on a daily basis. Its games are played in every country of the world, bar Tuvalu. + +Break point + +Corporate sponsors reacted swiftly to the revelation that Maria Sharapova, a five-time Grand Slam tennis champion, had failed a doping test earlier this year. At least three sponsors either cut or suspended their ties with the world’s highest-paid female athlete. Ms Sharapova tested positive for meldonium, which she said was prescribed to her for medical conditions. It was banned by the World Anti-Doping Agency only at the start of the year. + +In another crack at shedding its cheap image in order to appeal to business travellers, Ryanair, Europe’s biggest low-cost airline, started hiring out a customised Boeing 737 with 60 business-class seats for flights. The chartered corporate jet will provide “fine dining”, a far cry from the “hot chips, chicken nuggets, hot dogs…snack boxes and more!” offered in economy class (if passengers can get a meal at all). + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21694584-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Mar 12th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21694583-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +After Moore’s law: The future of computing + +The Petrobras scandal: Interrogating Lula + +Farming in Africa: Miracle grow + +China’s economy: Ore-inspiring + +Europe’s migrant crisis: A messy but necessary deal + + + + + +Articles Sections Next + +After Moore’s law + +The future of computing + +The era of predictable improvement in computer hardware is ending. What comes next? + +Mar 12th 2016 | From the print edition + + + +IN 1971 the fastest car in the world was the Ferrari Daytona, capable of 280kph (174mph). The world’s tallest buildings were New York’s twin towers, at 415 metres (1,362 feet). In November that year Intel launched the first commercial microprocessor chip, the 4004, containing 2,300 tiny transistors, each the size of a red blood cell. + +Since then chips have improved in line with the prediction of Gordon Moore, Intel’s co-founder. According to his rule of thumb, known as Moore’s law, processing power doubles roughly every two years as smaller transistors are packed ever more tightly onto silicon wafers, boosting performance and reducing costs. A modern Intel Skylake processor contains around 1.75 billion transistors—half a million of them would fit on a single transistor from the 4004—and collectively they deliver about 400,000 times as much computing muscle. This exponential progress is difficult to relate to the physical world. If cars and skyscrapers had improved at such rates since 1971, the fastest car would now be capable of a tenth of the speed of light; the tallest building would reach half way to the Moon. + +The impact of Moore’s law is visible all around us. Today 3 billion people carry smartphones in their pockets: each one is more powerful than a room-sized supercomputer from the 1980s. Countless industries have been upended by digital disruption. Abundant computing power has even slowed nuclear tests, because atomic weapons are more easily tested using simulated explosions rather than real ones. Moore’s law has become a cultural trope: people inside and outside Silicon Valley expect technology to get better every year. + +But now, after five decades, the end of Moore’s law is in sight (see Technology Quarterly). Making transistors smaller no longer guarantees that they will be cheaper or faster. This does not mean progress in computing will suddenly stall, but the nature of that progress is changing. Chips will still get better, but at a slower pace (number-crunching power is now doubling only every 2.5 years, says Intel). And the future of computing will be defined by improvements in three other areas, beyond raw hardware performance. + +Faith no Moore + +The first is software. This week AlphaGo, a program which plays the ancient game of Go, beat Lee Sedol, one of the best human players, in the first two of five games scheduled in Seoul. Go is of particular interest to computer scientists because of its complexity: there are more possible board positions than there are particles in the universe (see article). As a result, a Go-playing system cannot simply rely on computational brute force, provided by Moore’s law, to prevail. AlphaGo relies instead on “deep learning” technology, modelled partly on the way the human brain works. Its success this week shows that huge performance gains can be achieved through new algorithms. Indeed, slowing progress in hardware will provide stronger incentives to develop cleverer software. + +The second area of progress is in the “cloud”, the networks of data centres that deliver services over the internet. When computers were stand-alone devices, whether mainframes or desktop PCs, their performance depended above all on the speed of their processor chips. Today computers become more powerful without changes to their hardware. They can draw upon the vast (and flexible) number-crunching resources of the cloud when doing things like searching through e-mails or calculating the best route for a road trip. And interconnectedness adds to their capabilities: smartphone features such as satellite positioning, motion sensors and wireless-payment support now matter as much as processor speed. + +The third area of improvement lies in new computing architectures—specialised chips optimised for particular jobs, say, and even exotic techniques that exploit quantum-mechanical weirdness to crunch multiple data sets simultaneously. There was less need to pursue these sorts of approaches when generic microprocessors were improving so rapidly, but chips are now being designed specifically for cloud computing, neural-network processing, computer vision and other tasks. Such specialised hardware will be embedded in the cloud, to be called upon when needed. Once again, that suggests the raw performance of end-user devices matters less than it did, because the heavy lifting is done elsewhere. + +Speed isn’t everything + +What will this mean in practice? Moore’s law was never a physical law, but a self-fulfilling prophecy—a triumph of central planning by which the technology industry co-ordinated and synchronised its actions. Its demise will make the rate of technological progress less predictable; there are likely to be bumps in the road as new performance-enhancing technologies arrive in fits and starts. But given that most people judge their computing devices on the availability of capabilities and features, rather than processing speed, it may not feel like much of a slowdown to consumers. + +For companies, the end of Moore’s law will be disguised by the shift to cloud computing. Already, firms are upgrading PCs less often, and have stopped operating their own e-mail servers. This model depends, however, on fast and reliable connectivity. That will strengthen demand for improvements to broadband infrastructure: those with poor connectivity will be less able to benefit as improvements in computing increasingly happen inside cloud providers’ data centres. + +For the technology industry itself, the decline of Moore’s law strengthens the logic for centralised cloud computing, already dominated by a few big firms: Amazon, Google, Microsoft, Alibaba, Baidu and Tencent. They are working hard to improve the performance of their cloud infrastructure. And they are hunting for startups touting new tricks: Google bought Deepmind, the British firm that built AlphaGo, in 2014. + +For more than 50 years, the seemingly inexorable shrinking of transistors made computers steadily cheaper and more capable. As Moore’s law fades, progress will be less metronomic. But computers and other devices will continue to become more powerful—just in different and more varied ways. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21694528-era-predictable-improvement-computer-hardware-ending-what-comes-next-future/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Petrobras scandal + +Interrogating Lula + +Justice, not political war, should determine the fate of Brazil’s government + +Mar 12th 2016 | From the print edition + + + +YOU don’t have to be Brazilian to have been astonished by the events of recent days. In the early hours of March 4th police showed up at an apartment block in São Bernardo do Campo, near São Paulo, and took away for questioning a former president, Luiz Inácio Lula da Silva, who is beloved by many for his humble origins and his pro-poor policies. They were looking for evidence that Lula and his associates benefited from the gargantuan bribery scandal centred on Petrobras, the state-controlled oil company (see article). Five days later, in a separate case, prosecutors charged the former president with hiding his ownership of a beachfront flat. + +Dozens of politicians suspected of taking bribes, and businessmen thought to have paid them, have been caught up in the Petrobras scandal. Lula, president from 2003 to 2013, is the most consequential figure among them. He denies wrongdoing. On March 8th Marcelo Odebrecht, former head of Brazil’s biggest construction company, was sentenced to more than 19 years in prison for corrupt dealings with Petrobras. + +Brazilians take consolation from seeing the rich and powerful held to account. Sérgio Moro, a judge who is leading lava jato (car wash), the main investigation into the scandal, is a hero to many. But the scandal is also the focus of a ferocious political battle between the left-wing Workers’ Party (PT), to which both Lula and his successor as president, Dilma Rousseff, belong, and an opposition composed of disparate political parties and popular movements. + +Lula’s detention and the filing of charges against him have escalated those hostilities. Anti-government groups are to hold demonstrations on March 13th to renew their demand that Ms Rousseff be impeached. Her allies intend to hold counter-protests on the same day. Both camps are in danger of forgetting that justice is, or ought to be, blind. PT politicians accuse prosecutors of plotting a “coup”. But the opposition’s demands for impeachment have also raced ahead of evidence that would justify such a drastic step. The one charge that has stuck, that Ms Rousseff used accounting tricks to hide the true size of the deficit in 2014, does not provide legal grounds for evicting her from office. + + + +Waxing and waning: Brazil's economic woes, in charts + +Brazilians rarely settle their political differences through violence, but the ferocity on both sides risks damaging the consensus that underpins the country’s admirable democracy. The PT and its allies are the worst offenders. After Lula’s detention the party’s leader in the lower house of Congress declared a “political war”. In a tweet it later erased, the PT called Lula a “political prisoner”. At the same time, in forcibly detaining Lula, rather than asking him to volunteer to be questioned, Mr Moro may also have gone too far. A supreme-court justice accused him of breaking “basic rules”. + +Keep calm, and carry on investigating + +The Petrobras scandal could yet fell the government. The electoral court is looking into whether Ms Rousseff’s re-election campaign in 2014 was financed with money siphoned off from the oil company. If so, the court could annul the election and call a new one, which any candidate from the PT would almost certainly lose. + +A new government would stand a better chance of pulling Brazil out of its morass. Faced with a choice between sane economics and political survival, Ms Rousseff has chosen the latter. She has backpedalled on fiscal reforms, which alone can restore confidence in an economy suffering its worst recession since the 1930s. Her departure would, surely, be cause for celebration—but only if it comes about through the courts or the ballot box, not cynical political machinations. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21694535-justice-not-political-war-should-determine-fate-brazils-government-interrogating-lula/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Farming in Africa + +Miracle grow + +After many wasted years, African agriculture is improving quickly. Here is how to keep that trend going + +Mar 12th 2016 | From the print edition + + + +SOMETIMES it seems as though Adam’s curse, which promises mankind a harvest of thorns and thistles, applies only to African farmers. The southern part of the continent is in the teeth of a drought, which has been blamed on El Niño. The weather has been even worse in northern Ethiopia, where crops are shrivelling and cows are dying. But droughts, unlike biblical curses, end eventually. El Niño does not change the fundamental, remarkable fact about farming in sub-Saharan Africa: it is rapidly getting better. + +The post-war green revolution that transformed Asia seemed to have bypassed Africa. But between 2000 and 2014 grain production tripled in countries as far-flung as Ethiopia, Mali and Zambia. Rwanda did even better (see article). Farming remains precarious in a continent with variable weather and little irrigated land. But when disaster hits, farmers nowadays have a bigger cushion. + +African countries are on the whole more peaceful and better run than they were. Farmers are no longer forced into disastrous socialist collectives or banned from selling their crops in open markets. Border tariffs are lower and export bans rarer. As a result, innovation is accelerating. Africa has seen an explosion of seed companies producing clever hybrids, which can endure drought and resist disease. Perhaps the best proof of the importance of good government comes from Zimbabwe. It has an awful one, and productivity has crashed. + +The progress that has been made elsewhere is wonderful, but not enough. African farms remain far less productive than Asian ones: Chinese farmers harvest more than three times as much grain per hectare. Climate change is expected to make conditions harder. Yet agriculture is essential for firing economic growth across the African continent. More people still live in the countryside than in cities and many of Africa’s cities are not all that dynamic. Asia has a tight grip on labour-intensive manufacturing, although there is certainly space for more food-processing factories in Africa—so, for example, it could export cocoa powder instead of cocoa beans. + +Turning an agricultural uptick into a lasting boom will demand more reforms. One priority for Africa’s governments is to dismantle the remaining barriers to innovation in farming. It still takes years to approve new hybrid seeds in some countries. With a few exceptions, such as South Africa, the continent is holding the line against genetically modified crops. This is mad. GM is particularly helpful in making plants resistant to pests—a terrible scourge. The region’s governments should also take greater advantage of mobile technology. Many try to subsidise fertiliser for poor farmers, only for the stuff to be stolen before it reaches the intended recipient. They should be sending money or vouchers directly to mobile wallets. + +Africa’s cities are swelling, and the people who live in them crave meat and processed food. That is a huge opportunity for local farmers, but it will be missed if transport does not become far cheaper and easier. At the moment, the rule of thumb is that it costs three times as much to move goods one mile along an African road as it does to move them along an Asian one—and that is before the police shake you down. As a result, fertiliser is expensive and much food is wasted on the way to market. More investment in upgrading shoddy rural roads would be good. Better still would be an assault on the trucking cartels that keep prices high. + +Clearing out the weeds + +It would help a lot if farmers—particularly women—had clearer rights over land. Proper titles would encourage them to make long-term investments, like terracing and tree-planting, and allow them to use land as collateral for loans. Getting there is tricky. Many countries have long traditions of communal land management and a complicated web of customary farming rights. Charging in and handing out freeholds can actually strip people of rights. But a sensible first step, which a few countries are trying, is to register farmers’ entitlements so their land cannot be pinched. + +The rest of the world can help, too. Although some egregious subsidies have been trimmed, the rich world’s taxpayers still spend vast sums propping up their own farmers. America heavily subsidises peanuts and cotton—two things that Africa can grow well. Why shell out to make Africans poorer? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21694539-after-many-wasted-years-african-agriculture-improving-quickly-here-how-keep-trend/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +China’s economy + +Ore-inspiring + +In leaning towards stimulus rather than reform, China’s leaders are storing up trouble + +Mar 12th 2016 | From the print edition + + + +IN DECEMBER an adviser to China’s government predicted that GDP growth would soon rebound. Now was a good time, he said, to buy shares in companies that mined copper, nickel and coal—though even he drew the line at investing in iron ore, whose supply was simply too abundant. The adviser sounded insanely bullish back then; he might now rue his caution. On March 7th the price of iron ore jumped by 19%, a record one-day rise, in a sign of renewed optimism about China’s growth. + +The spike in the iron-ore price came hard on the heels of a speech by Li Keqiang, China’s prime minister, to the annual National People’s Congress in Beijing. In it, Mr Li announced a punchy GDP growth target of 6.5-7% for 2016, along with the means he hoped would secure it: a bigger budget deficit than had been planned for last year and faster credit growth. + +With sufficient stimulus China will avoid a sharp economic slowdown. But Mr Li did not simply open the macroeconomic spigots. He hinted that the fiscal boost would be designed to help rebalance the economy: China is aiming for just 3% growth in government revenue this year, suggesting that more of the deficit will come from tax cuts to private firms. He made clear that reforms to reduce overcapacity in low-end and inefficient industries were a priority. And by switching from a single-figure growth target to a range, Mr Li gave himself more flexibility in trading off some GDP growth for more reform. + +Look closer, though, and there is little sign of any real commitment to reform (see article). Promises to slim industries such as steel and coal sound tough—the government expects nearly 2m workers will be laid off—but the planned reduction would make only a small dent in oversupply. Instead the government seems to be doubling down on its well-worn recipe of debt- and investment-fuelled growth. + +Reaching the goal of 6.5-7% GDP growth will require either a fudging of the figures or investment in projects of dubious worth. A second train line to remote and mountainous Tibet is planned. Banks are being leant on to juice up the economy. Credit is growing at twice the rate of nominal GDP, in a country already overburdened by private debt. A big increase in the money supply will put downward pressure on China’s currency, which in turn will lead either to a rapid rundown in foreign-exchange reserves or a devaluation. + +In theory, China’s capital controls can ease the pressure, by making it harder for money to leave the country. And the latest figures suggest they are becoming more effective. Reserves dropped by just $29 billion in February, to $3.2 trillion, after three months of heavier falls. But even if China can successfully police its financial borders, rapid credit growth will fuel asset prices at home. Wary of the stockmarket, investors with cash to spare see property as the safest bet. Unregulated online lenders are helping them pile on leverage, skirting rules requiring minimum down-payments on homes. There are worrying signs of a bubble in several big cities: house prices in Shenzhen have risen by 53% in the past year (see article). + + + +China's debt binge: putting of the inevitable + +Supporting a sagging economy with cheap money and tax cuts is sensible. But China also needs to put in place the structural reforms that will make such stimulus both more effective and less destabilising. + +The mañana strategy + +The default of a few of the most hopeless state-owned enterprises, something Mr Li again promised in his speech, would set a useful precedent. It might also nudge banks into lending to profitable businesses instead of firms they expect to be bailed out by government. New homes with few ready buyers in lower-tier cities should be turned into social housing; better that than trying to pump up a broader property bubble to clear unsold stocks. In places where house prices are soaring, the government should summon the courage to introduce a long-discussed property tax to cool speculation. And now would be a good time to recapitalise China’s banks in readiness for a write-down of the latent bad debts on their balance-sheets. + +Yet the Chinese president, Xi Jinping, apparently wishes to avoid even mild turbulence in the economy, at least until he has appointed his own nominees to the Standing Committee of the Politburo, a key decision-making body, in 2017. (Many suspect that reform will remain elusive even after that date.) Mr Xi is scarcely alone among world leaders in setting policy with an eye on the political calendar. But financial markets cannot be relied on to play along with this schedule. At some point, China must deal with its excess debts and industrial overcapacity. By taking bolder steps on reforms now, China would do more to entrench faith in its longer-term economic outlook than stimulus measures ever could. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21694533-leaning-towards-stimulus-rather-reform-chinas-leaders-are-storing-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Europe’s migrant crisis + +A messy but necessary deal + +A European bargain with Turkey is controversial, but offers the best hope of ending migrant chaos + +Mar 12th 2016 | From the print edition + + + +THROUGHOUT the cold war, Turkey was one of Europe’s bastions against Soviet armies. Now it is being turned into Europe’s barrier against the huddled masses of the Middle East. At a summit on March 7th, European leaders and the Turkish prime minister, Ahmet Davutoglu, agreed on the outline of a strikingly ambitious deal. Turkey will take back all the boat-people setting off from its shores to Greece. In return, Europe is promising lots of things: money; the resettlement of many refugees now in Turkey; visa-free travel for Turks; and a revival of negotiations for Turkey to join the European Union. + +Every element of the arrangement is politically, legally or morally problematic. To make matters worse, the behaviour of the Turkish president, Recep Tayyip Erdogan, is increasingly autocratic: the weekend before striking the accord with the EU, his government took over a prominent opposition newspaper. But Europe is doing the right thing. The deal’s principles are sound (and have, indeed, been advocated by this newspaper): it would control chaotic mass-migration while preserving a generous European asylum system, and enlist Turkey as a gatekeeper by binding it more closely to Europe. It offers the best prospect of ending the uncontrolled influx that has been feeding anti-immigrant populism and undermining EU integration. And it provides a way for Europe to seek Mr Erdogan’s co-operation without flinching from criticising him. + +Deal with Erdogan + +Most of the 1.2m migrants who arrived in the EU last year came via Turkey. Donald Tusk, president of the European Council, had been negotiating a deal whereby asylum-seekers would be sifted on arrival in “hotspots” in Greece and Italy, and those rejected would be sent back to Turkey. The new scheme, championed by the German chancellor, Angela Merkel, is a more ambitious arrangement—all boat-people would be sent back to Turkey and processed there. This would avoid turning Greece into a refugee camp, offer a stronger disincentive to illegal migration and ensure that Europe grants protection to the most deserving, not those most able to pay people-smugglers. + +But lawyers and UN agencies are already questioning the legality of mass deportation, which would require Europe to declare Turkey a “safe” country for asylum-seekers. For all its generosity to Syrians, Turkey formally applies the 1951 convention on refugees only to those fleeing war or persecution in Europe. Unless Turkey can bring its asylum system up to international norms, the EU may have to fall back on Mr Tusk’s original plan. Either way, Europe will have to be generous to refugees—it has promised to take one Syrian from Turkey for every one that is sent back from Greece—though it still cannot agree how to share them out for resettlement. + +Visa liberalisation will be contentious, too. Turkey is the only EU candidate country not to enjoy visa-free travel already. The biggest obstacle, a framework for Turkey to take back illegal migrants, would be addressed by the new deal. But Turkey has yet to meet many of the EU’s 70-odd preconditions, including the introduction of biometric passports. And while a deal may limit the influx of Syrians, Afghans and others, freer travel would inevitably increase the migration of Turks into the EU. + + + +INTERACTIVE: A guide to Europe’s migrant crisis, in numbers + +Hardest of all will be any discussion of Turkey’s accession to the EU. Not even Turkey’s closest friends would claim that it meets the democratic standards required to begin EU negotiations, let alone gain membership. Mr Erdogan would dislike the constraints and scrutiny that membership would bring. So Europe should call his bluff by opening the two accession chapters that Mr Erdogan least wants to discuss—chapters 23 and 24, on justice and the rule of law. It should also press Turkey to do more to support talks on the reunification of Cyprus. + +Ultimately, Europeans must come to terms with two realities. First, they cannot change geography: they need Turkey because it stands between Europe and much of the Eurasian landmass. Second, they cannot seal their borders entirely: the only alternative to chaos is a fair and orderly migration system, which would most benefit Europe—and those fleeing war. This week’s proposed deal is messy, but it is Europe’s best option. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21694536-european-bargain-turkey-controversial-offers-best-hope-ending-migrant/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +Donald Trump, trachoma, trust companies, China, the Maldives, English law firms, Gaelic games: Letters to the editor + + + + + +Articles Sections Next + +Donald Trump, trachoma, trust companies, China, the Maldives, English law firms, Gaelic games + +Letters to the editor + +Mar 12th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +The Trump revolution + +You used so much ink trying to convince us that Donald Trump is not fit for office (“Time to fire him”, February 27th). Do you think the type of person who reads your erudite publication would ever consider voting for him? Not likely. The people who will vote for The Donald are the disaffected bitter-clingers whom the last candidate you passionately begged us to vote for—Barack Obama—disparaged in his campaign. Those same disaffected people haven’t been doing well over the past eight years, and in case you haven’t noticed, they are mad as hell. + +Government isn’t working for us. There are few good jobs, we’ve been stuck with a joke of a health-care system, the few rights we still enjoy are under siege and the future looks dim for our children. We are powerless to foment a revolution while working two part-time jobs to make ends meet, so all we can do is register a protest against the Dickensian nightmare that the elites have created for us by voting. Apparently, nobody listened (Republican or Democrat) to what we were trying to say in 2012. Come November, you’ll be hearing from us again, louder and clearer. + +MARK KRASCHEL + +Portland, Oregon + +I say we look to Plato, as quoted by Cicero in “On Duties”: keep the good of the people clearly in view and care for the welfare of the whole body politic and not the interests of one party. Mr Trump may not fit your image of what an American president should be, but the American people crave a leader who has the interests of the body politic at heart, not the interests of a party. But, you may wonder, are we another Weimar Republic looking to fill a vacuum of leadership and greatness? + +PETER ROBERTS + +Seattle + +Although it may have been true in the past to refer to the Republicans as “one of the world’s great political parties”, this is no longer the case. This is a party which has promoted some of Mr Trump’s more noxious ideas, just in coded language. It has abandoned its responsibility to govern. The prospect of a President Trump is indeed worrying, but after years of nativism and cynically pandering to the baser instincts of the masses, Mr Trump is the candidate the Republican Party deserves. + +COLE COUTURE + +New York + + + +Your cover of Donald Trump as Uncle Sam pins very nicely to my dart board. Thank you. + +DAVE LEWIS + +Healdsburg, California + +The debates and the election have turned into a reality TV show, perfect for a media feeding-frenzy. No wonder Mr Trump is winning. He understands how to entice the media and their fascination with the Kardashians and their ilk. I’m not worried. + +When President Trump takes on Xi Jinping over the South China Sea, what chance will President Xi have? What does he know of celebrity TV? We’ll destroy them in the ratings. + +DENNIS MERRITT + +Rockledge, Florida + +“From the Tower to the White House” (February 20th) stated that Mr Trump was “sensible enough to get out of casinos in Atlantic City”. With each successive bankruptcy of his casino company (four in total), his ownership interest was diluted down to practically nothing. I’m not sure that this qualifies as a sensible exit, although Mr Trump continues to portray his serial bankruptcies as a brilliant strategy. + +RICHARD COHEN + +Margate, New Jersey + + + +An end in sight + +* Thank you so much for your article highlighting the Global Trachoma Mapping Project (“Now is the time to say ‘goodbye’”, February 27th). The agony of the trachoma infection (dubbed “blinking hell” at Sightsavers) is profound and the blindness it causes impacts both individuals and their communities. + + + +Never have I seen such an amazing example of collaboration and determination. Some 24 organisations (NGOs and academics—and notably the International Trachoma Initiative in Atlanta) worked together, along with the World Health Organisation, to make the mapping happen. The Ministries of Health in these 29 countries all provided resources and agreed to standard processes on data management and methodologies. Approximately 2,500 people were involved altogether—a great feat—and it should be a model for disease mapping in the future. The British government provided most of the money but as the project expanded the American government stepped in to help—a brilliant example of coordination between donor nations. + +Programmes are in place to fight the infection and we have at least some of the money needed. + + + +Now we know exactly where the suffering from this disease is, let’s seize the moment and confine trachoma to the history books where it belongs. + + + +DR CAROLINE HARPER + +CEO of Sightsavers + +Melksham, Wiltshire + + + + + +Know thyself + +* You assert that American states “such as South Dakota and Nevada” carry “strong secrecy laws and weak oversight” but fail to provide the substance to back the claim (“The Biggest Loophole of All”, February 20th). Instead you validate the assertion with vague statements derived from Die Zeit, the German newspaper, noting that “Everyone is doing or looking into it.” This is both an intellectual and geographic stretch. + + + +In Nevada, both financial institutions and trust companies exist in a strong, stable jurisdiction and are governed by many state and federal anti-money laundering, anti-terrorism, and bank secrecy reporting requirements. Furthermore, annual on-site examinations are lengthy and thorough. Every Nevada institution must “know their client” before ever putting them on the books. This means that Nevada’s trust companies offer both strong privacy protection for clients and they adhere to effective government oversight—a combination that is clearly attractive to the legitimate global elite, not those of “dubious legality”. + + + +GREGORY CRAWFORD + +President + +Alliance Trust Company of Nevada + +Reno, Nevada + + + + + +What would Tim do? + +* One question I would like to ask Tim Cook in the dispute between Apple and the FBI (“Code to ruin?”, February 27th) is, if the San Bernardino shootings had happened in China and the Chinese government asked you either to unlock the attacker’s iPhone or have your products banned, what would you do? + + + +S. VISWANATHAN + +Bangalore, India + + + + + +The situation in the Maldives + +You suggest that criminal charges against opposition politicians in the Maldives are “overblown” (“Archipelago of ire”, February 20th). In fact, the charge against the former president is very clear: ordering the arrest of a judge for releasing one of his political critics, a crime he has publicly admitted to. Charges against another Islamist politician stem from his call for violence against the police. + +The current president, Abdulla Yameen, is confronted with political opponents with scant regard for the law, yet he personally wants multiparty talks, under foreign mediation, to reconcile the challenges the Maldives faces. This initiative did not feature in your piece, and neither did the views expressed by British members of Parliament who visited recently: that it is the claims of opposition politicians, from prison numbers to the threat from terrorism and more, that are overblown. Our government was voted into office in an election recognised by the international community as free and fair, another detail that is too often overlooked. + +HASSAN SHIFAU + +Deputy high commissioner of the Maldives + +London + + + + + +English commercial law + +You repeated the canard that commercial law firms benefit from the courts (“Law in a time of austerity”, February 27th). A more nuanced point might be that English law firms have benefited from the long cultural tradition of English law which has allowed them to build immensely successful international practices, but again the point is too simplistic. The partners in the great English commercial law firms started investing their own money in foreign offices and banging the international drum for the use of English law 40 years ago. Without that personal investment, English law, and its courts, judges, barristers and English commercial law firms, would have remained domestic and parochial, irrespective of its long heritage. With that investment, the international practice of law is one of the few British business sectors where we can claim to be a world leader, with commercial firms generating 1% of Britain’s GDP and a trade surplus of over £3 billion ($4.3 billion). + +ALASDAIR DOUGLAS + +Chair + +City of the London Law Society + +* You said that “Bodies such as the Law Society and the Bar Council often act as much to protect their members’ interests as to regulate them.” The Bar Council delegated responsibility for regulating barristers to the independent Bar Standards Board in 2006. As the representative body for barristers in England and Wales the Bar Council acts in its members’ interests as well as in the public interest. For example: in relation to challenging proposals to restrict judicial review; supporting the removal of the criminal courts charge; and safeguarding access to justice especially for the poorest and most vulnerable in society. + + + +The Bar thrives on competition. Through the lower overhead structure of chambers, compared with the traditional law firm model, barristers’ services are increasingly reaching consumers including through Direct Access and through the provision of unbundled services which offer value for money. These actions are not driven by self-interest but by our mission to ensure that justice is available for all. + + + +CHANTAL-AIMEE DOERRIES QC + +Chairman of the Bar + +London + + + + + +The puck of the Irish + +The photo you used of Xi Jinping kicking a football, in a story about China’s spending on foreign players, was taken in Dublin’s Croke Park, the headquarters of the Gaelic Athletic Association (“Patriotic goal”, February 27th). The GAA is the governing body for Ireland’s popular indigenous sports of hurling, handball and Gaelic football. Founded in 1884, it has helped heal divisions and nurture community spirit. It would be difficult to overstate the role it continues to play in Irish life. Today, Gaelic games are played throughout the world and GAA clubs support the Irish diaspora. If Mr Xi needs a reminder of the benefits of this spirit he should visit his own local club, Beijing GAA. + +RONAN MURPHY + +Washington, DC + +Mr Xi may dream that China could one day lift the World Cup, but with only 33 teams (31 county teams, and teams from London and New York), it might be more realistic for China to try and win the coveted All-Ireland Gaelic football title. Indeed, one player with Chinese links, Jason Sherlock, who has an Irish mother and a father from Hong Kong, succeeded in winning the title with Dublin in 1995. + +STEPHEN O’KANE + +Swatragh, Derry + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21694492-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +African agriculture: A green evolution + + + + + +Articles Sections Next + +African agriculture + +A green evolution + +The farms of Africa are prospering at last thanks to persistence, technology and decent government + +Mar 12th 2016 | GITEGA | From the print edition + + + +NOT so long ago Jean Pierre Nzabahimana planted his fields on a hillside in western Rwanda by scattering seed held back from the last harvest. The seedlings grew up in clumps: Mr Nzabahimana, a lean, muscular man, uses his hands to convey a vaguely bushy shape. Harvesting them was not too difficult, since they did not produce much. + +This year the field nearest to his house has been cultivated with military precision. In February he harvested a good crop of maize (corn, to Americans) from plants that grew in disciplined lines, separated by precise distances which Mr Nzabahimana can recite. He then planted climbing beans in the same field. On this and on four other fields that add up to about half a hectare (one and a quarter acres) Mr Nzabahimana now grows enough to enable him to afford meat twice a month. He owns a cow and has about 180,000 Rwandan francs ($230) in the bank. Although he remains poor by any measure, he has entered the class of poor dreamers. Perhaps he will build a shop in the village, he says. Hopefully one of his four children will become a driver or a mechanic. + +According to the UN Food and Agriculture Organisation, Rwanda’s farmers produced 792,000 tonnes of grain in 2014—more than three times as much as in 2000. Production of maize, a vital crop in east Africa, jumped sevenfold. Agricultural statistics can be dicey, African ones especially so. But Rwanda’s plunging poverty rate makes these plausible, and so does the view from Gitega. Another farmer, Dative Mukandayisenga, says most of her neighbours are getting much more from their land. Perhaps only one in five persists with the old, scattershot “broadcast” sowing—and most of the holdouts are old people. + +Rwanda is exceptional. But in this respect it is not all that exceptional. Cereal production tripled in Ethiopia between 2000 and 2014, although a severe drought associated with the current El Niño made for a poor harvest last year. The value of crops grown in Cameroon, Ghana and Zambia has risen by at least 50% in the past decade; Kenya has done almost as well. + +Millions of African farmers like Mr Nzabahimana have become more secure and better-fed as a result of better-managed, better-fertilised crops grown from hybrid seeds. They are demonstrating that small farmers can benefit from improved techniques. Despite some big, much-publicised land sales to foreign investors, almost two-thirds of African farms are less than a hectare in their extent, so this is good news. Progress need not mean turfing millions of smallholders off the land, as some had feared—though by making them richer it may yet give them and their children the means to move, should they wish. + +For the time being, though, more than half of the adult workers south of the Sahara are employed in agriculture; in Rwanda, about four-fifths are. With so many farmers and not much heavy industry, boosting agricultural productivity is among the best ways of raising living standards across the continent. And there is a long way to go. Sub-Saharan Africa’s farms remain far less productive than Latin American and Asian ones. The continent as a whole exports less farm produce than Thailand. + +The revolution will not be broadcast + +Since 1961 the total value of all agricultural production in Africa has risen fourfold. This is almost exactly the improvement seen in India, which sounds encouraging; after all, India had a “green revolution” during that time. But whereas Indian farmers got far higher grain yields per hectare, in Africa much of the new production just came from new land. In the early 1960s sub-Saharan Africa had 1.5m square kilometres given over to arable farming; now it uses 800,000 square kilometres more. + +Another thing African farming had more of was people. Even today, when population growth has slowed in rural Asia and Latin America, in rural Africa it is still 2%. More people meant more workers, which can mean more yield from a farm in absolute terms. But it also meant more mouths to feed. Africa’s population grew more steeply than India’s, and as a result production per person fell in much of the continent during the late 20th century. + +The explanations for Africa’s difficulties begin with geology. Much African bedrock is ancient, dating back to before the continent’s time at the heart of a huge land mass known as Gondwanaland. For hundreds of millions of years Africa has seen little of the tectonic activity that provides fresh rock for the wind and rain to grind into fertile soils. There is some naturally fertile land in the south and around the East African Rift, which runs through Rwanda. But much of the interior is barely worth farming (see map). + + + +Only about 4% of arable land south of the Sahara is irrigated, so local weather patterns determine what can be grown. Those patterns vary a lot from time to time and place to place. Variations in time make farmers more inclined to stick with hardy but low-yielding varieties of crop. Variations in space mean that crops and diets differ a lot across the continent. In Rwanda, white maize and beans are the staple foods. In other places millet, teff, sorghum, cassava or sweet potatoes are more important. Asia’s green revolution was a comparatively simple matter, says Donald Larson of the World Bank, because Asia has only two crucial crops: rice and wheat. Provide high-yield varieties of both and much of the technical work is done. African agriculture is so heterogeneous that no leap forward in the farming of a single crop could transform it. The continent needs a dozen green revolutions. + +Humans have added to these handicaps in all sorts of ways. Beginning in the 1960s, Africa’s newly independent nations—often, thanks to colonial borders, small and landlocked—taxed farm produce heavily to finance industrial ventures which often failed. They did little to improve the colonial era’s scant and inappropriate infrastructure, which tended to concentrate on railways from mines to ports. Africa still has a thin road network; in rural areas the roads are often primitive and impassable after a heavy shower. + +Governments frequently imposed price controls, reducing what farmers could earn. And in some places, such as Ethiopia, farmers were subjected to oppressive command-and-control regimes that sapped their will to work. “We lost two and a half to three decades,” says Ousmane Badiane of the International Food Policy Research Institute (IFPRI). + +The sorry history of fertiliser subsidies shows the cost of official ineptitude. Worldwide, about 124kg of artificial fertiliser is used per hectare of farmland per year. Many would argue that this is too high. But the 15kg per hectare in sub-Saharan Africa is definitely too low (see chart). Some countries, like Ghana and Malawi, have thrown money at fertiliser subsidies in flush years only to cut back when budgets tighten. Subsidised fertiliser intended for smallholders has often been resold at market rates with middlemen pocketing the profit. Nigeria’s system became so corrupt that in 2012 the agriculture minister, Akinwumi Adesina, estimated that as little as 11% of subsidised fertiliser was actually getting to small farmers at the subsidised price. + + + +Like the clumps of earth that African farmers whack with their hand hoes, these natural and human obstacles are stubborn and hard to break down. But bit by bit they can be worn away. African agriculture is improving not because of any single scientific or political breakthrough, but because the things that have retarded productivity for decades, both on the farm and off, are being assailed from many sides. + +For farmers, perhaps the most potent symbol of change is hybrid seed, often dyed a bright colour and usually burdened with an unlovely name, such as SC719. Joe DeVries of the Alliance for a Green Revolution in Africa, based in Kenya, says that by raising the prospect of higher yields, these seeds persuade farmers to spend money and time on fertiliser, weeding and pesticides. Today AGRA collaborates with more than 100 seed companies, representing about a third of the market. They produced about 125,000 tonnes of improved seed last year—up from 26,000 tonnes in 2010. + +Many of these seeds are being developed in Africa for Africans. N’Tji Coulibaly of the Institut d’Economie Rurale in Mali has developed six hybrid maize varieties. Because these tolerate drought well, they can be planted north and east of the capital, Bamako, in fields where sorghum is now the dominant crop. As though in retaliation, another nearby team has created a variety of sorghum that yields about 40% more than the indigenous kind even without additional fertiliser. + +Governments and charities are rushing to teach farmers how to plant the new seeds. In Rwanda, One Acre Fund, a charity, provides its clients seeds, fertiliser, know-how and, crucially, credit. To upgrade to hybrids means changing to a system where new seed has to be bought every year, because the plants that grow from hybrid seed do not produce seed of the same sort. And small farmers are usually starved of credit—one large survey for the World Bank found that only 1% of Nigerian farmers borrowed to buy fertiliser. + +Last year One Acre Fund’s large network of instructors, farmers themselves, taught some 305,000 more east African smallholders skills such as carefully spacing seeds so as to maximise productivity and measuring fertiliser using bottle caps. Mr Nzabahimana is a client, as are about a third of the farmers thereabouts. In parts of Kenya where One Acre Fund has been operating for at least four years, even the farmers who are not clients get about 10% more maize per hectare than similar farmers in areas where the charity recently arrived. Know-how spreads. + +Too few trucks, too many tariffs + +Untouched, if marginal, land used to be plentiful in Africa. Today it is rare, so farmers must work out how to grow more on each plot. And even countries with plenty of land have little to spare near their growing cities; given the difficulties of moving fresh produce over long distances that makes intensification near the big markets particularly attractive. These urban markets can also change what farmers grow. Farmers close to Addis Ababa, Ethiopia’s capital, are switching from red teff to fancier white teff because that is what city folk increasingly want. White teff is harder to grow, so the farmers are using more fertiliser and improved seed. Elsewhere, urban hunger for meat and eggs is persuading more farmers to keep cows and chickens. + +Poor roads are not the only reason it is hard to move farm produce long distances. In 2013 the UN estimated that African businesses that exported goods to other African countries faced average tariffs of 8.7%, compared with 2.5% for those that exported goods beyond Africa. But the tariffs and barriers are gradually coming down. Maximo Torero, an analyst at IFPRI, points out that 31% of the food calories exported from African countries went to other African countries in the mid-2000s—a low proportion, but an improvement on the 14% rate ten years earlier. The El Niño droughts of the last few months in Ethiopia and southern Africa have not yet led to widespread bans on food exports. + +Reform has been slower in another area. African farmers often have few or no rights over the land they work. Insecure farmers tend not to invest much, either because they do not see the point or because they cannot get credit. These problems can be particularly bad for women. One study in Ghana found that women farmers were less likely to let their land lie fallow (a simple way of increasing its fertility). They seem to have feared losing it if they did not plant it continuously. + +Well-intentioned attempts to entitle farmers have sometimes made things worse for women: as customary rights are replaced with legal ones, men tend to assert control. Still, things are improving in a few countries. In Ethiopia, where land is formally owned by the state, farmers’ rights to cultivate it and rent it out have been clarified. That reform, combined with a change to family law, seems to have increased women’s control. The Rwandan government has changed inheritance law to give women more rights. + +Few of these benign changes would have taken place without a rash of superior government. Sub-Saharan Africa still has some awful regimes in Equatorial Guinea and Zimbabwe (where agricultural productivity is dropping). It has some failed states such as the Central African Republic, South Sudan and Somalia. Yet some terrible rulers have gone and border wars are rare. + + + +In part as a result, the region is more placid than it was. The Centre for Systemic Peace, an American think-tank, tallies civil and ethnic conflicts, assigning them a seriousness score of one to ten. Between 1998 and 2014 the total conflict score in sub-Saharan Africa fell from 55 to 30. More peaceful land is more productive. So is land where the people are healthier. The World Health Organisation estimates that 395,000 Africans died from malaria in 2015, compared with 764,000 in 2000. New HIV infections are down by about two-fifths in the same period. + +There is still much to do. When Mr Nzabahimana wants to sell food, he simply hawks it around the village or hires a woman to carry it on her head to Rubengera, a tiny market town a few miles away. He does not know in advance what price his crops will fetch. As Africa’s fields grow more productive, such thin, fragmented markets are becoming a bigger problem. Too few agricultural buyers reach villages, and the ones that make it can often dictate prices. “The traders have all the information—they pay the farmers what they want,” says Mr Adesina, who is now head of the African Development Bank. + +Technology can help, to an extent: in Kenya, where mobile phones are ubiquitous, farmers can subscribe to services that give them price data. But rural roads will have to improve, as well as rural phones, if smallholders are to obtain better prices. So will the ability to store crops somewhere other than in their houses, where the weevils get them. Processing foods near farms, something Mr Adesina is keen on, would help reduce such waste and provide decent paying jobs. + +A lack of clouds on the horizon + +Another boost would come from better livestock. Far more of Africa is grazed than is planted, and demand for animal products is rising. Yet there are few meaty analogues to hybrid seeds. African cows are increasingly crossbred with European breeds to create tough animals that produce lots of milk; fodder yields are improving, just like yields of other crops. But animal vaccines remain expensive and are often unavailable, since they need to be kept cold. A pastoral revolution remains in the future. + + + +Mr Adesina likes to say that African agriculture is not a way of life or a development activity; it is a business, and it is as a business that it will grow, through investment and access to markets. That said, it will remain a risky business, one in which a vital input, rain, cannot be controlled—as millions of farmers are regretting at the moment. + +One way to face that risk is to encourage irrigation, especially water-hoarding drip-irrigation. Another is to offer some sort of crop insurance that pays out in particularly bad seasons, as Ethiopia is trying to do. Both are good options. How much they can do in the face of increasing climate change, which is likely to render the dry parts of the continent drier still, and which will do some of its damage just by making peak temperatures even hotter, remains to be seen. Some crops may become impossible to grow in the places where they are grown today. + +As with hoes and hard soils, there are no easy breakthroughs to be had. But for a long time Mr Adesina’s idea of African agriculture as a business to build up would have seemed alien inside the continent and fantastical beyond it. That it no longer does is as strong a basis for hope as any. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21694521-farms-africa-are-prospering-last-thanks-persistence-technology-and-decent/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Varieties of inequality: The great divergence + +Justice in Louisiana: The ruin of many a poor boy + +Polling flops: Mich-fire + +GOP souvenir edition: Heard on the trail + +The primary race: Trump done well + +Becoming an astronaut: The mice in their million hordes + +Lexington: Not so special + + + + + +Articles Sections Next + +Varieties of inequality + +The great divergence + +America’s most successful cities, states and firms are leaving the rest behind + +Mar 12th 2016 | DURHAM, NORTH CAROLINA | From the print edition + + + +IN THE Nuvotronics factory in Durham, North Carolina, small is beautiful. The firm, founded in 2008, uses a process resembling 3D printing to make miniaturised radio chips for jets and satellites. Typically, such chips are the size of a chocolate bar; Nuvotronics’s widgets are smaller than a breath-mint. Such innovation is lucrative; every kilogram saved makes a satellite $15,000 cheaper to launch. Nuvotronics is part of a cluster of high-tech firms that have increased Durham’s GDP per person by 28% since 2001. By the same measure, North Carolina as a whole grew by just 3% over the same period. Durham’s success reflects an emerging trend: high-flying cities, and the successful firms they contain, are detaching from the rest of the economy. + +Cities have long been the most productive places to do business, because they bring firms, customers and workers closer together. A banker in New York is only a taxi ride away from her clients; a new restaurant there immediately has 8.4m potential customers on its doorstep. Where clever people congregate, innovation results. + +For the most successful cities, these advantages seem to be getting bigger. In 2001 the richest 50 cities and their surroundings produced 27% more per head than America as a whole. Today’s richest cities make 34% more. Measured by total GDP, the decoupling is greater still, because prosperous cities are sucking in disproportionate numbers of urbanising Americans. Between 2010 and 2014 America’s population grew by 3.1%; its cities, by 3.7%. But the 50 richest cities swelled by 9.2%. + +Durham, whose population grew by about 7% in that period, provides some hints as to what makes a place flourish. The city thrives on its proximity to three leading universities—Duke, North Carolina State and the University of North Carolina. Far-sighted planning in 1959 led Durham and its close neighbours, Raleigh and Chapel Hill, to establish a research park between the three cities. The idea was to coax the universities’ boffins into business ventures. It worked; today 50,000 people work there. + +Unlike much of America, the area has not shied away from infrastructure investment. Raleigh-Durham airport has been renovated with a helping hand from local businesses. The roads are well maintained, if a little crowded. Bill Bell, the city’s mayor, hopes to develop a light-rail system for the city; in 2011 voters approved a sales-tax increase to help pay for it. + +Investment has also revitalised a deprived downtown area. For most of its history, Durham made tobacco and textiles. When those industries went into decline in the latter half of the 20th century, they left a vacuum in the city. But over the past decade the gap has been plugged. The tower of the old American Tobacco factory, emblazoned with the “Lucky Strike” logo, still stands—but the factory is now a “campus” featuring bars, restaurants and the kind of tech firms where staff ride around on scooters. The city’s performing-arts centre, across the road, is one of the four best-attended theatres in the country. Mr Bell says public-private partnerships account for much of the investment. + + + +Durham is unusual for its failure to drag up state-wide incomes. The state’s labour-force participation rate, at 61%, is grim even by American standards. Elsewhere, the presence—or absence—of rich cities determines economic fortunes. States with one of today’s richest 50 cities have grown 13% in per-person terms since 2001. The 18 (mostly southern and south-western) states without such a city saw growth of just 7%. As a result, inequality between states has risen for most of the past decade-and-a-half (see chart). + +Rich cities typically attract successful, growing firms. Nuvotronics is young, employing fewer than 100 people, and did not move to Durham until 2013. But the city also plays host to well-established firms like Cree, which makes LED lighting, and giants like Quintiles, a consultancy which works on pharmaceutical trials. Attracting the right companies matters because America’s firms, too, are diverging. In the past two decades returns to investment at the most profitable 10% have more than doubled by one measure. Returns for middling performers have increased only a little (see chart). A recent paper by Jason Furman of the White House and Peter Orszag, a former budget chief, says this could be because the best firms are gaining market power (think of Apple’s dominance of the smartphone market). A report by McKinsey attributes the divergence to the varying pace of digitisation across industries. Highly digitised industries such as technology, media and professional services—all common in successful cities—have benefited from the juiciest increases in margins. Digital laggards, such as health care and offline retailing, are doing less well. + + + +This bears directly on the inequality which matters most: that in wages. Two recent studies suggest that most of the increase in inequality over the past four decades is explained by wage gaps between firms rather than within them. A secretary will probably earn more working for Goldman Sachs than working for the local plumber; it is more lucrative to be a programmer at Facebook than in a corporate back-office. This means that bringing highly skilled workers to an area is not enough to guarantee high wages; the right firms must come to town, too. + +The end of mediocrity + +In 2013 Tyler Cowen, an economist at George Mason University, predicted in his book “Average is Over” that the fortunes of both people and places would become more polarised. Ambitious and talented workers, he argued, would want to work in a relatively small number of cities and regions. These vibrant clusters would then benefit from increasing returns to scale, cementing their advantages. Mr Cowen’s predictions are already coming true. While successful cities grow, almost 60% of rural counties are losing population. With America’s shale and manufacturing industries suffering, the pull of successful cities is becoming greater still. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21694356-inequality-between-states-has-risen-most-past-15-years-americas-most-successful-cities/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Justice in Louisiana + +The ruin of many a poor boy + +A crisis in Louisiana’s courts is emblematic of broader pathologies in both the state and American justice + +Mar 12th 2016 | NEW ORLEANS | From the print edition + +Wear that ball and chain + +OF THE shackled, jumpsuited defendants making their first appearance in the New Orleans criminal court, the first to rise in the dock was relatively fortunate. Up for possession of drugs, he was deemed indigent, and the city’s public defender was appointed to represent him. After a brisk back-and-forth of previous convictions and mitigating circumstances (a baby on the way, a job), bail was set at $5,000. The next man’s predicament was grimmer. Barely speaking English, he too was deemed indigent; but because his alleged offence—sexual battery—was more serious, the public defender reluctantly declined to represent him. Which means that, for the time being, no one will. + +He is not alone. At the last count, 52 people were stuck in jail in New Orleans without representation; a further 27 lacked counsel but are out on bail. The problem is that, while these defendants can’t afford lawyers, the lawyers say that, after drastic budget cuts, a hiring freeze and a spate of resignations, they can’t afford to act for the defendants. In 2010 the public defender’s office of Orleans Parish (coterminous with the city) employed 78 lawyers; since its budget fell by a third, it has 42, for an annual caseload of 22,000. In January the office began to refuse new clients accused of serious crimes, such as armed robbery and murder (capital cases are an exception). The rationale is that these graver accusations require resources the office cannot provide. In a city where 85% of felony defendants are considered indigent, the numbers are rising fast. + +“It’s terrible,” acknowledges Derwyn Bunton, the parish’s chief public defender. Mr Bunton grew up in poverty; several of his relatives have been through the courts. Like most of the clients his team serves, he is black. Yet he decided he was “not going to be complicit in the injustice” of providing inadequate defence. The tipping-point was the story of a man arrested for a multiple shooting in a city park. The man hired a private lawyer, who hired an investigator, who unearthed videotape proving he was in Houston when the crime was committed. Mr Bunton was “not sure we would have made it” before the tape was erased. The issue at stake, he says, is “Do poor people deserve equal justice? Do poor people deserve justice at all?” + +It isn’t only New Orleans. Jay Dixon, the state public defender, says offices in 13 districts have imposed restrictions on their services; the one in Plaquemines Parish temporarily closed altogether. G. Paul Marx, a veteran defender whose office covers Acadia, Lafayette and Vermilion Parishes, says his payroll has declined from 62 lawyers in early December to 16 now. He estimates the number of defendants without representation at a whopping 2,300, rising by 300-400 a month (most are out on bail). Mr Marx calls the situation a “man-made disaster”. The cause of this widespread denial of basic rights—the sort of derogation which, if it happened abroad, would be denounced by American diplomats—is the volatile and eccentric way those rights are subsidised. + +Louisiana is broke. Its legislature and new governor, John Bel Edwards, are struggling to repair its ruined finances, a mess many attribute to the doomed presidential ambitions and concomitant tax-cutting of Mr Edwards’s predecessor, Bobby Jindal. Like that for other essential services, state funding for public defenders is set to be severely squeezed. That will exacerbate the malaise, but is not its main cause, since roughly two-thirds of their income comes from a different source: punitive court fees and fines, including those for traffic offences. For various reasons—revised police priorities, pre-trial diversion programmes—in some parishes, such as Orleans, this revenue has crashed, though it has held up in places with lucrative stretches of highway. The state’s contribution was already too measly to compensate. + +The trouble with these funding arrangements is not just that they are unreliable. They are also ridden with conflicts of interest, even or especially when the cash is flowing. Not just public defenders but Louisiana’s sheriffs and prosecutors, and the courts themselves, subsist partly on fees, fines and bonds imposed largely at judges’ discretion, mostly on defendants who plead or are found guilty. Thus, in a perverse reversal of the usual formula, public defenders routinely work on a “No lose, no fee” basis. Hurrying through cases benefits everyone. The risks were highlighted by a still-rumbling scandal over the judicial expense fund of the Orleans criminal court, meant to cover overheads using the court’s share of the revenues. An auditor’s report in 2012 found judges had spent hundreds of thousands of dollars from the fund on medical bills and insurance. The district attorney who blew the whistle recused himself from investigating, since he had enjoyed similar perks when he was on the bench. + +The system bears an unfortunate resemblance to an extortion racket. Payments are often made on a schedule; people who miss them are liable to be locked up, alternatives known as “pay or stay”. Ashton Brown, for example, owed $500 arising from a theft conviction in 2013; he was also liable for probation-service fees. Arrested last year for possessing drugs, he was detained for an extra two weeks because of the old debt. The constitutional requirement to assess his ability to pay was ignored. Eventually his friends and grandmother came up with $100 to get him out. “It’s crazy,” says Mr Brown, who has yet to clear the debt (his record makes it hard to find work). He is among the plaintiffs in a suit filed by Equal Justice Under Law, a pressure group, alleging that Orleans Parish maintains an “unjust modern debtors’ prison” and that its officials “fund themselves off the backs of New Orleans’s poorest.” A court, says EJUL’s Alec Karakatsanis, “is supposed to be where justice is done, not where revenues are generated.” + +Habeas corpse + +In its criminal-justice excesses, as in other things, Louisiana is an outlier. Its incarceration and murder rates are the highest in America. In New Orleans, where malpractice has discredited both the police and prisons, both the violent-crime and imprisonment rates are double the national average. Yet these problems, while extreme, are also typical. Although no other state relies predominantly on court revenue to fund public defenders, many are overburdened; in the past, lawyers in Florida and Missouri have turned away clients, too. Unethical punishments are not uncommon: a judge in Alabama was recently suspended for ordering defendants to donate blood in lieu of money. The milking of poor communities by police and the courts, and enforcement of debts with jail time, were a factor in the unrest in Ferguson. + +The underlying causes are typical, too. Chief among them is an old imbalance between, on the one hand, a fearsome appetite for prosecuting and jailing people, and, on the other, a reluctance to foot the bill. At least, to foot it up-front: shortchanging public defence, like some other seeming economies, is actually expensive, leading as it does to miscarriages of justice (Louisiana’s exoneration rate is the country’s second highest), longer sentences and so a higher, pricier prison population. Underneath that, says Jim Craig of the Roderick & Solange MacArthur Justice Centre in New Orleans, lies an “unAmerican belief that people who are charged with crime are a lower breed of human beings.” In the South, that view has a racial tinge. Mr Bunton ascribes the state’s stinginess in part to a hunch that indigent defence is “only a right that poor people of colour need.” + +For now, in Louisiana, some of the slack is being taken up by private lawyers, whom some judges are ordering to defend cases pro bono. This fix has two obvious drawbacks: many of the lawyers don’t like it; and many are ill-qualified. Jack Bailey, who runs a personal-injury firm in Caddo Parish, says five felony cases were foisted on it last year, even though his three colleagues have no expertise in criminal law. He worries not only about the “expropriation” of his property in the form of their time, but also—after he exonerated two defendants—that innocent people will be failed by less assiduous lawyers, who may be inclined to prioritise paying customers. “Nobody cares about this”, Mr Bailey laments, “until it’s them.” It is absurd, he thinks, that this constitutional duty “should be inflicted on a small number of people who happen to have law licences.” + +“If the right to counsel means anything,” says Marjorie Esman of the ACLU, a lobby group, “it means the right to a lawyer who knows what they’re doing.” The ACLU is suing Mr Bunton and Mr Dixon in a federal court, with the aim of having the situation in Orleans Parish declared unconstitutional. That manoeuvre suggests one possible outcome to this crisis, since such a ruling could eventually lead to remedial action by the state or federal government. Another is that a court finds Mr Bunton in contempt (some judges have threatened as much); the unserved defendants get lawyers, albeit in name only; and Mr Bunton winds up in jail himself. + +There is a third possibility. Without lawyers, the cases of those languishing in prison will not be able to proceed. Sooner or later someone will file motions for their release; judges may have little choice but to comply. Legions of alleged killers and rapists walking free might just be embarrassing enough to galvanise reform. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21694525-crisis-louisianas-courts-emblematic-broader-pathologies-both-state-and/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Polling flops + +Mich-fire + +How pollsters missed Bernie Sanders’s surge in Michigan + +Mar 12th 2016 | From the print edition + + + +FOR Hillary Clinton, losing Michigan’s Democratic primary to Bernie Sanders was a nuisance. For pollsters, in contrast, the election was Armageddon. Eight different firms had surveyed the state in the previous month, and every one gave Mrs Clinton a double-digit lead. According FiveThirtyEight, a data-journalism website that had put Mrs Clinton’s chances of victory at greater than 99%, the 23-percentage-point gap between her average lead in the polls and the final result was the biggest error since Gary Hart’s victory in the 1984 New Hampshire Democratic primary. + +What went wrong? To produce a misfire of this magnitude, just about everything. Pollsters both underestimated how favourable the electorate would be to Mr Sanders—according to the exit poll, it was younger, more male and included more independents than expected—and how big a share of each group he would capture. He lost black voters by merely a 2.4-to-one margin, half as big as his shortfalls among African-Americans in the South. And he limited his deficit among voters who earn more than $100,000 to three percentage points (it was 36 in Virginia). + +Projecting the composition of the Michigan electorate was always going to be tough, since it was the first state in the rustbelt to vote this year, and it has not had a competitive Democratic primary since 1992. No live-interview surveys were conducted after a TV debate, preventing any measurement of its impact. Unseasonably warm weather could have boosted turnout and increased the share of less-reliable, Sanders-loving young voters. And complacent supporters of Mrs Clinton, expecting an easy victory, may have switched sides to meddle with their general-election opponents instead: 7% of voters in the Republican primary were self-identified Democrats. Now that the pollsters—who had previously performed fairly well this year by volatile primary standards (see chart), and did get Michigan’s Republican vote spot-on—have some egg on their faces, they are likely to pay extra attention to these factors before the upcoming votes in nearby Illinois and Ohio. + +On the other hand, some red flags could have been spotted in advance. One-third of the polling average published by RealClearPolitics, and one-quarter of FiveThirtyEight’s, came from automated, fixed-line-phone surveys conducted by Mitchell, a Michigan firm. The sample’s demographic sub-groups were re-weighted to match targets provided by Mark Grebner, a consultant whose main business is selling voter lists in local elections. Mr Grebner foresaw an electorate resembling a retirement community, with 88% of voters aged 40 or older and 76% at least 50. Since elderly Democrats adore Mrs Clinton, the two Mitchell polls taken shortly before the vote duly estimated her lead at 27 and 37 percentage points, boosting her average. + +However, the assumptions underlying the Mitchell numbers were inconsistent with exit-polls from northern states. Around half of Democratic voters were under 50 in each of Massachusetts, New Hampshire and Vermont. (The final number in the Michigan exit poll was 53%.) Had Mitchell simply copied the New England ratios, its forecast lead for Mrs Clinton’s would have shrunk to the mid-teens, the same range calculated by its competitors like Marist, YouGov and Monmouth. Such figures still would have left Mr Sanders a big underdog, but not a hopeless one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21694564-how-pollsters-missed-bernie-sanderss-surge-michigan-mich-fire/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +GOP souvenir edition + +Heard on the trail + +Mar 12th 2016 | From the print edition + + + +Honest Don + +“I can be more presidential than anybody […] other than the great Abe Lincoln. He was very presidential.” + +Donald Trump prepares himself for office + +Mittens has kittens + +“He gets a free ride to the White House and all we get is a lousy hat.” + +Mitt Romney, the Republican candidate in 2012, hits out at Mr Trump + +Don-inatrix + +“I could have said ‘Mitt, drop to your knees.’ He would have dropped to his knees.” + +Mr Trump responds to being scolded by Mr Romney + +Oh, Christopher + +“No, I wasn’t being held hostage. No, I wasn’t sitting up there thinking, ‘Oh my God, what have I done?’” + +Chris Christie explains his extraordinary glazed expression when on the podium with Mr Trump + +Values voting + +“[Marco Rubio] referred to my hands, if they are small, something else must be small. I guarantee you there is no problem. I guarantee.” + +Mr Trump on the big issues + +Mencken’s heirs + +“You are the most dishonest human beings on Earth.” + +Mr Trump on the reporters who cover his campaign + +Primal colours + +“The scream you hear, the howl that comes from Washington, DC, is utter terror at what we the people are doing together.” + +Ted Cruz wins contests in Kansas, Maine and Idaho + +Bye bye, Ben + +“You know there’s a lot of people who love me, they just won’t vote for me.” + +Ben Carson suspends, and then ends, his campaign + +Electorus! + +“I’m with Harry Potter, we’re not going to the dark side.” + +John Kasich tries to rise above the tone of his party’s primaries + +The withdrawal method + +“[M]y candidacy could lead to the election of Donald Trump or Senator Ted Cruz. That is not a risk I can take in good conscience.” + +Michael Bloomberg decides not to run for president. BloombergView + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21694565-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The primary race + +Trump done well + +The Republican front-runner gets a kick out of the Midwest + +Mar 12th 2016 | WASHINGTON, DC | From the print edition + + + +FOR Donald Trump to get his mitts (which are of a decent size, he claims) on the White House, two things must happen. First, he needs to win the Republican nomination; second, he would need a colossal share of white votes to compensate for the disdain in which he is held by Hispanics and blacks. After the results came in from Mississippi and Michigan, the biggest of four states to hold primary votes on March 8th, both scenarios looked likelier. + +Mr Trump won handsomely, despite having had the worst week of his campaign. He had caused disgust by talking up the size of his penis and alarm by leading a crowd in Orlando in a pledge of allegiance to himself, accompanied by a fascist-style salute. He had been castigated by Mitt Romney, the Republican nominee in 2012, as “a phony, a fraud”. On March 5th he was trounced by Ted Cruz in Kansas and Maine, where he had been predicted to win. It seemed Peak Trump had passed; Michigan and Mississippi showed it has not. + +Mr Trump bagged more than the 59 delegates he needed to stay on track for the nomination there and in Idaho, where he came second to Mr Cruz—even before the results came in from Hawaii, which he also won. And he saw two possible obstacles, Florida and Ohio, where a total of 165 delegates are up for grabs on March 15th, shrivel with the fortunes of their local champions, Marco Rubio and John Kasich. The senator from Florida failed to win any delegate, leaving him with two poxy wins, in Puerto Rico and Minnesota, from 24. Mr Trump has won 15 states; Mr Cruz seven; Mr Kasich, the governor of Ohio, has yet to win any. He says he will quit if he fails to win Ohio; his third-place finish in Michigan, where he campaigned hard, was another blow to that ambition. Winnowing the field to a two-man fight between Mr Trump and Mr Cruz should, in theory, help Mr Cruz. Yet, if Mr Trump wins Florida and Ohio, it may be too late to stop him. + +Mr Trump’s hope of sweeping the white vote in a general election was buoyed by a bigger upset, among the Democrats. Confounding the pollsters—who had given her a big lead in the state—Hillary Clinton lost Michigan to Bernie Sanders. She will probably still win her party’s ticket: she has a lead of more than 200 delegates. Yet the manner of her stumble suggests Mrs Clinton could be just the opponent Mr Trump needs. + +Her dozen primary wins, including in Mississippi, were mainly founded on huge support from African-Americans. Elsewhere, Mrs Clinton has found the going harder, with Mr Sanders’s excoriations of Wall Street and globalisation winning the love of younger and white voters in most states outside the South. Exit polls in Michigan suggested he won 81% of its youngsters. Yet he also cut deep into Mrs Clinton’s lead among blacks, apparently, in a state that has lost thousands of factory jobs in recent decades, with his anti-globalisation message. He had sought to make this the defining difference between himself and Mrs Clinton, whom he has castigated for supporting trade deals. Mr Sanders duly won majorities of voters worried about the economy and who think international trade has cost America jobs. + + + +America’s primary agenda: our interactive 2016 election calendar + +This suggests he could win again in a looming series of Midwestern states, including Illinois, Ohio and Wisconsin, prolonging the Democratic contest. More important, Mrs Clinton’s vulnerability in these states, and on this issue, signals Mr Trump’s likeliest path to the presidency. All Democratic-leaning states, they contain the rump of the party’s unionised, white working-class support; and Mr Trump, who is as protectionist as Mr Sanders, could conceivably storm that bastion. Mrs Clinton needs a better answer to the economic discontentment Mr Sanders and Mr Trump are drawing on. At this late stage in the contest, it will be hard to find without resorting to populism herself. Free traders could be in for a wretched few months. + +Yet Mr Trump gave little thought to that encouragement in the bizarre victory speech he delivered in Florida, at one of his golf clubs. Stung by criticism of his business record, he took the opportunity to showcase some of the many products he has hawked: Trump wine, Trump vodka, Trump water and Trump steaks. “Trump steaks. Where are the steaks? Do we have steak? We have Trump steak,” rambled Mr Trump, sounding like a presenter on The Shopping Channel. Strangely, his meat business seems to have been non-functioning since 2007. So if the beef was his, it was unfit for consumption. For Mr Trump and America, it seems, the steaks have never been higher. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21694566-republican-front-runner-gets-kick-out-midwest-trump-done-well/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Becoming an astronaut + +The mice in their million hordes + +NASA receives a record number of applications + +Mar 12th 2016 | From the print edition + +THE odds of becoming an American astronaut have always been slim. But this year the competition will be cosmically difficult: over 18,300 people have applied to join NASA’s next astronaut class, over double the previous record in 1978 and almost three times the number that applied for the most recent class, in 2012. The would-be starmen and women will jockey for up to 14 spots. Stephanie Schierholz of NASA cites two main reasons for the spike. Collaborations with two commercial groups, SpaceX and Virgin Galactic, have boosted interest, as has the development of the Orion spacecraft, which will (in theory, at least) shuttle humans deeper into the solar system than ever before—perhaps even to Mars. + +To examine what kind of health problems astronauts might develop during a 30-month mission to the red planet, NASA sent American astronaut Scott Kelly to the International Space Station for almost a year; his physical data will now be compared with those of his twin brother Mark, a retired astronaut who stayed at home. Scott returned on March 1st after 340 days in orbit, exceeding the previous NASA record of 215 days but well short of Russian and Soviet records. Astronauts who previously went on long-term missions endured changes to their vision, muscle atrophy and bone loss. On the bright side, NASA reports that while in space Mr Kelly’s excretions burnt up when entering the atmosphere. “Your faeces will not be shooting stars,” NASA’s website taunts readers who will never make it into space. + +As if the promise of flaming poop were not enticement enough, NASA has also become cleverer at broadcasting new opportunities. To coax more women to apply, a group of female NASA astronauts answered questions for Glamour magazine’s website. “A lot of people who are qualified to be astronauts don’t realise it,” Ms Schierholz says, explaining that the only requirements are a bachelor’s degree in science, technology, engineering or maths, three or more years of related work experience or study (or 1,000 hours as a jet pilot, which it is easy to imagine might come in handy) and the capacity to pass a gruelling physical. + +On Reddit, an online discussion forum, Shannon Walker, another astronaut, fielded questions about such requirements, as well as from users wondering how children who aspire to be astronauts can work towards their dream. Do well in school, was the predictable response. When one person inquired how many “parsecs it would take [for a NASA team] to make the Kessel Run”, a hyperspace trading route mentioned in “Star Wars”, Ms Walker replied that “NASA is not going to be using their technology to smuggle spice.” It may not be a requirement but, for long flights in tight quarters, a sense of humour surely helps too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21694567-nasa-receives-record-number-applications-mice-their-million-hordes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Not so special + +The best way to deal with Cuba is to end the embargo and the special privileges for migrants + +Mar 12th 2016 | From the print edition + + + +WERE Angel Rosabal Valdivia not Cuban, he might now be languishing in an immigration cell. In early March the 31-year-old computer technician crossed a bridge over the Rio Grande between Mexico and Texas without a visa and presented himself to border guards. Because Mr Rosabal is Cuban, he was swiftly granted leave to remain. Under a series of laws dating back to the cold war, notably the Cuban Adjustment Act of 1966, most arrivals from his island are welcomed as if they are political refugees, then granted permanent residency after a year and a day. + +Lexington met Mr Rosabal in Miami on March 7th in the offices of Church World Service (CWS), a refugee-assistance ministry. He was one of a throng of new arrivals being processed into the Cuban-Haitian Entrant Programme, under a 1980 law that makes Cubans instantly eligible for public assistance that most immigrants wait years to receive. Fresh-faced, and proudly sporting a watch that he had refused to give to people-smugglers during a ten-month trek to America via Ecuador, Colombia, Panama and Mexico, Mr Rosabal said the journey cost him $3,000. He was robbed twice—Colombia is “so bad”, he shuddered. Drawing on government grants and private fundraising, CWS (run by a coalition of Protestant and Orthodox churches) was about to put him up in a hotel and help him apply for a work permit. Within a week the ministry would fly him to one of six cities where it works with churches and employers to resettle new arrivals, from Lancaster, Pennsylvania to Louisville, Kentucky. After six months, 90% of CWS’s resettled Cuban clients are self-sufficient. Mr Rosabal was told that within a fortnight he can expect to be working, perhaps in a hotel or egg-packing plant. He looked cheerful but a little dazed, after arriving at dawn on a minibus from Texas. He had been in Florida seven hours. + +During his trek, other Latin Americans often asked Mr Rosabal why America offers special privileges to Cubans. Mr Rosabal would reply that back home with two jobs—working with computers by day and as a security guard by night—he earned $62 a month. Venezuelan or Colombian companions would gasp, asking: “How can you survive?” But Mr Rosabal misjudges his new American homeland. The special status of Cubans owes more to politics than to pity, and the politics is changing fast. + +Cuban-Americans have long enjoyed outsize clout, thanks in part to their concentration in Florida, a presidential battleground state. But the Cuban-American vote is evolving. Once, conservative exiles could halt Miami traffic with vast anti-Castro protests. Now their grandchildren are more likely to support lifting the embargo imposed on the island 55 years ago. + +When Republicans hold a presidential primary in Florida on March 15th, two of the four candidates will be Cuban-American senators, an astonishing feat for a community of about 2m people, or 0.6% of the national population. Both are supporters of the embargo. One of them, Senator Marco Rubio of Florida, introduced a bill in January that would end welfare payments and public assistance for Cuban arrivals unless they can prove that they faced political persecution back home—though he stopped short of suggesting changes to the entry privileges in the Cuban Adjustment Act. Campaigning in snowy New Hampshire, Mr Rubio cited reports of “outrageous abuse”, such as Cubans who claim American pensions while living on the island. His bill matches one introduced in the House of Representatives by Carlos Curbelo, a Miami-area Republican, who scolds what he calls “non-refugee Cubans” for abusing American goodwill. The longest-serving Cuban-American in Congress, Representative Ileana Ros-Lehtinen of Miami, said late last year that “it wouldn’t break my heart” if the Cuban Adjustment Act itself were repealed. + +Cubans sense the changes. Arrivals from the island have surged since December 2014, when President Barack Obama announced his plans to restore many diplomatic and economic ties. More than 43,000 Cubans applied for entry to America in 2015, a 78% increase on the previous year, some after perilous sea-crossings. Republicans blame Mr Obama. Ahead of his visit to Cuba on March 21st and 22nd, the first by a sitting president since 1928, Cuban-American members of Congress accused him of triggering “desperation” among Cubans with his policy of “unconditional engagement with the Castro dictatorship”. + +Openness v isolation + +Democrats blame Republicans for stoking fears on the island that the Cuba Adjustment Act will be scrapped. Annette Taddeo, a (Colombian-American) Democrat running for Mr Curbelo’s House district, accuses her Republican opponent of playing on resentments within their heavily Hispanic corner of south Florida. “The electoral calculation is to divide Cubans from non-Cubans, and older exiles from newer arrivals,” she charges. Ms Taddeo would preserve Cuban entry privileges until a broader immigration reform is achieved: a tough call in a year when voters are tingling at talk of border walls. + +At root, today’s fights about Cuban migration turn on old arguments about whether the island is best liberated by openness or isolation. Bruno Barreiro is the Miami-Dade county commissioner for Little Havana, a bastion of anti-Castro fervour. He says the Cuban Adjustment Act was a mistake: if Cubans had been bottled up on the island, they would have exploded long ago. The act saved lots of lives, Mr Barreiro concedes: “Unfortunately, it also permitted the Castro regime to stay in place.” Not every anti-Castro politician goes that far, though the logic of isolation underpins politicians’ growling about Cuban-Americans showing disloyalty by returning to the island to visit their families. + +In the end, the only sustainable Cuban immigration policy involves a free and prosperous island, 90 miles off Florida. Cubans’ entry privileges may be a relic of the cold war. But so is the failed embargo. Scrap both at the same time, and bet on openness. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21694524-best-way-deal-cuba-end-embargo-and-special-privileges/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Brazil’s political and economic crisis: Standing by their man + +Caribbean prisons: Blue seas, black holes + +Antiquities in Latin America: Returning the hatchet + +Bello: The return of an old enemy + + + + + +Articles Sections Next + +Brazil’s political and economic crisis + +Standing by their man + +The accusations against a former president make a tense situation even more fraught + +Mar 12th 2016 | SÃO PAULO | From the print edition + + + +THE Speaker of Congress’s lower house indicted for corruption; the country’s most revered politician detained by the police and then charged; a billionaire sentenced to two decades behind bars. All this happened in Brazil this month. In 2014, when investigators made the first arrests linked to a bribery scandal at Petrobras, the state-controlled energy giant, few imagined that courts and the police would reach so deeply into the country’s elites. The fearlessness of law-enforcers cheers Brazilians, who are fed up with high-level impunity. But their recent successes deepen the country’s political paralysis and do nothing to alleviate its economic crisis. + +The giant-killing began on March 3rd, when the supreme court voted to charge Eduardo Cunha, Speaker of the federal Chamber of Deputies, with accepting bribes linked to the award by Petrobras of contracts for building two oil-drilling ships. The chief prosecutor accuses him of managing the Petrobras “bribe pipeline”, which channelled billions of reais from construction firms to executives and politicians in the ruling coalition in exchange for padded contracts. Mr Cunha denies wrongdoing. On March 8th a federal court sentenced Marcelo Odebrecht, the former boss of Brazil’s largest construction conglomerate, which bears his family name, to more than 19 years in prison for corruption and money-laundering. + +The biggest shock was the brief detention for questioning by police on March 4th of Luiz Inácio Lula da Silva, Brazil’s former president and the mentor of its current one, Dilma Rousseff (pictured with him above). The bribery scheme appears to have started while Lula, as he is universally known, was in office from 2003 to 2010. Prosecutors say they have evidence that Lula, members of his family and the Lula Institute, an NGO he heads, received “undue advantages” worth 30m reais ($8m) after he left office from building firms embroiled in the affair. Lula was “one of the principal beneficiaries of the crimes” committed at the oil company, prosecutors allege. He denies any wrongdoing. After being released without charge, he fulminated against “persecution” and intimated that he would run for president again in 2018. On March 9th, in a separate investigation, São Paulo state prosecutors charged him with failing to declare ownership of a sea-side property. He says he is not the owner. + +Where this leaves the country is uncertain. The real interrupted its recent slide, and São Paulo’s stockmarket surged by 18%, following Lula’s detention. The markets are hoping that, as the Petrobras investigations progress, Ms Rousseff will eventually be forced out of office and a new government will take charge of the economy, which is in the midst of the worst recession in decades. But uglier scenarios seem at least as likely. + +Survival mode + +After Lula’s detention, Gilberto Carvalho, a leading light of his (and Ms Rousseff’s) left-wing Workers’ Party (PT), warned investigators in a newspaper interview against “playing with fire”. José Guimarães, the PT’s leader in the lower house of Congress, urged supporters to wage “political war” against “coup-mongers”. A journalist covering the events at the former president’s flat in São Bernardo do Campo, on the outskirts of São Paulo, was roughed up for representing “fascist media”. + +Feelings are likely to rise still higher on March 13th, when anti-government groups plan to hold demonstrations across the country to renew their demands for Ms Rousseff’s impeachment. The organisers, a hotchpotch of social movements ranging in ideology from centrist to loonily right-wing, hope to bring out more than the record 1m people, disproportionately from the middle class, who protested a year ago. The government’s supporters plan counter-demonstrations on the same day. + +The threats to Ms Rousseff are growing. One motion to impeach her, on the grounds that she used accounting trickery to hide the true size of the budget deficit in 2015, is being debated in the lower house of Congress. To that charge her foes want to add fresh allegations that she tried to interfere with the Petrobras probes, which she denies. Brazil’s electoral tribunal is investigating whether Petrobras money helped finance her re-election campaign in 2014; its mastermind, João Santana, was arrested last month. If the tribunal concludes that the campaign was tainted, it could annul the election and call a new one. + +The president’s survival strategy relies on mobilising her left-wing base. That is one reason she has failed to tackle the budget deficit, which widened to 10.8% of GDP in January. This has sapped confidence in the economy, which contracted by 3.8% in 2015 and is expected to shrink by as much this year. The PT’s opposition to austerity is likely to harden after the detention of Lula, who is still lionised by the left for his pro-poor policies. + + + +Waxing and waning: Brazil's economic woes, in charts + +But Ms Rousseff’s embrace of the PT risks alienating her centrist allies, whom she also needs. It is hard to impeach a president: both houses of Congress must vote in favour by two-thirds majorities. But that hurdle is not insurmountable. Just 100 left-wing deputies in the 513-seat lower house would never vote for impeachment, reckons João Castro Neves of Eurasia Group, a consultancy. In addition, Ms Rousseff needs 70-odd centrists to avoid the threat. + +As the economy worsens and the president’s approval ratings remain barely above 10%, some are likely to waver. Members of the Party of the Brazilian Democratic Movement (PMDB), the centrist party of the vice-president, Michel Temer, are likely to call for a break with the government at a convention on March 12th. The indictment of Mr Cunha, also a member of the PMDB, may weaken the president still further. He was a leading champion of impeachment and a big obstacle to Ms Rousseff’s (half-hearted) efforts to rein in the budget deficit. But the threat of a Petrobras-related indictment limited his effectiveness. Anti-government forces may now find a less encumbered leader. + +Ms Rousseff may yet survive until the end of her term in 2018. The demonstrations against her take place on Sundays, which limits their impact. The electoral authority will not annul her election without clear proof of wrongdoing, which has yet to surface. The PMDB may stick to its tactic of supporting Ms Rousseff in exchange for patronage. The party may not want to burden Mr Temer, who would succeed her if she is impeached, with responsibility for dealing with political paralysis and a stricken economy. But this month’s turbulence leaves the president weaker, Brazil less governable and policy adrift. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21694587-accusations-against-former-president-make-tense-situation-even-more-fraught-standing/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Caribbean prisons + +Blue seas, black holes + +Foul, crowded and dangerous, the region’s jails need reform + +Mar 12th 2016 | From the print edition + + + +“FREEDOM! We want freedom!” cried inmates of the Camp Street prison in Guyana’s capital, Georgetown. But in three days of unrest that began on March 2nd, 17 of them burnt to death. The rioting started after guards seized drugs and mobile phones from prisoners awaiting trial for violent crimes. The prisoners set fires; on March 3rd one flared out of control. Trouble continued the next day, with prisoners knocking down wooden cell-block walls and the authorities firing tear gas. + +That highly public tragedy is the consequence of a hidden one. Of the 50 countries with the highest incarceration rates, 15 are, like Guyana, former British Caribbean colonies or current ones. High levels of violence are partly to blame. So are the criminalisation of cannabis use and harsh sentencing laws. Last November Guyana’s former national football coach was sentenced to three years in prison, the minimum penalty for possessing more than 15 grams of cannabis. + +In most of the English-speaking Caribbean, at least a third of prisoners are suspects awaiting trial. One inmate who died in Camp Street had been waiting eight years to be tried for murder. Suspects exploit pre-trial delays to have witnesses killed or silenced. Once trials begin, they drag on; Guyanese judges painstakingly record each word of evidence in longhand. + +Conditions inside are often horrendous. Antigua’s prison, known as 1735 from the construction date carved above its entrance, was built to hold 150 inmates. It now houses around 400. Some are jammed 15 at a time into cells that are furnished with two bunk beds and two slop buckets. The government plans to install modern sanitation and convert a former nurses’ hostel into a remand prison. It may release 100 prisoners on parole to ease overcrowding. + +When such overcrowding is not dealt with, rebellions can get out of control. In 2005 Glendairy prison in Barbados, then 150 years old, was burnt down by prisoners. Its replacement took two years to build, at a cost of $144m. + +Guyana’s government, in office since May last year, reacted quickly to the Camp Street disaster. The public-security minister, Khemraj Ramjattan, met a group of prisoners during the protest and promised better meals and additional telephone calls. A public inquiry, chaired by a former judge, is to report within a month on what went wrong and what should be done to prevent a repeat of the violence. + +Mr Ramjattan wants to build a new prison, but says the government cannot afford it now. He argues for judicial reforms to unclog the courts and prisons, including making it easier for young first offenders to be released on bail. Before the riot, backbench parliamentarians had proposed more lenient drug-sentencing laws. + +Last September Britain’s prime minister, David Cameron, offered Jamaica $40m to help build a new prison to house both local inmates and some of the 600 Jamaicans serving time in British jails. The Jamaican government of the time, which lost an election last month, was cool to the idea, and many Jamaicans were outraged. + +There is, to be sure, something tin-eared about a political leader offering to pay to lock people up in a former colony. But dirty, crowded prisons add to the misery of inmates, many of whom were impoverished before they turned to crime. If Jamaica does not want Mr Cameron’s money, perhaps he should offer it to Guyana and Antigua instead. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21694586-foul-crowded-and-dangerous-regions-jails-need-reform-blue-seas-black-holes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Antiquities in Latin America + +Returning the hatchet + +Governments are starting to return treasures to their neighbours + +Mar 12th 2016 | TRUJILLO, PERU | From the print edition + +An old-fashioned demand for restitution + +THE basement of a petrol station is not an obvious place to display some 6,000 pre-Columbian ceramics. The shelves of the Cassinelli Museum are crammed with feline gods, copulating animals and vessels shaped like human faces. Many were made by the Moche and Chimú cultures, which peopled Peru’s northern coast for 1,400 years before the arrival of the Incas in the 15th century. + +The artefacts are safer here, argued the museum’s late founder, José Luis Cassinelli, than in tombs that dot the desert or beneath the adobe city of Chan Chan. There, they were prey to huaqueros, poor relic-hunters who sold them on to smugglers. Many ended up in American and European private collections. But some were carted off to countries closer to home. + +Lately, it has become fashionable to return antiquities to their countries of origin, as Yale University recently did with thousands of items taken from Machu Picchu in Peru. Latin American countries are starting to return artefacts, both ancient and modern, to their neighbours. The motives are often political. + +In January, Argentina gave 4,500 artefacts back to Peru and Ecuador, many probably looted by huaqueros from northern Peru. Argentina’s former president, Cristina Fernández de Kirchner, who arranged the restitution before she left office, used the occasion to lambast European and American museums for having snatched “chunks” of Greece and Egypt. Last May, Chile returned 189 pre-Columbian items to Peru and Ecuador. + +Some of the returned objects are less ancient but more politically symbolic. Throughout last year, Paraguay and Bolivia exchanged church bells and weapons carried off by one another’s soldiers during the Chaco war of 1932-35. Bolivia hailed one such swap as an “indisputable sign of fraternity” between historical enemies. Decades ago Brazil returned some of the archives it took from Paraguay in the war of the Triple Alliance of 1864-70. Such gestures are a low-cost way to improve relations, and can pave the way for political and economic deals, says Donna Yates, an expert in antiquities trafficking at the University of Glasgow. Bolivia and Paraguay followed up their swaps by signing agreements to increase economic co-operation. + +Holding on to other countries’ relics can be a sign of continuing tensions. Chile, which has a lingering border dispute with Peru, still has the Huáscar, a British-built ironclad captured from Peru during the war of the Pacific of 1879-83. + +Although Brazil has returned some documents to Paraguay, Rio’s Historical Museum still houses the captured ten-tonne “Christian” cannon. Vicenta Miranda, whose father built a museum to house cannonballs, bullets and other treasures from swampy battlefields around the fortress of Humaitá, thinks the unreturned Brazilian archives contain “explosive” accounts of atrocities committed by Brazilian troops. + +Countries such as Peru and Bolivia have reduced the outflow of antique contraband. But few governments have protected the colonial-era art to be found in churches in all but the smallest Andean pueblos. The time of the huaqueros is not yet over, and conservationists like Cassinelli are rare. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21694585-governments-are-starting-return-treasures-their-neighbours-returning-hatchet/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +The return of an old enemy + +An inflation test for Latin America’s central banks + +Mar 12th 2016 | From the print edition + + + +OLDER Latin Americans still have vivid memories of hyperinflation. Bello recalls changing money in dark doorways in the mid-1980s in Bolivia and being handed a truncheon of greasy banknotes secured by rubber bands. Peru went through a futile currency reform in which the sol lost three zeros and was briefly renamed the inti, which promptly racked up more zeroes. + +Hyperinflation destroys businesses, undermines political systems and hits the poor especially hard. Latin America should have learned this painful lesson. So when in Caracas recently Bello was given a large shoebox packed tightly with banknotes in return for a few hundred dollars, he received it with an eerie sense of déjà vu and dismay. Official statistics put the rise in the consumer-price index in Venezuela last year at 181%, the world’s highest; the IMF forecasts 720% this year. Venezuela is extreme in its economic mismanagement. But while the rest of the world worries about deflation, across Latin America prices are rising. In Argentina, inflation is forecast to spike from 27% to 33% at an annual rate; in Brazil it stands at around 10.5%; in Uruguay, it is only one point lower, and in Colombia it has climbed to 7.6%. In Chile, Peru and Mexico it has also ticked up. + +The reasons vary somewhat. In Venezuela and Argentina, inflation is mainly the result of printing money to finance indiscriminate subsidies. Ironically, it is rising now in Argentina partly because the new government of Mauricio Macri is cutting those subsidies. + +In Brazil, too, the government cut subsidies on electricity and petrol in 2015. But the main reason inflation is so high there, even though the economy is in deep recession, is price indexation, according to Edmar Bacha, an economist who helped tame chronic inflation in the 1990s. By law, the minimum wage was raised in January by 11.6%; it in turn has a big influence on other wages and the prices of services, as well as on pensions. And that, plus past fiscal laxity, has made a mockery of the Central Bank’s (unambitious) inflation target of 2.5-6.5%. + +Elsewhere the rise in inflation is the result of currency depreciation, which is driving up the price of imports (see chart). This is also a factor in Brazil and Argentina. Though very large, these depreciations are healthy: they are the way that Latin America’s economies are adjusting to sharply lower prices for their commodity exports. But they pose a dilemma for central banks that are committed to inflation targeting. In Brazil, Chile, Colombia and Peru central bankers began raising interest rates last year even as their economies slowed or were stagnant. Argentina, too, put up its interest rate last month. + +The good news is that the rate at which currency depreciation in Latin America is passed through into domestic price increases is much lower than in the past, according to Alejandro Werner of the IMF. The Fund’s research shows that before 1999, when several Latin American countries floated their previously fixed currencies and adopted inflation targeting, large depreciations were associated with very high rates of inflation. Now the average pass-through in these countries is below 10% (ie, if the currency depreciates by 10%, domestic prices will rise by less than 1%). + +Mexico’s central bank also raised its interest rate last month even though inflation is below its target. The peso has been clobbered by the fall in the oil price and by the weakness of manufacturing in the United States, to which Mexico’s economy is closely linked. Because the peso is very liquid and trades round the clock offshore, betting against it seems to be “the path of least resistance” for currency traders, says Luis Arcentales of Morgan Stanley, a bank. + +Mexico’s central bank also announced that it would start intervening at its discretion in the currency market. So is it now targeting the exchange rate, rather than inflation? Not really: it was worried that the speed of peso depreciation would feed expectations of higher inflation down the road. “By acting forcefully today it will probably need to tighten less later on,” says Mr Arcentales. + +The currency depreciations of the past two years are the first big test for inflation targeting in Latin America. One can argue whether individual central banks should have tightened monetary policy earlier or later. The big picture is that those countries that have been serious about inflation targeting are adapting to a tougher external environment at much less cost than those that have not been. They, at least, have learned the lessons of the 1980s. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21694588-inflation-test-latin-americas-central-banks-return-old-enemy/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Elections in the Philippines: A family affair + +Politics in Kiribati: Making waves + +India’s guru-entrepreneurs: Holy noodles + +Taiwanese identity: Multiculti roots + +Japanese politics: Abe agonistes + +Banyan: Not gloating, but fretting + + + + + +Articles Sections Next + +Elections in the Philippines + +A family affair + +After a Supreme Court ruling, the presidential field takes shape, dominated by familiar names + +Mar 12th 2016 | MANILA | From the print edition + + + +FOR decades political instability, a boom-and-bust economy and endemic corruption earned the Philippines the moniker of the “sick man of Asia”. But during the six years that Benigno Aquino has been president the country’s prospects have markedly improved. The economy has zipped along at an average growth rate of 6% a year, while foreign investment has more than tripled, with manufacturing, agribusiness and call centres all showing particular strength. Mr Aquino, whose family, huge landowners, is not short of a bob, has made a stand against corruption, and his approval ratings are high. But presidents may serve only one term, and an election for his successor takes place on May 9th. The question is whether Mr Aquino’s successor can keep the Philippines on the upswing. Five presidential candidates want to have a go. + +In America, a vice-president might present himself as the candidate for continuity. But in the Philippines voters elect the vice-president separately, and Mr Aquino has long been at odds with his number two, Jejomar Binay, now a leading prospect to replace him. Until 2010 Mr Binay was mayor of Makati, the wealthy business and financial district of Manila. It is home to the country’s stock exchange and the biggest banks and corporations; it also has the capital’s least-awful traffic. + + + +Over the past year Mr Binay has faced a stream of corruption allegations from his time running Makati, including not declaring properties, city contracts awarded to family members, the existence of bogus charities and hundreds of ghost employees on the government payroll. But the allegations seem hardly to dent his standing. Ordinary Filipinos care more about their own poverty and about lower-level graft: sticky-fingered bureaucrats and policemen. In Mr Binay they see less a corrupt politician than one who gets things done: he makes much of having got Makati residents free health care and better schools. In a televised election debate last month Mr Binay slammed the government for underspending on development and poverty alleviation (you could for a moment pretend that he was not part of the government he was railing against). + +One of the candidates jostling with Mr Binay for pole position is Grace Poe (pictured), a 47-year-old senator with a thin record but a compelling back story. She is said to have been abandoned at a cathedral as a baby, and was adopted by a popular film star, Fernando Poe, himself a presidential candidate in 2004. With bags of charm, in 2013 she won the highest ever number of votes for a Senate candidate. She shone when handling a congressional hearing into a botched raid against terrorists last year in which 44 policemen died. + +For some months Ms Poe’s candidacy had been in doubt. In December the election commission disqualified her, claiming that, as a foundling, she could not prove that she was a natural-born Filipina and that, as a former American resident, she had not lived in the Philippines for ten years—both constitutional requirements. Ms Poe appealed, and on March 8th the Supreme Court ruled in her favour. + +Though an independent, Ms Poe has backed Mr Aquino in the Senate. Now the president may be backing her behind the scenes, even though he has formally endorsed Manuel “Mar” Roxas, an old family ally. A former banker and interior minister, and the grandson of an earlier president, Mr Roxas has promised to carry on along Mr Aquino’s “straight path” fighting corruption. But he struggles to connect with ordinary Filipinos. Ms Poe, all sparkle, stands a better chance of winning. + +The other candidate with a chance is Rodrigo Duterte, or “Dirty Harry”, the crime-busting mayor of Davao, the largest city on the southern island of Mindanao. Though Muslims in western Mindanao have long waged a separatist battle, Davao is among the country’s safest cities, though the methods are dubious: vigilante execution squads that the mayor has endorsed. Mr Duterte speaks his mind. When a visit to Davao by Pope Francis last year caused traffic mayhem, Mr Duterte spluttered: “Pope, you son of a bitch, go home.” Asked about his womanising, he admitted to having two girlfriends, but complained that “without Viagra, I have a difficult time”. He appeals to people who want a strong leader. Others worry about how his rough edges will go down abroad. + +In the end, the race may come down to Ms Poe’s star power versus Mr Binay’s support from his party and business, and his strong links with local governments. No candidate promises to upend Mr Aquino’s programme, but then policy has never figured strongly in Philippine politics. For all of the country’s robust economy and its growing middle class, politics is driven by personalities and dominated by a few powerful families. Whoever wins in May, that will not change. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21694550-after-supreme-court-ruling-presidential-field-takes-shape-dominated-familiar-names/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Politics in Kiribati + +Making waves + +In the South Pacific climate change animates a presidential election + +Mar 12th 2016 | ABAOKORO | From the print edition + +A tide in the affairs of Kiribati + +LOUNGING under a thatch-roofed pavilion in the village of Abaokoro, a retired seaman, Tiree Tepenea, points at the turquoise lagoon that stops a few steps from his door. Flooding from the sea has become more common during his lifetime, he says, and dramatically eroded the coastline. Seawalls built with manual labour are of limited use against the restless tides. “Maybe in a few years the floods will cover this island,” Mr Tepenea says of Tarawa, one of Kiribati’s 33 wafer-thin islands and atolls. The country’s people “are just waiting for the problems that may come” as the climate changes. + +Kiribati (pronounced “kiribass” and derived from the British colonial name for the islands, the Gilberts) is not close to much. Its total land area, about a third of tiny Luxembourg’s, is home to just 111,000 people. Yet in diplomatic terms it punches above its weight because many of its atolls, rising just 2 metres (6.6 feet) above sea level, could someday be consumed by rising waters. The Intergovernmental Panel on Climate Change predicts a mean global rise in sea levels of up to nearly a metre by 2100. A 195-nation deal in December to keep an increase in global temperatures to below 2°C may not be enough to save Kiribati or other low-lying atoll nations from rising waters. + +The people of Kiribati, which declared independence in 1979, have long lived with the spectre of environmental catastrophe. In the 1950s drought forced colonial authorities to relocate hundreds to the Solomon Islands. The exhaustion of phosphate reserves on Banaba Island led to hundreds more being settled in Fiji. The El Niño weather system caused heavy rains and flooding on Kiritimati, or Christmas Island, in 1997. Severe overcrowding on South Tarawa is depleting fresh-water reserves. Now comes the threat of more-violent storms and rising sea levels. + + + +Anote Tong, a charismatic leader who stepped down as president this week after reaching his three-term limit, has frequently lectured rich countries about the human impact of rising carbon emissions. He has also developed contingency plans in the event that the world’s biggest emitters do not change their habits. In 2014 he used nearly $7m of government money to buy 6,000 acres of land in Fiji. It was, Mr Tong says, partly a property investment aimed at making money for the state. But since it is a potential site for farming, there was also a food-security dimension. And in the worst case, he says, it could be used for relocating Kiribati’s population. Mr Tong has also championed programmes for vocational training, to ensure that Kiribati’s people can eventually migrate with “dignity” and not as “climate refugees”. + +Mr Tong’s intense focus on climate change has made him a star on the international circuit, but his popularity is weaker at home. Tobwaan Kiribati (“Embracing Kiribati”), the lone opposition party, contends that Mr Tong has built an international brand while failing to deal adequately with alarmingly high rates of unemployment and infant mortality at home. Mr Tong’s predecessor, Tebururo Tito, even claims—with no evidence—that Mr Tong has deliberately left some villages vulnerable to dangerous floods in order to stoke international perceptions of Kiribati’s climate vulnerability. Mr Tito also says that Mr Tong’s faith in climate science is a brazen challenge to divine authority. (The country is fervently Christian, and churches hold enormous sway over public opinion.) Mr Tong bats away the charges as groundless. + +On March 9th the opposition’s candidate, Taaneti Mamau, a former secretary of finance, won the presidential election. He is from one of the drought-afflicted southern islands of Kiribati, whose population has fallen by a quarter since 1995. + +The question is whether Mr Mamau will continue to beat the drum on climate change, at home and abroad, and how this will go over. Educated young in Kiribati seemed especially receptive to Mr Tong’s migration-with-dignity mantra. “But the old ones, they’re not interested,” Teneti Bakarereua, a Catholic nun in South Tawara, says over a church breakfast. They mean to live and die where they were born. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21694548-south-pacific-climate-change-animates-presidential-election-making-waves/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +India’s guru-entrepreneurs + +Holy noodles + +The faith industry gains corporate smarts and political clout + +Mar 12th 2016 | DELHI | From the print edition + + + +“ITS time to charge yourself!” So, ungrammatically, the shiny wrappers of Lov Charger cream wafers declare. It is not just the peppy slogan and a pretty price (two rupees, or around three American cents) that make the biscuits sell. Their maker is a firm called MSG, letters that stand not for a flavour enhancer but—take your pick—either for Messenger of God or for the initials of the three gurus who have led Dera Sacha Sauda, a north Indian sect, since its founding in 1948. MSG and MSG2 are also the names of two films that star the sect’s current leader as a brawny, sequin-studded superhero who swats down goons and gangsters like flies while bursting into such lyrics as “I am so lucky because/You are my love charger.” + +The talented writer of that song is none other than Gurmeet Ram Rahim Singh Insan, the star himself (pictured, above). Mr Singh is far from the first religious leader in India to make money or a spectacle of himself. But his self-promotion via Bollywood-style films, music, gatherings like rock concerts and, since February, a line of some 150 consumer products, marks an important change. Mr Singh is one of a new, more sophisticated crop of godmen, as India’s press calls the country’s proliferation of spiritual entrepreneurs. They are seeking corporate-style synergies between religious messaging, personal celebrity, commercial success and political influence. + +An early mover is Ramdev, a teacher of yoga whose television lessons are credited with popularising the discipline among India’s fast-growing middle class. Ten years ago he launched a range of “ayurvedic” drugs and beauty products. More recently Ramdev’s brands have expanded aggressively into foods and detergents, competing directly with big multinationals. When India last year slapped a ban on instant noodles produced by Nestlé, a global food giant, after a health inspection raised alarms, Ramdev quickly stepped in with a version of his own. His next venture is a line of yoga sportswear that he says will be made from khadi, the homespun cotton that became an emblem of India’s independence movement. + +Advertising for the godman’s brands is not subtle. A recent newspaper spot suggests that most competing hair oil is “carcinogenic for every human being and may cause cancer”. Fine print urges customers to buy Indian so as to realise Mahatma Gandhi’s dream of self-reliance. Another product, a medicinal herb said to promote fertility, has stirred controversy. Some say its ancient name, which means “son’s life seed”, hints unethically at particular effectiveness in spawning male offspring. + +Nor are Ramdev’s promotion campaigns small affairs. During one week in January his Patanjali brand was the top spender in Indian television advertising, beating such consumer giants as Unilever and Cadbury with a blitz of 17,000 showings. Annual sales have reportedly doubled in the past year, to nearly $750m. Such success clearly buys clout, too. Patanjali’s factory complex was recently granted protection by a crack anti-terrorist police unit. The only other private facilities in India with such a privilege are strategic installations such as oil refineries, steel mills and internet hubs. + +Another of India’s god-magnates and a purveyor of traditional medicines is Sri Sri Ravi Shankar. He wields huge influence through his Art of Living foundation, a worldwide meditation franchise. When he decided to hold what is being billed as the world’s biggest arts fair on the banks of the Yamuna river, which flows through Delhi, a score of government agencies chose to overlook the fact that the river’s flood plain, a vital catchment area for drinking water, is meant to be protected from any encroachment. The prime minister, Narendra Modi, will even appear on a seven-acre stage along with the world’s biggest orchestra. Even the Indian army has chipped in, erecting a pair of pontoon bridges to carry what Art of Living says will be 3.5m visitors across the Yamuna. + +Environmentalists have made a fuss, and India’s figurehead president has called off his planned visit. Delhi’s police, not known for their delicacy, declared it dangerous for big crowds to gather by a river that is inky black, infested with mosquitoes and reeks of sewage. But after much fluster and a hasty investigation, the authorities decided that the show, which runs from March 11th to 13th, must go on. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21694575-faith-industry-gains-corporate-smarts-and-political-clout-holy-noodles/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Taiwanese identity + +Multiculti roots + +A museum tells a new story + +Mar 12th 2016 | TAIPEI | From the print edition + + + +CHINA claims Taiwan as its own and has long attempted to stop the hapless country from joining international organisations or maintaining official ties with all but a tiny handful of states. So Taiwan has to employ other means to raise its standing. With the recent opening in Chiayi county of a southern branch of the vast National Palace Museum, “museum diplomacy” is becoming a part of that—a way not just to boost tourism but to assert Taiwan’s sense of its own history as distinct from China’s. + +The main National Palace Museum in Taipei, the capital, which over 5m people visit a year, is an astounding receptacle for artefacts from imperial China. They were originally from Beijing’s Forbidden City and were brought by Chiang Kai-shek to Taiwan before his Kuomintang forces fled China from the all-conquering Communists in 1949. To Chiang and his followers, the collections of ancient works, imperial regalia and international treaties were a source of Chinese legitimacy. But a democratic Taiwan has developed a sense of identity rooted in something broader than a confining Sinosphere. + +The Chiayi extension is billed as a museum of Asian art and culture. The focus is on historical interactions among Asian cultures. “Taiwan’s identity comes from Asia and the sea,” says Shieh Jyh-wey, a member of the government that commissioned the branch 15 years ago. + +Some Chinese imperial artefacts from the Taipei collection are on display in Chiayi, but they are part of exhibitions with a pan-Asian theme. Exquisite silk wrappings used to cover Tibetan Buddhist texts, commissioned by the concubine of an early Qing emperor, are being shown for the first time; they illustrate the spread of Buddhist art across Asia. Another display of Islamic jade derives from a little-known collection of the Qing emperors. + +A permanent exhibition on Asian tea culture shows how Taiwanese culture stands increasingly on its own terms. It elevates Taiwan’s tea-taking practices, introduced by Fujianese immigrants, to the level of the formal rituals of Japanese tea ceremonies or those from China’s Song and Ming dynasties. For Hans-Martin Hinz, president of the International Council of Museums, the stress on international perspectives rather than narrow nationalism makes the new museum a “trendsetter” in Asia. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21694576-museum-tells-new-story-multiculti-roots/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Japanese politics + +Abe agonistes + +Will the prime minister once again postpone a tax hike and call an election? + +Mar 12th 2016 | TOKYO | From the print edition + + + +WHEN Shinzo Abe last called a snap general election, just two years after coming to power in 2012, Japan’s prime minister saw an opposition in disarray and a chance to consolidate seats in the Diet. Yet he presented the election as a matter of high principle: in the face of a sluggish economy he had chosen to delay a long-agreed rise in Japan’s consumption (value-added) tax, and such a portentous decision required the people’s approval. Mr Abe won handily. Now, principle appears to demand yet another election soon. + +That is because, with an economy refusing to show any bounce, Mr Abe may well announce that he is putting off the tax hike (from 8% to 10% and promised for April 2017) a second time. Perhaps he will do so after he hosts a summit for G7 leaders in May. Precedent would make it very hard for him not to dissolve the Diet and announce a general election over the matter. The betting is that he would fix the election for the same time as a scheduled poll in June or July for half of the seats in the upper house. + +Some of his colleagues want Mr Abe to hurry up and call a general election sooner, before his luck runs out. There are challenges on various fronts. The economy is the biggest worry: it shrank by an annualised 1.1% in the final three months of 2015, as consumer spending slowed. To boost demand the central bank announced a policy of negative interest rates in January. But the market reaction—a lower stockmarket and a higher yen—has been just the opposite of what was hoped for. + +Sooner or later, voters will want to blame Mr Abe for an economy he promised to fix. And there are other policies that are unpopular but for which he has not yet been punished. They include attempts to get Japan’s nuclear power plants working again after all were shut down following the catastrophic meltdown at Fukushima Dai-ichi five years ago this week. And new security laws passed last year, allowing Japan to take a more robust stance overseas, appear, according to many experts, to be unconstitutional. They certainly make many Japanese uncomfortable. + +Adding to the mood of discontent are the political scandals within the ruling party. In January the economy minister, Akira Amari, one of the prime minister’s key allies, resigned over a dodgy political donation. And a lawmaker in the ruling Liberal Democratic Party (LDP) who had made much of his being the first Diet member to take paternity leave turned out to have been having affairs during his wife’s pregnancy. Since then the prime minister’s approval rating has fallen to below 50%. + +As for the consumption tax, a first increase, from 5% to 8% in April 2014, knocked consumer spending. A key economic adviser to the prime minister, Etsuro Honda, now says that postponing the next hike is essential if people are not to lose faith in Mr Abe’s broader efforts to boost the economy. As it is, after three years of radical monetary easing, core inflation remains around zero, a long way from the central bank’s target of 2%. Not even Japan’s trade-union leaders are calling for big wage increases. And banks’ lending margins remain under pressure. It all threatens Mr Abe’s promises of a virtuous circle of higher wages, consumption and investment—and raises questions about how the Japanese might vote in the summer. + +Plenty of people think that Mr Abe should redouble his efforts to liberalise the economy, including by introducing sweeping reforms to the labour market. He could push much harder to ensure that part-time workers, whose low wages are a drag on consumption, are treated better. But no menu of deeper reforms is about to be revealed, a government official says. + +Meanwhile, however, though the opposition Democratic Party of Japan (DPJ) is working hard to ready candidates for a general election, it is unlikely to gain much ground. It still has miserable levels of popular support: only a tenth of voters back the centre-left party, according to opinion polls, compared with two-fifths for the LDP. The DPJ would highlight a second postponement in the consumption tax hike as a sign that Mr Abe’s economic plans have failed. But it is unlikely to oppose a postponement, especially if ordinary households are suffering. + +In weighing whether or not to call a double election, Mr Abe will consider the chances of a victory large enough to carry through his dream, that of rewriting Japan’s constitution in ways that erode the pacifist promises, laid down by the American occupiers in the late 1940s, that lie at the heart of it. He says that such a revision is necessary because, seven decades after a disastrous war, Japan no longer deserves to have its hands tied by an outdated pacifism when it lives in an increasingly dangerous neighbourhood. + +Abe likes a sound constitution + +Changing the constitution would require a two-thirds majority in both houses of the Diet, and a plain majority in a national referendum. The LDP and its coalition partner, Komeito, have more than two-thirds of the lower house, with 325 out of 475 seats, but a narrower majority, of 136 out of 242 seats, in the upper chamber. Mr Abe might pick up seats in the upper house, and also be able to rely on the help of a small right-wing party called Osaka Ishin no Kai. Yet attempting to revise the constitution would still cause deep alarm among the many Japanese who remain enormously proud of their country’s pacifism. In short, the main risk to Mr Abe’s hopes of securing electoral victory is his inclination to speak lovingly of his plans for constitutional change. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21694572-will-prime-minister-once-again-postpone-tax-hike-and-call-election-abe-agonistes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Not gloating, but fretting + +Asians have nothing to cheer in the dysfunctional politics of America and Europe + +Mar 12th 2016 | From the print edition + + + +FOR many in Asia, resentful of the constant lecturing about the superiority, nay, the historical inevitability, of Western forms of government, it must seem like vindication. The European Union, which once held itself up as a model of regional integration and shared sovereignty, faces stagnation, uncontrollable migration, the rise of xenophobic political movements and a British referendum on whether to leave the union. As for America, its government is often gridlocked thanks to partisan animosity, while the campaign for November’s presidential election has plumbed depths of personal abuse, mendacity and barely disguised racism and sexism. Small wonder that a commentary published by China’s official news agency to celebrate the current sessions of that country’s toothless parliament and its gumless consultative body should lament that “many Western countries are split by elitism and populism”, smirking that “China’s unique ‘check and balance’ system could teach them a thing or two.” + +Other Chinese commentators have taken wry pleasure in the discomfort within America’s political establishment over the emergence of Donald Trump, a self-promoting tycoon with flexible but mostly obnoxious ideas, as the leading contender for the Republican presidential nomination. If this is what Western democracy produces, the logic runs, maybe China’s illiberal form of self-proclaimed meritocracy is not so bad. Or conversely: what is wrong with Donald Trump? Curiously, he seems to have many fans in China’s cordoned-off sector of cyberspace. Writing in the Diplomat, an online journal, Dingding Chen of the University of Macau reports that many Chinese netizens like his brash, outsider image and his questioning of America’s military alliances with Japan and South Korea. Some even think that, as a dealmaker, China might negotiate with him more easily than with Hillary Clinton, the Democratic front-runner, who has a habit of talking about human rights (as long ago as 1995 she riled her hosts with a fiery speech at a UN women’s conference in Beijing). China also blames her for, as secretary of state, firmly asserting America’s interest in the disputed South China Sea in 2010. + +As for the EU’s travails, they might be expected to provoke some Schadenfreude among the ten members of the Association of South-East Asian Nations (ASEAN). Asia’s most far-reaching attempt at regional integration, ASEAN is nonetheless often criticised for its failure to go further. Sure enough, Munir Majid, a leading Malaysian intellectual and banker, has observed “some self-satisfaction” within the club that the “ASEAN Way” does not envisage “ever-closer union”—in other words the group is spared some of the stresses afflicting the EU. Yet he notes that ASEAN suffers its own strains over the pace and direction of integration. It cannot afford to be smug at the faltering of the European project. + +Nor for that matter is ASEAN really in a position to criticise Europe for its difficulties in tackling unprecedented waves of distressed refugees and migrants. ASEAN members have struggled to cope with far smaller numbers of boat people from the Muslim Rohingya minority fleeing Myanmar. And its solution to the question of labour mobility between ASEAN states is basically not to allow it at all, except for a few skilled professionals. + +As with the EU’s predicament, America’s election campaign may provoke some Asian gloating, along with amusement, bafflement and disgust. A more pervasive emotion, however, is worry. In California last month at a summit Barack Obama held with ASEAN leaders, Singapore’s prime minister, Lee Hsien Loong, noted that the election was being followed with concern. The most obvious worry is the possibility of a President Trump. Asians can only assume that most of his threats and promises would splinter when they collided with the reality of office. But it would still be alarming to see him win. He has said he wants to slap punitive tariffs on Chinese imports (risking a trade war); renegotiate defence treaties that have underpinned regional security for decades; and curb immigration, including banning Muslims from entering America. Most of the world’s Muslims live in Asia. + +Whoever wins, however, Asia may miss Mr Obama. The California summit capped his hallmark foreign policy, America’s so-called “pivot” or “rebalancing” to Asia. None of those vying to succeed him has such a personal stake in American policy in Asia—not even Mrs Clinton, who, at the state department, was present at the creation of the pivot. Indeed, she has turned against one of its most important aspects—the negotiation, pending ratification, of the Trans-Pacific Partnership (TPP), a free-trade area including America, Japan and ten other Pacific Rim countries. In fact not one of the leading presidential candidates likes the TPP. Free-trade agreements are electoral poison. Its proponents insist TPP will be ratified but they have trouble explaining how. By a lame-duck Republican-majority Congress right after the election? Under Mrs Clinton as president, after a cosmetic renegotiation? + +Three no-trumps + +The same forces roiling American and European politics are also present in most of Asia: internal ethnic and communal tensions; protectionist fears about globalisation and job losses; and angry, assertive nationalism. India’s prime minister, Narendra Modi, seems unwilling or unable to control the extreme Hindu-nationalist wing of his own party; Shinzo Abe in Japan is similarly loth to distance himself definitively from his party’s right-wing historical revisionists; China’s Xi Jinping is encouraging a resurgence of national pride which can take ugly, xenophobic forms. All three play variations of Mr Trump’s rallying cry: “Make our country great again!” The rise of nationalism at a time of economic gloom and geostrategic uncertainty is alarming for the region’s security. Europe, preoccupied with its own problems, has long forsaken any serious role in Asia. Now some Asians worry that America, needed more than ever to balance China and ensure the long peace, will start looking the other way. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21694546-asians-have-nothing-cheer-dysfunctional-politics-america-and-europe-not-gloating/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +The National People’s Congress: Unlucky for some + +Political music: The song dynasty + +Carbon emissions: Aiming low + +Trade with North Korea: What sanctions? + + + + + +Articles Sections Next + +The National People’s Congress + +Unlucky for some + +The government’s economic plan for the next five years will not live up to its promises of bold reform + +Mar 12th 2016 | BEIJING | From the print edition + + + +SOMETIMES leaders protest too much that all is well. Once a year, the 3,000 or so delegates of the National People’s Congress (NPC), China’s parliament, meet in Beijing to rubber-stamp decisions that have already been made in secret by leaders of the ruling Communist Party. At the session’s opening on March 5th (tea mugs, pictured, at the ready), the prime minister, Li Keqiang, announced that China had met all of the main targets that it set five years ago for completion by this year. A senior state-planning official told reporters covering the congress that the economy would “absolutely not” suffer a hard landing. The NPC’s chief said the government would act in full compliance with the constitution (which enshrines freedom of speech and assembly), and President Xi Jinping told delegates that capable, honest officials would be promoted. + +Few will be reassured by the congress’s relentlessly upbeat tone (that the media are being cleansed of sceptical voices with more than usual vigour will not help either). Commodity markets perked up a bit in response to Mr Li’s speech, which gave hints of more stimulus measures in the offing to prop up growth. But bearish sentiment about the country’s economic prospects for the rest of the decade remains rife at home and abroad. It is compounded by a growing perception that the country’s leaders—once widely praised for their management of a prolonged and spectacular run of economic growth—are now floundering as it slows. + + + +For the current year, Mr Li sensibly avoided the previous practice of declaring a specific aim for GDP growth. Instead he gave himself some wiggle-room by announcing a target range, of between 6.5% and 7%. By global standards, such a rate would be more than respectable. For China, it would be about the same as last year (see chart). But it will be difficult to achieve without more stimulus. And if China’s recent record is any guide, pump-priming may result in wasteful projects and even bigger piles of bad debt that could end up throttling the economy. + +Mr Li gave hints that, to hit its growth target, China would lean more heavily on both the central government’s fiscal and monetary policy, rather than binge spending on construction projects by local governments. He said the budget deficit would reach 3% of GDP, up from last year’s 2.3% target, and M2 (a broad gauge of the money supply) would grow by 13%, compared with last year’s target of 12%. Those may sound like modest adjustments, but they should help to boost growth, at least in the short term. Monetary policy is already easing. In January new lending by Chinese banks was 2.51 trillion yuan ($385 billion)—the most ever in a single month. + +The longer term looks more worrisome. One of the NPC’s duties during its ten-day session will be to approve China’s 13th five-year economic plan, the drafting of which was led by President Xi Jinping (see article). As expected, Mr Li said the government was aiming for average annual growth of 6.5% during the plan’s time-frame, which is from this year to 2020. But he acknowledged this would not be easy, thanks to problems such as an “extremely complicated and challenging international environment” and declining global trade. The superstitious in the party will be nervous, not because the number 13 suggests misfortune in China—it doesn’t—but because the progenitor of five-year plans, the Soviet Union, had barely embarked on its 13th one when it collapsed. + +The full text of the plan had not been published as The Economist went to press. But snippets released so far suggest it will at least sustain the party’s rhetorical commitment to badly needed economic reforms. Mr Li restated the government’s belief in a “decisive role” for market forces, and in the necessity of “supply-side reforms” (implying a need for deep structural changes, such as reducing the dominance of inefficient state-owned firms in vital areas of the economy). + +But leaders’ attempts at reform have failed to impress so far, and Mr Li gave no indication that he intends to launch any important new measures soon. He did not even mention the possibility of a property tax, a long-mulled measure that would help to reduce rampant speculation (see article). The plan includes some capital projects of questionable value, such as 50 new airports by 2020 and a second train line to remote Tibet. It even proposes to build, by 2030, a 126km (80-mile) high-speed rail link between China and Taiwan. That would be the world’s longest rail tunnel if it ever happens. It is highly unlikely to, if Taiwan has a say. + +Instead of focusing on economic reform, Mr Xi appears more preoccupied with tightening his political grip. Only days before the NPC opened, the authorities closed a social-media account with 38m followers operated by Ren Zhiqiang, a former property developer and party member. Mr Ren had used it to criticise Mr Xi’s recent efforts to tighten the party’s control over the media. During the NPC censors removed an online article published by Caixin, a business magazine in Beijing. It was accused of posting “illegal content”, apparently by quoting an adviser to the NPC as saying “the right to speak freely must be protected”. + +Optimists had once thought that Mr Xi, having secured political control, would eventually get around to using his power to attack foot-draggers on reform. Those hopes have not been entirely extinguished. But it is difficult to tell whether Mr Xi has gained the power he wants and now has little interest in reform, or whether he still does not feel politically secure. His strenuous efforts to crush opposition, more than three years after he took over as party chief, do not suggest that he has enormous confidence. Either way, it may be hard to square the party’s five-year plan with Mr Xi’s own personal one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21694581-governments-economic-plan-next-five-years-will-not-live-up-its-promises-bold/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Political music + +The song dynasty + +Melodious love-offerings for Xi Jinping + +Mar 12th 2016 | BEIJING | From the print edition + +A psychedelic plan + +LAST year a kitschy animated video about the drafting of China’s new five-year economic plan, probably commissioned by the government, attempted to sell the country’s road map to English speakers (see first video, below). “Every five years in China, man; They make a new development plan,” goes the country-style ditty. As the National People’s Congress (NPC), China’s parliament, prepares to approve that document, a new video aimed at audiences at home seeks to instil love for the plan’s drafter-in-chief, President Xi Jinping, or Uncle Xi as state media often call him. “If you marry someone, marry someone like Uncle Xi; Swift and decisive, conscientious in everything he does,” belts out a woman in the folk-bombast style beloved of China’s propagandists (the second video, below). + +Such attempts to harness popular culture in the adulation of Mr Xi and his works are increasingly common. The latest fawning hit praises Mr Xi’s “heroism” and “unyielding spirit”, and lauds his war on corruption: “No matter whether it’s flies or tigers, monsters or freaks, he will fight them all down.” Accompanying footage shows goose-stepping soldiers and ballistic missiles at a parade last year celebrating the end of the second world war. + +Since taking office in 2012 Mr Xi has been fostering a public image of himself as a staunch defender of the Communist Party and its Maoist traditions. Signs of a growing personality cult abound. Tibetan delegates to the NPC were spotted wearing badges with Mr Xi’s picture on them, a form of leader-worship that fell out of fashion in China in the 1970s. A new (big yellow) book called “Xi Jinping: Wit and Vision” will soon be in bookshops. When Mr Xi visited America last year, the party’s main mouthpiece, the People’s Daily, released a video in which foreign students in China called the solidly built leader “super-charismatic” and “so cute”; one hoped her future husband would resemble him. + +Mao would have loved it. In parks across the country people still sing and dance to the hymns of his era; Mr Xi is reviving and remoulding a remarkably tenacious culture. The Xi ballads also echo Russian odes to President Vladimir Putin (“I want a man like Putin, who won’t be a drunk,” goes one). One song, “Uncle Xi loves Mama Peng”, praises a “manly” Mr Xi for his “fairy-tale” love for his wife, Peng Liyuan. “Xi Dada versus horrified corrupt officials” is a catchy hit about graft. Another one in the style of Peking Opera recounts Mr Xi’s visit to a pork-bun restaurant in Beijing in 2013. There is also a song praising Mr Xi for: “Always caring about what migrant workers need; Always thinking about how laid-off workers are doing.” + +Some are probably the spontaneous work of amateurs; others are made at the behest of government officials, either to propagate Mr Xi’s message or impress him. They reflect a growing politicisation of the arts and media (last year the party banned 17 songs by a rap trio called In3, whose lyrics rail against high medical costs, Beijing’s traffic and officials who dine out on state funds). Mr Xi would like to teach China to sing in perfect harmony with him. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21694579-melodious-love-offerings-xi-jinping-song-dynasty/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Carbon emissions + +Aiming low + +Research shows China’s dirtiest days could be over sooner than officials say + +Mar 12th 2016 | From the print edition + + + +ONCE an environmental sluggard, China now pursues green policies with gusto. Last September it announced plans to launch a national carbon-trading scheme in 2017 aimed at reducing emissions of greenhouse gases. It also played an important role in December in securing a global deal in Paris on combating climate change. On March 5th China announced that its new five-year economic plan would include a target to cap annual energy consumption at a tough-sounding 5 billion tonnes of coal equivalent by 2020, up from 4.3 billion now. It is beginning to make greenness sound all too easy. + +A study by two researchers in Britain—Lord Nicholas Stern, a prominent environmental economist, and Fergus Green, an expert on climate policy—suggests it may indeed be relatively easy for China, because of the modest targets that it is setting for itself. The country says its emissions of carbon dioxide (CO²) will peak by 2030. But the academics’ paper, due to be published on the website of the journal Climate Policy later this month, shows that achieving this will pose little challenge. + +The country’s coal consumption almost trebled between 2000 and 2013, the government says. But Lord Stern and Mr Green say it is possible that the highest peak of China’s CO² emissions may have been reached by 2014. Even if not, they are not going to rise anything like as fast as before, and are almost certain to begin falling by 2025. That assumes that GDP growth is in line with official targets of 6.5% a year on average for the rest of the decade, and 5.5% in the following five years. There are many who doubt such growth can be achieved. In any case, the decline of manufacturing as a source of growth will result in a diminishing need to burn fossil fuels to keep factories going. China may have been deliberately underestimating the rate at which this shift will happen. + + + +Recent improvements in the way that China gathers coal-related statistics give the researchers greater confidence in their projections. Official figures show that coal production fell 2.5% in 2014 and that imports dropped by 10.9%; in the first three quarters of 2015 production sank 4.3%. This suggests that China’s emissions intensity—the amount of CO² it emits per unit of GDP—has already started falling. Lord Stern and Mr Green say the numbers showing falls in coal production and imports correspond with trends seen in the generation of thermal power (which are relatively easy to monitor, because related data come directly from meters) as well as in manufacturing output. + +At the same time, the proportion of China’s energy generated by renewable sources, such as wind and the sun, is rising. The country already invests more in exploiting these than America and Japan combined. China believes its security might be threatened if it becomes overly dependent on imported fossil fuels, and it wants to reduce the smog created by coal-burning because it is causing public anger and many premature deaths. + +Between 2010 and 2014, non-fossil energy generation capacity increased by 73%. But using such infrastructure effectively is not so simple. Within the energy industry, disputes are rampant over which generators should have priority in dispatching electricity to grids. Wind and solar farms often lose out. And coal-fired plants are still being built apace as local officials find the short-term economic benefits of such projects hard to resist. But many analysts still think it is likely that China is underselling its emissions-reducing abilities. In 2020, when signatories to the Paris accord on climate change are due to set themselves new carbon-cutting goals, the world’s biggest emitter may come under pressure to be more ambitious. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21694577-research-shows-chinas-dirtiest-days-could-be-over-sooner-officials-say-aiming-low/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade with North Korea + +What sanctions? + +On the border between China and North Korea it is business as usual + +Mar 12th 2016 | DANDONG | From the print edition + +From China, with gritted teeth + +ONLY a few hundred metres separate the small but lively Chinese city of Dandong from Sinuiju, its drab North Korean counterpart on the opposite bank of the Yalu River. There are two iron-truss bridges in the city centre, built by Japanese who were then occupying the area: one in 1911 and the other in 1943. Both were badly damaged by American bombers during the Korean war of the 1950s. A surviving stretch of the older one, renamed “Broken Bridge”, is now a tourist attraction (on the right of the picture). The newer one (on the left) still carries road and rail traffic across the river, a vital conduit for North Korea’s trade with China. + +In theory, that may now be disrupted by sweeping sanctions imposed by the UN, with China’s backing, on March 2nd. They ban trade in luxury items and call for (potentially time-consuming and costly) inspections of cargo going into, and coming out of, North Korea. China is by far the biggest trading partner of the North; if these sanctions are being applied rigorously, it should be evident in Dandong, which handles an estimated 70% of the trade between the two countries. + +It is not, yet. The first reported case of sanctions being enforced involved the impounding of a North Korean cargo ship at a commercial port in the Philippines a few hours after the UN voted to impose fresh sanctions in response to tests by North Korea earlier this year of a nuclear device and a long-range ballistic missile (dressed up as a rocket carrying a satellite into space). But there has been no report of trade between North Korea and China being affected. + +On March 9th your correspondent saw a sporadic flow of lorries travelling in both directions across the bridge. Locals said the volume looked normal. A foreign observer familiar with the area says it may be that the details of the new enforcement regime “have not yet trickled down to the person wearing the hat at the border”. Traders in the city say they have yet to feel the impact of sanctions. At a riverfront shop selling North Korean alcohol, cigarettes and ginseng, the owner shows no concern. He says the goods he sells will not be affected (he is right that they are not banned, unlike watches, snowmobiles and jet-skis). + +It would certainly be a bother for traders if Chinese customs officials were to inspect every shipment for items prohibited by the UN, including anything that could be used to help the country’s nuclear and missile programmes. But it is far from clear that that is what China intends. The latest UN sanctions allow for less rigorous inspections in the case of goods needed for humanitarian purposes. China could argue that much of its trade with North Korea falls in that category: it is the main supplier of food and oil. Since the latest sanctions were imposed, Chinese officials have continued to sound lukewarm about them. China’s foreign minister, Wang Yi, said this week that “blind faith” in sanctions was not a “responsible” approach. + + + +Peninsula of provocation: A timeline of clashes between North and South Korea + +South Korean press reports have said, however, that China had already begun restricting some North Korean transactions at Chinese banks and barring North Korean vessels at Chinese ports by late February, before the latest sanctions. China’s agreement to the tougher regime is certainly a sign of its frustration with its dangerously capricious neighbour, whose leader, Kim Jong Un, said this week that North Korea had developed miniaturised nuclear warheads that could be mounted on ballistic missiles. He even threatened a nuclear attack in response to large-scale South Korean and American military exercises now under way. Some observers are sceptical that the North has acquired such technology. Most discount its bellicose bombast. + +If he wants to curry favour with China, Mr Kim could try holding up his end of a deal for building a new bridge in Dandong. Gleaming but still idle, it was built by China at a cost of more than $325m. China has publicly blamed North Korean foot-dragging: in North Korea, the bridge ends in an empty field, connected to nothing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21694578-border-between-china-and-north-korea-it-business-usual-what-sanctions/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Women in Saudi Arabia: One step forward, one step back + +Transport in the Middle East: Let’s go together + +Equatorial Guinea: Palace in the jungle + +Rwanda: A hilly dilemma + +Energy in Rwanda: What lies beneath + + + + + +Articles Sections Next + +Women in Saudi Arabia + +One step forward, one step back + +Progress for women is going into reverse under the new king + +Mar 12th 2016 | JEDDAH AND RIYADH | From the print edition + + + +WHEN Hind Al-Otaibi went to the Riyadh Personal Status Court to have her father struck out as her wali, or guardian, the judges seemed sympathetic. Her father had raped and bruised her, Ms Otaibi, who was a teenager at the time, told the court. He refused to let her travel abroad, even to her mother’s funeral, and when she escaped from home had persuaded social services to send her back. After consideration, the judges determined last year that her father, an imam from the Saudi interior of Nejd, remained her legal guardian; but that a guardian only had powers to approve his ward’s marriage. If upheld on appeal, the ruling could topple the legal edifice of male control, depriving walis of their power over whether their women can study, work, travel or open bank accounts. “Emancipation from slavery,” says Ms Otaibi. + +In recent years, the lot of Saudi women has improved. An increasing number of malls, gated communities and even private beaches, where women swap burqinis (the all-enveloping swimwear Saudi women must wear) for bikinis, were put off-limits to the prying eyes of the religious police. The government sent tens of thousands of women abroad to study in Western universities, where they could experience the freedom of moving, dressing and driving as they pleased. Those left behind could gawp at the gap between their own world and the virtual one to which many Saudis escape for hours every day. + +Armed with doctorates, many have returned to prize open the job market. In 2012 the courts licensed their first female lawyer. Last December women for the first time stood for election to local councils. Bayan al-Zahran, a lawyer in Jeddah, has set up the first female-led law firm, and law faculties in women’s colleges churn out fresh attorneys. + +The numbers, though, remain paltry. Only 18% of working-age Saudi women work (against 65% of men), one of the world’s lowest rates. And for all the headlines, the kingdom has only 67 female lawyers (out of 3,400), and 21 female councillors (out of 3,150). Female lawyers say they have to contend with judges who tell them to sit down when they stand up to represent clients. But over time the taboos on women in public life seem to fraying. “Women are better at representing other women because women natter more than men, and women understand them better,” says Judge Faisal Orani, fresh from sentencing a whisky-drinker to 80 lashes. He opposes the introduction of female judges, he says, “but over time, anything can change. Maybe I’ll change too.” + +The kingdom’s joyless gender segregation persists. Banks maintain separate entrances for men and women, Starbucks restricts women from its open-air balcony and McDonald’s makes men and women queue separately for its burgers. In Riyadh and in Jeddah, though not in a few more liberal places such as Qatif, the clerics—who always opposed female participation in the elections—have stopped the new female local councillors from sitting in the council chambers with men. + +But to clerical consternation, (veiled) women now operate the tills in Ikea, a Swedish furniture outlet, in a poorer part of Riyadh, and men and women queue in mixed aisles. At the King Abdullah University of Science and Technology outside Jeddah, male and female students attend the same lectures and mingle freely. Architects of new office blocks locate male and female toilets on the same floor. + +Most Saudi women have yet to take the liberties their Iranian counterparts do with the veil. “Parents would object if I didn’t cover my face,” says a primary school headmistress who longs to remove it. But growing numbers of high-school girls are donning headscarves only, no matter that their elders consider that scandalous. In Jeddah, a more liberal port city, seamstresses design abayas with bright colours and women smoke water-pipes out of doors. + +But worryingly, King Abdullah’s incremental reforms seem to be stalling and even going to reverse under his successor, King Salman. His young son, Muhammad, who operates most of the levers of power, says he is anxious to increase Saudi productivity, and to lower birth-rates, by getting women out of the home and into the workplace. But even so he seems nervous of confronting the religious establishment, on whom the Al Saud rulers depend for legitimacy. Many of Abdullah’s reformers have been shifted; and a host of hardliners are back. The only female minister, in the education ministry, was dismissed soon after Salman took the throne. + +Four women who publicly defied the still unreformed ban on female driving were barred from contesting local elections. Shoppers in Jeddah report that the religious police are back, demanding that department stores black out any glimpse of unveiled women on their packaging. One executive at an international financial-services firm says that the snoops carried out three spot-checks on her office last year to check for signs of the sexes mingling. She is once again being forced to enter through side-entrances when visiting clients, while her male counterparts go through the front door; and they have to travel to meetings in separate cars. + +In the new, more conservative environment, perhaps the best hope for women is that the country might rediscover its own traditions. A senior official admires footage of the Saudi state’s founder, Abdulaziz, holding court in 1930s Mecca, while women riding on horseback bring their wares to market. At Jeddah’s annual festival, the organisers display the colourful costumes women used to wear before the puritans imposed the black abaya of the central desert on the whole country. Most striking of all is the Prophet Muhammad’s own requirement that women and men perform the pilgrimage to Mecca together; and that when women go round the Kaaba, Islam’s holiest place, they show their face. Saudi Arabia’s new rulers might take note. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21694406-progress-women-has-gone-reverse-under-new-king-one-step-forward-one-step/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Transport in the Middle East + +Let’s go together + +Public transport is all the rage in the region. More is desperately needed + +Mar 12th 2016 | BEIRUT AND CAIRO | From the print edition + +Cairo needs a better metro + +RIYADH, the Saudi capital, is no easy place to navigate. It sprawls over 1,500 square kilometres (580 square miles) and, but for a few exceptions, its drab, low-rise buildings all look much the same. For most of the year it is far too hot and dusty to walk anywhere. Little wonder the kingdom is touting a new 85-station metro, which is due to open in 2018, as a revolution for the city (it is expected that women will travel in separate carriages). + +Public-transport systems are in vogue across the region. Doha, the capital of tiny Qatar, will open its metro a year after Saudi Arabia. Oman is building railways. And it is not just the Gulf: Algeria is also constructing railways. Morocco is interested in trams. Lebanon is looking into a rapid bus system—a bus and metro hybrid with its own lanes—for the areas around Beirut. + +This trend is relatively new. Many Middle Eastern countries started to invest in buses only around a decade ago, but public networks are still limited; private minibuses abound. Dubai was the first place to operate a mass transit system when it opened its metro in 2009. In the few countries with railways, they are often out of use. Instead, governments have tended to build new roads. Amman and Beirut have no transport other than buses. Metro systems in Cairo and Tehran have failed to keep pace with urban expansion. Mostly, public transport in the region remains “really very bad”, says Ziad Nakat of the World Bank. + +Demand for ways to get around has grown rapidly since the 1970s. Populations have exploded. The region is one of the most urbanised in the world: some 60% of Middle Eastern people live in cities. Poor urban planning means towns often sprawl in every direction. Greater Cairo boasts a population of some 20m people. + +The lack of good public transport, coupled with rising incomes in some places, has pushed up the use of cars. Pew, an American research outfit, reckons 81% of Lebanese households have a car, not far off America’s 88%. Between 2012 and 2022, car ownership in the region is set to grow more quickly than any other, according to Carmudi, a car classifieds site. Meanwhile in poorer countries, such as Egypt, where cars are beyond measly pay packets, people struggle to get from A to B. Donkeys and carts endure. Tuk-tuks ply the streets in shanty towns and rural areas. People hang out of minibuses or are forced to squash up, faces against windows. + +The ensuing mess makes for nasty air and grumpy people, not to mention some of the world’s highest rates of road fatalities. A World Bank study estimated (conservatively) that 4% of Egypt’s GDP was lost each year because of time wasted in traffic in Cairo, its capital and the Arab world’s megacity. Part of the reason is that tailbacks encourage people to move into cities rather than commute. This adds to the stresses on cities already struggling to provide services to their people, such as Beirut, whose 2m inhabitants do not receive 24-hour power and water. + +The old solution of simply building more roads is unsustainable. For one thing, land has become too expensive to tarmac over. But shiny buses and trains—one of Riyadh’s stations is being designed by the architect Zaha Hadid—will not be enough on their own, either. People must be tempted to get out of the cool comfort of their car. Many governments, from Egypt to Iran, have started to remove fuel subsidies, causing the price of petrol to rise. But it is still only 20 cents per litre in Kuwait, compared with $1.40 in Britain. Road tolls, which exist in Dubai, and higher parking charges are needed across the region. + +The biggest barrier to public transport, though, is the expense. Metros can cost millions of dollars per kilometre of track. At a time of low oil prices, even the oil-producing states are cutting back. The United Arab Emirates has stopped tenders for the second part of Etihad, a new 1,200km national railway that is costing 40 billion dirhams ($11 billion). But a day navigating Cairo’s roads is enough to show that inaction now will lead to higher costs in the future. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21694542-public-transport-all-rage-region-more-desperately-needed-lets-go/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Equatorial Guinea + +Palace in the jungle + +Ordinary folk see none of their country’s riches + +Mar 12th 2016 | From the print edition + + + +TEODORO OBIANG, the president of Equatorial Guinea, and Teodorín, the most influential of his 42 recognised children, have expensive tastes. While most of his citizens live on less than $2 a day, the older Mr Obiang once shelled out $55 million for a Boeing 737 with gold-plated lavatory fittings. His son had at one point amassed $300m in assets, including 32 sports cars, a Malibu mansion and nearly $2m in Michael Jackson memorabilia. + +The past few years have been less kind to the Obiang clan. In 2014 the United States Department of Justice forced Teodorín Obiang to sell off a Ferrari, his Los Angeles abode and six life-size Michael Jackson statues in a money-laundering settlement. (He was allowed to keep one of the King of Pop’s crystal-encrusted gloves.) His father, who enjoys the distinction of being the longest-serving president in the world (36 years), has seen his pockets increasingly pinched as oil prices have crashed. + +While prices were favourable the country boomed. According to the IMF, its GDP expanded by an average of almost 40% per year between 1996 and 2006. But little wealth trickled down to the population. Though its GDP per head is the highest in Africa, over three-quarters of its population lives below the World Bank’s poverty line. Government spending on education and health lags far behind the sub-Saharan African average. Tutu Alicante, the executive director of EG Justice, an advocacy group, compares visiting a public hospital to “signing your own death sentence”. Patients must bring their own sheets and share their rooms with rats. + +Mr Obiang has instead channelled Equatorial Guinea’s petrodollars into grand projects such as Oyala, a new city he is building deep in the jungle. He hopes to move his capital there to avoid seaborne coup attempts, such as the one he suffered in 2009. The area currently consists of a new 450-room luxury hotel and a warren of empty buildings intended to become an international university. + +Such endeavours are becoming increasingly difficult to fund. Declining oil production, coupled with lower prices, have led Equatorial Guinea’s economy to shrivel since 2013. Last year was especially grim: GDP shrank by an estimated 10.2%. The great majority of citizens never reaped the benefits of their country’s upturn, so their experience of its downturn has been muted, but work is getting scarcer. + +Mr Obiang, who overthrew his uncle to become president, has a deplorable human-rights record; dissidents who anger him sometimes end up in prison where guards have been known to shock, beat and carve up their wards with knives. Nobody would be surprised if the economic crunch results in even greater repression. In January, two members of an opposition party, Convergence for Social Democracy, were arrested for the crime of handing out leaflets announcing a future meeting. + +As the 73-year-old Mr Obiang becomes frailer, his sons, including the prodigal Teodorín, have begun jockeying to succeed him. But in November, when Equatorial Guinea is scheduled to hold a presidential election, there is no doubt about who will prevail—whatever the price of oil. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21694543-ordinary-folk-see-none-their-countrys-riches-palace-jungle/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Rwanda + +A hilly dilemma + +Should Paul Kagame be backed for providing stability and prosperity or condemned for stifling democracy? + +Mar 12th 2016 | KIGALI | From the print edition + + + +AT SIX in the evening, as the streets start to throng with motorcycle taxis taking people home, a senior civil servant in Rwanda’s ministry of infrastructure sits back at his desk with a large flask of tea. The security officers on the entrance may have already left, but on the second floor officials are settling in for several more hours of work. Glance at their targets—more than doubling the amount of electricity generated in the country, providing infrastructure in cities to accommodate an urban population twice its current level, and all by 2018—and you can see why they are still at their desks. This is a country in a hurry. Twenty-two years since the start of a genocidal civil war that killed about a fifth of the population (and 70% of the minority Tutsis) and saw a third of the survivors fleeing across its borders, Rwanda is still racing to rebuild itself. And the sternest taskmaster is its president, Paul Kagame, who led the rebel forces that ended the genocide and has since shaped the country. + +The country he liberated had suffered not just an unimaginable human disaster; it was also left wrecked at the end of the civil war. Soldiers and militias loyal to the genocidal Hutu regime had systematically destroyed power plants and factories as they retreated. Hospitals and universities were devastated, their staff butchered or in exile. “We lost a lot of scientists,” Gerardine Mukeshimana, the minister of agriculture, says matter-of-factly, when explaining why the country has only limited capacity for agricultural research. + +It was also still dangerous, as forces from the former government attacked across the border from bases in the Democratic Republic of Congo (DRC), to the west, killing civilians and soldiers. “The hills were alive with the sounds of bazookas,” recalls Praveen Moman, a British businessman who runs a string of eco-lodges in the region, of his visits in the late 1990s, years after the war had officially ended. “Now visitors get off the plane and think they’ve arrived in the Switzerland of Africa.” + +By almost all social and economic measures Rwanda has proved to be the developing world’s shining star. Income per capita has doubled since 2000 and, unlike most other countries in the region, it has managed to grow quickly while also reducing inequality. One reason is that its Tutsi-dominated government (it would contest this designation, since talk of ethnicity is firmly suppressed) has bucked the trend of many of its neighbours. Instead of crafting policies aimed at benefiting the kin of those in power, many of its resources have gone to improving the lives of the rural poor, who are largely Hutu. The UN Human Development Index shows that Rwanda had improved by more than any other country over the past 25 years. + +These achievements are the more impressive since Rwanda is small, hilly, overcrowded and landlocked. Yet with few natural resources other than its fertile soil and a few mines, it has cranked out average growth of 7.5% over the past 10 years. + +Much of its success is due to effective government. It has clamped down on corruption—Transparency international, a Berlin-based organisation, ranks it as the fourth-least corrupt country in Africa, and well above places such as Greece and Italy. It is also because its government is both disciplined and technocratic. Officials and ministers are expected to work hard and are held accountable through performance contracts that extend right down to local mayors and other community leaders. Those who fail to meet targets (or who fiddle the numbers) are swiftly fired. + +A third reason is that it has embraced economic policies that are friendly to investment, growth and trade with great vigour; it is rated by the World Bank as the easiest place in continental Africa to do business. Many of its policies read as if they could have been written by the IMF, or this newspaper. Take power, for instance. Instead of trying to boost supply by pouring money into a state-owned utility it has encouraged private investment. That has spurred a wave of projects including extracting gas from Lake Kivu (see article). “Rwanda is an absolute pleasure to do business in compared with a lot of other countries in Africa,” says Paul Hinks, the CEO of Symbion Power, an American firm that is building one of them. + +Because of its relatively competent administrators and its commitment to the poor it has become the darling of Western governments and NGOs. More than a third of government revenues (and a tenth of GDP) come from aid. The fecund soils of its green capital, Kigali, sprout aid-agency offices like grass after the rains. + +The downside + +Yet those pouring money into Rwanda are confronted by a dilemma. As much as Rwanda has progressed on the economic front, its record is badly blotted when it comes to human rights. Domestic opponents of Mr Kagame have a nasty habit of getting locked up or being murdered, even once they have fled into exile. + +Another stain was Rwanda’s destabilisation of the DRC in the late 1990s after Rwandan troops invaded to stop cross-border raids by forces of the former government. The subsequent violence led to more than 5m deaths and contributed to the disintegration of the DRC. Fear of Mr Kagame runs so deep that in Kigali’s drinking holes people glance left and right, and drop their voices to a whisper, when venturing an opinion on him. With almost no opposition, and no obvious successor, Mr Kagame recently won an overwhelming mandate for changes to the constitution that will allow him to run for a third term in office in 2017 (and two more after that, potentially leaving him in power until 2034, when he will be only 76). + +The dilemma facing the West is whether to keep giving money to an authoritarian government with such scant regard for human rights and little more than the trappings of democracy. A consensus among aid and development workers in Kigali seems to be that it should; for in few other countries does assistance go so effectively to helping the poor. A broader conundrum facing the country’s benefactors is whether they ought to press Mr Kagame not to run in 2017. Yet aside from limp statements of disapproval (America said it was “disappointed” by his decision) from a few countries, many diplomats privately question whether anyone else could hold the country together. They point to its neighbour, Burundi, which is falling towards a civil war that is already being marked by ethnic killings. Without Mr Kagame’s firm hand, they argue, the miracle wrought in Rwanda could quickly be reversed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21694551-should-paul-kagame-be-backed-providing-stability-and-prosperity-or-condemned/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Energy in Rwanda + +What lies beneath + +Exploiting a hidden menace + +Mar 12th 2016 | KIBUYE | From the print edition + +Could it explode? + +THE breathtaking beauty of the Lake Kivu region, resting between the volcanoes and steep hills of the Democratic Republic of Congo and Rwanda, is exceeded only by its mercurial temperament. A clear sunny day can turn to a tropical downpour in minutes, before the sun beats down again. The lake’s still waters also hide another face: dissolved within are billions of cubic meters of flammable methane and more still of carbon dioxide, the result of volcanic gases seeping in. + +Two other lakes, in Cameroon, are filled with deadly carbon dioxide. One of them, Lake Nyos, belched out a huge bubble of it in 1986, asphyxiating about 1,700 people. But Lake Kivu is the only lake anywhere also to contain methane. The mix of gases, held tight by pressure like bubbles in a bottle of fizzy drink, presents both a source of power and a danger to hundreds of thousands of people living around the lake. If it were to froth over, as scientists think it has in the distant past, it could generate huge explosions and smother towns and villages in dense clouds of carbon dioxide. + +Now several firms are working to harness the energy and mitigate the dangers by gingerly extracting the methane from the lake. Among them is Contour Global, an American firm with power projects across Africa. In December it started producing power from its KivuWatt project. Below a huge barge is a pipe that sucks up water, from which it extracts and purifies the methane before pumping the less-fizzy water back down. + +In time the project will be expanded to produce about 100 megawatts of energy. That is more than half of Rwanda’s current, inadequate, generating capacity. Other firms are racing to catch up. Symbion Power, another American company, recently signed an agreement with the Rwandan government to build a 50MW power plant that will also run off methane tapped from the lake’s waters. + +The technology being used to tap the lake’s gas is cutting-edge; but this generation of wildcatters is not the first to see power beneath its placid waters. In 1963 an intrepid businessman sent down a small pipe that he used to power a brewery to produce Primus, a light lager with bubbles altogether more palatable than those used to make it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21694554-exploiting-hidden-menace-what-lies-beneath/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Europe’s migrant crisis: Desperate times, desperate measures + +Regional elections in Germany: Mutti’s challenge + +Nadia Savchenko: A modern martyr + +Italy’s Five Star Movement: Smartening up + +Charlemagne: The necessity of culture + + + + + +Articles Sections Next + +Europe’s migrant crisis + +Desperate times, desperate measures + +A deal with Turkey to stanch the flow of refugees may be the European Union’s last hope to find a solution + +Mar 12th 2016 | From the print edition + + + +A DEAL born of political desperation and fraught with practical, legal and ethical difficulties. That would seem to be a fair description of the agreement hammered out between Germany and Turkey to tackle the refugee crisis, which was endorsed by European Union leaders and Turkey’s beaming prime minister, Ahmet Davutoglu, on March 7th. Last year 1.2m people entered Europe from Syria, Afghanistan and elsewhere. Without concerted action at least as many are expected to try to follow them this year. + +The idea behind the agreement is to smash the business model of the people-smugglers. Any migrants landing on a Greek island after making the short but perilous voyage across the Aegean Sea will automatically be sent back to Turkey, where they will be put at the back of the queue of those seeking asylum. To relieve the pressure on Turkey, which has taken in 2.7m refugees since Syria’s civil war began five years ago, for each Syrian returned another whose asylum application has been properly processed will be allowed to enter the EU under an official resettlement scheme. If all goes to plan, migrants may be more reluctant to hand over their life savings to criminal networks and risk their lives making the crossing in capsize-prone inflatable boats. + +Despite a recent slight drop, the number of people crossing the Aegean remains high (see chart). According to the International Organisation for Migration, more than 320 people have already drowned this year. Last week 25 died off the Turkish coast, including 13 children. For those who do make it across, conditions along the land part of the route have worsened. On the border of Macedonia, which has been closed to refugees since March 9th, thousands are waiting in squalid camps. Stemming the flow is of utmost urgency. + + + +For Germany’s chancellor, Angela Merkel, faced with important state elections, the political stakes have become much higher (see article). Mrs Merkel’s welcoming stance to refugees, which at first caught the national mood, has since strengthened opponents in her own party and dented her popularity. + +Turkey’s government has made the most of the EU’s predicament. On March 4th a court placed the country’s largest-circulation newspaper, Zaman, under state control; its real crime, it seems, was to have links to Fethullah Gulen, a Muslim leader based in America—once an ally of the president, Recep Tayyip Erdogan, but now a rival. This latest authoritarian excess elicited only the mildest murmur of concern from the EU’s diplomatic service. + +The terms extracted by Mr Davutoglu in his negotiations with Mrs Merkel are generous. They include the speeding up of a $3.3 billion payment pledged in October, with the sum eventually being doubled, to help pay for better conditions in Turkey’s refugee camps over the next three years; the opening of five new “chapters” in long-stalled discussions about Turkey’s bid to become a member of the EU; and the relaxation of visa requirements for Turkish citizens entering the EU. + +All this has attracted plenty of criticism, though the deal could still be amended by European leaders next week before it is finalised at another summit on March 17th. Many are shocked that the EU has made such a lavish offer when Mr Erdogan has nothing but contempt for Europe’s values and is undermining the independence of Turkey’s courts and media. Some EU members, particularly those with strong right-wing parties, regard visa-free travel as “very sensitive and problematic”, says Camino Mortera-Martinez of the Centre for European Reform, a think-tank. + + + +INTERACTIVE: A guide to Europe’s migrant crisis, in numbers + +The legality of the proposal has also been questioned. Filippo Grandi, the head of the UN refugee agency, told the European Parliament he was “deeply concerned about any arrangement that would involve the blanket return of anyone from one country to another without spelling out the refugee protection safeguards under international law.” Lawyers are bound to challenge whether Turkey can be declared a safe third country. Under Turkish law, only those fleeing from Europe are granted refugee status, although temporary protection has been given to Syrians. Turkey has deportation agreements with some countries, including Afghanistan, that others consider to be war zones. + +It is also far from clear whether the deal, if it is indeed agreed upon, can be implemented. The forcible deportation of many thousands of people from Greece will be a logistical nightmare. Much is made of the increasing NATO naval presence in the Aegean since February. The alliance’s mission, though, is not to turn back refugee-laden boats, but to provide real-time intelligence to Frontex, Europe’s struggling border agency, and to Turkish and Greek coastguards which, for long-standing historical reasons, find co-operation difficult. It is also unclear who will decide who gets into Europe. Will that be left to Turkey or will EU officials set up shop in the refugee camps? Finally, an equitable quota-based system for distributing refugees around Europe remains as far away as ever. + +Yet for all the unease and scepticism, this rather tawdry agreement may be Europe’s last chance of regaining some control over the crisis. Somehow, it will have to be made to work. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21694569-deal-turkey-stanch-flow-refugees-may-be-european-unions-last-hope-find/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Regional elections in Germany + +Mutti’s challenge + +Angela Merkel’s refugee policy faces its first test at home + +Mar 12th 2016 | LANDAU | From the print edition + + + +LOCAL topics usually dominate regional elections. Improving schools and boosting infrastructure are normally the most hotly-contested topics of debate. But when three of Germany’s 16 federal states go to the polls on March 13th the elections will be dominated by one issue: Germany’s refugee policy. The results will be seen as the first big test for Angela Merkel, the German chancellor, since she opened the borders to refugees last year. + +Currently Mrs Merkel seems to be doing relatively well in the polls, despite a backlash against her refugee policy from parts of the German public and several conservative politicians. In a poll in late February for ARD, a German television station, 54% said they were happy with her work, compared with 46% a few weeks earlier. The prospect of a deal between the European Union and Turkey could boost her standing further. + +Even so the results look likely to be tricky for Mrs Merkel and her party. There are big regional differences between the three states (see map). Baden-Württemberg is an industrial powerhouse in the south-west; its neighbour, Rhineland-Palatinate, makes some of Germany’s best wines; Saxony-Anhalt is a much poorer state in what used to be East Germany. Only Saxony-Anhalt is governed by a Christian Democrat. Baden-Württemberg is currently run by Winfried Kretschmann, a popular premier from the Green party, while Rhineland-Palatinate’s incumbent is Malu Dreyer, a well-liked Social Democrat. + +Part of the difficulty is that, despite the support for Mrs Merkel, the Christian Democrats have been faring less well in the polls. Many conservatives have defected to Alternative for Germany, a right-wing party founded in 2013, which is at about 10% in the two western states and an astonishing 19% in Saxony-Anhalt, ahead of the Social Democrats. In response the local Christian Democratic big-wigs, Guido Wolf in Baden-Württemberg and Julia Klöckner in Rhineland-Palatinate, have contorted themselves into campaigning with Mrs Merkel while simultaneously distancing themselves from her refugee policy. Ms Klöckner has even proposed a plan which resembles the daily refugee quotas recently adopted by Austria—an idea which Mrs Merkel opposes. + +This helps the incumbents, especially Mr Kretschmann. People in Baden-Württemberg are a generally conservative bunch, but with an ecological bent. They like Mr Kretschmann because he is not like the leftist Greens in northern Germany, but rather prides himself on being pragmatic, pro-business and fiscally conservative. On refugees, moreover, Mr Kretschmann is closer to Mrs Merkel than to the Christian Democrats in the state. “I support the chancellor’s course with all my strength and passion,” he boasted at a campaign event in Stuttgart. That is awkward for the chancellor. In a television interview, she had to clarify that people who support her should vote Christian Democrat, not Green. + +Something similar is taking place in Rhineland-Palatinate. Mrs Dreyer is so popular that the Social Democrats’s slogan is simply her first name, “Malu”. Suffering from multiple sclerosis, she campaigns with the aid of an electric tricycle, the “Malumobil”, and has a winning charm. This makes it hard for any of her opponents to find fault with her. She, too, supports Mrs Merkel’s refugee policy, making Ms Klöckner appear isolated on the matter. + +Still, the outcome will be read as a signal of whether most Germans are still behind Mrs Merkel’s welcoming stance towards refugees. A vigorous showing by the centre-left parties would indicate that it is. Likewise a strong finish by the Alternative for Germany would point to a dangerous polarisation in German politics. But the outcome will also hint at how loyally the Christian Democrats will stand by their own chancellor. That is what will ultimately decide Mrs Merkel’s fate. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21694568-angela-merkels-refugee-policy-faces-its-first-test-home-muttis-challenge/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nadia Savchenko + +A modern martyr + +Ukraine has got a new national hero + +Mar 12th 2016 | From the print edition + +A defiant Nadia Savchenko + +UKRAINIAN historians may yet be grateful to Russia’s president, Vladimir Putin. His war against the country has given it a rallying cause. He has also provided it with a national hero, a Ukrainian Joan of Arc. She is Nadia Savchenko, a 34-year-old military pilot who served in Iraq. In July 2014 Ms Savchenko was captured by pro-Russian rebels in eastern Ukraine, smuggled by Russian security services across the border and put on trial for allegedly directing artillery fire that resulted in the death of two Russian television journalists. Prosecutors are demanding that she be sentenced to 23 years in jail and fined 100,000 roubles ($1,400). The fact that she was captured at least an hour before the journalists were killed did not seem to interest the court. + +Ms Savchenko’s trial, which has been under way for nearly two years, has also turned into a prosecution of the Russian legal system. She has been made a member of Ukraine’s parliament and appointed to the parliamentary assembly of the Council of Europe. Western and Russian intellectuals have signed petitions in her support. John Kerry, America’s secretary of state, called for her immediate release, as did Federica Mogherini, the EU’s high representative for foreign policy. She has several admirers among prominent Russian liberals. Not since Soviet times has a case of a political prisoner in Russia caused such furore. + +On March 9th Ms Savchenko, who has been held in prison in the small town of Donetsk, in southern Russia, made a closing statement in her trial: “I accept neither guilt, nor the verdict, nor the Russian court…I want the whole democratic civilised world to realise that Russia is a third-world country, with a totalitarian regime and a petty tyrant-dictator, where human rights and international law are spat upon.” She then leapt onto a bench inside a cage and showed her middle finger to the court’s three judges. She finished off by singing the Ukrainian national anthem. + +Since her trial began Ms Savchenko has posed a direct challenge to the Kremlin: either it returns her to Ukraine or she dies in jail. Ms Savchenko is not bluffing: she has been on several hunger strikes, including one that lasted 82 days. On March 4th she refused to take water or food and said she would continue her fast until her verdict. But the court said this would not happen until March 21st. On March 10th she agreed to take water. + +Ms Savchenko would not have become a martyr if she had not been abducted. She was one of the activists of the Kiev revolution in early 2014. After Russia’s annexation of Crimea she joined Aidar, one of the most controversial “voluntary” battalions fighting the separatists in the east of Ukraine. Amnesty International, an NGO, claims that Aidar was involved in several human-rights violations, including abductions and unlawful detentions. + +But Ms Savchenko may turn out to pose as much of a threat to the Ukrainian government, which has been mired in corruption scandals and internal squabbling, as she does to the Kremlin. If and when she returns to Ukraine she will be given a hero’s welcome. She could well turn into a populist leader who could rally the people against the government. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21694580-ukraine-has-got-new-national-hero-modern-martyr/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Italy’s Five Star Movement + +Smartening up + +An anti-establishment political group becomes slightly more conventional + +Mar 12th 2016 | ROME | From the print edition + +Virginia Raggi, a sharp contender + +EVEN fans of the Five Star Movement, an Italian political group often described as populist, maverick and anti-establishment, would never have credited it with slickness. So when the campaign video for Virginia Raggi, a 37-year-old running for mayor of Rome as the Five Star candidate, appeared online in late February, it came as a shock. Mute the soundtrack on Ms Raggi’s video, in which she declares that “we can again be a world city”, and her sharp suit and on-message presentation might be those of an aspiring Democratic congresswoman in America or Tory politician in Britain. A talented debater, Ms Raggi illustrates how Italy’s second-biggest political group is increasingly coming to resemble a normal party. + +Polls are continuing to give the Five Star Movement a quarter of the electorate: about eight percentage points behind the governing centre-left Democratic Party (PD), but ten percentage points ahead of the right-wing Northern League. In Rome, a city that has long suffered from neglect and corruption at the hands of mainstream parties, Ms Raggi stands a fair chance of success when the vote is held, most likely in June. That she should have a video ready before her rivals hints at both the importance the Five Star Movement attaches to her campaign, and to its growing professionalism. + +The enduring popularity of the group is all the more remarkable in view of recent setbacks and upheavals. In different ways, it is the most and least democratic of Italian political movements. Disdainful of conventional democracy, its leaders believe the internet offers a chance to return to an Athenian-style, direct democracy in which every major political issue would be submitted to an online referendum. Within the movement, online ballots are used to set policy and select candidates (and also to expel elected representatives who fail to abide by its strict rules). + +But the really big decisions, over whether or not Italy should stay in the eurozone and the like, have always been taken by its two unelected co-founders: Beppe Grillo, a satirical comedian, and Gianroberto Casaleggio, a political activist and entrepreneur. + +Although since last year Mr Grillo has started to concentrate more on his stage career, his influence is still decisive. Last month, as the Senate debated a bill to legalise civil unions, including same-sex partnerships, Mr Grillo unexpectedly announced he would give Five Star Movement senators a free vote on a clause that would allow gay partners to adopt each other’s biological offspring. Many Catholics and conservatives feared the provision would encourage surrogate births. The Movement subsequently withdrew its support for a motion that would have allowed the clause to go through unchallenged. That wrong-footed the PD, which had assumed the movement would not antagonise gay people. The PD had to turn to the centre-right for support. The measure went through without its contentious clause. + +Commentators accused Mr Grillo of cynically pitching for right-wing votes in preparation for the election in Rome. But Mr Casaleggio said the decision was partly due to “different sensibilities” in the Movement. It is far less radical than Greece’s Syriza government or Spain’s Podemos. United by a loathing for Italy’s tainted mainstream parties, Five Star activists are a heterogeneous bunch, often disagreeing on issues such as privatisation or abortion. Most are progressive, some distinctly conservative. Mr Grillo is critical of the euro and happy to hobnob with Nigel Farage, leader of the UK Independence Party, which is trying to get Britain out of the EU. If it is to become a mainstream party of government, such differences will need to be settled. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21694574-anti-establishment-political-group-becomes-slightly-more-conventional-smartening-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +The necessity of culture + +Europe’s shared history should be treasured, not ignored + +Mar 12th 2016 | From the print edition + + + +THE Mausoleum of Augustus in Rome is a sad place: fenced off and closed to visitors. In most other countries this huge tomb in the city centre would be a treasured national monument. Yet for years the only use Romans made of it was to take their dogs to relieve themselves in the encircling weeds. The latest plans to restore it were approved in 2007. But it was only last month that some of the funding was set aside. With a new mayor due to be elected soon, the money might yet be diverted elsewhere. + +The plight of the final resting place of Rome’s first emperor illustrates an irony. The European states with the greatest ancient cultural heritage, Italy and Greece, are those whose governments spend least on the preservation of that heritage and promotion of the arts. In 2013 spending on culture accounted for 0.2% of public expenditure in Greece, the lowest share of any EU country, and a measly 0.6% in Italy, the second-lowest, jointly with Portugal and Britain. Culture’s most avid patrons were the Renaissance men and women of the government of Latvia, who gave it 3.2% of their budget. + +The parsimony of Italy and Greece is partly connected with their economic difficulties. They are the member states with the heaviest public debts (133% and 179% of GDP respectively). Some of the severest cuts prompted by the euro-zone crisis were made in their culture budgets. But even before the upheaval, Italy and Greece had a propensity for low official spending on culture, which was all the more damaging since private funding has traditionally been scorned in both countries. + +Culture has special relevance at a moment when Europeans are questioning their common identity more intensely than at any time since the second world war. There are two arguments for the claim that Europeans have more in common than base economic self-interest. One, promoted by the former pope, Benedict XVI, emphasises the continent’s Christian heritage. But many Europeans are understandably wary of defining themselves in terms of religion when Europe is secularising rapidly, and when many of its enemies use religion as a badge of identity. + +An alternative argument reaches back to classical times and finds in the Roman empire and Greek philosophy the continent’s earliest unification and common beliefs, most notably in democracy. Like other founding myths, this one contains a fair measure of wishful thinking: Plato was no fan of democracy. Even so, the classical narrative that weaves through history from ancient Athens by way of the Renaissance to the Enlightenment and beyond offers an identity for Europe rooted in cultural and intellectual, as well as religious, values. Culture is frequently cited by Greek and Italian officials as an implied reproach to uncouth northerners obsessed with rules: kicking either state out of the euro zone would be tantamount to Europe ripping out its heart. + +Recently, however, the two countries’ approaches have diverged markedly. The most dramatic evidence was provided by Matteo Renzi, Italy’s prime minister. Soon after jihadists from Islamic State attacked Paris last year he declared that Italy would counter terrorism with €1 billion ($1.1 billion) to be spent on culture, to match €1 billion on extra security. As with many of Mr Renzi’s announcements, there was small print: his finance minister later explained the extra spending was dependent on the European Commission’s agreement to more budget flexibility. + +Even so, it was still a touching act of defiance against the murderously irrational and faith in the role culture can play in resisting it. With or without the blessing of the commission, this year Mr Renzi has approved a 27% increase in the culture ministry’s budget, to €2 billion (though it falls thereafter). + +Its energetic minister, Dario Franceschini, is trying to boost the involvement of the private sector and increase the interest of youngsters in their heritage. A tax break for cultural sponsorship is to be extended indefinitely. The government plans to give a card worth €500 to every 18-year-old for spending only at theatres, museums, bookshops and archaeological sites. + +In Greece the situation is radically different. Over 800,000 refugees arrived there in 2015. Trying to deal with this crisis, as well as pushing through pension reforms and bringing down national debt, has absorbed much of the government’s time and energy. + +But another reason why so little cash is available for culture is a view that Greece’s heritage is solely a matter of national concern. “Greece exists because of its heritage: other Europeans decided that, because of that heritage, it should be freed from Ottoman rule,” says Evangelos Kyriakidis of the Initiative for Heritage Conservation, a research organisation. The state lays claim to total ownership of the past: take a metal detector to hunt for ancient coins, as you can in many countries, and in Greece you could wind up in jail. Private cultural initiatives, even those funded by Greeks, are often met with disdain. + +Wine-dark seas + +Yet the state can no longer afford to protect all of the nation’s treasures. The archaeological service is overwhelmed. Of more than 10,000 formally recognised sites, fewer than 200 are open. + +Just as greater European involvement is needed to resolve the migration crisis, so there could be a case for closer European co-operation in cultural matters. The inauguration in June of an excavated site on Crete will make the point well. The EU provided more than 90% of the funds for one of the few on-site museums in Greece. Nikos Stampolidis, a professor of archaeology at the University of Crete who has made the excavation his life’s work, says the museum at Eleftherna will “shine a light into what archaeologists have chosen to call the Greek Dark Ages, before the Classical period.” That encompasses the time when Homer wrote. As Europe appears to fall into its own, darker period, what better way to celebrate shared, but increasingly questioned values than a museum that illuminates the times of its first great writer? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21694541-europes-shared-history-should-be-treasured-not-ignored-necessity-culture/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Britain and the European Union: Next stop: Brexit? + +Illegal immigration: Channel hopping + +Aston Martin and McLaren: Speed merchants + +Brexit brief: The roots of Euroscepticism + +Portsmouth’s shipyard: Pompey’s predicament + +Higher education: Open universities + +Young people and work: Jobs for the boys and girls + +Sunday-trading laws: Scotched + +Bagehot: Goggling at Britain + + + + + +Articles Sections Next + +Britain and the European Union + +Next stop: Brexit? + +The campaign to leave the European Union is still behind, but picking up speed + +Mar 12th 2016 | From the print edition + + + +IT WAS not meant to be like this. The plan had been that David Cameron would return in triumph from Brussels, having won reforms of Britain’s status in the EU, and throw his full weight behind the campaign to remain in. Most Tory MPs and voters would swing, albeit reluctantly, behind the prime minister. With strong backing from Labour and the Liberal Democrats, and from business and trade unions, the result would be a large majority in the referendum on June 23rd. + +It could still happen. Most polls, and even more strongly the bookmakers, put the Remain camp in the lead, though there was little of the hoped-for bounce after Mr Cameron came back from Brussels. Remainers believe that, when the debate is about jobs, they have the edge: this week’s claim by Mark Carney, the governor of the Bank of England, that Brexit was the biggest domestic risk to the economy reinforces that view. Yet the early weeks of the campaign have not gone smoothly. + +There have been cock-ups: a pro-EU round-robin from leaders of FTSE-100 companies was signed by only 36; a letter from military bigwigs saying the EU mattered for national security went awry when one signatory said he had not seen it; the ousting of the pro-Brexit boss of the British Chambers of Commerce was blamed on Downing Street. Lord Rose, chairman of Britain Stronger In Europe, the pro-EU campaign, has often seemed ineffectual. + +More troubling was the response to Mr Cameron’s deal. The government had hoped only 80 or so Tory MPs would vote Leave, and it was confident that Michael Gove, the justice secretary, and Boris Johnson, the mayor of London, would not be among them. In fact 140 Tory MPs have now declared for Leave, including Mr Gove and Mr Johnson, more than even the most optimistic in the Leave campaign expected. Local Conservative associations are still heavily Eurosceptic. The party’s squabbles over Brexit have also become inextricably linked to speculation about its next leader, since Mr Cameron has said he will not run again in 2020. + +The newspapers have also been unexpectedly strident, with even pro-EU titles joining Eurosceptics in rubbishing Mr Cameron’s deal as not producing a fundamental change in Britain’s EU relationship. Most have presented the arguments of both sides as finely balanced. The Leave campaign has proved aggressive and well financed. It has skirted past a lack of clarity over alternatives to membership, instead playing up concerns over migration and sovereignty lost to Brussels. It has denounced critics as scaremongers engaged in “Project Fear” and portrayed those doubting if Britain would do better outside the EU as unpatriotic. The Sun newspaper has even claimed that the queen backs Brexit (untrue, says the palace). + +Worse, Mr Cameron has received little help from other parties. The Scottish National Party is for Remain, but will not campaign with the Tories; it knows that a vote for Brexit could be an excuse for another independence referendum. Above all, Labour has been largely silent. Its leader, Jeremy Corbyn, claims to support Remain, but is a long-standing Eurosceptic. He has failed to raise Brexit, the most urgent issue of this parliament, in any recent session of questions to the prime minister. + +Alan Johnson, a former cabinet minister who is chairman of Labour in Europe, insists that his group will turn out the voters on the day. But some in the party recall that Labour was badly burnt after it campaigned with the coalition government against Scottish independence in 2014. Like Mr Corbyn, Mr Johnson is unwilling to appear on platforms with Mr Cameron. + +There is an underlying weakness in the prime minister’s position. Unlike Labour’s Harold Wilson before the in/out referendum in 1975, he has spent years attacking the EU and suggesting that, without substantial reforms, he would favour Brexit. Yet it is hard even for the prime minister to pretend that the deal he secured in Brussels, however worthwhile, makes a huge difference. Recent government statements have focused almost entirely on the benefits of membership and the dangers of Brexit, not on the terms of the new deal. If the benefits are so clear, some may ask, how could Mr Cameron have ever thought of arguing for leaving? + + + +In graphics: A guide to “Brexit” from the European Union + +A final worry for the Remain campaign is the referendum’s timing. A date in June was favoured because it gave less time to the Leave campaign, was close to Mr Cameron’s unexpected election win last May and would come before the summer inrush of migrants to Europe. Yet June may now prove a bad choice. The global economy is stuttering. The euro zone is again weak, with growth slowing sharply in Italy and France, and a renewed dispute over Greece’s debts. And far from diminishing in the winter, the EU’s migrant and refugee crisis has only grown (see article). + +The saving grace for Mr Cameron may lie within the Leave campaigns. Leavers are vulnerable not just to uncertainty over what alternative they would secure, but to their own disagreements. Grassroots Out and Vote Leave, the rivals to be designated as official campaigners, are bitterly divided. The first includes Nigel Farage, leader of the UK Independence Party, who has a little-Englander view and would make immigration the main issue. The second includes UKIP’s only MP, Douglas Carswell, who prefers a more libertarian, pro-globalisation message. The way the two groupings now pour more vitriol on each other than on their opponents is comically reminiscent of the rival popular fronts to liberate Judaea in the film “The Life of Brian”. + +The odds are still that the vote will be to Remain. The weight of business and union opinion in favour of staying in is likely to tell in the end. A preference among don’t-knows for the status quo will help. In talking up Project Fear, the Leave camp may only draw more attention to the dangers of Brexit. But the risk of an opinion-shifting event—terrorist attack, euro crisis, migration meltdown—is high. Mr Cameron must sometimes regret the promise of a referendum he made three long years ago. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21694549-campaign-leave-european-union-still-behind-picking-up-speed-next-stop-brexit/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Illegal immigration + +Channel hopping + +Mar 12th 2016 | From the print edition + + + +There has been a twelvefold increase in clandestine attempts to enter Britain via European ports and train tunnels since 2012, according to figures obtained by The Economist under freedom of information laws. Lorries are X-rayed for stowaways and sniffer dogs patrol regularly, making the obstacle course harder than ever. Yet this has done little to deter migrants—nor to soothe the fears of Eurosceptic voters ahead of the June 23rd referendum. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21694407-twelvefold-increase-comes-awkward-time-european-referendum/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Aston Martin and McLaren + +Speed merchants + +How two similar carmakers evolved into a luxury-goods firm and a tech company + +Mar 12th 2016 | GENEVA AND WOKING | From the print edition + + + +FEW countries are as adept at making luxury cars as Britain. Plutocrats and footballers queue to buy Rolls-Royces and Bentleys. Speed freaks in want of a sports car are also well served. At the Geneva Motor Show, which opened on March 1st, two leading British supercar firms launched pricey new models to compete with the likes of Ferrari and Lamborghini: Aston Martin unveiled the DB11 (pictured) while McLaren showed off its 570GT. The two brands offer similarly expensive toys, yet under the bonnet are very different firms. + +The pair are alike in some respects. Both make only a handful of vehicles. McLaren turned out just 1,650 last year; Aston around double that. An entry-level Aston costs nearly £100,000 ($140,000), whereas the cheapest McLaren costs another £30,000, but their flagship models cost around £150,000-200,000. Each firm has built hypercars that sold for around £1m. And both have recently announced expansion plans, to take advantage of a sales boom at the top end of the car market (IHS, a consulting firm, reckons that global sales of the priciest cars will triple between 2010 and 2020). Aston will open a new factory in Wales to make SUVs; McLaren plans to spend £1 billion over six years to widen its range to 15 models and 4,000 cars a year. + +The two have taken different routes to this destination. Aston, 103 years old, is well known thanks to the James Bond films but has struggled of late. It was a “basket case” which limped from one car to the next, losing money, according to its boss, Andy Palmer. Since taking over in 2014 Mr Palmer has won backing from private-equity firms to launch four new models and struck a deal to use Mercedes engines. + +By contrast, McLaren’s sports-car business took off only six years ago. Though it had made road cars in small numbers it was mostly known as a Formula 1 motor-racing team. McLaren diverted its British engineers, good at the speedy innovation and advanced manufacturing needed for racing, to making sports cars. + +A glance at the cars gives a clue that they do things differently. McLarens are wild-looking mid-engined sports machines that harness the firm’s skills in engineering to adapt racetrack materials, such as carbon fibre, and high-tech gizmos to make a car as at home on the circuit as the open road. Aston’s DB11 is more conventional. An aluminium body and engine at the front are typical of a “grand tourer”, designed to whisk drivers in comfort over long distances on public roads. + +Aston is first a “design company”, says Mr Palmer. Performance and handling are important but the aim is to make the “most beautiful car on the road”. To do so Aston has remodelled itself as a luxury-goods firm, emphasising design and craftsmanship that are a British speciality, while trying to extend the brand. The Welsh factory will make the DBX, an SUV that Aston hopes will broaden its appeal, especially among women, who buy few of its cars. + +McLaren, meanwhile, strives to make its cars the most technically advanced. Last year the firm renamed itself the McLaren Technology Group to emphasise the importance of innovation. Although racing and supercars will remain important, Ron Dennis, the firm’s boss, is convinced that its tech business will be its biggest and most important part in years to come. It already serves oil-and-gas, health-care and financial-services firms. Using skills honed in analysing the vast quantities of data generated by motor racing, it is developing analytics software for the likes of GlaxoSmithKline and KPMG. + +Both carmakers are in the business of hurtling drivers towards 200mph. Yet with their respective focus on luxury and advanced engineering, they are relying on contrasting British strengths. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21694552-how-two-similar-carmakers-evolved-luxury-goods-firm-and-tech-company-speed-merchants/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit brief + +The roots of Euroscepticism + +Why Britons are warier than other Europeans of the EU + +Mar 12th 2016 | From the print edition + + + +A COMMON (sometimes exasperated) question from abroad is: why is Britain having a referendum on its EU membership? The simple answer is that David Cameron promised one in the Conservative Party manifesto for last May’s election. But the deeper one is to be found in the rise and rise of British Euroscepticism. + +The origins of today’s EU lie in the ashes of post-war Europe. Reconciliation between France and Germany, urged by Winston Churchill in 1946, led to the creation of the six-member European Coal and Steel Community in 1951 and the European Economic Community in 1957. But a wary Britain, keen to preserve links with the Commonwealth and America, stood aside from both. Only in the 1960s did the British, impressed by the continent’s stronger economy, try to join, eventually doing so in 1973. + +What this history shows is that Britain has an essentially transactional relationship with the club. Membership has been evaluated in terms of costs and benefits, not as an emotional commitment. Moreover, as a latecomer, Britain has often found the EU’s organisation and policies uncongenial. This was reflected in Margaret Thatcher’s battles in the 1980s to cut the outsized British budget contribution. + +Over the years the political base of British Euroscepticism has moved from left to right. In the early years Labour was the more suspicious party. In 1962 its leader, Hugh Gaitskell, warned that joining the common market would end 1,000 years of history. In 1975 Harold Wilson dealt with Labour splits over Europe by staging a renegotiation and putting the result to a referendum—a tactic remarkably similar to Mr Cameron’s today. In the early 1980s, Labour was once again set on withdrawal. + +The pivotal moment came in 1988, when the European Commission’s president, Jacques Delors, promised the Trades Union Congress that Europe’s single market would be buttressed by tougher labour and social regulations. This reinforced Thatcher’s growing Euroscepticism, and led directly to her Bruges speech attacking excessive EU interference in the same year. Her political downfall two years later was triggered by her denunciation of Mr Delors’s plans for closer EU integration and a single currency. This marked the point when the Tories replaced Labour as the party of Euroscepticism. + +Mr Cameron not only inherited this as party leader in 2005 but also, as prime minister after 2010, had to deal with a growing threat from the even more Eurosceptic UK Independence Party (UKIP). His response, in his Bloomberg speech in January 2013, was, like Wilson’s 40 years earlier, to promise a renegotiation and referendum. + +Yet today’s shrill debate over Brexit reflects mainly internal Tory party politics. Most voters are less excited. Opinion polls suggest that they see Europe as a relatively unimportant issue. Moreover, in most elections since Britain joined the club in 1973, voters have delivered majorities to the more pro-EU of the two main parties. + + + +In graphics: A guide to “Brexit” from the European Union + +Even so, the roots of British Euroscepticism are deep. Matthew Goodwin of the University of Kent, who has studied the phenomenon and written a history of UKIP, reckons they are cultural as much as political. Britain, he says, forged its identity against perceived threats from across the Channel. He adds that, although the young and better educated tend to be less Eurosceptic, the popular notion that it is only older working-class voters who favour Brexit is not correct. + +Nor is it right to argue that British-style Euroscepticism is oozing all over the continent. Certainly there is growing disillusion with the EU, especially over migration and the euro’s woes. This has fostered a form of soft Euroscepticism (see chart). Unlike in Britain, it is young people who are most susceptible, because they suffer the most from high unemployment. Yet there is no serious debate anywhere but Britain about leaving the EU. Only if a post-Brexit Britain were a big success might that change—which is one reason why the EU will not want to help bring that about. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21694557-why-britons-are-warier-other-europeans-eu-roots-euroscepticism/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Portsmouth’s shipyard + +Pompey’s predicament + +Two years after losing its shipbuilding industry, the city depends on the navy + +Mar 12th 2016 | PORTSMOUTH | From the print edition + +Waving or drowning? + +ONLY one city in Britain has its own central-government minister. Not London, the capital and economic engine; nor Manchester, the go-ahead centre of the “Northern Powerhouse”. Instead it is Portsmouth, a south-coast port which is neither wildly successful nor especially poor. + +“Pompey” jumped up the political agenda in November 2013 when BAE Systems, a defence giant, announced that 940 jobs would go at its shipyard in the city. By mid-2014 the last of its shipbuilding operations in Portsmouth had closed, some to be relocated to Glasgow. Since most of BAE’s work in Britain is in public-procurement deals, the government took much of the flak for the job losses. It responded with a generous package for the shipyard and its workers, including £100m ($140m) of investment by the Ministry of Defence in the city’s naval base. Michael Fallon, a Conservative MP who is now the defence secretary, was appointed the first minister for the city, to “knock heads together” and get the shipyard moving. + +This week, Portsmouth’s empty shipyard returned to life when BAE began a new contract to maintain anti-mining ships there. Magma Structures, which makes high-tech hulls, is also due to start work there. But its move to the ship hall has been delayed. “There’s been no re-emergence of shipbuilding,” says Gary Cook of the GMB union. “The PM raised expectations that were never going to be met.” + +Others doubt the worth of the Portsmouth minister, a post now held by Mark Francois. “Why have MPs here if you need another minister to lobby on behalf of the city?” asks John Ferrett, a Labour councillor. Some see the post as a gesture designed to win Tory votes: Portsmouth South was won by the Conservatives in last year’s general election after 18 years in the hands of Liberal Democrats; the Tories had taken Portsmouth North from Labour in 2010. The council is Conservative-run, a rarity among Britain’s Labour-leaning cities. + +Yet the government’s short-term response to the shipyard redundancies was fairly successful. Of the 940 BAE employees whose jobs disappeared, only 165 were made compulsorily redundant. A little less than one-third were re-employed in other parts of the company, nearly 80% staying in Portsmouth. A “maritime task-force” was swiftly set up to develop a recovery strategy for the industry. + +Portsmouth Naval Base has remained busy. Ship maintenance and servicing, if not traditional shipbuilding, remains at the core of the local economy, since the docks are home to much of Britain’s surface fleet. From 2017 the city will be home to two aircraft carriers: HMS Queen Elizabeth and HMS Prince of Wales, the largest ships ever built for the Royal Navy. Smaller investments include £4m for a centre for research into unmanned vessels and £2m to move the Royal Marines Museum to the city’s dockyard. + +A more nuanced criticism is that too little has been done to reduce Portsmouth’s dependence on the navy. “The dockyard has been part of the problem in Portsmouth almost for ever,” says Nicholas Phelps, an economic geographer at University College London. Port towns suffer from “a sort of resource curse”, agrees Andrew Carter of the Centre for Cities, a think-tank. The government has shored up the politically important maritime industries at the expense of diversification. Until that changes, Pompey’s prosperity will rise and fall in line with defence spending. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21694561-two-years-after-losing-its-shipbuilding-industry-city-depends-navy-pompeys/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Higher education + +Open universities + +Dons have the power to admit as many students as they like. What will happen? + +Mar 12th 2016 | From the print edition + +Rowing against the current + +THE University of Liverpool is growing fast. Since 2011 it has invested nearly £250m ($360m) in new student accommodation, across three different sites, to house 4,500 students. “We have seen a dramatic increase in interest over the past couple of years,” says Gavin Brown, a university official. That it has been able to respond to the increased demand is partly due to an unheralded reform of student admissions. + +In 2012 restrictions on the number of students that universities were allowed to recruit (in place to control government spending) were relaxed in England to allow them to accept as many students with good grades at A-level, the exams taken at 18, as they wished. The following year George Osborne, the chancellor, surprised universities by going further, declaring that from 2015 the limit on the number of students they were allowed to recruit would be lifted entirely. + +The government hoped the change would enable universities to expand, creating more skilled workers and widening access to higher education. Another effect would be to increase competition between universities for students—a process encouraged by the trebling of tuition fees to a maximum of £9,000 in 2012, which means more funding now follows students. “It was a much bigger shift than many people in higher education initially realised,” says Nick Hillman, a former government adviser who now runs the Higher Education Policy Institute, a think-tank. + +A demographic dip in the number of 18- to 24-year-olds, an improving job market and a sluggish response from some universities mean that student numbers are yet to grow much, and are unlikely to do so for the next few years. Nevertheless, many universities are changing their approach to admissions. Early signs suggest that growth is concentrated in older, research-focused universities. In 2015 the English members of the prestigious Russell Group of universities accepted 6.7% more students than in the previous year. Meanwhile, acceptances by the English members of the Million+ group of newer, less fancy universities fell by 0.6%. + +This cannot be explained solely by the lifting of the cap. Some low-ranked universities have chosen to focus on increasing the academic ability rather than the number of students they take in. Many high-ranked universities have benefited from being able to expand under the earlier, partial lifting of the cap; others, including Oxford and Cambridge, have chosen not to take on more students. But it may also show that stronger institutions—new as well as old—are growing at the expense of weaker ones, says Emran Mian, director of the Social Market Foundation, a think-tank. Indeed, many successful new universities, including Coventry and Manchester Metropolitan, are expanding faster than older establishments. + +Although universities can compete on price, students have shown little sign of favouring institutions with lower fees (which partly explains why these days most charge the maximum). As a result, universities must now compete on quality, says Chris Husbands, vice-chancellor of Sheffield Hallam University. Some reckon that the higher-education market will diversify, with more institutions concentrating on niche or work-focused courses in order to attract students. + +A few universities will suffer at first. The question is whether the pain will be worth it in the long term, says Andy Westwood of Manchester University. Critics of the uncapping policy argue that some low- and mid-ranked universities are being punished unfairly by students’ preference for institutions that look good on a CV, rather than those with the best lecturers. Others complain that uncertainty over student numbers makes long-term planning hard. + +But much of the angst will be forgotten if student numbers begin to grow more quickly. When a similar cap was lifted in Australia in 2012, the proportion of youngsters going to university increased in every social group. Demographic trends mean the number of British 18- to 24-year-olds will pick up in the early 2020s. And all universities will benefit from more EU students: some 14% more were accepted this academic year than last. + +But funding the extra places will not be cheap: the policy will require the support of future governments. Unfortunately for those universities that are hoping to expand, that is far from guaranteed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21694560-dons-have-power-admit-many-students-they-what-will-happen-open-universities/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Young people and work + +Jobs for the boys and girls + +Youth unemployment, the scourge of much of Europe, has plummeted + +Mar 12th 2016 | From the print edition + + + +A FEW years ago Britain was in a panic about youth unemployment. As the economy sank, companies stopped hiring and let go of workers with the least bargaining power. The unemployment rate among 16- to 24-year-olds therefore soared (see chart). In many rich countries, the rise in youth unemployment has proved to be long-lasting: across the EU it has fallen by a mere 1.3 percentage points since 2011 and in countries like the Netherlands and Norway it has risen, raising fears that swathes of youngsters are structurally excluded from the labour market. Yet in Britain it has nosedived. The employment rate of young people not in full-time education is now at its highest since 2004. Why? + +The government credits its “long-term economic plan”. True, it helpfully raised the age at which people leave education to 18 last year, thus moving youngsters off the dole and into the classroom. Yet many programmes have fallen flat. A £300m ($425m) scheme whereby employers received a payment of up to £2,275 for hiring an unemployed young person closed in 2014 after low take-up. A £30m “Innovation Fund”, announced in 2011, rewarded investors who funded programmes to improve youngsters’ skills. It too closed to new entrants in November; the Department for Work and Pensions (DWP) has released no quantitative analysis of the scheme’s value for money. + +The DWP has even gone in search of young people online, setting up a page on the BuzzFeed news site with articles such as “7 most obscure excuses given by benefit fraudsters”. The target audience seems unimpressed (“Why don’t you give the ten worst reasons for stopping a person’s benefit and leaving them destitute?” asks one). + +Still, other welfare reforms have inadvertently helped the young. Since 2011 private providers of support for unemployed people have been paid according to how many of their clients move into work. In 2011-15 one-third of 18- to 24-year-olds in the programme moved into a job for a “sustained” period (meaning at least three or six months, depending on the person), compared with one-quarter of 25- to 49-year-olds. The difference may be partly down to this payment-by-results model, says Laura Gardiner of the Resolution Foundation, a think-tank: targeting youngsters, who may pick up skills quicker, has proved more lucrative to the contractors than focusing on harder-to-help claimants, particularly the over-50s and those with disabilities. + +Other policies will make young workers more attractive still to employers. In April a “national living wage” comes into force, under which the minimum wage will rise from its current level of £6.70 an hour to around £9 an hour (equal to 60% of median earnings) by 2020. But it does not cover those under 25, and Len Shackleton of Buckingham University says that this may have already created a bias among employers towards hiring youngsters. So has a policy introduced last April under which employers do not pay certain types of national-insurance contributions for workers under 21. + +Tech-literate youngsters are also well suited to the “gig” economy, in which short-term employment is arranged online or through apps. Gigs are proliferating: the number of “private hire” vehicles in London, a category that includes Uber taxis, has risen by 26% in the past two years. Uber claims that, in America, its drivers are twice as likely as conventional cabbies to be under 30. + +With such a decline in youth unemployment, it is no wonder that wages are buoyant. In 2015 those aged 18-21 saw a 2.8% rise in median hourly pay, compared with a national average increase of 1.6%. Nonetheless, such was the turmoil experienced during the crisis that the inflation-adjusted hourly pay of those aged 22-29 is still 12% below what is was in 2008, a worse performance than any age group above it. Young Britons may be back in work, but they are not yet back in the money. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21694558-youth-unemployment-scourge-much-europe-has-plummeted-jobs-boys-and-girls/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sunday-trading laws + +Scotched + +Politics, not economics, explains the Scottish National Party’s veto + +Mar 12th 2016 | From the print edition + + + +SINCE its return to power last May, Britain’s Conservative government has made clear its intention to loosen the laws on Sunday trading by devolving decisions over shops’ opening hours to local councils. Its attempt to do so on March 9th was defeated in the House of Commons by an unlikely alliance of churchgoing Tories, left-wing Labourites and opportunistic Scottish nationalists. + +In England and Wales shops larger than 3,000 square feet (280 square metres) are allowed to open on Sundays for a maximum of six hours, between 10am and 6pm. The government says loosening the regulations would help stores that are struggling to compete with online retailers that trade seven days a week. Labour opposed the plan on the ground that employees could be forced to work when they do not want to. Tory traditionalists said Sunday should remain a day of rest. + +If that is dubious, the opposition of the Scottish National Party (SNP) is odder still. First, the bill would have affected only England and Wales, making it doubtful whether Scottish MPs should have had a say. Second, in Scotland—where the SNP is in power—there are no such restrictions on Sunday trading. + +The SNP says that if the law changed in England, retailers might reduce the weekend wages of Scots, some of whom by convention enjoy a “Sunday premium” worth roughly 150% of hourly pay. Scottish Labour claims that Scottish shopworkers could lose £1,400 ($2,000) per year if the premium were cut. + +By some estimates about 60,000 retail employees get this premium. In reality there is little reason to believe that slightly longer Sunday hours in England would prompt shops in Scotland to reduce wages. Even if they did, there would be winners as well as losers: shops would hire more workers if wages were lower, something the £1,400 figure does not account for. + +The SNP had a clearer motive for killing the bill. Outvoting the government in Westminster—its second Commons defeat so far this Parliament—was a coup, coming just before Scottish parliamentary elections in May. And it helped to distract from Scotland’s woeful fiscal performance, data for which were also released on March 9th. With the collapse in the oil price, tax revenues have dwindled; Scotland’s budget deficit is now almost 10% of GDP, twice Britain’s overall level. Whatever the merits of Sunday trading, it is being put on hold in England and Wales for the worst possible reasons. + +Correction: A previous version of the headline said that the bill would allow shops in Britain to trade longer in Sunday. In fact, the bill applied only to England. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21694503-politics-not-economics-explain-scottish-national-partys-veto-scotched/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Goggling at Britain + +An unlikely television hit offers togetherness in a fragmenting country + +Mar 12th 2016 | From the print edition + + + +AT FIRST “Gogglebox” did not look like a winner. TV executives responded to Tania Alexander, the programme’s creator, with bafflement: who would want to watch other people watching television? They got their answer: 700,000 viewers, rising to 5m. Today the format—featuring couples, friends and families commenting on and discussing clips from popular dramas, game shows, documentaries and the news—has been exported to 16 countries and counts David Cameron among its fans. + +The secret is in the casting. Unlike reality shows predicated on conflict and the grotesque (all shouting and slicks of fake tan) Gogglebox mobilises the wit and warmth of recognisable tribes: the grandparents in Liverpool, the minority middle-class family from Derby, the woman vicar in Nottingham, the bohemians in Cambridge. Most facets of modern British life are there. The gay friends? That would be Stephen and Chris, a pair of catty Brighton hairdressers. The city-dwellers? Sandy and Sandra, Brixton loudmouths who roar with laughter and outrage, slurping pots of instant noodles. The poshos? Steph and Dom, who run a hotel in Kent and issue cut-glass sardonics when not guzzling oceans of booze and falling off their sofa. + +The result is a compelling barometer of the national mood. During last year’s election campaign, the Goggleboxers had their political leaders sussed: accurately identifying Nigel Farage’s anxiously frenetic attention-seeking (“He thinks with his mouth”), Ed Miliband’s lurking self-doubt (“He doesn’t quite know what he is doing”) and Boris Johnson’s faux-bumbling opportunism (“Beware the fool, because in all Shakespeare plays, the fool is actually the clever one”). Long before commentators had stopped sagely musing about the Liberal Democrats’ hidden local strengths, two of the show’s best-loved families—the Michaels and the Siddiquis—predicted the party’s rout and its leader’s resignation. Occasionally the chatter offers glimpses of the roiling, evolving country beyond the net curtains: “I’d say about a third of my mates are migrants, or second-generation,” George, a 30-year-old from Essex, tells his surprised parents. + +To be sure, the show is not meant as anthropology. Its subjects are selected for their spark and spontaneity (it only takes five seconds to tell whether a prospective family or pair is right, Ms Alexander says). Each 60-minute episode is a compilation of golden moments culled from 200 hours of footage. In a typical gem, one of the Siddiqui boys, watching a televised debate about immigration, wonders how he would evade border controls. “I’d swim the Channel,” replies his brother and, chortling, turns to his father: “How did we sneak in last time, Dad?” Reality-television gigs, newspaper profiles and even a chat show have duly rolled in. The programme-makers thus watch out for, and cut, anything that looks fake: the families must be relatable. + +Psychiatrist’s-couch potatoes + +Still, the show owes some of its success to the atypical nature of what it captures. For when historians write the story of British society in the first decades of the 21st century, their organising theme will surely be that of fragmentation. The gap between the booming, worldly cities and the declining, post-industrial towns increasingly shows up in Britain’s politics (witness its current divide on the EU). Intersecting this widening spectrum is the generational split between the liberal young and their conservative elders. As the spread of daily experiences and outlooks becomes broader, occasions on which the country comes together get rarer. Where once a handful of newspapers and television channels commanded the nation’s attention, the media’s fragmentation and the rise of more individualistic competitors (social media the prime example) mean ever fewer common reference points. The audience for the biggest programme shown on Christmas Day has fallen from 20.3m in 2001 to 6.6m in 2015. + +As Britain’s nations, regions, classes and age groups drift apart, a similar pattern is evident within neighbourhoods. The country leads the rich world in indicators associated with solitary lifestyles: gym-going (as opposed to team sports), divorce, smartphone and tablet adoption (replacing the family television set), self-employment, online shopping, eating alone, meal-skipping and the declines of both the pub and the nuclear family. Clubs of all sorts, from churches and political parties to golf clubs and trade unions, are shrinking. The proportion of single-person households has doubled over the past four decades. + +Nothing about this is inherently regrettable—indeed, Britons must be one of the most unstifled, diverse and emotionally self-sufficient peoples in Europe—but these trends have negative side-effects. The Office for National Statistics claims that Britain is the loneliest country in the EU (the sense of isolation especially acute among its young adults). Politicians seemingly discern in voters a yearning for connection, from Labour’s recent talk of “one nation” to Mr Cameron’s “big society” push for more volunteering and civic cohesion. + +“Gogglebox” leans against these shifts in two ways. It conjures up a half-remembered Britain of universal experiences and references; of families of all stations sitting down together and watching the same shows. And every Friday night, it brings that nostalgic ideal to life by commanding an audience that spans the generations (about 10% of potential viewers in each age group from 16 to 64 tune in) and the classes (its viewership, like the population as a whole, splits into four roughly equal groups: upper-middle, lower-middle, skilled-working and unskilled-working). The programme’s contradictions—camp and sincere, profound and silly, slapstick and mundane—enable it to transcend differences of geography, income and generation like few others. To a country whose citizens, voluntarily or otherwise, appear to be going their separate ways, “Gogglebox” offers the fleeting tonic of togetherness. In retrospect, it was always going to be a hit. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21694562-unlikely-television-hit-offers-togetherness-fragmenting-country-goggling-britain/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Civil servants: Mandarin lessons + +Exam-cramming in India: Turn over your papers…now + + + + + +Articles Sections Next + +Civil servants + +Mandarin lessons + +Countries are trying harder to recruit the best bureaucrats. Not hard enough + +Mar 12th 2016 | From the print edition + + + +“WANTED: people of promise”, proclaimed ads for America’s Federal Service Entrance Examination, introduced in 1955. Applicants faced posers on grammar and arithmetic—as well as the Battle of the Bulge and why presidential aides deserve anonymity (answer: “they relieve the president of many burdens and should not be subjected to a great deal of personal criticism”). But little more than two decades later, such exams had come under fire. Some said they tested knowledge rather than talent, thereby discriminating against black and Latino applicants. More broadly, their usefulness for picking tax-collectors and the like was questioned. In 1981 they were ditched. + +Last year the tests were resurrected, tweaked to be fairer and more useful. Growth in the number of university graduates, together with the popularity of a safe job in difficult economic times, had left many branches of government struggling to cope with a flood of applications. Federal agencies are now assessing candidates with USA Hire, an online quiz more relevant to the work to be done. + +America is not the only country where more young people have been going to university in recent years. And as governments and aid donors seek to cut graft, the original, meritocratic aim of civil-service exams seems increasingly relevant. Sure enough, says Vivek Srivastava of the World Bank, during the past quarter-century more countries have started using assessments to dole out government jobs. + +Of the 62 countries tracked in 2010-11 by Global Integrity, an NGO, 55 had rules against “nepotism, cronyism and patronage”. Last year Cyprus and Pakistan, among others, announced reforms intended to ensure that applicants are chosen on the basis of what they know, not whom. Countries such as Germany, Portugal and Spain pledge in their constitutions to recruit government staff based on skills. Prodded by aid donors, Afghanistan and Sudan recently promised to do likewise. + +Applicants can face daunting odds. The Fast Stream programme, a graduate scheme for British officials, admits about one in 20 after a series of tests, role-play exercises and interviews. Of the roughly 500,000 applicants for elite civil-service jobs in India each year, only about 1,000 make the grade. Last year there were 27,817 roles for the 930,000 takers of the Chinese civil-service exam (the picture above shows candidates at a test centre). + +Beancounters v boondoggles + +Hiring civil servants according to calibre has been rare throughout history. Most jobs have been inherited, bought or bestowed as patronage. Although China tested for grasp of classical texts as long ago as 134BC, officials in the West only began to be properly vetted in the 19th century. In Britain, the Northcote-Trevelyan report of 1854 called for exams to weed out hereditary incompetence. In the years following, anger at America’s “spoils system”, which saw jobs given to party hacks, also led to reform: an 1868 report to Congress found a sculptor and a washerwoman among the political allies on the Treasury’s staff. + +The best-known proponent of a new-model, meritocratic civil service was Max Weber, a German sociologist who died in 1920. He envisioned a closed, rigid hierarchy staffed by bureaucrats who entered by examination and enjoyed protected careers. This, he argued, would foster esprit de corps and curb cronyism. + +There is a fair bit of evidence in favour of the meritocracy Weber championed. Research published in 2011 by Victor Lapuente and Carl Dahlstrom of the University of Gothenburg, and Jan Teorell, of Lund University, looked at which features of a civil service cut jobbery. They found that corruption across 52 countries was correlated with neither civil-service pay levels nor whether jobs were for life. Merit-based hiring was the only aspect of bureaucracies that consistently reduced graft. The connection held in countries at different stages of development, and with different political systems. + +Meritocracy, more broadly conceived, also saves money and seems to promote economic growth. A forthcoming paper co-authored by Mr Lapuente analyses 1.4m procurement contracts in 212 regions of the European Union, and finds that the regions whose own public employees rate them as meritocratic pay less for roads, bridges and the like. The researchers estimate that if every region were as meritocratic as Baden-Württemberg, in Germany, EU governments could save €13 billion-20 billion ($14 billion-22 billion) a year. Separate work by Peter Evans and James Rauch, of the universities of California Berkeley and San Diego respectively, finds that in poorer countries meritocratic hiring and promotion are associated with faster growth. + +But some countries make the elementary mistake of setting a silly test. It is not obvious why applicants in Spain, for example, have to memorise swathes of the legal code; nor why Indian candidates must know which ancient kingdom was associated with the life of the Buddha. Others fail to maintain meritocratic principles through civil servants’ entire careers. Some of the most closed administrations, including those of Greece, Italy and Spain, are in reality highly politicised, since promotion often depends on being in favour with the government of the day. + +There are even worrying hints that independent hiring and promotion systems that should shield civil servants from shifts in political fortunes are somehow being subverted. A gap between law and practice is opening in eastern European countries such as Hungary, says Gyorgy Gajduschek of the Institute for Legal Studies, in Budapest. Across the OECD club of mostly rich countries, the number of bureaucrats replaced after elections seems to have risen since the 1980s, notes Mr Dahlstrom. + +Global Integrity, an NGO, says that though 43 of 54 African countries it follows have rules against cronyism, only Botswana tends to appoint bureaucrats based on “professional criteria”. Some development wonks naively promoted the Weberian model, without building up capacity to implement it. “We went into countries and said you need to be more like Denmark,” says Mr Srivastava. “So countries changed their laws to look like Denmark’s—but then nothing would happen.” + +Past papers + +The century-old notion that a bureaucracy should be a cadre of lifers is now facing more fundamental criticisms. The first is of the idea that civil servants should be unsackable. The intention was to ensure their independence and protect them from being fired by meddling politicians; in some places, though, it means that once they have made it through the entrance exam they need never do a tap of work. Some of Brazil’s most coveted jobs, for example, are in well-paid corners of the public sector, often mocked as places where applicants who make it through a stiff exam can hang their jackets over their chairs—and never show up again. + +The second problem is that the tasks civil servants must perform are becoming ever more complicated. Closed-shop bureaucracies can be short of essential skills, such as the ability to analyse data, manage big projects or write contracts for outsourced public services. In poorly governed, graft-prone countries, this may be a price worth paying for keeping politicians’ grubby hands off government jobs. But better-governed ones may be able to open up hiring without returning to nepotism. + +According to the Quality of Government Survey Report, an international assessment of bureaucracies by independent experts, some countries that frequently bring outsiders into their civil services without examination, such as New Zealand, are highly meritocratic. In a recent paper looking only at rich countries, where graft is less common, Anders Sundell of the University of Gothenburg finds no connection between entrance exams and levels of corruption. + +In much of the rich world, says Agnès Audier of BCG, a consultancy, a civil-service recruitment crisis looms. A third of government workers in the OECD are aged over 50; in America about 60% of senior federal employees are eligible to retire. In normal times, it would therefore be an excellent moment to tweak hiring rules, since a flood of new talent would quickly stir up stagnant bureaucracies. But many governments are squeezing staffing budgets or imposing hiring freezes to get their budgets back in balance after the financial crisis. The smart ones will be rethinking the way they recruit in preparation for the thaw. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21694553-countries-are-trying-harder-recruit-best-bureaucrats-not-hard-enough-mandarin/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Exam-cramming in India + +Turn over your papers…now + +The town that promises all the right answers + +Mar 12th 2016 | KOTA | From the print edition + +Feeling the pressure + +“WE TURN coal into diamonds,” says Pieush Agrawal, the head of Edge Academy, a coaching centre in Kota, Rajasthan. Since its opening six years ago Mr Agrawal has helped 106 students pass exams for the National Defence Academy (NDA) or other elite military schools. He has defied long odds: only one in 1,126 applicants makes it to the NDA. Students cram seven days a week, with CCTV cameras monitoring whether they (or their teachers) are slacking. “The backdrop of all learning is discipline,” Mr Agrawal says. “That’s what the army taught me.” + +Every year 125,000 students come to Kota to study. Across the bustling city billboards portray stern professors promising test success. Most incomers are swotting for university-entrance exams. But an increasing number are preparing for government jobs—a sign of growing competition for secure and well-paid official posts. + +Robin Singh Bamel, an 18-year-old who wants to follow his father and grandfather into the army, is one of Edge Academy’s hopefuls. He takes two coaching classes a day and reads three newspapers to brush up for general-knowledge questions. After failing the NDA exam last year, he has taken a year out from his normal school to prepare, and feels more confident. “To be an officer, you have to act like one,” he says. + +Similar discipline is required to win a place in the Rajasthan Administrative Service. Amrita Soni, aged 29, dreams of the day she can drive in one of the service’s white cars with a blue light on top. She is not the only one: around 100,000 students apply each year for a handful of jobs. She has passed the preliminary stage but a harder second test looms. + +To boost her chances she has signed up to Vidhi Classes, a self-proclaimed “result-generating machine”. Naveen Gehlot, its boss, spends up to 12 hours a day drilling students in history, politics, economics, sociology, maths and English. The questions can be detailed—and of little relevance to the job being sought. For example: “Explain the Rajput policy of Akbar, a Mughal emperor, during his reign from 1556 to 1605.” After the exams comes a notoriously tough interview. + +Unsurprisingly, given the high stakes, cheating is a problem. Papers are often leaked and on exam day students are forbidden from wearing shirts with long sleeves or pockets. Rings and necklaces must stay outside the exam room in case answers are hidden on the jewellery. + +Last year demand was so strong that Mr Gehlot had to book a cinema hall for his classes. Mr Agrawal is also expanding: next month he will move to bigger premises. Unlike other tutors around Kota, though, he has not yet sought to lure new students by plastering his face around town. “I don’t want my face on billboards, but in their hearts.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21694563-town-promises-all-right-answers-turn-over-your-papersnow/print + + + + + +Previous Articles Sections Next + + + + + +Technology Quarterly + + + + +After Moore's law: Double, double, toil and trouble + +More Moore: The incredible shrinking transistor + +New designs: Taking it to another dimension + +Brain scan: Bruno Michel + +Quantum computing: Harnessing weirdness + +What comes next: Horses for courses + + + + + +Articles Sections Next + +After Moore's law + +Double, double, toil and trouble + +After a glorious 50 years, Moore’s law—which states that computer power doubles every two years at the same cost—is running out of steam. Tim Cross asks what might replace it + +Mar 12th 2016 | From the print edition + + + +IN 1971 a small company called Intel released the 4004, its first ever microprocessor. The chip, measuring 12 square millimetres, contained 2,300 transistors—tiny electrical switches representing the 1s and 0s that are the basic language of computers. The gap between each transistor was 10,000 nanometres (billionths of a metre) in size, about as big as a red blood cell. The result was a miracle of miniaturisation, but still on something close to a human scale. A child with a decent microscope could have counted the individual transistors of the 4004. + +The transistors on the Skylake chips Intel makes today would flummox any such inspection. The chips themselves are ten times the size of the 4004, but at a spacing of just 14 nanometres (nm) their transistors are invisible, for they are far smaller than the wavelengths of light human eyes and microscopes use. If the 4004’s transistors were blown up to the height of a person, the Skylake devices would be the size of an ant. + +The difference between the 4004 and the Skylake is the difference between computer behemoths that occupy whole basements and stylish little slabs 100,000 times more powerful that slip into a pocket. It is the difference between telephone systems operated circuit by circuit with bulky electromechanical switches and an internet that ceaselessly shuttles data packets around the world in their countless trillions. It is a difference that has changed everything from metal-bashing to foreign policy, from the booking of holidays to the designing of H-bombs. + +It is also a difference capable of easy mathematical quantification. In 1965 Gordon Moore, who would later become one of the founders of Intel, a chipmaker, wrote a paper noting that the number of electronic components which could be crammed into an integrated circuit was doubling every year. This exponential increase came to be known as Moore’s law. + +In the 1970s the rate of doubling was reduced to once every two years. Even so, you would have had to be very brave to look at one of Intel’s 4004s in 1971 and believe that such a law would continue to hold for 44 years. After all, double something 22 times and you have 4m times more of it, or perhaps something 4m times better. But that is indeed what has happened. Intel does not publish transistor counts for its Skylake chips, but whereas the 4004 had 2,300 of them, the company’s Xeon Haswell E-5, launched in 2014, sports over 5 billion, just 22 nm apart. + +Moore’s law is not a law in the sense of, say, Newton’s laws of motion. But Intel, which has for decades been the leading maker of microprocessors, and the rest of the industry turned it into a self-fulfilling prophecy. That fulfilment was made possible largely because transistors have the unusual quality of getting better as they get smaller; a small transistor can be turned on and off with less power and at greater speeds than a larger one. This meant that you could use more and faster transistors without needing more power or generating more waste heat, and thus that chips could get bigger as well as better. + +Making chips bigger and transistors smaller was not easy; semiconductor companies have for decades spent heavily on R&D, and the facilities—“fabs”—in which the chips have been made have become much more expensive. But each time transistors shrank, and the chips made out of them became faster and more capable, the market for them grew, allowing the makers to recoup their R&D costs and reinvest in yet more research to make their products still tinier. + +The demise of this virtuous circle has been predicted many times. “There’s a law about Moore’s law,” jokes Peter Lee, a vice-president at Microsoft Research: “The number of people predicting the death of Moore’s law doubles every two years.” But now the computer industry is increasingly aware that the jig will soon be up. For some time, making transistors smaller has no longer been making them more energy-efficient; as a result, the operating speed of high-end chips has been on a plateau since the mid-2000s (see chart). And while the benefits of making things smaller have been decreasing, the costs have been rising. + + + +This is in large part because the components are approaching a fundamental limit of smallness: the atom. A Skylake transistor is around 100 atoms across, and the fewer atoms you have, the harder it becomes to store and manipulate electronic 1s and 0s. Smaller transistors now need trickier designs and extra materials. And as chips get harder to make, fabs get ever more expensive. + +Handel Jones, the CEO of International Business Strategies, reckons that a fab for state-of-the-art microprocessors now costs around $7 billion. He thinks that by the time the industry produces 5nm chips (which at past rates of progress might be in the early 2020s), this could rise to over $16 billion, or nearly a third of Intel’s current annual revenue. In 2015 that revenue, at $55.4 billion, was only 2% more than in 2011. Such slow increases in revenue and big increases in cost seem to point to an obvious conclusion. “From an economic standpoint, Moore’s law is over,” says Linley Gwennap, who runs the Linley Group, a firm of Silicon Valley analysts. + +The pace of advance has been slowing for a while. Marc Snir, a supercomputing expert at Argonne National Laboratory, Illinois, points out that the industry’s International Technology Roadmap for Semiconductors, a collaborative document that tries to forecast the near future of chipmaking, has been over-optimistic for a decade. Promised manufacturing innovations have proved more difficult than expected, arriving years late or not at all. + +Brian Krzanich, Intel’s boss, has publicly admitted that the firm’s rate of progress has slowed. Intel has a biennial “tick-tock” strategy: in one year it will bring out a chip featuring smaller transistors (“tick”); the following year it tweaks that chip’s design (“tock”) and prepares to shrink the transistors again in the following year. But when its first 14nm chips, codenamed Broadwell, ticked their way to market in 2014 they were nearly a year behind schedule. The tick to 10nm that was meant to follow the tock of the Skylakes has slipped too; Intel has said such products will not now arrive until 2017. Analysts reckon that because of technological problems the company is now on a “tick-tock-tock” cycle. Other big chipmakers have had similar problems. + +Moore’s law has not hit a brick wall. Chipmakers are spending billions on new designs and materials that may make transistors amenable to a bit more shrinkage and allow another few turns of the exponential crank. They are also exploring ways in which performance can be improved with customised designs and cleverer programming. In the past the relentless doubling and redoubling of computing power meant there was less of an incentive to experiment with other sorts of improvement. + +Try a different route + +More radically, some hope to redefine the computer itself. One idea is to harness quantum mechanics to perform certain calculations much faster than any classical computer could ever hope to do. Another is to emulate biological brains, which perform impressive feats using very little energy. Yet another is to diffuse computer power rather than concentrating it, spreading the ability to calculate and communicate across an ever greater range of everyday objects in the nascent internet of things. + +One idea is to redefine the computer itself + +Moore’s law provided an unprecedented combination of blistering progress and certainty about the near future. As that certainty wanes, the effects could be felt far beyond the chipmakers faced with new challenges and costs. In a world where so many things—from the cruising speed of airliners to the median wage—seem to change little from decade to decade, the exponential growth in computing power underlies the future plans of technology providers working on everything from augmented-reality headsets to self-driving cars. More important, it has come to stand in the imagination for progress itself. If something like it cannot be salvaged, the world would look a grimmer place. + +At the same time, some see benefits in a less predictable world that gives all sorts of new computing technologies an opportunity to come into their own. “The end of Moore’s law could be an inflection point,” says Microsoft’s Dr Lee. “It’s full of challenges—but it’s also a chance to strike out in different directions, and to really shake things up.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21694351/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +More Moore + +The incredible shrinking transistor + +New sorts of transistors can eke out a few more iterations of Moore’s law, but they will get increasingly expensive + +Mar 12th 2016 | From the print edition + + + +THANKS to the exponential power of Moore’s law, the electronic components that run modern computers vastly outnumber all the leaves on the Earth’s trees. Chris Mack, a chipmaking expert, working from a previous estimate by VLSI Research, an analysis firm, reckons that perhaps 400 billion billion (4x1020) transistors were churned out in 2015 alone. That works out at about 13 trillion a second. At the same time they have become unimaginably small: millions could fit on the full stop at the end of this sentence. + +A transistor is a sort of switch. To turn it on, a voltage is applied to its gate, which allows the current to flow through the channel between the transistor’s source and drain (see first diagram). When no current flows, the transistor is off. The on-off states represent the 1s and 0s that are the fundamental language of computers. + +The silicon from which these switches are made is a semiconductor, meaning that its electrical properties are halfway between those of a conductor (in which current can flow easily) and an insulator (in which it cannot). The electrical characteristics of a semiconductor can be tweaked, either by a process called “doping”, in which the material is spiced with atoms of other elements, such as arsenic or boron, or by the application of an electrical field. + +In a silicon transistor, the channel will be doped with one material and the source and drain with another. Doping alters the amount of energy required for any charge to flow through a semiconductor, so where two differently doped materials abut each other, current cannot flow. But when the device is switched on, the electric field from the gate generates a thin, conductive bridge within the channel which completes the circuit, allowing current to flow through. + +For a long time that basic design worked better and better as transistors became ever smaller. But at truly tiny scales it begins to break down. In modern transistors the source and drain are very close together, of the order of 20nm. That causes the channel to leak, with a residual current flowing even when the device is meant to be off, wasting power and generating unwanted heat. + +Heat from this and other sources causes serious problems. Many modern chips must either run below their maximum speeds or even periodically switch parts of themselves off to avoid overheating, which limits their performance. Chipmakers are trying various methods to avoid this. One of them, called strained silicon, which was introduced by Intel in 2004, involves stretching the atoms of the silicon crystal further apart than normal, which lubricates the passage of charge carriers through the channel, reducing the heat generated. + +In another technique, first adopted in 2007, metal oxides are used to combat the effects of tunnelling, a quantum phenomenon in which particles (such as electrons) on one side of a seemingly impermeable barrier turn up on the other side without ever passing through the intervening space. Developing more such esoteric techniques may allow chipmakers to go on shrinking transistors for a little longer, but not much. + +The 3D effect + +Beyond that, two broad changes will be needed. First, the design of the transistor will have to be changed radically. Second, the industry will have to find a replacement for silicon, the electrical properties of which have already been pushed to their limits. + +One solution to the problem of leaking current is to redesign the channel and the gate. Conventionally, transistors have been flat, but in 2012 Intel added a third dimension to its products. To enable it to build chips with features just 22nm apart, it switched to transistors known as “finFET”, which feature a channel that sticks up from the surface of the chip. The gate is then wrapped around the channel’s three exposed sides (see second diagram), which gives it much better control over what takes place inside the channel. These new transistors are trickier to make, but they switch 37% faster than old ones of the same size and consume only half as much power. + + + +The next logical step, says Mr Snir of Argonne National Laboratory, is “gate-all-around” transistors, in which the channel is surrounded by its gate on all four sides. That offers maximum control, but it adds extra steps to the manufacturing process, since the gate must now be built in multiple sections. Big chipmakers such as Samsung have said that it might take gate-all-around transistors to build chips with features 5nm apart, a stage that Samsung and other makers expect to be reached by the early 2020s. + +Beyond that, more exotic solutions may be needed. One idea is to take advantage of the quantum tunnelling that is such an annoyance for conventional transistors, and that will only get worse as transistors shrink further. It is possible, by applying electrical fields, to control the rate at which tunnelling happens. A low rate of leakage would correspond to a 0; a high rate to a 1. The first experimental tunnelling transistor was demonstrated by a team at IBM in 2004. Since then researchers have been working to commercialise them. + +Transistor design will have to be changed radically + +In 2015 a team led by Kaustav Banerjee, of the University of California, reported in Nature that they had built a tunnelling transistor with a working voltage of just 0.1, far below the 0.7V of devices now in use, which means much less heat. But there is more work to be done before tunnelling transistors become viable, says Greg Yeric of ARM, a British designer of microchips: for now they do not yet switch on and off quickly enough to allow them to be used for fast chips. + +Jim Greer and his colleagues at Ireland’s Tyndall Institute are working on another idea. Their device, called a junctionless nanowire transistor (JNT), aims to help with another problem of building at tiny scales: getting the doping right. “These days you’re talking about [doping] a very small amount of silicon indeed. You’ll soon be at the point where even one or two misplaced dopant atoms could drastically alter the behaviour of your transistor,” says Dr Greer. + +Instead, he and his colleagues propose to build their JNTs, just 3nm across, out of one sort of uniformly doped silicon. Normally that would result in a wire rather than a switch: a device that is uniformly conductive and cannot be turned off. But at these tiny scales the electrical influence of the gate penetrates right through the wire, so the gate alone can prevent current flowing when the transistor is switched off. + +Whereas a conventional transistor works by building an electrical bridge between a source and a drain that are otherwise insulated, Dr Greer’s device works the other way: more like a hose in which the gate acts to stop the current from flowing. “This is true nanotechnology,” he says. “Our device only works at these sorts of scales. The big advantage is you don’t have to worry about manufacturing these fiddly junctions.” + +Material difference + + + +Chipmakers are also experimenting with materials beyond silicon. Last year a research alliance including Samsung, GlobalFoundries, IBM and State University New York unveiled a microchip made with components 7nm apart, a technology that is not expected to be in consumers’ hands until 2018 at the earliest. It used the same finFET design as the present generation of chips, with slight modifications, but although most of the device was built from the usual silicon, around half of its transistors had channels made from a silicon-germanium (SiGe) alloy. + +This was chosen because it is, in some ways, a better conductor than silicon. Once again, that means lower power usage and allows the transistor to switch on and off more quickly, boosting the speed of the chip. But it is not a panacea, says Heike Riel, the director of the physical-sciences department at IBM Research. Modern chips are built from two types of transistor. One is designed to conduct electrons, which carry a negative charge. The other sort is designed to conduct “holes”, which are places in a semiconductor that might contain electrons but happen not to; these, as it turns out, behave as if they were positively charged electrons. And although SiGe excels at transporting holes, it is rather less good at moving electrons than silicon is. + +Future paths to higher performance along these lines will probably require both SiGe and another compound that moves electrons even better than silicon. The materials with the most favourable electrical properties are alloys of elements such as indium, gallium and arsenide, collectively known as III-V materials after their location in the periodic table. + +The trouble is that these materials do not mix easily with silicon. The spacing between the atoms in their crystal lattices is different from that in silicon, so adding a layer of them to the silicon substrate from which all chips are made causes stress that can have the effect of cracking the chip. + +The best-known alternative is graphene, a single-atom-thick (and hence two-dimensional) form of carbon. Graphene conducts electrons and holes very well. The difficulty is making it stop. Researchers have tried to get around this by doping, squashing or squeezing graphene, or applying electric fields to change its electrical properties. Some progress has been made: the University of Manchester reported a working graphene transistor in 2008; a team led by Guanxiong Liu at the University of California built devices using a property of the material called “negative resistance” in 2013. But the main impact of graphene, says Dr Yeric, has been to spur interest in other two-dimensional materials. “Graphene sort of unlocked the box,” he says. “Now we’re looking at things like sheets of molybdenum disulphide, or black phosphorous, or phosphorous-boron compounds.” Crucially, all of those, like silicon, can easily be switched on and off. + +If everything goes according to plan, says Dr Yeric, novel transistor designs and new materials might keep things ticking along for another five or six years, by which time the transistors may be 5nm apart. But beyond that “we’re running out of ways to stave off the need for something really radical.” + +His favoured candidate for that is something called “spintronics”. Whereas electronics uses the charge of an electron to represent information, spintronics uses “spin”, another intrinsic property of electrons that is related to the concept of rotational energy an object possesses. Usefully, spin comes in two varieties, up and down, which can be used to represent 1 and 0. And the computing industry has some experience with spintronics already: it is used in hard drives, for instance. + +Research into spintronic transistors has been going on for more than 15 years, but none has yet made it into production. Appealingly, the voltage needed to drive them is tiny: 10-20 millivolts, hundreds of times lower than for a conventional transistor, which would solve the heat problem at a stroke. But that brings design problems of its own, says Dr Yeric. With such minute voltages, distinguishing a 1 or a 0 from electrical noise becomes tricky. + +“It’s relatively easy to build a fancy new transistor in the lab,” says Linley Gwennap, the analyst. “But in order to replace what we’re doing today, you need to be able to put billions on a chip, at a reasonable cost, with high reliability and almost no defects. I hate to say never, but it is very difficult.” That makes it all the more important to pursue other ways of making better computers. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21694346/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +New designs + +Taking it to another dimension + +How to get more out of existing transistors + +Mar 12th 2016 | From the print edition + + + +STRICTLY speaking, Moore’s law is about the ever greater number of electronic components that can be crammed onto a given device. More generally, though, it is used as shorthand for saying that computers are always getting better. As transistors become harder and harder to shrink, computing firms are starting to look at making better use of the transistors they already have. “Managers in the past wouldn’t want to invest a lot in intensive design,” says Greg Yeric at ARM. “I think that’s going to start shifting.” + +One way is to make the existing chips work harder. Computer chips have a master clock; every time it ticks, the transistors within switch on or off. The faster the clock, the faster the chip can carry out instructions. Increasing clock rates has been the main way of making chips faster over the past 40 years. But since the middle of the past decade clock rates have barely budged. + +Chipmakers have responded by using the extra transistors that came with shrinking to duplicate a chip’s existing circuitry. Such “multi-core” chips are, in effect, several processors in one, the idea being that lashing several slower chips together might give better results than relying on a single speedy one. Most modern desktop chips feature four, eight or even 16 cores. + +But, as the industry has discovered, multi-core chips rapidly hit limits. “The consensus was that if we could keep doing that, if we could go to chips with 1,000 cores, everything would be fine,” says Doug Burger, an expert in chip design at Microsoft. But to get the best out of such chips, programmers have to break down tasks into smaller chunks that can be worked on simultaneously. “It turns out that’s really hard,” says Dr Burger. Indeed, for some mathematical tasks it is impossible. + +Another approach is to specialise. The most widely used chips, such as Intel’s Core line or those based on ARM’s Cortex design (found in almost every smartphone on the planet) are generalists, which makes them flexible. That comes at a price: they can do a bit of everything but excel at nothing. Tweaking hardware to make it better at dealing with specific mathematical tasks “can get you something like a 100- to 1,000-fold performance improvement over some general solution”, says Bob Colwell, who helped design Intel’s Pentium chips. When Moore’s law was doubling performance every couple of years at no cost anyway, there was little incentive to customise processing this way. But now that transistors are not necessarily getting faster and cheaper all the time, those tradeoffs are changing. + +Something special + +That was Sean Mitchell’s thinking when, a decade ago, he co-founded a company called Movidius. The firm designs chips for use in computer vision, a booming field with applications in everything from robotics to self-driving cars to augmented reality. Movidius has since raised nearly $90m in funding. + +“When we looked at the general-purpose chips out there,” says Dr Mitchell, “we found that they were very inefficient.” So Dr Mitchell and his co-founders set about designing their own specialised microprocessor. + +“We’ve got to process high-resolution images, each containing millions of pixels, and coming in at 60, 90 or even 120 frames per second,” he says. By tweaking the hardware to the task at hand—by providing exactly the mix of computational resources necessary for the mathematics of visual processing while leaving out any of the extraneous logic that would allow a general-purpose chip to perform other tasks—Movidius’s Myriad 2 chip can crunch huge amounts of visual information but use less than a watt of power (which is about 20% of the consumption of the chips in smartphones and only about 1% of those in desktop computers). In January the firm announced a deal with Google. + +Custom-built chips are already in use + +Custom-built chips are already in use in other parts of the computing industry. The best-known examples are the graphics chips used to improve the visuals of video games, designed by firms such as Nvidia and AMD and first marketed to consumers in the mid-1990s. Intel’s newer Pentium chips also come with built-in specialised logic for tasks such as decoding video. But there are downsides. Designing new chips takes years and can cost tens or even hundreds of millions of dollars. Specialised chips are also harder to program than general-purpose ones. And, by their very nature, they improve performance only on certain tasks. + +A better target for specialised logic, at least at first, might be data centres, the vast computing warehouses that power the servers running the internet. Because of the sheer volume of information they process, data centres will always be able to find a use for a chip that can do only one thing, but do it very well. + +With that in mind, Microsoft, one of the world’s biggest software firms and providers of cloud-computing services, is venturing into the chip-design business. In 2014 it announced a new device called Catapult that uses a special kind of chip called a field-programmable gate array (FPGA), the configuration of which can be reshaped at will. FPGAs offer a useful compromise between specialisation and flexibility, says Dr Burger, who led the team that developed Catapult: “The idea is to have programmable hardware alongside programmable software.” When one task is finished, an FPGA can be reconfigured for another job in less than a second. + +The chips are already in use with Bing, Microsoft’s search engine, and the company says this has doubled the number of queries a server can process in a given time. There are plenty of other potential applications, says Peter Lee, Dr Burger’s boss at Microsoft. FPGAs excel when one specific algorithm has to be applied over and over again to torrents of data. One idea is to use Catapult to encrypt data flowing between computers to keep them secure. Another possibility is to put it to work on voice- and image-recognition jobs for cloud-connected smartphones. + +The technology is not new, but until now there was little reason to use it. What is new is that “the cloud is growing at an incredible rate,” says Dr Burger. “And now that Moore’s law is slowing down, that makes it much harder to add enough computing capacity to keep up. So these sorts of post-Moore projects start to make economic sense.” + +At the IBM research lab on the shores of Lake Zurich, ambitions are set even higher. On a table in one of the labs sits a chip connected by thin hoses to a flask of purple-black liquid. Patrick Ruch, who works in IBM’s Advanced Thermal Packaging group, sees this liquid as the key to a fundamental redesign of data centres. He and his colleagues think they can shrink a modern supercomputer of the sort that occupies a warehouse into a volume about the size of a cardboard box—by making better use of the third dimension. + +Leaving aside innovations like finned transistors (see article), modern chips are essentially flat. But a number of companies, including IBM, are now working on stacking chips on top of each other, like flats in a tower block, to allow designers to pack more transistors into a given area. Samsung already sells storage systems made from vertically stacked flash memory. Last year Intel and Micron, a big memory-manufacturer, announced a new memory technology called 3D Xpoint that also uses stacking. + +IBM’s researchers are working on something slightly different: chip stacks in which slices of memory are sandwiched between slices of processing logic. That would allow engineers to pack a huge amount of computing into a tiny volume, as well as offering big performance benefits. A traditional computer’s main memory is housed several centimetres from its processor. At silicon speeds, a centimetre is a vast distance. Sending signals across such distances also wastes energy. Moving the memory inside the chip cuts those distances from centimetres to micrometres, allowing it to shuttle data around more quickly. + +But there are two big problems with 3D chips. The first is heat. Flat chips are bad enough; in a conventional data centre thousands of fans blowing hot air out of the server racks emit a constant roar. As more layers are added, the volume inside the chip, where the heat is generated, grows faster than the outside area from which it can be removed. + +The second problem is getting electricity in. Chips communicate with the outside world via hundreds of metal “pins” on their undersides. Modern chips are so power-hungry that up to 80% of these pins are reserved for transporting electricity, leaving only a few to get data in and out. In 3D those constraints multiply, as the same number of pins must serve a much more complicated chip. + +Dr Michel has dubbed the liquid “electronic blood” + +IBM hopes to kill two birds with one stone by fitting its 3D chips with miniscule internal plumbing. Microfluidic channels will carry cooling liquid into the heart of the chip, removing heat from its entire volume at once. The firm has already tested the liquid-cooling technology with conventional, flat chips. The microfluidic system could ultimately remove around a kilowatt of heat—about the same as the output of one bar of an electric heater—from a cubic centimetre of volume, says Bruno Michel, the head of the group (see article). + +But the liquid will do more than cool the chips: it will deliver energy as well. Inspired by his background in biology, Dr Michel has dubbed the liquid “electronic blood”. If he can pull it off, it will do for computer chips what biological blood does for bodies: provide energy and regulate the temperature at the same time. Dr Michel’s idea is a variant of a flow battery, in which power is provided by two liquids that, meeting on either side of a membrane, produce electricity. + +Flow batteries are fairly well understood. The electricity industry has been studying them as a way to store intermittent power from renewable energy sources. Dr Michel’s system is still many years away from commercial deployment, but the principle has been established: when Dr Ruch switches on the flow, the chip to which the hoses are connected flickers into life—without a plug or a wire in sight. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21694350/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brain scan + +Bruno Michel + +IBM’s head of advanced micro-integration reckons biology holds the key to more energy-efficient chips + +Mar 12th 2016 | From the print edition + + + +IN 2011 a supercomputer called Watson, built by IBM, beat two top-rank human champions at “Jeopardy!”, an American quiz show. This caused great excitement. Unlike chess, a game of abstract reason and logic, “Jeopardy!” is full of puns, double entendres and wordplay; just the sort of thing meant to stump computers. But Bruno Michel, who heads the advanced micro-integration group at IBM’s research lab in Zurich, says it was not a fair fight. “Do you know how much power [Watson] consumes? At the time it was something like 80kW. That’s thousands of times more than the humans it was playing against.” + +Dr Michel argues that computers are extremely inefficient machines, both in terms of the electricity they consume and the space they take up. A typical desktop machine or a server in a data centre, he reckons, uses only about 0.0001% of its volume to crunch numbers, and perhaps 1% to shuttle the results around. The rest is mostly empty space. The laws of physics set a limit to how efficiently information can be processed, but modern computers perform at only about 0.00004% of that theoretical maximum, he calculates. So for now a big data centre consumes tens of megawatts of power, almost all of which is transformed, literally, into hot air. + +Moore’s law used to keep a lid on electricity usage even as computing capacity raced ahead because smaller transistors needed less power. That is no longer true. “Nowadays the cost of buying a computer or a data centre is less than the cost of running it for a few years,” says Dr Michel. “That’s a paradigm shift.” Data centres already consume 2% of all the electricity produced in the world. + +Dr Michel’s benchmark for efficiency is evolution; his original training was in mechanical engineering, but he fell in love with biology after reading a genetics textbook. After earning a PhD in biochemistry and biophysics from the University of Zurich, he joined IBM’s Zurich lab to work with the scanning tunnelling microscope developed there in 1981. It won its inventors a Nobel prize, allowing scientists to see and manipulate individual atoms. That job led to a project on manufacturing technology for flat-screen displays. “I get fascinated by new things, and then I want to start working on them,” he says. “But my advice is: if you want to work in a new field, don’t be driven by creativity—be driven by impact.” + +That is how he got involved in his current work on more energy-efficient chips. “In the middle of the past decade there was a panic in the chip industry—soon we won’t be able to keep these things cool,” he notes. At the same time energy policy was becoming more important as climate change moved up the political agenda. + +Biology’s secret weapon, he thinks, is the spidery, fractally branching network of blood vessels that supply energy to the brain, allowing most of its volume to be turned over to useful data-processing tasks. As near as neuroscientists can tell, a mammalian brain uses about 70% of its volume for moving information around, 20% for processing it and the remaining 10% to keep everything in the right place and supplied with nutrients. In doing all these things, a human brain consumes about 20 watts of power. That makes it roughly 10,000 times more efficient than the best silicon machines invented by those brains, Dr Michel reckons. + +One of his favourite charts compares the density and efficiency of brains with a string of computing technologies going back to the second world war. All of them fall on a straight line, suggesting that to match the energy efficiency of the brain, scientists will have to emulate its density. + +He is now working on a project to build an electronic version of the blood that channels energy to biological brains (see article). “It was something like 200 years after the invention of the steam engine before mechanical engineering began to catch up with biology in terms of efficiency,” he says. “It would be good if computing could accomplish the same thing in half the time.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21694348/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Quantum computing + +Harnessing weirdness + +Quantum computers could offer a giant leap in speed—but only for certain applications + +Mar 12th 2016 | From the print edition + + + +THE D-Wave 2X is a black box, 3.3 metres to a side, that looks a bit like a shorter, squatter version of the enigmatic monoliths from the film “2001: A Space Odyssey”. Its insides, too, are intriguing. Most of the space, says Colin Williams, D-Wave’s director of business development, is given over to a liquid-helium refrigeration system designed to cool it to 0.015 Kelvin, only a shade above the lowest temperature that is physically possible. Magnetic shielding protects the chip at the machine’s heart from ripples and fluctuations in the Earth’s magnetic field. + +Such high-tech coddling is necessary because the D-Wave 2X is no ordinary machine; it is one of the world’s first commercially available quantum computers. In fact, it is not a full-blown computer in the conventional sense of the word, for it is limited to one particular area of mathematics: finding the lowest value of complicated functions. But that specialism can be rather useful, especially in engineering. D-Wave’s client list so far includes Google, NASA and Lockheed Martin, a big American weapons-maker. + +D-Wave’s machine has caused controversy, especially among other quantum-computing researchers. For a while academics in the field even questioned that the firm had built a true quantum machine. Those arguments were settled in 2014, in D-Wave’s favour. But it is still not clear whether the machine is indeed faster than its non-quantum rivals. + +D-Wave, based in Canada, is only one of many firms in the quantum-computing business. And whereas its machine is highly specialised, academics have also been trying to build more general ones that could attack any problem. In recent years they have been joined by some of the computing industry’s biggest guns, such as Hewlett-Packard, Microsoft, IBM and Google. + +Quantum computing is a fundamentally different way of manipulating information. It could offer a huge speed advantage for some mathematical problems that still stump ordinary machines—and would continue to stump them even if Moore’s law were to carry on indefinitely. It is also often misunderstood and sometimes overhyped. That is partly because the field itself is so new that its theoretical underpinnings are still a work in progress. There are some tasks at which quantum machines will be unambiguously faster than the best non-quantum sort. But for a lot of others the advantage is less clear. “In many cases we don’t know whether a given quantum algorithm will be faster than the best-known classical one,” says Scott Aaronson, a computer scientist at the Massachusetts Institute of Technology. A working quantum computer would be a boon—but no one is sure how much of one. + +The basic unit of classical computing is the bit, the smallest possible chunk of information. A bit can can take just two values: yes or no, on or off, 1 or 0. String enough bits together and you can represent numbers of any size and perform all sorts of mathematical manipulations upon them. But classical machines can deal with just a handful of those bit-strings at a time. And although some of them can now crunch through billions of strings every second, some problems are so complex that even the latest computers cannot keep pace. Finding the prime factors of a big number is one example: the difficulty of the problem increases exponentially as the number in question gets bigger. Each tick of Moore’s law, in other words, enables the factoring of only slightly larger numbers. And finding prime factors forms the mathematical backbone of much of the cryptography that protects data as they scoot around the internet, precisely because it is hard. + +Quantum bits, or qubits, behave differently, thanks to two counterintuitive quantum phenomena. The first is “superposition”, a state of inherent uncertainty that allows particles to exist in a mixture of states at the same time. For instance, a quantum particle, rather than having a specific location, merely has a certain chance of appearing in any one place. + +In computing terms, this means that a qubit, rather than being a certain 1 or a certain 0, exists as a mixture of both. The second quantum phenomenon, “entanglement”, binds together the destiny of a quantity of different particles, so that what happens to one of them will immediately affect the others. That allows a quantum computer to manipulate all of its qubits at the same time. + +The upshot is a machine that can represent—and process—vast amounts of data at once. A 300-qubit machine, for instance, could represent 2300 different strings of 1s and 0s at the same time, a number roughly equivalent to the number of atoms in the visible universe. And because the qubits are entangled, it is possible to manipulate all those numbers simultaneously. + +Yet building qubits is hard. Superpositions are delicate things: the slightest puff of heat, or a passing electromagnetic wave, can cause them to collapse (or “decohere”), ruining whatever calculation was being run. That is why D-Wave’s machine—and all other quantum computers—have to be so carefully isolated from outside influences. Still, progress has been quick: in 2012 the record for maintaining a quantum superposition without the use of silicon stood at two seconds; by last year it had risen to six hours. + +Another problem is what to build the qubits out of. Academics at the universities of Oxford and Maryland, among others, favour tickling tightly confined ions with laser beams. Hewlett-Packard, building on its expertise in optics, thinks that photons—the fundamental particles of light—hold the key. Microsoft is pursuing a technology that is exotic even by the standards of quantum computing, involving quasi-particles called anyons. Like those “holes” in a semiconductor, anyons are not real particles, but a mathematically useful way of describing phenomena that behave as if they were. Microsoft is currently far behind any of its competitors, but hopes eventually to come up with more elegantly designed and much less error-prone machines than the rest. + +Probably the leading approach, used by Google, D-Wave and IBM, is to represent qubits as currents flowing through superconducting wires (which offer no electrical resistance at all). The presence or absence of a current—or alternatively, whether it is circulating clockwise or anti-clockwise—stands for a 1 or a 0. What makes this attractive is that the required circuits are relatively easy to etch into silicon, using manufacturing techniques with which the industry is already familar. And superconducting circuits are becoming more robust, too. Last year a team led by John Martinis, a quantum physicist working at Google, published a paper describing a system of nine superconducting qubits in which four could be examined without collapsing the other five, allowing the researchers to check for, and correct, mistakes. “We’re finally getting to the stage now where we can start to build an entire system,” says Dr Martinis. + +Using a quantum computer is hard, too. In order to get the computer to answer the question put to it, its operator must measure the state of its qubits. That causes them to collapse out of their superposed state so that the result of the calculation can be read. And if the measurement is done the wrong way, the computer will spit out just one of its zillions of possible states, and almost certainly the wrong one. “You will have built the world’s most expensive random-number generator,” says Dr Aaronson. + +For a quantum algorithm to work, the machine must be manipulated in such a way that the probability of obtaining the right answer is continually reinforced while the chances of getting a wrong answer are suppressed. One of the first useful algorithms for this purpose was published in 1994 by Peter Shor, a mathematician; it is designed to solve the prime-factorising problem explained above. Dr Aaronson points out that alongside error correction of the sort that Dr Martinis has pioneered, Dr Shor’s algorithm was one of the crucial advances which persuaded researchers that quantum computers were more than just a theoretical curiosity. Since then more such algorithms have been discovered. Some are known to be faster than their best-known classical rivals; others have yet to prove their speed advantage. + +A cryptographer’s dream + +That leaves open the question of what, exactly, a quantum computer would be good for. Matthias Troyer, of the Swiss Federal Institute of Technology in Zurich, has spent the past four years conducting a rigorous search for a “killer app” for quantum computers. One commonly cited, and exciting, application is in codebreaking. Dr Shor’s algorithm would allow a quantum computer to make short work of most modern cryptographic codes. Documents leaked in early 2014 by Edward Snowden, a former American spy, proved what cryptographers had long suspected: that America’s National Security Agency (NSA) was working on quantum computers for exactly that reason. Last August the NSA recommended that the American government begin switching to new codes that are potentially less susceptible to quantum attack. The hope is that this will pre-empt any damage before a working quantum computer is built. + +Another potential killer app is artificial intelligence (AI). Firms such as Google, Facebook and Baidu, China’s biggest search engine, are already putting significant sums into computers than can teach themselves to understand human voices, identify objects in images, interpret medical scans and so on. Such AI programs must be trained before they can be deployed. For a face-recognition algorithm, for instance, that means showing it thousands of images. The computer has to learn which of these are faces and which are not, and perhaps which picture shows a specific face and which not, and come up with a rule that efficiently transforms the input of an image into a correct identification. + +Ordinary computers can already perform all these tasks, but D-Wave’s machine is meant to be much faster. In 2013 Google and NASA put one of them into their newly established Quantum AI Lab to see whether the machine could provide a speed boost. The practical value of this would be immense, but Dr Troyer says the answer is not yet clear. + +In his view, the best use for quantum computers could be in simulating quantum mechanics itself, specifically the complicated dance of electrons that is chemistry. With conventional computers, that is fiendishly difficult. The 2013 Nobel prize for chemistry was awarded for the development of simplified models that can be run on classical computers. But, says Dr Troyer, “for complex molecules, the existing [models] are not good enough.” His team reckoned that a mixed approach, combining classical machines with the quantum sort, would do better. Their first efforts yielded algorithms with running times of hundreds of years. Over the past three years, though, the researchers have refined their algorithms to the point where a simulation could be run in hundreds of seconds instead. + +It may not be as exciting as AI or code-breaking, but being able to simulate quantum processes accurately could revolutionise all sorts of industrial chemistry. The potential applications Dr Troyer lists include better catalysts, improved engine design, a better understanding of biological molecules and improving things like the Haber process, which produces the bulk of the world’s fertilisers. All of those are worthwhile goals that no amount of conventional computing power seems likely to achieve. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21694347/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +What comes next + +Horses for courses + +The end of Moore’s law will make the computer industry a much more complicated place + +Mar 12th 2016 | From the print edition + + + +WHEN Moore’s law was in its pomp, life was simple. Computers got better in predictable ways and at a predictable rate. As the metronome begins to falter, the computer industry will become a more complicated place. Things like clever design and cunning programming are useful, says Bob Colwell, the Pentium chip designer, “but a collection of one-off ideas can’t make up for the lack of an underlying exponential.” + +Progress will become less predictable, narrower and less rapid than the industry has been used to. “As Moore’s law slows down, we are being forced to make tough choices between the three key metrics of power, performance and cost,” says Greg Yeric, the chip designer at ARM. “Not all end uses will be best served by one particular answer.” + +And as computers become ever more integrated into everyday life, the definition of progress will change. “Remember: computer firms are not, fundamentally, in it to make ever smaller transistors,” says Marc Snir, of Argonne National Laboratory. “They’re in it to produce useful products, and to make money.” + +Moore’s law has moved computers from entire basements to desks to laps and hence to pockets. The industry is hoping that they will now carry on to everything from clothes to smart homes to self-driving cars. Many of those applications demand things other than raw performance. “I think we will see a lot of creativity unleashed over next decade,” says Linley Gwennap, the Silicon Valley analyst. “We’ll see performance improved in different ways, and existing tech used in new ways.” + +Mr Gwennap points to the smartphone as an example of the kind of innovation that might serve as a model for the computing industry. Only four years after the iPhone first launched, in 2011, smartphone sales outstripped those of conventional PCs. Smartphones would never have been possible without Moore’s law. But although the small, powerful, frugal chips at their hearts are necessary, they are not sufficient. The appeal of smartphones lies not just in their performance but in their light, thin and rugged design and their modest power consumption. To achieve this, Apple has been heavily involved in the design of the iPhone’s chips. + +And they do more than crunch numbers. Besides their microprocessors, smartphones contain tiny versions of other components such as accelerometers, GPS receivers, radios and cameras. That combination of computing power, portability and sensor capacity allows smartphones to interact with the world and with their users in ways that no desktop computer ever could. + +Virtual reality (VR) is another example. This year the computer industry will make another attempt at getting this off the ground, after a previous effort in the 1990s. Firms such as Oculus, an American startup bought by Facebook, Sony, which manufactures the PlayStation console, and HTC, a Taiwanese electronics firm, all plan to launch virtual-reality headsets to revolutionise everything from films and video games to architecture and engineering. + +A certain amount of computing power is necessary to produce convincing graphics for VR users, but users will settle for far less than photo-realism. The most important thing, say the manufacturers, is to build fast, accurate sensors that can keep track of where a user’s head is pointing, so that the picture shown by the goggles can be updated correctly. If the sensors are inaccurate, the user will feel “VR sickness”, an unpleasant sensation closely related to motion sickness. But good sensors do not require superfast chips. + +The biggest market of all will be the “internet of things” + +The biggest market of all is expected to be the “internet of things”—in which cheap chips and sensors will be attached to everything, from fridges that order food or washing machines that ask clothes for laundering instructions to paving slabs in cities to monitor traffic or pollution. Gartner, a computing consultancy, reckons that by 2020 the number of connected devices in the world could run to 21 billion. + +Never mind the quality, feel the bulk + +The processors needed to make the internet of things happen will need to be as cheap as possible, says Dr Yeric. They will have to be highly energy-efficient, and ideally able to dispense with batteries, harvesting energy from their surroundings, perhaps in the form of vibrations or ambient electromagnetic waves. They will need to be able to communicate, both with each other and with the internet at large, using tiny amounts of power and in an extremely crowded radio spectrum. What they will not need is the latest high-tech specification. “I suspect most of the chips that power the internet of things will be built on much older, cheaper production lines,” says Dr Yeric. + +Churning out untold numbers of low-cost chips to turn dumb objects into smart ones will be a big, if unglamorous, business. At the same time, though, the vast amount of data thrown off by the internet of things will boost demand for the sort of cutting-edge chips that firms such as Intel specialise in. According to Dr Yeric, “if we really do get sensors everywhere, you could see a single engineering company—say Rolls Royce [a British manufacturer of turbines and jet engines]—having to deal with more data than the whole of YouTube does today.” + +Increasingly, though, those chips will sit not in desktops but in the data centres that make up the rapidly growing computing “cloud”. The firms involved keep their financial cards very close to their chests, but making those high-spec processors is Intel’s most profitable business. Goldman Sachs, a big investment bank, reckons that cloud computing grew by 30% last year and will keep on expanding at that rate at least until 2018. + +The scramble for that market could upend the industry’s familiar structure. Big companies that crunch a lot of numbers, such as Facebook and Amazon, already design their own data centres, but they buy most of their hardware off the shelf from firms such as Intel and Cisco, which makes routers and networking equipment. Microsoft, a software giant, has started designing chips of its own. Given the rapid growth in the size of the market for cloud computing, other software firms may soon follow. + + + +The twilight of Moore’s law, then, will bring change, disorder and plenty of creative destruction. An industry that used to rely on steady improvements in a handful of devices will splinter. Software firms may begin to dabble in hardware; hardware makers will have to tailor their offerings more closely to their customers’ increasingly diverse needs. But, says Dr Colwell, remember that consumers do not care about Moore’s law per se: “Most of the people who buy computers don’t even know what a transistor does.” They simply want the products they buy to keep getting ever better and more useful. In the past, that meant mostly going for exponential growth in speed. That road is beginning to run out. But there will still be plenty of other ways to make better computers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21694349/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Health care: Things are looking app + +Fracking companies: DUC and cover + +Royal Enfield: Approved by mothers-in-law + +The Wallenberg group: A Nordic pyramid + +BMW at 100: Bavarian rhapsody + +Retailing: Shops to showrooms + +Schumpeter: Open for business + + + + + +Articles Sections Next + +Health care + +Things are looking app + +Mobile health apps are becoming more capable and potentially rather useful + +Mar 12th 2016 | From the print edition + + + +SAVILE ROW in London is best known for producing some of the world’s finest bespoke suits. But tucked away in a quiet corner of the same street is a firm that gives tailored health advice through a smartphone app. Your.MD uses artificial intelligence to understand natural-language statements such as “I have a headache” and ask pertinent follow-up questions. The app typifies a new approach to mobile health (also known as m-health): it is intelligent, personalised and gets cleverer as it gleans data from its users. + +There are now around 165,000 health-related apps which run on one or other of the two main smartphone operating systems, Apple’s iOS and Google’s Android. PwC, a consulting firm, forecasts that by 2017 such apps will have been downloaded 1.7 billion times. However, the app economy is highly fragmented. Many providers are still small, and most apps are rarely, if ever, used. + +That said, the successful ones are highly popular. As apps and wearables become increasingly capable and useful, and smartphones continue their march of dominance, m-health has a promising future. BCC Research, which studies technology-based markets, forecasts that global revenues for m-health will reach $21.5 billion in 2018 (see chart 1), with Europe the largest m-health market. + + + +So far, most smartphone health apps fall squarely into the category of “wellness”. Along with portable sensors such as the Fitbit wristband, such apps help people to manage and monitor their exercise, diet and stress levels (see chart 2). Other types of app, such as WebMD and iTriage, repackage medical information already found online, and offer information about symptoms and treatments. Some, such as ZocDoc, let users book consultations with doctors. + +However, m-health increasingly promises to do more of the heavy lifting in medicine. First, there is a growing range of apps through which users can talk directly to doctors and therapists. These include Teladoc, DoctorOnDemand, HealthTap and Pingmd. Since late 2014 Walgreens, an American pharmacy chain, has been offering an app called MDLive, which provides 24-hour access to a doctor for $49 a consultation. Patients will soon be able to chat with artificial-intelligence health advisers rather like Your.MD, but through messaging apps. Second, and with potentially more far-reaching effects on the quality of care, there is an emerging breed of apps that monitor and diagnose patients with a variety of ailments, in some cases predicting and thus helping to avert health crises. + + + +Cerora, a firm from Bethlehem, Pennsylvania, has created a headset, with an associated smartphone app, which monitors brain health. The headset measures brainwaves and tracks eye movement; the app uses the smartphone’s internal sensors to test patients’ balance and reaction times. Cerora plans to launch the product this year, subject to review by America’s Food and Drug Administration (FDA); it could help diagnose concussion and other neurodegenerative diseases. Cellscope, of San Francisco, offers a smartphone attachment that lets parents see inside a child’s ear, take photos or video, and send them to a doctor. + +A small number of patients, mostly the chronically sick, are disproportionately costly in any health-care system. M-health offers a continuous, long-term means of monitoring them, with the potential to improve the way conditions such as cardiovascular disease, epilepsy, asthma and diabetes are managed. + +Patients with diabetes constantly have to make decisions on medication, food and activity, says Hooman Hakami of Medtronic Diabetes, a maker of medical devices; and most will go for months between doctor’s appointments. Medtronic, allied with IBM’s Watson, an artificial-intelligence system, is creating an app to predict, three hours in advance, when a patient will experience high or low blood-sugar levels. It will gather data from Medtronic’s insulin pumps and glucose monitors, worn by the patient, and combine these with information on the user’s diet, and data from activity trackers. Among other providers of diabetes-related m-health services is Diabetes+Me, whose app is already showing that it can improve patient outcomes while reducing costs. Novartis, a Swiss drugs giant, is set to test a glucose-monitoring contact lens, developed by Google. + +Apps on prescription + +Constant, wireless-linked monitoring may spare patients much suffering, by spotting incipient signs of their condition deteriorating. It may also spare health providers and insurers many expensive hospital admissions. When Britain’s National Health Service tested the cost-effectiveness of remote support for patients with chronic obstructive pulmonary disease, it found that an electronic tablet paired with sensors measuring vital signs could result in better care and enormous savings, by enabling early intervention. Some m-health products may prove so effective that doctors begin to provide them on prescription. + +So far, big drugmakers have been slow to join the m-health revolution, though there are some exceptions. HemMobile by Pfizer, and Beat Bleeds by Baxter, help patients to manage haemophilia. Bayer, the maker of Clarityn, an antihistamine drug, has a popular pollen-forecasting app. GSK, a drug firm with various asthma treatments, offers sufferers the MyAsthma app, to help them manage their condition. + +GSK, along with Propeller Health, is developing custom sensors for GSK’s Ellipta asthma inhaler, so that the pharma company can gather information on how patients use it. GSK wants to know how well patients comply with instructions on when to take it, and to see how compliance relates to the safety, efficacy and economic benefits of the drug. + +All pharmaceutical companies are under pressure from regulators and health insurers to do more to demonstrate the value of their medications, and m-health may be a big help with this. Clinical trials of a proposed new drug will be able to use apps to measure disease progression more accurately, and thus demonstrate the efficacy of the treatment. After a drug is approved and perhaps many thousands of patients are taking it, the use of apps to monitor their condition will constitute a huge trial of the product’s long-term benefits. However, it could spell disaster for drug firms if such post-approval testing shows that their medicines do not in practice deliver the expected benefits, or shows up undesirable side-effects. + +As m-health apps take on more serious work, they will require more serious regulation. Inaccuracy is fairly harmless in a pedometer but less so in a heart-rate monitor. In August a popular product, Instant Blood Pressure, was removed from the Apple app store after serious concerns were raised over its accuracy. In 2011 a developer who claimed his AcneApp could treat pimples with light from an iPhone screen was fined. + + + +The longevity gap: Does big health care spending pay off + +Last year the FDA finished drawing up its regulatory regime for m-health, indicating that it will calibrate its approach, paying little attention to low-risk apps, such as ones that just promote a healthy lifestyle; and scrutinising those in areas where any misinformation could be dangerous. This sensible approach may be followed by regulators in other countries. + +But other regulatory questions are harder to answer. As health apps become more popular, concerns about how patients’ data are stored, used and shared will become more pointed. A new study in the Journal of the American Medical Association finds that many health apps may be sharing patients’ health data without their knowledge. Four-fifths of 211 diabetes apps it examined did not have privacy policies. + +America’s rules on the storage and transmission of personal-health data have not been changed since the advent of the iPhone. So doctors and hospitals may be reluctant to embrace health apps until the rules are updated to make it clear they can do so without breaching the stringent standards on data security. And conscientious providers and prescribers of m-health apps risk being tarred by association with any data-misusing rogues that emerge. + +The fragmented, nascent m-health market seems likely to consolidate in time, with its most promising startups perhaps being bought by, or entering alliances with, trusted health brands. That would help it to realise its substantial potential to help patients, doctors, health insurers and researchers alike. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21694523-mobile-health-apps-are-becoming-more-capable-and-potentially-rather-useful-things-are-looking/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Fracking companies + +DUC and cover + +Rising oil prices will not quickly rescue the beleaguered shale industry + +Mar 12th 2016 | From the print edition + + + +NO ONE can deny that America’s shale-oil industry is having a hard time. In recent weeks it has suffered the indictment and subsequent death in a car crash of one of its pioneers, Aubrey McClendon; a shellacking from Hillary Clinton, who could become America’s next president; and a warning from Ali al-Naimi, Saudi Arabia’s oil minister, to cut costs, borrow money or face liquidation. + +The data illustrate the extent of its woes. The American government’s Energy Information Administration (EIA) says oil production in December, of 9.3m barrels a day (m b/d), was lower than a year earlier for the first time since early 2011 (see chart 1), weighed down by Texas and North Dakota, the heartlands of hydraulic fracturing (fracking). The EIA said on March 8th that it expects American crude production to fall to 8m b/d before it bottoms out in the latter part of next year. + + + +Against that bleak backdrop, the mere hint this week that American oil prices were rebounding towards $40 a barrel, up from a low of less than $30 a barrel a month ago, must have felt like a get-out-of-jail-free card. With a chutzpah typical of the industry, some shale executives see $40 oil as the threshold above which they can resume drilling and make money again—even if America is still awash with record amounts of crude in storage. If they are right about that, it could change the entire dynamics of the oil market, quickly smoothing any upward or downward spike in prices. But it is not at all clear that they are. + +In theory, it is not hard for the frackers to increase production rapidly, once it becomes economical. Rig and drilling costs have fallen so fast that some wells could make money with prices around $40-45 a barrel, according to Rystad Energy, a consulting firm (see chart 2). Firms have laid off many workers, but with well-paid jobs hard to find elsewhere, it could be relatively easy to attract them back. + + + +In preparation for higher oil prices, producers from the Bakken field in North Dakota to the Permian and Eagle Ford in Texas have reported that they have hundreds of “drilled but uncompleted” ( DUC) wells. DUCs should be anathema to a self-respecting shaleman; they sink cash into the ground in the form of wells, but defer the all-important fracking that breaks open the shale rock and produces the oil. They could be a quick way to resume production, however. In late February Continental Resources and Whiting Petroleum, two big operators in the Bakken, said that above $40 a barrel they may begin fracking their rising inventory of DUCs. + +For most of the industry, however, the problem is not finding oil but finding cash. “No one is sitting on any excess capital,” says Ron Hulme of Parallel Resource Partners, an energy-focused private-equity fund. For years the industry borrowed heavily to finance its expansion, because it was failing to generate enough cash to cover investment in new wells. The supply of credit, whether from banks or the high-yield debt markets, has either dried up or is much more expensive than it was. + +Capital expenditure has fallen as a result, but not by enough to balance the books. In the fourth quarter of last year, American and Canadian oil firms spent $20 billion, while generating only $13 billion in cashflow, according to Bloomberg, an information provider. + +Only the strongest firms can make up the shortfall by raising capital via the equity markets. (Even they may find this harder, as investors realise that shale companies are less profitable than they once seemed.) The weaker firms are unwilling to sell assets to raise cash because the proceeds would go directly to their creditors. “You’d have to prise those assets from their dying hands,” says Mr Hulme. He notes that even firms that are technically insolvent may have enough liquidity to keep them from such potential fire sales. + + + +INTERACTIVE: Explore how oil prices affect OPEC and non-OPEC production and viability + +Not all of them, though. On March 8th Goodrich Petroleum, a shale oil-and-gas company, said it would postpone paying interest on its debt, as it puts pressure on creditors to exchange debt for equity in order to avoid a default. Three other oil firms, Chaparral Energy, Energy XXI and SandRidge Energy, have also recently missed debt payments. Brian Gibbons of CreditSights, a debt-research firm, says 26 oil-related bond issuers either filed for Chapter 11 bankruptcy or had distressed-debt exchanges last year. He expects the number to rise to 73 by the end of 2017. Those firms still saddled with revolving bank loans are also bracing for the next twice-yearly reassessment of borrowing limits, due next month. These depend on valuations of shale firms’ reserves, and could lead to further strains on cashflow. + +To provide a sufficient margin of comfort, prices may have to rally a lot higher than $40 a barrel to lure capital back in. Bobby Tudor of Tudor, Pickering, Holt, an energy-focused investment bank, believes that at $40 a barrel production will continue to decline, at $50 it would flatten out, and only at $60 would it increase. “Drilling wells at today’s commodity prices is still destructive of capital,” he argues. One further wrinkle: as oil prices increase, so can costs. Those, then, who hope that nimble shale producers will be able to move the global oil price up and down just by turning the taps on and off may be disappointed. Their financial backers will be the ones really calling the shots. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21694522-rising-oil-prices-will-not-quickly-rescue-beleaguered-shale-industry-duc-and-cover/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Royal Enfield + +Approved by mothers-in-law + +A popular motorbike-maker shows that winning is not always about being best + +Mar 12th 2016 | MUMBAI | From the print edition + +Gul Panag: biker chic + +ITS motorbikes may not be the best that India produces, in terms of performance or reliability, and they are certainly not the cheapest, but no other brand comes close to matching Royal Enfield’s cult following. Gul Panag, a Bollywood star-turned-politician, is often seen, as pictured, riding her Enfield. When she got married in 2011, her groom swept her off to their honeymoon in a Royal Enfield with sidecar. + +Indeed, it is said that owning one of the bikes can improve a young Indian man’s marriage prospects. They tend to be driven by sensible types, in contrast with those who get their kicks by showing off on flashy sports bikes, such as the KTM Duke 390. Owners of Enfields lavish care and attention on them, diligently polishing each spoke on their wheels. Prospective mothers-in-law find this reassuring. + +Royal Enfield claims to be the world’s oldest motorbike-maker in continuous production. Its history goes back to colonial times, when it was the Indian offshoot of a British firm. Indian-owned since the 1950s, it has long outlived its parent. + +In its early days of independence it was kept going with orders from the Indian army and police, which used it to patrol rough border terrain. Now consumers drive sales: in February more than 49,000 Enfields were sold, up by 63% on a year earlier. That month there was a frisson of excitement in India’s business press when the market capitalisation of the manufacturer’s parent company, Eicher Motors, briefly overtook that of Harley-Davidson, an equally admired American bike brand, having already surpassed it by sales volume. In Delhi, enthusiasts from across the world flock to rent Enfields for rides through the Himalayas. Other bikes may be speedier on the highways and sip less fuel, but only an Enfield can survive such rugged terrain, “not your Harley-Davidsons,” sniffs one fan. + +Yet as recently as 2000 the parent company was planning to close Royal Enfield down. Frequent breakdowns, oil leaks, engine seizures, electrical failures and poor service had dented the bikes’ reputation and burned much of the company’s cash. Sales were down to just 2,000 a month. A third-generation member of the family that controls the group, Siddhartha Lal—who had ridden to his own wedding on an Enfield instead of the traditional horse—persuaded his father to give him a chance to revive the brand. + +Over the years Mr Lal made a number of changes to the bike without compromising on what had made it so popular. The gold piping on their petrol tanks is still painted by hand. But mechanical carburettors have been replaced with electronic fuel-injection on most models, to improve mileage and prevent breakdowns, especially at high altitudes. The cast-iron engine was replaced by an aluminium one to reduce oil leaks. When this affected the sound of the bike’s legendary “thump”, foreign consultants were called in to fix things. The thump is one of the bikes’ biggest selling-points: some buyers pay workshops to tinker with their new bikes to make it even louder. + +Investment in increasing production capacity, in the firm’s southern home city of Chennai, has helped it meet surging demand, though there is a waiting-list of up to four months on some models. When their bike finally arrives, buyers sometimes hand out sweets in their workplace, as if celebrating the arrival of their first-born. K. Krishnamani, a forty-something manager at a logistics firm in Mumbai, now on his second Enfield, describes how riding his bike makes him feel as royal as the maker’s name. “On the road, anybody will stop and give way to you. That is the liberty you have when you ride Enfield.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21694520-popular-motorbike-maker-shows-winning-not-always-about-being-best-approved/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Wallenberg group + +A Nordic pyramid + +The lessons from 100 years of a family’s industrial empire + +Mar 12th 2016 | STOCKHOLM | From the print edition + +Wallenbergs: the fifth generation + +SWEDEN is a progressive place. Women participate fully in the workforce. Companies are transparent, generally uncorrupt and often globally minded. Enthusiasm for technology helps Stockholm flourish as a lively startup centre for gaming, music and fintech firms. Business leaders earnestly talk of the benefits of going green, caring for workers and being ethical. In politics, Sweden is egalitarian, redistributing wealth through high taxes. So it is a puzzle that Swedish capitalism appears so strikingly unequal, with a small number of individuals owning and running large chunks of the economy. + +Credit Suisse, in its annual report on global wealth in October, pointed to findings that the richest 1% of Swedish households control 24% of the population’s total wealth, making it only a bit less unequal than India (25.7%). In contrast, Spain’s 1% control 16.5% of the wealth, and Japan’s only 4.3%. As in many countries, family-controlled businesses are the norm in Sweden. But as Randall Morck of the University of Alberta in Canada has noted, Sweden is an extreme case among rich countries in that one particular family, the Wallenbergs, holds such sway in business. + +The foundations were laid for the dynasty’s fortunes 160 years ago when André Oscar Wallenberg, the globe-trotting son of a Lutheran bishop, returned from America with a book on how to set up a bank, and founded Skandinaviska Enskilda Banken (SEB). The bank flourished, and began buying chunks of distressed industrial firms, leading the family to set up a holding company, Investor, 100 years ago. + +At the height of the Wallenbergs’ pre-eminence, in the 1970s, their various firms together employed 40% of Sweden’s industrial workforce and represented 40% of the total worth of the Stockholm stockmarket. Like most modern manufacturers, the industrial firms in their portfolio, including ABB and Atlas Copco (engineering), AstraZeneca (drugs) and Electrolux (appliances), are no longer huge employers. But Investor, plus SEB and the other listed firms in Investor’s portfolio, still account for about a third of the stockmarket’s value. And they generally do better than the rest: in the past decade, Investor’s shares have doubled, whereas the OMX Stockholm 30 Index rose by just 40%. + +Swedes often talk about the collection of companies as Wallenbergsfaren, “the Wallenberg sphere”, and to its smaller local rivals as “systems”. One of the largest systems is Industrivarden, whose portfolio includes Handelsbanken and the maker of Volvo Trucks. It has passed through several hands down the years, including those of Ingvar Kamprad, the founder of the IKEA furniture stores; its leading investor nowadays is Fredrik Lundberg, the son of a construction magnate. The Wallenbergs and Industrivarden both have large stakes in Ericsson, a maker of telecoms equipment. + +Many Wallenberg firms have roots in the 19th century, before Investor was founded. But they have generally flourished under the active ownership and close managerial oversight of the family. The sphere is now overseen by a genial triad of middle-aged men, two brothers and a cousin: Jacob, Peter and Marcus Wallenberg (pictured, next page). A transition to a sixth generation of the family is looming, with the next set of leaders to be drawn from a pool of around 30 relatives in their 30s or younger. A hitherto male-dominated empire is then likely to have some Wallenberg women right at the top. Already, Caroline Ankarcrona, younger sister to Marcus Wallenberg and in her late 40s, has been running the main family foundation, KAW, for four years. + +“Sphere” is one way of describing the Wallenberg holdings. A more pointed term (literally as well as figuratively) is the one Mr Morck uses: a pyramid. The Wallenbergs are thought to have combined personal wealth of just $1 billion or so, but they control, or have strong influence over, businesses worth hundreds of times as much. + +They do so through a number of foundations. KAW, the largest, is named after two ancestors who provided the largest endowment, 99 years ago. KAW has 50.1% of voting rights in Investor, chaired by Jacob Wallenberg. It in turn holds stakes—and often outsized voting rights—in their main, listed firms, at which family members often take leadership roles. (Through a division called Patricia Industries, Investor holds majority stakes in financial, telecoms and other firms, and is also a founder-investor in a private-equity fund, EQT.) + +Fear of tunnelling + +These successive layers let the Wallenbergs multiply their clout. Investor has beaten the Stockholm market handsomely, but its listed businesses often trade at a discount to their global peers, points out Thomas Zellweger, who directs a centre studying business families in St Gallen, Switzerland. Outside investors may be discounting the shares out of fear of “tunnelling”, in which a controlling family uses one firm to prop up another—though Mr Morck notes that there is scant evidence of this. + +Shareholders may also fear a controlling family pursuing its private obsessions, while neglecting the business: an early Wallenberg, for instance, campaigned assiduously for a single global currency, based on gold and the French franc. They may also worry that the next generation of Wallenberg bosses are chosen for internal family reasons rather than on merit. The Wallenbergs have managed their successions well over the years, but there is no guarantee this will always be so. + +The Wallenberg empire might in theory be threatened if, as in other countries, there were moves towards curbing the use of the dual-class shares that let the family exercise such sway over its firms. In Ericsson, for example, Investor has just 5.3% of total stock, but controls 21.5% of votes. In Electrolux, Investor has 15.5% of the stock, but 30% of voting rights. Family firms often use such dual shares (The Economist Group, largely owned by European business families, uses them too), but prevalence does not mean popularity. However, the family has long enjoyed good political connections: for all its support for free trade and open markets abroad, until the 1990s it had decades of help from protectionist policies that kept foreign predators at bay. + +That the KAW and other foundations get the Wallenbergs’ share of profits helps shield them from Sweden’s top income-tax rate, of 62%. The foundations’ beneficence also helps shield them from criticism: the KAW, for instance, makes $250m of grants a year, notably to fund basic research and education. + +Nordic, not Anglo-Saxon + +Discuss their set-up with the Wallenbergs and they say “Anglo-Saxons”, schooled in British and American ideas that companies are best owned by masses of small investors (or pension funds), are wilfully blind to the benefits of family-dominated firms. The family argues that ownership models need not be “black and white”, that theirs has proved it can deliver a “nice track record” for more than a century-and-a-half. Well-run family firms can ensure modern virtues—transparency, professional management, clear communication, agility—as easily as those Anglo-Saxons. + +Tour the headquarters of Ericsson, and its CEO, Hans Vestberg, offers a similar argument: a stolid company, founded in 1876 (and part-owned by the Wallenbergs since 1950), can be nimble, even ruthless. Ericsson frittered away the strong position it once had as a maker of mobile handsets. But Mr Vestberg talks optimistically of how it will prosper from the coming launch of fifth-generation (5G) wireless telecoms and the “internet of things”. Ericsson, with a $5 billion annual research-and-development budget, files 4,000 patents a year, he says. In less than two years it has hired 30,000 staff, but also let go 28,000, to make possible a shift from a company that sells products to one more focused on services. + +Gunnar Wetterberg, author of a book on the Wallenberg family, argues that having most of its wealth locked up in the foundations best explains its long-term success: family feuds are discouraged when no relative can dream of running off to Bahamas with all the loot. “There are no family fights,” says one Wallenberg. “No one understands how it works, but it works well.” + +Other observers prefer explanations that focus on the personality and skills of a mostly self-effacing, hard-working and polyglot clan. Their spells working in the companies make them better owners. Carina Beckerman, who has just written a book on culture and leadership in Wallenberg companies, lauds two qualities that help encourage success. One is doggedness: the Wallenbergs found few firms, but they stick with existing ones, seek new markets and try ways to make them flourish. She notes that Atlas Copco had to be rescued from near-bankruptcy three times in its first 27 years, but now flourishes. + +The second quality, says Ms Beckerman, is a near-obsession with getting the right managers in place: it is often the top item on the agenda whenever the Wallenberg leaders gather. They typically favour loyal insiders, not show-offs who promise dramatic change. + +Not everything the family touches turns to gold. Efforts to go digital, just over a decade ago, by investing in a pair of online firms, Spray Networks and Bredbandsbolaget, had disappointing outcomes. Scania, a lorry-maker that has flourished since being bought by Volkswagen in 2000, was sold too cheaply, says Ms Beckerman. + +But the sphere’s more recent efforts to expand its medical interests have been more successful—witness its investments in Sobi, which specialises in treatments for haemophilia and other rare diseases, and in Mölnlycke Health Care, which makes products for use in surgery and treating wounds. Even if its dominance of the Swedish business scene has diminished in recent decades, the Wallenberg sphere looks set to go on prospering in the hands of its sixth generation. + +That makes them mere parvenus compared with the Lovenskiold family across the border in Norway: now led by its 13th generation, it claims a 360-year history and runs successful timber and furniture firms. But there may be a shared recipe for such longevity. “The majority of the really successful, long-lasting families are, like the Wallenbergs, convivial, modest, see the hard work needed and do it quietly,” says a close observer. If they were a bunch of work-shy show-offs, Swedes would surely have noticed the inequality by now. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21694555-lessons-100-years-familys-industrial-empire-nordic-pyramid/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +BMW at 100 + +Bavarian rhapsody + +Maintaining its recent run of growth will be the carmaker’s main challenge + +Mar 12th 2016 | From the print edition + + + +THE ride, handling and all-round appeal of BMW’s 3 Series, a sporty saloon car, makes it a benchmark for other vehicles of its type. The German firm, which celebrated its centenary on March 7th, has also become a benchmark for success in the motor industry. The world’s biggest maker of premium-priced cars is well run, has grown steadily and made profits consistently for years. But as the beer flowed and the oompah bands parped at the huge party thrown at its headquarters in Munich, BMW’s bosses may have been wondering how to stay ahead of the pack. + +BMW began life in 1916 assembling aircraft engines. Restrictions on Germany’s planemaking after the first world war encouraged it to diversify, first into motorbikes, and then in 1928 into making its first car. In 1933 it launched the 303, ancestor to today’s 3 Series, and the first BMW to feature the distinctive double kidney-shaped front grille. Though stylish and technically advanced, BMW’s pricey models at first sold in small quantities. At the end of the 1950s sales of motorbikes, on which the company still relied, faltered as cars from mass-market firms hit the roads. Only an investment by the Quandt family, which controls BMW to this day, saved it from a humiliating takeover by Daimler. + +Rather than joining the mass market, BMW, along with its German counterparts, Daimler’s Mercedes marque and VW’s Audi, all but cornered the worldwide market in expensive, high-performance saloons. By 1990 global sales of the “Ultimate Driving Machine”, as the company’s advertising slogan has it, hit half a million cars a year. However, in 1994 BMW took a wrong turn. Its purchase of Rover Group, an ailing British maker of both premium and mass-market cars, was a disaster. In 2000, having failed to turn Rover around, it decided to sell most of the group. + + + +Since then it has been upwards pretty much all the way, with sales now at more than 2m cars a year. BMW has confounded its rivals by maintaining an image of luxury and exclusivity even as it has introduced an ever-broader range of entry-level cars at prices comparable with the top of the mass-market firms’ ranges. + +For example, a clever reinvention of the Mini brand, retained from Rover, gives it a vehicle for drivers without the means to buy a BMW 1 Series, which in turn fits the budgets of those who cannot afford a 3 Series. BMW (unlike Volkswagen) was also early in spotting the craze for SUVs, and now makes them in all sorts of shapes and sizes. It even offers a people-carrier, the 2 Series Active Tourer. + +Having filled every imaginable niche, however, its growth seems to be slowing as it struggles to imagine new ones. Mercedes may overtake BMW by unit sales this year, as a slick restyling of its models wins over buyers seeking an alternative to BMW’s more staid designs. Jaguar Land Rover, Volvo and other premium carmakers are also competing harder than they used to. Mass-market brands such as Ford and Citroën are pouring resources into “premiumising” some of their models, in a drive for bigger margins. And the slowdown in China, hitherto a hugely profitable market, has hurt BMW disproportionately hard. + +Even so, BMW’s bosses were entitled to clunk their steins together and slap each other heartily on the back at this week’s celebrations. The firm has got where it is mainly through an unswerving commitment to producing excellent cars. Down the years a few of its model launches—such as a recent GT version of its 5 Series executive saloon—have underwhelmed somewhat. But so far at least, there have been no stinkers. Not bad for a centenarian. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21694353-premium-carmakers-BMW-100-years/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Retailing + +Shops to showrooms + +Why some firms are opening shops with no stock + +Mar 12th 2016 | NEW YORK | From the print edition + + + +THE Bonobos shop on lower Fifth Avenue, in Manhattan, sits in a row of familiar fashion brands, including J.Crew, Zara and Gap. As at those stores, shoppers at Bonobos can survey racks of clothes, try on this shirt and those trousers, then decide which items to purchase. Unlike in those stores, shoppers at Bonobos may not buy any clothes to take home. When Bonobos first tried this idea, in 2011, it seemed like a lark. The company now has 20 such shops, from Texas to California, and plans to open at least seven more this year. + +Bricks-and-mortar stores are in the throes of an identity crisis. The growing threat from online shopping has spurred some physical retailers to do more than just sell goods. Lululemon lures shoppers with both yoga clothes and yoga classes; Louis Vuitton displays fine art beside its frocks. Among the most interesting models to emerge, however, are chains such as Bonobos, whose outlets have no stock to sell. + +The idea is to divorce the purchase of a product from its distribution. Until recently, this business model was largely restricted to sellers of big, non-portable things like furniture: people like to examine sofas before they buy them, but they do not fit neatly into shopping bags. Now, clothing retailers are seeing the downsides of conventional shops, too. + +If a retailer stores and sells goods in the same place, it must lease space, often in an expensive central location, for the store room as well as the shop floor. Staff may be needed to unpack deliveries overnight, which raises costs further. Employees spend much of the day restocking shelves, which means less attention paid to customers. Companies can never predict perfectly which items will sell in which shops. Inevitably some clothes linger unsold for too long, and must be marked down, which squeezes margins. + +Online-only shops have less of a problem with this sort of thing, but there are still many consumers who like to check the fit and the feel of a garment before buying. So Paul Evans and Jack Erwin, two young shoe companies, have showrooms in New York where shoppers can inspect loafers and brogues, then order them online. Warby Parker does the same for glasses. + +The most prominent American example is Bonobos, which began as an online-only men’s retailer before realising customers wanted shops, too. Its outlets house many styles and many sizes, but not every style in every size. Salesmen have the sole job of helping each shopper find clothes he likes, identify the proper fit and order the clothes online. “We do a better job of selling clothes because we don’t stock the clothes,” boasts Andy Dunn, the firm’s founder. Bonobos need not guess which trousers will sell at which store. All its stock is at one central warehouse. + +In Asia, Zalora offers a variation on this theme. The four-year-old online retailer displays its clothes in pop-up showrooms in Singapore, Malaysia, Hong Kong, Indonesia and the Philippines. Such temporary installations, explains Tito Costa, Zalora’s marketing chief, are “a way to build confidence either in a new way of shopping or in a young brand.” Shoppers can try on Zalora’s clothes, chat with its stylists and order items online, either from computer stations or by scanning a QR code with their phones, using Zalora’s app. + +It is no coincidence that the companies that are testing out such showrooms began online. Big, established retailers are unlikely to convert stores to showrooms, at least in the foreseeable future. They have trained millions of customers to expect immediate gratification—buy a Zara dress in the afternoon, for example, and go dancing in it that same evening. Delivering to individuals rather than shipping in bulk to stores would also require established retailers to upend their distribution networks, says Neil Saunders of Conlumino, a consulting firm. But for many younger retailers, selling online and in showrooms may be the future, not least because showrooms are cheaper to run than conventional shops. That means they can open more of them, more quickly. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21694545-why-some-firms-are-opening-shops-no-stock-shops-showrooms/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Open for business + +In difficult times Mexico and its firms retain their faith in globalisation + +Mar 12th 2016 | From the print edition + + + +THESE are dark days for globalisation. In America, presidential candidates are talking about building walls and unpicking trade deals. Brazil, another giant of the Americas, seems as protectionist as ever. Britain is preparing to hold a referendum on withdrawing from the European Union. The EU as a whole is bickering over what to do about a swelling tide of refugees. + +Yet there is at least some light in the darkness. Mexico, for instance, continues to carry a torch for globalisation. President Enrique Peña Nieto’s administration boasts about the country’s 44 trade deals, more than any other country, and its 11 reform initiatives. The World Bank calculates that Mexico is one of the most open large economies in the world: exports plus imports are equivalent to 66% of GDP, compared with 26% for Brazil and 42% for China. The Boston Consulting Group finds in a survey that its people take a positive view of the future: 77% of Mexicans say they are optimistic, and only 6% that they are very pessimistic. Mexicans see the likes of Donald Trump as being cut from the same cloth as the old-fashioned Latin American strongmen who ruined the region through protectionism and gesture politics. + +When the North American Free Trade Area (NAFTA) was created in 1994 it was as controversial in Mexico as it was in the United States: a Yanqui conspiracy, according to those on the left, designed to turn their country into a colony of El Norte. Today the Mexican elite speaks with one voice on the subject. Mexico is now one of the world’s top 15 manufacturing economies and one of its top five car producers. The output of the ten largest car plants rose from 1.1m vehicles in 1994 to 2.9m in 2012. Mexican consumers now have access to a huge range of multinational brands: marketers refer to young, middle-class Mexicans as the “children of NAFTA”, because their taste is so cosmopolitan. + +Free trade has helped to produce a corps of elite Mexican companies that are capable of going head-to-head with the best in the world. Bimbo is the world’s largest baker, thanks in part to its ambitious expansion into America with the purchase of Sara Lee’s bakery business. Gruma is the world’s biggest maker of tortillas, with more than 100 plants in 20 countries. Free trade has been a double blessing for such companies. First, it has encouraged those that have reached the limit of the Mexican market to go global. They have the huge advantages of speaking one of the world’s most popular languages, and sharing a 1,900-mile (3,100km) border with America. Second, now that they are more vulnerable to competition and takeovers, they have been forced to shake off a long-standing tendency for successful Mexican companies to become flabby. When AB InBev, a global brewer, bought Grupo Modelo, a Mexican beer firm, in 2013, it quickly eliminated around $1 billion in annual costs. + +Schumpeter noted in a previous column on Mexico that it is unusual in having both a global upper class (thanks to American education) and a global peasantry (thanks to emigration to America). Free trade is now rapidly globalising the middle class, which by some estimates makes up 30-40% of the population. Scot Rank, the boss of the Lala Group, a dairy firm, points out that better-off Mexicans are becoming more like Americans in their tastes. They want “lite” products that will help them fight the flab (obesity is a big problem in a country addicted to a “vitamin T” diet of tacos and tortillas) and “drinkables”, nutrition that can be consumed on the go (partly in response to the rise of two-income families). + +Mexico is now freeing up two hitherto protected areas, telecoms and energy. Telmex has been forced to surrender its telecoms monopoly, and is now in a vigorous battle with the Yanqui AT&T, in which average tariffs have fallen by half in the past year. Pemex, the state oil monolith, is being forced to auction off some fields to foreign bidders, and to form joint ventures with foreign firms. A visit to Pemex’s headquarters illustrates just how radical the latter policy is. A collection of giant slabs surrounded by thick iron railings, protected by a phalanx of armed guards, it looks more like an arm of government than a commercial organisation. Which is exactly what it is: Pemex provides a third of government revenues and thousands of coveted jobs—and until recently its monopoly status was guaranteed in the constitution. Last month the government underlined its seriousness by sacking the company’s boss, Emilio Lozoya, despite his close relationship with the president. The new boss, José Antonio González, argues that the steep fall in the oil price is also a “golden opportunity”: Pemex now has no choice but to reform if it is to thrive in the face of greater competition. + +The other Mexico that still needs fixing + +Even if the government can successfully re-engineer Pemex, it still has an enormous amount to do. Mexico is one of the world’s most unequal societies. Perhaps half of Mexicans are still poor and parochial, beset by crime and corruption, and poorly served by schools and banks. The economy is hobbled by a long tail of inefficient firms: the McKinsey Global Institute, a think-tank, points out that, though the productivity of Mexico’s globalised companies has risen by 5.8% a year since 1999, the productivity of small, traditional firms has fallen by 6.5% a year. Poorer regions, especially in the south, are mired in the past, too far from the American border to benefit from the manufacturing boom. These problems have held back the economy’s growth rate to a disappointing 2-3% over the past 30 years. They have also supplied the drugs cartels (which benefit from globalisation in their own, malign way) with an endless supply of young recruits. + +Mr Peña Nieto’s administration has done something to extend the benefits of globalisation to this other Mexico by deregulating telecoms and taking on the teachers’ unions. However, this is just the start of what is needed. Successful Mexicans are right to mock Mr Trump’s talk of building walls. But they need to focus their energies on some construction projects of their own: building ladders of opportunity for the poor, and bridges of commerce between the two Mexicos. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21694488-difficult-times-mexico-and-its-firms-retain-their-faith-globalisation-open-business/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Chinese property: For whom the bubble blows + +Buttonwood: High tech meets low finance + +America’s economy: On the one hand + +Commodities: Steel chrysanthemums + +Greek banks: On the front line + +Financing divorce: Till debt us do part + +Discount brokerages: Free trade + +Free exchange: A proper reckoning + + + + + +Articles Sections Next + +Chinese property + +For whom the bubble blows + +House prices are soaring in big cities, but oversupply plagues much of the country + +Mar 12th 2016 | SHANGHAI | From the print edition + + + +SHANGHAI, China’s financial centre, does not make it easy on outsiders wishing to buy homes. Non-residents who are single are banned from buying property. The married are welcome but only so long as they have paid local taxes for two years and make nearly a third of the purchase in cash. Shenyang, China’s biggest northern city, is far more welcoming. Anyone can buy a home there. All to little effect: housing prices in Shanghai, five times more expensive than those in Shenyang, have risen by 20% over the past year; those in the northern city have edged down. + +This bifurcation is a worry for the government, which wants to spur growth without inflating bubbles. A divergence in housing prices between wealthy cities and the hinterland is a familiar problem in other countries—just look at London and Lincolnshire, say, or New York and Nebraska. But the divisions are starker in China. In its most prosperous cities, already giddy prices continue to shoot up, while unsold flats pile up in markets where valuations were low to begin with. Moreover, construction has long been one of the economy’s main engines, accounting for as much as a quarter of GDP growth until recently. This makes it especially important that the government get the balance right. Doing so is proving hard. + +Over the past half-year, the government has unveiled a series of measures to support the housing market that specifically exclude China’s five hottest markets (Beijing, Guangzhou, Sanya, Shanghai and Shenzhen). People buying homes need only make a 20% down-payment to obtain a mortgage, except in the five conurbations, where they must put down 30%. By the same token, in most of the country transaction taxes have been cut by as much as two-thirds for people buying second homes; in the five outliers they have been left unchanged. In Shenzhen, a southern tech hub that is the frothiest market, with prices up by 53% in the past year alone, local officials have vowed to crack down on speculators and expand the supply of affordable housing. + +The results of this two-tier system have been meagre so far. The frenzy in the biggest cities stems from the central bank’s steady loosening of monetary policy over the past 18 months. Although warranted from an economic perspective, it was inevitable that low interest rates would drive asset prices higher. Initially, much of the credit pumped out by banks ended up in the stockmarket, but following its crash last summer, property beckoned as one of the few decent investment options in China (capital controls, which have been further tightened recently, make it hard for Chinese savers to invest their money abroad). + +For speculators looking at property, the excess supply in smaller cities was all too evident, so they turned instead to the megalopolises. Du Jinsong of Credit Suisse describes it as a form of groupthink. “Everybody—investors, developers, policymakers and bankers—thinks that first-tier cities are safe,” he says. + +Even as the government tries to restrain the excesses, however, it does not want to snuff out the rally in the big cities altogether, for they tend to influence sentiment elsewhere. There are signs that this is beginning to happen. Housing prices started rising month on month in the biggest cities a year ago. In midsized cities (in China, those with populations of 5m-10m), prices have been rising for the past four months. In smaller cities (mere hamlets of 1m-5m), gains have been evident only for the past two months (see chart). + + + +If this upturn lasts, some investors reckon it will spur construction. Commodities used to build apartment blocks, such as iron (girders) and copper (wires), have recovered slightly from their recent swoon, partly in the hope that China’s property market is also stirring (see article). Indeed, a series of mini-cycles in the Chinese housing sector over the past decade followed this sort of pattern: rising housing sales led to new building starts, which in turn pushed commodity prices higher. + +Figures from the China Index Academy, a data provider, show that the stock of unsold homes has decreased recently, from nearly 30 months’ worth of sales early last year to 15 now. “A housing market with rising volume and prices clearly does not support the view that, on a macro level, China’s housing market is oversupplied,” notes Liang Hong of China International Capital Corp, an investment bank. + +But there is a further vast increment of supply on the verge of coming to market, because developers slowed the pace of construction in recent years and in some cases halted it altogether. There were 4.7 trillion square metres of housing under construction but not yet available for sale at the end of last year, up by 25% from the end of 2011; 452 billion square metres of housing were on sale, nearly three times as much as at the end of 2011. Some provinces and cities are drafting plans to convert unsold homes into subsidised housing for poorer residents. Xi Jinping, China’s president, has said that reducing property inventory is a “battle of annihilation” that must be won to revitalise the economy. Revived demand for new construction, in short, is a long way off. + +The exception is sure to be China’s biggest cities, where there clearly is an imbalance between supply and demand. Shenzhen and Shanghai, in particular, are popular with the young and the highly educated, just the kinds of people that push up housing prices. They are two of China’s best-run cities, offering good transport links, good jobs and, by Chinese standards, good air. Unsold housing inventories cover just about five months of demand at the current pace of sales, indicating that more construction is needed. + +Even with these strong fundamentals, it is hard to justify a 50% surge in housing prices over the past year. Regulators suspect that there has been some foul play. This week they said they would target online lenders that have made loans to homebuyers to cover their down-payments; these loans have, in theory, allowed speculators to buy homes entirely with borrowed cash, in contravention of the minimum down-payment requirements. + +But reining in animal spirits is a hard task. At the Baoshan Property Trading Centre, where people buying homes in a district of northern Shanghai must go to register their purchases, crowds have swelled to such a size that the local government has deployed police to keep the peace. On one recent day a phalanx of security officers in white helmets stood guard alongside barricades as people lined up to submit their documentation. One of those queuing, Wang Jie, bought a new apartment for 2m yuan ($307,000) in October, and has watched its value soar by another 1m since then. “No one seems to buy when prices are falling,” he chuckled. “But everyone does when they start rising.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21694530-house-prices-are-soaring-big-cities-oversupply-plagues-much/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +High tech meets low finance + +For all the money spent on technology, banking is not efficient + +Mar 12th 2016 | From the print edition + + + +TECHNOLOGY ought to have revolutionised finance more than any other industry. After all, modern money is mostly an entry on a computer—capable of being transmitted instantly and virtually costlessly around the world. Stockmarket activity is now dominated by high-frequency traders, who make deals faster than they can blink. + +The finance sector spends more on technology, as a proportion of its revenues, than any other industry. Nevertheless, compared with the world of e-commerce, banking still sometimes gives the impression of a Volkswagen Beetle instead of a Formula 1 racing car. It took many years of effort to get to a world of “T+2”, where securities are settled two days after the trade is made, rather than the “T+3” system that preceded it. + +The international payments system still looks like a “spaghetti junction”, in the words of Andrew Haldane, the Bank of England’s chief economist, with money passing through several hands on the way from payer to recipient. The annual revenues earned by the banking system for processing payments are huge, at $1.7 trillion, and rising (see chart). + +One reason for this inefficiency is that technology has been tacked on to a centuries-old banking model. Much bank spending on technology is devoted to maintaining existing systems, a desperate effort to keep the show on the road. + +Hence the hype around “fintech”—the hope that the whole system can be overhauled by disruptive innovators, much as Uber is revolutionising the taxi business and Airbnb is taking on hotels. Fintech firms operate in many areas, from digital payments to automated wealth management. But at a London Business School conference this week, the greatest excitement was reserved for blockchain technology. A blockchain is a “distributed ledger” under which transaction records are held by a wide number of participants in a network; it is the technology behind Bitcoin, a digital currency. + +Technology experts seem to think a distributed ledger is more secure. A hacker would be required to break into a wide range of sites rather than a single, central register. But there are doubts over whether such a system could handle the sheer volume of payments in the financial system—hundreds of thousands of transactions every second. + +Even if those technological hurdles could be overcome, a register could develop in two different ways. An open system would be good for customers, allowing them to exchange money quickly, cheaply and anonymously. But it would be a nightmare for regulators trying to crack down on tax evasion and money-laundering. No longer would the unscrupulous need to keep high-value notes under the mattress. A supervised system would get round this problem, but it would also give the authorities much more power to pry into people’s financial lives. Customers would understandably be far less keen. + +A largely unregulated technology sector is bumping up against a heavily regulated finance industry. The result may be that advances in this area will be slow as regulators clamp down on anything that seems too anarchic. The big banks, conscious of the ability of regulators to fine them for aiding and abetting money-laundering, will proceed with caution. + +Susan Athey, an economist with links to Silicon Valley, argues that blockchain technology might be most useful for other purposes—to register asset ownership, for example. People in developing countries find it difficult to establish their ownership of land; a reliable digital register could reduce that problem. And a digital land registry in America would eliminate the need for homeowners to pay for expensive title insurance. + +Forecasting how new technology will change an industry is never easy. As Bill Gates once said, and tech types constantly repeat: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” + +But monetary policy may be giving new financial models a lift. Very low interest rates encourage investors to search for yield. One beneficiary is peer-to-peer lending, in which investors extend credit to people and businesses directly. And imagine what would happen if negative interest rates became semi-permanent and were passed on to retail depositors—a tax on bank accounts. The appeal of digital currencies that were out of the reach of central bankers would increase exponentially. Never mind disrupting commercial banks. What about doing the same thing to central banks? + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21694531-all-money-spent-technology-banking-not-efficient-high-tech-meets-low/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +America’s economy + +On the one hand + +Inflation is rising, but households have yet to notice + +Mar 12th 2016 | WASHINGTON, DC | From the print edition + + + +IT IS a tough time to be a central banker. On March 8th the IMF called for more stimulus globally to see off a lack of demand in the world economy. On the same day economists at the Peterson Institute, a think-tank, issued a report that was labelled a “reality check”, arguing that fears for the world economy were overblown. (One of the report’s authors, Olivier Blanchard, was until last year the IMF’s chief economist.) The disagreement reflects conflicting signals that the Federal Reserve must untangle at its next meeting, which begins on March 15th. + +When the Fed raised interest rates by a quarter-point in December, after seven years without a change, inflation was still in the doldrums. According to the central bank’s preferred measure, prices were rising by just 0.5% a year. The Fed raised rates anyway: Janet Yellen, its chair, argued that the fizzing labour market meant inflation must be on the way. Waiting for it to arrive before raising rates might force the Fed to yank them up abruptly later, potentially triggering a recession. Crucially, households’ inflation expectations had not fallen much, so the Fed could argue that its 2% inflation target remained credible even as it tightened policy. + +Since “lift-off” in December, worries about the global economy have sent stockmarkets sliding. The S&P 500 has fallen by about 5% since then; in the gloomiest moment in February, it was 12% down. But America’s labour market has not been gyrating in the same way. In February the economy created 242,000 jobs, many more than the roughly 100,000 thought to be needed to stop unemployment rising. + +What is more, Ms Yellen’s prediction is beginning to come true. Core inflation, which excludes food and energy prices, was 1.7% in January, its highest level since 2013. The headline measure has risen too, to 1.3%—still well below target, but a marked increase nonetheless. Rate-setters are likely to raise their forecasts for core inflation at their meeting this month, according to Zach Pandl of Goldman Sachs. + +But not every measure is following Ms Yellen’s script. According to the University of Michigan’s survey of consumers, Americans’ inflation expectations have dipped to 2.5%. Although that is above the Fed’s target, consumers usually predict inflation that is higher still. Their expectations today are 0.5 percentage points below their long-term average, and as low as they have been since 2010. + +Consumers may have only now adapted to a world of cheap fuel and a strong dollar. If so, rising inflation should gradually turn their forecasts around. But measures of inflation expectations in financial markets—usually thought of as more forward-looking than consumers—have been depressed for some time. The difference between yields on inflation-protected government bonds and the normal kind points to inflation of just 1.4% over the next five years. (This measure also rallied in the second half of February, having previously dipped below 1%, its lowest level since the crisis.) + +Ms Yellen is sceptical of these barometers. The market for inflation-protected bonds is less liquid than before the financial crisis. That means investors might demand a higher return to hold these bonds rather than regular ones, compressing the spread between the two. The “inflation-risk premium”, which investors demand to insure themselves against very high levels of inflation, may also have come down (this can happen without the mean forecast for inflation changing). It is unlikely, though, that such factors fully account for investors’ apparent nonchalance about inflation. The swaps market, which suffers less from such problems, points to medium-term inflation of around 1.7%. Markets, it seems, think the likely path of monetary policy is too tight. + +Yet Americans continue to spend strongly, as Mr Blanchard and his colleagues point out. Incomes and spending both rose by a robust 0.5% in January. Retail sales are strong. + +In December most rate-setters forecast another interest-rate rise at the coming meeting. That now looks very unlikely, thanks to the gloomy global picture. But the Fed may be in the curious position of marking up its inflation forecasts even as it postpones rate rises. The recent financial volatility, which could be a sign of problems to come, justifies the change of heart. But with the domestic economy purring, it would not take much of a climb in the oil price, or a fall in the dollar, to push inflation higher still. Markets expect only one interest-rate rise this year, and only three more rises by the end of 2018. They are probably underestimating. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21694527-inflation-rising-households-have-yet-notice-one-hand/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Commodities + +Steel chrysanthemums + +A China-driven rally in metals prices may be as fleeting as spring + +Mar 12th 2016 | From the print edition + + + +THE spectacular leap of almost 20% in the price of iron ore on March 7th reveals a lot about the idiosyncrasies of commodities markets. Coming on the first trading day after the opening of China’s National People’s Congress, at which the government pledged to maintain GDP growth of at least 6.5% a year for the next five years, the jump may well have reflected renewed optimism about the appetite of the world’s biggest steel consumer. But the price of physical commodities tends to depend more on supply, demand and inventories than on the expectations of financial markets. So a giant flower show in Tangshan, China’s biggest steel-producing city, may be an equally good—and more fragrant—explanation for the sudden rally. + +Tangshan’s authorities want their flowers to bloom under clean air during the show, from April to October, so they are curbing output at the city’s steel mills. Low inventories and the prospect of reduced supply over the summer have pushed up local prices, making mills even keener to operate at full tilt until the stoppage begins. That led to a scramble for ore, according to Tomás Gutiérrez of Kallanish Commodities, a steel-industry watcher. “People really panicked.” + +In China as a whole, it is typical to build stocks of metals before construction picks up in spring. That may explain why many of them have rallied this year—albeit from very low bases. David Wilson of Citigroup notes that the depreciation of the yuan has also encouraged traders to import extra ore in case the currency falls further. And Capital Economics, a consultancy, says one of the main drivers of the recovery in iron-ore prices may have been speculative short-covering—or the unwinding of bets that prices would fall further. + +The new target for growth may also have played a part—even if China’s ability to meet it is hotly debated. Goldman Sachs, for example, says China’s main avenue for stoking metals demand would be the property market, but it argues that though there are more home sales and higher prices, there is no sign of this yet spreading into new construction. + +Others argue that the strength of physical demand is not mirrored in China’s weak import data, or in low freight rates at sea. The downward pressure on metals prices is due as much to an avalanche of oversupply as a shortage of demand. In iron ore, in particular, there are no signs the glut in production in Australia’s Pilbara region is ebbing. By the time Tangshan’s peonies and chrysanthemums are in full bloom, the iron-ore rally may be long gone. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21694532-china-driven-rally-metals-prices-may-be-fleeting-spring-steel/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Greek banks + +On the front line + +Greece’s biggest banks may appear to be out of danger, but they are not + +Mar 12th 2016 | ATHENS | From the print edition + + + +ON THE face of things, Greece’s four big banks are in their best shape in years. In November they received their third bail-out in as many years. The extra €14.4 billion ($15.9 billion) they got then (some of it from private investors) raised their capital ratios to 18%, well above the European average of 13%. Recent legal changes make it easier for them to repossess collateral and to sell loans to third parties. Better yet, recent data suggest the economy shrank by only 0.2% last year, much less than initially feared. The Bank of Greece predicts that growth could return as early as this summer. After eight years of crisis and recession, normality at last seems within reach. + +But beneath the cushion of fresh capital, cracks remain. Greek banks are still losing money. Piraeus Bank, the country’s second-largest lender, this week reported a net loss of €1.9 billion in 2015. Deposits have barely begun to grow again after last year’s run; the capital controls it prompted remain in place. Fully 40% of loans and 55% of mortgages are not being paid down, compared with a European average of 5%. Big losses on non-performing loans (NPLs) and debt securities could erode the banks’ capital once again. Greece is rowing with the other members of the euro zone about the conditions of its bail-out, raising the spectre of another crisis. A fourth recapitalisation is not out of the question, says Josu Fabo of Fitch, a rating agency. The markets remain nervous: bank shares are down by 36% since the start of the year. + +The banks are largely innocent bystanders in the endless back and forth between the Greek government and its creditors, but they are guilty of procrastination when it comes to their NPLs. Instead of restructuring the loans worth saving, calling the bluff of defaulters that could probably pay, and reclaiming and selling the collateral of the hopeless cases, they are counting on a return to growth to rescue delinquent borrowers. That, in turn, is impeding the flow of capital to ventures that might help revive the economy. Yannis Stournaras, the head of the central bank, recently demanded “bold and innovative initiatives” to clean up bad loans. “This cannot be ensured by the current ‘business as usual’ approach,” he added. + +The banks could also cut costs, by closing branches and shedding assets, such as National Bank of Greece’s Turkish subsidiary, Finansbank. Governance, too, is ripe for scrutiny. Many of those in charge of Greece’s banks when things went horribly wrong remain at the helm. As a condition of their latest loans, Greece’s creditors demanded a review of bank board members’ qualifications. + +As ever, however, the banks’ fate is largely out of their hands. An escalation of the government’s ongoing row with its creditors, a global economic downturn or a deepening of Europe’s migration crisis could all prolong and deepen Greece’s recession. The most immediate risk is that euro-zone governments and the IMF will withhold the next instalment of Greece’s bail-out, leaving the government unable to pay its bills this summer. + +Even if a crisis is averted, Greek banks are in no shape to make lots of new loans. NPLs may be on the verge of peaking (“If you haven’t defaulted after eight years of recession”, notes one banker wryly, “you probably never will”), but they still tie up the banks’ capital. Liquidity is another problem, points out Miranda Xafa of the Centre for International Governance Innovation, a research institute. Greek banks have around €202 billion in outstanding loans yet only €122 billion in deposits (down from €237 billion in 2009). Deposit-holders pulled out over €40 billion in the first half of last year alone. Emergency loans from the European and Greek central banks make up the difference. Cash machines in Athens still greet customers with a reminder that they can withdraw no more than €420 a week. As long as they have to deliver such messages, Greek banks cannot be expected to prosper. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21694534-greeces-biggest-banks-may-appear-be-out-danger-they-are-not-front/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Financing divorce + +Till debt us do part + +Lending to people seeking to end a marriage is a growing business + +Mar 12th 2016 | From the print edition + + + +IN MANY Western countries, including America and Britain, divorce lawyers are not allowed to represent a client in exchange for a share of whatever settlement they secure (as opposed to charging a fixed fee). Such arrangements, it is feared, would beget more and nastier divorces. Yet the same rules do not apply to financiers: they are free to fund legal battles over marital assets—and a growing number do. + +Novitas Loans, a British firm, is currently lending to 1,500 would-be divorcées (most are women) or divorcés, at 18% annual interest. The loans are intended to cover legal fees; applicants typically expect to win assets worth three times their borrowing. Without the loans, many would have to give up and settle for much less, says Jason Reeve, the firm’s managing director. It gets lots of thank-you letters from borrowers, he claims. Demand for loans of this kind has jumped since the British government restricted legal aid for divorces in 2013, notes Nigel Shepherd of Resolution, an association of family lawyers. + +Brendan Lyle of BBL Churchill Group, an American firm with cases in 27 states, says his role is “part financier and part therapist”. Vengeful clients, determined to fight over every last teaspoon, must be restrained. The firm’s average loan is $306,000 in New York state and somewhat less elsewhere. The typical interest rate is around 16%. The default rate is a modest 2%, although there is some forbearance for struggling customers. + +The big risk for divorce funders is that a couple might get back together. When that happens, assets are not sold and a borrower may not be able to pay back the lender. Novitas therefore prefers to fund cases that have been grinding through court long enough to make reconciliation unlikely. The Iceberg Partnership, Novitas’s biggest competitor in Britain, transfers this risk to the 374 law firms that refer clients for funding. They must agree to guarantee their clients’ loans, repaying Iceberg themselves if the client defaults. + +Rather than lend money, some firms “invest” in divorce cases, asking for repayment only if a settlement is reached. A year ago Novitas bought an American firm, National Divorce Capital, that offers such “non-recourse cash advances”. Since then, applications for advances have doubled. It plans to open branches in Australia and Canada later this year. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21694473-firms-who-lend-people-seeking-end-marriage-are-attracting-interest-inside/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Discount brokerages + +Free trade + +Share-trading joins the list of ostensibly free online services + +Mar 12th 2016 | NEW YORK | From the print edition + + + +BACK in the 1970s, after American regulators abolished fixed commissions for brokers who helped their clients trade shares, the likes of Charles Schwab and Fidelity were the insurgents. They dispensed with the expensive frills that most rivals offered, such as research and investment advice. That, in turn, allowed them to offer share trading to the masses at bargain prices. Twenty years later, the internet spurred the growth of a new wave of discount brokers, including E*Trade and TD Ameritrade. Now for the next challenger. + +Whereas full-service brokers demand a percentage of the value of the assets in their clients’ accounts (typically 1-1.75% a year), the discount firms charge around $9 a trade. That is highway robbery, however, by the standards of a new online brokerage, Robinhood, which enables clients to trade shares free of charge, via a new mobile app. + +Instead of taking commissions from customers, Robinhood receives them from the trading venues to which it steers their orders, a controversial but common practice. It also earns returns from the cash clients leave in their accounts, and plans soon to offer margin trading—the buying of stock with borrowed money—for which it will charge a fee. + +Whether this is enough to cover Robinhood’s costs is unclear (the firm does not disclose its financial results). But it provides an even leaner service than its rivals. It does not yet offer trading on its website, for example, catering to clients, whose average age is 28, exclusively via its app. + +Robinhood is also easy to use. Setting up an account can take as little as four minutes. To confirm customers’ identity, the firm asks them to take a picture of an ID with a smartphone. That has helped it to attract almost 1m customers since it started operations a year ago. It says it continued to recruit new clients during the recent market turmoil, even as activity declined at other firms. To bring in even more custom, it has begun integrating its service with apps such as Stocktwits, a social-media platform for retail investors. Increased turnover should boost its income more than its costs. In time, it may make life difficult for the disruptors of yore. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21694537-share-trading-joins-list-ostensibly-free-online-services-free-trade/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +A proper reckoning + +Feminist economics deserves recognition as a distinct branch of the discipline + +Mar 12th 2016 | From the print edition + + + +HAD he lived to see it, Alfred Marshall, a 19th-century giant of economics, probably would not have celebrated International Women’s Day, which takes place on March 8th. “If you compete with us, we shan’t marry you,” he once gallantly warned the fairer sex. In his book, Principles of Economics, he described the field as “the study of men as they live and move and think in the ordinary business of life”. + +Economics still has its problems with women. In 2014 only 12% of American economics professors were female, and only one woman (Elinor Ostrom) has won the Nobel prize for economics. But in terms of focus, economists have embraced some feminist causes. Papers abound on the “pay gap” (American women earned 21% less than men for full-time work in 2014), and the extra growth that could be unlocked if only women worked and earned more. A recent paper*, for instance, claimed that eliminating gender discrimination in Saudi Arabia could bring its GDP per person almost level with America’s. (Feminists, of course, consider gender equality a worthy goal irrespective of its impact on GDP.) That raises a question. Does “Feminist economics”, which has its own journal, really bring anything distinctive? + +Defining it as a look at the economy from a female perspective provides one straightforward answer. Feminist analyses of public policy note, for example, that men gain most from income-tax cuts, whereas women are most likely to plug the gap left by the state as care for the elderly is cut. Even if such a combination spurs economic growth, if it worsens inequality between sexes, then perhaps policymakers should think twice. + +Some feminists argue, moreover, that the very framework of economics is imbued with subtler forms of sexism. They point, for instance, to many economists’ blindness towards social norms that are unfair to women. Textbook models of the labour market, for example, assume that people choose between work and leisure based on how much spare time they have, how much they might earn and fixed personal preferences. By that logic, a woman’s decision about whether or not to take a break from work to have children is a function of how much she earns and how highly she values mothering. + +But as Sheryl Sandberg, a senior executive at Facebook, notes in a recent book, when men announce they are about to have a child, they are simply congratulated; when women do, they are congratulated and then asked what they plan to do about work. Given the strength and persistence of societal expectations about women’s role in parenting, presenting their choices in that regard as purely personal preferences is misleading at best, and a sop to sexism at worst. + +Economics as commonly practised often misses out another important element of inequality between the sexes: unpaid work. The main measure of economic activity, GDP, counts housework when it is paid, but excludes it when it is done free of charge. This is an arbitrary distinction, and leads to perverse outcomes. As Paul Samuelson, an economist, pointed out, a country’s GDP falls when a man marries his maid. + +The usual defence is that measuring unpaid work is hard. But Norway, for one, used to do it; it only stopped so that its figures could be compared with other, less progressive countries. Diane Coyle, an economist and author of “GDP: A Brief but Affectionate History”, asks whether statistical agencies have not bothered to collect data on unpaid housework precisely because women do most of it. Marilyn Waring, a feminist economist, has suggested that the system of measuring GDP was designed by men to keep women “in their place”. + +Women in the OECD, a club of rich countries, spend roughly 5% more time working than men. But they spend roughly twice as much time on unpaid work, and only two-thirds the time men do in paid work. By leaving unpaid work out of the national accounts, the feminist argument goes, economists not only diminish women’s contribution, but also gloss over the staggering inequality in who does it. + +Ignoring unpaid work also misrepresents the significance of particular kinds of economic activity. Ms Waring thinks that raising well-cared-for children is just as important to society as making buildings or cars. Yet as long as the former is excluded from official measures of output, investing resources in it seems like less of a priority. Of course, in a perfectly equal world, men would do much more child-rearing than they do now. In the meantime, it is women who are disadvantaged by economists’ failure to measure the value of parenting properly. + +How much of the sky? + +The impact of measuring things differently can be very significant. A recent paper from the Bureau of Economic Analysis attempted to calculate an augmented version of GDP that included unpaid work. Doing so boosted GDP overall, but lowered the growth rate: as women have moved into paid work, they have been doing less unpaid work at home, so total production has not been rising quite as quickly as official figures suggest. By their estimates, including unpaid work boosted GDP in 1965 by 39%, but by only 26% in 2010. Over the 45 years between those two dates, they put the average annual nominal growth rate at 6.7% if unpaid work is included, lower than the official 6.9%. + +Ignoring the feminist perspective is bad economics. The discipline aims to explain the allocation of scarce resources; it is bound to go wrong if it ignores the role that deep imbalances between men and women play in this allocation. As long as this inequality exists, there is space for feminist economics. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21694529-feminist-economics-deserves-recognition-distinct-branch-discipline/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Artificial intelligence and Go: Showdown + +Early human diets: Without fire? + +African science: Crucible + +Crop storage and the internet of things: Cool beans + + + + + +Articles Sections Next + +Artificial intelligence and Go + +Showdown + +Win or lose, a computer program’s contest against a professional Go player is another milestone in AI + +Mar 12th 2016 | Seoul | From the print edition + + + +TWO : NIL to the computer. That was the score, as The Economist went to press, in the latest round of the battle between artificial intelligence (AI) and the naturally evolved sort. The field of honour is a Go board in Seoul, South Korea—a country that cedes to no one, least of all its neighbour Japan, the title of most Go-crazy place on the planet. To the chagrin of many Japanese, who think of Go as theirs in the same way that the English think of cricket, the game’s best player is generally reckoned to be Lee Sedol, a South Korean. But not, perhaps, for much longer. Mr Lee is in the middle of a five-game series with AlphaGo, a computer program written by researchers at DeepMind, an AI software house in London that was bought by Google in 2014. And, though this is not an official championship series, as the scoreline shows, Mr Lee is losing. + +Go is an ancient game—invented, legend has it, by the mythical First Emperor of China, for the instruction of his son. It is played all over East Asia, where it occupies roughly the same position as chess does in the West. It is popular with computer scientists, too. For AI researchers in particular, the idea of cracking Go has become an obsession. Other games have fallen over the years—most notably when, in 1997, one of the best chess players in history, Garry Kasparov, lost to a machine called Deep Blue. Modern chess programs are better than any human. But compared with Go, teaching chess to computers is a doddle. + +At first sight, this is odd. The rules of Go are simple and minimal. The players are Black and White, each provided with a bowl of stones of the appropriate colour. Black starts. Players take turns to place a stone on any unoccupied intersection of a 19x19 grid of vertical and horizontal lines. The aim is to use the stones to claim territory. In the version being played by Mr Lee and AlphaGo each stone, and each surrounded intersection, is a point towards the final score. Stones surrounded by enemy stones are captured and removed. If an infinite loop of capture and recapture, known as Ko, becomes possible, a player is not allowed to recapture immediately, but must first play elsewhere. Play carries on until neither player wishes to continue. + +Go forth and multiply + +This simplicity, though, is deceptive. In a truly simple game, like noughts and crosses, every possible outcome, all the way to the end of a game, can be calculated. This brute-force approach means a computer can always work out which move is the best in a given situation. The most complex game to be “solved” this way is draughts, in which around 1020 (a hundred billion billion) different matches are possible. In 2007, after 18 years of effort, researchers announced that they had come up with a provably optimum strategy. + +But a draughts board is only 8x8. A Go board’s size means that the number of games that can be played on it is enormous: a rough-and-ready guess gives around 10170. Analogies fail when trying to describe such a number. It is nearly a hundred of orders of magnitude more than the number of atoms in the observable universe, which is somewhere in the region of 1080. Any one of Go’s hundreds of turns has about 250 possible legal moves, a number called the branching factor. Choosing any of those will throw up another 250 possible moves, and so on until the game ends. As Demis Hassabis, one of DeepMind’s founders, observes, all this means that Go is impervious to attack by mathematical brute force. + +But there is more to the game’s difficulty than that. Though the small board and comparatively restrictive rules of chess mean there are only around 1047 different possible games, and its branching factor is only 35, that does, in practice, mean chess is also unsolvable in the way that draughts has been solved. Instead, chess programs filter their options as they go along, selecting promising-looking moves and reserving their number-crunching prowess for the simulation of the thousands of outcomes that flow from those chosen few. This is possible because chess has some built-in structure that helps a program understand whether or not a given position is a good one. A knight is generally worth more than a pawn, for instance; a queen is worth more than either. (The standard values are three, one and nine respectively.) + +Working out who is winning in Go is much harder, says Dr Hassabis. A stone’s value comes only from its location relative to the other stones on the board, which changes with every move. At the same time, small tactical decisions can have, as every Go player knows, huge strategic consequences later on. There is plenty of structure—Go players talk of features such as ladders, walls and false eyes—but these emerge organically from the rules, rather than being prescribed by them. + +Since good players routinely beat bad ones, there are plainly strategies for doing well. But even the best players struggle to describe exactly what they are doing, says Miles Brundage, an AI researcher at Arizona State University. “Professional Go players talk a lot about general principles, or even intuition,” he says, “whereas if you talk to professional chess players they can often do a much better job of explaining exactly why they made a specific move.” Intuition is all very well. But it is not much use when it comes to the hyper-literal job of programming a computer. Before AlphaGo came along, the best programs played at the level of a skilled amateur. + +Go figure + +AlphaGo uses some of the same technologies as those older programs. But its big idea is to combine them with new approaches that try to get the computer to develop its own intuition about how to play—to discover for itself the rules that human players understand but cannot explain. It does that using a technique called deep learning, which lets computers work out, by repeatedly applying complicated statistics, how to extract general rules from masses of noisy data. + +Deep learning requires two things: plenty of processing grunt and plenty of data to learn from. DeepMind trained its machine on a sample of 30m Go positions culled from online servers where amateurs and professionals gather to play. And by having AlphaGo play against another, slightly tweaked version of itself, more training data can be generated quickly. + +Those data are fed into two deep-learning algorithms. One, called the policy network, is trained to imitate human play. After watching millions of games, it has learned to extract features, principles and rules of thumb. Its job during a game is to look at the board’s state and generate a handful of promising-looking moves for the second algorithm to consider. + +This algorithm, called the value network, evaluates how strong a move is. The machine plays out the suggestions of the policy network, making moves and countermoves for the thousands of possible daughter games those suggestions could give rise to. Because Go is so complex, playing all conceivable games through to the end is impossible. Instead, the value network looks at the likely state of the board several moves ahead and compares those states with examples it has seen before. The idea is to find the board state that looks, statistically speaking, most like the sorts of board states that have led to wins in the past. Together, the policy and value networks embody the Go-playing wisdom that human players accumulate over years of practice. + + + +As Mr Brundage points out, brute force has not been banished entirely from DeepMind’s approach. Like many deep-learning systems, AlphaGo’s performance improves, at least up to a point, as more processing power is thrown at it. The version playing against Mr Lee uses 1,920 standard processor chips and 280 special ones developed originally to produce graphics for video games—a particularly demanding task. At least part of the reason AlphaGo is so far ahead of the competition, says Mr Brundage, is that it runs on this more potent hardware. He also points out that there are still one or two hand-crafted features lurking in the code. These give the machine direct hints about what to do, rather than letting it work things out for itself. Nevertheless, he says, AlphaGo’s self-taught approach is much closer to the way people play Go than Deep Blue’s is to the way they play chess. + +One reason for the commercial and academic excitement around deep learning is that it has broad applications. The techniques employed in AlphaGo can be used to teach computers to recognise faces, translate between languages, show relevant advertisements to internet users or hunt for subatomic particles in data from atom-smashers. Deep learning is thus a booming business. It powers the increasingly effective image- and voice-recognition abilities of computers, and firms such as Google, Facebook and Baidu are throwing money at it. + +Deep learning is also, in Dr Hassabis’s view, essential to the quest to build a general artificial intelligence—in other words, one that displays the same sort of broad, fluid intelligence as a human being. A previous DeepMind paper, published in 2015, described how a computer had taught itself to play 49 classic Atari videogames—from “Space Invaders” to “Breakout”—simply by watching the screen, with no helpful hints (or even basic instructions) from its human overlords. It ended up doing much better than any human player can. (In a nice coincidence, atari is also the name in Go for a stone or group of stones that is in peril of being captured.) + +Games offer a convenient way to measure progress towards this general intelligence. Board games such as Go can be ranked in order of mathematical complexity. Video games span a range of difficulties, too. Space Invaders is a simple game, played on a low-resolution screen; for a computer to learn to play a modern video game would require it to interpret a picture much more subtle and complicated than some ugly-looking monsters descending a screen, and in pursuit of much less obvious goals than merely zapping them. One of DeepMind’s next objectives, Dr Hassabis says, is to build a machine that can learn to play any game of cards simply by watching videos of humans doing so. + +Go tell the Spartans + +For now, he reckons, general-purpose machine intelligence remains a long way off. The pattern-recognising abilities of deep-learning algorithms are impressive, but computers still lack many of the mental tools that humans take for granted. A big one is “transfer learning”, which is what AI researchers call reasoning by analogy. This is the ability to take lessons learned in one domain and apply them to another. And machines like AlphaGo have no goals, and no more awareness of their own existence than does a word processor or a piece of accounting software. + +In the short term, though, Dr Hassabis is optimistic. At a kiwon, or Go parlour, in Seoul, the day before the match, the 30 or so players present were almost unanimous in believing that the machine would fall short. “Lee is a genius who is constantly creating new moves; what machine can replicate that?” asked one. At a pre-match press conference Mr Lee said he was confident he would win 5-0, or perhaps 4-1. + +He was, plainly, wrong about that, although it is not over yet. “He’s a very good player,” said a diplomatic Dr Hassabis before the match. “But our internal tests say something different.” Even if Mr Lee does manage to pull off an improbable victory, though, humans are unlikely to stay on top for long. As AlphaGo’s algorithms are tweaked, and as it gathers more data from which to learn, it is only going to get better. Asked whether there was a ceiling to its abilities, Dr Hassabis said he did not know: “If there is, we haven’t found it yet.” + +Correction: An earlier version of this story suggested that 10170 was the number of possible positions of stones on a Go board; in fact it is an estimate of the number of possible Go games. Sorry + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21694540-win-or-lose-best-five-battle-contest-another-milestone/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Early human diets + +Without fire? + +Food processing affected human evolution, even before the invention of cooking + +Mar 12th 2016 | From the print edition + +Something to chew on + +IN 2009 Richard Wrangham, an anthropologist at Harvard, published an intriguing thesis. He was trying to answer a question that had long puzzled workers in his field: how could the evolution of an organ as energetically expensive to sustain as the human brain have happened? + +Before Dr Wrangham’s work the conventional answer was: “meat-eating”. Archaeological evidence such as a lack of tool marks on animal bones suggests humanity’s ancestors, the Australopithecines, were largely vegetarian. By contrast Homo erectus, the first widespread human being (pictured below), also ate meat, which is a more compact source of calories than most plant matter, and might thus have provided the extra brain-food needed. + +Dr Wrangham, however, had a different answer: “cooking”. He showed that the ease of digestion and additional nutritional value made available by treating food with fire (which alters starch and protein molecules in ways that make them easier to digest) boosts its calorific value enough for a reasonable daily intake to power both brain and body—so much so that modern humans who attempt to live only on raw foodstuffs (there are a few who try) have great difficulty remaining well-nourished. On top of this, the softening brought about by cooking could explain a second evolutionary trend, that toward smaller teeth and less-powerful jaws. + +Just when Homo erectus did start cooking is controversial. The oldest definitive evidence dates back only 500,000 years, though the species evolved 1.9m years ago. But the Wrangham thesis does not depend only on the beginning of heat-treating food. It also includes food preparation using tools to chop or pound meat and vegetables. This presumably makes them easier to digest. It also makes them easier to chew, which might account for the reduction in jaw and tooth size. + +A paper published in this week’s Nature by Katherine Zink and Daniel Lieberman, two of Dr Wrangham’s colleagues at Harvard, brings some evidence to bear on these questions, particularly that of chewing. Dr Zink and Dr Lieberman used replicas of the stone tools available to Homo erectus to process food, and looked at the consequences for those who attempted to masticate the result. + +The pseudo-Palaeolithic diet the two researchers chose comprised beets, carrots and yams as root vegetables, and goat as meat. They prepared the vegetables four ways: raw and unprocessed; raw and hit six times with a copy of a Palaeolithic hammerstone; raw and cut into small slices; and roasted for 15 minutes. The goat was also served four ways: raw and unprocessed; raw and pounded 50 times by a hammerstone; raw and cut into small slices; and cooked on a grill for 25 minutes. Dr Zink and Dr Lieberman then fed each preparation to a group of volunteers, to see how easy it was to chew. + +To measure this, they wired up the skin of their volunteers’ jaws using electrodes which recorded the force a volunteer exerted chewing. Once wired, volunteers were given samples to chew and asked to do so until they felt what they were chewing was ready to swallow. Sometimes the volunteers were then allowed to swallow. On other occasions, though, they were asked to spit the sample out, so that the bits could be analysed. (The raw meat was always spat out, to prevent foodborne illness.) + +Dr Zink and Dr Lieberman found, in line with Dr Wrangham’s original thesis, that chewing cooked root vegetables required a third less force than was needed to chew an equivalent amount of raw and unprocessed root. Slicing the vegetables did not provide any benefit, but pounding them reduced the force required to chew by about 9%. Pounding meat, by contrast, brought no benefit, whereas slicing it did. As with cooking the vegetables, it reduced the chewing force needed by around a third. Intriguingly, roasting meat actually increased the masticatory force required. + +On top of this, when Dr Zink and Dr Lieberman examined food spat out by their volunteers at the point it was deemed ready to swallow, they found that the unprocessed and the pounded meat usually came back as a single large lump that would be hard for the gut to break down. In contrast, when the meat was sliced or cooked before being chewed, participants were consistently able to chew it into tiny, digestible particles. + +Putting all their results together, Dr Zink and Dr Lieberman conclude that a diet of one-third sliced meat and two-thirds pounded vegetables, such as Homo erectus might reasonably have been expected to consume even in the absence of fire, would need 27% less effort to chew than an unpounded all-vegetable diet. Specifically, the inclusion of meat contributed a 15% reduction and the slicing and pounding a 12% reduction, which Dr Lieberman calculates equates to 2.5m fewer chews a year. + +That could certainly account for the shrinkage of jaws and teeth undergone by Homo erectus. As to its consequences farther down the digestive tract, those remain the province of further research. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21694489-early-humans-may-have-pounded-and-sliced-their-food-make-it-easier/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +African science + +Crucible + +A new forum hopes to bring Africa’s scientific researchers together + +Mar 12th 2016 | Dakar | From the print edition + + + +ASSANE GUEYE, a Senegalese-born postdoctoral researcher at America’s National Institute of Standards and Technology, is a student of systems. He studies the multiple networks of communications that hold cities together, and feels that a new scientific discipline is needed to describe these systems of systems. He hopes to create one. + +Amanda Weltman, a physicist at the University of Cape Town, seeks nuance in the laws of gravity. She suspects there is an undiscovered particle that links gravitational attraction with nature’s other forces, and is planning an experiment that uses a special satellite to try to track it down. + +Tolu Oni, an epidemiologist also at Cape Town, and Evelyn Gitau, an immunologist at the Kenya Medical Research Institute, both know that the seriousness of the illnesses they are trying to beat—AIDS, malaria and tuberculosis—can be amplified or diminished by patients’ circumstances, but they do not understand the details. Both have the same problem, managing large data sets. But until this week, they had never met. + +These four scientists are among 15 fellows who, together with 800 other academics, business folk and politicians (including the presidents of Senegal and Rwanda), are gathered at the Next Einstein Forum, being held this week in Dakar in Senegal. Next Einstein, the brainchild of Thierry Zomahoun, a Béninois administrator, is an attempt to scale up African science. At the moment, most African scientists work either in isolation or abroad. They do not know one another and are invisible to prospective colleagues. Visas for collaborative work are hard to come by and even flying from one part of Africa to another may require going via a non-African hub, such as Dubai. Next Einstein is an attempt to overcome this fragmentation, by providing a continental congress at which African scientists can meet. + +The forum has grown out of the African Institute for Mathematical Sciences (AIMS), of which Mr Zomahoun is president. AIMS is a graduate school with branches in Cameroon, Ghana, Tanzania and South Africa, as well as in Senegal. It was founded in 2003 by Neil Turok, a South African who now directs the Perimeter Institute for Theoretical Physics. In a sense, Dr Turok’s situation is an example of the problems Next Einstein is trying to overcome, for the Perimeter is based in Canada, and so he now lives in Ontario. + +AIMS concentrates on maths for two reasons. First, being a subject that requires little equipment beyond students’ brains, it is cheap to teach. Second, when Dr Turok was asking fellow African researchers which subjects would be most pertinent to the continental scientific Renaissance he hoped to trigger, most agreed that maths, which is fundamental to the rest of science, was the one to go for. + +The Senegalese campus, built on a beach-front an hour’s drive south of Dakar, is a place where up to 80 graduate students (who pay no fees for the privilege, the institute being funded by government grants and commercial sponsors) can sit for a year at the feet of visiting academics from Africa and elsewhere. These visitors come for three-week stints to lecture in subjects such as cryptography, finance and quantum mechanics. Students are thus exposed to a wide variety of ideas during their stay. + +Whether Next Einstein, which plans to meet every two years, will be able to build on AIMS and create for African scientists the sorts of opportunities that those in the rich world take for granted remains to be seen. But, as Mr Zomahoun observes, 40% of the world’s children are African. Statistically, therefore, the chances that the next Einstein will come from Africa are good. This week’s meeting in Dakar is at least a step on the road to making those odds more than just theoretical. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21694514-new-forum-hopes-bring-africas-scientific-researchers-together-crucible/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Crop storage and the internet of things + +Cool beans + +Legume-shaped sensor packages may help preserve stored crops + +Mar 12th 2016 | From the print edition + +Just call me Jack + +HANDING a farmer a fistful of magic beans with the promise that they will improve his business might sound like something out of a fairy-tale. But, as Arthur C. Clarke put it, any sufficiently advanced technology is indistinguishable from magic. The sensor-filled “beans” developed by Andrew Holland, an electronics engineer from Swaffham Bulbeck, near Cambridge, England, are not only advanced technology. They could also, Mr Holland says, provide an answer to many a farmer’s prayers. + +Mixed into the contents of a granary, his beans would report continuously on the temperature and humidity, both of which encourage rotting if they are too high, and on carbon-dioxide levels, which reflect the amount of insect breath exhaled, and thus the level of infestation. At the moment these things have to be measured (if they are measured at all) using hand-held instruments that are plunged into the grain pile at regular intervals by farmhands. + +The beans themselves are plastic shells 45mm long and 18mm wide, manufactured by 3D printing. This process is used to encapsulate within each bean a diminutive circuit board containing a low-power Bluetooth radio and sensors that can measure motion, temperature, humidity, air pressure and the concentrations of several gases, including carbon dioxide and carbon monoxide. A bean also contains an electronic compass and a tiny gyroscope that, acting together, sense its orientation. All of these devices are powered by a wirelessly rechargeable battery. + +Mr Holland sees potential for his device beyond the monitoring of stored crops. Placed discreetly in a living room or office, he suggests, it could register intruders via the trembles of its motion sensor. A change in air pressure brought about by blowing on it might let it work as a switch for a room’s lights. The gyroscope would permit it to act as the remote control for a television or hi-fi: swiping a bean through the air could turn the device on, while spinning it in a circle could step the volume up or down, depending on whether the spin were clockwise or anticlockwise. For the elderly, a bean carried in a pocket could register a fall and then call for help via its owner’s phone. For the suspicious, it could record whether a parcel had been mistreated in transit by being heated up or crushed. + +That beans would be better than existing ways of doing these things is not always obvious. But they will be programmable via a phone app, so owners will be able to devise other uses as they see fit. + +Grain-monitoring, though, is likely to be the first use. Once placed in and around a heap of grain, a collection of the beans will connect together wirelessly, becoming nodes in a network that gives a clear, three-dimensional picture of what is going on inside that heap. Mr Holland’s company, RFMOD, has just started testing beans for this purpose, and he hopes they will be commercially deployed within two years. + +One problem is recovering the beans when the granary is emptied. If they became a routine technology this could, no doubt, be done by “pinging” them when a shipment was sorted at the wholesaler, and pulling them out automatically as the grain left a hopper. In the meantime, RFMOD is experimenting with putting them in the plastic insect-trapping containers that farmers already deploy in grain-piles to keep infestations under control. + +If the beans do well at monitoring grain, Mr Holland hopes their other applications will make them an important part of the much-discussed “internet of things” which some prophets believe will, in the future, link many objects not currently connected electronically. If his own wildest dreams are fulfilled, that would make RFMOD a large and successful company. It might also suggest that Swaffham Bulbeck, a tiny village, has its own brand of magic to confer, for it was also once home to another startup, Advanced RISC Machines Ltd. ARM Holdings, as that firm is now known, has grown into one of the world’s biggest designers of microprocessors. In Silicon Valley, they do it in garages. In the English fens, it seems, old barns are just as good. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21694517-legume-shaped-sensor-packages-may-help-preserve-stored-crops-cool-beans/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Graphic novels: Lion City march + +British political biography: The shredding of Tony Blair + +Mervyn King and the financial crisis: Halfway there + +Running India: Domesday 2.0 + +Johnson: Don’t p@nic + + + + + +Articles Sections Next + +Graphic novels + +Lion City march + +A touching, thoughtful meditation on Singapore’s relentless progress + +Mar 12th 2016 | From the print edition + + + +The Art of Charlie Chan Hock Chye. By Sonny Liew. Pantheon; 320 pages; $30. + +WHAT sort of country is Singapore? Westerners who live there get used to being asked two questions whenever they go home: “Can you chew gum?” and “Have you been caned yet?” + +These foreigners may be familiar with “Disneyland with the Death Penalty”, a scathing essay that William Gibson wrote in 1993, depicting the Lion City as a soulless, consumerist, authoritarian wasteland. Yet to much of the developing world, Singapore is a model. It is politically stable and geopolitically independent; its citizens enjoy a high standard of living and all the trappings—but not much more than the trappings—of democracy. To its politicians and defenders, Singapore is an achievement born of self-sacrifice, hard work and committed multiculturalism (for instance, public-housing blocks, where most Singaporeans live, must reflect the ethnic make-up of the country: “There are no segregated ghettos in Singapore,” its prime minister boasted in a speech last year). + +Like any other country, Singapore means different things to different people. Its detractors admit that modern Singapore is safe, well-run and has achieved remarkable material progress since it became independent just over 50 years ago. And even its defenders admit that Singapore restricts civil liberties (for good reason, in their view), and that its progress has had costs as well as benefits. + +Sonny Liew’s brilliantly inventive “The Art of Charlie Chan Hock Chye” weighs those costs and benefits. Graphic novelists have made a mark in politics: Marjane Satrapi with Iran and Joe Sacco with Palestine are two of the most admired. The latest experiment in political storytelling through graphic art explores Singapore’s history through the career of Charlie, a fictional cartoonist, which begins in the mid-1950s when Singapore was still a British colony. + +The book is a series of interviews with Charlie, beginning in 2010, when he is 72 years old. Charlie is mild but steel-spined, observant and proud; with masterful economy of detail—an arched eyebrow here, his head at a resigned angle there—Mr Liew crafts him into a fully realised character. + +Charlie’s first published comic is a fairly standard mid-century science-fiction tale in which a boy and his dog discover a giant robot hidden in a cave. But his work quickly turns political. The boy and his dog find themselves embroiled in an anti-colonial demonstration. British police attack unarmed students, but the robot, who responds only to commands in Chinese, steps in to save the day. + +Lee Kuan Yew, who founded the People’s Action Party (PAP) in 1954 and won his first parliamentary seat a year later, makes an early appearance in Chan’s work in “Invasion”. The series depicts humanity under the rule of an alien race, the Hegemons. Mr Lee is a lawyer who argues for human self-rule and speaks fluent Hegemonese (“Invasion” is, of course, an allegory, with humans representing Singaporeans and Hegemons the British). Charlie also uses allegory to tell the story of Singapore’s failed merger with the Federation of Malaya in the early 1960s, with Mr Lee as Sang Kancil, a mouse-deer figure from Malaysian folk tales who lives by his wits; the British as Sir Lion, the Malayan prime minister as a kindly orang-utan. + +Charlie’s versions of Mr Lee grow steadily more Machiavellian. By 1983 he is “Mr Hairily” (Mr Lee’s name at birth was Harry Lee Kuan Yew), chairman of the so-called Sinkapor Inks corporation, who chucks his company’s newsletter-writer in the janitor’s cupboard for reporting inconvenient truths, and forces his employees to confess to their part in “a Richard Marxist conspiracy”—a sly reference to Operation Spectrum, in which 16 people were arrested and detained without trial, having been accused of being part of a “Marxist conspiracy” to topple the government. + +These events remain controversial: the country’s Media Development Authority in effect banned “To Singapore with Love”, a documentary about nine people exiled for their alleged involvement in a communist conspiracy during the 1960s and 1970s. The National Arts Council (NAC) revoked a grant awarded to “The Art of Charlie Chan Hock Chye” because, as a NAC director explained, the book “potentially undermines the authority or legitimacy of the Singapore government”. The book does not shy away from controversial periods in the nation’s history. + +But Singapore did not stop publication. One wonders if Lee Kuan Yew would have been so lenient. But the Singapore of 2016 is not the Singapore of 1983 or the 1950s. It is a more mature, confident country. + +Talk to an older Singaporean, however, and at some point you will hear her wax lyrical about the lost kampongs—the small, intimate villages of Singapore replaced by highways and high-rises. In perhaps the book’s most moving section, Charlie recalls the “old uncle with his cinema-on-wheels”: an old man on a bicycle toting a film projector. Eventually that gave way to theatres and television. The old uncles still came by, Charlie, recalls, “but the kids just didn’t seem to get as excited about his appearance anymore. As the years went by you’d see him less and less often, until one day (out of the blue), you’d look, but would not find him anywhere.” Most people, of course, would rather watch films on their flat-screen TVs than on the side of a courtyard wall. But in the rush to give everyone the means to buy state-of-the-art TVs, it’s worth sparing a thought for the walls. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21694495-touching-thoughtful-meditation-singapores-relentless-progress-lion-city-march/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +British political biography + +The shredding of Tony Blair + +The former prime minister gets the Bower treatment. At least some of it is undeserved + +Mar 12th 2016 | From the print edition + +War on terror firma + +Broken Vows: Tony Blair: The Tragedy of Power. By Tom Bower. Faber & Faber; 653 pages; £20. + +IT IS a measure of how far Tony Blair’s stock has fallen that he has attracted the unwelcome attention of Tom Bower. Usually Mr Bower takes aim at controversial businessmen, such as Robert Maxwell, Mohamed al-Fayed, Conrad Black, Bernie Ecclestone, Simon Cowell and (twice) Richard Branson. A diligent cuttings job and interviews with anyone with dirt to dish or an axe to grind provide the material to shred a chap’s reputation. + +The charge sheet against the former prime minister is predictably devastating. He was a fraud whose communications skills obscured a paucity of accomplishment during a decade in office. He deceived voters: over Britain’s involvement in two wars and by presiding over an undeclared open-door immigration policy. Distrustful of the competence of cabinet colleagues, unwilling to resolve the dysfunctional relationship with Gordon Brown and sceptical of the “modernising” commitment of senior civil servants, his approach to the exercise of power became destructive of the very fabric of government. His second career as a highly remunerated globe-trotting political consultant, often to some pretty dodgy regimes, has done nothing for his reputation. + +The attack is relentless. Much of the evidence supporting Mr Bower’s narrative of a gifted but shallow politician who over-promised and under-delivered appears, at first sight, compelling. However, there is early on a warning about just how unbalanced this account is. Few would disagree that one of Mr Blair’s signal achievements was the Good Friday Agreement that brought an end to 30 years of violence in Northern Ireland. Yet it merits only one rather barbed paragraph. + +Mr Blair’s first term certainly lacked any guiding idea about how underperforming public services should be improved other than by spending more money. His losing gamble on the outcome of the Iraq war also drained the prime minister of political capital. Without it, pushing through a reform agenda that was at odds with the ideological prejudices of most of his own party and which Mr Brown, as chancellor in control of the purse strings, was determined to undermine (for personal as much as political reasons) was uphill work. + +Where Mr Bower gets it wrong, however, is in casting Mr Blair as a feckless flibbertigibbet incapable of the serious analysis required to think through and implement complex policies. In the second half of his term of office, Mr Blair had a very clear idea of what needed to be done. There was no doubting his intellectual conversion to the role that market discipline could play in improving public services, nor his command of intricate policy detail. But there were only a handful of people who could help him realise his goals. All too often, when faced with Mr Brown’s intransigence, he failed to stand by them. + +On Iraq, Mr Bower does his best to suggest that Mr Blair was guilty of an act of deliberate deception in sending Britain to war. He fails to come up with anything fresh. Too much weight was indeed given to patchy intelligence about weapons of mass destruction. But there is no doubt that Mr Blair believed in it and thought it right to act on it. When the long-awaited Chilcot report is finally published, it will interest historians, but it will not satisfy those who say Mr Blair is a war criminal. + +Mr Bower is on firmer ground when it comes to Mr Blair’s life since leaving Number 10. Copying Bill Clinton, Mr Blair has combined lucrative political consulting and business networking with running philanthropic foundations: one aims to spread good governance in Africa, another advocates religious tolerance. In theory, the consulting is meant to provide funds for the philanthropy. But the latter often provides moneymaking openings for the former, Mr Bower alleges. + +Mr Blair’s acquisition of considerable wealth since leaving office has contributed as much to his subsequent vilification as the residual bitterness over Iraq. But his governments were far from being the unmitigated disaster Mr Bower describes. Had they been, voters would not twice have re-elected him. The author never tries to see things from his subject’s point of view. Nor does he consider the often adverse political context in which Mr Blair was operating. The result is a shrill and misleading account. Readers deserve a fairer and more serious book about this important political figure. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21694494-former-prime-minister-gets-bower-treatment-least-some-it-undeserved/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Mervyn King and the financial crisis + +Halfway there + +The former governor of the Bank of England on reforming global finance + +Mar 12th 2016 | From the print edition + + + +The End of Alchemy: Money, Banking and the Future of the Global Economy. By Mervyn King. W.W. Norton; 448 pages; $28.95. Little, Brown; £25. + +INSIDER accounts of the financial crisis are two a penny. The recollections of Timothy Geithner, a former American treasury secretary, are packed with pulsating drama. A book from Ben Bernanke, a former chairman of the Federal Reserve, lacks the pyrotechnics but offers a robust defence of the Fed’s response to market meltdown. Mervyn King, who was governor of the Bank of England in 2003-13, sees such “instant memoirs” as “partial and self-serving”. In “The End of Alchemy” there is no gossip and few revelations. Instead Lord King uses his experience of the crisis as a platform from which to present economic ideas to non-specialists. + +He does a good job of putting complex concepts into plain English. The discussion of the evolution of money—from Roman times to 19th-century America to today—is a useful introduction for those not quite sure what currency really is. He explains why economies need central banks: at best, they are independent managers of the money supply and rein in the banking system. Central bankers like giving the impression that they have played such roles since time immemorial, but as Lord King points out the reality is otherwise. The Fed was created only in 1913; believe it or not, until 1994 it would not reveal to the public its interest-rate decisions until weeks after the event. Even the Bank of England, founded in 1694, got the exclusive right to print banknotes (in England and Wales) only in 1844. + +At times, Lord King can be refreshingly frank. He is no fan of austerity policies, saying that they have imposed “enormous costs on citizens throughout Europe”. He also reserves plenty of criticism for the economics profession. Since forecasting is so hit and miss, he thinks, the practice of giving prizes to the best forecasters “makes as much sense as it would to award the Fields Medal in mathematics to the winner of the National Lottery”. + +This is all perfectly interesting, and Lord King opines on a wide range of issues (though with more emphasis on breadth than depth). But the real point of the book, it seems, is to propose a policy to reform global finance. The problem leading up to the crisis, as Lord King sees it, is that commercial banks had little incentive to hold large quantities of safe, liquid assets. They knew that in a panic, the central bank would provide liquidity, no matter the quality of their balance-sheets; in response they loaded up on risky investments. + +Instead of this unhappy arrangement, Lord King wants banks to buy “liquidity insurance”. In normal times banks would pledge collateral to the central bank, which would agree to lend a certain amount against it, if necessary. Banks would thus know in advance precisely how much help they could get in the event of a meltdown, making them behave responsibly when times were good. + +The argument is persuasive (indeed, some central banks have policies that bear resemblance to the one Lord King is suggesting). However, there is something unsatisfying about a plea for radical reform from a man who has recently spent a decade in a position of exceptional power: if your suggestions are so good, readers will find themselves asking, then why did you not push for them yourself? Lord King has produced a worthy book, but a shamelessly self-serving account of his role during the financial crisis would have been a lot more fun. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21694496-former-governor-bank-england-reforming-global-finance-halfway-there/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Running India + +Domesday 2.0 + +A technological blueprint for better government + +Mar 12th 2016 | From the print edition + +Your turn now + +Rebooting India: Realising a Billion Aspirations. By Nandan Nilekani and Viral Shah. Allen Lane; 337 pages; £20. + +IN A month or so, India will have registered a billion residents—the latest stage in the creation of a complete identity database of what will soon be the world’s most populous country. Aadhaar, which means “foundation” in Hindi, matches names with fingerprints and iris scans on a scale that has never been seen before. Reimagining government with such technology at its core will be key to meeting the mounting aspirations of India’s citizens, according to two of the scheme’s architects, Nandan Nilekani and Viral Shah. + +If the Domesday Book, an 11th-century survey of England, was commissioned to raise funds for government, Aadhaar’s most useful purpose is to help their disbursement. Making sure each farmer gets one dose of subsidised fertiliser and all poor families their share of rice is fiendish without knowing who they are. Many of those who are entitled to government handouts live in one of the 600,000 Indian villages with no banking facilities. + +Serving the citizenry in a country where 59% of births are not registered, and many people can’t read, is a task that has been a costly failure. Rajiv Gandhi, a former prime minister, once claimed that just 17% of subsidies reached the right people: not so much a leaky bucket as a sieve. A patchwork of rival ID schemes, from driving licences to ration cards, electoral rolls and tax-registration numbers, did not serve the purpose of making each and every citizen visible to the state. + +Much debate about public policy is about the principles behind it: which citizens should pay how much tax, for example. “Rebooting India” is a welcome detour to the often-overlooked realities of how these principles translate into reality. A government benefit which requires days of trekking to receive, and then a bribe to unlock, may not feel like much of a benefit at all. Women who can access a subsidy without the involvement of their husbands or brothers are in quite a different position than those who cannot. + +Aadhaar is transforming the way many citizens interact with the state. It allows the government to pay benefits directly to over 200m bank accounts linked to its database, so cutting out layers of corrupt and inept middlemen. That will feel much more tangible, to the average Indian, than a tax break here or a new subsidy there. + + + +“Rebooting India” is at its best when it delves into the veritable sausage-making that is large-scale government IT projects. (Mr Nilekani, one of the authors, knows more than most about what it takes to deliver these, having co-founded and then run Infosys, an Indian IT giant.) How do you coax a reluctant bureaucracy to adopt a new technology that might erode its privileges? How do you resist those who want to turn it into something more comprehensive than just an ID scheme—and therefore make it more likely to fail? Given Aadhaar’s relatively smooth implementation, civil servants across the world would do well to seek inspiration from it. + +Its potential is vast but mostly unknown. It is described as a “platform” in which an “ecosystem” can thrive, much like the iPhone is a platform for apps. Beyond subsidy payments, a few such applications for Aadhaar already exist: one allows citizens to track in real time which bureaucrats are physically at their desk. If that is not helpful, other uses that have not yet been thought of undoubtedly will be. + +There is the occasional whiff of naivety. The book’s title alone suggests that India’s governing apparatus could be improved if it could just be turned off and on again. And how can a government that is so inept as to need recasting be trusted to avoid the Orwellian possibilities of a billion-strong database? Police have already nagged to get access to its fingerprints and have been rebuffed—for now. + +If Aadhaar is indeed as revolutionary as the personal computer, it is frustrating that the second half of the book veers into other ways IT can help deliver government services. The authors’ suggestions on how road tolls or India’s court system could be better run with added tech savvy are correct, but their solutions to other problems, such as managing health records, lack Aadhaar’s elegance. + +It is a credit to Aadhaar that the book, while fascinating, feels like primary material for a weightier tome. The high politics of the scheme are glossed over, particularly the election of Narendra Modi halfway through its implementation (Mr Nilekani stood unsuccessfully as an MP for the rival Congress party). The chronicles of a revolution, if indeed this is one, are best not written by the perpetrators. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21694493-technological-blueprint-better-government-domesday-20/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +Don’t p@nic + +Punctuation has rarely been truly stable + +Mar 12th 2016 | From the print edition + + + +INTHEBEGINNINGWASTHEWORD, and the word was run together. Ancient texts (like the Greek of the Gospel of John) had few of the devices that tell readers where words begin and end (spaces), which words are proper names (the upper-lower case distinction), where breaks in meaning come (commas, dashes, semicolons and full stops), who said what (inverted commas), and so on. + +Most people take punctuation to be something obvious and settled. In fact, the system is in a bit of upheaval. The beginnings of that date back to 1971, when Ray Tomlinson sent an experimental message between two computers in the same room, connected only by ARPANET (the precursor to the internet). + +Tomlinson, who died on March 5th, made a lasting contribution to the world’s orthography by choosing the @ symbol for e-mail addresses. His legacy will be a long one. E-mail and the @ sign have conquered the world: you cannot truly say you speak a foreign language until you can give your e-mail address complete with the local word for the glyph, like snabel-a (“elephant-trunk A”) in Danish or aapenstartje (“little monkey’s tail”) in Dutch. + +It seems that Tomlinson opened a Pandora’s box. As communication using computers proliferated, so did people’s recourse to those lesser-used characters at the edges of their computer keyboard. In the 1990s, it was the rise of the emoticon, from the humble :-) to the more elaborate, like >:\ (a furrowed-brow look of scepticism). The use of # to signal a topic (#language), as on Twitter, has evolved as a way to send messages through a kind of second channel. Some find this #playful, and others find it #irritating, but it has its uses in condensed media like Twitter. + +Other innovations may have seen their day come and go: nerds once preferred tags in the style of HTML (used to code web pages) like “”. But this already seems to be on the wane, in favour of things like “*sigh*”. A *sigh* was Johnson’s reaction to another story of non-traditional writing: last year Oxford Dictionaries chose an emoji—those cartoonish faces descended from emoticons—as its “Word of the Year”. (It was the face intended to signal “tears of joy”.) Emoji aren’t really words or punctuation, but something akin to a graphical hashtag, performing a bit of the same role as tone of voice and body language in speech. + +With all this flux, many people worry that skill with punctuation is disappearing: witness, after all, the way teens text and tweet not bothering to capitalise or punctuate at all. It is in fact more complicated (and interesting) than that. Not putting a full stop in a text is normal for teens in an internet message, and including it sends a separate note of annoyance or frustration on the part of the writer. Full stops can also be used for other effects, like “You. Must. Be. Joking.” + +Such chaos is not all that historically unusual. The first English writers, when they punctuated at all, availed themselves of long-forgotten symbols like the diastole and trigon, the interpunct and the diple. Printing began the process of settling the punctuation system, but even that took four centuries. Samuel Johnson’s commas, in the mid-18th century, were not only heavy; many would be ungrammatical today, and this style persisted into the first editions of The Economist in 1843. + +As David Crystal, a linguist, points out in his history of punctuation (“Making a Point”) published in 2015, at the dawn of the 19th century, punctuation prescribers were still divided into those who insisted that punctuation follow grammar and those who wanted it to aid elocution. Even one of the grammarians, Lindley Murray, wrote in 1795, in a hugely influential grammar book, that a semicolon signalled a pause twice as long as a comma; that a colon was twice as long as a semicolon; and that a full stop was twice as long as a colon. (Try that next time you read a text aloud.) + +Punctuation, in other words, has not always been the epitome of order that some of its fans think. It is unsurprising that the rise of computers would unsettle a system that had barely settled to begin with. Fortunately, most of the upheaval is confined to new channels: e-mail, texting, Twitter and whatever is to come next. Even most teens know to keep it out of formal writing. And those who prefer not to follow fads at all need only wait a while: much of today’s playful punctuation will soon become unfashionable, dead as the diastole and the diple. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21694497-punctuation-has-rarely-been-truly-stable-dont-pnic/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Nancy Reagan: Keeping control + + + + + +Articles Sections Next + +Obituary: Nancy Reagan + +Keeping control + +Nancy Reagan, America’s First Lady through the 1980s, died on March 6th, aged 94 + +Mar 12th 2016 | From the print edition + + + +IF ANYONE attacked her Ronnie, when he was governor of California in the 1970s, Nancy Reagan knew just what to do. She would run a big tub, pour in lots of bath salts, and as she soaked she would shout defiance at the wall. Didn’t happen. Didn’t happen. What are you doing to my husband? What’s wrong with that? By the time the tub was cool she was all sweetness, and the world was in kilter again. + +Keeping life’s untidiness at bay was a full-time job. It started with herself. Only Julius could style her hair, and he had to be flown in from Los Angeles. As a teenager her nose was too big, so she had it done, of course. (She wanted to be a movie star; that never came to much, but she networked with Spencer Tracy and Clark Gable and met Ronnie, so it was worth it.) With daily exercise she could stay a size four, and look stunning in the Bill Blass gowns and red Adolfo suits that came in armfuls to the White House. But her ankles were so thick that she cried for days when the Washington Star noticed. + +On every side lay disorder, even in the White House. Ashtrays that needed emptying (she would do it herself, if no one else would). Pictures hanging askew, which must be straightened. Coffee cups on desks. Aides coming in sweaty, wearing trainers and with mussed hair: just inappropriate. Appearances mattered, which was why she had refused to live in the governor’s house in Sacramento, that old firetrap, and instead moved to a 12-room Tudor mansion in a better part of town. Good taste, and a horror of mismatched plates, was the reason she spent $209,508 on new china for the White House, which everyone attacked her for. Otherwise she was frugality itself, recycling unwanted presents and getting her rich friends to donate their furniture. Because everything had to be just so, she continually fussed, phoned and deployed her two steeliest weapons, the silence and the stare. Before state dinners, she checked that the salad leaves were perfectly arranged and the sauce exactly seasoned. When the Queen of England visited, she drafted the guest list five times over. If anything went wrong, she was furious. Naturally. + +Unhappy families + +Her own history needed tidying, too. Two years were lost from her age somewhere. Her potty-mouthed mother was kept at arm’s length. Her father, a car-dealer, out of the picture since her parents’ divorce, was replaced as “real” by Loyal Davis, her stepfather, a respectable neurosurgeon who did not agree to adopt her for six years. As for her own children, they were frankly a nightmare: Patti a damn hippie and Ron, eventually, a ballet dancer. She ransacked his bedroom for drugs and worried herself sick that he was probably gay, but had to accept in the end that families couldn’t be wrapped up prettily in white paper. The hardest thing was that Ronnie had brought two children of his own, with Jane Wyman, to the marriage. Her shadow came too. They couldn’t be fitted in at all. + +As for Ronnie himself, her wonder and her hero, the man without whom she couldn’t live—he was her chief project. Dear, sweet, easy-going Ronnie had no straight-line ambition to be governor or president. She had it for him. (She wasn’t political one scrap, beyond being, obviously, Republican, but could nudge him to do smart things like reach out to the Soviets.) Ronnie loved and trusted everyone; so it was just as well she didn’t. If anyone was harming him, they had to go, and she would keep at it and at it. + +She couldn’t win every battle, of course. Don Regan, pushy awful man, was turfed out as White House chief of staff, but Ronnie refused to put all protesters in jail, as she requested, or sack Cap Weinberger from the Pentagon, because he was his friend. (And sure enough, she wouldn’t drop her own best friends, like the Bloomingdales or Frank Sinatra, just because they got in a mess.) In front of the cameras she made certain Ronnie looked good, and tore up official snaps that showed him sleepy or old. If he got lost for words, she supplied them. Her unwavering, loving gaze when he spoke was, in fact, a firewall. + +One thing she could not order was the future and his fate. She could try her damnedest, though. She insisted that on election day in 1970, when Ronnie was running again for governor of California, he should play golf and eat chicken curry for dinner, just as he had on the day when he was first elected. It worked. In the White House she brought in astrologers to fix, according to Ronnie’s star chart, the times of press conferences and foreign trips. That worked, too. It even helped when she felt she needed to change her own image as a clothes-horse and an icicle to something softer. Following her seers’ advice, she started a “Just Say No” campaign against drug use and began to appear more often with sick children. When Ronnie got Alzheimer’s, she rather bravely—for a Republican—started pushing for stem-cell research. + +People still misunderstood her. They kept sniping at her tight little laugh, her jewellery and her influence over her husband. Perhaps, since Ronnie was so popular, they needed her as a lightning rod. Perhaps these press types—especially the women reporters—wished they too could be that slim and that much in control. Well, they would just have to work at it as hard as she had. Even in the bath. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21694453-driving-force-behind-ronald-reagans-presidency-was-94-nancy-reagan-americas-first-lady/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +Employment outlook + +The Economist commodity-price index + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Mar 12th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21694519/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Mar 12th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21694506-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Mar 12th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21694507-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Employment outlook + +Mar 12th 2016 | From the print edition + + + +A survey from Manpower, an employment-services firm, shows that in most countries a majority of employers are planning to expand their payrolls in the second quarter of this year. But the mood among firms has become gloomier since the equivalent survey for the first quarter of 2016; in only eight countries do a majority of employers expect to see improving conditions. Brazil is not one of them: the percentage of employers planning on shedding workers exceeds those who think they will hire more, and employer confidence is at its lowest since the survey was launched in 2009. Japan’s labour market looks healthier for jobseekers: nearly a third of employers say they have jobs to fill. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21694508-employment-outlook/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Mar 12th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21694509-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Mar 12th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21694513-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 11 Mar 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +After Moore’s law: The future of computing + + + + + +The Petrobras scandal: Interrogating Lula + + + + + +Farming in Africa: Miracle grow + + + + + +China’s economy: Ore-inspiring + + + + + +Europe’s migrant crisis: A messy but necessary deal + + + + + +Letters + + + +Donald Trump, trachoma, trust companies, China, the Maldives, English law firms, Gaelic games: Letters to the editor + + + + + +Briefing + + + +African agriculture: A green evolution + + + + + +United States + + + +Varieties of inequality: The great divergence + + + + + +Justice in Louisiana: The ruin of many a poor boy + + + + + +Polling flops: Mich-fire + + + + + +GOP souvenir edition: Heard on the trail + + + + + +The primary race: Trump done well + + + + + +Becoming an astronaut: The mice in their million hordes + + + + + +Lexington: Not so special + + + + + +The Americas + + + +Brazil’s political and economic crisis: Standing by their man + + + + + +Caribbean prisons: Blue seas, black holes + + + + + +Antiquities in Latin America: Returning the hatchet + + + + + +Bello: The return of an old enemy + + + + + +Asia + + + +Elections in the Philippines: A family affair + + + + + +Politics in Kiribati: Making waves + + + + + +India’s guru-entrepreneurs: Holy noodles + + + + + +Taiwanese identity: Multiculti roots + + + + + +Japanese politics: Abe agonistes + + + + + +Banyan: Not gloating, but fretting + + + + + +China + + + +The National People’s Congress: Unlucky for some + + + + + +Political music: The song dynasty + + + + + +Carbon emissions: Aiming low + + + + + +Trade with North Korea: What sanctions? + + + + + +Middle East and Africa + + + +Women in Saudi Arabia: One step forward, one step back + + + + + +Transport in the Middle East: Let’s go together + + + + + +Equatorial Guinea: Palace in the jungle + + + + + +Rwanda: A hilly dilemma + + + + + +Energy in Rwanda: What lies beneath + + + + + +Europe + + + +Europe’s migrant crisis: Desperate times, desperate measures + + + + + +Regional elections in Germany: Mutti’s challenge + + + + + +Nadia Savchenko: A modern martyr + + + + + +Italy’s Five Star Movement: Smartening up + + + + + +Charlemagne: The necessity of culture + + + + + +Britain + + + +Britain and the European Union: Next stop: Brexit? + + + + + +Illegal immigration: Channel hopping + + + + + +Aston Martin and McLaren: Speed merchants + + + + + +Brexit brief: The roots of Euroscepticism + + + + + +Portsmouth’s shipyard: Pompey’s predicament + + + + + +Higher education: Open universities + + + + + +Young people and work: Jobs for the boys and girls + + + + + +Sunday-trading laws: Scotched + + + + + +Bagehot: Goggling at Britain + + + + + +International + + + +Civil servants: Mandarin lessons + + + + + +Exam-cramming in India: Turn over your papers…now + + + + + +Technology Quarterly + + + +After Moore's law: Double, double, toil and trouble + + + + + +More Moore: The incredible shrinking transistor + + + + + +New designs: Taking it to another dimension + + + + + +Brain scan: Bruno Michel + + + + + +Quantum computing: Harnessing weirdness + + + + + +What comes next: Horses for courses + + + + + +Business + + + +Health care: Things are looking app + + + + + +Fracking companies: DUC and cover + + + + + +Royal Enfield: Approved by mothers-in-law + + + + + +The Wallenberg group: A Nordic pyramid + + + + + +BMW at 100: Bavarian rhapsody + + + + + +Retailing: Shops to showrooms + + + + + +Schumpeter: Open for business + + + + + +Finance and economics + + + +Chinese property: For whom the bubble blows + + + + + +Buttonwood: High tech meets low finance + + + + + +America’s economy: On the one hand + + + + + +Commodities: Steel chrysanthemums + + + + + +Greek banks: On the front line + + + + + +Financing divorce: Till debt us do part + + + + + +Discount brokerages: Free trade + + + + + +Free exchange: A proper reckoning + + + + + +Science and technology + + + +Artificial intelligence and Go: Showdown + + + + + +Early human diets: Without fire? + + + + + +African science: Crucible + + + + + +Crop storage and the internet of things: Cool beans + + + + + +Books and arts + + + +Graphic novels: Lion City march + + + + + +British political biography: The shredding of Tony Blair + + + + + +Mervyn King and the financial crisis: Halfway there + + + + + +Running India: Domesday 2.0 + + + + + +Johnson: Don’t p@nic + + + + + +Obituary + + + +Obituary: Nancy Reagan: Keeping control + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +Employment outlook + + + + + +The Economist commodity-price index + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.03.19.TXT b/homeworks/B20769/homework1/data2/2016.03.19.TXT new file mode 100644 index 0000000..c5e1459 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.03.19.TXT @@ -0,0 +1,5186 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Mar 19th 2016 | From the print edition + + + +In a surprise move, Vladimir Putin announced that he was withdrawing the bulk of Russian forces from Syria, six months after he sent them there to support his beleaguered ally, Bashar al-Assad. The same day, UN-chaired peace talks aimed at bringing an end to the five-year war began in Geneva. A ceasefire that came into force three weeks ago has largely held. See article. + +Gunmen attacked three hotels in Grand Bassam, a seaside town 40km from the capital of Ivory Coast. The attack, which left 18 people dead, was claimed by al-Qaeda’s north Africa branch. + +South Africa’s deputy finance minister, Mcebisi Jonas, claimed that he was offered the job of finance minister by members of the Gupta family, who have close ties to President Jacob Zuma. The Guptas, who own a wide range of businesses, have denied this. + +An audit of Nigeria’s state-owned oil company found that in 2014 it failed to pay $16 billion in oil receipts to the national government. + +Another one bites the dust + +Marco Rubio pulled out of the Republican presidential nomination race after coming a poor second to Donald Trump in the primary in Florida, Mr Rubio’s home state. John Kasich won the contest in Ohio, his home state, and remains in the race, as does Ted Cruz. On the Democratic side Hillary Clinton thrashed Bernie Sanders in the week’s primaries. See here and here. + +Mr Trump’s campaign was dogged again by racially tinged clashes at his rallies. He had to cancel an event in Chicago after protesters fought with his supporters. Mr Trump said later that if the Republican hierarchy tried to wrest the nomination away from him at July’s convention there would be “riots” in the streets. + +Barack Obama nominated Merrick Garland, a federal appeals-court judge, to replace the late Antonin Scalia on the Supreme Court. Senate Republicans say they won’t confirm his nomination; they want the vacancy to be filled by the next president, who won’t take office until January. See article. + +The frontman + + + +Myanmar’s parliament elected Htin Kyaw as the country’s next president, the first civilian leader after more than 50 years of control by the army. He is close to Aung San Suu Kyi, whose National League for Democracy won elections in November. Ms Suu Kyi is barred by the constitution from taking the job, but says she will be the effective ruler. See article. + +A court in North Korea sentenced an American student, Otto Warmbier, to 15 years’ hard labour for crimes against the state. He was found guilty of trying to steal a propaganda banner from a hotel. + +At the end of its meeting, China’s rubber-stamp parliament, the National People’s Congress, approved a new five-year plan for the country’s development, which calls for average annual GDP growth of at least 6.5%. The prime minister, Li Keqiang, told reporters that China would press ahead with “structural reforms” to boost market forces and said the government would try to find new jobs for those laid off. + +Thousands of miners in the north-eastern Chinese city of Shuangyashan staged protests over unpaid wages. The state-owned company they work for has suffered because of falling demand for its coal as China’s economy slows. See article. + +Taiwan’s president-elect, Tsai Ing-wen, named a former minister of finance, Lin Chuan, as the country’s next prime minister. Ms Tsai and Mr Lin will take office on May 20th when President Ma Ying-jeou’s term ends. + +Migrant-crisis talks + +Angela Merkel, Germany’s chancellor, and her European Union counterparts met to discuss a deal with Turkey, the main transit country for migrants making their way to Greece and beyond. Agreement is near, but controversial: Turkey must take back migrants from Greece; in return the EU must take an equal number from refugee camps in Turkey. In Germany anti-immigrant parties made significant gains in local elections. See article. + +A bomb in Ankara killed 37 people, the third attack in Turkey’s capital within five months. A Kurdish militant group claimed responsibility for the attack. Recep Tayyip Erdogan, the president, called for terrorism to be redefined. There should be no difference, he said, between “a terrorist holding a gun or a bomb and those who use their position or pen to support terror”. + +A shoot-out took place at a flat in Brussels, Belgium’s capital, as police hunted for suspected terrorists. The raid was linked to the search for the remaining perpetrators of the Paris attacks last November by Islamic State, which killed 130 people. Four police officers were shot and wounded in the exchange of fire and one suspect, an Algerian living illegally in Belgium, was killed. Two other suspects escaped. + +The introduction of a new tax on sugary drinks was the highlight of the British government’s budget. A 330ml can of Coke exceeds by a sixth the recommended daily amount of sugar for a child. Although a similar tax in Mexico has had a noticeable effect on sales, research suggests the benefits in Britain may be bittersweet, as such drinks make up less than 20% of Britons’ added-sugar intake. See article. + +They’ve had enough + + + +Protesters in cities across Brazil demanded the impeachment of the president, Dilma Rousseff; at least 500,000 people took to the streets of São Paulo alone. Ms Rousseff’s Workers’ Party and its coalition allies are enmeshed in a bribery scandal and the country is going through the worst recession since the 1930s. But in a defiant mood, Ms Rousseff appointed Luiz Inácio Lula da Silva, a former president, to her cabinet, meaning any charges he faces can be tried only in the supreme court. + +America loosened restrictions on travel to, and transactions with, Cuba ahead of Barack Obama’s visit. Americans will now be permitted to go to Cuba on their own, rather than as part of an organisation for educational purposes. + +Colombia’s president, Juan Manuel Santos, and the leader of the FARC guerrilla group, Rodrigo Londoño, said they will miss a self-imposed deadline of March 23rd for signing a peace agreement. The postponement means that the deal will not be signed when Mr Obama is in Havana, where the peace talks are taking place. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21695093-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Mar 19th 2016 | From the print edition + +Anbang, a Chinese insurance firm, made a $13 billion rival bid for Starwood Hotels, which counts the Sheraton chain among its assets and has already agreed to a takeover from Marriott. Also this week, Anbang made a $6.5 billion offer for Strategic Hotels, which owns the Fairmont in Chicago and 15 other luxury hotels. It is the latest move by a big Chinese company eager to expand abroad as the economy at home cools down. + +Not so valiant + +Shares in Valeant, a troubled drugs company, fell by half after it warned of a potential default on some of its $30 billion debt-pile and slashed its outlook. The company came under pressure last year when, among other things, it jacked up the price of two treatments for heart disease. Prosecutors and the Securities and Exchange Commission are looking into a variety of its business practices. Last August Valeant’s stockmarket value was $90 billion; it is now $11 billion. See article. + +The Bank of Japan left its benchmark interest rate on hold at -0.1%. Haruhiko Kuroda, the central bank’s governor, defended negative interest rates as a useful tool in the battle against deflation, and even suggested that the rate could be brought down to -0.5% if the economy faced headwinds from a financial crisis. At its policy meeting, the Federal Reserve took a cautious view about when it might next raise rates, saying a decision would be based on “realised and expected economic conditions”. + +Mario Draghi’s remark that he did “not anticipate” making a cut to interest rates again sent markets into a tizz. The president of the European Central Bank expressed his opinion after introducing a bigger-than-expected package of stimulus measures on March 10th, such as reducing its deposit rate to -0.4% and raising the amount of bonds it buys each month in its quantitative-easing programme from €60 billion ($66 billion) to €80 billion. + +Anheuser-Busch InBev issued €13.3 billion ($15 billion) worth of bonds, the proceeds of which will help fund its acquisition of SABMiller. The expansion of the ECB’s bond-buying programme caused a rush of euro-denominated offers this week as companies sought to take advantage of super-low interest rates. + +Bottoming floors + +Oil markets reacted positively to the International Energy Agency’s comment that prices “may have bottomed out”. A few days later the Qatari oil ministry said that a preliminary agreement between most big oil producers to freeze output had “put a floor under the price”. + +The London Stock Exchange and Deutsche Börse formally announced their intention to merge, which would boost their businesses in derivatives, clearing houses and other financial services. The combined company will be based in London, but the LSE’s chief executive, Xavier Rolet, will step down to make way for Carsten Kengeter, the German bourse’s CEO. ICE, the owner of the New York Stock Exchange, is still pondering whether to make a counterbid for the LSE. + +Atiur Rahman resigned as the governor of Bangladesh’s central bank following the electronic theft of $101m from the country’s official account at the Federal Reserve Bank of New York, which holds the deposits of many of the world’s central banks. It is one of the biggest cyber-heists to date and came to light via press reports in the Philippines, where the criminals who appropriated the money are thought to be based. + + + +Campari, an Italian drinks company, agreed to buy the maker of Grand Marnier in a deal valued at €684m ($761m). Campari, best known for its red-coloured bottled spirit, also owns the Cinzano, Wild Turkey and Skyy Vodka brands. It is taking an initial 28.8% stake in Grand Marnier from the family that controls the company with a view to buying the remaining shares. + +Chalk one up for humans. Lee Sedol of South Korea won a match in the Asian board game of Go against Google’s DeepMind AlphaGo machine. He lost the other four, however, in a five-round contest that pitted Mr Lee against an artificial-intelligent system designed by Google’s engineers. Go, a more complex game than chess stretching back thousands of years, was seen as the ultimate challenge for the AI upstarts. + +Back-seat driver + +The development of self-driving cars entered the slow lane this week when Missy Cummings, a robotics expert, told a US Senate committee that autonomous vehicles were “absolutely not” ready for widespread use. The debate shifted gear when, last month, a Google prototype struck a bus. That low-speed ding might put a dent in Google’s hopes for computers to overtake humans as the primary drivers of cars. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21695094-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Mar 19th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21695092-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Russian foreign policy: A hollow superpower + +Barack Obama visits Cuba: Cubama + +America’s primaries: What now? + +Britain’s budget: The fiddler’s charter + +Pandemics: An ounce of prevention + + + + + +Articles Sections Next + +Russian foreign policy + +A hollow superpower + +Don’t be fooled by Syria. Vladimir Putin’s foreign policy is born of weakness and made for television + +Mar 19th 2016 | From the print edition + + + +JUBILANT crowds waved Russian flags; homecoming pilots were given fresh-baked bread by women in traditional dress. Judging by the pictures on television, Vladimir Putin won a famous victory in Syria this week. After his unexpected declaration that the campaign is over, Mr Putin is claiming credit for a ceasefire and the start of peace talks. He has shown off his forces and, heedless of civilian lives, saved the regime of his ally, Bashar al-Assad (though Mr Assad himself may yet prove dispensable). He has “weaponised” refugees by scattering Syrians among his foes in the European Union. And he has outmanoeuvred Barack Obama, who has consistently failed to grasp the enormity of the Syrian civil war and the threat it poses to America’s allies in the Middle East and Europe. + +Look closer, however, and Russia’s victory rings hollow. Islamic State (IS) remains. The peace is brittle. Even optimists doubt that diplomacy in Geneva will prosper (see article). Most important, Mr Putin has exhausted an important tool of propaganda. As our briefing explains, Russia’s president has generated stirring images of war to persuade his anxious citizens that their ailing country is once again a great power, first in Ukraine and recently over the skies of Aleppo. The big question for the West is where he will stage his next drama. + +Make Russia great again + +Mr Putin’s Russia is more fragile than he pretends. The economy is failing. The rise in oil prices after 2000, when Mr Putin first became president, provided $1.1 trillion of windfall export revenues for him to spend as he wished. But oil prices are three-quarters down from their peak. Russian belts have tightened further because of sanctions imposed after Mr Putin attacked Ukraine. Living standards have fallen for the past two years and are falling still. The average salary in January 2014 was $850 a month; a year later it was $450. + +Mr Putin was losing legitimacy even before the economy shrivelled. Many Russians took to the streets in the winter of 2011-12 to demand that their country become a modern state with contested elections. Mr Putin responded by annexing Crimea and vowing to restore Russian greatness after the Soviet collapse—“the greatest geopolitical catastrophe” of the 20th century, he called it. Part of his plan has been to modernise the armed forces, with a $720 billion weapons-renewal programme in 2010; part to use the media to turn Russia into a fortress against a hostile West; and part to intervene abroad. + +With action in Ukraine and Syria, he has made it appear that Russia is the equal—and rival—of America. That is not only popular among ordinary Russians but also contains a serious message. Mr Putin fears that Russia, in its weakened state, could be vulnerable to what he sees as America’s impulse to subvert regimes using the language of universal democracy. In both Ukraine and Syria, he believes, America recklessly encouraged the overthrow of governments without being able to contain the chaos that followed. He intervened partly because he fears that the revolutions there must be seen to fail—or Russia itself could one day suffer a revolution of its own. + +So far his plans have worked. Beguiled by a pro-Kremlin broadcast media, ordinary Russians have been willing to trade material comfort for national pride. Mr Putin’s popularity ratings remain above 80%, far higher than most Western leaders’. But the narcotic of adventurism soon wears off. Since last October, the share of voters who feel the country is heading in the right direction has fallen from 61% to 51%. Russians tired of Ukraine; now Syria has peaked. Sooner or later, the cameras will crave action. Ukrainians are petrified once again. + +What does this mean for the West? So far America, at least, has misunderstood Mr Putin’s aims. In the autumn Mr Obama predicted that Syria would be a Russian “quagmire”. Speaking to the Atlantic recently, he argued that Russia’s repeated resort to force is a sign of weakness. That is true, but not (as Mr Obama suggests) because it shows that Mr Putin cannot achieve his foreign-policy goals by persuasion. For him, military action is an end in itself. He needs footage of warplanes to fill his news bulletins. There will be no quagmire in Syria because the Kremlin is not in the business of nation-building. + +Mr Obama thinks Russia should be left to its inevitable decline. Like a naughty child, Mr Putin is rewarded by American attentiveness, he believes. Yet, Syria shows how, when Mr Obama stands back in the hope that regional leaders will stop free-riding on American power and work together for the collective good, the vacuum is filled by disrupters like Iran and IS, and by Russia in its search for the next source of propaganda. + +So the West needs to be prepared. It is welcome that America is strengthening its forces in Europe. NATO’s European members should show similar mettle by putting troops in the Baltic states—which will require a change of heart in countries, such as Italy, that see any display of resolve as needlessly provoking Russia. If there is trouble, NATO and the EU will need to respond immediately to show that Russia cannot prise open the collective-security guarantee that lies at the heart of NATO. + +Carry on Kiev + +The biggest test will be Ukraine—a focus of Russian attention and also the country most like Russia itself. If Ukraine can become a successful European state, it will show Russians that they have a path to liberal democracy. If, by contrast, Ukraine becomes a failed state, it will strengthen the Kremlin’s argument that Russia belongs to its own “orthodox” culture and that liberal democracy has nothing to teach it. + +Alas, America and the EU have Kiev fatigue. Instead of doing everything in their power to help Ukraine, they expect Ukrainian politicians to prove that they are capable of reform on their own. That is a mistake. They should be offering financial help and technical advice. They should help root out corruption. And they should be patient. + +Eventually, deep Russian decline will limit its aggression. For the time being, however, a nuclear-armed Mr Putin is bent on imposing himself in the old Soviet sphere of influence. In Mr Obama’s last year as president, Mr Putin, fresh from Syrian success, could yet test the West one more time. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695003-dont-be-fooled-syria-vladimir-putins-foreign-policy-born-weakness-and-made/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Barack Obama visits Cuba + +Cubama + +The United States and Latin America can profitably draw closer, but only if the next president agrees + +Mar 19th 2016 | From the print edition + + + +CAUTION has been a watchword in the foreign policy of Barack Obama. But in one part of the world he has been adventurous. For any of the nine preceding American presidents, his planned visit to the Cuba of Raúl and Fidel Castro, on March 21st and 22nd, would have been unthinkable (see article). It crowns a bold gambit in which Mr Obama has restored diplomatic relations, frozen for 54 years, and begun to loosen the economic embargo against the island. He is betting that engagement with one of America’s neighbours will do more than isolation to bring its Communist regime to an end. + +Moreover, engagement with Cuba will lance a boil that has poisoned relations between the United States and the whole of Latin America. After a period in which China appeared to be displacing America in what some once called its backyard, those links could become increasingly warm and mutually profitable—so long as the next president seizes the opportunity. On the evidence of America’s rancorous election campaign, there is a danger that he or she will not (see article). + +How to change Cuba + +Mr Obama’s bet is the right one. The American embargo against Cuba is an exercise in futility. It is a cold-war anachronism that hurt Cubans (and Americans) rather than the Castros, who use it to justify their police state and as an excuse for the penury inflicted on the island by communism. + +The rapprochement comes as Cuba is changing, albeit at the pace of one of those patched-up 1950s cars that delight tourists to the island. Thanks to reforms Raúl Castro started when he took over as president from his elder brother in 2008, some 1m Cubans (one in five of the workforce) are members of an incipient private sector. Revenue from tourism, some of which goes to small businesses, and remittances from the diaspora are growing, just as aid from Venezuela is diminishing. + +Officially, Mr Castro’s reforms are an “updating of socialism”, not an embrace of capitalism, let alone democracy. Mr Obama’s critics conclude that he has given the Castros a free pass. Yet Cuba was never about to become a democracy overnight. Because the regime remains entrenched, political change is more likely to come gradually and from within. In 2018 Mr Castro intends to stand down as president. His likely successor, Miguel Díaz-Canel, was born after the Castros’ revolution in 1959. Cubans will judge him on his ability to improve their lives, which will require more economic reforms. The hope must be that, as Cuba becomes more prosperous and connected, political liberalisation will follow. + +Engagement can accelerate this process. Mr Obama is a powerful symbol among the many Afro-Cubans of the opportunities offered by freedom. Contact between two close and related nations through commerce, tourism and the reconnection of families will only feed the desire for change. + +There is another motive for Mr Obama’s opening to Cuba. The embargo has been a symbolic irritant in relations between the United States and its neighbours. Over the past 20 years or so, Latin American politicians of all stripes have come to oppose it. All the countries in the region have diplomatic and commercial ties with Cuba. The embargo has been taken as a symbol of American imperialism. Even many Latin American conservatives resent it. + +In recent years the United States and Latin America have in some ways drifted apart. Washington has other preoccupations, from the Middle East to Asia. Latin American countries profited from China’s appetite for their minerals, fuels and foodstuffs. The political cycle brought to power a crop of left-wing, anti-American leaders who saw in China an attractive alternative to the rigours of the IMF and the sometimes hypocritical lectures on drugs and human rights from Washington. + +This is bad for America. Although no region commands less attention in the foreign policy of the United States than Latin America, no region is more important to the daily lives of Americans. The two halves of the Americas are linked by trade, investment, tourism, family and remittances. Latin America takes a quarter of American exports, a similar proportion to Asia. Mexico, along with Chile and Peru, is a member of the Trans-Pacific Partnership, Mr Obama’s attempt to set the rules for trade and investment in the 21st century. + +The opening to Cuba can help heal the rift. It comes as the Latin American left is in retreat, because of the commodity bust and its own mistakes. Mauricio Macri, Argentina’s new president whom Mr Obama will visit after Havana, represents a pragmatic centre-right, well disposed to America. + +In his second term Mr Obama has become enthusiastic about the gains from closer ties with Latin America. The administration has launched an effort to reduce drug-related violence in Central America. It has helped Colombia’s government in long-running peace talks with the FARC guerrillas, which take place in Havana. Though a final agreement will not be reached before the March 23rd deadline set by both sides, there may be a symbolic handshake between them while Mr Obama is there. As with Cuba, immigration reform, albeit thwarted, and the downplaying of the failed war on drugs assuage long-standing Latin American grievances. + +Don’t stop thinking about tomorrow + +There is a risk that Mr Obama’s successor will take a different path. The obvious threat comes from Donald Trump, the Republican front-runner, whose proposal to build a wall along the border, and demand that Mexico pay for it, is an insult to one of America’s most important trade and political partners. The bombastic billionaire’s nativism has influenced other Republican contenders to harden their already uncompromising policies on immigration. The Democrats are less xenophobic than Mr Trump but are tempted by his protectionism. + +Mr Obama’s diplomacy leaves a choice for the next president: turn your back on Latin America and feed its resentments and failings, or help it become America’s front yard, a region of increasingly prosperous democracies linked by economic and political ties. The visit to Havana is a welcome step down this path. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695001-united-states-and-latin-america-can-profitably-draw-closer-only-if-next-president/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +America’s primaries + +What now? + +The Republican Party has run out of good options + +Mar 19th 2016 | From the print edition + + + +THE primaries that took place on March 15th were meant to bring clarity to the race for the White House. Although they did not disappoint, neither did they reassure (see article). For the Republican Party, this is the moment when a driver realises that a crash is coming and it is too late to brake. Their opponents have, barring disaster, picked Hillary Clinton to be the Democratic nominee and she is now free to concentrate on the general election. Donald Trump, meanwhile, is likely to scrap and bluster his way to the nomination before the convention, or to go into it with a commanding lead. + +For the party of Lincoln this is a disaster. Mr Trump is disliked so intensely by so many Americans that the damage to the party wrought by his nomination could go far beyond failing to win the White House, to hurting Republicans’ chances in House and Senate races. That is why the Republican establishment (or what is left of it) is frenziedly searching for ways, from a brokered convention to supporting a third-party conservative, to stop the man who has mesmerised their party. Unfortunately, there are no good options. + +All steamed up + +If Mr Trump accumulates the 1,237 delegates that he needs to command an absolute majority in the convention, he will have won fair and square. There will be much to mourn, but little responsible conservatives can do. + +The complications begin if the Republicans find themselves in a contested convention. On paper, the rules are simple: on the first ballot, almost all delegates are supposed to observe the preference of the primaries or caucuses in their state. If that round is inconclusive, they can then vote as they choose. + +In practice this is a recipe for a savage battle. Aware that his lead could go up in a puff of smoke as delegates desert him in a second round of voting, Mr Trump this week warned of riots if he is deprived of the nomination. Halfway between a prediction and a threat, Mr Trump’s words are one more reason he does not deserve the presidency. + +But he is right that the taint of unfairness could poison the nomination. In a contested convention the delegates’ individual actions are central: they not only select the nominee, but they also vote freely on changes to the rules—which they can skew to favour their personal choice. So who picks the delegates? Rules differ from state to state, but the answer is, largely, the very establishment that electors have rejected. As if that weren’t complicated enough, the parties took steps in the 1960s to bind the conventions more closely to the results of the votes in primaries. Were the party to anoint anyone other than Mr Trump or the second-placed Ted Cruz, a divisive ideologue who is detested by his colleagues in the Senate, it would cause outrage. And rightly so. + +The hard truth for the Republican Party (and thus, in a two-party system, for America) is that the lack of good options reflects a deep internal schism. The coalition between business, evangelicals, defence hawks and blue-collar voters has broken apart. The anger Mr Trump taps into is not unique to America: from France to Germany to America, between a fifth and a quarter of the electorate are tempted by populist parties. But in Europe that energy is channelled into seats in parliament and possible coalition governments. In America, the pipework narrows to a party’s nominee and then the presidency. + +That raises the stakes and makes a resolution harder. The Republican orthodoxy has no answer to the anger of Mr Trump’s supporters. The challenge goes deeper than one man. Republicans have a long journey ahead to work out what sort of party they want. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695038-republican-party-has-run-out-good-options-what-now/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Britain’s budget + +The fiddler’s charter + +George Osborne presents a sensibly small-bore budget to a nervy nation + +Mar 19th 2016 | From the print edition + + + +THIS ought to have been the speech of his life: the first full budget of Britain’s first majority-Conservative government in nearly 20 years, without even the threat of a credible Labour opposition to hold him back. Previous chancellors of the exchequer have used such moments to redraw the fiscal contours of the country in bold new colours. Yet when George Osborne rose to set out his vision on March 16th, some of its contents seemed rather weedy: lower tolls on a bridge to Wales, an air-ambulance for Northern Ireland, repairs to the A66 trunk road from Workington to Scotch Corner. + +Britain’s referendum in June on its EU membership—on which Mr Osborne’s own leadership prospects also hang—has put more ambitious reforms on hold, as the government does its best to win over waverers and shun controversy (see here and here). This was an intensely political budget of fixes and fiddles, with more tweaks than any budget in the modern era (see chart). For all that, it wasn’t too bad: Mr Osborne’s proposals, though designed primarily to woo Eurosceptic Tories and annex political ground abandoned by leftward-marching Labour, were for the most part prudent, if puny. + +Big multinationals, already on board with the EU Remain campaign, will pay more tax, following the closure of various loopholes and a cap on how much debt-interest they can write off against their tax bills. Small firms, many of which lean towards the Leave side, will benefit from a measure that will lift many out of paying business rates and reduce the bill for others. The self-employed will pay lower national-insurance contributions. Easing the tax burden on small firms while reducing avoidance mixes economic logic with political cunning. + +So does the continuation of Mr Osborne’s “devolution revolution”. Manchester, the most go-ahead of England’s regional cities, was already to get control of its health service next month; it will now run more of its criminal-justice system, too. New elected mayors were announced around England. A Bradford headmaster will lead a review of northern schools, to repeat the improvement seen in London. Manchester and Leeds will get a speedy new rail link. The English regions lean towards leaving the EU, so devolving power to them may win back votes—and satisfy one of Mr Osborne’s enduring aims. + +The young, another neglected constituency, also received attention in what Mr Osborne repeatedly described as “a budget for the next generation”. It failed that test: Britain’s intergenerational inequality will be significantly narrowed only by a shake-up of the housing market and welfare system, sensitive targets beyond the scope of this tiptoeing budget. New savings accounts with state contributions to supplement young people’s retirement funds will complicate an already mind-boggling system (the accounts have three age requirements and variable tax treatments). But a giveaway to the under-40s was welcome from a party that has hitherto ruthlessly protected pensioners’ privileges while ignoring the young. + +Hey, small spender + +Mr Osborne’s move towards the centre went only so far. Cuts to disability benefits will raise almost enough money to pay for an increase in the personal tax-allowance, from which the middle class will benefit more than the poor. Richer households will gain the most from the subsidised savings accounts for the young, and from an increase in the already-generous annual tax-free savings limit. This budget was not progressive. + +Nonetheless, Mr Osborne’s political instincts are leading him in a sensible economic direction. The budget was overcomplex (a mania for hypothecation means that school sports will be funded by a sugar levy), but its beneficiaries—small businesses, the young and the neglected Britons outside London—were deserving. Next year, supposing the EU referendum is safely won, Mr Osborne should take aim in the same direction, and with heavier fire. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695037-george-osborne-presents-sensibly-small-bore-budget-nervy-nation-fiddlers-charter/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Pandemics + +An ounce of prevention + +Crises of infectious diseases are becoming more common. The world should be better prepared + +Mar 19th 2016 | From the print edition + + + +ONE of the sobering lessons of the Ebola crisis was how ill-prepared the world was for such a deadly disease. It is terrifying to reflect on how the virus’s advance was halted in the teeming city of Lagos thanks only to the heroism of a single doctor and because the place just happened to have the expertise needed to trace all of the first victim’s contacts. Today the world is facing a worrying outbreak of Zika virus, adding to a growing list of diseases that includes SARS, MERS and bird flu. + +This is the new normal. New infectious diseases are becoming more common. With more people on the planet, more roads and flights connecting everyone, and greater contact between humans and animals, this is only to be expected. Over half of the 1,400 known human pathogens have their origins in animals such as pigs, bats, chickens and other birds. + +Pandemics and pandemonium + +When a new outbreak occurs, fear spreads even more rapidly than the virus. Politicians respond, rationally or not, with travel bans, quarantines or trade blocks. Airlines ground flights. Travellers cancel trips. Ebola has infected almost 30,000 people, killed more than 11,000 and cost more than $2 billion in lost output in the three hardest-hit countries. SARS infected 8,000 and killed 800; because it hit richer places, it cost more than $40 billion. Predicting these losses is hard, but a recent report on global health risks puts the expected economic losses from potential pandemics at around $60 billion a year. + +As the threat grows, so does the case for beefing up defences against disease. America’s National Academy of Medicine suggests that just $4.5 billion a year (equivalent to about 3% of what rich countries spend on development aid) devoted to preparing for pandemics would make the world a lot safer. The money would strengthen public-health systems, improve co-ordination in an emergency and fund neglected areas of R&D. + +Many of the investments to prepare for pandemics would bring broader benefits, too. Stronger public-health systems would help fight such diseases as tuberculosis, which reduces global GDP by $12 billion a year, and malaria, which takes an even bigger toll. But the priority should be to advance vaccines for diseases that are rare today, but which scientists know could easily become pandemics in the future: Lassa fever, say, Crimean Congo haemorrhagic fever or Marburg. + +Better sharing of data would help (see article). More important is funding and a review of who has liability if firms rush vaccines or drugs to market. The initial development and early-stage testing of vaccines for the most likely future pandemics would cost roughly $150m each. Drug firms have little incentive to invest in a vaccine that may never be used. For these firms even later-stage testing when a pandemic breaks out is tricky. The drug industry spent $1 billion on Ebola and took on liability risk, yet never made a profit. The same companies may not be so willing next time. To encourage drug firms to play their full part during an emergency, governments need to set out how they will share the burden. + +Since the financial crisis, banks have been required to hold more capital in order to lower the risk of economic contagion. The world spends about $2 trillion annually on defence. Investing in health security is a similar form of insurance, but one with better returns. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695036-crises-infectious-diseases-are-becoming-more-common-world-should-be-better-prepared/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +Brexit, concussion, Turkey, online dating, Bernie Sanders, language: Letters to the editor + + + + + +Articles Sections Next + +Brexit, concussion, Turkey, online dating, Bernie Sanders, language + +Letters to the editor + +Mar 19th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Nothing compares to EU + +Your leader suggested that “Scotland…is again agitating for a divorce” (“The real danger of Brexit”, February 27th). This is simply not the case: the nationalists are agitating, but Scotland is not. A YouGov poll in February this year showed that only 10% of Scots believe another referendum should be a priority for the next Scottish government, and that only 36% would support a referendum in the next five years. Even Brexit is not a valid reason to break up the United Kingdom. EU membership for a breakaway Scotland would be uncertain, and leaving the UK would make no economic sense. + +Recent research by Scotland in Union shows that Scotland currently exports between three and four times as much to the rest of the UK as it does to elsewhere in the EU. In the event of Brexit, the risk of trade barriers between Scotland and the rest of the UK and the potential for reduced freedom of movement across the border, would support Scotland remaining within the UK. + +ALASTAIR CAMERON + +Director + +Scotland in Union + +Glasgow + +Those in the “Out” camp should have no illusions that Britain will be better off on its own. Despite their noise, they have failed to understand the possibility of a vote to leave in England but a vote to stay in Scotland. If, as seems almost certain, the SNP continues to dominate the Scottish government after the parliamentary elections in Scotland in May, many of those who voted against independence in 2014 will vote in favour of it should another independence referendum take place. Scotland will then seek an independent future within the EU. + +STEPHEN SMITH + +Hawick, Scotland + +I remain baffled that the political classes are not able to grasp that the overriding reason for disillusion among European citizens, evidenced inter alia by the rise of separatist movements in many countries—not just Britain—is its huge democratic deficit. For example, presidents of the European Union are not elected: they are appointed after political horse-trading. Imagine what would happen if the president of the United States were to be appointed without the American people having a say. David Cameron may have won a few benefits for the people of Britain but he missed the opportunity to start a process which would have given an effective democratic voice to the people of Europe. + +TOM MOSS + +Camberley, Surrey + + + +As an undecided British voterI was interested to read your case for remaining in the EU (“The Brexit delusion”, February 27th). Did I understand correctly? However imperfect the current arrangement, if Britons voted to leave then those in charge of the EU would contrive to ensure that our lives on the outside would be more miserable than on the inside. Is this really supposed to win us over? Does the EU exist to serve the welfare of Europeans or just to perpetuate its own existence? I fear you may have inadvertently highlighted the strongest reason for getting out. + +TIMO HANNAY + +London + + + + + +Knock knock + +Your article on concussions in sport which seems tacitly to support the proposed ban on tackling in rugby for children, feels very out of line with your newspaper’s general ethos (“Schools and hard knocks”, March 5th). The Economist is generally wary of state intervention and is very quick to point out the law of unintended consequences. + +I learned how to tackle safely at the age of eight. I am still playing full contact rugby union 30 years later. I attribute my longevity in part to the excellent coaching in my youth. Do you really expect that the generation of children who might be subjected to this ban on tackling will simply “figure out” how to tackle and be tackled (by larger, meaner chaps) when they turn 18 and graduate to the full contact game? Surely this is an unintended consequence which is worth pointing out. + +JONATHAN GOODE + +Director of Rugby + +Bay Street Rugby Football Club + +Toronto, Ontario + + + + + +Turkish delight + +* As the founder of the European Union affairs ministry that Charlemagne wrote about I couldn’t resist the urge to respond (February 20th). President Erdogan considered Turkey’s ambitions in the EU important and created the ministry to focus on the necessary reforms while trying to reduce the number of cabinet positions. + + + +It is not Turkey’s fault that some in the country claim that the “EU’s name means betrayal”. Our European allies should understand that Turkey’s citizens will not allow their country to act as a bumper between the EU and the Middle East. Turkey is a democracy not a sultanate or kingdom and public opinion does matter. It is Turkish democracy and citizens of our country that have elected and re-elected Mr Erdogan and the Justice and Development Party (AKP). In comparison with some of the new members of the EU, Turkey is much more prepared to join the club. + + + +Turkey is (and always has been) committed to increasing the living standards of its citizens by implementing the necessary EU reforms—even if some EU leaders choose to ignore this. Turkey may not be perfect but it is much better than when the AKP first came into power. + + + +EGEMEN BAGIS + +Former Minister of EU Affairs & Chief Negotiator of Turkey + +Istanbul, Turkey + + + + + +Where is the love + +Free exchange discussed in depth the economics behind digital dating (February 13th) but did not mention any of the scientific studies on this topic. Online dating has shifted the ground for the entire romantic process, from selecting a partner to asking someone out. More than 10m Americans are estimated to date digitally, and as an industry in 2013 it reached $2 billion in revenue with over 2,500 dating sites in the United States. + +Many seeking dates online are doomed from the start due to poorly chosen screen names, badly worded profiles and messages, all scientifically shown to be ineffective in attraction and persuasion. Using a little science they can settle on a screen name of proven attractiveness, add a slight head tilt to the main profile picture, balance the profile text to a 70:30 magic ratio of who one is to what one is looking for, all with humour and truth, and then see it all swiftly move from online chatting to meeting in person. + +SAMEER CHAUDHRY + +Assistant clinical professor of medicine + +University of Texas + + + +KHALID KHAN + +Professor + +University of London + + + + + +* I was surprised the app Hinge was not mentioned in your article on online dating. As someone who has tried them all, Hinge is by far the best at selecting because it matches through friends of friends on Facebook. This ensures common interests and built-in background checks through shared acquaintances. It is also the only app where I’ve met a handful of suitors who work for your magazine. + + + +HOLLY DUNLAP + +London + + + + + +Political indignation + +* In “Slow Bern” (February 20th) you describe Bernie Sanders as “rickety”, have him speaking in a “croaky New York whine” while giving a “crotchety” speech to students at Morehouse College. Those of us in Vermont who have known Mr Sanders since the early 1980’s might describe his as energetic (he keeps up with those half his age during the rigors of a national campaign), bereft of the soothing accents of new presenters, and principled and trustworthy. His time as mayor of Burlington saw that city revitalised, its waterfront opened to the citizens, and its downtown pedestrian mall become a model for other cities. + + + +Maybe not Noble prize sorts of actions but part of his consistent message: that government should work for people other than those in the top tier of wealth and income. + + + +STUART FRIEDMAN + +Montpelier, Vermont + + + + + +Le ou la? + +I thoroughly enjoyed your recent Johnson column about the demise of the circumflex (February 27th). It amazes me that a well-educated French-speaker can immediately tell from a few lines of an e-mail (or a tweet) whether the sender is an alumnus of Grande École or a col bleu. I understand why the Gallic literati would want to cling to this surreptitious grammatical secret handshake. (As you have previously noted, to become an elected official in France is almost unimaginable unless you are a published author, capable of showing mastery of the written word.) + +For someone for whom French is not his mother tongue, I would humbly suggest to the French Academy that while dropping the superfluous “i” in oignon and scrapping the always-elusive-to-find-on-the-keyboard circumflex, are a good start, they should instead start with the lower-hanging fruit of irrational genders of nouns. While I can be persuaded of the logic that France is inherently feminine and deserves the definitive article “la”, and Canada is clearly a country brimming with Mounties and masculinity, hence “le” Canada, in what world of undue complexity would the breast and the vagina, the sine qua non of femininity, both be nom masculin? + +JORDAN HARPUR + +Montreal, Canada + + + + + +Innuendo bingo + +Now that I have at last read the word “fart” in your newspaper, (“Letters”, March 5th) I feel at liberty to ask our cousins in America, what exactly are the connotations, for them, of the word “trump”? + +DAVID ALLEN + +Boston Spa, West Yorkshire + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21694978-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Russia’s wars: A strategy of spectacle + + + + + +Articles Sections Next + +Russia’s wars + +A strategy of spectacle + +His willingness and ability to act abroad gives Vladimir Putin a big boost at home + +Mar 19th 2016 | MOSCOW | From the print edition + + + +DMITRY KISELEV, anchor of Vesti Nedeli, a weekly television show, and Russia’s chief propagandist, has had much to say about victory in recent weeks. The Syrian ceasefire that began on February 27th, he told his viewers, was “definitely a Russian victory”, made possible by Russia and America, two great powers, taking joint responsibility for the world’s biggest crisis. The Americans had been convinced “to work with us and forget about their exceptionalism” both by Russia’s diplomacy and by its display of military might: the precision of its bombs, the efficiency of its pilots and the range of its missiles—“which, by the way, can carry nuclear explosives.” + +His words were music to the ears of Larisa Kirillova, a pensioner from Kursk. Yes, her pension is no longer rising while food prices are soaring; yes, her daughter has lost her job: but Russia is once again a great power. “Of course things are tough, but we are encircled by enemies and will bear this crisis,” she says resolutely. + +On March 13th, walking along the flightline at Khmeimim, the base in Latakia from which the Russian air force has been launching its Syrian operations, Mr Kiselev rejoiced in “the victory of good over evil” and the mix of Russian firepower and acumen that had brought it about. “Russian planes are beautiful and splendid...Our strikes are more precise and efficient than [America’s]. We are making deals with the moderate opposition faster and deliver humanitarian aid more quickly. While the Americans are only coming to, we are already making friends, feeding and [medically] treating them.” The only thing that could have made the message plainer would have been a banner in the background saying “Mission Accomplished”. + +The next day, as peace talks were set to get under way in Geneva (see article), Vladimir Putin went on television to announce the withdrawal of Russian troops from Syria: “The task set for the Ministry of Defence and the military forces has been accomplished.” Bashar al-Assad has been bolstered (though not to the extent that he might have wished), America has been exposed as ineffective and dithering, troublesome Turkey has been sidelined. But though those are all welcome achievements for Mr Putin, there is another overarching one. + +When Russia started its bombing campaign in September, Barack Obama warned that Syria was “not some superpower chessboard contest, and anybody who frames it in that way isn’t paying very close attention to what’s been happening on the chessboard.” But if Mr Obama did not see it that way, Mr Putin did; and though what would come about on the chessboard mattered to him, the simple fact of playing mattered more. + +The purpose of Russia’s action in Syria was not just to shore up the regime of Mr Assad, nor to resolve the largest humanitarian crisis of the century so far. Indeed, to the extent that that crisis is a problem for the European Union (EU), Russia is all for it. Mr Putin wanted to force the West to recognise that, for all that it may deplore Russia’s actions in Ukraine and seek to isolate it with sanctions, Russia is a global power—the player on the other side of the board. “The process of asserting itself as a great power is more important than the result it achieves,” says Maria Lipman, the editor of Counterpoint, a journal. + +Mr Obama believes that Mr Putin’s adventures in Ukraine and Syria betray a fundamental misunderstanding of how power works in foreign policy. “Real power means you can get what you want without having to exert violence,” Jeffrey Goldberg recently quoted him as saying in the Atlantic magazine. But for foreign policy to bolster Mr Putin’s domestic agenda by satisfying people like Ms Kirillova, exerting violence is crucial. It is not just a means for getting what Mr Putin wants, but a goal in itself. Just so long as it is seen on a screen. + +Yadda Yalta yadda + + + +Mr Putin’s first two presidential terms, which ran from 2000 to 2008, were sold under the banner of political stabilisation and economic growth. The third, begun in 2012, has brought neither of these things (see chart 1). Russia is not becoming any more stable and it is getting distinctly worse off. The economy contracted by 4% last year. Disposable incomes have been falling since 2013. Thus the need for this current term to be reconfigured as a wartime presidency, its successes presented with polish by men and women like Mr Kisilev. + +The underpinning of this policy requires the world to be read in a number of seemingly contradictory ways. America must be seen as both a model for modernisation and a source of evil to be resisted. Russia must be seen as both unconstrained and beleaguered—a duality that harks back to the years of Stalinism, which saw the Soviet Union both as a beacon leading the world into an inevitable communist future and as a fortress besieged by enemies and shot through with spies. + +The Soviet Communist Party once ruled that no international issue could be resolved without Soviet participation or against its will. Mr Putin lacks the firepower or economic resources of the Soviet era, but lays great stock in the geostrategic position it aspired to, and which it surrendered with its collapse. He wants to return to the times of the Yalta and Potsdam agreements when America, the Soviet Union and Britain divided Europe into Soviet and Western spheres of influence. + +And the Russian people want that, too. One of the greatest hopes the public had for Mr Putin when he first became president in 2000 was that he would restore Russia to the position the Soviet Union had once held. According to polls carried out at the time, people cared about this considerably more than they cared about the recovery of savings lost in the early 1990s, social justice or the fight against corruption. Only the rule of law and stopping the war in Chechnya came close. + +It is not, after all, just America which believes itself a special nation. Soviet citizens were assured that they had a special place in the world and its history. But by 1991 half the Russian population felt that their country had reached a dead end. Journalists spoke slightingly of a homeland that had suffered one of the deepest traumas in its troubled history. The almost masochistic pleasure many took in national self-deprecation was the obverse of earlier and future exceptionalism. + +Small wonder that by 2000 many craved a restoration, and that they remain grateful to Mr Putin for providing it (see chart 2). In 1996 36% of Russians were proud of their country’s political influence in the world; at the end of last year the figure was 68%. Pride in the military surged from 40% to 85% over the same period. + + + +Lev Gudkov of Levada Centre, a pollster, says the growth in pride and self-worth is inseparable from anti-Americanism: “Russia’s collective identity is a negative one: people are consolidated only in the face of a perceived threat from the outside enemy.” Unwilling and unable to influence Russian domestic politics, people are easily induced to focus their anger on America and the West. In doing so, Mr Gudkov argues, they project on to America the qualities of their own country’s ruling class: cynicism, disrespect for human rights, greed and corruption. + +This attitude towards the West allows Russians to absolve themselves of responsibility for any wrongdoing and assume the role of a victim. Some 80% of Russians, while saying that they feel no personal animosity towards the West, blame its hostility for the confrontations that pit it against their country. The Kremlin portrays the annexation of Crimea and the bombing of Syria as defensive; according to Russian propaganda it was America that staged the coup in Ukraine in order to claw it away from Russia. The best way to stop the advances of the EU and NATO towards Russian borders is to try to undermine and rupture both alliances. + +You furnish the pictures... + +It was in the aftermath of the economic crisis of 2008-09 that this anti-Americanism became the main staple of the regime. The popularity of Mr Putin fell in the wake of the crisis—and though GDP growth soon returned, his previously sky-high ratings did not. In late 2011 and early 2012 tens of thousands of middle-class citizens took to the streets demanding a modern, European-style state. + +The annexation of Crimea in early 2014 turned things around. It distracted people’s attention from their daily lives, in which the state was a menace, to a historic narrative where the state is a source of Russia’s greatness. Television news ratings, which had been falling for almost a decade, perked up; Mr Putin’s popularity soared to new heights. “His mandate today is far bigger than the job of the president; he is the embodiment of Russian statehood,” says Ms Lipman. + +It is thanks to this role as the avatar of a resurgent nation that Mr Putin is staying popular during one of the worst economic crises in modern Russian history. As recently as the first air strikes in Syria, many believed that the current recession would be short-lived and bearable, like its predecessor. Not so. Though recession hit only in the third quarter of 2014, the economy had begun to slow at the end of 2012, when oil prices were still high and Crimea was still part of Ukraine. Natalia Zubarevich, an expert on Russian regions, argues that bad institutions and poor governance have brought about a slow, grinding downturn that risks turning into a long-term degradation. The model of economic growth fuelled by the redistribution of growing oil rents has run its course. + +The latest oil-price shock, coupled with Western sanctions which have cut Russia off from Western capital markets, made matters worse. Foreign direct investment fell by a staggering 92% last year. “A country in which investment has fallen for three years in a row is a country that is squeezing its future,” says Ms Zubarevich. “There is a feeling, among the elite, that while the train of history runs ahead, Russia is left behind,” says Ekaterina Schulmann, a political scientist. + +The brunt of the crisis of 2008-09 was borne by business; the public was sheltered by spending increases. This time the population has suffered. Large firms are under strict instructions not to lay people off, but they have cut hours and salaries. The high share of imports in Russian consumption means that the devaluation of the rouble hurts everybody. In dollar terms the average monthly salary in the year to January 2015 fell from $850 to $450. + +Yet this does not mean that Russians are about to take to the streets. The urban middle class has not been moved to public protest in the style of 2011-12. “When everything is being squeezed, a Soviet instinct kicks in: people survive in small groups, bonding with friends and relatives,” says Ms Zubarevich. The fact that it is relatively easy for the successful to leave the country provides the system with a safety valve. + +There have been some sector-specific protests by lorry drivers and doctors. But so far the protesters are appealing to Mr Putin more than they are attacking him. Recent polls show that most Russians are happy to give up Western goods and travel to America and Europe for the sake of Russia’s standing in the world. But they are not prepared to lose their jobs, or to see their salaries and pensions frozen. And that is the way the economy is heading. + +The Kremlin is making contingency plans. The riot police have been exempted from pay cuts and last December Mr Putin signed a law allowing the FSB, the state security agency, to open fire on crowds. Yet, for all his authoritarianism, Mr Putin is not a bloodthirsty dictator, but a cautious former KGB officer. He prefers mass manipulation to brutal repression. + +...I’ll furnish the war + +The country’s state television channels have been his favoured tool to that end. As part of the process the president has made himself, in the words of Fiona Hill of the Brookings Institution, a think-tank, a “TV personality”. Mr Putin has dressed up (or stripped down) to compete in judo matches, fly a microlight with migrating storks and recover sunken treasure on prime time. War leader is a weightier role—but not one of an entirely different sort. + + + +Kirill Rogov, an independent political analyst, argues that support for Mr Putin’s regime depends on television’s ability to draw the public away from their everyday experiences and into its news agenda. When people switch off the news, look around them and see the economy in a bad way, by and large Mr Putin’s ratings fall, too. The annexation of Crimea and the war in Ukraine saw the news and the president bounce back again (see chart 3). People who had previously distanced themselves from politics were mesmerised by dramatic imagery, martial music, well staged and edited action. + +Russian television does not simply cover wars that are driven by foreign policy. It takes foreign adventures as raw material from which to generate events that stoke domestic passions and reinforce the government narrative. For example, fake stories such as the one about “fascists” crucifying a Russian boy in eastern Ukraine helped to mobilise the population there against the Ukrainian government in 2014. A recent bogus story about a Russian girl being raped by migrants in Germany led to anti-migrant rallies by ethnic Russians in Berlin; it became a contentious issue between Russia and Germany, generating yet more footage for Russian television. + +Domestic news is given short shrift, since people’s personal experiences would allow them to see through official lies. What there is is dominated by orderly meetings of Kremlin officials. Death and destruction for the most part only occur abroad. The 31 miners and five rescue workers who perished in Vorkuta in February were barely covered on the nightly Russian news; the macabre story of an Uzbek nanny brandishing the severed head of a four-year-old girl outside a Moscow metro station received almost no mention on the state channels. Had the coal miners died in Ukraine or the girl been decapitated in Germany, Russian television would have spent days bombarding the audience with special reports, talk shows and investigations. + + + +For now they have the spectacle of warriors returning from Syria; jubilant crowds waving flags; women in traditional dress offering pilots bread and salt. This pageantry does not necessarily mean that Russia has disengaged completely: some Russian forces will stay at their base in Latakia and may continue to offer support to Mr Assad. But it does mean that there will now be slots to fill on the nightly news, and that makes Russia’s neighbours nervous. Soon after reporting the exit from Syria, Russia’s main news channels aired footage of renewed fighting in the Donbas, leading some in Ukraine to wonder whether the withdrawal may prove a redeployment. + +In truth, though, any of the former Soviet republics with a sizeable ethnic Russian population could be at risk. As a secret-service operative, Mr Putin excels in concealing his intentions. This tactical nous, Ms Hill argues, has allowed him to stay one step ahead of his opponents at home and abroad. From the war against Georgia in August 2008—the original template for Russia’s strategy of spectacle—to the operation in Syria, Russia’s adventures have repeatedly caught the West by surprise. + +In February Mr Obama announced plans to quadruple military spending in central and eastern Europe—including the Baltic states—to $3.4 billion. That makes deterrent sense. But Mr Putin’s ultimate goal is not to have a full-scale war with NATO. The sort of conflicts he needs to stay in power do not require him to fight over territory; just to keep the ratings up and feed the public’s appetite for a story in which they deservingly come out on top. + +Such conflicts, though, do have a limitation: Mr Putin cannot afford to sustain big losses. The Syrian footage focused on aircraft soaring high above any risks; when a few Russian soldiers were killed in Ukraine, the Kremlin did everything it could to cover it up. It is these concerns, rather than fear of further sanctions, that have kept Russia from moving deeper into Ukraine or risking a serious confrontation with Turkey. They have doubtless been a factor in not hanging around in Syria, either. However proud and grateful television may make the Russian people feel to Mr Putin, they are not prepared to sacrifice the lives of their children and loved ones for him. As Ms Kirillova from Kursk says, “We can tolerate anything, as long as there is no war.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21694997-his-willingness-and-ability-act-abroad-gives-vladimir-putin-big-boost-home-strategy/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Super Tuesday III: Beware the ides of March + +They could have stopped Trump: How non-voters blew it + +The Supreme Court: Going nowhere fast + +The campaigns: Heard on the trail + +Indiana’s refugee order: Exodus, continued + +Refugees in the north-east: The green light + +Exit Marco Rubio: Marcomento mori + +Lexington: The view from the rustbelt + + + + + +Articles Sections Next + +Super Tuesday III + +Beware the ides of March + +Hillary Clinton and Donald Trump tear up Florida and the Midwest + +Mar 19th 2016 | LEAVITTSBURG, OHIO | From the print edition + + + +THE ides of March—the 15th of the month, on which five big states voted at around the midpoint of the primary calendar —was bound to be a day of reckoning. In Florida, Ohio, Illinois, Missouri and North Carolina, Hillary Clinton and Donald Trump faced perhaps their last serious impediments to securing, respectively, the Democratic and Republican presidential tickets. Yet they breezed through. Mrs Clinton won all five states and, absent calamity, will be the first female presidential candidate. Mr Trump won four, losing only in Ohio to its popular governor, John Kasich. Though the rabble-rousing tycoon still has work to do; he looks almost unstoppable. The reckoning for his party, and perhaps America, will be dreadful. + +As a clue to the identity of America’s next president, Mrs Clinton’s achievement was more momentous. It was also more crushing and, unlike Mr Trump’s, beyond the candidate’s own expectations. Having lost to Bernie Sanders in Michigan, where the snowy-haired senator seemed to impress blue-collar workers with his hostility to free trade, Mrs Clinton’s campaign was braced for more defeats across the midwestern rustbelt: most fearfully, in Ohio. + +An important swing state, where Mr Sanders had surged into contention from nowhere, Ohio looked primed to aggravate deep doubts about Mrs Clinton’s candidacy. A veteran operator, mistrusted by most voters, she is an awkward fit for an electorate seething with anti-establishment rage. Had Mr Trump, who is as protectionist as Mr Sanders, won the Buckeye State, the doubts about Mrs Clinton could have turned to panic about her general-election prospects. And among the grim former steel-, rubber- and car-making towns of northern Ohio, to be sure, there was plenty of backing for those worries on polling day. “Thirty years ago, General Motors made every car in America, today they’re all made in Mexico,” said David Duffy, an unemployed stone mason in the decrepit town of Leavittsburg, with its peeling clapboard houses and broken roads, to explain why he had just voted for Mr Sanders. Exit polls suggested the economy was the biggest concern for Ohio’s Democrats—yet Mrs Clinton won the state by 14 percentage points. + +Most Democratic voters in Ohio also said that international trade had cost America jobs. Yet whereas Mr Sanders grabbed most of those who held that view in Michigan, more than half in Ohio plumped for Mrs Clinton. This suggested her loss in Michigan may have been less to do with trade than was thought: her campaign effort was plainly too lax in that state. It also suggested, by contrast, that her robust response to the defeat in Michigan, mingling low blows against Mr Sanders with a big push for blue-collar votes, was effective. In Leavittsburg former workers at a nearby General Motors factory cited, as a reason for having picked her, Mrs Clinton’s largely erroneous claim that Mr Sanders had opposed a bailout of the car industry. Yet her success in Ohio, and across the primaries, chiefly reflected her consistent lead among her party’s most reliable supporters: registered Democrats and African-Americans, both of whom she won by massive margins. + +Having bagged 371 delegates on March 15th, Mrs Clinton is now halfway to securing the 2,382 delegates she would need for the nomination. Mr Sanders lags more than 300 behind—nearly three times the biggest margin Mrs Clinton trailed Barack Obama by in the 2008 Democratic contest. And that understates her advantage: she has so far won endorsements from 467 of the 712 “superdelegates” whose votes will count at the party’s convention in July. Given that the Democrats, unlike, from now onwards, the Republicans, allocate all delegates as a proportion of the vote-share, Mr Sanders would need a barely imaginable run of thumping victories to catch up. + +In her victory speech, delivered in Florida—which she won with huge support from non-whites—Mrs Clinton barely mentioned her Democratic rival. Instead she turned her scopes on Mr Trump. “Our commander-in-chief has to be able to defend our country, not embarrass it,” she thundered to a crowd of activists whose euphoria betrayed their former nerves. “When we have a candidate for president call for rounding up 12m immigrants, banning all Muslims from entering the United States, when he embraces torture, that doesn’t make him strong, it makes him wrong.” It is early days. But for the many who wonder what could fire up Democratic voters with an enthusiasm for Mrs Clinton which many lack, this was an answer. Ladbrokes, a bookmaker, has cut its odds on her winning a third consecutive term for her party; it gives her a 69% chance. + +Swatting rivals aside + +Mr Trump has similar odds of winning the Republican nomination. That reflects his dominance of the Republican field, but also his failure to land, most obviously in Ohio, the knockout punch that Mrs Clinton has. Mr Trump now has 673 delegates—263 more than his closest rival, Ted Cruz. To win an overall majority, of 1,237, ahead of the Republican convention in July he would need to win 60% of the remaining delegates, which is a big ask; he has so far won 45%. + +Yet he has two things in his favour. The first is his ability to win votes across the Republican coalition. Mr Kasich’s main supporters are moderate Republicans—yet Mr Trump won that group in every state outside Ohio. Mr Cruz’s hope lies with evangelical Christians, yet 53% have a positive view of Mr Trump, a thrice-married, self-declared debaucher and former casino owner. His second reason for cheer is a run of big winner-take-all contests, including in Arizona on March 22nd and Pennsylvania on April 26th, where he is ahead in the polls. These could boost his delegate tally precipitously. + +In none of those contests, moreover, will the tycoon face the novel coincidence of anti-Trump forces that he has just swatted aside. In Florida his main opponent, Marco Rubio, was a local senator whose shining talents and touching back-story had made him a beacon of optimistic conservatism (see article). Mr Rubio was endorsed by 14 current and former governors and 27 senators—the sort of friends who attract big money. Before its primary, Florida’s airwaves were assailed by anti-Trump ads—the state received 88% of a battery of such ads aired there and in Ohio and North Carolina. One, put up on behalf of the billionaire industrialists Charles and David Koch, featured interviews with students who claim to have been swindled by Mr Trump’s real-estate college, Trump University, which is the subject of a fraud investigation. Another featured female actors reciting some of the names Mr Trump has called women: “dog”, “fat pig”, “bimbo”. + +The tycoon’s opponents also took hope from a belated wave of anti-Trump outrage in America’s media, after a spike in violence at his rallies. A reporter for Breitbart, a news website, filed charges against Mr Trump’s campaign manager, Corey Lewandowski, whom she accused of manhandling her in Florida; a 78-year-old white Trump fan was arrested for punching a black protester at a rally in North Carolina. Mr Trump said he might pay the thug’s legal bills, underlining his role in inciting the violence. At a recent rally in Las Vegas he had yelled that he wanted to punch a protester in the face. When, on March 11th, Trump fans, including pensioners giving Nazi salutes, clashed with anti-Trump protesters at the scene of an abruptly cancelled rally in Chicago, some compared it to America’s last major spasm of political clashes, in Chicago in 1968. + +That was absurd. Those serious clashes, at a Democratic convention in the city, were against the backdrop of anti-war protests and rioting after the assassination of Martin Luther King. The Trump-related kerfuffle appears, by contrast, to have been stage-managed by a clever reality-TV star with a lifelong commitment to proving there is no such thing as bad coverage: Mr Trump claimed the rally was called off by the police, who tartly replied that that was nonsense. His habit of lying has also received heightened attention: he fibs every five minutes, according to Politico. + +Even by Mr Trump’s standards, this had looked like poor preparation for the primaries. None of it mattered. Mr Rubio was blown away in Florida; an hour after the polls closed, he quit the race. Mr Trump even won a majority of Floridian women. Why on earth don’t more Americans object to his thuggery? + +The fruits of gridlock + + + +America’s primary agenda: our interactive 2016 election calendar + +Most do. Exit polls suggested that 25% of Republican voters definitely would not back him in a general election—a number that might make Ladbrokes’s odds on Mrs Clinton seem worth a flutter. For the rest, there is no easy explanation for what appears to be a straightforward moral failure; yet voters in Ohio offered a clue. Asked what they felt about the violence at Mr Trump’s rallies, some assumed the question related to Democratic protesters. “I have my concealed-carry weapon, so I’m not worried,” said Rob Meeker, a fireman in Leavittsburg. “What violence?” said Sue, an interior designer in a affluent suburb of Akron, who claimed to have voted for Mr Trump after a hard study of the issues. + +Grandstanding and gridlock in Washington; right-wing radio louts who thrive on the partisanship this foments; the shrinkage of the media of record—all these institutional failures have contributed to the gradual growth among parts of the electorate of confusion and misinformation that quickly turns to anger. That is not the only reason for Mr Trump’s success; many of his supporters have real economic fears. Yet it is perhaps the one that best explains the breadth of his appeal. + +Shattered by Mr Trump’s victories, the Republican establishment is now casting about for any last means to block him. None looks promising. Mr Cruz might conceivably have won a two-way contest against Mr Trump; Mr Kasich’s victory and subsequent commitment to fight on have robbed him of that possibility. And Mr Kasich’s own prospects are frail. They rest entirely on a hope that, in the event that Mr Trump fails to win a majority before the convention, the Republican Party’s dealmakers will conspire to give him the ticket. Many would consider such a move outrageous. It would be to pick a candidate who has so far won a single primary over one who has so far won 20. The result of such a stitch-up, predicts Mr Trump, for what that may be worth, would be a riot. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695080-hillary-clinton-and-donald-trump-tear-up-florida-and-midwest-beware-ides-march/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +They could have stopped Trump + +How non-voters blew it + +Mar 19th 2016 | From the print edition + + + +Voters who disdain Donald Trump have had the power to stop him but, as is often the way in the primaries, most have chosen to stay at home. Turnout in the Republican contest around this stage is at its highest since 1980, but still averages just 17% of eligible voters, according to Pew. Mr Trump’s margin of victory in the states where he has won is dwarfed by the potential pool of voters who sat it out. Even where a primary is closed to Republican voters, the apathetic far outstripped the enthusiastic. If more anti-Trump Republicans, and Democrats and independents in states that have open or semi-closed primaries, had turned out, they could have checked his momentum. Mr Trump would have picked up his fair share of that voter reservoir, but so far even the vast majority of Republicans have not voted for him. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695076-how-non-voters-blew-it/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Supreme Court + +Going nowhere fast + +Obama nominates Merrick Garland; Republicans vow to block him + +Mar 19th 2016 | NEW YORK | From the print edition + +It’s from McConnell: “In your dreams” + +IN A move that will test the mettle of recalcitrant Senate Republicans, on March 16th Barack Obama tapped Merrick Garland, a respected and politically moderate judge, to fill the late Antonin Scalia’s seat on the Supreme Court. Mr Obama presented Mr Garland as a “serious man and exemplary judge”: one of “America’s sharpest legal minds…who brings to his work a spirit of decency, modesty, integrity, even-handedness and excellence”. The nominee had been vetted but passed over for the highest bench by Mr Obama twice before. + +According to Tom Goldstein, an expert court-watcher, Mr Garland is a choice from central casting. He earned undergraduate and law degrees from Harvard, clerked for a renowned liberal justice, William Brennan, was made partner in an elite law firm in a blazing four years and, during a mid-1990s stint in the Justice Department, oversaw the trials of the Unabomber and the masterminds of the Oklahoma City bombing. Since 1997 he has served on the Court of Appeals for the District of Columbia, America’s second-most-influential tribunal, and has been its chief judge for three years. + +With a record that includes a decision in 2003 siding with the government against detainees at Guantánamo Bay, Mr Garland is no liberal firebrand and, in normal times, would probably be a bipartisan shoo-in for a seat on the Supreme Court. Orrin Hatch, a Republican senator, praised his qualifications two decades ago and reiterated his support when Mr Obama was hunting for nominees early in his presidency. Last week Mr Hatch called him “a fine man”, but predicted Mr Obama would make a bolder choice to energise the base of the Democratic Party. + +In his announcement, Mr Obama acknowledged that the political climate is “noisier and more volatile” than ever. If Senate Republicans refused to consider Mr Garland, he said, they would betray “our best traditions”. Yet he was clearly worried that they may do just that. “I hope they’re fair,” the president added. + +The Republicans quickly tossed cold water on those hopes. “The American people may well elect a president who decides to nominate Judge Garland for Senate consideration,” said Mitch McConnell, the majority leader, after the announcement, but in the meantime, the Senate would not budge. This was a matter of “principle”: voters “should have a say” in filling the vacancy, and the Senate should hold off until the next president takes office in 2017. + +Behind this paean to the will of the people is a concern that Mr Garland, though 63 and a centrist, would tip the balance of the Supreme Court away from the narrow conservative majority once anchored by Mr Scalia. With decisions pending on affirmative action, public unions, abortion, religious liberty and immigration, the eight remaining justices may elect to put off rulings for re-argument when their bench is once again complete. + +Will Senate Republicans hold the line? Although a CNN poll shows that 58% of Americans want Mr Obama to fill the vacancy, most of the intensity is on the blockers’ side. Confirming an Obama nominee would be seen by many conservatives as close to treason. Some Republican senators facing tough re-election races say they will meet Mr Garland privately, giving themselves cover without breaking the blockade against confirmation hearings. Other Republicans suggest that—should they lose the White House—confirming a centrist such as Mr Garland in the “lame duck” session after the general election might be less risky than waiting for a new Democratic president to make a more left-wing pick. For now, it seems unlikely that the Republicans will budge. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695085-obama-nominates-merrick-garland-republicans-vow-block-him-going-nowhere-fast/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +Mar 19th 2016 | From the print edition + + + +Vive le roi + +“You can always tell when the king is here.” + +Donald Trump’s longtime butler on his boss. The butler also revealed that Mr Trump wears a red baseball cap if he is in a bad mood, but cheers up if “Hail to the Chief” is played by a bugler as he enters his Mar-a-Lago estate. New York Times + +When hell freezes over + +“There’s no way I would team up with Donald Trump. No way. Forget it.” + +John Kasich gets fairly vehement about his political future. Fox News + +Values voter + +“If, for example, he were to go out on Fifth Avenue and shoot somebody, I would not be willing to support Donald Trump.” + +Ted Cruz sets his limits + +Working girl + +“This is not easy for me…I am not a natural politician, in case you haven’t noticed, like my husband or President Obama, so…I just have to do the best I can.” + +Hillary Clinton confronts her flaws during the latest Democratic debate + +Setting the pace + +“It equates to roughly one mis-statement every five minutes.” + +Politico fact-checked a week of Mr Trump’s speeches and statements + +Scoop + +“Did you watch the end of Downton Abbey?” + +An open mic catches what Chris Matthews of MSNBC really wants to ask Hillary Clinton + +Pigmentation-envy + +“My dad was born in Poland…Nobody has ever asked me for my birth certificate. Maybe it has something to do with the colour of my skin.” + +Bernie Sanders ponders his own birther question + +Don’t panic + +“Even if Donald Trump turns out not to be such a great president…we’re only looking at four years.” + +Ben Carson endorses Mr Trump. “The Steve Malzberg Show” + +A many-splendoured thing + +“It’s a love fest. These are love fests…and we love each other.” + +Mr Trump denies that there is violence at his rallies + +Stages of grief + +“I still, at this moment, continue to intend to support the Republican nominee. But [it’s] getting harder every day.” + +Marco Rubio feels the pain. It all got too much on March 15th + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695086-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Indiana’s refugee order + +Exodus, continued + +The governor seems to be losing his fight to keep Syrian refugees away + +Mar 19th 2016 | INDIANAPOLIS | From the print edition + + + +ON AN unseasonably warm evening in March, three giggling teenage girls wearing the hijab, and one whose dark hair is uncovered, pull out bicycles at a rental station along the Indianapolis Cultural Trail. They race off on the landscaped eight-mile pathway, which winds past the city’s arts institutions and government buildings through patches of green lawn, waterways and public art. The twilight bustle on the trail, the ride-sharing stations for electric cars scattered around downtown and the ethnic mix of people in the streets all contribute to the impression of hospitality among Hoosiers, as Indiana’s people call themselves. The courts are now being asked to determine how widely it should be extended. + +Indiana’s Republican governor, Michael Pence, has made it clear that refugees from one mostly Muslim country are not welcome in the state. On November 16th, three days after the terrorist attacks in Paris, Mr Pence suspended the resettlement of Syrian refugees “to ensure the safety and security of all Hoosiers”. As many as 30 other Republican governors (and one Democrat), including those of Alabama, Arkansas, Illinois, Michigan and Texas, subsequently made similar moves. None seemed to question whether their ban on Syrians was lawful or constitutional. + +Mr Pence was the first governor to be taken to court over his refugee order by the American Civil Liberties Union (ACLU), on behalf of Exodus, a local non-profit resettlement agency. On February 29th Tanya Walton Pratt, a federal judge, ruled that Mr Pence’s order to cut federal funds for the resettlement of Syrian refugees in his state was unconstitutional and “clearly discriminates against Syrian refugees based on their national origin”. In her 35-page ruling Ms Walton Pratt referred to the 14th Amendment, which stipulates that no state shall deny any person in its jurisdiction “the equal protection of the laws”, including civil-rights laws. + +After the initial bombast of his and the other governors’ announcements, Mr Pence had to confess that he cannot prevent Syrian refugees who have been admitted to America—after at least 18 months, and often much longer, of screening by intelligence agencies—from entering Indiana. Previously, he had withheld the portion of federal funds for the resettlement of Syrian refugees that the state controls; now, after the court ruling, he may not do so any more. If nativism were not so en vogue at the moment, the governor, who wants to be re-elected, might have left the matter there. But Mr Pence announced almost immediately after the judge’s ruling that he had instructed Indiana’s attorney-general to seek an immediate stay and appeal of the court decision. On March 8th the appeal was filed. + +Most other governors seem to have quietly dropped the matter of their ban on Syrian refugees. One exception is Texas, where Ken Paxton, the state attorney-general, has filed a lawsuit to block the federal government from resettling Syrian refugees on its territory. In early February a district judge denied Mr Paxton’s request for the second time. Mr Paxton’s office is now “evaluating” what to do next. Until the ruling on the governor’s appeal by a circuit court in Chicago, which is expected in a few months’ time, Mr Pence cannot withhold any funds from Exodus. + +Around 80% of the refugees settled in Indiana are Burmese. More than 10,000 of them live in Indianapolis, where they have revived a whole neighbourhood on the south side of the city with small shops and restaurants. The state’s Syrian refugees may be about to perform a similar service—despite the governor’s continuing efforts to stop them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21694832-most-other-governors-seem-have-quietly-dropped-matter-indianas-governor-losing/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Refugees in the north-east + +The green light + +A Syrian family arrives in New Jersey + +Mar 19th 2016 | JERSEY CITY | From the print edition + +Paradise after Homs + +“IT WAS a difficult decision to leave Syria, but [one] I had to make,” says Ahmad Abdulhamid. “At any time, a missile could drop on my house. At any time they could take away my children.” Homs, his home city, had been reduced to rubble, with thousands killed. So on March 31st 2013 he, his wife and their three boys, then all under nine, left Syria. He paid smugglers to take them to Jordan. + +There, they registered with the UN’s refugee agency. After more than two years of screenings and investigations from many agencies, including the FBI and the Departments of Homeland Security and Defence, and after thorough medical examinations, the family heard they had been cleared. They arrived in Jersey City, now with a new baby girl, the day before the fifth anniversary of the start of Syria’s civil war. + +Not all get the green light. “Syrian refugees are screened far more extensively than other[s]”, says Mahmoud Mahmoud, who runs the Jersey City office of the Church World Service. CWS is one of nine non-profits which arrange housing and support for displaced people. They also provide language classes, financial advice and help to find jobs. After 90 days, the refugees must fend for themselves. Some also get assistance from churches and charities. Rutgers Presbyterian Church, based in nearby Manhattan, furnished the Abdulhamids’ new flat and donated clothes, toys, schoolbags and halal food. + +President Barack Obama intends to accept 10,000 refugees this year, angering many governors. But other politicians are more welcoming. Bill Pascrell, a New Jersey congressman, along with 37 other lawmakers, sent a letter to Mr Obama last week urging him to accept more. The United States has taken in fewer than 3,000 refugees from Syria since 2011. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695084-syrian-family-arrives-new-jersey-green-light/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Exit Marco Rubio + +Marcomento mori + +In truth, the telegenic senator from Florida never stood a chance + +Mar 19th 2016 | MIAMI | From the print edition + + + +HE MADE a myth of himself until the end. After being whacked by Donald Trump in his home state of Florida, 46% to 27%, Marco Rubio insisted it was wonderful that the son of Cuban immigrants, with no connections or money, had been able even to run for president. But he couldn’t make second place sound like a triumph, as he had previously tried to, as if by a process of suggestion victories would magically begin to materialise. As a small crowd chanted his name, yelled “No” and took selfies, Mr Rubio bowed out. + +The post-mortem had begun even before his campaign’s demise. Its failure was attributed to his loopy malfunction in the televised debate in New Hampshire; or to his delay in attacking Mr Trump, a reticence unwisely followed by a roll in the gutter with the front-runner, when, with his puerile gibes, Mr Rubio implicated himself in the one-off spectacle of a presidential candidate bragging, on air, about his penis. Analysts mentioned his competition for donors and backing with Jeb Bush, another Floridian, and his role in a doomed, bipartisan push for immigration reform in the Senate in 2013, a pragmatic stance regarded as heretical by many conservatives. + +Yet in retrospect the notion that Mr Rubio had a serious shot at the nomination, and somehow wrecked it, looks naive. He initially pitched himself as a moderniser, able to broaden his party’s appeal through his endlessly repeated back-story, with its saccharine ode to America, his oratory and telegenic smile. His relative expertise in foreign affairs would offset his youth. Along the way that strategy morphed into a claim that he was best-placed to stop Mr Trump. Party bigwigs bought it—if endorsements were convention delegates, Mr Rubio would have long been home and dry—but voters were less impressed. Though occasionally his campaign seemed poised to ignite, as after his second-place finish in South Carolina, it never did. + + + +Mr Trump thrashed him not only in Florida but also in Nevada, where Mr Rubio spent a chunk of his childhood. His team’s assumption was that, as other candidates dropped out, the anti-Trump vote would consolidate around him. Instead his support drained away. Outlasting Mr Bush, in a face-off that once appeared pivotal to the contest, now seems a distinctly pyrrhic achievement. In the other four primaries on March 15th, Mr Rubio polled in single digits. Overall he won only in Minnesota, Puerto Rico and Washington, DC. + +He flopped for a reason bigger than any of his own missteps: the “tsunami”, as he put it, of anti-establishment fury that found its incarnation in Mr Trump, and which, despite his Tea Party credentials, Mr Rubio was unable to tame and confessed that he only half-understood. (In Miami, some of his fans were less diplomatic: Mr Trump’s supporters, one lamented, articulating the private outrage of many mainstream Republicans, had “dirt for brains”.) In defeat he congratulated himself on the positivity of his message and on his aim, as president, to “love all the American people, even the ones that don’t love you back.” In truth he had tried to straddle both the sunny uplands and the valley of despair, portraying America as a once-and-future great nation that was on the cusp of socialist disaster. It didn’t work. + +Looking exhausted, his much-travelled family by his side, he defaulted to the uplands. He said he was “still hopeful and optimistic about America”, even if that faith did not resonate in this election, before closing with a paean to God, who ordered every person’s life (and evidently didn’t want him in the White House—at least, not yet). Whether he has cause for optimism in his own political future is unclear. Devotees in Miami want him to run for Florida’s governorship in 2018—he is leaving the Senate—by when the stain of this humiliation by Mr Trump may or may not have faded. “They told us we had no chance,” Mr Rubio had gushed after his bronze medal in the Iowa caucuses. They were right. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695077-truth-telegenic-senator-florida-never-stood-chance-marcomento-mori/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +The view from the rustbelt + +Even workers protected by trade tariffs feel angry and neglected + +Mar 19th 2016 | From the print edition + + + +AMERICA feels sick at heart this year. Can conventional politics cure that malaise, or will voters turn to those peddling radical remedies, from trade wars to high border walls? That question weighs heavily in midwestern states, where factories propelled millions of post-war workers into middle-class prosperity. Though rustbelt states like Ohio, Michigan and Illinois helped Barack Obama win the White House, this year many midwestern voters seem drawn to fiery candidates who offer the sharpest contrast with the president’s cool, headmasterly style: from Donald Trump on the right to Senator Bernie Sanders on the left. + +More traditional politicians, starting with Hillary Clinton, the Democratic front-runner, are moving to placate unhappy voters by promising “fair trade”, using import rules to punish unfair competition by such rivals as China. Mrs Clinton, who lost the Michigan primary to Mr Sanders earlier this month, took Ohio on March 15th after tacking to the left on trade: at an Ohio Democratic dinner shortly before the primary she promised to oppose the Trans-Pacific Partnership (TPP), a flagship trade bill supported by Mr Obama. + +A day before the Ohio primary Lexington travelled to Findlay, a frayed-at-the-edges town of 41,000 people which is home to one of Ohio’s larger tyre plants. The smell of cooking rubber hangs over its streets. Twice under Mr Obama, anti-dumping tariffs of up to 88% have been slapped on imported Chinese tyres at the prodding of the United Steelworkers union (USW), to protect jobs at plants including the Cooper Tire & Rubber factory in Findlay. Mr Obama cited the tariffs in his state-of-the-union message in 2012, declaring: “Over a thousand Americans are working today because we stopped a surge in Chinese tyres.” + +Such tariffs are rare, making Findlay’s tyre-builders an unusually well-protected minority. Their plant offers a glimpse of what might happen if a President Trump (or Sanders) fulfils his promise to use tariffs and taxes to keep manufacturing jobs in America. Economically trade barriers are a bad and harmful idea, but what Findlay offers is a case study in the politics of trade. + +An evening shift-change saw lines of men leave the Cooper plant, lunch-boxes in hand. Most felt that tariffs on China had helped them: one called them a “game-changer” that had saved jobs and prompted extra shifts. But, strikingly, praise for the president was mostly dwarfed by anger at the state of the country. Some workers said they were Democrats but felt underwhelmed by Mr Obama. Others, Republicans, expressed suspicion verging on contempt for the president. Mr Obama is “the worst fucking piece of shit in this country, he should move to China”, spat a bearded worker in a camouflage hunting jacket who declined to give his name, turning back to add, pre-emptively: “And I’ve got black friends, so it isn’t that.” Another worker, Josh Wilkerson, a Trump supporter, said that anti-China tariffs were good, but he shared his colleague’s belief that, mostly, “Obama is for the people who don’t work.” + +Several workers accused Democrats of scorning traditional values. Jerry Eatherton said that tariffs on Chinese tyres have “helped a ton”, and voted for Mr Obama’s re-election in 2012. But this year he will support “anybody except Hillary”. Mr Eatherton is a hunter who feeds his family with venison and other game. Mrs Clinton, he avers, would like to take away the gun with which he puts “food on my table”. Several workers were for Mr Sanders (who on primary night won Hancock County, of which Findlay is the seat). A number declared Mr Trump “scary” and backed Governor John Kasich of Ohio, a Republican who won his home-state primary (Mr Kasich’s line on trade is Clintonesque in its nuances). Yet Mr Trump has won other rustbelt primaries in Illinois and Michigan, and dominates nationwide in exit polls among white voters without a college education. + +In dozens of interviews at the tyre plant, one person backed Mrs Clinton: Rod Nelson, president of the Cooper plant’s union branch, Local 207L of the United Steelworkers, and that was in the “realist” belief that she will be the Democratic nominee. At Lexington’s request, Mr Nelson gathered ten Cooper workers for a group interview. Asked to sum up Mr Obama, the men replied variously that he was a good man, a disappointment, a “great speech-giver”, a victim of Republican obstruction in Congress and a man who had failed to rein in the super-rich and their influence over politics. The president was praised for bailing out the car sector and other industries soon after taking office. He was thanked for tariffs on China, but his support for the TPP caused baffled dismay. Mr Nelson ventured that perhaps the president is using trade as “a diplomatic tool” to win allies. + +Make the foreigners pay + +Above all, tariffs on Chinese imports were described as too late to save thousands of jobs in American tyre factories. The men in the union hall want a new approach to capitalism, in which foreign trade partners must pay living wages and heed global environmental norms. Jeff McCurdy, a warehouse worker, described colleagues struggling to raise families on salaries of $14 an hour. “Their kids aren’t even getting the healthy food they need...and they wonder why people are pissed off,” he asked. The men in the USW hall distrusted Mr Trump’s America-first bluster, noting that his “Trump” branded clothing is made abroad. They accused him of wooing some of their colleagues with fear: at a recent union meeting a member stood up to say that the billionaire will “keep the Muslims out”. + +The lesson from Findlay is that there are no short-cut solutions to the anger of blue-collar workers. Findlay’s tyre-builders have had the direct attention of a president and international tariffs signed on their behalf. Still they feel—passionately—that the economy is stacked against them, and want larger changes to capitalism than mainstream politicians can deliver. What then? + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695075-even-workers-protected-trade-tariffs-feel-angry-and-neglected-view-rustbelt/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Barack Obama in Cuba: Hello, Barry + +How Latin Americans see the United States: Dugout diplomacy + +The United States and Latin America: Harmony now, discord later + +Bello: Of soldiers and citizens + + + + + +Articles Sections Next + +Barack Obama in Cuba + +Hello, Barry + +The promise and perils of a historic visit. The first of three stories on the United States and Latin America + +Mar 19th 2016 | HAVANA | From the print edition + + + +“THIS country will rock when he arrives,” predicts Leo, a taxi driver in Havana. He is not talking about Mick Jagger and the Rolling Stones, who will perform in the city on March 25th for an audience of perhaps 400,000 fans. He means Barack Obama, who four days earlier will become the first sitting United States president to visit Cuba since Calvin Coolidge in 1928. When Leo was 14 years old, in the 1980s, his teacher ordered him and his classmates to throw eggs and shout abuse outside the home of a schoolmate whose family had emigrated to the United States. “Now, thank God, the hate is over,” he says. + +Mr Obama’s trip is a symbolic culmination of a process of rapprochement that he and Raúl Castro, Cuba’s president, began in December 2014. Since then the United States has eased the half-century-old trade and travel embargo on Cuba, removed the country from its list of state sponsors of terrorism and restored diplomatic relations, cut in 1961. On March 15th America’s government eased restrictions further, allowing Americans to travel to Cuba on their own for “educational” purposes and Cubans to be paid salaries in the United States. Mr Obama argues that such interchange will do more to hasten the liberalisation of Cuba’s repressive socialist regime than continuing to isolate it. + +When he arrives, he will find modest grounds for hope. Cuba is visibly changing, in part because of economic reforms begun by Mr Castro before his accord with Mr Obama. But the changes so far have done more to enhance the lifestyles of a few than to bring freedom and opportunity for most Cubans. + +They are most palpable for the half-million Cubans who have registered as self-employed, especially those who cater to tourists. Guesthouse owners, restaurateurs and taxi drivers are profiting from a rise of close to 80% in the number of American visitors (excluding those of Cuban descent) in 2015. A further rise is sure when commercial airlines begin scheduled flights later this year. Some 300 restaurants and bars have opened in Havana over the past two years, says the owner of a paladar (owner-managed restaurant). + +A decade ago, when Raúl Castro’s brother, Fidel, was still in charge, the few Cubans with money dared not show it. That, too, has changed. Now the well-heeled like to pay for a sense of exclusivity, says the Italian owner of a bar in Havana. “Cubans just love a VIP area.” At the rooftop bar of the Fábrica de Arte Cubano in the district of Vedado, a vast hipster complex conceived by X Alfonso, a Cuban musician, gin and tonics cost $14 apiece. Young Cuban tipplers outnumber the tourists. + +For foreign investors hoping to launch something more ambitious than a bar, and for their prospective employees, conditions are less plush. The government is “updating” its socialist economic model cautiously. When the regime permits foreign firms to do business, its officials are often clueless about how to make it happen. American trade delegations seem “confused” by their meetings with the government, says one European diplomat. A group visiting the sugar monopoly found the experience so odd they thought they had gone to the wrong building. + +The regulations for doing business in Havana are “mind-boggling”, says a foreign entrepreneur. Some of these are designed to ensure that the benefits flow to the government rather than to workers. Investors in joint ventures pay salaries in convertible pesos, equivalent in value to American dollars, directly to the government. The government then pays the workers a fraction of the value in “national” pesos, and pockets the difference. + +No satisfaction + +You might think such fleecing would leave the government with cash to spare. But foreign businessmen whose firms supply it say they have trouble getting paid; two have been waiting since November. Some European and Canadian companies have long planned to sell their Cuban operations to Americans as soon as they are finally permitted to invest. “It’s part of the business plan,” says a Canadian executive. New hotels have been built to American safety specifications for that reason. + +During his visit Mr Obama may announce a Cuban investment by one or more American companies, perhaps in energy, telecoms or hotels, under a waiver issued by the Treasury Department. An experienced investor has prepared his greeting: “Welcome to our pain,” he says. + +Political reform is even more tortuous. Cuba’s government has released many long-time political prisoners; in what looks like a change of tactics it has increased the harassment and short-term detention of dissidents. It has modestly expanded citizens’ access to the internet. But Mr Obama’s opening to Cuba has so far yielded meagre political benefits. “All the movement has been on the US side,” says a European diplomat. “The Cubans have done remarkably little.” + +Reform could accelerate at the Communist Party’s seventh congress, to be held in April. Some analysts expect the party to give citizens a choice among (currently handpicked) candidates for seats in the National Assembly, whose modest powers may be expanded. It might also devolve some power from the central government to the regions. Bigger changes may follow in 2018, when Raúl Castro, who is 84, will step down and probably hand power to Miguel Díaz-Canel, the first vice-president, who is nearly 30 years younger. Little is known of Mr Díaz-Canel, who would be the first leader from outside the Castro family in nearly 60 years (it is known that he is a fan of the Rolling Stones). + +Mr Obama no doubt hopes that the very fact of his visit will speed up political reform. He is more popular on the island than either of the Castros, according to a poll conducted last year. “He looks like us,” many Cubans proudly proclaim; at least a third of Cubans have African ancestry, like Mr Obama. As well as taking in a baseball game (between Cuba’s national team and the Tampa Bay Rays), he will meet dissidents and may give a televised speech. He has promised to lobby Raúl Castro for freedom of speech and assembly. “Without democracy there is no possibility that things will get better,” says José Antonio Fornaris, of the Association for a Free Press, a pressure group on the island. + +Mr Obama’s biggest contribution may be to deny the regime its main excuse. “All totalitarian systems need an external enemy to sustain themselves,” says Dagoberto Valdés, editor of Convivencia, a Cuban magazine. He thinks that the recasting of America as friend rather than villain will force Cubans to “focus on resolving problems among ourselves”. It will take a real rocker, though, to convince Adrián, a mechanic, that change is coming. Fidel Castro had banned the Rolling Stones as agents of capitalist decadence. Adrián says that he will believe that Cuba is changing when he hears the opening strains of “Satisfaction” ring out across Havana. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21695058-promise-and-perils-historic-visit-first-three-stories-united-states-and/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +How Latin Americans see the United States + +Dugout diplomacy + +Where yanquis are popular, where they are not and why + +Mar 19th 2016 | From the print edition + + + +READ the horror stories about the dozens of times the United States has sent troops into Latin America, and you might assume that the region is consumed with resentment against the imperial hegemon of el norte. In fact, Latin Americans are quite well-disposed towards the yanquis these days. The most recent international survey by Latinobarómetro, a Chilean polling firm, found that 65% of respondents had a good or very good opinion of the United States (see chart). And the countries that seem to have the most cause for grievance feel least aggrieved: the two most pro-American nations in the region are the Dominican Republic (which the United States occupied from 1916 to 1924 and invaded again in 1965) and Guatemala (whose president was toppled in a coup organised by the CIA in 1954). + +Does that mean that the United States should send the Marines back as goodwill ambassadors? A closer look at the past 20 years of polling suggests not. There are more plausible explanations for variations in Latin Americans’ friendliness towards their northern neighbour. The region-wide view of the United States has oscillated considerably, from a low of 38% approval in 1996 to a high of 74% in 2009. Virtually all of these ups and downs seem to reflect just three factors: changes in foreign direct investment (FDI) from the United States and in GDP per person in Latin America, and the United States’ decision to go to war in Iraq and then to pull out. The more that American firms invest in Latin America, and the wealthier its inhabitants grow, the fonder respondents become of the gringos. + +These averages conceal wide differences between countries. In 2015 just 44% of Bolivians liked the United States, whereas 83% of Dominicans did. The strongest predictor of these gaps is distance: South Americans tend to dislike Uncle Sam, whereas residents of Central America and the Caribbean feel more warmly. Apparently, the easier it is for Latinos to get to know the United States, the more they like it. The next most important factor, unsurprisingly, is remittances, which make up more than 15% of the GDP of El Salvador and Honduras, for example. There is no better advertisement for the United States than emigrants sending cash back home. + +National politics also seem to affect the United States’ popularity. People governed by leftists, such as Venezuela’s Hugo Chávez or Bolivia’s Evo Morales, are more hostile than those led by conservatives such as Alberto Fujimori in Peru in the 1990s or Álvaro Uribe in Colombia in the early 2000s. Latin Americans also seem to hold the United States responsible for one of their region’s chief woes. Countries with high murder rates, which tend to accompany drug shipments flowing north, are less friendly to Americans than one would otherwise expect. + +Even after taking all these variables into account, Dominicans’ extreme fondness for the United States remains unexplained. Perhaps the answer lies in a passion their island nation shares with its giant neighbour. Whereas soccer reigns supreme across most of South America, baseball is both the American national pastime and a veritable religion in the Dominican Republic, whose small population supplies a startling number of Major League baseball players. The path to a Latin American’s heart, it seems, is paved not with guns and bombs but with bats and balls. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21695061-where-yanquis-are-popular-where-they-are-not-and-why-dugout-diplomacy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The United States and Latin America + +Harmony now, discord later + +After Barack Obama’s trip to Cuba, regional relations may deteriorate + +Mar 19th 2016 | MIAMI AND WASHINGTON, DC | From the print edition + + + +FIVE years ago, if Barack Obama had announced a trip to Havana, Cuban-American demonstrators would have filled Miami’s streets, suggests Carlos Gimenez, the mayor of Miami-Dade County. Now that Mr Obama is about to pay the first visit to Cuba by a sitting president since 1928, on March 21st and 22nd, the dominant mood in Miami is one of resignation, says the mayor, an urbane, silver-haired Republican who left Cuba as a boy the year after Fidel Castro took power. + +True, the “pretty universal” sentiment among Florida’s 1.4m Cuban-Americans is that Mr Obama has extracted too few concessions from the government of Raúl Castro, Fidel’s brother, in exchange for relaxing restrictions on travel and trade. But the normalisation of ties with the communist island is now seen as “inevitable”. In the Little Havana district of Miami crowds no longer gather to celebrate rumours that Fidel has died, Mr Gimenez marvels. The exiles who lost homes and businesses to the revolution have either grown old or died. The “fervour has gone”. + +But not among contenders for the Republican nomination in the American presidential race. Ted Cruz of Texas, a Cuban-American senator, is sharply critical of Mr Obama’s Cuba policies (as was Marco Rubio, a fellow Cuban-American senator, who dropped out of the race on March 15th). For them, the opening to Cuba is evidence of the president’s feckless, despot-coddling, blame-America approach to foreign policy. John Kasich, the moderate Republican left in the race, is also a sceptic. Mr Cruz says that he would cut off diplomatic relations with Cuba, which were re-established last July after a 54-year break. + +That promise, like much of the rhetoric produced by the presidential election campaign, is ominous for the United States’ relations not just with Cuba, but with Latin America as a whole. More than in most regions, the behaviour of the United States toward Latin America reflects its domestic concerns. Most of the candidates, including the Republican bigot, Donald Trump, and the Democratic protectionist, Bernie Sanders, have made promises that would damage in different ways the progress that Mr Obama has made on Latin America. Even Hillary Clinton sounds lukewarm about Mr Obama’s trade initiatives. + +After neglecting the region for much of his presidency, Mr Obama has recently attempted something of a reset. Arturo Valenzuela, an assistant secretary of state in his first term, says that the administration has sought to end a “Manichean” approach, in which the United States divided its southern neighbours into countries that were “with us or against us”. Tensions over George W. Bush’s invasion of Iraq and war on terror worsened relations and played into the hands of anti-American governments. Confrontations with Cuba fed a “symbiotic relationship” between hardliners within the Castro regime and anti-Castro right-wingers in the United States, Mr Valenzuela argues. + +Rather than feud with critics of the United States, Mr Obama tried to ignore them or, as in the case of Cuba, engage with them. In an interview with the Atlantic magazine, he argues that his willingness at regional summits to sit through anti-American rants helped to “right-size” such opponents as Hugo Chávez, the late Venezuelan leader, “rather than blow him up as this ten-foot giant adversary”. + +Now, some of the United States’ most unsparing critics are being weakened or sidelined by a combination of term limits, unpopularity and self-destructive economic policies. In Argentina, which Mr Obama will visit after Cuba, a centre-right pragmatist, Mauricio Macri, replaced an anti-yanqui populist, Cristina Fernández de Kirchner, after elections last November. Chávez’s successor, Nicolás Maduro, clings to power, but Venezuela’s economy is suffering from a lethal mix of recession, shortages and inflation, and his party lost control of the legislature last year. + +In Cuba, Mr Obama is betting, change will come through diplomatic relations, increased trade and investment and personal bonds forged by American teachers, students and other travellers. It will not happen “overnight”, he has repeatedly warned. Even if Congress does not swiftly repeal the 1996 law at the heart of the current embargo, the Helms-Burton Act, case-by-case licences will allow entry to American investors, whose adherence to transparency and anti-corruption laws could provide a model for Cuba. The rapprochement with the Castro regime will in turn undercut leftist narratives about American imperialism, removing one irritant from relations with the entire region. + +Mr Obama has tried to reduce others. He has used executive powers to shield millions of undocumented migrants from deportation and to focus expulsions on those who had committed serious crimes. That mostly affects the country’s 57m Hispanics, and their relatives in other countries—even if they had hoped for more. On narcotics Mr Obama shifted the government’s emphasis from interdiction to reducing demand at home, de-escalating the drug war, which is fought most ferociously on foreign soil. When Mexico’s president, Enrique Peña Nieto, indicated that he wanted the relationship with the United States to focus less on drugs and more on trade, Mr Obama went along. In the past year the two countries have opened the first new railway bridge between them for more than a century. In sum, after decades of cold-war confrontations, followed by “Washington consensus” blandishments on economic reform, Mr Obama has tried to make pragmatism the basis of his country’s relations with Latin America. + +Republican headbangers + +That is not the message from the presidential election campaign. To the extent that Latin America features at all it is as a source of unwanted immigrants and cut-price competition. Mr Trump’s fantastical talk of building a wall on the border with Mexico, paid for by the Mexican government, is a symptom of a larger malaise. + +At Trump rallies, Mexico has become an avatar for globalisation itself. The businessman calls the North American Free-Trade Agreement (NAFTA) with Mexico and Canada a disaster. He has described how, as president, he would call the bosses of such firms as Ford and demand that they move manufacturing jobs back from Mexico to the United States, or face import tariffs of up to 35%. Mexican politicians are “laughing at us” and “killing us economically”, Mr Trump tells roaring supporters. + +On Cuba Mr Trump sounds more liberal than his rivals. The embargo, he suggests, might be negotiable. “After 50 years, it’s enough time, folks,” said Mr Trump in a presidential debate on March 10th. He would “probably” close the new American embassy in Havana until he could reach a “really good deal”. + +The billionaire’s nativism has forced his Republican rivals to the right. Mr Cruz, a son of an immigrant, talks of foreign labour as a threat to American workers and jobs. He accuses Democrats of viewing “illegal immigrants as potential voters” and many Republicans of seeing illegal workers as useful “cheap labour”. Such rhetoric has been noted across the region. + +Blending sincere outrage with partisan point-scoring, Republicans justify opposition to the rapprochement with Cuba in terms of human rights. As a senator Mr Rubio has blocked the confirmation of a new American ambassador to Mexico for many months. He accuses Mr Obama’s nominee, Roberta Jacobson, of failing to emphasise human rights and democracy when negotiating with Cuba and Venezuela in her current post as the top State Department official for the Americas. Mr Cruz calls the idea of expanded trade with Cuba an example of Mr Obama allowing billions of dollars to flow to “nations that hate us”. + +The Democratic candidates pay less attention to Latin America, but they, too, might damage Mr Obama’s legacy. Mr Sanders was an early foe of NAFTA and would probably halt American participation in the Trans-Pacific Partnership (TPP), a proposed trade deal among a dozen Pacific Rim nations, including three Latin American ones, if it is not ratified this year. Mrs Clinton has backed away from her earlier enthusiasm for the TPP. As Mr Obama’s former secretary of state, she is the candidate likeliest to continue what he started. But Mr Obama’s trip to Havana may be the last big American overture to its neighbours for some time. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21695079-after-barack-obamas-trip-cuba-regional-relations-may-deteriorate-harmony-now-discord-later/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +Of soldiers and citizens + +Latin America’s armed forces have accepted democracy but remain a law unto themselves + +Mar 19th 2016 | From the print edition + + + +ON MARCH 24th 1976 a military junta ousted Isabela Martínez, Argentina’s president and the widow of Juan Perón, and took power in order to “put an end to the lack of government, the corruption and the scourge of subversion”. What followed was state terror, aimed not only at murderous left-wing guerrilla groups but also at harmless dissidents. At least 8,960 people were killed. + +In Buenos Aires memories of the coup remain raw. Barack Obama planned to be in town on the anniversary, and wanted to show his support for democracy and human rights by visiting a torture centre that is now a museum of memory. That annoyed activists—at the time, the United States had endorsed the coup. Mr Obama will play golf in Patagonia instead. + +Few would have imagined so at the time, but it was to be the last time an army seized power from a freely elected government in Spanish-speaking Latin America (in 1980 Bolivia’s army took power to prevent one from taking office). Tanks in the streets were a fixture of the region’s politics for much of the 20th century: the 1976 coup was the sixth in Argentina since 1930. Yet it is now hard to imagine the armed forces taking over almost anywhere. + +With surprising speed, they have lost political clout. There are caveats. In Honduras in 2009 the army acted on orders from the Supreme Court and the Congress to expel the elected president, Mel Zelaya, who had allied with Venezuela’s Hugo Chávez. But it did not take power itself. In Paraguay in 2012 the military endorsed the lightning impeachment of Fernando Lugo, an ineffectual left-winger. + +In only two countries—Cuba and Venezuela—does the army still play an important political role. Cuba’s president, Raúl Castro, was long the country’s top general; the armed forces control at least half of the economy. In Venezuela Chávez turned the army into a branch of his political movement. Under his successor, Nicolás Maduro, military officers hold many government posts and the armed forces have amassed a business empire. But while generals still mouth regime slogans, there are signs that the army is retreating to a more institutionalist stance. + +Most countries now have civilian defence ministers; some have exerted control over defence policy, through white papers and the like. In Colombia, soldiers who commit serious crimes are tried in civilian courts. Ecuador’s president, Rafael Correa, last month sacked the high command after they protested over money. + +The task of curbing military prerogatives remains unfinished. In Brazil the armed forces staved off, until recently, a truth commission’s inquiry into their dictatorship of 1964-85; their amnesty remains largely intact. Mexico was long unique in excluding the army from political power. But the generals have exacted a price for sending troops to help the government crack down on drug gangs. They resist trials by civilian courts, and neutered President Enrique Peña Nieto’s plan to turn up to 50,000 troops into policemen. + +That was a setback. In a region largely free of wars between countries, governments have not worked out what their armies are for. Guerrilla insurgencies in Colombia and Peru are winding down. The main security threat in the region is from organised crime. Several governments have followed Mexico’s lead in deploying troops against gangsters. Ill prepared for the job, they often end up killing innocents. More constructively, armies are responding to natural disasters, which are happening more often because of climate change. Then there are UN peacekeeping missions, to which the region is becoming a more frequent contributor. + +Yet many armies are oversized for such limited roles. “Latin America has not had a particularly threat-based approach to defence spending,” says Antonio Sampaio of the International Institute of Strategic Studies (IISS), a London-based think tank. Faster economic growth in the 2000s brought a swelling of defence budgets. To bolster its image as a rising world power, Brazil embarked on a spending spree, which included purchases of submarines and advanced jet fighters. Now budgets are under pressure again: in real terms, defence spending in the region fell by 2% last year, according to IISS. But at 1.2% of GDP it is higher than it needs to be. + +In Argentina, military prestige never recovered from the dictatorship and defeat in the Falklands war of 1982. Elsewhere, polls show that the armed forces enjoy greater trust than politicians. That should not mean that they are left to run their own affairs. Latin Americans are crying out for better-resourced police forces. It is high time for an adjustment in security priorities and spending. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21695083-latin-americas-armed-forces-have-accepted-democracy-remain-law-unto-themselves-soldiers/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Reforming India: Bouquets and brickbats + +Pakistan’s Mughal heritage: Short cuts + +A new president in Myanmar: Changing lanes + +The politics of protest in Vietnam: Gatecrashers + +Japan’s male-only emperor system: Imperial lather + +Propaganda in North Korea: Doctored Strangelove + + + + + +Articles Sections Next + +Reforming India + +Bouquets and brickbats + +Though the pace of change is not what Narendra Modi promised, he has been lucky with the economy + +Mar 19th 2016 | DELHI AND MUMBAI | From the print edition + + + +HAPPILY for its members India’s Parliament convenes for just three sessions a year, for an undemanding 100 days in all. In early spring the finance minister traditionally launches a session devoted to the budget. Arun Jaitley, the current minister, tossed spring flowers aplenty from his saffron-coloured briefcase on February 29th. There were promises to double farm incomes within five years, to raise wages for state employees and to spark new investment, all in a “pro-poor yet pro-market” bouquet of fiscal responsibility. + +Mr Jaitley is lucky to have an economic tailwind. Lower global oil prices have helped India. Its companies are vibrant. A growing domestic economy with huge potential makes some of the broader concerns about the world economy such as a slowdown in China and among Western consumers less relevant to India. Still, some of Mr Jaitley’s budget promises look less rosy now, after being roughly handled by India’s opposition and press. + +An apparent big boost for crop insurance turns out to have been accomplished largely by shunting funds between ministries, from finance to agriculture. Additional outlays for a rural-jobs scheme for the poor may be welcome, yet before he came to power nearly two years ago, the prime minister, Narendra Modi, condemned the same programme as a monument to failure. Some analysts contend that Mr Jaitley’s claim of robust economic growth of 7.6% is based on flawed statistical modelling. And others say that Mr Modi agreed to stick with a budget deficit of 3.5%, which is restrained by Indian standards, in order to save up for a bigger splash next year, when the more crucial state elections loom. + +In a democracy as sprawling and vibrant as India’s, sniping about such things is to be expected. So is a vigorous government response. Jayant Sinha, the junior minister for finance, is impatient with critics. He admits that many of the changes brought about by his government are small or not yet fully articulated. But such initiatives as a programme to open bank accounts for every household (which has already added some 212m accounts); or a hydrocarbons-exploration law that could promote a surge in investment to wean India off costly energy imports; or new bankruptcy rules that will make it easier for failed companies to be closed down; or a broad, yet-to-be-unveiled health insurance scheme aimed at the poor: all promise big returns. Taken together, he insists, such policies are transformational. + +That is overstating it but at least Mr Jaitley’s budget will pass. The ruling coalition has a comfortable majority in the Lok Sabha, Parliament’s lower house, and India’s constitution insulates “money bills” from meddling by the Rajya Sabha or upper house, dominated by the opposition. + +Meanwhile, the main reason Mr Modi’s government deserves credit, says one economist, is not any vision or drive but simply for appearing far less corrupt than its Congress-led predecessor, and for being reassuringly stolid at a time of deep global uncertainty. The government may be its own worst enemy, say other backers of its liberalising economic agenda, by injecting too much jumlebaazi—“word play” or “catchphrase” in Hindi, ie, hype—into the debate, thereby raising unrealistic expectations of land and labour reform and much more. + +On the airwaves, on posters and in government-sponsored print adverts, such promotions as Make In India, and Start Up India Stand Up India, with Mr Modi’s picture always prominent, have made a big splash. Yet when the prime minister declared at a recent IMF-sponsored event in Delhi, the capital, that India had opened “all sectors” to foreign investment, or that it had reached “the highest rank” in last year’s ease-of-doing-business index compiled by the World Bank, participants politely scratched their heads. + +India has opened more fields to foreign capital, including recently allowing wholly foreign-owned companies into food-processing industries. But it has generally done so in a piecemeal and often grudging fashion. As for the ease of doing business, a closer look at the index reveals that although India has moved up four places in the 2016 list, it still ranks only 130th out of 189 economies. A tangled bureaucracy, knotty laws and ponderous courts mean that while India ranks eighth in protecting minority shareholders, it trails in 178th place for enforcing contracts and in 183rd place for securing construction permits. + +The “licence raj” that began to be dismantled 25 years ago remains only half-demolished. Public-sector banks, burdened with a huge stock of bad loans to stalled infrastructure projects and ailing heavy industries, still make up seven-tenths of the banking system. The finance ministry, charged with privatising state assets, dares not touch such chronic loss-makers as Air India, which employs 28,000 voters. + +Yet no amount of government tinkering or talking up is going to turn the Indian elephant into a tiger any time soon. With the central government collecting the equivalent of just 11% of GDP in taxes, it lacks transformational capacity. A commendable, long-term devolution of power from the centre to individual states means that these now spend some 1.7 times what the national government does. Some states have used this growing clout effectively. Others lag far behind, giving India huge discrepancies in economic performance between regions and states (see chart). + + + +Transformational capacity would surely be boosted by a long-planned goods and services tax. It would improve government revenues and market efficiency by unifying a patchwork of sales and other taxes. Yet politics is stymying its introduction. Mr Modi blames the opposition’s obstructionism in Parliament, but his own party behaved just the same way before it came to power. Critics say that it should now be readier for political horse-trading. Its hot-headed Hindu-nationalist supporters, meanwhile, keep handing ammunition to the opposition, allowing it to change the subject from everyday economic issues to emotive questions of sectarianism or human rights. + +Raghu accentuates the positive + +Yet calmer voices are occasionally heard. Raghuram Rajan, who heads India’s central bank and is an advocate of prudent national finances, remains upbeat. “All too often our public debates generate more noise than illumination,” he says. He also warns of the danger of fixation on slow progress with certain reforms, such as privatisation, even as the overall trend remains positive. When the world’s financial markets are in turmoil, India’s strong growth prospects are something to be thankful for. “We are in a sweet spot,” he says. “Let’s not waste the opportunity.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21695035-though-pace-change-not-what-narendra-modi-promised-he-has-been-lucky/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Pakistan’s Mughal heritage + +Short cuts + +Chinese-style modernisation draws perilously close to brilliant 17th-century landmarks + +Mar 19th 2016 | LAHORE | From the print edition + + + +A SLEEK steel ribbon could soon slash through the centre of the capital of the Pakistani province of Punjab, cutting the length of a commuter’s trip across Lahore to just 45 minutes from anything between two and five hours today. Just 6% of the 27 kilometres (16.8 miles) of the proposed Orange metro line would be underground; the rest would sail on pylons across the city’s skyline. Lahoris agree that the new line, a first for Pakistan, would transform their city. But they are bitterly divided about whether that would mean its salvation or the ruin of its considerable charm. + +Punjab’s pushy chief minister, Shahbaz Sharif, younger brother of the prime minister, Nawaz Sharif, treats the metro as an urgent priority. His office makes a virtue of the fact that the line will be just a biscuit toss away from some of Lahore’s architectural gems: no better way to study them. The project appals conservationists. + +For centuries Lahore was the heart of Mughal Hindustan, known to visitors as the City of Gardens. Today it has a greater profusion of treasures from the Mughal period (the peak of which was in the 17th century) than India’s Delhi or Agra, even if Lahore’s are less photographed. The walled old city is anchored at one end by the red sandstone and white marble bulbs of the huge Badshahi mosque, and fixed at the centre by the polychrome mosque (pictured) of the great Mughal vizier, the Wazir Khan. Hidden jewels are strewn throughout, such as the royal hammam. Farther afield is the “house of wonders” (ie, colonial museum) where Kipling’s “Kim” began. Tucked down a cobblers’ lane is an exquisite shrine built for the wet nurse of Shahjahan, the fifth Mughal emperor. + +Conservationists claim law on their side. In January the Lahore High Court granted a stay against the government’s plans, ordering it to stop felling trees and otherwise preparing the ground for the metro. It was argued that building beside at least 11 sites would violate antiquities laws, which forbid construction within 200 metres of a protected area. This week the court gave the advocate-general a deadline of March 21st to make his case against the stay. UNESCO has joined the fray, albeit gently, by asking the government to draw up an assessment of possible damage. It is worried especially about the fate of the Shalimar gardens, built in 1641 by Shahjahan as the Taj Mahal was going up in Agra. The gardens’ foundations will be undercut if track is laid too close. + +The Punjab government wants to avoid any more delay. Late last year its director of archaeology, who refused to approve the Orange line, was sacked and replaced with a more supple archaeologist. Mr Sharif is keen that Chinese style and efficiency be brought to the line. Indeed the construction is powered by loans from China’s Exim Bank, with rolling stock from China’s Norinco, a diversified arms-trading company. Some grouse that Exim’s loan was accepted in preference to even cheaper money offered by the Asian Development Bank for an underground metro. But that would have taken years more to install, while Mr Sharif says his metro should be running by the end of 2017. He faces provincial elections the following year. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21695034-chinese-style-modernisation-draws-perilously-close-brilliant-17th-century-landmarks-short-cuts/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A new president in Myanmar + +Changing lanes + +Aung San Suu Kyi’s party prepares to move from opposition to government + +Mar 19th 2016 | NAYPYIDAW | From the print edition + +Htin Kyaw and Sister Suu + +ANOTHER month, another milestone in Myanmar’s democratic transition, with the country’s first free presidential election on March 15th. The system is that the upper and lower chambers of parliament each nominate a presidential candidate, as does the powerful army. Parliament votes, the winner becomes president and the two losers automatically become vice-presidents. The sizeable majority that Aung San Suu Kyi’s National League for Democracy (NLD) won in November’s parliamentary election meant that its nominee, Htin Kyaw, an economist and longtime confidante of Miss Suu Kyi’s, was a shoo-in. + +Yet much like the parliamentary election, the presidential one, although free, was hardly fair. Had the views of Myanmar’s citizens been taken into account, Miss Suu Kyi would surely have got the job. But the constitution that was drawn up in 2008 by the junta then in power bars from the presidency anyone with a foreign spouse or children. Miss Suu Kyi’s children are British citizens, as was her late husband. The junta seems specifically to have intended to keep her out, even though at the time she was still under house arrest. She is thought recently to have sought to have the rules changed, but the army would not budge. + +No matter, it seems: Miss Suu Kyi has said that she will be “above the president”. Mr Htin Kyaw knows his place. After he was affirmed as president, he said that this was “Sister Daw Aung San Suu Kyi’s victory”. She is thought likely to assume the post of foreign minister, calling the shots from there. It is the only position available that would enable her to sit on the powerful 11-member National Defence and Security Council, which will remain packed with army appointees. + + + +Myanmar in graphics: An unfinished peace + +Once the government takes office on April 1st Miss Suu Kyi says that her priority will be to forge a lasting peace with an array of ethnic armies that for decades have been battling the central government, mostly in the country’s borderlands. This may be why the NLD’s choice as vice-president, Henry Van Thio, is a member of one of Myanmar’s ethnic minorities, a Chin from the north-west and also a Christian in a predominantly Buddhist land. Yet to some the appointment smacks of tokenism. Mr Van Thio is an unknown who spent years living abroad and has little background in the country’s complex ethnic politics. + +As for the other vice-president, Myint Swe is a hardliner who remains on an American sanctions blacklist. The chief minister for Yangon, Myanmar’s business capital, Mr Myint Swe is the nephew of the wife of a former junta leader, Than Shwe. He was head of military intelligence at the time of the monk-led “saffron revolution” in 2007, when the regime gunned down dozens of unarmed protesters. + +Mr Myint Swe’s appointment might be a reminder to Miss Suu Kyi not to press for big changes too quickly. The army still wields immense power. In particular, it controls the defence, frontier and home-affairs ministries. That will not change after April 1st. How the strange accommodation between the NLD and the state’s darker forces will work in practice remains unclear, and raises concerns. For example, what happens to Miss Suu Kyi’s drive for peace if it leads to concessions being offered to ethnic groups that the army does not like? + +Equally unclear is whether Miss Suu Kyi will be able to abandon the habits that served her in opposition, such as centralising her authority, restricting information, relying on a small group of advisers and demanding absolute loyalty. The NLD and its leader spent decades bravely fighting for political power. Now they must learn how to wield it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21695087-aung-san-suu-kyis-party-prepares-move-opposition-government-changing-lanes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The politics of protest in Vietnam + +Gatecrashers + +By running for parliament, political outsiders challenge one-party rule + +Mar 19th 2016 | HANOI | From the print edition + + + +ONE of Vietnam’s political gadflies, Nguyen Quang A, posted a letter this week to the chairman of Vietnam’s National Assembly. Mr Quang A wrote that he had collected 5,000 signatures from among the public, including from famous writers, senior Communist Party officials and a retired general, and that he was now putting himself forward as a candidate for the rubber-stamp parliament. The odds of his bid succeeding, Mr Quang A acknowledges, are “nearly zero”. The assembly has a candidate-vetting process known as the “five gates” to keep out undesirables like him who “self-nominate”. Still, he is happy that his protest candidacy is a rare challenge to the party. + +Vietnam’s constitution pays lip service to democratic principles, but the country of 93m people is a repressive one-party state. In it, ordinary folk have little say over who their leaders are. Almost every top official in Vietnam is a Communist Party member. Since 2002 a few hundred Vietnamese have nominated themselves for the National Assembly, but only seven have been successful—and nearly all of those had deep ties to the party powerful in politics or business. Nguyen Dinh Cong, a retired university lecturer who quit the party last month in disgust over its jailing of dissidents, its stuffy Marxism-Leninism and its refusal to allow multi-party elections, says that polls in Vietnam are “just for show”. + +Yet this year’s self-nominating candidates, with a deadline this week to register for a parliamentary election scheduled to take place in late May, are testing the limits like never before. Nearly 100 candidates have put themselves forward from Hanoi, the capital, and Ho Chi Minh City, the commercial hub, alone. Some 15 of these are, like Mr Quang A, outspoken democracy activists. They include a former executive at a state-owned broadcaster and the vice-chair of an independent if unofficial journalists’ association. Other self-nominators, though not dissidents, are far removed from the party top brass. For instance, Mai Khoi, a pop singer from Ho Chi Minh City, is campaigning, including on Facebook, as a would-be parliamentary voice for Vietnam’s woefully underrepresented youth. + +Rogue candidates have little chance of surviving into May. Yet it will be hard for the Communist Party to silence them entirely, mainly because of their prominence in social media; Mr Quang A, for one, has over 22,000 followers on Facebook, which in Vietnam is not blocked as it is in neighbouring China. Their supporters, too, are increasingly willing to challenge officialdom, as happened last year when a campaign on Facebook managed to halt a municipal effort to chop down thousands of Hanoi’s trees. + +What is more, barring protest candidates from running for the National Assembly may have the effect of earning them an audience with Barack Obama, when the American leader visits Vietnam in May to promote the Trans-Pacific Partnership, an American-led trade pact that was signed in February but faces Congressional resistance. He would probably love to be seen meeting some of the authoritarian regime’s most outspoken critics. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21695082-running-parliament-political-outsiders-challenge-one-party-rule-gatecrashers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Japan’s male-only emperor system + +Imperial lather + +The United Nations fails to stick up for the rights of empresses + +Mar 19th 2016 | TOKYO | From the print edition + + + +THE progenitor of Japan’s imperial line, supposedly 2,600 years ago, was female: Amaterasu, goddess of the sun. But for most of the time since, all emperors have been male. This has exercised the UN’s Committee on the Elimination of Discrimination against Women. Recently it concluded that Japan should let women inherit the Chrysanthemum throne, too. + +It is not clear what Emperor Akihito, who is 82 (and has a hugely popular wife), thinks about this. But the Japanese prime minister blew his top. Shinzo Abe leapt to the defence of a male-only line, saying it was rooted in Japanese history. The panel’s meddling, he said, was “totally inappropriate”. Cowed, it withdrew its recommendation that the law of succession be changed. + +Polls suggest that most Japanese would welcome a female monarch. A decade ago a looming succession crisis triggered a robust discussion, led by Junichiro Koizumi, then prime minister and Mr Abe’s political mentor, on whether to allow a woman to ascend the throne. But the birth of Hisahito, a boy prince, ended the debate. A draft law was quietly shelved. + +Mr Abe does not share Mr Koizumi’s iconoclasm. An arch-traditionalist, he wants the male-only system preserved to protect the imperial bloodline. But in other ways he has been an unlikely champion of diversity since he came to power (for the second time) in 2012. He has cajoled Japanese firms into promoting more women and urged them to make it easier for them to come back to work after having children. + +There is a long way to go. Japan is bottom of the rich world in most rankings of sexual equality. For the past month Mr Abe has struggled with the political fallout from a much-read blog post by a working mother angry at a chronic shortage of day-care places. Still, Mr Abe’s efforts appear to be getting somewhere. From April big companies will have to declare their plans for promoting women. The hope is that this will shame firms that overlook female talent. As for the proportion of board members who are women, it has inched up by a percentage point in the past year—to 2.7%. + +The UN committee notes this progress but laments foot-dragging on other issues. Japanese women are still meant to need spousal consent for abortions, it says, even in cases of rape. Divorced women must wait months before remarrying thanks to an archaic rule designed to remove uncertainty over the paternity of unborn children. For most Japanese women, the question of whether or not some future princess can become empress is hardly pressing. But Yoko Shida, a constitutional scholar, says it matters nonetheless. It is, she says, a symbol of discrimination. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21695073-united-nations-fails-stick-up-rights-empresses-imperial-lather/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Propaganda in North Korea + +Doctored Strangelove + +Staged photographs are combed for clues + +Mar 19th 2016 | SEOUL | From the print edition + +Kim Jong Un gives on-the-spot missile guidance + +“THE whole point of the Doomsday Machine is lost if you keep it a secret,” Dr Strangelove tells the Soviet ambassador in Stanley Kubrick’s satire on cold-war fears of nuclear conflict. The point is not lost on North Korea, which has recently been repeating its threat to nuke the White House until “not even ashes are left”. To bolster the warnings the official news agency churns out pictures of the dictator, Kim Jong Un, in military set pieces: Mr Kim giving launch orders at a satellite centre (with an ash tray in view); Mr Kim in a fur hat guiding a simulated ballistic missile re-entry; Mr Kim in the conning tower of a steaming submarine (South Korean intelligence recently reported that one of the North’s submarines had sunk, for unclear reasons). Most striking of all, on March 9th Mr Kim (pictured) was next to a silver orb, presented on courtly red velvet, that North Korea claimed was a miniaturised nuclear warhead—though it is highly unlikely to have the capability for that. + +Weapons wonks pore over such images for clues as to North Korea’s actual capabilities. Melissa Hanham of the James Martin Centre for Nonproliferation Studies, an American think-tank, says that includes gauging parts using the size of other objects in the image, and collating shots from different angles to glean a three-dimensional picture. James Pearson of Reuters enlarged a map in view on a desk in a recent photograph, overlaid it with Google Earth’s imaging and tilted it to give a more useful, overhead perspective—revealing one North Korean missile target to be a nuclear plant in South Korea. + +Last year Ms Hanham surmised that a pesticide plant Mr Kim visited was probably making anthrax. Yet, she says, the images may have been meant as a “little wink” to America, which had recently been found mistakenly to have sent live, rather than inactivated, anthrax to a South Korean military base for training. + +North Korea puts out more propaganda imagery than ever, often with things like the Young Leader’s cigarettes airbrushed out. But where Pyongyangologists used to pinpoint Mr Kim’s whereabouts through his outings and his dynasty’s famous “on-the-spot guidance” at factories, farms and plants, now he is pictured inside anonymous military command buildings and tents: at once everywhere—and nowhere. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21695078-staged-photographs-are-combed-clues-doctored-strangelove/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Labour unrest: Deep in a pit + +UN covenants: Suppressed in translation + +Banyan: This insubstantial pageant + + + + + +Articles Sections Next + +Labour unrest + +Deep in a pit + +Large protests by miners augur ill for the government’s reform plans + +Mar 19th 2016 | SHUANGYASHAN | From the print edition + + + +“COMMUNIST Party give us back our money”, “We want to live, we need to eat!” Such were the slogans daubed on banners that were displayed on March 12th during a protest by thousands of coal miners in the dingy streets of Shuangyashan, a city in Heilongjiang province near the border with Russia. The demonstrators gathered outside the headquarters of Longmay, the largest mining company in the north-east and Heilongjiang’s biggest state-owned enterprise (SOE). They demanded wages which they said they had not received for at least two months. Some protesters blocked railway lines; others scuffled with police wearing riot gear. Internet censors deleted pictures of the unrest (such as the one shown) as they spread across social media. + +The protest was one of the biggest by workers at an SOE for many years. It was an indication of the problems that China’s government will probably face as it seeks to cut excess capacity among SOEs like Longmay and reduce their enormous losses. In February the labour minister, Yin Weimin, said that 1.3m coal workers and 500,000 steel workers could lose their jobs over the next five years. + +Other estimates say 3m-5m people may be thrown out of work in these industries as well as in aluminium production and glassmaking. That is far fewer than the tens of millions who lost their jobs during SOE restructuring in the late 1990s. But the economies of some cities, including Shuangyashan, are driven by a handful of large SOEs. In these, downsizing will be traumatic and possibly turbulent. + +Labour unrest is rising everywhere as economic growth slows (see chart). Many firms, like Longmay, are reacting to financial distress by paying wages late or not at all. According to China Labour Bulletin, a Hong Kong-based NGO, there were 2,700 strikes last year, twice the number in 2014. In the two months leading up to China’s lunar new-year holiday in early February, there were over 1,000 strikes and protests, 90% of them related to the non-payment of wages. Three days after the protest in Shuangyashan, an almost equally large one began at Tonghua Steel in neighbouring Jilin province, also over wage arrears. + + + +In Shuangyashan (its name, meaning Double Duck Mountains, refers to the shape of two nearby peaks), the authorities have tried to soothe the protesters by giving them overdue pay. Some mine workers say they have now begun receiving their salaries for January, and that they have been assured their pay packets for February will be coming soon. But the government remains nervous of further unrest. On March 15th police were still ubiquitous, on the streets of Shuangyashan as well as outside a nearby mine. In the city centre, a row of women who said the men in their families all worked in mines sat holding placards offering their services as cleaners or house painters. “We have no money to eat. What do they expect us to do?” said one woman angrily before being told by police to stop talking. A man who identified himself as a government official followed your correspondent everywhere. + +The protests in Shuangyashan were particularly embarrassing for the party, occurring as they did during the 12-day annual session of China’s parliament, the National People’s Congress (NPC), which ended on March 16th. Every year during the NPC session, officials try even more strenuously than usual to prevent street unrest, lest it tarnish the image of political unity and national prosperity that they want the NPC to project (see article). Party bosses in Heilongjiang will get their knuckles rapped by leaders in Beijing for failing to anticipate this outbreak, which followed months of grumbling among Longmay’s workers about lay-offs and overdue pay. In September, the company said it would shed 100,000 of its 240,000 staff. + +Remarks made during the NPC by Lu Hao, Heilongjiang’s governor and its deputy party-chief, appeared to ignite the unrest. On March 6th Mr Lu said Longmay’s 80,000 coalface workers had not gone unpaid in any month, nor had they been “shortchanged a single cent”. This prompted outrage in Shuangyashan, where many people said that some miners were owed up to six months’ wages. To avoid heavy punishment, protesters in China normally stop short of attacking senior leaders by name. One of the miners’ banners, however, proclaimed: “Lu Hao talks rubbish with his eyes wide open”. + +Mr Lu, who at 48 is China’s youngest provincial governor, had been regarded as a rising star—a possible candidate, even, for elevation to the ruling Politburo next year. He is thought to be a protégé of President Xi Jinping. Whether he will remain a favourite is now in doubt. Global Times, a newspaper in Beijing, called Mr Lu’s performance (without naming him) “regrettable”. Mr Lu said he had been misled. Longmay, he clarified, had not only failed to pay workers, but was also in arrears on its taxes and contributions to social welfare. + +Shuangyashan’s problems may be extreme, but they are familiar to many political leaders—not least in the north-east. The region is home to many of the large state-owned firms that have found themselves saddled by vast amounts of spare capacity thanks to a slump in demand. The coal and steel industries are among the worst affected. Output of both fell by 6% in the first two months of the year but demand is falling faster. Total debt in China, at 240% of GDP, is alarmingly high; SOEs have the biggest share of it. Many are not earning enough to service existing debts, so they are borrowing more to pay them off. + +Ducking out? + +The government appears to recognise that the only way to break the debt cycle is to close or slim down loss-making firms. At the end of the NPC, the prime minister, Li Keqiang, repeated his commitment to “structural reform”, and said the government would strive to find new jobs for those laid off. The labour ministry says it is setting up a fund worth 100 billion yuan ($15 billion) to help redundant workers find new employment. Some Chinese economists worry that this will not be enough and that the government will lose its stamina for tough reform. + +The north-east weathered the SOE shake-up of the 1990s with the help of dollops of central-government aid. It is likely to need a lot more. A sign over the exit of a work site near Shuangyashan reads: “The Number Three Mine will have a more beautiful tomorrow!” This week may have been slightly better than the previous one for miners who got their pay, but for many residents the future is hardly alluring. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21695091-large-protests-miners-augur-ill-governments-reform-plans-deep-pit/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +UN covenants + +Suppressed in translation + +How Chinese versions of UN covenants gloss over human rights + +Mar 19th 2016 | BEIJING | From the print edition + + + +“THE Chinese dream is the Chinese people’s dream of human rights.” That was not uttered by one of China’s beleaguered dissidents, who are now suffering the most intense crackdown on human-rights activists that the country has waged in many years. They were, in fact, the words of a foreign ministry official, in a speech this month marking the 50th anniversary of the UN’s adoption of two covenants on the protection of a wide range of political, cultural and other freedoms. As a signatory to the documents, China has little choice but to parrot their language, even though it often shows little regard for what the covenants mean. + +China signed the International Covenant on Economic, Social and Cultural Rights (ICESCR) and the International Covenant on Civil and Political Rights (ICCPR) in the late 1990s in an effort to improve its image abroad, which was badly tarnished by the bloody suppression of the Tiananmen Square protests in 1989. The government has embraced neither document with enthusiasm, but in 2001 its rubber-stamp legislature ratified the more palatable of them, the ICESCR. It has yet to take that step with the meatier ICCPR. In November a court in the southern province of Guangdong sentenced an activist, Sun Desheng, to two-and-a-half years in prison for the crime of touring the country holding up banners calling for ratification of the ICCPR, and circulating photographs of them on the internet. It also jailed another dissident, Guo Feixiong, for six years, partly for organising the banner campaign. + +So squeamish is China about both covenants that it prefers to use its own, alternatively phrased, translations of them rather than the official Chinese-language versions approved by the UN in 1966. China’s seat in the General Assembly was then held by the (also, at the time, human-rights averse) government in Taiwan. The unofficial versions began circulating in 1973, a couple of years after the Communist government in Beijing took over the seat. China does not dispute that the versions of 1966 are valid. But its diplomats and scholars usually quote the unofficial ones. + +There are significant differences between the two sets. “In far too many cases the revised drafts do violence to the plain meaning,” write James Seymour and Patrick Yuk-tung Wong of the Chinese University of Hong Kong in a recent paper on the topic. Where the authentic versions say governments “must make every effort” to observe rights, the alternative ones say only that they “should promote” them. The right “to serve in public office” is downgraded to a right to “participate in public affairs” (ie, choosing which Communist Party-approved candidate will serve in a toothless local legislature). There are also omissions in the unofficial versions, for example of a stipulation that members of the ICCPR’s human-rights committee “serve in their personal capacity” (China would balk at allowing its delegates to do so, lest they feel emboldened to criticise their own government). There are also formulations in the unofficial texts that are entirely invented, such as one requiring that “international remedies” be exhausted before any human-rights case is brought before the committee. + +Scholars argue over the importance of these discrepancies, but there is no denying that they were introduced in a most irregular manner. Mr Seymour says the alternative versions may have been produced by Chinese diplomats who were not aware at the time that UN-approved translations already existed. But he also believes China has been deliberately promoting the unofficial versions in the years since. “It was probably very innocent in the beginning and then it took on a life of its own,” he says. In public, the UN has avoided wading into the issue of rival translations; privately, one UN official calls it “a rather delicate matter”. Both sets can be found on the sprawling UN website. That may be helpful for Chinese diplomats seeking wiggle-room, though they would prefer to be pinned down to neither. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21695095-how-chinese-versions-un-covenants-gloss-over-human-rights-suppressed-translation/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +This insubstantial pageant + +The National People’s Congress is neither an effective parliament nor good theatre + +Mar 19th 2016 | From the print edition + + + +IN A country that has changed nearly beyond recognition in a generation, it is perhaps reassuring that some things remain much the same. Every spring the forbidding, cavernous pile of the Great Hall of the People on Tiananmen Square plays host to a timeless ritual. The nearly 3,000 delegates to the National People’s Congress (NPC) gather for a brief annual session (it lasted 12 days this year, ending on March 16th). This is what the constitution calls the “highest organ of state power”. Yet its members behave like well-trained extras in a drama scripted elsewhere. Rather than evolving, as once seemed possible, into a forum where China’s problems are discussed and different views are aired, the NPC is becoming less open and more controlled. In that respect at least, it reflects what is happening in the country more broadly. + +As they have since the first NPC convened in 1954, delegates stay heroically awake as turgid speakers drone on; they applaud enthusiastically on cue; and they approve, without exception, the laws, budgets and government reports put before them. The synchronised pouring of tea into leaders’ cups, aligned with geometric precision, is as immaculate as ever. Of course, the delegates themselves have moved with the times. They remain predominantly male, but over the decades their Mao jackets have given way to Western suits and they have become disproportionately rich. Spittoon use has dwindled. Delegates were banned from smoking in public in 2013. And, under the austere anti-corruption drive waged by the Communist Party’s leader, Xi Jinping, who took over the previous autumn, they are best advised to shun lavish banquets for frugal room-service fare. Being an NPC delegate is even less fun than it used to be. + +The biggest change may have been in 1986, when electronic voting replaced shows of hands. Since then “no” votes and abstentions have been watched for hints of dissent. A peak of rebelliousness was scaled in 1992, when only two-thirds of delegates voted for the plan to build the massive Three Gorges dam on the Yangzi river. Whatever the constitution says, the NPC has always been subordinate to the party. But at times it has seemed to have acquired power of its own—in the 1980s, for example, when its head, or speaker, was Peng Zhen, a fierce party elder with an unusual fetish for constitutional propriety. During pro-democracy protests across China in 1989 some even dreamed that Mr Peng’s successor, Wan Li, seen as a liberal, might convene an emergency session of the NPC to broker a peaceful resolution. + +No one harbours fantasies about the independence of the present NPC. It nodded through the nine documents presented to it this year, including not just the budget and prime minister’s report to the nation, but a new five-year plan. One new law, regulating charities, was much debated and amended—but not in its fundamentals. It scraped through with the votes of 92.5% of delegates, compared with 97.3% for the five-year plan. The atmosphere of disciplined conformity was enhanced this year by the removal of comfortable seats from the foyer of the Great Hall of the People, where delegates in the past would sit and chat with each other, and even, on occasion, with journalists. + +Nor did much of interest punctuate another annual ritual, the closing press conference by the prime minister, Li Keqiang. He defended the government’s GDP growth target, which for the first time in recent years is a range, from 6.5-7.0%. He noted, accurately enough, that it would be impossible for him to say China could not reach it. Anxious to accentuate only the positive, he also said China would reform its steel and coal industries without mass unemployment. Yet the government had already given a number for those who would lose their jobs in the next five years: 1.8m. + +China’s press, which tends to be even more circumspect than usual during NPC sessions, is especially concerned this year to find only good news to report. Last month President Xi visited the leading newspaper, news agency and television station, to remind journalists that their organs’ “surname” is “party”. Subsequently, a list of 21 sensitive topics of special concern to the censors was leaked. They range from North Korea to smog to a new fad for wearing lapel badges bearing Mr Xi’s beatific visage. An article quoting a member of the committee that advises the NPC, complaining about the constraints on free expression, was censored. So was an article reporting this. Meanwhile, the party has launched yet another ideological campaign. Assuming his people have already mastered his “Four Comprehensives” policy and his “Five Development Concepts”, Mr Xi now wants them to start counting on their toes as well. The press is promoting a new “Four Consciousnesses” movement. They span “ideology, the whole, the core and the line”. It seems yet another way of saying absolute loyalty to the party and its leader is the order of the day. + +Such stuff as dreams are made on + +Obscurantist propaganda by numbers; a Potemkin parliament; a stifled press; even lapel badges of the great helmsman: it all reeks of the bad old days. But the transformation of the China outside the Great Hall of the People cannot be wished away. At Mr Li’s press conference a Chinese reporter was able to ask a question (about the portability of medical insurance) based on 10m responses to an online survey. And delegates can at least raise concerns from the real world. Old-style press censorship is easy; but all those docile delegates have access on their smartphones to the mockery and anger it provokes on the internet. Suppressing online dissent is an endless game of whack-a-mole. + +The NPC’s unruffled, unaltered façade is an unconvincing distraction from the ferment affecting a society in the grip of wrenching economic and social change. Mr Xi’s instinct, it seems, in the face of the anxiety, dissent and even protest this provokes is to take refuge in the party’s old certainty: unity is strength. But restricting even further what is permissible for a tame parliament and tightly policed press looks less like unity than weakness. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21695074-national-peoples-congress-neither-effective-parliament-nor-good-theatre/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Africa’s ports: The bottleneck + +Nigeria’s currency crisis: Can you spare a dollar? + +Politics and patronage in South Africa: All the president’s friends + +Russia’s Syria surprise: Putin the peacemaker + +Tension in Saudi Arabia’s Eastern Province: After the execution + +Iraq: The unquiet cleric + + + + + +Articles Sections Next + +Africa’s ports + +The bottleneck + +New investment alone will not fix Africa’s ports. Governments need to deal with pilfering officials, too + +Mar 19th 2016 | MOMBASA | From the print edition + + + +AT THE entrance to the Port of Mombasa, just in front of where machinegun toting policemen check visitors’ permits, is a shipping container mounted on a plinth. It was erected last year to commemorate the port processing 1m containers (or TEUs; twenty-foot equivalent units are the industry standard) in a year for the first time. It is a boast about how much the port, east Africa’s biggest, has improved in recent years. And at the other end of the bay, a brand new container terminal juts out into the water, a smooth new road leading from it. On a hillside nearby, Chinese workers in straw hats look over the valley where a new railway is being built from the port to Nairobi. + +All this gives a solid sense of progress. Yet behind the scenes, not everything is going well at Mombasa. Though the builder, Toyo, a Japanese company, has handed over the new terminal to the government, a tender has not yet been agreed to run it. Instead, the port’s management is in chaos. Last month the head of the Kenya Ports Authority (KPA) was sacked along with six other senior officials. Corruption has soared of late, grumble Kenyan businessmen. “The port of Mombasa is completely rotten,” says one chief executive. + +What is true of Mombasa is true of ports across Africa. From Nigeria to Djibouti, decrepit and inefficient container ports are being expanded with money from the World Bank, governments (particularly those of China and Japan) and logistics firms such as Bolloré (a big French company which operates 14 port concessions across the continent). That offers the potential to transform African trade. Yet corruption and poor management may mean the gains will be squandered. + +Good ports are perhaps more important to Africa than any other region. On a continent bereft of good roads and productive factories, fully 90% of trade happens by sea. Ports also corrall trade where it can be regulated and taxed: in Kenya, for example, some 40% of government revenue is generated by the customs department. Ports are also the means by which much contraband, from drugs to ivory, escapes to the rest of the world. + +Onshore pirates + +Yet many African ports are dire. And most are tiny. In 2013 sub-Saharan Africa’s largest, Durban, in South Africa, processed just 2.6m containers––a thirteenth as many as Shanghai, the world’s busiest port. And they cost a fortune to use. According to the World Bank, in 2011 shipping a container from Africa was typically twice as time-consuming as getting one shipped from India and about six times as slow as doing it through an American port. On average, containers sit waiting in African ports for three weeks before being taken to their final destination—compared with a week in other emerging markets. + +This makes Africa poorer. The World Bank’s figures suggest that delays in ports add roughly 10% to the cost of imported goods, more in many cases than tariffs. For exports the harm is worse. In northern Mozambique, the banana industry could be 20 times larger if Nacala—a natural deep-water port—were as cheap as those in Ecuador, reckons Jake Walter of TechnoServe, an NGO. Instead, perhaps 80% of containers leave Africa empty. + +Poor transport links aggravate matters. At Mombasa, the old British-built narrow gauge railway can only take 5% of the containers that are offloaded, says Haji Masemo, a spokesman for the KPA. This means that the port suffers a constant traffic jam of lorries trying to get out. In Lagos, Nigeria’s commercial capital, the terminals are both practically in the city centre, so it can take an entire day for a lorry to get from the terminal to a warehouse. + +Much of the delay and cost is caused by bureaucracy and lack of competition. At Mombasa, as well as the KPA, importers have to deal with the Kenya Police, the revenue authority and the standards bureau, all of which can delay a shipment. Arguments over the valuations of products or the tariffs applicable can last for weeks. Neither the authorities nor port operators have much incentive to speed things up, because users generally have few alternatives, and are often paying for storage while they wait. + +Then there is corruption. Philip de Burgh of Gray Page, a maritime investigations firm, recounts how a client was exporting copper cathodes from Congo through Dar es Salaam in Tanzania. When the containers were opened in China, it was discovered that the copper had been replaced by rocks. In November Rwanda’s mining minister made a formal complaint about the damage being done to his country’s industry by corruption in Tanzania. Sandra Sequeira of the London School of Economics found that 53% of shipments through Maputo, Mozambique’s main port, were eased by bribes, usually to customs officials. + +New port infrastructure should help with congestion but only if roads and railways are upgraded, too. New terminals are being built as far afield as Nigeria, Ivory Coast, Cameroon and Togo. However, graft and inefficiency are proving harder to tackle. Kenya is not alone in sacking officials. In December Tanzania’s new president, John Magufuli, dissolved the board of the port authority and sacked the permanent secretary of the transport ministry. But Tanzania has sacked three port chiefs in three years; Kenya has been through half a dozen in a couple of decades. High-profile defenestrations do not do much to change the incentives faced by officials. + +Simpler fixes—such as moving documentation online—would probably prove more effective. But port workers have powerful lobbies, and changes to rules are not as glamorous as expensive new projects. At Mombasa, officials talk proudly about the next stage of their construction plans: a wholly new mega-port at Lamu, a pretty town on the northern coast. Maritime analysts say that the idea is barmy—the roads are terrible and the area nearby is home to a fierce Somali insurgency. But it seems that for politicians, it is easier to cut ribbons than corruption. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695054-new-investment-alone-will-not-fix-africas-ports-governments-need-deal/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Nigeria’s currency crisis + +Can you spare a dollar? + +How to make a hard-currency shortage worse + +Mar 19th 2016 | ABUJA | From the print edition + + + +THE mutterings of discontent are growing louder in Nigeria’s street markets. The price of a bag of rice has surged by 12.5% in the past month. Supplies of bread have dwindled after bakers turned off their ovens to protest about the rising cost of flour. The rich lament that milk is missing from supermarket shelves. The poor complain about the price of garri (cassava flour). A fish importer estimates that 70m Nigerians can no longer afford his wares. + +Such are the symptoms of Nigeria’s foreign-exchange crisis. Africa’s most populous nation exports oil and imports nearly everything else. As oil prices have collapsed, Nigeria’s foreign earnings have tumbled with them, putting huge pressure on the naira, the local currency. Yet President Muhammadu Buhari refuses to allow the naira to devalue, fretting that this would fuel inflation. Economists point out that a weaker currency would simply reflect that Nigeria is poorer now than it was when oil was above $100 a barrel. He ignores them. + +Since Mr Buhari came to power in May, the central bank has kept the official exchange rate artificially strong and restricted the supply of dollars. It refuses to release any for imports of a range of goods including meat, margarine and toothpicks. + +The policy is not working: inflation hit 11.4% in February and growth has fallen to 2.1%. Factories are closing down for lack of supplies and the managers of those still running spend much of their time trying to find things to sell abroad to raise dollars, such as gold jewellery or gum arabic. Most have been pushed into the black market, where they pay about 60% above the official rate unless they are lucky enough to get some of the $200m or so released each week by the central bank. That the bank has the power to hand out subsidised greenbacks naturally invites corruption. An executive at a big importer says its budgets now include a 30% “premium” to be paid to central bank officials to get dollars. + +Yet Mr Buhari seems unlikely to change his mind. So senior members of his party are now pushing for some form of dual exchange rate. This would leave the naira’s official value unchanged, satisfying the president, while legitimising a parallel market that would supposedly be used for non-essential imports. In practice most currency flows would soon be made at this new market rate. This solution is far from optimal—the central bank window would be a continued source of corruption and patronage—but better than the status quo. + +Without some flexibility on the currency, expect food shortages to worsen. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695065-how-make-hard-currency-shortage-worse-can-you-spare-dollar/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Politics and patronage in South Africa + +All the president’s friends + +A family close to the heart of power + +Mar 19th 2016 | JOHANNESBURG | From the print edition + +No laughing matter + +THE Gupta family estate spans a leafy block in Saxonwold, a genteel suburb of Johannesburg. Security guards mill about the gated entrance to a cluster of mansions; the main house, with its soaring white columns, has the bearing of an official residence. The family, led by brothers Atul, Ajay and Rajesh, came from Saharanpur, in northern India, to South Africa from 1993 onwards. They have since built a business empire with interests in mining and media, along with a close friendship with President Jacob Zuma. + +Quite how far their reach may stretch was underscored on March 16th when the deputy finance minister, Mcebisi Jonas, alleged in an official Finance Ministry press release that members of the Gupta family had offered him the position of his boss, the respected finance minister Nhlanhla Nene. He says he rejected the offer. Mr Nene was sacked in December and replaced by an unknown backbencher, who was himself fired a few days later. At the time many saw the move as an attempt to rein in Mr Nene, who had stood up to powerful allies of the president and resisted some of Mr Zuma’s projects, such as an unaffordable plan to buy nuclear power stations costing 1 trillion rand ($63 billion). + +The claim by Mr Jonas, which has been denied by the Gupta family, sheds new light on this incident. It follows other claims relating to the influence exercised by the Gupta family, including one by Vytjie Mentor, a former MP for the ruling African National Congress (ANC), who wrote on Facebook that she too had been offered a ministerial post by members of the family. + +The Guptas’ friendship with Mr Zuma is well known: neighbours say they have often seen the presidential motorcade arrive at the compound. Mr Zuma’s family members, including one of his wives, have worked for Gupta-owned companies and hold plum directorships with them. Duduzane Zuma, one of his sons, has a stake in a company that is buying a coal mine in partnership with the family. + +The Gupta brothers firmly deny exploiting political connections to land favourable deals, but their influence has caused deep divisions in the ANC. With every new revelation, Mr Zuma’s hold on the party is likely to weaken. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695057-family-close-heart-power-all-presidents-friends/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Russia’s Syria surprise + +Putin the peacemaker + +Russia’s president appears to turn from hard power to diplomacy + +Mar 19th 2016 | From the print edition + +Ta ta for now + +THERE is nothing Russia’s president, Vladimir Putin, likes more than taking everyone by surprise. Except, perhaps, demonstrating that his country is an independent actor on the world stage that has to be taken seriously. Thus, the announcement from the Kremlin on March 14th that Russia was partially withdrawing its forces in Syria was vintage Putin. His message was that Russia’s military objectives had been achieved and it was now time to support peace talks in Geneva that were due to resume on the same day. Better still, from Mr Putin’s point of view, he left everyone else guessing about his real intentions and what he might do next. + +A number of things can, however, be construed from Mr Putin’s démarche. The first is that Russia is not pulling out its forces completely. It will retain its naval presence in Tartus; at least a dozen fast jets will continue to fly from its air base near Latakia; about 1,000 military advisers and special forces will stay; and the recently-installed S-400 air defence system covering the north-west of the country will also be kept in place. Should the fragile “cessation of hostilities” that Russia and America brokered last month fall apart, it can re-escalate very quickly. But for now, Russia can cut the $3m a day cost of its military operation, while preserving much of the leverage it has bought. + +The second is that Mr Putin’s claim that his forces had “fulfilled their main mission in Syria” was revealing. Gone was any attempt to cling to the fiction that the intervention had been primarily aimed at hitting Islamic State (IS) rather than to preserve the imperilled regime of Bashar al-Assad, the Syrian dictator. The 9,000 or so sorties that have been flown by Russian planes since October shifted the military balance in favour of the regime. Russia’s defence minister, Sergei Shoygu, boasted that his forces had helped the government regain control over more than 400 “populated areas” and 4,000 square miles (10,000 sq km) of territory. + +But while the survival of the regime was the objective, it is now clear that Mr Putin was never inclined to give Mr Assad the kind of military blank cheque needed for him to take back all or even most of the country. Mr Assad’s bullish talk of recent weeks and his unwillingness to engage seriously with the UN-sponsored Geneva peace process appear to have gone down badly in the Kremlin. Whether that means, as some suggest, that Mr Putin is ready to abandon Mr Assad so long as he has a say in who succeeds him, is less certain. But Mr Assad has been reminded not to try being the tail that wags the dog. + +That leads to a third conclusion. John Kerry, America’s secretary of state, and Sergei Lavrov, his Russian opposite number, are known to have discussed the possibility of a federal structure for Syria as the only way to bring peace. The outlines of a partition that would be acceptable to Russia are already visible. + +Underpinned by Russian and Iran, the minority Alawite sect to which Mr Assad belongs would control territory in the west, running roughly from Latakia in the north down to Damascus in the south; an autonomous Syrian-Kurdish region in the north-east, known as Rojava, would be established; the rest of the country would be left to the Sunni opposition, who would be helped by Western and Russian air power to expel IS from its stronghold in Raqqa. + +Unfortunately, the facts on the ground do not yet support such a simple solution. One of many obstacles to such a carve-up is that some big cities, such as Aleppo and Homs, remain highly contested. In the past few weeks, pro-regime forces have more or less encircled Aleppo. But a fourth conclusion is that Russian and Iranian military advisers may not have much confidence in the ability of the Syrian army, depleted by five years of conflict, and a gaggle of Shia militias to conduct a successful offensive against the strongly-defended city. The Iranians have quietly also been pulling out some of their military personnel as their battlefield losses have mounted. + +What all this means for the talks in Geneva being orchestrated by the UN envoy Staffan de Mistura is too early to say. Iran and Saudi Arabia are still at loggerheads; the conflict between Turkey and the Kurds becomes ever more bitter. And above all, despite Mr Putin’s implicit message to both Mr Assad and the opposition that neither of them can expect to get all they want, there is scant sign from either of a readiness for compromise. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21694996-putin-appears-turn-hard-power-diplomacy-russians-show-their-hand/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Tension in Saudi Arabia’s Eastern Province + +After the execution + +The kingdom’s Shia are angry + +Mar 19th 2016 | AWAMIYA | From the print edition + + + +AWAMIYA, a town of some 30,000 in Saudi Arabia’s Shia-dominated Eastern Province, had been simmering ever since its cleric, Nimr al-Nimr, called on his followers to join the Arab spring in 2011. When the security forces responded that year with live ammunition, and incarcerated hundreds of youths, it only fired him up him more. “If we don’t get our dignity we cannot be blamed for seeking independence,” a video clip shows him saying. And when on January 1st this year the Saudi authorities executed Nimr and two fellow Shia on charges of treachery and inciting terrorism, Awamiya started to put his aspiration for self-rule into practice. + +The town’s walls today carry the message. “Long live al-Nimr” and “Death to the Al Sauds” are some of its milder slogans. Nimr’s portrait hangs from billboards and balconies alongside the Imam Hussein’s, an ancient symbol of Sunni oppression. Lamp posts are laced with black ribbon. Apart from the heavily garrisoned police station, whose approach road is strewn with rocks, tyres and barbed wire, the town is bereft of a government presence. Booksellers openly sell copies of Shia liturgies banned elsewhere in the kingdom. The cemetery is full of women crouched in mourning aside the colourful shrines of the town’s 23 “martyrs”, piled high with flowers, flags and memorabilia. + +Some 10% of Saudi citizens are Shia. How angry and alienated they are, outside Awamiya, is unclear. The town has been an exception ever since Nimr’s grandfather led an uprising after the Al Sauds captured eastern Arabia in 1913; it opposed the treaty other Shia notables signed with Abdelaziz, the founder of Saudi Arabia, in 1932. Most Shia follow more mainstream clerics, such as Ayatollah Ali al-Sistani in Najaf in Iraq, and Iran’s Supreme Leader, Ali Khamenei. + +But the authorities are taking few chances. At the exits off the highway skirting Shia towns, security personnel man checkpoints and inspect papers. They say they are protecting the Shia from Islamic State’s suicide bombers, who have struck six Shia mosques since late 2014. But since Nimr’s death, many Shia suspect their purpose is more to keep turbulent Shia under control. Most Shia would rather be protected by their own. On Fridays across the Eastern Province, young men in luminous jackets park cars and forklifts in the alleyways leading to mosques. Shia communal leaders, who kept away from Nimr when he was alive, have trooped to his mourning tent and hailed him as a hero and martyr. + +Saudi Arabia’s military support for Sunnis fighting Shia in other countries has further inflamed matters. The kingdom’s decision to sever ties with Iran upset local Shia, who have been banned from visiting Iran’s holy sites. Activists protest on social media. “Expression has become a capital offence,” says Nissima al-Sada, an activist who was barred from running in December’s local elections. Reprisals are getting violent. Gunmen have shot dead several policemen, and earlier this year torched a bus belonging to Aramco, the state oil firm. + +Nimr’s death has made compromise harder, but it is not too late to pull back from the brink. For all the talk of King Salman’s close ties with conservatives, state media sternly condemned IS’s attacks on Shia mosques. A lessening of tensions in Syria, too, might soothe tempers back in Saudi Arabia. Even Nimr’s brother supports a strong Saudi presence in the town, provided Shia are treated equally. “We want to be loyal Saudis,” he says. “We tell the government: deal with us politically, not militarily.” Lifting the death sentence that hangs over a reported nine more Shia might be a good start. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21694960-kingdoms-shias-are-angry-tension-and-revolt-saudi-arabias-eastern-province/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Iraq + +The unquiet cleric + +A new challenge for an embattled prime minister + +Mar 19th 2016 | BAGHDAD | From the print edition + +Ready to storm the Green Zone + +THE biggest challenge faced these days by Iraq’s prime minister, Haider al-Abadi, arguably does not come from Islamic State, even though it has occupied a third of his country. It comes instead from one of his own Shia political partners: Muqtada al-Sadr, a cleric who has escalated his political demands into a threat to storm government offices. + +Mr Sadr, whose fighters battled American and Iraqi government forces between 2004 and 2008, has re-emerged from a period of political silence to champion the rights of the common Iraqi—insisting that Mr Abadi root out corruption, fire many of his ministers and appoint a new cabinet of technocrats. + +To drive home his demands, the young cleric launched a show of force on March 4th with a huge protest outside the fortress-like Green Zone, where government offices and diplomatic missions are located. When security officials declared the night before that the protest would not be allowed, Mr Sadr sent fighters with rocket-propelled grenades into the streets. The authorities backed down. But although the protesters then demonstrated peacefully under the watchful eye of Mr Sadr’s own security forces, the cleric has told them to be ready to storm the Green Zone if he gives the word. + +For many of the poor, jobless and angry young men who make up Mr Sadr’s base of support the message is attractive. “Everybody hates the Green Zone in the street—it’s a symbol of corruption and a symbol of occupation. People think there are treasures inside,” says a well-placed official, who predicts that Iraqi security forces would refuse to fire on fellow Shias if they did storm the gates. + +On the other side of the concrete blast walls, razor wire and bomb-sniffing dogs that protect the Green Zone is an Iraqi prime minister struggling to fulfil promises made a year ago to reform ministries and arrest corrupt politicians, but with little power to do so. “Abadi is a weak leader even within his own Dawa party,” where he is overshadowed by Nuri al-Maliki, the former prime minister, says Saad Eskander, a historian of Iraq. “It’s not in the Shia or Sunni interest to abandon this man, but at the same time they are unwilling to support him to carry on meaningful reforms.” + +Mr Abadi has been unable to fire ministers he wants to see the back of, thanks to the fragmented nature of his political mandate. But it is the unfulfilled promise to tackle corruption that hangs most ominously over his head. Despite regular promises to arrest dirty officials, there have been no high-profile seizures, which Iraqis believe would inevitably include senior political figures. + +“Every day they arrest minor civil servants who took $25,000 but those who made $15m, where are they?” asks Mr Eskander. He says Mr Abadi has also failed to reverse any of the controversial temporary appointments made by the former prime minister. + +The protests have given Mr Sadr a chance to reclaim the spotlight as a national leader and room to claim the high ground. He has taken to wearing the white cloak of a martyr, saying he is willing to be killed for his fight for the rights of Iraqis. He recently detained one of his own party’s most senior officials on corruption charges. Rather than handing him over to a tainted judicial system, Mr Sadr has said he is keeping him under house arrest in Najaf for the next three months while he collects evidence. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695039-new-challenge-embattled-prime-minister-unquiet-cleric/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Higher education: Class apart + +Merkel under pressure: The lady’s not for turning + +Fighting in Ukraine: Bite the bullet + +Queuing for cash: Worth their wait in gold + +Charlemagne: The bystander + + + + + +Articles Sections Next + +Higher education + +Class apart + +A growing number of European students are opting to pay for their education + +Mar 19th 2016 | BAD HONNEF AND MILAN | From the print edition + + + +“SOME of my friends think I’m a snob,” admits Christopher Karp, a 20 year-old aviation-management student. Mr Karp attends the business school at the International University of Applied Sciences (IUBH) in Bad Honnef, a spa town in Germany. Rather than enroll in a free public university like his friends, Mr Karp borrowed money from his parents to study for a degree at IUBH. He has no regrets. Classes are small. Lecturers know the industry he wants to enter; many work for Lufthansa, an airline. He doesn’t even mind the shorter holidays. “We pay a lot of money for our studies and we want to make sure we receive a good education,” he says. + +Globally, one in three higher-education students is in the private sector, according to Daniel Levy, an academic at the State University of New York. In Europe the figure is only one in seven. But the share is set to rise. According to Parthenon-EY, a consultancy, between 2011 and 2013 the number of students enrolled in private higher education grew at a faster rate than those in the public sector. In Turkey the private sector increased by 22% over that period, compared with 14% in the public sector; in Germany by 13% versus 7%; in France by 3% versus 1% and in Spain by 6% compared with no growth in the public sector at all. In Britain, the number of higher-education students attending an “alternative provider” has climbed from 142,000 in 2009 to around 200,000 now. + +Disruption is nothing new for European higher education. In the 16th century Martin Luther, a scholastic entrepreneur of sorts, said universities would be “the great gates of hell” if they did not teach scripture. But the appeal of studying in old buildings, combined with free tuition and regulatory barriers to entry, have sheltered the public sector from competition. + +This is now starting to change. One reason is that private providers, including ones out to make a profit, are increasingly attractive to those who might have once gone straight into a job after school. Many do not take well to straight academic life. Nearly half of French students who pass their baccalaureate exam and enter university do not pass their second year. These sorts of students are starting to “buy differently”, says Matthew Robb of Parthenon-EY. They want courses that offer a clear progression to a career. + +Companies are also turning to private universities, further boosting their growth. IUBH offers a “dual studies” hospitality degree, paid for by hotels, whereby students spend alternate weeks on campus and at work. Even its standard degree features a 22-week internship. Other private university groups offer tailored MBAs in sectors such as the wine business, which distinguish them from their more traditional rivals. “We cannot compete with Harvard but we can do better than chambers of commerce,” says Bertrand Pivin, a partner in Apax, a private-equity fund which owns INSEEC, a French business-school group. + +International students are also swelling the ranks of private providers. There are 4.5m international higher-education students worldwide, a number that is expected to rise to 7m-8m by 2025. America’s State Department wants to double the number of American students abroad from 300,000 to 600,000 by 2020. European countries are popular destinations, both for students from other parts of the continent, and those from elsewhere. + +It’s fashionable abroad + +The Istituto Marangoni fashion school in Milan (pictured), which with its modernist furniture is as chic as one of the boutiques near the campus, is opening outposts in Florence and Shenzhen this year, adding to those in Paris, London and Shanghai. In Milan foreign students account for 70% of those enrolled, with Chinese students the biggest group. Many are well-off: annual fees start at €13,600 ($15,400) for a degree-level qualification, rising to €32,000 for a “fashion elite” course. + +Some European governments are starting to welcome private colleges. The Italian government should start to accredit degrees from the Istituto Marangoni this year. In Britain, the government will soon say how it intends to ensure that good alternative providers thrive and dodgy ones die. After Germany ended its eight-year experiment with tuition fees at public universities in 2014, the government has become more open to the idea of entrepreneurs stepping in, argues Patrick Geus, who teaches at IUBH. + +More countries are likely to follow, as many will have to start spending less on universities. “France is completely broke,” says Mr Pivin of Apax. This will create an incentive to offload more costs on to students, creating opportunities for investors from outside Europe, he thinks. Investors in education are also keen to diversify after scandals in private universities dented the American market, says Andrew Rosen of Kaplan, an education company. Some providers were accused of recruiting students with little regard for their academic ability or financial situation. Classes at a university founded by Donald Trump allegedly focused largely on persuading students to sign up for more expensive courses. + +America offers lessons for Europe. The decline of for-profit higher education is one reason Barack Obama could oversee a fall in the share of 18- to 24-year-olds attending university, argues Mr Rosen. It need not be like this. Students can benefit from being treated as consumers. But regulation is needed. Providers should be transparent about admissions and employment data. Failing private colleges should be shut down. Across Europe, students are looking beyond traditional options when deciding their future. Governments should be equally open-minded. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21695002-growing-number-european-students-are-opting-pay-their-education-class-apart/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Merkel under pressure + +The lady’s not for turning + +Angela Merkel will stay in power, if she wants to + +Mar 19th 2016 | BERLIN | From the print edition + + + +ON MARCH 17th, as The Economist went to press, Angela Merkel was on her way to Brussels for a summit that may define her legacy as German chancellor. At her initiative, the 28 member states of the European Union were to agree to a controversial deal with Turkey that Mrs Merkel had earlier this month sold as a potential “breakthrough” in the refugee crisis. But many of her EU counterparts demurred. Even if a compromise materialises, Mrs Merkel currently looks more isolated than any German chancellor since the 1950s. + +This continues a slide in Mrs Merkel’s power. Only last summer, she was first among equals in the EU, having managed the euro crisis and a showdown with Russia in Ukraine. But on September 4th she opened Germany’s borders to refugees streaming into Europe, setting off conflicts with Hungary and other eastern countries. At first she had Austria on her side. But in January its chancellor, Werner Faymann, turned into an opponent, as he led a group of Balkan countries to close their borders. + +Mrs Merkel’s isolation has not gone unnoticed in Germany. Horst Seehofer, the premier of Bavaria and leader of the Christian Social Union (CSU), nominally the sister party of Mrs Merkel’s Christian Democratic Union (CDU), has been attacking her for months. He demands a fixed upper limit on refugees, as Austria has imposed. Following regional elections on March 13th in which the Christian Democrats fared badly, Mr Seehofer warned of an “existential” threat to the Union parties. + +His worry is that Union supporters keep drifting to the Alternative for Germany (AfD), a right-wing party founded in 2013. On March 13th it came second behind the CDU in Saxony-Anhalt, with 24%. Compared with other countries with populist parties, however, that is not unusual. “I do not see the AfD as an existential problem for the CDU, but I do see it as a problem,” Mrs Merkel said. Defiantly, she then redoubled her commitment to a “European” solution to the crisis, rather than “national” one, involving border closures. + +The lessons of the elections are indeed ambiguous, for they show Mrs Merkel to be less vulnerable than it appears to observers abroad. The winners in the two western states, Baden-Württemberg and Rhineland-Palatinate, were the Greens and the Social Democrats, respectively. Their candidates supported Mrs Merkel’s stance on refugees and were rewarded for it. The Christian Democrats failed mainly because their candidates had tried to distance themselves from her line. “The majority of voters supported Merkel’s refugee policy,” says Gero Neugebauer, a political scientist at Free University Berlin. + +Moreover there exists no plausible scenario in which Mrs Merkel could be toppled. The opposition parties in the federal parliament have only 20% of seats and, in any event, agree with Mrs Merkel on refugees. The Social Democrats, her coalition partners, are cantankerous but also side with her. Moreover, they know that ousting Mrs Merkel would lead to new elections, which they do not want. They would lose seats (in two of the three elections on March 13th they received a drubbing). And the AfD would almost certainly enter the federal parliament, a situation which they want to avoid. + +Even the CSU cannot directly unseat Mrs Merkel. If its 56 members of parliament were to walk out of the coalition, Mrs Merkel’s majority would merely shrink from 80% to 71%. That leaves only her own party, the CDU, as the place where a putsch could originate. But while she does have naysayers there, it is famous for rallying loyally around its leaders. + +More importantly, no viable contender exists to take Mrs Merkel’s place. Wolfgang Schäuble, currently the finance minister, is said to hold a grudge since Mrs Merkel outmanoeuvred him to become party leader in 2000. But he is 73. Ursula von der Leyen, the defence minister, has less support within the CDU than Mrs Merkel and is at least as liberal as Mrs Merkel concerning refugees. Julia Klöckner, the Christian Democrat candidate in Rhineland-Palatinate, was once mentioned as a potential heiress to Mrs Merkel. But she lost the election there, her second defeat in five years. + +The only way for Mrs Merkel to leave office before her term is up in 2017 would be if she chooses to. Rumours do indeed recur that she may be open to the job of secretary-general of the United Nations. But that would be out of character at this stage of her career. For a woman who in the past decade became notorious for having no ideology, she appears, with the refugee crisis, to have found her calling. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21695008-angela-merkel-will-stay-power-if-she-wants-ladys-not-turning/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Fighting in Ukraine + +Bite the bullet + +The Minsk peace deal is going nowhere + +Mar 19th 2016 | KIEV | From the print edition + +Mr Poroshenko, not empty-handed + +A COLUMN of men in camouflage snaked through the streets of Ternopil, a sleepy town in western Ukraine, with a casket held aloft earlier this week. Yuri Dinya, a solider who died from wounds sustained in eastern Ukraine, was the latest casualty of a war that sputters along largely out of sight. Although the violence has ebbed, following a peace deal signed in Minsk last year, not one part of the peace plan has been implemented. A meeting on March 3rd between the foreign ministers of Ukraine, Russia, Germany and France ended in exasperation. + +Yet the skirmishes and negotiations continue not because both sides seek to control Ukraine’s Donbas region, but because neither wants to assume responsibility for it. Russia has made clear that it does not plan to annex it, and would rather use it to destabilise Ukraine from within. Ukraine’s leaders, while formally committed to taking back the territory, also recognise the problems they would inherit. The Minsk agreement is a “big fat status quo that doesn’t satisfy anyone, but that we can’t get out of,” says Balazs Jarabik of the Carnegie Endowment for International Peace, a think-tank. + +Part of the problem is that Petro Poroshenko, the president of Ukraine, agreed to a Kremlin-friendly deal that he never expected to hold up (an earlier compact crumbled within weeks). A ceasefire was to be followed by the withdrawal of heavy weapons and local elections. Amnesty for fighters, a hostage exchange, aid distribution and the restoration of Ukrainian financial responsibility for the territories were to ease the way toward reconciliation. Constitutional changes to decentralise power and a law granting the contested territories “special status” would formalise their return to Ukraine, and ultimately allow it to retake control of its borders. + +The debate over which step to take first has stopped any from being taken. The Kremlin blames Ukraine for balking at the political elements of the deal. Ukraine, in turn, insists that security should come first. Some in Kiev argue that constitutional changes are impossible until Ukraine’s borders are restored. The Organisation for Security and Co-operation in Europe still records hundreds or thousands of ceasefire violations weekly, mostly from the separatist side. + +Ukraine’s European allies have been pushing for progress on a law over local elections. But frustration is building, especially as Ukraine’s leadership is mired in internal squabbles and corruption scandals. Earlier this month, Jean-Claude Juncker, the president of the European Commission, declared that Ukraine will not become a member of the European Union or NATO in the next two decades. Mr Juncker’s remarks were meant to reassure Dutch voters ahead of a referendum on Ukraine’s association agreement with the EU next month. While the vote is not binding, it will hint at the European mood. + +Americans, too, seem wary of Ukraine’s continuing vulnerability. This week Victoria Nuland, the American under secretary for European and Eurasian affairs, warned in the Senate that the political chaos in Kiev creates a “doubt in Europe about whether continued support for Ukraine is warranted”. Such uncertainty gives Moscow hope that the EU will lift its sanctions when they come up for renewal this year. + +Politicians in Kiev note that the Minsk deal enjoys little public support. Mr Poroshenko is said to be considering a referendum on a special status for the Donbas; a no vote could be cited as a break with Minsk, while a yes vote may provide cover for divisive measures. A first round of voting on constitutional amendments last year on greater autonomy to the separatist-held territories brought demonstrators to the streets and left four dead. But Ukraine must “bite the bullet” on Minsk, says a Western diplomat in Kiev. For now, there may be no alternative. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21695060-minsk-peace-deal-going-nowhere-bite-bullet/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Queuing for cash + +Worth their wait in gold + +Italian red tape means jobs for those who stand in line + +Mar 19th 2016 | From the print edition + + + +THE idea came to Giovanni Cafaro two years ago when, like millions of his compatriots on any given day, he was waiting in a queue in Milan to pay a bill. “It occurred to me I could do the same for others,” he says. + +Mr Cafaro, who had just lost his job, set about his new enterprise with gusto. He handed out flyers advertising his services and found several dozen clients. These include companies that would rather their employees did something more productive, like work. In the process, he has created a new profession: that of codista (queuer). + +According to Codacons, a consumer group, Italians spend on average 400 hours a year queuing. The annual time wasted is worth €40 billion ($44 billion), it estimates. For decades, rich Italians have hired people to stand in line on their behalf to pay bills, send off parcels and deal with everyday bureaucracy. But Mr Cafaro has given the occupation a legal footing, with its own standardised contract, minimum pay (€10 an hour before deductions) and access to state-run industrial accident insurance (“in case, say, a codista trips on the stairs of a government office,” he explains). Mr Cafaro offers a five-hour course, which he gives over Skype. This includes learning the tedious requirements of central and local government departments for documents, signatures and charges. + +Successive Italian governments have tried to cut the queues. From March 15th members of the public can apply for a identification number giving them online access to public services. But it is not just Italy’s complex bureaucracy that keeps people waiting. Italian idiosyncrasies, which reflect a certain fiscal timidity, also play a role. Italy has one of the lowest rates of non-cash transactions in Europe. “Paying in cash is very widespread and people are generally reluctant to use either credit cards or direct debit,” says Mr Cafaro. This is consistent with the fact that Italy has one of the largest shadow economies in the rich world. + +Ironically Mr Cafaro’s initiative has created yet another layer of bureaucracy. Those looking to hire a codista under the terms of the new contract will have to pay welfare contributions and deal with the attendant paperwork, even if they employ the codista only for an hour. Rather than cut the queues, Mr Cafaro’s business may make them even longer. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21695055-italian-red-tape-means-jobs-those-who-stand-line-worth-their-wait-gold/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +The bystander + +France embodies Europe’s dilemmas over migration + +Mar 19th 2016 | From the print edition + + + +ABDUL has lost his front tooth, but not his sense of hope. Last year he journeyed 5,000 kilometres, from war-battered Sudan, via Libya and Italy, to the northern French coast. Now, just 33 kilometres of water separate him from Britain, where he wants to make a fresh start. In the refugee camp behind the Calais dunes, Abdul’s tiny two-bed wooden shack is neatly kept, its sloping roof lined with layers of black plastic and donated blankets. Tins of Tesco beans, distributed by British aid workers, sit on a wooden shelf crafted from packing crates. Diggers recently cleared part of the refugee camp, under a court order. But Abdul says he won’t move, until it is time to try his chances. “I just want to get to England,” he says, “and start my life again.” + +Barbed wire, metal fences and life under plastic sheeting mark the shocking new social geography of Europe. At Idomeni, on the Greece-Macedonia border, 12,000 refugees have been camped out under canvas since the frontier was shut last week. In Calais, where the sea crossing to Britain is at its narrowest, at least 4,000 migrants crowd into camps. Under a deal agreed in 2003, Britain patrols this border point from Calais, and has paid for reinforced fencing around the French entrance to the Channel Tunnel, to keep migrants out. So the refugees at the French port are stuck. The shacks they have built into the sand, on the border between two of Europe’s richest countries, speak of the continent’s agonised failure to handle its biggest refugee crisis of modern times. + +In some ways, France is a bystander to this historic influx. Last year, over 1m refugees registered for asylum in Germany; France received just 79,000 applications. Geography sets France out on Europe’s western fringes, off the favoured route from Syria via Turkey and the Greek islands to Germany. Economics and recent history do the rest. French joblessness, at 10%, is twice that in Britain. Linguistic and family ties to France are weak. Down a boggy, litter-strewn alley in the Calais squatter camp on a recent weekday, Pascal Brice, head of the French Office for the Protection of Refugees, was to be found, clad in a suit and wellington boots, valiantly trying to persuade refugees to lodge asylum applications in France. He has shortened processing delays, he told them; applicants who chose to stay would be housed in clean, dry reception centres around France, or in the 125 white containers now converted into shelters in Calais. But migrants were sceptical. “I don’t speak French,” says Hamid, who made it to Calais from Afghanistan via the Greek island of Lesbos, and has twice been caught by border police while trying to smuggle himself out in the back of a lorry: “and my friends are in England.” + +Yet France nonetheless embodies Europe’s dilemmas over borders. Back in the mid-1980s, no other country was quite as enthusiastic as François Mitterrand’s France for the dismantling of frontier controls under the Schengen agreement, in the name of freedom, reconciliation and a shared European future. Today, partly for reasons of counter-terrorism, France was one of the first to reinstate border checks. On its northern coast, France is affected by the refusal of Britain, not a member of Schengen, to let in refugees who are at its door there. And on its south-eastern flank, France is playing the role of Britain to Italy, which does belong to Schengen: controlling once again the narrow crossing between Menton and Ventimiglia, and keeping migrants out. Last summer, scores of refugees camped out on the sun-baked Italian rocks, where the steep cliff face falls into the Mediterranean. Today, a discarded red plaid blanket here, a khaki sleeping bag there, are the only traces of their passage. French police keep permanent watch at a checkpoint. Officials are pleased that they have, for now, sealed this border to migrants—although some fear that the numbers will swell again as Libya implodes, and if a deal with Turkey tightens the route into Europe through Greece. + +At once gatekeeper in the south, and host to squatter camps for those its neighbour has shut out in the north, France is well placed to understand the dynamics and anguish of Europe’s refugee crisis. As leading partner to Germany, whose open-door policy has won its chancellor, Angela Merkel, admiration and cost her electoral success, France is also qualified to act as wise counsel and pragmatic friend in the search for a solution. Yet the Franco-German dialogue over refugees has, in reality, been marked by misunderstanding, dismay and irritation. A low point was reached when Manuel Valls, France’s Socialist prime minister, visiting Munich last month, said that France would not take any more than the 30,000 refugees it had already agreed to host under a German-inspired redistribution scheme. “France,” he declared tartly, “never said: Come to France.” His comments, says Thomas Klau, former Paris head of the European Council on Foreign Relations, were an “act of extraordinary hostility”. + +The closing of borders, and minds + +For France and Germany to disagree, and hold divergent interests, is nothing new. The historical construction of Europe has been predicated on their ability to conjure compromise from conflicting views. Even the great Franco-German partnerships, including that of Mitterrand and Helmut Kohl, who together devised the passport-free area, were marked by profound mutual misgivings: Mitterrand feared German reunification; Kohl was wary of European monetary union. Yet the force of the tie has been a joint determination to overcome such differences. + +Today, the effort of each side to understand the other is half-hearted, at best. France, under President François Hollande, is exasperated by what it sees as Germany’s reckless unilateralism, both in welcoming the first wave of migrants, and now drawing up a deal to return new ones to Turkey. Germany feels let down by the refusal of Mr Hollande, fearful of his own far right, to back it properly. The handling of the refugee influx has not been Europe’s finest hour. But the inability of France and Germany to find common cause on the matter does it no further favours. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21695006-france-embodies-europes-dilemmas-over-migration-bystander/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +The budget: The generation game + +Savings: A nicer ISA? + +A tax on sugar: Pricier pop + +Brexit brief: Dreaming of sovereignty + +Bristol’s economy: London-upon-Avon + +“Programmable” Bristol: Data deluge + +The music business: Discs, jockeying + +Bagehot: A coastal town they forgot to close down + + + + + +Articles Sections Next + +The budget + +The generation game + +With little cash to spare, the chancellor promises a budget for Britons of the future + +Mar 19th 2016 | From the print edition + + + +IN THE run-up to his latest budget, nothing seemed to be going George Osborne’s way. The economy was slowing down, biting into the chancellor’s tax revenues. Growing worries about the June referendum on Britain’s membership of the European Union prompted the Treasury to cancel a proposed overhaul of the pensions system. But when Mr Osborne stood up on March 16th, he gave the impression that nothing would knock him off his course to reform the British economy. + +It was a budget “for the next generation”, he said repeatedly, as if to emphasise the scale of his ambition. With an extra £7.6 billion ($10.9 billion) of spending cuts, Britain is still forecast to run a budget surplus of £10 billion in 2019-20, just before an election. Lessening the burden of government debt on future generations, he argued, is the right thing to do, as is implementing the structural reforms that will make the British economy more competitive. In that regard, at least, Mr Osborne’s budget speech hit the right tone. But there was not enough to back it up. + +The biggest set of reforms, of company taxation, may indeed make the Britain of tomorrow a better place to do business. Following an agreement in November by the OECD, a club of mainly rich countries, Mr Osborne tweaked rules under which firms offset debt-interest payments against their corporation-tax bill. The plan will net around £1 billion a year by 2020. A change to the taxation of royalties, to undermine a wheeze used by oil and internet firms, goes beyond the OECD recommendations. + +Small businesses, which complain most vociferously about tax-dodging by big firms with expensive lawyers, are particularly happy. Mr Osborne raised the threshold up to which small companies are eligible for relief on business rates, taxes charged on non-domestic property. About 250,000 firms will see lower rates, a welcome windfall for those worrying about a higher minimum wage to be introduced next month. Allowing small outfits to keep more of their earnings may also encourage more people to give entrepreneurship a go, and others to expand. Among big, rich economies Britain has one of the lowest rates of rapidly growing small firms, which holds back productivity, according to a recent report by Goldman Sachs. + +Further incentives to invest were put in place through a reduction in corporation tax, which will fall to 17% by 2020, one of the lowest rates in the rich world. Greater certainty over future tax policy is welcomed by businessfolk. The reduction in capital-gains tax—the headline rate will fall from 28% to 20%—will also help them, at a cost to the Treasury of about £670m a year by 2020. The big downside for all firms is the ever-increasing complexity of the tax code: Mr Osborne smashed his own record by introducing an astonishing 86 tax measures in the budget. + +These plans may marginally improve competitiveness in the long term, but for now they are likely to favour oldies over youngsters. Lowering capital-gains tax benefits those with assets in the first place. Add in the increase in the personal tax-allowance and a rise in the threshold for paying a higher rate of income tax—from which richer (and older) types will benefit more than poor youngsters—and many policies seem skewed against the young. + +Still, the chancellor pressed on with his “next generation” theme by unveiling a few policies targeted at youngsters. As well as a new scheme to help people save for retirement (see article), he boasted of improving youngsters’ skills. A little more cash will be put towards school sports, to be paid for by a levy on sugary drinks (see article). Schools will soon be able to bid for cash to lengthen the school day—though with only £285m a year earmarked, there is enough for only one-quarter of them to do so. Mr Osborne also pledged to free all state schools from local-authority control by 2020 (currently one in seven primaries and two in three secondaries are independent). Making the change so quickly may be hard, especially when budgets are squeezed: per-pupil spending is supposed to fall by 8% in 2015-20. + +The government also talks a good game on infrastructure—the backbone of future growth—but again it was a weak point in the budget. Mr Osborne set in motion a plan for Crossrail 2, an underground railway that will traverse London, and confirmed rail and road upgrades in northern England. But despite a tiny recent increase in infrastructure spending, in 2020 public-sector investment as a percentage of GDP is forecast to be about half its level in 2010. Britain is slipping down international rankings of infrastructure quality. + +If Mr Osborne is serious about helping the next generation, structural reform will have to be deeper. In recent months Treasury officials have enthused about eliminating inefficiencies in markets for rail, energy and consumer banking, which could boost lagging productivity. But few such proposals made it into the budget. Mr Osborne also reaffirmed the government’s daft commitment to protect “green belts” of protected land surrounding cities, which constrain housebuilding and inflate property prices. This modest budget will do no harm, either to short-term economic growth or the government’s campaign to keep Britain in Europe. But talk of priming the next generation of Britons to be worldbeaters is overblown. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695062-little-cash-spare-chancellor-promises-budget-britons-future/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Savings + +A nicer ISA? + +A new scheme adds to tax complexity + +Mar 19th 2016 | From the print edition + + + +A FEW weeks ago the big change in the budget on March 16th was expected to be a radical revamp of the tax rules on pensions. That idea was abandoned in the face of industry and backbench opposition. But George Osborne, the chancellor, has introduced a scheme that might eventually become the basis for reform—a lifetime individual savings account (ISA). Patrick Bloomfield of Hymans Robertson, a benefits consultancy, described it as “essentially a new pension regime through the backdoor and the first step on the path to a pensions ISA for all”. + +The new scheme, which will start in April 2017, will be open to those aged between 18 and 40. They will be able to pay up to £4,000 a year ($5,700) into the tax-free account, and the government will pay a bonus of 25% of the amount invested each year until the age of 50. The money can be withdrawn to buy a first home with a value of up to £450,000 without penalty. If the money is left alone until the saver is aged 60, it can be withdrawn tax-free; if the money is withdrawn from the account earlier for any other purpose, the government will reclaim the bonuses (plus any investment return made from them) and charge a 5% penalty. + +With three separate age requirements and three different tax treatments, the new scheme will add to the complexity facing savers. It will also operate alongside other ISA schemes, including the help-to-buy ISA (also designed to encourage homebuyers) and the cash, stocks-and-shares and innovation ISAs, whose annual savings limit will rise from £15,000 to £20,000. + +The flexibility of the scheme may tempt more youngsters to save. But it could persuade others to opt out of their company pension plans. That would run counter to the government’s introduction of auto-enrolment into pension schemes. Steve Webb, a former Liberal Democrat pensions minister who now works for Royal London, an insurance company, warned: “Just at the point that millions of under-40s have started pension saving for the first time, the chancellor has set up a rival product which risks causing mass confusion.” + +Savers attracted by the government bonus may forget that, under corporate pension schemes, employers usually match the employee’s contribution—the equivalent of an uplift of 100%. And cautious youngsters may keep their lifetime ISAs in low-yielding cash, rather than riskier assets like equities that tend to yield higher returns over the long term. That may mean savers end up with inadequate pensions. + +Another question is whether the new scheme is well targeted. Many young people are on low salaries and are struggling to pay off student debts; they may not have the ability to save £4,000 a year. Those with rich parents, however, may find that the Bank of Mum and Dad will chip in. Even so, with £40,000 needed to fund the average deposit on a first home, it will take many years for savers to reach their goal. A house-building programme that brought down prices might have been a simpler, and better, answer to the problem. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21694994-new-scheme-adds-tax-complexity-george-osborne-introduces-new-type-isa/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A tax on sugar + +Pricier pop + +A levy on drinks may change recipes, but not waistlines + +Mar 19th 2016 | From the print edition + +Stand back, it’s time for a shake-up + +BRITAIN’S government wants its citizens to strive, not slurp. The budget on March 16th unveiled a new levy on sugary drinks, to be implemented by April 2018. Jamie Oliver, a television chef and sugar-tax evangelist, danced for joy outside Parliament. Shares in fizzy-drinks companies fell (though those of Tate & Lyle, a food company, recovered once traders remembered that the firm sold off its sugar business in 2010). + +The policy’s advocates hope that it will reduce sugar consumption, slimming the nation’s children and taking a weight off the National Health Service. The government believes that obesity and its related diseases cost the NHS £27 billion ($39 billion) a year. A levy on drinks makes particular sense because, unlike some sugary foods, they tend to contain few other nutrients. Some studies also suggest that sugar is less filling when gulped than when gobbled, making people particularly prone to overindulging. The tax will reduce the Treasury’s need to tighten its own belt, raising £520m in its first year. The proceeds are earmarked for extra sport in schools. + +Drinks with the highest sugar content will attract the highest tax rate. Current plans suggest that a 330ml (12-ounce) can of Coke will attract an 8p tax, whereas the lower-sugar Coca-Cola Life will be taxed 6p. Pricier pop should nudge customers towards low-sugar alternatives, though this relies on retailers passing on the tax to consumers (not a sure bet). + +Even if customers are not priced away from sugary drinks, the tax offers a sweet incentive for drinks companies to reformulate their recipes. Some in the soda industry have already been doing this: many of Robinson’s squashes and cordials already have no sugar. This outcome would comfort those worrying about the poorest, whose drinking habits might mean they are hit hardest. + +The Office for Budget Responsibility, a watchdog, expects that producers will change their ingredients to avoid the tax, and that consumers will swill around 5% less drink in the high-sugar category per year (but 2% more in the lower category). It also predicts a rise in cross-border trade, as people try to avoid the tax. + +A closer look at the evidence may leave some feeling flat. The Institute for Fiscal Studies, a research outfit, found that sugary drinks make up less than 20% of Britons’ added-sugar intake. Even if the tax drained sugary-drinks consumption entirely, nearly nine out of ten people would still get more than the recommended 5% of their calories from sugar. Beating the bulge will take time. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21694993-levy-drinks-may-change-recipes-not-waistlines-britain-gets-new-tax-sugary-drinks/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit brief + +Dreaming of sovereignty + +Talk of taking back power may be delusional, but more democracy is not + +Mar 19th 2016 | From the print edition + + + +“TAKE control” is the main slogan of the Vote Leave campaign. Indeed, the argument that Britain has lost sovereignty, and even its democracy, by being in the European Union is at the heart of the case for Brexit. Michael Gove, the justice secretary, complains that “our membership of the EU stops us being able to choose who makes critical decisions which affect all our lives”. Boris Johnson, the mayor of London, says that EU membership is incompatible with parliamentary sovereignty. Many of their fellow Brexiteers claim that, even if leaving has a price, it is worth paying to regain control. + +Despite fighting to stay in, David Cameron shares some of these concerns. The prime minister is proud of the European Union Act of 2011, which makes any treaty passing new powers to the EU subject to a referendum. He fought hard last month to win a British exemption from the European goal of “ever closer union”. The government says it is still working on a bill to assert Parliament’s supremacy. + +There are three strands to the sovereignty argument. The first is the pure concept of parliamentary supremacy. Before the 1972 European Communities Act, the then Tory prime minister, Edward Heath, insisted that “there is no question of any erosion of essential national sovereignty”. Yet this was true only in the sense that Parliament can repeal the act (a right confirmed by the very holding of a referendum). + +What Heath’s phrase skated over was the second strand: that EU membership means that European law trumps national law. This was established in the Factortame cases in the early 1990s, when a British parliamentary act on ship registration was voided by the European Court of Justice after complaints by Spanish fishermen. Vernon Bogdanor, a constitutional historian, says EU membership (along with devolution to Scotland, Wales and Northern Ireland) means parliamentary sovereignty has in practice been eroded. This is true even if Britain copies the sovereignty claims of the German constitutional court, since these have never been tested. + + + +In graphics: A guide to “Brexit” from the European Union + +Many talk of being sovereign as if it were like being pregnant: one either is or is not. The truth is more complex. A country can be wholly sovereign yet have little influence. Britain has signed some 700 international treaties that impinge on sovereignty. Although the EU has the biggest impact, others count a lot: membership of NATO, for example, creates an obligation to go to war if another member country is attacked. It can be worth ceding this independence to gain influence. Mr Cameron has warned Brexiteers against pursuing what he calls the “illusion” of sovereignty. + +They may do better pursuing the third strand: democracy, or rather the lack of it. It is wrong to argue, as some do, that EU laws are imposed by unelected bureaucrats in the European Commission. In fact, although the commission proposes draft legislation, it is adopted by the Council of Ministers, consisting of elected national governments, and the elected European Parliament. Moreover, the commission may be unelected, but the choice of Jean-Claude Juncker of Luxembourg as its president was made after he was chosen as the centre-right’s “lead candidate” before the 2014 European elections. + +Despite this, there is undeniably a democratic deficit in the EU. It is supranational, but elections (including European ones) are fought on national issues. There is no Europe-wide demos. Voters cannot throw out the EU’s collective leadership. Both the council and the parliament are remote and unaccountable, with decisions often agreed on by shifting alliances. This may partly explain why voter turnout in European elections is so much lower than in national ones (see chart). + + + +As Simon Hix of the London School of Economics notes, this matters especially to Britons, who are not used to coalition government. The demise in the 1980s of the Luxembourg compromise, which gave EU members a form of veto, and the spread of majority voting have also led to Britain being outvoted more often. This is where another of Mr Cameron’s ideas may help: more say for national parliaments. + + + +In 2013 Mr Cameron called national parliaments the “true source” of democratic legitimacy. Yet they have played only a marginal role in the EU. That is to be beefed up by a deal whereby if 55% of national parliaments object to a law it is withdrawn (a “red card”). There are also plans for parliaments to suggest laws (a “green card”). + +There is an irony here for British Eurosceptics who like to trumpet parliamentary sovereignty. National parliaments in Denmark, Sweden and the Netherlands are far better at overseeing their governments’ EU policies. In Britain, moreover, the elected House of Commons is less effective than the unelected House of Lords. That is partly because MPs can be shamefully ignorant of EU affairs. But just now it is also because MPs are consumed by arguments over Brexit. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695056-talk-taking-back-power-may-be-delusional-more-democracy-not-dreaming-sovereignty/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bristol’s economy + +London-upon-Avon + +The south-western powerhouse needs better government if it is to prosper + +Mar 19th 2016 | BRISTOL | From the print edition + + + +BRISTOLIANS think of themselves as different. Theirs was the only city to vote to adopt an elected mayor in a series of plebiscites held in 2012; nine others rejected the idea. The place has its own currency, the Bristol pound, which can be used in local shops and even to pay council tax. And it is unusually prosperous. The Bristol city-region, which includes three other councils (North Somerset, South Gloucestershire, and Bath and North East Somerset), has by far the highest productivity of any big conurbation outside London (see chart). It also has the highest household income beyond the capital. + + + +Now George Osborne, the chancellor, has dangled the carrot of building on that success as part of his plans to devolve more power to city regions. In his budget speech on March 16th he announced proposals for a “West of England” mayor, who would govern an area joining up the four councils of the region. The offer is well-timed for Bristol, whose productivity advantage over other cities has been slipping, partly as a result of squabbling among the different councils. + +Much of the city’s prosperity dates back to the slave trade, which accounted for half its income in the 18th century. Banks and insurance companies sprang up to support it. Even after slavery went away, the bankers did not: today Bristol has one of the highest concentrations of finance jobs in the country. + +Happier factors also explain Bristol’s success. An hour’s drive from the beautiful architecture of the city centre are lush Welsh valleys. Bristolian companies are particularly inclined to let their staff work from home, suggest data from the Centre for Cities, a think-tank. This helps to explain an exodus from London of working-age folk, particularly those with families: in 2014 one-third more 30- to 50-year-olds moved from London to the Bristol area than vice versa. Graduates make up 46% of Bristol’s working-age population, compared with a national average of 36%. Foreigners like the place, too; immigration has boosted the city’s population by 6% during the past decade, one of the biggest increases in the country. + +Bristol’s success is thus partly down to historical and geographical accident, but local officials have also taken some wise decisions. When the city received money to develop an “enterprise zone” offering financial relief to firms, the council located it in the city centre, next to the main train station. This was an unusual move: cities tend to use such grants to create business parks or manufacturing centres in struggling out-of-town areas. However, rapidly growing firms usually want to locate in buzzing city centres, points out Ben Harrison of the Centre for Cities. By supporting and encouraging more of them to locate there Bristol is playing to its strengths, he says. The council is also investing in snazzy new digital technology (see article). + +But in other ways government has hindered more than it has helped. The lack of joined-up thinking among the four local authorities explains why public transport is so ropy. Friends of Suburban Bristol Railways, a pressure group, laments that at Bristol Parkway, another big train station, passengers arriving on the last train from London may face a half-hour wait for a bus. With cars the only option for many, it is small wonder that Bristol’s traffic is some of the worst in Britain. + + + +As for housing, the average Bristol home costs nearly ten times earnings, pricier than in any comparably sized city. Lack of supply is partly to blame. Bristol’s “green belt” of protected land is six times the size of the city, so it is tricky to build new homes: in 2004-14 Bristol’s housing stock grew more slowly than that of inner London. Property will get still pricier as transport links improve. Within a few years a railway upgrade will shave 15-20 minutes off the train journey from London to Bristol’s main station. Londoners who fantasise about living in Bristol and working in the capital may be unable to resist. + +Poor public transport and inadequate housing is a bad combination if you want to retain youngsters. Research from the Centre for Cities has suggested that Bristol’s university students are not especially likely to remain in the city after graduation. The pricing-out of young people partly explains why booming Bristol is not especially entrepreneurial: the number of startups fell by 10% in 2010-14, in spite of a recovering economy, according to BankSearch, a consultancy. + +Much remains to be sorted out if the West of England proposal is to go through, not least opposition from some in the surrounding councils who fear domination by Bristol. Another question is whether the city’s own mayor would be dropped in favour of the new, regional mayor. But with the promise of more investment, and with other cities taking advantage of devolution offers, local politicians should not pass up the opportunity. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695067-south-western-powerhouse-needs-better-government-if-it-prosper-london-upon-avon/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +“Programmable” Bristol + +Data deluge + +A plan to create Britain’s smartest city + +Mar 19th 2016 | BRISTOL | From the print edition + +A LORRY overturns by the harbourside within earshot of a microphone-equipped lamppost, which mobilises the emergency services and reroutes traffic while pinging alerts into citizens’ pockets via their smartphones. For now this is just a vision of the future—but perhaps a not-too-distant one. Using a citywide fibre-optic network and a £12m ($17m) supercomputer, Bristol has ambitions to become a “programmable” city. + +Central to this is the Bristol is Open project, a joint venture between the council and Bristol University to open up data for public use. Around 200 anonymised data-sets on pollution, energy use, health and other matters have been released online. Such information will be gathered and transmitted using a network comprising 1,500 radio-linked lampposts, hundreds of kilometres of fibre-optic cable running under the city’s streets, and a mile-long stretch of public Wi-Fi spots. + +Bristolian boffins are proudest not of this physical infrastructure but of the way it is organised. The city now runs its own operating system, “CityOS”, which simplifies the introduction of new technologies into the system. Experiments such as the driverless cars currently being tested on Bristol’s streets can be easily integrated into the city’s network. + +The code is open source, so developers can test out their own ideas. Some of the suggestions so far include “smart ambulances” linked to traffic-management systems that could free up road space during emergencies; a network of smart bins that could notify waste lorries when they need emptying; and a mechanism whereby high levels of pollution could trigger an alert to joggers, or even prompt discounts on bus fares to reduce traffic emissions. + +Such ideas are some way off fruition: for now the project’s applications are limited to fairly modest services such as traffic-congestion updates. And some find all the data-harvesting less evocative of the future than of 1984. The university says it complies with data-protection laws and has suggested drawing up a “citizens’ data charter”. But critics fear that technology marches faster than regulations. For instance, there are plans to equip the lampposts with “acoustic detection sensors” capable of recording noise levels—and eventually, some worry, speech. In Bristol you never know who—or what—might be listening. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695066-plan-create-britains-smartest-city-data-deluge/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The music business + +Discs, jockeying + +A lack of capacity to press records threatens to derail the vinyl revival + +Mar 19th 2016 | From the print edition + +Searching for a Howlin’ Owl (or Wolf) + +NOSTALGIA is not what it used to be in the record industry. Having spent a decade from the mid-1990s in the wilderness, vinyl is now fashionable once again, and not just for obscure indie bands and old Eagles albums. Big labels release the music of stars such as Adele and Justin Bieber in the format. In 2007 just 205,000 vinyl records were sold in Britain. Last year the total reached 2.1m, the highest in 21 years (though still only 2% of all music sales). Vinyl sales are also booming in America, increasing by 30% to 12m last year. + +The renaissance has been so rapid it has caught the companies that press vinyl records off-guard. Unable to keep up with demand, they are giving priority to orders from big labels and delaying those from smaller ones, threatening the very basis of the revival. + +Vinyl is resurgent because it gives a better sound and, with modern music so disposable, it is satisfying to own an actual artefact, says Mark Burgess, who founded Flashback Records, a London record store and small music label, in 1997. “It’s also the ritual of putting the needle on the record and actively listening to the music,” he says. Flashback’s turnover has increased 10% annually for a decade: business has been so good that Mr Burgess has opened two more shops since 2006. The biggest-selling piece of audio equipment on Amazon, an online retailer, last Christmas was a budget turntable. + +Another reason for the revival is Record Store Day. Between 2000 and 2009, the number of such outlets in England fell by more than half, to 300. The trend was the same in America. In 2007 a group of store owners in Baltimore established a special day for people to support their local record shop. (This year’s is on April 16th.) Fans queue up to buy special editions only sold through record stores. + +The shops also host gigs and provide a venue for musical interaction that older generations took for granted. “It’s a lonely business, downloading,” sighs one customer at Flashback. Meanwhile, the cost of classic second-hand albums has soared. A few years ago an old Fleetwood Mac album such as “Rumours” would sell for £1 ($1.55), says Mr Burgess. “Now, you can pay up to £25 for a mint condition original.” Re-issues are pricey, too. + +The opening of new pressing plants has eased the production bottleneck somewhat; at its worst, last year, there was a six-month backlog. But there are bigger, more existential questions facing vinyl. In an age of instant gratification, can even larger groups of young people be persuaded to be patient and pay extra for something of style and beauty? + +And although Record Store Day has boosted vinyl sales, some shops now claim that the day, and the format itself, has been hijacked by the big labels. They print pink vinyl collector’s items of pop queen favourites and monetise their back-catalogues of 1970s has-beens, rather than promoting new artists. + +It is not only bearded, middle-aged men who are buying—teenagers and hipsters (some of them bearded) love the retro feel. But re-issues increasingly dominate the format. Joe Hatt of Howling Owl Records asks: “How can it be a revolution when the bands and the artists who are looking to the future can’t be heard over the sound of the irrelevant and the dead?” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695063-lack-capacity-press-records-threatens-derail-vinyl-revival-discs-jockeying/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +A coastal town they forgot to close down + +The sad underside of George Osborne’s metropolitan revolution + +Mar 19th 2016 | From the print edition + + + +BLACKPOOL in its pomp was everything a mill worker or clerk could wish for in a holiday resort. There were the piers and beaches, the outdoor dancing stages and the music halls, ludicrously extravagant Moorish and Indian follies where entertainers from Laurel and Hardy to Frank Sinatra delighted the crowds. And there was the Tower, modelled on Eiffel’s in Paris, with its lights, ballroom and mighty Wurlitzer organ. One in five Britons holidayed in the town. So the memories of those years lived on long after the dawn of mass foreign tourism in the 1960s. The recent success of “Strictly Come Dancing”, a televised ballroom-dancing contest, is testament to a lingering national soft-spot for its old blend of sequined razzmatazz and Victorian politesse. + +Today the memories are almost all Blackpool has left. Abandoned for the Costas, it failed to find a new role, became one of the ten most deprived towns in Britain and is now almost cinematically bleak: Coney Island meets Detroit. The town centre is a smelly (urine and fried food, with notes of cannabis) patchwork of charity shops, nightclubs with fading playbills and unloved tourist emporia flogging boiled sweets in saucy shapes. In the back streets scrawny men loiter outside terraces of peeling boarding houses, swigging from cans and glaring at the seagulls. “People aren’t usually in Blackpool if they have somewhere to go,” says Brian, an unemployed waiter outside the job centre. + +His comment reminded Bagehot of a song by Morrissey in which the gloomadon-popping Lancastrian evoked “the coastal town that they forgot to close down”. The lyric captures something of Blackpool’s sadness, but also the economic transformation under which it is falling yet further behind and which was advanced by George Osborne in his budget. The chancellor of the exchequer is curbing efforts to limit the decline of struggling places like this. Where previous governments, to varying degrees, tried to prop them up, his (tacit) message to their residents is: get on your bike. Move to those places with the connections, industries and profile needed to make it in a globalised economy. Places like Manchester, today a creative- and financial-services boomtown and the crane-dotted pivot of the “Northern Powerhouse”, his grand plan to integrate the big northern cities. + +What is Mr Osborne’s game? He wants the state to concentrate less on solving problems and more on creating the conditions in which places and people succeed in the first place. Think of his increases to the minimum wage, his infrastructure spending, his sugar tax and his wave of devolution to cities (none more than Manchester, which he announced would gain new control over its policing). Sometimes, such policies disproportionately boost the growth of places that are already doing well. For example, the chancellor announced that by 2020, councils will raise all the money they spend: “If you want local communities to take responsibility for local growth, they have to be able to reap the rewards.” Likewise, his small-business tax cut does more for municipalities that can fall back on big, profitable companies for their revenues, while his transport investments are unabashedly metropolitan: a new underground railway through London, a new tunnelled road linking Manchester and Sheffield and a high-speed trainline connecting the northern cities. On the eve of his budget speech the Manchester Evening News carried an artist’s impression of the extension and swankification of the city’s main station (from which the 200-mile trip to London, at 68 minutes, will be quicker than the 50-mile, bone-rattling ride to Blackpool). + +The corollary of all this is that failing places will be given more latitude to fail. For example, through cuts to welfare and local government, Mr Osborne is dismantling the Zimmer frame built up by Labour to keep decrepit towns on their feet. Blackpool is the local authority which has lost most per person under austerity, because it is so reliant on public spending. Its private economy is weak and seasonal and its people are relatively poor, unhealthy and troubled: one in four claims welfare benefits, life expectancy is five years below the national average and the town has acute crime, drug-abuse and alcoholism problems. Removing the Zimmer frame was always going to send it toppling, and so it has toppled: public-sector employment has fallen and, unlike in much of Britain, the private sector has not filled the gap. Blackpool’s economy shrank by 8% over the five years from 2010. + +Heaven knows I’m miserable now + +All of which is making a grim situation worse. The council has trimmed street-cleaning, business and social-care services. New cuts from Whitehall mean some leisure centres and libraries may have to close, warns Simon Blackburn, the Labour council leader. And Britain’s geographical polarisation is self-perpetuating: as Blackpool slides, its most mobile citizens leave for the big cities (254 well-educated youngsters left between 2009 and 2012, one-third for London) while down-and-outs attracted by low house prices move in (bedsits rent for £70, or $100, per week). The result is a downward spiral towards a future as, in Mr Blackburn’s words, “a refuge for the dispossessed and the never-possessed”. + +Mr Osborne’s metropolitan revolution responds to the harsh realities of the modern economy and is thus welcome. And it is a wise use of public money to extend the success of places that have what it takes to grow and be prosperous, and help people elsewhere relocate to where the good jobs are. But one can hold these views and simultaneously regret Blackpool’s fate. Voters there feel left behind and (like their counterparts across the West) are turning to populist political outlets: last year the UK Independence Party’s share of the vote more than tripled to 15% and 17% in the town’s two constituencies. And contrary to Brian the waiter’s assertion, plenty of people in Blackpool love its tawdry shimmer and do not want to leave. “It’s seen better days,” admits Jill, a permed pensioner admiring the grey Irish Sea from the prom. “But we get lovely sunsets.” + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695053-sad-underside-george-osbornes-metropolitan-revolution-coastal-town-they-forgot-close/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +The Commonwealth: What’s the point of it? + +Small islands: Lift up your voice + + + + + +Articles Sections Next + +The Commonwealth + +What’s the point of it? + +The new secretary-general will have to be tough, dynamic and crafty if the oddest of post-imperial clubs is to rekindle its sense of purpose + +Mar 19th 2016 | From the print edition + + + +“THERE’S been an existential question mark over the Commonwealth for some time,” says a seasoned diplomat in its secretariat in London. “The Commonwealth has been dead, absolutely dead, for the past eight years,” laments Richard Dowden, director of the Royal Africa Society (and a former Economist writer), taking a swipe at the outgoing secretary-general, Kamalesh Sharma, an urbane Indian diplomat who has run the show since 2008. As Queen Elizabeth nears 90 after 64 years as its titular head, some wonder if the club will survive when she goes. + +Ask citizens of the 53 countries that make up the Commonwealth what it is for, and most will shrug. Its most visible moment, which happens every four years, is a sports jamboree. A few years ago the Royal Commonwealth Society, which promotes the club, conducted a poll asking if respondents would be “sorry or appalled if your country left the Commonwealth”. People in its poorer members were likeliest to answer “yes”; those in Britain, Australia and Canada tended to indifference. Few knew much about it; a quarter of Jamaicans thought its head was Barack Obama. + +The modern Commonwealth was born in 1949, partly thanks to Jawaharlal Nehru, independent India’s first prime minister, who had declared his country a republic but wanted to stay friends with the former imperial power and other former British dominions. As other ex-colonies in Africa, Asia and the Caribbean joined, “Commonwealth values” (never precisely defined) were promoted, especially in the 1970s and 1980s, when Southern Rhodesia (later Zimbabwe) and South Africa struggled to shed their white masters. Under a dynamic secretary-general from Guyana, Sir Shridath (“Sonny”) Ramphal, from 1975 to 1990, the grouping gained clout in world councils. + +The Commonwealth’s purpose is twofold: to advance democracy and human rights; and to aid economic development. But on the first score it lacks a proper mechanism for enforcement. And on the second, it is not a big provider of cash. One of its principal boasts is its ability to help the gamut of island states, many of them tiny, that are members (see box on next page). But nowadays many of them look more eagerly to much richer bodies such as the European Union. + +Softly, softly, to a point of silence + +It was in 1991, in Harare, Zimbabwe’s capital, that heads of government declared that the Commonwealth should bolster human rights and democracy. The organisation gained respect for the teams it sent to observe elections. In 1995 a ministerial action group was set up to deal with “persistent and serious violators” of those principles. Since then several offenders, including Nigeria, Pakistan, Fiji, the Gambia and Zimbabwe, have been ejected or shamed into leaving, usually temporarily. + +But under Mr Sharma the organisation is generally thought to have atrophied, especially as a vehicle for upholding democracy and human rights. In 2011 the idea of a commissioner for human rights was floated—only to be sunk by Nigeria, South Africa, India and others. Every two years Commonwealth heads of government meet for a pow-wow known by its initials, CHOGM, pronounced “choggum”. The last was in November, in Malta (pictured above); the one before that, in Sri Lanka in 2013, was overshadowed by the host government’s execrable human-rights record. In the words of Hugh Segal, a former Canadian senator, the Commonwealth was “missing in action” over Sri Lanka, where 40,000 people, mostly civilians, are thought to have been killed by government forces in the closing stages of the civil war in 2009. + +The Commonwealth has also suffered from its newer members’ perception that it is run by a coterie of “white” countries, led by Britain, Australia and Canada. To gain more clout it needs the biggest post-colonial members, particularly India, Pakistan, Nigeria, South Africa and Malaysia, to start pulling their weight. But India’s prime minister has failed to attend the past three CHOGMs. Amartya Sen, an Indian Nobel prizewinner who co-authored a report in 2007 suggesting how to reinvigorate the Commonwealth, bemoans India’s lack of involvement, which he fears is unlikely to change under Narendra Modi. + +Mr Sharma says that quiet persuasion has done more to advance democracy than public denunciation would have, for example when Guyana’s government stepped down a year ago after narrowly losing an election. Commonwealth mediation helped Fiji re-embrace democracy and helped guide the Maldives away from its one-party regime in 2009, he insists. He regards his softly-softly approach to Sri Lanka as vindicated by last year’s decision by Mahinda Rajapaksa to bow out as president after losing an election. (A former senior UN official who tracked the proceedings calls this notion “preposterous”.) + +To give Mr Sharma his due, the Commonwealth acts by consensus. Countries are meant to carry equal weight in discussions and there are few sanctions short of expulsion. Even the democracy requirement is flexible; the sultanate of Brunei weirdly passes the test. + +And despite its weaknesses, the Commonwealth is still a club that countries want to join. Though war-ravaged South Sudan is the only one formally on the waiting list, a string of others have been dandled as “possibles”: Algeria, Burma, Burundi, Ireland, Kuwait, Nepal, Palestine, Yemen. Its very oddness is an attraction. As its proponents often boast, it encompasses a third of the world’s population, a quarter of the UN’s membership and a fifth of the world’s land mass. Most members share a legal heritage and language (though Mozambique broke the English-speaking mould by joining in 1995, followed by Rwanda in 2009). “The Commonwealth is of great value to the world for what it is, before you consider what it does,” says Mr Sharma. “It contributes to global sanity and global wisdom.” + +So what’s it for? + +The Commonwealth’s real force is as a unique all-purpose network, whose embrace includes trade, education and an array of 180-odd professional bodies, from law to dentistry. In the recent CHOGM in Malta, Jonathan Marland, a British peer and tycoon, relaunched the Commonwealth Business Forum, gathering 1,200 people from 70 countries, including 25 ministers and 15 heads of state. Britain’s prime minister, David Cameron, praises the club’s ability to “bring Pakistan and India together in a useful format”; its support for his campaign against global corruption; its climate-change advocacy in the run-up to the global conference in Paris late last year; and its “forum for discussions in Africa and in the Caribbean, which can feel ignored and unloved”. + +But the ultimate glue of the Commonwealth has undoubtedly been Queen Elizabeth. The headship of the club will not automatically pass to her son and heir. During his life Nelson Mandela was sometimes mooted as a possible successor. But Charles, Prince of Wales, has been steadily advancing his case: Operation Seduction, his friends half-jokingly call it. + +Into this strange milieu as the next secretary-general steps Patricia, Baroness Scotland, a dual citizen of Britain and the Caribbean island of Dominica, who was attorney-general in Britain’s most recent Labour government. She may tread softly on human-rights issues, though surely not as softly as her predecessor—her early promise to press for gay rights will displease many African members. + +The Commonwealth certainly needs a kick. That carries some risks: it could be mortally wounded if India and a few other big African countries ever walked out. But it is unlikely to die. It is an extraordinary network of disparate peoples bound by an imperial history that seems, even among former subject peoples, to inspire nostalgia as well as resentment. Besides, its assorted people “have the same sense of humour”, Lady Scotland said earlier this month. “No one needs to say ‘I’m only joking’ when saying something ironic to another Commonwealth citizen.” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21694706-new-secretary-general-will-have-be-tough-dynamic-and-crafty-if-oddest/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Small islands + +Lift up your voice + +The Commonwealth offers tiny islands a rare platform for airing their worries + +Mar 19th 2016 | From the print edition + + + +TUVALU and Nauru, lonely miniature outposts in the western Pacific, are just two of the minnows that enjoy making a splash when they swim with the big fish of the Commonwealth. Once the Ellice bit of the Gilbert and Ellice Islands, Tuvalu is a string of coral atolls, pictured above, at no point higher than 5 metres above the sea, lying more than 5,000km (3,150 miles) north-east of Australia. Its population is just over 10,000. Nauru, a rock of phosphate poking out of the sea in roughly the same expanse of ocean, is less populous by a rugby team or two. + +Both are acutely vulnerable to global financial shocks, natural disasters and climate change. Selling its internet domain (.tv) is Tuvalu’s biggest earner, along with postage stamps and remittances from abroad. Nauru depends almost entirely on selling its phosphate, the price of which fell by three-quarters in the year following the financial crash of 2008, and on aid from Australia. Both statelets sell licences to fishing companies. + +Though such tiddlers are members of an array of international and regional bodies, it is at meetings of Commonwealth heads of government every two years that many enjoy using a platform where they are listened to. No fewer than 31 of the Commonwealth’s 53 members are “small states”, defined as having a population under 1.5m or—to include such countries such as Namibia, Papua New Guinea and Jamaica—as having “the characteristics of small states”. Of those 31, 25 are islands, a tally that does not include Britain’s 14 “overseas territories” such as St Helena and Ascension Island in the Atlantic and the Pitcairn Islands (population around 50). + +In the past decade or so climate change, a special worry for small islands, has moved up the Commonwealth agenda. (Vanuatu, until 1980 the British-French condominium of the New Hebrides, was due to hold the next Commonwealth shindig, but bowed out after last year’s tropical cyclone.) At the Malta meeting in November proposals on climate change were agreed upon with the eager backing of islanders. Presented the following month to the grand UN climate-change conference in Paris, they added bite to the eventual declaration: an example of how the Commonwealth can project small-island power. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21695010-commonwealth-offers-tiny-islands-rare-platform-airing-their-worries-lift-up-your/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Tesla’s mass-market ambitions: On a charge + +Corporate governance: He who would Valeant be + +Taxation and oil companies: Oiling the wheels + +South Korean exporters: Films are the new stars + +Air cargo: Too little freight, too much space + +Religion, ethics and the workplace: Cross the boss + +Schumpeter: Team spirit + + + + + +Articles Sections Next + +Tesla’s mass-market ambitions + +On a charge + +As Tesla becomes more like a regular carmaker, it faces a bumpier ride + +Mar 19th 2016 | From the print edition + + + +THE eye-catching falcon-wing doors that adorn Tesla’s Model X (see picture) set it apart from other big and expensive SUVs. But like the firm’s Model S, a stylish and speedy saloon, the biggest difference lies under the bodywork: it is powered by a battery. Tesla has accelerated into the automotive fast-lane by making electric cars that appeal to rich folk keen to burnish their credentials as environmentally aware techies. But at the end of March it is launching the Model 3, a cheaper motor aimed at the upper end of the mass market. It will be a far harder sell. + +Tesla has hitherto thrived in a niche. Other carmakers crammed bulky and expensive batteries into petite “city” cars. Tesla put a bigger power-pack into large and expensive ones (prices start at $70,000), more readily absorbing the cost of the battery. This also gives the cars a decent range of more than 250 miles (400km) between charges, and lightning acceleration. In 2015, after just over ten years in business, Tesla’s sales surpassed 50,000 cars. By 2020 it hopes to sell 500,000 a year, mostly Model 3s. These will cost as little as $35,000 (before the generous subsidies many governments dish out). But it is entering a part of the market where competition is intense and profit margins slimmer. + +Its achievement so far is, nonetheless, remarkable. The roadside is littered with the wrecks of new entrants unable to take on the established carmakers, from Tucker in the 1940s to DeLorean in the 1970s and latterly Fisker’s failed bid to sell upmarket petrol-electric hybrids. Tesla’s classy design and nifty technology—a touchscreen instead of an instrument panel, and autonomous-driving capabilities—have ensured that only the Mercedes S-Class, which Daimler-Benz has spent decades refining, outsells it among large luxury saloons. + +Tesla has shown that the barriers to entry in the car industry are far lower than widely assumed. The company bought a factory in Fremont, California, from GM and Toyota for just $42m, after the American firm pulled out of their joint venture and filed for bankruptcy in the wake of the financial crisis. Tesla also bought equipment to kit it out cheaply, from other carmakers struggling to cut their capacity. + +It is run frugally. Sanford C. Bernstein, a research firm, reckons Tesla’s total capital spending and outlay on research and development so far is under $4 billion—one-seventh of what Volkswagen spends in a year. And in Elon Musk, its ebullient boss, it has a figurehead whose relentless promotion has quickly established Tesla as a luxury brand in an industry where convention suggests this should take 25 years. + +Tesla has also rewritten the economics of making electric cars. It tackled high costs by stringing together hundreds of small, mass-produced laptop batteries. Tesla claims that its power-packs cost half what big carmakers pay their suppliers for custom-designed large-format batteries, and that its Gigafactory, a huge battery plant close to completion in the Nevada desert, will cut costs by another 30%. + +It will need all its superior performance to stay ahead. Tesla currently has no direct competitors. Yet Apple looks set to launch a luxury electric car. Battery costs for other carmakers are also falling fast. In a couple of years Audi, Jaguar and other premium-car makers plan electric vehicles on a par with Tesla’s two priciest cars. + +Launching the Model 3 will put Tesla’s business model under far more strain. Other carmakers look on its extreme vertical integration with bemusement. If Mr Musk fancies himself as the next Henry Ford, his factory certainly resembles the Model T’s production line, where iron ore and rubber went in one end and a car chugged out the other. Other carmakers are now largely brand managers, assemblers and systems integrators, ensuring that all the parts they buy from suppliers work in harmony when bolted and welded together. This serves to spread risk and push costs to suppliers. Tesla makes most of its parts in-house. Mr Musk regards this as a competitive advantage. Firms “build value by doing hard things,” he reckons. But tooling, forging and design suck up capital. + +The firm is far more integrated even than carmakers of yesteryear. It has sought to attract buyers and tackle “range anxiety” by building its own worldwide network of more than 3,500 roadside “superchargers”. These can put an 80% charge on the battery in 40 minutes, and Tesla drivers can charge up without charge. It is a bit like Ford opening its own filling stations and giving away the petrol. + +Whereas other carmakers sell their vehicles through networks of independent dealers, Tesla sells directly to the public, through its website and in showrooms located in shopping centres. This means it keeps the retail markup, but it is unclear how much, if at all, this offsets the cost of maintaining the showrooms. And dealer networks are useful in other ways: they assume a lot of risk by paying for cars when they take delivery of them, rather than when they sell them. + +In all, Tesla’s way of working requires lots of cash. Barclays, a bank, thinks the firm will burn through $11 billion over the next five years, and will not generate significant profits until then. Investors have willingly stumped up so far but many analysts question whether Tesla is worth its current market capitalisation of $29 billion, more than half the value of GM, which makes nearly 10m cars a year. The worry is that entering the mass market will change the way Tesla makes cars, the sort of customers it chases and the competitors it faces. + +Tesla thinks of itself as a technology company but the Model 3 will make it more of a large-scale manufacturer. It is unclear how well suited it will be to the task of designing and churning out cars at far higher rates than now. Mr Musk admitted that the design of the Model X was overly ambitious, especially the fancy doors, delaying its launch by many months. + +Tesla will henceforth have to attract customers who want to buy a car not an engine, as Berenberg, another bank, puts it. The wealthy customers it has now often own more than one car, and can afford the luxury of charging facilities at home. They use the Tesla to salve their consciences with a “trip to church on Sunday”, as the boss of a rival carmaker jokes. Buyers of its cheaper model may rely on it as their sole vehicle, and lack space for home charging, making its range and the availability of public chargers more important. + + + +They may also care less about image and the environment, and more about cost and performance, putting the Model 3 in competition with fossil-fuel cars such as the BMW 3 Series and Mercedes C-Class, not just other electric cars. Even in the market for electrics, Tesla will no longer have the road to itself. Other makers are constantly boosting their battery cars’ range. A new version of the BMW i3 will go for 120 miles before plugging in. GM’s Chevrolet Bolt, which hits forecourts later this year, may cost a bit more than a Model 3 but boast a similar, 200-mile range. + +Analysts reckon Tesla will at best have ramped up its production to 320,000 cars, rather than its target of 500,000, in 2020. But perhaps that doesn’t matter. Mr Musk insists he is more interested in disrupting the car industry, and advancing the switch to electric cars, than in playing by his rivals’ numbers game. Among the Silicon Valley neighbours Tesla likes to compare itself to, “full stack” vertical integration is all the rage, and the biggest tech firms are less interested in making things than they are in creating software “platforms” on top of which a variety of services can be built. + +So, Tesla’s ultimate aim may be more to create a platform for slick electric, autonomous cars that can also be built by others, in the way that various smartphone brands run on Google’s Android operating system. In that case, how well the Model 3 sells may not be the main determinant of the firm’s value. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695012-tesla-becomes-more-regular-carmaker-it-faces-bumpier-ride-charge/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Corporate governance + +He who would Valeant be + +Lessons from a drug firm’s disaster + +Mar 19th 2016 | NEW YORK | From the print edition + + + +UNTIL recently, America hadn’t had a spectacular corporate disaster since Lehman Brothers in 2008. But Valeant, a Canadian but New York-listed drug firm, now meets all of the tests: a bad business model, accounting problems, acquisitions, debt, an oddly low tax rate, a weak board, credulous analysts, and managers with huge pay packets and a mentality of denial. The result has been a $75 billion loss for shareholders and, possibly, a default on $31 billion of debt. + +Valeant’s business model was buying other drug firms, cutting costs and yanking up prices. Since 2010 it has done $35 billion of deals, mainly financed by debt. At a time when Americans face stagnant living standards, a strategy based on squeezing customers was bound to encounter political hostility—“I’m going after them,” Hillary Clinton has vowed. + +Valeant added to this mix a tendency towards evasiveness. In October investigative reporters revealed its murky relationship with a drugs dispensary, Philidor, which it consolidated into its accounts yet did not control. The relationship was severed but the Securities and Exchange Commission is still investigating. Federal prosecutors are also looking into various of the company’s practices. On Christmas Eve Michael Pearson, Valeant’s CEO and architect, went into hospital with pneumonia. On February 28th Mr Pearson (total pay awarded of $55m since 2012, according to Bloomberg) returned to work, welcomed back by the chairman for his “vision and execution”. + + + +The facts that have emerged in March suggest that Mr Pearson should have been fired. Profit targets have been cut by 24% compared with October’s. The accounts will be restated and the filing of an annual report delayed. The results released on March 15th contain neither a full cash-flow statement nor a balance-sheet, but it appears that Valeant has been generating only just enough cash to pay its $1.6 billion interest bill this year. As suppliers and customers get wary, its cashflow may fall, leading to a default. + +There are three lessons. First, boards matter: the managers should have been removed in October. Second, disasters happen in plain sight. Valeant issued $1.45 billion of shares in March 2015, when 90% of Wall Street analysts covering its shares rated them a “buy”. Yet as early as 2014 a rival firm, Allergan, had made an outspoken attack on Valeant’s finances, the thrust of which has been proved correct. + +The final lesson is that “activist” investors, who aim to play a hands-on role at the firms that they invest in, have no monopoly on wisdom. Jeffrey Ubben of ValueAct and Bill Ackman of Pershing Square both own chunks of Valeant and have supported it. Mr Ackman is at present trying to consolidate America’s railway system. Mr Ubben is trying to shake up Rolls-Royce, a British aerospace firm. After Valeant, why should anyone listen to what they say? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695009-lessons-drug-firms-disaster-he-who-would-valeant-be/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Taxation and oil companies + +Oiling the wheels + +Governments are easing the tax burden on the industry, with some exceptions + +Mar 19th 2016 | From the print edition + + + +RISING oil prices once looked like a one-way bet for national treasuries. Governments in resource-rich countries were able to extract ever more money from oil companies through a range of levies, royalties and production-sharing agreements. Their average take on each barrel rose from $9.90 in 2000 to $30.40 in 2014, according to Boston Consulting Group. That rate was reasonable when oil prices hit triple digits. But with oil now languishing around $40 a barrel, it is too high. Governments are moving to cut it. In his budget on March 16th Britain’s chancellor, George Osborne, abolished one tax on oil production and halved another. Some North Sea oilfields will see their tax rate fall from 67.5% to 40%. + +Some ways of taxing oil production are more reactive to price changes than others. Countries like Australia and Norway take a share of an oilfield’s profits. When prices, and hence profits, fall, those systems adjust automatically. Others, such as Brazil and Kazakhstan, charge a fixed royalty per barrel. As oil prices fall, these stay constant, pushing up the government’s percentage take. Some systems, in which costs and revenues get shared between oil companies and governments, work as a mixture of the two. A number of the royalty-based regimes are now punitive. Figures from EY, an accounting firm, suggest that with oil at $40 a barrel, Brazil and Angola now take more than 100% of the gross profits of some oil projects (see chart). + + + +High tax rates can cause problems, even when they are not extortionate. Rystad, an energy consultant, expects global oil-and-gas investment to fall to $522 billion this year, from $900 billion in 2013. When governments try to attract new investment to a basin, they are now in effect bidding for a share of a smaller pie. Some oil resources are so attractive that oil companies swarm in come what may. Declining and high-cost oil provinces, such as the British North Sea, are not so fortunate. There, tax incentives can prove crucial. Last year Maersk Oil decided to go ahead with its Culzean field after the government introduced tax breaks for complicated projects. + +Some provinces face an even more pressing challenge. If an oilfield’s operating costs, including royalties, are above the oil price, its owners might shut it down temporarily. A number of American shale formations are particularly vulnerable, according to Alexey Kondrashov, EY’s head of oil-and-gas taxation. + +Britain fired the starting-gun on a round of tax cuts last year by reducing the rate it charges on oil profits and introducing a range of investment allowances. The headline tax rate for new fields, 60% at the start of 2015, fell first to 50%, and will now be cut to 40%. Following Britain’s first cut, Kazakhstan reduced its tax on exports of oil. Brazil put a new oil royalty on hold. Colombia, Mexico and Kenya all tinkered with some of their tax rules. The Canadian province of Alberta, which last year voted in a left-wing government promising corporate-tax rises, decided in January not to raise its oil royalties. + +If the recent partial recovery in oil prices peters out, more governments may rethink their fiscal regimes, despite tight budgets and the public’s dislike of tax cuts for the oil giants. But there are no easy answers. Whereas royalties are easy to calculate and hard to avoid, they are inflexible. Profit-based taxes and production-sharing agreements are complicated, and vulnerable to gaming by oil companies. That no system is without its flaws helps to explain why governments take such different views on how to tax the oil industry. + +Although a number of countries are reducing the tax burden, there is not yet a race to the bottom. Some governments may even move in the opposite direction. Russian oil firms, which received a windfall when their operating costs tumbled along with the rouble, are steadying themselves for a tax rise. And in February Barack Obama proposed a new federal royalty of $10.25—in addition to state ones—on every barrel produced in America. Fortunately for the oilmen, a Republican Congress means his plan may not get far. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695016-governments-are-easing-tax-burden-industry-some-exceptions-oiling-wheels/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +South Korean exporters + +Films are the new stars + +Ships and steel suffer, but the entertainment industry shines + +Mar 19th 2016 | SEOUL | From the print edition + + + +FOR an export juggernaut, South Korea’s recent losing streak is alarming: for 14 straight months its exports have fallen in value terms compared with a year earlier. In January they plummeted by 18.8% to just under $37 billion—the steepest drop since 2009. Petrochemical products are a key South Korean export, so low global oil prices partly explain the numbers. Still, the country’s longtime engines of growth, including steel mills, shipyards and car plants, appear to be running out of puff. + +Last year POSCO, a steel giant set up in 1968, posted its first annual net loss. It had already been bumped down the global rankings by Chinese and Japanese rivals, from third- to fifth-largest producer, between 2010 and 2014. This month Daewoo Shipbuilding & Marine Engineering (DSME), one of the world’s biggest shipbuilders, recorded its worst deficit on record, losing more than 5 trillion won ($4 billion) in 2015. Its sales fell by almost a quarter. It laid off 13,000 workers last year; now it says it will dismiss a further 12,000. In January Hyundai Motor, a carmaker, reported a drop in profits for an eighth straight quarter. It expects sales (combined with those of its affiliate, Kia Motors) to inch up by 1.5% this year—a fraction of the 24% growth achieved in 2010. + +Such firms are being hurt by growing output among Chinese producers and by the won’s recent strength against the yen, which is helping Japanese rivals. South Korea’s exports are equivalent to around half of its GDP, and a quarter of them go to China, where growth has been faltering. Ryu Seung-sun, head of research at Mirae Asset Securities in Seoul, says that because South Korea exports parts for consumer goods, like screens and chips for Chinese smartphones, it is bound to be among the first to suffer from a worldwide slowdown. + +However, Park Sangin, an economist at Seoul National University, thinks internal factors are the bigger culprits: after all, the country’s economy weathered the recent global recession with relative ease, he says. Many of its sprawling conglomerates are built around the smokestack industries that powered the country’s industrial take-off under Park Chung-hee, a former dictator (and father to the current president, Park Geun-hye) over four decades ago, with the result that manufacturing accounts for as much as a third of South Korea’s GDP today. Over the years these chaebol, as the conglomerates are known, have expanded into all sorts of sectors. One-tenth of their offshoots are now unprofitable “zombie” firms, kept on life support through cross-shareholdings. + +Some industrial groups have begun to shed ailing, non-core businesses; DSME, for example, is selling a subsidiary that runs golf courses. However, others are continuing to diversify in pursuit of new sources of growth. As Samsung’s electronics affiliate has lost market share to plucky smartphone-makers in China, the group has moved, among other things, into biopharmaceuticals, the pet project of the conglomerate’s de facto boss, Lee Jae-yong. Samsung BioLogics recently broke ground on its third production plant which, when up and running, will make it the world’s largest manufacturer of such drugs. + +Other businesses are thriving despite the downturn. Seven of the ten best-performing stocks last year in the MSCI Asia Pacific Index, a benchmark followed by big investment funds, were South Korean, among them pharmaceutical, cosmetics and aerospace firms. + +Media stocks have been buoyed recently by the success of CJ E&M, a subsidiary of CJ Corp, another chaebol. The affiliate established itself as an export star with the hit 2013 film, “A Wedding Invitation” (pictured), made for the Chinese market with Chinese actors but a Korean crew. In November last year MSCI added CJ E&M to its Korea index, as it bumped out Daewoo Shipbuilding and Hyundai Merchant Marine, a struggling shipping line. As media firms profit from the popularity of Korean soap operas, films and music in China and South-East Asia, more are partnering with Chinese firms to produce or promote content. + +It is doubtless a good thing that the South Korean economy no longer has all of its export eggs in a handful of heavy-industrial baskets. But cultural and fashion businesses are no less volatile and vulnerable to global trends than ones that make stuff out of lumps of metal. Last month South Korea’s two biggest cosmetics-makers, Kolmar Korea and Cosmax, which now depend heavily on the Chinese market, announced lacklustre earnings. Even a more diverse export base is not enough to protect South Korea entirely from the chill winds blowing across Asia. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695015-ships-and-steel-suffer-entertainment-industry-shines-films-are-new-stars/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Air cargo + +Too little freight, too much space + + + +Overcapacity hits another part of the transport industry + +Mar 19th 2016 | BERLIN AND CASTLE DONINGTON, ENGLAND | From the print edition + + + +TO BRITISH holidaymakers flying from East Midlands airport, near the quiet English town of Castle Donington, it seems like any other small airfield. But after dark, when the last passengers have departed, it begins to buzz with activity as Britain’s second-biggest air-cargo hub. Freighter planes arrive throughout the night at a dedicated terminal for DHL, a German logistics giant, to be serviced by an army of fluorescent-yellow-clad workers. Some planes are stuffed full of fish from Iceland, others with parcels from places as far-flung as rural Pakistan and the Pacific islands. + +Although East Midlands airport is bustling, and the global air-cargo business now handles more than a third of world trade by value, the industry has been under pressure since the financial crisis. At the World Cargo Symposium, a meeting of industry bigwigs in Berlin this week, there were grumbles that their business has seen better days. The volume of goods travelling by air has risen marginally over the past year but airlines’ cargo revenues have fallen from a peak of $67 billion in 2011 to around $50 billion a year now. Freight provides just 9% of total airline revenues now, down from over 12% a decade ago. + +A dramatic fall in sea-freight rates—of more than 75% since 2012 on some routes—as a result of overcapacity among shipping lines has encouraged customers to switch from sending some non-urgent deliveries by air. Excess capacity among the airlines themselves has done further damage. Since the financial crisis, there has been no let-up in the growth of passenger demand, so carriers have been expanding their fleets. This means the amount of cargo space in the belly of passenger planes has risen sharply. Combined with flat demand for shipping by air, the result is that average capacity utilisation across the air-cargo business has fallen to 43.5%, the lowest since the crisis. So, customers have been able to demand big price cuts. + + + +Some all-cargo airlines have gone bust in recent years, and other carriers with big cargo divisions have been suffering, despite the fall in the cost of jet fuel. Last August, for instance, Midex, at one point the largest all-cargo airline in the Middle East with a ten-strong fleet of freighters, closed down. Lufthansa Cargo, the freight division of Germany’s largest airline, slipped into loss last summer. South America’s largest airline, LATAM, reported a 27% year-on-year fall in cargo revenue for the fourth quarter of 2015. LATAM has responded by cutting its use of freighter planes to focus on belly-hold cargo. IAG, the owner of British Airways, now looks prescient for having got rid of its freighter fleet altogether. + +There are some routes on which there is more cargo than the passenger aircraft flying them can handle, says Andrew Herdman of the Association of Asia-Pacific Airlines. Exports from Africa to Europe and mainland China to America are more significant than passenger flows between them. Long journey times across the Pacific mean that many passenger aircraft do not have the range to take off with a full hold. + +Even so, airlines operating freighters are being squeezed into such niches by the expansion of integrated logistics businesses such as DHL, FedEx and UPS. These firms, with their vast fleets of planes, lorries and vans, and their highly efficient distribution centres, are sucking up much of the business from e-commerce companies. FedEx said this week that net profits in its most recent quarter were up 18% year-on-year, beating expectations. + +Even the logistics giants may soon see their businesses disrupted. This month Amazon, an e-commerce giant, said it would lease 20 Boeing 767 jets for its delivery service. That should have caused some concern at DHL, which currently makes a quarter of its revenues from shipping Amazon’s packages. + +Though planemakers continue to enjoy strong demand for passenger aircraft, weak sales of cargo planes are forcing them to re-examine their freighter programmes. Airbus has put on hold its plan to launch a freighter version of its A380 superjumbo. Sales of the latest freighter version of Boeing’s jumbo, the 747-8F, have disappointed since it entered service in 2011. Analysts used to think there was a case for a further update to the 747 freighter, to replace planes that will be retired in the 2020s—but now there is much scepticism. + +Because of the weak oil price, some elderly, fuel-guzzling freighters have continued to fly, or even been brought out of retirement, which is further reducing the demand for new freighters. However, the sharp fall in air-cargo rates is likely to hasten the decommissioning of many 747s, and the replacement of these four-engined jets with more efficient, two-engined Boeing 777s. And since no one is ordering passenger versions of the 747, Boeing is now losing money on the whole programme. The downturn in the air-freight market has spelled doom for several cargo airlines; it may also be the final blow for the venerable jumbo jet too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695013-overcapacity-hits-another-part-transport-industry-too-little-freight-too-much-space/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Religion, ethics and the workplace + +Cross the boss + +What your manager may have in common with a vampire + +Mar 19th 2016 | From the print edition + + + +SHOCKING as it may sound, bosses occasionally ask underlings to do unscrupulous things. In a study in 2013 by Ethics & Compliance Initiative (ECI), a non-profit body, 9% of American employees said they had been pressured by managers to undertake a task that compromised their ethical beliefs. Standing up for yourself can be bad for your career. When Countrywide, an American mortgage broker, leant on its staff to commit fraud by passing on defective loans to the government, it fired those who spoke out. Indeed, according to ECI, 21% of employees who reported misconduct at work said they faced some sort of retaliation from their firms. + +So perhaps it is better to ward off a dodgy request by signalling to your boss that such an approach would be unwelcome. New research by Sreedhari Desai of the University of North Carolina at Chapel Hill, to be published in the Academy of Management Journal, suggests one potential strategy. Just as vampires in gothic fiction can be kept at bay with a brandished crucifix, so too, it seems, can evil bosses. + +Ms Desai conducted field research at Indian firms to test whether those who kept a religious symbol at their desks were treated differently by their bosses to those who did not. In another experiment she looked at what happened when members of a team appended a virtuous quotation to their e-mail signoffs, such as “Better to fail with honour than succeed with fraud”. In each case she found that managers were less likely to ask those in their charge to act unethically if they displayed some indication of moral values. + +It may be that bosses are reluctant to put seemingly righteous employees in an awkward situation. Or they may fear that such people are more likely to blow the whistle on any improper demands. Or perhaps exposure to a moral sentiment or symbol makes bosses look deep within themselves, consider the ethics of what they are about to ask, and think better of it. + +The truth seems to lie in a mix of these factors, says Ms Desai. Her experiments showed that those in positions of power who were exposed to moral or religious symbols were less likely to ask something immoral of any of their employees—but they were even less likely to do so of the person to whom the symbol belonged. + +Interestingly, when looking at white-collar workers in India, it appeared that it made little difference whether the two parties shared a religion. Muslims were more likely to respect someone displaying a Hindu deity or Christian cross, for example, than someone who did not display anything. Indeed, Ms Desai worries that bosses who are themselves religious may discriminate more generally in favour of workers who are openly devout, to the disadvantage of those who keep their faith to themselves, or do not have one. + +In relatively godless Western countries, workers with a strong religious faith have become increasingly inclined to react against secular pressure by insisting on their right to self-expression at work. For example, in 2013 a British Airways employee won a discrimination case against the airline after it had told her to cover up a crucifix necklace which, it said, breached its uniform policy. In a survey by the Randstad Research Institute, the research arm of a big human-resources consultant, 23% of French managers reported instances of religious conflict in their workplace last year, about double the proportion in 2014. + +But attitudes to expressions of personal values at work may vary greatly between similar countries. The early findings of a follow-up study Ms Desai is conducting suggest that, for example, when Americans see a moral quotation appended to an e-mail they tend to take it as a true representation of the sender’s beliefs; Australians, by contrast, suspect the sender is being “holier than thou”, and tend to trust him less. + +The Aussies may be on to something. There may not be a correlation between someone who proclaims his religious or moral principles at work and that person’s propensity to act in a moral way. In a further experiment, Ms Desai gave her participants the opportunity to behave ethically or unethically. Then, in what they believed was an unrelated study, they were given the option of appending a moral quotation to an e-mail to others in their group and/or to one sent just to themselves. Those who chose to signal their righteousness only to the outside world were more likely to have misbehaved in the first part of the experiment. Such people might do well to consider Luke 16:15 in the New Testament: “Ye are they which justify yourselves before men; but God knoweth your hearts.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695011-what-your-manager-may-have-common-vampire-cross-boss/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Team spirit + +Businesses are embracing the idea of working in teams. Managing them is hard + +Mar 19th 2016 | From the print edition + + + +TEAMS have become the basic building-blocks of organisations. Recruitment ads routinely call for “team players”. Business schools grade their students in part on their performance in group projects. Office managers knock down walls to encourage team-building. Teams are as old as civilisation, of course: even Jesus had 12 co-workers. But a new report by Deloitte, “Global Human Capital Trends”, based on a survey of more than 7,000 executives in over 130 countries, suggests that the fashion for teamwork has reached a new high. Almost half of those surveyed said their companies were either in the middle of restructuring or about to embark on it; and for the most part, restructuring meant putting more emphasis on teams. + +Companies are abandoning functional silos and organising employees into cross-disciplinary teams that focus on particular products, problems or customers. These teams are gaining more power to run their own affairs. They are also spending more time working with each other rather than reporting upwards. Deloitte argues that a new organisational form is on the rise: a network of teams is replacing the conventional hierarchy. + +The fashion for teams is driven by a sense that the old way of organising people is too rigid for both the modern marketplace and the expectations of employees. Technological innovation puts a premium on agility. John Chambers, chairman of Cisco, an electronics firm, says that “we compete against market transitions, not competitors. Product transitions used to take five or seven years; now they take one or two.” Digital technology also makes it easier for people to co-ordinate their activities without resorting to hierarchy. The “millennials” who will soon make up half the workforce in rich countries were reared from nursery school onwards to work in groups. + +The fashion for teams is also spreading from the usual corporate suspects (such as GE and IBM) to some more unusual ones. The Cleveland Clinic, a hospital operator, has reorganised its medical staff into teams to focus on particular treatment areas; consultants, nurses and others collaborate closely instead of being separated by speciality and rank. The US Army has gone the same way. In his book, “Team of Teams”, General Stanley McChrystal describes how the army’s hierarchical structure hindered its operations during the early stages of the Iraq war. His solution was to learn something from the insurgents it was fighting: decentralise authority to self-organising teams. + +A good rule of thumb is that as soon as generals and hospital administrators jump on a management bandwagon, it is time to ask questions. Leigh Thompson of Kellogg School of Management in Illinois warns that, “Teams are not always the answer—teams may provide insight, creativity and knowledge in a way that a person working independently cannot; but teamwork may also lead to confusion, delay and poor decision-making.” The late Richard Hackman of Harvard University once argued, “I have no question that when you have a team, the possibility exists that it will generate magic, producing something extraordinary…But don’t count on it.” + +Hackman (who died in 2013) noted that teams are hampered by problems of co-ordination and motivation that chip away at the benefits of collaboration. High-flyers forced to work in teams may be undervalued and free-riders empowered. Groupthink may be unavoidable. In a study of 120 teams of senior executives, he discovered that less than 10% of their supposed members agreed on who exactly was on the team. If it is hard enough to define a team’s membership, agreeing on its purpose is harder still. + +Profound changes in the workforce are making teams trickier to manage. Teams work best if their members have a strong common culture. This is hard to achieve when, as is now the case in many big firms, a large proportion of staff are temporary contractors. Teamwork improves with time: America’s National Transportation Safety Board found that 73% of the incidents in its civil-aviation database occurred on a crew’s first day of flying together. However, as Amy Edmondson of Harvard points out, organisations increasingly use “team” as a verb rather than a noun: they form teams for specific purposes and then quickly disband them. + +Teeming with doubts + +The least that can be concluded from this research is that companies need to think harder about managing teams. They need to rid their minds of sentimental egalitarianism: the most successful teams have leaders who set an overall direction and clamp down on dithering and waffle. They need to keep teams small and focused: giving in to pressure to be more “inclusive” is a guarantee of dysfunction. Jeff Bezos, Amazon’s boss, says that “If I see more than two pizzas for lunch, the team is too big.” They need to immunise teams against groupthink: Hackman argued that the best ones contain “deviants” who are willing to ruffle feathers. A new study of 12,000 workers in 17 countries by Steelcase, a furniture-maker which also does consulting, finds that the best way to ensure employees are “engaged” is to give them more control over where and how they do their work—which may mean liberating them from having to do everything in collaboration with others. + +However, organisations need to learn something bigger than how to manage teams better: they need to be in the habit of asking themselves whether teams are the best tools for the job. Team-building skills are in short supply: Deloitte reports that only 12% of the executives they contacted feel they understand the way people work together in networks and only 21% feel confident in their ability to build cross-functional teams. Slackly managed teams can become hotbeds of distraction—employees routinely complain that they can’t get their work done because they are forced to spend too much time in meetings or compelled to work in noisy offices. Even in the age of open-plan offices and social networks some work is best left to the individual. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21694962-managing-them-hard-businesses-are-embracing-idea-working-teams/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +The blockchain in finance: Hype springs eternal + +Buttonwood: Overcoming their fears + +Central banks and digital currencies: Redistributed ledger + +TLTROs: Money for less than nothing + +Bridgewater: The hardest trade + +Cyber-crime: The Dhaka caper + +Measuring inflation: How much is that doggy? + +Rotterdam: The shipping news + +Free exchange: Doing less with more + + + + + +Articles Sections Next + +The blockchain in finance + +Hype springs eternal + +Distributed ledgers are the future, but their advent will be slow + +Mar 19th 2016 | From the print edition + + + +NORMALLY, it is Simon Taylor’s job to persuade sceptical colleagues at Barclays that rapid technological change will disrupt the bank’s business. So it comes as something of a surprise to have to dampen the excitement about the blockchain. “It’s quite silly. I get ten invitations to speak at a conference every day,” he says. “The technology will have real impact, but it will take time.” + +The blockchain is the technology underpinning bitcoin, a digital currency with a chequered history. It is an example of a “distributed ledger”: in essence, a database that is maintained not by a single actor, such as a bank, but collaboratively by a number of participants. Their respective computers regularly agree on how to update the database using a “consensus mechanism”, after which the modifications they have settled on are rendered unchangeable with the help of complex cryptography. Once information has been immortalised in this way, it can be used as proof of ownership. The blockchain can also serve as the underpinning for “smart contracts”—programs that automatically execute the promises embedded in a bond, for instance. + +It is easy to see why bankers get excited about distributed ledgers. Instead of having to keep track of their assets in separate databases, as financial firms do now, they can share just one. Trades can be settled almost instantly, without the need for lots of intermediaries. As a result, less capital is tied up during a transaction, reducing risk. Such ledgers also make it easier to comply with anti-money-laundering and other regulations, since they provide a record of all past transactions (which is why regulators are so keen on them—see article). + +Besides, embracing the technology allows big banks to appear innovative. For the most breathless evangelists, it holds out the prospect of liberation from all the dross that has accumulated in the financial system, from incompatible IT systems to expensive intermediaries. “For many, the blockchain is the Messiah,” says Gideon Greenspan, the founder of Coin Sciences, a blockchain startup based in Israel. + +Yet the path to the promised land won’t be an easy one. One stumbling block is what geeks call “scalability”: today’s distributed ledgers cannot handle huge numbers of transactions. Another is confidentiality: encryption techniques that allow distributed ledgers to work while keeping trading patterns, say, private are only now being developed. + +Such technical hurdles can be overcome only with a high degree of co-operation between all involved. But this is not a given in the highly competitive world of finance. Some efforts are already under way. More than 40 banks now have a stake in R3 CEV, a startup meant to come up with shared standards. Similarly, firms including IBM and Digital Asset Holdings have started the Open Ledger Project to develop open-source blockchain software. + +The Open Ledger Project may have trouble combining the bits of code its members contribute. Such problems will slow adoption, notes Tolga Oguz of McKinsey, a consultancy. Moreover, most projects are still “proofs of concept”. Only a few services have gone live. A dozen banks are using a firm called Ripple to process international payments cheaply. In August Overstock.com, an online retailer, announced a “smart-contract” platform, as did Symbiont, another startup. In January NASDAQ, a stock-exchange operator, launched Linq, a service that allows companies to issue debt and securities. It also plans to initiate a blockchain-based e-voting service for shareholders in firms listed on its exchange in Estonia. + +Then there are more specialised services. Everledger uses a blockchain to protect diamonds by sticking data about a stone’s attributes on it, providing proof of its identity should it be stolen. Wave, another blockchain startup, encodes documents used in global supply chains, reducing the risk of disputes and forgeries. + +More applications will pop up this year and next. Prime targets will be self-contained markets with complex products, many participants and convoluted procedures. One example is syndicated loans, which can involve dozens of lenders and which can take as long as a month to negotiate. Symbiont recently teamed up with Ipreo, another fintech firm, to automate such loans using smart contracts. Another tempting target is trade finance, which still requires lots of paperwork to travel around the globe along with the goods being sold. + + + +Widespread use of the blockchain is still five to ten years off, predicts Angus Scott of Euroclear, which settles securities transactions. What is more, he says, disruptive fintech startups are unlikely to lead the charge. In markets where the success of a technology depends on its adoption by many counterparties, as is often the case in finance, incumbents have an advantage. The Australian Securities Exchange in January set an example when it enlisted Digital Asset Holdings to develop a blockchain-based system for settling trades. + +Given the attenuated timetable and daunting obstacles, there is a risk that banks will lose interest and pursue less glamorous technologies instead. BNY Mellon, an American bank, recently decided not to go ahead with a project that would have used the blockchain to simplify international payments, because it could not persuade enough banks to participate. It would have taken “a significant effort” to make it work, according to Tony Brady of BNY Mellon. + +Yet it would be wrong to conclude that the blockchain is no more than a fad. It is merely moving through the same hype cycle as other next-big-things have done before it: inflated expectations are followed by disillusionment before a technology eventually finds its place. Although it will take a while for distributed ledgers to rule the world, they are an idea, to paraphrase Victor Hugo, that will be hard to resist. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695068-distributed-ledgers-are-future-their-advent-will-be-slow-hype-springs/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Overcoming their fears + +Investors may expect slower growth, but not a recession + +Mar 19th 2016 | From the print edition + + + +INVESTORS have recovered some of their confidence. In the first six weeks of the year stockmarkets plummeted, but in mid-February the S&P 500 index began a rally which has regained most of the lost ground (see chart). Emerging markets are back where they were at the start of the year. Another sign that markets are less fearful is the declining yield on speculative, or junk, bonds, which dropped from 10.2% on average on February 11th to 8.5% a month later. + +The two big worries in January and February were that the Chinese economy was slowing fast and that the Federal Reserve might therefore have miscalculated when it pushed up interest rates in December. Perhaps the global economy might be heading back into recession. + +Those worries have not completely disappeared: forecasts for economic growth are still being revised down. The OECD, a think-tank, predicts that global growth will be 3% this year, below its previous estimate of 3.3%. But slower growth is not the same as a recession. + +In China the official figures continue to show a slowdown but not a catastrophic one: industrial output in January and February (the months were combined because of the impact of China’s new-year holiday) was up 5.4% on the previous year while retail sales were up 10.2%. Both figures were lower than those recorded in December. But both fixed investment and property sales were higher than expected. A rebound in commodity prices, seen as a proxy for Chinese demand, may also be a sign that the economy is not collapsing. And the Chinese authorities have eased monetary policy (via a cut in the reserve ratio for banks) to boost growth. + +In America employment numbers have shown no sign of a deteriorating economy, although February’s retail sales were disappointing. The latest estimate of first-quarter growth from the Atlanta Fed’s GDP Now model is for an annualised rise of 1.9% (around 0.4-0.5% for the quarter). + +The European Central Bank (ECB) did its bit to boost growth on March 10th by cutting rates further into negative territory, expanding its bond-buying programme and offering banks an incentive to increase their lending. The package had a mixed initial reaction from the markets, after Mario Draghi, the ECB’s president, hinted that rates could not be cut any further. But most economists seemed to think that the ECB had done more than expected. + +The problem, according to Stephen King, an economist at HSBC, is that “the combination of weak nominal GDP growth and low interest rates suggests that central bankers’ monetary powers are beginning to wane.” Normally, monetary easing would weaken a currency, but the euro rose after the ECB’s move. The yen has also jumped since the Bank of Japan eased policy in January. It may take more to impress the markets these days than it did in 2012, when Mario Draghi turned the tide of the euro crisis: we have moved from “whatever it takes” to “whatever”. + +Another issue for markets is that growth in corporate profits has stalled. The first-quarter profits of S&P 500 companies are expected to be 6.2% lower than a year ago. Even if energy companies are excluded, they will be 0.7% lower. Global corporate profits fell by 2% last year, according to Société Générale, a French bank; in emerging markets they were down by 12%. In response, firms have been cutting investment spending: Standard & Poor’s, a rating agency, estimates that global capital expenditure fell by 10% in 2015 and will drop further this year and next. In real terms global capex may be no higher in 2017 than it was in 2006. + +Then there is political risk. The setbacks for Angela Merkel’s Christian Democratic party in German regional elections and the likelihood that Donald Trump will be the Republican nominee for president indicate that voters are in an ornery mood. Politicians may well respond to their anger by taking a more populist tack, increasing taxes on business and raising trade barriers. + +All this means there is a limit to how exuberant any equity rally can be. This year may end up resembling 2015, when, after many twists and turns, most markets finished flat or down. Yet it is hard to imagine investors turning their backs on shares altogether. The latest poll by Bank of America Merrill Lynch shows that fund managers retain a higher-than-normal weighting in equities. With cash yielding virtually nothing and many government bonds offering negative returns, investors do not have much choice. It will take signs that the global economy (or at least America’s) is actually in recession for investors to succumb to outright panic. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695072-investors-may-expect-slower-growth-not-recession-overcoming-their-fears/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Central banks and digital currencies + +Redistributed ledger + +Even central bankers are excited about the blockchain + +Mar 19th 2016 | From the print edition + +RUSSIA’S central bank has set up a working group. The People’s Bank of China (PBOC) is keen. Inspired by bitcoin and its blockchain technology, the world’s central bankers are contemplating digital currencies of their own. Like bitcoin, these would be built around a database listing who owns what. Unlike bitcoin’s, though, these “distributed ledgers” would not be maintained collectively by some of their users. Instead, they would be tightly controlled by the issuers of the currency. + +The plans involve letting individuals and firms open accounts at the central bank, a privilege usually enjoyed only by retail banks. Unlike a regular bank account, these would be guaranteed in full by the state, regardless of any limit in the national deposit-insurance scheme. That would make parking cash at the central bank particularly attractive during times of uncertainty. + +Central banks would benefit too. They could save on printing costs if people held more bits and fewer banknotes. Digital currency would be tougher to forge, though a successful cyber-attack would be catastrophic. Digital central-bank money could even, in theory, replace cash. If it did, central bankers could then use deeply negative interest rates to give the economy a jolt. And boosting growth by handing out “helicopter money” would become as easy as adding a zero to electronic balances. + +Better yet, whereas bundles of banknotes can be moved without trace, electronic payments cannot. Replacing cash with digital currency, under the control of the central bank, would make it tougher to launder money, dodge taxes or sell drugs. It would also make prying into people’s finances much easier. That may be one reason why the PBOC wants to introduce a digital currency “as soon as possible”. The technology first developed to free money from the grip of central bankers may soon be used to tighten their control. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695088-even-central-bankers-are-excited-about-blockchain-redistributed-ledger/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +TLTROs + +Money for less than nothing + +The ECB plans to pay banks to borrow from it + +Mar 19th 2016 | From the print edition + + + +AMID the volley of tricks Mario Draghi, the president of the European Central Bank (ECB), deployed earlier this month to revive the sluggish euro-zone economy, “targeted longer-term refinancing operations”, or TLTROs, received little attention. For one thing, the ECB has been trying TLTROs (extending cheap credit to banks that boost lending to businesses) since 2014. Moreover, next to ever-more-negative interest rates and ever-bigger bond purchases, TLTROs seemed mundane. But if you look at the fine print, the ECB is offering to pay banks to lend. + +To encourage credit growth, the ECB has been charging banks for parking excess reserves with it (those negative interest rates). The new TLTRO II scheme is supposed to increase the incentive to lend, by returning some of the money the ECB is making in this way to banks that increase their stock of corporate loans. Those that raise their lending above a certain target will be paid as much as 0.4% to borrow from the ECB, with the precise rate depending on how liberally they splash the ECB’s money around. + +The forebear of the current scheme, TLTRO I, was not quite as generous. It offered banks very cheap loans if they increased lending. It was aimed at countries like Italy and Spain, where monetary easing had not reduced borrowing costs by as much as it had in Germany or France. + +Some saw TLTRO I as a damp squib. Only half of the €400 billion ($436 billion) on offer in its early stages was taken up, and later demand dropped off further (see left-hand chart). Bank lending to firms in the euro area in January was the same as it had been in September 2014, at the scheme’s launch. The banks that borrowed from the ECB under TLTRO I did expand credit, but largely in countries with already healthy lending, such as Germany and France. + +As limp as this sounds, Mr Draghi was pleased with the scheme. Although banks in “vulnerable” countries—a category that includes Italy, Portugal and Spain—have not increased lending in absolute terms, they have at least been cutting corporate lending more slowly than they had been, as the scheme requires. Stabilising lending to companies when it had been falling at an average annual rate of 4% since 2012 is a success of sorts. Numbers crunched by Fitch, a rating agency, suggest that Italian and Spanish banks were the most avid participants. A single Italian bank, Intesa Sanpaolo, drew €28 billion of TLTROs. + +There are also signs that TLTRO I brought down borrowing costs for businesses. The ECB found that banks in vulnerable countries that received TLTRO funds cut lending rates by an average of 1.15 percentage points between June 2014 and July 2015, compared with only 0.45 points among non-recipients. Lending volumes followed a similar pattern. Borrowing costs around the euro zone converged (see right-hand chart), although perhaps thanks to other policies as well. + +Mr Draghi is taking few chances with the new, beefed up, TLTRO II. Whereas TLTRO I loans have to be repaid by September 2018, irrespective of when they were made, TLTRO II loans will last four years from the date of issuance. TLTRO I loans can also be called in if the borrower fails to meet its lending target; TLTRO II loans will not be recalled, and the interest on them will not rise above 0%, even if lending targets are not met. And banks will be eligible to borrow far more: TLTRO I limits the loans on offer to 7% of a bank’s outstanding corporate credit; under TLTRO II the cap will be raised to 30%. + +Marco Stringa of Deutsche Bank notes that TLTRO II even offers banks protection against speculative attack, as they will be able to use the cash to buy back their own bonds if necessary. Credit Suisse summarised the scheme’s conditions as “extremely favourable”, and added: “We expect markets to notice, eventually.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695089-ecb-plans-pay-banks-borrow-it-money-less-nothing/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bridgewater + +The hardest trade + +A successful hedge fund confronts mortality + +Mar 19th 2016 | New York | From the print edition + + + +OTHER than the obvious task of picking good investments, the most difficult trade for most hedge funds is swapping old bosses for new. Banks tout histories measured in centuries; many mutual funds have thrived for decades, through multiple managers and owners. Successful hedge funds, in contrast, with their unique investment strategies, tend to struggle with changes of leadership. In recent weeks Bridgewater, a giant of the industry with $154 billion under management, has been providing ample evidence of this. + +Bridgewater is in the middle of a ten-year “planful transition” in which its founder, Ray Dalio, has promised to relinquish both his majority ownership and management control. The first part appears to be going according to plan: Mr Dalio says he now holds only a “significant minority” of shares, having sold the rest of his holding to other employees. But he is still co-chief investment officer, among other roles. + +Mr Dalio recently became involved in a semi-public spat with Greg Jensen, who was co-CEO until complaining that the planful transition was not going according to plan (he remains co-chief investment officer). Mr Dalio, in turn, complained that Mr Jensen was violating the company’s principles by criticising him behind his back. Shortly afterwards Bridgewater hired Jon Rubinstein, a former Apple executive, as a new co-CEO. + +Mr Dalio dismisses all the fuss as part of Bridgewater’s “radically transparent culture”, in which disagreements are supposed to be voiced and settled openly (although not publicly). Both he and Mr Jensen maintain that their dispute has been resolved. Mr Dalio says he will continue to pull back from management, and ultimately hopes to become something of a “mentor”, who does not handle day-to-day decisions but remains involved. He cites the example of Lee Kuan Yew, who relinquished the title of prime minister and gradually stood back from running Singapore over a number of years (at one point styling himself “minister mentor”). + +Mr Dalio says he would judge himself a failure if the firm wilted without him. He believes that its unusual culture, which he has outlined in a 106-page statement of principles, helpfully broken down into 210 distinct points, is strong and effective enough to last without him. The most important of these, “truth”, is accompanied by bruising corollaries, such as “Don’t depersonalise mistakes” and “Don’t pick your battles. Fight them all.” The goal of employee evaluations is to be accurate, not kind. Meetings are recorded, aiding evaluation. Potential recruits are asked cryptic questions in interviews, such as, “Do you like something firm or soft?” + +This eccentric approach might be dismissed were it not for Bridgewater’s remarkable success. Its Alpha Fund has had only three down years since its inception in 1991 (see chart). Clients, the firm says, remain untroubled by the current hullabaloo. Perhaps they are reassured by principle number 136: “Understand that problems are the fuel for improvement.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695069-successful-hedge-fund-confronts-mortality-hardest-trade/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cyber-crime + +The Dhaka caper + +Online thieves unseat the governor of Bangladesh’s central bank + +Mar 19th 2016 | Delhi | From the print edition + +Rahman takes the rap + +IT WAS as audacious as any heist and yet unlikely material for a Hollywood blockbuster. Hackers masquerading as officials from Bangladesh’s central bank asked the New York branch of the Federal Reserve to transfer nearly $1 billion to private bank accounts in Sri Lanka and the Philippines. By the time authorities cottoned on, $101m had been nicked. On March 15th Atiur Rahman, the governor of Bangladesh’s central bank, took the blame and resigned. + +That has not stopped the finger-pointing. In the manner of a bank customer complaining about fraudulent credit-card charges, Bangladeshi authorities say the Fed, which was acting as the central bank’s bank, should not have paid out anything at all. The Fed says the instructions it received were legitimate. The Philippine authorities cannot say what happened to the $81m sent to their country. Much of the money disappeared in its opaque casinos, which they say are not covered by rules to prevent money laundering (a worry in itself). The CCTV system at a bank branch where some of the money was withdrawn was not working. + +Even the criminals (of which nothing is known) should kick themselves: were it not for a typo in one of their requests, dozens more payments might have gone through. Staff at the central bank of Sri Lanka, who blocked a $20m onward transfer on the grounds that it was odd for a central bank to be making a big payment to a private account, covered themselves in glory. Deutsche Bank, which reportedly spotted a payment to a “fandation” and asked for a clarification, also comes out looking vigilant. + +Mr Rahman, a development economist who was due to retire this summer, admits he is “not a technical guy”. It was as much his delay in revealing the fraud—the finance minister claimed he first read about it in the papers—as the loss itself that made his position untenable. + +The attack is hardly an isolated incident. Criminal gangs are adept at hacking into e-mail accounts and sending instructions to bankers asking them to wire large sums. Corporate treasurers are now warned not to trust e-mails that appear to come from the boss, requesting that a payment be made. + +Kaspersky Lab, a cyber-security firm, last year claimed $1 billion had been siphoned from financial institutions in this way. The Bank of England said it faced “advanced, persistent and evolving cyber-threats”. If a brave producer does take on the story of the Dhaka caper, expect plenty of sequels. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21694968-online-thieves-used-fake-emails-steal-money-101m-bank-heist-unseats/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Measuring inflation + +How much is that doggy? + +Big data provide new ways to gauge price rises + +Mar 19th 2016 | WASHINGTON, DC | From the print edition + + + +INFLATION is a simple concept, but price rises are surprisingly hard to measure. First, statisticians must work out what stuff people buy, and in what proportions (the “basket” of goods). Then they must track the prices of those goods over time. Finally they must decide how to account for new products, changing tastes and the fact that if the price of, say, apples rises, some people will buy another fruit instead rather than pay more. + +Big data could make all of this easier. At the moment, calculating America’s consumer-price index (CPI) involves sending people into shops to note down prices. The basket is based on a survey of consumers which is updated only every three years or so. This looks increasingly cumbersome in a world where every online purchase is logged, somewhere, in a database. In theory online baskets and prices, at least, could be tracked digitally. + +Adobe, a technology firm, is trying to do just that. The firm collects anonymised sales data from websites that use its software. The amount of data available is vast: according to the firm, it includes three-quarters of online spending at America’s top 500 retailers. It is using this ocean of information to compile a “digital price index” (DPI) to rival official measures of inflation. Two economists, Pete Klenow of Stanford University and Austan Goolsbee of the University of Chicago, are helping the firm to crunch the numbers. + + + +The DPI has several advantages over the conventional approach. It tracks 1.4m goods, compared with the CPI’s 80,000. It is based on actual purchases rather than advertised prices, increasing its accuracy. And the volume of data allows Messrs Klenow and Goolsbee to use fancier statistical methods to account for people changing what they buy as prices move. + +The new index completely misses changes in offline prices and spending on things like petrol and rent. It will not replace the CPI any time soon. It does suggest, however, that official statistics may themselves be missing big price movements, especially for consumer technology. The researchers found that the price of computers fell by 13.1% in the year to January, almost double the 7.1% fall recorded in the CPI. Televisions fell more in price than the CPI reports, too. The speed of innovation in technology might account for the difference. The researchers found that fully 80% of technology spending is on new products, which the more nimble DPI can incorporate quickly. + +If this is a widespread phenomenon, and inflation is lower than officially recorded, that has implications for central bankers, borrowers, savers and anyone who strikes long-term contracts. It also means that GDP might be understated, says Mr Klenow. If overall spending is recorded accurately but inflation is exaggerated, output must be higher than thought. + +Official statisticians are improving their methods. The CPI includes some prices that are collected automatically by “scraping” websites (something Britain’s statisticians are also experimenting with). But if their take-up of big data is sluggish, official statistics could eventually face disruptive private-sector competition. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695097-big-data-provide-new-ways-gauge-price-rises-how-much-doggy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Rotterdam + +The shipping news + +Europe’s biggest port is a barometer of the world economy + +Mar 19th 2016 | Rotterdam | From the print edition + +Oil, wind and water + +UNLESS you are a hermit, you own and consume things that have passed through the port of Rotterdam. Last year the port handled 466m tonnes of cargo, more than double the amount of Europe’s second port, Antwerp. The endless shifts in the size and composition of these flows provide an instant indicator of the state of the world economy. And the trends that are transforming the port’s operations—automation and the shift away from fossil fuels—give a sense of the future too. + +Thanks to its easy access for big ships from the Atlantic and for barges from the interior, Rotterdam has been Europe’s dominant port for much of modern history. Its success is man-made: in the mid-19th century, when the Ruhr region of Germany was industrialising, Rotterdammers dug a channel to connect the Maas river, which runs through the city, to the Rhine, creating the most shipworthy route from Europe’s industrial heartland to the North Sea. + +The port has been evolving in sympathy with the global economy ever since: in the mid-20th century, new handling and storage facilities for oil and chemicals were built to cater to the post-war boom. As globalisation gathered pace in the 1990s and 2000s, the port expanded further into the sea, to provide berths for the mega-ships bringing sneakers and flat screens from Asia to Europe. + +Activity at the port today bears witness to four trends currently shaping the world economy: the low price of oil, slow growth in China and emerging markets, the sluggish euro-area recovery and the global slowdown in manufacturing and trade. From his office overlooking the Maas, Eelco Hoekstra, the boss of Vopak, the world’s largest independent storage company of “all things liquid”, sees the physical manifestation of movements in energy markets sailing by each day. + +In 2014, he recalls, when fracking was flooding America with cheap natural gas, huge cargoes of American coal suddenly started floating past. Gas was displacing coal in America but remained expensive in Europe, since America had little export capacity. So European utilities began snapping up the unwanted American coal instead: more of it was exported to the Netherlands than to any other country in 2014 and the first half of 2015. + +Soon after, the price of oil collapsed. Big consumers expected a relatively prompt revival, however, judging by the price of futures contracts. Rotterdam’s vast storage tanks quickly filled, as traders bought cheap crude on the spot market and sold futures at a higher price, locking in a profit. The low oil price, meanwhile, has helped pad margins at refineries and chemical plants, spurring a flurry of activity in Rotterdam’s sprawling industrial complexes. + +The oil price fell thanks in part to slowing growth in China, which is also evident in the sudden appearance of Chinese ships offloading surplus steel. This in turn means fewer barges are taking iron ore down the Rhine to German steel mills. Declining sales of German cars in China compound the problem, as carmakers consume less steel. The drop in shipments of bulk goods arriving in Rotterdam, says Allard Castelein, CEO of the port, is a direct result of this baleful cycle. + +The relative strength of the American and British economies is some compensation. In 2015 so-called “RoRo” (roll-on roll-off) traffic of lorries crossing the North Sea to Britain increased by 13% compared with the year before. America-bound cargo has also held up well. There are also a few countries from which imports to Rotterdam are growing fast. As wages in China have risen, says Roderick de la Houssaye of van Uden, a logistics firm, his clients—particularly makers of shoes and clothes—are relocating. Some have gone to places with lower wages, such as Indonesia and Vietnam; others to closer manufacturing regions such as Turkey, which are less likely to suffer from transport disruption. + + + +Some people see “near-shoring” to places like Turkey as a sign that globalisation is ebbing. The Baltic Dry Index, which tracks the cost of moving raw materials by sea, hit a record low in February. That is partly the result of a ship-building binge, but also of faltering demand. For the past few years world trade has been growing no faster than the world economy—the reverse of the usual pattern; in dollar terms, it declined by almost 14% in 2015. + +All this can clearly be felt in Rotterdam, where one in four containers originates in China. “When Singapore’s harbour is empty, it’s hard to see how we can be full,” says Mr Castelein. Although the volume of goods handled in the port grew by 4.9% last year, this was almost entirely thanks to the increased trade in oil and oil products. Container volumes dropped by 1.1% and agricultural bulk by 3.8%. + +Whether this slowdown is just a temporary dip or a permanent one is the subject of a heated debate. Mr Hoekstra is convinced that intercontinental trade will continue to grow. In the past 15 years he has seen shipments of oil and refined products quadruple. The main driver, he says, is a growing imbalance between those who have natural resources and those who need them. As oil and gas production becomes ever more concentrated in a few places, the need to ship and store the stuff will only grow, he thinks. Russia and the Middle East have too much oil; Asia too little. Europe has a shortage of diesel but a surplus of gasoline, which South Africa, in turn, wants more of—and so on. + +Port in a storm + +But Bart Kuipers of Erasmus University argues that a number of trends all push in the same direction: less container traffic. Economies are shifting from industry to services; advances in logistics and technology, such as near-shoring and 3-D printing, are making it more practical to manufacture things in the rich world; recycling drives are sapping the incentive to import. + +Rotterdam provides much more conclusive evidence of another trend that will shape the world economy: automation. Earlier this year its crane-drivers, often referred to as “the kings of the terminal”, went on a 24-hour strike that paralysed large parts of the port for the first time in 13 years. They were protesting against competition from robots. In 2013 the opening of “Maasvlakte 2”, which extended the port by a fifth by reclaiming land from the sea, was welcomed as a feat of engineering not just because it made the Netherlands 20km² (8 square miles) bigger, but also because its new “ghost” terminals run with almost no human intervention. In an episode of “The Wire”, a hit American TV drama, a stevedore at the port of Baltimore declares a jazzy promotional video about Rotterdam to be a “horror movie”. + +AGVs on the march + +In this part of the port, there is no hustle and bustle. Crane-drivers have been replaced by “remote crane operators”, who sit in a distant office in front of computer screens, using joysticks to control as many as three cranes at once. The cranes lift containers onto self-driving, battery-powered automated guided vehicles (AGVs), which deliver them to stacks to be distributed by truck, train or barge. When their batteries run out, the AGVs drive to a depot where robots remove the spent ones and insert replacements. It is eerily quiet and dark, as the AGVs do not need light to navigate. + +Humans’ main role is to stay out of the way; an AGV is about as heavy as a small aircraft and the whole system shuts down if any unexpected people or vehicles enter the terminal. APM Terminals, which operates part of Maasvlakte 2, hopes each crane will be able to move over 40 containers per hour in this way, compared with 30 or so in less advanced facilities. That cuts shipping times, saving lots of money. It is also far safer and, as one shipping executive notes, “Robots don’t take breaks or strike.” Sensing mortal danger to their livelihoods, workers are threatening more strikes unless the management promises to preserve their jobs and salaries. + +Another area of evolution concerns how the new parts of the port are powered. The AGVs and cranes in the new terminals are all electric, and an increasing number of windmills and solar panels provide much of the power the port consumes. All this reduces emissions of greenhouse gases, in keeping with increasingly restrictive European rules. The port is also investing in all sorts of climate-friendly experiments, from using residual heat from industry to warm homes and offices in the city to storing carbon under the seabed. + +Nonetheless, notes Jan Rotmans of Erasmus University, “Everything in the port breathes fossil.” Much of its business comes from the shipping and storing of oil, coal and other polluting fuels. Shell and ExxonMobil recently announced that they would spend some €2 billion ($2.2 billion) expanding their refineries in Rotterdam. + +Mr Rotmans wonders whether this business will continue to grow. That depends on whether the rest of the world will follow the port’s lead in terms of curbing its emissions. Rotterdam and other ports are not perfect bellwethers for the world economy: they give little indication, for instance, of what is happening in services, since lawyers and consultants don’t tend to travel in ships. But, horror movie or not, it is hard to deny that Rotterdam’s docks reflect glimmers of the future. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695096-europes-biggest-port-barometer-world-economy-shipping-news/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Doing less with more + +Low wages are both a cause and a consequence of low productivity + +Mar 19th 2016 | From the print edition + + + +COUNTRIES grow richer when they learn how to produce more valuable stuff per person. Sadly, many advanced economies seem to have lost the knack. Except for a brief spurt around the turn of the millennium, productivity has grown painfully slowly in rich countries over the last four decades (see chart)—a factor, economists reckon, that has contributed to stagnant pay. Labour productivity in America fell at a startling 2.2% annual pace in the fourth quarter of 2015; growth of 0.6% for the year as a whole was better, but hardly impressive. + +Orthodox explanations for the problem tend to fall into one of three categories. The first, championed by Robert Gordon, an economist at Northwestern University, suggests humanity has run out of big ideas.* Recent technological advances, the argument goes, lack the transformative power of the inventions of the 19th and early 20th centuries. Electricity and indoor plumbing, in Mr Gordon’s view, altered lives in a far more fundamental way than the digital revolution has managed. We were promised flying cars, to paraphrase Peter Thiel, a venture capitalist, but wound up instead with social networks. + +There are several inconsistencies in this story, however. Recent developments in artificial intelligence and robotics look at least as transformative as the gains in software and computing that powered the productivity boom of the late 1990s. The breadth of the productivity slowdown also poses a problem for Mr Gordon’s thesis. Productivity growth has slumped not just in the rich world, but also in developing countries such as Mexico and Turkey, which should be able to boost efficiency easily by adopting the productivity-boosting technology that is already in use in wealthier places. + +Some optimists argue instead that the problem is one of measurement. Technological progress often raises productivity in ways that statistical agencies struggle to detect. The tumbling cost of digital media (vast amounts of which are in effect free) subtracts from measured GDP, for example. Meanwhile, huge improvements in the quality of goods like smartphones can be difficult for statistical agencies to capture. + +Yet mismeasurement probably plays only a small role in the slowdown. Chad Syverson of the University of Chicago estimates that the productivity slump has cost America about $2.7 trillion in lost output since 2004, or about $8,400 for every American. That is far more than most estimates of the unmeasured gains from information technology. New research presented at the Brookings Institution, a think-tank, by David Byrne and John Fernald of the Federal Reserve and Marshall Reinsdorf of the IMF suggests there is little reason to think that the official data are worse now than in the late 1990s, when measured productivity growth was much higher. Indeed, the data ought to have improved, since the smartphones and computers that give statisticians such headaches are no longer made in the rich world. + +A third, more worrying possibility is that ossifying rich economies are getting worse at shifting people from obsolete firms and stagnant towns to more productive ones. In America, for instance, the rate of startup formation has fallen steadily since the late 1980s, according to work by Jorge Guzman and Scott Stern of MIT. That is not as disconcerting as it sounds: the authors find that the American economy is still producing plenty of the right sort of firms, with lots of growth potential. Worryingly, however, fewer of those firms seem to grow big. + +A few, high-growth startups account for most new jobs created in the private sector. But over the past 15 years America’s high-growth companies have not expanded much faster than their plodding peers. Flagging competitive pressures could be to blame. Profitable firms are increasingly likely to bank their earnings than to plough them back into the business. Regulation may also be a problem. Messrs Guzman and Stern find that entrepreneurial potential in some places, such as San Francisco and its hinterland, is far larger than in others, such as Detroit. Yet restrictions on construction constrain the movement of people from stagnant places to dynamic ones. A paper published in 2015 by Chang-Tai Hsieh of the University of Chicago and Enrico Moretti of the University of California, Berkeley, suggested that if it were easier to build in and around San Francisco, and thus cheaper to live there, employment in the area would rise by more than 500%, while many cities in the Rust Belt would all but vanish. + +Waste not, want not + +Orthodox economics suggests plenty of ways to nurture productivity growth—and, with luck, wages—such as boosting support for research and cutting red tape. But some in the profession are also beginning to ask whether the link between low productivity and low wages may run in both directions. Low pay allows firms to employ workers profitably in marginal jobs and to continue to use workers even though robots or software could replace them. Investments in automated checkout machines, for example, are less attractive when there are lots of cheap humans around. + +Some economists, such as João Paulo Pessoa and John Van Reenen of the London School of Economics, reckon low British wages, which tumbled during the Great Recession, help account for weak productivity growth during the subsequent recovery, since firms felt less pressure to economise. Similarly, abundant, cheap labour may help explain how the American economy has managed to produce the unusual combination of soaring employment and weak wage growth in recent years. + +By allowing economies to operate with lots of labour-market slack and by relying on falling pay to boost competitiveness, governments have enabled firms to make careless use of low-wage labour. By prioritising a return to full employment, politicians could give a much-needed kick to both wages and productivity. + + + +Sources: + +“The Rise and Fall of American Growth: The US Standard of Living Since the Civil War”, Robert Gordon, 2016. + +“Challenges to mismeasurement explanations for the US productivity slowdown”, Chad Syverson, NBER Working Paper 21974, January 2016. + +“Does the United States have a productivity slowdown or a measurement problem?”, David Byrne, John Fernald and Marshall Reinsdorf, Brookings Papers on Economic Activity, Spring 2016. + +“The state of American entrepreneurship? New estimates of the quantity and quality of entrepreneurship for 15 US states, 1988-2014”, Jorge Guzman and Scott Stern, 2016. + +"Where has all the skewness gone? The decline in high-growth (young) firms in the US", Ryan Decker, John Haltiwanger, Ron Jarmin and Javier Miranda, NBER Working Paper 21776, December 2015. + +“Why do cities matter? Local growth and aggregate growth”, Chang-Tai Hsieh and Enrico Moratti, NBER Working Paper 21154, May 2015. + +“The UK productivity and jobs puzzle: Does the answer lie in labour market flexibility?”, Joao Paulo Pessoa and John Van Reenen, Centre for Economic Performance Special Paper, June 2013. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21695071/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Sonification: Now hear this + +Artificial intelligence and Go: A game-changing result + +Research publishing: Taking the online medicine + +Restoring lost memories: Total recall + + + + + +Articles Sections Next + +Sonification + +Now hear this + +Scientific data might be filled with important things waiting to be discovered. Just listen to them + +Mar 19th 2016 | From the print edition + + + +DURING the first world war Heinrich Barkhausen, a German physicist, carried into the trenches an antenna, a crude electronic amplifier and a pair of headphones. His mission: to intercept Allied field-telephone communications. The strange noises he heard among the transmissions were not, as he thought, a problem with his equipment; later it was discovered that these “whistlers” were radiofrequency bursts from extremely distant lightning. Barkhausen was among the first scientists to learn something new about the world from sound alone. + +By the 1960s, seismologists were using instruments that recorded local tremblings as frequency modulations on magnetic tape. Days and weeks of data lay on these tapes, and the only way to sift through them for interesting events was to play them back at high speed, listening for any anomalies. The field of sonification—turning data into sound—had been born. When the Voyager 2 space probe passed Saturn in 1981 and sent back a stream of data that its keepers could not decipher, they sonified it. The hailstorm-like sound, they determined, came from debris in Saturn’s rings striking the craft. + +Sonifications make for attention-grabbing sounds on the news, so these days many scientific findings are sonified. Overwhelmingly, though, these are an afterthought; scientists still rely on their eyes and algorithms to spot interesting phenomena. That looks set to change as more scientists, engineers and even designers and artists look to exploit better what the seismologists and Voyager scientists knew decades ago: sound can be the key to scientific discovery. + +Bring the noise + +One person currently championing sonification is Robert Alexander, a design scientist from the University of Michigan who spent time as a fellow at NASA’s Goddard Space Flight Centre. His work with data from satellites measuring the stream of particles from the sun has yielded a number of discoveries (and also a number of musical compositions). + +That is because hearing presents a different set of strengths from that of vision. Humans can hear frequencies across three orders of magnitude, from about 20 to 20,000 hertz, and can discern tiny differences in those frequencies. They can deal with volumes from that of a pin dropping to a rock concert. Perhaps hearing’s greatest strength is its temporal resolution, 100 times finer than that of vision: you will know if your favourite band’s drummer is as little as a few thousandths of a second late on the beat. + +Dr Alexander found, through listening alone, that ions of carbon are better at indicating the regions from which the solar wind originates than the oxygen that was previously employed, and determined the cause of a long-lived storm of swirling particles within the wind. He even spotted an undocumented source of noise in the instruments aboard the Ulysses spacecraft. + +A greater influence than these discrete discoveries, though, is the enthusiasm for sonification they have created among his colleagues. Lan Jian, a solar scientist at Goddard, has learned that sonification is a great way to search for unusual events within data from WIND, another spacecraft sent to observe the sun. It speeds things up by a factor of ten or more, she says. Dr Alexander has gone on to publish a kind of best-practice sonification guide for researchers swimming in the copious data from sun-studying satellites. + +Such success stories remain rare, as visual analysis of data still dominates the sciences. Yet vision has its limits. Many experiments measure a slew of variables at once, and the trick is to discover which of these are connected and how. As visual display technology has improved greatly it has been possible to display data in enhanced ways, but it is becoming a struggle. “Now we’re seeing people looking at very complicated graphs; they’re overloaded by data, and the visual system can’t handle it all,” says Matthew Schneps of the Harvard-Smithsonian Centre for Astrophysics. + +Dr Alexander’s work—and indeed much of the work in science so far—falls under a category of sonification called audification. When a single measure is taken at regular intervals, the result is a simple stream of regularly spaced points. Audification is simply the shifting of such “time-series data” to a frequency within the audible range—exactly what the seismologists, Voyager 2 scientists and lots of early radio astronomers did. As a reflection of change in just one variable in time, audification results in simple tones and rhythms. + +But hearing can discern much more than just pitch and pace: it can pick up multiple instruments with differing timbres, keeping track of each note’s pitch, and even its attack and decay—how fast it rises and falls in volume. That is where another kind of sonification called parameter mapping comes in. This can turn scads of data sources into one stream of sound. The rise and fall of one variable is mapped to, say, the volume of a synthesised violin, while the shift of another is mapped to its pitch. Many different timbres of sound can be added, resulting in a data-rich soundscape. + +Human hearing is extremely good at dealing with such noisy input. Making out what your interlocutor is saying at a crowded cocktail party, or noticing the approach of a predator among the cacophony of birds and bugs in a rainforest, can be done. “Where there are subtle changes of noise, or patterns in the change, that’s where the ear really takes over,” says Andy Hunt, of the University of York, in Britain. + +Intelligent design + +Dr Hunt has parameter-mapped data ranging from images of cervical cells being screened for cancer to electrical signals from the muscles of recovering stroke patients. He has also worked with data from several hundred sensors fitted to helicopters during test flights. These data used to be printed out and laid on the hangar floor; engineers walked along them for hours, looking for anything untoward. Dr Hunt parameter-mapped the same data and turned them into a sound file, just seconds long, in which problems could be spotted. + +David Worrall of the Australian National University believes parameter-mapping sonifications are particularly suited to monitoring of complex systems. When he began to work with the Fraunhofer Institute, in Germany, on a project to analyse network activity as a proxy for how much different departments were co-operating, those in the institute’s IT department were sceptical. But through regular listening to his sonification, he says “they started to notice patterns in the flow of the network—this would happen, then that, and then suddenly the printer drivers would go down.” What began as a managerial query has become a network-monitoring tool. Dr Worrall has also developed a sonification of the stockmarket for an Australian government research group, in order to spot insider trading. + +How precisely to carry out such parameter mapping is a subject of ongoing study; experiments have shown that volunteers tasked with plucking out sounds of interest find it easier when listening to some mappings than to others. That can depend in part on how easy the resulting sonifications are on the ear, especially if they are being monitored all day. + +“If you want anyone to use your sonification, it shouldn’t sound too disturbing or give you a headache,” says Alexandra Supper, a sociologist at the University of Maastricht, in the Netherlands, “but at the same time there can also be a danger of making it sound too pleasing, such that it becomes background music.” + +For sonification to become more widespread, researchers must bridge this divide. For Dr Worrall—a composer by training—the answer is in design, which he says “is an uncomfortable bedfellow” for both scientists and artists. But Paul Vickers of the University of Northumbria, in Britain, says progress is being made in breaking down scientists’ conservative nature and bringing in aesthetic elements in a serious and rigorous way. “We’re seeing people working in the scientific domains engaging with philosophers of music and psychologists, and thinking about how we listen in the real world to inform how we design sonifications.” Sounds promising. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21694992-scientific-data-might-be-filled-important-things-waiting-be-discovered/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Artificial intelligence and Go + +A game-changing result + +AlphaGo’s masters taught it the game, but an electrifying match shows what the computer may have to teach humans + +Mar 19th 2016 | From the print edition + + + +IT WAS not quite a whitewash, but it was close. When DeepMind, a London-based artificial intelligence (AI) company bought by Google for $400m in 2014, challenged Lee Sedol to a five-game Go match, Mr Lee—one of the best human players of that ancient and notoriously taxing board game—confidently predicted that he would win 5-0, or maybe 4-1. + +He was right about the score, but wrong about the winner. The match, played in Seoul to crowds on the edges of their seats and streamed to millions online, was won by the computer, four games to one. + +Ever since Garry Kasparov, a chess grandmaster, lost to a computer in 1997, Go—which is far harder for machines—has been an unconquered frontier. AlphaGo’s win demonstrates the power of “deep learning”, an AI technique being used by firms such as Google, Amazon and Baidu for everything from face-recognition to serving advertisements on websites. As the name implies, deep learning allows computers to extract patterns from masses of data with little human hand-holding. Games make a good testing-ground for technology that DeepMind hopes to apply in medicine and scientific research. + +With good reason + +The match was a roller-coaster. AlphaGo won the first three games. Commentators were convinced it had made mistakes, but as it racked up wins, they were forced to concede that perhaps the machine, which had learned from a mixture of watching humans play and playing against itself, was using strategies its human masters had simply overlooked. + +The fourth game, though, was thrilling. A brilliant tesuji (a clever, insightful move) by Mr Lee seemed to throw the machine, which had not foreseen it: its next dozen plays were, this time, real errors (For a more in-depth write-up, see here). That suggests that there remain, for now, a few weaknesses in the way AlphaGo plays. + +The fifth game underlined how hard it is to exploit them. Once again, the human commentators reckoned that the machine had made a serious mistake early on. However, Mr Lee could not capitalise on it and AlphaGo eventually clawed its way back into contention. + +Computers are already better than humans at chess, backgammon and even “Jeopardy!”, a punny American quiz show that was won by Watson, an IBM supercomputer, in 2011. Go had been, until now, a redoubt of human mental superiority. Yet some see AlphaGo’s victory as an opportunity: it already seems to have found new tactics and strategies that humans can, in turn, learn from. Asked if AlphaGo’s play had given him new insights into the game, Mr Lee said it had. “The typical, traditional, classical beliefs of how to play—I’ve come to question them a bit,” he reflected. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21694883-alphagos-masters-taught-it-game-electrifying-match-shows-what/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Research publishing + +Taking the online medicine + +Old-fashioned ways of reporting new discoveries are holding back medical research. Some scientists are pushing for change + +Mar 19th 2016 | From the print edition + +“NEVER tried sharing data like this before,” said the tweet. “Feels like walking into a country for the first time. Exciting, but don’t know what to expect.” + +David O’Connor of the University of Wisconsin-Madison was announcing his decision on February 14th to post online data from his laboratory’s latest experiment. He and his team had infected macaques with the Zika virus and were recording the concentrations of virus in the monkeys’ bodily fluids every day. Researchers know that Zika is transmitted principally by infected mosquitoes. But if the virus appears in saliva and urine then these might also be sources of infection. + +Dr O’Connor and his colleagues published their results every day to a publicly accessible website. They hoped this would be useful to others working on the disease and, ultimately, to health authorities striving to contain it. They did not expect to garner much attention. But they did. + +Within days, researchers from all over the world started contacting them, making suggestions and asking for samples to conduct work that Dr O’Connor’s lab was ill-equipped to carry out. He describes the experience of data-sharing as “universally positive”. But as his tweet suggests, such openness is far from routine. + +Careers in medical research hang on publishing papers in prestigious journals such as Nature, Science and Cell. Even in emergencies such as the recent Zika outbreak, or the earlier epidemic of Ebola fever in west Africa, biologists are reluctant to share data until their work is published. + +Once a paper is submitted to a journal, though, its findings can languish unseen for months as it goes through a vetting process known as peer review. Reviewers can ask for substantial changes, further experiments and also suggest the journal reject the paper outright. If several journals turn down a paper before it is published, it may be years before the results become public. + +Left in the dark in this way, other practitioners may waste time and money conducting unnecessary experiments. In cases where the unpublished work might warn of things like unsafe treatments, the cost of the delay could be measured in lives. Dr O’Connor’s response is part of a reaction against this delay. + +Peerless publishing + +He is not alone. On February 10th, prompted by concerns that vital data on the Zika epidemic could be held up by journal peer review, scientific academies, research funders and a number of academic publishers urged researchers “to make any information available that might have value in combating the crisis”. The publishers promised that posting a paper online as a so-called preprint would not disqualify it from publication in a journal later. + +But not all publishers signed up to the agreement, and it raises many questions. As Stephen Curry of Imperial College London noted in a blog post for the Guardian, a British daily newspaper, if the approach is valid for Zika, then why not for other infectious diseases, including malaria or HIV/AIDS, which kill millions every year? + + + +The problem is not new. But an increase in spending on biomedical research has led to a surge in scientific publication. The number of research articles published each year has doubled since 2003 (see chart), with the biomedical sciences accounting for about 40% of the total. + +That has tightened the bottleneck at elite journals, which publish no more papers than they did 30 years ago and demand that more research be crammed into each submission. As Ronald Vale of the University of California, San Francisco, noted last year in Proceedings of the National Academy of Sciences, an average biology paper in 2014 required two to fourfold more data than a paper published 30 years earlier. Graduate students at his institution now take about a year longer, on average, than they did to publish their first paper. + +“The problem is our CV is lagging behind our productivity,” says Jessica Polka, a postdoctoral researcher at Harvard. To convince people to embrace preprints, Dr Polka, Dr Vale and other biologists organised ASAPbio, a meeting held on February 15th-16th in Chevy Chase, Maryland. Their aim is to get more biomedical researchers to emulate physics, a field in which a preprint repository has existed since 1991. The arXiv, as this repository is known, now hosts over a million preprints, a large proportion of which have been published eventually by physics journals. + +Yet, although a poll of nearly 400 scientists attending ASAPbio revealed 90% are dissatisfied with the state of publishing in biology, biomedical researchers seem reluctant to follow the example of those in the physical sciences. About 8,000 preprints a month are now uploaded to arXiv. By contrast, bioRxiv, a similar repository for biology founded in November 2013, holds only around 3,000 in total. + +Several things prevent biology and medicine from catching up. First, there is the fear of disqualification from publication in an elite journal. While many such journals, including Nature and Science, do allow work to be published to preprint servers before submission, others do not. Cell, for example, considers them on a case-by-case basis, asking authors to contact them before posting online. The Journal of the American Medical Association, in general, bars such papers from consideration altogether. + +A second worry for researchers who post their research online is that they may be scooped by rivals who could copy their methods and publish the work in a journal first. This concern could be resolved if funders and institutions recognised a preprint as the first report of a discovery, rather than recognising only journal articles. In physics that is already the case. + +Thirdly, there is the danger of non-validated, erroneous findings in a preprint misleading researchers. However, this has not proved a significant problem in the physical sciences. Manuscripts submitted to arXiv (and bioRxiv) are checked to ensure that they are not crank science. And, as Paul Ginsparg, who founded arXiv, noted in a talk at ASAPbio, researchers are more careful to check un-peer-reviewed papers before making them public. Furthermore, journal peer review is not infallible: poor science routinely slips through the net. + +In any case, there is no reason to prevent a preprint from being reviewed after it is uploaded. One example of this is Discrete Analysis, a mathematics journal launched on March 1st by Tim Gowers of the University of Cambridge. This is an “overlay” journal, a sort of stripped-down online publication which provides links to papers in arXiv and sends submitted manuscripts out for peer review at no cost to the author (the administration cost of around $10 per submission is covered by the journal). + +Agency of change + +Michael Eisen of the University of California, Berkeley, a zealous proponent of open science, argues that the traditional publication model is outmoded. Researchers are far more likely to use keyword searches in Google to find papers relevant to their work than to leaf through printed journals. Preprints, he says, put researchers back in the driving seat: “Instead of being told by journals what papers to review, we review papers useful to us.” + +There are signs that researchers might be tiring of the grip that the elite journals have on the biomedical sciences. Over 12,000 people have so far signed the San Francisco Declaration on Research Assessment (DORA), which began in 2012 as a commitment for research to be assessed “on its own merits rather than on the basis of the journal in which the research is published”. If the science community takes this notion seriously, more researchers might be persuaded of the value of publishing preprints (because journal publications will be less important). A report to the British government on open access to research, published in February by the Department for Business, Innovation and Skills, recommends all universities in the country now sign DORA. + +The wide adoption of preprints, however, depends ultimately on paymasters and interview panels moving away from judging the worth of a scientist by the number of publications in elite journals that appear on his CV. While few funding agencies consider preprints to be formally published work, some have at least made tentative moves towards assessing a scientist’s research more broadly. Medical research groups in America, Britain and Australia, for example, have emphasised that scientific work will be judged by its quality, not by the reputation of the journal it is published in. That will certainly be more onerous for committees than counting up the “right” sort of papers. But if more researchers feel comfortable about uploading their work to preprint servers, it will break the stranglehold of elite journals on biomedical science and accelerate discovery. That would save millions of dollars. More importantly, it would save lives. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21694990-old-fashioned-ways-reporting-new-discoveries-are-holding-back-medical-research/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Restoring lost memories + +Total recall + +Missing memories have been restored in mice with Alzheimer’s disease + +Mar 19th 2016 | From the print edition + +Remembering in a new light + +SOME mice can easily remember where they hide food, but not those genetically engineered to develop Alzheimer’s disease. Like humans they become forgetful. By the time these mice are seven months old they are unable to remember, for example, which arm of a maze they have explored before. Two months later, their brains are riddled with amyloid beta, the protein “plaques” that also characterise the latter stage of the disease in humans. + +Now researchers have managed to restore memories to mice with Alzheimer’s. This helps provide more evidence about how memories are lost during the early stages of the disease and may point to how, some time in the future, those memories might be brought back. + +Susumu Tonegawa and his colleagues at the Massachusetts Institute of Technology used a technique known as optogenetics, which activates clusters of neurons by shining light on them. As they report in Nature, the researchers prepared seven-month-old Alzheimer’s mice by injecting a harmless virus into the rodents’ dentate gyrus, a part of the hippocampus that helps to store fearful memories. The virus contains a gene for channelrhodopsin-2, a light-sensitive protein which forms pores in the cell membranes of neurons infected with the virus. These pores are closed in the dark, but open in response to blue light, flooding neurons with positively charged ions. The resulting pulse of current makes the neurons fire. During their experiments, the researchers were able to illuminate the infected neurons of the mice using optical fibres implanted in their brains. + +Using a standard lab test of memory, a mouse was placed in a box and given a small electrical shock to its feet. Normal mice remember this and freeze in fear if put back in the box the following day, but mice with Alzheimer’s scamper about unfazed. Yet when the researchers stimulated the dentate gyrus of these mice with blue light, they also froze, suggesting that they were now able to recall the original shock. + +Holding on to a fearful memory in the long term, however, requires the brain to strengthen the nerve connections (synapses) that link memory of the box to experience of the shock. This process, known as long-term potentiation, goes awry in the brains of Alzheimer’s patients. Consistent with this idea, the Alzheimer’s mice did not freeze when placed in the box but only when their neurons were illuminated. + +To help the Alzheimer’s mice consolidate and keep their memory of the electric shock, the team flashed their dentate gyrus with blue light at 100 hertz, a frequency known to induce long-term potentiation. After this the Alzheimer’s mice froze in the box for at least six consecutive days, suggesting they were able to remember the shock themselves. + +Work by other groups has suggested that in its early stages, Alzheimer’s principally damages the brain’s ability to process and store memories. This new work, however, indicates that it is the brain’s ability to retrieve memories that is impaired. The distinction is far from an academic one. If memories are garbled before they are stored, they are lost for ever. But if Dr Tonegawa is right, then memories are correctly preserved in the brains of Alzheimer’s patients. That means it may be possible to rescue them—perhaps by adapting optogenetics for use in human sufferers. That remains a distant possibility for now. + +But there is a more immediate consequence of the work for the estimated 40m people with the disease. Electrical stimulation of large areas of the brain of Alzheimer’s patients is already being tried, using electrodes implanted in the skull. But Dr Tonegawa’s team found that stimulating neurons in the dentate gyrus other than those directly involved with holding the fear memory prevented Alzheimer’s mice from remembering their shocks in the long term. That suggests that unless the technique can be refined, deep-brain stimulation may not be effective. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21694971-step-forward-understanding-how-memories-workand-how-recover/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +India’s young: We’re not gonna take it + +Iraq’s unravelling: The mistakes that made Islamic State + +The Bard abroad: All the world was his stage + +Art and loneliness: Out of isolation + +Hartwig Fischer at the British Museum: On a mission + +Hartwig Fischer at the British Museum: Correction: “Don’t p@nic”, March 12th + + + + + +Articles Sections Next + +India’s young + +We’re not gonna take it + +India’s youth are trading fatalism and karma for free will—and higher expectations + +Mar 19th 2016 | From the print edition + + + +The End of Karma: Hope and Fury Among India’s Young. By Somini Sengupta. Norton; 244 pages; $26.95. + +DELHI found itself under siege last month. Young men blocked roads and canals that feed people and water into the city. They looted, set fires and dragged women out of cars to rape them. The protesters, from a relatively privileged group of land-owning peasants called Jats, were agitating to be included in India’s list of “other backward classes”, which guarantees university places and government jobs. Faced with dry taps, Narendra Modi’s government was eventually forced to concede to the demand. + +This is the fury to which Somini Sengupta refers in the subtitle of her sharply observed study of India’s young, “The End of Karma: Hope and Fury Among India’s Young”. The median age in India is 27. Every month between 2011 and 2030, nearly 1m Indians will turn 18. Those coming of age this month were born well after the country started opening up its markets in 1991; they have spent their formative years in a world of optimism and rapid economic growth. But Ms Sengupta calls India “a democracy that makes promises it has no intention of keeping”. + +By 2030 the majority of Indians will be of working age. This could be what economists call a “demographic dividend”, creating a high worker-to-dependent ratio—or it could be a time bomb. India is producing nowhere near enough jobs for the tens of millions of young people joining the workforce every year. + +The argument running through Ms Sengupta’s book, made of seven richly detailed portraits of young Indians, is both simple and beguiling. For centuries Indians born into wretched circumstances have accepted their lot as karma—punishment for misdeeds in past lives. This belief explains the persistence of the caste system, and the remarkable fact that a country that is home to one in three of the world’s poor has not come apart at the seams. But young people no longer accept karma, argues Ms Sengupta. Ideas of aspiration and free will have entered the Indian consciousness. Young Indians today demand the right to shape their own futures. If fury is in ample supply, so is hope. + +Yet at every step the young are thwarted. It starts in the womb. A traditional preference for boys means that India has one of the most skewed sex ratios in the world: 1.13 boys for every girl, second only to China. (The ratio in America is 1.05.) One in three children under five is underweight. Nearly two-thirds of food meant for early-childhood feeding programmes is pilfered. A rare bright spot is education: in 2013, 96% of primary-school-age children were enrolled. But here, too, India fails its young. By the age of ten, only 60% of students can complete work at the level of a five-year-old. More than half cannot subtract. + +These are the failings of the state. But culture is an enemy too. Varsha, the daughter of a dhobi, or laundry man, wants to be a police officer. But this is no work for a girl. Her father allows her to study chiefly to improve her marriage prospects. “He knows only louts will marry a girl without a high school degree nowadays,” says Ms Sengupta. Monica and Kuldeep, a glamorous young couple from the outskirts of Delhi, seemed to have escaped their karma. They chose each other—and worse, they chose from rival castes. At first estranged from their families, they eventually made peace. Life was going well. Then three years after their marriage, Monica’s brother shot them both in the head, thereby restoring the family’s honour. + +Out of anger, hope + +It is not all fury. Anupam, the son of a rickshaw-driver from the “other backward classes” from Bihar, itself among the most backward states, makes an unlikely escape from poverty. Improbably, he wins a place at an Indian Institute of Technology, elite engineering schools that admit just 5,000 of 200,000 applicants a year. He also attends the equally renowned Indian Institute of Management. His hard work earns him a job at India’s securities regulator. By the end of 2013, he has moved to a commuter town outside Mumbai. His mother relaxes on a sofa playing Candy Crush on an iPad he bought her. + +Ms Sengupta, whose family migrated from Calcutta (now Kolkata) via Canada to California when she was a girl, served as the New York Times’s New Delhi bureau chief between 2005 and 2009. She employs the traditional tools of the reporter to great effect, interweaving data, first-hand accounts and archival research to paint a vivid picture of life for India’s young people. But what separates the book from the musings of so many foreign correspondents is the lens through which Ms Sengupta sees the country: that of a mother. Becoming a parent “made me want to see India through the eyes of its young. It made the fault lines clearer,” she writes in the epilogue. “In that sense, it is a love letter to my own girl.” + +Reading Ms Sengupta’s stories of young women arrested for speaking their minds on Facebook, of teenagers trafficked to work as domestic servants in big cities, it is difficult not to feel gloomy. Yet stories like Anupam’s, while rare, are not unheard of. At the same time as the Jat protests outside Delhi last month, India’s political establishment was convulsed by a controversy surrounding the arrest for sedition, under a colonial-era law, of Kanhaiya Kumar. The student-union president of a left-leaning Delhi university, himself from a Bihari family, was accused of supporting “freedom” for Kashmir. Released on bail in early March, Mr Kumar clarified his position in a speech on campus: “It is not freedom from India we want. It is freedom in India,” freedom from hunger, from corruption, from caste. As long as India produces young men and women with this fire of conviction, it will also remain a place of hope. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21694984-indias-youth-are-trading-fatalism-and-karma-free-willand-higher/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Iraq’s unravelling + +The mistakes that made Islamic State + +Mar 19th 2016 | From the print edition + +Blood Year: Islamic State and the Failures of the War on Terror. By David Kilcullen. Oxford University Press; 312 pages; $24.95. Hurst; £9.99. + +WHEN David Kilcullen, a young Australian army officer who had been seconded to America’s State Department as a counter-terrorism strategist, arrived in Baghdad’s Green Zone in late 2005 he found himself at “Ground Zero for the greatest strategic screw up since Hitler’s invasion of Russia”. Just as it is said that the first world war was the calamity from which sprang all the other calamities of the 20th century, so too was the bungled aftermath of the invasion of Iraq the screw-up from which all other screw-ups followed. + +In his new book, Mr Kilcullen gives an unflinching insider’s account of how mistakes and missed opportunities led inexorably to the events of 2014. This is the “blood year” of his title, when Islamic State (IS) began its blitzkrieg through Iraq that culminated in the seizure of Mosul, the country’s second-biggest city, and the approach almost to Baghdad. Eighteen months after Barack Obama assembled his international coalition to “degrade and defeat” IS, the self-styled “caliphate” still holds Mosul and a string of other Iraqi cities, while controlling much of eastern Syria including Raqqa, its “capital” since 2013. + +There is plenty of blame to go round. Mr Kilcullen’s contempt for George W. Bush’s defence secretary, Donald Rumsfeld, is searing. If invading Iraq was an irresponsible distraction from the real fight against al-Qaeda, Mr Rumsfeld’s insistence on a “light footprint” strategy meant that the number of troops available to contain the entirely predictable (and predicted) chaos following the removal of Saddam Hussein was “criminally” inadequate. + +This was compounded by disbanding the Iraqi army and then dismantling the ruling Baath party, thus rendering most of the country’s qualified middle class unemployable. The conditions for the debacle to come were now complete. It was in the ensuing years of sectarian bloodletting that al-Qaeda in Iraq (AQI), the predecessor to IS, emerged under the psychotic leadership of Abu Musab al-Zarqawi as the most potent force in the insurgency. + +Yet Mr Kilcullen is full of praise for Mr Bush’s commitment to the troop “surge” in 2007 led by General David Petraeus. Mr Bush may have made a lousy call over Iraq in the first place, but he understood the moral and reputational imperative to repair some of the damage and was sufficiently flexible to apply new methods when old ones had failed. + +The same could not be said for his successor, Mr Obama. As Mr Kilcullen sees it, by the time the new president took office in 2009 Iraq was in a much better place. AQI had been more or less eradicated, the violence had largely abated and, under American guidance, the government of Nouri al-Maliki in Baghdad showed some willingness to share power with Sunnis and Kurds. But Mr Obama, instead of maintaining enough boots on the ground to keep things going in the right direction, headed for the exit at the first opportunity when, in late 2010, he and Mr al-Maliki failed to agree to a deal extending the legal status of American forces in Iraq. + +Within hours of the last American soldiers departing, Mr al-Maliki returned to his Shia sectarian ways, betraying promises made to the Sunnis and hollowing out the army (equipped and trained at a cost of $26 billion to American taxpayers), creating a corrupt praetorian guard. With nowhere to turn, the Sunni minority was vulnerable to co-option by a resurgent AQI, which by 2013 was responsible for levels of violence not seen since the surge. With a strategic hinterland across the notional border with Syria and faced with an Iraqi army unwilling to fight for mainly Sunni cities, AQI morphed into ISIS (Islamic State of Iraq and al-Sham) and then into IS. + +It was given a helping hand by a feckless Mr Obama, already guilty of “passivity in the face of catastrophe” according to Mr Kilcullen. Had Mr Obama punished Bashar al-Assad for crossing the “red line” by using chemical weapons against his own people, as Mr Obama had promised, the author believes that the regime might have fallen and IS would not have taken hold in Syria. + +Mr Bush learned from his mistakes. But in Mr Obama the author sees an ideological stubbornness that prevents him from doing so and that in some ways echoes the theories of Mr Rumsfeld. Mr Obama relies on technology and modest air campaigns to constrain the West’s enemies while refusing to commit the forces on the ground needed to defeat them (his partial U-turn on Afghanistan is typically grudging and insufficient). The longer America leaves IS to embed itself in the cities it has captured the greater the harm it does and the more lethal the force that will eventually be required to remove it, Mr Kilcullen argues. + +Unfortunately, this wise and important book ends on an off-note. Mr Kilcullen suggests that perhaps some sort of bargain could be struck with an economically distressed Russia that would lead to a co-operative effort to find a political solution to end the terrible civil war in Syria that IS has fed from. Given Mr Obama’s acquiescence in the ruthless bombing of Syrian rebels ordered by Vladimir Putin just as this book was sent to the publishers, it is not a far-fetched notion. But it would be a deal struck on Russian and Iranian terms aimed at preserving a monstrous regime only too happy to drive yet more desperate Sunni Arabs into the deadly embrace of IS. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21694981-mistakes-made-islamic-state/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Bard abroad + +All the world was his stage + +Mar 19th 2016 | From the print edition + + + +Shakespeare in Swahililand: Adventures with the Ever-Living Poet. By Edward Wilson-Lee. William Collins; 288 pages; £20. To be published in America by Farrar, Straus, and Giroux in September; $26. + +ACCORDING to the diaries of Captain William Keeling of the East India Company, in 1607 “Hamlet” was performed on his ship Dragon off the coast of Sierra Leone. If the extract is genuine, it was the first performance of the play ever to be mentioned in writing. Edward Wilson-Lee of Cambridge University has pulled together this and many intriguing threads in his “story of Africa less often told”. “Shakespeare in Swahililand” is an attempt to understand whether the great playwright’s work speaks across cultural boundaries to a shared humanity. It primarily looks at “Swahililand”: Kenya, Uganda, Tanzania, and the parts of Congo, Malawi and Sudan, where the language is spoken, but cannot resist ranging farther afield. (Ethiopia’s emperor, Haile Selassie, said that after God, Shakespeare was “the greatest creator of mankind”, but his information ministry banned an Amharic-language staging of the regicidal “Makbez”.) + +Shakespeare arrived on the continent in the baggage of explorers. From Richard Burton to Henry Morton Stanley, a volume or two of Shakespeare was an indispensable part of an African adventure. Mr Wilson-Lee speaks of the “exquisite strangeness” of the fact that “ravaged by physical hardship and fever” they should reach “for lines written for Elizabethan Londoners several hundred years earlier”. But Shakespeare was “a talisman of Englishness…to keep themselves from ‘going native’.” And as European explorers were replaced by settlers and colonists, Shakespeare became “a tool of psychological warfare and cultural colonisation”. + +In 1867, though, the missionary Edward Steere translated storybook versions of four of Shakespeare’s plays into Swahili. This was the beginning of a golden age when Shakespeare could be heard in new languages on the continent. Mr Wilson-Lee delights in examples of the “plays richly refracted through the eyes of a place and time wholly alien to the Swan of Avon”. In the early 1900s Indian acting troupes performed Agha Hashr Kashmiri’s “Saidi Havas”, a blend of “Richard III” and “King John”, in makeshift theatres in Mombasa; there were versions of “Hamlet” set on Mughal battlefields, and snake-bitten Juliets who merged with the character of Cleopatra. + +Shakespeare’s prominence in British-set school syllabuses meant his work had fully diffused into African life by the second half of the 20th century, “in the speeches of politicians and lawyers and the folklore of rural villages”. But as independence dawned, his influence was called into question. Was Shakespeare part of a universal human culture which belongs to everyone, or an extension of colonial power? Two Kenyans represented the contrasting views. Ngugi wa Thiong’o, a celebrated novelist, scoffed at “Shakespeare in Colonial Trousers” and went on to refuse to write in English, whereas the first African member of the Kenya Legislative Council, Eliud Wambu Mathu, used “The Merchant of Venice” in a speech in 1955 to explain the injustices of British rule. + +The subject, though interesting, can feel stretched over the book’s 250 pages. The historical records are sadly thin, which means Mr Wilson-Lee often resorts to what feels like speculative filler. Some of the links he makes are beyond tenuous—at one point he compares African elephants to the storm in “King Lear” on the grounds that both are “sublime grey objects”. The book sometimes strays far from both Shakespeare and Swahililand. But it has successfully told a lesser-known story of Africa, and it is a story worth knowing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21694985-all-world-was-his-stage/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Art and loneliness + +Out of isolation + +Mar 19th 2016 | From the print edition + + + +The Lonely City: Adventures in the Art of Being Alone. By Olivia Laing. Picador; 336 pages; $26. Canongate; £16.99. + +SEVERAL years ago, Olivia Laing, a British writer, took a leap of faith in a new relationship, moving to New York. Her lover was of the fickle sort, and she soon found herself alone, drifting, her lack of attachment amplified by the city’s urgency and purpose. + +Her book about this period, “The Lonely City”, grabs hold hard of the shameful feeling of loneliness. In modern society, loneliness has become “increasingly inadmissible, a taboo state whose confession seems destined to cause others to turn and flee”. People are more accepting of anger, envy, guilt and greed. To be lonely is to have failed, according to the rules of a shrinking and ever more interconnected world. Ms Laing builds a case for loneliness as particularly pernicious, citing studies to show it can be harmful to physical health and difficult to overcome: “the damaged individual and the healthy society work in concert to maintain separation.” + +Ms Laing’s loneliness was acute rather than chronic, and she overcame it through the consolation of art. She studies four men whose experiences cover the spectrum of isolation: Edward Hopper, Andy Warhol, David Wojnarowicz and Henry Darger. Her research on the lesser-known two is especially moving. + +Wojnarowicz was so abused and neglected as a child that even as an adult there were times he could barely speak. His art—installed, performed, written, painted—focused on those ignored by history. The eruption of AIDS gave a resilient man a cause. He lost friends and lovers; he got the disease himself. He became a prominent member of a direct-action group, ACT UP. According to Ms Laing, linking art and protest forced him finally “to resist the silencing and isolation he’d suffered from lifelong”. But as he grew sicker, the feeling of invisibility returned. He wrote in his journal, “I am disappearing but not fast enough.” His ashes were scattered on the White House lawn in protest at the government’s response to the crisis, a loner and outsider finding himself, Ms Laing writes, at “the absolute heart of America”. + +Where Wojnarowicz was able to find some connection through his art, Darger did not. He spent half a century as a hospital janitor. His other life as a creator of epic collages of fictitious worlds was discovered only after his death. His work often depicted violence against children, part of the reason he still sits outside the canon. Ms Laing interprets the horror as a desperate plea for attention: “Commit atrocities, become a windmill of slaughter: anything to get the attention of the divine eye, to prove that at least one being was aware of him, and felt his presence to be significant.” + +Ms Laing finds relief in taking these artists’ work in her own hands, suggesting that connecting through touch with the loneliness of others can act as a balm. Back behind her laptop, she decries the familiar arguments that digital culture has alienated us from human contact. Loneliness did not appear with the internet. Like many people, Ms Laing finds making connections, especially those “of a risk-free kind, in which the communicator need never be rejected, misunderstood or overwhelmed”, frighteningly hard. But connecting becomes less intimidating if the fear of failure is removed. This brave book is a step in that direction. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21694983-out-isolation/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Hartwig Fischer at the British Museum + +On a mission + +The new head of the British Museum wants museums to take a stand + +Mar 19th 2016 | From the print edition + +Unafraid of colours clashing + +WHEN the British Museum (BM) announced last September that its new director would be Hartwig Fischer, the common response was, “Hartwig who?” The soft-spoken director of the Dresden State Art Collections (SKD) was little known beyond the narrow world of museology. David Cameron had to approve his appointment, but six months on, the prime minister has still not met him. + +The challenges Mr Fischer will face are many. He must attend to the museum’s permanent collections, ignored in the past few years and looking tired. He must decide the future of the grand (if awkward) circular Reading Room that the museum inherited from the British Library, and he will have to learn the mysterious ways of the Whitehall civil servants who control the museum’s public funding. He will face growing calls to return objects to the places they were taken from. But it is the position he will adopt in the wider public debate about what museums are for by which Mr Fischer will be measured. + +Neil MacGregor, the museum’s scholarly and yet impish outgoing head, turned down the knighthood that would have drawn him further into the British establishment, and became instead the nation’s storyteller-in-chief with his radio series, “A History of the World in 100 Objects”. He positioned the BM, which had grown stale in the first years of this century, as “a museum of the world for the world”, giving it a new lease on life. With Mr MacGregor gone, and Sir Nicholas Serota, director of the Tate Galleries, possibly soon to retire (he turns 70 next month), culture in Britain needs a new advocate. Will Mr Fischer take up the challenge? + +Mr Fischer was born in Hamburg, but his mother was from Strasbourg, a city that has frequently changed hands between France and Germany, and the linguistic divide “went straight through the family”, he says. Mrs Fischer grew up in Milan and on the Italian lakes, as a result of which her son has been fluent in four languages since his youth. (At 16 he went to America for a year, working on a farm in Iowa while attending the local high school. Back in Germany a year later, having just passed his driving test, he drove to London, returning with his car weighed down by second-hand books.) Mr Fischer’s studies in art history led to a doctoral thesis ostensibly on a painter called Hermann Prell, but it also allowed him to study the violent, inward-looking nationalism that led Germany to the first world war. + +The man soon to take on one of the crown jewels of British high culture has a popular touch. He avoids the obfuscating language of his field, for example in a masterfully clear essay, “The Path to Abstractionism”, on Vassily Kandinsky, a great 20th-century Russian modernist. He insisted that any renovation at the 14 museums that make up the SKD, where he has been director for more than three years, must leave visible some reminder of Dresden’s wartime destruction. His open criticism of those who would rather paint over the past led to attacks in the press. The shows he has put on in Dresden have focused on global art history, reaching deep into the collections to highlight Indian miniatures and Japanese katagami painting of samurai kimonos, not just European porcelain. + +Tongue slightly in cheek, he says museums are “in charge of eternity”. But he truly does believe they have a political mission to forge “global citizenship” (the statement he gave at his appointment to the BM mentioned this in passing, but the reference was easy to miss). This has particular resonance in Dresden, which saw some of the biggest demonstrations in the uprising against Erich Honecker, the East German leader, in 1989, and which has since been the birthplace of Pegida, Germany’s anti-Muslim, anti-migrant movement. + +The turning point came in December 2014, when the museum projected the words “Dresden for all” on its façade. This attracted Pegida supporters chanting slogans with a Nazi tinge: Lügenpresse (“liar press”) and Volksverräter (“traitor to the people”). “I consciously took the decision not to remain neutral,” Mr Fischer says. He began making speeches to citizens’ groups that had formed to counter Pegida’s regular Monday marches (“the cultures of the world are at home here, and the people who carry those cultures,” he told them) and persuaded the government to allow the museum to hang long banners outside the building boasting: “The State Art Collections Dresden. Works from Five Continents. A House Full of Foreigners. The Pride of the Free State of Saxony.” In early February the museum threw open its doors to refugees and locals on a Sunday under the banner “Meet a Friend”. The place was soon overcrowded, with an open-hearted and warm atmosphere. + +Mr Fischer moves to Britain just as the country examines its own role in the world: which way to vote over membership of the EU. When he settles into his office overlooking the courtyard of Montague House on April 4th, he will be given the pick of the BM’s collection to hang on the wall. In his Dresden office he had just a single artwork, one of the compasses that Olafur Eliasson, a Danish-Icelandic artist, has used to explore questions of identity and integrity, nationalism and globalism. It hung from the ceiling and spun on its axis, stopping only when it found true north. Mr Fischer will wait and watch before he speaks out in public. When he does, his views are likely to be surprising. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21694980-new-head-british-museum-wants-museums-take-stand-mission/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Correction: “Don’t p@nic”, March 12th + +Mar 19th 2016 | From the print edition + +Johnson (“Don’t p@nic”, March 12th) gave the @ sign’s name in Dutch as aapenstartje. It is apenstaartje (“monkey’s tail”). Tail between legs: sorry. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21694982-correction-dont-pnic-march-12th/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: George Martin: Their humble servant + + + + + +Articles Sections Next + +Obituary: George Martin + +Their humble servant + +George Martin, record producer, died on March 8th, aged 90 + +Mar 19th 2016 | From the print edition + + + +THE first thing that struck George Martin, when the four young men strolled into his studio at EMI on Abbey Road in 1962, was that they looked quite clean. That came as a relief. Their demo tape, frankly, had not impressed him: badly balanced, and obviously recorded in a back room somewhere. Some sort of raw energy in it, hard to define, was all that had led him to bring them down from Liverpool. + +The Beatles, on their side, were equally surprised. They knew him as the producer behind the Goons, Peter Sellers’s crazy spoofs, and Flanders & Swann of “Mud, mud, glorious mud”. This posh-looking man (though, in fact, the son of a carpenter), with tailored clothes and the clipped voice of a kind headmaster, was not what they expected. But a liking for silly jokes bound them instantly. And Mr Martin soon found that, though he might perch on his high stool with “the boys” obediently gathered round to sing, it was they who were the masters, and he the servant. + +This arrangement did not trouble him. As the young and eccentric head of the struggling Parlophone label, he had stumbled on genius, and now his job was gently to encourage and record it. He himself, he stressed, had no brilliance. He was a Jack-of-all-trades, “averagely good” at a number of things, who happened to have perfect pitch and a decent pair of ears. As a child he had taught himself the piano, but was never that good. At the Guildhall he learned the oboe, at which he was workmanlike. For Parlophone he began on the rather despised light-music-and-classical side. He was in love with sound but, though devoted to Bach and in awe of Ravel’s orchestration, he found pop music offered him more chances to experiment and create. Arranging and recording it was like painting with an infinite palette of colours. + +His time with the Beatles, which lasted from their first single, “Love Me Do” (1962) to their last album, “Abbey Road” (1969), tested his ingenuity to the limit. He began, in mono, by tidying up the beginnings and ends of songs; in five years, on “Sergeant Pepper”, he was employing in stereo almost every instrument of the orchestra, and dubbing one four-track machine on another not once, but twice. For “Strawberry Fields Forever” he spliced together two takes at different tempi in different keys; for ”Tomorrow Never Knows” he brought in eight loops of sounds played backwards; soon he was getting the engineer to cut a tape in bits, toss them in the air and reassemble them. Technology could barely keep pace with the whims of his charges. + +Nor, sometimes, could he. It was up to him to interpret the boys’ mumbles and “dooby-doops”—“something like this, George”—as instrumental sections, whether a string quartet (“Yesterday”), a Lowrey organ (“Lucy in the Sky with Diamonds”), or a piccolo trumpet (“Penny Lane”). On “A Day in the Life” he brought in a 41-piece orchestra in black tie to make a glissando that went, as John wanted, “from nothing to the end of the world”. + +He refused to claim much credit for all this. Talk of him as the “fifth Beatle” he thought ridiculous. So were suggestions that he should share the composition honours on the record labels with Lennon and McCartney. After a while, the words “Produced by George Martin” appeared there, a first for the industry, but he went no further. Because, when all was said, he only arranged: he could never have found those notes, or written those songs. + +Where he defended himself more forcefully was over his pay. Though the Beatles were soon earning millions for EMI, he was stuck on £3,000 a year, and when he failed to secure more than one-fifth of 1% of the royalties he left, in 1965, to set up his own Air Studios in London and the Caribbean. The Beatles stayed with EMI but demanded that he should still record them, because he was their friend. So he remained, firmly, despite ups and downs caused by drugs and pushy girlfriends. Tactfully, he said nothing about either, and the result of their giggly dope-taking was, to his unfogged mind, music that melted into new shapes like the paintings of Salvador Dalí. Only twice did he impose himself: at the start, insisting that they replace Pete Best as their drummer, and at the end, when he agreed to record “Abbey Road” if they stopped fighting. + +Slightly out of tune + +Their chief effect on him was to make him, too, famous and in great demand. Fame he didn’t want; he was happy to be their interpreter, and the platinum and gold records were consigned to the loo. Demand he welcomed. In the early 1960s he took on Gerry and the Pacemakers and Cilla Black; in 1963, records produced by him were at number one for 37 weeks out of the 52. Later, when Air was set up, he recorded Shirley Bassey, Celine Dion, Elton John and Jeff Beck. He stopped, in the late 1990s, only because his hearing was beginning to decay. + +There was no George Martin sound to put beside the lushness of Burt Bacharach or the massed grandiosity of Phil Spector. At most, a few likings marked him out. For the natural vibrato and slight out-of-tuneness of the human voice; for the quirky resonances of different instruments; for the indefinable “something” of the old four-track machine and the U47 valve-operated microphone; for wit and freshness, and for the unimpeded flowering of talent under his unseen hands. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21694967-jack-all-trades-behind-much-beatles-success-was-aged-90-obituary-george-martin/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +World GDP + +The Economist commodity-price index + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Mar 19th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21695000/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Mar 19th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21695004-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Mar 19th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21695005-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +World GDP + +Mar 19th 2016 | From the print edition + + + +The world economy grew by 2.5% in the last quarter of 2015 compared with a year earlier, according to our estimates. Global GDP growth has declined for five consecutive quarters and is at its lowest since the beginning of 2013. Growth in the BRIC economies (Brazil, Russia, India and China) has slowed, as it has in other emerging markets. Emerging markets’ contribution to growth has fallen from 2.6 percentage points in the third quarter of 2013 to 1.8 points. In the rich world, the annual growth rate in America, Britain and Japan slowed between the third and fourth quarters of 2015. Euro-area growth has been moderate since the recession and economists reckon it will still be subdued this year. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21694998-world-gdp/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Mar 19th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21695007-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Mar 19th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21694995-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 18 Mar 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Russian foreign policy: A hollow superpower + + + + + +Barack Obama visits Cuba: Cubama + + + + + +America’s primaries: What now? + + + + + +Britain’s budget: The fiddler’s charter + + + + + +Pandemics: An ounce of prevention + + + + + +Letters + + + +Brexit, concussion, Turkey, online dating, Bernie Sanders, language: Letters to the editor + + + + + +Briefing + + + +Russia’s wars: A strategy of spectacle + + + + + +United States + + + +Super Tuesday III: Beware the ides of March + + + + + +They could have stopped Trump: How non-voters blew it + + + + + +The Supreme Court: Going nowhere fast + + + + + +The campaigns: Heard on the trail + + + + + +Indiana’s refugee order: Exodus, continued + + + + + +Refugees in the north-east: The green light + + + + + +Exit Marco Rubio: Marcomento mori + + + + + +Lexington: The view from the rustbelt + + + + + +The Americas + + + +Barack Obama in Cuba: Hello, Barry + + + + + +How Latin Americans see the United States: Dugout diplomacy + + + + + +The United States and Latin America: Harmony now, discord later + + + + + +Bello: Of soldiers and citizens + + + + + +Asia + + + +Reforming India: Bouquets and brickbats + + + + + +Pakistan’s Mughal heritage: Short cuts + + + + + +A new president in Myanmar: Changing lanes + + + + + +The politics of protest in Vietnam: Gatecrashers + + + + + +Japan’s male-only emperor system: Imperial lather + + + + + +Propaganda in North Korea: Doctored Strangelove + + + + + +China + + + +Labour unrest: Deep in a pit + + + + + +UN covenants: Suppressed in translation + + + + + +Banyan: This insubstantial pageant + + + + + +Middle East and Africa + + + +Africa’s ports: The bottleneck + + + + + +Nigeria’s currency crisis: Can you spare a dollar? + + + + + +Politics and patronage in South Africa: All the president’s friends + + + + + +Russia’s Syria surprise: Putin the peacemaker + + + + + +Tension in Saudi Arabia’s Eastern Province: After the execution + + + + + +Iraq: The unquiet cleric + + + + + +Europe + + + +Higher education: Class apart + + + + + +Merkel under pressure: The lady’s not for turning + + + + + +Fighting in Ukraine: Bite the bullet + + + + + +Queuing for cash: Worth their wait in gold + + + + + +Charlemagne: The bystander + + + + + +Britain + + + +The budget: The generation game + + + + + +Savings: A nicer ISA? + + + + + +A tax on sugar: Pricier pop + + + + + +Brexit brief: Dreaming of sovereignty + + + + + +Bristol’s economy: London-upon-Avon + + + + + +“Programmable” Bristol: Data deluge + + + + + +The music business: Discs, jockeying + + + + + +Bagehot: A coastal town they forgot to close down + + + + + +International + + + +The Commonwealth: What’s the point of it? + + + + + +Small islands: Lift up your voice + + + + + +Business + + + +Tesla’s mass-market ambitions: On a charge + + + + + +Corporate governance: He who would Valeant be + + + + + +Taxation and oil companies: Oiling the wheels + + + + + +South Korean exporters: Films are the new stars + + + + + +Air cargo: Too little freight, too much space + + + + + +Religion, ethics and the workplace: Cross the boss + + + + + +Schumpeter: Team spirit + + + + + +Finance and economics + + + +The blockchain in finance: Hype springs eternal + + + + + +Buttonwood: Overcoming their fears + + + + + +Central banks and digital currencies: Redistributed ledger + + + + + +TLTROs: Money for less than nothing + + + + + +Bridgewater: The hardest trade + + + + + +Cyber-crime: The Dhaka caper + + + + + +Measuring inflation: How much is that doggy? + + + + + +Rotterdam: The shipping news + + + + + +Free exchange: Doing less with more + + + + + +Science and technology + + + +Sonification: Now hear this + + + + + +Artificial intelligence and Go: A game-changing result + + + + + +Research publishing: Taking the online medicine + + + + + +Restoring lost memories: Total recall + + + + + +Books and arts + + + +India’s young: We’re not gonna take it + + + + + +Iraq’s unravelling: The mistakes that made Islamic State + + + + + +The Bard abroad: All the world was his stage + + + + + +Art and loneliness: Out of isolation + + + + + +Hartwig Fischer at the British Museum: On a mission + + + + + +Hartwig Fischer at the British Museum: Correction: “Don’t p@nic”, March 12th + + + + + +Obituary + + + +Obituary: George Martin: Their humble servant + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +World GDP + + + + + +The Economist commodity-price index + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.03.26.TXT b/homeworks/B20769/homework1/data2/2016.03.26.TXT new file mode 100644 index 0000000..8014f7d --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.03.26.TXT @@ -0,0 +1,5613 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: Technology and politics + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Mar 26th 2016 | From the print edition + + + +Suicide-bombers attacked the check-in area at Brussels international airport and a train at a metro station, killing more than 30 people and injuring hundreds of others. Belgium declared three days of national mourning; the authorities carried out raids and a manhunt. Islamic State claimed responsibility for the assault, which came a few days after the arrest at a flat in the Belgian capital of Salah Abdeslam, a suspect in last November’s attacks in Paris, which were also claimed by IS. See here and here. + +Nadia Savchenko, a Ukrainian army pilot accused of directing artillery fire which killed two Russian journalists, was given a 22-year prison sentence by a Russian court. Her supporters say the charges are nonsense and the trial a farce. Asked if she understood the sentence, she sang the Ukrainian national anthem. + +The EU agreed to provide €6 billion ($6.8 billion) and political concessions, including accelerated talks on visa-free travel, in return for Turkey accepting the return of migrants from Greece. The EU will instead accept refugees directly from camps in Turkey. Separately, a suicide-bombing in one of Istanbul’s busiest shopping districts killed four people. See article. + +Britain’s Conservative Party was rocked by the resignation of Iain Duncan Smith as welfare minister; he claimed that cuts to disability benefits were “a compromise too far” in a government budget that favoured higher earners. A supporter of Brexit, the timing of his departure has been questioned. His successor promptly reversed the cuts, leaving a £4.4 billion ($6.3 billion) hole in the budget. George Osborne, the chancellor, saw his future leadership hopes dashed further as open rebellion over the budget broke out within the party. See here and here. + +Very diplomatic + +Aung San Suu Kyi, the leader of Myanmar’s National League for Democracy, chose the job of foreign minister in the new civilian government, the first after 50 years of control by the army. She will hold several other portfolios too. Ms Suu Kyi’s party won an election last November, but she was barred from becoming president under the army’s constitutional manoeuvring. + +Jia Jia, a journalist and critic of the government in China, has been detained by the authorities, according to his lawyer, apparently in relation to an open letter that sharply criticised President Xi Jinping and called on him to resign. However, the lawyer says Mr Jia did not write the letter. + + + +Jakarta, the capital of Indonesia, came to a standstill when taxi drivers and public-transport workers demonstrated against ride-hailing apps, such as Uber. But the march turned unruly. Some protesters attacked rival taxi cabs and pulled drivers out of their cars who did not agree with their aim of banning app-based transport services. + +Australia seems to be heading for an early general election. Malcolm Turnbull, the prime minister, surprised the opposition by recalling Parliament for a sitting next month to discuss union reforms that have been held up in the Senate. See article. + +He has their support, for now + +A meeting of the national executive committee of South Africa’s ruling party, the African National Congress, expressed confidence in President Jacob Zuma. Some had predicted that the party would “recall” Mr Zuma after a series of damaging allegations of influence peddling, which the party said it would investigate. + +The government in Zimbabwe started to investigate the payment of compensation to farmers whose land it has seized illegally. An agreement to pay compensation is seen as a necessary first step towards winning debt forgiveness from Western governments. + +Judges from the International Criminal Court found Jean-Pierre Bemba, a former Congolese vice-president, guilty of a deliberate campaign of widespread rapes and killings that took place in the Central African Republic a decade ago. The ruling is the first by the ICC in which it passed a guilty verdict for rape as an act of war. Mr Bemba was held to have had “command responsibility”, even though he did not take direct part in the acts. + +Ayatollah Ali Khamenei, Iran’s supreme leader, accused America of acting to block the sanctions relief promised by last year’s nuclear deal. The remaining American non-nuclear sanctions have deterred banks from financing business deals with Iran. + +You need hands + +Donald Trump went to Washington to woo an establishment unnerved by the prospect of him winning the Republican nomination. At a speech to the American Israel Public Affairs Committee he gave assurances that he could broker a deal between the Israelis and the Palestinians. Speaking to the Washington Post he said that other NATO members should do more to counter Russian aggression. He also spoke at length about the size of his hands. See article. + +The Justice Department said that “an outside party” had shown it could unlock the iPhone used by one of the assailants in last December’s terror attack in San Bernardino. The FBI has asked Apple for help, but it has refused, arguing it would undermine its commitment to data privacy. + +Our man in Havana + + + +Barack Obama became the first American president since 1928 to visit Cuba. In a speech broadcast live on Cuban television he said he had come to “bury the last remnant of the cold war in the Americas”. He told Cuba’s Communist president, Raúl Castro, he “need not fear” freedom of speech and democracy. Mr Obama also met Cuban dissidents. See article. + +A supreme court judge in Brazil suspended the appointment of Luiz Inácio Lula de Silva, the former president, as chief of staff to the current president, Dilma Rousseff. Lula, who faces investigation in connection with the scandal centred on Petrobras, could only be tried in the supreme court if he were a member of the cabinet. Supporters of the government accused an investigating judge of breaking the law by releasing wiretapped conversations between Lula and his associates. See here and here. + +Rob Ford, a former mayor of Toronto most famous for having been caught on camera smoking crack cocaine, died from cancer. He was a popular mayor who ended a car-registration tax during his term in office from 2010 to 2014. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21695571-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Mar 26th 2016 | From the print edition + +The saga at Valeant rumbled on. Michael Pearson decided to quit as chief executive of the troubled Canadian drugmaker. He acknowledged that the past few months, during which time the company has been criticised for introducing whopping price increases on heart medicines and has come under federal investigation for its ties to an online pharmacy, have been “difficult”. He will stay until a successor is named. The company blamed the “tone at the top of the organisation” and pressure to achieve targets as factors causing it to restate its earnings. William Ackman, an activist investor whose hedge fund owns 9% of Valeant, was appointed to the board. + +IHS and Markit, two providers of market and financial data, agreed to merge in a transaction they valued at $13 billion. IHS is based in Colorado but will move to London, where Markit has its headquarters, thus allowing it to lower its corporate-tax rate considerably. It is the latest in a series of “tax inversion” deals that have attracted political controversy in America. The new IHS Markit will compete with Bloomberg and Thomson Reuters for business. + +Phone home + +Apple went back to basics, unveiling a new iPhone, the SE, which comes with a smaller screen than the iPhone 6 and is billed by the company as the cheapest iPhone ever. Meanwhile, America’s Supreme Court agreed to hear Samsung’s appeal against the penalties it has incurred for copying Apple’s patented designs on the iPhone. + +Marriott increased its offer for Starwood Hotels to $13.6 billion in order to fend off a rival bid from Anbang, a Chinese insurance company. Starwood, which counts the Sheraton and Westin chains among its brands, accepted Marriott’s new deal, which was discussed by the companies’ bosses when they accompanied Barack Obama on his visit to Cuba. Starwood also announced that it had struck a deal with the Cuban government to operate hotels on the island, the first American hotelier to do so since the revolution in 1959. + +The minutes from the latest meeting of the Bank of England’s policy committee showed that its members think uncertainty in the markets over the outcome of the June referendum on Britain’s membership of the European Union is a “significant driver” behind the fall of the pound. The central bank, which is officially neutral in the Brexit debate, said the uncertainty was also causing some businesses to delay spending decisions. + +In a surprise move, Nigeria’s central bank raised its benchmark interest rate by 1 percentage point, to 12%. Nigeria’s currency, the naira, has been hurt by the fall in oil prices. That has helped push up inflation to 11.4%. + +Football’s governing body, FIFA, posted its first annual loss since 2002, citing increased development expenses and higher competition costs. It also revealed that Sepp Blatter, the disgraced former president, had received a pay package of $3.7m, the first time it has detailed his remuneration. + +Fish out of water + + + +The price of salmon recovered some of the ground it lost last year, as prices on the Norwegian market leapt this week; they are up by over 30% compared with early last year. An algal bloom has reduced the output of salmon farms in Chile, the world’s second-biggest producer, unnerving investors. Share prices of salmon firms have surged amid worries over supply; prices are expected to stay buoyant in the short-term. + +Two former executives at Porsche SE were acquitted by a court on charges of misleading the markets about their intention to launch a takeover of Volkswagen in 2008. VW was not party to the trial. Porsche SE, a holding company, is being sued by investors over the matter, though the judge in the case said there was “absolutely nothing” to the allegations. + +The pilot of a Lufthansa passenger jet reported that a drone had come within 61 metres (200 feet) of his A380 on its landing approach to Los Angeles. Hundreds of intrusions by drones into planes’ air space have been reported around the world in the past few years, but this one was close. Dianne Feinstein, a senator who has sponsored a drone-safety bill, called the incident “reckless”. + +Left grappling + +Terry Bollea, a former wrestler better known as Hulk Hogan, pinned down Gawker, a celebrity-news blog, when he won an invasion-of-privacy case over part of a sex tape it had published. Mr Bollea was awarded $115m, more than he had claimed, by a jury in Florida; a further $25m was added for punitive damages. Gawker expressed confidence that it would win with a full submission on appeal. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21695580-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Mar 26th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21695578-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Business in America: The problem with profits + +Bombings in Brussels: The new normal + +Brazil’s political crisis: Time to go + +Reform in rural China: Sell up, move on + +Welfare cuts: Two-nation Britain + +Technology and politics: Bits and ballots + + + + + +Articles Sections Next + +Business in America + +The problem with profits + +Big firms in the United States have never had it so good. Time for more competition + +Mar 26th 2016 | From the print edition + + + +AMERICA used to be the land of opportunity and optimism. Now opportunity is seen as the preserve of the elite: two-thirds of Americans believe the economy is rigged in favour of vested interests. And optimism has turned to anger. Voters’ fury fuels the insurgencies of Donald Trump and Bernie Sanders and weakens insiders like Hillary Clinton. + +The campaigns have found plenty of things to blame, from free-trade deals to the recklessness of Wall Street. But one problem with American capitalism has been overlooked: a corrosive lack of competition. The naughty secret of American firms is that life at home is much easier: their returns on equity are 40% higher in the United States than they are abroad. Aggregate domestic profits are at near-record levels relative to GDP. America is meant to be a temple of free enterprise. It isn’t. + +Borne by the USA + +High profits might be a sign of brilliant innovations or wise long-term investments, were it not for the fact that they are also suspiciously persistent. A very profitable American firm has an 80% chance of being that way ten years later. In the 1990s the odds were only about 50%. Some companies are capable of sustained excellence, but most would expect to see their profits competed away. Today, incumbents find it easier to make hay for longer (see Briefing). + +You might think that voters would be happy that their employers are thriving. But if they are not reinvested, or spent by shareholders, high profits can dampen demand. The excess cash generated domestically by American firms beyond their investment budgets is running at $800 billion a year, or 4% of GDP. The tax system encourages them to park foreign profits abroad. Abnormally high profits can worsen inequality if they are the result of persistently high prices or depressed wages. Were America’s firms to cut prices so that their profits were at historically normal levels, consumers’ bills might be 2% lower. If steep earnings are not luring in new entrants, that may mean that firms are abusing monopoly positions, or using lobbying to stifle competition. The game may indeed be rigged. + +One response to the age of hyper-profitability would be simply to wait. Creative destruction takes time: previous episodes of peak profits—for example, in the late 1960s—ended abruptly. Silicon Valley’s evangelicals believe that a new era of big data, blockchains and robots is about to munch away the fat margins of corporate America. In the past six months the earnings of listed firms have dipped a little, as cheap oil has hit energy firms and a strong dollar has hurt multinationals. + +Unfortunately the signs are that incumbent firms are becoming more entrenched, not less. Microsoft is making double the profits it did when antitrust regulators targeted the software firm in 2000. Our analysis of census data suggests that two-thirds of the economy’s 900-odd industries have become more concentrated since 1997. A tenth of the economy is at the mercy of a handful of firms—from dog food and batteries to airlines, telecoms and credit cards. A $10 trillion wave of mergers since 2008 has raised levels of concentration further. American firms involved in such deals have promised to cut costs by $150 billion or more, which would add a tenth to overall profits. Few plan to pass the gains on to consumers. + +Getting bigger is not the only way to squish competitors. As the mesh of regulation has got denser since the 2007-08 financial crisis, the task of navigating bureaucratic waters has become more central to firms’ success. Lobbying spending has risen by a third in the past decade, to $3 billion. A mastery of patent rules has become essential in health care and technology, America’s two most profitable industries. And new regulations do not just fence big banks in: they keep rivals out. + +Having limited working capital and fewer resources, small companies struggle with all the forms, lobbying and red tape. This is one reason why the rate of small-company creation in America has been running at its lowest levels since the 1970s. The ability of large firms to enter new markets and take on lazy incumbents has been muted by an orthodoxy among institutional investors that companies should focus on one activity and keep margins high. Warren Buffett, an investor, says he likes companies with “moats” that protect them from competition. America Inc has dug a giant defensive ditch around itself. + +Most of the remedies dangled by politicians to solve America’s economic woes would make things worse. Higher taxes would deter investment. Jumps in minimum wages would discourage hiring. Protectionism would give yet more shelter to dominant firms. Better to unleash a wave of competition. + +The first step is to take aim at cosseted incumbents. Modernising the antitrust apparatus would help. Mergers that lead to high market share and too much pricing power still need to be policed. But firms can extract rents in many ways. Copyright and patent laws should be loosened to prevent incumbents milking old discoveries. Big tech platforms such as Google and Facebook need to be watched closely: they might not be rent-extracting monopolies yet, but investors value them as if they will be one day. The role of giant fund managers with crossholdings in rival firms needs careful examination, too. + +Set them free + +The second step is to make life easier for startups and small firms. Concerns about the expansion of red tape and of the regulatory state must be recognised as a problem, not dismissed as the mad rambling of anti-government Tea Partiers. The burden placed on small firms by laws like Obamacare has been material. The rules shackling banks have led them to cut back on serving less profitable smaller customers. The pernicious spread of occupational licensing has stifled startups. Some 29% of professions, including hairstylists and most medical workers, require permits, up from 5% in the 1950s. + +A blast of competition would mean more disruption for some: firms in the S&P 500 employ about one in ten Americans. But it would create new jobs, encourage more investment and help lower prices. Above all, it would bring about a fairer kind of capitalism. That would lift Americans’ spirits as well as their economy. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695392-big-firms-united-states-have-never-had-it-so-good-time-more-competition-problem/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Bombings in Brussels + +The new normal + +Europe has suffered another series of murderous attacks by jihadists. They will not be the last + +Mar 26th 2016 | From the print edition + + + +ON THE streets of Brussels they had been dreading the next attack. But when Islamic State (IS) eventually struck, on March 22nd at Zaventem airport and then, just over an hour later, in the city’s metro system, anticipation did nothing to diminish the shock or the suffering. As we went to press, the death toll was over 30; at least 200 were injured, some of them critically (see article). Belgium’s prime minister, Charles Michel, called the bombings “blind, violent and cowardly”. + +Over the coming days Europe will once again pass through terrorism’s stages of grief: despair over innocent lives cut short; anger towards the young men and women (some of them citizens) who kill in the name of jihad; questions about the grip of the police and intelligence services; and eventually, as news bulletins and headlines subside, a weary resignation. + +Yet even now, immediately after the attack, two lessons are clear. One is that, despite being at the top of the most-wanted list for years, IS remains resourceful enough to mount synchronised bombings in the heart of Europe. The other, which flows from this, is that big cities in Europe and America will have to get used to a long campaign of terror in which all are targets. + +Havens and have nots + +IS’s resilience will cause alarm and rightly so. The Brussels bombers struck days after police arrested Salah Abdeslam, a chief suspect in last year’s attacks in Paris in which 130 people died. For four months he had found haven with sympathetic friends and neighbours just a few streets away from his home in Molenbeek, a Brussels suburb. Plainly, some people are prepared to endorse Mr Abdeslam’s methods even if they are not yet ready to dip their own hands in their compatriots’ blood. + +As well as enjoying some support, IS commands expertise and recruits. Across six European countries 18 jihadists are known to be under arrest, suspected of a hand in the Paris attacks. Even so, IS could muster enough jihadists to mount a complex, co-ordinated operation under the nose of the authorities in Brussels, possibly at short notice. French officials have concluded that IS has learnt how to make bombs from commonplace chemicals such as hair dye and nail-polish remover. They have yet to find any of the group’s bombmakers and struggle to penetrate the jihadists’ communications. + +The threat is not about to diminish. Some would-be terrorists will be recruited locally. Thousands of men and women have left Europe for IS’s self-styled caliphate in Syria and Iraq, where they have received training and indoctrination. Libya is seething. Al-Qaeda and IS are competing to prove their jihadist credentials. The near-certainty is of more attacks in more cities. + +How should governments respond? The starting point is an awareness that terrorists set out to provoke an overreaction. They exult when politicians like Donald Trump vow to exclude Muslims from the United States; when leaders from eastern Europe say they will accept migrants from Syria only if they are Christian; or when Marine Le Pen, leader of the French National Front, compares Muslims praying in the street to the Nazi occupation. Such intolerance helps turn discontents into sympathisers and radicals into bombers. Equally, IS rejoices when Western countries dwell on scores of people dying at home rather than the hundreds of Muslims killed by bombs in Beirut and Turkey or the millions mouldering in refugee camps and suffering in Syria’s civil war. Policy should aim to split radicals off, not force the mainstream into their arms. + +Another priority—which goes some way to preventing an overreaction—is to reassure ordinary people that the government is working to protect them. Some politicians think that popular fears of perishing in a terrorist attack are irrational. Barack Obama, in a recent interview in the Atlantic, explained how he likes to remind his staff that more Americans die from falling over in the bath. But terrorism is different from accidental death or even from random murder. The public react to terrorism so strongly because they sense that their government cannot fulfil its basic duty to keep them safe from such enemies. The fear that terrorism provokes is not just a statistical delusion but also an inkling that people who know no limits are organising a conspiracy against the state. + +Asked to offer reassurance without straying into overreaction, governments struggle. France, which has suffered grievously in two attacks, is still living under a state of emergency in which the police can search houses without a warrant and place suspects under house arrest. President François Hollande and his prime minister still frequently declare that France is at war. Strong words and the suspension of normal rights were understandable just after the attacks in November. They may now be counterproductive (see article). + +Grains of sand + +The best protection would be peace in the Middle East—a distant dream, alas. The coalition has made progress against IS in its caliphate, which is shrinking and losing people. But eradicating it needs Iraqi troops (as yet unprepared) and ground forces in Syria (as yet non-existent). Meanwhile, IS’s ability to command and inspire terrorists will persist and, anyway, the West has its own, self-radicalised jihadists to deal with. + +And so the police and intelligence services need to operate in every sphere at home, from surveillance to deradicalisation. One thing that can be fixed quickly is underinvestment. Antiquated IT systems hinder collaboration. The security services also need to penetrate jihadist networks and their supporters, using human recruits and enhanced signal intelligence. Inter-agency co-operation has improved, but privacy-protection still hinders the sharing of data. Jihadists work across borders more easily than the security services do. (Brexit could well be a further obstacle.) Better policing and prisons can help stop petty criminals being radicalised. The economic and cultural isolation of districts like Molenbeek must end. It is a long, hard toil and much of it must go on unobserved—except when it fails. + +Many will dread the struggle ahead and regret the never-ending contest between security and liberty. But as long as jihadists threaten the West, there is no escaping the need to act. Welcome to the new normal. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695393-europe-has-suffered-another-series-murderous-attacks-jihadists-they-will-not-be/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brazil’s political crisis + +Time to go + +The tarnished president should now resign + +Mar 26th 2016 | From the print edition + + + +DILMA ROUSSEFF’S difficulties have been deepening for months. The massive scandal surrounding Petrobras, the state-controlled oil giant of which she was once chairman, has implicated some of the people closest to her. She presides over an economy suffering its worst recession since the 1930s, largely because of mistakes she made during her first term. Her political weakness has rendered her government almost powerless in the face of rising unemployment and falling living standards. Her approval ratings are barely in double digits and millions of Brazilians have taken to the streets to chant “Fora Dilma!”, or “Dilma out!” + +And yet, until now, Brazil’s president could fairly claim that the legitimacy conferred by her re-election in 2014 was intact, and that none of the allegations made against her justified her impeachment. Like the judges and police who are pursuing some of the most senior figures in her Workers’ Party (PT), she could declare with a straight face her desire to see justice done. + +Now she has cast away that raiment of credibility (see article). On March 16th Ms Rousseff made the extraordinary decision to appoint her predecessor, Luiz Inácio Lula da Silva, to be her chief of staff. She portrayed this as a shrewd hire. Lula, as he is known to all, is a canny political operator: he could help the president survive Congress’s attempt to impeach her and perhaps even stabilise the economy. But just days before, Lula had been briefly detained for questioning at the order of Sérgio Moro, the federal judge in charge of the Petrobras investigation (dubbed lava jato, or “car wash”), who suspects that the former president profited from the bribery scheme (see Bello). Prosecutors in the state of São Paulo have accused Lula of hiding his ownership of a beach-front condominium. He denies these charges. By acquiring the rank of a government minister, Lula would have partial immunity: only the country’s supreme court could try him. In the event, a judge on the court has suspended his appointment. + +This newspaper has long argued that either the judicial system or voters—not self-serving politicians trying to impeach her—should decide the president’s fate. But Ms Rousseff’s hiring of Lula looks like a crass attempt to thwart the course of justice. Even if that was not her intention, it would be its effect. This was the moment when the president chose the narrow interests of her political tribe over the rule of law. She has thus rendered herself unfit to remain president. + +Three ways to leave the Planalto + +How she exits the Planalto, the presidential palace, matters greatly. We continue to believe that, in the absence of proof of criminality, Ms Rousseff’s impeachment is unwarranted. The proceeding against her in Congress is based on unproven allegations that she used accounting trickery to hide the true size of the budget deficit in 2015. This looks like a pretext for ousting an unpopular president. The idea, put forward by the head of the impeachment committee, that congressmen deliberating Ms Rousseff’s fate will listen to “the street”, would set a worrying precedent. Representative democracies should not be governed by protests and opinion polls. + +There are three ways of removing Ms Rousseff that rest on more legitimate foundations. The first would be to show that she obstructed the Petrobras investigation. Allegations by a PT senator that she did so may now form the basis of a second impeachment motion, but they are so far unproven and she denies them; Ms Rousseff’s attempt to shield Lula from prosecution may provide further grounds. A second option would be a decision by Brazil’s electoral court to call a new presidential election. It may do that, if it finds that her re-election campaign in 2014 was financed with bribes channelled through Petrobras executives. But this investigation will be drawn out. The quickest and best way for Ms Rousseff to leave the Planalto would be for her to resign before being pushed out. + +Her departure would offer Brazil the chance of a fresh start. But the president’s resignation would not, of itself, solve Brazil’s many underlying problems. Her place would initially be taken by the vice-president, Michel Temer, leader of the Party of the Brazilian Democratic Movement. Mr Temer could head a national-unity government, including opposition parties, which, in theory, might be able to embark on the fiscal reforms needed to stabilise the economy and close a budget deficit that is close to 11% of GDP. + +Sadly, Mr Temer’s party is as deeply enmeshed in the Petrobras scandal as the PT. Many politicians who would join a unity government, including some from the opposition, are popularly seen as representatives of a discredited ruling class. Of Congress’s 594 members, 352 face accusations of criminal wrongdoing. A new presidential election would give voters an opportunity to entrust reforms to a new leader. But even this would leave the rotten legislature in place until 2019. + +The judiciary, too, has questions to answer. Judges deserve great credit for holding Brazil’s mightiest businessmen and politicians to account, but they have undermined their cause by flouting legal norms. The latest example is Mr Moro’s decision to release recorded telephone conversations between Lula and his associates, including Ms Rousseff. Most jurists believe that only the supreme court may divulge conversations in which one of the parties has legal immunity, as the president does. This does not justify the claim from government supporters that the judges are staging a “coup”. But it makes it easy for lava jato suspects to divert attention from their own misdeeds to the blunders of their pursuers. + +Brazil’s war of parties and personalities obscures some of the most important lessons of the crisis. Both the Petrobras scandal and the economic crash have their origins in misconceived laws and practices that are decades old. Getting Brazil out of its mess requires wholesale change: controlling public spending, including on pensions; overhauling growth-crushing tax and labour laws; and reforming a political system that encourages corruption and weakens political parties. + +These can no longer be put off. Those chanting “Fora Dilma!” on the streets would claim victory if she was ousted. But for Brazil itself to win it would be just the first step. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695391-tarnished-president-should-now-resign-time-go/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Reform in rural China + +Sell up, move on + +Rural residents are largely shut out of China’s booming property market. That is a mistake + +Mar 26th 2016 | From the print edition + + + +CHINA’S great lift-off began more than three decades ago in the countryside, when the Communist Party began loosening the rules it had used to ensure that farmers stayed in their villages and produced food at the party’s behest. + +Under Maoist madness, farmers were corralled into “people’s communes” where they toiled in abject poverty and sometimes extreme hunger. But from the late 1970s, farmers gradually gained yearned-for freedoms: to farm their own plots of land and sell their produce privately, and eventually to move into cities to work in factories. These changes were a liberation; they helped to transform the country from basket case to economic powerhouse. But they did not go far enough. The remaining vestiges of Maoist control are deeply unfair and hold back the country’s economic development at a time of slowing growth. China needs a new wave of reform. + +Twin shackles + +Farmers still cannot freely trade the land they use or the houses they own. And if they do move to cities, many of them are still shut out of subsidised urban public services, such as health care and education, simply because of their rural origins. For a country that sees middle-class spending as a vital source of future growth, these problems bode ill. They limit the ability of hundreds of millions of people to join the urban middle-class. And they create a dangerous social divide: the 250m or so who have already moved into urban areas are often treated as second-class citizens. Their household-registration papers, or hukou, still classify many as “peasants”. + +The Communist Party admits these problems need fixing. But it has been slow to reform. The south-western region of Chongqing is one of the few places that has put much effort into creating a rural property market (see article). It has also turned many migrants into full urban citizens, with hukou papers to prove it. But both experiments have run into obstacles. One is the colossal cost of building affordable housing for migrants, and of providing them with access to the same public services as everyone else. Another problem is that farmers still cannot trade their property freely; the rural-land market set up in Chongqing has benefited only a few of them. + +Rather than tinker with incremental reform, it is time for China both to scrap the pernicious hukou system, and give farmers full rights to the land they live on and till. That means letting them profit by selling their houses, a right that urban residents have enjoyed since the 1990s. It also means that rural dwellers must give up their claim to be allocated land, free of charge, to use for farming and the building of homesteads. Rural land rights should be privatised; just as urban land rights have been privatised in all but name. + +The government worries that farmers might sell everything and rush into cities, creating shantytowns filled with landless, jobless migrants who could pose a threat to stability. The party is wrong to fret. It is evident that many farmers would not sell up impetuously. Fearful of losing land rights, and with them a guarantee of somewhere to go if life goes awry in the cities, migrants often do not take up urban hukou even when offered it. At the same time millions of farmers have already been forced off their land with little or no compensation by China’s relentless urban expansion. They have not created vast slums nor, despite their many protests, have they threatened stability. + +Many in the party also believe that “collective” ownership of rural land is a sacred legacy of Mao, that, for all his mistakes, was created with noble intent. But the president, Xi Jinping, says that market forces should play a “decisive role” in China. Let that be so in the countryside, as much as in the cities. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695394-rural-residents-are-largely-shut-out-chinas-booming-property-market-mistake-sell/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Welfare cuts + +Two-nation Britain + +Iain Duncan Smith’s flounce was opportunistic, but he is on to something + +Mar 26th 2016 | From the print edition + + + +WHEN Iain Duncan Smith resigned on March 18th in protest at curbs to disability benefits, eyes in Westminster rolled. How odd for the man who has run the Department for Work and Pensions (fairly incompetently) for the past six years to turn on his own policies. How transparently his animus towards George Osborne, the chancellor of the exchequer, motivated his accusations. How conveniently these bolstered Mr Duncan Smith’s complaints, as a pro-Brexit campaigner, about an aloof and elitist Europhile establishment. “Disappointed” by the resignation and using sturdier language privately, a red-faced David Cameron went before his MPs in the House of Commons on March 21st to offer his retort and confirm that the disability cuts would not go ahead. He also reminded them of his government’s “one nation” achievements, including falling inequality, soaring employment and school reform. + +Mr Duncan Smith’s motives may be dubious and his complaint off-target (the proposed disability cuts were less egregious than some others). But he has stumbled on something that matters. The budget was regressive, cutting welfare as it reduced income tax for the top 15% of earners and capital-gains taxes mostly paid by the asset-rich (see article). Ministers say that a forthcoming increase in the minimum wage compensates for the cuts. In fact it most benefits middling households (since its recipients often support a higher-earning partner) and is part of a wider post-election tilt towards the better off. According to one estimate, changes announced since the Conservatives won a majority last year will leave the average annual income of the top 30% of households £280 ($400) higher and that of the bottom 30% £565 lower. Meanwhile the jobs engine is slowing, wage growth is faltering and the wealthiest are roaring ahead. The fall in inequality over the previous parliament will probably be wiped out over the course of this one. + +Blame politics. The Conservatives won the election partly by pledging a rush to budget surplus through welfare cuts so stringent that the Labour Party could not bring itself to match them. It also promised to ring-fence sensitive budgets like hospitals, schools and foreign aid, and committed to a “triple lock”, increasing the state pension by the rate of inflation, earnings growth or 2.5% a year, whichever is greatest. Such promises have left Mr Osborne with little option but to dip into the pockets of poorer, younger Britons who, conveniently, are less likely to vote. And with a divisive EU referendum looming in June, local Tory associations in revolt and a leadership election on the horizon (see Bagehot), no minister wants to sting the plump, grey Conservative base. The Labour Party may have trooped into the left-wing wilderness under Jeremy Corbyn, but the centrist overtures with which the prime minister has recently wooed the opposition’s more moderate supporters have been confined to safe schemes like improving mental health and sprucing up sink estates. + +Fools to the left, jokers to the right + +This newspaper cheers politicians who reduce dependency and sharpen the incentives to work, as the Tories have. We recognise the need to be mindful of Britain’s deficit, which some in Labour appear to disregard. But as long as the country’s belt-tightening disproportionately squeezes the worse-off, there will be a hole in the prime minister’s “one nation” rhetoric. If he wins the EU vote, Mr Cameron will face few threats and, having pledged to step down by 2020, no more general elections. He should use that freedom to spring the pensions “triple lock”, ease cuts to working-age benefits and release his party from the rigid promise to be in surplus by 2020. Today, swathes of the centre ground are vacant. The country would be better off if the Conservatives did more to seize it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695395-iain-duncan-smiths-flounce-was-opportunistic-he-something-two-nation-britain/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Technology and politics + +Bits and ballots + +Social media have made the world more democratic—for now + +Mar 26th 2016 | From the print edition + + + +THE world’s first tweet was as dull as they come. “Just setting up my twttr,” wrote Jack Dorsey, now Twitter’s chief executive, on March 21st 2006. Ten years after that inauspicious start, Twitter’s 320m monthly users send hundreds of millions of tweets a day. However cloudy the firm’s current prospects, and however trivial many of those tweets may be, Twitter is part of a wider communications revolution. As this week’s special report shows, the internet has distributed more political power to citizens. But new technologies also carry risks. + +Initial scepticism about the political impact of social media has faded. With the advent of the smartphone, messaging apps and video-streaming services, Twitter and other social platforms have become central to all kinds of collective action. They let like-minded people quickly find one another. They make it easy to get the message out and to mobilise the masses. And they allow nascent protest movements to function without leaders or formal organisations, to begin with at least. + +All this is to be welcomed. Twitter and other social media have made the world a more democratic place. They give voice and power to people who have neither—and not just in autocratic countries. Social media turbo-charged anti-austerity movements such as the indignados in Spain. More recently, they helped get Black Lives Matter, a movement fighting violence against African-Americans, off the ground. + +But technology is never purely good or bad—it always cuts both ways. Social media also facilitate more troubling kinds of activism: xenophobic groups in Germany and Islamic State both make extensive use of such platforms, for example. And even as social-media services democratise political movements, the data they carry can also concentrate power in pernicious ways. + +Online campaigns leave a big digital footprint that can be analysed, often in real time. Again, Twitter is a good example: those with access to its millions of tweets can map networks of activists, analyse what they are talking about and identify the most influential. This flood of digital information is a bonanza for intelligence agencies and, especially, for autocratic regimes. Both can use social media as a tool for surveillance. True, citizens can use encryption to protect themselves from the eye of the state. But greater secrecy also makes media less social, and political campaigns harder to organise. + +Power to the algorithm + +Access to data can concentrate power in the hands of private entities, too. Political campaigns, particularly in America, have long harnessed electoral data to identify supporters who need a nudge to get out to vote or who may be convinced to change their mind. Thanks to social media, voters can now be targeted with ever more precision. Facebook, for instance, allows political organisations to upload lists of voters and inject tailored ads into their newsfeeds. That might exacerbate political polarisation, by further walling off voters from different views. And such digital campaigns do not come cheap, handing an advantage both to those firms that sit on most data and to those candidates with most financial resources. + +The original vision of the internet, as a self-governing cyber-Utopia, has long since been consigned to history (see article). But it remains a public good. The danger is that the centralisation of data may undo many of the democratic gains that social media and other technologies have brought. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695396-social-media-have-made-world-more-democraticfor-now-bits-and-ballots/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On American politics, African trade, companies, migrants, glyphosate, Malaysia, the semicolon: Letters to the editor + + + + + +Articles Sections Next + +On American politics, African trade, companies, migrants, glyphosate, Malaysia, the semicolon + +Letters to the editor + +Mar 26th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +The party’s over + +Your assessment of the fractious condition of America’s political parties concluded that “it is impossible to imagine a big democracy staying healthy without them” (“The party declines”, March 5th). But the current state of many large democracies suggests exactly the contrary. The polarisation of politics in America; the entrenchment of party whips in Britain; complete dysfunction in Italy; and institutionalised corruption and class prejudice in India: all of these result from the misplaced importance accorded to political parties. + +America’s Founding Fathers focused on representation, not parties. This year’s presidential race shows how the parties have become so out-of-step with that ideal. The parties now represent the various interest groups they have cobbled together to justify their existence and have become part of the “establishment”, whose raison d’être is self-preservation. It is little wonder that voters are swayed more by the superficial emotional appeal of simple anti-establishment rhetoric than by serious consideration of the issues facing the country. + +Where, for example, is the debate on the role of education when it come to competing with the surging skills of India and China? Where is the serious analysis of how best to return the economy to surplus and manage the crushing burden of national debt on generations to come? + +Ultimately voters get the representatives they vote for. Sadly, too few give too little thought to this crucial right and duty. + +MIKE RAVEN + +Buffalo, New York + + + + + +Trade in Africa + +* Your article “Tear down these walls” (February 27th) covered a range of factors that impeded intra-African trade, such as tariffs and non-tariff barriers and overlapping memberships of African countries in regional trade bloc. The factors you listed relate mostly to trade in goods. Increasingly, African countries not only trade in goods but also in services. + + + +UNCTAD advises African countries to sharpen their competitiveness not only by revising national policy and regulatory regimes but also by fostering intra-African trade in services through regulatory co-ordination and co-operation in critical areas of infrastructure and finance. Ongoing negotiations toward both the Tripartite Free Trade Area and the African Union’s Continental Free Trade Area must include services in trade. Downplaying the importance of services in such negotiations will be a critical mistake that African countries need to avoid. + + + +The services sector is the oil that greases the wheels of trade: the complementarities between efficient services provision and competitive supplies of goods on regional and world markets must not be overlooked. Indeed, intra-African trade will be among urgent matters discussed by African and other states at a global ministerial conference to be held in Nairobi this July. + + + +JOAKIM REITER + +Deputy secretary-general + +United Nations Conference on Trade and Development + +Geneva + + + + + +Stay out of the limelight + +Projecting statesmanship may be necessary for some business leaders (Schumpeter, February 27th), but not if there is something rotten in the overall state of the company. We have found that, during the economic slump of 2007-10, those chief executives who were the media face of their company while simultaneously being connected with other issues of public interest, fared worst as business leaders. The market capitalisation of their companies shrank the most. + +Companies where market capitalisation contracted the least had CEOs who, relative to their peers, played the smallest role in the media coverage of their business, and were also hardly linked to any other public issue. + +GREGOR HALFF + +Professor of corporate communication practice + +Singapore Management University + + + + + +Migrants in Germany + +It is absurd to claim that in Germany “suddenly foreigners are in schools, swimming pools and hospitals” (Charlemagne, March 5th). In 2014, before the million refugees arrived, more than 20% of the German population had a foreign background. We have lived together for a long time in the real world, not in some 1950s fairy tale. + +In this refugee crisis a large number of Germans (and foreigners) have displayed a can-do attitude that is the opposite of what you describe as people withdrawing to private life. That said, it is right that the influx has polarised society and that political debate is becoming more aggressive. + +MICHAEL MEYER-RESENDE + +Executive director + +Democracy Reporting International + +Berlin + + + + + +Regulating glyphosate + +You stated that regulators in Europe “are arguing over the safety of glyphosate, the world’s top weedkiller” (“Fog of uncertainty”, March 5th). Although some politicians might be arguing about glyphosate, no pesticide regulator in the world considers it to be a carcinogen. In November 2015, the European Food Safety Authority concluded that “Glyphosate is unlikely to pose a carcinogenic hazard to humans.” And in April 2015, the Canadian regulator found that “the overall weight of evidence indicates that glyphosate is unlikely to pose a human cancer risk.” Also last year, America’s Environmental Protection Agency reaffirmed that glyphosate is not an endocrine disrupter. + +Glyphosate’s renewal is up for a vote by the European Commission, and it is no surprise that this process has sparked political debate. Much of the debate centres on a classification by a working group of the International Agency for Research on Cancer, even though it is not a regulatory authority. + +Regulators depend on science and an informed public to make the best decisions for all of us. + +PHILIP MILLER + +Vice-president, global regulatory and governmental affairs + +Monsanto + +St Louis, Missouri + + + + + +The state of Malaysia + +Many Malaysians barely recognise the country that you described in “The Najib effect” (March 5th). Contrary to your assertion that the economy is in trouble, growth last year beat expectations at a very healthy 5%, which the OECD predicts we will be able to maintain over the next five years. Since Najib Razak, the prime minister, launched Malaysia’s Economic Transformation Programme in 2010, 1.8m jobs have been created, and private investment has more than tripled. The truth is that our economy “continues to perform well”, to quote the IMF’s most recent report on our country. + +In addition, far from regressing, Malaysia has undergone a political-reform programme unmatched in recent history. Since assuming office, the prime minister has repealed the Internal Security Act; eliminated the bans on opposition party newspapers and removed the annual renewal requirement for printing licences; lifted the ban on student participation in politics; repealed the Banishment Act and the Restricted Residences Act, as well as emergency proclamations; passed the Peaceful Assembly Act, enshrining the right to protest into law for the first time; and set up a bipartisan panel on electoral reform. + +Moreover, the prime minister regularly attends the festivals of non-Muslims, going to churches and temples to share the celebrations of fellow Malaysians, and is acknowledged as a leader in the fight against terrorism and extremism, both nationally and internationally. + +This is the true picture of Malaysia today. + +DATO’ AHMAD RASIDI HAZIZI + +High commissioner of Malaysia + +London + + + + + +The semicolon; and its faults + + + +One bit of punctuation that should follow the diastole, the trigon, the interpunct and the diple onto the scrap heap of history is the semicolon (Johnson, March 12th). Very few people know how to use semicolons correctly and The Economist’s constant overuse contradicts its advice—contained in its very own style guide—not to overdo them. + +Kurt Vonnegut said it best: “Do not use semicolons. They are transvestite hermaphrodites representing absolutely nothing. All they do is show you’ve been to college.” + +JOHN O’CALLAGHAN + +Singapore + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21695365-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Business in America: Too much of a good thing + + + + + +Articles Sections Next + +Business in America + +Too much of a good thing + +Profits are too high. America needs a giant dose of competition + +Mar 26th 2016 | From the print edition + + + +AMERICA’S airlines used to be famous for two things: terrible service and worse finances. Today flyers still endure hidden fees, late flights, bruised knees, clapped-out fittings and sub-par food. The profit bit of the picture, though, has changed a lot. Last year America’s airlines made $24 billion—more than Alphabet, the parent company of Google. Even as the price of fuel, one of airlines’ main expenses, collapsed alongside the oil price, little of that benefit was passed on to consumers through lower prices, with revenues remaining fairly flat. After a bout of consolidation in the past decade the industry is dominated by four firms with tight financial discipline and many shareholders in common. And the return on capital is similar to that seen in Silicon Valley. + +What is true of the airline industry is increasingly true of America’s economy as a whole. Profits have risen in most rich countries over the past ten years but the increase has been biggest for American firms. Coupled with an increasing concentration of ownership, this means the fruits of economic growth are being hoarded. This is probably part of the reason that two-thirds of Americans, including a majority of Republicans, have come to believe that the economy “unfairly favours powerful interests”, according to polling by Pew, a research outfit. It means that when Hillary Clinton and Bernie Sanders, the Democratic contenders for president, say that the economy is “rigged”, they have a point. + + + +The last year has seen a slight dip in aggregate profits because of the high dollar and the effect of the oil price on energy firms. But profits are at near-record highs relative to GDP (see chart 1) and free cash flow—the money firms generate after capital investment has been subtracted—has grown yet more strikingly. Return on capital is at near-record levels, too (adjusted for goodwill). The past two decades have seen most firms make more money than they used to. And more firms have become very profitable. + +Opportunities + +An intense burst of consolidation will boost their profits more. Since 2008 American firms have engaged in one of the largest rounds of mergers in their country’s history, worth $10 trillion. Unlike earlier acquisitions aimed at building global empires, these mergers were largely aimed at consolidating in America, allowing the merged companies to increase their market shares and cut their costs. The companies in question usually make no pretence of planning to pass the savings they make this way on to their customers; take their estimates of the synergies involved at face value and profits in America will rise by a further 10% or so. + +Profits are an essential part of capitalism. They give investors a return, encourage innovation and signal where resources should be invested. Their accumulation allows investment in bold new ventures. Countries where profits are too low—Japan, for instance—can slip into morbid torpor. Firms that ignore profits, such as China’s state-run enterprises, lurch around like aimless zombies, as likely to destroy value as to create it. + +But high profits across a whole economy can be a sign of sickness. They can signal the existence of firms more adept at siphoning wealth off than creating it afresh, such as those that exploit monopolies. If companies capture more profits than they can spend, it can lead to a shortfall of demand. This has been a pressing problem in America. It is not that firms are underinvesting by historical standards. Relative to assets, sales and GDP, the level of investment is pretty normal. But domestic cash flows are so high that they still have pots of cash left over after investment: about $800 billion a year. + +High profits can deepen inequality in various ways. The pool of income to be split among employees could be squeezed. Consumers might pay too much for goods. In a market the size of America’s prices should be lower than in other industrialised economies. By and large, they are not. Though American companies now make a fifth of their profits abroad, their naughty secret is that their return-on-equity is 40% higher at home. + +Most explanations of America’s high profits draw on national-accounts data which show that the fall in the share of output going to workers over the past decade is equivalent to about 60% of the rise in domestic pre-tax profits. Scholars typically have three explanations for this: technology, which has allowed firms to replace workers with machines and software; globalisation, which has made it easier to shift production to lower cost countries; and a decline in trade-union membership. + +None of these accounts, though, explain the most troubling aspect of America’s profit problem: its persistence. Business theory holds that firms can at best enjoy only temporary periods of “competitive advantage” during which they can rake in cash. After that new companies, inspired by these rich pickings, will pile in to compete away those fat margins, bringing prices down and increasing both employment and investment. It’s the mechanism behind Adam Smith’s invisible hand. + +In America that hand seems oddly idle. An American firm that was very profitable in 2003 (one with post-tax returns on capital of 15-25%, excluding goodwill) had an 83% chance of still being very profitable in 2013; the same was true for firms with returns of over 25%, according to McKinsey, a consulting firm. In the previous decade the odds were about 50%. The obvious conclusion is that the American economy is too cosy for incumbents. + +In 1998, Joel Klein, who ran the antitrust operation at the Department of Justice (DoJ), declared that “our economy is more competitive today than it has been in a long, long time.” He may well have been right. In the post-war boom American firms grew into mighty conglomerates; in the 1960s J.K. Galbraith, a left-leaning economist, predicted the rise of a symbiotic “industrial state” in which large companies worked closely with the government. But in the 1980s deregulation opened some industries, such as telecoms and railways, to competition. And a new doctrine of shareholder value led big firms, such as RJR Nabisco, to be broken-up and sprawling conglomerates to become focused. In the 1990s American firms faced a wave of competition from low-cost competitors abroad (and, reciprocally, focused their energy on expanding overseas). + +Since then the pendulum seems to have swung back. Huge companies, long the focus of American worries about competition, have not actually got any bigger. In 2014 the top 500 listed firms made about 45% of the global profits of all American firms, as they did in the late 1990s. Instead they, and other companies, have become more focused. The strategy can be seen as an amalgam of the philosophies of two deeply influential business figures. Jack Welch, the boss of General Electric for two decades at the end of the 20th century, advised companies to get out of markets which they did not dominate. Warren Buffett, the 21st century’s best-known investor, extols firms that have a “moat” around them—a barrier that offers stability and pricing power. + + + +One way American firms have improved their moats in recent times is through creeping consolidation. The Economist has divided the economy into 900-odd sectors covered by America’s five-yearly economic census. Two-thirds of them became more concentrated between 1997 and 2012 (see charts 2 and 3). The weighted average share of the top four firms in each sector has risen from 26% to 32%. + + + +INTERACTIVE: Explore all 893 industries grouped by sector in our interactive scatter chart + +Miracles + +These data make it possible to distinguish between sectors of the economy that are fragmented, concentrated or oligopolistic, and to look at how revenues have fared in each case. Revenues in fragmented industries—those in which the biggest four firms together control less than a third of the market—dropped from 72% of the total in 1997 to 58% in 2012. Concentrated industries, in which the top four firms control between a third and two-thirds of the market, have seen their share of revenues rise from 24% to 33%. And just under a tenth of the activity takes place in industries in which the top four firms control two-thirds or more of sales. This oligopolistic corner of the economy includes niche concerns—dog food, batteries and coffins—but also telecoms, pharmacies and credit cards. + +Concentration does not of itself indicate collusion. Other factors at play might include regulations that keep competitors out. Business spending on lobbying doubled over the period as incumbents sought to shape regulations in ways that suited them. The rising importance of intangible assets, particularly patents, has meant that an ability to manage industry regulators and the challenges of litigation is more valuable than ever. + +The ability of big firms to influence and navigate an ever-expanding rule book may explain why the rate of small-company creation in America is close to its lowest mark since the 1970s (although an index of startups run by the Kauffman Foundation has shown flickers of life recently). Small firms normally lack both the working capital needed to deal with red tape and long court cases, and the lobbying power that would bend rules to their purposes. A lack of lobbying clout and legal savvy may also help explain foreign firms’ loss of momentum. In the 1990s adventurers from abroad piled into America, with the share of output from foreign-owned subsidiaries rising steadily. But foreign firms seem to have lost their mojo. Since 2003 their contribution has been flat at about 6% of private business output. + +Another factor that may have made profits stickier is the growing clout of giant institutional shareholders such as BlackRock, State Street and Capital Group. Together they own 10-20% of most American companies, including ones that compete with each other. Claims that they rig things seem far-fetched, particularly since many of these funds are index trackers; their decisions as to what to buy and sell are made for them. But they may well set the tone, for example by demanding that chief executives remain disciplined about pricing and restraining investment in new capacity. The overall effect could mute competition. + +Quantifying the effect of the corporate America’s defences is tricky. Profits are not the whole picture. In some industries—banking is a case in point—rent-seeking will result in high pay to an employee elite instead. But one can get a crude sense of what is going on by dividing the profits all firms generate into the “bog-standard” and the “exceptional”. Over the past 50 years return on capital has averaged about 10% (excluding goodwill) and that is what investors tend to demand, so let that represent bog-standard profits. The excess on top of that—which may reflect brilliant innovations, wise historic investments in intangible assets such as brands, or, perhaps, a lack of competition—is the exceptional bit. For S&P 500 firms these exceptional profits are currently running at about $300 billion a year, equivalent to a third of taxed operating profits, or 1.7% of GDP. + +I love you, you pay my rent + +About a quarter of America’s abnormal profits are spread across a wide range of sectors. Returns on capital, concentration and prices have risen in many pockets of the economy. The cable television industry has become more tightly controlled, and many Americans rely on a monopoly provider; prices have risen at twice the rate of inflation over the past five years. Consolidation in one of Mr Buffett’s favourite industries, railroads, has seen freight prices rise by 40% in real terms and returns on capital almost double since 2004. The proposed merger of Dow Chemical and DuPont, announced last December, illustrates the trend to concentration. After combining, the companies plan to split into three specialist companies each of which will have a higher share of its market than either original company had before the deal. They say the plan will yield $3 billion in cost savings. Since 2008 American mergers have sought to remove recurring annual costs of about $150 billion from industrial ledgers. Few firms that are not regulated utilities have public plans to pass these gains on to consumers. + +Concentration is contagious. As firms become more powerful those elsewhere on associated chains of customers and suppliers bulk up in response. Google now dominates internet searches for flights and hotels. This has led Expedia, the leading internet travel-agent, to beef up by buying two of its main rivals over the past two years. The spectre of very big online travel sites dominating the purchase of hotel rooms has led the hotel firms to consolidate, too, with Marriott agreeing to buy Starwood this month. (A Chinese firm, Anbang, may make a counter-bid). + +Roughly another quarter of abnormal profits comes from the health-care industry, where a cohort of pharmaceutical and medical-equipment firms make aggregate returns on capital of 20-50%. The industry is riddled with special interests and is governed by patent rules that allow firms temporary monopolies on innovative new drugs and inventions. Much of health-care purchasing in America is ultimately controlled by insurance firms. Four of the largest, Anthem, Cigna, Aetna and Humana, are planning to merge into two larger firms. + +The rest of the abnormal profits are to be found in the technology sector, where firms such as Google and Facebook enjoy market shares of 40% or more. By Silicon Valley’s account such penetration reflects the popularity and inventiveness of the products on offer, some of which are free to consumers. Today’s dominant firms could be tomorrow’s Nokia or Blackberry: Apple now trades on just 11 times earnings, suggesting investors expect it to decline. Firms such as Uber and Airbnb are a rare source of disruption in the economy, competing fiercely with incumbents. + +But many of these arguments can be spun the other way. Alphabet, Facebook and Amazon are not being valued by investors as if they are high risk, but as if their market shares are sustainable and their network effects and accumulation of data will eventually allow them to reap monopoly-style profits. (Alphabet is now among the biggest lobbyists of any firm, spending $17m last year.) A fall from grace in the tech world is not as bad as you might imagine. Microsoft’s operating profits today are twice what they were in 2000, when Mr Klein was prosecuting it in an antitrust trial. And the “sharing economy” startups that are being so highly rated by some investors mostly seek to dominate their markets. The large mountains of cash they are burning today can only be justified if they eventually mature to enjoy very high market shares and margins. + +In the past, periods of high and stable profits have ended. Just three years after Mr Galbraith made his 1967 prediction of a cosy, collaborative business world, it was already toast: profits had collapsed by a third relative to GDP as recession struck. Today’s profits, too, may be more vulnerable than they look. If wages finally pick up it could crimp margins. The earnings-per-share of listed firms have fallen slightly in the past few quarters, though a strong dollar and declining oil revenues explain much of that. Some observers of the stockmarket argue that it is already signalling more decline. The gap between the real yield on equities and that on government bonds suggests that either firms are riskier than ever, bond yields are freakishly low, or that profits face a cyclical downturn. + +Even so, it is hard to identify a mechanism by which profits might fall to more normal levels. Investors and managers continue to place extraordinarily high profit multiples on businesses with “moats”. The cable television industry is supposedly under pressure from the likes of Netflix and Amazon Prime. Yet in 2015 Charter Communications, a cable company, bought Time Warner Cable for $79 billion, or 26 times its free cash flow, which implies that it believes it will be in a position to raise prices. When Heinz (part-controlled by Mr Buffett) bought Kraft Foods in 2015, it paid 31 times the free cash flow and promptly slashed spending to boost margins, suggesting it felt the threat from rival makers of cheese slices was rather small. + +Antitrust, but verify + +Perhaps antitrust regulators will act, forcing profits down. The relevant responsibilities are mostly divided between the DoJ and the Federal Trade Commission (FTC), although some industries, such as railways and telecoms, also have their own regulators. The DOJ and FTC are busy trying to police the mergers-and-acquisition boom. Rather than contest every deal they select cases that set new precedents and argue them in court: of the 15,000 deals between 2005-14, about 3% have been subject to close scrutiny. + +Together the two bodies have roamed far and wide. The DoJ has blocked domestic deals, such as the takeover by AT&T of T-Mobile USA in 2011, and cross-border combinations that would have caused concentration in global industries, such as the merger of two chipmakers, Applied Materials and Tokyo Electron, in 2015. The FTC spends a big chunk of its time looking at health care. It has blocked hospital mergers and fought “pay-for-delay” deals in which pharmaceutical firms try to stop generic competitors from launching rival products when patents expire. The DoJ is casting a beady eye over the airlines. + +Yet the system suffers two limitations. One is constitutional. The two bodies’ job is to police infringements of a well-established and mature body of law through the courts. This leaves them admirably free of overt political interference and lobbying but it also limits their scope. Lots of important subjects are beyond their purview. They cannot consider whether the length and security of patents is excessive in an age when intellectual property is so important. They may not dwell deeply on whether the business model of large technology platforms such as Google has a long-term dependence on the monopoly rents that could come from its vast and irreproducible stash of data. They can only touch upon whether outlandishly large institutional shareholders with positions in almost all firms can implicitly guide them not to compete head on; or on why small firms seem to be struggling. Their purpose is to police illegal conduct, not reimagine the world. They lack scope. + +The second limitation is intellectual. America’s antitrust apparatus has gone through periods of leniency (1915-35) and stridency (1936-72). By the 1980s the Chicago school of free-market thought was ascendant. Its insistence that the efficiency benefits of big mergers should not be dismissed had a big influence on the courts. Antitrust guidelines which held that any deal involving a firm with a market share of 35% or more should be considered suspect on principle have been set aside in favour of a more granular approach, with regulators looking ever more closely at the specific effects of a deal. To work out if a deal lowers consumers’ level of choice or lets firms hike prices they will study micro-markets in specific regions. + +Who does not prefer the rifle to the blunderbuss, the scalpel to the axe? Such sophistication allows regulators to demand clever remedies, such as the disposal of subsidiaries. But with their heads deep in data and court rulings that set fine precedents, the scientists of antitrust are able to sidestep some troubling questions. If markets are truly competitive, why do so many companies now claim they can retain the cost synergies that big deals create, not pass them on to consumers? Why do investors believe them? Why have returns on capital risen almost everywhere? + +These legal and intellectual limitations of the antitrust apparatus raise the question of competition to the political sphere—currently, alas, a realm well supplied with blunderbusses and axes wielded haphazardly and at the wrong targets. Americans’ mistrust of their economic system and the companies that make so much money in it has so far been channelled into calls for protectionism and government intervention. Free trade should be limited. Health-care firms should be more regulated. Foreign firms—particularly Chinese ones—should be discriminated against. Wages should be forced up. Taxes on companies should be raised. + +Memories of the future + +Nowhere has the alternative approach been articulated. It would aim to unleash a burst of competition to shake up the comfortable incumbents of America Inc. It would involve a serious effort to remove the red tape and occupational-licensing schemes that strangle small businesses and deter new entrants. It would examine a loosening of the rules that give too much protection to some intellectual-property rights. It would involve more active, albeit cruder, antitrust actions. It would start a more serious conversation about whether it makes sense to have most of the country’s data in the hands of a few very large firms. It would revisit the entire issue of corporate lobbying, which has become a key mechanism by which incumbent firms protect themselves. + + + +Large firms no longer employ all that many people in America: the domestic employee base of the S&P 500 is only around a tenth of total American employment. New firms would invest more, employ more staff, and force incumbents to invest more in order to compete. If this sounds pie in the sky, consider the shale revolution over the past decade. Although the industry is now suffering from low oil prices, it is a rare example of entrepreneurial spirit taking on a stodgy industry to the benefit of all. A new commitment to competition could be the source of optimism that America is desperately searching for. After all, it is only a healthy dollop of greed and a belief in a better future that prompts people to start from scratch and try to cross the moat that has been dug around corporate America. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21695385-profits-are-too-high-america-needs-giant-dose-competition-too-much-good-thing/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Trump and the world: Don’t deal with it + +The primaries: Heard on the trail + +College endowments: Yard sale + +Deporting child migrants: Self-defence + +Primaries in the West: Mormons against the Donald + +Florida’s Haitian-Americans: The Creole caucuses + +Lexington: The meaning of blue jeans + + + + + +Articles Sections Next + +Trump and the world + +Don’t deal with it + +If Donald Trump wins the nomination he is likely to ditch half a century of Republican thinking on foreign policy + +Mar 26th 2016 | WASHINGTON, DC | From the print edition + + + +CONVENTIONAL candidates for the American presidency signal how they might deal with the world in three main ways. First, they are expected to issue detailed foreign policies, though—in truth—few of these plans are robust enough to survive when stuff happens. Next, by choosing advisers known for strong views or special expertise, candidates nod to their own priorities. The third signalling mechanism is the most nebulous but the most useful, and happens when contenders let slip some remark that betrays their deepest prejudices and gut instincts. + +Donald Trump, an unconventional candidate, has come a long way without revealing very much about his views on foreign policy. He has offered such bumper sticker slogans as “Bomb the shit out of ISIS”, and dodged questions about his preferred sources of geopolitical advice, recently declaring: “I’m speaking with myself, number one, because I have a very good brain.” + +On March 21st, however, the Republican front-runner visited Washington, DC for a day of traditional foreign-policy chin-stroking and speechifying. He joined presidential rivals in addressing some 18,000 supporters of the American Israel Public Affairs Committee (AIPAC), an influential pro-Israel lobby group, outlining his most detailed thoughts yet on the prospects for Middle East peace, on curbing Iran’s nuclear ambitions and on defeating the violent extremists of the Islamic State. In an earlier meeting at the Washington Post, he revealed the names of five close foreign-policy advisers. + +Mr Trump’s AIPAC speech, which unusually for him he read from a prepared text, was a mixture of pandering, implausible bluster and contradictory promises. The billionaire denounced the United Nations as an anti-Israeli opponent of democracy. “We will totally dismantle Iran’s global terror network, which is big and powerful—but not powerful like us,” he promised, without further explanation. He said he would “dismantle the disastrous deal” struck by President Barack Obama to curb Iran’s nuclear ambitions, then seemed to say that he would enforce it, or perhaps the sanctions regime that preceded it, “like you’ve never seen a contract enforced before, folks, believe me.” + +In recent months Mr Trump has set nerves jangling among conservative supporters of Israel by suggesting he would be “neutral” in efforts to broker peace between Israel and the Palestinians. When speaking to AIPAC he cast himself as sternly pro-Israeli, citing his role as Grand Marshal of the 2004 “Salute to Israel” Parade in New York and his daughter’s conversion to Judaism after marriage as evidence. Months after angering a gathering of Jewish Republicans by fudging his views on the status of Jerusalem, Mr Trump bowed to conservative pressure and pledged that he would move the American embassy to that divided city, calling it “the eternal capital of the Jewish people”. + +Yet Mr Trump also brought his constant campaign-trail refrain about being a dealmaker offering America as a broker between Israel and the Palestinians. “Deals are made when parties come together, they come to a table and they negotiate. Each side must give up something,” he told delegates. Even suggesting that Israel might have to give anything up in the name of peace involves challenging conservative shibboleths. In recent years, Republicans have aligned themselves with the views of Binyamin Netanyahu, the Israeli prime minister, in suggesting that Israel should not be prodded to engage in talks, because the Palestinian side has shown no sincerity or seriousness as a potential partner for peace. + +The little-known advisers named by Mr Trump shed only limited light on his views. They include Joseph Schmitz, a Pentagon inspector general under George W. Bush; Walid Phares, a Lebanese Christian academic who has in the past advised warlords in Lebanon; J. Keith Kellogg Jr., a retired army lieutenant-general and former chief operating officer for the Coalition Provisional Authority in Baghdad; and Carter Page, a businessman and analyst specialising in the oil and gas industry in the former Soviet block. + +Where Mr Trump was more revealing was in comments and asides that pointed to his deep instincts on foreign policy—instincts which mark a sharp break with recent Republican orthodoxy. He seems ready to break with Republican traditions of using America’s wealth, diplomatic clout and military muscle to promote universal values of economic and political freedom around the world—traditions which have dominated the party since the days of Ronald Reagan and the cold war. + +Appealing to Americans who want to feel safe from Islamic extremism but who wonder what almost 15 years of intervention in the Islamic world has achieved, Mr Trump has spent months promoting an America First policy of unleashing no-holds-barred violence, including torture, against foes in the Middle East, while shunning nation-building far from home. + +While doing the rounds in Washington he expanded a little more than before on those views. Asked at the Washington Post about the future of NATO, the businessman scolded other members of that Atlantic alliance for doing too little after Russia invaded Ukraine on their doorsteps. “Why are we always the one that’s leading, potentially the third world war, okay, with Russia?” he asked. To the cable television news station CNN, Mr Trump said that while he would remain a member of NATO he would “certainly decrease” American funding for the alliance. + +Asked about how to counter Chinese aggression in the South China Sea and Asia, Mr Trump again voiced long-standing gripes about how such allies as Japan and South Korea only pay for some of the costs of American bases in the region. Does America gain anything by having bases overseas, he was asked? “Personally I don’t think so,” he replied. + +Mr Trump keeps saying things like this. At some point it seems reasonable to believe that what comes out of his mouth reflects his views. Supporters love his message of chin-jutting, heavily armed isolationism. If elected, President Trump would be able to claim a mandate for ending decades of global power projection. It may be frustratingly hard to pin the Republican front-runner down on how, precisely, he would deal with the world. But do not discount the possibility that he intends to deal with it as little as he can. + + + +Why Ted Cruz triumphed in Utah + +If Donald Trump were to become the Republican nominee, most people in Utah would do what might once have seemed unthinkable: vote Democrat + + + +Mormons against the Donald + +The Republican contest, for so long overcrowded, has been reduced to a single main contest: between Donald Trump and those trying to stop him bagging the delegates to win the presidential nomination + + + +Hillary Clinton’s problem with (white) men + +One group which has been the most resistant to the front-runner's charms + + + +Heard on the trail + +The latest quips and quotes from the campaigns + + + +A 2016 election calendar + +Follow the results, delegate count and dates of the primaries for both parties + + + + + +More US election coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695407-if-donald-trump-wins-nomination-he-likely-ditch-half-century-republican/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The primaries + +Heard on the trail + +Mar 26th 2016 | From the print edition + + + +Let us drink beer + +“Now that the label talks so loudly, what’s in the bottle has lost its voice." + +A sommelier explains why she won’t serve Trump wines. Washington Post + +Old Testament + +“God called King David a man after God’s own heart even though he was an adulterer and a murderer. You have to choose the leader that would make the best king or president and not necessarily someone who would be a good pastor.” + +Jerry Falwell, Jr. sees something in Donald Trump. Liberty Champion + +The reverse Godwin + +“The truth is, by the way, they might be rehabilitating that fellow with the mustache back there in Germany.” + +David Duke, former Grand Wizard of the Ku Klux Klan and Trump fan, thinks comparisons of Mr Trump and Hitler might do wonders for the latter’s image. + +Barron’s financial news + +“I believe on occasion I used that name.” + +When reporters called the Trump Organisation in the 1980s they were sometimes put through to a spokesman called John Barron. Mr Trump later admitted in court that he and Mr Barron were one and the same. Washington Post + +Faint praise + +"He’s the best alternative to Donald Trump." + +Lindsey Graham endorsed Ted Cruz, who he once said could be murdered on the floor of the Senate without repercussions. + +Bromance + +"It was conservative erotica coming out of his mouth. Oh tell me more big boy" + +Glenn Beck, talk-radio and TV host explains why he’s supporting Ted Cruz. + +Classy + +Be careful, Lyin’ Ted, or I will spill the beans on your wife!” + +Mr Trump tweets. + +The opium of the people + +“The white American underclass is in thrall to a vicious, selfish culture whose main products are misery and used heroin needles. Donald Trump’s speeches make them feel good. So does Oxycontin.” + +The National Review’s Kevin Williamson examines the Trump phenomenon. + +Half-right + +“Washington has a very good football team but it doesn’t have to be called the Redskins.” + +Bernie Sanders is generous to DC’s lousy American football team. + + + +Don’t deal with it + +If Donald Trump wins the nomination he is likely to ditch half a century of Republican thinking on foreign policy + + + +Why Ted Cruz triumphed in Utah + +If Donald Trump were to become the Republican nominee, most people in Utah would do what might once have seemed unthinkable: vote Democrat + + + +Mormons against the Donald + +The Republican contest, for so long overcrowded, has been reduced to a single main contest: between Donald Trump and those trying to stop him bagging the delegates to win the presidential nomination + + + +Hillary Clinton’s problem with (white) men + +One group which has been the most resistant to the front-runner's charms + + + +A 2016 election calendar + +Follow the results, delegate count and dates of the primaries for both parties + + + + + +More US election coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695404-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +College endowments + +Yard sale + +Colleges with big endowments face calls to scrap tuition payments + +Mar 26th 2016 | NEW YORK | From the print edition + +Mr Harvard and his yard + +ON his deathbed in 1638, John Harvard bequeathed half of his estate, about £800 and his library of some 400 books to a new college in present-day Cambridge, Massachusetts. Harvard’s founders decided to name their new university for its first big benefactor. About 370 years ago the first Harvard scholarship to help “some poore scholler” was set up thanks to £100 donated by Ann Radcliffe. The university continues to be the beneficiary of generous donors. Last year, John Paulson, a hedge-fund investor, donated $400m to Harvard’s engineering school, its largest gift ever. Harvard has an endowment of $36 billion, the largest in the country. Last year it raised more than $1 billion. Some of its alumni think this ought to be sufficient to scrap tuition fees. + +Among them are Ralph Nader, a veteran political activist, and Ron Unz, author of a number of searing articles on American meritocracy. Both are hoping to win election to the university’s board of overseers, from which perch they will push to make Harvard free for all students to attend, and also pressure its admissions office to disclose data on how it chooses which students to admit. They hope that other well-endowed Ivies would then be shamed into doing the same. + +America’s universities raised a record $40.3 billion last year, according to the Council for Aid to Education. Harvard’s endowment is made up of 13,000 funds and is its largest source of revenue by far. Endowments are not usually used to lower tuition fees, but they can be used to provide scholarships and financial aid to students who cannot afford to pay (70% of students at Harvard get some assistance with fees and living costs). + + + +Some lawmakers are wondering whether threats to change the tax-exempt status of endowments might be used to persuade colleges to bring down the cost of tuition, which has increased by 220% in real terms since 1980. Nexus Research and Policy Centre (a group set up by the University of Phoenix, which is for-profit and therefore not tax-exempt) says colleges receive $80 billion in support from state and local government every year, which ought to give politicians some leverage in return. + +In January Tom Reed, a Republican congressman from New York, proposed a bill requiring endowments with assets of more than $1 billion to allocate 25% of their income for financial aid or lose tax-exempt status. Two congressional committees, the Senate Finance Committee and the House Ways and Means Committee, have sent letters to the heads of the colleges with the biggest endowments asking about spending, conflicts of interest and fee arrangements for money managers. The 56 largest private university endowments have until April 1st to explain how they use their tax-free investment earnings. + +The colleges have their defenders. “Most of these places are already providing a fair amount of financial aid for students well beyond the poverty line,” says Kim Rueben of the Tax Policy Centre. Kevin Weinman, Amherst’s chief financial officer, says his university’s endowment provides $90m to the college’s budget, $30m more than tuition, room board and various fees combined. This school year, it will spend $50,000 per student to fund financial aid, pay faculty and fund student activities. After Congress last examined the topic in 2007, more colleges began to award grants instead of loans. Financial aid has doubled over the past decade. Some schools, like Brown in Providence, Rhode Island also make voluntary payments in lieu of property taxes. + +In addition to pointing out their generosity, colleges also argue that forcing them to spend endowment money on free tuition might even be illegal. Donors can restrict their tax-exempt gift to a legally-binding particular purpose, such as creating a chair, establishing a scholarship or building a new lab. Around 70% of endowments are restricted funds. Not abiding by a donor’s wishes can result in a lawsuit. Princeton was sued by the heirs of the A&P grocery fortune who claimed a gift of $35m made in 1961 was misused and not spent as directed. Amherst, which has a $2.2 billion endowment, ran the numbers and found that if it increased annual spending to 8% from its current level of 4-5%, it would have to rely on tuition to fund running costs. After 25 years its endowment would be 60% smaller than it is now. + +If the wealthiest colleges already spend so much on financial aid, where is the problem? Mr Unz argues that relentless endowment-fuelled spending on new buildings, sports facilities and the hiring of administrators has created an arms-race in higher education, pushing up prices at those universities that are not fortunate enough to have lots of generous benefactors. Harvard could scrap tuition payments without damaging its finances or touching the restricted portion of its endowment, he reckons. Furthermore, the abolition of both complicated financial-aid forms and terrifying sticker-prices for tuition (ie, before financial aid is calculated) could, he argues, do much to encourage applicants from beyond the plutocracy. + +Correction: This piece has been updated to provide the correct figure for the contribution of Amherst's endowment to the college budget. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695548-colleges-big-endowments-face-calls-scrap-tuition-payments-yard-sale/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Deporting child migrants + +Self-defence + +Can toddlers represent themselves in court? At the moment, yes + +Mar 26th 2016 | From the print edition + + + +WHEN G.J.C.P., as she is known in court documents, was 13, gang members in her native El Salvador began tormenting her. The men offered her drugs, nagged her to get involved with them romantically and urged her to join their gang. G.J.C.P. refused, though the men had previously murdered a friend of hers for a similar offence. Fearful for her life and hoping to begin anew, she fled to America. Before she could get far, she was scooped up by border patrol agents in Hidalgo, Texas. + +Like many undocumented, unaccompanied migrant children, G.J.C.P. has no lawyer to represent her in her deportation proceedings. By law, migrants facing removal are assured the right to an attorney. They do not, however, have the right to a free one—only defendants in criminal cases do. If they can afford the $2,000-$10,000 it costs to process most deportation cases, unaccompanied migrant children are welcome to appear in court with a lawyer. If not, they are expected to seek help from non-profit organisations, which are stretched, or to represent themselves against government prosecutors. In the 91,104 deportation cases involving unaccompanied migrant children between 2004 and 2014, 46% of the plaintiffs have not had legal representation. Ninety percent of those who represented themselves were deported, while only 39% of children with lawyers were. + +The number of children from Guatemala, Honduras and El Salvador crossing the border with Mexico began to rise steeply in 2012, after people-smugglers discovered that their odds of success were better with minors, who cannot so easily be turned back by border guards, than with adults and changed their business model accordingly. The federal government responded by speeding up the deportation of child migrants in July 2014. This message seems to have reached Central America: in 2015 the number of unaccompanied children picked up by border patrol dropped back down to 40,000. For those already in the country, the government increased funding for child migrants in court, but not by enough to assure they all get lawyers. Adolescents over 16 were excluded from the initiative entirely. + +A few days after the federal government changed tack, a team of civil-liberties groups, advocacy organisations and private law firms launched a nationwide class-action lawsuit against the attorney-general’s office for failing to provide migrant children with representation in deportation proceedings. Not doing so, they argued, violates immigration laws and the 5th Amendment right to due process. On March 24th, after nearly two years of back and forth, a judge will rule on whether to certify the plaintiffs’ proposed class: all children under 18 involved in immigration proceedings after July 2014, who do not have attorneys and are unable to afford one. Should the judge reject the certification, the case will press forward to a trial in September with just a handful of plaintiffs. + +Both Eric Holder, the former attorney-general, and Loretta Lynch, the present one, have expressed dismay at the current state of affairs. One immigration judge has said he had “taught immigration law literally to three- and four-year olds.” Eleni Wolfe-Roubatis of the Centro Legal de La Raza, a non-profit group in Oakland, California, says that she has seen a child as young as 18-months old in proceedings on their own. When Ms Wolfe-Roubatis later took on the 18-month-old girl as a client, she held the infant in her arms as she made her pleadings. Kathryn Coiner-Collier, who works with unaccompanied migrant children in North Carolina, describes how lawyerless four- and five-year-olds fidget and play around in their hearings. + +Unaccompanied child migrants often struggle even to make it to court to defend themselves. Atenas Burrola, another immigration lawyer in North Carolina who serves low-income clients, explains that undocumented people cannot get driving licences in many states, and anyway lots of the children in deportation proceedings aren’t old enough to drive. She recalls one 15-year-old boy who had to shell out $300 each way for a taxi from his home in South Carolina to immigration court in North Carolina. Unrepresented children have missed more than 70% of their court appearances since 2005, and are often ordered to be deported in absentia. This was the case for G.J.C.P. When her grandmother called to check the status of her case, she learned a judge had already ordered her granddaughter to be removed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695572-can-toddlers-represent-themselves-court-moment-yes-self-defence/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Primaries in the West + +Mormons against the Donald + +Donald Trump and Hillary Clinton bag Arizona, but falter in Utah + +Mar 26th 2016 | WASHINGTON, DC | From the print edition + +Stop Trump HQ + +THE Republican primary contest, for so long overcrowded, has been reduced to a single main contest: between Donald Trump and those trying to stop him bagging the 1,237 delegates he needs to win the party’s presidential nomination. Besides Ted Cruz and John Kasich, Mr Trump’s bruised but surviving competitors, his opponents include most elected Republicans, most conservative journalists, perhaps half of Republican voters. On March 22nd the tycoon caused them further dismay by winning the Arizona primary. Its 58 delegates are a handsome prize and Mr Trump, having won the “winner-takes-all” state with just under half of the vote, got the lot. + +With 739 delegates overall, he is the only candidate with a serious chance of securing the Republican nomination before the party’s convention in July. It looks awfully tight; a reckoning of his prospects in the states still to vote suggests he might just fall short. For that, his opponents can now thank Mr Cruz’s coterminous success in Utah, where the Texan senator won easily, securing a rare statewide majority in the Republican contest and taking all its 40 delegates. Mr Cruz was heavily backed by the state’s Mormons, who represent most of Utah’s Republican primary electorate. As the sort of outsider group Mr Trump loves to pick on, its members dislike him. He also antagonised them further by questioning the Mormon faith of Mitt Romney, the most recent Republican presidential candidate and a leader of the emerging Stop Trump effort. Mr Trump came third in Utah. + +The Democratic contests held on March 22nd, in the same two states and in Idaho, showed a similar pattern. The party’s front-runner, Mrs Clinton, won comfortably in delegate-rich Arizona, with three-fifths of the vote. But she was well-beaten by Bernie Sanders in the two smaller states. In Idaho and in Utah the leftist senator won around 80%. Mrs Clinton won fewer delegates, but with an overall lead of over 300 delegates she still looks uncatchable. The extremity of her defeats was embarrassing, though, and left her rival nicely primed for an upcoming series of states he could win, including Alaska, Hawaii and Washington on March 26th. + +In winning Arizona, Mr Trump and Mrs Clinton appeared, albeit in the absence of exit polls, to have once again confirmed their main strengths. Mr Trump was popular with the many whites in the border-state who worry about illegal immigration. A large section of the wall he has promised to hide Mexico behind would be in Arizona, whose most divisive public figure, Sheriff Joe Arpaio, a well-known immigrant-basher, had endorsed him. Mrs Clinton, correspondingly, was supported by the state’s older white and large non-white populations. Having won big in Arizona, she will look forward more confidently to California, which has 546 delegates, up for grabs on June 7th, and a somewhat similar ethnic mix. + +For those hoping to block Mr Trump, Mr Cruz’s triumph in Utah is a rare fillip. He had been expected to win the state; it was unclear that he would pass the 50% threshold required to take all its delegates—in particular because of uncertainty over the effect of Mr Kasich in splitting the anti-Trump vote. The trouble for Mr Cruz, who has now won eight states to Mr Trump’s 20, is that he only seems able to win in places, such as Utah, with rare concentrations of evangelicals, Mormons or the otherwise ultraconservative. And there are not many such places left to vote. In only a handful, including Montana and Indiana, do evangelicals and Mormons make up more than 30% of the population; together they account for just 146 of the 905 Republican delegates still in play. That makes Mr Trump’s target, to win 60% of the remaining delegates, look achievable. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695573-donald-trump-and-hillary-clinton-bag-arizona-falter-utah-mormons-against-donald/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Florida’s Haitian-Americans + +The Creole caucuses + +Just possibly, the road to the White House might run through Little Haiti + +Mar 26th 2016 | MIAMI | From the print edition + +Little Haiti, big mural + +AMONG the shelves in Libreri Mapou, a bookshop in a row of pastel-fronted stores in Little Haiti, is a dull-looking door. Beyond it, up a staircase, lies a technicolour trove of paintings, statues, embroidery, memorabilia of bygone political campaigns and honours awarded to the proprietor, Jan Mapou. Imprisoned under Papa Doc Duvalier, Mr Mapou fled, moving to Miami in 1984 and establishing himself as a radio host, Creole-language advocate and poet. For years activists, lawyers and artists gathered above his shop. + +They still do, though much of the action has moved around the corner to the swish Little Haiti Cultural Centre. A candidate in Haiti’s disputed presidential race recently spoke in its classy theatre (many locals cannot vote in their ancestral homeland, but their remittances, estimated by the World Bank at $1.1 billion in 2012, give them a say); one of the centre’s galleries currently displays photos of Little Haiti by youngsters from Little Havana, and vice versa. In his adjacent studio Edouard Duval-Carrié, a Haitian-born artist, creates haunting nocturnal beach scenes, etched in glitter—a skeleton in a voodoo suit, a gunboat on the horizon—intended, he says, to illuminate the darkness behind rich-world fantasies of the tropics. + +The short stroll from Libreri Mapou to the cultural centre maps the evolving contours of the Haitian-American community. Built by the city government and opened in 2009, the centre is a testament to the community’s growing influence; the resilient links to Haiti exemplify the hybrid identities many immigrants now maintain. In a twist characteristic of this postmodern era of powerful diasporas and hotly contested microconstituencies, these features—Haitian-Americans’ progress, and their long memories—might play a role in November’s presidential election. + +The Port-au-Prince primary + +Counting immigrants and their descendants, there are officially around 1m Haitian-Americans, a population swollen by successive political and natural calamities (the true figure is doubtless higher). Almost half live in Florida, especially in and around Miami; in some counties they represent the biggest minority group. An early, small wave escaped Duvalier’s regime in the 1960s, largely for New York; a bigger, poorer, more rural one arrived, mostly in Florida and by boat rather than plane, in the 1980s. Less educated, slower to assimilate, they were also stigmatised by a supposed association with AIDS. + +In Miami’s bubbling ethnic stew, the tensions of those years have only partly dissipated. Among Haitian-Americans, as others, resentment lingers over Cubans’ preferential immigration status. As Mr Mapou puts it, Haitians had the extra misfortune to be victimised by a right-wing dictator, and so instead of the “red-carpet treatment” were liable to detention and repatriation. There has been friction with black Americans over jobs and local politics—though younger Haitians are much readier than their elders to see themselves as African-American, too. “When my son walks down the street, he is black,” says Sandy Dorsainvil, the cultural centre’s director. “Colour shows first.” + +Beneath that convergence, though, histories are different—which gives hope to Michael Barnett, chairman of Palm Beach County’s Republicans. In the past, he says, Haitian-American votes have been taken for granted by the Democrats and “written off by Republicans”. But Haitians are not instinctively suspicious of his party as other black Floridians are. Many are socially conservative; rising numbers are well-off. Mr Barnett points, as a model, to the 2014 campaign of Rick Scott, Florida’s governor, who visited Haitian evangelical churches and ran radio adverts in Creole. + +But perhaps the main ground for Republican optimism involves events in Haiti itself—in particular, allegations of mismanagement in the relief effort following the earthquake of 2010. Various agencies are implicated, but, overwhelmingly, one surname: Clinton. Bill was a UN envoy, Hillary secretary of state. As well as botching the aid, she is widely thought to have strong-armed Michel Martelly, the unloved former leader, into office. Some still grumble about Bill Clinton’s ruinous insistence, as president, that Haiti drop its rice tariffs. He cannot have anticipated that this arcane bit of trade policy might one day interfere with his wife’s presidential bid. + +Even if these gripes merely keep some would-be Democrats at home, they might matter. Florida’s result was the country’s closest in the election of 2012. In 2000, of course, Al Gore lost it, and the presidency, by 537 votes. “If 537 Haitians decide not to go to the polls,” the outcome could change, says Jean Monestime, a Democrat who came by boat as a teenaged refugee, with no English, and is now chairman of the Miami-Dade county commission. Jean-Philippe Austin, an oncologist and Democratic fundraiser, says he has advised the Clintons that Haitian-American votes “aren’t going to be automatic.” Mrs Clinton needs to explain the relief effort, he says. + +Still, some countervailing factors endure. Immigration policy remains a leading concern; should he be the Republican nominee, Donald Trump’s xenophobia is unlikely to go down well. Overall Florida’s Haitian-Americans are still poorer than average and more likely to be jobless. Gepsie Métellus of the Sant La Haitian Neighbourhood Centre, which offers employment and health-care services, frets that some Haitian teenagers are emulating the “bad boy” personas of their renegade peers. + +Yet, as is common in modern cities, even as Haitian-Americans struggle with hardship they also face the deracinating effects of prosperity. “Gentrification is in full force now,” says Father Reginald Jean-Mary of Notre Dame D’Haiti Catholic congregation. “It is Little Haiti in name only.” As Miami’s downtown and smart brands encroach on the old neighbourhood, rising rents are pushing people out, even as others leave voluntarily for more space and better schools. They trek back for Notre Dame’s child-care programmes and Creole services in the beautiful new church: one stained-glass window depicts Christ welcoming a boatload of refugees, Miami’s skyline looming behind them. Meanwhile, in an area recently considered dicey, tourists now come to browse Haitian crafts. “It doesn’t get any more American than that,” reckons Ms Dorsainvil. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695406-just-possibly-road-white-house-might-run-through-little-haiti-creole/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +The meaning of blue jeans + +Denim’s history suggests that American attitudes to work are more complex than they seem + +Mar 26th 2016 | From the print edition + + + +IN AN interview near the end of his career the fashion designer Yves Saint Laurent confessed to a regret: that he had not invented blue jeans. “They have expression, modesty, sex appeal, simplicity,” sighed the owlish Frenchman. “All I hope for in my clothes.” American denim-lovers might add other attributes. As far back as the 1930s, when the popularity of cowboy films helped jeans make the leap from workwear into the wardrobes of Hollywood stars, denim has been understood to stand for something larger about the American spirit: for rugged individualism, informality and a classless respect for hard work. + +“Deep down in every American’s breast…is a longing for the frontier,” enthused Vogue magazine in 1935, advising readers on how to dress with true “Western chic” (combine jeans with a Stetson hat and “a great free air of Bravado,” it counselled). Levi Strauss & Co., the San Francisco firm which invented modern blue jeans in 1873, saw sales boom after it crafted posters showing denim-clad cowboys toting saddles and kissing cowgirls. + +Jump to the 1950s and 1960s, and American consumers learned the heroic history of denim from nationwide magazine and television advertising campaigns. They were told that the tough blue cloth began life as “Serge de Nîmes”, in the French town of that name, and was used by Columbus for his ships’ sails, before outfitting the pioneers who tamed the West. In a country so often riven by culture wars, jeans crossed lines of ideology, class, gender and race. Presidents from Jimmy Carter onwards have worn denim when fishing, clearing brush or playing sports to signal their everyman credentials—though Barack Obama has endured mockery for donning capacious jeans that he later conceded were “a little frumpy”. + +Since the second world war, when GIs and sailors took blue jeans to the Old World and Asia, denim has carried ideas of American liberty around the globe, often leaving governments scrambling to catch up. Emma McClendon, a curator at the Fashion Institute of Technology (FIT) in New York, notes in a fine new book, “Denim: Fashion’s Frontier”, that when the Berlin Wall came down in 1989, reporters were surprised to see young East Berliners dressed exactly like their cousins from the West—in stonewashed jeans. Ms McClendon’s book accompanies a small but splendid exhibition on denim at the FIT on Seventh Avenue. + +The popularity of clothing invented to survive hard labour is of topical interest in America, a country gripped by election-year debates about blue-collar, working-class voters, and whether their interests have been ignored by ruling elites. Ms McClendon argues, persuasively, that much of what Americans think they know about denim draws on a set of “origin myths”, crafted and disseminated by manufacturers over many years, both individually and in campaigns run by the Denim Council, an industry group of clothing-makers and textile mills that was active from 1955-75. The council, whose papers are now in the FIT’s archives, was formed after jeans-clad motorcycle gangs and such films as “The Wild One” and “Rebel Without a Cause” led to something like a nationwide panic about denim and its unseemly effects on young bodies and minds. Committees of denim manufacturers and advertising executives set out to combat “anxieties over juvenile delinquency”. Wholesome films about jeans appeared on over 70 television stations, and “How It All Began” cartoons ran in newspapers, tracing the origins of denim back to medieval Europe. From the late 1950s Levi Strauss & Co. ran advertisements and a letter-writing campaign urging schools to allow students to attend classes in denim. Their pitch combined images of clean-cut, studious children in jeans with such slogans as “Right for School”, explains Tracey Panek, Levi’s company historian. + +Quite a lot of this marketing was hokum, or close to it. There is no evidence that Columbus crossed oceans under billowing denim sails, while the latest research is that the term “denim” may have been invented in England. Perhaps most strikingly, relatively few cowboys wore blue jeans at the height of the Wild West, Ms McClendon says: canvas and leather trousers were also common. Denim was mostly worn by small farmers, field-hands, labourers and miners—some of the oldest pieces in the archives of Levi Strauss & Co. were found in disused mines in California and Nevada (there is a whole world of denim-hunters out there, willing to endure much hardship to find a pair of 1880s Levi’s). + +The best history money can buy + +Ms McClendon describes economic and commercial forces at work in the 1930s. Denim sales to working-class customers slumped during the Depression. At the same time ranchers in need of extra income touted their properties as “dude ranches” at which affluent tourists could play at cowboys, apeing favourite film stars. Even Depression-era protectionism arguably played a role: Sandra Comstock, a sociologist at Reed College in Oregon, has written that tariffs on imported French clothing prodded department stores to promote domestic fashions including jeans. + +Myth-making about jeans suggests a political conclusion, too: that for a supposedly classless country America takes a complicated view of work. Study denim’s history and it is hard to avoid concluding that heroic individuals roaming the land, such as cowboys, are easier to sell as fashion icons than folk who toil by the hour in a factory, garage or field, taking orders from a boss. The first gallery at the FIT exhibition shows how the earliest denim clothes were often uniforms: it includes a prison uniform, sailor’s overalls and, most tellingly, the sort of blue work-shirt made of chambray (a cousin of denim) that inspired the term “blue-collar worker” back in the 1920s. Yet, other than to a few urban hipsters in recent decades, chambray shirts have mostly lacked the “cross-over cool” of denim jeans, says Fred Dennis, senior curator at the FIT—they did not fit into a “romanticised, cool-dude weekend look”. Small wonder that blue-collar workers feel forgotten. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695405-denims-history-suggests-american-attitudes-work-are-more-complex-they-seem/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Brazil’s political crisis: Tick tock + +Canada’s budget: Globalisation with a human face + +The United States and Cuba: An American invasion + +Bello: The drama of Lula + + + + + +Articles Sections Next + +Brazil’s political crisis + +Tick tock + +Dilma Rousseff’s chances of remaining in office are diminishing by the day + +Mar 26th 2016 | SÃO PAULO | From the print edition + + + +ON MARCH 18th the clock started ticking for Dilma Rousseff. The lower house of Brazil’s Congress voted to start the impeachment process against the president, who has until early April to present her defence. She faces charges of using accounting trickery to hide the true size of the budget deficit. Her congressional foes plan to put forward a second motion based on allegations that relate more directly to the main scandal that threatens her future: a former ally claims that she tried to obstruct a wide-ranging investigation into a multibillion-dollar bribery scheme at Petrobras, the state-controlled oil giant, from which her left-wing Workers’ Party (PT) profited. + +As congressmen in Brasília, the capital, cast their votes, 300,000-odd PT supporters swept onto the streets across the country in support of their embattled leader. But before the crowds dispersed, the president suffered another setback. The appointment as minister of her wily predecessor, Luiz Inácio Lula da Silva, was blocked by a supreme-court judge. + +Thus ended the most eventful and oddest 72 hours in recent Brazilian history. They leave the president weakened, possibly fatally. The reputation of her once-revered predecessor is in tatters (see article). That of the crusading judge leading the Petrobras investigation, Sérgio Moro, has been damaged, too. The country, which is suffering its worst recession since the 1930s, is angry and bewildered. + +The latest furore began on March 16th, when Ms Rousseff named Lula as her chief of staff—a position she once held under him. She needed “a skilful political negotiator” by her side, she explained, which is no doubt true. But most Brazilians think she hired Lula to give him the immunity from prosecution in ordinary courts that Brazilian law grants to members of cabinet. Mr Moro is investigating whether he benefited from the shakedown of Petrobras, which appears to have started while he was president from 2003 to 2010. Earlier this month police briefly detained him for questioning. Lula denies any wrongdoing. + +The anger of the government’s foes was fuelled by a telephone conversation between the former and current presidents, released by Mr Moro on March 16th. In it, the president tells her mentor that she will send a nomination letter for him to sign “if necessary”, which many interpreted as proof of a conspiracy to avoid justice. Anti-government protests erupted in several cities; in Brasília the night sky was lit up with burning tyres. The president’s office said the conversation was merely a reference to Lula’s possible absence from the swearing-in ceremony the next day. He attended the event, but was in office for a matter of hours before Gilmar Mendes, a supreme-court justice, suspended his appointment. + +The government is appealing against Mr Mendes’s ruling to the full tribunal. Ms Rousseff’s allies have also vowed to seek judicial redress against Mr Moro, who unsealed the wiretaps in “flagrant violation of the law and constitution”. Many lawyers agree that he erred in releasing recordings in which one party—the president no less—is not under formal investigation and enjoys strong constitutional protection. The controversial exchange was recorded after Mr Moro had ordered the police to stop tapping Lula’s phone. One supreme-court justice chastised the judge for “leaving the law by the wayside”. + +In theory the weight of evidence against Ms Rousseff, who denies all wrongdoing, will determine her fate in Congress. In practice political passions will play a big role. A poll published last weekend found that 68% of Brazilians favour impeachment. Fernando Henrique Cardoso, a former president who long believed that impeachment would set a dangerous precedent, now supports it. “That is what the streets clamour for,” he told a newspaper. A record 3.6m people marched earlier this month to demand Ms Rousseff’s fall. + +The passion of Dilma Rousseff + +On March 16th the Brazilian Republican Party decided to leave Ms Rousseff’s coalition—depriving her of 22 centrist votes. The Progressive Party, with 55 legislators, may do the same. More worrying for Ms Rousseff, her biggest coalition partner, the Party of the Brazilian Democratic Movement (PMDB), led by Brazil’s vice-president, Michel Temer, may also leave. It is to decide on March 29th. + +Several PMDB bigwigs have already declared themselves in favour of impeachment. Brasília is abuzz with talk of a Temer-led government of national unity, which would include Mr Cardoso’s centre-right Party of Brazilian Social Democracy (though not the former president himself). When this week Mr Temer denied any negotiations on such an alliance were taking place, few believed him. + + + +Waxing and waning: Brazil's economic woes, in charts + +Ms Rousseff’s chances of winning support from 172 of the 513 federal deputies—the number needed to stop the lower house from referring the impeachment motion to the Senate for trial—are diminishing. The upper house, too, appears hostile to the president. It is likely to accept for consideration any impeachment motion referred by the lower house, the chamber’s Speaker, Renan Calheiros, reportedly said. This could happen by mid-April. Ms Rousseff would then have to leave office for up to 180 days while the Senate deliberates. Mr Temer would take over. If the Senate impeaches her, Mr Temer would probably govern until the after next election in 2018. + +He would inherit a mess. GDP is expected to shrink by 4% in 2016 for the second year running. Inflation of more than 10% is reducing real wages. The unemployment rate has nearly doubled since 2014 (though it is still less than 10%). One in five young Brazilians is without work; economists warn of a “lost generation”. Brazil is no Venezuela: some export-oriented industries are thriving thanks to the weak currency (see article). But for most companies and workers the outlook is grim. + +Confidence will return only if the government reduces the budget deficit. At nearly 11% of GDP, it keeps interest rates high and has pushed public debt to what for Brazil is an unsustainable level, of 70% of GDP. Ms Rousseff’s proposals to cut spending and raise taxes are stuck in Congress—partly because her party opposes them. If that does not change, the government will miss this year’s unambitious target for a primary budget surplus (excluding interest payments) of 0.5% of GDP. Samuel Pessoa of IBRE-FGV, a think-tank, forecasts a “recurring” primary deficit (not counting one-off revenues) of a record 2.5% of GDP. It is time for politics to help the economy, the largely powerless finance minister, Nelson Barbosa, pleaded forlornly. + +Financial markets are pinning their hopes on a new government. If Mr Temer takes over at the head of a national-unity coalition, a stronger finance minister could push through emergency measures, such as a levy on financial transactions, to reduce the budget deficit. Share prices in São Paulo have risen by 25% since late February as odds of that happening have improved. + +Most Brazilians do not share this enthusiasm. Just one in six thinks a government led by Mr Temer would be any good. That is understandable. Six PMDB congressmen are being investigated in the Petrobras affair, including Mr Calheiros and the lower-house Speaker, Eduardo Cunha, whom the supreme court indicted for corruption earlier this month. Nearly 60% of Congress’s 594 members face criminal accusations, from presenting dodgy electoral accounts to homicide. Whether Ms Rousseff stays or goes they could remain in office until after an election in 2018. The renewal Brazilians yearn for is years away. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21695577-dilma-rousseffs-chances-remaining-office-are-diminishing-day-tick-tock/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Canada’s budget + +Globalisation with a human face + +The new prime minister begins to make his mark + +Mar 26th 2016 | OTTAWA | From the print edition + + + +JUSTIN TRUDEAU has been Canada’s prime minister since November, but it was only on March 22nd that he showed the country in detail how he intends to lead it. His government’s first budget, presented by the finance minister, Bill Morneau, broke decisively with the austerity of the previous Conservative administration. Faced with an economy weakened by low commodity prices, Mr Trudeau and his finance minister had no hesitation in keeping the lavish promises of extra spending made by their Liberal Party during the election campaign. + +Federal spending is projected to rise from 13.6% of GDP in the last fiscal year to 14.6% in 2016-17. The Liberals had promised a big programme of spending on infrastructure to repair the country’s creaking transport systems and invest in green technology. Their first budget wisely does this by boosting maintenance spending on existing facilities while they ponder backing bigger projects, perhaps including oil pipelines and LNG facilities, later on. The deficit is set to rise this fiscal year to C$29.4 billion ($22.5 billion), about 1.5% of GDP, from C$5.4 billion. Mr Trudeau seems to have given up on his goal to balance the budget by 2019. + +At a time when most rich-country governments are squeezing their budgets Canada’s can afford to splurge, in part because of the budget discipline practised by the Conservatives. Canada’s public debt is considerably lower than that of its peers (see chart). The government is hoping that the economy will strengthen with a looser fiscal policy enhancing the stimulus of low interest rates, rather than counteracting it as it has done since 2012. + +Mr Trudeau scrapped the Conservatives’ fiscal policy in part to preserve their other achievements. He supports the Canada-EU trade agreement negotiated by his predecessor, Stephen Harper, and has signed the Trans-Pacific Partnership, a trade accord among 12 Pacific nations. The Liberals have already kept their promise to cut income tax for the middle class, and pay for that with an increase for top earners. The budget does not raise corporate-tax rates, which remain comparable with those of Canada’s competitors. + +The aim seems to be to maintain Canada’s commitment to globalisation, but to give it a human face. With Donald Trump whipping up resentment across the border among Americans who feel left behind, Mr Trudeau is eager to keep anger and populism at bay. “A lot of what I worry about is that ordinary folks are going to withdraw their support for the growth economy,” said Mr Trudeau to a business audience in New York last week. The median income of the middle class has not risen in 30 years, he noted. Confidence in the economy is at its lowest point in 20 years, according to a recent poll. + +With total revenues of C$300 billion, the federal government’s capacity to lift the C$2 trillion economy is limited. The budget’s impact will be modest, says Craig Alexander of the C.D. Howe Institute, a think-tank. Still, most economists support deficit spending at a time when borrowing rates are low and the economy is weak. The question is: will Mr Trudeau know when to stop? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21695579-new-prime-minister-begins-make-his-mark-globalisation-human-face/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The United States and Cuba + +An American invasion + +Barack Obama brings a message of friendship and human rights + +Mar 26th 2016 | From the print edition + + + +FOR more than half a century Fidel Castro ordered Cubans to be prepared to resist an American invasion. When it finally came this week it took the peaceful and friendly form of President Barack Obama, his wife and daughters, nearly 40 members of Congress and some top business leaders. Even so, many residents of Havana, Cuba’s capital, had to pinch themselves when they saw Air Force One fly over the city on March 20th and the “Beast”, as Mr Obama’s armoured limousine is dubbed, ply the streets. Cubans turned out spontaneously to greet him. + +Mr Obama’s visit could truly be called historic. It set the seal on his dramatic move to restore diplomatic relations with the communist island and to loosen the economic embargo imposed in 1960 after Fidel Castro’s revolution. + +In 48 hours of walkabouts, meetings and speeches, the American president delivered the same message, politely and respectfully, but firmly: that he had come to “bury the last remnant of the cold war in the Americas” and “to extend a hand of friendship to the Cuban people” but also to make plain that Cuba needs to change. + +Raúl Castro, Fidel’s brother and Cuba’s president since 2008, treated Mr Obama with warmth and stressed that both sides should respect their differences. He also called for the lifting of the embargo (only the United States Congress can do that) and for the return to Cuba of the naval base at Guantánamo Bay. + +Mr Obama’s message rang out most clearly in the speech he gave on March 22nd in Havana’s newly renovated Grand Theatre, the same venue where the last sitting American president to visit Cuba, Calvin Coolidge, spoke 88 years ago. Mr Obama voiced his support for the right of Cubans “to speak their mind”, to “protest peacefully” and “to choose their governments in free and democratic elections”. + +The speech was broadcast live to the Cuban nation. So was a press conference the previous day at which Mr Castro crustily replied to a question about political prisoners by saying “give me the list right now” and he would order their release. Human-rights groups responded by circulating lists of 40 or so on social media. Mr Obama later met with dissidents, some of whom had been briefly arrested hours before his visit. + +Mr Obama’s Cuba opening is popular at home. Some of his Republican opponents criticised the visit as cosying up to America’s enemies. That is to understate its significance. It was the first time that a visiting head of state in Cuba has called so openly for democracy. Mr Obama may well have planted a seed that will germinate after Mr Castro steps down in 2018. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21695574-barack-obama-brings-message-friendship-and-human-rights-american-invasion/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +The drama of Lula + +A working-class hero’s sad fall from grace + +Mar 26th 2016 | From the print edition + + + +“I NEVER had access to formal study, as Brazilians know,” wrote Luiz Inácio Lula da Silva in an open letter to the supreme court this month. “I’m not a doutor, lettered or with great knowledge of the law,” he wrote. “But I know, like every human being, how to distinguish between right and wrong, what is just and unjust.” It was vintage Lula, reminding poorer Brazilians that he is one of them, that like them he suffers injustice meted out by the lettered classes, and that he, like them, is an honest man. But is he? + +The missive was part of an increasingly desperate defence by Brazil’s most important politician of this century. Two years after they began investigating a hydra-headed $2.5 billion corruption scandal at Petrobras, the state-controlled oil company, prosecutors are closing in on Brazil’s former president. They think he took gifts from construction companies involved in the Petrobras bribery scandal, which he vehemently denies. + +Lula has been charged with concealing ownership of a beachside apartment. Sérgio Moro, the judge leading the probe, had Lula briefly detained to answer questions about that, as well as a country retreat and donations to his institute. Lula insists the properties were borrowed and the donations above board. On his release, he pledged a political campaign to clear his name. Mr Moro then published tapes of his phone calls to allies. In often profane language, Lula cries persecution and accuses the supreme court of cowardice—prompting the emollient open letter. + +Only a few years ago he could do no wrong. Born in a dirt-poor family in the north-east, as a child he sold oranges and peanuts on the street. He first came to his country’s notice as the fiery leader of strikes by carworkers during Brazil’s military dictatorship. Having founded the left-wing Workers’ Party (PT), he was elected president, at the fourth attempt, in 2002. + +In office he combined the pragmatism of a trade-union leader with a determination to help Brazil’s poor. Unlike Hugo Chávez he didn’t harass business. Instead, he decreed big increases in the minimum wage and in social programmes. Helped by a commodity boom, it worked. In eight years 30m left poverty. With his homespun phrases and quick wit, Lula had a unique rapport with ordinary Brazilians. He became a global symbol of progressive social change. “He’s my man,” gushed Barack Obama. Lula left office with an 83% approval rating, having secured the election of his hand-picked successor, Dilma Rousseff, a politically clumsy bureaucrat. + +So where did it go wrong? On leaving office Lula returned to his modest flat in São Bernado, a suburb of São Paulo. He became an ambassador for Brazilian business, especially the construction companies. He charged around $100,000 a pop for lectures. That is half the going rate for the likes of Bill Clinton or Tony Blair. But prosecutors say he received $8m in all, and they doubt all the lectures took place. At the least Lula showed poor judgment in drawing so close to the construction magnates. But was it worse than that? The prosecutors have not so far proved that he has taken gifts through corrupt dealings with Petrobras. + +André Singer, a political scientist who once worked for Lula, calls Mr Moro, other judges, the prosecutors and their allies in the media the “Party of Justice”. It has long had Lula in its sights, holding him ultimately responsible for the scheme to funnel tainted cash from Petrobras to the PT and its allies. Lula denies that. His supporters see in such allegations the class hatred that he has always inspired among the better-off, for having grabbed power from them. + +Lula is far from the first working-class hero to enjoy the good things in life. He is in part a victim of his own hubris. He developed his own hatred of the centre-right opposition. He sought to isolate it by polarising politics between “the people” and the “neoliberals” and by engineering a ramshackle coalition of opportunists. PT officials were convicted of paying bribes to allies in an earlier scandal. Cornered over this in his first term, he fought back. But iron had entered his soul. + +Whether or not he is guilty, Lula has lost respect. According to Datafolha, a pollster, 57% of respondents disapprove of him. That may preclude a return to the presidency. The PT is set for big losses in mayoral elections in October. But at 70, Lula is not finished. His political skills are still unrivalled. “I’m the only person who could set this country on fire,” he told an ally on the tapes (adding that he didn’t want to). Brazil is in for a long fight between the Party of Justice and the leader who has most powerfully embodied the cause of social justice. The tragedy is that they are not on the same side. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21695576-working-class-heros-sad-fall-grace-drama-lula/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +New political drama in Australia: Turnbull’s big gamble + +Money laundering in the Philippines: Walls of silence + +Relations between China and Taiwan: The Gambia gambit + +South Korea and wartime sex slaves: Kindred spirits + +The South China Sea: China v the rest + + + + + +Articles Sections Next + +New political drama in Australia + +Turnbull’s big gamble + +The prime minister threatens an early election in a bid to stamp his authority + +Mar 26th 2016 | SYDNEY | From the print edition + + + +RIGHT after Malcolm Turnbull defenestrated his Liberal Party boss last September, Australia’s new leader, the fourth prime minister in three years, promised “substantial change” and a “different style of leadership” to that of Tony Abbott, his ousted predecessor. In place of the division and dysfunction of Mr Abbott’s time as prime minister, Mr Turnbull would be a unifying force, promoting sound policy while dragging politics back to the centre ground. After Mr Abbott’s rightist demagoguery, Mr Turnbull would lead through “advocacy, not slogans”. + +Australians cheered, and the approval ratings of the government that the (conservative) Liberals lead in coalition with the smaller National Party leapt. Mr Turnbull talked of a new dawn. Yet until recently the sun has shone upon the not much new. Mr Turnbull has struggled to assert his authority and carry out his promises. + +One problem lies in the Senate, where eight senators representing tiny parties, including the Australian Motoring Enthusiast Party (mission: to safeguard people’s right “to modify and restore vehicles based upon their own freedom of expression”), hold the balance of power. Another is that the Liberal Party’s rifts remained unhealed, with Mr Abbott and allies continuing to snipe from the backbenches. + +Mr Turnbull, a former investment banker and businessman, has made a few policy strokes. For instance, he wants legislation to curb anti-competitive business conduct, calling it a “long overdue reform”, a pointed swipe at Mr Abbott, who avoided the issue. But his promised plans to reform taxes remain confused. At first, his government signalled raising the goods and services (consumption) tax from its present rate of 10%, and lowering income taxes. It then seemed to drop both ideas. Mr Turnbull now says his tax plans will be revealed in the government’s forthcoming budget. + +Meanwhile, despite being a social liberal, he has pulled his punches on issues he had hitherto promoted, including gay marriage, which two-thirds of Australians support. Mr Turnbull favoured a simple parliamentary vote on same-sex unions. But now he has stuck to Mr Abbott’s proposal of a plebiscite to gauge public opinion, and to hold it after the next election. One estimate puts the cost at A$525m ($399m). + +He is paying the price for apparent drift. An opinion poll on March 21st gave the government just a two-point lead over the opposition Labor Party. As for Mr Turnbull’s own approval as prime minister, it has sunk to 39%, from 60% in November. His lead as preferred prime minister over the leader of the Labor Party, Bill Shorten, has also narrowed. + + + +Daily chart: Australia struggles to bring equality to its indigenous population + +Yet in the past few days Mr Turnbull has embarked on a series of canny steps designed to break the Senate logjam, set his stamp on his own party and keep the opposition off balance. On March 18th he won approval from Parliament to simplify the convoluted system of proportional representation under which Australians elect the Senate. The power of independents and so-called micro-parties has grown. They have learnt to use vote-swapping deals at elections to increase their numbers in the Senate. There they have blocked government legislation they dislike. But now the prime minister has won support from the Australian Greens, with ten senators, to push through changes that a parliamentary committee recommended two years ago. Rather than being bound in Senate elections by second-preference votes that parties allocate, voters will now be free to specify their own order of voting. + +Mr Turnbull called that and related changes a “great day for democracy”, by which he really meant for the bigger parties, since smaller ones will struggle in future to muster enough votes to qualify for a Senate seat. Two micro-party senators have launched a High Court appeal against the changes, but Mr Turnbull sounds confident that it will fail. + +Now to the polls + +Soon after Parliament voted on the Senate changes, it adjourned. It was due to return for the government to present its budget on May 10th, ahead of an election that was widely expected for September. Yet Mr Turnbull’s next move, on March 21st, suggested that the campaign has begun already. The prime minister called a press conference to declare that he would recall Parliament three weeks early, in order, he said, to consider legislation to police the building industry and the unions that play a powerful part in it. (The industry harbours two-thirds of Australia’s industrial disputes.) He wants to re-establish the Australian Building and Construction Commission that the previous Labor government abolished. Last year in the Senate, Labor, the Australian Greens and independents defeated a move by the Abbott government to bring the commission back. A second Senate defeat would give Mr Turnbull a constitutional trigger for a rare “double dissolution” of both houses of Parliament and an election, on July 2nd. + +The timing of Mr Turnbull’s move took nearly everyone by surprise, as did his September coup against Mr Abbott. In the House of Representatives, Mr Shorten declared that it was a mark of a government in “full panic mode”. But the prime minister will claim the high ground by accusing Labor of being beholden to unions. As for the Senate, the new voting rules give him a better chance than before of winning control of the chamber. + +Still, it all remains a gamble for Mr Turnbull. The unresolved divisions in his party are just one symptom of what Stephen Loosley, a former Labor senator, decries as the “indulgent politics” of both sides. And should the Senate reforms work his way, then, for the second time, Mr Turnbull will need to convince Australians that he is the one to change the political culture. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21695553-prime-minister-threatens-early-election-bid-stamp-his-authority-turnbulls-big-gamble/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Money laundering in the Philippines + +Walls of silence + +Bank thieves pick just the place for washing their money + +Mar 26th 2016 | MANILA | From the print edition + +Enter here, and vanish + +FROM the air, rich Chinese flying into the Philippines to gamble or Filipinos flying out to work overseas for a living can see the distinctive Solaire Resort and Casino beside the murky waters of Manila Bay. It was into these auspicious premises in early February that a money-remittance company, Philrem, moved about $60m stolen from Bangladesh’s central bank, delivering over half of it in cash. The money was part of $101m taken, of which $81m ended up in the Philippines. In all, only $20m has so far been recovered. + +Once behind the walls of the Solaire Resort, the swag disappeared, converted into untraceable gambling chips (other money went to an online gaming firm). “Our money trail ended up at the casinos,” the executive director of the Philippines’ Anti-Money Laundering Council (AMLC), Julia Bacay-Abad, has told a Senate committee holding public hearings into the case. + +The AMLC picked up the trail behind the frosted-glass frontage of a branch of Rizal Commercial Banking Corporation (RCBC) in the country’s financial centre, Makati, in the capital of Manila. There, the Senate committee was told, the branch manager used what may have been dummy accounts to receive the stolen money and then transferred it to the remittance company. The manager refused to answer many of the committee’s questions for fear of incriminating herself, and her superiors refused to answer some because the law protects the secrecy of bank accounts—even, it seems, fake ones. + +If the senators failed to get the answers they wanted, they knew why. In 2013 Congress amended the Anti-Money Laundering Act. The amendments were only tough enough to ensure that an international watchdog, the Financial Action Task Force, would not put the Philippines on its blacklist of untrustworthy countries—for that would have constricted the flow of remittances from millions of Filipino migrant workers that keeps the economy afloat. Casinos were specifically excluded from the new legislation and are consequently exempt from reporting on their operations or on specific players. + +As it stands, the law suits the political establishment nicely. In her column on March 18th the editor of the Philippine Star, Ana Marie Pamintuan, described the Senate as the “upper chamber of the nation’s biggest and most successful Laundromat”—encapsulating the insalubrious entanglement of money and politics in the Philippines, as politicians take from the public purse and wash the money clean. + +But as domestic and international condemnation has grown about how the stolen money was laundered through the Philippines, the country’s gaming regulator says he is amenable to the AMLC extending its reach to the casinos. The governor of the central bank also laments the Philippines’ lax regime to counter money laundering. A government spokesman, on the other hand, appeared unruffled by the disappearance of the loot. “On the whole,” he explained helpfully, “you can see the system is working.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21695555-bank-thieves-pick-just-place-washing-their-money-walls-silence/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Relations between China and Taiwan + +The Gambia gambit + +China resumes an old diplomatic game + +Mar 26th 2016 | TAIPEI | From the print edition + + + +TAIWAN and China, which claims the independent island-nation as part of the motherland, used to play a joyless slogging game called “dollar diplomacy”. In it each side competed with lorry-loads of cash and other inducements to get small, impoverished and often ill-run nations to switch their diplomatic allegiance. It was a game that Taiwan was steadily losing until, as a gesture of goodwill on the ascension of a China-friendly president in Taiwan, Ma Ying-jeou, China suddenly suspended it in 2008. The score: Taiwan 22, China 172. + +Yet on March 17th China suddenly resumed play, by establishing diplomatic ties with Gambia, once a Taiwan ally. Mr Ma was on a state visit to Belize, one of Taiwan’s surviving friends, when the news broke. He said it was very wrong. In Taiwan there was outrage. The mainland affairs ministry said China’s move ran contrary to the mutual trust that Taiwan and China had built up over eight years. + +But the game is being played not against him, but rather against his successor, Tsai Ing-wen, who takes office on May 20th. So far as China is concerned, the trouble with Ms Tsai is that she heads a party, the Democratic Progressive Party (DPP), that unlike Mr Ma’s Kuomintang is committed, at least on paper, to Taiwan’s declaring formal independence. + +No matter that Ms Tsai, a low-key former trade lawyer who won the presidential election in January in a landslide, has gone out of her way to reassure not just China but also the United States that she intends to pursue peace and stability across the Taiwan Strait. That is in stark contrast to her firebrand predecessor from the DPP, Chen Shui-bian, who was president from 2000 to 2008 (and then jailed for corruption). Under Mr Chen, cross-strait relations reached a nadir. His studiously provocative championing of Taiwan’s independence even strained Taiwan’s ties with the United States, its defender. + +Yet the sticking point for China is that Ms Tsai has to date refused to concede to Chinese demands that her government-in-waiting accept that Taiwan is loosely part of China. This is often referred to as the “1992 consensus”, in which both sides agreed that there was but one China, even though each disagreed over what exactly that was. The Communist and proudly atheist government in Beijing is so in thrall to this belief system that it threatens invasion should formal independence—ie, an end to the pretence that there is only one China—ever be declared. To date, Ms Tsai has avoided even saying that a consensus was reached in 1992. + +It is not certain that the diplomatic game will now resume with full intensity. Gambia, an impoverished west African dictatorship, actually severed ties with Taiwan in 2013. It was China that for three years respected the truce and turned down Gambian requests for ties. Recently Gambia got the signal and began learning the script. Shortly after its foreign minister, Neneh MacDouall-Gaye, signed the papers in Beijing with her counterpart, Wang Yi, she declared that her country looked forward to the peaceful reunification of China and Taiwan. + +Now, says George Tsai, a political scientist (unrelated to the president) at the Chinese Culture University in Taipei, the Taiwanese capital, the ball is in Ms Tsai’s court. China, he says, will wait for her inauguration speech for signals about her intentions. If the speech does not, in the eyes of Chinese leaders, rehearse an acceptable catechism, the diplomatic game could fully resume, or worse. “We absolutely will not allow…national separation,” thundered President Xi Jinping recently. + +A former DPP vice-minister, Tung Chen-yuan, highlights how mismatched the two sides now are. In 1992 the mainland’s GDP was 1.9 times larger than Taiwan’s. By 2014 the gap between the two economies had widened to nearly 20 times. These days China gets to set the conditions that Taiwan is expected to meet if good relations are to exist. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21695563-china-resumes-old-diplomatic-game-gambia-gambit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +South Korea and wartime sex slaves + +Kindred spirits + +A bestselling film on a subject shunned by most producers strikes a chord + +Mar 26th 2016 | SEOUL | From the print edition + +The hard road to China + +“I HEARD we are all going to a shoe factory,” says one of the terrified teenage girls in the film hopefully, huddled on the floor of a train bound for north-eastern China in 1943. In pastel linen dresses, and recently taken from their homes by soldiers of the Japanese imperial army, the captive girls will soon be beaten and raped repeatedly in a “comfort station”, one of the hundreds of military brothels that were set up to cater to soldiers in Japanese-occupied territory during the second world war. + +Up to 200,000 women, mainly Korean and Chinese, but also including many South-East Asians and a few Dutch and Australians, were enslaved. It remains a source of deep resentment for South Korea, and has long been at the heart of its troubled relations with Japan. There the shrill voices of historical revisionists, who dispute that women were coerced—there were, after all, also volunteers from Japan and elsewhere—have grown louder in recent years. And then not all South Koreans acknowledge that much of the recruitment was carried out by Korean community leaders and unscrupulous operators. + +“Spirits’ Homecoming” is a moving portrayal of these girls’ tragic and sometimes short lives, based on testimony from survivors (44 Korean “comfort women” remain alive today). It is set against glorious (South) Korean countryside, and overlaid with the country’s best-loved folk songs. It is true that most of the Japanese soldiers are depicted as brutes, as with nearly all South Korean films about Japan’s colonial occupation of Korea. But some Japanese are treated as victims too. Gentle Tanaka comes to the brothel, but he does not touch Jung-min, the film’s battered 14-year-old protagonist. Instead he offers kind words and eventually a map to help her escape. + +South Korean blockbusters typically cast Koreans with jarringly bad accents in Japanese villains’ roles. Mr Cho has used native Japanese speakers, among them zainichi, ethnic-Korean Japanese. Right-wing groups in Japan have tried to smear such actors online. The film has had over 3m viewers since it opened a month ago, a remarkable success for an independent feature film in South Korea. Having taken 14 years to make, it has been spurned by mainstream production houses and distributors because of its difficult subject matter. In the end its director, Cho Jung-rae, relied on the contributions of over 75,000 individuals for about half of his funding, including from many Japanese. + +A deal struck in December between the governments of South Korea and Japan to make amends to Korean women forced into prostitution has revived interest in their plight. For others, it is all too close to the bone still. Hong Ji-yea, an office worker, says she bought a ticket to support the film but was “not brave enough” to watch it. A friend who teaches young army officers gave hers and others’ tickets to her students. Ms Hong says that she hopes they might reflect on how difficult it is to stay human in war. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21695568-bestselling-film-subject-shunned-most-producers-strikes-chord-kindred-spirits/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The South China Sea + +China v the rest + +As the sea becomes more militarised, the risks of conflict grow + +Mar 26th 2016 | From the print edition + + + +FOR years China has sought to divide and rule in the South China Sea. It worked hard to prevent the countries challenging it over some or all of its absurdly aggrandising territorial claims in the sea from ganging up against it. So when tensions with one rival claimant were high, it tended not to provoke others. + +Not any more. In a kind of united-front policy in reverse, it now seems content to antagonise them all at the same time. This is both encouraging closer co-operation among neighbours and driving them closer to external powers including India, Australia, Japan and, above all, America. + +The latest fight China has picked is with a country with which—unlike Brunei, Malaysia, the Philippines, Taiwan and Vietnam—it has no territorial dispute: Indonesia. On March 21st the chargé d’affaires at China’s embassy in Jakarta was hauled in to receive a stiff protest. A Chinese coastguard vessel had rammed free a Chinese fishing boat as it was towed into port after being caught allegedly fishing in Indonesian waters. The crew of eight was already in detention. In a similar incident three years ago, Indonesia released detained crew members when confronted by an armed “maritime law-enforcement” vessel belonging to China’s fisheries bureau. + +Since that incident Indonesia has elected a new president, Joko Widodo, one of whose trumpeted policies has been to look after the interests of fishermen. To deter illegal interlopers, Indonesia now impounds and blows up foreign vessels caught poaching. In this case, it seems clear that the Chinese were in Indonesian waters. Indonesia claims that the boat was just four kilometres off the Natuna islands, well within Indonesia’s 12 nautical-mile territorial limit, let alone its 200-nautical-mile “exclusive economic zone” (EEZ). + +China explicitly acknowledges Indonesian sovereignty over the Natunas. Yet instead of apologising, China’s foreign ministry demanded the fishermen’s release, claiming that they had been carrying out “normal operations” in “traditional Chinese fishing grounds”. China is a party to the UN Convention on the Law of the Sea (UNCLOS), under which countries are entitled to territorial waters and EEZs. Yet the government’s implicit argument is that a self-proclaimed “tradition” trumps international law. By extension, with 5,000 years of sacred history touted ad nauseam by its Communist Party leaders, who is to deny China anything it wants? + + + +China’s tradition-based argument also has implications for its “nine-dash line” (see map) delimiting its claim to virtually all of the South China Sea (and passing just north of the Natunas). It would suggest China believes it has rights over not just land features inside the line, and their territorial seas and EEZs, but also over all the water itself—a concept alien to UNCLOS. + +Flaky claims, fake islands + +China has declined to explain how its claims fit within UNCLOS parameters. Indeed it has a record of flouting the law and international agreements when it comes to the sea. In 2002 it signed a joint declaration with the ten-member Association of South-East Asian Nations, in which the parties undertook to “exercise self-restraint” in the South China Sea, and in particular to refrain from occupying uninhabited features such as reefs. That commitment is hard to square with the massive building spree on which China has been engaged for the past two years in the Spratly archipelago, turning seven uninhabitable rocks and reefs submerged at high tide into artificial islands. Vietnam and the Philippines, rival claimants, have naturally been outraged. And this month an American admiral has reported Chinese activity at Scarborough Shoal, north of the Spratlys, that suggests it might be the “next possible area of reclamation”. China bullied the Philippines away from the shoal four years ago. + +The Philippines has asked an international tribunal, the Permanent Court of Arbitration in The Hague, to rule on some of China’s claims under UNCLOS. The court is expected to announce its verdict soon. If it rules broadly in favour of the Philippines, it would have the effect of making clear that China’s nine-dash line has no legal basis. China is boycotting the case and says it will ignore the verdict. The ruling might embarrass China. But it will not stop it creating artificial islands, or indeed make it dismantle those it has already built. + +It seems increasingly likely that the islands will have a military purpose. China denies that, but it is hard to see why else it needs the long airstrip it is building on the Fiery Cross reef in the Spratlys. It is in this context that the threat of building at Scarborough Shoal causes such alarm. China has controlled the whole of the Paracel chain in the north of the South China Sea since 1974, when it drove out the former South Vietnamese from part of it. It has recently installed missile batteries on Woody Island there. In the Spratlys to the south it is building what look like potential air and naval bases, complete with military-grade radars. Scarborough Shoal would complete a “strategic triangle” that would allow it to dominate the sea. China is widely expected one day to declare an “air defence identification zone” over the sea, as it has over parts of the East China Sea, including areas contested with Japan. + +Aggressors rarely see themselves as such. Indeed China accuses the United States of being the driving force behind the “militarisation” of the sea. Certainly America is responding to Chinese moves. Last year it resumed naval “freedom of navigation” operations, sending warships close to disputed features. This month it sent an aircraft-carrier strike group into the sea. American naval and marine-corps commanders have been in Vietnam to explore co-operation. Worse, from China’s viewpoint, American forces have just obtained access to five Philippine bases, including an airbase on Palawan, just opposite the Spratlys. For this, China’s official news agency accused America of “muddying the waters” and “making the Asia-Pacific a second Middle East”. + +China will not be deterred, confident that America is unlikely to risk a serious crisis, let alone conflict. China’s throwing its weight around in the sea erodes America’s credibility as the pre-eminent military power in the western Pacific, but does not directly threaten it. By contrast, rather than cow China, America’s enhanced military role gives it a pretext to carry on with its build-up. There is still the danger, however, of an accidental flare-up—a skirmish over illegal fishing, for example, and an ensuing escalation. Armed conflict in the South China Sea is a long way from being inevitable. But it is far from unthinkable. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21695565-sea-becomes-more-militarised-risks-conflict-grow-china-v-rest/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Urbanisation: Reform’s big taboo + + + + + +Articles Sections Next + +Urbanisation + +Reform’s big taboo + +An ambitious plan for social change has run into trouble + +Mar 26th 2016 | CHONGQING | From the print edition + + + +“I LIKE it here,” says Zhang Xiaojie, as she surveys the crowds scurrying below her spick-and-span apartment. Migrant workers bend under sacks of flour or lug around huge circular saws for use on the building sites where they work. Young professionals crowd into a local restaurant. Ms Zhang, a young information-technology officer, is one of millions of people from the countryside who have flocked for work to Chongqing, a province-sized “municipality” in south-western China (its core city has the same name). She looks around at a forest of 30-storey tower blocks, all built and run by the local government, and smiles: “It’s a good place to live. The government has done a pretty good job.” + +Chongqing is the setting for China’s most ambitious social reforms. They are aimed at keeping economic expansion going while ensuring that the huge social changes unleashed by growth do not perpetuate inequalities, or foment unrest. Some 250m people have moved from the countryside to cities, the greatest migration in history. Millions live in dormitories or doss down where they can. Most have no formal contracts with their employers, and are denied access to urban public services such as subsidised education and health care. As the country’s growth slows, the Communist Party hopes migrants will play an even bigger role in boosting the economy, not just by toiling in factories, but by joining the middle class and spending their new wealth. So it is looking for ways to improve their lot. + +For several years, Chongqing’s efforts to achieve this have gone further than anywhere else in the country. Though called a municipality, Chongqing covers an area the size of Scotland. Around 12m of its residents are villagers; another 18m live in the core city and other widely scattered towns. As elsewhere in China, the urban population has been growing fast thanks to a rapid influx of migrants (some are pictured). To manage this better, Chongqing persuaded the central government nine years ago to let it test out new ways of handling the newcomers and of making good use of the land they leave behind. The municipality’s special political status may have helped: it ranks on a par with Beijing and Shanghai. + +Under Bo Xilai, a now-imprisoned rival to President Xi Jinping, the municipality’s government touted what admirers called the “Chongqing model”. This involved three main initiatives. First, the government said it would build 40m square metres of housing in the decade to 2020 for rent to the urban poor, including rural migrants. To be eligible, tenants had to earn less than 1,500 yuan (now about $230) a month. It was a big undertaking: governments elsewhere in China are reluctant to spend money on housing migrant workers. Chongqing set the rent at about 60% of comparable private properties and allowed tenants to buy their homes after living in them for five years. + +Next, the government said it would give full urban status to 10m migrants, meaning they would get access to subsidised urban health care and education (typically, these services are available only in the place of one’s household registration, or hukou—usually the place of birth of one’s mother or father). Third, the government announced changes to the urban-planning system to allow land left behind by migrants to be traded for use in building new houses and offices. That was a breakthrough in a country that still officially disapproves of selling farmers’ property. + +The reforms are unique in scale and coherence. By providing housing, they aim to attract migrants and thus expand the urban labour force. By offering migrants better access to public services they aim to make life in cities fairer and thus more stable. By introducing a land market, they hope that migrants will arrive with cash in hand. If the reforms work, they should have a range of benefits, from reducing the loss of farm land to eroding age-old urban prejudice against farmers and, vitally for the economy, fuelling urban consumption. + +Breaking down barriers + +The most promising and controversial of the reforms involves the trading of rural land, at a price set by the market. Urban China is used to free trade in property, but in the countryside farmers are not allowed to sell their homes, nor the land they till. The idea of revising Mao’s hallowed notion of “collective” ownership of rural property remains all but taboo. + +That creates problems. As people move, they often leave houses in the countryside unoccupied. Chongqing’s reform allows land used for housing in faraway villages to be converted to use for farming, and a corresponding amount of farmland near towns to be used for urban expansion. The aim is to promote urbanisation, while slowing the rate at which Chongqing loses arable land. (National self-sufficiency in food is one of the party’s obsessions.) + +The reform was intended to be of particular benefit to farmers in remote areas, who would otherwise have no opportunity to benefit from land appropriations, which usually occur on city margins. Sometimes the compulsory acquisition of rural land for construction is carried out violently, with farmers receiving little or no compensation. Chongqing’s system aims to make this fairer. Farmers who want to sell their rights to their village land are given what is called a land ticket, or dipiao. Developers who want to build, say, a 10-hectare (25-acre) project on farmland, can buy 10-hectares’ worth of dipiao. They do not have to be tickets owned by farmers on that very plot. The farmers get to keep 85% of the sale price of the dipiao. Their village administrations get the rest. + + + +This new market allowed the trading of land-use rights to rise from nothing in 2008 to over 3,500 hectares’ worth in 2011 (see chart). Since then the amount traded annually has levelled out at around 1,300 hectares, worth roughly 4 billion yuan. The market has enthused villagers. In Wulong county, about three hour’s drive from the main city, the office in charge of dipiao trading is literally knee-deep in applications from farmers who want to sell. + +Chongqing’s reforms have helped its economy. Rural migrants attracted by cheap housing, health and education have provided a ready supply of labour for the municipality’s fast-growing car- and computer-making industries (Chongqing is the world’s largest maker of laptops). Doubtless the lure of good wages in these factories would have drawn many farmers into urban areas anyway. But Chongqing’s economy has performed better than many other inland cities; for the past five years its GDP growth has been about three points above the national average. + +The reforms may also have helped reduce outbreaks of social unrest. China Labour Bulletin, an NGO based in Hong Kong, says there were 42 known labour-related protests in Chongqing last year, compared with 121 in Shenzhen, a coastal city with half of Chongqing’s urban population. So far, Chongqing has been able to avoid a backlash among holders of urban hukou, many of whom, as elsewhere in China, fear that already strained public services may be overwhelmed if migrants gain more rights. + +And somewhere to park the car, one day + +But the municipality has not fulfilled its promises. Only about 15m square metres of public housing have been built (one project is pictured), half the amount that was supposed to be finished by now. One problem has been the enormous cost. Yang Jirui of Sichuan International Studies University reckons that the municipality has spent about 50 billion yuan building public housing so far and would need another 50 billion to meet its construction target. He says the government may only be able to achieve this by encouraging private developers to do the building, and by offering to subsidise the rents of poorer tenants. The Chinese Academy of Social Sciences calculates that it costs about 100,000 yuan (in total) to provide schooling, health care and other benefits for each rural migrant who becomes eligible to use urban services. For every 1m migrants, that means another 100 billion yuan. + +Another problem has been that many migrants still feel a strong sense of attachment to their rural land, even after they move into the cities. This is because of the entitlement they enjoy by law, as people from the countryside, to farm a family plot and to use a piece of land for their housing. Most farmers jealously guard that right: they see it as a form of insurance should they fail to make ends meet in the cities. Many farmers are reluctant to apply for urban hukou because they fear it would mean having to give up these rights. + +Through no fault of Chongqing’s, distribution of urban hukou has thus fallen far short of the target of 10m. Around 4m migrants have opted to switch their hukou status since 2010. Most are young and better-educated people: those with the best prospects in the cities and the least inclination to keep a rural bolthole. Some families have tried to ensure they have both kinds of documents. Yang Xianlu is a 60-year-old farmer in Wulong county. He says he was offered urban hukou but turned it down. His daughter-in-law and grandson (who work in the main city) have both applied for it, however. If they succeed, he says, the family would have the best of both worlds. + +To calm migrants’ fears about taking urban hukou, Chongqing has offered concessions: it has granted farmers who apply for ita three-year grace period during which they may change their minds. It has also allowed new holders of urban hukou to retain their farming rights—certainly the best of both worlds. In September 2015 it went further still, giving holders of rural hukou access to most urban social services. This sharply narrowed the formal difference between urban and rural dwellers. + +Similarly the dipiao system has not taken off as initially expected. Some officials had hoped it would eventually develop into a genuine free market for rural property: if the dipiao system was seen to work on a small scale, they figured, scruples about selling collective land might be overcome. But again, through no fault of their own, the dreams of Chongqing’s reformers have not been fulfilled. That is because officials in Beijing remain nervous of big land reform. Many officials are haunted by the (unsubstantiated) notion that allowing farmers to trade their property freely might prompt millions of them to sell up and move into cities, with no place to return to if they fail to prosper. + +Recently, there has been a bit of belated encouragement from on high. In January the finance minister, Lou Jiwei, said other places could try out dipiao trading. President Xi also paid a visit to Chongqing that month. It was the first by a Chinese president since the municipality’s reforms began, and was widely interpreted as a sign of his endorsement of Chongqing’s efforts. But neither men expressed full-throated support for the reforms. Mr Xi likely fears that promoting them may impose crippling financial burdens on local governments and unleash yet more uncontrollable social forces. He may be a leader of enormous power, but he is afraid to use it to make the changes China most needs. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21695556-ambitious-plan-social-change-has-run-trouble-reformu2019s-big-taboo/print + + + + + +Articles Sections Next + + + + + +Middle East and Africa + + + + +Oil and the Gulf states: After the party + +Yemen: Fighting to a standstill + +The Kurds: Containing multitudes + +Apostasy and Islam: Not advised + +Unrest in Ethiopia: Grumbling and rumbling + +Press freedom in east Africa: Pencil blunted + + + + + +Articles Sections Next + +Oil and the Gulf states + +After the party + +The low oil price is manageable in the short term; but the Gulf states must make big changes to face the future + +Mar 26th 2016 | DUBAI AND MUSCAT | From the print edition + + + +FAST cars whizz around, malls are full of expensive luxuries and cranes dominate the skyline. But scratch the shimmering surface of the Gulf and you soon find countries hurting from the low oil price, currently around $40 a barrel. Growth is slowing and unemployment is rising. Policymakers even dare utter a three-letter “t” word until recently taboo: tax. + +Oil is central to the six Gulf Co-operation Council (GCC) states, which have used the windfall of the past few years to spend lavishly. Unlike many oil exporters, such as Nigeria and Venezuela, they have high foreign-exchange reserves and low debts to cover short-term gaps. But public spending is generous and the private sector is heavily reliant on oil to boot. To be sustainable in an era of lower prices, the rulers must change the structure of their economies. + +The IMF reckons the lower oil price knocked $340 billion off Arab oil-exporting states’ government revenues in 2015. This year is looking worse. Moody’s, a ratings agency, this month downgraded Bahrain and Oman and put on watch the other four GCC states: Saudi Arabia, Kuwait, the United Arab Emirates (UAE) and Qatar. “It’s the end of an era for the Gulf,” says Razan Nasser of HSBC in Dubai. “And we’re only just starting to see the effects.” + +Oil receipts typically account for more than 80% of GCC government revenues, rising to over 90% of Saudi Arabia’s budget before the crisis. Dubai, one of the emirates making up the UAE, is an exception, with oil accounting for only 5% of revenues. That is because it has successfully diversified: tourism and services account for most of its government revenues. + +Governments are reacting to the squeeze on their incomes with a mixture of strategies, drawing down reserves and taking on debt on the one hand, and imposing spending cuts on the other. Last year they made tweaks, such as curbing benefits for public servants. This year will be tougher. Oman has told all state-owned enterprises to remove perks such as cars. Qatari companies including Al Jazeera and the Qatar Foundation, a cultural organisation, have laid off employees. With such tweaks Kuwait, the UAE and Qatar, which have small populations and high foreign-exchange reserves, can get by for a decade. + + + +But the other three states are in a trickier position. Oman and Bahrain have relatively low reserves. Oman posted a larger than expected budget deficit in 2015, at almost 16% of GDP. By the end of 2017 Bahrain’s debt is expected to reach 65% of GDP. It needs an oil price of $120 to balance its books. The two have other concerns, too. Bahrain’s Shia-majority population bristles at being ruled by a Sunni monarchy. There is a lack of leadership in Oman; Sultan Qaboos is, again, in Germany being treated for suspected cancer. + +Observers are particularly concerned about Saudi Arabia, which Barack Obama will visit to meet Gulf leaders next month. It has huge foreign-currency reserves—roughly $740 billion at the end of 2014—but is drawing them down at a clip, taking out about $115 billion in 2015. At 30m, its population is the Gulf’s biggest, and it has a sprawling royal family to pamper. + +Happily, predictions that the oil price will not rise quickly are focusing minds on all sorts of structural reforms. “This is good for the Gulf; it will be a rich period for policy-making,” says Nasser Saidi, an economist in Dubai. The UAE cut fuel subsidies last year, and other states are following suit. Bahrain removed subsidies on some food items. Saudi Arabia raised the cost of electricity and water. Oman is printing the cost of the fuel subsidy on household electricity bills to prepare the population for paying the whole lot. + +But with real prices now near the subsidised prices, there is less room for savings from cuts than there was a few years ago. And outgoings remain high. It is not just that the Gulf states are committed to large infrastructure projects—metros, financial centres, ports and railways. They spend billions of dollars on wages and handouts to their rapidly growing populations. The relatively young states need to spend cash on education. And they are embroiled in costly wars in the region. + +Making matters worse, cuts in spending affect the nascent private sectors where, apart from the UAE and Bahrain, most activity is linked to oil, such as services to the industry; and to public spending, such as construction. Economic growth is slowing. “The lack of countercyclical measures is amplifying the pain,” says Ms Nasser. Banks are getting tougher on loans just when the state wants to encourage more small businesses. By some reckonings, the private sector in the Gulf contributes less to GDP now than in earlier decades. + +The GCC countries need to do much more if the books are to balance in the future. Diversification, long talked about, has to happen now, although it is harder to do it in bad times. Plans look good on paper—encouraging tourism and logistics, for example—but more uncertain in real life. Saudi Arabia is not keen on Westerners trampling around the kingdom. + +A modest value-added tax, long discussed, of up to 5%, will be introduced across the region by 2018. Oman has raised corporate tax from 12% to 15%. Other states are considering taxing expatriates’ incomes. But above all, the public sector has to stop acting as the main employer. That would be a big shift. Gulf citizens have got used to earning without doing much. Private firms are not creating enough jobs to keep up with the number of young people graduating from university, and large expatriate workforces provide tough competition. Gulf rulers fear that cutting spending would alter the social contract in which largesse buys their people’s quiescence. + +But they have no choice. A new generation of younger leaders, such as Saudi Arabia’s Muhammad bin Salman and Muhammad bin Zayed in the UAE, are more willing to make tough changes. The GCC states have had an amazing few years in which they built up infrastructure and saved. But they did too little to prepare for a post-oil future. Now they must catch up. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695539-low-oil-price-manageable-short-term-gulf-states-must-make/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Yemen + +Fighting to a standstill + +But talk of a ceasefire proves premature + +Mar 26th 2016 | From the print edition + +Little left to save + +AS IS the way of the Middle East, when a ceasefire beckons the fighting intensifies, as the fighters try to press their advantage before the jaw-jaw begins. No sooner had Saudi Arabia talked last week of halting the year-long bombardment of its much poorer neighbour than its air strikes on Yemen resumed. The UN mediator, Ismail Ould Cheikh Ahmed, could barely scramble from Sana’a before the capital was struck. Another hundred Yemenis were killed when bombs struck a market in Hajja, a town near the Saudi border. Further south, the armed Shia group known as the Houthis, which seized the capital along with much of the country in 2014, continued shelling Taiz, a predominantly Sunni city. + +The deaths will probably change little. The battle lines have stayed stubbornly fixed for months. Both sides seem aware that a military victory is out of reach. After a year of bombings, bombs lose their impact. “We forget them in minutes,” says a nonchalant Yemeni. In Sana’a the old city’s once-empty alleyways are crowded again. Somehow markets are full. The electricity grid is entirely down, but a surfeit of solar panels has entered the country. Saudi-backed fighters claim to have lifted the Houthis’ siege of Taiz, but coalition ground-forces seem loth to advance on the capital or the Houthi strongholds further north. And the administration the Saudis have tried to re-establish in Aden, the southern port, is dysfunctional and prone to attack from al-Qaeda. The Emiratis, who play second fiddle to the Saudis, are said to have stopped their patrols. + +Still, preliminary talks are stumbling on. The warring parties are now negotiating directly in Saudi Arabia. Some ten days of meetings led by the Houthi spokesman, Muhammad Abdelsalem, have so far resulted in a cessation of cross-border fighting and Houthi shelling of Saudi border towns, as well as a prisoner swap. Saudi advisers speak of following Russia’s example by grounding most of their warplanes. + +The broad outlines of a political deal, too, seem to be slowly taking shape. The Houthis could offer the government in Aden a refuge in Sana’a, where it would be safe from al-Qaeda. In return the Houthis would gain several key ministries and see their militiamen taken onto the government payroll. The Saudis could claim that they have stopped another neighbouring capital from falling into the hands of Iranian clients,while the Houthis could formalise their presence at the heart of government, much like Hizbullah in Lebanon. + +Such, at least, is the road map. In reality, Yemen is too battered for anything resembling coherence or functioning central government to be quickly re-established. So the population will continue to suffer. In the Arab world’s poorest state, war has cut incomes by almost half. Some 2.5m people have been displaced; around 6,000 killed. The UN says a third of the country’s 21m people are in severe need of food. Other than spur Yemeni loathing for Saudi Arabia, the war has achieved little. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695541-talk-ceasefire-proves-premature-fighting-standstill/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Kurds + +Containing multitudes + +The Kurds have taken advantage of chaos in the region, but remain divided + +Mar 26th 2016 | ERBIL AND GAZIANTEP | From the print edition + + + +AFTER defeating Zuhak, an evil king with serpents sprouting from his shoulders, the Kurds celebrated by lighting the hillsides with fire. The fable is remembered each Nowruz, a holiday marking the start of spring and the new year in late March. The Kurds still celebrate by lighting fires—and, in the case of Kurdish soldiers near Mosul, sending flaming tyres down the hillside toward the trenches of Islamic State (IS). + +The Kurdish forces in Iraq (where they are known as peshmerga) and Syria are the West’s most reliable allies in the fight against IS. They have won important victories in the towns of Kobane, on the Syrian border with Turkey, and Sinjar in northern Iraq. In the process, they have increased and consolidated the territory under their control. Thanks to the chaos created by IS, the Kurds in each country are closer than ever to achieving self-determination. + +Yet a unified Kurdistan spanning the region’s borders is not in the offing. Last month Masoud Barzani, the president of Iraq’s autonomous Kurdistan region, called for a non-binding referendum on independence by the end of the year. Statehood could eventually follow. But in Syria the Kurds’ declaration of a federal region, called Rojava, on March 17th, was framed as a way of holding the country together, not splitting it. Though left out of peace talks, Kurdish leaders say Rojava could act as a model for a decentralised Syria. + +Syria’s Kurds may of course merely be a step behind their Iraqi counterparts on the way to independence. But that would belie the rivalry between the dominant Kurdish parties in each country. The Kurdistan Democratic Party (KDP), led by Mr Barzani, accuses the Democratic Union Party (PYD) in Syria of lacking commitment to Kurdish nationalism. The PYD has close ties to the Turkey-based Kurdistan Workers’ Party (PKK) of Abdullah Ocalan, who believes in a confederation of Kurds, not full independence, within current borders. The PYD and the PKK shun capitalism, while the KDP embraces it, in theory at least. + +The tension is exacerbated by the KDP’s co-operation with Turkey, home to a large and restive Kurdish population. Turkish leaders see the KDP as a palatable alternative to the PKK, which they blame for recent attacks inside Turkey. Mr Ocalan sits in prison, but fighting between the government and Kurds in south-eastern Turkey has reached a bloody peak. By extension, the government takes a dim view of the PYD, which it has prevented from forming a contiguous entity along the border in Syria by bombing Kurdish fighters—and by tacitly helping IS, claims the PYD. + +The PYD portrays Rojava as a democratic and pluralistic place, but the party is accused of monopolising power and, in some towns, of kicking out Arabs. Other Kurdish groups, such as the local affiliate of the KDP, have been sidelined and critics repressed. While maintaining an uneasy truce with the regime of Bashar al-Assad, Syria’s embattled president, the PYD’s soldiers have attacked other rebels, including other Kurds. “For the PYD, everyone is the enemy,” says Sultan Jalaby, a Kurdish journalist who fled Syria for Turkey. + +The KDP has done its share to alienate the PYD, including digging trenches on the Iraqi side of the border with Rojava. Mr Barzani also has critics at home. Over the objections of political rivals, the president’s term in office has been extended indefinitely due to the fight against IS. Many believe his call for a referendum was timed to distract from more pressing problems. The region has been cut off by Baghdad for failing to send oil revenue to the central coffers. Low oil prices, a bloated budget and the influx of nearly 2m refugees and displaced persons have it drowning in debt. + +The Kurds in Iraq and Syria are tightening their grip on disputed territories, such as oil-rich Kirkuk in Iraq. But there is little appetite abroad for the break-up of Iraq and Syria. The declaration of a federal Rojava was rejected by America. The Kurds may be winning ground; but peace among them may prove to be more elusive. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695540-kurds-have-taken-advantage-chaos-region-remain/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Apostasy and Islam + +Not advised + +The penalties for turning away from Islam can be quite stringent + +Mar 26th 2016 | From the print edition + +No turning back + +“IF THERE is a God, atheism must seem to Him as less of an insult than religion,” Edmond de Goncourt, a French writer, once said. He would not find much agreement in most of the Islamic world. In late February a Saudi Arabian man in his 20s was sentenced to ten years in prison, a hefty fine and 2,000 lashes for professing his atheism on Twitter. He could well have fared even worse. In 2014 Saudi Arabia passed a law equating atheism with terrorism. When last year another young man uploaded an online video of himself tearing up a Koran, Saudi courts sentenced him to death. + +According to the International Humanist and Ethical Union, a pressure group, Saudi Arabia is one of only 19 countries in the world that criminalises apostasy, the turning away from one religion to another one, or to none; it is one of 12 countries where it is punishable by death. All but two of the latter group are in the Middle East and Africa. In practice, the death sentences are rarely carried out; more commonly, apostates are merely thrown in jail and tortured. + +Even countries with civil laws that do not expressly outlaw apostasy still find creative ways to crack down on religious deviation. In Oman, Kuwait and Jordan Islamic courts can annul the marriages of apostates or prevent them from inheriting property. In Pakistan couples who convert from Islam risk having their children taken away. + +Where laws against apostasy do not exist, blasphemy laws are often applied instead. In Egypt, a 21-year-old student, Karim Ashraf Muhammad al-Banna, was sentenced to three years in prison last year after he broadcast his atheism on Facebook. Atheism itself is not illegal in Egypt; instead Mr al-Banna was charged with insulting religion. Blasphemy laws were famously applied in Pakistan too, when, Asia Bibi, a Pakistani Christian, was sentenced to death in 2010 after a confrontation with a group of Muslim women in which she supposedly defamed the Prophet Muhammad. Salman Taseer, the governor of Punjab, who defended Ms Bibi and railed against the blasphemy laws, was murdered by his own bodyguard in 2011. + +Not everyone in the region is so ardent. Despite the great risks associated with religious doubt in the Islamic world, curiosity about atheism seems to thrive. According to Google Trends, all of the seven countries most interested in the term “atheism” are in the Middle East. Still, a survey by WIN/Gallup International in 2012 suggested that Brazilians were more religious than Afghans and Armenians more zealous than Iraqis. Perhaps not wholly surprisingly, the proportion of Saudis reporting themselves to be “convinced atheists” was about the same as for Americans. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695542-penalties-turning-away-islam-can-be-quite-stringent-not-advised/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Unrest in Ethiopia + +Grumbling and rumbling + +Months of protests are rattling a fragile federation + +Mar 26th 2016 | ADDIS ABABA | From the print edition + + + +AN OUTBREAK of public protest unprecedented in its duration and spread since the ruling party took power in Ethiopia in 1991 is stirring a rare cocktail of discontent. Demonstrations started in November mainly by members of the Oromo ethnic group, which accounts for about a third of Ethiopia’s 97m-plus people, have refused to die down. Indeed, they have spread. The government has dropped its plan, the original cause of the hubbub, to expand the city limits of Addis Ababa, the capital, into Oromia, the largest of the federal republic’s subdivisions of nine regional states and two city-states. But the protests have billowed into a much wider expression of outrage. People are complaining about land ownership, corruption, political repression and poverty. Such feelings go beyond just one ethnic group. + +Human-rights advocates and independent monitors reckon that at least 80 people and perhaps as many as 250, mostly demonstrators, have been killed since the protests began. The government says the true figure is much lower and instead lays stress, as it always does, on terrorist and secessionist threats to the country’s stability. It points out that foreign-owned factories have been attacked, churches burnt down and property looted by organised gangs during the protests. Last month seven federal policemen in the south were killed by local militiamen during a particularly violent wave of disturbances. + +All the same, most of the protests have been peaceful. The Oromo particularly resent the sale or lease of land (almost all of which is state-owned) by the government to foreign investors. The government’s decision to shelve its master plan to expand Addis Ababa is regarded by the assorted opposition as a rare step in the right direction. But the protesters say the government must now allow Ethiopians to exercise their constitutional right to express dissent, or discontent could escalate. + +The army was deployed to bolster the federal police in the south. Both are regularly accused of brutality and are generally deemed able to operate with impunity. Shooting at protesters and arbitrarily arresting them, especially if they are students, has a long tradition in Ethiopia, going back to the military dictatorship that ran the country from 1974 until its downfall in 1991. + +The government is particularly suspicious of the Ethiopian diaspora, especially its representation in America, which fled abroad during that period. The foreign-based opposition, bolstered by social-media campaigners in America, is stirring things up for its own malign purposes, says the government. That, argues the opposition at home and abroad, is what it always says when seeking to discredit peaceful dissent. + +In any event, tension is bound to persist because the ruling Ethiopian People’s Revolutionary Democratic Front, which takes China’s top-down style of authoritarian government as a model, is loth to loosen controls at the centre, despite the federal constitution. For their part, critics of the government cannot escape from the fact that it has until now succeeded in holding together a diverse collection of ethnic groups. Moreover, under the current government the economy has boomed and poverty has fallen sharply, though a severe recent drought is causing new problems. Neither the government nor the federal system, however imperfect, is under immediate threat. + +Meanwhile Western governments, with America and Britain to the fore as large donors of aid to Ethiopia, have been notably silent about the turmoil. In a region battered by terrorism and violence in such nearby places as Yemen, South Sudan and Somalia, Ethiopia is still regarded as an anti-terrorist bulwark. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695402-months-protests-are-rattling-fragile-federation-grumbling-and-rumbling/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Press freedom in east Africa + +Pencil blunted + +A celebrated cartoonist loses his strip + +Mar 26th 2016 | From the print edition + + + +GADO has had no qualms about skewering politicians of all persuasions in 23 years as a cartoonist for a host of east African newspapers. But his unsparing caricatures were apparently too close to the bone for the Kenyan government: Gado claims he was sacked from the Nation Media Group (NMG), the region’s largest private media company, after pressure from the very top. + +The satirist, whose real name is Godfrey Mwampembwa, agreed to take a sabbatical in March 2015 after Tanzania banned the EastAfrican, an NMG newspaper, ostensibly because it wasn’t properly registered (despite having been sold in the country for two decades). The real problem, Gado was led to believe, was a drawing of then-president, Jakaya Kikwete, half-naked, attended to by buxom women named Incompetence, Corruption and Cronyism. In November he was told his contract wouldn’t be renewed. + +The termination came after a dispute closer to home. Gado says that in February 2015 the office of William Ruto, Kenya’s deputy president, complained about his depiction in connection with a controversial “land grab”. Gado says NMG also put pressure on him to stop drawing Mr Ruto wearing a ball-and-chain (representing a case brought against him by the International Criminal Court for violence in 2007-8). President Uhuru Kenyatta’s shackles disappeared when the ICC dropped charges against him. + +“One thing I will never allow is politicians to dictate what I draw,” says Gado, who is suing NMG and penning cartoons. The company denies bowing to government demands and says Gado’s contract came to “a natural end”. But the incident comes amid a clampdown on Kenya’s media, long seen as the continent’s liveliest after South Africa’s. A string of repressive laws has been passed of late. Recently a counter-terrorism bill was used to arrest bloggers who posted photos of Kenyan soldiers killed in Somalia. + +NMG is not the only media company ridding its pages of outspoken journalists. But if Gado’s claims are right it would be disappointing because of its previous history of fearless reporting. It also fired a managing editor, Denis Galava, in January, supposedly for publishing an editorial without getting proper approval from the editor in chief. The article was headlined: “Mr President, get your act together this year”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695400-celebrated-cartoonist-loses-his-strip-pencil-blunted/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Brussels bombings: Not again + +Terrorism and France: The end of insouciance + +Turkey and the EU: Refugees and terror + +Spain without government: Stuck in the centre + +What Europeans think of each other: Green-eyed continent + +Charlemagne: A terrible problem is born + + + + + +Articles Sections Next + +Brussels bombings + +Not again + +After a top fugitive is arrested, jihadists strike once more + +Mar 26th 2016 | BRUSSELS AND PARIS | From the print edition + + + +WHEN the leaders of Belgium and France announced the arrest of Salah Abdeslam on March 18th, they made sure not to sound too triumphant. Mr Abdeslam was Europe’s most-wanted terror suspect; he is believed to have been the Islamic State (IS) logistics chief behind the attacks that killed 130 people in Paris in November. But he had evaded a police dragnet in Brussels’ Molenbeek district for four months. That suggested shoddy Belgian police work and a deep and dangerous IS network. On March 21st Jan Jambon, Belgium’s interior minister, warned that terrorists might strike in response. The next day they did, carrying out suicide attacks at Brussels’ Zaventem airport and in a downtown metro station. + +The strikes showed the same worrying sophistication as those in Paris. At the airport two jihadists, later identified as brothers, set off bombs in the departure lounge, killing at least 11 people. (Police found and neutralised another bomb; as The Economist went to press, they were searching for a third attacker identified as Najim Laachroui, also linked to the Paris attacks.) The bomb an hour later in Maalbeek metro station killed at least 20 people, forcing the evacuation of nearby EU headquarters buildings. + +The timing of the attacks is unlikely to have been coincidental. Mr Abdeslam’s arrest may have triggered another cell to act on an existing plan. Or perhaps he planned to take part himself, and his capture forced co-conspirators to bring the attack forward. Either way, the sophistication of the attacks suggests that Europe must prepare for a “new normal” of periodic terrorism. On Brussels’ Place de la Bourse, where locals gathered after the attacks to light candles and lay flowers, the mood was sombre. “We thought it was over because they caught the terrorist,” said one mourner. “Now we know it is not.” + + + +Authorities remain optimistic over Mr Abdeslam’s arrest because it provides a rare chance to interrogate a prominent living jihadist. France has asked for his extradition, hoping he will fill gaps in what is known about the Paris and Brussels attacks. But what French investigators have learned so far is disturbing. For at least the past three years, IS appears to have been building a network across Europe to carry out terrorist outrages in different cities. Currently 18 people detained in six countries are suspected of helping the Paris attackers. That may be the tip of the iceberg. This week Belgian police identified yet another suspect whom they believe was in telephone contact with the Paris attackers. French investigators have been taken aback by the sophistication of IS operatives. The group’s bomb-makers in Europe are apparently able to make explosives using triacetone triperoxide, or TATP, whose precursors can be found in common products such as nail polish remover. Another sign of competent tradecraft is the discipline of their communications. The French authorities had no clue of what was to unfold on November 13th, and there seems to have been no actionable intelligence before the attacks in Brussels. The terrorists apparently use encryption for all their electronic communication. And IS increasingly carries out multiple, sequenced attacks against soft targets to spread confusion and stretch emergency services thin. + +The most critical problem European security agencies face in responding to this threat is failure to pool information. In linguistically divided Belgium, inter-agency co-operation is known to be dire. At the European level, Europol, the law enforcement agency of the EU, does a useful job in facilitating information exchange, but it has no executive powers to carry out investigations. And intelligence co-operation had been slowed by the legacy of totalitarianism, which has left many Europeans, the Germans in particular, with a deep aversion to the surveillance state. France has been pushing hard for a common European registry of passenger names to help track terror suspects’ movements ever since the Charlie Hebdo attacks in early 2015; the European Council agreed to the measure in December. Yet the European Parliament, concerned over data privacy, has failed to ratify it. + +A terrorist strike just metres from their own offices may help EU legislators see the urgency. Yet better security will not heal the social and ethnic divisions that have made Europe fertile ground for Islamic extremism. In the hours after the attacks, the capital transformed into a diorama of these tensions. In the city centre EU bureaucrats in suits and ties were trapped in their gleaming steel-and-glass offices as police cleared the streets. + +Among the run-down brick apartments of the Vierwindenstraat in Molenbeek, meanwhile, where Mr Abdeslam was arrested last week, no one would talk about the bombings. A middle-aged resident named Mehmet said he understood why local youth turn to extremism: “It’s a poubelle (dustbin) here.” On a nearby garage door, someone had scrawled the words mort aux keuf (death to the police). + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21695566-after-top-fugitive-arrested-jihadists-strike-once-more-not-again/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Terrorism and France + +The end of insouciance + +France is realising that its state of emergency may last a long time + +Mar 26th 2016 | PARIS | From the print edition + + + +FRESHLY painted in pale turquoise, “La Belle Equipe”, a bistro in eastern Paris, reopened this week after months of anguish. During last November’s terrorist attacks, 20 people were shot dead there. Four months on, the French are trying to turn the page after the worst-ever terrorist attack on their soil. But the latest carnage in Brussels is a bloody reminder that France, and all of Europe, will have to learn to live with terrorism. + +After two deadly terrorist attacks in 2015, France, home to Europe’s biggest Muslim minority, has been more alert to the threat than any other European country. Manuel Valls, the prime minister, frequently takes to the airwaves to remind the French of their vulnerability. In Munich last month he warned fellow Europeans: “We have entered a new era, marked by the long-term presence of hyper-terrorism.” It was the end, he said, of “insouciance”. + +As in America after the September 11th attacks, the French response has been to shift the balance between civil liberties and security firmly towards security. In November France became the only European country to declare a state of emergency over terrorism; it remains in place until May 26th. This grants the police sweeping powers to put suspects under house arrest and search premises without judicial warrants. The Socialist president, François Hollande, says the country is “at war”. Under “operation Sentinelle” 10,000 soldiers have been deployed on French streets. This week Bernard Cazeneuve, the interior minister, added another 1,600. + +The French seem to have accepted without much complaint the disruption to daily life that this has imposed. Bags are routinely checked at the entrances to shops on the Champs-Elysées or other busy streets. Queues for concerts can snake down the pavements due to security controls. Passengers for high-speed trains from Paris to Brussels and Amsterdam must now pass through scanners, as those between Paris and London have for years. With border checks reinstated, car journeys in and out of France can be delayed, too. Such nuisances are tolerated: a poll earlier this year showed 79% approved of extending the state of emergency. + +Yet settling into a long-term alert raises two difficulties. The first is getting the management of public anxiety right. After the November attacks, a spirit of solidarity prevailed in Paris, with photos defiantly shared on social media under the hashtag “#Jesuisenterrasse” (I’m at a pavement café). Nonetheless, over a third of Parisians told a recent poll that they have changed their behaviour, going less often to theatres or football matches. + +Visitors are also nervous. Last month Anne Hidalgo, the Socialist mayor of Paris, and Valérie Pécresse, the centre-right president of the Paris region, took an unusual joint trip to Tokyo to reassure Japanese tourists, whose number plunged 66% in December from the previous year’s level. + +Yet it is awkward for the government to reassure visitors while telling its own citizens to prepare for another attack. Public buildings are festooned with public-information posters entitled “How to react after a terrorist attack”, instructing people to turn off their mobile phones, keep away from windows and lie flat on the ground. Schools must carry out compulsory “confinement” exercises, in which pupils are quarantined in a classroom while windows and doors are sealed with wet towels or tape. “It’s terrifying for the children,” says one primary-school teacher. + +Equally difficult is meaningfully improving the security of soft targets, such as the public areas of airports, train stations and busy streets. Now that security around boarding areas is tight, the focus has shifted to the outer zones, where friends and family linger with passengers. Mr Cazeneuve this week announced that access to the entrance halls of French airports and main transport hubs will be allowed only for those with tickets—a first for Europe. Yet even this policy is unlikely to be applied consistently. Passengers taking trains to Brussels and Amsterdam are scanned before boarding in Paris; but not those leaving for Lyon or Marseilles. Access to the Paris Metro and buses will continue to be open. + +Perhaps the trickiest thing about a state of emergency is judging when to exit. Already, there is talk of another extension in June to cover France’s hosting of the European Championship football tournament. Yet prolongation has its own problems. One Paris official confesses that Japanese tourists seem more worried than reassured by France’s state of emergency. The extraordinary measures it allows were intended as just that, not a permanent response to a persistent threat. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21695562-france-realising-its-state-emergency-may-last-long-time-end-insouciance/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Turkey and the EU + +Refugees and terror + +Just as the EU declares Turkey safe for refugees, Istanbul is hit by a bomb + +Mar 26th 2016 | From the print edition + + + +ON MARCH 18th the European Union, seeking to stem the influx of refugees from the Middle East, struck a deal to return asylum-seekers who cross the Aegean illegally to Turkey, in exchange for promises of aid and other concessions. The following day, a suicide bomber killed at least five people, including himself and four foreigners, on Istanbul’s most popular pedestrian shopping street (pictured). Turkey has endured five big terror attacks since October, at a cost of nearly 200 lives; its war against Kurdish militants has left hundreds more dead. But after a disastrous year, the deal with the EU may offer at least a tentative promise of something better. + +No group has stepped forward to claim responsibility for the latest bombing. The day after the attack, officials identified a Turkish member of Islamic State (IS) as the perpetrator. IS has been quick to take credit for atrocities elsewhere, from Jakarta to San Bernardino. But it has yet to do so for any attack by its sympathisers in Turkey, including a double bombing that killed 102 people in October. + +Distressingly, the list of other possible suspects has grown longer over the past year. In neighbouring Syria, Turkish-backed proxies are fighting the regime of President Bashar al-Assad, his Russian allies, and the People’s Protection Units (YPG), Kurdish fighters associated with the Kurdistan Workers’ Party (PKK) with which Turkey is once again at war. Turkish forces have shelled the YPG directly. As the terror attacks continue, officials in Ankara, the Turkish caital, have pointed to all of the above as possible culprits. A Turkey that once tried to play firefighter in Syria is slowly being consumed by its flames. + +Yet the biggest threat to Turkey’s security is homegrown. An urban insurgency waged by the PKK across the country’s southeast, accompanied by a ruthless crackdown by Turkish security forces, has left more than a thousand people dead, including some 300 civilians. With the army deploying tanks and artillery against rebels armed with rocket-propelled grenades and machine guns, entire neighbourhoods have been blasted apart. + +Losing ground in the southeast, the PKK appears to be turning its firepower on soft targets, including civilians, in the country’s west. In the past two months, terrorist attacks claimed by one of the group’s offshoots have killed 66 people in Ankara. A senior PKK commander has warned that “at this point in the struggle” his militants are poised to fight by any means necessary. Amid the blowback from Syria, the increasingly radicalised Kurdish insurgency and a mounting crackdown against academics, journalists and politicians suspected of PKK sympathies, Turkey risks sinking further into a cycle of repression and violence. + +The best (if still fragile) hope of escaping chaos may lie in the new deal with Europe. In exchange for a commitment to accept migrants sent back from Greece and seal off a smuggling route used by over a million people since the start of 2015, Turkey has wrested a string of concessions from the EU. One, a promise to inject some fuel into the country’s stalled membership talks with the EU, is mere window dressing. The opening of a new chapter in the negotiations will keep the accession process running in low gear, but with little real hope of reaching its destination. Another, a pledge of €6 billion ($6.8 billion) in aid for the refugees Turkey harbours, is more appealing, especially for a country that ran a $33 billion current account deficit in 2015. + +The most important, at least in political terms, is an offer of visa-free travel by June. Even for those Turks not forced to endure long waits in front of European consulates, the issue is a matter of national pride. For their president, Recep Tayyip Erdogan, it is a vote-winner. Optimists argue that the strong conditions attached to the promise of visa liberalisation will bring Turkey back into the European fold and help stem its descent into authoritarianism. There is at least a chance that rebuilding bridges with Europe may rein in the authoritarian instincts of Mr Erdogan and embolden the few reformists left in his government. + +Yet the EU’s new openness cannot undo the damage done by the recent violence, which may strike a crippling blow to Turkey’s tourism industry by scaring Europeans away. The deal itself still faces legal, political and logistical challenges that could cause it to unravel. Greece will find it hard to set up the infrastructure needed to ensure orderly mass returns. Turkey will struggle mightily to meet the exacting conditions required for visa liberalisation by the summer. Even if it succeeds, EU governments, which have a final say in the matter, may bow to domestic pressure and torpedo the visa agreement at the last minute. + +Pessimists fear that Mr Erdogan, who once boasted of being able to flood Greece and Bulgaria with refugees, may use his leverage over the EU to press for still more concessions. The president does not seem terribly malleable; he will heed the advice of international bodies only “as long as it is fair,” he said recently. “If it is not, sorry.” Rather than change course, he could keep ratcheting up military action in the southeast and putting the squeeze on any domestic opponents who get in the way. Nevertheless, the renewal of a European connection may be the best chance of keeping the country from going off the rails. “Even some limited engagement has an upside,” says Atilla Yesilada, a political analyst. “Leaving Turkey out in the cold has no benefits.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21695236-europe-approves-critical-deal-send-asylum-seekers-back-turkey-just-terrorism-reaches/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Spain without government + +Stuck in the centre + +While regional parties collaborate, national ones remain at odds + +Mar 26th 2016 | VALENCIA | From the print edition + + + +ONCE a stronghold of the conservative Popular Party (PP), led by the prime minister, Mariano Rajoy, Valencia fell to a broad coalition of anti-austerity left-wingers in regional elections in May. Some now see that as a potential model for a national coalition government—a goal that has eluded Spain’s politicians since the general election in December. + +Spain’s voters created the three-month impasse by scattering their votes among four large parties and a smattering of small ones. The PP, which struggled with sky-high unemployment and corruption scandals, lost a third of its support. It can govern only in unlikely alliance with its arch-rival, the Socialist party. Likelier would be a broad left coalition headed by the Socialist leader, Pedro Sánchez, and backed by some of the parties—like the left-wing populist insurgents, Podemos—who prop up Valencia’s current government. + +In Valencia, that coalition is governing with a programme in which pragmatism trumps radicalism. “We run things better, and don’t steal,” says the region’s deputy president, Mónica Oltra. She helps lead Compromís, a local leftist party that allied with the Socialists and others to form the government. It also stood jointly with Podemos at December’s general election, claiming second place in the region. + +High public debt has prevented Ximo Puig, the region’s Socialist president, from pursuing many anti-austerity policies; he has raised taxes slightly and paid for some social welfare projects. But for voters tired of corruption scandals, it is enough for the government to appear clean and calm. The financial crisis revealed murky links between politicians, collapsed construction firms and failed savings banks; many of the local PP’s former leaders now face court cases. Most deny wrongdoing, but Marcos Benavent, a former official known for his expensive designer jackets, appeared in court last year sporting a bushy white beard, earrings and hippy bangles, apologising and vowing to “try to pay back all I stole.” + +Though the Socialists have co-operated closely with Compromís in Valencia, they have clashed repeatedly with Podemos in Madrid. In one of his first parliamentary appearances Podemos’s leader, Pablo Iglesias, accused the former socialist prime minister, Felipe González, of being stained with quicklime—a reference to the way in which state-sponsored death-squads disposed of the bodies of Basque separatists they murdered in the 1980s, when he was in office. Many Podemos members would prefer fresh elections to forming a coalition with the Socialists. And Mr Iglesias exercises direct control over only two-thirds of his party’s parliamentary tally; the rest actually belong to local coalitions led by partners like Compromís. + +If the Socialists and Podemos do team up—indeed, even if they gain the help of the communist-led United Left—they will still lack a majority. For that, they would need the support of a mixed group of Catalan and Basque nationalists, some of them right-wing. Many politicians, tiring of coalition-building efforts, are already preparing for new elections. Yet that may not solve the stand-off; voters look set to elect another fractured parliament if they are called back to the polls. Spain may have to wait till autumn for its next government. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21695575-while-regional-parties-collaborate-national-ones-remain-odds-stuck-centre/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +What Europeans think of each other + +Green-eyed continent + +Europeans have warped views of their neighbours—and themselves + +Mar 26th 2016 | From the print edition + + + +“THE grass is always greener on the other side of the fence” originates from a Latin phrase, quoted by Ovid, to do with envying another man’s fruitful harvest. Fittingly, modern day Italians also have a chlorophyll-tinted view of their neighbours. According to new data from Livewhat, a Geneva-based survey, Ovid’s successors tend to believe that life is better in other countries than the locals do. Over 70% of Italians imagine life to be good in France, when asked to rate it on a scale from one to ten, whereas only 43% of the French have the same opinion. + +The Italians are a self-critical bunch, but romanticised views of other countries are widely held in Europe. In all of the countries surveyed, more people believe that life in France, Germany, Italy, Sweden and Switzerland is better than those countries’ own citizens reckon. + +This creates odd perceptions, built on mutual jealousy. The Swiss think that the Swedes fare best in Europe; Swedes are quite certain that the Swiss are the truly enviable ones. + +By contrast, Europe’s poorer countries are cast in a dim light: many think life in Greece and Poland is unhappier than it is. Other Europeans view Poland poorly, while Poles have the most favourable view of their neighbours. This may explain why 0.1% of Poland’s population—among the lowest rates in Europe—is made up of people from elsewhere in the EU, and why there are 1.5m Poles living in Germany and Britain alone. + +Alas, some intra-European crushes go unrequited. According to a survey by Lord Ashcroft, a British pollster, Scandinavian countries tend to be the best-liked in Europe. Within this select clique, the Swedes are the most popular of all, with 84% of respondents holding a favourable view of the country. Poor Romania, meanwhile, has the fewest fans on the continent, with less than a third of Europeans rating it positively. And the countries that like Romania the least? Croatia… and Sweden. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21695581-europeans-have-warped-views-their-neighboursand-themselves-green-eyed-continent/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +A terrible problem is born + +Britain’s membership of the European Union suits Ireland perfectly. Brexit would open old wounds + +Mar 26th 2016 | From the print edition + + + +AS A small, cosmopolitan European capital, Dublin is a delight to visit. Georgian mansions recalling its role as the second city of the British Isles alternate with boutiques and cafés, buzzing with chatter in Spanish or Polish. And in the smart centre, the economic upturn is now palpable. On paper at least, the country has rebounded from recession and bail-out, posting GDP growth last year of 7.8%, five times the euro-zone average. + +But there is something else in the spring air. Adorning many handsome facades there are sepia posters of men bearing rifles. Over Easter weekend, the bustle will cease as Ireland commemorates a founding moment: the weeklong uprising in 1916, during the first world war; it is recalled in British annals as a stab in the imperial back and in Irish ones as a heroic self-sacrifice. + +The execution of its leaders, as much as the Easter Rising itself, triggered a maelstrom of events: a surge of anti-British rage and harsh counter-repression; a treaty in 1921 establishing two Irish parliaments (a northern one inside the United Kingdom, a southern one outside); and a civil war between supporters and opponents of that compromise. + +Those wounds still fester. In other countries, historical ceremonies help transcend domestic squabbles. Not in Ireland, stuck in a deep political impasse, only explicable via the feuds of the past. Fine Gael, a centre-right party whose forebears backed the 1921 accord, has just lost control of the legislature after an election in which its vote slumped to 25.5%. Nor was there a triumph for its rival, Fianna Fail, a party of pragmatic centrists who descend from opponents of the 1921 deal. It improved its score but only to 24.3%. Neither can easily form a government and each mistrusts the other. + +With the combined tally of the civil war-based parties now below 50%, is Ireland exorcising old demons and looking ahead? No such luck. The next biggest parliamentary bloc is Sinn Fein, with a 13.8% share; it claims to be the main moral heir of the 1916 insurgency (and will stage separate commemorations next month). Far more fiercely than Fianna Fail, Sinn Fein views all the political arrangements which followed the 1916 rising as a betrayal. Although it now shares power in Northern Ireland’s government, it also insists that its military wing, the Irish Republican Army, was justified in its 25-year war, ending in the mid-1990s, to end British rule in Ulster. + +Since the Northern Irish deal of 1998, Sinn Fein has vowed to pursue a united, socialist Ireland peacefully. But some hardliners think the 1998 compromise, too, was shabby, and are fighting on. One such group killed a prison officer in Belfast this month. + +Thus Ireland’s prime minister, Enda Kenny, may feel uncomfortable as he watches this weekend’s parades. His Fine Gael party represents the country’s most anglophile camp, and it abhors irredentists who call the rising unfinished business. Some in Fine Gael believe the rising was unnecessary; they think independence was won not by force but by Irish parliamentarians in London who operated peacefully and could have prevailed. + +For all their intensity, Ireland’s internal arguments would be manageable, were it not for another spectre. That is Brexit, and the risk that Ireland might again have to choose between continental Europe and a non-European Britain. In Mr Kenny’s cautious words, this outcome could cause “serious difficulty” for Northern Ireland, whose peace deal is predicated on the United Kingdom and the Irish republic (and thus both bits of Ireland) being in the union and working together to get European benefits. + +To see, at a deeper level, why Brexit is unwelcome, take another history lesson. In centuries past, England, Ireland and the continent made an ugly triangle. England saw Ireland as a soft underbelly which continental foes might exploit; Irish patriots looked to the continent for succour. In 1798, Irish rebels defied the Crown, aided by France; the insurgents of 1916 took help from Germany. + +When Britain and Ireland both joined the then European Economic Community in 1973, a prettier shape emerged. As formally equal partners, the two Anglophone lands collaborated in Brussels. Ireland was keener on farm aid than Britain; but over trade and regulation, British and Irish eyes often met. Ireland gained continental links without sacrificing its ties to Britain. This happy alignment will end if Britain marches out, leaving Ireland lonely. Some wonder if it might feel pressured to leave the EU, too. Irish manufacturers fear paying duties on British-made inputs; and if Britain eased regulations on its own businesses, their Irish competitors, following European rules, would howl. + +Brits not out + +Horror of Brexit unites politicians in opposite corners. Ask two youngish members of the new legislature. Paschal Donohoe, the Fine Gael transport minister, says he has enjoyed working with Britain in Europe, for example to support liberal aviation regimes; but with or without Britain, Ireland will stay in the EU. Despite Britain’s absence, Ireland has benefited from the “competitive rigour” of the single currency, he believes. Eoin O’Broin, newly elected to parliament for Sinn Fein, loathes the idea of an EU external frontier running through Ireland. But whatever Britain does, he wants to be in the heart of European politics, fighting Mr Donohoe’s liberal ideas alongside leftist allies such as Syriza of Greece, or Jeremy Corbyn’s Labour Party in Britain. + +For centuries, Irish people have found ingenious ways to divide their lives between the two islands, even when relations were frosty or worse, as they were in 1916. Britain and Ireland have long used different currencies: that has been a nuisance, not a catastrophe. The reappearance of a customs and security border between north and south would be more serious. Geography and kinship mean the two countries must muddle along. But even for Irish anglophiles, choosing Britain over Europe would be almost unthinkable. That is the newest lesson of Easter 1916. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21695567-britains-membership-european-union-suits-ireland-perfectly-brexit-would-open-old-wounds/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Fiscal policy: In it together? + +Brexit brief: Unfavourable trade winds + +Religion: Northward Christian soldiers + +Ministry of Silly Names: Name that boat + +Education reform: Starbucksification of schools + +The Baltic Exchange: Nordic noir + +Devolution: City united + +Bagehot: E pluribus unum + + + + + +Articles Sections Next + +Fiscal policy + +In it together? + +The balance of tax and welfare changes is tilting further in favour of the rich + +Mar 26th 2016 | From the print edition + + + +THE Conservative government was elected last year on a promise to fix Britain’s public finances. In coalition with the Liberal Democrats in 2010-15, the Conservatives had shrunk the budget deficit from 10% of GDP to 5%. Now freed of the need for a coalition partner, they want to eliminate the deficit entirely by 2020. In the quest to balance the books, they maintain that “we are all in this together”, pushing back against the popular perception that the Conservatives are the party of the rich. + +Their claim has been undermined by a controversy over disability benefits. To save about £1 billion ($1.4 billion) a year by 2020, in the budget on March 16th the government unveiled plans to cut the personal-independence payment (PIP), which helps disabled people with their higher costs of living. The amount awarded to those who use an “aid or appliance” (such as a magnifying glass or a ceiling hoist) would fall. Though the proposal was subsequently withdrawn, Iain Duncan Smith, the work and pensions secretary, resigned on the grounds that it epitomised the government’s regressive approach to deficit reduction. Mr Duncan Smith’s true motives are less noble (see article). But he points out an uncomfortable truth: since returning to office last year, the government has been increasingly hard on the poor. + +Benefit cuts under the coalition government of 2010-15 hit the needy hardest. That is unsurprising: for a working-age household in the bottom income quintile, benefits are worth about 45% of gross income, compared with just 2% for one in the top quintile. And many reforms were reasonable: for instance, the number of claimants of disability living allowance (DLA), which offers cash for disabled folk, tripled in 1992-2010, with a 369% real-terms rise in spending on people claiming for back pain. The government says that 70% of those on DLA were receiving indefinite awards, meaning they continued to receive money even if they got better. The phasing in of the PIP from 2013 toughened eligibility criteria. + +What’s more, the labour market came to the rescue of many of those who lost most from tax and benefit changes. By 2015 there were 1m fewer unemployed people than four years before. The employment rate was at the highest level since records began. Increasing work incentives through reform of the welfare state may have been partly responsible. But improving economic conditions, largely beyond the government’s control, undoubtedly helped. + +Thanks to the jobs boom, the living standards of the poorest did not fall as much as the tax and benefit changes alone implied. As bankers took smaller bonuses, there were big income falls at the top of the income distribution. The effect was that a household at the tenth percentile of the income distribution (ie, among the poorest) saw its income rise by 8% from 2007-08 to 2015-16, according to the Institute for Fiscal Studies (IFS), a think-tank, compared with a 3% fall for one at the 90th percentile. By the end of the coalition government, incomes were more equal than before the recession. The “we are all in this together” dictum stood up. + +Not any more. In its manifesto last year the Conservative Party pledged to take £12 billion out of the working-age welfare bill by 2017-18 (later postponed to 2019-20), which has forced it to make some painful decisions. A four-year freeze on things like tax credits (wage top-ups for the low-paid) and housing benefit will start next month. In-work benefits will get less generous. On March 22nd George Osborne, the embattled chancellor, said there were “no further plans” to cut welfare. Still, spending on working-age benefits will fall three times as fast in this parliament as in the last one. + +The poor will be hit harder by these policies than those of the coalition (see chart). Not only are the cuts deeper, but forthcoming changes seem more to do with penny-pinching than real reform. The abolition from next year of some child benefits for the third sprog onwards has little economic rationale. Making unemployment benefit stingier (Reform, a think-tank, reckons it will be worth £550 a year less in 2020 than in 2010) may do more to reduce the living standards of the jobless than make them likelier to find work. + + + +By comparison, the proposed cuts to PIP, now scrapped, were not so dreadful. The number receiving extra money solely as a result of needing aids or appliances has tripled in the past 18 months. Court rulings have broadened the scope of “aids and appliances” to include things like beds and chairs, which are needed by everyone. Even if the reform had gone ahead, spending on disability benefits would barely have changed from its level last year. + +Whatever the merits of particular cuts, Mr Duncan Smith is right to complain that targeting them at working folk is unfair when oldies are so coddled. The government has promised to protect state pensions, which will rise yet again this year by 3%. Rich folk, meanwhile, are doing well. In the budget the threshold for the higher rate of income tax was increased from £42,385 to £45,000. The median full-time employee, who earns £28,000 a year, will not benefit. Even the pledge to raise the personal allowance for income tax, from £10,600 to £11,500, is not especially pro-poor because over 40% of adults do not earn enough to pay any income tax. + +Conservatives point out that they have trimmed the incomes of the very richest through measures like greater restrictions on tax relief on pension contributions. The plan to raise tax thresholds was spelled out in their manifesto. But a move to cut the rate of capital-gains tax (CGT), which will most benefit the asset-rich, was not. Of the £30 billion of capital gains subject to CGT in 2013-14, half went to 35,000 individuals with incomes of £100,000 a year or more, according to the Resolution Foundation, a think-tank. + +The labour market is unlikely to offset the regressive effects of the Conservatives’ latest welfare changes, as it did in 2010-15. Unemployment cannot fall much lower. Wages are looking shaky, with growth-projections recently revised downwards. The government counters that a new “national living wage”, which will rise to 60% of median earnings by 2020, makes up for the welfare cuts. In fact, many of the very poorest are not in work; middle-income households will be the biggest winners, because many of those on the minimum wage are second earners in higher-income families. A household in the seventh decile will benefit three times more from the living wage than one in the bottom. + +The government talks a good game on sharing the pain around; during the coalition with the Lib Dems it was broadly true. But under current plans, the slogan is looking increasingly empty. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695538-balance-tax-and-welfare-changes-tilting-further-favour-rich-it-together/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit brief + +Unfavourable trade winds + +It would be hard for Britain to negotiate good trade deals post-Brexit + +Mar 26th 2016 | From the print edition + + + +TRADE is at the heart of the European Union. Indeed, many Brexiteers claim that in 1973 Britain joined a free-trade area that only later morphed into political union. Leaving the union would not interrupt trade with the continent for long, they suggest, since a new free-trade deal could be swiftly agreed. Yet the EU’s single market is deeper than a free-trade zone. It dismantles both tariffs and non-tariff barriers involving standards, regulations or rules of origin. That explains why joining the EU boosted Britain’s exports so much—as the chart shows for former West Germany. + +The EU is clear that non-members like Norway can have full access to the single market only if they accept most of the rules, including the free movement of people, and contribute to the EU budget. Switzerland has less access (its banks, for instance, are restricted in the services they can offer within the EU), yet it still accepts most rules and pays into the budget. + +Brexiteers argue that Britain, as Europe’s second-biggest economy, would use its clout to get a better deal. They say Britain’s big trade deficit with the rest of Europe means the EU needs the British market more than the other way round. And if no deal were done on single-market access, they reckon relying on World Trade Organisation (WTO) rules or having a free-trade deal like Canada’s would be good enough. + +Yet the atmosphere post-Brexit would be frosty. The EU would have a big incentive to be unhelpful, for fear that other countries might copy Britain in leaving. Even at the best of times, the EU finds it easier to deal with small countries; protectionist interests within Europe resist deals with bigger ones. Any trade offer from the EU requires the approval of all 27 other member countries, plus the European Parliament. + + + +As for the trade deficit, what matters is the share of exports: some 45% of British exports go to other EU countries, whereas only around 7% of their total exports come to Britain. It is true that German carmakers would want to sell to the British market. But several other countries run bilateral deficits with Britain or barely trade with it at all; a deal would not interest them. + +The WTO option would not remove non-tariff barriers, nor even tariffs on many products, such as cars (which attract a levy of around 10%). The Canadian deal does not cover all goods. And both the WTO and Canadian options omit most services, including financial ones, which make up Britain’s biggest exports to the EU. Rival financial centres such as Paris, Frankfurt and Dublin would seize the chance to win back business following Brexit. + +Hopes of easy trade deals with the rest of the world also look illusory. Lawyers say Britain would have to replace all the EU’s 53 free-trade pacts, which would be hard with tough negotiators like South Korea or Mexico. Several big countries, including America, China and India, are negotiating new deals with the EU, from which a post-Brexit Britain would be excluded. + +A free-trading Britain, say Brexiteers, would no longer be held back by protectionist EU members. But other countries’ trade negotiators might find the British market of 65m consumers less alluring than the EU’s 500m. The top American trade envoy, Mike Froman, has said his country would not be interested in a bilateral deal with Britain. Agreements that China has signed with Iceland and Switzerland are lopsided towards the Chinese. + +There are also practical problems. Because Britain has been in the EU for over 40 years, it has little experience of bilateral trade negotiations. The rules for exit say a trade deal with the EU should be done in two years, yet this is optimistic—the Canada deal took seven years and is still not ratified. Uncertainty over future trade pacts is a big reason why economists think Brexit would damage the British economy. + +A former EU trade commissioner, Lord Mandelson, says free-trade agreements “do not come free, do not cover all trade and take ages to agree.” He adds that trade deals are “started by liberals but finished by protectionists”. His conclusion is that a post-Brexit Britain would end up with fewer and worse trade deals than it has now. + + + +Talk of taking back power may be delusional, but more democracy is not + + + +The campaign to leave the European Union is still behind, but picking up speed + + + +Why Britons are warier than other Europeans of the EU + + + +A twelvefold rise in attempted illegal entries inflames Eurotensions + + + +Conservative splits on Europe belie the reality: Eurosceptics have already taken over the party + + + + + +More Brexit coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695544-it-would-be-hard-britain-negotiate-good-trade-deals-post-brexit-unfavourable-trade-winds/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Religion + +Northward Christian soldiers + +Britain’s Christians are clustered in the north-west, but that may change + +Mar 26th 2016 | From the print edition + + + +“THIS is a Christian country,” David Cameron declared valiantly, during an Easter speech in 2015. Not, perhaps, for much longer. In 2001 40.1m Britons declared themselves Christian on the census form; in 2011, the figure was just 36.1m, or 59% of the population. Yet some places are resisting the tide of godlessness. According to a new analysis* of census data, Britain’s bastions of Christianity tend to be urban (“but not too urban”) and mostly in north-west England. In Knowsley, an otherwise unremarkable borough on the outskirts of Liverpool, four out of five people were self-professed Christians in 2011; in nearby Chorley, Halton and West Lancashire, about three out of four were. + +Catholics originally hailing from Ireland account for much of the concentration in England’s north-west, says Peter Brierley, a church statistician. This group tends to pass religion on to its children, and to identify with it strongly enough to tick the optional box on the census. Like most second- or third-generation immigrants, he says, they tend to live just outside cities. Between 2001 and 2011 the north-west saw relatively little change in the number of Christians: Irish immigrants tend to be traditionally working class, says Mr Brierly: “They move, at most, one street over” and, like Britain’s Muslim and Jewish populations, Catholics cluster rather than spread. + +Christians are scarcest in London, particularly north of the Thames, where fewer than 50% declared themselves Christian in 2011. Here, other religions crowd in: 34.5% of people in Tower Hamlets, and 32% in Newham, are Muslim (against a national figure of 4.8%); 25.3% of those in Harrow, and 17.8% in Brent, are Hindu (versus just 1.5% nationally). + + + +Between the two censuses, Christianity underwent steep decline in some areas: parts of Cornwall and Dorset, as well as South Wales, for instance, all saw drops of more than 14% in the number of Christians. In these places the number of people saying they have no religion increased (in South Wales by more than 14%; in Cornwall, by more than 12%). “Church life in Cornwall is pretty dire,” says Mr Brierley. “If you started out a Christian, you might change your mind.” + +According to David Goodhew of Cranmer Hall, a theological college in Durham, patterns of church attendance tell a different story to the one outlined in the census. London may have relatively few who identify as Christian, but they are particularly enthusiastic: the capital’s weekly churchgoers, many of them immigrants, have increased by 16% since 2005. In the avowedly faithful north-west, meanwhile, church attendance is falling. + +With Christian identity fading almost everywhere, Mr Cameron’s description of a “Christian country” is ever more doubtful. What the census results really show, says Danny Dorling, one of the study’s authors, is “a map of history—and who is trying to forget their history quicker”. + +*“People and Places: A 21st-Century Atlas of the UK”, by Danny Dorling and Bethan Thomas. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695531-britains-christians-are-clustered-north-west-may-change-northward-christian/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Ministry of Silly Names + +Name that boat + +Mar 26th 2016 | From the print edition + + + +The Natural Environment Research Council (NERC) has launched an online poll to name a new polar research ship which it says will put Britain at the forefront of ocean science. The NERC said it was seeking something inspirational that would exemplify the work of the £200m ($288m) vessel: Endeavour, perhaps, or Falcon. So far the runaway winner in the online vote, yet to be confirmed by the NERC: Boaty McBoatface. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695527-name-boat/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Education reform + +Starbucksification of schools + +The government plans to expand chains of academies + +Mar 26th 2016 | From the print edition + + + +NICKY MORGAN, the education secretary, was billed as a steady hand when she took office in 2014. Her predecessor, Michael Gove, had enraged teachers and their unions (which he christened the “blob”, after a monster from a 1958 science-fiction film) with his shake-up of the education system. By the end of his four years in office there were around 4,000 academies, state-funded schools that are mostly free from government control, nearly 20 times the number at the start of his stint. It was expected that the pace of change would slow under Ms Morgan. + +Instead, she has proposed what some reckon to be the most radical reform of school governance in decades. Under plans outlined on March 17th, all schools would become academies by 2022, giving them the freedom to decide their own curriculum, pay teachers what they want and set shorter holidays. It would be a big, rapid change: currently 59% of secondary schools and only 17% of primary schools are academies. + +And the proposals are more than just an extension of existing policy. There has been a distinct change of tone from the Gove era, says Jonathan Clifton of the Institute for Public Policy Research, a think-tank. Whereas Mr Gove sought to release schools from the constraints of localauthority control before leaving them free to flourish or flounder, Ms Morgan is pushing education in the direction of a more closely managed system. + +Under her plans, schools (particularly those in struggling areas) would get more hand-holding from officials. And the government expects that the “vast majority” will join “multi-academy trusts”, charitable bodies which run chains of schools. It wants to encourage such chains on the basis that they allow the most successful managers to run more schools and enable good practice to spread. Chains often have far greater control over their schools than do local authorities, many with distinct cultures, brands and teaching methods. Some, for instance, focus on pupils in deprived areas; others seek to spread a religious ethos. The government plans to introduce league tables to rank chains. + +Supporters of the reforms argue that running a dual system, made up of both academies and local-authority schools, is expensive and confusing. But so far there is little evidence to suggest that chains are more adept than local authorities at supervising schools. Last year a report by the Sutton Trust, an education charity, found a wide range of performance in existing chains—and that the gap between good and bad ones was growing. It suggested that new chains should not be allowed to expand until they have demonstrated good results. + +Many doubt that the government will be able to spur the creation of sufficient numbers of high-performing chains. The impact of the shortage of good chains is likely to be particularly severe among primary schools, which tend to be smaller than secondaries and more reliant on administrative support from local authorities. It may also be tricky in rural areas, where chains have been slower to take off. “Once people accept the government position, the system will respond. But it will be incredibly difficult to make it work,” says the head of one academy chain. + +One potential salve, promoted by educationalists on the left and right and hinted at in Ms Morgan’s plans, would be to allow local authorities in effect to form their own chains. This would enable the best authorities to retain a role in the running of the schools, while also taking on schools in other areas. Some London boroughs are thought to be drawing up such plans. + +Even if the government gets the technical details right, the reforms will cause a rumpus. Many doubt that the Department for Education will be able to convert around 16,000 schools to academy status in just six years. There are plenty of good academies, and a few good chains. But forcing the expansion of the system at such a pace is unlikely to improve standards—which in turn could undermine the argument for academies in the first place. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695543-government-plans-expand-chains-academies-starbucksification-schools/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Baltic Exchange + +Nordic noir + +Ownership of an old City institution could be heading east + +Mar 26th 2016 | From the print edition + + + +THERE are few more venerable institutions in the City of London than the Baltic Exchange, a cornerstone of Britain’s maritime industry for nearly three centuries. It started as a coffee house where merchants and seamen could meet and do business, changing its name in 1744 from Virginia and Maryland to Virginia and Baltick. The Baltic has gone through several permutations since the Georgian era, surviving an IRA bomb that demolished most of its premises in 1992. Throughout, it has remained proudly independent—until now. + +The Baltic has revealed that it is looking at several offers to buy it, and the likelihood is that if it is sold, the new owners will be Asian. That will be a decision for the 370 or so of its 600 member-companies that hold shares in the organisation. + +The elegant old trading floor shut down in 2001, giving way to digital, but it is still the world leader in setting the freight rates for “dry cargo” (such as iron ore, coal and scrap metal) as well as tanker products, such as oil. It also produces indices on an impressive variety of shipping information, used for freight derivative trades. It does not make vast profits, but fills an important niche in the maritime industry. + +The front-runner to buy the Baltic is said to be the Singapore Exchange, but others that have been mentioned include China Merchants Group, a state-run trading corporation based in Hong Kong. The London Metal Exchange is also believed to have talked to the Baltic, as are some American-based exchanges. + +However, it is the Singaporean and Chinese interest that is most significant, as both countries, particularly the former, have been trying for a while to knock London off its perch as the centre of the world’s maritime services industry. Britain long ago gave up building merchant vessels, or even manning them, but London has retained a claim to be the pre-eminent place for marine insurance, chartering, brokering and more. Altogether, this cluster generates about £8.5 billion ($12.1 billion) a year. + +Some worry that letting such a stately body as the Baltic pass into Singaporean ownership, even if it physically remained in Britain, would be evidence of London’s role slipping in favour of the East. There was a minor furore last year when it was revealed that Britain’s shipping register accounted for only 1.1% of the world’s merchant fleets. Some users of the Baltic, such as Freight Investor Services, have also warned that new owners could restrict access to the vital Baltic indices, disrupting the market. + +Yet the UK Chamber of Shipping, a trade organisation, is relaxed about any possible deal, arguing that London is successful as a maritime centre precisely because of its global approach. “If we lose interest in global investment we lose interest in being a global player,” says the chamber. Watch this bulkhead. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695545-ownership-old-city-institution-could-be-heading-east-nordic-noir/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Devolution + +City united + +Manchester becomes the first city to run its own health system—and perhaps more + +Mar 26th 2016 | MANCHESTER | From the print edition + +Work in progress: from Whitehall to the Town Hall + +EVER since the government in Westminster stepped up the devolution of powers to Scotland, Wales and Northern Ireland, some in England have grown envious of the freedoms enjoyed by their neighbours. David Cameron’s government has been juggling these demands for autonomy with another difficult task: drastically trimming public spending, hoping to close by 2020 a spending deficit worth 10% of GDP when it entered office in 2010. + +Next month will begin an experiment that aims to deal with both of these difficulties. On April 1st the Greater Manchester Combined Authority, made up of ten adjoining boroughs, will take control of the city’s £6 billion ($8.6 billion) health and social-care budget. The hope is that a locally managed health-care system will improve services while saving money. + +Britain is the most centralised country in Europe, with Westminster raising more than 90% of taxes and carrying out about 75% of spending. No organisation better epitomises this than the National Health Service (NHS) in England, run from London and funded by general taxation. The NHS also exemplifies the financial straits the country is in. Although the government has promised to protect its £116 billion annual budget, rising demand from an ageing public means it is having to squeeze more out of its doctors, who this year have gone on strike over pay and conditions. + +The Manchester model will integrate health care with social care. Whereas the former is provided by hospitals and primary-care organisations (such as doctors and dentists), run centrally by the NHS and free at the point of use, social care (which includes old folks’ homes and social workers) is run and paid for by local government, which funds a heavily rationed service partly through user charges. + +Both systems are in crisis across England. The NHS is halfway through the most austere decade in its history. Public spending on health as a proportion of GDP is projected to fall to 6.7% by 2020-21, pushing Britain into the bottom half of the OECD club of rich countries. Waiting times are rising and performance targets are being missed. It is “a system built for acute illness, dealing with an epidemic of chronic conditions,” says Phillip Blond of ResPublica, a think-tank. + +Those with chronic problems such as heart disease account for 70% of NHS spending and 70% of NHS bed-days. For many, social care would be better. Yet a squeeze on social-care budgets means that old people’s homes are closing, pushing the elderly into pricier hospital beds. Local-authority spending on social care for the elderly has fallen by 17% in real terms since 2009-10, even as the population has aged. If nothing changes, within five years care homes will lose 37,000 beds—one in ten of the total—according to ResPublica. The number of hospital “bed blockers” is likely to rise. In the past five years the NHS has spent £2 billion caring for patients in hospital who are medically fit to leave. + +Devolution or delegation? + +Greater Manchester’s 2.7m people make good guinea pigs for the experiment in combining health and social care. Life expectancy is below average, unemployment above it. “The current system isn’t working,” admits Ian Williamson, the city’s head of health devolution. + +Until now, most big decisions about NHS spending in Manchester have been taken in London. Under the devolved system the leaders of the ten boroughs, along with the heads of the city’s hospitals and primary-care organisations, will co-ordinate planning and funding through a “strategic partnership board”. In the past, they rarely interacted officially. + +One of the boroughs, Stockport, has an annual budget of about £200m, of which £85m is for social care, says the council’s leader, Sue Derbyshire. It will now pool that with more than £100m from Stockport’s primary-care budget, she says, with the aim to treat more old people at home, which is cheaper than hospital. The other boroughs will take similar measures. Meanwhile, the number of hospitals offering some specialist services, such as emergency surgery, will decrease, reducing duplication. “The current system is very fragmented,” says Ms Derbyshire. + +Richard Humphries of the King’s Fund, a health think-tank, believes things are moving in the right direction. But he points to several reports that say integration does not reduce costs, though it can improve care. Furthermore, “What we are seeing is more delegation than devolution,” he says. In Manchester, final accountability lies with Mr Williamson, an employee of the NHS. If Manchester’s plans went against national priorities, it would soon be reined in, believes Mr Humphries. Ms Derbyshire of Stockport council agrees, but adds that “just because it is delegation does not mean that it is insignificant”. + +The devolution of health may be a model for other services. On March 16th the government announced that Manchester would gain control of parts of its criminal justice system. Decisions on offender management and work with wayward youths will be made locally. Like hospitals, prisons are clogged up by those who might be treated better and more cheaply in the community. Reformers believe that co-ordination in areas such as drugs and mental-health programmes could keep more out of prison, just as joined-up health and social care keeps people out of hospital. + +Each year Manchester spends £22 billion of public funds. It eventually wants control of it all. First it must prove that it can improve people’s health and save money. The revolution has only just begun. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695550-manchester-becomes-first-city-run-its-own-health-systemand-perhaps-more-city-united/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +E pluribus unum + +The split between Iain Duncan Smith and George Osborne epitomises their party + +Mar 26th 2016 | From the print edition + + + +IT WAS dubbed the “Easterhouse epiphany”. In 2002 Iain Duncan Smith was shown around that Glasgow housing estate. The then Conservative Party leader wept at the hopelessness he encountered on its litter-strewn streets and returned to London determined to do something for those who had lost out under Thatcherism. He was booted out of his job the following year, but pursued his vision (a socially conservative, globalisation-sceptic sort of Toryism) afterwards and in 2010 became work and pensions secretary under David Cameron. In a party striving to shake off its reputation for nastiness, his “Easterhouse modernisation” contrasted with the more metropolitan brand of renewal on offer: the “Soho” modernisation devised by well-heeled London Tories like Mr Cameron and George Osborne, now chancellor of the exchequer. This blended libertarian social policies with an interest in quality of life and environmentalism. + +Since then the differences between the Easterhouse and Soho schools have sundered Mr Cameron’s government; never more so than on March 18th when Mr Duncan Smith resigned as work and pensions secretary. He blamed the government’s planned cuts to disability benefits: the culmination, he argued, of years of unreasonable demands by the Treasury. In truth his motives went deeper, concerning the EU referendum (he supports Brexit, unlike the party leadership) and even styles of working, thus exposing the tensions in a Conservative Party that spans multiple classes, age groups, social circles and ideological camps. + +Indeed, this is just the latest chapter in the party’s long history of infighting. The Osborne-Duncan Smith split can even be compared to those over the protectionist Corn Laws in the 1840s (a wider argument which gave birth to this newspaper) or over European integration in the early 1990s. Which points to an awkward truth: were it not for Britain’s first-past-the-post electoral system, which rewards large, broad parties, the Conservatives would not sit together in Parliament at all. Under a proportional system, Mr Osborne might work with Blairites from Labour and free-market Lib Dems in a liberal party. Mr Cameron might join him, or lead his own Christian Democrat party. Mr Duncan Smith might club together with conservative Labourites like Andy Burnham. Other Tory MPs, like Priti Patel, might join figures from the anti-EU UK Independence Party in a new right-populist outfit. + +Such divisions have always existed in Tory politics, but Mr Duncan Smith’s resignation—like the ongoing wars over the EU—crystallised them. Its aftermath saw his allies, like Ms Patel, clash with Mr Osborne’s, like Ros Altmann, a pensions minister who had worked under the welfare secretary. Word got out of Downing Street that Mr Cameron had called his predecessor-but-one a “shit” and blamed his ally, the chancellor of the exchequer, for making a mess of what had been supposed to be a boringly safe budget ahead of the EU referendum in June. The fray even generated glimpses of the leadership contest to come when the prime minister steps down: Boris Johnson, London’s mayor, using an appearance on a chat-show to declare Mr Osborne’s cuts unfair. Local Conservative associations are furious about the prime minister’s support for EU membership (and thus sympathetic to Mr Duncan Smith’s flounce) and there is dark muttering among MPs about a bid to oust Mr Cameron after the referendum. + +So it remains possible that the Conservative Party will disintegrate over its culture wars. The next leadership election could exacerbate the splits, prompting Eurosceptics to peel away from pro-globalisation, Europhile colleagues. The associations may rise up against their own MPs. The Labour Party’s current hard-left torpor could give some Conservatives a dangerous sense of electoral immunity. + +But therein lies the case for caution: the corollary of Tories bickering when the going is good is that (much more so than Labour) they generally pull together if up against it. When Mr Osborne went before Parliament to defend his budget on March 22nd, for example, an expected drubbing turned into a triumph as Conservative MPs bobbed up and down with friendly questions, cheering him when he answered. The same was true in the previous parliament: despite violent eruptions over proportional representation, House of Lords reform and gay marriage, the party knuckled down in the months before the election and helped the leadership win an unexpected majority at the polls. + +It pays to disagree + +In other words, the Conservative Party is a faithful product of first-past-the-post. It is a strikingly wide coalition spanning much of British society, but one with the will to power that is needed to subsume its differences in the cause of winning elections. Mr Cameron encapsulates this. He is rooted in his own tribe, the posh Berkshire set, which can make him blinkered and get him into trouble. But he succeeds by being studiously vague and obsessively competitive (advisers avow that he even takes pub quizzes much too seriously); when presented with bad polls last year he told aides to “physically attack me with the right words” to improve things. This mix of constructive ambiguity and energetic pragmatism is the route to victory in the British system. + +Thus the Tories are still the party most likely to win the next election. When Mr Cameron goes they will probably pick a similarly mainstream replacement: Mr Osborne (down but not out following the recent dramas), Mr Johnson (who is only disingenuously Eurosceptic), Theresa May (the underestimated home secretary) or Stephen Crabb (Mr Duncan Smith’s dynamic replacement). Bridging such a wide part of the electorate will keep causing arguments, but it will also continue to give the Conservatives a greater reach than Labour; the reason they ran Britain alone for 47 years in the 20th century to Labour’s 22. In a country where people are growing farther apart, internal differences may prove as much an asset as a curse. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695533-split-between-iain-duncan-smith-and-george-osborne-epitomises-their-party-e-pluribus-unum/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Vaccination: A jab in time + +HPV vaccines: The cost of embarrassment + + + + + +Articles Sections Next + +Vaccination + +A jab in time + +Some Western countries have lower vaccination rates than poor parts of Africa. Anti-vaxxers are not the main culprits + +Mar 26th 2016 | From the print edition + + + +ERADICATING a disease is the sort of aim that rich countries come up with, and poor ones struggle to reach. But for some diseases, the pattern is reversed. These are the ailments for which vaccinations exist. Many poor countries run highly effective vaccination programmes. But as memories of the toll from infectious diseases fades across the rich world, in some places they are making a comeback. + +The World Health Organisation (WHO) reckons that vaccines save 2.5m lives a year. Smallpox was eradicated in 1980 with the help of a vaccine; polio should soon follow. In both cases, rich countries led the way. The new pattern looks very different. + +The trend is most evident for measles, which is highly contagious. At least 95% of people must be vaccinated to stop its spread (a threshold known as “herd immunity”). Although usually mild, it can lead to pneumonia and cause brain damage or blindness. The countries with the lowest vaccination rates are all very poor, but many developing countries run excellent programmes (see chart). Eritrea, Rwanda and Sri Lanka manage to vaccinate nearly everyone. By contrast several rich countries, including America, Britain, France and Italy, are below herd immunity. + + + +Last year Europe missed the deadline it had set itself in 2010 to eradicate measles, and had almost 4,000 cases. America was declared measles-free in 2000; in 2014 it had hundreds of cases across 27 states and last year saw its first death from the disease in more than a decade. The trends for other vaccine-preventable diseases, such as rubella, which can cause congenital disabilities if a pregnant woman catches it, are alarming, too. + +This sorry state of affairs is often blamed on hardline “anti-vaxxers”, parents who refuse all vaccines for their children. They are a motley lot. The Amish in America spurn modern medicine, along with almost everything else invented since the 17th century. Some vegans object to the use of animal-derived products in vaccines’ manufacture. The Protestant Dutch Reformed Church thinks vaccines thwart divine will. Anthroposophy, founded in the 19th century by Rudolf Steiner, an Austrian mystic-cum-philosopher, preaches that diseases strengthen children’s physical and mental development. + + + +INTERACTIVE: Explore vaccination coverage and measles cases worldwide from 1980 to 2014 + +In most countries such refuseniks are only 2-3% of parents. But because they tend to live in clusters, they can be the source of outbreaks. A bigger problem, though, is the growing number of parents who delay vaccination, or pick and choose jabs. Studies from America, Australia and Europe suggest that about a quarter of parents fall into this group, generally because they think that the standard vaccination schedule, which protects against around a dozen diseases, “overloads” children’s immune systems, or that particular vaccines are unsafe. Some believe vaccines interfere with “natural immunity”. Many were shaken by a claim, later debunked, that there was a link between autism and the MMR vaccine, which protects against measles, mumps and rubella. + +In America, some poor children miss out on vaccines despite a federal programme to provide the jabs free, since they have no regular relationship with a family doctor. Some outbreaks in eastern Europe have started in communities of Roma (gypsies). Members of this poor and ostracised minority are shunned by health workers and often go unvaccinated. + +Several governments are trying to raise vaccination rates by making life harder for parents who do not vaccinate their children. A measles outbreak last year that started with an unvaccinated child visiting Disneyland and spread from there to seven states prompted California to make a full vaccination record a condition of entry to state schools. The previous year, in a quarter of schools too few children had been vaccinated against measles to confer herd immunity. A dozen other states are considering similar bills. After a toddler died from measles last year, Germany recently started to oblige parents who do not wish their children to be vaccinated to discuss the decision with a doctor before they can enroll a child in nursery. Australia’s new “no jabs, no pay” law withdraws child benefits from parents who do not vaccinate, unless they have sound medical reasons. + +Persuasion, a fine art + +There is, however, surprisingly little evidence that tough laws make a big difference to vaccination rates. European countries that are similar in most respects (such as the Nordics) may have similar rates for jabs that are mandatory in one country but not in another—or very different rates despite having the same rules. Rates in some American states where parents can easily opt out are as high as in West Virginia and Mississippi, which have long allowed only medical exemptions. + +And strict rules may even harden anti-vaccination attitudes. Australia had previously made exemption conditional on speaking to a doctor or nurse about the benefits of vaccines. The new rules mean fewer chances to change parents’ minds. Research suggests that making it harder to avoid the most important vaccines may make it more likely that people who strongly oppose vaccination in general shun optional ones, says Cornelia Betsch of the University of Erfurt. + +More important, say public-health experts, is to boost confidence in the safety of vaccines and trust in the authorities that recommend them—both badly damaged in many European countries by pastpublic-health mis-steps, such as a scandal with contaminated blood supply in France from the late 1990s. The best way to handle a vaccine scare is to express empathy and promptly share the results from investigations of alleged adverse reactions, says Heidi Larson of the London School of Hygiene and Tropical Medicine. British authorities’ dismissive response to the MMR scare failed to reassure worried parents. + +One promising new approach is to keep track of the vaccine myths circulating in cyberspace and rebut each one as it appears. This requires tracking information from search engines and following anti-vaccination websites and parents’ forums. On one such forum, worriers say they have scoured government and vaccine-manufacturer websites but feel overwhelmed by information that they regard as inconclusive or contradictory. One mother seeks advice on how to get around California’s “fascist” new rule. Another casts doubt on a study on severe allergic reactions to vaccines: 33 cases from 25m jabs, she says, seems “fishily low”. + +Some countries are starting information campaigns that treat such concerns with respect. A parents’ organisation in Bulgaria launched one recently, under the auspices of the ministry of health and the national association of paediatricians. Its website is jargon-free and easier to navigate than unwieldy official hubs. France is launching a national dialogue on vaccines this spring, with a website where citizens can swap gripes, worries and advice. + +Although vaccine-hesitant parents often search for answers on the internet, their most trusted sources are doctors and nurses. The WHO recently developed guidelines to help health workers figure out, through a questionnaire, which type of worrier a parent is—and how to alleviate specific concerns. But recent research from several European countries shows that many doctors and nurses are also hesitant about vaccines, for much the same reasons as their patients. In a survey conducted in 2014, 16-43% of French family doctors said they never or only sometimes recommended some of the standard vaccines. + +An additional problem is that many adults were not immunised as children and have not caught up since. In the 1970s and 1980s, when the measles vaccine was new, many children did not receive it, or got just one shot, which is now known not to be reliable in conferring immunity. Some countries offer free catch-up jabs to some adults when outbreaks flare up—usually parents with small children and health workers in affected areas. + +But such efforts have, on the whole, been too little, too late. The return of easily preventable diseases that had all but disappeared is a shame. A bigger shame would be for governments to continue blaming it all on ignorant parents. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21695387-some-western-countries-have-lower-vaccination-rates-poor-parts-africa-anti-vaxxers/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +HPV vaccines + +The cost of embarrassment + +A jab to ward off cervical cancer is standard for girls. Should boys have it, too? + +Mar 26th 2016 | From the print edition + +THE causes of many cancers are mysterious. Not so for cervical cancer: in nearly all cases the villain is the human papillomavirus (HPV), a common sexually transmitted infection. In more than 60 countries girls are routinely vaccinated against the strains that cause the majority of cases. But in only a handful, including Austria, Australia, America, Switzerland, and some regions of Canada and Germany, are boys vaccinated, too. + +To decide who should get the jab, health authorities use mathematical models that tally the costs of various vaccination protocols and expected benefits. Vaccinating boys means that fewer will catch the virus and transmit it to girls; whether that is worth the cost depends on how many of those girls have already received the vaccine. A high vaccination rate among girls alone does much more to protect girls than a lower one among both girls and boys, says Paulus Bloem from the World Health Organisation (WHO). An analysis of America’s programme, published in 2011, concluded that gaining an extra year of healthy life by vaccinating boys cost eight times more if three-quarters of girls are covered than if only a fifth are. + +Unsurprisingly, the price of the HPV vaccine also influences the result of cost-benefit analyses. A price break was reportedly influential in Australia’s decision to include boys in the national programme. Price negotiations are usually confidential, but the WHO is trying to strengthen governments’ bargaining positions by publishing what some say they paid. Also helping to bring costs down is recent research showing that two doses at age 9-14 are as good as the standard three at age 16-25. Several countries have already switched. + +The most recent cost-benefit analyses also include the rarer cancers that HPV causes in men, including of the penis, anus and throat. These are much more common in gay men: their rate of anal cancer is the same as the rate of cervical cancer for women who are not screened for it. Tests that spot precursors to cervical cancer have saved many lives by catching cases early; there are no such tests for some of HPV’s male cancers. + +Some gay-rights activists lament that this argument for giving the jab to boys is ignored because even liberal politicians prefer not to talk about the realities of gay sex. Women had to campaign hard to break through the embarrassment that meant cancers of the breast and reproductive organs often went undiagnosed. The lesson is that such silence can kill. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21695389-jab-ward-cervical-cancer-standard-girls-should-boys-have-it-too-cost/print + + + + + +Previous Articles Sections Next + + + + + +Special report: Technology and politics + + + + +Technology and politics: The signal and the noise + +Election campaigns: Politics by numbers + +Tracking protest movements: A new kind of weather + +Online collaboration: Connective action + +Local government: How cities score + +Living with technology: The data republic + + + + + +Articles Sections Next + +Technology and politics + +The signal and the noise + +Ever easier communications and ever-growing data mountains are transforming politics in unexpected ways, says Ludwig Siegele. What will that do to democracy? + +Mar 26th 2016 | From the print edition + +DONALD TRUMP, THE Republican front-runner for the American presidency, is clearly riding a wave of anger—but he is also wielding a huge virtual megaphone to spread his populist messages. “@realDonaldTrump”, the Twitter account of the property magnate turned politician, has more than 7m followers and the number is rising by about 50,000 every day. Moreover, since each of his tweets is re-tweeted thousands of times and often quoted in mainstream media, his real audience is much bigger. And if he does win the Republican nomination, it will be hard to tune him out. “How do you fight millions of dollars of fraudulent commercials pushing for crooked politicians?” he tweeted in early March. “I will be using Facebook & Twitter. Watch!” + +If Ted Cruz, his fellow Republican, were to clinch the nomination, the campaign for America’s presidency would be quieter—but no less digital. Mr Cruz’s victory in the Iowa primaries was based on effective number-crunching. He bombarded potential supporters with highly targeted ads on Facebook, and used algorithms to label voters as “stoic traditionalists”, “temperamental conservatives” or “true believers” to give campaign volunteers something to go on. He also sent official-looking “shaming” letters to potential supporters who had previously abstained from voting. Under the headline “Voting Violation”, the letters reminded recipients of their failure to do their civic duty at the polls and compared their voting records with those of their neighbours. + +The way these candidates are fighting their campaigns, each in his own way, is proof that politics as usual is no longer an option. The internet and the availability of huge piles of data on everyone and everything are transforming the democratic process, just as they are upending many industries. They are becoming a force in all kinds of things, from running election campaigns and organising protest movements to improving public policy and the delivery of services. This special report will argue that, as a result, the relationship between citizens and those who govern them is changing fundamentally. + +Incongruous though it may seem, the forces that are now powering the campaign of Mr Trump—as well as that of Bernie Sanders, the surprise candidate on the Democratic side (Hillary Clinton is less of a success online)—were first seen in full cry during the Arab spring in 2011. The revolution in Egypt and other Arab countries was not instigated by Twitter, Facebook and other social-media services, but they certainly helped it gain momentum. “The internet is an intensifier,” says Marc Lynch of George Washington University, a noted scholar of the protest movements in the region. + +In the course of just a few years digital technology has become an essential ingredient in any protest movement. The Arab spring is just one example of how the internet has facilitated political mobilisation. Others include the civil unrest in Istanbul’s Taksim Gezi Park, the Maidan protests in Ukraine and the Umbrella Movement in Hong Kong, all in 2013 or 2014. In America the main instances have been Occupy Wall Street in 2011 and more recently Black Lives Matter, a campaign drawing attention to violence against African-Americans. In Europe, Spain’s Indignados, an anti-austerity coalition, in 2011 became the first big protest movement to make extensive use of social media. Even Islamic State relies on its online propaganda and messaging apps, which allow the self-styled caliphate to recruit new fighters and keep in touch with those on the ground. + +However, this special report will argue that, in the longer term, online crusading and organising will turn out to matter less to politics in the digital age than harnessing those ever-growing piles of data. The internet and related technologies, such as smartphones and cloud computing, make it cheap and easy not only to communicate but also to collect, store and analyse immense quantities of information. This is becoming ever more important in influencing political outcomes. + +America’s elections are a case in point. Mr Cruz with his data savvy is merely following in the footsteps of Barack Obama, who won his first presidential term with the clever application of digital know-how. Campaigners are hoovering up more and more digital information about every voting-age citizen and stashing it away in enormous databases. With the aid of complex algorithms, these data allow campaigners to decide, say, who needs to be reminded to make the trip to the polling station and who may be persuaded to vote for a particular candidate. + +No hiding place + +In the case of protest movements, the waves of collective action leave a big digital footprint. Using ever more sophisticated algorithms, governments can mine these data. That is changing the balance of power. In the event of another Arab spring, autocrats would not be caught off guard again because they are now able to monitor protests and intervene when they consider it necessary. They can also identify and neutralise the most influential activists. Governments that were digitally blind when the internet first took off in the mid-1990s now have both a telescope and a microscope. + +But data are not just changing campaigns and political movements; they affect how policy is made and public services are offered. This is most visible at local-government level. Cities have begun to use them for everything from smoothing traffic flows to identifying fire hazards. Having all this information at their fingertips is bound to change the way these bureaucracies work, and how they interact with citizens. This will not only make cities more efficient, but provide them with data and tools that could help them involve their citizens more. + +This report will look at electoral campaigns, protest movements and local government in turn. Readers will note that most of the examples quoted are American and that most of the people quoted are academics. That is because the study of the interrelationship between data and politics is relatively new and most developed in America. But it is beginning to spill out from the ivory towers, and is gradually spreading to other countries. + +The growing role of technology in politics raises many questions. How much of a difference, for instance, do digitally enabled protest surges really make? Many seem to emerge from nowhere, then crash almost as suddenly, defeated by hard political realities and entrenched institutions. The Arab spring uprising in Egypt is one example. Once the incumbent president, Hosni Mubarak, was toppled, the coalition that brought him down fell apart, leaving the stage to the old powers, first the Muslim Brotherhood and then the armed forces. + +In party politics, some worry that the digital targeting of voters might end up reducing the democratic process to a marketing exercise. Ever more data and better algorithms, they fret, could lead politicians to ignore those unlikely to vote for them. And in cities it is not clear that more data will ensure that citizens become more engaged. + +When the internet first took off, the hope was that it would make the world a more democratic place. The fear now is that the avalanche of digital information might push things the other way. Viktor Mayer-Schönberger, a data expert at the University of Oxford, sums up the problem: “Data are mainly helping those who already have information power.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21695198-ever-easier-communications-and-ever-growing-data-mountains-are-transforming-politics/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Election campaigns + +Politics by numbers + +Voters in America, and increasingly elsewhere too, are being ever more precisely targeted + +Mar 26th 2016 | From the print edition + +Trumping the enemy + +WHEN TOM PITFIELD talks about the campaign of Justin Trudeau, who was recently elected Canada’s prime minister, he gets animated. Mr Trudeau’s Liberal Party could not afford a lot of television time and spent much of its advertising budget on social media. That proved an inspired choice. “We would create an ad, see how people reacted to it on Facebook, tweak the content and test it again. On some days we would produce more than 50 different ads,” explains Mr Pitfield, who was in charge of the campaign’s digital side. This rapid feedback, he says, allowed his team to offer much more flexible and targeted messages than the competition. + +Although the trend is obscured by Donald Trump’s tweets and his other antics, Facebook will also play a big role in America’s presidential contest this year. The tools that the world’s biggest social network offers to campaigners are getting better all the time. Last year it provided a way to upload lists of people to its site so they could be sent targeted messages. Now it is offering a further service that allows campaigners to reach Facebook users who “like” and share a lot of political content. + +Even Barack Obama’s first presidential campaign in 2008 was widely hailed as “data-driven”. But it was only in 2012 that his team systematically used digital technology to deal with every campaign’s biggest challenge: how to make the best use of a limited budget to reach the right voters. In the past, geography had served as a proxy target: if a precinct was considered Democratic, for instance, it would get a lot of attention from Democratic campaigners. But in recent years it has become possible to target voters individually, thanks to the availability of ever more data as well as ever cheaper computing power and better methods to mine them. + +To find out where to concentrate its resources, the Obama campaign used polls and other data to generate a statistical model of the attributes potential Obama supporters had in common. “When volunteers knocked on doors in 2008, four out of ten people they met backed Obama. In 2012 the ratio was nine out of ten,” says Dan Wagner, who led the president’s data-science team during his second campaign. + +Hidden persuaders + +From a windowless office in Chicago that became known as the “data cave”, Mr Wagner and his colleagues also pioneered a number of other methods of persuasion in that election. They tested the subject lines of fundraising e-mails (“I will be outspent” raised $2.6m; “Do this for Michelle” only about $700,000). They found out whether a group of voters they wanted to target watched certain cable shows, which allowed them to use television advertising more cost-effectively. Beyond mobilising their own voters, they also tried to identify others who might be persuaded to change their mind (with limited success). + +Such novel approaches helped scupper the campaign of Mitt Romney, the Republican candidate last time round. At the time the Democrats were widely expected to retain a lasting edge in data, not least because they find it easier than the Republicans to attract highly trained data scientists. But that turned out to be wishful thinking. “Most of what we did in 2012 is now a commodity,” says Mr Wagner, who went on to found Civis Analytics, a startup which offers data-management and analytics services to left-leaning groups. + +The starting-point for all this information-gathering was the controversial Florida recount after the presidential election of 2000, which became necessary partly because of incomplete voter rolls. To avoid a repeat, Congress in 2002 passed the Help America Vote Act (HAVA), which required states to maintain a “single, uniform, official, centralised, interactive computerised statewide voter registration list”. This was a bigger deal than it appeared at first sight. Along with improvements in database technologies, HAVA made it possible for the first time for political parties to compile an up-to-date list of all voters in the country. In his book, “Hacking the Electorate”, Eitan Hersh of Yale University argues that this laid the groundwork for individual targeting. Campaigners were able to identify voters easily and link them to other public information. + +The legislation also kicked off what might be called “database politics”. Democrats were the pioneers: in 2006 party officials set up a company called Catalist which today offers one of the most comprehensive databases on Americans of voting age, covering more than 240m people. Apart from the official register of voters, it also includes other public records and information from commercial data brokers. Each entry contains hundreds of pieces of information, from race to the probability of owning an SUV. + +Catalist is best understood as a “data co-operative” for Democratic campaigns, trade unions and other left-wing organisations, says Laura Quinn, its chief executive. For a fee, it gives clients access to its common data pool. They can combine it with their own information and benefit from the firm’s analytics expertise, which mainly comes in the form of statistical “scores”. These numbers predict, for instance, how likely someone is to vote Democrat and go to the polls (see chart). + + + +But the Democratic Party did not want to rely on an outside database. When Mr Obama became president, it decided to create its own. Called VoteBuilder, it also relies on the principle of sharing data. During the primaries all competing Democratic campaigns can use VoteBuilder and combine it with data they gather on the trail. Much of that additional information is kept separate, but campaigns share basic items such as name changes or deaths. Once a nominee has been chosen for the general election, a lot of these data become part of the common pool. + +The Republicans’ central database, Voter Vault, has commanded less co-operation and has often been neglected between campaigns. Warring factions have insisted on producing their own databases, often working with commercial vendors. After Mr Romney lost to Mr Obama in 2012, Charles and David Koch, billionaire brothers with a passion for conservative causes, invested millions in i360, a for-profit firm that competes with Voter Vault. On both sides, access to all these databases can be a highly political issue. Insurgent Democratic candidates in state and local races frequently complain that they are being excluded; they need to show a minimum of co-operation to get the data. + +Thanks to all this data-gathering, campaigners now seem to “know you better than you know yourself”, as CNN, an American cable news channel, once put it. But the reality is different, explains Mr Hersh in his book. A lot of the available data, particularly the commercial sort, are of little value in helping campaigners decide which voters to target. The best guide is the basic demographic information taken from public records, such as gender, age, voting history and party affiliation. + +According to Mr Hersh, this explains why most lawmakers are in favour of allowing easy access to public records. In 2012 a legislator in Utah proposed giving voters the option of limiting access to their date of birth, but the idea was quashed by the leadership of both parties. Campaigners also file lots of requests based on the Freedom of Information Act and state statutes that govern public access to administrative data. “Ironically, laws ostensibly passed to help private citizens track the government’s action turn out to be laws that help political campaigns track private citizens,” writes Mr Hersh. But his main complaint is the conflict of interest arising when parties control the sources of data which they themselves use extensively. + +The big question is whether the use of such databases and the algorithms that sift through them change the outcome of elections. Recent estimates suggest that they can add between two and three percentage points to a candidate’s result. In a closely fought election that could be crucial, but in an emotionally charged race between Mr Trump and Mrs Clinton it may not play a decisive role. Then again, Mrs Clinton will probably end up relying on technology more than she has done so far. The Democrats, explains Matt Hindman of George Washington University, always have a harder time getting their supporters out to vote than the Republicans do. Since Mrs Clinton has not enjoyed universal enthusiasm for her candidacy, getting out the voters in November may be even more difficult than usual. + +Besides, even if parties do not derive a lasting and decisive advantage from data and analytics, they will still be obliged to invest in technology to keep up with their competitors. And although social media give politicians direct access to their voters, as the Trump campaign shows, big parties still enjoy an advantage because they have the money to hire technical talent, pay for polls and buy advertising on Facebook. + +Shrinking the public sphere + +More broadly, some people worry about how all this number-crunching will affect democracy, in America and elsewhere. Mr Hersh does not see much of a problem, as long as data are used just to get people out to vote, rather than to try to make them change their mind. But Zeynep Tufekci of the University of North Carolina argues that targeting voters with ever more personalised messages will shrink the “public sphere”, which Jürgen Habermas, a German philosopher, once defined as the basis of democracy. “This form of big-data-enabled computational politics is a private one. At its core, it is opposed to the idea of a civic space functioning as a public, shared commons,” writes Ms Tufekci. And privacy is a growing concern. In December a database containing the records of 191m voters found its way onto the internet. + +Rasmus Kleis Nielsen of Oxford University, who has written a book on political campaigns in America, thinks that such targeting will remain largely confined to that country. Nowhere else have party organisations access to so much money, data and technical talent. Moreover, America’s political system lends itself well to analytics because once voters get to the polling station they often have only two options. + +Yet there are signs that some other countries are shifting in America’s direction. Apart from buying lots of ads on Facebook, Canada’s Liberal Party in last year’s election used the services of Civis Analytics, a firm spun off from the Obama campaign in 2012. In Britain, too, targeted ads on Facebook helped the Conservative Party win the general election last May. And when it comes to using social media to influence the political weather more generally, America is by no means alone. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21695190-voters-america-and-increasingly-elsewhere-too-are-being-ever-more-precisely/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Tracking protest movements + +A new kind of weather + +Social media now play a key role in collective action + +Mar 26th 2016 | From the print edition + +Umbrella power + +WHEN BRITAIN’S MOST active followers of Islamic State (IS) sent tweets and posted on Facebook, they did not expect all their online output to end up in print on a wall at the International Centre for the Study of Radicalisation at King’s College London. “Allah gave you this life, so use it the way he commanded you to,” writes one. “Whenever pain comes to me I just stop and think, ‘Allah does not give me more than I can bear.’ Then I carry on,” says another. + +The unusual display is an important part of a research project to find out if British IS followers who left for Syria use social media differently from those who stayed at home. Shiraz Maher, the project’s leader, and his colleagues took months to classify each of the 50,000-odd messages and posts under headings such as “yearning for the afterlife”, “religiosity” and “desire to migrate”. “If we can find patterns, we can perhaps predict when somebody is about to go,” says Mr Maher. + +The research illustrates a basic dilemma for movements that live at least partly online: without the internet and social media some of them would not exist, but the technology also opens them up to an unprecedented degree of scrutiny. And the tools for laying them bare are getting ever better. + +Gilad Lotan, the chief data scientist at betaworks, an incubator for startups in New York, did his military service in the intelligence corps of the Israeli army, where he was trained to dig up information. He was pleasantly surprised when one day the data just started arriving without any effort on his part—on Twitter. The micro-blogging service was an important communication channel for activists of Iran’s Green Movement in 2009 before it was blocked by the government in Tehran. + +Mr Lotan’s fascination with the data generated by social movements has grown further as the tools to analyse them have improved. “Topic modelling” reveals what people are talking about; “sentiment analysis” gives an idea of how they feel; “network mapping” identifies the most important “nodes”; “visualisation” software turns the information into colourful pictures. And using such programs is becoming cheaper all the time. + +Last year Mr Lotan turned his attention to the anti-vaccination movement in California, which relies heavily on social media to spread its message. Analysing the hashtags—increasingly used as the brands of social movements, as in #BlackLivesMatter—he found that most anti-vaccination messages came from only a dozen Twitter accounts. After losing a legislative battle, the movement’s leaders changed their message: rather than making dubious claims about the link between vaccines and autism, many accounts started to present vaccination as a matter of freedom to choose (see the visualisation on the cover of this special report, where the dark blue cluster on top represents messages of that sort). + +Mr Lotan is about to turn his hobby into a product. Other firms already produce such network maps for money. One is Graphika in New York. Its speciality is identifying communities of interest within social networks, finding the most influential members and tracking what they are talking about. Most of the firm’s customers are companies such as fashion brands or media firms, but it also looks at political issues. Its software revealed, for instance, that during the Maidan protests in Ukraine in 2013-14, Russian “spam bots”—programs that automatically send messages—had a much larger presence in Ukraine’s Twittersphere than tweets by the Russian political opposition. + +Such analyses have answered many of the questions asked about collective action online. They show that social media play a key role under any kind of regime. Sceptics about the Green Movement in Iran pointed out that many if not most tweets were in English and sent by people outside the country. But during the Maidan protests most messages were in Ukrainian or Russian, say researchers at New York University’s Social Media and Political Participation (SMaPP) programme. + + + +Similarly, to find out how Hong Kong’s Umbrella Movement evolved, a team at Hong Kong University looked at its public Facebook pages. For every day when protesters occupied several public spaces in the city in the second half of 2014, they measured how interlinked the pages were. This number turned out to be a good predictor of the mood in the population at large. + +In a widely cited article in the New Yorker in 2010, Malcolm Gladwell, a bestselling author, argued that the form of protests promoted by social media, such as signing online petitions, would never have the same impact as “high-risk” actions such as those taken at the time of America’s civil-rights movements. But online “slacktivism”, as other critics have called it (combining the words “slacker” and “activism”), can make a difference. Looking at the tweets of several recent protest movements, including the Indignados in Spain and the demonstrators at Istanbul’s Taksim Gezi Park, researchers at SMaPP concluded that participants at their periphery were as important as the ones at the centre. + +Last but not least, social media can isolate people from viewpoints they disagree with. Eli Pariser, an internet activist, calls this the “filter bubble”. Researchers at Indiana University’s Network Science Institute who analysed links shared on Twitter and searches on AOL, a web portal, showed that the sites reached from social media are much less diverse than those reached from a search engine. Pablo Barberá, formerly of SMaPP and soon to join the University of Southern California, who examined the political Twitterspheres in America, Germany and Spain, found they were indeed polarised, particularly in America. + +Random spikes + +Some researchers have now moved on to building computer models to test theories about the behaviour of online social networks. The spread of information on social media is typically “spiky”, with some posts suddenly becoming extremely popular whereas others never take off, regardless of the topic. + +Politics in the age of social media is better described by chaos theory than by conventional social science + +To track how misinformation travels online, Filippo Menczer and his colleagues at Indiana University developed a system that can simulate millions of users to reproduce the “spikyness” of social media. Even if the “users” are programmed to prefer worthy content, misinformation can go viral when it coincides with information overload, which is common online. “People just pass on stuff without thinking,” notes Mr Menczer. + +A new book entitled “Political Turbulence” gives a taste of where such research might lead. The four authors, most of whom work at the Oxford Internet Institute, come to an intriguing conclusion: social media are making democracies more “pluralistic”, but not in the conventional sense of the word, involving diverse but stable groups. Instead, the authors see the emergence of a “chaotic pluralism”, in which mobilisations spring from the bottom up, often reacting to events. Online mobilisation can develop explosively and seemingly at random. Most online petitions, the authors found, attract only a small number of signatures, but the successful ones took off in the first few days (see chart). Success does not seem to depend on the subject matter: similar ones often fare quite differently. + + + +Politics in the age of social media, the authors conclude, is better described by chaos theory than by conventional social science: “Tiny acts of political participation that take place via social media are the units of analysis, the equivalent of particles and atoms in a natural system, manifesting themselves in political turbulence.” One day, say the authors, it will be possible to predict and trigger such surges, in the same way that meteorologists have become good at forecasting the weather. + +But who will be the political meteorologists? The chances are that it will not be researchers such as Mr Lotan or Mr Menczer. Access to data is getting harder. Many followers of IS, for instance, have abandoned Twitter and now use encrypted messaging services considered safer, such as Telegram or TextSecure. Social-media services are also becoming less generous with their data, both for privacy and commercial reasons. + +Only two groups of actors are sure to have good access to social-media and other types of internet data. One is the online giants, such as Facebook and Google, which know much more about people than any official agency does and hold all this information in one virtual place. It may not be in their commercial interest to use that knowledge to influence political outcomes, as some people fear, but they certainly have the wherewithal. In 2010 Facebook allowed James Fowler, a political scientist at the University of California, San Diego, to test the service’s influence on people deciding whether or not to vote in the elections for Congress. About 61m users were presented with an “I voted” button and shown pictures of friends who had clicked on it. Two smaller control groups received either no message or just a notice about the elections and how many users had clicked the “I voted” button. The results showed that the Facebook users who had seen pictures of their friends were 0.4% more likely to vote than those who had not. + +The other group of actors are governments, particularly the authoritarian kind. Having been caught off guard by online protest movements, many are now investing heavily in their web-based propaganda infrastructure. Russian government agencies, for instance, are not just good at setting up social-media bots and other spamming weapons to drown out genuine online discourse. They also employ armies of “trolls” to fight on their behalf in Western comment sections and Twitter feeds. + +China’s political weathermen are even more sophisticated. Researchers at Harvard University who studied millions of Chinese social-media posts found that censors mostly blocked content designed to spur collective action but tended to tolerate comments critical of the Chinese leadership. + +The longer-term worry is that the internet and related technologies could strengthen authoritarian governments and may make it harder for the countries concerned to move towards democracy. In a recent report the World Bank pointed out that among non-democratic countries, the most autocratic have invested most in e-government services (see chart). They do this, says the bank, to strengthen control and solve what it calls the “dictator’s dilemma”: the invidious choice between restricting the internet, which would hurt economic development, and leaving it unfettered, which could undermine the government’s power. + + + +Similarly, in a recent paper Espen Geelmuyden Rod and Nils Weidmann, both of the University of Konstanz, find that the internet tends to grow faster in countries in which regimes are more concerned about the flow of information. They also argue that there is no evidence to date “that democracy advances in autocracies that expand the internet”. + +At least in democratic countries, though, there are some encouraging signs that at the local level the internet has improved participation in decision-making from the bottom up. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21695192-social-media-now-play-key-role-collective-action-new-kind-weather/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Online collaboration + +Connective action + +How the internet changes the way people club together + +Mar 26th 2016 | From the print edition + +IT IS MORE than half a century old, but Mancur Olson’s book, “The Logic of Collective Action”, is still hugely influential. In a nutshell, the late economist argued that large groups of people will organise only if they have some particular incentive: many will simply “free-ride” on the efforts of others. Are the rules different online? + +In recent years a number of academics have tried to find an answer. One prominent attempt is a book called “The Logic of Connective Action”, by Lance Bennett and Alexandra Segerberg. The authors contend that when people express views online, they do not need to be part of a formal organisation. By sharing links or posting comments, they are already engaging in political activity. But this diffuse political energy has to be bundled to become effective, hence the importance of rallying cries such as the Occupy movement’s “We are the 99%”. + +Yochai Benkler, a law professor at Harvard University and author of another influential book, “The Wealth of Networks”, makes a similar argument. Just as far-flung communities of volunteer programmers are able to produce useful open-source software, he says, activists can further their cause by banding together online. The best example for such political “peer production”, as he calls it, was the successful campaign to stop SOPA and PIPA, two controversial bills in America aimed at strengthening intellectual-property rights online. He and his collaborators tracked the websites of the organisations supporting the campaign and mapped links between them at different stages. They found a network that was constantly evolving, with different players taking the lead at different points. “They managed to get things done in a decentralised way,” says Mr Benkler. He concludes that such movements have become a “new source of power” in addition to conventional ones, such as old-style media and political parties. + +Henry Farrell, of George Washington University, and Cosma Shalizi, of Carnegie Mellon University, are more interested in the scope the internet might offer for experiments to improve democratic structures. These are not nearly as good as they could be, they reckon in a paper entitled “Cognitive Democracy”. The internet is full of experiments in collective decision-making. The most successful ones can be found in open-source software and content-sharing sites. Their governance structures range from benevolent dictatorship (as practised by Linux, an operating system) to more decentralised organisations (for example, Wikipedia, an online encyclopedia). + +None of this refutes Olson’s basic premise that people do not automatically collaborate, even if they have a common interest. But the internet makes such collaboration much easier. And in the online world people take action for different reasons, argue the authors of another book, “Political Turbulence”: income levels matter less and personalities more. Extroverts, for instance, are attracted by the prospect that whatever they do will be widely noticed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21695191-how-internet-changes-way-people-club-together-connective-action/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Local government + +How cities score + +Better use of data could make cities more efficient—and more democratic + +Mar 26th 2016 | From the print edition + +What the mayor saw + +MARTIN WALSH, THE mayor of Boston, keeps on top of what is going on in his city. His office is dominated by a dashboard, a large screen packed with constantly changing snippets of text, numbers and charts (pictured). One section shows the current traffic to the city’s call centre and the percentage that has been answered within 30 seconds. Next to it is a chart tracking the number of potholes filled every day, which makes way for a map of Boston’s neighbourhoods coloured according to how often Mr Walsh has visited them. + +But the central piece of information is the “CityScore”, a single number to indicate Boston’s overall health. It combines 24 different metrics, from crime to Wi-Fi availability, energy consumption and grants for the arts. A value above 1 means that things are going better than planned; anything below this, and the mayor is likely to pick up the phone. “Everybody knows that he is looking at this,” says Daniel Koh, Mr Walsh’s chief of staff, who came up with the idea for the index. Bostonians can check it online. + +CityScore, launched last October, reflects a growing trend among city governments in America. Led by Boston, Chicago and New York, they have started to use the ever-increasing amounts of data they collect to improve planning, offer better services and engage citizens. To speed up the process, the White House recently launched a new “smart-city” initiative. + +Here we go again, you might say: it was only a few years ago that big makers of computing and communications gear made an effort to persuade city halls to buy more of their machines. But this time the push is coming more from the city governments and even the citizens themselves. Cities are becoming aware that data, and the infrastructure to analyse them, will eventually become as important to their citizens’ welfare as the power grid and the transport system. + +What most mayors have yet to realise, however, is how much their administrations will have to change to be able to get the best out of these data—and use them to make their cities more democratic. More and better data could help governments ensure that services in poor neighbourhoods are as good as those in rich ones. Given a city-wide system of sensors, the lead-contaminated water that poisoned poor citizens of Flint, Michigan, in 2014-15 would probably have been spotted much earlier. + +Pinpointing potholes + +In some ways Boston has been a digital pioneer. In 2006 the previous mayor, Tom Menino, hired the city’s first cabinet-level chief information officer. He was behind the launch of an app called “Citizen Connect” which made it easy for people to report problems, for instance by taking a picture of graffiti. Another first was the creation of an internal innovation team, perhaps best known for another app, Street Bump. This collects vibration data from moving cars to pinpoint potholes that need to be filled. + +Now the city is putting more effort into learning from such data. About one-third of its rubbish bins are equipped with solar panels and sensors that signal when a bin is full, making rubbish collection more efficient. The city’s data scientists have also analysed online classified ads to identify landlords who cram too many tenants into their flats. And they are running experiments known as “A/B-tests” that have already become routine online. So far they have tried prioritising buses at traffic lights and increasing fines for blocking an intersection, and then used data from Waze, a popular navigation app owned by Google, to see how this affects congestion, a big problem in Boston. + +A project called “Underworlds” envisages small robots crawling through sewers, collecting samples and perhaps one day analysing them on the spot + +MIT’s Senseable City Lab in Cambridge across the Charles River gives a taste of how much more cities could do with data. Researchers there are working on a cheap package of sensors to be put on top of street lights, which if widely deployed would make it possible to measure noise and pollution levels almost house by house in real time. A project called “Underworlds” envisages small robots crawling through sewers, collecting samples and perhaps one day analysing them on the spot. This could reveal things such as what people eat and how many have the flu. “Imagine how many data get flushed down the toilet,” says Erin Baumgartner, one of the lab’s directors. The project is supported by the government of Kuwait, which is looking for ways to measure its people’s excessive intake of salt. + +However, this sort of thing is not going to make much difference if the bureaucratic structure of city governments remains the same. Most are collections of departmental silos that do not communicate much with each other, held together by complex hierarchies and rules. That may have worked when information was scarce and moved slowly, but now it has become an obstacle. City governments have to become more of a coherent whole—a “platform”, as geeks put it. + +This often starts with getting the technology right. City governments’ computer systems tend to reflect their fragmented nature. Information is typically kept in separate databases. Making these work together is crucially important, but the task is often underestimated, explains Jascha Franklin-Hodge, Boston’s chief information officer. The city still has more work to do, but most of its digital information now sits in a “data warehouse”, a big computer system where it can be easily accessed and analysed. + +The next thing is better integration of a city’s administration. To be able to improve existing services and develop new ones, departments have to work together more closely, says Stephen Goldsmith of Harvard University and co-author of “The Responsive City”, a new book about urban government. City employees also have to be able to act more independently and be judged by their results, not have to follow rules slavishly. + +Regulation, too, has to be rethought. When information about businesses was hard to come by, it made sense to impose all kinds of rules and regularly check for compliance. But now that analytics can point to likely violators, and business practices can be tracked in real time, such regulation may amount to overkill. In Chicago inspectors were sent mainly to restaurants which an algorithm had identified as potential problems. + +Yet the biggest change will be of another order: cities need to play a more active role as broker of urban data. This means more than just sharing reams of their own administrative information, as many cities around the world already do, says Anthony Townsend, a researcher at New York University and author of a book on smart cities. Municipal governments should become the guardians of the local data ecosystem, creating a framework that encourages others to share data and offer services to citizens. They could act, for instance, as a portal for information from utilities and online firms, while also protecting privacy and ensuring that the algorithms used do not discriminate against particular groups of people. + +Some cities are beginning to take on this role. An early example is Boston’s data-sharing partnership with Waze on reducing traffic congestion. In return for some of the service’s data, the city is giving it early warning of any planned road closures. Chicago, meanwhile, has launched OpenGrid, a website which allows citizens and businesses easily to visualise public urban data using online maps. + +In New York the Centre for Urban Science and Progress (CUSP) has launched a project called “Quantified Communities” to work out how people could use data generated by increasing numbers of sensors in their neighbourhoods. One idea is to measure air quality in different areas and compare it with hospitalisation rates for asthma. Constantine Kontokosta, who heads the project at CUSP, explains that “we want to define the problem before we decide on the technology—not the other way around.” + +Seattle, for its part, has discovered that citizens will insist on stringent protection of privacy. A few years ago it began using a wireless police network that could track smartphones, along with automatic licence-plate readers. The programme was implemented without much public discussion or thought about how the data would be managed. That led to a backlash from residents and a hasty about-turn. The city has since adopted detailed privacy principles and has just appointed a data-protection officer—a standard requirement in European cities but a first in America. + +It is less clear what cities can and will do to prevent algorithms from becoming “Weapons of Math Destruction”, the title of a forthcoming book by Cathy O’Neil, a blogger and former quantitative analyst on Wall Street. Critics allege that local police forces in America are the worst offenders. Their “predictive policing”, which uses algorithms, crime statistics and other data to pinpoint “hotspots” where further crimes are likely to be committed, has sometimes proved quite accurate. But it can also lead to unnecessary questioning, excessive stopping and searching and racial profiling in such hotspots. + +Even apparently neutral apps such as Street Bump may have unintended consequences: the service could give priority to wealthier neighbourhoods where people can afford smartphones, leaving potholes in poor areas unfilled. To avoid such an outcome, Boston first released the app to its road inspectors, who drive all over the city. It has also negotiated a deal with Uber, the taxi-hailing service, to get trip data so that its transport department can monitor, for instance, how long passengers in poor neighbourhoods have to wait for a car. + +The big political question is whether data will simply make city government more efficient—which in itself is a worthwhile goal—or whether they will also empower citizens. Susan Crawford of Harvard University, co-author of “The Responsive City”, argues that having access to data will not only show people what their tax money can achieve, but give them the tools to get involved in their city’s affairs. + +Others are not so sure. Technology rarely fixes the underlying problem but mostly replicates it, says Benjamin Barber, an American political theorist with an interest in local government. “Above all we need smart mayors and smart citizens, not smart cities.” The dashboard in the mayor’s office suggests that in Boston, for now at least, efficiency and control win out. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21695194-better-use-data-could-make-cities-more-efficientand-more-democratic-how-cities-score/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Living with technology + +The data republic + +To safeguard democracy, the use of data should be made as transparent as possible + +Mar 26th 2016 | From the print edition + +The internet, but not as you know it + +“TECHNOLOGY IS NEITHER good nor bad; nor is it neutral,” said the late Melvin Kranzberg, one of the most influential historians of machinery. The same is true for the internet and the use of data in politics: it is neither a blessing, nor is it evil, yet it has an effect. But which effect? And what, if anything, needs to be done about it? + +Jürgen Habermas, the German philosopher who thought up the concept of the “public sphere”, has always been in two minds about the internet. Digital communication, he wrote a few years ago, has unequivocal democratic merits only in authoritarian countries, where it undermines the government’s information monopoly. Yet in liberal regimes, online media, with their millions of forums for debate on a vast range of topics, could lead to a “fragmentation of the public” and a “liquefaction of politics”, which would be harmful to democracy. + +The ups and downs of the presidential campaign in America and the political turbulences elsewhere seem to support Mr Habermas’s view. Indeed, it is tempting to ask whether all this online activism is not wasted political energy that could be put to better use in other ways. Indeed, the meteoric rise of many online movements appears to explain their equally rapid demise: many never had time to build robust organisations. + +But online activism cannot be dismissed. Some movements have had real impact, either by putting an issue on the political agenda or by taking over an existing organisation. Without the Occupy movement, the debate about income inequality in America would be much less prominent. The same goes for the Black Lives Matter campaign and violence against African-Americans. In Britain, Jeremy Corbyn and his supporters managed to commandeer the Labour Party. In America, Donald Trump seems about to do the same with the Republican Party (though whether he can do it to the whole country remains to be seen). + +No going back + +Only the most extreme critics want to go back to a time when the flow of information was controlled mostly by governments and mass media. And the current political turbulences may lead to the creation of services that calm them down. Earlier this year, for instance, Change.org, a petition site with nearly 140m members, launched Change Politics, which lets any user, including media companies and other organisations, post endorsements. The idea is that voters will be able to draw on recommendations by people they trust, rather than being manipulated by political commercials and tweets. + +The effect of vast quantities of data is both easier and harder to gauge. As this special report has shown, piles of digital information and the algorithms to analyse them tend to be good for those in power. Political parties with plenty of money can use them both to target voters and to discipline recalcitrant candidates by cutting off access. Autocratic governments that were blindsided when the internet took off in the mid-1990s have regained their vision. Data can make cities more efficient, but also more centralised and controlling. + +Piles of digital information and the algorithms to analyse them tend to be good for those in power + +All this suggests that data and analytics risk slowing down and perhaps even undoing the welcome redistribution of power to ordinary people that the internet seemed to be able to offer. They create “points of control” in what used to be largely an “open system”, as Yochai Benkler of Harvard University puts it in a recent article in Daedalus, an American journal. The design of the original internet, he writes, was biased towards decentralisation of power and the freedom to act. Along with other developments such as smartphones and cloud computing, he now sees data as a force for recentralisation that allows “the accumulation of power by a relatively small set of influential state and non-state actors”. + +Does this matter? Another law of technology, particularly the digital kind, is that it is never in equilibrium. Data can empower both empires and rebels. David Karpf, of George Washington University, expects a rise in what he calls “analytic activism”, the title of a forthcoming book of his. One example is MoveOn.org, a left-wing advocacy group in America with a voracious appetite for data of which even many of its 8m members are unaware. Among many other things, it closely tracks whether people have read the many messages it sends out. + +Equally important, digital technology has a “capacity to surprise”, says Helen Margetts of the Oxford Internet Institute (OII). The database politicking within America’s parties has created room for non-partisan offerings. One is NationBuilder, a startup based in Los Angeles. Its clients get access to a basic national voter file to which they can add their own data and share it with other campaigns if they wish. “Unlike an organisation which keeps a big central database, we don’t have to make a decision on who can use it,” says Jim Gilliam, the startup’s chief executive. + +And then there is the blockchain. This technology, a version of which powers bitcoin, a cryptocurrency, could prove to be a big democratic reset button. It is essentially a new type of database that is owned and maintained not by a single actor but by its users, who collectively agree to any changes. Such “distributed ledgers”, as they are known, could one day become alternatives to big centralised databases. Venture-capital firms have made their first bets on such undertakings, including OpenBazaar, a peer-to-peer marketplace. Perhaps one day voter files will be kept in blockchain-like distributed ledgers, which allow citizens to reveal their data only to the candidates they like. + +Taming the beast + +It would be foolish, however, to base public policy solely on the hope that some new service or technology will come along to solve existing problems. So what safeguards might be introduced to limit the power conferred by data? The most radical proposal comes from Evgeny Morozov, a technology critic. He thinks that big companies such as Facebook and Google should be barred from owning certain types of data, such as the keywords users search for, and whether those users have voted in the past. Instead, this information should belong to the individuals concerned and shared only if they so choose. Yet the political will to implement such a policy is lacking in much of the world, says Mr Morozov. + +A more practical idea comes from Gavin Starks, the executive director of London’s Open Data Institute. He argues that certain types of data may need to be kept available to all: address files and geospatial information, for instance, are akin to roads and other public infrastructure and need to be treated in the same way. “We need to discuss who owns our data infrastructure, what roles the public and private sectors should have, and what role we as citizens play,” he recently wrote in a blog post. + +Others think that more transparency would help. Zeynep Tufekci of the University of North Carolina wants campaigners to be required to publish all the messages they pitch to voters—in the same way as they are obliged, at least in America, to show in detail how they have spent their campaign money. And Eitan Hersh of Yale University recommends that voters should be given the chance to check the information held about them in campaign databases. + +Transparency over the use of algorithms has its limits. Opening them up for inspection, as some have proposed, can make them lose their value because it will allow them to be gamed. Others are so complex that even their authors do not fully understand how they operate. One possibility is to develop algorithms that check on algorithms. Researchers at Columbia University have built a software tool called Sunlight to reveal why, say, users of online services are presented with certain ads. + +Luciano Floridi, also of the OII, calls for an ethical framework for the use of data, much like that currently being developed for reproductive technologies. Some companies have already started to move in this direction. Google has set up an ethics committee for artificial intelligence. And the British parliament’s science and technology committee recently proposed the creation of a national data-ethics council. + +The debate about data and politics has only just begun and these proposals need time to mature. But getting the rules for managing digital information right is critically important. Societies will have to decide how they want data to be used, in politics as well as in other spheres. As Alec Ross, a former State Department official who now works as an adviser on technology politics for Hillary Clinton’s campaign, puts it in his new book “The Industries of the Future”: “The choices we make about how we manage data will be as important as the decisions about managing land during the agricultural age and managing industry during the industrial age.” + +Data and politics are likely to become ever more intertwined, as science-fiction writers have long forecast. They may have got the details wrong, but some of their ideas are nevertheless worth considering. Isaac Asimov, who died a quarter of a century ago, before the internet took off, invented a prophetic universe ruled by a group of “psychohistorians” who forecast humanity’s future, using a set of complicated equations. To prevent people from interfering with the predictions, they had to keep them secret, but that in turn created untold complications. The story, like this special report, suggests that technology is morally neutral. Data are neither good nor bad for democracy. It all depends on how people use them. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21695195-safeguard-democracy-use-data-should-be-made-transparent-possible-data/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Digital advertising: Invisible ads, phantom readers + +Mobile advertising: Shine, but not rise + +Electronics: Taiwan 2.0 + +Pulp producers in Brazil: Money that grows on trees + +Power stations in Indonesia: Shock therapy + +Television: Changing the channel + +Schumpeter: The man who put Intel inside + + + + + +Articles Sections Next + +Digital advertising + +Invisible ads, phantom readers + +Worries about fraud and fragmentation may prompt a shake-out in the crowded online-ad industry + +Mar 26th 2016 | NEW YORK | From the print edition + + + +THIS year, for the first time, advertisers in America may spend more online than on television. Worldwide, online ads may surpass television in 2017, predicts the forecasting unit of Interpublic, a giant ad agency. Digital advertisers’ ambitions border on the divine. They are omnipresent, nestling their ads in news sites, search results and Instagram feeds. They are increasingly omniscient: no longer do advertisers know just general things about you—a worldly professional, say, with superb taste in journalism—but they target you, specifically. Omnipotence, however, is proving harder to achieve. + +The industry has not so much a supply chain as a tangle. More than 2,500 companies are involved in the supply of digital ads, according to Luma Partners, an investment bank. Marketers worry that their ads will linger unseen in obscure slots or worse, be served to robots posing as human consumers. Meanwhile millions of real ones, fed up with online ads, want to block them. Among investors, enthusiasm for “ad tech” has waned. Digital advertising’s woes are not existential. Spending will continue to grow. But the current turmoil is likely to reshape the industry. + +“Programmatic”, or automated, buying and selling of ad slots was supposed to make advertising online simpler, and in many ways it has. Advertisers bid for space on a webpage that a consumer has just clicked on, based on cookies and other tags that are tracking his online activities. The auction is held, and the “winning” ad transmitted, within milliseconds. The idea is to help publishers get the best price for their slots and advertisers the best return on their investment. + +The trading of online ad slots is as complex as it is fiendishly fast. Thousands of firms jostle to analyse consumer data and buy, sell and monitor ads. Middlemen repackage “inventory” (as ad slots are known in the business), then sell it to other middlemen. An ad impression sold programmatically can change hands 15 times before finally being bought by an advertiser, notes Peter Stabler, an analyst at Wells Fargo, a bank. “We have an immature supply chain that is constantly evolving,” says Randall Rothenberg of the Interactive Advertising Bureau (IAB), which represents media and ad-tech firms. That brings both innovation, he argues, and headaches. + + + +Some problems are more easily fixed than others. In recent years the various participants in the industry have bickered over “viewability”: webpages are usually bigger than the screens they are viewed on, so if a reader sees only part of an ad on his screen, for a fraction of a second, how much should the advertiser pay? The Media Rating Council (MRC), which sets the rules for audience measurement, now considers a display ad “viewable” if a consumer can see half of it for at least one second. Videos must be seen for two seconds. + +But some advertisers want more. GroupM, a buyer of ad slots on behalf of consumer brands, considers an ad viewable only if the consumer can see all of it. Consumers must play at least half a video with the sound on. The MRC is still working on standards for ads on mobile phones. + +On the whole, however, the debate over viewability points to online advertising’s promise, not its failings. It is impossible to know if a television viewer has gone to the bathroom during the commercials or if a Vogue reader skips a particular page of ads. Online, marketers have at least some means of tracking who saw what, the better to understand which ads work. + +Fraud is a peskier problem. Bad actors hide within advertising’s supply chain, unleashing robots to “see” ads and suck money from advertisers. The subtly titled Trustworthy Accountability Group, backed by the industry’s trade associations, wants to create a registry of vetted online-ad firms and use special identifiers to track which firms get paid for each impression, the better to trace problems as they arise. AppNexus, which runs a big ad exchange, filters out ad slots that seem to be attracting lots of fake “readers”, offers rebates to advertisers which detect bot fraud and has cut the number of ad impressions sold by middlemen. Such steps will lower fraud, not banish it. The Association of National Advertisers reckons fake impressions will cost its members more than $7 billion this year. + +An even thornier challenge is the growing number of consumers blocking ads altogether (see chart). Some consider it creepy to be watched so closely. Third-party tags can be messengers for malware. Ads drain smartphones’ batteries and their users’ data plans. Tags to track viewability and bots make such things worse. + + + +Little wonder, then, that AdBlock Plus, a popular tool, has been downloaded more than 500m times. The company keeps a list of ads it deems tolerable, and thus lets through. Sites with lots of ads, such as Google, pay a fee to be on the list. AdBlock Plus says this is proper, as the paying firms must still offer palatable ads. Critics, including the IAB, call it extortion. + +Ad-blockers are most troubling for publishers, which rely on advertising revenue. But brands have reason to fret, too, if they cannot reach consumers online. The IAB is urging them to make advertisements less irksome, so that consumers are less inclined to block them. The Washington Post is one of many companies hoping that “native” ads, which mimic the paper’s editorial style, will be less annoying. But the company is also speeding page-load times and testing various dummy ads to see which types consumers dislike least. As these experiments continue, ad-blocking will impose broad costs on publishers, estimated by Wells Fargo at $4.6 billion in America and $12.5 billion globally this year. + +A secular shift + +All these problems may just be inevitable teething troubles. “We haven’t had this kind of transformation since television came in the late ‘40s and early ‘50s,” says Marc Pritchard, the marketing boss at Procter & Gamble, the world’s largest advertiser. Grappling with these challenges, however, may spur a shift in the industry’s structure. There will always be startups, particularly because technology changes so quickly. But on the whole, power is likely to move to fewer, larger companies. + +Rob Norman, GroupM’s chief digital officer, expects advertisers to continue shifting towards large platforms such as Google and Facebook, and a select group of firms that agree to stricter standards on viewability. Brands’ concern about fraud and fragmentation may help simplify the supply chain. Some brand owners, such as Procter & Gamble, control their own programmatic buying. + +Others are pruning the number of other firms they deal with. “We would always prefer fewer partners,” says Jamie Moldafsky, chief marketing officer for Wells Fargo. A variety of larger companies such as Yahoo, Oracle and Salesforce have bought up smaller firms, the better to offer themselves as one-stop shops to advertisers. + +The best positioned firms, however, are Google and Facebook. Terence Kawaja, Luma’s founder, notes that the two companies have more than half of the mobile-advertising market, a share he expects to rise. Thanks to logins, each can track consumers from their computers to their phones and back again. Each has a broad, ever-expanding suite of services. On March 15th Google unveiled new tools, including one to manage data on customers. + +Rivals are worried. TubeMogul, a provider of ad-buying software, has a new advertising campaign claiming that Google has excessive power. This is in part to defend its own interests—TubeMogul’s criticisms include Google’s decision to limit the ways by which brands can buy ad space on its YouTube video service. But it is not unreasonable to worry that the pressures to rationalise the fragmented online-ad industry might eventually push it too far in the other direction. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695388-worries-about-fraud-and-fragmentation-may-prompt-shake-out-crowded-online-ad/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Mobile advertising + +Shine, but not rise + +Ad-blocking may not quickly spread to smartphones + +Mar 26th 2016 | From the print edition + +AD-BLOCKING is becoming ever more popular on personal computers. According to some estimates, in a few countries more than a third of internet users now have the necessary software installed in their browsers. But what has advertisers and publishers really worried is that ad-blocking could soon make a dent in the more rapidly growing market for ads on smartphones, which will reach $100 billion this year globally, according to eMarketer, a data provider. + +On the face of it, such fears are indeed warranted. Mobile browsers which block ads on web pages (though not in apps) have become more popular, particularly in Asia. The operating system for Apple’s iPhones now lets users download ad-blocking software. Most importantly, last month Three, a big mobile operator, announced that it is planning to install ad-blocking technology in its British and Italian networks. Its customers will be able to use it to block ads within apps, too. Other carriers have said that they are looking into offering such a service. Digicel, which is based in Jamaica, is already doing so. + +But on closer inspection, it is too soon to write the obituary of mobile advertising, says Dean Bubley, a telecoms consultant. More than half the time, smartphone users connect to the internet using Wi-Fi, so they will still get ads even if their mobile operator blocks them. What is more, the fastest-growing sort of mobile advertising is “native”, meaning indistinguishable from other types of content, and sometimes even encrypted. That makes network-based blocking hard, if not impossible. + +Then there are legal and commercial hurdles. Three is planning to let subscribers opt into its ad-blocking service, which is based on technology developed by Shine, an Israeli startup. But that may still run afoul of “network neutrality” rules, which require that all sorts of online traffic, including ads, should be treated equally. To be on the safe side, the service is likely to be offered directly through Shine. Three has given itself a few months to figure it all out. Other carriers are likely to wait and see how Three’s ad-blocking efforts fare. + +Given all this, mobile ad-blocking may not grow much beyond its current level in the short term. Online publishers interviewed by Joseph Evans of Enders Analysis, a consulting firm, report that only a few percent of all ads are getting blocked. Even some consumers with ad-blockers installed on their phones may still be choosing to let some through. + +Yet advertisers and publishers should not get their hopes up too high. The frustration with mobile ads is growing, and not just because they can annoy. An increasing worry is privacy: mobile ads are targeted using lots of personal data, but it often remains unclear how they are being collected and used. If the advertising industry doesn’t clean up its act, ad-blocking on smartphones may yet grow, albeit slowly, to become as widespread as it is on personal computers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695390-ad-blocking-may-not-quickly-spread-smartphones-shine-not-rise/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Electronics + +Taiwan 2.0 + +The island’s electronics firms are in need of an upgrade + +Mar 26th 2016 | TAIPEI | From the print edition + + + +THE takeover bid by Hon Hai of Taiwan for Sharp, a chronically loss-making Japanese electronics firm, is being watched closely as a test of Japan’s openness to foreign investment. But it is also being scrutinised back in Taiwan. The deal may yet falter: as The Economist went to press, Hon Hai was reportedly seeking to knock around $900m off its earlier offer of $5.4 billion including assumed debt. But if it does go ahead, and Terry Gou, Hon Hai’s boss, succeeds in absorbing Sharp’s brand and technology, he will be able to offer his big customers, such as Apple, a broader array of parts, and may even transform his firm into a seller of innovative consumer goods. The deal could serve as a model for other Taiwanese electronics firms which want to go global, says the island’s economics minister, John Deng. + +Electronics firms together contribute 40% of Taiwanese exports, and 15% of its GDP. For more than two decades they have achieved great success assembling computers and other gadgets for Western companies. At first their factories were all in Taiwan, but as China opened up, they shifted some to the mainland. The combination of Taiwanese production expertise and the mainland’s cheap labour was hard to beat. + +Now, however, this cross-strait partnership is giving way to competition. Taiwanese firms fear that rising mainland counterparts, which they call the “red supply chain”, are catching up. Taiwan’s semiconductor firms, such as TSMC, are so far going strong. But its main makers of big display screens, Innolux (which Hon Hai controls) and AU Optronics, are under threat from the mainland’s BOE and China Star Optoelectronics. Whereas Taiwan’s total exports fell by 12% year on year in February, display screens and other “optical instruments” plunged by 34%. + +Of all the countries dependent on purchases by China, Taiwan has most to lose as the mainland’s electronics industry becomes more self-sufficient, says Angela Hsieh, an economist at Barclays, a bank. South Korea also depends on China, but its firms sell a wider variety of goods there, such as cars and cosmetics. + +Becoming more innovative is easier for some than others. Hon Hai, which has its eye on Sharp’s research into advanced OLED display screens, is big enough to absorb the struggling Japanese firm, and to keep throwing money at developing its technology. Likewise, South Korean firms such as Samsung Electronics, which belong to giant conglomerates, can afford the R&D and marketing budgets needed to remain globally competitive. But many of Taiwan’s electronics firms are, thus far at least, small, anonymous links in other companies’ supply chains. + +Starting to sell gadgets under their own brands might offer these firms far higher profit margins, allowing them to pull themselves up by their bootstraps. But past experience shows that it is hard to do this without going into competition with the more famous customers that they rely on. Some Taiwanese firms, including HTC and Asus, have produced branded products—such as phones and notebook computers—only to be deserted by the customers to whom they sell components. + +Raymond Hsu, an analyst with Taiwan Ratings, an affiliate of Standard and Poor’s, thinks Hon Hai would only try to make money from Sharp’s brand if it could attach it to products that wouldn’t upset its existing customers. The Taiwanese firm may be more interested, in the short term, in being able to offer brand-owners like Apple a wider range of components, and thus to increase its bargaining-power with them. Mr Hsu says Apple would prefer not to buy OLED displays from Samsung, which is a rival producer of smartphones. + +Taiwan’s president-elect, Tsai Ing-wen, has promised to reshape its economy by “shifting from an efficiency-driven model to an innovation-driven one.” Ms Tsai also wants to reduce reliance on China and promote greater technology ties with America and Japan. The question is how. Taiwanese firms have already been encouraged by the outgoing government to flirt with the likes of cloud computing, the “internet of things”, 3D printing, biotechnology and renewable energy. Some are showing potential, but there will be no quick fixes. Meanwhile, prospering rivals on the mainland enjoy the benefits of a vast home market, and a government with lots more money to throw around. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695529-islands-electronics-firms-are-need-upgrade-taiwan-20/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Pulp producers in Brazil + +Money that grows on trees + +Brazil’s economy is crumbling but its giant pulp firms are booming + +Mar 26th 2016 | TRÊS LAGOAS, MATO GROSSO DO SUL | From the print edition + +The margins are high too + +LOOK north from atop the 120-metre (390-foot) bleaching tower at the Horizonte 1 pulp mill, and all you see is plantations of tall, slender eucalyptus trees. They stretch from the factory gate, across the gentle undulations of Mato Grosso do Sul, a state in Brazil’s centre-west, all the way to the horizon. “That’s our competitive advantage,” explains Alexandre Figueiredo, who is in charge of production at the plant. Its owner, Fibria, is the world’s biggest producer of “short-fibre” cellulose pulp, which is used to make such things as newsprint, nappies and banknotes. (“Long-fibre” is used for high-grade paper and packaging.) + +As its name suggests, Mato Grosso do Sul (roughly, “southern thick bush” in Portuguese) has vast expanses of cerrado, or tropical savannah, a chunk of which was long ago turned into farmland, some of which has more recently been planted with eucalyptus. Most of Fibria’s 568,000 hectares of plantations lie within 200km of its mills. Eldorado, a rival with a mill on the other side of Três Lagoas (a city of 115,000 that is fast becoming Brazil’s cellulose cluster), needs its lorries to drive only a bit farther. No other firm in the world has such ready access to its raw material. Add the balmy climate and rich soils of Brazil’s south and centre-west—where, as Joe Bormann of Fitch, a credit-rating agency, puts it, eucalyptus “grows like a weed”—and it is easy to see how Brazil has conquered 40% of the global short-fibre market. + +Investment in technology is paying off, too. In the late 1990s Brazilians introduced a fast-growing eucalyptus variety that can be harvested after just seven years, compared with the two decades or more it takes to grow pine, the main source of cellulose pulp in the northern hemisphere. Next door to Horizonte 1, Fibria is building a high-tech nursery with technology devised by Dutch flower growers. Eldorado pioneered the use of drones to map the topography of its woods and optimise planting and harvesting. + +Pulp producers are also thriving thanks to the storm that is sucking life out of much of the rest of Brazil’s economy. From his vantage-point, Mr Figueiredo waves towards the only clearing in the arboreal landscape: an unfinished Petrobras fertiliser plant a few kilometres away. Construction stopped in 2014, when the state-controlled oil giant emerged as the locus of a multibillion-dollar bribery scandal that may yet topple Brazil’s government (see article). That is in stark contrast to the frenetic activity directly below him, where a second, 8.7 billion reais ($2.4 billion) production line is taking shape that will more than double Horizonte 1’s current annual capacity of 1.3m tonnes, once it is completed in late 2017. + +Recession and political upheaval have brought Brazil’s currency, the real, down by three-fifths against the dollar since 2011. That is a boon to pulp producers, who export nearly all their output. Standard & Poor’s, another rating agency, reckons that production costs in dollars dropped by $50 per tonne in 2015; another $40 per tonne was saved on maintaining mills. UBS, a bank, calculates that for every 10-centavo decline against the greenback, Brazilian producers’ earnings rise by $15 per tonne. + +As the real has tumbled, global pulp prices have held steady, whereas some of the other commodities Brazil produces have slumped (see chart). As it rebalances from investment to consumption, China may build fewer bridges, hurting Brazilian iron-ore exports. But the Chinese are buying more bog roll; and over 40% of Brazilian pulp producers’ output is turned into tissue for the Chinese market. Between 2013 and 2023 annual toilet-paper sales will grow by 7.4m tonnes, with China accounting for nearly half of the rise, according to RISI, a consulting firm. + + + +The combination of a cheap currency and healthy demand has pushed Brazilian producers’ margins to mouth-watering levels. Fibria’s rose to 53%, on record revenues of 10.1 billion reais, last year. With earnings equal to 75% of revenues in the fourth quarter of 2015, Eldorado’s margins set an all-time industry high. This helped ease its debt burden, which remains large compared with rivals’. Klabin and Suzano, two other big Brazilian firms, also had a good year, even if, as integrated producers of both pulp and its products, their mostly domestic papermaking businesses suffered in line with Brazil’s economy. + +Can it last? Overcapacity is one worry. Last May CMPC, a Chilean concern, fired up a plant in Rio Grande do Sul state in southern Brazil that will churn out 1.3m tonnes of pulp a year. This month Klabin produced the first bales at a 1.5m-tonne plant in nearby Paraná state. Eldorado is breaking ground on its own expansion project in Três Lagoas, which could add another 2.3m tonnes to annual output. And that is just Brazil. Global capacity is poised to grow by 2.7m tonnes this year alone, estimates UBS; demand by just 1.5m tonnes. That will surely weigh on prices eventually. And the real has recently begun to pick up, as markets bet on a change of government and thus an end to Brazil’s political and economic paralysis. + +Brazilian pulp bosses nevertheless seem chipper. If pulp prices fall, older, high-cost producers, mainly in the northern hemisphere, may go out of business, reducing any excess capacity. In the long run, demand for tissue can only grow. As Marcelo Castelli, Fibria’s boss, observes, the average Chinese still uses just over 5kg of it a year; in developed countries the figure is 10-20kg. + +As for the currency, Eldorado’s boss, José Carlos Grubisich, notes that the industry survived a rate of 1.6 reais to the dollar five years ago. With the exchange rate now around 3.6, there is a long way to go before it begins to hurt. Even the rich world’s falling demand for printing and writing paper is not such a worry: it means there is less used paper for recycling, which should in turn shore up demand for “primary” pulp. + +Though Brazil’s pulp industry is booming, it is on the lookout for new uses for its eucalyptus timber, from biofuels to green substitutes for plastics. In the past few years Fibria has bought stakes in several startups with promising technology, including one in Canada. It is sizing up two more. “Money can grow on trees,” Mr Castelli promises. “It just takes time.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695530-brazils-economy-crumbling-its-giant-pulp-firms-are-booming-money-grows-trees/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Power stations in Indonesia + +Shock therapy + +Plans for breakneck electrification mean opportunities for foreign firms + +Mar 26th 2016 | SINGAPORE | From the print edition + + + +A FLOTILLA of floating power stations is supposed soon to traverse the vast waters of eastern Indonesia. The ships, burning marine oil and leased from a Turkish firm, will be a temporary fix for the sprawling archipelago’s rising thirst for power. Indonesia consumes about half as much electricity as Britain, despite being four times as populous; about 50m Indonesians have no mains power at all. Shortages will grow more pressing as the country’s middle class expands: over the next decade or so, electricity demand is expected to rise by nearly 9% a year. + +Putting a stop to blackouts is a priority for the government. Last May President Joko Widodo announced an ambition to build more than 100 new power stations in five years (as part of an even bigger scheme to revamp the country’s creaking infrastructure). That plan, combined with work still hanging around from an earlier electrification drive, calls for about 43GW of new generating capacity to be added to the grid. This increase is comparable to the total installed capacity of countries such as Sweden and South Africa, and would mean almost doubling Indonesia’s power output. + +Such a scheme will require a huge expansion in the role of private-sector power firms. Independent power producers (IPPs) presently generate around 20% of Indonesia’s electricity; the rest is churned out by PLN, the state utility. Indonesia hopes they will build and operate most of the new power stations and that their home countries’ banks may finance them. Independents could eventually provide around half of the country’s juice. + + + +Foreign power firms were once keen on Indonesia. Many fled during the Asian financial crisis in the late 1990s, and those that remained were forced to sell their power far cheaper than they had planned to. Lately, confidence has returned, encouraged by liberalising legislation and the new government’s ambitions. India and China also have gargantuan electrification drives, but in Indonesia a paucity of local expertise means it offers a greater opportunity for foreign builders and operators of power stations. + +So far, firms from elsewhere in Asia have been keenest. One of the first big projects, a $2 billion power station in West Java, will be built by a consortium including Chubu Electric and Marubeni of Japan, and Komipo and Samtan of South Korea. Chinese companies are taking a leading role, despite a perception that some of the power stations China previously built in Indonesia were not entirely up to snuff. American and European utilities, for their part, are hanging back. Engie, formerly known as GDF Suez, a French firm with a long history in South-East Asia, has just sold its stake in one of Indonesia’s biggest power projects to Nebras of Qatar, as part of a global withdrawal from coal (though it remains keen on Indonesia’s promising but poorly-developed geothermal sector). + +Traps abound. Acquiring land—a headache for infrastructure-builders anywhere—is particularly tricky in Indonesia, says Lenita Tobing of PwC, a consulting firm. The construction of what is supposed to be South-East Asia’s largest power station, a 2GW coal plant in Java backed by an Indonesian firm and two Japanese ones, J-Power and Itochu, is running four years late after scores of locals refused to sell their farms. Meanwhile, Indonesia’s transmission and distribution network, run by PLN (which remains the monopoly buyer of electric power), will need beefing up enormously, with financing from multilaterals like the Asian Development Bank (ADB), if it is to transport all the energy the proposed power stations will produce. + +Mr Widodo’s administration is eager to help. It has created a “one-stop shop” to help foreign investors short-circuit Indonesia’s tortuous bureaucracy. Officials say they have cut the time it takes power firms to obtain permits from two-and-a-half years to about eight months. A new land-acquisition law, which came into force last year, may speed up negotiations; so will a recent presidential decree, says Agung Wicaksono, an energy-ministry official. Yet strong backing from Jakarta does not guarantee deference from provincial authorities, which under Indonesia’s political system enjoy great autonomy. + +Some people fret that the scheme could fall victim to its own ambition. Indonesia’s power demands could probably still be met if the new power stations were added over ten years rather than hurried through in five, reckons Pradeep Tharakan of the ADB. The presidency may be imposing a tight deadline in the belief that unless it creates a sense of urgency, nothing will get done. Most in the business doubt that the electrification drive will be completed on schedule. Nevertheless, all the whip-cracking has some observers worrying that quality will be sacrificed for speed—and has some IPPs wondering if bits of the country might even end up temporarily with an excess of capacity. Indonesians should be so lucky. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695532-plans-breakneck-electrification-mean-opportunities-foreign-firms-shock-therapy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Television + +Changing the channel + +A startup seeks to keep the conventional TV station alive in the digital era + +Mar 26th 2016 | NEW YORK | From the print edition + +Now, which channel is Hipster TV on? + +THE received wisdom of the on-demand era of television is that people, young ones especially, want to watch their favourite shows anytime, anywhere and on any device; the “linear” viewing of a succession of programmes chosen by a TV station will fade, as viewers dine à la carte from Netflix, Amazon and Hulu. The wisdom is not entirely wrong, but what if young consumers were offered channels more attuned to their tastes? + +Pluto.tv, a three-year-old American startup, offers free television over the internet on the assumption that many viewers are still couch potatoes at heart: they want to sit back and watch whatever happens to be on the telly. The firm has developed more than 100 channels, curated by humans with guidance from data (and the occasional hunch) on what people like to watch. Among the offerings are “Classic Toons TV”, “News 24/7”, “Cats 24/7”, an all-Beyoncé pop channel and another that plays nothing but Kung Fu movies. Sky, an early investor along with Universal Music Group, also streams its news channel on the service. Pluto splits advertising revenue with its content partners. + +This might seem a challenging business model, given the direction of travel in televised entertainment. Not only do viewers increasingly want to consume shows on demand, they also want to skip the ads. The Boston Consulting Group (BCG) projects that such “non-linear” television-watching in America will double to 40% of all viewing by 2018. + + + +Tech giants with huge user bases—Amazon and Google—are streaming video and commissioning original shows, and Apple may soon join them. As for the cable firms, they still enjoy an advantage in that many customers have to rely on them for their broadband-internet service. + +But there is one crack in these formidable content platforms that a niche service could exploit. They cost money, and millennials are said to hate paying for stuff. Cable in particular is coming to be seen as too pricey. There is a lot of waste in their expensive pay-TV packages, says Ken Parks, Pluto’s executive chairman and a former executive at Spotify, a music-streaming service. The cable giants’ bundles of channels include many that viewers will never watch, and their cost can exceed $150 a month. BCG estimates that the number of pay-TV subscriptions in America has just about peaked and will decline substantially, albeit gradually. + +Until the next generation of mobile technology, “5G”, arrives, bringing lightning-fast wireless-broadband speeds, many consumers will still have to hand over some money to the cable guys for their internet access. But Pluto (which does not yet release financial results) says it already has more than 2m people viewing its channels at least once a month. About 40% of those are aged 18-34. The service plans to add a premium, paid-for tier, but for now Mr Parks is banking on frugal young couch potatoes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695528-startup-seeks-keep-conventional-tv-station-alive-digital-era-changing/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +The man who put Intel inside + +Andy Grove, who died on March 21st, was at the heart of the computer revolution + +Mar 26th 2016 | From the print edition + + + +IN HIS book, “Giants of Enterprise”, Richard Tedlow of Harvard Business School argues that America has an extraordinary ability to produce business titans. Italy produces a disproportionate number of great opera composers, he writes, and Russia an abundance of great novelists. America’s unique genius lies in nurturing business heroes. Whether this remains true in the future as American capitalism becomes mired in red tape, protectionist pressure mounts, and business dynamism shifts to the emerging world, is open to debate. But Andy Grove certainly stood squarely in this great tradition. + +Just as Andrew Carnegie helped to usher in the steel age and John D. Rockefeller the oil age, Mr Grove, Intel’s former boss, who died this week, helped to bring about the computer age. And just as Carnegie and Rockefeller worked their magic by building organisations rather than inventing new products, Mr Grove, though a brilliant technologist, worked his by building Intel from a startup into the world’s dominant semiconductor firm. Like Carnegie and Rockefeller, he built huge plants employing thousands; but whereas they flaunted their wealth and power, Mr Grove laboured in a cubicle no different from those of his employees. + +Mr Grove’s genius was as an organisation-builder and manager rather than as an innovator. His most obvious quality was his fierce intelligence. He could be difficult—hot-tempered when confronted with idiocy, prickly when challenged. He believed in the value of “creative confrontation” (which sometimes meant screaming matches). His successful management book, published in 1996, was called “Only the Paranoid Survive”. Possessed of a fierce work ethic, he drove his subordinates as hard as he drove himself. But this combination of characteristics was exactly what was needed in the infant semiconductor industry. He joined Intel in 1968 as its first employee, after it was founded by Robert Noyce and Gordon Moore. He became Intel’s president in 1979, its CEO in 1987 and, when he stepped down from the CEO job in 1998, having earlier been diagnosed with prostate cancer, he remained its chairman until 2005. + +The semiconductor industry, then as now, was defined by incredibly rapid change. Mr Moore suggested (first partly in jest and then in seriousness) that the industry was governed by a law whereby the number of components that can be crammed onto a chip doubles roughly every two years. Companies had to run at top speed just to stay in the same place. A succession of competitors in Japan, South Korea and China tried to topple Intel. During Mr Grove’s 37-year career there the company courted disaster on several occasions: in the early 1980s, for example, he introduced an advanced chip, the iAPX 432 microprocessor, that was supposed to reshape the industry’s future but turned out to be far slower than its competitors. But he had a genius for coming back stronger than ever. He masterminded Intel’s switch from memory chips to microprocessors and, with Bill Gates, established the “Wintel” monopoly in personal computers, in which Intel’s processors and Microsoft’s Windows operating system became an unbeatable combination. + +Mr Grove achieved all this by embracing management methods that are now so common that they pass without comment, but were then strikingly new. He attacked corporate hierarchy and devolved power to front-line workers. He combined this with an obsession for measurement and performance-related rewards: top performers got juicy stock options; and weak performers were shown the door. Under the slogan “Intel inside”, he ensured that the firm’s processors became branded goods, not commodities. Under his leadership it increased annual revenues from $1.9 billion to more than $26 billion and made millionaires of hundreds of employees. + +His career is a testimony to the wisdom of America’s liberal immigration policy. He could hardly have had a worse start in life—he was born into a Jewish family in Budapest in 1936 and managed to survive both the Holocaust and then the Hungarian Communist Party. A childhood bout of scarlet fever left him almost deaf. (His hearing was corrected in middle age after several operations.) He fled to America in 1956 when the Soviets invaded his homeland, Anglicised his name from Andras Grof, and enrolled in the City College of New York, which was then both free and meritocratic. He graduated at the top of his class in chemical engineering, despite struggling with poor English and impaired hearing; then took a PhD in the same subject at the University of California, Berkeley. He claimed that he moved to California because he hated eastern winters but his quest for sun also put him at the heart of a new industrial revolution. + +A drunken rat in 1960s Berkeley + +Mr Grove’s career is also a testimony to America’s ability to spot merit even if it comes in the oddest of packages. Grove was not an obvious catch in 1963. He then spoke with a strong Hungarian accent. He adopted the manners of a resident of radical, mid-1960s Berkeley. By his own admission he was a “hotheaded 30-year-old running around like a drunken rat.” But Mr Moore saw the genius behind the quirky persona. For decades the Intel Trinity—Messrs Grove, Moore and Noyce—drove the semiconductor revolution in large part because they were such different people united only by a respect for raw IQ. Noyce was a visionary. Mr Moore was a technological virtuoso. Mr Grove was also a technologist but, to the surprise of many who knew him, he turned himself into a management genius, supplying Intel with drive and discipline and turning it round when it got into trouble. + +America was good to the young Andy Grove, providing him with a refuge from totalitarianism and then a first-class education. In return Andy Grove was good for America, by helping it to remain at the very heart of the semiconductor revolution. His career was a parable as well as a triumph. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695361-mr-grove-who-died-march-21st-was-heart-computer-revolution-andy-grove/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Buttonwood: Tough choices + +Investing in South Korea: Losing faith + +Gold in India: A tarnished appeal + +Kenyan coffee: A bitter harvest + +Chinese economic data: Fudge-ocracy + +Asset managers: The tide turns + +Peer-to-peer lending: A ripple of fear + +Free exchange: No exit + + + + + +Articles Sections Next + +Buttonwood + +Tough choices + +State spending will be hard to cut given rising inequality + +Mar 26th 2016 | From the print edition + + + +VOTERS’ anger over inequality is one explanation for the rise of politicians as varied as Donald Trump, Bernie Sanders and Marine Le Pen. This anger also makes it very difficult for the free-market right to realise one of its key aims: the shrinking of the state. In Britain a plan to reduce spending on benefits for the disabled has been sabotaged by the resignation of a government minister and a backbench rebellion. In America mainstream Republicans are horrified by the rise of Mr Trump, who does not share their small-government ideals. + +Ideally, conservatives would like people to be more self-reliant, owning their own homes and funding their own retirements. But many people do not have enough spare income to meet those goals. One study found that 21% of Americans lacked a savings account and 62% had less than $1,000 in their rainy-day funds. Similarly, in Britain, nearly 60% had less than £1,000 ($1,417) in liquid savings. Many of those people will have savings in another form, as part of a workplace pension scheme. Still, a Federal Reserve study found that around 31% of Americans had no private retirement savings at all, including nearly a quarter of those aged over 45. + +This leaves people very dependent on the state. Around 60m Americans currently receive payments from the Social Security system. The average retirement benefit is $16,000 a year. A person with average earnings who retires at 65 can expect to receive around 40% of their final salary. More than half of retired people depend on Social Security for the majority of their income; for more than a third, it comprises over 90% (see chart). In short, this is a vital benefit for tens of millions of Americans, which they would have no way to replace. No wonder that cutting Social Security has long been known as the “third rail” of American politics. + +Yet Social Security makes up around a quarter of all federal spending. Add in Medicare, a health programme for those over 65, which cost $546 billion in 2015, and 39% of the budget goes toward benefits for the elderly. With an ageing population, these figures are likely to go up, not down. + +Meanwhile, attempts by government to encourage private saving for pensions have run into difficulties. Tax breaks may simply prompt workers to shift their savings from accounts that are more heavily taxed rather than to increase their savings overall. And the biggest gainers from tax shelters tend to be the better-off, blowing a hole in government revenues without helping the poor much. + +Pushing up the retirement age would reduce the burden a bit. But many workers leave the jobs market before the official retirement age: figures show that such people account for around half of the marked decline since 2007 in the share of working-age Americans who are actually in work. In Europe, many of those who retire before earning a full pension still get state support of various kinds, reducing the saving for governments. + +Then there is housing. High prices and stagnant wages make it harder for young people to own homes. Figures from the 2011 census showed that the proportion of British households that were owner-occupiers had fallen to 64% from 69% in 2001—the first decline in that figure in a century. The ratio of house prices to the incomes of first-time buyers in Britain is 5.2, close to the peak reached in 2007; in London, the ratio is a staggering 10.1, well above previous highs. + +Attempts to encourage home ownership via tax breaks, such as the new lifetime individual savings account, may only push prices even higher. The fastest way to make prices more affordable would be a government-backed house-building programme, something that would be incompatible with attempts to cut the budget deficit and shrink the state. + +Then there is automation, which may turn into the big policy challenge of the coming decades. Innovations such as driverless cars may threaten millions of jobs. Some academics, such as Erik Brynjolfsson and Andrew McAfee of the Massachusetts Institute of Technology, envision a two-tier labour market, divided between workers who complement machines and those who compete against them. At the least, this may mean increased government spending on retraining; it may also mean higher welfare bills. It could create demand for public-sector employment to absorb surplus labour. + +In short, it is very hard to see how rising levels of inequality can be squared with a smaller state. Voters will surely demand that politicians either reduce inequality or maintain the safety net. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695554-state-spending-will-be-hard-cut-given-rising-inequality-tough-choices/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Investing in South Korea + +Losing faith + +Reunification as an investment theme + +Mar 26th 2016 | SEOUL | From the print edition + +Kaesong in happier times + +MANY South Koreans suspect that their country’s dream of reunification with destitute North Korea is best kept that way. But in early 2014 the South’s president, Park Geun-hye, began describing reunification as a “bonanza”. It would be a demographic boon, she suggested, marrying the technological know-how of the South, whose population may start shrinking as soon as 2030, to the young northern workforce. Resources, which are plentiful in the North, would help to fuel the South’s exports. + +Soon afterwards, three South Korean asset-management firms—HI, Kyobo AXA and Shinyoung—all launched new-fangled “unification funds”: small equity funds that invest in stocks which are expected to gain from unification. Within ten days of opening, Shinyoung’s fund, the largest, had attracted over 9 billion won ($8m); by the end of 2014 it had sucked in 51 billion won, and four other funds held a combined total of 6.5 billion won. Since then, money has been flowing the other way: assets in the small fund managed by HI have halved; 10 billion won has flown out of Shinyoung’s fund. + +The goal of the funds is to reap the expected benefits of unification in the long run, and of closer economic co-operation between the two Koreas in the short term. HI’s fund includes shares in short-haul flight operators, likely to boom in a unified peninsula. Shinyoung’s invests in South Korean utility and construction firms; others bank on North Korea’s 25m potential consumers, investing for example in makers of electric rice cookers, says Kuk Min-chung of Fund Online Korea, a South Korean fund supermarket. + +Jin Seong-nam of HI says that unification funds tend to attract investment when relations between the Koreas are cordial, on the expectation that cross-border business will grow. Over the past year, alas, a string of North Korean provocations has heightened tensions. Last month the South shuttered its last remaining economic project with the North, a jointly run industrial complex at Kaesong on the border. The South Korean textile and electronics firms with factories there at one point made up around 20% of HI’s reunification portfolio. It has since cut that back to just 5%. + +Yet this forced reversal does not seem to have harmed the fund’s performance. Returns in the month since the closure of the Kaesong complex, at 10.7%, are far better than the average for South Korean funds, 7%. Part of the reason is that a quarter of HI’s reunification portfolio is in the KOSDAQ, the local version of America’s high-tech NASDAQ market, which has been performing well. + +Shinyoung’s fund, in contrast, is heavily weighted towards manufacturing giants such as Samsung, an electronics firm, and POSCO, a steel giant, which it thinks would do well if the two Koreas became one. Both are now struggling due to China’s slowdown, and the fund is down 2.7% over the past year—far worse than the average. It seems that unification-fund managers can concoct a rationale for investing in almost any South Korean firm. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695557-reunification-investment-theme-losing-faith/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Gold in India + +A tarnished appeal + +India’s government tries to curb imports of gold—again + +Mar 26th 2016 | From the print edition + +Bonds are no substitute + +A SMALL room on the eighth floor of Mumbai’s former cotton exchange is where jewellery goes to die. At the Master Bullion Assaying & Hallmarking Lab in the heart of the gold district, superheated crucibles melt elaborate bangles and earrings into bars a central banker might recognise. This alchemy is being promoted by the government under a new “monetisation” scheme designed to reduce India’s imports of gold: the melted bling can be traded for a bond which will return the same amount of gold several years down the line, with interest of up to 2.5% in the interim. + +Gold is the bane of India’s exchequer. Indians vie with Chinese as the world’s biggest consumers, buying just under 1,000 tonnes a year and stashing it in anklets, safe-deposit boxes and Hindu temples. As all but a few bangles’ worth is imported, only oil accounts for a bigger share of India’s trade deficit. To put it another way, the imports cost India more dollars every year than it attracts from foreign institutions investing in stocks and bonds, points out Ajit Ranade, an economist. + +Although Indians have traditionally used gold as part of a bride’s dowry and as an offering at temples, demand has ballooned in recent years. In 1982 they consumed just 65 tonnes of the stuff. Decades of inflation and a much-debased rupee have pushed savers towards what is, in effect, a convenient way to insulate their nest-egg from the poor decisions of India’s policymakers (and, just as often, from its tax inspectors). In rupee terms, in other words, gold has been a stellar investment. + +Getting Indians to forgo gold for weddings and religious offerings is probably a non-starter. Easier to target the portion that is bought as an investment, especially in rural areas where banks are scarce and mistrusted. The government hopes it will gather 50 tonnes of gold through its bond scheme—a modest target given the country’s 20,000-tonne pile. Yet four months in only three tonnes have been gathered. + +That is hardly a surprise: government schemes to collect gold have disappointed since at least 1962, when Indira Gandhi, then the prime minister’s daughter, handed over her own finery to finance a border skirmish with China. Though gold and a government bond backed by gold are much the same on paper, they do not hold the same appeal for those who favour gold as a store of value. Indians who are comfortable with paperwork and banks simply aren’t big holders of gold, points out Gurbachan Singh, an economist at the Indian Statistical Institute. By the same token, most Hindu temples, many of which have hoards of gold donated by the pious, have steered clear of the scheme, despite pressure from the government. + +Policymakers have other ways of making gold less appealing. A modest excise tax in the recently unveiled budget has kept jewellers across the country on strike for a month. Gold sellers were already furious at import duties and rules forcing them to identify customers buying more than 200,000 rupees’ ($3,000) worth. In addition, the central bank is discouraging lending to buy gold. + +Several trends suggest gold may eventually lose its lustre. Inflation has fallen dramatically, reducing its value as a hedge. A government scheme is giving hundreds of millions of people bank accounts for the first time, providing them with an alternative way to save. Young people are said to be less interested in wearing gold jewellery than their parents. + +If the government really wanted to accelerate this shift, it could change its own ways. Various laws steer a big share of bank deposits into low-yielding government debt and agricultural loans. That, in turn, means that Indians earn little interest on their savings, enhancing gold’s relative appeal. Such financial repression helps the government fund itself cheaply. But it means that Indians are sitting on gold equivalent in value to four months of economic output. That could be financing productive investments instead. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695558-indias-government-tries-curb-imports-goldagain-tarnished-appeal/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Kenyan coffee + +A bitter harvest + +A cautionary tale about an overregulated industry + +Mar 26th 2016 | Nairobi | From the print edition + + + +COFFEE was once Kenya’s biggest foreign-exchange earner, but these days the industry looks less perky. The country’s record, 127,000-tonne crop was all the way back in the 1987-88 season. Output plunged by 40% the following year, after the global coffee cartel axed its quotas, exposing the industry to competition. It has been falling ever since: last year it was less than 45,000 tonnes, a mere 0.5% of coffee production worldwide. + +That is not for lack of quality. Kenya’s arabica coffee, grown in the highlands around Mount Kenya, is world-renowned, unlike the robusta produced in places like Vietnam and Brazil and used in instant granules. Domestic consumption is tiny, but growing by as much as 20% a year, as coffee-shop chains expand to cater to Kenya’s growing middle class. + +That middle class also craves better housing, however, generating an insatiable thirst for land among developers. Nairobi’s property market is bubbling. The road between the capital and Thika, a town on the brink of being swallowed by its northern suburbs, is lined with coffee plantations that have been sold to developers. No one has bothered to pull up the weeds overtaking the coffee bushes on one hill-top outside Thika that is destined to become 500 homes. + +For many smallholders, who account for 60% of the country’s coffee production, there just isn’t enough money in beans anymore. Some small farmers have abandoned the crop altogether for vegetables or other, more lucrative export crops, such as macadamia nuts. It doesn’t have to be this way. Coffee production in neighbouring Uganda has more than doubled since 1990, to 285,000 tonnes. In 2010, the most recent year for which comparative data are available, Kenyan coffee farmers received 20% of the export price of their crop, compared with more than 80% in Uganda. + +Mismanagement has played a part in the Kenyan industry’s decline. The Kenya Planters Co-operative Union (KPCU), which owned 70% of the country’s milling capacity at its peak as well as providing its smallholder members with loans and cheap fertiliser, went bust in 2009. It came out of receivership in 2014, but allegations about its past were aired last autumn and led some farmers to threaten to leave their harvests on the bushes in protest. These included stories of a boardroom fistfight over the purchase of new computers, and of the theft of all the machinery from the KPCU’s Nairobi mill, as well as unconfirmed reports that some of the organisation’s directors had looted loans and coffee-sale proceeds meant for its members for nearly two decades before it went under. + +Regulation has left the industry with a Byzantine structure that presents many opportunities for skimming off money. Only 10% of beans are bought directly from farmers. Most smallholders belong to a co-operative, which skins, ferments and dries the coffee beans before passing them on to a miller that finishes the processing and grading. The bags then go to one of eight licensed marketing agents, which sell the coffee to 60 local and international dealers at the Nairobi Coffee Exchange. + +The exchange’s auctions, which take place in the bowels of a half-empty building in a rundown area of the city, had to introduce a $1,500 dealer registration fee after marketing agents withheld coffee in 2012 in protest at buyers that existed solely to resell the free coffee samples to which they were entitled. Disgruntled participants claim that “cartels” rig the bidding, suppressing prices. One Kenyan journalist claims to have witnessed dealers whistling to each other as a signal to hold down prices. The only noises your correspondent heard in the dimly-lit room, which resembles a 1960s lecture theatre, were hushed murmurs and bleeps as traders pressed buttons to place bids, and polite applause when one lot of coffee sold at a record price for the season. + +Nonetheless, many of the mills, marketing agents and dealers are sister companies, which probably reduces competition to buy the wares of farmers. The multi-layered system has been further complicated by the decision of some local governments to set up their own mills and marketing agents. Further government meddling of this sort, needless to say, is unlikely to solve the industry’s problems. + +In Uganda, in contrast, the industry has been completely liberalised since 1992. There are no auctions: middlemen compete vigorously to buy directly from farmers and sell on to exporters. If Kenya’s government wants to make good on its promise to double coffee production by 2020, it should wake up to the smell of its neighbour’s success. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695564-cautionary-tale-about-overregulated-industry-bitter-harvest/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Chinese economic data + +Fudge-ocracy + +The way to get ahead in China is to manipulate statistics + +Mar 26th 2016 | SHANGHAI | From the print edition + +Four babies, by the local count + +IN THEORY Chinese officials receive promotions based on their performance against a range of targets: delivering strong growth, maintaining social stability and, until recently, enforcing the one-child policy. But scholars debate whether the system really rewards those who excel according to these (in any case flawed) metrics. Some believe the emphasis on merit is real, and helps explain China’s stunning economic progress over the past 35 years. Others reckon that connections to the right leaders matter more for those trying to advance their careers. New research, however, suggests a third option: that those who get ahead are adept not at stimulating growth nor at currying favour, but at cooking the books. + +A recent paper from America’s National Bureau of Economic Research uses fertility rates as a way to test this theory. Economists have found a relationship between GDP growth in an official’s fiefdom and subsequent promotion, but it is difficult to know how accurate the GDP figures are (a question that haunts anyone following the Chinese economy). Population data are different: in addition to the figures provided by local officials, China conducts a census every ten years, revising population data all the way down to the village level. That makes it possible to pinpoint where bureaucrats have been fiddling the statistics. + +Examining data on 967 mayors in 28 provinces from 1985 to 2000, Juan Carlos Suárez Serrato and Xiao Yu Wang of Duke University and Shuang Zhang of University of Colorado, Boulder, find that officials who claimed to have suppressed population growth were rewarded. Mayors who reduced the local birth rate by one child per 1,000 people per year by their own count had a 10% greater chance of being promoted. + +But the relationship between fertility rates and career trajectory disappears when using the census data rather than the figures reported by the local officials themselves. Mayors who received promotions were no better or worse at curbing population growth than those who did not. The way to get ahead in the Chinese bureaucracy, it seems, is to falsify statistics. It makes you wonder what other data have been doctored. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21695307-bureaucrats-who-falsify-economic-data-have-better-chance-being-promoted/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Asset managers + +The tide turns + +Consumers are finally revolting against an outdated industry + +Mar 26th 2016 | New York | From the print edition + + + +FOR decades looking after other people’s money has been a lucrative business. Profit margins in the asset-management industry were 39% in 2014, according to BCG, a consultancy, compared with 8% in consumer goods and 20% in pharmaceuticals. The industry’s global profits in 2014 were an estimated $102 billion, allowing firms to pay those picking stocks in the American equity market an average salary of around $690,000 a year. Better yet, asset-management is growing fast: the industry looks after $78 trillion worldwide, and could shepherd over $100 trillion by 2020. + +Yet the outlook for many asset managers is grim. The industry is being reshaped by low-cost competition. At the same time falling markets are shrinking assets under management, and thus fees levied as a percentage of those assets. Regulators, meanwhile, are trying to prevent consumers from being sold inappropriate products, which are often the most lucrative. + +The biggest challenge confronts so-called active managers, who promise to earn returns that are higher than the market benchmark (the S&P 500, for example) by picking investments judiciously. Very few manage to do so: a study by Standard & Poor’s, which compiles the S&P 500 index, among other things, found that 91% of active managers in emerging-market equities failed to beat the relevant index over ten years, and that 95% of active bond managers underperformed. + +This is hardly surprising: the average manager is likely to do no better than the market, before fees. Once fees are subtracted, therefore, active managers are likely to underperform. Morningstar, a data provider, has found that high fees are indeed a predictor of underperformance. + +Low blow + +When markets are rising, clients may not notice the impact of fees, protecting asset managers’ profits. But last year most markets were flat or lower. McKinsey, a consultancy, says profit margins and growth fell at the majority of American asset-management firms in 2015. Paul Smith of the CFA Institute, an association of investment advisers, says, “Now the tide has gone out and the emperor has no clothes.” + +That may help explain some big recent withdrawals (see chart). Actively managed funds in America saw outflows of more than $100 billion last year, even as $400 billion flowed into “passive” funds that aim simply to track an index, according to Morningstar. It did not help that resource-rich countries hit by falling commodity prices sold assets owned by their sovereign-wealth funds to compensate for lost revenue. Firms that specialise in emerging-market equities did especially badly, with Aberdeen suffering an outflow of 14% and Ashmore 19%. + + + +Regulation and technology are adding to the challenges for incumbents. In the wake of the financial crisis, regulators focused on the banks. Now they are looking at asset managers, with everything from the transparency of their fees to the liquidity of their investments under the spotlight. In America, the Department of Labour plans to introduce rules later this year obliging most financial professionals to suggest investments that are not just “suitable”, as current regulation has it, but “in the best interest” of customers. That will make it difficult to recommend investments in funds which pay the advisers a commission. A similar reform took effect in Britain in 2013. Account statements will also tell customers how much they are paying in fees. + +Such rules will have a big impact on business models. A greater number of wealthy investors will start choosing their own funds, which should benefit online retail platforms, predicts PricewaterhouseCoopers, an accountancy firm. Advisers will no longer have an incentive to push expensive products of dubious merit, which should boost low-cost products such as passive funds. + +Meanwhile, institutional investors are reducing the number of managers they deal with. RPMI Railpen, a British pension fund, has gone from 20 external equity managers in 2013 to seven today. According to a survey by State Street, a financial-services group, four out of five pension funds plan to increase in-house asset management. Investors are also reconsidering their exposure to high-charging hedge-fund and private-equity managers. CALPERS, a big Californian pension fund, has dumped its hedge-fund managers. PGGM, which manages Dutch pension money, has halved what it pays for infrastructure investments since 2008, mostly by investing directly. Some pension funds are clubbing together to negotiate lower fees. + +Technology also means that the strategies of active managers can be replicated at much lower cost. Take value managers, who claim to be able to beat the market by picking cheap shares. A computer program can comb the market for stocks that look cheap relative to their profits, asset values, or dividends; investors have no need to worry that the active manager might lose focus or change style. When it comes to choosing between asset markets, robo-advisers, using computer models, can help investors manage their wealth for a very low fee. Earlier this month Goldman Sachs, a big bank, became the latest big financial firm to buy one. + +Fees for active equity funds are falling slowly, dropping by 4% for retail investors between 2012 and 2014, according to BCG. But the competition from passive managers is intense. Fees on passive equity funds for retail investors dropped by a fifth over the same period, as operating costs keep falling. As a percentage of assets, expenses at Vanguard, a specialist in tracker funds, now average 0.18% a year, a fifth of what they were in 1975. + +Retail investors increasingly choose one-stop-shops, such as Vanguard. These investors are buying cheap exchange-traded funds (tracker funds that trade on the stockmarket) or all-in-one multi-asset funds (a mix of shares, bonds and other investments), rather than trusting equity specialists. Passive powerhouses like Vanguard and BlackRock, both of which also sell actively managed funds, are the main beneficiaries of the upheaval in the industry. In 2015 they captured almost half of the industry’s net inflows. There is also hope for newcomers: in China, some tech firms have become asset managers, earning custom from their prominent and trusted brands. A fund launched by Alibaba in 2014 quickly raised $90 billion from more than 100m investors. + +Some star active managers, such as Bridgewater, a hedge fund, will continue to win business. But those that do badly will see their assets wither further, as withdrawals compound poor returns. For investors, this is good news: the industry may finally start benefiting them as much as it does managers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695552-consumers-are-finally-revolting-against-outdated-industry-tide-turns/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Peer-to-peer lending + +A ripple of fear + +A fashionable form of credit encounters its first crunch + +Mar 26th 2016 | New York | From the print edition + + + +IN A financial landscape that ranges from the dreary to the disliked, peer-to-peer lending stands out. P2P firms, also called marketplace lenders, channel loans directly from institutional investors and individuals to borrowers, for a fee. In the process, they have lowered interest rates for many and expanded access to credit. They have been growing pell-mell (see chart), in part because their structure allows them to escape much of the regulation being heaped on banks. But recent months have shown that they are not immune to the burdens that weigh down their conventional rivals. + +On the face of things, it is business as usual. Lending Club, the biggest P2P firm, doubled its loan book last year. This year it expects it to grow by 72%, to over $14 billion. Yet its share price has fallen below $9, from a peak last year of $25. That is chiefly due to America’s slowing economy and rising interest rates (although the pace of increases is likely to be slow—see Free exchange). Under such circumstances, delinquent loans tend to increase. Prosper, the second-biggest P2P lender, has said that delinquencies are indeed rising on its riskier loans, although it emphasised that only a tiny subset of its portfolio had been affected and that the deterioration was trivial. Nevertheless, it has raised rates for all borrowers, especially the riskier ones, who now pay 31%. Lending Club has also raised its interest rates. + +The primary motivation for these increases may have been to reflect the risk of credit losses, but it is also possible that raising funds has become tougher. Borrowing costs in other risky markets have risen sharply recently. The volume of loans that P2P firms have sold in securitised packages has halved since the end of last year. + +Meanwhile, a case working its way through the courts may subject P2P loans to state usury laws, from which banks with a national charter are exempt. That would prevent the P2P firms from lending to the riskiest borrowers in much of America. In addition, the Consumer Financial Protection Bureau, a federal agency, announced this month that it would begin accepting complaints about P2P consumer lending. + +Nonetheless, the problems of P2P lending may be overstated, says Ram Ahluwalia of PeerIQ, a firm that crunches data for the industry. Securitisations may have slowed but they have not stopped. Defaults remain manageable. There may be ways around an adverse ruling on usury laws. And the market that P2P lending is catering to clearly has not been saturated. As long as that remains the case, growth may slow, but it is unlikely to stop. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695561-fashionable-form-credit-encounters-its-first-crunch-ripple-fear/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +No exit + +Global financial integration is tying central bankers’ hands + +Mar 26th 2016 | From the print edition + + + +IN THE weeks after December 17th, when the Federal Reserve raised its benchmark interest rate for the first time in nearly ten years, confident Fed officials told markets to expect four additional rate hikes in 2016. It has been obvious for a while that this guidance was wildly optimistic. Economists have been downgrading growth forecasts and markets have been retreating. At its meeting earlier this month the Fed acknowledged reality: it not only left rates unchanged, but also signalled in its projections that it expects to raise them by just two notches this year. This climbdown was not a surprise, but it does conceal a surprising admission: that American monetary policy is constrained, in part, by conditions in global financial markets. + +The Fed is a collegial, consensus-driven central bank, but over the past six months an internal debate has politely unfolded. One group, led by Stanley Fischer, the vice-chairman, hews to a fairly conventional view of the Fed’s task. Mr Fischer argues that low unemployment leads inexorably to upward pressure on wages and prices. In late 2015 hiring roared ahead, even though unemployment stood at just 5%. A jump in inflation seemed inevitable. In order to keep rising prices and wages under control, Mr Fischer’s side reckoned, the Fed needed to act pre-emptively, if gradually, to raise interest rates. This camp won the day in December, when projections published by the Fed suggested that the federal funds rate would climb to 1.25-1.5% by the end of 2016. + +The decision to raise rates in December was unanimous, but there was no consensus on the appropriate pace for subsequent increases. A second group, led by Lael Brainard, a member of the Fed’s Board of Governors, worried that the global nature of financial markets, and the dollar’s critical role within them, required the Fed to move slowly. In a speech in February Ms Brainard estimated that global market movements, in the form of a rising dollar and a growing gap between the rates at which governments and riskier private companies could borrow, in effect added 0.75 percentage points of additional tightening to the 0.25 percentage-point increase the Fed made in December. The planned procession of additional hikes, if amplified in a similar way, might well tip America and much of the world into recession. At the Fed’s meeting in March, Ms Brainard’s side seems to have had the better of the argument. + +Ms Brainard reckons that in an era of deep financial-market integration there can be no “Great Divergence” between policy in America and the rest of the world. Over the past two decades a global glut of savings has depressed long-run interest rates all over the place. Savings have piled up as skittish emerging-market central banks stockpiled foreign-exchange reserves and as the share of income flowing to the savings-prone rich grew. Meanwhile, investment lagged, thanks to reduced expectations for growth in the ageing countries of the rich world and, more recently, China. In an effort to mobilise this sluggish capital and perk up growth, central banks around the world have pushed down the cost of borrowing. + +In December the Fed calculated that American firms and households were confident enough to keep spending even if rates rose above zero. But capital flows freely around the world, and any country offering a safe financial return even a bit above the norm attracts waves of money. Similarly, a shift in the relative economic outlook—such as a downgrading in growth prospects in China relative to those in America—can lead to sudden moves in financial markets as a torrent of capital seeks safety. + +In late 2015 the expectation of a rate rise in America sent capital gushing into the country, pushing up the value of the dollar and tightening credit conditions elsewhere in the world. An expensive dollar makes American exports less competitive and places a drag on growth and inflation in the American economy. The effect on investors’ appetite for risk is more immediate. + +Between the Fed’s December meeting and early February, American stocks dropped by 10%; share prices in Europe and Asia fell by more. The spread between corporate-bond yields and those on safe government debt rose sharply (see chart). Not until mid-February, as policymakers around the world sought to soothe markets with promises to support growth, did the panic dissipate. Since then, share prices have recovered and the dollar has fallen in value; with its decision on March 16th, the Fed confirmed investors’ suspicion that it would not continue on its planned tightening path. + +Hell is other people’s money + +The forces inhibiting the Fed are, if anything, getting stronger. Central banks in Europe and Japan are loosening monetary policy in response to lacklustre economic conditions; China is easing, too. Meanwhile, America’s recovery continues thanks to its monetary reprieve, and various measures of inflation are moving back toward the Fed’s 2% target with surprising speed. If the Fed continues to stand pat, inflation may soon move above 2%, but if it attempts to raise interest rates well above the global level it may be inviting destabilising financial flows and an economy-choking rise in the dollar. + +The balance of risks suggests the Fed should tolerate rising inflation. A faster pace of increase in wages and prices would be a healthy development for the American economy. Inflation has been below 2% for four years; exceeding that level would affirm the Fed’s claim that 2% is a symmetrical target for inflation, rather than a ceiling. A temporarily higher inflation rate might be an annoyance for some Americans, but it is preferable to imploding portfolios and a risk of recession. + +Even though Ms Brainard prevailed in March, the debate is sure to continue. The Fed is bound to raise rates again at some point, as inflation rises. Another torrent of mobile capital will then flood in, perhaps swamping the Fed’s attempts to go its own way. The world should brace for more financial storms. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695549-global-financial-integration-tying-central-bankers-hands-no-exit/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Clinical trials: For my next trick... + +Urban planning: Listen up + +The sociology of science: In death, there is life + +Ecology: Pictures of guilly + +Software engineering: Of more than academic interest + +Dermatology: Rainbow’s beginning + + + + + +Articles Sections Next + +Clinical trials + +For my next trick... + +Too many medical trials move their goalposts halfway through. A new initiative aims to change that + +Mar 26th 2016 | From the print edition + + + +PAXIL was a blockbuster. It was introduced by its inventors, GlaxoSmithKline (GSK), in 1992, as an antidepressant. By the early 2000s it was earning the firm nearly $2 billion a year. It was being prescribed to millions of children and teenagers on the basis of a trial, called Study 329, which suggested it was a good treatment for depressed youngsters. But when British regulators took a second look at Study 329, in 2003, they concluded that it had been misleadingly presented. Not only did Paxil do little to help youngsters with depression, it often made things worse—to the extent of making some who took it suicidal. In 2012 the American authorities imposed the biggest fine in the history of the pharmaceutical industry, $3 billion, on GSK for misreporting data on a variety of drugs, of which Paxil was one. + +Since then, Study 329 has become one of the best-known examples of a piece of academic sleight-of-hand called “outcome switching”. This is a procedure in which the questions that a scientific study was set up to answer are swapped part way through for a different lot. Study 329 set out to measure the impact of Paxil on eight different variables, all based around how participants scored on a variety of depression tests. None showed that it was any better than a placebo sugar pill, but the researchers who wrote the paper came up with 19 new measures. Most of those showed no benefit either, but four did. In the paper, those four were presented as if they had been the main measures all along. + +Outcome switching is a good example of the ways in which science can go wrong. This is a hot topic at the moment, with fields from psychology to cancer research going through a “replication crisis”, in which published results evaporate when people try to duplicate them. Now, a team of researchers at the Centre for Evidence-Based Medicine, at Oxford University, have set up a project called COMPare, in the hope of doing something about it. + +Go COMPare + +Outcome switching can sometimes be done for good reasons: participants may refuse to fill in a long form, for instance, meaning that no data can be collected from it. But it can also let unscrupulous researchers go on “fishing expeditions” to prove whatever they want. Collect enough data, and correlations that look statistically significant will appear by chance. Pick them out after the event and you have, unless you re-test to demonstrate that they were not flukes, proved nothing. + +Study 329 finished in 1998. These days, such shenanigans are supposed to be impossible. American and European regulators require trials to be registered before they begin, complete with information about what they will be investigating and how they will go about it, so that researchers can check their colleagues have done what they promised to do. But enforcement is lax. A meta-analysis—a study of studies—published in BMC Medicine in 2015 found that 31% of clinical trials did not stick to the measurements they had planned to use. Another paper, published in PLOS ONE, also in 2015, examined 137 medical trials over a six-month period and found that 18% had altered their primary outcomes halfway through the trial, while 64% had done the same with secondary, less-important measures of success. + +The COMPare team’s results are similar. They analysed all the clinical trials reported between October and January in the five most prestigious medical journals—specifically, the New England Journal of Medicine, the Journal of the American Medical Association, the Lancet, Annals of Internal Medicine and the BMJ—looking for evidence of outcome switching. + + + +INTERACTIVE: Clinical trial simulator - Run your own trials and play the system in favour of your own drug + +That came to a total of 67 different trials. Of those, nine were perfect—they had done exactly what they had said they would do, or if they had changed their measurements, they had said so plainly and given their reasons. The other 58, though, had flaws. Between them they contained 300 outcomes that should have been reported but were not, while 357 new outcomes, not specified in the documents describing what the trial would be doing, were silently added. + +Where previous research has merely described the problem, says Ben Goldacre, a British doctor and epidemiologist who is leading the project, COMPare hopes to do something about it. For every imperfect trial, the team wrote a letter to the editors of the relevant journal, pointing out the inconsistencies with the aim of setting the record straight. + +So far, responses have been mixed. Of 58 letters COMPare has sent out since the project began, seven have been published. Another 16 were rejected by the journals, who argued either that the problem was insignificant or that attentive, industrious readers could work out for themselves what had happened. The rest have seemingly been ignored. + +Dr Goldacre—who has built a reputation as a crusader for open science—says some journals’ responses surprised him. He points out that all five have signed up to guidelines that require them to police outcome switching and to make sure papers they publish do not engage in it. The COMPare team plans to collate the responses into another scientific paper, to be published shortly. “I would regard this as a provocation study,” says Dr Goldacre, using the immunological meaning of the term. “When you provoke the system, the responses you get tell you a lot about how the system works. But we’re not doing this to be provocative and snide, we’re doing it to understand the pathology.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21695381-too-many-medical-trials-move-their-goalposts-halfway-through-new-initiative/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Urban planning + +Listen up + +How to map city soundscapes using social media + +Mar 26th 2016 | From the print edition + + + +“VIBRANT” is a word often used in guide books to describe a particular quarter of a city: Soho, in London, for example. But what does that actually mean? To Daniele Quercia of Bell Labs in Cambridge, England, and his colleagues, the term has a literal truth to it. Soho is a place of good vibrations through the air—good sounds, in other words. It shares this with the Gothic quarter of Barcelona, for example, but not with much of Mayfair and Belgravia, upmarket London districts near Soho that Dr Quercia brands sonically “chaotic”. + +He and his colleagues, who report their results in Royal Society Open Science this week, have been making sound maps of the two cities. In so far as city planners incorporate matters sonic into their thinking, Dr Quercia notes, they take most notice of noise. This form of sound, being by definition annoying, has political resonance, and planners do their best to minimise it. But sound can also be soothing, exhilarating, saddening, surprising and many other things besides. These aspects of the urban soundscape are little-studied. Dr Quercia thinks this is a pity. The spread of information technology, and in particular of social media, has created a pool of data about urban sounds that can be tagged to precise locations. That has let him and his team start correcting the omission. + +Using a statistical analysis of people’s reactions to different sorts of urban sound, the team drew up four broad categories: chaotic, calm, monotonous and vibrant. Mechanical sounds tended to be chaotic. Human ones tended to be vibrant. The sounds of nature, though, could be either calm or monotonous. Birds chirping were calming. Crickets chirping were monotonous. Rain pattering down from the sky was monotonous, but dripping from trees it was calming. Drawing on social media to show which sounds people report hearing around them in particular places, the team then mapped the centres of the two cities accordingly. + +Not surprisingly, parks, such as Hyde Park, sound calm. More surprisingly beaches (at least, those in Barcelona) are monotonous. But, main roads aside (they are usually chaotic), a stranger to either city would have difficulty predicting from a map which streets would have good vibes and which would seem chaotic. That would bear further investigation, and perhaps even the attention of forward-thinking planning departments. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21695376-how-map-city-soundscapes-using-social-media-listen-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The sociology of science + +In death, there is life + +Big-name scientists may end up stifling progress in their fields + +Mar 26th 2016 | From the print edition + + + +MAX PLANCK, the inventor of quantum theory, once said that science advances one funeral at a time. He meant—or, at least, is presumed to have meant—that the death of a dominant mind in a field liberates others with different points of view to make their cases more freely, without treading on the toes of established authority. It might also rearrange patterns of funding, for they, too, often reflect established hierarchies. + +But was Planck right? For almost a decade Pierre Azoulay of the Massachusetts Institute of Technology has been trying to find out. His conclusion, reported in a working paper by the National Bureau of Economic Research, is a qualified “yes”. + +Dr Azoulay first published on the subject in 2010 in the Quarterly Journal of Economics. On that occasion he came to an apparently different conclusion. This was that the death of a star resulted in a marked slowing of the published output of the star’s collaborators, a phenomenon which sometimes lasted for decades. But subsequent conversations led him to suspect this was not the whole story. Some scientists he spoke to agreed that the Quarterly Journal paper captured their experience. Others, though, dissented. These latter claimed that a star’s dominance often sucked the intellectual oxygen from a field, and that his or her demise let it back in. + +With the assistance of two others, Christian Fons-Rosen of the Pompeu Fabra University in Barcelona and Joshua Graff Zivin of the University of California, San Diego, Dr Azoulay decided to dig deeper. The trio focused on biology, America and the period between 1975 and 2003. They mined online databases to extract the publication records of biologists working in different fields before and after the deaths of stars in those fields. Crucially, their data included both people who had collaborated with the star, and people who had not. + +The three researchers’ definition of scientific stardom rested on such criteria as patents held, funding received and publications widely cited. Among those stars they identified, 452 also had in common the fact that they had died early—meaning, in this context, before they could retire or leave active research to take up administrative roles. They were, in other words, at their intellectual peaks. + +Gratifyingly for Dr Azoulay, he and his colleagues confirmed his earlier finding. A star’s collaborators did indeed produce fewer articles after that star’s death—as many as 40% less a year, on average. But they also found a contrary effect. This was that publications by researchers who had not collaborated with the star (and who were indeed sometimes working in entirely different fields at the time of the “extinction event”) increased by 8% a year. Within five years of a star’s death, the increase in non-collaborators’ articles had fully compensated for the drop-off in those of the collaborators. + +That the loss of his mentor would harm an acolyte’s career makes perfect sense. Why outsiders should benefit, though, is less clear. Dr Azoulay found that few of the stars in his sample sat on committees that distributed funds or edited journals, so explicit favouritism does not seem to be the answer. Perhaps the explanation does indeed lie in that woolly but evocative phrase, “intellectual oxygen”. A star’s death gives outsiders room to breathe. + +Morbid though the thought is, Dr Azoulay’s hypothesis has the scientific virtue of generating testable predictions. Among the influential scientists who have died prematurely in the past two years are David Flockhart, who helped create the field of personalised medicine; Yoshiki Sasai, a prominent stem-cell biologist; and Allison Doupe, a neurobiologist who studied birdsong as a model for human language. It will be interesting to see how the careers of others in these fields now evolve. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21695378-big-name-scientists-may-end-up-stifling-progress-their-fields-death-there/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Ecology + +Pictures of guilly + +Old photos are an untapped record of animal populations + +Mar 26th 2016 | From the print edition + +As it was in 1950 and 2014 + +IN GENERAL, the longer an ecological study goes on for, the more valuable it becomes. This is usually done, funding agencies permitting, by extending it into the future. Extending it into the past is tricker. It is not, though, impossible—as Jonas Hentati-Sundberg and Olof Olsson of Stockholm University show in a paper published this week in Current Biology. + +Dr Hentati-Sundberg and Dr Olsson borrowed an idea that historians of architecture are starting to use to track changes to buildings—looking at tourist photographs taken over the years. That works well for much-snapped edifices in holiday hotspots, but getting equivalent sets of pictures for parts of the natural environment means finding something specific that is equally photogenic. Fortunately, the two researchers think they have done so. + +Their something is Stora Karlsö in the Baltic Sea. This island is well known to ornithologists as a nesting site for guillemots and razorbills. Crucially, it has been a destination for daily tours to look at its cliffs since the 1920s—and was, before that, a royal hunting ground. The result is a trove of photographs, albeit one that is scattered around Sweden. + +The task Dr Hentati-Sundberg and Dr Olsson set themselves was to find as many of the photos as they could, and subject them to scientific scrutiny. To do that, they searched through national and regional archives, collaborated with photo agencies, and put requests in magazines and internet forums. Working this way, they tracked down more than 200 shots of the same cliff face (see above for a pair of examples), taken in 37 different years between 1918 and 2005, and then every year until 2015. + +They concentrated on the breeding season, and on guillemots in particular, since members of this species nest communally and are faithful to the same sites from year to year. They thereby hoped to judge the guillemot population’s health by noting from their photographs how many nests were occupied by birds that were either incubating eggs or brooding hatchlings. + +That focus on the breeding season (May 1st to July 10th in the case of guillemots) restricted the set of photos they could use to 113 snaps that were either specifically dated as having been taken between those days, or which appeared to have been from the state of the vegetation shown in them. In each of the 113 images the researchers counted all the birds they could see. They found that there were 182 nesting pairs in 1918, a number that rose slowly, to 304, by 1950. By 1964 there were 508 pairs, but that dropped back to a low of 353 in 1981. After this, the birds started to recover again, and have done so spectacularly. In 1998 there were 571 pairs; in 2015, 1,209. + +Dr Hentati-Sundberg and Dr Olsson interpret the initial half-century rise as being a consequence of the end of hunting and egg-collecting on the island. They put the decline after 1964 down to contaminants such as DDT and a growth in the practice of fishing for salmon with drift nets, which snag and drown birds that fly in to grab what looks like an easy meal. And they attribute the latest rebound to the result of curbs on such substances and practices. + +How widely deployable the method they have developed will be remains to be seen. What worked on Stora Karlsö would surely work for seabird colonies elsewhere, many of which are the subjects of regular photography. Whether it could be adapted for other habitats is less clear. There may, though, be places like national parks where tourists are so abundant that useful ecological information can indeed be extracted from dusty albums squirrelled away in the world’s attics. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21695379-old-photos-are-untapped-record-animal-populations-pictures-guilly/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Software engineering + +Of more than academic interest + +Professors’ unprofessional programs have created a new profession + +Mar 26th 2016 | Oxford | From the print edition + + + +SOME programmers call it “spaghetti code”. Though error-strewn, it works—most of the time. It is likely to have been written in an out-of-date language, possibly more than one of them. It has grown by accretion, as different graduate students and postdocs, many long since departed to other institutions, have tweaked it, fixed it and patched it. And it is, of course, unannotated, so nobody really knows what is going on inside it. + +In the rarefied atmosphere of academia, where enthusiasm is all and budgets are tight, that is generally good enough. For commercial applications, though, it is intolerable. Yet academic spaghetti code frequently contains commercially useful ideas that might be sold to outside companies or employed as the basis of new, startup businesses. So there is a market niche available to be occupied by those willing to take the stuff and untangle it. + +One occupant of said niche is Oxford Computer Consultants (OCC), a firm based in the eponymous English city. A recent project it carried out was the transformation of drug-testing software developed by researchers at Oxford University into a commercial package called Virtual Assay, which can speed up preclinical trials of putative medicines. A second began with pieces of code written partly in Fortran, a programming language devised in the 1950s, and partly in Matlab, a more modern language, by researchers at Southampton University. This mixture was turned into RoCiT, a system that engineers at National Grid, the firm which (among other things) runs Britain’s electricity-distribution network, use to calculate the maximum power that underground cables can carry safely. + +According to Reynold Greenlaw, one of OCC’s directors, cleaning up spaghetti code starts with the obvious but not-always-easy step of getting a copy of the program to run on one of the firm’s own machines—and, once it is running, to turn out the same results as it does on the originator’s machine. That done, each of the program’s parts can be examined and tested individually, translated into a more modern computing language if required, and upgraded as necessary. Only then, when all parts are working properly, is the spaghetti untangled, the entire program restructured into something a commercial programmer would accept, and annotation added to it so that other programmers can understand exactly how it works. + +As might be expected, OCC is not alone in its mission to transmogrify academic software into something business can use. Such an industry exists in America, too. There, though, universities often try to keep the process within their walls. The Venture Development Centre of the University of Massachusetts, in Boston, is one example of an in-house spaghetti untangler for researchers who want to go commercial. The New York University School of Engineering Incubator is another. A third is the Southern Tier Startup Alliance at Cornell, also in New York state. + +Untangling spaghetti code in this way would not, of course, be necessary if researchers were better programmers in the first place. But that would involve a change in their incentives, because for most academics writing software is merely a means to an end rather than an end in itself. Those who do put effort into producing good code risk being seen by their colleagues as time-wasters. + +Some brave souls are, nevertheless, trying to encourage this change. One such is Neil Chue Hong, founder and head of the Software Sustainability Institute (SSI) at Edinburgh University. The SSI has the self-appointed mission (backed by government funding agencies) of encouraging British academics to code sensibly from the beginning—for their own good, as well as that of any commercial spin-offs. + +Mr Chue Hong is a relative newcomer to the task of teaching good programming practices to academics, for the SSI was founded in 2010. Greg Wilson has been at it since 1998, when he started “software carpentry” workshops at Toronto University. He now runs the Software Carpentry Foundation, an international charity, but has not yet succeeded in turning the majority of computing’s academic bodgers into craftsmen. The spaghetti-untanglers, it seems, will be around for a while yet. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21695377-professors-unprofessional-programs-have-created-new-profession-more/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Dermatology + +Rainbow’s beginning + +The epidermis now comes in Technicolor + +Mar 26th 2016 | From the print edition + +Scars and stripes + +VERTEBRATE animals, human beings included, are constantly changing their skin—producing new layers of it as old cells slough off from the surface. Understanding this process of regeneration would help the treatment of skin diseases and of injuries such as burns. This week, a group of researchers led by Kenneth Poss of Duke University Medical Centre, in North Carolina, have announced a colourful new technique that should enhance such understanding. They dub it the “skinbow”. + +Skinbows are themselves an adaptation of an approach called a “brainbow”, invented almost a decade ago, that is used to label nerve cells different colours. Brainbow technology permits someone with an appropriate microscope to trace the connections that lots of individual nerve cells make with one another in the brain of, say, a mouse. + +Dr Poss’s experimental animal is not a mammal but a fish: the zebrafish. This species is widely employed in the study of embryology, and is thus well understood. Skinbow or brainbow, though, the basic procedure is the same. Genetic engineering is used to create lines of animals whose genomes contain multiple copies of genes for proteins that glow under ultraviolet light. These genes are controlled by DNA switches that are activated only in the appropriate tissue type—brain for brainbows, skin for skinbows. In the case of skinbows, some of the proteins glow red, some glow green and some glow blue. + +To create different hues out of these three primary colours, animals are subjected to a technique called site-specific recombination, to which the fluorescent-protein genes have been primed to be susceptible. Site-specific recombination randomly deletes some of those genes. Cells thus affected, and their descendants, will therefore glow red, green and blue to different degrees, and each specific mix of primaries will give that group a hue distinct from all of the others. + +At the moment Dr Poss reckons his microscopes can distinguish 70-80 such hues. This, as he and his colleagues describe in Developmental Cell, has given them one of the most detailed views of skin regeneration yet seen. Moreover, unlike brainbow technology, which requires that the animal be killed in order to see what is going on, a skinbow is visible from the outside. Regenerative processes can thus be followed over an extended period. + +The researchers could, for example, observe in detail how a fish responds to injury. When they amputated a fin from one of their charges, they were able to track cells moving to the site of the damage and helping to repair it. They also saw new cells rising from deeper layers of the skin to supplement those that had migrated to heal the injured fin. After two to three weeks of this, the fin had regrown completely. + +The next stage will be to test how fish skin responds to diseases, and to drugs that might treat those diseases. In the fullness of time, the technology might be extended to look at skin regeneration in other species, mammals included. Even while restricted to fish, though, it is likely to yield useful insights into the process of regeneration—not to mention the possibility of a nice little sideline in the creation of designer denizens for aquaria. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21695380-epidermis-now-comes-technicolor-rainbows-beginning/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Evolution of the internet: Growing up + +Existentialism: Smokey and the bandits + +China: Chronicle of a death foretold + +International Pop: Far and wide + +Johnson: Noam Chomsky + + + + + +Articles Sections Next + +Evolution of the internet + +Growing up + +How the internet lost its free spirit + +Mar 26th 2016 | From the print edition + + + +Splinternet: How Geopolitics and Commerce are Fragmenting the World Wide Web. By Scott Malcomson. OR Books; 198 pages; $15 and £10. + +RARELY has a manifesto been so wrong. “A Declaration of the Independence of Cyberspace”, written 20 years ago by John Perry Barlow, a digital civil-libertarian, begins thus: “Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather.” + +At the turn of the century, it seemed as though this techno-Utopian vision of the world could indeed be a reality. Entertainment and information, once extravagantly priced or locked away in dusty government offices, became instantly accessible. Brilliant youngsters set out to “organise the world’s information” and “make the world more open and connected”. It was easy online communication that helped Egyptians organise to topple Hosni Mubarak. + +It didn’t last. States do not allow new territories to go ungoverned for very long. Europe’s competition commissioner is pursuing Google with antitrust charges. Apple has been locked in a battle with the FBI over whether it should compromise security on its iPhones. Autocratic governments around the world learned from Egypt and have invested in online-surveillance gear. Filtering systems restrict access: to porn in Britain, to Facebook and Google in China, to dissent in Russia. + +Competing operating systems and networks offer inducements to keep their users within the fold, consolidating their power. Their algorithms personalise the web so that no two people get the same search results or social media feeds, betraying the idea of a digital commons. Five companies account for nearly two-thirds of revenue from advertising, the dominant business model of the web. Of the million-odd apps available for download, most people use fewer than 30 a month. + +The open internet accounts for barely 20% of the entire web. The rest of it is hidden away in unsearchable “walled gardens” such as Facebook, whose algorithms are opaque, or on the “dark web”, a shady parallel world wide web. Data gathered from the activities of internet users are being concentrated in fewer hands (see article). And big hands they are too. BCG, a consultancy, reckons that the internet will account for 5.3% of GDP of the world’s 20 big economies this year, or $4.2 trillion. + +How did this come to pass? The simple reply is that the free, open, democratic internet dreamed up by the optimists of Silicon Valley was never more than a brief interlude. The more nuanced answer is that the open internet never really existed. + +That should not have come as a surprise. As Scott Malcomson writes in “Splinternet”, an illuminating survey of the past and future of the internet, it was developed “by the US military to serve US military purposes”. In fact, nearly every technology that makes smartphones so delightful started life as a tool of war. The Washington naval treaty, signed soon after the first world war to limit the size of warships, was silent on the matter of weaponry; that provided the impetus to develop machines capable of the complex mathematical calculations required to aim and fire guns accurately. The attack on Pearl Harbour spurred what would become the first computer with an operating system. The computer screen came from the need for radar-tracking screens. + +So it is with the internet, argues Mr Malcomson. The Advanced Research Projects Agency, which created the internet’s forebear, ARPANET, was President Eisenhower’s response to the launch of Sputnik by the Soviet Union, he writes. The decentralised, packet-based system of communication that forms the basis of the internet originated in America’s need to withstand a massive attack on its soil. Even the much-ballyhooed Silicon Valley model of venture capital as a way to place bets on risky new businesses has military origins. + +In the 1980s the American military began to lose interest in the internet. Priorities shifted further with the fall of the Soviet Union and end of the cold war. The time had come for the hackers and geeks who had been experimenting with early computers and phone lines. + +Today they are the giants. Google, Apple, Facebook, Amazon and Microsoft—together with some telecoms operators—help set policy in Europe and America on everything from privacy rights and copyright law to child protection and national security. As these companies grow more powerful, the state is pushing back. + +There are two potential drawbacks to this reassertion of established power over the internet, both serious. The first is the threat from surveillance and its potential chilling effects on free speech. The disclosures made by Edward Snowden in 2013 about the mass collection of data by American and other intelligence agencies showed that the temptation to hoover up digital information can be hard to resist for even the most liberal countries. And the commercial data-gathering by big web companies means they often know us better than we know ourselves. When people know they are being watched, they are likely to self-censor and to change their behaviour in response. + +The other big risk is that the tension between states and companies resolves into a symbiotic relationship. A leaked e-mail shows a Google executive communicating with Hillary Clinton’s state department about an online tool that would be “important in encouraging more [Syrians] to defect and giving confidence to the opposition.” If technology firms with global reach quietly promote the foreign-policy interests of one country, that can only increase suspicion and accelerate the fracturing of the web into regional internets. + +This does not mean, however, that governments—at least democratic ones—should always keep their hands off the internet. Why should it be free of oversight when every other sphere of human activity is governed by laws and codes of conduct agreed upon by society at large? A well-regulated, well-governed internet is in the best interests of its users. And if that means losing some of the spirit of the early internet, that is a small price to pay, especially for the vast majority of the internet’s 3.3 billion-odd users who lack much technological expertise. + +The internet of 1996 and the internet of 2016 have little in common. When Mr Barlow wrote his manifesto, some 50m people, or 0.86% of the world, used the internet. Today well over 40% of humanity is online. No system of this scale can be completely self-governing. + +Mr Malcomson describes the internet as a “global private marketplace built on a government platform, not unlike the global airport system”. He does not push his metaphor far enough. Pining for the decadent, freewheeling internet of old is not dissimilar to romantic notions of the golden age of air travel, with its three-course meals and plenty of leg room. But that internet, like that era of air travel, was the domain of a small group of rich, highly educated, largely male users. Air travel today may be less luxurious but it is vastly more affordable and democratic. So too, for all its flaws, is the internet. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21695370-how-internet-lost-its-free-spirit-growing-up/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Existentialism + +Smokey and the bandits + +Fun and philosophy in Paris + +Mar 26th 2016 | From the print edition + + + +At the Existentialist Café: Freedom, Being and Apricot Cocktails. By Sarah Bakewell. Other Press; 439 pages; $25. Chatto & Windus; £16.99. + +EXISTENTIALISM is the only philosophy that anyone would even think of calling sexy. Black clothes, “free love”, late nights of smoky jazz—these were a few of intellectuals’ favourite things in Paris after the city’s liberation in 1944. + +Simone de Beauvoir was “the prettiest Existentialist you ever saw”, according to the New Yorker in 1947. Her companion, Jean-Paul Sartre (pictured) was no looker, but he smoked a mean Gauloise. Life magazine billed their friend, Albert Camus, the “action-packed intellectual”. + +Certainly there was action. One evening in Paris, a restaurant punch-up involving Sartre, Camus, de Beauvoir and Arthur Koestler spilled out on to the streets. In New York another novelist, Norman Mailer, drunkenly stabbed his wife at the launch of his abortive campaign to run for mayor on an “Existentialist Party” ticket in 1960. In addition to such excitements, existentialism offered a rationale for the feeling that life is absurd. + +Countless adolescents, both young and old, have discovered the joys of angst through the writings of Sartre and his ilk. In her instructive and entertaining study of these thinkers and their hangers-on, Sarah Bakewell, a British biographer, tells how she was drawn as a teenager to Sartre’s “Nausea” because it was described on the cover as “a novel of the alienation of personality and the mystery of being”. + +It was over apricot cocktails on the Rue Montparnasse that Sartre and de Beauvoir glimpsed a novel way to explore such mysteries. The year was 1932, and their friend Raymond Aron, a political scientist and philosopher, had just returned from Germany with news of the “phenomenology” of Edmund Husserl and Martin Heidegger. “If you are a phenomenologist,” Aron explained, “you can talk about this cocktail and make philosophy out of it!” The idea was to glean the essence of things by closely observing one’s own experience of them, preferably in mundane settings. Sartre and de Beauvoir set out to do just that. + +Drawing on considerable personal knowledge, Sartre delved into “the meaning of the act of smoking”, among other things. Observing the behavioural tics of waiters, he noted that they sometimes seemed to be play-acting at being waiters. This led to labyrinthine reflections on the nature of freedom and authenticity. De Beauvoir’s efforts were more focused. By dissecting female experience of everyday life, she illustrated the ways in which gender is shaped by self-consciousness and social expectations. Ms Bakewell plausibly suggests that de Beauvoir’s pioneering feminist work, “The Second Sex”, was the most broadly influential product of European café philosophy of the period. + +When Norman Mailer was asked what existentialism meant to him, he reportedly answered, “Oh, kinda playing things by ear.” Serious existentialists, such as Sartre, earned their label by focusing on a sense of “existence” that is supposedly distinctive of humans. People are uniquely aware of—and typically troubled by—their own state of being, or so the theory goes. Human existence is thus not at all like the existence of brute matter, or, for that matter, like the existence of brutes. People, but not animals, find themselves thrown into the world, as existentialists liked to say. They are forced to make sense of it for themselves and to forge their own identities. + +The café philosophers came to regard each other’s existence as particularly troubling. Except for Sartre and de Beauvoir, who remained an intellectually devoted pair until his death in 1980, the main characters in post-war French philosophy drifted apart with varying degrees of drama. So did the German philosophers who inspired them. + +Sartre’s embrace of Soviet communism, which he abandoned only to endorse Maoism instead, led Aron to condemn him as “merciless towards the failings of the democracies but ready to tolerate the worst crimes as long as they are committed in the name of the proper doctrines”. Ms Bakewell credits the existentialist movement, broadly defined, with providing inspiration to feminism, gay rights, anti-racism, anti-colonialism and other radical causes. A few cocktails can, it seems, lead to unexpected things. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21695369-fun-and-philosophy-paris-smokey-and-bandits/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +China + +Chronicle of a death foretold + +Why China must adapt or die + +Mar 26th 2016 | From the print edition + + + +China’s Future. By David Shambaugh. Polity; 195 pages; $19.95 and £14.99. + +EVERY few years a high-profile commentator gains fame and sometimes shame by predicting the imminent disintegration of the Chinese Communist Party. In 1989 many China-watchers disagreed only on whether it would take weeks or months for the Communist Party to crumble after it ordered government troops—the People’s Liberation Army—to crush the people’s liberation. In 2001 Gordon Chang wrote a book, “The Coming Collapse of China”, in which he predicted that a financial crisis would fell the regime within a decade. + +A year ago, David Shambaugh, an American political scientist, fired his opening shot as the new doomsayer, with a provocative opinion piece in the Wall Street Journal: “The Coming Chinese Crackup”. In it he wrote that “the endgame of Chinese communist rule has now begun,” and forecast the regime’s “protracted, messy and violent” demise. + +His new book, “China’s Future”, elaborates this view. Mr Shambaugh has long argued that China is less powerful than many people think and that this makes its future “one of the key global uncertainties over the coming decades”. The concern is partly about an economy that is so central to the global one. But China’s trajectory also raises a bigger question: no country has yet been able to modernise its economy without becoming a democracy. Can China break the model? + +His bald conclusion is “no”. China today is more repressive than at any time since the early 1990s, says Mr Shambaugh, bringing the country close to falling apart. The political system is “badly broken” and the wealthy elite have lost confidence in it. Like Mr Chang, he highlights systemic economic traps from which it will struggle to escape. Writing here for the general reader, Mr Shambaugh uses years of earlier academic research to put this repression in context. + +From the 1950s onwards China has been beset by political oscillations, with occasional periods of opening up followed by phases of tightened control. Mr Shambaugh also looks at the tensions between state and society in an authoritarian regime. He reminds readers that what made the mass pro-democracy protests in Tiananmen Square in 1989 so threatening to the Communist Party was that they had high-profile supporters within the elite, some of whom were making slighter, but potentially successful attempts to effect real political reform themselves. + +Looking forward, the author declares that China now faces a choice: reform or die. Ultimately, he reckons, it will stick to its current course of “hard authoritarianism”, corroding the party’s ability to govern, constraining economic progress and stifling innovation. He does well to disentangle which aspects of China’s predicament are distinct. All societies face a “revolution of rising expectations” as they get richer, he notes, but for autocratic governments like China’s, these pose an existential threat. + +In the end, Mr Shambaugh cannot decide whether the coming crackup will be led by the party or the people. Early in the book he notes that the major determinant of China’s future lies with its leadership and their choices. The party, in other words, commands its own destiny. But he also lists a catalogue of credible threats from within society, including tensions over pensions, health care and the environment: “At some point, some—or several—of the elements…will ‘snap’,” he reckons. Hong Kong, Tibet and the far western province of Xinjiang are all tinderboxes, with the fuses already burning. + +This sweep is both the book’s strength and weakness: by Mr Shambaugh’s telling, China’s problems are so many, various and deep that it does indeed seem impossible that the Communist Party can survive. Yet it raises the opposite question too: what, then, has held such an improbable regime together for so long? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21695373-why-china-must-adapt-or-die-chronicle-death-foretold/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +International Pop + +Far and wide + +A deeper and more international take on the Pop Art movement + +Mar 26th 2016 | From the print edition + +Set the tongues wagging + +WHEN John Locke wrote in 1689, “In the beginning all the World was America,” the English philosopher meant an untamed wilderness populated by savages. After the second world war all the world seemed to have become America once more, only this time the savages were not survivors from an almost vanished past but the brash hucksters of an emerging present. The Soviet Union might have competed with America militarily and even ideologically, but when it came to the soft power projected through high art and low commerce, it was simply no contest. + +Pop Art was the movement that captured the post-war reality of a globe awash in Americana hawked by Madison Avenue and Hollywood dream-merchants. But this did not mean all the art came stamped “Made in the USA”. As a thoughtful, ambitious exhibition at the Philadelphia Museum of Art demonstrates, much of the most interesting work was created far from American shores, by those on the receiving end of this apparently unstoppable gusher of products, posters and propaganda. “International Pop”, on view until May 15th, brings together works by artists from four continents to show how the same reality could appear drastically different depending on where you stood. + +For the Americans themselves the outlook was rosy, if not entirely uncritical. Robert Indiana, creator of the iconic “Love” image (those four stacked letters, with the “O” gently rocking on its side), once proclaimed that Pop Art “is the American Dream, optimistic, generous and naive.” Those from countries defeated in war or exhausted by hard-won victory, living in permissive Western democracies or under Latin American military dictatorships, generally had a more jaundiced perspective on the new world order, one characterised as much by repulsion as attraction. + +The first work in the show sets the tone: “20th/21st-Century Tribute” (pictured) by Antônio Henrique Amaral from Brazil. The painting, from 1967, depicts four mouths in mid-harangue superimposed over an American flag and atop what appears to be a pile of military badges. A none-too-subtle critique of military dictatorship, the work deploys the bright colours of advertising billboards to expose American complicity in authoritarian repression. Even more pointed is “The Western, Christian Civilisation”, a sculpture from 1965 by León Ferrari of Argentina, showing Jesus crucified on an American bomber. + +For those suffering under brutal dictatorship, subtlety was a luxury they could ill afford. But artists in nations newly liberated from tyranny tended to be more ambivalent, acknowledging the allure of American culture even as they struggled to free themselves from its grip. Shinohara Ushio, a Japanese artist, responded to the flood tide of American products with more humour than outrage. “Drink More” (1964) is a crudely slapped together assemblage in which the title phrase is stencilled over a canvas of the stars and stripes; a plaster hand protrudes, grasping a bottle of Coke. One of a series of works made for an exhibition called “This is Pop!”, the badgering slogan of the first is countermanded by another that says: “No thanks!” + +Sigmar Polke focuses as much on the medium as on the message. “Bunnies” (1966) reproduces a hugely enlarged photograph of Playboy hostesses in grainy dots that blur the image almost to the point of indecipherability. Mr Polke, a German artist, deploys many of the same strategies that have been used by American artists, such as Andy Warhol and Roy Lichtenstein, to reveal how manufactured desire turns people into consumers. As the signal is overwhelmed by the noise, the systems by which this transformation is achieved become exposed at the very moment they begin to break down. + +“International Pop” does not contradict the narrative that the second half of the 20th century belonged to America. But by telling a familiar story from multiple angles, by giving as much space to the dissenters as to the supporters, it enriches what has too often been presented in simplistic or triumphalist terms. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21695372-deeper-and-more-international-take-pop-art-movement-far-and-wide/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +Noam Chomsky + +The theories of the world’s best-known linguist have become rather weird + +Mar 26th 2016 | From the print edition + + + +FEW disciplines are so strongly associated with a single figure: Einstein in physics and Freud in psychology, perhaps. But Noam Chomsky is the man who revolutionised linguistics. Since he wrote “Syntactic Structures” in 1957, Mr Chomsky has argued that human language is fundamentally different from any other kind of communication, that a “linguist from Mars” would agree that all human languages are variations on a single language, and that children’s incredibly quick and successful learning (despite often messy and inattentive parental input) points to an innate language faculty in the brain. These ideas are now widely accepted. + +Over the past 60 years, Mr Chomsky has repeatedly stripped down his theory. Some aspects of human language are shared with animals, and others are part of more general human thinking. He has focused ever more narrowly on the features of language that he reckons are unique to humans. All this has led to a remarkable little book, published late last year with Robert Berwick, a computer scientist. “Why Only Us” purports to explain the evolution of human language. + +Other biologists, linguists and psychologists have probed the same question and have reached little consensus. But there is even less consensus around the world’s most eminent linguist’s idea: that a single genetic mutation created an ability called “Merge”, in a single human whom Mr Chomsky has called “Prometheus”, some time before the human exodus from Africa. That mutation was so advantageous that it survived and thrived, producing today’s 7,000 languages from Albanian to Zulu. But the vast differences among the world’s languages, Mr Chomsky argues, are mere differences in “externalisation”. The key is Merge. + +But what is it? Merge simply says that two mental objects can be merged into a bigger one, and mental operations can be performed on that as if it were a single one. The can be merged with cat to give a noun phrase, which other grammar rules can operate on as if it were a bare noun like water. So can the and hat. Once there, you can further merge, making the cat in the hat. The cat in the hat can be merged with a verb phrase to create a new object, a sentence: The cat in the hat came back. And that sentence can be merged into bigger sentences: You think the cat in the hat came back. And so on. + +Why would this be of any use? No one else had Merge. Whom did Prometheus talk to? Nobody, at least not using Merge. (Humans may already have been using cries and gestures, as many animals do.) But Merge-enabled, hierarchically structured language, according to Mr Chomsky, did not evolve for talking at all. Rather, it let Prometheus take simple concepts and combine them in sentence-like ways in his own head. The resulting complex thoughts gave him a survival advantage. If he then passed the mutant Merge gene on to several surviving children, who thrived and passed on the Merge gene to their children, Messrs Chomsky and Berwick believe that they must have then come to dominate the population of humans in Africa. Only later, as Merge came to work with the vocal and hearing organs, did human language emerge. + +Many scholars find this to be somewhere between insufficient, improbable and preposterous. The emergence of a single mutation that gives such a big advantage is derided by biologists as a “hopeful monster” theory; most evolution is gradual, operating on many genes, not one. Some ability like Merge may exist, but this does not explain why some words may merge and others don’t, much less why the world’s languages merge so differently. (Not a single non-English example appears in “Why Only Us”, nor a single foreign language in its index.) + +Mr Chomsky says those who disagree with his ever-more contentious ideas are either blind or hucksters. Critics refer to a “cult” of “acolytes” around a “Great Leader”, unwilling to challenge him or engage seriously with the work of non-Chomskyan scholars. (One critic has said “to be savaged by Chomsky is a badge of honour.”) Linguistics is now divided into a Chomskyan camp, a large number of critics and many more still for whom the founder of the modern discipline is simply irrelevant. He is unlikely to end up like Freud, a marginal figure in modern psychology whose lasting influence has been on the humanities. Mr Chomsky’s career is more likely to end up like Einstein’s—at least in the sense that his best and most influential work came early on. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21695371-theories-worlds-best-known-linguist-have-become-rather-weird-noam-chomsky/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Hilary Putnam: The meaning of meaning + + + + + +Articles Sections Next + +Obituary: Hilary Putnam + +The meaning of meaning + +Hilary Putnam, a philosopher, died on March 13th, aged 89 + +Mar 26th 2016 | From the print edition + + + +TO BE identified with a distinctive position is an academic career’s crowning achievement. Hilary Putnam did better than that: his intellectual odyssey meant that on some of the most important controversies in modern philosophy he had defined and defended positions on both sides of the argument. + +His Socratic self-questioning was notable, but his hallmark was thought experiments. He posited iron-willed, poker-faced Spartans to show that pain was not just about expression. To prove that meaning in language was not solely about what is intended, he proposed identical twins living on identical planets, which differed only in that water on one of them was not H2O but another substance with similar properties. Each twin would refer to “water”, intending the same meaning—but they would be referring to different things. + +By modern, hyper-specialised academic standards Mr Putnam ranged widely. His work included logic, ethics, metaphysics, political thought, mathematics, and the philosophy of science, of mind, of economics, of literature, of language and of religion. His early stance was that if humans can be said to have mental states, then it is impossible to say that machines do not. This was the basis of what became known as functionalism—the idea that what matters about mental states is what they do, not what they are made of. + +Over time he became less keen on thinking of the mind only in terms of what happens inside the brain. Instead he adopted externalism: “meanings just ain’t in the head”. Refining Wittgenstein, he posited a linguistic division of labour, analogous to Adam Smith’s thinking in economics. The people best able to determine a word’s meaning do so on the basis of expertise. Others then rely on their usage. As a Harvard philosopher, he might have no idea how to tell an elm from a beech, but he could confidently use the words with the assurance that botanists knew exactly what they meant. + +A related example of the tension between knowledge and reality came with another thought experiment: a sceptic might wonder whether she were no more than a brain in a vat, artificially nourished, and stimulated with a bogus but utterly convincing version of the real world. How could one prove that this is not so? The answer is that our brains are more than just perception machines, and meaning depends on what other people think too. So a brain in a vat might exist, but it could not meaningfully say that it was merely a brain in a vat. Philosophers would call that epistemological externalism: factors outside the mind are crucial to what it can be said to “know” and “think”. + +Many saw parallels between that controversy and “The Matrix”, a successful Hollywood film which bridged science fiction and philosophy. It portrayed a dystopia in which machines have subdued humans by trapping them in a simulated reality while their bodies languish in vats. + +Mr Putnam was surprised and flattered by the film-makers’ interest. He was not a populariser, liking the quip: “any philosophy that can be put in a nutshell belongs in one.” But he wanted philosophy to relate to the real world. It should fit the complexity of human existence and civilisation, and not the other way round. + +Reloaded + +That was a reaction to the arid logical positivism he was taught as a student—the idea, once dominant in the English-speaking academic world, that philosophy is really a branch of science and that the only knowledge that matters is what can be empirically verified. One of his famous courses at Harvard was a direct challenge to the logical positivist approach: it featured “non-scientific knowledge”, exploring the philosophy of aesthetics and ethics. + +In his case involvement in the real world mostly took the form of left-wing politics, where his views were almost as versatile as his philosophy. Born to communist parents (his father was a columnist for the Daily Worker), he lived in a commune, campaigning against the Vietnam war and joining the Progressive Labour Party, an exotic outfit for those who found the Communist Party too staid. He would stand outside factory gates in the early morning, trying to sell magazines and to discuss politics with the workers. He baffled his students by sitting among them during lectures, though later he took to the podium to brandish Mao’s “Little Red Book”. Harvard tolerated him more than he tolerated disagreement: he disrupted a colleague’s lectures because researching inherited intelligence was racist. + +He later recanted his communism, and also his fervent secularism (he once dismissed an Oxford philosopher’s argument that no machine could be an adequate representation of the mind with the scornful put-down: “If I believed that, I would have to be not only a Theist but an Episcopalian”). Yet the final great enthusiasm of his life was Judaism. He and his wife Ruth Anna were determined to recover the identity that his parents’ generation had rejected, and they created a Jewish household for their children. Mr Putnam himself had his own bar mitzvah in 1994, aged 68. He learned Hebrew, and wrote a book on Jewish philosophy as a guide to life: seeking proof, he argued, missed the point of religion. It was what it did that mattered. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21695366-hilary-putnam-philosopher-died-march-13th-aged-89-meaning-meaning/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Poland marks 20 years of OECD membership + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Mar 26th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21695397/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Mar 26th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21695398-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Mar 26th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21695399-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Mar 26th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21695401-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Poland marks 20 years of OECD membership + +Mar 26th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21695403-poland-marks-20-years-oecd-membership/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Mar 26th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21695382-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 25 Mar 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Business in America: The problem with profits + + + + + +Bombings in Brussels: The new normal + + + + + +Brazil’s political crisis: Time to go + + + + + +Reform in rural China: Sell up, move on + + + + + +Welfare cuts: Two-nation Britain + + + + + +Technology and politics: Bits and ballots + + + + + +Letters + + + +On American politics, African trade, companies, migrants, glyphosate, Malaysia, the semicolon: Letters to the editor + + + + + +Briefing + + + +Business in America: Too much of a good thing + + + + + +United States + + + +Trump and the world: Don’t deal with it + + + + + +The primaries: Heard on the trail + + + + + +College endowments: Yard sale + + + + + +Deporting child migrants: Self-defence + + + + + +Primaries in the West: Mormons against the Donald + + + + + +Florida’s Haitian-Americans: The Creole caucuses + + + + + +Lexington: The meaning of blue jeans + + + + + +The Americas + + + +Brazil’s political crisis: Tick tock + + + + + +Canada’s budget: Globalisation with a human face + + + + + +The United States and Cuba: An American invasion + + + + + +Bello: The drama of Lula + + + + + +Asia + + + +New political drama in Australia: Turnbull’s big gamble + + + + + +Money laundering in the Philippines: Walls of silence + + + + + +Relations between China and Taiwan: The Gambia gambit + + + + + +South Korea and wartime sex slaves: Kindred spirits + + + + + +The South China Sea: China v the rest + + + + + +China + + + +Urbanisation: Reform’s big taboo + + + + + +Middle East and Africa + + + +Oil and the Gulf states: After the party + + + + + +Yemen: Fighting to a standstill + + + + + +The Kurds: Containing multitudes + + + + + +Apostasy and Islam: Not advised + + + + + +Unrest in Ethiopia: Grumbling and rumbling + + + + + +Press freedom in east Africa: Pencil blunted + + + + + +Europe + + + +Brussels bombings: Not again + + + + + +Terrorism and France: The end of insouciance + + + + + +Turkey and the EU: Refugees and terror + + + + + +Spain without government: Stuck in the centre + + + + + +What Europeans think of each other: Green-eyed continent + + + + + +Charlemagne: A terrible problem is born + + + + + +Britain + + + +Fiscal policy: In it together? + + + + + +Brexit brief: Unfavourable trade winds + + + + + +Religion: Northward Christian soldiers + + + + + +Ministry of Silly Names: Name that boat + + + + + +Education reform: Starbucksification of schools + + + + + +The Baltic Exchange: Nordic noir + + + + + +Devolution: City united + + + + + +Bagehot: E pluribus unum + + + + + +International + + + +Vaccination: A jab in time + + + + + +HPV vaccines: The cost of embarrassment + + + + + +Special report: Technology and politics + + + +Technology and politics: The signal and the noise + + + + + +Election campaigns: Politics by numbers + + + + + +Tracking protest movements: A new kind of weather + + + + + +Online collaboration: Connective action + + + + + +Local government: How cities score + + + + + +Living with technology: The data republic + + + + + +Business + + + +Digital advertising: Invisible ads, phantom readers + + + + + +Mobile advertising: Shine, but not rise + + + + + +Electronics: Taiwan 2.0 + + + + + +Pulp producers in Brazil: Money that grows on trees + + + + + +Power stations in Indonesia: Shock therapy + + + + + +Television: Changing the channel + + + + + +Schumpeter: The man who put Intel inside + + + + + +Finance and economics + + + +Buttonwood: Tough choices + + + + + +Investing in South Korea: Losing faith + + + + + +Gold in India: A tarnished appeal + + + + + +Kenyan coffee: A bitter harvest + + + + + +Chinese economic data: Fudge-ocracy + + + + + +Asset managers: The tide turns + + + + + +Peer-to-peer lending: A ripple of fear + + + + + +Free exchange: No exit + + + + + +Science and technology + + + +Clinical trials: For my next trick... + + + + + +Urban planning: Listen up + + + + + +The sociology of science: In death, there is life + + + + + +Ecology: Pictures of guilly + + + + + +Software engineering: Of more than academic interest + + + + + +Dermatology: Rainbow’s beginning + + + + + +Books and arts + + + +Evolution of the internet: Growing up + + + + + +Existentialism: Smokey and the bandits + + + + + +China: Chronicle of a death foretold + + + + + +International Pop: Far and wide + + + + + +Johnson: Noam Chomsky + + + + + +Obituary + + + +Obituary: Hilary Putnam: The meaning of meaning + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Poland marks 20 years of OECD membership + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.04.02.TXT b/homeworks/B20769/homework1/data2/2016.04.02.TXT new file mode 100644 index 0000000..86c7051 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.04.02.TXT @@ -0,0 +1,5052 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Apr 2nd 2016 | From the print edition + + + +In Pakistan an Islamist suicide-bomber killed 74 people, including many children, in a park in Lahore, capital of the province of Punjab. Jamaat-ul-Ahrar, a splinter group of the Pakistani Taliban, claimed responsibility, saying that it intended to target Christians. Separately, in Islamabad thousands of protesters who overran the central government’s security zone left after extracting assurances that the government had no plans to amend the country’s draconian blasphemy law. See here and here. + +China’s government launched a high-level investigation into a huge black-market trade in out-of-date and improperly stored vaccines. The ringleaders were arrested a year ago, but the Chinese press only recently began to pay attention to the story, which has caused a furore on Chinese social media. It is the country’s biggest public-health scandal since 2008, when 300,000 children became sick and at least six died after drinking tainted milk. See here and here. + +A senior Chinese journalist, Yu Shaolei, resigned in protest against President Xi Jinping’s orders that the media remain loyal to the party. It was the latest sign of opposition to Mr Xi’s campaign. Some state-owned newspapers have published calls for more freedom to criticise the government. + +The high court in Delhi, India’scapital, ruled that calling your husband mota hathi, or fat elephant, was grounds for divorce. + +Looking rocky for Rousseff + +The Party of the Brazilian Democratic Movement, the main governing partner of the Brazilian president, Dilma Rousseff, quit the coalition. Although some of its ministers may stay, its departure increases the chances that Ms Rousseff will be impeached on charges that she used accounting trickery to disguise the size of the budget deficit. + +Venezuela’s National Assembly, which is controlled by parties opposed to the left-wing government of Nicolás Maduro, passed a law that would free 70 political prisoners. They include Leopoldo López, an opposition leader who was sentenced to 14 years in jail for inciting violence during protests. Mr Maduro has said he will veto the bill. + +Colombia’s government and the ELN, the country’s second-largest guerrilla group, are to begin formal talks to end half a century of conflict. The two sides agreed on an agenda, including terms for disarming the rebels and their participation in politics. Colombia has been holding peace talks with the largest rebel group, the FARC, since 2012. See article. + +Among the ruins + + + +Syrian government troops retook the ancient city of Palmyra, captured by Islamic State last May. Although two famous temples at the site were blown up by IS vandals, it looks as though the bulk of the antiquities have survived unscathed. Meanwhile, the Pentagon said that a senior commander in IS had been tracked down and killed in Syria by American special forces. See article. + +Human-rights groups criticised Angola for jailing 17 youngsters for organising a reading of a book about transitions from dictatorship to democracy. The government accused them of plotting rebellion and a court has sentenced them to jail terms of between two and eight years. + +Foreign-owned firms in Zimbabwe were given a deadline of April 1st to comply with a law that requires them to hand 51% of their ownership to “indigenous” citizens. Banks and mining firms are among those affected by the law. + +Iran’s Supreme Leader, Ayatollah Ali Khamenei, declared that missiles, and not just diplomacy, are the key to Iran’s future. + +Trump thumped + +Donald Trump had a bad week. His campaign manager was charged with battery following an encounter with a female reporter last month. Scott Walker and Jeb Bush endorsed Mr Trump’s main rival, Ted Cruz, for the Republican nomination. And Mr Trump implied that women should be punished for abortion if it becomes illegal (which he hastily retracted). The Republican front-runner also backtracked on his pledge to support the party’s nominee if he fails to win, complaining that he isn’t being treated fairly. + +The Republican governor of Georgia, Nathan Deal, announced that he will veto a bill that would allow religious organisations to withhold the provision of services from gay people. Conservatives were furious, blaming a lobbying campaign from big businesses, which worry that the bill tarnishes Georgia’s reputation. + +America’s Supreme Court ruled 4-4 in a case that sought to stop unions taking fees from workers who do not want to pay their dues despite benefiting from collective-bargaining actions. The court’s split decision means that the law stands as it is, a deep disappointment to conservatives who were sure they would triumph when arguments were heard in January, before the death of Justice Antonin Scalia. Republicans are still refusing to hold hearings to confirm Scalia’s nominated successor, Merrick Garland. See article. + +A clean sweep + +Ukraine’s parliament dismissed the country’s prosecutor-general, Viktor Shokin, after months of pressure from international donors who faulted him for refusing to act against corruption. Shortly before his dismissal Mr Shokin in turn had fired his popular, pro-reform deputy. A new nominee for prime minister, Volodymyr Groysman, is seeking allies to form a majority in parliament that would allow the unpopular Arseniy Yatsenyuk to step down. See here and here. See article. + + + +Radovan Karadzic, the leader of the Bosnian Serb side in the Bosnian war of 1992-95, was found guilty of genocide and war crimes by an international criminal tribunal in The Hague. He was sentenced to 40 years in prison. The conviction instantly sparked a bitter row between the leader of Serbia and the Bosniak (Muslim) leader of Bosnia. Vojislav Seselj, a Serbian nationalist and ally of Slobodan Milosevic, Serbia’s president at the time, was cleared in The Hague of committing war crimes. + +In Turkey the German ambassador was summoned twice in one week after a satirical song about President Recep Tayyip Erdogan, entitled “Erdowi, Erdowo, Erdogan”, was shown on German television. The incident hints at tensions between the two countries, which are both key to solving the refugee crisis in Europe. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21695931-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Apr 2nd 2016 | From the print edition + +Tata Steel announced that it was looking at selling off part or all of its business in Britain, just nine years after the Indian company entered the market. Coming a week after an agreement to sell its Scottish facilities, which were mothballed late last year, talk of nationalising Britain’s steel industry was in the air again, unsettling the government. The main casualty of Tata Steel’s decision is the Port Talbot plant in Wales. As it is losing £1m ($1.4m) a day, it will be difficult to find a buyer, putting 4,300 jobs there at risk. See article. + +Helping with inquiries + +Shell revealed that Dutch investigators had visited its offices in The Hague as part of a probe into a deal that gave it rights to operate in a Nigerian offshore oil block that contains as much as 9 billion barrels of oil. In 2011 Shell and ENI, an Italian oil company, said they paid the Nigerian government $1.3 billion for the block, but the transaction has been dogged by allegations of corruption. + +Israel’s Supreme Court tore up a government-backed deal to develop the Leviathan gasfield off the country’s coast. The project was to be run by Noble Energy of Texas with an Israeli partner, but the court ruled that a clause in the contract that barred the Knesset from changing the terms over the next decade was unconstitutional. The decision sparked a political row; the government wanted to sell the gas to Egypt and Jordan in order to boost relations with those countries. + +After renegotiating a lower price for its bid, Foxconn, a Taiwanese contract manufacturer which assembles products for Apple and others in China, sealed a deal to buy a majority stake in Sharp, a struggling Japanese electronics company, for $3.5 billion. Sharp was an early innovator in LCD TVs, but, as with others in the electronics industry, demand for its mid-range products was squeezed between the likes of Apple and lower-cost rivals. + +The shine came off SunEdison, a big solar-energy company, after one of its subsidiaries warned of a “substantial risk” of bankruptcy. With more than $11 billion in debt, that would be one of the largest failures outside the financial industry in the past decade. See article. + + + +The Bank of England called for lending criteria to be beefed up for buy-to-let mortgages—for example by seeing how borrowing would cope if the minimum interest rate is set at 5.5% (around twice current rates). The central bank is concerned that loose lending practices have fuelled the buy-to-let sector. The British government is also trying to constrain the growing army of part-time landlords. Buy-to-let purchases are already subject to a surcharge of three percentage-points above the current sales-tax rate. From next year tax relief on mortgage-interest payments will be cut and from 2019 capital-gains tax will be due within 30 days, not the end of the financial year. + +Janet Yellen, the chairman of the Federal Reserve, scotched any expectations of an interest-rate rise in April, and probably June as well, when she urged caution in tightening monetary policy. She also said she expects the pace of rate increases to be “somewhat slower” than expected. Stockmarkets rose in response. + +Hotel sweet + +The bidding war for Starwood Hotels, which counts the Sheraton chain among its brands, escalated. Anbang, a Chinese company that owns the Waldorf Astoria in New York, increased its offer to $14 billion, around $400m more than Marriott recently proposed after it upped its own bid. Starwood is talking to Anbang again, but favours Marriott’s deal, for now. + +An American court sided with MetLife, an insurance firm, in its battle to remove the government’s classification that it is systemically important, or “too big to fail”, and thus escape the tougher regulation that label brings. MetLife was seen as a victim of regulatory overreach by many on Wall Street. The decision is an embarrassment for the government, which plans an appeal. + +Volkswagen’s woes mounted, when America’s Federal Trade Commission sued it for an ad campaign that touted the green benefits of its diesel technology. The carmaker faces various investigations in America and Europe for cheating in emissions tests for its diesel vehicles. + +Left to its own devices + +America’s FBI said it had found a way to unlock the iPhone used by a terrorist in last December’s attack in San Bernardino, thus ending its legal battle with Apple, which had refused to help on the ground that doing so would undermine the iPhone’s security protocols. An Israeli forensics-software firm was reportedly assisting the FBI. That still leaves Apple with a problem if the FBI declines to share information about how it was able to get around the iPhone’s vaunted security features. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21695943-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Apr 2nd 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21695941-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Chinese politics: Beware the cult of Xi + +Free trade in America: Open argument + +Mergers and financial stability: Don’t clear the clearers + +A bomb in Lahore: The hard choice for Pakistan + +Dutch referendum on Ukraine: A hard Dutch kick + + + + + +Articles Sections Next + +Chinese politics + +Beware the cult of Xi + +Xi Jinping is stronger than his predecessors. His power is damaging the country + +Apr 2nd 2016 | From the print edition + + + +“IF OUR party can’t even handle food-safety issues properly, and keeps on mishandling them, then people will ask whether we are fit to keep ruling China.” So Xi Jinping warned officials in 2013, a year after he became the country’s leader. It was a remarkable statement for the chief of a Communist Party that has always claimed to have the backing of “the people”. It suggested that Mr Xi understood how grievances about official incompetence and corruption risked boiling over. Mr Xi rounded up tens of thousands of erring officials, waging a war on corruption of an intensity not seen since the party came to power in 1949. Many thought he was right to do so. + +Today, however, China is enduring its biggest public-health scandal in years. Tens of millions of dollars-worth of black-market, out-of-date and improperly stored vaccines have been sold to government health centres, which have in turn been making money by selling them to patients. + +Mr Xi’s anti-graft war has often made little difference to ordinary people. Their life—and health—is still blighted by corruption. In recent days there have also been signs of discontent with Mr Xi among the elite: official media complaining openly about reporting restrictions, a prominent businessman attacking him on his microblog, a senior editor resigning in disgust. + +Mr Xi has acquired more power than any Chinese leader since Mao Zedong. It was supposed to let him get things done. What is going wrong? + +Credibility gap + +In fairness, Mr Xi was bound to meet with hostility. Many officials are angry because he has ripped up the compact by which they have operated and which said that they could line their pockets, so long as corruption was not flagrant and they did their job well. + +But Mr Xi has also found that the pursuit of power is all-consuming: it does not leave room for much else. In three and a half years in charge, he has accumulated titles at an astonishing pace. He is not only party leader, head of state and commander-in-chief, but is also running reform, the security services and the economy. In effect, the party’s hallowed notion of “collective” leadership (see article) has been jettisoned. Mr Xi is, one analyst says, “Chairman of Everything”. + +At the same time, he has flouted the party’s ban on personality cults, introduced in 1982 to prevent another episode of Maoist madness. Official media are filled with fawning over “Uncle Xi” and his wife, Peng Liyuan, a folk-singer whom flatterers call “Mama Peng”. A video, released in March, of a dance called “Uncle Xi in love with Mama Peng” has already been viewed over 300,000 times. There have been rumours recently that Mr Xi feels some of this has been going a bit far. Some of the most toadying videos, such as “The east is red again” (comparing Mr Xi to Mao), have been scrubbed from the internet. + +Many would take that as a sign that the personality cult is little more than harmless fun. Mr Xi is no Mao, whose tyrannical nature and love of adulation were so great that he blithely led the country into the frenzy and violence of the Cultural Revolution. Although some older Chinese squirm at a style of politics so reminiscent of days long past, there is no suggestion that China is on the brink of another such horror. + +But Mr Xi does not need to be as extreme as Mao for his concentration of power to cause harm. He has been fighting dissent with even more ruthlessness than he has been waging war on graft. Not since the dark days after the Tiananmen Square protests in 1989 has there been such a sweeping crackdown on critics of the party. Internet censors have been busy deleting messages posted on social media by outraged citizens in response to the vaccine scandal. These have included posts reminding Mr Xi of his words in 2013 about the party’s fitness to rule. Police have also been investigating the appearance early in March of an anonymous letter on a government-affiliated website calling on Mr Xi to resign (raising, among several transgressions, the personality cult and his stifling of the media). Some 20 people have been arrested. Yet this work is never-ending. Even now citizens are pushing back. With the help of the internet, no matter how heavily it is blocked and censored, their voices keep crying out. + +No liberal, Xi + +By cracking down and puffing himself up, Mr Xi is neither buying himself security nor helping to keep China stable. He is using the party’s own thuggish investigators to take on graft. But they have a greater interest in settling political scores than in ensuring laws are applied fairly. That gets in the way of good administration, if only because officials are scared of spending money in case it attracts a probe. By cowing the media, Mr Xi created a press reluctant to challenge officials by exposing the dodgy-vaccine trade as soon as it was discovered at least a year ago. By the time such scandals eventually come to light, they pose even greater threats to the party’s, and Mr Xi’s, credibility. + +Mr Xi has pledged to give market forces a “decisive role”, and put “power in a cage” by establishing the rule of law. But he is providing neither the country with prosperity and freedom, nor reassuring the rest of the world with stability. Abroad, anxieties about him keep growing: his muscular efforts to assert control in the South China Sea have been driving countries across Asia closer to the American camp. + +Earlier in Mr Xi’s rule, observers had wondered whether, after establishing himself, he would turn to carrying out the reforms that he says he wants. But hopes are fading that a big reformist push will ever materialise. Mr Xi appears to have little time for the politically irksome business of making the party follow the law, closing down loss-making state-owned firms, or bringing about much-needed social changes, such as scrapping restrictions on access by rural migrants to urban public services. The task of preserving his power is a full-time job. + +In the past 66 years of Communist rule in China, the most troubled times have usually come about when tensions break out within the elite. Mr Xi’s style of rule is only serving to stoke them. The more Mr Xi tries to fight off enemies using scare tactics and brute force, the more enemies he is likely to make. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695881-xi-jinping-stronger-his-predecessors-his-power-damaging-country-beware-cult/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Free trade in America + +Open argument + +The case for free trade is overwhelming. But the losers need more help + +Apr 2nd 2016 | From the print edition + + + +IN 2011 Ronnie Dunn, a country singer, recorded “Cost of Livin’”, a poignant song about a former factory worker’s search for a job. Sensing there will be many more jobseekers than job openings, his can-do pitch gives way to desperation: “Bank has started calling/And the wolves are at my door”. Similar refrains can be heard all over America’s industrial heartland: almost 6m manufacturing jobs were lost between 1999 and 2011. + +The scale of these job losses is not itself surprising: America’s dynamic economy creates and destroys around 5m jobs each month. But a recent set of studies by economists at leading American universities has found something disturbing. A fifth of that 1999-2011 decline in factory jobs was caused by Chinese competition, and those who lost jobs generally did not find new ones nearby (see article). Nor did the newly unemployed go in search of work elsewhere. Instead there was almost a one-for-one increase either in unemployment or, more frequently, in people leaving the workforce entirely—often to claim disability benefits, which 5% of Americans aged 25-64 now receive. + +The anxieties that such findings stoke have made trade a touchstone issue in America’s presidential election. Donald Trump, the Republican front-runner, promises to slap prohibitive tariffs on imports from China and Mexico. Bernie Sanders, the rival to Hillary Clinton, the presumptive Democratic candidate, wears his opposition to trade deals as a badge of pride. Mrs Clinton has herself backed away from her previous support for the Trans-Pacific Partnership (TPP), a trade deal negotiated by Barack Obama. Freer trade was one of the engines of the prosperous decades following the second world war, in America and beyond. Yet mainstream politicians are now not only afraid to champion it, they pour fuel on the fire. That is lamentable. Free trade still deserves full-throated support, even if greater care needs to be taken of those it hurts. + +Toxic topic + +Advocates of freer trade have always known that some lose out even as the great majority benefit. In moving for repeal of the Corn Laws in 1846 (a campaign which this newspaper was founded to support), Sir Robert Peel acknowledged concerns about the harm this might do to agricultural labourers. “I wish it were possible to make any change in any great system of law without subjecting some persons to distress,” he said. Yet he also argued, correctly, that no one suffered more from tariffs on corn than the poorest farm workers. + +What the latest research makes clear, however, is that in America’s case the losses from free trade are more concentrated and longer-lasting than had been assumed. In large part, that reflects the speed of China’s rise: its share of world manufacturing exports soared from 2% in 1991 to 19% by 2013. The shock caused by China’s emergence also exposed fault lines in America’s economy. Workers seem less willing to switch jobs or move states than in the past. Part of the explanation may be rising home ownership, by anchoring people to declining areas or pricing them out of vibrant ones. Whatever the explanation, free trade can impose big costs on a few places. + +The worst possible response to such fears is the protectionism that Mr Trump is peddling. The surge in cheap imports of clothing, shoes, furniture, toys and electronics from China has greatly increased the spending power of those on low incomes. It has also added to the variety of goods they are able to buy. One study by economists at the University of California, Los Angeles, and Columbia University calculated that median income earners in America would lose 29% of their purchasing power if America was closed to trade, but that the poorest would forfeit as much as 62%, because they spend proportionately more on goods that are traded. Add to the reckoning the eventual benefits of a richer Chinese market for exporters, the spur to innovation in America from global competition and the low-cost inputs for consumer goods, such as the iPhone, that raise the productivity of American designers, and the arguments in favour of free trade are overwhelming. + +Displacement activities + +But what ought to be done to protect those workers who lose out because of competition from abroad? The safety net provided by trade-adjustment assistance, a federal programme, is threadbare—which is why many displaced American workers opt for more generous disability benefits and leave the job market altogether. In effect, America has imported some of the worst aspects of Europe while ignoring the best. Germany is Europe’s manufacturing powerhouse but has successfully absorbed the twin shocks of competition from China and the accession of countries to its east into the European Union. This is in part because Germany has been able constantly to upgrade the skills of its workforce, thanks to its system of apprenticeships. In America community colleges in depressed areas show promise in bridging the skills gap, but there is still too much emphasis on an expensive four-year university education and too little on vocational training. + +America has also lagged behind other rich countries in “active” labour-market policies. More could be done to help workers who lose jobs to find new ones, through job exchanges and courses to add to skills. In America’s panoramic jobs market, there may be a case for providing relocation grants for workers hurt by trade. A big gripe of displaced workers is that an alternative job in the service sector does not pay as well or come with the same health-care or pension benefits that big manufacturers used to provide. That is a strong argument for a system of portable benefits that go with workers when they change jobs. A system of wage insurance might have merit. + +Such policies are needed not only in America—workers in Britain’s steel plants are confronting the demise of the domestic industry (see article). Nor are they required only to smooth trade shocks. Many of these policies are necessary to deal with other sources of disruption, from cheaper robots to new technologies such as 3D printing. Protectionists want to turn back the clock. Far better to reap the permanent overall gains from trade while preparing the workforce for change. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695879-case-free-trade-overwhelming-losers-need-more-help-open-argument/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Mergers and financial stability + +Don’t clear the clearers + +The merger between Deutsche Börse and the London Stock Exchange should be blocked + +Apr 2nd 2016 | From the print edition + + + +AT THE peak of the financial crisis, in 2008, the Office of Fair Trading objected to a merger between Lloyds TSB and HBOS, two big British banks, saying that competition would suffer. The finding was overruled by the British government (on advice from the Bank of England, among others), which judged that a merger would increase financial stability. The ideal response to the proposed friendly merger between Deutsche Börse (DB) and the London Stock Exchange (LSE) would be a mirror image of the treatment of the Lloyds-HBOS tie-up. If Europe’s trustbusters bless the deal, governments should block it unless its backers allay concerns about financial stability. + +Much of the opposition to the mooted DB-LSE merger draws on predictable arguments: fear of foreigners taking over national stockmarkets and concerns about the new outfit’s pricing power. But the real objection to uniting Europe’s two largest stock exchanges is more alarming. The fees charged for listing and trading stocks accounted for less than a tenth of the total revenue of the two firms combined last year. The mainstay of both is clearing trades, notably interest-rate derivatives. Clearing-houses, like LSE’s LCH.Clearnet and DB’s Eurex, stand in the middle of trades, acting as a buyer to every seller and a seller to every buyer. If one party goes bust, the clearer will make the trade good. + +Since the financial crisis, when a load of bilateral derivatives trades blew up AIG, an insurer, clearing has become a pillar of the regulatory architecture. Traders in Europe will, for example, be obliged to clear most interest-rate swaps from June. Putting trades through a clearing-house means that a default by a single counterparty is unlikely to ripple through the system. But it also concentrates more risk in the clearing-house itself. If any of the big clearing-houses were to fail, the consequences would be horrendous. Lehman Brothers was a midsized investment bank, yet its failure helped turn a local bust into a once-in-a-century crisis because it was so tightly connected to the rest of the system. The world’s big clearing-houses are even more enmeshed: the notional value of interest-rate swaps cleared by LCH.Clearnet in 2015 was $533 trillion. + +Too big for sale + +Consolidating the big clearing-houses would further concentrate this risk. As if that were not reason enough to give financial regulators pause, one of the benefits for customers that the LSE-DB team is touting should rule a deal out. Clearing-houses require each party to a derivatives trade to make an upfront payment, which rises or falls in size as the market moves for or against each party. This payment, or margin, is part of the defences that a clearer calls upon to make a trade good if either counterparty fails to pay: DB and LSE combined hold €150 billion ($170 billion) in such collateral. If a client goes bust and its margin payments are insufficient, the clearer still has other funds to call on. But it is a step closer to failure. + +The exchanges say their clearing-houses will remain separate, but customers of both will be able to offset some classes of derivatives bets that tend to move in opposite directions, and put up less margin as a result (see article). Rivals, such as America’s CME, already allow this but that is no reason to replicate its risks. In a crisis, the offsetting correlations between different sorts of bets tend to break down. + +Regulators have relentlessly jacked up the amount of equity with which big banks must fund themselves so as to protect them from losses. Clearing-houses should be treated with even more care. Unless the LSE and DB pledge to keep their clearing-houses truly separate, with ring-fenced default funds and no skimping on margin, their tie-up should be blocked. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695902-merger-between-deutsche-b-rse-and-london-stock-exchange-should-be-blocked-dont-clear/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A bomb in Lahore + +The hard choice for Pakistan + +The country is threatened not just by terrorism, but by widespread religious extremism + +Apr 2nd 2016 | From the print edition + + + +THE suicide-bombing of a busy park in Lahore on Easter Sunday, which killed more than 70 people, most of them women and children, was not only more lethal than the terrorist attack in Brussels a few days earlier. It also represented a different order of threat to the country in which it happened. Pakistan is engaged in a belated struggle against religious extremism that will determine what sort of country it becomes. + +That threat is plain in the bomber’s choice of location and timing (see article). Lahore is the capital of Punjab, the provincial power base of the prime minister, Nawaz Sharif. Although most of the victims in Gulshan-e-Iqbal park were Muslim, one aim was to kill Christians. The attack happened to come just a few weeks after the execution of Mumtaz Qadri, a police bodyguard who in 2011 murdered Salman Taseer, the governor of Punjab, for his criticism of Pakistan’s blasphemy laws. Over 100,000 people attended Qadri’s funeral in Rawalpindi on March 1st. On the same day that the Lahore bomber struck, riot police in the capital, Islamabad, were trying to control a 10,000-strong demonstration against Qadri’s execution. + +The bombing in Lahore was carried out by Jammat-ul-Ahrar, which splintered from the Pakistani Taliban. The religious hatred it represents has been assiduously cultivated in Pakistan for many years. Saudi money for the building of madrassas (religious seminaries) began to flood into Pakistan during the 1980s with the encouragement of the president at that time, General Zia ul Haq, who saw the country’s Islamisation as his main mission. There are now some 24,000 madrassas in Pakistan, attended by at least 2m boys. Nearly all adhere to the highly conservative Deobandi sect, whose beliefs are similar to Saudi Wahhabism. Tahir Ashrafi, head of the Pakistan Ulema Council, an umbrella group, reckons that 60% of the pupils at madrassas were “not involved in any training or terrorist activities”. He declines to expand on what the other 40% might be up to. + +At least some members of Pakistan’s intelligence service and other parts of the “deep state” still regard certain violent and intolerant jihadist groups as useful weapons against India and Afghanistan. But the distinction they attempt to draw between outfits such as the Haqqani network in North Waziristan and the mainly Kashmir-based Lashkar-e-Taiba, which carry out their atrocities abroad, and those, such as the Pakistani Taliban, which concentrate on the homeland, fatally undermines Pakistan’s fight against terrorism. + +To do justice to Mr Sharif’s government and the army’s powerful chief of staff, General Raheel Sharif (no relation), they seem to understand the scale of the problem and are trying to tackle it. A turning-point was the massacre by the Pakistani Taliban of 148 children and teachers at an army school in Peshawar at the end of 2014. It was followed quickly by a national action plan to combat domestic terrorism, which is being implemented with some success. The army claims that its anti-terrorist operations have killed 3,400 terrorists and destroyed 837 of their hideouts and much of their infrastructure. + +A start, at least + +The ultra-violence that saw the deaths of 60,000 civilians over the past decade has abated somewhat. There have been attempts to clamp down on hate speech. The execution of Qadri required political backbone. But there is little to show for the action plan’s commitment to “stop religious extremism” and “regularise and reform” madrassas. Moreover, many state-run schools are hardly less toxic. The long-standing addiction to using militant groups as proxies in Pakistan’s disputes with its neighbours is far from broken. And the country should repeal its vicious blasphemy laws, which are used to attack religious minorities. The horror of Lahore shows that the road ahead is long and hard. But only if Pakistan chooses to follow it will the future hold much promise. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695903-country-threatened-not-just-terrorism-widespread-religious-extremism-hard/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Dutch referendum on Ukraine + +A hard Dutch kick + +Voting down the EU’s treaty with Ukraine would hand Vladimir Putin a win + +Apr 2nd 2016 | From the print edition + + + +IN November 2013 Viktor Yanukovych, then the president of Ukraine, succumbed to Russian pressure and renounced an association agreement with the European Union that he and his predecessors had spent six years negotiating. Many Ukrainians thought their country’s best hope for transforming itself from a corrupt gangster state into an orderly democracy (or, as they put it, a “normal country”) had been sacrificed on the orders of Vladimir Putin, Russia’s president. Thousands set up camp on Kiev’s Maidan, chanting “Ukraine is Europe”. Police attacked, touching off a cycle of protest and violence that ended in Mr Yanukovych’s flight to Russia, a new government—and the signing of the Ukraine-EU agreement. + +Mr Putin then sent troops into Ukraine to win back Russian influence by stealth and force. He succeeded in seizing Crimea, splitting off a few rebel areas and embittering Ukrainians’ once-warm feelings towards Russia. Yet the Ukraine-EU association agreement is in trouble again (see article). This time the sticking-point is the Netherlands, the only one of the EU’s 28 members that has not ratified it. + +Dutch Eurosceptics want to stop their government from doing so, and have gathered enough signatures to stage a referendum on April 6th. They argue that what Ukrainians call their “European choice” was actually imposed on them by Brussels. They describe Ukraine as a country “divided” between pro-European and pro-Russian regions; in fact, outside the rebel Donbas, the country has united against the Russian threat. They observe that the past two years have been an economic catastrophe, without acknowledging that it was Russia’s embargo and military interventions that did the damage. + +The Dutch government and all the main parties are campaigning for a Yes vote in the referendum. Yet the polls point to a No. That would be a tragedy. Ukraine is torn between a corrupt oligarchy and a nascent reform movement; between a moribund post-Soviet economy and the promise of farm exports and computing services for the European market. If Ukraine really is to become normal, it needs Europe to meet it part-way. For that to happen, the Dutch need to vote Yes. + +The Dutch worry about being tied to a large, poor, corrupt state (see article). When their leaders say that the deal involves little risk, they are reminded of similar promises before Greece was admitted to the EU. But the association agreement is overwhelmingly about trade. It does not allow Ukrainians to work in the EU. It refers to political and military co-operation, but without NATO-like obligations. Ukraine will need decades of reform before it could be a candidate for EU accession. + +Chaos v control + +For Ukraine, the economic promise of the deal is immense. For the Dutch, the reason to ratify it is to deny Mr Putin the fulfilment of his wish for a corrupt and anti-European Ukraine. Ever since Maidan, Russia has been trying to reassert control by spreading chaos on Ukraine’s border. The Dutch learned better than any other country what such chaos can mean, when scores of their countrymen were killed in 2014, in the downing of flight MH-17. When Ukrainians turned towards Europe, their dream was for their country to escape the pit of corruption and chaos. They are still struggling to climb out. Dutch voters should not step on their fingers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21695898-voting-down-eus-treaty-ukraine-would-hand-vladimir-putin-win-hard-dutch-kick/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On Africa, the Commonwealth, precision, America, energy poverty, China, migrants, George Martin, Moore’s law: Letters to the editor + + + + + +Articles Sections Next + +On Africa, the Commonwealth, precision, America, energy poverty, China, migrants, George Martin, Moore’s law + +Letters to the editor + +Apr 2nd 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + +Farming in Africa today + + + +“A green evolution” (March 12th) highlighted the things that are getting better in African agriculture. But you underplayed two negative aspects. The first is the pernicious effect of aid. When I was in Tanzania, working for a venture-capital fund, the country had the third-largest cattle population in Africa. Yet there was no indigenous dairy industry, not least because the European Union used it as a convenient place to dump its surplus milk powder. It is hard to compete with free goods. + +The second point is that African entrepreneurs, on the whole, do not want to invest in agriculture. Aid programmes may have given potential businessmen an education, but most then choose an urban lifestyle, if they have not moved abroad. Setting up mobile-phone and internet companies in the big city, yes; being farmers out in the bush, no. The absence of domestic go-getters means that farms remain small; the added value of agricultural processing is negligible or absent. + +I looked at investing in a farm outside Dar es Salaam run by a doctor who was the medical adviser to many of the city’s elite. They all thought him completely bonkers. + +ROBERT SATCHWELL + +Haarby, Denmark + + + +It is right to point to good governance as the key to sustaining growth in African agriculture. But so too is water resilience and security. Africa’s water is shared across 13 river basins that are mostly accessed by five or more countries. Collective action at the local, national and regional level has contributed to the agricultural success story, so far. But with the number of water-scarce countries set to rise over the next ten years, more needs to be done. + +Investments in small-scale water technologies such as low-till or zero-till agriculture, supplemental irrigation, groundwater recharge and rainwater harvesting could yield a direct net benefit of up to $200 billion to Africa’s 100m farmers. + +CALLUM CLENCH + +Executive director + +International Water Resources Association + +Paris + +You correctly noted the potential for African farmers to increase their production through the use of hybrid seed and fertiliser. But you also described the challenges facing the industry because of human handicaps. There is an important link between the two. Data from Uganda show that significantly fewer farmers, 10%, are using hybrid seeds and only 3% are using fertiliser. Our research investigating the quality of agricultural inputs found that in local markets, 30% of nutrient is missing in fertiliser. Hybrid maize seeds contain less than 50% of authentic seed. + +These shortfalls in quality imply that many of the fertilisers and seeds sold in the market are simply not profitable. Therefore, tackling the issue of substandard inputs is an important step towards increasing productivity in agriculture in Uganda in the near future. Agriculture in Africa is complex and heterogeneous. There will not be a single answer for the whole of the continent. + +RICHARD NEWFARMER + +Country director for Uganda + +International Growth Centre + +London + +Big problems arising from increased crop production in Africa include tremendous erosion and the depletion of natural vegetation. Traditional shifting cultivation has given way to continuous cropping with few, if any, conservation practices; marginal land is particularly vulnerable. The results are all too evident: perennial streams are now ephemeral, and massive quantities of topsoil silt up dams and flow into the oceans. + +The Economist should stop looking at sub-Saharan Africa through rose-coloured spectacles. The region is doomed to more frequent famines that will be the consequence of diminishing cropland, grazing and water resources. + +BRIAN DUNCAN + +Gettysburg, Pennsylvania + + + + + +A common good + +My response to whether the Commonwealth is worth it is an emphatic Yes! (“What’s the point of it?”, March 19th). Most Commonwealth countries often get out more than they put in. When I was heading up the Commonwealth Secretariat, Britain’s concerns were dominated by its relationship with America and with Europe, and by the threats, dramas and problems of the Middle East. Thinking about the Commonwealth was well down the pecking order. But British ministers who have understood the Commonwealth, and who have wanted to expand initiatives, have found a ready forum in the organisation. With more than 50 member countries it is a mini UN. + +The Commonwealth is no drain on the British taxpayer. A few years ago, my research showed that the cost per British citizen to belonging to the EU was about £60 ($85) a year, to the UN about £10, NATO £2 and the Commonwealth about 17 pence. And never underestimate the 80-plus organisations who carry the name Commonwealth for a variety of linkages and benefits. This grouping is the envy of La Francophonie. + +When the Commonwealth moves collectively, that is, when all countries are pursuing the same objective of free and fair elections and good governance, it can act against countries that don’t even pay lip service to those values. The fact that Zimbabwe and Gambia are no longer in the Commonwealth is because of a reluctance by the leaders of those countries to accept, adhere, commit and administer those values. + +SIR DONALD MCKINNON + +Commonwealth secretary-general 2000-08 + +Pukekohe, New Zealand + + + +* The crisis of the Commonwealth is one of identity rather than purpose. Many people would like it to be an organisation defined by shared values rather than an imperial legacy which it it isn’t: its members include undemocratic, human-rights violating governments. But one thing Commonwealth countries do share is their people. In 2010 the average Commonwealth country had received around half its immigrants from, and sent half its emigrants to, other Commonwealth countries. They collectively constitute one of the world’s great migration arenas, accounting for about a fifth of all migration globally. Despite differing values and their historical antagonisms, Commonwealth countries have an unparalleled depth of experience in cooperation over migration, and they have much to teach other regions where migration is now wrongly treated as a crisis. + + + +Migration is a defining issue that could galvanize the energy and expertise of the Commonwealth and perhaps even demonstrate its ongoing relevance as an organisation. And so, before asking what the Commonwealth is for, it is worth reconsidering what it is. + +ALAN GAMLEN + +Associate Professor + +Visiting Scholar, Stanford University + +Precisely + +“More than 40” I get. “Nearly 50” I get. But “Isaac Nabwana has written, directed and edited more than 47 films since 2008,” I don’t get (“Lights, camera, no budget”, March 5th). How many films did Mr Nabwana produce: 48? + +MICHAEL ARKIN + +Toronto + + + + + +Political round-up + +For months you have written off Bernie Sanders, consistently using punchy language to describe him as “crotchety” or a “septuagenarian”, even though he has only a few years on Hillary Clinton and Donald Trump. “Beware the ides of March” (March 19th) went so far as to claim that Mrs Clinton “breezed through” the Midwestern primaries. I would hardly call margins of victory of 1.8 and 0.2 percentage points in Illinois and Missouri solid wins. Mrs Clinton’s delegate lead has been amassed from mostly southern states, which she will not carry in November. + +These statistics, however, mask the importance of describing a populist movement spreading in America that is the antithesis of Mr Trump’s vitriolic message. Mr Sanders is calling for a systemic, pragmatic change and a government that works for all, not the few. + +MICHAEL MARZANO + +Chicago + +In 1935, with fascism on the rise in Germany and Italy, Sinclair Lewis wrote “It Can’t Happen Here”, a chilling semi-satirical political novel. The book focuses on the rise to power of Senator Berzelius “Buzz” Windrip who, with fantasist promises, wins the presidency. Windrip’s campaign strategy is eerily similar to Mr Trump’s: xenophobic and violent and at the same time promoting traditional values. His base of support came from the League of Forgotten Men, made up from the millions who were dispossessed by the Depression. Suffice to say, it does not end well for those who prize democracy and freedom. + +RON MCALLISTER + +York, Maine + +Mrs Clinton is not the first lady to run for president of the United States. That would be Victoria Woodhull in 1872. She was an advocate for free love, famously proclaiming that she had an “inalienable, constitutional and natural right to love whom I may, to love as long or as short a period as I can, to change that love every day if I please”. + +MATTHEW GOMEL + +New York + +Predicting American primary elections has always been a mug’s game (“Mich-fire”, March 12th). In every primary-election cycle some excellent polling firms, which have good records of forecasting general elections, have been badly embarrassed. Extreme volatility, very low turnout and the difficulty of finding likely voters can make even the best polls look bad. Everyone notices a bad prediction, whereas you get little credit for a good one. Which is why we decided, 25 years ago, not to poll primaries. + +HUMPHREY TAYLOR + +Chairman emeritus + +Harris Poll + +New York + + + + + +Lighting the way + +* You commendably shed light on off-grid solar companies’ role in improving electricity access in East Africa and yet your article omits some of the real challenges of ending energy poverty (“Power to the powerless”, February 27th). + + + +Analysis by the Overseas Development Institute, CAFOD and Christian Aid shows the cheapest way for most energy-poor people to get electricity is via off-grid, largely through renewable technologies. For grid access, the main barriers involve distribution, not generation: unreliable service, unaffordable connection fees and, as you explain, utilities’ failure to recover their costs. + +African countries need more capacity to power economic development, but it is not true that wind and solar power is too expensive and unreliable. In South Africa, Eskom recently purchased wind power at prices 17% lower than those projected for the two new coal plants, Medupi and Kiseli. Africa has huge untapped renewables potential, and as its share of capacity grows, there are many options to balance supply and demand. + + + +However, increasing the electricity supply will not necessarily tackle the most prevalent form of energy poverty—cooking with polluting fuels like firewood. Indoor air pollution contributes to 4.3m deaths globally each year. Few African and Asian households cook with electricity, even once connected to the grid. Other methods of cleaner cooking are cheaper, such as advanced biomass cook stoves, liquid petroleum gas stoves or biogas systems. + + + +ILMI GRANOFF + +Senior Research Fellow + +Overseas Development Institute + + + +SARAH WYKES + +Lead Energy Analyst, CAFOD + +London + + + + + +Overcapacity in China + +It is true that the Chinese government has recognised the problem of overcapacity in China (“The march of the zombies”, February 27th). There should be no illusion about the problem: overcapacity, including excessive capacity in the steel industry, is a daunting global challenge, but particularly acute in China. The government is thoroughly restructuring the Chinese economy, despite the social costs this entails. Eliminating overcapacity heads the agenda for reforming the supply side. The State Council has urged all authorities across the country to implement its directives on cutting capacity. + +Zombie enterprises with redundant capacity are leaving the market. Banks in China are banned from providing loans to them. It is therefore practically impossible for zombie enterprises to manoeuvre the export of their excessive products. Moreover, new projects in the industries with excessive capacities will not be approved any more and both state-owned enterprises and private firms are encouraged not to expand but to merge and cut capacity in order to carry out industrial transformation. + +Tackling overcapacity in the steel industry is a telling case. China has reduced capacity by more than 90m tonnes in recent years; last year it cut investment in iron and steel assets by 13%. Steel-production capacity is to be reduced by a further 100-150m tonnes. + +China has surpluses, yes, and more may need to be done, but things are moving in the right direction. + +YE FUJING + +Economic adviser + +China’s Mission to the EU + +Brussels + + + + + +A promise on migrants + +You analysed the feasibility of the Turkey-EU agreement but overlooked why many people are so sceptical of it (“A messy but necessary deal”, March 12th). It is not because it is unreasonable—it is because it is unenforceable. The last grand bargain was struck at the EU-Turkey Summit last November. The €3 billion ($3.4 billion) aid package had been contingent on taking action. Within hours Turkey launched the largest sting operation to date, rounding up 1,300 migrants on its beaches. + +Since then Turkey has done little to make good on its promise. The police have been overlooking much of the smuggling economy in Izmir. Cesme’s beaches are unpoliced, with hundreds departing to Chios daily. + +It is not just that Turkey makes shallow promises. EU membership has been dangled in front of Turkey since negotiations started in 2005, despite the glaring problem of German and Cypriot rejections. Furthermore, visa-liberalisation has been offered at a time of intense debate about the EU’s free-movement policy. Granting Turkey “safe country of origin” status comes at Mr Erdogan’s most fruitful period of press-censorship. + +I wonder who will call whose bluff first. + +MARIA WILCZEK + +Oxford + + + + + +Eight days a week + +His modesty notwithstanding, George Martin’s indelible influence on The Beatles cannot be overstated (Obituary, March 19th). His suggestions transformed “Please Please Me” from a slow, sombre song into a number-one hit. His string quartet turned “Yesterday” into an introspective timeless classic. His genius is evident in the baroque-style piano bridge he wrote and played for “In My Life”, in Paul McCartney’s deftly multi-tracked lead vocal in “Here, There and Everywhere”, and in his thunderous orchestral crescendo for “A Day in the Life”. He added a marching band to “Yellow Submarine”, a French horn solo to “For No One”, and piccolos to “Here Comes the Sun”. + +He was unquestionably one of the most important and talented producers in music history. + +STEPHEN SILVER + +San Francisco, California + + + + + +More on Moore + +As a veteran of the semiconductor industry I thoroughly enjoyed your assessment of the state of computing and Moore’s law (Technology quarterly, March 12th). I was fortunate enough to work under Moore at the Fairchild research facility and to hear his early presentation on the trend he observed in transistor density at a meeting of local engineers in Palo Alto. At the time, he wondered how all these projected thousands (not billions) of transistors could possibly be utilised. + +However, I think you have understated the cost/transistor trend. In the past, shrinking transistor geometry augmented by increased wafer diameter drove the cost of chips ever lower and functionality ever higher, as predicted by the self-fulfilling trajectory of Moore’s law. Your curve showing the number of transistors bought per dollar illustrates the incredible cost reduction that we had experienced until about 2012, when the curve actually peaks, and then shows costs increasing. + +The electronic revolution has been fuelled by the low cost of memory and microprocessor chips because this opened up the possibility of previously inconceivable cost-effective applications. + +Although, as you suggest, clever programming and specialised chip designs can still deliver some interesting products, the main cost-reduction driver will no longer be available and this will undoubtedly have a dampening effect on the future rate of change in electronic innovation. + +KEN MOYLE + +Beaverton, Oregon + +I can’t help but think that an “internet of things” will really mean “adverts on everything”. + +WARREN CULLY + +London + +Seeing the numerous mentions of computers based on 1s and 0s in your report reminded me of the T-shirt I saw a few years ago at MIT, my alma mater. On the front: “There are 10 types of people in the world”. And on the back: “Those who understand binary and those who don’t!” + +TOM BURNS + +Berkeley, California + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21695849-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +European social democracy: Rose thou art sick + + + + + +Articles Sections Next + +European social democracy + +Rose thou art sick + +The centre left is in sharp decline across Europe + +Apr 2nd 2016 | LUDWIGSHAFEN, PIRAEUS AND VALLETTA | From the print edition + + + +“THEY have disappeared. I don’t even know if they have premises here any more.” In his office overlooking the sun-scorched wharves and cranes of Piraeus, Giorgos Gogos, the head of the dockers’ union, is pondering Pasok, the social-democratic party that for decades dominated the politics of this sprawling Greek port. For years its vote here hovered steadily around 45%. Then came the economic crisis. At the insistence of European institutions the Pasok government agreed to privatise the container terminal at Piraeus. Appalled workers abandoned the party en masse for the far-left and -right, slashing the social-democratic vote to 4% in 2015. Traces of this radicalisation are sprayed across the warehouse walls: hammers and sickles; swastikas; “Piraeus Port Authority in workers’ hands!”. “Why would anyone vote for Pasok now?” asks Kiriakos, a former party activist. “They don’t stand for anything.” + +Greece’s economic and political turmoil is unparalleled. But when Mr Gogos jokes that Greece is “Europe on fast-forward” he may have a point. Political scientists looking at Europe’s centre left talk of a continent-wide “Pasokification”. Support for social-democratic parties is collapsing in an unprecedented way. + + + +Early in this century you could drive from Inverness in Scotland to Vilnius in Lithuania without crossing a country governed by the right; the same would have been true if you had done the trip by ferry through Scandinavia. Social democrats ran the European Commission and vied for primacy in the European Parliament. But recently their share of the vote in domestic (and Europe-wide) elections has fallen by a third to lows not seen for 70 years (see chart 1). In the five European Union (EU) states that held national elections last year, social democrats lost power in Denmark, fell to their worst-ever results in Finland, Poland and Spain and came to within a hair’s-breadth of such a nadir in Britain. + +Elsewhere, it is true, the centre left is in power: as an unloved and ideologically vague junior party of government in Germany and the Netherlands and at the helm of wobbly coalitions in Sweden, Portugal and Austria, all countries where it was once a natural party of government. In France, President François Hollande is plumbing new depths of unpopularity and may not make the run-off in next year’s presidential election. Matteo Renzi, Italy’s dynamic prime minister, is in better shape but his party is still losing support (and possibly, in May, Rome’s mayoralty) to the Five Star Movement (M5S), an anti-establishment party founded by a blogger. Former municipal and regional bastions like London and Amsterdam, Catalonia and Scotland have slipped from the traditional centre left’s grasp. + +Where are all the votes going? Many have been hoovered up by populists, typically of the anti-market left in southern Europe and the anti-migrant right in the north. But alternative left parties (feminists, pirates and greens, for example), liberals and the centre-right have also benefited. And so has the Stay On The Sofa party. + + + +Europe’s left has seen losing streaks before; its fortunes fell sharply in the late 1980s and early 1990s. It bounced back under leaders like Tony Blair and Gerhard Schröder, who sacrificed their parties’ old affection for rigid labour markets and high taxes in favour of a centrist, “Third Way” combination of social reform, deregulation and good public services funded by the ensuing economic growth. In 1996 Europe’s social democrats were doing as well as ever (see maps). + +But voters’ trust in such parties took a blow in the economic crisis of the late 2000s, to which parties of the centre left responded with cuts all but indistinguishable from those made by the right. At the same time parties of the right (especially in Germany, Britain and Scandinavia) nabbed popular bits of the Third Way—welfare-to-work programmes in Sweden, school reform and the minimum wage in Britain—for themselves. + +The howling storm + +The euro crisis exacerbated matters. In Europe’s north the idea of relaxing austerity came to be seen by many voters as a way of using their money to bail out the spendthrift south. The left’s options were thus sharply constrained. Take the predicament Mr Hollande found himself in. Elected in 2012 on the slogan “time for change”, he promised to curb austerity and reboot the economy. But a 75% tax rate on the rich was dropped after bringing in paltry receipts. The rest of the euro zone insisted that deficit limits which had previously been ignored now had to be taken seriously. With markets breathing down his neck, unable to devalue and spooked by the prospect of France being lumped in with the EU’s struggling south, Mr Hollande cut business taxes and made savings in the budget. + +But these circumstantial factors do not fully account for the depth and continental scale of the slump. Four things have made Europe a harsher environment for the centre left: its own success, structural change in the economy, a reduced fear of political extremes and the decline of monolithic class groups. + +First, success. Many of the goals of the incrementalist left-wing parties that can be traced back to 1889’s Second International, Marxists who favoured the parliamentary process over insurrection, have been met. A credo of universal public services and redistribution that used to be contentious is now so widely accepted as to be easily captured by rival parties of right and left. As Joseph Muscat, the Labour prime minister of Malta, puts it: “Is anyone contesting that people should have a pension?” The sense of a forward struggle, of victories to win rather than losses to be stanched, is gone. + +At the same time European economies have changed in ways that make the collectivist policies on which the centre left was built less effective. The transport of goods has become faster, cheaper and containerised; capital more mobile; trade deals (and associated state-aid rules) more far-reaching; and automation more sophisticated. Jobs have gone overseas or just gone altogether; the unionised industries of the Industrial Revolution, mining and steel, are hugely diminished. There has been a fundamental shift away from manufacturing and towards services, and from state ownership towards the private sector. + +Fearful symmetry + +The fall of the iron curtain in 1989 and the subsequent integration of eastern Europe into the EU hastened some of that change by providing new pools of cheap labour. It also had a deeper effect. The politics of the EU countries had until then been constrained by history: hemmed in by the threat of the Soviet Union on one side and by memories of fascism on the other, social democrats and Christian democrats huddled in the centre ground. A generation later parties can set out their pitch far away from the old mainstream. + +This broadening of the political spectrum goes along with the fourth change: a fragmentation of the identities on which the centre left was built. A study published by the BBC in 2013 showed that little more than a third of British voters belong to the traditional working- and middle-classes; the rest are in new, hybrid categories such as “new affluent workers”, “technical middle class” and “emergent service workers”. Young voters raised on social media create esoteric identities of their own rather than commit themselves to collective ones like class. They prefer movements to parties. + +This change poses problems to political parties of all hues. But the situation is particularly vexed on Europe’s left, less thoroughly held together by common culture than its right tends to be. The centre left relied on convincing the industrial working class and a significant fraction of the middle class, particularly that in the public-sector bits of the mixed economy, that they wanted the same thing, a trick which was easiest in places where the people involved genuinely started off feeling they had something in common. It is no coincidence that Europe’s most reliably social-democratic regions—Emilia Romagna, Andalusia, England’s north-east and North-Rhine Westphalia—all have populations with a proletarian self-image that helps politicians appeal to working and middle class alike. + +Today a divergence of interests, the decline of heavy industry and the success of places where jobs that demand high skills cluster are widening the split between blue-collar voters in fading industrial towns and progressive white-collar ones in booming cities. Citing a Danish political drama about cosmopolitan media-political types, Simon Hix of the London School of Economics points to “the growing divide...between voters in creative, liberal, ‘Borgen’ cities like London, Copenhagen and Berlin with those in rusting factory and port towns like Rotterdam, Malmö and Lille.” + +Where once the Copenhagens and Lilles were united in their support for social-democratic policies, now they are divided by the increasingly salient politics of identity. The Borgen types are internationalist and socially libertarian, their counterparts nationalist and socially conservative; the divide runs deepest on immigration and the EU. And new or revived parties on each side of this divide are eager to sweep up the voters that the strained centre left can no longer hold. + +Consider the Netherlands, where support for the centre-left PVDA has collapsed from 25% in the 2012 elections to below 10% today. As René Cuperus, an influential thinker on the Dutch centre left, points out, the party has been losing supporters in the big cities and university towns to D66 (a liberal party of entrepreneurs and professionals) and the environmentalists and libertarians of the Green Party; between them the greens and D66 now get the vote of some four out of five Dutch students. Meanwhile the PVDA’s former blue-collar strongholds in places like Rotterdamhave veered towards the Party for Freedom run by an anti-immigrant populist, Geert Wilders, who is seeking to do in the Netherlands what Marine Le Pen of the National Front has done in France. + +There are parts of Europe where the two diverging groups remain bound together—but it takes a stronger glue than today’s centre left can offer. The adhesive that works is a drive for self-determination, as seen in the cross-class appeal of the Scottish National Party and the Junts pel Sí (“Together for yes”) coalition in Catalonia. + +The invisible worm + +Left in the middle, the social democrats look defensive and indistinct, concerned more with protecting past advances than forging new ones. They are “neither opponent nor engine”, as Mr Cuperus puts it. “It is the right that has inherited the ambitious modernist urge to destroy and innovate in the name of a universal project,” Tony Judt, a British historian, lamented in “Ill Fares the Land”, a paean to social democracy he dictated on his death bed. + +The things voters found appealing about social democracy are still on offer: consider Angela Merkel’s pension-age-lowering, minimum-wage-introducing, environmentalist brand of centrism. They may also be seen when parties of the harder left come close to, or into, power and find themselves driven to the right by reality. Syriza, elected in Greece as a genuinely left-wing alternative, has found itself enacting policies it once decried: talking to The Economist Yanis Varoufakis, Syriza’s first finance minister, calls his former party “a new Pasok”. Spain’s left-wing Podemos moderated its policies in recent coalition talks with the centre-left PSOE. + +Some social-democratic policies, and spirit, can be found in new parties like M5S in Italy and Ciudadanos, a youthful liberal party, in Spain, though there are many other things in the mix, too. Other new outfits may also lay claim to traditionally social-democratic territory: in Berlin on February 9th, for example, Mr Varoufakis launched DIEM 25, a leftish “movement” committed to pan-continental democracy and burden-sharing. And the dirigiste economics that Third Way leaders renounced, but many of their comrades stayed fond of, remain on offer from anti-immigrant populists, too: witness the success of Austria’s FPÖ, which pitches itself to disaffected centre-left voters as the new “social homeland party” with plans for a “building offensive” on housing. It is on track to surpass the governing Social Democrats at the presidential election on April 24th. + +Crimson joy? + +What strongholds remain are often tired. Take Ludwigshafen, a south-west German industrial city where tens of thousands of workers—having completed their apprenticeships, of course—commute to well paid blue-collar jobs every day. Ludwigshafen voted for the SPD even when Helmut Kohl, one of its own sons, was Germany’s centre-right chancellor in the 1980s. On March 13th, as voters south of the city (in high-tech, environmentalist Baden-Württemberg) and north-east of it (formerly communist Saxony Anhalt) abandoned the party, the stolid voters of Ludwigshafen remained loyal. + +Yet at a pre-election rally for Malu Dreyer, a brassy, witty local leader who stands out against her lacklustre peers, the mood was remarkably flat. Ms Dreyer hailed once-social-democratic goodies that all now favour: child care, low unemployment, vocational training (“We want Meisters [foremen] as well as Masters”). A marching band played a foxtrot and “Mack the Knife” for supporters whose average age must have been 60. On the walls were posters with unobjectionable slogans: “Responsibility”, “Staying Together”. “Just Right For Our Time”, read one—but the time was the time of the grandparent. + +On their current trajectory, social democrats may well end up like liberals and greens today: subordinate players confined to regional strongholds whose best chance of influence is to nudge other parties in their direction should they get into coalition. But there are still some who are both in power and relatively popular. Their successes offer three lessons. + +First, renewal ends with national government; it does not begin there. Mayoralties and regional governments hone precisely the mix of pragmatism and innovative policy thinking that social democrats need if they are to win nationally. In Manchester a dynamic leadership with a “what works” credo keeps Labour dominant in an increasingly globalised city; in Hamburg the SPD parties like it’s 1969 thanks to a resilient coalition of low- and middle-earners. + +Second, remember that a leader whom people like and even trust—including people beyond the confines of the party—can be a great asset. The continent’s most charismatic and credible social democrats are among its most popular: Emmanuel Macron, minister for the economy in France, and Mr Muscat in Malta are two examples; another two, looking back, are Mr Blair and Mr Schröder. + +And Europe’s social democrats should learn from their North American counterparts, who have so far avoided their gloomy decline by building multifaceted, pluralistic coalitions like that which twice elected Barack Obama, a coalition that ranged from ethnic-minority voters, via urban liberals, insecure service employees and middle-class parents, to industrial workers. To that end Mr Renzi (a former mayor, uncoincidentally) has joined Justin Trudeau, Canada’s new prime minister, to take part in an initiative based in Washington, DC, which aims to reinvigorate the centre left worldwide. + +Persuading a plurality of voters that their interests are best pursued by a centre-left government means adopting policies that deliver results. Mr Macron has argued for portable and individual benefits that suit a more fluid, Uber-ised labour market. Others champion retraining programmes such as those at which the Nordic countries excel, or new ways of caring for children and the elderly. Such ideas offer more hope than trying to outdo populists of right and left, or returning—as Jeremy Corbyn, leader of Britain’s Labour Party, would wish—to the policies of the 1970s. + +Perhaps the best available template is Malta. There the Labour Party spent 15 years in opposition, consistently winning working-class port seats but failing to take middle-class votes. Taking the helm of the despairing party in 2008, Mr Muscat ditched the party’s Euroscepticism and dirigisme for a focus on social mobility, education and getting more women into work. The party won a landslide victory in 2013 and continues to lead in polls today. “What differentiates us and should differentiate us”, he said in a recent interview with The Economist, “is not that we represent those in society who are better off, but anyone who wants to be better off.” Malta, it is true, is a tiny country with a competitive economy. It nonetheless offers something like a way forward for a continent with few such exemplars. + +If they want to keep fighting, Europe’s social democrats must reckon with a newly unsentimental, biddable and fragmented electorate and a range of rivals eager to steal their supporters. They will need to combine distinctiveness, credibility and persuasiveness: no mean feat. They are no longer carried forth by the tide of history and are often swimming against it. They must make their own currents. + +For transcripts of the interviews mentioned in this briefing please visit www.economist.com/ESDmuscat www.economist.com/ESDvaroufakis + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21695887-centre-left-sharp-decline-across-europe-rose-thou-art-sick/print + + + + + +Articles Sections Next + + + + + +United States + + + + +America and the world: Trade, at what price? + +Sin and politics: No, not one + +Indiana’s abortion bill: Running against Roe + +Organised labour: Handed a victory + +The campaigns: Heard on the trail + +Crazy Republicans: The biters bit + +Campaign paraphernalia: What’s in a badge? + +Lexington: Ted Cruz, false hope + + + + + +Articles Sections Next + +America and the world + +Trade, at what price? + +America’s economy benefits hugely from trade. But its costs have been amplified by policy failures + +Apr 2nd 2016 | WASHINGTON, DC | From the print edition + + + +SO COMMON is anti-trade rhetoric in the election campaign that you might think America is about to erect a wall on every side. Donald Trump threatens to slap a 45% tariff on Chinese imports and to bully firms into returning their factories to America. Bernie Sanders proudly recalls his unwavering opposition to free-trade agreements, past and current. And Hillary Clinton, having supported the Trans-Pacific Partnership (TPP), the latest trade accord, as secretary of state, now opposes it. + +Presidential candidates have taken such positions in the past. Barack Obama, who today peddles trade deals, slammed them in 2008. What makes today’s protectionism more potent is that it draws on broader changes in thinking among economists about the impact of trade. Many are now a good deal more critical. + +Since the 1980s, America’s economy has gradually opened up to cheap imports. This accelerated in 1993, when President Bill Clinton signed the North American Free-Trade Agreement (NAFTA) with Mexico and Canada. The deal, America’s first broad trade accord to include a poor economy, eliminated most tariffs on trade between the three countries over a decade. Coincidentally, within a year of the start of tariff reductions, the peso collapsed, making Mexican imports cheaper still. Excluding fuel (which America had to buy from somewhere) imports from Mexico grew by about five times between 1993 and 2013, according to the Peterson Institute, a think-tank. Exports to Mexico grew by about three-and-a-half times. As a result of the disparity, a bilateral trade deficit worth $23 billion (then, 0.2% of America’s GDP) opened up within five years. + +The small size of Mexico’s economy—America’s is still well over ten times bigger—limited NAFTA’s impact. A greater shock was coming: in 2001 China joined the World Trade Organisation (WTO). Although this did not change any tariffs, a tsunami of cheap Chinese imports followed. “Made in China” labels became ubiquitous on clothes, toys, furniture and, eventually, electronics as Chinese imports surged from 1% of GDP in 2000 to 2.7% by 2015. The best explanation for this sudden inflow is that WTO membership gave certainty to investors in China’s export industries; until then, America could impose higher tariffs on China at will. + +Many blamed the yuan’s peg to the dollar for creating a trade imbalance. By 2014 China had accumulated nearly $4 trillion in foreign currency to sustain the peg. Economists have always struggled to formalise the allegation that China manipulates the yuan. Over time, higher wage inflation in booming China should undermine the advantage of a weak currency. Wages have indeed risen much faster in China than in the West. China’s current-account surplus, which reached 10% of GDP in 2007, is often cited as proof of fiddling. But Chinese surpluses and American deficits are—as a matter of accounting—the difference between saving and investment in those countries. So China’s vast surpluses in part reflected its extraordinary propensity to save. + +In any case, cheap imports were a windfall for American consumers. Excluding food and energy, prices of goods have fallen almost every year since NAFTA. Clothes now cost the same as they did in 1986; furnishing a house is as cheap as it was 35 years ago. More trade brought more choice, too. Robert Lawrence and Lawrence Edwards, two economists, estimate that trade with China alone put $250 a year into the pocket of every American by 2008. The gains from cheap stuff flowed disproportionately to the less well-off, because the poor spend more of their incomes on goods than the rich. + +At the same time, trade created new markets for American firms. In 1993 America sold nearly $10 billion-worth of cars and parts to Mexico, at today’s prices. By 2013 that had risen to $70 billion. Many American firms have become tightly integrated across the southern border, with low-skilled work done in Mexico and more complex tasks done at home. Exports to China grew by almost 200% between 2005 and 2014, with agriculture and the aerospace and car industries leading the charge. Some workers have benefited from rising exports, because firms that export pay more; one estimate puts the export wage-premium at 18%. Outsourcing low-wage assembly has also increased the productivity of America’s high-skilled workers. For example, Apple’s ability to assemble its iPhones cheaply in China has made the work of its American designers much more lucrative. + +The gain and the pain + +Trade, though, has an acute image problem. Its benefits are hard to perceive directly, spread as they are across large constituencies: consumers, exporters, and workers who may not realise just how much of what they make is shipped overseas. In contrast, its costs are highly concentrated. Cheap imports have been lethal for many American manufacturers, particularly in the midwestern rustbelt and in the South. + + + +Economic theory predicts that trade, though often good for average incomes, will squeeze the pay of those workers whose skills are relatively abundant overseas. A sharp rise in the college premium—the additional wages earned by skilled workers—from around 30% in 1979 to almost 50% by 2000 seemed to corroborate that theory, as it coincided with the first wave of cheap imports (see chart). But for some time there was scant evidence of a causal link between the two trends. In 1995 Paul Krugman, a trade economist, estimated that trade with poor countries explained only a tenth of the growth in the skilled-worker premium in the 1980s. Mr Krugman and others found that technological change was more to blame. That would explain why the return to education increased even in poor countries, which trade theory did not predict. + +But by 2008 Mr Krugman had changed his mind, warning that the sheer volume of trade with China and other poor countries was probably increasing inequality. In 2013 an updated estimate of his model showed that trade with poor countries depressed unskilled workers’ wages by 10% in 2011, up from 2.7% in 1979, according to Josh Bivens of the Economic Policy Institute, a think-tank. In that time, trade accounted for one-third of the rise in the college premium. + +For other economists, the impact of trade on jobs was a growing concern. The sharp decline in American manufacturing employment began in 2000, just as Chinese imports took off (see chart). Yet on the extreme assumption that every dollar spent on imports replaced a dollar spent employing an American, Mr Lawrence calculates that between 2000 and 2007 Chinese imports caused, at most, 188,000 of 484,000 annual manufacturing-job losses. A recent, more detailed, estimate by Daron Acemoglu, David Autor and others chalks up about 1m of 5.5m manufacturing jobs lost between 1999 and 2011 to Chinese competition (with similar-sized job losses in other industries). + + + +This implies that many other factors are in play. Technological change is probably the prime culprit for shrinking manufacturing employment. Productivity increases in the industry have been staggering. For instance, since 1994 carmaking’s contribution to GDP—to which outsourced production by American firms does not contribute—has fallen by about 10%. But there are 30% fewer carmaking jobs. This had led to the false impression that America’s car industry has outsourced most of its work. Such are the advances in manufacturing technology that if China disappeared tomorrow, far fewer jobs would return to America’s shores than left them. + +But another recent achievement of trade economists has been to show that trade-induced job losses, while relatively small, are particularly painful: more so than those caused by technology. Until recently, most economists assumed that displaced workers could find new work relatively easily. After all, in June 2007, on the eve of the financial crisis, unemployment was 4.6%—lower than it was before the recession of the early 1990s. Between 2000 and 2007 Americans left 5m jobs a month and started 5.1m new ones. A million or so jobs lost to trade with China over more than a decade seems tiny by comparison. + +But many workers displaced by Chinese imports did not simply find another job. Mr Autor and his colleagues have shown that, at local level, employment falls at least one-for-one with jobs lost to trade, and that displaced workers are unlikely to move to seek new work. The lowest-skilled who do find new jobs tend to move to similar, and thus similarly vulnerable, employment. One reason for this immobility could be that the economy is now an unwelcoming place for jobseekers without a university degree. The housing collapse of the late 2000s, which left many Americans trapped in negative equity, may have made things worse. This new strain of research has lent support to the claim of Dani Rodrik, a globalisation sceptic, that “If you are of low skill, have little education, and are not very mobile, international trade has been bad news for you pretty much throughout your entire life.” + +The losers from trade became reliant on the government. One supposed safety-net was “trade-adjustment assistance” (TAA), a programme dating from 1962 and beefed up after the signing of NAFTA. If the Department of Labour accepts a petition for TAA, workers get an extension to their unemployment-insurance payments. For most of the 2000s, the extension lasted six months. In addition, beneficiaries can enroll in training programmes; if they do, they receive more payments while they train. Workers over 50 also get a kind of wage insurance which pays up to $12,000 over two years to compensate them for starting a new job on lower pay. + +Until 2009 TAA was more limited for those displaced by Chinese competition than by NAFTA, notionally because no free-trade deal had been signed with the Chinese. It covered only those whose factories had shut because of direct competition from Chinese imports. It left out those further up the supply chain, or those whose employers had moved factories to China. Some workers decided to claim disability benefits instead. Mr Autor and his colleagues found that in areas affected by trade with China, new spending on disability benefits was more than double new spending on unemployment insurance and TAA (see chart). + +Even for those workers who did qualify for TAA, support was woefully inadequate. Only about a third entered training programmes, perhaps because the budget was so low: just $1,700 per displaced worker in 2007. The wage-insurance scheme was better than nothing, but was not enough to make up for wage losses which frequently exceeded 20%. The workers who lost the most in lifetime earnings—the young—were not eligible for wage insurance. In the aftermath of the recession TAA was improved, and Mr Obama now wants to expand wage insurance. But it is too late for those who lost out in the 2000s. + +Obstructing their progress + +How does this bear on today’s trade-policy debates? Economists were wrong to think in the 1990s that the concentrated costs of trade, which textbooks always predicted, had somehow been avoided. It is now clear that they can be, in fact, worse than first thought. But the gains from trade, which are larger still, were never an illusion. Trade sceptics sometimes seem to suggest that workers were better-off before the 1980s, because protectionism was rife but growth stayed high. Yet living standards today are far higher. Trade barriers, which prevent such advances, are a futile, self-defeating way to help the unskilled. + +Today’s trade agreements are very different from NAFTA or other deals which have brought down tariffs, because most levies have already been abolished. Only 10% of the projected gains from TPP, for instance, come from tariff reductions. Where tariffs do fall in the TPP, America is primed to benefit. For example, Uncle Sam’s carmakers will cheer the end of big Malaysian and Vietnamese tariffs on motors. + +The TPP’s biggest provisions concern protection for intellectual property, liberalising trade in services and enforcing stricter labour and environmental standards. All this probably helps American workers. Mr Autor and two of his most frequent co-authors support the deal, arguing that the globalisation of manufacturing is a fait accompli. Blocking the TPP or other modern trade deals will not undo the failure to help those who lost out from trade with China. + +To the extent that some Americans are harmed, which is inevitable, the projected gains of future free-trade agreements should be more than enough to compensate losers, if only the government can get itself organised. Peter Petri and Michael Plummer, two economists, estimate that the TPP will boost American incomes by $131 billion, or 0.5% of GDP. That is over 100 times what America spent on trade-adjustment assistance in 2009: there is plenty of scope to do more for the losers from trade. + +Many gains from trade remain on the table. Some hope that China may eventually join the TPP. China’s urban middle class will double over the next decade and seek services, from finance to telecoms, which America could compete to provide. The TPP includes restrictions on state-owned enterprises. China will be welcomed into the agreement only if it curtails subsidies to its national champions. + +Europe presents another opportunity. Negotiators hope that the coming Transatlantic Trade and Investment Partnership will harmonise regulatory standards across the Atlantic in industries such as pharmaceuticals, telecoms and transport. Removing all such “non-tariff barriers” could raise America’s GDP by up to 3%, according to the most optimistic study. And the world has still to grapple with how best to regulate global flows of data—an issue in which America, as the world’s technology hub, has a huge stake. + +Americans are not oblivious to these facts. A recent Gallup poll found that 58% see trade as an opportunity; only 34% see it as a threat. But this only reinforces the idea that the costs of trade are concentrated. Research shows that the more local workers compete with imports, the lower the number of votes cast for incumbent politicians—as the presidential hopefuls well know. If America is to go on reaping the gains from trade, it must ensure it compensates those who lose out. You can oppose protectionism, or you can oppose redistribution. It is getting harder to do both. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695855-americas-economy-benefits-hugely-trade-its-costs-have-been-amplified-policy/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Sin and politics + +No, not one + +The link between a scandal in Alabama and the rise of Donald Trump + +Apr 2nd 2016 | ATLANTA | From the print edition + + + +“IF WE’RE gonna do what we did the other day,” Robert Bentley, the governor of Alabama, tells his aide in a recently released recording, “we’re gonna have to start locking the door.” Explaining himself, Mr Bentley—whose 50-year marriage ended last year—apologised for his “inappropriate” remarks but, despite the tape’s evidence, denied any “sexual activity”. + +Many Alabamians did not expect such antics from a folksy, septuagenarian deacon of the First Baptist church in Tuscaloosa, who has assumed stridently judgmental stances on marriage and abortion. In truth, they shouldn’t be surprised. Beginning in 1834, when a congressman shot himself after reading a letter from his wife to Alabama’s governor, the office has furnished a rich chronicle of marital strife, paternity suits and phone-tapping. And, in fairness, for all the outrage their peccadillos engender, the politicians are not exactly outliers in Alabama. To a startling degree—and for reasons that may shed light on the presidential race—it and other southern states combine conspicuous religiosity with widespread loucheness. + +Alabama ranks third in the nation for weekly church attendance. Of the top eight states, six more are southern: Mississippi, South Carolina, Louisiana, Tennessee, Arkansas and Kentucky. Along with Alabama, those last three are among the five states with the highest proportions of white evangelical Protestants. Yet this devout region also scores impressively badly on a broad range of ungodly indicators. Dirty phone calls are the least of it. + +Louisiana’s murder rate is comfortably the nation’s highest. Mississippi’s is second (most of the other states are not far behind). The same pair suffer the country’s highest rates of gonorrhoea; Alabama, Arkansas and South Carolina make the top ten. Meanwhile Alabama, Louisiana, Mississippi and South Carolina feature in the top seven for the incidence of single-parent families. All those church-loving southern states rank in the top third for teenage pregnancy; several are prolific in divorce. + +There are provisos. John Shelton Reed, a distinguished sociologist, notes that, murder-wise, the South specialises in crimes of revenge and passion, reflecting an anti-institutional tendency to settle grievances privately. Divorce is relatively common, some apologists say, in part because southerners still bother to get married. The standard explanation for the overall picture is poverty, with which many social problems correlate. The destructive effects on black families of slavery and Jim Crow are relevant, too. + + + +Religion, in such analyses, is incidental. Indeed, for many it is a countervailing force: if there were more of it in schools and communities, these scourges would be ameliorated. Brad Wilcox, of the University of Virginia, offers a nuanced version of that argument. Domestic troubles, he observes, are particularly rife among lapsed Southern Baptists: men (especially) who inherit old-fashioned notions of family life, but drift from the church and are “stranded with traditional beliefs” that are hard to honour in modern America. + +Some secularists, on the other hand, think religion is implicated. They maintain that puritanical views repress frank talk and warp natural urges, as in sexual-abstinence programmes (widespread in the South) that sometimes fail to mention contraception. Drinking habits in some of these states may also fit this pattern: on average southerners are less likely to binge-drink than others, but in Louisiana, Mississippi and South Carolina, when they do, they are liable to down a lot. + +Another, paradoxical aspect of the evangelical creed may contribute. Like other forms of Protestantism, only more so, it promises salvation by faith alone. Sin, in this schema, is both inevitable and forgivable. Wayne Flynt, a historian and minister, adduces two biblical verses that are impressed on young southern Christians: “There is none righteous, no, not one”, and “For all have sinned and fall short of the glory of God.” Sinning and seeking forgiveness (so long as they are mainstream sins) is a recognised path to God and mark of faith. Falling short is not a bar to worship but an element of it. That philosophy, and its political advantages, were exemplified in Mr Bentley’s comments. “As a human being,” he said, “I do make mistakes.” His consolation was that “the God who loves me, loves me even through the mistakes.” + +This outlook may help to account for the regularity of scandals in Godfearing places like Alabama, and many voters’ willingness ultimately to overlook them. It may also be pertinent to a national enigma: the rise of Donald Trump. One reading of his strong showing among evangelical Christians—he swept all the states mentioned above—is that his supporters are only notionally religious: witness the decline in his ratings among evangelicals who go to church every week. Some may be plumping for a profane braggart because they think him strong enough to guarantee their liberty, like some latter-day Persian king. Or, for some, Mr Trump’s yen to turn back the clock may by association imply a resurgence of Christianity, even if his own behaviour doesn’t. + +But the conviction that no one is perfect—no, not one—may also be a factor in his seemingly contradictory appeal. Think how well he might do among the righteous if he found it in his heart to repent. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695895-link-between-scandal-alabama-and-rise-donald-trump-no-not-one/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Indiana’s abortion bill + +Running against Roe + +The governor has signed the most restrictive abortion law in the country + +Apr 2nd 2016 | CHICAGO | From the print edition + + + +GAIL RIECKEN, a Democratic state representative in Indiana, is the grandmother of a five-year-old girl with Down’s syndrome, a genetic disorder causing intellectual disability and delay in physical development. Ms Riecken’s daughter learned about her child’s condition when she was pregnant; she decided to carry her to term. Today she is ecstatic about her choice which, Ms Riecken points out, will affect the rest of her life. + +Soon women in Indiana will not be able to make such a decision for themselves. On March 24th Governor Mike Pence, a Republican who made his name as pro-life activist in Congress, signed a bill into law that prohibits abortions on the grounds of a diagnosis of Down’s syndrome or any other disability—as well as on grounds of race, skin colour, national origin, ancestry or the sex of the fetus. It mandates that an aborted fetus must be disposed of by burial or cremation. And it requires doctors to inform women about perinatal hospice care, a service for babies not expected to survive outside the womb. “It’s a mean bill,” fumes Ms Riecken. “All it does is punish the woman.” The bill was criticised by the American Congress of Obstetricians and Gynaecologists, which represents around 58,000 health-care professionals, because it might encourage a woman to hide facts from her doctor. + +The bill will become law in July. When it does, Indiana will have the most restrictive abortion legislation in the country. Seven states ban abortions based on a baby’s sex. Arizona’s ban extends to abortions based on race, and North Dakota passed a law in 2013 that prohibits abortions because of fetal abnormalities. “Indiana’s law is much broader [than other state laws] and clearly runs against Roe,” says Elizabeth Nash of the Guttmacher Institute, a think-tank that backs abortion choice. The Supreme Court’s ruling in 1973 in Roe v Wade held that a presumed right to privacy protects a woman’s right to decide whether to terminate her pregnancy, whatever her reasons may be. + +Supporters of the bill openly admit that it is unconstitutional, according to Dawn Johnsen, who teaches law at Indiana University. They mostly want to prevent as many abortions as possible. Planned Parenthood of Indiana and Kentucky and the American Civil Liberties Union both say that they are working on a legal complaint. This will come not long after the Supreme Court started to deliberate in early March, in Whole Woman’s Health v Hellerstedt, on how far states may go to make abortion difficult. The case concerns a new law in Texas which, its opponents say, makes access to abortions unduly burdensome. On March 30th Donald Trump added his two cents to the debate, declaring that any woman undergoing an abortion should receive “some form of punishment”. + +If the legal challenge to Indiana’s new law falters, as similar challenges have done, it would still be legal to abort a fetus displaying no genetic abnormalities until the 20th week of a pregnancy in Indiana, but illegal to do so if the test for disabilities comes back positive. This is, to put it mildly, confusing. Yet, argues Charlie Camosy, who teaches ethics at Fordham University, a Jesuit foundation, this may be a choice women don’t want to have. Up to 90% of fetuses with a diagnosis of Down’s syndrome are aborted in America, says Mr Camosy. To avoid the dilemma, some pro-life expectant mothers refuse to undergo the test in spite of pressure from doctors and peers. + +Yet who will help mothers forced to have a disabled child with the expense of extra care? According to Guttmacher, some 42% of the women in Indiana (and other states) who seek abortions fall below the federal poverty level. Mr Pence, a staunch fiscal conservative, is unlikely to lend them a helping hand. The governor seems to be counting on assistance from a higher power. “I sign this legislation with a prayer that God would continue to bless these precious children, mothers and families,” he tweeted on the day he signed the bill. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695904-governor-has-signed-most-restrictive-abortion-law-country-running-against/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Organised labour + +Handed a victory + +A split court delivers a tenuous win for public employees + +Apr 2nd 2016 | SAN DIEGO | From the print edition + +ON JANUARY 11th Rebecca Friedrichs, a California teacher challenging the way public-sector unions do business, bounded out of the Supreme Court wearing a big smile. Ms Friedrichs’s lawyer, Michael Carvin, had just argued her case in front of nine justices, five of whom gave her complaint a warm reception. But whilst Mr Carvin and Ms Friedrichs were celebrating beside the fountain on the Supreme Court plaza, they had no inkling that one of the expected votes in their favour would disappear with Antonin Scalia’s death in February, or that a court split down the middle would thwart their long-sought victory a month later. + +It takes a majority of justices to overturn a lower-court ruling. So on March 29th, when the now eight-member Supreme Court released a terse, one-sentence decision in Friedrichs v California Teachers Association, it made all the difference that the ninth circuit court of appeals had turned back the challenge to the unions when it considered Ms Friedrichs’s case last year. That decision, the justices wrote in an unsigned ruling, “is affirmed by an equally divided court”. A near-certain blow to teachers, police and firemen’s unions in about half the country was averted by a vote of 4-4. + +Ms Friedrichs’s target was a nearly four-decade precedent upholding state laws that allow unions to collect “fair-share” fees from public-sector employees who opt not to sign on as members. In Abood v Detroit Board of Education, decided in 1977, the court held that since non-members are represented by unions and profit from their efforts, fair-share or “agency” fees help preserve “labour peace” and prevent workers from free-riding on their dues-paying colleagues. Unions may not force non-members to pay for their overtly political activities (like campaigning for particular candidates), Abood said, but it is fine for states to conclude that the cost of bread-and-butter negotiations over salaries and benefits should be shared by everybody benefiting from those endeavours. + +Ms Friedrichs and a handful of other teachers challenged this distinction. Discussions about worker compensation and policies like class size, they claimed, address core political issues. By forcing every teacher to write a cheque to the union each month, the plaintiffs contended, the agency-fee regime compels dissenters to support ideas they reject, violating their freedom of speech. + +Four years ago Justice Samuel Alito called Abood “something of an anomaly”, all but inviting a Supreme Court challenge, and the libertarian Centre for Individual Rights quickly obliged. At the oral argument in January, Justice Alito and his fellow conservatives made no secret of their willingness to abandon the agency-fee model. It was all over, or so it seemed, when Anthony Kennedy, often the swing justice, told one of the unions’ supporters that the argument for fair-share fees “makes no sense”. + +A win for Ms Friedrichs and her disgruntled colleagues would have upended the rules for public-sector unions in California and 22 other states, threatening their funding and, possibly, their survival. But the 4-4 vote, the justices’ second deadlock since the loss of Scalia, will preserve agency fees until the next promised lawsuit challenging them works its way to the Supreme Court. If the Senate eventually sees fit to hold confirmation hearings on Mr Scalia’s successor—something that seems unlikely to happen before the next president is elected—the fate of organised labour will fall to the 113th justice. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695897-split-court-delivers-tenuous-win-public-employees-handed-victory/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +Apr 2nd 2016 | From the print edition + + + +Character witness + +“I’ve had talks about being presidential, about toning it down a bit, appealing to a broader group of people.” + +Ben Carson is advising Donald Trump. Politico + +Dad jokes + +“Donald Trump has had several foreign wives. It turns out that there really are jobs Americans won’t do.” + +Mitt Romney works on his stand-up routine + +Childish things + +“With all due respect, that’s the argument of a five-year-old.” + +Anderson Cooper of CNN tries to give Donald Trump a time-out + +Keep your enemies closer + +“I’ve never had an event hosted by someone who three weeks earlier publicly called for my murder.” + +Ted Cruz is amused that Lindsey Graham, who enjoyed imagining him dead on the Senate floor, is campaigning for him. Mr Graham confessed that his party “has gone batshit crazy”. Politico + +A question for the ages + +“Superman is better than Batman.” + +Bernie Sanders weighs in on last weekend’s blockbuster movie, choosing the alien over the trust-fund brat. Los Angeles Times + +Arms and the man + +“With this irresponsible and hypocritical act of selecting a ‘gun-free zone’ for the convention, the RNC has placed its members, delegates, candidates and all US citizens in grave danger.” + +Over 50,000 people have signed an online petition demanding that delegates at the Republican convention in Cleveland should be allowed to carry guns + +Atheists in foxholes + +“NPR has sent its political reporters to 90-minute hostile-environment awareness training.” + +Reporters covering Mr Trump now go prepared. Washington Post + +Someone’s gotta do it + +“Some reporters recently watched almost five hours of a certain candidate’s remarks to count the number of times he said something that wasn’t true…that was a significant sacrifice they made.” + +Barack Obama praises Politico reporters for their efforts + +Hear me roar + +“As one of the more than 65m…who voted to re-elect Barack Obama, I’d say my voice is being ignored.” + +Hillary Clinton slams Republicans for their refusal to vote on Merrick Garland, Mr Obama’s Supreme Court nominee + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695899-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Crazy Republicans + +The biters bit + +On Donald Trump’s latest obscenities + +Apr 2nd 2016 | WASHINGTON, DC | From the print edition + + + +IT TAKES a lot to make a humdinger of a National Enquirer exposé look mundane; Donald Trump and his campaign manager, Corey Lewandowski, have just managed it. Mr Lewandowski, a former police officer known for his abusiveness and alleged habit of making drunken advances to female journalists in late-night phone calls, was on March 29th charged with battery against one, Michelle Fields. One of the lawyers hired to defend him, it was alleged, had himself been accused of biting a stripper. Asked to condemn his man, Mr Trump naturally went on the attack. + +Ms Fields had accused Mr Lewandowski of grabbing her and barging her out of the way, as she was asking the Republican front-runner a question at a rally in Florida. Mr Lewandowski called her “delusional”; Breitbart News, the pro-Trump publication Ms Fields was working for at the time, seemed to side with him. Yet security-camera footage, released by the police, appeared to corroborate her claims. Unimpressed, Mr Trump suggested Ms Fields had been threatening him. “She had a pen in her hand which could have been a knife, it could just have been a pen, which is very dangerous.” + +It was unfortunate for the Enquirer, which had aired spicy allegations against Mr Trump’s main rival, Ted Cruz, on March 23rd, only to see them cast into the shadows by the contretemps. The tabloid newspaper alleged that “Pervy Ted Cruz”, as it termed the standard-bearer of holier-than-thou Christian conservatism, was a serial philanderer, with at least five mistresses. Mr Cruz, who denied the veracity of the story (without quite denying that he had been unfaithful to his wife), accused Mr Trump of having planted it; one of the five women the Enquirer depicted in blurry photographs did look awfully like one of Mr Trump’s spokeswomen, Katrina Pierson. But Mr Trump had a grievance of his own. He accused Mr Cruz of being behind a group that had publicised a naked photograph of his wife, under the headline: “Meet Melania Trump. Your next First Lady”. Mr Trump sought revenge by retweeting an unflattering picture of Mrs Cruz’s wife, Heidi; whereupon Mr Cruz called him a “snivelling coward”. Enough already—yet there will be a good deal more scandal and sleaze on the Republican trail. It has been the currency of Mr Trump’s celebrity for three decades. + +His supporters—who represent over 40% of the Republican electorate—are unfazed. A Gallup poll released on March 28th suggested they are the most devoted in either party; two-thirds are “extremely” or “very” enthusiastic about Mr Trump. Almost everyone else can’t stand him; over 60% of voters have a negative view of the Republican front-runner. That makes it hard to imagine him winning the White House. It may also make it hard for him to secure the Republican nomination if he fails to win a majority of the party’s primary delegates. Republican bosses, who would be influential in the horse-trading that would follow, appear increasingly resigned to losing a third consecutive presidential election. Given a choice, however, most would prefer a regular trouncing under the divisive Mr Cruz than the electoral annihilation Mr Trump threatens. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695909-donald-trumps-latest-obscenities-biters-bit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Campaign paraphernalia + +What’s in a badge? + +A lucrative trade in very small objects + +Apr 2nd 2016 | JANESVILLE, WISCONSIN | From the print edition + +Mine’s “We Shall Overcomb” + +CONTACT with this year’s presidential politics leaves many Americans hankering for a scrub with carbolic soap. But a hefty minority are relishing the contest so much that the traders who sell souvenirs outside campaign rallies are enjoying their best election in memory. + +The most lucrative rallies are those hosted by Donald Trump, whose official campaign symbol is a red baseball cap bearing the slogan “Make America Great Again”. But the most revealing sales are of something humbler: political badges, or buttons. These have been a staple of presidential races since 1896, when they were first mass-produced from metal and plastic-covered paper. + +A Trump rally on March 29th in Janesville, Wisconsin, drew dozens of itinerant traders. Ron Hillyard, a factory worker from Buffalo, New York, was using his annual leave to sell badges to rally-goers for $5 each, or $10 for three. The most popular featured an unusually benign portrait of the candidate, in a red cap, captioned “Trump for President 2016”. Runner-up was an image of Hillary Clinton behind bars and the caption: “Hillary for Prison 2016”—reflecting scepticism about the Democratic front-runner’s e-mails. A badge reading: “Trump 2016—Finally Someone with Balls” was also going well. + +Mr Hillyard has been selling election souvenirs since 2008, when Barack Obama stirred up large crowds. But nothing compares to the spending habits of Trump fans, he says: “It’s not even close.” Setting a personal record, Mr Hillyard sold $4,000-worth of hats, T-shirts and badges at a single rally in Michigan on March 4th (of which his boss, a wholesale dealer from Cleveland, Ohio, took three-quarters). + +Popular badges are quickly copied. The largest stand outside the Janesville rally belonged to Mike Kriener, whose family has been in the fair-and-carnival business for over a century. He was the first, he says, to make one widely sold badge featuring Mr Trump’s favoured counter-terrorism strategy: “Bomb the Shit Out of ISIS”. And he credits his nephew with inventing a badge featuring the Republican elephant symbol sporting a Trump-style swoop of yellow hair. “Now everybody has them, but that’s capitalism,” he observed, philosophically. + + + +America’s primary agenda: our interactive 2016 election calendar + +On the left Bernie Sanders draws the largest crowds, who snap up badges bearing the motto “Feel The Bern”, or imitation Andy Warhol portraits of their hero. Prices are lower at Sanders rallies, with two badges sold for $5, says Tim Engelskirchen, a veteran badge-maker and dealer whose home base is North Carolina. This is because Sanders supporters “have less money”, he explains. + +They are also fonder of whimsy: after a small bird landed on Mr Sanders’s lectern at a rally in Portland, Oregon, delighting the crowd, his campaign rushed out stickers showing a cartoon bird with Sanders-style white hair and glasses, named “Birdie”. These began as a gift for small donors: commercial knock-offs followed in hours. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695911-lucrative-trade-very-small-objects-whats-badge/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Ted Cruz, false hope + +The unctuous Texan is squandering a great chance handed to him by Stop-Trump Republicans + +Apr 2nd 2016 | From the print edition + + + +THESE are ghastly times for thoughtful Republicans. If Donald Trump is their presidential nominee in November’s general election, they increasingly fear that the businessman will lead them to a defeat of epic, Napoleon-in-Russia proportions, after laying waste to their support among women, suburbanites, non-whites and those dismayed by thuggish violence. A growing number have decided that the remaining candidate with the best chance of halting Mr Trump’s march to the nomination is Senator Ted Cruz of Texas, who has duly picked up endorsements from such former rivals as Jeb Bush, the ex-governor of Florida, and, most recently, Governor Scott Walker of Wisconsin, whose state holds its presidential primary election on April 5th. But Mr Cruz is an unctuous ideologue whose entire pitch to date has been aimed at the most conservative third of the country, all but ensuring that—if he somehow became his party’s candidate—he would lead them to a merely conventional sort of November defeat. + +A remarkable chance has been given to Mr Cruz by colleagues who never imagined they would need him so badly. Handed the battle-flag of the Stop Trump movement, he could attempt to rally Republicans of all stripes behind it. Without betraying his own principles, Mr Cruz could unite conservatives against Mr Trump by pointing out that the tycoon’s promises are impossible to honour, and amount to a cruel trick played on the most unhappy or frightened voters. Mr Trump says he can bully multinational companies to send jobs home. He pretends that illegal immigration can be ended with a border wall and mass deportations. Mr Trump claims that the obstacles to defeating Islamic terrorism are political correctness and squeamishness, proposing to keep America safe with a Muslim entry ban and torture for terrorists. + +In living memory, Mr Cruz has rejected such bad ideas as mass deportations, noting in January that America is not “a police state”. He used to be a devoted free-trader. Alas, judging by his rhetoric on the election trail in Wisconsin this week, the Texan is choosing to stick to a narrower path. Trumpeting his second place in the three-man race for the Republican nomination, Mr Cruz calls himself the man to stop Mr Trump. But instead of denouncing Mr Trump’s false promises, the senator has moved to borrow them for himself. Like a snake-oil salesman stealing a rival’s label and slapping it on his own patent remedy, Mr Cruz now addresses himself to workers “with calluses on your hands” and vows to bring “millions upon millions” of highly paid jobs back from Mexico and China. He promises to spark an economic boom so rapid that young school-leavers will find themselves with “two, three, four, five job offers”. Listen carefully though, and the Cruz plan to unleash this miracle is the same that he has always offered: deep tax cuts skewed towards the rich, looser environmental rules and business regulations, the repeal of the Obamacare health law (to be replaced for low-income Americans with cheap but skimpy insurance). His stance on immigration has hardened: he now attacks legal immigration as a job-killer, too. + +Addressing a crowd outside a suburban restaurant in Altoona, Mr Cruz rewrote the history of the Reagan era to omit all mention of its spiralling deficits, instead claiming that tax cuts and deregulation triggered an economic boom in the 1980s, funding a military build-up that led to Soviet defeat in the cold war. Mr Cruz promised to pull off a modern-day version of that Reagan miracle with a flat tax and by taking the “boot of the federal government off the neck of small business”. This, he says, would generate “trillions” of dollars in new revenues to fund the military firepower to defeat Islamic extremists. Worries about police states behind him, Mr Cruz now talks of patrolling Muslim neighbourhoods. + + + +America’s primary agenda: our interactive 2016 election calendar + +Campaigning in Wisconsin, Mr Cruz’s principal charge against Mr Trump is to cast the Republican front-runner as a phoney conservative who has donated to Hillary Clinton and other Democrats in the past, and to cast himself as a unifier. The audiences at Cruz events are not as united as they look, however. For one thing, nobody at the campaign stop in Altoona, or at a later rally in the smoke-stack town of Rothschild, bought the charge that Mr Trump—a man promising to torture terrorists and deport Mexicans—is a secret liberal. “I don’t think [Mr Trump] is a true conservative, but I think he will defend our country,” explained Carolyn Carlson in Altoona, summing up her presidential preferences as “Cruz first, Trump if necessary”. Most importantly, many Republicans explained that they had come to Mr Cruz only lately, after their favoured candidates had dropped out. They now long for the Texan to woo them. Lisa Nelson, a lobbyist, initially supported her local governor, Mr Walker, and the businesswoman Carly Fiorina. Now, she said, she wants to hear Mr Cruz become “less scary on social issues”. The Texan seems uninterested: his stump speech ends with a tribute to “Judaeo-Christian values”. + +Gambling on Cleveland + +A few in Altoona and in Rothschild praised the third-placed Republican contender, Governor John Kasich of Ohio, who is running as a voice of common-sense moderation, but sadly noted that he trails far behind. A striking number of voters at Cruz rallies in Wisconsin sound anxious and unhappy. “I honestly think that Trump might be more electable,” worried Pete Heineck, a factory worker from Wausau, speaking for many. + +Some Republican grandees might languidly reply that angst among Cruz voters does not much matter—they are not endorsing the Texan because they want him to win. They just need him to deny Mr Trump the 1,237 delegates he must have to win the nomination outright, triggering a contested Republican National Convention in Cleveland at which party bosses dream of imposing a more palatable replacement. That is a big gamble. General-election voters currently see a Republican contest dominated by two men competing to offer the harshest, most divisive rhetoric. Mr Trump is a disgrace, but Mr Cruz is not the solution. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21695886-unctuous-texan-squandering-great-chance-handed-him-stop-trump/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Following the Mugabe model: Spot the difference + +Canadian property: Steeples for sale + +Colombia’s wars: The second front + +Bello: The difficulty of dealing with Trumpery + + + + + +Articles Sections Next + +Following the Mugabe model + +Spot the difference + +Venezuela today looks like Zimbabwe 15 years ago + +Apr 2nd 2016 | CARACAS | From the print edition + + + +VISITING a supermarket in Venezuela is like entering Monty Python’s cheese-shop sketch. “Do you have any milk?” The shop assistant shakes her head. Sugar? No. Coffee? No. Soap? No. Cornflour? No. Cooking oil? No. Do you in fact have any of the products that the government deems so essential that it fixes their prices at less than what it costs to make them? No. + +This is hard cheese for the masses queuing outside in the hope that a truck carrying something, anything, will arrive. Yesenia, a middle-aged lady from a village near Caracas, got up at midnight, rode a bus to the capital, started queuing at 3am and is still there at 10am. “It’s bad, standing here in the sun. I’ve had no breakfast, and no water.” Why does she think there are such severe shortages? “Bad administration.” + +That is putting it mildly. The Venezuelan government spends like Father Christmas after too much eggnog, subsidising everything from rural homes to rice. It cannot pay its bills, especially since the oil price collapsed, so it prints money. + + + +Cash machines in Caracas spit out crisp new bills with consecutive serial numbers. The last time your correspondent saw such a thing was in Zimbabwe in the early 2000s. The IMF predicts that inflation will be 720% in Venezuela this year, a figure Zimbabwe hit in 2006. By 2008 Zimbabwe was racked by hyperinflation so crippling that beggars who were offered billion-Zimbabwe-dollar bills would frown and reject them (see chart). + +Might Venezuela go the way of Zimbabwe? They are culturally very different, but the political parallels are ominous. Both countries have suffered under charismatic revolutionary leaders. Robert Mugabe has ruled Zimbabwe since 1980. Hugo Chávez ran Venezuela from 1998 until his death in 2013. His handpicked successor, Nicolás Maduro, continues his policies, though with none of Chávez’s—or Mr Mugabe’s—political adroitness. + +Mr Mugabe seized big commercial farms without compensation, wrecking Zimbabwe’s largest industry. Chávez expropriated businesses on a whim, sometimes on live television. He sacked 20,000 workers from the state oil firm, PDVSA, and replaced them with 100,000 often incompetent loyalists, some of whom were set to work stitching revolutionary T-shirts. + +Mr Mugabe lost a referendum in 2000 but rigged the subsequent election to keep the (more popular) opposition out of power. The chavistas lost a parliamentary election in December but have used their control of the presidency and supreme court to neuter the (more popular) opposition. + +Mr Mugabe recruited a ragtag militia of “war veterans” to intimidate his opponents. Chávez recruited gangs from the slums, known as colectivos, to terrorise his. On March 5th gangsters on motorbikes rode around the (opposition-controlled) National Assembly and sprayed pro-government slogans such as “Chávez vive” on its walls. Police stood and watched. + +Yet the key similarity between the two regimes is not their thuggishness but their economic ineptitude. Both believe that market forces can be bossed around like soldiers on parade. In both cases, the results are similar: shortages, inflation and tumbling living standards. + +Mr Mugabe, who like the chavistas professes great concern for the poor, fixed the prices of several staple goods in the early 2000s to make them “affordable”. They promptly vanished from the shelves. The subsidies that are supposed to make price controls work have often been stolen in both countries. Suppliers, rather than giving goods away at the official price, prefer to sell them on the black market. + +Retail riot police + +Ana, a young hawker in Caracas, explains how it works. She holds a bag of washing powder that is supposed to be sold for 32 bolívares. She bought it for 400 and will sell it for 600. Her business is illegal, but she conducts it openly in a crowded square. Nearby, hawkers from the countryside haggle over illicit nappies. The bus ride to Caracas was 13 hours; the hawkers say they come every two weeks. + +Outside a state-owned supermarket, a dozen national guardsmen equipped with body armour, truncheons and tear-gas are stopping a pregnant woman from coming in. It’s not one of her designated days of the week for shopping, they explain. (You get two.) Shoppers must show their identity cards to enter the store and have their fingerprints scanned before buying their ration of price-controlled goods. + +Yet such measures are no match for the law of supply and demand. Suppose you are driving a tanker of subsidised petrol. You can sell the cargo legally in Venezuela for $100, or drive across the border to Colombia and sell it for $20,000. The pitifully paid border police will be easy to square. + +Wily entrepreneurs find ways around price controls without violating the letter of the law. When bread was price-controlled in Zimbabwe, bakers added dried fruit and called it “raisin bread”, which was not price-controlled. Venezuelan firms have added garlic to rice, called it “garlic rice” and sold it at unregulated prices. + + + +In graphics: A political and economic guide to Venezuela + +Ridiculous laws breed bitter comedy. A Venezuelan company boss recalls a time when he could not buy toilet paper. He rang up a friend who ran a paper company. The friend said he couldn’t sell him a single pack, but he could sell him a small truckload, company to company. It cost less than the single pack he had initially asked for. + +Mr Mugabe has long blamed his country’s economic woes on speculators, traitors, imperialists and homosexuals. Mr Maduro, to his credit, doesn’t blame gay people. But he insists that local capitalists and their American allies are waging an “economic war” on Venezuela. This is absurd: in both economies the assaults have come from their own governments. + +By the most overvalued official exchange rate, ten bolívares are worth one American dollar. On the black market, the same dollar fetches 1,150 bolívares. Zimbabwe abandoned its worthless currency not long after monthly inflation hit 80 billion per cent in November 2008. Zimbabweans now use American dollars and other foreign currencies. Real incomes in Zimbabwe fell by two-thirds between 1980, when Mr Mugabe took over, and 2008. They have partially recovered, thanks to dollarisation and the scrapping of some of the old man’s daftest policies. + +For Venezuela, the lesson is plain. If it fails to pick a better model than Mugabenomics, things will only get worse. The Venezuelan opposition are keen to change course. Mr Maduro’s cluelessness gives them a chance. He says that he is tackling shortages by raising his own chickens—and so should everyone else. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21695934-venezuela-today-looks-zimbabwe-15-years-ago-spot-difference/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Canadian property + +Steeples for sale + +Churches sell up, without completely selling out + +Apr 2nd 2016 | VANCOUVER | From the print edition + + + +WHEN Kurt Marx founded a Lutheran church in 1953 in Vancouver, he moonlighted as a carpenter to earn the salary that his tiny congregation of German immigrants could not pay. By the late 1960s Oakridge Lutheran Church ministered to hundreds with services in German. Today the worshippers are fewer, older and praying in Mandarin. But the property the church occupies is now worth a fortune. A dilapidated bungalow a few blocks away is on the market for C$2.7m ($2m). So Oakridge Lutheran is cashing in. It has asked city hall for permission to tear the church down and replace it with shops, housing and a smaller house of worship. It hopes to start construction this year. + +Sales of church property happen in many places, but business is especially brisk in Canada’s western metropolis. There are two main reasons: a surge in property prices, which exceeds that in almost every other Canadian city, and an influx of Asian immigrants, who bring their own religious traditions. West-coast hedonism may be a third factor, suggests David Ley, a geographer at the University of British Columbia. Pews in churches with European roots are emptying faster than those in other parts of Canada. They are the principal sellers. All this makes Vancouver’s sacred-property market “unique”, says Leonardo Di Francesco of Churchrealtors.com, which has sold more than 100 houses of worship over the past two decades. + +Often the buyers are burgeoning Asian communities, in part because it is hard to get permission to rezone church property for secular use. Terrorised by drug addicts, the nuns of the Gold Buddha Monastery in Vancouver’s seedy Downtown Eastside district sought safer quarters. Mr Di Francesco’s firm found them in a Salvation Army unit, whose hostel for jobless men had emptied out and whose programmes for disadvantaged youth attracted fewer participants. Now the main hall at the Salvation Army’s former premises is adorned with 10,000 golden Buddhas. The basement bowling alley provides storage for prayer books and ritual drums. This year, a Hindu community in eastern Vancouver sold its temple for nearly C$2m to a growing Chinese Christian congregation; the Hindus wanted even bigger premises. + +Whether selling to sacred or secular buyers, churches try not to be greedy. They feel obliged to help their communities, for example by alleviating the shortage of “affordable” housing created by Vancouver’s property boom, says Robert Brown of Catalyst Community Developments, a non-profit property developer. The rental housing planned by Oakridge Lutheran, to be built by Mr Brown’s company, is to be modestly priced. + +For First Baptist Church in downtown Vancouver, the plunge into the market is prompted not by decline but by growth. It plans to invest proceeds from redeveloping land behind its Gothic-style church in expanding its own facilities and building a block of low-rent housing. That will be dwarfed by a 56-storey tower with 300 condominiums. The site will not lose its spiritual aura: the proposed skyscraper is designed to look like a set of organ pipes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21695932-churches-sell-up-without-completely-selling-out-steeples-sale/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Colombia’s wars + +The second front + +The ELN agree to talk peace + +Apr 2nd 2016 | BOGOTÁ | From the print edition + +THE failure of the government and the FARC guerrillas to meet a self-imposed deadline of March 23rd to sign a final peace accord was greeted by Colombians with a mixture of cynicism and disappointment. A week later came better news: after more than two years of fitful exploratory talks, the second rebel group, the ELN, is to start formal peace negotiations. That holds out the hope that this year will, at last, bring an end to political violence in Colombia. + +Officials did not want demands by the ELN, with some 1,500 fighters, to complicate talks with the FARC, which has five times more. But there was a risk that, if still in the field, the ELN could have recruited recalcitrant members of the FARC and disrupted the crucial early months of peace. To make themselves felt, in recent months the ELN staged attacks on security forces and oil pipelines, and kidnapped and killed civilians. Last month it freed two hostages, which President Juan Manuel Santos had set as a condition for starting formal talks. + +Though both the FARC and the ELN purport to be Marxist insurgencies, they are very different. The FARC began as a peasant movement bent on seizing power. The ELN, with roots in the Cuban revolution and liberation theology, sees itself as part of a grassroots “resistance” movement. While the FARC is a disciplined, Stalinist force, the ELN is made up of seven autonomous “fronts”. That is reflected in the structure of negotiations: while talks with the FARC take place in Havana, those with the ELN may flit between five countries. Their agenda is a study in vagueness, featuring “democracy for peace” and “transformations for peace”. + + + +Colombia's peace process, in charts + +While talks with the FARC have dragged on for three and a half years, those with the ELN could in theory be brief. Mr Santos made it clear that both groups will have to accept the special tribunal for war crimes agreed with the FARC. The same will go for the mechanisms for handing over weapons and demobilising, which should be agreed with the FARC in the next few months. The ELN may want to make political demands of its own, which risk slowing things down. They face pressure to declare a unilateral ceasefire before the talks begin. While the FARC makes its money mainly from drugs and illegal mining, the ELN gets most of its cash from kidnapping and extortion. That will have to stop, too. + +The search for peace has dominated Mr Santos’s presidency. The protracted nature of the talks, and the concessions made to the guerrillas (they will escape jail if they confess to crimes), have taken their toll on the president’s popularity. But if he succeeds in ending the conflicts once and for all, many Colombians will thank him. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21695945-eln-agree-talk-peace-second-front/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +The difficulty of dealing with Trumpery + +Mexico needs to stand up for itself in the United States + +Apr 2nd 2016 | From the print edition + + + +THE verbal abuse has lasted more than nine months now. Last June in Las Vegas, Donald Trump launched his campaign for the American presidency by accusing Mexico of sending drugs and “rapists” across the border. His pledge on that occasion to build “a Great Wall” and to have Mexico pay for it has become a fixture at his rallies. Declaring that “Mexico is killing us on trade”, he would impose tariffs of 35% and stop some American companies building factories there. Oh yes, and he would deport 11m undocumented migrants, half of them Mexicans. + +Issues that involve Mexico, such as trade, migration and drugs, have often featured in American elections, but never in such a vitriolic and unfounded way, says Andrés Rozental, a former deputy foreign minister. As Mr Trump’s progress towards the White House has gathered pace, so has alarm and anger south of the Rio Grande. At Easter Mexicans gathered for the traditional burning of papier-mâché models of Judas Iscariot. This year Judas assumed the image of Mr Trump. + +President Enrique Peña Nieto initially took the view that it was better to ignore the billionaire property developer than to dignify him with a response. After all, he is not yet the nominee. Criticism from the Republican Party establishment has merely acted as a growth hormone for Mr Trump. And Ted Cruz, too, has supported building the border “wall”. + +Other Mexicans think their country has no choice but to hit back. In February Vicente Fox, a former president, responded in Mr Trump’s own lingo: “I’m not going to pay for that fucking wall,” he told an American television station. Felipe Calderón, Mr Peña’s predecessor, said the same, more politely. Thus prodded, the government opened its mouth. In an interview in March with a Mexican newspaper, Mr Peña declared that Mr Trump was damaging relations between the two countries and compared his “strident rhetoric” to that of Hitler and Mussolini. + +Mr Peña’s critics complain that such extemporaneous remarks, delivered for domestic reasons, do not add up to a coherent policy response to a serious international threat to Mexico’s interests. Under the North American Free-Trade Agreement, the two countries’ economies have since 1994 become ever more closely integrated. Some see in the government’s reluctance to speak out a throwback: when it ruled a one-party state until 2000, Mr Peña’s Institutional Revolutionary Party had a horror of involvement in the internal politics of other countries, for fear they would poke their noses into Mexican affairs. Others compare the government’s reticence to Mr Peña’s failure to react effectively to the murder of 43 student-teachers in 2014. + +The government has stepped up efforts by its 50 consulates in the United States to encourage up to 5m Mexicans who are legally resident to take out American citizenship and vote—implicitly against Mr Trump. But many foreign-policy wonks believe it should be doing more to debunk Mr Trump’s nonsense. + + + +What Latin Americans think of the United States + +It is not hard to do so. Even as immigration soared in the 1990s, crime rates in the United States began to tumble. The vast majority of the 11m Mexicans there are “hard workers, risk-takers and savers”, as a diplomat puts it. The border has never been more secure; net migration from Mexico is now negative, taking into account 100,000 deportations last year (which the Obama administration carried out with Mexico’s co-operation). American demand for drugs is literally killing Mexicans, with 60,000 dead in the country’s drug war. When Mr Trump points to Mexico’s $58 billion trade surplus, he fails to note that every dollar of goods it sends across the border contains 40 cents of Made in America content. + +What is missing is an effective messenger. Arturo Sarukhan, a former Mexican ambassador to the United States, says that his country needs both an equivalent of the Anti-Defamation League, which combats anti-Semitism, and AIPAC, America’s pro-Israel lobby. Unlike Mexico, Israel can count on enthusiastic backing from Republican politicians, largely because evangelical voters are passionate supporters of the country. Mexican-Americans do not benefit from such Bible-based support; they will have to lobby on behalf of their country of origin themselves. + +Mr Sarukhan worries that this campaign will damage the cross-border relationship, and while not destroying it altogether could “rewind it 20 years”. Mr Rozental thinks the relationship is less vulnerable. The underlying reality is of more trust and co-operation than ever before, he says. If Mr Trump becomes president, he might just come to realise that in the 21st century his country and Mexico will either fail or succeed together. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21695942-mexico-needs-stand-up-itself-united-states-difficulty-dealing-trumpery/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Countering terror in Pakistan: The battle for Punjab + +Social welfare in South Korea: Doubt of the benefit + +The politics of Thai Buddhism: Men-at-alms + +Banyan: Army manoeuvres + + + + + +Articles Sections Next + +Countering terror in Pakistan + +The battle for Punjab + +The struggle against terrorism moves to Pakistan’s largest province + +Apr 2nd 2016 | ISLAMABAD | From the print edition + + + +YEARS of terrorism have had a numbing effect on Pakistan. Most of the nearly 10,000 attacks the country has suffered in the past six years took merely hours to fall from the view of politicians and the media. It generally takes child victims or an attack on Punjab, Pakistan’s most populous, prosperous and peaceable province, to galvanise attention for longer. A suicide-bombing on March 27th—Easter Sunday—in a park in Lahore, Punjab’s capital, had both these elements. + +Poorer families had flocked to the Gulshan-e-Iqbal park for the affordable thrills of its fairground rides. After sunset a bomber sauntered in and blew himself up next to the queue for the dodgem cars. He killed 74 people, many of them children, and wounded over 300. + +Jamaat-ul-Ahrar, an especially repugnant splinter group of the Pakistani Taliban, was quick to take credit, saying the bombing was intended to target Christians. In fact, most of those killed were Muslims: as if in justification, the group also said that it was avenging the government’s assault on militants operating out of Punjab. “We have entered Lahore,” it warned Nawaz Sharif, the prime minister. + +Mr Sharif has long feared a surge in terrorism in the heartland of his party, the Pakistan Muslim League-Nawaz (PML-N). Punjab is home to half of Pakistan’s nearly 200m people, and many militant groups operate in the province’s south. Yet it has been spared much of the violence that the Pakistani Taliban, a loose affiliation of terror groups, has inflicted elsewhere. Harder hit have been ethnic-Pushtun areas in Pakistan’s north-west, including in North Waziristan, bordering Afghanistan. Punjab’s urbane elites regard that region as almost a foreign country. + + + +For years the PML-N was suspected of going easy on Punjab-based militants and even of striking deals with them, which it denies. But after the army launched an operation against militants in North Waziristan in June 2014, Punjab’s government, which is headed by Mr Sharif’s brother, Shahbaz Sharif, at last began to confront the groups. Public support for anti-terror moves leapt following the massacre of more than 130 schoolchildren in Peshawar in December 2014. + +Especially clobbered has been Lashkar-e-Jhangvi (LeJ), one of many Sunni groups spawned in southern Punjab in the 1980s, in part in reaction to the rise of a Shia theocracy in Iran. Last June counter-terrorism police bumped off the LeJ’s leader, Malik Ishaq, and many of his top lieutenants in a single night. The police barely pretended that what they had done was anything other than extrajudicial murder. The authorities recently boasted to journalists of the numbers of “jet-black”, ie, evil, terrorists killed, as well as of militants and rabble-rousing mullahs arrested. And they are proud of cracking down on expressions of hatred against religious minorities. + +But the Lahore attack should give them pause. The army certainly believes that much more is to be done in Punjab. It has demanded legal cover for its operations in the province. The model is Karachi, the capital of Sindh province, where the paramilitary Rangers were given powers to deal with violence. Nearly three years on they have done much to tame the sprawling port city’s militant and criminal gangs. + +The prime minister is having none of it, and his brother’s government has refused to authorise an army deployment (which did not stop the army from conducting a spate of raids of dubious legality in Punjab’s major cities immediately after the Lahore attack). The PML-N fears a repeat of the mission creep in Karachi, which saw the Rangers turn their attention to corruption rackets associated with Sindh’s ruling Pakistan Peoples Party. The prime minister, who was the victim of an army coup in 1999, will not let his stronghold be taken over by the army. Yet the province’s police force seems stretched, whereas the army has experience of the kinds of intelligence operations that will be needed to tackle terror networks and extremist madrassas. + + + +The plague of global terrorism, in charts + +Even if the army were to be given a bigger role, a difficulty would remain—its long association with violent groups in Punjab. These are committed, like the army, to destabilising Indian-held Kashmir, which Pakistan has demanded since partition in 1947. They include Lashkar-e-Taiba and Jaish-e-Mohammad (JeM), which is being linked to an attack in January on an air base across the border in India at Pathankot that killed seven Indian servicemen. + +That Pakistan rounded up JeM members and co-operated with the Indian investigation into the Pathankot attack may be a sign that its powerful army might, for once, have given its blessing to the prime minister’s desire to improve troubled relations with India. Pakistan has also shared intelligence with India about another attack planned from its soil. And, remarkably, this week India invited a Pakistani investigation team into the Pathankot base. + +Yet whenever ties with India look like improving too fast, the Pakistani army’s intelligence arm finds some means to set things back. On March 29th the army released to the media what it claimed was the filmed confession of a man captured in early March who said he was an Indian spy stoking a separatist insurgency in the southern province of Balochistan. + +The colourful details of the spy’s tradecraft (“Your monkey is with us” was one of the supposed codes) immediately drew the media’s attention. So, separately, did the government’s threat to use force against 2,000 hardline Islamists who had established a makeshift camp outside Parliament after storming into Islamabad in protest over the execution of Mumtaz Qadri, a bodyguard who assassinated his charge, a liberal Punjab governor, Salman Taseer, in 2011. Qadri had deplored Taseer’s call for Pakistan’s draconian blasphemy law to be repealed. The protesters, who left after assurances the law would not be changed, were a reminder to Mr Sharif of how deeply embedded in Pakistani society is intolerance breeding violence. After just two days the massacre of innocents in Lahore was already becoming old news. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21695925-struggle-against-terrorism-moves-pakistans-largest-province-battle-punjab/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Social welfare in South Korea + +Doubt of the benefit + +A local experiment to expand handouts ruffles the central government + +Apr 2nd 2016 | SEONGNAM | From the print edition + +Seongnam reflects on its social pool + +TO ITS current occupant, Seongnam’s town hall, a gleaming glass structure, stands as an edifice to wastefulness. It was built for 320 billion won ($280m) under a former conservative mayor of Seongnam, a city of 900,000 a little to the south-east of Seoul, South Korea’s capital. Upon succeeding him in 2010, Lee Jae-myung, the current liberal mayor, declared a moratorium—a first for the country—on repayments of the 520 billion won in debt that he had inherited. Budget cutbacks and an anti-corruption effort have since helped pay down the debt. In 2014 Seongnam was rated South Korea’s most financially stable city by its interior ministry. + +Yet the central government, led by Park Geun-hye of the conservative Saenuri party, thinks that Mr Lee, in his second mayoral term, is misusing taxpayers’ money. Last year Seongnam’s local assembly passed a series of social-welfare bills to offer free postnatal care to new mothers; free uniforms to secondary-school pupils; and cash handouts of 500,000 won a year to all of its 24-year-old residents amid high rates of youth unemployment, which it began to distribute in January in the form of vouchers—all to be doled out regardless of income or employment status. Organisers in one neighbourhood of Seongnam, with 18,000 residents, say that most of its eligible youngsters quickly pitched up for the coupons, with many posting snaps on social media of themselves brandishing their vouchers. Local businesses, from hairdressers to pharmacies, accept the coupons, as do most of the stalls at nearby Joongang market. A seller of rice cakes says that around half a dozen people pay with them each day. + +More South Koreans feel the country is now rich enough to build a more robust social safety net. But anxiety over a widening fiscal deficit and sluggish growth has stalled even timid welfare plans under Ms Park. She has rebuked Mr Lee for not getting her government’s say-so on his plan. The central government has since revised rules on subsidies to allow a cut in aid to any municipality that makes unilateral changes to its social-welfare schemes. The health ministry has filed a petition with the Supreme Court to halt Seongnam’s plan. The Saenuri party’s chairman, Kim Moo-sung, says that Mr Lee’s populist policies are “the devil’s whispers”. The city says it is all meddling and scaremongering. + +A favourite slogan of Mr Lee’s is: “South Korea cannot, but Seongnam can.” It helps that the city is an affluent suburb of Seoul, bordering on the capital’s glitzy Gangnam district and collecting high property taxes. Most other municipalities rely heavily on central-government subsidies. Taken as a whole municipalities collect just one-fifth of taxes, yet account for around three-fifths of all public spending, says Choe Chang-soo at Cyber Hankuk University in Seoul. The centre makes up the difference. + +The pressure for more generous spending is growing. In 2011 a liberal mayor of Seoul, Park Won-soon, was elected after his conservative predecessor stepped down having failed to block a programme for free school lunches that had been put to a referendum. Mr Park has recently also faced central-government opposition to a plan for handouts to unemployed Seoulites in their 20s from low-income families, to begin this summer. National elections for the legislature are to be held on April 13th, and welfare is a live issue. + +Shin Kwang-yeong, a sociologist at Chung-Ang University in Seoul, says that South Korean policymakers’ understanding of welfare is “limited and paternalistic”. Social spending has more than doubled in the decade since 2005, to 115 trillion won last year; yet, at 10.4% of GDP, it is still the lowest among 28 members of the OECD, a group of mostly rich countries, and half the average. Taxes, too, are among the lowest. The OECD found in 2011 that South Korea’s tax-and-benefit system did worst at reducing inequality and poverty. + +Mr Lee argues that the government views welfare as consumption, whereas at least some of it should be seen as investment. At 9.2%, youth unemployment was at a 15-year high in 2015 (compared with 3.6% for South Koreans as a whole). The share of young degree-holders who are not in employment, education or training is a high 25%. It is the first generation of South Koreans, Mr Lee says, to feel less hopeful about the future than their parents did. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21695926-local-experiment-expand-handouts-ruffles-central-government-doubt-benefit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The politics of Thai Buddhism + +Men-at-alms + +A squabble in the clergy widens Thailand’s dangerous divides + +Apr 2nd 2016 | PATHUM THANI | From the print edition + + + +JUST north of Bangkok, the Thai capital, stands an enormous golden stupa designed to last 1,000 years. Its gleaming exterior is made not from smooth tiles but from 300,000 tightly-packed statues of the Buddha; 700,000 more are hidden inside. Just as staggering is the vast apron surrounding the stupa, able to hold 1m worshippers. Worakate, a guide dressed in white, explains that followers of the Theravada school of Buddhism—dominant in Thailand and elsewhere in South-East Asia—have never had a gathering place as large as Mecca or the Vatican. She thinks the monument can be a meeting point for adherents from around the world. + +The stupa is the centrepiece of a sprawling religious complex, not all of it quite so bling, inhabited by the Dhammakaya movement. An influential if controversial Buddhist sect, it was founded by a handful of monks in the 1970s and now claims more than 3m followers in some 30 countries. As many as 10,000 mainly middle-class Thais flock to its Sunday ceremonies. One of the temple’s senior monks, Phra Somchai Thannavuddho, says that slick modern management has helped. But a big draw, he says, is the purity and clarity of its practices, qualities which many other temples have left behind. + +The movement’s opponents are numerous and vocal, and tell a different tale. Conservative worrywarts have long warned that the sect is more like a cult, beholden to its septuagenarian abbot, Phra Dhammachayo (who is almost always seen in signature shades). They say that the conventional Buddhist teachings it issues to newcomers conceal wacky theologies unveiled to adherents once they rise in the temple’s ranks. And they allege that the temple has grown wealthy by intimating that religious merit may be bought with fistfuls of cash. + +The controversy over the Dhammayaka temple is one of several tearing at Thailand’s Buddhist establishment. At heart is a battle over who should be the next Supreme Patriarch, the country’s chief monk and the leader of its two Theravada Buddhist orders, Maha Nikaya and Dhammayuttika Nikaya. The previous incumbent was 100 years old when he died in 2013; he was cremated in December. Following tradition, the Sangha council—in effect, Thai Buddhism’s governing body—announced that the next-most-senior clergyman, Somdet Chuang, should succeed him. But under pressure from dissenters, the junta that has ruled Thailand since a coup in 2014 has declined to submit the nomination to the royal palace for approval—thereby putting the process on hold. + +In part, the monks and lay people who oppose the nomination see an opportunity to push through an overhaul of Thai Buddhism’s stuffy governance that they say is long overdue. They accuse the Sangha council, hierarchical and gerontocratic, of failing to tackle rising materialism among the clergy, which has lately led to a string of embarrassing revelations involving wayward monks. Somdet Chuang is himself under investigation: police say he accepted as a gift a vintage Mercedes Benz that had been imported without paying the proper dues (his lawyer says he has done nothing wrong). Critics also accuse the council of being unhelpfully silent on contentious modern issues such as homosexuality and female ordination. + +But their opposition also has much to do with the Dhammakaya temple, which they say the council has sheltered from investigations into its finances and beliefs. Critics also foster the perception that the temple’s top brass are sympathetic to the cause of Thaksin Shinawatra, a populist former prime minister, detested by Thailand’s elites, whose parties have won every general election since 2001 but who now lives in self-imposed exile. The insinuation is that the Sangha council and Thai Buddhism more broadly have been captured by Thaksinite forces and must now be liberated. + +The temple says this is all nonsense, and that among its visitors and donors are politicians of every hue. The Sangha council is defending itself too. But the brawl is dangerous for the junta, whatever the truth. Lacking a democratic mandate, it would gain a huge boost from the monks’ blessing. Instead it finds itself caught between two embittered factions, neither of which it can ignore. The council’s opponents include Buddha Issara, a former soldier who is now a firebrand monk. He was influential in the royalist protests that helped to bring the junta to power and is now one of its most outspoken supporters. + +In the long run… + +Meanwhile, Somdet Chuang’s backers include members of an ultranationalist group, the Buddhist Protection Centre of Thailand. In February it helped organise a rally at which monks were filmed scuffling with soldiers (the same day troops also loitered outside Dhammakaya temple, lest any of its clergy were tempted to join the fray). Some clergy warn that the furore over the nomination actually conceals an attempt by monks from the smaller Dhammayuttika Nikiya, traditionally patronised by the elites, to keep down clergy from the larger Maha Nikaya. + +The spat is uncomfortable for the junta, but perhaps it can be managed. Khemthong Tonsakulrungruang, a scholar of law and Buddhism at Bristol University, reckons that Thailand’s government may try to spin out the present stalemate for as long as possible. It might, in other words, be years before a new Supreme Patriarch is appointed. Whether the present nominee, who is now 90 years old, will be available for the job is another matter. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21695901-squabble-clergy-widens-thailands-dangerous-divides-men-alms/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Army manoeuvres + +Myanmar celebrates a civilian government; the generals carry on as before + +Apr 2nd 2016 | From the print edition + + + +IT WAS an extraordinary moment, and seen by many as a happy culmination to a long, often bloody and always wrenching story: this week Myanmar swore in a new president as the titular head of the first civilian-led, democratic government to take office after decades of military-backed rule. It followed a landslide win for Aung San Suu Kyi’s National League for Democracy (NLD) in a November election that made crystal-clear what ordinary Burmese no longer wanted: the army running their affairs. + +And yet. Look more closely, and the army has not vanished from political life but still lies at the heart of it. Take the matter of the president, who is chosen by the national assembly. Those voting for the NLD in November were really voting for Miss Suu Kyi, daughter of the country’s founding father, Aung San, and figurehead of the democratic movement during years of house arrest until her release in 2010. She would have been a shoo-in to be president had the constitution drawn up by the army not disqualified her, for having children with British passports. The ban on foreign spouses and children appears to have been written expressly with her in mind. + +The result is that another NLD member, Htin Kyaw, has been sworn in as president. Mr Htin Kyaw, a close ally of Miss Suu Kyi’s, is a good egg. But Miss Suu Kyi has made it clear that she will be president in all but name. That is a far from satisfactory arrangement when stronger institutions, more transparency and greater accountability are needed to strengthen Myanmar’s weak governance, undermined by years of misrule. Also troubling is the fact that Miss Suu Kyi is taking the post of foreign minister as well—and the ministerial portfolios covering education, electricity and the president’s office (making her, in effect, chief-of-staff to herself). It beggars belief that anyone could do justice to so many briefs. The army is not to blame for Miss Suu Kyi’s appalling tendency to micromanage. But allowing her to be the formal president would have given the new, inexperienced government a better chance of being effective and accountable. + +More worrying is what the army is holding on to in government. Army men fill three powerful cabinet posts, overseeing defence, border affairs and home affairs. They have government experience, and may run rings around the callow democrats. What is more, the army and its affiliated ministries dominate the National Defence and Security Council, which can disband parliament and impose martial law—the constant threat to Myanmar’s new dispensation. + +What is it the army seeks by maintaining its influence? Foremost, perhaps, the generals do not want ever to be prosecuted for crimes and atrocities committed during their long dictatorship. Then come the material interests of the top 50-odd army families. They wish to hold on to their extraordinary and largely criminal wealth, including big property holdings in Yangon, the commercial capital, without fear of reprisals or confiscation. They will see as their protector the army’s appointee as one of the country’s two vice-presidents, Myint Swe. He is related through marriage to Than Shwe, a former junta leader. Head of the brutal military intelligence at the time of the bloody repression of a monk-led “saffron revolution” in 2007, he was also until recently chief minister for the Yangon region. Nothing like friends in high places. + + + +Myanmar in graphics: An unfinished peace + +The army looks likely to let the civilian government make the running in what one Burmese insider describes as a carefully fenced-off “sandbox”: matters of development, education, health care and the like—precisely the areas that for years it oversaw so dismally in this poverty-stricken country. Outside the NLD’s playpen, however, the army is unlikely to brook the democrats’ involvement. That applies to handling relations with Myanmar’s giant neighbour, China, which tweaks the generals’ tail by funding some of the myriad ethnic armies involved in low-level insurgencies, mainly in Myanmar’s border regions. And it applies above all to the so-called peace process that is supposed to end once and for all the conflicts between ethnic groups and an overweening central state, some of which have rumbled on since the country’s independence in 1948. + +Resolving the conflicts is Myanmar’s most pressing task, since, for all the foreign investment and aid money putting a shine on Yangon, a dirt-poor country cannot develop without a widespread and deep-rooted peace. In the run-up to taking power, Miss Suu Kyi said that her priority was seeking peace and granting the full rights and benefits of citizenship to the disadvantaged ethnic minorities that are spread across a large part of Myanmar. She even called for a second Panglong, referring to the agreement negotiated with ethnic minorities by her father in 1947 but never enacted after his assassination by militarists. + +Her implication was a federal union in which a hitherto heavily centralised state, dominated by the ethnic Burman majority, devolves powers. But that is anathema to commanders committed to defending a unitary state. In private they have made it clear they do not want the NLD involved in the army peace process (one that has only increased mistrust of the army among ethnic groups). Miss Suu Kyi has recently said less about a second Panglong. + +Road-works ahead + +In 2003, confronted by its failures, the junta unveiled what it called a seven-step “road map to discipline-flourishing democracy”—that is, democracy, but only on its terms. The democratic revolution that has swept Myanmar with such enthusiasm since 2010 may give the impression that the road map has been torn to shreds. And certainly the scale of Miss Suu Kyi’s victory took the generals by surprise. But the army’s continued presence at the heart of the political system makes it clear that Myanmar’s democracy is not guaranteed to move forward. The army still holds the power to turn it back. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21695900-myanmar-celebrates-civilian-government-generals-carry-army-manoeuvres/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Xi Jinping’s leadership: Chairman of everything + + + + + +Articles Sections Next + +Xi Jinping’s leadership + +Chairman of everything + +In his exercise of power at home, Xi Jinping is often ruthless. But there are limits to his daring + +Apr 2nd 2016 | BEIJING | From the print edition + + + +SHORTLY before the annual session in March of China’s rubber-stamp parliament, the National People’s Congress, two curious articles appeared in government-linked news media. The first, published in a newspaper run by the Central Commission for Discipline Inspection, the Communist Party’s anti-graft body, was called “The fawning assent of a thousand people cannot match the honest advice of one”. It was written in an allegorical style traditionally used in China to criticise those in power, in this case in the form of an essay praising the seventh-century emperor, Taizong, for heeding a plain-talking courtier. The article called for more debate and freer speech at a time when China’s president, Xi Jinping, has been restricting both. “The ability to air opinions freely often determined the rise and fall of dynasties,” it said. “We should not be afraid of people saying the wrong things; we should be afraid of people not speaking at all.” + +The second article, in the form of an open letter, ran—fleetingly—on a state-run website. “Hello, Comrade Xi Jinping. We are loyal Communist Party members,” the letter began. It called on Mr Xi to step down and eviscerated his record in office. The president, it said, had abandoned the party’s system of “collective” leadership; arrogated too much power to himself; sidelined the prime minister, Li Keqiang; caused instability in equity and property markets; distorted the role of the media; and condoned a personality cult. + +No one knows who wrote either the pseudonymous essay or the anonymous letter. But their timing was striking, coming just as China’s political elite was gathering in Beijing, and just after several other examples of public criticism had surfaced. The historical essay was reposted on the disciplinary commission’s website (where it remains); it was clearly more than the work of a single disgruntled editor. The letter may have been planted by a lone dissident who managed to hack into an official portal, but it raised many eyebrows in China. The police have reportedly detained around 20 people in connection with the case, including several employees of the website. Their response suggested that they feared the letter was more than just a flash in the pan, and that tough action was needed to prevent discontent with Mr Xi’s leadership from spilling into the open. + +When he became the party’s leader in 2012, more was known about Mr Xi’s family and personal qualities than about his politics. He was a princeling, as many in China describe the offspring of the first generation of Communist leaders (Mr Xi’s late father served as a deputy prime minister under Mao). This helped him get the top job: the veterans who picked him thought that princelings were more committed than anyone else to Communist rule. Mr Xi himself was regarded by his associates as ambitious and incorruptible. But little else was known. Mr Xi had spent almost 20 years in Fujian, a southern province far from political nerve-centres. + +Party-chief plenipotentiary + +More is now clear. As Geremie Barmé, an Australian academic, puts it, Mr Xi is China’s “COE”, or chairman of everything. Like his two predecessors, Hu Jintao and Jiang Zemin, Mr Xi is head of the party, commander-in-chief of the armed forces and head of state. But he has also acquired a series of other titles which they did not have, such as head of a committee that he set up to steer “comprehensive reform”, and of another one he established to oversee the country’s security agencies. Mr Hu was a wooden leader whose rule was overshadowed by the retired Mr Jiang; Mr Jiang, while in power, had to bow to his retired predecessor, Deng Xiaoping; even Deng trod carefully for fear of upsetting fellow party elders. Mr Xi, like Mao, appears unfettered by such concerns. + +He wants the country to know it, too. Mr Xi has encouraged the revival of a term that was invented by Deng to describe strong leaders such as himself and Mao: the “core”, or hexin. Mr Hu had meekly avoided using the term to describe himself, in order perhaps to convey a sense that the party was moving beyond strongman politics. Mr Xi has no such scruples. This year official media have reported on the kowtows of numerous provincial chiefs who have hailed him as the party’s hexin. + +By tolerating, if not encouraging, such flattery, Mr Xi comes close to violating the party’s charter, which prohibits “any form of personality cult” (a rule introduced in 1982 to prevent a return to the frenzy and violence once spawned by worship of Mao). Adulation of “Uncle Xi” in the official media looks like an even more blatant transgression. This year’s four-hour televised gala for Chinese New Year—one of the country’s most-watched shows—included extravagant praise of Xi Dada, the sobriquet’s form in Chinese. + +Mr Xi is no Mao, a man whose whims caused the deaths of tens of millions and who revelled in the hysteria of his cult. But he rules in a way unlike any leader since the Great Helmsman. After Mao’s death, Deng tried to create a leadership of equals in order to push China away from Maoist caprices. Mr Xi is turning from that system back towards a more personal one. Indeed, he is more of a micromanager than Mao ever was. Mr Xi tries to maintain day-to-day control over every aspect of government. He might be compared to Philip II of Spain, on whose desk in a palace near Madrid all the problems of his 16th-century empire landed in the form of endless letters requiring response. Unlike Mao, who had a mischievous sense of humour and enjoyed sparring with ideological foes such as Richard Nixon, Mr Xi is reserved and unsmiling—despite a carefully scripted publicity campaign that depicts him as a football-supporting, moviegoing, baby-kissing family man with a glamorous wife, Peng Liyuan (Peng Mama, as fawning official media call her). + +Most observers have tended to assume that, with all his power, Mr Xi can do more or less as he likes. However, important decisions he has made in recent months suggest something more complex. Concerning high politics, Mr Xi is ruthless and bold, and takes calculated risks. Dealing with society as a whole, he is willing to make changes but is more cautious. And with the economy, he lacks a sense of direction. Policy is confused and there have been numerous mistakes. Mr Xi is not an all-conquering strongman. He gets his way only in some areas. Across a broad spectrum of society, his policies and iron-fisted authoritarianism generate much resentment. + + + +Start where all politics in China does, with the party. As a provincial chief in coastal Zhejiang from 2002-07, Mr Xi had been known for the vigour of his fight against official corruption. Even so, the scale and persistence of the nationwide anti-graft campaign he unleashed in 2012 on becoming China’s leader has been surprising. In 2015 alone graft-busters said they had punished 336,000 officials, the highest number in 20 years. The numbers being jailed continue to climb (see chart, which shows named offenders), despite howls of anguish from officials high and low who fear being hauled away. Rather than face the party’s sometimes brutal interrogators, who eschew such niceties as lawyers, some have preferred to take their own lives. + +And though Xi be but little, Xi is fierce + +The anti-corruption campaign has involved a radical change in the unwritten rules that have held the party together since the near civil war that Mao inflicted on it. In an attempt to attract recruits and rebuild the party, Deng and his successors had often turned a blind eye when officials (most of whom are members) lined their pockets. Crackdowns tended to be short-lived and rarely affected the most powerful. Mr Xi, by contrast, has been relentless—even banning party members from joining golf clubs (how they must pine for the 1980s, when one general secretary, Zhao Ziyang, was an avid fan of the sport). Lest they whine, Mr Xi has also reminded them that party members are banned from “irresponsibly discussing the party centre’s major policies”. + +The anti-graft campaign is popular with the public, which suffers hugely from officials’ corruption, negligence and incompetence (a scandal that came to light in March involved rampant corruption in the state’s oversight of the sale and use of vaccines). But it has dismayed officials, many of whom have responded with passive resistance and fear-driven inertia. By the middle of last year, less than half of the government spending budget for the six months had been used up. Huge efforts had to be made to spend more in the rest of the year. Yet some officials are afraid to do anything that might attract graft-busters’ attention. + +Mr Xi has also sown alarm throughout the 2.3m-member People’s Liberation Army (PLA), the collective name for the armed forces. He has arrested generals for graft who were once considered untouchable, announced a trimming of the ranks by 300,000, shaken up the outdated command structure and slimmed down the top-heavy high command. Any one of these moves would have been impressive, given the PLA’s ability to make life difficult for political leaders whom the generals do not like. Mr Xi’s willingness to take on these tasks simultaneously suggests remarkable confidence (inspired, perhaps, by greater familiarity with the PLA’s ways than his two immediate predecessors enjoyed: early in his career Mr Xi was an assistant to a defence minister). + +Both in his reforms of the PLA and in his fight against corruption, Mr Xi’s actions aim first and foremost at tightening control: both the party’s over the army and his own over the party. It is similar in other areas of politics. Mr Xi has presided over the biggest crackdown on dissent since the bloody suppression of the Tiananmen Square protests in 1989, arresting hundreds of civil-rights lawyers, academics and activists. He has tightened controls over the media, including by making it much tougher to use software that allows access to the huge number of websites that are blocked in China. Mr Xi is determined to reimpose discipline on a querulous society that in recent years, thanks to the rapid spread of social media, has become much better equipped to organise itself independently of the party and to evade official controls. + +In the war against dissent, however, Mr Xi is facing visible resistance. Ren Zhiqiang, a property mogul turned commentator, said the media should serve readers and viewers, not the party. This was an unusually direct attack on Mr Xi by a well-known party member and a fellow princeling (Mr Ren’s father was a deputy minister of commerce under Mao). Censors reacted by closing Mr Ren’s social-media accounts and by purging the internet of numerous messages in support of him. Caixin, a Beijing-based magazine, responded to the censors’ removal of one online story about the need for freer speech by publishing two more about the article’s disappearance. Those too were deleted. This week Yu Shaolei, a senior editor of Southern Metropolis Daily, a widely read newspaper, resigned in protest against censorship. + +In social policy, however, Mr Xi has been trying to cast himself as a liberal, albeit a cautious one. This has been evident in his loosening of controls on family size (all Chinese couples are now allowed to have two children instead of just one) and his limited easing of restrictions on rural migrants’ access to urban public services. Both policies urgently required reform: the shortage of children means that China’s population is ageing fast; the controls aggravated distortions in the sex ratio. The country’s household-registration, or hukou, system, which is used to define who is given access to subsidised health care and education in cities, has created a huge social divide. It has also broken up the families of millions of migrants whose children cannot go to school where their parents live. + +Mr Xi could have removed family-planning controls altogether, as some Chinese demographers have urged. He could have made it easier for rural migrants to obtain urban hukou. Instead, he has tinkered, creating a nationwide system of residence permits, and allowing the biggest cities where migrants most want to live (such as Beijing, Shanghai and Guangzhou) to set their own restrictive conditions for being granted hukou. + +Mr Xi has been even more hesitant in his handling of the economy. Months after taking power, he proclaimed that under his leadership markets would play a “decisive” role. Since last year he has begun to talk of a need for “supply-side” reforms, implying that inefficient, debt-laden and overstaffed state-owned enterprises (SOEs)—ie, most of them—need shaking up. But his approach has been marked by uncertainty, U-turns and, occasionally, incompetence. + +It is true that some prices have been liberalised. In the second half of 2015, more market-friendly systems were introduced for setting exchange and interest rates. But the reform of SOEs has barely begun, stymied by the vested interests of SOE managers and their political friends, by fear of increasing unemployment, and perhaps by Mr Xi’s own oft-stated belief that the party should keep its hold on the main economic levers. There are few signs yet that loss-making SOEs will be shut down or that any will be subjected to real competition. + +Mr Xi’s lack of clear focus on the economy, and his unwillingness to let people more expert in such matters (namely, the prime minister, Mr Li) handle it, have caused a series of errors. Policymakers, including Mr Xi, talked up the stockmarket a year ago and then engaged in a doomed attempt to prevent its fall in the summer. They introduced and then hurriedly scrapped ill-designed “circuit-breakers” to calm market jitters. They caused global anxiety when they failed to explain what they were doing when they began tinkering with the exchange-rate regime. + +Markets are unpredictable and no Chinese leader (including Mr Xi) has any experience of the way they work in Western economies. But it is also likely that Mr Xi’s desire to hog power is partly to blame. This has confused officials. Once they would have sought guidance from the prime minister, who is supposed to be in day-to-day charge. But last year Mr Xi’s new task-force on reform was trying to exert control. The mishandling of the stockmarket and currency changes was the result, in part, of leadership confusion. + +Mr Xi’s diffidence in such areas may stem from the mandate he had from the elders who helped him into the jobs he now holds: a broad spectrum of retired and serving leaders and their powerful families who felt that without a helmsman of his mettle and commitment to the party’s survival, the party might collapse. (The Soviet Communist Party ruled for 74 years—a record for communism that China’s will reach just after Mr Xi is due to step down in 2022). They wanted someone who would keep the party in power and strengthen its grip on the army. They were less agreed on how far or how fast to proceed with reforms involving huge numbers of people and widely divergent interests. SOE reform could cause millions of job losses. Loosening hukou restrictions could overwhelm public services. So, bureaucrats fear, could abolishing family-planning rules. + +The solace of smoke-filled rooms + +In short, Mr Xi understands power, is not afraid to use it and is willing to take risks. He understands less about the new complexities of a changing society and worries about social unrest, so plays safe. He does not understand the economy well, is not sure what to do and does not trust others to act for him. + +The way Mr Xi rules has three broad implications. The first is that problems common to all dictatorships will grow. In such systems, if the man in charge makes mistakes, they are likely to be all the more damaging because they are less likely to be reversed. This was evident in the stockmarket debacle. + + + +Another implication is that it is no longer reasonable to argue that China is a model of an authoritarian country opening up economically without doing so politically. Mr Xi has increased control over the political system, but economic liberalisation has stalled. At the moment, the two are moving in lockstep in the wrong direction, to China’s detriment. The third is that Deng’s policy of putting “economic construction at the centre” is no longer the country’s most hallowed guiding principle. For Mr Xi, politics comes first every time. + +Some optimists still argue that Mr Xi believes the time is not yet ripe for bold economic change but that, once he has cleaned up the party, he will be able to turn his attention to economic reform. In this view, a critical period will come after a party congress due late next year. At that meeting, Mr Xi will put many more of his loyalists in positions of authority. But it is just as likely that he will continue to dawdle on reform, because opposition to it will have become entrenched. It is rarely possible to change course sharply after several years in power. + +Either way, the success of Mr Xi’s rule will rest not just on whether he wins the battles he has chosen to fight, but on whether he has picked the right ones. Seen from the point of view of China as a whole, it does not look as if he has. Mr Xi seems bent on strengthening his party and keeping himself in power, not on making China the wealthier and more open society that its people crave. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21695923-his-exercise-power-home-xi-jinping-often-ruthless-there-are-limits-his/print + + + + + +Articles Sections Next + + + + + +Middle East and Africa + + + + +Insecurity in Nigeria: Fighting on all fronts + +East Africa’s used-clothes trade: Let them weave their own + +Sierra Leone’s sea cucumbers: Silver in the deep + +Islamic State: Jihadists on the run + +Baghdad’s restaurant scene: Signs of happier times + +Iran’s new trains: Joining the dots + +Arab universities: The kingdom is king + + + + + +Articles Sections Next + +Insecurity in Nigeria + +Fighting on all fronts + +Bad governance has bred uprisings from Boko Haram to Biafra + +Apr 2nd 2016 | JOS | From the print edition + + + +THE prayers of Gyang Dahoro take on a decidedly political note. A dozen local chiefs, resplendent in traditional Nigerian dress, nod approvingly as he calls for protection from the “terrorists” who have “made us refugees in our own land”. The worshippers are Christians of the Berom tribe, farmers of north-central Nigeria, who have spent 15 years fighting Fulani herdsmen. Homes abandoned in the battle lie strewn across the rocky highlands from which their state, Plateau, derives its name. + +Across Nigeria’s “middle belt”, indigenous tribes like theirs spar with “settlers” who are moving south as the Sahel encroaches on their pastures. Up to 300 people were reported dead after an attack by herdsmen in Benue state in February. The Institute for Economics and Peace, an Australian think-tank, reckons that Fulani militants killed 1,229 people in 2014, compared with 63 the year before. Berom leaders say their attackers are foreign-sponsored jihadists, though there is little evidence to support this, and the fight is not one-sided. Fulani chiefs living deep inside the Plateau claim that they are provoked by farmers who steal their herds—a serious crime in a culture where wealth is measured in livestock. And modern-day bandit groups often cut across tribal lines. + +Muhammadu Buhari, Nigeria’s president and a former military dictator, takes security seriously. Yet this conflict in the middle belt, a loosely defined region that cuts across central Nigeria, has passed largely unnoticed in the shadow of Boko Haram, a far more murderous, and undoubtedly jihadist, insurgent group. Mr Buhari was elected president last year at least in part on the promise that he would restore security to the north-east, large swathes of which had fallen to Boko Haram. His government has had some success in pushing back the jihadists, but it has not managed to quell the flames. Villages are frequently raided or bombed. More than 840 people have lost their lives in Boko Haram’s heartlands since January. + + + +A third uprising also threatens Nigeria, this one in the oil-rich Niger Delta. This part of the country was once paralysed by an armed insurgency, which began when locals protested that little of the wealth generated from the oil extracted on their lands made its way into their communities. In the early 2000s oil production in the Delta fell by half, as militants blew up pipelines and kidnapped oil workers. Many also grew rich by stealing oil. The battle only ended in 2009 when the government offered an amnesty and militants were paid to protect the pipes they used to blow up. + +Mr Buhari has now cancelled those contracts, and in January an arrest warrant was issued for a Delta kingpin known as Tompolo, who is charged with laundering $170m. A spate of attacks followed. The worst, an explosion at an underwater Shell pipeline, forced the company to close its 250,000 barrel-per-day Forcados export terminal. Oil-industry executives point out that the attack was well-planned: it used military explosives and hit a part of the pipe that is hard to repair. + +Critics accuse Mr Buhari of failing to grasp the mafia-like workings of the Delta, and gloomily predict that deeper trouble lies ahead if militants decide to combine forces with independence protesters in the neighbouring region, formerly known as Biafra. The young people of Nigeria’s south have been growing increasingly fractious since a secessionist leader, Nnamdi Kanu, was arrested last year. These discontented people have little in common with criminals in the Delta, but alarm bells started ringing in January when a ship was hijacked by militants who demanded Mr Kanu’s release. + +Diverse as they are, these agitations share some features. An overarching problem is that Nigeria is split between a mostly Muslim north and a predominantly Christian south, with its 180m people belonging to 250 ethnic groups and speaking more than 500 languages. So differences often manifest along religious or tribal lines. Boko Haram’s insurgents target Muslims as well as Christians, but are mostly ethnic Kanuri. The campaigners who want to restore independent Biafra are mostly Igbos who believe they have been marginalised by Mr Buhari. Politicians have often fanned the flames by financing thugs or favouring one group over another. + +Poverty and population growth exacerbate these tensions. As many as 10m children are out of school and half of all young adults are un- or under-employed. Many of Boko Haram’s fighters joined because they were hungry rather than dedicated jihadists. As the oil-dependent economy slows, the number of unemployed and underemployed Nigerians is rising. + +Economics plays a part in the other conflicts, too. In central Nigeria, houses have been built across routes used by herdsmen. With no dedicated grazing grounds, herdsmen cut fences and drive their cattle through the crops. In most countries, such disputes would be resolved by the state; but in Nigeria it has been hollowed out by years of corruption. Thousands of policemen are allocated to guarding bigwigs and businessmen. Nigeria’s 80,000-strong army is spread thin, so many rural regions exist almost beyond state control. Vigilantes with ancient hunting rifles attempt to assert some kind of order, but their very existence simply emphasises the limitations of the government. + +There are some hopeful signs. The army is better organised since Mr Buhari’s election. He has clamped down on the corruption that had diverted funds from the armed forces (the former chief of national security is under arrest, accused of bogus arms deals totalling $2.3 billion). A joint civilian-military operation in Plateau has been praised for recovering stolen cattle, mediating between sparring communities and preaching peace in schools. + +The government says it will re-establish grazing pathways for nomadic herdsmen, and it is offering amnesty payments in the Delta. Safe conduct home may also be offered to fighters who joined Boko Haram for want of a job and are having second thoughts. Yet the only way to counter the forces that threaten to pull Nigeria apart is to help people out of poverty. Mr Buhari has made a start by raising spending on education. But he also needs to turn his mind to boosting economic growth, which has ground to a pace slower than population growth. Without greater opportunities, the frustrations of the young and uneducated will only worsen. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695882-bad-governance-has-bred-uprisings-boko-haram-biafra-fighting-all-fronts/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +East Africa’s used-clothes trade + +Let them weave their own + +The government takes aim at well-meaning foreigners + +Apr 2nd 2016 | NAIROBI | From the print edition + +Recycling at work + +GIKOMBA market, just north of Nairobi’s downtown, is a place to buy just about anything. At its entrance, where ragged minibuses splash their way through rutted red mud, stalls sell piles of pillows, plastic toys, cutlery and soap. But the most common wares are second-hand clothes. Piles of old T-shirts and jeans; winter jackets, incongruous in the equatorial heat; dresses and leather shoes; all are watched carefully by stallholders. This market is the biggest wholesale centre of the mitumba, or used-clothing, trade in east Africa. The raiments worn by the bulk of Nairobi’s population are sourced here. + +Yet if the governments of the East African Community, the regional trade bloc which comprises Kenya, Tanzania, Uganda, Rwanda and Burundi, get their way, all will change. By 2019 the EAC wants to outlaw imports of second-hand clothes. The idea is that ending the trade in old clothes—mostly donated by their former owners in rich countries—will help boost local manufacturing. On March 10th Uhuru Kenyatta, Kenya’s president, met market traders upset by the idea, and defended the need for “Kenyan manufactured apparel”. But the ban seems sure to fail. + +Mitumba trading is a big employer for Kenyans, most of whom work in the informal labour market. By one estimate, there are 65,000 traders in Gikomba alone. Imports have increased massively over the past two decades. In 2015, according to UN data, Kenya imported about 18,000 tonnes of clothing from Britain alone. Wholesalers buy bundles for anything up to 10,000 shillings (about $100), and sort the contents by type and quality. Retail traders then come and source stock for their own stalls elsewhere in the city, to be sold on to ordinary Kenyans. + +Few traders are happy with the idea of a ban. “Just let them dare,” says Elizabeth in front of her stall in a dark corner of Gikomba, piled high with women’s dresses, on being informed of the proposal. “How could they! We will remove our clothes, we will demonstrate in the streets, we will take our children.” Selling clothes is a relatively lucrative activity. A trader can make 1,000 shillings in profit a day in a part of Nairobi where many people get by on a tenth of that. And it is skilled work: traders have to put their own capital at risk, assessing how likely each item is to sell. + +Mr Kenyatta argues that new, better, jobs will be created in the textile industry to make up for these losses. That is not implausible, reckons Andrew Brooks, an academic at King’s College London who has studied the used-clothes trade. Kenya had a textiles industry in the 1960s and 1970s; South Africa has a ban, and a substantial textile industry. But to work, it would rely on east Africa’s borders being effectively sealed. A more likely outcome is that cheap clothes would simply be smuggled in, and the government would lose the 35% tariff levied on their import. + +Many traders think that the proposal is bluster. At Toi market, a warren of shops at the edge of Kibera, Nairobi’s biggest slum, where many of the clothes sold at Gikomba go next, Simon Kimondho runs a stall selling smart slacks and jeans. “Nothing will happen, they are just not able,” he says. Another trader, Julius Batu, opposite him disagrees. The ban will come in, he says, but he is not worried. “We can just go to China and get new clothes.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695877-government-takes-aim-well-meaning-foreigners-let-them-weave-their-own/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sierra Leone’s sea cucumbers + +Silver in the deep + +But locals lose out + +Apr 2nd 2016 | BANANA ISLAND | From the print edition + + + +THE sea cucumber—a warty, sausage-shaped creature that feeds on the ocean floor—can sell for half its weight in silver in the markets of Guangzhou in southern China. This fleshy sea-slug is prized as a delicacy, a traditional medicine reputedly capable of curing joint pain and fatigue, and a natural aphrodisiac. As overexploitation has depleted stocks throughout Asia, merchants have sought the creature further afield. Six years ago, two Chinese traders discovered that the waters around Sierra Leone’s Banana Island were teeming with sea cucumbers; islanders have been diving for them ever since. + +The leathery echinoderms only emerge from their hiding-places in the dark. So when night falls, Emmanuel Pratt slides out to sea in his brightly-painted canoe. Wearing a wetsuit and flippers, he takes a last drag of his cigarette before pulling a mask down over his face, and slipping into the dark water. Moments later the beam of his waterproof torch appears a dozen feet down as he searches for his new livelihood. + +When the Chinese traders, known to the islanders only as Mr Cham and Mr Lee, first turned up, locals say they promised to use some of the profits from the sea-cucumber trade to boost the islanders’ quality of life. A motorboat, a community centre, solar panels and water pumps were promised in exchange for being allowed to operate there. Six years on, a group of young men sit on empty petrol cans in the rundown village of Dublin, passing a spliff around in the pitch dark. “They delivered nothing,” says another diver. “The traders made a lot of money and we didn’t get any of it.” + +Similar words have echoed throughout Sierra Leonean history. For centuries foreigners have come to buy its resources—gold, diamonds, bauxite—but the country remains one of the world’s poorest, with a GDP per head of less than $800 a year. Yet despite the old complaint, most of the island’s young men are grateful that the Chinese came. They still get paid about $1 per cucumber. + +“I did not have any work before, I had no plans, but now I have a trade. I built my house with the sea-cucumber money,” says Mr Pratt. He proudly gestures to his cement house. Painted lime green, it stands out against the other ramshackle clapboard structures. Imagine how much more could be built if the islanders got a grip on their own resources. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695880-locals-lose-out-silver-deep/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Islamic State + +Jihadists on the run + +Palmyra is retaken as the caliphate is pushed back in Iraq and Syria + +Apr 2nd 2016 | MAKHMOUR | From the print edition + + + +LESS than a year after Islamic State (IS) burst onto the scene in June 2014, capturing Mosul and racing towards Baghdad, the jihadists stumbled. In early 2015 IS was pushed out of Kobane, in Syria, and Tikrit, in Iraq. But then its diehard fighters seized Ramadi and Palmyra, as Iraqi and Syrian troops fled. + +Predicting the demise of IS is fraught with difficulty. But its opponents in Iraq and Syria now sound increasingly upbeat. Western and Russian bombers have pummelled the jihadists from the air, as local fighters push them back on the ground. Though its motto is to “remain and expand”, IS now seems unable to do either in the region. The “caliphate” is thought to have lost 20% of its territory in Syria and 40% in Iraq since its peak. + +In fact, IS has not scored a big victory in its heartland since taking Palmyra, the site of Roman-era ruins, in May 2015. The jihadists made a show of destroying the temples of Bel and Baal Shamin, and the iconic Arch of Triumph—acts described as a war crime by the UN. But after weeks of fierce fighting, and with the aid of Russian air strikes, the Syrian army recaptured the city on March 27th. The ancient parts remain largely intact, including the amphitheatre (pictured) where IS beheaded the city’s chief archaeologist last year. + +The taking of Palmyra allows Bashar al-Assad, Syria’s embattled president, and Russia, his backer, to argue more convincingly that they are fighting jihadists, and not only mainstream Sunni rebels. The city was an important stop on an IS supply line running all the way to Anbar province in Iraq. Mr Assad now has a bigger buffer to his east, from where he is likely to launch more strikes on IS in Raqqa, its “capital”, and Deir ez-Zor. + +The jihadists, meanwhile, have retreated to the east, towards Iraq—but IS is faring no better there. Ramadi was retaken in December by the Iraqi army, local police and Sunni tribal fighters, backed by American air strikes. More recently, Yazidi and tribal fighters captured an area in the Sinjar region, on the border with Syria, and Syrian Kurds have pushed down to take the town of Shaddadeh. The main route between Mosul and Raqqa has been severed. + +Mosul, Iraq’s second city, remains the big prize. An ungainly alliance of Kurdish peshmerga, Shia and Sunni militias, and soldiers from the Iraqi army are slowly encircling the city. Inside, resistance is said to be mounting. Western officials and the Iraqi government say the offensive has begun. But a big push into the city may not come until much later this year, or next. It will involve intense urban combat, for which few Iraqi soldiers are trained. The army’s moves into villages around the city have been slow and messy. + +America, which is training the army, is set to increase its own troop numbers in Iraq. In March it killed Haji Iman, IS’s second-in-command, and Abu Omar al-Shishani, its minister of war, among other jihadist leaders. “We are systematically eliminating ISIL’s cabinet,” says Ashton Carter, America’s secretary of defence, using another term for the group. An American intelligence report from February estimated that the number of IS fighters in Iraq and Syria had fallen by some 20%, because of deaths and desertions. (More than 400 jihadists are thought to have been killed in the battle for Palmyra alone.) + + + +Fragile treasures: Discover all World Heritage Sites currently under threat + +The loss of territory has also affected IS’s finances. It has become harder for the group to export its oil since losing control of key crossing points on Syria’s northern border with Turkey. For months Western and Russian air strikes have targeted the jihadists’ oilfields, processing plants and stockpiles of cash. Wages have fallen, and tension has risen between local fighters and foreign ones, who are paid more. Recruits are being redirected to Libya, site of another civil war and a burgeoning hub for jihadists. + +The retreat of IS has allowed the Kurds to carve out statelets in Iraq and Syria, and Mr Assad to strengthen his hand. If the jihadists are defeated, the difficulty will be to figure out who among its myriad opponents, split along ethnic and sectarian lines, gets to rule liberated areas. Talks to end the five-year-old Syrian war, which has killed at least 250,000 people, are scheduled to resume later this month in Geneva. The future of Mr Assad remains a sticking point. But a ceasefire between his regime and the rebels has allowed more guns to be aimed at IS, which is excluded from a truce that has lasted a month. + +Even as it loses ground at home, IS is lashing out abroad—in a desperate attempt to maintain legitimacy, say some. The reason its suicide bombers struck Belgium on March 22nd, killing 32 people, “is that its fantasy of a caliphate is collapsing before their eyes,” says John Kerry, America’s secretary of state. But the attacks also suggest that control of a state may not be necessary for IS to sow terror. Even if defeated in its heartland, the group seems likely to endure elsewhere. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695884-palmyra-retaken-caliphate-pushed-back-iraq-and-syria-jihadists/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Baghdad’s restaurant scene + +Signs of happier times + +Just the place for a night out + +Apr 2nd 2016 | BAGHDAD | From the print edition + +Right this way, your table’s waiting + +IT IS not easy being the only restaurant critic in Baghdad. “Before when I wrote, I would say when something is bad,” says Anas al-Sarraf, the entrepreneurial founder of the online Baghdad Restaurant Guide. “But I stopped six months ago because I got a lot of threats. Someone who is spending $2m to open a restaurant can spend $5,000 to order a hit on me.” + +Mr Sarraf says he has reviewed more than 600 restaurants since starting his hugely popular Arabic-language Facebook page in 2012. These days, he is careful to give less opinionated reviews of new restaurants; he instead invites diners themselves to provide the more candid comments. Other obstacles face the intrepid reviewer. At a restaurant in Baghdad’s Sadr City, he once found himself surrounded by security people and had to convince them he was taking photos for a review, not to plan an attack. + +Mr Sarraf estimates that a new restaurant—anything from a small café to a multi-level culinary palace—opens in Baghdad every three days. Despite Iraq’s current financial crisis, he says, profit margins are around 50%: few of them fail. “Restaurants have become the only way for families to get out and breathe. There’s nothing else to do in Baghdad,” says Salam Mejbel al-Mohammad, co-owner of a newly-opened restaurant called Scusi in Baghdad’s posh Jadriyah neighbourhood. Mr Mohammad says he and his partners have spent $2m on the latest restaurant—their third in Baghdad. A big part of the cost of a new restaurant is land, now selling for $6,000 a square metre in ritzier neighbourhoods, or rent, which can be more than $250,000 a year. + +Amid a glut of new eateries, snazzier spots are using attractions other than just the food to draw in diners. Scusi’s three floors are filled with Iraqi art, all of it for sale. On the top floor, customers smoke shisha pipes beneath a glass skylight with hanging plants. Other new restaurants offer live music. The restaurant boom also includes Lebanese, Chinese, Turkish and Yemeni restaurants. Competition for good chefs is fierce: Mr Sarraf says they can make as much as $9,000 a month. + +The Baghdad restaurant boom has also helped other businesses—boosting demand for carpenters, musicians and interior decorators. There are few taxes, and in one of the world’s most corrupt countries, few questions about where the money for all these new restaurants comes from. But restaurateurs must face difficulties unknown in other gourmet locations. Some of the parking-lots outside restaurants are run by unofficial security forces who take hundreds of dollars a day in parking fees. One insider confides: “They say if you don’t pay we will burn down your restaurant.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695878-just-place-night-out-signs-happier-times/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Iran’s new trains + +Joining the dots + +Some treats ahead for railway enthusiasts + +Apr 2nd 2016 | TEHRAN | From the print edition + + + +THE 10,500km (6,500 mile) journey from Yiwu City in eastern China through Kazakhstan, Kyrghyzstan, Uzbekistan and Turkmenistan was sluggish. But when the first Chinese train pulled into Tehran station after a 14-day haul, Iranian officials hailed a great leap forward. “We’re becoming the global hub between east and west,” boasted one minister. By April, when the new trans-Kazakh railway opens fully, executives in Iran hope to have cut the journey time to China (see map) to just eight days—a month less than the sea route takes. Should Turkey get on board, the line might even challenge the Suez Canal as a primary Chinese and Iranian route to Europe. Iranian companies will no longer be limited to an 80m-strong local market, President Hassan Rohani’s advisers promise, but will be connected to the European Union’s 500m. + +Other rail links are coming down the line. Within six months Abbas Akhoundi, Iran’s British-trained transport minister, will open a track to Afghanistan’s mines, which will ship minerals to India via a revamped south-eastern port, Chabahar, bypassing Pakistan. Within two years Iran will have built a bridge over the Shatt-al-Arab river into Iraq and into the Fertile Crescent, he says. Fresh track will open the way through Azerbaijan to Russia and the Central Asian republics. “When we were inward we had poor cross-border links,” says Mr Akhoundi. “If we want to be outward-looking we need to improve them accordingly.” Iran also plans to more than double its internal 10,000km rail network over the next decade and replace rolling stock that trundles at 90kph with high-speed trains on electrified lines. Once the upgrades are complete, the 420km journey to Isfahan will take 90 minutes and the 920km trip to Mashhad less than six hours. + +The hitch, of course, is finance. In Iran’s sixth five-year plan, now awaiting parliamentary approval, Mr Akhoundi wants to spend $28 billion on railways, $20 billion on roads, $50 billion on upgrading the country’s Shah-era air fleet and $7 billion on airports (including extending Tehran’s main airport, Imam Khomeini, so that the largest modern airliners can land there). Yet the low oil price means that his government can barely pay public-sector salaries, let alone pay for infrastructure. So it has been wooing foreign investors instead. + + + +They seem keen. To finance the Mashhad line, China has reportedly offered a $2 billion loan, apparently underwritten by Iranian oil proceeds it had frozen during the time of sanctions. South Korea is exploring a similar deal. And while Italians recently waited in the wings, French rail executives, model trains in hand, paced the corridors of a Paris hotel waiting to greet Mr Rohani on the first trip by an Iranian president to Europe for 17 years. But with most foreign banks fearful of American fines, raising credit remains difficult. + +A “silk rail” between east and west will also require better relations with neighbours who fear Iran’s post-sanctions rebound. “The nuclear deal has proved a double-edged sword,” moans a member of Iran’s Chamber of Commerce. “While relations have improved with the West, they have deteriorated closer to home.” Russia suspects that Iran will come to challenge its dominance of regional markets. And the United Arab Emirates, which backs Saudi Arabia in the region’s sectarian power struggle, fears that Iran, with its many tourist attractions, might challenge its position as a regional transport hub. + +Much will depend on Mr Rohani’s diplomatic skills. Turkey’s prime minister, Ahmet Davutoglu, visited Tehran on March 4th with six ministers and discussed a high-speed rail link that might bridge Lake Van and triple bilateral trade, despite arguments over Syria. But should tensions persist, Iran is also exploring the seas. In February an Iranian cargo of petrochemicals arrived in Antwerp, the first Iranian ship to offload in Europe for six years. IRISL, the national shipping line, has plans to ship to the Far East, Oman and eventually the Americas; it hopes to enlarge its 160-strong fleet by floating some of its stock by the end of this year. Iran Air might go the same way after two years of restructuring, says the transport minister. Get ready for Iran’s reconnection with the world. + +Correction: Turkey’s prime minister visited Tehran on March 4th, not March 6th. This has been corrected + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695765-some-treats-ahead-railway-enthusiasts-iranu2019s-new-continent-spanning/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Arab universities + +The kingdom is king + +A snapshot of the region’s higher education + +Apr 2nd 2016 | BEIRUT | From the print edition + + + +IT MAY not be quite the country for the usual university experience: moving out of home; experimenting; dating. Nor does it have Egypt’s long history of scholarship, with the likes of the Al Azhar university, which has been going since the tenth century. But Saudi Arabia is gaining an unlikely reputation for learning in the Middle East. Earlier this year it gained three of the top four spots in an annual ranking of Arab universities by Times Higher Education (THE), a British weekly magazine. Topping the chart was King Abdulaziz University in the western city of Jeddah, which was founded only in 1967. + +The kingdom rarely pulls things off as well as, let alone better than, its more savvy fellow Gulf states. But in higher education it has steamed ahead. One reason is that many Saudis have long gone to study in Europe and America. Some return with top-notch degrees and go into academic teaching. In recent years the kingdom has also had the cash to attract foreign academics on the promise they can carry out research. That has paid off with an increasing number of mentions in academic journals, which is one of the indicators used by THE. + +Less surprising was the American University of Beirut’s romp into second place. It is one of a handful of private campuses in the region that date back to colonial times; after independence, large state-run institutions became the norm. It has long been seen as the region’s university of choice—and not only for the quality of its education, which is conducted in English. Its beautiful, green campus rolls down to the sea in liberal Beirut, where something more akin to the Western freewheeling student experience is on offer. Other Gulf universities and three Egyptian institutions fill the next slots in the top 15; Jordan and Morocco sneak in near the bottom. The war-torn states of Syria and Yemen are, unsurprisingly, absent. + +But by world standards, Arab universities do not offer students a very good deal. King Abdulaziz only just made it into the global top 300. Teaching in the Arab world tends to emphasise rote learning rather than developing analytical skills. Facilities often lack the latest technology. Jaidaa Hamada, a lecturer in English at Egypt’s University of Alexandria, thinks the main problem is the huge number of students, who are assigned to subjects according not to their own choice, but to their school grades. Medicine, engineering and political science require high results. Low-scorers are concentrated in arts, business and education courses. + +The very wealthy send their sons and daughters abroad. Many never come back, contributing to a brain drain in the Arab world. The well-off who keep their children at home for their higher education often prefer to send them to new private institutions with smaller classes. Scores of these have opened across the region in the past decade. But their shiny facilities often mask curriculums and lecturers that are no better than the average public institution. Indeed, many reckon the quality is usually lower. + +In one unexpected way, however, Arab institutions are making rapid progress. Women now outnumber men in half of the top 15 Arab universities. Even in Saudi Arabia, where women cannot drive and must have permission from a male guardian to travel, women’s faculties are being added to what were all-male institutions. King Abdulaziz’s student body has 57 female students for every 43 males. Sadly, female graduates are not going into the workforce in the same numbers as their male peers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21695893-snapshot-regions-higher-education-kingdom-king/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +The Netherlands and Ukraine: Dissociative disorder + +Ukrainian politics: Once more around the bloc + +Afghan refugees: Living in limbo + +Belgium’s security problem: No Poirots + + + + + +Articles Sections Next + +The Netherlands and Ukraine + +Dissociative disorder + +A Dutch referendum threatens an EU trade deal with Ukraine + +Apr 2nd 2016 | From the print edition + + + +UKRAINE’S efforts to reach an association agreement with the European Union have led to revolution, poisoned relations with Russia and caused war with Russian-backed separatists. After years of negotiations, Ukrainian and EU leaders at last signed the agreement in Kiev in March 2014, just after the Maidan revolution. But the deal may yet founder in a surprising place: the Netherlands. Dutch Eurosceptics have forced a plebiscite on whether to ratify it. The EU’s other 27 states have already done so; the Netherlands is the lone holdout, and most polls show that on April 6th “no” will probably win. + +The referendum is not binding, but the Dutch government will have to respond to the outcome. Rejection would hobble European diplomacy and suggest that the EU is too fractured to maintain a common foreign policy in the face of Russian interference in Ukraine. And it would send a signal to Ukrainians that however much they want to be part of Europe, many Europeans want no part of them. + +The campaign to block the association agreement began last summer when GeenPeil, a Eurosceptic social-media group, selected the issue as a test of the referendum law, which came into force on July 1st. It quickly gathered 470,000 online signatures, far more than the 300,000 needed to force a vote. Since the referendum was announced, it has transformed into an active campaign group, using volunteers to ensure that turnout reaches the 30% needed for the result to be valid. + +Opponents of the Ukraine agreement regard it as forcing them into an alliance with a corrupt country requiring billions of euros in aid. Though it is largely a trade deal and does not allow Ukrainians to work in the EU, many Dutch, ignoring reassurances from the likes of Mark Rutte, the prime minister, regard it as a step towards EU membership and fear losing jobs to low-wage Ukrainians. “There’s a lot of distrust,” says Frank van Dalen, a political consultant who is working with GeenPeil. The referendum is, he says, one of the few ways for Dutch citizens to feel that “at least for once we have some control”. + + + +The opposition is all the more remarkable, given that the Netherlands has suffered more than anywhere else in the EU from the Russian-backed war of secession in Donbas. In 2014, 193 Dutch passengers were killed when flight MH17 was shot down over Ukraine, most likely by Russian-backed rebels. A furious Dutch public firmly supported EU sanctions against Russia in response. But the referendum campaign has become a forum for those who mistrust the official Dutch government inquiry into MH17, or who subscribe to conspiracy theories about the crash’s cause. + +Others say the association agreement itself caused the Ukrainian conflict, and hold the EU to blame. “It’s a very bad scheme that we’re imposing on a country where we’ve either bought or brought oligarchs into our camp by false promises,” says Thierry Baudet, a prominent Eurosceptic. In his telling, Ukraine remains divided between pro-Russian and pro-European regions, and it was the West’s promises of EU membership that led to the violence. Trade with the EU, he argues, cannot make up for the loss of economic ties with Russia, which in any case is open to a three-way deal; the idea that Ukraine must choose between Russian or EU spheres is “a spin that Eurocrats have been imposing on us, reinforced by the Americans”. + +In fact it was Russia that ejected Ukraine from its customs union, annexed Crimea and supported separatists in Donbas. In recent decades Europe has been as important a market as Russia for Ukraine, and with exports to Russia now collapsing, the turn towards Europe was inevitable. But even though the “no” camp’s claims can be refuted, focus groups convened by supporters of the trade agreement demonstrate that such factual arguments cannot win the referendum. Instead, the “yes” side is concentrating on one message that did show promise: that to block the agreement would be to give Vladimir Putin, Russia’s president, just what he wants. + +“People are driven by emotions when it comes to referendums,” says Michiel van Hulten, a former chair of the Labour Party now heading the “Vote Yes” campaign. “Our main focus in the final ten days is the big choice: do we bow to Putin’s will?” Two polls show the “yes” camp may be gaining ground. But most analysts still expect it to lose. Defeat would be felt far beyond the Netherlands’ borders. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21695890-dutch-referendum-threatens-eu-trade-deal-ukraine-dissociative-disorder/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Ukrainian politics + +Once more around the bloc + +A cronyistic prosecutor is fired, but the government is teetering + +Apr 2nd 2016 | KIEV | From the print edition + + + +TWO years ago a Ukrainian blogger, Mustafa Nayem, published a Facebook post calling people onto Kiev’s Maidan and launched the protest that toppled the government of Viktor Yanukovych. On March 27th Mr Nayem, who is now a deputy in the Rada, Ukraine’s parliament, called people out again—this time to demand the dismissal of the country’s prosecutor-general, Viktor Shokin, who had conspicuously thwarted investigations into corruption. “Basta,” wrote Mr Nayem. “We once again have to come onto the streets.” His indignation was aimed at Petro Poroshenko, the president, who had protected Mr Shokin as a political crony. + +Two days later, bowing to pressure from Ukrainian civil society and western donors, the Rada dismissed Mr Shokin. As a parting shot he fired his pro-reform deputy, David Sakvarelidze, who had uncovered corruption within the prosecutor’s own office. Worse, the request to fire Mr Sakvarelidze reportedly came from one of Mr Yanukovych’s former associates. + +The strife in the prosecutor general’s office is the latest battle in a continuing war for the country’s European future. “We are on a brink of a catastrophe that could kill the state of Ukraine,” says Yuri Lutsenko, a former interior minister who was jailed by Mr Yanukovych and now leads the Petro Poroshenko Bloc (BPP) in the Rada. The ruling coalition in the Rada fell apart more than a month ago. The minority government, led by Arseny Yatseniuk, the prime minister, is paralysed. Public support for Mr Yatseniuk is now in single digits while 80% of Ukrainians do not trust the Rada. “Yatseniuk is so discredited that he can no longer absorb all the negative sentiment in the country,” says Yulia Mostovaya, the editor of Zerkalo Nedeli, a newspaper. + + + +Meanwhile, desperately needed loans from the International Monetary Fund have been put on hold. Ukraine, which is still facing Russian aggression in the east, urgently needs assistance. But first it needs a new government. After a vote of no confidence in Mr Yatseniuk last month failed, the prime minister agreed to step down in favour of Volodymyr Groysman, the chairman of the Rada and a close associate of Mr Poroshenko. In return Mr Yatseniuk’s party, the People’s Front, will retain important positions, including the interior and justice ministries. + +The roots of the crisis go deeper than the failings of Mr Yatseniuk. At bottom is the failure of the political class to let go of the system of oligarchic control and insider dealing that has long plagued Ukrainian politics. For weeks a group of central political figures known as the “strategic seven” has engaged in secretive horse-trading at midnight meetings in an effort to forge a new coalition government. The goal is to avoid having to hold early elections. The danger is that such opaque back-room dealing shuts the public out of politics, meaning that any government that might result would lack legitimacy. + +One configuration might be a coalition between the BPP, Mr Yatseniuk’s People’s Front and the party of the embattled former prime minister, Yulia Tymoshenko. But Ms Tymoshenko’s support has been on the rise, and she favours early elections. So does Mikheil Saakashvili, a former Georgian president and now the governor of Odessa, who is leading a popular movement against corruption. + +The BPP and the People’s Front are trying to recruit enough non-aligned MPs into their factions to form a government without a broader coalition. This may give Mr Poroshenko a short respite and create a semblance of stability. But unless the new government can initiate deep and genuine reforms, it is unlikely to last long. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21695888-cronyistic-prosecutor-fired-government-teetering-once-more-around-bloc/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Afghan refugees + +Living in limbo + +The treatment of Afghans shows how Europe’s asylum system is collapsing + +Apr 2nd 2016 | ATHENS, STOCKHOLM AND VAN | From the print edition + +No turning back + +SWEDEN seems idyllic to Munire, a 19-year-old Afghan asylum-seeker, and her two sisters. The three orphans travelled on their own from Iran, where they were living illegally and had no access to education. Now they live with a foster family and go to school while they wait to hear whether or not they can stay. But the respite may be short-lived. Unlike their brother, who has been a Swedish resident for several years, they could find themselves sent back to a country that, although their birthplace, is no longer their home. + +The refugee crisis has created rifts in Europe between countries which have welcomed refugees, such as Germany and Sweden, and those which have not, such as Poland and Hungary. It has also exposed tensions in Europe’s asylum system as a whole. A well-designed and relatively effective process has, under the pressure of numbers, started to crumble. Afghans, the second-biggest group of migrants to Europe last year at nearly 200,000, are the most likely to lose out. + +Asylum claims from Syrians, Eritreans and Iraqis are accepted at high rates across the European Union, at 97%, 87% and 85% respectively. For Afghans, the rate last year was only 69%. This prevents Afghans from being eligible for the EU scheme that relocates asylum-seekers in Greece and Italy to other countries, as refugees need to come from a country with a 75% acceptance rate. Those who try to make the journey themselves have become stranded, too. When tighter border rules came in at the end of February between Greece and Macedonia, Afghans were among the first to be refused entry, leaving thousands stuck in squalid tents on the border. + +Many countries that were once generous to migrants, such as Sweden, have started to toughen up, with stricter rules on bringing over family members and getting permanent visas. As a result, acceptance rates for Afghans in most European countries have started to fall (see chart). Several countries are trying to dissuade Afghans from making the journey. German officials describe how they have put up billboards in Kabul and Mazar-i-Sharif, emblazoned with “Leaving Afghanistan—are you sure? Thought it through?” A small number have also been sent back: in February 125 Afghans voluntarily left Germany. Sweden is trying to negotiate a treaty with Afghanistan to make such returns easier, says Morgan Johansson, the migration minister. + + + +A recent deal on migrants between the EU and Turkey also does not apply to Afghans (or any other migrants except Syrians). It involves a “one-for-one” policy: for every Syrian returned from Greece to Turkey, the EU will resettle another from Turkey. Afghans stuck in Turkey frequently complain of discrimination. Mohammad Reza, a refugee from Herat province, says that an Iranian friend who joined him on the mountain crossing was given asylum in Europe a long time ago. “I don’t even have a file number,” he says. Unlike Syrian refugees, who have recently been granted temporary work permits, Afghans have no right to employment in Turkey. On March 23rd, three days after the EU deal came into force, Amnesty International, a human-rights watchdog, reported that around 30 Afghans had been forcibly removed from Turkey and sent back to Kabul, without their applications for asylum being properly processed. + +Part of the reason Afghans are disproportionately affected by the squeeze on migrants is that unlike Syria, not all of Afghanistan is at war—and its government is backed by the West. Last year Sweden declared that seven out of the 34 Afghan provinces, including Kabul, no longer met the criteria for internal armed conflict, and so are safe enough to send people back to. But several human-rights organisations disagree, arguing that parts of the country are becoming more dangerous, says Linn Ost Nori, a Swedish asylum lawyer. And armed conflict is only one reason asylum-seekers flee. Minority groups, such as the Hazara, are especially at risk of being targeted by the Taliban or of facing persecution. “We’re from the Shia minority, so we were second-class citizens,” says Mohsin Nijad, a metalworker from a town near Bamyan who left Afghanistan as a child, and who is now in Athens. Afghans are often treated badly in Iran, too, and struggle to get an education or a job. + +Afghans are also being caught by a crackdown on asylum-seekers who have entered through a third country. The statistics are patchy, but a survey in January of 191 Afghans on the Greek islands of Lesbos and Chios by the UN High Commissioner for Refugees found that 26% had lived outside Afghanistan, most of them in Iran, for at least six months before travelling to Europe. In February police chiefs in Austria, Croatia, Macedonia, Serbia and Slovenia signed a joint statement saying that if Afghan asylum-seekers had lived in a third country, such as Iran or Turkey, their claim would not be valid—despite the fact that screening refugees based on nationality alone shows “blatant disregard” for the Geneva Conventions, says Claire Rimmer Quaid of the European Council of Refugees and Exiles, an alliance of 90 NGOs. “Too often the rhetoric at the member-state level is that this group are economic migrants,” she says. + +Faced with the sheer numbers of refugees making their way to Europe, the EU has had to set some hasty rules. Sorting migrants by nationality is one such. But it is storing up trouble. Many refugees, like Munire and her sisters, will be faced with a new and far harsher asylum system in Europe—but have no family back in Afghanistan to go to. The result, says Elizabeth Collett, of the Migration Policy Institute in Brussels, a think-tank, will be a “population in limbo”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21695894-treatment-afghans-shows-how-europes-asylum-system-collapsing-living-limbo/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Belgium’s security problem + +No Poirots + +Belgian police are flummoxed by IS + +Apr 2nd 2016 | BRUSSELS AND PARIS | From the print edition + +Off the grid + +THE response of the Belgian police to the terrorist attacks that claimed 32 lives in Brussels on March 22nd has displayed elements of farce. Two days after the bombings, officers arrested Fayçal Cheffou, a freelance journalist and Islamist agitator, as he loitered with several other men outside the federal prosecutor’s office. He was identified as the “man in the hat” seen on security footage at Brussels’ airport next to the two suicide-bombers. Four days later Mr Cheffou was released due to lack of evidence. Mobile-phone tracking placed him at home during the bombings, and his DNA was not found in the apartment where the bombs were made. + +“Belgium is the weakest link in the European Union’s [security] network,” says one EU diplomat. Salah Abdeslam, a suspect in the attacks in Paris in November whose arrest seems to have triggered the Brussels bombings, evaded police for four months before he was arrested in Molenbeek, the Brussels suburb where he grew up. Raids leading to his arrest turned up components of explosives, yet security at vulnerable locations was not beefed up. The Belgians had even been warned by foreign intelligence agencies that leaders of Islamic State (IS) in Syria had sent instructions to bomb the airport and a metro station. + +Meanwhile, Turkey said it had deported Ibrahim el-Bakraoui to Belgium in July 2015 and told the authorities that he was suspected of jihadist activity. Yet no criminal proceedings were opened. Mr el-Bakraoui is thought to have been one of the airport bombers. (The other, Najim Laachraoui, is suspected of making the bombs used in Paris and Brussels.) Khalid, his brother, is believed to have been responsible for the metro bombing. + +One reason for the bumbling is poor co-ordination between government agencies. The Turkish warning was passed to Belgium’s federal police, part of the interior ministry; the justice ministry’s state prosecution office, which could have ordered criminal proceedings, was not notified. The federal police division responsible for counter-terrorism is set up mainly to fight organised crime, while the state security service concentrates on foiling spying by foreign states. + + + +Islam in Europe: perception and reality + +“Much of the information was there in advance, but the pipelines are clogged,” says Jan Nolf, a legal journalist and former judge. “As a small country with limited resources, we simply can’t deal with all the responsibilities of being the headquarters of the European institutions and of NATO.” + +French police seem to be doing better. Two days after the Brussels attacks they thwarted an “advanced” terrorist plot near Paris, arresting Reda Kriket, a French citizen, and seizing weapons and explosives in his flat. Three suspected accomplices were arrested in Belgium, and Dutch police arrested a fourth in Rotterdam. + +Molenbeek, meanwhile, has been known to be a hotspot of IS activity ever since the Paris bombings. Yet security forces have failed to penetrate its jihadist networks. Molenbeek’s mayor, Françoise Schepmans, blames laws barring raids on apartments at night and holding terror suspects without charge for over 24 hours, as well as local politics. “When radicals began preaching in the mosques here, it was convenient for local politicians to do nothing,” Ms Schepmans says. “Even now, since the Paris attacks, when everyone realises that nothing can be the same again, wehaven’t received more resources.” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21695744-efforts-belgian-town-stop-young-muslims-turning-violence-appear-be-working-how/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Tata Steel: No, thank you + +Brexit brief: Immigration: Let them not come + +A religious killing in Scotland: A quiet man with a loud message + +Wages and jobs: Poor economics + +Down on the farm: Digging for victory + +E-cigarettes: The big smoke + +Women in prison: Breaking worse + +Bagehot: Referendum, what referendum? + + + + + +Articles Sections Next + +Tata Steel + +No, thank you + +Why it would be wrong for the government to bail out Britain’s steel industry + +Apr 2nd 2016 | From the print edition + + + +BRITAIN has been a centre of steelmaking since Henry Bessemer developed a method to mass-produce the metal cheaply in the 1850s. British mills, close to rich seams of coal and deposits of iron ore, cornered the global market within two decades. But the days when Britain’s furnaces turned out over 40% of the world’s steel, exporting it to every continent, are long gone. On March 29th Tata Steel, Britain’s biggest producer, said it planned to sell or shut down its British operations, prompting growing pleas for a government bail-out. The state of the global steel industry, and Britain’s now-peripheral position in it, mean that those calls should be resisted. + +Steel production in Britain has more than halved since its peak in around 1970, to some 12m tonnes a year. In 2015 British steelmakers contributed less than 1% of world supply. As British steel mills have fallen quiet, world production has expanded rapidly, almost doubling between 2002 and 2014. + + + +Most of the increase is accounted for by China, which has more than quadrupled its production since 2000. In 2015 China produced over 800m tonnes, or about half of the global total. But its flagging economy has led state-owned steelmakers to sell their growing surpluses on foreign markets. Exports have soared to 112m tonnes a year, overwhelming markets everywhere and leading to a collapse in steel prices (see chart). Prices do not look as if they will soon return to levels that would make most steelmaking profitable in Britain or in much of Europe. The OECD, a rich-country club, reckons global capacity exceeds demand by up to 600m tonnes a year. The Chinese central government plans to restructure its loss-making steel industry, which is probably responsible for half of this excess capacity. But that will encounter resistance and take time. + +The commoditised steel products turned out at Tata Steel’s main plant at Port Talbot in South Wales have been particularly vulnerable to these trends. The company’s announcement this week that it had decided to reject an “unaffordable” turnaround was painful (Tata Steel provides 15,000 of the 24,000 remaining jobs in Britain’s steel industry) but it was not unexpected. Other steel companies, too, have been cutting capacity and jobs. In October Redcar steelworks, owned by SSI, a Thai firm, went bust. Some 2,200 employees lost their jobs. Later that month Caparo Industries, with 1,700 employees, called in the administrators. Tata itself slashed 2,250 jobs in October and January. + +Most of the world’s steelmakers have suffered from China’s steel surplus, but Britain’s have taken a disproportionate hit. American firms have been helped by their government’s willingness to impose tariffs—of almost 500% on some forms of steel—as well as by cheap energy from fracked natural gas. Other European states have taken a less laissez-faire approach when steelmakers have tried to cut capacity, adding to the pressure on their British counterparts. British companies export around 30% of their wares to the continent. + +British producers face all the problems of other European steelmakers and more of their own. Their energy costs are the highest in Europe, partly because of levies to pay for climate policies. The strength of the pound last year hammered Britain’s exports, while steel mills in the euro area benefited from the euro’s weakness. + +The clamour for intervention is now growing louder. The British Chambers of Commerce, a business lobby group, and Unite, the country’s largest trade union, both want the government to guarantee the steel industry’s future. Jeremy Corbyn, the leader of Britain’s Labour Party, and even several Conservative MPs have called for Tata Steel’s British assets to be nationalised if a private buyer does not emerge. + +Some buyers have already bid for parts of the industry making specialised products that are less susceptible to tumbling market prices than Port Talbot’s output. In November 333 jobs were saved at the Caparo division that produces steel tubes for the car and aerospace industries. On March 24th two steelworks in Lanarkshire were bought by Liberty House, a metals group. Tata is in talks with Greybull Capital, a turnaround specialist, to buy its Scunthorpe site, which turns out rail lines and steel for construction. + +There is no such happy end in sight for Port Talbot, Britain’s biggest mill. To tempt a private buyer it would have to be able to pay its way eventually. Even if anti-dumping duties are imposed on Chinese steel, there is little prospect of that. In 2013 Tata opened a new blast furnace at Port Talbot, at a cost of £185m ($266m). It has spent £2 billion covering its British plants’ losses and now estimates that they will need at least another £2 billion just to break even. + +Any bail-out by the state would run into trouble. The European Commission allows governments to help steelmakers regain competitiveness by, for example, cutting energy taxes. But it bans them from offering aid to rescue or restructure ailing steelmakers. The EU has ordered Belgium’s government to recover €211m ($239m) in aid given to Duferco, which operates steel mills in Wallonia. It is also investigating whether Italy acted illegally in spending €2 billion to support the Ilva steel mill in Taranto. Unless the British government wishes to break European rules, and indemnify any future buyer, its ability even to tide over Port Talbot if it thinks a private buyer could in fact be found is limited. + +There are other things the government could do, such as cutting energy tariffs. That might not make enough difference, though, and in any event would clash with the national target of cutting carbon emissions by 80% by 2050. The state’s energy should now be concentrated not on propping up a waning business but on helping steelworkers move onward and upward. + +Located near busy Cardiff and Swansea, Port Talbot’s 4,300 workers are luckier than those in other declining industrial towns around Britain. But finding jobs in Cardiff’s thriving business-services sector, for example, will be difficult for former steelworkers. The government will need to spend serious money retraining them, helping them into new employment and improving transport links to big cities. Spending to keep the plant itself in business would just prolong the inevitable. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695872-why-it-would-be-wrong-government-bail-out-britains-steel-industry-british-steelmakers/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit brief: Immigration + +Let them not come + +Hostility to large-scale European Union migration could decide the referendum + +Apr 2nd 2016 | From the print edition + + + +POLLS say immigration is voters’ main concern, so the issue was always going to play strongly in the Brexit debate. David Cameron’s Tory government has promised to bring net migration below 100,000 a year but the latest number was 362,000. Worse, much of the upsurge is accounted for by a rise in EU immigrants. That is why Mr Cameron fought so hard to win a four-year delay in granting in-work benefits to them in his EU renegotiation. + +Despite Mr Cameron’s deal, immigration is one subject on which Leave campaigners have a clear lead. The correlation between hostility to immigration and support for Brexit is high, so if they can turn the vote into one about migration, they will win. Yet in trying to do this they not only ignore much economic evidence about the impact of migration but also muddle several unrelated strands of the subject. + +They say Britain has lost control of its borders. In fact anyone entering Britain (except from Ireland) must pass through border checks. Or they point to Europe’s refugee mess, although since Britain is not in the EU’s Schengen passport-free zone, the country has largely escaped it. Some warn that the accession of Turkey will let in hordes of Turks. Yet Turkish membership is many years off and, if it were agreed, would come with tight migration limits. A few Eurosceptics use the terrorist attacks in Brussels on March 22nd to claim that free movement of people lets terrorists into Britain (the government says they show how vital co-operation on security is). + + + +Does Europe care about Brexit? + +The Remain campaigners are not above their own scaremongering. Some suggest that Brexit might result in the 2m-odd Britons settled in Spain and elsewhere in the EU being sent home. This is unlikely, though questions might be raised over access to health care. Remainers have warned that France might scrap the Le Touquet treaty that places the Anglo-French border in Calais, bringing squalid refugee camps to Dover instead. Some French politicians might indeed want to end this unpopular deal, but it is a bilateral one and not linked to Britain’s EU membership. + +The real argument should be over the effects of EU migration. It has certainly been bigger than expected. In 2003 one forecast said that up to 13,000 east Europeans a year would come; five times as many turned up. There are now about 3m EU migrants in Britain, the latest inrush from southern Europe. Yet over half of net immigration comes from outside the EU. + +A post-Brexit Britain might not be able to stop EU migration anyway. If it wants to retain full access to the EU’s single market, it will probably be required to accept free movement of people, as Norway and Switzerland are (both have proportionately more EU migrants than Britain). + +Most Brexiteers insist on tougher controls. They say heavy EU migration burdens taxpayers, drives up welfare spending, strains public services like health and education and aggravates the housing crisis. Some argue that migration steals jobs and reduces wages, especially for the lower paid. Those who favour some immigration often prefer an Australian-style points system that would let Britain cherry-pick the best and brightest. + + + +There are good answers to most of these claims. Several studies have found that EU migrants, unlike non-EU ones, are net fiscal contributors. Mr Cameron’s benefit cuts are unlikely to deter them (indeed, more may now be lured by the new higher national living wage scheduled to take effect on April 1st). Migration adds to pressure on housing, but the real problem is planning constraints. Britain’s employment rate is at a new high, so there is little sign of migrants taking natives’ jobs. + +As for Australian-style cherry-picking, Jonathan Portes of the National Institute of Economic and Social Research points out that Britain does a lot of this already (see chart). The share of the foreign-born in Britain with tertiary education is higher than in Australia or almost all EU countries, and it is far higher than among the native-born. + +Rich countries need migration to thrive, not least to sustain their public services. A growing population can create problems, but a shrinking one is worse. The irony is that the surest way to reduce immigration to Britain is, as one migration adviser puts it, to wreck its economy, and leaving the EU is a quick way to do that. Brexiteers could inadvertently get what they want—but the country would be poorer for it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695958-hostility-large-scale-european-union-migration-could-decide-referendum-let-them-not-come/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A religious killing in Scotland + +A quiet man with a loud message + +A horrific murder prompts fears of more attacks on a small Islamic sect + +Apr 2nd 2016 | GLASGOW | From the print edition + + + +SHAH’S NEWSAGENT, in the Shawlands district of Glasgow, is firmly shuttered now. But the spirit of the man who ran it until his murder on March 24th lingers on in the hundreds of floral tributes that carpet the pavement outside. + +The “kindest, sweetest man”, says one card. Tellingly, there are also heartfelt messages from the local Methodist Church, a “Christian brother” and a “Jewish couple”, for Asad Shah was a Muslim, a member of the Ahmadiya sect, and a man who by all accounts believed firmly in embracing people of all faiths. Indeed, he had become something of a local celebrity for this, “a quiet man with a loud message” in the words of another mourner. And for this he might well have been killed as well. + +Mr Shah was found with multiple stab wounds outside his shop on the evening of the 24th and died in hospital. On March 29th Tanveer Ahmed, a 32-year-old from Bradford, in the north of England, appeared in court charged with the murder. Mr Ahmed, it is thought, is a Sunni Muslim. The murder has not only shocked the local community but has also provoked fears that a particularly vicious split among Muslims worldwide has finally arrived in Britain. Scotland, however, has prided itself on the lack of extremism among its 80,000 or so Muslims, so the authorities will be straining to ensure that Mr Shah’s death remains an isolated incident. + +The Ahmadi consider themselves Muslims but differ from the mainstream in that they believe Mirza Ghulam Ahmad, the 19th-century Indian who founded their tradition, was a latter-day prophet. In many Muslims’ eyes, this makes them un-Islamic and blasphemous. Pakistan’s Ahmadis, of whom there may be 4m, were declared to be non-Muslims by the government in 1974 and they have been subject to harassment and worse ever since. In effect, their faith has been criminalised. In 2010 gunmen entered two Ahmadi mosques in Lahore and killed 95 worshippers. Ahmadis have also been victimised and killed in Indonesia in recent years. + +There are about 25,000 Ahmadis in Britain, organised in 150 chapters across the country. Their first mosque was built in London in 1926. Perhaps 400 Ahmadis live in Glasgow. Until now, the Ahmadis report that relations with other Muslims have been generally good, although Abdul Abid, an elder at the Ahmadiya community centre in Glasgow, where Mr Shah worshipped, says that some of the sectarianism of Pakistan has always spilled over into their lives in Scotland. Certain Muslim-owned shops, for instance, will not stock goods produced by Ahmadiya communities. More importantly, says Mr Abid, certain imams have stoked hardline worshippers against the Ahmadiya and Muslim satellite channels have carried anti-Ahmadiya messages. + +Against this background some Ahmadis fear that Mr Shah’s murder could provoke others to attack them. “Intolerance breeds intolerance,” says an Ahmadiya leader, “so we want this problem nipped in the bud.” The Ahmadis have been trying to promote a positive image of Islam in Britain, running adverts on buses proclaiming “United against Extremism”, for instance. Now they want mainstream Muslim leaders to condemn unequivocally the same extremism that has very probably led to what the police describe as the “religiously prejudiced” murder of Mr Shah. + +Muslim leaders in Scotland have condemned the “outrageous, violent attack by one individual on another”, but that has not been enough for some Ahmadis. The local mosques and imams were invited to the Glasgow Ahmadiya centre on the morning of March 30th to show their solidarity with the grieving Ahmadis and to sign a joint statement. None came. It was “disappointing, an opportunity lost,” says Mr Abid. He accuses the imams of hypocrisy, of saying nice words but of failing to take a real stand together with the Ahmadis against extremism. One Muslim group has been accused of posting messages online gloating over Mr Shah’s death. + +“Love for all, hatred for none” is the slogan Ahmadis try to live by, and it seems to have inspired Mr Shah. Perhaps his death will help that message to prevail in the coming weeks and months. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695961-horrific-murder-prompts-fears-more-attacks-small-islamic-sect-quiet-man-loud/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Wages and jobs + +Poor economics + +Who benefits from the introduction of the national living wage? + +Apr 2nd 2016 | From the print edition + + + +BRITAIN’S economic recovery is now so far advanced that economists are worrying about the next recession. Yet despite six years of economic growth, inflation-adjusted average earnings are still 4% lower than they were before the financial crisis hit, the same measly performance that other rich countries have seen. Boosting the minimum wage may seem one solution. + +From April 1st Britain’s minimum wage is to be rebranded as the “national living wage” (NLW) and made more generous. The legal wage floor for those aged 25 or older rises from £6.70 ($9.60) an hour to £7.20; by 2020 it will be worth roughly £9 an hour. Touted as a measure to help the lowest paid, whom globalisation has not treated kindly, Britain’s new NLW is being watched closely by other countries. Unfortunately, this is no policy to help the poor. + +In recent years Britain’s minimum wage has become more generous. Following its introduction in 1999, it was worth about 45% of median earnings. By 2020 the NLW is expected to rise to 60%. + + + +It is small wonder that plenty of people will be affected. About 1.8m employees will be paid at a higher rate in 2016 because of the NLW and in 2020 around 3m will be. By then Britain’s wage floor may be one of the most munificent in the rich world as a percentage of median earnings (see chart), raising employers’ wage costs by £4 billion. + +The government hopes that companies will bear this extra burden. In recent years they have underspent on training, faster computers and better machinery, the argument goes, dragging down growth in productivity (ie, the amount a worker produces per hour) and with it wages. Indeed, had earnings kept rising at their growth rate before the crisis they would now be 25% higher than they are. The NLW may force firms to make up the productivity deficit. “Requiring a pay increase can prompt employers to make the investments that they otherwise do not necessarily feel that they would need to make,” Nick Boles, the skills minister, said recently. + +The circumstantial evidence looks encouraging. In the Netherlands, where the minimum wage is higher than in Britain, labour productivity is 20% greater. The economic evidence is less promising. Some research does suggest that Britain’s national minimum wage, introduced in 1999, prompted employers to improve training. This effect is likely to be small, though; it is already in companies’ interest to squeeze as much out of their workers as they can. + +Moreover, if firms respond to the NLW by boosting capital investment they may end up employing fewer people. Mr Boles is fulsome in his praise for French supermarkets, for instance: prices on French shelves are often marked on electronic displays so that, unlike in Britain, they do not need to be updated manually. Such gadgets are useful in a country where the minimum wage and other employment costs are high (French unemployment is twice Britain’s rate). The independent Office for Budget Responsibility (OBR) expects the NLW to raise hourly productivity by just 0.3 percentage points by 2020 and to lower working hours by 4m a week (about 0.2%). + +In industries where making big capital investments is tricky, bosses will have to try a different tack. Gentleman’s clubs in central London are raising membership fees well above the inflation rate, telling their monied clientele that the higher minimum wage leaves them no choice. Other firms, though, have less latitude with prices. Some employers will turn to under-25s, who are not covered by the NLW, instead of older workers. + +In industries such as cleaning (in which 30% of jobs pay at or below the minimum wage) and hospitality (where 25% do) hiring is likely to slow. Care homes are already struggling, thanks to cuts in government funding, and some have indicated that they will go bust. The OBR thinks the NLW could increase unemployment by 20,000-120,000 people by 2020. If that happened today it would raise the jobless rate, now 5.1%, by as much as 0.4 percentage points. As less productive workers drop out of the market, average productivity will rise—but this is a statistical trick rather than something to be welcomed. + +Whatever the overall impact of the NLW, its relative effects will be important. Those who lose their jobs because of the higher NLW will mostly be poor and low skilled. Many of those on the minimum wage are second earners in higher-income families, whereas many poor Britons do not work at all. According to the Resolution Foundation, a think-tank, a household in the seventh income decile (ie, nearer the richest) will benefit three times as much as someone in the bottom decile. + +The NLW may also have more impact in some places than in others. Data from Adzuna, a job-search website, show that in recent weeks just 2% of positions in Oxford have offered salaries that are less than the NLW, compared with more than 7% of jobs advertised in Salford and Sunderland. Areas already struggling with high unemployment may see their situation worsen. + +The distributional effects of the NLW are all the more concerning given other policy measures. The government’s pledge to shave £12 billion from the working-age welfare bill by 2020 will hit the poorest hard. Even if the £4 billion in extra pay under the NLW went to the very same people, it could not offset these welfare cuts. + +According to calculations by the Institute for Fiscal Studies, a think-tank, a household in the tenth percentile will see its income stagnate from now until 2020, whereas one in the ninetieth will see a 12% rise. An increase in the minimum wage will bring a welcome pay boost to millions, but those at the bottom are set to keep struggling in the coming years. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695959-who-benefits-introduction-national-living-wage-poor-economics/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Down on the farm + +Digging for victory + +After centuries of lay-offs, farms may be employing more people + +Apr 2nd 2016 | From the print edition + + + +GEORGE OSBORNE, the chancellor, has largely failed in his ambition to “rebalance” the British economy. Over the past decade the number of jobs in manufacturing has dropped by nearly half a million; the woes in the steel industry continue. Farming, however, seems to be bucking the trend. Employment in agriculture, forestry and fishing is up by a fifth from its nadir in 2002. Outside London and the south-east, Britain’s most economically advanced area, it has grown by 28% (see chart). + +A few factors may explain the resurgence. One is cheap wages, thanks in part to the recession but also to an influx of workers from the EU. About 7% of those in basic agricultural work are migrants who have lived in Britain for less than six years. Low wages may have encouraged farms to shift away from activities that need expensive machinery, like meat production, towards stuff that requires more labour. Since 2002 the number of cows in Britain has fallen by 5%. Over the same period, though, the land area devoted to delicate, high-value products such as asparagus and strawberries, which are most delicious when picked by hand, has soared. + +Changing lifestyles may also play a role. After years of strong growth, sales of organic goodies peaked in 2008, at about £2 billion ($2.9 billion), and after a recession-induced fall are now rising again. A paper from the Soil Association, a charity, suggests that organic farms require 32% more labour than a non-organic equivalent, perhaps because they rely less heavily on chemicals to do the job. A boom in farmers’ markets has also offered new employment opportunities. + +Farmers are changing too. The number of self-employed agricultural workers has risen by 50% since 2002. This may be down to the growth of “lifestyle farming”, a favourite of burnt-out city-dwellers who want a change. As the rate of home-working has risen—about 14% of workers are based at home, up from 11% in 2002—more Britons may be tending the land to supplement their other jobs. + +Mr Osborne will surely welcome the growth in farm employment. For his next photo opportunity, it may be more appropriate for him to swap his trademark hard-hat for a pair of wellies. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695962-after-centuries-lay-offs-farms-may-be-employing-more-people-digging-victory/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +E-cigarettes + +The big smoke + +Why e-smoking is flourishing + +Apr 2nd 2016 | From the print edition + + + +BRITAIN’S “vape” market is puffing along nicely these days. In 2012 there were 340 tobacconists—a category that includes vape stores—in England, Scotland and Wales. There are now 1,552. Vapers, who smoke electronic cigarettes that may contain nicotine but never tobacco, can pick up supplies in locations from shabby streetside vendors to slick dispensaries with assistants in lab coats. + +Choices too have grown. Vapour flavours range from Baba Napoletano (“Imagine the delicious rum-soaked cakes from the Neapolitan cookbook”) to Alice in Vapeland Crunkberry (“2AM in cereal land: the satisfying hit of a spoon to milk and cereal. Oh, yum!”). But most vapers end up choosing menthol or tobacco flavours, says Andrew Moss of E-Cig Wizard, a firm with 33 branches across the country. “People look for what they’re used to when they’re trying to quit,” he adds. + +Euromonitor, a research firm, estimates that Britons spent around £800m ($1.2 billion) on “vaping products” in 2015, up from £50m in 2011. The French, by contrast, spent only £290m and the Germans £230m. Analysts reckon the British love e-cigarettes mainly because they are cheap; heavy taxes make ordinary cigarettes in Britain among the most expensive in the world. Vaping can cost 90% less a month for someone used to smoking 15-20 cigarettes a day, says Shane MacGuill of Euromonitor. + +Perhaps for that reason, the increase in vape shops has been concentrated in poorer areas: the north-west has nearly three times the number in the London area, according to the Local Data Company, another research firm. The heavy regulation of tobacco provides vapers with other relative advantages, not least warmth. While smokers huddle outside, forced there by the ban on smoking indoors in public places, some bars and restaurants let vapers inhale behind closed doors. + + + +If people are vaping to save money rather than quit smoking, that is no bad thing. Opinion is mixed, but most agree that e-cigarettes are considerably safer than their flammable counterparts—one estimate suggests that they are only 5% as risky. And a 2014 study by academics at the University of Leuven found that using e-cigarettes pushes people to quit smoking tobacco even if they start with no intention of doing so. E-cigarettes may offer a low-cost way to improve health among poor manual workers, the group that has been slowest to stop smoking. + +Some fear that e-cigarettes act as a gateway to tobacco and reduce the stigma of smoking. Britain’s experience suggests otherwise. Despite the boom in e-cigarette sales, smoking and overall nicotine use has continued to fall. A tiny 0.2% of vapers did not previously smoke tobacco. + +EU regulations due to come into effect next month limit the size of the nicotine hit in e-cigarettes and make them more childproof. The new framework should encourage big tobacco firms’ forays into the market since they will be well placed to deal with the extra bureaucracy. That could lead to simpler, more elegant products to lure smokers put off by the current technicolour offerings, reckons Mr MacGuill. Good news for smokers’ families, bad news for tax receipts and the Treasury. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695963-why-e-smoking-flourishing-big-smoke/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Women in prison + +Breaking worse + +Female prisoners are more badly behaved than male ones + +Apr 2nd 2016 | From the print edition + +Bad behaviour behind bars + +AS A rule, women behave better than men, or are less frequently caught out: they make up just 5% of Britain’s prison population. Even these troublemakers are gentler than the opposite sex. In 2014 eight in ten women prisoners were jailed for non-violent offences, compared with seven in ten male prisoners. + +Behind bars, however, a different trend emerges. It is women who more frequently run up against prison rules. In 2014 there were 137 punishments doled out per 100 women but only 105 for every 100 men. They are also more violent, committing 52 assaults on staff per 1,000 female prisoners in 2015 whereas the male rate was 45. Why do women behave so badly in prison? + +Diego Gambetta, a sociologist, says women make rougher inmates because they take longer to establish a hierarchy. Fighting, he says, “is an information-seeking device”, and although the toughest men sport large muscles and scars, the toughest women are harder to spot without a scrap. Another theory is that female prisoners are trickier to manage because they are more likely to suffer from mental illness: in 2015 26% of them (and 16% of male inmates) had had a psychiatric admission before going to prison. A third argument is that female jails are less crowded, so unruly prisoners are easier to spot. + + + +The explanation that many academics and think-tanks favour is that guards are less tolerant towards women. A 1994 study of Texan prisons found that wardens in female prisons demanded total compliance but those in male prisons did not. Ellie Butt at the Howard League, a prison-reform charity, thinks little has changed. Female inmates, she says, are considered doubly deviant—“a woman, and a criminal?” says one female ex-con, “You’re practically Myra Hindley!” Guards may be more likely to write up and punish women’s verbal assaults on staff than men’s. + +Government figures hint this is true. “Disobedience or disrespect” was the reason for 44% of punishments given to female prisoners in 2014 compared with 39% of those handed out to men. Farah Damji, who has spent time in prison, says male guards were particularly keen to put her in her place. “It was a sense of, you think you have some status in the outside world? I’ll show you,” she says. Ms Butt reckons such treatment contributes to the disproportionate levels of self-harm committed by women—26% of the prison-system total in 2014. Punishments were designed for men, says Juliet Lyon at the Prison Reform Trust, a charity, and are often a bad fit for women. + +There are some promising signs of change. Since 2006 the rates of female assaults on staff have more than halved whereas male assault rates have stayed roughly flat. The gap between male and female punishment rates has also narrowed. One reason, Ms Lyon says, is that staff are learning more about working with prisoners who have suffered trauma. + +A different approach altogether might work better. Women fare worse than men after prison: they are more likely to reoffend after sentences shorter than 12 months, the type they most commonly receive. They do better on alternative measures, though. Around 95% complete community-service sentences, but only 76% of men do. If jail turns women into Walter White, the anti-hero of the television series “Breaking Bad”, there is a case for not putting them there in the first place. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695956-female-prisoners-are-more-badly-behaved-male-ones-breaking-worse/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Referendum, what referendum? + +Calm and competent, the Remain campaign is haunted by the spectre of indifference + +Apr 2nd 2016 | From the print edition + + + +WILL STRAW is a man in a hurry. Shadowing him on a recent visit to York—a whirl of leaps in and out of taxis, impromptu speeches, marches up shopping streets and down corridors—Bagehot was impressed by the energy and seriousness of Britain’s chief pro-EU campaigner. But was it all really necessary? York is the sort of well-heeled, studenty place that Remain, which does best among middle-class folk and youngsters, should have in the bag. + +Sure enough, at every stop on his tour (apart from a couple of old ladies who shoved their leaflets in a bin) the director of Britain Stronger In Europe (BSE) and his lieutenants seemed to encounter fellow pro-Europeans. A shopper in St Sampson’s Square gave campaigners in their rain-sodden “I’m In” T-shirts a thumbs up; a scientist at the Wolfson Atmospheric Chemistry Laboratory waxed Europhile about research grants and freedom of movement; a crowd at the students’ union at York University agreed with Mr Straw’s every word. “You go to electronics and they’ll tell you how much of their funding is from the EU,” one told him. + +Yet even here BSE has its work cut out. It estimates that around 35% of British voters are for EU membership. About another 35% are undecided. The campaign should surely be able to win over enough of these to cross the 50% line. But it will only succeed on June 23rd if those persuaded actually vote. So the second part of BSE’s job is to get them fired up, or at least sufficiently engaged to cast their ballots. Hence Mr Straw’s visit to York. “This is the fight of our lives and the other side are incredibly passionate about this issue, so we have to fight that passion,” he told the students. + +Current polling puts the two campaigns roughly neck-and-neck, with Remain slightly ahead. But in the latest survey by Ipsos MORI support for Remain slips from 54% to 49% when only people who say they are certain to vote are polled. + +Why? Consider the difference between the two sides. The Leave campaigns are loud, discordant and spirited, run by people who have obsessed about an EU referendum for decades. They think they can win if they make it a vote on immigration. Thus lurid claims about foreign criminals and “winning back our country” froth forth from Vote Leave and Leave.eu, the two main anti-EU outfits. BSE, by contrast, is calmer and more businesslike. It reckons it can prevail by focusing voters’ minds on Britain’s economic future and the risks of the unknown. So it has lined up serious establishment types—from businessmen and former generals to theatre directors and educationalists—to make hard-nosed arguments about jobs, investment and security: a virtuous cup of green tea to the Eurosceptics’ more stimulating brew. + +Demography accentuates Leave’s edge. In the general election in 2015 turnout was 78% among the over-65s, who are overwhelmingly Eurosceptic, and 43% among those aged 18 to 24, who are overwhelmingly pro-EU. The Remain campaign’s firmest bastions are a list of groups not given to voting. City dwellers vote less than suburban and rural folk. Many students are not registered and, as the vote will take place outside term time, will be away from their usual addresses—at music festivals, for example (there are no polling stations at Glastonbury). Expats too are often absent from records and lose the vote after 15 years anyway. A recent shift from household to individual registration has seen up to 1m voters drop off the lists. A disproportionate number are the sort of young, transient types more likely to vote Remain, adds Matthew Goodwin of the University of Kent. + + + +In graphics: A guide to “Brexit” from the European Union + +Combine that with narrowing polls (in Ipsos MORI’s surveys Remain’s lead has dropped from 26 points in December to seven now), the fact that voters have sometimes veered towards Euroscepticism towards the end of EU referendum campaigns elsewhere and the risk of a terror attack or migration drama grabbing headlines in the weeks before the poll, and it is easy enough to see why Mr Straw is in a hurry. His side may be in the lead, but Britain’s EU membership hangs by a thread. + +Is he up to the job? Here there are grounds for optimism. BSE is well-run, dynamic and less fractious than its anti-EU rivals, whose passion can hurt them, tipping them into damaging public squabbles and distracting them from the mechanics of the campaign. The Remain campaign recognises the scale of its task, its lieutenants criss-crossing the country geeing up local groups, university chapters (of which there are now more than 50) and student-registration drives. Contrary to Leave’s complaints, Remain has mongered more realism than fear—voters deserve to know the real risks of Brexit—and kept its tone broadly sunny. That should help, notes Mr Goodwin, who along with Simon Hix of the London School of Economics has found that the positive Remain arguments are more effective than the (ubiquitous, so priced in) Leave ones. + +Waiting for Corbo + +Yet all this may not be enough. Only six months old, BSE does not have the local infrastructure needed to overturn its turnout disadvantage. For that it needs the help of political parties. But the Conservatives are divided and, locally, overtly Eurosceptic. So Mr Straw—and for that matter David Cameron—is reliant on the Labour Party, the majority of which is pro-EU, to put its machine at Remain’s service. Jeremy Corbyn, its left-wing leader, dislikes the capitalists in Brussels and is at best ambivalent about membership. Thus pro-Europeans in his party, led by Alan Johnson, a former minister, have been given few resources. Its canvassers have not been instructed to expend much effort engaging with its supporters about the EU; almost half of voters do not even know that it is formally for membership. BSE is good, better than some of its critics allow. But it cannot win the referendum on its own. + +A full transcript of Bagehot’s interview with Will Straw is at: http://www.economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21695957-calm-and-competent-remain-campaign-haunted-spectre-indifference-referendum/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Counter-radicalisation (1): Battle of ideas + +Counter-radicalisation (2): Talking cure + +Counter-radicalisation (3): A disarming approach + + + + + +Articles Sections Next + +Counter-radicalisation (1) + +Battle of ideas + +In the first of three articles about Western countries’ attempts to counter Islamist violence, we look at a Belgian programme for disaffected Muslim youngsters + +Apr 2nd 2016 | VILVOORDE | From the print edition + + + +“IT WAS a time-bomb; merely a matter of when,” sighs Rafiq, a young man who runs a newspaper shop in Vilvoorde, just north of Brussels. Surrounded by papers with pictures of the bombers who killed at least 32 people in the Belgian capital on March 22nd, Rafiq says he is sure more will follow in their footsteps. “In Molenbeek it’s all out in the open. It’s well-known that terrorists live there. Here, it’s more hidden.” + +Vilvoorde is less notorious than Molenbeek, a suburb of Brussels that has become synonymous with jihadists and their sympathisers. Yet it has at least as troubling a history. Between 2012 and 2014 it is thought to have produced more recruits for foreign jihadist groups, as a share of Muslim residents, than anywhere else in western Europe. With a big Muslim population, and conveniently located on the AntwerpBrussels railway line, it proved an easy hunting ground for recruiters for Islamic State (IS). Security officials believe that 28 young locals had left for Syria by May 2014. + +Khadija Boulahrir, who now works in Brussels, still cannot believe that her former playmates joined IS. In the town’s Grote Markt square, Hamed, an older man, says he understands all too well. “There is nothing to do here for them,” he says. “No jobs, no apprenticeships, nothing.” Of Vilvoorde’s 43,000 inhabitants, 43% are of foreign origin; nearly half of those are unemployed. Many have parents or grandparents who came here as guest workers, before the local Renault factory closed 20 years ago. + +But in one respect Vilvoorde is very different from Molenbeek. In 2014 it decided to counter the lure of violent extremism head-on, with a prevention programme aimed at youngsters thought to be at risk. As the investigation into the bombings extends across Europe, evaluating its effectiveness has become a matter of urgency. + +The Vilvoorde programme starts from the premise that alienated youngsters are most likely to turn to violent extremism. “We want to give them a stake in society,” says Moad el Boudaati, a social worker whose best friend was among those who left for Syria. Most of those who join IS come from broken homes, where the father is absent and the mother has lost all authority, he says. Now he spends much of his time meeting parents, speaking with young people and working with imams. + +Tip-offs may come from schools or parents: after the Charlie Hebdo attacks in Paris last year many teachers called, alarmed by pupils who called the killers heroes. For each tip-off a team is set up; perhaps a health worker, a religious leader, a social worker, someone from the parent network and a school employee. It may offer therapy, help in finding a job, or housing support or parenting advice for the family. The aim, says Jessika Soors, who runs the scheme, is to “increase resilience, both of the families and the young people”. + +Relations between the police and local youngsters used to be disastrous, says Mr el Boudaati. Frequent house searches and random frisking on the street bred resentment. Now matters are slowly improving; police hold town-hall meetings to hear young peoples’ grievances. But Ms Soors is adamant that police involvement remain limited so as not to jeopardise trust. + +Opinions are divided over the effectiveness of showering could-be jihadists with attention and support. (A similar programme in Aarhus, Denmark, is even more generous.) And, like all prevention programmes, this one is hard to evaluate—how to count the youngsters who would have left had it not been for timely intervention? But in a positive sign, authorities think no further recruits have left from Vilvoorde since May 2014. Yet a new challenge is looming. Of the 28 who left to fight before that date, eight are known to have died in Syria (including Mr el Boudaati’s former best friend) and three are in prison in Belgium. One who returned and is living in Vilvoorde is intensively monitored and supported by local services. + +Hide and seek + +Keeping tabs on returning IS fighters is more onerous than preventing someone leaving for Syria in the first place. Both in Belgium and elsewhere, they may live openly, claiming to have volunteered in refugee camps. Others go into hiding: the arrest in Molenbeek on March 18th of Salah Abdeslam, the Belgian-born prime suspect in the attacks on Paris last November, demonstrated the frightening ease with which security services could be evaded. According to the authorities, at least one returned fighter is among the eight suspects in the Brussels and Paris attacks who are still on the run. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21695875-first-three-articles-about-western-countries-attempts-counter-islamist/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Counter-radicalisation (2) + +Talking cure + +France puts its faith in secular authorities to help fight radical Islamist ideas + +Apr 2nd 2016 | NICE | From the print edition + + + +IN THE 15 years since the terrorist attacks of September 11th 2001, many attempts have been made to draw people away from the jihadist world-view, involving health, social and security services; national and local authorities; and secular purveyors of advice as well as religious ones. Saudi Arabia lavishes cash on suspected terrorists who co-operate with its deradicalisation programme, setting them up with jobs, cars and even wives. Efforts by Indonesia’s government have been intensive but snarled up in the wider problems of a corrupt prison system; as in many countries, local initiatives have done better than central ones. In Western democracies schemes have targeted both those suspected or convicted of terrorist offences and those thought to be at risk of going down the same path. + +Not only the tools, but the aims and terminology vary. Some pundits reject the term “deradicalisation”, which became popular in Europe a decade ago, because it seems focused on the individual, ignoring social context. Some make a sharp distinction with counter-radicalisation—attempting to stop people turning to violent extremism in the first place. And in many countries “countering violent extremism” has become the preferred expression for both. It is often stressed that ultra-right fanaticism must be targeted, as well as the Islamist kind. + +Whatever they are called, all such programmes now face a growing challenge. By the end of 2015 the number of jihadists from western Europe fighting in Syria had doubled in just 18 months. Governments are scrambling to stop more joining them, and to deal with those who return. + +As a share of population, Belgium is the western European country that has supplied the most fighters to IS. But in absolute numbers France is top (see map). Twice targeted by Islamist terrorists and still under a state of emergency, it has turned somewhat belatedly to deradicalisation. Earlier this year it began a compulsory re-education programme in four prisons, where convicted terrorists have been grouped into special units. It is soon to open its first residential centre, for radicalised young adults. Some of the most interesting experiments, however, have emerged at the local level. + +Unlikely as it may seem, Alpes-Maritimes, the department that covers the swish Côte d’Azur, has one of the biggest problems with radicalisation outside the Paris region. A short drive from the shuttered façades and palm trees of old Nice, and in the shadow of a raised motorway bearing fast cars towards nearby Monaco, grim concrete tower blocks crowd into the narrow valley. Partly thanks to the efforts of a vigorous local recruiter, Omar Omsen, at least 55 residents from Nice or nearby towns are currently fighting in Syria, including 11 members of one family. Since 2014, the department has recorded 522 alerts about newly radicalised individuals, and it recently closed five underground prayer houses suspected of preaching violent Islamism. + +A year ago Alpes-Maritimes put in place a programme that has become something of a model. Thanks to local family-help organisations such as Entr’Autres, the department has trained teachers, social workers, doctors, policemen, prison officers and others to watch for signs of radicalisation and sound the alert. The basis for detection is a grid, devised by the French interior ministry. Signs range from the weak, such as a teenager who cuts himself off from his friends, to the strong, such as a pupil who defends terrorism in the classroom. A national telephone helpline for families also flags local warnings. A counter-radicalisation cell meets weekly to sift cases. + +When the system works, alerts have stopped some youngsters leaving for jihad in Syria. Last year two teenage boys were hauled off a plane at Nice airport before take-off. Under French counter-terrorism laws, would-be jihadists can be forbidden from leaving the country, and their passports confiscated. Thanks to an extra €425m ($476m) for counter-terrorism in last year’s national budget, if such hard-core cases involve minors, they can be referred to counsellors. + +“Some young people turn up like blocks of concrete,” says Patrick Amoyel, a psychoanalyst and co-founder of Entr’Autres. In a consulting room fitted out with a regulation couch and ample supply of cushions, he sees non-residential patients referred by the counter-radicalisation cell. Analysts follow a three-stage process. First, says Mr Amoyel, they need to forge trust. For an ordinary patient in psychoanalysis this requires a few weeks; with radicalised youngsters it can take months, if it happens at all. Next comes the attempt to “break down their ideological certainties” by finding a weak point in their armour of beliefs. Third, the putative jihadists are confronted with a “counter-discourse”, sometimes with the help of (often Muslim) mentors. + +Room for doubt + +“The objective is to bring someone back from the edge,” says Mr Amoyel, “from the point at which the radicalised mind turns to terrorism.” Brigitte Juy-Erbibou, co-founder of Entr’Autres, is most hopeful about the young girls, whether Muslim or converts. Some seem to be in the grip less of political Islam, she says, than of an adolescent identity crisis. But Mr Amoyel reckons there is, at best, a 50:50 chance of turning a hardened teenage boy. + +Two difficulties mark the French experience. One is linked to the country’s strict secular tradition, which keeps religion out of public institutions. Alpes-Maritimes has begun, tentatively, to include local Muslim leaders. Many social workers and teachers, however, remain uncomfortable. Yet excluding religion leaves a big credibility gap. Boubekeur Bekri, an imam in a tough part of Nice, says the youngsters he tries to talk out of extremism have been “exploited by ideas that have nothing to do with our religion”, so the fact that he shares their faith is “decisive”. + +The second issue, shared with other countries, touches fears about confidentiality. Those encouraged to flag trouble do so voluntarily. Yet social workers, trained in child protection, do not want to be seen as informers. There are particular worries about what happens to such information in a country that keeps intelligence files on some 10,500 Islamists and is under a state of emergency. Yet the need to step in and talk to young teenagers, long before they contemplate strapping explosives to their backs, makes it essential to look out for small early-warning signs. + +Perhaps most striking, the experience in Alpes-Maritimes reveals a three-way cultural gap between the security-driven tradition of French counter-terrorism, that of psychological therapy, and scholarship on political Islam. If deradicalisation is to mean anything—and some Islamic scholars are sceptical—it needs to link all three. Even the French intelligence services now recognise that a security-driven approach is not enough. + +“We should be honest,” says David Thomson, author of a book on French jihadists. “These programmes haven’t yet deradicalised anybody.” A 15-year-old girl from the French Alps recently tried to leave for Syria—after spending time in a deradicalisation programme. Mr Thomson, who is conducting research with returned jihadists, says such teenagers are typically drawn to fight through a sense of social humiliation. Working out the causes of this may be as important a part of the effort as counselling or surveillance. Deradicalisation, says one official, is a “growing industry with lots of exaggerated claims”. The aim, he says, “has to be to stop the process of radicalisation in the first place.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21695874-france-puts-its-faith-secular-authorities-help-fight-radical-islamist-ideas-talking/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Counter-radicalisation (3) + +A disarming approach + +Can the beliefs that feed terrorism be changed? + +Apr 2nd 2016 | From the print edition + +Peaceful coexistence + +ACCORDING to Peter Neumann, a terrorism-watcher at King’s College London, experience points to three common features in successful efforts to wean someone off extremism. He must already have inner doubts; trusted people, whether imams, friends or relatives, must be involved; and he must be offered an alternative peer group. He may also be more concerned with personal problems or geopolitical grievances than matters of theology. + +Still, given that IS’s appeal lies in a perverse but seductive form of religion, some of the counter-argument has to be religious. How to persuade a jihadist, or somebody tempted by jihadism, that there might be better, and truer, ways to understand Islam than the murderous fanaticism of IS and similar groups? + +One approach is to challenge their vision of the world, according to which a place belongs either to Dar al-Islam, the realm where Islam prevails, or to Dar al-Harb, where the faith’s enemies are to be found. In the land it controls, IS claims to have re-established Dar al-Islam with a purity comparable to the first Muslim community. The more idealised his vision of Dar al-Islam, the easier it is for an impressionable young Muslim to convince himself that everywhere else is Dar al-Harb, a zone of adversaries deserving no mercy. + +But a mentor can show that this division has never been binary. There are intermediate situations such as Dar al-Dawa, the abode of invitation, where Islam does not predominate but can be practised and preached freely. Another important term is Dar al-Ahd, abode of the contract: places which live in established peace with Muslims. Some Muslim scholars say the West is a more comfortable place to practise the faith than many Muslim-majority countries. And Islam has a lot to say about loyalty and obedience to states that allow Muslims to live safely and devoutly. + +To the jihadist and the Islamo-sceptical Westerner alike, sharia law may conjure up images of cruel religious punishment. To a young Muslim frustrated by the ambivalence of life in the West, there may be something seductive about the idea of swift, ruthless justice, ordained by God and therefore not open to question. But a mentor can suggest returning to the original meaning of sharia: a way of promoting the well-being of the individual and the community. The term refers not only to retribution but to Islam’s positive guidance for living generously and humbly. + +A hardened jihadist may have been swayed by “The Management of Savagery”, a kind of manifesto for al-Qaeda and its imitators that was published online in 2004. It calls for merciless violence, especially in Muslim countries where Western countries have some influence. The intention is to foment grievance, force the West to over-react and bring about chaos and collapse from which a true caliphate can emerge. It may be possible to convince the subject that all this is alien to the philosophy of war set out in the Koran and by its interpreters. These emphasise that war should only be waged in response to aggression, treachery or a broken treaty, and that civilians should be spared. + +Today’s jihadists can also be cast in an unflattering light by drawing parallels with an extremist sect from Islam’s earliest days. Known as the Khawarij, they turned against the caliph of the day and assassinated him, because he was emollient enough to submit to arbitration in a conflict with a rival. The Sunni preachers of IS strongly reject the comparison between themselves and the Khawarij. But the defining feature of the Khawarij, shared with today’s terrorists, was a fondness for denouncing as infidel any Muslim less fanatical than themselves. + +Among Muslims who set out to woo people away from terrorism, none of these points is much disputed. Each is intended to challenge the jihadists’ claim to be returning to Islam’s purest sources. But that does not mean that the work is free of controversy. + +In Britain, especially, there has been bitter argument, not over how to go about mentoring, but over who should do it. Is the job best given to religious teachers who themselves hold quite hard-line theological and political views and can therefore partly empathise with their subjects, or should it be restricted to those who espouse secular notions of liberty and equality, including, for example, gay rights? + +Words and wounds + +In recent years, the more restrictive view has prevailed. In comparison with interventions focused on social work elsewhere, Britain’s deradicalisation programme, known as Channel, is perceived to be police-led. It is part of an anti-terror strategy known as Prevent, which was denounced this week by a teachers’ union for requiring teachers to report on their pupils. + +Channel is also theology-heavy—but it only uses mentors who espouse liberal democracy, secular law and Western notions of freedom, tolerance and equality. They must unconditionally oppose attacks on British forces. Rashad Ali, one of those mentors and a fellow of the Institute for Strategic Dialogue, a think-tank in London, argues that deradicalisation can be worse than useless if practitioners, while condemning IS, condone other violence. + +The difficulty, insists Alyas Karmani, a British imam who has mentored jailed extremists but has now fallen out of official favour, is that restricting the pool to such impeccably liberal-minded folk disqualifies the great majority of those well-placed to communicate and empathise with their subjects. In particular, imams who share their subjects’ anger at Western foreign policy, for example the use of drones over Pakistan and Afghanistan, are excluded. + +In Islamic terminology, there is a degree of ijma, or consensus, on what to say to a would-be jihadist. But on who should say it there is fitna, a state of dangerous strife. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21695876-can-beliefs-feed-terrorism-be-changed-disarming-approach/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Artificial intelligence : Million-dollar babies + +Solar energy: Blinded by the light + +Telefónica: Hail, César! + +Malaysia Airlines: Recovery phase + +Shareholder value: Analyse this + +Schumpeter: Tycoonomics + + + + + +Articles Sections Next + +Artificial intelligence + +Million-dollar babies + +As Silicon Valley fights for talent, universities struggle to hold on to their stars + +Apr 2nd 2016 | SAN FRANCISCO | From the print edition + + + +THAT a computer program can repeatedly beat the world champion at Go, a complex board game, is a coup for the fast-moving field of artificial intelligence (AI). Another high-stakes game, however, is taking place behind the scenes, as firms compete to hire the smartest AI experts. Technology giants, including Google, Facebook, Microsoft and Baidu, are racing to expand their AI activities. Last year they spent some $8.5 billion on research, deals and hiring, says Quid, a data firm. That was four times more than in 2010. + +In the past universities employed the world’s best AI experts. Now tech firms are plundering departments of robotics and machine learning (where computers learn from data themselves) for the highest-flying faculty and students, luring them with big salaries similar to those fetched by professional athletes. + +Last year Uber, a taxi-hailing firm, recruited 40 of the 140 staff of the National Robotics Engineering Centre at Carnegie Mellon University, and set up a unit to work on self-driving cars. That drew headlines because Uber had earlier promised to fund research at the centre before deciding instead to peel off its staff. Other firms seek talent more quietly but just as doggedly. The migration to the private sector startles many academics. “I cannot even hold onto my grad students,” says Pedro Domingos, a professor at the University of Washington who specialises in machine learning and has himself had job offers from tech firms. “Companies are trying to hire them away before they graduate.” + +Experts in machine learning are most in demand. Big tech firms use it in many activities, from basic tasks such as spam-filtering and better targeting of online advertisements, to futuristic endeavours such as self-driving cars or scanning images to identify disease. As tech giants work on features such as virtual personal-assistant technology, to help users organise their lives, or tools to make it easier to search through photographs, they rely on advances in machine learning. + +Tech firms’ investment in this area helps to explain how a once-arcane academic gathering, the Conference on Neural Information Processing Systems, held each December in Canada, has become the Davos of AI. Participants go to learn, be seen and get courted by bosses looking for talent. Attendance has tripled since 2010, reaching 3,800 last year. + +No reliable statistics exist to show how many academics are joining tech companies. But indications exist. In the field of “deep learning”, where computers draw insights from large data sets using methods similar to a human brain’s neural networks, the share of papers written by authors with some corporate affiliation is up sharply (see chart). + + + +Tech firms have not always lavished such attention and resources on AI experts. The field was largely ignored and underfunded during the “AI winter” of the 1980s and 1990s, when fashionable approaches to AI failed to match their early promise. The present machine-learning boom began in earnest when Google started doing deals focused on AI. In 2014, for example, it bought DeepMind, the startup behind the computer’s victory in Go, from researchers in London. The price was rumoured to be around $600m. Around then Facebook, which also reportedly hoped to buy DeepMind, started a lab focused on artificial intelligence and hired an academic from New York University, Yann LeCun, to run it. + +The firms offer academics the chance to see their ideas reach markets quickly, which many like. Private-sector jobs can also free academics from the uncertainty of securing research grants. Andrew Ng, who leads AI research for the Chinese internet giant Baidu and used to teach full-time at Stanford, says tech firms offer two especially appealing things: lots of computing power and large data sets. Both are essential for modern machine learning. + +All that is to the good, but the hiring spree could also impose costs. One is that universities, unable to offer competitive salaries, will be damaged if too many bright minds are either lured away permanently or distracted from the lecture hall by commitments to tech firms. Whole countries could suffer, too. Most big tech firms have their headquarters in America; places like Canada, whose universities have been at the forefront of AI development, could see little benefit if their brightest staff disappear to firms over the border, says Ajay Agrawal, a professor at the University of Toronto. + +Another risk is if expertise in AI is concentrated disproportionately in a few firms. Tech companies make public some of their research through open sourcing. They also promise employees that they can write papers. In practice, however, many profitable findings are not shared. Some worry that Google, the leading firm in the field, could establish something close to an intellectual monopoly. Anthony Goldbloom of Kaggle, which runs data-science competitions that have resulted in promising academics being hired by firms, compares Google’s pre-eminence in AI to the concentration of talented scientists who laboured on the Manhattan Project, which produced America’s atom bomb. + +Ready for the harvest? + +The threat of any single firm having too much influence over the future of AI prompted several technology bosses, including Elon Musk of Tesla, to pledge in December to spend over $1 billion on a not-for-profit initiative, OpenAI, which will make its research public. It is supposed to combine the research focus of a university with a company’s real-world aspirations. It hopes to attract researchers to produce original findings and papers. + +Whether tech firms, rather than universities, are best placed to deliver general progress in AI is up for debate. Andrew Moore, the dean of Carnegie Mellon University’s computer-science department, worries about the potential for a “seed corn” problem: that universities could one day lack sufficient staff to produce future crops of researchers. As bad, with fewer people doing pure academic research, sharing ideas openly or working on projects with decades-long time horizons, future breakthroughs could also be stunted. + +But such risks will not necessarily materialise. The extra money on offer in AI has excited new students to enter the field. And tech firms could help to do even more to develop and replace talent, for example by endowing more professorships and offering more grants to researchers. Tech firms have the cash to do so, and the motivation. In Silicon Valley it is talent, not money, that is the scarcest resource. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695908-silicon-valley-fights-talent-universities-struggle-hold-their/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Solar energy + +Blinded by the light + +Two big potential bankruptcies cast a shadow over the solar landscape + +Apr 2nd 2016 | Austin and Madrid | From the print edition + +Some prospects are still dazzling + +IN SOME respects this is a bumper era for solar energy. Last year, for the first time, the world invested more in photovoltaic cells than in coal- and gas-fired power generation combined. This year, new solar installations in America are expected to more than double (see chart ). China, which now has more solar capacity than any other country, plans to triple it by the end of the decade. + + + +Yet this week two of the rich world’s most prominent solar-power developers have been flirting with disaster. Cheered on by yield-hungry creditors and investors, they had expanded too quickly, reliant on heavy borrowing and financial engineering. Not for the first time, some energy firms fooled themselves into believing that newfangled technologies and funding mechanisms could let them defy laws of financial gravity. + +On March 29th SunEdison, an American firm that calls itself the world’s largest renewable-energy development company, was described in a public filing as facing a “substantial risk” of bankruptcy. A day earlier, the Wall Street Journal reported the firm was under investigation by the Securities and Exchange Commission (SEC) over accounting disclosures. Its debt exceeds $11 billion, gathered in just a few heady years. + +Across the Atlantic, Abengoa, a big Spanish renewable and engineering firm with €9.3 billion ($10.6 billion) of debt, narrowly avoided bankruptcy this week after three-quarters of its creditors granted it a temporary reprieve to allow for the approval of a debt-restructuring plan. After four months of pre-bankruptcy proceedings, the truce was a big relief. + +Both firms were emblematic of the excitement over clean energy. They borrowed oodles to build large projects that delivered energy to utilities at increasingly attractive prices. They then sold the assets to publicly listed and tax-efficient offshoots, known as “yieldcos”, that funded themselves by issuing shares. Since 2014 the biggest such share sales in America were by SunEdison’s yieldcos, TerraForm Power and TerraForm Global, and by the eponymous Abengoa Yield. Each raised over $500m. + +But they were blinded by their own success, says Greg Jones of CreditSights, a financial-research firm. A plunge in oil prices and higher risk premiums for energy firms made it harder for yieldcos to raise money, which violated their promise to shareholders not only to issue steady payouts but also to increase returns. “They assumed there would always be access to capital markets,” he says. + +SunEdison has become particularly erratic. In the middle of last year its bosses said its shares were substantially undervalued at $32. They have since fallen below $1. Analysts say its combination of acquisitive hubris, operational failures, murky financials and shoddy corporate governance cast a shadow over the clean-tech industry, though many firms are far more prudently managed. + +SunEdison’s problems began last summer with a $2.2 billion merger agreement with Vivint Solar, a developer of rooftop solar controlled by Blackstone, a private-equity group. It hoped to use TerraForm Power to buy Vivint assets, but other TerraForm investors objected that the yieldco was becoming a dumping ground for SunEdison’s expensive acquisitions. Vivint ended up scrapping the merger. + +In the autumn analysts at CreditSights drew attention to murky debt disclosures, which further battered confidence in SunEdison. The company has twice since delayed filing an annual financial statement and admitted to “material weaknesses in its internal controls over financial reporting”. That may explain the SEC’s interest, which exacerbates the concern of creditors. “It’s like a gigantic layer cake of debt,” says Mr Jones. + +SunEdison had also upset TerraForm shareholders by saying Brian Wuebbels, its embattled chief financial officer, would become chief executive of the yieldcos, further subordinating their boards to the parent company. On March 30th both yieldcos announced his resignation. + +The uncertainty is affecting its business activities. Hawaiian Electric, a utility that agreed to buy power from SunEdison, is trying to cancel the contracts because of the seller’s failure to meet financing deadlines, amid fears the projects could be drawn into bankruptcy proceedings. + +Like SunEdison, Abengoa can only blame itself for its troubles. Its debt-propelled growth took place under the auspices of the founding Benjumea family, which has strong political connections. Abengoa built €28 billion-worth of projects between 2009 and 2015, including big water-desalination plants. Between 2011 and 2015 its debt-to-earnings ratio ballooned. + +Many thought it was too big to fail. But strains grew last summer in Brazil, where it was building power-transmission lines. Abengoa admitted in July it would have to spend more than planned on its Brazilian projects. After denying it needed to raise more from investors, management announced a €650 million capital increase. That dented confidence; the firm’s share price slumped and banks pulled credit lines. It asked for preliminary protection from creditors in November. Most of its big construction projects have fallen quiet. + +Abengoa hopes to reinvent itself. Under the restructuring plan, creditors would see 70% of debt swapped into equity. Existing shareholders would be left with just 5% of equity. That is painful but better than going into liquidation. The new Abengoa would receive fresh funding and do more “turnkey” construction for others. It would still labour under €4.9 billion of debt, but could at least focus on the type of engineering it does best. SunEdison may not have even that luxury. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695927-two-big-potential-bankruptcies-cast-shadow-over-solar-landscape-blinded-light/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Telefónica + +Hail, César! + +The fate of Telefónica under César Alierta mirrors Spain’s ups and downs + +Apr 2nd 2016 | Madrid | From the print edition + +Mr Alierta found his chair comfortable + +SIXTEEN years was surely too long for anyone to remain as boss of Spain’s largest telecoms company, Telefónica. During his spell in charge, César Alierta, 70, who at last agreed to hang up his receiver this week, created a giant. Telefónica expanded far and wide in Latin America and Europe, yet the benefits to shareholders were hard to see. + +A former stockbroker who was famously fond of cigars, Mr Alierta became one of the most powerful businessmen in Spain. Under his guidance, Telefónica’s debt-fuelled expansion mirrored Spain’s own overheated economic boom and subsequent slump. Early on he had shown caution: his tenure began with his cleaning up the mess that resulted from Telefónica’s dud investments during the dotcom bubble. Then, like bosses at other big Spanish firms such as Santander, a bank, Mr Alierta was tempted to splurge. Telefónica bought BellSouth’s Latin American mobile operations in 2004; acquired O2, a British telecoms firm, in 2006; and invested in China. By 2007 its market value exceeded €100 billion ($150 billion). + +Its heft did help Telefónica to weather Spain’s financial crisis, but its debt pile also grew. As Spain’s fortunes fell, Mr Alierta was forced into retreat, selling investments in Italy, the Czech Republic and Ireland. Last year Telefónica also agreed to sell O2. The firm decided to concentrate on core markets including Germany, where it bought E-plus, a big phone operator, and Brazil, the company’s largest market by sales. It also tried to bundle together packages of television, internet, mobile and fixed lines. That required heavy investment in ultra-fast fibre: Spain now has the most extensive fibre-to-home network in Europe. + +Under Mr Alierta’s guidance, Telefónica invested some €100 billion in all and its customers grew to 322m, from 68m in 2000. That sounds impressive, but it brought shareholders relatively little to cheer. Their returns, including reinvested dividends, amounted to minus 4.7% over the course of his tenure. Reasons exist to doubt his grand promise that dividends are assured for the next decade, as Telefónica will have to pay down debt in the next few years. One consolation is that other former telecoms monopolies, such as Telecom Italia, did even worse. Nimbler rivals such as Vodafone, however, delivered more solid returns. + +Spaniards see a generational shift under way in politics, as newcomer parties like Podemos and Ciudadanos show. Might some similar change be in the offing among corporate leaders? Spain’s largest firms are run by powerful executive chairmen, men in their late 60s who have been bosses for over a decade. In fact, Telefónica is not ushering in radical change. Its new boss is likely to be a well-liked and slightly younger insider, José María Álvarez-Pallete, who has a notable fondness for endurance running. Given his predecessor’s lengthy time at the company’s helm, that is not necessarily encouraging. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695924-fate-telef-nica-under-c-sar-alierta-mirrors-spains-ups-and-downs-hail-c-sar/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Malaysia Airlines + +Recovery phase + +Two years after flight MH370 vanished Malaysia’s flag carrier is still in trouble + +Apr 2nd 2016 | From the print edition + +Hoping for a miracle + +DISASTER struck Malaysia Airlines twice in 2014. In March, flight MH370 from Kuala Lumpur to Beijing, a Boeing 777 carrying 239 passengers and crew, disappeared an hour after take-off. Experts think it crashed in the southern Indian Ocean, though no one is sure why. Only a few fragments of debris have turned up, off Africa’s coast. Four months later Russian-backed militia in eastern Ukraine shot down MH17, another 777, killing all 298 people on board. Two years on, Malaysia’s struggling national carrier is still flying, but its financial health remains under scrutiny. + +Both crashes appeared to have been beyond the firm’s control but hurt business nonetheless. Customers deserted the airline. Chinese flyers feared it was jinxed: sales in China, a crucial market, fell by 60% immediately after the first crash. Shortly after the second disaster, in August 2014, Malaysia’s government renationalised the airline, rescuing it from collapse. + +In fact the airline was in a mess before the two tragedies. Malaysia last made a profit in 2010. In 2013 the firm lost $356m. As demand for air travel in the region grew, rivals such as Singapore Airlines and Air Asia, a low-cost carrier, hugely expanded capacity. Malaysia itself went on a shopping spree, buying 15 A330 wide-body jets and six A380 superjumbos from Airbus. But too many seats pulled down fares and profits across South-East Asia. + +Malaysia has all the attributes of a bloated national carrier—too many staff and costs that far outweigh leaner low-cost carriers. It has made some cuts. Last year it fired 6,000 of its 20,000 workers. And the government appointed a new boss with a reputation for slashing costs at underperforming airlines. Christoph Mueller, a former pilot, restored the fortunes of Aer Lingus, Ireland’s flag carrier, by cutting loss-making short-haul routes and focusing on cheap transatlantic flights. He also proved ruthless at Sabena, the now-defunct Belgian flag carrier. + +Mr Mueller plans to shrink the airline to become a regional carrier, giving up on making Kuala Lumpur a global hub. Unable to compete with the likes of Air Asia for the low-cost market or with Gulf airlines for long-haul customers, Malaysia will concentrate on middle-distance routes. In December it announced a tie-up with Emirates, letting it withdraw from most of the long-haul destinations it still serves in Europe. It plans to get rid of aircraft, including some of the superjumbos. + +Malaysia has tried this before. Previous bosses returned it to profitability in 2007, by slashing domestic routes and most of its international flights. Mr Mueller has other plans too. The airline will rebrand itself after improvements such as introducing on-board Wi-Fi, tarting up its lounges and providing tastier food. The aim is to change customers’ perceptions of the firm. That seems to have worked for Swiss International Air Lines, reborn from the bankrupt remains of the country’s national carrier, and more recently with Eurowings, the new name for Germanwings, which suffered a blow to its reputation after one of its pilots deliberately crashed his plane into a mountainside. + +The airline’s aim of making profits again by 2018 looks optimistic, however. The low cost of jet-fuel, priced in dollars, is a boon for airlines but the weakening of the Malaysian ringgit, the currency in which the firm earns most revenues, cancels out much of that benefit. China’s flagging economy is likely to mean slower growth in passenger numbers in the region. The South-East Asian market as a whole looks difficult. Low-cost airlines have expanded capacity by more than half over the past three years. As a result the biggest 16 airlines in the region barely broke even last year, according to CAPA, a consulting firm. National pride and public money mean Malaysia Airlines will stay in the air, but it will be a bumpy journey. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695933-two-years-after-flight-mh370-vanished-malaysias-flag-carrier-still-trouble-recovery-phase/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Shareholder value + +Analyse this + +The enduring power of the biggest idea in business + +Apr 2nd 2016 | From the print edition + + + +WHAT is the most influential contemporary book about the world economy? An obvious choice is “Capital in the Twenty-First Century”, a 696-page analysis of inequality by Thomas Piketty, a French economist. There is another candidate: “Valuation”, a 825-page manual on corporate finance and shareholder value. Some 700,000 copies of it encumber the bookshelves of MBA students, investors and chief executives around the globe. + +Inequality and shareholder value are linked in the minds of many folk, who blame investors and managers for stagnant wages and financial crises. Ruthless corporations are a big theme in America’s election campaign. The near-collapse of Valeant, a drugs firm, seems to illustrate a toxic business culture. Its shares have fallen by 73% this year. It is restating its accounts and is in negotiations with its lenders and under investigation by regulators. Valeant describes itself as “bringing value to our shareholders”. While there is no indication of fraudulent or illegal practice, the company could end up joining a pantheon of corporate fiascos that includes Enron (which pledged to “create significant value for our shareholders”), Lehman Brothers, (“maximising shareholder value”) and MCI WorldCom (“a proven record of shareholder value creation”). + +Yet the sixth edition of “Valuation”*, published last year, a quarter of a century after the first, is a reminder of why shareholder value is still the most powerful idea in business and why many criticisms thrown at it are unfair. The origins of the doctrine lie in the 1950s and 1960s, when Franco Modigliani and Merton Miller, two scholars, showed that a firm’s value is independent of its capital structure and dividend policy. That inspired a new framework for analysis, popularised in the 1980s by Joel Stern, a consultant, Alfred Rappaport, another scholar, and McKinsey & Co, a consultancy, among others. + +Company analysis was antediluvian until then. Models were scribbled on paper covered in correction fluid. Profits were cheered, without much regard to the book-cooking done, risks taken and capital used to achieve them. The worth of a firm was estimated by placing its profits or book value on a multiple, whose value was best decided after a three-Martini lunch. + +“Valuation” and a few books like it, offered new tools. Cashflow, not easy-to-manipulate accounting profit, mattered. An activity only made sense if capital employed by it made a decent return, judged by its cashflow relative to a hurdle rate (the risk-adjusted return its providers of capital expected). Two newish spreadsheet programs, Lotus 123 and Microsoft Excel, let analysts forecast firms’ long-term cashflows and gauge their present value today. + +This breathed fresh life into an old idea—that shareholders had the whip hand. Technically, shareholders do not own a company: the firm is a legal person and a share represents a bundle of entitlements to dividends and voting powers. But a doctrine of “shareholder primacy” had been outlined in 1919, when a Michigan court observed that “a business corporation is organised and carried on primarily for the profit of stockholders”. The new science of corporate finance revolutionised the pursuit of that goal. Managers realised that by working out where firms employed capital and using it more efficiently they could increase their value. Outsiders had a methodology with which to second-guess incompetent managers. + +These ideas lit up corporate America first. In the late 1980s and 1990s, profits relative to GDP were at historic lows and global competition intensified. Managers used the methodology of shareholder value to break up conglomerates and ditch weak business lines. The financial industry was deregulated, creating an army of number-crunchers to scrutinise firms. + +By the turn of the century, big European firms were on board. Germany’s system of cross-shareholdings between financial and industrial firms was unwound: investors could buy the same exposure and did not need companies tying up capital. The jewels of French industry were privatised and their bosses obliged to think of profitability as well as impressing politicians. + +Today shareholder value rules business. Abenomics, the plan to revive Japan’s economy, involves prodding firms to use capital better. Fosun, a private Chinese firm, devotes a page of its annual report to calculating the value it claims to have created. The only boardrooms that shareholder value has not reached are those of China’s state-run firms, whose party-appointed bosses look baffled if asked about return on capital and buzz for more tea. + +Value cremation + +Yet at this moment of ascendancy in the business world, shareholder value is under fierce attack beyond it, fuelled by a sense that Western economies are not delivering rising prosperity to most people. The criticism falls into two categories. The first is that shareholder value is a licence for bad conduct, including skimping on investment, exorbitant pay, high leverage, silly takeovers, accounting shenanigans and a craze for share buy-backs, which are running at $600 billion a year in America. + +These things happen, but none has much to do with shareholder value. A premise of “Valuation” is that there is no free lunch. A firm’s worth is based on its long-term operating performance, not financial engineering. It cannot boost its value much by manipulating its capital structure. Optical changes to accounting profits don’t matter; cashflow does (a lesson WorldCom and Enron ignored). Leverage boosts headline rates of return but, reciprocally, raises risks (as Lehman found). Buy-backs do not create value, just transfer it between shareholders. Takeovers make sense only if the value of synergies exceeds the premium paid (as Valeant discovered). Pay packages that reward boosts to earnings-per-share and short-term share-price pops are silly. + +Outbreaks of madness in markets tend to happen because people are breaking the rules of shareholder value, not enacting them. This is true of the internet bubble of 1999-2000, the leveraged buy-out boom of 2004-08 and the banking crash. That such fiascos occur is a failure of governance and human nature, not of an idea. + +The second criticism is weightier: that firms should be run for all stakeholders, not just shareholders. In a trite sense the goals of equity-holders and others are aligned. A firm that sufficiently annoys customers, counterparties and staff cannot stay in business. Some bosses, such as Paul Polman of Unilever, and Joe Kaeser at Siemens, say that pursuing social and financial objectives is consistent. But it is disingenuous to pretend conflicts do not arise. A firm with a loss-making factory cannot shut it without destroying jobs. + +The trouble is identifying a goal that could replace the pursuit of shareholder value. If firms had to promote employment they would be less productive and riskier borrowers, as China is discovering. The objective of maximising wealth is deeply embedded in the global savings system, with asset managers obliged to protect clients’ money. Asking firms to adopt objectives to solve inequality loads a giant problem on their shoulders. + +For these reasons shareholder value—properly defined—will remain the governing principle of firms. It is still drawing recruits. In August Larry Page, the co-founder and boss of Alphabet (Google’s parent), reorganised the firm, partly to “rigorously handle capital allocation” and make a “return above the benchmark”. But shareholder value is not the governing principle of societies. Firms operate within rules set by others. Consequences of stagnation could include higher taxes, tougher antitrust policing, more regulation and more rules to protect jobs. How firms respond is an issue for the next bestseller to tackle. + +*“Valuation: Measuring and Managing the Value of Companies”, by McKinsey & Company, Tim Koller, Marc Goedhart, David Wessels + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695940-enduring-power-biggest-idea-business-analyse/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Tycoonomics + +The rising number of emerging-market billionaires is a good thing + +Apr 2nd 2016 | From the print edition + + + +IN 1998 Peter Mandelson, a leading member of Britain’s then Labour government, said he was “intensely relaxed about people getting filthy rich as long as they pay their taxes.” Today Lord Mandelson is more uptight; he worries about the rising inequality and stagnating middle-class incomes brought about by globalisation. His volte-face is typical of the global elite. The head of the IMF, Christine Lagarde, says that rising inequality casts a “dark shadow” over the global economy. A recent OECD report warns that rising inequality will be a “major policy challenge” for all countries. + +In a new study, “Rich People, Poor Countries: The Rise of Emerging-Market Tycoons and their Mega Firms”, Caroline Freund of the Peterson Institute in Washington, DC, makes an important contribution to understanding this challenge. She draws a distinction between rich-world billionaires and those of the emerging economies, whose numbers have been rising at a faster rate. In 2004 the emerging world accounted for 20% of the 587 billionaires in Forbes magazine’s annual survey. By 2014 it accounted for 43% of the 1,645 billionaires on the list. In the rich world the share who were self-made, rather than heirs to a fortune, was fairly stable between 2001 and 2014, at about 60%. In the emerging world the self-made proportion rose from 56% to 79%. + +Being self-made is not automatically a virtue. Some self-made tycoons acquire their fortunes through cronyish connections. But Ms Freund argues that the fastest-growing group of emerging-world billionaires consists of what might be called “Schumpeterian” entrepreneurs—people building or managing big companies that have to fight for their lives in global markets. The rise of this type of tycoon, she says, can be a healthy consequence of structural transformation and rapid development. When economies expand quickly—as they did in America in the late 19th century, say—they develop big firms that produce concentrations of wealth but that also contribute to broad growth by pioneering productive techniques and creating jobs. Such economies lift up those at the bottom of the income scale as well as enriching those at the top. + +Ms Freund scrutinises the lists of billionaires, excludes those whose wealth was inherited and then classifies the self-made billionaires into four categories: those whose wealth came from government concessions and other forms of rent; those in finance or property; the founders of businesses that genuinely compete in the market; and highly paid executives at such Schumpeterian businesses. She treats only the last two categories as real entrepreneurs. In 2001 just 17% of all emerging-market billionaires made it into this classification; in 2014 roughly 35% did. + +Among the leading examples is Terry Gou of Taiwan, who founded Hon Hai, an electronics giant (also known as Foxconn), in 1974 with just $7,500. Its massive expansion on the mainland has made it China’s biggest exporter, with a workforce of nearly 1m. Dilip Shanghvi founded Sun Pharmaceutical Industries in 1983 with a $1,000 loan from his father. It is now India’s largest drugmaker, with 16,000 workers and a market value of $29 billion. Zhou Qunfei started out working on the family farm in Hunan and was then a factory worker in Guangdong before starting a firm that makes touchscreens. Ms Zhou is now the world’s richest self-made woman. Her company, Lens Technology, employs 60,000 and is worth close to $12 billion. The American dream of going from rags to riches appears more achievable in developing Asia than in America itself, which seems ever more in thrall to vested interests. + +The emergence of these goliaths is similar to the emergence of big companies in the United States and Europe in the late 19th and early 20th centuries, Japan in the 1950s and 1960s, and South Korea in the 1960s and 1970s. The comparison to America during the gilded age is particularly striking. Chinese tycoons such as Jack Ma of Alibaba and Robin Li of Baidu, two internet giants, are becoming fabulously wealthy by learning how to serve a huge new market in much the same way that Andrew Carnegie and John D. Rockefeller did with steel and oil. Tee Yih Jia Foods of Singapore has become a colossus of spring rolls by mechanising their production and improving marketing, much as H.J. Heinz did with sauces and pickles in 1890s Pittsburgh. + +Where’s the anti-billionaire backlash? + +There are significant regional variations in this happy picture. East Asia has the lion’s share of Schumpeterian billionaires, whereas Latin America still has a disproportionate share of inheritors, and South Asia and eastern Europe a continuing problem with cronyism. However, the anti-billionaire backlash that is such a marked feature of Western politics is, thus far, much less pronounced in the emerging world. This may be because emerging-market billionaires seem more dynamic: more than half of them are under 60 compared with less than a third in the rich world. But it is partly because ordinary people in the emerging world have been getting richer alongside the billionaires; in the rich world the masses have seen their incomes stagnate. + +You can pick holes in Ms Freund’s arguments. The line between Schumpeterian and crony firms can be hard to draw in China, where the government exercises huge influence behind the scenes. And if a recent slowdown in emerging economies worsens, it may show that some entrepreneurial stars built their empires on sand. But if anything, she errs on the side of caution. She excludes financiers, even though they can also be wealth-creators; and heirs, even though some—such as Ratan Tata of India, who increased the value of the Tata group enormously—are Schumpeterians. Although cronyism is far from extinct, the emerging world has witnessed a big increase in the number of true entrepreneurs. They are a symptom of economic dynamism, not a cause of rising inequality. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21695789-american-dream-going-rags-riches-appears-more-achievable-developing-asia/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +China’s M&A; boom: Money bags + +Buttonwood: Bucking the trend + +Global house prices: Hot in the city + +Clearing-houses: Double-crossed + +African bonds: Ante upped + +Myanmar’s economy: The Burma road + +Free exchange: Lean on me + + + + + +Articles Sections Next + +China’s M&A boom + +Money bags + +China’s global investment spree is fuelled by debt + +Apr 2nd 2016 | Shanghai | From the print edition + + + +“WE ARE on a wild ride,” Tom Mangas, the boss of Starwood, an American hotel group that owns the Westin and Sheraton brands, wrote to employees this week. He was referring to the bidding war over Starwood between Marriott, another American hotel operator, and a group led by Anbang, a Chinese insurer. Anbang this week raised its offer to $14 billion. But Mr Mangas could just as well have been talking about the wave of China-led mergers and acquisitions that is sweeping over the world economy. + + + +Chinese firms with little international experience and lots of debt have emerged as the biggest buyers of global assets. They have announced nearly $100 billion in cross-border M&A deals this year, already more than their $61 billion of foreign acquisitions last year (see chart). To be sure, announcing deals is not the same as closing them. Between losing out to other bidders and rejection by regulators, China’s investment tally could fall. Nevertheless, the trend is unmistakable. In recent years China has consistently accounted for less than a tenth of announced cross-border M&A deals; this year its share is nearly a third. + +For the world economy this investment boom is, in some respects, a welcome development. Global M&A is on track to fall by 25% in the first quarter of this year from a year earlier. Without China’s voracious appetite, the decline would be even more precipitous. The action has also been spread across a wide range of industries, from cosmetics to construction equipment and from film-making to fertilisers. China seems to have outgrown its fixation with commodities and energy. + +Politically the deals have also been relatively uncontroversial. According to Rhodium Group, a consultancy, there has been an increase in reviews by the Committee on Foreign Investment in the US (CFIUS), which examines takeovers in America for security threats, but it has been proportionally smaller than the increase in Chinese investments. + +Instead, a new concern is growing: that the surge in outbound investment is a sign of weakness in the Chinese economy. This view is easily exaggerated. The yuan’s gradual depreciation against the dollar over the past two years has indeed changed calculations, as has slower domestic growth. But rather than sparking a stampede to the exits, it is more accurate to say that these changes have alerted Chinese firms to the fact that they are still woefully underinvested abroad. + +China’s share of cross-border M&A has averaged roughly 6% over the past five years, despite the fact that it accounts for nearly 15% of global GDP. “China punches below its weight in outbound deals and has room to accelerate,” says Fred Hu of Primavera Capital, an investment firm that is part of the consortium bidding for Starwood. Chinese insurers such as Anbang are becoming more adventurous, but less than 2% of the industry’s assets are foreign. + +A senior banker working with Chinese firms says the prospect of a further depreciation of the yuan is at most “a nice add-on” when making deals. Strategic considerations—acquiring technology and brands that China lacks—are more important for buyers, both to bolster their position at home and to speed expansion abroad. When deals are actually completed, they will lead to substantial one-off outflows of capital. But if the investments are any good, they should generate a regular stream of inflows, in the form of profits from the companies concerned. + +A second category of concerns, about the financial structure of the deals, is more unsettling. Chinese buyers, by and large, are far more indebted than the firms they are acquiring. Of the deals announced since the start of 2015, the median debt-to-equity ratio of Chinese buyers has been 71%, compared with 44% for the foreign targets, according to The Economist’s analysis of S&P Global Market Intelligence data. Cash cushions are generally also much thinner for Chinese buyers: their liquid assets are roughly a quarter lower than their immediate liabilities. The forbearance of their creditors makes these heavy debts more bearable in China than they would be elsewhere. But the Chinese buyers are financially stretched, all the same. + +Where, then, are they getting the money for the deals? For many, the answer is yet more debt. Chinese banks see lending to Chinese firms abroad as a safe way of gaining more international exposure. The government has encouraged them to support foreign deals. As long as the firms to be acquired have strong cash flows, the banks are happy to lend against the targets’ balance-sheets, bringing debt to levels usually only seen in leveraged buy-outs. + +Foreign banks are also getting involved in some of the deals: HSBC, Credit Suisse, Rabobank and UniCredit are helping to arrange syndicated loans for ChemChina, which agreed to buy Syngenta, a Swiss seed and pesticide firm, for $43 billion. When the acquirers’ finances look shaky, bankers say they find solace in two things: that the deals themselves will generate returns and that the political pedigree of the buyers, especially that of state-owned companies, will protect them. “You have to trust that the acquirer has become too big to fail,” says an M&A adviser. + +For the buyers, there are two strong financial rationales for the deals, albeit ones that highlight distortions in the Chinese market. First, debt-funded buyouts can actually make their debt burdens more tolerable. Take the case of Zoomlion, a construction-equipment maker with 83 times more debt than it earns before interest, tax, depreciation and amortisation. It wants to buy Terex, an American rival with debt just 3.5 times larger than its earnings, for $3.4 billion. Even if the purchase consists entirely of borrowed cash, the combined entity would still have a debt-to-earnings multiple of roughly 18, a marked improvement for Zoomlion. + +Second, Chinese buyers know that one key financial metric works to their advantage: valuations in the domestic stockmarket are much higher than abroad. The median price-to-earnings ratio of Chinese buyers is 56, twice that of their targets. In effect, this means they can issue shares domestically and use the proceeds to buy what, from their perspective, are half-price assets abroad. This also gives them the firepower to outbid rivals in bidding wars. To foreign eyes, it might look like the Chinese are overpaying. But so long as their banks and shareholders are willing to stump up the cash, Chinese companies see a window of opportunity. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695915-chinas-global-investment-spree-fuelled-debt-money-bags/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Bucking the trend + +The dollar’s long rally seems to have halted + +Apr 2nd 2016 | From the print edition + + + +AT THE beginning of the year the dollar was on a tear. In trade-weighted terms, it had risen by almost 20% since the start of July 2014. With the Federal Reserve tightening interest rates for the first time since 2006, the greenback seemed destined to head higher. + +In fact, doubts were already emerging. In mid-December fund managers polled by Bank of America Merrill Lynch thought that being bullish about the dollar was the most overcrowded trade in the financial markets and that the currency was overvalued. + +The dollar continued to rise for the first three weeks of the year but then the tide turned: since January 20th, the currency has fallen by 3.8% in trade-weighted terms (see chart). The main reason may be a perceived shift in Fed policy; as the year began, investors were expecting three or four rate increases in 2016. The latest statement from the central bank suggests that only two rises are on the menu. + +The dollar’s ascent may have played a part in the Fed’s stance, since a stronger currency, by itself, represents a tightening of monetary conditions. The central bank has lowered its forecast for growth this year to 2.2%. Even that could be an overestimate: the Atlanta Federal Reserve’s GDPNow model, which tracks American growth, points to an annualised increase in output in the first quarter of just 0.6%. In a speech that took a cautious approach to further tightening, Janet Yellen, the Fed’s chairman, said this week that worries about global growth were another factor; similar concerns stopped the Fed from pushing up rates last September. Ms Yellen’s remarks drove the dollar down and pushed share prices higher. + +An exchange rate is the relative price of two currencies, so the dollar’s recent decline reflects more than just Fed policy. First, a pickup in commodity prices has allowed emerging-market currencies to rebound. Capital Economics, a research group, says its emerging-market exchange-rate index is at its highest since November. In some cases, currencies have been helped by tighter monetary policy: central banks in Colombia, Mexico and Peru have all pushed up rates. Another sign of confidence is a decline in the spread (the interest premium relative to Treasury bonds) paid by emerging-market debtors. + +Second, recent market reaction to the policy moves of other central banks has been rather counter-intuitive. Normally, you would expect monetary easing by a central bank to lead to a weaker currency. But recent policy shifts by the European Central Bank and the Bank of Japan have sent the euro and the yen higher, not lower. It is not clear why. Some think these market moves indicate that central-bank policy is less effective than it was in the aftermath of the 2008 crisis. Others believe that negative interest rates hurt bank profits, and are thus a poor policy instrument. + +This is a tricky area. Negative rates may well be designed to weaken the exchange rate or, at the very least, to stop a currency from strengthening. Other rich countries seem willing to turn a blind eye to a modest bit of depreciation. But if their own currencies appreciate too far, they will respond with monetary easing of their own. This fuels talk of “currency wars”. + +But if central-bank easing doesn’t even have the desired impact on the exchange rate, what next? One answer could be outright intervention: selling the domestic currency and buying foreign assets. The Swiss National Bank pursued such a policy from September 2011, capping the franc’s level against the euro, before suddenly abandoning it in January last year. + +Japan’s economy continues to struggle, more than three years after the launch of Abenomics; the latest figures show that industrial production fell by 6.2% in February. That suggests the Bank of Japan will be concerned about the yen’s strength. Mansoor Mohi-Uddin, a currency strategist at Royal Bank of Scotland, says that an appreciation of the yen beyond 110 to the dollar “will substantially increase the risk of the authorities intervening to counter the rise of the currency.” + +A change in the dollar trend may simply have shifted the problem. A rising greenback was bad news for emerging markets: in those with pegs to the dollar, the appreciating currency weakened their competitive position in export markets; in those with floating currencies, debt-servicing costs jumped for companies that had borrowed in dollars. A weaker dollar makes life more difficult for advanced economies, which are counting on exports to revive their moribund economies (see Free exchange). They may spend the rest of 2016 figuring out what to do about it. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695914-dollars-long-rally-seems-have-halted-bucking-trend/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Global house prices + +Hot in the city + +Valuations in globalised cities are rising much faster than in their hinterlands + +Apr 2nd 2016 | New York | From the print edition + + + +GLOBALISATION has created a handful of metropolises that attract people, capital and ideas from all over the world, almost irrespective of how their national economy is doing. House prices in such places, unsurprisingly, outpace the national average. In our latest round-up of global housing, we find that prices have risen in 20 of the 26 countries we track over the past year, at an (unweighted) average pace of 5.1% after adjusting for inflation. Prices in pre-eminent cities in these countries, however, have risen by 8.3% on average. + +In a survey conducted last year, fewer than one in nine residents of Amsterdam, Berlin, London, Paris, Stockholm and Zurich thought that it was easy to find reasonably-priced housing. In these cities, house prices have risen at an average pace of 6.5% a year over the past three years (again, unweighted), compared with a national average rise of just 3.2%. The value of homes in four cities on the Pacific—San Francisco, Vancouver, Sydney and Shanghai—has increased by 12% a year over the past three years, twice the average national pace. + +The supply of housing is rather inelastic, so in the short term house-price inflation is driven more by demand factors, such as the number of households, disposable income, interest rates and the yield available on other assets. In recent years all of these have helped to push house prices steadily upwards, especially in big cities. + + + +In the conurbations in question, the number of households is rising fast as hordes of ambitious millennials pour in. Two in five of Zurich’s residents were born outside Switzerland; 44% are between the ages of 20 and 44. The boom towns also have tight labour markets and therefore relatively high income growth: the unemployment rate in San Francisco and Stockholm is around a percentage-point lower than the national averages. Some are havens for second homes and money seeking safety: foreigners snap up half of London’s princeliest dwellings, according to Savills, an estate agent. Finally, they provide a decent return: net yields in Vancouver were 11% in 2015, according to MSCI, a data provider, three percentage points above the average for Canadian housing. + +Whenever the supply of a good is limited, there is potential for exuberance. San Francisco’s property market is intertwined with the technology sector: since 2008 there has been a 93% correlation between the monthly movements in the NASDAQ and house-price inflation in its metropolitan area. Since bottoming out in early 2012, prices in Silicon Valley have risen by 73%, compared with 31% in America as a whole. + + + +Compare global housing data over time with our interactive house-price tool + +To determine whether homes are fairly valued The Economist looks at the relationship between prices and disposable income (an indicator of affordability) and between prices and rents (a substitute for buying a home). If rising prices move these ratios above their long-run averages, then either incomes or rents are likely to rise, or house prices to fall. + +Across America house prices, after falling by 25% from their peak between 2007 and 2012, are now at fair value compared with rents and incomes. In San Francisco, too, they are at fair value when compared with rents, but 45% overvalued relative to incomes. Thanks largely to their big cities, housing appears to be more than 40% overvalued in Australia, Britain and Canada, according to the average of our two measures. Between 2002 and 2012 the typical London home sold for seven times the city’s average annual salary. That figure has since risen to 12 times. + +As property developers from Las Vegas to Limerick will attest, when supply does eventually respond to soaring demand, property prices fall. Restrictive planning laws curb new construction in the area around San Francisco Bay; the narrow peninsula that San Francisco itself occupies compounds the problem. London suffers from an even more severe planning regime. Yet housing starts are at a nine-year high in San Francisco. In London, too, builders are finding a way: construction began on 24,000 new homes in the capital in 2015, the highest rate for ten years. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695912-valuations-globalised-cities-are-rising-much-faster-their/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Clearing-houses + +Double-crossed + +Bigger may not be better when it comes to clearing-houses + +Apr 2nd 2016 | From the print edition + + + +THE bookmaker on Aldgate High Street, on the fringes of London’s financial district, attracts its fair share of risk-takers. But across the road, at the offices of LCH.Clearnet, part of the London Stock Exchange Group (LSE), the really big bets are handled. It and other clearing-houses now occupy a central position in high finance. They ensure that trillions of dollars are paid out on derivatives contracts each day. A decade of dealmaking has created five big beasts of clearing: LSE, Deutsche Börse, CME Group, ICE and HKEX. A planned merger between LSE and the Germans would reduce that to four. + +LSE and Deutsche Börse take their names from their respective bourses. But they now make more money from their clearing-houses, LCH.Clearnet and Eurex Clearing. That is because the clearing of derivatives has become central to the modern financial system. + +Imagine two banks want to hedge against interest-rate movements, but in opposite directions. They sign a contract that will lead to a payment from one to the other if rates rise, and the reverse if they fall. The potential loss or gain is theoretically unlimited, since there is no ceiling (or floor, as the world is fast learning) to rates. To make sure the other party is able to pay up, the two will often work through a middleman—the clearing-house. For a fee, the clearing-house signs two offsetting but technically separate derivatives contracts with the two parties. As long as both know that it is good for the money, they know their bets are solid. + +But the clearing-house is now left with the risk that the losing party fails to stump up. So it asks the two parties to post collateral, or margin, which it can keep if one of them defaults. That way the clearing-house only suffers if the defaulting party owes more than the margin it has posted. + +In theory, this system makes bank failures less contagious and the financial system more resilient. In 2009 the G20, a club of big economies, decided that simple derivatives contracts should all be put through clearing-houses, rather than settled directly between the two parties. As a result, clearing-houses, also known as central counterparties, now handle trades with a notional worth of hundreds of trillions of dollars. + +The more margin the clearing-houses take, the safer they are. The required margin is calculated using sophisticated actuarial models, and is heavily regulated. The riskier a trade, naturally, the more margin is needed. LCH.Clearnet and Eurex Clearing hold some €150 billion ($170 billion) in collateral between them (see chart). Deutsche Börse notes that its large margin pool helps to ensure the “safety, resiliency and transparency of global financial markets”. But having to put up more collateral is expensive for customers. Clearing-houses, which compete for customers, therefore have an incentive not to take too much. + +Banks don’t just bet on interest rates, of course. They may also buy derivatives tied to bond yields or currency movements, say. Some of those prices move in relation to one another in predictable ways. Gains on an interest-rate future may offset losses on a bond-price future, for example. Clearing-houses take such correlations into account when setting the overall amount of collateral they demand from their customers, a technique called “cross-margining” or “portfolio margining”. CME Group boasts that its portfolio-margining service can cut margin requirements by 54-80%. LCH.Clearnet’s “Spider” and Eurex’s “Prisma” services do something similar. + +All of which gives clearing-houses an incentive to merge. Some clients use LCH.Clearnet and Eurex Clearing to make correlated wagers. If the two entities combined, they could use cross-margining to reduce the amount of collateral such customers needed, gaining an advantage over the competition. (The pair say that initially, at least, they would limit such offsetting to perfectly matching derivatives.) + +There is a downside, though. The exchange industry is already highly concentrated. Regardless of who gobbles up LSE (ICE may yet enter the fray), the five big groups will soon become four. As they consolidate, the amount of collateral in the system is likely to be reduced. + +That could prove risky. Correlations between different asset classes sometimes break down during crises. Such unpredictable movements caused the clearing-house of the Hong Kong Futures Exchange to blow up after the stockmarket crash of 1987, forcing the city’s capital markets to close. Such events suggest that models that rely on correlations to trim margin requirements must be ultraconservative. + +There is no evidence that any big clearing-house holds too little collateral. Their models are designed to withstand the simultaneous failure of their two biggest customers. They can also tap big default funds if things go wrong. Regulators are untroubled. But it is a worry, nonetheless, that the logic of competition seems to be ever-bigger clearing-houses with ever less collateral. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695928-bigger-may-not-be-better-when-it-comes-clearing-houses-double-crossed/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +African bonds + +Ante upped + +Africa discovers the downside of foreign borrowing + +Apr 2nd 2016 | KAMPALA | From the print edition + + + +TEN years ago African bonds were a rare sight. Of all the countries south of the Sahara, only South Africa had ever sold a dollar-denominated bond to foreign investors. Since then, 16 more have. Excluding South Africa, African countries issued $6.75 billion of dollar debt last year, just short of the record $7 billion sold in 2014. But depreciating currencies, low commodity prices and a rise in interest rates in America are taking the shine off. + +Africa’s bond bonanza suited both investors and governments. With government bonds in their own countries offering measly returns, rich-country pension funds looked to Africa for higher yields. And by issuing debt in dollars, African governments could avoid the double-digit rates they pay to borrow at home. For a while, optimism reigned. Ghana’s debut dollar bond was four times oversubscribed. Zambia, buoyed by a copper boom, did even better: its ten-year bond, issued in 2012, was 24 times oversubscribed, and sold at a yield of 5.6%—lower than the equivalent Spanish bond at the time. + +Governments were able to issue bonds thanks partly to debt cancellation, which brought down external debt in the region from a peak of 76% of GDP in 1994 to 25% by 2008. Past debts were often owed to official creditors, such as the World Bank, and came with strings attached. Bond markets are less fussy, another reason governments like them. Of 30 African countries that benefited from debt relief, ten have since issued dollar bonds. Ghana, the first to do so, issued its debut bond in 2007, just a year after most of its debts were cancelled. + +Africa suddenly seems less creditworthy, however. Regional growth slowed to 3.5% last year, down from 5% the year before. Cheaper commodities have hit government revenue. And the prospect of further rate increases in America is forcing emerging-market governments to pay a higher premium to attract investors. Ghana sold a 15-year bond at a yield of 10.75% in October; Zambia, Angola and Cameroon have also paid more than 9% on new issues. Continuing to borrow in dollars is a mistake, say some—or “madness”, in the words of Tidjane Thiam, a former government minister in Ivory Coast who now heads Credit Suisse, a bank. + + + +It is the countries with collapsing currencies that look the most foolhardy. The Zambian kwacha lost 42% of its value against the dollar last year, almost doubling the cost of servicing its debt. Ghana’s debut on the bond market was accompanied by an increase in current spending, including a rise for civil servants; its debt has risen above 70% of GDP after three years of double-digit deficits. Ghana turned to the IMF a year ago, and Zambia looks likely to follow suit. Elsewhere bond issues have provoked political rows: in Kenya, opposition leaders claim some of the money raised has been stolen. + +The problems are not universal. Some countries, such as Ethiopia, continue to grow strongly. The median debt-to-GDP level in the region, though rising, is only 42%. And the structure of bond repayments affords some breathing-space. Their average maturity is 11 years, so until the 2020s most countries need worry only about interest, which is fixed. The annual cost of servicing existing bonds will typically remain below 1% of GDP. “There won’t be a huge African debt crisis tomorrow,” says Amadou Sy of the Brookings Institution, a think-tank, “but now is the time for governments to get their act together.” + +One thing they could do is issue bonds in local currency, rather than dollars, and so eliminate the risk of fluctuating exchange rates. But foreign investors are wary of taking on that risk themselves. Most local-currency bonds are issued by just a handful of countries, distinguished by their size (Nigeria) or market development (Kenya, Ghana). Investors worry about small markets freezing up, says Stuart Culverhouse of Exotix, a brokerage that specialises in frontier markets. + +Countries can build up domestic institutional investors (at present, banks buy most local bonds). Nigeria, for instance, has worked hard to reform its pension system, and pension-fund assets have grown at a rate of 25-30% over the past five years. Even so, yields on dollar debt are still much lower than domestic rates: Ghana paid 24% on a local-currency bond in November. With tax revenues falling, African governments will need to borrow from somewhere. Dollar debt will become dearer, but it won’t disappear. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695939-africa-discovers-downside-foreign-borrowing-ante-upped/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Myanmar’s economy + +The Burma road + +A long and painful journey awaits Myanmar’s new government + +Apr 2nd 2016 | YANGON | From the print edition + +Ripe for investment + +SPEND a day in Yangon, shuttling among new high-rises and bars before retreating to your boutique hotel, and you can almost believe that after decades of isolation, Myanmar is squarely on the road to prosperity. Spend more than a few days, however, and the cracks start showing: intermittent power cuts, ancient sewage systems, insufficient housing for an influx of migrants from the countryside. + +The situation is worse in rural Myanmar, where much of the population lives not just in extreme poverty, but also mired in debt. Bad roads make it costly to get goods to market and impede investment. Around three-quarters of the country’s children live in homes that lack electricity. Myanmar’s voters hope their first freely elected government since the 1960s, which took office this week, will change things for the better. + +The task ahead is daunting: within South-East Asia, only Cambodia has a lower GDP per person. Its infrastructure (both physical and financial) is somewhere between crumbling and non-existent; its laws are archaic and, after decades of isolation and underinvestment in education, its skills base is woeful. Government revenue is another problem: corporate and individual tax rates are high, but few people pay. The incoming government of Aung San Suu Kyi’s National League for Democracy (NLD) will inherit high inflation, sizeable budget and current-account deficits, a volatile exchange rate and institutions both ossified and hollow after decades of corruption, stagnation and top-down rule. + +Still, potential abounds. Myanmar has a young and cheap workforce, a long coastline, abundant agricultural land and an ideal location, wedged between the massive markets of China, India and South-East Asia. Expatriate Burmese are returning in droves, bringing enthusiasm and professional expertise with them. + +Meanwhile, the baby steps taken under the outgoing government of Thein Sein have become a proper toddle. Preliminary figures show that GDP grew by around 8.3% in 2015; the Asian Development Bank forecasts much the same this year. Yangon’s new stock exchange saw its first listing on March 25th; as many as ten other companies may list this year. Foreign investment, particularly in telecoms and energy, is flowing in. Thanks to Miss Suu Kyi’s election victory, Myanmar has the world’s goodwill. + + + +Myanmar in graphics: An unfinished peace + +Miss Suu Kyi’s government says that agriculture will rank among its top priorities, which makes sense: directly or indirectly the sector employs around 70% of the labour force. Before a military junta seized control of Myanmar in 1962 it was the world’s leading rice exporter—a title many believe it could reclaim. But most farmers grow low-value crops without decent fertiliser or seeds. Bad infrastructure and Byzantine internal trade rules keep the domestic market fragmented and productivity low: in 2012 average annual income from agriculture in Myanmar was $194 per worker, compared with $507 in Bangladesh and $706 in Thailand. + +In the near term, making it easier for farmers to get affordable credit would help. The main (and for decades, the only) source of rural credit is the state-run Myanmar Agricultural Development Bank, which provides only tiny loans. This sends farmers into the arms of informal moneylenders, who charge as much as 10% a month, fuelling a cycle of debt that often ends with farmers losing their land. + +Myanmar’s new government will also have to tackle land rights: confusing and poorly enforced land-use laws impede foreign investment and leave rural farmers vulnerable to confiscation. The NLD’s election manifesto promises land reform, but given that it will require the new government to confront the still-powerful army, that is easier promised than delivered. + +That hints at the first of two huge questions hanging over Myanmar’s economic reform: will the army and the NLD, inveterate foes until recently, be able to work together? And after 50 years of military rule, will the creaking bureaucracy be able to adapt and at least try to meet the citizenry’s high expectations? As one foreign investor in agriculture notes, “The ministers may understand what needs to be done. But there are so many layers below of people who have been living differently for so long that [change] will take a long time.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695944-long-and-painful-journey-awaits-myanmars-new-government-burma-road/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Lean on me + +Europe’s weak economic recovery is worryingly dependent on exports + +Apr 2nd 2016 | From the print edition + + + +EUROPE is hardly bursting with optimism. Threats of different kinds, from coping with refugees to the prospect of “Brexit”, weigh on continental minds. For the first time in years, however, the euro zone’s economy is not foremost among the worries. It grew in 2015, for a second consecutive year; unemployment rates around the periphery are falling; and “Grexit” has again been averted. Yet some caution is in order. The euro-zone economy remains heavily dependent on exports for its growth. That is both an indicator of the incomplete nature of Europe’s recovery and a dangerous vulnerability. + +Europe’s economic crisis was a stew with many ingredients, from spendthrift governments to inadequate safeguards in the banking system. The stock in which it all simmered, however, consisted of big imbalances in trade and capital flows. Economic integration encouraged high-saving households in slow-growing northern economies to ship their money to the periphery, where potential returns were higher. The flipside of that lending was a parallel imbalance in trade, as peripheral economies consumed more goods and services than they could produce themselves. On the eve of the global financial crisis, Germany was running a trade surplus of 2% of euro-area GDP, while Spain was running a deficit of 1% of euro-area GDP. + +Such imbalances are not inherently bad: it makes sense for savings-rich countries to fund investment in poorer ones. Such investment, if sensibly used, should boost growth in the long run, making it easier to repay the debts. But in the euro area too much of the borrowed money paid for consumption or investment in bubbly property. When northern Europeans began pulling money out in the aftermath of the global financial crisis, the periphery had to make an abrupt adjustment. Jobs that had relied on construction and booming domestic consumption evaporated. Investment collapsed amid financial panic and the wobbling of the euro-area banking system. Government spending also faced a squeeze, thanks to pressure from bond markets and austerity-minded politicians in other parts of the euro area. The best hope for peripheral economies was exports, to provide jobs for the jobless and to earn money to repay lenders. + +Outside currency unions, rebalancing toward exports is made easier by exchange-rate movements: capital-flow reversals lead to depreciations that make exports cheaper in foreign markets. Yet within the euro area, depreciation was not an option, and no peripheral economy was willing to risk the financial chaos that would have resulted from dropping out of the single currency. Even so, rebalancing could have been made easier if northern Europe, and especially Germany, had shared in the adjustment. + +Faster growth in wages might have boosted German consumption and investment while limiting how much wages in peripheral economies needed to fall to make export industries there more competitive. Yet German labour unions asked for only modest pay rises, despite low unemployment. By the same token, had the periphery been able to export more to the core, it would not have needed to slash imports so viciously. But from 2011 to 2015, German imports grew only slightly faster than those of the rest of the euro area, by 10% compared with 7%. Meanwhile, German exports rose faster still, by 17%. + +In other words, stronger northern countries did not pick up much of the slack. Poor policy choices contributed to the feebleness of German domestic demand. In 2012 and 2013 German officials lobbied against looser monetary policy; while other big central banks launched asset-purchase programmes, the European Central Bank (ECB) dithered. The German government joined the continent’s fiscal austerity drive, closing the country’s budget gap even as Germany briefly sank back into recession. Instead, Germany relied on exports as the source of growth. + +The rebalancing that has occurred within the euro area is therefore of an odd sort. The periphery has indeed leaned heavily on exports since the onset of the crisis—albeit more to the rest of the world than to other parts of the euro zone. That is because consumption has only grown relatively modestly, and investment scarcely at all, in Germany and the rest of the core. Instead, core and periphery alike have relied on international demand for their exports (see chart). Between 2011 and 2015 the euro area’s trade surplus rose from just 0.1% of euro-zone GDP to 3.7%. Even last year, as emerging economies slowed and as Germany enjoyed its lowest unemployment rate in decades, German net exports contributed about as much to the rise in euro-area GDP as German household spending did. + +When you’re not strong + +It may seem churlish to moan about how the beleaguered euro zone found its way, at last, back to growth. But the dependence on foreign demand carries risks. It places a dangerous drag on recoveries elsewhere. America’s trade deficit grew in 2015 despite a spectacular fall in its imports of petroleum; trade subtracted 0.6 percentage points from American GDP growth last year. And Europe’s addiction to exports leaves it vulnerable to any deceleration in global growth. Were China’s economy to slow more sharply, or America’s to return to recession, Europe, too, would see growth wane. + +Most importantly, exports’ starring role in European growth reveals the pitiful weakness of other elements of the euro zone’s economy. Take away the growth, of nearly a percentage point, attributable to trade, and Europe’s nominal GDP rose by just 2% last year. The ECB’s frantic easing has been sufficient to push down the euro, and thus to boost exports, but not enough to perk up wages or inflation. It is no wonder, then, that consumption is not pulling its weight. Government spending and investment could boost domestic demand directly, but governments in the euro zone remain committed to a course of austerity, despite extraordinarily low government-bond yields. The euro area’s weak and distorted recovery is a danger. It is not too late for the fiscal and monetary boost needed to get a real boom going. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21695913-europes-weak-economic-recovery-worryingly-dependent-exports-lean-me/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Supersonic air travel: Baby boomers + +Preventing an extinction: Not an ex-parrot + +Drug supplies: Track marks + +Coffee and chocolate: A new brew + +Mostafa Tolba: Green giant + + + + + +Articles Sections Next + +Supersonic air travel + +Baby boomers + +Quieting the sonic boom could help bring back supersonic flight + +Apr 2nd 2016 | From the print edition + + + +APART from a gentle nudge in the back as the pilots opened the throttles of its four Rolls-Royce Olympus jet engines, passengers had little sensation that Concorde was accelerating through the sound barrier. Not so for those on the ground. A sonic boom trailing behind the aircraft would rattle windows and dislodge roof tiles in Devon and Cornwall, two western British counties under the aircraft’s flight path from London to New York, a journey it could complete in just over three hours. + +Supersonic passenger flights came to an end in 2003 after a downturn in air travel and a fatal crash in Paris three years earlier. But Concorde, although a technological marvel for its time, was never a commercial success: the 14 aircraft that saw service were heavily subsidised by British and French taxpayers; they had limited range and guzzled fuel flying subsonically, which they were largely forced to do over land because of their sonic booms. Yet the idea of a Concorde successor has never quite gone away. If a supersonic airliner were to fly again, however, such a noisy footprint would have to be toned down. + +Now a group of engineers at NASA, America’s aeronautics agency, think they have found a way to do that. Lockheed Martin, an American aerospace firm, has been commissioned by NASA to carry out a $20m design of a small “low-boom” experimental supersonic aircraft (illustrated above). If all goes well, it will be test-flown in 2019 and then begin a series of trials to establish if the sudden and intrusive bang of a supersonic jet passing overhead can be turned into a sound that resembles a soft thump in the distance. + +Punching air + +Concorde’s supersonic boom, and for that matter those from jet fighters and the Space Shuttle, was caused not by one shock wave but the interaction of a series of shock waves radiating from various parts of an aircraft as it flies faster than the speed of sound, which is around 1,240kph (770mph, or Mach 1) at sea level. (These multiple shock waves leaving a supersonic jet fighter can be seen in a schlieren image (below), a photographic method which captures variations in the density of a liquid or gas.) + + + +Below Mach 1 the molecules of air in front of an aircraft are pushed out of the way, much as a boat travelling through water creates a bow and stern wave. Once an aircraft accelerates beyond the speed of sound, however, the air molecules simply can’t get out of the way fast enough but pile up at certain points on the aircraft. That creates an instantaneous change in pressure, resulting in a shock wave that contains a huge amount of sound energy. + +The first shock wave occurs at the aircraft’s nose and the others at places such as the leading edge of the wings and the engine inlets. At the rear of the aircraft, a “recompression shock” is formed when the rapid change in air pressure switches back to normal atmospheric levels. As they radiate away, the waves tend to coalesce, forming two main shock waves. This is why a supersonic jet passing overhead is often heard as a distinctive double boom. + +If plotted onto a graph, the two peaks in pressure from a sonic boom resemble an “N” shape in time. The idea at NASA is that by tweaking the design of a supersonic jet in various ways it should be possible to smooth out the N-wave of a sonic boom so that it resembles a softer “U” shape. + +“We are not shooting completely in the dark,” says Peter Coen, head of commercial supersonic technology at NASA’s Langley Research Centre in Hampton, Virginia. In an earlier trial the agency used a modified F-5 fighter which had been fitted with an extended nose shaped like a pelican’s, to help reduce the noise of a sonic boom. Tests have also been carried out using sonic-boom simulators to see what sorts of sounds people find less intrusive. + +The new design is for a single-seat, single-engine jet. Its most obvious feature is a long and slender triangular nose, which is supposed to modify the shape of the shock wave at the front of the aircraft and help disperse it. Other design features include an engine intake sculpted into the upper wing to reduce the intensity of the shock wave that forms there. To quieten things further, the aircraft would also fly a bit slower than Concorde, which had a cruising speed of Mach 2. + +To measure the sudden noise of a sonic boom, NASA uses a scale called perceived decibel level, or PLdB. Mr Coen says the experimental low-boom aircraft should produce a sonic boom with a noise level below 70 PLdB, compared with about 100 PLdB for Concorde. The result, he adds, will be a broader, softer sound that people on the ground should find tolerable, if indeed they notice it at all amid the cacophony of modern living. The proof will come in how people react to the noise during the aircraft’s test flights. + +If the aircraft’s quieter boom does prove to be acceptable, then its sound “signature” could become a certification standard that any future supersonic passenger aircraft would have to meet. But is there a realistic possibility that supersonic air travel could ever return? + +Mr Coen thinks it will, at first with small, supersonic business jets. A number of groups have plans for such aircraft at various stages of development. Among them is Aerion, a company based in Nevada, which is developing a Mach 1.5 executive jet called the AS2. Airbus, a giant European aircraft-maker, has been lending engineers to assist Aerion. The plan is to have a prototype ready for test flights in 2019. + +A supersonic airliner with 100 or more seats would be commercially more risky. And yet, technology moves on. Reducing the sound of a sonic boom is made possible with computational fluid dynamics, which relies on powerful computer systems. Concorde was born in an age of slide rules. New ways of making aircraft, especially with lightweight, carbon-fibre composites, have also been developed. + +Ultimately, whatever the technological advances, there has to be a big enough market. With some passengers now seemingly prepared to pay handsomely for super-luxury first-class and even small apartments on long-haul flights, getting to the other side of the world in just six hours might be a tempting proposition for some. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21695859-quieting-sonic-boom-could-help-bring-back-supersonic-flight-baby-boomers/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Preventing an extinction + +Not an ex-parrot + +A bizarre bird will have all its surviving members’ genomes sequenced + +Apr 2nd 2016 | HAMILTON, NEW ZEALAND | From the print edition + +Who’s a pretty Polly? + +ONE of the problems suffered by a species on the brink of extinction is low genetic diversity. Initially this is caused by lack of numbers, but then it is exacerbated by the inbreeding which inevitably results. Inbreeding brings with it infertility and susceptibility to disease. Hence concern for the kakapo, a nocturnal parrot that lives in New Zealand. Like many other island-dwelling birds, it has become flightless. It is also, at up to 4kg, the world’s heaviest parrot. Both of these things make it an attractive target for predatory mammals, which thankfully were absent for most of the 80m years during which it and its ancestors have inhabited the archipelago. + +The kakapo’s downfall began with New Zealand’s first wave of human colonisation, some 700 years ago, by Polynesians. These arrivals hunted it, and also brought rats with them, which ate nestling chicks. The second, European wave of immigrants brought cats and stoats to add to the birds’ woes. Humans also destroyed much of their habitat to make way for crops. Conservation efforts are not assisted by the birds’ reproductive habits. They feed their chicks on the fruit of the rimu, a tree that produces its nutrient-rich morsels only every two or three years. These trees all fruit simultaneously during what are known as mast years. This means the kakapo can breed only during mast years. + +With all these strikes against them it is little surprise that by the early 1970s the kakapo was thought to be extinct. But then two remnant groups were found in the south of the country. These were relocated and now live on three small, predator-free islands. After a troubled start, which saw the population hit a low of 51, this recovery programme has raised it to 123 adults. + +That is still a pretty parlous state of affairs, though. So the bird’s guardians at the Kakapo Recovery Programme, run by New Zealand’s Department of Conservation, have come up with a plan they hope will put the parrot on a more secure footing, by reducing, as far as possible, the risks inbreeding brings. + +According to Andrew Digby, the programme’s scientist, about half the eggs laid by female kakapo are unviable. One reason for this is a high rate of sperm abnormality, meaning many males that mate never produce offspring. The recovery team recently announced a plan to deal with this, called Kakapo 125 (then the number of adults alive; two have subsequently died). Kakapo 125 is a genome-sequencing project organised by Bruce Robertson of Otago University. Unlike other such species-specific genome projects, this one will not look merely at the DNA of a few representative individuals. Instead, it will sequence the genomes of every living kakapo—and also, if funds allow, of museum specimens too. + +Isles of the blessed + +Kakapo 125’s goal is to identify the genetic bases for infertility and disease. The kakapo are probably the world’s most intensively managed species. (Conservationists even sleep near their nests so they can keep eggs warm if the females wander off for too long, triggering an alarm in the process.) Hence there is a wealth of information about each individual’s health and fertility with which to correlate and interpret the genetic information. The results should help decide which male-female pairings will produce chicks with a genetic heritage that makes them as disease-resistant and fertile as possible. + +Controlling who mates with whom would be a simple matter if the birds could be bred in captivity, but captive kakapo fail to thrive. Instead, that must somehow be done in the wild. + +Kakapo mating is theatrical. Uniquely for parrots, they are lek-breeders. This means that the males advertise their eligibility in competitive displays for choosy females. Males scrape bowl-shaped depressions in the ground on a hilltop. Over subsequent nights they sit in or near their bowls, inflate specialised air sacs, and emit deep booms. Females, attracted by the serenades, approach the bowls along tracks the males have prepared by clearing and trimming the vegetation. An interested female may stop and mate with a male. An uninterested one will move on to appraise another suitor. + +The recovery team already intervenes in this process. Each adult kakapo wears sensors that transmit information about its behaviour to members of the team. If these sensors show that a female has mated with a suboptimal male, she can, over the course of the next few days, be inseminated artificially with sperm from a more advantageous partner. (The resulting competition between sperm inside the female’s reproductive tract is usually won by those from the last mating. This phenomenon, quite common in birds, is known as last-male sperm precedence.) The recovery team do this using information from mating records and simple genetic markers. They also do it if a female has mated only once, because multiple matings boost the chance of fertile eggs. + +This year is a rimu mast year, and a particularly abundant one. The breeding season reflects that abundance. At least 120 eggs have been laid. How many will hatch remains to be seen. But by the time the next such season comes around the genetic information garnered by Kakapo 125 will be available. Not a moment too soon. The oldest birds—those which have survived from the collecting expeditions of the 1970s—are starting to die. Such old-timers are likely to have the greatest diversity of all, and the most valuable genetic treasure to pass on to future generations. Knowing these birds’ genomes will permit the recovery team to take maximum advantage of whatever time these creatures have left. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21695858-bizarre-bird-will-have-all-its-surviving-members-genomes-sequenced-not/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Drug supplies + +Track marks + +Chemists find previously unknown sources of cocaine + +Apr 2nd 2016 | From the print edition + +We know where that came from + +MOST of the world’s supply of cocaine comes from just three South American countries: Colombia, Peru and Bolivia. Much of it is headed for the United States and Europe. Law-enforcement officials from America patrol international waters in the Caribbean and eastern Pacific, hoping to seize cocaine shipments before they reach their intended destinations. When they succeed in nabbing any smugglers, contraband samples are sent to chemists to help determine the source. + +The drug’s origins can be identified from telltale “fingerprints” formed by the chemical composition of the coca plant, from which cocaine is derived. These compounds vary naturally. The amount of nitrogen-containing compounds, known as alkaloids, differs between coca cultivars. And ratios of stable isotopes (non-radioactive atoms of the same element that contain different numbers of neutrons) are indicative of different regions. Typically, ratios of carbon-13 to carbon-12, which change according to temperature and altitude, and ratios of nitrogen-15 to nitrogen-14, which vary based on precipitation and soil conditions, are examined. + +Previously, these data could identify from which of five regions a particular batch of cocaine was produced. But no longer. Over the past 15 years or so coca cultivation has expanded to at least 19 regions, making accurate geographic identification more difficult. Now a team of scientists led by Jennifer Mallette and Paul Beyer of the US Drug Enforcement Administration and their colleagues have come up with a more comprehensive chemical analysis to fill in the gaps. Their results, published in Scientific Reports, added two more isotope ratios: hydrogen-2 to hydrogen-1, and oxygen-18 to oxygen-16. Plants incorporate different ratios of these isotopes based upon ambient conditions such as precipitation and humidity, thus providing yet another clue to their geographic origin. + +The researchers applied their enhanced technique to build a database of chemical fingerprints of cocaine samples from 572 specimens of coca leaves taken from all 19 known cocaine-growing regions. The cocaine was produced in the laboratory using the same processing methods employed by criminal enterprises. + +The final database, combined with statistical models, allowed the team to determine that nearly two-thirds of seized shipments originated in south-west Colombia. But then they were sent another sample that matched nothing in the database. The isotope analysis suggested that this cocaine originated from an area north of the Chapare Valley in Bolivia, a region not previously suspected of coca cultivation. Subsequent intelligence gained from a pilot involved in trafficking the shipment showed the team had fingered the right location, thereby confirming the value of their new drug-hunting technique. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21695861-chemists-find-previously-unknown-sources-cocaine-track-marks/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Coffee and chocolate + +A new brew + +The genetic diversity of yeasts could produce novel flavours + +Apr 2nd 2016 | From the print edition + +MORE than 7,000 years ago, people living in the Middle East discovered that they could ferment grapes to make wine. The yeast that they unknowingly harnessed for the process can now be found in every vineyard on the planet. As with wine, the processing of coffee beans and cacao, used to make chocolate, also requires some fermentation. But new research shows that coffee and cacao yeasts are far more genetically diverse than wine strains. This opens up the intriguing possibility of imparting entirely new tastes to the terroir of coffee and chocolate. + +Cacao originated in the Amazon and was widely cultivated in Central America before Hernán Cortés brought it to the Old World in 1530. Coffee moved in the opposite direction. From Ethiopia it was disseminated throughout the Middle East by Arab traders during the 6th century and ultimately arrived in the New World during the 18th century, where nascent Americans may have seen drinking it as something of a patriotic duty after the Boston Tea Party. + +As Europe’s thirst for coffee and chocolate grew, merchants keen to cash in on the crops started establishing vast plantations wherever the plants could be cultivated. In the first part of the 17th century, Dutch traders transported a Yemeni coffee plant to Holland. Shortly thereafter, they began cultivating its descendants in Sri Lanka and on Java and Réunion. Over the next three centuries, other trading nations completed coffee’s worldwide dissemination and set it up as a mainstay crop of many of the world’s poorest economies. Cacao was treated in much the same way and is now grown in 33 tropical countries. + +Given this history, Aimée Dudley of the Pacific Northwest Diabetes Research Institute, in Seattle, and Justin Fay of the University of Washington and their colleagues, wondered if the yeasts associated with cacao and coffee followed these plants from their places of origin just as yeasts had followed wine from the Middle East. To explore this, they collected unroasted cacao beans from 13 countries, including places as disparate as Colombia, Ghana, Madagascar and Papua New Guinea, and unroasted coffee beans from 14 locations, including Ethiopia, Honduras, Indonesia and Yemen. They then set about studying the yeast found on the beans. As a control, the team also studied the yeasts on grapes from diverse locations. + +As they report in Current Biology, although all vineyard-yeast strains are extremely similar genetically, there is tremendous diversity among the yeast strains associated with cacao and coffee. More specifically, they discovered that these differences correlated with geography. For example, all cacao beans collected from Venezuela carried closely related strains of yeast that were distinct from those found on Nigerian and Ecuadorean beans. The same was true for the yeasts found on coffee. The differences were so great that the researchers were able to use DNA sequences of the yeast strains alone to determine which country a sample of cacao or coffee came from. + +Why cacao and coffee yeasts vary so much is unclear, although human behaviour is likely to play a role. The researchers give several reasons why wine yeasts are so similar. Oak barrels are often exported from an established winemaking region to an area of new cultivation, and these serve as reservoirs of yeasts native to the original location. Winemakers also have a long history of using starter cultures of yeast from places that have traditionally produced wines, which makes it nearly impossible for local species of yeast to compete. In contrast, the use of starter cultures is very rare in the processing of cacao and coffee, where growers tend to rely upon the species of yeast found locally. + +This greater diversity of cacao and coffee yeasts means there is the potential to create new flavours by using a strain from one location in another, the researchers reckon. The yeasts of a Hawaiian coffee bean could, for example, be used to ferment beans being grown in Uganda; or the yeasts from Haitian cacao beans could be used with cacao grown in Ghana. No one knows what the resulting coffee and chocolate might taste like, but if Dr Dudley and her colleagues are correct in their hunch, there will be many new flavours for coffee lovers and chocoholics to savour. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21695860-genetic-diversity-yeasts-could-produce-novel-flavours-new-brew/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Mostafa Tolba + +Green giant + +A creator of the successful regime to reduce global emissions has died + +Apr 2nd 2016 | From the print edition + +Tolba, pulling the world together + +“PERHAPS the single most successful international agreement to date has been the Montreal protocol,” declared Kofi Annan, then head of the United Nations, back in 2003. Agreed 16 years earlier, the mechanism sought to limit damage to the stratospheric ozone layer that protects the planet from harmful ultraviolet radiation. The protocol phased out substances such as chlorofluorocarbons (CFCs)—coolants in devices ranging from air conditioners to refrigerators—which deplete the ozone. They also contribute to global warming. To date, the agreement has averted the equivalent of more than 135 billion tonnes of carbon-dioxide (CO2) emissions. One of its most important architects, Mostafa Tolba, an Egyptian scientist, died on March 28th, aged 93. + +Educated in Cairo and London, Dr Tolba helped found the institutions of modern climate diplomacy. In 1972 he led his country’s delegation to the Stockholm conference from which the United Nations Environment Programme emerged. After a short stint as its deputy executive director, he took full charge from 1975 until 1992. The Vienna Convention for the Protection of the Ozone Layer, the UN agreement accompanying the Montreal protocol, was a personal and public victory for Dr Tolba. It has since been ratified by 197 countries and by the European Union. + +No other environmental initiative has achieved as much. Ozone-depleting chemicals in the atmosphere reached their zenith in 1994. The concentration of ozone in the atmosphere should be back to what it was before 1980 by the middle of this century, studies suggest. America’s Environmental Protection Agency estimates that up to 2m cases of skin cancer may be prevented globally each year until 2030 because of it. + +The UN climate deal struck last year in Paris to limit global warming to “well below” 2°C above pre-industrial temperatures also owes much to the earlier agreement. Even after the failings of the Kyoto protocol, hashed out to curb CO2 emissions in 1997, and of UN climate negotiations in Copenhagen in 2009, leaders could still point to Montreal. It provided proof of the efficacy of international agreements and of the predictable regulatory environments they can create. + +More gains may yet accrue if a new deal is reached to limit other nasties under the protocol’s authority. Even if countries make good on all the pledges they made last year to slash emissions, the Paris agreement may still lead to global warming of 3°C. Curbing short-lived pollutants such as hydrofluorocarbons (HFCs), methane and black carbon could be one way to limit warming further. They are between 25 and 4,000 times more potent than CO2 and linger in the atmosphere for a far shorter time—20 years rather than up to 500—so cutting back now could bring benefits quickly. According to the Arctic Monitoring and Assessment Programme, an intergovernmental group, curbing the emissions of short-lived pollutants could skim 0.2°C off expected global warming by mid-century. + +The leaders of America, Canada and Argentina all want to phase out HFCs under the Montreal protocol. Barack Obama has championed the cause. Introduced to replace CFCs as they did not deplete the ozone, cutting these coolants could avoid the equivalent of 100 billion tonnes of CO2 by 2050. How exactly to help developing countries fund a switch from HFCs remains a sticky issue, particularly as many of them manufacture the domestic white goods which require them. But an amendment to the protocol is needed: HFCs are among the greenhouse gases that are increasing most rapidly. If such a change materialises, Dr Tolba’s admirable legacy will grow more impressive still. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21695857-creator-successful-regime-reduce-global-emissions-has-died-green-giant/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Globalisation and inequality: The new wave + +Girls and sex: Two steps forward, one back + +Self-help for the Ivy League: Getting the most out of one’s self + +New York theatre: Haves and have-nots + + + + + +Articles Sections Next + +Globalisation and inequality + +The new wave + +Surprisingly little is known about the causes of inequality. A Serbian-American economist proposes an interesting theory + +Apr 2nd 2016 | From the print edition + + + +Global Inequality: A New Approach for the Age of Globalisation. By Branko Milanovic. Belknap; 299 pages; $29.95. Harvard University Press; £22.95. + +IT’S a golden age for studying inequality. Thomas Piketty, a French economist, set the benchmark in 2014 when his book, “Capital in the Twenty-First Century”, was published in English and became a bestseller. The book mapped the contours of the crisis with a sweeping theory of economic history. Inequality, which had been on the wane from the 1930s until the 1970s, had risen sharply back toward the high levels of the Industrial Revolution, he argued. Now Branko Milanovic, an economist at the Luxembourg Income Study Centre and the City University of New York, has written a comprehensive follow-up. It reinforces how little is really known about economic forces of long duration. + +In some ways “Global Inequality” is a less ambitious book than “Capital”. It is shorter, and written more like an academic working paper than a work of substantial scholarship for a wider readership. + +Like Mr Piketty, he begins with piles of data assembled over years of research. He sets the trends of different individual countries in a global context. Over the past 30 years the incomes of workers in the middle of the global income distribution—factory workers in China, say—have soared, as has pay for the richest 1% (see chart). At the same time, incomes of the working class in advanced economies have stagnated. This dynamic helped create a global middle class. It also caused global economic inequality to plateau, and perhaps even decline, for the first time since industrialisation began. + + + +To help interpret these facts, Mr Milanovic provides the readers with a series of neat mental models. He muses, for instance, that at the dawn of industrialisation, inequality within countries (or class-based inequality) was responsible for the largest gaps between rich people and poor. After industrialisation, inequality across countries (or location-based inequality) became more important. But as gaps between countries become ever more narrow, class-based inequality will become more important as most of the differences in incomes between rich people and poor people will once again be due to gaps within countries. He seasons the discussion with interesting comments, such as how incomes and inequality fell over the course of the Roman Empire. + +Mr Milanovic’s boldest contribution is about “Kuznets waves”, which he offers as an alternative to two other prevailing theories of inequality. Simon Kuznets, a 20th-century economist, argued that inequality is low at low levels of development, rises during industrialisation and falls as countries reach economic maturity; high inequality is the temporary side-effect of the developmental process. Mr Piketty offered an alternative explanation: that high levels of inequality are the natural state of modern economies. Only unusual events, like the two world wars and the Depression of the 1930s, disrupt that normal equilibrium. + +Mr Milanovic suggests that both are mistaken. Across history, he reckons, inequality has tended to flow in cycles: Kuznets waves. In the pre-industrial period, these waves were governed by Malthusian dynamics: inequality would rise as countries enjoyed a spell of good fortune and high incomes, then fall as war or famine dragged average income back to subsistence level. With industrialisation, the forces creating Kuznets waves changed: to technology, openness and policy (TOP, as he shortens it). In the 19th century technological advance, globalisation and policy shifts all worked together in mutually reinforcing ways to produce dramatic economic change. Workers were reallocated from farms to factories, average incomes and inequality soared and the world became unprecedentedly interconnected. Then a combination of forces, some malign (war and political upheaval) and some benign (increased education) squeezed inequality to the lows of the 1970s. + +Since then, the rich world has been riding a new Kuznets wave, propelled by another era of economic change. Technological progress and trade work together to squeeze workers, he says; cheap technology made in foreign economies undermines the bargaining power of rich-world workers directly, and makes it easier for firms to replace people with machines. Workers’ declining economic power is compounded by lost political power as the very rich use their fortunes to influence candidates and elections. + +This diagnosis carries with it a predictive element. Mr Milanovic expects rich-world inequality to keep rising, in America especially, before eventually declining. Importantly, he argues that the downswing in inequality that occurs on the backside of a Kuznets wave is an inevitable result of the preceding rise. Where Mr Piketty sees the inequality-compressing historical events of the early 20th century as an accident, Mr Milanovic believes them to be the direct result of soaring inequality. The search for foreign investment opportunities engendered imperialism and set the stage for war. There are parallels, if imperfect ones, to the modern economy; rich economies seem to be stagnating as the very rich struggle to find places to earn good returns on their piles of wealth. + +Mr Milanovic’s analysis leads him to consider some dark possibilities as he looks ahead. America looks to be falling into the grips of an undemocratic plutocracy, he says, which is dependent on an expanding security state. In Europe right-wing nativism is on the rise. The good news is that emerging economies will probably continue on their path toward rich-world incomes—though that, he allows, is not guaranteed, and could be threatened by political crisis in China or in other markets. + +The book’s conclusion is a little unsatisfying. A theory in which rising inequality eventually triggers countervailing social dislocations feels intuitively right, but it also leaves many important questions unanswered. When is war, rather than revolution, the probable outcome of inequality? Are governments at the mercy of the cycle, or can they act pre-emptively to flatten out the waves and avoid crises of high inequality? Mr Milanovic’s contributions are ultimately similar to those made by Mr Piketty. The data he provides offer a clearer picture of great economic puzzles, and his bold theorising chips away at tired economic orthodoxies. But the grand theory does as much to reveal the scale of contemporary ignorance as to illuminate the mechanics of the global economy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21695853-surprisingly-little-known-about-causes-inequality-serbian-american-economist/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Girls and sex + +Two steps forward, one back + +For girls, growing up is a perilous journey + +Apr 2nd 2016 | From the print edition + +The uses of enchantment + +American Girls: Social Media and the Secret Lives of Teenagers. By Nancy Jo Sales. Knopf; 416 pages; $26.95 and £20. + +Girls & Sex: Navigating the Complicated New Landscape. By Peggy Orenstein. Harper; 320 pages; $26.99. + +FOR tips on taking a selfie, talk to teenage girls. Many know that your “good” side is the one without your parting, and that it is slimming to pose with a hand on hip and legs “bevelled” (one straight, the other bent). Not quite pleased with the results? Simply download one of many “selfie surgery apps” to edit blemishes, whiten teeth and shrink noses. + +Adolescents have always been keenly aware of how they are seen by their peers. But social media amplify this self-consciousness. Now that nearly three-quarters of American teens have access to a smartphone, many of them while away their days broadcasting their thoughts, photos and lapses in judgment for immediate praise or scorn from hundreds of “friends”. Being a teenager was never easy, but this is the first time your charm, looks or popularity have been so readily quantifiable, and your mistakes so easy for others to see. Just how this technological revolution affects young people—and particularly young women—is the subject of two fascinating new American books. + +For many girls, the constant seeking of “likes” and attention on social media can “feel like being a contestant in a never-ending beauty pageant”, writes Nancy Jo Sales in “American Girls”, a thoroughly researched if sprawling book. In this image-saturated environment, comments on girls’ photos tend to focus disproportionately on looks, bullying is common and anxieties about female rivals are rife. In interviews, girls complain of how hard it is to appear “hot” but not “slutty”, sexually confident but not “thirsty” (ie, desperate). That young women often aspire to be titillating should not be surprising given that the most successful female celebrities often present themselves as eye-candy for the male gaze. “Everybody wants to take a selfie as good as the Kardashians’,” says Maggie, a 13-year-old. + +Such self-objectification comes at a cost. A review of studies from 12 industrialised countries found that adolescent girls around the world are increasingly depressed and anxious about their weight and appearance. For Peggy Orenstein, an American journalist, these are symptoms of a larger and more pernicious problem: “the pressure on young women to reduce their worth to their bodies and to see those bodies as a collection of parts that exist for others’ pleasure”. In “Girls & Sex”, a wise and sharply argued look at how girls are navigating “the complicated new landscape” of sex and sexuality, Ms Orenstein notes that unlike past feminists, who often protested against their sexual objectification, many of today’s young women claim to find it empowering. “There are few times that I feel more confident about my body than when I wear a crop top and my boobs are showing and my legs are showing,” says Holly, a college student. “I never feel more liberated.” + +This hardly seems like progress, particularly when only certain bodies, those that are sexy to men, are allowed to be a source of pride. (Even Meghan Trainor’s body-positive anthem, “All About That Bass”, celebrates fuller bodies because “boys, they like a little more booty to hold at night.”) Yet both authors argue that girls are embracing their own sexualisation in part because they are living in a culture that prioritises women being “hot”. Just listen to Donald Trump, America’s Republican presidential front-runner, or try to find a female news presenter wearing a dress with sleeves. + +Both books also blame the “ever-broadening influence of porn”. The internet has made pornography more widely available than ever before. Few view it as realistic, but many consult it as a guide—which makes sense in a country where parents rarely talk candidly about sex with their children, especially their daughters, and few schools fill the gap. Educators commonly advocate abstinence and only 13 states require that sex education even be medically accurate. + +The problem is that much of this pornography is not only explicit but also violent, which can influence expectations. A study of Canadian teenagers found a correlation between consuming pornography and believing it is okay to hold a girl down for forced sex. Pornography also tends to present women’s sexuality as something that exists primarily for the benefit of men. Ms Orenstein notes that most of the young women she interviewed had removed all of their pubic hair since they were about 14 in order to cater to the fickle, porn-bred tastes of young men. They also tended to prioritise their partners’ physical pleasure over their own. + +For anyone raising a daughter, these books do not make for easy reading. Expect plenty of stories about binge drinking, random hookups, oral sex and misjudged sexting. Intellectually, many young women believe they can achieve whatever they set their minds to, but most still struggle to obey a sexual double-standard that gives them little room between being chided as “sluts” or “prudes”. As one teenage girl tells Ms Orenstein, “Usually the opposite of a negative is a positive, but in this case it’s two negatives. So what are you supposed to do?” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21695854-girls-growing-up-perilous-journey-two-steps-forward-one-back/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Self-help for the Ivy League + +Getting the most out of one’s self + +White-collar improvement + +Apr 2nd 2016 | From the print edition + + + +Smarter, Faster, Better: The Secrets of Being Productive in Life and Business. By Charles Duhigg. Random House; 380 pages; $28. William Heinemann; £20. + +Peak: Secrets from the New Science of Expertise. By Anders Ericsson and Robert Pool. Houghton Mifflin Harcourt; 307 pages; $28. Bodley Head; £18.99. + +THE world has quietly been undergoing a performance revolution. In nearly all areas, people are continuously getting better at what they do. This is obvious when measured on running tracks and tennis courts. But it is happening in myriad other areas as well, from surgery to management—and even violin-playing. Better training is largely responsible, by breaking down activities into discrete parts, and measuring how people perform best. + +Two new books promise to help people improve their abilities with a generous mix of fascinating anecdotes and a romp through the academic literature. In “Smarter, Faster, Better”, Charles Duhigg of the New York Times looks at the numerous ways that people can become more effective, whether in improving motivation, setting goals, making decisions or thinking creatively. Basically, Mr Duhigg’s is a self-help book for white-collar professionals. + +Readers learn how the American army welcomes new recruits who have little drive and teaches them to take responsibility and achieve goals. (The secret: transform mundane tasks into decisions that need to be made.) One learns how organisations like Google and the original cast of “Saturday Night Live”, an American comedy show, produce great teams. (The crux: create a feeling of trust so people can freely express themselves; this is more important than having superstars in the group.) And one finds out how Toyota took over one of the worst carmaking factories from GM and turned it into one of the best. (The solution: give line workers more control.) + +One of the best vignettes is on the making of the children’s film “Frozen”. It’s 18 months before the release and the creators have hit an impasse: Anna is a bossy brat, Elsa is a jealous prat and Olaf the cynical snowman conspires in a coup d’état. In short, the draft storyline is a wreck. No one sympathises with the main characters. “I f’ing hate Olaf,” confesses one writer after an early screening. “Kill the snowman.” + +How did Disney turn it around? Part of the method, readers learn, was to get the team to tap into their own life experiences, try new combinations and sense what felt right. Such advice is mildly plausible when applied to Hollywood screenwriters; it is doubtful the rest of humanity could employ it successfully. However, another approach rings more true: Disney shook things up by generating even more creative tension: a new co-director was added. A little disturbance to the customary workflow helped turn the grit into a pearl. + +Mr Duhigg is an effective storyteller with a knack for combining social science, fastidious reporting and entertaining anecdotes. It is the same technique he used in an earlier book, “The Power of Habit”, in 2012. Yet in his latest work the stories jump around so much that they produce mental whiplash. No sooner is the reader knee-deep in Israeli military analyses in the 1970s (to understand goal-setting) than the narrative swerves to General Electric’s human-resources woes. And by distilling individual performance down to eight main traits—each with its own chapter—the book oversimplifies its subject. + +“Peak” by Anders Ericsson, a psychologist studying expertise, and Robert Pool, a science writer, avoids these shortcomings. The book is a popular-science telling of Mr Ericsson’s research. Most notable is the “10,000 hour rule”: the idea that anyone can become an expert if they put in the time, a theme popularised by writers like Malcolm Gladwell. + +At the heart of Mr Ericsson’s thesis is that there is no such thing as natural ability. Not for Mozart, nor for Garry Kasparov. Traits favourable to a task, such as perfect musical pitch, help at the outset but confer no advantage at higher levels. Rather, after a basic ability, it all comes down to effort. + +Such mastery is possible because of what Mr Ericsson calls “deliberate practice”. This is focused training with an expert who can push an individual to a higher understanding of the craft. The key ingredient is mental representations: the ability to perform a task excellently without needing deliberate thought because similar situations have been so well practised that they seem second nature. + +Both books offer an optimistic anti-determinism that ought to influence how people educate children, manage employees and spend their time. Both place stock in developing mental models of activities, aspiring to an ideal form of the task at hand. And both emphasise setting “stretch goals”. The good news is that to excel one need only look within—provided one buys the books to learn how. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21695852-white-collar-improvement-getting-most-out-ones-self/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +New York theatre + +Haves and have-nots + +Putting America’s financial inequality on the stage + +Apr 2nd 2016 | NEW YORK | From the print edition + +Looking up fortune cookies + +THERE is something familiar about the Blakes, the American family at the centre of “The Humans”, a new play by Stephen Karam that is now on Broadway. Anyone who has navigated the emotional minefield of a family meal will recognise the affectionate way they bicker, their barbs softened with tenderness. But something else about this family will also resonate with a growing group of Americans: each member is struggling financially. + +Over the course of the fraught feast, it becomes clear that the youngest daughter (Sarah Steele), an aspiring composer, is working nights as a bartender to pay off her student loans. Her sister (Cassie Beck) is about to lose her job as a lawyer after calling in sick too often. Their parents are in their 60s, but neither can afford to retire, particularly now that they are stuck paying the grandmother’s mounting medical bills. The mother (Jayne Houdyshell), a veteran office manager, complains that the 20-something “kids” she works for earn five times her salary “just ’cause they have a special degree.” But no one sounds more bitter or frustrated than the father (the excellent Reed Birney), who recently lost his job of 28 years at a school. “I thought I’d be settled by my age, you know, but man, it never ends,” he gripes. “Don’tcha think it should cost less to be alive?” + +This conversation resembles countless others across the country, as Americans try to make sense of an economy in which working hard is no longer enough to afford a comfortable life. Parents who assumed that their children would surpass their own accomplishments are now startled to find so many of them sweating over rent and saddled with college debt. What does it take to get ahead? Why does the system create so few haves and so many have- nots? These questions are pushing voters towards presidential candidates who promise to blow up the status quo. They are also inspiring a generation of playwrights. + +“Hungry”, at the Public Theatre until April 3rd, is the first in a trilogy from Richard Nelson to look at a single American family over the course of this odd election year (pictured). Like the Blakes, the Gabriels sit at the kitchen table talking about a country they increasingly have trouble recognising, and an economy that is leaving them behind. In “Hold on to Me Darling”, a funny new play by Kenneth Lonergan (at the Atlantic Theatre Company until April 17th), Timothy Olyphant is hilarious as Strings McCrane, a swanning, impulsive, narcissistic celebrity who has more money than he knows what to do with. Without moralising, this play nicely illustrates some of the bizarre consequences of an economy in which the spoils of wealth are in the hands of a lucky few. + +Many of these dramas show ordinary Americans grappling with spiralling expenses. In Mona Mansour’s “The Way West”, produced by the Labyrinth Theatre Company at the Bank Street Theatre, Deirdre O’Connell is magical as an ageing mother who spins yarns about plucky pioneers to distract herself from the problems of her own life. Having lost her job at a tyre shop, she cannot quite remember the last time she paid her bills, nor can she afford to see a doctor about her mysteriously immobile arm. The housing market has just collapsed, and most of her neighbours in dusty Stockton, California, have already abandoned their homes. Her grown-up daughters are helping her file for bankruptcy, but they have financial woes of their own. Their mix of bad luck and poor choices sends them into a situation that seems comically dire. But instead of succumbing to despair, the mother takes a near-delusional comfort in yet more tales of early American fortitude, plainly unwilling to let go of the promise of the American dream. + +Other plays ponder what it takes to make it to the top. “Dry Powder”, a darkly amusing new work from Sarah Burgess, directed for the Public Theatre by Thomas Kail (who also directed “Hamilton”, a popular musical), considers the cunning machinations of the 1%. Hank Azaria plays a private-equity boss who is being “eviscerated” in the press for throwing himself a ritzy party on the very day his firm announced extensive lay-offs. “Of course they’re protesting, that’s what unemployed people do,” quips Jenny (Claire Danes), a particularly ruthless founding partner. + +To help improve the firm’s “optics”, Seth (John Krasinski), another founding partner, has a plan that would create jobs and increase revenues at an American luggage company. Yet the firm also ponders making more money by gutting the company and moving manufacturing to Bangladesh. Ms Burgess has little regard for the way such wheeling and dealing prioritises profits over people. This slick, fast-paced play will not win any awards for nuance, but it is entertaining. + +For a more subtle look at the ethical challenges posed by a winner-takes-all economy, Lucas Hnath’s taut and profoundly good “Red Speedo”, directed by Lileana Blain-Cruz at the New York Theatre Workshop, is on until April 3rd. Alex Breaux cuts a convincing figure as Ray, a lithe, monosyllabic competitive swimmer on the eve of the Olympics trials. For Ray, who lacks an education and lives in his car much of the time, qualifying for the Olympics is his only meal ticket. If he makes the cut he will be sponsored by Speedo in a deal that is worth “a lot of money”, assures his brother (Lucas Caleb Rooney), who works as his manager. When the stakes are so high, can Ray be blamed for taking drugs to help him compete? When so many others appear to be bending the rules, what is the value of heeding them? “Don’t I deserve a chance?” Ray pleads to his brother in the dark hours before the tryout. “Isn’t that the American thing?” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21695851-putting-americas-financial-inequality-stage-haves-and-have-nots/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Johan Cruyff: One given moment + + + + + +Articles Sections Next + +Obituary: Johan Cruyff + +One given moment + +Johan Cruyff, player and coach at Ajax Amsterdam and Barcelona, died on March 24th, aged 68 + +Apr 2nd 2016 | From the print edition + + + +THE true beauty of the world’s most beautiful game, according to Johan Cruyff, who knew, didn’t lie in tricksy technique. If a man could juggle a ball a thousand times, it proved only that he ought to join the circus. Of course, it was great when Rudolf Nureyev said he should have been a dancer. But he was not just using his long, lean body when he played football. He was mostly using his brain. That brain, as well as his famously agile feet, made him a local hero in Holland and Spain and, by extension, all over football-mad Europe. + +His rules of the game were simple. (Geometrical, some said, even mystical.) If he had the ball, the space on the pitch had to be made as large as possible. If he didn’t have it, the space had to become threatening and small. He adjusted his perspective continually with the movement of the ball. At one given moment—neither too early nor too late, en un momento dado, his catchphrase when he shaped Barcelona into the world’s top team—the ball and he would meet. And from this, as often as not, came glory. Toon Hermans, his fellow-countryman, eloquently described his almost spiritual enthronement in Dutch hearts: + +And Vincent saw the corn + +And Einstein the number + +And Zeppelin the Zeppelin + +And Johan saw the ball. + +He didn’t just see it. One piece of wizardry, the Cruyff turn, involved a dummy pass and a back-flick, completely wrong-footing the defender. He invented that in 1974, the neatest of legacies. In another trick, a pretend penalty of 1982, he rolled the ball sideways from the spot to allow an unnoticed team-mate to charge in and score. In 1977 he achieved a phantom goal, leaping up and twisting round, back to the net, so the keeper barely saw it coming. He back-heeled the ball then, but could also score with the laces, inside or outside of either foot. That made him six times as talented, he reckoned, as most modern players. + +In 1966-67, his best season for Ajax, he scored 33 goals. In 1974 he almost won the World Cup for Holland. He usually played forward, but his philosophy of “total football”—in which he had been coached himself by Rinus Michels at Ajax, before he became its most celebrated “conductor”, as of an orchestra—allowed any player to take any position on the field. Left-wingers could be right-wingers, and a goalie could even be an attacker, using his feet for a change. (Why not? It was a waste of a position otherwise.) Switching and swapping was a neat way to confound the opposition, whether the whirling “carousel” was wearing Ajax white-and-red or bright Holland orange. He had found yet another way to shake up European football. + +Match analysts almost made him into a scholar of the turf, “a Pythagoras in boots”, as he was called once. For him, it was all just instinct. He was a cocky, all-knowing Mokummer, master of the one-liner delivered in best Amsterdam slang: a poor boy from Betondorp, “Concrete Village”, who got into the Ajax junior academy mostly because his mother cleaned at the club and his stepfather was a groundsman. At ten, he was putting out the corner-flags and begging players to take pot-shots at him; at 17 his first team-photos showed him open-mouthed and wide-eyed, hungrier for the ball than anyone else. At that point, the mid-1960s, the Dutch football league was becoming increasingly professional. By the mid-1970s, with him playing, Ajax had won six Eredivisie titles and three consecutive European Cups. + +For all his talk about teamwork, he didn’t naturally fit in. He was a loner who smoked too much, preferred family to team-mates and wore the number 14 on his shirt. When the Dutch national team was sponsored by Adidas he wouldn’t wear their boots, and went with Puma instead. At the start of the season in 1973 he suddenly left, following Michels, to play for Barcelona for a spell. He returned to Ajax only to leave again in 1983, convinced that they undervalued him. He was never guilty of that himself. Clubs that took him on later as a director or adviser were berated when things were not done as they had to be, his way. “Before I make a mistake, I don’t make that mistake,” he said. + +Skinny’s cathedral + +His most lasting triumph, though, was the coaching of Barcelona. El Flaco, as they called him, “Skinny”, took the team to the top of La Liga and then, in 1992, to victory in the European Cup. Even more than at Ajax, Barça absorbed his edicts, setting up at his instigation a junior academy, La Masia, like the one he had gone to at Ajax. There a new generation of players—Messi, Iniesta, Xavi and the rest—learned to play in the swift, precise and total Cruyff style. Though he was no more gregarious, and as anti-majoritarian as ever, his separatist head warmed to the Catalans, and they to him. With him they felt they couldn’t lose, and in his eight years at the Camp Nou they rarely did. + +His most acclaimed successor as coach, Pep Guardiola, talked of him as the architect of a cathedral he could only reverently restore. Others compared his strategic nous to the paintings of Vermeer. It was all a bit highfalutin. But when he was on the ball, in that sweet moment when he was not too early and not too late, when opponents tumbled in astonishment and space sprang open where none had been before, then, yes, he was quite a lot like God. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21695827-player-and-coach-ajax-amsterdam-and-barcelona-was-aged-68-obituary-johan-cruyff-died/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Global investment-banking revenue + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Apr 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21695883/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Apr 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21695869-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Apr 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21695873-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Apr 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21695867-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Global investment-banking revenue + +Apr 2nd 2016 | From the print edition + + + + + +Pity those bankers. In the first quarter of this year global revenues from investment banking were $14 billion, down by 30% from the same period last year, according to Dealogic, a financial-data provider. Revenues in the quarter were the worst since 2009, when the financial crisis was still raging. Although fees fell in all areas, earnings from equity markets dropped especially sharply—by 52% year on year. This is largely because nervous investors shunned riskier assets. Equity markets only accounted for 18% of total investment-banking revenue in the first quarter, compared with a figure of 26% a year ago. There were only 173 initial public offerings over the period, the fifth-lowest first-quarter total on record. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21695866-global-investment-banking-revenue/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Apr 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21695868-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 01 Apr 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Chinese politics: Beware the cult of Xi + + + + + +Free trade in America: Open argument + + + + + +Mergers and financial stability: Don’t clear the clearers + + + + + +A bomb in Lahore: The hard choice for Pakistan + + + + + +Dutch referendum on Ukraine: A hard Dutch kick + + + + + +Letters + + + +On Africa, the Commonwealth, precision, America, energy poverty, China, migrants, George Martin, Moore’s law: Letters to the editor + + + + + +Briefing + + + +European social democracy: Rose thou art sick + + + + + +United States + + + +America and the world: Trade, at what price? + + + + + +Sin and politics: No, not one + + + + + +Indiana’s abortion bill: Running against Roe + + + + + +Organised labour: Handed a victory + + + + + +The campaigns: Heard on the trail + + + + + +Crazy Republicans: The biters bit + + + + + +Campaign paraphernalia: What’s in a badge? + + + + + +Lexington: Ted Cruz, false hope + + + + + +The Americas + + + +Following the Mugabe model: Spot the difference + + + + + +Canadian property: Steeples for sale + + + + + +Colombia’s wars: The second front + + + + + +Bello: The difficulty of dealing with Trumpery + + + + + +Asia + + + +Countering terror in Pakistan: The battle for Punjab + + + + + +Social welfare in South Korea: Doubt of the benefit + + + + + +The politics of Thai Buddhism: Men-at-alms + + + + + +Banyan: Army manoeuvres + + + + + +China + + + +Xi Jinping’s leadership: Chairman of everything + + + + + +Middle East and Africa + + + +Insecurity in Nigeria: Fighting on all fronts + + + + + +East Africa’s used-clothes trade: Let them weave their own + + + + + +Sierra Leone’s sea cucumbers: Silver in the deep + + + + + +Islamic State: Jihadists on the run + + + + + +Baghdad’s restaurant scene: Signs of happier times + + + + + +Iran’s new trains: Joining the dots + + + + + +Arab universities: The kingdom is king + + + + + +Europe + + + +The Netherlands and Ukraine: Dissociative disorder + + + + + +Ukrainian politics: Once more around the bloc + + + + + +Afghan refugees: Living in limbo + + + + + +Belgium’s security problem: No Poirots + + + + + +Britain + + + +Tata Steel: No, thank you + + + + + +Brexit brief: Immigration: Let them not come + + + + + +A religious killing in Scotland: A quiet man with a loud message + + + + + +Wages and jobs: Poor economics + + + + + +Down on the farm: Digging for victory + + + + + +E-cigarettes: The big smoke + + + + + +Women in prison: Breaking worse + + + + + +Bagehot: Referendum, what referendum? + + + + + +International + + + +Counter-radicalisation (1): Battle of ideas + + + + + +Counter-radicalisation (2): Talking cure + + + + + +Counter-radicalisation (3): A disarming approach + + + + + +Business + + + +Artificial intelligence : Million-dollar babies + + + + + +Solar energy: Blinded by the light + + + + + +Telefónica: Hail, César! + + + + + +Malaysia Airlines: Recovery phase + + + + + +Shareholder value: Analyse this + + + + + +Schumpeter: Tycoonomics + + + + + +Finance and economics + + + +China’s M&A; boom: Money bags + + + + + +Buttonwood: Bucking the trend + + + + + +Global house prices: Hot in the city + + + + + +Clearing-houses: Double-crossed + + + + + +African bonds: Ante upped + + + + + +Myanmar’s economy: The Burma road + + + + + +Free exchange: Lean on me + + + + + +Science and technology + + + +Supersonic air travel: Baby boomers + + + + + +Preventing an extinction: Not an ex-parrot + + + + + +Drug supplies: Track marks + + + + + +Coffee and chocolate: A new brew + + + + + +Mostafa Tolba: Green giant + + + + + +Books and arts + + + +Globalisation and inequality: The new wave + + + + + +Girls and sex: Two steps forward, one back + + + + + +Self-help for the Ivy League: Getting the most out of one’s self + + + + + +New York theatre: Haves and have-nots + + + + + +Obituary + + + +Obituary: Johan Cruyff: One given moment + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Global investment-banking revenue + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.04.09.TXT b/homeworks/B20769/homework1/data2/2016.04.09.TXT new file mode 100644 index 0000000..daff6f3 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.04.09.TXT @@ -0,0 +1,4994 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Apr 9th 2016 | From the print edition + + + +An international consortium of journalists published an investigation of a huge leak of documents from Mossack Fonseca, a Panamanian law company specialising in offshore shell companies. The documents shone a light on the sometimes embarrassing finances of top government officials around the world. Those caught up included Petro Poroshenko, the president of Ukraine; close associates of Vladimir Putin, Russia’s leader; and Sigmundur David Gunnlaugsson, Iceland’s prime minister, who stepped down after large protests. (See article) + +Frontex, the EU’s border agency, began returning migrants from Greece to Turkey under a deal struck last month to control the flow of Middle Eastern asylum-seekers. Only 202 migrants were sent back; further deportations were postponed because of delays in processing asylum applications. But the number of migrants entering Greece has already begun to fall. (See article) + +Fighting broke out in Nagorno-Karabakh, a mostly Armenian enclave in Azerbaijan that has been occupied by Armenia since the collapse of the Soviet Union. Azerbaijan said 16 of its soldiers had been killed, while the Armenian side claimed to have lost 20. Tens of thousands were killed in the war over the enclave in 1988-94. The two sides agreed to a ceasefire, but some fear the conflict could spiral into a proxy war between Turkey, which backs Azerbaijan, and Russia, which backs Armenia. (See article) + +A court in Northern Ireland, where abortion remains illegal in most cases, handed down a three-month suspended sentence on a woman who used medication bought online to terminate her pregnancy. She could not afford to travel to England, where abortion is legal. It is thought to be the first conviction of its kind in the province. + +Meanwhile, in Poland thousands protested against government plans to introduce legislation that would make abortions harder to obtain. Only a few hundred terminations are reported annually, but the abortion rate has been rising in recent years. + +Dutch voters rejected the EU’s association agreement with Ukraine in a referendum by 61% to 38%. Without Dutch ratification the treaty cannot fully take force. But the EU and 27 member states that have ratified the treaty will be annoyed by any Dutch effort to renegotiate it. + +Justice derailed + +A case against the deputy president of Kenya, William Ruto, before the International Criminal Court collapsed because of political meddling and interfering with witnesses. The charges related to violence that followed disputed elections in 2007 in which more than 1,300 people died. (See article) + + + +A motion to impeach Jacob Zuma, the president of South Africa, failed in parliament after members of the ruling African National Congress voted unanimously against it. The vote was held just days after the country’s highest court ruled that Mr Zuma had failed to uphold the constitution by ignoring an order to pay back money that the state had spent on his private home. (See article) + +Angola said it would ask the IMF for a loan. The country is Africa’s second-biggest oil producer, and has been hurt by the collapse in oil prices. + +A new government, which is meant to bring together factions from both the east and west of Libya, took up office in Tripoli. It faces daunting tasks in a country close to economic collapse and which is fighting a big Islamic State presence at its heart. (See article) + +The Wisconsin wobbles + +The Democratic and Republican front-runners for their parties’ presidential nominations tripped up in Wisconsin’s primary. Hillary Clinton lost against Bernie Sanders in the midwestern state and, after the worst week of his campaign, Donald Trump was heavily defeated by Ted Cruz. (See article) + +In a unanimous decision the Supreme Court ruled that states may account for all residents when drawing up legislative boundaries, a defeat for conservative groups which wanted only eligible voters to be recognised. The case was brought by two Texans who argued that their voting power was diluted by drawing districts that include people who cannot vote. (See article) + +Impeachment crazy + +A supreme-court judge in Brazil directed the lower house of Congress to consider impeachment charges against Michel Temer, the country’s vice-president. The president, Dilma Rousseff, is already facing impeachment on allegations that she used accounting trickery to hide the size of the budget deficit. Mr Temer stepped down as the leader of the largest party in Congress earlier than planned to defend himself against attacks. + +Thousands of Colombians in a score of cities held anti-government demonstrations. Backed by Álvaro Uribe, a conservative former president, the marchers protested against corruption and denounced the government’s peace talks with the FARC guerrilla army, saying they would hand the country over to terrorists. + +A worrying uptick + + + +Amnesty International reported that executions carried out by states increased by 50% last year compared with 2014, marking a 26-year high. Twenty-five countries executed prisoners in 2015. Three of them, Iran, Pakistan and Saudi Arabia, accounted for 90% of known executions. Amnesty’s figures exclude China, whose death-penalty tally is estimated to be in the thousands. Over 20,000 prisoners remained on death row around the world at the end of 2015. (See article) + +China said it would prosecute a former general, Guo Boxiong, who had served as vice-chairman of the armed forces until he retired in 2012. Mr Guo has been under investigation for a year for suspected corruption. He would be the highest-ranking officer to be tried for graft since the Communist Party came to power in 1949. + +After the generals blocked her bid to be president, Myanmar’s National Assembly approved of Aung San Suu Kyi becoming “state counsellor”. She will wield more authority than the president—her ally, Htin Kyaw—in the new, more democratic, government. (See article) + +In India a court urged that cricket matches in the Indian Premier League should be shifted from the state of Maharashtra because of a severe drought. A judge described the millions of litres of water sloshed over the league’s pitches as “criminal wastage”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21696570-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Apr 9th 2016 | From the print edition + +Pfizer called off its $160 billion merger with Allergan after the US Treasury proposed new rules that would severely curtail the benefits of “inversion” takeovers (where an American company buys a foreign one in order to reduce its corporate-tax bill). Allergan is listed in New York but has its corporate headquarters in lower-taxed Ireland, which is where Pfizer would have based the newly combined company. Such deals have become politically toxic in America, but the White House denied that the new regulations were intended specifically to scupper the Pfizer-Allergan deal. (See article) + +The death knell + +America’s Justice Department filed a lawsuit to stop the $25 billion merger of Halliburton and Baker Hughes, the world’s second- and third-largest oilfield-services companies, citing antitrust concerns. The merger was announced in November 2014 but opposed by some big oil companies. They worried that diminished competition in oil services would put a further squeeze on profits already hit by the fall in oil prices. + +The share prices of big French telecoms companies plunged following the collapse of a proposed €10 billion ($11.4 billion) merger between Orange (formerly France Télécom) and Bouygues. The negotiations failed to resolve differences over the value of the deal and the French government’s 23% stake in Orange. + +The Reserve Bank of India cut its benchmark interest rate from 6.75% to 6.5%, the lowest it has been in five years. Inflation, usually a headache for the central bank, has eased. + +A new “fiduciary rule” on financial advice was published by the American government. From now on almost anyone giving investment advice will be required to act in the “best interest” of their clients. They previously had to ensure they were giving only “suitable” advice. + +Checking out + +Anbang, a Chinese insurance company that has been buying hotel assets overseas, dropped its bid for Starwood Hotels, which counts the Sheraton and Westin chains among its brands. Marriott had already struck a deal to take over Starwood before Anbang launched its rival offer. + +A flutter of consolidation among America’s smaller airlines looked likely after Alaska Airlines agreed to buy Virgin America in a $4 billion deal. The new carrier will become America’s fifth-largest. Virgin America was started by Richard Branson in 2004. (See article) + +Don Blankenship, arguably America’s most powerful coal-industry executive when he was boss of Massey Energy, was sentenced to a year in jail for conspiring to violate safety rules in relation to an explosion at a mine in West Virginia in 2010 that killed 29 men. + +Glencore put a dent in its $26 billion debt pile by selling 40% of its agricultural business to Canada’s largest pension fund for $2.5 billion. Earlier this year the Swiss commodities and trading company said it would dispose of assets worth up to $5 billion in 2016 as part of its streamlining efforts. + +India’s government welcomed the news that 1 billion people are now enrolled in its biometric-identity scheme, known as Aadhaar. After people register their fingerprints and retinal patterns they are issued with a card that gives access to public benefits. The government claims this is producing savings, but a proposal in Parliament to allow security agencies to tap the data has raised privacy concerns. + +San Francisco became the first place in America to compel businesses to provide full pay for new parents who take leave. California provides new mothers and fathers with 55% of their pay for six weeks after the birth of a child, but firms in San Francisco will now be told to top up the remainder. + +Where dreams don’t come true + +Disney’s succession plan to replace Robert Iger as chief executive when he eventually retires lay in tatters, after Tom Staggs, the chief operating officer and Mr Iger’s heir apparent, abruptly announced his departure. Mr Staggs had been considered a shoo-in for the top job, but was reportedly not happy that the board was also considering names from outside the Disney world for the position. + + + +Demand is high for Tesla Motors’ new Model 3 electric car, according to Elon Musk, the company’s boss. More than 276,000 vehicles had been reserved by customers by April 2nd, just two days after its official launch. With a starting price of $35,000, the Model 3 will compete directly with midsized executive cars. Deliveries will start in late 2017. But reports of problems procuring parts for Tesla’s older Model X prompted some worries that similar hitches could bedevil the Model 3’s success, and put the brakes on Tesla’s soaring share price. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21696564-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Apr 9th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21696573-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Facebook: Imperial ambitions + +Libya: Another chance + +Peru’s election: A dangerous farce + +Leak of the century: The lesson of the Panama papers + +Tata Steel: Cast-iron arguments + + + + + +Articles Sections Next + +Facebook + +Imperial ambitions + +Mark Zuckerberg prepares to fight for dominance of the next era of computing + +Apr 9th 2016 | From the print edition + + + +NOT since the era of imperial Rome has the “thumbs-up” sign been such a potent and public symbol of power. A mere 12 years after it was founded, Facebook is a great empire with a vast population, immense wealth, a charismatic leader, and mind-boggling reach and influence. The world’s largest social network has 1.6 billion users, a billion of whom use it every day for an average of over 20 minutes each. In the Western world, Facebook accounts for the largest share of the most popular activity (social networking) on the most widely used computing devices (smartphones); its various apps account for 30% of mobile internet use by Americans. And it is the sixth-most-valuable public company on Earth, worth some $325 billion. + +Even so, Mark Zuckerberg, Facebook’s 31-year-old founder and chief executive, has even greater ambitions (see article). He has plans to connect the digitally unconnected in poor countries by beaming internet signals from solar-powered drones, and is making big bets on artificial intelligence (AI), “chatbots” and virtual reality (VR). This bid for dominance will bring him into increasing conflict with the other great empires of the technology world, and Google in particular. The ensuing battle will shape the digital future for everyone. + +Empires built on data + +Facebook has prospered by building compelling services that attract large audiences, whose attention can then be sold to advertisers. The same is true of Google. The two play different roles in their users’ lives: Google has masses of data about the world, whereas Facebook knows about you and your friends; you go to Google to get things done, but turn to Facebook when you have time to kill. Yet their positions of dominance and their strategies are becoming remarkably similar. Unparalleled troves of data make both firms difficult to challenge and immensely profitable, giving them the wealth to make bold bets and to deal with potential competitors by buying them. And both firms crave more users and more data—which, for all the do-gooding rhetoric, explains why they are both so interested in extending internet access in the developing world, using drones or, in Google’s case, giant balloons. + +The task is to harness data to offer new services and make money in new ways. Facebook’s bet on AI is a recognition that “machine learning”—in which software learns by crunching data, rather than having to be explicitly programmed—is a big part of the answer. It already uses AI techniques to identify people in photos, for example, and to decide which status updates and ads to show to each user. Facebook is also pushing into AI-powered digital assistants and chatbot programs which interact with users via short messages. Next week it is expected to open up its Messenger service (which can already be used to do things like order an Uber car), to broaden the range of chatbots. And Facebook’s investment in VR—it bought Oculus, the cheerleader of this emerging field, for $2 billion in 2014—is a bold guess about where computing and communication will go after the smartphone. + +But Facebook faces rivals in all these areas. Google is using AI techniques to improve its internet services and guide self-driving cars, and other industry giants are also investing heavily in AI—though with the deepest pockets and the most data to crunch, Facebook and Google can attract the best researchers and most promising startups. Facebook lags behind Amazon, Apple, Google and Microsoft when it comes to voice-driven personal assistants; when it comes to chatbots, it faces competition from Microsoft and a host of startups eager to prove that bots are the new apps (see article). And its push into VR—which Mr Zuckerberg sees as a stepping stone to “augmented reality” (AR), where information is superimposed on the real world—pits it against formidable rivals, too. Microsoft has jumped straight to AR with its HoloLens headset, its most impressive product in years, and Google, already active in VR, has invested in Magic Leap, a little-known AR startup. + +The scale of Facebook’s ambition, and the rivalries it faces, reflect a consensus that these technologies will transform how people interact with each other, with data and with their surroundings. AI will help devices and services anticipate your needs (Google’s Inbox app already suggests replies to your e-mails). Conversational interfaces will let you look things up and get things done by chatting to a machine by voice or text. And intelligent services will spread into a plethora of products, such as wearable devices, cars and VR/AR goggles. In a decade’s time computing seems likely to take the form of AR interfaces mediated by AI, using gestures and speech for inputs and the whole world as its display. Information will be painted onto the world around you, making possible new forms of communication, creativity and collaboration. + +This is the ambitious vision that Facebook, Google, Microsoft and other technology giants are working towards. But along the way there are certain to be privacy and security concerns. Crunching all that information to provide personalised services looks a lot like surveillance, and will cause a backlash if consumers do not feel they are getting a good deal in return for handing over their personal details (as the advertising industry is discovering to its cost)—or if security is inadequate. + +Power from the people + +There will also be worries about concentration and monopoly, and the danger of closed ecosystems that make it hard for people to switch between services. Facebook’s plan to offer free access to a limited subset of websites was blocked by India’s telecoms regulator, which argued that it was “risky” to allow one company to act as a gatekeeper. And Germany’s competition authority is investigating the way Facebook handles personal data. As its dominance grows, Facebook can expect to face more such cases, as Microsoft and Google did before it. + +Striking a balance between becoming ever more intimately entwined in billions of peoples’ lives, making huge profits as a result and avoiding a backlash will be one of the biggest business challenges of the century. Even in ancient Rome, emperors could find that the crowd suddenly turned against them. So applaud Mr Zuckerberg—and fear for him, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21696521-mark-zuckerberg-prepares-fight-dominance-next-era-computing-imperial-ambitions/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Libya + +Another chance + +The new unity government is the best hope for preventing economic collapse and the spread of Islamic State + +Apr 9th 2016 | From the print edition + + + +SINCE the overthrow of Muammar Qaddafi nearly five years ago, good news from Libya has been in short supply. But on March 30th some came at last. Fayez al-Serraj, the prime minister of a new Government of National Accord (GNA) nominated by a UN-backed negotiation process, entered Tripoli with six ministerial colleagues. They had travelled by boat from Tunisia after the rival National Salvation Government, supported by mainly Islamist militias, had closed down Tripoli’s airspace. Despite fears that he would be killed on the way to his office, Mr Serraj was warmly received. Within days, key institutions of the state, including the central bank and the national oil company, had pledged loyalty to the GNA. + +Mr Serraj will have his work cut out if he is to have any hope of uniting this extraordinarily fractious country. Libya has been in chaos since the revolution of 2011. Things went from bad to worse in 2014, when Islamists responded to electoral defeat by seizing Tripoli and setting up a rival assembly to the internationally recognised parliament, known as the House of Representatives, which was forced to decamp to the eastern city of Tobruk. Under the respective banners of Operation Dawn in the west and Operation Dignity in the east, loose coalitions of militias and remnants of the armed forces have since fought each other sporadically. + +For several months, the GNA struggled to get off the ground, but on March 13th it was declared the sole legitimate government of Libya by Western powers impatient to end the deadlock. This was what gave Mr Serraj the confidence to move to Tripoli. The next, far harder step, will be to build on this surprising success. + +Mr Serraj’s priority must be to persuade the House of Representatives to recognise his government. Before that can happen, a compromise must be found over the filling of senior military and security posts. The stumbling block is General Khalifa Haftar, who leads the Operation Dignity forces and has the backing of Egypt and the UAE. He wants to be defence minister, but he is a divisive figure. To win the parliament’s support, Mr Serraj must prove that he heeds its concerns about instability in the east. He may need to find a job for General Haftar to show that he is sincere (see article). + +Help wanted + +Once the legitimacy of his government is established, Mr Serraj needs to tackle two urgent problems, both of which will require the help of the outside world to fix. The first is Libya’s collapsing economy. According to the Economist Intelligence Unit, our sister company, it will shrink faster than that of any other country this year. Libya was once prosperous, but nearly a fifth of its people are now thought to suffer from malnutrition. The only thriving business is the smuggling of desperate migrants into Europe from Tripoli. + +The second and connected challenge is the growing presence of Islamic State. As IS has been squeezed in Iraq and Syria, many of the Libyans who went to join it have returned, bringing with them hardened foreign fighters and experienced administrators. They have carved out an area extending some 180 miles around Sirte, the coastal town where Qaddafi was born. Attracting some of the most extreme local jihadists, IS now has some 5,000 fighters in Libya and has been launching attacks on the country’s petroleum infrastructure. Output of Libya’s oil industry, which contributes nearly all state revenues, has fallen by 75% since 2011. + +America, Italy, France and Britain have a shared interest in helping Libya rid itself of IS and improving general security. To that end, they have drawn up plans for a 6,000-strong international stabilisation force and for a much more vigorous campaign against IS than today’s largely covert one. But they cannot proceed without the invitation of a credible Libyan government. As soon as Mr Serraj asks, they should step in. + +Greater domestic security will boost the economy. So, too, would the promise of Western investment to rebuild Libya’s hydrocarbons industry. A commitment by the UN to begin unlocking the assets of Libya’s $67 billion sovereign-wealth fund (frozen since 2011) will also help. + +This is a rare chance for a devastated country to escape extremism, violence and economic collapse. It is up to the Libyans to take it. But the West should do more than just watch. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21696526-new-unity-government-best-hope-preventing-economic-collapse-and-spread/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Peru’s election + +A dangerous farce + +Daft decisions from the electoral authority subvert democracy and undermine the rule of law + +Apr 9th 2016 | From the print edition + + + +FOOTBALL fans are familiar with the occasional match in which the referee changes the course of the game by mistakenly sending off players and awarding a dubious penalty or two. Peruvians are discovering, to their bemusement, that the referee can determine who wins in politics, too. On April 10th they will go to the polls to choose a new president. Two names, those of Julio Guzmán and César Acuña, will not be on the ballot, although polls promised them almost a quarter of the vote between them. However, barely a month before the election and after weeks of legal gyrations, the electoral authority disqualified them. + +Mr Guzmán, who had a good chance of reaching and winning the probable run-off ballot and thus becoming president, was thrown out because the small party which had adopted him changed its procedure for choosing its candidate without informing the electoral authorities beforehand. Mr Acuña was expelled for handing out a total of around $4,400 during a couple of campaign stops. + +“The law is the law,” parroted many of the two men’s rivals and Peru’s media establishment. Fine, except that in this case the law is an ass, is being misapplied and, it seems, is not the same for everyone. The electoral law has been disfigured by frequent amendments and absurd regulatory detail. Nobody in Mr Guzmán’s party complained of a violation of internal democracy. Disqualification is a grossly disproportionate punishment and elevates a minor administrative error above the constitutional right to participate in politics. Mr Acuña fell foul of a provision approved only in mid-January that bars candidates found to have handed out money or gifts. + +Then videos emerged of Keiko Fujimori, long the front-runner, at a hip-hop competition organised by her party’s youth group at which the winners were given prizes of about $90 each. Facing the prospect of an election deprived of all credibility, the parrots changed their tune. The law, it seems, is not always the law. An electoral tribunal, in a judgment smuggled out at 12.05am on Good Friday, decided that Ms Fujimori should not be disqualified. It rejected a similar allegation against another candidate. But Ms Fujimori’s campaign was in any event unfairly damaged by the referee’s actions, since she was wrongly blamed for Mr Guzmán’s exclusion. + +A warning for Latin America + +Since democracy spread across Latin America in the 1980s, no presidential candidate has been banned so close to an election. Some Peruvians spy partisan conspiracy; the charitable view is that it is blind incompetence. Whatever the explanation, the winner of the election will enjoy less than full legitimacy. That is unfortunate: even by Latin American standards, Peruvians are contemptuous of their politicians and dissatisfied with their democracy. If Peru is to remain a Latin American growth star, it needs reforms that only a strong and credible government can provide (see article). The worry is that it will see social conflict and lawlessness instead. + +Peru’s electoral farce also holds a wider warning for the region. Faced with weak political parties and cronyism, Latin American countries tend to respond with regulatory overkill. Like the red tape that chokes business, this fails to achieve its aim, because it brings the law into disrepute and leads people to break the rules. Many of the region’s democracies need reforms to restore public trust in politics. The touchstone for these should be: the simpler the better. They should deter wrongdoing, not upend elections because of procedural slip-ups. Above all, if in doubt, don’t ask the lawyers to decide: look to the voters instead. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21696528-daft-decisions-electoral-authority-subvert-democracy-and-undermine-rule-law/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Leak of the century + +The lesson of the Panama papers + +More should be done to make offshore tax havens less murky + +Apr 9th 2016 | From the print edition + + + +THREE years ago a watchdog published a series of reports on tax havens based on leaks of confidential documents. Some nervous clients of Mossack Fonseca, a law firm in Panama that specialises in setting up offshore companies, asked if their secrets were safe. The law firm told them not to fret; its data centre was “state of the art” and its encryption algorithm was “world class”. Whoops. This week the same watchdog, the International Consortium of Investigative Journalists (ICIJ), published the first stories based on a trove of leaked data on Mossack Fonseca’s clients (see article). + +The leaker (whose identity has not been revealed) provided the ICIJ with 11.5m files covering nearly 40 years. The “Panama papers”, as they have been dubbed, unveil the offshore holdings of 140 politicians and officials, including 12 current and former presidents, monarchs and prime ministers. They show how money was moved around and hidden by at least 33 people and companies blacklisted by the United States for allegedly doing business with rogue states, terrorists or drug barons. The sums involved are huge; so are some of the names. + +Friends of Vladimir Putin, the president of Russia, have shuffled $2 billion through a network of banks and offshore firms, the ICIJ claims. The brother-in-law of China’s president, the children of Pakistan’s prime minister and the cousins of Syria’s dictator all did business with Mossack Fonseca. So did the late father of David Cameron, Britain’s prime minister. + +The law firm denies wrongdoing, as do many of its clients. And indeed, there are plenty of legitimate reasons for using offshore companies or bank accounts. When two firms set up a cross-border joint venture, for example, they may choose to incorporate it on neutral turf. And the citizens of unstable countries often seek safe places to park their savings. But offshore companies are also used to dodge taxes and hide illicit wealth. + +Browsing through the data that the ICIJ has so far disclosed, it is striking how rich the cronies and relatives of some politicians have become. The daughters of Azerbaijan’s president appear secretly to control gold mines. A nephew of South Africa’s president, Jacob Zuma, has done nicely out of oil contracts in the Democratic Republic of Congo, where South Africa has sent more than 1,000 peacekeepers. Ordinary citizens are incensed. Mr Zuma faced impeachment proceedings this week over allegations that he misappropriated public money to build himself a palace and refused to pay it back (see article). Furious protests forced Iceland’s prime minister to resign, after his wife was revealed to have secret offshore investments with claims on the country’s failed banks. + +Corruption makes the world poorer and less equal. When politicians steal, they reduce the amount of public cash left over for roads or schools. When they give sweetheart contracts to their chums, they defraud taxpayers and deter honest firms from investing in their country. All this hobbles growth. + +Cleaning up tax havens will not end graft. The prime responsibility for this lies with national governments, many of which should do more to make their finances transparent and their safeguards against cronyism stringent. But it would help if kleptocrats were less able to hide their stashes. Hence co-ordinated global efforts are required to crack down on corporate anonymity and to stop the middlemen who make it so easy for crooks to launder their loot. + +Dredging the canal of corruption + +Many schemes described in the Panama papers involve anonymous shell companies, whose real owners hide behind hired “nominees”. Such vehicles are known as the “getaway cars” for tax dodgers, launderers and crooked officials. It is time to untint their windows by creating central registers of beneficial ownership that are open to tax officials, law-enforcers—and the public. The penalties for lying when registering a firm should be stiff. Britain and a few smaller countries have led the way in this. Others should follow. + +Next, regulate the law firms and other intermediaries that set up and husband offshore companies and trusts. They are supposed to know their clients, weeding out the dodgy ones. But too many are paid to act as buffers, offering an extra layer of protection against those who pry. Governments make great efforts to ensure that global banks comply with anti-money-laundering rules, while this shadow financial system is barely policed. That must change. Governments could start by making it a criminal offence to enable tax evasion by others. Mr Cameron will host a global anti-corruption summit next month. The Panama papers give him just the platform he needs to persuade other governments, and his own, to turn their tough talk of recent years into action. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21696532-more-should-be-done-make-offshore-tax-havens-less-murky-lesson-panama-papers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Tata Steel + +Cast-iron arguments + +How should governments cope with the global glut of steel? Britain is a depressing case study + +Apr 9th 2016 | From the print edition + + + +ON THE rich world’s long march away from heavy industry, Britain once again finds itself to the fore. Unless Tata Steel UK is sold in the next few weeks, its Indian owner will close it down. Some 15,000 jobs are at stake—and thousands more in the local economy of the largest works, at Port Talbot, in south Wales. Because the glut is global, Britain is grappling with questions that are bearing down upon steelmakers around the world. Unfortunately, if Britain is any guide, governments are likely to come up with the wrong answers. + +Cold-rolled gloom + +The world’s steel industry is buckling under low prices (see chart). Global crude steel output was about 1.6 billion tonnes in 2015 (Britain’s share was only 11m tonnes). The OECD puts total overcapacity at a devastating 600m tonnes. + +Politicians and campaigners are falling over themselves to say why the business must be saved (see Bagehot). They make three arguments, none of which stands up to scrutiny. Some claim that steel is “strategic”, like banks, which needed saving to prevent an economy-wrecking collapse of the payments and credit system. Others call steel a “foundation industry”—a grandiose way of saying that British manufacturers need a domestic supply. In fact steel is a globally traded commodity. If Britain suffered a geopolitical or economic crisis so severe that imports were blocked, steel would be the least of its problems. + +Another argument is that steel is cyclical. If only Tata Steel hung on for other makers to fold first, it would be a decent business. However, those 600m tonnes are grounds for scepticism. So is the fact that Tata’s British steel operations recorded pre-tax losses in 2014-15 of £768m ($1.2 billion) on sales of £4.2 billion. Port Talbot is said to be losing £1m a day. As an investor, Tata is long-term almost to a fault. It paid £6.2 billion for the business in 2007 and has spent £2 billion to cover losses. Yet it reckons its British steel plants are worth next to nothing. + +Those who disagree do not have to take Tata’s word for it. The business is for sale and anyone who thinks he can make money should bid. Specialised parts of the business, including its Shotton and Trostre plants, which make coated panels and tin-plated steel respectively, will almost certainly find buyers. One possible bidder thinks he could replace Port Talbot’s blast furnaces with plant that runs on scrap (see article). + +But watch out for the small print. Buyers seeking subsidies and tax-breaks will press a third set of arguments—that steel’s failure is the fault of government policy. Electricity prices are higher for Tata in Britain than for steelmakers in the rest of Europe. Yet this is the result of policies judged sensible for Britain as a whole. When objectives conflict, the longer-term, sustainable one should prevail. In any case, electricity is about 6% of costs: the heavy-industry rebate would surely be too small to save Port Talbot. Some want the state to take on the cost of cleaning up sites, but, like debt, environmental liabilities are part of the business. They should stay with it. + +Equally misguided is the attempt to urge the government to impose steep tariffs on steel being “dumped”, especially by China. In general, anti-dumping duties are unwise because they penalise consumers and lead to tit-for-tat protection (see Free exchange). When a globally traded commodity is at stake, they are doubly foolish. Tariffs against Chinese commodity steel would be futile—because, in a world market, steel from somewhere else would take its place. A general duty on steel would punish Britain’s most successful manufacturers. It makes no sense to save jobs in an ailing industry like steel by taking them away from a successful one like cars. + +The aim of policy should be to protect workers, not jobs. The state could help the salvageable subsidiaries find buyers by socialising Tata’s pension fund, which is almost fully paid up. In the parts that fail, the government should focus on “active” labour-market policies that match people to work using job exchanges and retraining. It should invest in infrastructure to help business in general and offer grants for people who want to move to new jobs. None of this will be easy. But, without a buyer, it is the least bad outcome. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21696527-how-should-governments-cope-global-glut-steel-britain-depressing-case/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On Harvard, HPV, the budget, America, our covers, Moore's law, Canada, queuing: Letters to the editor + + + + + +Articles Sections Next + +On Harvard, HPV, the budget, America, our covers, Moore's law, Canada, queuing + +Letters to the editor + +Apr 9th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Harvard’s endowment + +I would like to make some further comments to your article on Harvard University’s endowment (“Yard sale”, March 26th). In addition to funding Harvard College, the university’s endowment supports 12 other Harvard schools, including medicine, law and public health. It also helps fund the sixth-largest art museum in the United States, the largest academic library in the Americas and a large public park (the Arnold Arboretum) in Boston, among many other things. + +Moreover, endowments are to be maintained into inflation-adjusted perpetuity, with the principal stewarded and investment returns used to finance current operations. Overspending today would erode its future value, as well as the educational and research activities it can make possible in the years to come. + +Harvard College, through the university’s endowment, already supports one of the most robust financial-aid programmes in the nation for low- and middle-income families. Indeed, $1.5 billion has been awarded to undergraduates over the past decade. The proposed free-tuition programme would expand that effort to include wealthy families, transforming an affordability initiative into a subsidy for those who already can afford to pay. This would necessarily come at the expense of other endowment-funded activities, including research into global challenges ranging from climate change to cancer. + +JEFF NEAL + +Chief university spokesperson + +Harvard University + +Cambridge, Massachusetts + +This is not the first time government has cast covetous eyes on rich college endowments. Henry VIII, after seizing monastic endowments and giving them to his supporters, ordered an inquiry into Oxford and Cambridge college endowments in 1546. Through creative book-keeping the colleges were able to demonstrate that they were operating in the red. Henry responded archly that “he had not in his realm so many persons so honestly maintained in living by so little land and rent”. The colleges responded with obfuscation, Henry died within a year, and Oxford and Cambridge went on to prosper for centuries. I expect American universities hope for the same. + +DAMIAN LEADER + +McLean, Virginia + + + + + +HPV vaccines + +Your article on vaccines for the human papillomavirus (HPV), a common sexually transmitted infection, contained some minor errors (“The cost of embarrassment”, March 26th). In a fashion virtually identical to Pap smears performed on the uterine cervix, anal Pap smears are now being performed on men at risk for HPV- associated disease. The equivalent data to that derived from decades of Pap smears on women in lowering the incidence of cancer is lacking, but there is every reason to believe this will be an effective screening tool. In addition, some dental practices are now screening patients for tumours of the oral cavity. + +There has been a dramatic increase in HPV-associated oropharyngeal cancers. These cancers are more common in men but also occur in women. They occur because of sexual practices, not the sex of one’s partner. In addition it is worth pointing out that, in America at least, anal cancer is actually slightly more common in women than men, again related to sexual practices. + +ELLIOT WEISENBERG + +Pathologist + +Chicago + + + + + +Not convinced + +* A sure sign of a government on the back foot is when its budget defence in Parliament depends on comparisons with the performance or policies of other parties (“The fiddler’s charter”, March 19th). Accordingly, the financial secretary to the Treasury recently answered two out of three questions on the Conservatives’ budget with references to the budget deficit left by the last Labour government, Labour’s anti-business policies and the likely state of Scotland’s economy had the Scottish National Party succeeded in winning independence for Scotland. + + + +Together with a splattering of well-rehearsed supportive comments from other Tories, about the performance of the economy, getting people back to work and so on, it amounted to a poor, negative and unconvincing defence of a budget which the country desperately needed to believe in. + + + +PAUL WENMAN + +InvestAssure + +Abingdon, Oxford + + + + + +Blame the constitution + +Rather than blaming the Republicans for America’s current political situation (“What now?”, March 19th), we should look to the electoral system. America’s basic law was written in 1787 when democracy was young, there were no political parties and the principal mass medium of communication was the pulpit. Supposedly it provides checks and balances preventing tyranny, but does America, a mature democracy, need that in the 21st century? + +Parliamentary systems are better. They produce a collegial leadership where the head of government must maintain the confidence of his cabinet ministers, who themselves are leaders of geographical, ethnic, class and ideological bases. A single constituency system, such as the presidency, gives undue influence to minorities. That is the case in Israel, where the electoral list results in every government depending on the support of religious parties representing perhaps 10% of the population. A successful party in a parliament of several hundred constituencies based on the voter’s residence must campaign to the centre and govern from the centre. This makes consensus and compromise more likely. + +JAMES DECANDOLE + +Toronto + + + + + +Cover issues + +“The new normal” (March 26th) rightly called on Western politicians to condemn terrorist attacks in Lebanon and Turkey as much as those in their own countries. I look forward to the day when The Economist will feature an attack in a Muslim country on its front cover, just like those published after the Paris and Brussels attacks. + +KAMIL ALTINTASOGLU + +Wellesley, Massachusetts + + + + + +Even more Moore's law + +* In your recent coverage about “The Future of Computing” (Technology Quarterly, March 12th) the word “security” appears only once, specifically in a reference to the National Security Agency. During the decades in which Moore’s Law approximately held true (in the general sense of computer performance), computer and network security took a very distant second place as design and engineering criteria to the relentless drive toward higher performance, lower power requirements, and lower cost. As companies, governments and individuals evaluate their needs in the post-Moore’s-Law era, one can only hope that security—real security, deep security, designed into hardware, software, and networks from the bottom up—becomes a top priority. One only needs to read the newspapers to see the latest business and government breaches. Will “After Moore’s Law” include the radical redesign of hardware, software, and networks needed to provide greater security for the increasingly computer- and network-dependent world? + +C. C. WOOD + +Santa Fe Institute + +Santa Fe, New Mexico + + + +Canada’s budget facts + +Your piece on Canada’s recent federal budget mentions the “discipline” practised by the former Conservative government (“Globalisation with a human face”, March 26th). Nothing could be further from the truth. Under Stephen Harper as prime minister, Canada’s Conservatives added some C$150 billion ($115 billion) to the national debt between 2006 and 2015 because of a consistent string of annual budget deficits. Reducing Canada’s goods and services tax (GST) from 7% to 5% early in the party’s nine-year term exacerbated the problem by taking out C$15 billion a year from the federal treasury. + +In fact, Canada’s commodity taxes, specifically the value-added GST, are very low by OECD standards; lowering it further reduced the government’s ability to weather the economic storms of 2007-08. + +ROY CULLEN + +Liberal member of Parliament, 1996 to 2008 + +Victoria, Canada + + + + + +Taking a line + +I read your piece on the growing profession of the codista (queuer) in Italy (“Worth their wait in gold”, March 19th). As early as the 18th century, Romans made money by occupying seats in restaurants and theatres for wealthy folk, running errands and standing in line. The practice was so rampant that travellers to Rome reported pubs full of “sitters”, people paid to reserve a seat hours before a wealthy patron would arrive for lunch. + +During the high season when thousands of pilgrims visited Rome’s churches, poor Romans were paid to stand in line and await the arrival of rich Germans, Swedes and Britons, so that they “may be spared the indignity of being seen standing in the muddy streets”, according to one book. + +MARTIN HIESBOECK + +Taipei + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21696490-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +The new face of Facebook: How to win friends and influence people + + + + + +Articles Sections Next + +The new face of Facebook + +How to win friends and influence people + +The social network has turned itself into one of the world’s most influential technology giants, and wants to become ever more powerful + +Apr 9th 2016 | SAN FRANCISCO | From the print edition + + + +A HUGE thumbs-up, Facebook’s “like” symbol, greets visitors at the entrance to the company’s headquarters in Menlo Park, in the heart of Silicon Valley. The imposing sign is crafted from that of a former occupant of the attractive corporate campus, Sun Microsystems, a once high-flying startup that crashed before Facebook moved there in 2011. When employees leave they can see Sun’s name and logo still inscribed on the back of the sign. This corporate memento serves as a reminder of how quickly fortunes can change if tech startups take success for granted. + +Not long ago sceptics dismissed Facebook itself as a fad. Having watched its early rivals stumble, many doubted the longevity of another social network and underestimated the ingenuity of its 31-year-old boss, Mark Zuckerberg. An ill-managed initial public offering in 2012—the firm’s share price sank on the first day of trading—seemed to confirm those doubts. But those betting against Mr Zuckerberg were wrong. + +Facebook is now the sixth-most-valuable public company in the world, with a market value of around $325 billion. Facebook claims nearly 1.6 billion monthly users for its social network (see chart 1). Around 1 billion people, nearly a third of all those on the planet with access to the internet, log on every day. + +Facebook takes up 22% of the internet time Americans spend on mobile devices, compared with 11% on Google search and YouTube combined, according to Nielsen, a research firm. As a result it has more data about more users than almost any other company in history. It has used that advantage to become one of the most powerful forces in the advertising business. Its revenues have more than doubled in two years, to $18 billion in 2015. + + + +The firm has maintained its dominance by becoming one of the tech industry’s most active acquirers, buying other services that might have lured users away. Since 2012 it has spent more than $25 billion on businesses including Instagram, a photo-sharing site, WhatsApp, a messaging service, and Oculus, a virtual-reality firm. Americans spend 30% of their mobile time with Facebook and other apps it owns (see chart 2). + +Facebook has become more like a holding company for popular communications platforms than a social network. But even that description understates Mr Zuckerberg’s ambitions. He is making big bets on the future of communication, mainly messaging services, artificial intelligence and virtual reality. Speaking to The Economist Mr Zuckerberg says that he sees his company as “a mission-focused technology company”. That puts it in direct competition with other tech-industry titans, especially Google. + +Faced with the challenge of how to grow when a huge share of the connected globe already uses his products, Mr Zuckerberg is determined to bring the internet, and so Facebook, to people who are not yet linked up. One scheme involves an unmanned solar-powered plane. Such plans are audacious, sometimes controversial and by no means guaranteed to be successful. But Mr Zuckerberg has a history of pushing beyond what most observers thought possible. + +I’m liking it + +Facebook has reached its position of influence and power by defying three maxims about the internet: that social networks have short lifespans, that it is impossible to make money from them and that mobile advertising is a grim business. + +Facebook goes from strength to strength but only narrowly avoided the fate which befell rival services that seemed destined for dominance. Friendster and MySpace fizzled out. Frequent headlines about executive departures in its early days contributed to the suspicions that Mr Zuckerberg was leading his startup to a similar disaster. In 2006 he came close to selling Facebook to Yahoo for $1 billion, but pulled out when it tried to negotiate the price down. Other firms, including Viacom and Microsoft, have also been suitors. + + + +Mr Zuckerberg, however, always had a long-term plan. He spoke about how the service could become a “utility” and talked about the next ten or even 20 years, causing mirth among industry veterans. + +That meant ensuring that Facebook did not meet the same end as Friendster, where frequent outages and long page-load times caused users to abandon it. From the start Facebook invested heavily in technology so the site would not go down. It expanded gradually to universities beyond a select group, then high schools and the rest of the world, but only when it felt it had the server capacity to support new users. The firm’s technology infrastructure “is not visible, but that is probably what we have spent most of our time on,” says Mr Zuckerberg. + +Status update + +The company’s commercial ambitions and professionalism changed markedly in 2008 when Mr Zuckerberg hired Sheryl Sandberg as chief operating officer. An early employee at Google, she had an important role in building the search engine’s ad business. At Facebook she has plenty to play with. The mass of data it has on users is attractive to advertisers, who can target messages to their desired audiences with greater precision than they can through traditional media, such as television. + +Facebook has had to adapt to fast-changing technology and the habits of users to reap the rewards of digital advertising. By 2012, when it had built a robust ad business primarily for desktop computers, users started spending more time on mobile devices. This sparked a crisis at the company around the time of its initial public offering. “We had a problem, which was that we had exactly no revenue on mobile,” says Ms Sandberg. Services developed for use on mobile devices, such as Twitter, a live-blogging platform, were reckoned more likely to succeed. + +Twitter squandered its advantage. And mobile has proved an unexpected boon for Facebook, which is better suited to smartphones. Last year its advertising revenues were eight times greater than Twitter’s, largely because it has more users who spend more time generating more data. But it is also a result of Facebook’s more settled management. Since it went public Facebook has kept most of its senior bosses, regarded in Silicon Valley as among the best at getting things done—unlike Twitter, which is plagued by dysfunction and turnover at the top. And this stability allowed Mr Zuckerberg to devote more time and money to working out a suitable format for mobile advertising. + +Mobile devices lengthen the amount of time people spend online each day, and give advertisers more information with which to target messages, including where users are and what type of device they own (wealthier ones tend to have iPhones). Facebook’s ads appear in users’ newsfeeds, where news from friends and other content is collected. They look like updates from pals, featuring a glossy photo or video of a product. + +Facebook has also reached new users in emerging markets, such as Indonesia, where mobile phones are more common than desktop computers. Around a third of Facebook’s active users are in Asia (excluding China, where the service is blocked). Another third are in America and Europe; and the rest are elsewhere around the world. Of the top ten apps in India, Facebook controls three. + +Facebook is in such an exalted position because no other company, with the exception of Google, has as many users, knows as much about their behaviour online and can target them as effectively. In addition to all the personal and geographical information, interests, social connections and photos users share, the social network is able to see where else they go online. Anywhere with a “like” symbol feeds back information, as do sites that allow people to log on with their Facebook credentials. + +Advertisers can reach consumers with laserlike precision. An energy-drink company may target ads at parents of teenage athletes; a retailer can market goods to people from specific neighbourhoods who have visited its website. “There are three compulsory elements to online advertising today: you have to have a mobile website, and be involved with Google and Facebook,” says Peter Stabler of Wells Fargo, a bank. As a result Facebook claimed 19% and Google 35% of the $70 billion spent on mobile advertising worldwide in 2015, according to eMarketer, a consulting firm (see chart 3). Twitter and Yahoo had to make do with a meagre 2.5% and 1.5%, respectively. + + + +Facebook is likely to remain on Google’s tail. Its core service continues to grow. Last year it added 200m new users. It has successfully outmanoeuvred regional competitors, such as Orkut, a social network owned by Google that was popular in Brazil. This is partly down to Mr Zuckerberg and his hacker mentality. He believes in rolling out products quickly: “Move fast and break things” is a company motto. Not everything works. Paper, a stand-alone app that aggregated news articles, was a notable flop. And sometimes employees complain about being “Zucked” when he changes his mind. + +Mr Zuckerberg’s big acquisitions have helped to defend his firm’s place in the social-network order. The first was Instagram, a budding mobile photo-sharing service, bought for $1 billion in 2012. At the time, that seemed a huge sum for a firm with no revenues and only 13 employees, but now Instagram is regarded as a steal. Facebook started selling ads on Instagram only last year but this year they could bring in over $2 billion in revenues, according to Mark Mahaney of RBC Capital, a bank. + +Instagram’s price tag was modest compared with the $22 billion Facebook paid in 2014 for WhatsApp, a profitless messaging service that then had 450m users, many of them in emerging markets. Services like WhatsApp, which let people communicate instantaneously, are potent because they compete with other social networks for time spent online and data collection. + +Facebook has, for that reason, separately cultivated its own service, Facebook Messenger, which boasts 900m users. WhatsApp now has 1 billion users and analysts agree that the deal was a smart one. “There were three existential threats to Facebook: WhatsApp, Instagram and Snapchat,” says Jeremy Philips of Spark Capital, a venture-capital firm. “Zuckerberg bought two of them for a little more than 10% of Facebook’s market cap.” + +Aside from the blockbuster acquisitions a little-noticed deal has also proved shrewd. Facebook’s bought Onavo, an Israeli startup involved in mobile analytics, for a rumoured $120m in 2013. Onavo helps Facebook track which apps are becoming popular and could be worth purchasing. + +Onavo was instrumental in the acquisition of WhatsApp and also helped Facebook spot that Snapchat, a messaging service, was fast becoming popular, especially with teenagers. Facebook reportedly tried to buy Snapchat in 2013 for $3 billion. Today Snapchat, which is still privately owned, is said to be worth $16 billion and probably poses the greatest direct threat to Facebook for teenagers’ time. + +Facebook proves that social networks do not always have short lifespans, but there remains the persistent concern—present in many real-life social networks too—that someone newer and cooler is going to come along. And Facebook will not be able to buy every rival. + +Mr Zuckerberg insists his firm is not going to waste cash and time on an acquisition unless it has the potential to grow into a truly fearsome competitor. “A lot of companies will try to acquire the number two or three product and assume that they can make it good. We are not interested in that,” he insists. It will probably leave alone sites like Pinterest, where people post photos of things they like. “If you look at everything we are doing through the lens of this intense mission focus and this underlying focus on building technology platforms, everything we do will make sense,” Mr Zuckerberg explains. + +Facebook’s plan is to embed itself deeper into people’s daily lives. That will make it harder for users to leave or switch to competitors. In the past Facebook has tried, in partnership with software developers, to become a “platform” on top of which other firms can build content and apps. However, with the exception of gaming, this plan has failed, in part because the scheme was mismanaged but also because a social network is not a natural means of interacting with companies and services. + +Facebook is pushing Messenger and WhatsApp, to become services through which people can buy things and privately communicate with businesses. For example, KLM, a Dutch airline, is giving flyers access to boarding passes and flight information through Messenger, and letting them chat with customer-service representatives. Already people can hail an Uber car through Messenger instead of going to the taxi firm’s own app. + +Sign in with Facebook + +The strategy of turning a messaging app into a platform has been a success for WeChat, a Chinese messaging app which enables users to do everything from wiring money to ordering food for delivery. Messaging services are sure to play a larger role as the mobile internet evolves beyond apps (see article). This will make Facebook even more powerful, because it can connect what people share with their friends in a public forum (a social network) with private transactions and communications (messaging services), giving it even deeper insight into people’s behaviour on the web. + +Facebook has already become a sort of “universal passport” on the internet, allowing people to log on to other websites using their Facebook credentials. Its messaging strategy is a more concerted push in the direction of becoming an authenticator of people’s digital lives. The more it knows about users and the more users that go through it, the greater its power as a single port of call online, and the less likely it is to be dislodged by competitors. + +Messenger is also experimenting with a personal-assistant service, called M, which is operated through a combination of human errand-runners and artificial intelligence (AI). It can answer people’s questions and complete assignments, such as recommending and buying gifts. + +Several other firms are betting that people will use the internet differently in the future too. Google Now and Microsoft’s Cortana also offer help from a smart “secretary”, which employs clever algorithms to anticipate people’s needs and tell them what they want. Such a shift will intensify the relationship between tech firms and their users. + +Facebook does not make money from WhatsApp or Messenger, and is unlikely to introduce advertising on them, but it could start to take a cut of transactions that are completed on these services or charge businesses for finding customers. Facebook’s strategy, which many startups embrace, is first to build up usage and then design a business model later. By one estimate the combined revenue of Messenger and WhatsApp could be $10 billion by 2020. + +One question is how big the messaging business will become. Another is what other ventures will widen Facebook’s net. The social network is full of posts by amateurs (otherwise known as your friends). Investing in professionally made content might lure ever more users. The firm is already spending more money on video. + +Another possibility might be to acquire Pandora, a popular music-streaming firm. Although Facebook never buys media companies and, rather than making its own content, has preferred producing it in partnerships with established firms in the industry, the idea might not be so far-fetched. Mr Zuckerberg’s first startup, developed when he was at boarding school, was a music-recommendation service. + +Facebook owes much of its past popularity and profitability to clever predictions about what people want to see: photos and videos, relevant posts about their friends, adverts that are not too annoying. All of this is possible in part because of AI. Facebook’s success in the future will depend on its offering even more useful services. With that in mind it is investing heavily in AI. + +Facebook does not have the field to itself. Google is acquiring AI startups and talent. In 2014 Facebook tried to buy DeepMind, a startup in “deep learning” which lets computers work out, by repeatedly processing complicated statistics, how to extract general rules from masses of data. It was outbid by Google, which reportedly paid $600m for the firm. Facebook then set up its own AI lab. So far it has helped Facebook to target ads better and to filter spam, which means fewer human workers are required for those tasks. + +The lab has already paid its way for the next ten years, says Michael Schroepfer, the firm’s chief technology officer. Though AI has mundane applications like spam filtering, it could also lead to more ambitious and profitable breakthroughs that Facebook is keeping under wraps for now. + +Facebook is investing in other areas where fast-developing technology is opening new opportunities. In 2014 it bought Oculus VR, which makes virtual-reality headsets, for around $2 billion. In partnership with Samsung, it has released a headset costing just $99 and recently started selling the Oculus Rift, an expensive version for gamers. VR’s prospective audience may not extend much beyond a niche. But the acquisition of Oculus keeps it out of the hands of competitors and is a relatively cheap gamble in case VR suddenly becomes popular. + +Oculus will also help Facebook develop its expertise in augmented reality (AR). Unlike VR, which requires a headset and provides an all-encompassing experience, AR displays digital information against the backdrop of the real world. Despite the failure of Google Glass, people may eventually wear glasses which let them glance at relevant information, if they become smaller and sleeker. “You have to build the BlackBerry before you can build the iPhone,” explains Mr Zuckerberg. Facebook has lots of competitors in AR, including Microsoft, which is building its HoloLens glasses, and Magic Leap, a secretive startup in which Alphabet, Google’s parent company, has an investment. + +Friending the world + +Facebook’s most audacious and controversial scheme yet is to take a role connecting the world’s poor to the internet and to its social network. It has joined forces with mobile-phone operators in emerging markets to make a lighter version of Facebook that is accessible without incurring data charges. Now it is thinking in even grander terms, beaming down the internet from the sky. + +This smacks to some of calculated corporate self-interest dressed up as humanitarian rhetoric. Facebook’s critics are fearful that it might control poor people’s use of the internet, giving access only to a few sites including Facebook but not introducing them to an “open” web. In February it suffered a setback when attempts to connect Indians to a free version of Facebook was struck down by the country’s telecoms regulator. It said that the scheme violated net-neutrality rules, which call for equal treatment of all web traffic. + +Mr Zuckerberg sees such efforts as a logical next step in Facebook’s mission to “make the world more open and connected”. He has hired aerospace engineers from NASA’s Jet Propulsion Laboratory and its Ames Research Centre. They have designed Aquila, an unmanned plane with the wingspan of a passenger jet but the weight of a car. Powered partly by solar panels that enable it to fly for months at high altitudes, the plane will transmit data using laser beams to towers and dishes in far-flung places. + + + +A fierce rivalry on Earth—over users’ time, advertisers’ dollars and the best engineering talent—is now a battle in the sky. Alphabet is also working on a plan to bring the internet to people in poor countries using hot-air balloons and drones. + +Schemes to bring connectivity to the unconnected highlight one of Facebook’s biggest challenges: as so many people already use its services, how can it attract more of them? China, a vast market, is out of reach, because its government refuses to let in Western internet firms. Nonetheless, Mr Zuckerberg is ready if China opens up. He has learned Mandarin and serves on an advisory board of Tsinghua University in Beijing. His smiling profile picture on Facebook was taken in China and recently he posted a photo of a smog-shrouded jog through Tiananmen Square in Beijing. + +Mr Zuckerberg’s personality suggests that he will not stop looking for a way to keep his company growing. He has an intensity and inquisitiveness reminiscent of Jeff Bezos, the founder of Amazon, who started selling books online as a gateway to selling everything. His long-term approach to building his business should continue to serve him well. + +Mr Zuckerberg does not appear to be motivated by wealth. Last year he and his wife pledged to give away most of their fortune to causes they care about, some of which align with Facebook’s interests, such as “connecting people and building strong communities”. Although he has a reputation as a computer hacker who does not play by even Silicon Valley’s relaxed set of rules (an image that “The Social Network”, a Hollywood film which dramatises the early days of Facebook, did little to dispel), Mr Zuckerberg has grown up. + +As Facebook expands, however, it will face two tough issues that come with its particular type of triumph: market dominance and privacy. Microsoft and Google have shown that success can bring regulatory scrutiny. Already watchdogs around the world, and especially in Europe, are keeping an eye on Facebook. They may intervene if the firm continues to buy budding rivals. Given this closer scrutiny, it seems probable that Facebook would face objections were it to try again to purchase a large competitor, such as WhatsApp. + +Privacy issues, too, will loom large. As Facebook pushes into messaging and other services, it will collect even larger amounts of data about users’ activities. Already the European Union, which takes a sterner view about privacy than America’s government, is looking at how Facebook uses and stores that information. In March Germany’s competition authority launched an inquiry into Facebook’s dominance and its notoriously complicated terms and conditions, which most users dismiss with a rapid click of agreement. + +Facebook has a history of hastily changing its privacy policy and the information it shares in public. In 2007 it revealed people’s activities on external websites without their consent (showing, for example, the purchases they made on other sites), causing an outcry. Such occurrences have damaged the firm’s reputation for protecting users. + +Facebook’s brand ranks below that of other technology companies according to the Reputation Institute, a think-tank, in large part because of its perceived lack of trustworthiness. Chris Cox, Facebook’s chief product officer, says the main misperception about the company is that it sells people’s data. In reality, it matches advertisements to users while keeping that information to itself. But users remain wary that Facebook’s interests are not the same as their own. + +Likeability is not always necessary for firms to thrive. Ask any big oil company. But the big thumbs-up at Facebook’s gateway is a reminder that for a service bringing friends together and with ambitions to control the digital connective tissue between them, it is critical. This is not the youthful Mr Zuckerberg’s first big test, but it may be the defining challenge of Facebook’s adulthood. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21696507-social-network-has-turned-itself-one-worlds-most-influential-technology-giants/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Wisconsin and after: Donald downed? + +Open conventions: A user’s manual + +Wisconsin’s Democratic primaries: Sewer socialism’s heir + +The campaigns: Heard on the trail + +Hawaiian agriculture: Paradise sprayed + +Atlantic City: Out of luck + +Catching halibut: Wiki-fishing + +Lexington: The primaries puzzle + + + + + +Articles Sections Next + +Wisconsin and after + +Donald downed? + +Defeat for Donald Trump in Wisconsin is a bad blow, but far from fatal + +Apr 9th 2016 | MILWAUKEE | From the print edition + + + +A STATE synonymous with cheese, niceness and the troglodyte habits of its early European settlers, Wisconsin is being additionally celebrated, by wishful Republicans, as Donald Trump’s Waterloo. The blowhard tycoon was trounced there on April 5th, losing to Ted Cruz, his last serious rival, by a 13-point margin. He even lost in Waterloo, Wisconsin, the sort of languishing factory-town whose inhabitants had helped him win 20 of the previous 32 Republican primary contests. Across the state’s south-east, which Mr Cruz swept, Republicans emerged from polling booths, on an icy day, to say they wanted “anyone but Trump”. According to exit polls, six in ten said the prospect of a Trump presidency made them “scared” or “concerned”. + +The Democratic front-runner, Hillary Clinton, also suffered in the Badger State. She lost to Bernie Sanders by 13.5 percentage points, extending his run of victories to six of the past seven states. Yet the former secretary of state has a dual consolation which Mr Trump lacks. Packed with white progressives, Wisconsin’s Democratic electorate always looked unusually likely to favour Mr Sanders (see article). More important, because the Democrats pony up all their delegates in proportion to vote-share, his victory has only slightly reduced Mrs Clinton’s massive delegate-lead. Provided Mr Sanders does not win the biggest remaining primaries, starting with New York on April 19th, by almost unimaginably big margins, she has little to fear, except further embarrassment. + +Wisconsin Republicans, similarly, always looked a tad more conservative and well-educated than Mr Trump would have wanted; his blend of nativist bile and egotistical bunkum go down best with the lightly educated, unideological and aggrieved. Yet he recently led in some opinion polls in the state. His defeat, with 35% of the vote to Mr Cruz’s 48%, was due to a consolidation of the anti-Trump vote in favour of Mr Cruz, which was in turn partly due to the recent winnowing of the Republican field—and also to Mr Trump. + +The tycoon’s habitual offensiveness and displays of flabbergasting ignorance have set a high bar for gaffes; this is a candidate who entered the race calling Mexicans rapists and promising to reverse globalisation. Even so, his pre-Wisconsin performance seems to have given some potential supporters pause. He advocated banning abortions and punishing any woman who had one, which alarmed even ardent pro-life Republicans. On second thought, he then said abortion should remain legal, which alarmed them doubly. He advised South Korea and Japan to get nuclear weapons. He predicted a “very massive recession”, unless he becomes president, in which case, he said, he would eradicate America’s $19 trillion debt in eight years (without raising taxes). + + + +It was pathetic; Mr Trump’s efforts to undo the damage were beyond parody. Aware that he has a bit of a problem with women, seven out of ten of whom dislike him, the Republican front-runner invited a lachrymose former Miss Wisconsin and his wife, Melania, to read out praise poems to him at his pre-vote rally in Milwaukee. At least the row of college dudes seated in front of your correspondent—wearing T-shirts showing Mrs Clinton’s face and the slogan “Trump that bitch”—loved it; most said they were for John Kasich, an also-ran in Wisconsin. + +It is, as always with Mr Trump, easy to exaggerate the negative effect of such absurdities. He won 35% of Wisconsin’s Republicans, representing an undeterrably Trumpian core vote that is present in almost every state. Its Wisconsin members were easily found and unabashed. “He says all the damn wrong things, but I feel in my heart he’s the right guy to make a change,” said Carol, a former machinist, laid off after 20 years’ graft, outside a polling station in the Milwaukee suburb of New Berlin. “There’s no jobs—they’ve all been shipped to China—nothing’s left for the kids,” she said, hugging a leaflet entitled “How to get Social Security online” against the chill. She didn’t give two hoots what Mr Trump said about abortion; he actually did as well with women in Wisconsin as with men. He failed there because, only partly as a result of his blunders, he could not prevent almost all the votes formerly dedicated to Marco Rubio, Jeb Bush and other former candidates going to Mr Cruz. “I don’t like Cruz at all,” said John, a machinist in Jefferson, southern Wisconsin, though he had just voted for the Texan. “But Trump brings hatred.” + +Wisconsin was the first primary wholly conducted in a three-man field, an ill marker for Mr Trump. Yet he leads Mr Cruz by 237 delegates, and in several forthcoming states his core vote looks big enough to stretch the gulf. He leads the polls in his native New York and Pennsylvania, which have 166 delegates on offer between them, by double-digit margins. His setback, in short, does not look Napoleonic. Yet it has made it even harder than it already was for Mr Trump, a weak front-runner by historical standards, to bag the 1,237 delegates he needs for victory. That raises the prospect of America’s first truly contested party convention in six decades, in Cleveland in July—and, if Wisconsin is a guide, of much intrigue, with the Republican top brass already lining up to nobble Mr Trump. + +That was obvious in Wisconsin, where the state’s Republican establishment—represented by Scott Walker, a failed presidential candidate but popular governor—was organised and unanimously for Mr Cruz. It was also apparent in the lavish spending of anti-Trump groups, such as Our Principles PAC, which splurged $2m in attack ads—outspending Mr Trump 4:1—in the run-up to the primary. Most worryingly for Mr Trump, it is evident in a brewing shadow war over the selection of the delegates who will be charged with naming the Republican nominee in Cleveland. + +In normal times this scarcely matters, because most delegates are bound to vote according to their state primary results in the first case. In the event of a contested convention it would matter a lot, however, because most delegates are unbound in subsequent votes. That Mr Cruz’s supporters, who typically include a sort of small-fry ideologue influential in the Republican grassroots, are quietly easing their own onto state-delegate slates could therefore be hugely significant. Mr Trump, by contrast, appears to have only belatedly awoken to the issue; his campaign has laid off staff in many states and in any event starts with a disadvantage, because of its relative reliance on independent voters. It is indeed hard to imagine how a gaggle of self-styled outsiders, united by Mr Trump’s personality cult, can compete in a game of Republican Party politics. Already, a whiff of sour grapes pervades their efforts. Asked whether Mr Cruz was beating Mr Trump in the battle for delegates, Diana Orrock, the tycoon’s only declared supporter on the Republican National Committee, said, “You hear stories about delegates being offered monetary prizes for their loyalties. Of course, they have yet to be confirmed.” + +A contested convention would be messy; but Republicans have no other way to avert the calamity Mr Trump would mean for their party. Were he its candidate in November, 29% of Republican voters in Wisconsin said they would vote for Mrs Clinton or a third-party candidate, or not vote. If Mr Cruz were the candidate, that disaffected portion would fall—but only to 25%, making him a poor saviour. Hope, for Republicans, comes in small doses. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21696565-defeat-donald-trump-wisconsin-bad-blow-far-fatal-donald-downed/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Open conventions + +A user’s manual + +The thing of which political journalists dream looks increasingly likely + +Apr 9th 2016 | From the print edition + + + +AS A matter of logic, the front-runners seeking the Republican presidential nomination should have welcomed a petition calling for guns to be allowed at the party’s national convention, to be held in Cleveland, Ohio from July 18th-21st, which drew more than 50,000 signatures. After all, Donald Trump says that the terror attacks in Paris would have been “much different” if more French citizens had been armed, while Senator Ted Cruz of Texas has denounced “gun-free zones” that turn the unarmed into targets for “lunatics”. Oddly, both men deferred to the Secret Service, which said no guns. Others sighed with relief, for this year’s Republican National Convention may be a brawl. + +That marks a break with recent history. The main task of a national convention is to pick a presidential candidate, a choice made by delegates representing different states and territories. This year there will be 2,472 delegates—local worthies selected at state conventions or by party committees. Most delegates are “bound” in the first ballot, meaning they are allocated to a candidate by the results of a primary, caucus or convention back home. At every national convention since 1980 the winner was known before the first ballot, because a candidate arrived with a majority of delegates bound to him, turning the convention into a coronation. This year, if no candidate has secured 1,237 delegates then the voting could go on and on (see chart). + +Trump backers insist that—should the businessman fall short of a majority but reach Cleveland with more delegates than any rival—there would be outrage if party “kingmakers” try to “steal” his nomination. Mr Trump himself has speculated about “riots”. The political context may be on Mr Trump’s side: this is, after all, an election cycle dominated by rows between the angry grassroots and a weak party elite. + +The lessons from history are less clear. The party has held ten contested conventions. Only three nominated the candidate who initially boasted the most delegates. From the 19th century until the 1970s, Republican nominees were chosen after back-room deals between party barons and political machines, occasionally triggering fist-fights and furniture-smashing on the convention floor. Often the most important battles took place at state conventions and then in committee meetings in the days just before the convention, at which voting rules were set and the credentials of delegates loyal to one faction or other could be summarily revoked. The convention of 1880 went to 36 ballots, leaving all early favourites by the wayside. + +Even today, convention rules are less like laws than the weapons with which political battles are fought. A rule of 2012, put in place by Mitt Romney’s allies to squash an insurrection by fans of Ron Paul, a libertarian, states that the presidential nomination is reserved for candidates who have won a majority of delegates in eight states. That bylaw, Rule 40, could stymie John Kasich and would prevent grandees from drafting Paul Ryan, say, as a last-minute nominee—unless the 2016 rules committee revokes it (a decision a majority of delegates would have to endorse). + +John Hudak of Brookings, a think-tank, suggests that the real difference between 1880 and 2016 is that modern parties cannot build, fund and run a presidential campaign in the three and a bit months between the Republican convention and election day. That favours today’s two front-runners, Mr Cruz of Texas and Mr Trump. Both men are flawed national candidates, but both have established campaign machines. This year, convention delegates may face only bad options. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21696560-thing-which-political-journalists-dream-looks-increasingly-likely-users-manual/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Wisconsin’s Democratic primaries + +Sewer socialism’s heir + +The cradle of progressive politics is enamoured with Bernie Sanders + +Apr 9th 2016 | MILWAUKEE | From the print edition + +Let’s talk plumbing + +“WE HAVE a history of progressive politics,” says a voter in Wisconsin’s primary elections. He is leaving the Frank Zeidler municipal building, named after Milwaukee’s three-term Socialist mayor, who stepped down in 1960. The voter, an employee at the state Department of Transport, opted for Bernie Sanders, whose environmental policies he especially likes. Even if Mr Sanders does not become the nominee, he argues, his ideas will have gained prominence. Next time round an even stronger candidate espousing his ideas could win. + +Almost everyone leaving the Zeidler building on a chilly April 5th had voted for Mr Sanders, who went on to win the primary with 56.5% of the vote compared with 43.1% for Hillary Clinton. “This is one of the most Democratic wards in a very Democratic city,” said Katie Parch, who also voted for the senator from Vermont. + +Surrounded by staunchly Republican suburbs, Milwaukee was the cradle of the American socialist movement. Founded by mostly German immigrants, this was sometimes referred to as “sewer socialism” because of its proponents’ habit of boasting about the city’s excellent sewer system and their fixation with cleaning up political life. In the early 20th century, socialists competed in the city with progressives. Robert La Follette carried Wisconsin for the Progressive Party when he ran for president in 1924, on a Sanders-ish platform of pacifism and trustbusting. + +To many Wisconsin progressives, especially students, Mr Sanders seems to be the rightful heir of this legacy. He denounces inequality, wants free public college education and free health insurance for all, promises to introduce a $15 minimum wage nationwide and to spend $1 trillion on the country’s crumbling infrastructure. “One-tenth of 1% own as much as the bottom 90%,” he boomed to boos from the audience at a rally at the Wisconsin Convention Centre on April 4th. The Waltons of Walmart, he continued, own as much as the bottom 40% of the population. (The Waltons are a favourite whipping boy at his rallies, because they pay their workers’ “starvation wages” that require many of them to rely on state assistance.) + +The self-proclaimed democratic socialist never bothers much to explain how he would pay for his promises. But this did not seem to matter to many of his fans, who came out in force for a rally on an evening when the opening game of the local baseball team, a Donald Trump pageant at the nearby Milwaukee Theatre and the Tripoli Shine Circus competed for attention. + +Does Mr Sanders still have a chance of winning the Democratic presidential nomination? He has triumphed in six of the past seven primaries and caucuses and raised $15m more than Mrs Clinton in March. Yet she leads with 1,748 delegates (out of 2,383 needed) compared with 1,058 for Mr Sanders. Punters on Predictwise, a prediction market, give Mrs Clinton an 89% chance of clinching the nomination. To catch up, Mr Sanders would need to win big in the New York primary on April 19th, when 291 delegates are up for grabs (an unlikely victory, but not impossible), as well as in Connecticut, Maryland and Pennsylvania the next week. + +Even if he loses those contests, Mr Sanders vows to campaign all the way to the convention. That leaves Mrs Clinton grappling with a much stronger and better-funded rival than she anticipated. And to the delight of many Milwaukeeans, it increases the chances of social-democratic ideas taking root in a country notoriously hostile to them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21696566-cradle-progressive-politics-enamoured-bernie-sanders-sewer-socialisms-heir/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +Apr 9th 2016 | From the print edition + + + +It’s who you know + +“I have actually—believe it or not, I have a lot of friends that are Muslim...In most cases, they’re very rich Muslims, OK?...They’ll come in. And you’ll have exceptions.” + +Donald Trump will let his rich Muslim friends into America. MSNBC + +Modest mouse + +“My life has been about victories. I’ve won a lot. I win a lot. I win—when I do something, I win. And even in sports, I always won. I was always a good athlete. And I always won. In golf, I’ve won many club championships. Many, many club championships.” + +Trump just can’t stop bragging. Washington Post + +Superego? + +“Really, I feel like we are watching an id—an id with hair.” + +Hillary Clinton on Mr Trump. New York Post + +Not a native New Yorker + +“Look, look, the pizza came scalding hot, OK? And so I use a little fork.” + +John Kasich defends his shocking (in New York) deployment of cutlery on his pizza. He put it away after his first bite, telling a reporter: “I’ve been eating pizza since before you were born!” ABC + +Easy rider + +“The bikers love Trump. I’m not a huge biker, I have to be honest with you, OK? I always liked the limo better.” + +Donald Trump campaigning in Wisconsin, home of Harley-Davidson. + +Full disclosure + +“Mid-century modern home with a true park-like setting. Smoking and animals okay…Close to Cuyahoga Valley National Park, Montrose shopping.” + +Serial killer Jeffrey Dahmer’s childhood home in Akron, Ohio is available for rent during the Republican convention. Cultofweird.com + +White privilege + +“As long as you come here legally and get a proper job…we need immigrants. Who’s going to vacuum our living rooms and clean up after us? Americans don’t like to do that.” + +Ivana, the first Mrs Trump, needs domestic help. New York Post + +Mad hatter + +“There is an ironclad rule of politics, which is: No funny hats…And any hat is, by definition, defined as a funny hat.” + +Ted Cruz refused to wear a cheesehead hat while campaigning in Wisconsin. That didn’t prevent him being photographed behind a giant cheese-hatted mouse. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21696576-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Hawaiian agriculture + +Paradise sprayed + +Poisonous debates rage around pesticides and those using them + +Apr 9th 2016 | HONOLULU | From the print edition + + + +IN 1893 the overthrow of Hawaii’s last monarch, Queen Liliuokalani, involved powerful plantation owners backed by American forces. When sugar and pineapple operations eventually declined, agricultural biotechnology firms set up during the 1960s: Monsanto, BASF, Syngenta, Dow AgroSciences and DuPont-Pioneer, which all remain in place. But big agricultural interests still seem to inspire little trust in the state. An argument over pesticide use has settled like a fine mist over the operations of these companies. + +Over half a billion pounds (600,000kg) of pesticides are used in America each year; the Environmental Protection Agency (EPA) regulates their distribution, sale and application. Much of its oversight is delegated to state departments of agriculture. The EPA distinguishes between “general use” pesticides, for all and sundry, and “restricted use pesticides” (RUPs) for application only by those qualified to do so. These types are among the most regulated and most toxic. + +In Hawaii 1.3m pounds of active ingredients contained within RUPs were sold in 2013. Hungry termites meant 36% of the stuff was used for urban and structural purposes; 32% went on agricultural ones. But patchier data since make it difficult to ascertain what exactly is sprayed where in Hawaii, and by whom. Groups on different sides of the debate try to fill in the gaps. According to calculations by the Centre for Food Safety, an advocacy outfit, 17 times more restricted-use insecticides, which target bugs, are unleashed per acre on maize crops on the island of Kauai than are used on America’s mainland. + +Hawaii is far better known for its surfers than its farmers. Yet the land devoted to seed crops increased tenfold between 1982 and 2011 (biochemical firms own about 25,000 of the 1.4m acres used for farming in the state). The tropical climate allows three harvests a year, meaning biotech wizards can produce new inbred seeds in about half the time it would otherwise take, according to Shay Sunderland, who works at Monsanto’s Kunia site on the island of Oahu. Parent inbred seeds from Hawaii are then used to produce hybrid plants from Brazil to Pakistan. + +Critics say pesticides used in this process harm the health of Hawaiians and their children. Some oppose genetically modified crops altogether. State legislation to introduce buffer zones around recently sprayed fields failed to pass last year. But since 2013 several Hawaiian counties have passed ordinances, now tied up in the courts, to regulate application more closely or banish hybrid operations altogether. More than $2m was spent on television advertising—from a group backed by firms including Monsanto and Syngenta—ahead of a vote in Maui County alone. + +Agricultural firms say the furore is unfair for several reasons. Less than a third of their land is in use at any one time. Second, pesticides add greatly to their input costs, so wanton use of them is out of the question. Third, they operate under more intense scrutiny than other RUP-spreaders such as gardeners and groundsmen. On 16 occasions between 2006 and 2014 a school was evacuated because of pesticide drift. In more than half these cases the nasties were sprayed by householders, according to Hawaii’s Department of Agriculture. Its head, Scott Enright, says biotech companies apply pesticides in the state “better than anybody ever has”. + +The debate has inspired a smattering of local research, but little across Hawaii. A recent draft report from a group appointed to look into pesticide use on Kauai concluded that such chemicals are not harming residents or their surroundings. It also revealed the scarcity of relevant data to study. There is “very little robust environmental testing” and there are “no data from human samples”—blood, urine or tissue—to indicate levels of exposure to pesticides on the island. The authors also note that some local doctors contest the patchy records on birth defects provided by Hawaii’s Department of Health. + +Biotechnology companies in Hawaii release increasing amounts of information to the public about their spraying activities. Mr Enright is keen to take one voluntary local reporting scheme statewide. More detailed knowledge of the geographical co-ordinates and a survey of firms’ field-base maps could help determine more exactly how much of a restricted-use pesticide is being sprayed in one place at one time. Such information from seed companies, and the many others spraying away, would calm controversy; more accurate exposure testing and fairer regulation could follow. The current dearth of data sows only seeds of discontent. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21696575-poisonous-debates-rage-around-pesticides-and-those-using-them-paradise-sprayed/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Atlantic City + +Out of luck + +The gambling mecca is on the verge of running out of cash + +Apr 9th 2016 | ATLANTIC CITY | From the print edition + + + +BOARDWALK is the most expensive street in Monopoly, the board game inspired by Atlantic City’s streets. But it has been hard to shift property in Atlantic City, including on the Boardwalk. Developers are waiting for things to turn round before building on an empty plot on the spot where the Playboy Hotel and Casino once stood. That could take some time: bankruptcy for the once-grand seaside resort seems a strong possibility. Don Guardian, the mayor, has said that without state help City Hall will have to give IOU slips to police and firefighters in place of wages. The city council has found a way to keep paying, for now. But by mid-May Atlantic City will not be able to “pass Go”, let alone “Collect $200”. + +Thanks to New Jersey’s aggressive supervision of municipal finances, there has been no default or bankruptcy in the state for nearly 80 years. But no town has had so much go wrong so quickly as Atlantic City. In 2014 four of its 12 casinos closed and gaming revenue, which the state relies on, plummeted. Nearly 8,000 jobs were lost in a city with already high unemployment. Punters were still gambling, just not in New Jersey. When gambling laws were relaxed in nearby states, Atlantic City lost its monopoly (see map). + +Atlantic City relies on property taxes for most of its revenue. Real-estate agents are not selling, but are staying busy by reassessing property values. The value of taxable property has fallen by 64%, from $20.5 billion in 2010 to $7.3 billion in 2015. The city owes several casinos tax refunds: Borgata alone is owed $170m. Atlantic City’s jobless rate of 7.7% is far higher than that of the state or the rest of the country. The city, which has a population of 40,000 people, had a deficit of $120m last year, or $3,000 per person. One in three residents lives below the poverty line. + + + +Chris Christie, New Jersey’s governor, has made Atlantic City’s recovery a recurring project. Within weeks of his inauguration he set up a commission to look at gambling. He created a state-supervised tourism district in 2011. He approved multiple loans and held summits. In early 2015 he appointed an emergency management team. Mr Christie had hoped the team, which for a time included Kevyn Orr, previously Detroit’s emergency manager, would shuffle the deck. But despite the mayor adhering to the emergency manager’s recommendations, including workforce cuts, Mr Christie has twice vetoed an aid package, including a bill allowing casinos to make fixed payments in lieu of property taxes. This would have given the city more certainty. Mr Christie now says he will not give any more money without a full state takeover. + +The Republican mayor, Mr Guardian, and the Democratic state assembly speaker, Vincent Prieto, both say no dice. A takeover could allow the state to end collective-bargaining agreements, among other things. The stakes increased on April 4th, when the state sued Atlantic City for $34m in property-tax revenue owed to its schools. On the same day Moody’s, a credit-ratings agency, downgraded the city’s already junky rating to reflect a greater likelihood of default within the year. In November New Jerseyans will vote in a referendum to allow gambling in the northern part of the state, near New York city. If passed, this would likely do more damage to city finances. + +Over the horizon lie some reasons for optimism about Atlantic City. The eight remaining casinos have seen their revenues jump. The city, long a one-industry place, is beginning to spread its bets. A new conference centre is booked until 2019. Stockton University is opening a new campus there. The Boardwalk, running along a fine sandy beach, still has plenty of appeal. Maybe, as Bruce Springsteen (New Jersey’s most famous poet) once sang of Atlantic City, everything that dies someday comes back. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21696561-gambling-mecca-verge-running-out-cash-out-luck/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Catching halibut + +Wiki-fishing + +How Alaska’s smaller boats compete with vast trawlers + +Apr 9th 2016 | JUNEAU | From the print edition + +Knowledge worker in action + +STEPHEN RHOADS, a commercial longline fisherman in Alaska’s verdant south-east panhandle, fishes by two rules. One is: stay married. Mr Rhoads has seen countless marriages of fellow fishermen sink under the weight of so many days at sea. The second rule is: use fewer hooks. Mr Rhoads works the Pacific halibut fishery, which opened for business on March 19th, using baited hooks strung off lines as long as three miles. Using as few hooks as possible and carefully targeting the desired species, Mr Rhoads explains, helps keep fish stocks healthy and smaller businesses afloat. To do so, he relies on a crowdsourced compendium of fishermen’s tales. + +A war between small family fishing operations and Seattle-based companies pushed Alaska to statehood in 1959. The state’s $6 billion commercial fishing industry still suffers from a David-and-Goliath complex. Over the years, Alaskan halibut fishermen have faced big reductions in their harvest limits while factory trawlers dump millions of pounds of dead halibut overboard as by-catch. Quotas are becoming consolidated into fewer hands, and fishing permits are leaving Alaska’s small coastal communities and heading out of state. The average age of a fisherman in Alaska is 50, an increase of a decade since 1980. + +Mr Rhoads is a member of a network started by the Alaska Longline Fishermen’s Association (ALFA), which aims to do something about this and to reduce by-catch of sensitive species such as rockfish at the same time. Network fishermen, who numbered only 20 at the project’s start, agreed to share data on where and what they were catching in order to create maps that highlighted areas of high by-catch. Within two years they had reduced accidental rockfish harvest by as much as 20%. + +The rockfish mapping project expanded to create detailed maps of the sea floor, pooling data gathered by transducers fixed to the bottoms of boats. By combining thousands of data points as vessels traverse the fishing grounds, these “wikimaps”—created and updated through crowdsourcing—show gravel beds where bottom-dwelling halibut are likely to linger, craggy terrain where rockfish tend to lurk, and outcrops that could snag gear. + +Public charts are imprecise, and equipment with the capability to sense this level of detail could cost a fisherman more than $70,000. Skippers join ALFA for as little as $250, invest a couple of thousand dollars in computers and software and enter into an agreement to turn over fishing data and not to share the information outside the network, which now includes 85 fishermen. + +Skippers say the project makes them more efficient, better able to find the sort of fish they want and avoid squandering time on lost or tangled gear. It also means fewer hooks in the water and fewer hours at sea to catch the same amount of fish. A healthy fleet benefits welders and boatwrights in turn. “If the entire fleet comes up from Seattle,” says Mr Rhoads, “we become just a trailer park and a bar.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21696559-how-alaskas-smaller-boats-compete-vast-trawlers-wiki-fishing/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +The primaries puzzle + +Today’s partisan activists are hopelessly ill-equipped to pick presidential winners + +Apr 9th 2016 | From the print edition + + + +THE constitutional powers of a defeated presidential candidate are, to use a technical term, zilch. That being so, it is striking that many partisans sound complacent when asked to explain how their favourite politician might win the general election this November. George Stone, a retired snuff salesman from Colfax, Wisconsin, spoke for many Republicans when he told Lexington recently why the conservative whom he favours, Senator Ted Cruz of Texas, has no need to tack to the political centre. Look at Ronald Reagan, he was unabashedly of the right and he won, Mr Stone averred: “If you explain conservatism to most people, they understand that they are a conservative.” + +Fans of Donald Trump have spent months echoing the businessman’s claim to enjoy an unrivalled following among fed-up conservatives, independents and Democrats, so that if nominated he would—in his self-assessment—have “more crossover votes than anybody that’s ever run for office”. Ardent admirers of Bernie Sanders, the Vermont senator and populist who has forced Hillary Clinton to fight hard for the Democratic presidential nomination, strike a slightly more defensive note. Asked whether the country is ready for a president who wants to make America more like leftish bits of Europe, Sanders-backers say things like: “We are expanding the zone of what is considered possible” (to quote a Sanders precinct captain in Grinnell, Iowa). If they sense that blithe confidence is not doing the trick, Sanders-supporters often cite opinion polls that find most Americans favouring policies advocated by their hero, such as a higher minimum wage. + +In part, the complacency of many partisans is a by-product of ideological zeal. A 2014 survey by the Pew Research Centre found that the share of Americans who are consistently conservative or consistently liberal has doubled over the past two decades. Levels of ideological purity are highest among the politically active, such as the 30m or so Americans who voted in presidential primary contests in 2012 (out of an eligible electorate of some 200m). + +In part, though, partisans sound confused because the business of picking a presidential candidate is so unlike any other task they face. In modern general elections, more than nine out of ten incumbent members of Congress are re-elected, most of them easily. In dozens of states, one or other party has a near-lock on many elected offices, from governor to county clerk. When primary contests are held to pick candidates for such safe billets, activists need not worry about broad appeal—their rational instinct is to please themselves and folk like themselves. + +Presidential contests are different. In recent elections neither diehard Republican nor Democratic partisans have had the numbers to carry a president to victory on their own. That confronts partisans picking a candidate in a presidential primary with a rare challenge. If they care about electability (and not all do), they must try to guess who may appeal to folk unlike themselves, including some who—gasp—routinely vote for the other side. + +If cross-party mind-reading was a chore in the past, it confronts many partisans in 2016 with a nearly impossible conundrum: like asking vegans to order for the steak-lovers at the next table. For partisans are not just more disciplined today. Levels of antipathy between the parties have grown still more dramatically. Pew polling finds that roughly two-fifths of Democrats and Republicans now have a “very unfavourable” view of the other party, with many calling it a threat to the nation’s well-being. + +Both Republicans and Democrats have made divisions worse. A dismaying number of political disagreements are presented as zero-sum battles, in which one economic class, demographic group or race is accused of harming the interests of another. To take one current example on the right, a spate of “bathroom bills” have been proposed in conservative states, most recently in North Carolina, by which mostly Republican politicians seek to defeat laws or ordinances shielding gay and transgender people from discrimination by claiming (with scant evidence) that sexual predators would use them to enter women’s lavatories or girls’ changing-rooms at schools: an example of a moral dispute being twisted into a row about physical danger. On the left Mr Sanders does not just worry about inequality or think it preferable for big banks to take fewer risks: he growls that the rich are corrupting democracy and that “the business model of Wall Street is fraud.” + +No narrow paths to the White House + +The zero-sum atmosphere affects views of government itself. The American Values Survey, taken by the Public Religion Research Institute last year, found roughly three-quarters of Republicans believing that the federal government looks out for the interests of blacks, Hispanics, gays and women. But only half of Republicans or fewer think that the government looks out for Christians or middle-class people. Democrats, meanwhile, overwhelmingly think that the federal government looks out for the rich and big business. There are warnings here for both parties. + +Democrats, and especially Sanders-backers, should beware citing polls that back this or that government intervention. Distrust between groups means that it is not that useful to say that most Americans support policy X or Y. The real question to ask voters is: Do you think this policy helps or hurts “people like you”? The query reliably exposes deep gulfs between different races, generations and parties. Mrs Clinton, for her part, has called for more empathy across party lines. In March she urged Democrats not to dismiss Mr Trump’s followers as mere bigots, but to imagine themselves, “just for a minute”, in the minds of Americans who feel their best days, and the country’s, are behind them. Expect no cheers from Republicans, who are united only in their certainty that Mrs Clinton is a phoney and a crook. Whatever her motives for feeling the pain of Trump voters, Mrs Clinton’s instincts are correct. The presidency is an office that must be won with a broad coalition. Narrow tribalism will not do it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21696572-todays-partisan-activists-are-hopelessly-ill-equipped-pick-presidential-winners/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Peru’s election: Choosing a new broom + +West Indian cricket: The Windies won + +Bello: When a “coup” is not a coup + + + + + +Articles Sections Next + +Peru’s election + +Choosing a new broom + +A Latin American success story is threatened by political weakness + +Apr 9th 2016 | LIMA | From the print edition + + + +THE Mall del Sur, a new $200m shopping centre at the gateway to Lima’s sprawling southern shantytowns, is crowded on Good Friday morning, even though its two anchor department stores are not yet operating. Among the sightseers are Henry Salgado and Olga Falcón. He is a theatre photographer; she ran a small catering business that folded. They plan to vote for Keiko Fujimori in Peru’s election on April 10th. + +The two friends, both aged 42, remember the 1990s, when Ms Fujimori’s father, Alberto Fujimori, ruling as an autocrat, vanquished the Shining Path terrorist group and hyperinflation. He set Peru on a path of 25 years of rapid economic growth before his regime collapsed amid systematic corruption and electoral fraud. “It’s true that he got corrupt at the end,” admits Mr Salgado. “But all this began then,” he says, referring to the mall. Ms Falcón worked in a hotel in Spain for ten years. Now she sees opportunities in Peru. + +The country has enjoyed a remarkable growth spurt. Income per person rose at an annual average rate of 3% between 1990 and 2013, compared with 1.7% for Latin America as a whole, according to the World Bank. In 2001, 54.7% of Peruvians were poor; by 2014 that figure had fallen to 22.7%, according to the UN. + +In this century, the economy was boosted by high prices for Peru’s minerals. It has also been underpinned by a political consensus in favour of a market economy run by technocrats. That consensus survived the election in 2011 of Ollanta Humala, a former army officer, who initially ran on a leftist platform. Almost uniquely in South America, Peru saved part of the gains from the commodity upswing: Luis Carranza, a former finance minister, points out that net public debt fell from 37% of GDP in 2000 to just 3.6% in 2014. + +Now the mining boom is over and growth per person has dropped, to less than 2% last year. Much of that comes from the opening of big new copper mines. With metals prices much lower, their impact on the domestic economy is limited: private-sector formal jobs are expanding at only 1% a year. + +The task facing the new government is to sustain growth and social progress in a less favourable climate. That means tackling the many inefficiencies that hold Peru back. The conduct of the election may make the next president’s job harder. The electoral tribunal has undermined the legitimacy of the eventual winner by disqualifying one of the strongest candidates (see chart). + + + +After initial stumbles, Mr Humala’s government started to correct some of the economy’s underlying problems. It is trying to support diversification with technology centres, industrial parks and the cutting of some needless regulation. It has stepped up (still low) spending on health and education and subjected teachers to evaluation. It has begun a reform of the civil service and has expanded and professionalised social programmes. + +Still pending are some politically contentious or complex reforms. Top of the list is the labour market: the law bars employers from sacking most workers, thus deterring hiring and condemning 70% of Peruvians to ill-paid, insecure jobs in the informal sector. Alonso Segura, the finance minister, says that devolution needs to be rethought. Regional and local governments now get more than half the resources for public investment but are often slow to spend the money. He adds that a bigger effort is needed to cut red tape. + +Public investment should be steered away from big-budget projects, such as a gas pipeline to the Chilean border, and towards improving transport and internet connections and public services, argues Alberto Rodríguez of the World Bank. There are no direct flights between Arequipa, the second city, and Trujillo, the third. Lima, the capital, has become an inefficient monster. Mr Humala did nothing to gain consent for several big mining projects stalled by local opposition. Another challenge involves water: more than 60% of the population lives on the Pacific coast, which is a desert. + +Crime has become rampant on Mr Humala’s watch, unimpeded by a corrupt police force and by seven interior ministers in five years. His lack of political skill meant that he lost control of Congress. And corruption allegations swirl around his ambitious wife, Nadine Heredia (who denies wrongdoing). Under the constitution, Mr Humala cannot run again. His approval rating is around 15%. + +Fujimori v anti-Fujimori + +That opprobrium highlights Peru’s biggest weakness: the near-total absence of genuine political parties, which is both a symptom and a cause of the cynicism Peruvians express towards their leaders. It is also a big factor in the unpredictability of the country’s elections, exacerbated this year by the arbitrary and nitpicking application of the law by Peru’s electoral authority. + +After a campaign marred by the disqualification of Julio Guzmán, a centrist development consultant, and another candidate, the opinion polls suggest that Ms Fujimori will take a strong lead into a run-off ballot on June 5th. She promises continuity in economic policy but has been cagey about reforms. + +Her likeliest rival is Verónika Mendoza for the left-wing Broad Front, who wants “profound changes” in economic policy and a new constitution. Aged 35 and a congresswoman, she was close both to Hugo Chávez’s regime in Venezuela and to Ms Heredia before breaking with the Humala government. A relaxed and articulate campaigner who speaks fluent Quechua, the main Amerindian language, she is the clearest beneficiary of the exclusion of Mr Guzmán. The polls suggest she is poised to overtake Pedro Pablo Kuczynski, a former economy minister. He is honest, liberal and has the best-qualified team of advisers. But he has handicaps: he is 77, and a former investment banker who struggles to connect with ordinary Peruvians. + + + +Two issues have dominated the campaign. The first is anger at the political establishment. That is why Mr Guzmán surged past Mr Kuczynski in the polls and support for Alan García and Alejandro Toledo, both former presidents, plummeted. The desire for change is now benefiting Ms Mendoza and, to a lesser extent, Alfredo Barnechea, a journalist and consultant campaigning as a European-style social democrat. + +Second, there is the battle between Ms Fujimori and “anti-Fujimorismo”, the issue that will dominate the run-off ballot. Her father continues to be revered by around 20% of Peruvians. Many poor people recall fondly that he travelled around the country opening schools and health clinics. But a larger number of Peruvians abhor him for having shut down Congress in a “self-coup” in 1992, for his human-rights abuses and for the unprecedented corruption of his regime, for which he is serving jail sentences. + +Ms Fujimori, aged 40 and educated in the United States, lost narrowly to Mr Humala in 2011. Since then she has expanded her political base and edged towards the centre. She has dumped some of her father’s aides and admits that he made “several political mistakes”. According to Martín Tanaka, a political scientist at Lima’s Catholic University, “she promises efficiency and order, and is a symbol [of Fujimorismo] with a friendlier and more reasonable face” than her father. In any event, her party, Popular Force, looks likely to win almost half the seats in Congress. + +But will all this be enough for Ms Fujimori to win the presidency? She is in a much stronger position than five years ago. Her rival, Ms Mendoza, shows no desire to make the move from left to centre that brought Mr Humala victory, although she says she would not copy chavista Venezuela. Should Mr Kuczynski make it onto the June ballot, he would have a better chance of uniting the anti-Fujimori vote. + +It is symptomatic of Peru’s political weakness that its most powerful ideological current is a purely negative one. Ms Fujimori’s critics worry that her victory would retroactively legitimise her father’s abuses against democracy. Around 30,000 joined a protest march on April 5th to mark the anniversary of Mr Fujimori’s shutdown of Congress. “I think she’s a democrat,” Mr Tanaka says of Ms Fujimori, “but it’s true that she leads a movement where many are not convinced democrats.” In a campaign debate on April 3rd Ms Fujimori unveiled and signed a one-page document in which she promised “unrestricted respect for democracy and human rights”, and declared she would never seek to change the constitution to stay in power or repeat the “self-coup”. + +Unless Mr Kuczynski clings on to second place, Peru faces a battle between the heir to its most controversial president of the 20th century and a neo-chavista. And it will elect its first woman president. Whether it will get the reformist government it needs to sustain its progress is less clear. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21696541-latin-american-success-story-threatened-political-weakness-choosing-new-broom/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +West Indian cricket + +The Windies won + +Why The Economist failed to predict a stunning victory + +Apr 9th 2016 | KOLKATA | From the print edition + + + +WRITING about West Indian cricket last year, The Economist tried to explain “why a dazzling team has faded”. On April 3rd in Kolkata, the West Indian men’s and women’s teams both dazzled by winning the Twenty20 (T20) championships. We feel nearly as sheepish as the bookmakers who put the odds of that happening at 150 to one. + +Caribbean players excel at T20 cricket, a three-hour version of the game in which each side bowls 20 overs (six ball-tosses towards the batsman). When they come together every few years for international T20 tournaments they do well; the men won a world championship in 2012. Where they fall short is in one-day international (ODI) and five-day Test matches. In fact, those failures are one reason for the West Indies’ T20 success. + +Unlike richer, better-managed rivals, the West Indies Cricket Board (WICB) does not have the money to lure the best cricketers away from high-paying T20 leagues to play international games. Caribbean men have thus become T20 specialists. Five of the men’s team that beat England in the final in Kolkata now only play T20 cricket; none of the English players does. The West Indians overpowered them with skills honed in T20 leagues: big hitting (Carlos Brathwaite stunned England by hitting four consecutive sixes in the final over) and bowling techniques crafted to avoid such disasters. Luck helped: Darren Sammy, the men’s captain, won all six coin tosses, allowing his side to bat second, so it knew just how many runs it would need to win. + +Despite the West Indians’ T20 success, the men rank eighth among Test cricketing nations and failed to qualify for the Champions Trophy, a tournament for the top ODI nations, to be held next year. + +Even as they celebrated, the victors grumbled. Mr Sammy said his teammates felt “disrespected” by the WICB, with which they have been feuding over pay and selection criteria. Stafanie Taylor, the women’s captain, pleaded for “some infrastructure”, without which the team would “deteriorate”. After their triumph, the West Indies men will return to nomadic T20 careers, flitting from league to league throughout the year. The champions may never play together again, Mr Sammy said. + +The WICB’s president, Dave Cameron, promises to find ways to allow the men to play international matches in all three forms of cricket. The International Cricket Council is trying to reduce scheduling clashes between club and international games. Its chairman, Shashank Manohar, wants to reverse a decision in 2014 that awarded more revenue to Australia, England and India at the expense of smaller teams, like the West Indies. If that happens, the Windies may yet dazzle again. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21696549-why-economist-failed-predict-stunning-victory-windies-won/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +When a “coup” is not a coup + +How should presidential systems deal with political breakdown? + +Apr 9th 2016 | From the print edition + + + +IN DAILY verbal broadsides, Brazil’s president, Dilma Rousseff, and her political allies claim that the attempt to impeach her is a “coup d’état”. It is an emotive statement that moves people beyond her governing Workers’ Party (PT) and beyond Brazil. Her supporters held rallies on March 31st, the same day that in 1964 Brazil’s army took power in the last actual military coup the country suffered. “We are here in unyielding defence of democracy,” Chico Buarque, a singer and writer, told the crowd in Rio de Janeiro. + +Ms Rousseff argues that she has not committed a “crime of responsibility” and that her impeachment is therefore illegal. There is no evidence that she is personally corrupt. Unlike her lead accuser, Eduardo Cunha, the Speaker of Congress’s lower house, neither she nor her family have Swiss bank accounts or Panamanian offshore companies. Many of her would-be impeachers are accused of taking bribes in the scandal centred on Petrobras, the state-controlled oil company. The administrative crime of which she is accused—a piece of fiscal trickery—is a technicality, her defenders say. + +Behind her impeachment they see the same de facto powers—the media, private business, prosecutors and judges—which, they claim, brought down democracy in 1964. Military juntas may be a thing of the past in Latin America, but Ms Rousseff’s allies point to a pattern of “soft coups” that ousted presidents of the left, in Honduras in 2009 and in Paraguay in 2012. + +Denouncing supposed coups has become part of the left’s propaganda kit. Nicolás Maduro’s government in Venezuela constantly spies them, the latest in the form of a law granting amnesty to political prisoners. Last year Evo Morales, Bolivia’s president, warned of a “judicial coup” against Argentina’s then-president, Cristina Fernández de Kirchner, because a judge proposed to investigate her. + +Those who cry wolf about coups take a selective view of democracy. Mr Morales seems to think that all courts should be an appendage of the executive, as they are under his government. Mr Maduro, who was elected in 2013 with 7.6m votes (50.6% of the total), denies all legitimacy to the National Assembly, which was won by the opposition last December with 7.7m votes (56% of the total). This is the perversion, not the defence, of democracy. + +A coup involves the seizure of power through the unconstitutional use or threat of force by a small group. That is not the case in Brazil. Whatever their occasional slips, the corruption probe is run by independent prosecutors and judges. The constitution allows for impeachment, but only by a two-thirds majority in Congress. + +Supporters of its use against Ms Rousseff argue that it is a political as well as legal matter—that is why the Senate, and not the supreme court, tries the case. They say that from 2003 PT governments installed an organised scheme of graft in Petrobras which funnelled money to the party and its allies with the aim of securing a permanent hold on power. Her fiscal misdemeanours qualify as a crime under the impeachment law. They are right that impeaching Ms Rousseff would be a constitutional act with a legal basis, albeit a flimsy one. In opinion polls, two-thirds of respondents are in favour. But that doesn’t make it wise: it would divide Brazil and risk poisoning its politics for years. + +The drama the country must deal with is what to do when a government ceases to function. Ms Rousseff began her second term in January 2015 with the economy collapsing, along with her popular and political support. Each week brings fresh claims of corruption. The president does not govern in any meaningful sense of the term. The country cannot withstand almost three more years of this. + +In parliamentary systems, the government normally falls under these circumstances. In presidential systems, such breakdowns are traumatic. Fortunately, the days when they triggered real coups in Latin America are past. But the underlying problem remains. Ms Rousseff has set her face against resigning, or seeking a government of national unity. Anyway, her vice-president signed some of the questioned fiscal measures and may now be impeached, too. If that happens, the best way out would be a fresh election. + +The electoral tribunal may call one: it is looking at claims that money from Petrobras bribes financed Ms Rousseff’s campaign; her campaign guru has been arrested on those grounds (he denies wrongdoing). But Brazil also needs a new Congress, given its tainting by corruption. An early general election requires a swift constitutional amendment. Next time they take to the streets, it is what Brazilians should call for. That would be a better way to defend democracy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21696550-how-should-presidential-systems-deal-political-breakdown-when-coup-not-coup/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Coping with senility in Japan: Grey zone + +State elections in India: Back at the spinning wheel + +Patriotism in India: Oh mother + +Legislative elections in South Korea: No walk in the Park + +Timor-Leste and Australia: Line in the sand + +Banyan: Of blowhards and bombs + + + + + +Articles Sections Next + +Coping with senility in Japan + +Grey zone + +As cases of dementia rise, Japan gropes for new ways to deal with them + +Apr 9th 2016 | TOKYO | From the print edition + + + +OVER the months Yuichi Okano realised that his elderly mother was losing her mind. She stopped bathing and started to smell. At night she chatted to her late husband. She would head out of the front door and disappear, with Mr Okano left to pound the streets of Nagasaki, plotting her meandering course with the help of neighbours. What he feared most was not noticing her sitting outside in the dark as he parked the family car. + +Last year over 10,000 dementia sufferers went missing in Japan. Many turned up dead, or not at all. Some walked into the paths of trains, for which their families may suffer a posthumous indignity: a bill for the cost of the accident. One man who lost his father this way recalls staring in disbelief at a carefully itemised invoice from the railway company for ¥7.2m ($65,215). Late settlements accrue interest. + +Japan is one of the planet’s oldest societies, pipped only by tiny Monaco for the proportion of elderly in the population. Lengthening life expectancy is a boon for millions of Japanese retirees leading full lives. But it also means a sharp increase in the numbers suffering from dementia. Who, asks Florian Coulmas, an expert on Japanese ageing, should accept responsibility for people unable to articulate their own interests or care for themselves? + +Over 5m elderly Japanese suffer from dementia. By 2025 some 7m will need care, the health ministry predicts. Most live at home, putting a strain on relatives. A new survey says three-quarters of people looking after elderly family members are at their wits’ end, and many have considered suicide, or worse: last year police recorded 44 cases of murder or attempted murder in such homes. + +Japan has made strides in coping with the problems of a population with ever fewer young people. The retirement age has been pushed back, and it is not unusual for 70-year-olds to be driving taxis, working as watchmen on building sites and serving in supermarkets. Many elderly say they are keen to keep on working for as long as they are fit. As for dealing with senility, some approaches have been innovative. Convenience stores, everywhere in Japan, offer themselves as safe havens for wandering pensioners. Phone and car companies have made products with simpler, more intuitive functions. + +Policy and spending lag, however. Public funding for long-term care for the elderly was the equivalent of just 1.2% of GDP in 2010 versus 3.7% in the Netherlands, according to the most recent OECD comparison. One reason is that relatives are still the main caregivers in Japan, says Miharu Nakanishi of the Tokyo Metropolitan Institute of Medical Science. Family members often quit work and burn through savings to look after senile parents. + +More professional care would make a big difference, but there is an acute shortage of nurses. Nursing is poorly paid, and staff turnover is high. Despite much fanfare a decade ago about the government bringing in nurses from the Philippines and Indonesia, only a trickle have come. Visas are extremely hard to obtain. Among other things, foreign care workers must pass absurdly tough language tests. + + + +Beds, too, are in increasingly short supply. One report claims that by 2025 about 130,000 elderly with dementia in Tokyo alone will need beds in care homes but not be able to find one. A think-tank, the Japan Policy Council, recently floated a desperate solution: moving the elderly out of the capital to pep up declining rural communities. The plan was endorsed by the government, but raised eyebrows. The minister in charge of rural revitalisation, Shigeru Ishiba, had to deny that the government was bringing back ubasute, the mythical ancient custom of dumping grandma on a mountain to die. He also insisted that no one would be forced to move. + +Forget me not + +To date over 200 local authorities have expressed interest in hosting what are being called continual care retirement communities. A few are already up and running. But if such facilities are to be greatly expanded, it is unclear who will pay for places, whether families or the state. + +Undaunted, the prime minister, Shinzo Abe, promises that Japan will become an example to the world in dealing with senility. Among his promises is better funding for research into Alzheimer’s disease and more money to train 60,000 doctors in its early diagnosis. But much more should be done, including lowering the immigration barriers that keep out foreign care workers (which Mr Abe shows little sign of doing). Ms Nakanishi says the entire national strategy for dealing with dementia is fragmented. Above all, she says, the government has failed properly to consult with those who actually take care of the elderly. + +Still, attitudes in Japan are changing. In a landmark ruling in March the Supreme Court threw out an attempt by Japan Railways to claim for the costs of an accident involving the death of an elderly man. The 91-year-old sufferer from dementia had slipped out of the door and stumbled onto the tracks after his wife dozed off. The company argued that the man’s son and wife were responsible because they “did not fulfil their obligation” to monitor him. What many do not realise, says the son, is how expensive and exhausting it is to look after parents who have become children. The state is going to have to find better ways to help. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21696538-cases-dementia-rise-japan-gropes-new-ways-deal-them-grey-zone/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +State elections in India + +Back at the spinning wheel + +Elections in four Indian states raise dust but may not change much + +Apr 9th 2016 | DELHI | From the print edition + + + +THE wheel at the centre of India’s flag is an appropriate symbol. In the world’s largest democracy politics ceaselessly turns yet seldom moves, and then rather slowly. Take West Bengal, the most populous of the four Indian states (plus a tiny union territory) that are holding local elections over the next six weeks. + +Many of the state’s 92m residents think that the local ruling party, the Trinamool Congress (TMC), has brought scant improvement since taking power in 2011. Fresh scandals include the capture on video of party officials taking bribes, and the deadly collapse of a hideous, costly and long-delayed flyover in the state capital, Kolkata. Yet the TMC’s dispensing of gifts, such as a claimed 2.5m bicycles, and its system of patronage and persuasion backed by street toughs, appears likely to win the party another five years in office. + +Together with those in West Bengal, elections in Assam, Tamil Nadu, Kerala and the union territory of Puducherry will see more than 160m people invited to cast their vote, a fifth of India’s overall electorate. Yet in all but one of these contests polls suggest that the outcomes, which are to be announced together on May 19th, will follow predictable patterns. + +In the prospering southern state of Tamil Nadu the dominant local party also looks set to shrug off corruption charges and return to office. Like West Bengal’s TMC under Mamata Banerjee, the AIADMK is run with tight discipline by a veteran female politician, Jayaram Jayalalitha, a former film star who has served five times as the state’s chief minister. + +Neighbouring Kerala appears likely to opt for a different sort of continuity. Since the late 1970s power in the state has alternated between two enduring coalitions. Barring upsets, polls suggest that the pattern will be repeated, with the communist-led Left Democratic Front likely to oust the United Democratic Front led by the Congress party, the once-formidable national electoral vehicle of the Gandhi dynasty. Congress’s great rival, the Bharatiya Janata Party (BJP), in office nationally under the prime minister, Narendra Modi, has sought to make inroads in Kerala. But though its Hindu-nationalist rhetoric has won converts, its effectiveness is limited in a state in which nearly half the voters are either Muslim or Christian. + +The state of Assam in the north-east also has large minority populations. Yet a history of animosity between native Assamese and incomers, particularly recent Muslim migrants from Bangladesh, provides more fertile soil for communal grudges. Congress’s incumbent local leader, Tarun Gogoi, who has served as Assam’s chief minister since 2001, is 81 years old. Despite his personal popularity, many are ready for a change. + +Mr Modi’s party strategists have exploited these weaknesses with skill and determination, helped by the defection of one of Mr Gogoi’s most promising lieutenants. Top BJP ministers and officials, including Mr Modi, have assiduously courted the state. On the campaign trail Amit Shah, the party’s grizzled president and a man viewed as a Hindu-nationalist hardliner, has frequently brandished the sectarian card. At a rally in November he accused Congress, absurdly, of harbouring a “secret plan” to surrender Assam to Bangladesh. + +Mr Shah’s language has softened lately. He now merely pledges that a BJP-led state government would seal the border with Muslim-majority Bangladesh “so not even birds can fly across”. Yet repeated insinuations of a looming Muslim menace, including from Congress pandering to its supposed “Muslim vote bank”, have been effective. Some pollsters are predicting a big win in Assam for the BJP. + +Victory there would be extremely welcome to Mr Modi. Since the BJP’s crushing defeat of Congress in the national elections of May 2014, the party’s fortunes have been mixed. Last year it lost badly to local parties in both the capital, Delhi, and in Bihar, India’s third-most-populous state. + +Those setbacks put paid to hopes of the BJP making inroads in Parliament’s upper house, the Rajya Sabha; its rotating membership is indirectly elected, apportioned according to parties’ success in state elections. Congress and other opposition parties have used the upper house to thwart legislation passed by the lower house, where the BJP holds a big majority. + +The BJP hopes to capture Assam, make inroads in states in this round, and then do even better in next year’s election in Uttar Pradesh, the most populous state with over 210m people. Yet even then the upper house’s brake on the wheel of change will not be released. The BJP and its allies hold just 64 of the Rajya Sabha’s 245 seats. Under India’s constitution seats change hands at a stately pace, with one-third of the membership retiring every two years. In other words, by the time Mr Modi’s first term runs out in 2019 he will, in the best of circumstances, be running in place. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21696548-elections-four-indian-states-raise-dust-may-not-change-much-back-spinning-wheel/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Patriotism in India + +Oh mother + +A nationalist slogan sends sectarian sparks + +Apr 9th 2016 | DELHI | From the print edition + +Bharat Mata channels Britannia + +IT SOUNDS innocuous enough for any Indian to wish victory to Bharat Mata, or Mother India. And the slogan bharat mata ki jai, which means much the same thing, is being chanted at rallies across the election-fevered state of Assam. Yet in a giant country of multiple creeds and tongues, and even more opinions, simple words carry complex and even dangerous meanings. + +To the one in five Indians who are not Hindu the slogan sounds perilously close to the religious chant, jai mata di, which honours a Hindu mother goddess. The association is especially tricky for Muslims, whose monotheism abhors the attribution of godly power to any but one supreme being. It does not help matters that during India’s independence struggle against Britain, patriots seeking symbols for Indian nationhood tried to elevate Bharat Mata into a pukka Hindu deity. + +The effort, which was strongly influenced by Western fabrications such as Britannia and America’s Statue of Liberty, did not take off. Bharat Mata’s iconography remained vague. Did she have four arms or ten? Was she accompanied by a lion, or a map of India? And which map at that? Yet several temples were dedicated to the would-be goddess, including one in the holy city of Varanasi opened in 1936 by Mahatma Gandhi himself. A handful across India draw a trickle of worshippers today. + +Accustomed to India’s garish and usually cheerful religious diversity, many Muslims would ordinarily be inclined to ignore a recent fatwa issued by a Deobandi seminary, one of India’s stricter seats of Islamic teaching, which condemned the contentious words as a sin. The trouble is that harder-line Hindus, emboldened by the strength of the ruling (and Hindu-nationalist) Bharatiya Janata Party (BJP) have taken to wielding the slogan as a test of patriotism. + +Some private schools now require applicants to wish victory to Mother India. The BJP chief minister of Maharashtra says that anyone who avoids the words “has no place in India”. Baba Ramdev, a yoga leader, upped the ante further by asserting that were it not for India’s constitution he would have “beheaded hundreds of thousands” for refusing to repeat the chant. Mother India will need to get her squabbling children in line before someone gets hurt. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21696537-nationalist-slogan-sends-sectarian-sparks-oh-mother/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Legislative elections in South Korea + +No walk in the Park + +South Koreans are fed up with politicians squabbling + +Apr 9th 2016 | SEOUL | From the print edition + +Waffles in the wind + +FEW will be sorry to see the back of South Korea’s current National Assembly when its four-year term ends in late May—least of all Park Geun-hye, the country’s conservative president. Legislative gridlock has hobbled her administration since she came to office in 2013. The current crop of lawmakers has passed less than a third of all bills introduced into the assembly. In February the main opposition Minju party led an eight-day filibuster (the world’s longest) to stall a vote on a controversial surveillance bill. + +Three-fifths of MPs must agree to bills being introduced before they vote on them. The ruling Saenuri party holds only a slim majority. That is why it is so eager to boost its share to 180 of the 300 seats up for grabs in legislative elections on April 13th. Then it could revise the “three-fifths” law which has caused it such headaches. + +As her supporters see it, Ms Park could then at last get on with her job in the 20-odd months that remain to her in office. But there is a problem. In opinion polls Saenuri’s popularity is slipping, from 44% in mid-March to 35% last week. Shin Yul of Myongji University in Seoul predicts that the party will take fewer than 140 seats—in other words, it will lose its majority. That would guarantee a lame-duck end to Ms Park’s already underwhelming presidency. + +Voters are exasperated with internal party feuds over the nomination of candidates. Last month the Saenuri party denied candidacy to a host of MPs critical of Ms Park. The party’s chairman, Kim Moo-sung, a hopeful for the presidency in 2017, refused to confirm some of the replacement nominations. Some of the snubbed MPs chose to run independently; Ms Park’s office attracted derision when it demanded that they return their official portraits of the president. + +Most voters say they know little about the candidates or their policies, some of which are pure waffle. Saenuri plans to “multiply fairness and divide care”. A campaign song for Minju, belted from the loudspeakers of roaming election vans, promises “More, More, More”. + +Voting has long been determined not just by ideology but also by geography. The south-west region of Jeolla is the power base of the leftish Minju party. Gyeongsang in the south-east is Saenuri’s traditional stronghold: a region that has nurtured industrialists and military dictators, among them Ms Park’s late father, Park Chung-hee. + +But now old loyalties are fading. In Jeolla opinion polls show the Minju party eight percentage points behind the People’s Party, a splinter group set up by Ahn Cheol-soo, a former software entrepreneur and presidential candidate. In the city of Daegu, Ms Park’s power base, the Minju candidate is about ten points up on his Saenuri rival. + +Ko Ho-cheol, a 61-year-old retiree living in Seoul, has supported the conservatives since his 20s. But for the first time, his vote will go to the Minju party, because the candidate running in Mr Ko’s district, Park Ju-min, is part of a well-known collective of liberal lawyers that holds unscrupulous officials to account. Mr Park, the lawyer, will also get the protest vote of Suh Ji-ye, a 25-year-old jobseeker. The opposition is barely more capable, she says, but at least it will be a change from the conservatives, who have been in power since 2008. + +Youth unemployment hit a high of 12.5% in February, well above that for all South Koreans, at 4.9%. Yet parties have been busier wooing the ballot-casting over-60s, promising them jobs, housing and senior centres. Elderly poverty, acute in South Korea, deserves attention. But so does the creeping dejection of its young. Mature political debate would help. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21696545-south-koreans-are-fed-up-politicians-squabbling-no-walk-park/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Timor-Leste and Australia + +Line in the sand + +Trying to squeeze money from the last drop of oil + +Apr 9th 2016 | DILI AND SYDNEY | From the print edition + +A strong central tendency around the median line + +THOUSANDS of people recently rallied in front of the Australian embassy in Dili, the seaside capital of Timor-Leste, in probably the biggest demonstration since the tiny country’s birth 14 years ago. The protesters were angry at Australia’s refusal to negotiate a permanent boundary in the Timor Sea, beneath which lie untold quantities of oil and gas. Timor-Leste claims that the refusal is costing it billions of dollars and is a slight to its sovereignty. + +Australia maintains that revenue-sharing agreements the two countries signed years ago remain in force. One of them postpones discussion of permanent maritime boundaries until 2057, though recent statements by Australia’s opposition Labor Party in favour of negotiations have given Timorese hope. Yet a successful resolution to this dispute will merely postpone the most critical question facing Timor-Leste: what to do when the oil runs out. Nine-tenths of state revenues come from oil and gas. Only a handful of fragile states, among them South Sudan and Libya, depend more on hydrocarbons. + + + +Timorese long saw Australia as their friend. It won goodwill when it led an international force into East Timor (as Timor-Leste was more often known) in 1999 to protect its people from Indonesia, from which Timorese voters had just voted for independence. (Indonesia had invaded and annexed the former Portuguese colony in 1975.) The goodwill dissipated over three treaties Australia then struck with Timor-Leste. On the face of it they look generous. The Timor Sea treaty of 2002 established a “joint petroleum development area” (see map), giving 90% of the area’s oil revenues to Timor-Leste and the rest to Australia. A second treaty covered Greater Sunrise, a lucrative gasfield, most of which lies outside the area, beneath waters Australia still claims as its “exclusive seabed jurisdiction”. A third treaty in 2006 agreed to split the Greater Sunrise revenue evenly between Timor-Leste and Australia. + +Yet many in Timor-Leste say that without an agreement over the two countries’ maritime boundary, the treaties are unfair. Although Australia agreed a seabed boundary with Indonesia in 1972, it has never negotiated one with Timor-Leste. Under international law, Timorese argue, such a boundary should run halfway between the two countries. That would leave the Greater Sunrise field completely inside Timor-Leste’s 200-nautical-mile exclusive economic zone. + +Australia’s behaviour has been high-handed at times. In 2002 it withdrew from the mechanism for adjudicating maritime boundary disputes under the UN Convention on the Law of the Sea (UNCLOS). During talks on the third treaty, Australia is alleged to have bugged government offices in Dili. This has left Timor-Leste feeling bullied into accepting an unfair deal. It is, says Tomas Freitas of MKOTT, an activist group, why so many demonstrators went to the Australian embassy on March 23rd. + +But it may also have been a sense that Australia is now more susceptible to pressure. Woodside Petroleum, the Australian firm which heads the Greater Sunrise development consortium, says that future investment depends on “government alignment” between the two countries. The implication is that the dispute must be settled before it will spend big money on exploration. A recent Australian defence white paper cites a strong, secure Timor-Leste as one of the country’s top strategic interests—and a boundary agreement would undoubtedly make it more secure. The foreign-affairs spokesman for Australia’s Labor party, Tanya Plibersek, promises to start “good-faith” negotiations over the maritime boundary if her party wins a general election expected in July. She also says Australia should accept international adjudication under UNCLOS, if ever such negotiations failed. + +Yet even the most favourable outcome would be less than Timor-Leste hopes for. For instance, the government wants a pipeline from the Greater Sunrise field to run ashore at Tasi Mane, a planned refinery project on the south coast. But that would mean laying it across the Timor trough, which is 3.3 kilometres (2 miles) deep. Woodside and its partners prefer floating terminals nearer the field, which would be more profitable for Timor-Leste. + +With Greater Sunrise, Timor-Leste can keep pumping oil and gas until around 2031, though other fields will be exhausted in four years or so. The question looms: what happens after the oil money runs out? Timor-Leste was careful during the boom years earlier this century to put lots of petrodollars into a sovereign-wealth fund. But the fund is dwindling and may be gone entirely by 2025, claims a local NGO, Lao Hamutuk. More than half of Timor-Leste’s population of 1.2m is under 17; all will one day need jobs. Yet in a dirt-poor country that relies too much on subsistence farming, too little is being done to plan for a post-oil economy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21696544-trying-squeeze-money-last-drop-oil-line-sand/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Of blowhards and bombs + +Donald Trump and Kim Jong Un seem to want to make nuclear proliferation more likely + +Apr 9th 2016 | From the print edition + + + +MORALLY, Donald Trump is not like Kim Jong Un. He does not send children to gulags. But the bombastic tycoon and the bellicose tyrant do have some things in common: a habit of self-adulation, an original take on reality, a preference for high walls around their countries. They have also, between them, stirred up the debate about nuclear proliferation in North-East Asia. + +When North Korea first acquired the bomb ten years ago, many feared that its neighbours would soon follow suit. South Korea, Japan and Taiwan are all technologically adept and have reason to feel threatened. Yet none has gone nuclear. And their restraint is likely to continue even though Mr Kim has tested what he claims was a hydrogen bomb and Mr Trump has suggested that Japan and South Korea should build their own bombs to relieve America of the burden of defending them. + +In a recent book, “Asia’s Latent Nuclear Powers”, Mark Fitzpatrick of the International Institute for Strategic Studies argues that, of the three countries, South Korea is the most likely to acquire nuclear weapons—though that is still not likely at all. Polls show that nearly two-thirds of South Koreans back a nuclear capability. Some politicians agree. One is Chung Mong-joon, from the dynasty behind the giant Hyundai conglomerate and a presidential candidate in 2012. After the latest nuclear test he called for South Korea to quit the Nuclear Non-Proliferation Treaty (NPT) and pursue the bomb as the only way of forcing the North into nuclear negotiations. That, he wrote on his blog, was a “cold-war lesson”. + +More than two decades of browbeating, bribing and cajoling North Korea have been fruitless. And, South Korean pro-nuclear types point out, India and Pakistan have been declared nuclear powers since 1998 without going to war or becoming international pariahs. Yet the dangers to South Korea of going nuclear seem far to outweigh the benefits. With America fiercely opposed, it would threaten the alliance on which the South’s security depends. The country would be vulnerable to economic sanctions. Others, such as Japan, might want to go nuclear as well. And North Korea might react violently to signs that the South was building its own bomb, which some experts think would take 18 months. Some argue for nuclear weapons more for effect than as a practical policy—to prod America into reaffirming its “nuclear umbrella” and to make China put real pressure on North Korea. + +Some are also motivated by a sense that South Korea has been harshly constrained under the NPT regime compared with Japan, the only one of 185 non-nuclear-armed parties to the NPT with complete fuel-cycle technologies, including both uranium enrichment and plutonium reprocessing. So Mr Fitzpatrick suggests that Japan may have the shortest “breakout” time to build a bomb, albeit longer than the common Western estimate of six months. Some Japanese hawks do advocate Japan’s going nuclear. On April 1st the cabinet reconfirmed that this would not violate Japan’s constitution. Seeing such hints, and suspicious of moves by Shinzo Abe, the prime minister, to ease legal constraints on Japan’s armed forces, some in South Korea and China fear that Japan may soon abandon its anti-nuclear principles. + +It won’t. Like South Korea, Japan has too much to lose. And unlike South Korea, its voters would also strongly disapprove. The country of Hiroshima and Nagasaki does not want to become a nuclear power. At the fourth Nuclear Security Summit in Washington, DC on April 1st, it was praised as one of America’s closest allies in the effort to minimise the use of sensitive nuclear materials. Thanks partly to the shortness of its breakout time, Japan would not be the first nuclear domino. + +Nor, probably, would Taiwan, though it faces an even more explicit threat, since China claims the right to use force to “reunify” the island with the mainland in certain circumstances—such as its declaring formal independence. China’s military build-up in recent years calls into question Taiwan’s ability to defend itself by conventional means. And, unlike Japan and South Korea, Taiwan has no clear guarantee that America would come to its defence. Rather, the Taiwan Relations Act of 1979 leaves America’s security commitment vague. But even under the traditionally pro-independence Democratic Progressive Party of the incoming president, Tsai Ing-wen, Taiwan is not likely to pursue nuclear weapons. It would be suicidal. + +The reason South Korea, Japan and Taiwan remain “latent” nuclear powers is that in the past they have all pursued the necessary technologies, but then renounced them. Nobosuke Kishi, Mr Abe’s grandfather and his political hero, who was prime minister in 1957-60, believed that Japan needed the bomb. Under Park Chung-hee, South Korea’s president in 1963-79, and father of the incumbent, Park Geun-hye, South Korea had a clandestine nuclear programme. So did Taiwan under Chiang Ching-kuo. + +The Trump doctrine + +The factors that made nuclear programmes seem vital then have lessons for today. In Guam in 1969 President Richard Nixon announced a policy of shifting the burden of defending America’s allies to the allies themselves. Campaigning for the presidency in 1976, Jimmy Carter pledged to withdraw American troops from South Korea. America’s switch of diplomatic recognition from Taipei to Beijing in 1979 alarmed Taiwan and other allies. + +All three gave up their nuclear dabbling because they were subsequently reassured about America’s commitment to their security. Whatever happens in November’s presidential election, Mr Trump has undermined that confidence by showing that an American politician can win a ton of votes by telling foreigners to get stuffed. This reinforces China’s argument that, whereas it is in Asia by geography, America is there by choice, and might one day leave; and it encourages calls in American-allied democracies for their own nuclear deterrent. Like Mr Kim, his fellow playboy-with-a-rich-dad, Mr Trump makes Asia more dangerous. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21696523-donald-trump-and-kim-jong-un-seem-want-make-nuclear-proliferation-more-likely-blowhards-and/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Catholics: Party and pontiff + +House churches: Underground, overground + + + + + +Articles Sections Next + +Catholics + +Party and pontiff + +Two articles examine China’s often troubled relationship with Christianity. The first looks at signs of a rapprochement with the Vatican + +Apr 9th 2016 | BEIJING | From the print edition + + + +IN LATE September Pope Francis and President Xi Jinping happened to visit America at the same time. The coincidence was unremarkable. Both men were there for the annual session of the UN General Assembly in New York. But it afforded Chinese officials a glimpse into something they may not have fully understood: the international stature and popular appeal of the pope. American media covered his every move—each appearance before an adoring crowd, and each ride he took in his humble little Fiat—while paying much less attention to Mr Xi (whose crowds included far fewer supporters and many more protesters than the pope’s). + +Chinese officials were “shocked and flabbergasted” by the difference in the responses to the two leaders’ visits, says a Vatican analyst in Beijing. “They thought Xi Jinping was the emperor, the most important guy, and then along came this man in white to overshadow him.” Some observers believe that officials’ awakening to the pope’s popularity may help encourage them to improve relations with the Vatican after decades of diplomatic estrangement. China craves the admiration of great powers. The Vatican may be puny in size, but in soft power it is hard to match. + +Relations were already warming up before the two men went to America. In August China’s Catholic church appointed a bishop for the first time in three years. The consecration of Joseph Zhang Yinlin, in the central province of Henan, was striking: it had been approved not only by China’s state-linked church, but also by the Vatican. Also noteworthy was China’s decision in July to allow a bishop who had been appointed in secret by the Vatican to begin working openly. These developments suggested that the two sides were trying to work out ways of co-ordinating their efforts again in the naming of bishops. In 2011 and 2012 the Vatican had excommunicated two who had been appointed by China’s church without papal approval. Another bishop, Thaddeus Ma Daqin, had the backing of both sides when he was appointed in 2012. But Bishop Ma’s renunciation of the Chinese church at his consecration ceremony had caused co-operation to break down. + +New leaders, new hopes + +Since then, much has changed both in the Vatican and in China. At the end of 2012 Mr Xi took over as China’s leader. In an attempt to strengthen the Communist Party’s grip, he launched a sweeping crackdown on civil society. In May last year he said religion must be free of foreign influence—tricky if your faith was founded by, say, a Jew, an Arab or an Indian. Still, Mr Xi has appeared open to improving relations with the Vatican. And Pope Francis, who took over the Catholic church in 2013, also seems to want better ties. + +In 2014 China allowed the pope to fly through its airspace as he returned to Rome after a visit to South Korea (in 1995 it had denied similar permission to Pope John Paul II). From his plane the pope sent a message to Mr Xi, invoking “divine blessings of peace and well-being” upon China. This year (in an interview with Francesco Sisci, a Beijing-based journalist) the pope spoke of China’s “great culture” and “inexhaustible wisdom”. In February Global Times, a party-controlled newspaper, said hopes of a thaw had “gained momentum”, and that an official Chinese delegation had paid a rare visit to the Vatican in January (it is popular with Chinese tourists, pictured). + +But if a permanent thaw does occur, two groups of Catholics will have cause to worry. The first are those underground Catholics who do not want anything to do with the state-backed Catholic church, even if their boycott of it incurs the pope’s displeasure. Some already privately grumble that recent signs of warming between the Vatican and China amount to a betrayal by the Vatican of those Catholics who have endured considerable hardship, including imprisonment, as a result of their support for the pope. Several underground Catholics are in jail. + +The other group is the hundreds of thousands of Catholics in Taiwan. The Vatican is one of only 22 states that have full diplomatic relations with the island, and the only one in Europe. In terms of global status, the Vatican is by far the most important of Taiwan’s friends. China says it will not establish formal relations with the Vatican unless the pope severs diplomatic ties with Taiwan. In 2008 China tried to make up with the island by suspending its efforts to poach Taiwan’s allies. But it discarded that truce last month when it agreed to establish relations with Gambia. Catholics in Taiwan are praying that the Vatican is not the next in China’s sights. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21696511-two-articles-examine-chinas-often-troubled-relationship-christianity-first-looks-signs/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +House churches + +Underground, overground + +Despite harassment by police, China’s house-church movement is growing + +Apr 9th 2016 | BEIJING | From the print edition + +The faithful party + +FOR the past couple of years, China’s tens of millions of Christians, most of whom are Protestants, have been watching events in the coastal province of Zhejiang with anxiety. The authorities there have been waging a relentless campaign to remove the large crosses that adorn the roofs of many churches; hundreds have been taken down, to the horror of their congregations. In January this took a turn for the worse with the arrest of Gu Yuese, the outspoken pastor of the country’s largest church, a colossal edifice in the provincial capital, Hangzhou, that seats 5,000 people—about 50% more than St Paul’s Cathedral in London. Many feared that the detention of Mr Gu, who had been criticising the removal of crosses, might signal the start of a fiercer, nationwide, crackdown. + +To their relief, Mr Gu was released a few days ago. It was also a surprise. Only in February the pastor of another state-approved church in Zhejiang had been jailed for 14 years and his wife for 12 years after they protested against the removal of crosses. Mr Gu may owe his freedom to his church’s high profile in such a large and important city, rather than to any change of heart by Zhejiang’s authorities. Christians in the province, which has a high concentration of them, are not yet rejoicing. + +But there is little sign that Zhejiang’s clampdown on the public flaunting of Christian faith, of which the crosses are seen as an example, is encouraging officials elsewhere to adopt a similar approach. Indeed in some areas, including Beijing, “house churches”, as those without official approval are often called (even though they sometimes meet in offices), have been operating ever more openly. + +That is not to say that most Chinese Christians enjoy religious freedom. Far from it. Police in some areas continue to harass and detain members of house churches. But in many places, house churches are flourishing, and often make little if any effort to hide their activities from the government. Officials appear to turn a blind eye. President Xi Jinping is waging a fierce campaign against dissent, rounding up hundreds of civil-rights activists and tightening controls on the media. He appears less keen, however, to take on the country’s fast-growing Christian community, as long as its members do not openly defy the Communist Party. + +In central Beijing, one house church meets in the basement of an apartment building. Its rented rooms include a high-ceilinged hall; another is used as a nursery. Underground it may be, but it is far from clandestine. A large red cross in a ground-level window advertises its presence. Posters of Bible verses inside the building are visible from the outside. “We are not exactly lying low,” says one church leader. “We sing hymns so loudly that people in the community get curious and come down to see what’s going on. Anyone is welcome.” + +Under their noses a believer may be + +Many are drawn to house churches because they resent the control exerted by the party over officially approved ones. The appointment of pastors has to be vetted by the government. They cannot preach to people under 18. They cannot declare allegiance to any particular branch of Protestantism. As one young man puts it: “The Chinese government is not my boss. God is my only leader.” But most house churches take precautions. When talking to foreign journalists, their leaders often ask not to be named. Some say they avoid preaching about issues relating to politics and social problems. To avoid drawing unwanted attention from officials (and getting too cramped) they try not to let their congregations grow larger than a few hundred members. Those that do often split up into separate churches. + +In Beijing, members of unregistered churches are usually younger than 40. Brent Fulton of ChinaSource, a Christian NGO in America, says that many of the house churches that operate more openly were started in the 2000s by young people who had been members of informal Bible-study groups while they were at university. Such believers tend to see their faith as involving more than just private prayer, he says. Some are involved in charity work. A few even try to recruit new members through social media and websites, despite a ban on proselytising. + +The government is expected soon to convene a policy-setting meeting on religion, its first in a decade. Observers are unsure whether this will result in a tightening of regulations on house churches, or possibly even a relaxation. Unusually, some senior officials have made contact with house-church leaders in recent months to discuss their work. This has given optimists some hope. + +In the meantime, house churches continue to grow. In Beijing, one of the most prominent of them, called Zion Church (pictured), is so big that the house-church label seems wildly inappropriate. When it was founded in 2007 the congregation met in a small office in a commercial building. Since 2013 it has been using an entire floor of it. Some 1,500 people attend services each weekend. Hundreds of others are members of five associated churches scattered across the city. The main venue has a large auditorium with rows of plush blue chairs, children’s play areas and numerous meeting rooms of various sizes. It even has a coffee shop and gift store. + +“In the end, it doesn’t matter if there is more persecution or less,” says Jin Mingri, Zion’s founding pastor. “When times are good, there are more followers, and when times are bad, there are different opportunities for the church and the fellowship grows as well.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21696534-despite-harassment-police-chinas-house-church-movement-growing-underground-overground/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Kenya and international justice: Obstruction of justice + +Libya’s civil war: Unity, up to a point + +The West Bank: Deadly DIY + +Djibouti: The superpowers’ playground + +South Africa: Moment of truth + + + + + +Articles Sections Next + +Kenya and international justice + +Obstruction of justice + +The collapse of the case against William Ruto is terrible news + +Apr 9th 2016 | Nairobi | From the print edition + +Not a stain on his character + +STREET parties are only rarely inspired by international legal judgments. However, Eldoret, the hometown of William Ruto, Kenya’s deputy president, bopped after charges against him and against a local radio journalist were dropped by the International Criminal Court (ICC) on April 5th. Drunken revellers crowded the cameras as TV anchors tried to explain the news. The party was led by the local MP and the county’s governor, who apparently asked the police to tolerate the raucousness. But while the decision is a boon to Mr Ruto and his constituents, it is a serious blow to the ICC. + +The case against Mr Ruto began in 2010, when allegations against him and Uhuru Kenyatta, now Kenya’s president, were referred to the ICC by Kofi Annan, the UN’s former secretary-general. The two were accused of orchestrating violence which killed at least 1,300 people after disputed elections in 2007. The charges against Mr Kenyatta were dropped in December 2014 but those against Mr Ruto continued, threatening the coalition that brought the pair to power in 2013. Now that the charges have been dropped, it will be much easier to reconstitute that alliance for the presidential elections due in August 2017. + +In a statement, Mr Kenyatta said the decision “brings to a close what has been a nightmare for my nation”. After a “painful journey”, the court “reaffirms my strong conviction from the beginning about the innocence of my deputy president”. That sentiment was firm across the Kenyan establishment. Even Raila Odinga, the opposition leader, congratulated Mr Ruto on the decision of the court, before calling for the government to pay compensation to the victims of violence. + +The case had certainly poisoned relations with the West. Mr Kenyatta accused the court of being a tool of neocolonial persecution. But his claims that his government had co-operated and that the decision proved Mr Ruto’s innocence were disingenuous. Mr Ruto was not acquitted. Rather, the case was dropped for lack of evidence. The presiding judge, Chile Eboe-Osuji, said that he had wanted to declare a mistrial “due to the troubling incidence of witness interference and intolerable political meddling”. Several witnesses had recanted their testimony; others simply went missing. The prosecution’s case was torpedoed when the court decided in February that recorded interviews of witnesses who subsequently recanted could not be used as evidence. In theory, prosecutors could try again in the future. + +With elections coming next year, many Kenyans are worried that violence will flare up again. Mr Ruto’s and Mr Kenyatta’s alliance works well because they bring two of Kenya’s largest ethnic groups together: the Kikuyu, Mr Kenyatta’s tribe, which has dominated Kenyan politics most of the time since independence, and the Kalenjin, Mr Ruto’s group, who are populous in the Rift Valley. But other tribes, in particular the Luo, Mr Odinga’s lot, feel left out of government. + +For the ICC, the decision is a disaster; one ICC insider immediately denounced Kenya’s government for having done more to obstruct justice , and to vilify the court, than any other. The court has long annoyed African politicians, some of whom accuse it of disproportionately targeting their continent. Nine out of ten sets of cases where there are indictees are African, though most were referred to the court by African governments themselves. The failure to convict Mr Ruto suggests that the court can easily be frustrated if governments do not want to co-operate. In June, South Africa declined to arrest Omar al-Bashir, Sudan’s president, who was on South African soil and is wanted for war crimes and genocide. + +For the moment, several trials continue, but most involve former politicians, not current ones. One example is the trial of Laurent Gbagbo, the ex-president of Ivory Coast, who started—and lost—a short war to stay in power when he lost an election in 2010. African despots who have lost power may still have reason to fear the ICC. But for those who stay in, the court now looks much less threatening. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21696459-collapse-case-against-william-ruto-will-hurt-international-criminal/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Libya’s civil war + +Unity, up to a point + +The arrival of a new government brings hope to war-ravaged Libya + +Apr 9th 2016 | CAIRO | From the print edition + + + +MIRED in war, threatened by jihadists and short of cash—it is a wonder that anyone wants to rule Libya. Yet until recently the country had four competing governments. Rival administrations based in Tripoli, the capital in the west, and Beida, in the east, have spent the past two years fighting over a disputed election, among other things. That has allowed Islamic State (IS), the third contender, to grab roughly 180 miles (290km) of coastline around Sirte, in between them. + +The jihadists’ advance hastened the creation last year of a fourth outfit, the Government of National Accord (GNA). It is the result of a UN-sponsored deal signed in Skhirat, Morocco, on December 17th by politicians from both sides of the country. But they did not have the backing of the warring parties. So despite Western support, when leaders of the new body left Tunisia for Tripoli on March 30th, they travelled by boat—for fear of being shot down. + +The surprisingly smooth arrival of the prime minister, Fayez al-Serraj (pictured), and six others from the GNA’s nine-member presidency council has provided Libya with a glimmer of hope. Mr Serraj, a businessman with little political experience, has received pledges of support from several militias and municipalities. He now controls the state’s only functioning institutions: the national oil firm, Libya’s sovereign-wealth fund and its central bank, which welcomed the “start of a new era”. + +The situation, though, is by no means settled, even in the west of the country. There is confusion about whether the old Tripoli government is standing down in favour of the new one. Mr Serraj and his colleagues are hunkered down at a heavily-guarded naval base while talks continue. Loyalties tend to be fickle. Even the militias supporting the GNA are doing so out of self-interest, says Anas El Gomati of the Sadeq Institute, a Libyan think-tank. The GNA can pay salaries and negotiate oil deals, so “it is the new game in town,” says Mr Gomati. + +Gluing a nation together again + +Under the Skhirat agreement, members of the old Islamist-tinged parliament in Tripoli join a new advisory body called the State Council. But some feel the deal, which was not formally approved, lacks legitimacy. That view is shared in the east, where the internationally recognised House of Representatives (HOR), slated to become Libya’s legislature, has failed to secure the required supermajority in favour of the agreement. + +European sanctions on foot-dragging leaders in the east and west are meant to speed the process, but they do not cover Khalifa Haftar, the Libyan army general who is waging a brutal campaign against “terrorists”—many of whom happen to be his opponents. Supported by foreign powers, such as Egypt and the UAE, General Haftar looms over the eastern government. Article 8 of the Skhirat agreement brings the army under the control of the new government: hated in Tripoli, General Haftar is likely to be sacked. So the HOR insists that the article be removed. + +Some suggest a compromise whereby eastern Libya is given a measure of autonomy and its own regional army led by General Haftar, under a central command. But that might alienate the GNA’s supporters in Tripoli. And the general still seems to harbour national ambitions. One of his commanders promised this week to “clear out” Sirte—and then Tripoli and Misrata, home to dozens of militias. + +The lack of unity is complicating efforts to defeat IS, which has some 5,000 fighters in Libya. Western powers hope the Skhirat agreement may eventually bring the country’s armed groups under a single command that could work with their forces. For now, though, the West is lining up friendly militias to battle the jihadists, while occasionally striking them from the air. This risks exacerbating divisions in the country. Everyone wants to be the peshmerga of Libya, says Mattia Toaldo of the European Council on Foreign Relations, a think-tank, referring to American-backed Kurdish fighters in Iraq. “The problem is that having several peshmerga means not having a unified country.” + +Mr Serraj vows to confront IS, but is prioritising the reeling economy. Banks, short of cash, have limited withdrawals, or closed. So within days of arriving in Tripoli the prime minister froze state bank accounts for everything except salaries. Most Libyans now shun the banks and rely on the black market to trade currency. Militia commanders drive around in cars full of cash to pay fighters. High inflation and a weak dinar—Libya must import many staples—mean that even when cash is available, it doesn’t go far. + +On its current trajectory, Libya would run out of money by 2019, says the International Monetary Fund. Output of oil, which accounts for almost all of government revenues, has fallen from 1.6m barrels per day at the start of 2011 to less than a quarter of that. There is hope that the GNA can increase the flow. It has received support from Ibrahim al-Jathran, leader of the semi-official Petroleum Facilities Guard (PFG), which had been aligned with the eastern government. Mr Jathran has promised to reopen installations that his forces blockaded because of disputes. + +But the challenges posed by renewed oil sales suggest that the path ahead will be hard for the GNA. General Haftar could still make a play for the facilities in the east. In the west, militias from Zintan are blocking the main pipeline. IS continues to attack oilfields with little regard for who is guarding them. And the price of oil has crashed anyway. Still, for some the glass is half-full. “I’m not expecting 100%,” says Abdlrauf Beitelmal, the mayor of Tripoli. “Anything above 50% is good enough.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21696514-arrival-new-government-brings-hope-war-ravaged-libya-unity-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The West Bank + +Deadly DIY + +Angry Palestinians are turning to home-made guns + +Apr 9th 2016 | NABLUS | From the print edition + +Here are some they made earlier + +AS ARMS deals go, it was not the slickest. On an industrial street near the kasbah in the West Bank city of Nablus, a balding middle-aged man described his services. He couldn’t supply an AK-47 or a Tavor, the standard-issue Israeli assault rifle—those are too hard to find. In fact, he had no guns at all. But he insisted that he had the next-best thing: a friend with a lathe. + +Palestinians have carried out near-daily attacks against Israelis since October, killing 34 people and wounding hundreds more. At first, the knife was the weapon of choice: only 10% of last year’s attacks involved guns. Since January, though, that percentage has steadily risen, and they are now used in 25-30% of cases. + +Yet guns are actually quite hard to find in the occupied West Bank. Palestinian civilians are not allowed to own them, and the Israeli army carries out regular raids, seizing everything from shotguns to antiquated hunting rifles. The American-trained Palestinian security forces keep tight control of their own arsenals. Israeli officers say there is no evidence of their guns being diverted to militants, a common problem during the second intifada, which lasted from 2000 to 2005. + +Modern firearms are beyond the reach of most Palestinians, especially the unorganised young people who are involved in what many call the third intifada. An M-16 assault rifle can cost $15,000 in the occupied territories, twice the average annual salary. One man from the Hebron area, who used to run guns for a militia linked to the ruling Fatah party, left the business a few years ago and now works in tourism. “I need to make a living,” he shrugs. + +So the attackers are buying home-made guns. Many of these are based on the Carl Gustav—the “Carlo,” as it is known locally—a simple submachinegun developed in Sweden in the 1940s. The makeshift variety first appeared in Israel about 15 years ago, as a common fixture in the criminal underworld. They are assembled in garages and workshops using car parts, broken bits of other weapons and scrap metal. A simple “Carlo” costs as little as $500. One version, used in February to kill an Israeli policewoman outside Jerusalem’s old city, had a barrel made from a water pipe. + +The rise of homemade guns suggests something good: that co-ordination between Israeli and Palestinian security forces is still working well, despite the unrest. Well-armed militias like the Fatah-linked Tanzim have stayed out of the violence, under orders from the Palestinian leadership. But it also means that the attackers are getting better organised. The first stabbings were carried out by individuals who acted on impulse, grabbing a knife or even a screwdriver from the kitchen drawer. Today they increasingly work in pairs or small groups, motivated by revenge: more than 120 Palestinian attackers have been killed in the act, and their deaths fuel further violence. Israel’s generals believe that boosting the West Bank’s stagnant economy is the best way to curb the violence. But this is one growth industry they’d rather snuff out. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21696515-angry-palestinians-are-turning-home-made-guns-deadly-diy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Djibouti + +The superpowers’ playground + +Everyone wants a piece of Djibouti. It’s all about the bases + +Apr 9th 2016 | DJIBOUTI | From the print edition + + + +AT 2pm in the tiny African state of Djibouti everything stops. As the sun burns high in the sky people retreat to their homes, save for a few men lying in the shade of colonial-era walkways, chewing qat leaves that bring on a hazy high. In the soporific heat you would be forgiven for thinking that time had forgotten the New Jersey-sized nation. Yet its quiet stability within the volatile Horn of Africa has made the country of just 875,000 people a hub for the world’s superpowers. + +The stars and stripes flutters alongside the runway where military and passenger planes touch down: Camp Lemmonier, America’s only permanent military base in Africa, hosts 4,500 troops and contractors who conduct missions against al-Qaeda in Yemen and al-Shabab in Somalia. The outpost, leased for $60m a year, shares an airstrip with the international airport, although its drones now fly from a desert airfield eight miles away after one crashed in a residential area in 2011. + +Djibouti also hosts France’s largest military presence abroad (it still has an agreement to defend its former colony); Japan’s only foreign base anywhere; and Spanish and German soldiers from the EU’s anti-piracy force, who are billeted at the fancy Kempinski and Sheraton hotels. The Saudis and Indians are also rumoured to be interested in establishing outposts, as are the Russians. + +Meanwhile, China is building its first overseas base anywhere in the world in Djibouti, for which it will pay a more modest $20m in rent annually. It is supposedly nothing more than a logistics hub for anti-piracy operations and evacuating citizens from hotspots like Yemen, just 20 miles away across the Bab el-Mandib strait. Some Western officials fear that China may have bigger plans, however. It might in the future be awkward to have countries that do not always see eye-to-eye running military operations out of the same crowded space. + +The tiny desert state wants to be more than a superpowers’ playground, though; it has ambitions to become a Dubai or Singapore at the gateway of the Red Sea and Indian Ocean. “We don’t have anything else but location,” says Robleh Djama Ali, the head of business development at the Djibouti Ports and Free Zone Authority. The country’s lack of natural resources may be coincidental, but its fortuitous geography, wedged between Eritrea, Ethiopia and Somalia, is no accident. France wanted a port to rival Aden, Britain’s colony on the other side of the Red Sea. It has been desirable more recently too. The terrorist attacks of September 11th, 2001 brought the American military. Somali pirates brought EU soldiers. The Ethiopia-Eritrea war from 1998 to 2000 robbed Ethiopia of access to its smaller neighbour’s ports. Now 90% of Ethiopia’s imports come through Djibouti, accounting for 90% of its ports’ traffic. + +Ethiopia’s double-digit growth over the past decade has rubbed off on Djibouti. Around $9.5 billion of energy and infrastructure projects are under way, including four more ports, two new international airports and two pipelines, and a railway to Ethiopia (the last, ministers promise, is due to open within weeks). Another $9.7 billion of proposals are as yet unfunded. To put this in perspective, Djibouti’s GDP was just $1.6 billion in 2014. + +China is the biggest investor, much of it via soft loans. Officials won’t say exactly how much they are in hock to the Chinese, but both the IMF and African Development Bank have warned about its public debt, which is projected to balloon from 60.5% of GDP in 2014 to 80% in 2017. The finance minister, Ilyas Moussa Dawaleh, isn’t concerned: “what we are getting from China is much more important than any other long-standing partner,” he says. + +The boom has not benefited everyone. The ports account for a whopping 70% of GDP, but only provide a few thousand jobs. The UN puts unemployment at 60%, though Mr Dawaleh claims it is half that (Djibouti’s data are dodgy). Illiteracy runs at about 45%. The lack of employment is offset by traditional support systems; one worker can support an entire extended family. So the government can buy the loyalty of, say, 30 people by hiring a single bureaucrat. + +Dissent still simmers. Opposition figures claim police killed 19 people at a religious celebration in December 2015 (the government says only seven died). A corruption case brought by the government against Abdourahman Boreh, a wealthy businessman who was President Ismael Omar Guelleh’s right-hand man until he questioned his plan to run for a third term in 2011, was thrown out by a British High Court at the start of March. The country is voting on April 8th, but the re-election of Mr Guelleh for his fourth presidential term is a foregone conclusion; the opposition, an unwieldy coalition of seven parties, is fielding two rival candidates. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21696512-everyone-wants-piece-djibouti-its-all-about-bases-superpowers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +South Africa + +Moment of truth + +Jacob Zuma has survived a ruling that he broke the law, but his grip on the ANCis slipping + +Apr 9th 2016 | JOHANNESBURG | From the print edition + +It’s hard to embarrass President Zuma + +“ARE we ready?” asked Jacob Zuma, shuffling awkwardly as he prepared to address the nation. South Africans had paused their Friday nights and gathered around televisions to watch the president’s prime-time broadcast, called barely an hour earlier. There was a momentous air to it all: the last time a presidential address had been called on such short notice it was to announce the death of Nelson Mandela. + +The latest call, on April 1st, came after a spate of scandals. A day earlier, South Africa’s highest court had found that Mr Zuma had breached the constitution by disregarding an order to repay public money he had spent on his private mansion, Nkandla. (He claimed that a new swimming pool was a security feature, and therefore a legitimate expense.) Many hoped he was about to announce his resignation. + +But despite looking tired and cowed, Mr Zuma fought on. He apologised, not for failing in his sworn duty to uphold the constitution, but for the “frustration and confusion” around the powers of the public protector, an anti-corruption ombudsman who had ordered him to repay the money. His dissimulation fooled neither the public nor the upper echelons of his own party, among which discontent is rumbling. + +Given the dominance of the African National Congress (ANC), which has governed South Africa since the first democratic elections in 1994 and took 62% of the vote in 2014, Mr Zuma’s future depends on the party. Mr Zuma understands this only too well: he got the top job after the ANC tossed out his predecessor, Thabo Mbeki. + +For now, Mr Zuma remains in charge. The party batted back an impeachment vote introduced into parliament by the opposition with not a single ANC MP dissenting. The party’s unwavering defence of the president was partly motivated by a desire not to hand the opposition Democratic Alliance (DA) a victory. + +It also reflected a desire for self-preservation: MPs are nominated by their party rather than being elected directly. (Each party wins seats in parliament in proportion to its share of the national vote.) Having run the ANC’s intelligence operation when it was in exile, Mr Zuma knows which of his colleagues’ closets are filled with skeletons, so MPs fear him. Even so, as his popularity with voters withers, his grip over the party is slipping. + +The ANC is like an elephant, the party’s secretary-general Gwede Mantashe once said: a lumbering beast, it is slow to change direction. Yet close watchers of the party say that a “turning process” against Mr Zuma is under way. It began in December after he fired a well-regarded finance minister, replaced him with a political neophyte, and then, under pressure from his party and the markets, reversed course a few days later. It has gained pace with recent allegations that a wealthy Indian family close to the president had been meddling in cabinet appointments, including offering the finance minister’s job to his deputy, Mcebisi Jonas (who said no). + +More serious still was the Constitutional Court ruling, which has prompted some ANC bigwigs who worry about the rule of law to turn against Mr Zuma. What is more, a court will soon decide whether to reinstate some of the 783 charges of corruption, fraud, money-laundering and tax evasion against Mr Zuma that were dropped shortly before he came to power in 2009. + +Trevor Manuel, a successful former finance minister, has joined the calls for Mr Zuma to resign. He says the president committed “a violation of the key oath of office of the head of state”. A union representing 16,000 soldiers demanded that Mr Zuma be removed and urged its members to join “mass action campaigns” against him. The South African Communist Party, allied with the ANC, refrained from criticising Mr Zuma directly, but said that the court judgment “should be a clear warning signal to the ANC”. + +With pressure mounting on Mr Zuma, some fear the struggle may turn nasty. The DA accuses the government of settling political scores with a special anti-corruption police unit, known as the Hawks, whose commander was appointed by Mr Zuma in 2015 not long after a High Court judge ruled that he (the commander) was “dishonest”. Thuli Madonsela, the public protector, says she is under investigation by the unit. So too is Pravin Gordhan, the finance minister. More worrying still was a robbery at the offices of the Helen Suzman Foundation, a liberal think-tank that often criticises the government. Earlier this month it asked the courts to suspend the boss of the Hawks, Berning Ntlemeza. Days later, armed robbers broke in and stole documents, computers and hard drives. + +The Constitutional Court verdict was a reminder that even presidents are supposed to obey the law. The ANC, by sticking with a leader who appears not to believe this, is making a mockery of the democracy that it and others fought so hard to establish. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21696518-jacob-zuma-has-survived-ruling-he-broke-law-his-grip-ancis/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +French student politics: I dreamed a dream + +Greece’s migrant deal: Back where they came from + +Iceland’s prime minister: Big fish + +Nagorno-Karabakh’s war: A frozen conflict explodes + +Russia’s dairy embargo: War and cheese + +Charlemagne: The politics of memory + + + + + +Articles Sections Next + +French student politics + +I dreamed a dream + +Students are protesting against labour reforms that would benefit young people + +Apr 9th 2016 | PARIS | From the print edition + + + +A WARM spring morning, and the atmosphere is more rock concert than revolution. Chicken kebabs are sizzling on pavement stalls. Giggling teenage girls in skinny jeans are dancing to a rap number on the back of a open-back truck. They and their high-school classmates have skipped school to go on a manif, or demo, in protest at the French Socialist government’s liberalising labour bill. “It is festive,” agrees Florian Mazet, a final-year lycée pupil, over the pounding beat from the truck’s amplifier: “We don’t want to be confrontational, but if we have to, we are ready for it.” + +April 5th was the fourth of a series of one-day protests in which high-school pupils and university students joined unionists on the streets. This time some 34 lycées were shut, mostly due to blockades by pupils. The turnout was down on the previous week, but violence was up. After clashes with troublemakers in Paris, the police set off tear gas and detained 148 people. French students are campaigning not against harder exams or higher university fees, but against a draft law that would ease the negotiation of longer working hours and limit payouts for unfair dismissals. “Insecure youth is angry!” read one home-made placard. + +The heart of the complaint is that a Socialist government, meant to be the guardian of workers’ rights, is pandering to corporate bosses by dismantling them. Worse, goes the charge, it is making the disingenuous claim that this will help employers create jobs. “Who could possibly believe that making redundancies easier will create jobs?” reads a union flyer handed out at the rally. “Thomas Piketty agrees,” says one student triumphantly, referring to an article in Le Monde, a newspaper, in which the best-selling French economist argued that reducing redundancy costs will not curb unemployment. + +Yet Mr Piketty was not the only rock-star French economist to opine on the labour reforms. In his own piece in Le Monde, Jean Tirole, a Nobel prize-winner, argued the opposite: that the insecurity of the young is precisely the fault of over-protected “insider” jobs. Because businesses fear being burdened with such employees, 90% of new hires are now for temporary jobs, and young people can be stuck with short-term contracts for years. The new labour law, argued Mr Tirole, should lead to more permanent hires and curb youth insecurity. + +François Hollande, who campaigned to put youth at the centre of his presidency, has simply failed to make this case convincingly. He is already enfeebled, having been forced by a political outcry to shelve a proposal to strip nationality from French-born dual citizens convicted of terrorism. Now, protests against the labour bill have prompted the government to water down some provisions. Manuel Valls, the prime minister, has met with student leaders to hear their complaints. + +Only about 8.5% of France’s 2.4m students take part in elections to university union bodies, and the National Union of French Students (UNEF), the country’s biggest, has just 19,000 members. Yet their capacity to frame national debates and influence policy far exceeds this strength. One reason is that when la jeunesse gets involved in protests, the authorities get nervous. High-school pupils, who in France have their own unions, are particularly unpredictable. The revolutionary imagery of 1968 (though rarely its existentialist wit) still informs today’s chants and slogans. Protests can rapidly become violent, especially in the face of high-handed policing. + +Do you hear the people sing + +Equally important, student unions are an incubator of the next generation of political leaders. Many Socialist politicians began their careers at UNEF, including both Mr Valls and Mr Hollande. Jean-Christophe Cambadélis, the current Socialist Party head, was a UNEF leader. And universities seem remarkably tolerant of student politics intruding on studies. Today’s UNEF leader, William Martinet, is 27 years old and graduated only last year. + +“It’s a great training school,” says Bruno Julliard, who led UNEF a decade ago and is now one of Paris’s 21 deputy mayors. Ten years ago, he made his name by leading a massive student protest against a previous liberalising labour bill. The centre-right government at the time was forced to back down, and folk memories of that struggle linger. Student protests are a “sign of democratic vitality”, says Mr Julliard: “The French like their rebellious side, so they are looked upon kindly. Through young people, we express the ideals of the country.” Mr Hollande’s failure today is an inability to explain how, even with liberal policies, such ideals can still be upheld. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21696509-students-are-protesting-against-labour-reforms-would-benefit-young-people-i-dreamed-dream/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Greece’s migrant deal + +Back where they came from + +An EU agreement with Turkey starts shipping migrants out of Greece + +Apr 9th 2016 | ATHENS AND DIKILI | From the print edition + + + +THE police had prepared for violence, but in the end the deportees went quietly. A group of 202 migrants, the first to be sent back from Greece under the European Union’s new agreement with Turkey, left the islands of Lesbos and Chios on April 4th aboard vessels chartered by Frontex, the EU border agency. Most were Pakistanis and Afghans; a few came from Bangladesh, Ivory Coast and Congo. They came ashore in the Turkish town of Dikili, where Turkish officials covered the ship’s bow with tarpaulins to prevent journalists from seeing inside. From there they were bused to a camp near the Bulgarian border, over 250 miles away, to await deportation to their home countries. + +As the ferries docked, a few demonstrators stood atop a breakwater holding signs welcoming the refugees. Locals in the neighbouring square were less cordial. “We don’t want them here,” said Yemil Gunes, a pensioner. His friend Emin added: “They’ll take all the university graduates and dump the uneducated on us,” referring to the EU’s pledge to accept one Syrian refugee from a camp in Turkey for every Syrian returned from Greece. + +The EU hopes the threat of deportation will deter migrants from entering Greece. It may be working. Arrivals in Greece have dropped sharply since the EU deal with Turkey took effect on March 20th. Turkey is cracking down, too: according to Efkan Ala, the interior minister, Turkish police arrested 351 people-smugglers and intercepted over 64,000 illegal migrants in the first three months of this year. As those sent back from Greece arrived in Dikili, 55 Pakistani men intercepted at sea huddled at a nearby dock, waiting to be transferred to a police station. Asked if he would try again, one said “Never.” + +In the coastal city of Izmir, a hub of the smuggling trade, the neighbourhood of Basmane—once overflowing with refugees—now looks deserted. Waseem Qahwaji, a refugee from Damascus, said it no longer made economic sense to attempt the crossing. “It costs between $1,000 and $1,500 to go to Greece, but you lose all that money if you’re sent back,” he said. + +While deterrence may be starting to work, the EU’s plan to return a stream of migrants to Turkey is not. None of those sent back to Dikili had applied for asylum in Greece. Those who do apply cannot be deported until their claims are reviewed. Further returns are on hold while officials round up other migrants who have neglected to file asylum claims, among the 6,000 detained on the Greek islands. Detainees are rushing to apply. “The word’s out: request asylum here on arrival and it will take weeks and even months before your case is decided,” says a Greek official. + + + +Greece’s understaffed asylum service heard only about 1,000 cases last year. More people are being hired, but it will still take months to speed up the process, says Maria Stavropoulou, the director. The EU has promised to send 400 asylum experts; only 30 have arrived. The plan also envisions sending back rejected asylum seekers who are waiting for an appeal hearing. Human-rights organisations say that is illegal, as are other aspects of the deal. EU officials deny this. + +Even if new migrants stop coming, Greece must care for the more than 50,000 who have been trapped on the mainland by the closures of borders along the route to Germany. Many are in camps built by the Greek army, and tensions run high. Afghans fight with Syrians, who are seen as having a better chance of getting to northern Europe. About 10,000 people have refused to leave a squalid camp at the shuttered border with Macedonia, hoping it may re-open. Another 4,000 are squatting at the port of Piraeus in Athens. Many are waiting for smuggling routes to Europe to open up. “We hear about going through Albania…I’m waiting to get some firm offers,” says Ali Hussain, a student from Kabul living in a tent on the quayside. + +Greece’s cash-strapped government is waiting, too—for more than €380m ($433m) of EU emergency funding. The migrants impose a huge burden on an almost bankrupt country that faces spending caps after its bail-out by the EU and IMF. The government thinks many asylum-seekers could still be in Greece in three years. Moving them requires the EU to implement its relocation plan, which has been hobbled by the refusal of some member states to accept any asylum-seekers. + +Greek finance officials once hoped to use the refugee crisis to win concessions on fiscal targets from the country’s creditors. That looks less likely than ever. This week Alexis Tsipras, the prime minister, accused the IMF of trying to push Greece towards default, after a whistle-blowing website published transcripts of an internal IMF phone conversation. Christine Lagarde, the IMF’s managing director, reacted furiously. + +Relations between Athens and Brussels remain fraught. But the EU will have to deliver more help for its migrant plan to work. It must also come through on its promises to Turkey, including €6 billion in aid and the scheme to accept Syrian refugees. The EU’s tough new return policy has already slowed the flow of migrants. But the rest of its deal with Turkey could easily fall apart. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21696543-eu-agreement-turkey-starts-shipping-migrants-out-greece-back-where-they-came/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Iceland’s prime minister + +Big fish + +A reformer is entangled by an investigation of offshore shell companies + +Apr 9th 2016 | From the print edition + +Bit cold for a banana republic + +WHEN Sigmundur David Gunnlaugsson was elected as Iceland’s youngest-ever prime minister in 2013, he rode to power on a wave of fury over the elite’s mismanagement of the financial system. Bad decisions had made the country exceptionally vulnerable to the global financial crisis; when it arrived in 2007-09, GDP fell by 9%. David Gunnlaugsson campaigned against foreign creditors and vowed to write off part of Icelanders’ mortgage debts. But after the publication by a journalistic consortium of the “Panama papers” (see article), popular anger was directed at the prime minister. + +The leak revealed that in 2007 David Gunnlaugsson and his wife set up a company in the British Virgin Islands to hold proceeds from his wife’s inheritance, including bonds issued by three of Iceland’s banks (whose failure triggered the collapse). David Gunnlaugsson sold out to his wife for $1 in 2009, when he became an MP. But he never declared the existence of the company, and critics charged that since the banks have claims on Iceland’s government, his wife’s bonds constituted a conflict of interest. The next day around 10,000 protestors gathered outside parliament; many chanted that Iceland was turning into a banana republic and wielded that fruit. Soon afterwards, David Gunnlaugsson said that he would hand over powers to his deputy, Sigurdur Ingi Johannsson. + +David Gunnlaugsson has done much to make Iceland’s financial system work better. Its pre-crisis economy was plagued by incompetence and corruption. Thanks to feeble supervision, in the 2000s the three biggest banks, Glitnir, Kaupthing and Landsbanki, amassed assets 14 times larger than Iceland’s GDP. Households merrily borrowed abroad too. When short-term financing for banks dried up in 2008 and capital rushed out of the country, the currency tanked and inflation soared. + +In contrast to his predecessors, David Gunnlaugsson tightened banking regulation. Last year the government pushed through reforms that will force the creditors of Iceland’s failed banks to suffer even heavier consequences from their poor decisions. Before they are allowed to transfer Icelandic krona-denominated assets out of the country, they must pay a hefty fee. This raises government revenue: in 2015 the budget moved into the black for the first time since 2007. It also helps to prevent uncontrolled sales that would make the krona crash again. The capital strength of Iceland’s big banks, meanwhile, is rising. Non-performing loans are dropping. + +During David Gunnlaugsson’s term, Iceland has begun to return to financial normality. In October the country repaid, ahead of schedule, its debts to the IMF, which had given it a big bail-out in 2008. Capital controls, a crisis measure which made it hard for Icelanders to get foreign currency, are slowly being removed. + +After trundling along for a few years, growth accelerated rapidly in 2015. It is also expected to be strong this year. Happily, this strong performance is not dependent on fancy finance; banking now accounts for 6.7% of GDP, down from more than 12% at the height of the bubble. The number of tourists has doubled since 2007, thanks in part to a weak krona. Iceland is again embracing the reliable industries that long sustained it: the fish-processing industry has grown by 40% in the past decade. Real wages are around their pre-crisis level. Inequality and poverty have fallen. + +This should have bolstered David Gunnlaugsson’s popularity. But even before the “Panama papers” scandal, it was waning. The Pirate Party, a radical group formed in 2012 which campaigns for softer drugs laws and more electronic privacy, has steadily risen in the polls. Part of its appeal is that it is anti-establishment; the party does not have an official leader. A poll on April 6th put the Pirates’ support at 43%. If snap elections were called, the group would probably win or lead the next coalition. They do not seem strong on economic policy, unlike David Gunnlaugsson. Despite his current woes, history may judge his tenure kindly. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21696574-reformer-entangled-investigation-offshore-shell-companies-big-fish/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nagorno-Karabakh’s war + +A frozen conflict explodes + +After facing off for decades, Armenia and Azerbaijan start shooting + +Apr 9th 2016 | MOSCOW | From the print edition + + + +WITH so many conflicts in the world, Nagorno-Karabakh gets little attention. The bloody fighting between Armenian and Azerbaijani forces in the mountainous enclave this week was a reminder that it should. Tanks and artillery traded fire; at least 50 people were killed in four days. The spectre loomed of a wider war, one that could draw in Russia, Turkey and Iran. A ceasefire brokered in Moscow on April 5th appears to be holding for now. But it brought the two foes no closer to peace. + +The fighting dates back to 1988, when Nagorno-Karabakh’s ethnic Armenians attempted to secede from Azerbaijan. (At the time, both Armenia and Azerbaijan were republics of the Soviet Union.) As the Soviet Union broke apart in 1991, the conflict grew into a full-scale war. By 1994 some 30,000 people were dead and Nagorno-Karabakh was under Armenian control. Russia, America and France brokered a ceasefire, but sporadic shooting continued. Rather than time healing old wounds, it deepened them. + +On April 2nd the frustration spilled over. Azerbaijani forces seized settlements and strategic heights along the front. (Both sides accuse each other of starting the fighting.) The campaign to capture territory marked a departure from an earlier Azeri strategy of attacks aimed at “pressure and posturing”, says Richard Giragosian, head of the Regional Studies Centre, a think-tank in Yerevan. Armenian and Karabakhi officials say they retook the captured land, but their claims have not been independently verified. The outburst demonstrates that the 1994 ceasefire framework, with no peacekeepers and only a handful of unarmed monitors, “no longer fits”, says Thomas de Waal of the Carnegie Endowment for International Peace. + +The fact that the assault began with both the Azeri and Armenian presidents in Washington for a security summit suggests that it was no accident. Discontent with the stalled diplomacy may have pushed Azerbaijan to try to change facts on the ground. “This is about bringing Armenia to the negotiating table,” says Zaur Shiriyev of Chatham House, a British think-tank. + +At home, the political dividends were immediate. The brief war “created euphoria”, says Anar Valiyev, a Baku-based analyst. The government boasted of newfound military superiority, the result of the oil-rich state’s expansion of defence spending (from $177m in 2003 to $3 billion in 2015). Casualties were seen as justified. “The people are hungry for victories,” says Mr Valiyev. + + + +That may help Azerbaijan’s president, Ilham Aliyev, cushion the pain of falling oil prices. Oil and gas accounted for 94% of the country’s exports in 2013. As prices dropped over the past two years, the Azeri central bank burned up more than two-thirds of its reserves supporting the currency before allowing it to devalue sharply. In January 2016 the government imposed a 20% tax on foreign-exchange transactions and sounded out the International Monetary Fund about a possible loan. Rising prices and unemployment prompted protests in several smaller towns earlier this year, a rarity under Mr Aliev’s tight watch. + +Some on the Armenian side suggested that Turkey, a longtime ally of Azerbaijan and new foe of Russia, helped provoke the violence. Turkey’s president, Recep Tayyip Erdogan, fueled the speculation by declaring that he would stand by Azerbaijan “to the end”. Yet the Turkish role is a red herring, says Laurence Broers of Chatham House: “The motives are local and not about great-power competition.” + +Nonetheless, peacemaking will require a push from powers such as Russia. Moscow has closer ties with Armenia: it has a military base there and a treaty obligation to defend the country against attacks on its territory (excluding Nagorno-Karabakh). But Russia also sells large quantities of arms to Baku. Any peace plan depends on external pressure overcoming local resistance. The stakes of diplomatic failure have never been clearer: little is left to prevent a repeat, or worse, of last week’s clashes. “Now there is no excuse for the outside powers to say the situation can just be managed,” says Mr de Waal. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21696563-after-facing-decades-armenia-and-azerbaijan-start-shooting-frozen-conflict-explodes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Russia’s dairy embargo + +War and cheese + +In a land where European cheese is banned, one man dares make his own + +Apr 9th 2016 | MOSCOW | From the print edition + +Parmesan of patriots + +AT 27, Oleg Sirota was living the Russian dream. He had an information technology company with 30 employees, an apartment in Moscow, a Toyota and a Mercedes. Yet he was tormented by an unfulfilled childhood ambition: “All that time, I was dreaming of farming, dreaming of milk, of cows and of cheese.” He thought about starting a creamery, but saw no way to compete with European imports. Besides, he told himself, corruption would make securing land a nightmare. + +Then Russia annexed Crimea, and everything changed. The West imposed sanctions. Vladimir Putin retaliated by banning farm imports from the European Union. Mr Sirota saw an opening. He sold his business and moved to the countryside, 60km outside Moscow. He took out loans from family and friends. He found a partner online, a Russian working at a creamery in Germany. He hired two refugees from Makeevka, a town near the front line in eastern Ukraine. In August 2015, in a field outside the village of Dubrovskoe, Mr Sirota opened “Russkiy Parmesan”. + +Mr Sirota (pictured) hopes to help restore Russia’s self-sufficiency, which (like Mr Putin) he considers a matter of both dignity and security. The Russian government is trying to stimulate domestic production of everything from butter to guns. Last year Mr Putin announced plans to spend some 2.5 trillion roubles ($37 billion) on 2,500 import-substitution projects. + +The results have been unimpressive. Most industries have a hard time replacing foreign components and know-how. Yet agriculture has been a bright spot of sorts, as “anti-sanctions” have cleared space for Russian producers. Russia imported about 440,000 tons of cheese in 2013. Through the first 11 months of 2015, that had halved to just 180,000 tons. + +Mr Sirota must fend off domestic rivals who substitute palm oil for dairy fats. He spends most nights in a wooden cabin next to his creamery, waking at dawn and working till dusk. His only worry is that sanctions may be lifted too early. “If Obama and Merkel extended sanctions for another 10 years, I’d build them a monument in bronze right out front.” + +Russkiy Parmesan produces nine varieties, including gorgonzola and an original creation called “Gubernatorsky”. (“It goes with everything,” Mr Sirota boasts.) True parmesan remains a distant dream. Russian sanitary regulations bar unpasteurised milk and copper pots, both needed for hard cheeses. Finding high-quality milk is also a constant struggle. + +Patriotism runs through Mr Sirota’s creamery: he flies both the Russian tricolor and the red and blue cross of Novorossiya. Among the wheels of cheese maturing on wooden shelves is an experimental blend infused with red wine from Crimea. Mr Sirota hopes to revive Russia’s pre-revolutionary Meshchersky cheese, invented in the late 19th century by Swiss experts working on Russian estates. (After the revolution, cheesemaking died out as foreign experts fled the Bolsheviks.) + +Mr Sirota did not support Mr Putin before 2014, but he does now. The president’s interventions in Ukraine and Syria have brought Russia closer “to the country I dreamed of since childhood”, he says. Mr Putin was invited to the opening of Russkiy Parmesan, but did not make it. No matter: 5.5kg of the finest “Gubernatorsky” have been set aside for whenever the president can drop by. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21696571-land-where-european-cheese-banned-one-man-dares-make-his-own-war-and-cheese/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +The politics of memory + +Poland had been coming to terms with its past. Now the government wants to bury it again + +Apr 9th 2016 | From the print edition + + + +DARIUSZ STOLA, the owlish director of Polin, the museum of Jewish life in Warsaw, remembers when Jewish sections first started to appear in bookshops in Poland. “I thought it would fade out,” he says. It didn’t. Instead, over the past two decades Poland has become a place where the nation’s past, in particular its relationship to the 3m Polish Jews who were murdered in the Holocaust, is debated more vigorously by politicians, intellectuals and ordinary people. Many bookshops now have a section on Polish-Jewish history; since it opened in 2013, Polin has become one of the capital’s most popular museums. + +This debate may now be under threat. The Polish government, led by Law and Justice, a radical nationalist party, appears intent on politicising historical discussion—and even criminalising it. In February Patryk Jaki, the deputy minister for justice, proposed banning the phrase “Polish death camps” on pain of a fine or three years’ imprisonment. + +Poles detest this phrase, since it inaccurately suggests that Poles, not Germans, ran concentration camps such as Auschwitz-Birkenau and Treblinka on Polish soil. When Barack Obama used it in a speech in 2012, Poland’s previous government slapped him on the wrist. (He apologised.) Poles have long preferred the formulation “Nazi death camps in German-occupied Poland”. + +Many Poles are frustrated by what they perceive to be a portrayal of Poland as a collaborator with Germany, says Michael Schudrich, the country’s chief rabbi. Many also point out that, alongside the Jewish victims of the Holocaust, some 3m non-Jewish Poles died in camps too. For Maciej Swirski, the head of the Polish Anti-Defamation League, which campaigns for the “good name of Poland”, the phrase “Polish death camps” is a form of Holocaust denial, as it underplays German responsibility. + +But criminalising it is something new. Previously, when journalists used it, ambassadors would dispatch angry letters. The proposed law is a blunt instrument. It would, among other things, punish anyone, domestic or foreign, who publicly ascribes responsibility to the Polish nation or state for “crimes committed by the Third German Reich”, even inadvertently. + +Alongside this, Andrzej Duda, the president, has threatened to strip Jan Gross, a historian at Princeton University, of an Order of Merit after he asserted last year that more Jews than Germans were killed by Poles during the war. And when “Ida”, a film released in 2013 depicting Polish complicity in the deaths of some Jews, was shown on public television (which was taken over by pro-government managers in January), it was accompanied by a 12-minute clip in which three critics slammed the film. One spoke of a conflict between Polish and Jewish “sides” of the story. + +In isolation, these incidents are embarrassing for Poland. Together, they are alarming. They indicate the ferocity of Law and Justice’s obsession with the past. They also suggest that the party sees political gain in stirring up historical resentments. It plays up the most glorious aspects of Poland’s history, such as the anti-Nazi resistance. At the same time, it portrays the country and its people as victims, then and now. + +The party and its divisive leader, Jaroslaw Kaczynski, are preoccupied with the country’s allegedly botched transition after 1989, which they contend left the communist-era elite manipulating the reins of power, just in a different guise. This leads them to denigrate Poland’s post-communist success. The previous government emphasised the country’s economic recovery, with GDP per head almost doubling since joining the European Union in 2004. By contrast, Law and Justice portrays Poland as a nation bullied by Brussels and its refugee-loving, secular leaders. + +Unlike the previous, Europhile government (Donald Tusk, the former prime minister, is now the head of the European Council), the current one shrugs at what outsiders think of it. Since coming to power in October, as the first party to win an outright majority in over three decades, Law and Justice has thumbed its nose at the EU’s liberal ideals. It has made heavy-handed changes to the constitutional court, security services and public media. In January the European Commission launched a formal assessment of whether these moves breach the rule of law. On April 4th Moody’s, a credit-ratings agency, warned that the constitutional tussle may dent Poland’s attractiveness to foreign investors. + +Forget about it + +Law and Justice’s core supporters do not seem to mind. Many of them are old, socially conservative voters who live far from big cities like Warsaw. The proposed law would play to their sense of victimisation. This is a shame. Law and Justice is not anti-Semitic, and its leaders are firmly pro-Israel. But introducing criminal penalties into intellectual debate is no way to deal with historical resentments. Indeed, in trying to whitewash the past, the government may stir up prejudice instead. Those with anti-Semitic views may feel vindicated, or even emboldened, when they hear politicians deny that Poles bear any responsibility for crimes against Jews. This will leave Polish Jews feeling persecuted, and kick off a new cycle of recrimination. + +Some of Law and Justice’s politicians seem to be aware of this. In March, Mr Duda spoke out against anti-Semitism at the launch of a museum which commemorates a Polish family killed by German forces for hiding Jews. Strikingly, he acknowledged that the war had seen cases both of Polish heroism and of Polish infamy, with some Gentile Poles betraying their Jewish neighbours and those who helped them. His statement surprised many—especially as his threat to strip the state decoration from Mr Gross, who has written extensively about the less creditable aspects of Poland’s past, is still up in the air. It hinted that, despite the populist bluster, the party may eventually let its misguided proposals slide. But not before they have damaged Poland’s reputation, and its own attempt to come to grips with its history. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21696555-poland-had-been-coming-terms-its-past-now-government-wants-bury-it-again/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Fiscal devolution in Scotland: A taste for more + +Brexit brief: The economic consequences + +Defence industry: Take your partners + +Domestic abuse: Violence in the shires + +The housing crisis: Lords a-leaping + +Second homes: To the lighthouse + +Bagehot: Land ahoy! + + + + + +Articles Sections Next + +Fiscal devolution in Scotland + +A taste for more + +Devolving tax powers benefits Scotland more than the rest of Britain but may do little to keep the union together + +Apr 9th 2016 | EDINBURGH AND INVERNESS | From the print edition + + + +SCOTLAND is fast becoming one of the world’s most powerful subnational states, along with Canadian provinces and Swiss cantons. It is now adding significant control over fiscal policy, in particular income tax, to the substantial autonomy it has enjoyed since 1999. The devolution deal, hastily concluded by an alarmed British government when only 55% of Scots voted in 2014 against independence, favours Scottish taxpayers over those in the rest of Britain. Even so it may only whet the appetite for full sovereignty. + +Traditionally the British Treasury has collected revenues in Scotland, as elsewhere, and handed the Scottish government a slug of money, the “block grant”, to finance most of its spending. On April 6th a new Scottish rate of income tax (SRIT) was introduced that will take ten pence from every pound subject to income taxes. Scottish taxes due to Westminster have been correspondingly reduced. Scotland will keep the revenue from its new tax band, but its grant will be smaller. Next year Scotland will gain full control over income tax, collecting roughly half the money it spends, and the grant will shrink further. Other powers are also being devolved, including more say on welfare spending and the ability to borrow a little more. + +It looks like a bad time, however, for Scotland to assume control of its fiscal destiny. The effects of lower world prices for oil and gas, exports of which accounted for one-quarter of Scotland’s GDP in 2012, may worsen in 2016, as contracts for fabricating and maintaining oil rigs expire and are not renewed. Forthcoming revisions could show that the Scottish economy contracted in the fourth quarter of 2015. + +In the area around Inverness, Scotland’s biggest oil region after Aberdeen, unemployment has risen for five straight months. The Port of Cromarty Firth, where rigs are stored when they are not needed in the North Sea, is jammed (see picture). Diversifying into renewable energy and tourism will not offset job losses in oil. Pay packets in the industry are about 50% above the British average, so having fewer to tax takes a big bite out of receipts. + + + +The fine print of the devolution agreement should help the Scots to cope with a slowing economy, however. The British government cut Scotland a sweet deal. Though the Scottish government is now in charge of a chunk of income tax, it will not run any economic risk in 2016-17, says Jim Gallagher of Oxford University. The reduction in the block grant will exactly offset the tax receipts generated this year by SRIT, he says. If revenues are low, London will make up the difference. + +Scotland will take on much more risk when it gets full control over income tax in April 2017, but the fine print of the deal may still mitigate it. Scotland’s income-tax take in 2016-17 will help to determine how big a block grant it receives thereafter. If the economy performs badly this year, the grant next year will be more generous. If growth then bounces back, Scotland could find itself with both juicy tax receipts and a hefty handout from London. + +The way in which the block grant will be adjusted in future years is also to Scotland’s advantage. Its population is growing much more slowly than Britain’s. Revenues from income tax can be expected to grow more slowly too, and so can demand for public services. + +Some argue that any adjustment to the block grant should take into account Scotland’s diminishing need for cash relative to needs elsewhere in Britain. In fact its budget will be protected from its relatively lower population growth—precisely what the ruling Scottish National Party (SNP) was aiming for in the negotiations over devolution. Public spending per person in Scotland is already more than 10% higher than it is in Britain as a whole, though Scotland is not particularly impoverished. The deal ensures that it is unlikely to decline toward the British average, says Mr Gallagher. + +This latest round of devolution comes at an interesting time. The government at Holyrood is controlled by the SNP, which advocates independence, lost the referendum on it and went on to stunning victory in the British general election in 2015. It now hopes to do as well in the Scottish elections scheduled for May 5th. + +One view is that the new tax powers could weaken the SNP. Since 2011, and especially since the referendum, it has built a sprawling coalition of support by bashing London and the British government’s austerity policies, combining left-wing rhetoric with middle-class goodies. Its opponents hope the transfer of fiscal powers will make it harder for the SNP to disavow responsibility for Scotland’s problems and promise all things to all people. That, in turn, might dampen popular enthusiasm for independence. + +Some evidence points this way. Tax, not independence, has dominated the election campaign, with Labour seeking to outflank the SNP on the left (pledging tax rises to pay for expanded services) and the Conservatives on the right (hinting at cuts). Some think Scotland’s move towards fiscal autonomy—on generous terms—will convince people that full independence is neither necessary nor desirable. + +Their hope is probably optimistic. Past transfers of powers have not stopped the SNP from fingering London for its failures in devolved areas such as education. If the Scottish economy takes off after the tax changes, the SNP can argue that Scotland deserves still more autonomy. If the new regime creates disgruntled losers, or if economic growth is weak, the party can blame Westminster for not giving it enough control over other things: employment law, say, or corporation tax. It will also grumble that the deal forces it to implement the central government’s austerity policies, given that Scotland still has very limited power to borrow. + +Those who oppose the break-up of the United Kingdom will breathe a sigh of relief if Britain votes to stay in the European Union on June 23rd, as the SNP has all but promised a new Scottish independence referendum in the event it does not. But even if the Remain camp wins, Scotland is drifting away from the rest of the country, one round of devolution at a time. The new tax powers were designed to keep Scots in the union. They may nudge it closer to the exit. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21696519-devolving-tax-powers-benefits-scotland-more-rest-britain-may-do-little-keep/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit brief + +The economic consequences + +Most estimates of lost income are small, but the risk of bigger losses is large + +Apr 9th 2016 | From the print edition + + + +THE impact of leaving the European Union on Britain’s economy may be the most heated issue of all as the referendum on June 23rd approaches. Many of those who are unsure how to vote say they will decide on the basis of whether Brexit is likely to make them better or worse off. The arguments are hard to assess. Andrew Tyrie, the Tory MP who chairs the Commons Treasury select committee, which is inquiring into the costs and benefits of EU membership, says both sides in the debate “are prepared to set aside all qualifications and restraints in the wilder claims they make.” He hopes his committee can do better, though it too is bitterly divided. + +Mr Tyrie notes that, when it comes to Brexit, “the central problem is that there is no counterfactual.” In October, for instance, a Bank of England study concluded that EU membership had boosted the British economy by making it more dynamic. That is hard to square with Brexiteers’ claim that membership has been damaging. Yet the cause of the new dynamism could be something unrelated: perhaps, as Eurosceptics say, the Thatcherite reforms of the 1980s, lower taxes or less red tape. + +The missing counterfactual is even more problematic in assessing the economic effects of Brexit. Nobody can be sure what access Britain will have to the single market, what its regulatory regime and migration rules will be, or how long any of these may take to negotiate. Several teams of economists have had a go at guessing. The table shows the conclusions of six of the most comprehensive studies. The wide range of GDP predictions demonstrates how uncertain the outcome is. + +One thing both pro- and anti-EU voices can agree on is that the short-term impact of Brexit is likely to be negative. Uncertainty over future trade arrangements has already reduced confidence in sterling and investment could well be discouraged. The Bank of England calls Brexit the biggest risk to domestic financial stability. That Britain is running a record current-account deficit, which has to be financed by capital inflows, makes it all the more vulnerable. + + + +The longer-term effects are more controversial, although most economists reckon that they too are likely to be negative. That is not least because it can take many years for an economy to recover forgone short-term output (if it does). Broadly speaking, economists find five ways in which Brexit could affect future GDP. + +Losses arising from lower trade are by far the biggest. Later this month the Centre for European Reform, a think-tank, will publish a revised version of its 2014 study on Brexit, based on the work of economists from Groningen University in the Netherlands. It concludes that Britain’s trade with the EU has been 55% greater than it would have been without membership—and that there have been no detectable losses from trade diverted from third countries towards the EU. + +Even if only some of these gains were at risk from Brexit, they would hugely outweigh the second effect, the economic benefit from cutting Britain’s annual net contribution to the EU budget of some £8.5 billion ($12 billion). The budget gain is also swamped by likely losses from the third factor, lower foreign investment. Brexiteers argue that this will be unaffected, but the evidence is that a large chunk of foreign investment, especially in financial services and cars, has come because of Britain’s EU membership. Gains from a fourth possible factor, fewer onerous rules, are largely illusory. Analysis by the OECD, a rich-country club, finds that British labour and product markets are already among the least regulated of all its members. + +The fifth consideration is migration. Were Britain to impose tighter controls on EU migrants post-Brexit, growth would depend on attracting from elsewhere the skills its economy needs. Yet it is politically unrealistic to believe that Britons who have just voted to leave the EU partly to curb uncontrolled migration from eastern Europe will want to welcome many more migrants from places like India and Africa. + +The Treasury is due to produce its own assessment of EU membership later this month. It is likely to conclude that the economic effects of Brexit would be negative, and that the short-term risks to Britain’s economy are substantial. Economics is accordingly the Remain campaign’s strongest card—provided the campaigners manage to play it well. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21696517-most-estimates-lost-income-are-small-risk-bigger-losses-large-economic/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Defence industry + +Take your partners + +Defence firms look to joint ventures to boost exports and profits + +Apr 9th 2016 | BARROW-IN-FURNESS AND STEVENAGE | From the print edition + +Astutes prepare to go out and down + +INSIDE the Devonshire Dock Hall in Barrow-in-Furness, the mottled black fin of Britain’s latest nuclear-powered submarine is just discernible above a mass of scaffolding. Seven storeys high and about 100 metres long, HMS Audacious, the fourth in the Astute class of attack submarines, is expected to emerge from the shed for sea trials early next year. + +At around £1 billion ($1.4 billion) apiece, these are among the most advanced weapons systems in the world, capable of firing cruise missiles and torpedoes out of their four silos. The subs are so stealthy, their makers claim, that one could pass five metres behind a diver underwater unnoticed. The secret is in the propulsion system, the only part of the boat entirely sheathed in tarpaulin to keep it from prying eyes. + +The seventh, and last, such boat should be finished in around 2020. Then BAE Systems, the biggest defence contractor in Britain and the world’s third-largest, expects to move straight into producing the four new submarines that will carry Britain’s Trident missile nuclear deterrent. The government has set aside £41 billion to develop them: it will be, by some way, the country’s most expensive defence procurement ever, and one of its biggest construction programmes of any kind. Already BAE Systems has engineers looking at the successor to the Astute class. + +Unsurprisingly, BAE is enjoying the continuity at Barrow, boosted by the government’s renewed pledge to keep defence spending at 2% of GDP. Not every British defence contractor is doing so well. + +Rolls-Royce, which makes the reactors for the nuclear submarines, among many other things, has issued five profit warnings in 20 months. Defence still makes up a sixth of its business, down from one-half during the cold war, and Rolls blames its woes partly on falling demand for military-jet engines and other equipment. QinetiQ, a defence-aviation testing agency, is another firm that has suffered. It almost ran out of cash in 2010 when military spending began to drop. Defence budgets are beginning to recover now, but as its companies search for models to sustain them in the future, Britain’s aerospace and defence industry—with a turnover of £56 billion that makes it the world’s second-largest—is being reshaped. + +At one end of the spectrum BAE Systems relies almost entirely on big orders from a few sources: America’s Department of Defence (DoD), by far the world’s largest defence spender with some $585 billion requested by the president for this year; Britain’s Ministry of Defence (MoD), the fifth-biggest spender; and several others, principally Saudi Arabia, with the third-largest budget. Over one-third of BAE’s buoyant group sales in 2015 came from its American subsidiary, which operates under a Special Security Agreement there and has privileged access to the market. The contract to supply Typhoon and Hawk aircraft to Saudi Arabia generated almost as much in sales for BAE as Britain’s MoD. + +At the other end are companies such as MBDA, a quintessentially pan-European firm that makes missiles. MBDA was born of the merger in 1996 between a division of BAE and a French company, to which German and Italian outfits were later added. Headquartered in Stevenage, it builds missiles in the four countries of its constituent parts. MBDA argues that it achieves economies by concentrating different functions—research or testing, for example—at one or other of its sites. Because it lacks BAE’s special status in America it has failed to make headway in that notoriously closed market. This has forced it to be more nimble in others. With a product range that includes the Brimstone missile used by British forces against Islamic State, MBDA sells strongly in Europe. In 2015, for the first time, it won more orders elsewhere. + +In between BAE Systems and MBDA lies unhappier territory. Rolls is neither a niche manufacturer like the missile-maker nor, as its managers admit, big enough to compete in military engines against larger rivals such as America’s GE and Pratt & Whitney. Rolls plans to increase all engine production by 50% over the next five years, but efforts to expand are burdening its balance-sheet and using up its cashflow. As the British government has retained a controlling “golden share” in BAE, Rolls and QinetiQ, it is hard for these firms to grow through outright mergers or to raise capital from investors. BAE’s state shareholder did approve its attempted merger in 2012 with EADS (a European conglomerate known today as Airbus) but the deal was scuppered by the German government. + +Holding hands + +As the cost of weapons escalates—each new military-jet engine costs over $1 billion to develop—even the biggest defence firms are looking at forming alliances. Many will be determined case-by-case depending on the systems involved. Such deals would allow companies to gain scale by pooling resources with other firms, without straining financially or becoming dependent on one product. + +The civil business of Rolls has said that it is looking for partners to develop an engine for narrow-bodied aircraft in the 2020s, and such a partnership could be a model for future military projects. BAE points out that its Typhoon fighter jet is a pan-European aircraft produced with Airbus and Finmeccanica of Italy. At an Anglo-French summit in March the governments pledged to spend a further £750m each on a drone project principally between BAE Systems and Dassault Aviation of France. MBDA’s success owes quite a lot to the Anglo-French defence treaty signed in 2010. + +Such alliances might also help exports, increasingly Britain’s weakness. Francis Tusa, a defence expert, says that although British defence firms are now “very competitive on cost” compared with their American rivals, this does not help them much elsewhere. The exacting requirements of America’s DoD and Britain’s MoD force suppliers dependent on them to build only top-of-the range equipment that other countries cannot afford to buy. + +BAE’s Type 26 frigate, for example, has so far failed to elicit firm global interest and could end up as a very expensive bespoke Royal Navy vessel. “Developing countries are being offered ships at half the price and they are much better than half as good,” says Mr Tusa. Defence firms in Germany and France now export more than British ones and to a wider spread of customers. But if British companies come to see their European counterparts more as partners than as rivals, that could change. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21696551-defence-firms-look-joint-ventures-boost-exports-and-profits-take-your-partners/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Domestic abuse + +Violence in the shires + +Prosecutions for domestic violence are becoming more common + +Apr 9th 2016 | From the print edition + + + +THE village of Ambridge provides a bucolic escape for the 4.8m people who tune in to “The Archers”, Radio 4’s much-loved (and derided) soap opera. The show was created in 1950 to tell “an everyday story of country folk”, a mission from which it rarely strays. Typical fare includes discussions about a farm’s organic accreditation and the best way to milk cows, as well as the ups and downs in the villagers’ private lives. The latest story line—a two-year-long tale of domestic abuse, culminating on April 3rd in a revenge stabbing—has shocked listeners. + +Some argue that although the programme has handled the issue of domestic abuse “sensitively”, the bloody retribution meted out by its victim is over the top. They may have a point: few instances of domestic abuse end with the victim taking revenge on the perpetrator, and women are far more likely to be killed or injured by their partners than the other way round. Helen Titchener was in a minority when she stabbed her ghastly husband in Ambridge. + +Charities and lawyers will listen to future developments with interest. Few cases of domestic abuse reach the courts, especially given the number of people who report being victims. According to the 2015 Crime Survey for England and Wales, more than one in four women and one in ten men have known domestic abuse as adults. Such behaviour plays a part in a third of all recorded assaults involving injuries. + +But prosecutions are becoming more common. In 2014-15 almost 93,000 people were taken to court for offences related to domestic violence, a 38% increase since 2008-09. Rates of domestic violence remained stable over the period, according to the Office for National Statistics (ONS). Its figures fail to show a growth in the number of repeat crimes, though, says Jude Towers of Lancaster University. The ONS stops counting after five incidents involving the same victim so as to reduce spikes in the annual figures. + +Most agree that the rise in prosecutions is a result of the police taking greater interest in such crimes. But, despite improvements, “the police response is still woefully inadequate,” says Sandra Horley, the chief executive of Refuge, a domestic-abuse charity. “Every day we hear about police officers failing women experiencing domestic abuse,” she adds. + +Campaigners say that shows such as “The Archers” encourage victims to come forward. Indeed, there was a 17% increase in the number of calls to the National Domestic Violence Helpline in February. Fans of the programme—who have raised more than £100,000 ($140,870) for Refuge—will be hoping that Rob Titchener, its villain, is among the three-quarters of those prosecuted who end up with a conviction. That might just persuade them to forgive the scriptwriters for the unwelcome disruption to their rural idyll. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21696557-prosecutions-domestic-violence-are-becoming-more-common-violence-shires/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The housing crisis + +Lords a-leaping + +More problems for the prime minister as the Lords prepares to fight his housing bill + +Apr 9th 2016 | From the print edition + +More bricks and mortar, please + +AS IF David Cameron did not have enough on his plate between steel-plant closures and financial disclosures (see here and here), there is trouble brewing in the House of Lords over his government’s controversial housing and planning bill. Peers from across the political spectrum are poised to force changes when it begins its report stage in the upper chamber on April 11th. The government’s time frame is tight—it wants the bill settled before the Queen’s Speech on May 18th—and its desire to avoid negative headlines before the EU referendum on June 23rd makes its opponents confident that they will be able to extract concessions. + +The bill is part of the government’s continued attempt to get more people on to the home-owning ladder and out of social housing, which Tory leaders think breeds Labour voters and dependency on the state. Critics say the bill is a disaster. It provides a massive redistribution of government resources away from the poor to those on higher pay, says Lord Kerslake, a former head of the civil service and one of the bill’s main opponents. + +At the heart of the legislation is the “right to buy”, a totemic Thatcherite policy from the 1980s that allowed tenants in council housing to buy their homes at a discount to market rates. The plan was revived in 2012 and the bill now extends it to housing-association tenants. Their purchases under “right to buy” would be funded through the sale of high-value council houses as they become vacant. + +The Local Government Association (LGA), which represents 371 councils across England and Wales, predicts that councils will be forced to sell off 88,000 homes. The measure will affect some of them disproportionately: fully 97% of council homes in Kensington and Chelsea in London, for instance, would be subject to sale when their current tenants leave, says Shelter, a housing charity. + +The sales might raise up to £2.2 billion ($3.1 billion), less than half the £4.5 billion the government estimated it needed to fund the “right to buy” programme, warns the Chartered Institute of Housing. The measures may also add over £200m to the housing-benefits bill, the LGA says, as more people will have to be lodged at taxpayers’ expense in private rental housing. Many fear it will grow even harder to build new social housing. Selling such homes when more are needed is “like trying to fill a bathtub with the plug out”, says Adam Challis of JLL, a property consultancy. + +While “right to buy” may help people who already have secure council or housing-association homes on cheap rents, rebel peers point out that it will do nothing for millions of private renters, or for adults living with their parents because they cannot afford to buy. In February a House of Commons committee called the policy’s funding model into question. “The fundamental success of this policy”, said Clive Betts, the committee’s chairman, “depends not just on whether more tenants come to own their home but on whether more homes are built.” That is not happening. Since 1990 house-building in Britain has been below its historical trend. Scotland is scrapping the “right to buy” this year. Wales intends to do the same. + +The other big controversy is over “starter homes”. These are newly built houses purchased for 80% of their market value, with the government contributing the remaining 20%. Even with this discount, Shelter found that a family on average earnings would be unable to afford a “starter home” in more than half of England’s local authorities. + +In London buyers can take advantage of the “starter-homes” scheme in conjunction with other programmes. Under “help to buy” the government gives the purchaser a loan, initially interest-free, for up to 40% of the value of the property. Mark Farmer of Cast, a property consultancy, worries that taxpayers’ money is boosting demand among a group of people who cannot necessarily afford to buy. The government is on the hook if there are problems when the interest-free period runs out, interest rates rise or if a market crash pushes the value of the property below the price the buyer paid for it. “It has some parallels with the sub-prime lending that led to the global financial crisis,” he says. + +What is more, unless peers are able to force amendments to the bill, “starter homes” will cut into the construction of other forms of affordable housing, some of which are better suited to poorer people. The bill gives precedence to building “starter homes”, requiring them to make up 20% of any new development larger than ten homes. Activists in the Lords want to give local councils the power to decide the proportion of such homes in their area, and also the length of time before they can be sold again at full price. The bill envisages five years; some Lords prefer 15. + +Since “right to buy” and “starter homes” were manifesto pledges in the general election of 2015, even optimists in the upper house recognise that it will be hard to amend them radically. Some believe there is more wiggle room on non-manifesto provisions such as “pay to stay”. This measure would force hundreds of thousands of social-housing tenants to pay market rents once they earn more than £30,000 a year. Lord Kerslake also thinks he and his allies can alter measures to end lifetime tenancies in social housing and limit new ones to five years. + +Even if the government accepts a raft of amendments for the sake of tranquillity before the EU referendum, these are unlikely to solve the sector’s problems—essentially the shortage of affordable supply. Mr Cameron and George Osborne, the chancellor, continue to insist that Britain has a homeowning crisis, ignoring the housing crisis that actually exists. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21696554-more-problems-prime-minister-lords-prepares-fight-his-housing-bill-lords/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Second homes + +To the lighthouse + +One seaside town in Cornwall is taking on the out-of-towners + +Apr 9th 2016 | From the print edition + + + +“I COULD fill pages remembering one thing after another that made the summer at St Ives the best beginning to a life conceivable,” wrote Virginia Woolf of her childhood summers in Britain’s idyllic south-west. The beauty of St Ives (current population: 11,000) formed the backdrop to some of her best-known works. The artistic fragrance has lingered. Writers and artists still visit. Fancy restaurants cater to their cosmopolitan tastes, and there is a branch of London’s Tate Gallery to stroll through. + +One consequence of the views and the artiness is that house prices have shot up, with even parking spots in the town going for £70,000 ($99,000). A quarter of the properties in St Ives are second homes or holiday lets. + +The situation has become so tense that local residents are now fighting back. On May 5th, when the town votes in a referendum on a number of local issues, tucked into the ballot will be a particularly controversial question: whether to make it a legal requirement that all new housing in the area must be for principal residences only. The town expects over 1,000 new homes to be built before 2030. If the measure passes, outsiders will still be able to buy existing properties as second homes, but not new ones. + +The vote is causing divisions. Some point to the wealth brought in by second-home owners and holiday-makers. Others feel they are destroying the town. “Enough is enough,” says Tim Andrewes, a local councillor, who supports the proposal. He argues that a less wealthy family living in St Ives all year round is likely to spend just as much as a wealthy London family that is there for six weeks. + +“Some people here are living on streets where half the houses are empty for more than half the year,” he says. “It affects the sense of community.” It also means that local people with low incomes cannot buy. One resident called it “financial cleansing”. There are nearly 600 households (out of 7,000) on the waiting list for social rented housing. + +About 1.6m people in England and Wales (2.8% of the population) own a second home. St Ives is not the first to take action. Lynton and Lynmouth in Devon passed a similar measure in 2013. Seaside towns are idyllic, but only if you can afford them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21696553-one-seaside-town-cornwall-taking-out-towners-lighthouse/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Land ahoy! + +Despite calls for protectionism, Britain remains strikingly comfortable with free trade + +Apr 9th 2016 | From the print edition + + + +ADDRESSING supporters in Manchester on February 19th 1904, Winston Churchill delivered a speech that could easily describe today’s Britain. The young MP warned that victories won by past free-trade campaigners were under threat from “the fashion nowadays to sneer at the Manchester school [of economic liberalism]” that was taking hold in the newspapers and capturing chunks of the political parties. Ministers who should have known better were flip-flopping, he fretted, demanding tariffs just to please their audiences. Referring to a hero of the fight against the protectionist Corn Laws in the 1840s, he warned, “We are met to consider a very momentous question: whether… the statue of Sir Robert Peel is to be pulled down.” + +History, Mark Twain observed, does not repeat itself. But it does rhyme. It is hard to read Churchill’s words and not hear their assonance. Once more Britain appears to be questioning the wisdom of the liberal economic credos of its recent past. The impetus is the announcement on March 29th by Tata, an Indian industrial giant, that it cannot afford to save its struggling British steel operations, especially its giant plant in Port Talbot, in south Wales. Tata blamed weak demand and high energy prices—but especially competition from cheap Chinese imports. + +As The Economist went to press the government was in talks with potential buyers, which had allayed fears that Port Talbot would have to close entirely. Yet already the news had provoked a cacophony of condemnations of Britain’s free-trade, globalised economic model. Calls for tariffs on Chinese steel and a possible nationalisation of Port Talbot emanated not just from the hard-left Labour Party leadership but also from Conservative MPs and even (privately) some ministers. “Tata steel could spell the end for Britain’s love affair with the free market” and “Britain’s free market economy isn’t working”, ran two typical headlines. + +All of which comes at a time when voters across the West—from the Republican Party in America to Scandinavia—seem to be demanding from their politicians the re-establishment and reinforcement of borders (physical and economic) between countries. In Britain hostility to the EU, itself a proxy for economic dislocation and immigration, is on the march before the June referendum. Once more the “signs of the weather” (as Churchill put it) are ominous for free traders. + +Yet some perspective is warranted. The country has lived through such ruckuses in the past: during the collapse of MG Rover, a British car maker, in 2005, for example; or in 2010, when MPs and unions protested against the takeover of Cadbury, a confectioner, by Kraft, an American food-processing company. For all the chatter about protecting cherished firms and industrial heritage, of public-interest tests and strategic sectors, such moments have not significantly dented Britain’s essentially liberal instincts. That is especially true when Britain is compared with other rich economies. + +Consider the polling. An international survey by YouGov in 2015 put net agreement that free trade is good for business at +6% among Americans, +3% among Germans and at -4% among the French. In Britain the figure was +40% (the country was also an optimistic outlier, ahead even of the liberal Scandinavians, on whether trade is good for jobs). A poll by the Pew Research Center found that 65% of Britons support the proposed Transatlantic Trade and Investment Pact, compared with 50% of the French and 39% of Germans. + +That openness is evident across British life. The country’s car industry is almost totally foreign owned (Tata has made a great success of Jaguar Land Rover); many of its biggest airports are in Spanish hands; chunks of its energy industry belong to French and Chinese investors; its football clubs make the United Nations look monocultural. Its central bank is run by a Canadian and the London Olympics were organised by an Australian. London’s glitziest property developers are from Qatar and Malaysia and its stock exchange may soon be in German hands. In 2013 the proportion of shares in Britain’s firms owned by foreigners zoomed passed the 50% mark, to almost total public indifference. + +The country’s politics reflects this dispassion. For all the hand-wringing over immigration, Britain has spawned only one party that clearly opposes globalisation: the UK Independence Party. That outfit—mild by European or, increasingly, American standards of protectionist populism—went into the general election in 2015 with two seats in Parliament and emerged with one. As for the EU referendum, it is hard to imagine many countries where the Remain and Leave campaigns would, as in Britain, squabble over which outcome would do more to lower trade barriers. + +Research suggests that generational rotation will only accentuate these traits. Ipsos MORI, a polling firm, finds young Britons markedly more inclined to free markets than their predecessors at the same age. A YouGov poll in 2014 showed that those aged 18 to 24 were about half as likely as those over 60 to say that foreign ownership of British firms was a bad thing, or to support government interference in foreign takeover bids. + +Don’t batten down the hatches + +None of this is to say that supporters of an economically open Britain can afford to be complacent. But it does discourage over-reaction to tabloid headlines and short-lived uproars. Britons’ instincts have been forged over centuries as a maritime trading power (that same spirit infuses their language—shipshape, high and dry, the cut of one’s jib) and by a fundamentally benign experience of globalisation and trade. As Churchill said in 1904: “Large views always triumph over small ideas. Broad economic principles always in the end defeat the sharp devices of expediency.” + +Correction: In the issue dated March 19th Bagehot said that Blackpool’s economy shrank by 8% between 2010 and 2015. In fact the latest figures, from 2010 to 2014, show that the town’s output (adjusted for national inflation) fell by 3.4%. Sorry. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21696516-despite-calls-protectionism-britain-remains-strikingly-comfortable-free-trade-land/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +The Panama papers: A torrential leak + +The reaction in Russia: Nothing to see here + +The reaction in Russia: Internship + + + + + +Articles Sections Next + +The Panama papers + +A torrential leak + +A huge trove of documents has revealed the secrets of offshore business, presaging tougher times for tax havens + +Apr 9th 2016 | From the print edition + + + +AS A young man, Ramon Fonseca considered taking holy orders. Instead he became an evangelist for offshore business. Now the law firm he co-founded is at the centre of a global storm, linked—unfairly, he insists—to a multitude of financial sins. + +Few had heard of Mr Fonseca’s Panama-based firm, Mossack Fonseca, until April 3rd, when a collective of journalists from 76 countries began publishing stories exposing the hidden wealth of politicians, celebrities and others, based on 11.5m documents leaked from the firm’s database. The “Panama papers” cover a period of almost 40 years, but some are only a few months old. They contain details of thousands of opaque offshore companies, trusts and foundations used by Mossack’s clients. (The firm says it has never been charged with wrongdoing and conducts thorough due diligence on all clients.) + + + +The files had been passed anonymously, in several batches, to Süddeutsche Zeitung, a German newspaper. It shared them with the International Consortium of Investigative Journalists, an outfit created by the Centre for Public Integrity, an American charity. The ICIJ has made hay with leaked documents before, including the “Lux Leaks” files, which exposed tax-avoidance deals between multinational firms and Luxembourg’s government. But this leak is the biggest yet (see chart) and the most wounding. Some 140 political figures have links to firms serviced by Mossack, either directly or through family, friends or associates, according to the ICIJ. + +Offshore finance has many legitimate uses. But it smells foul to Western voters, who are still angry with bankers and the politicians who seemed to treat them kindly during the financial crisis before imposing austerity on everyone else. And the opacity it offers, particularly through shell companies with nominee owners, is open to abuse by tax evaders, money launderers and corrupt officials looking for somewhere to stash their loot. In his seminal book on tax havens, “Treasure Islands”, Nicholas Shaxson describes offshore finance as “a project of elites against their, and our, societies”. + +On April 5th the leak claimed its first big victim. Iceland’s prime minister, Sigmundur David Gunnlaugsson, resigned after it emerged that he had discreetly sold a stake in an offshore firm holding investments in Icelandic banks to his wife. Some 20,000 Icelanders had protested in the streets—a lot in a country of 330,000 people. A smaller scalp produced wry smiles. The head of the Chilean branch of Transparency International, which campaigns against corporate secrecy, resigned after being linked to five firms in tax havens. + +There is no mention of Vladimir Putin, Russia’s president, in the files. But members of his inner circle play starring roles: for instance, Sergei Roldugin, a close friend and godfather to one of Mr Putin’s daughters, apparently moved $2 billion through a web of offshore entities—not bad for a cellist. Among the investments part-owned by Mr Roldugin are a 12.5% stake in Russia’s largest television-advertising agency, which has never disclosed its ownership, and 3.2% of Bank Rossiya, a firm that American officials have described as the personal bank of Mr Putin. Such revelations appear to support their assertion that he is hugely rich but hides his wealth by parking it with trusted associates. Mr Putin’s spokesman accused the Americans of organising the leak to discredit his boss (see article). + +In China, too, the Panama papers were dismissed as a Western plot by Global Times, a party mouthpiece. Censors tried to delete all discussion of them from the Chinese internet. They had plenty of work to do. The files suggest that some of China’s highest-ranking families, including a relative of the president, Xi Jinping, own or have owned secret offshore companies. + +Mr Xi’s brother-in-law, Deng Jiagui, a property magnate, was a director of two companies registered in the British Virgin Islands (BVI). According to Bloomberg, a media group, he and his wife, Mr Xi’s older sister, ran businesses worth hundreds of millions of dollars, though the offshore firms were reportedly defunct by the time Mr Xi came to power. Two other members of the country’s top decision-making body, the Standing Committee of the Politburo, also have relatives connected with Mossack firms. One of them is Liu Yunshan, the man in charge of propaganda. + +Not all of this will come as a shock in China, where relatives of high-ranking officials are among the country’s most successful business folk. But evidence of covert offshore holdings goes down badly in a country whose president is conducting an anti-corruption drive. And top political families are not the only ones involved. The leaked files suggest that China is Mossack’s largest market. The firm’s Hong Kong office has been its busiest, and it has outposts in eight other Chinese cities. These nine offices set up 29% of all the firms Mossack had on its books at the end of 2015, according to the ICIJ. + +Although there is no evidence of illegality, obeying the law is not the only requirement for Chinese officials. Almost all of those involved are Communist Party members, who must abide by the party’s code of conduct. This bans them from registering or investing in companies abroad. So they may have broken rules, if not the law. High-ranking officials in China can also be held responsible for the business dealings of relatives. + +A popular use of offshore shell companies is to circumvent sanctions, and the files are studded with examples. Mossack worked with more than 30 people and companies that were at one time or another blacklisted by America’s Treasury, the ICIJ says. These include businesses linked to senior figures in Syria and North Korea. + +The law firm reportedly acted as a front for companies linked to Rami Makhlouf, a cousin of Syria’s president, Bashar al-Assad. He has long been subject to Western sanctions and was once described in American diplomatic cables as a “poster boy for corruption”. The files reportedly show that in 2011 Mossack partners rejected a recommendation by their compliance team to sever ties to Mr Makhlouf, though they agreed to do so months later. The firm has said it never knowingly allowed anyone connected with rogue regimes to use its companies. + +The gossip pages + +Mossack also catered to entertainers. The files show that Jackie Chan, an actor, and Pedro Almodóvar, a film director, put business the firm’s way. No large financial leak would be complete these days without a mention of FIFA, football’s governing body, and this one does not disappoint. The files reportedly show that Gianni Infantino, who replaced the disgraced Sepp Blatter as FIFA boss in February, signed off on contracts with businessmen who have since been indicted on bribery charges when he was at UEFA, contrary to indications the European football body had given. Mr Infantino said he is “dismayed” that his “integrity is being doubted”. + +The leak has already sparked action: probes have been launched in Australia, Britain and other countries. South African regulators are to scrutinise a firm linked to President Jacob Zuma’s nephew that struck a lucrative oil deal. France has stuck Panama back on its tax blacklist. With so many leads to follow, governments seem barely to know where to start. + + + +The intermediaries that did business with Mossack are likely to receive plenty of scrutiny. The firm dealt with more than 14,000 law firms, banks, incorporation agents and other middlemen to set up its clients’ companies, trusts and foundations, the ICIJ reckons. + +Global banks, already hounded and in some cases fined over their links to tax-dodgers and sanctions-busters, should brace for more pain. Around 500 banks registered shell companies with Mossack. HSBC alone reportedly set up or provided financial services to more than 2,000 entities, including a company linked to Mr Makhlouf, called Drex Technologies. A spokesman for the bank said the allegations were “historical” and predate HSBC’s “significant” reforms implemented in recent years. + +Governments are not alone in taking an interest. The files will be a boon for corporate investigators looking, say, to revive asset-search cases related to disputes. “Many a trail has gone cold in Panama. This should open new doors,” says David Robertson of K2, a corporate-detective firm. Outfits like his might receive calls from clients hoping to use the leak to their advantage in other ways—for instance, to gain intelligence on rivals’ positions in commodities markets. Some firms route transactions through Panama to keep such information from prying eyes. + +The leak will heap pressure on Panama to embrace transparency reforms to which other financial centres have committed. Its government has refused to accept an OECD-led international standard on the exchange of tax information. That could now change, especially if other countries follow France in blacklisting Panama. + +Ironically, the leak comes at a time of reformist zeal. Last year Panama’s Supreme Court ordered the arrest of Ricardo Martinelli, president from 2009 to 2014, who has been accused of illegal wiretapping and embezzlement (he has denied the allegations). Panama has been praised for passing a strong anti-money-laundering law last year, though it remains to be seen if this will be rigorously enforced. + +The fear in Panama is that such improvements are being ignored in the rush to traduce the country for the actions of one business. “This is a report that speaks of documents of a firm of lawyers, not our financial-services platform,” says one minister. The government has announced a probe of its own, but has also hinted at a vigorous defence. The leak undermines Panamanian sovereignty and its defence of the right to privacy, some harrumph. + +The spotlight has also been thrust back on Britain’s overseas territories, which are important cogs in the offshore engine. Of the more than 200,000 firms mentioned in the files, half are domiciled in the BVI. “Panama and the BVI go together like Bonnie and Clyde,” says an offshore lawyer—though he also points out that some of the most watertight corporate secrecy can be found onshore. Shell companies set up in Delaware and Nevada have been linked to frauds and corruption scandals. + +The BVI link will add to pressure on Britain’s government to persuade its dependencies (which enjoy financial autonomy) to introduce public registers of corporate ownership, as Britain itself will do later this year. A poll carried out just before the Panama story broke found that 77% of Britons believe David Cameron, their prime minister, has a “moral responsibility” to ensure that Britain’s offshore satellites are “as transparent as possible”. Mr Cameron is feeling the heat directly: he has been forced to clarify his links to an offshore fund set up by his late father, details of which appear in the files. + +A louder whistle + + + +The furore over the Mossack documents suggests that leaks will do more than any politician to sink tax havens. As the public mood towards offshore shenanigans hardens, more employees of financial and law firms seem to feel morally compelled to pilfer data and hand it to reporters or governments. Some believe the spate of whistle-blowing since the global financial crisis has helped cool interest in using shell companies; Mossack has closed more than it has opened in recent years (see chart). + +The affair is also a triumph for a new model of investigative reporting. The ICIJ enlisted some 400 journalists to help it sift the data dump, which they did using a bespoke search engine. It picked some odd collaborators: in America it chose to work with the Charlotte Observer and Fusion, a news site for millennials, rather than, say, the New York Times. Still, many eyes meant less was missed. And distributed journalism of this kind is almost impossible to censor or stop. + +There is much in the 2.6 terabytes of data that is yet to be noticed or revealed. The ICIJ has been drip-feeding stories daily after publishing the initial batch. More revelations were expected after The Economist went to press. And there is plenty more beyond Mossack that might be leaked: the firm has only 5-10% of the global market for shell companies. No wonder that, as one adviser to the wealthy puts it, “We’re now telling clients they have to assume anything they do offshore will become public, and they’ll have to be able to justify it when it does.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21696497-huge-trove-documents-has-revealed-secrets-offshore-business-presaging-tougher/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The reaction in Russia + +Nothing to see here + +The Mossack Fonseca leak shakes Ukraine more than Russia + +Apr 9th 2016 | MOSCOW | From the print edition + +Music to his ears + +THE Kremlin had warned that an attack was coming. “Comrades are working in accordance with tried and tested schemes,” Vladimir Putin’s spokesman, Dmitry Peskov, said last month, predicting an attempt to “rock the boat” ahead of elections in Russia. But when the Panama papers appeared, revealing a $2 billion trail leading to Mr Putin’s inner circle, the leadership exhaled. “We were expecting more impressive results,” said Mr Peskov. “They have found little new.” + +Suggestions of shady dealings in the president’s court neither surprise nor enrage most Russians. Only a few opposition activists came out to protest in central Moscow on April 5th; several were quickly detained. Some 76% of the country believes its authorities are corrupt; 66% say Mr Putin bears significant or full responsibility for such high-level corruption. Yet he remains secure. “Corruption is seen as a fact of life, and the sense that there’s nothing we can do about it is pervasive,” says Maria Lipman, editor of the journal Counterpoint. The latest revelations will do nothing to change those perceptions. + +With the help of friendly media, the Kremlin has instead used the leak to reinforce a familiar story of Western meddling. As Lev Gudkov, head of the Levada Centre, an independent pollster, points out, Russian reactions depend almost entirely on the nature of the news coverage. + +State-run television networks said little about the Panama papers except to present them as part of an “information war” against Mr Putin, “the curatorial work of the US State Department itself”. Mr Putin’s name, they note, does not appear in the Mossack Fonseca documents. Questions about how the president’s old friend, the cellist Sergei Roldugin, came into such enormous wealth are dismissed as “Putinophobia”. Andrey Kostin, head of the state-run bank VTB, which allegedly made loans to Mr Roldugin through a Cypriot subsidiary, called the notion of Mr Putin’s involvement “bullshit”. + +The documents may prove far more damaging for Mr Putin’s counterpart in Ukraine, Petro Poroshenko. A confectionery magnate known as the “Chocolate King”, Mr Poroshenko promised to sell his company, Roshen, after winning the presidency in May 2014. Earlier this year he announced that he had transferred his assets to a blind trust. Instead, the documents indicate, they were moved offshore to the British Virgin Islands. + +Legally, Mr Poroshenko may have an explanation. His associates suggest, and some experts agree, that the BVI company created in his name was nothing more than a vehicle for a pre-sale restructuring of Roshen. The documents do not suggest Mr Poroshenko abused his office to enrich himself. The Ukrainian general prosecutor’s office says that so far it “does not see any elements of a crime”. + +Politically, though, this is a giant problem for a president who rode a revolution to power promising to clean up his country’s crooked political system. Ukrainian media emphasised that Mr Poroshenko opened his offshore account just as soldiers were being massacred in the battle for Ilovaisk in August 2014. Several reform-minded MPs have called for the creation of a special investigative committee in parliament, while populists are clamouring for Mr Poroshenko’s impeachment. The revelations also did little to help Ukraine’s case in the Netherlands, where voters overwhelmingly rejected a trade deal between the EU and Ukraine in a referendum on April 6th. + +The Panama controversy comes at a sensitive moment for Kiev. A governmental crisis has been dragging on for more than a month. Negotiations to form a new coalition in parliament and replace the widely loathed prime minister, Arseniy Yatsenyuk, seemed poised for resolution but are now imperilled again. Early parliamentary elections look ever more likely, an outcome that Ukraine’s Western backers have been straining to prevent. “Compared with the government and the parliament, the presidency was an institution that seemed to maintain a relative measure of trust,” writes Svitlana Zalishchuk, a reform-minded MP from Mr Poroshenko’s party. “Now the war of all against all is entering a new and dangerous phase.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21696506-mossack-fonseca-leak-shakes-ukraine-more-russia-russia-finds-little-say-about-panama/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Internship + +Apr 9th 2016 | From the print edition + +We are seeking a summer intern to write about foreign affairs for The Economist. The internship will last for about three months and will pay £2,000 per month. Anyone is welcome to apply. Applicants should send an original unpublished article of up to 600 words on any issue in international politics or foreign affairs, a c.v. and a cover letter to foreignintern@economist.com. We are looking for originality, wit, crisp writing and clarity of thought. The deadline is May 6th. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21696513-internship/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Global steel: Through the mill + +Taxing America Inc: Pfiasco + +Industrial overcapacity: Gluts for punishment + +An Indian unicorn: Global appetites + +Mobile services: Bots, the next frontier + +Schumpeter: The grey market + + + + + +Articles Sections Next + +Global steel + +Through the mill + +It is hard to see a future for many of the world’s high-cost steel producers. Britain’s are no exception + +Apr 9th 2016 | PORT TALBOT | From the print edition + +Specialisation does it + +PORT TALBOT in South Wales is known for producing two things: stardust and steel. Its dazzling crop of home-grown film stars stretch back for generations, including Richard Burton, Sir Anthony Hopkins and Michael Sheen. So do its steelworking families. Christian Reed, a project manager, has worked at the Tata Steel plant—Britain’s biggest—for 11 years. His father worked in the local steel industry for 40 years, and his grandfather was a foundry worker. “It’s very difficult to contemplate losing the plant,” he says. “It would be like losing a member of the family.” + +The fate of his job and those of about 4,300 other Port Talbot steelworkers, as well as Britain’s loss-making steel industry in general, have become the most poignant part of the political row that has erupted in Britain since Tata Steel, Britain’s biggest producer, said in late March that it planned to sell or close its operations in the country. Opposition politicians have demanded that the government engineer a rescue, either by erecting high tariff walls against cheap steel imports, as America has done (see article), or by going for some sort of nationalisation, as Italy has attempted with the ill-starred Ilva plant in the heel of the country. On April 5th a potential rescuer, Sanjeev Gupta of Liberty House, a commodity-trading company, said he was interested in buying the Port Talbot business, though he wants plenty of government sweeteners before doing so. He has called Britain’s steel industry “probably the worst in the world.” + +There are few parts of the rich world where steel remains a good business, however. Port Talbot’s woes are indicative of a global problem—especially in places where makers of unspecialised steel face competition from cheaper producers. + +In the eyes of many, including the Welsh steelworkers, the main bogeyman is China, where steel output has ballooned (see chart). The country has produced more steel in two years than Britain since 1900, according to the International Steel Statistics Bureau, and is indeed awash with excess capacity. But this is part of a phenomenon that extends across the developing world. The OECD, a club mostly of rich countries, reckons that in the four years to 2017 steelmaking capacity will have grown by 50% in the Middle East, 20% in Africa and 10% in Latin America. + + + +Meanwhile, the China-led slowdown in developing economies and low oil prices, which have hit the use of steel in rigs and pipelines, mean that demand is severely lagging supply. Even in India, which is supposed to be the bright spot of the global steel market, demand growth is unlikely to recover to levels in the years before 2010 when it embarked on a debt-fuelled infrastructure construction binge. + +Across the developing world, countries are scrambling to offload their excess tonnage on global markets. In absolute terms China accounts for the lion’s share. But as a portion of its steel output, exports were only 12%. Brazil and Russia exported 24% and 29%, respectively, of their production last year, estimates CRU, a consultancy. + +The upshot, says Wolfgang Eder, chief executive of Voestalpine, an Austrian steelmaker, is that many other parts of the industry will confront similar problems to those at Port Talbot. It is “a matter of fact”, he says, that costs are too high for commodity steel to be produced competitively in Western Europe. Taxes, energy costs, wages and carbon pricing all put steelmakers at a disadvantage compared with rivals in Russia, Ukraine and Turkey, let alone China. Bitter experience tells Mr Eder there has to be restructuring. In the 1980s a forerunner of Voestalpine went bust and, in the face of competition from eastern Europe, it rebuilt itself into a maker of specialised steel products, such as high-speed rail tracks and aircraft parts. As a result, it has become a rarity: a profitable steel firm. + +Although higher steel prices and protectionist tariffs have pushed up share prices of American steelmakers in recent weeks, they are also in trouble. The industry is split: on the one hand, struggling integrated firms (such as loss-making US Steel) which use blast furnaces that forge steel out of iron ore, coal and gas; and on the other more nimble firms with electric-arc furnaces such as Nucor that employ scrap as raw material and rely on electricity for fuel. Such “mini-mills” have lower labour costs and can easily be switched on and off to cope with changes in demand. They are likely to be the future of American steelmaking, says Sarah Macnaughton of CRU. + +Mr Gupta of Liberty House says that if he buys the Port Talbot plant from Tata Steel, he would replace its recently installed coal-burning blast furnace with an electric-arc one. He hopes for government support to reduce the labour, energy and environmental costs. His business model is unproven, however. Industry insiders say British electricity costs are prohibitively high; he admits that they are “the crux of the problem.” But he hopes to cut a deal with the government to subsidise his existing renewable-energy projects in support of his industrial ambitions. “Our model is to cover all ends of the business, from energy to downstream steel.” + +At any rate, much of the European industry will need a full-scale overhaul in order to survive, reckons Voestalpine’s Mr Eder. He notes that, since 1993, the number of European steelmakers has fallen from 26 to seven. But this, he argues, was a “legal”, rather than a “structural”, consolidation: it failed to cut enough capacity. The problems, he says, will grow as steel used in car bodies, for example, declines in weight. + +Mr Eder also worries that governments will interfere with the coming shake-out, mainly because they tend to think that the closing of a blast furnace symbolises the death of a region. Instead, he says, they should offer economic support, re-education and other services to those who lose their jobs—rather than “prolonging the process of dying”. + +Surprisingly, Port Talbot’s steelworkers seem to agree: they are distrustful of even temporary nationalisation. They note that, at its height, when it was taken over by the state in 1967, the steelworks employed 18,000 workers. Things have gone downhill almost ever since. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21696556-it-hard-see-future-many-worlds-high-cost-steel-producers-britains-are-no/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Taxing America Inc + +Pfiasco + +Open warfare breaks out between the White House and America’s tax-shy multinationals + +Apr 9th 2016 | From the print edition + + + +IN THE final year of the Obama administration its relationship with big business, always testy, is deteriorating into outright combat. On April 4th Jack Lew, the treasury secretary, announced a renewed crackdown on “inversions”, takeovers that allow American firms to switch their nationality to that of the firm they are buying, in order to escape America’s tax net. + +Two days later Pfizer, a pharmaceutical firm, cancelled its $160 billion purchase of Allergan. It would have been the third-biggest takeover in history and was premised on shifting Pfizer’s tax-domicile to Dublin. Howls of outrage were heard from America’s boardrooms and from Allergan investors, who lost $13 billion in 48 hours as its shares sank. European multinationals panicked that they might become the injured bystanders in an American brawl. + +The spat makes everyone look bad. It reveals an administration that is capricious and a Republican Party establishment so out of touch that it thinks it should be the mouthpiece for firms that renounce their citizenship. It shows great companies, such as Pfizer, reduced to shifty deal-junkies that are obsessed with financial fixes. It exposes a tax system that is 30 years out of date and obsolete in an age of globalisation. And it highlights a hyper-partisan political system that is incapable of reform—even though, in this case, almost everyone privately agrees what must be done. + +The backdrop is that America’s headline corporate-tax rate is far too high. It stands at 39%. That is roughly the same as it was in the late 1980s, but since then other rich countries have slashed their tax rates, to an average of 25%. At the same time big American firms have become more global. Financial markets have become more sophisticated. And the tax code has become far more complex, reaching 4m words. + +It is a golden arbitrage opportunity—one that big American firms have become brilliant at exploiting, pushing their bills far below the official rate. The actual tax paid by all corporations was 33% of their domestic pre-tax profits in 2015 (see table). The 50 largest listed firms in America paid global cash tax equivalent to just 24% of their pre-tax profits in 2015. Apple paid a rate of just 18% and Pfizer 27%. Despite having a notionally tougher tax regime, American firms got clobbered far less than their European cousins—the biggest 50 of which paid 35% of their global profits in tax. + + + +How do big American firms manage it? After all, their taxman claims a right to grab a share of their global profits, unlike most European authorities, which aim to tax only the local profits of global firms. Partly by exploiting myriad loopholes: there is a reason why America Inc spends $3 billion a year lobbying politicians. But crafty global tax-planning is vital, too. + +Firms shift where they book profits to countries with lower tax rates, and hope that the American tax authorities do not make up the difference. They allocate debt and its associated interest costs to their American subsidiaries, reducing profits there and boosting them elsewhere. They decline to repatriate foreign profits back to America (these are taxed only when they cross the border). At the end of 2015 the accumulated profits of big American firms stranded overseas reached an awe-inspiring $2 trillion. Apple has $92 billion parked abroad. Pfizer has $80 billion. + +Tax inversions are the logical culmination of all of these tactics—the ultimate expression of a system that doesn’t work. You buy a firm that is foreign and adopt its tax domicile, which will ideally be somewhere with rock-bottom rates. You book your global profits in that territory, which is especially easy if your firm specialises in intellectual property that has no physical presence, as pharmaceutical and technology firms tend to. Because the merged company is no longer American, it can access the trapped cash and pay it out as dividends and buy-backs to shareholders without incurring American tax. + +Since 2012 there have been 20-odd inversions. Allergan is itself the mutant product of two prior deals. The Treasury has tried to crack down before. This time its intervention will be decisive. The test for whether a firm qualifies will be tightened and companies that engage in serial inversions will be barred. The Treasury will also lean on firms that use intercompany loans to allocate debt to the American operations and depress their profits there. The number of pending inversions is small. Most sensible firms had already concluded they were pushing their luck. The odds of new inversions happening are negligible. + +The collateral damage may include foreign multinationals, which have $550 billion of net debt allocated to their American operations. Often this is legitimate and has nothing to do with tax. By matching their assets and liabilities in dollars foreigners can hedge against currency risks. It can make sense for them to tap America’s huge bond market. The Treasury’s new ruling on intercompany debt could prompt a giant and expensive rejig of foreign firms’ American balance-sheets. + +But the big loss is the chance to rewrite the tax code. The last time it happened was in the 1980s, when Ronald Reagan won cross-party support in Congress for comprehensive reform. The contours of a new settlement are obvious. Slash the headline rate to 25-30%, ditch all of the loopholes and charge American tax only on American profits. That would cut complexity, prod firms to bring profits home and keep tax revenues steady at about 2% of GDP. + +Sadly, as the primary campaign demonstrates, the corporate-tax system is not the only thing that has deteriorated. So has the quality of America’s political leaders and the effectiveness of its government. Tax reform will have to wait until after the election, in the hope that a more pragmatic president and Congress are in place. Don’t hold your breath. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21696542-open-warfare-breaks-out-between-white-house-and-americas-tax-shy-multinationals-pfiasco/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Industrial overcapacity + +Gluts for punishment + +China’s industrial excess goes beyond steel + +Apr 9th 2016 | SHANGHAI | From the print edition + +FIRST a tsunami of steel—next a flood of what? Industrialists all over the place might look nervously at China’s cooling economy and ask that question. The global glut in steel is most alarming because China’s industry dwarfs all others and its mills could easily produce more. Yet other sectors also have existing or looming gluts. + +One is coal. Thanks to a massive expansion now under way, China’s coal industry could have 3.3 billion tonnes of excess capacity within two years, reckons Fitch, a rating agency; domestic consumption is less than 4 billion tonnes a year and dropping. Traditionally China has imported, not exported, coal—but that could change. Shenhua Energy, the country’s biggest coal miner, says it might export 10m tonnes soon, up from 1.2m tonnes last year. + +Another possibility is aluminium. Chinese smelters push out over half the world’s supply of the metal, thanks to an expansion that goes on despite the current global oversupply. China Hongqiao, the world’s biggest producer, plans to increase capacity to 6m tonnes, up from 5.2m a year ago. The output of Chinese aluminium has sent global prices plunging, hurting rivals. Yet a large part of the cost of making aluminium is in the energy consumed. Just as China might end up wary of exporting coal, it might also shy away from exports which, in effect, also mean exporting energy. + +Over-capacity within the oil refining industry also poses a threat beyond China’s shores. Shanghai Securities, a broker, estimates that the country has more than 200m tonnes of overcapacity today. In 2014 Chinese refiners were thought to be running at just two-thirds of capacity. Diesel exports leapt 79% to over 7m in 2015. China National Petroleum Corp, a state energy giant, forecasts that total net exports of all oil products will rise by 31% this year to 25m tonnes. + +Chemicals could be another glut candidate. Some 25,000 chemicals firms exist in greater China—though it is worth keeping in mind that statistics on Chinese business are best served with generous pinches of salt. Many of those firms are copycats cranking out commodity chemicals. For most of the 16 main types of chemicals, ranging from purified terephthalic acid (PTA) to acrylic acid, factories have been running well below capacity. Even so, Chinese firms are still increasing their potential output. For example, the capacity for making PTA, a polyester feedstock, has risen by 200% over the past five years. This flood has swept away the profits of Japanese rivals. + +Other industries also have grand overcapacity, but most will pose no global threat. China’s state-owned enterprises have many under-used factories that make cars, for example, but these are so shoddy that few people want to buy them abroad. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21696552-chinas-industrial-excess-goes-beyond-steel-gluts-punishment/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +An Indian unicorn + +Global appetites + +An Indian startup takes a local business model overseas + +Apr 9th 2016 | MUMBAI | From the print edition + +You say “tomato”, I say “Zomato” + +INDIA has surprisingly few brands that are recognised abroad. Some have been acquired, such as Jaguar, Land Rover orTetley tea, which are all part of the Tata conglomerate. One or two business-facing ones exist, such as Infosys, a firm of technology consultants. But consumer marques from India ring few bells internationally. Newcomers in its ebullient startup scene are mostly focused on the 1.3 billion-strong home market. So Zomato, a restaurant listing service now striving to diversity, counts as an exception. It is trying to take its local business model global. It operates in nearly two dozen countries, though not without some difficulty. + +Zomato, which is based near Delhi, started in 2008 as a listing service for local eateries. Restaurateurs who barely know how to upload pictures or scan menus let the firm do it for them. Its staff, known modishly as “Zomans”, update this information by visiting each joint at least every three months. Although that information is painstaking to gather, it attracts foodies and in turn restaurants that are eager to advertise. The result is a business with mouth-watering margins. + +Similar specialist listings and review sites exist worldwide. TripAdvisor, which serves tourists, does something similar but relies on customers reviews. Many others are locally minded, just like the restaurants they cater to. Zomato has decided that going global is a better bet. Since 2012 it has expanded to the United Arab Emirates (UAE), New Zealand, Poland, Turkey, the Philippines, America and beyond. + +Few other Indian ventures go down this route. One reason for Zomato’s overseas push was, somewhat ironically, its limited domestic market, says Deepinder Goyal, one of the firm’s founders. India has relatively few restaurants and most of those are cheap: residents of Lisbon spend twice as much as those in Delhi on eating out, even though the Indian capital is 20 times more populous. + +Investors, including Temasek, a Singaporean fund, smacked their lips at the strategy and have funnelled $225m to Zomato, valuing it at roughly $1 billion. After acquisitions abroad, India accounts for barely a third (and falling) of Zomato’s revenue, which is reported to have reached $30m in 2015. Among foodies, at least, the upstart has potential to become a global brand. + +Some air has escaped the Zomato soufflé, however. In October it sacked around 10% of its global workforce, which now numbers around 2,200. Much of the slicing happened in America, where the firm had spent over $50m to acquire and rebrand Urbanspoon, a rival based in Seattle. A pricier workforce and savvier restaurant marketing staff made the “feet on the street” approach unviable in America. Other foreign acquisitions also seem to have flopped and no others are planned. + +Mr Goyal claims the retrenchment is merely a pause for breath. It also reflects a more sober funding environment for Indian startups, which can no longer raise investments without showing at least a path to profits. The business is looking for ways to diversify, providing more services to its existing crop of restaurants. In India, the UAE and the Philippines it now offers a food-ordering app, which allows punters to order straight from restaurants. + +But this is a fiddly business to get right. Rivals abound, such as FoodPanda, a delivery-only service backed by Rocket Internet, a startup foundry. Venture capitalists who have financed some 800 food-related outfits in India are happy to subsidise losses as long as their companies gain market share. Discounts are offered willy-nilly to diners, sapping profits for all. And in India at least, Zomato’s execution is far from flawless: order through its app and you can expect several calls from the restaurant before dinner arrives—almost as tiresome as cooking. + +Startups focused on logistics offer a smoother experience, albeit one with slimmer margins. Zomato’s bosses have grander goals: to create a back office for restaurants worldwide and to design, among other things, table-booking gizmos and terminals to compute bills. That shows gumption, but a switch from dealing with consumers to focusing on technology would not be easy. Perfecting the recipe in its main business should be the priority instead. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21696558-indian-startup-takes-local-business-model-overseas-global-appetites/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Mobile services + +Bots, the next frontier + +The market for apps is maturing. Now one for text-based services, or chatbots, looks poised to take off + +Apr 9th 2016 | From the print edition + +App exterminators + +“YOU are a developer and you’ve just spent two weeks writing this amazing app. What is your dream? Your dream is to get it in front of every iPhone user.” That was how Steve Jobs, then Apple’s boss, introduced an online shop for smartphone apps eight years ago. At first few paid it much heed, but it launched one of the fastest-growing software markets ever. Since then over 100 billion apps have been downloaded, generating $40 billion in revenues for developers and billions more in subscriptions and other fees. + +At a conference on April 12th in San Francisco, Mark Zuckerberg, Facebook’s boss, is expected to make a similar announcement. He will probably unveil an online shop and coding tools for “chatbots”. These are text-based services which let users complete tasks such as checking news, organising meetings, ordering food or booking a flight by sending short messages. Bots are usually powered by artificial intelligence (hence the name, as in “robot”), but may also rely on humans. Many in the technology industry hope that Facebook’s event will mark the beginning of another fast-growing, multi-billion-dollar software economy. Are bots the new apps? + +The timing looks right, because smartphone software is in flux. Download numbers are still growing, but the app economy is clearly maturing. “The dream of the independent developer building a business in the app store is over,” suggests Activate, a consultancy. The 20 most successful developers grab nearly half of all revenues on Apple’s app store. Building apps and promoting them is getting more costly. Meanwhile, users’ enthusiasm is waning, as they find downloading apps and navigating between them a hassle. A quarter of all downloaded apps are abandoned after a single use. + + + +Only instant messaging bucks the trend. Over 2.5 billion people have at least one messaging app installed, with Facebook Messenger and WhatsApp, which is also owned by Facebook, leading the pack (see chart). Within a couple of years, says Activate, that will reach 3.6 billion, about half of humanity. Many teenagers now spend more time on smartphones sending instant messages than perusing social networks. WhatsApp users average nearly 200 minutes each week using the service. + +Talking out of your bot + +As services based on artificial intelligence improve, they need a way to talk to real people. Chatbots are one option. At a conference on March 30th Microsoft showed off several prototypes. It will be a while before anyone trusts such services, however. A few days earlier one of Microsoft’s bots, “Tay”, designed to impersonate a millennial, started parroting racist language it had learned from users on Twitter. “Tay” had to be sent to her digital room. + +As a result of these various developments, a new software ecosystem has started to emerge. Text-based services have been around since the dawn of internet time, but the birth of the bot economy can be dated to June last year, when Telegram, a messaging app with Russian origins and more than 100m users, launched a bot platform and a “bot store”. It now counts thousands of bots, such as news alerts from media organisations, or feeds that link to football videos or porn. + +A few dozens startups exist. Some provide tools: Chatfuel is a web-based offering that lets users build bots for Telegram. Others offer specialised services: Digit allows users to interact with their bank accounts and find ways to save money; Pana is an online travel agency that takes text messages and turns them into bookings. MeeKan sets up meetings for users of Slack, a popular corporate-messaging service (now valued at nearly $4 billion). + +Then there are firms which want to be the foundation for other services. Assist aims to be the equivalent of Google’s search box—to find bots. Another firm, Operator, hopes to become the Amazon of bot-commerce: when a shopper requests, for example, certain sports shoes, its system can contact a salesperson in a nearby shop or get one of its own “experts” to handle the order. Robin Chan, Operator’s boss, talks of creating a virtuous cycle of more buyers attracting more businesses, which will in turn draw in more buyers. + +The app economy grew quickly only after Apple and then Google became enthusiastic champions. The bot economy will also need industry leaders, and Microsoft and Facebook look eager to play the role. Most smartphones are powered by operating systems controlled either by Apple or Google. The bot market, by contrast, is unconquered territory. At its conference, Microsoft also introduced tools to create clever new services. Facebook is expected to open its messaging platform to all sorts of bots (users can already chat with a selected few, including one impersonating Miss Piggy of the Muppets) and launch an online shop which will list the services. + +Given the drawbacks of apps, there should be plenty of demand for bots, says Michael Vakulenko of VisionMobile, a market-research firm. Much like web pages, they live on servers, not a user’s device, meaning they are easier to create and update. This is likely to make them attractive to businesses which have shied away from developing their own apps, such as restaurants and shops. + +Users should find bots smoother to use, which explains another of their monikers: “invisible apps”. Installation takes seconds; switching between bots does not involve tapping on another app icon; and talking to bots may be more appealing than dealing with a customer-support agent of a bank or airline, for example. + +No guarantee exists, however, that the bot economy will be as successful as the app one, which has created 3.3m jobs just in America and Europe, according to the Progressive Policy Institute, a think-tank. The economics for developers are not obviously attractive: if bots are easier to develop, that means more competition. Consumers could, again, be overwhelmed by the cornucopia of services and ways of interacting with them. And designing good text-based interfaces can be tricky. After launching the first version for Slack, Matty Mariansky, a co-founder of MeeKan, was surprised by the many different ways users tried to communicate with his bot. He has since hired dedicated script writers, who have come up with more than 2,000 sentences to handle a meeting request. + +The popularity of messaging apps suggests people will happily talk to bots. But much will depend on “killer bots”—hugely popular services that work best in the form of bots. Toby Coppel of Mosaic Ventures, a venture-capital firm, sees health care as a promising market. Bots could deal with routine ailments and send difficult ones to a doctor. Ted Livingston, the founder of Kik, another messaging app, which launched a “bot shop” on April 5th, expects “instant interaction” to dominate. He predicts businesses won’t just have phone numbers and web pages, but bots too. Restaurants could take orders via instant message—as some do already in China. + +As with apps, bots will need much experimentation to find their place. That will, in turn, depend on how well providers manage their platforms. Telegram lets developers do pretty much what they want (although it has shut down chat channels related to Islamic State). Microsoft has promised to be as open as possible. Developers and investors have their doubts about Facebook, given its chequered history: it made life difficult for developers of applications for its website. + +There will still be an app for that + +Microsoft, Facebook and others will also have to deal with Apple and Google, both of which are laggards in messaging and bots. They could try to get ahead, for instance by attracting developers with their widely used payment systems. Or they might try something entirely new, says Benedict Evans of Andreessen Horowitz, another venture-capital firm. One possibility would be to allow bots to show up on a smartphone’s notification panel. + +Still, there will soon be “a bot for that”, to paraphrase Apple’s iconic slogan which suggests that an app exists for everything. Yet bots, unlike the Daleks of Dr Who fame (pictured), won’t try to take over the world. They will be happy to co-exist on people’s smartphones with websites, apps and other things yet to be invented. The mobile world will keep changing, but will always be a mixed affair. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21696477-market-apps-maturing-now-one-text-based-services-or-chatbots-looks-poised/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +The grey market + +Older consumers will reshape the business landscape + +Apr 9th 2016 | From the print edition + + + +IN 1965 Diana Vreeland, the editor-in-chief of Vogue, coined a phrase “youth-quake” to describe how baby-boomers were shaking up popular culture. Today the developed world is in the early stages of a “grey-quake”. Those over 60 constitute the fastest-growing group in the populations of rich countries, with their number set to increase by more than a third by 2030, from 164m to 222m. Older consumers are also the richest thanks to house-price inflation and generous pensions. The over-60s currently spend some $4 trillion a year and that number will only grow. + +Yet companies have been relatively slow to focus on this expanding market—certainly slower than they were to attend to the youth-quake. The Boston Consulting Group (BCG) calculates that less than 15% of firms have developed a business strategy focused on the elderly. The Economist Intelligence Unit, a sister organisation to The Economist, found that only 31% of firms it polled did take into account increased longevity when making plans for sales and marketing. + +One reason for this tardiness is that young people dominate marketing departments and think that the best place for the old is out of sight and mind. Germaine Greer, a feminist, speaks for her generation, as usual, when she says that “just because I’m over 60 nobody wants to sell to me.” A study by fast.Map, a marketer, and Involve Millennium, a consultant, found 68% of British 65-74-year-olds “don’t relate” to advertising that they see on television. + +But the biggest reason is that oldies are such slippery customers. The definition of what it means to be “old” is complicated and dynamic. Sixty-five-year-olds are not the same as 85-year-olds. Age affects people in different ways: some fade early while others march on. Class divisions are more marked now than for previous generations of retirees: the winners, sitting on suburban mansions and defined-benefit pensions, cannot spend their money fast enough, while losers go cap in hand to charities (31% of working-age Americans don’t have a pension or savings, according to the Federal Reserve). Most greying baby-boomers in the rich world are in denial about ageing: 61% say that they feel at least nine years younger than their chronological age. + +The surest way of alienating older consumers is to treat them as old. When Procter & Gamble, a consumer-goods company, repackaged some of its dental products as “selected for aged fifty-plus consumers”, it saw sales plunge. Bridgestone blundered by promoting a new line of golf cubs as one for pensioners, producing poor sales. + +Yet change is in the air. Some industries such as health care and automobiles have been thinking about the grey market for a while. Others such as retailing and consumer goods started paying attention more recently. Now comes the silver rush. A report by the McKinsey Global Institute points out that older consumers are one of the few engines of growth in an otherwise sluggish global economy. The emerging-market boom is slowing in some countries, notably China, and turning into a bust in others, notably Brazil. Millennials suffer from the twin burdens of student debt (especially in America) and the lingering effects of the 2008 financial crisis. They are starting families and buying houses later than their parents, if at all. MGI calculates that pensioners in the rich world spend an average of $39,000 on consumption compared with $29,500 for the 30-44 age group. The old are becoming the new new thing. + +Some firms are trying to understand older people better. Kimberley-Clark, a maker of consumer products, has built a mock-up of what a senior-friendly shop might look like in the future. Ford has created a “third-age suit” for car designers to wear to help them understand the needs of older people: the suit thickens the waist, stiffens the joints and makes movement more cumbersome. Thick gloves reduce the sense of touch and yellow-tinted goggles simulate eye cataracts. BCG research on older people suggests they are less eager to acquire material possessions than preceding generations and much keener to acquire experience, particularly through travel and study. + +Understanding is giving birth to new products and business models. NTT DoCoMo not only produced a phone with large keys and a big display screen. It also redesigned it marketing, promoting the new phones during bus tours for pensioners and providing classes in shops to explain the ins-and-outs of apps. Electronics makers are producing devices that are designed specifically for old people: for example, Independa manufactures a monitor that sends an alert if something untoward happens, making it easier for the frail elderly to stay in their own homes (“age in place”) rather than move to nursing homes. + +Companies are also mastering the art of discretion—addressing older people, but not too explicitly. Retailers are surreptitiously lowering shelves and putting in carpets to make it harder to slip. Package-goods firms are printing larger typefaces and using more white space. Kimberley-Clark has overhauled its Depend brand of adult nappies to make them more like regular underwear. Sabi, a design company, now sells walking canes in bright colours. Car firms don’t make a song and dance about the fact that old people with stiff necks and fading vision will benefit disproportionately from self-parking cars. + +One foot in the gravy + +Yet this is only the early stages of a revolution. Baby-boomers have spent their lives making noise and demanding attention. They are not going to stop now. They will be the biggest and richest group of pensioners in history. They will also be the longest lived: many will spend more time in retirement than they did working. The baby-boomers have changed everything they have touched since their teenage years, leaving behind them a trail of inventions, from pop culture to two-career families. Retirement is next on the list. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21696539-older-consumers-will-reshape-business-landscape-grey-market/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Brazilian banks: Defying gravity + +Buttonwood: Betraying the promise + +India’s GDP data: The elephant in the stats + +Migrant workers in the UAE: Wages of chagrin + +Structural reform: Don’t stop believing + +Tax amnesties: Making crime pay + +Free exchange: Dumping and tub-thumping + +Free exchange: Marjorie Deane internships + + + + + +Articles Sections Next + +Brazilian banks + +Defying gravity + +Brazil’s banks have shrugged off the country’s recession—for now + +Apr 9th 2016 | From the print edition + + + +IT LOOKS like a bad joke: the world’s fastest man promoting a bank in the world’s fastest-shrinking big economy. Yet the use of Usain Bolt’s image on posters for Banco Original, a five-year-old Brazilian bank, is apt in a way. In 2015 Original raced ahead at a clip worthy of Mr Bolt: profits increased by half compared with the previous year, to 111m reais ($30m). Its loan book grew by two-thirds, to 4.25 billion reais, even as Brazil’s economy shrivelled by 3.8%. + +Original’s lightning loan-growth stands out. Demand for credit has sagged as the worst recession since the 1930s deprives Brazilian businesses of customers and workers of income or, worse, jobs. With non-performing loans (NPLs) on the rise, banks think twice before lending. After a decade of expansion, outstanding credit barely budged last year; in real (ie, inflation-adjusted) terms it contracted. + +But look at Brazilian banks’ bottom lines, and most, like Original, have had a remarkably good crisis so far. Out of 180-odd institutions monitored by the central bank only 25, most of them small, posted losses in 2015. In the year to September the banking sector as a whole (excluding state-owned development banks) raked in net profits of 85 billion reais, up from 66 billion reais in 2014 (see chart 1). Return on equity averaged 15%, down from more than 20% in the mid-2000s, when Brazil prospered on the back of a commodity boom, but better than in the preceding couple of years. + + + +This seems to fly in the face of financial aerodynamics, much as Mr Bolt’s towering figure (too tall for a sprinter, apparently) defies physics on the track. Part of the explanation is that lower loan volumes have been offset by higher interest margins (the difference between the rates banks pay on deposits and those they charge on loans). These have jumped as the central bank has lifted its benchmark SELIC rate by seven percentage points since 2013, to 14.25%, in an effort to curb inflation, currently around 10%. The average price of credit hit a high of 32% a year in October. As rich-world banks bewail negative rates, their Brazilian peers enjoy real returns of around 5% on government bonds, which make up a quarter of their assets, according to José Perez-Gorozpe of Standard & Poor’s, a rating agency. + +But Brazilian bankers have been sensible as well as lucky. The industry drew the right lessons from a formative crisis in 1995-98, says Ivan de Souza of Strategy&, a consultancy. Back then distressed loans from failing institutions, many of them state-owned, were hived off into a government-run bad bank and the good bits sold to stronger private-sector rivals. The cleansed system that emerged was more concentrated: today the five biggest banks account for three-quarters of all loans. It was also more conservative, partly because banks must set aside hefty provisions for delinquent loans (at present, 180% of their value). When the global financial crisis struck, only one big lender, Unibanco, got into trouble, from trading losses. (It subsequently merged with a competitor, Itaú, creating Latin America’s biggest bank by market capitalisation.) + +In the aftermath of that crisis Brazil’s left-wing government kept subsidised credit flowing through its two retail giants, Banco do Brasil and Caixa Econômica Federal, and the national development bank, BNDES. Rather than compete on price, rivals in the private sector focused on their own asset quality. When car loans began to sour in 2011, hinting at trouble ahead, they shifted towards less risky borrowers and safer assets, such as mortgages (nearly all for first homes, with loan-to-value ratios below 60%) and payroll loans (serviced directly from salaries, predominantly of unsackable public-sector employees). To preserve profits, the private sector let the state-owned banks chip away at its market share, which declined from two-thirds in 2008 to just 45% last year. + +Meanwhile banks are putting more emphasis on less volatile, fee-based services, such as insurance and credit cards. A host of measures from voluntary redundancies to sharing ATMs has helped to contain costs. Heavy investment in technology—22 billion reais in 2014 alone—has shunted more than half of transactions online. This is reducing banks’ dependence on costly branches, which are required by law to employ at least two armed guards: last year the sector spent 9 billion reais just on physical security. Banco Original dispenses with bricks and mortar altogether, plumping instead for a digital-only service. + +Relative prudence and decent management will, observers agree, help Brazil avert a banking crisis of the sort that befell other struggling economies (think Spain or Greece). Fewer than ten tiddlers have folded—chiefly as a result of fraud. Roughly 70% of loans are funded with deposits. The likelihood of a run on these is a very low: high inflation makes mattress-stuffing costly for Brazilian savers, who also cannot easily invest abroad. The system’s overall capital buffer, currently 15.8% of risk-weighted assets, is well clear of the 11% regulatory minimum. + +Most private-sector banks are on course to meet the stricter “Basel 3” capital standards, which come into full effect in 2019. Public ones will have a harder time. They generate half the earnings of Itaú and Bradesco from comparable risk-weighted assets, since they charge lower interest rates (admittedly, their NPLs are also lower, since cheap loans are easier to service). They, too, have begun reining in credit (see chart 2). Nonetheless, J.P. Morgan, an investment bank, reckons that Banco do Brasil (BB), Caixa and BNDES will need to raise 56 billion reais, or 0.9% of GDP, of extra capital. + + + +With a budget deficit of 10.7% of GDP, the government cannot afford to recapitalise the state-owned banks. That makes President Dilma Rousseff’s recent noises about getting BNDES to pump out more subsidised credit all the more alarming. The idea appeals to her left-wing base, whose support she needs to fend off looming impeachment by Congress (over, of all things, failing to make certain payments to state-owned banks on time). Most economists think earmarked loans merely crowd out private investment and force the SELIC much higher than it need be, since the benchmark rate only affects unsubsidised credit, currently just half of the total. + +At least Caixa and BB are undertaking (timid) capital-preserving measures. In March BB decided to return just 25% of profits to shareholders, instead of the usual 40%. On March 24th Caixa raised the interest rate it charges on mortgages. There is talk of spinning off its insurance business. + +Profits are expected to dip across the industry this year. Natalia Corfield of J.P. Morgan warns that with GDP doomed to shrink by another 4% or so in 2016, delinquent loans will take more than the usual 11-17 months to reach a peak, requiring more costly provisions for longer. With the exception of Bradesco, whose pending acquisition of HSBC’s Brazilian retail business may cut the combined entity’s costs by 30%, banks will struggle to find more savings. And with no more rate hikes on the horizon, interest margins will remain flat at best. Even Brazil’s well-run lenders cannot defy the laws of finance for ever. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21696547-brazils-banks-have-shrugged-countrys-recessionfor-now-defying-gravity/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Betraying the promise + +America’s Congress has allowed a pension-insurance scheme to become dangerously underfunded + +Apr 9th 2016 | From the print edition + + + +MANY workers depend on their employers for their retirement income. But, for defined-benefit schemes, this is an explicit bet that their employer will still be around several decades later: quite a gamble. So governments in Britain and America have set up insurance schemes designed to protect workers against the risk that their companies go bust. These bodies, Britain’s Pension Protection Fund (PPF) and America’s Pension Benefit Guaranty Corporation (PBGC), are funded by levies on employers. + +Now that Tata Steel’s loss-making British operations are up for sale, the chances are that the company’s pension fund will end up in the PPF’s clutches before too long. Buyers are likely to cherry-pick the steel company’s assets, which may leave the scheme without a viable sponsor—contributions into the fund were £155m ($219m) in the most recent financial year. And because the scheme is a legacy of the old nationalised British Steel, it is huge, relative to the existing business: its assets are almost £14 billion compared with annual turnover of just £8.1 billion at Tata Steel’s European operations. + +Fortunately, the scheme is pretty well-funded, thanks to a policy of buying inflation-linked government bonds to match its liabilities closely. As of March 2015 it had a deficit of £485m (or 3% of assets). That would still be a lot for a private buyer to agree to fund. But it is not that big a burden for the PPF, which had a surplus of £3.6 billion at the time of its last report. + +Things don’t look quite as healthy over at the PBGC, which has been around for much longer. As of its 2015 report it had total assets of $87.7 billion and liabilities of $164 billion—a deficit of $76.3 billion, a record (see chart). The big problem is the multi-employer bit of the PBGC’s responsibilities, where the deficit is $52.3 billion. + +Multi-employer schemes cover industries such as mining and trucking, in which a number of companies contribute to a collective pot. As the industry shrinks and individual employers go bust, the financial position of such schemes deteriorates. They end up in the arms of the PBGC when they run out of money to pay benefits (normally, when a single company goes out of business, there are enough assets to cover most of the liabilities). So when a multi-employer failure occurs, the PBGC’s liability is accordingly huge. It makes provision on its balance-sheet for funds that it expects to run dry over the next decade. But Congress has provided for the PBGC to get a levy of only $27 per employee per year. That adds up to an annual payment of around $270m, woefully inadequate to cover a $52 billion liability. + +On March 31st the PBGC warned that it will require significantly higher premiums to keep its multi-employer scheme running. And last year it said, with respect to the scheme, that “the risk of insolvency rises over time, to exceed 50% in 2025.” It added that the risk increases to more than 90% within 20 years. “When the programme becomes insolvent, PBGC will be unable to provide financial assistance to pay guaranteed benefits in insolvent plans,” it concluded. + +The PPF is in a much stronger financial position because it has been better funded. But the fundamental problem for such insurance schemes is the changing nature of industry and of the type of pensions promised by employers. Defined-benefit promises, where the pension is linked to a worker’s final salary, are the most expensive for companies to fund. They were the norm in the 1960s and 1970s when developed economies had a much bigger focus on heavy (and unionised) industry. Those sectors have now shrunk in size but they still must bear the legacy cost of the pensions promised to former workers. British Steel’s pension fund has fewer than 17,000 working members but more than 86,000 claiming retirement benefits. + +Meanwhile, the businesses that have emerged in the past 20 years have tended to be non-unionised and to offer defined-contribution pensions, in which retirement income is not guaranteed by the employer. Such schemes are not part of the PGBC or the PPF; there is no promise for an insurance scheme to back. So there are no new companies to pay the levy; an ever-smaller number of employers are funding a huge historic liability. + +Congress needs to pull its finger out. The PBGC can hardly cut benefits any further: a worker with 30 years’ service in a multi-employer scheme will get less than $13,000 a year, with no inflation protection. If Congress doesn’t want to charge employers more, it should fund the PBGC directly. Setting up an insurance scheme, and then failing to fund it adequately, is a betrayal of its constituents. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21696540-americas-congress-has-allowed-pension-insurance-scheme-become-dangerously/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +India’s GDP data + +The elephant in the stats + +Few economists wholeheartedly believe India’s stellar growth rate + +Apr 9th 2016 | From the print edition + + + +GOVERNMENT statisticians shun the limelight, which only ever finds them when things go awry. So it is with India’s national bean counters, who are struggling to convince the world that an economy with idle factories, sagging exports and ailing banks grew by 7.5% in 2015, as their models purport to show. Ever since a new methodology for calculating GDP was adopted last year, India has appeared to be the world’s fastest-growing big economy, outpacing China. But scepticism about the data is growing even faster. + +Growth figures are calculated by first arriving at the value of economic output over a given period and then comparing it with the prior period. The difference between the two gives a nominal rate of growth (ie, without any adjustment for inflation). Most observers agree that India’s egg-heads perform these tasks well. The problem seems to be the “GDP deflator”, a gauge of inflation by which the data are adjusted to derive the “real” growth rate. The higher inflation is assumed to be, the bigger the slice of nominal growth that is attributed to price rises rather than genuine increases in output. + +Mercifully enough, GDP deflators do not normally attract much attention. Typically, different bits of the economy are deflated by whichever inflation series is most apposite. India compiles two measures: a wholesale price index (WPI), measured at the factory gate, and a consumer price index (CPI), which tracks how much consumers pay. Changes in the two usually move in tandem, so it doesn’t much matter which is used. + +All that has changed since prices of oil and other commodities tumbled last year, causing wholesale prices to decline. Despite this, deflation remains a distant dream for shoppers: the price of consumer staples is still rising by over 5% a year. The gap between the change in the two indices swelled from nothing to nine percentage points in September, before falling back to six percentage points. The statisticians use WPI to deflate the nominal growth of service output, which accounts for roughly half the economy, even though most services have not benefited much from low commodity prices. The blended inflation figure used to deflate the nominal data may therefore be too low, making real GDP growth come out too high (see chart). + +Investors, at any rate, roundly disbelieve India’s growth figures. Nevsky Capital, a hedge fund, cited dodgy data from India, among other places, as a reason to shut up shop at the start of the year. Even the government’s own chief economic adviser has admitted he is sometimes flummoxed by the data. A cottage industry has sprung up to cater to the sceptics, blending various indicators of economic activity to produce new gauges of growth. + +Such home-brewed statistics have been common in China for some time: Li Keqiang, now the country’s premier, admitted as a provincial governor that he all but ignored “man-made” economic statistics in favour of hard-to-fiddle data such as railway-cargo volumes, electricity consumption and loans made by banks. The Economist began publishing a “Keqiang Index” when his habits became known in 2010. + +Ambit Capital, a broker based in Mumbai, now computes its own “Keqiang Index” for India, which implies a real growth rate of 5.4%. Economists at HSBC, a bank, think 5.9-6% is closer to the truth. + +If the divergence between WPI and CPI is indeed distorting the data, its nefarious impact should soon disappear as year-on-year readings of commodity prices stabilise and so reunite the two series. Statistical improvements are also promised by India’s boffins. But measuring fast-evolving economies is tricky: Nigeria two years ago announced its GDP was almost twice as big as official statistics had previously indicated. It does not help that 90% of India’s workers toil in the informal sector. + +“The debate will reduce but not go away,” predicts Pronab Sen of the National Statistical Commission, an advisory body. Though they have flaws, India’s official statistics are pretty good by emerging-market standards, he argues. But in a global economy with few bright spots, where only America and China are adding a bigger amount to global GDP, it would be comforting to be more certain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21696546-few-economists-wholeheartedly-believe-indias-stellar-growth-rate-elephant/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Migrant workers in the UAE + +Wages of chagrin + +A reform highlights how much the previous regulations were suppressing pay + +Apr 9th 2016 | From the print edition + +No longer indentured + +MANY in the Western world may fret about excessive immigration, but in truth its borders are relatively closed. In 2015 migrants made up 15% of America’s population, compared with 88% in the United Arab Emirates (UAE). Migrants go to the Emirates in search of higher wages; 65% come from Bangladesh, India and Pakistan. But the flipside of the UAE’s astonishing openness to foreign workers is a draconian regime that restricts their rights and turns a blind eye to abuses. Those restrictions have been loosened slightly in recent years, happily, which has made it possible to quantify just how harmful they are. + +To obtain a visa to work in the UAE, a migrant must first receive a job offer from an employer. (In practice, recruiting firms act as middlemen, handing out job offers to suitable candidates in exchange for a big fee.) The worker then becomes legally dependent on their employer in various ways under a system of kafala, or sponsorship. Some workers are housed in large labour camps; the government collects fees from employers to cover the cost of catching and deporting workers who abscond. + +It used to be worse. Until recently workers needed their employer’s permission to seek a job anywhere else, even after their original contract had expired. Employers, in other words, held all the cards, which helped to keep wages low. + +In late 2010, however, Saqr Ghobash, the UAE’s reform-minded minister of labour, issued a decree allowing workers with contracts expiring after January 2011 to look for work elsewhere after they had served out their contracts. Some employers grumbled, aware that this would raise the cost of labour. + +The sharp cut-off point was a gift for economists, as it made it easy to compare behaviour before and after the reform. Suresh Naidu of Columbia University, Yaw Nyarko of New York University, Abu Dhabi and Shing-Yi Wang of the Wharton School of Business used the Ministry of Labour’s database on contracts as well as data on wages to do just that, in a forthcoming paper to be published in the Journal of Political Economy. They found that the impact of the new rule was big and fast. Workers’ real wages jumped by more than 10% in the three months after their contract expired, whereas before the change they barely moved at all. + +Even though the reform made it easier for workers to change jobs, the fraction of workers renewing their contracts increased. More than twice as many workers did go to a new employer, but this was because far fewer of them left the country altogether after their contract expired. Over the first three months of the reform, the rate at which people returned home dropped by about four percentage points, from a baseline of around 12%. Workers’ original employers, Mr Naidu explains, were offering higher wages to persuade them to stay on, while higher overall earning power was keeping more workers in the country. “Before the reform you’re not allowed to switch, and after the reform you don’t have to switch,” he says. + +The change also allowed the authors to calculate how much employers’ power had been suppressing wages. They worked out that wages before the reform were about half what they would have been under a perfectly free market. The reform increased wages to around 73% of their free-market value, by their reckoning. + +In January of this year Mr Ghobash went further, allowing workers to leave their jobs even before the end of their contract, as long as they serve out a fixed notice period. That is likely to reduce employers’ power to suppress wages even more, although Mr Naidu expects that the reform will be of more benefit to skilled workers, who want to switch to jobs that match their training better, than to the legions of foreign labourers on construction sites in the Emirates. + +Some will not benefit from the liberalisation. Maids, nannies and other domestic workers (mostly women), who are subject to some of the worst abuses reported by groups like Human Rights Watch, have largely been excluded from the new freedoms. And the ability to switch jobs is no help to the millions waiting in the subcontinent for a chance to work in the UAE. Mr Naidu and his co-authors found that after the reform in 2011 companies hired fewer workers from abroad, and did not increase the salary of those they did hire. Instead, they kept on existing workers, who were on average more productive. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21696533-reform-highlights-how-much-previous-regulations-were-suppressing-pay-wages/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Structural reform + +Don’t stop believing + +The IMF suggests some sweeteners to help the medicine go down + +Apr 9th 2016 | From the print edition + + + +ASK a Greek government official what is ailing the economies of the European periphery, and he will almost certainly mention weak demand, before launching a tirade against austerity-obsessed politicians from northern Europe. Ask a German official, however, and the answer will be very different. In March, as the European Central Bank prepared a new salvo of stimulative measures, Jens Weidmann, the president of the Bundesbank, expressed his disapproval. Stimulus is no panacea, he warned, and “can’t replace urgently needed reforms.” + +Structural reform is like exercise: nearly everyone could use a bit more of it. This newspaper has been known to recommend it to governments from time to time. Yet the extent to which economies stuck in a mire of low growth and low inflation should focus on structural reform, rather than stimulating demand, is a tricky question. Few economists would argue that Italy’s economy is a model of efficiency. Yet some economists reckon that making it easier to sack workers and cut prices is risky when a country is already facing high unemployment and deflation. + +In its latest “World Economic Outlook”, the International Monetary Fund devotes a chapter to the debate. It affirms that structural reforms help raise an economy’s long-run growth prospects. Productivity stagnates when it is difficult to start new firms or expand healthy ones, or when labour cannot easily be shifted from moribund sectors to more efficient ones. Advanced economies still have plenty of room for reform, the IMF reckons. + +However, some reforms, the IMF points out, take effect faster than others, and with a less painful adjustment. Reform of “product markets” aims to boost competition among firms, through privatisation, deregulation, the liberalisation of trade and by making it easier to start a business or attract investment. Such reforms generate bigger benefits in the long run than in the short run, but can nonetheless boost output almost immediately. Deregulation of the energy sector, for example, can reduce costs and boost profits in other industries, and open new investment opportunities. These benefits begin to accrue almost at once, even in weak economic conditions (though the IMF does caution that short-run gains may be limited when credit markets are malfunctioning, a common feature of economic crises). + +The short-run payoff to reform of labour markets is much more dependent on the state of the economy. Reforms which make it easier to hire and fire workers contribute to rapid growth in output and employment when an economy is already running on all cylinders (see chart). At times of economic weakness, however, firms respond by doing far more firing than hiring, deepening the downturn. + +Cuts to unemployment benefits designed to encourage the jobless to seek work follow a similar pattern: in bad times, the benefits in terms of increased interest in work are outweighed by the squeeze such reforms place on spending. An exception to the pattern are reforms that peel away inefficient taxes on labour. This delivers the greatest bang when economies are weak. A one-percentage-point cut in overall taxes on labour during a slump boosts output by 0.7% in the year of the reform, the IMF finds, but yields no benefit at all during booms. + +Governments presiding over weak economies could enact changes in ways that minimise nasty short-run effects, the IMF suggests. They could prioritise product-market reforms, and adopt labour-market reforms that would only take effect after a lag, to allow time for economic recovery. Reforms could also be coupled with fiscal stimulus, the IMF reckons, which could then be unwound as growth improves. + +The big debts carried by the governments of the euro-area periphery will be difficult to sustain if the prospects for growth do not brighten in the long run. A short burst of deficit-financed stimulus might therefore prove a small price to pay for a much-needed dose of structural reform. In contrast, by adopting structural reforms at the same time as slashing spending, European politicians may be creating an association in voters’ minds between reform and economic hardship—a reflex that would not bode well for the health of Europe’s economy or for the survival of the euro. Stimulus is no substitute for urgently needed changes. It might prove an indispensable complement, however. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/21696437-some-sweeteners-could-help-bitter-medicine-go-down-imf-weighs-europes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Tax amnesties + +Making crime pay + +Indonesia contemplates a handsome pay-off for tax dodgers + +Apr 9th 2016 | SINGAPORE | From the print edition + +Brodjonegoro is in a hurry + +WHAT is the best design for a tax amnesty? Some object to them all, since they reward those who have broken the law. Others argue that maximising revenue should be the goal. The OECD nods at both philosophies, suggesting that an amnesty should cost the tax-dodger less than if he were caught by the authorities, but more than if he had been compliant from the start. Few, however, would recommend the approach Indonesia is taking. + +The government estimates that rich Indonesians have perhaps $900 billion stashed overseas. To entice some of that money home, it wants to offer an amnesty. Parliament, which reconvened this week, is due to take up a bill soon. People who have hidden assets abroad will face no criminal prosecution or penalties, other than a flat fee of between 1% and 6% of the value of the assets in question, depending on how quickly they declare their stash and whether they repatriate it. (The 1% is for those who bring their money home immediately; 6% for those who take more than nine months to admit to hiding assets and keep them abroad.) Yet even 6% is a bargain compared with Indonesia’s top tax rate of 30%. Scofflaws should see the amnesty as an invitation “to invest their money for Indonesia’s development,” says Indonesia’s finance minister, Bambang Brodjonegoro (pictured). Indonesia’s government projects $8 billion-15 billion in revenue from the scheme. + +That Indonesia has a revenue-collection problem is beyond dispute. Only some 27m of the country’s 255m people are registered for tax and in 2014 only 900,000 of these paid what they owed. Last year Indonesia took in just 82% of the tax revenue it had set out to collect. Its tax-to-GDP ratio is around 10%, compared with 13-15% for its South-East Asian neighbours. Joko Widodo, Indonesia’s president, says he wants to raise that to 16%. Indonesia’s constitution caps budget deficits at 3%, and most governments fear to get close to the cap, since missing revenue targets requires real and immediate cuts to spending. + +But by taking $10 billion or so now, the government could be leaving ten times that amount on the table. Starting next year most jurisdictions where Indonesians are presumed to keep their hidden wealth, including Singapore, Hong Kong, Switzerland and Mauritius, have agreed to share information on foreign account-holders with their home governments as a matter of course, under an OECD scheme known as the Common Reporting Standard (CRS). Applying Indonesia’s normal tax rates to a conservative estimate of the money to be revealed by the CRS could yield well over $100 billion, before penalties, which Indonesia levies at 2% of the tax due a month. + +The leniency is puzzling. Indonesia could levy a 25% tariff on offshore funds, and their owners would still come out ahead. Nicholas Shaxson of the Tax Justice Network deems it “very likely that powerful people in Indonesia have engineered this to make sure they’re not exposed and not subject to penalties.” But expediency is another possible explanation: Mr Brodjonegoro says that if the government waits for the CRS to take effect, “The benefit in terms of tax revenue will only start in 2019, the end of this administration.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21696503-government-contemplates-handsome-pay-tax-dodgers-indonesia-weighs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Dumping and tub-thumping + +Throwing up tariffs is a counterproductive response to economic weakness + +Apr 9th 2016 | From the print edition + + + +IT WAS a flood of cheap steel from an intimidating new economic power that prompted the passage of the world’s first anti-dumping law. In 1904 Canada’s parliament, angered by soaring imports of cut-price steel from America, imposed punitive tariffs. America is now on the other side of a similar trade dispute. Last year China exported over 100m tonnes of steel—more than the entire output of all America’s mills. Only 3% of that went to America, but American steelmakers squealed all the same and in March the government announced plans to impose an anti-dumping tariff on steel imports from China (and a handful of other countries) of up to 266%. The instinct behind such measures is understandable, but no good will come of them. + +Dumping is the practice of selling goods in foreign markets at an unfairly low price—typically, one lower than the going rate in the exporter’s home market. Anti-dumping measures are intended to prevent a company from selling goods below cost in order to drive competitors out of business, before using the resulting market power to gouge customers. + +The threat was all too real when Canada adopted its pioneering law. The American corporate monopolies of the day were more than willing to manipulate markets in order to put rivals out of business. American lawmakers eventually took aim at their “predatory pricing”, creating the first modern competition laws. Such laws usually bar firms from selling their wares below the cost of production. Anti-dumping rules, in contrast, tend to set a lower bar: they can be invoked if the price in one market is lower than in others. That makes it easy for firms seeking to shelter themselves from foreign competition to abuse them. + +Competition is not the only concern of those who argue for anti-dumping measures. In Britain, where rock-bottom global steel prices now threaten Tata Steel, the owner of the country’s biggest surviving mill, proponents of tariffs argue that it is important to preserve domestic steelmaking to ensure supplies for the defence industry, among others. But it is hard to see how the use of French steel in British submarines harms Britain’s security (its pride is another matter). For manufacturers of all sorts, most notably carmakers, cheap steel is a boon. + +Weighing against these shaky benefits are a heap of costs. Economic analyses suggest that temporary anti-dumping tariffs are actually more damaging than run-of-the-mill protectionism. Anti-dumping rules, like other trade barriers, cause economic harm by shrinking markets and excluding efficient producers, thereby raising prices for consumers. But anti-dumping measures do additional harm, because big global firms know how to game them. Should their rivals attempt to cut prices to gain market share, they file anti-dumping petitions against them. That encourages everyone to keep margins plump, in effect creating an unspoken cartel. Such tacit collusion inhibits innovation and creative destruction, and holds back growth. One recent analysis suggests that America’s anti-dumping policy reduces American consumption by 3%—an effect equivalent to a uniform tariff of 7%. + +Nonetheless, anti-dumping rules have been enshrined in global trade treaties, which outline when and how such duties can be applied and provide a forum in which they can be challenged. Some economists suggest that they could actually provide a boost to globalisation, by making trade liberalisation seem more palatable to those whose livelihoods it threatens. Broad reductions in trade barriers may look less alarming if governments retain the right to impede the most disruptive imports. + +Greg Mankiw, an economist at Harvard University, recently used a similar argument to defend the anti-dumping tariffs that America placed on steel imports in 2002, when he was advising George W. Bush, the president at the time. Mr Mankiw claims the tariffs were part of a calculated political strategy to push for trade liberalisation. By imposing them, he says, Mr Bush helped persuade Congress to grant him “trade promotion authority”—the right to negotiate trade deals which Congress cannot amend, but only approve or reject. Later, Mr Mankiw writes, that authority was used to secure the approval of a free-trade agreement with the countries of Central America. + +At the moment, however, it is hard to justify anti-dumping tariffs as a calculated sop to the opponents of liberalisation. Progress on multilateral trade deals has stalled; the fate of regional agreements also hangs in the balance thanks to the protectionist mood seizing Western voters. + +A movable glut + +Cheap exports from China reflect overcapacity that has developed as the Chinese economy has slowed. The resulting “dumping” is not proof that China is on the verge of vanquishing all rivals, but rather a reflection of its manufacturers’ weakness. + +That weakness is now being exported. Cheap exports depress prices in foreign markets, most of which are already experiencing worryingly low inflation. Central banks have little room to respond using conventional tools: interest rates are already at historic lows. In the 1930s economies that were unable to respond vigorously enough to headwinds blowing in from abroad (in that case, because of the gold standard, which constrained monetary policy) were the most likely to resort to protectionist tariffs. + +Yet the impulse to raise tariffs, if understandable, should be avoided. Once one country gives in to it, the imports that prompted the move are diverted to another country, which naturally follows suit, setting off a chain reaction. As Tata Steel teeters, Britons are rethinking their opposition to anti-dumping tariffs. Yet Tata itself was a target of the American tariffs imposed in March. Politicians are keen to get their economies growing again; tariffs are a poor way to manage it. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance/21696325-throwing-up-tariffs-counterproductive-response-economic-weakness-why-no/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Marjorie Deane internships + +Apr 9th 2016 | From the print edition + +Applications are invited for The Economist’s 2016 Marjorie Deane internships. Financed by the Marjorie Deane Financial Journalism Foundation, the awards are designed to provide work experience for a promising journalist or would-be journalist, who will spend three months at The Economist writing about economics and finance. Applicants are asked to write a covering letter and an original article of no more than 500 words suitable for publication in the Finance and economics section. Applications should be sent to deaneintern@economist.com by April 30th. For more information, please visit www.marjoriedeane.com. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21696524-marjorie-deane-internships/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Space travel: Pump it up, Scotty + +Ship propulsion: We are sailing + +Detecting explosives: The litmus test + +Coral bleaching: A hot survivor + + + + + +Articles Sections Next + +Space travel + +Pump it up, Scotty + +The International Space Station is about to get an inflatable extension + +Apr 9th 2016 | From the print edition + +AT 73 metres long and 420 tonnes, the International Space Station is the biggest artificial object in space. And it is growing: its 15 existing modules are due to be joined by five more before the decade is out. On April 8th, if all goes according to plan, a rocket will lift off from Cape Canaveral in Florida carrying the first of these new additions. But it is no ordinary module. + +The Bigelow Expandable Activity Module (BEAM—illustrated above) is the first bit of the ISS created entirely at the initiative of a private company. Bigelow Aerospace, its manufacturer, is an American space firm set up in 1999 by Robert Bigelow, a businessman who made his money in the hotel trade. And unlike the rest of the ISS, which is essentially a series of space-going aluminium cans, the BEAM is made from cloth. It is folded up and stowed for the journey into orbit, much like a tent, and then inflated to its full size after being attached to the station. + +An inflatable space station might sound a bit mad (perhaps for that reason, Bigelow Aerospace prefers the word “expandable”). But many space cadets are fans of the idea. In the 1950s Wernher von Braun, a Nazi rocket prodigy poached by the Americans after the second world war, described a space station 75 metres across with room for 80 people, made of reinforced, inflatable rubber tubes. In the 1960s, with the space race in full swing, NASA built a full-sized test model of a smaller, 7.3 metre model. And in the 1990s the agency returned to the idea with a design called the TransHab, an inflatable spaceship designed to take a crew of humans all the way to Mars. But that mission never happened. In 1999, in a neat bit of symmetry, Bigelow Aerospace bought the relevant patents from NASA and began working on the technology itself. + +Inflatable spaceships offer several advantages, but the main one is mass. An inflatable module is much lighter than its metal counterpart, and mass is the rocket scientist’s worst enemy. Lugging mass into orbit requires a lot of energy. Adding extra mass requires more fuel. That fuel, in turn, has mass of its own, requiring yet more fuel to lift, meaning that even a small increase in mass can end up requiring a dramatically bigger rocket. Bigelow Aerospace reckons that its inflatable designs offer more than twice as much internal volume per kilo as a traditional, metal design. + +Space is another advantage. The size of a rigid spacecraft is limited by the size of the rocket that launches it. But inflatable craft can be launched folded up, reducing the amount of room they occupy, and then blown up once they reach their destination. When packed away for launch the BEAM measures 2.2X2.4 metres, compared with 4X3.2 metres when fully inflated. At the same time, the module’s thick fabric walls—made of tough layers of exotic materials such as Vectran, a Kevlar-like substance used in ropemaking, or Nomex, which is used to make firefighting clothing—ought to offer astronauts better protection from the hazards of space than metal walls do. Multiple layers of fabric should be good at absorbing impacts from micrometeoroids: tiny pieces of space-going debris whose high speed makes them dangerous. Finally, fabric walls should offer better protection against radiation than metal ones. + +Nor is all this mere theory. In 2006 and 2007 Bigelow Aerospace launched two free-flying, uncrewed stations, Genesis I and II, using repurposed Ukranian nuclear missiles. Both stations have been circling the Earth ever since, providing data on how they cope with the rigours of orbit. Attaching an inflatable module to a crewed space station will, the firm hopes, be the final step in proving that its technology works. + +Swelling ambition + +Assuming it does, Bigelow has bigger plans for the future. One idea is to attach a much larger module, called a B-330, to the ISS, for use as a fully-fledged, crewed part of the station. That would be a substantial boost: a B-330, as the name suggests, offers 330 cubic metres of room, about a third of the total space presently available on the ISS. A more adventurous option is to launch a separate, free-flying station, called Space Complex Alpha, made from a pair of B-330s. Such a structure would offer about two-thirds as much pressurised space as the entire ISS at a fraction of the price. (The best guess for the ISS’s cost is $150 billion, making it one of the most expensive objects humans have ever built.) The main reason is that the ISS required dozens of rocket launches to assemble; Bigelow’s station could, in theory, be put in orbit with just a handful. The firm reckons it could lease a third of a single module (ie, 110 cubic metres) to interested customers for 60 days for around $25m. That is a lot of money, but it is considerably less than the $70m NASA presently pays Russia to fly its astronauts to the ISS. + +But Alpha will have to wait for the rest of the private space industry to catch up. Bigelow’s business plan depends on the development of privately-built spaceships capable of cheaply ferrying astronauts aloft. That may not be too distant: the BEAM is being flown to the ISS by SpaceX, another private firm that offers rocket launches at far lower prices than more established competitors. For now, SpaceX is restricted to cargo flights (it has a bulging order book of satellite launches as well as ISS flights for NASA). But next year it hopes to start flying astronauts to the ISS. Boeing, a big aerospace firm, hopes to do the same thing. And on April 2nd Blue Origin, a private rocketry firm set up by Jeff Bezos, the founder of Amazon, made the third successful flight of its New Shepard rocket. Although it only inched into space by crossing the Karman Line, the somewhat arbitrary barrier 100km up deemed to mark the beginning of space, Mr Bezos hopes one day to carry passengers into orbit proper. + +If it ever flies, Bigelow hopes to rent Alpha for specialised scientific research that requires zero gravity, leasing space on the station to private companies, or perhaps national governments without space programmes of their own. That fits with NASA’s plans. The agency has been nurturing the private space business in the hope that, once it is established, private firms can take over the comparatively routine business of flying to low-Earth orbit, leaving it free to concentrate on Apollo-style megaprojects such as missions to the asteroids and Mars. But history suggests that it may be tricky to fund a space station from scientific research alone: the ISS is supposed to be a platform for science, but its contribution has so far been measly. + +If that does not work, another option might be to turn the station into the world’s most exclusive hotel, an idea that Bigelow flirted with in its early days. After all, there is already a small but proven market. The ISS has hosted several tourists, including Richard Garriott, a British video-game designer, and Dennis Tito, an American investment manager, each of whom paid tens of millions of dollars for the trip. The B-330 comes with four windows built in. The views, one presumes, would be magnificent. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21696487-international-space-station-about-get-inflatable-extension-pump-it/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Ship propulsion + +We are sailing + +Wind power makes another comeback + +Apr 9th 2016 | From the print edition + +Full spin ahead + +OLD technologies can return with a twist, just as airships keep threatening to and windmills and electric cars have already. Fitting ships with sails to assist with propulsion, thus saving fuel and reducing emissions, is an idea that has been around for decades. It has now gained renewed interest with a search by the Energy Technologies Institute (ETI), a British public–private partnership that promotes low-carbon uses, for suppliers and a shipowner prepared to undertake a trial of wind-driven rotors on a large cargo vessel. The plan is to gather operating data on whether rotor sails are a worthwhile investment. Depending on the routes, suitably equipped vessels could reduce fuel consumption by 5-12%. As some 90% of the world’s trade travels by sea, such savings would soon add up. + +The type of sail the ETI is interested in is the Flettner rotor. These were demonstrated by Anton Flettner, a German aerospace engineer, in the 1920s. When placed on a ship the giant rotating cylinders extract energy from the wind using the Magnus effect, a force acting on a spinning body in an airstream to create a pressure difference on either side—the same effect that causes a spinning ball to curve through the air. This force can be used to help push the ship along. + +Rotor sails are most suitable for ships that sail below 15 knots (28kph) on trade routes where the apparent wind (that experienced by an observer in motion) is blowing sideways across the vessel, reckons the ETI. For a rotor sail the higher the ratio of wind speed to ship speed the better. In general, the rotors produce more thrust the windier it is and the slower the ship steams. + +In 1924 Flettner installed two 18.3-metre rotating metal cylinders on a converted sailing ship, the Buckau (pictured), which crossed the North Sea and the Atlantic. Other ship owners have flirted with the technology. In 2010, Enercon, a German windpower specialist, launched E-ship1 with four 2-metre rotor sails to assist its diesel engines. In 2014, Norsepower, a Finnish firm, fitted an 18-metre rotor sail to Estraden, a ferry which operates between the Netherlands and Britain. A second rotor was fitted to the ship in 2015. Norsepower reckons they produce a 6% fuel saving on average. + +This is not a lot to show for more than 90 years of tinkering with the technology. But the arrival of new lightweight composite materials that enable the rotors to spin at higher speeds, together with advanced computer controls that can use sophisticated wind sensors and satellite tracking to constantly adjust the setting of the rotors, holds out greater promise of a return to sail, of a sort. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21696488-wind-power-makes-another-comeback-we-are-sailing/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Detecting explosives + +The litmus test + +A new way to spot home-made bombs + +Apr 9th 2016 | From the print edition + + + +ALTHOUGH surveillance has increased around the world following March 22nd’s bombings in Brussels, it remains extremely difficult to detect explosives carried into railway stations, shopping malls and other public places. The bombs used in Belgium might well have been picked up after the check-in desks at Zaventem Airport, but the suicide-attackers probably never intended to reach the security gate. The intensive screening carried out inside airports is not practical in many other places. That could change as new techniques are developed. + +The bombs in Brussels were composed of triacetone triperoxide, known as TATP. This is the same explosive used to kill 52 people in London in train and bus attacks in 2005. It is extremely unstable, but for terrorists bent on sacrificing themselves TATP has considerable appeal since it can be made from compounds found in easily obtained materials such as paint thinners and hair-bleaching agents. + +TATP can be detected with traditional technologies, like ion mobility spectrometry. This uses a desktop machine to analyse swabs. As the process can pick up minute traces of substances associated with explosives, it is hard to prevent at least a few molecules escaping onto someone’s hands and belongings. But even in airports, not every passenger is swabbed. Some machines sample air puffed onto passengers standing in cubicles, but it is a slow process. Dogs can pick out TATP, but handlers had been reluctant to train their animals to find the explosive because even tiny amounts can detonate. Now, though, trainers can use TATP as beads encased in a polymer that prevents detonation but also releases the odour. + +Such developments help, but airport-style security would be expensive and highly disruptive if these measures were imposed at all the entry points to crowded public places. Far better would be a system that can automatically analyse air samples and raise an alarm if any dangerous compounds are detected. That idea had seemed fanciful, but Kenneth Suslick at the University of Illinois at Urbana-Champaign thinks he has found a way to do it. + +Dr Suslick’s strategy is to hunt for TATP using chemical dyes which can readily bind to reactive airborne compounds, changing colour when they do so. By using differently coloured dyes that each have an affinity for molecules of a specific compound released into the air by different explosives, the system would generate a unique colour signature when a dangerous material was nearby. Dr Suslick thinks that adding sensors onto a small cartridge-type device containing an array of different dyes would improve the system further by measuring other characteristics of airborne particles, such as their acidity and molecular polarity (the way they conduct a charge). It appears to be a complex bit of kit, but Dr Suslick is quick to point out that the method is really not much different to a multidimensional form of litmus paper. + +After collaborating with colleagues for more than a decade, Dr Suslick has successfully designed a set of dyes that can detect many of the explosive compounds terrorists are likely to wield, including TATP. In a study last year they found that ferrous chloride reacted vigorously with airborne hydrogen peroxide that travelled out of a small sample of TATP and that this exposure oxidised the ferrous chloride, turning it from blue-green to yellow-brown. The researchers have also reported that a device, similar to the sort traditionally used to scan information on business cards, was able to monitor the many different colours on their dye array and signal if it had detected compounds in the air indicative of dangerous materials nearby. + +Given that the researchers reckon each array at the centre of the device could cost less than a dollar to make, the technology appears to have the potential to be used in hand-held devices that could be widely carried by security staff. They could stand by the entrances to malls, airports and stations, checking people as they walk past with little disruption (although terrorists could still detonate their device among the crowds milling outside the building). Plans are afoot to commercialise the technology. + +The idea, if successful, could be developed further. If the detectors were positioned around a building they might be connected by a wireless network to automatically track the chemistry of the air. The main challenge is that the arrays are like chemical fuses and must be changed after being tripped. Dr Suslick, however, thinks one way around that is to use cartridges that have multiple arrays stored on a spool, so that a new one becomes available as soon as a used one gets soiled. The trick with security is to try and remain one step ahead of the terrorists. If this idea succeeds, it might be a leap. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21696485-new-way-spot-home-made-bombs-litmus-test/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Coral bleaching + +A hot survivor + +A newly found species of algae might help corals survive in warm water + +Apr 9th 2016 | From the print edition + + + +CORAL reefs are one of the world’s richest environments for marine wildlife, but they live on the edge. Coral thrives in warm water but quickly dies if temperatures rise just a single degree above the average summer maximum for their region. As climate change warms the world’s oceans this is a precarious situation. But not all corals suffer at the same temperatures. While most perish in water above 31°C, those in the Persian Gulf can withstand a punishing 35°C. Now a new study suggests that the way these corals survive could help corals elsewhere adapt to changing conditions. + +Corals get their brilliant colours from tiny algae that live in their tissue in a symbiotic relationship—the coral provides a home and the algae food produced during photosynthesis. If it gets too hot the algae leave, turning coral into a “bleached” white skeleton. Last year, Jörg Wiedenmann, a marine biologist, and his colleagues at the University of Southampton in Britain discovered that the algae inside the Persian Gulf corals were in fact a different species from that commonly found in other parts of the world. It was this species’ ability to tolerate extreme heat that appeared to be crucial for its hosts’ survival. + +The discovery of the aptly named Symbiodinium thermophilum raised more questions than it did answers. Dr Wiedenmann knew that the Persian Gulf was geologically very young, a mere 15,000 years old, but was unsure whether the algae had rapidly evolved there or travelled in from afar. To find out, the researchers analysed the genetics of the region’s algae. + +They collected coral samples from 23 reefs within the Persian Gulf, the adjacent Gulf of Oman and the Red Sea, which sits at nearly the same latitude as the Persian Gulf but is geographically isolated from it. They screened the samples for the unique DNA signature associated with S. thermophilum and, as expected, found the species made up the bulk of the algal population inside the corals of the Persian Gulf. But it was not confined to it and was also present in the Gulf of Oman and the Red Sea, albeit in much lower numbers. + +Gene genie + +Dr Wiedenmann decided to take a closer look at the genetics of S. thermophilum itself. All of the samples from the Persian Gulf were genetically very similar, but those from the Gulf of Oman and the Red Sea were markedly different. While the researchers admit that the similar genetics of the Persian Gulf population could be explained by some lonely member of the species drifting in several thousand years ago only later to be cut off from the rest of the world and forced to reproduce in isolation, they think that is unlikely since the Gulf of Oman and the Persian Gulf are well connected by the Strait of Hormuz. Instead, they argue in Proceedings of the National Academy of Sciences that the intense heat of the Persian Gulf has historically functioned as something of a trial-by-fire for algae attempting to set up shop in the area’s corals, with most being cooked alive within just a few years of settling down. + +The traits that make the population of S. thermophilum in the area so remarkably heat tolerant remain to be identified. Nevertheless, Dr Wiedenmann points out that maintaining a large biodiversity of algae in the world’s oceans might allow heat-resistant species to try their luck in other reefs as they struggle for survival. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21696486-newly-found-species-algae-might-help-corals-survive-warm-water-hot/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Alibaba: Crocodile of the Yangzi + +Myanmar: All change, or not + +Wallace Stevens: More truly and more strange + +Johnson: Of two minds + +Birth-cohort studies: Lifelong learning + +Zaha Hadid, 1950-2016: Outside the rectangle + + + + + +Articles Sections Next + +Alibaba + +Crocodile of the Yangzi + +How Jack Ma conquered China’s internet + +Apr 9th 2016 | From the print edition + + + +Alibaba: The House That Jack Ma Built. By Duncan Clark. Ecco; 287 pages; $27.99 and £18.99. + +NOT since John Rockefeller has a businessman defined a country’s transformation as well as Jack Ma does. Rockefeller’s Standard Oil capitalised on the rise of petroleum and the internal-combustion engine, a combination that powered a century of American greatness. He became America’s first billionaire and its richest man by far. Through both ruthless dealing and visionary philanthropy, he came to personify American capitalism. + +Alibaba, which Mr Ma and a handful of collaborators started in a cramped apartment in Hangzhou in 1999, is now one of the world’s biggest internet companies. It utterly dominates e-commerce in China, and has also made inroads into internet finance, cloud computing and logistics. Its flotation in New York in 2014 was the biggest public offering ever, and with a fortune worth perhaps $23 billion, Mr Ma is one of China’s richest men. + +How did a poor boy who barely scraped into a teacher’s college manage this? Like Rockefeller, Mr Ma spotted a confluence of technologies and market opportunities. The rise of the internet came just as China was gearing up to join the World Trade Organisation in 2001. Duncan Clark, an expert on China’s technology sector, explains the result in a fascinating new book: Mr Ma “stands at the intersection of China’s newfound cults of consumerism and entrepreneurship”. + +It began with Mr Ma’s homesick search for a pint of Chinese lager. As an English translator, he got the chance to travel to Seattle in the mid-1990s and to use the internet for the first time. Told that one could find anything in the world online, he searched for “beer”. He found American beer, German beer and so on, but no Chinese beer. His country was, it seemed, living in the dark ages. That gave him the inspiration he needed. + +With liberalisation would come rising incomes and global travel, reasoned Mr Ma, and soon hundreds of millions of Chinese would clamour for the goods and services enjoyed by the comfortable classes elsewhere. Unlike those in America, the land of Sears and Walmart, China’s retail chains were fragmented and stodgy. This, Mr Ma calculated, meant that e-commerce could quickly become a potent force. + +He was right. China’s online consumers are now the world’s most voracious, buying over $14 billion-worth of goods on Alibaba’s platforms on just one day last year (a promotion known as Singles’ Day). That is far more than Americans purchase on Cyber Monday, when online retailers heavily discount goods for Christmas shoppers. Alibaba now sees some 3 trillion yuan ($464 billion) in e-commerce transactions flow yearly through its portals, triple the figure seen in 2012. + +The cult of the entrepreneur is strong in China too. Though state-owned enterprises and national champions lumber on, it is private enterprise that has created nearly all net new urban jobs in China over the past two decades, and private firms account for perhaps two-thirds of all economic output. China is producing millions of new entrepreneurs each year, and (unlike Rockefeller, who was widely reviled as a monopolist) Mr Ma is idolised by them. + +eBay for lunch + +How did he come from nowhere to overcome such American rivals as Yahoo (which later became a big investor in Alibaba) and eBay? The answer lies in the most powerful cult of all: a team of martial-arts heroes with Jack Ma as its leader. Alibaba’s campus in Hangzhou features numerous artistic references to Jin Yong, a celebrated writer of martial-arts novels. Employees take nicknames from his novels and other pulp fiction, and use these names for internal communication. Team-building exercises regularly have employees doing handstands, and office romances are often made official at mass weddings (pictured), witnessed by Mr Ma. The company’s philosophy is a “six-vein spirit sword”, and during an interview conducted last year at his headquarters, Mr Ma several times got up to punctuate his answers with an actual sword from his wall. + +Mr Ma does not believe in religion or communism, saving his faith for a kind of inclusive capitalism. Unlike the founders of other big Chinese internet firms, Mr Ma distributed shares to employees from the beginning, and continued to find ways for them to cash in during Alibaba’s spectacular rise. As a result, his share is smaller than that held by comparable tycoons. Western technology founders like Google’s Larry Page and Sergey Brin and Facebook’s Mark Zuckerberg structured share offerings so that they retained a tight grip on their creations. Mr Ma formed a partnership before Alibaba’s flotation, and shares control with several dozen colleagues. + +Mr Ma rejects Milton Friedman’s nostrum that “the business of business is business”, namely that companies exist only to make a profit and that philanthropy should be strictly personal. He has set up a philanthropic fund, but uses Alibaba itself as a vehicle for social change, helping people book doctors’ visits, for example, or selling cheap water-testing devices and encouraging his customers to upload results for big-data analysis. Given his ambitions, perhaps it is a good thing that Mr Ma plans for Alibaba to flourish “at least 102 years”: begun in the last year of the 20th century, it may yet leave a mark on the 22nd. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21696495-how-jack-ma-conquered-chinas-internet-crocodile-yangzi/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Myanmar + +All change, or not + +Apr 9th 2016 | From the print edition + +Soon to have her hands even fuller + +Understanding Reform in Myanmar: People and Society in the Wake of Military Rule. By Marie Lall. Hurst; 346 pages; £20. To be published in America in July; $30. + +The Lady and the Generals: Aung San Suu Kyi and Burma’s struggle for freedom. By Peter Popham. Rider; 440 pages; £20. + +ON March 30th Myanmar’s new government was sworn into office. For the first time in over 50 years the South-East Asian country now has a civilian president and executive, all from the National League for Democracy (NLD), founded by Aung San Suu Kyi in 1988 to oppose military rule. It has been an extraordinary turnaround for a country that only five years ago was being ruled by one of the world’s most brutal and callous dictators, Than Shwe. Two new books help to shed some light on how this came about. + +“The Lady and the Generals” is by a British journalist, Peter Popham. He has already written one biography of Miss Suu Kyi, taking her story up to 2010 or so. His latest book picks up, roughly, from there, when she was released from house arrest and then persuaded by a new president, Thein Sein, to help start reforming the country. This latest tranche of Suu Kyiology is less successful than the last, partly because the author, as he laments at some length, failed to get anything first-hand out of his subject, despite her new freedoms. As a result there is a fair bit of padding. + +However, in some places the book does offer a useful, rounded portrait of Miss Suu Kyi, now aged 70, as she finally takes over running the country—and none of it is reassuring. Mr Popham writes of the Nobel prizewinner’s “ravenous egotism” and “queenliness”. He exaggerates, perhaps, but many of her sympathisers and colleagues have been dismayed by her authoritarian and high-handed ways as the NLD has been trying to prepare for power. Her inability to delegate, to share power or to listen much has hampered the NLD in the new democratic era. Denied the presidency itself by the army-designed constitution, she has instead taken on the burden of the foreign ministry and a specially created job that makes her, in effect, prime minister as well. Myanmar could well end up learning the follies of micromanagement the hard way. + +If Mr Popham’s book is intended to reach a wide readership, Marie Lall’s is more academic. At its heart is a rigorous look at the reform process over the past few years, written partly from an insider’s viewpoint: Ms Lall continued to work with NGOs and colleges in Myanmar even when the country was largely boycotted by the West before 2010. She emphasises the role that civil-society organisations played in Myanmar’s transition, particularly Myanmar Egress. This think-tank was formed by intellectuals to bridge the gap between the few in the government who did actually want to reform and the NLD. Certainly one legacy of those years is that Myanmar does have a flourishing network of local NGOs. That should help to embed democracy. + +But Ms Lall’s book is also a sobering reminder of what a monumental job the new NLD government has to reconstruct the country. She credits Mr Thein Sein’s government, rightly, with making a start, but running through the grim statistics on poverty, educational attainment and more, it is clear that they were only scratching the surface. Now it’s up to the Lady. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21696491-all-change-or-not/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Wallace Stevens + +More truly and more strange + +Apr 9th 2016 | From the print edition + + + +The Whole Harmonium: The Life of Wallace Stevens. By Paul Mariani. Simon & Schuster; 481 pages; $30. + +AS A freshman at Harvard, Wallace Stevens—who would go on to become one of the most significant American poets of the 20th century—inscribed a quotation from Benjamin Jowett in his journal: “If I live I ought to speak my mind.” It is ironic, then, that Stevens would keep his life as a lawyer and senior insurance executive in Hartford, Connecticut, separate from his career as a poet. While he pored over surety bonds during the day, his poetry, which flourished as a “secret vice”, became a place where “fire-fangled feathers” coexisted with “dream[s] of baboons and periwinkles”. + +Stevens is an inscrutable figure in American letters, his life a constant contrast between the exotic pleasures of imagination and the mores of the insurance lawyer—what Paul Mariani, the author of a new biography, “The Whole Harmonium: The Life of Wallace Stevens”, calls “exterior vacancy while the mind roiled beneath”. As Stevens boasts in a decadent early poem, “My titillations have no foot-notes.” + +After a quiet childhood in Reading, Pennsylvania, Stevens picked up a “Harvard manner” (irking his parents) at the exclusive Signet Society and the literary magazine, the “Harvard Advocate”, of which he was president. + +Stevens suffered sporadically from a “habitual blackness”, which Mr Mariani diagnoses as depression, and his marriage to the awkward, pretty Elsie Kachel, also from Reading, was an unhappy one. Stevens would describe the couple as “warty squashes”, their home life like “two grave-diggers spending a rainy night in a vault”. As he rose through the ranks of the Hartford Accident and Indemnity Company, he dictated poems to his secretary, wrote them on walks to the office and even, Elsie once complained, barrelled out of the bathroom “with a poem in his teeth”. His only indulgences came on trips to Key West, Florida, where he drank, smoked and even brawled with Hemingway. + +Nothing in this life can prepare a reader for the sensuous obscurity of Stevens’s vocabulary (ice cream as “concupiscent curds”) or his startlingly lucid vision (“The world imagined is the ultimate good”). The voice of an awesome god speaks in his first book, “Harmonium”, published when he was 44: “I was the world in which I walked, and what I saw/Or heard or felt came not but from myself;/And there I found myself more truly and more strange.” + +Stevens believed in the divine power of the imagination, “the central mind” that provides irrepressible illumination. “How high that highest candle lights the dark”, he marvels in a late poem. In this light, the poet sees both himself and the world “more truly and more strange”. + +Stevens is a difficult biographical subject. First, he and Elsie destroyed many of his letters, manuscripts and notes, giving Mr Mariani less to work with than recent biographers of, for example, James Merrill and Gore Vidal. Second, his poetry is sometimes abstruse, despite his protestations that they are “so simple and natural to me”. Third, any biographer must confront Stevens’s racism, which has rightly troubled many readers and recently received renewed attention in American literary circles. A major shortcoming of this biography is the only passing attention that Mr Mariani pays to this element of Stevens’s character, even as he devotes many pages to Stevens’s attitudes toward wars, elections and other political events. + +But Mr Mariani’s primary concern is not Stevens’s life, which after all lacks the drama that attracts readers to biographies of Ted Hughes or Dylan Thomas. Mr Mariani instead provides a careful and clear introduction to Stevens’s essential poetry, offering strong evidence that with the appropriate context, Stevens’s poems “will yield their richness”. + +However, the Wallace Stevens of “The Whole Harmonium” remains a mysterious vessel for his genius. He appears in these pages “more truly and more strange”. His life, even in this fine telling, only makes sense if one is willing to believe in the transcending and total power of the imagination—a second world within us, the “highest candle” of our interior lives. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21696493-more-truly-and-more-strange/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +Of two minds + +The advantages of working in your own language are obvious. Those of working in a foreign one are subtle + +Apr 9th 2016 | From the print edition + + + +MORE and more of the world is working in English. Multinational companies (even those based in places such as Switzerland or Japan) are making it their corporate language. And international bodies like the European Union and the United Nations are doing an ever-greater share of business in the world’s new default language. At the office, it’s English’s world, and every other language is just living in it. + +Is this to the English-speaker’s advantage? Working in a foreign language is certainly hard. It is easier to argue fluently or to make a point subtly when not trying to call up rarely used vocabulary or construct sentences correctly. English-speakers can try to bulldoze opposing arguments through sheer verbiage, hold the floor to prevent anyone else from getting a word in or lighten the mood with a joke. All of these things are far harder in a foreign language. Non-natives have not one hand, but perhaps a bit of their brains, tied behind their backs. A recent column by Michael Skapinker in the Financial Times says that it’s important for native English-speakers to learn the skills of talking with non-natives successfully. + +But, as Mr Skapinker notes, there are advantages to being a non-native, too. These are subtler—but far from trivial. Non-native speakers may not be able to show off their brilliance easily. It can be an advantage to have your cleverness highly rated, and this is the luck of verbally fluent people around the world. But it is quite often the other way round: it can be a boon to be thought a little dimmer than you really are, giving the element of surprise in a negotiation. And, as an American professor in France tells Johnson, coming from another culture—not just another language—allows people to notice stumbling blocks and habits of thinking shared by the rest of the natives, and guide a meeting past them. Such heterodox thinking can be wrapped in a bit of disingenuous cluelessness: “I’m not sure how things work here, but I was thinking…” + +People working in a language not their own report other perks. Asking for a clarification can buy valuable time or be a useful distraction, says a Russian working at The Economist. Speaking slowly allows a non-native to choose just the right word—something most people don’t do when they are excited and emotional. There is a lot to be said for thinking faster than you can speak, rather than the other way round. + +Most intriguingly, there may be a feedback loop from speech back into thought. Ingenious researchers have found that sometimes decision-making in a foreign language is actually better. Researchers at the University of Chicago gave subjects a test with certain traps—easy-looking “right” answers that turned out to be wrong. Those taking it in a second language were more likely to avoid the trap and choose the right answer. Fluid thinking, in other words, has its down-side, and deliberateness an advantage. And one of the same researchers found that even in moral decision-making—such as whether it would be acceptable to kill someone with your own hands to save a larger number of lives—people thought in a more utilitarian, less emotional way when tested in a foreign language. An American working in Denmark says he insisted on having salary negotiations in Danish—asking for more in English was excruciating to him. + +All this applies regardless of the first language. But in the modern world it is English monoglots in particular who work in their own language, joined by non-native polyglots working in English too. Those non-native speakers can always go away and speak their languages privately before rejoining the English conversation. Hopping from language to language is a constant reminder of how others might see things differently, notes a Dutch official at the European Commission. (One study found that bilingual children were better at guessing what was in other people’s heads, perhaps because they were constantly monitoring who in their world spoke what language.) It was said that Ginger Rogers had to do every step Fred Astaire did, but “backwards, and in high heels”. This, unsurprisingly, made her an outstanding dancer. + +Indeed, those working in foreign languages are keen to talk about these advantages and disadvantages. Alas, monoglots will never have that chance. Pity those struggling in a second language—but also spare a thought for those many monoglots who have no way of knowing what they are missing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21696489-advantages-working-your-own-language-are-obvious-those-working-foreign/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Birth-cohort studies + +Lifelong learning + +Apr 9th 2016 | From the print edition + +The Life Project: The Extraordinary Story of Our Ordinary Lives. By Helen Pearson. Allen Lane; 399 pages; £20. To be published in America by Soft Skull Press in May; $17.95. + +UNKNOWN to the vast majority of the population, a small group of British 70-year-olds has shaped the health and well-being of everyone in Britain for their whole lives. They are not policymakers or professors, but a random nationwide sample linked only by the week of their birth in 1946. Recruited barely out of the womb, they have been followed by researchers and an army of data-gatherers asking about their lives and behaviours. These have yielded profound insights into the causes of health and illness in Britain from the cradle to the grave. + +Helen Pearson, a geneticist and journalist, has written “The Life Project”, a fascinating book charting the 1946 cohort and four that followed. They are a peculiarly British undertaking, and despite perhaps not being championed enough in the country—their funding has frequently been in peril—within epidemiological fields they are looked on with envy and admiration by the rest of the world. + +The five cohorts, begun in 1946, 1958, 1970, 1991 and 2000, total about 70,000 Britons, providing data ranging from punch-cards in the earliest cases to fully sequenced genomes today. The 1946 cohort revealed that working-class women suffered high rates of stillbirth due to lack of medical care during pregnancy; when the National Health Service was launched shortly after in 1948, those findings led to prenatal care being provided free. Findings from the 1958 cohort were the first to reveal the impact of smoking during pregnancy on the risk of stillbirth, which led to a change in advice to pregnant women. Free adult-education courses launched in the early 2000s were offered as a result of cohort studies revealing that around one in five adults in the early 1990s struggled with reading, and even more, around one in three, with basic mathematics. + +But the sad message that has emerged from the studies, from the birth of the 1946 cohort to the present day, is that being born poor remains a huge source of risk to health and well-being. While it is possible to triumph over adversity (reading for pleasure as a child, for example, predicts better outcomes later in life, whatever the socioeconomic status of your parents) the odds are stacked against some people from before they are even born. For all the subjects’ influence on public policy, this has hardly changed in the half-century since the first published study from the 1946 group. + +Despite this bad news (and Ms Pearson’s passion about it) the book is often a delight, interspersed with vignettes about individual members of the different cohorts, as well as the researchers. (One research-team leader kept falling asleep during the making of a video about the project, after two days without sleep. Another liked to joke of his own birth “at an early age”, head “the wrong way round”.) + +It’s hard to believe something as simple as observing a group of babies follow their path through the world can provide such a huge amount of knowledge about the human condition. “The Life Project” makes the case for why they should be a jewel in the crown of British science. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21696494-lifelong-learning/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Zaha Hadid, 1950-2016 + +Outside the rectangle + +The Iraqi-British architect refused to choose between art and building + +Apr 9th 2016 | From the print edition + +Striking in Glasgow + +ZAHA HADID, like her architecture, was striking to look at. Ring-like objects stretched across her hands like delicate cutlery, and she favoured pleated fabrics, feathers, unusual silhouettes and complicated footwear. Like the swimming pools with swooping double-curved roofs she built for the London Olympics, she was instantly recognisable. But like the cancer centre she designed for Kirkcaldy’s Victoria Hospital, she was reluctant to reveal everything at once: a spiky exterior protects a sheltering and intimate interior from a bleak setting. + +There were times Ms Hadid needed a hard shell. Her design for the Cardiff Bay Opera House won a competition against 268 entrants, but was torpedoed by a minority that didn’t like it—or her. The Heidar Aliyev centre she designed for Azerbaijan’s capital was called a monument to a dictator, a charge not often levelled at male peers in similar political environments. In 2014 the New York Review of Books retracted and apologised for a claim that there had been more than 1,000 deaths of migrants working on the site of a stadium she was building in Qatar. There had been no deaths, and construction had not even started. But the story was repeated by the BBC, so in a radio interview about her winning the Royal Gold Medal for Architecture, she rebutted the claim, then cut the interview short. + +Ms Hadid built one of the world’s most impressive architectural practices. Its professionalism allowed her to work on a large scale all around the world, from Istanbul to Wolfsburg, Doha to Cincinnati. In Glasgow her Museum of Transport (pictured) is as striking as a lightning flash on the banks of the Clyde. Of two huge projects in Beijing, one is a cluster of dune-like skyscrapers, the other a hollowed out vortex of glass and steel. + +Her life was marked by the loss of a secular modern Iraq that might have been: her father was a prominent politician before the Baathists took power. After studying mathematics at the American University of Beirut, she studied at the Architectural Association in London in the 1970s, at a time when there was still a huge divide between the art of architecture and the business of building. That this divide has vanished can partly be attributed to Ms Hadid. + +Under the influence of her charismatic teacher, Rem Koolhaas, she discovered the paintings of Kazimir Malevich, the pioneer of “dynamic suprematism”. She began to draw and paint, beautifully and compulsively, producing images with little apparent connection to buildings. She didn’t want to be conventional, but she certainly did want to build. Those drawings presaged her search for fluid ideas about what architectural spaces could be like. Through sheer force of will she realised them. + +Give or take the Sydney Opera House, architecture was still in the era of the rectangle when she began. For better or worse, her work, together with that of a few others, notably Frank Gehry, has given permission for an entire generation to experiment with explosive architectural forms. In the process, what was once revolutionary has become mainstream. She tackled office towers and ski jumps and cutlery, all the while trying to make materials do new things and to create new shapes. And that is what gained her a constituency far beyond the world of architects. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books/21696432-iraqi-british-architect-refused-choose-between-art-and-building-zaha-hadid/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Peter Maxwell Davies: The roar of the sea + + + + + +Articles Sections Next + +Obituary: Peter Maxwell Davies + +The roar of the sea + +Peter Maxwell Davies, composer, died on March 14th, aged 81 + +Apr 9th 2016 | From the print edition + + + +WHAT he hated most was noise. An aircraft flying low overhead; the buzz of a traffic light at night; the awful possibility, with a telephone, that it might “go off” at any moment. All this drove Peter Maxwell Davies to a frenzy. Critics of his early works might have been puzzled by that. They had only to think of “Worldes Blis”, a piece building to an unbearable climax of violent brass, or the manic percussion of “Eight Songs for a Mad King”, or, in “Revelation and Fall”, a howling soprano assaulting a megaphone. Max, like some demon elf with his springing curls and blazing blue eyes, seemed to spend the 1960s testing listeners to the limit. But these wildly avant-garde productions had come, against all probability, from a well of quiet. + +He had to listen out for music. It might come through at any minute, when he was in the bath, or in bed. The notes had been crowding in ever since, at four, he had come home from Gilbert and Sullivan’s “Gondoliers” with his head full of tunes, and his life-path set. So many ideas thronged there later that the minute he put a double bar at the end of a piece, he had to start something new. Forget revision; what was done was old already, and the next piece beckoned, better. Over his career he stacked up 335 opus numbers, starting with a hair-raising trumpet concerto and ending in 2015 with “The Hogboon”, a fairytale of Orkney for children’s choirs. + +And one particular sound had changed his life. He first heard it in 1970, when he was visiting the near-deserted valley of Rackwick on the island of Hoy, in Orkney: the continuous “Aeolian harp” of the thronging seas of the Pentland Firth. While others talked, he sat entranced. His life, as it happened, was at a point of change. Many of his possessions had been lost in a fire; and his music, too, was shifting. He was finishing his first large-scale opera, “Taverner”, based on the life of the Tudor composer: a piece about belief corrupted into inhumanity, in appropriately strident modes, which had obsessed him for 14 years. Now he needed a new landscape, and fresh quiet. At Rackwick, a fog-draped ruined croft above the sea offered more solitude than he had ever known. Danger, too; but he lived by danger. + +From stone to thorn + +He stayed there for 24 years, the first six without electricity and with driftwood fires. When he eventually moved it was only to a more remote island, Sanday, and closer to the shore. Music poured out of him, coloured now with reel-rhythms, pipes, the pounding sea and the light cast from it. In Orkney some of his searching, at least, seemed to be answered, and some of his artistic contradictions calmed. + +From his years at music college in Manchester in the mid-1950s, defying fashion, he had loved early music: Dunstable, Monteverdi, Taverner of course, and plainsong. Many of his works in the 1960s were based on masses and hymns, which he then broke up, distorted or turned into silly foxtrots. He loved the ancient settings; but religion was a dirty word, fit for bitter jokes. He would not be told what to do or what to believe: a view sharpened by his homosexuality, at a time when it was illegal. + +Orkney did not change those convictions. But through his friendship with George Mackay Brown, a local poet whose every line suggested music, he began to sense the ties between Christianity and the rhythm of the seasons. On Hoy he cut peat, grew potatoes and delivered lambs. One shock-work of his pre-Orkney years, “Vesalii Icones”, had featured a near-naked dancer acting out the Stations of the Cross and bursting from the tomb as AntiChrist. The first thing he wrote on Hoy, “From Stone to Thorn”, was a setting of a poem by Mackay Brown in which Christ was a grain of wheat, cut down and threshed to spring again. His second opera, “The Martyrdom of St Magnus”, grappled again with that theme of sacrifice, this time in the life of Orkney’s own saint. + +He also realised on the islands his greatest ambition. As a composer, he was bound to be an outsider; but not one in an ivory tower. (He was naturally anti-elitist, a delicately polite Salford boy, born above a shop.) His responsibility was to promote a love of music, especially in children. In his 20s, teaching at a school in Cirencester, he would tell his pupils to write any music they liked: no rote-learning for him. On Hoy, and while he was a resident composer with the Scottish Chamber Orchestra, he wrote ten “Strathclyde Concertos”, ideal to take into schools. Shy as he was, he “de-inhibited” himself to do it. In 1977 he set up the summer St Magnus festival, bringing world-famous musicians and poets to Orkney alongside the locals, adults and children, who loved to sing and play whatever he wrote for them. + +He was made a knight and then, in 2004, master of the queen’s music. Both of these he found amusing, because his work continued to lambast any and all authority. “Black Pentecost” (1979) raged against uranium mining on Stromness; “Last Door of Light” (2008) was a violent plea to tackle climate change. What the public most fondly remembered of him, a gentle chanson triste for piano called “Farewell to Stromness”, was another anti-mining lament. But at the same time it evoked the hush from which his music had continued to leap, burn and cry, while beneath his windows the sea surged on and on. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21696496-peter-maxwell-davies-composer-died-march-14th-aged-81-roar-sea/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Markets + +The Economist poll of forecasters, April averages + + + + + +Articles Sections Next + +Interactive indicators + +Apr 9th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21696498-interactive-indicators/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Apr 9th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21696562-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Apr 9th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21696567-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Apr 9th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21696568-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Apr 9th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21696569-markets/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist poll of forecasters, April averages + +Apr 9th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21696577-economist-poll-forecasters-april-averages/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +TE20160409 + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Facebook: Imperial ambitions + + + + + +Libya: Another chance + + + + + +Peru’s election: A dangerous farce + + + + + +Leak of the century: The lesson of the Panama papers + + + + + +Tata Steel: Cast-iron arguments + + + + + +Letters + + + +On Harvard, HPV, the budget, America, our covers, Moore's law, Canada, queuing: Letters to the editor + + + + + +Briefing + + + +The new face of Facebook: How to win friends and influence people + + + + + +United States + + + +Wisconsin and after: Donald downed? + + + + + +Open conventions: A user’s manual + + + + + +Wisconsin’s Democratic primaries: Sewer socialism’s heir + + + + + +The campaigns: Heard on the trail + + + + + +Hawaiian agriculture: Paradise sprayed + + + + + +Atlantic City: Out of luck + + + + + +Catching halibut: Wiki-fishing + + + + + +Lexington: The primaries puzzle + + + + + +The Americas + + + +Peru’s election: Choosing a new broom + + + + + +West Indian cricket: The Windies won + + + + + +Bello: When a “coup” is not a coup + + + + + +Asia + + + +Coping with senility in Japan: Grey zone + + + + + +State elections in India: Back at the spinning wheel + + + + + +Patriotism in India: Oh mother + + + + + +Legislative elections in South Korea: No walk in the Park + + + + + +Timor-Leste and Australia: Line in the sand + + + + + +Banyan: Of blowhards and bombs + + + + + +China + + + +Catholics: Party and pontiff + + + + + +House churches: Underground, overground + + + + + +Middle East and Africa + + + +Kenya and international justice: Obstruction of justice + + + + + +Libya’s civil war: Unity, up to a point + + + + + +The West Bank: Deadly DIY + + + + + +Djibouti: The superpowers’ playground + + + + + +South Africa: Moment of truth + + + + + +Europe + + + +French student politics: I dreamed a dream + + + + + +Greece’s migrant deal: Back where they came from + + + + + +Iceland’s prime minister: Big fish + + + + + +Nagorno-Karabakh’s war: A frozen conflict explodes + + + + + +Russia’s dairy embargo: War and cheese + + + + + +Charlemagne: The politics of memory + + + + + +Britain + + + +Fiscal devolution in Scotland: A taste for more + + + + + +Brexit brief: The economic consequences + + + + + +Defence industry: Take your partners + + + + + +Domestic abuse: Violence in the shires + + + + + +The housing crisis: Lords a-leaping + + + + + +Second homes: To the lighthouse + + + + + +Bagehot: Land ahoy! + + + + + +International + + + +The Panama papers: A torrential leak + + + + + +The reaction in Russia: Nothing to see here + + + + + +The reaction in Russia: Internship + + + + + +Business + + + +Global steel: Through the mill + + + + + +Taxing America Inc: Pfiasco + + + + + +Industrial overcapacity: Gluts for punishment + + + + + +An Indian unicorn: Global appetites + + + + + +Mobile services: Bots, the next frontier + + + + + +Schumpeter: The grey market + + + + + +Finance and economics + + + +Brazilian banks: Defying gravity + + + + + +Buttonwood: Betraying the promise + + + + + +India’s GDP data: The elephant in the stats + + + + + +Migrant workers in the UAE: Wages of chagrin + + + + + +Structural reform: Don’t stop believing + + + + + +Tax amnesties: Making crime pay + + + + + +Free exchange: Dumping and tub-thumping + + + + + +Free exchange: Marjorie Deane internships + + + + + +Science and technology + + + +Space travel: Pump it up, Scotty + + + + + +Ship propulsion: We are sailing + + + + + +Detecting explosives: The litmus test + + + + + +Coral bleaching: A hot survivor + + + + + +Books and arts + + + +Alibaba: Crocodile of the Yangzi + + + + + +Myanmar: All change, or not + + + + + +Wallace Stevens: More truly and more strange + + + + + +Johnson: Of two minds + + + + + +Birth-cohort studies: Lifelong learning + + + + + +Zaha Hadid, 1950-2016: Outside the rectangle + + + + + +Obituary + + + +Obituary: Peter Maxwell Davies: The roar of the sea + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Markets + + + + + +The Economist poll of forecasters, April averages + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.04.16.TXT b/homeworks/B20769/homework1/data2/2016.04.16.TXT new file mode 100644 index 0000000..984f299 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.04.16.TXT @@ -0,0 +1,4251 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: Business in Africa + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Politics this week + +Apr 16th 2016 | From the print edition + +Ukraine’s prime minister, Arseniy Yatseniuk, said he will resign as soon as the parliament finds a candidate to replace him. President Petro Poroshenko has nominated Volodymyr Groisman, the speaker of parliament, but he has struggled to gather enough support among the splintered parties to form a new government. Mr Yatseniuk’s approval ratings had fallen to single digits over his failure to attack corruption; Mr Poroshenko’s are drooping too. See article. + +Belgian police arrested Mohamed Abrini, a suspected terrorist who confessed to being the “man in the hat” in images of the attack on Brussels airport on March 22nd. He is believed to have played a role in the terrorist attacks in Paris last November too. Police interrogators said he revealed that the Brussels attackers had originally aimed to strike a football tournament in France. + +Emmanuel Macron, France’s economy minister, launched a movement called “En Marche!” (On the Move!), to bring liberal economic ideas into the Socialist Party. France is preparing for presidential elections in 2017 with a Socialist president, François Hollande, who is the least popular president in French history. See article. + +Turkey formally requested that Germany prosecute a comedian who ridiculed President Recep Tayyip Erdogan. Under a little-used German law criminalising the defamation of foreign leaders, Jan Böhmermann faces up to three years in prison for a poem that involved ludicrous sexual innuendoes regarding Mr Erdogan and animals. The row complicates Germany’s increasingly important relationship with Turkey. See article. + +Slight return + +Keiko Fujimori, a conservative, came top in the first round of Peru’s presidential election with nearly 40% of the vote. She will face Pedro Pablo Kuczynski, a liberal former prime minister and IMF official, in a run-off on June 5th. Ms Fujimori’s father, Alberto Fujimori, Peru’s president in the 1990s, is serving a jail sentence for human-rights abuses and corruption. + +A congressional committee in Brazil voted to press ahead with impeachment proceedings against the president, Dilma Rousseff. Next, the lower house of Congress will take up a vote against her, on charges that she manipulated government accounts. If that passes by two-thirds, she will face trial in the Senate. A steel wall was raised in the capital to separate the crowds who are expected to demonstrate for and against impeachment. + +A federal appeals court in New York cleared the way for Argentina, which defaulted on its debt in 2001, to repay bondholders who had rejected earlier debt restructurings. This should allow the country to resume borrowing on international capital markets. It plans raise up to $15 billion through a new bond issue. Most of the money will be used to pay the holdout bondholders. See article. + +Knowing when to fold ’em + +Congress made an opening bid towards solving Puerto Rico’s $72 billion debt crisis. A House committee offered the island most of the benefits of a bankruptcy, including the suspension of litigation while a fiscal plan is sorted, new abilities to corral creditors and the power to modify its debt. This relief would come at a steep cost. An “oversight board”, nominated by Congress, would in effect revoke the self-government the commonwealth has enjoyed since 1948. See article. + +Paul Ryan, the Speaker of the House, once again ruled out putting himself forward as a candidate for the Republican Party’s presidential nomination. Some Republicans had hoped he might ride to the rescue at the convention in Cleveland, saving them from either Donald Trump or Ted Cruz. That now looks unlikely. + +War, peace and war + +Peace talks between some of Syria’s warring parties restarted in Geneva. But with a new ground offensive, supported by Russian air strikes, poised to start against rebel-held parts of Aleppo, the “partial ceasefire” struck in February risks falling apart. Meanwhile Bashar al-Assad’s government organised elections in its remaining territory, which Western countries denounced as a sham. + +Drought forced Malawi’s president, Peter Mutharika, to declare a national emergency. Some 3m people in his country already require food aid. + +American air strikes in Somalia killed 12 members of the Shabab, a jihadist outfit. A Pentagon spokesman said they posed an imminent threat to American soldiers assisting the Somali government. + + + +Egypt’s president, Abdel-Fatah al-Sisi, caused uproar on social media by announcing that two uninhabited islands that Egypt has been looking after since the 1950s will be handed back to Saudi Arabia. He angrily refused to answer questions about the agreement. + +China’s nervous neighbours continued to look for new ways to defend themselves. A visit to India by Ash Carter, America’s defence secretary, brought an outline agreement on sharing military bases, equipment and fuel. Separately, defence officials from Vietnam and the Philippines will meet to discuss joint patrols of the South China Sea. + +Taiwan objected to Kenya’s decision to send 45 Taiwanese to China for criminal investigation in a fraud case. It called the move “extrajudicial abduction” by China and accused Kenyan police of forcing suspects onto an aeroplane. + + + +A court in Changsha in central China ruled that a gay couple could not register as married. Officials allowed about a hundred supporters of the two men to attend their hearing, which was the first of its kind in China. Hundreds more gathered outside the building. + +Mobile-internet services were suspended in parts of Indian-controlled Kashmir, to slow the spread of protests against the security forces’ killing of four civilians at two separate demonstrations. + +The ruling party in South Korea lost its long-held parliamentary majority, worsening a long-standing legislative gridlock that hampers President Park Geun-hye’s plans. Her Saenuri party had hoped to increase its share of the 300-seat National Assembly to three-fifths (the fraction required to bring bills to a vote). + +So long, suckers + +Inky, a common octopus, made a bold contortionist’s escape from New Zealand’s national aquarium. Slipping through a gap at the top of his tank, he scurried across the floor and made his way down a 50-metre drainpipe into Hawke’s Bay, North Island. + + + + + +Business this week + +Apr 16th 2016 | From the print edition + +The EU detailed plans to force big firms to open up their tax affairs. Under the scheme, companies with sales of more than €750m ($846m) a year would be required to publish how much tax they pay and in which countries, including in tax havens. Although the move has been long-planned, it has been given impetus by the revelations contained in the recent “Panama papers” leak. Britain, meanwhile, is mulling a new law that would criminalise companies that failed to stop their staff assisting in tax evasion. See article. + +Mail shot + +The publisher of the Daily Mail is looking for private-equity backing to launch a bid for Yahoo. Potential buyers have until April 18th to submit bids for the ailing internet firm. Yahoo has lost ground to rivals such as Facebook and Google, both of which receive significantly more revenue from advertising. The Mail is the world’s most-read English-language news website, with an estimated 220m monthly unique visitors. Several other media firms are also thought to be considering bids. See article. + +Nomura is to reduce the size of its European equities business. Reports suggest the Japanese bank may cut between 500 and 600 jobs in the region. Nomura made a loss of ¥50 billion ($458m) in Europe for the first three quarters of this financial year. It will unveil a full restructuring plan on 27th April, along with full-year results, when it may also announce cuts to its operations in America. + +Goldman Sachs is to pay $5.1 billion to settle a case brought by American authorities over the mis-selling of mortgage-backed securities between 2005 and 2007. Investors lost billions of dollars through the practice, according to the US Department of Justice. Goldman Sachs said it was pleased to put such “legacy matters” behind it. + +Regulators told five big American banks, including JPMorgan Chase and Bank of America, that their living wills—plans that would make it easier to dismember them or start winding them up—did not pass muster. The firms have until October to submit new plans or face sanctions. + +Britain’s Competition and Markets Authority (CMA) asked the European Commission to block CK Hutchison’s proposed £10.5 billion ($14.9 billion) purchase of O2, a rival mobile-phone operator. The deal, which would reduce the number of mobile networks in Britain from four to three, would be bad for consumers, said the CMA. Although a final decision by the commission is not due until mid-May, it may bring its judgment forward, so as not to impinge on Britain’s referendum on EU membership in June. + +Italy approved a plan that would see a consortium of the country’s banks, insurers and pension firms set up a €5.5 billion ($6.2 billion) bail-out fund to help troubled lenders. It hopes that since most of the institutions involved are private, the scheme will skirt EU rules on state subsidies. It also said it would streamline bankruptcy procedures, a step that might help banks resolve the €360 billion of bad loans on their books, by making it easier to seize collateral. See article. + +It emerged that American regulators have threatened to bar Elizabeth Holmes, the founder of Theranos, a blood-testing company, from owning or operating a lab for two years. Concerns have been raised that the firm’s procedures and practices. + +The IMF lowered its forecast for global growth in 2016 from 3.4% to 3.2%—although that is still a shade faster than 2015. While America, Europe and the emerging world as a bloc all saw similar downgrades, the forecast for sub-Saharan Africa was pared back the most, in large part because of a gloomier outlook for oil-rich Nigeria, the continent’s largest economy. + +Not-so-delicate China + +There was better economic news in China’s latest trade figures. Exports from the country grew by 18.7% in March compared with a year earlier, the biggest increase for 13 months. Imports fell by 1.7%— less than expected—prompting hopes that manufacturing is recovering. However, the results looked good only in comparison with bleak 2015 figures. + + + +The more optimistic outlook in China came too late for Peabody Energy, the world’s largest private coal firm, which filed for Chapter 11 bankruptcy. Peabody blamed weak demand in China, as well as a fall in the coal price, environmental legislation and abundant natural gas in America, for its woes. The firm said it would continue to operate as it attempts to restructure its debts. See article. + +Vivendi, a French media firm, chaired by Vincent Bolloré, took a 3.5% stake in Mediaset, Italy’s largest commercial broadcaster. The deal moves Vivendi closer to creating a pan-European media empire. + + + + + +KAL's cartoon + +Apr 16th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +Leaders + + + + +Dealing with autism: Beautiful minds, wasted + +Business in Africa: Making Africa work + +Tax transparency: Two rights, wrong policy + +The French left: Liberty, equality, seniority + +Solar energy: The new sunbathers + + + + + +Dealing with autism + +Beautiful minds, wasted + +How not to squander the potential of autistic people + +Apr 16th 2016 | From the print edition + + + +IN AMERICA in 1970 one child in 14,000 was reckoned to be autistic. The current estimate is one in 68—or one in 42 among boys. Similarly high numbers can be found in other rich countries: a study in South Korea found that one in 38 children was affected. Autism is a brain condition associated with poor social skills. It has a wide spectrum of symptoms, from obsessive behaviour to hypersensitivity to sound, light or other sensory stimulation, the severity of which ranges from mild to life-blighting. The range of consequences is also wide. At one end, the autism of a computer scientist may be barely noticeable; at the other, a quarter of autistic children do not speak. + +Autism is a condition that defies simple generalisations. Except one: the potential of far too many autistic people is being squandered. Although around half of those with autism are of average intelligence or above, they do far worse than they should at school and at work. In France, almost 90% of autistic children attend primary school, but only 1% make it to high school. Figures from America, which works harder to include autistic pupils, suggest that less than half graduate from high school. In Britain, only 12% of higher-functioning autistic adults work full time. Globally, the United Nations reckons that 80% of those with autism are not in the workforce. + +These numbers represent a tragic human toll, as millions of people live idle and isolated outside the world of work. Loving parents and siblings struggle to know how to help. Autism imposes hefty economic costs, reducing economic growth and swelling disability rolls. One American study suggests those costs could be as high as 2% of GDP. Fortunately, this need not be the case. Evidence, particularly from advanced economies, suggests there are plenty of things, from earlier screening to greater assistance with finding jobs, that could transform the lives of many autistic people (see Briefing). + +Pieces in the puzzle + +Early screening is essential. There is no definitive test for autism. It can be diagnosed only by observing behaviour. Most babies learn by watching their parents smile, hug, eat and bicker; autistic children often fixate on inanimate objects or play with their toys in an oddly repetitive way. Relying on diagnosis by observation makes the statistics around autism slippery: one reason the condition’s incidence has risen in recent decades is that doctors have changed the way they detect it. Yet there is little doubt that early diagnosis and intervention can help autistic children’s brains develop better. If parents fill in a detailed questionnaire about what their children can and can’t do, doctors can usually spot the symptoms by the age of two. Speech therapy and other intensive treatments can help an autistic toddler cope and encourage learning and interaction at an age when the brain is at its most plastic. A study in 2013 in Washington state found that, though costly, such early coaching paid for itself within eight years by reducing the need for extra help in school. Alas, the average age of diagnosis in the rich world is three and a half. + +A second aim should be to provide autistic children with schooling that suits them. A debate rages about when and how to include autistic children in mainstream classes. The evidence argues against blanket rules. Some do better when mixed in with other children and given additional support. Some need to be taught separately, either for their own sake or because they are disruptive. Others need a bit of both. Whatever the degree of integration, teaching autistic children effectively will require more funding, to train both specialist and mainstream teachers. In one study 60% of British teachers said they felt unprepared to teach autistic children. + +From genes to synapses + +Maximising the returns from this investment in education means ensuring that autistic adults find work. Not all such people can hold down a job. But the high-functioning among them tend to be deft analysts. They can spot patterns or errors in data that are invisible to most non-autistics, making them attractive employees for software firms. + +Even less gifted autistic people often have an extraordinary capacity to focus and an eye for detail that make them effective workers. Their desire for routine and dislike of change make them loyal ones, too. They can excel at jobs that require precision and repetition, such as updating databases, stocking shelves, organising libraries or tinkering with broken cars. Firms that set out to recruit autistic workers, such as Walgreen’s, a big pharmacy chain, find them just as productive as their peers. + +Plenty more companies could benefit from hiring autistic people. Agencies that specialise in recruiting them stress that even if they interview badly (not making eye contact, taking questions too literally), they may still be good workers. For autistic candidates, employers should consider replacing interviews with tests of relevant skills—filing tests for filing jobs, coding tests for coding jobs, and so on. Once an autistic person is hired, small adjustments help employers to get the best out of him: for example, by providing a calm workspace and clear instructions, expressed textually or visually rather than verbally. (Teaching managers to give clear instructions is a good idea for other reasons, too.) + +The final element of an ambitious autism agenda should be greater investment in research. Medical understanding of the condition has improved since 1949, when the psychiatrist who first identified autism blamed cold, unloving mothers for making their children withdraw into themselves. Scientists today are sure that genes play a role, as do environmental factors. Still, many questions remain unanswered, both about the condition’s origin and its progression. The amount of public money spent studying autism is shockingly modest. Britain’s government spends a trivial £4m ($5.6m) a year. America shells out around $200m a year—about what it costs to look after 100 severely autistic people for a lifetime. Such sums are dwarfed by the opportunity cost of having so many potentially productive people dependent on others. Beautiful or otherwise, an autistic mind is a terrible thing to waste. + + + + + +Business in Africa + +Making Africa work + +The continent’s future depends on people, not commodities + +Apr 16th 2016 | From the print edition + + + +“IS ANYONE here actually hoping to make any money, or are you all just trying to minimise your losses?” The question, asked at a dinner in London for investors who specialise in Africa, showed how the mood has changed in the past year. The financiers around the table—mostly holders of African bonds—all said they were simply trying not to lose money. + +Only a few years ago people were queuing up to invest in Africa. As recently as 2012 Zambia paid less than Spain to borrow dollars. Private-equity funds dedicated to Africa raised record sums to invest in shopping malls and firms making everything from nappies to fruit juice. Businessfolk salivated at the prospect of selling to the fast-growing African middle class, which by one measure numbered 350m people. Miners sank billions into African soil to feed China’s appetite for minerals. + +Now investors are glum. In the short run, they are right to worry. In the long run, as our special report on African business shows this week (see article), the potential rewards from a market of 1.2 billion people are too juicy to ignore, despite the risks. + +From oil in the gears to sand in the wheels + +For decades, sentiment about Africa has followed commodity prices, rising and falling like a bungee-jumper at Victoria Falls. The recent plunge has caused a 16% drop in sub-Saharan Africa’s terms of trade (the ratio of the price of its exports to that of its imports). Growth across the region will slow to about 3% this year, predicts the World Bank, down from 7-8% a decade ago. That is barely ahead of population growth of 2.7%. Nigeria and Angola, two big oil exporters, will probably need bail-outs from the IMF within a year. + +Yet Afro-pessimists should remember two things about commodity busts. They don’t last for ever. And they don’t hurt everyone: 17 African countries with a quarter of the region’s population will show a net benefit from the current one, thanks to cheaper energy. More important, by focusing on the minerals markets it is easy to miss some big trends that are happening above ground—and these are mostly positive. + +The first is that Africa is far more peaceful than it was even a decade ago. The wars that ripped apart the Democratic Republic of Congo and sucked in its neighbours, causing millions of deaths, have largely been quelled. A few states, such as Somalia, South Sudan and the Central African Republic, are in chaos. But overall the risk of dying violently in Africa has tumbled. The latest ranking of the world’s most violent countries by the Geneva Declaration includes just two African states (tiny Lesotho and Swaziland) among its top ten. + +Africa is also far more democratic than it was. In the 1960s, 1970s and 1980s, only one sub-Saharan government was peacefully voted out of office. Now nearly all face regular elections, which are harder to rig thanks to social media. Voters have real choices—one reason why policies have improved. + +Old-style governments favoured nationalisation, printing money and (in some cases) rounding peasants up at gunpoint and forcing them onto collective farms. Small wonder Africa grew poorer between 1980 and 2000. Now inflation has largely been tamed, most central banks are islands of excellence and many ministers boast of cutting red tape. Five of the ten fastest reformers in the World Bank’s latest report on the ease of doing business are African. Better government has led to better results. The proportion of Africans living in absolute poverty has fallen from 58% to 41% since 2000. In that time primary-school enrolment has risen from 60% to 80%. Annual malaria deaths have fallen by more than 60%. + +Pessimists fret that much of this progress will reverse now that Africa faces economic headwinds. There are some worrying signs. Leaders once hailed as democrats are amending constitutions to escape term limits. In Congo, Joseph Kabila’s efforts to cling to power risk restarting a civil war, as the president of neighbouring Burundi already has. The continent’s two biggest economies are making needless and costly policy errors. Nigeria is trying to prop up its overvalued currency by, in effect, banning imports. Instead it is driving up inflation. South Africa, meanwhile, has prompted capital flight and brought economic growth to a halt by keeping in power a president who was found to have breached the constitution and on whose watch corruption has flourished. + +But massive missteps like these are now the exception rather than the rule. Most countries in Africa are following sound economic policies, controlling government deficits and keeping inflation in check. Dig beneath the headlines, and even in countries that are making big errors there is momentum for reform: in South Africa once-taboo policies such as privatisation are back on the table, and in Nigeria the government is clamping down on corruption and trimming a bloated civil service. Ethiopia is sucking in foreign investment, and smaller economies such as Ivory Coast and Rwanda are growing rapidly after making it easier to do business. + +Minds, not mines + +The continent’s future is in the balance. Whether it bounces back from this commodity slump or slips back into stagnation, war and autocracy will depend on whether enough of its leaders keep moving forward. Two goals stand out. The first is to recognise the new reality. Given the decline in its terms of trade, Africa’s buying power has gone down. Currencies must fall and governments adjust. Those that relied on mineral royalties must broaden their revenue bases: taxes are just 10-15% of GDP in most African countries. + +Second, African governments need to keep up the hard slog of improving the basics. Bad roads, grasping officials and tariff barriers still hobble trade between African countries, which is only 11% of total African exports and imports. Improving that means investing in infrastructure, fighting corruption and freer trade. + +Africa’s past has long been defined by commodities, but its future rests on the productivity of its people. By 2050 the UN predicts that there will be 2.5 billion Africans—a quarter of the world’s population. Given good governance, they will prosper. The alternative is too dire to imagine. + + + + + +Tax transparency + +Two rights, wrong policy + +A push to publish people’s tax returns pits transparency against privacy. Which should win? + +Apr 16th 2016 | From the print edition + + + +THE “Panama papers”, a vast data leak on the use of offshore tax havens by the rich and powerful, have already claimed the scalp of Iceland’s prime minister. Now they are seriously embarrassing Britain’s leader. David Cameron will not—and should not—lose his job over revelations that his family has made use of offshore tax arrangements. But the Panama papers have led to clamorous demands that politicians should be required to make their tax returns public. Mr Cameron revealed six years of tax data on April 10th (see article), the first time a British prime minister has done such a thing. + +Questions about how much information should be made available on people’s tax affairs stretch beyond Britain. In America, where presidential candidates are used to public scrutiny of their returns, Donald Trump has been batting away requests that he release his tax records. The debate also extends beyond politicians: in Norway, Sweden and Finland, everyone’s tax returns are available online. Working out where the line should be drawn on requiring the publication of individuals’ returns is not easy, because it brings into conflict two basic principles: transparency and privacy. + +Arguments for Scandinavian-style radical transparency fall into two categories. The first is that it will reduce bad behaviour. People who know that their details can be scrutinised by friends and associates will report their income more meticulously, and hesitate before using convoluted schemes to minimise the taxes they pay. One study found that business owners declared 3% more income when Norway made its returns searchable online in 2001 (see article). The second is that more information will mean better choices: by individuals as they decide which jobs to pursue or wages to push for, and by policymakers as they examine issues such as equal pay. + +The opposing camp musters several responses. Bad behaviour simply changes its form, rather than being eliminated: even those nice Scandinavians are fond of using foundation-owned corporate structures to reduce tax bills, for example. And transparency is as likely to encourage nosiness as better policy choices: in full-frontal Norway, many complain that the exercise does little more than furnish “tax porn” for the idly curious. A trove of aggregate data on income distribution and gender pay gaps is publicly available in many countries. + +In defence of privacy + +The case for privacy is not purely utilitarian: it is important in its own right. To justify putting everyone’s tax information in the public domain, the case must be made that it is the best way to achieve a greater good. That case is not compelling enough. A simpler code and more resources for the tax authorities are better ways to reduce tax-dodging than nosy neighbours and social shaming. + +What of a narrower disclosure requirement, for politicians and others in positions of authority? People in public office have less entitlement to privacy, the argument goes. Those who make the laws should show that they are not subject to conflicts of interest. If today’s systems for preventing conflicts are not working (Britain’s register of MPs’ interests has clear gaps), the remedy is to strengthen them rather than to throw tax returns into the breach. When it is only public figures who see their tax affairs spread out for the delectation of the multitudes, many people with useful skills will refuse to enter the public arena. Some 68% of British respondents told YouGov pollsters this month that they think all senior MPs should publish their tax returns; a growing number will no doubt do just that. But it should be a choice, not an obligation. The case that transparency should trump privacy is not convincing. + + + + + +The French left + +Liberty, equality, seniority + +French politics usually favours grey hair and fusty ideas. Emmanuel Macron provides fresh thinking + +Apr 16th 2016 | From the print edition + + + +CANADA boasts 44-year-old Justin Trudeau; Italy has Matteo Renzi; even America’s Barack Obama became president in his 40s, promising change. When a dynamic 38-year-old launches a new political movement in France, however, he is dismissed as an upstart. This, at least, is the reaction of many party barons to the launch last week by Emmanuel Macron, the economy minister, of “En Marche!” (On the Move!), a cross-party movement designed to “unblock” France. They are right to judge him an untested outsider—and will try to keep him one. But Mr Macron has captured the broader French imagination, and his ideas deserve a hearing. + +In many respects, Mr Macron’s effort to reboot France by creating a consensus for change that reaches from the centre-left to centre-right looks doomed. He has never been elected, and is not a member of President François Hollande’s Socialist Party. He thus has no party base, no political machine and no grassroots network. Much of the French left considers his past as an investment banker unforgivable. He is (probably) too loyal to run against Mr Hollande, if the unpopular president defies reason and seeks re-election next year. Were Mr Hollande instead to retire quietly, Mr Macron would face a crowd of other presidential hopefuls, including a fellow moderniser, the prime minister, Manuel Valls. + +Yet there is a yearning in France, as elsewhere, for a different sort of politics. The left-right divide is increasingly seen as the source of obstructive petty politicking rather than a reflection of distinct ideological identity. Outdoor sit-in movements, born in Spain and now spreading in France, show exasperation with tired party machines. The march of populist nationalism from the fringes of respectability to the centre of voting intentions demands new thinking by mainstream parties about how it can best be disarmed. The right response to all this in France surely cannot be the prospect in 2017 of the same line-up as in 2012: Mr Hollande on the left, Nicolas Sarkozy on the centre-right and Marine Le Pen on the nationalist right. + +Politics 2.0 + +Mr Macron’s high poll ratings suggest that he appeals to the politically disillusioned. Two of his efforts merit particular attention. One is the desire to reach across the left-right divide. This is partly an attempt to overcome the resistance to change entrenched by a polarised system. But it also hints at a possible future shift. Europe’s globally minded parties of left and right often have more in common, on matters of trade and immigration, for instance, than either do with the protectionist, identity politics of the nationalist right. For now, tribal instincts, backed by institutional machinery, still prop up the old split. But France has already learned, in regional elections, that the left and right cannot always fight each other, as well as Ms Le Pen. + +His other effort is about how to adapt progressive thinking for the 21st-century economy. Unlike many others on the French left, Mr Macron argues that digital disruption can be a progressive force if it opens up opportunities for, say, the 25% of young French people who are unemployed. But it also demands a broader rethink about how systems of welfare and job protection, forged in an era of jobs-for-life, can adapt to Uber-isation. What do rules about working time mean, for example, when salaried employment is no longer the norm? + +More than 40 years ago Michel Crozier, a French sociologist, published “The Blocked Society”, deploring his country’s difficulties in adapting to a changing world. It is far from clear that Mr Macron will manage to build his movement into a force that can overcome such blockages. Maybe all he can hope for is to put out uncomfortable ideas, and nudge the debate forward. European social democracy is not flush with fresh thinkers right now. France dismisses its own at its peril. + + + + + +Solar energy + +The new sunbathers + +To see how bright the future of solar energy is, look to the developing world + +Apr 16th 2016 | From the print edition + + + +THE sun is the world’s battery pack. Photosynthesis captured the energy that is burned in fossil fuels. The sun drives the wind and ocean currents. And in an hour and a quarter the amount of sunlight that threads through the clouds to the Earth’s surface could power all the world’s electricity, vehicles, boilers, furnaces and cooking stoves for a year. + +Yet solar power produces less than 1% of the world’s commercial energy. For a long time it was dismissed as a luxury only the rich could afford; it spoke volumes that Germany, a place where the sun shines for less than five hours on an average day, used to lead the world in installed solar capacity. Now, however, solar is coming of age (see article). + +Solar power garnered $161 billion in new investment in 2015, more than natural gas and coal combined. A trend that began in northern Europe, where electricity demand is stagnant and clouds proliferate, is taking root in countries where power needs are growing fast and the sun shines brighter. For the first time last year, developing countries attracted more investment in renewable energy than rich ones. Poorer countries, from China to Chile, are increasingly getting their electricity from giant solar parks in arid places linked to their national grids. This year America hopes to triple the 3 gigawatts (GW) of solar capacity it added in 2015; China, the new world leader, and India each plan to add about 100GW in the next four and six years respectively. + +Lower costs help explain this extraordinary expansion. The price of solar panels, which are produced almost exclusively in China, has fallen by 80% in the past five years. A new business model is proving just as beneficial. Grid providers are offering long-term contracts to private firms to produce large amounts of solar energy, which in turn helps those firms secure cheap finance and cut prices. A recent tender in Mexico will generate electricity at a record low cost of $40 a megawatt per hour—cheaper than natural gas or coal. + +That is good news for almost everyone (oil firms may beg to differ). The industry is expanding in hotter climes mostly without lavish subsidies; China is an exception, but it plans to cut its feed-in tariffs in June. The sun provides power when it is needed most, during daylight hours when air-conditioning systems are running at full blast. And by reducing the need to import carbon-burning fossil fuels, solar power helps the planet as well as the balance of payments in such countries. + +Flying closer to the sun + +When industries sizzle like this, some caution is usually warranted. Bids to provide power may prove to be too ambitious. Two stricken renewable-energy providers, America’s SunEdison and Spain’s Abengoa, provide salutary lessons on the dangers of financial engineering and taking on too much debt in order to expand quickly. + +Bottlenecks in energy infrastructure are another problem. Developing countries will need to invest more in building transmission lines to connect the solar power being generated in far-flung deserts with its users. Makers of solar panels should focus not just on slashing their cost but on improving the technology so that more of the sun’s energy is converted into electrical power. The intermittency of the sun will remain an issue. But if storage costs continue to decline, the possibility of combining batteries on land with energy from the giant battery pack in the sky could be unbeatable. + + + + + +Letters + + + + +Business in America, regulation, US election, South China sea, the EU, Shakespeare, the semicolon: Letters to the editor + + + + + +Business in America, regulation, US election, South China sea, the EU, Shakespeare, the semicolon + +Letters to the editor + +Apr 16th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +For what does it profit a man? + +You pointed out that profits are too concentrated in America, which does not benefit consumers (“Too much of a good thing”, March 26th). You mentioned the airline industry. Around 85% of American passengers in 2013 travelled on American, Delta, Southwest and United. The predictable outcome is higher fares, inferior service and restricted routes. Paradoxically, although it was the first to deregulate airlines, the American government maintains a massive entry barrier to competition through the air cabotage law, which prohibits transport between points in the United States in a foreign civil aircraft. + +Repealing this outdated legislation, which the European Union did in 1997, would inject foreign competition into the domestic market. Like Europe, internal competition from international carriers would create new jobs, cut fares, increase flight options and open up new routes. The added bonus of lower transport costs for all manner of products could boost economic growth and increase the global competitiveness of the United States. + +FRANCOIS MELESE + +Professor of economics + +Naval Postgraduate School + +Monterey, California + +Regulation and government bail-outs also help explain entrenched profits. A big company will have a compliance department that can finagle the federal code. And the bail-outs of the car and banking industries were direct subsidies to those established players. More than anything, an aspiring rent-seeker seeks the warm embrace of federal, state and local regulators, whose protection obstructs the tiresome chore of actually competing for business. + +SHIRAZ ALLIDINA + +Tiburon, California + +Not enough attention was given to the power of buyers in your briefing. New, innovative, smaller regional suppliers run into many obstacles put in their way by national retailers with great bargaining power. Most big companies have whittled down their base of suppliers, as a smaller supplier-base costs less to administer in terms of logistics, store maintenance, ordering and compiling data. Furthermore, a small supplier may have cost-effective new products to offer, but will have problems navigating the waters of a big national business that has the heft to provide various financial incentives such as promotions and advertising, support that is only provided to their entrenched partners. + +DOUGLAS CHIPMAN + +President + +Charles Chipman & Sons + +Easton, Pennsylvania + + + + + +No need for regulation + +* It was surprising to read in The Economist the suggestion that “regulation is needed” should the current set of incentives affecting the performance of private universities in Europe fail (“Class apart”, March 19th). An economist would more probably argue that the correct solution is to alter the incentive structure and align it to the desired objective. + + + +If students “want courses that offer a clear progression to a career” then universities should be paid accordingly, and in proportion to their graduates’ earnings rather than with a fixed fee regardless of whether or not their charges secure graduate level employment. In England graduates already pay for their studies in proportion to earnings so they would see little change. + +But by directing the proceeds of the loan repayments to the university rather than government its incentives would be aligned with the career interests of its students and regulation would be wholly unnecessary. + + + +PETER AINSWORTH + +Managing director + +EM Applications + +London + + + + + +The pledge of allegiance + + + +Lexington notes that given the available choices in the party’s presidential nomination race, “these are ghastly times for thoughtful Republicans” (April 2nd). I would hope that I am one of those thoughtful Republicans, but even if John Kasich cannot pull off an unlikely win, we still have one rational choice left: Hillary Clinton. Our loyalty should be to country first, then party. + +JEFF BODENSTAB + +Boston + + + + + +Going to Scarborough is fair + +“Sunnylands and cloudy waters” (February 20th) fails to reflect basic facts about the South China Sea. As the oldest country in the region, China’s sovereignty over the South China Sea islands has solid historical and legal basis. Ample historical documents and literature found all over the world show that China was the first country to discover, name, develop and exercise continuous and effective jurisdiction in this area. + +China has always exercised maximum restraint in disputes over maritime territory, seeking peaceful resolution through negotiation and consultation. Instead of stopping encroachment on China’s sovereignty, the Philippines insisted on initiating and pushing forward an international arbitration on the South China Sea thus violating international law, including the UN Convention on the Law of the Sea (UNCLOS) and its agreement with China that the two sides shall settle their disputes through negotiation and consultation, an agreement confirmed by the Declaration on the Conduct of Parties in the South China Sea. + +The essence of the Philippines’ claim relates to the sovereignty of some of the maritime features of the Nansha (Spratly) islands, which is beyond the scope of UNCLOS, and maritime delimitation, which is excluded from arbitration through a declaration of the Chinese side in 2006 pursuant to Article 298 of UNCLOS. The Philippines have failed to observe the fundamental international principle that agreements must be kept and has undermined the integrity and authority of UNCLOS. It is a downright political provocation disguised as a legal process. + +China is the last of the countries in the South China Sea to engage in construction on its islands and reefs. These construction efforts will benefit and reinforce freedom and safety of navigation in the South China Sea. Ironically, in the name of protecting freedom of navigation, American naval ships and military aircraft have been making frequent visits to areas close to or even inside the maritime and air space of some Chinese territories in the Nansha islands. That not only threatens China’s sovereignty and security but also gravely imperils peace and security in the South China Sea. + +China pursues peaceful development and firmly safeguards peace and stability in the South China Sea and is ready to work with the countries in the region to safeguard peace and stability. Peace, friendship and co-operation are what China wants for the South China Sea. + +ZENG RONG + +Spokesperson of the Chinese Embassy in the United Kingdom + +London + + + + + +Switzerland and the EU + +* You were right to point to the complexity of bilateral treaties between a post-Brexit Britain and the European Union (“Unfavourable trade winds”, March 26th). The Swiss experience confirms the costs and conditions of such a relationship. Currently some 100 bilateral agreements between Switzerland and the EU are in effect, completed during four decades of tough negotiations beginning with a free-trade agreement in 1972. A package of seven agreements is inextricably linked to the free movement of people. + + + +This package includes crucial issues such as the waiver of technical barriers to trade and the mutual recognition of standards, as well as access to the European framework programme for research and innovation, “Horizon 2020”. In recent years, annual migration from the EU to Switzerland amounted to about 1.3% of its workforce; the EU accepts no limitation despite lengthy discussions. As a precondition to any further progress, the EU insists on a general agreement, superior to all bilateral treaties. This would bring about the automatic amendment of Swiss law in line with the development of EU law covering existing bilateral agreements together with the acceptance of the European Court of Justice to adjudicate disputes. + + + +Switzerland rejects these requirements insisting on sovereignty. These and other controversial aspects are set to challenge the relationship between Switzerland and the EU for the foreseeable future. + + + +BEAT HOTZ-HART + +Bolligen, Switzerland + + + + + +Lend me your ears + +The review of “Shakespeare in Swahililand” (“All the world was his stage”, March 19th) did not mention that Julius Nyerere, the first president of Tanzania, who took office in 1964, translated “Julius Caesar” into Swahili, with the title “Julius Kaisari”. How many other national leaders have managed such a feat? + +DAVID BROKENSHA + +Fish Hoek, South Africa + + + + + +Punctuation rules + +A reader called for semicolons to be thrown “onto the scrap heap of history” (Letters, March 26th). I disagree. A good guide is Lewis Thomas’s “Notes on Punctuation”, which says: + +The semicolon tells you that there is still some question about the preceding full sentence; something needs to be added; it reminds you sometimes of the Greek usage. It is almost always a greater pleasure to come across a semicolon than a period. The period tells you that that is that; if you didn’t get all the meaning you wanted or expected, anyway you got all the writer intended to parcel out and now you have to move along. But with a semicolon there you get a pleasant little feeling of expectancy; there is more to come; to read on; it will get clearer. + +MARK LEE + +Montreal + +* Letters appear online only + + + + + +Briefing + + + + +The rise of autism: Spectrum shift + + + + + +The rise of autism + +Spectrum shift + +Children in the rich world are far more likely to be diagnosed with autism than in the past. Why is this and what can be done to help them lead fulfilling lives? + +Apr 16th 2016 | From the print edition + + + +ALONE and in silence, Sören Schindler sits in a white-walled conference room in Munich for six hours a day. He is writing a program that will run an online service for HypoVereinsbank, one of Germany’s largest financial institutions. His workspace suits him better than his previous one: an open-plan office where he felt constantly assaulted by the din of phones, clacking keyboards and chatty colleagues. “Working in such a loud environment exhausted me,” he says. Mr Schindler has Asperger syndrome, a form of autism. + +Mr Schindler’s condition appears to have become more common over the past half-century. Autism was first identified in 1949 but not studied systematically for decades. An early study in 1970 found that one in 14,000 children in America was autistic. In 2000 America’s Centres for Disease Control and Prevention began collecting data regularly. Since then the share of eight-year-olds diagnosed with some form of autism has more than doubled to one in 68 or 15 in every 1,000 (see chart). A recent study in South Korea is the world’s first to be based on an entire population of school-age children rather than a sample. Alarmingly, it finds that one child in 38 between the ages of seven and 12 has some degree of autism. + + + +Autism is a complex brain condition, encompassing a broad range of symptoms. These can include discomfort around other people, hypersensitivity to sounds, touch, tastes, smells and light, and obsessive interests. At least a quarter of children with autism do not speak, though some studies put the figure higher. At the other end of the scale are people of average or high intelligence who can live relatively normal lives. Dan Aykroyd, a Canadian comedian, is a notable example. + +Autism affects different people in different ways. Some autistics score above average on intelligence tests but struggle to communicate verbally and make compulsively repetitive movements, such as rocking back and forth or flapping their arms. Others have a healthy vocabulary but a low IQ and poor motor control, which can make writing by hand or using a fork difficult. The autism of a particularly high-functioning person might be almost imperceptible, manifesting itself only subtly in an obsessive interest with maps, say, or the merits of different aeroplanes. + +The causes of autism are not well understood. Research on identical twins suggests that genes play a big, probably dominant, role. But some environmental factors appear to matter, too, such as complications at birth or prenatal exposure to viruses or air pollution. + +Researchers believe that autism begins developing early in life, perhaps in the womb. Although parents sometimes notice their babies behaving oddly before the age of one, symptoms do not always appear until later. Males appear to be more susceptible. In America, for example, autism is diagnosed almost five times as often in boys as in girls. There is no cure, although sometimes autistic children become adults for whom the label seems inappropriate because they grow out of it or improve with treatment. + +One reason for the apparent rise in autism across the rich world is growing awareness, says Simon Baron-Cohen of Cambridge University. Some cases that used to be diagnosed as an “intellectual disability” or (in the bad old days) as “mental retardation” are now being recognised as autism, says Jennifer Stapel-Wax of Emory University’s Marcus Autism Centre. The proportion of people affected by autism appears much lower in poor countries. That is not necessarily because it is less common, but because of shortcomings in diagnosis and data collection, says Andy Shih of Autism Speaks, a charity. + +Making a different diagnosis + +Another reason is that doctors have changed the way they diagnose autism. The “spectrum” of autistic conditions has expanded to include Asperger syndrome, a milder social disorder, and some other similar conditions. As with autism, those with Asperger’s often struggle to connect with others, but are usually of average or above average intelligence and tend not to have difficulty talking. + +There is no objective test for autism; a diagnosis is made by observing behaviour. Does a baby fail to make eye contact or respond when called by name? Does he play with toys in an oddly repetitive way—running the same car back and forth on the carpet thousands of times or lining up plastic dinosaurs in perfect rows? Has he begun speaking at the appropriate age? + +By asking such questions, doctors can spot autism with some reliability by the age of two. Even so, the average age of diagnosis in many rich countries is three-and-a-half. Screening is seldom universal. Long waits between a parent first expressing worry and final diagnosis are common. Fewer than a fifth of the children in America who are eventually diagnosed with autism are diagnosed before they turn two. + +The consequence, says Dr Stapel-Wax, is that autism has too much time to advance. The human brain is at its most malleable in the first two years of life. Infants typically learn voraciously during this time. They watch and listen as people around them talk, laugh and eat. They play with others. By contrast autistic babies tend to fixate on inanimate objects, limiting how much they can learn from their environments. Autism is a “social disability that develops so quickly it can become an intellectual disability”, says Dr Stapel-Wax. + +Autism can be treated, particularly if it is caught early. Intensive coaching from a young age can help alleviate the symptoms. Using applied behaviour analysis (ABA), therapists work with children one-on-one, sometimes for 40 hours a week. They evaluate a child’s life skills and reward signs of progress. A child who stops spinning or rocking may earn praise. One who learns how to greet people may be rewarded with a smile. + +A study in Washington state in 2015 was encouraging. It found that children treated for two years, starting between the ages of 18 and 30 months, using the “early-start Denver model”, which combines building relationships through play and ABA, had less intense symptoms by the age of six. What works for one person, alas, may not for another. Nonetheless, early intervention is clearly cost-effective. A Swedish study found that the cost of lifelong care for someone with autism could be cut by two-thirds with early diagnosis and treatment. + +School of hard knocks + +Even if they are spotted and treated early, autistic children often have a wretched time at school. Mr Schindler says that as a schoolboy he avoided his fellow students and never engaged in classroom discussion unless explicitly required to do so. A survey by the Interactive Autism Network, an American research group, found that autistic children are three times as likely to be bullied as their non-autistic siblings. Many drop out. In France, for example, 87% attend primary school, but only 11% progress on to lower secondary school and just 1% to upper secondary school. + +In several countries, including America and Britain, autistic pupils are mostly educated in mainstream schools but offered extra help from therapists and teachers trained to deal with them. Education authorities like this approach because it is cheaper than setting up specialist schools. Parents often prefer their children to be taught alongside non-autistic children. But integrating the two groups can be hard. In a survey of the NASUWT, a British teachers’ union, 60% of members said they were not adequately prepared to teach children with autism. This creates frustration and sorrow. Three-quarters of parents of autistic kids in Britain complained that it was not easy to get the support their child needed. A similar number said their child’s social skills, self-esteem and mental health had suffered as a result. + +Teaching autistic children well can be expensive. Netley primary school in London has an autism programme for children aged 3-11 who can weave in and out of mainstream classes. It receives a grant of £22,500 ($31,800) per pupil per year from the government, far more than is allotted to most other schools in England. There are 16 staff for 24 pupils, compared with a national average of one for every 17. + +Teachers often work with the children individually. In the room for kids between eight and 11 years old, a pupil and teacher do sums on a whiteboard. Next door, younger ones sing a song about the alphabet. “For two individualised 15-minute sessions a day students direct activities and a teacher will join in,” says Gianna Colizza, who runs the programme. “If a child wants to flip a toy car over on its back and spin its wheels, instead of saying ‘That’s not how you play with a car’, we’ll play along. It can be exhausting for them to operate in our world all day, so twice a day we go into theirs.” In the “sensory room”, an oasis of beanbags and lava lamps where anxious students can recharge, a boy gets a foot massage from a teacher while calming music wafts from surround-sound speakers. + +School can be tough for autistic people, but many have a worse time once they leave it. A study by the A.J. Drexel Autism Institute in Philadelphia found that only 19% of American autistic people in their early 20s lived independently, away from their parents. Wherever they live many are isolated: one in four said that they had not seen friends or received invitations to social events in the past year. Some autistic people prefer their own company, but many are unhappy. Adults with Asperger’s are ten times more likely to mull suicide than the general population, a British study found. + +Hard at work + +To live independently, autistic people need jobs but the prospects for finding work are bleak. Academic studies on global employment rates for adults with autism do not exist, but the UN estimates that 80% do not work. A survey by Britain’s National Autistic Society, a charity, suggests that only 12% of higher-functioning autistic adults work full time. For those with more challenging forms of autism, only 2% have jobs. + +Job training, life-skills coaching and psychotherapy could help. An American study found that 87% of autistic youngsters who were given assistance to find a job, got one. Only 6% who did not receive support were successful. But in most countries, services disappear the moment autistic people finish full-time education. Robert Schmus, a 27-year-old American social worker with Asperger’s, describes leaving school as “going off the cliff”. He no longer received the social coaching that he used to have along with maths and English classes. + + + +Help that should be available often is not. America’s Individuals with Disabilities Education Act is supposed to guarantee services such as vocational training. Gary Mayerson, a lawyer specialising in issues relating to autism, is suing the New York city Department of Education for $500m on behalf of thousands of special-needs students who claim they did not receive assistance they were entitled to. + +Judging what proportion of autistic people is actually capable of working is tricky. About half are of average or above average intelligence, but that does not necessarily mean they will all be employable. An autistic person might score well on an IQ test but suffer from such debilitating anxiety that he cannot stray far from home. Most autistic people want to work. In a survey by the National Autistic Society, 79% of autistic adults on out-of-work benefits said they would like to find a job. Higher-functioning autistic adults have an easier time getting and keeping a job than those more severely affected, but both groups find job-seeking tricky. + +The first big hurdle is the interview. Many autistic people struggle with social conventions, such as making eye contact when speaking. Laura Williams, a British cat-rescue worker with Asperger’s, recalls that in past interviews she found it hard to know when to shake hands and what to say when greeting the interviewer. When meeting new people she sometimes creates scripts to ease her nerves, working out in advance when to say things like “hello” and “thank you”. + +Autistic people often speak bluntly. Asked what he thought of team meetings, Mr Schindler replied: “They don’t work. Before digging into the problem at hand people waste time talking about their weekends. Great, but I don’t care.” Many non-autistic people would wholeheartedly agree, but few would say so openly in a job interview. + +Speaking their minds + +Non-autistic people routinely exaggerate their abilities during interviews. Many autistic people find this hard. Kurt Schöffer of Auticon, a German IT consultancy that hires people on the autism spectrum (including Mr Schindler), recently spoke with a candidate whom he knew to be a brilliant Java coder. When asked if he was an expert programmer, the candidate said no. Only when pressed did he explain that he did not consider himself an expert because he had not fully mastered all the other computer languages. + +An autistic person who makes it through the interview faces other difficulties once in work. Autistic people are frequently hypersensitive to the everyday annoyances of office life: ringing phones and bright fluorescent lights may distress or drain them. They might get tripped up by less-than-specific instructions. Socialising can be thorny, too. + +Some find their own ways of coping. Ms Williams recalls the problems of dealing with customers at a grocery where she used to work. “I was very neat and precise—I was good at stocking shelves and things. But I had a hard time when it came to talking to people, so I would just watch my colleague and try to copy her.” After her diagnosis, she also read books about Asperger’s and began asking for more social advice. “I learned that if you smile and say hello, that’s an outward sign that you want to be friends.” Before, she would avert her gaze, stay silent and agonise over why people did not like her. + +Despite these drawbacks, employers who hire autistic staff are usually glad they did. Many have strengths that make them well suited to some jobs. They are unusually good at focusing, for example. When asked what he most enjoys about his job, Mr Schindler says: “Solving software-engineering problems.” His favourite hobby? “Solving software-engineering problems.” + +Autistic people often enjoy repetitive tasks that others might find boring, such as updating databases, organising filing systems and fixing computers. Employers also report that autistic workers are reliable and loyal. Their desire for routine means, once they find a job that suits them well, they rarely miss work or quit. + +Autistic people’s brutal honesty can be socially awkward, but it can also work to an employer’s advantage. One of Auticon’s consultants noticed that a process he was working on could be automated and immediately told the client. (Instead of staying mum, as an ordinary person might to preserve his job.) The project finished ahead of time and under budget. + +Finding employment is starting to get easier for some people with the condition. A growing number of charities and businesses find work for autistic people of high intelligence. Specialisterne, a Danish firm operating in several European countries, offers training and help with job searches. Kaien in Japan, AQA in Israel and Passwerk in Belgium all offer autistic consultants to clients in need of software testing. Their employees are provided with job coaches, who help negotiate pay and brief potential clients on what to expect. Siemens, which hired two people from Auticon to develop and implement software-testing systems, said that they processed on average 50% more tests than other consultants. + +The benefits to firms of hiring autistic people with rare technical skills are obvious. For autistic adults without such abilities it is harder to find work, but given a chance they usually do well. Steve Pemberton of Walgreen’s, an American pharmacy group which makes a point of hiring people with disabilities, says autistic employees at the group’s distribution centres perform at least as well as other workers. + +At Rising Tide Carwash in Parkland, Florida, autistic employees have helped build a bustling business. To work there, candidates—many of whom have never had a job before—must pass tests of their practical skills such as wiping windows and vacuuming interiors. Thomas D’Eri, who founded the business with his father after noticing the dearth of opportunities for his autistic brother, says his workers provide top-notch customer service, work hard and smile even in the oppressive Florida heat. They are grateful for their jobs. Mr D’Eri reckons they stay with him three times longer than non-autistic workers, saving him time and money on recruitment and training. + +There are other unexpected benefits for the businesses that take on autistic employees, says James Emmett, a consultant who advises firms about hiring disabled workers. Because autistic people often think very literally, managers have to give much clearer instructions; and that helps non-autistic staff, too. + +Learning fast + +Fruits of Employment, a programme run by TIAA Global Asset Management, an investment group, recruits autistic employees to tend six farms in California and Washington state. It uses detailed checklists to train workers to tend apple trees and harvest grapes. Heather Davis, the CIO of TIAA, who was inspired by the talents of her autistic son to start the programme, found such prompts helped her non-autistic employees learn quicker, too. + +Firms that hire autistic staff may also reap a reputational benefit. Other people may conclude that they are caring and generous, and be more inclined to work for them or buy their products. Mr D’Eri thinks his firm’s social mission brings publicity and thus business: “You don’t usually talk about car washes at the dinner table unless they return you a dirty car. With Rising Tide, people do.” + +Autistic workers are proving themselves in many fields. Israel’s army uses autistic volunteers to interpret complicated satellite images. L’Oréal, a cosmetics firm, hires autistic adults to pack products and update databases. Harry Specters, a chocolate shop in Cambridge, England, employs autistic adults to cook truffles. The number of schemes to help autistic people find work is growing. Autism Speaks, a charity, recently introduced a jobs database, Spectrum Careers, that allows autistic jobseekers to browse thousands of opportunities across America. + +A recent study in JAMAPaediatrics, a science journal, calculated that the lifetime cost of supporting an American with autism was $1.4m-2.4m. Paul Leigh of the University of California at Davis and Juan Du of Old Dominion University have added up not only the cost of care but also the opportunity costs of autism in America. They include an estimate of the output lost when autistic people are jobless or underemployed, and when their relatives cut back on working hours to look after them. They put the total at $162 billion-367 billion in 2015, the equivalent of 0.9-2% of GDP, on a par with both diabetes and strokes. By 2025 the figure could exceed $1 trillion, they predict. Confronting autism is costly, but failing to do so may cost even more. + + + + + +United States + + + + +Southern Republicans: Going rogue + +Activist mayors: Ted versus the machine + +Encryption and the law: Scrambled regs + +The campaigns: Heard on the trail + +New York’s Republican primary: Bronx cheer + +Medicare: Fat loss needed + +Puerto Rico: News from the colonies + +Lexington: Bad vibrations + + + + + +Southern Republicans + +Going rogue + +Republicans in the southern statehouses are angry—fundamentally, perhaps, about the waning of the values they are fighting for + +Apr 16th 2016 | ATLANTA | From the print edition + + + +THE traditional way to influence the governor of Georgia, insiders say, is to enlist the boss of the power company or a big bank. In the case of the state “religious-liberty” bill passed last month, the lobbyists were more eclectic but equally effective. The bill would have allowed faith-based groups to withhold services, or to hire and fire, on grounds of religious belief; its opponents included Disney, Coca-Cola, Delta Air Lines and the National Football League. Nathan Deal, the Republican governor, vetoed it. For Mr Deal, though, the trial of reconciling alarmed moderates and a legislature controlled by doctrinaire members of his party isn’t over: he must also decide on a measure that would let students carry concealed guns on campus. + +The brief legislative session, laments Vincent Fort, a Democratic state senator, was wastefully devoted to “God, guns and gays”. Nor is Georgia’s the only southern legislature that, this year, has gratified hardliners at the cost of wider outrage. In March North Carolina’s governor, Pat McCrory, signed a law that obliges transgender people to use public lavatories according to their birth sex, notionally to protect other vulnerable patrons; it also mandates a statewide anti-discrimination policy that omits sexuality as a criterion. + +Following a pattern established last year in Indiana, the fallout included litigation and boycotts, including one by Bruce Springsteen. Facebook, Bank of America and the National Basketball Association, among many others, weighed in. “Welcome to North Carolina”, read a protest billboard near the state border; “please set your clock back 100 years”. If the law “protected the life of just one child or one woman from being molested,” insists Dan Forest, the lieutenant-governor, the uproar “was worth it.” Mr Springsteen’s stance, rages Mr Forest, “shows the value he places on the women and children of our state.” The governor is sounding less combative: in a conciliatory gesture on April 12th he expanded the equal-employment policy for state workers to cover sexuality. + +Mississippi’s governor, meanwhile, has signed an even more startling bill, which allows religious organisations both to fire people and refuse services on the basis of belief, and protects devout bakers and disc-jockeys who eschew same-sex weddings; officials may now recuse themselves from licensing or presiding over them. Disapproval of sex outside marriage (as well as of the gay variety) is one of the convictions the law expressly safeguards. Numerous other bills addressing the use of restrooms and matrimonial tastes have surfaced elsewhere. Virginia’s governor vetoed one of them. + +Sexuality is not the only preoccupation. As well as the right to take guns to class, “constitutional carry”—whereby concealed weapons may be carried without a permit—has been exercising legislatures. West Virginia’s Republican-dominated assembly overrode a veto by the Democratic governor to enforce it. In a session that rivalled Georgia’s in its ultraconservatism, West Virginia also enshrined English as the state’s official language (even though its motto is in Latin) and banned some abortion procedures. + +Abortion-related activity, says Elizabeth Nash of the Guttmacher Institute, which monitors it, has been “very intense”, fuelled in part by the furore over Planned Parenthood. Along with Indiana’s ban on terminations motivated by fetal disabilities, Florida withdrew funds from abortion-providers; Kentucky imposed new pre-procedure counselling rules. + +Do not go gently + +On the face of it, much of this seems odd. Judging by the rhetoric of the Republican presidential contest, the country is going to the dogs; in parts of the South, the infrastructure is indeed crumbling. Yet the region’s politicians are concentrating on problems that, to put it mildly, are often less than pressing. Florida passed a law stopping clergy from being dragooned into conducting same-sex marriages, a threat already neutralised by America’s constitution. Predatory men infiltrating women’s toilets, the spectre raised in North Carolina and elsewhere, is a similarly apocryphal fear. Remarkably some southern governors have elevated such concerns above job-creation. Many in Georgia think Mr Deal should have followed suit: predicting that “religious liberty” will haunt next year’s session, too, Josh McKoon, a disappointed state senator, says that while “prosperity is an important value, so is individual freedom”. + +What explains this eccentric turn? It is a reaction, most obviously, to last year’s Supreme Court ruling on gay marriage, of the kind that often follows dramatic social change. Melton McLaurin, a historian at the University of North Carolina at Wilmington, notes that this particular “rearguard action” resembles opposition to racial desegregation in emphasising the supposed endangerment of women and children. But many southern Republicans feel beleaguered by more than one ruling: they see Washington as at once insidiously liberal and hopelessly gridlocked. Religious-liberty bills and the like offer the consolation of decisive action (even if some are destined to be struck down), of a sort that, unlike new roads and bridges, requires no tax dollars. + +And if pressure from above is part of the current southern syndrome, so is insurgency from below. John Dinan of Wake Forest University observes that while stand-offs between the federal and state governments capture more attention, battles between states and municipalities have become as frequent and fierce. The mess in North Carolina originated partly in response to an anti-discrimination ordinance implemented by the council in Charlotte; Tennessee and Arkansas had previously passed laws squashing related city-level initiatives. In February the Alabama legislature nixed a minimum-wage hike introduced in Birmingham (North Carolina’s law also tags on a statewide employment clause). Forgetting, temporarily, their reverence for local self-determination, lots of states have counteracted municipal efforts to control guns; some have moved on to ensuring the unimpeded statewide carrying of knives. + +Tension between urban liberals and their more conservative environs is an old story, given extra piquancy by the migration to some southern cities of sophisticated types from elsewhere in the country. Yet the role of demography in the South’s political convulsions runs deeper. As well as exemplifying the frictions between different levels of government and different strands of Republicanism (business-minded and religious), these flashpoints also illuminate a bigger clash: between the past and the future. + +Americans’ southward migration—for jobs, cheaper living or better weather to retire in—is helping to transform not just individual towns but the South’s overall complexion. Arrivals from overseas are contributing too; many first-generation immigrants can’t vote, but their children will. All this means that the share of southern states’ populations born outside the region is rising. Already, around 30% of Georgians and North Carolinians come from elsewhere (Florida and Virginia are even more diluted). Georgia is set to be a “majority-minority” state by 2025. Even in less cosmopolitan places, the balance is shifting. Mississippi’s whites, for example, will be outnumbered by mid-century. + +Twilight of an empire + +As Florida and Virginia have shown, this evolution unmoors political allegiances. It is concurrent with a generational upheaval in attitudes, most starkly in young Americans’ milder views on sexuality. In this light, the rush of reactionary legislation can be seen as the flailing of a long-dominant group which senses that the states it has ruled, as well as the country, are escaping its grasp. As Richard Cohen of the Southern Poverty Law Centre, an advocacy organisation, sees it, these are “the dying throes of a bygone era”. + +For the time being, this defiance may help southern Republicans, by galvanising some pious voters who might otherwise have stayed at home in November. Equally, though, the revanchism could hurt. The “coat-tail” effect generally works down the ballot, “from the White House to the courthouse”, says Larry Sabato of the University of Virginia; but when related worries—say, the whiff of nastiness—pervade the ticket, the influence can flow both ways. In North Carolina that may damage Mr McCrory, who faces re-election, and the Republican nominee for president. In the long term, if they remain fixated on bathrooms, southern Republicans may, like Agamemnon, expire there. + + + + + +Activist mayors + +Ted versus the machine + +Today, Clarkston; tomorrow, the world? + +Apr 16th 2016 | CLARKSTON, GEORGIA | From the print edition + +An excellent adventure + +AS TO whether he has smoked marijuana, Ted Terry is frank. “I’m a millennial,” he says; “what do you think?” But his reasons for wanting to “deprioritise” possession of small quantities, making it punishable only by token fines, are impersonal and sound. More severe treatment distracts the courts and police, he argues, weighing unfairly on the poor. Unlike most millennials—Mr Terry is 33, a youth his hipsterish beard underscores—he is, as Democratic mayor of Clarkston, outside Atlanta, well-placed to do something about it. + +Mr Terry hopes the measure will come up before the city council in May. He is confident that, unlike outright decriminalisation, varying drug punishments in this way falls within the city’s authority; anyway, he points out, issuing tickets for pot, rather than arresting people, is already widespread. First elected in 2013, he has flexed his municipality’s muscle—and irked Georgia’s conservatives—before. When, last year, the state’s governor, like many others, theatrically announced that it would not be accepting Syrian refugees (a position he was forced to reverse), Mr Terry said they were welcome in Clarkston. He mentors one Syrian family himself. + +Most people seem to fit in. Clarkston has been called “the Ellis Island of the South”; its 13,000 residents, Mr Terry estimates, encompass 60 languages and 40 nationalities. Only 13% are white. At the local coffee shop, staffed by refugees, he bumps into a councillor reputed to be the country’s first elected Eritrean; the waiter is Congolese. Some of these newcomers, arriving from conservative cultures, might be expected to resist the mayor’s liberal impulses. But the older ones, he says, are too busy making a living, while their offspring tend to share their American peers’ tolerance. + +Like liberal mayors in other southern cities, Mr Terry—who endorsed Bernie Sanders for president, and, outside his civic duties, works for the AFL-CIO—is hemmed in by state laws that limit municipal powers. For instance, he would like to raise the minimum wage, but can’t. Yet precisely because “the progressive agenda doesn’t really get a hearing” in the Republican-controlled legislature, he thinks it falls to places like his to be “laboratories of democracy”. He is inspired, he says, by bigger cities like Nashville and Charlotte. He anticipates Clarkston emulating the anti-discrimination ordinance passed in Charlotte that set off the current rumpus in North Carolina. + + + + + +Encryption and the law + +Scrambled regs + +The cold war between government and computing firms is hotting up + +Apr 16th 2016 | From the print edition + + + +ON APRIL 5th the world’s billion or so users of WhatsApp, a messaging service owned by Facebook, woke to the news that their messages would from now on be protected by “end-to-end encryption”, a mathematical technique for scrambling messages which ensures that only the sender and his intended recipients are able to read them. Computing firms have been shoring up the security of their products ever since Edward Snowden leaked thousands of documents outlining what, to many Silicon Valley libertarians, looked rather ominously like a system of mass electronic surveillance. + +That focus on security has put America’s technology firms on a collision course with its policemen and spies, who worry that encrypted e-mails and messages help criminals and terrorists to evade detection. That spat became public in February, when the FBI tried to persuade a court to compel Apple to hack an iPhone that had belonged to Syed Farook, a terrorist who, along with his wife, killed 14 people in an attack in California in December. The agency backed down after it found a way to hack Farook’s phone without Apple’s help. + +On April 7th the legislative branch tried a different approach, when the draft text of a bill that aims to regulate cryptography appeared online. Co-sponsored by Diane Feinstein and Richard Burr, a pair of senators, the draft bill would require technology firms to provide readable, decrypted versions of electronic messages whenever the authorities asked them to. + +This sounds reasonable enough. Computer-security specialists, though, thought the draft bill appalling. Jonathan Zdziarski, a freelance security researcher, described it as “a hodgepodge of technological ineptitude”; Matthew Green, a cryptographer at Johns Hopkins University, said it was “clueless and unworkable”. + +The bill avoids technical questions of how firms should comply, saying only that they must. In practice, says Kenn White, a security researcher, there are only three ways: to abandon cryptography altogether, to keep hold of “keys”—long, randomly-generated numbers used to scramble and unscramble messages—or intentionally to cripple the cryptography so that the original message can be read after all (what security types call a “back door”). The best analogy is with locks: the bill requires either unlocked doors, a central repository of skeleton keys, or locks deliberately designed to be picked with a paperclip. + +The trouble is that, like locks, cryptography has many more legitimate uses than illegitimate ones (without it, for instance, online shopping would be impossible, because credit-card information would have to traverse the internet unprotected). And there is no way to weaken it so that only the authorities would benefit. “There’s no algorithm to check your moral intentions,” notes Mr White. A central repository of keys would be a magnet for cyber-crooks, who could use them to impersonate and defraud ordinary internet users. And government computers are far from hack-proof: in February, the FBI announced that it had discovered a years-long hack of a series of government computer systems. So would a back door, which is safe only as long as it is secret: announcing that you are building one would only encourage people to look for it (and enough have been discovered by accident to convince researchers that they are fundamentally not secure). “This is not a trade-off between privacy and security,” says Mark Jaycox of the Electronic Frontier Foundation, a lobbying group. “It’s security versus security.” + +The rules would apply only to American products. That would leave the law-abiding relying on crippled cryptography while the truly dangerous made use of more robust software written elsewhere. It would badly damage America’s technology firms, which would be forbidden by law from providing secure software to their customers—who would probably choose to go elsewhere. + +Many security types find the debate frustrating, because it rehashes arguments first made in the 1990s, when online cryptography began to spread. But the bill as it is currently drafted has little chance of becoming law. Senator Feinstein has a reputation for sympathising with the intelligence agencies when it comes to encryption, but other senators have spoken out against her bill. The White House has said that it will not support it. But alongside the FBI’s attempts to compel Apple to co-operate, it marks another escalation in what had, until recently, been mostly a war of words. + + + + + +The campaigns + +Heard on the trail + +Apr 16th 2016 | From the print edition + + + +Freudian slip + +“I appreciate Bill Clinton being my psychoanalyst. It’s always nice.” + +Bernie Sanders responds to an accusation of subconscious sexism by Mr Clinton. CNN + +Backpedal + +“I didn’t mean to attack people in New York. I love New York.” + +Ted Cruz, campaigning in New York, backtracks from his sneering comments about “New York values”. New York Times + +No one can hear you scream + +“I told them, ‘Just hang in there. This is the silly season. It will pass’.” + +Lindsey Graham reassures Middle Eastern leaders about the chance of a Trump presidency. Roll Call + +Wicked games + +“The system, folks, is rigged. It’s a rigged, disgusting dirty system. It’s a dirty system and only a non-politician would say it.” + +Donald Trump find that some states have awkward rules for allocating delegates + +The apprentice + +“Donald’s whole pitch is he’s a great businessman and yet…it appears he can’t run a lemonade stand.” + +Ted Cruz replies to Donald Trump’s complaints about delegate distribution. “The Glenn Beck Programme” + +All in the family + +“They had a long time to register, and they were...unaware of the rules, so they feel very, very guilty, they feel very guilty, but it’s fine, I understand that.” + +Two of Donald Trump’s children did not register to vote in New York’s primary + +Bestest ever + +“We’re gonna have, you know, the most secure and best convention that will be put on. I just got back from Cleveland, the preparation is unbelievable. The city is excited, it’s going to be phenomenal.” + +Republican Party spokesman, Sean Spicer, seems to have absorbed the rhetorical style of the leading candidate. CNN + +Mad money + +Of the more than $132m spent on negative ads by candidates and the groups supporting them, nearly $70m has gone to commercials assailing Mr Trump. + +New York Times analysis of data provided by Kantar Media/CMAG + +White knight? No thanks + +“I simply believe that if you want to be the nominee for our party—to be the president—you should actually run for it. I chose not to do this…End of story.” + +Paul Ryan denies, again, that he will somehow magically save the Republican presidential race + + + + + +New York’s Republican primary + +Bronx cheer + +Seeking votes in America’s poorest, most Democratic district + +Apr 16th 2016 | NEW YORK | From the print edition + + + +WHEN Ted Cruz’s tour bus stopped in the Bronx on April 6th, the man in alligator-skin boots chose to make his stump speech at a Chinese-Dominican restaurant. The next day, a few miles away, John Kasich gobbled spaghetti at an Italian deli. Both eateries sit firmly in New York’s 15th congressional district, the poorest, most Democratic district in the country. + + + +America’s primary agenda: our interactive 2016 election calendar + +Why did the candidates spend time in a place that is home to just 13,000 registered Republicans? Because New York’s Republican primary on April 19th will allocate three delegates to the majority winner in each of the state’s 27 congressional districts. That gives Republicans in the 15th district seven times more clout than the average New York Republican. + +Hispanic Republicans are likely to account for over half the vote in New York’s 15th district according to Aristotle, a data provider. Exit polls reckoned Donald Trump attracted just a quarter of the Hispanic vote in Texas and Florida. That does not bode well for his New York City campaign. For Mr Cruz and Mr Kasich, who trail the front-runner, the 15th district offers low-hanging votes and delegates. In a district where just 5,315 people voted for Mitt Romney in November 2012, never will a Republican vote be heard so loudly. The 7th, 13th and 14th districts also give a small number of Hispanic Republicans disproportionate sway in the primary. + + + +Polling suggests that Mr Trump, whose penthouse on 5th Avenue offers a view of the Bronx, is likely to win just over half of New York’s vote, with Messrs Cruz and Kasich level-pegging at around 20%. Mr Trump looks set to prosper in New York’s hinterland, which is less racially mixed. Speaking at a rally in Rome, 200 miles north of the Bronx, on April 12th, he bemoaned the primary rules, which in some states have given him fewer delegates than his vote-share suggested he deserved. But thanks to a change in New York’s rules last year, he will pick up one delegate in each of the state’s congressional districts where he is runner-up (when the winner does not gain over half of the vote). + +If Mr Trump fails to win New York convincingly, a brokered convention in July will become hard to avoid. “I think I may have to move to the South if New York doesn’t treat me great,” mused the candidate. Many of his fellow New Yorkers are crossing their fingers. + + + + + +Medicare + +Fat loss needed + +A welcome proposal to cut payments for drugs has doctors on the defensive + +Apr 16th 2016 | From the print edition + + + +WHEN a doctor treats a patient enrolled in Medicare—government-funded health insurance for the old—for breast cancer, he may prescribe Paclitaxel, a treatment costing the government $201 and netting the doctor $12 in profit. Or he may prescribe a comparable treatment, Abraxane, costing the government a whacking $16,700 but netting the doctor $1,000. With incentives like these, it is little wonder that, despite America’s system of private health insurance, the government spends more on health than Britain does on its nationalised health service. The Obama administration reckons some liposuction is in order. + +About two-fifths, or $619 billion, of the government’s health spending goes on Medicare. A little over $20 billion of that pays for drugs administered under the so-called “Part B” programme, which covers outpatient visits to doctors and hospitals— for example, to receive the cancer treatments described above. When a doctor prescribes a drug under Part B, they are paid the average market price for it, plus a 6% premium, allowing them to make a profit (they are compensated separately if they administer the drug, too). + +This creates an incentive for doctors to prescribe more expensive drugs, much as a car salesman earning a fixed commission wants to sell the priciest set of wheels. The payments also look generous because some providers—usually those who serve many poor patients—receive mandatory discounts on their drug purchases averaging 34%. In 2013 doctors and hospitals claimed $3.5 billion for prescribing these discounted drugs, of which they pocketed $1.3 billion—a 37% margin. + +The federal government, which would rather pay for better care than for salesmanship, wants change. In March it proposed testing a reduction in the premium from 6% to just 2.5%, plus a flat fee per treatment. In fact, the premium would be lower still, because since 2013 most Medicare payments have been trimmed by 2% as part of the so-called sequester cuts to government spending. In November’s budget deal this discount was extended to 2025. + +Doctors and drug companies hate the idea. Medicare already pays less than private plans. A new study by the Evidence-Driven Drug Pricing Project finds that the average margin on cancer drugs, including Medicare and private sales, is 16% for doctors and a whacking 140% for hospitals. + +It is not clear how much doctors’ profits influence care quality. Some fear lower margins will mean that only hospitals will be able to provide cancer care at the necessary scale, choking off smaller, more innovative providers before they have a chance to develop their businesses, says Prabjhot Singh of the Peterson Centre on Healthcare. However, the 2% cut in Medicare payments in 2013 seems not to have caused too much trouble. + +The uncertainty means pilot programmes are welcome. Much of America’s inflated health-care spending ends up in the pockets of doctors and drug companies. They can be expected to protest as the government tries to end the largesse. It is hard to distinguish justified complaints from disingenuous scaremongering. + +The fuss over the proposed change has parallels with another recent regulation: the so-called “fiduciary rule” which will require investment advisers, who are usually paid on commission, to act in the best interests of their clients rather than peddle the most expensive products. When making the right choice requires extensive training, it is usually better to separate advisers and salesmen. But the procedure can be painful. + + + + + +Puerto Rico + +News from the colonies + +The island’s debt crisis will put its political status under new scrutiny + +Apr 16th 2016 | From the print edition + +The long road ahead + +LAST December Paul Ryan, the Speaker of the House of Representatives, promised that the Republican Congress would pass legislation to tackle Puerto Rico’s fiscal woes no later than March 31st. America’s cash-strapped Caribbean commonwealth needs a lifeline. After a decade of recession and population loss, some of its state-owned enterprises (SOEs) have already missed interest payments. However, they cannot declare bankruptcy, because that privilege is limited to the 50 states. As a result, disgruntled creditors have sued, hoping to force the issuers to produce money they did not have. + +Mr Ryan’s self-imposed deadline has come and gone, and the rescue bill is still stuck. On April 12th the House’s natural-resources committee released a new draft that offers Puerto Rico the essential criteria for a successful restructuring: a “stay” that temporarily suspends litigation while a fiscal plan is developed; the authority to impose terms accepted by a supermajority of creditors on all claimants; and the ability to modify all $72 billion of Puerto Rican debt—including the central government’s general-obligation (GO) bonds, which the island’s constitution guarantees will be paid before all other spending. However, this financial relief would come at a steep political cost: the imposition of an “oversight board”, similar to the one that ran Washington, DC from 1995 to 2001. Board members would be nominated by Congress and would have the authority to reject the Puerto Rican legislature’s budgets, write their own and order spending cuts by fiat. In practice, this would amount to a revocation of the self-government that the island has enjoyed since 1948. + +The bill will face a steep path to becoming law in anything resembling its current form. Creditor groups have been lobbying furiously to prevent Puerto Rico from gaining the power to reduce its debt load without their consent, particularly regarding the supposedly sacrosanct GOs. In the Senate, Charles Grassley and Orrin Hatch, the respective chairs of the judiciary and finance committees, have said they oppose letting the island restructure its obligations. In order to compensate for the loss of votes from Republican legislators who are reluctant to harm bondholders, Mr Ryan and Mitch McConnell, the Senate majority leader, will probably need to secure support from some congressional Democrats, as well as Barack Obama’s signature. And Democrats—particularly with their party’s presidential caucus in Puerto Rico scheduled for June 5th—are likely to quibble with the imperialist overtones of dispatching administrators from Washington to run roughshod over the sovereignty of a poor, Spanish-speaking overseas possession. + +On May 1st Puerto Rico’s Government Development Bank, whose coffers are all but dry, faces a $423m payment. A default would probably turn what so far has been a modest trickle of lawsuits from jilted creditors into a stampede. Two months later the next GO instalment comes due. The island’s legislature did pass a law on April 5th authorising the governor to declare a moratorium on debt service, but such powers would be hard to square with the GOs’ constitutionally protected status. If the courts force Puerto Rico to tell police, teachers, doctors and firefighters to stay at home—which Alejandro García Padilla, the governor, has said he would refuse to do—a debt crisis that has so far been relatively contained and slow-moving would erupt into a cataclysm comparable to Argentina’s in 2001. + +However these fiscal troubles are eventually resolved, the most important legacy of the island’s lapse into insolvency may be a re-evaluation of its political status. For nearly 70 years Puerto Rico, formally a United States commonwealth, has seemed to enjoy the best of both worlds: its residents receive all the benefits of American citizenship, while still being left to manage their own internal affairs. But the recent debate in Washington has reinforced the long-standing argument made by opponents of the status quo: the territory cannot claim meaningful sovereignty if a Congress in which it has no voting representative can take over its government at will. If Puerto Rico were an independent country, it could simply renounce all debt issued under its law; as the 51st American state, its localities and SOEs could throw themselves on the mercy of a federal bankruptcy court. As a commonwealth, its only hope is that a pair of misfiring, polarised political parties 1,500 miles away manage to strike a deal to save it before the lights go out. + + + + + +Lexington + +Bad vibrations + +Meeting Pete Wilson, a successful governor blamed for killing California’s Republican Party + +Apr 16th 2016 | From the print edition + + + +THIS week Lexington had lunch with a bogeyman. In the cool hush of a law firm’s conference room, 45 floors above central Los Angeles, he munched sandwiches with California’s most successful living Republican, Pete Wilson, a three-term mayor of San Diego later elected four times statewide as a senator, then governor. On the same day, the din of the Republican presidential race reached California, ahead of its primary election on June 7th. At a rally in Orange County Senator Ted Cruz of Texas predicted that the state—which usually votes too late to pick presidential candidates—will be decisive this time. That may be right: if the front-runner, Donald Trump, does badly in California he will not have enough delegates to avoid a contested national convention. + +A busy working lawyer at 82, Mr Wilson is following the race closely. As governor from 1991-99 he led his state through a recession, riots and earthquakes to an economic boom. Working with Democrats to fix a budget crisis and a supporter of legal abortion and gay rights, he judged voters shrewdly, helping Republicans to their first majority in the state Assembly in decades. + +Yet bad vibrations still hang about him. Critics, starting with Democrats and advocates for Latinos in California (who are now 38% of the state’s population, equalling whites of European descent), blame Mr Wilson’s tough line on illegal immigration, and above all his support for Proposition 187, a ballot initiative in 1994 that sought to deny state services to unlawful residents, including free schooling for some 300,000 children, and sought to order teachers and doctors to report pupils and patients who might lack legal status. The proposition passed easily, backed by TV spots that showed migrants sprinting across the Mexican border as a narrator intoned, “They Keep Coming”. + +Courts soon blocked most of the proposition’s rules, but critics assert that the political fallout lingers. In 1990 Mr Wilson won almost half the Latino vote. Four years later he got just a quarter of it, and—apart from a blip when Arnold Schwarzenegger became governor in 2003—Californian Latinos have increasingly fled the Republican Party. That ended years of Latino movement towards the Republicans, notably after a 1986 immigration reform by a Californian governor turned president, Ronald Reagan, who breezed that with their family values and work ethic, “Latinos are Republicans, they just don’t know it yet.” In the decade after Proposition 187 over 1m new Latinos registered to vote in California, and most were Democrats. A once-mighty California Republican Party has not won a statewide office since 2006. Latinos did not single-handedly deliver California to the Democrats, but their hostility makes a Republican recovery dauntingly hard. + +Republicans are divided on whether Mr Wilson is to blame. Wooing Latinos during his first presidential campaign, George W. Bush said that he opposed the “spirit” of Proposition 187, seeming to chide Mr Wilson. Against that, many conservatives call it a “myth” that a fierce line on immigration killed Republicans in America’s most-populous state. The debate is of more than academic interest. The demographic transformation of California is being repeated at national level, with white Americans of European descent on course to become a minority around 2044. Today Mr Wilson condemns Mr Trump’s talk of Mexico flooding America with rapists as “boorish and grossly unfair”. But other Republicans express immigration views similar to Mr Wilson’s old policies. Mr Cruz, for one, wants more border fencing and a big increase in Border Patrol agents. Like Mr Wilson, the Texan senator questions the “birthright citizenship” granted to babies born in America, even to mothers with no legal status. Echoing Mr Wilson, Mr Cruz praises migrants who came the right way, summarising his immigration views as “Legal good, illegal bad”. + +It matters, therefore, when Mr Wilson concedes that voter perceptions of his immigration policies “played a significant role” in successive election losses for Californian Republicans. To be sure, he adds many caveats. The Republican who tried to succeed him as governor, Dan Lungren, was hurt by opposing abortion, he argues, losing the women’s vote “by a large margin”. Mr Wilson scolds the press for deliberately omitting the word “illegal” from discussions of illegal immigration, and for deeming “anti-immigrant” anyone demanding a secure border. He is cross that his TV ads in 1994 are called harsh: he calls “They Keep Coming” a “statement of fact”. He accuses Democrats of pushing the “contemptible” lie that Republicans are racists (it is true that when Mr Wilson left office, San Francisco’s black Democratic mayor, Willie Brown, said of him: “He is no racist. His problem was his party”). + +Mr Wilson says that he backed Proposition 187 to prod the federal government to action, and to spur review of a Supreme Court ruling of 1982 that states must offer all children a free education. Had unlawful-resident children lost that right, California would have helped them to “transition” and not expelled them instantly, he insists. Still, after criticising what he calls “demagoguery” aimed at convincing Latinos that Republicans are bigots, he concludes: “Unhappily, it was successful with a great many, and has been successful with young people as well.” + +Wouldn’t it be nice + +Lexington put it to Mr Wilson that a lesson for Republicans is that many voters do not draw his sharp distinction between legal and illegal immigrants. Border-crossing is not like bank-robbery. Sometimes good people come the wrong way, including kids. Surely Republicans need a plan for the country’s roughly 11.3m undocumented residents that sounds both realistic and humane? + +Mr Wilson calls that premature: secure the border before discussing what to do with those here unlawfully, he retorts. That will restore public trust and avoid encouraging new arrivals: if Washington politicians broker an amnesty first, “then the damn border will never be secure”. Lots of Republicans agree with him. History suggests they are taking a risk. + + + + + +The Americas + + + + +Argentina: Old whines + +The FARC’s finances: Unfunny money + +Ecuador’s universities: Academic arguments + +Bello: How to win an election + + + + + +Argentina + +Old whines + +The new president has moved fast to reform the economy. The results so far have been painful + +Apr 16th 2016 | MENDOZA | From the print edition + + + +MAURICIO MACRI, Argentina’s reformist president, has been in office for just four months. For Constanza Pimentel, who along with her mother and brother runs a small winery on the outskirts of Mendoza, the country’s winemaking capital, his government has so far been a mixed blessing. Bodega Caelum, their 50-hectare vineyard, produces 70,000 bottles a year of Torrontés, Malbec and other wines. Recently it has struggled. Argentina’s previous president, Cristina Fernández de Kirchner, introduced currency controls, which kept the peso artificially strong and made exporting unprofitable. Ms Pimentel was delighted when Mr Macri allowed the currency to float in December: she plans to expand sales in the United States and Britain this year. But for now her customers are mostly Argentine oenophiles, and they are drinking less. In March she raised prices by 12% to keep up with inflation. “Wine is becoming a luxury,” Ms Pimentel laments. “Customers are watching their wallets.” + +One can hardly blame them. Mr Macri, whose election ended 12 years of populist rule by Ms Fernández and her late husband, Néstor Kirchner, has been feted by foreigners. He is on the verge of ending a 14-year confrontation with foreign creditors; Barack Obama paid him a visit in March. But for most Argentines, life is getting worse. The annual inflation rate is approaching 40%, according to independent estimates (official numbers are not being published while Argentina overhauls its statistics agency). It is the highest rate in Latin America outside Venezuela. Meat, a staple, is 44% more expensive than a year ago. A study by the Catholic University reports that 1.4m Argentines have dropped below the poverty line so far this year. + + + +Mr Macri inherited high inflation (see chart). During Ms Fernández’s reign the central bank printed money to pay for subsidies, which reached 4% of GDP last year. But the measures the new president has taken to stabilise the economy have made things—temporarily—worse. The floating of the peso, to make exports competitive and reduce a drain on the central bank’s foreign-exchange reserves, pushed up inflation. So did cutbacks to subsidies of electricity, water, gas and transport to control the budget deficit, which reached 5.8% of GDP in 2015. On April 8th bus and train fares in Buenos Aires, the capital, doubled. The public sector has laid off nearly 11,000 workers since December. The economy is likely to shrink by 0.5% this year. + +Mr Macri warned that there would be pain, but he was not gloomy enough. His government is likely to miss the inflation target of 20-25% it set for 2016, in part because the country’s powerful unions are demanding pay rises of 30%. The finance minister, Alfonso Prat-Gay, now promises that inflation will fall in the second half of the year and predicts an inflation rate of 17% for 2017. “We are very confident that we can hit” that rate, he told a conference on April 5th. + +One reason for his optimism is the prospect of Argentina’s return to the international capital markets. On April 13th a court in New York cleared the way for Argentina to repay bondholders who had rejected earlier debt restructurings (see article). The country now plans to issue up to $15 billion in new bonds. It will use most of that to pay the holdouts. The rest will pay for government spending, reducing the need for inflationary financing of the budget deficit. + +The government is betting that the return to the credit markets will encourage investment by foreign companies. There are hopeful signs. Since Mr Macri took office Dow Chemical and American Energy Partners have announced that they will invest alongside YPF, the state-owned oil company, in exploring for shale gas and oil in Vaca Muerta, which holds vast reserves of both. Coca-Cola has promised to invest $1 billion in Argentina over the next four years; Fiat Chrysler, an Italian carmaker, has said it will spend $500m to upgrade its plant in Córdoba in central Argentina. + +But investment may not recover quickly enough to provide the lift that the government is hoping for. Brazil, Argentina’s largest trading partner, is suffering its worst recession since the 1930s. Some analysts argue that Mr Macri needs to do more to restore confidence. Martín Redrado, a former head of the central bank, thinks investment will not rebound until prices stabilise. Even with renewed borrowing on the international markets, the government will need to raise a lot of money from local investors to pay its bills or resort to central-bank financing. To shore up confidence, Mr Redrado calls for the president to establish a “council for macroeconomic stability”, which would set inflation and growth targets at least two years in advance. + +Ms Pimentel is “confident” that Mr Macri has good intentions and thinks “it will take some time” to heal the economy. The president is counting on the patience of voters like her. According to a survey conducted in March by Isonomía, a consultancy, 72% of Argentines view him favourably and 69% think he can control inflation. Their confidence may have been shaken when Mr Macri’s name appeared among the thousands in the leaked “Panama papers”, showing that he was a director of an offshore company founded by his father. He says he drew no income from it and has nothing to hide; a judge is investigating. Argentines are giving him the benefit of the doubt. If inflation does not retreat by the end of this year, they may turn on him. + + + + + +The FARC’s finances + +Unfunny money + +The government may never get its hands on the guerrillas’ ill-gotten gains + +Apr 16th 2016 | BOGOTÁ | From the print edition + +A typical day at Club FARC + +WHEN Colombia’s government and the FARC rebel group missed their self-imposed deadline of March 23rd to sign a peace agreement, the main sticking points were how to demobilise the FARC’s 6,500 fighters and how the deal would be ratified. Both sides expressed confidence that an agreement ending their half-century fight will be signed by the end of 2016. + +One contentious issue no longer on the agenda is money. At its strongest, in the late 1990s and early 2000s, the FARC had 18,000 fighters and a war chest brimming with cash from illegal gold-mining, extortion, kidnapping and the drug trade. Estimates of the FARC’s annual income at the time range from $200m to $3.5 billion. Since then the FARC’s fortunes have faded, both on the battlefield and at the bank. Its finances “aren’t what they were 15 years ago”, says a government official. + +But the group may have held on to much of its loot. According to an unpublished study by government analysts, even after paying to maintain its fighters the FARC still had assets worth 33 trillion pesos ($10.5 billion) in 2012. In the peace negotiations taking place in Havana the government tried to extract some of this to compensate victims of the FARC’s crimes. After more than a year of wrangling, the FARC agreed to “contribute to the material reparation of the victims” but said it was broke. + +The government is welcome to take over its offshore bank accounts, said the FARC’s top negotiator, Iván Márquez, in an interview with the BBC. “But we don’t have any.” No one known to be connected with the FARC (or the ELN, a smaller guerrilla force with which the government will hold talks) is among the 850 Colombians whose names appear in the “Panama papers”, leaked documents that reveal the hidden wealth of thousands of clients of a Panama-based law firm (see article). Mr Márquez is no doubt delighted that the government’s top peace negotiators—Humberto de la Calle, who leads talks with the FARC, and Frank Pearl, who handles the ELN—do appear in the document haul. Both say the offshore companies they established were legitimate, had been reported to the Colombian tax authorities and are no longer active. + + + +Colombia's peace process, in charts + +Financial analysts think that much of the FARC’s hoard, its criminal origins disguised, is invested inside Colombia, in transport companies, rural property and even the stockmarket. Some has probably been stashed abroad, in Costa Rica, Venezuela and Ecuador, as well as in Panama. Anti-money-laundering officers at Colombian companies fear that a share of this money will come back into the country after the peace accord is finally signed. According to a survey conducted in 2015 by Lozano Consultores, a consulting firm, 61% of banks’ compliance officers felt ill-prepared to identify and report such cash to the government. + +A peace agreement will not deter the authorities from trying to track down the FARC’s assets. Under Colombian law, they can seize the fortunes of people who mysteriously become rich until they can account for their wealth. But investigators are unlikely to find much. Worldwide, governments detect just 20 cents of every $100 of laundered money, estimates the UN Office on Drugs and Crime. That is a pity. The cost of implementing any peace accord, which includes paying for demining and infrastructure, is likely to be $15 billion-30 billion over ten years. The FARC’s hidden fortune might pay for a big chunk of that. + + + + + +Ecuador’s universities + +Academic arguments + +The government has built up higher education, and weighed it down + +Apr 16th 2016 | QUITO | From the print edition + + + +THE guests filed past an honour guard of Shuar warriors, their serrated spears of chonta hardwood wreathed in Ecuador’s national colours of yellow, blue and red. The ceremony in January marked a handover of power. The founding rector of the Universidad Andina Simón Bolívar in Quito, an Oxford-trained historian called Enrique Ayala, made way for César Montaño (pictured), a professor of law. Mr Montaño has yet to exercise his duties. The government says his election violates a rule that rectors must hold doctorates from a university other than the one they lead. Mr Montaño has stepped aside for a caretaker. + +The row has drawn attention to the testy relationship between Ecuadorean academia and the left-wing government of Rafael Correa. A reform in 2010, aimed at improving the quality of universities and helping poor people attend them, was one of his most ambitious policies. But the dispute with Andina shows that the government is keener on regulating universities than on liberating them. + +Mr Correa has shaken things up. The constitution adopted in 2008 ended fees at public universities. The government raised its budget for them from $335m in 2008 to $1.7 billion in 2013 (it spent less). It shut down 14 low-quality institutions with 38,000 students in 2012 and set up four new “world-class universities”, including Ikiam, a life-sciences institute near the Amazonian town of Tena, and Yachay, a technology school meant to transform Ecuador into a “knowledge economy”. Getting a place at one of those is harder than entering Harvard, Mr Correa claims. To allow universities to become more selective, the government reintroduced entrance exams. + +Enrolment is growing twice as fast as the population, boasts René Ramírez, the government’s secretary for higher education. From 2008 to 2014 the share of students who come from hard-up families has risen from 11% to 25%. But critics contend that in pushing for better and more open universities the government has weighed them down with bureaucracy and clipped their autonomy. They now answer to regulatory bodies that include no university representatives. Only rectors (and student representatives) are elected by faculty, students and staff; the government ended a long tradition of electing deans, says Mr Ayala. Courses of study are to be linked to the “national development plan”, as interpreted by bureaucrats. + +It is not unreasonable, retort Mr Correa’s defenders, for the government to set goals for publicly financed universities. Why should taxpayers pay for the training of too many lawyers? A bigger worry may be that money is becoming scarcer, and some is being misspent. While the government lavishes cash on Mr Correa’s pet projects—last year some deans at Yachay were paid $16,300 a month—less-favoured universities face cutbacks. In 2014 the government cut the universities budget to less than $1 billion; low oil prices are likely to force further cuts. Some universities have laid off staff and suspended classes. Mr Correa plans to cancel the government’s $32m payment to the three postgraduate universities, including Andina, saying it is the “fruit of custom and lobbying”. FLACSO, one of the three, has suspended construction of a new building. + +Andina, which operates under the auspices of the Andean Community of Nations (CAN), is in a class of its own. Mr Montaño says the treaty establishing the CAN allows the university to follow its own rules in naming a rector. Mr Correa says he would rather quit than “permit this insult to the people of Ecuador”. Siding with the government, the CAN council that oversees Andina has given the university a week to present a plan for electing a rector. Mr Correa may win, but academics who cherish independence will not forget. + + + + + +Bello + +How to win an election + +The rise of the Latin American political guru + +Apr 16th 2016 | From the print edition + + + +IT IS a sensational claim. Andrés Sepúlveda, a Colombian computer-hacker serving a ten-year jail sentence for espionage, told Bloomberg Businessweek that he spent years carrying out dirty tricks during Latin American elections. He spied on rival campaigns, stole data and manipulated social media, often working for Juan José Rendón, a Miami-based Venezuelan political consultant. One of his tasks was to hack the communications of rivals of Enrique Peña Nieto in Mexico’s 2012 presidential campaign, he says. (Mr Rendón denied using Mr Sepúlveda for anything illegal. Mr Peña’s campaign denied hiring either of them.) Many of Mr Sepúlveda’s efforts were unsuccessful, Businessweekacknowledged, “but he has enough wins that he might be able to claim as much influence over the political direction of modern Latin America as anyone” in this century. + +Disturbing as Mr Sepúlveda’s claims are, that is an exaggeration. Elections in Latin America, as elsewhere, turn mainly on the merits of the candidate and the mood of the voters. Mr Peña, for example, won because many Mexicans disliked his opponents. But Mr Sepúlveda’s account does show that the influence of political gurus and technology is growing in the region, and that it is not always benign. + +Time was when Latin American elections were fairly predictable, with stable parties based on secular ideology or religion and with a dollop of political clientelism. Much has changed in the past two or three decades. Voters are better educated, more urban and less ideological (party loyalty has hit rock bottom). They share ideas and preferences through social media, which can help political outsiders get noticed. “The [established] media and political leaders have ever less influence,” says Jaime Durán Barba, an Ecuadorean consultant who helped Mauricio Macri pull off an unexpected victory in Argentina’s presidential election in November. + +Such trends are a boon for gurus. Joseph Napolitan, who worked on John Kennedy’s presidential campaign in 1960, introduced American-style consulting to Latin America, starting in Venezuela in the 1970s. As democracy spread in the 1980s, so did consultants. “Thirty years ago there were ten or so of us,” says Mr Durán. “Now there are thousands.” + +Some campaigns use Americans, such as Dick Morris or James Carville, both advisers to Bill Clinton. “But it can be very hard if the candidate doesn’t speak English and they have to work through a translator,” says Mario Elgarresta, a Cuban-American consultant. Nowadays, the top Latin American gurus are almost household names, and are richly rewarded. + +On the right of the political spectrum, Mr Rendón has worked on many successful campaigns, including those of Juan Manuel Santos in Colombia and, Mr Rendón claims, Mr Peña. On the left, João Santana, a Brazilian who is a former journalist and writer of pop songs, shot to fame when he helped Luiz Inácio Lula da Silva win a second term in 2006. His clever television spots contributed to Dilma Rousseff’s victories in 2010 and 2014. He notched up four other presidential wins outside Brazil, and does not deny a report that he is worth more than $50m. In February he was arrested on suspicion, which he called “baseless”, of receiving illicit payments in Brazil’s campaign in 2014 from Odebrecht, a construction firm. + +The gurus tend to be self-promoting and bitchy. How effective are they? “You can do a good campaign but you can’t do miracles,” says Mr Elgarresta. “It’s the candidate who wins or loses,” Mr Durán agrees. But an understanding of the electorate, derived from polling and focus groups, a sound strategy and effective publicity can make a difference. The gurus complain that candidates often don’t know how to use them. + +They insist that they do not engage in illegal actions, such as hacking. Daniel Zovatto of International IDEA, an inter-governmental body that promotes democracy, says that cyber-attacks are still exceptional in Latin America. He sees Mr Sepúlveda’s story as a wake-up call. The combination of hacking and social media means that there will be “more scope for both negative and dirty [ie, illegal] campaigning”, he says. Some countries are more awake to the threat than others. Brazil’s electoral tribunal, for example, organises hacking sessions to test the security of its electronic voting system. + +No amount of dirty tricks can turn the tide of history or defeat a strong candidate. Today’s Latin American voters tend to dislike negative campaigning, Mr Durán thinks. But in a tight race, hackers might conceivably tip the result. Those who think elections should be fair as well as free have been warned. + + + + + +Asia + + + + +Warming relations between India and America: A suitable boy? + +Religion and politics in Pakistan: Bad moon rising + +Japan’s gossipy weeklies: Pulp non-fiction + +Thailand’s deadly roads: Look both ways + +South-East Asian economies: Okay, for now + +Banyan: Trawling for trouble + + + + + +Warming relations between India and America + +A suitable boy? + +The Pentagon is wooing India, but the bride is still coy + +Apr 16th 2016 | DELHI | From the print edition + + + +THEY seem such a promising pair, India and America. The two biggest and noisiest democracies are linked by language and blood: 125m Indians speak English, and over 3m Americans claim Indian descent. They share a belief in the rule of law and (most of the time) in free enterprise, as well as common regional concerns over such things as fighting Islamist extremism and accommodating the rise of China. But as much as a match of American wealth and know-how with Indian brawn and drive would make sense, and ought to bolster global security, Indian pride and American prejudice have repeatedly got in the way. + +Yet with regional stars realigning, Indian pride has grown less prickly and American prejudice less smug. “Pivoting” to Asia during Barack Obama’s presidency, America has sought new friendships just as India’s prime minister, Narendra Modi, finds it lacks the punch to back his bigger ambitions for India on the wider stage. There will be no flashy wedding between the two in the near future. But what is emerging is a quiet, cautious meeting of mutual interests. American officials call it a strategic handshake, Indian ones a strategic partnership. Neither would utter the word “alliance”, but if the relationship continues to thicken, that is what conceivably might take shape somewhere down the road. + +The latest development is small but significant. During a visit to India between April 10th and 12th, his second in less than a year, the American defence secretary, Ashton Carter, joined his Indian counterpart, Manohar Parrikar, in promising quickly to sign a logistics agreement to enable smoother mutual support between the two armed forces. Two other pacts, covering communications and protocols for digital mapping, are also close to conclusion. Together they will make it easier for the two countries’ forces to co-operate, and allow India access to a bigger range of American equipment. + +Indian logic rules + +America has similar arrangements with dozens of countries. But in India’s case it has taken a decade of haggling to get this far. Before concluding the logistics deal, India insisted on a change of names to distinguish its own version. It is to be a Logistics Exchange Memorandum of Agreement rather than the usual Logistics Support Agreement. “We changed the initials so we don’t seem to follow the same logic as US allies,” says C. Uday Bhaskar, a military analyst and former Indian naval officer. He added that there remain “strong views in our services” about too close an embrace with America. + +Those views have a long history. After independence, India prided itself on being “non-aligned”, while turning to the Soviet Union for military supplies. It has been wary of other countries’ causes, a wariness reinforced by watching America bungle in Vietnam and later in Iraq and Afghanistan. Trounced by China in a brief but bloody border war in 1962, India is also cautious about provoking its big neighbour, or being seen as part of an American-led gang-up. Most of all India resents the continued military support America gives to Pakistan, even in the face of evidence that Pakistan has sponsored anti-Indian terror attacks and worked to undermine American-led efforts to bring peace to Afghanistan. + +Yet disdain for America is weakening. The latest agreements come on top of a growing pile of protocols that go beyond defence co-operation to include a “joint strategic vision” for Asia signed in January 2015. American armed forces now hold more joint exercises with India than with any other country. And two years ago India overtook Pakistan as a buyer of American weaponry. It helps that America has the kinds of goods that India’s armed forces want as they seek to project power more widely in the Indian Ocean, including long-range patrol aircraft and drones, maritime helicopters, aircraft-carrier technology and anti-submarine gear. America has also moved nimbly to accommodate India’s plans (see article) for strengthening its own defence industry. Aside from half-a-dozen existing partnerships involving such things as jet-engine design and avionics, the two sides have suggested jointly producing fighter aircraft, probably an Indian version of the F-18. + +The trigger for all this is the growing boldness of China. With a GDP that is now five times India’s, the regional heavyweight has courted India’s smaller neighbours with aid. Chinese warships now regularly push into the Indian Ocean, and the Chinese government has sought to build a network of bases or, at the least, friendly ports extending from Myanmar to Pakistan to Djibouti. India has mostly stayed aloof from troubles outside its immediate waters. When American officials jumped the gun in February by claiming that India would join patrols in the South China Sea, where China is pressing maritime claims over the objections of everyone else, India issued a vigorous denial. But Chinese pressure closer to home raises alarms. + +It is over China that Indian and American interests converge most. Mr Bhaskar says that Americans want India to become more capable and “carry a bigger load”. They may seek more than that. Speaking last month in Delhi, the Indian capital, Admiral Harry Harris, who heads America’s Pacific Command (responsible, he said, for American military operations “from Hollywood to Bollywood”), described expanded military co-operation with India as “arguably the defining partnership for America in the 21st century”. + +But deepening mutual interests, kind American words and tempting American hardware are not enough, yet, to prod India into an open embrace. For one thing, the possibility has yet to be exposed to the rough and tumble of Indian politics, where opposition would be fierce. And for all its size and growing strength, India’s armed forces remain compartmentalised and tradition-bound. India still prefers its old bachelor ways to married life. + + + + + +Religion and politics in Pakistan + +Bad moon rising + +Pakistan’s Barelvis used to be trusted as anti-militants. Perhaps no longer + +Apr 16th 2016 | ISLAMABAD | From the print edition + +Qadri on his way to his shrine + +MALIK BASHIR, a retired builder, now spends his days sitting under the shade of a tarpaulin, supervising the transformation of his son’s final resting place into a pilgrimage site near Islamabad, Pakistan’s capital. Eventually it will incorporate a shrine, mosque and madrassa. Six weeks after the burial of Mumtaz Qadri, a policeman-turned-bodyguard who murdered his own charge in the name of Islam, there is a temporary structure above his rose-petalled grave and a shop catering to the hundreds who visit each day. Among the trinkets are data-cards packed with videos of Qadri awaiting his execution, singing religious songs from a prison cell. + +The hanging of Qadri on February 29th has become a rallying point for Pakistan’s Barelvis, a broad movement within the majority Sunni community which had been regarded as non-political and non-violent as well as a useful foil to more militant sects. Their furious reaction to Qadri’s death has challenged those assumptions. + +To the astonishment of senior police in Punjab province, some 100,000 people turned out for Qadri’s funeral prayers on March 2nd. Equally unexpected was the behaviour of the Barelvi mullahs at Qadri’s chehlum, an event held on March 27th to commemorate his death. The clerics led crowds of protesters into Islamabad, where they fought with police, smashed up bus stations and occupied an area outside Parliament for four days. They left only after senior ministers agreed to hear their demands. + +Chief among these, many Barelvis want to preserve a draconian ban on blasphemy. They count Qadri as a hero because the man he killed, Punjab’s liberal governor, had criticised it as a “black law”, whereas they think it essential for protecting the honour of Muhammad. Their characteristically South Asian veneration of holy figures puts them at odds with an austere school of Islamic thought that emerged from the Indian seminary of Deoband in the 19th century. Deobandi hardliners disapprove of revering martyrs’ graves, and much else besides. The Barelvis, named after the north Indian town of Bareilly, were organised in defence of folk Islam; most regard themselves simply as Sunnis. The Pakistani Taliban and other terrorists are Deobandis. + +Arif Jamal, an expert on religious militancy, says the Barelvis are not as far down the militant path only because Pakistan and its ally Saudi Arabia deliberately kept them out of the state-backed jihad in Afghanistan in the 1980s. But “even without state patronage they will be radicalised, slowly but surely”, he says. + +A radical turn could pose serious problems. The Barelvis are the majority among Pakistani Sunnis, and probably in the population as a whole. They are especially prominent in Punjab, home turf of both the ruling Pakistan Muslim League-Nawaz (PML-N) and the army. Devotees at Qadri’s shrine say they are furious with both institutions. + +Mr Bashir says he will never again vote for the PML-N, whose leader is condemned in florid graffiti near the shrine. Instead, he says, he is drawn to a new party coming up in Lahore, led by a Barelvi cleric. + + + + + +Japan’s gossipy weeklies + +Pulp non-fiction + +Scurrilous tabloids step in where other media fear to tread + +Apr 16th 2016 | TOKYO | From the print edition + + + +A LIVELY brew of tabloid-style sensationalism, erudite literary commentary and exposés of figures ranging from pop idols to politicians, Japan’s tabloid weekly magazines, or shukanshi, defy categorisation. Their scoops ought to shame the big television channels and newspapers, which pull their punches when reporting on the establishment, of which they are firmly part. Revelations earlier this year of bribe-taking in the office of the economy minister first appeared in a weekly, the Shukan Bunshun, not a mass-circulation daily. The minister, Akira Amari, resigned, in the biggest political setback for the prime minister, Shinzo Abe, since he came to office in late 2012. + +Together the weeklies sell over 2m copies a week. Goings-on in the world of yakuza gangsters, the night-time wanderings by torchlight of a member of the imperial family, corruption in sumo wrestling and the grisly doings of child murderers: all are staples for the shukanshi. They blossomed after the second world war to entertain readers hungry for distractions from the hard graft of pulling Japan from the ruins. For salarymen enduring long commutes and overbearing bosses, they remain morale-boosters, says Mark Schreiber, who has published collections in English of their wackiest stories. + +The weeklies echo an earlier publishing tradition: towards the end of the Edo period (1603-1867) comic books full of gossip and political satire flourished. Written largely in the vernacular, they stirred up controversy so successfully that the censors stepped in. In some ways the weeklies are as bold today. Their reporters are mainly outside the cosy system of “press clubs” in which groups of reporters accredited to particular ministries are fed titbits by politicians and senior bureaucrats, on the (usually unspoken) assumption that they will not spill the real beans. + +In few other democracies do reporters know so much yet convey so little. By contrast, freelances are hungry to supply scoops for the weeklies, while on occasion mainstream reporters frustrated at not being able to get their story out will give it to a weekly to run under a pseudonym. Two weeklies in particular, the Shukan Bunshun and the Shukan Shincho, which are put out by reputable publishing houses and do without the pictures of naked women that other weeklies carry, are read widely by Tokyo’s political establishment. + +Their usefulness grows as journalists complain of increasing self-censorship on television and in newspapers. The head of NHK, the state broadcaster, has said that he thinks its job is to hew to the government’s line. And in recent months talk-show hosts critical of the Abe government have left NHK and two leading commercial television stations, with some suggestion that they were under government-led pressure to go. + +It is all grist for the weeklies. Indeed, says Shukan Bunshun’s editor-in-chief, Manabu Shintani, the best way to resist attempts to co-opt the media is to uncover facts that discomfort the powerful. That is all very well, but the “guerrilla” media’s scoops tend to fritter away the public’s attention on trivial personal scandals, says Michael Cucek of Temple University. Rather than reading about how the political system is failing to deal with growing inequalities in the labour market, for instance, shukanshi devotees prefer the story about the severely handicapped married celebrity author with political aspirations and five lovers. + + + + + +Thailand’s deadly roads + +Look both ways + +Another bout of hand-wringing over the country’s lethal roads + +Apr 16th 2016 | BANGKOK | From the print edition + +Spot the crash helmet + +SMOKE belched from the exhaust of a double-decker coach as it laboured over a rail crossing a short distance from Bangkok, Thailand’s teeming capital. The vehicle, which was full of Thai holidaymakers, paused for a moment, as if stalled. Within seconds a train ploughed into it, spinning the coach by 90 degrees and depositing it metres up the track. Three people were killed and 30 injured. + +Captured on a security camera, the accident at a crossing in early April is one more reminder of the daily carnage enacted on Thailand’s roads (although this one, unusually, involved a train). More grisly scenes are likely this weekend, when 22m Thais travel back to their workplaces after celebrating Songkran, the Thai new year. Road accidents always spike during the “seven days of death” that encompass the festival. A similar surge accompanies revelries at the turn of the calendar year. + +Among countries for which the World Health Organisation (WHO) measures road safety, Thailand is less lethal per head of population only than Libya, whose drivers have to contend, among other things, with rocket-propelled grenades. Each year more than 24,000 people are killed on Thai roads, a mortality rate well above other South-East Asian countries (see chart), even much poorer ones with lousier roads. Until recently, misreporting had obscured the scale of the problem, says Pichai Taneerananon, an expert at Songkla University. + + + +Thai roads are busy, testament both to the country’s relative wealth and its limited public transport. They are also packed with vulnerable motorbikes and scooters, which are involved in nearly three-quarters of fatalities. Only half of their riders wear an obligatory helmet, and even fewer of the passengers riding pillion. + +Speed limits are too high—up to 80 kilometres (50 miles) an hour in urban areas—and local authorities have limited power to change them. Traffic cameras are proliferating, but fewer than half of Thais pay the measly fines for transgressions. Red tape within government means that licences are rarely revoked. As for drunk drivers, until last year they could legally refuse breathalyser tests. Even now, many traffic cops do not have breathalysers in their kit. + +Thailand may have better roads than scruffier neighbours such as Cambodia, says Mirjam Sidik of the Asia Injury Prevention Foundation, a charity, but that only makes it more tempting to go too fast. And as local roads have grown into monstrous highways, safety features such as traffic calming on the edge of towns have not kept pace, says Michael Woodford of the Safer Roads Foundation, which funds improvements at accident black spots. + +Thais are growing less tolerant of the daily slaughter, some of which does graphic rounds of the internet thanks to dashboard cameras. Yet the policy response can be dismal. It is hard to see how licensing cyclists, as some recommend, would stop them being ploughed under by lorries. Proposals that new drivers should take psychiatric tests to weed out reckless types ought to disqualify most males under 25. Meanwhile, superstitious Thais have taken to placing small zebra figurines at the sites of accidents. The animals are said to ward off the unhappy ghosts of crash victims, lest they cause more pile-ups. + +Thailand’s ruling junta says it is on the case. A review of road-safety laws is under way, and this month authorities said that dangerous drivers would have to do work experience in morgues. A new policy of impounding cars and motorbikes driven by drunks is an “important stride”, says Daniel Kertesz of the WHO. Mr Woodford says the police he meets are determined to cut death rates. There is little sign yet that they are succeeding. The 380 fatalities recorded over the new year in January was the highest figure for years. + +The government has to convince Thais that its new offensives will be enforced without favour. In March two students died when their small car was rear-ended by a Mercedes travelling at top speed. Yet the police allowed the driver, from a wealthy family, to decline a test for alcohol or drugs. The ensuing furore reflected a sense among ordinary Thais that the law goes easy on the rich and influential. In 2012 Vorayuth Yoovidhya, heir to a fortune earned from Red Bull, an energy drink, was accused of running down a police officer in his Ferrari. His case has yet to be heard. + + + + + +South-East Asian economies + +Okay, for now + +The region is looking perkier than most, but its growth potential is waning + +Apr 16th 2016 | SINGAPORE | From the print edition + + + +WHEN you consider the backdrop of weak global demand, a faltering Chinese economy and uncertainty over American monetary policy, then the predictions for South-East Asian economies appear quite upbeat. Of the ten countries in the region, only tiny Brunei is close to recession. Indeed the Asian Development Bank (ADB) forecasts that growth in regional GDP will climb from 4.4% last year to 4.5% this year and 4.8% in 2017. But hold that backdrop in mind: such forecasts may prove too optimistic, especially if global financial markets get another bout of jitters like those earlier this year, and foreign capital is pulled out in a hurry. + +The region’s healthiest economies are those of Vietnam and the Philippines: both have young populations and rely less than most in South-East Asia on either China or exports of commodities, whose prices are currently depressed. Growth in Vietnam was 6.7% last year, driven by competitively priced exports. It was only a tad less in the Philippines, thanks to strong services, particularly call centres. Fresh investment in infrastructure in both countries is also driving growth. But the going will not be so easy in the future. Vietnamese manufacturing would be hurt by weaker global trade; meanwhile the government has many galumphing state-owned enterprises to wrestle with. And Philippine call centres face competition from automation software. + +A slowdown in China, with its reduced demand for commodities, is hitting Indonesia and Malaysia particularly hard. Commodities (including coal, palm oil and nickel ore) account for three-fifths of Indonesian exports. But tax collection is too weak for the government to do much to soften any slowing of growth. Hoping to spur further investment, the government said this week that it would cut corporate tax from 25% to 20%. But it will probably be years before this stimulates enough investment to translate into more tax receipts. President Joko Widodo entered office in 2014 promising to return the country to 7% growth; today that looks somewhere between fanciful and impossible, despite ambitious plans to ramp up spending on much-needed infrastructure. + +Malaysia, Asia’s biggest oil exporter, suffers not just from low commodity prices but from its prime minister’s increasingly surreal hold on power, a combination that has put downward pressure on the currency, the ringgit. Najib Razak has spent months giving unsatisfactory answers to questions about how hundreds of millions of dollars passed through his personal bank accounts. He has cracked down on political opponents and engaged in racial politics—while the price of oil, which makes up a fifth of Malaysian exports, has fallen by over 60% from its peak two years ago. Strong exports of electronics give Malaysia a cushion that other oil producers lack. Yet that sector is more exposed than many to global demand. Malaysia’s annual GDP growth is forecast to average below 5% to the end of 2018. But that assumes questions over Mr Najib do not paralyse government or spill onto the streets. + +Poor governance also afflicts Thailand. Last year it grew at a sluggish 2.8%, following dismal growth of under 1% in 2014, after General Prayuth Chan-ocha led a coup and then installed himself as prime minister. Domestic demand has since recovered, and tourists are coming back to the beaches. But uncertainty about the country’s political direction is surely a dampener on foreign and domestic investment. Should infrastructure projects, some backed by China, proceed as planned, and political calm prevail, then growth may pick up. Yet Mr Prayuth’s team has yet to evince a flair for economic management. + +Beyond these economies’ immediate prospects, however, longer-term issues are more important, as the ADB’s latest outlook highlights. Among the most serious are shrinking workforces and declining birth rates, especially for Thailand and rich Singapore. Another is lower productivity growth in the future. Easy gains were made when tens of millions of poor South-East Asians moved from the countryside to work in new factories or burgeoning service sectors. But the next leap will be much harder, and will depend on more young people getting a college education, more flexible labour markets, constant upgrading of technologies and smarter, more responsive governments. + +It is all a tall order. In fact, the ADB concludes that South-East Asia, along with most of the rest of Asia, has seen its potential growth flag by over two percentage points since 2006-10: the sizzling rates of a decade ago will not return without that next leap. + + + + + +Banyan + +Trawling for trouble + +Why do Chinese fishermen keep getting arrested? + +Apr 16th 2016 | From the print edition + + + +AS A deterrent it is wasteful, polluting and provocative. But it is also, Indonesia’s government insists, highly effective. On April 5th the country’s maritime-affairs minister, Susi Pudjiastuti, watched live feed from seven different places as 23 Malaysian and Vietnamese trawlers, seized for illegal fishing in Indonesian waters, were blown to smithereens. Since Joko Widodo assumed the presidency in 2014 and promised to look out for local fishing communities, Indonesia has now destroyed more than 170 foreign vessels. The government says the number of poachers has fallen, and the catch of the domestic fleet has increased. Now the combative and popular (at least at home) Miss Susi hopes that the country’s Supreme Court will allow her to destroy ten more vessels, seized for poaching in 2014 and coming from the country with more boats than any other involved in Asia’s huge and growing business of illegal fishing: China. + +Burning their boats + +Indonesia is already seething with anger at China’s reaction to an incident last month in which a Chinese coastguard cutter rammed free a Chinese fishing boat as the Indonesian authorities were towing it to port, having just caught it poaching in waters off Indonesia’s Natuna islands. Eight of the crew were detained. The ninth has since managed to bring the boat back to the southern Chinese port of Beihai, escorted by the Chinese cutter. There he told the New York Times it was “probable” that he and his shipmates had been fishing in Indonesian waters. In fact, it seems almost certain. Indonesia’s possession of the Natunas is undisputed, and under international law the Chinese were well inside its “exclusive economic zone”. Yet China defended the crew by claiming they were in waters that were “traditional Chinese fishing grounds”. The waters are inside the sweeping “nine-dash line” that China draws on its maps (and even passports) to mark its claim over almost the entire South China Sea. + +Chinese fishermen have been detained in Japan, the Philippines, Taiwan and Vietnam, all of whose maritime claims overlap with or mirror China’s. But it is not just in contested waters that they get into trouble. Chinese have also been detained in the Russian Far East, North Korea and Sri Lanka in recent years. In 2011 a Chinese fisherman stabbed a South Korean coastguard to death. The next year one was killed by the police in Palau, a tiny Pacific republic. Farther afield, last December two dozen African countries called on China to stop illegal fishing off west Africa. And just this week four Chinese fishermen were freed from detention in Argentina. + +More than national sovereignty, what is driving these far-flung adventures is that China is by far the world’s largest consumer (and exporter) of fish. Chinese fish-consumption per person is twice the global average. Aquaculture has met much of this growing demand. But China’s wild catch also dwarfs that of other countries (13.9m tonnes in 2012, compared with 5.4m for Indonesia, 5.1m for America, 3.6m for Japan and 3.3m for India). Overfishing and pollution have blighted China’s inshore fisheries. Stocks are severely depleted: in the South China Sea, with a tenth of the global fish catch, inshore (coastal) fisheries have just 5-30% left of the stocks they had in the 1950s. Chinese fishermen are driven farther offshore and into distant waters. + +China’s government encourages this, seeing food security as a priority and fishing as a good source of jobs (14m of them). In 2013 the president, Xi Jinping, visited Tanmen, a fishing port on the southern island of Hainan, and urged fishermen there to “build bigger ships and venture even farther into the oceans and catch bigger fish.” The government provides subsidies for new boats, fuel and navigation aids. + +This does not necessarily make fishermen the tools of an expansionist policy. Indeed, the government has sometimes struggled to control Chinese fishermen, some of whose scrapes have surely embarrassed it. In a new paper in Marine Policy, a journal, on “Chinese fishermen in disputed waters”, Zhang Hongzhou, a scholar at RSIS, a think-tank in Singapore, reports on trips to Chinese fishing ports, including Tanmen. There he found that, rather than following Mr Xi’s exhortation, many fishermen had taken up the wholly illegal but lucrative trade in endangered turtles and giant clams, which are protected species. + +Nevertheless, fishing can have strategic uses. Like China’s splurge on building artificial islands on reefs in the South China Sea, the habitual presence of big numbers of Chinese boats in disputed waters congeals into facts on the water that become harder to dispute. It also underpins the notion that China has “traditional” claims. And at times fishermen have indeed been used to advance those claims. In 1974 armed fishing trawlers acted as China’s advance guard as it seized the southern part of the Paracel archipelago from the regime of the former South Vietnam. Similar tactics worked in driving the Philippines out of two other parts of the South China Sea: Mischief Reef in 1995 and Scarborough Shoal in 2012. + +Giving state backing to poaching or to fishing in contested waters is a dangerous ploy, however. The grave rise in tension with Japan over the uninhabited Senkaku, or Diaoyu, islands in the East China Sea dates back to September 2010, when a Chinese trawler, apprehended for illegal fishing, rammed a Japanese coastguard vessel. As the seas become more militarised, the risks of clashes mount. To date, the Chinese navy has rarely been involved. But some Chinese fishing ports have expanded their “maritime militias”—ie, armed civilian vessels—and both China and other coastguards are becoming better armed. After China’s provocation in the Natunas, Indonesia says it will send marines, special forces, an army battalion, three frigates, a new radar system, drones and five F-16 fighter jets. But this probably won’t stop China and its fishermen from casting their nets ever wider. + + + + + +China + + + + +Industrial clusters: Bleak times in bra town + +Intimate apparel: The little red look + +Porters in Chongqing: Bang bang, I hit the ground + + + + + +Industrial clusters + +Bleak times in bra town + +One-product towns fuelled China’s export boom. Many are now in trouble + +Apr 16th 2016 | GURAO | From the print edition + + + +A PYRAMID of bras stands beside each worker at the Honji Underwear factory in Gurao, a town in the southern province of Guangdong. The workshop resounds with the clack-clack of sewing machines as employees repeat their single, assigned task before passing the garment on to the next person on the production line. Most of the 22,000 thickly padded bras made here each day are destined for shops in China. In this “Town of Underwear”, as the local government likes to call it, there are thousands of similar factories. Gurao produces 350m bras and 430m vests and pairs of knickers a year for sale at home and abroad. Undies account for 80% of its industrial output. + +Across Gurao, billboards show big-breasted—usually foreign—women sporting the lingerie that underwires the town’s prosperity (see picture). But many people in Gurao and other underwear-factory clusters around Shantou, a coastal city, worry about the future. Costs are rising, but customers are unwilling to pay more, says June Liu of Pengsheng Underwear, which makes lingerie and swimwear. Last year several factory-owners fled from Gurao, leaving debts and unpaid wages. Some also shut up shop in Chendian, another underwear town nearby. + + + +During the past three decades of rapid economic growth, one-industry towns like Gurao and Chendian sprang up along China’s eastern seaboard, often in what were once paddyfields. With investment from Hong Kong and Taiwan, and a huge influx of migrant labour from China’s interior, they fuelled the country’s export boom. There are now more than 500 such towns, making products such as buttons, ties, plastic shoes, car tyres, toys, Christmas decorations and toilets (see map). + +Knickerbocker glories + +Gurao is one of several underwear hubs that have made China the world’s largest lingerie producer. The country made 2.9 billion bras in 2014, 60% of the world’s total, according to Frost & Sullivan, a consultancy. In several industries, the clustering of similar firms in the same place creates a critical mass of good suppliers and workers with relevant skills. Niche towns in China produce 63% of the world’s shoes, 70% of its spectacles and 90% of its energy-saving lamps. + +All this growth has had an environmental cost. In 2010 Greenpeace, an NGO, reported that fabric-dyeing plants in Gurao had severely polluted the water, making it unfit to drink. But the bra-makers of Gurao are far more worried about foreign competition than foreign eco-warriors. + +China’s consumer goods grabbed a huge share of global markets thanks to their low prices. That advantage is fading. Since 2001 wages have risen by 12% a year. Thailand and Vietnam, where labour is cheaper and taxes lower, now make lingerie for global brands such as Victoria’s Secret and La Senza. China’s biggest underwear firm, Regina Miracle, will open two factories in Vietnam this year, its first outside China. It plans another two there by 2018. Cambodia and Myanmar are joining the fray. Wacoal, a Japanese underwear-maker, opened factories in both countries in 2013 and another in Myanmar last year. + +Gurao still has advantages, such as excellent supply chains. Several factories there make components for undergarments: dyed textiles, lace and the tough foam used to upholster push-up bras. Every form of elastic waistband used for boxer shorts is produced locally. The town also appears to enjoy loose regulation of trademarks. Some of the waistbands use misspellings such as “Calven Klain” and “Oalvin Klein” in an attempt to cash in on famous brand names. + +Officials in Gurao insist that the town can overcome its difficulties by upgrading its technology and using machines instead of people. But attracting the capital and skill to transform Gurao may be more difficult than the daring step taken by a local entrepreneur in 1982 when he opened its first bra factory, at a time when private enterprise was still frowned on in China. + +Even China’s largest underwear manufacturers have always found it hard to get long-term commitments from buyers. That has made them reluctant to spend on research or technology. Some factories in Gurao are upgrading, for example by making seamless laser-cut underwear and using new, more comfortable, materials to underwire bras. But most remain low-tech and labour-intensive. + +Because they are dominated by private enterprises, towns such as Gurao may be nimbler at adapting to changing market conditions than China’s steel and coal cities, where 1.8m layoffs are planned in the next few years. In 2013 migrant workers made up nearly half of Gurao’s 161,000 people. Many are low-skilled, moving from one job to another, sewing the same part of the bra as they did in the previous factory. Most did not complete high school and are ill-equipped to retrain for jobs in service industries, which the Chinese government hopes will replace manufacturing ones. But luckily most of them have houses and farmland to go back to in their villages if they lose their jobs. + +Some of the one-product boomtowns could fade away, leaving little behind but the concrete shells of empty factories and polluted soil. Gurao and other such places have generated extraordinary wealth in once dirt-poor parts of the country. But to thrive in the future, they will need to look beyond the bare necessities. + + + + + +Intimate apparel + +The little red look + +A brief history of Chinese underwear + +Apr 16th 2016 | BEIJING | From the print edition + + + +REVEALING the curves of breasts was considered lewd for most of Chinese imperial history. Bosoms were often bound (though not as savagely as feet, a bone-crushing practice intended to enhance the female form). Imperial underwear developed accordingly. Various types of compressing vests or tunics were popular over the centuries. High-class women often favoured the dudou, or belly-band—a diamond-shaped piece of embroidered cloth that stretched from neck to waist and was tied at the back (some designers are now trying to resurrect the dudou as a fashion item). Men wore thong-like loincloths, similar to sumo-wrestlers’ competition belts, but underpants for women were rare. + +Bosoms briefly enjoyed a renaissance after the collapse of the last imperial dynasty in 1911. Fancy foreign bras also began to spread around that time. But such items were dismissed as bourgeois when the Communists took over in 1949. Under Mao’s rule, both sexes sported loose outfits. If women wore any underpinnings at all they were typically modelled on functional Soviet undergarments. During the anti-bourgeois fanaticism of the Cultural Revolution in the 1960s and 1970s a famous producer of female underwear, Gujin, started making woollen jumpers to survive. + +After China began opening to the outside world in the late 1970s, social mores loosened only slowly. It was not until 1986 that bikinis were worn for the first time in public—and only then because an international bodybuilding contest in China required female contestants to wear them (the bikini had made its debut in Paris in 1946). Some Chinese commentators said the garment offended “oriental sensibilities”. But Guangming Daily, a national newspaper, declared the bikini to be compatible with Communist values. As one judge at the competition put it: “The women of China, after thousands of years of imbibing feudalist thinking, are opening their minds.” + +Even in the 1990s, fashions remained modest. Big, flesh-coloured knickers were then in vogue, often stretching down to the knee. Bras made for the domestic market still tend to be less skimpy than those for export. But breast size has since become an obsession: racks are now filled with technicolour, diamanté and heavily padded cleavage-boosters. These days China makes and buys more fancy underwear than any other country, supporting socialism from top to bottom. + + + + + +Porters in Chongqing + +Bang bang, I hit the ground + +The decline of a great urban institution + +Apr 16th 2016 | CHONGQING | From the print edition + + + +YU XIAOYAN waits for work in the rain, sitting on a bamboo pole near the centre of Chongqing, a large city in the south-west. A wiry 60-year-old with pepper-and-salt hair, a wispy beard and an air of resignation, he muses: “I’ve been here 20 years, and it’s never been so tough.” He is what locals call a bangbang man. + +Bang means stick. Mr Yu is one of the porters who for generations have hauled the worldly goods of Chongqing from the Yangzi and Jialing rivers on which the city sits, and up its precipitous slopes, using only bamboo and string. Everything from wide-screen televisions and blocks of ice to bricks and car tyres is tied to a short pole and hoisted onto willing shoulders. The bangbang brigade is unique to Chongqing and an emblem of the city (also once distinguished for the rarity of bicycles; as China gets richer, they are becoming rarer everywhere). In 2014 when Li Keqiang, the prime minister, paid a visit, he called the bangbang men “a symbol of the Chinese people’s hard-working spirit”. + +But the trade is dying. “When I first came,” says Mr Yu, “there were thousands of bangbang men and plenty of work, but not any more.” According to a documentary made in 2015 for state television, the city had over 300,000 stick men in the late 1990s. Now there are only 3,000. “No one with any education would become a bangbang man,” says Mr Yu. “It’s all old people.” + +He is right. A study in 2015 of 400 porters by Chen Hong, Liu Dapei and Du Zhongbo of Chongqing Normal University found that two-thirds of them were over 50. “The decline in the profession symbolises the ageing of Chinese society,” says Zhou Xuexin, dean of the Chongqing Economic and Social Development Institute. + +It also reflects improvements in urban infrastructure. When roads were unpaved and buildings lacked lifts, brawn was the only way to move goods up and down the steep hills and into tower blocks. But with better roads and more modern buildings, that is no longer true. Delivery companies with young men on motorcycles have taken over, and the remaining bangbang men are coming to terms with modern technology. They have set up an instant-messaging group to parcel out the available jobs. + +For Mr Yu, it is too late. “Most people are going back to their villages,” he says. He turns to write his name, using a finger to draw characters on the wet marble where he sits; the rain soon washes them away. + + + + + +Middle East and Africa + + + + +Islamic State in Iraq: The last battle + +Iraq’s politics: Abadi agonistes + +Running in Cairo: Miles by the Nile + +Narcotics in Africa: An emerging drug market + +Southern Africa’s drought: Too little, too late + +China and Africa: A despot’s guide to foreign aid + + + + + +Islamic State in Iraq + +The last battle + +The long fight to retake Iraq’s second-biggest city, Mosul, has begun + +Apr 16th 2016 | From the print edition + + + +IT WAS not an auspicious start. On March 24th the government in Baghdad announced the beginning of operations to retake the city of Mosul, Iraq’s second largest, from Islamic State (IS). The first phase went well. An Iraqi force of about 5,000 quickly overran several villages. But within a few days progress stalled, when a counter-attack by no more than 200 IS fighters resulted in the loss of the village of al-Nasr and the high ground it sits on. Some 20 Iraqi soldiers were killed. An American marine also died from a rocket attack on a small American “fire base”, established to provide artillery support, an indication of America’s expanding role in the conflict. + +Iraqi officials still talk positively about pushing IS out of Mosul before the end of the year. It is a big prize: the mainly Sunni Arab city had a population of 2m when it fell to IS in June 2014, and is the key to regaining control of the northern province of Nineveh. But the setback at al-Nasr has been a reality check. Just to take and hold al-Nasr, the local operations command says it needs to bring in more tribal fighters and police. + +Military analysts reckon there is, in fact, little prospect of a concerted attempt to regain Mosul before 2017. Michael Pregent, a retired colonel who served as an adviser to Kurdish peshmerga fighters in Mosul during the 2007 surge (and is now at the Hudson Institute, a think-tank), says no force large enough to do the job has been built. One under-strength Iraqi division with some American military advisers will not cut it. Pentagon sources reckon that a force of at least 40,000 will be needed. + +The problems do indeed appear immense. Iraqi intelligence puts IS’s fighting strength in Mosul at around 10,000, although the Americans think that the number is dwindling as IS comes under pressure elsewhere. Whatever the precise figure, IS has had the best part of two years to build multilayered defences. Mr Pregent says that although there are reasonably capable peshmerga forces to the east of Mosul that can help, these units have little interest in trying to take a city that will never be a part of Kurdistan and in which their presence would provoke ethnic tensions. + +The Shia question + +The same concerns, only more so, apply to the Shia-dominated Hashd al-Shaabi, or Popular Mobilisation Units. Their leaders claim that it will be impossible to regain control of Mosul unless they are involved. However, when Iraqi security forces (ISF) drove IS out of Ramadi, the capital of largely Sunni Anbar province, earlier this year, the Baghdad government, under pressure from the Americans, ordered the Hashd, some of which are trained by Iran, to stay away. They did not want a repeat of the sectarian reprisals that marred the retaking of another Sunni city, Tikrit, last year. + + + +There are other risks in deploying the Hashd for the assault on Mosul. In a survey carried out in February by an Iraqi polling firm that included 120 respondents in Mosul, 74% said they did not want to be liberated by the mainly Shia Iraqi army on its own, while 100% said they did not want to be liberated by Shia militias or Kurds. That does not mean Mosul’s inhabitants support IS—according to a nationwide survey in January, 95% of Iraqi Sunnis oppose it—but it does suggest that they are at least as fearful of their potential liberators as they are of their oppressors. One solution would be to bring more Sunnis into the Hashd, but it will be hard to rebalance a force that consists of some 120,000 Shias and only about 16,000 Sunnis. + +Mr Pregent says that the force that eventually goes to Mosul must be mostly Sunni. He argues that it should be recruited from among the American-trained soldiers and officers who were purged from the army by the former prime minister, Nouri al-Maliki. He reckons that there are as many as 50,000 such men, some of them sitting in camps for internally displaced people, who, with an offer of some back pay, would be keen to join up. + + + +An interactive guide to the Middle East's tangled conflicts + +Another factor in the battle for Mosul will be the size and role of American forces. Air strikes are a given, but the Pentagon has said that it wants to set up more fire bases of the kind that came under attack last month. Both Ashton Carter, the defence secretary, and General Joe Dunford, the chairman of the joint chiefs of staff, have put forward plans that are believed to include, among other things, the deployment of more special forces and Apache helicopter gunships. These could operate from a new airbase at Erbil, 20 minutes’ flying time from Mosul, if allowed to do so by the Iraqi Kurdistan authorities. + +However, the White House has yet to agree. Barack Obama’s pledge of no “boots on the ground” has worn thin, but there is little indication that he is ready to sanction military support on the scale needed to regain Mosul. That may have to wait until the election of a new president—another reason to suppose that Mosul will be in IS hands until next year. + +The enemy also gets a vote, at least on the battlefield. Patrick Martin of the Institute for the Study of War, a think-tank in Washington, DC, notes that a recent spate of spectacular suicide-attacks by IS in the south suggests that its strategy is now to destabilise Iraq’s southern provinces, thus putting pressure on the Iraqi army and the Hashd to restrict their operations in the north and west. IS knows that the fall of Mosul will signal, in effect, its defeat in Iraq; so it is determined to delay that moment for as long as it can. It may one day lose its bloody grip on the city. But when, how and at what cost it will be liberated, remains to be seen. + + + + + +Iraq’s politics + +Abadi agonistes + +Two new governments in a month + +Apr 16th 2016 | From the print edition + +PM for how long? + +WHILE their soldiers gain ground battling Islamic State (IS), Iraq’s political leaders in Baghdad are losing their footing. On April 12th the parliamentary Speaker suspended proceedings as MPs furious at Iraq’s second new cabinet in a month resorted to fisticuffs in front of him. Over a hundred of them demanded that the prime minister, Haider Abadi, should resign, and began a sit-in. And across southern Iraq protest leaders threatened to return to the gates of the Green Zone, the government’s sheltered enclave in the heart of Baghdad. + +The reason for all the politicking is a struggle over the sectarian system that has dominated Iraq since America’s invasion in 2003. For over a decade the leading factions and their militias have divvied up ministries, treating them as their fiefs. They have stuffed them with their cadres, inflating the government payroll from 1m under Saddam Hussein to 7m today. Ghost projects and ghost workers have emptied state coffers and, together with plummeting oil prices, have saddled the government with a whopping budget deficit of 25% of GDP. Though oil is being pumped in record amounts, hospitals are suspending services for lack of funds. Transparency International lists Iraq’s as the eighth-most-corrupt government in the world. + +Mr Abadi’s promise to end the quota system had powerful support. America and Iran, long-term rivals for influence over Iraq, rallied behind him. Grand Ayatollah Ali al-Sistani, Shia Islam’s chief religious authority, urged him on. Each Friday, tens of thousands of demonstrators braved blistering temperatures to echo his call for an end to corruption and Iraq’s transformation into a militia-free civil state. Last month the leader of one of the strongest Shia factions, Muqtada al-Sadr, sent out his followers from Baghdad’s shantytowns to join the protests. Still Mr Abadi dithered, unable to break free of Dawa, his own faction, which has ruled Iraq for a decade. + +Only after Mr Sadr erected a protest tent in the Green Zone, and insisted he would stay there until Mr Abadi acted, did Mr Abadi finally pluck up the courage to name his own cabinet. On March 31st the prime minister went to parliament and sought its approval for his new ministers. It never came. His nominee for oil minister, a Kurdish academic, withdrew after Kurdish leaders vowed that men in Baghdad would never choose their ministers again. His finance minister also backed out, fearful of Shia gunmen. To the fury of Mr Sadr and the protesters, Mr Abadi’s second list was designed to appease the factions. Instead of his first choice for foreign minister, Sherif Ali Hussein, a Sunni scion of the Hashemite monarchy that once ruled Iraq and has close ties to Arab Gulf states, he named Faleh al-Fayyad, an inept Dawa hand with a habit of dozing off in meetings. + +What happens next is unclear. Mr Abadi’s former backers have turned their backs on him. The protesters are returning to the streets, this time to demand his resignation. Plans are afoot for a vote of no confidence in Mr Abadi, when parliament next convenes, possibly within the next few days. Fresh elections could soon follow. Mr Sadr’s men are mulling a march on the Green Zone, while other armed factions vow to prevent them. “A war is brewing to defend the sectarian system,” says Faleh Jaber, a veteran Iraqi analyst trying to mediate between some of the factions. “When Muqtada Sadr enters the Green Zone, generals open the gates and kiss his hands. If he’s shot there’ll be civil war.” Perplexed Americans, including John Kerry, the secretary of state, have hastened to Baghdad to urge restraint and a renewed focus on what they see as the most important task, battling IS. But the situation is alarmingly volatile. + + + + + +Running in Cairo + +Miles by the Nile + +An unlikely fitness craze in Egypt + +Apr 16th 2016 | CAIRO | From the print edition + + + +IN RECENT years Egyptians have gathered in public spaces to pursue such lofty goals as democracy and social justice. But one of the country’s best organisers was motivated by something more mundane. “I was a bit fat,” says Ibrahim Safwat, who regularly leads thousands of Egyptians into the streets. + +Mr Safwat is the head of Cairo Runners, which gathers on Friday mornings, before the city perks up and goes to mosque. He and about a dozen friends started the group on Facebook in 2012. Now it attracts up to 3,000 people to its runs, which change place and increase in length each week, culminating in a half-marathon on April 15th. + +There were runners, and even running clubs, in Cairo before Mr Safwat and friends took to the streets. But not many, and most stayed indoors. Broken pavements, potholed roads and snarling traffic make even walking hazardous. Green space is sorely lacking. Dirty air, extreme heat and the threat of harassment complete the unwelcoming picture. + +But on Friday mornings the streets are unusually calm and the air feels fresh. Each week the procession of mostly young, Lycra-clad runners, male and female, elicits stares, but little harassment. There is safety in numbers, and the sight is becoming more common. Cairo Runners has given birth to a running culture, and not just in the capital. Similar clubs have sprung up in Alexandria and Ismailia. + +Still, most Egyptians do not exercise. Diabetes is a growing scourge. The trick for Cairo Runners is that most see it as a social activity as much as a fitness routine. Runners stop for water—and to post selfies. Others enjoy the escape. “We wanted something in the streets that had nothing to do with the political stuff,” says Ayman Guemeih, a co-founder. + +But the political stuff creeps in. When the group organised a run at the pyramids of Giza last year the police, after initially consenting, tried to stop them. An uproar on social media forced the cops to relent. The group dreams of holding a marathon in Cairo, like the one in Beirut. But it needs the support of the government. “We’re not there yet,” says Mr Guemeih. + +Abdel Fattah al-Sisi, Egypt’s president, seems inclined to support the runners. He has made a show of riding his bike in public to promote fitness. The president even met the group while they were out on one of their runs. “He stopped his car, took some photos with us and asked what we were doing,” says Mr Ibrahim. Doing more will require Mr Sisi to overcome his fear of large groups of motivated young people. + + + + + +Narcotics in Africa + +An emerging drug market + +As parts of Africa get richer, rich-world problems proliferate + +Apr 16th 2016 | NAIROBI | From the print edition + +Heroin or rat poison? + +IN THE early morning at a bar in Nairobi, Kenya’s capital, electronic beats pump from a DJ on a stage. Shielded from the autumn rains under tarpaulins, a substantial crowd, mostly of young Kenyans but with several European and American expats, dances. Outside the women’s toilets, attendants turn their eyes away—in exchange for a tip—as groups of young people go in together and then wander out, wiping their noses. + +The drug scene is not entirely new to Nairobi. “There has been cocaine here since I was 14 years old,” says one young Kenyan woman, who works for an e-commerce firm and is now 26. But whereas in the geriatric West recreational drug use is falling and many night clubs are closing, in Africa’s capitals it appears to be growing, both among the new middle class and the poor. Drug-use surveys are rare in Africa, but governments are worried. + +Africans have consumed drugs for decades, if not centuries. Cannabis is grown and toked across the continent: the UN estimates that roughly 7.5% of African adults smoke weed in a typical year, almost double the global figure of 3.9%. In Somalia and Ethiopia, many men chew vast amounts of qat, a leaf with mild amphetamine properties, (much to the irritation of their wives). + +The more recent spread of harder drugs such as heroin and cocaine is driven by the expansion of Africa as a transit route for chemicals on their way to Europe. Cocaine is smuggled from South America to West Africa by boat or small plane. In some small countries, the trade is huge. In Guinea-Bissau, Colombian drug dealers are alleged to have funded the re-election campaign of President João Bernardo Vieira in 2005. Mostly, the product is then smuggled out to Europe by land, sea or air. But much is sold locally, too. Cocaine-snorting in West Africa is now thought to be as common as in Europe. + +In east Africa the more urgent problem is heroin, which is imported from Afghanistan and Pakistan on its way to Europe, but also serves a local market. No one is quite sure how many people take heroin—across Africa, the UN puts the number of injecting drug users anywhere between 330,000 and 5.6m. But everyone is sure it is growing. With injection comes HIV, the virus that causes AIDS, which is easily spread by sharing needles. In the poorer parts of Mombasa, some users even inject blood extracted from another drug user to get a free high, a technique called “flashblood”. It is, of course, incredibly risky. + +Governments are reacting. Kenya’s drug-and-alcohol-addiction authority now operates a free helpline for addicts of all sorts, which is advertised on the back of high-visibility jackets given to motorcycle taxi drivers. The phone line is answered quickly, but other treatment is patchy, says Elizabeth Ogott of the Kenya Alcohol Policy and Control Alliance, an NGO. When rehab is available, it costs too much for most Kenyans, she says: at least 1,000 shillings (about $10) a day. Methadone clinics have recently opened in Mombasa, but “that’s just a drop in the ocean”. Few Kenyans understand addiction, she thinks. + +Corruption makes prohibition even less effective than in the West. Kenya’s government likes to blow up boats carrying contraband in front of journalists. But few traffickers are prosecuted. Even booze laws are barely enforced: bars are supposed to stop serving drinks at 11pm, but you’d never guess it wandering around Nairobi at midnight. In January Ugandan officials admitted that about 80kg of cocaine which had been seized by the police at Entebbe airport had subsequently gone missing. As Africans get rich, the party seems sure to get louder–whatever the consequences. + + + + + +Southern Africa’s drought + +Too little, too late + +Governments are responding too slowly to an approaching disaster + +Apr 16th 2016 | TOMALI, MALAWI | From the print edition + + + +IN TOMALI, a village in Malawi’s Chikwawa district, a village elder born in the 1930s says she cannot recall a drier year. Esther Manganjala points to the desolate field where she has planted her maize and cotton. By lifting her hands above her head she indicates how tall her crop should be at this time of year. The seeds have barely sprouted. + +The drought has scorched Chikwawa. A year ago, this traditional bread basket of Malawi was suffering from severe flooding. The effect of two poor harvests in a row is more than Chikwawa, or indeed Malawi, can bear. On April 12th its president declared a state of national disaster; Zimbabwe and parts of South Africa have done the same. In February the UN’s World Food Programme (WFP) made an urgent appeal for $38m in international aid. Combined with other countries in the region, southern Africa’s appeal for emergency aid stands at $1.6 billion. That is in addition to east Africa’s $2.7 billion appeal, which has received the lion’s share of media coverage and donations. (Ethiopia gets the most attention.) + +The WFP has been operating in Tomali for years. Long-standing programmes help farmers to develop new businesses and aim to wean them off more vulnerable plants. But sensible planning goes only so far. Schemes such as one that encourages people to make and sell efficient clay stoves are useful only if there are customers with money to buy them, or food to cook on them. At a nearby market, bags of maize, the staple, are getting too costly. + +In lean years Malawi looks to South Africa and Zambia to supply maize, but the scale of southern Africa’s drought means that they have problems of their own. In South Africa the government reckons that the maize harvest will be 27% lower than last year. It has relaxed restrictions on genetically modified crops, and will import at least 3.8m of the roughly 14m tons of maize needed to feed its people this year. + +In Zambia, where an election is due in August, the government is furiously obfuscating. Last month authorities impounded 28 trucks carrying maize bound for Malawi and “restricted” exports to Zimbabwe. But Zambia’s agriculture minister continues to deny that exports have been banned, and insists there will be enough food for everyone. + +Further afield, Zimbabwe’s food problem is probably the most acute, with a quarter of the population considered to be at risk. One aid worker who recently visited the country claims to have seen not one healthy crop on the long drive from Harare to Bulawayo. In recent weeks Robert Mugabe, the president, has requested $1.5 billion in food aid. + +The world’s response has been slow and stingy. Emma Donnelly, the coordinator for Britain’s Department for International Development in Zambia, says the migrant crisis in Europe and the war in Syria are straining donors’ capacity and will. Delay is costly: a study by the department in 2012 noted that responding to drought early is several times cheaper than waiting until famine takes hold. Aid officials are afraid to talk about famine, for fear of sounding alarmist. But that is what may be in store if more is not done. + + + + + +China and Africa + +A despot’s guide to foreign aid + +Want more cash? Vote with China at the United Nations + +Apr 16th 2016 | From the print edition + + + +PITY the UN ambassador of a small African country each time a vote is called in the General Assembly. Many of the resolutions will be ones that their president and most of their compatriots neither know nor care about. Take Resolution 70/230, adopted just before Christmas and new year when the world’s mind is on how it will recover from one hangover while bracing for the next. The UN resolved, among other things, to hold a symposium on basic space technology in South Africa and a workshop on “human space technology” in Costa Rica. It passed easily. + +But what of more contentious resolutions, such as one condemning North Korea for abuses of human rights? Deciding whether to vote yea or nay ought to be easy: North Korea has one of the worst records on earth. Yet 19 countries voted against the resolution, among them Zimbabwe, Burundi and Algeria. Another 48 abstained, among them Kenya, Mozambique and Ethiopia. One reason, perhaps, is that China (which dislikes criticism of its pals in Pyongyang) smiles on nations that agree with it. + +AidData, a project based at the College of William and Mary in Virginia, keeps a huge database on official aid flows. Its number-crunching shows how much China appears to reward African countries that vote with it. The relationship is not a simple one (see chart), according to Brad Parks, a director of the organisation. China gives proportionally more money to poorer countries, for instance. But by and large countries that support China do better. AidData reckons that if African countries voted with China an extra 10% of the time, they would get an 86% bump in official aid on average. If Rwanda, for instance, were to cast its ballot alongside China 93% of the time (instead of its current 67%), its aid from China could jump by 289%. + + + +China's development aid to Africa: who gets most and why? + +A purely self-interested foreign policy would need to take into account donors other than China, too. America’s Congress receives an annual report from the State Department showing which countries voted with Uncle Sam. Many academics claim to have found evidence that America, too, buys UN votes with aid. (If so, it is hardly consistent. Afghanistan routinely opposes American positions at the UN, yet still gets great dollops of cash.) Even so, cash-strapped African leaders should probably hire a data scientist or two to optimise the yield on their votes, or at the very least make sure their ambassadors turn up. Burundi, Gabon and the Democratic Republic of Congo missed almost half of the votes that America considers key. Swaziland missed two-thirds of its opportunities to cosy up to America or China. Surely in the business of vote-buying the principle of “no vote, no pay” applies. + + + + + +Europe + + + + +Ukraine’s struggle against corruption: Clean-up crew + +Abortion in Poland: No exceptions + +Germans ridicule Turkey’s president: There once was a prickly sultan + +Italy’s migrant route: Opening back up + +The Balkan arms trade: Ask not from whom the AK-47s flow + +Charlemagne: All quiet on the Aegean front + + + + + +Ukraine’s struggle against corruption + +Clean-up crew + +Ukraine is broken, but its civic activists are trying to build a new country + +Apr 16th 2016 | From the print edition + + + +IT is easy to despair of Ukraine. The war-torn country has been engulfed by political crisis for nearly two months. The “Revolution of Dignity” that overthrew the corrupt, authoritarian government of President Viktor Yanukovych two years ago brought no revolutionary change. Corruption is still rampant. Key reforms are incomplete. The separation of powers between the president and prime minister remains vague. The oligarchs are still entrenched and the old political faces are having a makeover. The government is paralysed. Foreign aid is frozen. And the shenanigans around the formation of the new government seem painfully familiar. + +On April 10th, after weeks of vacillation, the prime minister, Arseniy Yatseniuk, whose popularity had plummeted along with Ukrainians’ living standards, offered to resign. His two-year term produced mixed results. His government managed to raise the absurdly low price Ukrainians are charged for gas, and reduce the country’s dependence on Russian supplies. Public procurement—a big source of corruption—became more transparent. But his administration was tarred by corruption scandals and stalled reforms. + +Mr Yatseniuk’s offer of resignation was followed by dissension and backroom horse-trading. The squabbling exemplified Ukraine’s lack of a responsible political elite. On April 14th the Rada, Ukraine’s parliament, voted in a new government led by Volodymyr Groisman, the speaker of parliament and a close ally of President Petro Poroshenko. Oleksandr Danyliuk, a former consultant at McKinsey, is to be finance minister. The new administration is backed by a thin coalition between Mr Poroshenko’s bloc and Mr Yatseniuk’s party, which despite its miserable ratings will retain key cabinet posts, including the Ministry of the Interior. + +Ukraine-watchers could not escape a feeling of déjà vu. Twelve years ago the Orange Revolution was followed by a period of misrule by then-President Viktor Yushchenko. At the time Mr Poroshenko, who was one of Mr Yushchenko’s lyubi druzi (“dear friends”), epitomised the betrayal of the revolution’s hopes. + +Yet in at least one respect the current situation is different: the energy of the Revolution of Dignity has not dissipated. Instead it has carried over into civil society. With international support, Ukrainian civic groups are trying to force the government to follow through on the promises of the Maidan uprising to reform a corrupt, oligarchic post-Soviet system. + + + +On a Kiev street parallel to the presidential administration building, dozens of young activists are shaping a new European-style state, building parallel institutions and drafting laws that are pushed through parliament. Some 50 of the leading non-governmental organisations (NGOs) have formed a coalition, oddly styled the “Reanimation Package of Reforms” (RPR) in English, that is pushing bills, staging protests, monitoring reforms and holding weekly meetings with MPs. + +RPR includes two dozen groups with expertise on reforms such as decentralisation and the fight against corruption. “We have real sway,” says Vadym Miskyi, a 26-year-old RPR organiser who was on Maidan two years ago. The network also includes independent media organs and some 40 young members of parliament who call themselves Euro-optimists. Many of the young activists, encouraged by the success of Georgia’s reforms in the mid-2000s, are rallying behind Mikheil Saakashvili, a former Georgian president and now the governor of Odessa, who is spearheading a national anti-corruption movement. + +Unlike the Georgian reforms, which were zealously enforced from the top, the changes in Ukraine are less visible. Yet they have broader support. Daria Kaleniuk, the head of Anti-Corruption Action Centre, one of the RPR’s member groups, says one reason corruption may seem to be getting worse is that it receives more media exposure than it did under Mr Yanukovych. “We have created a toxic environment for Ukraine’s corrupt officials, who have been stealing for the past quarter-century,” says Sevgil Musaieva-Borovyk, the editor of Ukrainska Pravda, an online newspaper. + +But although civil society has scored important victories in the information war, the main battle is over law enforcement. Unable to break up corrupt structures such as the prosecutor’s office (which is even less trusted by Ukrainians than Russia’s propaganda-spewing TV stations, according to polls), Ukrainian civil society is helping to build parallel institutions. + +A number of cities have established new police forces to bypass the old corrupt ones. There is a National Anti-Corruption Bureau (NABU) empowered to investigate high-level graft, a new anti-corruption prosecution service and a National Agency for the Prevention of Corruption to monitor the income declarations of government officials. Civic activists are trying to change election rules to limit the private funding of election campaigns and prevent political parties from serving as the oligarchs’ poodles. + +The victory of Ukraine’s civil-society movement is far from guaranteed. It will depend partly on the efforts of Western donors to enforce strict conditions for the funds they disburse in Ukraine. Establishing NABU was one of the main conditions the IMF attached to its $17 billion loan programme, which has been frozen over concerns about corruption. Desperately reliant on foreign aid, the Ukrainian government had limited wiggle room. + +Inevitably, the civil activists and NABU investigators—rigorously selected, trained by Western anti-fraud services and well paid—are provoking resistance from the old system. The General Prosecutor’s office, headed until recently by Viktor Shokin, a protégé of Mr Poroshenko, has refused to pass information to NABU and attacked the Anti-Corruption Action Centre. “In a country where officials steal by percentage points of GDP, it was always going to be a struggle,” says Ms Kaleniuk. “We were ready for it.” + + + + + +Abortion in Poland + +No exceptions + +A proposed ban pits pro-choice women against the government and the church + +Apr 16th 2016 | PRENZLAU AND WARSAW | From the print edition + +Not their idea of Law and Justice + +IT TOOK Anna four weeks to make up her mind. A Catholic from Poland’s conservative south, she already has three children, the youngest just seven months old, and says she could not afford a fourth. Abortion is illegal in Poland except in cases of rape, severe prenatal defects or when the mother’s life is at risk, so Anna and her partner found a clinic in Germany. On a fairly typical day early this April, she was one of six Polish women who underwent abortions at the hospital in Prenzlau, a town north-east of Berlin. + +Poland’s abortion restrictions are already among the tightest in Europe, but they may be about to get tighter. Pro-life organisations, backed by the Catholic church, have proposed legislation that would ban the procedure except to save the mother’s life, and lengthen the penalty for those administering it from two years in prison to five. If their draft law collects 100,000 signatures, Poland’s parliament will have to consider it. + +The initiative jibes with the social conservatism of Poland’s new government, run by the populist Law and Justice party (PiS). Since coming to power in October, it has announced the end of state-funded IVF treatment and mulled restricting access to the morning-after pill. At the same time, it has launched a child subsidy of about $130 per month. Jaroslaw Kaczynski, PiS’s leader, suggested that most of the party’s MPs would vote in favour of the abortion ban. + +But although many in the party back the initiative, it is causing a political headache. Three-quarters of Poles oppose abortion on demand, but most approve of the existing exceptions, according to a recent poll. Thousands of pro-choice demonstrators waving wire coathangers have marched against the proposed ban in Warsaw and other cities. When priests in Polish churches began reading out a letter from the country’s bishops supporting the initiative, female worshippers walked out in protest. + +Poland’s current laws may or may not prevent abortions, but they certainly make them harder to obtain, and sometimes more dangerous. Just under 1,000 legal abortions were carried out in Poland in 2014. The number of illegal ones is estimated to be many times higher. Some women travel to Germany, where abortion is technically unlawful but tolerated until the 12th week of pregnancy, or to other nearby countries where restrictions are laxer (see chart). In Berlin, some are helped by Ciocia Basia (“Aunt Basia”), a network of activists that introduces Polish women to sympathetic gynaecologists and puts them up at volunteers’ homes. + + + +Others attempt to solve the problem themselves. Some swallow stomach-ulcer pills, hoping the side effects will lead to miscarriage. Janusz Rudzinski, a Polish gynaecologist who runs the abortion department at the hospital in Prenzlau, says he was once phoned by a woman with a critically high fever after she ended her pregnancy with a piece of wire. + +The government may yet back away from the measure. Beata Szydlo, the prime minister, first said she supported a tighter ban but later denied that any such measure was being discussed. The church, too, fears over-reaching. Some Catholic women say the bishops’ support for a complete ban has driven a wedge between them and their faith. On the left, many are now calling for the current restrictions, which date from 1993, to be lifted. “Each woman should have the choice,” says Anna, resting against the hospital pillows before her long journey home. + + + + + +Germans ridicule Turkey’s president + +There once was a prickly sultan + +Whom Germans were fond of insultin’ + +Apr 16th 2016 | BERLIN | From the print edition + + + +BEFORE reading a “poem” on German television on March 31st, Jan Böhmermann, a satirist of questionable tact, explained that he wanted to clarify the boundaries of free-speech law. He then declaimed a series of obviously fictional passages (in rhyming verse) depicting Recep Tayyip Erdogan, the president of Turkey, engrossed in a series of athletically challenging sexual activities with barnyard animals. By the time the broadcaster took the video off its website a day later, it had caused a diplomatic fracas between Turkey and Germany. + +The tension had been a long time brewing. In 2007 the chancellor, Angela Merkel, snubbed Mr Erdogan by opposing Turkish membership of the European Union. As Mr Erdogan’s rule became increasingly autocratic, Mrs Merkel often chided him for nobbling dissidents and the press. But in 2015 refugees started streaming into the EU via Turkey. Suddenly Mrs Merkel needed Mr Erdogan’s help. + +The result is the deal that the EU, at Mrs Merkel’s prodding, made with Turkey last month. In return for taking back migrants from Greece and cracking down on people-smugglers, Turkey gets billions in aid and new talks about joining the EU. Its citizens will also be allowed to travel visa-free in Europe. Mrs Merkel is now reluctant to criticise Mr Erdogan. + +Basking in its new importance, Turkey has summoned the German ambassador for a dressing-down three times in recent weeks. One complaint was over a mildly satirical song about Mr Erdogan aired on German television on March 17th. At that point Mrs Merkel declared press freedom sacrosanct—prompting Mr Böhmermann to up the ante. + +On April 10th Ankara dispatched a formal diplomatic note, invoking an antiquated German law against insulting foreign heads of state. In theory Mr Böhmermann could go to prison for three years, if the German government decides to prosecute. Amid howls of outrage in Germany, Mrs Merkel has yet to rule this out. Mr Erdogan has also filed a personal complaint on the same charges. + +Mrs Merkel will need all her diplomatic skill to contain this spat. The stakes are greater than Mr Erdogan’s fragile ego: freedom of speech, the refugee crisis and Syrian policy are all in the mix. Meanwhile, another blow-up is on the horizon. This spring the German Bundestag is set to vote on whether the mass killings of Armenians by Turks a century ago constituted genocide. Expect Turkish tempers to fray. + + + + + +Italy’s migrant route + +Opening back up + +Most migrants to Europe once came through Italy. They may again + +Apr 16th 2016 | ROME | From the print edition + + + +THE Brenner Pass between Italy and Austria is an Alpine fantasy landscape of sheepfolds and snowy peaks, traversed by a highway crowded with holidaymakers and truckers. On April 12th a European Union spokeswoman declared the pass to be “essential for the freedom of movement within the European Union”. Her words were not celebratory, but foreboding. Earlier, Austrian police had disclosed that construction workers had begun pouring concrete for a registration hall and a 250-metre-wide barrier that would allow the pass to be closed. + +This was not just the latest reaction to the more than 1m asylum-seekers who have entered Europe through Greece since last year. Rather, it was in anticipation of a new wave that may be coming. Up to 300,000 migrants could arrive in Italy this year, Austria’s former interior minister, Johanna Mikl-Leitner, said before meeting her Italian counterpart on April 8th. And no one should assume that the pass will stay open if the migrants turn up. + +Ms Mikl-Leitner, a member of the centre-right Austrian People’s Party, is a hardliner on immigration. And she is no longer interior minister; she resigned last week to take a senior job in regional government. But her warning is plausible. In the first quarter of this year, while the world’s attention was fixed on events in the Balkans, almost 20,000 migrants arrived in Italy by sea, according to UNHCR, the UN’s refugee agency. That is double the number who came in the same period in 2015, a year in which a total of 150,000 reached Italy. The Austrian ex-minister’s arithmetic, moreover, takes no account of the possibility that the closure of the Greek route in March could push Syrian and other refugees to switch their attention to Italy. + + + +INTERACTIVE: A guide to Europe’s migrant crisis, in numbers + +The vast majority of those currently heading for Italy in boats leaving from Libya, and occasionally Egypt, are not from Syria or Afghanistan, but sub-Saharan Africa. One recent spike saw 2,800 people rescued in a single day. That may have been due to better weather. But it may also have reflected a slight improvement in the security situation in Libya, which has been racked by civil war since the fall of Muammar Qaddafi in 2011. Tunisia has announced that it will reopen its embassy in the capital, Tripoli. Other countries are discussing following suit. + +Italy retains a strong interest in Libya, where it had colonies from 1911 until the second world war. On April 12th Italy’s foreign minister, Paolo Gentiloni, flew to Tripoli to show support for a new UN-sponsored unity government launched last month. One of the two rival regimes that had been contesting power has already stepped down in favour of the unity government; the other is due to make its decision on April 18th. America and its allies hope the unity government will help roll back Islamic State fighters who now control a large chunk of Libya. + +For Italy, however, pacifying Libya would be a gamble. The chaos has afforded cover for human trafficking, but it also acted as a deterrent to would-be migrants, adding to the considerable perils of crossing first the Sahara and then the Mediterranean. It is unclear whether a restoration of order would encourage migration more than it discouraged trafficking. UNHCR says there are already 100,000 people in Libya waiting to cross the Mediterranean. + +A more immediate imponderable is the effect of the blocking of the route through the Balkans. Nicola Carlone, a rear admiral in the Italian coast guard, thinks it probable that traffickers will now try to smuggle Syrian refugees into Europe via North Africa. Others may take aim at Italy’s Adriatic coast. Since the 1990s, when the coast of Puglia in Italy’s south-east was the preferred destination for clandestine migrants from Albania, landings there have been infrequent. In 2015 there were only five, according to a UNHCR spokesperson. But at the end of March 21 people, including Syrians, Palestinians and Somalis, came ashore in a small boat on Italy’s Adriatic coast. They are unlikely to be the last. + + + + + +The Balkan arms trade + +Ask not from whom the AK-47s flow + +The answer is often Serbia, Croatia or Bulgaria + +Apr 16th 2016 | BELGRADE | From the print edition + + + +THE arsenal discovered in the apartment of Reda Kriket, a suspected terrorist arrested on March 24th near Paris, included explosives, Kalashnikov AK-47 rifles and a machine pistol from Croatia. The terrorists who staged the attacks last November in Paris used Kalashnikov ammunition made in Bosnia. The Kouachi brothers, who attacked the satirical magazine Charlie Hebdo the previous January, employed AK-47s made by Zastava, a Serbian manufacturer. Whatever else these terrorists may have shared, one thing they certainly had in common was a fondness for Balkan arms. + +The tendency of guns from the Balkans to show up in terrorist attacks in Europe is no surprise. The wars attending the breakup of Yugoslavia in the 1990s, and the near-collapse of the Albanian state in 1997, left a vast supply of small arms in the region. One study estimated the number of firearms in private hands in the Balkans at over 6m, most of them unregistered (see chart). Serbia has the highest concentration of private guns per head in Europe. + + + +On a continent with strict gun laws, Balkan guns have been a blessing for organised crime, too. A study of 26 gang weapons seized in Marseille found nine were Kalashnikovs from the former Yugoslavia. French police report that Albanian gunrunners bring in 20 of the rifles at a time, concealed in the floors of vans. In 2014 Slovakian police stopped an entire lorry full of guns and grenades heading from Bosnia to Sweden. + +Helping other regions Balkanise + +Yet such shipments into north-western Europe are the small-time “ant trade” of the region’s arms industry, says Ivan Zverzhanovski, co-ordinator of SEESAC, an organisation working on small-arms control in the Balkans. The big customers are foreign governments—many of them Western. In 2014 American, Australian, British and Canadian military cargo planes collected 22m rounds of Kalashnikov ammunition and other arms from Albania and delivered them to Kurdish Peshmerga forces fighting Islamic State (IS) in northern Iraq. + +In that case the munitions were free: Albania donated them to earn political credit with Washington, says Evelyn Farkas, a former American defence official. But in most cases the contracts are lucrative. Many of the militias that Western countries back in the Middle East use weapons from the former communist bloc, especially the cheap, reliable, long-lasting AK-47. Since Western countries do not make them, Balkan sources come in handy. America has been buying crates of Kalashnikovs from Serbia’s Zastava since the late 2000s, mainly for Iraqi and Afghan security forces. + +Some of these guns leak into local bazaars, or are seized when militias capture government arsenals. A study by Armament Research Services (ARES) of ammunition used by IS in an area of Iraq in 2015 found that 17% of it came from the Balkans. Videos on social media show Syrian militias using Croatian rifles—almost certainly among 10,000 supplied to Iraqi forces as part of a €100m ($120m) deal in 2014-15. In 2012 Croatian arms bought by Saudi Arabia were flown to Jordan for distribution to Syrian rebels in a deal backed by the CIA. + +Although most of the Balkan arms business is above-board, some is not. Non-state groups can get the “end-user certificates” needed for international deals through well-connected consultants, says one Serbian source. Another says militias in Yemen, which is under a UN arms embargo, are getting guns through buyers with end-user certificates from Persian Gulf states. Western countries that back the militias, the source says, “turn a blind eye”. Bulgarian arms supposedly destined for the Gulf are turning up in Yemen, Libya and Sudan. + +Two decades after the Balkan wars ended, the region’s arms trade does not seem to be slackening. On February 19th an American air strike on an IS base in Libya killed two Serbians associated with the country’s embassy who had been kidnapped in November. Aleksandar Vucic, the Serbian prime minister, said he would rather not discuss the reasons for the kidnapping. It was, he said, “related to certain weapons deals”. + + + + + +Charlemagne + +All quiet on the Aegean front + +The migrant deal with Turkey has created breathing space. Europe must use it generously + +Apr 16th 2016 | From the print edition + + + +ZIPPING across the choppy Aegean in his powerboat, Nassos Karakitsos, a volunteer with a search-and-rescue NGO called Emergency Response Centre International, scans the horizon for refugees. He spots none. A few months ago the seas around the Greek island of Lesbos were filled with overstuffed rubber dinghies (“balloons with engines”, Mr Karakitsos calls them) carrying Afghans, Iraqis and Syrians from the Turkish coast. Today they are home only to the more forbidding vessels of the Greek coast guard, Frontex (the European Union’s border agency) and NATO, lately arrived to help with maritime surveillance. + +The quiet seas are the result of a deal struck between the EU and Turkey to reduce migrant flows, which came into effect on March 20th. It took everyone by surprise, says a European official on Lesbos, and there were teething troubles: the police tailed a Turkish liaison officer stationed on the island, suspecting he was a spy. But for now the migrants have stopped coming. Some of the scrappy volunteer groups that flocked to Lesbos last autumn, when 6,000 refugees might clamber ashore in one day, are closing shop. Larger organisations are moving staff to mainland Greece, where 46,000 refugees have been trapped by the closure of the Macedonian border. + +The drama has shifted to Greek ministries, EU agencies and the quasi-prisons on Aegean islands created by the Turkey deal. On Lesbos, all arrivals are taken to Moria, a “hotspot” (processing centre) turned detention camp. Most will face return once their asylum claims have been found inadmissible, on the ground that they reached Greece from Turkey, now considered a safe country for asylum-seekers. (Deportations of migrants who did not claim asylum in Greece have already begun.) Activists consider the deal a shameful abrogation of the EU’s commitment to human rights. The pope, who has attacked Europe’s “anaesthetised conscience” on refugees, will visit Lesbos on April 16th. + +Well over 3,000 souls have been stuffed into Moria, a grim place of barbed wire and watchtowers. Through a fence Muhammad, a Syrian refugee, tells Charlemagne of overcrowded shelters and a complete lack of information before a policeman cuts the conversation short. Pakistanis—who, curiously, have been arriving in greater numbers since the deal kicked in—have begun a hunger strike. The NGOs that used to provide services inside Moria have partly withdrawn in protest, leaving it short of infrastructure, expertise and food. Last week Amnesty International, a human-rights watchdog, criticised the “appalling conditions” at Moria and another centre on the island of Chios. + +Worse may be to come. All migrants on the island have the right to claim asylum and to appeal if rejected, and 95% have taken this up. The Greeks plan to conclude each case within just 15 days. But there are endless unanswered questions over the process, from the treatment of unaccompanied minors to the provision of legal aid. “It’s an experiment for us, and for Europe,” says Maria Stavropoulou, the director of the Greek asylum service. + +Very little about Europe’s handling of the refugee crisis has gone right. This deal is unlikely to be an exception. Refugees who have spent vast sums to flee life-threatening situations may not go willingly. The fate of non-Syrians returned to Turkey is unclear. Legal challenges are certain. The timeline for processing may well slip. In the meantime, if arrivals pick up again, Lesbos could reach its capacity of around 6,000. Officials have already begun offloading migrants from Moria to other camps. Dozens of EU asylum officials have been dispatched to process the claims. Ms Stavropoulou’s service has doubled in number. But she cannot bring herself to say that she is confident the deal will work. + +Much of the criticism the deal has attracted is therefore deserved. And yet, as Yannis Mouzalas, the Greek migration minister, notes, by the time it was signed it was the best that could be done. The EU had learned the hard way that it was unable to create a relocation scheme to share the refugee burden, and without one, fences were the only alternative. For those European politicians whose priority was to reduce the flow, the new arrangement looks like a success. New asylum registrations in Germany fell to 21,000 in March, down from over 200,000 in November. Fears that migrants stranded in Greece would find other ways through have not come to pass; instead, they have camped out in wretched conditions near the border, and elsewhere, in the futile hope that it will reopen one day. + +Asylum or bust + +This has created a tinderbox in Greece—last week Macedonian police tear-gassed migrants who tried to storm the border—but breathing space for politicians. Not long ago pundits speculated that Angela Merkel, the German chancellor, might not see out her term. Now she enjoys rising approval ratings. + +That could change if the deal collapses. But there is a bigger concern. There was, despite appearances, a noble idea behind the EU-Turkey deal: stop the irregular migrant flows to make way for regular ones. Europe will probably make good on its minimal commitment to accept one Syrian refugee from Turkey for each one sent back from Greece. But the deal also includes a vague promise of far more substantial resettlements to Europe: optimists have spoken of 200,000 a year or more. On this there is little sign of movement, despite the efforts of German and Dutch politicians to corral their colleagues into making pledges. + +Throughout this crisis Europe has been accused of pulling up the drawbridge and shunting its problems onto its neighbours. So far the accusation has not been warranted. But it will be if the EU fails to make good on its resettlement promises. On the wall of Moria the graffiti is still visible behind the whitewash: “EU shame on you.” If Europe does not show that its refugee policy amounts to more than border closures, detention and forced deportation, it will become impossible not to agree. + + + + + +Britain + + + + +David Cameron’s woes: Events, events + +Tax transparency: When less is more + +Teacher workload: All work and low pay + +Railways: Re-coupling + +Hospital waiting times: An unhealthy situation + +Supermarkets: Dancing in the aisles + +Brexit brief: A matter of business + +Bagehot: Jeremy Corbyn’s trench warfare + + + + + +David Cameron’s woes + +Events, events + +Lessons from an unhappy few weeks for the prime minister + +Apr 16th 2016 | From the print edition + + + +SELDOM has there been so striking a confirmation of the old reply by Harold Macmillan, a one-time Tory prime minister, when he was asked what causes governments most trouble: “Events, dear boy, events.” David Cameron, now Tory prime minister, has been buffeted by a series of events, ranging from an ill-received budget to a steel crisis to (this week) a scandal over his culture secretary and a prostitute. + +The trickiest, however, was a row over his own taxes that began with the revelation in the “Panama papers” that Mr Cameron’s late father had set up an offshore unit trust called Blairmore from which family members had benefited. Mr Cameron and his advisers handled the news with extraordinary maladroitness, insisting at first that it was a private matter and only slowly dripping out further information. It did not matter that, as the prime minister told the House of Commons on April 11th, he had paid full British taxes on his drawing from Blairmore, that it was set up offshore for administrative reasons rather than to avoid tax, or that he had sold his holdings before taking office. The mere words offshore and trust were enough to evoke images of rich people not paying their fair whack. + +Although he seems to have done nothing wrong, Mr Cameron could partly blame himself. Four years ago he criticised Jimmy Carr, a comedian, for equally legal tax avoidance. This came back to haunt him when, after the Blairmore story, he released a summary of his tax returns for the past six years and revealed that his mother had given him £200,000 ($280,000) that is likely to escape inheritance tax. His decision to publish his returns led George Osborne, his chancellor, Boris Johnson, mayor of London, and Jeremy Corbyn, the Labour leader, to do so as well (yielding the discovery that Mr Corbyn was fined £100 for late filing). + +The pressure is now on other public figures to follow suit. There is even talk of publishing all tax returns online, as in Norway (see article). One Tory backbencher, Jacob Rees-Mogg, predicted sadly that all MPs would have to publish their tax returns before long. Their reputation for financial chicanery has not recovered from the parliamentary expenses scandal of a few years ago. Another Tory MP, Alan Duncan, spoke crassly when he warned that the House of Commons might soon be filled only by “low achievers”, but the fear that too much transparency could put talented people off public life is real enough. + +The political problem for Mr Cameron and Mr Osborne is not really about taxes at all. It is the confirmation of the widespread notion that they are posh boys from privileged and wealthy backgrounds who are out of touch with ordinary folk. Mr Corbyn struck a chord this week when he spoke of one rule for the super-rich and another for everybody else. A common perception ever since the financial crisis is that the government is trying to balance its budget on the backs of the poor, the disabled and the young while protecting the rich and the old. It was borne out when Iain Duncan Smith resigned in March as work and pensions secretary, complaining that Britons were “not all in it together”. + +This perception of Mr Cameron as one who seeks always to look after his own is not quite correct: his party conference speech in October was an admirably sincere attack on the deep unfairness and inequalities that disfigure British society. But it is making it harder for him to command support, even among his own backbenchers. Ungrateful Tories seem to have forgotten that it was Mr Cameron who, less than a year ago, pulled off an unexpected election victory and that the economy is steaming ahead, with the employment rate at a record high. + + + +In graphics: A guide to “Brexit” from the European Union + +Underlying almost all Mr Cameron’s political woes is the June 23rd referendum on Britain’s membership of the European Union, the official campaigning for which began this week. The combination of a tiny government majority in the Commons, a relatively strong economy and the ineffectiveness of Mr Corbyn as Labour leader (see Bagehot) is giving Eurosceptic Tory backbenchers more freedom to make trouble. They reason that, since the Conservatives are bound to win the next election anyway, there is nothing for the party to fear from splits or rebellions. The talk in Westminster is now of a big cabinet reshuffle or even of a leadership challenge after the referendum. In any event, since Mr Cameron has said he will not run again in 2020, the political agenda will move on to open debate over his successor. + +What should be most worrying for the prime minister is that the campaign to remain in the EU seems not to be going well. Matthew Goodwin at the University of Kent, who is part of the academic network “The UK in a Changing Europe”, notes that the poll lead for Remain has narrowed sharply, partly because of rising concerns over immigration. He cites evidence suggesting that turnout will be higher for Brexiteers and concludes that, if overall turnout is 50-55%, Brexit may well win. Another blow is the designation by the Electoral Commission this week of Vote Leave as the official campaign group entitled to state funding. Vote Leave is the more sensible of the two rival pro-Brexit organisations. + +Against this background, maintaining voters’ trust in the prime minister is more crucial than ever. The Remain campaign’s silver bullet was always Mr Cameron’s advocacy of its cause. If he is tarnished by the hoohah over his taxes, his own wealth or the random events that afflict prime ministers, the risk of Brexit will rise. When asked this week by Douglas Carswell, the UK Independence Party’s lone MP, if he would stay in office were he to lose the vote on June 23rd, Mr Cameron replied tersely: “Yes”. But few Tories believe him. The irony is that, when he first promised a referendum in early 2013, he did so in hopes of uniting his party. Now it is the referendum that is doing the most to divide it. + + + + + +Tax transparency + +When less is more + +The evidence on full tax transparency is thin, and mixed + +Apr 16th 2016 | From the print edition + + + +SUNLIGHT may be the best disinfectant, but it can also burn. On April 10th David Cameron, forced into it by revelations in the “Panama papers” on tax havens (see article), became the first British prime minister to publish a summary of his annual tax returns. As the press howled with indignation over his supposed tax dodges, other politicians released their own data. One outraged MP threatened to propose a ban on curtains so that every aspect of private life would be open to public view. + +In some countries, however, such disclosures are routine, and not just for politicians. In Sweden, Norway and Finland all tax returns are publicly available. Showing how much everyone contributes to the common coffers is meant to increase social cohesion as well as trust in the government and the tax system. Rather than aimlessly sniping at the rich for not pulling their weight, Norwegians can check to see whether they actually do. Tor Dolvik of Transparency International, a pressure group, says one positive effect is continuous debate about the tax code. + +Hard evidence on the specific impact of making tax returns public is scarce, but a Norwegian reform in 2001 provides some clues. Before that date, tax records were available only in paper form. Then the government put them online, enabling people to search painlessly and anonymously for their neighbours’ returns. + +The boost in transparency produced benefits. A study by Erlend Bø and Thor Thoreson at Statistics Norway and Joel Slemrod at the University of Michigan found that reported income among business owners rose by around 3%. Another by Ricardo Perez-Truglia of Microsoft Research credited the change with improving people’s awareness of where they really ranked in overall income distribution. + +But there were also costs. Mr Perez-Truglia found as well that some at the lower end of the spectrum did not like what they found out: the gap between how happy the rich and poor said they felt widened. There were tales of children bullied because of their parents’ income, low-paid workers shamed and crooks using the information to plan their next hit. And such easy access stimulated snooping. When the authorities later stripped searchers of anonymity, the number of searches fell by more than 90%. + +How relevant is Norway’s experience to privacy-loving Britain? Perhaps surprisingly, 51% of respondents in a poll in 2012 by YouGov favoured making all tax returns in Britain public. More recently and more predictably, another YouGov poll this month found that 68% thought senior politicians’ returns should be in plain view. + +The argument for holding politicians to a higher standard of transparency than the masses is the public interest in revealing conflicts of interest and rooting out corruption. Around 90% of countries have a disclosure system of some sort, says Larissa Gray of the World Bank, though less than half give access to the public. Some fear that forcing politicians to disclose their tax affairs discourages people from standing for office, but this is now the norm for London mayoral candidates and would-be American presidents, for example. + +Evidence on whether greater transparency produces better politics is also a bit thin on the ground. A working paper by Florian Schulz, an economist, and colleagues looked at India, finding that a requirement for political candidates to disclose their assets had deterred some incumbents from running again. Promisingly, in the areas where they dropped out economic growth was higher than before. Another study published in 2010 in the American Economic Journal: Applied Economics looked at 175 countries and discovered a strong relationship between greater financial disclosure on the part of politicians and improved public perception of the quality of governance. + +The same study also shows that for politicians to disclose their assets, liabilities, income sources and conflicts of interest mattered more to people than how rich their rulers were. This bodes well for British MPs worried about an explosion of tabloid tax porn if their tax returns are made public. It suggests that the current register of MPs’ interests, which is intended to reveal conflicts of interest rather than total wealth, may be drawn broadly enough. + +Mr Cameron has said firmly that he expects only the most senior politicians to publish their tax returns, though this may not be enough to satisfy a distrustful public. More generally, he hails himself as a champion of transparency: later this year he will introduce a public register showing who owns what companies. This could reveal unsuspected conflicts. A similar recent change in Norway has caught out several of its politicians. + + + + + +Teacher workload + +All work and low pay + +Teachers in England gripe about long hours—and justly so + +Apr 16th 2016 | From the print edition + + + +CLAIRE COLLING has been a teacher for 23 years and has never had to put in the hours she does now. Her work begins at around 7am and sometimes does not end until 10pm, when she finishes marking and preparing lessons slumped in front of the television. Making sure that classes meet the needs of all her pupils—from high-flyers to stragglers—is tough. But it is not as tough as marking, which takes up “an inordinate amount of time”, partly because of rules imposed from above. “I never thought I would be micromanaged to such an extent that I would be told what colour pen to use,” she says. + +Ms Colling is not the only Stakhanovite in English schools. Indeed, her hours are not that far from the norm. Teachers in England and Wales are among the busiest in the world (see chart). Each day, they work an hour and a half longer than the average reported by their colleagues in other countries; only Singaporean and Japanese teachers are more dedicated. English teachers also spend an unusually high proportion of their day on marking and administration. Such activities take up 30% more time in English schools than in most of their international equivalents. + +At first glance, it seems that English teachers are reasonably well paid for their efforts. According to analysis by The Economist, their salaries, adjusted for hours spent at school and compared with those of similarly-qualified graduates, are around the average for the OECD club of mostly rich countries. But English teaching contracts are flexible: although they state that a full-time teacher must work a relatively puny 1,265 hours a year, teachers must also put in “reasonable additional hours” to plan lessons, assess pupil performance and mark homework. And what may once have been reasonable now looks increasingly unreasonable. According to the Department for Education, which analysed teachers’ diaries, the time teachers spent marking nearly doubled from 2010 to 2013. Altogether, teachers worked seven hours more a week than they did in 2010. + +The rise in teachers’ workload is partly a result of the long-running trend to focus on the performance of each pupil rather than that of the class as a whole at the end of the year, says John Howson of Oxford University. The situation has been exacerbated, however, by government tinkering with exams and the curriculum. The move to supervised coursework for GCSEs, the qualifications taken at 16, and to teacher assessment in primary schools has caused difficulties, says Daisy Christodoulou of Ark, a high-performing academy group. Partly for this reason, supervised coursework is to be phased out from this year. Further changes to GCSEs and to A-levels, exams taken at 18, are still to come into effect. “A more consistent approach from government would help,” sighs one primary-school headteacher. + +But bad management in schools is also a problem. Many teachers are overwhelmed by poor-quality data-collection, unnecessary marking and formulaic lesson planning. A forthcoming report by the Education Endowment Foundation, a charity, will warn that there is little research to back many popular marking strategies. And teaching fads are still widespread, notes Jonathan Simons of Policy Exchange, a think-tank, with schools often motivated by myths of what inspectors are said to look for. + +The intense workload is not just bad news for teachers. Schools are finding it increasingly difficult to recruit them, and shortages are exacerbated by a rise in the number of those leaving the profession. In 2014 10.4% of teachers quit their jobs, up from 9.6% in 2011. It seems that few are moving for more money: according to the National Foundation for Educational Research, a charity, about as many leave to become teaching assistants as to go into the private sector. + +Most educationalists reckon the government has grasped the extent of the problem. The Department for Education recently published a series of reports on how to reduce teacher workload, which were pragmatic but offered few concrete solutions. Ofsted, the schools watchdog, has clarified that it focuses on outcomes rather than processes. But rising pupil numbers and a falling schools budget mean that such efforts are likely to be in vain. That is unfortunate: too many teachers currently work like students cramming for final exams. And as many former students can attest, there are better ways to get results. + + + + + +Railways + +Re-coupling + +Many railway lines in Britain that were closed in the 1960s are re-opening + +Apr 16th 2016 | WISBECH | From the print edition + + + +A MUSEUM in the centre of Wisbech, a Georgian town of 30,000 souls in East Anglia, proudly displays the original manuscript of Charles Dickens’s “Great Expectations”. Those were days in which Wisbech prospered. The frenzy of railway building in the 19th century gave the town three stations. Now it has none. The last passenger train left in 1968, five years after the report by Richard Beeching, chairman of British Railways, on the future of rail, which led to the closure of nearly a third of Britain’s 17,000 miles of track and a third of its 7,000 stations. The town has suffered economically. + +Yet Wisbech, like many towns cut off from the rail network, is now expecting great things. In recent years several hundred miles of railways around the country have been restored. As roads clog up and urban house prices climb, commuters, environmentalists and local politicians are pushing for more old lines to be re-opened. Some 200 proposals have been put forward, says Andrew Allen of the Campaign for Better Transport, a lobby group. + +It is a remarkable new trend. After the war, many thought that roads would rule and rail would go the way of canals. When Milton Keynes, a new town, was built 55 miles north of London in the 1960s, it was deemed not to need a station. One was at last opened in 1982. In 2015 6.6m journeys started or ended there. Traffic on other restored lines has boomed, too. The track that re-opened in 2015 from Edinburgh to the Borders expected 650,000 journeys in its first year. Half a million were made in the first five months. + +The process of re-opening is laborious. Feasibility studies take years. But with rail journeys doubling in the past two decades, Whitehall now realises it may be easier and cheaper to add rail capacity this way than through pharaonic projects such as HS2, a high-speed link north from London, set to cost over £45 billion ($64 billion). + +It is the growth of Cambridge, 40 miles to the south and a centre for high-tech, that has provided the impetus for re-connecting Wisbech. A new station is opening at the Cambridge Science Park and it is hoped that the old line to Oxford will be restored by 2024. The Wisbech rail link would halve travel time to 40 minutes. Cambridge has lots of jobs and Wisbech has cheap houses (the average price is around £150,000 compared with £398,000 in Cambridge), with a recent local plan proposing 10,000 more. If the link goes ahead, the government would meet most of the £100m cost. + +Devolution has played a role in recent re-connections. Many of the new lines are in Scotland, Wales or the big cities, which have control over local transport and can push and finance them. In the English shires no single body oversees the process, says Chris Austin, a rail expert. Greg Clark, the secretary of state for local government, visited Wisbech in March and insisted that money for the line was not dependent on East Anglia accepting devolution. Some locals, wary of having foisted upon them the regional mayor that was a condition of other devolution deals, still worry. + +With government money tight, other areas are tapping different sources for the cash to re-open lines. In the south-west, Kilbride, a developer, is putting £11.5m towards a rail link into Plymouth as part of a deal to build 750 new homes at Tavistock. + +Britain is not expecting another Dickensian railway boom. Perhaps 700-800 miles of lines closed by Beeching will be restored in total, says Mr Austin. But sometimes small amounts of investment can make a big difference. + + + + + +Hospital waiting times + +An unhealthy situation + +New figures show A&E departments under more pressure than ever + +Apr 16th 2016 | From the print edition + + + +IN 2010 a new coalition government set its own target for hospital accident and emergency (A&E) departments: 95% of patients were to be dealt with within four hours of their arrival. Since July 2013 the mark has not been hit. February brought A&E’s worst miss yet (see chart): 18.4% of patients waited more than four hours to be treated, transferred or discharged. + +This can be blamed on various bottlenecks, but the worst restricts the passage from hospital to social care. Old people stay longer in hospital than they need because there is no one to look after them at home and no place available in a nursing home. In early 2015 the inability to sort out subsequent social-care arrangements to free hospital beds accounted for around a quarter of the delays in transferring A&E patients. It now accounts for about a third. + +Growing demand has not helped. In 2005-06, 18.8m people went to A&E; by 2014-15 the total had risen to 22.4m. Numbers were flat the following year but John Appleby at the King’s Fund, a think-tank, reckons A&E departments had already reached a tipping point. When a hospital has filled almost all its beds, small fluctuations in demand make a big difference. + +Solutions seem far off. The current government’s pre-election promise to smooth the path between health and social care has yet to have much effect, says Andrew Haldenby of Reform, a think-tank. The proportion of people struggling to get help from a GP surgery rose from 12% of those surveyed in 2011 to 15% in 2016, making the “worried well”—37% of those turning up at A&E just need advice—harder than ever to shift. + +Some ideas show promise. Lakeside Healthcare, a large GP surgery in Northamptonshire, has a new urgent-care centre giving appointments at less than a third of the cost of an equivalent A&E visit. It has cut overnight stays in local A&Es by up to 50%. Such measures are sorely needed: A&E will not cure itself. + + + + + +Supermarkets + +Dancing in the aisles + +At last, better news from Britain’s biggest supermarket + +Apr 16th 2016 | From the print edition + +Tesco’s brighter future + +SELDOM had a British company fallen quite so far, so fast. As recently as 2010 Tesco, the country’s biggest retailer, was riding high after years of relentless expansion, making pre-tax profits of £3.5 billion ($5.6 billion). Yet last year this same company lost £6.3 billion, by a stretch its own worst result ever and the sixth-largest loss in the country’s corporate history. + +So the announcement on April 13th that Tesco has returned to profit, albeit a slender one, was great news, not only for the company itself but also for the rest of Britain’s struggling supermarkets. For the past few years Tesco, Sainsbury’s, Asda and Morrisons, the traditional top four, have been losing market share and pretty much everything else to the German-owned discounters Aldi and Lidl. Now, it seems, their position may be stabilising. + +Tesco made a pre-tax profit of £162m in the year to February 27th on sales of £48.4 billion. It was the first time in three years that year-on-year sales had grown in Britain, by 0.9% in the fourth quarter, compared with a drop of 1.5% in the previous three months. None of these figures stack up against Tesco’s performance when it was in its pomp under Sir Terry Leahy, but they are a lot better than last year’s, and slightly ahead of expectations. The turnaround owes much to decisions taken by David Lewis, who became the ailing company’s chief executive 18 months ago. + +Most importantly, he has taken on Aldi and Lidl at their own game, lowering prices and cutting costs. In launching its own selection of cheap “Farm Foods”, for example, Tesco has cut the cost of an average shopping basket from £46.98 in August 2014 to £44.73. It has also reduced the number of products it sells. + +Mr Lewis has shut 43 unprofitable stores and axed plans to open another 49 supermarkets, mostly the big out-of-town ones that consumers increasingly shun. The fleet of corporate jets has gone, and so have thousands of jobs. Mr Lewis has also been selling off businesses that Tesco accumulated over the years but no longer deems essential. Thus the supermarket’s South Korean Homeplus business was sold for £4.2 billion last year, its loss-making online video business, Blinkbox, went to TalkTalk and on April 12th Tesco sold half of its share in Lazada, an online retailer based in Singapore, to Alibaba, a vast Chinese firm. This raised another £90m. Others will go in due course. + +The fact that Tesco’s share price actually fell on the news that it had returned to profit suggests that it is by no means out of intensive care, however. Mr Lewis himself warned that the retail market remains “challenging and uncertain”. Investors will want to see much more progress, albeit in roughly the same direction, before they relax. There will be no let-up in the competition from Aldi and Lidl, for one thing. The discounters are planning to open hundreds of new stores and Lidl, in particular, is targeting Tesco’s backyard in London and the south-east. Both Aldi and Lidl have been tweaking their own retail strategies, by offering more brands, for instance, and selling wine online, to entice Tesco’s more middle-class customers through their spruced-up doors. + +Yet as Bryan Roberts, an analyst at TCC Global, a retail consultancy, argues, the Tesco results show that even if the British supermarkets cannot beat the discounters, at least they can come up with ways to co-exist with them successfully. Sainsbury’s has been fighting back by opening its own Netto discount stores. Cost-cutting Morrisons recently reported its first slight lift in sales for four years. The future may not be so bleak after all. + + + + + +Brexit brief + +A matter of business + +Most firms want to stay in the European Union, but some are leery of saying so + +Apr 16th 2016 | From the print edition + + + +“THE business of business is business,” Milton Friedman once said. Many companies and trade groups follow his dictum, steering well clear of politics. Yet as the official campaign for the June 23rd referendum on Britain’s EU membership kicked off this week, more businesses were making their views known. + +Vote Leave, which has just been designated as the official pro-Brexit campaign group, claims that business is evenly divided. Yet most polls by trade associations find big majorities for staying in the EU. A survey by the Confederation of British Industry (CBI) found 80% of members for Remain, with only 5% for Leave. In response to claims that it represents only big companies, the CBI points out that it speaks for 190,000 members, mostly small and medium-sized enterprises, and that 71% of SMEs want to stay. The Institute of Directors and the British Chambers of Commerce, with memberships that have a higher share of SMEs than the CBI, find most in favour. Even a majority of the Federation of Small Businesses narrowly backs Remain. + +Specialist trade associations report similar results. TechUK, an IT group, finds 70% for staying in the EU. The EEF manufacturers’ association has 61% (see chart). A survey this week by the UK arm of the International Chamber of Commerce found 86% of international businesses supporting Remain. Groups as diverse as Universities UK, the Food and Drink Federation and the aerospace and defence association also report large support for Remain. + + + +This is not to deny that some businessmen favour Brexit. James Dyson of the eponymous manufacturing firm is one. Like Alan Halsall of Silver Cross, a pram maker, he believes EU rules hamper the export of his products. Many small firms think that, since they do not export at all, they should be exempt from Brussels rules. Yet as Paul Drechsler, president of the CBI, notes, 25 years of single-market integration have created a supply-chain network so dense as to make such compartmentalisation impossible. + +A good example of a business that benefits from the EU is the British car industry. Mike Hawes, the chief executive of the Society of Motor Manufacturers and Traders (SMMT), says it was largely moribund in the 1980s and 1990s. But thanks to foreign ownership and investment attracted by a gateway into the EU single market, it has revived strongly. It accounts for 800,000 jobs and 12% of British exports (80% of its output goes abroad). Britain now produces more cars than France. Fully 77% of SMMT members favour Remain, not just because future investment depends on access to the single market but also to retain influence over the industry’s regulation. Mr Hawes cites the case of an exemption that British lobbying secured from EU emission rules for low-volume niche producers like Lotus and McLaren. + +It is a similar story for financial services. Mark Boleat, the policy director of the City of London Corporation, says his outfit has come out strongly for Remain in line with the views of the overwhelming majority of City firms. Like many businesses, they complain about the burden of regulation, but Mr Boleat points out that much of this now comes not from the EU but from either domestic or global sources. He says that even hedge funds, several of whose richest bosses favour Brexit, have been unable to point to any benefits from leaving the EU. + + + +In graphics: A guide to “Brexit” from the European Union + +Should business speak out more? Remain campaigners would like it to, as would the government. Mr Drechsler of the CBI says companies should be clear that it is not their job to tell people how to vote. But he says they would be negligent if they failed to spell out to customers, employees and suppliers the damage that Brexit will do to the economy and jobs. He does not want bosses to wake up on June 24th after a vote to leave feeling they had not done enough to spell out the risks. + +Still, some business bosses are cautious. Airbus ran into heavy criticism when it wrote to all employees to warn them of the dangers of Brexit. Japanese firms in Britain are careful not to say explicitly that they might switch investment to continental Europe. Several supermarket groups refuse to talk publicly about Brexit for fear of alienating customers. The CBI itself is a favourite target of Brexiteers, who accuse it of being a Brussels puppet and wanting to join the euro. Yet for British businesses the Brexit referendum matters more than any general election. They must nerve themselves to stick their heads above the parapet if Remain is to win. + + + +Labour rejects "Lexit" + + + +The choice of official campaigning group may boost Brexit’s chances + + + +Talk of taking back power may be delusional, but more democracy is not + + + +Most estimates of lost income are small, but the risk of bigger losses is large + + + +Calm and competent, the Remain campaign is haunted by the spectre of indifference + + + + + +More Brexit coverage + + + + + +Bagehot + +Jeremy Corbyn’s trench warfare + +Despite his abysmal performance, Labour’s leader is well dug in + +Apr 16th 2016 | From the print edition + + + +IT IS hard to imagine a more benign month for the Labour Party than the past four weeks. George Osborne’s budget quickly unravelled. Then Iain Duncan Smith, the welfare secretary, resigned and accused his party of looking after its rich supporters at the expense of the poor. Next came the news that swathes of Britain’s steel industry might have to shut. To top it off, David Cameron’s wavering response to the Panama papers, which exposed his family’s offshore holdings, put him on the back foot and reminded everyone what a privileged toff he is. All the while the Tories’ battles over Europe rumbled on. Who, in Britain’s opposition, could possibly have failed to profit from these blows? + +Jeremy Corbyn, that’s who. Labour’s hard-left leader has honed a precise formula for such moments. First he launches or endorses a petition (in Corbyn-land, objecting to things is tantamount to changing them), which is duly signed by lots of people who already dislike Conservatives. This is typically accompanied by a wildly unrealistic call for a senior Tory to resign. That does not happen. Then comes the grand showdown in the House of Commons, at which—in a convention now so well established it should be written into Erskine May’s handbook on parliamentary practice—Mr Corbyn lets the prime minister off the hook, rattling off the case against the government with all the wit and agility of an automated supermarket checkout. + +The coming weeks may prove just as damning. It is telling that Corbyn loyalists are trying to lower expectations before the local elections on May 5th. Getting their excuses in early, they warn that their candidate, Sadiq Khan, may lose the London mayoral race. Most revealingly, they are talking up a projection that the party will lose 150 seats at the elections taking place in towns like Milton Keynes, Gloucester and Rugby that decide national elections. As Marcus Roberts of YouGov, a polling firm, notes, the party should be aiming for around 300 gains. Any net loss of seats would be a “truly extraordinary event”, he adds. + +Combined with Mr Corbyn’s absence from the Europe debate (as The Economist went to press Labour’s instinctively Eurosceptic leader was about to give a speech—at last—on the subject), all of this is nudging Labour legislators towards the “regicide” button. Some have already shown their colours, two calling for Mr Corbyn to go and Labour First, a group on Labour’s right, pushing for a change to the electoral rules that enabled him to win the leadership last autumn. If the party’s results in the local elections are bad, critics will initially hold their tongues and concentrate on the Europe debate. But already there is talk of public denunciation of Labour’s leader—and perhaps even a leadership challenge—on June 24th, the day after the referendum. + +Other threats to Mr Corbyn’s leadership are less overt. Dan Jarvis, a much-fancied MP and former soldier, gave a leader-like speech on the party’s future on March 10th, while a “shadow shadow cabinet” of moderates offers the sort of incisive opposition from the backbenches that Mr Corbyn and his team fail to offer from the front. Local Labour branches are passing resolutions against anti-Semitism: a pointed objection to the spread of that virus since Mr Corbyn (whose criticism of Israel seems to be attracting all the wrong people) became leader. + +Yet he is well dug in. In December he faced down his shadow cabinet over British air strikes in Syria. In January he fired Michael Dugher, a shadow minister who was critical of him, and clipped the wings of Hilary Benn, the shadow foreign secretary who had dared to speak out against his peacenikery. Tom Watson, his otherwise-rambunctious deputy, now seems cowed. Much of this betokens what Atul Hatwal, a Labour commentator, calls the victory of the “Stalinists” (cynical but capable fixers like Seumas Milne, Mr Corbyn’s Richelieu) over the “Trotskyists” (airy idealists like Jon Lansman, an ally of Labour’s leader who advocates bottom-up control of the party). In other words, Mr Corbyn’s operation has decided it needs to ditch the flowery stuff and nobble its enemies. + +At the same time, Mr Corbyn is consolidating his grip on Labour’s membership, his last line of defence. Thousands of lefties joined last summer to vote for him. Many have been absorbed by Momentum, the party-within-a-party set up to defend Labour’s leader from the challenge he will eventually face. Without a drastic influx of moderate members and supporters, Mr Corbyn or his designated heir will win any new leadership election. + +Breaking out of the bunker + +So he is holding his ground. But that is not the same as going over the top: initiating the great battle, yet to be fought, over the soul and mission of the Labour Party. It looks as if the coming debate over the renewal of Trident, Britain’s nuclear deterrent, will prove to be that moment. Whenever he has the chance, Mr Corbyn talks about the case for unilateralism. Labour insiders suggest that he plans to go over the heads of his (mostly pro-Trident) MPs by holding a vote of party members and supporters and then taking the (probably anti-Trident) result as his position. Eager to foment discord, Mr Cameron seems willing to oblige, planning a vote on renewal for the weeks following the EU referendum. + +All that might just be a dry run for a bigger confrontation: a new leadership election triggered not by the moderates (who are many months off feeling ready to take on Mr Corbyn and his thousands of idealistic supporters) but by the Labour leader himself. He is almost 67. Rumours swirl about his health. Supporters and critics alike suggest that he could step down, perhaps in 2018, and make way for John McDonnell, his shadow chancellor. Mr McDonnell is a decent media performer with vast ambitions and close links to Momentum; he is popular among the grassroots and has been touring Labour branches seeking their support. In other words: Mr Corbyn may be hapless, but Corbynism is not going to disappear. Mr Cameron is luckier than he looks today. + +Economist.com/blogs/bagehot + + + + + +International + + + + +The trade in wild-animal parts (1): Last chance to see? + +The trade in wild-animal parts (2): Prescription for extinction + +The trade in wild-animal parts (2): Internship + + + + + +The trade in wild-animal parts (1) + +Last chance to see? + +In the first of two articles, we look at how poachers, smugglers and lax law enforcement combine to threaten rare species with extinction + +Apr 16th 2016 | From the print edition + + + +THE Jim Corbett National Park in the foothills of the Himalayas has perhaps the world’s highest concentration of wild tigers. Not even there are they safe. Last month Indian police arrested one of a gang of poachers operating from nearby Kotkhadar. They also seized 125kg of tiger bones and claws, and five skins. + +A tiger’s stripes are as unique as a human’s fingerprints. Authorities in India keep a database of more than 1,500 stripe patterns taken from camera-trap images. It showed that at least four of the skins were from animals in the park. The discovery would “embarrass us in front of the entire world”, a forest department official feared. + +The trade in wild-tiger parts starts with poachers, usually poor locals, and ends with customers, mostly Chinese. In between are Tibetan, Indian and Nepalese traffickers. Because several have been arrested in recent years, some poachers are now dealing directly with Chinese retailers. But, says Debbie Banks of the Environmental Investigation Agency (EIA), an NGO based in Britain, “Lhasa is still a trade hub for tiger and leopard parts. The bones are used for medical purposes, the teeth as amulets.” Chinese officers in Tibet are particularly keen buyers. Indian and Nepalese police are getting better at working together, but they are still getting limited co-operation from China, says Ms Banks. + +In 2010, with tiger bones retailing at up to $1,200 per kilo, the UN Office on Drugs and Crime (UNODC) put the annual turnover of the traffic in tiger parts at around $5m. Wild-tiger parts became more valuable as the wild population declined (encouragingly, the latest tally by the World Wildlife Fund shows a rebound, from 3,200 in 2010 to 3,890 today, though that could just reflect improved counting). Less welcome is a rise in the number of farmed animals: Laos’s biggest breeding facility, near Thakhek, reportedly holds around 400 tigers. Many are bred solely for their parts. The skins are prized as decorations. + +Farmed-tiger parts mostly move to China through the unruly Golden Triangle where Myanmar, Thailand and Laos converge. The region is a hotspot for trade in protected species: an EIA team that visited the Golden Triangle Special Economic Zone in Laos, popular with Chinese tourists, found tiger-bone wine, bear-bile pills, pangolin scales and carvings from the beaks of helmeted hornbills openly on sale. Outside the God of Fortune restaurant was a caged bear-cub that could be killed and cooked to order. + +Laos also offers a link to the most lucrative of all illegal wildlife enterprises: the trade in rhinoceros horn, which UNODC estimated six years ago was worth $8m a year. Since then the number of rhinos slaughtered annually by poachers in Africa has more than tripled (the poaching of Asia’s depleted stock of rhinos is modest). Poachers are sometimes caught; those higher up the chain rarely are. The only high-level trafficker in jail is a Thai, Chumlong Lemtongthai, who is serving a 13-year sentence in South Africa. He was charged in 2011 with bringing Thai prostitutes to South Africa so they could claim they had shot rhinos on legal hunts and were thus entitled under South African law to export horns as trophies. It was the most bizarre of several methods used to get hold of a substance that can fetch up to $70,000 a kilo—almost twice the price of gold. + +Mr Chumlong has been linked to a man who has been described as the Pablo Escobar of wildlife-trafficking, Vixay Keosavang, a former soldier in the Lao People’s Army who operates from a walled compound far off the beaten track in the central province of Bolikhamxay. In 2013 the American government offered $1m for information that would help dismantle the network it believes that Mr Vixay heads, which it suspects of trading wild-animal parts across several countries. Mr Vixay has denied wrongdoing. + +A killing cure + +Some experts believe that the surge inrhino-poaching, which has cut the world’s population by a fifth since 2008, has been driven by a surge in demand in Vietnam. There, rhino-horn shavings are a supposed cure for hangovers; entire horns are given as gifts and displayed as ornaments. Others believe that much of the rhino-horn taken to Vietnam ends up in China. + +As their country opened up in recent decades, “some enterprising Vietnamese citizens got residential status in South Africa and very quietly began trading,” says Tom Milliken of Traffic, an NGO. In at least two cases, professional South African hunters have been caught shooting rhino for Vietnamese clients and, in two others, Vietnamese nationals have been arrested trying to smuggle rhino-horns out of South Africa by air. Hunts have been arranged for citizens of the Czech Republic, which has had a large Vietnamese community since the cold war. Since that ruse was discovered, Slovaks, Poles, Ukrainians and Russians have been enlisted as bogus trophy-hunters. “Some Vietnamese residents have bought their own game ranches, so they are now able to buy rhinos at auction and organise sports hunts,” says Mr Milliken. + +The international nature of the trade poses big problems for law-enforcement. Documents that would prove decisive in a prosecution for rhino-horn trafficking can sit in a South African office for months awaiting translation, says Mr Milliken; the situation is no better for other animal parts. “None of what we do for drugs do we do for wildlife trafficking,” an international official involved in the fight against organised crime laments. “Extraditions are rare. There are no controlled deliveries. Sophisticated investigative techniques are seldom deployed. We’re not doing any of the things we could be doing to stop it.” + + + + + +The trade in wild-animal parts (2) + +Prescription for extinction + +Misuse of traditional Asian medicine fuels demand for endangered beasts + +Apr 16th 2016 | SINGAPORE | From the print edition + +An ignoble end + +TUAN BENDIXSEN needs a new barber. The man who has cut his hair for years in Hanoi, Vietnam’s capital, knows what Mr Bendixsen’s job is: he runs the local operation of Animals Asia, a charity campaigning against the trade in products from endangered animals. Yet the hairdresser, as he was snipping, confided that he had used rhino-horn powder just recently. + +A downside of the East Asian economic miracle is that millions more people can afford to buy products made from endangered species. Not just rhinos, but some types of tiger, bear, alligator, sea turtle, water buffalo, scaly anteater, manta ray, musk deer and others are at risk. Many are in theory protected under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). But on occasion the governments and medical bodies of some signatory countries—including China’s—portray it as a conspiracy against them. + +In March, 14 members of a high-profile committee that advises China’s parliament, the National People’s Congress, argued that China’s wildlife-protection law should be relaxed. Competition from Western medicine meant traditional Chinese medicine had “suffered vilification and attack”, they claimed. “We mustn’t ignore our cultural background and blindly adopt Western values.” + +The 14 were not calling for unfettered poaching: they want to be allowed to use products from farmed animals. Bears have long been caged with tubes attached to their gall bladders to “milk” their bile. Rhinos and tigers are now also farmed: some 6,000 tigers, 50% more than survive in the wild, are on Chinese farms. China is said to have stocks of 100 tonnes of tiger bones against annual medical-industry demand of around 22 tonnes (about 1,000 tigers). + +Why not allow the sale of farmed products, rendering poaching redundant? There is also pressure to allow the sale of poached material seized by governments. South Africa is to ask CITES, at its conference this September in Johannesburg, to permit the sale of some of its stocks of seized rhino horn. The snag: nothing suggests that legal trade cuts poaching at all. On the contrary, it makes it easier to launder illegal goods. It also destigmatises the consumption of endangered body parts, thus raising demand for them. And it can raise the value of the wild product, which is believed by many fans of Chinese medicine to be more potent. + +Western activists therefore argue that the way to save wild animals is not to increase the supply of farmed ones but to cut demand. Much of the industry supports them. In 2007 the World Federation of Chinese Medicine Societies, a trade group, arranged a tour of China for some Chinese doctors to preach against the use of tiger products. Many involved in Chinese medicine, such as Richard Eu, the boss of Eu Yan Sang (EYS), a Singapore-listed company, regard the link with ecological crime as an embarrassment. + +EYS makes traditional treatments, runs clinics and has 272 retail outlets in China, Hong Kong, Macau, Malaysia and Australia as well as Singapore. Among its bestsellers are cordyceps, or caterpillar fungus, and birds’ nests for soup. The fungus, harvested wild in Tibet, is highly prized in China as a “Himalayan Viagra”. EYS, which sells both wild and (cheaper) cultivated strains, advertises instead the boost it supposedly gives to the respiratory system. The birds’ nests are made from the solidified saliva of swifts and swallows. Some of the priciest come from deep in the Indonesian rainforest, where birds are provided with lavish new towers with protruding chutes for their nests. + +As birds’ nest soup shows, Chinese medicine is not far removed from Chinese cuisine. Many of EYS’s products are supplements and tonics, rather than cures. So it should be possible, with public-education campaigns and the respectable parts of the industry, to cut demand for products that threaten endangered species. Just as shark’s fin soup has stopped being a fixture on Chinese-wedding menus since the danger to sharks’ survival caused by the harvesting of the fins became widely known, so consumers could be convinced that they do not need those “medicines”. + +Some traditional Chinese medicines contain real active ingredients—in the case of bear bile, ursodeoxycholic acid—that can be synthesised cheaply. Many others are useless, so any alternative would be as good. Rhino horn is supposedly good for fevers and rheumatism. Though Mr Bendixsen’s barber says he uses it as a hangover cure, he might as well use the hair he sweeps up from his floor. A Vietnamese superstition that it cures cancer does not even have roots in traditional belief, but is a modern invention. + +Tiger-bone wine, rhino horn and the like are the platinum-label whiskies of the Asian wellness industry: pricey, prestigious and useful for lubricating business deals. Demand is driven not by medical professionals who nurture millennia-old traditions, but by the networks that feed supply—poachers, holders of stocks of banned items, farmers and their allies in some governments. + +It may be too late for some species. On rhinos, Mr Bendixsen laments, “we are losing the battle.” If there is hope, says Judith Mills, the author of “Blood of the Tiger”, it may lie with Xi Jinping, China’s powerful president. Many activists attribute a recent sharp drop in the price of ivory to an agreement last year between China and America to end legal sales. Other endangered species, too, might be saved by a pledge that the trade ban will stay and be enforced—not as an anti-China or anti-Asia conspiracy, but as a duty to the planet. + + + + + +Internship + +Apr 16th 2016 | From the print edition + +Internship: We are seeking a summer intern to write about foreign affairs for The Economist. The pay is £2,000 per month. Anyone is welcome to apply. Applicants should send an original unpublished article of up to 600 words on any subject, a c.v. and a cover letter to foreignintern@economist.com. We are looking for originality, wit, crisp writing and clarity of thought. The deadline is May 6th. For more details, see www.economist.com/foreignintern + + + + + +Special report: Business in Africa + + + + +Business in Africa: 1.2 billion opportunities + +The middle class: A matter of definition + +Manufacturing: Not making it + +Exporting flowers: Coming up roses + +Trade: Obstacle course + +Diasporas: Settled strangers + +Financial technology: On the move + +E-commerce: Virtual headaches + +Prospects: Fortune favours the brave + + + + + +Business in Africa + +1.2 billion opportunities + +The commodity boom may be over, and barriers to doing business are everywhere. But Africa’s market of 1.2 billion people still holds huge promise, says Daniel Knowles + +Apr 16th 2016 | From the print edition + + + +FOR A LOOK at the African boom at its peak, do as a multitude of foreign investors have done and fly into Abidjan, the capital of Ivory Coast. Visitors arrive in an air-conditioned hall where a French-style café sells beers, snacks and magazines. There is advertising everywhere, for mobile-phone companies, first-class airline tickets and a new Burger King. The taxi into the city smoothly crosses over a six-lane toll bridge. On the way to the Plateau, the city’s commercial core, cranes, new buildings and billboards jostle for space on the skyline. In the lagoon, red earth piles up where yet another new bridge is under construction. + +Just five years ago, Ivory Coast seemed like a lost cause. Having been defeated in an election at the end of 2010, the then president, Laurent Gbagbo, refused to leave office. The victorious opposition leader and now president, Alassane Ouattara, mounted a military offensive to force Mr Gbagbo out. French troops seized the airport to evacuate their citizens (the country used to be a French colony). Protesters were gunned down by troops, foreign businesses were looted and human-rights activists gave warning about mass graves being dug. + +Ivory Coast still has problems, as shown by a terrorist attack in March that killed 22 people. But its economy is the second-fastest-growing in Africa (after Ethiopia, which is much poorer), expanding by almost 9% per year. Foreign investment is pouring in. As well as the Burger King, Abidjan now has a Carrefour supermarket, a new Heineken brewery, a Paul bakery and plenty of new infrastructure. Sharp-suited, French-educated ministers explain in perfect English what they are doing to “open up”, “improve the ease of doing business” and “sustainably grow the middle class”. Expensive hotels, such as the reopened $300-a-night Ivoire, are booked up; their bars are full of affluent people striking deals. The country’s three port terminals, the biggest of which is being expanded by Bolloré, a French industrial firm, are working at full capacity, importing cars and electronics and exporting cocoa, coffee and cashew nuts. + +This is the Africa of business magazines and bank ads: a continent that is rising at a prodigious pace and creating profitable new markets for multinational firms. But Abidjan also has plenty of reminders that it has been here before. For all of the new buildings springing up, its impressive skyline is still dominated by crumbling 1960s and 1970s concrete modernism. The roads may be new, but the orange taxis that ply them are still ancient fume-spewing Toyota Corollas, remnants of an earlier boom. For the two decades after independence from France in 1960, Ivory Coast enjoyed an economic miracle. Then, quite suddenly, the price of cocoa and coffee plunged and the boom faded as quickly as it had begun. + +Reasons to worry + +The deepest fear of today’s investors in Africa is that it may be happening again. In Ivory Coast’s neighbour, Ghana, thousands of government workers have been marching in the streets in the past few months to protest against their rising cost of living. Ghana relies on oil and gold, both of which have fallen in price, as well as cocoa. That, plus prodigious government borrowing, has caused a crisis. One US dollar now buys 4 cedi, the local currency; in 2012, it bought not quite two. Growth has halved since 2014, and Ghana is running a budget deficit of 9% of GDP and a current-account deficit of 13%. + +According to the World Bank, in the year to April last year the terms of trade deteriorated in 36 out of 48 sub-Saharan African countries as the price of their commodity exports fell relative to the cost of their imports, mostly manufactured goods. Those 36 countries account for 80% of the continent’s population and 70% of its GDP. Eight countries, including two giants, Angola and Nigeria, derive more than 90% of their export revenues from oil, which has recently plummeted far below the price needed to draw in new investors. Growth across sub-Saharan Africa dropped to 3.7% in 2015, far below East Asia’s 6.4% and nowhere near enough to create enough jobs for the continent with the world’s youngest and fastest-growing population. The World Bank expects it to tick up again, but only to 4.8% in 2017. + + + +Countries that happily borrowed from international investors over the past few years have now found themselves shut out of the markets. The stock of outstanding sovereign bonds in the region had risen from less than $1 billion in 2009 to over $18 billion in 2014. If growth continues at a decent clip, that should be manageable. But if it stops, interest rates of 10% or more on dollar-denominated bonds will make refinancing difficult. + + + +The continent’s two biggest economies, Nigeria and South Africa, are already in deep distress. The reasons are different, but both have suffered from commodity-price falls as well as from atrocious economic management. The IMF, although loathed in much of Africa, is back, providing a $ 1billion loan to Ghana and preparing another for Zambia. Some fear a return to 2000, when this newspaper described Africa as the “hopeless continent”. + +Yet despite that, Nairobi’s thriving malls and Abidjan’s humming ports show that there are plenty of reasons to stay optimistic. The economic conditions have got worse, but this is a very different continent from two decades ago, when troops from eight African countries were fighting in Congo alone. Wars still rage in South Sudan, Somalia, Mali and northern Nigeria, and violence bubbles in places like eastern Congo, the Central African Republic and Burundi. But broadly speaking, most of sub-Saharan Africa is now peaceful. Elections seem increasingly less likely to result in strife, even if they still generally return incumbents, and more and more often for unconstitutional third terms. The governments that come to power are still often corrupt and inefficient, but far less brazenly so than those of cold war despots such as Mobutu Sese Seko of Congo or Jean-Bedel Bokassa of the Central African Republic. + +Africa’s 1.2 billion people also hold plenty of promise. They are young: south of the Sahara, their median age is below 25 everywhere except in South Africa. They are better educated than ever before: literacy rates among the young now exceed 70% everywhere other than in a band of desert countries across the Sahara. They are richer: in sub-Saharan Africa, the proportion of people living on less than $1.90 a day fell from 56% in 1990 to 35% in 2015, according to the World Bank. And diseases that have ravaged life expectancy and productivity are being defeated—gradually for HIV and AIDS, but spectacularly for malaria. Some of the gains may seem modest, but given that living standards across Africa declined during the 30 years after independence they are sufficiently established to prove lasting. + +And for all that oil and metals have come to dominate economies such as Nigeria’s and Congo’s, the boom broadened beyond natural resources. Mobile telephones have transformed commerce across Africa, and now smartphones and feature phones (which are halfway between dumb and smart) are taking hold. In 2014, the latest year for which figures are available, 27% of Nigerians owned a smartphone. In many African countries 4G mobile-phone infrastructure is the only thing that works well, but it works at least as well as in much richer countries, and a lot can be built on it. What began with mobile-money systems such as Kenya’s M-Pesa is now branching into bank accounts, savings accounts, loans and insurance. That in turn is helping people rise out of poverty and invest in their future. + +This special report will argue that despite some deep and entrenched problems, African businesses offer hope too. It is clearly risky to make sweeping judgments about an entire continent with 54 countries and 2,000 languages. This report draws on visits to various countries in sub-Saharan Africa, but four in particular: South Africa, Nigeria, Kenya and Ivory Coast, all coastal, urbanised and relatively rich. They certainly do not represent the whole of Africa, but your correspondent picked them because they each illustrate a different aspect of business across Africa as a whole. The businesses covered have not yet transformed the continent, but they show that African firms are capable of extraordinary innovation—if only they can be set free. + + + + + +The middle class + +A matter of definition + +Who are Africa’s affluent consumers? + +Apr 16th 2016 | From the print edition + +Enough customers to go round + +NAIROBI IS MANY cities in one. In tourist brochures, it is a pleasant, laid-back colonial city where you can see giraffes and lions in the national park before relaxing with a gin and tonic on a verandah. In the literature produced by NGOs and charities, it suffers from overcrowded slums and brutal crime. But in investors’ pamphlets it is a city of malls and highways. The latest temple to consumerism, Garden City, just off a new eight-lane motorway, opened in May last year. Inside, well-dressed Kenyans enjoy fast food and buy jewellery. The view from the roof-top car park, where SUVs wait under solar-panelled shades, is of terracotta-tiled new suburban houses in all directions. + +The mall is the signature investment of Actis, one of Africa’s biggest private-equity firms. At one end a branch of Game, a South African chain now part-owned by Walmart, sells refrigerators, televisions and everything else needed to furnish those new semi-detached houses. At the other, an enormous supermarket, Nakumatt, sells food to put in the freezers. Duplex apartments built alongside it sell for as much as $600,000. It is a powerful symbol of investors’ confidence in the emergence of a large middle class in Africa. + +And yet across the continent that confidence has taken a knock over the past year or so. Following the collapse in commodity prices, some are beginning to wonder whether much of the apparent growth of a consuming class was simply a product of oil and metals money flowing into the economy. In a part of the world where statistics are scarce, and those that exist are often suspect, investors are now trying to decide whether a new, affluent class of consumers really is emerging. + +The fried-chicken test + +The idea of such an African middle class, as distinct from the super-rich, has captured businesspeople’s imagination for at least a decade. In 2011 the African Development Bank (AfDB) published a report claiming that the middle class at that time numbered 350m people, or 34% of Africa’s population. In the intervening five years, businesspeople across the continent have used that figure to talk up their prospects. + +However, the definition used by the AfDB is very broad. To reach its figure of 350m, it defined the middle class to include a “floating class” of people earning between $2 and $4 a day. Its definition of the middle class proper was of people earning $4 to $20 a day. The sort of people who make the Garden City mall profitable—the sort who can afford to spend $10 on a fried-chicken lunch, or $200,000 on a new apartment—would come from the top end of what the AfDB called its “rich” category. They made up less than 5% of the total African population. + + + +Other studies that have appeared since the AfDB report have been more sceptical. In 2014 South Africa’s Standard Bank surveyed 110m households in 11 African countries and concluded that “Africa’s middle class is rising swiftly,” but came up with far more modest numbers. Using a South African measure of living standards that defines middle-class households as those with annual incomes of $5,500 or more, it found that only 14% fell into that category. It also found that by far the fastest growth had been in oil-rich Nigeria and Angola, where it may well tail off now. Another survey published last year by Pew, an American polling firm, found that although poverty in Africa had fallen dramatically, “few countries had much of an increase in the share of middle-income earners” in the decade to 2011. + +Such figures help explain why some of the most exuberant boosterism about Africa has deflated. Indeed, some now wonder whether African consumers will ever become a profitable market. “We thought this would be the next Asia, but we have realised the middle class here in the region is extremely small and it is not really growing,” said Cornel Krummenacher, a Nestlé executive, in an interview with the Financial Times last year. In 2014 Cadbury closed its chocolate factory in Nairobi, importing its products from Egypt and South Africa instead. Last September Diageo, a big drinks firm, announced it was investing in selling more Guinness beer in Nigeria, quietly giving up on a plan to push its expensive vodka and whisky. And even those sales of Guinness are falling short of its hopes. + +Yet many investors plough on. Koome Gikunda, a director of Actis, the private-equity firm that built Garden City (pictured), says that there most definitely is a middle class affluent enough to shop at the mall. In the absence of good census data, the company conducted its own rough market research to gauge its size. “We hired a firm who flew over the area in a plane and literally counted TV satellite dishes,” he explains. They concluded that perhaps as much as a third of their catchment area of 1m people could afford to shop at the mall. So far, the firm’s hopes seem to have been vindicated. The 220 flats they built alongside the mall sold out in four months. And even on a weekday afternoon the shops are far from deserted. + +The Mara Group, a conglomerate founded by Ashish Thakkar, a British-born Asian-African businessman (see article), is also investing in African malls. CFAO, a French firm, plans to construct dozens of malls in eight African countries over the next decade; it has just opened the first in Abidjan. And in many African capitals new housing estates are going up to cater for families with two children and one car. Though in most African countries it is mainly ancient secondhand Toyotas and Peugeots that ply the roads, car dealerships are full of newer models, and radio stations advertise loans to buy them with. Are all these firms holding their hopes too high? + +One plausible explanation for their enthusiasm is that Africa’s population is so large, and its middle class was so miniscule to begin with, that even modest growth is providing enormous investment opportunities. In Ethiopia, where according to Standard Bank 99% of the population are still poor, the middle class has nonetheless grown tenfold over the past decade or so. That means a lot more people who buy beer, so in 2014 Heineken opened a new brewery there, its third in the country. Another possibility is that there has always been money around but it was going abroad. Sir Paul Collier, an academic at Oxford university, estimates that in 1990 about 40% of Africa’s wealth was held outside the continent. Thanks to the relative political stability of the past two decades, much of that wealth is now returning, and being invested in property and African businesses. + +Africa’s population is so large, and its middle class was so miniscule to begin with, that even modest growth is providing enormous investment opportunities + +But the most probable cause of the optimism is that although Africa’s middle class may be small as a proportion of the total population, it really is growing fast in the big cities, which is where the foreign investors are putting their money. The World Bank reckons that by 2050 well over half of the continent’s population will live in urban areas. Nairobi’s population, which was about 3m at the most recent census in 2009, is growing at 5% per year, half as fast again as that of Kenya as a whole. The city’s middle-class population needs to grow only slightly faster than the average to need a big new mall every year. And even the poor spend money. They may not shop at malls but they do buy things like washing powder, processed food and mobile-phone credit. + +In a report published last year PricewaterhouseCoopers, a big consultancy, argued that the best opportunities in Africa are in cities, because that is where the infrastructure spending goes. In big cities, the report said, there is a “constant rise in discretionary spending of a kind that did not exist even a decade or two ago…we can safely say it is the result of Africa’s rapidly expanding urban middle classes.” Such cities concentrate consumers; they also attract returning diaspora Africans. + +What would make them expand even faster is industrialisation. This could replace some imports, as well as provide the foreign exchange needed to pay for the rest. Unlike mining, making basic things needs lots of people, so the wealth generated would be spread widely. But manufacturing in Africa has never been easy, and in some places it is getting harder. + + + + + +Manufacturing + +Not making it + +A successful manufacturing sector requires many things that Africa lacks + +Apr 16th 2016 | From the print edition + +This on the ground + +BASHIR DANYARO STANDS in dismay in his shoe factory in Kano, northern Nigeria’s biggest city. In its heyday, around 15 years ago, up to 200 women operated rows of sewing machines producing footwear for soldiers and schoolchildren. Now the place is silent and covered in a layer of dust. It has been almost two years since the last decent contract came in, Mr Danyaro says. Dozens of his local competitors have closed up shop; his flailing business is flanked by a deserted leather tannery and a shuttered ceramics plant. + +Nigeria’s deindustrialisation is perhaps more visible in this part of the country than anywhere else. The Sahelian north has fine leather and agricultural supplies, but its factories are falling into disrepair. A once-thriving textile industry is all but extinct. “It’s not profitable. But what else will I do?” asks Mr Danyaro. “This is the only business I know.” + +Three thousand miles to the south, in a suburb of Pretoria, South Africa’s capital, things seem better. At the Nissan factory near Rosslyn, workers in grey overalls and white face masks assemble pickup trucks. This factory is probably more sophisticated than anything else on the continent, yet it, too, is struggling. It currently produces around 185 pickup trucks a day, mostly for the stagnant South African domestic market. With another shift it could more than double its output, but managers at the factory grumble that their bosses in Japan do not want to make full use of their investment. + + + +Manufacturing in Africa is only for the brave. In Nigeria it makes up about 10% of GDP, according to official statistics, which may not be reliable. In South Africa, a far more developed economy, it accounts for 13% of GDP, down from a fifth in 1990. In Thailand the equivalent figure is 28%. Between 1970 and 2013, says the Brookings Institution, an American think-tank, Africa’s share of global manufacturing output fell from 3% to 2%; as a share of sub-Saharan Africa’s GDP, manufacturing has shrunk from almost 20% to about half that. Almost the entire output is for domestic consumption, not export. + +Even though labour is generally cheap, making stuff can be more expensive than in parts of Europe because of poor infrastructure, powerful trade unions (in South Africa) and pervasive corruption. There is almost nothing like China’s electronics factories or Bangladesh’s textile sweatshops. Everything from cornflakes to kettles is imported from Europe or Asia. + +Africa boosters say that the fall in commodity prices is a dose of nasty but necessary medicine. The way they see it, falling currencies will drive up the cost of imports, and governments will have to open up to investment and reduce regulation and corruption in order to increase tax revenue. Yet this scenario is far too rosy. South Africa and Nigeria are not entirely representative of the rest of Africa, but together they make up roughly half of sub-Saharan Africa’s GDP and give some idea of the challenges the region faces. + +Powerless + +The biggest immediate problem is power. Nigeria, which alone accounts for a third of sub-Saharan Africa’s GDP, has just 3,000MW of on-grid power-generating capacity, less than North Korea. Mr Danyaro says he gets four hours of power a day at most. Most factories have to rely on diesel generators to keep going. A new tomato-processing facility belonging to the Dangote Group, a huge Nigerian conglomerate owned by Africa’s richest man, has had to import two enormous generators which together produce about 2MW of electricity. “Every hour they use 400 litres of diesel,” says Alhaji Keita, who manages the plant. “It’s by far our biggest overhead.” Even the diesel is mostly imported: despite its oil wealth, Nigeria has very little refining capacity. + +World Bank figures show that the amount of power consumed per person in Africa has fallen in recent decades because generating capacity has not kept up with population growth. With 1.2 billion people, the continent has a sixth of the world’s population but only 3% of its generating capacity, which is heavily concentrated in just a few countries. In places like Zambia and Malawi, most of the existing capacity comes from hydroelectric plants built in colonial times or shortly after independence, which often do not run in the dry season. South Africa has many crumbling power stations from the 1960s that have not been upgraded or replaced, so people in its big cities suffer blackouts and factories often come to a halt. + +Poor roads are another problem. Suleiman Umar owns a factory in Kano that makes relief blankets on ancient-looking looms. But only ten of the 68 machines are currently working, and that is not bad for a textile business in Nigeria, he says. It costs him more to transport a container from coastal Lagos than it does to ship one all the way from China. Even in South Africa, where rail and road connections are generally good, the vast distances make it expensive to move anything across the country. + +But fixing these fundamental problems is hard, so many African countries have tried to foster manufacturing through protectionism. In Nigeria the new government of Muhammadu Buhari has tried to stimulate local production by banning the use of foreign exchange for a list of items including toothpicks and glass. That comes on top of total import bans on products such as cloth from China and punitive tariffs on imports of new cars. In South Africa, the car industry is sheltered by a 20% tariff on imports of new cars and an outright ban on importing used cars. + +In some ways, this has spurred production. Without the tariffs, South Africa’s car industry would have had a harder time. Nigeria became self-sufficient in cement after the government ruled that only manufacturers could ship it in. At the Dangote group’s biggest cement plant, an enormous site looming over the scrubland of the central Kogi state, managers admit that they would never have been able to compete under less sheltered conditions. And the profits have allowed Mr Dangote to invest in other businesses, such as his new tomato-canning factory. + +But the main industry that thrives thanks to Nigeria’s trade barriers is corruption. In a Kano hotel, a gap-toothed smuggler explains that his syndicate has spent a decade manoeuvring fabric, rice, pasta and vegetable oil to huge warehouses in Kano via Benin and Niger. “The official process is tedious and expensive. You have to deal with customs, immigration, security, and it takes so long,” he says in the local Hausa language. “We organise the illegal route so the products come successfully.” Up to 50 containers might cross the Jibia border post at once, he says, each yielding a profit of up to 5 million naira ($15,000). In Lagos’s markets, “west African” fabric is invariably imported from China. The cars on its roads often arrive after being “lost” in transit to Niger, without payment of Nigeria’s hefty duties on imported cars. + +And although trade barriers are helpful for those who are protected, they hurt other businesses. Mr Dangote has more than 60% of Nigeria’s cement market, a near-monopoly. “He has cornered the market. He has access to the limestone deposits. He is a friend of every government, he gets cheaper loans and he gets tax holidays. Which other business gets that?” says Oluseun Onigbinde, founder of BudgIT, a Lagos-based fiscal-analysis group. Last year Dangote, which makes one of the world’s most basic products, had a profit margin of 53%. + +In South Africa smuggling is less of a problem, but policy is little better. The Nissan car factory is one of seven in the country. Broadly defined, the car industry makes up 30% of manufacturing output. Demand for cars of all sorts is soaring across the continent, yet South Africa’s huge potential is being wasted by a toxic combination of power cuts and poor labour relations. At the Nissan factory, stickers plastered all over the machinery encourage workers to vote for “strong shop stewards to confront the bosses”. Last year a strike shut the plant down for two months. For historical reasons, managers in the car factories tend to be white and workers black. Disputes are politicised, confrontational and frequent. Relative to their productivity, South African industrial workers are some of the most expensive in the world. A cheap rand should help, by lowering the cost of labour (although it may also raise inflation, which could induce more strikes). But it would take a fundamental change in South Africa’s rigid labour laws to create jobs for the one in four South African adults who are unemployed. + +A local flavour + +In the meantime, the best hope comes from locals, who know how the system works, and from products sold locally rather than across borders. At Wilson’s Juice, a new factory at the edge of Lagos, lemonade is being bottled on an assembly line manned by 16 people. On the other side of the room workers chop up pineapples. The business was started by Seun and Seyi Abolaji, two brothers who were raised and educated in America and returned to Nigeria, to the bemusement of their families. The margins are good and the firm is expanding quickly. The only materials that have to be imported from outside Africa are for the bottles and the labels, so the shortage of foreign exchange has not hurt too much. “A lot of people are apprehensive, but we are super-excited. For people who source their own materials locally, now is a great time to grow,” says Seyi. + +Growth could be speeded up if foreign investors were building factories, too. If this were done on a large scale, as in Asia, it could create millions of export-related jobs. Huge obstacles need to be overcome before that can happen. But efforts to improve Africa’s dire trade links should help. + + + + + +Exporting flowers + +Coming up roses + +Kenya’s flower-export business is a rare success + +Apr 16th 2016 | From the print edition + +Heading for a Russian wedding + +AROUND THE EDGES of Lake Naivasha, under the shadow of a dormant volcano, Mt Longonot, one of Kenya’s most successful export businesses of recent years has become established. All around the lake, and off dirt roads that lead from it, are acres and acres of plastic tenting in which flowers of all sorts, but especially roses, are grown for export. At the biggest operators, thousands of workers go in each day to water, feed, pick and prepare the crop. On average, 360 tonnes of flowers are flown out of Nairobi airport every day, mostly to Europe but also to Asia and the Middle East. Kenya is the world’s third-largest producer of cut flowers; the crop is its second-largest export, after tea. Since 1988 the industry has grown more than tenfold. + +Africa’s global share of agricultural exports, as of manufactured exports, has declined in the decades since independence, from over 8% in the 1970s to just 2% in 2009. Nigeria used to be the world’s biggest producer of palm oil; Ghana of cocoa; and Kenya and Ethiopia of coffee. All have now been overtaken by other regions. Yet the plastic-roofed greenhouses of Kenya’s flower farms are the closest thing the country has to an Asian-style high-tech manufacturing cluster. + +Growing flowers and vegetables is a competitive business, says Mark Low, the boss of Groove Flowers, one of the smaller outfits around Lake Naivasha. “The margins are getting smaller and smaller.” Colombia, Ecuador and Ethiopia are all chasing the same customers. But many of Kenya’s growers are hoping to do better by running a highly sophisticated operation. Mr Low, an earthy white Kenyan, mostly grows roses, bouvardia and delphiniums. He does not sell to supermarket suppliers because the prices they pay do not give him a decent margin. Instead, he goes to a lot of trade fairs to find out what Russian oligarchs will order for their daughters’ weddings. + +Fashions keep changing, so Mr Low experiments a great deal. Walking through a greenhouse full of spray roses, with several flowers growing on one stem, he explains that these are much harder to grow than the single-flower variety but can fetch higher prices from florists. Sadly, so far they have not done as well as he had hoped because the drop in the rouble is making for less lavish wedding budgets. A lot of other factors also have to be taken into account. For example, if a flower is particularly heavy, it may not be worth growing even if it fetches good prices, because air freight is very expensive. Fragile flowers are no good either, because they will get shaken up on his rutted dirt roads. + +Flower farming, then, is a bit like fast-fashion manufacturing. To thrive, it needs an educated workforce; effective, but not onerous, regulation; good access; a decent airport nearby; and plenty of electricity. Indeed, after air freight and labour, power is the main cost: flowers need plenty of light and carefully controlled air and water supplies. The industry has settled around Naivasha because the area’s volcanic terrain is home to several geothermal power stations, the lake provides water and the airport is not far away. Other parts of Kenya are not so well provided for. + +Africa’s agricultural productivity has improved immensely over the past decade. Between 2000 and 2013, output of cereals grew by 3.3% a year, faster than in any other region. But turning farming into a thriving export business and a big employer providing well-paid jobs is harder. In Kenya, flowers may have bloomed, but production of coffee, a more traditional export, has collapsed, falling from almost 100,000 tonnes a year in 2000 to below 40,000 in 2013. Many coffee farms have succumbed to foreign competition or been swallowed up by housing development. The success of Kenya’s flower farms will not easily be replicated by other crops. + + + + + +Trade + +Obstacle course + +Africa’s trade suffers from dismal infrastructure, lack of investment and corruption + +Apr 16th 2016 | From the print edition + +The potholes did for it + +IT WAS MIDDAY when the lorry on which your correspondent had hitched a ride pulled out of the factory yard in Yopougon, an industrial suburb of Abidjan, Ivory Coast’s commercial capital. By 7pm, when it reached Bouaké, the second-biggest city, the driver had been stopped by police nine times and paid seven bribes. And that was the easy part of the six-day journey taking a cargo of carpets across bumpy, bandit-infested roads to Ouagadougou, capital of next-door Burkina Faso. + +Ivorian ministers give the impression that trade in west Africa should be going swimmingly. “We want Ivory Coast to be a hub for the region, we want our goods to go through the country to Burkina Faso, to Mali, to all of our neighbours,” says Abdourahmane Cissé, the country’s budget minister and a former Goldman Sachs banker. On the face of it, the region seems well integrated. Ivory Coast shares its currency, the CFA franc, with its northern neighbours. It belongs to a customs union, UEMOA, that is older than the European Union. Yet according to IMF figures, in 2014 trade between Ivory Coast and Burkina Faso was worth just €376m, or a mere 2% of Ivory Coast’s total trade. + + + +What is true of Ivory Coast is true of much of the continent. Last year 26 African countries signed an agreement to create a “Tripartite Free Trade Area”, combining the existing eastern and southern African trade blocs into one. That ought to be a huge boon for a continent divided by arbitrary colonial borders. Yet the trade figures suggest that African cities are mostly not hubs; rather, they are islands with ports. According to the United Nations, merchandise trade within the continent made up just 11% of Africa’s total trade between 2007 and 2011. In Asia, intra-continental trade was 50%; in Europe, 70%. + +This lack of internal trade helps explain why Africa remains poor, and why it has failed to create big firms that straddle national boundaries. Even though the sub-Saharan part of the continent contains over a billion potential customers, in reality it is made up of lots of small markets, each of which has to be conquered individually. That is what prompted The Economist to hitch a ride with a lorry driver and his brother to get a sense of the true barriers to trade, going north from Abidjan via Ferkessédougou, a rough Ivorian border town, towards Ouagadougou. + +After a couple of hours of waiting for paperwork, with Michael Jackson blaring through the speakers, the lorry pulled out onto a new, wide, fast-moving road. At the end of 2013 a new toll road opened that goes all the way from Abidjan to Yamoussoukro, the grandiose official capital that Ivory Coast’s post-independence president, Félix Houphouët-Boigny, built around his home town in the 1980s. The road was, as an expat businessman had predicted, “like driving in Europe”. As the driver, Sounkalo Ouattara, revved the engine, he explained that only a few years ago the 220km journey to Yamoussoukro could take six or seven hours. Now, on the six-lane highway, even a heavily laden lorry can do it in three. + +The good road comes at a cost, though. The official tolls are fairly modest: 5,000 CFA francs, or about $10, for a lorry to travel all the way. But that is only the start. “You have to pay everyone, even the national-park rangers, you have to pay,” says Sounkalo. “Everyone who has a gun, you have to pay.” His lorry was travelling on a Saturday afternoon, a particularly bad time. “At weekends, all of the senior police officers are not working, so that is when the junior ones make their money.” At 1.22pm a police officer gestured the lorry over with his gun. The lorry stopped while Fousseni, Sounkalo’s brother, got out and handed him 1,000 francs (about $2). At 1.29pm, another road block and another bribe. Then again at 2.21pm, 2.31pm and 3.32pm. Overall, the bribes add up to more than the tolls. + +And Yamoussoukro is not much of a destination, even though it offers one of the world’s most egregiously expensive churches and one five-star hotel with “presidential” suites for $420 a night. After stopping briefly to admire the church, your correspondent squeezed back into the cab for the 100km stretch to Bouaké, which has a customs checkpoint. From there, the distance to Ferkessédougou, the second night’s stop, is about 200km, yet it took the Ouattaras’ lorry the best part of ten hours to get there. Just a few miles out of Bouaké the tarmac starts to develop potholes several metres long. At each, the vehicle has to slow down almost to a standstill to cross it, and then gradually regain speed. Some go faster, but they take a big risk. At one point the lorry passed a group of about 30 people and their luggage, waiting by their crashed bus. A smear of rubber led from a particularly large pothole off the road and into a tree. + +As the roads deteriorate, so does the security. Though there are police checkpoints every 10km or so—generally a couple of men and a piece of a string or a log blocking the road—they mostly go home at sunset. Vehicles travelling after that are often held up by robbers wielding AK-47s. Even in the day, there is a risk. Luckily the Ouattaras’ lorry was not robbed, but Bright Gowonu, a Ghanaian analyst for Borderless Alliance, an NGO which tries to promote more trade, was less fortunate. Travelling from Ouagadougou to Abidjan on the same route, the lorry he was on came across an armed robbery of a bus, and was stopped at gunpoint. When Mr Gowonu and his driver reached a police checkpoint, somewhat lighter on cash, they were told that there was nothing that could be done. But they were still asked for money for tea and mobile-phone credit. + +In the middle of nowhere + +According to a study by Saana Consulting, a development-economics firm, carried out on behalf of the Danish government, the cost of moving a container from a port in west Africa inland is roughly 2.5 times what it would be in America. Bribery generally makes up about 10% of that (although for perishable goods such as fruit it can be much more). But the biggest cost is the sheer amount of time swallowed up by poor roads. Just one-third of Africans in rural areas live within 2km of an all-season road, compared with two-thirds of those in other developing regions of the world. Some of the statistics are astonishing. The Democratic Republic of Congo, a country four times the size of France, has fewer miles of paved road than Luxembourg. + +The costs of this mount up quickly. A study in 2010 by Africa Country Infrastructure Diagnostic, a research project led by the World Bank, found that farmers four hours by road from a city of 100,000 people produced only 45% of what their land ought to yield. Those six hours away produced just 20%, and those eight hours away produced a mere 5%. Not only do they find it hard to sell their produce, they cannot easily buy fertilisers and equipment or get credit, because doing any of this requires access to a reasonably sized city. And what is true for farmers is true for everyone: being unable to move around means that children do not get educated, job opportunities are missed and businesses are not started. + + + +Things are improving, but not nearly fast enough. In 2009 the World Bank estimated that Africa needed an extra $93 billion a year in infrastructure spending. Last year the Brookings Institution argued in a report that a large chunk of this has now materialised. New ports, roads, railways and power stations are springing up across the continent. Some rely on private finance, others on soft Chinese loans. Next year Kenya will open a new railway line going from Mombasa, its main port, to Nairobi, its capital. Ethiopia has recently opened a new line from Djibouti to Addis Ababa. Both are Chinese-funded. + +But progress would be much faster if governments were willing to let private investors build. Too many African politicians favour projects that create opportunities for kickbacks, or which mostly help favoured groups. Governments’ unwillingness to pay the bills for power generated by private companies puts investors off. The projects that do get built are either so profitable that they can accommodate these risks, or else they are funded by the World Bank or China. Sovereign-wealth funds are desperate to invest in long-term projects, but cannot find nearly enough opportunities for reasonably safe investments to soak up the available capital. + +Meanwhile smaller fixes could help boost trade. One would be better customs arrangements and more containerisation. At the moment, coastal countries such as Ivory Coast repeatedly check lorries travelling inland to try to stop tax evasion. Duties provide much of the government’s revenues. As Nigeria’s smugglers know, a common ruse to avoid them is for goods “in transit” to a landlocked country to go missing en route. But those checks also slow things down and provide opportunities for bribery. If Burkina Faso were able to collect its import duties at Ivorian ports, lorries could move inland more quickly. + +At the final customs checkpoint at Ouangolodougou the crew had to negotiate the lorry’s passage into Burkina Faso with an officious man in a khaki uniform who was adamant that their paperwork was not in order. It seemed ominous, but within a few hours the official was back and the truck was moving again. Within half an hour the lorry was at the border itself—a thin river, with the final barrier a simple gate guarded by a couple of sleepy soldiers, where your correspondent descended. + +A decade ago, this was rebel-held territory and there was no trade at all, so those carpets crossing the border represent an improvement. Yet barriers to trade in goods are only part of the story. If Africa is going to become more prosperous, cross-border investment, too, will have to become a lot easier—and that still seems a long way off. + + + + + +Diasporas + +Settled strangers + +Why some diasporas are so successful + +Apr 16th 2016 | From the print edition + +LIFE HAS NOT always been easy for Ashish Thakkar, founder of the Mara Group, a conglomerate that invests across Africa. He was born in 1981 in Leicester, about a decade after his family settled in Britain after being kicked out of Uganda (where his forebears had moved from India in the 1880s) by Idi Amin. The family worked hard and saved, and in 1993 they moved back to Africa. + +Ashish was sent to school in Nairobi; the family started a new business in Kigali, Rwanda’s capital. The day after he returned home for the Easter holidays in 1994, the Rwandan genocide started. “Cutting a long story short, we came out alive but we lost everything again,” he recalls. + +Undeterred, the Thakkars went back to Kampala, Uganda’s capital, and started all over yet again. In 1995 the teenage Mr Thakkar left school, raised a $5,000 loan and set up an IT hardware business. After that he moved to Dubai. Now the Mara Group operates in 25 African countries. Many African-Gujarati businessmen in east Africa have similar tales to tell. Doing business in Africa may be difficult, but some groups—Gujaratis in east Africa, Lebanese in west Africa—seem to be particularly good at it. + +East Africa’s biggest supermarket chain, Nakumatt, is mostly owned by the Shah family, who also have their origins in Gujarat. In Uganda, the leading sugar manufacturer, Kakira Sugar, is owned by the Madhvani family, who bought their business back after it went bankrupt when they were expelled from the country. In Ivory Coast the biggest retail firm is Prosuma, which is Lebanese-owned. Lebanese Ivorians claim that Lebanese families control around 40% of the Ivory Coasts’s economy. + +What is it about these diasporas that allows them to succeed in business? Large numbers of Indians came to Kenya and Uganda in Victorian times, drawn by the new British-built Mombasa-Kampala railway. With the Lebanese, the story goes that they got lost in Ivory Coast on their way to Brazil and decided to stay. Both groups have become “settled strangers”, a label used by Gijsbert Oonk, a Dutch historian who has studied Asian diasporas in east Africa. That quality may explain their business success. “It’s a marriage of global ability with local knowledge,” says Aly Khan Satchu, a Kenyan financier whose family arrived in east Africa in 1884. “These families use their international relations like a multinational corporation would do,” notes Mr Oonk. + +Chadi Srour, a Lebanese property developer in Abidjan, moved to Ivory Coast from Washington, DC, on a recommendation from his brother. Lebanese people, he says, “are not afraid of dangerous places as long as they are making money”. Ivory Coast’s two wars this century were profitable opportunities, he jokes, since many long-established French expats sold up “and the Lebanese took over.” + +Asian businesses are no longer as dominant in Kenya as they were at independence. Avaricious governments after independence hurt some; poor succession planning others. In Ivory Coast, Lebanese businesspeople complain that they are being squeezed by corrupt politicians. Yet the declining importance of Africa’s business diasporas may be a sign of success. Asians did well because they had strong families and easy access to education and international capital. These days, such privileges are also enjoyed by plenty of Africans. + + + + + +Financial technology + +On the move + +Much hangs on mobile money + +Apr 16th 2016 | From the print edition + +Mobiles are a must + +FROM HIS SHACK in Kangemi, a slum at the western edge of Nairobi, Gilbert Onduko sells bare essentials to his neighbours. A blackboard above the hatch lists prices for ugali (maize cooked into a sort of porridge), farina (similar to semolina) and cooking oil. On the roof of the shack is a small solar panel, about the size of a tea tray, which powers two lights inside and a mobile phone. Since he got it, about a month before your correspondent visited, Mr Onduko has been able to keep his shop open until midnight rather than just in the daytime. He has also cut down his kerosene bill by 100 shillings (about $1) a day—a hefty saving in a Nairobi slum. “And now my phone is always charged,” he grins. + +Mr Onduko’s story shows how electricity can improve Africans’ lives. But it also shows what access to credit can do. It was not technology that was stopping shopkeepers in Nairobi’s slums from having electricity. Indeed, power lines run within sight of Mr Onduko’s shop. The problem has been that connecting to the grid, and paying the bills, is beyond the means of most slum-dwellers. To get his solar panel, all Mr Onduko needed was a mobile phone and a deposit of about 3,500 shillings. The rest he can pay for on tick. Each day he sends 50 shillings via his mobile to M-Kopa, the firm that provides the solar panels. That keeps the machinery going, and within about a year he will own it. M-Kopa, which means “to borrow” in Swahili, has made its name selling solar panels, but it is rapidly becoming one of east Africa’s most innovative financial companies. + +Mobile and internet technology is transforming industries across the world, but Africa has more potential than most because the existing infrastructure falls so far short of people’s needs. Executives talk exuberantly about how the continent is “leapfrogging” the West through technology. A lot of this is wishful thinking. Drones, for instance, seem unlikely to become a substitute for roads. But the revolution in finance is real. According to the World Bank, between 2011 and 2014 the proportion of adults in sub-Saharan Africa who have a mobile-money account increased from 24% to 34%. + +East Africa is one of the most developed markets. Some 58% of Kenyans use mobile-money services, overwhelmingly M-Pesa. And as M-Kopa shows, such mobile services offer more than just a means to transfer money. Mobile phones can provide an address book, a credit rating and a distribution network all in one. Together, those things can allow even very poor people to acquire assets with their earnings, setting them on the path to becoming middle-class. + + + +M-Kopa’s offices in Nairobi show all the signs of a tech startup. Table-football and table-tennis sets glow in the equatorial sun. The adjacent call centre is alive with the sound of employees touting for new business. When customers are reaching the end of their loan terms, M-Kopa agents call them to see if there is anything else the company can sell them. If customers wish, they can extend their loans and upgrade their solar set to a bigger one that can support a television. + +M-Kopa also sells fuel-efficient cooking pots and smartphones, and would like to supply a small refrigerator, too. It has sold around 325,000 solar panels so far, and 50,000 of their buyers have already paid off their loan and then bought a cooking pot, a television or a smartphone. The customers’ repayments records offer an effective way of judging their creditworthiness. Pay off your solar panel quickly and you are probably worth lending more to, explains Jesse Moore, the firm’s American founder. + +M-Kopa is far and away the most successful of the African firms innovating on top of mobile technology, but it is not the only one. Insurance is one promising area. Milvik, a multinational microfinance firm, now sells life insurance in four African countries, Tanzania, Uganda, Ghana and Senegal, partnering with insurance businesses and telecoms providers. Agents sign up customers, and the premiums—typically about 2 US cents per day—are taken automatically from mobile-phone top-ups. Over 95% of customers earn less than $10 a day. The policies promise a $1,000 payout in the event of an unexpected death. + +The mobile-telecoms operators are not doing much to promote innovation. Though most Africans now own mobile phones, these are generally cheap and dumb, and since most Africans are poor, they do not spend much on accessing the internet. Unlike in the West, therefore, it is hard to reach a mass market with a good app. Instead, mobile operators load apps directly onto SIM cards and keep the data they generate in-house. + +By far the most successful is Safaricom. It has a loans service called M-Shwari, and has worked with Kenyan banks to try to integrate its service. But even the firm’s executives admit there is far more it could do. Safaricom has declined to turn itself into a bank, but says it is opening up M-Pesa to other developers. It wants to become a “platform” rather than just a mobile-telecoms provider, but it has a long way to go, and its monopoly does not provide the best incentive. + +Keep innovating + + + +In the meantime the best hope is any innovation that gets around M-Pesa’s monopoly power. The rise of smartphones and feature phones (which can be preloaded with apps) will help. By 2020 over half of Africans will have access to smartphones with mobile broadband, reckons the GSMA, which represents mobile-phone operators worldwide. But given the right technology, even dumb phones can be useful. Counterintuitively, a promising source of innovation could be the banking sector, which has a strong interest in not letting mobile-telecoms operators steal its actual or potential customers. + +In the Democratic Republic of Congo, one of Africa’s largest and least functional countries, the number of people with bank accounts has increased from just 50,000 in 2005 to over 3m in a population of about 80m. A government programme to pay state employees by bank transfer instead of in cash has helped. But so too has innovation. Trust Merchant Bank (TMB), the country’s biggest, has developed a voice app for its customers that works a little like telephone banking in the West: customers can carry out a mobile transaction by making a phone call or sending a text message, avoiding the need for an app. In Congo, unlike in much of east Africa, mobile-money transfers have not so far taken off, probably because the infrastructure is missing. TMB is hoping that it can beat the telecoms firms to the chase. + +Another innovator is Equity Bank, a Kenyan firm with operations across east Africa. In Kenya it has launched its own mobile-phone company, Equitel, which uses the network of Airtel, another mobile operator, but exists mainly to provide banking services. It offers a “thin SIM” which can be overlaid onto an existing SIM card so that a phone can access two networks at once. That allows banking to be carried out through a dumb-phone SIM app without giving up the benefits of making phone calls and sending text messages through the dominant provider. + +So far, this innovation looks better on paper than in practice. The reason why Equitel’s thin SIM has not been taken up in huge numbers, observers of the bank reckon, is probably that it costs 500 shillings to buy, which for most Kenyans is a hefty sum. But Equitel now has some 1.5m subscribers, all of whom also have a bank account with Equity. TMB has not released numbers for users of its app. But increasing access to banking—not just to mobile money—will be key to opening up other businesses such as M-Kopa. + +There are other areas that phone companies could usefully tackle. For example, mobile money has not yet made much progress in international money transfers, where it could lower the cost of remittances. And even money-transfer services within national borders are still very expensive. Few in the West would use Safaricom’s M-Pesa to send money to relatives and friends: the transaction fee can eat up as much as 10% of the value of the transfer. The only place where mobile money is often preferred to cash for small transactions is Somaliland, the autonomous and peaceful northern part of Somalia. The main system there is on a network run by Dahabshiil, a firm that started as a remittances business and bank rather than as a telecoms provider. In contrast to almost everywhere else in Africa, making payments in Somaliland is free. + +Mobile money has been one of east Africa’s great successes over the past decade. Not only has it created business opportunities, it is a big revenue generator for government: in Kenya, Safaricom pays more taxes than any other firm. But if growth is to continue, telecoms firms will either have to open up voluntarily or have their monopolies broken. Most Africans still do not have access to proper loans, insurance or savings facilities. Even the wealthy keep their money in cash and property; the poor rely on buying physical assets. Firms such as M-Kopa have made a start, but there is plenty more to do. + + + + + +E-commerce + +Virtual headaches + +E-commerce firms like Jumia have to beat multiple handicaps + +Apr 16th 2016 | From the print edition + +IN A DIRTY warehouse in an industrial district of Abidjan, a few entrepreneurs are trying to create a version of Amazon for Africans. At one end, dozens of workers sit at desks making phone calls and confirming orders. At the other end sit boxes and boxes of deliveries, waiting to go out. Televisions, washing machines, laptops and clothes pile up. The idea is that getting something delivered to your home should be as cheap and easy in Ivory Coast as it is in America. But in a country with no proper address database, a barely functional postal service and hardly any credit cards, that is an ambitious goal. + +Investors chasing the African middle class like to build malls, as Actis has done in Nairobi, but a growing number are getting interested in e-commerce too. The warehouse in Abidjan is run by a firm called Jumia, which started in Lagos but now has operations in ten other African countries, including Kenya, Ghana, Cameroon and Tanzania. Much of its funding comes from Rocket Internet, a German firm that tries to replicate successful Western internet businesses in countries that do not have them yet. Rocket Internet also owns Hellofood, a food delivery app similar to Seamless, and Easy Taxi, rather like Uber. + +Jumia is having to learn to adapt to local conditions. Importing its own goods and supplying them directly, as Amazon does in the West, would mean dealing with customs officials and facing delays and demands for bribes. So instead Jumia sets prices, takes payment and arranges delivery, but gets local firms to provide the products as they are ordered and send them to Jumia’s warehouse. This means they take a few days to arrive. + +Jumia started out using private delivery firms in Ivory Coast, but they were not reliable enough, so now it has its own contractors. Processing payments is another headache. The firm would like to take mobile money, but many customers prefer to pay cash on delivery. All new online orders are confirmed from a call centre, but even so perhaps a fifth of deliveries end up back at the warehouse, estimates Francis Dufay, the firm’s director in Ivory Coast. + +It is perhaps unsurprising that so far Jumia is not profitable. It has high fixed costs and has to sell things more cheaply than shops to compete. But there are reasons to be optimistic: on a continent where proper shopping centres are still rare and traffic jams are ubiquitous, ordering things online ought to hold wide appeal. And Amazon itself, after all, still only barely turns a profit. + + + + + +Prospects + +Fortune favours the brave + +Doing business in Africa is risky, but potentially highly rewarding + +Apr 16th 2016 | From the print edition + + + +ON THE EDGE of Kinshasa, the capital of the Democratic Republic of Congo, is the Marché de la Liberté, a big wholesale market. Kinshasa is Africa’s third-largest city and has a population of at least 8m, and perhaps as large as 12m (that nobody knows for sure tells you much about Congo). And even here, in the capital of one of the poorest countries on the planet, there is clearly money flowing. At the market’s centre, deafening noise blares from enormous speakers mounted onto cars, which double up as stalls selling mobile phones. You can buy anything here, from fried fish to Premier League football shirts. People flash cash as they negotiate, and everyone is haggling. + +The irony of investing in Africa is that it is both one of the world’s most difficult regions in which to do business and also perhaps its most entrepreneurial. In no other part of the world does such a large share of the population rely on their wits and their trading abilities to get by. Even the most modest stallholders are smartly dressed and juggle mobile phones, shouting prices and striking deals. Yet they also tell stories of hardship. “Life is expensive!” exclaims James, who sells plumbing equipment. Cops demand bribes. Transporting his goods to the market costs a fortune. And in the neighbourhood where he lives, there is always the risk of a riot. + +What is true for stallholders is also true for the world’s biggest multinationals. Africa holds promise like no other region. For the first time ever, hundreds of millions of people are buying beer, washing powder, mobile-phone credit, fast food, insurance and electricity. But it is also a place to lose your shirt. Too much of Africa’s growth over the past two decades has been sustained by commodities and little else. It seems perverse that in many African capitals where most people earn a few dollars a day, it is still impossible to find a clean hotel room for anything less than $200 a night, or a good Western meal for less than $30. Optimists see this as evidence of a spectacular opportunity to enter the market and make a profit. Pessimists reckon it shows just how difficult it is to do business here—because if it were easy, somebody would have done it. + +The receding commodities boom has made this conundrum clear. Nigeria, the continent’s most populous country and many investors’ biggest hope over the past decade, now looks somewhat less appealing. Yet not every country is like Nigeria, and not all the money that used to flow so easily has been wasted. A decade of investment has given Africa lots of new roads, power stations and telephone towers. The next decade will still see new railways, ports and motorways being built, often with Chinese money. Even in Kinshasa, a new highway runs through the centre of the city. Many African countries have taken on large amounts of debt, which may prove a problem in the future. But they are also acquiring assets, which are already generating new sources of growth. + +Build on what you have + +Over the next decade, the businesses that succeed in Africa will be those that can capitalise on this without the help of cheap money and expensive oil—those that can build a genuine middle class of consumers. Over the past decade, the seeds for this have been planted. It is a hopeful sign that African emigrants are returning to invest the money they earned overseas. In Kenya last year they injected $1.5 billion into an economy that generated only $63 billion in all. In Somalia remittance money is rebuilding war-torn Mogadishu. + +From the mobile-phone masts that have spread all over every big city to the soaring apartment blocks, the desire to change things is evident. The question for the next decade is whether governments can live up to those hopes. In Nigeria, the drop in oil revenues may force the country’s leaders to face up to the fact that for decades they have systematically mismanaged their economy. Their attempts to protect the exchange rate and increase manufacturing by diktat are doomed to fail. Ghana and Zambia, which have spent their windfalls on public-sector salaries rather than growth-generating investment, will have to make tough decisions about the best use of their revenues. Not all these countries will do well. + +Africa has something that it lacked a generation ago: stability + +Yet with a number of exceptions, Africa has something that it lacked a generation ago: stability. When commodity prices fell in the 1980s, the result was a series of coups and a generation of war, much of it paid for by superpowers competing with each other. Between 1966 and 1993 Nigeria was ruled almost entirely by military leaders and suffered six coups. That seems unlikely to happen again. The leader of one of those Nigerian coups, Muhammadu Buhari, is now Nigeria’s president again. But this time he won an election in which his incumbent opponent, Goodluck Jonathan, stepped down with far more grace than he ever showed in office. In Burkina Faso, a coup led by the presidential guard was overturned after days of protests in the streets. + +Mobile phones do not just create consumers. They also link people up and help them share information. A generation ago politicians could suppress dissent just by controlling the radio stations. Now stories of corruption spread quickly by text message and on WhatsApp. Protest movements can organise far faster and more easily than in the past. + +In some places that may be destabilising. In Burundi, opposition to Pierre Nkurunziza’s attempt to hold on to power is being led by just the young urban and educated people that Western companies most want to sell to. But elsewhere, politicians may come under increased pressure to shape up or stand down. For decades, the most corrupt African leaders have tried to resist urbanisation lest it threaten their rule. They are failing. + +Even so, the next decade will be more testing than the last. With less money to distribute from the proceeds of oil, copper or gold, it will be harder for patronage politicians to convince their populations that the future is bright. Tanzania’s new president, John Magufuli, has delighted Western diplomats since his election in October by prosecuting corrupt officials and requiring government employees actually to do their jobs. But he has also stoked up xenophobia, expelled foreign workers and shut out imports. + +It is only the pluckiest investors who will brave such choppy waters. Revealingly, the biggest private foreign investments recently have been in malls and mobile-phone masts, which are relatively cheap—not roads and railways, which cost billions. But the potential rewards are extraordinary. Africa’s population is expected to more than double by 2050, to nearly 2.5 billion. Many of these people will still be poor, and some will still live in countries torn apart by war. But even if only a small proportion of them thrive, that will still be a market worth going for. + + + + + +Business + + + + +Solar energy: Follow the sun + +Peabody Energy: The pits + +Digital media: Mail’s got you + +The music industry: Scales dropped + +The Yukos affair: Baiting the bear + +Etsy’s growing pains: Knitty gritty + +India’s defence industry: Opportunity strikes + +Schumpeter: Keeping it under your hat + + + + + +Solar energy + +Follow the sun + +Solar power is reshaping energy production in the developing world + +Apr 16th 2016 | Ma’an | From the print edition + + + +RAED KHADER, a Jordanian driver, has an alarming habit of thumbing his mobile phone while at the wheel—albeit on a straight road cutting across the desert. But after scrolling back through almost two years of photos, he finds a picture that tickles him: of camels against a sandy backdrop. Today that same spot outside Ma’an, a poverty-stricken city in south Jordan, is crawling with workers in the final stages of installing five square kilometres (almost two square miles) of solar panels. + +He is enraptured by the photovoltaic (PV) modules that shimmer in the desert sunshine. “It’s amazing. I love it. It’s good to see my country develop its own source of energy,” he says. “We have such good sun here. It’s free. Why don’t we use more of it?” In his enthusiasm, he has convinced his daughter to become one of the first Jordanian women to study for a solar-energy engineering degree. + +The 160-megawatt (MW) solar park, which is scheduled to open this summer, will mark the launch of Jordan’s effort to reduce its fossil-fuel imports, which generated 96% of its energy last year and cost about 10% of GDP. In a restive neighbourhood, it has good reason to become more self-reliant. Its liking for solar intensified after Egypt temporarily cut natural-gas supplies during the Arab spring in 2011. + +The small steps sanctioned by Jordan’s cautious bureaucracy pale in comparison with the growth of solar energy in some other countries. But they illustrate the allure of the technology, as well as some of its teething problems. + +Across the developing world, solar power is hitting its stride. Rather than the rooftop panels popular in Germany, countries where solar irradiance is much stronger than northern Europe are creating vast parks with tens of thousands of flexible PV panels supplying power to their national grids. Some countries, such as China, provide generous subsidies (though these are sometimes years overdue). But in other countries solar PV is becoming competitive even without financial support. + +In 2015 China surged past Germany to become the biggest producer of solar energy, benefiting from its dominance of solar-panel manufacturing and policies to reduce dependence on dirtier fuels, such as coal. Solar power accounts for just 3% of the electricity mix, but China is now building its biggest plant, in the Gobi desert. Analysts expect the country to install 12 gigawatts (GW) of solar in the first half of this year. That would be one-third more than the record amount America plans to build for the full year. Coal, meanwhile, is in growing trouble (see article). + +India is determined to keep up. Its government is targeting a 20-fold increase in solar-power capacity by 2022, to 100GW. Though this might be over-ambitious, KPMG, a consultancy, expects solar’s share of India’s energy mix to rise to 12.5% by 2025, from less than 1% today. It thinks solar in India will be cheaper than coal by 2020. (Even Coal India, a mostly state-owned entity, plans to contract 1GW of solar power to cut energy bills.) Such is the frenzy that officials in sunny Punjab are urging farmers to lease their land to solar developers rather than till it. + +Led by big projects in these two countries, global solar-energy capacity rose by 26% last year. More remarkable is the decline in its cost. Studies of the “levelised cost” of electricity, which estimate the net present value of the costs of a generating system divided by the expected output over its lifetime, show solar getting close to gas and coal as an attractively cheap source of power. Auctions of long-term contracts to purchase solar power in developing countries such as South Africa, the United Arab Emirates, Peru and Mexico provide real-world evidence that such assumptions may even prove to be conservative (see chart). + + + +In sunny places solar power is now “shoulder to shoulder” with gas, coal and wind, says Cédric Philibert of the International Energy Agency, a prominent forecaster. He notes that since November 2014, when Dubai awarded a project to build 200MW of solar power at less than $60 a megawatt hour (MWh), auctions have become increasingly competitive. + +Some renewable-energy developers are gaining global reputations as record-breakers. The Dubai bid was won by Acwa Power, a Saudi company that is taking big strides across the Middle East and Africa, despite the oil-rich kingdom’s own half-hearted plans for solar development. In Morocco it has built the first phase of the world’s largest solar-thermal plant, which is using mirrors to generate heat to drive electricity turbines. Moody’s, a rating agency, says the completed plant will cut Morocco’s oil-import bills by 0.3% of GDP. + +Let the sunshine in + +Italy’s Enel Green Power (EGP) is also attracting attention. In February it won a tender to provide Peru with 20 years of power from solar PV at just under $48 a MWh. Just over a month later Mexico awarded it a similarly lengthy contract to generate solar power in the arid northern state of Coahuila at a price of about $40 per MWh. Bloomberg New Energy Finance (BNEF), a research firm, called it “the lowest subsidy-free solar contract we have ever seen”. EGP’s head of business development, Antonio Cammisecra, says there is a clear trend of falling prices. “We are trying to drive it,” he says. + +The main factor behind the price drop is an 80% fall in the cost of solar panels since 2010, according to the International Renewable Energy Agency, an industry body. But Mr Cammisecra says that may now be close to ending. He travelled to China this week to persuade panel manufacturers to invest more in technological improvements, in order to increase the amount of solar energy that can be converted into electricity. + +Analysts are also concerned that some providers’ auction bids may be over-aggressive, though companies can incur stiff penalties if they fail to complete a contract. Mr Philibert notes that some contracts may collapse because bidders are unable to raise finance. + +Jenny Chase of BNEF says that in some cases “the model is being pushed to the absolute limit”. Indian firms, for example, are calculating development costs well below comparable global benchmarks. “I struggle to see how they will do this without cutting corners,” she says. + +Jordan is a case in point. A Greek developer, Sunrise, last year agreed to charge $61 per MWh to build a 50MW solar plant north of Amman, which rival developers thought too cheap because of relatively high financing costs in Jordan. Last month Acwa Power bought the Jordanian unit in order to rescue the contract. Analysts say it is hard to see how Acwa will make money from it, but the gesture may help it win solar contracts in the future. + +The kingdom offers more lessons on potential pitfalls. Like many developing countries, its national electricity company, NEPCO, has failed to expand its grid as quickly as private firms can erect solar parks, though it now has funding to build high-voltage transmission lines to connect the solar plants to Amman, the capital, where most electricity is consumed. (This problem is shared with China, which sometimes forces solar and wind plants to “curtail” their electricity output because the grid lacks the capacity to absorb it.) + +But Jordan is blessed with geographical features that will let it expand its solar capacity once it has ironed out its problems. Engineers say that the area around Ma’an, with about 330 sunny days a year, has some of the best solar irradiance in the region. They add that, because of its altitude and terrain, heat and dust do not substantially lower the efficiency of the PV panels, as they do in neighbouring Saudi Arabia. + +Support also comes from the top. King Abdullah has ordered solar panels to be installed on palaces and mosques, businessmen say. His most senior ministers drive Tesla electric vehicles. With more solar energy, the economic future of Jordan would be brighter and the country less at risk in a volatile region. All it needs is for the sun to energise its bureaucrats. + + + + + +Peabody Energy + +The pits + +The world’s biggest coal miner goes bust + +Apr 16th 2016 | From the print edition + +Marching on + +“MAKE No Mistake: The Age of Coal Marches On”. So reads a headline on the website of “Advanced Energy for Life”, an advertising campaign led by Peabody Energy, the world’s largest private coal company, whose flair for public-relations guff looks boundless. No amount of image-scrubbing could help it on April 13th, though. The American firm, with debts of $6 billion, filed for Chapter 11 bankruptcy protection. Its boss, Glenn Kellow, blamed a “historically challenged industry backdrop”. + +The industry is indeed in a hole, beset by pricing and pollution problems, plus NGO pressure on creditors and investors to pull out their money. But Peabody’s problems are also of its own making. It raised big debts to buy an Australian firm, Macarthur Coal, for $5.2 billion in 2011, aiming to bolster sales of metallurgical coal to China just before that country’s steel industry plunged into crisis. As prices of metallurgical and thermal coal (used in power stations) tumbled, it lost $2 billion last year, writing off almost $1 billion of its Australian assets. + +Since the start of 2015, five big American coal miners have declared bankruptcy, including Arch Coal and Alpha Natural Resources. A former Australian coal billionaire, Nathan Tinkler, was declared bankrupt this year after losing a fortune in coal. Some companies in America use bankruptcy protection to buy time to salvage themselves, much as car firms and airlines have done; Peabody, too, said it would emerge stronger. + +But sooty clouds are unlikely to blow over—coal has not joined a recent commodities rally. The shale revolution in America meant that for much of last year, for the first time, natural gas replaced coal as the country’s main fuel for generating electricity. Britain plans to close all its coal-fired power stations by 2025, and on one day last week even that rainy island produced more power from solar than coal. In China coal use for its power supply fell in 2015 for the second year. On April 13th Greenpeace, an NGO, said China’s National Energy Administration had ordered 28 of 31 mainland provinces to suspend approval of new coal-fired power plants. + +India and China will keep using coal for decades, as they rely on it to generate about 70% of electricity. “Let’s not kid ourselves. Had prices of gas and oil not fallen...you would not have seen such a reduction in use of thermal coal,” says Hunter Hillcoat of Investec, a bank. The efforts to resuscitate Peabody may come off. Nonetheless the firm has just added a new lump of evidence to suggest a dark future for coal. + + + + + +Digital media + +Mail’s got you + +A potential bid by the Daily Mail for Yahoo may make sense + +Apr 16th 2016 | NEW YORK | From the print edition + +Paywalls have never really worked + +KIM KARDASHIAN, a famous woman, has declared her love for it. Kris Jenner, her mother, uses it as a “baby monitor” to track her celebrity children. In the space of a few years DailyMail.com, the American website of the Daily Mail, a British tabloid, has captured the digital zeitgeist of the market it most covets. By churning out a free flow of everything Kardashian, Trump and more (with 1,200 stories and 10,000 photos daily), the site attracted 66.7m unique visitors in February—only a mite less popular than the New York Times and the Washington Post. + +The strategy of the Daily Mail runs against conventional wisdom in digital media. Home pages of websites matter less than before. Many news sites have ceded the job of distributing content to Facebook, Snapchat, Twitter and other platforms. But organisations that let Facebook and others publish their stories risk losing their ability to profit from them. The Mail uses its home page as a distribution hub, helped along by its titillating “sidebar of shame”, which features celebrity gossip and racy photos on continuous refresh. Since 2012 it has claimed the title of the world’s most-visited English language news site. It now attracts an estimated 220m monthly unique visitors to its various sites around the world, including Mail Online in Britain. + +The Daily Mail and General Trust (DMGT), which owns the site, isn’t satisfied. It says it is thinking about joining a bid for a much larger business: Yahoo. (Bigger companies, such as Verizon, are also interested in bidding.) The portal, which lost the global battle for eyeballs, advertisers and technology talent to Google and Facebook, is still a force in America, where it drew 204m visitors in February. Excluding its Asian assets, such as a stake in Alibaba, the Chinese online giant, Yahoo is estimated to be worth less than $8 billion—perhaps far less. + +Advertising buyers gravitate to websites with the highest traffic, leaving smaller sites to struggle to sell their inventories. By getting big, the Daily Mail websites have already done a fair job of selling ads. Digital advertising revenues grew from £10m ($15.4m) in 2010 to £73m in 2015, though will fall short of a target of £100m in digital-ad revenues for this year. + +But the Mail needs to increase advertising business in America, where revenues were just £18m last year, well short of earnings from Britain of £46m. Though online ads in America are now rising fast (they grew by 66% in the first quarter of this financial year), acquiring Yahoo would reinforce that growth. The portal has offerings in sports and finance where the British tabloid is lacking; and Yahoo has its own popular, if not exactly sexy, home page. + +DMGT does well from operations such as risk modelling, but would not have the means to buy Yahoo outright. But private-equity firms see in Yahoo a popular media property failing to make the most of its potential. A joint bid by these funds and the Mail may sound like an unlikely tabloid tale. But Yahoo could yet be in line for a Kardashian-style makeover. + + + + + +The music industry + +Scales dropped + +More people are paying to stream music, but the industry is still wobbly + +Apr 16th 2016 | NEW YORK | From the print edition + + + +ONCE upon a time record-industry executives could all but weigh their profits on scales. Each pallet of compact discs (CDs) they sold translated into predictable quantities of cash for them and, second, for singers and songwriters. In 1999, the year the music-sharing service Napster was founded, wholesale revenues in the industry peaked at $23.7 billion. Then they began a slide that has since continued almost without interruption. + +Until now. Growth in the digital streaming of music helped industry revenues to expand by 3.2%, to $15 billion, last year. That was the fastest rate since 1998, according to IFPI, a trade body (revenues also increased by a smidgen in 2012; see chart). The largest piece of the market was digital, with 45% of the total, whereas demand for those CDs continued to fall: physical goods accounted for just 39% of sales. Subscription-based streaming services like Spotify, Deezer and Apple Music proved especially successful, as the fastest-growing category: last year revenues from these rose by 59%, to more than $2.3 billion. Digital downloads on services like iTunes (which slice up albums into 99-cent individual tracks) accounted for $3 billion of sales, though that represented a decline of 10.5% on the year before. The music industry looks increasingly likely to be defined by services like Spotify, weightless but not cashless. + + + +So much for the good news. The gloom for music bosses and artists, however, remains far greater than any cheer. The total market remains 36% smaller than it was at its pre-Napster peak. Nor has a perennial problem with piracy abated. Illegal downloads have declined, at least in America, but piracy takes various forms, such as when people rip music from digital sources. Smartphone apps make this easy. MusicWatch, a market-research company, estimates that in America the number of “streamrippers”—those who copy music from streaming services, including YouTube—rose by half to about 20m, between the end of 2013 and early last year. + +Another big concern for the industry is how easy it is to access free music legally. Watching online music videos is the most popular way to get music for nothing. Licensed clips often come bundled with an advert, but their popularity does not yet produce big revenues. IFPI estimates that 900m people got music from ad-supported user-upload services like YouTube, but that these generated only $634m in revenues globally—barely 4% of the total. + +That is largely because much of the music streamed on YouTube and similar sites is not properly licensed. In a report IFPI argues that songs and videos uploaded by users let YouTube and similar services “build their business without fairly remunerating rights holders”. In America the Digital Millennium Copyright Act protects the sites from prosecution over unlicensed content uploaded by users, as long as they comply with takedown requests. + +YouTube has made fortunes for a few performers who got started on the platform, and the site’s defenders say there is great potential for established artists to earn more. But Peter Mensch, manager of Metallica, Red Hot Chili Peppers and Foals, says, “I don’t know anybody who is getting rich off YouTube spins.” + +The IFPI report shows that there are still far fewer users who pay directly for digital music than who listen to it for nothing, but the paying portion is at least growing rapidly. Streaming services had 68m paid subscribers in 2015, up from 41m a year earlier. Spotify has 30m paying customers. Perhaps, given time, revenues from such subscribers and from advertisers will grow sufficiently to let more bands and firms prosper, even in an era of digital music. Mr Mensch reckons that his clients will do “fine” from Spotify. But none of them will earn two dollars a record, as in the days when music could be sold by the pallet. + + + + + +The Yukos affair + +Baiting the bear + +Russia is trying to impede enforcement of a massive damages award + +Apr 16th 2016 | From the print edition + +Out of Khontrol + +A DECADE on from Vladimir Putin’s expropriation and dismemberment of Yukos, things are not going quite to plan. The Russian oil company was seized from its owners, then bankrupted and broken up after being accused, on flimsy evidence, of tax evasion. Its boss, Mikhail Khodorkovsky (pictured), was jailed. Yukos’s livid shareholders sued the government, and after years of legal wrangling began to score victories. The biggest came in 2014: a $50 billion award against Russia by a court in The Hague, a record for an international arbitration. The judges ruled unanimously that Russia had breached the terms of an international charter that protects cross-border investment. Moscow refused to pay up, sending Yukos’s well-resourced former owners into a hunt to seize assets—and creating a headache for the Kremlin. On April 20th a Dutch court is expected to hand down another ruling in the case. + +Under an international convention, arbitration rulings are enforceable in any of the 156 signatory countries. The former majority owners’ holding company, GML (which is 70%-owned by Israel-based Leonid Nevzlin), has sought court orders to grab Russian state assets in America, Belgium, Britain, France, Germany, India and the Netherlands. Some have already been frozen in France and Belgium, including assets in France worth €1 billion ($1.13 billion)—among them buildings, money held by the French arm of a Russian bank, and a firm’s debt to a Russian satellite operator. + +Any state asset is fair game, as long as it is not diplomatic. Several properties have been targeted, only for a plaque to be affixed to the building a day or two later, announcing it to be an annexe of the Russian embassy. The asset-hunters are careful to take photographs of facades before applying for asset-freezes, so they can provide before-and-after pictures as evidence. + +Having reluctantly taken part in the arbitration, Russia is now trying to get the ruling set aside with help from a blue-chip American law firm, White & Case. It says the tribunal lacked jurisdiction because Russia signed, but did not ratify, the energy charter. And it claims the charter was designed to protect foreign investments, not those made by Russians. (The tribunal rejected both arguments; the relevant corporate entities were registered outside Russia.) Moscow also accuses the arbitrators of committing “gross violations”: it alleges that an assistant at the three-person tribunal acted improperly as a fourth arbitrator, basing its conclusions on an analysis of the large number of hours he worked and the ruling’s writing style. It is on these matters that the Dutch court will rule on April 20th. + +A Russian state investigative committee recently said it was close to amassing “proof” that Mr Khodorkovsky and his associates got their shares in Yukos through an elaborate theft, hid them in a web of shell companies, and therefore have no right to compensation. Now they are employing “another scam using international courts”, said a committee spokesman. + +This is part of a pattern of Russia changing its line of argument as it has grown more desperate, says Tim Osborne, a lawyer for the former majority shareholders. It is now “grasping at an ‘unclean hands’ argument” that it did not focus on in the past, he argues, referring to the allegation that Yukos was acquired by theft. + +Moscow has supplemented its arguments with threats. It has told America, Belgium and France that any action against Russian property will be considered grounds for retaliation against not only their governments, but their citizens and companies too. Russia’s Duma has passed legislation permitting tit-for-tat seizures. + +Much as this may show disregard for the rule of international law, some of those at whom the bear has shown its claws appear unready to fight. In February the Belgian foreign ministry intervened in enforcement proceedings at Russia’s request, threatening a bailiff involved in auctioning a seized building in Brussels used by a Russian news agency. The mandarins feared that going ahead with the sale could provoke a “major diplomatic incident”. + +Don’t need no money + +As the game of cat-and-mouse continues, the dispossessed shareholders will go after more stuff. They say they may set their sights on the assets of Rosneft and Gazprom, two state energy giants. Russia, meanwhile, is fighting to get blocked assets unfrozen. This week a $700m payment to its space agency was released after a court deemed it to be separate from the state. + +Expect this to turn into a legal ultra-marathon. The upcoming ruling in The Hague is subject to appeal, all the way to the Dutch Supreme Court. That could take five years. Assuming there is no settlement, the enforcement process could last another ten. An estimated $300m-400m has already been spent on lawyers, with Russia outspending its gadflies two to one. + +Mr Khodorkovsky—now the Kremlin’s leading critic-in-exile—is not directly involved in the case, having sold his stake long ago. (“I don’t need the $50 billion,” he says.) But he is not without an opinion. As the battle rumbles on, it could “expose the weakness” of Mr Putin’s regime, he believes, because it “feeds the perception that they can’t deal with me.” + + + + + +Etsy’s growing pains + +Knitty gritty + +A do-good company tests investors’ need for speed + +Apr 16th 2016 | NEW YORK | From the print edition + +From Brooklyn, with love + +ETSY, an online marketplace for all things artisan, from dog soap to Bernie Sanders dolls, seems to be on a roll. In February the firm was recertified as a “B Corporation”, which meets certain social and environmental standards, and reported good results, with sales last year reaching $2.4 billion, up by 24%. On April 5th the firm’s executives, flanked by succulents and a yarn bouquet at their headquarters in Brooklyn, announced a new service to help sellers build their own websites. On April 16th Etsy will celebrate the one-year anniversary of its initial public offering. + +All this appears to add up to what Etsy aims for: “sustainable growth”. The company wants to make everybody involved richer: not just shareholders, but buyers, sellers and manufacturers. It does not give quarterly guidance. It works for the long term. “We are really focused on building a business that can grow consistently year after year,” says Chad Dickerson, Etsy’s chief executive. + +Yet this sunny vision confronts a glum fact. In its year as a listed company, Etsy’s share price has plunged by nearly three-quarters. Investors are happy for the firm’s goods to be produced slowly. Sales are another matter. + +The firm has a big market to tap. Americans spend about $35 billion each year on handmade and vintage jewellery and other crafts, reckons Rohit Kulkarni of RBC Capital Markets, a bank. Globally, that figure rises to $70 billion. Etsy fits consumer trends like a crocheted glove. Shoppers trust about one-fifth of brands in North America and one-third in Europe, according to Havas, a marketing agency. They crave “authenticity”—none more so than Brooklyn’s prairie-booted yuppies. + +Etsy offers authenticity by the gigabyte. Consumers can buy all sorts of unusual products, whether handmade or vintage. For sellers, Etsy is an alternative to craft fairs and trunk shows. The firm owns no inventory. It charges 20 cents to list a product and a 3.5% commission for each sale, as well as optional services such as shipping labels. By the end of last year Etsy had 24m buyers and 1.6m sellers on its site. + +Etsy’s share price has plummeted mainly because the firm is not growing quickly enough to satisfy investors. Sales may have climbed by 24% last year, but this is down from expansion of 43% in 2014. Growth of revenue, active buyers and sellers slowed last year, too. For a regular e-commerce site Etsy’s numbers may still be good, but for an online marketplace they suggest a slowing of the virtuous cycle by which more sellers attract more buyers, which brings higher sales, which in turn lures more sellers. + +When this flywheel is losing speed, “it limits the company’s ability to reinvest,” says Brian Nowak of Morgan Stanley, another bank. He expects Etsy’s revenues—from commissions and fees—to grow at about the same pace as Amazon’s this year, but expects sales on the online giant’s website to rise twice as fast. As Etsy’s share price has sunk, Amazon’s has jumped by more than 50%. + +Being a “B corporation”, which does not bind Etsy legally, distinguishes the firm from rivals. But Etsy’s do-good culture is not what is holding it back. It is facing more fundamental problems, says Mr Kulkarni of RBC: people will spend only so much on artisan goods, so it may be hard to coax more sales from existing buyers; and Etsy’s sellers, most of whom work from home, may have trouble making more products. + +Etsy is not sticking to its knitting to boost sales. It is spending more on marketing to lure new buyers, though this has widened losses. It is helping sellers to grow. Its new website service lets them reach more buyers. And a programme launched last year connects sellers with vetted manufacturers. But the competition is not sitting still either: Amazon has introduced its own crafts site, called “Handmade”. Etsy’s second year as a listed company could be even more tricky than its first. + + + + + +India’s defence industry + +Opportunity strikes + +The country’s conglomerates are throwing themselves into arms-making + +Apr 16th 2016 | TALEGAON | From the print edition + +This one looks sub standard + +VISITORS to the Talegaon plant of Larsen & Toubro (L&T), an Indian engineering company, might confuse it for the props department of a film studio. Half-a-dozen hangars spread over 50 acres near Pune, a city in western India, are filled with enough weaponry to thrill a Bond villain: camouflaged track-mounted howitzers, anti-submarine rocket launchers and, particularly appealing should Blofeld share Indians’ fondness for trains, a contraption to turn a humble carriage into a ballistic-missile-launcher. + +The missile itself is a dummy, but the rest of the kit speaks of India’s ambitions to breed world-class makers of defence equipment. Although India now has the world’s fourth-biggest military budget, it has been the single biggest arms importer for seven of the past ten years, says SIPRI, a research institute (see chart). The government, tired of this unwanted accolade—and convinced indigenous weapons production can provide jobs, budget savings and technological know-how—puts defence at the heart of its drive to boost domestic manufacturing. + + + +Local conglomerates are salivating at an opportunity they expect could be worth $150 billion-200 billion in the coming decade. Tata, Mahindra and Godrej—as well as L&T—are among those that have piled into weapons manufacturing in recent years. But to succeed they will have to take on foreign importers (which snap up about two-thirds of all procurement by value), a crowd of state-owned companies and the country’s bloated defence bureaucracy. + +Impatience with familiar suppliers opened the first breach for private contractors over a decade ago. An unconvincing victory in a skirmish with Pakistan, in Kashmir in 1999, exposed the Indian army’s lack of capability. Insiders blamed a plethora of corruption scandals, involving foreign firms as well as flabby state-owned arms-makers, for leaving forces ill-equipped. But private-sector enthusiasm faded when promises of contracts did not materialise. + +The latest sally slightly preceded the arrival of Narendra Modi in power in May 2014, and has been reinforced by his team’s energetic drumming of a “Make in India” theme. Mr Modi has spoken of having 70% indigenous weapons procurement by 2020, roughly double today’s figure (the defence ministry is a bit less ambitious), with more of it produced by the private sector. To achieve this, procurement rules overtly favour stuff made locally. Some of the red tape entangling all things industrial has been done away with: for example, foreign groups may now own as much as 49% in Indian ventures, up from 26%. + +Bosses at private Indian firms are delighted by the new rhetoric: Tata, India’s largest conglomerate, identifies defence as one of four core growth areas. Groups with a background in cars (Mahindra) or precision engineering (L&T) have recast themselves as arms-makers, often with the help of Western partners such as Airbus, Boeing or Lockheed Martin. + +The pipeline for new defence systems looks appealing. The military budget, some $50 billion a year, is expected to track long-term economic-growth rates of around 7% a year. Press reports suggest the armed forces are short of some 300 fighter jets, at least a dozen submarines, over 1,000 combat helicopters, seven frigates and perhaps 3,000 artillery guns. What gear it has is often of cold-war vintage and from Russia, India’s traditional supplier. Even ammunition is in short supply. + +Yet in practice the armed forces are lousy customers. Defence bureaucrats are risk-averse. Military spending is growing, but much new money goes towards salaries and pensions. The share of funds for procurement, research, development and testing has slumped from 34% in 2005 to 25% today, says IHS Jane’s, a research outfit. + +Worse, a fifth of the capital budget typically goes unspent because, in the run up to year-end, the finance ministry usually begs generals to shelve projects so that overall public-spending targets can be met. That leaves just $11 billion-12 billion for procurement, says IHS. And much of this is committed to existing projects, often in the hands of state-run companies good at lobbying for their share. + +So those in charge of India’s putative defence groups are waiting to see if the opportunity is really as big as it appears. Official rhetoric was enough for investment plans to be drawn up, but not quite enough for big amounts to be spent. “We like the policy; we await the execution,” says one firm’s defence-division boss. A bureaucrat who misinterprets a single word in a regulation could stymie a billion-dollar project, he adds. + +Foreign firms will also seek a chance to profit. Nearly 500 attended a recent defence jamboree in Goa. Some are still hoping to do deals to deliver equipment outright. Dassault has been in talks to sell its Rafale fighter jets for over 15 years (“We are getting closer...we are in the final phase,” its chairman said last month, redefining optimism). But if it comes off, this deal would probably be one of many contracts to have the first batch of a weapons system made overseas before shifting manufacturing—and some technology—to India for later orders, assuming the local partner could cope with production demands. + +The past year has seen the weaving of a tangled web connecting big Western defence groups and Indian manufacturing counterparts. A recent deal for BAE Systems to supply howitzers uses Mahindra as the local assembler. A track-mounted artillery gun at L&T’s facility (part of which is a joint venture with Airbus Defence) was designed by Samsung. Boeing and Tata have a partnership to produce Apache helicopter fuselages, among other things. + +Sceptics wonder whether local groups do much more than give existing foreign weapons systems an Indian veneer just thick enough to get contracts. Systems developed abroad (often some time ago) can be assembled in an Indian plant, with both sides claiming the gear has been extensively adapted for the Indian market. + +Assembly work is not the lucrative bit of the weapons industry—just as the iPhone brings more profits to Apple (its designer) than to Foxconn (its contract manufacturer). For now, India mostly makes the cheaper bits, especially parts that can benefit from lower labour costs. Pricier systems, which require long development lead-times, are hampered by higher capital costs for Indian firms compared with Western rivals. + +All that could change if Indian companies develop expertise to design, not just assemble, equipment. Last month the government said it would give priority to weapons designed and made in India. It should also let firms export their wares—which, in the long term, is the only way investments in arms-making pay, says Deba Mohanty of Indicia, a consultancy. Countries that spend heavily on armed forces typically have successful arms-making companies. India’s ambition, one day, is to stop being an exception to this rule. + + + + + +Schumpeter + +Keeping it under your hat + +An old management idea gets a new lease of life + +Apr 16th 2016 | From the print edition + + + +APPLE and Tesla are two of the world’s most talked-about companies. They are also two of the most vertically integrated. Apple not only writes much of its own software, but designs its own chips and runs its own shops. Tesla makes 80% of its electric cars and sells them directly to its customers. It is also constructing a network of service stations and building the world’s biggest battery factory, in the Nevada desert. + +A century ago this sort of vertical integration was the rule: companies integrated “backwards”, by buying sources for raw materials and suppliers, and “forwards”, by buying distributors. Standard Oil owned delivery wagons and refineries in addition to oil wells. Carnegie owned iron-ore deposits and rail carriages as well as blast furnaces. In his 1926 book “Today and Tomorrow” Henry Ford wrote that vertical integration was the key to his success: “If you want it done right, do it yourself.” He claimed he could extract ore in Minnesota from his own mines, ship it to his River Rouge facility in Detroit and have it sitting as a Model T in a Chicago driveway—in no more than 84 hours. + +Today this sort of bundling is rare: for the past 30 years firms have been focusing on their core business and contracting out everything else to specialists. Steelmakers sold their mining operations and carmakers spun off their parts suppliers. Controlling it all made sense, the argument went, when markets were rudimentary: when supplies of vital materials were limited or contractors could cheat you. As markets became more sophisticated these justifications fell away. Thanks to globalisation, companies could always find new resources and better suppliers. + +Yet a growing number of companies are having second thoughts. This is most visible in information technology. The industry’s leaders were at the heart of the contracting-out revolution. Vertically integrated companies such as IBM outsourced as much as possible in order to lower costs. Upstarts such as Microsoft prospered by focusing on a narrow—but exceptionally valuable—slice of the pie: the operating system of personal computers. Now many startups in Silicon Valley pride themselves for being “full stack”. But re-bundling can be found everywhere, from fashion to manufacturing. + +Reasons for the reversal abound, but five stand out. The most important is simplicity. Consumers are willing to pay a premium for well-integrated products that do not force them to deal with different suppliers or land them with components that do not talk to each other. They want to be able simply to press a button and let the machine do the rest. This is largely why Apple opted for integration, as did Nest, a maker of wireless thermostats. + +A second reason is that firms operating on the technological frontier often find it more efficient to do things in-house. Companies that are inventing the future frequently have no choice but to pour money into new ventures rather than buy components off the shelf. This explains Tesla’s “gigafactory” for batteries: their availability is the biggest constraint on the firm’s growth. Boeing tried to cut its production costs by outsourcing 70% of the production of its 787 Dreamliner to hundreds of different suppliers—more than any airliner before. The result was a disaster: parts came in late; bits didn’t fit together; deadlines were missed. The firm reversed course, bringing manufacturing back in house and buying a factory. + +A third reason is choice: the more the market has to offer, the more important it is to build a relationship with customers. Netflix and Amazon now create their own television shows in order to keep their viewers from buying more generic content elsewhere. Harry’s, an American company that sends its subscribers a regular supply of razors and shaving cream, spent $100m to buy a German razor-blade factory. + +Choice is reinforced by speed: fashion brands such as Spain’s Zara have resisted contracting out everything. Instead, they operate their own clothes factories, employ their own designers and run their own shops. This gives them a big advantage: they can turn the latest trend into new product, often in small batches, and have it in stores in a couple of weeks. Less vertically integrated brands such as Gap and American Apparel find they are stuck with yesterday’s creations because they cannot get supply chains to produce new wares quickly. + +And then there is a combination of old worries about geopolitical uncertainty and new worries about the environment. In 2014 Ferrero, an Italian confectionary-maker, bought Oltan Gida, which produces one-third of Turkey’s hazelnuts, the vital ingredient in Nutella. In 2015 IKEA, a Swedish furniture company, bought nearly 100,000 acres of forests in Romania and the Baltic region. Earlier this year ChemChina, a state-owned company, purchased Syngenta, a Swiss seeds and pesticides group, for $43 billion, driven by the government’s quest for food security. Cruise companies such as Costa Cruises and Disney have bought islands in the Caribbean and the Bahamas so that they can guarantee that their passengers will have somewhere empty and unspoiled to visit when they sail past. + +Core complexities + +The renewed fashion for vertical integration will not sweep all before it. For the most mundane products the logic of contracting out still reigns supreme. And today’s bundling is less ambitious than Henry Ford’s: Apple, for instance, contracts out a lot of production to contract manufacturers such as Foxconn (though it keeps them on a tight leash). Integration is also hard to pull off: Tesla lost some of its shine on April 11th when it recalled 2,700 of its sport-utility vehicles because of a glitch. That said, striking the right balance between doing things in-house and contracting things out is clearly much more complicated than it was in the days when Tom Peters and his fellow gurus told companies to focus on what they do best and outsource the rest. + + + + + +Finance and economics + + + + +Russia’s central-bank governor: Putin’s right-hand woman + +After the Panama papers: Who next? + +Unlocking Mossack Fonseca: The key’s in Sin City + +Italian banks: A heavy load + +Rehabilitating Argentina: The green light + +The world economy: System says slow + +Agriculture and demography: The toll of tariffs + +Free exchange: Terms of enlargement + + + + + +Russia’s central-bank governor + +Putin’s right-hand woman + +The Russian economy is in a bad way, but Elvira Nabiullina has saved it from worse + +Apr 16th 2016 | MOSCOW | From the print edition + + + +ELVIRA NABIULLINA’S first encounter with capitalism came during her university days, when she enrolled in a course called “Critique of Western Economic Theory”. It was an unusual start for a modern central banker. These days she embodies another contradiction. Russia’s economy has been held back for years by corruption and rent-seeking, and more recently by Western sanctions and the low price of oil and gas, the country’s main exports. Yet the Central Bank of Russia (CBR) is a model of competent, technocratic policymaking. Since Ms Nabiullina became governor in 2013, the CBR has kept Russia’s economy, awful though it is, out of worse trouble. + +The soft-spoken Ms Nabiullina has humble roots. Her mother worked in a factory; her father was a chauffeur. For years she has been at the centre of Russia’s turbulent transition to a market economy. When Vladimir Putin became president in 2000, he proclaimed a break with the chaos of the 1990s. But when it came to economics “Putin didn’t have clear ideas,” says Yevgeny Yasin, a former economy minister. He thus entrusted economic policy to a cadre of professionals with orthodox views, including Ms Nabiullina, who became deputy economy minister in 2000 and minister in 2007, an experience she calls “the most influential” on her approach to economics. + + + +The crisis of 2008-09, when oil prices fell and the world economy stagnated, revealed that the Russian economy was dependent on flighty foreign hedge funds and retail investors. As they pulled money out, the CBR tried to prop up the value of the rouble, losing over $200 billion of foreign-exchange reserves in a matter of months (see chart). Lending shrivelled across the economy. In 2009 GDP shrank by 8%. + + + +That prompted Russia to enact two sets of reforms, in preparation for the inevitable next oil-price crash. First, it diversified its sources of funding. In 2013, for instance, Russian regulators made it possible for Euroclear and Clearstream, two international securities depositories, to begin handling certain Russian bonds. That helped to attract institutional investors, who tend to shrug off market gyrations and like to buy assets when they are cheap, says Jan Dehn of Ashmore, a fund manager. + +On Ms Nabiullina’s watch Russia’s domestic investment market, another source of stable funding, has also deepened. The share of Russia’s public debt in domestic hands rose from 66% to 70% in 2013 alone. Goldman Sachs, a bank, reckons that the assets of Russian pension funds, which are regulated by the CBR, will increase from about $60 billion today to about $200 billion by 2020. + +This diversification of funding, Mr Dehn says, has left the Russian economy less starved of capital than it would otherwise have been. Relative to the size of the economy, private-sector capital flight was smaller in 2014-15 than in 2008-09. In 2015 GDP shrank by 4%, a better performance than in 2008-09, despite a bigger drop in the oil price. + +The second big change in policy since 2008-09 concerns Russia’s international reserves. They grew by $140 billion in 2009-13 to more than $500 billion (about a fifth of Russian GDP), thanks to high oil prices. This big cushion is one reason why Russia has been able to pursue an aggressive, anti-Western foreign policy, since it has not needed to turn to the IMF for a bail-out, as it did in 1998. Ultimately that will not work to Russians’ advantage. But it also gave Ms Nabiullina room for manoeuvre. + +To maintain reserves when the oil price began to fall, Ms Nabiullina accelerated a plan to allow the rouble to float. It fell by 40% against the dollar in 2015 alone. Propping up the rouble would have been popular, since it would have preserved ordinary Russians’ purchasing power, but it would have meant burning through the country’s reserves again. Instead the CBR channelled dollars to sanction-hit banks and energy companies, to help them repay external debt. Reserves have also been used to finance the budget deficit. As oil prices recover, so the CBR is again accumulating reserves, with a view to hitting the $500 billion mark once again. + +The rouble’s fall has stoked inflation, as imports have become more expensive. As a result, real (ie, adjusted for inflation) wages have fallen by more than 10% since 2014. (They are still triple what they were when Mr Putin took office in 2000.) Interest rates, which in 2014 were jacked up to 17%, have been the only tool the CBR has used to stem the rouble’s fall. High rates also help to bring down inflation, currently 7%, towards the CBR’s target of 4%. These decisions have “reflected the capacity of the institution to do what is right for the country regardless of the political situation”, says Birgit Hansl of the World Bank. + +Such steps have been “painful, but necessary”, in Ms Nabiullina’s words. To ease the pain, the government is spending 3% of GDP recapitalising well-managed banks and compensating Russians with savings in bad ones. In addition, banks were temporarily allowed to revalue foreign-exchange liabilities at a pre-crisis exchange rate, making their balance-sheets seem healthier than they really were, and thus allowing them to lend more. The CBR also allowed banks to offer forbearance on souring debts, a move cautiously welcomed by the IMF. All these measures may be paying off: non-performing loans remain at a lower level than in 2008-09. Credit is inching up. + +At the same time Ms Nabiullina has tightened supervision. “She received carte blanche from the president to go after those banks that were earlier untouchable,” says Oleg Vyugin, chairman of MDM Bank and a former deputy governor of the central bank. About 200 banking licences have been rescinded since 2014, roughly one-fifth of the total. + +Nonetheless, the long-term economic outlook is poor. Ms Nabiullina’s critics say the CBR’s tight monetary policy is the culprit, since it cripples investment. But corporate profits rose by 50% last year as the rouble value of foreign earnings jumped; companies have plenty of cash to invest. In regular surveys, manufacturers cite policy uncertainty, not high interest rates, as a big constraint. Ms Nabiullina agrees. “Our economic downturn is mostly the result of structural factors,” she says. What worries her most is not protracted low oil prices, but “how quickly and dynamically” Russia can improve its business environment. Until then, the CBR will have an outsize role in keeping the Russian economy going. + + + + + +After the Panama papers + +Who next? + +Mossack Fonseca and its homeland are not alone in facing closer scrutiny + +Apr 16th 2016 | From the print edition + +Even paradise has its laws + +THE travails of Mossack Fonseca, the Panamanian law firm from which a trove of documents about offshore firms it had helped create was recently leaked, intensified on April 12th, when prosecutors raided its head office. But as the firm defends itself, campaigners for financial transparency are already looking for other Mossacks and other Panamas. + +Mossack was an outlier, rivals claim. “Everyone knew that if you wanted that bit more secrecy, you’d go to them,” says a lawyer who investigates offshore fraud. “We were lucky to get beneficial-ownership data from them 30% of the time.” Nevertheless, other incorporation mills face more scrutiny too, among them Panama’s other big law firms, such as Morgan & Morgan, and OIL, part of Hong-Kong-based Vistra, which caters primarily to Chinese customers. Like Mossack, these are wholesalers. They sell shell companies in blocks to law firms and banks, which sell them on to the end client, sometimes via other retailers. Mossack has dealt with 14,000 such intermediaries. + +In many of the cases highlighted in the Panama papers, there was a clear breakdown of due diligence along this chain. Retailers who were supposed to check clients’ identities and store the information were not doing so. Mossack was doing little—and may not have been obliged to—to know its customers’ customers. + + + +Explore the data behind The Panama Papers + +Also likely to come under the spotlight are the giants of corporate services, such as TMF and Intertrust, both based in the Netherlands, although forming companies is just a small part of their business. The global market for offshore company formation and ancillary services is not huge: annual revenues are perhaps $6 billion. But it is very profitable (pre-tax margins are often 30-40%) and growing by 7% a year. The typical offshore company has an average life of 8-10 years, meaning that clients offer “a nice, annuity-like earnings stream”, says one operator. This has attracted some savvy investors: Blackstone has a stake in Intertrust; Doughty Hanson owns TMF. + +Other jurisdictions are also coming under scrutiny, although Panama is genuinely different. Among sizeable offshore financial centres, it alone has firmly resisted the move to greater tax transparency—a stance which it may now abandon. Apart from Panama itself, the most heat is on Britain and its offshore territories—particularly the British Virgin Islands (BVI), home to roughly half of the 214,000 companies mentioned in the Panama papers. + + + +A dozen of the world’s 50-60 active offshore financial centres are current or former British possessions. Perennially derided as dens of financial iniquity, these islands have in fact cleaned up a lot since the first sustained attacks on them in the 1990s. They now do as well as many bigger places in reviews by the OECD (see chart) and the Financial Action Task Force (FATF), which set tax-transparency and anti-money-laundering standards. + +But David Cameron, Britain’s prime minister, is under pressure to extract another pound of flesh from them. He is likely to renew a push for them to adopt public registers of company ownership, as Britain has. Those territories that have no central registers readily available to the taxman and law enforcers, as Bermuda and Jersey already do, have agreed to set them up. This will put them ahead of FATF standards, which do not require centralised data collection. This week they pledged to speed up response times to requests from British authorities, from weeks or months to a day or less—though they will still resist the idea of making their registers public. + +The BVI, which is home to 450,000 companies in all, hopes to deflect criticism with its new requirements on corporate agents. One of these, which kicks in this year, will force them to collect and verify beneficial-ownership information on clients. Until now this has often been left to “introducers” in the client’s home country, who often fail to do it. + +Some worry that if the British outposts are squeezed too hard, business will flow to less tightly regulated places with shell-company-friendly laws, such as the Seychelles and Samoa. Hong Kong, already a giant peddler of offshore firms, could also benefit, as could the numerous American states with lax regulation of registration agents and ironclad corporate anonymity, like Delaware and Nevada (see box). + +And then there is Britain itself. Oversight of its company-formation industry is poor. Many embarrassing links have been established between British shell companies and criminals, such as those behind a $1 billion swindle in Moldova involving Scottish limited partnerships. Fraudsters use Britain and America because they are “cheap, anonymous and good names”, says Martin Kenney, an offshore investigator. “Since compliance departments don’t count them as high-risk, they are often subjected to less due diligence.” That gives the transparency-loving Mr Cameron lots to ponder as he prepares to host a global anti-corruption summit, set for May 12th. + + + + + +Unlocking Mossack Fonseca + +The key’s in Sin City + +Thinking of investigating a firm mentioned in the Panama papers? Read on + +Apr 16th 2016 | From the print edition + +WITH numerous governments already announcing probes into the “Panama papers” and others preparing to do so, Mossack Fonseca, the law firm from which the hoard of documents about offshore companies was leaked, will be receiving lots of inquiries in the coming months. Until now, getting information on clients of law firms in Panama has been about as common as ice-skating on the Canal. But sleuths may soon find it a lot easier, thanks to a court ruling in, of all places, Las Vegas. + +In 2014 Elliott, a fund that owned debt on which Argentina had defaulted, sued in Nevada to compel Mossack’s local affiliate to provide information on shell companies, in the hope of discovering Argentine assets to seize. The affiliate, MF Nevada, claimed—implausibly—that it was independent of Mossack. In a series of legal skirmishes, Elliott and its lawyers from Dechert LLP established numerous links between the two: for instance, that the employment contract of MF’s sole employee was signed by Mossack partners. E-mails among the Panama papers are said to show that the firm tried to hide evidence of its control over MF Nevada, and wanted its local representative to lie about the relationship. (Mossack has denied this.) One manager reportedly worried that “it could easily become clear that we are hiding something.” + +A judge in Las Vegas ruled in March 2015 that Mossack and MF Nevada were one and the same. That put a crack in the wall of secrecy around American shell companies. But its full significance is only now becoming apparent: it means that, under an American law about assisting with foreign legal proceedings, any investigator anywhere in the world can subpoena Mossack, through the Nevada subsidiary, for information that could be relevant to cases in any country. (Mossack plans to appeal.) + +In short, the little-noticed ruling is the key that unlocks the door for investigators everywhere. Faced with the power of American subpoenas, Mossack’s head office will find it much harder to stonewall foreign requests for information. Ignoring them could mean being found in contempt of court. That would leave it open to penalties designed to compel it to comply, including asset seizures, in other countries where it operates. + +The firm could, of course, slam the door shut by closing its American business. But it is contractually obliged to provide services for thousands of companies there, and cannot disentangle itself from them overnight. Still, those looking to take advantage of the trail Elliott has blazed shouldn’t hang around. + + + + + +Italian banks + +A heavy load + +Italy’s latest attempt to stabilise its banking system + +Apr 16th 2016 | Milan | From the print edition + + + +IN CLASSICAL mythology, Atlas was the god condemned to hold up the sky for all eternity. In Italy on April 11th a clutch of banks and other financial institutions agreed to create a fund called Atlante (Atlas in Italian) to bail out troubled rivals and thus allay fears of a systemic crisis in Italian banking. The scheme should help bolster confidence, but will not live up to its superhuman billing. + +Italian bank shares have lost 31% on average since the start of the year (see chart). Italy’s long recession, only now abating, has taken its toll, leaving €360 billion ($405 billion) of bad debts. Two banks—Veneto Banca and Banco Popolare di Vicenza—are in especially dire straits: the European Central Bank wants them to raise €1 billion and €1.5 billion respectively in extra capital. Given how much investors have soured on the sector, there was a risk that this pair would not have found enough buyers for their share offerings, increasing jitters and leaving the banks that are underwriting the issues with their own capital shortfalls. + +The political stakes are particularly high because of the danger that ordinary Italians could be ruined by a cascade of bank failures. Italy’s banks have long indulged in the pernicious habit of selling their riskiest debt to their own customers: retail investors hold around half their €67 billion of subordinated bonds. Italy’s prime minister, Matteo Renzi, was vilified after a public bail-out of four small banks last year led to losses for small investors. + +Enter Atlante. Its immediate purpose is to provide a backstop for the upcoming cash calls. Details are still being ironed out, but the rescue fund is expected to amount to around €5.5 billion. Investors will include banks, insurance companies and several foundations that own big stakes in banks, as well as the Cassa Depositi e Prestiti (CDP), a state-controlled bank that invests Italy’s postal savings. + +In the longer term the fund is expected to buy some of the industry’s mountain of bad debts. In January the government reached agreement with the European Commission on a scheme intended to speed sales of non-performing loans (NPLs) by allowing the CDP to guarantee senior tranches of securitised bundles of them. But investors were unenthusiastic, leaving a wide gap between the price at which banks are prepared to sell (roughly 40% of face value) and the amount buyers are willing to pay (20%). + +The hope is that sales of NPLs will accelerate as a result of the third element of the scheme: a government decree to speed up bankruptcy proceedings. Atlante is, in theory, a private undertaking, but the government, says Pier Carlo Padoan, the finance minister, was “the facilitator”. The meetings to clinch the deal were held in the finance ministry with the governor of the central bank, Ignazio Visco, on hand. + +The government has already passed a reform aimed at jollying the bankruptcy courts along. It has also quietly introduced a measure that reduces stamp duty for those who buy property pledged as collateral—a step that should make the NPLs more valuable. Now, says Fabrizio Pagani, the official who oversaw the birth of Atlante, what is needed is a greater sense of urgency among judges and lawyers. That is an understatement. According to Mediobanca, an investment bank, bankruptcy proceedings in Italy average almost eight years; the norm in Europe is two years. Making it easier to realise the value of the collateral that banks hold against their NPLs would also make it much easier to agree terms with distressed-debt funds. + +Yet vowing to speed up Italy’s notoriously sluggish legal procedures is easier than actually doing so. Some also ask if the involvement of the CDP, which is said to be investing €500m-600m, breaches European rules on subsidies to business, although Mr Padoan insists it does not. Another issue is how Atlante’s governance will work. It will be managed by Quaestio Capital Management, and no single shareholder will be allowed to hold a majority. That may lead to squabbling (and political pressure) over which banks are to be saved and which loans bought. Worse, good banks are in effect exposing themselves to the mistakes of badly managed ones. Bank stocks, which rallied at first on news of Atlante’s creation, soon fell back again. + + + + + +Rehabilitating Argentina + +The green light + +A ruling in New York paves the way for a return to international bond markets + +Apr 16th 2016 | Buenos Aires | From the print edition + +Vulture on a high + +ARGENTINA’S exit from default is finally in sight. On April 13th, more than 14 years on from a catastrophic $82 billion sovereign default, a federal appeals court in New York upheld a ruling that allows the country to pay its “holdout” creditors, holders of its defaulted debt who rejected restructurings in 2005 and 2010. That paves the way for Argentina’s long-awaited return to international credit markets. The decision marks another important victory for Mauricio Macri, who reopened formal negotiations with the holdouts after becoming president in December. + +The appeals court upheld a decision taken on February 19th by Thomas Griesa, a lower-court judge, to lift an injunction blocking Argentina’s access to international credit markets. Mr Griesa agreed to remove the bar on two conditions: that Argentina repeal laws barring payments to the holdouts, whom the previous government had dismissed as “vultures”, and that it pay those of them who agreed to a deal promptly. The move infuriated the holdouts, who had used the injunction as leverage in their negotiations. While they took their case to the appeals court, Argentina fulfilled its end of the bargain: last month its Congress voted to repeal the relevant laws. + +Argentina now plans to raise up to $15 billion through a bond issue, which is set to begin on April 18th. It will use $10.5 billion-12.5 billion of that to pay the 90% of holdouts with whom it has reached an agreement. The remainder of the cash will be used to finance the budget deficit, which amounted to 5.8% of GDP last year. The bonds will be issued under New York law, in tenors of 5, 10 and 30 years; the government expects to pay interest of 7.5-8.5%. + +Argentine officials think demand will be high. Although Argentina has defaulted eight times since independence in 1816, Mr Macri’s government has been applauded around the world for its efforts to restore the country’s standing and revive its economy (see article). His lieutenants say he will keep a better grip on the country’s finances than his predecessor, Cristina Fernández de Kirchner. Investors seem willing to give him the benefit of the doubt. + +Argentina’s stockmarket responded positively to the news of the appeals-court decision, jumping by 4% to a five-week high. The same cannot be said of those bondholders who have yet to reach an agreement with Argentina. Some are retail investors, who bought bonds with their savings, rather than speculative hedge funds. They now have little alternative but to accept Argentina’s formal offer, made on February 5th, of 72 cents on the dollar. They will feel aggrieved; Mr Macri, ecstatic. + + + + + +The world economy + +System says slow + +The IMF sees political danger in the economic doldrums + +Apr 16th 2016 | From the print edition + + + +IS THERE a global economic crisis on the horizon? Probably not. Is the world in danger of falling into recession? Not soon. Yet the IMF’s latest update of its forecasts is nevertheless resolutely downbeat. Speaking this week in Washington, DC, its chief economist, Maurice Obstfeld, outlined yet another downward revision to its prediction for global GDP growth. It is likely that the next revision will again be down. One of the big threats to the world economy, he said, is from “non-economic risks”—fund-speak for grubby politics. A world economy stuck in the doldrums, he cautioned, may be a perilous place politically. + + + +The actual forecasts are far from horrible. The fund nudged down its estimate of global growth for 2016 from 3.4% to 3.2%. That is still a shade faster than in 2015. The revisions are broad-based: America, Europe and the emerging world as a bloc all saw similar downgrades (see chart). The forecast for sub-Saharan Africa was pared back the most, in large part because of a gloomier outlook for oil-rich Nigeria, the continent’s bigest economy. The recent recovery in crude prices will take some pressure off oil producers, but “we won’t be seeing prices at the $100 a barrel level for some time, if ever,” said Mr Obstfeld. Of biggish economies, only China escaped a downgrade. The fund is more confident than it was in January that stimulus measures there will work. But there is a concern about the quality of China’s growth, said Mr Obstfeld, as fresh credit is directed towards sputtering industries. + +The scenario the fund seems most concerned about is a steady slide in global GDP growth that feeds on itself by discouraging investment, thereby exacerbating political tensions, which in turn make fixing the economy even harder. Brazil shows how a bad economy can be made worse by political paralysis. Low growth might add to the “rising tide of inward-looking nationalism” in the rich world, said Mr Obstfeld. Politics in America is moving against free trade. And there are various threats to Europe beyond the perennial problem of Greece. The refugee crisis has already put pressure on the European Union’s open-borders policy and there is a “real possibility” that Britain might leave the EU. + +The IMF has some familiar remedies for the global economy: keep monetary policy loose, augment it with fiscal stimulus where possible and add some pro-growth reforms to the mix. Such action is needed to insure against the risks the fund identifies. But the world should also be making contingency plans for a co-ordinated response if a financial shock hits. “There is no longer much room for error,” said Mr Obstfeld, with a certain weariness. + + + + + +Agriculture and demography + +The toll of tariffs + +Historians find yet another way protectionism harms development + +Apr 16th 2016 | CAMBRIDGE | From the print edition + +Too much rolling in the hay + +ECONOMISTS have long argued that tariffs are bad for a country’s development in the long run. They raise prices for consumers, steer capital away from the most productive investments and breed inefficiency and rent-seeking by limiting competition from abroad. To that long list add another baleful consequence: by coddling farmers, agricultural tariffs encourage them to have more children and to educate them less, hampering economic growth for decades into the future. + +So, at any rate, suggests a paper presented at the conference of Britain’s Economic History Society in Cambridge earlier this month. The authors, Vincent Bignon of the Bank of France and Cecilia García-Peñalosa of Aix-Marseille School of Economics, look at the relationship between agricultural tariffs and demography in France in the 1890s. In particular, they look at how the Méline tariff on grain, which was introduced in 1892, affected France’s demographic transition. + +A demographic transition is a country’s gradual shift from high fertility and mortality to lower rates of both. Economists see it as an important factor in development. If a greater proportion of children survive, parents tend to have fewer of them and to invest more in their health and education. That, in turn, increases a country’s human capital and thus its growth prospects. + +The paper shows that this process can be delayed by agricultural tariffs. The Méline tariff raised food prices by more than a quarter, as well as boosting agricultural wages. The authors found that fertility rates rose and primary-school attendance fell in the districts that benefited most from the tariff. This was because higher farm wages enabled parents in rural areas to have more children. It also reduced the relative return to education by increasing wages for (uneducated) agricultural labourers, thereby discouraging parents from sending their children to school. + +As a result, Mr Bignon and Ms García-Peñalosa argue, the tariff strongly reduced human-capital formation in late-19th-century France. Their results show that in areas with the most employment in agriculture, the Méline tariff halted a century-long decline in the birth rate and set educational development back 15 years. This may go some way to explaining why the economy of Britain, which did not protect agriculture at all at the time, outperformed France’s during the early 20th century. + +There is some evidence of a similar relationship in the modern world. Studies of the impact of agricultural tariffs in sub-Saharan Africa suggest that they encourage subsistence farming rather than prompting export industries to grow. Just as in France, that is likely to boost fertility and dent enrolment rates in schools. Farmers may like the sound of agricultural protectionism, but it does not do their children any good at all. + + + + + +Free exchange + +Terms of enlargement + +Clever reforms can reduce the power of NIMBYs and cut housing costs + +Apr 16th 2016 | From the print edition + + + +THE world’s great cities are engines of wealth creation. Places like London and San Francisco account for a disproportionate share of economic output. They are the combustion chambers in which ideas and capital are combined to generate new riches. + +To an alarming extent, such cities are also playgrounds for the rich—and only the rich. The soaring cost of housing in these places pushes those of more modest means away, toward spots where homes are cheaper but opportunity is more limited. That pressure has serious consequences. A recent paper* reckons that over the past 50 years this dispersing effect left American output 13.5% below the level it would otherwise have reached. Poor Americans living in rich cities survive longer than their counterparts in poor ones. Finding more effective ways to reduce housing costs would thus not only save money but prolong lives. + +Economics is all about supply and demand, and high housing costs are the product of too little of the former in the face of lots of the latter. Strict planning rules in pricey cities make building new homes a nightmare for developers. In London, for example, they face myriad rules about what they can build where, including one that states that nothing should impede the view of the dome of St Paul’s Cathedral from a gap in a hedge ten miles away. By the same token, a thicket of environmental rules in California has given NIMBYs (short for “not in my backyard”) a host of ways to stall, shrink or stop new projects. + +Most onerous planning restrictions reflect the difficult political economy underlying urban growth. Would-be migrants to rich cities stand to benefit handsomely from access to lucrative jobs, but lack a political say in the places that are building too little. Within cities the balance of costs and benefits favours NIMBYs. Everyone in the city stands to gain from growth; productivity in skilled cities rises with population, so when more people move in, all workers’ incomes should rise. But the gains from any particular property development are relatively small and thinly spread, whereas the costs are highly concentrated. + +Those in the immediate vicinity of a big new project must put up with noise and other inconveniences during construction, and increased competition for parking spaces and places in good schools after it, not to mention blocked views. Because affected residents live near each other and often share local-government representatives, the cost of organising opposition to new projects is low (and the motivation to do so is high). Even those who see urban growth as a positive have strong incentives to oppose development in their own backyards. Since almost every part of a city is someone’s backyard, far too little construction takes place. + +Clever policy, however, can help balance the concerns of NIMBYs with the broad benefits of growth in productive places. One approach is simply to neutralise local opposition to development by compensating neighbours for the costs they bear when new construction is approved—to bribe, them, in effect. David Schleicher, a professor of land-use law at Yale Law School, has proposed the use of “tax increment local transfers”, or TILTs. New buildings normally generate extra property-tax revenue for the city once they have been completed. Some portion of the expected rise in the tax take associated with a proposed new development (the tax increment) could be promised to nearby residents in the form of a temporary property-tax rebate, scheduled to last ten years, say, if the development went ahead. As Mr Schleicher notes, TILTs would enhance the signalling value of local opposition to new projects: residents who fight against a proposed development despite the prospect of direct financial gain from it are more likely to have reservations worth addressing. + +An alternative to buying NIMBYs’ silence would be to reform planning procedures to balance NIMBY voices with those seeking more development. Most city-dwellers are not reflexively anti-growth; they merely prefer that building occur in other parts of their city, giving them the benefits of growth while sparing them many of the costs. But when battles over building unfold at the neighbourhood level, the affected residents have little reason to prioritise the citywide benefits over the local costs. + +Shifting the debate about new construction to the level of the city as a whole would change this dynamic. Representatives charged with thinking about the citywide loss from forgone development still have an incentive to push for limited development in their own neck of the woods. But it would be to their advantage to ensure that at least some building does in fact take place. In another recent paper Mr Schleicher and Roderick Hills of New York University reckon such dealmaking could be encouraged by using city plans as binding development “budgets”: one area could curb construction below the planned level only if a deal was reached to boost building in another part of the city. + +Build me up, buttercup + +If cities fail to act, regional or central governments can take matters into their own hands. Evidence from America suggests that where state governments help to set building guidelines, NIMBYs have less influence. The government of Washington state is more involved in planning than that of California. Partly as a result, the housing stock in Seattle grew at twice the rate of the San Francisco Bay area in the 2000s; house prices correspondingly grew less. + +Other governments are beginning to heed the lesson. A bill in the Massachusetts state legislature would require cities to designate areas in which dense building can occur without a fight—a measure targeted at expensive, restrictive Boston. More experimentation would be welcome. Though NIMBYs deserve their say, they ought not to dominate the conversation. + + + +Sources: + +"Why do cities matter? Local growth and aggregate growth", Chang-Tai Hsieh and Enrico Moretti, NBER Working Paper, May 2015. + +"The association between income and life expectancy in the United States, 2001-2014", Raj Chetty et al, Journal of the American Medical Association, April 2016. + +"City unplanning", David Schleicher, Yale Law Journal, May 2013. + +"Planning an affordable city", Roderick Hills Jr and David Schleicher, Iowa Law Review, November 2015. + +Visit our Free exchange economics blog + + + + + +Science and technology + + + + +High-definition maps: The autonomous car’s reality check + +Space travel: Starchip enterprise + +Bird strikes on aircraft: Sonic scarecrow + +Surviving inherited diseases: Genetic superheroes + + + + + +High-definition maps + +The autonomous car’s reality check + +Building highly detailed maps for robotic vehicles + +Apr 16th 2016 | BERKELEY | From the print edition + + + +A CAR sprouting a dome containing a spinning laser sensor and festooned with cameras barely draws a second glance as it edges through the crowded streets of Berkeley. Self-driving cars are no longer a rare sight on Californian roads. Over 100 autonomous vehicles from a dozen manufacturers are now being tested in public, covering hundreds of thousands of kilometres each year. + +But this car is different: its human driver keeps his hands firmly on the wheel. The vehicle, nicknamed “George” by HERE, a Berlin-based mapping company owned by BMW, Audi and Daimler, is not driving itself but collecting data that enable other cars to do so. + +By George + +For every second of its journey, a high-precision GPS receiver on George’s roof collects the car’s latitude, longitude and elevation ten times over; a motion-tracking inertial system records its yaw, pitch and roll 100 times; and the laser scanner calculates its distance from some 600,000 different points, such as trees, kerbs and buildings. At the same time, four cameras also shoot a 96-megapixel, 360-degree panoramic image for every 6 metres the vehicle moves along the road. + +A day’s driving can accumulate 100 gigabytes or more of data. Together, these allow HERE to build up an extremely detailed three-dimensional image of George’s route—what digital cartographers call a high definition (HD) map. + +A few years ago, some carmakers hoped that autonomous vehicles might be able to position themselves using the low-definition maps found in today’s turn-by-turn navigation devices and apps. Sensors would do the rest. With clear road markings, for instance, visual sensors can already keep cars safely within their lanes, and even spot the solid or dotted lines that indicate stop signs and exits. + +The trouble is, a fully driverless car needs to operate safely in all environments. “You don’t really need a map to do simple lane-keeping,” says John Ristevski, HERE’s grandiosely named vice-president of reality capture. “But if you’re on a five-lane freeway, you need to know which of those five lanes you’re in, which are safe to traverse, and at what exact point that exit ramp is coming up.” + +The trouble is road markings can wear away or disappear under snow. And modern laser-surveying sensor systems (called LIDARs, after light detection and ranging) may not be accurate in those conditions. LIDARS calculate distances by illuminating a target with laser light and measuring the time it takes for the light to bounce back to the source. Radar does much the same thing with radio waves. In cars, LIDARS and radars have an effective range of around 50 metres, but that can shrink significantly in rain or when objects are obscured by vehicles ahead. Even the smartest car travelling at motorway speeds can “see” only around a second and a half ahead. What HD maps give self-driving cars is the ability to anticipate turns and junctions far beyond sensors’ horizons. + +Even more important for an autonomous vehicle is the ability to locate itself precisely; an error of a couple of metres could place a car on the wrong side of the road. Commercial GPS systems are accurate only to around 5 metres, but can be wrong by 50 metres in urban canyons and fail completely in tunnels. HD maps, however, can include a so-called localisation layer that works with a variety of sensors to position a car within centimetres. + +HERE is experimenting with several such layers. One involves extracting features like bridges, road signs and guard rails from images shot by the mapping vehicle, and then comparing them to what the car sees through its own cameras. + +TomTom, a mapping firm based in the Netherlands, rejected this process as too unreliable. “We found that trying to model reality down to every single bridge pillar and then triangulating it is too sensitive to change,” says Pieter Gillegot-Vergauwen, one of the firm’s vice-presidents. Problems can arise if, for instance, a tree is cut down or a street scene alters from summer to winter. “There are too many visual changes,” he adds. + +Instead, TomTom captures a “depth map” using its mapping vehicles’ LIDARS. This system continuously records the distinctive shapes and distances of roadside scenery, without trying to identify what the individual things are. By considering the whole stretch of road it is possible to correlate the output from the autonomous car’s own LIDAR unit with the pattern of the depth map and calculate its location even if, say, a tree grows or a lorry is in the way, says Mr Gillegot-Vergauwen. + +Google, which has long been testing autonomous cars, builds its localisation layer in a similar fashion. HERE is also trying out a system that uses artificial intelligence to identify features from cameras and LIDARs. Whatever the approach, all three companies claim that they can now position a self-driving car on the road to an accuracy of within 10-20cm. + +Some car firms, including Nissan, Ford, Kia and Tesla, think self-driving technology will be ready by 2020. Volvo plans to offer fully autonomous cars to 100 drivers as early as next year. All this increases the pressure to map the world in high definition before cars begin to drive themselves out of showrooms. HERE has several hundred vehicles like George mapping millions of kilometres of roads annually in 32 countries. TomTom has 70 on motorways and major roads in Europe and North America. Zenrin, a Japanese mapping firm partly owned by Toyota, is particularly active in Asia. + +Analysing and processing data from so many vehicles is one of the biggest challenges. HERE originally had people inspecting the raw LIDAR data and turning it into a digital model using editing software—rather like “Minecraft for maps”, says Mr Ristevski. But manually extracting the data was painfully slow, and the company has now developed machine-learning algorithms to find automatically such things as lane markings and the edges of pavements. HERE’s AI systems can identify road signs and traffic lights from George’s still photos. Humans then modify and tweak the results, and check for errors. + +Yet George’s data begin to age as soon as they are collected. Subsequent construction, roadworks or altered speed limits could lead to a self-driving car working from a dangerously outdated map. Maps will never be completely up-to-date, admits Mr Ristevski. “Our goal will be to keep the map as fresh and accurate as possible but vehicle sensors must be robust enough to handle discrepancies.” + +Mapping vehicles are sent back to big cities like San Francisco regularly, but the vast majority of the roads they capture might be revisited annually, at best. A partial solution is to use what Mr Ristevski euphemistically calls “probe data”: the digital traces of millions of people using smartphones and connected in-car systems for navigation. HERE receives around 2 billion individual pieces of such data daily, comprising a car’s location, speed and heading, some of it from Windows devices (a hangover from when HERE was owned by Nokia, now part of Microsoft). + +These data are aggregated and anonymised to preserve privacy, and allow HERE quickly to detect major changes such as road closures. As cars become more sophisticated, these data should become richer. Ultimately, reckons Mr Ristevski, self-driving cars will help to maintain their own maps. This is already the case with Google’s self-driving cars, which can detect and report traffic cones and construction workers in high-visibility vests. Not only does Google have more autonomous vehicles on the roads than any other carmaker, it has access to navigation and traffic data from the estimated 1.5 billion Android phones and devices active globally. (Google says it is currently concentrating its HD-mapping efforts on just its self-driving test locations in Mountain View, California; Austin, Texas; Kirkland, Washington, and Phoenix, Arizona.) + +As more new cars are fitted with smart-driving features, such as automatic braking, lane control and overtaking, technology will continue to lead vehicles towards full autonomy. And HD maps will extend beyond the road. Both HERE and TomTom include low-level aerial information, such as utility wires, bridges, trees and, in some cases, details of buildings up to 15 storeys. Such data could be used for navigation by another type of robotic vehicle—drones—which is why one company with drone-delivery ambitions, Amazon, is in talks to buy a stake in HERE. + + + + + +Space travel + +Starchip enterprise + +Flying to the stars means thinking both very big and very small + +Apr 16th 2016 | COLORADO SPRINGS | From the print edition + +Power to the stars + +SPACEX and Blue Origin, two American space companies, can now return their rockets to Earth and reuse them, which promises to reduce launch costs. But what if, instead of bringing the boosters back to Earth, you could build one that never leaves it? Your propulsion system could be arbitrarily large and powerful, since you wouldn’t have to lift it; your spacecraft, no longer needing engines or fuel, could be stripped down to its barest essentials. + +Such a split sounds impractical, but beams of light could make it work. One of the counterintuitive implications of the theory of relativity is that, although light has no mass, it still has momentum. Thus when light bounces off a mirror it exerts a tiny pressure; if the light is bright enough, and the mirror light enough, the mirror will start moving. + +In the 1970s Robert Forward, a physicist, showed that very powerful lasers could push a spacecraft with a reflecting “sail” to a tenth the speed of light or more. Moving thousands of times faster than rockets can, such probes might reach planets round other stars in decades, rather than in hundreds of thousands of years. But the incredible technical challenges of such a scheme meant that Forward’s ideas were never developed in any practical way. + +That could be about to change. On April 12th, the 55th anniversary of Yuri Gagarin’s first flight into space, Yuri Milner, a Russian physicist and billionaire investor, announced a plan to develop the technologies such interstellar flight would need. Mr Milner—who was named after Gagarin—is devoting himself to the challenges of deep space. Last year he said he would spend $100m to bring recent advances in computing to bear on the search for extraterrestrial intelligence (SETI). + +When he first looked at laser-powered interstellar travel, Mr Milner says, the idea triggered both his scepticism as a physicist and his cynicism as a businessman. But he has concluded that, as in the case of SETI, technological capacities developed for other reasons will be a boon. Given current trends in microelectronics, nanotechnology and lasers, he thinks that within a generation attempts at interstellar flight might be no more costly than today’s most ambitious scientific programmes. So he is going to spend $100m on a “Breakthrough Starshot” research programme aimed at making that dream possible. + +Beam me up + +The basic problem with using light to drive a spacecraft is low efficiency. A gigawatt laser beam—1GW being a billion watts, roughly the power output of a large nuclear plant—provides a bit less than seven newtons of thrust: a force equivalent to that required to lift a glass of beer. For such thimblefuls of thrust to amount to anything much, they have to be applied to a very light spacecraft indeed: ideally one with a mass not much larger than a gram. + +It is a measure of the outlandishness of this endeavour that fashioning such a nanoscale spacecraft almost seems like the easy bit. Zac Manchester, a Harvard researcher involved in Mr Milner’s scheme, has already crowdfunded a project that produces satellites the size of postage stamps. In the fairly near future a camera, a decent computer, a communications laser and a tiny speck of plutonium for on-board power—all capable, like the electronics in “smart” artillery shells, of surviving extraordinary accelerations—might plausibly sit on a single silicon “starchip”. + +Building a similarly low-mass sail may prove a much taller order: perfect mirrors typically weigh quite a lot. But Philip Lubin of the University of California, Santa Barbara, one of the researchers who inspired Mr Milner’s enthusiasm, says the sail only needs to reflect one wavelength of light: that of the laser. It could be transparent to all other wavelengths. That makes things simpler. With coatings engineered on an atomic scale, a layer of glass just a few tens of atoms thick might be able to do the job. + +The propulsion system Mr Milner sees as the final goal would consist of perhaps 10m lasers, each delivering 10 kilowatts or so, spread over a square kilometre of otherwise empty desert. For a launch their output would be combined into a single 100GW beam focused on a sail just a few metres across up in space. If that sail and its starchip were to have a mass of just five grams, then after ten minutes of the array’s 670-newton attention the probe would be a third of the way to the orbit of Mars and travelling at a quarter of the speed of light—fast enough to get to the nearest stars in less than 20 years. After flashing by its target planets—there is no possibility of braking—it would send back data with its on-board laser. No current observatory could pick up such a signal—but the kilometre-wide launch array should be able to. The optical systems used to meld the output of the lasers could be used in reverse as a vast and sensitive telescope. + +Far fetched as all this sounds, purely in terms of energy it is not that much grander than everyday space flight. Rockets deliver many gigawatts of power, but to big objects. Dr Lubin points out that a space-shuttle’s motors produced a stonking 45GW at lift-off and in a bit less than ten minutes were capable of giving their 100-tonne spacecraft a kinetic energy only a few times smaller than that of a starchip travelling at a fifth the speed of light. + +Still, a dozen or more technologies will need to improve by orders of magnitude for a starshot to be feasible. Or, rather, a series of starshots: the array could be used again and again, and if starchips can be made they can surely be mass produced. + +In some areas a lot of improvement is likely. Laser power is getting cheaper, as are the storage systems needed to suck up many gigawatt-hours of energy and disgorge them in minutes. Advances are also steadily being made in the sort of solar-power systems needed to supply the necessary gigawatts to the desert array and the computers needed to operate it. + +Other advances will be more challenging and, being more specific to a starshot, less likely to be developed for other purposes. One such is how to protect a piece of microelectronics from impacts with specks of interstellar dust at a relative speed of 80,000km/sec. Perhaps the most daunting task is “shaping” the output of millions of lasers into a 100GW beam focused on a spot thousands of kilometres distant, all the time taking the turbulence of the atmosphere into account. + +That will require subtle fine tuning of the output of millions of lasers. For comparison, the biggest telescope on the drawing board today has 798 separate mirror elements —and the challenges for telescopes focusing light from elsewhere are much less extreme than those facing arrays that emit light by the gigawatt. Those challenges may prove insurmountable. + +Enthusiasts might say that the problems were similarly immense in the early days of rocketry, but less than 25 years after the first V-2 flight, men arrived on the Moon. Inspiring, perhaps; perturbing, too. Rocketry was a military discipline, from its origins in China to the modified ballistic missile that sent Gagarin on his way. And although lasers have lots of civilian uses, the military has a keen interest in them. Much of the recent progress in combining separate lasers into a single coherent beam and making them more powerful as a potential weapon can be traced to the Defence Advanced Research Projects Agency, the Pentagon’s funder of far-out tech. + +A 100GW array could be quite a weapon. The energy in one of the mooted ten-minute blasts needed for a starchip is equal to that unleashed in the bombing of Hiroshima. If a mirror in orbit were used to reflect the beam back to Earth it would be impossible to defend against. + +This means that just as Mr Milner’s team has a lot of technology to sort out, it faces other potentially show-stopping challenges. His project leader, Pete Worden, is a retired Air Force general with experience in space weapons and arms control as well as an astronomer. That should help. Like his boss he accepts that such powerful technologies might need to be under some sort of international control. Were such oversight possible, it might be fitting as well as prudent. If humans are to stand on the threshold of the stars, it would be nice if they could do so together. + + + + + +Bird strikes on aircraft + +Sonic scarecrow + +A new way to shoo birds away from airports + +Apr 16th 2016 | From the print edition + + + +BIRDS were an inspiration for early aviators, but they are a pilot’s nightmare. Collisions with birds are reckoned to cost America’s airlines almost $1 billion in repairs and flight delays annually. When a multiple bird-strike knocked out both engines of a US Airways Airbus A320 taking off from LaGuardia Airport, New York, in 2009 all 155 passengers and crew survived only after the pilots carefully glided the aircraft to a splashdown on the Hudson River. Airports have tried all sorts of ways to shoo away birds but few work for any length of time. Now an ornithologist has come up with a bird scarer that might be the answer. + +John Swaddle and his colleagues at the College of William and Mary in Williamsburg, Virginia, think the trick is to blanket the area around a runway with a noise that makes it difficult for birds to communicate. Sound is already used to scare off birds: examples include the boom of propane cannons and recordings of predatory hawks. But birds soon get used to such ruses. + +Dr Swaddle knew that noise from traffic and machinery at a certain frequency could disturb birds. To explore this, the researchers decided to investigate how European starlings, a species notorious for ending up in aircraft engines, responded when feeding areas in an aviary were placed next to speakers playing a noise that overlapped with the frequency of their calls. The noise reduced foraging by half over several days. + +The group then tested the idea at an airstrip near Newport News, Virginia. They placed speakers on a patch of grass and for four weeks before the speakers were turned on carried out regular bird counts on the site and on two others nearby without any speakers present. Bird numbers were much the same. + +Then the speakers started pumping out a noise of 2-10kHz, which overlapped with the birds’ call frequencies. Just as with the aviary experiment, the result was dramatic. As the team report in Ecological Applications, bird numbers plummeted by 82% within a zone 50 metres from the speakers—where noise levels were over 80 decibels, a similar volume to a passing freight train—and by 65% farther out, at noise levels of 65-80 decibels. Crucially, the reductions within the zone persisted for the four-week period the speakers were on, suggesting that the birds were not becoming accustomed to the racket. At the sites with no noise, bird numbers remained constant. + +The researchers believe the noise pattern may make birds believe an area is too risky to inhabit because their ability to detect alarm calls is compromised. If the system can be effective over even longer periods and is capable of being scaled up to cover an entire airport, it could save a lot of money and lives. + + + + + +Surviving inherited diseases + +Genetic superheroes + +A study finds rare individuals resistant to inherited fatal diseases + +Apr 16th 2016 | From the print edition + + + +SUPERHEROES with powers that come from mutations in their genomes are, like the X-Men, a staple of comic books and movies. Now an extensive study of the genetics of more than 500,000 people has revealed a different kind of mutant superhero: a small number of individuals who seem to be perfectly healthy despite carrying in their DNA a mutation linked to a severe childhood disorder. + +The 13 adults identified were found to have faulty genes associated with one of eight different inherited conditions. These included cystic fibrosis, a disease that interferes with breathing, and atelosteogenesis, which affects bone and limb development. People with the eight different genetic faults can die at birth or shortly after. + +Eric Schadt of the Icahn School of Medicine at Mount Sinai, New York, and Stephen Friend of Sage Bionetworks, a non-profit organisation based in Seattle that promotes open science, began their investigation by collecting genetic data from 12 studies carried out by other groups. The data, from European, Asian and American sources that included 23andMe, a biotechnology company, and the Beijing Genomics Institute, yielded an initial pool of DNA sequences from 589,306 people. Of these, full genome sequences were only available for 3,524 individuals. The remainder of the data came from medical screens that identified mutations in a selection of genes, or from exome studies that only looked at the genes that code for proteins—about 1% of the total. + +Dr Schadt, Dr Friend and their colleagues then winnowed these down by selecting sequences containing mutations known to cause severe diseases in childhood. They focused on Mendelian disorders, diseases caused by a mutation in a single gene and named after Gregor Mendel, an Augustinian friar who founded modern genetics. The researchers chose only mutations that were believed always to result in the individual developing the disease. That took the number down to 15,597 people, each carrying at least one mutation for one of 163 different diseases. + +Next, they checked the sequences and discarded any that they suspected may have contained errors. They also excluded those carrying mutations that occurred in more than 0.5% of the population: relatively common mutations are unlikely to result in severe forms of a disease. That left 303 candidates whose sequences and medical records were scrutinised to ensure that the individuals concerned were healthy and that the mutations they carried had been identified in the scientific literature as giving rise to a disease that would be likely to prevent them surviving to adulthood. The research team also obtained original biological samples, where possible, to verify the DNA sequences. + +At that point, as the team report in Nature Biotechnology, they were left with just 13 people whose medical records indicated they were healthy, despite carrying a mutation for one of the eight severe diseases. Unfortunately, only partial DNA sequences were available for the 13. Ideally, the next step would be to sequence these individuals’ entire genomes to discover why they were able to carry, with seemingly no ill-effects, mutations that are deadly in others. Any genes thought to confer protection could be spliced into the genomes of diseased cells grown in a laboratory to test their effects. Such work might provide a step towards the discovery of new treatments. Frustratingly, the researchers could not do that because the consent forms used by the subjects did not provide permission for them to be recontacted. + +The team, however, have not given up on identifying genetic superheroes and finding out what accounts for their ability to resist inherited diseases. Together with Jason Bobe, also of the Icahn School of Medicine, they have launched the Resilience Project. The idea is cheaply to screen the DNA of well over 100,000 healthy people for a wide range of genetic disorders. This time, the consent forms will allow the researchers to recontact any potential survivors so that their genomes can be fully sequenced. Such folk may not have the ability to take on comic-book villains, but have an even more extraordinary power fortuitously hidden in their genes. + + + + + +Books and arts + + + + +Single women: Why put a ring on it? + +Artistic judgment: Everyone’s a critic + +The Holy Roman Empire: Neither holy nor a failure + +Seamus Heaney’s “Aeneid”: Music from the underworld + +Chinese contemporary art: Fountainheads + + + + + +Single women + +Why put a ring on it? + +Single women are reshaping America from marriage to politics to the economy + +Apr 16th 2016 | From the print edition + + + +All the Single Ladies: Unmarried Women and the Rise of an Independent Nation. By Rebecca Traister. Simon & Schuster; 352 pages; $27 and £16.99. + +Enter Helen: Helen Gurley Brown and the Rise of the Modern Single Woman. By Brooke Hauser. Harper; 480 pages; $28.99 and £20. + +Spinster. By Kate Bolick.Crown; 336 pages; $26. + +“I MARRIED for the first time at 37. I got the man I wanted,” crowed Helen Gurley Brown on the first page of “Sex and the Single Girl”, a runaway bestseller in 1962. She snagged a brainy, sexy, fabulously successful beau despite being neither “bosomy” nor brilliant, she added. But by the time they met, she was worldly enough to beguile him, having spent almost two decades living by her wits as a single woman, sharpening her skills in the office and the bedroom. “Marriage is insurance for the worst years of your life,” she quipped. “During your best years you don’t need a husband.” + +As Brooke Hauser writes in “Enter Helen”, a colourful new biography, Brown cunningly sold a brand of empowerment in terms that would please men. As editor of Cosmopolitan from 1965 to 1997, she transformed a family-friendly magazine into a titillating and wildly successful glossy for women not yet ready to be wives or mothers, but craving male attention all the same. Feminists balked at the busty cover-girls and articles about losing weight and wearing false eyelashes to bed, but countless women also learned how to avoid pregnancy and secure a loan. Before Betty Friedan exploded the myth of the happy housewife in “The Feminine Mystique” in 1963, Brown was already telling women to live a little before settling down. + +Brown was prescient. As Rebecca Traister writes in “All the Single Ladies”, on the rise of single women in America, women are waiting longer to wed than ever, and many are choosing not to do so at all. The freedom to pursue high-powered careers and sexually diverse lives without fear of pregnancy or stigma has turned marriage into a choice, not destiny. By 2009 nearly half of all American adults younger than 34 had never married, a rise of 12 percentage points in less than a decade. Unmarried women outnumber married ones for the first time ever. + +Single women are reshaping politics. As women tend to worry more about reproductive rights and fair pay, they have favoured Democrats for president since 1988. But the overall women’s vote hides a divide: in 2012 Mitt Romney narrowly carried married women, while the unmarried rushed to Barack Obama in their millions, giving him a 36-point margin. Single women cast almost a quarter of the votes, nearly guaranteeing his re-election. They may be even more important this year: a recent poll shows Hillary Clinton, the likely Democratic nominee, leading Donald Trump, the Republican front-runner, by 52 percentage points among unmarried women. + +Delaying marriage is also having economic effects: women aged 25 to 34 are the first generation to start their careers near parity with men, earning 93% of men’s wages. Single women now buy homes at greater rates than single men, a big step in independent wealth-building. + +These trends have some conservatives fretting about the decline of the family, but Ms Traister convincingly argues that “independent female adulthood” has been good for marriage. The divorce rate rocketed in the 1970s and 1980s, as women who had rushed into unhappy marriages discovered they could make their own way. The boom in divorce encouraged many in the next generation to abstain from marriage rather than enter a flawed one. Now that marriage is simply one option among many, fewer women are exchanging vows, but those that do tend to be in happier, more co-operative relationships. + +The divorce rate, now falling, has plunged fastest among those who stay single longest. Despite the stereotype that high-achieving women are doomed to spinsterhood, the truth is that these women are now the most likely to tie the knot, and can afford to hold out for the right match. Ms Traister says that her own successful work as a journalist in New York made it easy for her to feel fulfilled through her early 30s, until she met and fell in love with the man she would marry: “I wound up happily married because I lived in an era in which I could be happily single.” More demanding women are also making men evolve; the number of stay-at-home dads in America almost doubled in the first decade of this century. + +Not all women are celebrating. For some, singlehood is less a choice than bad luck. Outside big cities, women who are unmarried into their late 30s are often pitied. For those who hope to become mothers, biology imposes harsh deadlines—though breakthroughs in fertility treatments have raised the number of women giving birth after age 35 by 64% between 1990 and 2008. + +In particular, poor single women face a different landscape. Not all are unmarried by choice: America’s high incarceration rate has shrunk their pool of men. Single parenthood is strongly correlated with poverty. Conservatives duly push marriage as the antidote: the federal government has spent almost a billion dollars on pro-marriage programmes, to little avail. Ms Traister stresses education, housing and child care instead, noting that in northern European countries, marriage rates have plunged without poverty increasing. + +Ms Traister is right to cheer the advances that have created this new era. But with choice comes uncertainty, and this is the subject of “Spinster”, Kate Bolick’s often lyrical bestselling memoir about making a life on her own, now in paperback. Some readers will disagree with her opening claim that whom and when to wed are questions that continue to “define every woman’s existence”. But she is right that mentors for the new single life are hard to find. Her own late mother, like so many in her generation, married young and set aside her ambitions to raise children. + +Now 43, Ms Bolick has spent around two decades casting about for inspiring templates of modern-day spinsterhood. She offers five “awakeners”, including Edith Wharton, Edna St Vincent Millay and Charlotte Perkins Gilman. They show Ms Bolick “how to think beyond the marriage plot” at pivotal moments of her life, as she cycles in and out of romantic dalliances and writing projects, largely in New York. + +Some have carped that for a book about life on her own, Ms Bolick seems to suffer no shortage of boyfriends (her publisher, keen to make clear that she is a “spinster” by choice, put a picture of the beautiful author on the cover). Others have grumbled that her “awakeners” are all relatively fortunate white women who marry at some stage. But this misses the point. Ms Bolick’s is a personal story of the pleasures and challenges of being a woman at a time of changing rules and seemingly endless possibilities. Helen Gurley Brown once promised women that they “could have it all”. Women today know better. But it is surely good to have so many more options to choose from. + + + + + +Artistic judgment + +Everyone’s a critic + +Apr 16th 2016 | From the print edition + +Bloody business, being a critic + +Better Living Through Criticism: How to Think about Art, Pleasure, Beauty, and Truth. By A. O. Scott. Jonathan Cape; 277 pages; £12.99. Penguin; $28. + +THESE are tough times for the gatekeepers, for those who claim a certain expertise and get paid to pass judgment. The oracular voice of authority is being drowned out by the aggregated voice of the Everyman, the credentialled scholar dethroned by the anonymous Wikipedia contributor. As assessments of quality are increasingly crowd-sourced—through the Facebook “Like” button, the Yelp review, and algorithms predicting preferences based on previous purchases—the professional critic is marginalised as at best irrelevant and at worst the embodiment of an elitist and undemocratic patriarchy. + +Few people are in a better position to respond to these slings and arrows than A. O. Scott, a film critic for the New York Times. As he points out in “Better Living Through Criticism”, his new book in defence of his own profession and of the critical faculty in each of us, “critic” has always been ranked somewhere between “undertaker” and “tax collector” in terms of popularity. Artists tend to regard critics as parasites on real creativity, while the general public asks what gives them the right to pronounce on matters that properly belong to everyone. “Criticism is not nice,” Mr Scott admits. “To criticise is to find fault, to accentuate the negative, to spoil the fun and refuse to spare delicate feelings.” + +But it is also essential. Without thoughtful and disinterested judges, everyone would be at the mercy of the marketers. “Culture now lives almost entirely under the rubric of consumption,” Mr Scott says, and it is the critic’s job to step in to protect the audience from the hucksters, the frauds and the sell-outs. Criticism, then, “is not an enemy from which art must be defended, but rather another name—the proper name—for the defence of art itself”. + +Despite that, it is often the artists who are quickest to condemn. Among the more creative defences Mr Scott mounts is that artists are essentially critics, paying tribute to or improving upon the work of their predecessors. Quentin Tarantino (pictured) and the Coen Brothers, for instance, are not only film-makers themselves but also students of film, their work informed by countless hours spent analysing images on the flickering screen. “A work of art is itself a piece of criticism,” Mr Scott asserts. + +One defence he does not offer is that of infallibility, or even great precision. To pass judgment is to risk making a fool of oneself. Getting it wrong, he admits, “is the one job we can actually, reliably do.” Many of the most amusing (and appalling) tales Mr Scott relates involve critics getting it spectacularly wrong, like the reviewers of “Moby Dick” who drove Herman Melville into bitter retirement, or of John Keats’s “Endymion”, who may well have driven him to an early grave. While it’s easy to sneer at the reviewer who wrote of the pharmacist-turned-poet, “Back to the shop Mr John, back to plasters, pills, and ointment boxes,” one also has to acknowledge that Percy Shelley, in calling the critic a “noteless blot on a remembered name”, was also engaging in criticism, albeit of a more perceptive sort. + +The persistence of this conflict actually offers some encouragement for a profession under siege. If criticism can survive the catalogue of its own errors, if it has endured for centuries despite more detractors than defenders, it’s likely to survive the current crisis as well. + + + + + +The Holy Roman Empire + +Neither holy nor a failure + +Apr 16th 2016 | From the print edition + + + +The Holy Roman Empire: A Thousand Years of Europe’s History. By Peter Wilson. Allen Lane; 941 pages; £35. Belknap; $39.95. + +ON A map, the Holy Roman Empire resembles something closer to a Jackson Pollock painting than an empire. Splattered across the lands of central Europe are countless territories overseen by an emperor who shared power with a hierarchy spanning princes, bishops and dukes, down to abbots, knights and city councils. Territory sizes ranged from the vast kingdom of Prussia to the tiny Free Imperial City of Zell am Harmersbach, half the size of San Marino. By its maturity the empire had evolved into a “mixed monarchy” that was neither feudal nor democratic, federal nor unitary. Instead it was a combination of all of them. + +To the modern reader, this may seem chaotic to the point of inefficiency. But Peter Wilson of Oxford University argues that we have been conditioned to see the empire this way. From the 19th century, nationalist historians rewrote European state history as a progression towards centralised, ethnic nation-states. Thus the idea of the Holy Roman Empire as a failed nation-state (as opposed to a successful multiethnic empire) has prevailed since—even Hitler condemned this era of his beloved Germany. + +In his masterly retelling, Mr Wilson paints a more nuanced picture of the empire as a stable and unique entity that protected the weak. An empire with rulers such as Conrad II—who stopped to hear pleas from a serf, a widow and an orphan despite being late for his coronation in 1027—could only be an empire dedicated to “peace through consensus” between rulers (very much plural) and ruled. + +Consensus, achieved by distributing power, made the empire’s decentralised structure an advantage rather than a weakness. The result was multiple strands of governing hierarchies rooted in the feudal system, each level able to make its own decisions while being subservient to those higher up. Local bodies such as peasant communes could make decisions about their land while obeying an imperial prince, who in turn obeyed imperial institutions that acted as a check. + +Supreme imperial power was initially vested in the emperor himself, but by the 15th century had evolved into structures never before seen in European history. The imperial parliament (“Reichstag”) sat permanently beginning in 1663 (Britain’s “Mother of Parliaments” was permanently in session only decades later). The Reichstag decided questions affecting the whole empire, and its college of electors chose the emperor. The highest court of appeal displayed remarkable similarities to modern judiciaries, with justices chosen by the court itself, giving independent rulings that could favour the humblest plaintiff against the most regal defendant. + +Mr Wilson argues that inhabitants of the empire were loyal to this system—it emphasised local identities and freedoms, with citizenship based on political allegiance rather than culture or creed. Quite astounding paradoxes could result—Counter-Reformation bishops who enjoyed “absolute” rule could only fume quietly over their Jewish or Protestant populations, free to practise their religion under imperial protection. + +However, political systems that work on paper do not always work in practice. Serfdom and the rise of princely absolutism are rehabilitated by Mr Wilson as tools for consensus, without discussion of their frequent abuse. Take the prince of Hildburghausen, who was known to keep two pistols and a hunting-knife on his table while listening to advisers. They knew he was within his absolutist rights to use them if they dared “advise” too freely. + +Briefly looking to the future, Mr Wilson notes new, post-modern distortions. European Union politicians have celebrated Charlemagne’s empire as an early form of transnational co-operation, despite the fact Charlemagne had no “nations” to make co-operate. Any comparisons with the EU must allow for the fact that the empire treated its subjects and member-states hierarchically, in contrast to EU’s principles of democratic equality. Mr Wilson rightly believes that the empire should be seen as a unique entity, rather than a blueprint for modern Europe. + + + + + +Seamus Heaney’s “Aeneid” + +Music from the underworld + +Apr 16th 2016 | From the print edition + + + +Aeneid: Book VI. By Seamus Heaney. Faber; 53 pages; £14.99. To be published in America by Farrar, Straus and Giroux in May; $23. + +DO GREAT poets much enjoy translating the work of other poets? Yes and no. Seamus Heaney’s spirited and acclaimed translation of “Beowulf”, published in 1999, made him feel like a man sentenced to hard labour, he later confessed. Now, three years after his death, we can read what he made of a fragment from Virgil’s “Aeneid”, a work by an utterly different kind of maker. The Roman poet, in contrast with the unknown Anglo-Saxon who wrote “Beowulf”, is mellifluous and silver-tongued. + +Heaney had been nursing a fascination with the sixth book of the “Aeneid” since his days as a pupil in Father Michael McGlinchey’s Latin class. Its themes haunted him: the miraculous wresting away of the golden bough; Charon’s lugubrious barge; Aeneas’s quest to meet the shade of his talkative father, Anchises, by descending into the underworld. They were made all the more poignant for him by the death of his own father, a taciturn cattle dealer from Northern Ireland, in 1986. + +In 2010, Heaney started to deal with this Virgilian fragment obliquely, publishing “Human Chain”, his last full collection before his death in 2013. It contained a sequence of poems entitled “Route 110”, written in celebration of the birth of a grand-daughter and consisting of a series of autobiographically rooted glancings off incidents from the sixth book of Virgil. + +Heaney’s Virgil is quite unlike what he called “the physical brunt of the old tongue” of “Beowulf”. Virgil’s decorous Latin gets translated into a language which calls for eloquent Latinate polysyllables: the Sibyl flings the guard-dog Cerberus “a dumpling of soporific honey”. But this “Aeneid” is also driven by the pitch and the rhythms of the characteristic Heaney speaking voice. The words he uses often have a pleasingly home-spun, home-grounding feel to them: “an outlander groom” for a foreigner, for example, or “a payout of thread” that is let slip through the fingers bit by bit. He cleaves beautifully to the concreteness of things, describing, for example, how foolish Salmoneus sought to ape Jupiter’s thunderbolt-throwing by flourishing “smoky guttering pine-brands”. The reader can almost smell them, transported to the world of Aeneas and to Heaneyland too. + +This is by no means a faultless translation. Heaney nods from time to time—there is a tiresome instance of needless repetition in “And then they saw him, Misenus, on a dry stretch of beach/they came up and saw the son of Aeolus”—and he would doubtless have continued to polish had he lived. And in the poem’s conclusion, Heaney noted in a preface, “the translator is likely to have moved from inspiration to grim determination,” as Virgil, through Anchises, offers up for admiration a catalogue of the names of great Roman generals to come once Aeneas has gone on to found Rome. Nevertheless, at its best—for example, the sections when he is witnessing, with the Sibyl, the various punishments that the gods have imposed upon those who have fallen short—the book is wonderful; a not entirely great work by Heaney is worth much more than the toilings of many lesser poets. + + + + + +Chinese contemporary art + +Fountainheads + +Two exhibitions focus on Chinese creativity + +Apr 16th 2016 | From the print edition + +Hands up for creativity + +DO WESTERNERS take Chinese artists seriously as artists? Or are they merely illustrations of a changing China? Uli Sigg, a Swiss businessman and former ambassador to Beijing, began buying Chinese contemporary art in the 1970s, when artists, often working alone and in secret, were reacting to the political turmoil of the time. His collection of over 1,000 works forms the backbone of what will be M+, the museum of visual culture in Hong Kong, which is due to open in 2019. Until then the Sigg holdings are gradually being unveiled in a series of small shows around the city. Anyone who missed the latest iteration, at Art Basel Hong Kong in March, can catch up with the M+ app. + +Displayed against a timeline of political developments, the works on the app trace the growth of China’s artists from the Cultural Revolution, through the upheaval of 1989, and on to the commercialisation that followed after economic growth began to accelerate. To many viewers, it is not the art that matters here, but what the artists were reacting to—and against. Mr Sigg and M+ have made a choice to present the collection as a historical archive. The format is useful for visitors who are learning about modern China and Chinese art for the first time. It pays little attention, though, to the creativity of Chinese artists themselves. + +Two other shows have taken the opposite tack. The first is “What About the Art? Contemporary Art from China”, on until July 16th at Al Riwaq in Qatar’s capital, Doha, part of the Qatar Museums network. The second is a show dedicated to the Chinese contemporary-art scene at the Fondation Louis Vuitton in Paris. One part is an exhibition of works by 12 artists brought together under the headline “Bentu: Chinese artists at a time of turbulence and transformation”, on until May 2nd. The other exhibition consists of Chinese works from the museum’s collection and runs until August 29th. + +The show in Qatar, three years in the making, has been curated by Cai Guo-Qiang, internationally known for his installations made with fireworks and explosions. An ascetic who survives on black tea and a ferocious exercise regime, Mr Cai bemoans the fact that Chinese contemporary artists are often judged by just two measures: their take on the one-party system or the record prices their work fetches at auction. In the show he has created in Doha he focuses instead on creativity. + +The overwhelming presence of the Qatari royal family as patrons of the country’s nascent art world makes it hard for curators, even those of Mr Cai’s stature, to operate completely independently. Mr Cai salutes his patrons with a huge family portrait by Liu Xiaodong of the former minister of culture, Hamad bin Abdulaziz Al-Kawari, and his children, as well as small panoramas of Doha and the Qatari hinterland. These will be of little interest to international visitors, even if they draw in local audiences. + +But three other pieces that Mr Cai has selected are particularly memorable. Acting as a prologue to the show is an installation by Hu Zhijun, a peasant farmer who discovered sculpture in 2013 at the age of 61. A year later Mr Cai commissioned him to make almost 600 figures, all of them crucial in the development of modern art in China. Painters and video-makers, designers and architects, his figures—mounted on terraces that resemble rice paddies—form a powerful choral voice of artists and artisans. Another work inspired by China’s physical environment is by Xu Bing, a doyen of the Central Academy of Fine Arts in Beijing. His “Background Story: Shangfang Temple” seems on the face of it to be a traditional Chinese landscape, a translucent sky with brown hills and trees coloured in yellow and green. Step behind the installation, though, and you realise that the hills are made of mounds of rubbish, the trees coloured with abandoned plastic bags. + +The third memorable piece in the show has not been seen since the opening of the Yuz Museum in Shanghai in 2014 and never outside China. “Freedom”, by Sun Yuan and Peng Yu, is a 12-metre-square metal-plate box containing a fire hose and a high-pressure hydraulic pump. The box has round glass windows at eye level for watching the hose in action—a bucking water-cannon that evokes rampant sexuality and vicious crowd control (though that may not have been obvious to the show’s conventional hosts). + +If Mr Cai’s “What About the Art?” concentrates on the creativity of individual artists, the show at the Fondation Louis Vuitton in Paris focuses on how artists inspire creativity in one another. On the upper floor, Philip Tinari of Beijing’s Ullens Centre for Contemporary Art and the Fondation’s artistic director, Suzanne Pagé, have grouped together a series of landmark Chinese works from the Vuitton collection. In one impressive room stand both one of Ai Wei Wei’s huge wooden trees linking the heavens and the underworld and one of Huang Yong Ping’s “Fifty Arms of Buddha” series (pictured). Made between 1997 and 2013, and a bridge between past and present, the spiritual and the physical, it pays homage in its shape and conception to Marcel Duchamp’s “Porte-Bouteilles” from over a century earlier. + +One floor down and the visitor encounters “Bentu” (“of this earth”), a parallel show highlighting 12 artists returning home to re-examine their roots. They explore not just the anxieties and preoccupations born of four decades of economic transformation, but more existential questions, about hope, anxiety, pleasure and curiosity. + +Some are sad, others homesick, still more are confused. Two, in particular, stand out: Qiu Zhijie’s “Map of the Third World”, an exuberant re-depicting of the world with its Lake of the Leaders, its Mount Globalisation and its Plateau of Colonialism all swelling into a global chorus of political narrative. In contrast, “The Woman in Front of the Camera” is a three-minute film by Hu Xiangqian of a middle-aged woman dancing, oblivious to the crowd surrounding her—and utterly entranced. No politics or history; just art for its own sake. + + + + + +Obituary + + + + +Obituary: Joseph Medicine Crow: War songs of the Plains + + + + + +Obituary: Joseph Medicine Crow + +War songs of the Plains + +Joseph Medicine Crow, last war chief of the Crow tribe, died on April 3rd, aged 102 + +Apr 16th 2016 | From the print edition + + + +THEY were on a path over the hills when Joseph Medicine Crow saw the horses: 50 of them. It made him pause, for there was never anything ordinary about these creatures. They were the most precious possession any Indian could have: the gift of the Sky World, with lightning in their limbs and starlight in their eyes. He longed to leap on one, bareback, and ride it away. + +He was going ahead of his party, scouting the trail. It was a natural job for him, since from childhood he had been taught to notice bear-scrapes on bark, deer prints in mud, the habits of waterfowl and the distant suggestions of dust. Though his tribe, the Crow, had been confined to a reservation since 1884, he had been trained in the old nomadic ways: to sleep only on the floor, wrapped in a blanket; to be perfectly alert, ready to spring, the moment he woke; to harden his feet, by going barefoot in snow, for endless walking. His people had been employed as scouts by George Armstrong Custer before the battle of the Little Bighorn in 1876, when they had joined the white men against their old Plains enemies, the Lakota Sioux and the Cheyenne. As a very small child, hanging round the fire and the mysterious sweat lodges, he had heard the stories of four of these old-timers—including his maternal step-grandfather, White Man Runs Him—and relived the massacre of the blundering blue-uniformed soldiers through their ancient eyes. + +Now, however, the year was 1945. He was no longer on the immense western Plains, but somewhere behind the Siegfried Line; and through his fieldglasses he could see that the men on the horses were German SS officers. + +His childhood training had included facing his worst fears. “High Bird” was his Crow name, the imperturbable floating eagle. He had been made to jump into freezing rivers, fight with a Sioux boy, go to the white hospital full of doctors and ghosts, and to the public school where a white girl had stuck pins in him. Not many months back, he had been ordered to lead a squad through enemy machinegun fire to carry out some dynamite: to face death, in other words. His commanding officer had naturally assumed he would be the ideal man to do it. + +Yet, along with his native skills, he was highly educated. He had been the first in his tribe to go to college and get a masters degree, and was more than halfway through a doctoral thesis when he was called up. His title was “The Effects of European Culture Contact upon the Economic, Social and Religious Life of the Crow Indians”. He found that influence good, in many ways. As a result of it he could read, write and get well-paid jobs, and he did not mind putting on a suit and tie, just for part of the day, to do them. All his life he was to be a bridge between the two worlds, lecturing on the need to combine the best of old ways and new, and encouraging amity and peace to reign, in particular, round the battlefield at Little Bighorn. + +His call-up in 1943 raised typically mixed feelings. He wanted to prove himself in Europe, but in a Crow way. For them, warfare was seldom about killing. Rather it was an endless series of raids and horse-stealing in which young men showed how cunning, noble and resourceful they were, decorating their coup sticks with beads and feathers to prove it. It was, he thought, the finest sport in the world. He went on raids along the Siegfried Line with red war-paint under his uniform and a yellow-daubed eagle feather, symbol of his spirit-helper, tucked inside his helmet. In one village he collided with a German soldier. Rather than simply shooting him, he threw away his rifle and wrestled him into submission, as he had the Sioux boy long ago. + +Memories preserved + +Now, with the horses, his ancestral instincts definitely got the upper hand. He tracked them to where they were stabled and, at first light, crept past the guards to slip an Indian bridle on the best of them, a thoroughbred with a white blaze on its face. Vaulting on, he stampeded the rest out of the barn and over the hills, shouting a victory song in Crow as he rode. “High Bird! High Bird! You fought the Germans! You great warrior!” Only back in Montana, swapping war stories with the elders, did he realise that he had unconsciously performed—by grabbing the explosives, manhandling the enemy soldier, seizing his rifle and stealing the horses—the four deeds that established him as a war-chief of his people, as his paternal grandfather Medicine Crow had been before him in the buffalo days. + +Some might think he had nothing to fight about in the decades that followed. Not so. Struggles multiplied against drugs, alcohol, joblessness and lack of funding on the Crow lands, which covered 3,600 square miles of plain and mountain. When, as war chief, he welcomed Barack Obama in 2008, he urged the presidential candidate to recognise native Americans as first-class citizens, not people “at the bottom of the ladder”. Carefully, in dozens of boxes stacked in his house and garage, he preserved handwritten stories of the old-timers and photographs, captioned in pencil, of their worn, proud, haunted faces. Honours poured down on him, as keeper of the memories of his tribe. At each award ceremony, including the one for his Medal of Freedom in the White House in 2009, he swung his coup stick and chanted a vigorous Crow war song, the only man truly qualified to sing one—and the last. + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Taxing wages + +Markets + + + + + +Interactive indicators + +Apr 16th 2016 | From the print edition + + + + + +Output, prices and jobs + +Apr 16th 2016 | From the print edition + + + + + +Trade, exchange rates, budget balances and interest rates + +Markets + +Apr 16th 2016 | From the print edition + + + + + +The Economist commodity-price index + +Apr 16th 2016 | From the print edition + + + + + +Taxing wages + +Apr 16th 2016 | From the print edition + + + +The “tax wedge” is the difference between workers’ take-home pay and the costs of employing them, including income taxes and social-security contributions. At 55.3%, Belgium has the highest tax wedge in the OECD club of rich countries; Chile has the lowest, at 7%. The OECD average stood at 35.9% in 2015, unchanged from the previous year. Although average labour costs are similar in Belgium and Switzerland, Swiss employees take home more pay because the tax wedge there is only 22.2%. Employees in Norway and Australia end up with similar amounts of take-home pay. French employers pay 27.5% of labour costs in social-security contributions, more than any other OECD country. + + + + + +Markets + +Apr 16th 2016 | From the print edition + + + + + +Table of Contents + +The Economist + +The world this week + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + +Dealing with autism: Beautiful minds, wasted + + + + + +Business in Africa: Making Africa work + + + + + +Tax transparency: Two rights, wrong policy + + + + + +The French left: Liberty, equality, seniority + + + + + +Solar energy: The new sunbathers + + + + + +Letters + +Business in America, regulation, US election, South China sea, the EU, Shakespeare, the semicolon: Letters to the editor + + + + + +Briefing + +The rise of autism: Spectrum shift + + + + + +United States + +Southern Republicans: Going rogue + + + + + +Activist mayors: Ted versus the machine + + + + + +Encryption and the law: Scrambled regs + + + + + +The campaigns: Heard on the trail + + + + + +New York’s Republican primary: Bronx cheer + + + + + +Medicare: Fat loss needed + + + + + +Puerto Rico: News from the colonies + + + + + +Lexington: Bad vibrations + + + + + +The Americas + +Argentina: Old whines + + + + + +The FARC’s finances: Unfunny money + + + + + +Ecuador’s universities: Academic arguments + + + + + +Bello: How to win an election + + + + + +Asia + +Warming relations between India and America: A suitable boy? + + + + + +Religion and politics in Pakistan: Bad moon rising + + + + + +Japan’s gossipy weeklies: Pulp non-fiction + + + + + +Thailand’s deadly roads: Look both ways + + + + + +South-East Asian economies: Okay, for now + + + + + +Banyan: Trawling for trouble + + + + + +China + +Industrial clusters: Bleak times in bra town + + + + + +Intimate apparel: The little red look + + + + + +Porters in Chongqing: Bang bang, I hit the ground + + + + + +Middle East and Africa + +Islamic State in Iraq: The last battle + + + + + +Iraq’s politics: Abadi agonistes + + + + + +Running in Cairo: Miles by the Nile + + + + + +Narcotics in Africa: An emerging drug market + + + + + +Southern Africa’s drought: Too little, too late + + + + + +China and Africa: A despot’s guide to foreign aid + + + + + +Europe + +Ukraine’s struggle against corruption: Clean-up crew + + + + + +Abortion in Poland: No exceptions + + + + + +Germans ridicule Turkey’s president: There once was a prickly sultan + + + + + +Italy’s migrant route: Opening back up + + + + + +The Balkan arms trade: Ask not from whom the AK-47s flow + + + + + +Charlemagne: All quiet on the Aegean front + + + + + +Britain + +David Cameron’s woes: Events, events + + + + + +Tax transparency: When less is more + + + + + +Teacher workload: All work and low pay + + + + + +Railways: Re-coupling + + + + + +Hospital waiting times: An unhealthy situation + + + + + +Supermarkets: Dancing in the aisles + + + + + +Brexit brief: A matter of business + + + + + +Bagehot: Jeremy Corbyn’s trench warfare + + + + + +International + +The trade in wild-animal parts (1): Last chance to see? + + + + + +The trade in wild-animal parts (2): Prescription for extinction + + + + + +The trade in wild-animal parts (2): Internship + + + + + +Special report: Business in Africa + +Business in Africa: 1.2 billion opportunities + + + + + +The middle class: A matter of definition + + + + + +Manufacturing: Not making it + + + + + +Exporting flowers: Coming up roses + + + + + +Trade: Obstacle course + + + + + +Diasporas: Settled strangers + + + + + +Financial technology: On the move + + + + + +E-commerce: Virtual headaches + + + + + +Prospects: Fortune favours the brave + + + + + +Business + +Solar energy: Follow the sun + + + + + +Peabody Energy: The pits + + + + + +Digital media: Mail’s got you + + + + + +The music industry: Scales dropped + + + + + +The Yukos affair: Baiting the bear + + + + + +Etsy’s growing pains: Knitty gritty + + + + + +India’s defence industry: Opportunity strikes + + + + + +Schumpeter: Keeping it under your hat + + + + + +Finance and economics + +Russia’s central-bank governor: Putin’s right-hand woman + + + + + +After the Panama papers: Who next? + + + + + +Unlocking Mossack Fonseca: The key’s in Sin City + + + + + +Italian banks: A heavy load + + + + + +Rehabilitating Argentina: The green light + + + + + +The world economy: System says slow + + + + + +Agriculture and demography: The toll of tariffs + + + + + +Free exchange: Terms of enlargement + + + + + +Science and technology + +High-definition maps: The autonomous car’s reality check + + + + + +Space travel: Starchip enterprise + + + + + +Bird strikes on aircraft: Sonic scarecrow + + + + + +Surviving inherited diseases: Genetic superheroes + + + + + +Books and arts + +Single women: Why put a ring on it? + + + + + +Artistic judgment: Everyone’s a critic + + + + + +The Holy Roman Empire: Neither holy nor a failure + + + + + +Seamus Heaney’s “Aeneid”: Music from the underworld + + + + + +Chinese contemporary art: Fountainheads + + + + + +Obituary + +Obituary: Joseph Medicine Crow: War songs of the Plains + + + + + +Economic and financial indicators + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Taxing wages + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.04.23.TXT b/homeworks/B20769/homework1/data2/2016.04.23.TXT new file mode 100644 index 0000000..8db6ffb --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.04.23.TXT @@ -0,0 +1,5100 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Apr 23rd 2016 | From the print edition + + + +The lower house of Brazil’s Congress voted to forward a motion to impeach the president, Dilma Rousseff, to the Senate. If the Senate votes to accept the motion by a simple majority, Ms Rousseff will have to step aside for up to 180 days while it conducts a trial. Ms Rousseff is accused of using accounting trickery to hide the true size of the budget deficit, but few of the congressmen who voted to impeach her gave that as their reason. She accuses Congress of conducting a “coup d’état”. + +Hundreds of people died and at least 4,000 were injured in the most powerful earthquake to strike Ecuador in more than 70 years. The death toll from two recent earthquakes to hit Japan rose to 44. + +Argentina returned to international capital markets after an absence of nearly 15 years when it issued $16.5 billion-worth of ten-year bonds. Demand far exceeded supply. Argentina’s recently elected president, Mauricio Macri, paved the way by reaching a deal with investors who had refused to accept earlier restructurings of debt on which the country had defaulted. + +Cuba’s Communist Party announced that the country’s president, Raúl Castro, would remain chief of the party until 2021. Mr Castro is due to step down as president in 2018. His brother, Fidel Castro, gave a rare speech in which he praised communism for producing “the material and cultural goods that human beings need”. + +Breaking the truce + +Peace talks on Syria were hanging by a thread after the opposition said it was demanding a pause (not quite, as yet, a walk-out) after an intensification of attacks by the regime of Bashar al-Assad in apparent violation of a month-old ceasefire. At least 50 people are thought to have been killed this week. See article. + +Xenophobic violence erupted in Lusaka, the capital of Zambia, amid rumours that foreigners were behind a series of murders in recent weeks in which the bodies of victims were said to have been mutilated. Hundreds of people were arrested after riots and attacks on foreigners in which two people were burned to death. + +Barack Obama arrived in Saudi Arabia on a visit aimed at repairing strained relations with the Gulf monarchies following his nuclear deal with Iran. He was then due to visit Britain and Germany. + +Tragic circumstances + + + +The UN said it feared up to 500 migrants may have died when the boat they were using to cross the Mediterranean from Libya to Italy capsized. After visiting Lesbos, the Greek island where thousands of migrants and refugees are held in camps, Pope Francis unexpectedly took 12 Muslim Syrian refugees back to the Vatican as a humanitarian gesture. + +Angela Merkel, the German chancellor, faced criticism for agreeing to prosecute Jan Böhmermann, a satirist, who read a “poem” on German television calling Recep Tayyip Erdogan, Turkey’s president, a paedophile and more. Left-wing politicians have called for the arcane part of the penal code which allowed Mr Erdogan to request prosecution to be scrapped. + +Britain’s Treasury drew up three scenarios under which the country could leave the EU, with each estimating the damage to economic growth of a Brexit over a sustained period. The chancellor, George Osborne, claimed Britain would be permanently worse-off, saying that after 15 years each household would lose £4,300 ($6,200) a year. The official Leave campaign called the paper “economically illiterate”. Meanwhile the governor of the Bank of England, Mark Carney, defended the bank’s apparently pro-EU position before a committee in the House of Lords, saying that it has a duty to be “open and transparent” when delivering its evidence-based judgments. + +New York state of mind + +Hillary Clinton won the New York Democratic primary with 58% of the vote, a fillip to the front-runner’s campaign after a recent string of losses to Bernie Sanders. She remains the firm favourite to capture the party’s presidential nomination. In the Republican primary Donald Trump scored a victory with 60% of the vote. He will have to win similar margins of victory in the remaining primaries to avoid a contested convention in July. See article. + +The first charges were brought in relation to investigations into the contamination of drinking water in Flint, Michigan, which has prompted a state of emergency in the city. Three state and local officials were indicted. The scandal started when the city began to draw its water from the Flint river instead of Lake Huron in order to save money. + +Testing votes of confidence + +In Australia an early election in July seemed more likely after a controversial bill to restore regulatory oversight of construction unions was defeated in the Senate. The prime minister, Malcolm Turnbull, called for a “double dissolution” (in which every seat in both legislative chambers is up for grabs) if the bill failed to pass. An election will not be called until after the budget on May 3rd. + +Malaysia’s borrowing costs shot up, after a sovereign-wealth fund from Abu Dhabi axed a debt deal with 1MDB, a scandal-hit Malaysian state fund. The emirate had guaranteed $3.5 billion of 1MDB’s bonds, but 1MDB missed a payment of $1.1 billion. + + + +The Taliban started its annual spring offensive in Afghanistan by attacking a compound in Kabul used by the country’s security services. The explosion and a co-ordinated gun battle killed 64 people and wounded 350, most of them civilians. The death toll was the worst in the Afghan capital since 2001. See article. + +State television in China said that nearly 500 children at a school in the eastern city of Changzhou had fallen ill, some of them seriously, apparently because of contamination of the school from chemical factories that used to be there. The central authorities have been urging tighter supervision of industrial chemicals since explosions last year in the port city of Tianjin that killed 165 people. + +A Chinese military aircraft landed on Fiery Cross Reef, a man-made island in the South China Sea, ostensibly to take workers back to China for medical treatment. It was the first reported use of the contested island’s newly built runway by a Chinese military plane. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21697292-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Apr 23rd 2016 | From the print edition + +The European Union opened up a new front in its antitrust battle with Google by accusing the company of using the dominant position of its Android operating system in the smartphone market to limit competition. The EU is focused on the strict licensing rules that Google imposes on smartphone-makers—for example, requiring them to pre-install its Chrome browser as a condition of licensing some Google apps. Google, which has a few months to respond, pointed out that apps for Facebook, Amazon and others are also usually pre-installed on phones. See article. + +The deadline passed for potential buyers of Yahoo to submit their offers. Verizon, America’s biggest wireless telecom firm, is said to be leading the field of contenders. Marissa Mayer, Yahoo’s chief executive, responded to investor criticisms that the process was slow and disorderly by saying that the huge interest shown by the suitors was “humbling”. + +Intel decided to cut 12,000 jobs worldwide, 11% of its workforce, as it rejigs its business to focus more on powering cloud-computing services and less on making chips for PCs, which still account for 60% of its sales. + +Carry on regardless + +A mooted freeze in oil output among most of the world’s big producers was scuppered when talks collapsed in Doha, the Qatari capital. Saudi Arabia walked away when Iran, which only recently regained full access to international oil markets, refused to attend. Russia had joined the Saudis to call for a freeze in output in order to ease the current glut and thus boost oil prices, the collapse of which has hammered oil-producing economies. Oil workers in Kuwait achieved what the negotiators in Doha could not when they went on strike for three days, which helped lift prices. See here and here. + +Underscoring the effects of cheaper oil, Saudi Arabia turned to international creditors for the first time since 1991, raising $10 billion in loans over five years to help cover its budget shortfall. American and Asian banks led the consortium of lenders. See article. + +A Dutch court approved Russia’s application to set aside a $50 billion arbitration award to former shareholders of Yukos, a forcibly nationalised oil company. The court ruled that the arbitration panel had lacked jurisdiction in the case. The dispossessed former owners plan to appeal. + +Banca Popolare di Vicenza set the price range for its capital-raising exercise at between €0.10 and €3 a share ($0.11 to $3.40) following a lack of interest among big institutions. The troubled Italian lender was forced into the offering after the European Central Bank required it to pad its capital buffers. + +To be expected + +Capping a poor quarter for America’s biggest banks, Goldman Sachs reported net profit of $1.2 billion for the first three months of the year, which was down by 56% compared with the same period last year. Morgan Stanley’s net income dropped by 53%, to $1.1 billion. And Citigroup registered a profit of $3.5 billion, a fall of 27%. Given the volatile start to the year in markets, the results were not that surprising. + +China’s GDP expanded at an annual rate of 6.7% in the first three months of the year. Although that was the slowest pace since the start of 2009, it was in line with most forecasts and the government’s new growth target of 6.5-7%. There were also signs that the economy had performed better in March than in January, with fixed-asset investment growing at its fastest rate since August. But there may be trouble ahead: new bank loans and other forms of debt have also risen sharply. + +Mitsubishi Motors, Japan’s sixth-largest carmaker,admitted that its employees had altered data in fuel-consumption tests for some of its models so that they would record better mileage. Mitsubishi’s boss apologised, though that didn’t stop a suspension of trading in the company’s shares, whose price plunged by 15% after the news broke. Meanwhile, Volkswagen’s share price soared in anticipation of an agreement with American regulators over an emissions-cheating scandal. + +Attack of the drones + + + +An aeroplane approaching Heathrow airport was struck by a drone. This came after a fuss about a drone flight that filmed stunning views over London, but broke many rules in the process. Drone-flyers are breaching both no-fly zones and restricted airspace around airports with increasing frequency. There have been calls for mandatory “geo-fencing” software, which would stop these incursions automatically, and for the rules to be applied more stringently. A total ban on drones over London and Windsor was announced ahead of Barack Obama’s visit this week. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21697281-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Apr 23rd 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21697279-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Hillary Clinton’s plans for the economy: Can she fix it? + +Brazil: The great betrayal + +Bloodshed in central Africa: Burundian time-bomb + +The case against Google: Tie breaker + +Saudi Arabia: The new oil order + + + + + +Articles Sections Next + +Hillary Clinton’s plans for the economy + +Can she fix it? + +Hillary Clinton has the Democratic nomination within her grasp. She needs bolder ideas on what to do with it + +Apr 23rd 2016 | From the print edition + + + +SOMETIMES relief makes triumph all the sweeter. That is how Hillary Clinton must feel after this week’s Democratic primary in New York, when she broke a losing streak by beating Bernie Sanders handily. She is now almost certain to be her party’s presidential candidate in November. After a 50-year slog through American politics, even the cautious Mrs Clinton was emboldened to declare that “Victory is in sight!” + +Mrs Clinton is experienced. In an age of extremes she has remained resolutely centrist. Yet, rather than thrilling to the promise of taking the White House or of electing America’s first woman president, many Democrats seem joyless. + +And America as a whole is seething with discontent. It may dodge putting a populist, an ideological extremist or a socialist in the White House in 2017. But, if voters’ anger remains unabated, it will not do so for much longer. Mrs Clinton needs a bold plan to counter this popular frustration. Alas, judging by her economic policies so far, she is more inclined to tinker. + +The not-a-fan belt + +To gauge Mrs Clinton’s programme, start with the Clintonomics that her husband pursued in the mid-1990s. Broadly, it got the big things right by transforming a tax-and-spend party into one that took deficits seriously. Under Bill Clinton, the Democrats made peace with Wall Street and free trade, and agreed to ambitious welfare reform. Thanks to these sensible policies, and the fortuitous tailwind of higher productivity growth, the economy boomed and prosperity was shared. + +America today is more divided; its economy is weaker and beset by problems. Since 2000 most workers’ incomes have stagnated, even as those of the richest have soared. Scarred by the financial crisis, battered by technological change and globalisation, less-skilled workers have fared worst. Many have left the labour force (54% of over-25s with only a high-school education are in work, down from 63% in 2000). An opioid epidemic is lowering their life expectancy. + +The Democratic Party looks different, too. Mr Sanders, victor of seven of the past nine primaries, thinks the Wall Street banks are criminal and suggests that the only solution to America’s ills would be to start a revolution. Many younger voters seem to agree with him. + +Faced with all this, what are Mrs Clinton’s ideas? A lesser candidate would have veered to the left. Yet, even as Mr Sanders has proposed a top rate of tax of almost 70% and wants to scrap the trade pact with Canada and Mexico, Mrs Clinton has largely stood her ground. When she sets out to create “strong growth, fair growth, and long-term growth”, her rhetoric is hard to fault. In her plans to make college more affordable, grant paid leave to parents, introduce a $12 federal minimum wage and increase infrastructure spending, she has the rudiments of an agenda that does not stray too far to the left (see article). + +But next to the ills they are supposed to correct, Mrs Clinton’s solutions too often seem feeble. A typical Clinton speech on the economy contains some reflections on the tornadoes of globalisation and automation that have torn up opportunities for less-skilled workers, then culminates in a proposal to introduce a minuscule, two-year tax credit for companies to encourage profit-sharing schemes. This risks repeating the worst parts of 1990s Clintonomics, which added a slew of micro-measures to America’s over-complicated and inefficient tax code. + +Sometimes, her policies are fiddly. Rightly fearing that some Wall Street banks are too big to fail, Mrs Clinton wants an extra tax on their debt. Making sure banks hold enough capital and scaling back the tax-deductibility of interest on all firms’ debt would do the job better and be simpler. Her plans for personal income tax, which would take the top federal rate to around 45%, are equally complex, as is a proposed change to tax on the capital gains of long- and short-term investors, which looks like a solution to a non-existent problem. + + + +America's primary agenda: our interactive 2016 election calendar + +Worst of all, Mrs Clinton sometimes ignores her own diagnosis. She accepts that the main reason many American workers have seen living standards fall since the 1990s is technology and, to a lesser extent, trade with China. But she goes on to advocate policies that focus on punishing cruel bosses for screwing their workers. And, rather than rethink how to help those who lose from trade, she wants to abandon beneficial new trade deals, such as the Trans-Pacific Partnership. + +Mrs Clinton can be bold when she chooses. She has proposed reforms to criminal justice that would lead to fewer non-violent offenders ending up in jail. This has attracted criticism, because it underlines how, in the 1990s, she backed her husband’s hardline views on crime. In fact, she should be willing to overturn applecarts more often. + +Don’t monkey-wrench around + +A bigger plan to help American workers would start by boosting competition, both by slashing unnecessary regulations for small businesses and by ensuring that big firms no longer operate in protected markets. Losers from globalisation and technological change need more ambitious support, from wage insurance to retraining and help to relocate for work. A big expansion of the earned-income tax credit—a kind of negative income tax—would be a start. More generally, Mrs Clinton should aim for a tax system that is efficient as well as progressive by stripping out deductions, including popular ones like mortgage-interest relief. + +To be clear, we are holding Mrs Clinton to a higher standard than other candidates. She has released more detailed plans than anyone else and made more effort to make the sums behind them add up. But she needs a compelling pitch because, if Americans concluded that the only way to bring radical change was to elect a Trump, Cruz or Sanders, it would represent a disastrous failure of the political centre. We are also asking her to be ambitious just when Washington has been plagued by gridlock and obstruction for its own sake. Yet the mess the Republican Party has got itself into may present Mrs Clinton with a chance to reshape the nation. What a shame if her ideas were too small to seize it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21697225-hillary-clinton-has-democratic-nomination-within-her-grasp-she-needs-bolder-ideas-what/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Brazil + +The great betrayal + +Dilma Rousseff has let her country down. But so has the entire political class + +Apr 23rd 2016 | From the print edition + + + +BRAZIL’S Congress has witnessed some bizarre scenes in its time. In 1963 a senator aimed a gun at his arch-enemy and killed another senator by mistake. In 1998 a crucial government bill failed when a congressman pushed the wrong button on his electronic voting device. But the spectacle in the lower house on April 17th surely counts among the oddest. One by one, 511 deputies filed towards a crowded microphone and, in ten-second bursts broadcast to a rapt nation, voted on the impeachment of the president, Dilma Rousseff. Some were draped in Brazilian flags. One launched a confetti rocket. Many gushed dedications to their home towns, religions, pet causes—and even Brazil’s insurance brokers. The motion to forward charges against Ms Rousseff to the Senate for trial passed by 367 votes to 137, with seven abstentions. + +The vote comes at a desperate time. Brazil is struggling with its worst recession since the 1930s. GDP is expected to shrink by 9% from the second quarter of 2014, when the recession started, to the end of this year. Inflation and the unemployment rate are both around 10%. + +The failure is not only of Ms Rousseff’s making. The entire political class has let the country down through a mix of negligence and corruption. Brazil’s leaders will not win back the respect of its citizens or overcome the economy’s problems unless there is a thorough clean-up. + +Ditching Dilma + +Sunday’s vote was not the end of Ms Rousseff, but her departure cannot now be far off. Brazil ought not to mourn her. Incompetence in her first term in office, from 2011 to 2014, has made the country’s economic plight incomparably worse. Her Workers’ Party (PT) is a prime mover behind a gargantuan bribery scheme centred on Petrobras, the state-controlled oil company, which channelled money from contractors to politicians and parties. Although Ms Rousseff has not been personally implicated in the wrongdoing, she tried to shield her predecessor as president, Luiz Inácio Lula da Silva, from prosecution. + +What is alarming is that those who are working for her removal are in many ways worse. If the Senate votes to put her on trial, probably by mid-May, Ms Rousseff will have to step aside for up to 180 days. The vice-president, Michel Temer, who comes from a different party, will take over and serve out her term if the Senate removes her from office (see article). Mr Temer may provide short-term economic relief. Unlike the hapless Ms Rousseff, he knows how to get things done in Brasília and his Party of the Brazilian Democratic Movement (PMDB) is friendlier to business than the PT. + +But the PMDB is hopelessly compromised, too. One of its leaders is the speaker of the lower house, Eduardo Cunha, who presided over Sunday’s six-hour impeachment spectacle and has himself been charged by the supreme court with taking bribes through the Petrobras scheme. In announcing their “no” votes, some of Ms Rousseff’s allies denounced Mr Cunha as a “gangster” and a “thief”. + +The taint of corruption is spread across many Brazilian parties. Of the 21 deputies under investigation in the Petrobras affair, 16 voted for Ms Rousseff’s impeachment. About 60% of congressmen face accusations of criminal wrongdoing. + +There are no quick ways of putting this right. The roots of Brazil’s political dysfunction go back to the slave-based economy of the 19th century, to dictatorship in the 20th and to a flawed electoral system that both makes campaigns ruinously expensive and also shields politicians from account. + +In the short run, impeachment will not fix this. The charge that is the basis for trying Ms Rousseff—that she manipulated accounts last year to make the fiscal deficit look smaller than it was—is so minor that just a handful of congressmen bothered to mention it in their ten-second tirades. If Ms Rousseff is ousted on a technicality, Mr Temer will struggle to be seen as a legitimate president by the large minority of Brazilians who still back Ms Rousseff. + + + +Waxing and waning: Brazil's economic woes, in charts + +In any other country, such a cocktail of economic decline and political conflict might be combustible. Yet Brazil has remarkable reserves of tolerance. Divided as they are over the rights and wrongs of impeachment, Brazilians have kept their anger in check. The past three decades suggest that theirs is a country which can endure a crisis without resorting to coups or collapses. And here, perhaps, is a shred of hope. + +The fact that the Petrobras scandal has ensnared some of the country’s most powerful politicians and businessmen is a sign that some institutions, especially those that enforce the law, are maturing. One reason politicians are in such trouble is that a new, better-educated and more assertive middle class refused to put up with their impunity. Some of the statutes now being used to put away miscreants were enacted by Ms Rousseff’s government. + +One way of capturing this spirit would be for the country to hold fresh elections. A new president might have a mandate to embark on reforms that have eluded governments for decades. Voters also deserve a chance to rid themselves of the entire corruption-infested Congress. Only new leaders and new legislators can undertake the fundamental reforms that Brazil needs, in particular an overhaul of the corruption-prone political system and of uncontrolled public spending, which pushes up debt and hobbles growth. + +Second best + +True enough, the path to renewal through the ballot box is strewn with obstacles. Given its record, Congress is unlikely to pass the constitutional amendment required to dissolve itself and hold an early general election. The electoral tribunal could order a new presidential ballot, on the ground that Petrobras bribe money helped finance the re-election of Ms Rousseff and Mr Temer in 2014. But that is far from certain. + +There is thus a good chance that Brazil will be condemned to muddle on under the current generation of discredited leaders. Its voters should not forget this moment. Because, in the end, they will have a chance to go to the polls—and they should use it to vote for something better. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21697226-dilma-rousseff-has-let-her-country-down-so-has-entire-political-class-great-betrayal/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bloodshed in central Africa + +Burundian time-bomb + +The killing of rebels in Burundi has ominous echoes of Rwanda in 1994 + +Apr 23rd 2016 | From the print edition + + + +WHEN a Hutu politician says it is time to “pulverise and exterminate” rebels who are “good only for dying”, outsiders should sit up. When he talks of spraying “cockroaches” or urges people to “start work”, it is hard to miss the old codewords for massacring Tutsis. When the politician is not some obscure backbencher but the president of the Burundian Senate, the world should be alarmed. + +History does not always repeat itself in central Africa, but it rhymes cacophonously. Rwanda and Burundi, two small countries with Hutu majorities and Tutsi minorities, have seen large-scale ethnic massacres in 1959, 1963, 1972, 1988, 1993 and 1994. These were not, as some outsiders imagine, spontaneous outbursts of tribal hatred. They happened because those in power deliberately inflamed ethnic divisions. The Rwandan genocide of 1994, in which perhaps half a million Tutsis were hacked to death, was meticulously planned by Hutu army officers and politicians. They did it to avoid sharing power with Tutsi rebels after a peace accord to end a civil war. They raised a militia, cranked up the genocidal propaganda and imported hundreds of thousands of machetes in advance. The outside world barely noticed until it was too late. The genocide ended only when a Tutsi army swept in to stop it, led by Rwanda’s current president, Paul Kagame. + +Today in Burundi, many people hear echoes of 1994. Since last April, when President Pierre Nkurunziza, a Hutu, declared that he would seek a (probably unconstitutional) third term in office, the country has been plunged into turmoil. Bujumbura, the pretty capital on the shores of Lake Tanganyika, has endured a botched coup and street fighting. Its cobbled streets are deserted after dark and ring to the sound of gunfire. In recent months repression has gathered steam. Mr Nkurunziza’s youth militia terrorises his opponents, many of whom are Tutsis. Hundreds, perhaps thousands, of people, mostly young men, have been “disappeared”. Torture is rife. Maybe 250,000 people have fled to neighbouring countries; more are displaced internally. The economy is collapsing. + +Tutsis have cause to be afraid. They are quietly being purged from the army. On the radio, they hear murderous rhetoric of the sort that preceded the Rwandan genocide. As was the case in Rwanda in 1994, today’s Burundian government feels besieged. Several of its members have been assassinated, and rebels have launched attacks into Burundi from foreign refugee camps. It is far from clear that genocide is looming. But even if the worst is unlikely, it makes sense to take precautions. History shows that calamity can happen very quickly: Rwanda’s genocide lasted a mere 100 days. And conflict can often spread across borders: the ripples from Rwanda started a great war in Congo that eventually claimed even more lives. + +A short fuse + +What can be done to defuse Burundi? The European Union is cutting aid to its government, but Mr Nkurunziza has simply redirected spending from health and education to the security forces, leaving the UN and charities to look after children and the sick (see article). The African Union considered sending 5,000 soldiers—but then backtracked when Burundi objected. The UN has suggested sending peacekeepers but has done nothing. This is not good enough. + +More targeted sanctions, which hurt the president’s cronies personally, are needed. If things get worse, outsiders should be ready to send in troops, under the aegis of the African Union or the UN. There are 19,000 UN blue helmets just across the border in Congo. They should be prepared to step in, and the great powers should make sure that Mr Nkurunziza knows it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21697222-killing-rebels-burundi-has-ominous-echoes-rwanda-1994-burundian-time-bomb/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The case against Google + +Tie breaker + +The EU’s case that Google has abused its dominance in mobile operating systems has merit + +Apr 23rd 2016 | From the print edition + + + +TECH moguls look upon the European Commission with as much enthusiasm as does the average Tory MP from the English shires. Europe has no successful technology companies of its own, they whisper, which is why Eurocrats spend their time hassling American tech giants instead. + +Not for the first time Google finds itself in the commission’s crosshairs. This week, the head of the EU’s trustbusting division, Margrethe Vestager, issued charges against the internet-search firm (see article). Its “preliminary view” is that Google is guilty of unfairly using its control of Android, the operating system that powers over 80% of the world’s smartphones, as a means to get its apps and services preferred over those offered by rivals. Europe trying to protect its own? Perhaps. Nevertheless, Google has a case to answer. + +The commission’s claim has echoes of antitrust battles against Microsoft, which was found guilty on both sides of the Atlantic of trying to extend a monopoly in one area, the operating system for desktop computers, into others. The commission reckons that Google has a European market share of over 90% in three related areas: internet search, licensed smartphone operating systems and the distribution of apps for use on the Android platform via its online store, Google Play. Google is charged with using these near-monopolies to reinforce each other and also to extend its market power to other apps in its line-up. So if a manufacturer wants to pre-install Play on its handsets, it must also install Google Search as the default search engine. If it wants to license Google Search, it must pre-install Google’s Chrome browser. By “tying” its products in this way, Google can consolidate its market power. + +This makes it harder for apps from Google’s current rivals (or by potential future innovators) to get a look in. Google claims there is no arm-twisting of manufacturers. Android is open-source software, it says. Anyone can use it without Google’s say-so. Handset-makers, such as Samsung, can and do pre-install apps of rivals, such as Facebook and Amazon, alongside those from the Google stable. Apple’s iOS, by contrast, is a closed operating system. But Apple’s slice of the smartphone market, though wildly profitable, is much smaller. In contrast, Google’s sway over Android gives it the power to crush rivals and, crucially, to entrench its position in search, where it currently has no strong competitors. + +That power adds weight to a second charge by the commission, that Google is offering financial incentives to manufacturers to pre-install its search service on smartphones and tablets exclusively. A third charge is that Google does not allow manufacturers to use modified versions of Android on any of their devices if they want to pre-install the firm’s apps on one of them. If such restrictions were truly necessary to preserve the integrity of the Google-licensed version of Android, that might be good for consumers. But such conditions also seem to show that Android is a rather less open system than Google likes to claim. + +Besmirched engine + +Awkwardly for Ms Vestager, Canada dropped charges against Google the day before she unveiled hers. The European interpretation of competition does not hold much sway in America, where the prevailing view of its courts is that the power and profits that come with a dominant market position are simply the prize for success. Yet the need to reward Google has to be balanced against the need to inspire innovations that might complement Android or Google Search—or even displace them. It is now up to Google to demonstrate that its mobile strategy does not harm competition, and thus consumers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21697223-eus-case-google-has-abused-its-dominance-mobile-operating-systems-has-merit-tie/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Saudi Arabia + +The new oil order + +An impetuous prince is rattling the Middle East, but may also bring bold reform + +Apr 23rd 2016 | From the print edition + + + +FOR generations, oil and stability have gone hand in hand in Saudi Arabia. The puritanically conservative kingdom has used its oil wealth to buy loyalty at home and friends abroad. But since King Salman came to the throne last year, his 30-year-old son, Muhammad, has injected unpredictability into the Middle East. + +Critics consider the deputy crown prince a hothead, whose dangerous obsession with Iran, Saudi Arabia’s rival, is feeding sectarianism and fraying relations with America. At home, though, the impetuousness of Muhammad bin Salman may be just what Saudi Arabia needs to start weaning itself off oil, the price of which has fallen sharply over the past 18 months. A big test comes on April 25th, when the prince is due to unveil the kingdom’s long-delayed “Vision” reform plan. + +Under the prince, Saudi Arabia has certainly seemed rash. A year ago it went to war in Yemen, and is now bogged down. In January it executed a prominent Shia cleric, inflaming relations with Iran. Days later the prince revealed to this newspaper plans to float shares in Saudi Aramco, thought to be the world’s biggest company, surprising executives and ministers alike. On April 17th he torpedoed an attempt in Doha by some of the world’s leading oil producers to raise the price of crude by holding output steady. By sinking the agreement at the eleventh hour, he destroyed the credibility of technocrats such as the veteran Saudi oil minister, Ali al-Naimi (see article). + +Yet Prince Muhammad also has striking ideas about how to diversify the Saudi economy. The world’s biggest oil power relies on crude oil for nine-tenths of government revenues. With the collapse in prices, the country is expected to post a budget deficit of 13.5% of GDP this year; it is having to cut spending, draw down its reserves and borrow abroad. The rentier model, whereby the Al Sauds distributed largesse and do-nothing public jobs in return for obedience, was under strain even when oil was booming. + +Prince Muhammad’s plans include abolishing subsidies, raising new taxes, the part-privatisation of public services and an industrial reform involving Saudi Aramco and SABIC, a petrochemicals giant. But it faces obstacles. One is the weak capacity of the kingdom’s civil service to act on such ambition. Another is the power of the sprawling ruling family and ultra-conservative clerics to block the other reforms needed to attract investment: promoting a vigorous private sector, fostering transparency and the rule of law, and empowering women. + +Some of the pain is self-inflicted. Saudi Arabia stopped propping up the price of crude in 2014. Instead it kept pumping oil to drive out higher-cost rivals, including some American shale producers, and preserve its market share. To do otherwise, say the Saudis, would be to subsidise uncompetitive producers. They are also trying to squeeze Iran. Saudi Arabia says it will not freeze production unless Iran does so, too. Iran thinks it has every right to rebuild its output after the lifting of Western nuclear-related sanctions in January (see article). + +The American factor + +Saudi Arabia is being combative partly because of its fear of abandonment by America. The Al Sauds think that Barack Obama, visiting Riyadh as we went to press, is tilting towards Iran. Mr Obama has stoked fears by calling Gulf states and other allies “free-riders”, and telling the Saudis “to share the neighbourhood” with Iran. This adds to the urgency of reform. Saudi Arabia may have more oil, but Iran has a more diversified economy—and knows how to deal with hardship. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21697221-impetuous-prince-rattling-middle-east-may-also-bring-bold-reform-new-oil/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On politics, Bruce Springsteen, steel, the American constitution, South Korea, clearing houses, English: Letters to the editor + + + + + +Articles Sections Next + +On politics, Bruce Springsteen, steel, the American constitution, South Korea, clearing houses, English + +Letters to the editor + +Apr 23rd 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +E-politics + +We read your special report on technology and politics with interest (March 26th). However, your claim that most progress in this field has occurred in the United States and your limited focus on the use of big data to “mobilise the masses” were both too narrow. The Aam Aadmi Party in India, for example, won an overnight victory in Delhi’s state elections in 2015 on a clean-hands ticket and developed software to project the real-time flow of its donations online. Political movements like Podemos in Spain and the Five Star Movement in Italy have used software to include people in formulating policy, membership debates and internal voting. In Argentina, Pia Mancini and her Partido de la Red, or Net Party, used the free software DemocracyOS to thrust open the traditional backroom process of policymaking and transformed it into an online proposing, debating and voting frenzy. + +The Dutch Labour Party (PvdA) and social liberal D66 are both developing online voting systems for policy and to select candidates. The Danish Liberal Alliance has experimented with blockchain to conduct internal voting. + +The use of technology in politics goes far beyond understanding and mobilising the masses. As long as politicians continue to see technology as a mere unidirectional tool for the few to know and influence what the masses do, it will remain a means for manipulation, as your special report suggests. This is not where IT’s strength lies. Instead, political parties should see technology as a means to let the masses know and influence what the few in power do. Numerous political parties and those supporting democracy are already doing just that. + +YVES LETERME + +Secretary-general + +SAM VAN DER STAAK + +Senior programme manager + +International Institute for Democracy and Electoral Assistance (IDEA) + +Stockholm + + + + + +Men of steel + +The ability of Britain to produce its own steel is more than a matter of national pride or free markets (“Cast-iron arguments”, April 9th). Machiavelli noted that the failure of many city states in early modern Italy was due to their lack of strategic supplies in times of conflict, a lesson which Britain learned following two world wars. In both instances, Britain’s industrial capacity was central to its fighting ability, while its reliance on imports (especially food) nearly brought defeat. It was this memory which influenced policymakers to support the Common Agricultural Policy, a strategic but wholly uncompetitive set of subsidies which the EU fully endorses. + +ANDREW GRAY + +Norwich + +Although China’s manufacturing activity has decreased recently, the country’s excess steel capacity has come about because of the unconstrained building of factories. The world has never encountered a beast of such epic dimensions and it should be constrained by any means possible. Tariffs are just fine in my book. + +TYLER OWEN + +Executive vice-president + +Owen Industries + +Carter Lake, Iowa + + + +* Let me offer some additional reasons for the decline of the British steel industry to the ones you mentioned. The big factor is the dwindling manufacturing base that transforms steel into usable machines, equipment and infrastructures. Today the British economy transforms 184kg of crude steel per person, whereas Germany transforms 527kg. At its peak in the 1970s Britain was transforming 460kg against Germany’s 550kg. + +Germany has preserved its manufacturing base, but the British steel industry also endured bad management. Nationalisation in 1967 merged 14 steel companies but failed to restructure them sufficiently and left most mills operating to preserve local employment. Privatisation at a rock bottom price in 1988 did not bring significant restructuring either, since it consisted mostly in closing the worst mills and not building new ones that could have competed with new mills on the continent. Tata Steel’s takeover in 2006 had even fewer strategic, industrial or commercial synergies. + + + +An adversarial relationship between management and the unions did not help. In Germany, Mitbestimmung, or co-management, led to much smoother transitions that preserved customer relationships and business confidence. + + + +As a result of many years of mismanagement by all sides, the British industry lost the confidence of many of its domestic customers. In 2014, Tata Steel UK had a meagre 30% market share in its own home base, and 70% of its customers already relied on foreign, mostly continental, imports. So if today Chinese imports are cheaper, why not continue? + + + +MARCEL GENET + +Managing director + +Laplace Conseil + +Paris + + + + + +Constitutional issues + +Bello pointed to the near fatal flaw with presidential constitutions based on a strong separation of powers (April 9th). In the 1980s Fred Riggs, a political scientist, studied such constitutions around the world and found that they all led to severe gridlock resulting in either a presidential coup d’état over the parliament or a parliamentary coup unseating the president. Except in the United States. Many factors are credited with explaining this American exception, including the victory of the north in the civil war, the availability of land, industrialisation, the power of economic elites and the capacity of certain presidents to temporarily overcome crisis and obstructionism and set a new course, as with the New Deal in the 1930s. + +However, this constitutional American exceptionalism is under growing pressure from globalisation, social fragmentation and a backlash from those who think they have lost out. + +The American constitution is deeply revered as the glue that holds the United States together. But in this rapidly changing environment it is becoming increasingly dysfunctional. Can it adapt further and avoid the fate of other such constitutions? + +PHILIP CERNY + +Professor emeritus of politics at the University of Manchester + +York + + + + + +Welfare in South Korea + +Your article on social welfare in South Korea (“Doubt of the benefit”, April 2nd) said that sluggish growth had stalled even timid welfare plans under President Park Geun-hye. Yet in 2013 South Korea began to pay child-care allowances and nursery-school fees to all parents regardless of income. The Basic Pension Scheme was introduced in 2014 successively after the National Pension Scheme in 1988. Low-income families now receive more benefits, under a reformed National Basic Livelihood Security System. + +Job creation is also a priority. The government is increasing the support for startups and the employment services. The government views welfare as a vital pillar of national progress and has raised its total welfare budget in 2016 to 123.4 trillion won ($108 billion), a 33% increase from 2012. + +The government is also managing the consultation between the central and regional governments regarding the welfare programmes under the principle of properly distributing precious tax for promoting welfare. + +NAMKWON JO + +Director-general for welfare policy + +Ministry of Health and Welfare + +Sejong, South Korea + + + + + +Market scale + +* You oppose combining Deutsche Börse with the London Stock Exchange, on the basis that it would lead to a merger of their clearing houses, Eurex and LCH.Clearnet (“Don’t clear the clearers”, April 2nd). Your concern is that there will be some extra offsetting of the collateral (margin) held by the merged clearing house (when a user has a long position in one market and a short position in another), the degree of offset depending on the correlation between markets. + + + +This already happens for positions margined by a single clearing house, such as Eurex or LCH.Clearnet. So your argument is that increasing scale is, of itself, a risk for the margining system. The logic of that argument is difficult to follow, unless the true danger you wish to avoid is of an administrative “cock-up” over margining. Such administrative faults have occurred in the past and led to the failure of clearing houses for the French sugar market in 1974, the Kuala Lumpur palm-oil market in 1983, and the Hong Kong stock-index market in 1987. + + + +But failures of clearing houses are very rare and have tended to occur at young clearing houses with one main commodity and inadequate systems of margining. In each of these cases there were influential members who decided that, rather than paying-up their own debts, it was preferable that the clearing house should fail. The lesson is that a clearing house should not feel obligated to a cabal of the members. + + + +The main danger for a clearing house is that its management is inept or subject to special interests. Because of their systemic role in the financial system, there is an indisputable need for the regulation of clearing houses, but increasing scale is not a particular danger. + + + +GORDON GEMMILL + +Emeritus professor of finance + +Warwick Business School + +Coventry + + + + + +Land of hope and dreams + +As a New Jerseyan by birth, I took umbrage at your statement that Bruce Springsteen is “New Jersey’s most famous poet” (“Out of luck”, April 9th). Although there can be no questioning that singer’s talent, William Carlos Williams was born, lived most of his life in and then died in New Jersey. And none other than Walt Whitman spent many years in the state, where he died in the only home that he ever owned. + +He enjoyed those years, remarking that “Camden [New Jersey] was originally an accident, but I shall never be sorry I was left over in Camden. It has brought me blessed returns.” He sung of the open road, too, but unlike the Boss, Whitman was an actual poet. + +DANIEL LURKER + +Washington, DC + + + + + +Lesser languages + +Johnson’s column on the use of English in the international business world (April 9th) reminded me of an old joke: + +What do you call someone who speaks three languages? + +Trilingual. + +What do you call someone who speaks two languages? + +Bilingual. + +What do you call someone who speaks one language? + +English. + +THORSTEN LONISHEN + +Cologne, Germany + +*Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21697205-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Hillary Clinton: Unloved and unstoppable + + + + + +Articles Sections Next + +Hillary Clinton + +Unloved and unstoppable + +In a year of insurgents, Americans appear likely to elect an establishment grande dame as president + +Apr 23rd 2016 | ORANGEBURG, SOUTH CAROLINA, AND WASHINGTON, DC | From the print edition + + + +AMONG the millions of words Hillary Clinton has expended on the campaign trail, these stood out. “This is not easy for me,” said the Democratic front-runner, during a televised debate in Florida last month. “I am not a natural politician, in case you haven’t noticed, like my husband or President Obama.” A more straightforward answer to the question posed—why do two-thirds of Americans mistrust you?—might have cited the many scandals that have attended her three decades in public life. An FBI investigation into her casual handling of classified information is merely the latest. But if somewhat disingenuous, her response was, in its way, accurate and revealing. + +She does not mesmerise on the stump, as Barack Obama and Bill Clinton did. She is fluent and accomplished but icily controlled, as if stage-managing her every utterance. Her grip on policy is ironclad; in hours of wonkish debate with Bernie Sanders, the rival she beat handsomely in the New York primary on April 19th (see article), she has rarely been caught out. But the easy charm Mrs Clinton displays in private is seldom evident. “She tries so hard to be real she just seems false,” said a 21-year-old student, voting in the Ohio primary last month. His friends nodded; all were “feelin’ the Bern, definitely!” + +Her oratorical weaknesses contribute to Mrs Clinton’s reputation for shiftiness. Where Mr Obama inspired with promises of a better world, she rams home her argument like a trial lawyer. That can sound hectoring; it also makes her look especially hypocritical when she changes tack. Her decision to come out against the Trans-Pacific Partnership (TPP) last year would have seemed less cynical had she not predicted that the deal would be the “gold standard” of trade agreements. + +These problems hurt Mrs Clinton even before a large part of the Democratic electorate, enraged by the financial crisis and its aftermath, turned against establishment politicians. A 68-year-old former first lady, senator and secretary of state, with good friends on Wall Street (she pocketed $675,000 for giving three speeches to Goldman Sachs in 2013), her candidacy was always liable to face an anti-establishment attack. Still, Mr Sanders, the 74-year-old conscience of Vermont, has made her struggle far more than anyone predicted. + +When Mr Sanders announced his presidential run in a four-minute-long speech to a handful of journalists, he did not look like a contender. The rumpled senator, who for 25 years has been the sole self-declared socialist in Congress, has gone on to win 17 states. In recent months his campaign has raised more money than Mrs Clinton’s: $44m last month, mostly in small contributions from millions of admirers. Most are young and white—like those Ohioan students, one of whom predicted Mr Sanders would win because he “didn’t know anyone who wasn’t voting for him”—or well-educated lefties. These groups have felt the Bern by huge margins. Even women below the age of 35 have done so, suggesting that the radical promise of a first woman president is not such a big deal to those born after the 1970s. + +Down and confused + +Mrs Clinton owes her lead over Mr Sanders to older whites and to Hispanics and blacks of all ages, who have backed her by a similar preponderance—but with less obvious enthusiasm. A few days before the primary in South Carolina, it was hard to find voters in Orangeburg, one of America’s blackest cities, fired up by the candidate they were about to choose by a 72-point margin. In 2008, recalled Sharon Marlon, who runs the city’s Masters hair salon, you could hardly move for Obama yard-signs. “But where are the Hillary signs? I haven’t seen one!” This apathy looks bad for Mrs Clinton’s chances in a general election. The Democrats need a big turnout if they are to win a rare third straight victory. + +Scandal-dogged, distrusted and divisive, a workaday campaigner with a style and résumé at odds with her party’s humour, Mrs Clinton is not ideal. Yet all this may hardly matter. She is almost certain to win the Democratic nomination. Her victory in New York has extended her lead in elected delegates to 237. She also has a large lead in “super-delegates”, the Democratic top brass who have a vote at the party’s nominating convention in July (see chart 1). To catch up, Mr Sanders would need to win about 60% of the remaining delegates, which is almost unimaginable. The Democrats divvy up their delegates in proportion to vote share and Mrs Clinton has a lead in all the big remaining states, including Pennsylvania and California. + + + +Having won her party’s ticket, Mrs Clinton would probably face either Donald Trump or Ted Cruz in November. Both men have consistently lost to her in head-to-head polling (see chart 2). Predictwise, which looks at polls, betting markets and bookies, puts her chance of becoming president at more than 70%. Perhaps only an indictment arising from the investigation into her use of a private e-mail server when secretary of state could stop her. + + + +Her Republican rivals claim to expect one. Mr Trump says she faces “up to 20 years in prison”. Mr Cruz, in his snider fashion, says that, instead of the White House, “I’ve got slightly different government housing in mind for her.” Within the next few weeks Mrs Clinton and a couple of her aides are expected to be summoned for interviews with the FBI to ascertain whether they “knowingly” mishandled classified information, or allowed that to happen through “gross negligence”. If Mrs Clinton is indicted, it is assumed she would quit the contest (leaving Democratic leaders to try to block Mr Sanders much as their Republican counterparts are trying to nobble Mr Trump). + +Republicans have a history of pinning imagined crimes on Mrs Clinton. The e-mail case sprang from one such: on the basis of no evidence, many believed Mrs Clinton had failed to protect America’s ambassador to Libya and three co-workers, killed by jihadists in 2012. Mrs Clinton’s e-mail arrangements emerged from one of several congressional inquiries into this bogus scandal. Disdaining the usual protocols, she used a private system, protected by off-the-shelf security systems, to send and receive e-mails—2,100 of which, it transpired, contained classified information. + +This looks naive and high-handed—a familiar case of Mrs Clinton bending rules to her convenience, her critics say. Her friends admit the trait, in both Clintons, but excuse it as a response to Republican hounding. “It is to stop those who would undermine them that they do things they shouldn’t do,” says Leon Panetta, a former head of the CIA and Mr Clinton’s former chief of staff. Contemptuous of her Republican accusers, Mrs Clinton for too long refused to admit having done anything wrong. That made her look arrogant and prolonged the controversy; the public’s trust in her, impressively high when she was secretary of state, tumbled (see chart 3). + + + +Republicans compare her case with that of General David Petraeus, who pleaded guilty to mishandling classified information last year. On the face of it, that is absurd. Mr Petraeus knowingly gave top-secret intelligence to his biographer (with whom he was having an affair). There is so far no suggestion that Mrs Clinton knew her e-mails contained classified information. The 2,100 in question were classified after the fact, often against the advice of the State Department and mostly in the mild “confidential” bracket. After a review of dozens of federal investigations into similar cases, Politico, a newspaper, concluded it was “highly unlikely” she would be indicted. + +The fisted glove + +If Mrs Clinton does make it back to the White House, as seems likely despite her struggles, it will be for three main reasons. Mr Sanders has done her more good than harm; the Democrats are more united than they seem; and the Republicans are every bit as divided. + +The Sanders insurgency has forced Mrs Clinton to build her campaign aggressively. Modelled on Mr Obama’s victorious efforts, it relies on a loose structure of volunteers. Some worried that the graft required for such an approach to deliver would not be forthcoming for a candidate so much less inspiring than Mr Obama. It seems that it has been, though, especially among African-Americans, a group which may have been made more politically active by its decisive role in determining the outcome in 2008 and 2012. Though there were few Hillary yard-signs up in Orangeburg, Mrs Clinton’s activists had toured the city’s Baptist churches and were confident of the rout they duly delivered. + +An adept debater, Mr Sanders has forced Mrs Clinton to sharpen her message, especially on issues such as wages and trade that are likely to be crucial in the general election. Mrs Clinton’s biggest scare, by far, was a surprise defeat in Michigan on March 8th that reflected Mr Sanders’s success in painting her as a jobs-destroying free trader. This evoked a nightmare of Mr Sanders tearing up the rest of the rust-belt—or, supposing Mrs Clinton survived that, of the protectionist Mr Trump doing likewise in November. Both Clintons promptly descended on Ohio, Illinois and Missouri, which were due to vote a week later, to advertise her more mixed record on trade. + + + +Hillary versus Hillary: The 2008-2016 horse race + +There is little doubt she favours free trade. She was a cheerleader for the North American Free Trade Agreement, signed into law by her husband, and voted for several bilateral deals in the Senate. When in need of union votes, however, she has been less enthusiastic—in 2008 she aped Mr Obama by slamming NAFTA; in the Senate she voted against its Central American equivalent. In a speech in Ohio, Mrs Clinton vowed to “stop dead in its tracks any trade deal that hurts America and American workers.” The onslaught worked. Mrs Clinton won all three states—including a majority of those Ohioans who thought international trade had cost America jobs. + +Being seen to scrap has been beneficial in itself; a recent Gallup poll suggests her supporters are becoming more enthusiastic. “I was for Bernie, but what she’s said about equal pay for women has really swayed me,” said Dana, a Harley-Davidson motorbike inspector in Wisconsin, ahead of its primary on April 5th. Mrs Clinton lost that one. Indeed, going in to New York, she had lost seven of the previous eight states. But her strategists were pretty relaxed. Those defeats were in places with few big cities and a lot of whites—in other words, those least representative of the Democratic electorate. + +It is an indicator of her underrated strength that Mrs Clinton has largely avoided lurching to the left after Mr Sanders, a manoeuvre that would inevitably damage her in the general election. Many pundits claim otherwise, but this is based on wishful thinking of two different sorts. Those on the right want to see their long-held belief that she is a dangerous leftie borne out. Those on the left, the more realistic of whom always saw nudging Mrs Clinton leftward as the most they could hope for, want to see that hope realised. “The Sanders movement has caused her to reconsider her priorities, change her positions,” says Congressman Raúl Grijalva from Arizona, a rare Bernie-backer on the Hill. But there is little evidence for this. + +The prime, incontestable shred is Mrs Clinton’s flick-flack on TPP, which would be hard for her to reverse. Yet if the Senate ratifies the agreement this year, as it may, she will be spared the dilemma. She has said nothing to rule out future deals, including TPP’s companion agreement, covering trans-Atlantic trade. Otherwise, Mrs Clinton’s more leftist positions, for example those on cutting student debt and expanding Social Security, are more moderate than she often tries to make them sound. She has proposed nothing that is likely to panic swing voters in November. + +Take tax. To pay for his policies, Mr Sanders would increase income tax and introduce two new payroll taxes. The marginal rate paid by the richest Americans, including federal and state taxes, would rise to 73% in the average state. Mrs Clinton’s tax plan entails a 10% increase in the marginal rate for those with income over $5m a year, bringing it to 43.6%, and a minimum federal-income-tax rate of 30% for those earning over a million dollars. Despite the post-crisis anxiety many voters feel over bankers, wages and other left-wing targets, there is little in any of her proposals to suggest she would stray from the pragmatic, pro-market, centre-left territory of Mr Obama and her husband. + +The public seems to understand this better than the pundits. On a left-right scale compiled by Crowdpac, a data firm, from the perceptions of millions of political donors, Mrs Clinton has scarcely budged in a year. She has much the same liberal rating as Mr Obama. This must be disappointing for Mr Sanders’s fans. Even so, two-thirds of them already say they will vote for her in November, and the number will surely rise as the party closes ranks in the summer. There is already evidence of this. “If she wins, we hope our supporters will support her,” said Mr Sanders’s wife Jane on April 13th. “It’s nowhere near as rancorous as it was between Barack Obama and Hillary Clinton.” + +If not natural no matter + +This is the second factor in Mrs Clinton’s favour. Despite their differences, Democrats are basically united. Most revere Mr Obama, who is quietly backing Mrs Clinton, dislike Republicans and want power. In an online poll of 400,000 Democratic voters conducted by Alan Grayson, a congressman from Florida, hardly any said they were supporting either candidate because they disliked the other. + +The third factor is that the Republicans are mustering for civil war. Exit polls in Wisconsin suggested more than a third of Republican voters would not back Mr Trump in a general election. No wonder Republican bosses are trying to block him; yet if they do, a third of Mr Trump’s supporters say they will not support any other Republican candidate. Mr Cruz would be a less divisive figure, but perhaps only a bit; he is caustically right-wing and hated by most of the party bosses. + +Love the one you’re with + +Some moderate Republicans already say they would hold their noses and pick Mrs Clinton over either man. At a polling station in Milwaukee, a retired marine who had just voted for John Kasich, the Republican in distant third place, said he would vote for her over Mr Trump or Mr Cruz. More important, either of those two would put fire into the bellies of apathetic Democrats, enabling them to stretch their emerging advantage in the popular vote. Although Hispanics have one of the lowest participation rates in the Democratic coalition, it will still matter that eight in ten of them dislike Mr Trump—and seven in ten loathe him. + +It has been long assumed that, even if Mrs Clinton does win the presidency, a Republican-controlled Congress would prevent her doing much with it. Yet some Republicans now fret that, with Mr Trump on their ticket, they could lose not only the Senate but also their 30-seat majority in the House of Representatives. This possibility, while still seeming far-fetched, has some Democrats wondering what Mrs Clinton might do with a freer hand than Mr Obama has recently enjoyed. + +She might well attempt nothing more dramatic than she has already promised. In the best case for the Democrats, she would still face a Republican filibuster in the Senate. Moreover, her own record there and as secretary of state suggests pragmatism and a commitment to incremental improvement, not radicalism and the grand gesture. “She is totally opposed to not getting anything done,” says Mr Panetta. “She knows her limitations, but she also knows how to empower others.” Her caution is partly informed by the high price Mr Clinton and Mr Obama both paid for launching ambitious measures, including on deficit reduction and health care, early on. Both lost control of Congress after two years. Mrs Clinton might be expected to eke out her political capital more gradually. + +It is a remarkable paradox that, in a year of populist insurgency, she, the archetypal establishment creature, looks best-placed to win. If she does, she suggested in a recent interview with Business Insider, Americans will soon like her a lot more than they do now: “Because when I have a position, whether it’s first lady, or senator, or secretary of state, and I’m doing the work, I’m really quite popular.” Quite likely, we will see about that. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21697220-year-insurgents-americans-appear-likely-elect-establishment-grande-dame/print + + + + + +Articles Sections Next + + + + + +United States + + + + +New York and after: March of the titans + +Psephology: Uptown Trump + +The $20 bill: Not going to Jackson + +The campaigns: Heard on the trail + +Immigration and the Supreme Court: Branching out + +The cost of college: Delayed gratification + +Cocaine: Nosedive + +Lexington: Ben Heard + + + + + +Articles Sections Next + +New York and after + +March of the titans + +Hillary Clinton and Donald Trump won big in the Big Apple + +Apr 23rd 2016 | NEW YORK | From the print edition + + + +“NEW YORK values”, a phrase Senator Ted Cruz used to posit America’s greatest city as an East-Coast Gomorrah—liberal, licentious, infested with bearded atheists wearing unhealthily constrictive jeans—turn out, electorally at least, to be consistent with American norms. In a restorative day for front-runners, Hillary Clinton and Donald Trump both cast aside recent setbacks to trounce their rivals in New York’s Democratic and Republican primaries on April 19th. Mrs Clinton, an adoptive New Yorker, won 58% of the vote, and over 30 delegates more than Senator Bernie Sanders, an exiled son of Brooklyn. This surpassed her expectations, nullified most of the gains Mr Sanders had made in winning seven of the previous eight states, and sent him scuttling home to Vermont for an unscheduled timeout. Mr Trump, another native New Yorker, did even better, winning 60% of the vote and almost all the state’s 95 delegates. Mr Cruz got none. + +Exit polls suggest the Democratic vote was divvied up in a familiar pattern. Mr Sanders, who had predicted for himself “a major victory here in New York” won 65% of voters aged 18-29 years, tens of thousands of whom attended a pair of giant pre-poll rallies in leafy New York parks. In Brooklyn, hipster heaven, streams of young voters flowed from polling stations berning with enthusiasm for the 74-year-old democratic socialist. “People use socialism as a bad word, but they appreciate socialist things,” said Christina Reich, a single mother who teaches mindfulness to small children. Yet the zeal of Mr Sanders’s young idealists was, once again, met with cool-headed resistance from most other Democratic groups—which is why Brooklyn fell heavily for Mrs Clinton. + +Older and affluent voters, blacks, Hispanics and women all plumped for the former New York senator by big margins; voters in Westchester County, where she lives, backed her by 2:1. “There’s no place like home!” she hallooed, in a victory speech in which she slammed the Republicans, called on her party to unite and barely bothered to mention Mr Sanders. She knows she has the nomination in the bag. + +Trump bump + +Mr Trump is further from glory; his victory was for that reason more necessary—and timely. Opposition to the foul-mouthed celebrity builder has consolidated and hardened inside the Republican Party as its primary field has thinned; only Mr Trump, Mr Cruz and John Kasich, the governor of Ohio, remain from a starting pack of 17 candidates. Hence Mr Trump’s thumping loss on April 5th in Wisconsin, after the state’s conservative bigwigs rallied behind Mr Cruz. That was embarrassing: Mr Trump’s gassy claim to be a preternatural “winner” makes him look silly in defeat. It also made it seem unlikely he could secure the 1,237-delegate majority he needs to win the Republican ticket before the party’s convention in July. In short, Mr Trump badly needed this home-state win. + +It always looked likely. A self-designed symbol of New York pugnacity and success, he has been a fixture in the city’s tabloid newspapers for four decades; Mr Cruz is best known to many New Yorkers for his fatuous slur. Yet the breadth of Mr Trump’s victory was impressive; he won over half the vote in most of the state’s 27 congressional districts—and won every district except the one covering the area of Manhattan where he lives. Another measure of his wide appeal: 57% of Republican voters considered him likeliest to beat Mrs Clinton in a general election. Only 12% said that of Mr Cruz, despite his claim to be uniting the party—which is not something Mr Trump could ever hazard: over a third of Republican voters in New York said they were “scared” or “concerned” by the prospect of a Trump presidency. + +Mr Trump now has 846 delegates, over 300 more than Mr Cruz, and a revived hope of a ticket-clinching majority. His prospects will probably look even better after April 26th, when another five eastern states—Connecticut, Delaware, Maryland, Pennsylvania and Rhode Island—will hold primaries. Given his strength in nearby Massachusetts, his biggest win before New York, Mr Trump will expect to win all five and most of their 172 delegates. + + + +America's primary agenda: our interactive 2016 election calendar + +It would still be tough for him. To get 1,237 delegates—or near enough to that mark to bargain a way to it—Mr Trump will probably need to do better than he is currently predicted to do in California, where 172 delegates will be up for grabs on June 7th, the last day of the primary season. Mr Cruz has pockets of support there; it looks awfully tight. + +Intriguingly, Mr Trump has tacitly acknowledged this by making the first significant changes to his campaign since he entered the race last June. The obvious danger he faces is that, if he fails to secure a majority of delegates, he may lose out to Mr Cruz or some other establishment-approved challenger in the horse-trading that would ensue at the Republican convention in July. There are already warning signs. Mr Cruz has run rings around Mr Trump in a concurrent shadow battle over the rosters of delegates who will attend the convention and nominate the candidate; in a first ballot, most will vote in accordance with the results of the primaries and caucuses; in subsequent ballots, if no candidate has a majority, most will be able to vote for the candidate of their choice. In a belated effort to punch back, Mr Trump hired a veteran convention fixer, Paul Manafort, to organise his delegate-selection efforts. Mr Manafort promptly supplanted the tycoon’s loutish campaign manager, Corey Lewandowski, thereby bringing more professionalism and calm to Mr Trump’s scandal-plagued campaign. + +The tycoon’s New York victory speech, delivered in Trump Tower, the Manhattan skyscraper where he lives and from which he launched his campaign, exemplified that change. Gone—or at least much pared back—was the usual ad hominem invective and rambling braggadocio. For the first time in months, Mr Trump referred to his main rival as “Senator Cruz”, not “Lyin’ Ted”. He did not indulge in his usual diatribes against Mexicans or Chinese people. Instead, with great clarity, he nailed his main campaign pledges, to bring back lost factory jobs and build up the armed forces; briefly railed against the “rigged” and “crooked” Republican nomination system; then thanked his supporters. As a display of the political skills Mr Trump has added to his charisma, it was rather worryingly impressive. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21697269-hillary-clinton-and-donald-trump-won-big-big-apple-march-titans/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Psephology + +Uptown Trump + +It is a myth that he owes his support to disaffected blue-collar workers + +Apr 23rd 2016 | From the print edition + + + +MOST analysis of Donald Trump’s support has focused on his appeal to poorer working-class whites, who are assumed to have lost the most from globalisation. His victory in New York was a reminder that his appeal is wider than that. He won the Empire State by such a big margin that he could not help picking up the votes of plenty of richer Republican primary voters. But exit polling from those other state primaries where it is available show that better-paid and better-educated voters have always formed as big a part of Mr Trump’s base as those at the lower end of the scale for income and education. + +On average, people earning under $50,000 have made up 29% of the Republican electorate in primary states with exit polls, and 32% of Mr Trump’s voting base. However, those earning over $100,000 have accounted for 37% of the electorate and 34% of his base. In Illinois, for example, he took 46% of those earning under $50,000, but they made up only a quarter of the electorate: he won 39% of those earning over $100,000, who were two-fifths of that primary’s voters. Voters with a high-school education or less have made up 16% of the Republican electorate and a fifth of Mr Trump’s base. College graduates and postgraduates account for 43% of his support. + +Mr Trump does not have a majority among wealthy Republicans. But the idea that it is mostly poorer, less-educated voters who are attracted to Mr Trump is a myth. Only 13% of the votes in New York’s Republican primary came from New York City; the vast majority were cast upstate. Statewide data show that he won 52% of those earning under $50,000 and 64% of those earning over $100,000. Mr Trump may seem to be a champion of disaffected blue-collar whites. But there are not enough of them among Republican primary voters to account for his success. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21697265-it-myth-he-owes-his-support-disaffected-blue-collar-workers-uptown-trump/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The $20 bill + +Not going to Jackson + +Harriet Tubman is set to replace Andrew Jackson, and rightly so + +Apr 23rd 2016 | NEW YORK | From the print edition + +Coming, eventually, to a greenback in your pocket + +ANDREW JACKSON, America’s seventh president, lived 78 years and has enjoyed another stint of 88 years as the mournful, impressively coiffed face gracing the $20 note. But Jackson’s days are numbered. Jacob Lew, the treasury secretary, announced on April 20th that the slaveholding leader of the Democratic Party is now to make room for Harriet Tubman, a woman born into slavery who escaped and became a leading abolitionist in the years leading up to the civil war. + +This switch is the headline move in the first big revamp of America’s currency since 1929. It erases the visage of a man once praised in high-school history textbooks but whose reputation has taken a turn. “Virtually everything about progressive politics today is about liquidating the Jacksonian influence in American life,” wrote Walter Russell Mead in The American Interest in January. + +It has been a long time coming. In 1980, Howard Zinn, a historian, noted that conventional references to Jackson as “frontiersman, soldier, democrat, man of the people” painted a rather sanitised picture of a man who was also “slaveholder, land speculator, executioner of dissident soldiers, exterminator of Indians”. Jackson’s four decades owning hundreds of slaves who picked cotton on his Hermitage plantation in Tennessee make his replacement by a freed slave a potent symbol of America’s inclination to reckon with its past. + +Jackson is also notorious for his ruthless treatment of Native Americans. In 1829, the first year of his two-term presidency, Jackson asked Congress to earmark land west of the Mississippi river for Indians. Less than six months later he signed the Indian Removal Act, a law that would eventually push the Cherokee, Creek, Choctaw, Chickasaw and Seminole tribes out of their native lands in the American south-east. In the winter of 1838-39 (Martin Van Buren finished the job Jackson started), a quarter of the 15,000 migrating Cherokee died on the 1,000-mile “trail of tears”, trekking in the cold from their lands in Georgia, Tennessee and the Carolinas to what would later become Oklahoma. + +Recent years have seen Jackson’s stock drop. In Jacksonville, Florida, last summer, a statue of him on a horse was defaced with spray paint (“Black Lives Matter”) and adorned with an Indian mask. In March, a similar statue in New Orleans provoked protests linked to the removal of Confederate-era monuments. And a year ago Women on 20s, an advocacy group dedicated to getting a woman’s face on the $20 note to honour the 100-year anniversary of women’s suffrage in 2020, took aim at Jackson and hosted an online election to pick a successor. Out of more than 600,000 votes cast, Tubman emerged on top, edging out Eleanor Roosevelt by a scant 7,000 clicks. + +Mr Lew lauded Tubman’s “incredible story of courage and commitment to equality” and noted his excitement that “for the first time in more than a century, the front of our currency will feature the portrait of a woman”. Born Araminta Ross circa 1822, she married John Tubman at 20 and escaped from her owner in 1849. Tubman then undertook a series of 70-odd rescues, ushering slaves to freedom as a “conductor” of the Underground Railroad, a covert network of byways and safe houses running through 14 northern states. The founder of Women on 20s, Barbara Ortiz Howard, celebrated the Treasury Department’s move: “We are delighted”, she wrote, “that the parties involved in the decision are united in their commitment to the goal of honouring women in this most visible fashion.” + +But others are cross that the Treasury has reneged on a promise to feminise the $10 bill, a note long fronted by Alexander Hamilton, the founding father and current Broadway mega-star. As he announced plans to nix Jackson, Mr Lew unveiled a new blueprint for the $10 note that would add a covey of suffragists—Susan B. Anthony, Lucretia Mott, Alice Paul, Elizabeth Cady Stanton and Sojourner Truth—to the back of the bill. This is too little, too late, for some. In a letter to Mr Lew three dozen women, including Gloria Steinem, Arianna Huffington and Cokie Roberts, insisted that “it is about time we put our money where our mouth is”. The fact that the new $20 note featuring Tubman may not appear for a decade or more is “undoubtedly...a major blow to the advancement of women”, they reckon. + +There is another potential hitch. With Barack Obama moving out of the White House in January, a new administration could tweak these proposals—or scuttle them. Mr Lew, the outgoing treasury secretary, isn’t worried: “I don’t think somebody’s going to probably want...to take the image of Harriet Tubman off of our money.” While Hillary Clinton and Bernie Sanders both promptly tweeted the Treasury accolades for the new bills, the Republican candidates—one of whom sports an authentically Jacksonian coiffure to match his Jacksonian politics—had no immediate comment on the matter. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21697264-harriet-tubman-set-replace-andrew-jackson-and-rightly-so-not-going-jackson/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +Apr 23rd 2016 | From the print edition + + + +A whuppin’ + +“We kicked his ass tonight. I hope this convinces Bernie to tone it down. If not, fuck him.” + +A senior Clinton aide glories in her win in New York. Politico + +“It is impossible to catch us.” + +Donald Trump glories equally + +Scarlet women + +“Medicare-for-all will never happen if we continue to elect corporate Democratic whores who are beholden to big pharma and the private insurance industry instead of us.” + +Dr Paul Song, a Sanders supporter, colourfully introduces his candidate in New York + +Going Old Testament... + +“An eye for an eye.” + +Donald Trump’s favourite Bible verse. WHAM 1180 AM + +More or less? + +“I shook his hand and nothing more. If someone thinks that greeting someone means getting involved in politics, I recommend that he find a psychiatrist!” + +Pope Francis doesn’t feel the Bern when meeting him in Rome. New York Times + +Voter suppression + +“If I wasn’t a felon, I would vote for you.” + +A Sanders fan in New York + +Hot sauce in my bag, swag + +“I’ve been eating a lot of hot sauce. Raw peppers and hot sauce. Because I think it keeps my immune system strong.” + +Hillary’s surefire health tip. 105.1FM + +Quid for quo + +“Delegate, listen, we’re going to send you to Mar-a-Lago on a Boeing 757, you’re going to use the spa, you’re going to this, you’re going to that, we want your vote.” + +Mr Trump defines corruption + +Breaking news + +“Bill Clinton was married to Crooked Hillary Clinton. You know that?” + +Mr Trump unearths a shocking fact + +Open all hours + +“It’s very close to my heart because I was down there, and I watched our police and our firemen down at 7-Eleven…and I saw the greatest people I’ve ever seen in action.” + +Mr Trump confuses the worst terrorist attack on America with a corner shop known for its slurpees + +Inside out + +“I’m an outsider…Sanders is an outsider. Both with the same diagnosis, but …with very different paths to healing.” + +Ted Cruz makes a surprising, but probably prescient, comparison + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21697262-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Immigration and the Supreme Court + +Branching out + +The even-number court is likely to hand the president a defeat + +Apr 23rd 2016 | From the print edition + +As in Immigration and Customs Enforcement, rather than cubes + +AMERICA’S framers designed separate institutions to make, enforce and interpret laws. But when Congress ceases to function as it should, the division of labour becomes blurry. Comprehensive legislation to deal with 11.3m undocumented immigrants has long proved elusive. In November 2014, a year and a half after a bipartisan Senate bill was rejected by the Republican leadership in the House of Representatives, Barack Obama picked up his pen and issued executive orders shielding about a third of illegal immigrants from deportation and allowing them to work. On April 18th, the Supreme Court considered whether his actions were legal. + +At issue in United States v Texas is Mr Obama’s move granting “deferred action” to undocumented aliens whose children are American citizens or lawful permanent residents. The policy, known as Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA), aims to grant relief to those “who have become integrated members of American society”, and to keep families from being dispersed across international borders. The programme lifts the threat of removal from over 4m people but does not confer “any form of legal status” on its recipients. + +Republicans in 26 states condemned DAPA as executive overreach and won an injunction against it from a district-court judge in Texas, a ruling that was upheld by the Fifth Circuit Court of Appeals. In defending the policy at the Supreme Court, Donald Verrilli, the solicitor-general, pressed the case for not breaking up families where some children are American citizens. Since immigration officials have discretion over whom to deport, he said, and since the government “has resources only to remove a fraction of the unlawful aliens”, there is no legal barrier to favouring the removal of some over others. + +In a question to Scott Keller, the lawyer for Texas, Justice Stephen Breyer referred to the politics colouring the fight and suggested that the case before the court may have been cooked up in the hope of getting a hearing. The states’ supposed injury—having to pay for the subsidised driving licences of DAPA recipients—is a rather weak claim, Justice Breyer suggested, to “standing”, a constitutional requirement for all lawsuits. Allowing Texas to sue on fiscal grounds would lead “taxpayers all over the country” to sue “in all kinds of cases, many of which will involve nothing more than political disagreements”, which courts are ill-equipped to adjudicate. “Before you know it”, Justice Breyer warned, “power will be transferred from the president and the Congress, where power belongs, to a group of unelected judges.” + +Before the hearing, court-watchers thought the chief justice, John Roberts, might be sympathetic to this argument on standing, and would decide to leave the president’s actions intact without the court ruling on their legality. A dozen years before he became chief justice, he warned of the danger of the court “aggrandis[ing] itself…at the expense of one of the other branches” if it was not picky about which cases to hear. But in his determined questioning of Mr Verrilli, Mr Roberts did not buy the government’s argument on standing—that Texas suffered no real injury because it could decide not to pay for immigrants’ licences. Withdrawing that subsidy may subject Texas to lawsuits from immigrants claiming discrimination, he said: “That’s a real Catch-22”. + +If, as it appears, the liberal and conservative justices are split evenly on both the legality of Mr Obama’s immigration policy and the “standing” question, a 4-to-4 divide will affirm the lower court’s rulings, the president will be handed a defeat—and many undocumented migrants will have to worry again that a routine traffic stop could lead to deportation. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21697244-even-number-court-likely-hand-president-defeat-branching-out/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The cost of college + +Delayed gratification + +Home-owning is falling among young adults, but don’t blame student debt + +Apr 23rd 2016 | NEW YORK | From the print edition + + + +A COLLEGE degree has never been more necessary: graduates earn, on average, 80% more than high-school graduates. Yet ever more Americans are taking on serious debt in exchange for that diploma. Between 2004 and 2014, student-loan balances more than tripled to nearly $1.2 trillion. The average debtor leaves college owing around $27,000. + +Some of this mounting debt is good news. More Americans are going to college—undergraduate enrolment rose by nearly 40% between 2000 and 2010, according to the National Centre for Education Statistics. Many are also staying around for a second degree. But the cost of college has also risen sharply, as state spending on higher education has plummeted. Average tuition fees have surged 40% in the decade to 2015-16 for full-time students at public four-year colleges, and 26% at private ones. Those who take longer to graduate—as many increasingly do—simply rack up more loans. + +Outstanding student loans are now second only to mortgages when it comes to household debt in America. This makes some economists worry about their macroeconomic effects. Though the housing market has been steadily recovering, the share of first-time buyers continues to decline, and is now at its lowest point in nearly three decades, according to the National Association of Realtors. The home-ownership rate among 30-year-olds has been tumbling, but the fall has been especially fast among those paying off student loans, according to the New York Fed. + +So are the soaring costs of college keeping millennials from starting households of their own? Not according to a new paper from Jason Houle of Dartmouth and Lawrence Berger of the University of Wisconsin-Madison. Using longitudinal data on college-going Americans who were aged between 12 and 17 in 1997, the authors found that student-loan debtors were in fact more likely than non-debtors to own a house by the age of 30. But this was mostly because debtors tended to be older, employed, married and with children, and the debt was largely irrelevant. + +Others have found that student debt may delay home-ownership, but does not deter it entirely. In an analysis of data from the National Educational Longitudinal Survey, Daniel Cooper and J. Christina Wang of the Federal Reserve Bank of Boston noted that young debtors were less likely to own a home than their debt-free peers. Yet when the authors confined their analysis to college graduates, they found that debtors in their late-20s were more likely to own a home than non-debtors. So the reason for the delay in home-buying among those with student loans seems to have been that many had dropped out before earning their degree. + +The decline in young home-owners seems to be part of a larger trend of deferring the conventional trappings of adulthood. The share of 18- to 34-year-olds who are married with children has fallen from 27% in 2000 to 20% in 2015. Several studies have asked whether student debt is nudging youngsters to put off marriage vows and stick to birth control, but the link seems tenuous. As for home-ownership, perhaps the biggest challenge facing young home-buyers is the fact that prices have outpaced income growth for 15 years. + +The amount of debt a student has is often less important than the college or the degree. Students with the most debt often have the greatest earning power, as degrees in business, law and medicine tend to be especially costly. The young adults who tend to be most hobbled by their student debt are those who either dropped out or went somewhere non-selective. + +There are even signs that taking on more student debt reduces the odds of bouncing back home to live with one’s parents, as long as it results in a degree. In an analysis of longitudinal data on college-going Americans born between 1980 and 1984, Mr Houle and Cody Warner of Montana State University found that the young adults who returned home tended to be younger, underemployed, modestly indebted and from privileged homes. College drop-outs had a particularly high risk of returning to the nest. Every 10% rise in college debt reduced the odds of returning home by around 17%. + +Millennials may be sluggish about starting their own households, but college graduates are more likely to do so than their less-educated peers, according to the Pew Research Centre. The earnings of young degree-holders are nearly double those of young high-school graduates. There is little question that the rising cost of college education is a problem, but the cost of not going—or, worse, dropping out—is higher still. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21697242-home-owning-falling-among-young-adults-dont-blame-student-debt-delayed/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cocaine + +Nosedive + +Why so few people are snorting white powder for fun + +Apr 23rd 2016 | NEW YORK | From the print edition + + + +“COCAINE”, said Robin Williams, a comedian who was rueful about addiction, “is God’s way of saying that you’re making too much money.” No longer. The total amount of pure cocaine consumed by Americans fell by half between 2006 and 2010, and there is nothing to suggest the trend has changed since. The Drug Enforcement Administration (DEA) says the supply of coke is stable. Cocaine-related deaths fell by 34% between 2006 and 2013. + +Credit for this decline must go to policing and changing fashion. In the 1970s and early 1980s, cocaine users were either well-off or had disposable income to waste. By the mid-1980s most cocaine was being smoked as crack by poorer Americans. Sentencing laws changed and incarceration rates, especially for young black men, began to soar. One 1986 study showed that in Manhattan 78% of those who agreed to be tested after an arrest for a serious crime tested positive for cocaine. In 1985 there were nearly 6m cocaine-users, according to the University of Michigan’s national household survey on drug use. + +Beau Kilmer, who has pondered the “cocaine nosedive” for RAND, a think-tank, thinks some of the decline is due to supply-side changes. Cocaine’s slump began shortly after thousands of acres of coca were eradicated in Colombia. Large quantities of cocaine were seized there and in the rest of Central America from 2006 onwards. Around the same time, local criminal organisations became interested in illegal gold mining and were weakened, both by internal fighting and by government crackdowns. Mr Kilmer adds that increased demand outside the United States may also have played a role. Cocaine costs more in Europe than in America. + +Yet part of the explanation lies in changing fashion. The University of Michigan’s survey reports that young people are less inclined to try cocaine than was once the case. Cigarette companies used to observe that nobody liked to smoke the same brand as their parents. The same may be true of drugs. Would-be cocaine-users have turned to other substances. Methamphetamine is one, but a striking variety of synthetic drugs are now available. “I went to see a dealer the other day in Manhattan and the guy had an astounding array of things,” says Ric Curtis, an anthropologist at John Jay College of Criminal Justice. Although cocaine is still very much on the DEA’s radar, says Russel Baer of the agency, it is not the threat it once was. Heroin, methamphetamine, opioid and synthetic consumption, meanwhile, are all going up. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21697241-why-so-few-people-are-snorting-white-powder-fun-nosedive/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Ben Heard + +The junior senator for Nebraska thinks both parties are breaking apart + +Apr 23rd 2016 | From the print edition + + + +CALL it the “Sunset Boulevard” riposte. Too many candidates have spent this election declaring that America is too diminished or plain dumb to keep its people prosperous and safe. Such gloom has served some of them dismayingly well. Filter out this doomy din, though, and a bunch of young, reform-minded conservatives can be heard making a different case. To paraphrase Norma Desmond, these reform Republicans believe America is still big; it’s the politics that got small. + +One of them is Senator Ben Sasse of Nebraska, a 44-year-old former college wrestler, business consultant, policy adviser in the government of George W. Bush, university president and, to date, one of the only members of Congress to say that conservative principle will stop him voting Republican in November if Donald Trump is the party’s nominee. + +After his election in 2014 Mr Sasse waited a year to give his first speech on the Senate floor. He spent those months watching debates and, heeding his training in corporate crisis-management, interviewing fellow-senators about why the Senate is a “broken institution”. In his maiden speech he reported back. With its six-year terms and nearly limitless hours for debate, the Senate was built as a sort of national board of directors, he thinks: rising above short-term popularity to consider big things that America needs to get right. Yet it has fallen prey to “soundbite culture”, Mr Sasse told his colleagues. Too many debates are “fact-free zones” full of straw-man attacks. He urged both parties to accept that “the people despise us all”. + +Conventional wisdom holds that Washington’s ills stem from excessive partisanship and incivility. Mr Sasse demurs. He does not want less fighting between the left and right. He wants more “meaningful fighting” about issues of substance. America’s big problems are no mystery, he notes. A post-industrial age is imposing breakneck change on the world of work. Both parties have promised federal benefits, notably for the old, that are not “mathematically possible”—but called them “entitlements” so that voters imagine that they have paid for them. The government does not really know how to fight radical jihadism, or cyber-attacks. At the same time the public is impatiently tuning out traditional sources of authority, from politicians to the mainstream media. + +Alas, the Democratic and Republican Parties are “obsessively” focused on what Mr Sasse calls “a bunch of stuff that is not big enough”. On paper, such criticism from a newbie might make him sound bumptious. In person he is more disarming. Many senators resemble Victorian bishops in their slow-moving pomposity. Not Mr Sasse, a young-professor type who talks at machinegun pace. Loping along Senate corridors to his office, he abruptly ducks into the next-door office of Senator David Perdue of Georgia. Lucky Georgia is home to giant firms like Coca-Cola which sponsor free drinks and coffee for Mr Perdue’s visitors, he explains—and as a poor Nebraskan, he has established a permanent claim. He kneels by a small fridge to help himself and his spokesman to Cokes, offering Lexington some, too. “What, now you help others to our stuff too?” asks a young Perdue staffer, half-amused and half-incredulous, as Mr Sasse jogs out. + +The senator sometimes sounds like another lean, sports-mad 40-something farm-state Republican with young children: the Speaker of the House of Representatives, Paul Ryan of Wisconsin. In late March Mr Ryan gave a speech seen as a rebuke to Mr Trump, telling a gathering of congressional interns to believe in a “confident” politics based on ideas, not insults. + +Mr Sasse goes further. He sees both parties breaking up as they focus on “26% issues” rather than “70% issues”—meaning questions that interest impassioned partisans on left or right, rather than problems that most Americans know to be important. At times he sounds like a physicist, describing party coalitions drifting apart in the absence of principles weighty enough to exert a gravitational pull. Mr Sasse says calmly that he expects both political parties to fall apart within the next decade. He had thought the Democrats would break up first, given the distance between the party’s pragmatic wing and leftists like Bernie Sanders. Instead, he marvels, it looks as if the Republican Party “is going to come apart first”, undone by Mr Trump, a man who scorns so many organising principles of conservatism. + +What happens next + +In an open letter explaining his opposition to Mr Trump, the Nebraskan reminded fellow-conservatives that they believe in limited government, constrained by a constitution whose “heartbeat” is the First Amendment, guaranteeing freedom of religion, freedom of the press, freedom of association and freedom of speech. In contrast, he wrote, Mr Trump has praised Chinese leaders for showing “strength” in crushing the Tiananmen Square protests, threatened to toughen libel laws, and says that Mr Obama has "lead the way" in using executive orders. If Mr Trump is his party’s nominee, Mr Sasse says conservatives will need a “third option”. + +The senator is no moderate: his voting record is sternly conservative, and he accuses Democrats of exploiting racial issues for political gain. But he deplores the fact that some in the Republican Party think that “white working-class identity politics”, as stirred up by Mr Trump, might be a legitimate tactic. He thinks Mr Trump is a warning. A lack of “shared facts” and broad national discourse undermines accountability. This creates an opportunity for big men (or women), with big personal brands, even if Mr Trump himself fades from the scene. Mr Sasse is sure big government is not the solution, saying: “Monopolistic, insular, unaccountable bureaucracies will do really stupid things.” + +Pressed to spell out big, bold alternatives of his own, Mr Sasse notes that he is just one senator, new to the job. For now he is focused on sounding the alarm about America’s shrinking politics. It’s a start. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21697246-junior-senator-nebraska-thinks-both-parties-are-breaking-apart-ben-heard/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Brazil’s political crisis: The darkest hour + +Brazil’s terrible politics: Dilma, out! + + + + + +Articles Sections Next + +Brazil’s political crisis + +The darkest hour + +The economy is in freefall. The president is likely to be impeached. Brazil’s democracy faces its toughest moment since the end of dictatorship + +Apr 23rd 2016 | BRASÍLIA | From the print edition + + + +ON THE night of April 17th Brazil stood still. In the streets, hundreds of thousands held their breath, many sporting the yellow-and-green jerseys of the national football team, brandishing Brazilian flags, vuvuzelas at the ready. Millions more were glued to television screens in homes, bars and restaurants across the country. + +Contrary to appearances it was political, not sporting, history that was being made. At 11.07pm it was all over. Bruno Araújo of Pernambuco state, a federal deputy for the centre-right opposition Party of Brazilian Social Democracy (PSDB), cast the 342nd vote in Congress’s 513-seat lower house in favour of sending impeachment charges against the president, Dilma Rousseff, to the Senate for trial. That breached the necessary threshold of two-thirds; Ms Rousseff’s foes in the chamber burst into song. Outside Congress, and in dozens of cities, car horns blared. + +By the time voting ended, the government had been trounced by 367 votes to 137 (plus seven abstentions and two absentees). In ten-second speeches during a rowdy, six-hour roll-call vote, pro-impeachment lawmakers railed against economic mismanagement and corruption under Ms Rousseff’s Workers’ Party (PT). Brazil is suffering its worst recession since the 1930s, and the PT and its allies are embroiled in a vast bribery scandal centred on the state-run oil company, Petrobras. They were voting for their families, many proclaimed, or their constituents, or God (see article). Others nodded to the special interests that got them elected. Few mentioned the specific charge against Ms Rousseff: that she had fiddled government accounts to disguise a big budget deficit. + +The next morning Brazil awoke to a changed political landscape. Ms Rousseff looks likely to follow in the ignominious footsteps of Fernando Collor, the country’s first directly elected president after two decades of military rule ended in the mid1980s. He was impeached for corruption in 1992, less than three years into his term. + +Ms Rousseff’s departure would bring to an end the PT era, which began 13 years ago under her predecessor and patron, Luiz Inácio Lula da Silva. It would upend Brazil’s politics—and increase uncertainty—even as the country struggles to halt an economic crisis. This is perhaps the most dangerous moment for the still-evolving democracy since the generals stepped down in 1985. + +Ms Rousseff and her party denounced the lower-house decision as a coup d’état—like the one in 1964, but with the role of the generals played by biased media, a “selective” judiciary and compromised legislators. Forty of the congressmen who voted against her have been indicted for various crimes; 15 more are under investigation in Lava Jato (Car Wash), as the Petrobras corruption investigation is known. She compared her ordeal to the torture she suffered as a left-wing guerrilla under the dictatorship, and vowed to fight on. + +But she looks unlikely to win over the Senate, which began to set up a commission to analyse the lower-house motion on April 19th. The Senate’s make-up is somewhat more friendly to her than that of the lower house: larger and richer states in the south and south-east, where she and her party are widely loathed, account for half of lower-house seats but only a quarter of the Senate’s. But only a bare majority is required for the Senate to accept the impeachment motion for trial. Estado de São Paulo, a newspaper that has been tracking voting intentions, reckons that 46 out of 81 senators want an impeachment trial (and 20 are against). + +The Senate is likely to vote by mid-May. If the result is as expected, Ms Rousseff would have to step aside and the vice-president, Michel Temer, would take her place for up to 180 days. Should two-thirds of senators then vote to remove Ms Rousseff from office, he would serve until her term ends in December 2018. + +In office, Mr Temer would have to tackle several Herculean tasks. Brazil’s economy is tanking, chiefly as a result of interventionist mismanagement during Ms Rousseff’s first term from 2011 to 2014. Output fell by 3.8% in 2015 and could do so again this year, the IMF reckons. Per person, output could be down by a fifth since its peak in 2010. Since the start of Ms Rousseff’s second term 1.8m jobs have been lost. Some 10m Brazilians, or one in ten workers, are out of work, and unemployment is likely to increase further, as businesses struggle under debt incurred in the boom years. Inflation has eased slightly but remains near 10%, further eroding incomes. + +Cleaning the stables + +To restore confidence Mr Temer would need urgently to cut the budget deficit. On Ms Rousseff’s watch it ballooned from 2.4% of GDP to a terrifying 10.8%. Restoring public finances would take a combination of spending cuts and tax rises, neither of which is popular—and some measures would require constitutional changes. In November Mr Temer outlined business-friendly reforms that would mark a break with the PT’s left-wing programme. + +But he would struggle to push them through. Ms Rousseff tried similar, smaller measures several times, and appointed a market-friendly finance minister, Joaquim Levy, on her re-election. The real jumped when he was named, and again whenever reforms looked likely to make it through Congress (see chart)—only to slump again when they were stymied by politics. Mr Levy stepped down late last year, having achieved less than he had hoped. The markets’ spirits recovered as the odds of impeachment improved. + + + +Just because 72% of the lower house backed impeachment does not mean Mr Temer would be assured of simple majorities in both houses to pass legislation, let alone the three-fifths in each needed to amend the constitution. He could not even rely on his own centrist Party of the Brazilian Democratic Movement (PMDB): seven of its congressmen backed Ms Rousseff in the impeachment vote, including its leader in the chamber. + +Even more worryingly, many PMDB leaders are beholden to business interests that back reform in principle but not always in practice. A tangle of tax breaks is unlikely to be relinquished without a fight, and the coddled manufacturing sector cherishes the subsidies and trade barriers that shield it from foreign competition. Austerity would hardly be a vote-winner in October’s local elections. These are especially important to the PMDB, which is more a coalition of regional bigwigs than a grouping of politicians with similar ideas about how to run a country. + +The vice-president’s party is not only fractious but tarnished by allegations of corruption. It was the PT’s main ally until it pulled out of the governing coalition last month, and several of its congressmen have been accused of involvement in the Petrobras affair. On April 18th a former executive at the company claimed that Renan Calheiros, the PMDB speaker of the Senate, had taken $6m in bribes from a supplier of oil rigs. The supreme court has already indicted his opposite number in the lower house, Eduardo Cunha, for corruption and money-laundering. Four other senior PMDB congressmen are under investigation. (All deny wrongdoing.) Meanwhile, the electoral authority is investigating whether Ms Rousseff and Mr Temer took money from the Petrobras scheme for their re-election campaigns. If it concludes they did, it could call a new election for both president and vice-president. + +With friends and donors thus tainted, Mr Temer would struggle to attract talent to his government. Arminio Fraga, a former Central Bank governor close to the PSDB, is reported to have spurned Mr Temer’s advances, though the PSDB itself has hinted that it might unofficially support his government. And he would have to balance the pressing need for competence against the steps required to build a coalition in a Congress that houses 27 parties. + +Brazilian analysts forecast that GDP would shrink by 3-4% this year with Mr Temer at the helm. That is better than 4-6% under Ms Rousseff, but still horrible. Inflation might be a shade lower than otherwise, and the currency a touch stronger. But few see growth returning before 2018, and then only sluggishly. Unemployment could reach 11% by the end of the year—and stay there. João Castro Neves of Eurasia Group, a consultancy, speaks of a slew of “unknown unknowns”. The PT has vowed “total” opposition in Congress to a government led by Mr Temer. Its allies among trade unions and social movements are considering roadblocks and perhaps a general strike—especially if Mr Temer were to pursue the measures needed to stabilise the economy, which they dub “neoliberal”. + +Unlike Mr Collor, who had no popular or political backing to speak of, Ms Rousseff still enjoys some. And the third of Brazilians who oppose impeachment see the vice-president as a usurper. During the house vote, 26,000 of Ms Rousseff’s supporters gathered in front of Congress, separated from 53,000 pro-impeachment protesters by a steel fence erected by the police. Similar scenes—minus the fence—were repeated across Brazil. Some fear that they symbolised a country rent asunder—and a democracy at risk of tearing apart. All this leaves Mr Temer vulnerable to discontent and puts Brazil at risk of further turmoil and decline. + +But there are reasons to think that the damage will be limited. The country’s institutions have shown an ability to withstand the twin traumas of the impeachment process—even one as contested and flawed as Ms Rousseff’s—and the Lava Jato investigation. + +Even in the rush for impeachment the supreme court, despite being packed with PT appointees, set out guidelines but did not second-guess the legislature on the merits of the case against the president. All involved obeyed the rules; though the vote was decried by her supporters in the lower house, no one suggested that it should be overturned by force. Emotions ran high during the voting, and some of the rhetoric was intemperate, but the deputies mostly observed parliamentary decorum. “Few countries could have pulled this off,” marvels Matthew Taylor, a political scientist at American University in Washington, DC. + +The protesters outside also behaved well. There was no violence that warranted intervention by the police, let alone the army. Crowds dispersed peacefully. The next morning, normal life resumed. + +Students of democracy + +Brazilians are not given to revolutions; they have never had a bloody one. The “coalitional presidentialism” that grew out of the system enshrined in the constitution adopted in 1988, in which a strong executive co-exists with a multiparty legislature, both reflects and reinforces a cultural affinity for consensus. Since 1995 the sitting president’s party has never held more than 20% of all seats in Congress, points out Saulo Porto of Prospectiva, another consultancy. To secure backing for policy measures, a leader must coax and cajole a broad range of allies. + +This has sometimes taken an unseemly form: in the mensalão (big monthly) scandal in Lula’s first term, the government paid small coalition parties regular kickbacks in exchange for their support in Congress. The petrolão (big oily), as the Petrobras affair is known, appears to have had a similar aim. Alliance-building also tempers any radical instincts. Brazil was slower than some of its neighbours to embrace—and then only half-heartedly—the “Washington consensus” of liberal reforms in the 1990s, notes Mr Castro Neves. But it also resisted the siren song of the far-left “Bolivarian revolution” led by the late Hugo Chávez in Venezuela in the following decade. + +In choosing between political boldness and stability, Brazil generally plumps for the latter. It is no surprise that its most revered post-war presidents were not visionaries but wheeler-dealers: from Juscelino Kubitschek in the 1950s to Lula himself. Mr Temer is also comfortable in smoke-filled rooms. Fernando Henrique Cardoso, Lula’s two-term predecessor from the PSDB, was enough of a political operator to be unfazed when the PT forced an impeachment motion (over helping out troubled banks) onto the lower-house agenda after his re-election in 1999. It was roundly defeated by 342 votes to 100. Dozens of other attempts to oust Mr Cardoso and Lula never got that far. + +“Presidentialism doesn’t work without a strong president,” says Nilson Leitão, a PSDB leader in the house. Ms Rousseff is singularly weak. She has barely tried to hide her disdain for Congress—or her lack of interest in political horse-trading. On her watch coalitional presidentialism turned into “collision presidentialism”, jokes Murilo de Aragão, a political scientist. Congressmen punished her by elevating Mr Cunha, for years a thorn in her side, to the position of house speaker in February 2015. He accepted the impeachment motion last December partly to divert attention from his own mounting legal woes, but also because of personal animosity. Without him, her position would probably have been secure. + +A glimmer of dawn + +Ms Rousseff’s likely downfall is the result of a string of personal failures—economic errors, tolerance of sleaze and political ineptitude. That is not to say that Brazilian democracy will function well without her: absurd electoral rules, for instance, force would-be federal deputies to campaign across entire states, the largest of which is home to 44m people. That is a recipe for corruption. And with no minimum vote-share required to enter Congress, parties are excessively fragmented, weakly led and clientelistic. These are flaws in the design of democracy, but not threats to democracy itself. + +Lava Jato, too, revealed the seriousness of Brazil’s situation—and the resilience of its institutions. Public prosecutors and judges have wielded their constitutionally guaranteed independence with gusto. They have also gained new tools. Ms Rousseff pushed through laws rewarding plea bargains and mandating stiff penalties for corporate bribery. These have been essential in uncovering the corruption at Petrobras; dozens of defendants collaborated in return for leniency. And firms are now shutting bribery departments, quips one consultant, to replace them with compliance offices. + +While denouncing the Lava Jato investigators as coup-mongers, Ms Rousseff has not tried to stop them—much to the dismay of many of her allies. (An attempt in March, shortly after he was detained for questioning, to shield Lula from prosecutors by naming him chief of staff with ministerial immunity was a rare lapse.) A PMDB-led administration could try to rein in Lava Jato. Yet such is Brazilians’ weariness with dirty politics that Mr Cardoso, the former president, was surely right when he intimated recently that they would rebel. + +After decades of passive acceptance, Brazilians are fed up with graft. Despite the weak economy, corruption has replaced health and security as their top concern. As Lava Jato progresses from businessmen to politicians—the supreme court is expected soon to indict congressmen, who are protected from prosecution in lower courts—politics could be purged of its dirtiest practitioners. Even before sentencing, which could take years, voters may punish the worst at the ballot box. + +After 13 years of PT rule, during the first decade of which rising prosperity and enlightened social polices turned millions of poor people into consumers, Ms Rousseff’s mistakes and her party’s moral collapse are now helping to turn Brazilians into citizens. It will not happen quickly. One executive of a big investment bank likens Lava Jato to chemotherapy: “It may weaken Brazil now but will help it survive in the long run,” he says. The catastrophe of Ms Rousseff’s presidency has given Brazilians an invaluable political education. Eventually, that should strengthen the country’s democratic foundations. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21697291-economy-freefall-president-likely-be-impeached-brazils-democracy-faces-its/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Brazil’s terrible politics + +Dilma, out! + +Few pro-impeachment congressmen cited the specific charges + +Apr 23rd 2016 | From the print edition + + + +DILMA ROUSSEFF, Brazil’s embattled president, is accused of fiddling government accounts. But the congressmen who voted in favour of impeachment on April 17th mostly cited other reasons. The lowest point came when Jair Bolsonaro, a hard-right ex-soldier, dedicated his vote to the torturer-in-chief of the dictatorship that imprisoned thousands in the 1960s and 1970s—including Ms Rousseff herself. + +The majority invoked the Brazilian version of motherhood and apple pie. Only a handful referred to the charges. Others cited special interests and fringe causes. A smattering is given here. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21697284-few-pro-impeachment-congressmen-cited-specific-charges-dilma-out/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Myanmar-China relations: High mountains, distant emperors + +War in Afghanistan: Fresh offence + +Kashmir in stasis: Rough sleeping + +The Koh-i-Noor diamond: Rock in a hard place + +Banyan: Open wounds + + + + + +Articles Sections Next + +Myanmar-China relations + +High mountains, distant emperors + +Aung San Suu Kyi extends a wary welcome as China tries to regain lost influence + +Apr 23rd 2016 | BEIJING, MUSE AND YANGON | From the print edition + + + +JUST days after her government took office late last month, Aung San Suu Kyi, the world’s best-known democracy activist, welcomed her first foreign dignitary: Wang Yi, foreign minister of the world’s biggest authoritarian state, China. They smiled and shook hands for the cameras. Miss Suu Kyi welcomed China’s “substantial assistance”. And Mr Wang praised the pauk phaw (fraternal) warmth between the two countries. + +Yet the warmth is not what it was. Indeed, so deep had resentment become in Myanmar of China’s growing influence that it helped push the generals who had long ruled the country towards a democratic opening in 2011, and towards the West. With waves of Chinese investment bringing tens of thousands of Chinese workers and traders, ordinary Burmese, particularly in Myanmar’s north nearer the Chinese border, were beginning to feel that their country was at risk of becoming just another Chinese province. + +As Chinese influence grew, at least some of the much-loathed generals appeared to understand what a liability China’s backing was becoming. In September 2011 the president, Thein Sein, an army man, suddenly announced the cancellation of a vast Chinese dam at Myitsone, at the top of the Irrawaddy river. It was a huge surprise. Other Chinese-backed projects, including a copper mine and a railway linking China’s Yunnan province with the Bay of Bengal, were also called off. By then Mr Thein Sein and Miss Suu Kyi, recently released from years of house arrest, had already discussed the outlines of a democratic transition. The job of handling tricky relations with Myanmar’s big neighbour is now hers. (On April 1st, the day after he stepped down as president, Mr Thein Sein shaved his head and disappeared into a Buddhist order.) + +China is no longer the patron of a pariah state. In modern Myanmar it must contend with Western powers for influence. But it still has huge commercial and strategic interests in Myanmar. The conciliatory nature of Mr Wang’s visit suggests that it wants to manage these more adeptly. + + + +With Chinese dams and mining projects dotted around the country, and high-end Chinese condominiums rising in Yangon, the commercial capital, China remains the biggest foreign investor in Myanmar. Central to its needs are two pipelines, owned by China National Petroleum Corporation and designed to bring gas, from platforms in the Bay of Bengal, and oil, shipped to the Burmese coast from the Middle East, into China’s fast-growing interior (see map). Another Chinese state-owned giant, CITIC, leads a consortium developing an industrial zone and deep-sea port near Sittwe in Rakhine state, where the two pipelines start. Guangdong Zhenrong Energy plans a $3 billion oil refinery further south in Dawei, near the border with Thailand. And in January a 300-acre, Chinese-backed business district opened in Muse, just a few miles inside Myanmar’s border crossing with Yunnan (pictured above). Its purpose will be to handle and perhaps eventually regularise a thriving (if often illicit) cross-border trade. + +With some of these projects, Miss Suu Kyi inherits headaches. The outgoing government is rumoured to have reached an agreement months ago over the Dawei refinery project, but, worried about a public outcry, it waited for its last day in power to hold the signing ceremony. With oil prices low, some consider the refinery a white elephant and doubt that China will actually pay for a project inked by an over-eager company and a government on the way out. Du Jifeng, an expert on South-East Asia at the Chinese Academy of Social Sciences in Beijing, says that “China will be quite unhappy” should Miss Suu Kyi cancel the Dawei project. To date, Miss Suu Kyi has made only pragmatic noises about Chinese investment. Her government is bent on rapid economic development, for which Chinese help will be indispensable. She is trying to make that case to her compatriots, who are suspicious of China. + +Managing formal Chinese trade and investment is one thing. Other aspects of the relationship are even trickier, especially the complex dynamics of ethnic insurgencies that have long rumbled along Myanmar’s border with China. A year ago the Burmese army bombed and killed Chinese civilians inside China, while fighting rebels from the Kokang region in northern Shan state. To signal its displeasure, China’s army held live-fire exercises along the border. The message from China was clear: keep the instability on your side of the border, where it belongs. + +Bloodlines complicate matters: several of Myanmar’s rebel groups, all of whom chafe at central rule, have historical ties to China. For instance, the Kokang, who launched a sudden and spectacular attack on the Burmese army in February 2015, are ethnic Han who speak Mandarin, and their militia leader, Phone Kyar Shin, lived for years in China. Chinese nationals may have fought alongside the Kokang against the Burmese army. A number of ethnic groups in conflict with the Burmese army inhabit both sides of the border, including the Kachin, Shan and Palaung. The United Wa State Army, which controls one of the most redoubtable holdout territories in Myanmar, has Chinese backing, uses the Chinese currency and conducts its affairs in Mandarin. With ties going back centuries, the interests of locals in Yunnan often run at cross-purposes with the desires of the central government in faraway Beijing. + + + +Myanmar in graphics: An unfinished peace + +Smuggling also complicates matters along the porous border. Tucked among the watermelons and maize in lorries trundling into China are jade, illegally felled rosewood and heroin. Paying the Burmese police to turn a blind eye costs lorry drivers around $80 a trip, but the profits in China can be stupendous. Proceeds from the trade enrich the ethnic rebel groups, the Burmese army and corrupt officials on both sides. + +Officially, China wants stability along the border. In March its ambassador to Myanmar promised to “promote the peace process” with these rebel groups—a priority of Miss Suu Kyi’s as well—and offered “material and financial support”. Mr Wang, the foreign minister, reiterated China’s support for “peaceful reconciliation” with the ethnic groups when he visited Miss Suu Kyi. Yet for years China played both sides, signing deals with the junta while funding rebel groups. It is not clear what might now change—especially since the Burmese army, anxious to call the shots in their country’s regions, may deny Miss Suu Kyi a significant role in negotiations with the ethnic groups. + +Still, China acknowledges the political change that has taken place in Myanmar—and how that has altered China’s position. At his big press conference, Mr Wang said that Chinese companies must “respect Myanmar’s social customs” and “protect the local ecology and environment”. China can no longer simply buy goodwill. These days, Myanmar has other suitors. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21697287-aung-san-suu-kyi-extends-wary-welcome-china-tries-regain-lost-influence-high-mountains/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +War in Afghanistan + +Fresh offence + +The Taliban tighten a deadlock, with a grisly start to the new fighting season + +Apr 23rd 2016 | KABUL | From the print edition + + + +WHEN the Taliban announced the start of their annual spring offensive last week, Afghans braced for bloodshed. It came this week. On April 19th, during morning rush hour, a member of the Taliban drove a truck laden with explosives to the gates of an elite military base in downtown Kabul and set off his charge. Guerrillas stormed the compound amid the dust; a battle with security forces ensued. At least 64 people were killed and about 350 wounded, making it the deadliest strike in the capital since 2001. + +The target was a training ground for the bodyguards who protect Afghan and foreign dignitaries. Not even those to whom you entrust your protection are safe, the insurgents seemed to be telling their foes. Most of the casualties were civilians. “The Taliban always say they kill the foreigners and security forces,” said Haroon Faqiri, who was 100 metres from the blast. “But I saw hundreds of wounded civilians.” + +Even for a city accustomed to explosions, this bomb’s power was shocking. The blast rattled windows miles away and blew open wooden doors. Metal storefronts near the site crumpled like cellophane. Kabulis responded with grief and solidarity, queuing outside hospitals to donate blood. + +The Taliban’s announcement of a spring offensive is an annual occurrence. Warmer weather and new foliage for battle-cover herald months of intensified fighting. But this winter hardly saw a lull. In the vacuum left by the withdrawal of foreign soldiers, the Taliban made advances not only in their southern and eastern heartlands, but also in the north. + +Facing a leadership battle after it was made public last summer that the movement’s founder, Mullah Mohammed Omar, had died more than two years earlier, the Taliban need military successes to unite their ranks. A demonstration of strength, like the attack this week, might help foot-soldiers regain lost confidence. + +The new commander of the American and NATO troops in Afghanistan, General John Nicholson, and the Afghan president, Ashraf Ghani, saw it differently. The attack was a sign that “the insurgents are unable to meet Afghan forces on the battlefield and must resort to these terrorist attacks,” as General Nicholson put it—a sign, essentially, of Taliban weakness. + + + +The reality is that the Taliban currently contest more territory than at any point since 2001. Last year Afghan security forces suffered record casualties: on average more than 1,000 soldiers and police were wounded or killed each month. They lost more men in a single year than the Americans have in the whole war. + +The deteriorating security situation is a major factor behind the exodus of Afghans. Last year Afghanistan was second only to Syria as a source of migrants to Europe. More than 200,000 Afghans made the journey. + +Yet the Taliban are not on the verge of victory. Government forces still control all the main towns and cities. Big advances by the Taliban have usually been reversed within a few days. Moreover, the Afghan army has learned to operate with fairly minimal help from NATO forces. Tactics have changed, from exposed outposts towards mobile units that can be concentrated when and where needed. Those troops will also enjoy more close air support this year. Although the Afghan air force remains very much a work in progress, for this year’s “fighting season” it will be equipped with three new Mi-25 helicopter gunships and eight A-29 Super Tucano light attack aircraft. + +The chances of the American-led mission being boosted next year are high. Officially the American contingent assisting NATO is due to fall from 9,800 now to 5,500 by the end of the year. But the American president’s military advisers are opposed to the drawdown. If Barack Obama’s successor is Hillary Clinton, she will not want to start out with an Afghan security crisis; she may well prefer a small increase in troop numbers. Defeating the Taliban proved impossible; preventing them from winning is probably easier. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21697196-taliban-tighten-deadlock-grisly-start-new-fighting-season-fresh-offence/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Kashmir in stasis + +Rough sleeping + +The idyllic valley is less violent, but anger lingers + +Apr 23rd 2016 | SRINAGAR | From the print edition + +Holding out, but feeling hopeless + +MUSLIMS know the parable as the story of the People of the Cave: some men fall asleep and find, on waking, that centuries have passed and the world is transformed. The people of the Kashmir valley in the lush uplands of the Indian state of Jammu and Kashmir have their own version. Ever since 1947, when they found themselves east of an active frontline between the two new states of India and Pakistan, valley folk have watched the world evolve. But for them, politically at least, nothing changes. Leaders come and go; promises are made and betrayed; anger erupts into violence, which is crushed with greater violence. And still the valley’s 7m people, who speak their own unique language, are nearly all Muslim and generally disdain India and Pakistan alike, remain hapless pawns in a vicious game between those rivals. + +A recent twist in this cycle was sadly typical. In the town of Handwara on April 12th, a 16-year-old girl stepped into a public toilet. According to witnesses and human-rights activists who spoke to her, an Indian soldier followed. She screamed, drawing angry residents. When the soldier slipped away to a nearby army post, they demanded his surrender and attacked the position with stones. Police arrived, took the girl into custody and tried to disperse the crowd. But a panicked officer fired in the air, and soon two men were shot dead. In further rioting, army or police gunfire killed another three civilians. + +But according to the girl’s testimony as recorded by police, and later repeated by her before a magistrate, there was no soldier at the toilet. Instead, she said two local boys had harassed her outside the facility. The subsequent fracas was due to false rumours. To calm tempers the state government has now launched an inquiry, torn down the army post and lifted a curfew it had clamped on Handwara. + +Some facts are clear. Anger at the Indian army’s heavy presence is explosive. Security forces are quick to shoot, and keen to divert attention from their misconduct. The girl has been kept under close watch since the incident, while video of her testimony mysteriously leaked onto the internet, damaging her reputation. The girl’s mother publicly declared that that the testimony was obtained under duress. + +Few in Kashmir doubt which version is closer to the truth. They have too often heard of sexual abuse by soldiers, and of police framing scapegoats. Incidents like this often lead to escalating protests and shootings, and end in inquiries with no result. And in any case India’s half-million or so security men in the valley are shielded by laws that grant them legal immunity. + + + +Our interactive map demonstrates how the territorial claims of India, Pakistan and China would change the shape of South Asia + +Some 40,000 people, by official count, have died in the valley since 1990, when a bloody insurgency covertly sponsored by Pakistan provoked a brutal Indian crackdown. In recent years Pakistan has throttled the flow of arms; India’s harsh policing and better intelligence have also taken effect. Analysts say there are only a few hundred armed militants left. Their scrapping with Indian forces scarcely disrupts everyday commerce. Dependent on income from tourism, the wider public has scant appetite for jihadist heroics against India’s massive might. + +Yet in Kashmir’s main city, Srinagar, struck by a devastating flood in 2014, resentments surface quickly. Unemployment, corruption and shoddy infrastructure—the single, 300km-long road that links the valley to the rest of India is closed half the year and takes eight hours at best to traverse—add immediacy to chronic political despair. “It’s been 26 years since militancy peaked, but there is more anger and alienation among the youth now than then,” says Mirwaiz Umar Farooq, a separatist leader. He points to soaring attendance at funerals for slain guerrillas and to a disturbing trend towards militancy among the better educated. “We want to keep resistance peaceful, but it’s very hard when India bans every outlet for protest or debate, and in fact doesn’t even acknowledge that there is a problem.” Time for India’s leaders to wake from their slumber. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21697283-idyllic-valley-less-violent-anger-lingers-rough-sleeping/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Koh-i-Noor diamond + +Rock in a hard place + +Less a story of Indian giving than of colonial taking + +Apr 23rd 2016 | MUMBAI | From the print edition + + + +AN AWFUL curse will befall any man who dares wear the Koh-i-Noor, according to a medieval Indian text. On the other hand, it said, whoever owned the “Mountain of Light” would also “own the world”. For centuries Mughal emperors, as well as Hindu and Persian kings, fought over the most legendary gemstone ever dug out. Eventually the Victorian British who took possession of it whittled the rock down from a glassy 186 carats to a brilliant 106, and gave it to their queen. Today it sits in the Tower of London, set in a fur-trimmed crown. + +On April 18th its glittering story was set to spin again. The government of India rejected a request by an Indian NGO to reclaim the stone. In a baffling turn, the solicitor-general told the Supreme Court the jewel was neither “forcibly taken nor stolen” from colonial India. Rather it was “a gift” made by the descendants of Ranjit Singh, a Punjabi maharajah, in 1849: specifically, by his child, Duleep Singh, who was less than a year old when his father died and seven when he signed away his kingdom. + +The Supreme Court ordered caution in forgoing the nation’s claims; other Indians cried foul; and within two days the government backtracked, resolving to “bring back the Koh-i-Noor diamond in an amicable manner”. Perhaps some official had been feeling over-amicable towards Britain after a holiday spent in India by the Duke and Duchess of Cambridge earlier this month. + +Many Indians would like to see the Koh-i-Noor come home. In November some tried invoking the Holocaust Act in Britain, which allows the return of Nazi loot to rightful owners. With the Koh-i-Noor, it is hard to say who the original owners would be. A Pakistani barrister filed a petition last year arguing it should go back to its previous domicile, in Lahore. Descendants of Duleep Singh want it for themselves. Afghanistan and Iran have their own ideas. + +Successive British governments have flatly refused their demands. But it is hard to maintain that the Koh-i-Noor was ever a gift. Anita Anand, a historian working in Britain, cites the Delhi Gazette of 1848 which boasts the jewel was kept “under the security of British bayonets” as “one of the splendid trophies of our military valour”. To repatriate any spoils of colonial war might establish a precedent to empty out the British Museum. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21697282-less-story-indian-giving-colonial-taking-rock-hard-place/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Open wounds + +After half a century, Indonesia opens a debate about its darkest year + +Apr 23rd 2016 | From the print edition + + + +IN LITTLE more than a decade, starting in 1965, Asia suffered four man-made catastrophes apart from the Vietnam war; altogether they cost millions of lives. China endured the Cultural Revolution. Bangladesh was born amid horror and mass slaughter. In Cambodia Pol Pot’s Khmers Rouges inflicted genocide on their own countrymen. And in Indonesia hundreds of thousands of suspected communist sympathisers died in 1965-66 as the then General Suharto consolidated what was to become a 32-year dictatorship. None of these disasters has been subject to a thorough public accounting, let alone a truth-and-reconciliation process. Of the four, however, Indonesia’s has been the least examined at home. Unlike the others, it has remained a taboo topic; its survivors still suffer censorship, discrimination and persecution. + +So a symposium held this week in Jakarta, the capital, titled “Dissecting the 1965 tragedy”, was remarkable. Human-rights groups, former army officers, government representatives, victims’ families and survivors met in a public forum. Opinions on the worth of the exercise varied. That it happened at all prompted protests from some Islamic groups, seeing, implausibly, the thin end of a communist-revival wedge. Government spokesmen questioned the scale of the killings being discussed. Even some of the activists, who for decades have been urging Indonesia to face up to the carnage, saw the symposium less as historic breakthrough than as history rewritten. + +How many died that year is unknown. It started with the murder of six generals in the early hours of October 1st 1965. This was blamed on an alleged coup attempt by the Indonesian Communist Party, or PKI. Purging the country of supposed PKI sympathisers meant murdering, by one common guess, 500,000 people. Haris Azhar of Kontras, a charity that campaigns for the rights of the victims, thinks it was between 1m and 2m, with a far larger number affected in other ways: by imprisonment, torture, forced labour, rape or exile. The obscurity is deliberate. Suharto held power until 1998; twice as much time to bury the truth as to unearth it. But the period is still glossed over in school history lessons and books about it are banned. + +Its shadow falls across islands where millions live side-by-side with former tormentors or victims. An estimated 40m are still excluded from government jobs because of their families’ alleged association with the PKI. Some of the bloodiest massacres happened in Java and Bali, but violence scarred most of the archipelago. Indonesia, hiding its past, never learns its lessons. The grim techniques of control that were honed during the terror were later used with disastrous effect against faraway secessionist movements: East Timor (now Timor-Leste), Aceh and Papua. + +It counts as progress that the symposium drew together so many people on both sides of the killings—or at least their children. One of the organisers was Agus Widjojo, an intellectual former general and a son of one of the six assassinated in 1965. One delegate was the daughter of D.N. Aidit, leader of the PKI at the time—when only the Soviet Union and China had larger communist parties. Another was Sukmawati Sukarnoputri, one of the daughters of Sukarno, Indonesia’s founding president, who was squeezed out of power by Suharto in 1966. + +Yet the former army men and the government seemed to cast doubt on whether there was anything to discuss at all, dismissing the notion that hundreds of thousands had died. A retired general, Sintong Panjaitan, said the figure was closer to 80,000. Another former general, Luhut Panjaitan (no relation), now the government’s security minister, went further: “I don’t believe the number was more than 1,000; probably fewer.” + +Some activists claimed that the symposium, a worthy idea of academics and NGOs, had been “hijacked” by the government. Mr Haris of Kontras boycotted it, arguing it was designed to portray the tragedy as the result of a “social conflict” between rival groups—ie, ignoring the “dirty hand” of the government and army. Others, however, such as Andreas Harsono, of Human Rights Watch, a New York-based lobby group, welcomed the symposium as a “tiny” but important first step. Optimists hope it will be followed by other meetings round the country and so, at long last, by a national reckoning. The generals’ estimates of the death toll may be ludicrously understated, but at least they open the way for a discussion about the real numbers. + +Many hoped that the administration of Joko Widodo, the president elected in 2014, might be happy to open such a debate. The first president from outside the old elite, with no military links, he seemed to have much to gain. But maybe the Islamic groups, the army and others opposed to open discussion have more political clout, even today, than survivors and victims’ descendants. Mr Luhut ruled out any government apology, and appeared to see calls for openness as a foreign plot, thundering: “I’ll be damned if this country is controlled by other countries.” + +The sound of silence + +Perhaps he was thinking of the part played in raising awareness of the slaughter by two harrowing, prizewinning documentaries (“The Act of Killing” and “The Look of Silence”) by an American film-maker, Joshua Oppenheimer. But in fact for years the West connived in the silence: America, Britain and other countries were aware of the massacres. In 1966 Australia’s prime minister, Harold Holt, seemed pleased that Indonesia had been straightened out, telling an audience in New York that “with 500,000 to 1m communist sympathisers knocked off...I think it is safe to assume a reorientation has taken place.” It is not only inside Indonesia that an examination of the year of living dangerously raises embarrassing questions about the cold war and its effect on basic human values. But it is Indonesia that has to live with the consequences, and Indonesians, above all, who are demanding truth in the hope that one day justice and reconciliation may follow. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21697252-after-half-century-indonesia-opens-debate-about-its-darkest-year-open-wounds/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Ideology: The return of correct thinking + +Genetically modified crops: Gene-policy transfer + +Communist Party membership: Hammer and shackle + + + + + +Articles Sections Next + +Ideology + +The return of correct thinking + +To keep the party and public in line, Xi Jinping is using Marxist classics + +Apr 23rd 2016 | BEIJING | From the print edition + + + +ON APRIL 6th Xi Jinping, China’s president, launched yet another ideological campaign. It is named (as most such initiatives are) with a low number and a couple of nouns: “Two Studies, One Action.” The aim, says Mr Xi, is to “strengthen the Marxist stance” of Communist Party members and keep them in line with the party leadership in “ideology, politics and action.” Previous such efforts under his rule had focused on officials, he said. Now it was time to focus on the rank and file. + +Ideology has always mattered to the party’s leaders. University students endure lessons on “Marxism-Leninism-Mao Zedong Thought”. Soldiers have to spend hours a week studying the party’s history and the military writings of its leaders. Applicants for party membership undergo rigorous indoctrination. Chen Xiaojie, a 25-year-old official, recalls weekly classes on party theories and having to write a 1,500-word essay every three months on the latest doctrine. “When you’re in the party, you’ll join a group at least every month to learn about the latest thing they’re promoting.” Officials take regular refresher courses at party schools. + +Since Mao’s rule, when ideological training took up a considerable portion of almost everyone’s lives, leaders have given people much more time to get on with their jobs. Deng Xiaoping’s catchphrase, “It doesn’t matter if a cat is black or white so long as it catches mice,” captured a new mood of pragmatism. But the party continued to stress the importance of indoctrination. After the pro-democracy upheaval of 1989, Deng expressed regret that there had not been enough of it. Since taking over in 2012, Mr Xi has shown particular enthusiasm for ideology. One of his first moves was to set up a National Ideology Centre to push—or invent—his own interpretation of Marxism-Leninism. He quickly spelled out to officials that ideological work was of “vital importance” to the party. + +Numbers and nouns have come thick and fast. Some have been aimed at improving the behaviour of a corrupt bureaucracy. Mr Xi’s “Eight Points” campaign launched in 2012 required party officials to eschew such things as lavish welcoming ceremonies and traffic-snarling cavalcades when they tour the country. His “Three Stricts, Three Honests” drive of 2014 was about strengthening officials’ moral rectitude. Other campaigns have been more ideological: the “Eight Musts” of 2012 stressed the importance of the party’s monopoly of power as well as of “reform and opening”; a campaign was launched in February requiring officials to bone up on Mao’s essay, “Working Methods of Party Committees”, and “improve their consciousness of democratic centralism”. + +Mr Xi’s attentions are not confined to the party. In 2014 he said students and teachers at universities (fountainheads of dissent, historically) both needed greater “ideological guidance”. They soon got it from the party’s Central Committee, which told universities in January 2015 to make the teaching of Marxism a higher priority. The education minister then restricted the use of foreign textbooks (Chinese microbloggers were quick to point out a problem with the party’s efforts to combat “Western values” on campuses—Marxism-Leninism being a Western import, too). + +It is not clear how much the president really expects to change people’s beliefs. He will certainly have difficulty doing so. Some folk are clearly indifferent to ideological browbeating. Lin Qun, a 52-year-old teacher and party member since 2003, says he occasionally has to turn in 5,000-word essays on the latest theories. “They just have different themes once in a while.” + +Bore them into submission + +Why, then, has Mr Xi chosen to put such stress on ideology? Roderick MacFarquhar of Harvard University says that Leninism may be the part that most appeals to Mr Xi. Lenin has a lot to offer someone trying to establish centralised one-party rule. The campaigns, with their emphasis on discipline, also help Mr Xi in his efforts to root out corruption—a problem so pervasive when he took over that he saw it as a threat to the party’s survival. By requiring members actually to attend classes as rituals of loyalty, Mr Xi is tightening his grip over the party’s 88m members and, he hopes, strengthening the party itself. The head of his new ideology centre, Zhu Jidong, argued last year that the Soviet Union had collapsed in part because it failed to maintain ideological standards. + +The party’s concerns were made clear in a document that began circulating in secret in April 2013 and was later leaked. Document Number Nine, as it is called, describes “the current state of the ideological sphere” and identifies seven challenges to it. They include Western constitutional democracy, universal values, civil society, neoliberalism and “the West’s idea of journalism”. To combat these, the communique says, party members must make ideological work “a high priority” in their daily lives. The document was approved by the central leadership and appears to represent Mr Xi’s thinking. Its ideas have permeated his subsequent campaigns as well as his broader efforts to tighten social and political controls. + +Mao emphasised the supreme importance of being “red”—that is, imbued with Maoist fervour—over that of being “expert”. Much of the suffering China experienced during his misrule stemmed from that. Mr Xi is hardly a man of Mao’s stripe. But after years of technocratic government that has stressed the expert end of the spectrum, he is taking a risk in tilting the balance back towards the red zone. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21697266-keep-party-and-public-line-xi-jinping-using-marxist-classics-return-correct/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Genetically modified crops + +Gene-policy transfer + +China may relax its almost total ban on growing GM food + +Apr 23rd 2016 | BEIJING | From the print edition + + + +AFTER years of fierce debate in China about whether to allow widespread growing of genetically modified (GM) food crops, a strong signal emerged in 2013 that the leadership wanted to push ahead. It was given in a speech on agricultural policy by President Xi Jinping. In it he recounted his own experience of hunger during China’s great famine in the early 1960s. He also recalled lean times later that decade during the Cultural Revolution when he went months without “seeing the tiniest drop of oil” or “knowing the taste of meat”. He said that guaranteeing China’s “food security” was still a serious worry. Hinting at what he saw as a possible remedy, he said China must “occupy the commanding heights of transgenic technology” and not yield that ground to “big foreign firms”. + +Twenty years earlier, visiting European scientists had been flabbergasted at how much progress China appeared to be making in this area. Unlike the Europeans, who had had to beg regulators for permission to experiment with a few hundred square metres of GM plants, their Chinese counterparts were conducting trials across tens of thousands of hectares. + +Since then, however, Chinese policy had grown much more conservative, for two main reasons. The first is anxiety among some members of the public about the safety of GM foods. The other is a worry that China’s food market might become reliant on foreign GM technology. True, a large share of the soyabeans imported by China are genetically modified. So is the vast majority of the cotton it grows. In 2015 there were more than 6.6m farmers growing GM cotton, and a total of 3.7m hectares of GM crops under cultivation, including cotton and papaya, according to Randy Hautea of the International Service for the Acquisition of Agri-biotech Applications, an industry group. But the government has been reluctant to approve the growing of GM staples such as maize (corn) and rice. + +Concerns about China’s growing dependence on food imports (see chart) may be causing policymakers to rethink. This year’s Document Number One, the name given to an annual statement on agriculture that is released by the leadership in January, said for the first time that China would “carefully promote” GM food crops. On April 13th Liao Xiyuan, an official at the agriculture ministry, said China planned to “push forward” commercial cultivation of GM maize over the next five years. + +Worries about foreign domination of GM technology may ease if a $43 billion deal reached in February goes ahead for the takeover of Syngenta, a Swiss agricultural firm, by a Chinese company, ChemChina. The acquisition must still be approved by regulators in several countries, but it could give China control of Syngenta’s valuable GM-seed patents. + +China’s policymakers may be trying to bring belated order to what is already thought to be the widespread, illegal, growing of GM crops. Greenpeace, an NGO, reported in January that 93% of samples taken from maize fields in Liaoning province in the north-east tested positive for genetic modification, as did nearly all the seed samples and maize-based foods it gathered at supermarkets in the area. Anti-GM campaigners in China may be too late in trying to close the barn door. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21697272-china-may-relax-its-almost-total-ban-growing-gm-food-gene-policy-transfer/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Communist Party membership + +Hammer and shackle + +To keep party members clean, officials try outing them + +Apr 23rd 2016 | From the print edition + + + +ROUGHLY one adult Chinese in every 13 is a member of the Communist Party, yet identifying such people can be difficult. In private businesses, especially foreign-invested ones, they are often reticent about revealing their status; doing so, they fear, might complicate relations with bosses who dislike the party’s meddling. There are also many who prefer not to advertise their membership because they do not want to be held to the party’s notionally high moral standards and its irksome principles of thrift and self-sacrifice. + +In recent months, however, numerous local party organisations have been telling their members to identify themselves by wearing a badge showing the party’s red hammer-and-sickle. Often this requirement applies just at work. In some places, however, members are being instructed to wear their badges (over the left chest, above any other badges they may be sporting) whenever they appear in public. Some party committees have issued such orders before, but the frequency with which badge-wearing edicts are now being reported by official media suggests a broader push. + +Typically, members are being told that wearing their little red badges will help others to supervise their work and boost the party’s image. One district of Zhanjiang, a city in the southern province of Guangdong, is reported to have handed out more than 10,000 badges to party members this year. Their “enthusiastic” wearing of them is said to have “whipped up a red whirlwind”. The local party chief has praised the badges’ ability to “restrain the speech and actions” of those displaying them. + +If local committees are finding this beneficial, it might be thought that President Xi Jinping, in his anti-graft campaign, would require all 88m members to wear badges all the time. On April 16th a professor at the country’s most prestigious police academy posted an “online friend’s” suggestion to this effect on his Weibo microblog (which has nearly 94,000 followers). Those who refused to wear their badges, it said, should be treated as “traitors to the party”. Censors eventually deleted the post. The party, it seems, is not yet ready for the shock of having its members exposed so permanently. Too many fall short of the ideal. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21697267-keep-party-members-clean-officials-try-outing-them-hammer-and-shackle/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Burundi: Sliding towards anarchy + +African hospitality: No room at the inn + +Egypt’s prickly president: Permission to speak, sir + +Tech startups in Africa: Africa uber alles + +Syria: Drifting back to war + +Israeli politics: Curtains for Herzog? + + + + + +Articles Sections Next + +Burundi + +Sliding towards anarchy + +Political, ethnic and economic crises stalk Rwanda’s neighbour + +Apr 23rd 2016 | BUJUMBURA | From the print edition + + + +ON THE hard-packed dirt roads of Cibitoke, a northern suburb of Bujumbura, the capital of Burundi, police ask residents who have them to put on electric lights at night. They impose a penalty of 50,000 francs ($25 at black market rates) on those who don’t comply. Leaving the lights on allows the officers to see better when they come through looking for suspects. Most young men in the neighbourhood have fled to the countryside or other districts; those who remain tell stories about how they dodged arrest. + +Burundi, a tiny green country of 10m people bounded by Rwanda, Tanzania and Congo, has become a place of fear. In cities, people fear police abductions, torture and murder. In the countryside, they fear hunger as the economy collapses. Even among the government’s higher ranks, there is the constant fear of assassination. But the biggest fear of all is that a conflict so far fought on political lines could once again divide Burundi on ethnic ones, between Hutus and Tutsis, and lead to new massacres. + +The crisis began in April last year when Pierre Nkurunziza, the president since 2005, announced he would run for a third term. He argued that this was compatible with the constitution, which limits presidents to two terms. Mr Nkurunziza claims his first term did not count, as he was appointed to it by parliament. + +Mr Nkurunziza’s announcement produced protests in many of Bujumbura’s neighbourhoods. These were followed in May by an attempted coup launched by a former intelligence chief and supported by soldiers from the president’s own Hutu majority. Mr Nkurunziza was then reelected in July by a comfortable margin. But opposition, much of it from Hutus, did not stop. On December 11th last year, a campaign of grenade-throwing culminated in fighting on the streets as armed opponents of the president, both Hutu and Tutsi, mounted an attack on a barracks. Afterwards, government troops rampaged through those neighbourhoods of Bujumbura that were thought to have supported the rebels, killing people indiscriminately and burying them in mass graves. + + + +So far, there has been no repeat of fighting on that scale. But peace is elusive, too. Instead of warfare, the government has adopted a strategy of eliminating its opponents. “When the police come now, they know exactly who they are looking for,” says one young man in Cibitoke, who has been dodging night-time patrols for months now. But the grounds for suspicion can be razor-thin. The things he lists that can be suspicious include wearing jeans, travelling and socialising in groups larger than three. + +Ominously, there is growing evidence that the government crackdown is seeing people being targeted for their ethnicity as well as just for their political affiliation. Certainly plenty of Hutu men have been arrested; but the neighbourhoods of Bujumbura targeted most heavily by the security forces are disproportionately Tutsi. Tutsis are also being sidelined from government institutions. On April 15th the government announced that 700 soldiers—almost all of whom served in the army when it was an entirely Tutsi institution—were to be forced to retire. “Retiring Tutsis is not genocide”, says one Western diplomat. “But it is a sign.” + +Worse, some politicians have used language that is strikingly reminiscent of the Rwandan genocide of 1994. Révérien Ndikuriyo, the president of the Senate, has talked on the radio about “spraying cockroaches” with bullets and “starting work”, a euphemism for killing used in Rwanda. Persistent rumours fly that the government is co-operating with groups linked to the Rwandan Hutu killers who fled into Congo after the genocide of 1994. + +The most immediate problem is that people are beginning to starve. Insecurity has plunged the economy into a tailspin—GDP contracted by 7% in 2015, according to the IMF. People cannot move around because of the proliferation of police roadblocks and the chance of being arrested if caught in the wrong place. In the capital, people who fear arrest are also going hungry. In some neighbourhoods the price of rice has trebled. But the effect is creating problems in the countryside, too. The farmers near Ijenda, a village 45km from Bujumbura, used to sell vegetables to people on the road and use the proceeds to buy flour and fertiliser. But the customers have disappeared. “Look at these,” says a man, bringing over a box of peppers. “They are going to rot and no one will buy them.” + + + +The economic crisis is likely to worsen. In March the European Union announced it would no longer give money directly to the Burundian government, because it refuses to take part in peace talks. It is also looking for a means to pay 6,000 Burundian soldiers fighting in Somalia directly, rather than through the government. Not all aid will be cut—some will be “reprogrammed” through the UN. But the share of the budget accounted for by aid is likely to fall from half in 2015 to less than a third this year. Whether the squeeze will do much to prevent the violence is difficult to say. For the moment, the government has redirected spending from social programmes to pay the army. Mr Nkurunziza shows little interest in talks. An evangelical Christian as well as a former rebel, he is said to believe he has a God-given right to rule. Perhaps fearing assassination, he rarely enters Bujumbura and seems to have bunkered down with a small group of cronies in the countryside. + +Insofar as he has a strategy, it seems to be to crush opposition and wait for donors to tire of complaining. Sadly, it may work. The alternative idea to sanctions—an international intervention—has not got far. An African Union proposal in January to send 5,000 peacekeepers was vetoed by Mr Nkurunziza. A UN Security Council proposal to send several hundred peacekeepers has also been watered down after objections. But while the world prevaricates, the crisis gets worse. Across Lake Tanganyika, in the Democratic Republic of Congo, sporadic fighting that started after the Rwandan genocide in 1994 continues. This year, Joseph Kabila, Congo’s president, seems likely to try his own version of Mr Nkurunziza’s three-term gambit. The result could well be similar to what has happened in Burundi. And Congo is dramatically larger. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21697289-political-ethnic-and-economic-crises-stalk-rwandas-neighbour-sliding-towards/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +African hospitality + +No room at the inn + +Africa needs decent hotels, but building them is not easy + +Apr 23rd 2016 | LAGOS | From the print edition + +A view without many rooms + +THOSE who have spent years travelling in Africa have learned to do so with good humour. A decade ago, when Angola’s economy was booming, one businessman remembers being forced to share his posh hotel room with a total stranger. More recently, another tells how the water dried up at his smart lodging in Lagos, Nigeria’s heaving commercial capital, leaving him to shower using soda from the minibar. A third recalls inquiring about gym facilities at a big-brand hotel in Ethiopia’s capital, Addis Ababa, only to have an ancient exercise bike dumped at his door. + +Bills can be even scarier than the service. Low supply, high construction costs and power problems push charges at international hotels above $500 per night in certain cities. Even at those prices, the lights can go off. + +Other than housing bigwigs, hotels create employment (more than two direct jobs for every room, one World Bank study reckoned) and support local industries. Africa badly needs more of them. Khaki-clad tourists have been washing up on its shores for generations, but with fewer wars breaking out their numbers are increasing. The UN’s World Tourism Organisation says that 56m holiday-goers visited the continent in 2014. Within 15 years, it predicts that figure will more than double. And although overall regional trade measures a tiddly 12% of the total, airlines now link east and west Africa, so more locals are travelling internally, too. + +Hoteliers are trying to keep up. W Hospitality Group, a Lagos-based consultancy, counts 365 hotels in the African pipeline this year—an increase of almost 30% on the number planned or under construction in 2015. The Hilton is doubling its presence in Africa and AccorHotels, whose brands include Sofitel and Ibis, recently signed a deal to open 50 properties in Angola, which is currently negotiating an IMF bail-out. Nowadays only a handful of Africa’s poorest countries are without big-name hotels. International chains are investing in lower-cost brands, not just watering holes for the rich and famous. Local groups are moving over borders, helped by online booking sites which raise their profile. Azalaï, a Malian company, has bought a string of government-ownd hotels across west Africa. Kenya’s Serena Hotels has 35 destinations in the east and south. + +Occupancy rates are reasonable—and so are profits. But getting a hotel up and running is not easy. There are few acquisition opportunities for existing hotels south of the Sahara, so most chains rely on local investors to work with them to build new ones. Often those are fat-cats or families who lack experience and underestimate the costs, which can stretch as high as $350,000 per room, according to Jones Lang LaSalle, a property group. Because profits are slow to materialise, getting finance is a perennial struggle. Starwood, which runs Sheraton and Westin hotels, reckons it takes twice as long to complete a development in Africa as in the Middle East. Andrei Tomilin, who invests in hotels for the International Finance Corporation, thinks that a “very small fraction” of the promised hotels will ever see a cocktail sipped by their pools. In Lagos’ smartest district, the hulking shell of what was supposed to be a Meridien hotel testifies to the trouble. Work on the huge project ground to a standstill last year after its owner defaulted on payments to his bankers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21697288-africa-needs-decent-hotels-building-them-not-easy-no-room-inn/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Egypt’s prickly president + +Permission to speak, sir + +Abdel-Fattah al-Sisi can’t handle his growing army of critics + +Apr 23rd 2016 | CAIRO | From the print edition + + + +THE table was round, suggesting there might be a discussion. But Abdel-Fattah al-Sisi, Egypt’s president, had no intention of letting his guests speak. For nearly two hours on April 13th he defended his policies before a group of officials and journalists on state television. When he finally stopped, there was applause, then silence. One politician tried to ask a question, but Mr Sisi cut him off: “I did not give permission for anyone to speak.” + +The president must dream of controlling the public in such a way—and oh, how he’s tried, cracking down on civil society and banning protests. But criticism of Mr Sisi has grown louder of late, culminating in a burst of outrage over his decision to cede two uninhabited islands in the Red Sea, called Sanafir and Tiran, to Saudi Arabia. As pressure has mounted, Mr Sisi has looked unsteady. The once-beloved former general appears shocked and angered by the public’s lack of obedience. + +Take the islands, which Mr Sisi claims to be returning to their rightful owner. He is probably right: Saudi Arabia transferred them to Egypt in 1950 for fear that Israel might grab them. But few Egyptians know that. And their return, after months of secret talks, was announced while the Saudi king was in Cairo approving billions of dollars worth of investments in Egypt. So many saw it as a dodgy swap of land for cash, and therefore as an affront to Egyptian national pride. + +The backlash seems to have surprised the president, whose supporters quickly scrambled to justify his actions. Did people not realise that Mr Sisi was their protector, the man who would “remove from the face of the earth” anyone who challenged the state, as he had earlier said? + +All this patronising has not gone over well. On April 15th over 1,000 people gathered in downtown Cairo, in defiance of a ban on protests and in the face of the police. It was the largest demonstration since Mr Sisi took office nearly two years ago. While the islands provided the spark, the protesters aired pent-up grievances ranging from economic mismanagement to abuses by the security services. “I was protesting for too many reasons,” says Shady, a young protester. But the aim was clear: “The people demand the fall of the regime,” went one chant. + +For now, though, Mr Sisi’s behaviour is more likely to result in ridicule than revolution. He has, for example, come up with unorthodox solutions to Egypt’s economic problems, such as suggesting that citizens text the government one Egyptian pound (about 11 cents) each day. The “remedy” for Egypt’s problems is simple, says Mr Sisi: “Don’t listen to anyone but me.” Some observers are drawing parallels with Anwar Sadat, the thin-skinned former president who tolerated the “loyal opposition”, while denouncing the “agitators, traitors and haters who deliberately distort Egypt’s image.” Mr Sisi has condemned “people of evil among us working on sabotaging our achievements by promoting lies”. + +The institution that Mr Sisi trusts most is the army, from which he came. Since taking office, the president has given it control of large projects, such as the expansion of the Suez Canal, and enabled it to crowd out the private sector. He seems to expect the same loyalty from average Egyptians. “But we’re not soldiers,” says Khaled Dawoud, the spokesman for a coalition of opposition political parties. + +Another big protest is planned for April 25th in Cairo. Egypt’s activists, long dormant, appear somewhat renewed. “The spark of the January 25th revolution is still there,” says Mr Dawoud, referring to the uprising that toppled Hosni Mubarak in 2011. “That is something that [Mr Sisi] needs to remember.” But the lesson learned by the president may be that any flicker of opposition must be swiftly snuffed out. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21697280-abdel-fattah-al-sisi-cant-handle-his-growing-army-critics-permission-speak/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Tech startups in Africa + +Africa uber alles + +The potential and pitfalls of African tech innovation + +Apr 23rd 2016 | KIGALI | From the print edition + + + +THE fastest, and cheapest, way to zip around the hilly capital of Rwanda is to catch one of the many motorcycle taxis, or motos, that attract custom by hooting at pedestrians as they drive along. Grab a ride on one and you can nip from one end of Kigali to the other for less than $1. + +Yet catching a ride is a white-knuckle affair. Drivers seldom expect repeat custom so make no effort to be nice (which can be a welcome respite from over-chatty London cabbies). Most want to finish the journey quickly to look for their next fare. So many of them race about the city as if in a grand prix: they speed around blind corners, brake sharply at the very last minute and take off from traffic lights quickly enough almost to unseat an inattentive passenger. + +The solution, according to two entrepreneurs, Peter Kariuki, a Kenyan, and Barrett Nash, a Canadian, is an Uber-style app that not only allows passengers to hail a ride, but also gives them some hope of surviving the journey. Their firm, SafeMotos, insists that taxi drivers own a smartphone, which contains accelerometers that can determine if drivers speed or brake too hard, among other things. The data they collect score the drivers on safety. Only safe ones get business. + +Uber, the car-hailing app valued at $51 billion, and local startups have launched similar motorcycle-taxi services in various countries from Indonesia to Uganda, but SafeMotos is more than just a clone. Whereas in many other countries drivers are comfortable using digital maps on their phones, SafeMoto uses a simpler system: directing drivers via a series of well-known waypoints until they are close to the final destination. + +Yet the experience of SafeMotos also underscores some of the difficulties of establishing tech startups in Africa. Its founders say that the main problem many face is a shortage of skilled coders. There is no real ecosystem of tech entrepreneurs who can bounce ideas around, or inspire bright young people to quit safe jobs in the civil service and start their own companies. + +This is slowly changing. Technology hubs, where startups cluster in shared office space, in Nairobi, Cape Town and Lagos are producing promising companies and attracting international attention. Last year African tech firms raised $186m in funding, says Disrupt Africa, an analyst, and it has finally produced a “unicorn”, or tech company valued at more than $1 billion. Yet plagued by power shortages, expensive and unreliable internet connections, and ruinous bank rates, the continent has a way to go. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21697278-potential-and-pitfalls-african-tech-innovation-africa-uber-alles/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Syria + +Drifting back to war + +Both the partial ceasefire and peace talks are breaking down + +Apr 23rd 2016 | From the print edition + + + +HOW long is a piece of string? That is about as good a response as there can be to the question of when the “cessation of hostilities” in Syria, partial though it was, will be deemed to have broken down entirely. The fighting has abated to a surprising and welcome degree since the ceasefire came into force on February 27th. But violations are now on the increase, which suggests that a new crisis has begun. + +Since the first week in April the Damascus-based regime of Bashar al-Assad has been bombing areas south of Aleppo. They have got away with this in part because the opposition there is dominated by Jabhat al-Nusra, al-Qaeda’s affiliate in Syria, one of the terrorist groups excluded from the ceasefire, along with Islamic State (IS). But recent air strikes have also hit civilian areas there and beyond. On April 19th bombings by Mr Assad’s forces killed 50 people in two towns in Idlib province, including one that is known for its resistance to extremist groups. + +Opposition violence has risen too. On April 18th a group of rebels announced a new offensive in response, it said, to government attacks. That was followed by reports of rebel assaults in Latakia province, a regime stronghold. Rebel mortars and snipers killed at least 16 people in Aleppo over the weekend, according to the Syrian Observatory, a monitoring group. + +Not surprisingly, this has put the kibosh on peace talks in Geneva, which got under way again only this month. The High Negotiations Committee (HNC), the body representing the non-jihadist Syrian opposition, said on April 18th that it was stepping away from the table over the rising violence and also because of the unacceptable proposals for a political solution in the country being discussed. + +These ideas, dubbed “dumb” on Twitter by Robert Ford, a former American ambassador in Damascus, include putting in place three vice-presidents from the opposition to serve under President Assad. Like parliamentarians and other civilian officials, Syria’s deputy presidents have no power compared to that of the president and his security forces. + +Indeed, the flaw in both the ceasefire and the political talks is that they duck the main problem: that it will be hard to find peace in Syria with Mr Assad still in charge. America and the UN have become willing to compromise on Mr Assad’s fate in order to concentrate on IS, despite ever more evidence of industrial-scale torture by the regime, including sodomy, burning using welding torches, and castration that is being documented by the Commission for International Justice and Accountability, an independent investigative body working on Syria. + + + +An interactive guide to the Middle East's tangled conflicts + +Russia, which backs Mr Assad, and America, which nominally backs the opposition, are trying to put things back on track. Both say they will put pressure on the parties to abide by the ceasefire. Both want to see a broader deal, and now. Not only has the war dragged on for five ghastly years, but the American administration will soon change. American and Russia co-operation rests largely on the relationship between John Kerry, the current secretary of state, and his Russian counterpart, Sergey Lavrov. + +Still, Russia is hardly helping. American officials told the Wall Street Journal that Russia is moving artillery units back to the north of Syria, where some Iranian forces have also returned, suggesting preparations to resume fighting. + +The rebels are being squeezed not only by the regime, but also by IS, which is not party to the partial ceasefire. Despite setbacks, such as the loss of Palmyra, IS continues to capture some new territory. It has taken land north of Aleppo, close to the Turkish border, including camps for displaced Syrians. Médecins Sans Frontières, a medical charity, says 35,000 have fled and a total of 100,000 Syrians are trapped between the fighting and the Turkish border, which for months has been closed to all but a few. Peace is as vital as ever, but seems no easier to achieve. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21697157-both-partial-ceasefire-and-peace-talks-are-breaking-down-drifting-back-war/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Israeli politics + +Curtains for Herzog? + +The opposition leader looks doomed + +Apr 23rd 2016 | JERUSALEM | From the print edition + + + +AS IF things could not get any worse for the embattled leader of the Israeli opposition, Yitzhak “Bougie” Herzog, a year on from his general-election loss to Binyamin Netanyahu in March 2015, it has now emerged that he is under investigation for receiving illegal funding in his leadership campaign three years ago. Mr Herzog, who was questioned by police on April 17th, denies any knowledge of such payments. + +But the investigation has put paid to secret talks he had been holding (through intermediaries) to join Mr Netanyahu’s coalition, and has led to calls for Mr Herzog’s suspension from parliament. A coalition position, most likely that of foreign minister, would have proved to be a lifeline for the leader of the Labour Party (the main component of Zionist Union, itself the largest opposition party). He is widely regarded even by his colleagues as incapable of mounting an effective campaign against the prime minister. + +Recent polls, taken before the allegations against Mr Herzog were made public, show Zionist Union at risk of losing a third of its current seats in the Knesset to Yesh Atid, a centrist party headed by Yair Lapid, a popular former talk-show host. Mr Lapid is something of a political lightweight and not considered by many Israelis as a credible candidate for national leadership; but he has succeeded where Mr Herzog has failed in keeping up a constant barrage of criticism of the government. + +Mr Herzog has succeeded in postponing scheduled leadership primaries which he is obliged to call as a result of his loss to Mr Netanyhu; but challengers are already preparing their campaigns. While rivals have yet to declare officially, they already include a number of prominent Labour parliamentarians such as two former party leaders, Amir Peretz and Shelly Yachimovich, as well as a venture-capitalist millionaire, Erel Margalit, and a former commander of the special forces, Omer Bar-Lev. + +In the past 20 years Likud has had only two leaders, Ariel Sharon and Mr Netanyahu, both of whom managed to win elections. Labour has gone through seven in the same period, only one of whom, Ehud Barak, made it to prime minister. Not only has Labour failed to challenge Likud’s dominance of politics; it seems incapable at the moment of presenting a coherent alternative even to other centrist parties that are eating away at its constituency. All this is good news for Mr Netanyahu. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21697243-opposition-leader-looks-doomed-curtains-herzog/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Reunifying Cyprus: You say raki, I say ouzo + +Germany sours on Russia: Fool me once + +Roundabouts: French revolution + +Czech name change: Metamorphosis + +German beer laws: Pure swill + +Charlemagne: Quantum of silence + + + + + +Articles Sections Next + +Reunifying Cyprus + +You say raki, I say ouzo + +Greek and Turkish Cypriots, close to a deal, may yet call the whole thing off + +Apr 23rd 2016 | KORMAKITIS AND NICOSIA | From the print edition + + + +PERCHED on a hilltop a few miles from the sea, the Christian Maronite village of Kormakitis, in Turkish-controlled northern Cyprus, is running out of time. In 1974, when Turkish troops invaded the island following a Greek Cypriot coup, the town was home to some 2,000 people. Today about 110 pensioners remain. They spend their time at the café joking in the indigenous dialect, a blend of Arabic, Aramaic and Greek. Their children, who have moved to the richer Greek part of the island, visit on holidays. A Lebanese priest leads prayers at the newly restored church. Every fortnight a UN convoy arrives from Nicosia, the capital, carrying supplies. + +“There is no work here, no school and no room for investment,” says Napoleon Terzis, who worked in the Greek south as an air-traffic controller before returning to retire. Without jobs, he says, the town, its language and its people, who moved here from Lebanon in the 12th century, all face extinction. Mr Terzis and his friends place their hope in a united Cyprus. + +That prospect may be within reach. Since last year, Nicos Anastasiades, president of the Republic of Cyprus, and his counterpart, Mustafa Akinci, of the self-declared Turkish Republic of Northern Cyprus (TRNC), have met at least 25 times to hammer out a deal. Both sound optimistic. “A solution is possible within months,” says Mr Akinci. + +Analysts agree. The Eurasia Group, a consultancy, estimates the likelihood of a settlement at 60% by the end of 2016. A parliamentary vote in the south, scheduled for May, and a government crisis in the north may delay the talks, but will not scupper them. + + + +Cypriots have been here before. In 2004, on the eve of the island’s accession to the European Union, a UN reunification plan was put to a referendum. Turkish Cypriots voted in favour. The Greek side voted against. Cyprus remained split, with the north recognised by only one country, Turkey. The difference now, says Espen Barth Eide, the UN envoy chairing the talks, is that both sides are on board. In 2004 the then Greek Cypriot president campaigned against reunification. “This time, the deal will be written by Cypriots,” Mr Eide says. + +Officials on both sides say they have made headway in areas including power sharing, property and applying EU law in the north. But the biggest hurdles are ahead. One anxiety is the bill. Compensation for the 160,000 Greek and 40,000 Turkish Cypriots forced to abandon their homes in 1974 will cost billions of euros. “There’s no way the international community will offer that kind of money,” says Fiona Mullen, head of Sapienta Economics, a Nicosia-based consultancy. The south, still convalescing from a banking crisis and a €7.3 billion ($8.3 billion) bail-out, cannot take on much more debt. + +But concerns about money are also driving the talks forward. A settlement could add almost 3 percentage points to the country’s annual growth rate over the next 20 years, says a report by the Peace Research Institute Oslo (PRIO). For the south, reunification would mean access to the $800 billion Turkish market, as Turkey does not recognise the republic. For the north, it would be a chance to tap EU funds and revamp an economy that now subsists on tourism, casinos, strip clubs and a bloated public sector bankrolled by Ankara. Cypriots on both sides know that a deal might be their only chance to market the island’s plentiful offshore gas deposits. + +Reminders of old grievances abound. Near a crossing on the southern side of the UN buffer zone, photos document the killing of a Greek Cypriot protester by Turkish ultranationalists. On the northern side, a sign bears the words “Turkish Republic of Northern Cyprus—Forever”. + +It will take more than a peace settlement to compel Greeks and Turks to live as neighbours again. “People cannot imagine going back to their old homes,” says Cevdet Ozguler, a Turkish Cypriot who fled his village in the south after the war. “They would rather stay where they are and seek compensation.” Even when unified, the island will remain a loose federation divided on ethnic lines. + +For many Greek Cypriots, anything short of a complete withdrawal of the 40,000 Turkish troops stationed in the north would be a deal-breaker. That gives Turkey and its president, Recep Tayyip Erdogan, a veto over the talks. Turkey has publicly backed a settlement. Buffeted by IS suicide bombings, a Kurdish insurgency, a row with Russia, and nearly 3m refugees, Mr Erdogan’s government might be glad to take at least one longstanding conflict off the table. It could also use the $1 billion it spends each year on the TRNC. + +Yet Mr Anastasiades and Mr Akinci both say time is working against reunification. Young Cypriots, accustomed to life on a divided island, are drifting further apart. In Kormakitis, the sense of urgency may be even greater. Without a solution, the town’s children and grandchildren may never come back, frets Mr Terzis, as he drinks coffee beneath portraits of Lebanese politicians and Catholic popes. “We do not want to be the last generation.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21697230-greek-and-turkish-cypriots-close-deal-may-yet-call-whole-thing-you-say-raki-i-say/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Germany sours on Russia + +Fool me once + +Germany’s establishment once believed in conciliation with Russia. No longer + +Apr 23rd 2016 | BERLIN | From the print edition + + + +IN HER colourless suit, Angela Merkel looked like a grey mouse, too ashamed to face the German public after her cowardly decision to permit investigation into a comedian who had insulted the Turkish president. She is the epitome of hypocrisy and double standards. Her migration policy is an act of political suicide which has empowered Germany’s fascist right...and so on, and so forth. This was the sneering tone with which Russia’s state television channels portrayed Germany’s chancellor last week. No other post-communist German leader has come under such fire from the Russian propaganda machine. + +Only a few years ago Russians saw Germany as one of their closest allies. Opinion polls show they increasingly see it as an enemy. In contrast to Gerhard Schröder, the former German chancellor who now lobbies for Mr Putin, Mrs Merkel has become a steadfast ideological opponent. She has taken a firm stand against Russian aggression in Ukraine, and the campaign of lies deployed to legitimise it. According to one of Mrs Merkel’s aides, Mr Putin’s mendacious denials that the “green men” who seized Crimea were Russian soldiers were a turning point for her. In turn, it is Mrs Merkel’s adherence to principle that makes her so alien to the Kremlin, which operates in a postmodernist world where truth and facts do not apply. + +Mr Putin excels at exploiting other countries’ weaknesses. The Kremlin is now working hard to exacerbate the political damage done to Mrs Merkel by her policy of openness towards refugees. “Putin tries his best to topple Merkel, and he has a lot of instruments at his disposal,” says Stefan Meister, a Russia expert at DGAP, a think-tank in Berlin. + +One of these instruments is television, aimed at both the domestic audience and native Russian speakers elsewhere, including 3m in Germany. In January Russia’s Channel One aired a story about a 13-year-old Russian-German girl allegedly gang-raped by a group of immigrants in Berlin. The report sparked large protests in Germany by ethnic Russian-Germans and anti-Muslim activists. German police soon learned that the story was false, but Russian television continued to report it. Russia’s foreign minister, Sergei Lavrov, even accused Germany of a cover-up. + +The flagrant deceit of the so-called “Lisa affair” shocked the German public. Russia had employed similar disinformation tactics in the war against Ukraine, but never in Germany. “The Russians went too far,” says Mr Meister. “They have largely lost the German establishment.” + +“I used to see Russia as a strategic partner and competitor,” says Roderich Kiesewetter, an MP from Mrs Merkel’s Christian Democratic party (CDU). “Now it has become a potential enemy.” Even proponents of Ostpolitik, Germany’s traditionalpolicy of accommodation with Russia—mainly members of the centre-left Social Democratic Party (SPD), the junior partners in government—felt let down. Remaining Russia sympathisers such as Alexander Rahr, director of the German-Russian Forum in Berlin, are left appealing to his country’s deep-rooted fear of war. “The most important issue at the moment is not Ukraine, but preventing a third world war,” says Mr Rahr. + +Russia once counted on business ties with Germany to secure the relationship. It miscalculated. Among Germany’s trade partners, Russia ranks below the Czech Republic. Before the EU’s Ukraine-related sanctions, Russia accounted for 4% of German trade; that has fallen to 2.4%. “Our overriding goal is to show that we will not accept violations of the post-war order,” says Markus Kerber, director of BDI, a business association. + +The Kremlin has also tried courting the SPD to split Germany’s governing coalition. Sigmar Gabriel, the SPD leader, was received in Moscow by Mr Putin last autumn to agree on the construction of Nord Stream 2, a gas pipeline that would circumvent Ukraine and the Baltic states. The EU may block the deal; privately, Mrs Merkel “would be happy to see the project fold”, says one of her advisers. + +More important is the roll-over of sanctions in July. Getting them removed would be a victory for Mr Putin and a defeat for Mrs Merkel. But Frank-Walter Steinmeier, the foreign minister and member of the SPD, has advocated more diplomatic co-operation with the Russians, arguing that without them “none of the major international conflicts can be solved” (eliding the point that Russia causes many of those conflicts in the first place). + +Mr Putin cultivates links with parties on both the extreme right and the extreme left. One ally is the right-wing Alternative für Deutschland (AfD) party. Another is the ex-communist party, Die Linke. Many supporters of the xenophobic Pegida movement are also pro-Putin. At anti-immigrant rallies last year in Dresden, where Mr Putin was stationed as a KGB officer in the 1980s, demonstrators waved Russian flags and chanted “Help us, Putin.” Russian propaganda activities in Germany have prompted the BND, Germany’s security service, to launch an investigation. + +Yet Mrs Merkel has come to see that Mr Putin’s antipathy to her stems from weakness rather than strength. In a storied encounter with the chancellor a decade ago, Mr Putin, aware of Mrs Merkel’s fear of dogs, brought his black Labrador into the room. Mrs Merkel froze; Mr Putin smirked. A fluent Russian-speaker brought up in East Germany, the chancellor understood Mr Putin’s language. “I understand why he has to do this—to prove he’s a man,” she told a group of reporters afterwards. “Russia has nothing, no successful politics or economy. All they have is this.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21697236-germanys-establishment-once-believed-conciliation-russia-no-longer-fool-me-once/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Roundabouts + +French revolution + +Invented in Britain, modern traffic circles invade France’s hexagon + +Apr 23rd 2016 | CORMEILLE-EN-PARISIS | From the print edition + +The rond-pointlessness of existence + +A TRAFFIC intersection may not seem an obvious subject for metaphysical reflection. But in France, few aspects of life escape philosophical investigation. Now it is the turn of the roundabout, a humble road-junction improvement which is invading the French landscape and unsettling the order of things. Uncommon in France a generation ago, they number some 30,000 today—more than in Britain, which invented the modern version—and an estimated 500 more are built each year. According to a French radio programme, they are not merely a tool for traffic management and road safety, but “an example of when the absurd becomes banal.” + +It was a French town planner and architect, Eugène Hénard, who in the early 1900s invented what is officially known as a carrefour giratoire (gyratory crossroad). New York built the first, Columbus Circle, in 1905. Two years later, Hénard installed his version in Paris, designed to circumnavigate the Arc de Triomphe from the star of avenues that lead to it, which were laid out by Baron Haussmann in the mid-19th century. To this day, this form of traffic circle obliges vehicles already circulating to give way to those approaching, in line with the French rule of giving priority to cars coming from the right. The modern roundabout, by contrast, pioneered by British traffic engineers, forces vehicles approaching from an access road to await a gap in circulating traffic. + + + +Why have the French become such roundabout enthusiasts? The main reason is road safety. In America, for instance, which has a mere 4,800 roundabouts, a quarter of all road deaths take place at intersections. America’s Federal Highway Administration, which helpfully supplies a “roundabouts outreach and education toolbox” to overcome public distrust, says that they reduce deaths or serious injuries by around 80%, compared with stop signs or traffic lights (see chart). + +France has other reasons for roundabout mania, too. The country prides itself on its public infrastructure: the National School of Bridges and Roads, founded in 1747, remains one of the more prestigious engineering schools. Another is the opportunity roundabouts afford to indulge the national obsession with municipal gardening. At Cormeille-en-Parisis, in the Paris suburbs, two brand-new roundabouts on near-empty roads are already neatly planted with tulips, spring blooms and whispery architectural grasses. + +Indeed, roundabout decoration has turned some intersections into art statements for French mayors, who began spending heavily on such matters after gaining decentralised powers in the 1980s. (Local-authority spending has risen faster than any other public spending over the past decade.) The mayor of La Haye-Fouassière, in western France, says that his roundabout installation—a hovering spaceship—has singlehandedly made a name for the town. Roundabout kitsch has proliferated; another radio station last month ran a competition to select the nation’s ugliest. The top three included a giant mustard-yellow arm (Châtellerault), pictured above, and a colossal red sausage and doughnut (Montpellier). + +Some venture deeper explanations. Motoring along French national roads, Michelin touring guide in hand, used to involve regular stops at traffic lights; now, constant movement prevails. “The roundabout has accompanied the development of the fluid society,” suggests Laurent Devisme, of the National Architecture School in Nantes. Like modern life, it requires “judgment, anticipation and commitment”. Kevin Beresford, founder of Britain’s Roundabout Appreciation Society, says the French may like the roundabout’s “zen-like” quality: calm, order and civility, in contrast to the authoritarian traffic light. Others still point to the roundabout’s sense of the absurd, ingrained in the French mind thanks to the final scene of Jacques Tati’s “Playtime”, a film made in 1967. His rond-point turns like a fairground carousel, and a metaphor for life: cars are set in perpetual circular motion, devoid of jams, but heading nowhere. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21697235-invented-britain-modern-traffic-circles-invade-frances-hexagon-french-revolution/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Czech name change + +Metamorphosis + +The Czech Republic awakens to find itself transformed into Czechia + +Apr 23rd 2016 | PRAGUE | From the print edition + + + +SOME countries change their names for ideological reasons (the Soviet Union), some as part of a break-up (Bangladesh) and some on a dictatorial whim (Myanmar). It is a bit of a relief that the Czech Republic wants to change its name—or rather, the way it is referred to in English—simply for stylistic reasons. On April 12th the country’s foreign minister, Lubomir Zaoralek, gently suggested that English-speakers should begin referring to it as Czechia. + +The new moniker is backed by the cabinet and the president, Milos Zeman. Wiseacres noted that it might have been better to have made the decision earlier: the uniforms for the athletes competing in this summer’s Olympics are already emblazoned with the name Czech Republic. + +The announcement caused some backlash and a fair bit of confusion. Czech leaders insist that the country’s full official name is not changing: they are merely requesting that the United Nations register Czechia as an official shortened name (like “Russia” for “the Russian Federation”). Mr Zaoralek says the shift is meant to prevent future “distortions and misspellings”. But the underlying argument is that Czechia is just a little more modish. + +“It is short, and very similar to the name used in other languages,” says Lubos Motl, a physicist and longtime advocate of the change who, in addition to being a leading expert on string theory, claims to be the world’s foremost modern user of the name Czechia. Yet even Mr Motl admits he does not understand “why exactly this happened now”. + + + +Czechia can be seen as a literal translation of Cesko, which entered into common use after the 1993 break-up of Czechoslovakia, though some historians argue it dates back as far as 1634. Mr Zeman has long advocated its use. Supporters say it is analogous to the shortened names used for other countries (France, after all, is officially “the French Republic”), and note that it is closer to the names used in most Romance and Germanic languages, as well as Hebrew. Even the New York Times used Czechia once, in 1925. + +But Czechs seem less convinced. A 2013 survey by Mlada Fronta Dnes, the country’s leading daily, found 73% opposed to Czechia. The antipathy may reflect long-standing mixed feelings towards Cesko. Back in the 1920s, the writer Karel Capek said Cesko was “not musical”; for foreigners “it even sounds a little facetious.” Czechoslovakia’s first post-communist president, Vaclav Havel, said it evoked images of “crawling slugs”. More important, the word reminded him of the break-up of Czechoslovakia, which he opposed so strongly that he briefly resigned as president, returning as the first president of the Czech Republic. + +During the break-up, as now, several names were suggested, but many came with baggage. Some Czechs would prefer a name referring to the country’s two main regions, Bohemia and Moravia. But that would bring up unpleasant memories of the Protectorate of Bohemia and Moravia, the name by which German-occupied territory was known in the Nazi era. + +It is not yet clear whether Czechia will be widely embraced. Karla Slechtova, the regional development minister, has suggested holding a referendum on the name. Adding to the confusion, the “Cz” spelling used in English comes from Polish, not Czech. It may have been adopted as a result of the influx of Jews from Poland to the anglophone world in the 19th century. + +In short, while adopting Czechia in the English-speaking world would be an improvement, its spelling is essentially a mistake. But Mr Motl, who taught at Harvard University from 2004 to 2007, thinks that a small country may have to put up with a certain amount of ignorance on the part of foreigners: “I am used to the fact that people in America, for example, don’t know anything about us.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21697158-government-prefers-english-version-name-reminded-vaclav-havel-crawling/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +German beer laws + +Pure swill + +A half-millennium of regulated brewing leaves a hangover + +Apr 23rd 2016 | BERLIN | From the print edition + +No mere alcoholic malt drink + +WITH films, exhibitions and a commemorative stamp, Germany is marking the 500th anniversary on April 23rd of an event considered central to the national identity. It is not Martin Luther’s nailing of his 95 theses to a church door in Wittenberg—that anniversary falls next year. Rather, it is the passing of a law concerning beer by two Bavarian dukes, Wilhelm IV and his brother Ludwig X. Henceforth, they decreed, brewers in Bavaria were to use only three ingredients: water, barley and hops. (They did not yet know about yeast, which occurs naturally in beer but was officially permitted as an additive only later.) + +Subsequently dubbed the Reinheitsgebot, or “German beer purity law”, the regulation spread. Otto I, a Bavarian prince who became king of Greece in the 19th century, subjected his new country’s brewers to its stringent rules (becoming perhaps the first German to impose austerity on the Greeks). Other German regions adopted it after unification in 1871, and from 1906 the whole of Germany did. Today the Reinheitsgebot—which governs lagers but is more relaxed for top-fermented ales—is in effect a marketing tool for the country, a liquid extension of “Made in Germany”. + +But the purity law was always an impostor. True, nasty things could be found in 16th-century swill, from traces of chalk and pitch to ox gall. But the primary purpose in 1516—as with many regulations today—was market-rigging and protectionism. By excluding wheat and rye in beer, the law aimed to keep grain prices low for bakers. It also kept out northern German and foreign beers that contained other ingredients. (That bit, at least, has been rectified: in 1987 the-then European Economic Community ruled that brews produced abroad and not compliant with the purity law may be sold as beer in Germany.) + +The law’s real victim is variety. Germany makes some fantastic beers, of course. Connoisseurs such as Johannes Tippmann, a scholar of brewing at the Technical University of Munich, reckon that more than 3,500 different compliant beers are made today, and more than 1m variants could be made just by tweaking the mineral content in the water, the type of yeast and so forth. + +But the prevailing view is that the purity law has stifled German beer innovation. Nimble craft breweries in California and makers of lambic beer in Belgium—fermented by exposure to local and wild yeasts and bacteria—have left the Germans in the foam. While foreigners can experiment with spices, fruits and much else, most of Germany’s 1,388 breweries must stick to their four traditional ingredients if they want to call their product “beer” (as opposed to, say, “alcoholic malt drink”). + +That helps explain why Germans are increasingly turning to wine. At reunification in 1990, annual beer consumption per head was 148 litres. By last year it had fallen to 106. The Oktoberfest may still be the quintessential German party. But it’s not the beers that make it exciting. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21697256-half-millennium-regulated-brewing-leaves-hangover-pure-swill/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Quantum of silence + +Europe and Russia no longer know how to talk to each other. That is dangerous + +Apr 23rd 2016 | From the print edition + + + +AS ANY fan of action movies knows, the best way to keep a madman from executing a dastardly plan is to keep him talking. The distraction buys time to save the hostage or defuse the bomb. With luck, you might persuade the villain that violence is against his own interests. This, more or less, is the approach adopted by some European countries towards Russia. Vladimir Putin appears to have lost any interest he once had in a rapprochement with the West, and in the east of Ukraine the bullets still fly. But, the thinking runs, an isolated Russia could turn yet more unpredictable and dangerous. Better, surely, to talk. + +The trouble is finding things to talk about. NATO suspended all co-operation with Russia after its annexation of Crimea and invasion of Ukraine. This week the NATO-Russia Council, a forum set up in 2002 to build mutual trust, met for the first time since June 2014 after prodding from the Germans and French, as well as Jens Stoltenberg, the alliance’s secretary-general. But with so much separating the two sides—over Ukraine, NATO’s plans to station more troops on its eastern flank, even the accession of tiny Montenegro—it was a predictably flat affair. + +That is worrying enough. But military officials’ nerves were further jangled last week by incidents in the Baltic Sea: Russian warplanes buzzed an American destroyer and performed aerial acrobatics over a reconnaissance plane. John Kerry, America’s secretary of state, said the ship would have been within its rights to open fire. Last November Turkey, a NATO member, did just that to a Russian plane that had entered its airspace. A similar incident on NATO’s eastern flank, particularly if it involved American forces, would make Europe’s other crises look like child’s play. + +To reduce the chance of a nasty accident, the European Leadership Network (ELN), a London think-tank, has been urging NATO and Russia to negotiate a memorandum of understanding on how to conduct themselves in emergencies. But that assumes a willing partner on the other side. Russia has shown little interest in Mr Stoltenberg’s plan to modernise the Vienna Document, an ageing agreement on military transparency and information exchange. The problem, says one senior Western official, is that Russia sees value in behaving unpredictably, perhaps in part to compensate for its disadvantage in conventional forces. + +This is of a piece with Russia’s general diplomatic stance. Behind closed doors Russian diplomats are increasingly boorish, say their Western counterparts. They particularly enjoy the spectacle of the EU ripping itself apart, from the refugee crisis to the looming Brexit vote. Some Western military types are nostalgic for the later part of the cold war, when American and Soviet officials worked out mechanisms to avoid military accidents. Today such arrangements have largely vanished. + +Where does that leave Europe? Its diplomats abhor a vacuum, and from time to time a proposal to “engage” Russia on this or that dossier, from cyberterrorism to climate change, wafts vaguely out of some European foreign ministry. Grand ideas, such as formalising the European Union’s relationship with the Eurasian Economic Union, a Kremlin-backed regional vanity project, have not yet died. But such schemes rarely amount to much. + +That is partly because of splits among, and within, EU countries: according to one source this week’s talks were held largely to placate German Social Democrats in whom vestiges of the old Ostpolitik linger (see article). Russia’s military exploits in Ukraine and Syria have left Europe to wonder where it will point its guns next (perhaps Libya). Kremlin-backed media spew anti-Western vitriol. Russia disdains NATO and the EU, preferring to deal with the United States on military matters and Germany on most political ones. + +And so Europe’s Russia policy has been whittled down to the periodic drama over renewing sanctions—the latest round expires in July—plus exercises to improve resilience at home. These include improving energy flows across the continent, countering Kremlin propaganda and helping weak non-EU states like Moldova. Despite the “sanctions fatigue” of Italy and a few other countries, the measures will probably be maintained at June’s summit of EU leaders: Mr Putin has supplied few reasons to relax them. + +Russia’s insistent provocations also explain NATO’s plans to station around 5,000 more troops in the Baltic states, Poland, Bulgaria and Romania, a decision likely to be formalised at a summit in Warsaw in July. The alliance will get around the ban on “permanent” bases enshrined in the 1997 NATO-Russia Founding Act by regularly rotating its troops. That should placate a sceptical Germany, but will hardly satisfy the Kremlin. Last week Alexander Grushko, Russia’s ambassador to NATO, told reporters that NATO’s actions contradicted the principles and logic of the act. + +No country for bold men + +Together this presents a puzzle, for any political attempts by Europe to lower the temperature with Russia will be cancelled out by the stepped-up troop presence. Mr Putin, the provoker-in-chief, will declare this a grave provocation. To Russian ears, NATO’s repeated insistence that its actions pose no threat sound like a textbook case of protesting too much. There may be more close calls in the run-up to the Warsaw summit, and more arms piled into Russia’s military exclave of Kaliningrad, nestled between Poland and Lithuania. That in turn will unnerve NATO’s eastern members further. Thus does the negative spiral continue. + +It is the Russian president who faces the worse predicament. Russia’s creaking economy can no longer deliver the rising living standards that were once the basis of the compact between state and citizen, and the Kremlin’s adventurism abroad has a limited shelf life. In cheap action films the bad guy is taken out by force. In the better sort, he falls victim to his own hubris. The great risk, though, is that Europe and Russia find themselves in a film noir, where the villain’s plot fails but takes everyone down with it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21697239-europe-and-russia-no-longer-know-how-talk-each-other-dangerous-quantum-silence/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +America and Brexit: More special in Europe + +Britain in Iraq: The beginning of the end + +Queen Elizabeth at 90: Long to reign over us + +Brexit brief: The ins and the outs + +Scottish languages: To speak in tongues + +Brexit and the young: Turning out the teens + +Nuclear energy: Is smaller better? + +Bagehot: B for Brexit + + + + + +Articles Sections Next + +America and Brexit + +More special in Europe + +As Britain’s EU referendum nears, Barack Obama joins the Remain campaign + +Apr 23rd 2016 | From the print edition + + + +WHEN people wheel out the old quotation by Dean Acheson to the effect that Britain had lost an empire and not yet found a role, the rest of his speech is often forgotten. Acheson, who was President Truman’s secretary of state, went on to say that Britain’s attempt to play the part of a world power aloof from Europe by leveraging its “special relationship” with America was almost “played out”. That was in 1962. More than 50 years later, those pushing for Britain to vote on June 23rd to leave the European Union are still in denial. + +On April 22nd Barack Obama will be in London to tell people arguing for Brexit, as politely as he can, that they are mad, and that if Britain wants to retain much influence in the world, let alone a special relationship with America, it must stay in the EU. Jeremy Shapiro of the European Council on Foreign Relations, a think-tank, puts it starkly: “Britain can be a geopolitical actor within the EU or it can be a geopolitical irrelevance outside it.” + +Mr Obama will not go that far, but last year he told the BBC that Britain’s place in the EU was a cornerstone of post-war peace and prosperity. He added: “We want to make sure that the United Kingdom continues to have that influence.” There is much at stake for America too if the British people choose not to listen. + +For Mr Obama this is a farewell visit to an old ally and a chance to have lunch with the queen, who will just have celebrated her 90th birthday (see article). But he might have skipped it were it not for the looming referendum. Shocked by the near break-up of Britain in 2014 when the Scots came closer than expected to voting for independence—a triumphant Scottish Nationalist Party would have closed the nuclear-submarine base at Faslane, with worrying implications for NATO—Mr Obama has decided to speak his mind. + +NATO and the EU (and its previous incarnations) have been the basis of America’s post-war engagement in Europe. The EU may be unexciting, with confusing institutions and rules, but seen from Washington, it has been a huge success. + +In the first place it has helped to stop Europeans killing each other and thus reduced the need to send American armies across the Atlantic to fight. More recently, it provided both an example and magnet for the countries of the former Soviet empire. The EU’s important part in ending the cold war on Western terms, and its setting of democratic norms and values for aspirant members from the east, has been of incalculable benefit to America. + +It is to Europe that America turns when something needs doing in the world that it either cannot or does not want to undertake alone. Its first port of call is still likely to be NATO. But it was the EU’s embargo on Iranian oil exports rather than American sanctions that brought Iran to the negotiating table and paved the way for the recent nuclear deal. It is EU sanctions on Russia that have substantially raised the costs of Moscow’s aggression in Ukraine. It is to the EU that America looks as a main partner in the fight against jihadist terrorism. + +If the EU is a critical part of the West’s security architecture, it is even more fundamental for world trade. Should the negotiations between America and the EU to establish the Transatlantic Trade and Investment Partnership (TTIP) succeed, it will be the biggest bilateral trade deal in history. The TTIP has its opponents on both sides of the Atlantic, but the gains are worth having. A study by the Centre for Economic Policy Research estimated possible benefits at up to €119bn ($134bn) a year for the EU and €95bn for America. A British government report suggested a gain for Britain of £100 billion ($144 billion) over ten years. + +From the outside in + +Without Britain’s free-trading tradition and voice in the EU it is unlikely that the TTIP would have got this far. Were Britain to leave, it could deal a mortal blow to the treaty. If it still went ahead, Britain would find itself looking forlornly in from the outside. “I imagine the White House is absolutely bewildered by the proposal to leave,” says Dana Allin of the International Institute for Strategic Studies, a think-tank. + +All Britain’s allies and friends outside Europe are at least as flummoxed. The other Anglosphere countries (Canada, Australia and New Zealand) are horrified. It matters less to them, but the Indians and the Japanese, who are big investors in Britain, are quietly dismayed. India’s prime minister, Narendra Modi, says he sees Britain as “our entry point into the EU”. Even China hopes Britain will stay in. Only Russia’s Vladimir Putin is cheering the Brexiteers. + +Mr Obama’s concerns go beyond a Britain intent on self-harming. He fears the smouldering forces of nativism, populism and isolationism could be ignited across Europe by Brexit. The long euro-zone crisis has left raw scars, while the massive inflow of migrants from the war-torn Middle East is creating new divisions and anxieties. + + + +In graphics: A guide to “Brexit” from the European Union + +In Washington’s view, the last thing Europe needs is for Britain to give its foundations a further hefty kick. As David Miliband, a former British foreign secretary, put it: “Brexit would be an act of arson on the international order.” Brexit on its own might not be a catastrophe for America, says Mr Allin, “but it could be a stage in the unravelling of the Western liberal order.” No wonder Mr Obama is worried. + +Leaders of the Leave campaign—including the mayor of London, Boris Johnson—have got their retaliation in first, calling Mr Obama’s anticipated pro-EU message “hypocritical” because America would never consent to pool its sovereignty as Britain must do in the EU. Mr Johnson, who hopes to become prime minister should Brexit win and David Cameron fall, appears not to have heard of NATO, which obliges America to go to war should any other member be attacked. On April 20th, when eight former American treasury secretaries described Britain’s departure from the EU as a “risky bet” that would jeopardise the City’s role as a global financial centre, their advice was derided as an attempt to belittle Britain’s place in the world. + +How much a warning from Mr Obama will pierce voters’ consciousness is hard to gauge. He is more popular in Britain than he is at home, especially with the young. If Mr Obama talks frankly about the perilous future of Britain’s trading relationships, and the weakness of its negotiating hand should it stand alone, he may hit home. + +As for the special relationship, Britain will continue to be an important security partner for America because it has the biggest defence budget in Europe and the most deployable armed forces. The unique intelligence relationship will also endure, although it will have less value to America if Britain is excluded from EU information-sharing arrangements. + +But so much of the case for Brexit is built on the idea that a buccaneering Britain would forge wonderful new partnerships with powerful and dynamic countries outside Europe. When Britain’s oldest and closest partner says, sorry, you won’t be nearly so interesting to us in the future if you take this step, that idea crumbles. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21697251-britains-eu-referendum-nears-barack-obama-joins-remain-campaign-more-special-europe/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Britain in Iraq + +The beginning of the end + +The interminable Chilcot inquiry into the Iraq war is on its last lap + +Apr 23rd 2016 | From the print edition + +The dust begins to settle over Britain’s involvement in Iraq + +ALMOST seven years after the announcement of the Iraq Inquiry by Gordon Brown, then prime minister, the completed report of the committee led by Sir John Chilcot was delivered into the hands of a team of Whitehall officials and spooks this week for national-security vetting. Mr Brown’s successor, David Cameron, hopes they will complete their checks on a document the size of 15 chunky novels within two weeks. + +John Penrose, the Cabinet Office minister in charge of shepherding the report through to publication, reassured MPs on April 14th that nothing would be censored to save ministers or officials from embarrassment. Its long-awaited release is likely to be soon after, rather than before, the EU referendum on June 23rd. + +Sir John and his committee have been the butt of much criticism, including from Mr Cameron himself, for the time they have taken to complete their work. They are accused of failing to respect the desire of families who lost loved ones to learn what happened and put it all behind them. That was never the purpose of the report. It was intended to provide a complete record of Britain’s involvement in Iraq from mid-2001 to 2009, two years after British forces ignominiously pulled out of Basra. It is hoped that future governments will be able to draw lessons from it. + +One reason why the report has taken so long is the amount of material that had to be gathered and examined. To draw defensible conclusions and make recommendations that will be heeded, an inquiry has to show that it has left no stone unturned and has weighed the evidence objectively. + +Another is the need for fairness. Inquiries of this kind are set up on the assumption that some people made mistakes or behaved badly. Those whose reputations may be damaged by its conclusions must be allowed to see and respond to the case against them. Some accuse individuals including Tony Blair, the prime minister who took Britain into Iraq, of using the process both as a delaying tactic and as a way to deflect or dilute criticism. Mr Blair strongly denies such charges. The responses of some others were worth the wait as they made a positive contribution to the report. + +A third reason for the almost interminable wait is the need to negotiate with other governments, particularly America’s, before making public material they regard as sensitive or confidential, such as the undertakings made by Mr Blair to President George W. Bush in private conversations. Britain’s military and intelligence relationship with America, however awkward at times, remains the cornerstone of British security. An agreed path through this diplomatic minefield had to be found. + +Sir John hopes that when people see the comprehensiveness of the inquiry they will understand the time it has taken. The reality is that it can only disappoint many of those who have been demanding its publication most stridently. They will be satisfied only when Britain’s role in the war has been officially declared illegal and Mr Blair is convicted as a war criminal. Neither is imminent. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21697250-interminable-chilcot-inquiry-iraq-war-its-last-lap-beginning-end/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Queen Elizabeth at 90 + +Long to reign over us + +Familiarity with this long-serving monarch has not bred contempt + +Apr 23rd 2016 | From the print edition + + + +THE queen celebrated her 90th birthday on April 21st and notched up her 23,451st day on the throne. While other monarchs succumb to the Grim Reaper or the discreet charm of retirement, she remains a firm fixture on the list of the world’s most durable rulers. Only Thailand’s King Bhumibol Adulyadej has been calling shots for longer, and that is because he ascended the throne as a teenager (see chart). + +The queen and her British subjects have had their fallings-out—most notably when many thought the queen insufficiently moved by the death of the “people’s princess”, her daughter-in-law Diana. These are now behind her. Polling by Ipsos-MORI this month shows that the older she gets, the less people want her to retire. Belief in the monarchy as an institution remains strong: 76% of respondents think Britain should continue with a king or queen as head of state, up from 65% in 2005. When the explicit alternative is an elected president, 86% think so. + + + +The queen at 90: And a ranking of other crown-clutching monarchs + +Outside Britain the queen is head of state in 15 countries. There the picture is more mixed. Australians like “Lizzie” better as she ages, it seems, and jolly visits from Princes William and Harry have no doubt helped. The desire for a republic down under has dropped from over two-thirds in 2010 to less than half. New Zealanders too are disinclined to replace their British sovereign. Polls show Canadians are cooler, especially towards the queen’s heir, Prince Charles. + +It is in the West Indies that republicanism is brewing. On April 14th the governor-general of Jamaica announced that a constitutional amendment to make the island a republic was on the agenda. The prime minister of Barbados is thinking along the same lines as his country approaches the 50th anniversary of its independence from Britain in November. One thing seems clear: when the queen eventually slips off the list of long-serving royals, her successor will have fewer crowns to juggle. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21697258-familiarity-long-serving-monarch-has-not-bred-contempt-long-reign-over-us/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit brief + +The ins and the outs + +Britain has the best of both worlds + +Apr 23rd 2016 | BRUSSELS | From the print edition + + + +IT HAS been a busy week for Britain’s Treasury. On April 18th its study of the costs and benefits of European Union membership concluded that Brexit could reduce GDP after 15 years by as much as 6.2%. George Osborne, the chancellor, called Brexiteers who claimed there would be no costs in leaving “economically illiterate”. Yet his bigger concern over Britain and the EU is not economic: it is whether the euro zone might unfairly discriminate against non-euro countries like Britain. + + + +Mr Osborne put this issue at the heart of the government’s effort to renegotiate its EU membership. Since November 2014 the 19-member euro zone has in itself constituted a “qualified majority” that can, in theory, take decisions without consulting the nine non-euro countries. Before then, in January 2014, Mr Osborne warned that, if non-euro countries felt their interests were not protected, they would “have to choose between joining the euro, which the UK will not do, or leaving the EU”. + +At a Brussels summit in February, Mr Osborne’s boss, David Cameron, won several concessions. One was recognition that the EU has more than one currency. Next was an undertaking that the euro zone would not damage the wider 28-strong single market—although in return non-euro countries promised not to obstruct deeper euro-zone integration. He also secured the right to appeal to a full EU summit against euro-zone decisions that Britain disliked. And he won acceptance that, within broadly agreed boundaries, the British could apply their own detailed rule book when regulating financial services. + +Mr Cameron hailed this deal as giving Britain the “best of both worlds”. It is in the single market but not the euro (and so liable for euro-zone bail-outs), just as it is in the EU but not the Schengen passport-free zone (with its refugee crisis). Many in Brussels reckon Britain frets too much about the euro zone ganging up on non-euro countries. The top official working for the euro group of finance ministers says that, far from forming a rapacious caucus eager to do down non-members, his political masters find it hard to agree on anything. One observer, Iain Begg of the London School of Economics, also argues that the British fear is more theoretical than real. + +Yet the Treasury points to cases where British interests have been overlooked. The European Parliament imposed an EU-wide ban on excessive bankers’ bonuses. Several euro-zone countries are trying (so far unsuccessfully) to impose a financial-transactions tax. The European Central Bank sought to stop the clearing and settlement of euro transactions in London, though the British successfully challenged this in court. Last summer euro-zone ministers used an EU-wide rescue fund to help Greece despite promising not to (later they agreed to cover any losses by Britain and other non-euro countries). + + + +In graphics: A guide to “Brexit” from the European Union + +So British concerns over euro-zone caucusing may not be wholly hypothetical. Many on the continent resent the dominance of London as Europe’s financial centre and would like to grab some of its business. They are also clear that they cannot allow Britain a veto over financial regulation, as they showed when they sidestepped an attempt in December 2011 by Mr Cameron to block a fiscal treaty unless he was given just such a veto. And they do not want to extend the “double majority” mechanism of the London-based European Banking Authority, whose decisions require the approval of majorities of both euro and non-euro countries. + +Will Mr Cameron’s deal safeguard British interests? Only time can tell, but there are reasons for moderate optimism. One is that the EU will have many non-euro countries for years to come. The Poles, Swedes, Danes, Hungarians and Czechs seem in no hurry to adopt the single currency. A second is that, for all the talk in Brussels of another leap forward in euro-zone integration with a euro-zone finance minister, a common budget and mutually backed Eurobonds, there is as yet no agreement on any of it. The Germans remain hostile to anything that could be seen to turn the monetary union into a “transfer union”. + +And third there are the February concessions, which will be written into the EU treaties. They should make it harder for the euro zone to dictate terms to non-euro countries, even if Britain feels increasingly uneasy as more join the euro. The paradox is that, although this may be the most important part of the renegotiation, it is the hardest to explain to voters—and so barely features in the referendum campaign. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21697253-britain-has-best-both-worlds-ins-and-outs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Scottish languages + +To speak in tongues + +Gaelic is making a comeback + +Apr 23rd 2016 | INBHIR NIS AND DOOLISH | From the print edition + + + +TRAVELLERS at the airport in Inverness navigate a revolving door adorned with posters urging them to teach their children Gaelic. “Being bilingual is magic! Bilingual children find it easier to learn a third language,” claims one which depicts a cherubic toddler waving a magic wand over a rabbit in a hat. “Give your child a flying start—learn Gaelic,” says another. + +The posters are part of a larger effort in Scotland to preserve its Celtic language, which was disappearing at a precipitous rate until recently. In 1755 almost a quarter of Scotland’s people spoke Gaelic. A new education law in 1872 forbade the language in classrooms, and children caught speaking it got the belt. Another statute in 1918 required authorities to “make adequate provision for Gaelic,” but by 1981 only 1.6% of people in Scotland spoke it. Many of them were older folk or clustered in the Highlands and islands. Their slim ranks thinned by 21% in the ten years from 1981 and by 11% in the one after that. + +Now, however, Gaelic is fighting back. The proportion of Scots who speak it barely dipped between 2001 and 2011, when the most recent census was finished. And more than before are under the age of 20. + +Robert Dunbar, head of the Celtic-languages department at the University of Edinburgh, attributes the uptick to the spread of Gaelic education outside the Western Isles. In 2007 one school taught in Gaelic. Five now do—including one in Glasgow and another in Edinburgh—and the number of pupils has grown by a third. The government minister in charge of Scotland’s languages, Alasdair Allan, holds that the bigger budget for Gaelic education (up by £400,000 over the past eight years) is being driven by parental demand. “The government is struggling to keep up,” he says. + +For Karen Campbell of Kilmaluag, a windswept village at the northern tip of the Isle of Skye, the decision to send her children to a Gaelic school was an easy one. “Gaelic was my own first language… I feel being able to read and write the language, as well as speak it, leaves children better placed to appreciate their own unique culture and, in turn, other cultures.” Parents who do not speak Gaelic may think a bilingual education will help their child learn other tongues, says Mr Dunbar. + +Gaelic television is also stirring up interest. Founded in 2008, BBC Alba—a collaboration between the BBC and MG Alba, a Gaelic broadcasting company—reaches 700,000 viewers a week, eight times the number of people who are thought to understand Gaelic. All the programmes, which include Scottish rugby and football, traditional music and a popular drama series, are subtitled in English. + +Both Mr Dunbar and Mr Allan deny that the recovery of Gaelic has anything to do with independence aspirations or tension between Scotland and its southern neighbour. Instead they attribute it to a growing appreciation for cultural and linguistic diversity in the age of globalisation—a trend that transcends Scotland’s borders. Manx, the Celtic language historically spoken on the Isle of Man, has also made a comeback after having been declared extinct by UNESCO in the 1990s. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21697255-gaelic-making-comeback-speak-tongues/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit and the young + +Turning out the teens + +Universities want students to vote in the EU referendum + +Apr 23rd 2016 | From the print edition + +Glastonbury or the EU referendum? + +BEFORE the general election in May 2015, Warwick University had iPad-bearing volunteers running around campus registering students to vote. De Montfort University in Leicester got students to confirm their address when they logged on to the student portal to ensure that they received a polling card. Sheffield went even further: it integrated voter and start-of-term registration. They all had one goal: to get as many names as possible on the electoral roll. + +It did not work. Turnout in 2015 among those aged 18 to 24 was just 43%, one percentage point less than in 2010. Over 66% of all registered voters showed up at the polls but not the young. + +Their voice could well prove decisive in the referendum on Britain’s membership of the European Union on June 23rd, but boosting students’ participation will be difficult. For one thing, they move frequently. Britons at university tend to live in short-term, rented accommodation, which makes it hard for the authorities to register them. + +A change in the law in 2014 made the problem worse. Voters must now register individually, so neither parents nor a hall of residence can do the paperwork on students’ behalf. Although a student can enroll at two addresses, it is up to local councils to decide whether a person spends enough time in the area to qualify to vote there. Not all meet the test. + +Another difficulty is the date of the referendum. It falls just after the end of term at most universities. And the local elections on May 5th add a confusing wrinkle. Students will sign up using their term-time address for May’s vote, but most will have to re-register after that using their out-of-term contact details to take part in June’s referendum. It is a considerable hassle. + +Universities have every reason to seek a solution to the problem of low student turnout. They rely on the EU for both funding and students, and young people are the most pro-European of any age group. So the iPads are out again. Student- union officers encourage students to post selfies on social media when they register to vote. Mock referendums are organised on campus. Lectures include information on how to register and why. + +It may not be enough. Even in the referendum in 2014 on Scottish independence, when overall turnout was 85%, just over half of 18- to 24-year-olds voted. If their peers are not keen on casting a ballot, says Ed Fieldhouse, a politics professor at Manchester University, students are unlikely to do so themselves. That may explain why some universities are encouraging foreign students to take an interest even though they are not eligible to participate. They would be advised to talk about postal votes too. Glastonbury Festival, a huge music event that is popular among the young, kicks off on June 22nd. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21697249-universities-want-students-vote-eu-referendum-turning-out-teens/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nuclear energy + +Is smaller better? + +Small reactors are promoted as a way to save the nuclear industry + +Apr 23rd 2016 | SHEFFIELD | From the print edition + +Coming soon to a field near you + +THE horizontal boring machine at the nuclear Advanced Manufacturing Research Centre (AMRC) in Sheffield cuts large steel components with microscopic precision. Judging by the build-up of swarf around it, the machine is much in demand; some of the world’s biggest engineering firms are using it to help design what some say is the next big thing in civil nuclear power—Small Modular Reactors, or SMRs. + +Such reactors are often billed as one solution for a nuclear industry bedevilled by massive cost overruns and technical snafus. The spiralling cost of the proposed Hinkley Point C power station in Somerset is a case in point; Électricité de France (EDF), the main contractor, has been hesitating over whether to press on with the controversial £18 billion ($25.9 billion) project. SMRs are mini-reactors that can produce anything from about 50 to 400 megawatts of electricity, much less than the gigawatt or so that most existing big reactors can put out, or the two 1,600MW reactors planned for Hinkley Point. Their backers argue that SMRs make more sense. + +First, small reactors can be built by the dozen in a factory, proponents argue, and then transported to sites and plugged in. This means economies of volume rather than of scale. SMRs should also produce revenues more quickly than big reactors. Around eight SMRs in the same place would be needed to produce the equivalent power of, for example, Hinkley. But whereas the first SMR on site could be lighting up the country within three to five years of being ordered, thus beginning to pay for itself and the SMRs to come, conventional big reactors can take ten years or more to plug in and start making money. + +SMRs have other advantages too, their fans allege. Rolls-Royce is designing a 220MW SMR that, at 16 metres in height and four metres in diameter, could be transported by truck, train or barge. They are supposed to use much less water for cooling than conventional reactors, so they need not be located by the sea or large rivers. Easier to power up, they could respond more flexibly to peaks in demand than many of their larger counterparts. + +Britain’s government is in theory enthusiastic: it needs a nuclear option to meet stringent emissions targets and replace ageing plants. The National Nuclear Laboratory estimates that SMRs could provide 7GW of power, equivalent to a bit over two Hinkleys. In 2015 the government promised £250m for nuclear research, part of it to finance a competition for the best SMR design. Rolls-Royce, which makes nuclear reactors for submarines, is submitting what is likely to be the only domestic proposal. Foreign companies such as NuScale and Westinghouse of America may also bid. + +This official commitment sounds encouraging, but for many in the industry it is too little and perhaps also too late. To develop and test a prototype SMR, according to Mike Tynan, the head of the nuclear AMRC, could cost up to £2 billion. The licensing process alone, to ensure that this new technology is safe, would cost millions and take five years or so. Its probable share of the British market is too small to cover such sums and sustain a profitable domestic manufacturing operation, argues David Orr, head of developing SMRs at Rolls-Royce. Britain may be too far behind the field to pick up much foreign business. + +While Britain has dithered, the American government has spent hundreds of millions of dollars encouraging and commissioning prototype designs. NuScale’s design, backed by $217m from the American Department of Energy, could begin its licensing process this year. NuScale also has a prospective customer for an SMR, a municipal utility in Idaho. China, South Korea and other countries have a lead on Britain too. Mr Tynan argues that if the British government decided quickly to bear more of the risks in developing SMRs, the country could still exploit its nuclear know-how to compete in a global market that may be worth up to £400 billion. + +Not everyone believes that SMRs are the nuclear industry’s silver bullet, however. Some of the challenges that face big reactors—in particular, safety—confront smaller ones too. There is a reason why, historically, reactors have grown bigger and bigger: similar solutions to similar problems can be exploited more efficiently. SMRs have the edge when they can be placed in locations where big reactors cannot. But Britons are not famous for welcoming unwanted developments into their green and pleasant neighbourhoods. + +The government may have been slow to see the potential of SMRs. More importantly, successive generations in government have been slow to pick a design for big reactors and stick to it. If there is to be a nuclear future for British industry, this is the nettle that politicians must grasp. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21697254-small-reactors-are-promoted-way-save-nuclear-industry-smaller-better/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +B for Brexit + +For diehard Eurosceptics, the Leave campaign is a national liberation movement + +Apr 23rd 2016 | From the print edition + + + +IT IS a bright cold day in April and the clocks are striking 13 (the 12-hour clock having gone the way of the pound and the ounce, the mile and the inch). Britain is no longer a democracy, nor an independent country. Rule the waves? It does not even rule its own borders. For that strength which in old days moved earth and heaven is now a beleaguered outpost of someone else’s empire. Such remnants of the old glories as remain—the army, or British nationality—are one stroke of a colonial administrator’s pen away from extinction. Farms and factories lie devastated by vindictive diktats channelling wealth to the imperial centre. And Britain’s ministers, legislators and judges? They are but puppets answerable only to a distant capital. Along with the media elites, the education system and the spies, they blind the people to their country’s quiet abolition. + +Still, a revolution is coming. Foolish David Cameron, Britain’s Potemkin prime minister, has been forced to put his country’s subjugation to a vote for the sake of appearances. Of course, he and his masters in Brussels plan to fix it: the state, the newspapers and the broadcasters flood every home with propaganda dictated by the security services at shadowy meetings in London hotels. Foreign leaders and tycoons close to the regime are trying to frighten voters into backing the status quo. + +But in small towns and villages far from journalists—who are paid not to be interested in what real people think—the resisters are gathering. Mr Cameron’s establishment may have the power and the money, but the rebels have boots on the ground and the truth on their side. On June 23rd they will deliver the biggest upset in Britain’s political history. Ordinary Britons, at last conscious of their shackles, will cast them off and in doing so inspire other peoples under the European jackboot—the mighty Danes, the noble French—to begin their own revolts. June 24th will be Independence Day: the beginning of the end for an empire that, like those of Caesar, Napoleon and Hitler, is doomed to fall. + +Enough. Bagehot may have applied some creative licence in the paragraphs above, but he was astonished to encounter every single one of the arguments therein at a recent pro-Brexit meeting in Hampshire. The setting was genteel: South Wonston, a cosy cluster of houses and farms north of Winchester, on a crisp April afternoon. The arguments advanced in the packed village hall were anything but genteel. From the platform Ray Finch, an MEP of the UK Independence Party (UKIP), and Rupert Matthews, a former Conservative candidate for the European Parliament, presented a chillingly dark, dystopian vision of Britain as an EU member. If anything they were restrained: Mr Matthews once claimed that the European Commission would send German tanks to London in the event of popular unrest. All but two members of the audience cheered them on. + +The two were a Frenchwoman and her British husband. She contested the notion that her compatriots were clamouring to leave the EU, he the claim that European defence collaboration was necessarily contrary to British interests. From the mostly rural, aged and thus (in line with demographic trends) pro-Brexit crowd, the response was baffled tutting. From the speakers it was sheer pity at the couple’s ignorance. “British troops will be subsumed into an EU army,” counselled Mr Finch, sympathetically. “Do you want British servicemen to be sent to die on the casting vote of Latvia?” inquired Mr Matthews. + +This is an aspect of the anti-EU campaign that some of its more enlightened lieutenants would rather bury. The referendum will not be decided by die-hards like those in South Wonston but by the voters (almost a third of the total, according to some projections) who have not made up their minds and do not feel strongly either way. The designation on April 13th of Vote Leave, rather than the more right-wing Leave.eu, as the official pro-Brexit outfit ensured that the campaign’s focus would be on transactional factors like wages, unemployment and national security rather than wide-eyed talk of national liberation. + +Yet that talk matters. Contrary to what the businesslike pronouncements of Vote Leave might suggest, for swathes of the Leave camp—exemplified by the burghers of South Wonston and by Nigel Farage, the UKIP leader—the upcoming referendum is about more than the best economic and geopolitical posture for Britain’s future. It is about making the country democratic again, about freeing it from foreign tyranny. If, as is likely, Britons vote to stay in the EU, this contingent knows whom to blame: meddling ministers, nefarious MI5 officers, corrupt journalists and, among the electorate, those “youngsters” who “don’t know how to make grown-up decisions”. Mr Finch even claimed confidently that the Out campaign is trying to keep the referendum date off websites heavily used by young Britons, in order to reduce their turnout. + +Vive la résistance! + +In other words, this part of the Brexit campaign does not intend to take “Remain” for an answer. Mr Matthews admitted as much: “If it is close we will keep fighting; if [the margin] is ten points we will push for a referendum at the next treaty change.” Only if the Remain side wins by 20 points or more (which is unlikely) will the Brexiteers give up, he predicted. At which Mr Finch chided his comrade-in-arms for being too polite. + +For all the nonsense that the two men spoke, this part struck Bagehot as accurate. Because as defeatist, paranoid and neuralgic as the hard-line Brexiteers are, their resolve seems strong and sincere. They have their excuses at the ready in the event of a Remain win. They will fight on, perhaps as part of a swollen UKIP, perhaps within a newly Eurosceptic Conservative Party, or perhaps as some new political force outside the existing party landscape altogether. Britain’s referendum throws many political realities up in the air. But one thing is for sure: whatever the outcome the Brexiteers will still be with us. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21697259-diehard-eurosceptics-leave-campaign-national-liberation-movement-b-brexit/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Counterfeiting and piracy: Stamping it out + +Counterfeiting and piracy: Internships + + + + + +Articles Sections Next + +Counterfeiting and piracy + +Stamping it out + +As China grew richer and more innovative, people assumed it would counterfeit less. Think again + +Apr 23rd 2016 | From the print edition + + + +IF YOU have bought Ferragamo shoes recently, fancy footwear was not all that came in the box. Inserted in the left shoe’s sole is a passive radio-frequency identification (RFID) tag. A transmitter-receiver known as an interrogator can send a signal to the tag and read its response. Only genuine Ferragamo shoes send back the correct one. The RFIDs are the Italian shoemaker’s latest weapon in its campaign to protect its brand from fakes. Last year alone, the company says, it took down tens of thousands of ads for fakes bearing its label from online auction sites, and recovered or revoked 140 domain names and websites which, it argued, infringed its copyright, most of them belonging to Chinese people or firms. + +It has long been known that counterfeiting and piracy (respectively the infringement of trademarks and copyright, together known as intellectual property, or IP) make up a vast global business. But a report published on April 18th by the OECD suggests that, despite the advent of such high-tech counter-measures, it is far bigger than previously thought. The last such survey by the club of 34 mostly rich countries was in 2008. Updated the next year with data from 2007, it put the value of cross-border trade in fakes at $250 billion, or 1.8% of the total for all goods. The latest report estimates that by 2013 those figures had risen to $461 billion, and 2.5%. + +Some increase was predictable: global trade has recovered since the financial crisis, and it is natural that illicit commerce should, too. But, says Piotr Stryszowski, the report’s lead author, he had not expected the rise in percentage terms to be so high. In part, it could be thanks to better data. Mr Stryszowski likens the difference in quality between today’s figures and those on hand in 2007 to that “between a communist-era Polish Fiat and a Lamborghini”. But he thinks the rise is real, nonetheless. Branded, knowledge-based products make up an increasing share of the global economy. And the rise of e-commerce has made selling and transporting fakes much easier: almost two-thirds of seizures nowadays are of postal shipments, mostly of goods bought online. + +The sincerest form of flattery + +Counterfeiting and piracy cover an immense gamut: from synthetic cinnamon to fake Louis Vuitton luggage to copies of the world’s most elaborately programmed computer software. Some manufacturers and distributors are out-and-out hoodlums: investigations in America, Canada and Sweden have linked biker gangs to counterfeit medicines, notably drugs used to treat erectile dysfunction. Others are guileful entrepreneurs who would doubtless shrink from other areas of organised crime. A Chinese woman accused of selling bogus branded luxury goods worth millions of dollars was found last year to be living in a quiet Californian suburb, studying for a university degree. + +Measured by the number of customs seizures, footwear was the most-affected industry in each of the three years studied by the OECD, from 2011 to 2013. Other popular items to rip off included clothing, electrical equipment, leather goods and watches. The country that suffers most from trademark infringement is, of course, America. Next is Italy, a country long notorious for making sham products, but which is also home to many of the world’s most envied brands. + +Globalisation has enabled traffickers to run rings round officialdom, says Candice Li, vice-president of the International Anti-Counterfeiting Coalition (IACC), a lobby group. “There isn’t an international legal or enforcement framework with which to confront the problem,” she says. Counterfeiters can make parts in one country, assemble a product in a second and package it in a third—without stepping outside the law in any of them. + +Even when laws are broken, the risks are slight. “Nobody is sitting in jail for taking fake shampoo or bouillon cubes across international borders,” says Hans Schwab, the founder of Illicit Trade Monitor, a website. “[Drug] cartels in South America are starting to move towards the counterfeiting of consumer products because it is more lucrative, and there is no need for bribes or fast boats or planes.” + +Establishing the origins of internationally traded counterfeit or pirated goods is not easy. Distributors go to great lengths to zig-zag around the world. A consignment of counterfeit versions of Avastin, a cancer drug, found in America in 2012 had travelled through Turkey, Switzerland, Denmark and Britain. Free-trade zones are particularly favoured as transit points—as are poorly governed or war-torn countries. Afghanistan, Syria and Yemen are all leading countries of provenance. + +Even so, the data from seizures support Mr Stryszowski’s conclusion that “China is the super-producer in almost every sector”. Including Hong Kong, it was the origin in 84% of cases (see chart). For comparison, in 2013 its share of global manufactured exports was only 17%. Another report released this month, by the American customs bureau, also named China as the primary source, saying it accounted for more than half of the $1.35 billion-worth of fake products the bureau had seized in the most recent tax year. + + + + + +Occasionally, Chinese customers fall victim to foreign fraudsters: Chinese wine collectors were prime targets for the most famous producer of bogus rare and fine wines, Rudy Kurniawan. An Indonesian living in Los Angeles, Mr Kurniawan mixed his brew in his kitchen sink and printed fake versions of the labels of winemakers such as Château Pétrus on his computer. He is appealing against a ten-year sentence for fraud and one other offence. + +When China joined the World Trade Organisation nearly 15 years ago, hopes were high that it would crack down on IP violation—especially as its economy developed and more Chinese firms and artists had valuable trademarks, patents and copyrights to protect. Surely, the argument went, Chinese enforcement would improve when Chinese firms were being ripped off as well as Hollywood film studios and Italian fashion houses? + +And indeed Chinese entrepreneurs are gradually becoming victims as their brands acquire lustre. But the seizure of fakes masquerading as Chinese brands still accounts for barely 1% of the global total. And strolling the streets and market stalls of Beijing, where pirated DVDs and bogus Rolexes abound, it is clear that Chinese consumers are themselves often duped into buying fakes (or, like consumers elsewhere, knowingly buy good imitations because they are cheaper). In just the latest scandal, China’s food regulator said earlier this month that a rogue factory had produced 17,000 tins of counterfeit brand-name infant milk powder and distributed them nationwide. + +Visiting America this month Zhang Xiangchen, China’s deputy international-trade representative, said that the very concept of intellectual-property rights was relatively new to China and—an understatement—there remained “a lot of room for improvement”. In fact there has been some progress. Surveys find that foreign firms in China continue to name IP violations as one of the top constraints on their operations. But many respondents also say that enforcement has improved in recent years. + +According to legal experts, China’s supreme court and senior prosecutors are taking the issue more seriously, and have streamlined procedures for accepting cases, including those brought by foreign firms. Police sometimes make a great show of burning, crushing or steamrollering seized counterfeit goods. Wang Yang, a deputy prime minister, said last month that tackling piracy was essential if China is to become an innovation-driven economy. He promised a crackdown on fake agricultural equipment and pirated software, and greater scrutiny of exports. + + + +Holders of intellectual-property rights argue that fakery discourages innovation, diddles the taxman and funds terrorism (though hard evidence of links between terrorists and counterfeiters is elusive). But many in the developing world see strict IP laws as a way of keeping poor countries down. The argument gets especially heated when it comes to pharmaceuticals. Governments in poor countries, and NGOs, argue that the poor cannot afford costly Western patented drugs and should be allowed to buy cheap copies even before the patents expire. An attempt in 2006 to frame a global approach to counterfeit medicines foundered on resistance from India and Brazil. + +The World Health Organisation (WHO) has since limited the definition of counterfeit drugs to those “deliberately and fraudulently mislabelled”, rather than those competently made without the consent of the inventor. Pills that are bogus by the WHO’s definition are often useless or dangerous. Most contain the wrong ingredients, incorrect quantities of the right ingredients or, in about a third of cases, none of the listed active ingredients at all. In 1995 bogus meningitis vaccines led to the deaths of more than 2,500 people in Niger. + +Not only medicines, but other fakes, such as vehicle brake parts and pesticides, can be lethal. Falsely branding merchandise is theft. It erodes the brand-owner’s profits or, if the goods are poorly made, its reputation. However, fakes can also build brand awareness. As people in emerging markets grow richer, more of them will doubtless upgrade to the real thing. For software, in particular, fake copies are as good as real ones at building brand loyalty, squeezing out the competition and creating a de facto standard. That may help explain why firms have been slow to exploit new technologies that could allow consumers to differentiate between genuine products and rip-offs with a click of their smartphones. + +Damming the source + +The most important recent development in the war on fakes has come from a different direction. On April 13th Alibaba, China’s biggest online retailer and, until now, the marketplace of choice for many Chinese producers of counterfeits, joined the IACC. Two years earlier Jack Ma, the firm’s founder and boss, had called counterfeit goods a “cancer” and vowed to fight them. The new partnership—the first between the anti-counterfeiting group and an online retailer—suggests he is serious. + +But powerful opposing forces are still at work. For Chinese local-government officials, who are responsible for providing health care, pensions, housing and so on, enforcing intellectual-property laws is hardly a priority. And because they are evaluated almost exclusively by their economic performance, it is easy to see why many tolerate a factory that employs workers and pays tax—even if it steals other people’s intellectual property. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21697218-china-grew-richer-and-more-innovative-people-assumed-it-would-counterfeit-less-think/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Internships + +Apr 23rd 2016 | From the print edition + +Internships: The Economist is seeking two summer interns, one to write about foreign affairs and one to work on our newsdesk. The pay is £2,000 per month. Anyone is welcome to apply. For both positions we are looking for originality, wit, crisp writing and clarity of thought. Please see www.economist.com/foreignintern and www.economist.com/newsintern respectively for details of how to apply. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21697219-internships/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Europe v Google: Android attack + +Pemex: Turning the tanker + +Theranos: Blood sports + +Cigarettes: Smoke signals + +India’s most colourful tycoon: Hangover + +Picking the boss: The outside track + +Business in Iran: The over-promised land + +Schumpeter: Pay dirt + + + + + +Articles Sections Next + +Europe v Google + +Android attack + +The European Commission is going after Google again—this time with a better chance of success + +Apr 23rd 2016 | From the print edition + + + +IN 2001—aeons ago in internet time—the European Commission sent a sternly worded missive to Microsoft. It accused the software maker of having illegally extended its dominance in operating systems for personal computers (PCs) into adjacent markets, for instance by tying Windows to programs that play music and videos. The legal action lasted more than a decade and took many turns, but Microsoft eventually had to unbundle its Windows monopoly from other software, in particular by giving consumers the choice of which web browser they want to use. + + + +On April 20th the commission presented Google, one of the brightest stars in the modern tech firmament, with a similar “statement of objections”, as the charge sheet in European Union (EU) antitrust cases is called. Google, it argues, has followed a strategy to “preserve and strengthen its dominance in internet search” by tying this service and some of its popular apps to Android, its mobile operating system, which powers around 80% of all new smartphones (see chart). As in the Microsoft case, Google may ultimately be forced to unbundle its package of software and services. + +This is not the only bit of Google’s business that is facing antitrust scrutiny. Last year the commission accused it of having harmed consumers by using its dominance in the internet-search market to steer them away from rival offerings and towards its own comparison-shopping service. Also in the pipeline are probes into Google’s behaviour in other online services, digital advertising and Google’s use of content from other sites (for things like Google News). On April 18th News Corp, a media giant, filed a second complaint against such “scraping”, alleging that this keeps consumers from visiting its sites and strengthens Google’s search dominance. + +But the Android case stands out. It is particularly timely: the action in the tech industry has long moved from PCs and online search to mobile computing and apps. It is more of a threat to Google: Android is a key part of the firm’s money-making machine. And the case is more straightforward from the trustbusters’ point of view. In terms of remedies, Google wouldn’t have to rewrite its software, but simply change its conduct. It is also harder to accuse the commission of once again picking on American tech firms, since the Federal Trade Commission in Washington, DC is also looking into the matter. + +On the face of it, putting Android at the centre of an antitrust case seems silly. It faces competition from iOS, Apple’s mobile operating system. It is also “open-source”, meaning any hardware-maker can adapt the program as needed and install it on its devices for nothing. Yet since Apple doesn’t license its software to other smartphone and tablet brands, they are stuck with Android. And to be able to offer commercially viable products, it helps to pre-install some of Google’s popular apps, particularly Google Play, which is the dominant app store for Android. + +The problem is that these add-ons are not open source and come with strict licensing rules. The commission focuses on three of these: handset-makers that wish to pre-install Google Play must, among other apps, also add Google Search and make it the device’s default search service; if they want to share in Google’s ad revenues they have to exclusively pre-install Google Search; and if they pre-install Google’s apps on any of their models, they must commit to install only Google’s standard version of Android on each and every one of their models. + +The case hinges on whether such restrictions are deemed legitimate. It is easy to see why Google would want to promote its search and other apps. They are a vehicle for advertising, help the company to make money from Android, in which it has invested billions, and let it collect all sorts of data about users. The licensing terms, the firm argues, also serve to keep Android from fragmenting into incompatible versions and “make sure that people get a great ‘out of the box’ experience with useful apps right there on the home screen”, in the words of Hiroshi Lockheimer, who is in charge of Android at Google. + +The commission begs to differ. The licensing conditions, it argues, limit the freedom of manufacturers to choose the apps they want to pre-install, and make it hard for rivals to compete on their merits. This stifles competition and harms consumers, especially by limiting innovation, according to Margrethe Vestager, the EU’s competition commissioner. “A strong incentive for innovators is that they can present their product to consumers,” she said this week. “If that isn’t possible, why bother?” + +The case won’t be decided soon, unless Google opts to settle, which seems unlikely. The firm has 12 weeks to respond, after which Brussels could take several months to come up with a final ruling and a remedy (it still has to issue a decision in the search case, which is now expected to come before the summer break). This ruling can be appealed to the European Court of Justice, meaning that a final decision may be years away. If Google loses, it would presumably have to drop the licensing restrictions. It might also have to pay a fine, although it is unlikely to be anywhere near the theoretical limit of $7.4 billion, 10% of the firm’s 2015 revenue. + +Google has a point when it says that it needs to keep Android from fragmenting. If that happened, life would get a lot more complicated not only for app developers, but smartphone users. And it would become harder for Android to compete with iOS. But it is difficult to see, for instance, why Google Search needs to be the default search service. What harm would be done, other than to Google, if Android phones came with Microsoft’s Bing as the default for search? China shows that competition is livelier without such licensing conditions: because Google Play is not available there, most handsets are powered by modified versions of Android and come with different app combinations. + +Antitrust sceptics see the Android case as yet more proof that such legal action is just not worth it in the fast-moving tech world. Even if a decision comes soon, it will take time for a remedy to change things on smartphone screens. And by then the market for mobile software may have changed completely: instant messaging apps are growing into application platforms of their own and text-based services called “chatbots” are poised to become an alternative to apps. But it is easy to forget that although in the Microsoft case, too, the remedy came late and was of limited relevance, being under antitrust scrutiny forced the company to offer competitors more room. One of the main beneficiaries was none other than Google. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21697193-european-commission-going-after-google-againthis-time-better-chance/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Pemex + +Turning the tanker + +A daunting challenge faces the new boss of Mexico’s oil giant + +Apr 23rd 2016 | MEXICO CITY | From the print edition + + + +THE radio in the office of José Antonio González is tuned to one of the American classical-music stations that he loves. The sounds may be relaxing, but the firm Mr González has led since February—Pemex, Mexico’s state-owned oil company—is in crisis. On April 13th the Mexican government was forced to respond to the firm’s troubled finances with a 73.5 billion peso ($4.2 billion) aid package and a 50 billion peso tax cut. This week Mr González headed to New York to soothe the fears of banks and rating agencies. + +They will take some persuading. Pemex’s crude production fell last year to 2.3m barrels a day, down from a peak of 3.4m in 2004. Next year, says the finance ministry, that will probably fall to 2m—“a disaster”, says Adrián Lajous, a former Pemex chief. After taxes and royalties the company made a loss of 522 billion pesos last year. In March Moody’s cut Pemex’s credit rating by two notches to its lowest investment grade. More bad news followed on April 20th when several workers died in a blast at a Pemex facility. + +Preparing for wrenching change + +A low oil price hurts, of course. But Pemex is also suffering because of years of inadequate investment, unproductive working procedures, over-generous pension promises (pension liabilities at the end of the year stood at 1.3 trillion pesos). A lack of specialisation and massive tax bills have added to the woes. Grim as that sounds, a strong leader, ready to make waves, could turn things around. Mexico’s recent energy reform and the appointment of Mr González give Pemex a faint glimmer of hope. + +Analysts like the new boss. One calls him the best possible pilot of the worst possible aircraft. Mr González is not an oil man, but spent three years on the board of Pemex when in a previous job at the finance ministry. As an engineer he is fond of detail, unlike previous managers. He has run huge operations before: in a three-year stint as leader of Mexico’s social security agency, which has around 450,000 staff, he knocked it into better shape. He is a political insider, close to the president, Enrique Peña Nieto, and linked through marriage to an ex-president, Carlos Salinas. + +He has started cutting costs at Pemex. Government officials want the firm to lower its budget by 100 billion pesos in 2016. The plan to make two-thirds of the savings by deferring investments will raise some eyebrows. The government’s recent aid package is a reminder that officials cannot let a firm that currently generates a third of all government revenues falter through a lack of investment. + +Pemex’s changing status might attract cash from elsewhere. An energy reform signed into law in 2013 is designed to transform the domestic oil and gas industry by letting foreign firms enter the Mexican market. A state-owned monopoly might thus become a “productive state enterprise” able to pursue joint ventures. Mr González suggests partners could take joint ownership of refineries and help modernise them. + +Sales of some downstream parts of the company, such as its fertiliser plant and petrochemicals business, would leave Pemex to focus on oil exploration and production. It might do well to concentrate on shallow-water offshore oil fields where it has expertise and which are cheap to operate, rather than bigger, more expensive ones onshore and in deep water. + +Much depends on a recovery of the oil price. “Things should look a bit better in two to three years,” predicts Pablo Medina of Wood Mackenzie, a consulting firm. He thinks Pemex is readier than before to take tough decisions, such as cutting jobs. Mr González will have to face the music to put Pemex back on song. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21697277-daunting-challenge-faces-new-boss-mexicos-oil-giant-turning-tanker/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Theranos + +Blood sports + +Pressure is mounting on a startup that has tried to shake up the lab-test market + +Apr 23rd 2016 | SAN FRANCISCO | From the print edition + +Harried Holmes + +“TRUST me. If the results are not there we would hear,” said Nimesh Jhaveri, a divisional vice-president at Walgreens, the largest pharmacy chain in America, when asked last June about the accuracy of revolutionary blood tests it was offering in some of its stores. A few months later the provider of these tests, a startup called Theranos, began to lurch from one problem to another. + +A series of critical articles in the Wall Street Journal has questioned whether Theranos’s technology, which purportedly performs a wide range of tests on just a tiny sample of blood, really works. It has fallen foul of regulators over practices at one of its labs: they have threatened to force its founder and boss, Elizabeth Holmes, out of the blood-testing business. And it emerged this week that the firm is being investigated by American prosecutors and the Securities and Exchange Commission (SEC) over whether it misled investors. Many now write off the firm entirely. Should they? + +The company’s biggest immediate problem is the revelation of deficiencies in its laboratory in Newark, California. Of several issues found by the laboratory regulator, the Centers for Medicare and Medicaid Services (CMS), one was deemed to pose an immediate threat to patient health. Theranos says it has contacted all the doctors who ordered these tests, and that it has no reason to believe any patient was harmed. However, in March the firm received word from the CMS that it was not happy with the reply it had received and sanctions might follow. Theranos has responded again, and is waiting for a ruling. + +Until then, it is impossible to know how things will unfold. Despite seeming to be in a heap of trouble, 90% of the firm’s tests are conducted at its Arizona laboratory, which Theranos says was successfully audited by the same regulator last year. Since opening both laboratories the company has conducted 6.1m diagnostic tests. + +The firm has taken flak for quietly resorting to using traditional machines for many of its tests, rather than its own supposedly whizzier devices. Yet it appears that the firm can run 80 separate tests on a finger-prick of blood—15 on its own machine, 65 on commercially available equipment. If Theranos has worked out how to dilute small blood samples to run on existing equipment, that could yet constitute a big advance. + +Another criticism is that the startup, supposedly a pioneer in testing blood taken through a finger-prick, ended up tapping veins for some of its tests when it expanded to run a full-service laboratory. But Theranos was open about this change at the time. And it was still able to run its test on unusually small blood samples using small, paediatric needles. + +If there are big problems with Theranos’s technology, one question is why Walgreens felt able to roll it out, and promote its alliance with the startup so vigorously. Last year Mr Jhaveri said Walgreens’ chief medical officer had “reviewed” the technology and the data before it introduced the service, and also that Theranos’s tests had been compared with traditional methods and it was “getting the results”. Walgreens later said the word “review” was incorrect, but that its clinical office was “integrally” involved in the roll-out and was confident in the quality of Theranos’s services. This week it said it did not independently validate or verify the tests. + +An investigation by the SEC into a private tech startup is unusual. But Brooke Buchanan, a spokesperson at Theranos, says: “The feds read the papers like everyone else. The Wall Street Journal has written 21 articles about Theranos comprising 22,000 words since October.” + +The controversy will ensure heightened scrutiny of “unicorns”—private technology firms valued at more than $1 billion. The head of the SEC, Mary Jo White, recently indicated she wants to look at startups that could pose risks to investors. You might imagine that those willing to put millions into a new medical technology would be aware of the levels of risk involved. But unicorns have been able to claim lofty valuations without the rigorous scrutiny endured by public firms. + +Even among unicorns, Theranos is a unique sort of beast. It has been run secretively, sharing little information with investors. These funders are also atypical in the world of big tech startups: with the exception of one of its early “seed” investors, Draper Fisher Jurvetson, no big venture-capital firm has invested. + +It remains to be seen whether the regulatory assault and negative publicity will prove fatal to the firm. 23andMe, a genetic-testing outfit, managed to survive a nasty brush with the Food and Drug Administration a few years ago. But even if Theranos is mortally wounded, finger-prick testing is too good an idea to die with it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21697273-pressure-mounting-startup-has-tried-shake-up-lab-test-market-blood-sports/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cigarettes + +Smoke signals + +Philip Morris, health company? + +Apr 23rd 2016 | NEW YORK | From the print edition + + + +TOBACCO companies specialise in contradiction. They herald the decline of smoking among youngsters, for example, then flaunt their sales to callow puffers. The most skilled contortionist in the industry may be Philip Morris International, the world’s biggest tobacco firm. To date, any good news for shareholders has been bad news for lungs. But the firm now says it wants to improve profits and health alike. + +It may seem an odd goal for a company that last year sold 850 billion cigarettes. But it boss, André Calantzoupolos, insists Philip Morris is on the verge of a revolution. He touts “reduced-risk products”: on April 19th the firm said its top offering in this category, iQOS, accounted for one in 30 cigarette sales in Tokyo, a test market. + +The new product resembles a pen. A user inserts a cigarette-lookalike called a HeatStick; iQOS then warms the stick’s tobacco, but doesn’t burn it. That produces an aerosol that carries a traditional cigarette’s taste but, the company hopes, eliminates much of the nasty stuff that comes with combustion. “For the first time in history,” Mr Calantzoupolos declared recently, “we have products with the real potential to both accelerate harm reduction and grow our business.” + +This is hardly the first time tobacco firms have peddled healthier-seeming goods. Some have dubious benefits. Consumers have long bought “light” cigarettes to lower their risk of disease, despite evidence they do nothing of the kind. E-cigarettes are less risky than traditional ones, but bring their own challenges. Some fear they will reduce the stigma around smoking. Debate rages over whether e-cigarettes help smokers quit. What is more, many smokers simply don’t like them. Complaints range from faulty batteries to poor taste—e-cigarettes deliver vapour with nicotine, but no tobacco. Their share of the cigarette market remains tiny: 0.4% last year, estimates Euromonitor, a research firm. + +Philip Morris’s new products might have broader appeal. Its research staff now includes some 300 scientists, many poached from pharmaceutical and medical-device companies. The company has several alternatives to combustible cigarettes, but iQOS is its most prominent. Bonnie Herzog of Wells Fargo estimates that by 2025 the product could displace 30% of cigarette sales in rich markets. + +Philip Morris says that early evidence is promising. It reports that the vapour created by iQOS contains just one-tenth as much “harmful or potentially harmful” chemicals as a standard cigarette. + +So far iQOS has been launched in only a few places, including parts of Japan and Italy. There are plans to expand quickly. That will eat into Philip Morris’s cigarette sales, but evidence from Japan suggests consumers might switch not just from the firm’s own brands, but from cigarettes made by rivals too. All in all, iQOS could be a boon: Wells Fargo expects combined profits for iQOS and traditional cigarettes in 2025 to be nearly 50% higher than they would have been for traditional cigarettes alone. + +Sales could rise even further if Philip Morris can sway health officials. The company will soon ask American regulators to designate iQOS as a “modified risk tobacco product”. Such a title would let the firm’s partner in America, Altria, hawk iQOS’s claimed lower risks. But regulatory approval is by no means assured. Katie McMahon, a policy expert at the American Cancer Society’s advocacy arm, is sceptical of tobacco firms as allies, given their history of misleading the public. After decades of distrust, it can be hard to know when a tobacco company is advancing health and when it is blowing smoke. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21697275-philip-morris-health-company-smoke-signals/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +India’s most colourful tycoon + +Hangover + +After the good times comes the reckoning for Vijay Mallya + +Apr 23rd 2016 | MUMBAI | From the print edition + +Mallya in more buoyant times + +FEW brewery owners think of launching airlines; the synergies are far from obvious. And indeed, sharing a name with a popular lager didn’t help Kingfisher Airlines avoid collapse in 2012 after several years of losses. Now its founder, Vijay Mallya, who inherited a booze empire and personified the Kingfisher way of life as India’s “king of good times”, is struggling to appease the airline’s irate creditors. On April 18th, in the latest turn in a long-running saga, a Mumbai court issued a warrant for his arrest. + +Defaulting on loans isn’t usually a criminal offence. But the atmosphere in India is febrile when it comes to “wilful defaulters”, those who could but won’t make good on their debt. Many suspect Mr Mallya has a few rupees lying around to pay what he owes—if the tabloid pictures of his lavish birthday bash in December are any indication. Worse, much of the money is owed to state-owned banks, which are under fire for having extended dud loans to political cronies. + +Beyond partying too hard for his creditors’ tastes, Mr Mallya has made it difficult for banks to accept anything less than full repayment—some 90 billion rupees ($1.3 billion) including interest, some of which he has personally guaranteed. He still has a roughly one-third stake in United Breweries, of which Heineken is now the biggest shareholder, though some of his equity is reportedly already pledged as collateral for other loans. In this debacle the personal and the corporate are closely intertwined. + +Mr Mallya’s creditors know he has at least $40m, part of a package he received in February from Diageo to resign from the board of a spirits group he sold to the British drinks company in 2013. Diageo can count itself among the stiffed: it agreed to repay $135m to Standard Chartered to settle a loan taken out by a company close to Mr Mallya. It also gave the bearded bon vivant a sweetheart deal on 13 houses the company owned but he had historically used. + +Once seemingly immune to the pressure, Mr Mallya left India on March 2nd just as courts were being asked to keep him in the country. (He denied absconding at the time and now a spokesman declines to comment.) His whereabouts are a mystery; he might be holed up in a posh retreat he owns outside London. A regular of Formula One’s travelling circus (he co-owns a team), Mr Mallya has been absent from the trackside of late. His diplomatic passport—a handy perk of sitting in India’s upper house of parliament, as he has done for over a decade—has been suspended. + +Mr Mallya has tried to settle his tab by offering the banks 40 billion rupees, to no avail. The latest charge from a government agency is that 4.3 billion rupees of a loan made to Kingfisher for airline-related things was used to buy property instead. Even if he shakes off that allegation, which he denies, a court appearance of the sort he has avoided thus far seems inevitable. Unless Mr Mallya settles up, he may be in for a long hangover. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21697271-after-good-times-comes-reckoning-vijay-mallya-hangover/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Picking the boss + +The outside track + +Why companies are appointing more outsiders as CEOs + +Apr 23rd 2016 | From the print edition + + + +TO MAKE or to buy is perhaps the most basic question in business. This week a new report from Strategy&, an oddly named consulting division of PWC, an accounting firm, argues that a growing number answer “buy” when it comes to appointing bosses. + +Strategy&, formerly Booz & Co, has been studying CEO succession in the world’s 2,500 biggest public companies for the past 17 years. It found that between 2012 and 2015 boards chose outsiders in 22% of planned successions, up from just 14% between 2004 and 2007. Looking at the numbers in a different way, in cases where outsiders were parachuted in, 74% of them joined as part of a succession that was planned in the 2012-15 period (up from 43% in 2004-07). Traditionally boards have turned to outsiders in the last resort—when they have to boot out incumbent CEOs or when the pipeline of internal candidates runs dry. The new statistics suggest that firms increasingly go for outsiders as part of regular succession planning. + +Good reasons exist for this. Boards want leaders who can deal with powerful disruptive forces, such as new technologies and radical business models. Industries that have seen a lot of disruption from technological innovation or regulatory change are particularly keen on outsiders. In the 2012-15 period, outsiders made up 38% of incoming CEOs in telecoms, 32% in utilities, 29% in health care, 28% in energy and 26% in financial services. How far outside firms will go varies: in financial services almost all outsiders (92%) came from other financial firms; in utilities 72% of outsiders came from other industries. + +Boards are more independent than they used to be, thanks largely to regulatory changes introduced after corporate-governance scandals early last decade. They are more likely to consist of genuine outsiders unencumbered by ties to the CEO and equipped with a wide range of contacts and perspectives. That makes it harder for bosses to anoint heirs apparent. Spencer Stuart, a headhunter, calculates that last year 84% of all board directors of S&P 500 firms were independent and 29% of boards had a truly independent chair. Strategy& says that only 7% of last year’s incoming CEOs were also named chairman of the board. + +Board independence is reinforced by the rise of activist investors. Institutional investors and hedge funds expect as a matter of course that boards will hold managers to account and sack bosses who badly underperform. SharkWatch, a corporateactivism database, says almost half the companies at which an activist investor gains a board seat replace their boss within 18 months. + +A fashion for outsiders is at first glance worrying. It probably helps push up bosses’ salaries (see Schumpeter). Insiders have traditionally fared better: in 2005 retiring insiders had a median tenure of 5.8 years, against 4.8 years for outsiders. And some outsiders have proved to be embarrassing flops. Yahoo hired Scott Thompson from PayPal only to sack him a few months later when it learned he had falsified his academic credentials. J.C. Penney recruited Ron Johnson from Apple but dumped him after its share price fell by half. + +But outsiders had a poor record in part because companies used only to turn to them in extremis. Now they choose them in good times: last year companies in the top quartile of performance (as measured by total shareholder returns) hired a larger share of outsiders than did poorly performing companies, and retiring outsiders had a longer tenure than insiders. By insisting on considering outsiders as well as insiders, boards give themselves more options. The more important change is not that they sometimes decide to buy from outside, but that they are getting better at doing their most basic job—planning CEO succession. About time, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21697274-why-companies-are-appointing-more-outsiders-ceos-outside-track/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Business in Iran + +The over-promised land + +It is proving harder than expected for investors to make a start + +Apr 23rd 2016 | TEHRAN | From the print edition + + + +IT WAS billed as a once-in-a-generation opportunity. Iran is the “biggest new market to re-enter the global economy in decades”, British trade officials said in January, predicting more than $1 trillion of investment over ten years. “Iran is a new region to conquer,” said an imperial-minded boss of a French luxury-goods firm this month. Sanctions had kept outsiders from an oil-rich economy worth an estimated $400 billion. Although an American trade embargo remains in place, firms from other parts of the world were expected to scramble to enter after the lifting of nuclear-related sanctions in January. + +At first glance the influx has begun. Soon after the IAEA, the international nuclear watchdog, said Iran had fulfilled the terms of an agreement with big powers, European firms trumpeted deals potentially worth billions. Airbus said it would sell Iran 118 jets, with bigger orders possibly to follow. PSA Peugeot Citroën and Renault-Nissan said they would assemble and sell cars to Iran’s 80m people. Analysts foresaw record car sales this year. + +So many delegations of would-be investors flocked to Tehran that visitors reported struggling to find rooms in the smog-choked city. Earlier this month Italy’s prime minister, Matteo Renzi, became the latest to lead a gaggle of businessmen there, predicting a golden era for industrial ties. Italian fashion firms, such as Versace and Roberto Cavalli, and a French cosmetics firm, Sephora, have opened shops in Tehran or plan to do so. In cafés in north Tehran, where peroxide hairdos poke from veils, rumours circulate about a European arm of an American turbine-maker that has agreed a big joint venture. Local “business enablers”—such as Ilia, run by well-connected Iranians and Germans—are popping up like mushrooms. They offer to help outsiders navigate markets, set up joint ventures, rent offices, find pre-paid credit cards and more. + +Yet getting started is proving harder than many expected. The biggest problem is a lack of finance. On April 13th a Treasury official denied that America is continuing to freeze Iranian overseas assets. Yet such funds, worth perhaps $100 billion, which had been expected to help pay for an investment boom, do not seem to be flowing. More importantly, America continues to deny firms that operate in Iran access to its financial system. That spooks foreign banks, which are wary of the long arm of American law. Since 2009 the Treasury’s sanctions enforcer, the Office of Foreign Assets Control (OFAC), has imposed $14 billion in fines on those dealing with Iran. + +Without the banks, those headline-grabbing deals will struggle to go far. Uncertainty lingers. The US Treasury seems unable to define the benchmarks Iran has to meet to regain access to the American financial system. “It was better when sanctions were still in place,” grumbles a wheat merchant, who traded with American suppliers (OFAC approved) throughout the sanctions era. “At least the banks then knew what they could and couldn’t do. Now the lawyers, not the bankers, are taking decisions, and nothing is moving.” + +Lacking lubrication + +“We can’t sell to Iran because our bank won’t accept payment,” says a British producer of drilling parts for oil platforms, who has stayed out of Iran’s market for the past six years. European export credit agencies are issuing some credit notes, such as a recent Italian one for $5 billion. A few European banks, including Belgium’s KBC and Germany’s DZ Bank, have started handling transactions, probably because neither has a big presence in America. Even so, they cannot trade in dollars (unless, America says, those dollars were already abroad) and appear only to be testing the water. + +In Tehran, businessmen and officials say everything is stymied from afar. Ayatollah Ali Khamenei, Iran’s religious leader, says Americans lifted sanctions only “on paper”. Hamidreza Taraghi, who advises the Supreme Leader, says deals announced, including the largest with Airbus, were “just show”. (Airbus executives have been in Tehran this month, but the deal is yet to be finalised.) An international trade forum due in Tehran this autumn has been cancelled for lack of interest. Iran’s oil ministry has delayed a promised shindig in London five times. + +A fast-growing Iranian e-commerce site, Netbarg, complains that an American server shut all its websites this year without warning. “They didn’t do anything when Iran was under sanctions,” says its owner, Ali Reza Sadeghian. Since the lifting of sanctions America has made it harder for Europeans who visit Iran to get visas. An American ban continues on commercial use of American products in Iran. A lawyer in London who advises firms on trade in Iran says visitors there should not use iPads, Microsoft PowerPoint or the like. + +The headaches do not end there. Much excitement, for example, rested on the prospect of oil funds being splurged on infrastructure. But despite rising output, revenues will disappoint. In 2010 oil generated $125 billion for Iran; this year, given low prices, it will be lucky to get $25 billion. + +Much of Iran’s industry, oil included, is run-down. Once flourishing industrial parks are ghost towns. Though luxury-goods firms see an opportunity, many consumers are short of cash and opt for the cheapest goods. Chinese car parts, for example, outsell pricier European ones. + +A labyrinthine bureaucracy frustrates everyone. Since last October many Western visitors (though not Britons or Americans) have been able to get visas on arrival. Getting a work visa, however, still involves tiresome wrestling with red tape. Worse, a few foreigners have been arrested, among them Siamak Namazi, an Iranian-American businessman held since October, and his father, an ex-official at the UN. Statements from some public figures are discouraging. “We’re not going to go in their countries and we don’t want them to come and live in ours,” says Hadi Khamenei, the brother of the Supreme Leader. + +Other sources of uncertainty include pervasive corruption and the activities of shadowy groups, such as the Revolutionary Guard Corps, which have big, hidden economic interests. It is hard to navigate Iranian politics, or even to find trusty accounting and legal firms, although several foreign outfits are returning to Tehran. + +Spot the foreigner + +Iran has a modest ranking, 118th, on the World Bank’s ease-of-doing-business index (see chart). Things might improve if parliament, newly elected, were to pass laws to tidy up customs rules, or to make it easier to hire and fire workers. Some officials also talk of restructuring state-owned firms, such as Iran Air. + +Such reforms would make sense, irrespective of the availability of outside financing. Relations with America are unlikely to warm up quickly. America says Iran’s government is violating the spirit of the international deal, by launching missiles and more. This month Barack Obama told Iran to stop “engaging in a range of provocative actions that might scare business off”. America might not ease its position until after its presidential election in November. Were a Republican to win, that “poses a huge risk for investors”, says a Tehran-based consultant. Iran still holds huge promise, but the scramble will be more stately than expected. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21697276-it-proving-harder-expected-investors-make-start-over-promised-land/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Pay dirt + +Shareholders are partly responsible for the latest executive-pay brouhaha + +Apr 23rd 2016 | From the print edition + + + +FAT cats and big bonuses routinely stoke public anger. Now shareholders are pig-wrestling mad. On April 14th investors in BP rejected a pay rise for Bob Dudley, the oil firm’s boss, furious that he had got a 20% bump in his compensation last year (pension included) for overseeing the company’s biggest-ever operating loss. “Let me be clear,” soothed Carl-Henric Svanberg, BP’s chairman. “We hear you.” + +BP’s shareholders are not the only ones being bolshie. On the same day, investors also slapped down Smith & Nephew, a FTSE 100 maker of medical devices, for waving through bonus payments even though targets set under its own pay policy had not been met. Fresh boardroom embarrassments loom. Shareholder-advisory firms have issued many more recommendations to vote against FTSE firms’ pay policies this year than last. Their targets this week included Anglo American, a mining firm, whose boss presided over a loss of £3.7 billion ($5.6 billion) in 2015 but took home a bonus of almost £1m. VW’s board is trying to head off trouble at the pass: it has said it will cut bonuses significantly, given the carmaker’s emissions scandal. Citigroup is lobbying its shareholders to ignore criticisms of its pay policies. + +These belches of discontent are striking. First, public breaches between investors and directors happen rarely. True, the BP vote was a charade. It was an advisory vote, not a binding one; Mr Dudley had already banked his pay before shareholders rejected it. Nonetheless, any sort of dissent is unusual. It has been six years since the Dodd-Frank act gave shareholders in American firms an annual “say on pay” vote: the vast majority of them sail through. Less than 1% of S&P 500 firms suffered a defeat on pay last year; half got approval from more than 95% of their shareholders. Apart from a brief “shareholder spring” in 2012, it has been the same in Britain: just one FTSE 100 firm lost a pay vote last year. + +Second, pay structures have shifted shareholders’ way in the past few years. The financial crisis underlined how managers could bank millions while shareholders picked up the pieces; public anger over inequality has made boards more conscious of the bad publicity that comes with egregious pay; and the votes on pay have given investors more leverage. Compensation committees claim to have forged a much tighter link between bosses’ pay and corporate performance. There is something to this. The percentage of S&P 500 firms tying pay to performance has jumped from 63% to 83% since 2011, according to Equilar, a research firm. + +What, then, explains the current mini-mutiny? Investors have not had some sort of epiphany about the evils of excess pay for executives. The amounts of money involved in CEO pay may be enormous to the eyes of individuals, but they are trifling in corporate terms. Google’s chief executive, Sundar Pichai, just landed a pay award that could leave him $200m better off, for example. But if he makes decisions that add just 1% to the market capitalisation of Alphabet, Google’s parent company, that would be a $5 billion gain to shareholders. Pay is not as big a priority for shareholders when things are going well. + +But when investors suffer—as those in oil and mining certainly have over the past year—and executives do not, the mood changes. Willis Towers Watson, another consultancy, analysed the recommendations that Institutional Shareholder Services, a shareholder-advisory firm, issued in America last year: 86% of those advising a “no” vote on pay reflected concern about disconnects between remuneration and performance. + +Firms are supposedly making compensation more contingent on performance, yet these disconnects are still happening. One reason for this is complexity. Creating pay structures that perfectly reflect performance is a mug’s game. That hasn’t stopped an entire industry of consultants and proxy advisers from trying. Wading through the remuneration policies of listed firms deserves a bonus in itself: pages of dense text describing varieties of equity award with different triggers for vesting, some related to share prices, others to operational and financial measures. + +It all looks very clever on paper. Indeed, BP’s shareholders voted en masse in 2014 in favour of the very pay policies that spat out Mr Dudley’s pay rise this year. But the results can be perverse. Setting detailed targets risks distorting behaviour. The pay policy at Valeant, an imploding drugs firm, used to be lauded for its emphasis on performance; plenty now reckon that setting a target of 15% annual growth in the share price helped it towards disaster. In March a government-sponsored review into gender diversity in British boardrooms called for bonuses to be linked to diversity targets. That would encourage gaming, says Alex Edmans, an academic at London Business School. + +Comparing the performance of a firm to a group of industry peers also has an obvious logic to it. Otherwise executives can get rewarded or hurt by things outside their control: a stockmarket buoyed by easy central-bank money, or a slump in the oil price. But falling a bit less far than the worst of your peers, which was BP’s achievement in 2015, is an odd definition of success. It certainly isn’t one that aligns managers’ and investors’ interests. + +Comp mentis + +In the face of these sorts of anomalies, some heretical thoughts are surfacing. A Harvard Business Review article published earlier this year argued the case for getting rid of variable pay altogether and paying bosses a fixed salary. Shareholders will not go for that. But performance-based pay needs to be simpler: one option is to award stock without setting any performance-based conditions at all, but restricting executives’ ability to sell. That would both tie managers’ payouts to long-term performance, and reduce incentives to game results. This month’s outbreak of rebelliousness may look like a straight fight between tin-eared boards and wronged shareholders. Investors themselves have played their part in bringing about the outcomes they now oppose. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21697240-shareholders-are-partly-responsible-latest-executive-pay-brouhaha-pay-dirt/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Bank of America: The limits of fasting + +Buttonwood: The wrong kind of savings + +The 1MDB affair: Turning the screw + +China’s economy: Romance of the three quarters + +Oil markets: Drill will + +Blended finance: Trending: blending + +Free exchange: Money from heaven + + + + + +Articles Sections Next + +Bank of America + +The limits of fasting + +Severe cost-cutting is getting a giant of American banking only so far + +Apr 23rd 2016 | New York | From the print edition + + + +INVESTORS in American banks are a hardened lot. Profits at the six biggest were down in the first quarter, year on year—by as much as 53% in the case of Morgan Stanley—thanks chiefly to dwindling earnings in their investment-banking units. Earlier this month regulators rejected the “living wills”—blueprints for breaking up or liquidating a bank should it get into trouble—of all six save Citigroup. Yet markets barely flinched. Limp profits and brickbats from regulators, alas, have become routine. + +Yet even these grizzled veterans have their doubts about Bank of America. Its profits fell by 13% in the first quarter—much better than some. But that left its return on equity at a measly 4%, the lowest figure among the big six (see chart). Its shares are priced at just 66% of the value of the assets on its books, lower than any of its peers and far below figures of 106% at JPMorgan Chase and 150% at Wells Fargo. + + + +This is all the more disappointing given Bank of America’s many strengths. Its funding is remarkably cheap (it pays just 0.12% interest, on average, on the $1.2 trillion of deposits in its commercial bank). It is a more pervasive presence in America than its rivals, with branches all over the country, bringing it a degree of geographic diversification that others lack. And in Merrill Lynch, its wealth-management arm, it has the biggest salesforce for financial products in America, catering to a wealthy clientele. + +What is more, Bank of America’s management has been avidly cutting costs to boost profits. The number of employees has dropped from 288,000 to 213,000; the number of branches has been cut from 6,100 to 4,700. The floorspace occupied by the bank has dropped by one-third, or 44m square feet—equivalent, it proudly declares, to 14 Empire State buildings. All this has reduced operating expenses dramatically, from about $17 billion a quarter to $13 billion. + +The current chief executive, Brian Moynihan, has also laboured to clean up the mess left by his predecessor, Ken Lewis, who bought Countrywide, a big subprime mortgage lender, in 2008. Since 2010 Bank of America has spent some $194 billion to cover costs linked to the financial crisis, including $36 billion for litigation and $46 billion to address all Countrywide’s dud loans. It had to hire 56,000 people to sort out delinquent mortgages, which peaked at 1.4m but now number only 88,000. + +More prosaically, Bank of America has trimmed back the bewildering thicket of products and systems left over from the acquisitions of Mr Lewis and his predecessor, Hugh McColl. The number of different kinds of current accounts has fallen from 23 to 3, of credit cards from 18 to 6, of savings accounts from 44 to 11, of home loans from 136 to 39 and so on. + +The relentless cost-cutting, however, is in part a reflection of how tricky it is for Bank of America to boost income. New rules on liquidity make it harder to lend out those cheap deposits, and low interest rates constrain the profits to be made. The bank’s loan-to-deposit ratio, which often used to exceed 100%, is just 74%. Its net interest margin (the difference between the average rate it pays depositors and that it charges borrowers) is two percentage points, well below the historical average. “All of these numbers add up to significant unutilised earnings capacity,” says Richard Bove of Rafferty Capital Markets, a broker. + +Moreover, as one employee says with a sigh, the regulators “keep coming at us”. The latest cudgel is the “fiduciary rule”, which is intended to prevent financial advisers from elevating their own interests above those of their clients and in practice makes it hard to manage money in exchange for trading commissions rather than fees. The companies that stand to benefit from the rule are asset managers that provide cheap index-tracking funds, such as Vanguard and BlackRock. Those that offer more complicated and expensive products face extra compliance costs, at the very least. + +Given that Merrill Lynch has America’s biggest network of what were once called brokers but are now wealth managers, Bank of America is bound to be affected. It is putting on a brave face, saying that the rule will affect only 10% of the almost $2 trillion of assets it manages and will have no impact on earnings. But Keefe, Bruyette & Woods, a research firm, says that the rule will reduce the bank’s earnings in 2017 by 2.7%—the most among the universal banks. + +In short, regulation is making assets such as a mountain of cheap deposits and a huge network of brokers less valuable to Bank of America than they would have been in the past. Neither low rates nor the onslaught of new regulation will last forever. But in the meantime Mr Moynihan’s response to the lacklustre first-quarter results gives a good sense of Bank of America’s strategic impasse: he promised to cut costs even more fiercely. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21697229-severe-cost-cutting-getting-giant-american-banking-only-so-far-limits/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +The wrong kind of savings + +The economic equivalent of St Augustine’s plea + +Apr 23rd 2016 | From the print edition + + + +NEGATIVE interest rates are surely a sign that something is wrong with an economy. Normally, people have to be rewarded if they are to be induced to postpone consumption. Penalising them for doing so seems perverse. + +Admittedly, negative nominal rates apply mostly to commercial-bank reserves held at the central bank. But many savers in the developed world are suffering negative returns in real, after-tax, terms. Larry Fink, the chairman of BlackRock, a fund-management group, recently argued that low rates may not work as central bankers intend: those planning for retirement will need to save more, not less, to generate a given income. By the same token, low rates explain why lots of companies’ pension funds are in deficit. + +Many economists argue that low interest rates are the result of too much saving, rather than too little. A “savings glut” means that the returns from investing have inevitably fallen. Unfortunately, the savings aren’t really accumulating in the right places. The ageing citizens of the rich world should be putting lots of money aside for their old age, but personal savings rates are generally low. + +Britain’s household-savings ratio perked up after the 2008 crisis, without ever reaching the 16.5% recorded in the last quarter of 1992. In the fourth quarter of 2015 it was 3.8%, well below the average level since 1963, of 10%. The American savings ratio is 5.4%; between 1963 and 1985, it often exceeded 10% (see chart). + +In economic textbooks, companies use the savings of households to finance their expansion. But for much of this century companies in the developed world have been net savers. In Japan this has been going on even longer. + +Given the ultra-low interest rates available on cash, and with investment-grade corporate bonds yielding just 3%, you might think there would be lots of profitable projects for companies to invest in. Although corporate investment has picked up since the 2008 crisis, it is hardly booming. Perhaps companies are cautious about the outlook for demand; perhaps competitive pressures are not what they were; perhaps they are simply using their cash to buy back shares. Whatever the reason, their behaviour has changed. + +In theory, a financially strong corporate sector is good news for workers. Their employers could be putting aside a lot of money to meet their future pension commitments. In practice, however, the switch from final-salary pension schemes to defined-contribution (DC) plans means that employers’ pension contributions are lower than before. The average American employer ponied up just 4.5% of pay in 2013. Many people are going to depend on the state in their old age. As it is, more than a third of retired Americans get more than 90% of their income from Social Security. + +If a country’s private sector has net savings, then mathematically the government must be running a deficit or the country must be exporting the excess, generating a current-account surplus. Deficit financing by governments makes sense as a way of stimulating demand in the short term. But it could be argued that rich countries with ageing populations should be running current-account surpluses and investing in faster-growing emerging markets. The euro area, in aggregate, does follow this approach (although Germany, its biggest economy, is often criticised for doing so), but Britain and America run persistent current-account deficits. Instead many countries in the emerging world, including China and Taiwan, are investing huge surpluses abroad. Although very low or negative rates in the developed world should discourage this, they seem to be having little effect. + +Meanwhile, governments in the developed world face big long-term financial challenges. A recent report from Moody’s detailed the unfunded liabilities facing the American taxpayer: 75% of GDP for Social Security, 18% for Medicare, 20% for the cost of pensions for federal employees and another 20% for pensions in state and local government. Britain has unfunded pension liabilities (for government employees) of around 66% of GDP. + +Perhaps governments will deal with those challenges by cutting benefits or raising taxes. But if workers think that will happen, they should be saving more now in order to compensate for that future hit to their incomes. There is no sign that they are doing so. Indeed, governments don’t want to see a huge rise in household saving in the short term because of the impact on demand. It’s the equivalent of St Augustine’s plea, “Lord, make me chaste, but not yet”. And it is another sign that economies are in a mess. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21697234-economic-equivalent-st-augustines-plea-wrong-kind-savings/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The 1MDB affair + +Turning the screw + +Investigators focus on the mystery of the missing billion + +Apr 23rd 2016 | From the print edition + + + +AS IF being investigated by seven countries wasn’t enough, 1MDB is also flirting with default. Government gumshoes in Switzerland, America and elsewhere are said to be close to mapping the full money trail in a suspected multi-billion-dollar scam centred on the heavily indebted Malaysian state investment fund. As their probes intensify, 1MDB’s relationship with a big backer is unravelling: IPIC, an Abu Dhabi sovereign fund, has declared 1MDB to be in breach of an important financial contract between the two—and has duly terminated it. The move complicates an already tricky debt restructuring at 1MDB. It also fans the flames of a scandal that touches the upper reaches of Malaysian politics and international finance. + +IPIC bailed out 1MDB last year with a $1 billion loan and an agreement to take responsibility for interest payments on some of 1MDB’s bonds; in return 1MDB was to transfer undisclosed assets to IPIC. But on April 18th the Gulf fund said 1MDB was “in default” on the deal, and stopped making payments to bondholders, including $50m due this week. That kicked off a five-day grace period. 1MDB says it has “ample liquidity” to cover the obligations. + +The reason for IPIC’s ire is $1.1 billion that appears to have gone missing. 1MDB was supposed to transfer this to IPIC as part of their deal, but IPIC says it was never received. Investigators believe this was part of a larger sum—perhaps $3.5 billion—that was siphoned off from 1MDB to a shell company in the British Virgin Islands which had an almost identical name to one of IPIC’s subsidiaries, Aabar, but was unconnected to it. + +Investigators think some of the diverted money ended up in the personal bank accounts of Najib Razak, Malaysia’s prime minister (pictured). Bank records seen by the Wall Street Journal show that $15m was spent on personal items such as jewellery, with a larger amount funnelled into the ruling coalition’s 2013 election campaign. Mr Najib denies ever having taken public money for personal gain. Malaysia’s attorney-general says a $681m payment into the prime minister’s accounts was a legal personal donation from a Saudi royal. + +The investigators believe much of the cash that flowed into Mr Najib’s accounts came via an offshore firm whose beneficial owner was a business partner of a Malaysian financier called Jho Low, a member of Mr Najib’s inner circle at the time, according to the Wall Street Journal. Mr Low is thought to have played a key role in the transfers. He has denied wrongdoing. + +Some $150m is also believed to have flowed from 1MDB to Red Granite Pictures, a film-production firm co-founded by Mr Najib’s stepson. This outfit subsequently financed “The Wolf of Wall Street”, a Hollywood film about a hedonistic crook. Red Granite denies wrongdoing. Mr Najib’s younger brother may also be caught up in the affair: Nazir Razak has taken a voluntary leave of absence from CIMB, the Malaysian bank he chairs, while a review is conducted into a $7m transfer into his personal account from the prime minister. + +Investigations within Malaysia have been timid or stymied. Last year the attorney-general was replaced—supposedly on health grounds, though leaked documents appear to show he was about to bring criminal charges against Mr Najib. His successor has rebuffed calls by the central bank for 1MDB to face charges. A parliamentary report into the fund’s affairs identified irregularities but stopped short of alleging outright fraud. + +That leaves other countries to make the running. On April 12th the Swiss said the scope of their enquiries was widening, and that they were now investigating two former public officials from the United Arab Emirates—understood to be former bigwigs at IPIC and Aabar. The statement, unusually blunt for an ongoing probe, talked of suspected “embezzlement”, “criminal mismanagement”, “forgery” and “money-laundering”. + +The Swiss earlier estimated the amount possibly misappropriated through 1MDB to be $4 billion. Some investigators now reckon it could be as much as $6 billion. Switzerland’s top financial regulator calls it a “clear” case of corruption, with “concrete indications” of “inadequate” anti-money-laundering measures by banks that handled 1MDB’s cash, among them some of the biggest names in finance. America’s FBI is believed to be looking at bank transactions, property deals and much else besides. With graft and dodgy offshore manoeuvres high up political agendas after the leaking of the “Panama papers”, investigators have an added incentive to dig deep. The 1MDB affair could become an important test of how the world deals with cross-border corruption. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21697270-investigators-focus-mystery-missing-billion-turning-screw/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +China’s economy + +Romance of the three quarters + +If the recent pattern holds, China’s latest upturn will be short-lived + +Apr 23rd 2016 | Shanghai | From the print edition + + + +“THE empire, long divided, must unite; long united, must divide.” This famous opening from “Romance of the Three Kingdoms”, a classic Chinese novel, refers to the inevitable ebb and flow of dynasties over the centuries. The same principle, in less dramatic fashion, applies to the ups and downs of the economy. But in the past couple of years, the rhythm in China has been unusually fast: the economy, stumbling for a few quarters, must strengthen; strengthening for a few quarters, must stumble. + +For now, China’s economy appears to be strengthening again. Real growth edged down to 6.7% year on year in the first quarter, but that figure, subject to fiddling by the authorities, is treated with scepticism by analysts. Instead, they pay more attention to a range of indicators that tell a different story. First, nominal growth—to which corporate earnings are more closely tied—jumped to 7.2% year on year, up from 6% in the final quarter of 2015. Second, the revival of the property sector—the most important part of the economy—gathered pace: the prices of new homes increased by 3.1% in March from a year earlier, the fastest growth since mid-2014. Third, industrial output rose by 6.8% year on year in March, compared with a subdued 5.4% average over the previous two months. + +All this is far from the double-digit growth that once seemed so effortless in China, but it is nevertheless striking given investors’ gloomy outlook at the start of this year. Then concerns focused on surging capital outflows, the depreciating yuan and a swooning stockmarket. Now, all three are in much better shape. Foreign-exchange reserves increased in March, for the first time in half a year. The yuan has risen by nearly 2% against the dollar over the past three months, and the CSI 300, an index of Chinese blue-chip stocks, has climbed by 7% since the end of January. + +Yet anyone counting on a sustained upturn in the economy would do well to examine the pattern of the past few years. Since early 2012 Chinese growth has been trending downward despite a rapid sequence of ups and downs (see chart). The force behind these fluctuations is on-again-off-again policy support from the government. Determined to keep the economy growing in line with its annual GDP targets, officials have turned to fiscal and monetary stimulus when growth has faltered. Wary of overdoing it, they have pulled back when the economy has picked up. + +That might seem to be a feat of fearsomely effective central planning, but, worryingly, each leg-up in the mini-cycle has required a bigger push. The current rebound follows a boom in lending as well as a series of policy incentives that have fuelled a mammoth property rally in the biggest cities. Total new credit rose by 42% in the first quarter compared with a year earlier, the biggest increase in three years. New home prices in Shenzhen, a southern metropolis, soared by 62.5% year on year in March, while those in Shanghai rose 30.5%. When growth flags again, as many expect will happen later this year, the government will have less scope to boost it without raising an already towering debt load. + +In the meantime, regulators are trying to undo some of the excesses. They have started to crack down on leverage in the bond market, one of the main channels for new financing in recent months. Officials in big cities have also made it harder for speculators to buy homes. But appetite for the tougher reforms needed to energise China’s economy in the long term—deleveraging the financial system, breaking up state-owned monopolies and eliminating excess capacity in industry—is still wanting. Shen Jianguang, an economist with Mizuho Securities, believes the government will focus on reforms that support growth, such as providing more financing for business startups. It is reluctant to pursue the more difficult reforms, for fear of undermining growth. That means the next downshift in the mini-cycle is, like the current upturn, only likely to go so far. + +Some factors are beyond China’s control, however. A big question stemming from its rebound is how that will influence monetary policy in America. The Federal Reserve has refrained from increasing interest rates after an initial rise in December, with Janet Yellen, the Fed’s chair, highlighting risks from China as a prime reason for caution. Now that China is faring better, the path to a second rate increase in America ought to be clearer. But that might lead the dollar to rise and place renewed pressure on the yuan, which would risk stoking capital outflows and, in turn, fresh concerns about the health of the Chinese economy. If it all sounds a bit dreary, one should at least be grateful that the mini-cycle features none of the death and carnage so prominent in “Romance of the Three Kingdoms”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21697261-if-recent-pattern-holds-chinas-latest-upturn-will-be-short-lived-romance/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Oil markets + +Drill will + +America, not OPEC, decides the fate of global oil markets + +Apr 23rd 2016 | From the print edition + +Where the action really is + +“WE DON’T care about oil prices,” Muhammad bin Salman, Saudi Arabia’s deputy crown prince, recently told Bloomberg, a news agency: “$30 or $70, they are all the same to us.” Such comments by the man calling the shots in the world’s biggest oil power should be taken with a pinch of salt. Low oil prices cost the country billions, threaten its credit rating and are turning it from creditor to debtor: this week it set out to raise $10 billion from global banks. Yet the claim is not entirely hollow, either. Saudi Arabia is determined not to give any succour to higher-cost producers, despite the damage the low price does to its own finances. + +At a meeting in Doha, the Qatari capital, on April 17th Saudi Arabia blocked an agreement between OPEC and non-OPEC producers, such as Russia, to shore up global oil prices by freezing production at January’s level. The idea that such a deal could have been enforced was fantasy anyway. As Carole Nakhle of Crystol Energy, a consultancy, points out, Russia is pumping at record levels and there was no way to police its compliance with a freeze. Iran, which is vowing to raise output to pre-sanctions levels, had dismissed the notion that it would take part as “ridiculous”. + +Prince Muhammad apparently forced his negotiators to shun a deal just as they were about to sign it, insisting that the kingdom would only freeze production if Iran were prepared to do likewise. Some participants were furious at his behaviour. The Saudi delegation “had no authority to decide on anything”, fumed Eulogio del Pino, Venezuela’s oil minister. + +For decades Saudi policy has been steered by deft negotiators such as Ali al-Naimi, the kingdom’s oil minister. Now it is under the thumb of the 30-year-old prince, who believes low oil prices will help his drive for economic reform at home and weaken Iran, Saudi Arabia’s arch-rival. “For years we’ve been told that Saudi oil policy is driven by commercial and economic considerations,” says Jason Bordoff of Columbia University’s Centre on Global Energy Policy. “Yet what happened in Doha seems to have had a big geopolitical dimension to apply pressure on Iran.” + +Fortuitously for oil prices, the Doha debacle coincided with the start of a three-day strike in Kuwait that temporarily dented the emirate’s crude production. Yet that underscored how daft the effort to impose a freeze was in the first place: low oil prices are already dampening global supply. The strike in Kuwait was the result of public-sector pay cuts brought on by lean oil revenues. Schlumberger, an oil-services firm, says it is reducing activity in Venezuela because the cash-strapped state oil firm there has not paid its fees. Oil traders say they can no longer get letters of credit to trade with Venezuela. They also worry about the counterparty risk of dealing with oil-dependent countries like Nigeria. + +The real freeze, says John Castellano of Alix Partners, a debt consultancy, is taking place in America. Shale producers that borrowed heavily to increase production in the boom years are likely to flock to bankruptcy court this year in even greater numbers than in 2015, he predicts. On April 14th and 15th respectively two such firms, Energy XXI and Goodrich Petroleum, filed for Chapter 11 protection. Even those that are still going concerns have no money to invest in maintaining production. As a result, shale production has fallen by 600,000 barrels a day since its peak last year, according to the Energy Information Administration, an official body. That, more than any OPEC posturing, is what is underpinning oil prices. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21697268-america-not-opec-decides-fate-global-oil-markets-drill-will/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Blended finance + +Trending: blending + +The fad for mixing public, charitable and private money + +Apr 23rd 2016 | From the print edition + +What blended finance hath wrought + +MEETING the United Nations’ Sustainable Development Goals will require additional investments of $2.5 trillion a year in things like health care and education for the world’s poorest people, according to UNCTAD, a UN agency. A further $13.5 trillion is needed by 2030 to implement the Paris climate accord, according to the International Energy Agency, a watchdog group. It is enough to drive development types to drink—which may be how they came up with the term “blended finance”, a heady cocktail of public, private and charitable money. + +The phrase is being floated at all manner of gatherings, from the recent meetings of the IMF and the World Bank to the World Economic Forum in Davos, as a way to make the limited pool of money available for worthy causes go further. The new name notwithstanding, however, the idea of using public funds to attract private money is a venerable one. For it to change development finance fundamentally, as enthusiasts claim it can, it will have to become easier to scale up. + +Private investors do not typically fund the construction of rural roads in Africa, say, or vaccination drives in villages, even though the returns on such investments are often enormous. That is because the returns are either hard to monetise, or the risks are too great for the private sector to tolerate. The point of blended finance is to use public or charitable funds to remedy those problems, allowing private money to flow to places and projects it would usually shun. According to a WEF survey of 74 blended-finance vehicles, this “honey trap” is working: every dollar of public money invested typically attracts a further $1-20 in private investment. + +When Wandee Khunchornyakong, a Thai entrepreneur, wanted to build solar farms in sunny north-east Thailand, commercial lenders were unwilling to take a leap into such an untested market. In 2011 the IFC, an arm of the World Bank, provided an $8m commercial loan blended with a low-interest loan of $4m from CTF, a climate investment fund backed by several governments. This gave three local banks the confidence to lend a further $14m. By 2015 the company had attracted $800m of investment, all but the initial loan from the private sector. + +AATIF, a $146m fund which invests in sustainable African agriculture, goes even further to protect private investors. It has three categories of shareholders. The first two, comprising the German Ministry of Development, KfW, a development bank owned by the German government, and Deutsche Bank, which also manages the fund, agree to absorb losses before the third tier—consisting only of private investors—gets hit. That means losses have to exceed 50% of the fund’s net asset value before investors in the third tranche suffer any harm. + +In a similar vein GuarantCo, which is backed by aid agencies, helps make investments in infrastructure in poor countries bankable by taking on the most nettlesome risks. For every dollar it invests it has attracted $13.50 in private money. In 2014 it helped Mobilink, a telecoms firm, expand into remote parts of Pakistan by guaranteeing part of an Islamic bond denominated in Pakistani rupees. The Gates Foundation, too, has put aside $1 billion to provide loan subsidies, guarantees and other sweeteners for twitchy private creditors. + +Blended finance can also be used to generate financial returns on investments that would normally only yield less tangible benefits. The most common method is the “social-impact bond”, in which “outcome funders”, such as governments and aid agencies, pay back investors who have funded projects that meet goals which, although socially desirable and delivering notional cost savings, do not yield direct profits. In one example, Children’s Investment Fund Foundation, a charity, has agreed to pay a return of 10% on a project designed to improve school attendance among Indian girls if enrolment, literacy and numeracy improve as agreed after three years. If the results exceed expectations, the return rises to as much as 15%. + +Social-impact bonds are promising. But they are still very new, and more discussed by wonks than used in the real world. Kois Invest, an impact-investing firm, counts 60 social-impact bonds launched since 2010, mostly in the rich world. The Indian education bond is financed by a sympathetic lender, the UBS Optimus Foundation, which hopes to prove the financial viability of the concept. + +Few data exist on the scale and success of blended finance more broadly, but it is still a niche. Two global platforms were recently launched to match investors with projects. One of them, Convergence, has a database of over 150 blended transactions since 2000 with a total value of $40 billion, but says its list is not exhaustive. + +For the industry to grow from the billions to the trillions, it will need more than a catchy name. A larger pool of private investors and more easily replicated projects will be essential. At the moment, for instance, every social-impact bond is tailor-made. The mixologists of development finance have to start preparing their cocktails by the pitcher, not the glass. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21697263-fad-mixing-public-charitable-and-private-money-trending-blending/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Money from heaven + +To get out of a slump, the world’s central banks consider handing out cash + +Apr 23rd 2016 | From the print edition + + + +“HELICOPTER money” sounds like an item on an expense claim at a hedge fund. In fact, it is shorthand for a daring approach to monetary policy: printing money to fund government spending or to give people cash. Some central bankers seem to be preparing their whirlybirds (and their printing presses). In March Mario Draghi, the president of the European Central Bank, described helicopter money as a “very interesting concept”. Ardent supporters see it as a foolproof way to perk up slumping economies. Yet helicopter money is a less radical departure from the norm than it sounds. What is more, it fails to remove the political constraints that have been the biggest drag on recovery. + +The evocative concept of helicopter money comes from Milton Friedman, the father of monetarism, who mused in 1969 that central bankers could never fail to boost the money supply since they could always drop newly printed bills from the sky onto the cash-starved economy below. The idea cropped up again in the early 2000s, as economists puzzled over how to spring the Japanese economy from its deflationary trap. Ben Bernanke, at the time a new governor at the Federal Reserve, made reference to Friedman’s conceit in speeches about dispelling deflation, earning himself the nickname “Helicopter Ben”. + +Helicopter money provokes fewer chuckles today. The world’s big, rich economies have all joined Japan in a rut of chronically low inflation and interest rates. Growth in nominal GDP has been pitifully low in the aftermath of the financial crisis: especially in Europe and Japan, the top candidates for a dose of helicopter money. The weakness persists despite central banks’ vigorous attempts to get their economies moving, by cutting rates into negative territory and printing trillions to buy government bonds (a policy known as quantitative easing, or QE). A new strategy does indeed seem overdue. + +Advocates of helicopter money do not really intend to throw money out of aircraft. Broadly speaking, they argue for fiscal stimulus—in the form of government spending, tax cuts or direct payments to citizens—financed with newly printed money rather than through borrowing or taxation. QE qualifies, so long as the central bank buying the government bonds promises to hold them to maturity, with interest payments and principal remitted back to the government like most central-bank profits. (The central banks now buying government bonds insist they will sell them at some point.) Bolder versions of the strategy make the central bank’s largesse more explicit. It could, for instance, hand newly printed money directly to citizens. Jeremy Corbyn, leader of Britain’s Labour Party, has proposed “people’s QE” of this sort. + +The advantages of helicopter money are clear. Unlike changes to interest rates, stimulus paid for by the central bank does not rely on increased borrowing to work. This reduces the risk that central banks help inflate new bubbles, and adds to their potency when crisis or uncertainty make the banking system unreliable. Fiscal stimulus financed by borrowing provides similar benefits, but these could be blunted if consumers think taxes must eventually go up to pay off the accumulated debts—a problem helicopter money flies around. + +A paper published in 2014 by Jordi Galí, an economist at the CREi, an economics-research centre in Barcelona, reckoned that money from the sky could have “strong effects” on a slumping economy with only mildly inflationary consequences. A recent analysis by economists at Deutsche Bank points out that most rich economies have turned to central-bank-financed spending in past emergencies, especially during the world wars, when America and Britain were notable enthusiasts. In some cases, this led to hyperinflation. Yet printing money to escape a slump should pose less risk than printing money to fund a state too weakened by war to raise taxes, particularly if control of the presses is left in the hands of independent central banks. + +The real problem with helicopter money is that it is a technical solution to a political problem. Europe’s economic slump has been worse than those in America and Britain partly because the ECB has been slower to use policies like QE, for instance. That is because European law forbids the central bank from financing governments. Only last year did the spectre of deepening deflation allow Mr Draghi to argue there was an urgent monetary-policy justification for bond-buying. For the ECB to pursue helicopter money, European governments would have to amend the treaty that created it. But if they were willing to give the ECB that kind of leeway, things would never have got to this point. + +Money isn’t everything + +Similarly, many euro-area governments face borrowing costs close to zero for durations of up to 30 years; even longer in Japan. Thanks in part to QE, debt-financed government spending costs little more than stimulus paid for by central banks. Yet European governments continue to work to cut their deficits. Even in spendthrift Japan, the recovery plan of Shinzo Abe, the prime minister, is threatened by his determination to raise the rate of consumption tax in order to reduce the deficit. Free money is already available: what is missing is political consensus on whether and how to use it. To think helicopter money can help now, you must believe that it would close differences of political opinion in places like the euro area. Given worries in Germany (and elsewhere) about inflation and moral hazard, the opposite seems as likely. + +It would be a good thing if governments began building frameworks for the use of helicopter money. When the next crisis strikes, central banks will almost certainly have little room to reduce interest rates. The ability quickly to credit individual bank accounts with cash, for example, would render shocks more manageable. But there is no way without a will. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21697227-get-out-slump-worlds-central-banks-consider-handing-out-cash-money/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Earthquakes: Preparing for the Big One + +Martial arts: Modern gladiators + +Sleeplessness: Neurological night watch + +Keeping the skies safe: Drones club + + + + + +Articles Sections Next + +Earthquakes + +Preparing for the Big One + +Big earthquakes on either side of the world cause concern about building protection + +Apr 23rd 2016 | LOS ANGELES, MASHIKI AND QUITO | From the print edition + + + +THE giant tectonic plates which make up Earth’s outermost layer are always on the move, sliding past and colliding with each other. This creates plenty of seismic activity, especially in the area around the Pacific Ocean known as the “Ring of Fire”, which accounts for some 90% of the world’s earthquakes. On April 14th a magnitude 6.2 tremor shook Kumamoto prefecture on the southern Japanese island of Kyushu. Then, in the early hours of the morning on April 16th, a magnitude 7.0 quake struck the same area. On the same day, on the opposite side of the ring, a coastal region of Manabí and Esmeraldas provinces in Ecuador was shaken violently by a magnitude 7.8 quake—15 times stronger in terms of the energy released than the second Japanese quake. In Japan more than 40 people died; in Ecuador the death toll is expected to exceed 525. + +The greatest risk posed by earthquakes on land comes from buildings collapsing. Whether or not they fall down depends both on circumstance and on how they are built. This was evident in both disasters. In Ecuador, traditional homes made largely from bamboo withstood the quake better because of their flexibility. The more affluent, living in buildings made of concrete, were less lucky as walls, floors and roofs collapsed (as pictured above). In Mashiki, a town hard hit by the two Japanese earthquakes, dozens of traditional wooden homes collapsed, along with the community’s Buddhist temple and Shinto shrine. But among them stands a more recent house that remains unscathed, rather like a gleaming tooth among otherwise rotten gums. Inside, recounts its relieved elderly owner, her cups and saucers were flung around but the house stood firm. + +Last one standing + +That solitary house underlines one of the most successful ways to protect against seismic activity. The most important part of Japan’s approach remains its stringent building code, says Naoshi Hirata of the Earthquake Research Institute (ERI) at the University of Tokyo. + +For decades Japan has tightened its construction codes—by now the world’s strictest—and supported other innovations in quake-proofing construction methods. All buildings constructed after 1981 had to be sturdy enough to withstand collapse in an earthquake with an intensity of “upper 6” or higher on the scale used by the Japan Meteorological Agency (which measures shaking at individual points whereas magnitude measures the size of an earthquake). The regulations were strengthened again after the quake that hit Kobe in 1995, which had a magnitude of 6.8. + +Those building regulations have sharply reduced both the rate of collapsed structures and the risk of fires spreading. When the March 2011 earthquake struck off the Pacific coast of Tohoku it was the ensuing tsunami that wrecked the coastal region, setting off a nuclear meltdown at the Fukushima Dai-ichi nuclear-power plant. Most newer buildings withstood the shaking, which was somewhat attenuated by the time the seismic waves reached land. + +Ecuador introduced stricter seismic regulations of its own after the Haiti earthquake in 2010. But there are problems. Hugo Yepes, a geophysicist at the National Polytechnical University in Quito, complains that builders and developers have been largely ignoring them and that local officials have effectively “legalised” informal new neighbourhoods without insisting on anti-seismic standards. When visiting the area, Rafael Correa, Ecuador’s president, said building standards had to be applied with greater rigour to avoid a similar scale of destruction in the future. + + + +Tremorous timeline: An interactive map of global earthquakes over two decades + +Yet, as the scene in Mashiki shows, even the world’s centre of excellence in earthquake technologies can still suffer a lot of damage. Around a fifth of buildings across Japan predate the stricter codes introduced in 1981. It was chiefly such buildings that collapsed in Kumamoto prefecture, many of them in the first quake. + +The loss of life will inevitably direct attention towards the deadly consequences of a giant earthquake striking the Tokyo area. Another fearsome scenario is a shock from the Nankai Trough, a large offshore fault. A magnitude 9.1 earthquake and a resulting tsunami could kill 323,000 people in the very worst case scenario, Japanese government scientists said four years ago. + +In the mid-1970s experts were also convinced that a large quake would hit part of the Nankai Trough in a region known as the Tokai area, stretching from Nagoya to Shizuoka. There, an elaborate system of seismographs and devices to measure minute swellings and shrinkage of local bedrock are still testament to a belief that reliable earthquake precursors can be found. Some experts even call for levels of wells to be monitored, since tectonic friction is thought to drain water from their depths. + +Japan is not the only place to worry about a “Big One”. In Los Angeles, computer simulations of a magnitude 7.8 quake on the southern end of the San Andreas Fault suggest the city centre there would shake for 55 seconds, causing some 2,000 deaths and 50,000 injuries. The Los Angeles blueprint for survival, announced in 2015, seeks to solve what is that city’s greatest vulnerability: a lack of progress in reinforcing buildings. But determining who pays for the work is making just as little progress. + +Quake watchers + +Better building is not the only focus of activity. Japan has spent billions of yen in the Tokai region and elsewhere trying to forecast when and where quakes will hit, so as to be able to evacuate areas beforehand. The ERI, for example, forecast in early 2012 that a powerful earthquake had a 70% likelihood of striking under Tokyo within four years. (The Ecuadorean government is reportedly funding research by an “earthquake whisperer” who claims to be able to detect quakes at least three days in advance; there have been no published studies to support this remarkable feat.) + +Many scientists are sceptical about the prediction business. All of Japan’s recent big earthquakes have occurred in regions other than the Nankai Trough zone or under Tokyo, which are said to be at greatest risk according to the government’s official models of earthquake-hazard areas. Government researchers’ models missed the 2011 Tohoku earthquake despite the fact that quakes and accompanying tsunamis have frequently struck there in earlier centuries. The Japanese government’s hazard map tends to lull people in supposedly lower-risk areas into a false sense of security, says Robert Geller, a professor of geoscience at the University of Tokyo. + +The map assigned a relatively low probability to the likelihood of an earthquake on Kyushu. That may be one reason why the first nuclear plant in Japan to start operating since the very last one was shut down in 2013 following the 2011 disaster is located at Sendai in Kagoshima prefecture. This week the nuclear regulator declined to shut down that plant, which is nearly 100 miles away from the earthquakes’ epicentre, despite calls from citizens’ groups to do so. Yet if the system eventually succeeds in predicting just one big earthquake, argues Yukitoshi Fukahata of the disaster-prevention research institute of Kyoto University, the gain would be immense. + +A well-functioning part of Japan’s regime is its real-time warning system, which sounds after a quake occurs but before seismic waves arrive at more distant places. It can give seconds or even over a minute for people to react and it too has significantly improved since 2011, scientists say. In the recent quake it meant that the Kyushu railway company was able to stop or slow nine shinkansen high-speed trains just before the ground began shaking (only one empty train was derailed). The limitation of the system is that it gives little or no warning to those directly above an earthquake. At sea, much effort has also gone into building 150 new ocean-floor monitoring stations to detect tsunamis forming. + +For now, a minute or so of warning is about the best anyone can expect in an earthquake zone. Designing buildings to be flexible enough to survive the violent side-to-side swaying that a tremor brings is therefore the priority—although, as Ecuador shows, the real difficulty is enforcing construction rules. Living on the Ring of Fire will remain a precarious business. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21697215-big-earthquakes-either-side-world-cause-concern-about-building/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Martial arts + +Modern gladiators + +New body armour promises to transform fighting sports + +Apr 23rd 2016 | From the print edition + +Time for a blast of cool air + +LOOKING somewhat like a stormtrooper from “Star Wars”, Martin “The Wolf” Söderström, a Swedish devotee of kung fu, raps a heavy fighting stick down onto the arm of his opponent, who is clad in similar attire. At the other side of the room a computer quickly determines if the blow would have caused a bruise or a fracture if his adversary had not been so protected. Welcome to a new world of violent martial arts brought to you by advances in materials and microelectronics. + +Ordinarily, Mr Söderström would not be able to fight like this. His punches would have to be pulled to avoid causing serious or even fatal injuries. Chunky body protectors and helmets offer fighters more defence from harm, but such gear also slows and restricts their movements. Nor does it make scoring any easier. Would whacking that stick over his opponent’s head, for instance, have broken his skull, or delivered but a glancing blow? + +The armoured body suit which Mr Söderström and his opponent are wearing is called the Lorica. It has been developed by Chiron Global, an Australian firm. At just 19 kilos, it is neither too heavy nor cumbersome to prevent even aerial cartwheels, but it is tough enough to render painless a powerful sword strike to the head or the chest, says Mr Söderström. + +That protection comes from Kevlar, a tough synthetic material invented almost 50 years ago by DuPont and now extensively employed in protective clothing. In a Lorica, however, it is reinforced with carbon-fibre composites, a lightweight material that is stronger than steel and widely used in aerospace. On top of that are various polymers and other materials, which Chiron is keeping secret. + +Some of the areas around the body’s joints are protected only by a dense foam without a rigid shell. This allows mobility for moves like kicks, but it also means that strikes to certain areas of the body are banned and that the edges of weapons must be blunted. The company says its helmet can protect against the concussive injuries that now worry many in contact sports, but that remains to be seen. + +It can get hot inside the suits, so fighters use a Lorica for 90-second bouts and then rest while they are cooled by compressed air blasted into a network of silicone tubes contained in the suit. The air passes out through thousands of tiny holes held against the skin by an undergarment. + +Virtual casualties + +Scoring is done by 52 sensors, which 10,000 times a second measure various forces, including blows, accelerations and vibrations, generated by the impact of hands, feet and weapons. The data are wirelessly transmitted to a computer to calculate the fractures, tissue damage and other injuries which are likely to have been sustained had the fighters been unprotected. Because there is little published information on wounds inflicted by blows from certain edged weapons on different body parts, Chiron’s researchers plan to carry out their own experiments, attacking pig cadavers with weapons such as flails, arrows and ninja stars. + +What this all adds up to, reckons Justin Forsell, one of Chiron’s co-founders, is a telegenic new sport. A series of test fights using the system was staged in Wellington, New Zealand, in March. The first official fights, which are being branded as the Unified Weapons Master, will begin later this year in Australia, with competitions expanding to America in 2017. + +Nationalistic fervour will be part of the entertainment mix. Martial arts from different cultures, such as Japanese swordsmanship and Chinese staff fighting, will be pitted against each other. Shen “War Demon” Meng, a Beijing fighter who used a particularly ruthless form of kung fu known as “eagle claw” in the Wellington trials, believes the system lends an air of superhero to the martial arts. He also liked the fact there was less need for a referee to have to step in and stop the fight to prevent injury, and that reviewing the detailed fight data afterwards was good for improving his technique. + +Less than 24 hours after the first video of the test fight appeared online, an official at America’s Special Operations Command phoned Chiron to ask about obtaining some suits. Four more armies have since made similar requests. The army, it seems, thinks the suits can be used to teach close-quarter combat. The bright lights of television may beckon, but this somewhat brutal Aussie invention seems already to have found another market. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21697212-new-body-armour-promises-transform-fighting-sports-modern-gladiators/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sleeplessness + +Neurological night watch + +Why a familiar bed provides a good night’s sleep + +Apr 23rd 2016 | From the print edition + +Counting predators, not sheep + +SOME good news for road warriors. Everyone knows booking all your accommodation with the same hotel chain earns loyalty points, which can be traded for upgrades, free stays and the occasional bottle of wine. Now a new study shows there could be performance benefits too (so copy this to the accounts department). + +That people often experience trouble sleeping in a different bed in unfamiliar surroundings is a phenomenon known to psychologists as the “first night” effect. This is because if a person stays in the same room the following night they tend to sleep more soundly. Yuka Sasaki and her colleagues at Brown University in Providence, Rhode Island, set out to investigate the origins of this effect. + +Dr Sasaki knew the first-night effect probably has something to do with how humans evolved. The puzzle was what benefit would be gained from it when performance might be impaired the following day. She also knew from previous work conducted on birds and dolphins that these animals put half of their brains to sleep at a time so that they can rest while remaining vigilant enough to avoid predators. This led her to wonder if people might be doing the same thing and suffering from fatigue the next day as a result. + +To take a closer look, the team studied 35 young and healthy people as they slept in the alien environment of the university’s Department of Psychological Sciences. The participants each slept in the department for two nights and were carefully monitored each time with neuroimaging techniques that looked at the activity of their brains. Their heart rates, muscle and eye movements were also tracked. + +Dr Sasaki found that, as expected, the participants slept less well on their first night in the lab than they did on their second, taking more than twice as long to fall asleep and sleeping less overall. During deep sleep (as opposed to the lighter phases of sleep which are characterised by rapid eye movement), the participants’ brains behaved assymetrically, in a manner reminiscent of that seen in birds and dolphins. More specifically, on the first night only, the left hemispheres of their brains did not sleep nearly as deeply as their right hemispheres did. + +Curious if the left hemispheres were indeed remaining awake to process information detected in the surrounding environment, Dr Sasaki re-ran the experiment while presenting the sleeping participants with a mix of regularly timed beeps of the same tone and beeps of a different tone made sporadically during the night. She worked out that, if the left hemisphere was staying alert to keep guard in a strange environment, then it would react to the random beeps by stirring people from sleep and would ignore the regularly timed ones. This is precisely what she found. + +Based upon these findings, Dr Sasaki argues in Current Biology that the first-night effect is a mechanism that has evolved to function as something of a neurological nightwatchman: to wake people up when they hear noises when sleeping in an unfamiliar environment, even one with a comfy king-size bed, jacuzzi, deluxe minibar and a distinct lack of predators. Wangle a nice hotel room next time you travel, and you can argue that a similar booking in the next hotel may be the only way to get a good night’s kip. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21697213-why-familiar-bed-provides-good-nights-sleep-neurological-night-watch/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Keeping the skies safe + +Drones club + +Better technology and tougher enforcement of the rules is needed for the safe operation of drones + +Apr 23rd 2016 | From the print edition + + + +THE airspace over London is among the most crowded in the world. The soaring popularity of small unmanned drones has added to the congestion. After several close encounters, drone and plane now appear to have collided. Police are investigating a report that on April 17th a British Airways flight from Geneva was hit on its nose cone by a drone as it approached Heathrow airport. Thankfully there was negligible damage. But stricter enforcement of regulations and better technology are required to prevent more serious accidents. + +The scale of the problem is unclear. Sales of drones in Britain and many countries are not counted. The vast majority of them are small. Those the size of a large insect are not much to worry about. But drones of up to 25kg are a graver threat. And the sales trend is upward. America’s Federal Aviation Administration (FAA) reckons consumer sales could grow from 1.9m in 2016 to as many as 4.3m by 2020. + +Close encounters are also on the ascent. Recently the pilot of a Lufthansa aircraft flying at 1,500 metres reported that a drone passed within 60 metres of his plane as it approached Los Angeles International airport. Britain’s Airprox Board, which collects reports of incidents, found 23 near-misses between drones and aircraft between April and October last year. Of the 582 sightings reported between August 2015 and January 2016, the FAA said that over a third were potentially hazardous. + +No one is sure how much damage a drone could do to a jet airliner. Steve Landells of the British Airline Pilots Association says that tests are needed to find out. Passenger jets are designed to survive a bird strike but if several are sucked into the engines the consequences can be serious. Drones may be more dangerous. They have metal components, including lithium-ion batteries, which can explode if damaged. Light aircraft and helicopters might be more vulnerable. + +In line of sight + +Rules and regulations on operating drones are meant to ensure such worries are moot. In Britain and America drones are not supposed to fly near airports, nor go higher than 150 metres or so. They should be kept in sight by their operators at all times; not doing do so is a criminal offence. + +Rules alone will not stop accidents. “You cannot legislate stupidity out of the stupid,” observes Andrew Charlton, an aviation consultant. But stricter enforcement would help. In America, the FAA now requires recreational users to register their drones online. So far over 400,000 have done so. Users are then given an identification number for their craft. Failure to register could mean a fine of up to $250,000. Schemes to help identify drone operators are planned in Europe. + +Technology can also keep drones out of trouble. Some dronemakers are installing “geo-fencing” software which programs a drone’s GPS to prevent flights near sites such as airports and nuclear-power stations as well as restricting the speed and height that they can reach. Another method is a “virtual tether”, which in effect puts a drone on an invisible leash to prevent it flying too far from its operator. Plenty of governments want geo-fencing as a condition of sale. But it would not stop the use of drones near moving vehicles, such as air ambulances, that might be a target for journalists or ghouls. Developing ways of putting up an emergency cordon is one idea. No-drone zones can also be employed; one was due to be in force over London during Barack Obama’s visit this week. + +Crash-avoidance technology is another area of development. A number of groups are working on small low-powered anti-collision systems, some combining sensors with machine-learning algorithms. Ross Allen, a researcher at Stanford University, recently demonstrated a hovering quadcopter avoiding stationary objects at the same time as it dodged a fencer’s foil. + +If rules like drone registration, safety features and more public education would help curb irresponsible consumer behaviour, what of operators of larger commercial drones, such as those used for surveying or deliveries? They are already required to register with aviation authorities in many countries, and in some cases demonstrate their competence on training courses. Professional operators also have a sharper incentive to act responsibly. + +There are alternatives to thicker rulebooks. NASA, among others, has a project under way to develop techniques for commercial operators to file flight plans and to track their craft. The drones would also be able to communicate with each other and inform other aircraft and air-traffic controllers of their position. The drones would use highly detailed digital maps, like those being developed for autonomous cars. Parimal Kopardekar, manager of NASA’s Safe Autonomous System Operations Project, says the service would also provide weather information, right down to the microclimates in a specific area. + +Neither rules nor technology will stop those intent on deliberately causing harm. Terrorists might use drones to deliver bombs: although the payload is small, even a hand grenade dropped into a crowd would have terrifying consequences. Biological weapons carried as aerosols would be a greater concern. Like any other new technology, drones can be used for bad purposes as well as good. But they might also be used to detect and, one day perhaps, capture or shoot down those released by the bad guys. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21697214-better-technology-and-tougher-enforcement-rules-needed-safe/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Jazz music: Steps to heaven + +Gang crime in Central America: Prayer, police and punishment + +Nationalism in Russia: The in crowd + +Travel writing: The art of looking + +Johnson: English becomes Esperanto + +Sicily: Land of reinvention + + + + + +Articles Sections Next + +Jazz music + +Steps to heaven + +How to distinguish good jazz from bad + +Apr 23rd 2016 | From the print edition + + + +How to Listen to Jazz. By Ted Gioia. Basic Books; 272 pages; $24.99 and £16.99. + +JAZZ is not a popular art-form. To its many detractors, it amounts to little more than pretentious noodling, based as it is largely on improvisation. To others, it is simply mystifying. How can an entire genre be made up of playing, again and again, variants of show tunes that were mostly composed in the 1930s and 1940s? + +Ted Gioia understands why people find jazz so esoteric. The problem, as he sees it, is that no one has ever bothered to explain what “good” or “bad” jazz really is. Critics hold strong opinions on whether Charlie Parker or John Coltrane is the better saxophonist, but rarely do they explain “what they [are] listening for”. Mr Gioia’s job is to teach jazz-lovers how to assess the music and persuade sceptics to give jazz a go. + +Mr Gioia has produced a fascinating book. He takes the reader through the most important ingredients of jazz, explaining, for instance, how “swing” is more than syncopated, finger-tapping rhythm. A bass-player and drummer who sound comfortable in each other’s company is one sure sign of swing. (Listen to Elvin Jones and Jimmy Garrison, playing with Coltrane, for instance.) Unlike amateur outfits that feel the need to overplay, the best groups can swing without playing many notes. In Keith Jarrett’s trio, the pianist goes for long stretches without even using his left hand, but the listener barely notices until it reappears, upon which it makes the music sound even richer. + +Most useful to the uninitiated, the book provides tips on what good improvisation really means. Bad players tend to rely heavily on a small number of rhythmic and harmonic patterns in their phrases—licks containing a certain number of notes, for instance, or a tendency to begin or end their phrases at a certain place in the bar. Listen to such an improviser for more than a minute or so, and “even novice listeners will perceive an inescapable monotony,” says Mr Gioia. The best players, including Louis Armstrong and Miles Davis (pictured), never fall into such traps, however. + +In his enthusiasm, Mr Gioia’s analysis of improvisation sometimes veers into abstraction. Take his discussion of what he calls “intentionality”, which he says is another crucial element of good soloing. He defines this as “a musical phrase that reveals the total commitment of the improviser”—hardly an illuminating description. Yet read the book within easy access of a music-streaming service or YouTube, and Mr Gioia’s commentary suddenly feels much more useful. A middling trumpeter (say, one in a student band) appears to struggle against the music, and will finish a phrase upon running out of breath. Davis’s phrases on the trumpet, by contrast, have a clear beginning, middle and end. No note is wasted and the accompanists seem to work around him. (For an excellent example of this, see his opening solo in “Spanish Key”, recorded in 1969.) + +Mr Gioia also delves into musical theory, in a way that will help both jazz neophytes and experts understand what they are listening to. The best jazz musicians do not worry much about producing clearly defined notes (the do-re-mi system that structures Western classical music). Instead they look to make particular sounds—bending notes and creating unusual timbres—which is a consequence of the heavy African influence on jazz. The emphasis on sound over notes is especially pronounced in Coltrane’s late work. + +Alongside the tips for listening, Mr Gioia’s book gives a helpful overview of how jazz has evolved since its beginnings in turn-of-the-century New Orleans. Buddy Bolden, a cornet-player in the Big Easy of whose music there are no recordings, is credited by many with inventing “jass”. Like the rest of the book, the majority of this discussion focuses on long-dead musicians (many of whom met untimely ends thanks to debilitating drug habits). As if to compensate for the book’s backward-looking bias, at the end the author lists 150 contemporary jazzists “who deserve your attention”. + +“How to Listen to Jazz” is not a long book, but it emphasises a beautiful point about the genre, a point that applies to no other sort of music. When you see a live performance, you may be watching a 60-year-old musician playing a 100-year-old piece; but what is produced on stage has never been, and will never be, played again. Jazz is undoubtedly struggling, but as an introduction to why its remaining fans are so devoted, Mr Gioia could not have done a better job. Through him, jazz might even find new devotees. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21697207-how-distinguish-good-jazz-bad-steps-heaven/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Gang crime in Central America + +Prayer, police and punishment + +Why Central America is so violent + +Apr 23rd 2016 | From the print edition + +Guns, not roses + +A History of Violence: Living and Dying in Central America. By Óscar Martínez. Translated by John Washington and Daniela Ugaz. Verso; 257 pages; $24.95 and £14.99. + +IF YOU take just one book to Central America on holiday, don’t pick this one. Óscar Martínez, a Salvadorean journalist, has written a punishing account of the lives of the poor in Guatemala, Honduras and El Salvador. Melding acuity and anger, he unveils the scary realities of organised crime in the so-called Northern Triangle, and the mostly useless response. + +The preface explains the book’s rationale. A collection of 14 separate essays that Mr Martínez wrote about “this terrifying little corner of the world”, “A History of Violence” aims to describe “the lives of people who serve you coffee every morning” (it is aimed at American readers). In so doing it explains why they are prepared to suffer as they do in order to reach America. + +Mr Martínez is a brave man. To research his first book, “The Beast”, he rode Mexico’s trains with migrants clinging to the roofs as they headed towards America. Here he interviews inmates in prisons racked with violence, tracks down the “coyotes” who arrange travel for desperate immigrants and spends time with a hitman from the Mara Salvatrucha, El Salvador’s most infamous gang, who says that his kill tally is “about 56”. + +The chronicles are all dispiriting in their different ways, either because of the horrors they reveal or because of the insights they give into politicians and police forces that are too corrupt, impoverished or incompetent to respond. Three stand out. + +In one, El Salvador’s only working forensic investigator tells the author about his job and about the 805 days—and counting—that he has spent trying to dig to the bottom of a well that is known to contain bodies. In another, Mr Martínez visits an isolated Salvadorean town where a former gang member awaited the trials of those he would testify against. “The state thought it was best to keep their key witness locked up above a septic tank without any food,” Mr Martínez writes. And so, after 15 months, the man escaped. Better to risk death at the hands of his enemies than to stay put. + +The saddest story involves a group of families in the Salvadorean capital, San Salvador. They have been forced to leave their homes because gang members, who believe that someone in the block has snitched on them, have threatened to kill every resident. The author rages on behalf of one such leaver: “This man, who squeegees windshields all damn day long on the corner of a street in this baking hot country, has had to empty his house that he furnished and rented with his own sweat because a few lipsticked women threatened a whole condo complex.” A policeman from an anti-gang unit advises residents to pray, and says the police will stay until people feel safe. “Could you leave a policeman to guard every one of our doors for ever?” asks a woman. + +The author offers no solutions to these problems, other than to report them. He meets individual investigators and politicians who are doing their best, but they lack the resources and the colleagues needed to make a difference. Given that just two gangs, Barrio 18 and the Mara Salvatrucha, have around 70,000 members between them in El Salvador, the situation is daunting. Mr Martínez deserves credit for bringing it so effectively to life. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21697206-why-central-america-so-violent-prayer-police-and-punishment/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nationalism in Russia + +The in crowd + +A fine analysis of what motivates Vladimir Putin’s regime + +Apr 23rd 2016 | From the print edition + + + +Black Wind, White Snow: The Rise of Russia’s New Nationalism. By Charles Clover. Yale University Press; 360 pages; $35 and £25. + +NO QUESTION is more contested among Russia-watchers than what really motivates the regime. Is the nationalist bombast simply camouflage, to enable the Kremlin and its cronies to continue looting tens of billions of dollars a year from the Russian people? Is their real aim merely to stay in power, for fear of what would happen to them if they left? Or do they actually believe that Russia exemplifies a new civilisation—free of the decadence and weakness of the West? + +Charles Clover’s book is an important contribution to this discussion. A veteran Financial Times correspondent, he started reporting from Ukraine in the 1990s when Alexander Dugin, a hirsute polyglot brainbox who is now the chief theorist of Russian exceptionalism, was a marginal crank. But by 2014, Ukraine—invaded and dismembered—was arguably the biggest victim of the Kremlin’s new ideology, under which Russia’s neighbours are pawns in a geopolitical game. + +“Black Wind, White Snow” traces the rise of Eurasianism: the belief (crudely put) that Russia’s national identity is determined by its ethnicity, geography and destiny. It covers the battiest fringes of émigré life in the 1920s, the nationalist subculture of the chaotic Boris Yeltsin years and Eurasianism under Vladimir Putin as a central feature of the Kremlin’s playbook. Russia’s new rulers, ideologically orphaned by the collapse of Soviet communism, have increasingly latched onto the belief. It lends grandeur and dignity to their doings, and allows them to look down on the notionally more successful societies of the West as doomed and decadent. + +The book has two main strands. One is an academic history of this peculiar corner of the Russian philosophical landscape, involving tragic figures such as Lev Gumilev, consigned to the Gulag chiefly for the crime of being the son of Anna Akhmatova, a great anti-Stalinist poet. Making sense of the contradictory, whimsical and largely evidence-free doctrines he and others espoused is difficult. In his case and others, Eurasianism is probably best understood as a reaction to trauma, rather than as a serious school of political thought. Mr Clover grapples gamely with the madness of the past, but sometimes lapses into banality, writing lamely of an émigré scholar’s “incredibly creative” period at university in Vienna in the 1920s. + +The other strand is an exploration of Russia’s recent political history with particular reference to the role of the KGB and its shadowy legacy, and the overlap with Eurasianist thinking. Mr Clover hints, but does not state explicitly, that a “deep state” of KGB veterans has been behind the most puzzling (he favours “troubling”) events of the past 25 years. The questions include: whether Mikhail Gorbachev really was the victim of the 1991 attempted coup, or actually an accomplice; who egged on the hardliners in the mysterious insurrection in the Russian parliament in 1993; and what is the truth about the apartment-block bombings of 1999, which gave Mr Putin the chance to seem Churchillian (but were probably staged by a criminal working with the security services)? + +Mr Clover’s reporting is excellent, but he does not fully succeed in explaining how the ideology and the spookery overlap. Mr Dugin, once a Bohemian intellectual of no significance, is now remarkably well connected—particularly in senior military circles. But he coyly declines to explain to the author who introduced him to his rich and influential friends. + +The book ably highlights the contradictions in modern-day Eurasianism. It is “tendentious at best and totally contrived at worst”. But it is believed. It allows Russia’s leaders to detach their country from Western rationalism, with its fussy obsession with truth and logic, and pursue different, mystical goals, creating a “geographical border around a separate truth”. + +Non-specialist readers may find parts of Mr Clover’s book heavy going. But they will find other bits gripping. People in and around the Kremlin take Eurasianism seriously. They run the biggest country in the world. They have nuclear weapons. And they believe history is on their side. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21697211-fine-analysis-what-motivates-vladimir-putins-regime-crowd/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Travel writing + +The art of looking + +A psychiatrist and English scholar on journeying + +Apr 23rd 2016 | From the print edition + + + +Far and Away: Reporting from the Brink of Change. By Andrew Solomon. Scribner; 592 pages; $30. + +ANDREW SOLOMON is an inveterate traveller. In his two most recent books, “The Noonday Demon” and “Far from the Tree”, he journeyed inward, in the first exploring the world of depression, from which he has suffered, in the second considering children who have surprised or disappointed their parents, as he did by being gay. These are both substantial works that required intense, far-reaching research. So it is a surprise to find that all the time he was writing them Mr Solomon was also travelling the world. + +The 28 pieces gathered here are the fruits of 25 years of travel to 83 countries and all seven continents. He believes that engaging with different cultures is “the necessary remedy to our perilously frightened times”. So he is never a tourist, but instead aims for total immersion wherever he goes, winning the confidence of the people he meets, forging solid friendships. + +Mr Solomon was a timid child, “afraid of the world”, terrified that, as a grown up, he might have to go and fight in Vietnam. It was in part his homosexuality that drove him abroad. In the end, it was England where he mustered the courage to come out. In 1988 a British magazine sent him to the Soviet Union to report on Sotheby’s first sale of contemporary Soviet art. Sotheby’s was offering diplomatic entertainment, singing Gypsies, caviar and champagne. Mr Solomon opted instead to hang out with a band of avant-garde artists who had stuck together through hard times “like the early Christians, or like Freemasons”. + +Mr Solomon is drawn to countries that are struggling or being transformed: Afghanistan, Myanmar, South Africa, Cambodia. He is good at the big picture, but he prefers to understand countries from human stories. His piece on Rwanda opens with a masterfully concise exposition of the Hutu-Tutsi conflict and closes with a woman asking Mr Solomon how she can love a daughter born of rape. He has gifts of compassion and close attention that make people keen to confide in him. + +The final piece takes the reader to the Great Barrier Reef and a scuba-diving holiday. What should have been an idyll turns into a nightmare when Mr Solomon is nearly drowned. As he drifts in the sea, certain he will die, he thinks achingly of his four children, to whom this book is dedicated. Being a parent, he concludes, is the most thrilling journey of all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21697209-psychiatrist-and-english-scholar-journeying-art-looking/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +English becomes Esperanto + +The institutions of the European Union will still speak (a kind of) English if Britain leaves + +Apr 23rd 2016 | From the print edition + + + +BRITAIN has never been a typical European Union (EU) member. It is the only country vetoed for membership (by France), and twice, at that. It joined only in 1973, almost two decades after the original six members established the European Economic Community. It is more free-trading, free-marketeering and Atlanticist than the continent. And it is the only country to hold a referendum on leaving, in 1975, not to mention a second one, due in June. + +All this makes it anomalous that the institutions of the EU are dominated by the language of its most recalcitrant member. Legally, the 24 official languages of the 28 members have equal status. Gradually, however, English has displaced French as the most common language between two Eurocrats or parliamentarians who do not share a native tongue. Even so, many French-speakers still expect that, in any gathering, it is acceptable to switch to French and expect the room to follow. (Indeed, most people can, partly because the union’s de facto capital, Brussels, is mostly French-speaking.) No other language’s speakers presume this, though German is often called the third working language. + +So English is very much first among equals, despite the fact that English voters may favour leaving the EU. (Voters in the other three nations of the United Kingdom are more likely to prefer staying in.) That would leave an odd fact: a union of over 500m dominated by a language spoken officially only in the Republic of Ireland (population 4.6m) and Malta (where it is co-official on an island of 450,000), unless Scotland demands and wins a second referendum on independence from Britain, and rejoins the EU. + +But even with the Scots, 10m or so native English-speakers will be a tiny minority in a union of over 500m. An increasing number of the others speak English—in 2012 a report found that 38% of the EU’s citizens speak it as a foreign language. Nearly all of those working at EU institutions in Brussels do. What would happen to English without the English? + +A sort of Euro-English, influenced by foreign languages, is already in use. Many Europeans use “control” to mean “monitor” because contrôler has that meaning in French. The same goes for “assist”, meaning to attend (assister in French, asistir in Spanish). In other cases, Euro-English is just a naive but incorrect extension of English grammatical rules: many nouns in English that don’t properly pluralise with a final “s” are merrily used in Euro-English, such as “informations” and “competences”. Euro-English also uses words like “actor”, “axis” or “agent” well beyond their narrow range in native English. + +Jeremy Gardner, an official at the European Court of Auditors, has written a guide to “Misused English Words and Expressions in EU Publications”, which attempts to correct many of these quirks of Euro-English. It could be that whatever native-speakers might consider correct, Euro-English, second language or no, is becoming a dialect fluently spoken by a large group of people who understand each other perfectly well. Such is the case of English in India or South Africa, where a small group of native speakers is dwarfed by a far larger number of second-language speakers. One effect may be that this dialect would lose some of the tricky bits of English, such as the future perfect progressive (“We will have been working”) that aren’t strictly necessary. + +What about the other European languages? The French would be thrilled to restore their language to its old primacy. This will not happen: the French academician who suggested that French be the union’s sole legal language in 2007 (thanks to its supposedly unmatched precision) was surely pitied as much as he was laughed at. But French’s role as the second language of the EU is assured—some old hands still prefer it as a lingua franca. Despite the economic strength and political confidence of modern Germany, the Germans are not keen on pushing their language on others. + +All this makes for an odd result. Britain may be a polarising, unusual EU member, but English has become neutral, utilitarian; it is useful because others understand it. Its association with Britain is already weak and set to weaken if “Brexit” comes to pass. Dreamers have long hoped for a neutral auxiliary language that is common to all. Some have even gone to the trouble of inventing such languages. Who knows? English might one day fulfil the destiny intended for Esperanto. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21697210-institutions-european-union-will-still-speak-kind-english-if-britain/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sicily + +Land of reinvention + +Charting change in the Mediterranean + +Apr 23rd 2016 | From the print edition + + + +SICILY fills the mind with vivid images: Al Pacino on a dusty hillside, shotgun over his shoulder, in “The Godfather”, or Burt Lancaster, “The Leopard” himself, pronouncing “Everything must change so that everything can stay the same.” But things have never stayed the same in Sicily, as a new exhibition at the British Museum shows. “Sicily: Culture and Conquest”, one of the legacies of Neil MacGregor, the former director, looks beyond Sicily’s recent tribulations to the many reinventions of an island that has been part of every important civilisation of the Mediterranean. + +The journey begins with the vibrant pre-Greek cultures, notably the Phoenicians, who also founded Carthage. Their craftsmanship is evident in a delicate beaten-gold bowl (600BC) decorated with six slender bullocks, identical down to their minuscule ribs. Onwards through Greeks, Romans, Byzantines, Arabs and Normans to the polymathic Hohenstaufen King Frederick II, known as stupor mundi, the wonder of the world, during whose reign (1198-1250) sonnets were first written. + +This exhibition focuses almost exclusively on the two periods of the richest material culture, the Greek (700-250BC) and the brief but astoundingly productive Norman (1061-1189AD). The legacies of both are largely architectural, posing a challenge to any curator, but this exhibition does a superb job of evoking Sicilian buildings and the landscape itself. Visitors enter a deep-blue space, with ceiling-high photographs of Etna smoking and the perfect Greek temples at Agrigento and Segesta. Given a context, fragments of statues regain some of their former grandeur. + +But it is the Norman period that is the glory of Sicily, and of this show. Roger II (1112-54) ruled a court where Norman, Byzantine and Arab cultures found a unique hybrid expression in art and architecture. Greek marble gives way to the intricately decorated interiors of Arab-Norman palaces, where Byzantine mosaics (pictured) are juxtaposed with carved wooden ceilings. In 2015 nine Arab-Norman buildings in Palermo were designated Sicily’s seventh UNESCO world-heritage site. + +On display is a coin that is the earliest example in Europe of recording a year in Arabic numerals. Stamped with the figure of Christ Pantocrator, it is dedicated in Arabic to Roger and dated 533 by the Islamic calendar (1138). There is also the oldest surviving paper document in Europe, an injunction in Arabic and Greek from a Norman Catholic queen to Muslim guards-men, to protect a Greek-rite monastery. + +Perhaps the greatest achievement of Roger’s court is an atlas of the world created by an Arab scholar-geographer, Muhammad al-Idrisi. No originals survive, but two of the oldest copies are on show. Sadly, the maps, the greatest empirical project of the age, are poorly displayed. The two pages shown do not convey the significance of the complete work. A quick search online yields a montage of the 70 double-page spreads of the original as a single, astonishingly accurate view of the globe. There was wall-space enough for views of Etna—so why not for this? + +The gaps in the narrative reflect the island’s history. Roman Sicily was too pre-occupied with producing grain for the empire (or rebelling against it) to make many beautiful things. The one big Roman exhibit—a thrillingly spiky battering-ram from the decisive naval defeat of Carthage in 241BC—is followed by nothing much until some Byzantine jewellery of 500-700AD. This 1,000-year gap is oddly unexplained, as if the curators, who have chosen their exhibits well, were afraid of overwhelming visitors with information. + +The past 600 years that have shaped modern Sicily are also glossed over, so this is not an exhibition of evolution but of transience, of even the greatest cultures and conquerors. Everything changes. But there is continuity too. Ultimately the show demonstrates the creative potential of encounters between cultures. And it keeps one eye on current affairs. Running alongside are events about Sicilian music, cinema and food, as well as a debate on European migration through history. As the Mediterranean struggles to decide how to share its future, understanding its shared history is more important than ever. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21697208-charting-change-mediterranean-land-reinvention/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Phil Sayer: The train now approaching... + + + + + +Articles Sections Next + +Obituary: Phil Sayer + +The train now approaching... + +Phil Sayer, the best-loved voice on England’s railways, died on April 14th, aged 62 + +Apr 23rd 2016 | From the print edition + + + +TRAVELLERS are creatures caught between two worlds. They are neither where they anticipate, nor where they were, but on a featureless white concourse or grey station platform, considering the void. A smartphone will fill that, to a point; but it does not quite smooth the edge of their anxiety and displacement. What they need is existential reassurance that they can, for certain, move towards where they want to go. + +Such blessed assurance, at least for passengers on the busiest southern, south-western and central parts of England’s railways, was what Phil Sayer gave in spades. When he announced that the 17.36 for Hampton Court, calling at Vauxhall, Clapham Junction, Earlsfield, Wimbledon, Raynes Park, New Malden, Berrylands, Surbiton, Thames Ditton and Hampton Court, was standing at Platform 6, you knew it could not possibly be anywhere else, or bound for any other place. When he added that this train was formed of four coaches, you knew it would not be five, or three. Such warm, confident tones could not be wrong. + +Accordingly, travellers entrusted their lives to him. All across the London Underground, at his behest, they took care to Mind the Gap between the train and the platform—or sometimes, more subtly, between the platform and the train. Thanks to him, they stood clear of the closing doors and did not leave cases or parcels unattended anywhere on the station; for any unattended articles, he had told them, were likely to be removed without warning. The gentle but firm authority in his voice obviated the need to say “Please”. + +Few gave a thought to who he was, or where. If not in the clouds, then he was in the cavernous cast-iron murk of the station roof, where pigeons brooded. Those who listened to him daily detected human touches: his succulent enthusiasm for the trolley service of drinks and light refreshments that would be available on this train, as if he was already unwrapping a tuna sandwich; his palpable excitement at the words “London Midland” or “Cross Country”; his interesting hesitation, when announcing the Bournemouth service, between “Brockenhurst” and “Sway”, as though he doubted for a moment whether tiny Sway existed. + +The words “We are sorry”, which he said a good deal, prefatory to adverse weather conditions, leaves on the line, staff absences and signal failures, were controversial. Their firmness had a touch of melancholy and defiance. Perhaps, saying them so often, he never meant them at all. Perhaps, sitting snug and smug in an office somewhere, he cared nothing for the ant-like confusion of the crowd below. At Birmingham New Street once a furious passenger, caught out by a late platform alteration, was seen shaking his fist at the tannoy and crying that he had lied. + +In fact Mr Sayer was a nice, funny, ordinary chap, brought up in Liverpool and living in Bolton; station cognoscenti, despite his perfect, classless diction, could still detect the northerner in him. The messages of comfort or doom were recorded in a little studio across the hall from his kitchen; and as his apologies were relayed to the southern morning scrum he was generally asleep, or leisurely sipping a large cup of coffee to lubricate his voice. The only difference between his ordinary and working personae was that the working Phil straightened, focused and widened his eyes behind the specs, becoming just slightly more ridiculous, he would say, than his real self; and praying not to trip over “Micheldever”, “digital”, “shortages”, or other well-known traps of the trade. + +He was not indifferent to the plight of travellers. Indeed, he was often a champion of the common man. In the 1970s he had worked for a while on a pirate-radio “peace boat” aiming pop songs at the Middle East. Much of his career was spent on local and BBC radio in Manchester, where he cut ribbons at primary schools and played darts in street-corner pubs, absorbing the life and chatter of the place. When not announcing trains, he did radio commercials for new cars, dog shows, fungal-infection creams and everything under the sun. He loved voice-over work, and claimed even to be on friendly terms with the (still secret and much-loathed) woman on the supermarket self-checkouts, with her unexpected items in the bagging area. + +A broken-down grill + +His railway job gave him great happiness. Down in London one day, he stood as close as he dared to perfect strangers on the Tube and parroted his own announcements, hoping they would recognise him. Disappointingly, they didn’t. For visiting reporters he and his wife Elinor, his business partner and Tube co-instructor (“Please take all your personal belongings with you”), would give a glimpse of the home life many assumed they led: + +“What’s for breakfast, darling?” + +“We apologise for the late running of your breakfast. This is due to the late running of the children’s breakfast earlier.” + +“Oh well, I’ll just have some toast.” + +“We regret to announce that the toast service has been cancelled, due to a broken-down grill.” + +His death was announced by his wife with the words: “This service terminates here.” He might have added a less finite thought: “All change, please; all change.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21697186-phil-sayer-best-loved-voice-englands-railways-died-april-14th-aged-62-train-now/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Exchange rates against the dollar + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Apr 23rd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21697216-interactive-indicators/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Apr 23rd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21697231-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Exchange rates against the dollar + +Apr 23rd 2016 | From the print edition + + + +The dollar rose against other currencies in advance of, and immediately after, the Federal Reserve’s interest-rate rise in December. Since the end of January, however, the greenback has headed in the other direction, helped along by the Fed’s signal in March that there would probably be two, rather than four, rate rises this year. Emerging-market currencies have climbed, particularly those of commodity-producing countries with dollar-denominated exports. The yen has also appreciated. That spells trouble for Japan’s exporters and may encourage an expansion of monetary stimulus. Brexit-related uncertainty means that sterling is one of the only big currencies to have depreciated against the dollar this year. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21697232-exchange-rates-against-dollar/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Apr 23rd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21697233-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Apr 23rd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21697237-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Apr 23rd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21697238-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Thu, 21 Apr 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Hillary Clinton’s plans for the economy: Can she fix it? + + + + + +Brazil: The great betrayal + + + + + +Bloodshed in central Africa: Burundian time-bomb + + + + + +The case against Google: Tie breaker + + + + + +Saudi Arabia: The new oil order + + + + + +Letters + + + +On politics, Bruce Springsteen, steel, the American constitution, South Korea, clearing houses, English: Letters to the editor + + + + + +Briefing + + + +Hillary Clinton: Unloved and unstoppable + + + + + +United States + + + +New York and after: March of the titans + + + + + +Psephology: Uptown Trump + + + + + +The $20 bill: Not going to Jackson + + + + + +The campaigns: Heard on the trail + + + + + +Immigration and the Supreme Court: Branching out + + + + + +The cost of college: Delayed gratification + + + + + +Cocaine: Nosedive + + + + + +Lexington: Ben Heard + + + + + +The Americas + + + +Brazil’s political crisis: The darkest hour + + + + + +Brazil’s terrible politics: Dilma, out! + + + + + +Asia + + + +Myanmar-China relations: High mountains, distant emperors + + + + + +War in Afghanistan: Fresh offence + + + + + +Kashmir in stasis: Rough sleeping + + + + + +The Koh-i-Noor diamond: Rock in a hard place + + + + + +Banyan: Open wounds + + + + + +China + + + +Ideology: The return of correct thinking + + + + + +Genetically modified crops: Gene-policy transfer + + + + + +Communist Party membership: Hammer and shackle + + + + + +Middle East and Africa + + + +Burundi: Sliding towards anarchy + + + + + +African hospitality: No room at the inn + + + + + +Egypt’s prickly president: Permission to speak, sir + + + + + +Tech startups in Africa: Africa uber alles + + + + + +Syria: Drifting back to war + + + + + +Israeli politics: Curtains for Herzog? + + + + + +Europe + + + +Reunifying Cyprus: You say raki, I say ouzo + + + + + +Germany sours on Russia: Fool me once + + + + + +Roundabouts: French revolution + + + + + +Czech name change: Metamorphosis + + + + + +German beer laws: Pure swill + + + + + +Charlemagne: Quantum of silence + + + + + +Britain + + + +America and Brexit: More special in Europe + + + + + +Britain in Iraq: The beginning of the end + + + + + +Queen Elizabeth at 90: Long to reign over us + + + + + +Brexit brief: The ins and the outs + + + + + +Scottish languages: To speak in tongues + + + + + +Brexit and the young: Turning out the teens + + + + + +Nuclear energy: Is smaller better? + + + + + +Bagehot: B for Brexit + + + + + +International + + + +Counterfeiting and piracy: Stamping it out + + + + + +Counterfeiting and piracy: Internships + + + + + +Business + + + +Europe v Google: Android attack + + + + + +Pemex: Turning the tanker + + + + + +Theranos: Blood sports + + + + + +Cigarettes: Smoke signals + + + + + +India’s most colourful tycoon: Hangover + + + + + +Picking the boss: The outside track + + + + + +Business in Iran: The over-promised land + + + + + +Schumpeter: Pay dirt + + + + + +Finance and economics + + + +Bank of America: The limits of fasting + + + + + +Buttonwood: The wrong kind of savings + + + + + +The 1MDB affair: Turning the screw + + + + + +China’s economy: Romance of the three quarters + + + + + +Oil markets: Drill will + + + + + +Blended finance: Trending: blending + + + + + +Free exchange: Money from heaven + + + + + +Science and technology + + + +Earthquakes: Preparing for the Big One + + + + + +Martial arts: Modern gladiators + + + + + +Sleeplessness: Neurological night watch + + + + + +Keeping the skies safe: Drones club + + + + + +Books and arts + + + +Jazz music: Steps to heaven + + + + + +Gang crime in Central America: Prayer, police and punishment + + + + + +Nationalism in Russia: The in crowd + + + + + +Travel writing: The art of looking + + + + + +Johnson: English becomes Esperanto + + + + + +Sicily: Land of reinvention + + + + + +Obituary + + + +Obituary: Phil Sayer: The train now approaching... + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Exchange rates against the dollar + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.04.30.TXT b/homeworks/B20769/homework1/data2/2016.04.30.TXT new file mode 100644 index 0000000..ea9350a --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.04.30.TXT @@ -0,0 +1,5176 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Apr 30th 2016 | From the print edition + + + +Donald Trump won all five primaries this week, taking over 50% of the vote in all of them. The victories extended his lead in the Republican presidential-nomination race. If he wins by those margins in the remaining contests he should secure enough delegates to avoid a contested convention. On the Democratic side Hillary Clinton won four of the five states on offer, putting her within touching distance of the delegates she needs to clinch her party’s nomination. See article. + +Mr Trump’s closest rival, Ted Cruz, chose Carly Fiorina to be his vice-president should he win the White House. Mr Cruz may hope that his selection of Ms Fiorina, a former chief executive in Silicon Valley, will win him some votes in California’s primary on June 7th. + +Dennis Hastert, the Speaker of the House of Representatives from 1999 to 2007, was sentenced to 15 months in prison for trying to pay off a victim he sexually abused when he was a schoolteacher. + +Mad at Maduro + +Venezuela’s populist president, Nicolás Maduro, told civil servants to work a two-day week to save electricity. The country’s political crisis worsened when the supreme court blocked a proposed amendment to the constitution that would force an early election. But the opposition claimed a small victory when the electoral commission issued the petition forms needed to launch a referendum to recall Mr Maduro. + +An international commission investigating the disappearance of 43 student teachers in Mexico in 2014 said there was little evidence to support the government’s claim that their bodies had been burned after they were kidnapped and murdered by local police acting in league with a drug gang. It said that suspects appear to have been tortured and that the government had barred investigators from talking to the army. + +Mexico’s president, Enrique Peña Nieto, proposed legalising medical cannabis and increasing the amount people can keep for personal use without penalty from five grams to 28. He had once opposed liberalisation. See article. + +It changed football + + + +The families of 96 Liverpool football fans crushed to death at Sheffield’s Hillsborough stadium in April 1989 said they had at last secured justice when an inquest jury found that the victims were unlawfully killed. Mistakes made by the police and ambulance service “caused or contributed” to the tragedy. The ruling exonerated Liverpool’s supporters from any blame, reversing the findings from an official inquiry in 1990-91. The jury was shown footage of a similar incident in 1981 at the stadium that had caused serious injuries but no deaths. See article. + +Junior doctors in England went on strike again in their prolonged dispute with the government over new contracts covering weekend work. The walkout was the fifth this year but the first in which support was not provided for emergency care. See article. + +Aleksandar Vucic, the prime minister of Serbia, won another term in elections. He is likely to continue many of the reforms needed for Serbia to join the EU. But the bigger challenge is the economy, which last year grew by only 0.7%. + +In Spain King Felipe announced that, after exhaustive talks following the country’s inconclusive election in December, he had not been able to find a new prime minister. Instead it is likely that new elections will be held on June 26th. The polls indicate that the result may be the same. + +The government of Norway launched an appeal against a court ruling that it had violated the human rights of Anders Breivik, a far-right extremist who killed 77 people in 2011. Mr Breivik lives in a three-room cell with windows, a treadmill and a television. + +Silencing liberal voices + +A leading gay-rights activist in Bangladesh was hacked to death along with a friend. The prime minister blamed the killings on the opposition, but the local branch of al-Qaeda claimed responsibility. Two days earlier, Islamic State said it was behind a similar murder, of a professor of English. Four Bangladeshi liberals have now been murdered by Islamists this month. + +India made an embarrassing diplomatic U-turn when it reneged on issuing a visa to Dolkun Isa, a peaceful Uighur activist whom China regards as a terrorist. The Indians had seemed ready to welcome Mr Isa in a tit-for-tat measure: they were angry that China was reluctant to apply the terrorist label to a man they blame for actual terror attacks in India. + +North Korea declared the launch of a ballistic missile from a submarine off its coast to be a “great success”. The rogue state’s foreign minister said it would suspend its programme of nuclear tests if America ceased its joint military exercises with South Korea. Barack Obama refused. + +Papua New Guinea’s Supreme Court ruled that Australia’s controversial detention camp for migrants on its Manus Island was illegal. The judges said the privately run camp, which houses around 850 men, breached PNG’s constitutional guarantee of personal liberty. Australia said there would be no change in its policy. + +Oil’s not well + +Saudi Arabia’s deputy crown prince published what he called a “vision” for the kingdom in 2030. The plan aims to curb dependence on oil by boosting non-oil businesses, and to part-privatise Saudi Aramco in order to set up a huge sovereign-wealth fund that will invest at home and abroad. Prince Muhammad bin Salman also wants to raise the participation rate of women in the workplace from a paltry 22% now to a still-paltry 30% by 2030. See here and here. + + + +Hopes were tentatively raised that a durable peace might break out in South Sudan when the fledgling country’s chief rebel, Riek Machar, returned to Juba, the capital, after more than two years away. Standing next to the president, Salva Kiir, with whom he has been in bitter dispute, he was sworn in as vice-president. A unity government was supposed to take shape within days. + +In a rare conviction for corruption, a former member of a Nigerian state legislature was sentenced to 154 years in jail. But the judge ruled that he should serve his sentences concurrently for 77 crimes, including the embezzlement of around $7m, so he should be free in two years. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21697875-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Apr 30th 2016 | From the print edition + + + +Apple reported its first fall in like-for-like sales for the iPhone, as unit sales of the device declined by 16% in the three months ending March 26th compared with the same period last year. Slipping demand in China and the rest of Asia meant sales dropped by almost a fifth in the region, which accounts for 40% of the company’s worldwide sales. Overall revenues fell by 13% in the quarter, the first such drop since 2003, and net profit was down by a fifth, to $10.5 billion. See article. + +Not much to chirp about + +Investors were once again left disappointed by Twitter’s quarterly earnings. Although the growth in users who access the social-media site at least once a month rose by more than expected, to 310m, it posted another net loss, of $80m, and forecast much lower revenues for the second quarter than analysts had been expecting. + +Facebook bucked the trend of weak quarterly earnings from tech companies when it reported a 52% jump in revenues, to $5.4 billion, based on the strength of its advertising business on mobile phones. The company also proposed creating a new class of non-voting shares that would allow Mark Zuckerberg to retain long-term control of the company. + +The Bank of Japan decided not to adjust its policy at its latest meeting, surprising markets which had anticipated another round of stimulus measures in light of reduced forecasts for growth in Japan and the strength of the yen. The currency rose sharply after the decision. At its meeting the Federal Reserve kept its options open about raising interest rates in June, making references to international risks to the US economy without signalling an imminent rate rise. See article. + +A court in Munich acquitted Jürgen Fitschen, one of Deutsche Bank’s co-chief executives, on charges of lying under oath in a case related to the collapse of the media empire run by Leo Kirch (who died in 2011). Four other bankers who used to work at Deutsche, including Josef Ackermann, a former chief executive, were also cleared. Mr Fitschen is leaving his job next month when John Cryan takes over as the bank’s sole CEO. + +Suits booted + +Two British high-street clothing retailers, Austin Reed and BHS, went into administration. BHS is saddled with £571m ($830m) in pension liabilities, a harbinger of wider issues about underfunded pension schemes at British companies. Its overall debt is £1.3 billion. Around 11,000 workers could lose their jobs. Austin Reed called time after 116 years in business, putting around 1,000 jobs at risk. See article. + +BP reported a net loss of $583m for the first quarter. The oil giant was hit with another charge, of almost $1 billion, related to the oil spill in the Gulf of Mexico in 2010. It reached an agreement with the federal and state governments last year but the latest settlement is with some local businesses and residents. BP’s cumulative costs associated with the disaster have climbed to almost $56.5 billion. + +Standard & Poor’s downgraded Exxon Mobil’s credit rating by one notch, the first time the company has not held a triple-A rating since the 1940s. With oil prices averaging $34 a barrel in the first three months of the year, other oil companies have also had their ratings cut in the expectation that they will have to rely less on earnings and more on raising debt to fund their activities. + +Uber agreed to pay $100m to settle a dispute with its drivers in California and Massachusetts. The settlements mean that Uber’s drivers will still be classified as freelancers. The cases were scheduled to go before a jury to determine if the drivers were employees of the app-based taxi firm, which could have imperilled Uber’s business model. See article. + +Volkswagen increased its estimate of the costs it will incur from the emissions-cheating scandal to €16.2 billion ($18.3 billion). The German carmaker booked the charge in its delayed annual earnings, which pushed it to a €5.5 billion net loss for 2015. It has also postponed making public the findings of an internal investigation until it finalises a deal with US regulators. + +Meanwhile Mitsubishi Motors, Japan’s sixth-largest carmaker, said that orders have halved since its recent admission that employees had falsified fuel-economy tests on some vehicles, a practice which the company now says started as long ago as 1991. Adding to the list of potential wrongdoing in the car industry, Daimler said the US Justice Department had asked it to start an inquiry into its testing of car emissions. + +Red planet + +SpaceX announced that it was teaming up with NASA to send an unmanned spacecraft to Mars as soon as 2018. NASA is providing “technical support” to the space exploration firm founded by Elon Musk. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21697881-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Apr 30th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21697880-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +The 21st-century economy: How to measure prosperity + +Philippine politics: Fatal distraction + +Metropolitan growing pains: Little London + +The ECB: Going negative + +Corporate propaganda: Sweet little lies + + + + + +Articles Sections Next + +The 21st-century economy + +How to measure prosperity + +GDP is a bad gauge of material well-being. Time for a fresh approach + +Apr 30th 2016 | From the print edition + + + +WHICH would you prefer to be: a medieval monarch or a modern office-worker? The king has armies of servants. He wears the finest silks and eats the richest foods. But he is also a martyr to toothache. He is prone to fatal infections. It takes him a week by carriage to travel between palaces. And he is tired of listening to the same jesters. Life as a 21st-century office drone looks more appealing once you think about modern dentistry, antibiotics, air travel, smartphones and YouTube. + +The question is more than just a parlour game. It shows how tricky it is to compare living standards over time. Yet such comparisons are not just routinely made, but rely heavily on a single metric: gross domestic product (GDP). This one number has become shorthand for material well-being, even though it is a deeply flawed gauge of prosperity, and getting worse all the time (see article). That may in turn be distorting levels of anxiety in the rich world about everything from stagnant incomes to disappointing productivity growth. + +Faulty speedometer + +Defenders of GDP say that the statistic is not designed to do what is now asked of it. A creature of the 1930s slump and the exigencies of war in the 1940s, its original purpose was to measure the economy’s capacity to produce. Since then, GDP has become a lodestar for policies to set taxes, fix unemployment and manage inflation. + +Yet it is often wildly inaccurate: Nigeria’s GDP was bumped up by 89% in 2014, after number-crunchers adjusted their methods. Guesswork prevails: the size of the paid-sex market in Britain is assumed to expand in line with the male population; charges at lap-dancing clubs are a proxy for prices. Revisions are common, and in big, rich countries, bar America, tend to be upwards. Since less attention is paid to revised figures, this adds to an often exaggerated impression that America is doing far better than Europe. It also means that policymakers take decisions based on faulty data. + +If GDP is failing on its own terms, as a measurement of the value-added in an economy, its use as a welfare benchmark is even more dubious. That has always been so: the benefits of sanitation, better health care and the comforts of heating or air-conditioning meant that GDP growth almost certainly understated the true advance in living standards in the decades after the second world war. But at least the direction of travel was the same. GDP grew rapidly; so did quality of life. Now GDP is still growing (albeit more slowly), but living standards are thought to be stuck. Part of the problem is widening inequality: median household income in America, adjusted for inflation, has barely budged for 25 years. But increasingly, too, the things that people hold dear are not being captured by the main yardstick of value. + +With a few exceptions, such as computers, what is produced and consumed is assumed to be of constant quality. That assumption worked well enough in an era of mass-produced, standardised goods. It is less reliable when a growing share of the economy consists of services. Firms compete for custom on the quality of output and how tailored it is to individual tastes. If restaurants serve fewer but more expensive meals, it pushes up inflation and lowers GDP, even if this reflects changes, such as fresher ingredients or fewer tables, that customers want. The services to consumers provided by Google and Facebook are free, so are excluded from GDP. When paid-for goods, such as maps and music recordings, become free digital services they too drop out of GDP. The convenience of online shopping and banking is a boon to consumers. But if it means less investment in buildings, it detracts from GDP. + +Stop counting, start grading + +Measuring prosperity better requires three changes. The easiest is to improve GDP as a gauge of production. Junking it altogether is no answer: GDP’s enduring appeal is that it offers, or seems to, a summary statistic that tells people how well an economy is doing. Instead, statisticians should improve how GDP data are collected and presented. To minimise revisions, they should rely more on tax records, internet searches and other troves of contemporaneous statistics, such as credit-card transactions, than on the standard surveys of businesses or consumers. Private firms are already showing the way—scraping vast quantities of prices from e-commerce sites to produce improved inflation data, for example. + +Second, services-dominated rich countries should start to pioneer a new, broader annual measure, that would aim to capture production and living standards more accurately. This new metric—call it GDP-plus—would begin with a long-overdue conceptual change: the inclusion in GDP of unpaid work in the home, such as caring for relatives. GDP-plus would also measure changes in the quality of services by, for instance, recognising increased longevity in estimates of health care’s output. It would also take greater account of the benefits of brand-new products and of increased choice. And, ideally, it would be sliced up to reflect the actual spending patterns of people at the top, middle and bottom of the earnings scale: poorer people tend to spend more on goods than on Harvard tuition fees. + +Although a big improvement on today’s measure, GDP-plus would still be an assessment of the flow of income. To provide a cross-check on a country’s prosperity, a third gauge would take stock, each decade, of its wealth. This balance-sheet would include government assets such as roads and parks as well as private wealth. Intangible capital—skills, brands, designs, scientific ideas and online networks—would all be valued. The ledger should also account for the depletion of capital: the wear-and-tear of machinery, the deterioration of roads and public spaces, and damage to the environment. + +Building these benchmarks will demand a revolution in national statistical agencies as bold as the one that created GDP in the first place. Even then, since so much of what people value is a matter of judgment, no reckoning can be perfect. But the current measurement of prosperity is riddled with errors and omissions. Better to embrace a new approach than to ignore the progress that pervades modern life. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21697834-gdp-bad-gauge-material-well-being-time-fresh-approach-how-measure-prosperity/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Philippine politics + +Fatal distraction + +The danger of personality-driven politics + +Apr 30th 2016 | From the print edition + + + +FOR too long the Philippines was the sick man of Asia—cheerful, democratic but a chronic underperformer. In recent years, though, its fortunes have begun to turn. Much of the credit should go to the outgoing president, Benigno Aquino. The economy is booming and investors are flocking in. The country has gained in geopolitical importance, too, thanks to its resistance to China’s expansionism. + +But Mr Aquino’s achievements risk being squandered by an old weakness at the heart of Filipino politics: its love of showmanship and personality over policy and administrative ability. Boxers and film stars project themselves into public jobs while the diligent and competent too often languish. This year’s presidential campaign is no exception (see article). + +The foundling and the beast + +Ahead of the ballot on May 9th, the field is narrowing to two leading candidates. One is Grace Poe, a foundling, adopted daughter of an action-man actor (the late Fernando Poe junior, a failed presidential candidate), and now a telegenic senator. She promises continuity with Mr Aquino’s pro-business policies, but her CV is thin and her campaign lamentably vacuous. + +The front-runner, Rodrigo Duterte, is downright alarming. The mayor of the southern city of Davao, he likes to play the hard man. He has spoken approvingly of vigilante killings of suspected criminals, and promises to clean up the country by executing 100,000 lawbreakers and dumping their bodies in Manila Bay. Mr Duterte sneers at the trapos—short for “traditional politicians” and a pun on “old rags”. He appeals to those who have not shared in the boom. He is a proponent of a barely defined “federalism”. If he does not get his way within a year of being elected, he says he will declare a “revolutionary government”. He made unforgivable remarks about wishing he had been among those who gang-raped an Australian lay minister who died in a prison riot in 1989. When American and Australian officials objected, he dared them to sever ties. + +The leading candidates thus present voters with a ghastly choice between vapidity and vigilantism; neither shows any sign of being up to tackling the many serious issues facing an archipelago of some 100m people. The economic to-do list is long. For all the rosy growth figures, almost one-third of Filipinos, especially rural folk, live on less than $3.10 a day (a measure of poverty for middle-income countries). Cities remain crippled by gridlock; graft is still endemic. And despite Filipinos’ enthusiasm for democracy (the former dictator, Ferdinand Marcos, was evicted by a “people power” revolt in 1986) politics remains dominated by a few wealthy families—including Marcos’s son, a leading vice-presidential candidate. + +A serious geopolitical threat looms in the South China Sea, where disputed rocks and reefs are being built up provocatively by China into what are almost certainly new military bases. The Philippines has filed a closely watched lawsuit at the International Court of Justice, and is forming closer military ties with America, Japan and Australia. Mr Duterte, in particular, risks damaging these vital friendships if he is elected. + +President Aquino (the son of a former president) has endorsed Mar Roxas, the competent interior minister (and grandson of an ex-president), in an attempt to institutionalise some sort of party system. Alas, Mr Roxas is a hopeless campaigner and is far behind in the polls. + +What should Filipinos do? This newspaper’s view is that the dull but diligent Mr Roxas would make the best next president. But if on May 9th he obviously has no chance of winning, then they should swing behind Ms Poe. Better the novice foundling, surely, than the beast of Davao. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21697850-danger-personality-driven-politics-fatal-distraction/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Metropolitan growing pains + +Little London + +Britain’s capital needs to build more. Its would-be mayors are short on plans for making that happen + +Apr 30th 2016 | From the print edition + + + +THERE are many ways to kill the goose that lays the golden eggs. London’s economy makes Britain rich. If Britons were to vote on June 23rd to leave the European Union, London would suffer. But another problem is just as threatening. Soaring property prices are constraining London’s ability to foster new businesses and create jobs. The great city must overcome that problem if it intends to remain great. + +The past two decades have been kind to the capital. It is growing by more than 100,000 new residents a year. Like other booming cities, including New York, London thrives amid globalisation and technological change, which boost both demand for its financial services and the market for its startups. + +Yet if London has given striving people and firms plenty of reason to come, it has done a poor job housing them. Building is maddeningly difficult. London has been adding only 25,000 or so new homes a year (New York City approved nearly that much in half the land area). The median price of a London home has tripled over the past two decades as a result. Office construction lags, too. Commercial property in London’s West End is twice as expensive as in midtown Manhattan. + +The main culprit is land regulation, which is strict everywhere in Britain but draconian in the capital. To many Londoners, these rules offer a defence against a tide of change that threatens to transform the very essence of their city. More building might well slow the growth in prices but would sacrifice London’s character for economic expediency, they argue. + +Such arguments are misguided. Cities cannot be frozen in aspic. London’s very reluctance to build changes it, just as surely as a construction boom would do. The capital is an increasingly forbidding place for non-plutocrats: between 2001 and 2011 the disposable income of those renting private housing fell by nearly 30%. Businesses are worried, too. In early April more than 50 business leaders called for at least 50,000 new homes to be built each year, arguing that expensive housing was threatening their ability to recruit young talent. Productivity has begun to slow , as promising firms are forced out (see article). Overpriced property is costing London the economic and human diversity on which its prosperity depends. + +London needs leaders + +Londoners go to the polls on May 5th to elect a new mayor to replace the incumbent, Boris Johnson. You might expect the leading candidates to offer useful prescriptions for curing the capital’s gravest ill. Alas, they do not. The hopefuls pay lip service to the need for more building, but then skitter down side streets. Zac Goldsmith, the Conservative candidate, encourages employers to lend workers the deposit they need to rent homes. Sadiq Khan, his Labour rival, wants a daft new form of rent control. Lamentably, both oppose the single best way to expand the housing supply: building more in the “green belt”. + + + +Interactive map: Explore how house prices in England and Wales have changed since 1995 + +This swathe of undeveloped land around London’s perimeter contains a fifth of the city’s acreage. Far from being the Edenic retreat that its name suggests, almost half is underused scrub; 7% consists of golf courses for rich people. By one estimate, it includes nearly 20,000 hectares (49,000 acres) with no claim to outstanding beauty that lie within 800 metres of a Tube, train or tram station. Judicious building there could yield nearly a million new houses, while keeping plenty of attractive green space for the enjoyment of residents. In contrast, building on “brownfield” former industrial land—a politically more palatable option preferred by both leading candidates—is more expensive and less effective. Most economists reckon brownfield development could provide, at best, less than half the new housing London needs. + +If it is disappointing that neither mayoral front-runner has the courage to counter the NIMBYist tendencies of London homeowners, it is not surprising. For, bully pulpit aside, London’s chief executive has far less power than he should have over housing. Without the agreement of politicians in Westminster, the mayor can neither open the green belt to development nor pursue other useful policies—such as rewarding London councils that allow a lot of house-building by letting them keep more of the extra property-tax receipts this generates. The capital’s housing woes won’t be solved until that changes. + +If Britons foolishly yank their country out of the EU and send firms and talent packing, London will become more affordable for all the wrong reasons. If they sensibly choose to remain in the EU, however, London’s health, and the need for more building, will loom as a critical issue for British economic growth. It is time Britain’s leaders realised that. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21697851-britains-capital-needs-build-more-its-would-be-mayors-are-short-plans-making/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The ECB + +Going negative + +Germany should stop whining about negative rates and start borrowing + +Apr 30th 2016 | From the print edition + + + +GERMANY and the Netherlands are usually great supporters of central-bank independence. In the 1990s Germany blocked France’s push for a political say over monetary policy in the new European Central Bank (ECB). The Dutchman who first headed that bank, Wim Duisenberg, said that it might be normal for politicians to express views on monetary policy, but it would be abnormal for central bankers to listen to them. + +That was then. Now German and Dutch politicians are trying to browbeat Mario Draghi, the ECB’s current president, into ending the bank’s policy of negative interest rates (see article). The German finance minister, Wolfgang Schäuble, accused Mr Draghi of causing “extraordinary problems” for his country’s financial sector; wilder yet, he also pinned on the ECB half of the blame for the rise of the populist Alternative for Germany (AfD) party. + +Both countries’ politicians attack low rates as a conspiracy to punish northern European savers and let southern European borrowers off the hook. ECB autonomy was sacred when rates suited Germany; now that rates do not fit the bill, and are imposed by an Italian to boot, it is another matter. The critics are not just hypocritical. They are partly responsible—let’s say 50% to blame—for the mess. + +As Mr Draghi has pointed out, his mandate is to raise the euro zone’s inflation rate back towards 2%. It is currently at zero, and periodically dips into negative territory. There is a legitimate debate to be had about how far a negative-interest-rate policy can go. The banks are unwilling to pass on negative rates to depositors, which means their own earnings are dented. And yes, savers are undoubtedly suffering at the moment. But raising rates would squash the recovery, and with it any chance of a normalisation of monetary policy. + +The ECB’s policies of ultra-low rates and quantitative easing (printing money to buy bonds) are the same as those used by other central banks in the rich world since the onset of the financial crisis. Even the Bundesbank, whose allergy to inflation largely explains why the ECB was slower to embrace unconventional monetary policy than its peers, has felt compelled to defend Mr Draghi from attacks in Germany. + +Fixed ideas, broken economy + +The fundamental reason for Europe’s low interest rates and bond yields is the fragility of its economy. Its unemployment rate is stuck at 10%. While the ECB has been doing what it can to press down the accelerator, however, the austerity preached by the likes of the German and Dutch governments has slammed on the brakes. For years, Mr Draghi has been saying that monetary policy alone cannot speed up the economy, and that creditworthy governments must use fiscal policy as well, ideally by raising public investment. If Mr Schäuble wants higher yields for German savers, he should be spending more money. Instead, his government is running a budget surplus. + +A hesitation to spend might be understandable if it were difficult for the German government to find good investment opportunities. But Germany has suffered from low infrastructure spending for decades. Investment by municipalities has fallen by about half since 1991, according to a 2015 report by the German Institute for Economic Research; since 2003 it has failed even to keep pace with the deterioration of infrastructure. + +Should Mr Schäuble wish for a demonstration of how the money might be spent, he might take a car journey from his office in Berlin to that of his colleagues in The Hague. He would come to a halt halfway there, in Bad Oeynhausen, where the Autobahn peters out into a jammed four-lane city road. (As an EU report delicately put it last year, “The motorway is missing.”) A train would be just as slow: Germany’s high-speed trains can travel at their top speed of 300kph (190mph) on only a fraction of their routes. + +The German and Dutch governments can currently issue ten-year bonds at yields of 0.3% and 0.5%. They should be taking advantage of cheap money to spend more on problems like these. That would stimulate short-term economic activity and facilitate long-term growth. There is no better way to help meet the desire of their ageing citizens for higher returns on their savings. If politicians want a scapegoat for the low rates that bedevil their savers, they would do better to look in the mirror than target the ECB. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21697844-germany-should-stop-whining-about-negative-rates-and-start-borrowing-going-negative/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Corporate propaganda + +Sweet little lies + +How to read between the lines of companies’ accounts + +Apr 30th 2016 | From the print edition + + + +AMERICA’S corporate-earnings season is always a spectacle worth watching. Every quarter, in the space of a few weeks, 500-odd big firms report their results. Together, they are a barometer of the world economy: they account for a third of global market value and make half of their sales abroad. + +It matters that investors can easily decipher how these companies are doing. Instead, the quarterly reporting season has become a carnival of confusion, obfuscation and fibbing that would make even a presidential candidate blush. For a time after the financial crisis of 2007-08, firms were on best behaviour, keen to look investors in the eye and tell the truth and nothing but. Now, after a long bull market, investors have got lazy again and managers are taking the mickey. + +In the cycle that is now under way, earnings-per-share are expected to drop by 9% for the first quarter, compared with the previous year, or by 4% once losses at energy firms are excluded. Some technology firms are also losing their shine: Apple, the world’s most valuable public company, this week reported its first drop in revenue since 2003 (see article). + +Yet, too often, bosses sound more like salespeople than managers accountable to a board. The chief executive of IBM, Ginni Rometty, boasts of “transformation progress” and “double digit” growth in its “strategic imperatives”. In fact Big Blue is badly bloodied, with pre-tax profits falling by 66% (or 27% if you accept that a variety of costs are one-off, as the firm itself suggests). In a statement, Tim Cook, Apple’s boss, consoled shareholders with the news that the firm had “executed extremely well”. + +It is trickier to tell if a line is being spun when the numbers that companies put out are also being finessed. All listed firms in America file their earnings according to strict accounting rules. For firms in the S&P 500 index, the gap between these official profits and the more flattering “adjusted” numbers that they shove in front of investors is now about 20%, well above the long-term trend. Often these adjusted profits come in multiple flavours. General Electric offers at least half a dozen measures of earnings. Microsoft’s latest profits rose by 6%, dipped by 3% or sank by 25%, depending on the metric. + +There can be good reasons for some firms to adjust their official figures—to show the impact of big changes such as currency movements or acquisitions, for example. If regulators forced firms to focus on one “correct” number, you can be sure that managers would find ways to massage it. But much of the additional information they put out is distracting propaganda. + +In a few cases firms have got away with conjuring up an alternative reality. Valeant, a drug company, ran itself using measures of profit invented by its managers. Its shares have collapsed in the last year. SunEdison, a loss-making solar-power company, emphasised voodoo metrics that supposedly captured its ability to sell assets to affiliated firms. It went bust in April. Listed partnerships with $400 billion of assets, mainly in the energy sector, boast of paying high dividends even if they are unaffordable and financed with debt. + +You can’t manhandle the truth + +For investors trying to peer through the corporate veil, there are some obvious rules of thumb. A mature firm that cannot make a profit using standard accounting rules should be approached with a bargepole, as should any firm where the gap between official accounting profits and adjusted profits is persistent and large. If a firm makes abnormally low cash payments to the taxman, it may be a warning sign that it reports lower profits to the authorities than it does to its investors. Above all, investors should focus on cashflow. This is not a perfect measure: it doesn’t include the cost of the lavish stock options that technology firms award their staff, for example. But it is much harder to fiddle. + +In 2015, 232 firms in the S&P 500 had cashflow (after capital investment) below their adjusted profits, according to Bloomberg, a data provider. By the time this earnings season is over, that list will be even longer. Investors can do better at spotting the shenanigans. But they should also remind managers that their job is to report a fair and accurate picture of their firms, not to polish reality as if they were selling second-hand cars. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21697849-how-read-between-lines-companies-accounts-sweet-little-lies/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On Facebook, SVM, Czechia, autism, offshore trusts, Peru, University of the People, lasers, Brexit, tongues: Letters to the editor + + + + + +Articles Sections Next + +On Facebook, SVM, Czechia, autism, offshore trusts, Peru, University of the People, lasers, Brexit, tongues + +Letters to the editor + +Apr 30th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +The anti-social network + +Not content with running Facebook, Mark Zuckerberg is stepping up the battle of the technology giants by announcing plans to connect people in poorer countries via internet signals from solar-powered drones (“Imperial ambitions”, April 9th). Facebook craves more users and more data, but at what cost? Regardless of the technology, the fear is that Mr Zuckerberg’s latest venture could backfire in this age of transparency and declining consumer trust. This year’s Edelman Trust Barometer featured the “inversion of influence”, whereby decisions made at the top are the least trusted. A recent survey by Prophet, a consultancy, had Facebook ranked 200th in terms of consumer trust. + +In an age where technology is increasingly about anticipating future need as well as meeting current need and a more personalised service is linked to surveillance, the repercussions of this space odyssey will be wide-ranging and complex. Mr Zuckerberg’s sheer determination does not necessarily guarantee success—and it will make the likes of Microsoft and Google even more competitive. I would urge the ambitious Mr Zuckerberg to heed the story of Icarus; Google will clip his wings for starters. + +ROB HUNTER + +Managing director + +Hunterlodge Advertising + +Rickmansworth, Hertfordshire + +You portrayed Mr Zuckerberg magnificently as the divine Augustus, signifying the tech giant’s imperial reach. A more telling analogy might have been a large poster of Mr Zuckerberg’s face, with the slogan “Facebook is watching you”. Your concerns about Facebook’s ever-changing privacy policy were placed in the context of risks to its reputation and possible regulatory clashes. But you passed over the implications of this “universal passport” for personal freedom and choice. Facebook holds our entire lives in its servers: our expressed feelings, our political views, the identities of our friends and lovers, with photographs of all. Our preferences and locations are tracked, our data mined. Closing an account is no straightforward matter—try it. Luckily for “the spirit of Man”, as Winston Smith called it in “1984”, you identify Facebook’s great and single weak spot: it needs to be “liked”. + +DAVID JOHN + +London + +You underestimate the disruption that will be caused by virtual reality (VR). Unlike augmented reality, which projects ancillary information onto the real world, VR creates entirely parallel worlds, unconstrained by mundane inconveniences. Thanks to the rapid development of processing power, these virtual worlds will eventually be indistinguishable from real life. + +Within 10-20 years we should expect to spend more time in VR than in the real world: the impact on the job economy, education and entertainment will be dramatic. It is for that reason Facebook and others are investing so heavily in virtual reality. It will literally be a whole new world. + +TORSTEN REIL + +Chief executive + +NaturalMotion + +Oxford + + + + + +Joel Stern on SVM + +There were some shortcomings in your otherwise fascinating discussion of shareholder value management and policy (SVM) (“Analyse this”, April 2nd). You were correct that the original thinking on the subject was developed by Franco Modigliani and Merton Miller in their 1958 and 1961 papers on the theory of valuation. But the fact is that the ideas presented in McKinsey’s book, “Valuation”, now in its sixth edition, were found for the first time in my book, “Analytical Methods in Financial Planning”, first published in 1972. Almost all of the ideas in my book were covered in 96 articles I wrote for the Financial Times, each of which was designed to provide a specific lesson in both the theory and policy of corporate finance: “how to” as opposed to “what’s going on”. They deal with a much broader range of subjects including, for example, “Why people believe capital markets are inefficient.” + +There are other contributors to SVM, including Eugene Fama, from the University of Chicago, Stephen Ross of MIT and Richard Roll of UCLA. Valuation involves both selecting an appropriate measure of corporate performance and also a required rate of return for risk in achieving that corporate performance. My contribution was recognising that “discounted cashflow” as a process and “net present value” as a measure do not provide a way to solve the corporate-governance problem, such as designing incentives on pay for senior management down through middle management and even to the shop floor. + +In order to accomplish the latter on corporate governance and remuneration, it was essential to develop a new concept called “economic value added”, which provides a way of measuring performance year-by-year contemporaneously, so that rewards can be paid in the current year based on actual performance. + +JOEL STERN + +Chairman + +Stern Value Management + +New York + + + + + +All about Czechia + +I was a little disappointed when reading your article about the move to introduce Czechia as the Czech Republic’s short name (“Metamorphosis”, April 23rd). Czechia is the literal translation of Èesko. You wrote that in the 1920s, the writer Karel Capek said Èesko was “not musical” and that “it even sounds a little facetious” to foreigners. But he never wrote that about Èesko/Czechia; he was referring, in an article from 1922 co-written with his brother, Josef, to the word Èeskoslovensko/ Czechoslovakia. + +You also say that the “Cz” spelling used in English “comes from Polish, not Czech. It may have been adopted as a result of the influx of Jews from Poland to the Anglophone world in the 19th century”. However, the spelling comes from the Czech itself. From the Middle Ages until the orthographic reform of 1842 (when it was changed into Èech/Èechy), the name of the people and the country were spelled Cžech/Cžechy. The first use of the English term Czechia comes from 1841, in an encyclopedia written by two English churchmen who used Czech sources, continuing the already long-established tradition of the use of that word in Latin. There is no Polish or Jewish intermediary documented anywhere in this process; that is pure speculation based on a superficial comparison of the English and Polish orthography. + +JIRI SITLER + +Historian and diplomat + +Stockholm + + + + + +Trust the trusts + +I think you are wrong to support the public dissemination of beneficial ownership in an impetuous effort to combat offshore tax evaders (“The lesson of the Panama papers”, April 9th). This is a reckless violation of personal privacy and stands to put in physical danger law-abiding individuals and their relatives around the world. The vast majority of offshore strategies are used legally, for a variety of business and privacy purposes. In fact, your position goes beyond the current scope of the OECD’s noxious “common reporting standard”. This will gather and automatically exchange individual names, addresses, tax-identification numbers, and financial-account balances with the governments of countries such as Azerbaijan, Cameroon, China, Kazakhstan, Russia and Uganda. Where the information might go from there, no one knows. + +Shaming kleptocrats with a public database will not bring an end to the shadow financial system. What it will do is make many honest people and their families more vulnerable to extortion and kidnapping. + +GREGORY CRAWFORD + +President + +Alliance Trust Company of Nevada + +Reno, Nevada + + + + + +A hesitant divorce + +You say that many people who are unsure how to vote in Britain’s referendum on whether to stay or exit the European Union will decide on the basis of whether Brexit is likely to make them better or worse off (“The economic consequences”, April 9th). Most divorces leave both parties worse off and the future uncertain. But these days, that is rarely a reason for a couple who have fallen out of love to wait until death to part. Provided both sides have an equal say in the matter, those who are unsure how to vote won’t do so. + +GINA ANTCZAK + +Lymington, Hampshire + +Boris Johnson, London’s mayor and a leading Brexiteer, scurrilously suggested that the “half-Kenyan” Barack Obama’s reason for wanting Britain to remain in the EU was based on an old resentment of the British empire. Since one of Mr Johnson’s forebears was Turkish, are we to dismiss his antipathy to the EU as being motivated by the fact that he is “part-Turkish”? That would be unworthy, which is why Mr Johnson was ill-advised to try to raise the president’s family background. + +With only two months to go, I am left wondering how much further into the political gutter Mr Johnson will try to take the debate. + +ANDREW HALPER + +London + + + + + +Employing brain power + + + +“Beautiful minds, wasted” (April 16th) was a welcome attempt to tackle the stigma associated with autism, emphasising how various features of parts of the spectrum, increased focus, reliability and honesty, could benefit employers. But autism is not alone among psychological differences in representing possible opportunities to bosses. Recent research has begun to uncover a positive association between worry, rumination and some anxiety disorders, with higher intelligence. Perhaps a more “emotionally intelligent” workplace might learn to embrace a wider spectrum of people with different outlooks on life, for mutual benefit. + +As F. Scott Fitzgerald put it in “The Crack Up”, an essay first published in Esquire in 1936, “The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.” + +Does this increasingly look like the demands of a modern-day office? + +RAJ PERSAUD + +Consultant psychiatrist + +SIR SIMON WESSELY + +President + +Royal College of Psychiatrists + +London + +Most funding on autism clings to the old view of “genetics-first/brain-wiring” paradigm. As the father of an autistic child and as a professional experienced in the biomedical industry, the current approach to tackling the condition frustrated me to the point where I founded the N of One: Autism Research Foundation. This organisation takes a “venture capital” approach to seeding potential breakthroughs in our understanding of the biology of autism by funding research that lies outside the conventional, but largely unproductive, consensus view. + +Although I appreciate the attention to autism that The Economist brought to tackling autism’s challenges and agree that more medical research should be a top priority, I believe the greatest returns to society will come when we expand our medical-research focus beyond a paradigm that has failed to produce treatments and answers. + +JOHN RODAKIS + +Founder + +N of One: Autism Research Foundation + +Dallas, Texas + + + + + +Peru’s election + +“A dangerous farce” (April 9th) misconstrued Peru’s electoral process. The electoral authority did not “subvert democracy and the rule of law”. It ruled in strict accordance with election law. The European Union Observation Mission was one of a dozen impartial witnesses. It suggested improvements that could be made for the future but acknowledged the election was democratic and certified its transparency. The chief observer from the OAS shared that assessment. Moreover, no observer has questioned the integrity of the authorities, nor the legitimacy of the whole process or its results. + +Millions of Peruvians went to the polling stations to elect a new government for the next five years, and to decide which candidates will proceed to the second round. As stated by the EU High Representative, the elections proved Peru’s commitment to democracy. + +CLAUDIO DE LA PUENTE + +Ambassador of Peru + +London + + + + + +University of the People + +*With regards to your article about University of the People, (“Cheap MBAs: Costly for some”, April 21st). I respect and value journalistic freedom and the right of any news media and journalist to write whatever they wish. For what it’s worth, however, I only wish you would have researched more thoroughly and more accurately before shooting down UoPeople’s groundbreaking MBA programme before it’s even launched, and without fair reason. + +For starters, “Cheap MBAs: Costly for some” is not a level-handed title. It implies that UoPeople’s affordable (note: not “cheap”) MBA degree doesn’t pay off, even though the programme is yet to start. Second, to set the record straight, we are not UoP (which is University of Phoenix), we are “UoPeople.” + +In addition, you suggest a shortcoming of UoPeople not having industry accreditation for its MBA. The standard is that a university usually cannot begin to even apply for industry accreditation until a few years into its programme and only after graduating cohorts of graduates. This vital piece of information is missing from the article, implying to readers that UoPeople simply isn’t good enough to be ranked. + +Finally, you express doubts over who would hire our students. Since UoPeople already has graduates with bachelor’s degrees in business administration, you could have easily verified this by simply asking to be put in touch with graduates, or better yet, with employers of our graduates (of which, there are many, including the likes of IBM, Amazon, World Bank, the UN and more). + +For future articles, UoPeople is more than happy to provide interviewees and necessary information (including information about our highly qualified instructors), in order to facilitate accurate reporting and avoid damaging, erroneous assumptions. + +SHAI RESHEF + +President + +University of the People + +Pasadena, California + + + + + +Zap! + +Aircraft do not only face the threat of bird strikes when taking off or landing at airports (“Sonic scarecrow”, April 16th). Birds in transit, such as migratory formations, are also a danger. I have for some time wondered if laser technology could be used to deal with this hazard, but thought it would be too bulky, require too much power and be slow to aim at the offending birds. + +However, your preceding article on space travel, “Starchip enterprise”, suggests the feasibility of such an initiative. The laser beams would only have to focus on a fairly small short-range cone that would destroy the bird prior to entering the engine. As the technology of robotics and artificial intelligence (AI) is progressing, the operation of the laser could be automatic rather than requiring pilot intervention. + +The dust and ashes of a lasered bird would probably not be a sufficient problem to cause serious engine malfunction; inspection after a safe landing would confirm if any maintenance work was necessary. + +JOHN CHURCHILL + +Former air-traffic controller and senior manager in the RAF + +Christchurch, Dorset + + + + + +Tongue and groovy + +Schumpeter noted Boston Consulting Group’s calculation that “less than 15% of firms have developed a business strategy focused on the elderly” (April 9th). I have been fortunate enough to work for astute companies that sell to older folks, including my present task of marketing a deluxe range of designer tongue-scrapers. At first we targeted the product to the young date-conscious and their bad-breath anxieties, but we quickly refocused on wine drinkers with declining palates and geriatrics with fading appetite. + +A swift tongue-scrape removes the debris that blocks taste-bud efficacy. + +MANO MANOHARAN + +London + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21697796-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Measuring economies: The trouble with GDP + +GDP revisions: Rewriting history + + + + + +Articles Sections Next + +Measuring economies + +The trouble with GDP + +Gross domestic product (GDP) is increasingly a poor measure of prosperity. It is not even a reliable gauge of production + +Apr 30th 2016 | From the print edition + + + +ONE of Albert Einstein’s greatest insights was that no matter how, where, when or by whom it is measured, the speed of light in a vacuum is constant. Measurements of light’s price, though, are a different matter: they can tell completely different stories depending on when and how they are made. + +In the mid 1990s William Nordhaus, an economist at Yale University, looked at two ways of measuring the price of light over the past two centuries. You could do it the way someone calculating GDP would do: by adding up the change over time in the prices of the things people bought to make light. On this basis, he reckoned, the price of light rose by a factor of between three and five between 1800 and 1992. But each innovation in lighting, from candles to tungsten light bulbs, was far more efficient than the last. If you measured the price of light in the way a cost-conscious physicist might, in cents per lumen-hour, it plummeted more than a hundredfold. + +Mr Nordhaus intended this example to illuminate a general point about how flawed economists’ attempts to measure changes in living standards are. Any true reckoning of real incomes must somehow account for the vast changes in the quality of things we consume, he wrote. In the case of light, a measurement of inflation based on the cost of things that generated light and one based on a quality-adjusted measure of light itself would have differed by 3.6% a year. + +When a first-year undergraduate first encounters the idea of GDP as the value added in an economy, adjusted for inflation, it sounds pretty straightforward, says Sir Charles Bean, the author of a recent review of economic statistics for the British government. Get into the details, though, and it is a highly complex construct—and, as Mr Nordhaus’s fable shows, a snare for the unwary. + +The production boundary + +Measuring GDP requires adding up the value of what is produced, net of inputs, across a wide variety of business lines, weighting each according to its importance in the economy. Both the output and the materials (if any) used up in making it have to be adjusted for inflation to arrive at a figure that allows for comparison with what has gone before. + +This is tricky enough to do for an economy of farms, production lines and mass markets—the setting in which GDP was first introduced. For today’s rich economies, dominated by made-to-order services and increasingly geared to the quality of experience rather than the production of ever more stuff, the trickiness is raised to a higher level. No wonder GDP statistics are still so prone to constant and substantial revision (see article). + +The problem is not just that it is hard to make these calculations. It is that what the calculations produce is a measure put to too many purposes, and, though useful, not truly fit for any of them. And there are worries that things may be getting worse. As the price of light illustrates, standard measures miss some of the improvements delivered by innovation. But at least new lighting products show up in the figures once people start buying the things in sufficient volume. These days it seems that a growing fraction of innovation is not measured at all. In a world where houses are Airbnb hotels and private cars are Uber taxis, where a free software upgrade renews old computers, and Facebook and YouTube bring hours of daily entertainment to hundreds of millions at no price at all, many suspect GDP is becoming an ever more misleading measure. + +The modern conception of GDP was a creature of the interwar slump and the second world war. In 1932 America’s Congress asked Simon Kuznets, a Russian-born economist, to estimate national income over the preceding four years. Until he produced his figures just over a year later, no one knew the full extent of the Depression. In Britain Colin Clark, an enterprising civil servant, had been collecting statistics on national income since the 1920s, and in 1940 John Maynard Keynes made a plea for more detailed figures on Britain’s capacity to make guns, tanks and aeroplanes. He went on to establish the modern definition of GDP as the sum of private consumption and investment and government spending (with account taken for foreign trade). Kuznets had treated government spending as a cost to the private sector, but Keynes saw that if wartime procurement by the state was not treated as demand, GDP would fall even as the economy grew. + +Keynes’s idea of GDP won out on both sides of the Atlantic and soon spread further. Countries that wanted to receive post-war aid under America’s Marshall plan had to produce an estimate of GDP. In the 1950s Richard Stone, a protégé of Keynes, was asked by the United Nations to prepare a template for GDP accounting that could be used by all member states. To be a nation was, in part, to know your GDP. + +In wartime, GDP was concerned with managing supply. With peace, the influence of Keynes’s ideas on fighting slumps flipped it into a way to manage demand, as Diane Coyle notes in her book, “GDP: A Brief but Affectionate History”. Either way it was (and is) a measure of production, not of welfare—which, as GDP growth became a goal for politicians, also became an occasion for criticism. + +A measure created when survival was at stake took little notice of things such as depreciation of assets, or pollution of the environment, let alone finer human accomplishments. In a famous speech in March 1968, Robert Kennedy took aim at what he saw as idolatrous respect for GDP, which measures advertising and jails but does not capture “the beauty of our poetry or the strength of our marriages”. + +It’s a manufacturer’s world + +From time to time, such dissatisfactions have brought forth alternatives. In 1972 Mr Nordhaus and James Tobin, a colleague at Yale, came up with a “measure of economic welfare” which counted some bits of state spending, such as defence and education, not as output but as a cost to GDP. It also adjusted for wear-and-tear to capital and the “disamenities” of urban life, such as congestion. The paper was in part a response to environmentalist concerns that GDP treats the plunder of the planet as something that adds to income, rather than as a cost. It was much talked about; it was not much acted on. In 2009 a report commissioned by the French president, Nicolas Sarkozy, and chaired by Joseph Stiglitz, a prominent economist, called for an end to “GDP fetishism” in favour of a “dashboard” of measures to capture human welfare. + +Kennedy was right. Much that is valuable is neither tangible nor tradable. But much that is tradable is also not tangible. A problem with GDP even when it is being asked to do nothing more than measure production is that it is a relic of a period dominated by manufacturing. In the 1950s, manufacturing made up more than a third of British GDP. Today it makes up a tenth. But the output of factories is still measured much more closely than that of services. Manufacturing output is broken down into 24 separate industries in the national accounts; services, which now make up 80% of the economy, are subdivided into only just over twice that number of categories. + +A bias toward manufacturing is not the only distortion. By convention GDP measures only output that is bought and sold. There are reasons for this, only some of them sound. First, market transactions are taxable and therefore of interest to the exchequer, an important consumer of GDP statistics. Second, they can be influenced by policies to manage aggregate demand. Third, where there are market prices, it is fairly straightforward to put a value on output. This convention means that so-called “home production”, such as housework or caring for an elderly relative, is excluded from GDP, even though such unpaid services have considerable value. In early editions of his bestselling economics textbook Paul Samuelson joked that GDP falls when a man marries his maid. + +Despite convention, a lot of what is included in GDP lies outside the market economy. Many government services are provided free, and for decades the value given to such output was simply the cost of provision. It is only fairly recently that statisticians have started to measure some bits of public-sector output directly by, for instance, counting the number of operations performed by health services or the number of students taught in schools. + +Some private-sector services are also measured indirectly. Housing services is one. This is straightforward wherever householders rent the property they live in. Rental payments capture both the value of housing services to tenants as well as the income of landlords from providing them. But in places where most people own the home they live in, a large part of the total value of housing services has to be imputed. + +Finance is another activity that is mostly measured obliquely (and badly). Typically financial services are not paid for directly in fees: banks make a large part of their income from charging more interest on loans than they pay on deposits. To capture the value being added, statisticians use an imputed figure, the “spread” between a risk-free interest rate and a lending rate, and multiply this by the stock of loans. The problem with this method is that the lending spread is a measure of the risk banks take. For this reason its use in GDP figures can have perverse results. For example, at the turn of 2009 Britain’s financial sector was close to collapse. But because fear of bank defaults was driving spreads up, GDP figures recorded a spike in the sector’s value added, and thus its contribution to GDP (see chart 1). + + + +As statisticians try to capture ever more of the economy’s output in their figures, new activities are added to GDP. In 2013 an EU agreement on GDP standards, for example, included income from selling recreational drugs and paid sex work. In Britain, the changes added 0.7% to GDP. How much credence should be given to that figure, though, is open to doubt. The statisticians have to fall back on crude proxies to estimate what is going on: thus the paid-sex market is assumed to expand in line with the male population, and the charges at lap-dancing clubs are taken as a measure of the price of sex. Leaving aside the appropriateness of these approximations, Paul Samuelson might have been spurred to muse on the GDP implications of a woman marrying her gigolo. Robert Kennedy might have asked if a nation is really doing better when its sex- and drug-trades are growing more quickly. + +The price is wrong + +A further complication is that, for all the caution that statisticians offer against seeing GDP as a measure of welfare, the two are intertwined in perhaps the trickiest part of their calculations: adjusting for inflation. Inflation is a measure of how much more you have to pay this year than you did last year to achieve the same level of well-being. It is at least as challenging to measure as output. + +For a start, a change in the price of a product will influence how much of it people buy. If red apples rise in price, people buy more green apples; if the price of beef shoots up, they buy more pork. There are tricks that capture this sort of substitution when compiling price measures. One is the “geometric-mean aggregation” of price quotes. Multiplying together the prices of n goods and then taking the nth root of the product allows price aggregations to take into account a degree of switching proportionate to the change in relative prices. This sounds abstruse: but getting it right has an effect of lowering inflation by half a percentage point or so. Broader shifts in consumer preferences are picked up by updating the weights attached to each category of goods in the overall price index. + +Then come adjustments for changes in quality. This year’s smartphone might cost more than last year’s, but if so it will also do more. If statisticians focus only on changes in price, they will overstate the true inflation rate by missing improvements in performance. An advisory committee of leading economists set up by America’s Senate in the mid-1990s and headed by Michael Boskin, of Stanford University, reckoned that failure to adjust for quality and new products meant true inflation was overstated by at least 0.6% a year. It called for greater use of “hedonic” estimation, a technique that captures the implicit value of each particular attribute of a product by measuring how variation in those traits affects the product’s price: for example, how much more do people pay for a brighter light bulb? Once an implicit price for each attribute is established—processor speed, or memory, say, for a phone—prices are tweaked accordingly. + +Hedonic estimation helps. But it is a labour-intensive business, because the implicit prices have to be updated frequently to ensure accuracy; in practice only a small fraction of prices are adjusted in this manner. It also runs into problems when quantitative changes get so large as to become qualitative. A modern flat-screen television is simply a different beast from the squat little cathode-ray tube numbers of the 1980s. + +Such adjustments are even harder to do for services, which tend to be bespoke, than for goods, which are still for the most part standardised. The value of a meal, for instance, depends on the cooking and ingredients but also on the speed of service, the background noise, how close together the tables are, and so on. Each of these factors can change from one period to the next. The true value of public-sector services is even harder to measure comparably over time. The number of operations can be counted quarter by quarter. Their effects on health and longevity may not be seen for years or decades. + +As the Boskin commission pointed out, new products are a particular headache. In theory their value to consumers is the gap between the reservation price (what consumers are willing to pay) and the actual price, known as “consumer surplus”. In practice, new products enter the consumer-price index without any such adjustment. Then there is the sort of novelty that broadens choice. The number of TV channels or over-the-counter painkillers available in America, for instance, is overwhelming. Yet in 1970 there were just five of each. Though people may complain about too much choice, this greater variety is to a great extent a boon. But it is invisible to GDP measures. For GDP, the output of a million of shoes in one size and colour is the same as a million shoes in every size and colour. + +The benefits of many new products are simply not picked up at all. The upfront costs of providing services on a digital platform, such as Facebook or Twitter, are hefty. But the marginal cost is close to zero, and the explicit price to users is normally nothing. By global convention, zero-priced goods are excluded from GDP. So are all voluntary forms of digital production, such as Wikipedia and open-source computer programs. Some of this unpaid-for activity can be picked up in the accounting; although there is no charge for a Google search, consumers pay a shadow price by supplying information and attention, for which advertisers pay. But the advertising revenue is likely to be well below the benefits that consumers get. + +The review chaired by Sir Charles Bean outlined two other possible approaches to valuing free digital services. One is to estimate the value of the time spent on the internet. The Bureau of Economic Analysis, America’s main statistical body, has used market wage rates to estimate the value of home-production activities, such as cooking, cleaning and ironing. Following a similar approach, Erik Brynjolfsson and Joo Hee Oh of MIT estimated that the welfare gain of free internet products added 0.74% a year to America’s GDP between 2007 and 2011 (other studies reach somewhat lower estimates). The other approach uses rising internet traffic as a proxy (see chart 2). The review cites research which found consumer internet traffic in western Europe growing at 35% a year from 2006 to 2014. If the output of IT services had grown at a similar clip, official GDP growth rates in Britain would have been 0.7 percentage points higher each year. + + + +It is not just that many new services are now given away free; so are some that used to be paid for, such as long-distance phone calls. Some physical products have become digital services, the value of which is harder to track. It seems likely, for instance, that more recorded music is being listened to than ever before, but music-industry revenue has shrunk by a third from its peak. Consumers once bought newspapers and maps. They paid middlemen to book them holidays. Now they do much more themselves, an effort which doesn’t show up in GDP. As commerce goes online, less is spent on bricks-and-mortar shops, which again means less GDP. Just as rebuilding after an earthquake (which boosts GDP) does not make people wealthier than they were before, building fewer shops does not make them poorer. + +These problems do not invalidate the use of GDP. But given the direction of technological change in an ever-more digital world they seem likely to grow more serious, and solutions to them are both hard and imperfect. Measuring the consumer surplus from new or free products relies on brave assumptions; estimates vary widely depending on which ones are used. To be consistent over time would require measuring the consumer surplus of goods and services that are well established in the consumer basket. + +A sense of the scale of the task can be gained from looking at estimates of how fast the economy grew during a previous time of headlong technological change—the Industrial Revolution. Around the time that GDP was first being used to measure contemporary economies, some economic historians ventured to apply it to the past, too. They concluded that there had been a sudden take-off in economic growth after 1750; a landmark post-war study reckoned that GDP per worker rose by 1.4% a year, an unprecedented rate, in the first half of the 19th century. + +You say you measured a revolution + +In the 1980s, research by Nicholas Crafts of Warwick University found that the 18th century’s glut of industrially transformative inventions had been applied rather narrowly, with madcap growth seen only in a few sectors of the economy. He put productivity growth at a less revolutionary 0.5% a year. A generation further on colleagues of Mr Crafts, led by Steve Broadberry, published research which nudged the figures back up a bit. Even centuries on, it is hard to settle on GDP estimates in times of upheaval. And they still miss many of the changes wrought—the consumer surplus due to railways, say. + + + + + +“It is a big mistake to think that one number serves for all purposes,” says Sir Charles. The problem is that, as things stand, GDP risks serving all its purposes ever-less well. The Bank of England has become so chary of GDP figures that it publishes a range of numbers both for its forecasts of growth and for its history. Its latest projections put recent GDP growth in Britain somewhere between zero and 4%. Such hyper-scepticism might seem a bit silly. But is it really no more absurd than proclaiming, with great certainty, that GDP growth in China fell from 6.8% to 6.7% in the year to the first quarter, when it almost certainly didn’t? + +If comparisons of GDP from one quarter to the next are dodgy, those from decade to decade are perilous. America’s Census Bureau calculates that median household income, adjusted for inflation, was barely higher in 2014 than it was 25 years earlier. Measured living standards for a typical American have stagnated for a quarter-century, in other words. This finding undoubtedly reflects something real. But would a typical American really be indifferent between 1989 medical care at 1989 prices and today’s medical services at current prices, asks Ken Rogoff of Harvard University? If GDP figures really measured what they try to measure, that would be the rational stance. + +The challenge, said Mr Nordhaus in his paper on light, is to construct measures that “account for the vast changes in the quality and range of goods and services that we consume.” But that means finding ways to more readily compare hand-held e-mail with fax machine, self-driving car with jalopy, vinyl records with music-streaming services and custom-made prosthesis with health-service crutches. Perhaps an Einstein could do it. Odds are, though, that he’d take one look and stick with the simplicities of physics instead. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21697845-gross-domestic-product-gdp-increasingly-poor-measure-prosperity-it-not-even/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +GDP revisions + +Rewriting history + +The nation’s income is a constantly moving target + +Apr 30th 2016 | From the print edition + + + +BY HOW much did Britain’s economy grow in 1959? It would seem to be a question that ought to have been settled long ago. It hasn’t been. Samuel Williamson of the University of Illinois finds that in the British government’s annual “Blue Book” reports on GDP in the half-century or so since this uncelebrated year, there have been 18 different answers. The Blue Book published in 1960 said 2.7%; that of 2012 said 4.7%. British GDP, it seems, is under almost constant revision. + +Britain is scarcely alone in rewriting recent history. Recent research by the OECD, a rich-country think-tank, found that for G7 countries the average absolute revision to GDP growth figures three years after preliminary estimates was at least as large as those seen in Britain. Those revisions tend always to increase the initial estimate—except in America, the only economy where initial estimates are usually too optimistic. Beyond three years, though, there is evidence that revisions in Britain are larger than its rich-country peers. + +In poor countries, revisions can be huge. Nigeria’s GDP was revised up by 89% in 2014. Later that year, Kenya’s GDP was revised up by 25%. Ghana’s GDP had been upgraded by 60% in 2010. + +Some of these bigger changes to GDP estimates are outcomes of “rebasing”. GDP is measured by reference to a survey of the economy in a “base” year in which statisticians look at a sample of firms across business lines to gauge how quickly production is growing. The weight given to each industry depends on its importance to the economy in that year. As the economy changes over time, with some sectors growing faster than others, this snapshot becomes less accurate. Before its revisions in 2014, the base year for Nigeria’s GDP had been 1990, providing a hopelessly outdated picture of the economy. The revised figures, based on 2010, gave due weight to industries, such as mobile telephony and filmmaking, that had sprung up in the meantime. In Kenya and Ghana, a delay in updating the base year meant their GDP figures had become similarly inaccurate. + +To avoid periodic rebasing rich countries have switched to “chain-weighting”, a system by which the base year is updated each year. Even so, new data or changes to the way GDP is calculated result in frequent revisions. There are a number of ways of calculating GDP—it can be treated as the sum of all value added, or the sum of all income or the sum of all expenditure—and they can be used to cross-check each other, but the data needed for the different methods do not become available at the same time. In Britain, early estimates of GDP rely on proxies for output, such as business turnover. As more information on spending and incomes from, for instance, tax returns is available, the cross-checking begins, which usually sees the figure revised upwards. Changes to the way GDP is estimated also typically lead to upward revisions; statisticians become better at tracking new industries or business models. There is, it seems, an upward drift to GDP measures over time. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21697846-nations-income-constantly-moving-target-rewriting-history/print + + + + + +Previous Articles Sections Next + + + + + +United States + + + + +The north-eastern primaries: Top Trump + +The great Republican delegate wrangle: Sectional preferences + +The labour market: The force awakens + +The campaigns: Heard on the trail + +Suicide: The saddest trend + +The future of cities: Ersatz urbanism + +Lexington: When economists turn to crime + + + + + +Articles Sections Next + +The north-eastern primaries + +Top Trump + +After an impressive five-state sweep, Donald Trump is starting to look unstoppable + +Apr 30th 2016 | PITTSBURGH AND WASHINGTON, D.C. | From the print edition + + + +IT SEEMS it could really happen, the most viciously personalised, all-round nasty presidential face-off imaginable: Hillary Clinton against her old pal Donald Trump. That was the main takeaway from the big wins the respective Democratic and Republican front-runners scored in five north-eastern primaries, Connecticut, Delaware, Maryland, Pennsylvania and Rhode Island, on April 26th. Because, while both candidates had been expected to do well, and though Mrs Clinton’s grip on the Democratic nomination had already looked secure, the unexpectedly eye-watering totality of Mr Trump’s victories was potentially race-changing. As the Republican contest now swings westwards, for ten last state primaries, the party bigwigs scrabbling to Stop Trump have their work cut out; if he wins in Indiana on May 3rd, Mr Trump may be unstoppable. + +To make up the ground he recently lost in Wisconsin—and get back on track for the requisite 1,237 delegates—he was estimated to need a little over 100 of the 118 elected delegates available this week. He won 109, on the back of his biggest wins in terms of vote-share yet. In New York on April 19th he cracked 50% of the vote for the first time; he repeated that feat in all five north-eastern states—winning Rhode Island with 64%, Delaware with 61%. He won almost every county in every state. Ted Cruz and John Kasich were humiliated. + +Of the 213 delegates available in the north-eastern quintet and New York, the Texan senator, who has styled himself the only plausible anti-Trump candidate, won just three. Flailing to distract journalists from this meltdown, he declared on April 27th that Carly Fiorina, a failed presidential candidate and businesswoman known for the massive job losses she oversaw at Hewlett-Packard, would be his running-mate. Judged on Ms Fiorina’s performance earlier in the contest, it is as well he may not need her. Mr Kasich’s haul, of nine delegates, was even worse; the Ohio governor had remained in the contest, despite winning only his own state, partly in the hope of doing well with the north-east’s relatively moderate voters. + + + +America's primary agenda: our interactive 2016 election calendar + +Exit polls in the three biggest states, Connecticut, Maryland and Pennsylvania, offered some familiar explanations for Mr Trump’s success. It was above all fuelled by resentment of the ways in which America’s economy is changing and of the political-business elite presiding over it; more than four in ten Republican voters said Wall Street hurts the economy and Mr Trump won two-thirds of them. Yet the polls also suggested deepening support for Mr Trump, who has now won 26 of the 41 states that have voted, across the Republican electorate. He beat Mr Cruz handsomely among evangelicals and strong conservatives, the Texan’s biggest fans. Given that he also outperformed his poll ratings in every state—reversing a former habit of underperformance—the impression was of a Republican electorate that has, rather suddenly, decided to plump for Trump. + +There are three possible explanations for this change. One is that voters are unimpressed by the technical hurdles his rivals are trying to pile in Mr Trump’s path. Thus, for example, Mr Cruz’s, impressive effort to insert his supporters onto the lists of delegates that each state will send to the Republican National Convention in July. If Mr Trump failed to win the nomination on a first ballot there, most would be free to vote for the candidate of their choice in subsequent votes, potentially handing Mr Cruz a big advantage. There is nothing underhand about that, yet of course Mr Trump says there is, and opinion polls suggest many might sympathise with him. Most Republicans say their ticket should go to whoever wins the most delegates. + +A second possible explanation is that Republican voters who strongly disapprove of Mr Trump—around a third of the total—are giving up. The fact that turnout was down on early Republican primaries points to that. A third, related, reason for the pro-Trump wave is that the growing likelihood of Mr Trump as the candidate has sanitised him a bit. Thus, he did better than usual with late deciders—such as Anthony Venditti. “I went in 75% sure I was voting for Cruz,” said the 27-year-old engineer, outside a polling station in Pittsburgh, Pennsylvania. “But I went for Trump because he has the best chance of bringing back manufacturing and jobs.” + + + +The wave could fade. The north-eastern states are packed with the working-class whites who love Mr Trump’s protectionist message best. Indiana, which has 57 delegates available, most of whom the tycoon must win, is more conservative and religious, making it more propitious for Mr Cruz. He is running Mr Trump fairly close; polls put him on 33% to Mr Trump’s 39%. And on April 24th he and Mr Kasich announced a non-aggression pact, under which the governor, who is at 19%, will stop campaigning in Indiana. If more of his supporters were to peel away to Mr Cruz than to Mr Trump, the Texan could win. That is tough to predict; Mr Kasich’s followers dislike Mr Cruz’s caustic conservatism almost as much as Mr Trump’s reckless populism. But it may be their main hope of denying the tycoon the ticket. + +In his victory speech—naturally delivered in Trump Tower, in Manhattan—Mr Trump appeared to be readying himself for Mrs Clinton; albeit not in the measured, sophisticated way his advisers have briefed Republican elders to expect. Mr Trump just piled in. “The only card she has is the women’s card,” he sneered—“and the beautiful thing is women don’t like her”. Yet they like him much less—70% of women have a poor opinion of Mr Trump—and this did not seem a good way to woo them. + +Mrs Clinton, who won all the north-eastern states except Rhode Island, stretching her lead over Senator Bernie Sanders above 300 elected delegates, was also in general election mode. In her victory speech—delivered in Philadelphia, in recognition of Pennsylvania’s potential importance as a swing state—she beseeched Democrats, independents and even “thoughtful Republicans” to rally to her standard. It would have seemed unimaginable only recently, but the way things are going a few of them might, Even in the most surprising quarters: this week Charles Koch, a billionaire industrialist, libertarian and mega-funder of conservative causes, said it was “possible” Mrs Clinton would make a better president than whoever the Republicans put up. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21697835-after-impressive-five-state-sweep-donald-trump-starting-look-unstoppable-top/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The great Republican delegate wrangle + +Sectional preferences + +Two kinds of contest are going on within the Republican primaries + +Apr 30th 2016 | INDIANAPOLIS | From the print edition + + + +“IF THE GOP does not nominate Donald Trump, the delegates need to be cleansed,” says an e-mail received a few days ago by Craig Dunn, a Republican delegate for Indiana’s fourth congressional district. It was one of many e-mails, calls and messages posted on the local Republican website to Mr Dunn from supporters of Donald Trump, the Republican front-runner, calling him a traitor and employing some colourful expletives. Mr Dunn had dared to say in an interview with Politico, a news organisation, that he would not support Mr Trump unless Satan were one vote away from the nomination. In that case, said Mr Dunn, he would “consider voting for Trump if he was the only alternative”. + +The fight for Republican delegates has become fevered and rather nasty as Mr Trump scrambles to shore up support from 1,237 “bound” delegates, or 50% plus one vote, before the Republican convention in Cleveland, Ohio, in July. According to state party rules, a bound delegate assigned to Mr Trump in a primary election is obliged to vote for him in the convention’s first round of voting. Even Mr Dunn says that he would vote for Mr Trump if the property tycoon wins in his congressional district in Indiana’s primaries on May 3rd. + +Mr Trump’s main rival, Ted Cruz, a Texan senator, no longer has a chance of reaching the magic number of 1,237 bound delegates, so he is focusing all his energy on stopping Mr Trump from reaching that threshold, in which case convention delegates continue to vote in at least two and possibly more rounds in a so-called contested convention. That notion riles Mr Trump. “The whole delegate system is a sham,” he told Fox News on April 26th. He has also called it “rigged” and “crooked” and accused his detractors of bribing delegates with trips and other perks. There is a certain amount of theatre in this. Anything that allows Mr Trump to claim outsider status is good for business; anything that makes his rivals look spooked or weak is doubly so. But his attacks bother party leaders, in particular in those states where Mr Trump lost and blamed his defeat on the delegate system. + +“The process has been effective for decades,” says Pam Pollard, state party chairman of Oklahoma, where Mr Cruz won. “It’s a grass-root model driven by local party activists, not a sham,” says Mark Wynn, the Republican chairman in Indiana’s sixth congressional district. Many delegates are devoted volunteers and activists who have been loyal to the party for decades. Others say Mr Trump should have Googled the convention rules before he decided to run for president. They also point out that he has benefited from the system because his share of delegates thus far has exceeded his share of the vote. + +The rules for the selection of convention delegates (2,472 for the Republicans and 4,765 for the Democrats) in a patchwork of more than 50 local elections, held in school gyms and other public buildings across the country, are not easy to follow. In many ways the primaries are hyper-democratic. In France, party apparatchiks choose their party’s presidential candidate without any input from voters. The same is true in Germany, where parties choose their candidate for the chancellorship. Yet in a contested convention, a few hundred delegates become kingmakers. + +After the first round of voting—and even more so after the second and third rounds—most of them are free to vote for whomever they like, regardless of the wishes of primary voters. All eyes are now on Indiana, the only state to go to the polls on May 3rd and, apart from California, the most important of the states still to vote. The state is in the middle of two fierce fights on the Republican side. The first is a conventional one for votes. The second is for delegates whose loyalties can be relied on if they become unbound in Cleveland. + +Mr Cruz criss-crossed Indiana on a bus in the second half of April. After stops in four different towns in Indiana on April 25th, he appeared at a rally on April 26th in a gym in Knightstown, a town of some 2,000 souls, where he attacked Mr Trump and Mrs Clinton in the same breath for their support of abortion choice, higher taxes and illegal immigrants (Mr Trump wants to send them back to wherever they came from, he said, and then let them in again). Mr Trump visited Indiana only once during the campaign, but on April 27th he flew to Indianapolis for a rally with Bob Knight, a popular basketball coach fond of throwing chairs in fits of temper. + +Apart from trying to scoop up as many of the remaining candidates as possible, Mr Cruz wants to get delegates assigned to vote for Mr Trump on his side in a potential second ballot, especially in states he lost. Indiana’s delegate slate includes many party activists who are unlikely to vote for Mr Trump, unless they are required to, though some of them back Mr Kasich rather than Mr Cruz. “We will be an extended pit stop on the road to the second ballot,” predicts Pete Seat, a political consultant. Mr Seat thinks that Indiana delegates would support Mr Kasich on the second ballot because he is the most electable and the likeliest of the three to beat Mrs Clinton. (However, Mr Kasich can compete at the convention only if the Republican leadership changes its rule 40(b), which stipulates that to win the nomination a candidate must have won a majority of delegates in at least eight states.) + +Jeff Cardwell, Indiana’s Republican state chairman, denies that whom they support was a criterion in the selection of delegates. He says delegates had to be Republicans “in good standing” and be deeply involved in party activities to make the cut. He points out that Rex Early, the chairman of Mr Trump’s campaign in Indiana, is one of the 57 delegates. Mr Cardwell rejoices in all the attention Indiana is getting this year. “Indiana could be a game changer,” he says, a role Hoosiers are unused to. + +Until May 3rd many of Indiana’s delegates will be under lots of pressure from Trump supporters, who are inundating them with e-mails, phone calls and more. “The Trump camp started very late trying to win over delegates,” says John Hammond, one of Indiana’s two representatives on the Republican National Committee. What Mr Trump’s supporters lost in time they are now trying to make up with intensity. “We need a refresher course in civics,” sighs Mr Hammond. With only a couple of months left until the Republican convention, it may be a little late for that. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21697853-two-kinds-contest-are-going-within-republican-primaries-sectional-preferences/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The labour market + +The force awakens + +Labour-force participation is rising again, at last + +Apr 30th 2016 | From the print edition + + + +ACCORDING to Donald Trump, America’s “real” unemployment rate is higher than 40%. The fact hiding behind this Trumpism is that America’s labour-force-participation rate—the fraction of the population either in a job, or looking for one—is only 63%. The Donald is mixing up his economic barometers. But America’s low participation rate has captivated economists almost as much as unemployment, ever since participation tumbled dramatically after the financial crisis. Recently, it has begun a belated recovery. + +In early 2007, 66% of Americans were in the labour force. After recession struck, participation tumbled, falling to 64% by 2012. By September 2015 it had hit 62.4%—its lowest since 1977, when less than half of women worked. Since that low, however, participation has come back into fashion: 2.4m Americans have joined the labour force in the last six months, pushing the rate back up by 0.6 percentage points. As a result, despite the simmering jobs market—the economy created 215,000 net new jobs in March—unemployment is fairly steady. It was 5.1% in September, and is now 5%. + +Both the big fall in participation since the crisis, and the recent rally, are mysterious. There are three potential explanations for the long-term decline. The first, and most obvious, is demography. The financial crisis coincided almost exactly with the oldest among the baby-boom generation reaching the age of eligibility for Social Security (pension) benefits. But a retirement surge cannot fully account for the sharpness of the fall. In 2007 the Bureau of Labour Statistics, demographic projections in hand, forecast a much smaller decline in participation, to only 65.5% in 2016. + +The recession may have pushed the demographic trend by forcing oldies who lost their jobs to retire sooner (despite the fact that falling stock prices damage retirement nest-eggs). In response to a Federal Reserve survey in 2013, 15% of retired folk said they stopped work earlier than planned because of the recession, three times as many as said that the downturn had forced them to slog for longer. This phenomenon is uniquely American: economists at Goldman Sachs recently examined 19 rich countries, and found that only in America has the participation rate of 55- to 64-year-olds fallen since 2008. In total, the bank reckons, retirement accounts for 58% of the fall in participation since 2008 (see chart). + +The second explanation is incentives. Higher returns to education may have encouraged more people into (or back into) school: 10% of the workers who have gone missing can be found in the library. The same trend may be pushing out less-educated workers: the biggest falls in participation have been among male college dropouts and female high-school graduates. + +Some conservatives blame low participation on growing welfare rolls. During the recession, with unemployment soaring, nearly every state suspended work requirements tied to the supplemental nutrition-assistance programme, better known as food stamps. Under the work requirements, which were introduced in 1996, able-bodied adults without children cannot receive food stamps while unemployed for more than three months in any three-year period. With this rule mostly suspended, the proportion of the population claiming food stamps swelled from 9% at the end of 2007 to 15% by the end of 2012. + +Work requirements are now back in force in more than 40 states. Twenty-two of these reintroduced them in January. Could that have driven Americans back to work? It looks unlikely. In states which brought back work requirements, claims for food stamps fell by a weighted average of 0.4% of the working-age population. In states with no such change, food-stamps claims fell by only half as much. Yet in both groups of states the participation rate rose by the same amount—a weighted average of half a percentage point—between December and March. That suggests something else is going on. + +The final explanation is that much of the fall in participation was simply the result of a weak economy. Plentiful jobs, and rising real wages, are now tempting Americans back into work. If this is right, forecasting how far the trend has to run is a crucial challenge for the Fed as it decides when next to raise interest rates (see article). + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21697855-labour-force-participation-rising-again-last-force-awakens/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +Apr 30th 2016 | From the print edition + + + +Game of thrones + +“People go. They use the bathroom that they feel is appropriate, [and] there has been so little trouble.” + +Donald Trump shows a remarkable lack of concern over transgender bathrooms + +Rocky Horror Show + +”So lemme make things real simple: even if Donald Trump dressed up as Hillary Clinton, he shouldn’t be using the girls’ restroom.” + +Ted Cruz supports “bathroom bills” + +Hooking up + +“There’s no magic formula this year. It’s kind of like computer dating gone bad.” + +Ed Rollins, a veteran Republican consultant, on finding a vice-presidential candidate. Washington Post + +Live from Minnesota + +“[Republicans’] best hope of stopping Donald Trump is a guy who’s the love child of Joe McCarthy and Dracula.” + +Al Franken, the Democratic junior senator, returns to his comic roots. MinnPost + +Hell freezes over + +“It’s possible.” + +Billionaire right-wing political activist and left-wing bogeyman, Charles Koch, thinks that Hillary Clinton may be the best available president. ABC News + +Fast and furious + +“Characterising Donald Trump as a type of car or animal resulted in some fascinating descriptions…women depicted him as a Porsche, a Ferrari, a muscle car, a boxer who stands his ground, a bulldog, an Escalade, a lion (fierce and king of the jungle) and as an unpredictable cat.” + +A focus group of “Walmart moms” on the Republican front-runner. Washington Post + +Sleeping with the enemy + +“Collaborator!” + +A Trump supporter in Philadelphia berates John Kasich for his mutual non-aggression pact with Ted Cruz. Cathleen Decker of the LA Times + +Burning down the house + +“Sometimes you can’t fix it. Sometimes you can just take a seven-alarm fire and just make it a four-alarm fire. It’s still burning, but it’s not as bad as it was.” + +Reince Priebus, head of the Republican National Committee, is trying to remain calm about the convention. CNN + +Fear Factor + +“Lock your doors, folks. Okay. Lock your doors...Who knows, maybe it’s ISIS.” + +Mr Trump, campaigning in Rhode Island, warns locals about the Syrian refugees who have been resettled there. Sopan Deb, CBS News + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21697854-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Suicide + +The saddest trend + +Suicide rates are rising in America, and in other rich countries + +Apr 30th 2016 | From the print edition + + + +EACH year the Centres for Disease Control and Prevention (CDC), a federal agency, adds up the causes of death noted on coroners’ certificates. It is the most melancholy of lists, from heart disease at the top to scarlet fever at the bottom. Suicide usually hovers around number ten, prominent but not exactly startling. On April 22nd the CDC sorted the numbers another way, picking out the suicides and examining trends in self-destruction. Viewed this way, the data are alarming: America is in the grip of a sustained raise in the suicide rate across all age groups and for both sexes. From 1999 to 2014, the suicide rate rose by 24%. The numbers are adjusted to take account of ageing. Men shoot themselves; women take poison. There has been a rise in suffocation and strangulation. + +The finding fits with other melancholy ones from economists, including Anne Case and Angus Deaton, who have pointed to declining life-expectancy for poor whites, and Raj Chetty of Stanford and his colleagues at Harvard and elsewhere, who show how inequality correlates with illness. Everything seems to point in the same direction, to a national malaise, challenging the idea that America’s story is one of inexorable progress. Yet some caution is order. The suicide rate declined steadily from 1986 until 2000, the date the CDC paper takes as its starting point. What is happening in America is a return to the mid-1980s rather than a leap into some lethal, dystopian future. + +It is also worth noting that a similar pattern can be seen some other countries. Using a database from the OECD, and filling in a few gaps from other sources, we have compared America’s suicide rates with those elsewhere. The OECD data do not correspond exactly with those produced by the CDC because of the different ways their respective statisticians adjust the raw numbers for ageing. But they show that America’s suicide rate comes out considerably lower than those of France or Belgium. And the recent uptick is mirrored in Britain and the Netherlands, among other countries. + +The rise since 2007, when the financial crisis got under way, adds weight to the idea that suicide studies are really just a branch of macroeconomics. But within the CDC numbers there is enough to suggest that the causes of the increase are more complicated than that. When plotted on a map, what researchers refer to as a “suicide corridor” runs from Montana in the north to New Mexico in the south, with Nevada to the west and Colorado to the east. The best explanation for this seems to lie in demography. Native Americans and non-Hispanic whites both have a higher propensity for suicide than other ethnic groups. The mountain West has plenty of both. The desert has also become a popular retirement destination for old bones. Surveyed by age, the group at the highest risk of committing suicide is not reckless young men but males aged 75 or over. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21697852-suicide-rates-are-rising-america-and-other-rich-countries-saddest-trend/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The future of cities + +Ersatz urbanism + +Instant, ready-made downtowns bulldoze the distinction between city and suburb + +Apr 30th 2016 | MIAMI | From the print edition + + + +AMERICAN suburbs don’t come much more ordinary than Sunrise. In street after street, modest single-storey houses sit behind grass yards dotted with bougainvillea bushes and palm trees. Each house has a mailbox on a pole, with a little red flag to signal when it is full. Sunrise is so similar to other Florida suburbs that when it was built, in the 1960s, the developer lured visitors with a gimmick: an upside-down house, with upside-down plants and an upside-down car in the driveway. + +What is being built now seems odder even than that. On the edge of Sunrise, next to the Florida Everglades, eight modernist blocks of flats (the first of them 28 stories high) are to rise, along with offices, car parks and a shopping street including restaurants and a cinema. Erick Collazo of Metropica Holdings, the developer, says the idea is to build a downtown in suburbia. Metropica, as the 26-hectare complex is called, will not really be a downtown. Because of what it suggests about the future of cities and suburbs, it will be more interesting than that. + +Florida rivals southern California as the rich world’s most inventive, exuberant urban laboratory. The architectural movement known as new urbanism took off there, producing two settlements that tried to bottle the essence of small-town America: Seaside (the setting for “The Truman Show”) and Celebration, built by the Walt Disney Company. If you want to see out your last years playing golf there is nowhere better: one huge retirement community, known as The Villages, has 48 courses. + +Today the fad in south Florida is not golf villages or retro towns but ready-made city centres. Half an hour’s drive south of Sunrise, another Metropica-like development, City Place Doral, is under construction. Two others with even taller towers, Miami Worldcentre and Brickell City Centre, are going up in central Miami. A huge development called SoLe Mia will rise in north Miami. All will combine “walkable” shopping streets, offices and homes—mostly two- and three-bedroom flats in towers. Similar developments have appeared in other American cities, and beyond. But Florida is being overrun. + +Builders call these developments “mixed-use”, a term that fails to capture what they are up to. The idea of combining flats, offices and shops even in a single building is not new: look at an old New York district like Chelsea. Metropica and its kin try to create urban cores in places that lack them. Whereas new urbanist settlements often promote a small-town ideal, these sell big-city life, which is why they have words like “metro”, “city” and “centre” in their names. The salesmen claim that residents will be able to live, work and be entertained in a single district. + +Ersatz city centres are multiplying now partly because it takes about this long after a financial crisis to begin a big project. Another reason is the rising price of land. Jeffrey Soffer of Turnberry Associates, a big Miami developer, points out that south Florida has almost run out of room to sprawl. Pinched between the Everglades in the west and the Atlantic in the east, it must go up. And although some cities, including Miami, are probably building too many high-rise flats, demand is fairly strong. Foreigners want to own them (most of the people buying flats in Metropica are Latin Americans) and young Americans want to rent them, partly because they find it hard to get mortgages to buy family homes. The towers are growing bigger: 48% of flats constructed in America in 2014 were in buildings with at least 50 units. + +Mixed-use development is also being pushed by politicians. They have tweaked the zoning rules that normally separate homes, offices and shops, and allowed taller buildings: Miami approved a more relaxed zoning code in 2009. Rules that require a minimum number of parking spaces to be constructed for every new restaurant table or every 100 square metres of office may also be softened in mixed-use developments. The developers claim, reasonably, that the same parking space can be used by a worker during the day and a diner at night. + +As it has done before, Florida is pioneering a new kind of city. Robert Bruegmann, an authority on urban sprawl at the University of Illinois, reckons that American city centres and suburbs are coming to resemble one another. Suburbs are growing denser and more diverse; urban cores are greener, cleaner and often less densely populated than they were (even go-go Manhattan has two-thirds as many people as it did a century ago). Ersatz city centres, which can be built in low-rise suburbs like Sunrise or in built-up areas, bulldoze the distinction further. South Florida is becoming a landscape of scattered centres—sprawl with bumps. + +But creating the appearance of urbanity is not the same as making a city. Cities are supposed to be cosmopolitan and surprising; they ought to change in unpredictable ways. Mixed-use developments, by contrast, are fully-formed when they are built—and are too costly for the poor. They are not supposed to be diverse. John Hitchcox of Yoo, a design firm that has worked on Metropica and many other projects, says that mixed-use developments aim to create communities of like-minded people. Though they look like cities, they are supposed to feel like villages. + +In fact, the low-rise 1960s suburb where Metropica is being built is already full of cosmopolitan surprise. Behind those monotonous lawns lives a diverse population: one-third of the 88,000 people who live in Sunrise are black and one-quarter are Hispanic. The strip malls are filled with esoteric businesses—a South Indian vegetarian restaurant run by Palestinians, a Vietnamese café, a Dominican hairdresser, even a British shop selling Boddingtons beer and scones. Walkable they are not. But by providing places for immigrants to get ahead, the cheap, ugly, car-oriented strip malls of suburban Florida are already doing what cities are supposed to do. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21697780-instant-ready-made-downtowns-bulldoze-distinction-between-city-and/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +When economists turn to crime + +How cost-benefit analysis might save America’s criminal-justice system + +Apr 30th 2016 | From the print edition + + + +IT TOOK decades for politics—that messy, flawed business of gauging the public mood, haggling with interest groups and turning out votes—to build America’s prison system: a behemoth of staggering size and cost, unlike anything else in the developed world. What chance is there that the monster can be tamed by the dry, abacus-clicking discipline of economics? + +A non-trivial chance is the surprising answer, judging by a bipartisan conference of economists and policy wonks at the White House on April 25th, co-hosted by the conservative American Enterprise Institute and the broadly progressive Brennan Centre for Justice. The meeting launched a report into a system that, after decades of relentless growth, holds over 20% of the world’s prisoners, though America is home to less than 5% of the global population. The report’s dry title, “Economic Perspectives on Incarceration and the Criminal Justice System”, should not deceive. Written by the White House Council of Economic Advisers (CEA), an in-house think-tank that has advised presidents since Harry Truman, it is a 79-page catalogue of unintended consequences, failed policies and heartbreaking waste, counted in the tens of billions of dollars and, more important, in human lives. + +By tradition, American journalists refer to really startling facts as “Hey, Martha!” moments, imagining a newspaper reader exclaiming to a breakfast companion. In Britain, such facts are “marmalade droppers”. Such moments fill the new report. America spends $80 billion a year locking up 2.2m people, reflecting an incarceration rate that has climbed remorselessly to more than four times the world average, even as violent crime rates fell sharply. Between 1980 and 2014 the proportion of people behind bars more than tripled, with especially sharp rises among black and Hispanic men. Much growth was driven by “tough on crime” laws passed in the 1980s and 1990s, which sent even non-violent drug offenders to jail. If past trends continue, one in three black men born in 2001 can expect to serve time at some point. + +Every year, 600,000 people are released from American prisons. More than half of all prisoners have mental health problems, while about two-thirds did not complete high school. Once out, ex-cons join about 70m Americans with criminal records, a status which in several states will deny them public housing and the right to vote, and legally bar them from occupations which require a licence, such as hair-cutting or plumbing. Recidivism rates are dire: one study following people released from state prisons found that, within five years, more than half were back behind bars. + +Small wonder that politicians on both the left and right are increasingly asking whether today’s system is humane or just. Protesters have challenged the Democratic presidential hopeful, Hillary Clinton, to disown a crime law passed in 1994 by her husband, Bill Clinton, which included billions of dollars for new prisons and tougher sentencing rules. She has partially obliged, calling for an end to today’s “era of mass incarceration”. Congress is weighing bipartisan bills to loosen rigid sentencing laws. But for all the talk, politicians seem stuck. In Congress, conservatives vow to resist bills that might release violent offenders. Leftists demand radical change to a system they call inherently racist. + +Enter the economists. The CEA report confines itself, explicitly, to questions of costs and benefits: whether locking so many people up for so long is an efficient way to reduce crime. Its conclusion is a resounding no. Incarceration does prevent some crimes from being committed, it concedes: a big California study from 2013 suggested that each extra year in jail typically avoided one or two property crimes, with the effects strongest for motor-vehicle theft. But hefty prison spells turn out to be a costly and clumsy way to deter offenders. Explaining this finding, the CEA’s chairman, Jason Furman, cited the law of diminishing marginal benefits. Once a country’s prison population is large, additional prisoners are more likely to be low-risk offenders. Indeed several studies suggest that harsher sentences may be counter-productive, for instance as young offenders emerge hardened by juvenile jails. Other research points to better policing and an ageing population as likelier causes of lower crime rates. + +Misbehavioural economics + +Two former directors of the Congressional Budget Office spoke at the White House meeting. Douglas Holtz-Eakin, a Republican who served on George W. Bush’s CEA, called criminal-justice reform a “rare public-policy moment” that offers both parties a chance to save taxpayers money, help more people into the labour force, strengthen families and reduce poverty without sacrificing public safety. Peter Orszag, a Democrat who headed the Office of Management and Budget in Barack Obama’s first term, called the evidence “compelling” that, to deter crime, the severity of a possible punishment matters much less than the certainty that it will be inflicted. Alas, politicians have poured resources into incarceration rather than more cost-effective tools, such as hiring more police and directing them to crime hotspots (America employs two-and-a-half times more corrections officers per person than the global average, but 30% fewer police). The vast majority of burglaries (85%) are never cleared up, while fewer than half of violent crimes lead to arrests. + +One strength of this wonkish, follow-the-numbers approach is that it avoids the political challenge faced by reformers: the fact that many voters yearn to feel safe from crime, and do not want to be told that this is a wicked or selfish ambition. The CEA report duly calculates the cost to society from crime, and finds that it is large. But it then shows that today’s policies are a horribly wasteful way of reducing that scourge. Scare-mongering headlines, followed by pandering and guesswork by politicians, have driven criminal-justice policy for too long. Enough marmalade-dropping panic: time to give cost-benefit analysis a go. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21697826-how-cost-benefit-analysis-might-save-americas-criminal-justice-system-when-economists-turn/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Murder in Mexico: The great mystery + +Innovation in Canada: More particle than wave + +Bello: Fidel’s last stand + + + + + +Articles Sections Next + +Murder in Mexico + +The great mystery + +A grisly crime and a possible cover-up remind Mexicans of what they most dislike about their government + +Apr 30th 2016 | MEXICO CITY | From the print edition + + + +EVEN the official story is shocking. In September 2014 a group of student teachers from Ayotzinapa, in the south-western state of Guerrero, decided to commandeer some buses in the nearby town of Iguala. They wanted to go to a rally in Mexico City, and it is common for students in this part of Mexico to take buses for such things. They usually return them. + +Forty-three of those students disappeared, and are presumed dead. The mayor of Iguala and his wife were angry with them for having disrupted a political event, the federal government says, and ordered the local police to hand them over to a drug gang, the Guerreros Unidos. The gangsters mistook the students for members of a rival gang. They killed them, burned their bodies at a rubbish dump and tossed the remains in a river. + +Or so the government insists. The truth may be worse. Under pressure from the families of the missing students, the government invited foreign experts, convened by the Inter-American Commission on Human Rights, to investigate. The group, known by its Spanish initials GIEI, released a 608-page report on April 24th. + +They found no evidence that the students had been burned at the rubbish dump at the time the official account said they had been. And they have suggested that one of the buses was perhaps being used to move heroin from Guerrero—Mexico’s main heroin-producing state—to Chicago. The students may have been killed because they inadvertently made off with millions of dollars’ worth of drugs. + +Even the details on which both sides agree are confusing. On September 26th, at around 9.30pm, about 100 students left Iguala in five buses. Three of the buses came under fire from local police. The students in one of the buses were taken away by the police and have not been seen since. The other two buses, which took a different route, were also stopped. Again, the students on one were taken away and have not been seen since. The others, who had been alerted to what was happening, escaped into the darkness. The bodies of three bystanders and three students were later found. One of the students had his eyes gouged out and the skin on his face was missing. + +Not the whole truth + +The mayor and his wife are in custody, as are 73 municipal policemen and 50 gang members. The government’s version of events relies partly on confessions from gangsters. The GIEI alleges that 17 of the gang members were tortured, citing photographs showing their bodies increasingly battered as the interrogations progressed. The government says it is investigating this claim—but it is also sending the foreign experts packing. + +The GIEI complains that the government obstructed its investigation by not allowing it to question soldiers from the battalion based in Iguala. The country’s National Human Rights Commission says it has heard from witnesses who say that federal police officers were present when students were bundled off one bus and into local patrol cars, and did not interfere. The government denies this. The GIEI asks whether the army also failed to act when it could have. + +No one knows what really happened, but the whole country is speculating. Who, Mexicans ask, is the government protecting? The army and federal police, many suspect. Mexicans are even more appalled by the behaviour of local-level officials. The saga reminds them that in some parts of their country organised crime has infiltrated local politics so thoroughly that the two are hard to tell apart. It also reminds them that crimes in Mexico are rarely punished: only one in 100 leads to a conviction. + +For the president, Enrique Peña Nieto, it has been a public-relations disaster. At first he seemed aloof: it took him a month to meet the victims’ families and 17 months to visit Iguala. Now many Mexicans question his willingness to confront the culture of corruption that allows violence to thrive. “The rest of his presidency will be plagued by this,” says Jorge Castañeda, a former foreign minister. + +Mr Peña’s approval rating is a woeful 30%, in part because of allegations ofsleaze. The boss of a government contractor that built the president’s wife a house was revealed in the Panama papers to have moved $100m through an offshore centre. And Iguala-like local tragedies keep happening. Five people vanished earlier this year in the eastern state of Veracruz after their arrest by state police. Video of a suspect being tortured with a plastic bag over her head by two soldiers and a federal police officer recently went viral on social media. “Mexico is awakening,” says Viridiana Rios of the Wilson Centre, a think-tank in Washington. A bigger and more assertive middle class “is no longer prepared to put up with corruption and impunity”, she says. Congress will soon consider a package of anti-corruption bills. + +Mr Peña, who has pushed through reforms of energy and telecoms, still has the capacity to surprise. Last week he admitted that the drug war wasn’t going well. He proposed legalising medical marijuana and decriminalising the possession of 28 grams or less of recreational pot. This could start to de-escalate the drug war, removing harmless offenders from Mexico’s jam-packed prisons and focusing law enforcement on the crimes that terrify ordinary citizens, like the killing of the student teachers of Ayotzinapa. But establishing the rule of law in Mexico will take years. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21697882-grisly-crime-and-possible-cover-up-remind-mexicans-what-they-most-dislike-about-their/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Innovation in Canada + +More particle than wave + +A geeky prime minister wants to make the country more inventive + +Apr 30th 2016 | WATERLOO, ONTARIO | From the print edition + +Schrödinger’s catnip + +ASKED by a journalist in April about Canada’s role in fighting Islamic State, Justin Trudeau, the prime minister, came back with a pithy lecture on quantum computing. “The uncertainty around quantum states,” he explained, lets quantum computers encode much more information than the conventional binary sort can. This detour into geekdom seemed natural at the Perimeter Institute for Theoretical Physics, which Mr Trudeau was visiting to proclaim his enthusiasm for basic research. The video of the impromptu lecture went viral, adding to the glamour already radiated by the snowboarding, cannabis-legalising, refugee-embracing prime minister. The assembled physicists duly cheered; Mr Trudeau then answered the question. + +He has given boffins much to celebrate. Unlike his Conservative predecessor, Stephen Harper, who governed until last November, Mr Trudeau shows no inclination to muzzle politically inconvenient research. The Liberal government’s first budget, presented in March, increases federal spending on innovation clusters, university labs and research bodies, including the Perimeter Institute. In naming his cabinet Mr Trudeau rechristened the industry ministry: it is now the ministry of innovation, science and economic development. + +All this has more to do with economic necessity than prime ministerial nerdiness. For a decade much of Canada’s growth has come from natural resources, especially oil and gas. That allowed Canada to ignore its weaknesses as a producer of knowledge-intensive goods and services. In the World Economic Forum’s ranking of countries’ performance in innovation, Canada comes a dispiriting 22nd. As a share of GDP it has the lowest level of “technology exchange”—money spent on or earned from patents, designs and other forms of know-how—among the 15 countries tracked by the Conference Board of Canada, a think-tank. “The resource supercycle covered up a lot of issues around innovation and productivity,” says Dan Muzyka, the Conference Board’s chief. The end of the commodity boom caused a six-month recession last year; in 2016 growth is expected to be a feeble 1%. Without more innovation, Canada is unlikely to grow much faster than that for long. + +Canada does not lack scientists or good universities. Nor has its government been stingy. Public spending on research and development is higher as a share of GDP than in Europe and the United States (see chart). Where Canada falls short is in transforming ideas into marketable products. It produces relatively few patents. R&D spending by business has been declining for the past 15 years as a share of GDP; just 2.2% of companies are engaged in innovation, according to Dan Breznitz of the Innovation Policy Lab at the University of Toronto. + + + +A report in 2013 on Canada’s innovation deficits by the Council of Canadian Academies, a think-tank, pointed out that the country’s managers have less education than executives in the United States and that government procurement policies do little to create markets for new technologies. Venture capital, the financial lifeblood of technology companies, is puny. Investment by Canadian venture-capital firms was C$2.6 billion ($1.9 billion) last year. That is 11% more than in 2014 but less than half as a share of GDP than in the United States. Canadian venture-capital funds also lack the expertise of their American counterparts, and so are less able to help companies grow. Stockmarket valuations for Canadian technology firms are lower than in the United States. As a result, most do not see a future for themselves as independent companies. Three out of four tech entrepreneurs surveyed by PwC, a consultancy, said they plan to sell their businesses within six years. + +That cautious strategy may owe something to an unambitious business culture, which is difficult to demonstrate but widely acknowledged. One Canadian techie who moved to California complains that “Canadians shoot for eighth place. They just want to make the playoffs.” + +The twin cities of Kitchener and Waterloo in Ontario embody both the strengths and weaknesses of Canadian innovation. The area’s most famous firm is BlackBerry, a maker of once-cool communications devices. Today it employs 3,000 people in the region, compared with 11,000 at its peak. When BlackBerry lost the smartphone war to Apple “everyone assumed that Waterloo was toast”, says Steve McCartney of Communitech, a non-profit group that helps tech companies. + +Yet the area seems to be thriving. Some 15,000 companies, at least a third of them startups, are based in the corridor that runs from Waterloo to Toronto. They employ 200,000 people. Mike Lazaridis, a co-founder of BlackBerry (and of the Perimeter Institute) is a University of Waterloo dropout. OpenText, one of Canada’s largest software companies, started as a university project to create an electronic database for the Oxford English Dictionary. Mr McCartney thinks Waterloo’s tech firms benefit from traditions of collaboration established by the area’s Mennonite groups. + +Communitech, which seeks to encourage partnerships between technology companies and the university, is a prime example. It hosts “VeloCity Garage”, where 120 startups work on such products as a self-driving floor scrubber and a device that helps doctors find veins. Kik, a messaging app with 275m users, started there. + +Yet Waterloo is more an exporter of talent than a magnet for it. The best business plans come from University of Waterloo students, says Paul Graham, co-founder of Y-Combinator, a venture-capital fund in California. A typical software engineer in Waterloo makes two-thirds the salary of his California equivalent (though the cost of living is also lower). Pay is “60-70% of the decision to move”, says Herman Law, a Waterloo graduate who works for a company that makes graphic-processing units for electronic games. Professional opportunities are also much greater in California. “The tech sector in Canada just isn’t as big,” Mr Law says. It ends up serving as the “farm team” for Silicon Valley, Canadians grumble. + +Navdeep Bains, the innovation minister, says he knows what the problems are. His plan for solving them will be ready by early next year. It is likely to include measures to encourage more collaboration among business, government and academia. Some analysts think innovation incentives should depend less on tax credits, the main source of public support for R&D. Instead, the government should finance promising ventures. David Wolfe, of the Innovation Policy Lab, points out that Canada lacks a technology-development agency like the United States’ DARPA or Israel’s Office of the Chief Scientist. Insulated from political influence and pressure to produce quick results, such agencies can help commercialise technologies without spending much money, Mr Wolfe argues. + +More self-confidence would also help, Mr Bains thinks. “We don’t brag enough,” he says. After Mr Trudeau’s elegant turn at the lecture podium that could begin to change. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21697891-geeky-prime-minister-wants-make-country-more-inventive-more-particle-wave/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +Fidel’s last stand + +The Cuban Communist Party blocks change + +Apr 30th 2016 | From the print edition + + + +WHEN Fidel Castro made a brief appearance at the Cuban Communist Party’s seventh congress on April 19th he was greeted with prolonged applause. “Well, let’s move to another subject,” he eventually said, his stentorian voice distorted by age. It was a joke. But he might as well have been turning the page on the historic visit to Havana by Barack Obama in March and the expectations it generated among Cubans of speedy changes. Having reminded his audience that he would soon turn 90 and that death comes to all, Fidel went on: “The ideas of Cuban communists will endure.” + +No serious student of Cuba imagined that Mr Obama’s visit and his televised call for free elections would prompt overnight change. But the party congress proved to be a disappointment even by the cautious standards of the reforms that Raúl Castro, Fidel’s slightly younger brother, has set in train since he took over as president in 2008. + +The stasis was symbolised by the retention as second party secretary (behind only Raúl) of José Ramón Machado Ventura, an 85-year-old Stalinist ideological enforcer. Even officials had hinted that his powerful post might be passed to Miguel Díaz-Canel (56), the vice-president and Raúl’s putative successor as president in 2018. Five new, youngish members joined the politburo, but none is known to be a reformer. Earlier hopes in Havana that the congress might approve an electoral reform and a bigger role for the rubber-stamp parliament were dashed. + +Raúl Castro devoted part of his opening report to the congress to answering Mr Obama. Complaining of a “perverse strategy of political-ideological subversion”—a reference to Mr Obama’s call for the empowerment of Cuba’s small businesses and incipient civil society—Raúl told the delegates that “we must reinforce anti-capitalist and anti-imperialist culture among ourselves.” As for free elections, he twice insisted: “If they manage some day to fragment us, it would be the beginning of the end…of the revolution, socialism and national independence.” + +He insisted that the “updating” of Cuba’s economy, to give a bigger role to the non-state sector and remove distortions and subsidies, would continue “without haste but without pause”. In fact, the reforms have all but halted: of the 313 “guidelines” approved at the previous congress in 2011, only 21% have been fully implemented. The government recently reintroduced price caps on some foodstuffs. Days before the congress Omar Everleny Pérez, the most prominent of the reformist economists advising Raúl, was sacked from his post at the University of Havana. His alleged fault had been to share information with American academics. Mr Pérez has often called for the reforms to go faster. + + + +Cuban thaw: a history of US-Cuban relations + +One hypothesis is that Raúl can afford to move more slowly because of the injection of dollars from Mr Obama’s loosening of restrictions on tourism, remittances and investment. That may be true in the short term. But Raúl himself offered a withering critique of Cuba’s underlying problems, criticising “out-of-date mentalities”, “a complete lack of a sense of urgency” in implementing change and the “damaging effects of egalitarianism” in failing to reward work or initiative. He lamented the economy’s inability to raise wages, which “are still unable to satisfy the basic needs of Cuban families”. + +So what explains Raúl’s caution? He said that he had joked with American officials that “If we were to have two parties in Cuba, Fidel would head one and I the other.” Joking apart, that rings true. Many of the Communist Party’s 670,000 members are terrified of change, fearing the loss of security, perks and privileges. They see Mr Obama’s opening to Cuba as an existential threat. Fidel is their reference point. He acts as a brake on reform. + +What Raúl, in his neat and tidy way, is doing is to institutionalise the Cuban system, which long depended on Fidel’s whims. He has set out a gradual process of transition to a post-Castro leadership. He is no liberal democrat: he praises the balance between state planning and the market in China and Vietnam. He has initiated both a “conceptualisation” of Cuba’s socioeconomic model and a revision of the constitution to incorporate his reforms. These will be the Castro brothers’ political testament. + +But Raúl, unlike Fidel, is a realist. He knows that the system does not work and that the steps he has taken, especially the opening to the United States, have unleashed expectations of change and a better standard of living. Cuban society is evolving fast, even as the political leadership remains as stodgy as a government-supplied lunch. In the medium term, something will have to give. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21697888-cuban-communist-party-blocks-change-fidels-last-stand/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +An election in the Philippines: Siren song of the strongmen + +Nepal’s reconstruction: Still shaking + +Australia’s navy: Underwater envy + +Vietnam’s drying delta: Salt of the earth + +Banyan: Once in a lifetime + + + + + +Articles Sections Next + +An election in the Philippines + +Siren song of the strongmen + +In a presidential race, a thuggish mayor leads the polls + +Apr 30th 2016 | DAGUPAN CITY | From the print edition + + + +AT MID-AFTERNOON in Dagupan City, hundreds of people sweat and jostle politely in an arena awaiting Grace Poe, one of five candidates vying to be elected president of the Philippines on May 9th. When she arrives, the crowd surges to greet her. But during her well-rehearsed stump speech, attention wavers. People shift in their seats. Some leave. Afterwards, some clamour for T-shirts she tosses from a truck, but the overall response seems more dutiful than passionate. + +Ms Poe needs to do better than this to win. As the vote approaches, she appears stuck in second place; she must energise her supporters and attract more. But she seems too much of a trapo—a pun on “traditional politician” and a Tagalog word meaning “old rag”—for an electorate in an anti-establishment mood. This year, the more experienced candidates are doing worse in the polls. Battling for third and fourth position are Jejomar Binay, the vice-president, and Mar Roxas, a former cabinet minister who has been endorsed by the outgoing president, Benigno Aquino. Behind them is Miriam Defensor Santiago, a former UN judge who has served in all three branches of government. + +The front-runner is Rodrigo Duterte (pictured, in striped shirt) a vulgar, impolitic mayor who has never sought national office, is not backed by any big party and appears wilfully ignorant on policy. His simple line—the system is broken; I’ll fix things—resonates with millions of people. + + + +From outside, and even in many parts of Manila, the system hardly looks broken. The economy has grown steadily since 2000, and it has a healthy current-account surplus (see chart). The country’s credit rating has been raised, foreign cash has poured in and spending on infrastructure and social services has risen. Steady remittances from workers abroad, a booming service sector and low oil prices have helped keep demand humming. In the South China Sea the Philippines has stood up to China, contesting its expansive territorial claims. A peace deal ending decades of conflict in the southern region of Mindanao would have been signed, but for a botched raid in 2015 that killed 44 policemen. Even so, investment continues to pour into the underdeveloped island. As Japan, China and Thailand age, the Philippines is enjoying its demographic bonus: the median age is 22. + +But not everyone has benefited equally. Many rural families remain in deep poverty. Most of the good jobs generated during Mr Aquino’s tenure are in cities. There are not enough for the millions joining the workforce each year. Urban poverty is rising. For all Mr Aquino’s talk of “the straight path”, corruption is endemic. Infrastructure spending is concentrated around Manila, fuelling anger in regions such as Visayas, Mindanao and distant parts of Luzon. + +Mr Duterte is well-positioned to capitalise on that resentment. He is a Visayan who for most of the past 25 years has been mayor of Davao, Mindanao’s biggest city. He has strong support in both regions. His promise to fix a broken system has won over many in Manila who are frustrated by perpetual gridlock. He also taps into what Richard Javad Heydarian, a political analyst, calls “cacique democracy fatigue”: fading tolerance of a feudal politics long dominated by a few prominent families. + +Because the trapos are polished and cautious, Mr Duterte’s rough bluster gives him an air of authenticity. His emphasis on crime and the difficulties of urban living appeals to ordinary folk. But he has a darker side. He reportedly forced a tourist who violated Davao’s anti-smoking ordinance to eat a cigarette butt. He called the pope “a son of a bitch” and, in speaking of an Australian missionary who had been raped and murdered during a prison riot, lamented that he had not been first in line to abuse her sexually. When American and Australian authorities tweeted their disgust at the “joke”, he dared both countries—allies the Philippines needs to counter Chinese assertiveness—to cut ties. + +More worrying than Mr Duterte’s boorishness is his contempt for democracy and the rule of law. He has spoken approvingly of the extrajudicial killing of suspected criminals, and sneers at Westerners who “want to rehabilitate instead of just killing” criminals. He promises to end crime within six months of his election, and says his presidency is “going to be bloody. People will die.” People who fret over human rights, he said at an event on April 27th, are “cowards”. He praised Ferdinand Marcos, a longtime dictator who was overthrown in 1986, for his ability to “change the system”. (Mr Marcos’s son is near the top of the vice-presidential polls.) + +To supporters, such talk shows that Mr Duterte will get things done. “Voters don’t care about process,” says Alan Peter Cayetano, Mr Duterte’s running mate: they just want things to work. Another Philippine politician once said something similar: “The times are too grave and the stakes too high for us to permit the customary concessions to traditional democratic processes.” That was Marcos declaring martial law in 1972. He went on to torture and kill thousands of his countrymen. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21697878-presidential-race-thuggish-mayor-leads-polls-siren-song-strongmen/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Nepal’s reconstruction + +Still shaking + +Rebuilding Nepal after a devastating earthquake is taking far too long + +Apr 30th 2016 | BUNGAMATI | From the print edition + +Still waiting + +LIFE should be busier for Ganeshman Shakya, a mason in Bungamati, a village in the Kathmandu valley. A year ago this week a 7.8-magnitude earthquake killed nearly 9,000 people and left millions of Nepalese, including his family, in need of new homes. But Mr Shakya, sitting idly on the front step of a corrugated-iron hut on the village’s outskirts, says that beyond patching up a few damaged buildings, there has been little new construction to keep him occupied. He had hoped to build a new place for his family within months of the quake. A patch of freshly-planted vegetables in front of the hut suggests he is betting it will be a longer haul. + +Frustration is mounting in Nepal. Much of the $4.1 billion pledged by international donors in the earthquake’s aftermath has yet to be spent. Politicians, many belonging to parties wedded (at least in theory) to various shades of Maoism, Leninism or Marxism, have hampered rather than helped. So has a chaotic bureaucracy. The Red Cross says 4m people remain in temporary shelter (as pictured). + +Some of this is the result of corruption; a lot is simply cock-ups. Funding schemes designed to spur rebuilding have in fact delayed it. Just a few hundred people have received even the first disbursement of a promised grant of 200,000 Nepali rupees ($2,000) to reconstruct their homes. Many worry that if they go ahead without first receiving the money, they may forfeit it. Confusion reigns as to whether those who get such a grant are eligible to receive a soft loan of 2.5m rupees promised by another aid programme. Delays in the granting of building permits mean even those with money to rebuild cannot get started. + + + +Compounding the misery, economic growth has been weak. Nepal’s economy is deeply intertwined with that of its fast-growing Indian neighbour; much of the industrial base in the southern lowlands was hardly affected by the disaster. But growth is forecast to be 1.5% in this fiscal year. That is partly the result of constitutional amendments in September. Lowlanders with close ties to India, fearing the changes would reduce their political clout, protested by blockading the southern border. They had India’s tacit support. + +The disruption ended at the turn of the year, but fuel remains scarce in parts of Nepal. In Kathmandu, petrol queues are often an hour long. Electricity is available only around half the time. Inflation is in double digits. Remittances from a steady flow of young men going to work overseas play a vital role in keeping the economy afloat. + +On April 25th, the anniversary of the initial quake, protesters demanding faster reconstruction marched on government buildings. Foreign diplomats openly express annoyance at the delays. Few of them believe the government’s assurances that construction will get going in earnest before the rainy season starts in June. + +Rebuilding Nepal was never going to be easy. Much of the terrain is forbidding; there are still frequent aftershocks. Democracy is a relative novelty; Nepalis are divided by caste, religion and language. A disaster on the scale of last year’s might have been expected to forge solidarity. Instead, it has left the faith of the Nepalese in their fragile society badly shaken. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21697879-rebuilding-nepal-after-devastating-earthquake-taking-far-too-long-still-shaking/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Australia’s navy + +Underwater envy + +Australia spends big on new submarines, upsetting Japan + +Apr 30th 2016 | SYDNEY AND TOKYO | From the print edition + + + +IT WAS a poignant moment in mid-April when a Japanese Soryu-class submarine sailed into Sydney harbour—the first visit by a Japanese undersea vessel since three of the country’s midget submarines raided the harbour and killed 21 allied sailors during the second world war. This time, Japan had a different aim: it was vying with France and Germany to win a bid to build a new fleet of submarines for Australia. So when Malcolm Turnbull, the prime minister, announced on April 26th that the A$50 billion ($38 billion) contract had gone to France, Japan took it to heart. The decision, it said, was “deeply regrettable”. It demanded an explanation. + +Intense speculation had surrounded the competition between the three countries for the biggest single weapons-buying deal in Australian history. It will double the size of the country’s submarine fleet to 12. Some observers had taken note of politics in Australia. An election is looming, probably in July. Mr Turnbull says the subs will be built in South Australia, where support for his coalition government has been waning. Lay-offs in the car-making industry, and a downturn in the steel industry, have hit the state hard. Building the subs there, even at a higher cost than doing so abroad, could create almost 3,000 jobs. + +But the strategic aspects of the bid had aroused greater interest than the ramifications for Australian politics. Japan’s hopes had soared under Tony Abbott, whom Mr Turnbull ousted as Liberal leader and prime minister seven months ago. Mr Abbott had cosied up to Shinzo Abe, Japan’s prime minister. He had called Japan Australia’s “best friend in Asia” and said he hoped it would become a “more capable strategic partner”. Japan had got the impression that its bid was almost in the bag. + +Since taking over, Mr Turnbull has gone out of his way to strike more of a balance in his country’s relationships with Japan and China, Australia’s biggest trading partner. During a visit to China in mid-April, Mr Turnbull spoke of China’s “extraordinary opportunities”. He has tried to dampen speculation that Australia might form a closer military partnership with Japan and America as a hedge against China’s rise. + +Australia insists that grand strategy had nothing to do with its decision on the subs. DCNS, the state-owned French naval shipbuilding firm that won the contract, will build a modified version of Shortfin Barracuda-class subs to replace Australia’s ageing Collins-class fleet. Mr Turnbull says DCNS is the “most suitable international partner” for building subs to meet Australia’s “unique national-security requirements”. This means subs that can travel greater distances in the surrounding Indian and Pacific oceans. + +Australia’s latest defence white paper, released in February, says that half the world’s submarines will be operating in the two oceans within 20 years; it says a “more challenging maritime environment” justifies the doubling of Australia’s undersea fleet. Military planners do not like to say so openly, but they are worried that China’s territorial ambitions in the South China Sea may become a cause of conflict that may affect Australia. + +It is likely that Japan lost out because it could not match France’s experience in making warships on such a scale for export. Had Japan won, it would have been the country’s first big arms-exporting deal since it passed legislation two years ago ending a long-standing ban on selling weapons abroad. The white paper said Australia needed submarines with a “high degree of interoperability with the United States”. Japan could have provided that, but there would have been technical challenges. It would have had to build boats with greater power than the subs it uses, to enable them to travel longer distances. (And the cabins would have had to be adapted for mixed-gender crews.) + +Rory Medcalf of Australian National University says Japan should swallow its pride. The purchase of the French-built subs, he argues, will help make Australia the kind of security partner Japan wants in order to deter an assertive China. Even Mr Turnbull, the balancer, says the “special strategic partnership” between Japan and Australia will get “stronger all the time”. Japan, however, will lick its wounds a while longer. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21697887-australia-spends-big-new-submarines-upsetting-japan-underwater-envy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Vietnam’s drying delta + +Salt of the earth + +Bad weather and bad policy aggravate an awful drought + +Apr 30th 2016 | From the print edition + + + +SHADED by a tree, an elderly farmer gestures hopefully at the scrawny green shoots poking from his small plot in Vietnam’s Mekong river delta. The sugar crop he planted earlier in the year has already failed once, poisoned by dry and salty soil. Fresh growth from the cut-back plants now offers a second chance, but without rain it may go the same way. The farmer is lucky to have a pond full of fish, which he shares with his neighbours. But he says his family will have to find other work this year to make ends meet. + +Tales such as this are common on the tiny island of Cu Lao Dung in the delta’s southern reaches (see map), five minutes from the mainland by scooter-crammed ferry. During the annual dry season surrounding waters always turn salty, as brine from the sea pushes up the delta’s channels. But this is an exceptionally dry year, with river levels at 90-year lows. The water has become unusually concentrated with salt, which is spreading more extensively. The salt is creeping through the farmland like damp up a wall. + + + +Drought is plaguing much of mainland South-East Asia, including Myanmar, Laos and Cambodia. Thailand’s shortages are the worst for two decades (though urbanites still splashed around during Songkran, its annual water festival in mid-April). Vietnam has been hit as hard as any. The Mekong basin is home to one-fifth of the population. It produces about half of the country’s rice. The government says the amount available for export in the three months to June will be 11% less than originally forecast. Drought in the country’s Central Highlands has affected a third of coffee plantations there and now endangers the region’s supply of drinking water. These woes are weighing on the economy. Growth in the first quarter slowed by half a percent year-on-year to 5.5%. + +The immediate cause is El Niño, a recurring weather phenomenon which causes downpours in the Americas but heat and drought in much of Asia. Scientists believe that El Niño’s effects are growing stronger as global temperatures rise. Last year it was blamed for exacerbating annual fires on farmland in Indonesia, which smothered much of the region in a noxious haze. + +People living near the Mekong say there is another problem: hydroelectric dams built in China near the head of the river that are holding up its flow. Since March China has loosened some of the dam gates, ostensibly as a favour to its neighbours. But locals say the effect on water levels has been measly. The episode has only heightened fears that China (with which Vietnam has an enormous trade deficit and an intense territorial dispute) can use water flow to hold the country to ransom. + +The dams are certainly stripping the Mekong of essential sediment. But many of Vietnam’s water woes are self-inflicted. In the delta, for example, a booming population has built more than 1m wells since the 1960s. These have made saline contamination worse, and are also causing subsidence. In 2014 an American study found that the delta, which mostly lies less than two metres above sea level, could be nearly a metre lower by 2050. + +A related problem is the ruling Communist Party’s obsession with maximising rice production. Straining to hit absurd targets—inspired by memories of post-war food shortages—the government has pushed delta farmers to produce three rice crops per year. + +This policy has caused the poisoning of paddies with pesticides and has discouraged farming of more profitable, less thirsty crops. It has also prompted the building of a massive network of dykes, canals and sluice gates, which spread pollution from fertilisers and pesticides and restrict the flow of sediment. Koos Neefjes, a climate-change expert in Hanoi, the capital, reckons all this infrastructure has done more to harm the delta than China’s dams. + +Fixing this will mean taking on powerful state-owned rice traders and exporters, who benefit from intensive production. Nguyen Xuan Phuc, who took over as prime minister in early April, is said to be a competent technocrat. But he may not have the political strength to carry out difficult reforms. Some simple remedies would be useful, however. Giving farmers earlier warning of drought would help avoid pointless ploughing and planting, says Nguyen Huu Thien, an environmentalist. He says the authorities may soon be caught out by La Niña, a sodden period which often follows El Niño’s parching. + +At a roadside café in Cu Lao Dung, young sugar farmers moan about their lot. Life would be easier if they could work at tea stalls, they say, with cooling banana-leaf roofs. Or perhaps on coconut farms, where trees need watering only every few days. Each year supplies of safe drinking water get a little tighter, says one. He worries that in ten years there will be no fresh water at all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21697886-bad-weather-and-bad-policy-aggravate-awful-drought-salt-earth/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Once in a lifetime + +Convening a rare congress, all North Korea’s ruling party has to celebrate is its own survival + +Apr 30th 2016 | From the print edition + + + +THE last time North Korea’s ruling Workers’ Party, the KWP, held a national congress was in October 1980, when its present leader, Kim Jong Un, was not even born. The meeting’s main purpose was to formalise the party’s graduation from a traditional Marxist-Leninist dictatorship to a dynastic one. Mr Kim’s father, Kim Jong Il, was crowned as dauphin to his own father, Kim Il Sung, the country’s founding leader. The eldest Kim died in 1994 but, even in death, remains the country’s “eternal president”. Meanwhile party doctrine largely ditched Marx, Lenin and the rest in favour of Kim Il Sung’s own ideology of juche, or self-reliance (real meaning: distrust, confront and rob foreigners). Kim Jong Il ruled until his death in December 2011 without feeling the need ever to convene a party congress. Yet his son is preparing to preside over one, starting on May 6th. In the world’s most closed political system, it is not easy to work out why. + +Precedent is no explanation. In 1980 five-yearly congresses were decreed. But a 35-year gap has opened since. The calendar imposes no more pressure on Kim Jong Un than it did on his father. Moreover, it will be embarrassing not to welcome foreign bigwigs. In 1980 177 delegates came from 118 countries, including Robert Mugabe, then Zimbabwe’s prime minister; the president of Guinea, Sékou Touré; and a Chinese delegation led by the late Li Xiannian, one of an “immortal” first generation of revolutionary leaders. The upcoming congress, it seems, will be a North Koreans-only affair. Kim Jong Un’s continuation of his father’s pursuit of a nuclear arsenal and the missiles to deliver it—most recently the claimed test of a submarine-launched ballistic missile on April 23rd—has isolated their country even further. An offer this week to halt nuclear testing in exchange for an end to annual American-South Korean military exercises was swiftly dismissed. The congress will highlight the flip side of juche. North Korea really is on its own. + +Nor does the KWP have much to celebrate other than the claimed “success” (at best partial, say foreign experts) of its four nuclear tests, two of them under this third-generation Kim, with the most recent in January. A fifth seems imminent. Mr Kim has not yet inflicted on his people the kind of famine that killed hundreds of thousands under his father in the late 1990s. But just this month the UN Food and Agriculture Organisation produced a chilling report on persistent food shortages. It estimated that 10.5m people—two-fifths of the population—were undernourished and that 2.4m pregnant or breast-feeding women and children under five were at risk of malnutrition. Over three-quarters of North Koreans, it concluded, remain “food insecure”. + +Yet on top of all its other woes North Korea has been enduring a “70-day campaign of loyalty”, a propaganda countdown to the congress’s opening. Clearly Mr Kim thinks it important. Indeed, some scholars of North Korea, such as Hajime Izumi of Tokyo International University, think nothing has mattered more for him. They believe that flaunting strength through nuclear and missile tests is aimed at laying the groundwork for a self-congratulatory congress—never mind the disastrous impact such chest-thumping has on the country’s foreign relations. + +Mr Kim presumably hopes the congress will mark a formal consolidation of his own power. When he took over many outside analysts assumed he would merely be the Kim front for a ruling clique of more experienced thugs. In fact, he has ruthlessly purged the senior ranks of the party and army, even executing his uncle by marriage, Jang Song Taek, the regime’s main interlocutor with China. The congress may rubber-stamp his installation of loyalists in senior party positions. More of them are likely to be civilians rather than the generals who kept his father in power. It may also enshrine Mr Kim’s own ideas in party doctrine. This could involve a switch from his father’s songun, or “military first”, doctrine to his own “byungjin line”, of pursuing nuclear weapons and economic development in tandem. + +The power of wishful thinking + +If this happens, optimists believe the congress may prove a turning-point. It is early enough in his rule for Mr Kim not to have to take responsibility for the regime’s many failures. He can, however, claim credit for its nuclear prowess. Having proved that North Korea matches the description he had written into the preamble to its constitution in 2012, as a “nuclear state and a militarily powerful state that is indomitable”, he can turn his attention to feeding his people and easing their poverty. And that would imply patching up relations with China, North Korea’s only ally and main economic lifeline, which after the North’s most recent transgressions has seemed more serious about enforcing sanctions. + + + +Peninsula of provocation: A timeline of clashes between North and South Korea + +It would also mean extending olive branches to other countries, particularly South Korea, which in February withdrew from the joint industrial complex at Kaesong, just north of the border. That marked the end of the South’s “sunshine” policy aimed at changing North Korea through engagement. Now Mr Kim himself may slowly let the sun in, adopting the market-oriented reforms and opening to the outside world that catapulted China to prosperity, and which its leaders have long urged on North Korea. + +It would make sense. In a reformed North Korea, Mr Kim would have more resources to buy the loyalty of those around him, and he might sleep easier. China has shown that economic development can be achieved without the party losing power. Since both China and the West fear his regime’s collapse into bloody chaos as much as its nuclear bellicosity, he would find willing helpers. Yet it is hard to see grounds for optimism in Mr Kim’s rule so far. He has shown no concern about antagonising the rest of the world, has promoted hardliners and has pursued the potential for nuclear warfare even more obsessively than his father. The congress may be less a turning-point than a dead end, saying to the world: this is North Korea today; live with it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21697890-convening-rare-congress-all-north-koreas-ruling-party-has-celebrate-its-own-survival-once/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Homosexuality: Rohmer-therapy + +Urbanisation: Megalophobia + + + + + +Articles Sections Next + +Homosexuality + +Rohmer-therapy + +Acceptance of gay rights is growing. But gay marriage remains a distant prospect + +Apr 30th 2016 | BEIJING | From the print edition + + + +AT THE end of March a website run by the Communist Youth League published news of a remarkable development in China’s staid, heavily censored film industry. A preview had been released online of what is being described as mainland China’s first film focusing on a gay romance, “Looking for Rohmer”. (On television, there have been documentaries about gay relationships before, as well as dramas hinting at them.) The new film, to be shown “soon”, describes the relationship of two young men, one Chinese, one French, as they travel across Tibet. + +The two are not shown holding hands, let alone doing anything more intimate. But China’s cultural commissars, rarely open-minded at the best of times, have been in an unusually censorious mood since 2014, when President Xi Jinping stressed that art must “serve socialism”. + +Cheng Qingsong, a film critic, says the makers of “Looking for Rohmer” worried that the censors might change their minds after they approved the film for release last year. The trailer’s appearance, and the Youth League’s interest in it, suggests all is well. More broadly, it shows that, despite a political chill, conservative attitudes to same-sex relationships are changing. In the past, homosexuals were sometimes jailed for “hooliganism”. In 1997 the removal of that ill-defined crime from the statute books lifted what was, in effect, a ban on homosexual activity. In 2001 the health ministry struck homosexuality off its list of mental diseases. But public tolerance remains low. Clinics still offer “cures” for gay people, involving electric shocks or nausea-inducing drugs. No well-known public figure in mainland China has come out. + +In a recent survey of 18,650 lesbians, gay, bisexual and transgender (LGBT) people by WorkForLGBT, a China-based NGO, only 3% of the male respondents and 6% of the female ones described themselves as completely out. A third of the men (though only 9% of the women) said they were in the closet. Only 18% of the men said they had come out to their families, and nearly 80% were reluctant to do so because of family pressure. But half the men and three-quarters of the women had come out to friends, an indication that private tolerance is expanding. + +The government itself is also becoming less hostile to gays. In 2013 censors permitted websites and newspapers to discuss LGBT issues. Li Yinhe, an academic and promoter of gay rights, says this was a turning point for homosexuals. Online dating services for gays have sprung up. One of the largest of them, Blued (run by a gay former policeman), was read by over 40% of those surveyed by WorkForLGBT. + +A milestone was reached at the end of 2014 when a court in Beijing gave its verdict in a case lodged by a gay man against a clinic which had offered to change his sexuality. He accused it of false advertising and malpractice. The court fined the clinic and ruled that homosexuality was “not a mental disease” and did not require treatment. It was the first reported decision of its kind by a Chinese court. + +Gay marriage is still not recognised, but public discussion of it is becoming more lively. Some gay people have held unofficial wedding ceremonies. In June, two internet entrepreneurs (pictured) organised one in a park in Beijing, after encountering great difficulty finding a venue willing to host the event. Chinese media gave the celebration much publicity. + +Testing the law + +In January a court in the southern city of Changsha agreed to hear a suit filed by Sun Wenlin, a 26-year-old man, against a government agency responsible for marriages. Mr Sun said the agency had illegally refused him permission to marry his male partner. On April 13th, with hundreds of gay-marriage supporters outside, the court ruled against him. That was expected. What was surprising was the court’s acceptance of the case, and the official media’s enthusiastic coverage. “It is we who will win in future,” said Mr Sun’s lawyer, as quoted in a Chinese newspaper. + +But Hu Zhijun, the co-founder of a support network for lesbians and gays in China, thinks gay marriage will not become legal until there is clear public support, which is still a very distant prospect. “People don’t want those outside the family to know,” he says. “They still fear losing face.” + +And although “Looking for Rohmer” has been approved for release, other works have not been so lucky. Early this year, a popular gay online series called “Addicted (Heroin)” was banned—apparently because of its gay content—after several episodes had been uploaded. In December two television-industry associations issued guidelines, recently leaked online, which said televised portrayals of homosexuality were taboo—as were those of extramarital affairs and sexual promiscuity. + +Still, a decade ago censors had banned the showing in China of “Brokeback Mountain”, a Hollywood film about a gay romance between cowboys. It was thus, as one Chinese newspaper put it, “unexpected” when “Looking for Rohmer” gained the censors’ approval. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21697867-acceptance-gay-rights-growing-gay-marriage-remains-distant-prospect-rohmer-therapy/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Urbanisation + +Megalophobia + +China’s biggest cities are afraid of growing bigger. They should not be + +Apr 30th 2016 | BEIJING AND SHANGHAI | From the print edition + +An unwelcome sight + +ON A recent afternoon excavators and dump trucks crammed into what remained of the alleyways of Xupu on the western edge of Shanghai. Their task was to remove debris from the place, formally a village but in reality an urban slum. Officials had had enough of the eyesore: in October they had sent in demolition crews which, within two months, had evicted some 13,000 migrants and flattened buildings with a total of 6,000 rooms. “Seven out of ten people I know here have left,” says Zhuang Shiguo, a 42-year-old kitchen worker from Jiangsu, a neighbouring province, standing next to a heap of rubble. In recent months the authorities have targeted more than 30 other slums in Shanghai for similar “makeovers”. + +Shanghai is stepping up its efforts to control the growth of its population. One of its techniques is to make it more difficult for unskilled workers from the countryside to live there, such as by knocking down their cheap, ramshackle accommodation. Similar efforts are under way in the capital, Beijing. The governments of both cities have been deluged with complaints about pressures on transport, schools and hospitals. Their response has been to strike at those most easily displaced: rural migrants whose household-registration papers, or hukou, make them ineligible for urban benefits such as social housing or subsidised health care and education. + +Last year Beijing’s government said it would not allow the capital’s population (those resident six months or longer) to exceed 23m before 2020. That is only 1m more than the current population, which inhabits an area half the size of Belgium comprising a main city, several satellite towns and a rural expanse. Shanghai followed, setting a population limit of 25m by the end of the decade for its urban and rural areas, up from 24m today. The two cities’ targets contrasted with a far more relaxed one set by Guangzhou, a megacity in the south: 18m by 2020, an increase of 4m. + +Living in large cities has never been easy for rural migrants. Until 2003, police could expel anyone found without proof of employment or a residence permit (often after detaining them for weeks or even months). The hukou system is still an invisible barrier. Migrants are often not allowed to buy houses or cars in a city if they do not have hukou there. Officials, sometimes lax in their application of safety rules, are zealous in their use of them to evict migrants from lodgings. + +In 2014 the central government issued a plan for what it called “new-type urbanisation”. This envisaged 60% of the population living in urban areas by 2020 (56% do now) and outlined measures to give migrants greater access to public services. But the 16 largest cities were urged to restrict migration by using a “points system” offering urban-welfare privileges only to the educated and affluent few. China’s new five-year plan for economic and social development, approved in March, calls for “people-centred urbanisation”. But some cities are allowed to be choosy about what kind of people they focus on. The government does not want the biggest ones to develop the kind of slum-sprawl that is common in other developing countries. It worries that shanty towns may breed social instability and blot the cities’ image. + +Beijing and Shanghai, the megacities of greatest political and business importance, have exploited this leeway with the most enthusiasm. Both have large middle-class populations, many of whose members resent sharing the cities’ superior amenities with people they regard as outsiders. + +Since 2014, the two cities have tightened restrictions on access to local schools. Parents in Beijing need to show contracts proving they have jobs and housing. This is difficult for the many migrants who are employed casually and have no formal agreement with their landlords. Such restrictions contributed to a fall in the number of migrants’ children enrolled in Beijing’s primary schools by 22% in 2014. Using similar rules, Shanghai is estimated by some Chinese scholars to have excluded 50,000-80,000 children from its primary schools in the past two years. In February the central government issued new guidelines aimed at improving the lot of more than 60m children “left behind” in the countryside by migrant workers, appealing to parents to take their children with them when possible. Beijing and Shanghai are making that more difficult. + +The cities’ measures may be working. Government statistics show the migrant population in Shanghai fell by 1.5% in 2015, the first drop in 28 years. In Beijing, the number of migrants increased by 0.5%, the slowest rate since 1998. + + + +There are other reasons for the cities’ loss of allure. They include the soaring cost of housing in both, and the growth of job opportunities in smaller cities closer to migrants’ hometowns. There is also a dwindling supply of cheap labour in the countryside. The country’s working-age population fell by nearly 5m last year, the biggest drop ever (see chart). But Beijing and Shanghai are compounding the problems caused by these trends. The two cities may believe they are helping middle-class residents, but they risk pushing up the cost of the labour that the middle classes depend upon, not least for help at home. That, it seems, is a price the two cities are willing to pay—and a much lower one than building more schools and hospitals and better public transport. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21697871-chinas-biggest-cities-are-afraid-growing-bigger-they-should-not-be-megalophobia/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Vision or mirage?: Saudi Arabia’s post-oil future + +Saudi Aramco: The big float + +Truth and reconciliation in Tunisia: Shadows from the past + +Car ownership in Kenya: Kicking the tyres + +Smuggling in Nigeria: Blurred lines + +Sport and race in South Africa: Diversify or die + + + + + +Articles Sections Next + +Vision or mirage? + +Saudi Arabia’s post-oil future + +Bold promises from a young prince. But they will be hard to keep + +Apr 30th 2016 | RIYADH | From the print edition + + + +IF ANYONE needed confirmation that Muhammad bin Salman, Saudi Arabia’s deputy crown prince, is a man in a hurry, they got it on April 25th. The 30-year-old unveiled a string of commitments to end the kingdom’s dependence on oil by 2030 which, in themselves, would be a remarkable achievement for a hidebound country. Then he proceeded to trump himself, saying that the kingdom could overcome “any dependence on oil” within a mere four years, by 2020. + +That may have been meant to convey a sense of urgency; but it also sums up what seems to be manic optimism among the youthful new policy-setters of the royal court. They have yet to set out a cool, detailed explanation of how to turn vision into reality. That has been promised since January, and will now supposedly be provided in a few weeks’ time. + +The outlines of the announcement, which has generated much anticipation, had been well trailed. They included: the floating of a small stake in Saudi Aramco, the world’s biggest oil company; the creation of the world’s largest sovereign-wealth fund to invest in a diverse range of assets; more jobs for women; and more vibrant non-oil industries, ranging from mining to military hardware. These are radical proposals in a country that has historically generated nine-tenths of government revenues from oil, and whose budget deficit is expected to reach 13.5% of GDP this year after an 18-month slump in oil prices. + + + +Prince Muhammad backtracked on none of them this week—though his modest goal of raising the female participation rate in the workforce from 22% to only 30% in 15 years appeared to reflect resistance from the Wahhabi religious establishment, whose shadow hangs over all reform in Saudi Arabia. A promise that women would be allowed to drive, essential if they are to enter the workforce fully, had been hoped for by some, but failed to materialise. There was also no word on democratic reform or other freedoms: the sort of things which might be expected to appeal to a youthful population. + +The prince expects the sale of a stake of up to 5% in Aramco to value the company at a minimum of $2 trillion, and he promised to transform it into a “global industrial conglomerate” (see article). Much remains unclear. But the proceeds of the sale, and the business itself, would be put into a sovereign wealth fund known as the Public Investment Fund, which with other assets could be worth as much as $3 trillion, generating plenty of non-oil investment income. Other industries would be given incentives to grow. The kingdom, with the world’s third-biggest military budget, spends only 2% of it on arms purchases at home. The “vision” calls for over half of it to be spent on locally made armaments by 2030. + +To achieve such goals, Saudi Arabia needs to throw itself open to trade, investment, foreign visitors and international codes of conduct such as more transparency and secular laws. But much of this is anathema to the clerics who, for decades, have sought to shun the outside world. Powerful business interests within the prince’s own huge extended family will also slow things down. The tense feud with Iran, stoked by Prince Muhammad through a proxy war in neighbouring Yemen, adds potential instability to the risks that investors would face. But a step in the right direction was unveiled this week with the promise of “green cards”, permanent-residence documents for foreigners. + +The indolence of a society brought up to expect that oil riches will be lavished upon them is another large hurdle. For years, efforts to end the kingdom’s addiction to oil have run up against a wall of apathy. As one Saudi commentator puts it, “It’s been like a father telling his 40-year-old son that it’s time to go out and get a job.” Prince Muhammad’s youth in a country used to gerontocratic rulers should make it easier for him to motivate young people, and social media give him better access to the pulse of the country. But with oil revenues weak and unemployment at 11.6%, the chances of disillusion are strong. + +That is why he will have to address some of the questions hanging over the reforms when he reveals the National Transformation Plan, fleshing out his vision, in late May or early June. Foreign executives in Riyadh, impressed by the urgency with which Prince Muhammad’s economic council appears to be slashing government waste, say concrete steps are needed before investment will come in. + +“The big change here is that they’ve recognised ‘We’re inefficient, we’re corrupt and we need to change,’” says Paddy Padmanathan, chief executive of Acwa Power, a Saudi electricity-generator which hopes to benefit from a pledge to produce 9,500 megawatts of renewable energy. He lauds the cutting of subsidies for public services such as electricity. But he adds that to attract investment the government will need to clarify the privatisation plans for its utilities, and show how they can balance their books. Investors “don’t want to rely on a macho government saying ‘Trust me, I will pay,’” he says. Another businessman says the country needs labour-market reform so that it becomes politically possible to fire Saudi employees who fail to do their jobs. “If you fired 20 Saudis who didn’t turn up for work, you’d find yourself in a Twitter storm,” he says. + +Ultimately, the chances for success may depend on the power of the prince himself, who has amassed enormous control over policymaking since his 80-year-old father, Salman, became king last year. But he remains only second in line to the throne, and has a stalemate in Yemen counting against him. “This is not a dream, this is a reality that will be achieved, God willing,” he says. But when the sums involved are in the trillions of dollars, the neighbourhood is fraught with tension and the reforms require the tearing up of a social contract to succeed, the burden of proof is high. Saudi Arabia has promised diversification away from oil for decades. The prince still needs to prove that this time is any different. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21697673-bold-promises-bold-young-prince-they-will-be-hard-keep-saudi-arabias/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Saudi Aramco + +The big float + +How to part-privatise the world’s biggest company + +Apr 30th 2016 | From the print edition + +Open to offers + +THE centrepiece of Saudi Arabia’s plans to transform its economy is the blockbuster sale of a stake in Saudi Aramco, reckoned to be the world’s most valuable company. The government hopes it will put a value on Aramco of about $2 trillion. The proceeds will be central to the country’s plans to create a war-chest to buy non-oil assets from around the world and complement volatile oil revenues with, it hopes, steadier investment income. + +But in an interview with The Economist on April 26th, Aramco’s chairman, Khalid al-Falih, noted that potential complications in the sale of the shares mean its final form is not yet decided. An initial public offering (IPO) would offer to investors reliable dividends, from a country that produces one in every eight of the world’s barrels of oil, and the chance to take a share in a company transforming itself into a “global conglomerate”. But the size of the potential stake is unprecedented—$100 billion, or four times the size of the biggest IPO anywhere in the world to date, that of the Chinese e-commerce firm Alibaba in 2014. Only the largest stockmarkets, like New York and London, could handle the sale (some shares would also be offered in Saudi Arabia). That throws up potential legal problems that could have “unintended consequences”, Mr Falih says. + +A listing in New York, for example, would raise the possibility of “frivolous lawsuits” against the kingdom, he says. Analysts have already noted the Saudi government’s anger over a bipartisan bill before America’s Congress, which the White House has threatened to block (though a veto might then be overridden), which would let families sue the kingdom over the terrorist attacks of September 11th 2001. Among the 19 hijackers were 15 Saudi nationals. The Saudi government has always denied involvement. The bill could weaken sovereign-immunity defences, leading to a possibility that a listed Aramco could be exposed to legal action. A London listing, meanwhile, might lead to awkward questions about the reach of British authorities into a company’s global revenues and assets. + +The IPO would enable investors to buy shares in the Aramco parent company. That whets their appetites, because it includes access to the world’s most lucrative oilfields. Though Mr Falih notes that the reserves are constitutionally the property of the kingdom, he says that a concession and an appropriate fiscal regime would enable the company to promise a steady stream of forward income to shareholders. + +The company is also likely to grow. In its oil and gas business it seeks a global stage rather than a domestic one, Mr Falih says. The company is giving serious consideration to investments in liquefied natural gas and other gas-related projects abroad. + +At the downstream end of the business, Aramco plans to expand in Saudi Arabia and beyond. The chairman says it plans to build up domestic businesses in chemicals, power and renewable energy. It will also create subsidiaries that will build oil rigs and offshore platforms, and maintain and repair supertankers. Some of these could later be spun off. Elsewhere, it aims to broaden its presence in fast-growing emerging markets by refining oil, marketing it and turning it into petrochemicals. + +In the long term, the success of the strategy will depend on the future level of demand for hydrocarbons. Mr Falih says that many policymakers in Saudi Arabia think that because of climate change, rising fuel efficiency and other factors, oil demand will probably peak before the supply starts to run out. The timing of peak demand is unclear, but whether it is 15 or 40 years away, he says the pressure is on to transform the Saudi economy: “If we end up being too anxious and calling it sooner than it really happens, it’s going to be for our betterment, because we will be ready sooner than others.” But he adds that barring “a game-changing technology breakthrough”, oil will be in demand for decades to come as a transport fuel and as a feedstock for advanced materials, petrochemicals and plastics. + +The hazy future should not deter investors from buying Aramco shares, Mr Falih says. Demography, mobility trends and urbanisation all require copious amounts of fuel. And oil, he says, is still the most convenient source of energy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21697839-how-part-privatise-worlds-biggest-company-big-float/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Truth and reconciliation in Tunisia + +Shadows from the past + +A dark history hangs over the only bright spot in the Arab world + +Apr 30th 2016 | KASSERINE AND TUNIS | From the print edition + + + +SOMETIMES it was as simple as leaving the lights on. “We lost any sense of whether it was day or night,” says Nasri Muhammad Naceur, one of thousands of former political prisoners in Tunisia. But the torture meted out in the infamous cells beneath the interior ministry, where Mr Naceur was held, was often much worse. During the dictatorships of Habib Bourguiba, from 1957 to 1987, and Zine el-Abidine Ben Ali, from 1987 to 2011, many prisoners were hung naked, like a roast chicken, from an iron bar. Others were beaten or electrocuted. Women picked up by the state stood a good chance of being raped. + +More than five years after the revolution that tossed out Mr Ben Ali and ushered in a wobbly democracy, Tunisia is still coming to grips with its brutal past. Mr Naceur and thousands of others have shared their stories with the country’s Truth and Dignity Commission. Inspired by the South African body that examined the sins of apartheid, Tunisia’s commission aims to deliver justice to the government’s victims from as far back as 1955, a year before the country’s independence from France. According to the law creating the commission, those responsible for the worst crimes, such as rape and murder, should be prosecuted; victims of abuse and corruption should be compensated; and the commission should offer reforms so that the past is not repeated. + +The sweeping effort is the first of its kind in the Arab world, where oppressive leaders are still the norm. The hasty executions of Saddam Hussein and Muammar Qaddafi passed for transitional justice in Iraq and Libya. The Egyptian government of Abdel-Fattah al-Sisi has locked up victims of the old regime, while allowing its remnants to return to power. The difficulty of achieving reconciliation by picking at old wounds is perhaps why Lebanon did not really try after ending its civil war in 1990. In several countries, such as Yemen and Iraq, past grievances have powerfully contributed to new conflicts. + +Always with them + +It is a shame, then, that the example Tunisia is setting for the Middle East is flawed. Over a year into its five-year mandate, the Truth and Dignity Commission has suffered from infighting and mismanagement, say a growing number of critics. Its leader, Sihem Bensedrine, a former journalist and human-rights activist, has been attacked by politicians and the media. The government expresses support for the process, but seems intent on undermining it. The new order looks a lot like the old one, say Tunisians, who worry that justice will not be done. + +It was never going to be easy. Many of the claims the commission has received are about events that are decades old. Some, such as those concerning election fraud and corruption, could be referred for prosecution, but it is difficult to know where to draw the line—or which complaints are valid. In Kasserine, one claimant was in fact a ruling-party official under Mr Ben Ali. For his part, Mr Naceur feels his nephew deserves financial compensation because he was dismissed from his job during Mr Naceur’s time in prison, and even because he developed a physical disability. Others may not agree. + +A series of hearings, some public, are meant to uncover the truth. But they have been slow in coming. Some blame Ms Bensedrine, who has struggled to win support for the commission. Critics point to her confrontational style and suggest a political bias: the commission was set up by the previous government, led by Islamists from the Ennahda (“Renaissance”) party, many of whom are past victims. Right now Ennahda is a minor coalition partner; a secularist party, with links to the old regime, leads the government. Parliamentarians have accused Ms Bensedrine of corruption and, preposterously, terrorism. Parts of the media, controlled by an old elite, have been even more vicious. + +Ms Bensedrine dismisses the “smear campaign”. The real problem, she says, is those in government, “who do not want us to do our job”. Politicians who served under Mr Ben Ali still hold sway. The commission has feuded with the state over funding, personnel and access to information. Last year Beji Caid Essebsi, the president, proposed a law that would give amnesty to officials who colluded with corruption (but did not benefit) and create a new commission to handle privately the cases of crooked businessmen and civil servants who took bribes. They too would go free if they return their illicit gains and pay a fine. + +That bill stalled in parliament, but revisions are in the works. Ennahda, which some accuse of prioritising stability over justice, is part of the discussions. Supporters say the measure would relieve some of the burden on the commission, which should focus on human-rights abuses. Mr Essebsi hopes it will calm a fearful bureaucracy and encourage potential investors, who may be waiting to see how far the investigations will reach. Tunisia’s economy, still suffering from Mr Ben Ali’s cronyism, is teetering. “Businessmen are ready [for reconciliation], but they’re afraid,” says the president, who himself served as a minister under Bourguiba and was president of the lower house of parliament under Mr Ben Ali. + +They ought to be afraid, say critics of the proposal. Compliant bureaucrats and conniving businessmen allowed Mr Ben Ali’s clan to dominate the economy, though they produced little of value. The corruption went hand in hand with other abuses, making it difficult for the commission to disentangle the two. (Political prisoners, for example, often had their property confiscated.) And the graft persists. “Today there are still the same officials running the public sector and doing the same for other groups,” says Ms Bensedrine. But the proposed law would undermine the commission’s other task, which is to dismantle the system of corruption by weeding out bent officials. It doesn’t make economic sense, says Ms Bensedrine. + +The fines assessed under Mr Essebsi’s proposal would at least be used to help poor regions of the country, where there is concern that hopeless young men are turning to terrorism. Residents of rural areas complain of a lack of security. But there is also fear that the security forces, which often duck accountability, will revert to old ways. Several big terrorist attacks last year and the large presence of Islamic State in Libya, next door, make them harder to confront. Reports of torture by the police are still all too common. + +In the neglected region of Kasserine, the official bickering appears out of touch. Many of those who have filed claims with the commission want nothing more than an acknowledgment of wrongdoing. Mr Naceur, whose crime was being an Islamist, seeks rad attibar. “It means respect,” he says; “restitution in the eyes of society.” If the commission can find a way to deliver that without tearing the country apart, Tunisia will have set another precedent for a troubled region. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21697873-dark-history-hangs-over-only-bright-spot-arab-world-shadows/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Car ownership in Kenya + +Kicking the tyres + +The government is not doing much for drivers + +Apr 30th 2016 | NAIROBI | From the print edition + +Recognise any of them? + +GET in a taxi in Nairobi and the dashboard will often be lit up with Japanese characters. Most of the cars that ply east Africa’s roads once had another life elsewhere, usually in Japan. As well as being right-hand drive, Japanese cars are favoured for being in better condition than other rusty hand-me-downs. Importers reckon that as many as 90% of second-hand vehicles in Kenya come from that country. Yet the booming trade is now being throttled by government intervention. + +Kenya wants to boost its own fledgling auto industry, feeble though it is, so it is trying to make car imports harder. Vehicles shipped to Kenya increased by 40% to almost 110,000 a year between 2010 and 2015. But a drastic additional tax, which came into effect at the start of December, has already slashed imports by a third—bad news for buyers, and also for government coffers, which as a result of the falling numbers could end up with less cash. + +A new import duty has been set at a flat rate rather than ad valorem, so it has more of an impact on smaller cars than big ones; and a higher tax is used for older cars than newer ones. It was also slapped on lorries, pickup trucks and other commercial vehicles. If you want to bring in a nearly new, top-of-the-range 4X4 you’re in luck. But most of Kenya’s burgeoning middle class buy smaller, older cars (Kenya does not allow vehicles older than eight years into the country) and taxes on some cheaper imports have more than doubled. For example, a seven-year-old car that sold for around $3,700 last year now costs $5,500. + +The auto industry suffers its fair share of dodgy dealing. Sean Garstin, a Briton who imports around 100 cars to Kenya a year, recalls a customs official at the notoriously corrupt port of Mombasa demanding a 600,000 shilling ($6,000) bribe on top of the import duty of 850,000 shillings. Reports abound of older vehicles being smuggled across the border from Uganda to get around Kenya’s eight-year rule. Meanwhile, thousands of stolen British cars are making their way to the ports of Mombasa, Boma in Congo and Dar es Salaam in Tanzania, says Nathan Ricketts, a detective with Britain’s National Vehicle Crime Intelligence Service. Around 79,000 vehicles were stolen in Britain in the year to September 2015; around 40% of these will eventually be recovered. While there are no data for the number that end up abroad, Mr Ricketts, who found a stash of 28 high-end British vehicles in Kampala last year after tracking one via Oman and Kenya, estimates 80% of stolen vehicles spirited out of Britain eventually end up in east and central Africa. + +Yet all the bribery and vehicles of dubious provenance have not sated the demand for second-hand cars. And cheap local ones have not materialised. Even relatively low taxes of 26% on car parts have not tempted more factories to look past high energy costs, a lack of skilled labour and the absence of a supply chain to set up shop in Kenya. That has not stopped governments ploughing money into doomed local manufacturers over the years. In the early 1990s, Kenya spent millions building just five prototype Nyayo Pioneer cars. Now Uganda, which has no vehicle-assembly factories, is repeating the feat, having splurged $70m on Kiira Motors since 2012. After producing test electric cars, and a solar-powered bus that broke down on its maiden drive, the government-owned company is planning to make 305 traditional pickup trucks in 2018. They will be sold for $32,000—having cost $100,000 each to make. + +Private companies do not necessarily find things any easier: thanks to all the bureaucracy and lack of an established local manufacturing industry one Kenyan startup, Mobius Motors, has taken five years to produce its first 50 low-cost vehicles. African governments would do better to ease up on both the white-elephant projects and punitive import taxes if they want to help their citizens to drive. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21697872-government-not-doing-much-drivers-kicking-tyres/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Smuggling in Nigeria + +Blurred lines + +The government’s protectionist policies are keeping the bootleggers in business + +Apr 30th 2016 | KANO AND COTONOU | From the print edition + + + +THERE is a clamour down the tiny alleyways of Kano’s central market, in northern Nigeria, as vendors thrust fabrics at passers-by, promising the best colour, quality and price. Amid the racket, Alhaji Zakari sits cross-legged on his countertop, surrounded by materials marked “Made in Côte d’Ivoire”. “They’re not”, he says with a degree of honesty which can do little good for sales. “It’s imitation from China.” + +Nigeria is awash with contraband. Chatham House, a British think-tank, reckons that at least 70% of trade between Africa’s biggest economy and its neighbours goes unrecorded. In 2010, the World Bank estimated that $2 billion worth of textiles like Mr Zakari’s are squirrelled into Nigeria every year. + +One bootlegger supplying the latter is Adamu Muhammad, or so he gives his name. Like many others in the north, his syndicate brings goods in through Cotonou, Benin’s main port and commercial capital, then through Niger, and across Nigeria’s border. For a decade, convoys of up to 50 of the syndicate’s vehicles have rattled into Kano without obstruction, because bigwigs in the capital were paid to let them pass. A lucrative lorry-load may command a fee of up to 1m naira ($5,000 at official rates), Mr Muhammad says. In return, “Everyone is settled—from Niger to Kano.” + +Sadly for his crew, that party is now over. Almost a year ago Nigeria acquired a stringent new president, Muhammadu Buhari, who has vowed to crack down on corruption. He put trusted counterparts at the top of misbehaving agencies such as the customs department, so it is now harder to get the sign-off for illegal deliveries. It seems to be working: Mr Muhammad says his friends must wait until the process can be “facilitated” again. + +Mr Buhari has affected cross-border business in other ways, too. Nigeria’s economy, dependent on oil (the price of which has slumped since 2014) is in dire straits. In a bid to conserve foreign exchange, Mr Buhari has imposed harsh restrictions on imports of goods that he reckons could be made at home. As a result, the value of the dollar has soared on the black market, making it increasingly expensive to buy from abroad. In Benin, huge car dealerships used to do a roaring trade with Nigerians who smuggled vehicles through the bush. They are now eerily quiet. A peeved merchant of second-hand tyres says he is doing “zero business”. + +Another part of the reason that goods are secreted into Nigeria is that shipping to Lagos is slow and bureaucratic. Customs officials ask businesses to produce 13 documents when they bring a shipment in, and nine on the way out. Corruption is rampant, and tariffs are high. Import bans on items including rice and carpets are supposed to protect local businesses, but instead push trade underground and make rich the cronies who win waivers. It is no coincidence that women cross into Nigeria carrying rice on their heads, or that Mr Muhammad also specialised in deliveries of cooking oil and pasta, the import of which is supposedly banned. + +This hurts Nigeria’s economy (in 2010 the World Bank estimated annual revenue losses from smuggling of $200m). Despite the efforts to protect them only a handful of the 175 companies producing local fabric in the mid-1980s survive today. + +The World Bank says that removing import bans would lift 4m Nigerians out of poverty. Unfortunately, Mr Buhari thinks that barriers will help shore up the currency and stimulate domestic production. Under his watch, foreign exchange has been banned for imports of 41 items, including glass and wheelbarrows. + +History shows this will not work. At Benin’s Seme border post, an immigration official watches a motorbike laden with rice whizz past and declares, with a smile: “Smuggling is easy.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21697847-governments-protectionist-policies-are-keeping-bootleggers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sport and race in South Africa + +Diversify or die + +The government punishes sports bodies whose teams are too white + +Apr 30th 2016 | From the print edition + +IN A move that has shaken one of the sportiest countries in the world, South Africa’s government has told four of the country’s most muscular sports associations that they may no longer host international events because their teams are too white. Athletics, cricket, netball and rugby have all been thus chastised. Rugby feels sorest, as its union was set to bid to hold the World Cup at home in 2023. Only football, in the government’s view, has passed multiracial muster. + +Whereas blacks make up four-fifths of the populace, they are still a small minority in many top teams. A growing number of South Africans of mixed race—still known as Coloureds—are excelling in rugby and (along with some players of Indian descent) in cricket, but black Africans remain thinly represented at the top. This is largely because they have poor facilities and training programmes, so those sports have yet to catch on among the black majority. In cricket, ten private schools are said to have produced a third of South Africa’s international players since 1991. + +Football is the most popular sport among black South Africans, whereas whites, especially Afrikaners (whites of mainly Dutch descent), still dominate at the top of rugby. For many blacks, the game still smacks of apartheid. John Carlin, whose book inspired the film “Invictus”, which portrayed Nelson Mandela inspiring an almost lily-white national rugby team to World Cup victory in 1995, the year after apartheid ended, says that black players have been “socially marginalised” and that “subtle racism” still prevails at the top. + +In 2014 the government agreed with the main sports associations that 60% of national team players should not be white. Cricket has made big strides. There was much celebration earlier this year when Temba Bavuma became the first black South African to score a Test century (against England, as it happens). On occasion more than half of national cricket teams have been non-white. + +But that is not good enough for Fikile Mbalula, the combative minister of sport, who issued the recent edict. By the by, it is thought that he may be bidding for a starring spot when the ruling African National Congress has its own party elections next year. + +His intervention has certainly stirred emotions across the racial spectrum. A sports commentator of Indian background, Dhirshan Gobind, lambasted Mr Mbalula: “How narrow-minded, short-sighted and indeed racist can one be?” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21697848-government-punishes-sports-bodies-whose-teams-are-too-white-diversify-or-die/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Northern Europe’s angry savers: Mario battles the Wutsparer + +Chernobyl 30 years on: Soviet apocalypse + +Russia and the Panama papers: The lawyer and the cellist + +Poland’s rightist revolution: Red and white cavalry + +Turkey and the EU: Clearing customs + +Charlemagne: Trading places + + + + + +Articles Sections Next + +Northern Europe’s angry savers + +Mario battles the Wutsparer + +Thrifty Germans and Dutch are furious at low interest rates, and the ECB + +Apr 30th 2016 | AMSTERDAM | From the print edition + + + +THIS week millions of people in the Netherlands celebrated the national holiday by getting up at dawn, staking out a patch of pavement and selling off their junk. The traditional King’s Day flea market gives the Dutch a chance to indulge in their favourite pastime: bargain-hunting. Their eastern neighbours are just as frugal. “Germans love saving. They think there’s something morally inferior about people who borrow,” says Reint Gropp, a German economist. In both Dutch and German, the word for debt also means “guilt”. + +Their taste for saving and aversion to borrowing helps to explain why both countries’ citizens have lots of money in their saving accounts. This seemed to serve them well when interest rates were high. But in recent years, as rates hovered near zero, Europe’s best savers grew angry that their thrift was not rewarded. Now they have found a scapegoat: the European Central Bank and its suspiciously Italian chairman, Mario Draghi. + +This month Germany’s finance minister, Wolfgang Schäuble, attacked the ECB’s policies of negative interest rates and quantitative easing, blaming Mr Draghi for the rise of the populist AfD party. At a hearing, Dutch MPs prodded their own central bank’s governor to say whether he thinks the ECB is exceeding its mandate. Pieter Omtzigt, a Christian Democrat MP, later said that the ECB was “a Mediterranean central bank” whose policies are redistributing wealth from northern savers to southern sovereign borrowers. + +The media are on the attack, too. “Who can stop Draghi?” roared a typical German headline. (“We would stop Draghi!” answered an online article by Nicola Beer, general secretary of the liberal FDP party.) In Die Welt, a daily, Hans-Werner Sinn, a conservative economist, claimed low rates would cost Germany €327 billion ($369 billion). In another article, the paper cited estimates by DZ Bank that after six years of low rates, the average German citizen will have lost out on €2,450 by the end of 2016. + + + +The conflict over the ECB has brought back the tensions between Europe’s north and south that emerged during the euro crisis. With their large current-account surpluses, Germany and the Netherlands are net lenders; low interest rates hurt them and help southern European countries, which borrow more. This is partly due to savings habits. Germans put aside 17% of their disposable income, while the Dutch save 14%—on top of their huge pension-fund assets of €1.3 trillion, almost double their GDP. That compares with 11% in Italy, 9% in Spain and negative savings rates in Cyprus and Greece. Both Germany and the Netherlands are particularly affected by ageing populations, which means saving more makes sense. + +But the Germans and Dutch seldom mention why the ECB is setting such low rates. The euro-zone economy is barely growing, and may be on the verge of deflation. Trying to force rates up now would be disastrous, says Michael Burda of Humboldt University. Particularly in southern Europe, indebted governments would have to redouble austerity measures, households would curtail spending, firms would defer hiring and troubled banks would be pressed by rising costs. That could send Europe into recession—a boon for political extremists. Besides, the bank’s control over rates is limited: as Mr Draghi reminded critics last week, low interest rates are “a symptom of low growth and low inflation”, not the cause. + +If German and Dutch savers are vulnerable to low rates, it is partly due to their own investment habits. In Germany nearly four-fifths of household wealth is in bank deposits, life-insurance policies or pension funds, where performance is closely tied to interest rates. In the Netherlands two-thirds sits with pension funds and insurers. Southern Europeans save less, but they spread their bets more: in Italy and Spain pensions and insurance make up less than a fifth of household wealth, while over a third is in equities. And southerners are more likely to own their homes than Germans, so they profit from rising house prices when mortgage rates fall. + +Hoist by their own pension funds + +Home ownership is higher in the Netherlands. But last week the largest Dutch pension funds warned they may cut benefits in 2017. Premiums may be raised, too. As for Germany’s savings banks, they have spared depositors by not passing on the ECB’s negative rates, but real returns are still only just above zero. The German media talk of Wutsparer, or “angry savers”. + +Another flashpoint is inequality. A new book by Marcel Fratzscher, an economist, claims that Germany’s bottom 40% has less wealth than anywhere else in the euro zone. Germany’s financial industry is lobbying its government, especially Mr Schäuble, to stand up for savers (and for them). “It’s the first time countries and institutions in the north are really suffering from the euro-zone crisis,” says Guntram Wolff of Bruegel, a think-tank in Brussels. + +Germany and the Netherlands could have enacted reforms long ago to make household wealth less dependent on interest rates. Germany’s hundreds of small savings banks struggle in a low-rate environment because regulations bind them to a simple business model of taking deposits and lending locally. Countries such as Italy and Spain got rid of such set-ups years ago. The real target of German voters’ anger should be their own government, which has hesitated to reform. + +The Netherlands’ pension funds, meanwhile, generally promise defined benefits. Legally, they must meet strict coverage ratios, so when rates fall they are forced to save large amounts of cash. They end up “fighting rates like Don Quixote”, says Gerard Riemen of the Dutch pension federation. This is an unfortunate side-effect of low rates, which are intended to encourage spending, not saving. + +Mr Draghi’s job—as defined in its German-inspired mandate—is not to guarantee yields for savers, but to meet the ECB’s inflation target. But with elections in both Germany and the Netherlands next year, he has become a punch-bag for Eurosceptic populists. Mainstream parties are terrified of losing older voters, and many join in the ECB-bashing. + +The result, says Robert Grimm of Ipsos, a pollster, is a “moral panic” that Germans are again bailing out dubious foreigners. This, he thinks, has indeed aided the AfD’s rise. In the Netherlands, the debate over the ECB, like that over the Greek bail-out, feeds into citizens’ sense that they have lost control. “Voters feel powerless,” says Frank van Dalen, a political consultant. “The general signal is ‘stop’.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21697876-thrifty-germans-and-dutch-are-furious-low-interest-rates-and-ecb-mario-battles/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Chernobyl 30 years on + +Soviet apocalypse + +A nuclear disaster that caused many deaths, including that of the Soviet Union + +Apr 30th 2016 | PRIPYAT | From the print edition + + + +“MY MOTHERLAND is the Soviet Union,” reads a sentence written in cursive script in one of the exercise books scattered on the floor of an abandoned school in Pripyat, a Soviet-era ghost town in Ukraine next to the Chernobyl nuclear plant. The town, built for the plant’s workers and their families, was evacuated on the afternoon of April 27th 1986, some 36 hours after the worst nuclear-power disaster in history. Today Pripyat is being reclaimed by nature and tourists. What were once streets have become forest paths. Concrete blocks of flats decorated with Soviet symbols and slogans are barely visible through the trees. + +Some 200 pensioners eventually returned to villages in the area, but Pripyat itself remains dead, a Soviet Pompeii. Tourists and journalists stroll past rusting propaganda stands, taking photographs of scattered gas masks, clothes, toys and textbooks in abandoned schoolrooms. Some may have been positioned there deliberately by tour organisers. + +Chernobyl is also a monument to the extinction of Soviet civilisation. The KGB had been secretly warning Soviet leadership about safety breaches and the reactor’s flaws. At 1.23am on April 26th, during a test of the system, a power surge caused a steam explosion that blew off the roof of the reactor and set off a graphite fire. The explosion led to the release of 400 times as much radioactive material as the atomic bomb dropped on Hiroshima. It also blew the lid from the Soviet propaganda. + +The ensuing cover-up was more deplorable than the errors that led to the explosion. Soviet officials did not report the accident. The first information came from Sweden, which detected a rise in radioactivity. While firefighters were heroically trying to put out the blaze, receiving deadly doses of radiation, children in Pripyat played football on the streets and couples celebrated weddings outdoors. + +Only on April 28th did the government make a 15-second statement on the evening news. On May 1st hundreds of thousands of ordinary people attended a May Day parade in Kiev, where radiation levels were several-fold higher than normal. + +Instead of providing information, the Soviet propaganda machine was busy battling the foreign media. Moscow News, a propaganda sheet published in a dozen languages, ran an article headlined “A Poisoned Cloud of Anti-Sovietism”. It denounced “a premeditated and well-orchestrated campaign” aiming to “cover up criminal acts of militarism by the USA and NATO”. Foreign journalists were prevented from travelling to Ukraine. The KGB classified all information, not only about the disaster but about the illnesses caused by it. Forty-one men died as a result of the explosion and the meltdown of the reactor; a WHO study ultimately found it had caused about 4,000 premature deaths. + +The symbolism went far beyond the accident itself, partly because nuclear power was more than a utility in the Soviet Union. It was a symbol of technical progress and modernity that was at the core of the communist utopia. The conquest of nature by a new Soviet man was part of the mythology; the town symbol of Pripyat was Prometheus. + +Instead, Chernobyl became a symbol of apocalypse. Searching for answers, people turned to the Book of Revelation, which describes a deadly star named Wormwood that would fall from the sky and poison rivers and springs. Some translated Wormwood into Ukrainian eerily as “Chornobyl”. Svetlana Alexievich, a Nobel laureate in literature, wrote that two disasters coincided: “a social one as the Soviet Union collapsed before our eyes...and the cosmic one—Chernobyl.” + +As Mikhail Gorbachev, the last Soviet leader, reflected years later, the meltdown, “even more than my launch of perestroika [restructuring], was perhaps the real cause of the collapse of the Soviet Union”. It was a catalyst for glasnost, the opening up of the media. As a transcript of a Politburo meeting after the meltdown shows, Mr Gorbachev was furious over his limited access to information: “Everything was kept secret from the Central Committee. The whole system was penetrated by the spirit of boot-licking, persecution of dissidents, window-dressing and nepotism.” Mr Gorbachev believed that to renew the Soviet system, he had to open up the channels of information. Within weeks glasnost began in earnest, undermining the pillar on which the system rested: lies. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21697883-nuclear-disaster-caused-many-deaths-including-soviet-union-soviet-apocalypse/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Russia and the Panama papers + +The lawyer and the cellist + +What links Vladimir Putin’s musician chum to a nasty fraud case? + +Apr 30th 2016 | From the print edition + +Magnitsky won’t go away + +SERGEI ROLDUGIN is a humble cellist who is also one of Vladimir Putin’s closest friends. This month the Panama papers, a mega-leak of documents from an offshore law firm, revealed that he owned shell companies through which hundreds of millions of dollars had sloshed. Now the Organised Crime and Corruption Reporting Project (OCCRP), a journalists’ collective, claims to have uncovered a link between those companies and one of the biggest fraud cases in Russian history: the Magnitsky affair. + +Sergei Magnitsky was a lawyer with Hermitage Capital Management, an investment firm. In 2007 he uncovered the theft of $230m from Russia’s treasury in a tax-refund scam. After accusing police of a cover-up, he was tossed in jail, where he died in 2009. The case became a cause célèbre, and America adopted a law barring entry to officials suspected of involvement in the lawyer’s death. + +The OCCRP now says it has bank records showing that International Media Overseas, a firm owned by Mr Roldugin, received money in 2008 from another offshore company, called Delco, that it believes is linked to the pilfering uncovered by Magnitsky. Just a few months earlier, the OCCRP believes, Delco had received a large payment from a web of opaque firms used by Russian officials and an organised-crime gang to siphon away the money from the tax scam. + +Mr Roldugin has previously told Russian media that the money in his firms came from donors and was used to buy expensive musical instruments. He could not be reached for comment. But if the documents seen by the OCCRP are genuine, it would appear that Mr Putin’s old pal received cash from the same network used in one of this century’s most egregious swindles. + +The possible link between the Magnitsky case and Mr Roldugin has been big news in the West and among Russia’s rare liberals. But for most Russians, it will be erased by state propaganda. Dmitry Peskov, Mr Putin’s spokesman, has implied that the Panama papers were a CIA provocation. + +As though to pre-empt the revelations, Russian state television broadcast a documentary earlier this week alleging that Magnitsky was the victim of a plot hatched by his employer, Bill Browder, an American investor. Co-conspirators supposedly included an anti-corruption campaigner, Alexei Navalny, and, of course, the British and American secret services. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21697884-what-links-vladimir-putins-musician-chum-nasty-fraud-case-lawyer-and-cellist/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Poland’s rightist revolution + +Red and white cavalry + +The Law and Justice party purges a horse farm, and much else + +Apr 30th 2016 | WARSAW | From the print edition + +Jockeying for political advantage + +THERE is no evidence that Marek Skomorowski had ever worked withhorses professionally before he was appointed to head one of the most elite stables in Poland, a 199-year-old state-owned stud farm in the village of Janow Podlaski. He had a degree in economics; his main credential seemed to be his connection to a small right-wing party allied to the ruling Law and Justice party (PiS), which took power last autumn. The director whom he replaced was an experienced breeder. “The horses haven’t succumbed to depression,” Mr Skomorowski quipped after taking over the job in February. He spoke too soon. By early April two mares owned by Shirley Watts, the wife of the Rolling Stones’ drummer, Charlie Watts, had died. Mrs Watts withdrew her two surviving horses this month, threatening to sue. + +Jockeying for political advantage + +The turmoil at Janow Podlaski is part of a wholesale purge of scores of executives at state-owned enterprises (SOEs) carried out by PiS since it came to power. Previous governments have replaced top managers, but not on the same scale. The CEOs of 13 of the 14 SOEs listed on the Warsaw exchange’s WIG30 index, including insurance, railway and energy companies, have all been canned. The companies’ share prices have fallen noticeably (see chart). Only PKO BP, Poland’s biggest bank, has kept its chairman. (Dawid Jackiewicz, the treasury minister, personally affirmed that the bank’s CEO could “sleep soundly”.) Rzeczpospolita, a daily, found that CEO turnover at the most important SOEs over the past year has exceeded 100%. + +PiS has already come under fire from the European Union for seizing control of state media and trying to force its appointees onto the constitutional court. In the state sector of the economy, too, it wants managers who will play along. Appointees need to “identify with the government’s programme”, Mr Jackiewicz told the parliament in March. Loose job requirements leave plenty of room for cronyism: the new CEO of LOTOS Group, an oil company whose chief was axed last week, needs only a master’s degree and five years of professional experience. English is desirable, but not required. + +Jaroslaw Kaczynski, PiS’s leader, values loyalty above competence. The government has changed the civil-service law, scrapping competitions for senior jobs and the requirement that appointees must not have belonged to a political party in the past five years. As tensions with the EU escalated in January, Warsaw sacked its permanent representative in Brussels. (In a possible dig, the European Commission has since named him head of its office in Warsaw.) A former PiS MP was appointed head of the public TV broadcaster. Nearly all the regional superintendents of education have been fired; the new ones include former PiS parliamentary candidates. Last week a former assistant of Beata Szydlo, the prime minister, was named head of the country’s second-largest airport. + +Not just horse enthusiasts are irked. The liberal Nowoczesna party has launched an online infographic exposing the web of appointees’ connections, with an anonymous hotline. Moody’s, a credit-rating agency, has warned that the constitutional-court tussle could dent Poland’s attractiveness to foreign investors. It is due to review its rating on May 13th. But by extending its grasp over Poland’s state-controlled companies, which Mr Jackiewicz likened to “sovereign princedoms”, PiS has strengthened its base. Now, cadres in place, it is pushing on with the revolution. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21697889-law-and-justice-party-purges-horse-farm-and-much-else-red-and-white-cavalry/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Turkey and the EU + +Clearing customs + +Europe’s migrant deal hinges on Turks getting visa-free travel. It may collapse + +Apr 30th 2016 | ISTANBUL | From the print edition + + + +SERHAN TURKOGLU stands outside one of Istanbul’s many visa-application bureaus, clutching his flight and hotel bookings, travel insurance, proof of employment, social-security registration, recent salary slips and bank statements, and a vehicle licence. Mr Turkoglu, an accountant, needs all of this simply to secure a holiday visa to Spain. For his next European holiday he will have to go through the whole rigmarole again. “It makes you feel like a second-class citizen,” he says. + +Turkish diplomacy towards the European Union is focused on obtaining visa-free travel. It is easy to see why. Turkey has been negotiating to accede to the EU for more than a decade; it is the only candidate country whose citizens still need visas to enter the bloc’s Schengen area. Peruvians, Malaysians and Mexicans, by contrast, no longer need visas to travel there. + +Europe’s panic in the face of mass migration from the Middle East has provided Turkey with a new opening. In March, in exchange for a pledge to re-admit thousands of migrants deported from Greece, the EU offered Recep Tayyip Erdogan, the country’s president, €6 billion ($6.8 billion) in aid, progress in the moribund membership talks and visa-free travel for his people by June. + +To qualify, Turkey must meet 72 benchmarks by late April, from biometric passports to better data-protection. Turkey’s prime minister, Ahmet Davutoglu, claims that his country already meets most of the conditions. But the EU says much more needs to be done. “The criteria will not be watered down,” insists the European Commission’s president, Jean-Claude Juncker. + +In fact, it is hard to see how Turkey could meet the political conditions for visa liberalisation. These include bringing its terrorism laws into line with the EU’s, and guaranteeing the rights to assembly and free speech. But for quite some time, Turkey has been restricting political activity and going in the wrong direction on human rights. + +The government is prosecuting a group of academics on terrorism charges, after they signed a petition to end a crackdown against the Kurdistan Workers’ Party (PKK) that has raged in Turkey’s south-east since last year. Two journalists face life in prison for reporting on covert arms shipments to Syria. Last week a Dutch columnist was detained and barred from leaving the country pending trial; her offence was a profane tweet and an article calling Mr Erdogan a “dictator”. + +If the commission agrees that Turkey meets the benchmarks, on May 4th it will recommend that the EU’s 28 governments (as well as the European Parliament), approve visa-free travel for Turkey. In theory this could be done by a qualified-majority vote; in practice, rejection by a large country would torpedo the deal. Far-right anti-Muslim parties are surging in many parts of the continent. With Marine Le Pen looking stronger in the run-up to France’s presidential election in 2017, notes Marc Pierini, a former EU envoy to Turkey, “France cannot afford to vote yes” to visa-free travel. + +Turkish officials warn of a diplomatic train crash if they do not get their way. The first victim would be Europe’s migrant deal. “If the EU does not keep its word, we will cancel the readmission agreement,” the country’s foreign minister, Mevlut Cavusoglu, said recently. + +On April 27th the French and Germans proposed strengthening safeguard mechanisms in the visa process, so that it could be suspended in the event of a large number of visitors who exceed the 90-day limit. That might be one way to avert a collision. Another, says Cengiz Aktar, a scholar at the Istanbul Policy Centre, a think-tank, is to play for time. “The EU can say that there’s been progress, but that some things are missing, so let’s revisit this in the autumn,” he says. Turkey and the EU are accustomed to kicking the question into the long grass. Mr Turkoglu, like other Turks forced to queue for visas, may have a long wait ahead of him. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21697885-europes-migrant-deal-hinges-turks-getting-visa-free-travel-it-may-collapse-clearing-customs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Trading places + +What the aversion to global trade says about Europe and America + +Apr 30th 2016 | From the print edition + + + +FORGET left and right. These days, it is often said, the real dividing line in politics is between open-door liberals and pull-up-the-drawbridge nationalists. Like most grand claims, this one can be overdone. But the pummelling that international trade is taking on both sides of the Atlantic suggests there is something to it. + +Nigel Farage and Marine Le Pen—leaders of right-wing populist parties in, respectively, Britain and France—sound like the far left when they dismiss deals such as the Transatlantic Trade and Investment Partnership (TTIP), a proposed agreement between the European Union and America, as stitch-ups that favour only big corporations. In America, Donald Trump’s pronouncements (“It’s not free trade, it’s stupid trade”) resemble those of Bernie Sanders, the “democratic socialist” who is slowing Hillary Clinton’s path to the Democratic presidential nomination. + +Why has trade become the piñata of politics? Partly because it fits the anti-elite mood. Trade deals are cooked up behind closed doors by obscure bureaucrats. Negotiating positions are hidden from voters. The economic changes wrought by technology and competition should perhaps shoulder more of the blame for job insecurity. But it is easier to rail against the hand of a politician who signs a trade deal than the invisible hand of globalisation. + +So far, so transatlantic. But there are telling differences between Europe and America. In the EU, opposition to TTIP is at its sharpest in Germany and Austria, two export powerhouses with low unemployment. The thousands of protesters who rallied in Hanover last weekend, as Barack Obama rolled into town to instil energy into the flagging talks, or the Dutch campaigners gathering signatures to put TTIP to a referendum, fulminate not against lost jobs but greedy multinationals and the lower food and environmental standards they believe the deal will bring. + +But in America the anti-trade message resonates most in post-industrial regions that lost out from NAFTA, a trade deal struck in the 1990s with Canada and Mexico, as well as the accession of China to the World Trade Organisation in 2001. This led to huge job losses as American firms struggled to compete with cheap imports. In his Hanover speech Mr Obama acknowledged that governments must do more for globalisation’s losers. + +Why the difference? Pascal Lamy, who served as the EU’s trade commissioner before running the WTO from 2005 to 2013, distinguishes between the “old” and “new” worlds of trade deals. The old world, dominated by national producers, was about opening markets and cutting tariffs. The new one aims to reduce differences between sets of national or regional rules that hinder trade in a world of transnational production and long supply chains. In the old world, trade negotiators battled producers who sought protection from international competition. In the new, officials must contend with consumers who fear that the domestic standards they cherish will be watered down. + +Ironically, it is the Old World that is grappling with these fresh challenges first. For now, America’s gaze remains fixed on a not-yet-ratified Asian trade deal, and the fears of a new flood of cheap imports. The controversy over TTIP in Europe, by contrast, is about standard-setting and regulatory co-operation. To that extent the protesters have understood its significance better than the European Commission, which is negotiating the deal with America, or the EU governments that sought it in the first place. The politicians’ attempts to sell TTIP were hopeless from the start; many thought a deal with an advanced economy would be free of rows about labour standards. But the economic gains are highly uncertain, given the difficulty of modelling such a complex “new-world” deal. Transparency concerns were ignored. All this allowed TTIP’s opponents to build up their own narrative, one often untroubled by factual accuracy. + +EU officials say the protests have sharpened their minds. As America does with the Asian deal, the commission now emphasises the strategic value of TTIP in setting standards that much of the rest of the world will be obliged to follow. It has also tried to channel public concern into the negotiations. After an outcry over a provision in TTIP that would allow investors to sue governments, for example, the commission issued a revised proposal. The Americans remain sceptical. + +Such delicate manoeuvring is best done by elected politicians. But while Angela Merkel, David Cameron and Matteo Renzi all profess support for TTIP, none has invested much energy in convincing voters. In Austria leaders compete to see who can sound most opposed. In Britain, free-traders on either side of the June Brexit referendum are distracted by an argument over who could best reach a deal with America. All have left the hard work of selling this innovative deal to the bureaucrats of the commission. But without political authority, they struggle to do any more than engage in endless (and fruitless) “mythbusting”. + +TTIP-toeing towards a deal + +Protesters may yet have their way. The TTIP talks are floundering on issues such as public procurement, services and agricultural markets. A breakthrough during a 13th round of talks in New York, held as The Economist went to press, looked unlikely. Both sides say the trickiest elements will be left for a final bout of horse-trading in the autumn. But it is hard to see a meaningful deal concluded by the end of the year, the current target. Delay would mean a new American president, a new Congress, a new trade negotiator and quite possibly a new set of priorities. French and German elections next year could also cause trouble. TTIP may have to wait until 2018 or later for ratification. + +That would be a pity. The deal would provide a boost to Europe’s morose economy. And it would help reassure those who worry that the transatlantic bond is fraying. Right now the EU could do with some good news. The terrain of new worlds demands skilled navigators. But they are nowhere to be seen. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21697877-what-aversion-global-trade-says-about-europe-and-america-trading-places/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Living in London: The grip tightens + +Brexit brief: How others see it + +The death of BHS: The lights go out + +The Hillsborough inquest: Justice for the 96 + +NHS spending: Operating costs + +Scottish elections: Opposition reshuffle + +UKIP in the north: Of springboards and lifeboats + +Bagehot: 2030 vision + + + + + +Articles Sections Next + +Living in London + +The grip tightens + +Faulty land-use regulation is throttling the capital + +Apr 30th 2016 | From the print edition + + + +AT FIRST glance London looks unstoppable. It is the most important city in Europe, perhaps the world. In the past decade its economy has grown twice as fast as Britain’s and its population 50% faster. Scratch the surface, however, and its situation looks less good. The motor of the British economy is becoming less productive and more unequal. The fundamental problem is how land is used and regulated. + +Over the last full economic cycle, from 1993 to 2008, the cost of a hectare of residential land in London increased by over 300% in real terms, to more than £8m ($15m). Commercial-property prices rocketed up too. Now less-productive industries are moving out. The supply of floor space put to industrial uses such as factories and warehousing has fallen by half in the past five years, suggest data from JLL, a property firm. And London’s population is becoming more skilled. Over the past decade, the proportion of people with university degrees has increased much more quickly inside the capital than outside it. + +Economists might welcome a shift from low- to high-value industries, but property prices threaten its continuance. Academics say they have been forced to move out of town. The share of employed people in inner London working in professional scientific, research, engineering and technology jobs has fallen from 6.6% to 5.4% since 2011. Public services struggle. “It’s almost impossible to hire young teachers who don’t live with their parents,” says one head. And it is not just young teachers who are throwing in the towel: between 2011 and 2014 the number of twenty-somethings fell by 3%, reversing long-term growth. + +Those who cling on in the city do so at a cost. Between 2008 and 2014, Londoners’ disposable income (ie, after housing costs) fell by 4%, a steeper decline than in any other part of England (see chart). According to the Centre for London (CFL), a think-tank, the disposable income of private renters in inner London dropped by 28% between 2001 and 2011. + + + +But while most Londoners struggle, some are thriving, in particular homeowners. Income inequality has risen faster in London than in Britain as a whole over the past decade. This is bad for the city. Costly rents and mortgages transfer wealth from poorer people, who tend to spend what they have, to richer folk, who save it. As a result there is less demand to support the economy. Decreasing diversity is another loss: if different sorts of people do not cluster together, they cannot exchange ideas and innovations so readily. In 2012 and 2013 productivity per worker fell in London, though it rose in the rest of the country. The share of total employment that comes from startups is falling, and small firms are now closing at a faster rate than more established outfits. + +Poor land-use regulation is the main reason for London’s crazy prices. Two problems stand out. First, not enough space is given to new development. About 25,000 homes were built in 2015, half of what was needed. Over one-fifth of London’s land is “green belt”, open space encasing the city that is largely off-limits to developers. People imagine that green belts are pleasant spaces for walking dogs. In reality about 7% of London’s green belt consists of golf courses. Over half is agricultural. + +There is enough green-belt land in Greater London to build 1.6m houses at average densities, says Paul Cheshire of the London School of Economics (LSE)—about 30 times the number of new houses London needs a year. But opposition from homeowners is strong—especially from those near the green belt, who do not much like the thought of newcomers bringing down property prices. Today, though approved applications to build on it have risen a bit, the green belt is virtually as big as it was in 2007. Many argue that developing brownfield land (land previously used for some industrial purpose) would solve London’s problems. Research by Nathaniel Lichfield and Partners, a consultancy, however, concludes that brownfield sites could accommodate less than half of the homes required up to 2030. + +A plethora of other regulations also block development. By one count there are ten protected views of St Paul’s Cathedral, including one from a specific oak tree on Hampstead Heath. This imposes severe restrictions on building height across the city. Population density in central London is about half New York’s. According to Mr Cheshire and Christian Hilber, also of the LSE, restrictive planning policies inflate the price of office space in the West End by about 800%. A square foot there is twice as expensive as in midtown Manhattan. + +Councils might get rid of the barmiest rules were it not for the second problem: taxation. Council tax, levied on housing, is collected by local governments. The prospect of broadening their tax bases should spur councils to allow more building. + + + +Interactive map: Explore how house prices in England and Wales have changed since 1995 + +Not a bit of it, argues Mr Hilber. Residential property taxes are lower in Britain than in other countries, so housing developments create little additional revenue. Worse, the way the central government doles out grants to councils more or less eliminates any extra revenue in the medium term for local authorities that allow more development. And the cost of the additional infrastructure that building makes necessary—roads, schools and the like—is rarely met by central government, he says. + +Help is on the way, maintains the government. Londoners may soon be allowed to add storeys to their home if an adjoining building is taller. It has also become easier to convert offices into dwellings. But other new policies will discourage homebuilding. From 2020 councils will have full control over business rates and receipts, which will lead them to prefer commercial development, points out Mr Hilber. + +As Londoners prepare to choose a new mayor on May 5th, London’s property woes have never loomed so large. Unfortunately, neither of the leading mayoral hopefuls—Sadiq Khan, the Labour candidate, and the Conservatives’ Zac Goldsmith—is brave enough to propose a serious solution. Both have pledged to preserve the green belt, and their other plans amount to little more than tinkering. + +So prices will probably continue to rise—unless Britons vote on June 23rd to leave the European Union, and demand for London property withers. The economy will slow as rent takes a bigger chunk of pay and earnings. Skilled people will move to jobs in less productive places, thus earning less. A recent paper by Chang-Tai Hsieh of Chicago University and Enrico Moretti of the University of California, Berkeley suggests that tight land regulation in America may have reduced GDP by more than 10%. A similar, perhaps larger, effect is likely in Britain. Unless London’s property market can be sorted out, people across the country will bear the brunt. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/21697575-faulty-land-use-regulation-throttling-capital-londons-property-woes-are-getting-worse/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit brief + +How others see it + +The European Union would suffer from Brexit—which is why it could not be kind to Britain afterwards + +Apr 30th 2016 | From the print edition + + + +MOST of the Brexit debate has been about its effect on Britain. But a British departure would also have a profound impact on the European Union. And that would affect how others approach negotiations with a post-Brexit Britain. + +For the EU, a vote for Brexit on June 23rd could hardly come at a worse time. The club is in trouble. The euro crisis is not over, with growth slow, youth unemployment high and Greece again in difficulties. The recent fall in the flows of refugees across the Mediterranean may prove temporary. Many leaders, including Germany’s Angela Merkel, seem politically weakened. + + + +The longer-term effects of Brexit would also be serious. The EU would lose much prestige from the exit of one of its biggest members. Britain is one of the few EU countries with real diplomatic and military clout. Brexit would also upset the balance of power, leaving more naked both German hegemony and French weakness. And it would make the EU less outward-looking. As the Centre for European Reform, a London-based think-tank, notes in a new report, a British departure would leave the EU “less liberal, more suspicious of science and more protectionist”. That could hurt hopes of new trade deals, notably with America. Jan Techau of Carnegie Europe, a think-tank in Brussels, says Brexit would be bad for transatlantic relations, in which Britain is a key intermediary. + +All this means other EU countries will see Brexit as a hostile act meriting a firm response. Diplomats avoid crude talk of punishment, but they also see a need to avert any risk that Brexit could encourage others to leave. Euroscepticism has grown in most countries and so have populist parties, many of which openly back Brexit. Marine Le Pen, leader of France’s National Front, even plans to campaign for it in Britain. + +The new deal that David Cameron won in February may have been dismissed at home as trivial (and it barely features in the referendum campaign). But in Brussels many saw it as giving in to a blackmailer threatening to walk out. Michael Emerson, a former Eurocrat now at the Centre for European Policy Studies, another Brussels think-tank, also stresses Europeans’ aversion to Britain’s cherry-picking the bits of the EU to which it deigns to belong. + +To most Brussels hands, that means there can be no question of giving a post-Brexit Britain full access to the EU’s single market while letting it escape the EU’s rules and the free movement of people. As one diplomat puts it, the other countries simply have to show that Brexit doesn’t work. + +Brexiteers retort that, since the EU sells more to Britain than the other way round, it has a huge interest in a free-trade deal. German carmakers, it is said, would insist on one. Yet the bargaining clout of the EU is far stronger. For Britain, exports to the EU make up 12.6% of GDP, whereas for the EU, exports to Britain are only 3.1%. And for many countries, all of which would have to ratify a new trade deal, the ratio is smaller still (see chart). Take Romania: its exports to Britain are worth only 1.5% of GDP, and it may also be asked to accept curbs on migration if Britain leaves. Romania is threatening to veto an EU-Canada trade deal because of Canadian visa restrictions. + +A final consideration for the EU is the need to show, post-Brexit, that the European project can still go forward. An obvious way to do this would be to relaunch the euro zone’s movement towards closer integration. In Brussels many predict a new Franco-German initiative after June 23rd, whichever way the vote goes. It may not get far as there is little agreement on what deeper union should entail. But it could still discomfort Mr Cameron, who likes to claim that the high-water mark of European integration has passed. + +A Brexit vote would also come at a testing political time for Europe. Elections loom almost everywhere: in Spain three days after the referendum, in France, Germany and probably Italy next year. And in a final irony, Britain is due to take the rotating EU presidency in the second half of 2017—just when post-Brexit negotiations could be at their most intense. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21697825-european-union-would-suffer-brexitwhich-why-it-could-not-be-kind-britain/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The death of BHS + +The lights go out + +The collapse of a retailer raises questions about business regulation + +Apr 30th 2016 | From the print edition + +More for me: Sir Philip Green + +BUSINESSES fail every day. But sometimes a company’s demise can trigger a wider debate about business ethics and regulation. So it is with BHS, a retailer with 11,000 workers, which went into administration on April 25th with massive debts and a probable £571m ($830m) hole in its pension fund. Richard Fuller, a Conservative MP, has already dubbed the saga “the unacceptable face of capitalism”. + +The company, which was founded back in 1928, was an old-fashioned midmarket retailer that had failed to adjust to the internet. Its fashion range was unappealing to young shoppers and only its lighting department was seen as having broad appeal. As such, BHS’s death might have attracted comment only as a sign of “creative destruction” on the high street; Austin Reed, a suit retailer, was another group to go into administration this week. + +But it is BHS’s recent history that has prompted all the controversy, given the contrast between the rewards earned by those who ran the company and the current health of its pension scheme. In 2000 BHS was bought for £200m by Sir Philip Green, a well-known retailer, and eventually merged into his Arcadia group, which contains well-known names like Miss Selfridge and Topshop. Between 2002 and 2004 BHS paid dividends of £423m, most of which went to Sir Philip and Tina, his wife. The retailer also paid rent totalling £155m between 2002 and 2014 to a property company owned by the Greens. + +Having repeatedly lost money, BHS was sold for £1 to a newly-formed company called Retail Acquisitions in 2015 (Arcadia wrote off £215m of debt at the time). But property sales and an attempted debt restructuring failed to turn the business around. Retail Acquisitions has received £22m in interest payments, management fees and wages from BHS since the deal. + +Meanwhile the financial position of the pension fund, which was in surplus in 2008, has been deteriorating. The credit crunch of 2008-09 led to a decline in the value of the scheme’s assets while long-term interest rates plunged, increasing the cost of its liabilities (paying pensions). Similar problems have affected other British firms: figures from Hymans Robertson, a benefits consultant, show that, although British companies have paid £500 billion into pension schemes since 2000, the collective deficit has tripled to £800 billion. + +Traditionally, British workers were dependent on the continuing health of their employers for the safety of their pensions. But after various scandals, an insurance scheme called the Pensions Protection Fund (PPF) was founded in 2005, funded by an annual levy on the corporate sector. The PPF is likely to assume responsibility for paying BHS pensions. Those who have already retired will see their payments continue, with some limits on future increases; those who are yet to retire will see a 10% cut in their expected payments. + +To protect the PPF, a body called the Pensions Regulator has wide powers, including the ability to pursue past owners if it believes a takeover has allowed a company to avoid its obligations. The regulator has confirmed that it is investigating BHS, and Sir Philip is reported to have offered £80m to help plug the pensions shortfall. + +The bigger question is how the deficit was allowed to get this large. The 2015 accounts of the pensions scheme show that since 2013 the firm had been in the midst of a recovery plan designed to eliminate the pension deficit by 2036. The company was paying £9.5m a year into the scheme but making no dent in the deficit; benefit payments in the most recent year were £19.6m. + +The regulator says it does not “approve” recovery plans but it does assess them and it has the power to impose a funding plan on the employer. But it cannot say whether it imposed a plan on BHS, or whether it cleared the takeover by Retail Acquisitions under its anti-avoidance procedure. + +The whole system looks too opaque. The regulator has to balance the interest of the pensioners (demanding more money upfront) against the risk that demands for contributions might send a firm to the wall, with taxpayers perhaps the ultimate guarantor. The BHS saga suggests the regulator must make managers pay much more attention to the health of pension funds. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21697822-collapse-retailer-raises-questions-about-business-regulation-lights-go-out/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Hillsborough inquest + +Justice for the 96 + +A jury rules that those who died at Hillsborough were “unlawfully killed” + +Apr 30th 2016 | From the print edition + + + +FOR THE families of those who died, it has been an interminably long wait. On April 15th 1989, in an overcrowded stand in the Hillsborough stadium in Sheffield, 96 men, women and children were crushed to death; another 766 were injured. In the aftermath of the event, a police cover-up meant that fans of Liverpool Football Club were blamed for the disaster. To this day, some survivors struggle to cope with what they saw on that sunny Saturday afternoon. + +In the 27 years since then, campaigners have slowly wrung the truth from the institutions at fault. It has emerged that the police managed the crowd poorly, lied about what happened and erased evidence. The ambulance service failed to spot the signs that something was terribly wrong. In a penny-pinching move, Sheffield Wednesday, the football club that plays at Hillsborough, had decided not to invest in the safety measures its crumbling home needed. Yet although it has long been clear that Liverpool fans were not to blame for what happened, justice has so far evaded those who campaigned for it. + +On April 26th an inquest held in a makeshift coroner’s court in Warrington, a town 16 miles from Liverpool, provided a measure of justice. The jury declared, after sitting for two years—the longest jury case in British legal history—that the 96 fans had been “unlawfully killed” and that Liverpool supporters had played no part in provoking the disaster. Chief Superintendent David Duckenfield, the police officer in charge of crowd control, was held responsible for manslaughter by gross negligence. In court, family members sobbed; outside, after the decision, they sang “You’ll Never Walk Alone”, Liverpool FC’s anthem. + +Hillsborough did much to harm public trust in the police. The inquest demonstrated that the force responsible for the match, the South Yorkshire Police (SYP), was dominated by bullying, incompetent leadership. Although the police now are more accountable and less militant, the inquest itself raises questions as to whether they have learned their lesson. David Crompton, chief constable of the SYP, was suspended on April 27th following accusations that the police force had fought “tooth and nail to avoid adverse findings by the jury”. + +Meanwhile, two criminal investigations are under way: one focusing on the actions of police officers in the run-up to the match and on the day itself; the other on the subsequent cover-up. Both are due to report before the end of the year. The Crown Prosecution Service must then decide whether there is sufficient evidence to bring criminal charges against any police officers or organisations. Campaigners insist that those responsible must be held to account. To do so will require a higher standard of proof than was required by the inquest. + +Whatever happens next, blame has now been correctly apportioned. That fans were “unlawfully killed” and the truth of it suppressed is unpardonable; that it has at last been acknowledged provides solace to grieving families. For some, the wait is over. For Chief Superintendent Duckenfield, it has just begun. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21697744-jury-rules-those-who-died-hillsborough-were-unlawfully-killed-justice-96/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +NHS spending + +Operating costs + +As junior doctors strike, the health secretary mollifies other medics + +Apr 30th 2016 | From the print edition + + + +HISTORY of a sort was made on April 26th and 27th when over 20,000 junior hospital doctors in Britain went on strike. It was the fifth time this year that they had withdrawn their labour, but this week they abandoned emergency services as well as their more routine duties. No lives seem to have been lost, but no concessions were gained. As The Economist went to press, Jeremy Hunt, the health secretary, still intended to impose the new contract cutting the rate for most weekend work that sparked the strikes in the first place. + +The finances of the National Health Service are in serious trouble. Between 2000 and 2009 spending on health increased from 6.3% of GDP to 8.8%, the average spent by countries in the European Union before the steep rise in NHS funding. Since then, Britain has fallen behind its peers. Annual spending growth has averaged 3.7%, adjusted for inflation, since the NHS’s founding in 1948, but spending is set to rise by only about 0.8% a year in the decade from 2010-11. On current trends, the share of GDP that Britain spends on health will be back to around its level in 2000 by 2021. + +Hospitals are “on a knife-edge”, says John Appleby, chief economist at the King’s Fund, a think-tank. A few years ago, only a handful of the worst-managed hospitals ran deficits. The vast majority do so now (see map). Managers want more nurses and doctors to deal with a growing and greying population; employee costs account for about three-fifths of hospital budgets. A public-sector pay freeze has kept down the costs of most staff, but not the amount spent on nurses and doctors hired on flexible contracts. Between 2011-12 and 2014-15, spending on permanent staff rose by 0.03% a year and on temporary staff by 15.3% (it has now been capped). + +At the same time, the tariff that determines most of hospitals’ income has fallen in real terms. The squeeze is meant to make them do more for less: Mr Hunt wants £22 billion ($32 billion) in efficiency savings by 2021. To help, in December he promised a £1.8 billion fund to invest in ways to save cash. The money looks as if it will plug gaps in budgets instead. So too will funds put aside for buildings. It is against this background that the health secretary is pushing a new contract for junior doctors. + +But youngish hospital doctors are not the only grumpy medics these days. The 29,000 general practitioners (GPs) who perform 90% of patient consultations are fed up too. They have more work than before—patients’ visits rose by an estimated 23% between 2010 and 2015—and their earnings have fallen in real terms. In a recent poll by the Commonwealth Fund, a think-tank, 59% of British GPs said their job was “extremely or very stressful”, more than in the ten other rich countries surveyed. Three in ten GPs want to quit. So whereas Mr Hunt has been holding out against the junior hospital doctors, he is mollifying GPs. On April 20th NHS England said that the share of its £106.8 billion annual budget given to GPs would rise from 8% to 10% by 2020-21. + +Simon Stevens, the head of NHS England, believes better primary care should stop the flow of sick people to hospitals, where treatment is more expensive. Adam Roberts, an economist at the Health Foundation, a think-tank, agrees, but warns that the money could either go straight into GPs’ pay-packets or lead to more referrals to hospitals that are already struggling to cope with current loads. + +Shifting money around different bits of the system may help it go further. The bigger challenge, though, is making the NHS more productive overall when finances are as tight as a gastric band. A report in March by the Health Foundation found that productivity among health-care providers has fallen in recent years. + +Carol Propper, an economist at Imperial College London, worries that financial woes are diverting attention from efforts to increase competition. Her research has found that when patients have more choice, hospitals do a better job of treating them. Such reform, she adds, should apply to GPs too: “If you are going to increase GP spending, you need to increase the ability for people to choose their GPs.” + +General practitioners form a “cottage industry” untouched by recent reforms, Mr Appleby says. For all the changes in their remit since the 1980s, GPs remain small in scope, and much of what they do could be covered by cheaper staff, Ms Propper adds. But overhauling the system fundamentally would mean upsetting still more doctors. Mr Hunt seems to have decided that another fight would be bad for his health. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21697829-junior-doctors-strike-health-secretary-mollifies-other-medics-operating-costs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Scottish elections + +Opposition reshuffle + +Why an SNP victory does not mean a new push for independence + +Apr 30th 2016 | EDINBURGH | From the print edition + + + +THE separatist Scottish National Party (SNP) is cruising to victory in the elections to Scotland’s Parliament on May 5th. No surprise there, given that the SNP won 56 of the 59 Scottish seats in the general election in 2015. Though the party lost the independence referendum in 2014, it did so by a narrow-enough margin to establish itself as the champion of Scottish interests at Westminster. But look at the SNP’s record in government, and questions as to why it is so popular at home arise. + +Scotland’s economy is flagging, thanks in large part to the drop in world oil prices. GDP growth in 2015 was 1.9%, year on year, against 2.3% in Britain. Unemployment is falling, but the growth in jobs is weaker than in the country as a whole. Scotland’s budget deficit is about twice Britain’s as a share of GDP; the Institute for Fiscal Studies, a think-tank, reckons that whereas Britain will be in surplus by 2019-20, Scotland will have a deficit equal to 6.2% of GDP. + +Public services are sliding too. Standards of literacy and numeracy among primary-school pupils have fallen. In 2015 the OECD, a group of mostly rich countries, reported that secondary students’ attainment in mathematics, which a decade ago was among the highest in the world, is now only average. Merging Scotland’s eight police forces into one in 2013 has provoked complaints of less accountable and unnecessarily standardised policing, with armed coppers cavorting through low-crime rural areas on routine patrol. Farmers protested outside Holyrood in March over computer failures that delayed payment of their EU subsidies for months. + +So why is the SNP a shoo-in for a third term in government? “Debate has become polarised between independence and the union, forcing many previous supporters of more powers for the Parliament into the independence camp [and the SNP],” says James Mitchell of Edinburgh University. + +This has so eroded the once-dominant Labour Party that polls show the long-despised Conservatives within a percentage point or two of beating it into second place. The Tories, portraying themselves as the only reliable defenders of the union, are also the sole party that has pledged to keep taxes as low as those in the rest of Britain when Scotland controls its income tax. + +If Labour hands the opposition baton to the Conservatives, Nicola Sturgeon, the SNP’s leader and first minister of Scotland, will not lose any sleep. A bigger problem for her is the increasingly active group of radical pro-independence zealots. Some are in her own party, but many have joined a new anti-capitalist alliance called RISE (Respect, Independence, Socialism, Environmentalism), dubbed by some “the Scottish Syriza” after the election-winning left-wing Greek party. They want another plebiscite soon on independence. + +Ms Sturgeon does not, because she fears it would produce the same result as last time. She must hope that Britons do not bounce her into one by voting to leave the European Union on June 23rd. She has said that, if they do, a new referendum is “very highly likely”. Scots like the EU even more than they do the SNP. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21697828-why-snp-victory-does-not-mean-new-push-independence-opposition-reshuffle/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +UKIP in the north + +Of springboards and lifeboats + +The upstart party takes on Labour + +Apr 30th 2016 | HARTLEPOOL | From the print edition + +Limbering up + +FOR decades, the working-class town of Hartlepool in north-east England was a centre of shipbuilding. But the last shipyard closed in 1961 and since then Hartlepool has declined. That is one reason why many people tell John Tennant, a candidate for the UK Independence Party, that they will vote for him in the local-council elections on May 5th. Labour has dominated here for years and holds 22 of the 33 council seats, against UKIP’s two. But “UKIP are the only ones listening,” says Michael Tipp, a retired factory worker and former Labour voter. Immigration and closures at the local hospital are his concerns. + +In the general election of 2015, the decline of the Liberal Democrats as the party of protest and worries over immigration swelled UKIP’s share of the national vote from 3% to 13%. Yet it gained only one seat in Parliament, coming second in 120 races. The party was then consumed by infighting. Now it is looking to the local elections and the EU referendum in June as springboards to greater success. The next few weeks are crucial if UKIP is to achieve its aim of becoming the Scottish Nationalist Party of northern England, speaking for the region. “If they don’t make big gains now, they never will,” says Tony Travers of the London School of Economics. + +Much of UKIP’s growth in the south has been in Conservative heartlands. In the north, the party is targeting Labour. In Hartlepool it almost won the general election, increasing its votes by 21 percentage points. Other Labour strongholds are also under attack. UKIP is expected to win its first seats in the Welsh Assembly. + +Yet UKIP’s performance, and its candidates, can be erratic. In December the party was thrashed by Labour in a by-election in Oldham, another northern town. Caitlin Milazzo of the University of Nottingham thinks that although people are concerned about UKIP’s core issues—immigration and the EU—the party may never get more than 15% of the national vote. That is why Mr Tennant spends so much time on doorsteps opposing the decision to close the emergency department at the local hospital and touting the need for better schools. “We want to be more than just a one-subject party,” he says. + +The EU referendum has been a “lifeboat” for UKIP, says Ms Milazzo, rescuing it from its internal problems. Yet, strangely, polls suggest declining support for Brexit in the north, even as UKIP surges there. If Britain remains in the EU, UKIP must decide whether it wants to continue as a disaffected troublemaker or to be something bigger. To do that, it must broaden its base. Lifeboats do not last long on the open sea. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21697830-upstart-party-takes-labour-springboards-and-lifeboats/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +2030 vision + +London’s mayoral election offers glimpses of Britain’s future political fault-lines + +Apr 30th 2016 | From the print edition + + + +LISTEN carefully to British politics these days and you can hear the old party order creaking. With the EU referendum looming, hybrid alliances are emerging: Labourites, Liberal Democrats and Conservatives share pro-EU platforms while Tories and UKIPers rub shoulders in the Leave campaign. Elections in Scotland on May 5th could put the Conservatives there within inches of becoming the leading party against Scottish independence. That same day council elections in England may see UKIP surge in the Labour north. + +Nowhere encapsulates the growing gulf between the traditional left-right spectrum and the reality of modern Britain better than London, where the election to succeed Boris Johnson as mayor also takes place on May 5th. There, it is true, the two main parties are in fierce battle: Sadiq Khan, a fast-talking Labour politician, is comfortably ahead in the polls, though he might succumb to Zac Goldsmith, his patrician Tory rival, if he fails to turn his voters out on the day. But what they argue about—and what they do not—is striking. On subjects that usually define the party-political divide, they agree. Both have campaigned as market liberals: enthusiastic about the City and opposed to tax rises. That has put Mr Khan at odds with his party leaders. Both are liberals on migration and on law-and-order measures like stop-and-search, too. That has driven a wedge between Mr Goldsmith and Tory higher-ups. + +At a succession of hustings over the past months, the two have fought on their own metropolitan battlefields. The first concerns London’s exploding population. Mr Khan wants to freeze transport fares and expand Gatwick airport. Mr Goldsmith wants to increase fares to fund investment and is a conservationist. Their second and most blood-flecked arena concerns cultural politics. Mr Goldsmith is for Brexit, which might help him in outer boroughs like Havering, considered by one study the most Eurosceptic part of the country. Mr Khan has accused him of thus “jeopardising our city’s prosperity” and undermining the ability of Londoners from other EU states to stay in the city. + +But nothing has inflamed debates between the two more than Mr Goldsmith’s dark suggestions that, by appearing at nine events along with Suliman Gani, a hardline imam, his rival has given cover to extremists. Mr Khan retorts that, as a civil-rights lawyer and a prominent Muslim, it is only natural that he should have crossed paths with such types. He points out that he endured verbal abuse from Mr Gani—and death threats from others—for supporting gay marriage. Mr Goldsmith’s attack appears to be part of his energetic pitch for Hindu and Sikh votes; he has also circulated leaflets promoting his efforts to protect the Harmandir Sahib, the Sikh holy site in Amritsar, and his recent encounter with Narendra Modi, the Indian prime minister. + +That these dividing lines, rather than conventional ones like tax, crime and immigration, dominate London’s election is partly because the mayor has few powers. But the capital’s strangeness provides a fuller explanation. It is a melting pot with a hyper-liberal centre, a nativist periphery and a bias towards free trade and enterprise. The city has moved beyond left-versus-right to battles over space, logistics and cultural values. These altered its two modern mayors—Ken Livingstone, an old-school lefty, and Boris Johnson, a fairly conventional Tory. + +Yet in truth London is less strange than avant-garde. Where it goes, the country follows. For on the subjects that currently dominate national elections, Britain is moving in London’s direction. According to research by Ipsos MORI, a polling firm, Britons are becoming more pro-market, more comfortable with their multi-ethnic society and more relaxed about immigration. Such issues, in other words, will become less salient determinants of political identity nationwide. But those that now interest Londoners are on the rise. For example, the capital’s obsession with infrastructure will soon define politics across the country. As the population booms (Britain is expected to grow from 65m today to 77m by 2050), and especially if productivity continues to stagnate, debates about how investment in road, rail and broadband should be financed and allocated will intensify. All this will be part of a broader contest: the quest for space. As more people pile into a small number of big cities (and a handful of smaller but dynamic ones like Cambridge), ever-larger chunks of the population will be sucked into debates like those currently raging in London, about how sought-after land—and if the capital is anything to go by, skylines and basements too—should be carved up to give each person the space to work, travel and live. + +All the faraway towns + +Meanwhile more regions of the country will exhibit within their borders London-like extremes of liberalism and nativism. The divide between, say, Islington and Havering will increasingly be replicated elsewhere as Manchester, Leeds and Birmingham soar ahead of their peripheries. The politics of Britain will be transformed as non-whites constitute an ever-larger share of the population. Already Labour’s political monopoly of such voters is breaking down, as ethnic-minority Britons move out of the city centres into middle-class suburbs: Labour’s lead over the Tories among ethnic minorities fell from 52 points in 2010 to 19 in 2015. The old ideological battles are giving way to struggles over specific ethnic and religious groups; the Conservative lunge for Hindu and Sikh support may be a sign of things to come. + +These developments have one thing in common with the shifting political alliances over the EU, in Scotland and across the English regions: they cut across the traditional left-right divide. The obvious answer is for bits of existing parties to break off and coalesce into new coalitions of interest and outlook. When this will happen is unclear: British politics is institutionally conservative. But heard from London, the creaking is getting louder. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21697824-londons-mayoral-election-offers-glimpses-britains-future-political-fault-lines-2030-vision/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Demography: The strange case of the missing baby + +Immigrant fertility: Fecund foreigners? + +Immigrant fertility: Internships + + + + + +Articles Sections Next + +Demography + +The strange case of the missing baby + +As the financial crisis hit, birth rates fell in rich countries, as expected. But a persistent baby bust is a real puzzle + +Apr 30th 2016 | From the print edition + + + +HE IS not exactly leading by example, but Pope Francis wants more babies. “The great challenge of Europe is to return to being mother Europe,” he said last year, while suggesting that young people might be having too few children because they preferred holidays. Europe certainly lacks young souls, particularly in Catholic countries such as Italy and Spain. But the baby shortage is broader: mother America and mother Australia have gone missing, too. + +They were certainly present a decade ago. Although birth rates were low in the former communist countries of eastern Europe, and in traditionalist places where it is hard to combine work with motherhood—think Japan, South Korea and southern Europe—many countries were having a baby boom. In the decade to 2008, the total fertility rate (the number of children a woman can expect to have in her lifetime based on present patterns) rose in much of the rich world. In Britain it went up from 1.68 to 1.91 (see chart 1); in Australia from 1.76 to 2.02; and in Sweden from 1.5 to 1.91. America even managed to reach the “replacement rate” of 2.1, meaning its population was sustaining itself, without taking migration into account. + + + +There were two reasons, says Tomas Sobotka of the Vienna Institute of Demography. First, women who had delayed having children while they studied and started careers hurried to the maternity wards while they still could. Births to women in their 30s, which had been rising gently for years, went up further in Norway and elsewhere (see chart 2). Second, fertility among women in their 20s stopped falling. + + + +The financial crisis abruptly turned the boom to bust. Countries in the European Union delivered 5,469,000 babies in 2008 but only 5,075,000 in 2013—a drop of over 7%. That was too much for Kimberly-Clark, the maker of Huggies nappies, which announced in 2012 that it would pull out of most of Europe. In America the fertility rate fell from a peak of 2.12 in 2007 to 1.86 in 2014. Ken Johnson, a demographer at the University of New Hampshire, estimated that America was missing 2.3m babies. + +The crunch was unsurprising: anxiety about jobs and money puts people off children. But a rich-world baby bust that began predictably turned into a puzzle. + +Fertility rates have fallen in countries with woeful economies, such as Greece and Italy. But they have also fallen in countries that sailed through the financial crisis, such as Australia and Norway. Although the American baby bust was expected, the lack of recovery after seven years seems odd. “I was fairly confident that women were just delaying births, and that we would see a rebound,” says Mr Johnson. “I’m beginning to wonder now.” In Britain the drop came late: the fertility rate fell from 1.92 to 1.81 between 2012 and 2014. Then there is France, where couples looked at the economic slump and shrugged. The fertility rate there has barely moved. + +If some of the international trends are hard to fathom, so is the strange uniformity within countries. Trude Lappegard, a Norwegian demographer, says that her country’s baby bust, which has been going on for six years, might be easy to explain if it had hit one group especially hard. Instead, women of all ages and all levels of education are having fewer children. + +One possible explanation is that immigrants are not boosting birth rates much these days, and might even be dragging them down (see article). Some demographers suggest that cuts to welfare might have made poor mothers warier of having children. But that does not explain the behaviour of middle-class women. And family support has actually become more generous in some countries with falling fertility. + +Ann Berrington of Southampton University points to housing. Young and even not-so-young couples find it hard to buy property in England and Wales: 46% of 25- to 34-year-olds lived in private rented accommodation in 2014-15, up from 24% a decade earlier. Four in ten 24-year-olds still live with their parents. Home-ownership rates have fallen in America and Australia, too. The rate is rising in France, where fertility has held steady—though that might be thanks to strong pro-natalist policies. + +You can have a baby in a rented flat, of course. But in a country like Britain, where earlier generations found it easy to buy homes, that seems to flout a psychological rule for some. In the 1960s Richard Easterlin, an American economist, suggested that people would avoid having children if they felt unable to bring them up in a style that at least matched the way they were raised. It might be time to dust off that idea. + +Some couples could be delaying having babies not because they cannot afford them, but because of a vague feeling that family life is harder than it used to be. A Pew poll of 11 rich countries last year found that 64% believe that today’s children will be worse off than their parents. Perhaps the gloom has spread even to countries with strong economies. Mr Sobotka suggests that Scandinavians could have overreacted to repeated news reports about hard times elsewhere in Europe. “It gets below people’s skins,” he says. + +In this, childbirth might be a little like politics. When a surly, anti-politics mood first took hold in Europe and America after the financial crisis, it was tempting to think it would dissipate as economic growth returned. Today Donald Trump is the probable Republican presidential nominee in America, the National Front is rampant in France and the British government is fighting both Scottish separatism and Europhobia. Bad moods can linger. + +Whether and when birth rates bounce back, and how high, has broad consequences. America’s Census Bureau simply assumes that current fertility rates will persist. Since 2008 it has slashed its prediction for the country’s population in 2050 from 439m to 398m. If lower fertility lasts, it would help balance government accounts in the short term, because there would be fewer children to educate, but hurt in the long term. A fertility rate of 1.8 would mean twice as large an annual social-security deficit by 2089 as one of 2.2, as a percentage of the social-security tax base. + +A persistent slump would also be bad news for nappy-makers. But the overall effect on the market for baby gear might be surprisingly slight. Marcus Tagesson, the boss of Babyshop, a Stockholm-based retailer, says that the important thing is that couples have at least one child. The first baby is the most profitable, he explains. Parents want everything to be new and perfect; besides, they make mistakes with their first-born that they do not repeat. Such as? “White clothes,” says Mr Tagesson, a little ruefully. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21697817-financial-crisis-hit-birth-rates-fell-rich-countries-expected/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Immigrant fertility + +Fecund foreigners? + +Immigrants do less to raise birth rates than is generally believed + +Apr 30th 2016 | DUISBURG | From the print edition + + + +FOR a Turkish woman ready to start a household, Weseler Strasse in Duisburg is a one-stop shop. There, in the shadow of an enormous steel works, are dozens of stores selling wedding dresses and glitzy tuxedos; jewellery and home furnishings. What this stretch of Weseler Strasse does not contain is a baby shop. + +In the early 1980s women with foreign passports in Duisburg had a birth rate much higher than native Germans (see chart). Most of the foreigners were Turks, who had settled in this Ruhr Valley city for its industrial jobs and brought their big-family culture with them. But then came an astonishing drop. Today foreigners are actually slightly less fertile than natives. That is saying something: German women in Duisburg, and in Germany as a whole, do not have nearly enough babies to keep the population ticking over naturally. + +Xenophobes and xenophiles share a belief in the fecundity of newcomers. “Immigrants are more fertile,” explained Jeb Bush, an erstwhile American presidential candidate (and xenophile) in 2013. “They love families and they have more intact families, and they bring a younger population.” That is still just about true in America, but the gap is vanishing. + +Between 2006 and 2013 the fertility rate among Mexicans in America fell by 35%, compared with a drop of 3% among non-Hispanic whites. In the Netherlands, the immigrant fertility rate is now almost exactly the same as the native one. Even in Britain, where a quarter of births are to immigrants, statisticians reckon that immigration has raised overall fertility by a mere 0.08 children per woman. + +The fertile immigrant is partly an illusion. Women tend not to move country with babies in tow, explains Gunnar Andersson of Stockholm University: they travel first and then have a child quickly. That makes them seem keener on babies than they really are. Partly, too, the countries that send migrants to the rich world have changed, points out Michael Teitelbaum, a demographer at Harvard Law School. Fertility rates have plunged in both Mexico and Turkey, from more than six children per woman in 1960 to less than three today. Grandma in Oaxaca is probably no longer pushing her emigrant daughter to have a third. + +But the big reason immigrants’ birth rates are falling is that they tend to adopt the ways of the host communities. This happens fast: some studies suggest that a girl who migrates before her teens behaves much like a native. Acculturation is so powerful that it can boost birth rates as well as cut them. In England, migrants from high-fertility countries like Nigeria and Somalia have fewer babies than compatriots who stay put. Those from low-fertility countries such as Lithuania and Poland have more. + +Christine Bleks, who runs a children’s charity near Weseler Strasse, points to the front gardens of houses around Duisburg’s large mosque. They are small and orderly, with neat hedges and kitsch ornaments. The style is stereotypically German, she says. But the owners are mostly Turkish. As with gardens, so with families: immigrants have gone native. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21697819-immigrants-do-less-raise-birth-rates-generally-believed-fecund-foreigners/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Internships + +Apr 30th 2016 | From the print edition + +Internships: The Economist is seeking two summer interns, one to write about foreign affairs and one to work on our news desk. The pay is £2,000 per month. Anyone is welcome to apply. For both positions we are looking for originality, wit, crisp writing and clarity of thought. Please see economist.com/foreignintern and economist.com/newsintern respectively for further details. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21697818-internships/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +China’s consumers: Still kicking + +Car emissions: Exhaustive analysis + +Corporate whistleblowers: Deltour in the dock + +The future of Apple: Shake it off + +Independent contractors: Category error + +Travel security: Risky business + +Schumpeter: Crazy diamonds + + + + + +Articles Sections Next + +China’s consumers + +Still kicking + +Despite China’s economic slowdown, consumption is resilient + +Apr 30th 2016 | BEIJING | From the print edition + + + +IF YOU believe that China’s economy is in trouble and that Chinese consumers are clinging tightly to their yuan, a visit to a local car dealership may make you think again. China has roared past America already to become the world’s biggest car market. In March sales of passenger cars zoomed again, by nearly 10% year on year. Shiny sport-utility vehicles (SUVs), the hottest, shiniest items at this week’s biennial Beijing Auto Show (pictured), did even better: sales jumped by 46% in March from a year earlier. The car market is forecast to keep growing briskly for the rest of this decade (see chart). + + + +The Chinese consumer is flashing his wallet elsewhere, too. China’s box-office revenues shot up by nearly 50% on a year earlier in 2015, to $6.8 billion. Cinema operators led by Wanda Group, an ambitious local conglomerate that recently bought Hollywood’s Legendary Entertainment, have poured money into expansion; the number of screens across China has been rising at 36% a year since 2011. + +After years of expansion, the smartphone market is peaking. Some firms still thrive: China’s Huawei, a telecoms giant, predicts that revenues from its consumer-devices division will rise by about 50% this year. But Xiaomi, an innovative electronics firm once seen as China’s answer to Apple, is losing steam. Apple itself announced weaker results on April 26th (see article). Revenues from sales in greater China fell by 26% year on year. As the market for devices matures, however, consumer spending is shifting to services: data usage has grown at triple-digit rates since 2012. + +The unrelenting march of e-commerce continues. In 2010 online shopping accounted for only 3% of total private consumption, but it now makes up 15%. Alibaba, which processes more sales on its e-commerce platforms than eBay and Amazon combined, saw annual Chinese revenues grow to 63 billion yuan ($9.7 billion) in 2015, a rise of nearly 40% compared with a year earlier. JD, its main local rival, saw revenues leap by nearly 58%. + +Chinese are still spending heavily abroad. Their international tax-free shopping shot up 58% last year, according to a new report from Global Blue, a big operator of duty-free shops. Overall, Chinese tourists spent $215 billion on outbound travel last year, a rise of 53% on the previous year. Ctrip, a big online travel firm partly owned by Baidu, a Chinese internet search giant, saw its revenues jump by nearly half last year, to 10.9 billion yuan. + +As with cars, screens and travel, so with consumption generally. All retail sales across the economy, adjusted for inflation, rose by 9.6% during the first quarter, compared with the same period a year ago. The services sector, which caters to the growing demands of the middle class, has been rising by 8% a year in real terms since 2012 (see chart). Services made up 57% of economic output in the first quarter; electricity consumption in services rose by some 10%, but was flat for industry. + +Not every market is as bouncy as it once was. A cooling economy and an official anti-corruption drive have squeezed luxury goods, sales of which fell by 2% year on year in 2015, to 113 billion yuan. But some firms are doing well. Rémy Cointreau, a premium liquor brand offering tamper-proof bottles on the mainland (“near field communications” tags tell your smartphone if the booze has been diluted), saw global revenues rise by nearly 10% last quarter and credited “improving trends in greater China”. According to Bernard Arnault, the boss of LVMH, a luxury goliath: “Analysts underestimate the Chinese economy… the fundamentals are good. Household spending is still increasing.” + +The two Chinas + +Can consumption remain resilient given the troubles of the country’s state-dominated industrial economy, ranging from vast overcapacity to record levels of debt? One temporary source of comfort is the fact that the state sector may now itself be stabilising, thanks to a massive, debt-fuelled government stimulus. But greater reassurance comes from the fact that even a big shakeout in heavy industry would be unlikely to derail the Chinese consumer. By one estimate, if 30% of capacity is slashed across China’s most bloated state industries, perhaps 3m workers will lose their jobs over the next three years. But thanks largely to the private sector, the country created 64m jobs between 2011 and 2015, with more than 13m emerging in the past year alone. + +The dynamism of the mostly-private consumer sector comes not from stimulus, argues Andy Rothman of Matthews Asia, an investment firm, but from strong income growth and low household debt. (Chinese household debt stands at about 40% of GDP, roughly half the level seen in America.) Real urban incomes rose by 5.8% in the first quarter. Willis Towers Watson, a consultancy, estimates that white-collar salaries are now significantly higher in China than in South-East Asia. That fuels a bristling optimism. A recent study by McKinsey, a consultancy, found that 55% of consumers in China are confident that their incomes will rise significantly over the next five years. + +Many big firms seem willing to look past current clouds over China’s economy to brighter days ahead. Pepsi, an American snack-food firm, opened its first Quaker Oats manufacturing plant on the mainland in October, and has launched oat-based dairy drinks to cater to local tastes. It even hopes to introduce Pepsi-branded smartphones. McDonald’s, an American hamburger chain, wants 1,250 outlets in the mainland over the next five years on top of the 2,200 it operates already. + +America’s Walt Disney, an entertainment colossus, is set to open Shanghai Disneyland in June. The $5.5 billion theme park is its biggest investment outside Florida. Keen to experience such wondrous novelties as Peking-duck-topped, Mickey-Mouse shaped pizza, Chinese families are now eagerly snapping up entry tickets online. Starbucks, an American coffee chain, plans to add 500 outlets this year in China, including one at the entrance of the new Disney park. Howard Schultz, its boss, predicts it will be “Starbucks’ highest-grossing retail store overnight”. + +Firms such as these are betting on the continued rise of the affluent middle class. By 2020, the number of households earning above $24,000 per year is expected to double to 100m, making up 30% of all urban households. They are also betting on the frivolity of the free-spending young. Consumption is rising at 14% a year among under-35s, twice the level of frugal oldies. But above all, they are betting on the law of large numbers. A joint study, by the Boston Consulting Group, another consultancy, and AliResearch, the research arm of Alibaba, predicts that even if economic growth falls to only 5.5% per year (well below official claims of nearly 7% a year now), China’s consumer economy will expand over the next five years by some $2.3 trillion. Despite the deficiencies in economic forecasts, that incremental gain would be bigger than the entire consumer economy in Britain or Germany today. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21697597-free-spending-consumers-provide-comfort-troubled-economy-consumption-china-resilient/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Car emissions + +Exhaustive analysis + +The gulf between test results and the real world widens + +Apr 30th 2016 | From the print edition + + + +CARMAKERS have two methods for dealing with the gases that belch from exhaust pipes. One is to reduce emissions of carbon dioxide, nitrogen oxide (NOx) and other nasties by spending heavily to develop cleaner engines. Another is to devise methods to game emissions-testing systems but keep polluting the atmosphere on the road. + +Volkswagen and Mitsubishi opted for the second method, using means illegal in some countries. But many other carmarkers bend the rules: after VW’s deception came to light, for instance, independent tests showed that across the board, official NOx figures in Europe were a far cry from expectations. This persistent gap between test results and what can be achieved in practice undercuts limits imposed by governments to curtail greenhouse gases and air pollution. Enforcement regimes are in need of repair. + +Mitsubishi, Japan’s sixth-largest carmaker, saw its shares plunge after it admitted on April 20th that it had improperly conducted fuel-economy tests. Its potential punishment in court for 25 years of rule-breaking is, as yet, unclear. The vast complexity of Japan’s emissions regime clouds proceedings. + +The scandal at VW centres on its development of software that detected the regular driving pattern of emissions-test cycles and responded by artificially lowering the amount of NOx produced by 11m diesel cars. The German carmaker reached a deal on April 14th in an American court to fix cars, compensate owners and pay fines. The details are not yet public but reportedly VW will buy back around 480,000 cars and give a further $5,000 to each owner. VW also plans to increase the sum it has set aside this year to help meet the mounting costs of the scandal to a whopping €16.2 billion ($18.3 billion). + +Europeans, who own 8.5m of the cars affected by VW’s actions, may not be treated as generously. The firm has offered a recall to adjust the dodgy software but is not planning compensation or a buy-back. Despite admissions of guilt in September VW has since said it is considering whether its software is actually illegal in Europe. + +The regulations are “fuzzy”, says Nick Molden of Emissions Analytics, a consulting firm. Europe’s system relies on a gentle test cycle that fails to replicate how cars are actually driven on the road. Carmakers are permitted to test specially prepared prototypes. Testing agencies compete for business from carmakers by promising to “optimise” conditions. America’s system, in contrast, is more robust. Carmakers test their own vehicles. The Environmental Protection Agency subsequently checks their figures using randomly selected production cars. If the numbers diverge it has the power to levy eye-wateringly large fines on firms. + +Europe’s laxer regime has resulted in a big gap between test results and “real-world” figures. According to the International Council on Clean Transportation, which researches such matters, fuel consumption is on average 40% higher on the road and NOx emissions seven times higher than manufacturers’ data suggest. Germany, alongside Britain and France, tested a variety of diesel models anew after the VW scandal. On April 22nd, it confirmed what others had found: NOx emissions far in excess of test figures. + + + +Tougher rules for vehicle emissions and efficiency: why diesel cars are under threat + +Carmakers are abusing another loophole, according to Greg Archer of Transport & Enviroment, a green pressure group. Turning off emissions controls is permitted at low temperatures, to protect engine components. Yet it is also common for this to happen at balmy outside temperatures, in some cases as high as 18°C. Germany’s regulators have asked VW, Daimler and GM to recall 630,000 cars to fix the problem, but acknowledge that the cars comply with regulations. + +The search is now on for evidence of further manipulation. French officials raided the offices of Renault in January and on April 21st turned up at PSA, the maker of Peugeots and Citroëns. The next day America’s Department of Justice asked Daimler to investigate the certification process of its diesel cars. Though details have not been made public the investigation may also centre on the system that turns off emissions technology at low temperature. Unlike in Europe, American regulators require explanation of how this type of software operates during testing. + +Changes to testing regimes are afoot. Japan is likely to review the way its tests are carried out. Europe’s system is also being readied for an overhaul. Plans are in place to replace its test cycle with a new one that more closely mimics real-world driving and imposes stricter rules over how cars may be prepared. A system for rechecking NOx emissions from production vehicles on the road is under discussion. That should ensure exhausts are cleaner. But the new test will only be harder, not impossible, to game. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21697869-gulf-between-test-results-and-real-world-widens-exhaustive-analysis/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Corporate whistleblowers + +Deltour in the dock + +The beancounter who exposed cosy tax deals for multinationals goes on trial + +Apr 30th 2016 | From the print edition + + + +THE identity of the hacker who sucked 2.6 terabytes of data out of Mossack Fonseca, a law firm, to bring the world the “Panama papers” remains a mystery. Not so the source of the previous biggest financial leak: on April 26th Antoine Deltour, a soft-spoken, bespectacled former auditor with PwC, went on trial in Luxembourg for his role in the “LuxLeaks” affair. + +Mr Deltour does not deny being behind the exposure of cosy tax deals between the Grand Duchy and 340 of the accounting firm’s corporate clients, including Pepsi and FedEx. He passed 28,000 pages of documents to Edouard Perrin, a French journalist, in 2012. Many of these were later put online by the International Consortium of Investigative Journalists. PwC identified the former employee as the source of the leak and complained to prosecutors, who charged him with theft, violating secrecy laws and illegally accessing a database. + +If convicted, Mr Deltour faces up to ten years in prison and a hefty fine. In the dock with him are another former PwC man, Raphaël Halet (in connection with a separate, smaller leak), and Mr Perrin, who is charged as an accomplice. The trial is expected to last until May 4th. + +Luxembourg’s lawyers and moneymen mostly take the view that the case against Mr Deltour is straightforward: he stole data to reveal tax arrangements that were legal, and should be punished for his crime. + +Mr Deltour’s lawyers argue that the action was justified because it was in the wider European public interest. Neighbouring countries were being stripped of tax revenue by the deals, unaware of their cushy terms (profits routed to Luxembourg incurred tax of as little as 1-2%). Not all tax deals of this kind are legal: the European Commission argues that some fall foul of European Union (EU) state-aid rules. + + + +The EU’s competition commissioner, Margrethe Vestager, has praised Mr Deltour’s actions, as has France’s finance minister, Michel Sapin. The European Parliament has awarded him a prize. Even in Luxembourg, people have turned in droves against the questionable tax and other financial practices through which the tiny country grew rich: three-quarters of those voting this week in an online poll by Le Quotidien, a local newspaper, disapproved of the criminal charges. Regardless, overt support for corporate whistleblowers remains muted. Only a few dozen activists turned up to cheer Mr Deltour as he entered court; some waved “Justice Fiscale” placards, others blindfolded themselves with EU flags (something to do with hidden tax havens, apparently). + +As part of their public-interest defence, Mr Deltour’s lawyers will be sure to highlight the policy impact that LuxLeaks has had. By drawing attention to exploitable gaps in international tax rules, it sharpened the debate on reform. The OECD is overseeing the closure of numerous loopholes as part of its “Base Erosion and Profit Shifting” proposals. Large companies are steeling themselves to report profits and taxes paid on a country-by-country basis. EU governments have agreed to share with each other details of any special tax deals they strike with companies. “We’ve seen more tax progress in Europe in the past 18 months than in the previous decade,” says Carl Dolan of Transparency International, a lobby group. + +However, the LuxLeaks case has exposed weaknesses in legal protections for whistleblowers. The relevant law in Luxembourg, passed in 2011, is one of the strongest in Europe, but too narrow: it covers only blatant criminality, not behaviour that is legal (or in a legal grey area) but nevertheless damaging to the public interest. The justice minister, Félix Braz, says it is “not a law that allows everyone to denounce everything and anything according to his own moral values”. Still, the government is thinking of proposing changes. Campaigners want stronger EU-wide protections for leakers. + +These would come too late for Mr Deltour. He is said to be “worried” about the prospect of spending time behind bars, but his lawyers say he has no regrets. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21697864-beancounter-who-exposed-cosy-tax-deals-multinationals-goes-trial-deltour-dock/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The future of Apple + +Shake it off + +The world’s most valuable company needs another mega hit + +Apr 30th 2016 | SAN FRANCISCO | From the print edition + + + +“OUR product pipeline has amazing innovations in store,” Tim Cook, the boss of Apple, declared on April 26th. He hoped to sound reassuring after the company reported its first year-on-year quarterly revenue decline since 2003. But he was not convincing enough. Shares of Apple fell by around 8% in the hours after its results emerged, erasing more than $46 billion in market value. + +Investors’ immediate concern is the popularity of the iPhone. It accounts for the bulk of Apple’s revenues and profits; sales were 18% lower than a year ago. The broader smartphone market is sluggish, says Mr Cook. Apple hopes that the flashy new features of the iPhone 7, which it is expected to introduce in September, will convince customers to abandon older models. Until then, the company will probably face a further fall in revenue. + +The bigger question that Mr Cook must answer is whether Apple will ever have another product as successful as the iPhone, the most lucrative in the technology business to date. Enthusiasm has waned for some of its other older products, such as iPads, and its newer ones remain niche offerings (see chart). + +The Apple Watch celebrated its first full year on the market on April 24th. It sold more in its first year than the iPhone did in 2007. But today’s consumers are better primed to buy gadgets now than they were then; watch sales should be far higher. The cost of the Apple Watch—which starts at $300—puts people off. So does its dependence on a smartphone for most activities, such as providing directions. The firm will sell a mere 8m watches in 2016, generating $4 billion in sales, thinks Toni Sacconaghi of Sanford C. Bernstein, a research firm. + +One bright spot is Apple’s services business, which is expected to grow steadily. As it sells more gadgets—over 1 billion devices are in use—it can also sell content and services, and gain revenue from music, its app store and more. In the second quarter Apple had $6 billion in services revenues, more than for Macs or iPads. + +What else could the firm come up with? That Apple has been working on an electric car is one of the worst-kept secrets in the technology business. Reported disagreements with German carmakers over control of users’ data may have halted a potential alliance. Many also expected Apple to disrupt television. But Apple TV, the firm’s alternative to a set-top box and subscription, sells most shows and films à la carte, which becomes expensive very quickly. Its appeal is limited. + +The problem, says James McQuivey of Forrester, another research firm, is that it will be difficult for Apple to come up with another single product as central to daily routines as the iPhone. Collections of devices in connected homes will matter more instead. The exception may be augmented reality (see article), but Apple’s rivals already appear to be ahead. + +Apple’s biggest problem is its past success. It is the most valuable company in the world by market capitalisation because investors believe the firm can make new technologies popular. Mr Cook, who took over as chief executive in 2011, soon before the death of the firm’s co-founder, Steve Jobs, has led Apple competently. But there are lingering doubts about whether he can produce the sort of smash for which Jobs was so feted. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/21697812-worlds-most-valuable-company-reported-its-first-year-year-quarterly-revenue-decline/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Independent contractors + +Category error + +A third category of worker could benefit the gig economy + +Apr 30th 2016 | From the print edition + + + +CONTROVERSY over America’s “independent contractors”—self-employed workers who do not benefit from regulations governing employment—predates the gig economy by decades. In 1984 the IRS estimated that 3.4m workers were being misclassified as independent contractors. FedEx, a delivery firm, has been fighting lawsuits that allege its contractors are really employees for at least ten years. But the upsurge in apps that connect users with contractors—to drive them somewhere, collect their laundry or deliver their shopping—has reinvigorated this old debate. + +On April 21st Uber, a ride-hailing app and the biggest such platform, announced that it had settled two class-action lawsuits brought by drivers in California and Massachusetts. Under the deal, which still needs judicial approval, the classification of Uber’s drivers as independent contractors will not change (though, among some other concessions, they will be able to form a “driver’s association” through which they can air concerns). + +Uber did not bring contractor status to its industry: in 2009, the year the firm was founded, 88% of taxi drivers were already contractors. Unlike employees, who must show up to work and obey instructions, contractors usually strike bargains for individual tasks, such as fixing a sink. This model works best when such deals are easily struck and enforced. It is rarely easier than in the taxi industry, where a contract is a promise to take someone from A to B. + +What is new about platforms like Uber is their potential power over workers. Traditional contractors—plumbers, say—can advertise in multiple places to find work. Licensed taxis can physically seek out passengers. But for some drivers, Uber’s size and competitive advantage may make it the only feasible route to finding clients. There is little workers can do if a monopoly platform decides to slash prices, take a bigger cut of each transaction for itself, or disconnect them due to low customer ratings. (As part of the settlement Uber set out its disconnection policy for the first time.) + +The first potential solution is competition. Where rivals operate, Uber must tread more carefully. Cut drivers’ earnings too deeply, and they might flee to a competitor. Yet switching costs and network effects—the benefit customers and drivers get from using the same app—could make these platforms natural monopolies. In that case, letting workers unionise is the second logical response to platforms with outsize bargaining clout. The problem is that contractors usually cannot unionise because antitrust law treats them as businesses. To bargain collectively is to run a cartel. + +That provides one reason to treat drivers as employees. There would be other upsides, too. Contractors must pay both the employer’s and the employee’s portion of social-security taxes. For most self-employed workers, this makes sense: electricians could hardly ask each of their clients to pay such levies. If drivers were employees, a centralised platform such as Uber could handle the paperwork. That would simplify life for drivers, who currently face one tax rate in their car and another in a regular job. + +However, full employee status would risk breaking the business model of most platforms. Take the minimum wage, which employees but not contractors are entitled to. Uber’s app works so well because it steers drivers to where demand is highest. If they could earn a minimum wage for driving around in a quiet area, those incentives would be blunted. + +One solution, advocated by economists Seth Harris and Alan Krueger, who has consulted for Uber in the past, is to introduce a third category of worker for the gig economy: the “independent worker”. These hands would have the right to organise and would have social-security contributions made on their behalf. But they would not receive the minimum wage or unemployment insurance. The idea has some merit, though it would make worker classification still more complicated. In the meantime, lawsuits against Uber in other states roll on. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21697861-third-category-worker-could-benefit-gig-economy-category-error/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Travel security + +Risky business + +International SOS is the biggest player in a fast-growing industry + +Apr 30th 2016 | From the print edition + + + +AT THE centre of a large office in west London sits a raised circular platform with several seats. Screens in front carry international news superimposed on a huge atlas. From here rescue missions are co-ordinated by International SOS (ISOS), the world’s largest travel-security firm, which counts nearly two-thirds of the Fortune Global 500 companies as clients. It operates 26 other centres across the world. The firm says they have never been busier. + +ISOS has responded to emergencies large and small. They range from giving timely advice to the parents of a child in Nigeria who had swallowed a coin to evacuating corporate and NGO clients from Burundi during last year’s coup attempt. Torn between a medical airlift and potentially risky surgery in a local hospital, the child’s parents were counselled by ISOS doctors to let nature take its course, which it duly did. The Burundi operation was trickier. + +“When the president [Pierre Nkurunziza] started talking about serving an unconstitutional third term,” explains Tim Willis, a former army officer who is the firm’s European security director, “we thought ‘look out’ and began sending alerts to our members. When the balloon went up in May, their families had got out and they were prepared.” A nurse was embedded with one client, a local security provider was told to stand by with vehicles and an ISOS manager flew to neighbouring Rwanda to co-ordinate the operation. + +Next a handful of people were moved into a secure hotel. Then, once the road to the border was declared viable, they made their way out. A plane was being chartered in Nairobi meanwhile to collect another 73 employees of a client from the airport at Bujumbura, the capital, and fly them to Rwanda’s capital, Kigali. For Mr Willis it showed how managing efforts close to the action results in a “boring evacuation, which is what we want”. + +Globalisation (ever-increasing business travel and tourism), political instability (spreading in an arc from the Gulf to sub-Saharan Africa) and fear of terrorism in places previously thought safe (such as Istanbul, Jakarta, Paris and Brussels) are all drivers of the business. So too is China’s expanding international footprint. This year China will overtake America as the biggest spender on business travel. Last year ISOS saw its “outbound” China business grow by 46%, thanks in part to Beijing’s commitment to building a “new silk road” from Central Asia to the Mediterranean. + +Founded over 30 years ago to provide emergency medical care for Europeans working in South-East Asia, ISOS has become a global business. When the Arab Spring got going in 2011, it had the resources to carry out large-scale evacuations from Egypt (1,250 people) and then Libya (1,500). + +Since 2001 ISOS has grown from revenues of $250m a year and 2,500 employees to $1.5 billion and a staff of 11,000, which includes over 5,000 medical professionals and 200 security specialists. Operating from around 1,000 locations in 90 countries, it takes nearly 5m assistance calls every year. However, while it is large-scale evacuations at times of crisis that grab attention, the biggest risks that business travellers face are more prosaic. According to a survey of its European customers in 2015, 11% said they had experienced terrorism as a threat to their safety compared with 34% who cited petty crime and 33% traffic accidents. + +Whatever the emergency, knowing exactly where your people are when something bad happens is the first part of any plan to help them. After the terrorist attacks of September 11th 2001, ISOS introduced travel-tracking technology that provides real-time data about employee movements. Now, apps on phones using GPS can establish virtual secure areas—so called “geo-fencing”. A panic button on the phone sends SMS and e-mail alerts with location information if someone leaves or enters designated perimeters. + +Although support when an emergency strikes is what gives clients reassurance, ISOS and its smaller rivals, such as Annapolis-based iJet and Anvil Group, a British firm, emphasise that risk mitigation starts with understanding where and how threats arise and knowing how to avoid or deal with them. That matters not just for practical reasons but for legal ones too. Employers have a duty of care and so can be sued if staff have not been adequately prepared or properly informed about dangerous situations they might find themselves in. One more reason why ISOS and its ilk need not worry too much about falling demand. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21697868-international-sos-biggest-player-fast-growing-industry-risky-business/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Crazy diamonds + +Billionaires are funding lots of grandiose plans. Welcome their ambition + +Apr 30th 2016 | From the print edition + + + +YURI MILNER, a Russian internet billionaire, wants to answer the great existential question: “Are we alone in the universe?” He has already launched a project to listen for signals from outer space, using two of the world’s biggest radio telescopes. This month he also unveiled plans to send an armada of tiny spaceships, powered by laser beams and equipped with all sorts of sensors, to Alpha Centauri, 40 trillion kilometres away. + +Sir Richard Branson, the boss of the Virgin Group, and Elon Musk, the entrepreneur running Tesla, a car company, have both founded space ventures, Virgin Galactic and SpaceX. Sir Richard wants to turn space tourism into an industry; Mr Musk lists his ultimate goal as “enabling people to live on other planets”. Once upon a time the space race was driven by the competition between capitalism and communism. Now it is driven by the competition between individual capitalists. + +Space is not the only frontier that billionaires want to conquer. Sergey Brin, the co-founder of Google, hopes to give meat a makeover by growing it from stem cells. Mr Musk desires to “reinvent” railways by shooting passengers down hermetically sealed tubes. Tycoons are particularly keen on schemes to cheat the grim reaper. Peter Thiel, a co-founder of PayPal, proclaims that “The great unfinished task of the modern world is to turn death from a fact of life to a problem to be solved.” Larry Ellison, the chairman of Oracle, has said: “Death never made any sense to me. How can a person be there and then just vanish?” Both men have invested money in various ventures designed to come up with ways of reversing ageing. Dmitry Itskov, one of the pioneers of the Russian internet, says that his goal is to live to 10,000. + +History is full of examples of rich men with big ideas. The merchant princes who founded enterprises such as the London Company in the 17th century wanted to build bustling empires across the seas. Howard Hughes spent the 1930s testing innovative aircraft and setting aeronautical records, almost killing himself in the process, and founded a medical clinic whose goals included discovering “the genesis of life itself”. But the closest parallel with what is happening today is the gilded age in America. + +The late-19th and early-20th centuries saw gigantic concentrations of wealth in the hands of people who created their own companies. Andrew Carnegie and John Rockefeller held the majority of shares in their companies just as the founders of Facebook and Google hold controlling shares in theirs. The political system was incapable of dealing with the pace of change: in America it was paralysed by gridlock and complacency, and in Europe it was overwhelmed by animal passions. Entrepreneurs, flush with money from new technologies, felt duty-bound to step in, either to deal with problems that politicians were unable to confront or to clean up after their failures. Today’s state may be much bigger, but its shortcomings are no less glaring. + +Back then, numerous industrialists, including William Lever in Britain, J.N. Tata in India and Milton Hershey in America, founded company towns that were intended, at a minimum, to combat the evils of industrial civilisation and, on occasion, to create a new kind of human being. Carnegie, a steel baron, and Alfred Nobel, a dynamite tycoon, both became obsessed by the idea of abolishing war for ever. Henry Ford launched a succession of ambitious schemes for improving the world, including eliminating cows, which he couldn’t abide. In 1915 he took a ship of leading business people and peace activists to Europe to try to end the first world war and “get those boys out of the trenches”. “Great War to end Christmas day,” read a New York Times headline; “Ford to stop it.” In 1928 he tried to recreate an American factory town in the middle of the Amazon rainforest. + +Fashions change. None of today’s billionaires spends serious money on universal peace. But the psychology of the very rich seems the same. Reforming billionaires down the ages display the same bizarre mix of good and bad qualities—of grandiosity and problem-solving genius, naivety and fresh thinking, self-importance and altruism. + +There is a lot of ego involved—the minted are competing with each other to produce the most eye-catching schemes, much as they vie to run the most successful businesses. That helps to explain why the billionaire space race has escalated from sending rockets into orbit to sending spaceships to Alpha Centauri. There is also a lot of misdirected effort. The gift of $100m by Mark Zuckerberg, Facebook’s founder, has not dramatically improved Newark’s schools. Ford’s Amazonian experiment crumbled into ruins as employees balked at some of his rules, which included serving only American food and compulsory square-dancing. His voyage to end the first world war descended into farce: the press re-christened his vessel “the ship of fools” and the Norwegians diagnosed him as suffering from Stormannsgalskap, or the “madness of great men”. + +Big cheques, bigger dreams + +Yet the madness does far more good than harm. Deep-pocketed entrepreneurs not only add to the number of moonshot projects, literal or metaphorical, they also introduce fresh thinking. Mr Milner’s ideas for contacting aliens challenge some of the unexamined assumptions of America’s space bureaucracy by using tiny spaceships and laser beams rather than larger craft and rocket fuel. The most talented billionaires have a genius for combining grand ideas with intense pragmatism; the Gates Foundation is pursuing its aim of abolishing polio and malaria with a business-like attention to detail. And sometimes grandiose ideas can do good even without achieving their ultimate goals: the Carnegie Endowment for International Peace and the Nobel peace prize have improved the world even if they haven’t abolished war. You cannot shake up the world without treating what most people regard as facts of life as “problems to be solved”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21697791-billionaires-are-funding-lots-grandiose-plans-welcome-their-ambition/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +India’s rural economy: Dry times + +Buttonwood: The great switchover + +Goldman Sachs: From the 1% to $1 + +The Bank of Japan: When easing gets hard + +Portuguese banks: Spanish steps + +The Federal Reserve: DC hold’em + +Chinese loans to Africa: Credit limit + +Free exchange: If it ain’t broke, don’t Brexit + + + + + +Articles Sections Next + +India’s rural economy + +Dry times + + + +Meagre rainfall is only part of the problem for India’s farmers + +Apr 30th 2016 | KHARSAI | From the print edition + + + +HIS village may be parched, but Balachandra Ambaji Payar’s banana trees are a vivid green. In the shade cast by their fronds, a few chilli plants add more colour—and income—to a region left blanched by two consecutive years of disappointing rain. Mr Payar is an advertisement for “drought-proofing”: a simple irrigation system installed last year brings water onto his land in western India from a nearby well, to be drip-fed to his crops through a perforated hose. It is just the sort of investment that rural India needs to escape problems far greater than the weather. + +Some 850m Indians live in rural areas, and nearly 60% of them depend on farming for survival. For many, it is not much of a living. India has more people living in poverty than any other country—260m by the World Bank’s count—and 80% of them live in the countryside. + +Farmers are poorer than urban folk the world over, but the difference in India is stark: the median annual wage for a farmer, at 19,250 rupees ($290) including the implied value of the food they consume, is barely two months’ minimum wage in Mumbai. Data from 2008 show the rural-urban wage gap at 45%, versus around 10% for China and Indonesia. + +Much of that is down to low productivity: farmers in India grow 46% less rice per acre than their Chinese counterparts and 39% less wheat. Less than half of Indian farmland is irrigated. That leaves farmers at the mercy of the monsoon, which dumps the lion’s share of annual rainfall in just a few months over the summer. Normal rains this year (which early weather forecasts are predicting, albeit with a record befitting astrologists or economists) would bring respite. But a good drenching is no substitute for greater investment. + +By the government’s own assessment, Indian farmers are “locked in” to low-value crops such as wheat and rice, even as increasingly affluent city types demand fruit, vegetables and meat. Making the switch to bananas and chillies is potentially lucrative: Mr Payar’s harvest will fetch 75,000 rupees, nearly four times the value of the rice and millet crop he could grow on unirrigated land, monsoon allowing. But the transition needs agricultural infrastructure such as cold storage as well as access to credit, which is not usually forthcoming for farmers like Mr Payar (the Swades Foundation, an NGO, paid most of the 36,000-rupee bill for his irrigation system). + + + +Only a tenth of the money the government spends in rural areas goes on investments that might boost yields. Much more is squandered on subsidies that encourage farmers to grow staples while occasioning vast corruption. Other countries have embraced genetically modified seeds, but India allows them only for cotton—the sole crop to have seen yields grow rapidly in recent years. For a time high prices for agricultural commodities around the world disguised the effects of such daft policies, by boosting rural incomes, but not any more (see chart). + +Non-farming income in rural areas has also suffered. A small guaranteed-employment scheme has helped relieve acute distress, but only goes so far. Other forms of employment available outside cities, notably in mining, are in the doldrums. Remittances from the Gulf are under pressure, too, as oil prices have slipped. + +A quick way to enrich Indian farmers would be to turn them into city-dwellers. However hard India tries to boost rural wages, farming cannot compete with a service sector that is six times more productive. But policymakers with romantic ideas about the rural heartland have impeded the flow of migrants. In 1970 India’s urbanisation rate stood at 20%, higher than both China’s and Indonesia’s. Urbanisation has since trebled in those two countries, to around 55%; in India, it is just over 30%. + +Moving to cities (or commuting on a seasonal basis) is easier than it once was thanks to improved roads and telecoms. But various government benefits that can be accessed only in their native district tie Indians to their place of origin, much as the hukou system pinions rural Chinese. Village-dwellers are also reluctant to abandon informal rural safety nets based on caste. And construction jobs, a well-trodden pathway to urbanisation, are currently hard to come by. + + + +A continent masquerading as a country: Explore India in our interactive map + +Another impediment is land: few owners have firm title to theirs, and so cannot sell it. Leasing it is risky, since it can be hard to reclaim from the tenant. As a result, farms in India have shrunk as the rural population has swelled: the average plot in 2010 measured just 1.16 hectares (roughly the size of a Manhattan city block), down from 1.84 hectares in 1980. Such fragmentation makes investment in machinery harder and dampens farmers’ selling power. Demography points to ever-smaller farms: much of India’s still rapid population growth comes from the countryside, points out Anirudha Dutta, an analyst. + +Aware of rural distress—and facing elections in farm-heavy states—Narendra Modi, the prime minister, has pledged to help farmers. He wants agricultural incomes to double by 2022, an ambitious target as yet unsupported by detailed policies. Better crop-insurance schemes and improved ways for farmers to market their produce are evergreen ideas whose success depends on implementation. Some states are sensibly pushing ahead with land registries. Using biometric technology to ensure subsidies go to the right people should also help. + +In the past, the failure of the monsoon was enough to prompt a nationwide recession. Not any more: now failed rains, even for two years running, cause only localised distress. That represents progress, but more is needed. Even doubling rural Indians’ wages would be just a start. For Indian farmers to escape poverty, there need to be fewer of them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21697870-meagre-rainfall-only-part-problem-indias-farmers-dry-times/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +The great switchover + +The mood of the markets has changed + +Apr 30th 2016 | From the print edition + + + +SOMETIMES the financial markets seem to go in a different direction from the fundamentals. Global economic forecasts for 2016 are still being revised downwards and the rate of defaults on corporate bonds is rising sharply. But since the middle of February, share prices have rallied strongly while the spread (the excess interest rate over government bonds) paid by corporate borrowers has fallen significantly. + +The reason for this divergence is that investors are affected not just by news, but by how the news diverges from their expectations. Things may not be great, but they are not as bad as was feared earlier in the year. In February there were widespread worries about the Chinese economy—concerns that the plunging price of oil and other commodities seemed to validate. The latest data suggest the Chinese economy is slowing but not crashing; commodity prices have rebounded. In February the Federal Reserve was also expected to tighten interest rates repeatedly this year; now investors think it will move cautiously (see article). + +The mood of the markets has changed in other ways too. Rob Arnott at Research Affiliates, an advisory firm, says conditions at the start of 2016 resembled those that pertained in early 1999. Inflation expectations had been falling, emerging equities and currencies were underperforming and “growth stocks” (in technology, for example) were beating “value stocks”—those that look cheap relative to their peers. All these trends have since reversed. The rebound in commodities has helped sentiment towards emerging markets and pushed up inflation expectations (crucially, investors seem less concerned about deflation). Tech stocks have mostly headed south amid disappointing profits from Alphabet, Apple, Microsoft and Twitter. + +The markets’ mood swings may reflect the difficulty in analysing the global economy since the financial crisis of 2008. It has neither recovered as strongly as many expected nor slipped back into recession. In addition, investors face a continuing dilemma. Low (and sometimes negative) yields on cash and government bonds mean that the stockmarket looks like the only plausible source of decent returns. But many wonder whether the bull run in equities, which began in 2009, can be maintained in the face of a sluggish economic recovery and faltering corporate profits. Whenever the economic outlook darkens, investors sell equities. But the sell-offs don’t last long given the paltry returns available elsewhere. + +Short-term volatility is not the biggest problem facing pension funds, endowments and insurance companies. A new report from McKinsey, a management consultancy, argues that future investment returns are likely to be lower than the exceptional figures achieved over the past 30 years (see chart). A lot went right for investors over that period, after all. Inflation declined, allowing bond yields to fall and equity valuations to rise, delivering outsize capital gains; global GDP growth was boosted by the emergence of China and by productivity gains from the internet; corporate profits around the world rose, from 7.6% of global GDP in 1980 to 10% by 2013, by McKinsey’s reckoning. + +These trends are unlikely to continue. Bond yields are very low and can hardly fall much further; equity valuations are already high; GDP and productivity growth have disappointed recently; profit margins are high and seem more likely to fall than rise (the slowdown in tech profits reinforces that impression). + +McKinsey reckons that, in a slow-growth environment, real annual returns from equities over the next 20 years may be 4-5%, well below the average of the past 30 years; real bond returns may be just 0-1%. Even a rebound in American growth to 2.8% a year might generate real equity returns of only 5.5-6.5%, below the average of the past three decades. + +Central banks, by offering support to asset markets in the form of quantitative easing, may have pushed up valuations (and pushed down yields) in the short term. But in essence this means that the markets have “borrowed” returns from the future; from a starting point of higher valuations (lower yields), future returns are likely to be lower. + +This has big implications for today’s workers. McKinsey reckons that a 30-year-old will have to work seven years longer or save almost twice as much to afford the same pension as the typical baby-boomer. But with job security weak and wage growth hard to come by, few 30-year-olds will have enough income to ramp up their savings. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21697863-mood-markets-has-changed-great-switchover/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Goldman Sachs + +From the 1% to $1 + +The high-rolling investment bank courts small depositors + +Apr 30th 2016 | NEW YORK | From the print edition + + + +TO THE extent that Goldman Sachs has anything to do with the little guy, it is usually accused of trampling over him in pursuit of profit. As an investment bank, Goldman had not sought out deposits and the onerous regulation that comes with them. In recent years it has declined even to manage assets for clients with less than $10m, in the hope of escaping rules regarding “unsophisticated investors”. Yet all that changed in mid-April, when it completed its purchase of GE’s internet-banking subsidiary. That brought it $16 billion in retail deposits. It is now soliciting more, offering generous interest (by today’s miserly standards) on balances of as little as $1. + +Admittedly, Goldman already held $88 billion in deposits. But those were either the cash holdings of the millionaire customers of its wealth-management arm, or accounts steered to it in wholesale batches via middlemen. Online deposits at GS Bank, as the internet bank is known, earn annual interest of 1.05%. That is only a bit less than the 1.11% offered by Dime Savings Bank of Williamsburgh, a tiny New York bank that is America’s most generous deposit-taker according to Bankrate.com, a comparison website. But it is considerably more than the 0.75% paid by Capital One, America’s biggest online bank. It is more than double the 0.49% Goldman pays on its existing deposits. And it is many times the rates big banks pay on conventional savings or current accounts. + +Compared with borrowing on the bond market, however, it is cheap. Goldman has $175 billion in long-term debt, with an average annual interest rate of 4.6%, according to Morningstar, a research firm. The two are not strictly comparable: deposits involve higher administrative costs and payments to America’s deposit-insurance fund. They can also be withdrawn at will, whereas Goldman’s debt has an average duration of seven years. + +In practice, ordinary savers seldom withdraw their money in a panic, since deposits of $250,000 or less are insured. That is in stark contrast to short-term investors in the bond markets, who sometimes rush to sell at the first whisper of trouble, leaving banks less able to borrow. At any rate, regulators are encouraging banks to seek deposits under various new rules designed to ensure that banks do not suffer liquidity crises. + +Goldman has not said what it will do with the money GS Bank attracts. Some speculate that they will be used to fund Mosaic, its embryonic online-lending business, which plans to dish out modest sums to individuals and small businesses. The idea of Goldman as a savings bank and lender to the masses may seem somewhat incongruous, but GS Bank and Mosaic are not its first forays into the finances of the 99%. In March it bought Honest Dollar, an online provider of retirement accounts through which companies help their employees to save. It charges low and transparent fees to make investments in inexpensive exchange-traded funds. For years Goldman has courted only those at the top of the heap. Now, apparently, it sees opportunity at the bottom. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21697857-high-rolling-investment-bank-courts-small-depositors-1-1/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Bank of Japan + +When easing gets hard + +As monetary policy hits the buffers, policymakers blame big companies + +Apr 30th 2016 | TOKYO | From the print edition + + + +HARUHIKO KURODA added another instance to his record of wrong-footing financial markets this week. Confronted with a rising yen and tumbling inflation, the thinking went, the central-bank governor had little choice but to shore up the credibility of the Bank of Japan (BoJ) with even looser monetary policy. But in the end the BoJ kept its stance unchanged. Markets reacted swiftly after the decision on April 28th: the yen jumped and the Nikkei 225 stockmarket index slumped. + +Since introducing an interest rate of -0.1% on excess bank reserves in late January, Mr Kuroda has been hauled before parliament no fewer than 32 times to explain himself. Perhaps that has left him gun shy. Or perhaps the BoJ’s inaction is a hint to Shinzo Abe, the prime minister, that monetary policy should bear less of the burden of dragging Japan’s economy out of the slough of low inflation and growth. + +Many economists reckon, nonetheless, that the BoJ will have little choice but to ease again soon. Mr Abe’s policies have failed to produce much growth or inflation, partly due to a falling oil price and China’s slowdown. GDP contracted by an annualised 1.1% in the last quarter of 2015 and is expected to continue fluctuating around zero in the first half of 2016. + +Some hopeful data emerged before the BoJ’s monetary-policy meeting, notably that industrial production rose month on month in March by 3.6%, the biggest leap in nearly five years. But growth in the second quarter will probably suffer from recent earthquakes in Kumamoto prefecture, which disrupted industrial supply chains. + +Worse, Japan is once again mired in deflation. Core CPI, which excludes fresh food, fell by 0.3% in March year on year, the biggest drop since the BoJ launched its programme of easing three years ago. Meanwhile the BoJ’s preferred measure, which strips out fresh food and energy, rose by 1.1%. Yet the drops in the headline measures have dented households’ and firms’ expectations of inflation. The BoJ once again cut its forecasts for growth and price rises. + +What especially worries policymakers is that the yen has risen by nearly a tenth against the dollar since late January, reversing a long decline as the BoJ embraced quantitative easing (see chart). If anything, Japan’s trade and current-account surplus signal further currency strength over the rest of the year, reinforced by the Federal Reserve’s failure to signal another imminent rate rise at its meeting this week (see article). + +All in all, the power of the BoJ to overcome structural imbalances in Japan’s economy seems to be diminishing. Large firms have continued to add to their hoards of cash. They now hold close to ¥250 trillion ($2.2 trillion) in cash, a massive 50% of GDP. Capital investment by firms is 7% below its level eight years ago and the gap between corporate cashflow and investment is at record levels, notes Richard Katz of the Oriental Economist, a newsletter. + +Nor have firms raised wages much in spite of a tight job market. Pay rises in the order of 5-10% this year are required to boost household consumption, economists argue. Instead, workers at large firms are on track to receive a lower pay rise—an average hike in overall base pay and seniority-related pay of 2.19%—than they did in the previous two years. + +Many in the government feel let down by the corporate sector, says an official. Mr Abe has improved the environment for big business with (until recently) a sharply lower yen and reduced corporate-tax rates. But big firms argue, in circular fashion, that their spending is inhibited by Japan’s uncertain growth prospects. + +Mr Abe is now likely to use fiscal policy to try and sustain some level of growth. In May he is expected to postpone a rise in Japan’s consumption tax from 8% to 10%, which is scheduled for April 2017. A large supplementary budget package is in the works. But all that will add to worries about the size of Japan’s national debt, which is more than 240% of GDP. + +Some economists believe that the BoJ will become the first big central bank to resort to “helicopter money”—printing money to fund government spending or to give people cash. Some argue the bank is already deploying something close to ’copter cash by sucking up so many government bonds. But it does not buy them directly, and Mr Kuroda recently said he would not countenance outright helicopter money. It was not long ago, of course, that he categorically ruled out negative rates. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21697820-monetary-policy-hits-buffers-policymakers-blame-big-companies-bank/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Portuguese banks + +Spanish steps + +A bad-tempered takeover battle, and other troubles + +Apr 30th 2016 | LISBON | From the print edition + +Dos Santos says there was no deal + +BY PORTUGAL’S undemanding standards, Banco BPI is in decent shape. Two Portuguese lenders, Banco Espírito Santo (BES) and Banif, have collapsed in the past two years. In September the government called off the auction of Novo Banco, the “good” bank salvaged from the wreckage of BES, because the bids were too low. As the euro crisis battered Portugal, BPI also suffered. But the country’s fifth-largest bank, with assets of €40.7 billion ($46 billion), returned to profit last year. (It was due to report earnings on April 28th, after The Economist went to press.) Its bad-loan ratio is 4.9%; the national average is a dismal 12%, says Fitch, a rating agency. + +BPI’s biggest shareholder, CaixaBank, the third-largest lender in neighbouring Spain, sees promise: this month it made its second offer in just over a year for the 55.9% it does not already own. CaixaBank asserts that it can squeeze BPI’s cost-income ratio from 74%, far above the 57% average of its rivals, to below 50% in three years. + +Yet the bid reflects urgency as well as hope. CaixaBank and Santoro Finance, BPI’s second-biggest shareholder with a 18.6% stake, have been wrangling over how to comply with the European Central Bank’s insistence that BPI reduce its exposure to BFA, an Angolan bank of which it owns 50.1%. To BPI, BFA is not small beer. Last year the Angolan bank contributed €135.7m to BPI’s net profit of €236.4m. Its return on equity, 32%, dwarfed the Portuguese business’s 5.2%. + +Santoro is controlled by Isabel dos Santos, daughter of the president of Angola (a Portuguese colony until the 1970s) and reputedly Africa’s richest woman. Unitel, a mobile-telecoms operator which Ms dos Santos controls jointly with the Angolan state oil company, owns the rest of BFA. Talks eventually centred on the obvious: CaixaBank would get a majority of BPI and Unitel of BFA. On April 10th, the ECB’s deadline, BPI said a deal had been struck. + +A week later BPI said Santoro had “disrespected” the deal, requesting an unacceptable change. The Spaniards made their new offer, asking the ECB to put sanctions on hold. The bid is conditional on the scrapping of a legal cap on shareholders’ votes at 20%, which helped Santoro to block last year’s takeover attempt. Portugal’s government promptly passed a law to ease the lifting of the cap. + +Santoro denied that a deal had been finalised, and damned the change in the law as “clearly partial”. Expresso, a Portuguese weekly, reported that Angola’s government was contemplating limiting BPI’s voting rights at BFA, thus handing control to Unitel, and even stopping expatriate Portuguese workers sending money home. + +António Costa, Portugal’s Socialist prime minister, wants BPI’s future settled swiftly. He has plenty of other banking troubles. Weeks after his minority government took office in November, he spent €2.2 billion bailing out Banif (since sold to Santander, another Spanish bank). In December the central bank transferred nearly €2 billion of bonds from Novo Banco to the “bad” bank where BES’s toxic assets had been dumped. Furious investors are suing. Novo Banco remains unsold. + +Worried about the drag of ailing lenders on the economy, Mr Costa wants to create another bad bank, like that recently set up in Italy, to house non-performing loans. This would free banks to lend to viable companies, he says, but spare the taxpayer, as it would be financed by the private sector with the help of some state guarantees. Where the private money would come from is unclear. As Elena Iparraguirre of Standard & Poor’s, a rating agency, points out, in Italy bigger, stronger banks are supporting smaller, weaker lenders. In Portugal “the weaker ones are the largest”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21697866-bad-tempered-takeover-battle-and-other-troubles-spanish-steps/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Federal Reserve + +DC hold’em + +How long will the Fed keep rates steady? + +Apr 30th 2016 | From the print edition + + + +IF ANY other lift-off were so sluggish, you would not want to be aboard the rocket. In December the Federal Reserve raised interest rates from close to zero, where they had been since 2008, to between 0.25% and 0.5%. At the time members of its rate-setting committee said they expected four more increases in 2016. + +Not any more. Shortly after lift-off, stockmarkets, which always doubted the Fed’s plans, tumbled on fears that disappointing growth in China would drag down the world economy. The S&P 500 lost 11% between the start of the year and its trough in mid-February. Surging spreads (the excess interest over government borrowing) on corporate bonds, often a sign of imminent economic woe, caused some pundits to predict a recession. And market-based measures of inflation expectations slumped. At one point in February, the gap between yields on inflation-protected bonds and the regular kind implied that inflation would average just 0.9% over five years—the lowest projection since 2009. + +Unsurprisingly, the Fed held fire in January and March. Janet Yellen, the Fed’s chairman, made it clear that global turbulence had forced a change of plan. Most of the rate-setters now forecast just two rate rises in 2016, bringing them into line with what the markets were forecasting in December. But markets, too, have adjusted their expectations downwards. Today, they reckon there is a one-in-three chance of no rate rises at all this year. + +Last autumn the Fed signalled very clearly that it was preparing to raise rates. Its statement after the meeting that concluded on April 27th sent no such signal. Three-quarters of the economists polled before the meeting by the Wall Street Journal had expected a rate rise in June, at what is now the Fed’s next meeting. After this week’s dovish statement, they will surely put back that date. + +It is easy to see why the economists were wrong-footed. Markets have mostly shaken off their start-of-year woes (see Buttonwood). Oil prices have rebounded. On a trade-weighted basis the dollar, which had surged by 6% between the start of August and the end of January, is almost back where it started, as money has rushed out of dollar-denominated assets and into previously shunned investments elsewhere. + +Most important, the labour market continues to fizz. Payrolls swelled by 215,000 in March—well above the level of employment growth needed to reduce slack in the economy. Even the labour-force participation rate, which had tumbled, is now recovering (see article). Ms Yellen recently said the Fed is “coming close” to its goal of full employment. + +Inflation—the Fed’s other target—is also rising. The Fed’s preferred index of core inflation, which excludes volatile food and energy prices, is up by 1.7% year on year. The last time it was this high was in July 2014, just before oil prices tanked. Headline inflation is lower, at only 1%, but core inflation is generally a better predictor of where the headline rate is headed. As a result, simple so-called “Taylor rules” for monetary policy, which take into account both unemployment and inflation, suggest that lift-off is well behind schedule. This is true even when you adjust them in ways that Ms Yellen has advocated (see chart). + +Why, then, the delay? Weak growth is one explanation. Growth in the first quarter of 2016, due to be revealed as The Economist went to press, was expected to be lacklustre, at less than 1% annualised. With the labour market creating so many jobs, GDP is stalling because of measly rises in productivity. There is little the Fed can do about that. + +By the Fed’s standards, in short, the case for a rate rise on the basis of the domestic economy is strong. The new statement also sounded less concerned about the world economy. The Fed may have proved dovish so far this year, but that could change sooner than the markets seem to think. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21697859-how-long-will-fed-keep-rates-steady-dc-holdem/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Chinese loans to Africa + +Credit limit + +New data suggest that China lends less to Africa than is commonly assumed + +Apr 30th 2016 | KAMPALA | From the print edition + + + +CHINESE loans to Africa generate frenetic commentary. Some say they prop up dictators; others, that they spur development. The figures quoted are often enormous. Visiting South Africa in December, for example, Xi Jinping, China’s president, pledged $60 billion in funding to Africa, mostly in the form of loans and export credits. + +But don’t be dazzled by the headlines, say researchers at the China-Africa Research Initiative (CARI), based at Johns Hopkins University in America. Since 2007 they have been trying to track the African lending of China’s notoriously opaque state-owned banks. Their findings suggest that China lends much less to Africa than is commonly reported. + +The researchers doggedly followed up 1,223 reports of Chinese loans, looking for evidence like the start of works or a notice on an official website. They found that only 56% of the loans actually materialised. In 2011 Fitch, a rating agency, reported that over the previous decade the China Export-Import Bank had lent more than the World Bank to sub-Saharan Africa. In fact, say the CARI team, the World Bank has been the bigger lender every year in the past decade bar two, although Chinese lending is catching up (see chart). + + + +China's development aid to Africa: who gets most and why? + +There are other surprises, too. China-watchers sometimes talk of an “Angola model”: low-interest loans, using commodities as collateral. Oil-rich Angola has indeed received more Chinese loans than any other African country: it accounts for a quarter of the $86.9 billion lent to African governments and state-owned enterprises between 2000 and 2014. But across the continent only about a third of Chinese loans were tied to natural resources, says Deborah Brautigam, who led the research project. The second-biggest borrower was resource-poor Ethiopia, which is apparently deemed a good investment thanks to its China-like approach to development. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21697856-new-data-suggest-china-lends-less-africa-commonly-assumed-credit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +If it ain’t broke, don’t Brexit + +The British economy would be neither destroyed nor unleashed by leaving the EU + +Apr 30th 2016 | From the print edition + + + +ON JUNE 23rd Britons will vote on whether their country should stay in the European Union. They face a bewildering range of estimates of the potential economic effects of a Brexit. By 2030 Britain’s GDP could be as little as a fraction of a percentage point below the level it would otherwise reach, or as much as 9.5 percentage points lower, depending on just whom you ask and what they assume about the future. While such analyses are useful (particularly in their clarifying agreement that Brexit would do at least some damage to the British economy over the next 15 years), they are also guilty of providing a spurious sense of precision. When attempting to predict the fate of the British economy after Brexit, it is useful to keep two rules of thumb in mind. + +The first broad principle should hearten the Brexiteers: over long periods, GDP per person in Britain has risen surprisingly steadily (see top chart). It has usually taken a war to cause that growth to deviate much from the underlying trend—although there was a long and painful slowdown during the 1920s and early 1930s, when Britain stuck doggedly to a contractionary monetary policy. As soon as Britain abandoned the gold standard in 1931, it was off again on a long streak of steady growth (briefly interrupted by the disruptions of the second world war). + +Indeed, stable growth in output per person continued until the financial crisis of 2007-08. Joining the EU in 1973 does not seem to have accelerated it much, just as crashing out of Europe’s system of pegged exchange rates in 1992 did not slow it down. Other seminal events—the loss of Britain’s empire in the post-war years, or its balance-of-payments crisis and IMF bail-out in 1976—also seem to have had no impact on the trend. + +Past performance is no guarantee of future returns, but Britain’s history suggests that the costs of Brexit will probably not be as large or as lasting as the more dire prognostications maintain. As the Remain campaign often points out, membership of the European Union has not prevented Britain being one of the most flexible, and least regulation-bound economies in the rich world. That flexibility would help Britain adjust to the shock of Brexit, as would the demand-boosting drop in the pound that would almost certainly follow a vote to leave. + +However, a modest cost is still a cost. Moreover, whether a member of the EU or not, Britain is a European country, deeply and irrevocably linked to the fortunes of the continent. As annoying as it must be to the Leave campaign, only 21 miles (33km) of the English Channel separate Britain from France (and there is no distance at all between Northern Ireland and the Republic of Ireland, or Gibraltar and Spain). From Paris, Brussels and Amsterdam, it is a far shorter train journey to London than to Berlin. Britain is thoroughly, helplessly European, and always has been, since its first prehistoric settlers blundered over the land-bridge from the continent. + +The European connection has big implications. Trade with far-off countries is costly, in terms of money and time. A paper published in 2012 by David Hummels of Purdue University and Georg Schaur of the University of Tennessee finds that every day goods are in transit adds a cost equivalent to a tariff of between 0.6% and 2.1%. Countries therefore trade most heavily with close neighbours. More than 50 years ago Jan Tinbergen, a Dutch economist, observed that trade seemed to follow a “gravity model”, meaning that trade flows were a function of both the distance between trading partners and their size (or economic “mass”). + +Britain sits cheek-by-jowl with big European economies. They were Britain’s dominant trading partners three centuries ago, when Europe accounted for 75% of British trade. And they are Britain’s dominant trading partners now, accounting for roughly 50% of its trade, despite the fact that the rest of the world accounts for a much bigger share of global economic activity now than it did in the 18th century (see bottom chart). + +In fact, trade between Britain and the rest of the EU is larger than geography alone would predict, according to a recent analysis by the Centre for European Reform, a think-tank. It calculates that the flow of goods and services across the Channel is 55% greater than distance and economic mass alone would imply. What is more, that extra activity is a genuine bonus. It is almost entirely made up of new economic activity that would not otherwise take place, rather than exchanges diverted from partners outside the EU by the single market’s external tariff. The integration fostered by European institutions nurtures cross-border supply chains and trade in services—a British speciality. Britain’s exports of services to the EU are larger than those to North America, Japan and the BRICs combined. The EU, in effect, shrinks the distance between European economies even further. + +Tilting at geography + +In other words, the push for Brexit is quixotic. However close the cultural affinities between Britain and its partners in the Anglosphere, the contribution of their trade to British output is much smaller than the EU’s, as are the contributions of the world’s big emerging economies. A Brexit would not delink Britain’s economy from the rest of Europe; it would merely worsen the terms on which trade is conducted and reduce Britain’s influence in European affairs. History suggests that the choice to leave the EU would probably not prove a calamitous one in economic terms. That does not mean it would be astute. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21697858-british-economy-would-be-neither-destroyed-nor-unleashed-leaving-eu-if/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Additive manufacturing: A printed smile + +Welding and forming: Getting the pulse racing + +Viral infections: General knowledge + +Portable devices: Buddy, can you spare a watt? + +Augmented reality: Here’s looking at you + + + + + +Articles Sections Next + +Additive manufacturing + +A printed smile + +3D printing is coming of age as a manufacturing technique + +Apr 30th 2016 | From the print edition + + + +A SET of straight and gleaming teeth makes for a beautiful smile. But how many people who have undergone a little dental maintenance know that they may have inside their mouths some of the first products of a new industrial revolution? Tens of millions of dental crowns, bridges and orthodontic braces have now been produced with the help of additive manufacturing, popularly known as 3D printing. Forget the idea of hobbyists printing off small plastic trinkets at home. Industrial 3D printers, which can cost up to $1m, are changing manufacturing. + +The business of dentures shows how. For the metal bits in false teeth, dentists have long relied upon a process called “investment casting”. This involves creating an individual model of a person’s tooth, often in wax, enclosing it in a ceramic casing, melting out the wax and then pouring molten metal into the cavity left behind. When the cast is split open, the new metal tooth is removed. It is fiddly, labour-intensive and not always accurate; then again the casting method is some 5,000 years old. + +Things are done differently at an industrial unit in Miskin, near Cardiff, set up by Renishaw, a British engineering company. The plant is equipped with three of the firm’s 3D printers; more will be added soon. Each machine produces a batch of more than 200 dental crowns and bridges from digital scans of patients’ teeth. The machines use a laser to steadily melt successive layers of a cobalt-chrome alloy powder into the required shapes. The process is a bit like watching paint dry—it can take eight to ten hours—but the printers run unattended and make each individual tooth to a design that is unique to every patient. Once complete, the parts are shipped to dental laboratories all over Europe where craftsmen add a layer of porcelain. Some researchers are now working on 3D printing the porcelain, too. + +Say “ah” + +The mouth is not the only bodily testing-ground for 3D-printed products. Figures gleaned by Tim Caffrey of Wohlers Associates, an American consultancy that tracks additive manufacturing, show that more than 60m custom-shaped hearing-aid shells and earmoulds have been made with 3D printers since 2000. Hundreds of thousands of people have been fitted with 3D-printed orthopaedic implants, from hip-replacement joints to titanium jawbones, as well as various prosthetics. An untold number have benefited from more accurate surgery carried out using 3D-printed surgical guides; around 100,000 knee replacements are now performed this way every year. + +That the health-care industry has so swiftly adopted additive manufacturing should be no surprise. People come in all shapes and sizes, so the ability of a 3D printer to offer customised production is a boon. The machines run on computer-aided design (CAD) software, which instructs a printer to build up objects from successive layers of material; a medical scan in effect functions as your CAD file. And software is faster and cheaper to change than tools used in a traditional factory, which is designed to churn out identical products. + +Compared with the $70 billion machine-tool market, additive manufacturing is still tiny. But it is expanding rapidly, and not just in health care. Overall, Wohlers estimates that 3D-printed products and services grew by 26% last year, to be worth nearly $5.2 billion. That is just the tip of a bigger mountain in the making. McKinsey, a management consultancy, reckons that in terms of things like better products, lower prices and improved health, 3D printing could have an economic impact of up to $550 billion a year by 2025. + +One reason why 3D printers are becoming more mainstream is that the “inks” they use are getting better thanks to advances in materials science, says Andy Middleton, the European head of Stratasys, an Israeli-American company that makes 3D printers. One method Stratasys uses, called PolyJet, is similar to inkjet printing: cartridges deposit layers of a liquid polymer which are cured with ultraviolet light. The company has just unveiled a new PolyJet model called the J750. It uses multiple cartridges to print items in 360,000 different colours and any combination of six different materials, which can be rigid or flexible, opaque or transparent. + +The machine is intended to make prototypes as the polymers are not yet robust enough for a final product. Nevertheless, that allows a manufacturer of trainers, for instance, to print a complete shoe in one go, with a rubbery sole and a leather-like upper. The ability to make realistic prototypes greatly speeds up product approval and the time it takes to get to market. + +Increasingly, however, 3D-printed objects are being produced as finished items, rather than as models or prototypes. This leads consultants at PWC to conclude in a new report that additive manufacturing “is crossing from a period of hype and experimentation into one of rapid maturation”. Their research found more than two-thirds of American manufacturers are now using 3D printing in some form or the other. + +Another 3D-printing process used by Stratasys builds parts layer by layer, by heating and extruding thermoplastic filaments. Airbus now uses these machines to print internal cabin fittings for its new A350 XWB airliner. The printers use a resin that meets the safety standards on aircraft. As airlines often specify custom fittings, 3D printing saves on re-tooling. It also allows multiple components to be consolidated into a single part, which reduces assembly costs. It will not be long, some in the industry reckon, before carmakers will offer interior customisation using 3D printers, too. + +Although further development is needed to speed up additive-manufacturing systems and improve the surface finish, the technology is already trusted enough to be used in products that have to withstand high stresses and strains. GE has spent $50m installing a 3D-printing facility at a plant in Auburn, Alabama, to print up to 40,000 fuel nozzles a year for the new LEAP jet engine it is making in partnership with Snecma, a French company. The nozzles will be printed in one go, instead of being assembled from 20 different parts. They are made from a powered “super alloy” of cobalt, chrome and molybdenum. The finished item will be 25% lighter and five times more durable than a fuel nozzle made with conventional processes. + +Materials companies are coming up with more and more specialised ingredients for additive manufacturing. Alcoa, a leading producer of aluminium, recently said it would supply Airbus with 3D-printed titanium fuselage parts and the pylons used to attach engines to wings. Alcoa is spending $60m expanding its R&D centre in Pennsylvania to accelerate the development of advanced 3D-printing materials and processes. + +Large 3D printers are also emerging to make big things. Oak Ridge National Laboratory in Tennessee is working with a company called Local Motors to print cars, or at least much of their structure, using a blend of plastic and carbon fibre. The lab has also teamed up with Skidmore, Owings and Merrill, a firm of architects, to print substantial sections of buildings. The idea is to develop an additive-building process that results in no waste. + +Some factory bosses have said that 3D printing will never replace mass manufacturing. Perhaps, but it does not have to in order to transform production processes. Additive-manufacturing systems are being mashed together with traditional production methods, which themselves are improving with digital technologies. Even old-fashioned metal bashing and welding is going high-tech (see article). + +Perhaps the surest evidence comes from China. LITE-ON, a leading contract manufacturer, has just installed a set of 3D printers in a Guangzhou factory that makes millions of smartphones and other portable consumer electronics. The printers, made by Optomec, an Albuquerque-based firm, use a process called Aerosol Jet to focus a mist of microdroplets into a tightly controlled beam, which can print features as small as 10 microns (millionths of a metre). LITE-ON is using the machines to print electronic circuits, such as antennae and sensors, directly into products instead of making those components separately and assembling them into the devices either by robot or by hand. When a manufacturing technology arrives in the workshop of the world, it really is coming of age. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21697802-3d-printing-coming-age-manufacturing-technique-printed-smile/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Welding and forming + +Getting the pulse racing + +A cleaner, sharper way to weld and shape metals + +Apr 30th 2016 | From the print edition + + + +DURING the first world war it was observed that when armour plating was hit by shrapnel some of the bits not only embedded themselves into the metal but ended up welded to it, a process that normally takes a great deal of heat. Laboratory tests later showed that if one material is accelerated fast enough into another they become plastic at the point of contact and fuse together, even at room temperature. This led to a process called explosive welding which, as its name suggests, uses chemical explosives spread over the top of a sheet of one material to blast it into a sheet below. + +Explosive welding, for obvious reasons, is usually carried out in tunnels under mountains or in remote deserts. It is often employed to cover steel plate with a more expensive anti-corrosion layer of stainless steel or nickel alloy. This clad plate is typically used in chemical plants. Now the same idea, minus the explosives, is beginning to be used inside factories to make products ranging from white goods to aircraft and cars. + +The process, known as magnetic-pulse welding, works a bit like the Large Hadron Collider near Geneva, accelerating materials into each other with extremely powerful magnetic forces, but on a less grand scale and with components rather than atomic particles. Bmax, based in Toulouse, France, has been developing the technology to produce machines that both weld components and shape them. + +To do this two tubes, for example, are fitted together and placed inside one of the firm’s machines, where a coil generates an intense electromagnetic pulse in one of the tubes. This propels it into the other, over a distance of only a millimetre or so but in just a matter of microseconds (millionths of a second). When the two materials are forced together at such intensity, the atoms at the point of contact start sharing electrons, which fuses the components together. As no heat or melting is involved, dissimilar and difficult-to-weld materials can be joined, such as aluminium to copper and nickel to titanium. The same process can be used to shape materials, slamming down a sheet of metal onto a mould to make, say, the crease lines in the skin of a car door. Normally this is done with giant and noisy stamping presses. + +A combination of factors has stimulated interest in the technology, says Rani Plaut, Bmax’s chief executive. Because the process operates at room temperature without clouds of welding sparks and fumes, it is cleaner and saves energy. It also produces stronger joins as conventional welds can be prone to corrosion. There is aesthetic value too, he adds: fused welds look much tidier than blobs of molten weld. And in shaping panels, lines can be made sharper than with conventional pressing. A process with roots in the noise and chaos of war may make the factory of the future a much quieter and cleaner place. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21697799-cleaner-sharper-way-weld-and-shape-metals-getting-pulse-racing/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Viral infections + +General knowledge + +Progress towards a broad antiviral treatment + +Apr 30th 2016 | From the print edition + +IN THE medical armoury vaccines are a wonderful piece of ammunition. But they are like bullets that can hit one target only. Different vaccines are needed to prevent specific viral infections. If a person is already ill, vaccines won’t help. Various antiviral drugs might, shortening the time people are ill or preventing serious complications. The trouble is viruses are a moving target because they can evolve rapidly. Researchers have tinkered with some antiviral treatments that might work against a wide spectrum of diseases, but all have had shortcomings. Now one group thinks they have found a method that might protect cells in the body from a viral invasion. + +The new research, led by James Hedrick of the IBM Almaden Research Center in California, Naoki Yamamoto of the National University of Singapore and Yi Yan Yang of the Institute of Bioengineering and Nanotechnology, also in Singapore, stems from an old tactic that has been problematic in the past. All viruses depend upon similar electrical charges at their surfaces to connect to the cells that they are trying to infect. If the charges on viruses and cells could somehow be meddled with, it should make things harder for the virus to infect the host. + +Lots of experiments have demonstrated that the theory is sound. Unfortunately, many of the materials used to interfere with the electrical charges have also been toxic to the cells they are supposed to protect. Dr Hedrick and his colleagues speculated that it might be possible to work around this problem with polyethylenimine. Previous work has shown this polymer can thwart a viral invasion, but it has groups of amines, derivatives of ammonia, on the ends of its molecular branches and these can kill healthy cells. + +To prevent the amine groups from causing collateral damage the researchers wondered if it was possible to neutralise them with more benign compounds. To find a suitable candidate the team carried out an extensive search of the scientific literature. Eventually they found a type of sugar, known as mannose, which looked fit for the job. A series of studies showed that mannose largely did stop the amines from making contact with cells, while at the same time allowing the polymer to attach to a variety of viruses. + +To discover which form of mannose would work best, the researchers bound a number of versions of the sugar, called moieties, to the polyethylenimine. They then treated cell cultures with their creations before exposing them to a wide range of viruses, including those that cause influenza, dengue fever, Ebola and herpes. + +As they report in Macromolecules, their technique worked. Cell cultures exposed to the mannose-decorated polyethylenimine molecules proved invulnerable to every virus that they studied. More important, they found that the newly created material is not toxic at the concentrations that were needed to meddle with the surface charges on viruses. + +As with most research, there is a long way to go before the new material could be developed and tested to see if it can be used in humans, perhaps as a form of general-purpose antiviral medicine. A more immediate use might be as a sanitary wipe to prevent viruses spreading. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21697803-progress-towards-broad-antiviral-treatment-general-knowledge/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Portable devices + +Buddy, can you spare a watt? + +Trading power could free users from dead-battery tyranny + +Apr 30th 2016 | From the print edition + + + +ONE of the most annoying features of smartphones is that they run out of power just when you need it most. After a day of e-mailing, streaming music, downloading podcasts, watching cat videos and snapping selfies, a device can easily be left without enough charge to make an emergency call. What would help, reckons Paul Worgan of the University of Bristol, in England, is to give portable devices the ability to share some of their power. + +Mr Worgan and his colleagues have come up with a wireless-charging system which they call PowerShake. To use it someone holds a phone with an expiring battery against another device—a phone, or even a smartwatch or a fitness band—and this initiates a power transfer from one to the other. Some 12 seconds of contact provides enough juice to make a one-minute telephone call. One minute of contact would allow, say, a four minute music video to be watched. The researchers will present their idea to CHI2016, a conference on computer-human interaction, in San Jose, California, in May. + +Wireless charging of mobile devices is not new. Many smartphones and watches can be placed on a charging mat, allowing an alternating magnetic field from a slim copper coil in the mat to induce a current in another coil inside the device to charge its battery. There are two dominant standards: Qi, from an industry body called the Wireless Power Consortium, and PMA, named after its originator, the Power Matters Alliance. Both have big backers: Starbucks, for instance, is building PMA-based chargers into its coffee-shop tables. IKEA is building Qi chargers into bedside tables and desk-lamp bases. Samsung’s Galaxy S6 smartphone supports both formats. + +Initially, the Bristol team have opted to customise the Qi coil for PowerShake experiments. They cannot use the existing Qi format because it is not designed for inductive charging next to human skin. So, to conform to international regulations, they are looking at including a ferrite and copper shield between the coil and someone’s skin, which is necessary on devices like a fitness band or smartwatch. + +In testing their idea out, however, the researchers ran into a less technical problem. Some people said they were reluctant to offer their precious battery charge to others. A form of inducement might help. Vassilis Kostakos, a computer scientist at Oulu University in Finland, says one answer is cash. Anticipating the arrival of technologies like PowerShake, Mr Kostakos and his colleagues set up an auction for device power with 22 volunteers. The results, also due to be released at CHI2016, showed people wanted €1.76 ($2.00) to sell 10% of their device’s power when their battery was fully charged, but €4.41 to offload 10% when the charge had depleted to 20%. On average, 10% of device power sold for €2.22. Of course, if you appear desperate to see that cat video, the price may go up. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21697800-trading-power-could-free-users-dead-battery-tyranny-buddy-can-you-spare/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Augmented reality + +Here’s looking at you + +Smart glasses may have a big future at work + +Apr 30th 2016 | From the print edition + +The view is very different from in here + +AHEAD of its time or just plain weird? Whatever the answer, Google last year stopped selling consumer prototypes of its controversial Google Glass, a camera-equipped head-mounted display resembling a pair of spectacles. Using a process known as augmented reality (AR), Glass can display in the viewer’s line of sight information about what they are looking at, among other things. + +What consumers found unusual, factories and other businesses may not. Workers are often required to wear odd-looking safety equipment, such as helmets and protective glasses. It is more normal to be filmed. And indeed, the workplace is where AR equipment is taking hold, which is why Google is revamping Glass with business uses in mind. + +Engineers that work on and repair transformers that distribute electricity can spend up to half their time searching for technical data in assorted software, databases, activity logs and even old-fashioned filing cabinets, says Alain Dedieu, a vice-president in the Shanghai operations of Schneider Electric. The French multinational is now testing AR systems that make the technical information that is being sought appear before their engineers’ eyes. + +Schneider is doing this with headsets and tablet computers, both of which superimpose information onto an image of the object on either the lenses in the headset or the screen on a tablet. The system uses image-recognition software, and sometimes a bar code stuck on equipment, to determine what the piece of kit is. It then wirelessly fetches any data relevant to it, such as its optimum operating temperature, fluid levels and maintenance history. + +Software then “sticks” that information to the image on the screen, so that it disappears if the camera is turned to something else. The data reappear if the equipment comes back into view. Early results from China suggest AR can slash the amount of time engineers spend looking for information to about a tenth of current levels, says Mr Dedieu. + +One in the eye + +In America, ITAMCO, an Indiana-based engineering company, has found similar benefits. Some of its operators use an AR system with Google Glass headsets. Having data automatically pop into their field of view saves enough time for two machine operators to do work that previously required three or four, says Joel Neidig, an ITAMCO technologist who has helped clients including Caterpillar and General Electric set up similar systems. + +The use of AR systems in Europe is proving more difficult to implement because some unions deem the technology to be a sneaky way for management to monitor workers, says Mr Neidig. He maintains management wants to reduce accidents by ensuring workers see proper procedures and danger alerts. + +Some European firms are using the technology. Siemens, a German engineering giant, is using JoinPad, an Italian firm, to set up an AR system to help with a number of tasks, including the prevention of hazardous and costly oil fires in high-voltage transformers. Productivity gains from AR are not always dramatic, but 20% or more is typical, says Nicolas Pezzarossa of JoinPad. + +The technology still has room for improvement. Around 200 workers using AR on tablets at Newport News Shipbuilding in Virginia don’t yet rely on it to find the exact location to install critical equipment. But it still beats flipping through lots of paper diagrams and determining if one piece of equipment has to be installed above or below another, says Patrick Ryan, an engineer overseeing the roll-out of AR in building an aircraft-carrier and half-a-dozen submarines for the US Navy. Once the price of headsets come down, the firm may well start using them as well as tablets. + +Headset prices are getting keener. Atheer, a Silicon Valley firm, will begin shipping its Air Smart Glasses to industrial users within a few months for some $4,000; a current model for software developers costs $9,000. The Smart Helmet, an AR headset made by DAQRI, a Los Angeles firm, is being used at KSP Steel in Kazakhstan. It costs $10,000, but also doubles as a hard-hat and eye shield. It automatically switches off instructions if hand movements detected by the camera suggest that the user has learned what to do. + +Headsets can also augment communications. Microsoft’s HoloLens, an AR headset that is being used on the International Space Station, sends video of the astronaut’s field of view to a tablet at mission control on Earth, where a technician can draw on the touchscreen—putting, say, a circle around a switch that has to be flipped—and have that circle appear in the astronaut’s view. Vuzix, an American firm, is developing smartglasses for use in a variety of business locations, from warehouses to field training. + +Augmedix, a San Francisco company, is developing a Glass-based system for hospitals and clinics. The idea is that rather than burying their head in a computer screen when a patient walks into the consulting room, a doctor will be able to look at them and see that person’s medical history, prescriptions and other information in his field of view. Augmedix reckons the system can increase a doctor’s productivity by more than 30%. + +Whether people become comfortable with such devices in everyday life remains to be seen. It is not unusual for new technologies to take off in business first, as mobile phones did and Apple Watches are with some firms using them to send employees messages. In the workplace, smart glasses are already less of a spectacle. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21697801-smart-glasses-may-have-big-future-work-heres-looking-you/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Contemporary art in America: Going public + +China’s economy: Neither a bull nor a bear be + +Eastern Europe: Backwards and forwards + +Queen Elizabeth I: Smart redhead + +Papa Wemba: The king of the rumba + + + + + +Articles Sections Next + +Contemporary art in America + +Going public + +The biggest contemporary-art museum in America will be unveiled next month. Building it took ingenuity, persuasiveness—and a lot of money + +Apr 30th 2016 | SAN FRANCISCO | From the print edition + + + +IN MANY countries rich art-buyers are deserting public institutions in favour of building their own private museums. Not in the Bay Area, where some 200 collectors have been persuaded to donate over 4,000 works of art to the new San Francisco Museum of Modern Art (SFMOMA). As if that were not enough, they have also contributed generously to a new $305m building designed by Snøhetta, a Norwegian firm, and to a healthy endowment of $245m. When it opens on May 14th, SFMOMA will be the largest museum of modern and contemporary art in America. + +Five years in the making, the new SFM OMA reflects the confluence of old money from the American West and new wealth from Silicon Valley. And it proves, in a way that few other projects could, how important collecting contemporary art has become as a measure of wealth, taste, ambition and civic duty. + +Nearly three-quarters of the works on show in the inaugural exhibitions are recent gifts. Neal Benezra, the director, engineered a “Campaign for Art” in which the museum cherry-picked works from important local collections. “We did not just drop a net to see what we could catch,” he explains. The museum has focused on filling gaps in its collection and bolstering areas where it is already strong. + +Robin Wright, a lifelong philanthropist and vice-chair of the board, helped SFM OMA solicit gifts. She gave the museum a list of the works in her collection; the museum chose 36 pieces, including a rare Ed Ruscha painting from 1973 entitled “Evil” and made with the artist’s own blood. “It’s hard to imagine dying,” says Ms Wright. “And who could be a better guardian of your art once you’re gone?” Collectors can enjoy knowing that their art pieces are (literally) museum-worthy, and that they will return home when the museum changes displays. It all, says Mr Benezra, contributes to “great estate planning”. + +A decade ago, many donations to American museums were “fractional gifts”; collectors could benefit from tax write-offs on a proportion of the changing (often increasing) market value of their works. When the rules were changed by the Pension Protection Act of 2006, the practice became financially unattractive and art donations fell. + +Another system known as “promised gifts” began to take precedence. SFMoMA has done a good job of spelling out the psychological and social benefits of this form of philanthropy. Just as it was confirming Ms Wright’s gift, Charles Schwab, chairman of the board, and his wife Helen made an offer of their own—27 works, including stellar paintings by Fernand Léger, Jackson Pollock and Francis Bacon. Soon afterwards, seven other important collectors pledged over 100 more works. + +By far the largest contribution came from Donald and Doris Fisher, co-founders of Gap, a clothing chain. In September 2009, just before he died, Mr Fisher shook hands with Mr Benezra on a deal which granted SFMOMA a 100-year loan of 1,100 works, including 25 by Alexander Calder, 22 Gerhard Richters, 18 Andy Warhols and 18 Ellsworth Kellys (some of which can be seen pictured). + +Fascinated by the creative process, the Fishers had bought “in depth”, sometimes following an artist’s career over several decades. “In many museums, you see one of this and one of that,” says Bob Fisher, the eldest of three Fisher sons who is president of the SFMOMA board. “You gain an understanding of what Abstract Expressionism or Minimalism is, but you aren’t given the chance to appreciate the mind of an artist.” Neither the Fishers nor the museum will disclose the value of the collection, but experts suggest it is worth well over $1 billion. + +The partnership of SFMOMA and the Fishers is unprecedented, and it comes with strict rules. Every ten years, the museum must put on an exhibition that focuses exclusively on the Fisher collection. At other times, the museum can mix the Fisher works with those from its own and other collections. SFMoMA will also take care of conserving and promoting the art. In return, the Fishers contributed an undisclosed “very generous” sum towards the new building and its endowment. + +The challenge of presenting this onslaught of gifts to the public has fallen principally to Gary Garrels, senior curator of painting and sculpture, who spent three years contemplating scale models of the museum’s seven exhibition floors and has been installing the works since December. The museum decided to include at least one work from each of the campaign’s 231 donors, so the installation will offer a portrait of the Bay Area collecting community rather than an art-historical narrative. + +Visitors can enter the museum through the elegant new Snøhetta structure into the sort of grand light-filled space that has become a standard requirement of art museums (Tate Modern, which will open its own new extension a month after SFM OMA, will have one too). In San Francisco the space will be filled with a classic rusted-steel sculpture by Richard Serra; upstairs in the atrium is an uncharacteristically joyful, blue-and-white wall drawing by Sol LeWitt entitled “Loopy Doopy”. + +What will make SFMOMA unique is the enfilade of rooms offering mini-retrospectives of individual artists. Thanks to the bounteous gifts the museum has received, these are so good they will become destinations in themselves. One has an exuberant range of mobiles and other sculptures by Calder, who went to the same San Francisco high school as Donald Fisher. Another, nicknamed “The Chapel”, is an octagonal room with a suite of seven serenely geometric paintings by Agnes Martin. + +San Francisco is the Wall Street of the West, but it is also the historical hub of hippies, gay liberation, the farm-to-table movement and digital culture. It is a creative city that sprang from nothing in 1848, when the Gold Rush hit. Its citizens know all too well that culture does not just happen; it has to be made, underwritten, nurtured. “One thing I’ve learned through this fund-raising process,” says the museum’s director, “is that this community loves a big idea. They are willing to take chances and risk failure, but they want the next awesome idea.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21697807-biggest-contemporary-art-museum-america-will-be-unveiled-next-month-building-it/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +China’s economy + +Neither a bull nor a bear be + +Growth is slowing but fears of collapse are overdone + +Apr 30th 2016 | From the print edition + +Lucky for some + +China’s Economy: What Everyone Needs to Know. By Arthur Kroeber. Oxford University Press; 319 pages; $16.95 and £10.99. + +Street of Eternal Happiness: Big City Dreams Along a Shanghai Road. By Rob Schmitz. Crown; 326 pages; $28. + +CHINA’S economy inspires extreme and, often, diametrically opposed views. There is the bear case: growth is severely unbalanced, waste unbearably high and collapse nigh. And the bullish: past performance is proof of the government’s managerial skill, innovation is blossoming and China will soon surpass America as the global economic powerhouse. But between these extremes lies a wide expanse of “muddle-through” alternatives, which hold that China’s future will be far less spectacular: neither especially bright nor very gloomy. + +If the notion of a middle way sounds intuitively appealing, Arthur Kroeber’s book brings rigour to the debate to show why it is also the most likely outcome. A longtime China analyst now managing an independent research firm, he launches an assault, albeit courteously worded, on conventional wisdom from the two opposing camps. What emerges is a nuanced take on an economy facing serious challenges, ones that do not spell its collapse but could prove intractable all the same. + +Many of the commonly heard warnings about China’s economy are exaggerated. Take the opinion that it suffers from pervasive over-investment. At the start of its reform period in 1980, China had a paltry stock of factories, infrastructure and homes. The tried-and-tested way for an economy to modernise is to accumulate all of these, requiring a lengthy period in which investment grows faster than GDP. China’s experience in this regard has not been dramatically different from that of Japan, South Korea and Taiwan in their heady years; its investment mania has run on too long, but the benefits of the 30-year boom outweigh the waste. Most rich economies have capital stocks more than three times as big as their GDP; China’s was still just 2.4 times as high in 2010. + +Similarly, fears about a property crash are overblown. China did not privatise home ownership until the 1990s, and prices were still far below their true value in the early 2000s, laying the groundwork for a surge. The leverage that caused havoc in property markets elsewhere in the last decade is not an issue: minimum down-payments are still 20% and buyers often pay closer to half in cash. Far more problematic is an excess of high-end homes and insufficient supply of affordable housing. The solution is more, not less, government involvement in helping home construction and guaranteeing mortgages. + +Ultimately China should be able to do this, because marshalling resources to build stuff is its strength. But it is also clear that its growth model needs to change. Since the global financial crisis of 2008, it has become too reliant on debt and productivity growth has steadily fallen. Mr Kroeber lays out grounds for pessimism. Xi Jinping, China’s president, seems intent on a model of “Leninist capitalism”, reinforcing the Communist Party’s political grip, while also strengthening the economy with market reforms. This can work for a while: China still has scope to grow through industrial reforms, urbanisation and partial deregulation. Yet in order to become a high-income country, it needs innovation and efficiency, which are inconsistent with an overweening government. The model is not broken, but it is clearly running out of steam. + +For all the clarity of Mr Kroeber’s writing, his book is heavy going for the general reader. Rob Schmitz’s book makes a useful complement. Its approach is the opposite: a portrait of China from the stories of a single Shanghai street. Still, there is much to link the two books in their marvelling at what China has accomplished, mixed with sadness at the human costs of its breakneck development. + +Changle Road, the “Street of Eternal Happiness” of the title, is a poignant microcosm. Most visitors see only its exterior: a tree-lined street with expensive apartment buildings and trendy cafés. Mr Schmitz, a radio correspondent, chose to live there. Over the years, he learned about the ambitions, corruption and daily struggles seething just beneath its surface. + +One neighbour, from a poor village, lifted herself from rural poverty into relative wealth by running a flower shop. Another is an older woman easily seduced by get-rich-quick investments, burning through her savings on one far-fetched idea after another. Most harrowing are the lives of the residents clinging to their homes on an abandoned block. The local government tried to seize their land. Demanding the compensation promised by law, they protested, and have faced harassment and intimidation ever since. + +Yet coursing under even the bleakest stories is a sense of optimism that tomorrow will be better, with some evidence to support it. Families invest in their children’s education and, in time, reap the dividends. Migrant workers transform themselves from factory workers into cooks as the economy changes. Small entrepreneurs scrape their way to small successes. The energy and talents of China’s people are undiminished. The task for the government is to give them the space to thrive. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21697809-growth-slowing-fears-collapse-are-overdone-neither-bull-nor-bear-be/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Eastern Europe + +Backwards and forwards + +Before there was immigration there was emigration + +Apr 30th 2016 | From the print edition + + + +The Great Departure: Mass Migration from Eastern Europe and the Making of the Free World. By Tara Zahra. W.W. Norton; 392 pages; $28.95 and £18.99. + +EASTERN Europe is in the midst of a migration panic. Milos Zeman, the Czech Republich’s president, has called the influx of refugees to the continent an “organised invasion”; Jaroslaw Kaczynski, chairman of Poland’s ruling Law and Justice party, warns that they may be carrying “very dangerous diseases”. But anxieties about migration in the region are nothing new. In 1890 a lawyer in Galicia described it as “one of the most important, burning problems of the day”. Yet as Tara Zahra recounts in “The Great Departure”, a perceptive history of migration and eastern Europe, until very recently that problem was not immigration but emigration. + +In the late 19th and early 20th centuries, emigration was considered a “fever”, that could empty villages. For most, the destination was America: 300,000 made the journey from Austria-Hungary in 1907, the highest number to arrive from one country in a single year. The story of their arrival there has been told many times; Ms Zahra, of the University of Chicago, describes the impact that leaving had on their homelands and the debates it provoked. The departure of so many men of working age, for example, created new opportunities: in one Hungarian town women reportedly took over most of the positions in local government. But it alarmed local elites. Polish nobles were deprived of cheap agricultural labour, Austrian and Hungarian military officials of conscripts. + +The authorities quickly found a convenient scapegoat. They fined and arrested Austria-Hungary’s travel agents, accusing them of duping gullible peasants into leaving the country. This was part of a wider propaganda battle, in which newspapers ran lurid items about violence and exploitation in America. After the first world war, scare stories no longer sufficed. Populations had been devastated, first by the fighting and then by the Spanish flu. The region’s new nation-states quickly deemed emigration an existential threat. In 1920 Poland introduced stricter passport controls; Czechoslovakia sought to lure back expatriates to boost the national stock. + +Emigration did have its uses for some, though. Politicians realised they could exploit migration policy to remove unwanted minorities. Despite the passport restrictions, in Poland Jews were encouraged to emigrate. By the mid-1930s many politicians in the region were in favour of mass Jewish emigration. Seeking a solution to what was widely referred to as the “Jewish problem”, Western officials fruitlessly considered places—Madagascar, British Guyana—where eastern European Jews could be resettled. As Ms Zahra points out, these efforts blurred the lines between “rescue and removal…emigration and expulsion”, while doing little to save Jews from the horrors that awaited them. Even before the Holocaust, removing Jews from eastern Europe had become politically acceptable. + +For the author the Iron Curtain was the “culmination” of eastern Europe’s struggle against emigration. Communist regimes had long warned of the misery that awaited emigrants to the West; now, however, the political stakes were far higher. Embarrassed by defections to the West, eastern-European governments sought to woo back other émigrés, offering them financial incentives even as they denounced the greed of capitalist societies. But still they were willing to let certain citizens leave. Dissidents and unwelcome minorities could be sold to West Germany or Israel in exchange for substantial ransoms: in the 1970s, Nicolae Ceausescu said that Romania’s best export commodities were “Jews, Germans and oil”. + +Eastern Europeans now enjoy the freedom of movement that so many longed for under communism. The expansion of the EU in 2004 gave Poles, Hungarians and Czechs, among others, the right to live anywhere in the union, stimulating the biggest wave of east-west migration in a century. Migration today is never one-way. Some people spend just a couple of years in the West before returning. Others never leave at all. Now that east Europeans can move as they please, for many true freedom is the “freedom to stay home”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21697806-there-was-immigration-there-was-emigration-backwards-and-forwards/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Queen Elizabeth I + +Smart redhead + +A new assessment of the final years of Elizabeth’s reign + +Apr 30th 2016 | From the print edition + + + +Elizabeth: The Forgotten Years. By John Guy. Viking; 490 pages; $35 and £25. + +THE glorification and defamation of the ageing Elizabeth I is almost as old as the queen herself. Few English monarchs have been subjected to as much historical bias and mythmaking. She has been painted as the defiant Gloriana of Spenserian epic, uniting the land in religion and peace, and the mercurial crone lusting after her younger courtiers. Neither is true, as John Guy shows in this account of her later years. + +Recent biographers have focused on the early decades, with Elizabeth’s last years acting as a postscript to the beheading of Mary Queen of Scots and the defeat of the Spanish Armada. Mr Guy argues that this period is crucial to understanding Elizabeth; the threat to the realm did not abate after these two episodes. Four more armadas were sent to invade the British Isles, although in the end good luck and bad weather scuppered their plans. + +Courtiers gained Elizabeth’s favour through exploits of land and sea, to the consternation of the old nobility. Walter Ralegh dazzled her majesty with his vision for an American colony. Robert Devereux, Earl of Essex, strove to woo her with plots to plunder Spanish ships. Neither was very successful as the old order closed ranks to frustrate their ambitions. When Essex, powerless after losing campaigns in Portugal, France and Ireland, attempted to ignite a rebellion against Elizabeth in London, he was beheaded. + +The master of the old order was the lord high treasurer, William Cecil, Lord Burghley. He controlled access to state papers, briefed England’s ambassadors and drafted royal correspondence. Only a sixth of Elizabeth’s 15,000-odd surviving letters and warrants were penned or dictated by her, Mr Guy reckons. Burghley was so powerful through much of Elizabeth’s reign that the early period could be renamed the Cecilian age. But the queen lost faith in him in 1586, when he plotted to accuse Mary Queen of Scots of treason. A believer in a divinely appointed monarchy, Elizabeth resented having her hand forced over her rival’s execution and wavered over whether to kill a sovereign chosen by God. It was only when she was in her early 50s, Mr Guy thinks, that Elizabeth at last asserted supreme power over Burghley. + +But the lord high treasurer was not a man to give up easily. He was instrumental in sending Essex on doomed foreign missions. Burghley hired an actor to serenade the queen with pageantry and poetry with a none-too-subtle motif that she should appoint his son to the Privy Council. Robert Cecil eventually became secretary of state as such and survived in the role into James I’s reign in true Cecilian fashion. + +One crucial question is why Essex survived as long as he did. He bungled military adventures and had little political shrewdness, yet he held influence all through the 1590s. Previous biographers have hinted that the sexagenarian queen was smitten by the buccaneer in his 30s. Mr Guy plays down any sexual intrigue, suggesting instead that she sought a courtier to curb the Cecils’ power. Yet it is to Elizabeth’s discredit that she held on to a man who frustrated her foreign policy and inflamed factionalism at court. + +Admirers of Elizabeth will take solace in few of these pages. Far from the war leader of legend, she seeks peace with Spain while it builds its invasion fleets. She pays war veterans poorly and hangs her own limping soldiers when they demand more money. She roots out Catholic gentry and is complicit in their torture. What emerges from the author’s great efforts to mine the archives for a truer picture is a more flawed Elizabeth—but perhaps a more human one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21697810-new-assessment-final-years-elizabeths-reign-smart-redhead/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Papa Wemba + +The king of the rumba + +A revered Congolese musician dies on stage + +Apr 30th 2016 | From the print edition + +His last hurrah + +MOST peoples measure their national history in rulers; Britons count back in monarchs, Americans in presidents. Many Congolese like to reflect on five generations of musicians, whose languorous rumbas and faster modern beats, adored across Africa and beyond, have served them better than any government. Papa Wemba, who died on stage in Abidjan, Ivory Coast, on April 24th, was of the third musical generation. But as the most travelled of Congo’s peripatetic singers, possessed of a distinctive and beautiful voice, he often seemed to stand for them all. + +Jules Shungu Wembadio Pene Kikumba, as he was properly called, was born in Lubefu, central Congo, in 1949. This was at the end of a decade of growth, driven partly by wartime demand for Congolese resources. A swelling music scene in the colonial capital, Léopoldville, catering for a rising African middle class, was one result. It was fuelled by enthusiasm for the new Congolese rumba, a sound the first generation of stars had repurposed from the Cuban songs they discovered on a budget range of ten-inch, 78rpm records put out by a British label, “His Master’s Voice”. Wemba moved to the city soon after. + +The adopted son of a pleureuse, a professional singer at funerals, he learned to sing in church, perfecting the keening falsetto that would remain his trademark. Church music influenced his songwriting, too. He once said: “With religious music, the minor key always recurs. When I compose songs, I often use the minor key.” + +Wemba’s first band, Zaiko Langa Langa, launched in 1969, announced him as an innovator, not an acolyte, however. Its name came from a garbled folksaying about the Zaire, or Congo, river—Zaire ya bankoko, “Zaire of our ancestors”. But Zaiko was rebellious, not folkish. Reacting against the big bands of the latest titans of the rumba, such as François “Franco” Luambo, Zaiko swapped brass instruments for a snare drum and electric guitars, and upped the tempo. The critics were scandalised; but this was a time of hope and change in Congo which Zaiko’s thrusting rhythms captured. After five years of upheaval and war, following Belgium’s abrupt exit from the country in 1960, Congo was enjoying a burst of optimism under Mobutu Sese Seko, its first dictator. By 1970 the Congolese were buying a million records a year. + +Then Mobutu lost the plot. He launched a nativist programme, “Zairianisation”, which began as a cultural revivalist campaign and would end with the expropriation of white-owned industry, wrecking the economy. Wemba, who, like all Congo’s star musicians, naturally maintained an ambivalent attitude to power—sometimes critical, but generally compliant—at first played along. He and his bandmates adopted folk instruments such as the lokole, a log-drum; he would also sometimes perform in traditional raffia skirts, wearing hats decorated with cowrie shells. But Wemba soon became associated with a more compelling and subversive fashion movement, the Religion Kitembo, or “worship of clothes”, which was in part a sardonic comment on the charmless weeds and general decay that Zairianisation had brought. + +Through the sad boulevards of Kinshasa—as the Congolese capital had been renamed—worshippers strutted (and they strut still) in glorious assemblages, perhaps matching a sharp suit with an ebony cane and a fur coat, quite possibly lifted from some faraway European boutique. They were also known as Sapeurs, after another of their names, in English, The Society of Ambience Makers and Elegant People; and Wemba—Le Pape de la Sape, “the Pope of Sapeurs”—was the movement’s high priest. “Listen my love,” he sang, “On our wedding day/The label will be Torrente/The label will be Giorgio Armani/The label will be Daniel Hechter/The label for the shoes will be J.M. Weston.” + +By now the star performer of several bands—including Viva La Musica, whose hit single “Ana Lengo” sold half a million copies in Africa—Wemba wanted more than a wilting Kinshasa could provide. In the early 1980s he moved to Paris, where he produced ballads in Lingala and pop versions of the rumba, more accessible to a Western audience that was increasingly eager for exotic “World” music. He sang with Stevie Wonder and toured with Peter Gabriel, whose Real World label produced one of his best-selling albums, “Emotion”. He kept his feet in Congo, however—as was apparent, in 2003, when he was arrested in Paris, and briefly jailed, for smuggling dozens of Congolese into Europe as bogus members of his entourage. + +His fans back in Kinshasa were aggrieved. The fine reputation of Congolese musicians is one of their country’s last boasts. Many also believed Wemba, despite his success, had been overcharging desperate migrants for their passage. But they still turned out, in multitudes, to welcome him home to Kinshasa from prison. And when Wemba announced, at a packed press conference, that although he had reconnected with Jesus there, he still liked dancing and pretty girls, the crowd thundered with joy and relief. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21697808-revered-congolese-musician-dies-stage-king-rumba/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Prince: Music like a river + + + + + +Articles Sections Next + +Prince + +Music like a river + +Prince Rogers Nelson, musician, died on April 21st, aged 57 + +Apr 30th 2016 | From the print edition + + + +SO SEXY, freedom. So sexy, he couldn’t begin to explain it. Free to put on mascara, paint his lips, glue on long eyelashes to lower, flutter and seduce. Wear any colour, especially purple, but also electric blue, scarlet, glitter-silver and eye-aching lizard green. Strut in ruffles, squeeze in black leather, preen his naked midriff, shake his naked ass out of a yellow jumpsuit. Stack his heels, until his elfin figure became a giant. Dance with a white man, writhe with a black woman, kiss both, couple with either, be both races and sexes and neither in one cat-like, commanding frame. And, along the way, sell more than 100m records worldwide. + +Free in his music, too. Brutal as a rapper, tender as a balladeer, swooping smoothly from bass to falsetto. Astounding on guitar, soaring off into a universe of riffs and improvisations. At the half-time concert at the Super Bowl at Miami in 2007, in torrential rain, he seemed unable to stop; and it was the same on piano, keyboards, percussion, drums. He played 27 instruments on his first album, “For You”, in 1978, but felt he had the hang of thousands. + +A thousand genres, too, from funk (“Kiss”), dance (“Uptown”), rock (“The Cross”), techno (“New World”), pop (“When Doves Cry”), obscenity (“Jack U Off”), beauty (“Nothing Compares 2 U”) and all the world in between. Half a dozen genres in the same song, sometimes. The rhythm & blues of Little Richard, the soul of Sly Stone, the clicks and whoops of Michael Jackson, James Brown, Miles Davis, Marvin Gaye, Duke Ellington, were mixed up, fused, made fantastic, and poured in astonishing profusion through his guitar. If he couldn’t get the music out of his head, everyone’s music as well as his, he couldn’t function. + +Most necessary of all was the freedom to reinvent who he was, throw the world off his track, and hide. In the mid-1980s he refused to give interviews, reducing any to the statement: “I’m looking 4 the ladder.” When writing songs for other people he hid behind the names “Jamie Starr” and “Alexander Nevermind”. In the wake of his album “Purple Rain” (1984), which sold more than 20m copies, became a film and won him an Academy Award for best score, he made a cult of that colour, like a cloak. The best ruse came in 1993 when he changed his name to an unpronounceable symbol that combined, gracefully, the male and female signs. It couldn’t even be whispered; he drew it on the air. If people called him Prince, he didn’t know who they were referring to. His name was right there, beautifully enciphered: all he was, and all his music was about. + +There was also a sharp point behind it. He was fighting his recording company, Warner Bros, because they weren’t releasing his albums fast enough to keep up with the music inside him. He was defying them because the name “Prince” was now their property, not his. Not even the rights to his own songs belonged to him. He wasn’t going to be yet another black entertainer selling his soul, as Little Richard had, for a new car and a bucket of chicken. He’d got a pink Cadillac thanks to Warner Bros; that was enough. At the Brit Awards in 1995 his 13 words of thanks concluded: “In concert: Perfectly free. On record: Slave.” “SLAVE” was written on his face too, in bold black pen. After 19 years he wrestled free, putting out an album called “Emancipation” and answering to Prince again.He made a stand for all black musicians, not just himself. + +Uncatchable + +Could anything pin him down? Not women: his two marriages were unhappy, and didn’t last. Not time: his sense of it was limited to an indefinite future, his appearances onstage usually late. Not expectations, because he could cancel shows on a whim and then as suddenly put them on, impromptu, all-night and free. Not religion, because his fervour as a fresh-minted vegan, teetotal Jehovah’s Witness came and went, together with the spirits who sometimes ordered him around. + + + +Party over, out of time: The life and career of Prince in graphics + +Roots defined him slightly. He was born and schooled in Minnesota and stayed loyal to it, supporting the Timberwolves, sneaking into the Dakota Jazz Club in Minneapolis and building his studio complex at Paisley Park in Chanhassen. There, though, he was as elusive as ever, not to be caught on any recording device, including mobile phones. Fleeting impressions only, like vivid strobes. The internet bothered him, and he strove to ban his music from Spotify, iTunes and anywhere where he could not control it. For a while he tried to ban his showman’s likeness, too. + +Only one thing held him. He felt its tingling grip when he was seven, struggling to be good enough to be allowed to play his father’s piano. It possessed him at Minneapolis Central High School: all those hours in the music room, his already-high-teased hair nodding over the keys, after his friends had gone home. It roared through his body on the stage like a river without end. At Paisley Park, if he was not at his purple grand piano, he would be recording; and though he produced 39 studio albums, four in his last 19 months alone, he still had shelves of recordings that were not quite ready, not sufficiently perfect, in his vault: enough material (some said) to make annual albums for the next hundred years. + +To be bound to music was sexier even than freedom. So he let it fill both his days and his white, unsleeping nights. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21697782-prince-died-april-21st-aged-57-nothing-could-pin-him-down-obituary-prince-nelson-rogers/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Metal prices + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Apr 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21697816/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Apr 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21697832-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Apr 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21697831-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Apr 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21697833-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Metal prices + +Apr 30th 2016 | From the print edition + + + + + +The Economist’s metals index has fallen by 46% from its peak in 2011, largely because of slowing demand in China. Supply disruptions caused occasional spikes: nickel prices rose in the first half of 2014 after Indonesia banned metal-ore exports and zinc prices jumped in 2015 after mine closures. Metals prices have rallied in the past few months, however, thanks to a weaker dollar and a credit surge in China. The price of iron ore, a steel-making ingredient, has jumped by 70% since December. The value of tin has increased because Indonesia, the world’s second-biggest producer, introduced regulations to halt illegal trade that also curbed exports; recent flooding has also restricted access to mining areas. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21697837-metal-prices/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Apr 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21697836-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +TE20160430 + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +The 21st-century economy: How to measure prosperity + + + + + +Philippine politics: Fatal distraction + + + + + +Metropolitan growing pains: Little London + + + + + +The ECB: Going negative + + + + + +Corporate propaganda: Sweet little lies + + + + + +Letters + + + +On Facebook, SVM, Czechia, autism, offshore trusts, Peru, University of the People, lasers, Brexit, tongues: Letters to the editor + + + + + +Briefing + + + +Measuring economies: The trouble with GDP + + + + + +GDP revisions: Rewriting history + + + + + +United States + + + +The north-eastern primaries: Top Trump + + + + + +The great Republican delegate wrangle: Sectional preferences + + + + + +The labour market: The force awakens + + + + + +The campaigns: Heard on the trail + + + + + +Suicide: The saddest trend + + + + + +The future of cities: Ersatz urbanism + + + + + +Lexington: When economists turn to crime + + + + + +The Americas + + + +Murder in Mexico: The great mystery + + + + + +Innovation in Canada: More particle than wave + + + + + +Bello: Fidel’s last stand + + + + + +Asia + + + +An election in the Philippines: Siren song of the strongmen + + + + + +Nepal’s reconstruction: Still shaking + + + + + +Australia’s navy: Underwater envy + + + + + +Vietnam’s drying delta: Salt of the earth + + + + + +Banyan: Once in a lifetime + + + + + +China + + + +Homosexuality: Rohmer-therapy + + + + + +Urbanisation: Megalophobia + + + + + +Middle East and Africa + + + +Vision or mirage?: Saudi Arabia’s post-oil future + + + + + +Saudi Aramco: The big float + + + + + +Truth and reconciliation in Tunisia: Shadows from the past + + + + + +Car ownership in Kenya: Kicking the tyres + + + + + +Smuggling in Nigeria: Blurred lines + + + + + +Sport and race in South Africa: Diversify or die + + + + + +Europe + + + +Northern Europe’s angry savers: Mario battles the Wutsparer + + + + + +Chernobyl 30 years on: Soviet apocalypse + + + + + +Russia and the Panama papers: The lawyer and the cellist + + + + + +Poland’s rightist revolution: Red and white cavalry + + + + + +Turkey and the EU: Clearing customs + + + + + +Charlemagne: Trading places + + + + + +Britain + + + +Living in London: The grip tightens + + + + + +Brexit brief: How others see it + + + + + +The death of BHS: The lights go out + + + + + +The Hillsborough inquest: Justice for the 96 + + + + + +NHS spending: Operating costs + + + + + +Scottish elections: Opposition reshuffle + + + + + +UKIP in the north: Of springboards and lifeboats + + + + + +Bagehot: 2030 vision + + + + + +International + + + +Demography: The strange case of the missing baby + + + + + +Immigrant fertility: Fecund foreigners? + + + + + +Immigrant fertility: Internships + + + + + +Business + + + +China’s consumers: Still kicking + + + + + +Car emissions: Exhaustive analysis + + + + + +Corporate whistleblowers: Deltour in the dock + + + + + +The future of Apple: Shake it off + + + + + +Independent contractors: Category error + + + + + +Travel security: Risky business + + + + + +Schumpeter: Crazy diamonds + + + + + +Finance and economics + + + +India’s rural economy: Dry times + + + + + +Buttonwood: The great switchover + + + + + +Goldman Sachs: From the 1% to $1 + + + + + +The Bank of Japan: When easing gets hard + + + + + +Portuguese banks: Spanish steps + + + + + +The Federal Reserve: DC hold’em + + + + + +Chinese loans to Africa: Credit limit + + + + + +Free exchange: If it ain’t broke, don’t Brexit + + + + + +Science and technology + + + +Additive manufacturing: A printed smile + + + + + +Welding and forming: Getting the pulse racing + + + + + +Viral infections: General knowledge + + + + + +Portable devices: Buddy, can you spare a watt? + + + + + +Augmented reality: Here’s looking at you + + + + + +Books and arts + + + +Contemporary art in America: Going public + + + + + +China’s economy: Neither a bull nor a bear be + + + + + +Eastern Europe: Backwards and forwards + + + + + +Queen Elizabeth I: Smart redhead + + + + + +Papa Wemba: The king of the rumba + + + + + +Obituary + + + +Prince: Music like a river + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Metal prices + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.05.07.TXT b/homeworks/B20769/homework1/data2/2016.05.07.TXT new file mode 100644 index 0000000..a239fe9 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.05.07.TXT @@ -0,0 +1,5697 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: Finance in China + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +May 7th 2016 | From the print edition + + + +Donald Trump all but secured the Republican nomination for America’s presidential election after a thumping victory in the Indiana primary. Ted Cruz, his closest rival, quit the race after the result came in, as did John Kasich, the only other Republican left standing in a field that started with 17 candidates. After a wobble in April’s Wisconsin primary, Mr Trump has taken impressively large shares of the vote in the past seven contests and is now on course to get the majority of delegates he needs to avoid a contested Republican National Convention in July. See article. + +For Democrats Indiana was anything but decisive. Hillary Clinton, the front-runner, felt the “Bern” again when Bernie Sanders, her rival, nipped her to a surprise victory in the state. Although he still trails heavily in the delegate count, the septuagenarian Mr Sanders is likely to fight to the finish. The turn towards a Clinton v Trump race will have to wait a little longer yet. + +Calling time + +Venezuela’s opposition submitted 1.85m signatures to the country’s electoral commission to initiate a referendum to recall the populist president, Nicolás Maduro. That is more than nine times the minimum needed to begin the next stage of the process, the collection of a further 4m signatures. To save power, which is in short supply, the government moved the clocks forward a half-hour. This ended the Venezuela-only time zone introduced by Mr Maduro’s predecessor, Hugo Chávez. See article. + +A judge in Brazil ordered mobile-phone operators to shut down WhatsApp, a messaging service with more than 100m users in the country, for 72 hours. The judge decided that WhatsApp had withheld information from police conducting a drug-trafficking investigation. The company says it does not have the information. An appeals-court judge ordered the service to be restored. See article. + +Mexico’s Senate failed to approve the “3-out-of-3 law”, which would require officials to publish declarations of assets, taxes paid and possible conflicts of interest, because of opposition from the ruling Institutional Revolutionary Party. The Senate also blocked a law to grant independence to a new anti-corruption prosecutor. Unless Congress calls an extraordinary session and passes the measures by May 28th, a proposed National Anti-corruption System is unlikely to be implemented. + +Thinking inside the zone + + + +Hundreds of protesters stormed the barriers around the “Green Zone” in Baghdad, the capital of Iraq, and entered parliament calling on MPs to approve a government of technocrats. Many Iraqis view the current government, in which ministries are shared out between big ethnic and religious voting blocks, as corrupt and ineffective. See article. + +An Israeli man was sentenced to life in prison for the abduction and murder of a Palestinian teenager during an upsurge of violence in 2014. The incident occurred shortly after three Israeli teenagers were murdered on the West Bank in an attack attributed to members of Hamas. + +The International Monetary Fund cut its forecast for economic growth in sub-Saharan Africa this year to 3%, which would be the slowest rate since 1999. The fund had previously expected growth of 4.3% + +In Kenya the government set fire to 105 tonnes of ivory, around 5% of the world’s total, as part of a campaign to stigmatise the trade and protect elephants from poachers. + +Polling stations + +With his treasurer unveiling a budget that, among other things, promised to penalise multinational companies that moved profits offshore to avoid tax, Malcolm Turnbull, the prime minister of Australia, paved the way for an early general election on July 2nd. He will struggle to keep the hefty majority for his Liberal-National coalition that he inherited from his predecessor as prime minister, Tony Abbott, whom he defenestrated from office last September. See article. + +Vijay Mallya, the founder of Kingfisher airlines and one of India’s most prominent businessmen, stood down from the seat he holds in Parliament amid questions about outstanding debts. Mr Mallya left India in March, before a court issued a warrant for his arrest. Known as “the king of good times”, his lavish lifestyle had become a symbol of the rise of India’s go-getter capitalist class. + +Gucci, a European luxury- goods maker, warned shops in Hong Kong not to sell paper replicas of its handbags, shoes and jewellery that are burned as offerings to deceased relatives, so that they may be surrounded by comforts in the next world. It is not known what the recipients think. + +Out-of-office message + +Turkey’s prime minister, Ahmet Davutoglu, is being forced out over tensions with the president, Recep Tayyip Erdogan. The pair have been at odds over peace talks with Kurdish rebels and constitutional changes to boost the presidency, among other things. See article. + +The European Commission recommended that Turkish citizens be allowed to travel in EU countries visa-free. The move would fulfil a key condition of the deal reached in March between Brussels and Ankara to stem the flow of Middle Eastern migrants across the Aegean Sea, but some European governments oppose the shift. The commission also proposed measures to punish EU member states that do not accept their quota of asylum-seekers. See article. + +Spain announced that it will hold another general election on June 26th, after months of talks between the parties failed to produce a government. At the election last December, Spaniards split their votes between two establishment parties and two upstarts, and neither the governing centre-right People’s Party nor the opposition Socialists could forge a coalition. Opinion polls indicate that new elections may return similar results. + + + +Leicester City, an English football club, pulled off one of the all-time sporting upsets by winning the Premier League title just a year after narrowly avoiding relegation to a lesser division. Starting odds of 5,000 to 1 meant several lucky gamblers collected tens of thousands of pounds from betting on the team’s fairy-tale success. Some punters who cashed out early for a guaranteed lower return are now ruing that decision as an own goal. See article. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21698299-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +May 7th 2016 | From the print edition + +Europe’s big banks followed the trend of their American counterparts with generally dismal first-quarter earnings. The share prices of UBS and Commerzbank fell sharply after each said net profit had fallen much more than had been expected compared with the same three months last year, to SFr707m ($712m) at UBS of Switzerland and €163m ($180m) at Commerzbank of Germany. HSBC’s pre-tax income dropped by 14% to $6.1 billion, but the bank pointed out it was on track in restructuring its business to focus more on Asia. + +A share issue by Banca Popolare di Vicenza flopped. Italy’s tenth-largest bank had tried to raise capital to satisfy European regulators through a share sale, but few investors were interested, leaving a bank-rescue fund created by other Italian financial firms to underwrite the whole issue. See article. + +The European Central Bank decided to phase out the €500 banknote ($570) by late 2018 because of the proclivity of criminals and terror groups to use them. The last time €500 bills were printed was 2014, but they are popular among law-abiding folk in Germany and some other European countries. + +Transatlantic drift + +Intercontinental Exchange, which runs the New York Stock Exchange, decided not to bid for the London Stock Exchange, which has already agreed to a merger with Deutsche Börse. In March ICE announced that it was considering whether to make a rival offer; it says the London exchange displayed a “disappointing level of engagement”. + +In a surprise decision Australia’s central bank reduced its benchmark interest rate by a quarter of a percentage point, to 1.75%. It was the first cut in a year and came after one measure of Australia’s inflation rate dipped to 1.5%. See article. + +Halliburton and Baker Hughes called off their $28 billion merger, which would have rivalled Schlumberger in size in the oilfield-services industry. The deal had run into opposition from antitrust officials, notably in America where the Justice Department recently signalled its intent to block the merger. See article. + +The torrent of mergers in the health-care industry kept flowing. IMS Health and Quintiles agreed to combine in a $9 billion transaction that will integrate the wide range of data services they provide to drug companies, from tracking medical claims to advice on clinical trials. Another big deal was Abbott Laboratories’ $25 billion takeover of St Jude Medical, which brings together two of America’s biggest makers of medical devices for hearts. + +A civil lawsuit in Brazil was filed against Vale and BHP Billiton seeking $44 billion in damages for the collapse of a dam last November that was run jointly by the two mining companies. The disaster killed 19 people and polluted hundreds of miles of rivers. Said to be Brazil’s worst environmental disaster, lawyers say the claim for damages has been calculated by comparing the costs from BP’s oil spill in the Gulf of Mexico in 2010. + + + +Despite a brewing political crisis Brazilians have not been crying into their beer as much as AB InBev would like. The beermaker, which counts Budweiser among its labels, posted a steep fall in profit for the first quarter, to $844m, partly because sales in Brazil drooped. + +Comcast announced that it would buy DreamWorks Animation, which includes the “Shrek” films in its stable of hits, for $3.8 billion. + +Little problems in big China + +The world’s most valuable company, Apple, lost an unusual trademark case in China when a court in Beijing found in favour of Xintong Tiandi, a seller of leather goods with the name “iPhone” emblazoned on them. The court ruled that Apple had failed to prove that the iPhone was well-known in China before Xintong Tiandi filed its trademark application in 2007. + +Craig Steven Wright, an Australian computer scientist, claimed that he was “Satoshi Nakamoto”, the reclusive creator of bitcoin. Mr Wright released what he claimed was cryptographic proof that he is Mr Nakamoto, five months after he was outed in an investigation by two tech publications. But his initial proof was swiftly debunked and doubts remain if he is the right man. See article. + +Being and nothingness + +In France an executive sued his former employer for making his job too boring. The man claims he suffered from “bore out” when his superiors downsized his role as general-service director and asked him to perform non-work-related tasks, such as picking up their children from lessons. The existential strain of doing nothing led to months of sick leave, after which the man was let go. He wants €360,000 ($415,000) in damages. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21698297-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +May 7th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21698300-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +American politics: Trump’s triumph + +China’s financial system: The coming debt bust + +Child refugees: Under-age and at risk + +Crony capitalism: Dealing with murky moguls + +Fairy tales: Underdogs are overrated + + + + + +Articles Sections Next + +American politics + +Trump’s triumph + +Donald Trump’s victory is a disaster for Republicans and for America + +May 7th 2016 | From the print edition + + + +DURING its 160-year history, the Republican Party has abolished slavery, provided the votes in Congress to pass the Civil Rights Act and helped bring the cold war to a close. The next six months will not be so glorious. After Indiana’s primary, it is now clear that Republicans will be led into the presidential election by a candidate who said he would kill the families of terrorists, has encouraged violence by his supporters, has a weakness for wild conspiracy theories and subscribes to a set of protectionist and economically illiterate policies that are by turns fantastical and self-harming. + +The result could be disastrous for the Republican Party and, more important, for America. Even if this is as far as he goes, Mr Trump has already done real damage and will do more in the coming months. Worse, in a two-horse race his chances of winning the presidency are well above zero. + +It is possible that, with the nomination secured, Mr Trump will now change his tone. The crassness of his insults may well be muted as he tries to win over at least some of the voters, particularly women, who now abhor him. His demeanour may become more presidential (though there was little sign of that in this week’s bizarre and baseless pronouncements that the father of Ted Cruz, his erstwhile rival, had been around Lee Harvey Oswald before he shot John F. Kennedy). What he will almost certainly not do is change political course. For it is increasingly clear that Mr Trump has elements of a world view from which he does not waver (see article). These beliefs lack coherence or much attachment to reality. They are woven together by a peculiarly 21st-century mastery of political communication, with a delight in conflict and disregard for facts, which his career in reality television has honed. But they are firm beliefs and long-held. + +Beyond the braggadocio + +That world view was born, in part, on his father’s construction sites in New York in the 1960s. Mr Trump likes to explain that he once spent his summers working in such places alongside carpenters, plumbers and men carrying heavy scaffolding poles. That experience, he claims, gave him an understanding of the concerns of the hard-working blue-collar men whom American politics has left behind. It explains his deep-rooted economic nationalism. + +Mr Trump has railed against trade deals for decades. He was arguing against NAFTA in the early 1990s. He now calls it the worst trade deal in the history of the world. Similarly, he has always viewed America’s trade deficit as evidence of foul play or poor negotiating skills. For a man with such convictions, it is plain that more such trade deals would be a disaster and that American companies should move production back home or face tariffs. Mr Trump might be willing to bargain over the penalties they should pay, but the underlying instincts are deeply held. He is a conviction protectionist, not an opportunistic one. And, judging by the results of the Republican primaries, at least 10m voters agree with him. + +On foreign policy Mr Trump mixes a frustration at the costs of America’s global role, something that has become common after the wars in Iraq and Afghanistan, with a desire to make the country feared and respected. Those outside America who dwell on his geographical and diplomatic ignorance (of which there is plenty) risk missing the simple principle that animates him. Mr Trump wants to make those outside America pay the full cost of the hegemonic protection it gives them. Allies should have to stump up more for American bases on their soil, and for the costs of equipping and paying the soldiers in them. It is not correct to call this isolationism, since Mr Trump has also proposed some foreign adventures, including the occupation of Iraq and seizure of its oilfields. Rather it is a Roman vision of foreign policy, in which the rest of the world’s role is to send tribute to the capital and be grateful for the garrisons. + +Counting the damage + +For those, such as this newspaper, who believe in the gains from globalisation and the American-led liberal order, this is a truly terrifying world-view. Fortunately, Mr Trump will probably lose the general election. A candidate whom two-thirds of Americans view unfavourably will find it hard to win 65m votes, which is about what the winning candidate will need. The share of women who disapprove of him is even higher. + + + +America's primary agenda: our interactive 2016 election calendar + +But that should be scant comfort, for even without a victory in November Mr Trump’s coronation as candidate will cause damage. There may be violence at the Republican convention in Cleveland, where Trump supporters and protesters are likely to clash. Voters will spend the next six months hearing over and over again that Hillary Clinton, his Democratic opponent, is a crook and a liar. Much of that will stick even if she wins, leaving those who believe it enraged and Mrs Clinton weakened. America’s allies will watch the polls fearfully: whether at the UN Security Council or at bilateral talks in Beijing, Mr Trump’s spectre will loom over every meeting between America and a foreign power between now and November 8th. + +The Republican Party, always fractious, may actually fracture. Even if he loses, Mr Trump will have shown that there is a path to the nomination that runs via nativism and economic populism. Mountaineers know that the surest route to the summit is the one that has worked before. Some Republicans will say that Mr Trump’s message, shorn of its roughest edges, could deliver victory next time. Others will argue that he lost because he was not a true conservative. Without agreement on what went wrong, it will be hard to forge something new. + +And then, of course, there is the possibility that he might just win. Mrs Clinton is not loathed by as many Americans as Mr Trump is, but the share who view her unfavourably is far higher than is usual for presidential nominees. Just as the killings in Paris in December energised Mr Trump’s campaign, a terrorist attack or other event that terrified Americans could tip the vote his way. The balance of probability is against, but none of this is impossible. That is why Mr Trump’s triumph has the makings of a tragedy for Republicans, for America and for the rest of the world. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21698251-donald-trumps-victory-disaster-republicans-and-america-trumps-triumph/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +China’s financial system + +The coming debt bust + +It is a question of when, not if, real trouble will hit in China + +May 7th 2016 | From the print edition + + + +CHINA was right to turn on the credit taps to prop up growth after the global financial crisis. It was wrong not to turn them off again. The country’s debt has increased just as quickly over the past two years as in the two years after the 2008 crunch. Its debt-to-GDP ratio has soared from 150% to nearly 260% over a decade, the kind of surge that is usually followed by a financial bust or an abrupt slowdown. + +China will not be an exception to that rule. Problem loans have doubled in two years and, officially, are already 5.5% of banks’ total lending. The reality is grimmer. Roughly two-fifths of new debt is swallowed by interest on existing loans; in 2014, 16% of the 1,000 biggest Chinese firms owed more in interest than they earned before tax. China requires more and more credit to generate less and less growth: it now takes nearly four yuan of new borrowing to generate one yuan of additional GDP, up from just over one yuan of credit before the financial crisis. With the government’s connivance, debt levels can probably keep climbing for a while, perhaps even for a few more years. But not for ever. + +When the debt cycle turns, both asset prices and the real economy will be in for a shock. That won’t be fun for anyone. It is true that China has been fastidious in capping its external liabilities (it is a net creditor). Its dangers are home-made. But the damage from a big Chinese credit blow-up would still be immense. China is the world’s second-biggest economy; its banking sector is the biggest, with assets equivalent to 40% of global GDP. Its stockmarkets, even after last year’s crash, are together worth $6 trillion, second only to America’s. And its bond market, at $7.5 trillion, is the world’s third-biggest and growing fast. A mere 2% devaluation of the yuan last summer sent global stockmarkets crashing; a bigger bust would do far worse. A mild economic slowdown caused trouble for commodity exporters around the world; a hard landing would be painful for all those who benefit from Chinese demand. + +Brace, brace + +Optimists have drawn comfort from two ideas. First, over three-plus decades of reform, China’s officials have consistently shown that once they identified problems, they had the will and skill to fix them. Second, control of the financial system—the state owns the major banks and most of their biggest debtors—gave them time to clean things up. + +Both these sources of comfort are fading away. This is a government not so much guiding events as struggling to keep up with them. In the past year alone, China has spent nearly $200 billion to prop up the stockmarket; $65 billion of bank loans have gone bad; financial frauds have cost investors at least $20 billion; and $600 billion of capital has left the country. To help pump up growth, officials have inflated a property bubble. Debt is still expanding twice as fast as the economy. + +At the same time, as our special report this week shows, the government’s grip on finance is slipping. Despite repeated efforts to restrain them, loosely regulated forms of lending are growing quickly: such “shadow assets” have increased by more than 30% annually over the past three years. In theory, shadow banks diversify sources of credit and spread risk away from the regular banks. In practice, the lines between the shadow and formal banking systems are badly blurred. + +That creates two risks. The first is higher-than-expected losses for the banks. Hungry for profits in a slowing economy, plenty of Chinese banks have mis-categorised risky loans as investments to dodge scrutiny and lessen capital requirements. These shadow loans were worth roughly 16% of standard loans in mid-2015, up from just 4% in 2012. The second risk is liquidity. The banks have become ever more reliant on “wealth management products”, whereby they pay higher rates for what are, in effect, short-term deposits and put them into longer-term assets. For years China restricted bank loans to less than 75% of their deposit base, ensuring that they had plenty of cash in reserve. Now the real level is nearing 100%, a threshold where a sudden shortage in funding—the classic precursor to banking crises—is well within the realm of possibility. Midsized banks have been the most active in expanding; they are the place to look for sudden trouble. + +Pandamonium + +The end to China’s debt build-up would not look exactly like past financial blow-ups. China’s shadow-banking system is big, but it has not spawned any products nearly as complex or international in reach as America’s bundles of subprime mortgages in 2008. Its relatively insulated financial system means that parallels with the 1997-98 Asian crisis, in which countries from Thailand to South Korea borrowed too much from abroad, are thin. Some worry that China will look like Japan in the 1990s, slowly grinding towards stagnation. But its financial system is more chaotic, with more pressure for capital outflows, than was Japan’s; a Chinese crisis is likely to be sharper and more sudden than Japan’s chronic malaise. + +One thing is certain. The longer China delays a reckoning with its problems, the more severe the eventual consequences will be. For a start, it should plan for turmoil. Policy co-ordination was appalling during last year’s stockmarket crash; regulators must work out in advance who monitors what and prepare emergency responses. Rather than deploying both fiscal and monetary stimulus to keep growth above the official target of at least 6.5% this year (which is, in any event, unnecessarily fast), the government should save its firepower for a real calamity. The central bank should also put on ice its plans to internationalise the yuan; a premature opening of the capital account would lead only to big outflows and bigger trouble, when the financial system is already on shaky ground. + +Most important, China must start to curb the relentless rise of debt. The assumption that the government of Xi Jinping will keep bailing out its banks, borrowers and depositors is pervasive—and not just in China itself. It must tolerate more defaults, close failed companies and let growth sag. This will be tough, but it is too late for China to avoid pain. The task now is to avert something far worse. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21698240-it-question-when-not-if-real-trouble-will-hit-china-coming-debt-bust/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Child refugees + +Under-age and at risk + +Unaccompanied children are the neediest kind of refugee + +May 7th 2016 | From the print edition + + + +IN 1939, at great personal risk, an English stockbroker rescued 669 Jewish children from Nazi-occupied Czechoslovakia. Nicholas Winton travelled to Prague, helped the children onto trains and battled with his own country’s bureaucrats to have them admitted to Britain. Among those he saved from the gas chambers was Alf Dubs, now a Labour peer, who is pressing Britain’s government to grant asylum to refugee children in Europe without their parents. + +He has met stout resistance. On April 25th the House of Commons, including nearly all MPs from the ruling Conservative Party, voted against Lord Dubs’s proposal to admit 3,000 of these children. After an outcry from various charities, on May 4th the prime minister, David Cameron, relented somewhat. Reversing his previous stance that Britain would take refugees directly only from the region around Syria, he said that the country would take an unspecified number of unaccompanied children from European camps. + +That is a start. But neither Britain nor the rest of Europe has done nearly enough to provide proper homes for the 90,000 unaccompanied refugees under the age of 18 who made their way to the European Union last year. They do not face the same peril that Lord Dubs once did, but their plight is dire. Many are in squalid camps in Italy and Greece. Hundreds are in the lawless “jungle” of Calais. By one estimate 10,000 have gone missing in the past two years. Many end up sleeping rough, or turning to prostitution or theft to get by. Others are underfed or unwell, and desperate to be in school. These are not adults who can look after themselves. They need help. + + + +INTERACTIVE: Where in Germany offers the best opportunities for refugees? + +Sweden and Germany have taken the largest number, though both countries are getting stricter. France and Spain have taken hardly any. Opponents of granting asylum to these children make three main arguments. First, it is hard to tell if they are all really minors. Second, letting them stay would spur more children to undertake the hazardous voyage across the Mediterranean. Third, granting them legal papers would allow their parents to come and join them. + +Did some refugees lie about their age? Of course, and it is indeed hard to check—few packed their birth certificates when fleeing the barrel-bombs. But most are plainly children. + +Would granting asylum to children already in Europe prompt more to board leaky boats? Perhaps, but probably not many. Since the European Union struck a deal with Turkey on March 18th, it has become far harder for refugees to cross the sea to Greece. Future asylum-seekers are likely to be screened while still in Turkey or Jordan, thus avoiding a potentially lethal voyage and the vast fares charged by people-traffickers. + +Will Syrian parents seek to rejoin their children? One certainly hopes so. In many cases, however, the parents are dead. In the meantime, this is a humanitarian crisis, so politicians should err on the side of generosity. Supporting a few thousand more foster parents would not cost much. + +The least we can do + +Granting asylum to the 90,000 unaccompanied children should not be a substitute for letting in more adult refugees. Nor should Europe stint in offering aid to help refugees in Turkey and Jordan find jobs (see article). The refugee crisis must be tackled on several fronts, over several years. In the short term, however, the least Europeans can do is to keep the lost children of Syria safe. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21698254-unaccompanied-children-are-neediest-kind-refugee-under-age-and-risk/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Crony capitalism + +Dealing with murky moguls + +How to disentangle business from government + +May 7th 2016 | From the print edition + + + +THE past 20 years have been a golden age for crony capitalists—tycoons active in industries where chumminess with government is part of the game. As commodity and property prices soared, so did the value of permits to dig mines in China or build offices in São Paulo. Telecoms spectrum doled out by Indian officials created instant billionaires. Implicit state guarantees let casino banking thrive on Wall Street and beyond. Many people worried about a new “robber baron” era, akin to America’s in the late 19th century. They had a point. Worldwide, the worth of tycoons in crony industries soared by 385% in 2004-14, to $2 trillion, or a third of total billionaire wealth; much of it (though by no means all) in the emerging world. + +Now cronies are on the back foot. Their combined fortunes have dropped by 16% since 2014, according to our updated crony-capitalism index (see article). One reason is the commodity crash. Another is a backlash from the middle class. Corruption scandals have lit a fire under governments in Brazil and Malaysia. Elsewhere, pressure is coming from the top down. India’s reforming prime minister, Narendra Modi, is trying to subject his partly closed economy to a blast of competition. Xi Jinping, China’s autocrat, thinks graft is the big threat to one-party rule, and is trying to root it out. + +Crony capitalism—or “rent-seeking”, as economists call it—shades from string-pulling to bribery. Much of it is legal, but all of it is unfair. It undermines trust in the state, misallocates resources and stops countries and true entrepreneurs from getting rich. So the dip in crony activity is welcome. To stop it roaring back, governments need to seize the moment. + +A few will not want to. Cronyism is central to Vladimir Putin’s vision of Russia, the country that scores worst in our ranking. Others, though goaded by public anger at inequality and corruption, will find it hard to confront vested interests. On April 29th Mexico’s Senate failed to pass two anti-corruption measures (see article). Often the biggest difficulty is knowing where to start. It is all very well to demand efficient courts, fair regulators and an end to illicit political funding. These matter, but are the work of generations. + +The quickest fixes + +So governments should focus on four quicker steps. The first is to take care when public resources pass into private hands. Botched privatisations created Russia’s oligarchy—and many cronies elsewhere. Mexico is opening up its oil monopoly; Saudi Arabia plans to; and other developing countries, from Brazil to India to China, may privatise state-controlled firms to raise cash and improve efficiency. Unless the sales are fair, a new generation of cronies will be born. + +Second, governments must rein in state-owned banks. In the past decade state-lending booms in Brazil, India and China have enriched well-connected moguls—and built mountains of bad debt. Rather than prop up the banks, governments should overhaul the way they are run. + +The third step is to make it harder to stash crony cash overseas. Global capital flows have made the world richer, but also allowed cronies to hide in tax havens. Public registers of “beneficial ownership”—the humans behind the trusts and shell companies—would make that harder. This is on the agenda of an anti-corruption summit in London next week (see article). + +Finally, be prepared for cronyism to adapt. China’s epic industrial boom will not be repeated; the days of making billions by shipping iron ore from Goa to Guangdong are over. Technology may be cronyism’s next frontier. It is ripe for rent-seeking: profits are huge and monopolies arise naturally. Governments should not seek to micromanage tech firms, but ought to push vigorously for competition and transparency. + +America’s original robber barons provoked a reaction that led to the Progressive era. At the turn of the 20th century, politicians passed antitrust laws and corruption ebbed. America became richer, stronger and more politically stable. Emerging economies face a similar moment. They should not waste it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21698261-how-disentangle-business-government-dealing-murky-moguls/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Fairy tales + +Underdogs are overrated + +Leicester City’s success should be celebrated, but not sentimentalised + +May 7th 2016 | From the print edition + + + +THE British like being on the side of the underdog. This affinity has more than a whiff of historical hypocrisy; the British empire, a distinctly top-doggy affair, was hardly noted for its enthusiastic encouragement of the downtrodden. Still, it is a genuine part of the national character. So when, on the evening of May 2nd, Leicester City were anointed champions of the English Premier League, a football competition, the country was united in delight. Bookmakers, to their subsequent regret, had set the odds of such a victory at 5,000 to 1. Leicester’s triumph was heralded as the greatest underdog story in sporting history, and Britain rejoiced in it. + +The world is short enough of occasions for joy that to disparage such a blameless one may seem harsh. No one would begrudge the long-suffering supporters of Leicester, or the citizens of this East Midlands city (see article), their moment of jubilation. But a delight in seeing the expected undone can be a pathway to poor thinking. It encourages people to value the quality of narratives over the desirability of outcomes; to indulge in unrealistic assessments of their own potential; and to set too little store by one of the greatest achievements of civilisation: predictability. + +There is a fairy-tale appeal to stories in which people vanquish great odds. But the tellers of tales are able to stack the deck and deal the winning hand to someone deserving. Real life is not so accommodating; having a good story in no way equates to being a good person. Lance Armstrong’s comeback from cancer was a profoundly inspiring narrative, but it did not make him a deserving winner of the yellow jersey. The fact that many pundits who wrote off Donald Trump last summer are now eating crow does not make his rise admirable, desirable or amusing. It is undeniably plucky of North Korea, despite the challenges it faces, to have got through some preliminary heats in the nuclear-arms race. So what? + + + +INTERACTIVE: Flying foxes - footballing pay and performance + +Surely Leicester’s underdog triumph has an inspirational value? Perhaps. But to delight in underdogs only when they win is rather to miss the point of what an underdog is. Most of the people thus inspired will go on to no comparable triumph; one unlikely outcome does not make others more likely. If it is good and kind to suggest to people that the odds against their dreams are shorter than they think, then Las Vegas is truly a very good, kind city. But most do not think it so. + +That leaves the argument that the world is somehow a richer place if its events and contests are less predictable. But when the author of the book of Ecclesiastes cautioned that the race was not always to the swift, nor the battle to the strong, he did not do so with any sense of satisfaction at this state of affairs; he was lamenting how little his world made sense. When Damon Runyon, the bard of Broadway, noted that though these biblical caveats about races and battles had some truth, that was still the way to bet, he was proclaiming a salutary view that things could be predicted, and were all the better for it. + +Leicester we forget + +Making the world more predictable allows people to put more into it and get more out of it. This is the great work of civilisation, from explanations of nature through science to expectations that justice will be delivered through the law. A probabilistic nihilism that delights in the unexpected in and of itself sets at naught such achievements. So well done, Leicester. But if consistency has value, there is no team quite like Arsenal. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21698263-leicester-citys-success-should-be-celebrated-not-sentimentalised-underdogs-are-overrated/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On business in Iran, Dilma Rousseff, interest rates, English language, Republicans, solar power: Letters to the editor + + + + + +Articles Sections Next + +On business in Iran, Dilma Rousseff, interest rates, English language, Republicans, solar power + +Letters to the editor + +May 7th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Doing business in Iran + +I would like to correct several points made in your article on business in Iran (“The over-promised land”, April 23rd). It is simply false that non-Iranian firms operating in Iran are cut off from the American financial system. Under the Joint Comprehensive Plan of Action foreign banks and firms may generally engage in business with Iran without risk of being cut off. With very limited exceptions, America’s primary embargo remains in place and prohibits access to the US system by or for Iran, which is something very different from what you described. As the secretary of state John Kerry noted, the United States has no objection to foreign banks engaging with Iranian banks and companies, as long as those banks and companies are not on our sanctions list for non-nuclear reasons. + +You also repeated a myth that the Treasury’s Office of Foreign Assets Control has in recent years imposed billions of dollars in fines on foreign companies simply for “dealing with Iran”. OFAC’s enforcement actions were in response to foreign banks routing billions of dollars of transfers through US banks on behalf of sanctioned parties, often doctoring records to avoid detection. Introducing such payments into American banks was illegal and was not simply “dealing with Iran”. + +You point to real concerns about the business climate in Iran, and we hope that the government in Tehran will address them quickly. To the extent that banks and firms have questions about American sanctions, I can only repeat the advice of Mr Kerry: do not assume. When in doubt, ask us. The bottom line is this: we are not standing and we will not stand in the way of business permitted under the Iran deal. Assertions to the contrary are flatly inaccurate. + +AMBASSADOR STEVE MULL + +Lead co-ordinator + +Office of Iran Nuclear Implementation + +US Department of State + +Washington, DC + + + + + +A rocky road for Rousseff + +None of the factors you listed about Brazil’s political situation exempts Dilma Rousseff from responsibility for the wrongdoings of her government (“The great betrayal”, April 23rd). She and the Workers’ Party (PT) must be held liable. The creative accountancy perpetrated by the government is not a mere “technicality”. Falsifying the fiscal surplus destroyed the credibility of our economic policy. According to Datafolha, a pollster, over 60% of Brazilians support her impeachment. + +Calling new elections would require a broad consensus to approve a constitutional amendment to allow that to happen. This would take several months and strain our electoral system, which is preparing for municipal elections. Brazil needs solutions. Impeachment could be a first step towards what you call “a thorough clean-up”. + +FELIPE ITO ANUATTI + +Ribeirão Preto, Brazil + + + + + +Interesting rates + +* Your article accurately describes one of the failures of America’s Congress to adequately fund the America’s Pension Benefit Guaranty Corporation (PBGC)—formed to guarantee the pension funds of corporations that went broke without adequate assets to cover their pension obligations (“Betraying the promise”, April 9th). That failure is minuscule compared to what the almost $20 trillion national debt has done to the long range actuarial soundness of public pension funds, such as Social Security; Medicare; and state and local government pensions, as well as thousands of private corporate pension funds and private 401(k)s. + + + +In order to ensure that they can meet their obligations, most pension funds assume an actuarial return of 6-9%. That much return must be met to satisfy their obligations based on their current level of contributions. They must invest conservatively—usually in government bonds—and if they can only receive a return of 1-2% on these investments the retirement income that pensioners rely on won’t exist. For every 1% rise in interest that the government has to pay to service its $20 trillion debt costs them $200 billion dollars. Even with the historically low interest rates of the last nearly ten years (1-2%) the Treasury can’t raise enough revenue to cover the cost of running the government. In the current fiscal year the deficit will be $400-500 billion dollars, and the government will have to borrow that much to keep operating. + + + +If the government raises interest rates to rescue the pension funds it won’t be able to pay the interest on the debt and will default. But if the rates are held down to 1-2% on government bonds, the pension funds will go broke (except the defined contribution funds, which will simply run out of money much sooner). I think that the government will keep interest rates low so that they can say that they are balancing the budget and that way they don’t have to talk about what that will do to pensioners. + +It’s a Catch-22. Does anyone know how to solve the problem? And why is no one talking about it? + + + +ROBERT BAKES + +Retired chief justice of the Idaho Supreme Court + +Eagle, Idaho + + + + + +Ringing in the changes + +Johnson should not entirely blame the European Union for the changes to English introduced by speakers of other European languages (April 23rd). He used the example of Europeans using “control” to mean “monitor” because contrôler has that meaning in French. But among British bird-ringers “control” was already in widespread use by 1965. It was used in “The Ringer’s Manual”, produced by the British Trust for Ornithology, albeit in the restricted sense of the recapture of a ringed bird in a place other than that at which it had been ringed. + +I recall Sir Landsborough Thomson, one of the founding fathers of British bird-ringing, pleading at that time for this usage to be dropped on the ground that “control” had a different and long-established meaning in science. To no avail: even the eminent cannot stem the tide of change in living languages. + +PROFESSOR JEREMY GREENWOOD + +Centre for Research into Ecological and Environmental Modelling + +University of St Andrews + +St Andrews, Fife + + + + + +Starr witness + +Your observation that “Republicans have a history of pinning imagined crimes” on Hillary Clinton is strongly supported by a source not usually cited on this point (“Unloved and unstoppable”, April 23rd). In November 1998, Kenneth Starr told the House Judiciary Committee that after years of investigating all accusations, he had nothing negative to report about either Bill or Hillary Clinton regarding Whitewater, the FBI files or the White House travel office. I complained about his delay in telling us this—until after the midterm elections—and asked, as an example, for the date on which he had exonerated the Clintons on the travel-office issue. He replied that there was no such date because there had never been any information implicating them in the first place. + +BARNEY FRANK + +Former member of Congress + +Newton, Massachusetts + + + + + +The sundowners + +If there is any chance that the world is to meet the Paris objectives on climate change, renewable energy such as solar power must surely be a key part of a solution (“The new sunbathers”, April 16th). However, focusing on concerns over the prices bid at recent auctions can be misleading, as those bids take no account of important related costs. You mentioned the investment needed to expand solar grids and for measures to mitigate the intermittency of solar power; these could easily add 50% to the prices quoted in recent bids. + +Solar power could become cost-competitive with gas and coal, especially if the costs of carbon were internalised. But we should not compare apples with oranges; that is what advocates of solar power encourage us to do. + +ANTHONY FRAYNE + +Montreal + + + + + +A brewing argument + +Regarding the Reinheitsgebot, or “German beer purity law” (“Pure swill”, April 23rd). Your withering comments about the quality of German beers were off target. The variation of flavours is wide despite the restrictions on ingredients. I am a member of the Campaign for Real Ale and frustrated at the regular addition of wheat to ales. + +LYNDA ATKINSON + +Swansea + +As a longtime Geordie exile in Germany with a sturdy Teutonic beer belly to prove it, I must take you to task over your vicious assault on the hallowed Reinheitsgebot. The shelves of my local supermarket are replete with cans of fizzy, heartburn-provoking foreign pop masquerading as beer rapidly approaching its best-poured-straight-down-the-toilet date. The Veltins and the Bitburger are being carted off by the crate load. + +If it don’t comply with the Reinheitsgebot, it ain’t gonna sell in Germany. Punkt, full stop, period. So who do you think you are kidding, lesser breweries, if you think old Deutschland’s done? + +PETER CAIN + +Trier, Germany + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21698215-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +The Republican nominee: Fear trumps hope + + + + + +Articles Sections Next + +The Republican nominee + +Fear trumps hope + +Donald Trump is going to be the Republican candidate for the presidency. This is terrible news for Republicans, America and the world + +May 7th 2016 | NEW YORK | From the print edition + + + +WHEREVER the eye falls in Donald Trump’s Manhattan office, on the 26th floor of Trump Tower, there is Trump. Images of the tycoon glower from walls plastered with covers of Playboy, GQ, Newsweek and more. Piles of campaign literature—“Trump—Make America Great Again!”—jostle with stacks of more recent Trump-fronted publications on a desk so packed as to recall a dentist’s waiting room. A mound of Trump-covered copies of The Economist has pride of place: “I put you up front,” he says solicitously. + +The pride Mr Trump takes in such self-aggrandising trumpery is almost touching. His Aladdin’s cave of celebrity puff, which doubles as the headquarters of a presidential campaign and large property company, is sufficiently eccentric to recall why his candidacy, announced at Trump Tower last June, was at first ridiculed. He looked like a chancer—a reality television star, with no serious political experience, who had changed his political stripes at least four times. Yet Mr Trump’s victory in Indiana on May 3rd (see article) has made him the presumptive Republican nominee. His remaining opponents, Senator Ted Cruz and Governor John Kasich, have quit the race. He was for far too long underestimated. The same must not be said of the threat his egomania and pernicious nativism represents to America and the world. + +His electoral success is founded on espousing a view of America both exceptionally bleak and widely shared. Two-thirds of Americans think the economy is rigged in favour of the rich; almost seven in ten believe their politicians don’t care about ordinary Americans. It is not hard to see why. Until the recent fall in the oil price, median real wages had been stagnant for over a decade. Between 2007 and 2014 the wages of many workers declined; the lowest-paid, struggling to adapt to falling demand for low-skilled factory labour, have been especially hard-hit. America’s infrastructure is crumbling. Its Middle Eastern policy has seen wars waged across the region. Terrorism—though it claimed fewer American lives last year than toddlers with guns—has become a national bogeyman. + +Strange but not a stranger + +Mr Trump inflates and conflates these problems into an absurd caricature of undiluted failure and decline. “We’re like a third-world country,” he laments. America “makes the worst trade deals ever made in the history of trade…We’ve spent $4 trillion in the Middle East and we’re in far worse shape than we were before…China, it doesn’t respect us.” He must believe some of this; his opposition to free trade is long-standing. Yet his miserabilism is plainly tactical. It gives him opportunity to throw a few popular scapegoats to his despondent supporters: job-stealing illegal immigrants—including the “rapist” Mexicans he denounced when he launched his campaign; factory-killing Chinese trade negotiators, whom he accused this week of “raping” America; “incompetent” and “crooked” politicians. + +His success, in short, is based on inviting the most exaggeratedly down-in-the-mouth Americans to indulge their meanest instincts. To attend a Trump rally, as hundreds of thousands of Americans now have, is to participate in a ritual enactment of injury and vengeance; an enactment which has, on occasion, done real harm. + +As when two thugs in Boston who had beaten a homeless Hispanic man with an iron bar quoted Mr Trump to the police in justification; as when an aged Trump supporter in North Carolina assaulted a protester after, in Las Vegas, Mr Trump himself had screamed “I’d like to punch him in the face!” over the cries of another such. Or as in Virginia, when a Trump rally, interrupted by protesters from the group Black Lives Matter, appeared to totter on the brink of a race riot. It is probably only a matter of time before one of the journalists Mr Trump keeps caged up at the back of the rallies gets badly beaten. One of his party tricks is to insult them—“some of the most dishonest people in the world”—and invite his crowds to jeer. From the cage, as opposed to the privacy of his Manhattan office, where Mr Trump is immensely charming, he does not seem solicitous. He seems threatening and vile. + +Some commentators say he is a fascist—an idea he encouraged by inviting his followers to pledge their allegiance to him with a fascist-style salute at a rally in Florida. This seems like an exaggeration, however, and, given his hunger for a grievance, self-defeating. There is, similarly, no reason to suppose he is racist, as many have. But a significant minority of his supporters are—17% of them consider ethnic diversity bad for America, a strikingly high number—and Mr Trump’s dog-whistling on immigration seems at least partly designed to appeal to them. No wonder 86% of African-Americans and 80% of Hispanics have a negative view of him. Through a conscious effort to spread discord he regularly transgresses moral lines that no decent American public figure ever should. His methods are abhorrent to most Americans; two-thirds of voters dislike him. Yet the minority that does not balk at them is growing. + + + +For most of the Republican contest, Mr Trump got around 35% of the vote, mainly from white men with only a high-school education. That was more than his rivals—a starting line-up of 17, including four senators, of whom Mr Cruz was the last left standing, and nine current or former governors, including Mr Kasich. But it was low enough to make Mr Trump seem a weak front-runner, unable to win a majority in any state, and apparently dependent for his advantage on the way his opponents had split the mainstream Republican vote. Once the field was winnowed, it was assumed, Mr Trump would be trumped. + +Gonna come in first place + +Yet it was he who was to prove the main beneficiary of that consolidation. He won his first outright majority in his home state of New York on April 19th. He has since matched that feat six times on the trot; in Indiana he won 53% of the vote. In so doing he has started picking up support from other groups, including college students and women, previously averse to him. + +Evangelical Christians have been strangely drawn to Mr Trump from early on. Working-class evangelicals, in particular, took him to victory in southern states such as Georgia and South Carolina. In Indiana, Mr Trump won evangelicals, who represent half the state’s primary electorate, by eight percentage points—which might seem surprising. Mr Trump is thrice-married and irreligious. On primary day in Indiana he also gave voice to an outlandish slander against Mr Cruz’s father, a well-known evangelical preacher. (He suggested, on the basis of no evidence, that Mr Cruz senior had been involved in the murder of John F. Kennedy: “I mean, what was he doing—what was he doing with Lee Harvey Oswald shortly before the death? Before the shooting? It’s horrible.”) + +Despite the initial size of the field, Mr Trump is on the verge of breaking the record for votes won in the Republican primaries (10.8m, set by George Bush in 2000). That is partly because, owing to a combination of riled activists and a growing population, more people vote in Republican primaries these days. He is still a long way shy of the 66m votes with which Mr Obama won re-election in 2012. Yet the size of the haul and the growing breadth of his appeal underlines the fact that, despite his divisiveness, Mr Trump has a solid chance of becoming president. + +His odds are helped by having a probable opponent, Hillary Clinton, who is also disliked; around half of voters take a poor view of her. Mrs Clinton must be thrilled to have an opponent more unpopular still, and whom she has beaten in all but two of the last 58 head-to-head polls. Yet such polling tends to be a poor guide until after the party conventions, which focus voters’ minds. And being unpopular is always a weakness. Mrs Clinton’s victory over Mr Trump, though likely, is not assured. + + + +He would be a disastrous president. If Mr Trump’s diagnosis of what ails America is bad, his prescriptions for fixing it are catastrophic. His signature promise is to wall off Mexico and make it pay for the bricks. Even ignoring the fact that America is seeing a net outflow of Mexicans across its southern border this is nonsense. Mexico has already refused to pay. Mr Trump’s response was to threaten to stop remittances being sent home to Mexico: “It’s an easy decision for Mexico. Make a one-time payment of $5-10 billion to ensure that $24 billion continues to flow into their country year after year.” That would probably be illegal, and only by instituting capital controls could Mr Trump prevent people withdrawing cash from an American bank account in Mexico. His other big promises on the border, to deport 11m illegal immigrants and their offspring, and to bar all foreign Muslims from America—“until our country’s representatives can figure out what is going on”—are no better. + +Time for jumping overboard + +Mr Trump’s economic positions, some of which he rehearsed in his office, are also fantastical. For example, he has pledged to pay down America’s $19 trillion national debt in eight years, while at the same time cutting taxes by $10 trillion. Given that he has also pledged to protect Social Security, the Committee for a Responsible Federal Budget, an advocacy group, has estimated that he would have to cut other areas of government by 93% to meet his objective. He disagrees, citing the growth he promises to unleash by improving America’s trade terms and the savings he would make by rendering the government more efficient. Yet the contribution government waste and abuse makes to America’s $4 trillion federal budget is surely minuscule? “No, all over government,” Mr Trump blusters. “And I’ll tell you where there’s tremendous, tremendous money being spent is on the military. And yet I’m going to build up the military. But I’m going to build it up for us, not for every other country in the world. We’re spending massive amounts of money to protect other nations.” This sort of free-flowing nativist bunkum, purposefully delivered, including random references to unrelated national fears, is illustrative of Mr Trump’s rhetoric. + +Other countries should be worried, because Mr Trump has bad news for all of them. He would jettison America’s existing trade agreements in favour of short-term, bilateral negotiations undertaken in a spirit so spikily retaliatory as to make trade wars, with China for starters, inevitable. Mr Trump declared himself ready for that outcome, as he must: his professed willingness to walk away from any negotiation, whether with a rival property developer or the world’s second biggest economy, is part of his shtick. “They can’t afford it, we can,” he says. “We have a trade deficit with China of hundreds of billions of dollars a year.” + +To reinforce America’s military writ, Mr Trump would employ similar means. “Let’s say we say we’re going to have a 10% tax on goods coming in from China. Because they’re not supposed to be building in the South China Sea, and because they’ve devalued their currency…I’ll do that in a heartbeat.” He would demand that America’s allies pay “at least” the total cost of any protective American presence—or be abandoned to police themselves: “I would like to continue defending Japan. I would like to continue to defend South Korea. And I would like to defend Germany and Saudi Arabia and other countries. [But] they’ve got to pay up.” + +Wait till the party’s over + +Mr Trump would be even less indulgent towards America’s multilateral obligations. Asked whether, on the basis of his coruscating criticisms of the United Nations, which he called fat, sloppy and inactive, he would consider withdrawing America from that organisation, he says: “You always have to be prepared to walk or you can never get anything done. And that means walking from countries, in terms of defence, it means walking.” + +No one could be more appalled by Mr Trump’s success than the leaders of his own party, most of whom are free-traders and national-security hawks, and all of whom want to win in November. That explains the enthusiasm many Republican bosses and donors showed for the Stop Trump movement. Despite a growing probability that Mr Trump would be their champion, they poured over $5m into television and radio spots supporting Mr Cruz or denigrating Mr Trump in Indiana. (Mr Trump spent less than $1m.) + +They had no shortage of ammunition. Mr Trump has in the past bragged about his many sexual conquests. He has had recourse to bankruptcy law four times. His every speech is littered with lies. By one calculation, 76% of his political statements last year were untrue. In a normal year, his Republican critics would have stopped him; why did they fail? + +His unusual talents are part of the answer. Charismatic, tactically astute, charming at times and ruthless, Mr Trump is a far more formidable politician than almost anyone had suspected. His outrages have kept print- and broadcast-media attention focused on him; with nearly 8m followers on Twitter and a flair for pithy invective, he rules on social media, too. At the time of his entry into the race, his slander against Mexicans seemed naive as well as boorish; it now seems remarkable how well-formed his pitch to resentful, working-class whites was. He says this was because he understands and shares their concerns. “I worked summers when I was going to school with carpenters and electricians. You know my father was a builder in Brooklyn and Queens, predominantly…I worked with all of these guys, I know these guys.” That has a rare ring of truth. Expedience explains his positions on many issues, including guns, which he once disliked and now advocates, abortion, which he once accepted and now opposes, God, in Whom he previously showed little interest but now praises. His xenophobia and protectionism, however, have form. + +Call and response + +Newspaper clippings suggest he vigorously opposed the North American Free Trade Agreement in 1993: “The Mexicans want it and that doesn’t sound good to me,” he was reported as saying. On trade, revealingly, and unusually for a man who admits to no weakness, he is even prepared to acknowledge the negative consequences of his populism. Asked whether his supporters would not object, under a Trumpian trade regime, to being forced to pay more for an American-made product, he says: “Maybe they buy less of it. I see people buying five dolls for their daughters; maybe buy two dolls.” + +Yet if Mr Trump’s supporters like his message, many are also motivated by disdain for the party bosses who so haplessly opposed him. Exit polls in Indiana suggested half of Republican voters felt “betrayed” by their party. This is a harvest the party sowed in two ways. First, though it is a caricature to suggest, as Mr Trump and others have, that the Republicans have long made fools of distressed working-class whites by offering them God, the flag and tax cuts to the rich, it is a caricature with some truth to it. None of Mr Trump’s 16 rivals spoke convincingly to the concerns of wage-distressed workers; none had a thoughtful answer to them. + +Second, years of partisan grandstanding in Congress have discredited America’s entire political process, and the Republicans—especially those of them thrust to power by the party’s previous populist insurgency, the Tea Party—are mainly responsible. The several recent crises Republican congressmen have engineered over the passage of the federal budget, which they sought to hold hostage to their unrealistic and unconstitutional demands of Mr Obama, have earned the voters’ disdain. In that sense, the Trumpian revolt is not a continuation of the false promise raised by the anti-government Tea Party, but its successor. With Mr Trump’s nomination almost assured, its fires, too, must now rage and burn out. + +Trump against Clinton: the general election is shaping up to be hot and ugly. There appears to be little prospect of Mr Trump moderating his positions, by lurching to the more ameliorative centre that Republican leaders—fearing electoral annihilation—recommend. Whether he believes in his positions or not, they are mostly too extreme to be credibly revised. Apparently vindicated by his success in the primaries, Mr Trump seems to have little interest in changing tack. That also goes for his aggressive, often offensive methods. Turning to Mrs Clinton, his one-time wedding guest, the presumptive Republican nominee is disdainful. “She’s playing the woman card. That’s all she’s got going. She’s got nothing else going. The only thing she’s got is the woman card. And she plays it to the hilt,” fumes Mr Trump, whom 70% of American women dislike. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21698252-donald-trump-going-be-republican-candidate-presidency-terrible-news/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Indiana’s primaries: The fifth stage of grief + +The campaigns: Heard on the trail + +New York politics: Boss de Blasio? + +Ageing and income: Silver-haired in clover + +Disarray in the South: Sweet home + +Lexington: What next for Bernie Sanders + + + + + +Articles Sections Next + +Indiana’s primaries + +The fifth stage of grief + +Can Republicans accept Donald Trump as their nominee? + +May 7th 2016 | CROWN POINT, INDIANA | From the print edition + + + +“TRUMP is scary,” says Jim Adkins, the manager of a branch of Olive Garden, a restaurant chain, as he comes out of the banquet hall of the St Peter & Paul Macedonian Church, where he has just cast his vote for Hillary Clinton. Mr Adkins usually votes for the Republican Party, but this time he overcame his dislike for Mrs Clinton. An election volunteer, who overhears the conversation, says many Republican voters are defecting to the other side, thanks to the seemingly unstoppable rise of Donald Trump. + +These defections will play a role in the November elections, but in the Indiana primary on May 3rd only Republican votes counted for Mr Trump—and he won big. In spite of the local Republican establishment’s best efforts to halt his advance, he received 53% of the votes, compared with only 37% for Ted Cruz, the Texas senator who was the figurehead of a “Never Trump” alliance. John Kasich, the governor of Ohio, had ceased to campaign in Indiana to improve Mr Cruz’s chances; he got a measly 8%. Most of Indiana’s 57 delegates are likely to go to Mr Trump. He is now almost certain to reach the 1,237 bound delegates required to secure the Republican nomination. He will be unopposed in the states that are yet to vote. California alone offers 172 delegates, New Jersey hands out 51. Mr Trump has already passed the mark of 1,000 delegates. + +On the Democratic side the race was a bit tighter. Hillary Clinton, the front-runner, was beaten by Bernie Sanders, her only rival. Mr Sanders received 53% of the vote compared with 47% for Mrs Clinton, confounding polls that suggested she would win. Yet Mr Sanders still has virtually no chance of wresting the Democratic nomination from Mrs Clinton, who is already focused on the general election. + +The biggest news of the night was Mr Cruz’s decision to drop out of the race. “From the beginning I’ve said that I would continue on as long as there was a viable path to victory,” he said in a speech in Indianapolis, the state’s capital. “Tonight, I’m sorry to say it appears that path has been foreclosed. Together, we left it all on the field in Indiana.” The room was quiet. Some supporters cried. Several told reporters they would never vote for Mr Trump. + +Until as little as a week ago, Mr Cruz seemed to have a good chance to win by a decent margin in Indiana. He had bet big on the Midwestern state, making it a personal all-or-nothing battle. Yet Mr Trump’s surprisingly big victories in Maryland, Delaware, Pennsylvania, Connecticut and Rhode Island on April 26th gave the property tycoon a big boost. Trying to distract from Mr Trump’s victories in the north-east, Mr Cruz rushed to anoint Carly Fiorina, a former boss of Hewlett-Packard, as his running-mate in Indianapolis the next day. Two days later he managed to persuade Mike Pence, the state’s governor, to endorse him. + + + +Mr Cruz’s departure from the campaign is unlikely to be the end of his political career. The junior senator, a hardline conservative who advocates deep tax cuts skewed towards the rich, the loosening of environmental rules and business regulations, the repeal of Barack Obama’s health-care law and an increasingly fierce anti-immigrant rhetoric, is only 45 years old. In his speech on May 3rd he seemed to be leaving the door open to a comeback in some future year. “Our movement will continue, and I give you my word that I will continue this fight with all of my strength and all of my ability,” he said. + +Mr Trump is keen to get the supporters of Mr Cruz’s movement to back him instead, which is why he found unusually warm words in his victory speech for his rival, whom only the day before he had called “Lyin’ Ted” around two dozen times in a speech in Indiana. In his victory speech at Trump Tower in New York, Mr Trump said that he was not sure whether Mr Cruz liked him, but praised him anyway, as “a tough smart guy” and “one hell of a competitor”. + + + +America's primary agenda: our interactive 2016 election calendar + +Leading Republicans are starting to embrace Mr Trump’s takeover of their party. After the Indiana results were confirmed, Reince Priebus, chairman of the Republican National Committee, wrote that “Donald Trump will be presumptive GOP nominee, we all need to unite and focus on defeating Hillary Clinton”. After shock, anger and denial, much of what is left of the Republican establishment has reached acceptance. Mitch McConnell, the Senate majority leader, put out an artfully worded statement saying he was committed to supporting the Republican nominee and that the nominee was Mr Trump. + +Mr Kasich, the only remaining candidate with appeal to centrist Republicans (the unctuous Mr Cruz never hit it off with Washington insiders), jumped ship on May 4th. In a meandering speech in Ohio, the deeply religious governor said that as he was suspending his campaign he had “renewed faith, deeper faith, that the Lord will show me the way forward, and fulfil the purpose of my life”. Not one word about Mr Trump or any of his other rivals. + +Never since modern polling began have the two likely nominees of the big parties been so disliked by the electorate. Mr Trump’s net approval rating (where those who disapprove are subtracted from those who approve) is minus 40. Mrs Clinton is at a still-Siberian minus 20. + +Mr Adkins at the polling station says that he finds it hard to trust Mrs Clinton, but at least she is smart and experienced. On the other hand Faylene Altomere, a retired schoolteacher, voted for Mr Trump because “he seems to be sincere”. Her biggest worry is an explosion of violence at the convention in Cleveland. “It might be 1968 again,” she says, referring to the violent clashes between police and protesters at the Democratic convention in Chicago that year. Then, as now, voters were unhappy with the government—and deeply disliked the presumptive nominee. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21698320-can-republicans-accept-donald-trump-their-nominee-fifth-stage-grief/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +May 7th 2016 | From the print edition + +Character witness + +“Lucifer in the flesh...I have never worked with a more miserable son of a bitch in my life.” + +Former Speaker of the House, John Boehner on Ted Cruz. The Stanford Daily + + + +Touch the stars + +“They just wanted to get in with Donald.” + +Rival groups of supporters in Florida are fighting over which are the real “Trumpettes”. Gawker + +Riot grrrl + +“The only way [Trump] wins the general election is if he …repeal[s] women’s suffrage between now and November.” + +Tim Miller, press secretary for Jeb Bush’s defunct campaign. CNN + +Truther + +“This man is a pathological liar...The man cannot tell the truth, but he combines it with being a narcissist...the man is utterly amoral.” + +Ted Cruz finally nails the Donald + +Nobody loves us + +“It sucks to be California, we’re like the ugly stepchild. They need us for our cash and our donors, they don’t need us for anything else.” + +The California Republican Party is insulted by cheap seats in Cleveland. CNN + +The boys are back in town + +“I’m anticipating we’ll be doing a victory dance. But if the Republican Party tries to pull off any backroom deals and ignores the will of the people, our role will change.” + +Chris Cox, chainsaw artist and founder of Bikers for Trump, plans for the convention. Huffington Post + +You’re gonna miss me + +“They say Donald lacks the foreign-policy experience to be president, but, in fairness, he has spent years meeting…leaders from around the world: Miss Sweden, Miss Argentina, Miss Azerbaijan.” + +Barack Obama at his final White House Correspondents’ Association dinner + +Hedging your bets + +“I mean, I guess never say never. On the one hand, I’ll say #NeverTrump, and on the other hand, I’ll say never say never. I’ll leave it ambiguous. + +Former #NeverTrump leader and Weekly Standard editor, Bill Kristol, seems to have given up. Newsmax + +Bargain basement + +“Five dollar shirts. Something to wipe the tears off with.” + +Salesman at Mr Cruz’s concession rally. Matt Flegenheimer of the New York Times + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21698317-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +New York politics + +Boss de Blasio? + +Probes may reveal more about corruption in Albany than in City Hall + +May 7th 2016 | NEW YORK | From the print edition + +The mayor, probed + +“I NEED your prayers,” said Bill de Blasio, New York City’s mayor, to the pastor before addressing a congregation in Queens. He did not say why, but it may be because his administration is the subject of multiple investigations by federal, state and local enforcement and regulatory agencies. Most of the probes, including one by Preet Bharara, the federal lawyer trying to weed out corruption in New York state, involve money, specifically fundraising and campaign finance. Mr de Blasio has not been accused of any wrongdoing, but some in his inner circle have received subpoenas, including Emma Wolfe, a political adviser, Ross Offinger, his former top fundraiser, and BerlinRosen, a consulting firm with close ties to him. + +The investigations, among other things, are looking into whether his office avoided campaign-contribution limits by getting powerful unions and wealthy individuals to donate to upstate county committees. The money then seems to have been handed to candidates running for state Senate, which may have broken the law. Campaign-finance laws in New York, up to now, have not been well enforced. And guidelines are lacking. “The system seems to work on a wink-wink, nudge-nudge basis,” says Susan Lerner of Common Cause, a corruption watchdog. “Did [Mr de Blasio] say something instead of winking?” + +Mr de Blasio says there is a double standard. He has implied that he is being unfairly targeted. He may be right. At first glance, the various investigations might seem petty. But two questions remain: did his team engage in a quid pro quo, and did the mayor endorse it? There have long been accusations that Mr de Blasio is too close to developers who donated to his now closed non-profit. He has been accused of picking an unnecessary and unpopular fight to ban the horse-drawn carriages from Central Park because developers were said to want the land occupied by the stables. That the mayor’s team does not appear to have done anything that is not already common in Albany, the state capital, no longer sounds like much of a defence. + +On May 3rd Sheldon Silver, a Democrat and former Assembly Speaker, was sentenced to 12 years in prison after being found guilty of using his position to obtain nearly $4m in bribes and kickbacks. Corruption in New York does not stick to one side of the aisle. Dean Skelos, a Republican and former head of the state Senate, will receive his sentence next week. He was convicted of conspiracy, bribery and extortion and using his post for financial gain. Between 2004 and 2013 there were more than 500 public-corruption convictions in the state. According to Citizens United, state lawmakers are more likely to quit because of ethical or criminal issues than to die in office. Mr Bharara has called Albany a “cauldron of corruption”. + +New Yorkers are fed-up with dirty politicians. A Siena poll released on May 3rd showed that a whopping 97% of them want the governor and the legislature to pass new laws to address corruption in state government before the session ends next month. But they are extremely pessimistic that lawmakers will do anything about it. Previous efforts went nowhere, or did not go far enough. Andrew Cuomo, New York’s governor, vowed to clean up Albany, but he disbanded a commission to root out public corruption. + +City Hall does not share Albany’s reputation. But even if Mr de Blasio is cleared of all wrongdoing, the probes have severely damaged him, according to Doug Muzzio, a political scientist at Baruch College. The mayor has been the focus of damning headlines in local tabloids for days. All this distracts from his successes, points out Nicole Gelinas of the Manhattan Institute, a New York think-tank. Crime remains low even as it goes up elsewhere. Last month was the safest April in more than 20 years. Homelessness is down. For the moment Mr de Blasio’s reforms in criminal justice go unheralded, and governing is difficult while his top staff are receiving subpoenas. The whole business may also affect his re-election campaign, depending on how long the investigations last. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21698319-probes-may-reveal-more-about-corruption-albany-city-hall-boss-de-blasio/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Ageing and income + +Silver-haired in clover + +How demography distorts household-income statistics + +May 7th 2016 | From the print edition + + + +HOW fast are incomes growing? The answer swings elections; Ronald Reagan, on his way to victory in 1980, told voters to ask themselves if they were better off than they were four years earlier. It also shifts the political spectrum. Paltry wage growth since the financial crisis has fed populism in both parties. According to official statistics, real (ie, inflation-adjusted) median household income in 2014 was only 0.7% higher than in 1989, when the Gipper left office. It is a common refrain that since then rising inequality, trade and outsourcing have left middle America languishing behind. But several trends make household-income statistics look gloomier than they really are. + +Take household size. Since 1989, households have become, on average, 3.4% smaller, as fertility has fallen and living alone has become more common. In 1989 there were 2.63 Americans per household; today there are 2.54. Smaller households mean fewer earners (and fewer mouths to feed) in each, lowering median incomes without necessarily making anyone worse off. At the same time, higher earners are increasingly likely to marry one another. This pushes up inequality between households, but not between individuals. Since 1989, the real earnings of the median worker—a measure affected by neither of these trends—have grown by fully 13%. + +All that growth, however, came before 2000, lending credibility to Hillary Clinton’s claim that most workers have not seen a pay rise in 15 years. Small pay rises in the mid-2000s were wiped out by the financial crisis. But another trend is suppressing the recovery of incomes since the recession: ageing. Americans’ incomes usually peak in middle age, then decline as they head towards retirement. The median income of households headed by 45- to 54-year-olds in 2014 was $71,000; for households headed by 65- to 74-year-olds, it was only $45,000. + +This matters because America has been greying. The oldest of the baby-boom generation began to retire in 2008. Because workers who were once cashing paycheques are now drawing pensions, this has held down average income growth. Between 2010 and 2014, real median household income grew by 0.3%. But a weighted average of the median income in each age-group, with the weights frozen to reflect the age profile of the population in 2010, is up by 1.9%. This suggests that ageing is a significant drag on the headline measure. (When the numbers are not adjusted for ageing, the weighted-average measure is up by only 0.7%, so the different construction of the two measures accounts for only some of the gap.) + +There is a catch, though: although the old have lower incomes than the working-age, today’s oldies have benefited most from rising incomes in recent decades. For example, households headed by 65- to 74-year-olds have incomes almost 30% higher in real terms than similar households in 1989. By contrast, incomes of households headed by 45- to 54-year-olds are 7% lower (see chart). + +Why have the silver-haired done relatively well? Rising Social Security (public pension) payments are one answer. The median Social Security cheque has grown by 9% in real terms over the past decade. This is probably because today’s pensioners enjoyed rising incomes while they were working. Social Security entitlement grows with average wages, so rising wages in one decade deliver larger retirement cheques in the next. + +This phenomenon diminishes, but does not eliminate, ageing’s drag on incomes. Exclude over-65s entirely from the figures, and the weighted-average median income, with 2010’s population weights, grew by 1.5% (rather than 1.9%) between 2010 and 2014. + +Gender matters, too. Among women, real median earnings are up 32% since 1989; for men, growth was just 4.5%. But as more women entered the workforce, their lower earnings probably reduced average wages. Reagan’s question was simple enough for individuals to answer. For a whole country, it is much harder. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21698318-how-demography-distorts-household-income-statistics-silver-haired-clover/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Disarray in the South + +Sweet home + +The circular web of scandals that has ensnared Alabama’s leaders + +May 7th 2016 | MONTGOMERY | From the print edition + +A comfortable Bentley + +OSCAR WILDE’S quip doesn’t cover it. For not one, nor two, but three of a state’s highest officials to be embroiled in separate scandals goes beyond misfortune and carelessness and begins to look like a trend. And, in a way, in their strange intersections the pile-up of controversies in Alabama do create a pattern. It has the rough shape of a Mexican stand-off. + +The grand-daddy of the ruckuses involves Alabama’s grandfatherly governor, Robert Bentley, a hitherto moralistic 73-year-old. Mr Bentley has been humiliated by leaked recordings of saucy phone calls between him and Rebekah Mason, a former aide; last year the governor’s wife of 50 years divorced him. Mr Bentley issued a Clintonian denial of “a physical affair”, but the embarrassment has continued in reports of his extensive use of burner phones and demands for the inspection of “Wanda’s desk”, named after Mr Bentley’s former secretary (on the tapes, he says he wants to rearrange her office for privacy). + +Cue calls for his resignation, appeals to the state ethics commission and for a recall, inconveniently not provided for by Alabama law. Slightly more practically, Ed Henry, a Republican member of the state House of Representatives, submitted a resolution calling for the governor’s impeachment, on grounds he summarises as Mr Bentley’s “inability to run the state” and “using state resources inappropriately”. Since Alabama has never impeached a governor before, new procedures had to be devised, whereupon, Mr Henry says, the party establishment concocted rules to “make it so difficult as to nullify” the prospect. If that was the aim, it failed, and he won the support needed to trigger a probe by the state House Judiciary Committee. (Mr Henry is co-chairman of Donald Trump’s state campaign, but sees his peccadilloes differently: Mr Bentley “deceived the people”, he says, whereas Mr Trump “hasn’t tried to sell us a bill of goods”.) + +The next step would be hearings in the House itself, presided over by its Speaker, Mike Hubbard. That is, so long as Mr Hubbard’s own trial on 23 felony charges, set to begin this month, goes his way. He is accused of improperly exploiting his Speakership and former chairmanship of Alabama’s Republican Party; his colleagues have sportingly kept him in office since his arrest in 2014. Mr Hubbard denies all wrongdoing. His lawyers argue that an ethics law he championed, now turned against him, is unconstitutional. + +Mr Hubbard’s predicament and Mr Bentley’s are linked by more than the impeachment formula. The amorous tapes were released just as Spencer Collier—head of the Alabama Law Enforcement Agency (ALEA), until he was dismissed by Mr Bentley the previous day—gave his own version of the governor’s relationship with Mrs Mason. Mr Bentley said he fired Mr Collier over alleged mismanagement, “including possible misuse of state funds”. In his defence Mr Collier points to a recent auditor’s report that found no such problems in the agency; he calls the allegations against him “bogus, made-up stories”. Being sacked by Mr Bentley, whom he considered a close friend, was a betrayal “beyond my worst nightmare”. + +The real motivation, Mr Collier maintains, relates to Mr Hubbard. In a claim less salacious than his account of the governor’s private life, but perhaps more important, Mr Collier says he was dismissed because he submitted an affidavit affirming that the ALEA had cleared prosecutors in the Hubbard case of misconduct. He claims Mr Bentley wanted him to say the investigation was ongoing: “That’s why he blew up.” Had he not filed the affidavit, the trial might have been delayed further—and with it a possible appearance on the witness stand by the governor. (Mr Collier is now suing Mr Bentley; Mr Bentley, who denies asking Mr Collier to lie or that there are grounds for impeachment, appointed his own bodyguard as ALEA’s boss instead.) + +The impeachment process may wither in committee. But should it get through the House, Mr Bentley would be tried in the Senate. As Alabama’s constitution specifies, that trial could be overseen by the state’s chief justice, Roy Moore. That is, if he has not been forcibly ejected from office himself—again. + +You remember Mr Moore: in 2003 he was ousted as chief justice after defying a federal court’s order to remove a granite monument of the Ten Commandments from the state judicial building; he was re-elected in 2012. This time the complaint, currently under consideration by the Judicial Inquiry Commission, is that he abused his authority, and undermined public trust in the judiciary, by counselling probate judges to flout federal orders to issue same-sex marriage licences. On April 27th, in the rotunda where the offending monument was once installed, Mr Moore denied any misconduct. Far from disobeying the law, he argues, he was following it. + +Casting the first stone + +“He’s disgraced his office too many times,” says Richard Cohen of the Southern Poverty Law Centre, which submitted the complaint. Still, a fresh martyrdom might be a useful springboard for a bid for the governorship. Mr Moore has run twice before, once against Mr Bentley. “Who knows what I will do in the future?”, he recently told The Economist. (Mr Hubbard is also considered a contender, circumstances permitting.) Quite apart from their political rivalry, Mr Bentley and Mr Moore have not always seen eye to eye: for all his sanctimony, Mr Bentley has been fatalistic about gay marriage, whereas Mr Moore is still fighting it. If he is disrobed again, Mr Bentley would appoint his successor. + +These imbroglios are different and coincidental. Yet they overlap. To begin with, everyone concerned is a conservative Republican—further evidence, perhaps, of the risks of single-party rule, a danger amply documented in Alabama’s lurid political history (the lack of impeachments is not for want of cause). In the past the accused were frequently Democrats: the last Democratic governor is in prison. Indeed, the promise to clean up the mess helped the Republicans sweep the statehouse and brought Mr Hubbard to the Speakership. + +And, disparate as they are, the cases have collided. To recap: Mr Bentley could appoint Mr Moore’s successor, if he is not impeached first. Mr Moore could oversee Mr Bentley’s impeachment, unless he is defenestrated, in which case the governor’s appointee might preside. Mr Hubbard would refer the impeachment to the Senate, depending on the verdict of his own trial, which may feature testimony from Mr Bentley. Alternatively, of course, they may all keep their jobs. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21698306-circular-web-scandals-has-ensnared-alabamas-leaders-sweet-home/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +What next for Bernie Sanders + +Hillary Clinton’s leftist rival can lose the Democratic nomination and still be a winner + +May 7th 2016 | From the print edition + + + +“THE lesser of two evils is not an option. I won’t vote for evil.” So says Julie Edwards, a volunteer for the insurgent presidential campaign of Senator Bernie Sanders, explaining why she will spurn both main party candidates if—as looks almost certain—her hero loses the Democratic presidential primary and Hillary Clinton ends up battling Donald Trump. Ms Edwards was one of dozens of Sanders-backers gathered at an Indianapolis pub on May 3rd to watch the results of the Indiana presidential primary. Many, declaring themselves “Bernie or Bust” voters, pledged to write their hero’s name on to the ballot paper if he is not the Democratic nominee. Mrs Clinton is steeped in “incredibly horrendous scandals” and can never win a general election, averred Ms Edwards. Other volunteers called her “a criminal”, a “neocon” and—perhaps most damningly for some—a pragmatist. + +A hard-bitten professional campaign consultant, hopping cross-country flights to snag rich donors, might find the crowd at the Union Jack Pub a little homespun. A bearded man startled babies by leading shouts of “Feel the Bern”, then, unbidden, apologised to a Native-American woman on behalf of his ancestors. But there was nothing woolly about the headlines that filled the pub’s TV screens, prompting whoops: they showed Mr Sanders beating Mrs Clinton in the Indiana primary, marking his 19th victory. More than 9m Americans have now voted for Mr Sanders (who does notably well among the young) and more than 2.4m have given him donations totalling $210m. Mrs Clinton remains well ahead, with more than 12m votes to date and an all-but-insurmountable lead in the race to accumulate delegates, as well as among the party bigwigs who cast ballots as superdelegates. Yet she is more respected than loved—helping to explain the startling success of Mr Sanders, a snowy-haired scold who thunders against global free-trade pacts, wants to break-up big banks and generally make America more like a Nordic social democracy. + +Still, Mr Sanders’s power over the primary contest is fading. His fundraising dropped last month and his campaign recently laid off hundreds of staff. Even among true believers at the Union Jack Pub, many only hoped that he can still win. Attention is thus turning to how his clout will be felt from now on. While insisting that he still has a path to the nomination and will fight on for the last major prize, California’s state primary on June 7th, Mr Sanders has signalled his intent to exert power over Mrs Clinton as a nominee and president. Most directly, he wants to enshrine such policies as a $15-an hour minimum wage, a ban on natural-gas fracking and bank-bashing in the party platform approved at the Democratic National Convention. + +Ben Wikler of MoveOn.org, a prominent campaign outfit of the left, suggests that Mr Sanders can still wield considerable sway by prodding Mrs Clinton to embrace progressive policies as a candidate, and even more sway when she fills big jobs in her government, citing the dictum “personnel is policy”. He credits the senator from Vermont with riding a “perfect populist storm”, at a moment when social media and digital tools have eroded the power of big media “gatekeepers” and big money donors—and when “the system has manifestly failed to deliver, for young people, for instance”. + +But campaign platforms are soon forgotten and do not bring lasting change, cautions Howard Dean, the former governor of Vermont who staged his own insurgency in 2004. Mr Dean briefly led the presidential primary field with an internet-driven revolt against his own party, which he denounced for supporting George W. Bush’s tax cuts and invasion of Iraq. Mr Sanders is “not thinking clearly right now” says Mr Dean, adding: “I have been where he is, this is a very difficult time.” Admitting that victory is lost is not as hard as letting down supporters “energised” around the country, recalls the former candidate. Mr Dean, who later became a party boss as chairman of the Democratic National Committee and who is backing Mrs Clinton, is sceptical about another Sanders demand: to turn all Democratic presidential contests into primary elections open to independents and non-members. That would abolish the Iowa caucuses (the quirky, low-turnout gatherings that kick off each presidential season), and “I have been there and tried that,” says Mr Dean with a hollow laugh. + +The revolution will be digitised + +Have no doubt that the Sandernista movement is big: his rallies can draw tens of thousands, some reciting his best-known lines along with their hero. A harder question is: how big? Has the senator merely fired up the most liberal quarter of the electorate? Or has he (as Bernie fans insist, pointing to opinion polls) found causes that inspire nationwide majorities? Mr Dean, for one, suggests that his Vermont neighbour has correctly spotted issues that worry most Americans, starting with a sense that the economy is rigged, but has not found solutions with majority support. + +Perhaps surprisingly, Mr Dean (now a silver-haired grandee, interviewed at his Washington law firm) and young volunteers at the Union Jack Pub agree on how Mr Sanders may wield lasting power: by changing the party from the bottom up, even though the Vermont senator joined the Democrats to run for the White House only after years as an independent. Mr Dean founded a group, Democracy for America, that claims to have elected 100 candidates from local councils to Congress. A Sanders-backed outfit could “easily raise $200m” and elect 1,000 candidates, predicts Mr Dean. That appeals to Elizabeth Hyde, a Sanders volunteer-leader in Indianapolis, who talks of a years-long campaign to move her party leftwards, copying “infiltration” tactics long used by the Republican right. In the short term, Ms Hyde is steeling herself to vote for Mrs Clinton if she must, to stop Mr Trump. She is not alone, polls suggest. The Sanders movement may well torment Democratic centrists for years to come. But sometimes elections precisely involve picking lesser evils. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21698314-hillary-clintons-leftist-rival-can-lose-democratic-nomination-and-still-be/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Venezuela: Lights out + +Pollution in Mexico: Blocking traffic + +Technology in Brazil: Faulty powers + +Bello: Stop stealing + + + + + +Articles Sections Next + +Venezuela + +Lights out + +The country is running out of power. The regime will find ways to hang on + +May 7th 2016 | PUERTO ORDAZ | From the print edition + + + +AT 7.30pm it is pitch dark at the Orinokia shopping centre in Puerto Ordaz, in eastern Venezuela. The mall, one of the biggest in Latin America, would normally be floodlit and open until 9pm. But under a new edict from Venezuela’s government, shopping centres must close by seven. That is one of a number of measures the country’s populist regime has taken to cope with crippling power shortages. It has instigated scheduled four-hour rolling power cuts across the country, which in some areas have lasted for days. Civil servants have been told to work just two days a week. Clocks have been moved forward by half an hour, ending the Venezuela-only time zone introduced by the late Hugo Chávez, the country’s leader from 1999 to 2013. The remedy for the energy crisis, the government seems to be telling its citizens, is to do as little as possible. + +For residents of Puerto Ordaz, Venezuela’s only planned city, power shortages seem like a bad joke. It was founded in the 1950s with the idea that cheap hydroelectric power would fuel industries that would make the country less dependent on oil exports. The city lies downstream from the Guri hydroelectric plant, the fourth-largest in the world, which provides around two-fifths of Venezuela’s electricity. But the reservoir is running dry. The water level is less than two metres from its “catastrophe” point, at which the generator must be switched off to avoid damaging its turbines. Unless it rains, Venezuela could be plunged into darkness within a matter of weeks. + +The immediate cause is drought, worsened by El Niño, a climatic phenomenon. But that is not the whole story. This is Venezuela’s third electricity crisis since 2010. The national government, which owns the Guri plant, has not increased power generation in line with demand. It has spent billions of dollars on back-up thermoelectric projects, but failed to maintain them properly. Many are operating at far below their capacity. + +Bolivarian blackouts + +The power cuts add to the misery caused by inflation, which is expected to top 400% this year, and shortages of basic consumer goods. Polar, a private conglomerate that makes around 80% of Venezuela’s beer (as well as much of its food), stopped brewing on April 29th after the government turned down its request for the dollars it needs to import malted barley. At night, people express their fury by burning tyres and running wires to block traffic along the road that leads from Puerto Ordaz to San Félix, its older, poorer neighbour. “I’m a pacifist, I don’t like protesting,” says Karina, cradling a baby. “But this is unbearable.” + +Such discontent is a worry for Chávez’s bumbling successor, Nicolás Maduro. About 60% of voters want him out of office by the end of this year, according to opinion polls. The opposition, which took control of the National Assembly in elections last December, is doing its best to make that happen. One idea, a constitutional amendment to shorten Mr Maduro’s term, has been blocked by the supreme court, which takes its marching orders from the regime. The government’s foes hope to get further with a referendum to recall the president from office. + + + +In graphics: A political and economic guide to Venezuela + +They have cleared the first hurdle. In only six days the opposition collected 1.85m signatures on a petition to initiate the referendum, more than nine times the 200,000 needed. Karina, once a supporter of the government, was one of the signers. On May 2nd the opposition delivered the signatures to the election commission. In theory, once the commission verifies them, opposition workers will collect 4m signatures, representing a fifth of the electorate, to launch the referendum itself. If that passes this year, with more than the 7.6m votes Mr Maduro won in the 2013 presidential election, he will have to leave office and a new election will be held. + +The government can be counted on to use all the tricks at its disposal to frustrate that plan. Mr Maduro has dismissed the referendum as a plot by the “oligarchy” that now runs the National Assembly. In case the election commission does not prove to be as subservient as the supreme court, he created an entirely new “council for signature revision” to double-check its work. It will be headed by Jorge Rodríguez, the gruff mayor of a district in Caracas, who is one of his closest allies. In making the announcement, a rattled Mr Maduro repeatedly claimed that the recall process is “optional”. In fact, Chávez inserted it into the constitution adopted in 1999 as a way to justify extending presidential terms from five years to six. + +Delaying the referendum might suit the government’s purposes (though not Mr Maduro’s) better than derailing it. To trigger a new presidential election, a referendum would have to be completed before Mr Maduro’s term has less than two years to run. If it happens later, the vice-president, currently Aristóbulo Istúriz, would take over for the remainder of the term. The cut-off date is disputed. Mr Maduro would argue that his six-year term began when he took over from Chávez, then suffering from cancer, in January 2013; the opposition says it started after he won the election in April that year. + +A referendum that ushered into power Mr Istúriz, who is more moderate than Mr Maduro but still a loyal chavista, might delight some factions of the regime, including the armed forces. Many chavistas know that the floundering president cannot win another election in 2018. They would prefer to go into that fight with a more pragmatic, and perhaps more competent, leader. The opposition, and most Venezuelans, would like Mr Maduro to leave office, without turmoil, this year. Of all the possible scenarios, says Luis Vicente León, a pollster, that one seems the least likely. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21698257-country-running-out-power-regime-will-find-ways-hang-lights-out/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Pollution in Mexico + +Blocking traffic + +To clean up its air the capital has to spend more money, more intelligently + +May 7th 2016 | MEXICO CITY | From the print edition + + + +ABOUT 30 years ago Carlos Fuentes published a dystopian novel set in the near future about a city washed by acid rain. He called the town “Makesicko Seedy”. In 1992 the United Nations identified Mexico City’s air as the most polluted on the planet. It is more breathable now, thanks to the closure of an oil refinery, the elimination of lead from petrol and numerous other green measures, but still not wholesome. + +In mid-March this year local authorities issued the first ozone alert in nearly 14 years. There have been two since, prompting parents to keep their children home from school. After a spike on May 2nd the “environmental commission of the megalopolis”, a regional body, ordered 40% of the cars off the road, initially for a day. The order was then extended. This provided a respite but angered drivers. Mexico City needs better ways to clean up its air. + +The city’s site, at an altitude of 2,250 metres and surrounded by mountains, makes that difficult. Solar radiation, more intense at high altitude, encourages the formation of lung-damaging ozone. The mountains trap the gas. With 5.5m cars, Mexico’s capital is the world’s most congested city, according to TomTom, a maker of navigation devices. If the current rate of growth in car ownership continues, the city’s fleet will double in size over the next four years. + +The government’s sticking-plaster solution is to keep some vehicles temporarily off the road. In response to the March ozone alert it tightened the rules for “hoy no circula” (“don’t drive today”), a scheme that bans cars from the city one day a week (and one Saturday a month). Before, the rule applied only to the dirtiest cars. From April to June, all cars will be confined to their garages once a week. When the air gets especially noxious, as on May 2nd, the number of banned cars doubles. + +This has done some good. In addition to purifying the air, the new rules reduced traffic jams by 30%, according to Waze, a navigation app. But they have provoked off-road rage, especially among drivers of cleaner vehicles. “Customers are furious because I can’t resolve their problems,” fumes Alejandro Nuñez, a repairman. Congestion and pollution will return as the number of cars expands. If the restrictions continue, more drivers are likely to buy cheaper, dirtier cars for days when their primary vehicles are immobilised, as some did when hoy no circula was first introduced. + + + +INTERACTIVE: From CO2 to GHG, which countries have the highest emissions? + +To solve the problem, Mexico will need to spend more money more intelligently. Three-quarters of transport investment in urban Mexico goes into expanding and maintaining roads, according to the Institute for Transportation and Development Policy, a think-tank in New York. Some Mexican planners want to change that. The environmental commission advocates doubling the number of Metro lines to 24 and adding 1,000km (600 miles) to the bus rapid transit (BRT) network. The World Bank may lend 3 billion pesos ($170m) for public-transport projects nationwide, including an extension of one of the BRT lines. That will not come close to paying for the commission’s ambitious ideas, which would cost 40 billion pesos a year. Neither the city nor the federal government can afford that. + +Nasty little buses + +Among the most urgent needs is to do something about smog-belching, privately owned microbuses, which account for half of passenger journeys in Mexico City, says Francisco Barnés of the Centro Mario Molina, a think-tank. He proposes extending the BRT network to the busiest microbus routes and replacing dirty buses with cleaner ones on less popular routes. Other possible fixes would be more parking meters; ending a requirement that builders of new apartment blocks provide enough parking for all their residents; and a congestion charge. These would not be popular. Resistance from bus-owners and commuters may block such changes as effectively as they snarl up the city’s traffic. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21698258-clean-up-its-air-capital-has-spend-more-money-more-intelligently-blocking-traffic/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Technology in Brazil + +Faulty powers + +A judge shuts down WhatsApp. Chaos ensues + +May 7th 2016 | SÃO PAULO | From the print edition + + + +TO RESIDENTS of Lagarto, a town of 100,000 in north-eastern Brazil, Judge Marcel Montalvão is a hero for his pursuit of drug traffickers, a local scourge. The 100m Brazilians who use WhatsApp joke that he must be smoking something himself. On May 2nd Mr Montalvão ordered mobile-phone companies to suspend the internet messaging service for 72 hours. Its alleged offence: it failed to provide information that police had requested in an investigation into narcotics trafficking. + +The judge’s order threatened to disrupt not just social life but commerce as well. What started a few years ago as merely a cheap and convenient way for Brazilians to text their friends is now a crucial consumer-to-business communications platform, observes Juliano Spyer, an anthropologist who studies Brazilians’ social-media habits. From hipsterish food-trucks to hawkers in favelas (shantytowns), businesses use it to plug their wares and take orders. “The first thing that ran through my mind when I learned of the block was: bookings!” exclaimed Paula Costa, who runs a bed-and-breakfast near São Paulo. Four in five reservations now come via the app, she says. + +In this case, the law itself is not an ass. Brazil’s “internet bill of rights”, passed in 2014, enshrines the principle of “net neutrality” (which obliges network operators to treat all traffic equally). It also gives strong protections to online privacy and freedom of expression. Advocates of internet freedom laud the legislation as an example to follow. + +The problem is with how it is implemented and interpreted. Regulations that specify how to apply the law have yet to be passed. Law-enforcement officials are clueless about how to interpret it, and, indeed, about how the internet works, laments Monica Rosina, a lawyer and academic who has lectured to judges, prosecutors and police officers on the subject. Though some are ignorant of technology, judges have been emboldened by their successful crusade against corruption (see article). The result, says Ms Rosina, is that “extreme measures are being treated as standard.” In December a lower-court judge in São Paulo blocked WhatsApp, which is owned by Facebook, for 48 hours on grounds similar to those invoked by Mr Montalvão. + +An appeals-court judge unblocked the service well before the suspension had run its 72-hour course. He accepted WhatsApp’s argument that it simply cannot comply with Mr Montalvão’s wishes (it does not store chat histories, and the messages are in any case encrypted). He chastised his fellow judge for causing “social chaos”. Most experts agree that the blanket ban violated net neutrality (by singling out WhatsApp traffic) and freedom of expression (by curbing Brazilians’ ability to communicate). Mr Montalvão based his decision on a clause that permits “temporary suspension of activities” in narrow circumstances. His critics contend he misread it. Brazil’s biggest consumer-protection group called the ban “disproportionate and harmful”. + +Some lawmakers want to prevent future disruptions by amending the law to forbid the state from blocking internet services. But a congressional committee on cybercrime, which is dominated by law-and-order conservatives, has its own ideas. It issued recommendations that would make it easier for judges to force network operators to take down entire websites or apps. WhatsAppers are not safe yet. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21698272-judge-shuts-down-whatsapp-chaos-ensues-faulty-powers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +Stop stealing + +What lies behind the popular revolt against corruption? + +May 7th 2016 | From the print edition + + + +EARLIER this year more than 600,000 Mexicans signed a draft anti-corruption bill drawn up by civic groups, thus forcing the country’s Congress to debate it. Popularly known as the “3-out-of-3 law”, the bill would require public officials to publish declarations of assets, taxes paid and possible conflicts of interest. On April 29th, the last day of the parliamentary session, the Senate failed to approve it and an equally important measure to grant independence to a new anti-corruption prosecutor, mainly because of the opposition of the Institutional Revolutionary Party of President Enrique Peña Nieto. Unless Congress calls an extraordinary session and the laws are passed by May 28th, Mr Peña’s vaunted new National Anti-corruption System, enshrined in a constitutional amendment last year, will become a dead letter. + +The push for the 3-out-of-3 law is an example of an unprecedented popular mobilisation against corruption in Latin America. This has gone furthest in Brazil, where millions have taken to the streets to demand the impeachment of Dilma Rousseff, the president, and also to back a judicial crusade against graft at Petrobras, the state-controlled oil company, which has seen business leaders jailed and powerful politicians accused. + +But it goes wider. In Guatemala street protests and the work of a UN-backed investigative commission helped to topple a president over corruption allegations last year. Protests in Honduras forced the government to accept a similar, though weaker, commission. In Chile, a party-financing scandal prompted laws against conflicts of interest. In Argentina, following a change of government, prosecutors and judges are closing in on Cristina Fernández de Kirchner, the previous president, and her associates. + +Corruption has long been endemic in Latin America. Voters have tolerated politicians who “steal but get things done” (an epithet first applied to a populist governor of São Paulo in the 1940s). In highly unequal societies with rudimentary states, the poor were grateful to the few politicians who helped them. The commodity boom of the 2000s brought wealth to governments; some of that was stolen. But overall there is no evidence that corruption has got worse: polls report that slightly fewer respondents say they have had to pay bribes. + +Several factors are behind the mounting intolerance of corruption. There is a bigger middle class, which is demanding accountability and wants tax revenues spent on better public services. Social media have made it easier for individual citizens to mobilise. And there has been a slow maturing of civil society. + +Perhaps the least remarked development has been what Kevin Casas-Zamora, a former vice-president of Costa Rica now at the Inter-American Dialogue, a think-tank in Washington, calls “the patient building of a new normative edifice” against corruption. Many countries have adopted international conventions against bribery and in favour of open government. These have been complemented by national laws, on freedom of information, increasing the penalties for corruption and, in Brazil under Ms Rousseff, empowering investigators by allowing plea-bargaining. During 30 years of democracy, many of Brazil’s judges and prosecutors have become more independent and more professional. + +That is not so everywhere. In the short term, the corruption scandals are undermining faith in democratic politics. There is a risk that anger will be exploited by populist leaders. Hugo Chávez came to power in Venezuela by posing as a crusader against corruption. In office he did his best to increase it, by curtailing the independence of the judiciary, media freedom and accountable government. Some Latin Americans still turn a blind eye to dishonesty: a poll in Lima in 2014 found that half of voters believed that the victor in a mayoral election would steal but get things done. + +It is vital that the current mobilisations against corruption translate into more effective laws and stronger institutions. Deltan Dallagnol, a young Harvard-trained prosecutor who heads a task-force investigating the Petrobras scandal, told La Nación, an Argentine newspaper, that the object is “to build citizenship, especially among lower-income people, so that they understand that the money siphoned off by corruption affects the attention that the state gives to their needs.” + +That was well said. Many Mexicans get the point. By blocking action against corruption, Mr Peña not only looks like a man whose party has something to hide. He is also putting himself on the wrong side of Latin American history. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21698269-what-lies-behind-popular-revolt-against-corruption-stop-stealing/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +State elections in India: The fire goddess of West Bengal + +Identity politics in India’s north-east: How green is my valley? + +Australia’s looming election: Turnbull rolls the dice + +Elections in Malaysia: Rumbles in the jungle + + + + + +Articles Sections Next + +State elections in India + +The fire goddess of West Bengal + +A local ruling party faces unexpected challenges + +May 7th 2016 | KOLKATA | From the print edition + + + +THE impressive view across the Hooghly river from her office high up in the Nabanna building must be pleasing to Mamata Banerjee. True, the other side has yet to sprout the giant Ferris wheel that Ms Banerjee, an admirer of the London Eye in the British capital, keenly wants. But in other respects the great city of Kolkata, capital of West Bengal, looks much as the state’s chief minister would wish. + +Even her detractors admit that Kolkata’s crowded streets have grown markedly cleaner since Ms Banerjee’s Trinamool Congress (TMC) stormed to power in 2011, ending the 34-year reign in West Bengal of the communist-led Left Front, during which the state increasingly lagged the economic progress in other parts of India. Better yet for the chief minister, whose dress is often a plain white sari with blue trim, much of the city now basks in her trademark colours. Railings, bridges and even the safety barriers on highways; buses and bus stops; hospitals and government offices—all sport combinations of her blue-and-white. For the current election season, lampposts along Kolkata’s boulevards shimmer at night in spirals of pearl-and-cobalt fairy lights. + +Ms Banerjee’s colours are a pervasive reminder of who is boss in West Bengal. Pictures of the chief minister herself are everywhere, often accompanied by slogans that play on the fact that her first name rhymes with khamata, Bengali for power or strength. The chief minister frequently appears in person, too, striding through adoring crowds, her palms pressed together in silent humility. Supporters call her “Bengal’s fire goddess”. + +When voting kicked off in West Bengal at the beginning of April, the TMC’s confidence matched its visual dominance. The party holds 187 of 295 seats in the outgoing state assembly. It has sought to cement its popularity with lavish handouts: some 2.5m bicycles for high-school students, sacks of rice for the poor and government stipends for imams in a state where Muslims make up 27% of the 92m-strong population. The TMC machine, which critics say is backed in many areas by local criminal gangs, wields an intimidating presence in a state that has long been coloured by political violence. It is often said that whoever controls the ballot box controls the election. It does not help that the state police are seen as subservient to the party. + +Meanwhile, the TMC’s rivals long looked a sorry bunch. The Hindu-nationalist Bharatiya Janata Party, in power nationally under the prime minister, Narendra Modi, has never gained traction in West Bengal. As for the Left Front, its crushing defeat in 2011 prompted much of its own street muscle to desert to Ms Banerjee. But in a move that has shocked the hard-core Marxists, the Left Front has now entered an unlikely electoral alliance with an ancient enemy, the Congress Party, once powerful but now the much-diminished national vehicle for the Gandhi clan. + + + +The results of voting in West Bengal will not be announced until May 19th, along with those of three other states holding elections, including neighbouring Assam (see article). Opinion polls before the election, as well as exit polls, are not allowed. But, just possibly, Ms Banerjee is facing a shift in mood among voters. + +For a start, fate has recently been unkind to the TMC. In March an independent journalist released videos showing more than a dozen party leaders casually accepting cash bribes from a bogus company seeking favours. Soon afterwards, one part of a controversial new flyover in central Kolkata collapsed, killing 27 people and raising questions about government contracts and shoddy construction standards. The flyover had already come under fire for being over-budget and supremely ugly. + +Tales of extortion and corruption under the TMC resonate among middle-class voters, while in some districts criminality by TMC street thugs has turned poorer voters against Ms Banerjee’s party. And to general surprise, the Left Front’s alliance with Congress appears to be quite effective. The former rivals efficiently divided constituencies among candidates and have mounted a strong grassroots campaign. + +Ms Banerjee’s toughest challenge, however, comes from outside the state. Aware of West Bengal’s reputation for politically motivated violence, India’s national election commission has been unusually energetic. To ensure adequate policing and monitoring of this year’s vote, it divided the state into six regions and staggered the voting over five weeks, with the final stage held on May 5th. The commission has also used its power to remove local election officials and police chiefs, appointing its own replacements. Police from outside the state have bolstered local forces on election days, mounting mobile and stationary patrols and detaining suspected party thugs. + +As a consequence, this election has, to date, been the most peaceful in West Bengal’s recent memory. Yet the chief minister has not taken kindly to the measures. She has lashed out at the election commission and accused the police of “unleashing terror”. She has also threatened retaliation against unhelpful officials when she is returned to power. “I am gentle to those who are good,” she warned at a recent rally, “but if anybody shows red eyes to me he will have to face the consequences.” + +Political analysts in Kolkata predict a shrunken majority for Ms Banerjee rather than an outright loss. Still, the suspense before the election result is notably high. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21698250-local-ruling-party-faces-unexpected-challenges-fire-goddess-west-bengal/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Identity politics in India’s north-east + +How green is my valley? + +The BJP promises to sniff out intruders in exotic Assam + +May 7th 2016 | GUWAHATI | From the print edition + + + +FOLLOWING the crooked finger of the Brahmaputra river east and north towards its Tibetan origin, Assam looks like no other place in India. Its lush riverine lands have attracted incomers since ancient times. The result is a medley of peoples of varied languages, dress, cuisines—and political interests. + +Yet in the current state election the prize will go either to the incumbent Congress party or to the Bharatiya Janata Party (BJP) of the prime minister, Narendra Modi. For the first time, it is making inroads into India’s north-east, as the spectre of illegal immigration from Bangladesh threatens to realign politics in the BJP’s favour. The third parties that represent specific Assamese groups have been shunted into supporting roles, setting the stage for a battle royal between India’s two chief national parties. Should the BJP win in Assam, which with 33m people is the biggest of the north-east’s seven states, the party will be able to claim a brand that now works in every corner of the country. + +Mr Modi’s familiar emphasis on the economy goes down well in Assam. But turning the state’s complicated human terrain to the advantage of his party, which has its roots in the Hindi-speaking north and west, requires attention to local detail. The Assamese are anxious to preserve their cultural identity, a mix that combines the easternmost Indo-European stock with ethnic groups of Tibeto-Burman and Tai origin (ie, related to present-day groups in Thailand and Laos), clusters of endemic tribes, and also the “tea tribes” brought by the British from east-central India to work plantations. The BJP’s standard appeal to Hindu-first Indian nationalism never found a wide audience in a hybrid state with occasionally secessionist tendencies. + + + +But Assam also happens to be 34% Muslim, more than any state bar Jammu and Kashmir. Over the past quarter-century the proportion of Muslims has grown rapidly, even as the proportion of Assamese speakers has dipped below 50%. Here the BJP’s strategist, Amit Shah, scented opportunity, claiming in November that the state government was conspiring with a smaller Muslim party, the All India United Democratic Front, to let Bangladeshis pour over the border and change the demographics in the party’s favour. Bangladesh, Mr Modi has also claimed, sounding like an Indian Donald Trump, was sending intruders over the border; his government, given power in the state, would round them up and kick them out. Bengali-speaking Muslims feel threatened, even though many live in communities that have been in Assam for generations, if not centuries. Many have decamped from Congress, their usual party, to the Muslim third party, because it is devoted to their protection. + +Though the greatest number of the state’s Bengali-speaking Muslims are descendants of immigrants who arrived under British supervision in the first decades of the 20th century, no one really knows how many have entered Assam illegally since Bangladesh was founded in 1971. Supposedly to determine the number, a National Register of Citizens is being compiled—for Assam only. + +Publication of its findings has been postponed several times before the election and will not happen now until after the vote is declared on May 19th. The chances are that relatively few Bangladeshis will be decreed to be in Assam and due for deportation. After all, why would great numbers of poor Bangladeshis want to move to Assam in the first place? Its living standards have improved greatly under the government of the chief minister, Tarun Gogoi, yet they still lag far behind those of Bangladesh. Still, that truth sits uncomfortably with those keen to work up communal divisions for electoral gain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21698249-bjp-promises-sniff-out-intruders-exotic-assam-how-green-my-valley/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Australia’s looming election + +Turnbull rolls the dice + +The prime minister gambles that this week’s budget will win the election + +May 7th 2016 | CANBERRA | From the print edition + + + +HOURS after his treasurer, or finance minister, unveiled the annual budget, Malcolm Turnbull, Australia’s prime minister, confirmed what for weeks had been an open secret: that he would call a general election for July 2nd. And so the budget laid out by Scott Morrison on May 3rd is less about the fiscal priorities for the coming year than it is the basis for Mr Turnbull’s bid for a new political mandate. That is rather a lot to lay on any budget. But having failed to deliver the “substantial change” that he promised last September when knifing his predecessor, Tony Abbott, as leader of the (conservative) Liberal Party and prime minister, Mr Turnbull has mainly himself to blame. + +Gone is Mr Abbott’s rhetoric about fixing the previous Labor government’s “debt and deficit disaster”. Instead Mr Morrison called his document “not just another budget”, more an “economic plan”. The budget deficit of A$40 billion ($30 billion), or 2% of GDP, will fall only slightly next year, to be followed by deficits until at least 2020. Abandoning its pledge to produce surpluses, Mr Morrison now merely says that the budget will be balanced “over time”. + +This is candid, at least. Sustained by trade with China, Australia is entering its 26th year of continuous economic growth. The government’s forecast for growth in 2016-17 is a respectable 2.5%. But that forecast was pared back; and a sharp slowdown in Chinese demand, along with falls in the prices of iron ore, coal and gas, Australia’s chief exports, mean that the resource sector’s fabulous profits from the boom in China are a thing of the past. It is probably right that there should be no rush to plug the deficit. For one thing, net government debt, at 19% of GDP, is remarkably low. And now signs of softness are appearing in parts of the economy. In a surprise move hours before the budget, the central bank cut interest rates by a quarter of a percentage point, to 1.75%, citing “unexpectedly low” inflation. It may well move again. + +Natural resources were responsible not only for much of Australia’s growth in recent years, but also for much government revenue. Mineral exports will remain important: thanks in part to heavy investment, Australian resource firms are among the lowest-cost producers. But their extra capacity and output has played a part in pushing down commodities prices worldwide. So the country needs to find new sources of growth. + +The budget partly reflects the mantra of Mr Turnbull, a self-made millionaire, that offering incentives to innovators is the key. The budget projects a cut in corporate taxation. From July the rate for small businesses with a turnover of less than A$10m will fall from 30% to 27.5%; after ten years the rate for all businesses, big and small, will be 25%. + +Australian businesses have long called for such cuts. Meanwhile, the second-highest rate of income tax was pushed out from those earning A$80,000 to A$87,000—helping some 500,000 Australians, the treasurer said. But many others may wonder what is in the budget for them. This is perhaps why Mr Morrison also espoused more popular causes, such as promising punitive taxation for multinational companies deemed to be using loopholes to divert profits to other jurisdictions and so avoid tax. He also promised more infrastructure spending, including a planned freight-rail link between Melbourne and Brisbane, so taking lorries off the roads. + +The budget rejected reform in an area that will feature in the campaign: housing. Low interest rates are not the only thing that has encouraged average house prices to nearly double over the past ten years. The crazy practice of “negative gearing”, which allows investors in property to write nearly everything off against tax, has also helped push up prices beyond the reach of Australians in their 20s and 30s (many of whom, even if they are able to buy a property, still have to live with their parents to afford it). Yet Mr Turnbull calls the idea of repealing negative gearing “reckless”, knowing that it would anger property-owners—and possibly alarm banks, heavily exposed to mortgages. + +The Labor opposition wants to end most forms of negative gearing. More broadly, Bill Shorten, the Labor leader, intends to campaign on a theme that Mr Turnbull is merely a smoother version of the abrasive Mr Abbott, but just as unfair. Meanwhile, his shadow treasurer, Chris Bowen, says he intends to prove to Australians that left-leaning Labor is also the party of fiscal probity. + +Mr Turnbull’s campaign hinges on how cleverly he can counteract this. Australia’s fourth prime minister in three years, he at first offered hope to a cynical electorate of ending the country’s political shambles. Recent opinion polls place Labor ahead after second-preference votes. More voters still nominate Mr Turnbull over Mr Shorten as their preferred prime minister, and more still think the Liberal-National coalition, not Labor, will win the election. But it could be more closely fought than seemed likely a few months ago. The coalition holds a comfortable majority. Should it win with a much reduced one, then far from being the solution to Australia’s troubled politics, Mr Turnbull could conceivably become part of the problem—and become as vulnerable to a knifing as Mr Abbott was nine months ago. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21698298-prime-minister-gambles-weeks-budget-will-win-election-turnbull-rolls-dice/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Elections in Malaysia + +Rumbles in the jungle + +A cakewalk in Borneo is a boon for Najib Razak—at least for now + +May 7th 2016 | KUCHING | From the print edition + + + +IN A hut on stilts on the island of Borneo, a dozen skulls hang in a cage. They are those of long-dead victims of the Dayaks—indigenous tribes whose members make up the majority in Sarawak, a sprawling Malaysian state. Once thought to harbour protective spirits, the heads are now tourist curios. Few indigenous people still live in the communal dwellings such relics guard, and those who remain hang Christian crosses on their doors. + +This month many Malaysians would like to see the Dayaks take one last scalp. Sarawak’s state election on May 7th is a chance for voters to rebuke Najib Razak, Malaysia’s unpopular prime minister, who has spent much of the past year denying that hundreds of millions of dollars which entered his bank accounts were wangled from an ailing national investment firm. Investigations into 1MDB’s dealings are under way in half a dozen countries; some of its borrowings are in default. Yet parties loyal to Barisan Nasional, Mr Najib’s coalition, will probably retain a crushing majority in Sarawak’s state assembly. That prospect illuminates the prime minister’s resilience, which outsiders find bizarre. + +Sarawak is one of two Malaysian states in the northern part of Borneo, abutting the tiny kingdom of Brunei. Matters which enrage voters in Peninsular Malaysia, 500 miles (800 kilometres) across the sea, often feel distant. Victor, a shopkeeper in the town of Bau, says he doesn’t know much about 1MDB: it is “a national issue”, not a local one, he explains. Instead, the topics that irk Sarawakians include shabby road and power networks, land-grabbing loggers and the royalties which Petronas, the state oil firm, pays for access to its wells. + +Maintaining Sarawak’s support is becoming essential for Barisan, which in various forms has ruled Malaysia since independence in 1957 but whose popularity among urbanites is collapsing. Mr Najib has visited the state more than 50 times since 2009, impressing locals. Sarawak’s biggest party, the PBB, forms the second-biggest bloc in Mr Najib’s federal coalition; half of its MPs hold cabinet posts. At the general election in 2013, parties from Sarawak delivered 25 seats to the government—whose winning majority was just 22. + +Lucky then that polls in Sarawak hand the incumbent a huge advantage. Limited access to the internet means state-controlled newspapers retain great influence. Canvassing the vast interior is hard without helicopters or speed boats, observes James Chin, a political scientist. Years of gerrymandering have doubled the size of the state assembly. Loyal Malay-Muslim areas enjoy a glut of seats; rebellious ethnic-Chinese ones suffer a paucity. Of 11 new seats being added this year, Barisan will snap up ten. + +Unsophisticated rural voters are routinely bought with gifts of cash and other goodies. Sanjan Anak Daik, a candidate from the opposition Democratic Action Party, says some are led to believe that grants and subsidies can be demanded back if they vote against the government. An old man waiting for treatment at a grotty clinic in the small town of Siburan—a stop on Mr Sanjan’s campaign trail—says the opposition will never win if all they hand out is leaflets. + +This year Barisan is also getting a legitimate boost from the wild popularity of Sarawak’s newish chief minister, Adenan Satem. A survey in January found that Mr Adenan’s approval rating has climbed above 80%; billboards near Kuching, the state capital, boast that “Adenan fever” is rife. In part voters are simply pleased to see the back of his predecessor (and former brother-in-law) Taib Mahmud, who held power for three decades and on whose watch Sarawak’s precious rainforests were plundered. But he has also softened up locals with a barrage of populist policies, including an end to toll roads and new protections for the environment. + +His canniest move has been to back growing calls for the federal government to grant Sarawak greater autonomy, co-opting a cause long championed by the opposition. Playing up the state’s distinctiveness has helped Mr Adenan argue that 1MDB’s woes are not relevant to Sarawakians—and to ban from Sarawak scores of opposition figures who, he hints, will bring problems from the peninsula. Opposition parties, for their part, have made a tough job trickier by squabbling over seats, resulting in undignified multi-cornered fights. + +Mr Najib’s coalition will sweep the polls. The victory will probably be peddled as proof that the prime minister retains popular support. But the government’s advantage in Sarawak is slowly eroding. Barisan’s share of the vote fell from more than 70% at state elections in 2001 to only 55% in 2011, notes Faisal Hazis, an academic. An old man sitting outside a shop in Siburan says this election is creating more hullabaloo than usual. He thinks the opposition has given locals a much better understanding of how their state is run. + +The big opportunity for Mr Najib’s opponents is not to oust Sarawak’s immovable rulers, but gradually to weaken the state’s allegiance to Barisan. Among other disenchantments, Sarawak’s many Christians are disturbed by the Malay-Muslim chauvinist rhetoric which Malaysia’s government increasingly tolerates. If federal elections keep getting tighter, Sarawak’s MPs may be tempted to defect—dumping Barisan from power in exchange for more autonomy or a greater share of oil. For years a firm friend of the ruling party, Sarawak may one day think for itself. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21698308-cakewalk-borneo-boon-najib-razakat-least-now-rumbles-jungle/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Overhauling tax policy: Central tendency + +NGOs and religion: Charity ends at home + +Enforcing cultural purity: Exterminate the foreign names + +Banyan: The 15-year hitch + + + + + +Articles Sections Next + +Overhauling tax policy + +Central tendency + +A new tax should boost both service sectors and the central government + +May 7th 2016 | SHANGHAI | From the print edition + + + +“SUCCESS at the start of battle is of course good. But we dare not claim victory yet or let our guard down.” These words, spoken by a Chinese official last week, might have described military efforts to claim territory in the South China Sea or the government’s latest crackdown on foreign ideology (see article). In fact, they were about fiscal policy. The head of the State Administration of Taxation was praising the smooth launch of an expanded value-added tax (VAT). Its roll-out marks the completion of the biggest but also most protracted reform of China’s taxation system in 20 years. It has as much to do with politics as the economy. + +On May 1st the government extended VAT from the sale mainly of goods to all major service sectors, including construction and finance. It replaces a business tax based on gross revenues. Under the value-added system, companies may deduct many of their input costs. The VAT rate is higher (for example, 11% for property developers, compared with a business tax of 5%), but the deductions should end up saving them money. + +The move may reduce tax receipts by as much as 500 billion yuan ($77 billion) this year. It has led some analysts to characterise it as a fiscal stimulus to counter slower growth, since it will leave companies with extra cash to invest. Yet the short-term impact may be overstated. Tax enforcement in China is patchy, and smaller businesses often understate earnings to save on their tax bills. To obtain VAT deductions, companies will need proper receipts of costs, which in turn will bring more transactions to the government’s attention. Companies will enjoy a lower effective tax rate, but face pressure to declare more income. + + + +In the long run, the tax change is the right move for the economy. China is on the way to joining more than 140 countries with full VAT regimes, according to EY, an accounting firm. It has applied a VAT on its manufacturers since 1994, recognising it as a fairer way to tax companies. But the exclusion of most service sectors tilted the playing field against them, reinforcing China’s overdependence on industry over the past two decades. An industry-dependent growth model has now run out of steam, with services accounting for a bigger share of GDP than manufacturing. A more sensible tax was long overdue. + +Politics is to blame for why the switch took so long. The reform exposes cracks between central and local governments that lie at the heart of the Chinese fiscal system. Since the early 1990s policies have placed more and more revenues in the hands of the centre, while saddling local governments with the vast majority of expenditures, from health care to infrastructure. To make up for a shortfall, local governments have relied heavily on sales of land—one factor fuelling a manic construction boom in recent years. + +Services offered a rare, reliable stream of revenues for local governments. With a business tax on services, they kept 100% of the take. They feared the VAT change would be modelled on the VAT on manufacturing, from which they receive only 25% of revenues, the remainder going to the central government. So they resisted the reform and delayed its implementation. With pilot programmes dating back to 2012, businesses had at first expected it to go into force last year. + +Local opposition to the reform appears to have yielded some benefits. Rather than a 25% share, local governments will get half of all revenues from the new services VAT. What is more, the finance ministry has promised to make transfer payments that will ensure that local governments lose no money from the new tax. + +But mother still holds the purse strings + +Yet the reform’s completion actually feeds into a renewed centralisation of taxing and spending since President Xi Jinping took office in 2013. Much as local governments are happy to get transfer payments, it implies that officials in Beijing have more control over the purse strings. The central government has also promised to take on additional expenditures, for instance, picking up the tab for more public services and funding more investment in infrastructure. Its share of total government spending, which fell for more than a decade, may well have bottomed out. + +The wisdom of centralising expenditures is debatable. Too much can be counter-productive in a big and diverse country. Decentralisation of the other half of the fiscal equation—giving local governments more powers to raise revenues—might have been better. But under a controlling Mr Xi, there was little doubt about which side would come out on top. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21698266-new-tax-should-boost-both-service-sectors-and-central-government-central-tendency/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +NGOs and religion + +Charity ends at home + +China’s leader guards against nasty foreign influences + +May 7th 2016 | BEIJING | From the print edition + + + +DENG XIAOPING once dismissed worries about unwanted foreign influence by saying that when you open a window, of course the flies come in, along with the fresh air. China’s current leader, Xi Jinping, is less insouciant as fly-swatter-in-chief. Witness, in the two past weeks, a newly published speech he gave to the Central Party School, a new law governing foreign non-governmental organisations (NGOs), signs of an unwelcome policy shift towards religions deemed to be too “foreign”, and even, on a lighter note, a ban on landlords naming buildings in China after foreign places (see article). + +Mr Xi has long been suspicious of Western ideas (except Marxism-Leninism). But his speech to the party school in Beijing last December, published in a party magazine, Qiushi, on May 1st, was unusually insistent. He repeatedly warned educational institutions not to deviate from the party line and not to “spread Western capitalist values”. They did not sound like the words of a reformer. + +And these were not just words. On April 28th the parliament passed a long-debated law concerning foreign NGOs. It imposes onerous registration and reporting requirements on them. All foreign NGOs must report to the Public Security Bureau (ie, the police) and promise not to “endanger China’s national unity…or ethnic unity”—however the authorities choose to define that. More onerous, charities must find an official sponsor from a list to be issued by the government. Charities worry that these sponsors, presumably public agencies, could keep them from activities the government does not like, such as those to do with human rights or labour law. Foreign NGOs will also be banned from raising money in China, which they fear will limit their activities further. + +It could have a big impact on civil society, given that much of the work on environmental, women’s, minority and gay rights is done by foreign NGOs. In March the parliamentary spokeswoman, Fu Ying, a relative liberal, affirmed that China’s 7,000 foreign NGOs bring the country valuable expertise. But how many will continue to do so once the law goes into effect next January remains to be seen. + +As for religion, on April 22nd Mr Xi convened a big meeting on handling it. Such a gathering happens about once every 15 years and usually signals significant policy shifts. Just before this one, the government decreed that retired party officials should not be members of religious organisations, one more example of tighter party discipline (working officials are already banned from belonging to any religious group). Now the meeting talked about “Sinicising” religion, meaning believers should pay more attention to traditional Chinese culture and identify themselves more closely with China’s “national aspirations”—as defined by an avidly atheist party. + +This process seems to be aimed mostly at China’s growing numbers of Christians since, of the other officially recognised religions, Buddhism and Taoism are viewed as culturally Chinese anyway, while Islam is seen through the lens of state security. In the past two years the provincial government of Zhejiang, on the east coast, has removed over 1,500 crosses from churches. It is possible that the big gathering will give a green light to similar actions elsewhere. + +Mr Xi is not slamming the door on the outside world. China remains the world’s largest exporter and the second-largest destination for foreign direct investment. But views of the world that offer alternatives to Mr Xi’s increasingly assertive ideology are being constrained. This affects not only foreign NGOs and churches but also universities, where foreign textbooks are restricted; Apple, which recently closed its online book and film store in China; and Western publications (including The Economist) whose distribution in China is curtailed and websites and apps more frequently blocked. In worrying about the flies, Mr Xi risks keeping out the fresh air. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21698292-chinas-leader-guards-against-nasty-foreign-influences-charity-ends-home/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Enforcing cultural purity + +Exterminate the foreign names + +Xi Jinping’s latest purge + +May 7th 2016 | BEIJING | From the print edition + +Jackson Hole: but Hebei not Wyoming + +A RIDDLE is making the rounds online: “This morning I go for a drive and pass by American Gardens, Victorian Town, Cannes Water, Vancouver Square, Roman Holiday, Nottingham, Provence and Paris Spring: where am I?” + +The answer can only be China. Western-sounding names are commonly used to lend the apartment complexes, towers and gated compounds that have gone up over the past two decades—almost all architecturally adrift and hideously ugly—an air of the international and exotic. + +But fear is now rippling through the creative-naming departments of bubble-era property companies. For in March the minister of civil affairs, Li Liguo, called for Western and other “bizarre” property names to be expunged as part of a State Council determination that such names damage—what else?—“national sovereignty and dignity”. In April the Communist Party mouthpiece, the People’s Daily, reinforced the criticism by declaring that foreign property names undermine Chinese cultural tradition. + +Weird names for housing developments—think “Merlin Champagne Town” and “Oriental Yosemite”—exist across China. The names in Chinese are generally the closest phonetic representation of the English words, sometimes with the English below for show (a floral, cursive or Gothic script is preferred). Beijing has Venice (Weinisi) Gardens and Florence (Foluolunsa) Town, while Shanghai boasts Thames (Taiwushi) Town and Harvard (Hafo) Apartments. Huizhou, a city in Guangdong province in the south, has complexes called Evian (Yiyun), Imperial Hall Boston (Boxitanuo) and Oriental Babylon (Babilun). + +It is not the first diktat against foreign-sounding place names—an earlier regulation from 1996 technically forbade them. Nor were details given about how the latest one is to be enforced. But the measure comes on the back of a spate of official statements that put Chinese culture and “socialist core values” first, while cracking down on the foreign or strange. (President Xi Jinping has also called for an end to “weird architecture”, which will worry some Western architects who have prospered in China.) + +Mr Li’s decree has been met with mockery as well as patriotism. “Why not demolish all Western-style apartment blocks…so as not to toady to foreign powers?” wrote one contributor to an online forum. Another commentator wondered whether “ ‘Smog Towers’ has already been taken?” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21698293-xi-jinpings-latest-purge-exterminate-foreign-names/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +The 15-year hitch + +A pact from 2001 stirs trouble between China and the West, and between America and Europe + +May 7th 2016 | From the print edition + + + +FOR China’s leaders it is as if, having signed a postdated cheque in their country’s favour, Western countries are threatening not to honour it. Their excuses—that the cheque was only ever provisional, that their domestic politics make it impossible and that times have changed anyway—serve only to confirm the impression of defaulters wriggling off the hook. So when, as seems likely, not all the world’s big economies grant China “market-economy status” by the 15th anniversary of its accession to the World Trade Organisation in late 2001, China will cry foul and an almighty row will ensue. China will probably take the dispute to the WTO for settlement. This does not mean it is in the right. + +China argues that geopolitical and domestic economic considerations are clouding a clear legal obligation. It may also sense an opportunity: to divide the China policies of the West’s two most important components, America and the European Union. More than a decade ago, it gave up hope that it might persuade the EU to lift the embargo on arms sales to China imposed after the Tiananmen killings of 1989. American disapproval put the kibosh on that. Now, however, it may, to American dismay, win “market” status unilaterally from Europe. + +At issue is the interpretation of China’s accession agreement to the WTO. Article 15 allows countries to treat China as a “non-market economy” when weighing accusations that it is dumping products abroad—ie, exporting at an unfairly low price. When an alleged dumping country has market status, complaining countries have to compare its export prices with those in its domestic market. For China and other non-market economies, they are allowed to use other similar countries as comparison. + +This matters. No country is accused as often as China of dumping (it is the current target of 28 out of 38 anti-dumping investigations by the European Commission). And WTO rules allow members to impose hefty punitive tariffs on dumped products. However, Article 15 provides that if Chinese producers can prove that market conditions prevail in their industry, then the importing country has to use Chinese prices as a comparison. And, it goes on, “in any event” the non-market presumption will expire 15 years after China’s accession—ie, on December 11th 2016. + +It amounts, says China, to a guarantee of market status by that date. That is not, however, what the agreement says. Rather, it says that importing countries will lose the right automatically to treat China as a non-market economy for anti-dumping purposes. That is not the same as according it full market status under their domestic laws. China does not enjoy market status in the EU, America or Japan, the world’s three biggest economies not counting itself, nor in other giants such as Canada, India and Mexico. A lot is hanging on the interpretation of Article 15. + +When China joined the WTO all those years ago, it appeared bound on a course of market-oriented reform. So the present debate was not foreseen. Yet later, in 2008, a European Commission assessment deemed China to have failed to meet four out of five criteria that the EU sets for winning market status. Since then, despite the Communist Party’s decision in 2013 to let market forces play a “decisive” role, and despite the continued growth of the private sector in China, there has been no fundamental transformation of its economic structure. In 2014 a body set up by America’s Congress to monitor the security implications of economic relations with China noted that many witnesses had told it that “China is not currently a market economy and is not on the path to become one in the near future.” + +China is of course right, however, that more than purely legal factors will sway other countries’ decisions. In 2001 China accounted for 4.4% of global merchandise exports. By 2015 the proportion had tripled. As China’s economic clout has grown, so has fear about its impact on jobs elsewhere. In this respect, it is unfortunate for China that the debate is coming to a head at a time of panic in an industry China dominates: steel. + +Last year China produced 803m tonnes—50.3% of the global total—and exported 112m tonnes. The world’s second-biggest producer was the EU, with 166m tonnes. Even if China carries out its declared plans to close a lot of steel mills, at the cost of hundreds of thousands of Chinese jobs, it will still have annual excess capacity of 200m tonnes or more. This is great for steel consumers, but threatens the jobs of steelworkers, of whom there are 328,000 in the EU alone. What is more, the closure of steel plants provokes atavistic fears about whether Western manufacturing has a future. To many Europeans and Americans, even national identity may seem to be at stake. + +On both sides of the Atlantic, anti-China diatribes are becoming more common. Britain’s Conservative government is accused of sacrificing the steel industry to toady up to China. In America Donald Trump, who accuses China of “raping” America and wants to impose a 45% tariff on Chinese imports, is now the all-but-certain Republican presidential nominee. + +Three-way split + +It seems unlikely, in this climate, that America will change its laws to grant market-economy status to China. In Europe the decision is harder to call. Britain, the Netherlands and the Nordic countries are likely to be in favour, with some Mediterranean countries, notably Italy, against. In the end, some in Washington fear, Europeans may be tempted to give China what it wants for the sake of commercial advantage and to avoid a quarrel. + +If so, that would recall the tussle over the arms embargo. It would also be in keeping with Europe’s role as a distant, detached observer of the geopolitical tussle under way between China and America for strategic primacy in Asia. So the worst outcome of an obscure wrangle over China’s status in the WTO may not be a blazing row with China so much as the widening of an already worrying rift in the transatlantic alliance. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21698265-pact-2001-stirs-trouble-between-china-and-west-and-between-america-and-europe/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Iraq unravels: The ungovernable country + +Syria’s war: Spiralling out of control + +Syrian refugees in Jordan: Peace, bread and work + +Jobs in Africa: In praise of small miners + +South African idols: Who owns Mandela? + + + + + +Articles Sections Next + +Iraq unravels + +The ungovernable country + +Iraq is in desperate need of responsible leaders + +May 7th 2016 | AMMAN AND CAIRO | From the print edition + + + +EVEN before America sealed it off with blast walls and razor wire, the area now known as the Green Zone in central Baghdad was viewed with a mixture of fear and loathing. Saddam Hussein, Iraq’s brutal late dictator, adorned his palaces with monuments to himself. After toppling him, the American-led coalition moved into one of these—the Republican Palace—and the Green Zone developed around it. The fortifications were meant to be temporary; a response to an insurgency outside. But as the Americans withdrew, Iraq’s new leaders replaced them in the citadel—and as the main target of an angry public. + +It has been 13 years since the fall of Saddam, but many Iraqis are still struggling to get by. Successive governments, detached from the people, have produced little more than staggering levels of corruption and incompetence. Idle officials sit in air-conditioned offices even as the population lacks basic services. Progress seemed possible last year, when Haider al-Abadi, the prime minister, introduced a reform agenda, ostensibly backed by the entire parliament. But MPs’ swift reversion to bickering merely fuelled public outrage, which boiled over on April 30th, when hundreds of Iraqis stormed the Green Zone. + +After smashing some furniture in parliament, and beating one of its members, the protesters quickly retreated. But their actions deepened Iraq’s worst political crisis since the fall of Saddam in 2003. + +The proximate cause is a dispute over cabinet posts, which are divvied up between political blocs based on sect and ethnicity. The blocs have mostly plundered the ministries under their control. Mr Abadi has tried to shrink the cabinet from 22 ministers to 16 (he previously cut 11 posts), and to replace the political appointees with technocrats who might actually do their jobs. His efforts are backed by America, Iran and Grand Ayatollah Ali al-Sistani, Shia Islam’s chief religious authority. He also has the support of Muqtada al-Sadr, a mercurial Shia cleric whose followers dominate the protest movement. + +Sadr and sadder + +Still, nearly all of Iraq’s political parties cling to the old system, which guarantees them a share of power and its spoils. So even before Mr Abadi’s five least-contentious nominees were confirmed on April 26th, some lawmakers had already hurled water bottles and left the assembly. Days later, a vote on several new nominees was postponed for lack of a quorum. + +Forming another will be tough: Kurdish members have returned to their autonomous region, where the crisis is encouraging more talk of independence, and Mr Sadr is off visiting Iran. The speaker says he will try to hold a new session of parliament on May 10th. But some fear it hardly matters and that the country is so divided and corruption so entrenched that it has become ungovernable. Although the prime minister can keep paying salaries, and continue the war against Islamic State (IS), with or without the legislature, there is little anyone can do to fix the Iraqi state. + +Mr Abadi had hoped to repair some of the damage wrought by his sectarian predecessor, Nuri al-Maliki. But it may be too late. Tensions are growing between communities, and within them. Shia groups such as the Badr organisation, backed by Iran, and the Sadrist movement battle for influence, while Mr Maliki plots a comeback. In the north the Kurds squabble among themselves. And the jihadists of IS kill more of their fellow Sunnis than anyone else. Emma Sky, a former adviser to the American military in Iraq, suggests viewing the conflicts as “a struggle for power and resources in a collapsing state. A Hobbesian world of all against all.” + +Ms Sky says that some Iraqis are reminded of the last days of the monarchy in 1958 when another elite refused to reform, and was overthrown. Mr Sadr has fomented insurrection. “I’m waiting for the great popular uprising and the great revolution to stop the march of corrupted officials,” he has said. More protests are set for May 6th. But the Sadrists may not actually want to topple the government. “They have used their anti-establishment appeal to strengthen their position in the establishment,” says Maria Fantappie of the International Crisis Group, a think-tank. + +The economy, meanwhile, is unravelling. The government gets most of its money from oil sales, but the price of the stuff has collapsed. Parliament passed a budget of 107 trillion dinars ($100 billion) for 2016—and projects a deficit of 24 trillion dinars. Officials are hoping for loans from the IMF and World Bank, but the political crisis threatens those, too. + +More than 70% of public spending will go to the salaries and pensions of 7m public employees, up from 1m under Saddam. Many sit at empty desks. Mr Abadi has cut the pay of some public employees. But others have been given raises, and politicians will not let him lay anyone off. + +Iraq’s war with IS costs millions of dollars each year, and illustrates how the country’s problems compound each other. “If the government was not so messed up, they would have kicked these guys out a year ago,” says Kirk Sowell of Inside Iraqi Politics, a newsletter. During past incidents of unrest, Mr Abadi has withdrawn army units from Anbar province, where IS is strong, in order to secure Baghdad. + +The fight to recapture the city of Mosul, Iraq’s second largest, began on March 24th. On May 3rd jihadists counterattacked, breaking through Kurdish defences, killing an American. The eventual liberation of Mosul would damage IS, yet, as Ms Sky notes: “the main lesson of the Iraq surge of 2007-09…was that if the politics do not come together, tactical successes are not sustainable, and things fall apart.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21698256-iraq-desperate-need-responsible-leaders-ungovernable-country/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Syria’s war + +Spiralling out of control + +Attempts to end the war are failing + +May 7th 2016 | BEIRUT | From the print edition + + + +“OUT of control,” is how John Kerry, America’s secretary of state, described Syria’s war this week. “A miracle that is now fragile,” said Staffan de Mistura, the UN envoy to Syria, on the partial ceasefire that had brought a degree of calm since it came into force on February 27th. + +Violence in Syria is rapidly escalating. Since April 21st the regime has been blasting Aleppo, the country’s biggest city. On April 27th it bombed al-Quds hospital, killing more than 55 people, including Muhammad Wassim Moaz, one of the city’s few remaining paediatricians. In February Médecins sans Frontières, a medical charity, stopped giving the co-ordinates of hospitals it supports to the Syrian and Russian governments. It worries that pro-Assad jets are deliberately targeting them. + +The rebels are not blameless. They have intensified their shelling of the government-held part of the city, making life more dangerous for civilians there. On May 3rd a mortar shell fired by rebels killed three people in a hospital. The rebels said they were aiming at a tank nearby. + +The regime’s attacks on Aleppo galvanised rare international outrage at Bashar al-Assad, who until recently had been seen by many governments as a lesser evil than Islamic State (IS). A social-media campaign entitled “AleppoIsBurning” sparked protests from Syria to Chicago, after it emerged that a new temporary cessation of fighting that was declared on April 30th excluded Aleppo, the very place that needed it most. Amnesty International and other human-rights groups have called on the UN to impose sanctions on those who deliberately attack hospitals, or otherwise treat the Geneva conventions as blotting paper. On May 3rd the UN Security Council passed a resolution urging members to prosecute those responsible for such crimes. + +America, Russia and the UN are now running round trying to salvage the recent partial ceasefire. An extension of the truce to include Aleppo was announced late on May 4th, but it was not clear how it would deal with rebels fighting alongside Jabhat al-Nusra, the local al-Qaeda affiliate. This group is excluded from the ceasefire, along with IS, even though mainstream rebels are often intermingled with it. (They refuse to fight shoulder-to-shoulder with IS because it is too bloodthirsty.) + + + +The rate at which people are dying from the fighting is climbing back to where it was before the ceasefire (see chart). At least 200 people have been killed in regime strikes in the past fortnight alone in Aleppo. If the truce is ineffective—and the parties could not even agree when it was to have started—it is unlikely that peace talks in Geneva will reconvene. (They ended in acrimony last month.) + +Furthermore, two assumptions behind the talks are looking shaky. The first is that Russia wants to broker a fair deal between the parties. Although it says it is keen to do so, and has sometimes appeared annoyed at Mr Assad’s stubbornness, its actions have been aimed at giving the regime a military advantage. It is in any case unclear how much leverage Moscow has over Damascus should it wish to force a deal. + +The second assumption is that America no longer insists that Mr Assad should immediately relinquish power. Yet it will be almost impossible to bring Syria’s war to a close so long as its chief instigator, who is responsible for most of the roughly half a million war deaths, remains secure. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21698255-attempts-end-war-are-failing-spiralling-out-control/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Syrian refugees in Jordan + +Peace, bread and work + +Jobs for Syrian refugees help them and their hosts, and slow their exodus + +May 7th 2016 | AMMAN | From the print edition + + + +FAWZI HAMAMA pulls four months’ worth of electricity bills out of a plastic bag, wondering how he will ever pay them. Since fleeing from Syria to Jordan three years ago, he has sold the gold he gave to his wife as a dowry. The family of four now survives on handouts from international agencies. That does not cover rent on their flat, let alone bills. “I may be kicked out of my home at any time,” he says. + +Poverty and rootlessness have become facts of life since the forces of Bashar Assad, Syria’s president, began raining rockets down on Mr Hamama’s hometown in northern Syria at the start of the war. He abandoned his house and job as a driving instructor, and the family fled. In Jordan, he first settled in a refugee camp. Then he was “bailed out” by a relative and allowed, like most Syrian refugees, to move to a flat in Amman, the capital. + +Mr Hamama has recently learned to repair refrigerators and air-conditioners on a course paid for by the British government. All he now needs is permission from the Jordanian authorities to work. “We Syrians don’t want sympathy or aid. Just give us work permits,” he says. + +That desire makes him a potential beneficiary of an initiative being considered by the European Union and Jordan that could pioneer a new way of dealing with refugees in overstretched host countries. The “Jordan Compact”, agreed in London in February, recognises that the small country has borne a disproportionate burden of hosting refugees, and that other countries have only limited resources to help it. Instead of more aid, it offers a trade-off: the EU will allow more Jordanian goods, such as textiles, into its market if Jordan allows refugees to work in special economic zones (SEZs) or industries that don’t employ many Jordanians. + +The SEZs, born out of an export deal with America in the 1990s, currently employ temporary immigrants from Bangladesh, Sri Lanka and elsewhere in South Asia. Most of them are seamstresses in textile factories, such as those in Ad-Dulayl Industrial Park, near Amman, who make clothes for American brands, including Under Armour and LL Bean. They sit behind row after row of sewing machines, ten hours a day, six days a week. Their own headscarves, dresses and shawls from a variety of cultures are far more vibrantly coloured than anything they are stitching. + +The managers of one factory, Needle Craft, say they would be happy to employ Syrian refugees, noting that many come from a part of Syria near Aleppo that used to have a garment industry based on home-grown cotton. Needle Craft says it would provide refugees with food and accommodation, as well as pay. + +European officials argue that letting Syrians work in such places would provide them with skills to help rebuild their war-shattered country when the conflict ends. It could also help the Jordanian economy, which has suffered during the Syrian conflict, as has that of another neighbouring refugee haven, Lebanon (see chart). Proponents of the initiative hope that Jordanians, too, could find new white-collar jobs in the SEZs. + + + +Europe’s motive is not entirely altruistic. It also hopes that by encouraging employment in Jordan it will slow migration to richer countries. “Providing hope where refugees already are…is the best assurance that they won’t gamble everything, including their lives, to come to Europe,” says Justine Greening, Britain’s international development secretary. + +Still, there are pitfalls. European officials will ease some rules on Jordanian imports relating to where goods are made, but they are anxious to ensure that countries such as China do not take advantage to sneak their own textiles into Europe. + +Jordanian officials hope the initiative will mark the start of a new way of dealing with a refugee problem that has long weighed on their country. Its ruler, King Abdullah, wittily describes Jordan as being stuck “between Iraq and a hard place”. Previously the hard place was Israel; since the Arab-Israeli war of 1948, huge numbers of Palestinian refugees have settled in Jordan. Now it is Syria; an estimated 1.4m Syrians now live in Jordan, alongside some 6.6m Jordanians. + +The Wana Institute, a Jordanian think-tank, notes that there is a “serious flaw” in the traditional way of dealing with refugees. Host countries, including poor ones such as Jordan, are required by international law not to expel refugees who face a genuine threat of persecution. Yet the rich world is not obliged to offer financial support. For decades the kingdom has had no choice but to hold out a begging bowl for international help. This has distorted its economy and made it dependent on aid. + +Like their host country, the refugees too tend to become reliant on handouts. Almost 70 years after 1948, many Palestinians (and their descendants) are still supported by the UN. + +British officials say that the Syrian refugees are likely to spend 5-10 years in Jordan. Yet offering them jobs is sensitive in a country such as this, where the unemployment rate is above 14% (and almost twice that for women). It would also feed the perception that immigrants are an economic burden on host countries. “We have a joke here,” says a local businessman who supports giving jobs to refugees: “The Egyptian is cleaning, the Syrian is selling, the Iraqi is buying, and the Jordanian is watching.” + +To assuage such fears, Jordan hopes to attract new foreign investment to take advantage of its access to Europe’s market. Companies including Asda, a British subsidiary of Walmart, an American retailer, and IKEA, a Swedish home-furnishing store, have flown to Jordan to take a look. + +A senior European official says there is “real urgency” to finish the negotiations within the next few months so that the scheme can get under way. If it works, Lebanon may be able to get similar support to provide jobs to refugees on its farms and in its construction industry. Mr Hamama is surprisingly upbeat, for all his hardships. “If I could get a decent job and a decent wage, I wouldn’t even consider going to another country,” he says. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21698260-jobs-syrian-refugees-help-them-and-their-hosts-and-slow-their-exodus-peace/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Jobs in Africa + +In praise of small miners + +A boom in artisanal mining offers lessons in development + +May 7th 2016 | ANGOVIA | From the print edition + +From early mornin’ till night + +ON THE outskirts of the western Ivorian town of Angovia, Joseph Bado hunches over a pile of gold-laced stone, pulverising it with a hammer. Mr Bado, who is in his mid-30s, was born in a farming village in central Ivory Coast. Frustrated by his meagre earnings in the cocoa fields, he left in 2003 to become a miner. His travels took him to neighbouring Ghana and Mali before he returned to Ivory Coast in 2013, drawn by its own nascent gold boom. “You can work for years in cocoa and not get anything. You won’t even have food,” says Mr Bado. + +Informal mining settlements like Angovia’s, a series of hills dotted with tattered tarpaulin-covered shelters and pockmarked by deep pits, have been unexpectedly popping up in recent years across the west African country. For many years Ivory Coast’s economic fortunes were tied to agriculture. After independence in 1960 it became the world’s largest producer of cocoa. Few gave much thought to what treasures might lie deeper in its ochre-red soil. + +But a slump in cocoa prices and a jump in those of minerals prompted a boom in artisanal mining. From a base of virtually nothing at the turn of the century, the government reckons there are now some 500,000 small-scale gold miners. + +Ivory Coast was one of the last guests to the African mining party, arriving just before the music was turned down. Yet across the continent there has been a surge in small-scale mining. The World Bank reckons that the number of artisan miners in Africa has grown from about 10m in 1999 to perhaps 30m today. Among the minerals they dig out with rudimentary tools are gold, diamonds and emeralds. + +Angovia’s filth and grime may not, at first glance, commend it. But researchers are concluding that small-scale mining may offer a more attractive path out of poverty than either farming or moving to already overstrained megacities. In Tanzania, for instance, liberalisation of the country’s once dismal socialist economy in the 1980s helped spark the spectacular growth of towns in the country’s gold- and emerald-mining regions. + +In the Tanzanian town of Kahama, once a sleepy trading outpost, the population has more than trebled to about 250,000 in the past 15 years, town officials say. An industrial mine that started commercial operations in 2009 has contributed jobs and infrastructure, but locals say small-scale gold mining has driven the town’s explosive growth. Today, the mayor boasts, there are ten banks, 40 petrol stations and more than 300 guesthouses. + +For many governments and do-good development agencies, informal mining towns are the very definition of unsustainable—dirty and disorganised, with transient populations. Most miners work clandestinely, since they do not have a legal right to dig. Working conditions are generally poor. Young men, and sometimes children, may be lowered down a flimsy mine shaft 60 metres deep on a rope. Deadly accidents are common. So is the use of mercury, a pollutant, to extract gold. + +Some informal mines support killers. Many militias in the Democratic Republic of Congo’s lawless east at least partly finance themselves with proceeds from illicit mining. Some towns, including Angovia, have seen violence between newcomers and existing residents. And sometimes conflict can break out with formal mining companies. AngloGold Ashanti, a South African mining firm, said its plans to invest in rehabilitating Ghana’s Obuasi gold mine, one of Africa’s oldest, have been put on hold since illegal miners invaded it earlier this year. + +Governments have responded to the growth of informal mining settlements in two ways. One is to evict the diggers. Ivory Coast’s government, for instance, says it has shut down more than 280 illegal sites since last year. More common, however, is for governments and aid agencies to pretend these new mining towns do not exist. The UN agency and NGO signs that line so many roads in rural Africa are conspicuously absent when the scenery turns from verdant fields to mines. + +Both responses are misguided. Small-scale mining is not a curse. On the contrary, it creates jobs in some of the poorest places on earth. Globally, artisanal mines employ about ten times as many people as industrial ones. Moreover, small mining towns are less affected by the commodity boom-and-bust cycle than are towns that depend on large-scale capital investment. Big foreign mining firms tend to retrench quickly when markets turn down; small local miners tend to keep digging. Also, small miners’ earnings tend to be spent locally. In central Mozambique, for instance, increased legalisation of formerly illicit gold mining over a decade has led to a farming renaissance in many villages, alongside booms in construction and trade. + +Governments that allow miners to legalise their operations see several benefits. They can keep a closer eye on labour and environmental conditions, and collect millions of dollars in taxes that would otherwise not be paid. In return, they sometimes offer miners basic services such as water and sanitation. + +Other bodies are pitching in. The World Bank is working with the African Development Bank to make geological data available to African miners. The American government and European Commission are financing projects to help miners obtain advanced equipment. Some recall that small-scale mining has been an engine of development before. Among other things, it created the cities of San Francisco, Johannesburg and Melbourne. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21698262-boom-artisanal-mining-offers-lessons-development-praise-small-miners/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +South African idols + +Who owns Mandela? + +The ANC has gone from minting heroes to jealously guarding their images + +May 7th 2016 | JOHANNESBURG | From the print edition + +A national treasure + +SOMETIMES even a revolutionary government can seem out of touch. The African National Congress (ANC), which has ruled South Africa since 1994, feels this problem acutely. In the bad old days of apartheid its leaders were unjustly imprisoned and widely admired, even as they broke rocks on Robben Island. Now they are more likely to be fighting corruption charges (like President Jacob Zuma) or living it up in a way their constituents could never afford. At a party in 2012 the then-deputy president of the ANC, Kgalema Motlanthe, told the crowd: “The leaders will now enjoy the champagne, and of course they do so on your behalf through their lips.” + +To take voters’ minds off the present, the ANC likes to invoke the memory of struggle heroes such as Nelson Mandela. But amid fierce campaigning ahead of local elections that are planned for August 3rd, control of history is a competitive business. + +A newish left-wing opposition party, the Economic Freedom Fighters (EFF), is keen to align itself with the icons of the past. Last month it held a lecture on the life of Solomon Mahlangu, a member of the ANC who was hanged by the apartheid government. The ANC was outraged. Mahlangu’s family asked a court to stop the event, accusing the EFF of using his legacy as “an election tool”. The South African Communist Party, a political ally of the ANC, said the EFF was “stealing” revolutionary symbols. + +For its part, the ANC is happy to claim heroes from other parties. Last year its leaders flocked to the grave of Steve Biko, who founded the Black Consciousness Movement (a rival to the ANC) to commemorate his death at the hands of apartheid police. They were outdone, however, by the EFF, which arranged a more exuberant rally nearby. The EFF’s firebrand leader, Julius Malema, claimed to be Biko’s true ideological heir. + +The jostling over the past involves not just the recruitment of dead heroes but also their scions. The DA scored a coup in April when Ghaleb Cachalia, the son of two prominent anti-apartheid figures, quit the ANC. He joined the DA and said he would run as its mayoral candidate in Ekurhuleni, a huge industrial city near Johannesburg that is currently controlled by the ANC. + +After more than two decades of rule by a single party, South Africa is at last seeing the emergence of competitive politics. The battle for votes is fierce: the ANC may lose control of several big cities, including Johannesburg and Port Elizabeth. If past polls are any guide, even Nelson Mandela (who died in 2013) will be caught in the fray. He was a devoted member of the ANC, but a leaflet in 2014 for the Democratic Alliance, the main opposition party, showed him embracing Helen Suzman, a staunchly anti-apartheid member of parliament for a party that preceded the DA. The ANC retorted with a snarky poster pointing out that it had “so many” of its own struggle heroes that there was “no need to borrow”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21698205-anc-has-gone-minting-heroes-jealously-guarding-their-images-who/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +NATO and the European Union: Buddy cops + +France at war: Aux armes + +Turkey’s prime minister: No room for moderates + +Repressing Islam in Russia: Salafis mustered + +Germany’s migrant complex: Doppelgänger envy + +Charlemagne: Visa wars + + + + + +Articles Sections Next + +NATO and the European Union + +Buddy cops + +New threats are forcing NATO and the EU to work together + +May 7th 2016 | BRUSSELS | From the print edition + + + +THEIR headquarters are separated only by a three-kilometre taxi ride across Brussels, and over the years they have declared their shared interests and common values any number of times. But despite having 22 members in common, NATO and the EU have always found it easier to talk about co-operating to than to do so. That may be about to change. + +Leaders of both institutions hope that NATO’s biennial summit in Warsaw this July will mark a new era of partnership to defend Europe. NATO’s secretary-general, Jens Stoltenberg (pictured), a former prime minister of Norway, describes it as a “landmark” summit that must respond to big changes over the past two years in the threats Europe faces. Terrorists have slaughtered rock fans in Paris. Syria’s civil war has sent a wave of refugees into Europe. Russia is waging “hybrid war” in the east, achieving its aims with a mix of conventional force, political subversion and disinformation. All these problems are forcing NATO and the EU to find new ways of working together. “We have realised,” says a NATO official, “that we only own part of the tool-box.” + +The EU and NATO have managed to cooperate in the past. More than a decade ago, the EU took over stabilisation missions in the Balkans that use NATO’s command headquarters and planning capabilities. These arrangements allow NATO to support EU-led operations in which the alliance as a whole is not engaged. NATO and the EU also tried to form a civil-military partnership in Afghanistan, and both have deployed naval forces to fight Somali pirates since 2008. + +But the tendency has been for the two organisations to work in parallel rather than together, leading to wasteful duplication and muddle. In part this is due to the long-running row between Turkey (a member of NATO but not of the EU) and Cyprus (a member of the EU but not NATO) over the former’s occupation of the northern part of the island since 1974. Whenever possible, Cyprus thwarts attempts at cooperation. Meanwhile, America and the alliance’s more Atlanticist members, such as Britain, have always mistrusted Franco-German plans for establishing an EU military planning headquarters (and derided notions of an EU army). + + + +However, the urgency of the new threats facing Europe may be forcing change. “We now have a real reason to work together,” says one NATO official. The hybrid warfare techniques that Russia used to annex Crimea, and to wrest control of eastern Ukraine’s Donbas region away from Kiev, require a response different from the force-on-force confrontations envisaged during the cold war. Diplomatic, communications, military and economic assets must all be used in concert. “It is a more blurred line between peace and war,” says Mr Stoltenberg. + +The first challenge, when faced with a hybrid threat, is to understand what is happening and to know where your vulnerabilities are. That means that NATO and the EU must share intelligence and analyse it together, and ensure that both can protect their networks from cyber-attacks. It also means protecting critical infrastructure, such as eastern Europe’s energy supply, and using joined-up communications to counter disinformation. + +Mr Stoltenberg is expecting three things to come out of the summit. The first will be a joint statement from him and his EU counterparts on hybrid, maritime, and cyber-security co-operation. He describes it as “an expression of will”. The second is the creation of a playbook for dealing with a range of hybrid-warfare scenarios, to speed up decision-making and answer in advance questions about who does what. The third will be linked EU-NATO exercises next year to test reactions to an emerging hybrid-warfare threat. + +How the two alliances will respond to the chaos enveloping Syria, Iraq and Libya is less clear. If the new national-unity government in Libya asks for it, NATO and the EU will provide help building up both military and civil institutions. The refugee crisis led to a more urgent request from Germany, Greece and Turkey for help from NATO. The alliance is working with the EU’s Frontex border agency to stem illegal trafficking and migration by means of intelligence gathering and surveillance in the Aegean Sea and at the Turkey-Syria border. A NATO official describes it as “a challenge of strategic proportions” that requires the use of armed forces. Mr Stoltenberg points to Greek and Turkish officers serving on the Aegean flotilla’s German flagship as an example of NATO-led co-operation between the EU and Turkey. + +Security threats are pushing NATO and the EU to improve their relationship. But many will remain sceptical until EU politicians take the issue more seriously. Ian Kearns, director of the European Leadership Network, a think-tank, says: “There is a lot of activity at the official level, but the big challenge is political.” He questions whether the playbook idea can work; in a real crisis, sluggish EU decision-making might prevent anyone from following the script quickly enough. The “game-changer”, he says, would be a deal on Cyprus. + +The Americans think more NATO-EU co-operation would be nice, but what they really want is for their allies to spend more on defence. Mr Stoltenberg agrees that it is not “sustainable” for America to cover 72% of the alliance’s spending. But he notes that European defence budgets did, at least, stop falling last year; 16 member countries actually increased them. “It is,” he says, “the first step in a long journey.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21698248-new-threats-are-forcing-nato-and-eu-work-together-buddy-cops/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +France at war + +Aux armes + +Between missions abroad and at home, French military power is stretched thin + +May 7th 2016 | LA DEFENSE | From the print edition + + + +A TRIO of soldiers in full combat gear advances in triangular formation, heads swivelling from left to right. On this bright spring afternoon, the unit has been deployed to patrol La Défense. But this is not a military site. It is a shopping-mall and office-tower district to the west of Paris, named after a statue commemorating the capital’s defence during the Franco-Prussian war. The soldiers are part of Operation Sentinelle, patrolling the streets under France’s state of emergency. + +When the operation was first launched, patrolling transport hubs and places of worship after the terrorist attacks in January 2015, the idea was to reduce its size as the threat subsided. After terrorists struck Paris again last November, however, President François Hollande imposed a state of emergency, and Sentinelle was reinforced to its full quota of 10,000 troops. The government is now seeking a third extension of the state of emergency to cover the European football championships this summer. Jean-Yves Le Drian, the defence minister, says the operation will continue “as long as necessary”. + +For military planners, this is a challenge. Sentinelle is the biggest military operation on home soil since the Algerian war in the 1960s. The French army had planned the capacity to provide 10,000 soldiers for a domestic emergency, but not permanently. Now the strains are showing. General Pierre de Villiers, chief of the French armed forces, said recently that the army was operating “at its limit”. + +To try to meet the challenge, last year Mr Hollande raised defence spending by €3.8 billion ($4.4 billion) over four years and expanded France’s operational ground force from 66,000 to 77,000. But the extra soldiers will take time to train. Meanwhile, the army has had to make do. Some exercises have been cancelled. The number of training days between missions has shrunk far below the NATO norm of 90. Last year 70,000 French soldiers took part in Operation Sentinelle, some serving five or six rotations. There is “a risk of being worn out between domestic and foreign operations”, said Nathalie Kosciusko-Morizet, a centre-right MP, who recently visited French troops in the Sahel. + +Meanwhile there have been complaints about “rustic” camp conditions in Paris, and a lack of beds. Some soldiers are camping in empty former defence-ministry offices. Families, a report noted, seem less tolerant of absences when soldiers are sent to patrol Paris rather than on missions abroad. Morale needs managing, too. The terrorist attacks have prompted a surge in new recruits, but it is not obvious that they signed up to patrol shopping centres. + +In the longer run, France may have trouble maintaining its activist defence and security policy abroad. Other European countries that deploy a heavy military force at home, such as Italy, do not also aspire to project force outside their neighbourhood. In 2013 France dispatched 4,500 troops to beat back an Islamist incursion in Mali; America’s RAND Corporation, a think-tank, called it a model expeditionary force. It sent another 2,000 troops to the Central African Republic, to control a “pre-genocidal” situation. France was the first European country to join the American-led coalition striking Islamic State in Iraq, and later Syria. + + + +Overstretch could curb the capacity to respond to new threats. “Our technical capacity is very good,” says General Vincent Desportes, a former army officer and critic of Operation Sentinelle. “But clearly France is in no position to commit to any further adventure.” French expeditionary culture is hardy: in Mali, where soldiers endure desert conditions without optimal supplies or equipment, the army “makes coping with austerity a point of pride”, notes RAND admiringly. But there is a pressing need for more attack helicopters and drones. + +Mr Le Drian has described facing the new threat as “entering a different era”. A parliamentary report last year referred to a “change in paradigm”. The most recent strategic defence review, though, was in 2013; it is already outdated. If France’s domestic operation becomes permanent, say analysts, the government will need to do much more than just reverse defence cuts. + +France’s pull-out from Afghanistan in 2014 did not much affect the allied mission there, observes Camille Grand, director of the Foundation for Strategic Research, a think-tank. But had it not intervened in Mali, “where our troops are involved in real fighting”, there would have been serious consequences for regional and ultimately European security. France is one of the few Western countries that still projects force abroad. But with its new domestic-security worries, it will need to spend more to continue doing so. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21698289-between-missions-abroad-and-home-french-military-power-stretched-thin-aux-armes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Turkey’s prime minister + +No room for moderates + +Ahmet Davutoglu, architect of the EU-Turkey migrant deal, is forced out + +May 7th 2016 | ISTANBUL | From the print edition + + + +FOR Turkey’s prime minister, Ahmet Davutoglu, May 4th began on a good note. In the morning the European Commission, the European Union’s executive arm, endorsed a proposal to lift visa restrictions for Turks travelling to the bloc’s Schengen zone as of June. For Mr Davutoglu, who had made visa-free travel a key condition for enlisting Turkish help in stemming illegal migration to Europe, the relief was short-lived. By the evening, it was clear the prime minister was out of a job. + +The man who pulled the carpet from under his feet was the same one who appointed him less than two years ago: Turkey’s president, Recep Tayyip Erdogan. Tensions between the increasingly authoritarian Mr Erdogan and his prime minister have simmered for months. The two disagreed over the future of peace talks with Kurdish insurgents, and over Mr Erdogan’s plans to change the constitution to give the presidency executive powers, cementing his grip on government and his own Justice and Development (AK) party. + +They also clashed over the management of the economy, and Mr Erdogan’s crackdown on critics. (Its latest victims, two journalists, were sentenced to two years in jail last week for republishing a drawing from Charlie Hebdo, a French weekly, featuring a weeping Prophet Muhammad.) Mr Erdogan has accused his prime minister of stealing the spotlight. “During my time as prime minister it was announced that Schengen travel would come into force in October 2016,” he said recently, referring to the visa talks. “I cannot understand why bringing it forward by four months is presented as a triumph.” + +Signs that Mr Davutoglu was fighting for his political life emerged last Friday when AK’s executive body stripped him of the right to appoint provincial party officials. Over the weekend, an anonymous blogger believed to be a member of Mr Erdogan’s inner circle suggested that the prime minister had reached his expiry date. Mr Davutoglu, the blogger alleged on a website named “The Pelican Brief”, had crossed his boss by criticising the arrests of academics and journalists and by declining to drum up support for Mr Erdogan’s executive presidency—and by giving an interview to The Economist last year. + +On May 5th, a day after the two men met in Mr Erdogan’s 1,100-room palace, AK’s executive council gathered to settle the prime minister’s fate. It was not clear at press time whether he would resign immediately. But in the coming weeks, AK is expected to hold an extraordinary congress to elect Mr Davutoglu’s successor as party leader. Likely candidates include Binali Yildirim, the transport minister, and Berat Albayrak, the energy minister (who also happens to be Mr Erdogan’s son-in-law). + +The bookish Mr Davutoglu, a former foreign minister, may have quietly sparred with Mr Erdogan on occasion, but generally tried to play down divisions. His ouster suggests there is no tolerance left for opposition to the president inside his party. It also reveals the price that Mr Erdogan is willing to pay to pursue his agenda. Within hours of his meeting with the prime minister, the Turkish lira plummeted by almost 4% against the dollar, the biggest such drop since 2008. Fears spread that the EU, which had found in Mr Davutoglu a sensible interlocutor and a channel to bypass his abrasive boss, would lose its appetite for engaging with Turkey. + +Mr Erdogan appears not to care. No groundwork has been laid for Mr Davutoglu’s departure. To many AK supporters, who saw their prime minister propel the party to a thumping win in elections last autumn, his abrupt ouster seems puzzling. Ozer Sencar, the chairman of Metropoll, a polling company, said it shows Mr Erdogan wants a referendum on his executive presidency this year: “(Mr Davutoglu) presented an obstacle. He had to go.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21698290-ahmet-davutoglu-architect-eu-turkey-migrant-deal-forced-out-no-room-moderates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Repressing Islam in Russia + +Salafis mustered + +A crackdown drives Dagestan’s Muslims towards Islamic State + +May 7th 2016 | KHASAVYURT AND MAKHACHKALA | From the print edition + +A pattern of repression + +IT WAS prayer time at the Northern Mosque in Khasavyurt, a town in western Dagestan, when troops in black balaclavas arrived one day in February. “They said: ‘This mosque is closing—turn off the lights and hand over the keys’,” recalls one of the congregants. The next day Muhammad Nabi Magomedov, a local imam, led some 5,000 Salafi believers in a march on city hall, chanting “Allahu akbar!” and “Return our mosque!” In early April the security services came for Mr Magomedov, arresting him on terrorism charges. + +Once in custody, the imam was told to shave off his beard. Then six men took him into a room. “One said: ‘Get on your knees’,” Mr Magomedov later told a member of Russia’s prison oversight committee, who shared details of their conversation with The Economist. “I said, ‘I won’t get on my knees’.” The men beat up Mr Magomedov, sending a clear signal to the ultra-conservative Salafi community: there will be no dialogue. “It’s a shame,” says Rasul, one of Mr Magomedov’s young followers. “He was one of the peaceful ones.” + +Since last autumn, the authorities in Dagestan have ramped up pressure against Salafis. They have reason to worry: as Moscow launched air strikes in support of Syria’s government, the Islamic State (IS) declared a holy war on Russia, took credit for downing a Russian passenger jet over Egypt and released a video threatening “a sea of blood” in Russia itself. Officially, some 900 Dagestanis have left for Syria. Independent experts say the true figure may be as high as 4,000. Even the conservative estimate means that relative to its population, Dagestan has supplied nearly eight times more jihadists than Belgium, the leading source of European foreign fighters. Most fighters who stayed in Dagestan have switched their allegiance from the Caucasus Emirate, a regional insurgent group linked with al-Qaeda, to IS, which last year claimed the Russian North Caucasus as one of its provinces. + +So far, IS has failed to launch a big attack on Russian soil. In fact, the exodus of radicals to Syria led to a drop-off in the ongoing low-level insurgency in Dagestan: casualties fell 46% in 2014 and a further 51% in 2015. Yet the past six months have seen a series of smaller attacks, including car bombings, suicide-attacks on police and a deadly shooting at an ancient citadel in Derbent. Violence and flows of money are picking up, says Akhmet Yarlykapov of the Moscow State Institute of International Relations. IS runs several Russian-language media outlets, and Russian officials fret about recruitment. While Mr Magomedov was leading his protest, IS released a video calling on Dagestanis to resist the mosque closures by force. + + + +The Russian government makes no distinction between non-violent Salafis and the radical underground. According to Magomedrasul Saaduev, chief imam of the main state-endorsed Sufi mosque in Makhachkala, the region’s capital, “Moderate Salafism will always remain soil for extreme Salafism.” Police have expanded the use of terror watch-lists, or profuchet. The 15,000 people on the lists are tracked closely and can be detained at any time, forced to give blood and DNA samples and to submit to interrogation. “They ask: ‘When are you going to Syria?’” complains one Salafi man on the profuchet. Last autumn the authorities shut down Makhachkala’s main Salafi mosque. To the south, in Derbent, another Salafi mosque was set on fire. + +In Khasavyurt, city officials claim that the Northern Mosque was a place where IS found recruits. Khaibulla Umarov, the town’s deputy mayor, argues that arresting Mr Magomedov helped pacify his followers: “People grasped that the state exists.” More probably, the state’s actions will exacerbate extremism. Sweeping up moderate voices “removes the buffer that stands between young people and those calling for violence,” says Irina Starodubrovskaya, an expert on the North Caucasus. As space for legal Salafi activity shrinks, the community will be driven underground and online, where radical voices have more sway. + +Mr Magomedov, whose sermons in Khasavyurt drew thousands, spoke out publicly against IS. Indeed, he was even threatened by extremists. While he and his associates continue to insist on peaceful methods, they warn that his mistreatment plays into the extremists’ hands. “If a rational person...wanted maximally to radicalise the fundamentalist Muslim community,” argues Ekaterina Sokirianskaia of the International Crisis Group, “they would need to use exactly these methods.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21698111-police-shut-dagestans-salafi-mosques-believers-head-fight-islamic/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Germany’s migrant complex + +Doppelgänger envy + +For some Germans, refugees seem like more daring versions of themselves + +May 7th 2016 | From the print edition + + + +AS THE flood of refugees who arrived in Germany last year has tapered to a trickle, scholars have begun to examine the challenges the migrant crisis poses to German identity. Social scientists are looking at public attitudes. For example, in the aftermath of last winter’s assaults in Cologne, much was made of German fears of Middle Eastern migrants’ sexual behaviour. Research by Marc Helbling, a sociologist in Bamberg, finds that the belief that migrants are sexually dangerous is concentrated among German men and women who are “benevolent sexists”—those who regard women as a weaker sex in need of male protection. This view is more common on the right than on the left. + +Others are looking more deeply into how the migrant crisis has affected the national psyche. Matthias Wellershoff, a psychoanalyst in Cologne, has noticed that the crisis forms the emotional backdrop for many of his patients’ complaints. Headlines during the crisis reflected only the most extreme reactions: a euphoric “welcome culture” among some Germans and a xenophobic backlash by others. But judging by what they say on the couch, most Germans’ feelings are subtler and more conflicted. + +Many, Mr Wellershoff says, seem to feel a counterintuitive sort of envy. For them, the migrants are “the active ones, the courageous, those who venture forth,” he says. “We, or 99% of us, are not courageous or active.” Most Germans go dutifully about their routines in an efficient but over-regulated economy, doing what is expected of them rather than what they want. They, too, often feel a need to escape. + + + +INTERACTIVE: Where in Germany offers the best opportunities for refugees? + +Indeed, like the migrants, Germans often try to escape by heading for Greek beaches. Of course, Germans on package holidays experience those beaches very differently from Syrians in dinghies. The refugees face mortal peril and an uncertain future. The Germans are temporary refugees from a life of material and political security that leaves them feeling boxed-in and depressed. Many Germans would like to change their lives, but cannot bring themselves to do so; the refugees have upped sticks and left. Some Germans see refugees as freer than themselves, and this secret admiration can turn into irritation or depression. + +Individual Germans handle these emotions in different ways. In Mr Wellershoff’s practice, those who have not felt welcome in their own lives react “allergically” to the term “welcome culture”. Some become envious: why do the refugees get free bus tickets? Others want to erect barriers, physical or metaphorical, and keep migrants away. + +But many of Mr Wellershoff’s patients transcend both naive attempts to deny that migration creates problems, and fantasies of fence-building. “I myself have the same feelings sitting on my chair behind my couch listening to them,” he says. As German philosophy has recognised since the days of Hegel, it is in confronting the Other that one begins to understand oneself. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21698284-some-germans-refugees-seem-more-daring-versions-themselves-doppelg-nger-envy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Visa wars + +To keep asylum-seekers out, the European Union must let 75m Turks in + +May 7th 2016 | From the print edition + + + +WHEN Macedonia was granted visa-free access to the European Union’s Schengen area in 2009, its citizens popped champagne corks in the streets. Last week, as Turkey passed a last-minute flurry of laws to win the same prize, MPs brawled in the National Assembly. Now, as the European Commission proposes waiving visas for Turkey in a deal to send back migrants from the Greek islands, it stands accused of rewarding a serial human-rights violator and undermining its own values. + +The decline tells a story. Over the years the EU has run out of tools to influence its neighbours. The most powerful was the promise of enlargement, but that has run out of steam; the club has struggled just to digest its eastward expansions in 2004 and 2007. Creating regional associations short of membership made elites happy, but often did little for ordinary citizens. + +That left the prospect of visa-free travel as the last card in the deck, and for those Balkan countries that won it a few years ago, it succeeded. Laws improved and bureaucracies were streamlined. There were hiccups: last year Balkan Roma seeking a few months of benefits surged into rich countries like Germany, making unwarranted asylum claims. But these were quickly fixed by judicious rule changes. + +Now Turkey, Ukraine, Georgia and Kosovo are all in line for visa waivers later this year. From the EU’s perspective, loosening visa rules for neighbours is a triple win. To obtain it, countries must pass better laws on matters like border control and data protection. The process encourages pro-EU, reformist forces in sometimes unstable countries. Perhaps most importantly, it encourages commercial and cultural exchange, and removes a source of grievance from people otherwise forced to endure long queues at embassies and mind-numbing piles of paperwork. “It is sometimes hard for outsiders to understand just how important this is for us,” says Natalie Sabanadze, Georgia’s ambassador to the EU. + +Seen in this light, the proposal to exempt Turks from visa requirements looks positive. Turkey began negotiations to join the EU in 2005; its outraged politicians never fail to point out that it is the only candidate country still on the visa list. For their part officials in Brussels argued that visa liberalisation would bind Turkey closer to EU norms; would strengthen the hand of its pro-European prime minister, Ahmet Davutoglu, against the increasingly autocratic president, Recep Tayyip Erdogan; and would enable ordinary Turks to visit their relatives, zip around on Interrail trains and sell their wares at German trade shows. In other words, it would work for Turkey as it has for other beneficiaries. + +Not so fast. The tourism and business links that visa-free travel will foster are an unalloyed good. But Turkey is on a dangerous path that a mere visa process will not derail. Mr Erdogan, determined to quash dissent, has detained journalists and academics under anti-terrorism laws. Asli Aydintasbas, of the European Council on Foreign Relations, points out that the legislation Turkey passed in the 2000s as part of its EU membership bid, which was still on track back then, has hardly stopped Mr Erdogan’s march towards illiberalism. As for Mr Davotuglu, this week he was squeezed from power by his irascible boss. That places the future of the migrant deal he negotiated with the EU in jeopardy. + +Note the irony. Traditionally conceived, visa liberalisation is the sort of policy that might be designed by a foreign minister steeped in Joseph Nye’s theory of soft power. But in Turkey’s case, granting visa-free access to 75m people is simply the price paid by the EU to keep irregular migrants away. And extra safeguards will be put in place to forestall abuses, such as overstaying visas. Call it the revenge of the interior ministers. Once the stuff of geekery, their preoccupations—border security, asylum rules, passport technology—are now driving EU policymaking. “Before last year migration was like transport policy,” says one EU official. “Too boring for the alpha politicians.” Now it dominates summits. + +The approach is infectious. This week the commission also proposed a radical revision of the EU’s rules on asylum-seekers. The plans include a complex formula to redistribute asylum-seekers around the EU from countries facing a huge influx, as Greece did last year. Countries that refuse to take their share will face big fines, and the EU asylum office’s role will be greatly expanded. The proposals are so far-reaching that Britain urgently sought an exemption ahead of its referendum on EU membership. (This was eventually secured in a weekend frenzy of phone calls between London and Brussels.) All involve a transfer of powers to Brussels; none would have been countenanced a couple of years ago. The business of migration, asylum and security, long the side act of EU policy, is becoming the main show. + +All along the watchtower + +The switch will not be easy. The commission’s asylum plans must now be discussed by Europe’s governments. Many, particularly in the continent’s eastern half, will not take kindly to orders from Brussels to receive refugees, or to the threat of fines. (A previous relocation plan flopped last year.) The deal with Turkey must be approved by governments as well as by the European Parliament, which never misses a chance to assert its independence from grubby politicking. Both will scrupulously monitor Turkey’s attempts to meet the five outstanding “benchmarks” that remain before visa-free travel may be granted. On one of them, Turkey’s draconian anti-terrorism laws, it is hard to see Mr Erdogan reversing course to a degree that will satisfy MEPs. Should the visa bid fail Mr Erdogan has vowed to tear up the migrant deal, and Mr Davutoglu will not be around to protect it. + +A policy paradox is emerging for the EU. Europe’s governments have learned the hard way that they can manage the hot potatoes of migration and asylum only by co-operating. And yet it is because these issues matter so much that politicians are reluctant to cede control. There are big battles to come. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21698253-keep-asylum-seekers-out-european-union-must-let-75m-turks-visa-wars/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +EU referendum campaign: The eternal quest for youth + +Leicester’s success: Foxes and tigers + +Brexit brief: City blues + +Working hours: Nice work if you can get it + +Migration crisis: Rebels with a cause + +Port Talbot steelworks: Either ore + +The rental market: Full house + +Bagehot: The loneliness of Ken Livingstone + + + + + +Articles Sections Next + +EU referendum campaign + +The eternal quest for youth + +So far opinions have barely shifted. That means the outcome will depend on turnout by young voters + +May 7th 2016 | From the print edition + + + +THIS week’s local elections, the results of which were due after The Economist went to press, will be parsed for what they mean for Jeremy Corbyn, the embattled Labour leader (see article). But they will also be analysed as a guide to the more crucial vote on European Union membership soon after, on June 23rd. Referendum campaigning will now step up a gear. + +What is notable about opinion polls on the referendum is how little they have moved (see chart). Barring the odd blip, the Remain side has a small lead. Reforms David Cameron brought back from Brussels—the start of a prime ministerial campaign to stay in—and a Treasury report on the economics of leaving the EU appear to have had no impact. Nor has the advice of America’s president, Barack Obama, against Brexit. The number of “don’t knows” is still over 10%, but predictions that most will vote Remain are less sure. + + + +Polls find a clear majority of Tory voters favour Leave, whereas some two-thirds of Labour voters back Remain. Only a third of better-off adults are for Leave, against half of the poor. Above all there is a big age gap. Discounting “don’t knows”, two-thirds or more of older voters support Brexit, compared with only one-third of younger ones. In this respect Britain is unlike other countries, where older voters favour the EU more than younger ones do. John Curtice, a political analyst at Strathclyde University, suggests some older British voters who in 1975 voted to stay in the common market want to rectify their error. + +This puts a premium on turnout. Backers of Brexit are more committed and more likely to vote. As in elections, the old vote more than the young. The two main campaigns, Britain Stronger in Europe (BSIE) and Vote Leave, disagree about almost everything else, but they agree on turnout. If it is below roughly 60%, Leave will win; if above, it will be Remain. This should worry Mr Cameron. Unlike the Scottish independence vote in September 2014, when turnout was exceptionally high at 85%, the EU campaign has engendered only limited passion so far—and the little there has been is mostly on the Leave side. + +Voters’ divisions also affect the issues that campaigners choose to concentrate on. The Remain side talks up the risks of Brexit for the economy and jobs, because young people worry more about these. A barrage of reports to this effect have emerged from the Bank of England, the Confederation of British Industry and the IMF. Most recently the Treasury suggested Brexit would cost the average family £4,300 ($6,245) a year by 2030. Days later the OECD, a think-tank of mostly rich countries, said that the cost in 2020 would be equivalent to an extra tax of £2,200 on every household. + +With another Treasury paper on the short-term costs of Brexit due soon, Leavers are avoiding the subject. On alternative trading arrangements Michael Gove, the justice secretary, incurred ridicule by noting that even Albania had free trade with the EU. This week Lord Lawson, a former chancellor, wrote in an essay for Politeia, a London think-tank, that the alternative to EU membership was simply non-membership. But most Leavers have conceded that the short-term effects of uncertainty would be negative. So they focus instead on taking back sovereignty and curbing immigration, two issues that resonate particularly with older voters. + +The campaigns range beyond the central issues of the economy, sovereignty and migration. In many ways the underlying question is what sort of country voters want. Brexiteers appeal to old nostalgics and also to the angry and dispossessed who are attracted to populist parties in Europe and to Donald Trump in America. That is one reason to worry that, despite claims to the contrary by people like Mr Gove and Boris Johnson, outgoing mayor of London, a vote to leave would mean a more closed, inward-looking Britain. Yet although Mr Cameron told a parliamentary committee on May 4th that he wanted a big, bold Britain, the Remain side hardly trumpets a more positive future, relying heavily on stressing the risks of Brexit. + +Both sides lay claim to the patriotism label, just as both insist a vote for them is the way to retain the status quo (a harder line for Brexiteers to sustain). And both bring in extraneous matters in support of their cause, ranging from the Brussels bombings to the woes of the Port Talbot steelworks to the merits of a transatlantic trade deal. Two examples stand out. One was when Theresa May, the home secretary, said that, although she backs Remain for security reasons, she wants to pull out of the European Convention on Human Rights, an idea promptly slapped down by none other than Mr Gove. The second is general scaremongering over the funding of the National Health Service, a sacred cow that is now paraded in all political arguments, however irrelevant it may be. + +The NHS argument is, of course, yet another bid to win over older voters. But it is the young who will decide the outcome. Will Straw, executive director of BSIE, says his group has established 72 branches in universities, and insists that much is being done to raise voter registration and encourage postal voting. Mr Cameron, too, wants to appeal to the young, speaking this week of “a choice for a generation”. But the young need more inspiration from the left. + +It is striking how feeble the official Labour Party’s engagement in the campaign has been so far. Most trade unions back Remain and Mr Corbyn has given a dutiful speech in favour. Emma Reynolds, an energetic pro-European backbencher, promises that, after the local elections, the party will focus more intensively on the issue. Yet voters suspect, rightly, that Mr Corbyn is at heart a Eurosceptic. And many Labour supporters object to the idea of rescuing Mr Cameron from his folly in calling the referendum. The vote will remain hard to predict right up to the day itself. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698270-so-far-opinions-have-barely-shifted-means-outcome-will-depend-turnout-young/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Leicester’s success + +Foxes and tigers + +There are lessons to learn from the city as much as from the football club + +May 7th 2016 | LEICESTER | From the print edition + +Richard III: my kingdom for a fox + +FOR 20 years the English Premier League has been dominated by glamorous foreign players paid for by Russian oligarchs and Arab sheikhs, to the exclusion, some feel, of local players and fans. So the country woke up with a collective smile on its face on May 3rd, after Leicester City Football Club clinched the title for the first time. Leicester, known as the Foxes, are among the league’s least glamorous clubs, based in one of the nation’s least fancy cities. At the start of this season bookmakers gave odds of 5,000 to 1 on a Leicester title, longer than those on Jeremy Corbyn—the bearded, Marxist leader of the Labour Party—becoming the next James Bond. + +Now, the world is beating a path to Leicester’s door to find out how they did it. Management theories abound (see Schumpeter). What people might find is that it is not just the football club, but the city (population: 340,000) that has plenty to share. Leicester was for good reason chosen as the first stop on the Queen’s Diamond Jubilee tour of the country in 2012. In some ways it is the epitome of modern Britain. Locals argue that the footballing triumph is but the validation of Leicester’s re-emergence as a city; a mix of long-term ambition and unflashy, organic growth. + +“Leicester clothes the world” was the slogan when the city was full of hosiers and bootmakers; in 1936 it was named as the second-richest city in Europe. But in the 1980s Leicester lost almost all this to cheap overseas competition. Rebuilding the devastated economy has been a painful task, but is now bearing fruit. + +The development of a strong entrepreneurial culture has been important. Leicester has the fastest business growth rate outside London, and its gross value added, a measure of economic output, rose 22% between 2009 and 2014. This has spawned plenty of jobs, sucking newcomers in; between 2001 and 2011 its population grew by 17%, the fourth-highest rate in the country. + +Immigration has contributed much. In 1972 when Idi Amin kicked Asians out of Uganda, 30,000 of them, mainly Gujaratis, settled in Leicester, where they set up their own businesses. Crown Crest, a large retail chain, was founded by immigrants. Another family made a fortune selling toilet rolls. Leicester is now one of only three towns and cities outside London to have a majority non-white British population. + +The city’s universities are among the country’s most entrepreneurial. Undergraduates are encouraged to develop their own startups, and the universities award seed money to “incubate” them. Local politics have helped too. Leicester is one of only five cities in England with a directly elected mayor: Labour’s Sir Peter Soulsby, in office since 2011, says this enables him to take fast executive action when opportunities arise. The council was quick to exploit the unearthing of the remains of King Richard III under a car park in 2012, and brilliant at marketing the find to tourists. + +The council has also encouraged small businesses, says Jon Prest, managing director of a local media design company. It matches up companies with properties and landlords, and has created a Cultural Quarter to help revive the city centre. Sir Peter says he has avoided getting Leicester swallowed up into any sort of regional devolution deals. Keeping its local identity while drawing on its global links is the Leicester way. + + + +INTERACTIVE: Flying foxes - footballing pay and performance + +The same could be said about the Foxes. Romantics see the team’s success as a serendipitous triumph of character over money, the yeomen of England vanquishing the overpaid glamour boys. There is indeed plenty of home-grown talent in the Leicester team, but the Foxes, too, have their own foreign billionaire owner, Vichai Srivaddhanaprabha, of Thailand’s King Power group, who bought the club in 2010. Unlike others, however, he has not splashed out on star players to boost his profile, but has invested for the long term, spending £100m on infrastructure, such as a training ground and youth academy, and on scouting for overlooked talent. + +The total cost of Leicester’s regular team (£25m, or $36m) is less than a quarter of what Manchester United spent on new players last summer. “This year’s success has come sooner than expected,” says a spokesman. Nor is Leicester’s success limited to football. The city’s rugby union team, the Tigers, is England’s most successful. + +The Foxes will look to emulate the Tigers’ long-term success. Even if they do not, they have given hope to the unsung clubs of English football, as their city has done the same for unheralded English towns. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698271-there-are-lessons-learn-city-much-football-club-foxes-and-tigers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit brief + +City blues + +The financial-services industry would be one of the biggest losers from Brexit + +May 7th 2016 | From the print edition + + + +THE place with most at stake in the Brexit debate may be the City of London, Britain’s financial hub. Although the European Union’s single market in services is incomplete, it clearly works in wholesale financial services. Today London is more obviously the financial centre of both the EU and the euro zone than it was 20 years ago, inspiring much jealousy among potential rivals like Paris and Frankfurt. José Manuel Barroso, a former European Commission president, bluntly told a recent conference organised by UK in a Changing Europe, an academic network, that, post-Brexit, “London could no longer be the financial capital of Europe.” + +According to TheCityUK, a lobby group, almost 2.2m people work in financial and related services such as accounting and the law, two-thirds of them outside London. They produce nearly 12% of GDP, 11% of the country’s tax take and a net trade surplus of £72 billion ($104 billion). Financial services have taken a third of foreign direct investment in Britain since 2007, most of it coming from the EU. Some 250 foreign banks operate in London, and over 200 foreign law firms have offices across Britain. + + + +A Brexit study by PwC, an accounting firm, for TheCityUK concludes that gross value-added in financial services would fall by 5.7-9.5% by 2020 and employment by 70,000-100,000. The sector would grow more slowly and some firms would relocate to other EU financial hubs. The main cause would be the loss of “passporting rights”. These allow any British-based bank or investment firm to trade across Europe: without them, firms would have to set up separately capitalised subsidiaries inside the EU. A study by Frontier Economics for London First, another lobby group, also finds that total British trade in services would fall by £67 billion-92 billion a year. + +Brexiteers dismiss all this as scaremongering. London was a financial centre, they say, long before Britain joined the EU. Indeed, membership has been damaging by imposing stupid rules. Gerard Lyons, economic adviser to the mayor of London, argues that Europe cannot replicate the City: the real competitors are New York, Singapore and Hong Kong, not Paris or Frankfurt. Brexiteers say their opponents also claimed 15 years ago that the City would suffer if Britain did not join the euro. No wonder, they conclude, that City opinion is divided, with many bankers and hedge-fund managers backing Brexit. + +This last claim is wrong. Repeated surveys find that most current practitioners want to remain in the EU. It is hard to find a single bank in favour of Brexit. It is true that hedge-fund bosses like Crispin Odey and Paul Marshall are big contributors to Vote Leave, the main pro-Brexit campaign. But David Harding, founder of Winton Capital Management, is one of the biggest backers of Britain Stronger in Europe, the chief pro-Remain group, and he is not alone. + + + +INTERACTIVE: The Economist's “Brexit” poll-tracker + +The case against EU red tape is also unconvincing, not least because the City has thrived inside the club (see chart) and the 2008 financial crash led to demands for more not less regulation. Brussels can be annoying, especially when it sets limits on bankers’ bonuses. But most of today’s regulations stem from international accords like the Basel rules on bank capital or domestic proposals in the Vickers report into bank structure. As an EU member, Britain has often improved clumsy draft regulations coming from Brussels. Were it to leave, it would lose any influence over the EU’s planned capital markets union. + +As for Europe’s ability to compete, Chris Cummings, chief executive of TheCityUK agrees that nowhere can challenge the City as a whole. But the risk is that chunks of the industry would migrate. Dublin and Luxembourg are strong in fund management, for instance. The most immediate threat is to clearing and settlement of euro trades, which the European Central Bank has already tried to relocate into the euro zone, only to be rebuffed by the European courts. Were Britain to leave the EU, it would lose this judicial protection. The profits from clearing and settlement are crucially important to financial exchanges. + +It is true that concerns about the City were rife when Britain refused to join the euro. But the loss of passporting rights matters far more than being out of the single currency. Fears over the City’s future are one reason why sterling has been so wobbly this year. Some in the City reckon it could fall by another 20-30% post-Brexit—the betting on which may explain why a few hedge funds back the idea. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698267-financial-services-industry-would-be-one-biggest-losers-brexit-city-blues/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Working hours + +Nice work if you can get it + +Britons are getting more leisure time. That may not always be a good thing + +May 7th 2016 | From the print edition + + + +GLOBALISATION has not been kind to Britons’ work-life balance. Foreign competition has increased, encouraging people to work harder. British businesses must meet demands from customers based in different timezones. The internet allows people to check in with work colleagues at any time. Professional types, with legal and financial skills in demand across the globe, have in recent decades come under the greatest pressure to slog. + +Some data suggest that the long-term decline in British working hours, from at least the end of the nineteenth century (when the average working week was 60 hours), was slowing or even reversing by the 1990s. Newspapers talk fearfully of the emergence of a “cult of overwork”, driven by new technology. The latest evidence seems to show that such worries are justified. Since 2011 the average number of hours that people spend at work has risen by 3%, according to data from the Office for National Statistics. + +Yet interpreting recent trends is complicated by the financial crisis. The number of hours worked slumped during the recession: firms won fewer contracts and bartenders were offered shorter shifts. As the economic recovery took hold, it is hardly surprising that hours rose a little. Over a slightly longer time-frame, however, the notion that Britons are working ever harder does not stand up. The average full-timer now spends an hour less working per week than they did in the 1990s. (The data take into account extra work that people do at home—checking e-mail first thing in the morning, for instance—since they are based on surveys of what people say they do, not what employers reckon.) + +In addition, the number of Britons putting in long shifts is falling. In the early 2000s about a quarter of workers laboured for more than 45 hours a week, but by 2015 this had dropped to about a fifth. Even highly skilled people, those most likely to be in high-pressure jobs, may be feeling a little calmer. Between 2000 and 2015 the proportion of workers with a degree above a bachelor’s who worked more than 60 hours a week fell from 7% to 5%. + +All this may reflect a shift in employers’ attitudes towards work. Some bosses are acting on a body of econometric evidence suggesting that working fewer hours makes people more productive, both on a per-hour basis and over a full week. Goldman Sachs, a bank, recently told its young charges that they need not work on Saturdays. On two days a week, those working at Agent Marketing, a firm based in Liverpool, now work for just six hours. “We cut through a lot of the admin which takes up time, to focus on actual project delivery,” says Paul Corcoran, the managing director. + +Improved technology may force some people to check e-mails in bed, but it can liberate others. In recent years the rate of home-working has risen—about 14% of workers are based at home, up from 11% in 2000. People working on a laptop from the kitchen take things easier than they would if they were in an office. + +Legal changes also play a role. The working-time directive (WTD), a European Union plan to limit the working week to 48 hours that was introduced in Britain in 1998, may have reduced time spent at work, according to a government report from 2014. The WTD may also have encouraged workers to take more holiday, the report finds. Survey data suggest that there are fewer workers than in the early 2000s who work more than they would like to. All this may be having a positive impact on health: the incidence of work-related stress has fallen by a tenth in the past decade. + +However, the fall in working hours may have a dark side. Despite six years of post-recession growth (and a record low jobless rate of about 5%), underemployment—particularly of those with low skills—is a problem. According to David Blanchflower of Dartmouth College and David Bell of Stirling University, the number of hours people say they would like to work is higher than the number they actually do. The gap between the two is likely to have risen further in the first quarter of 2016, as fears over Brexit cause the economy to slow. Some Britons may be taking a more enlightened approach to working hours, but others may simply be struggling to make ends meet. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698285-britons-are-getting-more-leisure-time-may-not-always-be-good-thing-nice-work-if-you-can/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Migration crisis + +Rebels with a cause + +The government concession over lone child refugees shows where Britain’s true opposition lies + +May 7th 2016 | From the print edition + +Refugees to England in another era + +TO DESCRIBE the Conservative Party as the dominant force in British politics would be an understatement. The opposition Labour Party under Jeremy Corbyn, its unelectable leader, is irrelevant—especially when it is having one of its sporadic crises (see article). The real battles over power in Britain are taking place within the Tory fold, not on its flanks. For the foreseeable future the leadership of the Conservative Party comes with an official residence: 10 Downing Street. + +So it is easy to forget that the party has a slender working majority of just 18 seats. Occasionally reality comes calling, as in the days leading up to May 4th, when David Cameron finally announced that he would relax rules preventing lone child refugees in continental Europe from seeking asylum in Britain. Currently the country only takes in such migrants directly from camps in the Middle East. From the continent it has taken just a small handful who have relatives in Britain. Now, the prime minister has confirmed it will accept young, lone migrants who registered in France, Italy or Greece before March 20th. The exact number will be decided in consultation with local councils. + +This was a departure from past policy. On April 25th the government had whipped its MPs to vote against an amendment put forward by Alf Dubs, legislating for the admission of 3,000 lone child refugees. Lord Dubs is a Labour peer who came to Britain as a six-year-old in the Kindertransport rescue programme in 1939. The amendment failed by 276 votes (mostly Labour and Scottish nationalists) to 294 Tory ones. James Brokenshire, the immigration minister, deployed the usual line in opposition to the amendment: Britain’s focus is on helping displaced people in the Middle East and on limiting the “pull factors” persuading them to venture across the Mediterranean Sea in rickety boats. + + + +INTERACTIVE: European asylum, acceptance and denial + +There are political reasons for this stance. The EU referendum in June may turn on which side best defines the choice before the electorate. The Remain campaign says it is a vote on the economy; the Leave campaign portrays it as a vote on immigration. Mr Cameron, whose legacy as prime minister depends on a Remain vote, wants to deny his opponents their ammunition. Moreover, Britain has a vast international aid budget that it struggles to spend. So it is natural to focus on improving conditions in Middle Eastern camps rather than taking in large numbers of refugees. + +Yet now the government has broken from this strategy. While it claims that the March 20th cut-off will discourage other refugees from trying to cross the Mediterranean, the decision to accept children from the continent sets a precedent and is thus a U-turn. Why has Mr Cameron done this? Not because of Labour. The decisive factor was the prospect of a Tory rebellion. Many of the 30 or so Conservative rebels had met with Mr Brokenshire on May 4th. Already Stephen Phillips, a popular MP, had written to colleagues urging them to support the watered-down Dubs amendment that cleared the House of Lords on April 26th. Especially influential was an editorial in the Daily Mail, the loudest anti-immigration voice on Fleet Street, urging the government to make an exception for unaccompanied refugee children. + +All of which carries a lesson for Labour’s leadership and political idealists of all shades. Campaigners in the party (most notably Yvette Cooper, the former shadow home secretary) along with those beyond it (like Sir Erich Reich, another Kindertransport veteran) deserve credit for helping to change the mood. But ultimately Mr Cameron’s U-turn was a function of the power of Tory MPs. Change pushed by the opposition is a possibility; change pushed from within government, a certainty. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698286-government-concession-over-lone-child-refugees-shows-where-britains-true-opposition/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Port Talbot steelworks + +Either ore + +Britain’s biggest steel mill is up for sale + +May 7th 2016 | Port Talbot | From the print edition + +The dragon still roars, but for how long? + +THE two giant blast furnaces at Port Talbot were still pouring out large volumes of molten iron this week. Every few minutes large “torpedoes” full of the stuff, the size of large lorries, emerged from the two plants to be moved by rail to where it will be processed into steel sheets. But it wasn’t quite business as usual, for May 3rd was the deadline for prospective buyers to register an intention to buy the plant. + +Tata Steel, the current owner, has been losing more than £1m ($1.45m) a day on Port Talbot, and is therefore selling it, together with the rest of its British operations. Two groups have emerged as possible buyers, but whether either of them can produce a sustainable future for Port Talbot is questionable. At stake are about 4,300 jobs and the future of steelmaking in Britain. + +One contender is a management buy-out, led by Stuart Wilkie, a senior manager at Tata Steel, and Roger Maggs, the chair of Port Talbot’s Waterfront Enterprise Zone. Their newly-formed Excalibur Steel wants to revive the “turnaround plan” presented and rejected by Tata Steel’s board in Mumbai in March. This would include various efficiency measures intended to make producing new steel at the two blast furnaces profitable by the end of 2017, continuing the work of the present owners. They hope to fund the £200m-400m they may need to complete the buy-out with a combination of government funding, bank loans and by asking present and past employees to invest up to £10,000 each in the project. + +Lined up against them is Liberty House, a steel firm led by Sanjeev Gupta, from a family of Indian billionaires. His plan involves increasing the amount of steel that the plant produces out of scrap metal from the current level of around 20% of its output, and away from producing steel from raw coke and iron ore. This would eventually involve installing energy-efficient electric arc furnaces of the sort seen in “mini-mills” in America. These have lower labour costs and can easily be switched on and off to cope with changing demand. + +Mr Gupta argues they could be viable at Port Talbot; such equipment is already in operation in nearby Cardiff. While the profitability of new steelmaking is highly vulnerable to coal, iron-ore and steel prices on global commodity markets, margins on melting down scrap are much more stable. And there is plenty of this available: Britain produces 9m tonnes of scrap a year, of which two-thirds is smelted abroad due to Britain’s high energy prices. + +Recycling this scrap at home would be much greener than exporting it abroad to places such as Turkey where less environmentally-friendly forms of energy are used. And not only does this save on green miles transporting the stuff in and out of Britain, but also means that Britain would need to make less steel from iron ore, a carbon-intensive process; Port Talbot is one of the most polluted places in the country. + +As the bids presently stand, the management buy-out’s is the least convincing. If Tata Steel, a well-capitalised multinational with global expertise in technology and marketing cannot turn Port Talbot round, a poorly-funded management buy-out with little expertise in global marketing or supply chains will hardly do better. + +Mr Gupta’s plan appears more viable, because it attempts to find a sustainable model for the industry in the long term. But even so, Liberty House would still need some help from the government to reduce the labour, energy and environmental costs of the plant, in particular by removing the carbon taxes from the electricity his arc furnaces would use. + +But here the government is bound to be helpful. David Cameron, the prime minister, paid a surprise visit to Port Talbot on April 26th and reiterated his government’s pledge to do “all it can to support the sustainable future of steelmaking” at the plant. Mr Cameron is mindful of the impact of job losses if Port Talbot were to close. Mr Gupta must therefore be hopeful that he can strike a good deal with ministers to sweeten his takeover. + +Most workers at the plant probably favour the Excalibur plan, as it preserves the status quo, and with it most of the jobs. However, they want to examine carefully the terms on which they might be asked to invest in the new project. Under the management buy-out’s plan, if steel prices drop, the workers could find themselves without their jobs or their savings. And any dowry given to the firm that could have been spent retraining workers would be wasted in a repeat of the collapse of Rover, a Midlands carmaker that went bust five years after a similar buy-out in 2000. + +While Mr Gupta’s plan may involve some job losses much sooner, it will give time for workers to retrain and other firms in the area to grow. Although some steelworkers may move away to projects such as HS2, a high-speed railway, there are plenty of opportunities in Swansea and in Cardiff, which is the top city in Wales for job creation. Steel has traditionally dominated the local economy. Now other industries must take the lead. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698288-britains-biggest-steel-mill-up-sale-either-ore/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The rental market + +Full house + +May 7th 2016 | From the print edition + + + +IN A red-hot housing market, a “For Sale” sign does not stay up long. But since the crash, it has often been replaced upon completion by a “To Let” sign. England’s housing stock has swelled by 1m since 2008 but, with poor returns for investors elsewhere, private rentals grew by 1.3m. Owner-occupation fell by 2%. Attempts to build even more housing and increase home-ownership have failed. A new 3% tax on buy-to-let homes may do little when prices are climbing 8% a year, as they did to February. Meanwhile, Barclays became the first high-street lender to offer a 100% mortgage to new home-buyers since 2008. Conditions apply, but as the average home now costs ten times median earnings, boosting demand but not supply looks foolhardy. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698287-full-house/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +The loneliness of Ken Livingstone + +Anti-Semitism in the Labour Party does not reflect British society at large + +May 7th 2016 | From the print edition + + + +IN HIS book “Submission”, Michel Houellebecq, a French author, conjures up a France of 2022 ruled by an anti-Semitic alliance of spineless socialists and conservative Islamists. The country gets its first Muslim president, causing Jews, including the narrator’s girlfriend, to flee to Israel. When the novel appeared last year some called it bold satire; others said it was Islamophobic. Its timing heightened its inflammatory effect, coming out on the day of the attacks on Charlie Hebdo, a satirical magazine, and followed two days later by killings at a kosher supermarket. + +To judge by some recent newspaper headlines (especially in America), one might think Britain were becoming the France of Mr Houellebecq’s lurid imagination: “Britain’s raging anti-Semitism scandal”, “Is it time for the Jews to leave Europe?”, “Why the Labour Party won’t confront British Muslim anti-Semitism”. + +The subjects of these stories, it is true, have a faintly Houellebecquian aura: in the past weeks each day has brought a new example of what some in the party insist on calling its “issues around anti-Semitism”. A Labour councillor suggests Islamic State is an Israeli front. Another compares Israelis to Nazis. The co-chair of the Oxford University Labour Club resigns and claims many of its members “have some kind of problem with Jews”. Jeremy Corbyn, the party’s far-left leader, a self-declared friend of Hamas and a former presenter on Iran’s Press TV, only reluctantly suspends Naz Shah (an MP in Bradford) for suggesting that Israel be “transported” to America. To crown it all Ken Livingstone, a leading Corbynista and the former mayor of London, unburdens himself of the assertion that Hitler supported Zionism before he “went mad and ended up killing 6m Jews”. + +Coming at a time when anti-Semitic attacks in Britain have risen (some Jewish schools now hold terror-attack drills), these developments have the country’s Jews understandably worried. Jay Stoll, of the Jewish Labour Movement, describes a Passover service during which, before prayers, the rabbi pointed to Mr Livingstone’s comments as proof that they “may not be so secure” in Britain. It is thus tempting to lump Labour’s ongoing moral degradation in with the broader rise of anti-Semitism in Europe. + +In truth, however, the British picture is more complex. According to Jonathan Boyd of the Institute for Jewish Policy Research, anti-Semitic sentiment among Britons is “fairly stable in general”, whereas “levels of antipathy among non-Jews towards Jews are higher in more or less every European country but the UK”. Jonathan Arkush, president of the Jewish Board of Deputies, agrees that although communal anxieties have increased—partly because of the attacks in Paris and Brussels—the public’s attitude towards Jews is “not fundamentally changing” and the government is committed, in word and deed, to protecting them. + +Britain remains a much better place to be a Jew than France, where just leaving the house wearing a yarmulke is much riskier than it is across the Channel. In London (unlike Paris) the old establishment’s antipathy to Jews (Harold Macmillan once moaned that Margaret Thatcher’s cabinet contained more “old Estonians” than old Etonians) has gone. While one source says some 5,000 French Jews have moved to Britain in the past few years, there is, Mr Arkush notes, no question of British Jews leaving for, say, Israel in large numbers. When Israel’s prime minister, Binyamin Netanyahu, urged them to do so, several Jewish groups issued a terse rebuff rejecting his entreaty and its premise. + +Far from metastasising through British society, anti-Semitism is largely confined to certain pockets within it. One is the electorally moribund far right. Large parts of British Islam are another, where antipathy to Jews becomes especially prominent when nerves jangle in the Middle East (for example during the Gaza crisis of 2014, when a placard reading “Hitler would be proud” loomed above a peace march in London). And then—only sometimes linked to Islamic anti-Semitism—there is the far left. + +There, too, the picture is more nuanced than the headlines suggest: it is not clear whether socialist anti-Semitism is now on the rise, or just noisier and more prominent than before. Asking Jewish Labourites what they make of it all, Bagehot frequently encounters the observation that the comments and opinions now making the news have long existed among spittle-flecking old lefties—for whom Israel’s alliance with America relegates Jews, even British ones, to the very bottom of the hierarchy of victims deserving sympathy—and in depressed northern towns, like Bradford, with large, Labour-voting Muslim populations. By winning the party leadership last September Mr Corbyn, in the words of Howard Jacobson, a Jewish writer, merely emboldened and gave new voice to “something that had been there all along”. Mr Arkush agrees: “What has become so plain for everyone to see in the past weeks is something the Board of Deputies has been warning about for some time, but has not been heeded.” + +No submission + +The rise of anti-Semitic incidents should worry Britons—and guard against any complacency born of the comparison with other European countries. Yet visions of a monolithic anti-Semitism sweeping British society are unhelpful. First, they are flat-out inaccurate and alarmist. Second, they distract attention from the ugly exceptionalism of those narrow segments of British life where the virus stubbornly thrives, and as such let the likes of Mr Corbyn off the hook. (Labour’s leader, in whose circle Mr Livingstone’s implicit conflation of Israeli government policy with Jewishness is virtually de rigueur, can barely bring himself to admit that the problem exists.) Third, the suggestion of a blanket anti-Semitism taking hold of the country gives London’s former mayor and his ilk headlines they do not deserve. Mr Livingstone is not some tribune of social change but an embittered old man whose views are still gratifyingly repellent to the vast majority of Britons. By his solitude may he be known. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698264-anti-semitism-labour-party-does-not-reflect-british-society-large-loneliness-ken/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Our crony-capitalism index: The party winds down + +Corporate ownership and corruption: How to crack a shell + + + + + +Articles Sections Next + +Our crony-capitalism index + +The party winds down + +Across the world, politically connected tycoons are feeling the squeeze + +May 7th 2016 | From the print edition + + + +TWO YEARS ago The Economist constructed an index of crony capitalism. It was designed to test whether the world was experiencing a new era of “robber barons”—a global re-run of America’s gilded age in the late 19th century. Depressingly, the exercise suggested that since globalisation had taken off in the 1990s, there had been a surge in billionaire wealth in industries that often involve cosy relations with the government, such as casinos, oil and construction. Over two decades, crony fortunes had leapt relative to global GDP and as a share of total billionaire wealth. + +It may seem that this new golden era of crony capitalism is coming to a shabby end. In London Vijay Mallya, a ponytailed Indian tycoon, is fighting deportation back to India as the authorities there rake over his collapsed empire. Last year in São Paulo, executives at Odebrecht, Brazil’s largest construction firm, were arrested and flown to a court in Curitiba, a southern Brazilian city, that is investigating corrupt deals with Petrobras, the state-controlled oil firm. The scandal, which involves politicians from several parties, including the ruling Workers’ Party, is adding to pressure on Brazil’s president, Dilma Rousseff, who is facing impeachment on unrelated charges. + +A Malaysian investment fund, 1MDB, that is answerable to the prime minister, is the subject of a global fraud probe. Supporters of Rodrigo Duterte, the front-runner to win the presidential election in the Philippines on May 9th, hope he will open up a feudal political system that has allowed cronyism to flourish. In China bosses of private and state-owned firms are now routinely interrogated as part of Xi Jinping’s purge of “tigers” (a purge that has left Mr Xi’s family well alone). Worldwide, tycoons’ offshore financial cartwheels have been revealed through the Panama papers. + + + +The economic climate has been tough on cronies, too. Commodity prices have tanked, cutting the value of mines, steel mills and oilfield concessions. Emerging-market currencies and shares have fallen. Asia’s long property boom has sputtered. + +The result is that our newly updated index shows a steady shrinking of crony billionaire wealth to $1.75 trillion, a fall of 16% since 2014. In rich countries, crony wealth remains steadyish, at about 1.5% of GDP. In the emerging world it has fallen to 4% of GDP, from a peak of 7% in 2008 (see chart 1). And the mix of wealth has been shifting away from crony industries and towards cleaner sectors, such as consumer goods (see chart 2). + + + +Despite this slowdown, it is too soon to say that the era of cronyism is over—and not just because America could elect as president a billionaire whose dealings in Atlantic City’s casinos and Manhattan’s property jungle earn him the 104th spot on our individual crony ranking. + +Behind the crony index is the idea that some industries are prone to “rent seeking”. This is the term economists use when the owners of an input of production—land, labour, machines, capital—extract more profit than they would get in a competitive market. Cartels, monopolies and lobbying are common ways to extract rents. Industries that are vulnerable often involve a lot of interaction with the state, or are licensed by it: for example telecoms, natural resources, real estate, construction and defence. (For a full list of the industries we include, see article.) Rent-seeking can involve corruption, but very often it is legal. + +Our index builds on work by Ruchir Sharma of Morgan Stanley Investment Management and Aditi Gandhi and Michael Walton of Delhi’s Centre for Policy Research, among others. It uses data on billionaires’ fortunes from rankings by Forbes. We label each billionaire as a crony or not, based on the industry in which he is most active. We compare countries’ total crony wealth to their GDP. We show results for 22 economies: the five largest rich ones, the ten biggest emerging ones for which reliable data are available and a selection of other countries where cronyism is a problem (see chart 3). The index does not attempt to capture petty graft, for example bribes for expediting forms or avoiding traffic penalties, which is endemic in many countries. + + + +The rich world has lots of billionaires but fewer cronies. Only 14% of billionaire wealth is from rent-heavy industries. Wall Street continues to be controversial in America but its tycoons feature more prominently in populist politicians’ stump speeches than in the billionaire rankings. We classify deposit-taking banking as a crony industry because of its implicit state guarantee, but if we lumped in hedge-fund billionaires and other financiers, too, the share of American billionaire wealth from crony industries would rise from 14% to 28%. George Soros, by far the richest man in the hedge-fund game, is worth the same as Phil Knight, a relative unknown who sells Nike training shoes. Mr Soros’s fortune is only a third as large as the technologyderived fortune of Bill Gates. + +Developing economies account for 43% of global GDP but 65% of crony wealth. Of the big countries Russia still scores worst, reflecting its corruption and dependence on natural resources. Both its crony wealth and GDP have fallen in dollar terms in the past two years, reflecting the rouble’s collapse. Their ratio is not much changed since 2014. Ukraine and Malaysia continue to score badly on the index, too. In both cases cronyism has led to political instability. Try to pay a backhander to an official in Singapore and you are likely to get arrested. But the city state scores poorly because of its role as an entrepot for racier neighbours, and its property and banking clans. + +Encouragingly, India seems to be cleaning up its act. In 2008 crony wealth reached 18% of GDP, putting it on a par with Russia. Today it stands at 3%, a level similar to Australia. A slump in commodity prices has obliterated the balance sheets of its Wild West mining tycoons. The government has got tough on graft, and the central bank has prodded state-owned lenders to stop giving sweetheart deals to moguls. The vast majority of its billionaire wealth is now from open industries such as pharmaceuticals, cars and consumer goods. The pin-ups of Indian capitalism are no longer the pampered scions of its business dynasties, but the hungry founders of Flipkart, an e-commerce firm. + +In absolute terms China (including Hong Kong) now has the biggest concentration of crony wealth in the world, at $360 billion. President Xi’s censorious attitude to gambling has hit Macau’s gambling tycoons hard. Li Hejun, an energy mogul, has seen most of his wealth evaporate. But new billionaires in rent-rich industries have risen from obscurity, including Wang Jianlin, of Dalian Wanda, a real-estate firm, who claims he is richer than Li Ka-shing, Hong Kong’s leading business figure. + +Still, once its wealth is compared with its GDP, China (including Hong Kong) comes only 11th on our ranking of countries. The Middle Kingdom illustrates the two big flaws in our methodology. We only include people who declare wealth of over a billion dollars. Plenty of poorer cronies exist and in China, the wise crony keeps his head down. And our classification of industries is inevitably crude. Dutch firms that interact with the state are probably clean, whereas in mainland China, billionaires in every industry rely on the party’s blessing. Were all billionaire wealth in China to be classified as rent-seeking, it would take the 5th spot in the ranking. + +The last tycoons + +A possible explanation for the mild improvement in the index is that cronyism was just a phase that the globalising world economy was going through. In 2000-10 capital sloshed from country to country, pushing up the price of assets, particularly property. China’s construction binge inflated commodity prices. In the midst of a huge boom, political and legal institutions struggled to cope. The result was that well-connected people gained favourable access to telecoms spectrum, cheap loans and land. + +Now the party is over. China’s epic industrialisation was a one-off and global capital flows were partly the result of too-big-to-fail banks that have since been tamed. Optimists can also point out that cronyism has stimulated a counter-reaction from a growing middle class in the emerging world, from Brazilians banging pots and pans in the street to protest against graft to Indians electing Arvind Kejriwal, a maverick anti-corruption campaigner, to run Delhi. These public movements echo America’s backlash a century ago. The Gilded Age of the late 19th century gave way to the Progressive Era at the turn of the 20th century, when antitrust laws were passed. + +Yet there is still good reason to worry about cronyism. Some countries, such as Russia, are going backwards. If global growth ever picks up commodities will recover, too—along with the rents that can be extracted from them. In countries that are cleaning up their systems, or where popular pressure for a clean-up is strong, such as Brazil, Mexico and India, reform is hard. Political parties rely on illicit funding. Courts have huge backlogs that take years to clear and state-run banks are stuck in time-warps. Across the emerging world one response to lower growth is likely to be more privatisations, whether of Saudi Arabia’s oil firm, Saudi Aramco, or India’s banks. In the 1990s botched privatisations were a key source of crony wealth. + +The final reason for vigilance is technology. In our index we assume that the industry is relatively free of government involvement, and thus less susceptible to rent-seeking. But that assumption is being tested. Alphabet, the parent company of Google, has become one of the biggest lobbyists in Washington and is in constant negotiations in Europe over anti-trust rules and tax. Uber has regulatory tussles all over the world. Jack Ma, the boss of Alibaba, a Chinese e-commerce giant, is protected by the state from foreign competition, and now owes much of his wealth to his stake in Ant Financial, an affiliated payments firm worth $60 billion, whose biggest outside investors are China’s sovereign wealth and social security funds. + +If technology were to be classified as a crony industry, rent-seeking wealth would be higher and rising steadily in the Western world. Whether technology evolves in this direction remains to be seen. But one thing is for sure. Cronies, like capitalism itself, will adapt. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21698239-across-world-politically-connected-tycoons-are-feeling-squeeze-party-winds/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Corporate ownership and corruption + +How to crack a shell + +Ownership registries could help to end the corporate secrecy that fosters corruption. But current plans are not promising + +May 7th 2016 | From the print edition + + + +JOHN CHRISTENSEN runs the Tax Justice Network, a group that campaigns against tax evasion and corruption. A decade ago, its message fell on deaf ears. No longer. After the Panama papers leak last month, Mr Christensen says international media were camped at his door for days, seeking his views on how to stop dodgy dealings. + +Corruption has flown up policy agendas, thanks to the work such crusading groups have done to reveal the extent of hidden offshore wealth to angry voters facing austerity. On May 12th Britain will host an anti-corruption summit. Officials from around 30 countries, including America, Brazil and Nigeria, will attend. + +Discussion will range from secret ownership of offshore firms to corruption in sport. It will, no doubt, end with a forceful declaration; commitments may be harder to extract. Campaigners are hoping for progress on corporate transparency, disclosure of payments in oil, gas and mining, and co-operation in cross-border corruption cases. + +Cracking open shell companies is the most important of these. There is a correlation between graft and these anonymous vehicles: take investigations into a suspected multi-billion-dollar theft from 1MDB, a Malaysian state fund, which are focused on shell companies in the Seychelles and Caribbean. Tracing illicit funds to a shell’s bank account is of little use if you cannot identify the individuals who control it. This worries business people as well as policymakers: a recent survey of corporate leaders in 62 countries by EY, an accounting firm, found strong support for more openness in ownership; legitimate firms want to know whom they are trading with. + +International standards on “beneficial” owners (the real people, as opposed to other firms, behind firms) have been tightened, but remain quite loose. The information should be collected somewhere, whether in registries or by company-formation agents, and made available to “competent” authorities when requested. + +Practice varies greatly. Some offshore centres, including Jersey, have had (non-public) registries for years, having set them up under pressure after scandals—though they rely heavily on regulated formation agents to collect, verify and update information. In America, by contrast, agents are not licensed, and ownership information is not collected, let alone verified. + +Momentum is shifting towards central registries. A new European Union directive calls on members to set these up and to make the data available to police, tax authorities and others with a “legitimate interest” (such as investigative journalists). Britain has gone further: it launched a public registry last month. Other countries, including Australia and the Netherlands, plan to do the same. + +In principle, openness seems a fair exchange for the privilege of limited liability. But there are problems in practice. Those registries already up and running tend to be purely archival: they do not verify incoming information because of the cost. This tempts money-launderers to lie. + +Britain plans criminal penalties for false declarations. But unless declarations are checked—and resources are stretched already—ne’er-do-wells may take their chances. Formation agents have little incentive to push for accurate information: monitoring of the industry, which falls under HM Revenue & Customs, is scant. + +Britain’s overseas territories argue against public registries, partly on privacy grounds but also because they consider their “gatekeeper” model to be more robust. This places a duty on law firms, trust companies and other registration agents to collect and certify beneficial owners’ identity documents. The offshore centres argue that leaning on regulated entities, close to the client, is more practical and effective than relying on registries, which are further removed from the action and do not face the threat of licence suspension. + +In Jersey, ownership information and the source of funds must be verified at registration. The regulator also makes checks, including to ensure that formation agents update information when ownership changes. By comparison, vetting on the British mainland is “rubbish”, says a regulator who has worked in both systems. + +There are problems with the gatekeeper model, to be sure. Ownership information can get lost along chains of intermediaries. Some (though very few, it seems) conspire with crooks. Enforcement is patchy: Jersey has jailed rogue formation agents, but the British Virgin Islands does no more than pull licences, and even then only rarely. + +Nevertheless, research suggests that, for all the criticism, offshore financial centres have done more to comply with beneficial-ownership rules in recent years than their onshore peers. That may be surprising in the light of the Panama papers and other leaks—but much of what they contain is 15 or even 20 years old. The most comprehensive study, “Global Shell Games” by Michael Findley, Daniel Nielson and Jason Sharman, was conducted in 2012. The authors e-mailed 3,773 formation agents around the world, posing as consultants looking to set up untraceable firms. Agents in offshore centres, they found, were much less willing to deal with them than service providers in OECD countries. Not a single one in Jersey or the Cayman Islands took the bait; dozens did in America. + +The authors concluded that blacklisting had forced offshore centres to get tougher, whereas OECD countries had never faced equivalent pressure and could get away with being laxer. That could change with public registries—if more big countries follow Britain’s lead, and if both policing and punishment are strong. But Mr Sharman is not reassured by the blueprints on the table. Self-declaration without verification is, he reckons, the public-registry model’s weak point. As currently designed, it risks being “completely ineffectual”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21698241-ownership-registries-could-help-end-corporate-secrecy-fosters-corruption/print + + + + + +Previous Articles Sections Next + + + + + +Special report: Finance in China + + + + +Finance in China: Big but brittle + +Banks: Breaking bad + +Shadow banks: Dark and stormy + +Capital markets: Risky returns + +Politics: Power to the party + +Global impact: Nowhere to hide + +The way forward: Pain and prosperity + + + + + +Articles Sections Next + +Finance in China + +Big but brittle + +China needs to free up its financial system, even if it hurts, says Simon Rabinovitch + +May 7th 2016 | From the print edition + + + +THE HEAD OFFICE of Sheyang Rural Commercial Bank is a reassuringly solid building. Its grey stone façade and arched doorways convey a feeling of prosperity, a splash of high finance in this small county town in eastern China where grain fields nip at the edges of factories. But look a little closer, and you will still find a couple of scars from the bank’s near-collapse two years ago. One is a digital sign running in a loop over the entrance: “Treasure your hard-earned money, avoid the temptation of high returns, stay far from illegal financial schemes.” The second is a prize draw for cars, a pair of gleaming white Kias on a red platform outside the bank. “Deposit 100,000 yuan today and win the chance to drive a new car home,” blares the announcement. The bank is fighting to attract customers because it knows all too well what it is like to lose them. + +Decades of heady growth had put money into the pockets of Sheyang’s residents. But China’s big banks had little time for the countryside. Farmers who wanted to buy homes or start companies struggled to get loans. Illegal lenders stepped into the gap; they collected cash from those with idle savings and lent it out, often at double-digit interest rates. Business boomed. As locals put it, the lenders sprouted up like bamboo shoots after a spring rain—until a few years ago, when a harsh wind uprooted them. The economy was slowing and investment plans relying on superfast growth fell apart. Borrowers could not pay back what they owed. The unregulated lenders started defaulting on their depositors. Panic spread. In March 2014 it was rumoured that even Sheyang Rural Commercial Bank, which is owned by the government, was low on cash. + +This was enough to spark China’s first bank run in years. Crowds gathered outside its branches, waiting for hours in the drizzly chill to get their money out. Bank managers stacked up bricks of 100-yuan notes (China’s largest denomination) to show they had sufficient cash. Yet fear travelled like a virus, infecting another nearby bank. On the third day of the panic the China Banking Association, an industry group, entered the fray and declared the rural banks to be healthy—in effect, pledging to stand behind them. That ended the run. It had taken the full weight of the nation’s banks acting in concert to restore calm. + +One county’s travails might not seem worth making a big fuss about. After all, the deposits at Sheyang Rural Commercial amount to just 13.5 billion yuan ($2.1 billion), barely 0.01% of the total in banks nationwide; and the problems were successfully contained. But the run raised troubling questions. How could the authorities have let so many illegal lenders operate? Why were they suddenly collapsing? If they were in such bad shape, were proper banks safe? Was China on the brink of a financial crisis? + +The scale of potential trouble in China is immense. Its banking sector is the biggest in the world, with assets of $30 trillion, equivalent to 40% of global GDP + +Sheyang’s bank run is just one of a series of problems to reveal cracks in the Chinese financial system in recent years. Others include a cash crunch in 2013, a wave of shadow-banking defaults in 2014, a stockmarket collapse in 2015 and a surge of capital flight at the start of 2016. Underlying it all, China has seen a dramatic rise in debt, from 155% of GDP in 2008 to nearly 260% at the end of last year, according to an estimate by The Economist. Few countries have gone on borrowing binges of that magnitude without hitting a crisis. + +The scope for potential trouble in China is immense. Its banking sector is the biggest in the world, with assets of $30 trillion (see chart), equivalent to 40% of global GDP. China’s four biggest banks are also the world’s four biggest. Its stockmarkets, even after the crash, together are worth $6 trillion, second only to America’s. And its bond market, at $7.5 trillion, is the world’s third-biggest and growing fast. + + + +A cocoon of regulations limits direct foreign involvement in China’s financial system, but connections are deepening by the day. Given its economic heft, serious problems could easily dwarf the global consequences of any previous emerging-markets crisis. Even the mild yuan depreciation at the start of this year (1% against the dollar in one week) sent shock waves around the world, upsetting stocks, currencies and commodities. Just imagine the effects of a big one. + +Still, it is worth recalling that predictions of financial doom in China have long been wrong. Because of the nature of the system—the state owns both the banks and their biggest borrowers—the government is in a much better position to dictate outcomes than those in most other countries. Until recently the financial system has been very conservative. Plain-vanilla bank lending is the dominant form of credit; exotic products such as securitised loans that caused havoc in rich economies barely exist in China. Moreover, liquidity buffers are strong: residents have historically had little choice but to stuff their cash in banks, and a semi-closed capital account has made it hard for them to send money abroad. + +All these controls have allowed China systematically to gather up its people’s savings in its banks and use the money to build infrastructure, factories and homes, fuelling economic growth. When lending has gone badly wrong, as it did in the 1990s, the state has recapitalised its banks and fired up the lending machine again. Not best practice for an advanced economy—but, as Taiwan and South Korea have shown, it can be a supremely effective model for development. + +Crunch time + +Even so, China’s status quo cannot be sustained for ever. Returns on capital are declining. It now takes nearly four yuan of new credit to generate one yuan of additional GDP, up from just over one yuan of credit before the global financial crisis. As the population ages and the economy matures, growth is bound to slow further. + +At the same time, bad debts from the past decade’s lending binge are catching up with banks. Given slower growth, it will be tougher to clean them up than it was 15 years ago, when the country was booming. Moreover, the edifice of control is getting shakier: shadow finance is eating away at the power of state-owned banks, and the capital account has sprung leaks that regulators are struggling to plug. + +China has, in other words, reached a level of development where it needs a more sophisticated financial system, one that is better at allocating capital and better suited to the market pressures now bubbling up. The government pays lip service to this, and indeed some reforms point in the right direction: it is deregulating interest rates; the exchange rate, though still managed, is more flexible; defaults are chipping away at the notion that the state will guarantee every investment, no matter how foolish. + +Yet the state has held the levers of finance so tightly for so long that the loosening of its grip generates new dangers. Coddled banks are being plunged into competition. People who once had few outlets for their savings have many choices, each riskier than the next. Companies probe for weakness in the mesh of regulations, with the government seemingly always one step behind. In the past year alone, it has spent nearly $200 billion to prop up the stockmarket; $65 billion of bank loans have gone bad; financial frauds have cost investors at least $20 billion; and $600 billion of capital has left the country. + + + +This report will argue that China is faced with two unpalatable options. One is that it moves more boldly to free up its financial system. That would be the right thing to do for the future but would release pent-up perils now; defaults would climb, banks would rack up losses and many shadow lenders would go bust. The other is that China eschews reform and instead tries to patch up its current system. That would be easier in the short term, but the inexorable accumulation of debt would sap the economy’s vigour and raise the spectre of a fearsome crash. + +In practice, the government has wavered between the two options. In good times, when the economy behaves as it should, it plods ahead with reforms. But at the first whiff of trouble it tends to lose its nerve, building up much bigger problems a few years hence. China needs to move faster, even at the cost of greater turbulence today. + +Some good at least came of the Sheyang bank panic. China introduced nationwide deposit insurance last year, trying to reassure savers that their money is safe, no matter what happens to their bank. Banks have also raised their game, as demonstrated by the car giveaway at Sheyang Rural Commercial Bank. People again line up at its doors, only this time to put their cash in the bank, not take it out. But financial fragility is surfacing nearby. Grass encroaches on the lot of a textile company that defaulted on a bond last year. And on the county’s outskirts, apartment blocks stand empty, totems to the debt that looms over China’s financial system. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21697983-china-needs-free-up-its-financial-system-even-if-it-hurts-says-simon-rabinovitch-big/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Banks + +Breaking bad + +With dud loans much higher than reported, banks must brace for trouble + +May 7th 2016 | From the print edition + + + +THE VIDEO PANS from the empty lot outside the factory to the interior, where metal parts lie in a heap, detritus of a bankrupt steel company. Playing cards litter the ground. Over the desolate scene, soft piano music plays and a narrator describes the floor plan and location: “An exceptionally good choice to set up an office.” + +It is an advertisement of sorts. The factory was collateral on a loan made by Agricultural Bank of China (AgBank) to Hanquan, a steel company that went bust. A court in Tianjin, the northern city that was home to Hanquan, is auctioning it off on AgBank’s behalf. As defaults go, it was not a particularly big one; the asking price for the property is 77.6m yuan ($12m). But just two years earlier AgBank had declared Hanquan a top-rated AAA customer and the local government had praised it as a pillar of its industrial zone. Then a nationwide construction slowdown did for the company, and its loan soured. + +For China’s banks, this is a small pointer to a much bigger concern. Non-performing loans (NPLs)—those which borrowers cannot repay—have reached a total of 1.3 trillion yuan, doubling in just two years (see chart). Even so, official data show that dud loans amount to only 1.7% of total loans, well within accepted safety margins. The problem, a familiar one in China, is that no one much believes these figures. How lenders deal with the bad debt piling up on their books is the most urgent question hanging over Chinese banks. If this is mishandled, the country’s hard-earned financial stability could evaporate. + + + +Dodgier than it looks + +There is plenty of evidence that bad loans are higher than the banks have disclosed, probably much higher. Alongside the steep rise in NPLs, there has been an even larger increase in “special-mention loans”, which in theory are still good but not cast-iron. Added together, NPLs and special-mention loans already make up 5.5% of the banks’ loans. At a recent conference in Shanghai an investor with Oriental Asset Management, a distressed-debt buyer, said the NPL ratio at smaller banks was as high as 10%. That might have shocked the crowd a few years earlier, but on this occasion it barely raised an eyebrow. + +Given China’s explosive lending growth since the global financial crisis of 2008, this outcome was drearily predictable. The economy’s debt load has more than tripled over the past seven years. It is implausible that so much credit could have been prudently allocated in such a short time; large amounts were bound to be wasted or stolen. + +What happens now is far from clear. Bad loans, even lots of them, do not automatically translate into a crisis, especially not in a country where the government has so much control. In normal markets banks might slow their lending; in China the government directs banks to continue lending and provides them with the liquidity to do so. This gives it flexibility to solve the problems, but does not magically make them disappear. + +Broadly speaking, China has three options for tackling its banks’ NPLs. The first and most seductive choice is to suppress the bad news. This is the most damaging in the long term, but it has been China’s default mode for the past five years. Methods include booking loans as investments or classifying them as “overdue but not impaired” for months on end. The most widespread practice—and one not confined to China—is to refinance bad loans with new ones in the faint hope that business might improve. If it does not, this “extend-and-pretend” banking only makes the debt burden worse. + +China is nearing this point. Interest payments swallowed about two-fifths of all new credit issued in the past three years. In 2014 some 16% of China’s 1,000 biggest companies owed more in interest than they earned before tax, according to The Economist’s analysis of S&P Global Market Intelligence data. Bad debt, though superficially contained, is thus becoming a millstone around the economy’s neck. Less credit is going to good firms for productive uses, clogging the gears of growth. + +The second option is to clean up the bad loans, with the government taking charge and spreading the cost around. Many investors think China will eventually adopt this solution, as past form suggests. In the late 1990s two-fifths of loans in China had gone bad and banks were technically bust. The finance ministry pumped fresh capital into the banks, which carved off large chunks of their dud loans and sold them at par to “bad banks”. The effect was salubrious, freeing the banks to resume lending and preparing them for stockmarket listings. + +China is trying something similar now, though only in part. In the past two years the government has handed licences to more than 20 new regional bad banks. It has also orchestrated a swap whereby banks will exchange up to 15 trillion yuan of high-yielding local-government loans, many of which might have gone bad, for low-yielding, safe bonds. + +However, a full-blown bail-out would be more damaging this time. To fund the rescue 15 years ago the government imposed a hidden tax on households, pushing deposits into banks at artificially low interest rates. That held back consumption. Roaring growth acted as a palliative, boosting incomes and shrinking the relative size of bad debts. + +Today the trade-offs would be starker. A tax, hidden or not, to fund the bail-out would set back China’s efforts to encourage consumption. It could monetise the costs, but that would add to capital-outflow pressures, which it has been trying to resist. Moreover, a second big rescue within two decades would make it harder for China to modernise its banks, leaving them reliant on the state. “If things go really bad, we can do it again. But we want to avoid it,” says Li Daokui, a former central-bank adviser. + +A third option is for banks to recognise the bad loans on their books and replenish their capital themselves. This would be best for China’s long-term development, even if it hurt to begin with. Some quiet progress has been made. AgBank’s auction of the loan to Hanquan, the bankrupt steel company, is one of many that banks have attempted over the past year. Some have started bundling NPLs into securities to speed up their disposal. The government is also encouraging banks to convert bad debt into equity in their troubled borrowers. + +Benjamin Fanger of Shoreline Capital, a fund company that invests in Chinese distressed debt, has been through this before. He set up his firm in 2004 when assets from the previous credit blow-up were just going on the market. Despite all the worries about the economy now, he thinks the bad assets tell a different story. “Last time the debt was garbage,” he says. “Now it’s companies with real business.” Loans are better secured, collateral is worth more and the financial ecosystem—banks, courts and investors—is more developed, if not quite mature yet. + +Encouraging though that is, most NPLs sold so far consist of loans to private enterprises. Yet the biggest share of bank lending—nearly 50%—goes to state firms, and banks are more likely to roll these over than push them into default. Besides, the final tally of NPLs is sure to exceed investors’ appetite. Huarong, the largest of China’s bad banks, has publicly called for cheap funding from the government to help it digest the distressed debt coming its way. + +There is no easy way out for China’s banks + +To prepare for write-offs, banks have been raising equity; their loss-absorbing capital is about 11% of assets. But the pressure on them is increasing. Their cash set aside to cover impairments fell from nearly three times their NPLs in 2013 to less than double last year—and that was based on the artificially low official NPL level, not the real one. In short, there is no easy way out for China’s banks. Sooner or later they will need to take big losses, and the government will have to help repair the damage. + +Degrees of pain + +How bad will things get? Some expect little short of Armageddon. Kyle Bass, founder of Hayman Capital, a hedge fund, made headlines this year with his estimate that China would need $10 trillion—almost 100% of its current GDP—to recapitalise its banks. Implicit in this doomsday prediction is the view that NPLs are gargantuan: some think that, as in the 1990s, nearly half of all loans will go into default. + +But that is an extreme assumption. A more realistic assessment is that half of banks’ assets—their reserves at the central bank, government bonds, loans to the biggest state firms and liquid money-market funds—are lower-risk. The fact that banks are already disposing of bad loans shows that China is further ahead than in the late 1990s. And thanks to a national savings rate of nearly 50%, banks still have a strong funding backstop from plentiful deposits. That gives them time to deal with their problems—a luxury they need to use well. + +Analysts at China International Capital Corp, a local investment bank, predict that the worst outcome would be bad loans of $1.5 trillion—still a lot, though an order of magnitude smaller than the ultra-bearish view. But as David Cui at Bank of America Merrill Lynch argues, specific estimates are beside the point. Investors have little faith in China’s banks, pricing their stocks at a 30% discount to the stated value of their assets. The government, Mr Cui reckons, must recapitalise them on a scale to win over investors; the exact size will, in effect, be determined by the market’s reaction. + +As though this were not difficult enough, Chinese banking is getting more competitive. The “big four” banks’ share of sectoral assets has fallen from 54% a decade ago to less than 40% today as smaller institutions nip at their heels. For many years the central bank enforced a spread between lending and deposit rates that provided banks with a handsome guaranteed profit. Last year it liberalised interest rates. It is phasing in deregulation to give the banks time, but the trend is clear: interest margins, which five years ago were about 3%, are heading towards 2%. At the same time the government has allowed several private companies, including deep-pocketed tech giants such as Tencent, to establish banks. For now they are constrained by regulations, but hope soon to join battle with lumbering state-run ones. + +All this is putting Chinese banks under pressure to find new ways to generate profits. On balance this ought to be a good thing, nudging them to lend to private companies and consumers who are willing to borrow at higher interest rates than state firms. It is also forcing them to improve their services to attract more customers. + +At the headquarters of Shanghai Rural Commercial Bank (SRCB), which despite its sleepy-sounding name is one of China’s 30 biggest lenders, with some 600 billion yuan in assets, employees are drawing up plans to expand the banks’ offerings. Some branches now stay open until 8pm to cater to people who work late. But the quest for profit is also pushing banks to take on new risks. Xu Li, the SRCB’s president, says one idea is to make better use of its balance-sheet—code for investing more aggressively. “Before, we mainly invested in government bonds. Now we want to get into corporate bonds in a big way,” he adds. + +Many smaller banks are racing to expand, using volume to make up for thin margins. Whereas the assets of big national banks grew by 10% last year, those of city-focused banks increased by 25%. Risks could ripple through the sector. Smaller banks have started to turn to the interbank market for funding if they cannot get it from deposits, and big banks often end up providing it. “Interconnectedness among banks is increasing,” says Frank Wu of Moody’s, a rating agency. + +Regulators are still trying to swaddle the banks, forcing them to keep plenty of cash in their vaults and limiting their loans to weak industrial sectors. Yet banks are straining to break free. They have devised a mixture of off-balance-sheet solutions to get around the rules. The products are not as complex as the subprime debt securities in America that sparked the financial crisis in 2008, yet there is much toxic bilge swirling around China’s banks. And as global investors learned almost a decade ago, what lurks in the shadows can come back to haunt them. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21697979-dud-loans-much-higher-reported-banks-must-brace-trouble-breaking-bad/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Shadow banks + +Dark and stormy + +A repressed financial system has sprouted high-risk alternatives to banks + +May 7th 2016 | From the print edition + + + +AFTER LI HUI’S husband died in a car accident a decade ago, she received an insurance payout of 800,000 yuan. The money could not begin to make up for his loss, but Ms Li, a soft-spoken pensioner, thought it would at least help tide her over for the rest of her life and provide a nice inheritance for her daughter. Yet relying on savings alone is difficult in China. The cost of housing, food and travel has risen steeply, whereas interest rates on bank deposits have barely kept pace with inflation. For a risk-averse woman who likes yoga and oil painting, decent investment options are limited. Playing the stockmarket, she knew, was foolhardy. + +Then one day Ms Li came across the Fanya Metals Exchange. On its platform she could lend money, at an annualised interest rate of 13%, to buyers of rare industrial metals. Fanya seemed exotic but safe. It advertised partnerships with China’s biggest banks and flaunted its connections with the government, including endorsements from officials who pledged to support it. She poured in her savings. + +Last year disaster struck: Fanya suspended all withdrawals. The value of its stocks of metal had collapsed. Up to 43 billion yuan vanished from the exchange under suspicious circumstances. Investors hoping for a comfortable retirement became protesters overnight, picketing outside banks and government offices. Regulators distanced themselves from the wreckage. They declared Fanya an illegal venture and intimated that people should have done their homework before investing in it. + +Just beyond the conservative confines of China’s banking system, there is a much rowdier parallel universe: shadow banking. This is where borrowers and industries shunned by banks look for funding. In some corners, promised investment returns run to double digits. Regulators look the other way. + +Lengthening shadows + +Until the early 2000s banks accounted for nearly all lending in China, but in the past five years their share has come down to just three-fifths of all new credit. On a conservative estimate, China’s shadow financing now adds up to 40 trillion yuan, nearly two-thirds of GDP. Compared with advanced economies, this is modest: America’s shadow-banking sector is 1.5 times the size of its GDP. But China’s shadow assets have increased by more than 30% annually over the past three years, compared with less than 10% for the rest of the world, according to the Financial Stability Board, a global grouping of regulators. + +In theory shadow banks should seek higher returns but also take care to manage risks. In practice it often does not work out like that + +Shadow banking in China covers everything from private investment companies to peer-to-peer lenders. To varying degrees they all function like banks, intermediating between savers and borrowers. But there is one crucial difference: whereas the government guarantees bank deposits, shadow lenders are supposed to stand on their own. In theory they should seek higher returns, but also take care to manage risks. In practice it often does not work out like that. Some, such as Fanya, are reckless. Worse, lines between them and the banks are blurred, with bank assets funnelled through them. Dangers lurking in the shadow system could thus easily contaminate the banking sector. + +China’s boom in shadow banking had an innocent enough start. In 2010 regulators reined in bank lending after the credit binge that helped lift the economy out of the global financial crisis. Projects from highways to apartment blocks were left half-finished. To see them through to completion, regulators tolerated an expansion in non-bank financial institutions. It was a workaround that seemed to shift risk away from the banks yet kept credit flowing. + +The most prominent of the shadow lenders were trust companies, versatile institutions that could lend money and take direct stakes. Trusts charged higher rates on loans than banks and also offered higher returns to their wealthy investors (the minimum investment is 1m yuan). Today they hold assets of 16 trillion yuan, more than the insurance sector. + + + +At first trust products were straightforward. Unable to count on state backing, trust companies demanded plenty of collateral, typically keeping loan-to-value ratios at less than 50%. Investors were warned that if products failed there would be no bail-out. But when defaults started in early 2014, investors got their principal back. “The customer actually has to write out a sentence saying ‘I assume all the risk’,” grumbles a bank regulator in Beijing. “But when real losses arise, they say, no, your sales people told me it’s 100% guaranteed.” Usually it was not the government that rescued investors but trusts themselves: they did not want their reputations damaged. + +Regulators tried to mitigate the risks by forcing trust companies to set up a communal insurance fund. They also pressured shareholders to recapitalise their firms. In a narrow sense, the strategy was successful: trust companies have evolved into something more akin to wealth managers, pitching themselves to prospective clients as firms with the deftness to navigate China’s choppy markets. “Rather than just doing lending, we are expanding into securitisation, private equity and advisory services now,” says Wang Bo, CEO of Hwabao Trust. + +But far from spelling the end of China’s shadow banking, this has created space for other, often riskier forms to establish themselves. One of the fastest-growing segments of this market has been entrusted lending: loans made by one company to another through banks as agents. Banks help with loan management but do not shoulder any risk. Entrusted lending in China reached 10.9 trillion yuan at the end of last year, up 60% since the start of 2014. + +Many entrusted loans look more like cash management (loans to subsidiaries) than anything deeply dangerous. But there is also plenty of lending by suppliers to cash-strapped buyers, and about a fifth of the total consists of high-interest loans to property developers. This means that the debt problems of hard-up companies can infect their healthier peers. One indicator of the potential spread is the growing chain of unpaid corporate bills: in 2007 China’s 1,000 biggest companies took an average of 61 days to pay their invoices, but by last year that figure had risen to 117 days, according to S&P Global Market Intelligence. + +Online finance is also booming. As in other countries, supporters argue that they bring sorely needed innovation to the Chinese economy. Banks have been slow to lend to small businesses and consumers, partly because they lack information about personal credit histories. Online lenders help fill this gap, armed with algorithms and data to assess creditworthiness. In China, with the right connections, they can acquire GPS records, point-of-sale-machine data and even internet search histories. + +Some online firms appear to be living up to the innovation story, though their footprint is still small. Lufax, backed by Ping An Group, has built a comprehensive online investment platform; its clients can put cash into peer-to-peer (P2P) loans or equity and bond funds. Ant Financial, an affiliate of Alibaba, an e-commerce giant, controls an array of online finance companies. Many of these describe their businesses with the same missionary zeal as do their peers abroad. “The philosophy behind the business was and remains today that everyone deserves access to credit,” says Tang Ning, CEO of CreditEase, whose P2P arm listed in New York last year. + +Other online lenders operate in far murkier territory. Yinpiao lets people make loans to businesses collateralised by bankers’ acceptances. These products, which resemble post-dated cheques, have been plagued by fraud. Ezubao, until recently China’s biggest P2P firm, was declared a Ponzi scheme this year; it had faked many of its 50 billion yuan in loans. Failure has been shockingly common: more than a third of the 4,000 P2P platforms launched in recent years have collapsed. Online lending amounts to about 500 billion yuan—just 0.5% of bank lending, but up more than tenfold over the past two years. + +The risks in online finance, trusts (in their purest form) and entrusted loans are all supposed to reside outside banks. Whatever the dangers, this should make for a more diversified financial system, a good thing. But two huge pieces of the shadow-banking puzzle are directly tied to banks, meaning that much of the apparent diversification is illusory. + +The first is loans that actually sit on banks’ balance-sheets in different guises. The most common are trust beneficiary rights (TBRs) and directional asset-management plans (DAMPs). Despite their technical-sounding names, these are simply loans booked as investments. For TBRs, a trust company acts as the custodian of the loan; for DAMPs, brokerages do. But in both cases it is banks that provide the financing, receive the income and face the risks. Jason Bedford of UBS, a bank, estimates that these shadow loans were worth more than 12 trillion yuan midway through last year, or roughly 16% of standard loans, up from just 4% in 2012. + +Why would banks bother with them? One reason is that capital requirements to back up investments are much lower than for their standard business: they need hold only a quarter as much capital as for loans. The wheeze also enables them to get round government diktats about sectors they should or should not lend to. More worryingly, banks can use the instruments to mask bad loans, because disclosure requirements for investments are much less stringent than for loans. If things go badly, banks’ losses on their shadow books could be far more serious than disclosed so far. + +The second piece of the shadow-banking puzzle is the “wealth-management” assets that banks hold off their balance-sheets. With deposit rates capped, banks needed to find a way to attract customers who wanted higher yields. Starting a decade ago, banks have sold wealth-management products (WMPs) as products akin to deposits, often with interest rates a couple of percentage points higher than for normal bank accounts. Sales of WMPs have surged. At the end of 2015 there were 23.5 trillion yuan of WMPs outstanding, more than double the figure just two years earlier. + +To deliver the higher yields, banks themselves need more profitable assets. In many cases they invest in shadow loans through trust firms. A growing portion of their cash has also ended up in stock investments. Not all WMP funds are risky; many go into bonds. Regulators have tried to deal with the dangers by capping “non-standard credit assets” (read: shadow loans) to 35% of WMP funds, a sufficiently low threshold to be safe. + +But as ever there are loopholes. If banks sell a shadow loan to another bank and buy it back through the interbank market, it counts as a standard asset. And so long as banks do not guarantee the principal of these products, they need not report them on their balance-sheet. Nearly three-quarters of all WMPs fall into this non-guaranteed category. “They can be viewed as a hidden second balance-sheet, but with poor disclosures and few reserves or capital to cushion losses,” says Grace Wu of Fitch, a rating agency. + +Where danger lurks + +As the kings of China’s financial jungle, banks ought to have their pick of clients, ensuring that their shadow assets are generally sounder than those of other lenders. But it is striking that the banks with the biggest shadow-loan books are mid-sized institutions—those that have been expanding their market share most aggressively. WMPs account for about 15% of deposits at the biggest banks but over 40% at mid-tier banks. + +Moreover, the vaunted liquidity buffers of China’s financial system are fraying. The average maturity of WMPs is just 113 days. But many back much longer-term loans. This means that banks must constantly sell new WMPs to retain their funding base. Optimists think the liquidity risks are manageable: if savers were to lose faith in WMPs, their cash would probably flow back into bank accounts. But some institutions, such as Industrial Bank, whose WMPs account for nearly 60% of its deposits, could suffer acute pain. And Industrial Bank is no bit player: it has more than 5 trillion yuan in assets, which in America would be enough to make it the fifth-biggest bank. + +Five years ago Chinese shadow banking was driven mainly by companies that could not get bank loans. Now the main impetus comes from ordinary people looking for higher returns. Perhaps Li Hui, the Fanya investor, should have known better than to trust a rare-metals exchange promising a 13% yield. The same cannot be said for the millions now buying WMPs: these products are created and sold by banks, and even if the banks do not guarantee them, customers view their support as implicit. + +It is a vicious cycle. Seeing savers’ insatiable appetite for these products, banks feel compelled to create yet more. As a result, they are straying deeper into the shadows: distant enough from conventional banking to offer higher rates but close enough that their customers still feel reassured. Shadow banking, far from being a new kind of efficient lending, has spread hidden risks throughout the economy. So China is now turning to its capital markets instead, hoping they will make its financial system smarter and more transparent. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21697985-repressed-financial-system-has-sprouted-high-risk-alternatives-banks-dark-and-stormy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Capital markets + +Risky returns + +China is struggling to unleash the power of stocks and bonds + +May 7th 2016 | From the print edition + + + +JUST BEYOND CHARLIE CHEN’S perch, Shanghai looks every inch the global financial centre it aspires to be. Skyscrapers shimmer in the spring light, capped by the names of some of the world’s biggest banks and insurers. On the pavement below, smartly dressed workers scurry from the crowded rush-hour subway to their offices in Lujiazui, the city’s financial district. The small team at MegaTrust Investments, Mr Chen’s firm, quietly taps away at computer terminals, reviewing overnight price movements and building trading models. + +But anyone with a passing interest in business news will know that for all of Shanghai’s glistening modernity, its markets are still in their infancy. They are beset by corruption, price manipulation, insider information, government intervention and a mob-mentality trading style, all of which makes their counterparts in New York, London and Hong Kong, volatile as they are, look like paragons of orderly behaviour. “We like that the market can be so irrational. Otherwise it would be more efficient and we wouldn’t be able to beat it,” says Mr Chen. His flagship fund has averaged a tidy 45.5% net annual return over the past three years. + +From a narrow perspective, it is easy to shrug off the dysfunctions of China’s markets. They are largely sideshows to the real economy. Investors have limited exposure to them and companies obtain relatively little funding from that source. Banks are the beating heart of the financial system. + +But for China to develop properly, it must get its capital markets right. With a thriving stockmarket, companies could fund themselves with more equity, not just debt. A healthy bond market would take pressure off overburdened banks. Just as significant, transparent markets are needed to help investors price capital properly and press companies to improve their governance. + +China’s stockmarket is often likened to a casino. Wu Jinglian, a respected local economist, once quipped that this comparison was unfair to casinos: at least they have rules. The propensity for wild swings and lawlessness has been on full display over the past year. Blue-chip stocks more than doubled in an orgy of debt-fuelled buying before crashing, landing not far from where they started. Officials panicked, ordering big shareholders to refrain from selling, pumping money into the market and drafting state-owned brokerages and banks into a “national team” to buy shares. They also detained dozens of investors, bankers and regulators in investigations of the market mayhem; at least two others committed suicide before the authorities could get to them. + + + +Less in the global eye but potentially more dangerous, the Chinese bond market is growing explosively. Bond issuance last year reached 12.5 trillion yuan, up from 7.7 trillion in 2014. Despite the huge volume of offerings, spreads between yields on AAA-rated corporate bonds and government bonds fell to historic lows of less than 0.4 percentage points this January. A narrowing of spreads implies that investors see less risk of default in bonds, a prognosis which is hard to square with the slowing economy. Spreads have at least widened a bit lately, but yields for any company believed to have government backing, whether public or private, are still uncannily low. + +Part of the reason for the bond rally is familiar from the stock bubble: leverage. In the case of bonds, investors have used repurchase agreements to multiply their investments (buying a bond with their own funds, then borrowing against that bond to buy yet more). Credit-rating agencies, which did not exactly cover themselves in glory in the lead-up to the 2008 financial crisis, are far weaker in China. Regulators have yet to accredit the big global agencies (Moody’s, S&P and Fitch) to provide ratings for onshore bonds. Instead, these are rated by domestic agencies, whose judgment has been highly dubious. In spite of falling profits and soaring debt loads, they upgraded ratings on 656 bonds last year and downgraded only 126. + + + +Analysts typically point to the heavy presence of retail investors as an explanation for the madness of China’s markets, suggesting that more professional investors would bring greater stability and sanity. It is true that small-time investors are the dominant force in the stockmarket, accounting for roughly 80% of trading volume. Yet a larger share of professionals by itself is unlikely to be the solution. Institutional investors in China are not seasoned veterans. “I don’t know a single bond trader with more than five years of experience,” jokes one in his late 20s, exaggerating only slightly. + +Moreover, many of the biggest investors play by the same rules as the smaller punters. The arrest last November of Xu Xiang, head of Zexi Investment, provided a rare glimpse of one of the masters of the game. Mr Xu was a leading member of the zhangting gansidui (go-for-max kamikaze squad): investors who pump up stocks, lure in unsuspecting money and then sell out after a few of days of gains. He had managed an eye-watering 3,200% return since 2009. But his outsized gains last summer even when the market crashed proved too much for the authorities: police charged him with insider trading and price manipulation. Even so, many would-be Zexis are waiting in the wings. When the regulators last year made it easier for fund managers to set up, some 20,000 of them registered for business, a fourfold rise in a year. + +Voices of reason + +Amid all the neophytes and kamikazes, there is an emerging class of investors with ample experience in global markets that is now plying its trade in China. Charlie Chen, like many in the industry, spent years working for foreign fund houses before founding MegaTrust, which now manages about $400m in assets. His seven analysts each meet about 200 companies a year. They sift through shareholding structures to work out who really controls them, a bottom-up approach to research that is rare in China. Shen Yi, a former trader with Goldman Sachs, is part of a cohort that has started to apply quantitative trading strategies to the domestic market, which is rife with the kinds of inefficiencies that are fertile ground for quants. + +The bond market is also attracting serious players. Edmund Ng, formerly the Hong Kong Monetary Authority’s head of direct investment, last year launched a firm, Eastfort Asset Management, to trade Chinese bonds. The recent opening of the interbank bond market (the main bond market) to foreign institutional investors will bring in even more serious money over time. + +The government is also looking to insurance firms to play a bigger role. By their nature, these are long-term, patient investors, just the kind that China lacks. Regulators have steadily loosened constraints on insurers, letting them lift their exposure to equities to 30% (the current industry average is 15%). With more aggressive marketing they have more than doubled their assets under management over the past five years, to nearly 13 trillion yuan. + +The infrastructure around these firms is improving. Wind Information, a data provider, is trying to turn itself into the Bloomberg of China. Both Bloomberg and Reuters themselves have dramatically increased their Chinese-language offerings. Suntime tracks the returns of thousands of private fund managers. Sycamore Investment Services provides valuations of hard-to-price securities traded off exchanges. Small advances have been made even in the legal arena. Courts in big cities are getting better at handling disputes over investments that go wrong. “Previously, court personnel might not have even understood what arbitration was for,” says Violet Ho of Kroll, a consultancy. + +Still, it would be naive to expect Chinese markets to mature of their own accord without major reforms. After all, foreign investment banks from UBS to Goldman Sachs have been underwriting stocks and bonds in China for the better part of a decade, but have had limited influence on the behaviour of their onshore peers. Investment quotas for large global institutions have also had little effect. And some of China’s insurers, the big domestic institutional hope, more resemble risk-taking shadow banks than prudent investors. They have been selling short-term investment products, offering returns in excess of 6%, and piling heavily into stocks. In one prominent case last year, Baoneng, until then almost unknown, used heavy leverage to fund a 30 billion yuan purchase of shares in Vanke, a property developer. + +The rules of engagement in China’s markets need to change. These are some of the commonly heard suggestions: the government should stop micromanaging the timing and pricing of initial public offerings; clear the way for investors to short individual shares; make it easier for private companies to issue bonds; develop credible rating agencies; draft an effective bankruptcy law; and attract more experienced professionals into regulatory agencies. But at the root of all of these, and indeed underpinning a great many of the dysfunctions in China’s financial system, is something that is not easily changed: a belief that, when all else fails, the state will always be there to rescue investors from their mistakes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21697984-china-struggling-unleash-power-stocks-and-bonds-risky-returns/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Politics + +Power to the party + +The state wields extensive control. So why is the financial system so unruly? + +May 7th 2016 | From the print edition + + + +IF YOU SCOUR the annual reports of China’s biggest banks, you will find hardly a mention of the Communist Party. There are passing references to the “Party Discipline Office” in descriptions of the banks’ internal structures, and the biographies of a few executives note that they graduated from the “Party School”. But that is about it. Only when you get to Citic Bank, the ninth-largest by assets, is there any suggestion that the party might play an important role. The first four of Citic’s objectives for 2015 read like those of banks anywhere in the world: improve management, increase profits, control risks and boost efficiency. Its fifth and final objective, though, is quite distinctive: “Comprehensively strengthen construction of the party”. + +In all countries there is a gap between what banks and regulators reveal to the outside world and what happens behind the scenes. In China that gap is wider than usual. The party’s unchallenged, spectral position at China’s apex gives it a tight grip on the financial system but also causes many of its ills. The key to understanding the party’s influence is that it does not simply sit atop China’s financial institutions. At the highest levels, it is them. The same people often hold senior roles in both their firms and the party. + +As far back as 1995 the Chinese government declared that banks were to be commercial entities, focused on making money and responsible for their losses. When the government invited foreign firms to take stakes in the country’s biggest banks in the early 2000s and encouraged them to list on stock exchanges, its ambition was to instil a businesslike mindset. Hard-nosed investors would scrutinise their books and put pressure on them to perform well. + +Up to a point, this has worked. China’s banks, brokers and insurers have acquired the patina of profit-focused banks. They file regular statements to stock exchanges and publish glossy annual reports. Their results are reviewed by international auditors such as KPMG and PwC. Their risk-control departments stress-test their balance-sheets. Over the years they have become leaner: Agricultural Bank of China, for one, has cut back from 50,000 branches in 2000 to less than half that today. + +The greater of two goods + +But if considerations of social stability and market efficiency clash, the former almost always wins. When the global financial crisis erupted in late 2008, banks had to toe the party’s line and finance the government’s mammoth stimulus. When the stockmarket crashed last June, state-owned brokers were ordered to buy shares and banks were made to lend to them. Bankers have “a political duty to comply” with their masters, notes Richard McGregor in his book, “The Party”. + +Though concealed in banks’ stock-exchange filings, the party’s hand is visible in bankers’ daily lives. If you step out of the lift on a Chinese bank’s executive floor, you will often see signs pointing to the president’s office in one direction and to the office of the discipline inspection committee (the body in charge of enforcing party rules and rooting out corruption) in the other. In much the same way that Xi Jinping is presented to foreigners as China’s president but described domestically as general secretary of the Communist Party, so bankers wear two hats. The person whom investors know as chairman is also known internally as the bank’s party secretary. + + + +Like the heads of other state-owned corporations, China’s titans of finance are moved among institutions whenever the party’s organisation department sees fit. In the first decade of the 2000s at least 43 senior cadres shifted from one top financial firm to another, according to Chen Li of the Chinese University of Hong Kong. Dozens more flitted between regulatory agencies and financial institutions. In America and Britain there is an old—and to critics, repugnant—tradition of regulators leaving office to join firms they once supervised. Rules to prevent conflicts of interest work only partially. But in China the whole point is to fuse the elite together. Regulators and financial firms are meant to work towards the common goal of building a prosperous nation. + +However, just because the party is in control does not mean that it has things under control. Last summer’s stockmarket crash and the capital flight of recent months are only the latest examples of its frailties. Crudely put, shadow banking has evolved in recent years through firms devising investment products that get around regulations; the government slowly catching on; and the firms responding by finding new loopholes. + +If the party is so powerful, how can its edicts be so blatantly disregarded? Many in the government now believe the failure lies in the structure of regulation. In the early 2000s China divided its supervisory framework, appointing a banking regulator for banks, an insurance regulator for insurers and a securities regulator for brokers. That worked well enough for a decade, but as the financial system has grown bigger, so have the holes in it. Last year’s stockmarket crash exposed some of them. The securities regulator, looking at margin financing on brokers’ books, saw little danger from investors buying stocks with borrowed cash. The bank regulator, focused on lending, did not watch off-balance-sheet products that brought yet more leverage into the market. + +Policymakers are convinced that regulation has to be better integrated. One popular idea is to merge the banking, insurance and securities bodies into a super-regulator under the aegis of the central bank. If only it were so simple. “Even if all regulation was under the same roof, you might still have separations between the different units,” says Wang Jun, a former central-bank official now at China Europe International Business School. + +One of the defining traits of Mr Xi’s rule has been the consolidation of power. Party bodies that used to provide general direction for government policy are getting more involved in day-to-day management of the economy. Yet the concentration of power has, if anything, been associated with greater instability in markets and unpredictability in policy. Officials at all levels are more hesitant, afraid of making decisions that go against what Mr Xi might want. Regulatory bodies tried their best to recruit people with experience working for top-flight international firms, but after a few years of low pay and limited influence many have left. + +Some believe the problem lies in the very nature of party control. Governments have three basic functions in finance: as promoters of healthy market development; as regulators of institutions; and as owners or guarantors of firms, especially at times of trouble. In a stinging report last June, the World Bank said China had mangled all three. Instead of promoting sound markets, the government twisted them to drive economic growth; the state’s ownership of financial firms was too pervasive; and regulations were consistently loosened to suit economic priorities. “These interventions have no parallel in market economies,” the report stated. Just two days later, the World Bank itself intervened to remove the section about finance from the report. It said this was its own decision, not the result of Chinese pressure. + +To its credit, the party itself has expressed similar ideas about ceding more power to the market, albeit couched in softer language. Yet overhauling financial regulation is tough. Among other things, China must permit banks to compete properly, stop controlling the yuan and allow insolvent firms to go bust. The party, in other words, must give the market room to work. + +Even with the best intentions, this transition is bound to be volatile. Government guarantees—sometimes explicit, often implicit—blanket much of the economy. Many in China, from investors to bankers, assume that local governments and state-owned enterprises (SOEs) cannot fail. By fostering cohesion, the party encourages the belief that, if the worst happens, it will keep credit rolling over. + +Private companies understand the power of this belief. Whereas state-owned banks often hide their party background, their shadow peers play up their government connections, however tenuous. Ezubao, the large peer-to-peer lender that collapsed recently, held its annual meeting last year in the Great Hall of the People in Beijing, the venue for big party gatherings (which is available for hire when not in official use), and advertised in state media. Investors who lost their money have protested, demanding that the government compensate them. + +Let them go bust + +Ending the party’s support for firms that are in fact state-owned will be that much trickier. “Failure may be the only cure,” writes Zhu Ning, an economist, in his recent book, “China’s Guaranteed Bubble”. Mr Zhu argues that China has to make an example of spendthrift companies and local governments, letting them default or even go bust to get investors to take market forces seriously. + +Yet that can have extreme repercussions. In China’s struggling industrial heartland, the Hebei Financing Investment Guarantee Group, a government-owned company, underwrote vast amounts of loans to small manufacturers over the past decade. Thanks to its support, lenders treated the manufacturers as virtually risk-free. But when they began defaulting, Hebei Financing could not come up with the money. Last year it revealed that 32 billion yuan of loans it had guaranteed were in danger. Soon afterwards, a distraught investor stabbed the CEO of Global Wealth Investment, a fund manager that had lent to companies backed by Hebei Financing. Alarmed at the prospect of unrest, the Hebei provincial government has since scurried to make good on the loan guarantees, at least in part. It set up a re-guarantee company, in effect underwriting the underwriter. That has helped mitigate panic, but the trade-off has been moral hazard: investors will continue to expect the government to bail out state-run companies. + +Elsewhere the party is taking a harder line. A handful of small state firms have missed bond payments this year. A credit-risk officer with a mid-tier bank says his team no longer assumes that provincial-level SOEs will receive bail-outs. He expects a few bankruptcies of government-backed steel mills and coal miners. But neither he nor almost anyone else thinks China will allow the biggest state firms to default. With so many economic and political levers in its hands, the party still retains plenty of control for now. The rest of the world can only watch and wait. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21697980-state-wields-extensive-control-so-why-financial-system-so-unruly-power/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Global impact + +Nowhere to hide + +China’s newest export is its financial system, for good and for ill + +May 7th 2016 | From the print edition + + + +SOME OF THE finest infrastructure to be found between Singapore and Dubai lies in the south of Sri Lanka, close to the crashing waves of the Indian Ocean. Broad highways connect a deep-sea harbour to a silvery, angular convention centre and, further inland, to an elegant airport terminal with vaulted wooden ceilings. But it does not take long for visitors to see that something is awry. Wild peacocks scampering across the roads easily outnumber the people using the state-of-the-art facilities. The port sees less than a ship per day and the airport, which has been open for three years, no longer offers regular flights. The Sri Lankan government’s debt on the complex runs to at least $1.5 billion, or nearly 2% of the country’s GDP. And almost all of that is owed to Chinese banks. + +Sri Lankan officials are careful not to blame China for the mess. It was the previous president, Mahinda Rajapaksa, who wanted all these facilities built near his home town of Hambantota, even though there was little commercial justification for them. But privately they feel that the lender must also bear responsibility. Were it not for Chinese banks extending vast amounts of credit with minimal safeguards, Sri Lanka would never have been saddled with these debts. Moreover, the Chinese banks charged unusually high interest rates on at least some of the loans. The term “odious lending” comes to mind, says a Sri Lankan government adviser. Partly because of its debt load and big looming repayments, Sri Lanka turned to the International Monetary Fund this year for a bail-out. + +Tracking the ways in which the Chinese financial system affects the global financial system is far from straightforward. Since China is the world’s biggest trading nation, the fate of its economy clearly affects most of the globe. The slowdown in its construction industry has already battered commodity exporters from Mongolia to Brazil. But direct financial connections between China and the rest of the world are much more limited. In China itself regulations cap the involvement of foreign institutions, and Chinese banks, insurers and brokerages have been remarkably diffident about expanding abroad. Nevertheless, the promise and the problems of China’s financial sector are rippling beyond its borders. + +As Sri Lanka can attest, one crucial, if often overlooked, linkage is China’s funding for other emerging markets. At the end of last year the combined overseas loan book of China’s two leading development lenders, China Development Bank and Export-Import Bank of China, reached $550 billion, a multiple of the World Bank’s roughly $150 billion. Some of that lending has gone to Chinese firms doing business abroad, but the bulk has been for governments and companies in developing countries. + +A great deal? + +It might seem churlish to criticise China for lending to poor countries, but loans are not gifts. The recipients have to repay them, so it is fair to ask whether they are getting a good deal. The evidence is mixed. China’s money has built many useful things, including power stations, roads, dams and railways across Africa, Latin America and South Asia. It has also offered a lifeline to emerging markets suffering capital outflows. Last year China’s two development banks lent $29 billion to hard-hit Latin American governments, three times as much as in 2014, according to the Inter-American Dialogue, a Washington think-tank. + +But Chinese money is part of what got these countries into trouble in the first place. Its development banks have exported some of the worst excesses of the Chinese financial system: lending out huge dollops of cash with few strings attached, other than that Chinese contractors must do much of the construction. In the case of the airport and port in southern Sri Lanka, officials say there was insufficient analysis of their viability and no competitive bidding. “Would it have been bad to insist on these conditions? These are things we needed to do,” says Harsha de Silva, a critic of the original loans who is now deputy foreign minister. Allegations of corruption and waste have also followed Chinese loans around from Pakistan to Angola, Ecuador and Venezuela. + +There are some signs that China wants to mend its ways. It has started being tougher on loan recipients, and is hoping to emulate the World Bank’s best practices in running the Asian Infrastructure Investment Bank, a multilateral lender it established last year. Yet the legacy of the past decade is that a number of poor countries are now deeply in debt to China, sometimes with little to show for it. China, to its credit, has so far been accommodating to those in trouble, extending maturities and providing new financing. But if China itself hits the skids and loses more foreign-currency reserves, it will have fewer dollars to spare for others. That would make the outlook for those already in hock to China even grimmer. + +Tiny, but not for long + +For advanced economies the picture looks very different. Chinese banks have only a minor presence there, so the dangers of a China-led credit crunch are much smaller. At the end of last year overseas loans by Chinese commercial banks totalled just $410 billion, less than half the loan portfolio of Wells Fargo, America’s largest bank by market value. Chinese banks have been wary about making international acquisitions after ill-timed investments by China Investment Corp, a sovereign-wealth fund, just before the global financial crisis. Industrial and Commercial Bank of China’s $690m purchase of the London-based trading unit of South Africa’s Standard Bank is one of the most ambitious overseas forays by a Chinese bank ever—yet it is worth less than 0.03% of ICBC’s assets. + + + +Whatever happens to the domestic economy, it seems inevitable that Chinese financial institutions will increase their weight in developed markets in the coming years. If growth in China holds up well, they will have even more cash to deploy abroad; if their own economy stumbles, they will have an extra incentive to look abroad. For now, less than 3% of Chinese banks’ 102 trillion yuan in loans are in foreign currencies. Just serving Chinese companies as they venture abroad will ensure a big increase: they have accounted for nearly a third of all global cross-border M&A deals so far this year, according to Dealogic. Of Chinese insurers’ 13 trillion yuan in assets, a mere 2% are currently overseas. Insurers are starting to grab headlines with their overseas investments, such as Ping An’s acquisition of the Lloyd’s building, a London landmark, and Anbang’s bid for Starwood Hotels & Resorts, owner of the Sheraton and Westin brands. More are sure to follow. + +In some ways this is to be welcomed. Over the past 15 years China has transformed earnings from its trade surplus into foreign-exchange reserves, most of which in turn were stashed away in American government bonds, which are safe but low-yielding. Foreign investment and overseas acquisitions, if well managed, are a more productive use of China’s savings. + +Yet these outbound forays also harbour serious dangers. In the vanguard are state-owned enterprises, many of which are already leveraged to the hilt at home. Take ChemChina, a chemicals giant that bid $44 billion for Syngenta, a Swiss rival, earlier this year. If approved, this will be China’s biggest overseas takeover in history. Yet ChemChina’s debt-to-equity ratio is 234%; Syngenta’s is a much more conservative 44%. + +In normal circumstances, banks might be reluctant to fund companies already carrying so much debt. But Chinese banks are only too willing to back SOEs, especially when international expansion is part of their national mission. Foreign banks, too, assume that government support for SOEs is rock-solid. These deals are spreading China Inc’s indebtedness to foreign markets; the balance-sheets of its acquisition targets will become much more vulnerable to a downturn in growth. + +Mercifully, direct global exposure to the dangers within China’s financial system is still small for now. That is thanks in large part to a regulatory wall around the economy: foreigners can own no more than 20% of local banks, and can invest in stocks and banks only through strictly controlled channels. As a result, foreign investors own just around 1% of the Chinese stockmarket and even less of the bond market. + +International banks, for their part, account for only 1.5% of total commercial bank assets in China. More than half of those assets are concentrated in the hands of three institutions: HSBC, Standard Chartered and Singapore’s OCBC Wing Hang, according to KPMG. Several others, including Goldman Sachs, Bank of America and Citi, previously had large investments in Chinese banks but sold them for chunky profits in recent years. + +For foreign banks with big operations in China, its slowdown clearly poses risks. Standard Chartered got a taste of that in 2014, when it set aside about $175m to cover losses incurred in lending to a Chinese trading company, which had pledged the same stockpile of metals as collateral many times over to different banks. That scandal also dragged in Citi, HSBC and others. But they have generally been careful, partly because they have no alternative. Chinese banks, with their deeper local connections and rapid lending, have scooped up the vast majority of domestic clients, including the most indebted ones. Foreign banks, by and large, still serve international companies, which are among the safest borrowers in China. “The joy of being a drop in the ocean is that you can choose your drop in the ocean,” jokes one foreign veteran. + +The next few years could bring dramatic changes on multiple fronts. Regulators have opened new channels for foreigners to invest in stocks, creating a link between the Shanghai and Hong Kong stock exchanges; another link to the Shenzhen exchange is also in the works. As part of making the yuan a more global currency, China is also opening its bond market to institutional investors. + +And some foreign banks want a bigger foothold, believing that China’s growth prospects outweigh its risks. International bank lending to Chinese residents in mid-2015 amounted to $1.2 trillion, close to an all-time high and more than three times the 2010 figure, according to the Bank for International Settlements. HSBC, the biggest foreign bank in China, considered shifting its global headquarters to Hong Kong earlier this year, though in the end stayed put in London. Even those firms that want to insulate themselves from China will find it difficult to resist the gravitational pull of the world’s second-largest economy. “For serious investors, it’s no longer optional to be here,” says Eugene Qian, China head for UBS. + +Many are still holding off, believing that Chinese growth and the yuan have further to fall. But it is only a matter of time before major benchmarks such as the MSCI world equity index start to incorporate Chinese stocks and bonds. As that happens, funds from university endowments in California to pension providers in Sweden will follow their lead, adding onshore Chinese assets to their portfolios. Based on their current trajectory, China’s capital markets could be the world’s biggest within a decade. “Investors in America won’t be able to go to bed without knowing where China is trading,” says Luke Spajic of the Asian arm of Pimco, a giant fund manager. The pace may vary but the trend seems inexorable: Chinese and global financial systems are becoming intertwined. With each passing year, China’s problems will increasingly be the world’s problems. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21697982-chinas-newest-export-its-financial-system-good-and-ill-nowhere-hide/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The way forward + +Pain and prosperity + +China is following a well-trodden but dangerous path + +May 7th 2016 | From the print edition + + + +AT THE TIME, the “Five-Year Plan for a New Economy” seemed a courageous fresh start. The government vowed to wind down controls on interest rates, allow companies to borrow abroad, open domestic markets to foreign investors and sell its holdings in dozens of state-owned enterprises. Officials had promised at last to end “delay and vacillation”, remarked a leading reformist. Five years later the currency was plunging and banks’ bad loans were surging. It took a bail-out from the International Monetary Fund to douse the fire. + +An imagined scenario of what lies ahead for China? No; this is a potted account of South Korea’s economic history in 1993-97, a period of bold deregulation that culminated in financial turmoil. Parallels with China are imperfect. For a start, South Korea’s vulnerability stemmed from the fatal combination of a whopping current-account deficit and a reliance on short-term foreign funding; China has neither to worry about. Yet two lessons are relevant to it. First, moving from a state-directed financial system to a market-based one is almost bound to cause serious turbulence. China is following a successful Asian development model pioneered by Japan and replicated by both Taiwan and South Korea. Their governments were unabashed in protecting infant industries and promoting exports and used banks to mobilise domestic savings for capital-heavy investment. In all three countries the benefits of such controls eventually faded away, but undoing them caused trouble, in the form of property and stockmarket bubbles in Japan in the 1980s; similar, if slightly smaller, bubbles in Taiwan by 1990; and South Korea’s financial crisis in 1997-98. + +Such problems are not confined to Asia. Carlos Díaz-Alejandro, an economist, arrived at the same diagnosis in Latin America decades ago. The title of his classic 1985 paper went to the nub of it: “Goodbye Financial Repression, Hello Financial Crash”. Details vary from place to place, but there are common features. The most significant is the moral hazard that builds up in managed financial systems over time. Because the state wields so much control, lenders and investors alike come to count on it as a backstop when trouble arises. As Mr Díaz-Alejandro wrote, “warnings that intervention will not be forthcoming appear to be simply not believable.” + +Deregulatory risk + +Belief in the government’s role as guarantor is particularly dangerous when deregulation begins. Suddenly, opportunities arise for higher profits because returns are no longer capped, but financial institutions do not yet have proper risk safeguards in place. Some might even calculate that it is in their interest to expand as quickly as possible, gambling that by the time the government pulls the plug on guarantees they will have become “too big to fail”. + +These dynamics are already at play in China. Over the past few years its banks have been piling on risk through their shadow operations. To attract funding, they have offered higher rates to depositors through wealth-management products. They have put more of their cash into higher-return assets, often dodging regulatory limits to do so. Mid-sized banks, those on the cusp of too-big-to-fail status, have been the wildest. Insurers, peer-to-peer lenders and asset managers, among others, have all been drawn into the race to offer higher yields, at the very moment when growth is slowing and returns are declining. And whereas the official preference is to move slowly, money is not waiting around. If need be, it will move abroad. + +If deregulation involves such dangers, why would anyone want to risk it? The reason is that repressed financial systems eventually outlive their usefulness. Dysfunctions begin to corrode previously potent growth models. Returns on capital decline as banks roll over loans to struggling companies. Shadow banks flourish as companies and investors work around rules. Controlled capital accounts come apart at the seams. These ills are already far advanced in China. Just look at the growing amount of debt it employs to fuel short-term growth. + +The second, more hopeful, lesson from the experiences of other Asian dynamos is that financial tumult need not spell the end of development. In recent years it has become fashionable to present crises as opportunities, but that is far too glib; the effects of a crisis are unpredictable and the damage to people’s lives all too real. Yet it is also clear that mistakes did not stop South Korea or Taiwan from subsequently doing well. Precautions are needed to limit the turmoil, but putting off change indefinitely will spell steady decline. + +China’s financial reforms have been edging in the right direction, but not fast enough + +China’s financial reforms have been edging in the right direction, but not fast enough. Many observers expect it to follow Japan towards chronic malaise. For China, that would be even worse. When Japan stumbled, its people’s incomes were close to American levels, but average Chinese incomes today are just a quarter of those in America. + +China, however, is different from Japan in a number of ways. Some are helpful: it is less developed than Japan was in the 1980s, giving it more scope for catch-up growth—and for recovery from financial missteps; its exchange rate is under pressure to depreciate, not appreciate; its property bubble is less gigantic; and its stockmarket has already crashed. + +Ideological differences are more worrying. The Communist Party is, almost by definition, wary of the market and suspicious of the West. In Japan, South Korea and Taiwan, economists who trained abroad eventually returned home and pushed for reform. China has an embarrassment of talented citizens with global experience, but many of those who have returned have grown frustrated with the party’s grip and left government. Without more political openness, the road to financial reform will be fraught. + +There is another big difference to consider. China’s weight in the global economy is far larger than that of any other country whose banks have gone through a similar transition. The case for change is plain: the government needs to cede more control to the market to make the financial system work and to unleash the economy’s potential. Even if it gets it right, the process will be rough for China and bumpy for the world. The alternative—that it fiddles while its banks falter—is too awful to contemplate. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21697981-china-following-well-trodden-dangerous-path-pain-and-prosperity/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Hydrocarbons: Not-so-Big Oil + +Spotify: These boots are made for walking + +Internet firms: Growing, wildly + +Hospitality: Stay with me + +The grey market: Golden oldies + +Entertainment: Parks of recreation + +Schumpeter: What do the Foxes say? + + + + + +Articles Sections Next + +Hydrocarbons + +Not-so-Big Oil + +The supermajors are being forced to rethink their business model + +May 7th 2016 | From the print edition + + + +IT HAS been a grim decade for investors in international oil firms—among them, many of the world’s biggest pension funds. Even before oil prices started to fall in 2014, the supermajors threw money away on grandiose schemes: drilling in the Arctic and building giant gas terminals. Their returns have trailed those of other industry-leading firms by a huge margin since 2009. + + + +In the past 18 months things have gone from bad to worse. The Boston Consulting Group, a consultancy, calls it the industry’s “worst peacetime crisis”. That is evident in first-quarter results released in the past week by Exxon Mobil and Chevron of America, and European rivals, Royal Dutch Shell, BP and Total, which bear the scars of a collapse in oil prices to below $30 a barrel in mid-February (see chart). + +Since then the oil price has rebounded to $45 a barrel; as a result of aggressive cost-cutting efforts, their earnings have mostly been better than expected. Miraculously, a bit of cheer has returned. The big firms’ share prices have outperformed America’s S&P 500 index by nine percentage points since the start of the year. + +It is too soon to declare victory, though. Not only do the supermajors need to brace for the possibility of a renewed slide in oil prices in the short term; they must also prepare for a future in which oil demand is increasingly uncertain because of climate change, pollution and the emergence of alternative sources of energy. Sanford C. Bernstein, a research firm, argues that such “peak demand” is not imminent. There may be at least another 15-year growth cycle by oil firms before investors throw in the towel. But in the meantime companies need to develop a new business model built around a quest for returns rather than for reserves. + +These returns are still woefully low, and debts unusually high. On May 4th Shell issued its first earnings report since acquiring BG, a smaller British rival, for $54 billion in February. Thanks mostly to decent sales and marketing performance, analysts considered it a fair outcome. But its returns on average capital employed, an industry benchmark, were a miserly 3.8%—well below its cost of capital. It also had net debt of $69 billion, a burden that should keep its executives awake at night if oil prices fall again. A few days earlier, Exxon Mobil reported its smallest quarterly profit since 1999, shortly after Standard & Poor’s, a rating agency, had cut the triple-A rating that it had enjoyed for decades. (That left America with only two blue-chip firms, Johnson & Johnson and Microsoft.) + +Optimists, however, are starting to look beyond these shortcomings, for several reasons. First, cost discipline is becoming an industry-wide mantra. Shell, for instance, says it hopes to slash $30 billion from combined operating costs and capital spending by the end of this year, compared with 2014, despite the effort involved in swallowing BG. + +Second, investment projects are being looked at more realistically than they were when it was blithely assumed that oil prices would remain above $100 a barrel for the foreseeable future. Third, the supermajors are less likely to embark on wasteful mega-mergers, as they did in the 1990s. The Shell/BG deal went ahead despite loud opposition from some shareholders. Elsewhere, competition authorities are baring their teeth. On May 2nd Halliburton, the world’s second-largest oil-service company, scrapped its $28 billion merger with Baker Hughes, the third-largest, after the Department of Justice opposed it on antitrust grounds. + + + +INTERACTIVE: Explore how oil prices affect OPEC and non-OPEC production and viability + +Some doubt that this zeal for capital discipline will last long if oil prices rise much higher. “This is a cyclical business and it always will be,” says Bernstein’s Teng Ben. Paul Spedding, a former head of oil research at HSBC, a bank, says it has been forced upon the supermajors by weak market conditions. + +Two reports issued this week suggest that investors should strive to keep the spending straitjacket on oil companies even if prices improve further. One, by Carbon Tracker, an NGO, (and co-authored by Mr Spedding), seeks to show that pursuing new reserves at all costs would not only be bad for the environment, it would be bad business. It argues that even if climate-change policies severely constrain demand for oil, companies will still need to produce more of the black stuff. But if oil prices are anywhere below $120 a barrel, they would produce higher returns if they carry out selective drilling of low-cost wells rather than “business as usual”. Another report, by Paul Stevens of Chatham House, a think-tank, says the supermajors should consider selling assets and returning cash to shareholders because relentlessly pursuing reserves is a dead model. + +Unsurprisingly, the oil companies reject the notion that they need to shrink. They say they are adapting their portfolio to changing demand for hydrocarbons. Shell and BP favour what they see as cleaner natural gas over oil. France’s Total is developing renewables as well as oil and gas. Their instinct is to assume that even as the world battles climate change, it will want more hydrocarbons—especially in fast-growing developing countries such as China and India. Investors may pressure them to think differently. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21698305-supermajors-are-being-forced-rethink-their-business-model-not-so-big-oil/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Spotify + +These boots are made for walking + +An aspiring tech giant threatens to turn its back on Stockholm + +May 7th 2016 | STOCKHOLM | From the print edition + +And that’s just what they’ll do + +ON MAY 14th Stockholm hosts the final of the Eurovision song contest: a camp, televised crooning event that draws nearly 200m television viewers. Bands competing for votes and fame relish exposure; the host city gets to promote itself for tourists and businesses. And a big selling point for the Swedish capital is its status as home to a string of successful digital firms, exemplified by a large music-streaming business, Spotify. + +Tech and Stockholm have long thrived together. “Programming is the single most common occupation in Stockholm today,” says Mikael Damberg, Sweden’s minister of enterprise. An estimate, by the city itself, suggests the tech sector employs 18% of workers—far above the 10% said to be typical in most European capitals. + +A digital boom is one reason why the Swedish capital region has one of Europe’s fastest-growing populations (2.3m people, up by 10% since 2010). It also explains why the city’s economy as a whole is rattling along at about 5% annualised growth; the city claims to be the fastest-growing in Europe. Stockholm can boast not only about its hordes of clever startups—Paris, Berlin and others brag about these too—but also of fully fledged firms. Torbjorn Bengtsson, of the city’s business-development council, says that since 2003 it ranks as the fifth city, globally, in nurturing unicorns, private firms valued over $1 billion. It got one-fifth of all European investments in “fin tech” firms between 2010 and 2014, he says. One, Klarna, an online-payments firm, was valued at more than $2 billion last year and is expanding in America. + +Games firms do well, too. Microsoft bought Mojang (creator of Minecraft) for $2.5 billion, two years ago. In February Activision Blizzard, a Californian firm, snaffled up King Digital (maker of Candy Crush and other mind-numbing games) for $5.9 billion. Communication is another strength. Microsoft bought Skype for $8.5 billion, five years ago. Now Truecaller, a digital contacts book and personal organiser, is going great guns. It says it doubled global users to 200m in the past year, notably in South Asia and the Middle East. + +The biggest of the lot, however, is Spotify, which streams music, sells advertising and has persuaded 30m users—at the latest count—to pay for tracks. Last year it was valued at $8.4 billion. In March it raised $1 billion, in consolidated debt, from a single round of financing. Visit its offices and you find vinyl records stacked in crates and rooms crammed with trendy-looking staff in their 20s. + +Spotify is in “a hyper growth stage”, says an employee. It has 1,000 staff at its operational headquarters in central Stockholm, though the firm is legally incorporated in Luxembourg. A team of 53 exists to recruit “super talent” globally; the firm expects to double the number of employees at its main offices by, or soon after, the turn of the decade. By then, it might count as Europe’s first real example of a new tech giant. (SAP, an older software goliath in Germany, is worth some $83 billion.) “Spotify wants to grow, they are competing with Apple; I would love Spotify to challenge some of the big platform companies in the world,” says Mr Damberg. + +As the industry leader in music-streaming, Spotify will expand as long as most musicians continue to co-operate with it (see Free exchange). Taylor Swift and certain other artists refuse to do so, but they are exceptions. More in doubt is whether Spotify will grow in Stockholm or shift elsewhere. + +Last month its co-founders, Daniel Ek and Martin Lorentzon, wrote a public letter about Sweden’s business climate. The men raised three concerns. Employees who get stock options face whopping tax bills. Renting a home in central Stockholm has become eye-poppingly expensive. Both problems worry foreigners especially. Third, too few Swedish schoolchildren are learning to code: needlework and carpentry are compulsory, not programming. Unless politicians act, say Messrs Ek and Lorentzon, the firm could choose to grow somewhere else—Silicon Valley, perhaps. + +That sounds a mite ungrateful. Stockholm has long promoted tech, and all but pampered those who exploit it. Subsidies have helped to get personal computers and the internet into almost every household, however poor. 3G licences were given out free, as long as firms got as many people as possible online and mobile. The metro has Wi-Fi. The city built a network to connect 98% of homes, and all commercial property, with fibre-optic cables (firms operate the services). Finance, notably venture capital, is easier to access in Stockholm than in many European cities. + +A policy of welcoming foreigners also helps tech firms: Mr Bengtsson reckons as many as one-third of city startups are launched by first- or second-generation migrants. Each year an estimated 2,500 Indian software programmers apply for visas to work in Stockholm. Every tech job, in turn, creates 4.3 other jobs, often low-paid, according to a report by an advocacy group for American tech firms. Carl Bildt, an opposition politician, says “an open attitude to people coming from wherever to work” is hugely beneficial, as Sweden relies on imported talent. He wants the 100,000-odd refugees who arrived last year to be taught coding, so they can respond “to a huge demand for that sort of talent”. + +Spotify’s complaints are not just self-interested, they are also carefully timed. Sweden is now debating a proposed legislative change to let employees in companies with fewer than 50 workers for a time enjoy lower taxes on stock options. Spotify and others are miffed that the reform would exclude bigger firms. Talk of growing elsewhere is obviously intended to spur a rethink. Mr Damberg says the government will listen and consider a bolder reform, but says Sweden has fostered lots of big, non-tech firms before, such as Volvo or IKEA, without dropping its egalitarian, high-tax approach. + +Tackling pricey housing in Stockholm is harder. A banker with a young family, looking to buy, laments that prices have doubled in five years and properties sell in a frenzy of bidding. Regulated rental markets mean tenants at times resort to paying landlords under the table. Politicians in power talk a lot but do little to help. + +As for schools, more teaching in tech is bound to come—the question is how fast. This month a pilot scheme of compulsory coding lessons is due to start in some Stockholm schools. One goal is to get more young women to take it up: Spotify says its Saturday camps for pre-teen programmers often have more girls than boys who attend; but by college age, male coders vastly outnumber female ones. + +Even if it got all its wishes, Spotify might end up growing faster abroad in any case. What really matters, says Jessica Stark, who leads SUP46, a lobby for Swedish tech firms, is the broader signal to many other start-ups as they grow—who voice the same complaints as the music-streaming company. “Stockholm should definitely not aspire to be Silicon Valley, but that doesn’t mean we can’t compete with it,” she says. In at least one area, however, the Swedish capital will always have the upper hand: Silicon Valley will never get to host Eurovision. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21698311-aspiring-tech-giant-threatens-turn-its-back-stockholm-these-boots-are-made-walking/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Internet firms + +Growing, wildly + +China’s online-search market comes under scrutiny + +May 7th 2016 | SHANGHAI | From the print edition + + + +THE duty of large corporations is “not limited to ‘not being evil’”, argues People’s Daily, the bombastic mouthpiece of China’s Communist Party. The newspaper desires greater social responsibility at China’s internet-search firms. It apparently wants them actively to “stand up for the company’s ethics”. + +The publication’s wrath centres on Baidu, China’s biggest online-search firm, for a scandal involving the ads it carries. Dodgy postings for questionable medical treatments may have led to a cancer patient’s death—after reportedly he paid $30,000 for the quackery. The case has prompted Chinese regulators to open an investigation into the company’s advertising practices, news that sent Baidu’s shares tumbling this week. The mess follows another health furore. In January, Baidu’s boss admitted that his firm had accepted payments from ostensibly independent health experts moderating its online chat rooms for sick patients. + +The newspaper’s admonition also took a sideswipe at Google, whose longstanding motto is “Don’t be evil.” The American search giant noisily pulled out of China in 2010 rather than be subject to official censorship. Despite this seemingly principled departure, Google actually kept several of its lower-profile businesses going. It is rumoured that Google Play, its app store for Android smartphones, may arrive in China soon (which would require the firm to kowtow to censors). + +The troubles at Baidu and the temptations of Google have the same root cause: China’s soaring online-search market (see chart). Revenues are forecast roughly to double to 411 billion yuan ($63 billion) by 2018. Group M, a division of WPP, a big advertising firm, estimates that roughly half of all advertising spending in China will take place online this year, up from just 15% five years ago and higher than the global average of 31%. Mobile online advertising shot up by 178% year on year in 2015, to 90 billion yuan. + +Breakneck growth has come with problems. Recent reports from the University of Toronto found that browsers developed by Baidu and others used weak or little encryption, collected vast amounts of needless, intrusive personal data and proved highly vulnerable to malware. (Baidu insists its products are safe, but acknowledges ongoing efforts will “significantly strengthen information security”.) Other research suggests 15-20% of the roughly 10 billion daily clicks traded in advertising exchanges in China are generated by automated “bots”—not humans. Evil or not, the party newspaper is right to call for China’s internet firms to do better. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21698312-chinas-online-search-market-comes-under-scrutiny-growing-wildly/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Hospitality + +Stay with me + +As online rivals whizz ahead, hotels try to be both big and nimble + +May 7th 2016 | NEW YORK | From the print edition + +Room for a few more + +HOTEL companies check out well just now. On May 3rd Hyatt became the latest chain to report sunny results—profits were up by 55% over the same quarter in 2015. In America RevPAR (revenue divided by rooms available in a given period) has risen for the past six years, according to STR, a data outfit. + +Analysts debate when fortunes will change. America’s market has been buoyed by a temporary mismatch of slow-growing supply and robust demand. In the long term, however, the greatest uncertainty is not cyclical, but structural, as online firms change the industry’s shape. + +Neither Airbnb, a room-sharing site, nor online travel agents are hotels’ obvious adversaries. Big hotel chains subsist on weary business travellers; Airbnb does not. Yet the growing popularity of the platform, now valued at around $25 billion, means it may siphon more guests from hotels in future. Booking sites help hotels but chomp into their margins with fees of up to 25%. Last year they accounted for nearly one in five bookings in America, up from one in ten in 2006, according to Phocuswright, a research firm. In Europe, where the hotel market is more fragmented, online agents account for one in four. + +For hotel firms, one solution is to get bigger. After a bidding war with Anbang, a Chinese insurer, Marriott agreed to buy Starwood for more than $13 billion last month. The result will be a 1.1m room behemoth. Other firms are bulking up, too. Last year saw $67 billion of hotel mergers, according to Dealogic, a research firm—the highest level since 2007. + +Scale will help hotels battle their main competitors: other hotels. But the recent spate of deals is also a response to challengers online. A bigger hotel firm can seek lower fees from online travel agents. Investments in technology can be deployed across more rooms. And the more hotels a firm manages, the more credibly it can urge travellers to bypass third parties and look for rooms on its own site, as Hilton, InterContinental Hotels and others are doing. + +Hotels are also finding new partners or acquiring firms outright. On April 5th AccorHotels, a French firm, said it would buy onefinestay, an upscale rival to Airbnb. InterContinental, which was due to hold its annual meeting on May 6th, is partnering with a company called Amadeus to launch a new, cloud-based reservation system that gives more personalised service. + +Despite such efforts, it will be difficult for hotel firms to keep up. They cannot beat online firms’ reach. Airbnb has more rooms than even the combined Marriott and Starwood; online travel agents’ inventory is broader still. Expedia’s scale is particularly worrisome for hotel companies. Its sites include not just Expedia.com but Travelocity, Hotwire, Hotels.com and Orbitz—an acquisition regulators declined to challenge in September to the dismay of hotel chains. Less than two months later, Expedia said it would pay $3.9 billion to buy HomeAway, which helps property owners rent their houses to those who want them for a holiday. + +Matching online firms’ agility will be equally challenging. Airbnb is trying to attract business types by helping them find homes with wireless internet, 24-hour access and a desk. Expedia plans to offer more listings that show hotel rooms beside houses and flats. Such a move could make both Airbnb and hoteliers bristle. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21698307-online-rivals-whizz-ahead-hotels-try-be-both-big-and-nimble-stay-me/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The grey market + +Golden oldies + +Ageing societies are forcing big shifts in the provision of health care + +May 7th 2016 | From the print edition + + + +THE forecasts are clear: by 2050 the number of people aged over 80 will have doubled in OECD countries, and their share of the population will rise from 3.9% to 9.1%. Around half will probably need help with daily tasks—particularly those with enduring chronic illnesses such as Alzheimer’s, heart disease and osteoporosis. Health systems designed only to offer hospital care for acute cases will struggle to provide such support. + +To maintain the well-being of wrinkly populations, hospital stays can be replaced by residencies in purpose-built facilities at less cost. A forthcoming report covering 20 countries from KPMG, a consultancy, suggests the number of care-home residents could grow by 68% over the next 15 years. How care is managed in any one country reflects a tussle between cultural attitudes, national budgets and gritty demographic realities. The increasing availability of technology that would allow the elderly to stay in their homes for longer will also affect demand for such options. + +Residential care in America and Japan is flourishing. But in an era of tight public finances, some governments are trimming the payments they offer to cover, or subsidise, care-home places. Some operators now struggle to make money; in western Europe, for example, governments are encouraging the elderly to stay in their own houses for longer. This is why the length of stays in care homes has declined from an average of three to four years a decade ago to 12 to 18 months today, says Max Hotopf, the boss of Healthcare Business International, a publishing company. Thousands of residential beds in the Netherlands and Sweden have disappeared as a result. About 5,000 debt-laden British care homes—a quarter of the total—may close within three years. + +This makes emerging markets a more attractive prospect, at least for European care firms. Senior Assist, a Belgian company which manages residential facilities and home help, is now expanding in Chile and Uruguay. But China is the big prize. The Chinese will rely heavily on residential care, thanks to the country’s one-child policy and increasing urbanisation: two parents and four grandparents often depend on one child far away. + +Families in other developing countries are more hesitant about handing Granny over to strangers, however. In Brazil, India and richer countries of the Middle East, such as Saudi Arabia, elderly care remains centred around hospitals. In Brazil taking the old from their neighbourhoods is frowned upon. In India and the Middle East, families are expected to look after their elderly when they are not in hospital. Helmut Schuehsler, from TVM Capital Healthcare, a private-equity firm in this sector, says to prevent hospital beds being blocked by oldies, “rehabilitation services” tied to hospitals should be on offer, or at least home care that avoids the need for a hospital in the first place. + +Overall, home care is an increasingly attractive market, expected to reach $355 billion by 2020 globally, and growing by 7.8% on average a year, according to Grand View Research. For one thing, it is cheaper to provide help for the elderly in their own homes (as long as it doesn’t involve overnight care); for another, a growing desire exists to “age in place”. + +In India, says Mr Hotopf, many agree that equipping ordinary homes with medical equipment will be the solution for those who can afford it. But simpler and cheaper additions can help keep oldies healthier at home, too. The company Sen.se, based in Paris, has a device called Mother that runs a family of “motion cookies”—small sensors. One will fit comfortably on the side of a pill bottle, for example. If placed appropriately around a house, they can monitor room temperature, the time that a person has spent in bed, the opening of the fridge door and whether tablets have been taken. An elderly relative’s data can then be monitored remotely on apps. + +Keeping an aged parent in view is also becoming easier. The robotics company Revolve has a telepresence robot called Kubi that allows spectators far away to pan and turn an iPad—a tool that makes it easier for anyone concerned to see how elderly relatives are coping. + +For those in need of human oversight, meanwhile, a range of startup companies hope to make finding and employing a carer far easier. Apps, including TenderTree and HomeHero, will replace the advertisements once crafted for fusty magazines. + +Care firms and other professional outfits can save money themselves through advances in remote monitoring. In Britain, for example, the Airedale Hospital in the north of England put telemedicine services (a two-way secure video link) into nursing and residential homes for a period, and hospital admissions dropped by more than a third. This was because nurses were on hand to work out whether incidents in care homes were serious or not. In February the hospital started a new digital hub to provide these services on a wider basis. + +Yet health-care systems have generally been slow to adopt technology this way. It may now be possible to consult with a doctor via a tablet, but governments have many rules about how medical advice is provided and how related data are handled. The extent to which new technologies grant the elderly independence will be limited by how willing governments are to integrate them into larger systems. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21698313-ageing-societies-are-forcing-big-shifts-provision-health-care-golden-oldies/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Entertainment + +Parks of recreation + +Why media giants are betting big on the future of theme parks + +May 7th 2016 | NEW YORK | From the print edition + + + +WHEN Disney opens its newest theme park in Shanghai next month, one of the first sights to greet visitors will be the Enchanted Storybook Castle. Its gold finials and blue spires will tower 60 metres above the centre of the park, making the castle the largest in any of Disney’s six such domains. A translucent canopy will house a twisting rollercoaster based on the “Tron” science-fiction franchise; robotic boats will voyage through the lair of Davy Jones, a buccaneering villain from the “Pirates of the Caribbean” film franchise. + +Marvels like these are why Bob Iger, the head of Disney, has promised this will be the company’s “most technologically innovative park”. With a $5.5 billion price tag it will also be the most expensive. But Shanghai Disneyland represents just a fraction of the investments the firm has been making in its theme parks. Over the past five years alone, it has ploughed $14 billion into its parks division. There have been major upgrades to all of its existing parks and many additional wonders are already being built in them. + +Disney is not alone. Major media companies are clamouring to open new theme parks or expand their existing offerings. Universal Studios, which is owned by Comcast, has its own Chinese park in the works, a $3.3 billion project slated to open in Beijing in 2019. Viacom-owned Paramount Pictures has plans for a similarly pricey development outside London. And in Dubai, Sony Pictures and Lionsgate are among the studios collaborating with local developers on a huge complex of parks that is set to open later this year. + +This global boom in investment might seem tough to reconcile with the challenges of the theme-park business. Delighting both ten-year-olds and their parents is a magical feat in itself. And as anyone who has heard the gruesome tale of Euro Disney knows, parks are costly to build and expensive to maintain. + +Newfound enthusiasm for them partly reflects upheaval in the media industry. As it has become harder to reap riches in television and film, companies are eager to spin gold from both their vast content libraries and to attract attention to their new offerings. Disney and Comcast have enjoyed considerable success doing this through their parks businesses, which have chugged along as reliable profit engines. Universal Studios has contributed more to Comcast’s profits over the past five years than either the broadcast network NBC or the Universal Pictures film studio, its corporate siblings. At Disney, the company’s theme-park division has generated a better return on assets than its film studio in four of the past five years. + +Media companies also see theme parks as a good way to cash in on demographic and economic shifts. Thanks to rapid growth in emerging markets, nearly three billion people over the next two decades will attain middle-class purchasing power; flush with disposable income, this tide of consumers is expected to generate huge new demand for recreational travel. Already, theme-park attendance numbers in Asia are growing at the fastest clip of any market in the world; if that trend continues, the Themed Entertainment Association, an industry group, predicts the market there could eclipse that of North and South America within four years. The scene outside Shanghai Disneyland suggests why: although the park does not open for more than a month, thousands flock to its tarp-covered gates each day in the hope of peeking in. + +It helps that media companies need not assume as much risk as they did in past decades of park investments. Many simply license their characters, stories and other intellectual property to local developers in exchange for a cut of gross revenues or other fees. That ensures a relatively steady stream of income regardless of whether the park is making money, thereby minimising the risks to licensors. Such deals typically give licensors less control over the final product and limit the potential return from a park project. But for firms such as Paramount and Sony which are just beginning to explore such ventures, this model has nevertheless proved popular. + +Companies with more theme-park experience prefer to take on more risk for the greater control and returns that a joint venture provides. In these deals, firms supply the intellectual property, design, management expertise and some cash in exchange for equity and fees. But they cede ownership of the park assets to a majority-shareholding local developer who then fronts much of the construction costs. Shanghai Disneyland, for example, depends upon one such arrangement. + +Even if theme parks have many media companies spellbound, there are hazards. Measly economic growth can make finance for new construction harder to obtain. And as parks tend to draw the majority of their visitors from close by, attendance figures rise and fall with local incomes. A full-blown recession could do even more damage; profits from parks tumbled at many big firms, including Disney, during the depths of the global recession in 2009. Companies must make certain that their soaring hopes for theme parks, unlike the towers and turrets within them, do not rise too high. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21698310-why-media-giants-are-betting-big-future-theme-parks-parks-recreation/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +What do the Foxes say? + +The success of Leicester City will be pored over for management lessons + +May 7th 2016 | From the print edition + + + +IN FOOTBALLING terms, Claudio Ranieri, an affable Italian, has found a way to turn water into wine. Mr Ranieri manages a club in England, Leicester City, which historically has not been very good. On May 2nd his team were crowned champions of the English Premier League, a competition more watched than any other on the planet, and reliably won—including in every one of the preceding 20 years—by one of four much bigger clubs. The Foxes had been 5,000-to-1 to win the title on the season’s opening day. + +Sports obsessives will spend the summer debating how the cunning Foxes did it—swift counter-attacks, regular interceptions and deep defence all helped on the field—and if their good form can be sustained. But Leicester’s triumph will also spark inordinate interest in the world of business, which has long looked to sport for lessons on management and leadership. Sir Alex Ferguson, a wildly successful former boss of Manchester United, has taught courses at Harvard Business School. Billy Beane’s use of statistics at the Oakland Athletics, a baseball team with limited means, was an early parable of the power of “big data”; Mr Beane now sits on the board of Netsuite, a software firm. Steve Peters, a psychiatrist who has worked with a range of elite athletes, runs programmes promising to help stressed business folk manage their “inner chimp”. It’s a fair bet that Mr Ranieri will be asked onto the corporate-speaking circuit next year, or urged to pen a book on leadership (“I, Claudio”, anyone?). + +He can certainly draw on several management themes to offer up lessons for the boardroom. Business leaders are routinely exhorted to learn from, and even celebrate, their mistakes. Walt Disney’s early bankruptcy is said only to have strengthened his resolve to succeed. Henry Ford called blunders necessary for achievement. And Bill Gates has declared success a much lousier teacher than failure. Mr Ranieri, who is 64, took over at Leicester last July and brought 30 years of experience as a manager. He had never won anything notable in England before, being known as a “nearly man” for finishing second in the Premier League when he coached Chelsea. One big criticism then was that he fiddled too much with his team choices, a trait that earned him the nickname “The Tinkerman”. At Leicester, however, he resisted meddling. It can be hard to know precisely what to change; Mr Ranieri, by design or good fortune, found the right thing to adjust. + + + +INTERACTIVE: Flying foxes - footballing pay and performance + +The club’s story will be seized on by management gurus as a reminder of an increasingly popular business theme: that the opportunities for smaller fry to emulate giants have got bigger, thanks to technology. Where it once took hefty budgets and in-house data centres for retailers like Walmart to analyse sales data and lure shoppers to out-of-town malls, for example, now cloud computing means that smaller firms can crunch data to draw likely buyers to their wares online. Leicester, too, adopted the approaches of the biggest football clubs in using new technology and analysing lots of data on how players perform. + +Mr Ranieri might also reflect that not succeeding in one area can be helpful—if you can then focus on doing better elsewhere. The team fared badly in cup competitions, but was then free to concentrate on winning league games. In business, too, avoiding distractions and focusing on the “core” is a well-worn management theme. Total, a huge French energy company, had hoped to get into gas production in America, but is now thankful it missed out. More deliberately another French firm, Kering, has withdrawn from general retailing in the past few years—selling off brands such as Printemps, Fnac and Conforama—and now specialises in far more lucrative luxury goods. + +Finally, there are the lessons to be reeled off from Mr Ranieri’s own relaxed management style. In training sessions he used an invisible bell—calling out “dilly ding, dilly dong”—to keep his team focused; he bought them all pizza when they performed well. The result was to cultivate a particularly strong sense of team spirit. Tech firms are well-versed in team-building tricks, using perks such as food, nap pods and idiosyncratic slang (“Googlers”, “Softies” and “Amazonians”) to bind employees together. As expectations and pressure grew, Mr Ranieri downplayed his team’s ambitions. Modesty in public can be shrewder than hyping up expectations. Plenty of unicorns will end up regretting claims that they are about to change the world. + +No “I” in Leicester + +There is another way of looking at Leicester’s triumph, however, and one that the self-deprecating Mr Ranieri might endorse. “The Halo Effect” (2007), a book on management delusions by Phil Rosenzweig, argued that great performance by a business often leads to managers being feted for their brilliance, just as poor performance sees them pilloried for their bad decisions. In truth, it is very hard to identify the sources of outperformance, and success is not necessarily the result of things a manager can control. Luck, in the form of a lack of injuries, played its part in Leicester’s success; so too did the shortcomings of rivals. It is easier to cultivate team spirit when you are winning. Mr Ranieri himself has not suddenly gone from good to great: he has been using his imaginary bell to decent effect throughout his career. + +The big test for Leicester will be if they can sustain their success. Being champions will bring a financial fillip: a prize of about £90m ($131m), which is a share of the £1.7 billion the league gets in broadcast income yearly. Other blessings will follow. Leicester will now also play (for a while) in the Champions League, generating more income. But unglamorous clubs have previously won the Premier League, only to revert to relative mediocrity. Blackburn Rovers triumphed in 1995, but now languish in a lowlier division; most fans, and players, will remain keen on the biggest clubs. Winning the league has gone far beyond most expectations. But if Leicester were to do it again, the Tinkerman really should get ready to lecture at Harvard. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21698059-leicester-city-management-lessons/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Emerging markets: The unloved bounce + +Buttonwood: A losing bet + +Bailing out Greece: Where are those buckets? + +Car loans: New engine + +Italian banks: Broad shoulders + +American infrastructure: Buy local + +Developing Bangladesh: How to spend it + +Free exchange: When life gives you lemons + +Bitcoin’s creator: Wright’s wrongs + + + + + +Articles Sections Next + +Emerging markets + +The unloved bounce + +The recovery in emerging markets looks fragile for all but a handful of countries + +May 7th 2016 | From the print edition + + + +IT IS not easy to have faith in the rally in emerging-market currencies that has taken place since February. The ones that have risen most in recent weeks are typically those—the rouble, the real and the rand—that had lost most ground since May 2013, when the emerging-market sell-off began in earnest (see chart 1). What is there to like about Russia, Brazil and South Africa, with their wilting economies and dysfunctional politics? + + + +The proximate causes of the rally are clear. One was the fading of fears for China’s economy. At the start of 2016 capital appeared to be fleeing China at a rapid rate, in a vote of no confidence. The yuan seemed in danger of losing its moorings against the dollar, raising fears of a round of competitive devaluations across Asia and beyond. Views changed around the time of the meeting of the G20, a club of big economies, in Shanghai in February. Informal pledges by the Chinese authorities not to let the economy slide were backed up by stimulus policies, including a big budget deficit and faster credit growth. Tighter capital controls stemmed the outflows from China. Prices of scorned commodities, such as iron ore, surged at the prospect of Chinese construction. Currencies of raw-material exporters rose too. + +A second trigger was a change of heart by the Federal Reserve. In December it raised its main interest rate for the first time in a decade and suggested four further increases were likely in 2016. It has since backed away from these hawkish forecasts. Real interest rates, measured by the yield on inflation-proof bonds, have fallen to 0.14%. The dollar has slumped against even rich-world currencies. No wonder the high yields on offer in Brazil, Russia and other emerging markets are so tempting to rich-world investors, says Kit Juckes of Société Générale, a French bank. + +The improved conditions for emerging markets may prevail for a while, but not indefinitely. China’s policy of loose credit only adds to its alarming debt pile (see article). The Fed will eventually resume tightening. Even so, there is a bit more to the emerging-market rally than just a favourable backdrop. + +To understand why, go back to May 2013, the start of the “taper tantrum”, when hints from the Fed that its bond-buying would soon tail off prompted a stampede out of emerging markets. Before the Fed’s shift their trade deficits had been growing, leaving them more reliant on foreign borrowing to fill the gap. So when the exodus got going, the hardest hit were economies that depended most on foreign capital. + +Jump forward to 2016, and the picture is very different. Emerging markets in aggregate are running a trade surplus. That is the case even if China’s bumper surplus is excluded (see chart 2). What is more, the countries whose trade balances have adjusted the most, Brazil and Indonesia, are among the best recent performers, says Paul McNamara of GAM, a fund manager. True, the improvement is the result of crushed demand for dearer imports, not a revival in exports. But this is a typical pattern of adjustment: imports fall first; exports recover later. + + + +Sceptics counter that there is little that links the countries whose currencies have bounced recently. Some are oil producers. Others export different commodities. A few do neither. Some have made painful changes. Many have skirted them. “Even the dogs have rallied quite hard,” sniffs another fund manager. + +The quest for a Teflon-coated emerging market is probably futile. If investors become chary of risky assets again, even those with half-decent fundamentals will get dumped. Still, some traps seem avoidable. China is one obvious snare. Renewed trouble in its economy would hurt commodity producers through lower prices, but probably will not lead to a further drop in investment in drilling and mining, which has already been crushed. At greater risk, perhaps, are the fairly rich economies that supply China with half-finished or finished goods—Singapore, South Korea and Taiwan—though all have ample protection in the form of trade surpluses and foreign-exchange reserves. + +A second concern is interest-rate increases in America. So few of them are expected that even a turn in a mildly hawkish direction by the Fed might give the dollar a lift. Countries with biggish current-account deficits, such as Colombia and South Africa, or big stocks of dollar debt, such as Chile, seem most vulnerable. Turkey is at risk on both counts, as well as from political upheaval, which caused the lira to slump this week. Manoj Pradhan of Morgan Stanley stresses a third potential pitfall: overly rapid credit growth. China, which has huge and still-growing debts, is Exhibit A. Malaysia, Thailand and South Korea may also face credit hangovers. They all have strong trade links with China, too. + +Once these traps are taken into account, there are just a handful of emerging markets to feel fairly sanguine about. Russia has already endured a deep recession. It has a cheap currency, a current-account surplus and a capable central bank. Better yet, with inflation likely to fade, interest rates there are expected to fall this year. + +India is a net commodity importer; it is tied only loosely to China’s economy; it has a smallish trade deficit and credit has been slowing for years, even if its banks are weighted down by souring corporate debts. Indonesia has similar merits. Mexico’s economy has been a let-down (in part because America’s economy also has), but it has fewer weak links than its peers. It is testimony to the still parlous state of emerging markets that such lukewarm investment cases are the best on offer. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698268-recovery-emerging-markets-looks-fragile-all-handful/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +A losing bet + +Hedge funds haven’t delivered on their promise + +May 7th 2016 | From the print edition + + + +HEDGE funds employ the cleverest people in the world to exploit the opportunities that other managers miss. That is why they deserve their high fees—or so the story goes. + +That story is getting harder and harder to believe. In the first quarter of the year the average fund lost 0.8% after fees, according to Hedge Fund Research, an index provider. That follows a loss of 1.1% for the average fund in 2015, and a gain of just 3% in 2014. In other words, the average investor has earned a cumulative 1% since the start of 2014. + +While clients have made do with the crumbs, the managers are still dining well. They get annual management fees of 2% or so, however the funds perform. Those that have done well have earned performance fees on top. All told, managers will have earned a lot more than their clients over the past couple of years. + +Market conditions have been difficult for the hedge-fund titans. Sudden shifts between “risk-off” and “risk-on” markets, such as the market turnaround in February, are very hard to time. Official intervention in the markets, either through central banks or regulatory action, can also blindside the savviest investors. In January Martin Taylor closed down his Nevsky Capital fund, citing economic nationalism, the poor quality of data in China and India, and less transparent markets as reasons for his decision. + +Dan Loeb, who runs the Third Point hedge fund, told clients in a letter in late April that recent months have seen “one of the most catastrophic periods of hedge-fund performance that we can remember”. Mr Loeb says many hedge funds were convinced that China would be forced to devalue the yuan early this year; it didn’t. Others backed big technology stocks like Apple and Netflix; they have underperformed. And some fund managers have lost out because of events in the pharmaceutical sector: the collapse of the Allergan-Pfizer merger and the plunge in Valeant’s share price. + +Individual funds have their ups and downs. It is unfair to judge fund managers over the short term. So what about the longer run? In 2007 Warren Buffett, the investment guru who heads Berkshire Hathaway, a conglomerate, struck a $1m bet with Protégé Partners, a fund of hedge funds, over whether a hedge-fund portfolio would beat the S&P 500, after fees, over the subsequent ten years. As the chart shows, with around 19 months to go, Mr Buffett seems almost certain to collect. He drummed the point home at Berkshire’s recent annual meeting, saying, “There’s been far, far, far more money made by people in Wall Street through salesmanship abilities than through investment abilities.” + +Defenders of hedge funds would say that the S&P 500 is not the best benchmark. Instead of aiming for the highest total return, managers use their skill to limit risk and deliver a more consistent performance. Even in this respect, however, hedge funds have lagged a long way behind a typical institutional portfolio comprising 60% American equities and 40% Treasury bonds. + +It is not too difficult to figure out why. In a world of low interest rates, low bond yields and low dividends, the fees charged by hedge funds simply take too big a bite out of gross returns to leave much for clients. The golden age of hedge funds was in the 1990s, when the likes of George Soros delivered double-digit returns every year. Pension funds and endowments still have a dim memory of those days; that is why they hope hedge funds will act as a deus ex machina and deliver the outsize returns needed to fund the promises they have made. They have been repeatedly disappointed; some, such as CalPERS, a giant Californian pension fund, have liquidated all their investments in the sector. + +All the statistics in this article refer to the average hedge-fund return; of course, there will always be managers who perform much better than average. But how to spot them in advance? If it were easy, then why would anyone give money to below-average managers? It will always be possible to find managers who have earned exceptional returns in the past, just as some people actually did back Leicester for the English football title at 5000-to-1. That doesn’t mean you’d pay good money for the same punters’ tips on the Kentucky Derby. + +There is no doubt that many hedge-fund managers are extremely clever and work diligently at ferreting out profitable opportunities. But are there enough opportunities to sustain an industry with 10,000 individual funds and $2.9 trillion of assets? Nowhere near. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698273-hedge-funds-havent-delivered-their-promise-losing-bet/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bailing out Greece + +Where are those buckets? + +Brinkmanship over emergency loans resumes + +May 7th 2016 | From the print edition + +The script seems familiar + +THE tagline of the film “My Big Fat Greek Wedding 2”, which was released in March, is “People change. Greeks don’t.” Whether any euro-zone finance ministers have seen the film, let alone detected any resemblance to their ongoing talks with the Greek government, is unknown. But the renewed bickering over the terms of Greece’s latest bail-out, complete with threats of a snap election if its creditors don’t give more ground, has the air of a duff sequel. + +Greece badly needs the next dollop of the €86 billion ($99 billion) bail-out creditors promised it last summer, in exchange for promises of austerity and reform. But it will not get the money until the creditors complete a review of its progress, which has been dragging on since October. The government has scraped together enough cash (by raiding independent public agencies) to pay salaries and pensions in May, perhaps even in June. But by July 20th, when a bond worth over €2 billion matures, the country once again faces default and perhaps a forced exit from the euro zone. The threat of Grexit is not exactly back; it never really went away. + +With a referendum on Britain’s EU membership in June and a possible flare-up of the refugee crisis as summer approaches, the last thing Europe needs is another Greek drama. The European Commission is thus in a mood for compromise. It emphasises that negotiations are “99%’’ complete. But the other creditor, the IMF, is less forgiving. With tax arrears in Greece rising and reforms constantly delayed, the fund has little faith that the programme’s target of a 3.5% primary budget surplus by 2018 can be achieved. It wants Greece to make a contingency plan to raise more money or cut spending further before it approves the next instalment of the bail-out. + +In April a meeting of euro-zone finance ministers, intended to approve Greece’s fiscal plans along with the pending disbursement, was cancelled at the last minute. Although negotiators had more or less agreed on a package of €5.4 billion (3% of Greek GDP) in austerity measures, they hit a deadlock over an extra €3.6 billion in contingency measures to be adopted if the primary surplus does not reach 3.5%. The Europeans seem content to have a woolly plan B, but Christine Lagarde, head of the fund, says it will “have to be legislated upfront, have to be credible, and have to be triggered with a degree of automaticity”. Greece’s finance minister, Euclid Tsakalotos, says this is constitutionally impossible. + +In fact the biggest constraints are political, not legal. The contingency package would probably involve further cuts to pensions, a direct assault on the base of the ruling Syriza party. Alexis Tsipras, the prime minister, faces a revolt by 53 of his own MPs, led by Mr Tsakalotos. Greece’s main opposition party, New Democracy, now leads in the polls and has called for snap elections. It says it will vote neither for the €5.4 billion austerity package (because it is too tax-heavy and reform-light) nor for additional contingency measures. + +The meeting of euro-zone finance ministers has been rescheduled for May 9th. Before that, negotiators on both sides will need to agree on the contingency plan. If they do so, the deal will have to be approved by the Greek parliament by May 24th, when the next finance ministers’ meeting takes place. If Mr Tsipras strikes a deal but cannot get it through parliament, a new election is likely. And several euro-zone governments must get parliamentary approval to sign off on any disbursement of bail-out funds. The potential pitfalls, in other words, are legion. + +The irony is that the IMF, for all its current intransigence, is the more forgiving of Greece’s creditors. It wants to reduce the primary-surplus target to 1.5% and to write off some of Greece’s debt. Such concessions are politically indigestible for euro-zone governments, especially Germany’s. The most likely solution, as always, is a fudge: an agreement that gives creditors just enough confidence to release the next slug of cash, without putting Greece’s finances on a sustainable footing or resolving the most heated disputes. + +Deal or no deal, election or not, the economy is struggling. Banks are still zombies; many structural reforms (such as to the judiciary, labour and product markets) have been put off; and private investors continue to give Greece a wide berth. Yet other euro members do not want to talk about debt relief. Greeks are not the only ones, it seems, who do not change. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/21698206-brinkmanship-over-emergency-loans-resumes-again-threat-grexit-never-really-went-away/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Car loans + +New engine + +Fintech firms find a way to finance purchases of secondhand cars + +May 7th 2016 | New York | From the print edition + + + +OF THE 3.1m Americans who bought a new car in the last three months of 2015, 86% of them took out a loan to do so, according to Experian Automotive, a research firm. More car loans are issued in America than mortgages. The total amount outstanding on them is almost $1.1 trillion—well in excess of credit-card debt, and almost as much as the stock of student loans. But there is one part of the car market where credit is scarcer: only 55% of the 5.6m who bought secondhand cars in the fourth quarter of 2015 received a loan. + +Whereas sales of new cars get most of the attention, secondhand cars generate twice as many transactions, worth 50% more in total. Stereotypical small car-dealers, with their oily manner and shouty television advertisements, are being displaced by big chains, such as CarMax, with transparent prices and standards. These outfits are able to offer credit, since they can provide accurate valuations, and thus be sure that the car in question is adequate collateral for a loan. Indeed, CarMax makes 40% of its profits from lending. + +Every year, however, more than 10m cars are sold in America by one individual to another. Such transactions are much harder to finance. Lenders have little way of knowing whether the money is actually being used to buy a car, let alone whether the car is worth the amount to be borrowed. Credit unions will occasionally finance such transactions, but only for buyers with very high credit ratings and only after cumbersome procedures to guard against fraud. Both buyer and seller are required to show up at the credit union to sign the relevant documents in person. + +There are few market failures in America that do not now have fintech firms clamouring to correct them, and used-car loans are no exception. An online marketplace called Shift opened for business in San Francisco a little over a year ago and now operates in six cities. Rather than buy and resell cars, Shift greases the wheels of “peer-to-peer” transactions for a fee without ever owning any cars. (A rival startup called Beepi offers a seemingly similar service, but does take ownership of the cars, making it more like a web-only version of CarMax.) Shift picks up cars from sellers, checks what shape they’re in, photographs them and advertises them on its website at a price it sets. When a buyer is found, it handles all the paperwork. It even delivers the car to potential buyers for a test drive. + +The extensive inspection allows Shift to assess the car as collateral for a loan, and by handling the paperwork itself it reduces the risk of fraud. That allows Shift to offer loans at rates of 4-9%—more or less what a conventional dealer would offer, but without the same incentive to inflate the sales price. The innovation may help America’s mountain of car loans grow even taller. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698276-fintech-firms-find-way-finance-purchases-secondhand-cars-new-engine/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Italian banks + +Broad shoulders + +A catastrophe is averted, but there’s still trouble ahead + +May 7th 2016 | MILAN | From the print edition + + + +WHEN Italian financial institutions created Atlante, a €4.3 billion ($4.9 billion) bank-rescue fund, at the government’s behest last month, they did so partly to guarantee a share sale by Banco Popolare di Vicenza (BPVi), the country’s tenth-biggest bank. They also hoped that Atlante’s mere existence would encourage other investors to subscribe. Fat chance. On May 2nd the stock exchange said too few had signed up for its stockmarket listing to proceed. Atlante (Italian for Atlas, a mythical giant who supported the sky) will underwrite the whole €1.5 billion issue, leaving it the owner of almost all of the troubled lender. + +Atlante’s intervention has staved off an immediate crisis: after November’s botched public bail-out of four small banks, in which retail investors lost money, failure to raise new capital for BPVi was unthinkable. UniCredit, Italy’s biggest bank, will be especially relieved, having sidestepped an ill-advised commitment to underwrite the issue in full. + +BPVi’s flop bodes ill for Banca Veneto, another smallish bank which plans a €1 billion capital increase in June. But Veneto’s predicament is less dire; and Intesa Sanpaolo, one of Italy’s stronger banks, has syndicated its underwriting of the rights issue, which UniCredit failed to do for BPVi’s. Veneto’s chairman says he does not expect to need Atlante’s help. + +The fund’s biggest test of strength will be denting Italy’s gigantic pile of bad debts. Gross non-performing loans amount to €360 billion, of which €196 billion are especially troublesome. Mediobanca, an investment bank, reckons that Atlante (bulked up by leverage, and working alongside a new government guarantee scheme) could absorb €21 billion. Equita, another, suggests the fund could buy up to €33 billion. + +Atlante’s stamina will depend partly on how Veneto’s capital increase goes: if the fund chips in a lot, it will have less left over for bad loans. A bankruptcy reform to speed up credit recovery, passed on April 29th, may help by making duff loans a little more valuable. + +Questions also remain over how the fund will be governed, how it will turn round the banks it supports and how it will sort out the loans it acquires. The European Banking Authority is due to carry out further “stress tests” on the banks it supervises this summer, to assess their resilience to economic shocks. Italians will hope it puts no more weight on Atlante’s shoulders. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698277-catastrophe-averted-theres-still-trouble-ahead-broad-shoulders/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +American infrastructure + +Buy local + +America increasingly relies on state governments to fund public investment + +May 7th 2016 | DES MOINES | From the print edition + + + +IN THE suburbs of Des Moines, Iowa, yellow diggers slowly knock chunks out of a tired-looking bridge. Beneath lies Interstate 80, one of America’s economic arteries, which traces the route of the Lincoln highway—the first road to cross America—from New York to San Francisco. The bridge impedes traffic both on the highway—it is too low—and over it—it is too narrow. Its replacement will be a third wider, making room for cycle lanes and more traffic, and six inches higher, allowing bigger lorries to pass beneath. The diggers are out across Iowa, which embarked on a five-year programme to upgrade its bridges and highways in January. + +Elsewhere, however, the diggers sit idle. America’s government invests much too little in infrastructure. A study in 2013 by the American Society of Civil Engineers claimed that additional spending of $1.6 trillion, in 2010 dollars, is needed by 2020 to bring the quality of the country’s infrastructure up from “poor” to “good”. Roads are a particular problem: over the past decade, America’s roads have fallen from seventh to fourteenth in the World Economic Forum’s rankings of the quality of infrastructure. Part of the problem is that the federal tax on petrol (gasoline), which provides most of the funding for federal spending on roads, has been stuck at 18.4 cents per gallon since 1993. Over that period the price of construction materials and the wages of construction workers have both risen by more than 75%. + +Happily, the federal government is responsible only for about a quarter of spending on highways. States are keener to raise local taxes on petrol: 12 did so in the year to January. Iowa’s rise was the sharpest. Since last year Iowans have paid 31 cents per gallon to the state, up from 21 cents per gallon—a rate set in 1989. Most states tax by the gallon and so have also benefited from the falling oil price, which has boosted petrol sales. Nationally, they are up by 3% on a year ago. + +Since 2013 state and local governments’ net investment (ie, after depreciation) is up by about a quarter. In contrast, federal net investment, which was barely positive in 2013, is now negative, meaning that Congress is not even spending enough to maintain what it has. In the aftermath of the financial crisis, states cut investment to balance their budgets, while the federal government upped its spending as part of a stimulus program. Now the reverse is true: state and local investment adds to growth, while falling federal investment is a drag on it (see chart). + + + +Investment by Iowa’s state government rose by 7% last year, according the National Association of Budget Officers. The state will raise about $215 million from its petrol-tax increase in 2016, says Stuart Anderson of the Iowa Department of Transportation. There is less political gridlock than in Congress. Even so, getting the petrol tax up took more than a decade of studies and consultations. And needs remain: addressing all the state’s infrastructure problems would require an increase five times as big. + +The federal government has made some progress. In late 2015 Congress reached a deal to fund highway spending until 2020, having previously relied on a series of short-term compromises. This encouraged states to invest by removing the risk that federal funds would suddenly dry up, causing projects to be cancelled, says Mr Anderson. The deal also provided some new cash—the White House says road funding will increase by 4%—but, bizarrely, paid for this by raiding the capital of the Federal Reserve. + +Further petrol-tax rises are scheduled for the next 12 months in Michigan, Nebraska and Washington. Politicians in other states, including Alabama, Hawaii and Louisiana, are considering raising their levies this year. In spite of this progress, however, local petrol taxes still have the same problem as the federal one: they tend to be fixed in nominal terms, such that inflation erodes their value over time. As a result, politicians must burn political capital just to stand still. And unrelated problems may yet jeopardise local investment: slowing growth in other local tax receipts is raising a “yellow flag” for state budgets, according to the Rockefeller Institute, a think-tank. + +That means Congress must find a way to finance more federal investment, especially once the latest deal expires in 2020. Hillary Clinton, the front-runner for the presidency, promises a modest $275 billion increase in spending. More will be needed, or America’s roads and bridges will continue to crumble, diggers or not. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698301-america-increasingly-relies-state-governments-fund-public-investment-buy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Developing Bangladesh + +How to spend it + +An ambitious attempt to work out the best use for scarce resources + +May 7th 2016 | From the print edition + +Sifting through the options + +EVERY government minister, senior civil servant and charity official is familiar with the pitch. Spend money on my project, says the supplicant: it will bring such large benefits that you will actually save money in the long run. At this, the official sighs, knowing that another supplicant with an equally bold pitch is waiting outside. How can he pick among competing pleas for bridges, IT systems, deworming medicines and a thousand other things? + +Next week, at a conference in Dhaka, the Copenhagen Consensus will try to answer that question. For more than a decade the think-tank has assessed the global costs and benefits of different development schemes. Now it has commissioned studies, mostly by academics at BRAC, a local charity, into 70-odd activities in Bangladesh. Better drains are weighed against cash transfers to the poor and research into more nutritious rice. The idea is to give a tailwind to the best ideas and a headwind to the worst, says Bjorn Lomborg, who runs the Copenhagen Consensus. The results are clear—indeed, rather too clear. + +Most of the interventions score between one and 20, meaning that a dollar spent on them will yield $1-20 of economic, social and environmental benefits. A stiffer, better-enforced tobacco tax would supposedly repay at a ratio of eight to one, for example, whereas expanding village courts would yield 18 to one. A few interventions, including unconditional handouts of cash to poor Bangladeshis and treating and immunising against cervical cancer, score less than one. + +The winner, yielding a fantastic $663 in benefits for every $1 spent, is digital procurement. Bangladesh’s government requires most would-be suppliers to submit bids in person. That is a costly nuisance for them; it also encourages corruption. Powerful bidders intimidate weaker ones and even employ thugs to seize rivals’ bids—a phenomenon known as “tender snatching”. One study suggests that e-procurement cuts the price of contracts by about 12%. Because switching to online bids is fairly cheap, the assumed returns are huge. + +Weighing the costs and benefits of diverse projects is astute, and not only for poor countries like Bangladesh or Haiti (next in line for the Copenhagen Consensus treatment). Cost-benefit analysis is common in the West, although it is often applied to just one project—a high-speed railway, say—rather than a menu of options. But there is a hitch. “Cost-benefit analysis gives you a number,” says Munshi Sulaiman of BRAC, who contributed a study of anti-poverty programmes. “It doesn’t tell you how much confidence you can have in that number.” + +Some projects have been rigorously analysed. A “graduation” programme for the very poor, which combines training with gifts of livestock, has been subjected to several large randomised controlled trials. It comes out comparatively badly, with returns of two to one—but at least the benefits are certain. For other projects the evidence is weaker. Stimulating the minds of stunted children is assumed to repay at 18 to one because a small Jamaican programme that began in 1986 got good results. The e-procurement study extrapolates from the experience of Bangladesh’s local engineering department. + +Ahmed Mushfiq Mobarak of Yale University, who has experimented with encouraging Bangladeshi farmers to migrate to cities during the lean season, thinks it unfair to compare carefully tested projects to others where the cost-benefit numbers are “essentially made up”. Binning reliable, low-scoring projects for untested high-scoring ones would be foolish. But if the upshot is more scrutiny for promising projects, the exercise is useful. And almost anything would be better than spending money on projects because their backers can tell a good story, or because they are supported by powerful politicians. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698302-ambitious-attempt-work-out-best-use-scarce-resources-how-spend-it/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +When life gives you lemons + +The economics of digital music favour streaming. Artists are learning to adapt + +May 7th 2016 | From the print edition + + + +THE release of Beyoncé’s newest album (a genre-jumping tour de force entitled “Lemonade”) was carried out with the precision of a military operation. Manoeuvres began in February, with the release of a single and a performance at the Super Bowl. Phase two commenced in April, when the complete album was rolled out across various platforms in stages, alongside a short film and the launch of a worldwide promotional tour. Beyoncé’s campaign is about more than showmanship. Like other artists, she is attempting to work out the answer to a difficult question: how to maximise the money made selling digital files that many listeners can easily (if not always legally) obtain free of charge. + +Money earned by selling music has declined steadily from a peak in the late 1990s, the salad days of the compact disc, to the early 2000s. Though Apple used the popularity of the iPod to reaccustom people to paying for music, in the form of low prices for digital downloads, sales of physical recordings have fallen faster than digital ones have grown. The era of digital downloads in any case proved short: in 2015, for the first time, more money was spent on paid subscriptions to music-streaming services. + +The economics of digital music seem to favour streaming. A typical user values the music of a few favoured artists highly—highly enough to pay for their albums (and perhaps also for concert tickets and merchandise). That user may also enjoy songs by other performers, but not enough to shell out the $1.29 it costs to download the music legally. Rather than reduce the money earned on each sale by cutting the typical song price, the music industry has instead chosen to lose sales, often to piracy. + +Streaming offers a way to pick up those pennies from the pavement. By bundling thousands of songs together and offering access to them on demand, streaming services like Spotify have created an appealing product. Many services provide free, ad-supported streaming while also offering premium subscription packages; both Tidal’s standard service and Spotify’s ad-free premium service cost $10 per month—less than the $17.99 it costs to buy “Lemonade” as a digital download. IFPI, an international recording-industry trade group, estimates that there are now 41m fee-paying subscribers worldwide, up from 8m in 2010. Streaming services add value in other ways, as well. Tidal offers a more expensive service providing high-fidelity audio, and all services compete for users by seeking to build the best algorithms, which tailor playlists to users’ tastes. + +Each time a user listens to a song, the artist earns a small fee: about $0.007 on average at Spotify, for instance. This income pales in comparison with the windfalls that sales of physical albums used to generate. In 2013 Thom Yorke, Radiohead’s lead singer, declared streaming services to be “the last desperate fart of a dying corpse”. Yet recent research suggests that streaming is not in itself diminishing artists’ earnings. Although it does displace some digital sales, the shift of other listeners from illegal downloading to streaming more than makes up for the loss. + +As streaming grows, artists are pursuing several broad strategies to boost what they earn. Most rely on cross-selling: streaming helps build demand for live performances, for instance, which provide nearly all the money earned by artists just starting out and as much as half of the income for big acts like Beyoncé. + +Other artists focus on boosting album sales. Some, like Adele, eschew streaming, relying instead on older fans who are still happy to buy CDs. Artists occasionally market their album as an artistic whole (rather than as a collection of tracks that can be slotted into streaming-service playlists); most of the songs on “Views”, a new album by Drake, a Canadian rapper, cannot be purchased as individual tracks. Adding bells and whistles to the album can help, too. Many come with digital books or videos; those who purchase “Lemonade” can also download the accompanying film. Artists are also selling old-fashioned records, which appeal both to nostalgic baby-boomers and to young hipsters who see some cachet in vinyl. Last year the industry earned more selling vinyl records than it did from ad-supported streaming services. + +Against the current + +The most marketable artists increasingly follow a third strategy, of deeper involvement with streaming services themselves. Tidal was set up by musicians, including Beyoncé and her husband Jay-Z, a rapper; part of the service’s pitch to users is that it pays out a bigger share of its earnings to musicians than rivals. + +Popular acts are also learning to play online music outlets off against each other by auctioning off the exclusive right to stream or sell their music, a practice called “windowing”. Beyoncé’s last album, released in 2013, was available only on Apple’s iTunes for a week after its debut; “Lemonade” was exclusive to Tidal for a day. In 2014 Taylor Swift pulled her music from Spotify and gave exclusive streaming rights to Apple; Prince did something similar with Tidal, which saw sales jump when he died on April 21st. + +Although windowing provides artists with a way to capture more of the money made selling their music, it complicates life for consumers. When services compete on the basis of catalogues, that dispels the dream of having all of the world’s music available in one place; users must instead decide whether to sign up for multiple services or miss out on some artists. Consumers may ultimately gravitate to one dominant service, with which all musicians feel compelled to do business; or competing services could co-operate to share artist catalogues. Yet while that might satisfy users, artists might balk at the concentration of market power in streamers’ hands (and regulators might take an interest). More likely still, technology will strike the next blow, delivering new ways for users to access digital music—and leaving artists and record companies scrambling to adapt once again. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698274-economics-digital-music-favour-streaming-artists-are-learning-adapt-when/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bitcoin’s creator + +Wright’s wrongs + +The quest to find Satoshi Nakamoto continues + +May 7th 2016 | From the print edition + + + +ANOTHER Satoshi has bitten the dust. On May 2nd Craig Wright, an Australian entrepreneur, published on his blog what he claimed was proof that he is Satoshi Nakamoto, the mysterious creator of bitcoin, a cryptocurrency. Within 90 minutes the post had been debunked on Reddit, an online forum. He then said that he would present “extraordinary proof” that he is indeed Mr Nakamoto by moving some bitcoin from accounts thought to be under control of the currency’s creator. But on May 5th he wrote on his blog that he did not have the strength to continue trying to prove his identity, prompting most to add his name to the long list of false leads in the hunt for Mr Nakamoto. + +In October 2008 somebody who went by that name posted an academic “white paper” online, outlining the design of a cryptocurrency the author dubbed bitcoin. The following January the same person switched on a system like the one outlined in the paper. But nobody, not even his closest collaborators, ever met Mr Nakamoto in person. They communicated with him only electronically. And a couple of years into the project, he stopped joining in. “I have moved on to other things,” he wrote in April 2011. Except for a few messages, most of which are believed to be hoaxes, he has not been heard from since. + +The invention that underlies the currency, called the “blockchain”, is widely considered brilliant. That Mr Nakamoto has not basked in its glory suggests an overwhelming desire for privacy. Nor does Mr Nakamoto seem to be motivated by fortune: all bitcoin in circulation are now worth about $7 billion. Mr Nakamoto is thought to hold more than 1m bitcoin, worth about $450m at current rates (the currency’s value has recovered a bit after a steep fall—see chart). + +Mr Nakamoto’s reclusiveness has given rise to a cottage industry of Satoshi-hunters. In 2014 Newsweek, an American magazine, identified a man called Dorian Satoshi Nakamoto as the real Satoshi, but he turned out not to be. In December 2015 it was Mr Wright’s turn to be outed: hackers leaked some of his e-mails and documents. But holes soon started to appear in that story, too. SGI, a maker of supercomputers, for instance, denied that it had ever done business with one of his firms, Cloudcroft. After a raid by Australian tax officials on his house in Sydney, many came to believe that the entire story was an elaborate hoax, perhaps one staged by Mr Wright himself. + +Soon afterwards Mr Wright moved to London, where one of his companies has an office, but kept silent—until late March, when his public-relations agency contacted three media outlets, including The Economist, saying that Mr Wright wanted to refute claims that he had made the story up and to offer cryptographic proof that he is indeed Mr Nakamoto. Although he gave us a demonstration that seemed to show that he is in possession of cryptographic keys which only Mr Nakamoto should have, important questions remained. In particular, Mr Wright was unwilling to use his keys to sign digitally a message provided by us, which would have been stronger, although not absolutely watertight, evidence that he is Mr Nakamoto. + +Others were convinced by his claim, however. Gavin Andresen, Mr Nakamoto’s successor as the leading developer of bitcoin’s software, confirmed in an interview that he had met Mr Wright and thought his proof was valid—an endorsement that lent credence to his claim. + +Blog jam + +This week Mr Wright published a blog post which he had promised would not only describe the proof in detail, but also provide data to allow it to be independently verified. But the post turned out to be an exercise in obfuscation: he laid out a very complicated way of proving his identity and provided as cryptographic proof a string of numbers that is publicly available. + +This bungled self-outing provoked head-shaking among bitcoin gurus: if Mr Wright was indeed Mr Nakamoto, surely he could provide more convincing evidence? Mr Andresen, too, was flabbergasted by the blog post and later said that it was a mistake to endorse Mr Wright’s claim before reading it. + +Faced with much ridicule, Mr Wright backed out. “I believed that I could do this,” he wrote in a new post. “I believed that I could put the years of anonymity and hiding behind me. But, as the events this week unfolded and I prepared to publish the proof of access to the earliest keys, I broke.” + +The most obvious explanation for Mr Wright’s erratic behaviour is that he is indeed an imposter—and does not have the access to Mr Nakamoto’s keys. But things may be more complicated. One theory holds that Mr Wright was only one of a group of inventors of bitcoin. Ian Grigg, another bitcoin expert, recently wrote: “It is true that Craig is the larger part of the genius behind the team, but he could not have done it alone.” Two possible members of that team, Hal Finney and Dave Kleiman, have died. + +In other words, the Satoshi saga will go on. In the meantime the bitcoin community remains divided community into two competing camps with different views about how the currency should evolve. One side wants to keep it smallish and pure; the other is pushing for it to grow rapidly, even if this means turning it into something more like a conventional payment system. The controversy has dragged on for months because bitcoin lacks institutions to reach and impose a decision. + +The “civil war”, as some call it, has already slowed bitcoin down, says Jeff Garzik, another influential developer and co-founder of Bloq, a bitcoin startup. If the strife continues, another cryptocurrency may well supersede bitcoin—in which case the effort to establish Satoshi’s true identity will become academic. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698294-quest-find-satoshi-nakamoto-continues-wrightu2019s-wrongs/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Robotic surgery: Who wields the knife? + +Genes and disease: Encore une fois + +Quantum computing: Now try this + +Animal behaviour: Time and motion study + +Matrimonial harmony: Count me in + +Matrimonial harmony: Technology correspondent’s job + + + + + +Articles Sections Next + +Robotic surgery + +Who wields the knife? + +A machine carries out an operation almost unaided + +May 7th 2016 | From the print edition + + + +THEY don’t drink, they don’t get tired and they don’t go on strike. To hospital managers, the idea of robots operating on patients without human intervention is an attractive one. To patients, though, the crucial question is, “are they better than human surgeons?” Surgery is messy and complicated. A routine operation can become life-threatening in minutes. + +Such considerations have meant that the role of robots in operating theatres has been limited until now to being little more than motorised, precision tools for surgeons to deploy—a far cry from the smart surgical pods and “med-bays” of science fiction. But a paper published this week in Science Translational Medicine, by Peter Kim of the Children’s National Health System in Washington, DC, and his colleagues, brings the idea of real robot surgeons, operating under only the lightest of human supervision, a step closer. Though not yet let loose on people, it has successfully stitched up the intestines of piglets. + +To build their robodoc, dubbed the Smart Tissue Autonomous Robot (STAR), Dr Kim and his team fitted a robotic arm with an articulated suturing tool and a force sensor to detect the tension in the surgical thread during the operation. They equipped the arm with cameras that could create a three-dimensional image, to guide it as it deployed the tool, and also a thermal-imaging device to help distinguish between similar-looking tissues. A computer program written by the team controlled the arm. This had a repertoire of stitches, knots and manoeuvres that permitted it to plan and carry out a procedure, known as anastomosis, which involves sewing together two parts of a bodily tube. + +No pig in a poke + +Before each of the trial operations, the team anaesthetised a piglet and opened its abdomen to expose part of its small intestine. They then severed this and highlighted pertinent areas with fluorescent dye, to help guide the arm. Under a surgeon’s supervision, STAR sewed the piglet’s gut together again. In the four operations reported in the paper it carried out about 60% of the procedure without human intervention, and the rest with only minor adjustments to its stitches. Since the team submitted their results for publication, however, they say STAR has successfully completed the entire process unaided. + +Comparing STAR’s work with that of experienced surgeons operating both with and without the assistance of existing robotic tools, Dr Kim and his colleagues reckoned STAR’s stitches were more evenly spaced and the sutured gut less leaky. None of the pigs suffered complications. + +STAR did, it is true, take much longer than a human surgeon would to create the suture. It averaged 50 minutes for the operation, whereas a person would take about eight. But that will surely get faster. And even if STAR never quite matches a human being at work for speed, the better final product it seems to deliver would, if translated into regular clinical practice, reduce readmission rates. + +For now, STAR remains a tool rather than a truly autonomous agent. But such autonomy is probably not far away. Dr Kim hopes, for example, that a souped-up version will soon be able to remove an appendix without any assistance from doctors. + +STAR’s existence does, though, highlight two questions being raised more and more in what is an increasingly robotised society. These are: “will people trust robots with their lives?” and, “who is liable if something goes wrong?” + +The answer to the first will probably depend on the level of supervision the machines are subject to. It would not take much, for example, to turn airliners into drones, but passengers are reassured by the presence of a flight crew, so this is unlikely to happen soon. The same will probably be true of surgical robots, however good they become. In answer to the second, the lawyers are already circling. Intuitive Surgical, a maker of surgical robots based in Sunnyvale, California, has been on the receiving end of lawsuits alleging (which the firm denies) that surgeons were inadequately trained to use its machines or that the robots were defective. Machines may get the better of humans in the operating theatre, but the courtroom will also determine how fast they spread. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21698220-operations-performed-machines-could-one-day-be-commonplaceif-humans-are-willing/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Genes and disease + +Encore une fois + +The genomic era arrives. And this time it’s probably real + +May 7th 2016 | From the print edition + + + +WHEN the DNA sequence of the human genome was revealed in 2000, many people expected it to start a revolution. Researchers would be able to discover the genes that caused or influenced diseases. And drug companies would be able to use that knowledge to create better medicines. Until recently, though, it has been a case of “revolution postponed”. The flood of promised discoveries has been more like a trickle. + +Much of the reason for the unfulfilled promises was naivity about how straightforward the link between different versions of genes and particular diseases would be. But that naivity has gone, and the fact that complex illnesses often have contributions from large numbers of genes is now recognised. This recognition, plus better computing and sequencing power, mean researchers are indeed beginning to pick the relationships between genes and disease apart. + +In January, for example, a group at the Broad Institute in Cambridge, Massachusetts said they had homed in on most of the genes involved in schizophrenia, and thus had a hypothesis for a mechanism that might be causing it. This week it is the turn of breast cancer, as the most comprehensive analysis yet of mutations related to this condition is published in Nature. + +The team that did the analysis, led by Serena Nik-Zainal of the Sanger Institute in Cambridge, England, sequenced the genomes of cells from 560 tumours. These, says Dr Nik-Zainal, proved vastly different from the genomes of healthy cells from the patients involved, for they had generally acquired thousands of mutations. That is not surprising. Early mutations in the development of a tumour often involve genes involved in DNA repair. Once this has happened other mutations accumulate. But all these secondary mutations make it hard to sift out the ones which are clinically relevant. To do so you need to compare lots of samples from different people, and thus see which mutations some of them have in common. + +That, Dr Nik-Zainal and her colleagues did. They also found mutations that were known to indicate damage from exposure to ultraviolet light (perhaps from too much sunbathing), smoking and other risk factors. This study makes it possible, on the basis of genetic similarities, to cluster breast cancers into different types. In essence, even though their symptoms are similar, these groups are different diseases. It is therefore likely that they will respond differently to particular treatments. The next stage is to see which treatments work best on which clusters. + +Genomics is already having an impact on the treatment of cancers such as this. Foundation Medicine, in Cambridge, Massachusetts, offers a test for 300 genes that are often mutated in solid tumours. This lets oncologists try to match treatments with patients. In the future, DNA from patients’ tumours is likely to be sequenced completely for diagnostic purposes. + +The arrival of genomics as a science of clinical significance was further underscored by AstraZeneca’s announcement on April 21st that it would form a collaboration to sequence 500,000 samples taken during clinical trials it has conducted over the years. This British-Swedish drug firm says it plans to see 2m genomes so studied over the next decade. + +One of its main partners in this endeavour is Craig Venter, a man who led one of the human-genome sequencing projects that resulted in the announcement in 2000. Dr Venter, now the boss of a genomics firm called Human Longevity (HLI), which is based in San Diego, said at the launch of the collaboration, “you can’t tell much from a handful of genomes. We needed large numbers of genomes to find small differences.” + +He should know. HLI has compiled a list of the common variants in the human genome. The firm needed 10,000 genomes to pick these out. Larger numbers than this will therefore be required to notice rare and ultra-rare variants that may or may not be associated with diseases. Dr Venter reckons that to discover all of the genetic variation which human beings display, 10m genomes will need to be sequenced. + +Variations on a theme + +Of course clinical data, too, are needed to work out what those variants all mean.AstraZeneca has these for its trial participants. Genomics England, part of Britain’s Department of Health, has clinical data too. It intends to sequence 100,000 whole genomes from consenting patients. And other pharmaceutical companies are also looking to form collaborations with sequencing groups such as HLI and Genomics England. + +It all bodes well for the future of genome-based diagnosis. A report published in 2013 found that nearly a third of drugs in clinical development are associated either with a known DNA variant or with a variation in the structure of a specific protein, ultimately traceable to DNA. The presence in, or absence from, a patient of such a variant allows drugmakers to know whether their products are likely to work in that individual. A new era of genome-based medicine is set to arrive. Again. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21698229-genomic-era-arrives-and-time-its-probably-real-encore-une-fois/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Quantum computing + +Now try this + +IBM is making a quantum computer available for anyone to play with + +May 7th 2016 | From the print edition + +A handful of qubits + +USING the rules of quantum mechanics to carry out computations far faster than any conventional machine can manage is an idea that goes back decades. It was proposed in the early 1980s, but was confined to the blackboards of theoreticians until the late 1990s, when experimentalists gave it life by building simple machines which proved that the equations on those blackboards worked in practice. Now it has bloomed into a corporate project. Google, Microsoft, Hewlett-Packard and IBM each have dedicated quantum-computing research groups. + +What quantum computing has not done, though, is make much impact on the outside world. And in some part that is because those quantum computers which do exist are still confined to laboratories. Only researchers have been able to tinker with them. Until now. For, on May 4th, IBM announced that it would connect one of its quantum computers to the internet and make it available for anyone to play with. + +Quantum computing is exciting because it offers the promise of computers that can crunch through some kinds of mathematics (though not all) far faster than any classical computer that could ever be built could manage. This power comes from two counterintuitive phenomena: superposition and entanglement. + +Superposition turns the fundamental unit of classical computing, the bit, into the qubit. A bit represents the smallest possible dollop of information: on or off; yes or no; 1 or 0. A qubit, though, is a mixture of both, superimposed upon each other. A classical computer with, for example, four bits can represent 16 different states. This machine can, however, exist in only one of those states at any given time. Its quantum equivalent, by contrast, can exist in a superposition of all 16 states at once. + +But it is entanglement, which binds the fates of particles together, that really makes quantum computers sing. Entanglement makes it possible to manipulate groups of qubits all at once—so, as the number of qubits grows, the number of states a machine can occupy rises, quite literally, exponentially. A 300-qubit computer would have more possible states than there are atoms in the universe. + +The result could manipulate prodigious amounts of information with ease. It could thus crunch through many tricky problems, from cracking cryptographic codes to simulating chemical reactions accurately at the molecular level. That is something ordinary computers find intractable, but which would prove useful for all manner of industrial processes. + +A 300-qubit machine is far in the future. IBM’s current offering is a five-qubit processor built on a chip from loops of superconducting metal (see picture). It is suspended at the bottom of a large helium fridge at the firm’s research centre in Yorktown Heights, New York. This chills it to within a whisker of absolute zero—the lowest temperature possible—so that the chip’s delicate innards remain undisturbed by any stray puffs of heat. The chip is programmed by squirting carefully calibrated doses of microwaves into the fridge, with each qubit responding to a different frequency. + +Qubit by qubit + +None of that fiddly technical stuff, however, will be visible to users. Instead, they will be presented with something that looks rather like a musical staff: five horizontal lines, each representing one of the qubits. A collection of symbols, one for each quantum operation, can be dragged onto the staff. When a program, which IBM calls a “score” in a nod to the musical analogy, is ready, the user can press a button and the chip will execute it. + +The Economist watched as Jerry Chow, who is in charge of the project, made the machine run Grover’s algorithm, a quantum algorithm designed to search through unsorted piles of data, and to do so faster than any classical machine. A classical computer could take as many tries to find an item as there are things to be searched through (so up to 52 attempts to locate the ace of spades in a 52-card pack, for instance). A quantum computer can do it in a number of steps equal to slightly less than the square root of the number of items to be searched. In the case of the cards, it needs just six attempts. + +By itself, though, a five-qubit chip is not going to set the world on fire. A run-of-the-mill laptop can simulate quantum computers with as many as 40 or 50 qubits, says Scott Aaronson, a quantum-computing researcher at the Massachusetts Institute of Technology. According to Dr Chow, IBM plans to upgrade its quantum chip as the technology improves. But the main idea is not, yet, to produce a commercially valuable machine. Instead, he hopes to introduce the principles of quantum computing to as wide an audience as possible, to encourage understanding of those principles by potential programmers. The best way to do that, he thinks, is to give people “hands-on” time with a real machine. + +Unlike classical machines, quantum computers answer questions probabilistically rather than definitely. A given result has only a certain chance of being correct. Exploiting their power is tricky. To get an answer it is necessary to measure the machine. That causes its quantum superposition to vanish, which leaves it in a single state, just like a classical computer. To ensure that state is the one containing the answer needs careful management, so that the probability of getting the correct answer is reinforced, while the chances of getting a wrong answer are suppressed. + +Quantum computers thus need a great deal of coddling. Their superposed states are delicate and the slightest intrusion from outside—a stray electromagnetic wave or a tiny change in temperature—can make those states vanish prematurely. To work properly, then, a quantum computer must be isolated as much as possible from the rest of the universe. Bulky shielding and cryogenic cooling mean they are unlikely ever to fit on a desktop or into a smartphone. This means that big, commercially useful quantum computers will probably, like the prototype just unveiled, live in remote data-centres, wired up to the internet, waiting to be called upon by ordinary, classical machines whenever their specialised talents are required. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21698234-ibm-making-quantum-computer-available-anyone-play-now-try/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Animal behaviour + +Time and motion study + +How to make zoologists more productive + +May 7th 2016 | From the print edition + +Not as hidden as it thinks it is + +HANG a collar fitted with a GPS tracker and a radio transmitter around a wild animal’s neck, or simply glue such a device to its back, and you will know all the time where it is. You will not, though, know what it is up to—which is usually more interesting than its mere location. For this, you need to have someone in the field, watching and taking notes. That is expensive, needs special equipment to do at night and is impossible if the animal is underground in a burrow. But a group of ecologists and engineers at the University of California, Berkeley, led by Talisin Hammond, hope to change this state of affairs. As they describe in Experimental Biology, by adding an accelerometer to the tracker they have found a way to spy in detail on the lives of the world’s fauna. + +Building the new tracker was no mean feat. Ms Hammond studies chipmunks—animals that weigh about 35 grams. Anything such an animal is forced to carry around needs to be considerably lighter than this. Her colleague Dwight Springthorpe succeeded, however, in cramming the necessary processing chip and memory chip, accelerometer and lithium-polymer battery into a small weatherproof case, to produce a pack that weighed a mere 1½ grams—or 4.25% of an average chipmunk’s body weight. The result was something that could be glued onto the back of a chipmunk with the sort of adhesive used to attach false eyelashes. + +A battery light enough to be part of such a package cannot, of course, store much juice, so the researchers programmed the tracker to run for ten seconds every quarter of an hour, in order to sample the animal’s behaviour at regular and reasonably frequent intervals without taxing the power supply too much. On this regime it lasted 4½ days before conking out. + +The team’s first task was to understand which patterns of accelerometer behaviour corresponded to which patterns of animal behaviour. To find out, they tested the new device on 18 captive chipmunks, using video cameras to record the animals’ behaviour. When each recording session was over, they removed the tracker, downloaded the data and fed them, along with a record of what the chipmunk had been up to, into a machine-learning algorithm designed by a third member of the team, Taylor Berg-Kirkpatrick. The algorithm proved a fast learner. After parsing 28 hours’ worth of data from the captive chipmunks, it was able to work out what the rodents were up to—running, grooming, digging, eating or lying still—82% of the time. Ms Hammond therefore put it to the test in the wild. + +She and her colleagues attached the new trackers to 15 alpine chipmunks and 15 lodgepole chipmunks living in Yosemite national park, and then attempted to live-trap the animals between two and six days later. Nine of the alpines and 11 of the lodgepoles obliged them by going into the traps, so they got 20 of their devices back. + +Ms Hammond was not just collecting data at random. She was testing a hypothesis that alpine chipmunks would be more active than lodgepoles during mornings and evenings, and less so during the middle of the day. She suspected this because the alpine chipmunk’s range has shifted more in response to global warming than has the lodgepole’s, leading her to wonder if it is more sensitive to heat, and thus more likely to be crepuscular. + +As it turned out, her hypothesis was wrong. But she had been able to demonstrate its wrongness in two weeks of observation (one in the summer and one in the winter). A conventional study using field glasses and eyeballs would have taken ten times as long to gather enough data to draw an equivalent conclusion. That is a huge efficiency gain. Technology can improve productivity almost anywhere. Even, it seems, in zoology. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21698230-how-make-zoologists-more-productive-time-and-motion-study/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Matrimonial harmony + +Count me in + +Just how important is sex to a marriage’s success? + +May 7th 2016 | From the print edition + + + +DOES marital bliss depend on an active sex life? It sounds like a bears-in-woods and papal-religious-affiliation sort of question, yet around half of studies carried out into the matter suggest the answer is “no”. And this is not just a question of Darbies and Joans, who were at it in their youths, having slowed down as the years have passed. Even reasonably newly married couples, these studies suggest, do not rely on sex to keep their bond strong. + +On the other hand, the remaining 50% of investigations have shown the correlation that common sense would predict—namely that in matters matrimonial, sex is crucial. Lindsey Hicks of Florida State University therefore wondered if, as is the case with many things in life, it is all a question of how you ask the question. Many psychological questionnaires permit the respondent time for reflection. Ms Hicks was having none of that. She wanted instant, gut responses. + +Ms Hicks’s study, just published in Psychological Science, started off by doing what previous ones have done. She collaborated with a team of colleagues to round up 120 recently married local couples. The partners in these couples were then separated and each asked to fill in a questionnaire that inquired about how satisfied they were with their spouses and how often they had sex (a fact on which, despite what cynics might suspect, husband and wife generally agreed). + +Ms Hicks, however, did not leave things there. She suspected the reason why past explorations of this subject have had mixed results is because many people want to believe their marriage is in a good state despite infrequent sex, or that frequent sex should not be important for maintaining a healthy relationship. Wanting to believe something is not, though, the same as actually believing it. So she needed a way to distinguish between the two. + +Her answer was what is known as an automatic attitude test. Such tests measure instant feelings. Participants are shown an image and then presented with a word that is either positive (“wonderful”, “outstanding” or “charming”, for example) or negative (“awful”, “disturbing”, “horrible”). When they see this word they must indicate as quickly as they can, using a keyboard that measures their reaction time, whether it is positive or negative. Previous work has shown that faster reaction times to positive words and slower reaction times to negative ones suggest a participant has a positive attitude towards whatever he saw in the image. Slower reaction times to positive words and faster ones to negative words suggest the opposite. + +To wield the test for her own purposes, Ms Hicks arranged for participants to work through several sets of words. The first set was a control, in which they ranked the words without seeing an image beforehand. The following sets were preceded either by another control (a picture of the participant him- or herself) or by a picture of the participant’s spouse. + +Ms Hicks and her colleagues found that although the frequency with which couples have sex does not have much correlation with how satisfied they claim to be with their partner, it correlates well with their automatic attitudes towards one another. Those who said they had sex with their spouse two or more times a week reacted more quickly to positive words and more slowly to negative ones after seeing an image of said spouse. The opposite was true for those who had sex once a week or less. None of these effects emerged after people saw an image of themselves, or during the initial control. + +Ms Hicks’s result does not mean the no-sex brigade are lying when they claim it does not signify. They may genuinely believe what they say. But it does suggest they are fooling themselves. And that is not a matter of mere prurience. If things do start to go wrong in a relationship, and the participants want to patch matters up, then understanding where the real problem lies is important. This is only a single study, of course. But if it is successfully replicated, marriage-guidance counsellors the world over might want to take note. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21698232-just-how-important-sex-marriages-success-count-me/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Technology correspondent’s job + +May 7th 2016 | From the print edition + +The Economist is looking for a technology correspondent to work at its headquarters in London. Knowledge of the field, an ability to write informatively, succinctly and wittily, and an insatiable curiosity are more important attributes than prior journalistic experience. The successful candidate will understand that the terms “technology” and “information technology” are not identical. An engineering degree, or background in engineering, would be an advantage. Applicants should send a CV, a brief letter introducing themselves, and an article of about 600 words which they think would be suitable for publication, to techjob@economist.com. The closing date for applications is May 27th 2016. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21698233-technology-correspondents-job/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +India and the second world war: For king, then country + +The English country house: Partying, hunting, shooting + +Alessandro de’ Medici: A dark duke + +Fazioli pianos: Piano nobile + +Johnson: Beyond black and white + + + + + +Articles Sections Next + +India and the second world war + +For king, then country + +In India, as elsewhere, the second world war changed everything + +May 7th 2016 | From the print edition + + + +India at War: The Subcontinent and the Second World War. By Yasmin Khan. Oxford University Press; 416 pages; $29.95. Published in Britain as The Raj at War: A People's History of India's Second World War. Bodley Head; £25. + +India’s War: World War II and the Making of Modern South Asia. By Srinath Raghavan. Basic; 554 pages; $35. Allen Lane; £30. + +AT THE close of 1945 the British Raj could congratulate itself. Despite growing impatience for independence, the empire had still managed to muster a 2.5m-man Indian army, the largest all-volunteer force in history. Indian troops had served loyally at home to crush an incipient insurrection in 1942. They proved crucial to British victories in Ethiopia, north Africa and the Middle East; in Burma they eventually inflicted the biggest land defeat ever suffered by the Japanese imperial army. India also contributed materiel and money: by the war’s end Britain owed its prized but impoverished colony £1.3 billion, an eighth of British GDP. + +Yet the war was also catastrophic, both for the Raj and for India. The relatively small scale of India’s direct war casualties—some 90,000 soldiers killed in six years of fighting on three continents, 6,000 sailors lost and 1,400 civilians killed by Japanese bombs—belied far wider suffering. The Bengal famine of 1943, the prime cause of which may have been inflation fuelled by the printing of rupees to cover wartime deficits, left as many as 3m dead. Ignominious defeats in Malaya, Singapore and Burma undermined British prestige. Of the half a million Indian civilians who joined a chaotic exodus from Burma in 1942, perhaps one in ten also perished. + +Far from securing the jewel in the British empire’s crown, the war rendered India’s independence inevitable. Distress caused by the wartime doubling of prices, the bare-knuckle crushing of dissent, the requisitioning of land and goods, the militarisation and mobilisation of large chunks of Indian society and Britain’s divide-and-rule manipulation of India’s sectarian rifts all contributed to a combustible atmosphere. In 1947, two years after the war ended, it exploded in the bloodletting of partition. + +Few had foreseen or wanted this outcome at the war’s onset. The brutal logic of partition, as two new histories of India and the second world war make clear, evolved in large part as a result of decisions made by a fateful triangle of actors: British officials desperate to keep a lid on India, a secular Congress movement that wavered between Gandhian pacifism, support for the Allies and collaboration with the Axis, and a hitherto unpopular Muslim League that exploited the turmoil to push for dividing the subcontinent along religious lines. Pakistan’s founding father, Muhammad Ali Jinnah, later admitted that this “war which nobody welcomed proved to be a blessing in disguise.” To him, at least. + +Despite the importance of India’s role in the war and its critical impact on India’s own destiny, few popular histories have treated the subject. These two new books for the general reader neatly fill the gap. Better yet, they are complementary rather than competing accounts. (A third superb recent work, Raghu Karnad’s “Farthest Field: An Indian Story of the Second World War”, which traces one family’s dramatic war years, also deserves mention.) + +Yasmin Khan, a historian at Oxford, offers a richly researched social history of wartime India that is peppered with fascinating detail. Her sources range from official accounts and court records to the diaries and letters of Indian and British soldiers and officers, upper-class colonial women and rebellious Indian housewives. All this she weaves into a flowing narrative that touches on such forgotten aspects as India’s acceptance of stranded European refugees as well as of Japanese civilians transported from Singapore, whose squalid internment influenced Japan’s own ugly treatment of captured civilians. Describing the slow erosion of discrimination between British and Indian officers in the army of the Raj, she notes that it was only mid-way through the war that Indians were allowed to sit on courts-martial for British soldiers, and that after the capture from Italy of the Eritrean city of Asmara, separate brothels were maintained for British and Indian soldiers. + +Ms Khan picks out ironies, such as the discomfort caused to the Raj by Britain’s chief ally. When American diplomats placed advertisements in Indian newspapers proclaiming the right of all men to freedom, British censors quietly confiscated those editions. Yet the Raj went along with a softer American propaganda ploy, the distribution of pin-ups of Hollywood starlets. “Images of women and the promise of sex, whether real or imagined, were hitched firmly to the war effort,” writes Ms Khan. “The Raj had to jettison, or at the very least reformulate, the old ways of protecting the prestige of women.” + +There is irony, too, in a comment she unearths from an intelligence report on the mood among British troops in India. “The British Tommy...does not understand Indian politics,” it stated confidently. “To him it appears foolish to fight for a country that does not want to be helped and from which we are clearing out after the war.” This generic soldier seems better attuned to Indian politics than his superiors. + +Srinath Raghavan, a fellow at the Centre for Policy Research, a Delhi think-tank, usefully supplies the facts, in charts, figures, maps and details of military operations, which Ms Khan elides. He also gives thorough, fascinating and revealing accounts of the economic transformations generated by the war, and of the debates and decision-making in wartime politics. + +No one comes out of this looking very good. Mr Raghavan lets the cynicism and occasional outright racism of British officials speak for themselves. Winston Churchill, for instance, told his cabinet in 1940 that troubles between Hindus and Muslims were “a bulwark of British rule”, and later dismissed famine in Bengal as less important than famine in Greece. + +But the author also offers a corrective to later Indian accounts that have exaggerated the strength of pro-independence feeling and glorified the Japanese-sponsored Indian National Army, made up of Indian POWs and defectors. No more than 9,000 of these soldiers actually fought against the Raj in Japan’s ill-fated invasion of India in 1944, Mr Raghavan notes. More remarkable in retrospect was the loyalty shown by many Indian soldiers: a British censor’s log from Tunisia records a soldier’s letter to his family declaring proudly, “Our beloved king (God save him) has conquered this country.” + +Both books argue persuasively that the war not only consolidated India’s sense of self, but generated many of the institutions and attitudes that framed independent India. Mr Raghavan quotes a British staff officer of the 19th Indian division describing its drive to capture the Burmese capital, Rangoon: “Twenty races, a dozen religions, a score of languages passed in those trucks and tanks. When my great-great-grandfather first went to India there had been as many nations: now there was one—India.” Sadly, this would not be so true by 1947, and the Raj cracked into two parts. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21698223-india-elsewhere-second-world-war-changed-everything-king-then-country/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The English country house + +Partying, hunting, shooting + +May 7th 2016 | From the print edition + +A cup of nostalgia + +The Long Weekend: Life in the English Country House, 1918-1939. By Adrian Tinniswood. Basic; 344 pages; $30. To be published in Britain by Jonathan Cape in June; £25. + +LOOKING back on the years before war broke out across Europe in 1914, Vita Sackville-West, an aristocratic English novelist, remembered an upper-class world of “warmth and security, leisure and continuity”. For many of her aristocratic contemporaries in the 1920s and 1930s, the Edwardian country house was the heart of that world. For them, the pre-war age of innocence stood in stark contrast to what followed. In many memories, it was a period of decline and decay. + +One-tenth of titled families had lost their heirs in the trenches. Mansions and estates were put up for sale at an unprecedented rate, which rose further after the stockmarket crash of 1929. Some were torn down, others abandoned: in the 12 years to 1930 more than 180 country houses were destroyed. Wollaton Hall, one of the most flamboyant Elizabethan examples, was transferred to the local city council and became a museum; Claremont in Surrey became a girls’ school. As the importance of land declined, mansions and family seats no longer had much use as a home. + +The inter-war era has long been seen as an “Indian summer”, awaiting the death knell of the second world war. But as Adrian Tinniswood argues in an engaging new account of inter-war country-house life, this has obscured a world of energy, invention and change. “Fast”, the byword of the era, applied not just to Soho “flappers” and Jazz Age ballrooms, but to the country-house set, too. The loosening bonds between family, mansion and local community meant the country house was changing, but it was not dying. New owners—often Americans—brought “new aesthetics, new social structures, new meanings”. + +A “spirit of restlessness” characterised the age. Country-house parties could last from 48 hours to three weeks. The word “week-end” entered common usage as expanding rail networks and car ownership meant that people could dash to the country on Friday and return on Monday exhausted after a race, a ball, a shoot or a political gathering. (Although, as Mr Tinniswood points out, the phrase in polite circles was still “Saturday-to-Monday”, to distinguish the leisured class from those who had to be at work on Monday morning.) Women, in particular, were confronted with gruelling social expectations: a seven-day shooting party, for example, would require multiple outfits for every day of the week, and spending whole seasons like this was arduous. + +Only a fraction of all country houses, mansions and estates was destroyed. And new ones were built. Philip Sassoon, a hyperactive Conservative politician, built Port Lympne in Kent as a “fairy palace”—a gaudily theatrical Cape Dutch-style red-brick mansion overlooking Romney Marsh towards the English Channel. To its architect, it stood as a declaration that “a new culture had risen up from the sickbed of the old, with new aspirations.” There were modernist novelties, too—Crowsteps near Newbury, Joldwynds in Surrey—shocking the public with their shiny white walls, flat roofs and angular façades. But these were anomalies: most of the design in this period was backward-looking, as aristocrats and nouveaux-riches seeking stability and refuge embarked on a frenzy of castle restorations in a bid to “domesticate the past”. + +The picture was never uniform. Mr Tinniswood provides rich detail from all corners, uncovering plenty of angst, but also much optimism—until 1939. When the next war came, the idea returned that the world was lost, symbolised, to many people, by the disappearance of domestic service (which, contrary to some alarmist inter-war accounts, had held up buoyantly for most of the preceding two decades). In the 1950s, the National Trust came into its own as a flood of houses passed into its stewardship. The “English Country House” became an object of nostalgia. Mr Tinniswood’s book is a work of historical scholarship, not heritage fetishism. For all its merits, though, it still seems to be a product of the mindset. The English country house casts a long, rose-tinted shadow. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21698222-partying-hunting-shooting/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Alessandro de’ Medici + +A dark duke + +May 7th 2016 | From the print edition + + + +The Black Prince of Florence. By Catherine Fletcher. Bodley Head; 308 pages; £20. To be published in America by Oxford University Press in September; $29.95. + +THE short life and violent death of Alessandro de’ Medici, duke of Florence, is like the plot of a Verdi opera. Alessandro, who had a keen sexual appetite, lusted after a married woman in Florence. While her husband was away on business, his trusted cousin Lorenzino promised him an assignation with her. Lorenzino, meanwhile, hired a villain, Scoronconcolo, who, on being asked to kill an anonymous victim, said: “That I’ll do, even if he’s the duke himself.” So it was. Alessandro, napping in his rooms while waiting, was woken not by a caress, but by a sword in his stomach. Scoronconcolo then cut his throat. + +On his death in 1537, Alessandro was in his mid-20s. It was his misfortune, says Catherine Fletcher in her gripping narrative, to be assassinated “first with a sword, then with a pen” by historians. + +Her operatic plot, which builds gradually, is broken off for details of the ducal lifestyle: silk, satin and taffeta for the horses, plentiful staff (26 men to look after the hawks and dogs), and the cuisine (165lb of veal, 14 capons and 24 chickens eaten daily). But this is a political drama based on the restoration of the fortunes of the Medici family, which had ruled Florence for much of the 15th century. Different branches of the family had produced only two sons, Alessandro and Ippolito; both were illegitimate. Alessandro’s mother was a servant who may have been a Moorish slave. Their lives were organised by Clement VII, a Medici pope. The cousins, friendly as children, grew to hate each other. Ippolito, the older and more opportunistic, desperately wanted to be duke. + +The crucial year in this complicated plot is 1529, which Ms Fletcher describes in detail without losing momentum. Clement VII, who was waging war with Charles V, the Holy Roman Emperor (and king of Spain), fell ill. To protect the family’s power base, he made Ippolito, then 18, a cardinal, which was a serious obstruction in his path to the dukedom. + +Clement survived his illness and made peace with Charles. Part of the settlement was that the families should be united by Alessandro’s marriage to the emperor’s daughter Margaret. The armies of the alliance were ordered to retake Florence from its populist Republican government so that Alessandro could become duke. + +Outraged, Ippolito tried to seize the title, trying first a coup, then diplomacy. He failed. In 1532 Alessandro became duke, inheriting the palace, bride-to-be, advisers, artists and a mistress. Feeling insecure—with good reason—he almost certainly had Ippolito poisoned in 1535, and he may have had his own mother murdered too. There is no shortage of damning material here, but Ms Fletcher remains stubbornly fair to the oft-maligned Alessandro. + +The principal relic of Alessandro’s brief reign is the Fortezza da Basso, built into Florence’s 14th-century walls. He married the 13-year-old Margaret, who was 14 when she miscarried. She was widowed shortly afterward. Ms Fletcher can find no motive for the murder of Alessandro by Lorenzino, who was himself assassinated in 1548. But it is impossible to finish this medieval melodrama without thinking that it would make a riveting series for an enterprising TV producer. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21698226-dark-duke/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Fazioli pianos + +Piano nobile + +Why more and more pianists are opting for instruments costing $200,000 + +May 7th 2016 | From the print edition + +If price is no object + +IN 1980 a Roman engineer and pianist, Paolo Fazioli, made what most of his friends considered a foolish decision. He opened a piano factory, and not one making cheap pianos for children. Mr Fazioli planned to make the world’s best pianos. + +The market for high-end pianos has been dominated for so long by the German-American Steinway brand that nobody thought Mr Fazioli would be able to sell even more expensive ones. The only successful new entrants into the grand-piano market have been companies like Yamaha, a Japanese brand, which sold a cheaper product. + +To build his factory, Mr Fazioli moved from Rome to Sacile, near Venice and, more important, near the Val di Fiemme, known as the “musical forest” for spruce trees yielding especially resonant wood. Antonio Stradivari made his violins from it three centuries ago. Using his engineering skills, Mr Fazioli set about designing a grand piano that would produce a sound superior to any other piano. + +Today Mr Fazioli’s factory—more accurately, a hall filled with craftsmen and their tools—runs at full capacity, turning out 140 grand pianos a year. Because they are made to order, customers have to wait between four and eight months for delivery of the instruments, for which they are prepared to pay as much as $200,000. So large is the demand that Mr Fazioli is increasing the size of the factory to make 160-170 pianos a year. + +Stephen Carver is head piano technician at the Juilliard School in New York which, with 275 pianos, is the world’s largest owner of Steinway grands. That makes him an important arbiter in the debate about pianos’ attributes and financial value. “Fazioli pianos are very well-crafted and have a clear, bell-like presence and an even line of sound,” Mr Carver explains. “Steinways have a darker colour, which some people would call richer than the Fazioli sound.” Steinways, Mr Carver adds, also vary in quality and are slightly harder to play than Faziolis. Some 97% of Juilliard’s pianos are Steinways. It also owns several Yamahas. In a major victory for the Italians, though, Juilliard bought a Fazioli piano five years ago and has two more on order for this year. + +Even with output of 170 pianos, Fazioli will never defeat Steinway, which makes about 2,000-2,500 a year, with grand pianos starting at $63,000. Mr Fazioli, by contrast, considers his firm a boutique instrument-maker. The company exports almost all its pianos, with Europe being the main market, followed by America, Canada, China, Japan and other Asian countries, including Thailand and Indonesia. + +Pianos are a growing business again. In 2014, the latest year for which details are available, the American market saw an increase in sales from $293m to $304m, according to the National Association of Music Merchants (NAMM). Although still not back to their levels before the financial crisis, piano sales in America have increased every year since 2009. And newly rich Chinese consumers present a golden opportunity for high-end instrument makers. According to NAMM, exports to China have shown constant growth over the decade to 2014. In 2014 China imported nearly 6,000 grand pianos, up from fewer than 2,000 in 2005. + +But a maker of rare instruments differs from other companies in one important respect: it is not the number of customers, or the price they are willing to pay, that matters most. It’s who they are. Fazioli needs to sell to famous pianists, not just wealthy amateurs. “More and more professional pianists use us,” insists Mr Fazioli. “They’re the most important segment because their interest shows that we’re grown-up.” + +Alessio Bax, a New York-based concert pianist who prefers Hamburg-made Steinways, says that no leading pianist would turn down a Fazioli. Angela Hewitt, a renowned interpreter of Bach, performs on Fazioli instruments whenever possible. “The action is incredibly responsive to every variation in touch, and everything I imagine in my head I can produce with my fingers,” she explains. “Other pianos can be very beautiful but are less interesting, because the sound cannot be varied to such an extent as on a Fazioli.” + +Even so, the company struggles with something of an arriviste aura among the best performers. “Fazioli are not catching on as fast among concert pianists as among the general public,” says Mr Carver. “There’s some issue of psychology there; people are resistant to change.” He also points to Steinway’s impressive marketing. “Steinway has managed to establish itself as an instantly recognisable top brand, even though there are other piano-makers that have been making excellent instruments for as long.” Bösendorfer, an esteemed but struggling Austrian maker, was acquired by Yamaha eight years ago. + +Back in Sacile, Mr Fazioli recently dreamt up a new way of addressing the doubters. Using specially developed software, he is reproducing recordings of now-dead pianists such as Glenn Gould as they would sound if they had performed on Fazioli pianos. Still, he insists, he will never beg famous pianists to use his instruments. Instead he promises to “convince only through quality”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21698225-why-more-and-more-pianists-are-opting-instruments-costing-200000-piano-nobile/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +Beyond black and white + +Two biracial comedians on language in a divided America + +May 7th 2016 | From the print edition + + + +AS A premise, it isn’t terribly promising: Rell, fresh from a breakup, adopts a kitten, calling it Keanu. When the kitten winds up in the hands of gangsters, he and his friend Clarence infiltrate the gang to get it back. “Keanu”, which opened in American cinemas on April 29th, would be forgettable in most hands. But Keegan-Michael Key and Jordan Peele—the stars of “Keanu” and, before that, of their sketch-comedy show, “Key & Peele”—have a way of using goofy premises to make a serious statement about male friendship and competition, race, class and especially language. + +Mr Key is tall, thin, bald and energetic; Mr Peele is short, soft and bespectacled; his characters often have a quiet intensity that balances Mr Key’s bouncing around. Both have black fathers and white mothers, and away from the camera both, as they put it, “sound whiter than Mitt Romney in a snowstorm”. But they have an uncanny ability to disappear into a gallery of characters from any race or background. At its best, this goes far beyond “doing accents” to be a walking, talking and devastatingly funny sociolinguistics thesis on race as a performance. + +In “Keanu”, Rell and Clarence have every mainstream—that is, non-black—feature possible, from their names to their music (Clarence lives to a George Michael soundtrack). To penetrate the gang, they need new names (“Shark Tank” and “Tectonic”) and, most of all, a new way of talking. Finding themselves in a black strip club, Clarence orders a white-wine spritzer. Rell panics: “You can’t talk like that in here.” A denizen sceptically asks: “You niggas in the right place?” Clarence, transformed, wheels round, wide-eyed, and shouts “Yeah, we in the right place, nigga!” She backs off. + +This is their shtick at its broadest and most obvious. The simple strangers-in-a-strange-land storyline of “Keanu” disappointed critics. But a sketch from “Key & Peele” better illustrates black language as a tightrope walk. The two sit as colleagues at a table in a small soul-food restaurant; the sun beats down on the sleepy southern town outside. In dress shirts and ties, they’ve made good in a big city somewhere else. “I’m so glad we could bring this project to this neighbourhood—I grew up in a neighbourhood like this.” “I grew up in a neighbourhood exactly like this.” + +Suddenly, each is worried that the other is more authentic. When the waitress comes, each man’s voice smoothens, vowels lengthening. Both keep changing their orders, trying to get the most typical soul-food dish from the proud black South. Through collard greens, cornbread, okra, ham-hocks, chitterlings and pigs’ feet, neither can stop upping the ante. Key finally orders “some dandelion greens, a cow hip and a dog face; wrap that whole mess in a old Ebony magazine”. Peele ends up with “a platter of stork ankles, an old cellar door, a possum spine and a human foot”. Both would gain if they could stop performing, but neither wants to do it first. + +Mr Key is from Detroit, but light-skinned; Mr Peele grew up on the Upper West Side of Manhattan. Controlling just how black or white to sound was a daily exercise. “You never want to be the whitest-sounding black guy in a room,” says Mr Peele. John McWhorter, a linguist at Columbia University, grew up with a black family and friends in Philadelphia and New Jersey, but as he writes in a deeply personal recent essay, he has no—his term—“blaccent”, sounding “like an announcer in a 1940s newsreel”. It’s a small heartbreak every time he sees the surprise on the faces of black people he meets: is he trying to put on airs, to be better than them? He isn’t, but to fake a “blaccent” would be, for him, preposterous. + +For black Americans, the right voice means warmth and solidarity, but for many whites, black dialect (including its grammatical differences) sounds like broken standard English, which it isn’t. Messrs Key and Peele are lucky to control it with such ease. They have lent this talent to another man who must walk a thin racial line. Mr Key’s sketch character “Luther” is Barack Obama’s “anger translator”, saying things the president wishes he could say but can’t. The real Mr Obama invited “Luther” to join his comedy routine at last year’s White House Correspondents’ Dinner. When he is no longer president, America will hear more in his memoirs about striking the balance between warmth and cool, black and white during a tumultuous two terms in office. Until then, Messrs Key and Peele will keep a nervous America laughing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21698224-two-biracial-comedians-language-divided-america-beyond-black-and-white/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Harry Wu: Beyond the wire + + + + + +Articles Sections Next + +Obituary: Harry Wu + +Beyond the wire + +Harry Wu (Wu Hongda), victim and exposer of China’s gulag, died on April 26th, aged 79 + +May 7th 2016 | From the print edition + + + +THE top of the carrot, blackened by frost, poked just above the frozen ground. As soon as he saw it, Harry Wu dropped to his knees and scraped for it until his fingers bled. After 18 months in one of China’s laogai (“re-education through labour”) camps, hunger consumed him. Already he had sampled the half-rotten roots of cabbages left in the ground, and learned to dig into rat-holes to find stores of grain. In another hole he found a tangle of hibernating snakes, pulled them out, bit off their heads, skinned them and boiled them up for that wonderful, near-forgotten taste of meat. + +He had learned to fight, too. When he took off his glasses he no longer looked like the intellectual he was. He was ready to beat up anyone who challenged his theft of a hard wotou bun or a piece of salted turnip, aiming his punch straight for the nose or the eyes so that his assailant wouldn’t try twice. The camp had made an animal of him, throwing desperate creatures together as, when a boy, he had put ferocious yellow ants and black ants in a bottle and watched them kill each other. In his case, his fall into barbarity had not taken long. + +The ostensible reason he was there—he assumed, for he was forced to sign the charge-sheet in 1960 without reading it—was because he had been accused of stealing 50 yuan. In fact he had been hauled in to be turned into “a new socialist person”. As an eager student at the Geology Institute in Shanghai in the mid-1950s, after the Communists had seized power, he resented spending half the day studying party doctrine. He was slow to confess in public that, as the son of a banker, waited on by servants and educated by Jesuits, he was from “the exploiting class”. He had also skipped indoctrination sessions to be with his girlfriend. The result was that his brain had to be dulled by hard labour, and new thoughts put inside. + +This went on for two decades, all through his best young years. He worked on farms and down a coal mine, where his back was broken. The Red Brigades found his favourite books—“Moby-Dick” and “The Old Man and the Sea”, sagas of men obsessed with a dream against enormous odds—and burned them. For a week he was put in solitary, in a cement cell three feet high. He had tried to send out letters of protest, desperate that no one knew of his plight or where he was. As comrades died around him, he reflected that their lives were just a flick of cigarette ash on the wind. When he had clambered out of that mood, he resolved not only to survive but also to ensure that no one forgot China’s laogai and the thousands suffering there. + +This was harder than he imagined. After years of rising slowly through the prisoner hierarchy, helped too by the death of Mao Zedong and the milder rule of Deng Xiaoping, he emerged to try to work as a lecturer in geology. He was still viewed as a rightist, he found. And China remained indifferent to the laogai, with a further twist: the forced labour of prisoners was enabling his country to roar into world markets as a producer of cheap car parts, tools, toys, clothes and hardware. The prison camps were being renamed factories, and the world hoodwinked into buying goods stained with blood and marked with tears. As soon as he could get his papers, in 1985, Mr Wu left for California—to make a new life, and spread the word. + +Making trouble + +He had $40 in his pocket, supplemented by night shifts on a doughnut stand. His English was fractured and, again, his voice was a lonely one. Americans in the mid-1980s knew almost nothing of mainland China except, increasingly, its trade potential. Stories of the Chinese gulag were the province of right-wing think-tanks, such as the Hoover Institution, and right-wing congressmen. Many thought he was exaggerating the horrors, or being soft on criminals who deserved it. But Mr Wu stressed that China’s labour camps were both inhuman, and contained an alarming number of political troublemakers like himself. Besides, America, like most European countries, already had laws on the books banning the import of goods made with forced labour. + +To get his point across, he travelled the world with instruments of torture in his suitcase. Relentless as a terrier, he lectured, lobbied and wrote, until by 1989—when Tiananmen Square made his argument for him—Americans did not question that the gulag existed. What he most yearned to do, however, was to go back to China for more evidence. In the early 1990s he managed to sneak in several times, with journalists and hidden cameras, to the camps where he had been held. With fame, his trips became much riskier: he was chased by security men, spotted from watch-towers, and in 1995 was arrested as he tried to enter from Kazakhstan. Only pressure from the Clintons (Hillary being about to visit) secured his deportation, after 66 days. + +That second spell of captivity, though relatively gentle, reminded him how much he had been shaped by the first. He could fall asleep anywhere in 15 seconds, even with guards watching, and still be aware of what was happening round him. He could see escape routes where others couldn’t. His broken back still ached, and the sight of prisoners made him tremble so much that he could not film them. None of this, however, curbed the overwhelming hunger the laogai had left in him: hunger to play with fire, taunt the system, dig deep. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21698188-mr-wu-died-april-26th-aged-79-obituary-harry-wu-victim-and-exposer-chinas-gulag/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +The Economist poll of forecasters, May averages + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +May 7th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21698236/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +May 7th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21698242-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +May 7th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21698244-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +May 7th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21698245-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist poll of forecasters, May averages + +Other markets + +May 7th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21698247-other-markets-economist-poll-forecasters-may-averages/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +May 7th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21698246-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +TE20160507 + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +American politics: Trump’s triumph + + + + + +China’s financial system: The coming debt bust + + + + + +Child refugees: Under-age and at risk + + + + + +Crony capitalism: Dealing with murky moguls + + + + + +Fairy tales: Underdogs are overrated + + + + + +Letters + + + +On business in Iran, Dilma Rousseff, interest rates, English language, Republicans, solar power: Letters to the editor + + + + + +Briefing + + + +The Republican nominee: Fear trumps hope + + + + + +United States + + + +Indiana’s primaries: The fifth stage of grief + + + + + +The campaigns: Heard on the trail + + + + + +New York politics: Boss de Blasio? + + + + + +Ageing and income: Silver-haired in clover + + + + + +Disarray in the South: Sweet home + + + + + +Lexington: What next for Bernie Sanders + + + + + +The Americas + + + +Venezuela: Lights out + + + + + +Pollution in Mexico: Blocking traffic + + + + + +Technology in Brazil: Faulty powers + + + + + +Bello: Stop stealing + + + + + +Asia + + + +State elections in India: The fire goddess of West Bengal + + + + + +Identity politics in India’s north-east: How green is my valley? + + + + + +Australia’s looming election: Turnbull rolls the dice + + + + + +Elections in Malaysia: Rumbles in the jungle + + + + + +China + + + +Overhauling tax policy: Central tendency + + + + + +NGOs and religion: Charity ends at home + + + + + +Enforcing cultural purity: Exterminate the foreign names + + + + + +Banyan: The 15-year hitch + + + + + +Middle East and Africa + + + +Iraq unravels: The ungovernable country + + + + + +Syria’s war: Spiralling out of control + + + + + +Syrian refugees in Jordan: Peace, bread and work + + + + + +Jobs in Africa: In praise of small miners + + + + + +South African idols: Who owns Mandela? + + + + + +Europe + + + +NATO and the European Union: Buddy cops + + + + + +France at war: Aux armes + + + + + +Turkey’s prime minister: No room for moderates + + + + + +Repressing Islam in Russia: Salafis mustered + + + + + +Germany’s migrant complex: Doppelgänger envy + + + + + +Charlemagne: Visa wars + + + + + +Britain + + + +EU referendum campaign: The eternal quest for youth + + + + + +Leicester’s success: Foxes and tigers + + + + + +Brexit brief: City blues + + + + + +Working hours: Nice work if you can get it + + + + + +Migration crisis: Rebels with a cause + + + + + +Port Talbot steelworks: Either ore + + + + + +The rental market: Full house + + + + + +Bagehot: The loneliness of Ken Livingstone + + + + + +International + + + +Our crony-capitalism index: The party winds down + + + + + +Corporate ownership and corruption: How to crack a shell + + + + + +Special report: Finance in China + + + +Finance in China: Big but brittle + + + + + +Banks: Breaking bad + + + + + +Shadow banks: Dark and stormy + + + + + +Capital markets: Risky returns + + + + + +Politics: Power to the party + + + + + +Global impact: Nowhere to hide + + + + + +The way forward: Pain and prosperity + + + + + +Business + + + +Hydrocarbons: Not-so-Big Oil + + + + + +Spotify: These boots are made for walking + + + + + +Internet firms: Growing, wildly + + + + + +Hospitality: Stay with me + + + + + +The grey market: Golden oldies + + + + + +Entertainment: Parks of recreation + + + + + +Schumpeter: What do the Foxes say? + + + + + +Finance and economics + + + +Emerging markets: The unloved bounce + + + + + +Buttonwood: A losing bet + + + + + +Bailing out Greece: Where are those buckets? + + + + + +Car loans: New engine + + + + + +Italian banks: Broad shoulders + + + + + +American infrastructure: Buy local + + + + + +Developing Bangladesh: How to spend it + + + + + +Free exchange: When life gives you lemons + + + + + +Bitcoin’s creator: Wright’s wrongs + + + + + +Science and technology + + + +Robotic surgery: Who wields the knife? + + + + + +Genes and disease: Encore une fois + + + + + +Quantum computing: Now try this + + + + + +Animal behaviour: Time and motion study + + + + + +Matrimonial harmony: Count me in + + + + + +Matrimonial harmony: Technology correspondent’s job + + + + + +Books and arts + + + +India and the second world war: For king, then country + + + + + +The English country house: Partying, hunting, shooting + + + + + +Alessandro de’ Medici: A dark duke + + + + + +Fazioli pianos: Piano nobile + + + + + +Johnson: Beyond black and white + + + + + +Obituary + + + +Obituary: Harry Wu: Beyond the wire + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +The Economist poll of forecasters, May averages + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.05.14.TXT b/homeworks/B20769/homework1/data2/2016.05.14.TXT new file mode 100644 index 0000000..8b85137 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.05.14.TXT @@ -0,0 +1,6498 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: The Arab world + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +May 14th 2016 | From the print edition + + + +Rodrigo Duterte won the presidential election in the Philippines in a landslide victory over Mar Roxas, a former member of the cabinet of the outgoing president, Benigno Aquino. Mr Duterte had been the mayor of Davao, a city in the southern island of Mindanao, where he waged a controversial anti-corruption campaign. He once asserted that suspected criminals should be killed if need be. See article. + +Bangladesh executed Motiur Rahman Nizami, who headed the country’s largest Islamist party. He was convicted for war crimes committed during the independence war against Pakistan in 1971, but critics claim his trial was not fair. See article. + +A four-star general in North Korea who was thought to have been executed earlier this year has apparently resurfaced. In February South Korea reported that General Ri Yong-gil had been executed in a purge by the regime, but pictures from the North’s state media this week showed him in uniform with three stars, suggesting the lucky general had instead been demoted. + +The White House announced that Barack Obama will visit Hiroshima, the first American president to do so. He is going to the Japanese city to promote his goal of reducing stockpiles of nuclear weapons. + +On the refugee front line + +Werner Faymann stepped down as the chancellor of Austria. He had been in power since 2008, but faced criticism from within his party, the Social Democrats, for the country’s increasingly hard line on refugees. The far-right Freedom Party is ahead in the polls in the run-off for the federal presidency, a mostly ceremonial role. See article. + +Ahead of new elections in Spain on June 26th, Podemos, a far-left movement, announced that it would form a parliamentary pact with United Left, the former communist party. “We want to agree on a government for progressive change,” said Pablo Iglesias, the leader of Podemos. + +After weeks of protests against France’s controversial new labour laws, François Hollande, the president, forced through the reforms without a parliamentary vote. See article. + +The Italian parliament voted in favour of civil unions for gay couples. Italy was the last big Western democracy not to have any legal recognition of same-sex partnerships. + + + +Sadiq Khan, a British-born Muslim of Pakistani descent, won London’s mayoral election with over 50% of the vote. The battle between the Labour man and his Conservative rival was marred by a pernicious attempt to link Mr Khan to Islamic extremism. Donald Trump, the presumptive Republican presidential candidate, said he would make an “exception” for the mayor to his proposed ban on Muslims entering America. Mr Khan dismissed the offer. See article. + +In other elections in Britain, the Conservatives surged to replace Labour as the second party in Scotland behind the nationalist SNP, which lost its majority rule. In Wales the right-wing anti-Europe UK Independence Party claimed seven seats, their first ever in the Welsh Assembly. In England Labour avoided the drubbing that was expected in council elections. It still lost seats, though not as many as the ruling Tories. + +After making a gaffe by naming two fantastically corrupt” countries before an open microphone (and the queen), David Cameron, Britain’s prime minister, used the ensuing publicity to promote an anti-corruption summit being held in London. One of his proposals is a crackdown on foreign ownership of British property held by shell companies using illegally acquired money. + +Back with a vengeance + +At least 90 people were killed in three separate car-bomb attacks in Baghdad. The worst hit a crowded market-place in Sadr City, a strongly Shia area of the Iraqi capital. + +In a possible sign of reconciliation, the warring sides in Yemen agreed to a prisoner swap, to take place in the next three weeks. + +The World Health Organisation said that an outbreak of yellow fever has killed 277 people in Angola since December. An article in the Journal of the American Medical Association warned that the mosquito-borne disease could spread to other continents. See here and here. + +Crunch time + +Brazil’s Senate voted to impeach the country’s president, Dilma Rousseff, on charges that she manipulated fiscal accounts. While the impeachment trial is being conducted the vice-president, Michel Temer, will take over as president. If the Senate votes to convict Ms Rousseff by a two-thirds majority, Mr Temer will serve out her term. See article. + +Panama said that it will temporarily close its border with Colombia to bar Cuban migrants from crossing over. Some 3,500 Cubans attempting to migrate to the United States are stuck in Panama after Costa Rica blocked them from proceeding further. + + + +A forest fire forced 90,000 people to flee their homes in Fort McMurray, which serves as the base for oil firms that work the tar sands in the western Canadian province of Alberta. The fire covered more than 220,000 hectares and forced some firms to suspend production, prompting economists to lower their projections of Canada’s GDP growth for the second quarter of 2016. See article. + +She’s got it, but… + +Hillary Clinton lost another primary to Bernie Sanders in the race for the Democratic presidential nomination. Her defeat in West Virginia is the latest in a state where black and Hispanic voters, the mainstays of her support, form only a small part of the electorate, raising questions about Mrs Clinton’s wider appeal. See article. + +In Minneapolis ten potential jurors in the trial of three Somali-Americans accused of conspiring to join Islamic State and commit murder were allowed to step down after telling the judge they could not be impartial in the case. One of the jurors said she felt “uncomfortable” being in the same room as the accused, who were arrested by the FBI. + +A survey of American military personnel found that Donald Trump was the preferred presidential candidate among people on active duty. Support for him was twice that for the Democratic front-runner, Hillary Clinton. On a negative note for both, over a fifth said they would rather not vote in November if the choice was between the two. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21698718-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +May 14th 2016 | From the print edition + +Saudi Arabia replaced Ali al-Naimi as oil minister. He had been in the job for 20 years and was instrumental in refusing to cut oil production, even as prices fell, in order to protect the kingdom’s market share. His successor, Khalid al-Falih, is chairman at Aramco, the state oil company, which is expected to launch an IPO this year. See article. + +The disruption to the oil industry caused by last year’s plunge in the oil price was described as a “double-edged sword” by Emirates Airline, which reported its annual earnings for the year to March 31st. Cheaper fuel helped Emirates, which is based in Dubai, to increase net profit to $1.9 billion, but its chairman said the turmoil in oil markets was proving a “bane” for business confidence. + +Nissan agreed to take a 34% stake in Mitsubishi Motors for $2.2 billion. The alliance between the two Japanese carmakers will give Nissan access to Mitsubishi’s extensive market in Asia, and help shore up Mitsubishi as it contends with the fallout from admitting that it had cheated on fuel-efficiency tests since at least 1991. Mitsubishi’s share price, which has slumped by half since mid-April, soared on news of the deal. + +The hard shoulder + +Takata, a Japanese maker of air bags linked to at least ten deaths in America after rupturing in cars, reported an annual loss of ¥13 billion ($109m). It had only recently estimated a profit. But America’s road-safety agency has recalled up to another 40m cars fitted with the air bags in addition to the 29m that may pose a risk. + +Credit Suisse reported another quarterly net loss, of SFr302m ($304m) for the first three months of the year. The Swiss bank is restructuring to refocus on its private bank and away from the more volatile business of investment banking. It cheered markets by reporting signs of progress in that regard, such as SFr14 billion in net new money inflows to wealth management. Tidjane Thiam, the chief executive, said the bank had managed to steer relatively unscathed through “some of the most difficult markets on record” in the first quarter. + +Lending Club, an online peer-to-peer lender, saw its share price plummet by 35% when Renaud Laplanche, its founder and chief executive, abruptly resigned. This came after the company acknowledged, among other things, that a sale of $22m of loans to an investment firm had contravened agreed criteria. An audit committee found that the dates on the loans had been changed by a “senior manager” at the company. See article. + +A court case to determine the mental competence of Sumner Redstone, the 92-year-old media tycoon who owns controlling stakes in CBS and Viacom, was thrown out. The case was brought by a former girlfriend whom Mr Redstone had cut out of his will and stopped from making decisions about his health care. The judge threw out the case when Mr Redstone said he wanted his daughter to look after him. But the ruling did not touch on his mental fitness to perform his business duties, which worries investors. + +The proposed $6 billion merger of Staples and Office Depot collapsed, when a judge sided with the Federal Trade Commission in finding that combining the two stationery suppliers would lead to higher prices for companies that buy their office products in bulk. + +Voters in Austin rejected a ballot measure sponsored by Uber and Lyft that would have overturned city rules requiring fingerprint-based background checks for their drivers. The two app-based taxi firms say the system they use is more efficient. After losing the vote the pair decided to halt operations in the Texan city, which some derided as sour grapes. In New York, Uber agreed that negotiations over terms for drivers could be conducted through a new union-associated guild. + +The European Commission blocked CK Hutchison, a telecoms company based in Hong Kong, from buying O2, a mobile-phone operator in Britain that is owned by Telefónica of Spain. The commission said the £10 billion ($14.4 billion) deal would reduce customer choice and result in higher prices. CK Hutchison, which already owns Three, another operator in Britain, expressed disappointment and indicated that it would appeal against the decision. + +Make America great again + + + +In a nod to the presidential election, Budweiser, which is owned by Anheuser-Busch InBev, a Belgian-Brazilian brewing giant, said it would emblazon “America” on its beer cans between late May and the vote in November. The rebranding is part of Budweiser’s campaign theme that “America is in Your Hands”. Whose hands, and whether they are adequately sized, is an entirely separate matter. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21698714-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +May 14th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21698716-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + +Leaders + + + + + +The breakdown of Arab states: The war within + +An election in the Philippines: The dangers of Duterte Harry + +Yellow fever: A preventable tragedy + +Second homes: Stay away + +Banks and state aid: The rule of flaw + + + + + +Articles Sections Next + +The breakdown of Arab states + +The war within + +Europe and America made mistakes, but the misery of the Arab world is caused mainly by its own failures + +May 14th 2016 | From the print edition + + + +WHEN Sir Mark Sykes and François Georges-Picot secretly drew their lines on the map of the Levant to carve up the Ottoman empire in May 1916, at the height of the first world war, they could scarcely have imagined the mess they would set in train: a century of imperial betrayal and Arab resentment; instability and coups; wars, displacement, occupation and failed peacemaking in Palestine; and almost everywhere oppression, radicalism and terrorism. + +In the euphoria of the uprisings in 2011, when one awful Arab autocrat after another was toppled, it seemed as if the Arabs were at last turning towards democracy. Instead their condition is more benighted than ever. Under Abdel-Fattah al-Sisi, Egypt is even more wretched than under the ousted dictator, Hosni Mubarak. The state has broken down in Iraq, Syria, Libya and Yemen. Civil wars rage and sectarianism is rampant, fed by the contest between Iran and Saudi Arabia. The jihadist “caliphate” of Islamic State (IS), the grotesque outgrowth of Sunni rage, is metastasising to other parts of the Arab world. + +Bleak as all this may seem, it could become worse still. If the Lebanese civil war of 1975-90 is any gauge, the Syrian one has many years to run. Other places may turn ugly. Algeria faces a leadership crisis; the insurgency in Sinai could spread to Egypt proper; chaos threatens to overwhelm Jordan; Israel could be drawn into the fights on its borders; low oil prices are destabilising Gulf states; and the proxy conflict between Saudi Arabia and Iran might lead to direct fighting. + +All this is not so much a clash of civilisations as a war within Arab civilisation. Outsiders cannot fix it—though their actions could help make things a bit better, or a lot worse. First and foremost, a settlement must come from Arabs themselves. + +Beware of easy answers + +Arab states are suffering a crisis of legitimacy. In a way, they have never got over the fall of the Ottoman empire. The prominent ideologies—Arabism, Islamism and now jihadism—have all sought some greater statehood beyond the frontiers left by the colonisers. Now that states are collapsing, Arabs are reverting to ethnic and religious identities. To some the bloodletting resembles the wars of the former Yugoslavia in the 1990s. Others find parallels with the religious strife of Europe’s Thirty Years War in the 17th century. Whatever the comparison, the crisis of the Arab world is deep and complex. Facile solutions are dangerous. Four ideas, in particular, need to be repudiated. + +First, many blame the mayhem on Western powers—from Sykes-Picot to the creation of Israel, the Franco-British takeover of the Suez Canal in 1956 and repeated American interventions. Foreigners have often made things worse; America’s invasion of Iraq in 2003 released its sectarian demons. But the idea that America should turn away from the region—which Barack Obama seems to embrace—can be as destabilising as intervention, as the catastrophe in Syria shows. + +Lots of countries have blossomed despite traumatic histories: South Korea and Poland—not to mention Israel. As our special report sets out, the Arab world has suffered from many failures of its own making. Many leaders were despots who masked their autocracy with the rhetoric of Arab unity and the liberation of Palestine (and realised neither). Oil money and other rents allowed rulers to buy loyalty, pay for oppressive security agencies and preserve failing state-led economic models long abandoned by the rest of the world. + +A second wrong-headed notion is that redrawing the borders of Arab countries will create more stable states that match the ethnic and religious contours of the population. Not so: there are no neat lines in a region where ethnic groups and sects can change from one village or one street to the next. A new Sykes-Picot risks creating as many injustices as it resolves, and may provoke more bloodshed as all try to grab land and expel rivals. Perhaps the Kurds in Iraq and Syria will go their own way: denied statehood by the colonisers and oppressed by later regimes, they have proved doughty fighters against IS. For the most part, though, decentralisation and federalism offer better answers, and might convince the Kurds to remain within the Arab system. Reducing the powers of the central government should not be seen as further dividing a land that has been unjustly divided. It should instead be seen as the means to reunite states that have already been splintered; the alternative to a looser structure is permanent break-up. + +A third ill-advised idea is that Arab autocracy is the way to hold back extremism and chaos. In Egypt Mr Sisi’s rule is proving as oppressive as it is arbitrary and economically incompetent. Popular discontent is growing. In Syria Bashar al-Assad and his allies would like to portray his regime as the only force that can control disorder. The contrary is true: Mr Assad’s violence is the primary cause of the turmoil. Arab authoritarianism is no basis for stability. That much, at least, should have become clear from the uprisings of 2011. + +The fourth bad argument is that the disarray is the fault of Islam. Naming the problem as Islam, as Donald Trump and some American conservatives seek to do, is akin to naming Christianity as the cause of Europe’s wars and murderous anti-Semitism: partly true, but of little practical help. Which Islam would that be? The head-chopping sort espoused by IS, the revolutionary-state variety that is decaying in Iran or the political version advocated by the besuited leaders of Ennahda in Tunisia, who now call themselves “Muslim democrats”? To demonise Islam is to strengthen the Manichean vision of IS. The world should instead recognise the variety of thought within Islam, support moderate trends and challenge extremists. Without Islam, no solution is likely to endure. + +Reform or perish + +All this means that resolving the crisis of the Arab world will be slow and hard. Efforts to contain and bring wars to an end are important. This will require the defeat of IS, a political settlement to enfranchise Sunnis in Iraq and Syria, and an accommodation between Iran and Saudi Arabia. It is just as vital to promote reform in countries that have survived the uprisings. Their rulers must change or risk being cast aside. The old tools of power are weaker: oil will remain cheap for a long time and secret policemen cannot stop dissent in a networked world. + +Kings and presidents thus have to regain the trust of their people. They will need “input” legitimacy: giving space to critics, whether liberals or Islamists, and ultimately establishing democracy. And they need more of the “output” variety, too: strengthening the rule of law and building productive economies able to thrive in a globalised world. That means getting away from the rentier system and keeping cronies at bay. + +America and Europe cannot impose such a transformation. But the West has influence. It can cajole and encourage Arab rulers to enact reforms. And it can help contain the worst forces, such as IS. It should start by supporting the new democracy of Tunisia and political reforms in Morocco—the European Union should, for example, open its markets to north African products. It is important, too, that Saudi Arabia opens its society and succeeds in its reforms to wean itself off oil. The big prize is Egypt. Right now, Mr Sisi is leading the country to disaster, which would be felt across the Arab world and beyond; by contrast, successful liberalisation would lift the whole region. + +Without reform, the next backlash is only a matter of time. But there is also a great opportunity. The Arabs could flourish again: they have great rivers, oil, beaches, archaeology, youthful populations, a position astride trade routes and near European markets, and rich intellectual and scientific traditions. If only their leaders and militiamen would see it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21698652-europe-and-america-made-mistakes-misery-arab-world-caused-mainly-its-own/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +An election in the Philippines + +The dangers of Duterte Harry + +A return to the bad old ways under Rodrigo Duterte? + +May 14th 2016 | From the print edition + + + +DURING the six years of President Benigno Aquino’s administration, the Philippines has amazed itself and others by being both boring and successful. Once South-East Asia’s chronic underachiever, with a sluggish economy and a politics that puts showmanship over substance, the Philippines belatedly took the path of other, more successful economies. It adopted policies (now there’s a novelty) and these have encouraged foreign investment, spurred spending on infrastructure and boosted consumption. Growth has been a healthy 6% a year, the best among the region’s bigger economies. Jobs have been generated—call centres in the Philippines handle many of the world’s complaints. And social spending has risen even as the national debt has come down. Now all that progress is thrown in doubt with the emphatic election as president of Rodrigo Duterte, a loudmouth pursuing a wildly populist campaign (see Briefing). After the dull-but-sound Mr Aquino, the great risk is that bad old ways are about to return. + +Sadly, it’s no joke + +Mr Duterte—aka “Duterte Harry” or “the Punisher”—is the long-standing mayor of the city of Davao on the troubled southern island of Mindanao. What he lacks in policymaking interest or experience he made up for during the campaign with the showmanship that had been absent from national politics. Many Filipinos loved it. + +He joked about sexual exploits with mistresses and he publicly entertained rape fantasies. In a Catholic country, he made people laugh by saying of Pope Francis that “your mother’s a whore”. He treated allegations of his links to vigilante killings in Davao with pride. And when he promised that he would, as president, dump the corpses of 100,000 gangsters in Manila Bay, the crowd went wild. That claim, a promise to declare a “revolutionary government” if he cannot get his way in pushing through a vaguely defined new “federalism” for the country, plus a vow to shut down Congress if it ever tries to impeach him, are pretty much the only policies he has articulated. Little things like due process, he suggests, are for wimps. + +The elites in Manila are in shock at the defeat of their candidates. But they have only themselves to blame. They always found it more pleasant to take the case for liberalisation to Davos than to the millions of Filipinos, especially in the provinces, who have missed out on the fruits of growth. And, in their gated communities in the capital, they failed to grasp how much petty corruption and gun violence blight ordinary lives. The mayor of Davao understood. + +The elite rarely mix with ordinary folk, apart from maids, chauffeurs and deferential farm hands who have worked for generations on the vast haciendas of the landowners (such as the clan the Aquinos married into). So they failed to see resentment growing at their wealth and complacency. Shortly before the election, Mr Aquino warned of a return under Mr Duterte to something like the dictatorship of Ferdinand Marcos, (who put the country under martial law, tortured thousands and stole billions). Mr Aquino called on the other presidential candidates to come together to defeat Mr Duterte. They didn’t. Now they should acknowledge that the “people power” revolution in 1986 that unseated Marcos, and put Mr Aquino’s mother in power, has ossified into a self-selecting oligarchy. + +Now that the oligarchy has been humbled, the question is how Mr Duterte will govern. In foreign policy his blunt style is cause for concern, at a time when extreme delicacy is needed in responding to China’s high-handed maritime claims in the South China Sea. As for the economy, Mr Duterte’s record in Davao, where he cut crime and encouraged investment, suggests that he may not be opposed to business. Indeed, unlike Donald Trump, to whom he is sometimes likened, he proposes no radical change of economic direction. Rather, he says he will hire the country’s foremost economic brains and put them in charge. + +Perhaps that is why the stockmarket bounced on news of his victory. But much remains vague. He is thought to want to scrap competitive bidding for infrastructure contracts. If so, he will frighten off the foreign investment that has underpinned the Philippines’ boom. With so much uncertain, it is not clear what is to be feared more: Mr Duterte ignoring legal norms and trampling his country’s democratic institutions, or the old elite regrouping to frustrate him, inviting political chaos. The Philippines’ future risks being a mix of both. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21698648-return-bad-old-ways-under-rodrigo-duterte-dangers-duterte-harry/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Yellow fever + +A preventable tragedy + +Africa is in the grip of one of the worst outbreaks of yellow fever in 30 years. A wider disaster threatens + +May 14th 2016 | From the print edition + + + +ONE of the mysteries of epidemiology is why Asia does not suffer from yellow fever. The disease is endemic in Africa, the continent where it evolved. It is widespread in South America, having been carried there by European slave ships. It was once found in both North America and southern Europe, but it was eradicated by the application of considerable effort and money—and both places shared the good fortune of lacking monkeys, which act as reservoirs for the yellow-fever virus. Yet, although much of Asia is plagued by Aedes aegypti, the mosquito that spreads yellow fever, it remains blessedly free of infections. + +It may be that Asian strains of A. aegypti are poor transmitters of yellow-fever viruses (though they have no difficulty passing on those of dengue, a related illness). It may be that surviving and recovering from dengue, which is widespread in southern Asia, confers a degree of resistance to yellow fever. Or it may be that past trade between Africa and Asia was too modest for the virus to take root. The world may soon find out. For an unplanned experiment has just started that could, if it is not nipped in the bud, spread one of the world’s nastiest diseases to its most populous continent. + +Eastward, ho + +The centre of events is Angola. Like many other African countries, it has endemic yellow fever (reckoned to be responsible for 80,000 African deaths a year). But in December 2015 doctors there noticed their caseload was rising and realised that they had an epidemic on their hands (see article). + +This epidemic has now spread to the Democratic Republic of Congo; Angola’s other neighbours are watching nervously. A distant country that has at least as much cause to worry is China. As a result of fast-growing trade between Asia and Africa, large numbers of Chinese live in Angola. They are there, though, not as emigrants but as expatriates who expect to return home. This return has, for the first time, brought 11 cases of yellow fever to China. More will surely follow. + +Other Asian countries must also be alert to the threat. A. aegypti is rife in Cambodia, India, Myanmar and Thailand (see map). With more intercontinental flights carrying travellers to and fro, the risk of an outbreak in Asia has never been higher. And A. aegypti has recent form in spreading disease to new places. The Zika virus, which it also transmits, infected more than 1m people in South America in a little over a year, from what was more or less a standing start. Should yellow fever come to Asia, some experts reckon that over 100m people living in large, well-connected cities would need to be vaccinated. That would rapidly exhaust the world’s supply of vaccine, even if only a fifth of a dose (thought to be enough to confer immunity to adults) were administered to each person who needed it. In the long term, if the disease establishes itself in Asia’s jungles, over 1 billion more people could be at risk. + +That would be an unconscionable outcome—doubly so because yellow-fever vaccine is cheap and confers a lifetime of immunity. Production must be stepped up. The World Health Organisation, which has been vaccinating Africans against the disease since 2007, must now accelerate its efforts to reach the remainder who are at risk of contracting it, using the reduced dose to stretch the supply if necessary. Asian countries need fumigation plans in place to eliminate the mosquito from their cities. They must also train medical staff to administer the vaccine widely in an emergency. + +The world has already failed to thwart yellow fever effectively in Africa. That threatens to put millions more lives at risk. It is time to act. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21698649-africa-grip-one-worst-outbreaks-yellow-fever-30-years-wider-disaster/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Second homes + +Stay away + +There’s a new villain in town—at weekends and during the summer + +May 14th 2016 | From the print edition + + + +WHEN owning one home seems like a struggle, resenting those with two comes easily. Second-home ownership is uncommon: in 2010 around 4% of houses in America were second homes; 1% of English homes are second properties of people living in England. But they still arouse passions. + +Norway and Denmark limit second-home ownership, and in 2012 the Swiss voted to restrict second homes in places where they were most common. Australia has also clamped down on foreign purchases of residential property. Latest to the barricades is St Ives, a seaside town in south-west England, where a quarter of houses are second homes or holiday lets. On May 5th 83% of St Ives’s voting residents decided that newly built homes should be off-limits to non-residents. It is unclear if the vote is enforceable. It is certainly wrong-headed. + +In some cases antipathy to second-home ownership simply reflects an ugly dislike of outsiders; in others, the NIMBYism of second-home owners themselves, keen to preserve the exclusiveness of their holiday patch. (In Switzerland the vote to ban new construction of second homes in sensitive areas was carried by urban residents of Basel, Zurich and Geneva, not the people affected.) Sometimes, too, it stems from a misguided effort to fight the facts of economic life, and stop dwindling rural populations from shrinking further. But the St Ives vote, and schemes like it, can also reflect more legitimate concerns: that ghost streets and empty houses drain local communities of life and that, as non-residents hoover up homes, housing will become unaffordable for poorer permanent residents. + +Those tempted to mend the market should beware unintended consequences. Restricting the option to sell newly built properties as second homes will depress their price, discouraging development, including the new affordable housing that builders are often required to put up. And the spillover effects on the rest of the housing market could be nasty. + +One risk is that the life is sucked out of the local economy as rich holidaymakers go elsewhere. Christian Hilber and Olivier Schöni of the London School of Economics have studied the effects of the Swiss reform, and their preliminary findings suggest that it depressed prices of primary residences in the affected areas by 12%. Much as locals want to climb the housing ladder, they are unlikely to welcome a less vibrant economy; and existing homeowners will resent the hit to their wealth. Another risk is that it could worsen the very “ghostification” problem it is trying to solve. If, as in St Ives, existing primary residences can easily be sold to out-of-towners, that may well boost their prices, encouraging locals to cash in and move out. + +There are better answers to the problems posed by second homes. The tax system is one: the British, Dutch, French and Israeli governments all impose higher taxes on them. This makes most sense in places of extraordinary natural beauty, like the Swiss Alps or national parks, where sprawling new developments would blight the landscape. + +Another brick in Cornwall + +Everywhere else, the best policy is to increase supply. As long as homes are scarce, only those with deep pockets will be able to afford them. Loosening planning rules and incentivising development would keep the outsiders coming without forcing out locals. Australia has at least recognised the root of the problem by requiring foreign buyers to show that their investment will add to the existing stock. Build, don’t ban. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21698651-theres-new-villain-townat-weekends-and-during-summer-stay-away/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banks and state aid + +The rule of flaw + +Italy has been flirting with a banking crisis—and Brussels is partly to blame + +May 14th 2016 | From the print edition + + + +ATLAS could hold up the sky. Atlante, Italy’s bank-rescue fund, looks like a weakling. The fund, which raised €4.25 billion ($4.9 billion) last month, almost half of it from Italy’s two largest banks, has two purposes. One is to act as an emergency investor in banks starved of funds; the other is to kick-start a market in dud loans clogging up banks’ balance-sheets. On both counts, the fund has not done enough to calm nerves. Italy should have acted sooner to sort out its banks. But Europe’s approach to financial crises is also to blame. + +Italian officials talk about the fund as a “game-changer”—partly because it has already pulled off a rescue of Banca Popolare di Vicenza (BPVi), a regional bank whose initial public offering (IPO) flopped. But that only underlines how close Italy has come to disaster. BPVi’s IPO had been fully, and foolishly, underwritten by UniCredit, Italy’s largest bank: had not the fund stepped in, UniCredit itself might have run short of capital. A banking crisis at the heart of the euro zone might by now have been raging. As it is, the BPVi’s rescue has depleted Atlante’s firepower. More calls on its cash may be imminent—an IPO by Veneto Banca hardly has investors swooning. + +Defenders of Atlante pooh-pooh the critics. The fund has seen off the immediate risk of a crisis, they say, and enough money is left to put a big dent in Italy’s €360 billion of gross non-performing loans (NPLS). Specifically, Atlante is meant to help close the gap between the value that banks put on such assets and the price that investors in distressed debt will pay for them. It is supposed to accomplish this by acting as a junior investor in financial instruments that bundle banks’ bad debts together; by buying the riskiest slices of these investments, it will reduce the chance of losses for those higher up the ladder of investors. The theory is fine. But the appetite of those other investors is unproven. And as the amount of equity in Atlante goes down, so does the amount of risk it can take on. + +In the meantime, it is true that the number of duff loans in the system has stabilised and that banks have set aside lots of provisions. A new bankruptcy law, by bringing down the time needed to foreclose on loans, ought to encourage investors to buy NPLs from banks. But gross non-performing loans still make up around 18% of total loans, equivalent to a fifth of Italy’s GDP. And the law applies directly only to new lending; its impact on the stock of bad loans will be more muted. + +State flayed + +If Atlante is an unconvincing answer to Italy’s woes, that is partly the country’s own fault. It stood by as NPLs soared. But blame also lies with Europe’s new rules for handling banking crises. Tighter restrictions on state aid have prevented Italy from setting up a government-backed “bad bank” of the kind that Spain used to cleanse its banks. In late 2015 the European Commission also ruled that tapping Italy’s deposit-insurance fund to recapitalise four troubled lenders would count as state aid. If the commission concludes that state aid has been given, it automatically means that a bank is deemed to be failing, or close to it, triggering Europe’s new “bail-in” regime. That in turn starts to hand out losses to shareholders and creditors (retail investors among them), risking contagion at other banks. Atlante exists because Italy has precious few alternatives. + +The new rules are well-intentioned. State aid can distort competition; bail-in is designed to protect taxpayers from paying for bank failures. But in this instance the outcome is perverse. The Italian state is being forced, in effect, to stand back while its better banks risk being poisoned by the weaknesses of its worse ones. As a result the euro zone’s third-largest economy, and its second-largest public debtor, has been made more vulnerable to a banking crisis. Given a choice between financial stability and the rule book, ditch the rule book. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21698650-italy-has-been-flirting-banking-crisisand-brussels-partly-blame-rule-flaw/print + + + + + +Previous Articles Sections Next + + + +Letters + + + + + +On GDP, nuclear energy, Andrew Jackson, women and Islam, young voters: Letters to the editor + + + + + +Articles Sections Next + +On GDP, nuclear energy, Andrew Jackson, women and Islam, young voters + +Letters to the editor + +May 14th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Economics revision + +I read with interest your briefing on “The trouble with GDP” (April 30th), which highlighted the limitations of gross domestic product as a measure of prosperity. I agree that although GDP provides a good measure of market and government economic transactions, it does not take account of many other important economic and social factors. + +Since 2011 the Office for National Statistics has been developing wider measures of economic well-being. These include household “satellite accounts” that estimate the value of unpaid labour, such as volunteering and informal child care, that fall outside the scope of GDP. In 2014 the value of this activity amounted to £1 trillion ($1.65 trillion) compared with a British GDP of £1.8 trillion. We have also been publishing quarterly information on economic well-being since December 2014 that brings together a number of indicators to give a more rounded and comprehensive picture. These include net domestic product and net national disposable income per person that adjust GDP for the depreciation of assets, the net flows of profits into and out of the country and population change. + +JONATHAN ATHOW + +Deputy national statistician for economic statistics + +London + +Having seen countries magically slash excessive current-account deficits by big GDP revisions, I wish you success in finding a better assessment of prosperity. Whatever measure we end up with, multiply the growth rate by the percentage of the population that is better off financially from one year to the next. With two countries growing at 4%, the country where 75% of a population saw a blend of income and assets rise in real terms from one year to the next would report a 3% growth rate compared with 2% for the country where just half the population saw growth. + +If we begin to measure economies in a way that reflects income distribution, we are more likely to see politicians motivated to pursue policies that support more inclusive growth. + +MIKE HARRIS + +Head of research + +Renaissance Capital + +London + +Policymakers still focus on increasing the employment rate without giving enough attention to the quality of work that is being created. Research carried out in Scotland and Asia by Oxfam found that, when asked what they need to live well, people identify issues such as dignity, job security and meaningful work. + +The move to replace GDP with a range of alternative measures is long overdue. These new measures must be aligned with a more human economy, one that genuinely reflects the public interest, from the environmental costs of transactions to whether wealth is distributed to benefit all citizens, especially those at the bottom. + +Without this full picture, politicians will continue to make decisions based on flawed and partial data. + +KATHERINE TREBECK + +Senior researcher + +Oxfam GB + +Glasgow + + + +Many years ago I was teaching economics in Peru, my native country, and I used to tell my students that a massive migration of women from poorer countries to advanced ones would result in an increase in GDP per head to both the exporting and the receiving countries. The rationale is simple: by reducing the population denominator in the poorer (exporting) country, you increase GDP per head. At the same time, the migrating young women would be hired as service maids in the receiving country, allowing wives to go to work. The salaries of the maids and the wives would boost the GDP per head in the receiving country. And this is not even counting transportation costs. + +MAURICIO HERMAN + +Palmetto, Florida + +You could have cited Fred Hirsch’s masterful “Social Limits to Growth”, first published in 1976. If more refined measures of GDP do only a better job of accounting for the consumption of material goods and services, they will not capture the paradoxical phenomenon so sharply articulated in the book by Hirsch, a former financial editor at The Economist. I refer to “positional goods”, which bestow social status. Their implication for enhanced social welfare is primarily through the change in relative status conferred by the consumption of such goods. + +JOEL DARMSTADTER + +Bethesda, Maryland + + + + + +Nuclear energy + +* Your article on the Chernobyl explosion 30 years ago did not address the new nuclear safety risks emanating from Ukraine’s large and rapidly ageing nuclear sector (“Soviet apocalypse”, April 30th). Of the current 15 operating reactors, six will reach the end of their design lives by 2020. Amid acute power shortages, the demand pressure on nuclear generation is growing by the day. Ukraine is forced to import electricity from Russia with which it is in a proxy war. The coal-fired power plants are hamstrung by inadequate fuel supplies from the coal mines controlled by pro-Russian separatists. Natural gas supplies from Russia have been reduced to a trickle. The aging nuclear plants have thus become the lifeline of the economy and a guarantor of Ukraine’s energy security. + + + +Amid this heavy demand pressure, there is a high risk that nuclear units with compromised safety are allowed to operate indefinitely and without proper maintenance. Current efforts, with help from Euratom and the European Bank for Reconstruction and Development, are focused on short-term safety upgrades, not on long-term life-time extensions. More ominously, Energoatom, the nuclear utility and market monopolist, is financially bankrupt due its huge debts and a poorly functioning, over-centralised power market with rampant non-payment. A financially weak nuclear utility is bad for nuclear safety. The company is beset by a flurry of corruption charges—the last thing you want to hear about a nuclear utility. These new security risks posed by the aging nuclear plants should be addressed now both by Ukraine and the international community before again it’s too late. + + + +ISTVAN DOBOZI + +Former Lead Energy Economist of the World Bank + +Gaithersburg, Maryland + + + + + +In praise of Jackson + +You were rather hard on Andrew Jackson (“Not going to Jackson”, April 23rd). Yes, he was ruthless in removing native Americans from some states and yes, he was an unapologetic slaveholder. But his victory against the British in New Orleans in 1815 made it clear that the United States could not be successfully invaded. As president, Jackson almost single-handedly stood down South Carolina in the nullification crisis and thus kept our country from unravelling in the generation before the civil war. He also vetoed the rechartering of the second Bank of the United States, which established that a private group could not operate under the government to control the economy. + +We are far away from the world of Andrew Jackson. What can we make of a man who clubbed a man who tried to shoot him to the ground with his cane? Grievous flaws he had, but maybe, without endorsing all his actions, we can still have some admiration for a man who did so much for his country and who in his life epitomised the values of personal loyalty, integrity and honour that were so important to early 19th-century America. + +VINCENT DONATO + +Yonkers, New York + + + + + +The female form + +The greatest achievement of Roger II’s court in Sicily was not, as you suggest, an atlas (“Land of reinvention”, April 23rd). Rather it was the promulgation of the Muslim view. To Christians a woman was a tool of Satan; to Muslims she was admirable, a thing of beauty, an ornament of creation. The Renaissance is often portrayed as a home-grown European invention. Au contraire, the freedom and fertility of 14th-century arts can be traced to the social innovations of the 13th century. The revised view of women was the true renewal of the human spirit, too often ignored in history until given visible form through works of art. + +BRIAN BAYLY + +Tucson, Arizona + + + + + +Rock the vote + +“Turning out the teens” (April 23rd) mentioned how a low turnout among the younger generation might affect the outcome of Britain’s referendum on the European Union. You noted that the vote will coincide with the start of the Glastonbury festival. I was surprised (and pleased) to see that my ticket-confirmation e-mail for Glastonbury pointed this out and provided helpful links to register for postal votes. Who says political activism is dead in modern rock music? + +HELEN MCLEOD + +London + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21698627-letters-editor/print + + + + + +Articles Sections Next + + + +Briefing + + + + + +The Philippines: Fist of iron + + + + + +Articles Sections Next + +The Philippines + +Fist of iron + +A new strongman president may prevent the Philippines from becoming an economic star + +May 14th 2016 | MANILA | From the print edition + + + +IN A vain effort to quell the revolution that created the first, brief Philippine republic in 1899 the Spanish army executed Jose Rizal, a nationalist author, in a park that now bears his name. Almost 90 years later demonstrators, fed up with the murderous kleptocracy of President Ferdinand Marcos, massed in the same park in a display of people power that eventually pushed him into exile. On May 7th, two days before Filipinos went to the polls to choose a new leader, 250,000 people thronged Rizal Park for a rally for Rodrigo “digong” Duterte (pictured above), who promises another political upheaval. + +Mr Duterte, the tough-talking mayor of Davao, triumphed on May 9th: with more than 95% of the vote counted, he holds a 15-point lead. The two runners-up have conceded defeat. His rivals were well beaten. Miriam Defensor Santiago, who has served in all three branches of government, took just 3.4% of the vote. Grace Poe, a telegenic senator with little political experience, threw in the towel on election night. Mar Roxas, a cabinet minister, finished well adrift, despite an endorsement by the outgoing president, Benigno Aquino. Jejomar Binay, Mr Aquino’s vice-president, who has faced a steady stream of corruption allegations, finished even further behind. + +The country of 100m people that Mr Duterte inherits has one of the fastest-growing economies in Asia. But poverty stubbornly persists. Voters are also fed up with crumbling infrastructure, productivity sapping gridlock, persistent corruption and ineffective government. And discontent simmers at the country’s narrow, feudal politics, dominated for decades by a handful of wealthy landowning families. + +Mr Duterte ran as an action man and outsider, ready to tackle the nation’s problems just as one might wring the neck of a foul snake. He has given few details. In a long, meandering speech, laced with bad language, at the rally in the park he promised only to fight crime and corruption. The crowd cheered as he pledged to send the army and police to kill criminals. Similar threats made on the campaign trail thrilled many more people than they horrified. Ordinary Filipinos are sick of the robbers they meet in the street—as well as those they put up with in high office. + + + +Mr Duterte will be the first president from Mindanao, the southernmost of the islands that make up the Philippines and the poorest part of the country (see map). He will also be the first not to have held national office since the late Corazon Aquino, mother of Benigno and widow of an assassinated opposition leader, who rode the “people’s power” revolution to the presidency in 1986. Mr Duterte tapped into a deep resentment at the immense wealth and political sway amassed by a few elite families. + +Three of the four candidates whom Mr Duterte defeated were politically connected to Ms Aquino; the fourth, Grace Poe, was the adopted daughter of a friend of Marcos. Malcolm Cook at Singapore’s Institute for South-East Asian Studies, refers to them as “the faded yellow ribbon brigade” (yellow ribbons were an anti-Marcos symbol). + +Family ties + +The promise of the 1986 revolution has turned into what Miguel Syjuco, a Filipino novelist, calls “a resurgent oligarchy”. Political dynasties dominate local and national politics. Even the Marcoses have worked their way back into power: Imelda, Ferdinand’s widow, is in Congress; Ferdinand junior is a senator locked in a tight race for vice-president; and his sister, Imee, governs Ilocos Norte province. This elite is well-connected, often Western-educated and its members present themselves well to the world, but they have grown increasingly disconnected from the people they supposedly serve. + +Mr Duterte exploited this gap. He mentioned his modest means repeatedly during the campaign. His supporters railed against trapos (“traditional politicians”, a play on the Tagalog for “old rags”). His unpolished speech and impatience with convention and democratic processes became assets rather than liabilities; signs of authenticity and an indication that he will do things differently. + +His advocacy of a barely defined federalism appealed to simmering provincial resentment of the power concentrated in Manila. To win over voters in the capital, meanwhile, he touted his record in Davao, which he takes credit for turning from a violent city into a mini-Singapore: safe, clean and orderly. Residents frustrated by chaos and gridlock in the capital hope he will work the same wonders there. But the Manila region, a conurbation of 17 cities and municipalities, will be hard to corral. And honouring his promise of federalism would require changing the country’s constitution. Three post-Marcos presidents have tried—and failed—to do so. + +The question now is what sort of president Mr Duterte will make. His campaign focused almost entirely on crime, drugs and corruption. These are important in a gun-mad country where being asked for bribes is a daily frustration. But to deal with them he has offered only macho posturing. His promise to stamp out all three within six months of taking office is impossible, even if he goes ahead with his killing spree (he has threatened to slaughter 100,000 criminals and dump their bodies in Manila Bay to fatten the fish). But he can do a lot of damage trying. + +Crime and punishment + +He vows to hang offenders, and reminisced fondly about Marcos’s ability to “use the forces of government to get what he really wanted”. Many dismiss such statements as bluster and trust that Mr Duterte will moderate his tone once in office. But hoping that a president will not do as he says is risky. + +In some respects, Mr Duterte says, he will follow the path the country is already taking, for instance, by seeking peace in the south. Mr Aquino’s administration was on the brink of signing a peace agreement with Muslim rebels in Mindanao, ending a decades-long insurgency, when 44 policemen died in a botched raid on a splinter group. After that raid the bill to establish an autonomous political entity became politically toxic and died in Congress. Mr Duterte says he supports creating such an entity and may revive the bill. + + + +An abrupt shift in economic policy seems unlikely. For all his tough talk on everything else, he has suggested no major changes. Since the economy is chugging along nicely, this is just as well. Nominal income per head grew from $2,372 in 2011 to $2,873 in 2014. Between 2010 and 2015 the economy expanded at an average annual rate of 6.3%, nearly two percentage points faster than in the previous five years—and the biggest improvement among South-East Asia’s larger economies (see chart ). The World Bank forecasts more of the same—growth of 6.4% in 2016 and 6.2% for the two years after. In Mr Aquino’s term the country attained an investment-grade credit rating for the first time, reducing the country’s borrowing costs. + +As the economy has expanded, public debt has declined markedly, from 77% of GDP in late 2004 to around 44% in March. Remittances grew in 2015 for the 14th year in a row and now account for around 10% of GDP. But a fast-growing service sector, particularly in business-process outsourcing—call centres, data transcription, software and engineering design, and other back-office tasks—has kept more skilled Filipinos at home. The number living abroad has fallen from 10.2m in 2013 to 9.4m today, according to Mr Aquino. + +Mr Duterte wisely plans to maintain his predecessor’s focus on infrastructure. Less wisely, he thinks he can revive the country’s steel industry, despite a global glut. He wants to boost investment in tourism—the Philippines attracts fewer visitors than it should, given its situation and beauty—and proposes leasing islands to foreign investors to set up factories. Worryingly, given the Philippines’ potential as a trading nation, he sounds lukewarm about joining the Trans-Pacific Partnership, a free-trade pact. He says that he will hire “the economic minds of the country”, and let them make policy. Choosing the right advisers might reassure jittery investors and keep the country on track. + +Mr Aquino does not deserve all of the credit for the country’s economic health. Gloria Macapagal Arroyo, his predecessor, put in place budgetary and fiscal reforms that laid the groundwork for steady growth. She introduced a value-added tax, which boosted government revenues, slashed administrative costs and instituted a cash-transfer programme that gives up to 15,000 pesos ($319) a year to nearly 4.4m poor households, provided they vaccinate their children and send them to school. + +Mr Aquino built on Ms Arroyo’s ambitious social programmes and fiscal reforms. In 2012 his government imposed “sin taxes” on tobacco and alcohol, directing 85% of the revenue to health care and 15% to help tobacco workers and farmers find new jobs. Two years later the health department’s annual budget had risen from $1.25 billion to $2 billion; by mid-2015 the share of people enrolled in a popular national health-insurance scheme had risen to 82% from 74% in 2011. He expanded basic education to include kindergarten and schooling to the age of 18, and extended Ms Arroyo’s cash-transfer programme for the poor. + +Mr Aquino also spent political capital on fighting corruption and improving transparency. Many noticed, however, that the highest-profile victims of his anti-corruption campaign were three opposition senators, a chief justice who ordered the break-up of an Aquino family plantation and Ms Arroyo, also a political opponent. Many also noticed that, despite Mr Aquino’s noble statements about following “the straight path”, ordinary folk still had to pay backhanders to police and bureaucrats. Even so, the Philippines has improved its position in Transparency International’s corruption index from 134th in 2010 to 95th last year. + +Infrastructure is improving. Spending rose from 1.8% of GDP when Mr Aquino took office to around 5% this year. The perception that such spending is more effective and has been transparently handed out has helped bring a tripling of foreign direct investment into the Philippines. + + + +A guide to the Philippines, in charts + +Such encouraging numbers do not tell the whole story, however. The share of Filipinos living below the national poverty line in the first half of 2015 was 26.3%, the same as in 2009, before five years of runaway growth. An expanding population means that even as some have moved out of poverty, there are more poor people now than when Mr Aquino took office. + +Poor state of affairs + +City-dwellers and service-sector workers have done well. GDP per person in Manila is over four times higher than in parts of Visayas and Mindanao. More than half of the country’s poorest people are farm workers, who are three times more likely than city-dwellers to be poor. High rice prices, a result of a misguided self-sufficiency programme, hit the poor especially hard. + +Manila and other cities remain horribly congested. Voters blamed Mr Aquino, though it is not his fault. The Philippines has underinvested in infrastructure for years. As the economy boomed, more money has been put into fixing roads, but not nearly enough to keep up with the soaring number of cars, especially in Manila. No one knows what Mr Duterte plans to do about rural poverty, or how he will ease Manila’s traffic jams. + +When it comes to foreign relations, he has already shown a knack for offending allies. When officials from America and Australia expressed displeasure at a crass remark from Mr Duterte, about how he wished he had been first in line when an Australian missionary was raped and murdered during a prison riot in the Philippines, he dared these steadfast allies to sever diplomatic ties. After Singapore said that a Facebook post showing Lee Hsien Loong, the prime minister, appearing to endorse Mr Duterte was false, he joked about burning a Singaporean flag. Such cracks did not go down well, for some reason. + +No figure is too beloved for Mr Duterte to insult. Recalling the heavy traffic during a papal visit to Manila, Mr Duterte said, “Pope, you son of a bitch, go home. Don’t visit us here anymore.” That was in a speech accepting his party’s nomination for president. Filipinos, more than 80% of whom are Catholic, seem not to have held it against him. + +The most pressing foreign-policy question facing the Philippines is its stand-off with China over claims in the South China Sea (or the West Philippine Sea, as it is known at home). On this Mr Duterte has careened all over the map. He has declared himself “ready to die” for this country’s claims, vowing to jet ski to a disputed island personally to plant a Philippine flag. He has insisted that he is open to bilateral negotiations and joint development, something China has said it favours as well. He has also vowed to “shut up” about the dispute if China agrees to build train lines across the Philippines. + +What he will actually do is a mystery. Most recently, he has seemed willing to accept the status quo: after voting on Monday he told reporters, “I would say to China: ‘Do not claim anything here, and I will also not insist that it is ours.’” The Permanent Court of Arbitration, an international dispute-resolution body in The Hague, is expected to rule in the coming weeks on the Philippines’ case against China. If it sides with the Philippines and then China begins building on the Scarborough Shoal—which both countries claim and which China has occupied since 2012 in contravention, according to the Philippines, of an American-brokered agreement—no Filipino president can simply acquiesce, especially a tough guy. + + + +For all of Mr Duterte’s bravado and alleged extrajudicial killings of suspected criminals, he may not even make much of an impact on crime. The murder rate in Davao remains stubbornly high. Mr Duterte’s reputation for cleanness was challenged toward the end of the campaign, when Antonio Trillanes, an independent vice-presidential candidate, accused him of having millions of dollars stashed in secret bank accounts, running illegal protection rackets and hiring ghost employees. Mr Duterte denied the charges. + +His anti-establishment campaign may also hamper him: having run against the political elite, he now must govern with them. In Mr Duterte many see echoes of Mr Estrada, another populist outsider elected on an anti-corruption platform. His presidency lasted just under 18 months: he was impeached for graft, and resigned after the army withdrew its support. + +A similar future may lie in store for Mr Duterte. During the campaign some speculated that Mr Aquino’s Liberal Party (LP) machine would throw its support behind Ms Poe once it became clear that Mr Roxas could never win. Instead party grandees are rumoured to prefer impeachment, particularly if the LP candidate, Leni Robredo, wins the vice-presidency, and would become president on Mr Duterte’s departure. As The Economist went to press she had a narrow lead. + +Many hoped the Philippines had outgrown such antics. When Mr Aquino steps down at the end of June, he will become the first president to enter office with clean hands and to leave the same way since Fidel Ramos in 1998. Unlike his two predecessors, Mr Aquino has faced no charges of impeachment (they succeeded against Mr Estrada, but not against Ms Arroyo) or coup attempts. Whatever one thinks of Mr Duterte, the country’s voters chose him and he deserves to take office with the wind, rather than schemers, at his back. + +Thriller in Manila + +A return to instability would do the Philippines no good. The country is not over-reliant on commodities or China. Unlike China, Japan and Thailand, the Philippines has a young population and a cheap English-speaking labour force. The country does not share Indonesia’s protectionist instincts and is more welcoming to foreign investors. If it keeps to today’s path it could become one of Asia’s stars. + +All of that is at risk. In the short term Mr Duterte is unlikely to make any policy reversals to stop growth. But investors are nervous: Mr Aquino was dull but predictable; Mr Duterte is neither. Further ahead, the Philippines risks the same combination of political unpredictability and stagnation as Thailand—another country divided between a minority long accustomed to getting its way and a majority that keeps voting against it. If the Filipino elite understands the message voters have sent in electing Mr Duterte, they could avert this fate. + +The bigger risk comes from the long-term damage a strongman could do to a young democracy’s still-fragile institutions. On the stump Mr Duterte mused about shutting down Congress and declaring a “revolutionary government” if he fails to get his way. His enthusiasm for vigilante killings shows his preference for order at the expense of law. The Philippines’ growing prosperity reflects the country’s improved governance, and the confidence of investors. Voters rightly want more inclusive growth and are frustrated at the domination of their country by a small number of families. But electing a president with contempt for the law and democratic norms will solve neither problem. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21698684-new-strongman-president-may-prevent-philippines-becoming-economic-star-fist/print + + + + + +Articles Sections Next + + + +United States + + + + + +Death and money: Looking up + +The Republicans: Learning to love the Don + +The campaigns: Heard on the trail + +Scourge, rather than saviour: Scourge, not saviour + +Zombie campaigns: Greenback from the dead + +Campus life: Unclubbable + +The Supreme Court: Slowing down + +Lexington: Citizen Brandeis + + + + + +Articles Sections Next + +Death and money + +Looking up + +The link between income and mortality rates is weakening + +May 14th 2016 | From the print edition + + + +IT IS a bad time to be a middle-aged, middle-class, white American. Stripped of manufacturing jobs by trade and technology, then skewered by the financial crisis, white men aged 45 to 54 earn 7% less, in inflation-adjusted terms, than in 1987. Their suffering is not just financial. In November Anne Case and Angus Deaton, two economists, found that middle-aged whites were more likely to die in 2013 than they were in 1999. Another study recently found that, since 2001, gains in life expectancy at 40 have been unevenly distributed, benefiting the rich most. Yet the plight of middle-aged, middle-income whites, while distressing, is atypical. Across the whole population, the chance of early death depends ever less on economic circumstances. + +In a recent article in Science, Janet Currie of Princeton University and Hannes Schwandt of the University of Zurich rank America’s counties by the proportion of their residents living in poverty. The poorest areas are clustered in the South; the poverty rate in Holmes County, Mississippi, for example, is over 40%. Counties with the least poverty are likely to be near rich, northern cities; Somerset County, New Jersey, an hour’s drive from Manhattan, has a poverty rate of only 5%. In general, the poorer the county, the more deaths. The researchers examined the strength of this relationship in three-year periods starting in 1990, 2000 and 2010. + + + +Mortality has fallen for almost everyone. You would expect this: health care and lifestyles (most notably, smoking rates) have improved. Less predictably, age affects how those gains are divvied out between rich and poor (see chart). Those over 50 have done best in rich counties, reinforcing the notion that the link between income and health is strengthening for the middle-aged. Yet among the young—and particularly among young men—the biggest gains have been in the poorest places. + +There are three likely explanations. First, crime has fallen, benefiting poor areas more. In 1990 there were 37 homicides per 100,000 men aged 18-24. By 2014 there were 20. This has particularly affected black men, who more frequently fall victim to murder. In 1990 twice as many young black men died from any cause as young white men. That has fallen to 50% more, with the lower murder rate accounting for four-fifths of the improvement. + +Second, HIV is killing fewer people. This is partly due to fewer cases. In 1990 there were 21 incidences of HIV/AIDS per 100,000 men; today there are 12 (though all the progress was before 2000). It is also due to better treatment. Because the HIV epidemic is concentrated in poor, black, southern areas, falling deaths from HIV make mortality rates more equal. HIV mortality has fallen most among 25- to 44-year-olds; among black men in this age-group, HIV deaths are down by 90% since 1990. + +The third explanation is better health care for mothers, babies and children. During the 1980s, for instance, Medicaid coverage for pregnant women was greatly expanded. The benefits were long-lasting: a study in 2015 found those whose mothers were included in the expansion were healthier in adulthood. Among other things, they were less likely to be obese. + +In 1997 the federal government also began helping states provide health insurance to children in families that were poor, but not poor enough to qualify for Medicaid. This has probably reduced infant deaths that happen after mothers and babies leave hospital. A study in 2014 found that such deaths are largely responsible for America’s persistently high infant-mortality rate compared with Europe’s. + +Targeted interventions such as the 1997 reform probably reduced infant mortality among the poor. The expansion of the earned-income tax credit in the 1990s may have helped, too, by reducing the strain on mothers, or improving toddlers’ nutrition. Other public-health improvements, such as cleaner air—particularly important for childhood health—have also disproportionately benefited poor areas. + +These trends are especially welcome because more equal mortality should persist throughout the lives of today’s youngsters, argues Ms Currie. Frustratingly, this does not show up in the most-used statistic: life expectancy at birth, which rose by about the same amount in rich and in poor counties. Life expectancy is calculated by assuming that people continue to die at the same rate as today, so that opposing mortality trends among young and old cancel each other out. But in reality, mortality rates evolve over time. Today’s poor and middle-income young may avoid the malaise currently afflicting middle-aged, middle-income whites. Manufacturing jobs lost to trade cannot easily be lost a second time. The opioid epidemic ravaging communities today may yet be vanquished. + +If so, the gap in life expectancy at birth between rich and poor will also fall. This has already happened between whites and blacks, because middle-aged blacks are living longer (for that, thank falling rates of cancer and heart disease). As a result, the life expectancy of whites is now just three-and-a-half years higher than that of blacks, down from seven years in 1990. + +In short, income and race have an ever-weaker effect on mortality, despite rising income inequality. Thanks to the plight of middle-aged whites, this good news is easily missed, says Ms Currie. Evidence, perhaps, of a different sort of inequality. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21698702-link-between-income-and-mortality-rates-weakening-looking-up/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Republicans + +Learning to love the Don + +The Republicans are in tatters over Donald Trump + +May 14th 2016 | WASHINGTON, DC | From the print edition + +Trunk show + +AFTER a bruising workout in the primaries, both parties are supposed to clank back into line for the general election. The losers and maimed quell their sniffling for the sake of unity. But that is not happening for Donald Trump. As Republican congressmen and senators returned to Capitol Hill on May 10th, the ranks backing the party’s prospective nominee looked ragged and querulous. + +Many Republican congressmen have held off endorsing Mr Trump, including their leader, Paul Ryan, the Republican Speaker of the House of Representatives, who has declared himself “just not ready” to. Other Republican leaders, including two former presidents, George Bush senior and junior, a handful of senators, such as Lindsey Graham of South Carolina, and at least one governor, Charlie Baker of Massachusetts, have said they will never back him. ‘Sometimes there’s a stink you just can’t wash off, kinda like a venereal disease,” said a Republican congressman. “That’s the problem Trump’s got.” There is muttering of mutiny, perhaps a rallying around an alternative leader. Senator Ted Cruz, who suspended his campaign after Mr Trump trounced him in Indiana, hinted on May 10th that he might reactivate it. + +This is at once unprecedented and predictable. No presidential nominee has shown such contempt for his party’s verities as Mr Trump has. While professing to admire Ronald Reagan, he castigates free trade, vows to defend Social Security and apologises for Vladimir Putin. He has also missed no opportunity to belittle his Republican confrères. + +Asked, in an interview with The Economist, which brand was more powerful, the Republicans or his own, he responded by nofsting that a television debate he had appeared in was watched by 24m people; “Massive, massive show—biggest show in the history of cable. If I wasn’t in it, they would’ve had 3m-4m, if that.” Responding to Mr Ryan, he has declared himself “not ready to support Speaker Ryan’s agenda” which, he implied, ran contrary to the interests of Americans, who “have been treated so badly for so long.” That was less a snippy rejoinder than a statement of war. It identified the prospective Republican nominee with those—around half the Republican electorate, according to recent exit polls—who say they feel “betrayed” by their party. + +As The Economist went to press on May 12th, Mr Trump and Mr Ryan were due to hold peace talks. The impression of a party in meltdown is helping neither. Despite his braggadocio, Mr Trump needs Mr Ryan’s help to raise money—he says he may need $1.5 billion—and to turn out the conservative vote in November. There are not enough aggrieved Republicans to give him victory; Mr Trump needs all Republicans—including those, roughly a quarter of the total in recent primary exit polls, who currently say they will not vote for him. + + + +America's primary agenda: our interactive 2016 election calendar + +Mr Ryan’s interests are more balanced. A wonkish sort of politician, he must be horrified by Mr Trump’s policies. He preaches fiscal discipline, including by trimming welfare; Mr Trump, who vows to safeguard Social Security, promises tax cuts worth $10 trillion (though he says he is seeing if he can reduce that cost a bit). A former acolyte of Jack Kemp, who retains his mentor’s optimistic belief in the power of enterprise and free markets to help the poor, Mr Ryan must find Mr Trump’s angry pessimism even more objectionable. He denounced the tycoon’s proposed ban on foreign Muslims, as well as his reluctance to disavow the support of a former Grand Wizard of the Ku Klux Klan, David Duke. Mr Trump’s offensiveness is also a worry for the many Republican congressmen who are up for re-election in November—and maintaining Republican control of both houses is one of Mr Ryan’s main responsibilities. John McCain, a senator from Arizona, a state with many Hispanics, who mostly loathe Mr Trump, has predicted a tough re-election fight for himself. Despite Mr Trump having denigrated his heroism as a prisoner-of-war in Vietnam, however, Mr McCain is reluctantly backing the tycoon. + +Sooner or later, Mr Ryan is likely to follow suit. He will not want to be seen blocking party unity. For the same reason, he and other front-rank Republicans will probably not be tempted to run as an independent, which would hand victory to Hillary Clinton, the prospective Democratic nominee. By holding out against Mr Trump, at least for a bit, Mr Ryan mainly hopes to persuade him to adopt a less vituperative style. He knows there is not much he can do to influence Mr Trump’s policies. “This is a big-tent party,” he said on May 11th. “There’s plenty of room for policy disputes.” + +The painful fact for Republican leaders, including Mr Cruz, whose campaign is dead, is that Mr Trump has won. They have lost. The rest is mostly noise. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21698712-republicans-are-tatters-over-donald-trump-learning-love-don/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +May 14th 2016 | From the print edition + + + +Four years a candidate + +“Be full of faith and so full of joy that this team was chosen to fight a long battle. Think that slavery—it took 25 years to defeat slavery. That is a lot longer than four years.” + +Heidi Cruz, in a call-in with supporters, on her husband’s campaign. Texas Tribune + +Taking care of the pennies + +“I don’t take money from billionaires, but I do check every vending-machine change slot.” + +Bernie Sanders on his fundraising technique. Late Show, CBS + +A gimme + +“It was unbelievable. But I guess it was his course, so it was his rules.” + +Oscar De La Hoya, ex-champion boxer, claims Donald Trump cheats at golf. AP + +The apprenticeship + +“Well this is the ultimate reality show, it’s the presidency of the United States.” + +Paul Manafort, an adviser to Mr Trump, on convention plans. MSNBC + +Veep peep + +“We would consider people who are Americans and who put America first.” + +Ben Carson explains the parameters of Mr Trump’s veep search. Wall Street Journal + +Jobs for the boys + +“This is one, singular person who is the Steve Jobs of modern politics. And he is going to drive the system.” + +Newt Gingrich auditions. Bloomberg + +Tow thy neighbour + +“Something came over me, I think the Lord came to me, and he just said ‘Get in the truck and leave.’ And when I got in my truck…I was so proud, because I felt like I finally drew a line in the sand and stood up for what I believed.” + +A Trump-supporting tow-truck driver in North Carolina refused to tow a stranded Sanders supporter. ABC Eyewitness News + +Foreign affairs + +“I know Russia well, I had a major event in Russia two or three years ago—Miss Universe contest.” + +Mr Trump on Russia. Fox News + +With a whimper + +“My heart is not in this.” + +John Kasich ends his presidential campaign on a runway in Columbus, Ohio + +Vanity, thy name is... + +“My hair look okay? Give me a little spray.” + +Donald Trump discusses hair products with coal miners in West Virginia. Gawker + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21698710-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Donald Trump and small business + +Scourge, not saviour + +What small-businesses owners might wish to know about Mr Trump + +May 14th 2016 | From the print edition + + + +“HE ALMOST bankrupted us,” says the retired owner of a construction business on the east coast. Thirty years ago he ran a small business with around ten employees, which was hired by Donald Trump to work on an 11-month project at his Taj Mahal casino in Atlantic City. It was the biggest contract, by far, that the business had ever had. The builders worked as they had never done before to complete the job on time. As soon as they finished, Mr Trump stopped paying. He owed around $200,000 of a bill totalling about $700,000, a huge sum for a small company. + +What followed was a nearly year-long battle to extract the money it was owed. Lawyers advised the company that Mr Trump would procrastinate with expensive litigation, as he had done many times before. Other contractors relayed their experiences with the “Trump discount”, the billionaire’s habit of rarely paying the full sum he owed. As the “Trump discount” made the rounds in the industry, wily contractors quoted a higher price at the outset to avoid suffering any losses. Then, one day in 1988, the phone rang at 9.30am. A sweet-voiced special assistant of Mr Trump’s announced she had a cheque for the builders which, she claimed, had been lying on her desk for a year. “We only got paid because of Merv Griffin,” says the retired contractor. In a surprising swoop, Mr Griffin, an entertainment-business tycoon, had bought the company that owned the Taj Mahal. + +Owners of small businesses are among Mr Trump’s most dedicated supporters. They believe his biggest selling point is his business acumen. He is a consummate dealmaker, they say, and has made heaps of money, maybe as much as $10 billion. They also like his proposal to slash the corporate income-tax rate from 35% to 15%. A poll earlier this year by Manta, an online directory for small businesses, of 2,527 owners of small companies who were planning to vote in the primaries, found that 60% favoured Mr Trump as the Republican candidate. + +Bryant Simon of Temple University, who wrote a history of Atlantic City, marvels at how the author of “The Art of the Deal” sells his failure there as a great success. Mr Trump paid too much to finance the Taj with junk bonds; he also overpaid for the casino’s interior, whose mirrors and chandeliers made the palace of Versailles look unadorned. Even though the Taj was the highest-earning casino in America for a while it could not cover its debt. + +Even more impressive business accomplishments do not readily translate into success in the White House. Presidents who cut their teeth in business are among the least successful and least popular of the 43, according to the Siena College Research Institute (SRI), which ranks presidents in 20 areas such as integrity, intelligence, willingness to take risks and leadership ability. Harry Truman is the only president with business experience who ranks highly, says Don Levy, director of the SRI. (Truman, a former haberdasher, ranks ninth.) Warren Harding, a newspaper publisher, comes bottom, at 43. Calvin Coolidge, a corporate lawyer, ranks a lowly 29th and Herbert Hoover, who had a career in the mining industry, comes in at 36. + +Those businessmen who became presidents eased into politics slowly. After making money in the oil business, George H.W. Bush served for years in Congress, as ambassador to the UN and as boss of the CIA. His son, George W., also started out in the oil business and then, after a false start when he lost a House race, was elected governor of Texas at the first attempt. + +Some companies are considering skipping the Republican convention in Cleveland. Presented with a choice of Trump v Clinton, the owner of the construction business that worked on the Taj would set aside his dislike of Mrs Clinton and vote for her. The Clinton campaign can look forward to plenty more stories like this from those who have worked with Mr Trump during his freewheeling career. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21698613-what-small-businesses-owners-might-wish-know-about-mr-trump-scourge-not-saviour/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Zombie campaigns + +Greenback from the dead + +Presidential campaigns raise funds long after they cease to function + +May 14th 2016 | From the print edition + + + +KIM CLAUSEN of Denver, Colorado, made a $250 contribution to the presidential campaign of Republican Senator Marco Rubio on March 16th. The transaction was, for the most part, unremarkable. Indeed, Ms Clausen had made identical contributions in each of the previous six months. Her latest gift, however, would differ in one key respect. Its designated recipient, Mr Rubio, had suspended his campaign the day before. + +Ms Clausen is not alone. Since September, the Federal Election Commission (FEC) has recorded hundreds of contributions to presidential campaigns whose candidates are no longer in the race. In all, zombie campaigns have raised about $1m. Scott Walker, the governor of Wisconsin, leads the pack, having raked in more than $700,000 since his withdrawal from the primaries in September. Lindsey Graham, who quit in December, has since raised about $70,000. + + + +America's primary agenda: our interactive 2016 election calendar + +Fundraising of this sort is perfectly legal under FEC rules. Candidates who suspend their campaigns can continue raising money long after they have left the trail. A campaign technically ends only once it has retired its debts and filed a termination report with the FEC. For most candidates, this will not happen soon. FEC records show that as of March 31st, the failed Republican presidential campaigns had debts of nearly $5m. Mr Rubio alone owes nearly $2m. Lincoln Chafee is the most indebted Democratic ex-candidate: he owes $360,000. + +Democrats may be tempted to chide their Republican counterparts for their profligacy. They should recall that in 2008, after a long and bitter primary campaign, Hillary Clinton was left with over $22m in unpaid bills. Those debts would not be paid until January 2013, more than four years later. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21698720-presidential-campaigns-raise-funds-long-after-they-cease-function-greenback/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Campus life + +Unclubbable + +Harvard sanctions members of off-campus private clubs + +May 14th 2016 | CAMBRIDGE, MASSACHUSETTS | From the print edition + +FRANKLIN D. ROOSEVELT won four presidential elections, but there was one vote that eluded him. As a Harvard undergraduate, he “punched”—sought to join—the Porcellian, the oldest of Harvard’s eight private, historically all-male “final clubs”. Even though it had previously admitted his father and his cousin Theodore, he was rejected. Now Drew Faust, Harvard’s president, is attempting to tame the secretive organisation as even the Roosevelt clan could not. On May 6th Ms Faust announced that the college would punish students who join single-sex social clubs. + +America’s oldest university was historically an exclusively male domain. It did not educate women until the founding of Radcliffe in 1879, which did not merge with Harvard itself until 1977. As expectations of sexual equality evolved, Harvard followed suit, and demanded that its social clubs go co-ed. They refused, and in 1984 the college cut ties with them. + +Once Harvard’s relationship with the clubs was severed, however, its administrators lost all power to influence them. As a result, the final clubs have continued to play a dominant role in the college’s social life without any external oversight. By the late 1990s female students began setting up their own single-sex organisations. Today, a quarter of undergraduates belong to a social club. Since 2014, two male clubs opened their doors to female members. + +But in recent years activists and the press have devoted increasing scrutiny to the spectre of rape on campus. In March Harvard published an official inquiry into sexual assault, and found that 47% of women in their last year of study who had attended final club events (including female-hosted ones) said they had experienced non-consensual sexual contact in college, compared with 31% for senior women overall. Defenders of the clubs said the study conflated correlation with causation—it did not determine whether these unwanted encounters occurred in the clubs or elsewhere, or whether the perpetrators were club members. The report’s authors accused the clubs of “deeply misogynistic attitudes” and a “strong sense of sexual entitlement”. + +Even the clubs’ critics, however, had reason to be surprised by Ms Faust’s response. Although Harvard cannot control unaffiliated private organisations, it still wields power over other aspects of student life. So rather than targeting the clubs, Ms Faust went after their members. She announced that from 2017, members of single-sex clubs, fraternities and sororities will not be allowed to lead official campus groups or captain sports teams. Nor will they be eligible for some scholarships. Harvard, she said, could not “endorse selection criteria that reject much of the student body merely because of gender”. + +The final clubs protest that the university is violating their First Amendment right to freedom of association. One may challenge the policy in court—though such a claim is unlikely to get far, since Harvard is itself a private institution, with the same freedom to establish rules for its students that final clubs do for their members. In the case of the all-male Porcellian, which does not allow guests of any gender past its reception hall, its former graduate board president Charles Storey has noted that forcing it to admit women “could potentially increase, not decrease, the potential for sexual misconduct.” Sororities are not happy with the decision either. They marched through Harvard Yard on May 9th, declaring that all-female clubs provide a much-needed “safe space” for women. + +Even if the statistical evidence tying the clubs to sexual assault is contested, Ms Faust has good reasons to pressure them to go co-ed. Despite the proliferation of sororities and female final clubs, only the male clubs boast luxurious mansions scattered around Harvard’s campus, out of the reach of police enforcing under-age drinking laws. This disparity entrenches Harvard’s retrograde tradition of privileges for men. + +But the main reason Ms Faust’s predecessors left the clubs in peace is that the new edict may be unenforceable. Final clubs do not publish membership lists. Will the college plant spies at their events? Or reward students who rat out their roommates with extra helpings in the dining hall? Harvard may end up proving the law of unintended consequences taught in its economics courses: as Peter Ayala, a student, notes, the rule could cause the clubs to become more secretive than ever. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21698711-harvard-sanctions-members-campus-private-clubs-unclubbable/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Supreme Court + +Slowing down + +Why, when it comes to justices, nine are better than eight + +May 14th 2016 | WASHINGTON, DC | From the print edition + +Eight ain’t great + +WITH five votes, the late Justice William Brennan liked to tell his clerks, “you can do anything around here”. The rule still applies after the death in February of Antonin Scalia. But with only eight justices remaining, the magic number of five is now harder to come by. Twice since Mr Scalia’s death the Supreme Court has performed the judicial equivalent of throwing up its hands. In a small case concerning banking rules and in an important one challenging the future of public-sector unions, the justices issued one-sentence per curiam (“by the court”) rulings: “The judgment is affirmed by an equally divided court.” A tie in the high court means that the ruling in the court below stands. But these non-rulings do not bind other lower courts, and the judgment has no value as a precedent. A tie, in short, leaves everything as it was and as it would have been had the justices never agreed to hear the case in the first place. + +That’s a lot of wasted ink, paper, time and breath. And now it seems the justices may be keen to reduce future futile efforts as they contemplate a year or more with a missing colleague. Only 12 cases are now on the docket for the October 2016 term, and grants are lagging below the average of recent years. The slow pace is especially notable because it marks a slowdown from an already highly attenuated docket. Seventy years ago, the justices decided 200 or more cases a year; that number declined to about 150 in the 1980s and then plummeted into the 80s and, in recent years, the 70s. The justices will grant more cases in dribs and drabs following their conferences in May, June and September (followed by more conferences throughout the autumn and winter), but early indications are that the next term may be one of the most relaxed in recent memory. + +What’s wrong with eight justices? The main worry is that tied votes sow legal confusion. When the judges are split down the middle, they cannot resolve rival views on controversial issues—from affirmative action and public unions to gay rights, birth control and abortion. By letting lower-court decisions stand but not requiring other courts to abide by the ruling, the stage is set for odd state-by-state or district-by-district distinctions when it comes to the meaning of laws or the constitution. This seems to be the worry that prompted the justices to search for a compromise, after hearing arguments in March in the latest fight over Obamacare and contraception. One federal district court has said that the law’s compromise violates a law of 1993 banning the government from unduly interfering with other people’s religious scruples. Half a dozen other appellate courts have come to the opposite opinion. So if the justices divide 4-4 in Zubik v Burwell, women across most of America will have access to birth control through their employer’s health coverage, while women in seven midwestern states will not. + +Some legal scholars argue that an eight-justice bench isn’t so bad. Eric Segall, of Georgia State University, thinks the 4-4 ideological divide is pushing justices to moderate their arguments in an effort to win votes from their colleagues on the other side. “To accomplish their goals,” Mr Segall writes, “the justices would simply have to get along better.” + +Just such a compromise may have led to a recent voting-rights decision, Evenwel v Abbott. After the oral argument in December, most pundits were expecting a 5-4 decision upending the common understanding of “one person, one vote” (counting everybody) in favour of counting only eligible voters, a scheme favouring whiter, wealthier, districts. But the justices came out 8-0 in the other direction. The four liberals seem to have attracted the conservatives’ votes by lowering the temperature a bit: the constitution allows states to use total population as the basis for drawing districts, Ruth Bader Ginsburg wrote for her colleagues, but the question of whether it requires them to do so is off the table until a case forces it back on. + +Yet it is hard to see how a denuded court is appealing in the medium or long term. A patchwork of legal realities may have been fitting for America under the Articles of Confederation, before the country had a political system that turned it into a union, but America’s constitutional design is not consonant with confusion about what the law means on controversial questions. Whether the divide manifests as 4-4 splits or a tendency to hear fewer cases in which those splits seem likely, a Supreme Court with eight judges is not a court that can live up to its name. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21698709-why-when-it-comes-justices-nine-are-better-eight-slowing-down/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Citizen Brandeis + +A 20th-century giant of the Supreme Court offers lessons about politics today + +May 14th 2016 | From the print edition + + + +SOME of the wiser words about the great American experiment—namely, the creation of a continent-sized country, governed of, by and for the people—were written by Louis Brandeis, a justice of the Supreme Court between 1916 and 1939. To Brandeis is owed the observation that the federal system often gains by letting each state, if its citizens so choose, serve as a “laboratory” of democracy, trying out new policies without imposing them on the whole country. Few have improved on Brandeis’s defence of free speech, written in 1927 after a Californian woman was jailed for speaking on behalf of a communist party. America’s founders, he argued, put their faith in reasoned discussion among citizens and believed that the “greatest menace to freedom is an inert people”. Thus, unless hateful speech poses an imminent danger, the remedy is “more speech, not enforced silence.” + +The centenary of the Brandeis confirmation falls next month, sparking a flurry of scholarship. His confirmation by the Senate was bitterly contested by the standards of the day. Brandeis was the first Jewish justice, nominated by Woodrow Wilson amid some coded anti-Semitism (one critic accused him of “Old Testament” cruelty towards courtroom opponents). Others called him a dangerous radical: he was an outspoken foe of concentrated power, whether wielded by rival-crushing big businesses, or by remote and therefore clumsy big government. + +A live political charge still flows through his words: indeed, with his views on tolerating speech that shocks, Brandeis might struggle to give a college commencement address in 2016 without provoking jeering protests. But in a time of populist, elite-bashing rhetoric, his beliefs about the “curse of bigness” are even more topical. To simplify, Brandeis urged intense scepticism when any leader—in politics or business—claims to have the general interest at heart, while at the same time constructing any agency or enterprise so large that it cannot be understood, efficiently managed or held to account by alert, responsible, ordinary citizens. + +A fine new book, “Louis D. Brandeis: American Prophet” by Jeffrey Rosen, describes how seriously the justice took these beliefs. Though eager to see big banks and businesses broken up to prevent monopolies, Brandeis turned on President Franklin D. Roosevelt and his young left-wing advisers when they used the New Deal to bring great swathes of the economy, including small farms, under central government control. Mr Rosen, who heads the National Constitution Centre in Philadelphia, describes Brandeis joining more conservative justices in striking down key planks of the New Deal in 1935. After that display of wrath, Brandeis summoned a presidential aide to hear a message for FDR. “This is the end of this business of centralisation,” he said, adding that “as for your young men…tell them to get out of Washington…back to the states. That is where they must do their work.” + +Brandeis was brought up in Kentucky by a loving and bookish family of secular Jewish immigrants from Prague. His upbringing, which included three years of schooling in Dresden, left him with a distrust of high finance (bankers playing with “other people’s money”, he scowled), a fondness for small business and a horror of chain stores that was at once rather Germanic and powerfully influenced by Thomas Jefferson’s vision of America as a country of self-governing yeoman farmers. + +Brandeis offers modern political lessons because his equal distrust of big corporations and big government puts him at odds with both political parties. The Republican-controlled Senate may be refusing even to hold hearings for Merrick Garland, the centrist judge nominated by Barack Obama to sit on the Supreme Court after the recent death of Justice Antonin Scalia. But if transported to the present, Brandeis (who died in 1941, aged 84) would not have a hope of nomination, let alone confirmation. + +It is not just that the left would find Brandeis dismayingly unmoved by the ills of racism, and the right would find him too willing to read the constitution in the light of modern values and science. His real problem is simpler: both parties rather like some forms of bigness. To too many Democrats, calls for limited government sound like unilateral disarmament: they view federal authority as the only effective check on corporate power, big polluters or those who challenge civil rights. The policy platform of Hillary Clinton, the presumed Democratic presidential nominee, is built on a tottering stack of federal regulations, tax credits and paper-spewing schemes to make a Brandeis weep. Meanwhile, too many Republicans make populist arguments about bullying officials and Washington pen-pushers, while turning a blind eye to years of mergers that have left some industries at the mercy of a few, exceedingly powerful, incumbents. One Republican, the putative presidential nominee Donald Trump, positively boasts that he will run the economy like a Putinesque strongman. + +Chain-store politics + +Even Brandeis’s passion for devolving power to accountable levels of government has been subverted by the forces of bigness. National interest groups have perfected the art of drafting cut-and-paste “model” bills, ready to be passed by pliant legislatures. Rather than acting as innovators in democratic laboratories, such groups look more like chain stores choosing locations for a new franchise. Gun lobbyists, say, know just which statehouse might buy their law allowing teachers to pack heat at school. Trade unions know in which cities to sell a minimum-wage ordinance. + +Ordinary Americans have to take their democracy back from the political hacks and lobbyists, Brandeis might respond. Always suspicious of experts, he put his trust in enlightened citizens. Civic activism is hard in a busy, distracted, cynical age. But barriers to rallying like-minded campaigners are falling, too. The digital world might startle the stern and cerebral justice: he loathed newspapers filled with “gossip”. But if new laboratories of democracy are out there, Brandeis would surely bless them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21698653-20th-century-giant-supreme-court-offers-lessons-about-politics-today-citizen/print + + + + + +Previous Articles Sections Next + + + +The Americas + + + + + +Brazil’s political crisis: An unplanned presidency + +Bello: Mercosur’s missed boat + +The Fort McMurray fire: The green and the black + + + + + +Articles Sections Next + +Brazil’s political crisis + +An unplanned presidency + +Michel Temer has better ideas than Dilma Rousseff. That does not mean he will be a successful president + +May 14th 2016 | SÃO PAULO | From the print edition + + + +VICE-PRESIDENTS rarely wield real power. Presidential candidates pick them as running mates to broaden their appeal to voters, or to butter up allies. Once in office they become appendages—unless fortune thrusts them into the top job. In Brazil, that happens more often than you might think. José Sarney became president in 1985, when the man Congress chose after 21 years of military rule died before he was sworn in. Mr Sarney oversaw failed attempts to quash hyperinflation. In 1992 Itamar Franco replaced the first directly elected leader after the dictatorship, Fernando Collor, who was impeached for taking bribes. Franco healed an economy damaged by his predecessors’ erratic policies. + +As The Economist went to press, Brazil was bracing itself for its third unplanned presidency in as many decades. In the early hours of May 12th the Senate voted to open the impeachment trial of President Dilma Rousseff. Under the law, she must now step aside for up to 180 days while the chamber considers her fate. Michel Temer, the vice-president, will now move into the Planalto, as the presidential palace is known. If the Senate votes by a two-thirds majority to convict Ms Rousseff, Mr Temer would serve out the rest of her term, which ends in 2018. + +Despite the high stakes and chaos surrounding the impeachment process, it now seems inconceivable that some last-minute reversal could keep Ms Rousseff in office. That nearly happened on May 9th, when the Speaker of Congress’s lower house annulled a vote by that chamber to forward the impeachment motion to the Senate. Hours later he changed his mind. But it now looks virtually certain that Mr Temer will become president, at least for a while. How he acquits himself could affect Brazil’s fortunes for years to come. + +His job will be harder than the one faced by earlier unelected presidents. After five years of inept rule by Ms Rousseff, Brazil is suffering its worst recession since the 1930s. The economy will probably shrink by a total of 7.5% in 2015 and 2016; the unemployment and inflation rates both stand at around 10%. The budget deficit is more than a tenth of GDP. Nearly as acute as the economic crisis is the political one caused by the scandal surrounding Petrobras, the state-controlled oil company. This has tarnished both Ms Rousseff’s Workers’ Party (PT) and the centrist Party of the Brazilian Democratic Movement (PMDB) of Mr Temer. + +The multi-talented Mr Temer + +His claim to the presidency, unlike that of his forerunners, is bitterly contested. Ms Rousseff and her allies denounce the impeachment process as a “coup”. On the eve of the Senate vote pro-PT protesters put up barricades and blocked roads in several Brazilian states. The more Mr Temer tries to reverse Ms Rousseff’s disastrous policies, the more her supporters will accuse him of overturning the verdict of the voters who re-elected her in 2014. + +Mr Temer has offsetting strengths. Temperamentally, he is nearly the opposite of the unpopular Ms Rousseff. While she is gruff, he is charming. Mr Temer is eloquent. Ms Rousseff inspired the coinage of the word dilmês, meaning garbled oratory. She is stubborn. Mr Temer, the youngest of eight children, is conciliatory. Ms Rousseff had never held elected office until she became president. Mr Temer was elected to Congress four times and was Speaker of the lower house. He has written dry tomes (a bestselling textbook on constitutional law) and moist verse (collected in “Anonymous Intimacy”). + +Although Mr Temer rarely challenged his boss’s economic interventionism, he believes in a blend of economic and social liberalism that is unusual in Brazil. As one of the drafters of the constitution adopted in 1988, he opposed its employment-stifling protections for workers. He was against the death penalty (which was banned for civil crimes) and in favour of legal abortions (which are still outlawed in most cases). + +As the PMDB’s 13-year alliance with the PT began falling apart, Mr Temer’s closet liberalism came out into the open. Last October his party published “Bridge to the Future”, an 18-page manifesto that laments the enterprise-sapping effects of Brazil’s overlarge state, which claims 36% of GDP in taxes while providing poor public services. Though short on detail, the document advocates a series of sensible measures, from privatisations and freer trade to reform of over-generous public pensions, sclerotic labour laws and the Byzantine tax code. + +Judging by the ministers Mr Temer is expected to appoint, he intends to carry out some of these proposals. Henrique Meirelles, an inflation-busting governor of the Central Bank under Ms Rousseff’s predecessor, Luiz Inácio Lula da Silva, will probably be the new finance minister. Seasoned PMDB operators will probably serve as chief of staff (Eliseu Padilha), planning minister (Romero Jucá) and as super-minister for infrastructure, a new job (Moreira Franco). Mr Temer is expected to compensate for the loss of the PT’s votes in Congress by bringing into government the centre-right Party of Brazilian Social Democracy (PSDB). + +Swift reforms, especially cuts to public spending, would, despite the recession, boost confidence, curb inflation and allow the Central Bank to start reducing its target interest rate from a growth-crushing 14.25%. Mr Temer may chop the number of ministries from 32 to 23 to please voters who think the government should make sacrifices, too. That would be an astonishing decision for a man from the PMDB, where the unifying characteristic is the quest for patronage. Such prospects have stirred euphoria in the financial markets, which would otherwise be depressed by the miserable state of the economy. + + + +Waxing and waning: Brazil's economic woes, in charts + +Things could easily go wrong. The first problem is the PMDB’s role in the Petrobras scandal, which fuels the fury that is driving Ms Rousseff from office, though it does not provide the legal grounds for her impeachment. Six of the PMDB’s sitting congressmen, including Mr Jucá, are under investigation. On May 5th the supreme court suspended Eduardo Cunha, the PMDB Speaker of the lower house, from Congress after indicting him for corruption. Mr Cunha and the others deny wrongdoing. + +The electoral authority is investigating whether Petrobras-related bribes helped finance the re-election campaign of Ms Rousseff and Mr Temer. If it unearths irregularities, it could annul the results, evicting Mr Temer from office. A new election would allow Brazilians to choose leaders untainted by scandal, which would be welcome. But the uncertainty leading up to them would unsettle the economy. Mr Temer argues that the PMDB’s coffers were separate from the PT’s, and above board. + +A second worry is that the new president, despite his backroom flair, may fail to secure majorities for reforms. At the best of times, congressmen are reluctant to vote for spending cuts and tax rises. Their attention will soon shift to the Olympic games in Rio de Janeiro, which take place in August, and then to October’s local elections. The latter will be more important than usual. The Petrobras scandal has cut the flow of illicit money to political parties; last year the supreme court barred corporate donations. So candidates for national office in 2018 will rely on local officials elected this year to usher their voters to the polls. Austerity will not appeal to congressmen already thinking about their re-election campaigns two years hence. + +Mr Temer could forgo immediate budget cuts in favour of fundamental reforms, such as delinking pensions from the minimum wage and granting independence to the Central Bank. But these measures would run up against a third problem: the perception, especially among Ms Rousseff’s supporters, that Mr Temer has no mandate to do anything important. In 2014 voters rejected a blander version of Mr Temer’s reforms, put forward by the PSDB’s losing candidate, Aécio Neves. Impeachment is bringing about not just a change of personnel but a change of political philosophy that Brazilians did not vote for. It may be legal, but it is not legitimate, said Celso Amorim, a former foreign and defence minister, in an interview with the BBC. + +Most Brazilians, delighted to see Ms Rousseff gone, are not pleased about Mr Temer coming in. He and a majority of the most important members of his prospective team are septuagenarians with centuries of political baggage between them. Just 8% of Brazilians think they will do a better job than Ms Rousseff and her colleagues. Mr Temer might be able to change their minds, if he can enact the controversial reforms he espouses and Brazilians feel the economic benefits. The question is whether the newly promoted vice-president will get that chance. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21698719-michel-temer-has-better-ideas-dilma-rousseff-does-not-mean-he-will-be-successful/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +Mercosur’s missed boat + +Can a new attempt to strike a deal with Europe revive a moribund trading block? + +May 14th 2016 | From the print edition + + + +AT A meeting in Brussels this week, officials from the European Union (EU) and Mercosur exchanged offers to cut tariffs and expand market access for each others’ goods and services. This is their second attempt to begin serious negotiations on a free-trade agreement—a mere 16 years after the idea was first mooted. + +The first effort collapsed in 2004, when both sides judged the other’s offer to be insufficiently ambitious. Even now, nobody should count on success. The core Mercosur countries—Argentina, Brazil, Paraguay and Uruguay—are keener. But 13 European countries, led by France, want to scupper the talks because their farmers are scared of Mercosur, the world’s most competitive producer of grains and meat. They forced the EU to withdraw, at the last minute, proposed tariffs cuts on beef. + +A trade pact between the blocks would make shopping cheaper for 750m consumers. The EU wants accords on services and government procurement. Brazil’s law firms are notorious for protecting their home market, while its construction and engineering companies used corrupt practices to win contracts from Petrobras, the state-controlled oil company. As for Mercosur, Europe is potentially a big market for some of its manufactures as well as its grains and soyabeans. + +If the talks prosper, the biggest benefit for Mercosur could be the reviving of its original mission of boosting trade and investment. Over the past dozen years, left-wing governments in Brazil, Argentina and Uruguay have turned Mercosur into a political club. They invited Hugo Chávez’s Venezuela to join; Bolivia, under Evo Morales, followed (neither is part of the EU talks). Buoyed by high prices for their commodities, they proclaimed their commitment to “south-south” economic ties. + +They did strike useful agreements on migration, pensions and tourism. But they lost interest in trade deals with rich countries and in deepening economic integration in Mercosur itself. Although Mercosur claims to be a customs union (like the EU) with a common tariff and foreign-trade policy, in practice it is not even a proper free-trade area. Cristina Fernández de Kirchner, Argentina’s former president, imposed quotas and licences on imports from Brazil. Uruguayan truckers face harassment in Brazil, says Luis Alberto Lacalle Pou, a Uruguayan senator. Intra-Mercosur trade was only 14% of its members’ total trade in 2014, down from 19.5% in 1995. Mercosur thus excluded itself from regional value chains in which much production is now organised—as well as from new trans-regional trade and investment agreements, such as the Trans-Pacific Partnership. + +A light breeze of change is now in the air. Argentina’s new president, Mauricio Macri, is opening up his country after Ms Fernández tried to shut it off from the world. Tabaré Vázquez, Uruguay’s president, recognises that Mercosur is suffering from “fatigue”. The impeachment of Dilma Rousseff, Brazil’s president, would bring to power people who are more open to trade talks with Europe and the United States, and who are “very critical of the south-south strategy”, says Alfredo Valladão, a Brazilian political scientist at Sciences Po, a French university. + +The obstacles to renewal in Mercosur remain large. In the short term Brazil’s political upheaval divides the group. At a meeting last month to mark the 25th anniversary of the Treaty of Asunción, Mercosur’s founding document, most of the Brazilian parliamentary delegation walked out in protest when Jorge Taiana, who was once Ms Fernández’s foreign minister and now chairs the block’s parliament, called Ms Rousseff’s impeachment “a coup”. Many in Uruguay’s left-wing government are wary of collaborating with Michel Temer, who is poised to replace Ms Rousseff as Brazil’s president. Argentina is cautious about freeing trade in cars within Mercosur, fearing that Brazil’s currently idle factories will flood its market. Most Brazilian industry lives on “protection and subsidies”, says Mr Valladão. + +But some Brazilian industrialists are starting to realise that the state has run out of money to prop them up and that protectionism has weakened them. China has wrested markets from Brazilian manufacturers across Latin America. Chile, Colombia, Peru and Mexico formed the Pacific Alliance of free-trading economies; on May 1st they eliminated tariffs on 92% of their trade with each other and will phase out the rest over 17 years. + +Brazil’s industry lobbies, like its probable new president, now want to talk trade with the United States as well as the EU. But free trade has become politically toxic in the north. While they were indulging ideological dreams, Mercosur’s governments were also missing the trade boat. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21698715-can-new-attempt-strike-deal-europe-revive-moribund-trading-block-mercosurs-missed/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Fort McMurray fire + +The green and the black + +A catastrophe increases tensions over oil, pipelines and climate change + +May 14th 2016 | OTTAWA | From the print edition + + + +CANADIANS have rallied round Fort McMurray, the western city ravaged by a forest fire this month. They have sent food, clothing and messages of support to the 90,000 people who fled their homes. The Red Cross collected C$54m ($42m) in a matter of days. Justin Trudeau, Canada’s prime minister, promised federal help. + +But the disaster has also exposed divisions between oil-producing Alberta, where more than 220,000 hectares (550,000 acres) were engulfed by fire, and the rest of Canada. The rancour appeared first on social media, with tweets such as “Welcome to climate change, Alberta. Feel free to keep denying it.” “Scumbag” was one Albertan response. The spat spread to newspapers and television. Asked at a news conference whether he blamed climate change for the fire, Mr Trudeau dodged the question. + +He cannot avoid the argument which the fire has reignited. Fort McMurray makes its living from Alberta’s Athabasca tar sands. Although scientists can never be sure that climate change caused a particular event such as the Alberta fire, few people doubt that producing Athabasca crude emits more greenhouse gas than conventional oil. When oil prices were high, Fort McMurray and Alberta prospered, spurring Canada’s economic growth. The price drop has hit the region’s economy hard. Alberta is in its second year of recession; the province is likely to have a record budget deficit of C$10 billion this year. After the fire forced firms near Fort McMurray to suspend production, economists revised down their forecasts for Canada’s growth in the second quarter this year. + +What Albertans want, far more than help from the Red Cross, is pipelines to carry crude oil to world markets. The province now sells nearly all its oil to the United States, which pays too little, Albertans grumble. Barack Obama has blocked the Keystone XL pipeline (see map), which would have made transport cheaper. Albertans’ hopes now rest on three other proposed conduits. Energy East, a 4,500km (2,800-mile) pipeline, which is already partly built, would carry crude to the Atlantic coast. Northern Gateway and Trans Mountain, which would run alongside an existing line, would pipe it to the Pacific. All three need the approval of the federal government and its regulator, plus support from aboriginal groups and the provinces through which they would pass. Many places have objections. + +British Columbia greeted Northern Gateway with a barrage of conditions, including protection for indigenous groups, benefits for the province and measures to prevent oil spills. Most voters in the province oppose both the pipelines that would cross their territory. The governments of Ontario and Quebec set similar tests for Energy East. The project must pass a “climate test”, insists Montreal’s mayor, Denis Coderre. He dreams of a city buzzing with electric cars, drawing power from Quebec’s dams. That does not fit well with the idea of providing passage for crude from Alberta’s sticky oil sands. The project as it is “is not acceptable”, says Mr Coderre. + +Even before the fire, such attitudes were riling Albertans. “We can’t continue to support Canada’s economy unless Canada supports us,” warned Rachel Notley, the province’s premier, in April. Her left-leaning government tightened environmental rules to encourage other Canadians to accept the pipelines. Rona Ambrose, the interim leader of the federal Conservative Party, who is from Alberta, says the federal government’s reluctance to support Energy East, the least unpopular project, is a national-unity issue. Some worry that such resentments will encourage the growth of Alberta’s tiny separatist movement. + +All this puts Mr Trudeau in an awkward spot. In last October’s election, his Liberal Party promised to fight climate change and subject pipelines to rigorous regulatory standards. Young green voters who helped the Liberals win will be disappointed if the federal government now backs any of the three proposed pipelines. Mr Trudeau has sent mixed messages. He has come out against Northern Gateway, mainly because its route passes through a temperate rainforest. His position on Energy East and Trans Mountain is unclear, but his government has added several steps to the environmental reviews they face. Oil-industry lobbyists worry that more are to come. Ms Ambrose says the prime minister is “waffling”. That was before the fire. Now Mr Trudeau faces an unenviable decision: whether to help the victims of a natural disaster at the expense of nature itself. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21698717-catastrophe-increases-tensions-over-oil-pipelines-and-climate-change-green-and-black/print + + + + + +Previous Articles Sections Next + + + +Asia + + + + + +India’s water nightmare: Unholy woes + +Child poverty in Japan: Hidden blight + +Taiwan readies for a new president: Sizing Tsai up + +Kim Jong Un thrills North Koreans with hours of brilliance: Sport of Kims + +Banyan: Despotic in Dhaka + + + + + +Articles Sections Next + +India’s water nightmare + +Unholy woes + +India’s water shortage owes more to bad management than drought + +May 14th 2016 | UJJAIN | From the print edition + + + +AT THE dawn of time Lord Vishnu made gods and demons join in churning the milky oceans to extract an elixir of eternal life. After cheating the demons of their share, Vishnu spilled four drops of the precious nectar. Where they fell sprang up sacred rivers whose waters wash away sins, now sites for mass Hindu pilgrimages called Kumbh Mela. + +For a lunar month every 12 years it falls to Ujjain, a town in the central Indian state of Madhya Pradesh, to host the Kumbh Mela by the revered Shipra, whose waters meander north into the mighty Ganges and eventually eastward to the Bay of Bengal. By the time the full moon reappears on May 21st tens of millions of bathers, among them thousands of bearded ascetics known as sadhus (pictured), will have worshipped on Ujjain’s teeming riverbanks. + +What few are aware of is that the water is no longer the Shipra’s. Urbanisation, rising demand and two years of severe drought have shrivelled the sacred river. Its natural state at this time of year, before the monsoon, would be a dismal sequence of puddles dirtied by industrial and human waste. But the government of Madhya Pradesh, determined to preserve the pilgrimage, has built a massive pipeline diverting into the Shipra the abundant waters of the Narmada river, which spills westward into the Arabian Sea. Giant pumps are sucking some 5,000 litres a second from a canal fed by the Narmada, lifting it by 350 metres and carrying it nearly 50 kilometres to pour into the Shipra’s headwaters. To ensure clean water for the festival, the Shipra’s smaller tributaries have been blocked or diverted, and purifying ozone is being injected into the reconstituted waters in Ujjain itself. + +The pilgrims and merchants of Ujjain are happy. But down in the Narmada valley there is little cheer. “They are wasting water on sadhus…while our farms go dry,” says Rameshwar Sitole, a farmer in the hamlet of Kithud. Since March the canal, which feeds his 2.5 hectares of maize and okra along with the farms of 12 other hamlets, has been bone dry. Mr Sitole’s crops have withered and died: a loss, he reckons, of some 50,000 rupees ($750). The government insists the water will return once Ujjain’s pilgrimage ends, but he is not so sure. “They turn it on when we protest, and then take it away again,” Mr Sitole shrugs. Meanwhile, over the hills, industrial users near Ujjain are lobbying loudly to exploit the fancy new water sources. + + + +Poor monsoons are not unusual, but the back-to-back shortfalls, linked to the El Niño effect, which India has experienced in the past two years are very rare. Ten out of 29 states, with a population of some 330m, have been badly hit, with the worst-affected areas in the centre of the country. India is suffering its gravest water shortage since independence, says Himanshu Thakkar, a water expert in Delhi, the capital. Every day brings news of exhausted rivers and wells, destitute farmers migrating to the cities or even committing suicide, water trains being dispatched to parched regions—and of leopards venturing into towns in search of a drink. + +The central government has responded with make-work programmes for afflicted areas, emergency shipments of water, and many promises. In February Narendra Modi, the prime minister, pledged to double farm incomes by 2022. Other ministers speak of massive irrigation projects, and have dusted off an ambitious water-diversion scheme for parched regions that is priced at $165 billion and involves no fewer than 37 links between rivers. Most links would be via canals—some 15,000km of artificial waterways in all. + +Hydrologists such as Mr Thakkar are sceptical of big projects, open to massive cronyism, when simpler and environmentally sounder solutions are at hand. India relies not on rivers but on underground aquifers for some two-thirds of its irrigation and for more than three-quarters of its drinking water. With 30m wells and pumps at work, it is hardly surprising that groundwater levels have been dropping. Nearly two-thirds of wells tested in a recent nationwide survey showed levels lower than their ten-year average. Much water is being squandered. + +Plenty, Mr Thakkar argues, could be done to conserve groundwater; for instance, by collecting and storing rainwater more effectively, regulating consumption, treating urban sewage properly and providing credit for drip irrigation to replace wasteful flooding techniques. And pricing water properly would be much better than shunting it about at great expense. Despite the severity of the current drought, which will end if meteorologists’ predictions of a better-than-average monsoon in June are correct, the real problem is not a lack of water. Per person, India has twice as much of the stuff as water-starved northern China. But India is being hampered by mindless overuse and, in many places, a lack of sensible water-allocation policies. + +The contrast between two districts in a corner of Maharashtra state that is severely afflicted by drought provides a case in point. For the past two months the 400,000 residents of Latur, a city 400km east of Mumbai, have had, at great expense, to rely on tanker lorries and trains coming from the Krishna river 350km away to quench their thirst, while the district’s stricken farmers have fled en masse. Nearby Solapur once faced similar problems. Following a bad monsoon in 2012 it had to mobilise more than 650 tanker lorries to get water to needy citizens. This year, under far worse drought conditions, fewer than 20 tankers are operating. + +The difference comes down to governance. When Tukaram Mundhe was appointed the main local-government administrator in 2014, he set to work applying laws and policies on groundwater use that had been wilfully ignored in the arid region. “Solapur was not taking any preventive…measures,” he says. “So I took a firm stand. I went directly to the public instead of going through my officers.” + +Local farmers were encouraged to revive some 5,000 defunct water sources, such as abandoned wells and silted-up ponds, to collect rainwater. Strict regulation was imposed on these and existing sources, with only nearby farms allowed access. Commercial drilling for new wells was restricted. The owners of a water-guzzling sugar factory were fined for polluting nearby water sources. In Latur, by contrast, politically influential owners kept sugar mills running even as the wells dried up. + +With the monsoon looming and their storage capacity high, Solapur’s farmers appear confident of avoiding future shortages. Mr Mundhe says that all his projects are “scalable and replicable”. But he will not have a chance to find out himself. The state government abruptly appointed him last month to a municipal post near Mumbai. Some in Solapur suspect that powerful owners of water-tanker fleets and sugar mills may have had a hand in Mr Mundhe’s sudden transfer. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21698678-indias-water-shortage-owes-more-bad-management-drought-unholy-woes/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Child poverty in Japan + +Hidden blight + +Japan has more poor children than it thought + +May 14th 2016 | TOKYO | From the print edition + + + +VISITORS to Japan rarely encounter the usual markers of privation. Housing is not run down. The urban homeless are out of sight, in makeshift tents in public parks or down by river banks. Japanese cherish a belief that theirs is an egalitarian society. So high poverty among children should come as a shock. + +Official figures on child poverty were not even published until 2009. They show that the rate of (relative) child poverty—defined as the proportion of children in households with income after tax and transfers of less than half the national median household income—rose from 11% in 1985 to 16% in 2012, one of the highest rates among OECD countries. The gap between well-off and poor children is more pronounced in Japan than in America, and not far off levels in Mexico and Bulgaria, said Unicef last month. + +Couples who both work in low-paid irregular or contract jobs, which now make up around two-fifths of all employment, are particularly badly off. But roughly a third of poor children live with divorced or widowed single mothers. Akiko Kamon, a single mother of two young boys in a hard-up area of Osaka, says she struggles to feed them properly. She wanted to work longer hours to earn more money, but her eight-year-old son burst into tears at the prospect of being left alone. Like many, Ms Kamon won’t take the paltry general welfare on offer, so great in Japan is the social stigma. + +Single parents sometimes leave children as young as five at home during the day or night, with a bento box for food. Poverty raises the odds of worse-off children dropping out of school or even sleeping rough. Chiatsu Sumi, the 16-year-old daughter of a single mother from Saitama, near Tokyo, works part-time. But she says she still finds it hard to afford compulsory school trips, the four different kinds of shoes that her school requires and other extras. Poor children are especially prone to being bullied, she says. + +Poor kids are not starving, but often the school lunch is their only proper meal, with junk food supplementing their diet. Gas and electricity are often cut off when parents cannot pay the bills, so children end up washing in public toilets. As for socialising with friends in cafés, or affording after-school cramming classes—considered essential for getting into university—these activities are out of the question. + +The government is starting to take notice. New measures in 2014 increased the number of social workers in schools and slightly lifted child allowances for single parents for the first time in years. Given that many in the (conservative) ruling Liberal Democratic Party blame single mums for getting divorced, it was surprising that the party did that much, says Aya Abe, who heads a poverty-research unit at Tokyo Metropolitan University. + +It may come under pressure to do more. For a government that recently pledged to ensure that every Japanese citizen can play an active role in society, child poverty is awkward. The office of the prime minister, Shinzo Abe, is devising ways to pitch his economic policies as especially helping the young rather than the elderly (on whom the state already spends generously). But competing with recent newspaper headlines about poor children stealing, resorting to prostitution or living in squalid conditions may prove rather hard. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21698687-japan-has-more-poor-children-it-thought-hidden-blight/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Taiwan readies for a new president + +Sizing Tsai up + +Tsai Ing-wen has a delicate balancing act, both at home and with China + +May 14th 2016 | TAIPEI | From the print edition + +YOUNG designers have come up with a rose-gold brooch for the ushers at the presidential inauguration on May 20th of Tsai Ing-wen. One of the designers, Zita Hsu, explains that they found inspiration in a mathematical concept known as Euler’s formula to create an abstract design. Both mathematics and Ms Tsai, she adds, embody rationality and calmness. + +Ms Tsai will need plenty of both. A quiet, cat-loving former legal scholar, Ms Tsai worked hard in opposition to nudge her party, the Democratic Progressive Party (DPP), away from economic populism and an anti-China, pro-independence stance towards more moderate views. She was rewarded with a landslide in January elections, in which her party also secured control of the parliament, the Legislative Yuan. + +Yet her new administration will have no honeymoon. At home she is under pressure to revive an economy that is barely growing and offers few good jobs to the young. Abroad, she will need to manage delicate relations with China. The Chinese government has made very clear in recent days that it will blame Ms Tsai for any crisis across the Taiwan Strait that might erupt after she takes office. + +The economy first. Ms Tsai inherits a growth rate of less than 1%; a trading system skewed heavily towards China; an ageing population; and a pension system for public officials that is going bankrupt. When growth was sizzling, earlier Kuomintang (KMT) governments used to pick developing industries and throw money at them. Now Ms Tsai has to foster an environment that is friendly to innovation and foreign investment. It means dismantling unhelpful regulations, fostering co-ordination among ministries and sharpening up the civil service. Not only KMT-linked business interests will oppose her. Her own left-leaning party is suspicious of business. + +Ms Tsai’s government line-up favours technocratic competence over politicking. The prime minister will be Lin Chuan, a former finance minister, reflecting a focus on the economy. Ms Tsai has even put experienced KMT hands in the cabinet. Ms Tsai’s choice of defence minister, Feng Shih-kuan, the former head of a state-run aerospace company, reflects her desire to build up a local defence industry. And the economics minister, Lee Chih-Kung, is an energy expert—the DPP pledges to make Taiwan nuclear-free. + +As much as anything, Ms Tsai wants to strengthen trade ties. She seeks better business links with South-East Asia and is keen to launch negotiations for a free-trade agreement with Japan. But greatly expanding trade agreements depends, as ever, on China. It has long frustrated Taiwan and has the power, behind the scenes, to discourage countries or blocs from signing free-trade deals with Taiwan. To date only Singapore and New Zealand have bilateral agreements with both China and Taiwan, while the island is outside South-East Asian initiatives. + +As for trade with China itself, it ballooned under the outgoing president, Ma Ying-jeou (as did Chinese tourism to the island). Indeed, Taiwan is one of very few countries to run a trade surplus with China, thanks mainly to contract manufacturing and exports of capital equipment. Yet many Taiwanese resent the relationship, along with the cross-strait trade and economic agreements that multiplied under Mr Ma. Indeed the signing of a services agreement led two years ago to the “sunflower” movement of protesters, who argued that the deal would lead to China’s exerting undue influence on Taiwan. The movement, and subsequent student occupations of the Legislative Yuan, greatly undermined Mr Ma’s presidency. + +Yet Ms Tsai has no choice but to grapple with trade issues across the Taiwan Strait. They remain for now at the heart of her island’s prosperity. And not to engage on trade would only confirm Chinese suspicions that Taiwan under the DPP is not to be trusted and is intent on drifting further away from the mainland. She is quietly negotiating with Taiwanese civic groups and student leaders over a bill for monitoring cross-strait trade and economic agreements, one of the protesters’ key demands. Some say they accept Ms Tsai’s tactful avoidance of language that casts Taiwan and China as two separate countries in the DPP’s draft of the bill. To do otherwise would enrage China, which insists that Taiwan, a democratic country, is merely a renegade region that must be reclaimed. + +The bill will be deliberated during a parliamentary session that ends by July. Already, one main complaint is that it does not give enough room for public participation or for in-depth legislative review of future agreements. For now the DPP has fallen in line behind Ms Tsai on the bill. The question is how long she can maintain unity on such issues in a party with hardline pro-independence members who do not favour thicker ties with China. + +Yet it is not just over trade that Ms Tsai must tread carefully with China. It insists that the rapprochement that took place under Mr Ma, whom China’s president, Xi Jinping, met in a surprise summit in Singapore last November, should continue. But Mr Xi has also made it clear that Ms Tsai’s government must acknowledge that Taiwan, however loosely, remains part of China. To date, the president-elect has promised peace, and no unilateral changes to Taiwan’s status (ie, moving towards formal independence). But China will surely want more. The honeymoon is over before Ms Tsai even begins. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21698707-tsai-ing-wen-has-delicate-balancing-act-both-home-and-china-sizing-tsai-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Kim Jong Un thrills North Koreans with hours of brilliance + +Sport of Kims + +A rare congress of the Workers’ Party produces almost nothing of note + +May 14th 2016 | SEOUL | From the print edition + + + +THE seventh congress of the Workers’ Party was meant to be North Korea’s most notable political shindig in nearly four decades. The sixth, in 1980, was a coming-out party for its then dictator-in-waiting, Kim Jong Il. At this one the late Kim’s son, Kim Jong Un (pictured), spoke for interminable hours to more than 3,000 clapping delegates, lauding a recent nuclear test and missile launch (subjects know nothing of the three that flopped last month) and announcing an empty five-year economic plan. None of the 120-odd foreign journalists invited to cover the show saw any of this gripping stuff, being sent off to a model electric-cable plant, a pristine hospital and a silk mill instead. Things briefly went off-script when North Korea expelled a BBC journalist and his team for “disrespectful” reporting—furnishing visiting media with some news after all. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21698703-rare-congress-workers-party-produces-almost-nothing-note-sport-kims/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Despotic in Dhaka + +Bangladesh is sliding into one-party dictatorship + +May 14th 2016 | From the print edition + + + +IN TERMS of international news stories per head of population, Bangladesh, a Muslim-majority country of more than 160m, is among the world’s most underreported places. But recently it has been attracting headlines for ugly reasons. First came the religiously motivated murders—of more than two dozen secular bloggers, liberals and others since 2013, typically hacked to death with machetes; then, on May 11th, the execution of Motiur Rahman Nizami, leader of the country’s largest Islamist party, for atrocities committed during the war for independence from Pakistan in 1971. Less reported is Bangladesh’s remorseless descent into authoritarian rule. All three phenomena are symptoms of the same disease: a political culture that cannot brook dissent and which views power as a means to crush it. + +The hanging of Mr Nizami is a reminder that Bangladesh was born with the disease. In the war of secession, probably hundreds of thousands died in the former East Pakistan, the Bengali half of a geographically divided country. The Bangladeshi government estimates that 3m died and accuses Pakistan of genocide, systematically killing intellectuals and professionals to blight the new country’s prospects. A crucial role was played by Al-Badr, a pro-Pakistan militia which in 2014 Nizami was convicted of having led. + +Many Bangladeshis resented that for so long no one was held responsible for the crimes committed in 1971. So when the government of Sheikh Hasina, the prime minister from the Awami League, set up a tribunal in 2010 to try suspects, it was a popular move. It remains so, but the process has been a travesty: a witch-hunt to weaken opposition to the League rather than a search for justice. Mr Nizami is the fourth senior figure in his party, Jamaat-e-Islami, to be executed. The party was a coalition partner in the previous government of the Bangladesh Nationalist Party (BNP) of Sheikh Hasina’s nemesis, Khaleda Zia. Mr Nizami served as her industry minister. Jamaat is in decline, but still a force in parts of Bangladesh. Protesters took to the streets after the execution, though not in huge numbers; a strike called after the rejection of Mr Nizami’s final appeal on May 5th was poorly observed. + +Bangladesh used to have a kind of rotating one-party system. Sheikh Hasina is trying to keep the one-party bit without the rotation. One of her supporters looks to Malaysia as a model, another moderate Muslim-majority country with a strong economic record and a democratic constitution, but with one party apparently immovable from power. In Bangladesh from 1991 to 2006 the League and BNP would rule in turns, winning elections thanks to popular disgust at the other’s failings, and using their stints in office to enrich themselves and hound the opposition. So entrenched was the winner-takes-all mentality that even the possibility of free elections was unimaginable, and polls were held under supposedly impartial caretaker governments. But after a landslide victory in 2008, the League changed the constitution to get rid of the caretaker arrangement. As a result the BNP boycotted the most recent election, in January 2014. No longer enjoying a popular mandate, and with opposition marginalised, the League has bullied and muzzled the press and bought off public officials with a hefty pay rise. The courts, civil service, army and police are all thoroughly politicised. + +That Bangladesh’s government can get away with trampling on democracy, freedom and the rule of law owes much to two factors. One is the “Bangladesh paradox” that, despite everything, the country’s development record is respectable. Somehow, the political mayhem—the repression, the frequent street protests and strikes, the recurrent violence—does not do too much economic damage. Even now, GDP is growing by more than 6% a year. + +The second factor is the awfulness of the most recent BNP government. On top of its incompetence, corruption and authoritarianism it was also seen as pandering to extremist Islamist groups. Under its rule, Bangladesh’s most important foreign relationship, with India, languished. (Mr Nizami, besides his war crimes, was also convicted of involvement, as a cabinet minister, in a huge arms-smuggling scandal in 2004, funnelling weapons to insurgents in India’s north-east.) In opposition, the BNP’s record is hardly much better. In early 2015 it was blamed for the killing of civilians to enforce a transport blockade it had called in an effort to bring down the government. + +Bad news + +For all its sins, the League is still heir to the liberal, secular dreams many Bangladeshis nurtured when they were led to independence by Sheikh Hasina’s father, Mujibur Rahman. The spate of murders, however, makes a mockery of these ideals. Targets have included atheists, liberals, Hindus, gay-rights activists and, on May 7th, a Sufi Muslim leader. The government insists that culprits are being hunted, caught and prosecuted. But it has seemed far more critical of the victims’ perceived crimes against Islam than of their murderers. The perception is of a culture of impunity and that the League, too, is appeasing Islamists. + +The government blames the murders on the BNP and Jamaat. It resists claims that Islamic State and al-Qaeda are to blame, because it likes to present itself as the best bastion against Islamist extremism in Bangladesh. Many outsiders, nevertheless, fear fanaticism is on the rise. Last month eight Bangladeshi migrant workers were detained in Singapore, having allegedly formed a group called Islamic State in Bangladesh and plotted attacks in their homeland. With mainstream political competition foreclosed, extremist fringes are likely to thrive. The religious murders may provide grisly evidence of this. They also attract headlines abroad that foster the paranoid nightmares said to haunt Sheikh Hasina: that, having vanquished her enemies at home, she will somehow be brought down by meddling foreigners. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21698677-bangladesh-sliding-one-party-dictatorship-despotic-dhaka/print + + + + + +Previous Articles Sections Next + + + +China + + + + + +The Cultural Revolution, 50 years on: It was the worst of times + +Xi Jinping and the Cultural Revolution: Mao, diluted + + + + + +Articles Sections Next + +The Cultural Revolution, 50 years on + +It was the worst of times + +China is still in denial about its “spiritual holocaust” + +May 14th 2016 | BEIJING | From the print edition + + + +IN FEBRUARY 1970 a 16-year-old boy, Zhang Hongbing, denounced his mother to an army officer in his village in Anhui province, in eastern China. He slipped a note under the officer’s door accusing her of criticising the Cultural Revolution and its leader, Mao Zedong. She was bound, publicly beaten and executed. Decades later Mr Zhang began writing a blog about the tragedy, seeking to clear his mother’s name and to explain how her death happened. “I want to make people in China think,” he wrote in April. “How could there be such a horrifying tragedy of…a son sending his mother to execution? And how can we prevent it from happening again?” Mr Zhang suffers recurrent nightmares about his mother. So does China about the Cultural Revolution. + +What documents at the time called “the Great Proletarian Cultural Revolutionary bugle to advance” first sounded 50 years ago, on May 16th 1966, when Mao approved a secret circular declaring war on “representatives of the bourgeoisie” who had “sneaked into the Communist Party, the government, the army and various spheres of culture”. Just over a year later Mao wrote to his wife, Jiang Qing, that he wanted to create “great disorder under heaven” so as to achieve “greater order under heaven”. + +He achieved only the first. Between May 1966 and Mao’s death in 1976, which in effect ended the Cultural Revolution, over 1m died, millions more were banished from urban homes to the countryside and tens of millions were humiliated or tortured. The Communist Party does not want any public commemoration of those horrors. Though it has called the Cultural Revolution a “catastrophe”, it fears that too much scrutiny might call into question the party’s fitness to rule. But debate about it still rages on the internet in China, and even occasionally surfaces in mainstream publications. + +Its wounds are still raw. On May 2nd the Great Hall of the People in Tiananmen Square held a gala concert featuring “red songs” of the period, triggering uproar on social media. Xi Jinping, China’s president, was himself a victim. Yet his seeming fondness for Mao, his contempt for Western liberal thinking and his ruthless campaigns against political enemies cause some to see parallels between China today and that of Mao’s later years (see article). Like an unexorcised demon, the Cultural Revolution still torments China. + +To most outsiders, the period was one of those episodes of unreason that can afflict a great nation, comparable, say, to France’s reign of terror in 1793, though that nightmare lasted only ten months and claimed fewer lives. The Cultural Revolution involved three years of mob violence and an entire decade of terror (or more—even in 1978, two years after Mao’s death, the Cultural Revolution was officially described as having been “triumphant”). + +It was a time of ignorance and folly. “They beat her to death with their clubs,” wrote a student about his teacher. “It was immensely satisfying.” Schools and universities closed for months or years on end. When it reopened, Beijing Middle School Number 23 was held up as a model for devoting many hours to Mao Zedong Thought and the Great Proletarian Cultural Revolution, and for dedicating “a very limited amount of time…to general cultural knowledge (for example, Chinese, mathematics and foreign languages).” + +The struggle of memory + +It was a time of devastation. The demolition of ancient monuments by Islamic State in the Syrian city of Palmyra was an echo of what happened in Qufu, Confucius’s birthplace in eastern China, in 1966. Groups of Red Guards (Maoist youth gangs) took over the Confucian temple there, a great national treasure, and smashed it up. They destroyed thousands of manuscripts, ancient stone tablets and other “feudal property”. Of the 6,843 officially designated places of cultural and historic interest in Beijing, Red Guards vandalised 4,922. + +Above all, it was a time of death. In Wuhan, in central China, where 54 rival Red Guard groups fought it out, middle-school students were paid 50 yuan (roughly a month’s wages) by gang leaders to kill children in rival factions. “I killed five kids with my star-knife,” wrote one teenager. In Daxing, on the southern outskirts of Beijing, 325 people from “landlord and rich peasant families” were killed in one night, with most of the bodies dumped down a well. A Chinese journalist who visited in 2000 was told of an old lady and her granddaughter being buried alive. “Granny, I’m getting sand in my eyes,” the child cried. “Soon you will not feel it any more,” came the reply. + +In a nightmarish confluence of class hatred and reversion to primitive custom, it is claimed that victims in Guangxi, a province in southern China, were eaten according to rank. In “The Cultural Revolution: a People’s History” (see article), Frank Dikötter quotes a local account asserting that “leaders feasted on the heart and liver, mixed with pork, while ordinary villagers were only allowed to peck at the victims’ arms and thighs.” + +The people’s entertainment + +Mr Dikötter estimates that between 1.5m and 2m were killed in political violence across China between 1966 and 1976. As a proportion of the total population (then 750m), that was smaller than the number of Chinese killed in pogroms in Indonesia just before the Cultural Revolution began. It was also eclipsed by the numbers killed in earlier episodes of violence and calamity inflicted upon China by its Communist leaders. Millions had died in purges of “landlords” and “counter-revolutionaries” in the early years after Mao’s victory in the civil war of the 1940s. Tens of millions perished in the famine Mao created with his “Great Leap Forward” of the late 1950s. + +But what made the Cultural Revolution so unusual was its assault not only upon the lives but also on the values and norms by which people had lived for centuries. One of its core purposes was to accelerate the eradication of the “Four Olds”: old customs, old culture, old habits, old ideas. So family ties, cultural traditions and Confucian principles of respect for the elderly and learning all became targets of Mao’s revolutionary fury. Ba Jin, a novelist, once called the Cultural Revolution China’s “spiritual Holocaust”—a stretch but perhaps an understandable one. In “Mao’s Last Revolution”, Roderick MacFarquhar and Michael Schoenhals quote the chairman as saying “this man Hitler was even more ferocious. The more ferocious, the better, don’t you think? The more people you kill, the more revolutionary you are.” + +But the Cultural Revolution was not anarchic for anarchy’s sake. It was manipulated by Mao to rid himself of rivals, real and imagined, and to purge the Communist Party of doubters of his wisdom. After the famine, Mao thought he was being sidelined. To reassert control, he called on students and workers to “bombard the headquarters”, that is, attack everyone in authority—except himself and those he had clearly signalled to be his allies. By 1968 almost three-quarters of the members of the Central Committee had been dubbed traitors or counter-revolutionaries. They included Liu Shaoqi, the state president, whom Mao had once tipped as his successor. Had Mao seen his revolution mainly as a means of defeating rivals, he might have stopped there. But he wanted it to go further. According to Chen Boda, Mao’s secretary in the early 1950s and later the Cultural Revolution’s chief propagandist, Mao thought that, when righting a wrong, one had to “go beyond the proper limits”. This he repeatedly did. + +Disorder under heaven + +Almost all countries struggle to come to terms with dark periods in their histories. Japan, for example, has failed fully to acknowledge its wartime atrocities. China is no exception. Both its government and its people wrestle with the story of the Cultural Revolution. + +For many young people at the time, the Cultural Revolution was a thrilling experience, a period when those in authority were humbled and peasants and workers were encouraged to speak up (as long as they supported Mao); when students could travel free by train and meet comrades from other parts of China. + +Zhang Baohua, a member of a group that promotes orthodox Maoism via a website in China called Utopia, recently wrote about China’s modern leftists commemorating the achievements of the Cultural Revolution with seminars, lectures and other public events. He admitted they are being kept low-key, lest the government stop them. + +Many of today’s leaders spent their formative years in the Cultural Revolution. Of the seven members of the Politburo’s Standing Committee, the party’s highest organ, four others shared President Xi’s experience of banishment to the countryside to “learn from the peasants”, including: the prime minister, Li Keqiang; the chief ideologue, Liu Yunshan; and the anti-corruption chief, Wang Qishan. The sister of another, Yu Zhengsheng, committed suicide after persecution by schoolmates. Mr Xi’s half-sister also committed suicide. + +Many perpetrators survived, too many to prosecute. And millions were both perpetrator and victim. Red Guard torturers were tortured in their turn. Among a generation of educated teenagers sent to the countryside were some who had been vicious fanatics. And although for some of those rusticated the experience was liberating, for many others it was grim. Girls were raped; girls and boys starved. No wonder older Chinese do not want to revive such memories. + +Thomas Plankers, a German psychologist, argues in “Landscapes of the Chinese Soul” that, in the few countries where people have come to terms with dark periods in their history, historians and public intellectuals have played vital roles in overcoming the reluctance of politicians and ordinary people to talk openly. That process has not happened in China. + +One reason for the silence is private reticence. But another is Mao’s unique position. Whereas in the former Soviet Union, the chief perpetrator of terror, Joseph Stalin, had not been the founder of the Communist state (that was Vladimir Lenin), in China, Mao was both. At the end of his life, he described his two proudest achievements as the founding of Communist China and the launching of the Cultural Revolution. It is impossible to separate one from the other. “Discrediting Comrade Mao Zedong”, said Deng Xiaoping in 1981, “would mean discrediting our party and state.” + +That could not be tolerated, so official historians, with Deng’s guidance, concocted a careful formula. In 1981 the Central Committee published a “Resolution on Certain Questions in the History of Our Party”. It argued that Mao had “initiated and led” the Cultural Revolution, which it called a “grave blunder”. But “as for Lin Biao [Mao’s chosen successor in 1969-71], Jiang Qing and others…the matter is of an entirely different nature. They…committed many crimes behind his [Mao’s] back, bringing disaster to the country and the people.” And having established that, Deng said he hoped debate on major historical questions would come to an end. It was a sort of historical omerta. + +And it has mostly been respected. A few memoirs have been published. In the late 1970s a so-called “scar” literature appeared, in which writers sought to describe their experiences. And in March Wang Meng, a former minister of culture under Deng, wrote in Yanhuang Chunqiu, a reformist magazine, that China bore an “unshirkable responsibility” to explain the politics of the Cultural Revolution. “The Chinese people should be doing this, the Chinese Communist Party should be doing this, Chinese scholars should be doing this. It is the duty of the Chinese people, to history and to the world.” + +But public discussion is rare. Most Chinese historians have steered clear of writing about the period. Shapingba cemetery in the south-western city of Chongqing is the only one dedicated to the dead of the Cultural Revolution, bearing monuments to hundreds of Red Guards, most of whom were killed in battles with another faction. It is closed most of the year. Museums gloss over the period. And this year China’s leaders, who love to celebrate anniversaries at every opportunity, will draw a veil of silence over the decade. + + + +Yet however much the Cultural Revolution is ignored officially, it casts a long shadow. Widespread abhorrence of it enabled the eventual rise of pragmatists led by Deng Xiaoping, who ushered in economic and social reforms. But it also exacerbated widespread disenchantment with politics; Rana Mitter, a historian at Oxford University, notes that older generations that suffered under Mao’s endless political campaigns and policy flip-flops transmitted their disillusionment to younger ones. Perhaps, Mr Plankers suggests, Chinese people are unusually determined to succeed in business partly in order to protect themselves against the randomness of power embodied in the Cultural Revolution. + +Failure’s inheritance + +Yet the reaction against a decade in which ideology trumped all has not helped China’s leaders think more profoundly about how to avoid the destructive caprices of unrestrained power. In a rare criticism of this omission, China’s then prime minister, Wen Jiabao, warned in 2012 that without successful political reform, “such historical tragedies as the Cultural Revolution may happen again in China.” + +The violence of the Cultural Revolution, and the many officials it claimed as victims, may explain why China’s liberalisation of the economy has not gone hand-in-hand with greater democracy. To Westerners, the students protesting in Tiananmen Square in 1989 may have seemed a million miles from the Red Guards who had assembled there more than two decades earlier screaming Maoist slogans. But to China’s leaders, there has always been a connection: that the Cultural Revolution was a kind of “big democracy” (as Mao called it) in which ordinary people were given the power to topple officials they hated. The students in 1989 may not have been Mao-worshippers, but had they been given a chance, they would have acted just like the Red Guards, according to the logic of Chinese officials—with chaotic, vindictive rage. They produce no evidence. They do not need to. The nightmare of the Cultural Revolution continues to disturb the dream of Chinese democracy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21698701-china-still-denial-about-its-spiritual-holocaust-it-was-worst-times/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Xi Jinping and the Cultural Revolution + +Mao, diluted + +The Cultural Revolution echoes faintly in Xi Jinping’s rule + +May 14th 2016 | BEIJING | From the print edition + +THE Cultural Revolution was a hellish period for millions of Chinese. President Xi Jinping’s father, Xi Zhongxun, a minister under Mao, was tortured, and a half-sister committed suicide. Yet some who lived through the period (those who suffered less) recall aspects of it with nostalgia. So it is with mixed feelings that Chinese now view the recent reappearance of some of the ingredients that made that era so toxic. + +Many liberals in China wince at a renewed emphasis under Mr Xi on the Communist Party’s traditional beliefs, including “Mao Zedong thought”. They fret about adulation of Mr Xi in the official media—faintly reminiscent of Mao’s personality cult, which reached fever pitch during the Cultural Revolution. Others shrug. China needs a strongman like Mao, they say (though not his Red Guard mobs). + +Mr Xi wants to be seen as such a man. By taking all the top jobs under his control, he has been turning away from the collective leadership of equals that Deng had created after the Cultural Revolution to ensure the capricious rule of someone like Mao could never happen again. In early April Mr Xi gave himself a new title: “commander-in-chief” of the Joint Operations Command, a new body (he was already head of the armed forces). He showed this off by appearing for the first time in public wearing combat fatigues. + +Mr Xi clearly worries that liberals might try to use the horrors of the Cultural Revolution to negate Mao entirely, and thus the party’s right to rule. He has been campaigning against what he calls “historical nihilism”, namely attempts to blacken the party’s early record by contrasting it with the prosperity of the post-Mao era. + +Officially, the Cultural Revolution is still described as having inflicted “untold disasters” on China. But Mr Xi wants the period since 1949 to be seen as a continuous whole, with no break in 1976 when Mao died. He does not want people to conclude that Mao was all bad. + +There are huge differences between Mr Xi’s rule and the Cultural Revolutionary period, of course. Mr Xi has no truck with Maoist ideas about permanent revolution. Through his anti-corruption campaign, he is attacking his enemies in the party, but his attacks come from above, not (as in the Cultural Revolution) from below. He is even rumoured to be trying to dampen his mini-personality cult. But as Andrew Nathan of Columbia University points out, even distant parallels are worrying. Mr Xi is blowing on the embers of the conflagration that consumed China 50 years ago. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21698708-cultural-revolution-echoes-faintly-xi-jinpings-rule-mao-diluted/print + + + + + +Previous Articles Sections Next + + + +Middle East and Africa + + + + + +The Democratic Republic of Congo: The guide to the promised land? + +Zimbabwe’s new currency: Who wants to be a trillionaire? + +Closing the world’s largest refugee camp: Kenya says go home + +Sierra Leone’s first post-war traffic light: Amber for recovery + +Fighting Islamic State in Libya: The scramble for Sirte + +Israeli agriculture: Desert wines + + + + + +Articles Sections Next + +The Democratic Republic of Congo + +The guide to the promised land? + +Moïse Katumbi takes on President Joseph Kabila + +May 14th 2016 | LUBUMBASHI | From the print edition + + + +AT THE Palais de Justice in Lubumbashi, the Democratic Republic of Congo’s second biggest city, an impressive piece of political theatre is about to unfold. Hundreds of cops in navy-blue uniforms form a cordon, clutching riot shields and smoke grenades. They are waiting for the arrival of Moïse Katumbi Chapwe, a former governor of Katanga, the region of which Lubumbashi is the capital, whom the government has accused of hiring mercenaries and plotting a coup. + +When Mr Katumbi arrives, he does so in a black minivan surrounded by a huge crowd of people who fill the square, singing and waving signs that read “Je Suis Moïse”. Dressed all in white, with a Congolese flag around his neck, he clambers out and pushes through the crowd, ascends the steps and goes inside. The moment the doors of the Belgian-built 1920s Art Deco building close, the cops rush the crowd, firing tear gas and waving tasers. In less than a minute, the square is devoid of anyone not wearing a blue uniform. + +Over the past year, Mr Katumbi has become Congo’s most influential opposition leader. Few believe the accusation about mercenaries: despite raiding Mr Katumbi’s homes, the Congolese government has arrested only a few unarmed security guards. The American embassy has dismissed the claim. But even without armed men, Mr Katumbi may be the biggest threat to Congo’s president, Joseph Kabila. + +Under the constitution, adopted in 2006 at the end of a war that killed anywhere between half a million and 5m people (nobody is sure), Mr Kabila should stand down at the end of his second term in December. But the former guerrilla, who took over as president when his father was murdered in 2001, shows little sign of planning to do so. As a result Congo, a country of perhaps 90m people four times the size of France, which outside its fragile eastern regions has been relatively stable for the past decade, may be plunged back into chaos. + + + +Mr Katumbi formally entered the race on May 4th, the same day that the accusations about mercenaries emerged. His plans were hardly secret, however. In September he split from Mr Kabila’s party together with a number of other influential Congolese politicians, declaring that he no longer believed the president would respect the constitution. Ever since, he has been courting the press and nurturing allies among Congo’s disparate opposition. + +More than anyone else, Mr Katumbi has the chance to build a coalition able to force Mr Kabila to step down. In Katanga, where he was born—the son of a Greek Jew and his Congolese wife—he is enormously popular. Having made a fortune in servicing mining companies, in 1997 he bought TP Mazembe, Lubumbashi’s football team, and turned it into Africa’s most successful. Katanga, by far Congo’s wealthiest region, is also its most functional. Some of this is thanks to Mr Katumbi’s work as governor, at a time when international mining companies moved back to Katanga having all but abandoned it. + +The president, by contrast, is deeply unpopular in most of the country. He won elections in 2006 and 2011, but against a divided opposition, and amid widespread irregularities. In both cases, he relied heavily on support from Katanga, and in turn on Mr Katumbi, who was one of his closest allies in government. + +That support is now almost all gone. “We do not want another Mobutu,” says a smartly dressed man who gives his name as Constantine, outside a pharmacy in Lubumbashi (Mobutu was the dictator of the then Zaire from 1965 to 1997). “I was not a supporter of Moïse Katumbi, but today I am,” he says. + +The question is whether Mr Kabila can gather enough support to stay in power despite the constitution, following the example set by the presidents of Congo-Brazzaville, Rwanda, Uganda and Burundi. So far the indications are that he is weaker than his peers. At the end of 2014 he sought to change the constitution. Some 40 protesters were shot by the police on the streets of Kinshasa. But the gambit failed. + +Since then, he has followed a strategy of glissement, or slippage. He split Congo’s 11 regions into 26, in the process ejecting many of his opponents from their positions. He has starved the election commission of funds and has claimed an election is impossible to organise. That, the Supreme Court has just ruled, would allow him to stay on past December. Most recently, he has started a “national dialogue” to try to convince opposition leaders to support a way for him to stay in power. + +But he has also embarked on a policy of repression. Whereas soldiers fighting rebels in the east do so with ancient weapons, the police in opposition strongholds such as Lubumbashi are smartly equipped with brand new equipment, such as the tasers. Protests have been put down by force. Hundreds of people—opposition politicians, activists and journalists—have been arrested across the country. + +This has not made Mr Kabila more popular. And too-blatant repression is threatening to undo him. Diplomats from donor countries are talking about imposing targeted sanctions if Mr Kabila does not leave office. More importantly, the economy is slowing because of lower commodity prices. In Katanga some mines have closed and many Western investors are pulling out. On May 9th Freeport, a large American firm, announced that it planned to sell its copper mine to a Chinese firm for $2.65 billion. The government is running through its reserves fast and, being unable to borrow, is printing money. + +What happens next is anyone’s guess; the government is plainly nervous about the local reaction if it tries to cart Mr Katumbi off to Kinshasa for trial. A day before he was taken to court, Mr Katumbi explained his strategy at the tennis courts behind his house in Lubumbashi, a mansion festooned with football memorabilia. “He can’t bribe all of the population and he can’t kill all of the population.” Mr Katumbi proposes to lead demonstrations against the government until it gives up—and if he is arrested, or worse, killed, then to become a martyr. “My fight is a pitiful fight. I have no gun. But if I die, it will be for a cause,” he says, somewhat grandiloquently for a man dressed in whites and clutching a racquet. He thinks that Mr Kabila should step down gracefully. + +Yet others are fearful of nastier consequences. Not everyone in Congo will embrace a president from the south, like Mr Katumbi. In the east, in particular, as many as 70 armed groups still run rackets and fight localised wars with the government and each other. Many are hostile to the entire Congolese state, not just to Mr Kabila. Even if he does not step down, Mr Kabila may struggle to stay in control of much of the country. And Congo’s history shows that when the president struggles, bloodshed quickly follows. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21698657-mo-se-katumbi-takes-president-joseph-kabila-guide-promised-land/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Zimbabwe’s new currency + +Who wants to be a trillionaire? + +Lock up your dollars right now; Mugabenomics is back + +May 14th 2016 | From the print edition + + + +LIKE the governors of the Reichsbank, who kept on speeding up the printing presses as Germany plunged into ever-steepening hyperinflation in the 1920s, insisting that the real problem was a shortage of banknotes, Zimbabwe’s government claimed to have overturned the laws of economics during its own bout of hyperinflation nearly a decade ago. Gideon Gono, then governor of the Reserve Bank of Zimbabwe, claimed that “traditional economics do not fully apply in this country,” and said “I am going to print and print and sign the money…because we need money.” + +The result was an increase in prices so swift that it was almost impossible to calculate the rate of inflation. By some estimates it peaked at 500 billion per cent, as the government printed ever-larger denominations. Notes such as one with a face value of 100 trillion Zimbabwe dollars are worth much more now as a novelty on eBay (where they sell for about $45) than they ever were in shops in Harare. + +Zimbabwe finally tamed inflation in 2009, when it abandoned the Zim dollar and started using American dollars and other foreign currencies instead. (It converted bank balances to US dollars at a rate of $1 for every 35 quadrillion Zim dollars.) That brought instant relief. But the government of Robert Mugabe, a 92-year-old who has held power since the end of white rule in 1980, has again been spending more than it collects in taxes, and importing more than it exports. It does not help that Mr Mugabe destroyed the country’s main source of foreign revenue when he chased mainly white farmers off their land and handed it to ruling-party bigwigs. + +Without money to pay civil servants—in particular the soldiers and policemen who keep Mr Mugabe in power—the government intends to start printing it again. This time it insists it is not bringing back the reviled “new” Zim dollar, but is printing notes that are “backed” by some $200m that Zimbabwe has borrowed from the African Export-Import Bank. However, it seems unlikely that holders of these new notes will be allowed to exchange them for those real dollars. + +Given Mr Mugabe’s track record, that means they are likely to plummet in value very fast. Slow-motion bank runs have already started, as savers fret that their US dollars will be forcibly converted into the new notes. Banks have had to restrict dollar withdrawals, in some cases to as little as $20 a day. The last bout of hyperinflation wiped out savers and pensioners. Savers are braced to be robbed again. + +The governor of the Reserve Bank, John Mangudya, insists the new notes will be an “incentive” to exporters, not a return to the bad old days. Not even the government believes this. It will not, for example, be using them to pay civil servants. Instead they will be foisted onto exporters who, having paid their suppliers and workers in hard cash, will have to accept funny money for their earnings. What could go wrong? Many will go bust, so export revenues will quickly tumble. Eddie Cross, an opposition MP, says the new policy could mean “the final collapse of the economy”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21698658-lock-up-your-dollars-right-now-mugabenomics-back-who-wants-be/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Closing the world’s largest refugee camp + +Kenya says go home + +Or are the refugees bargaining chips? + +May 14th 2016 | NAIROBI | From the print edition + +THE world’s largest refugee camp looks permanent. The first tents were pitched in the desert almost 25 years ago. Dadaab now sprawls over more than 50 square kilometres (20 square miles) on the arid Kenyan-Somali border. It is home to some 344,000 people, mostly Somalis who have fled their war, as well as shops, makeshift cinemas and a football league. The Kenyan government now wants to dismantle what is in effect a medium-sized city, along with Kakuma, a second smaller camp of 189,000 refugees close to South Sudan and Uganda. Neither task will be easy; either would provoke outrage. + +The country’s interior ministry announced on May 6th that it wanted to close the two camps as quickly as possible, citing risks to national security. A similar pledge was made last year after 147 students at Garissa University were killed by attackers from a Somali terrorist group, al-Shabaab, (who some security officials say had links with Dadaab). On that occasion, an international outcry, culminating in a visit from John Kerry, America’s secretary of state, forced the government to back down. This time it seems more serious. It has repeated its declaration several times; and now, ominously, Kenya’s Department of Refugee Affairs (DRA) has also been shut down. + +“We can’t do anything right now because we don’t exist,” says one aid worker. Some 70-100 asylum seekers arrive from South Sudan every day, but they cannot be registered and moved into Kakuma’s main camp, according to Lennart Hernander of the Lutheran World Federation, which manages the camp’s overflowing reception centre. The DRA is (or was) also responsible for issuing passes for medical emergencies that cannot be treated in camp hospitals; charity workers fear death rates will rise as a result. + +Aid agencies in Kenya and beyond have struggled to respond to the latest announcement. As The Economist went to press the UNHCR still had not been able to meet the government to decipher its motives or plans. In an article published on May 9th the interior ministry’s top civil servant, Karanja Kibicho, said that terrorist attacks, including one on the Westgate Mall in 2013, had been “planned and executed from Dadaab”. Others, though, put more of the blame on endemic problems within the Kenyan security services. Although a settlement that size has almost certainly been infiltrated by al-Shabaab to some extent, “those attacks couldn’t have happened without the same kind of vulnerabilities you find across Kenya,” says Cedric Barnes of the International Crisis Group. Kenya’s security has been improving, thanks in part to increased intelligence co-operation with Western countries. + +Money is probably the real reason for the sudden announcement. Mr Kibicho pointedly mentioned in his article that donor funds are being switched from Kenya to deal with the influx of migrants to Europe. Having seen Turkey secure promises of €6 billion of aid in return for taking migrants back from Greece, Kenya doubtless wants more from the West. + +AMISOM, the African Union force in Somalia, to which Kenya contributes more than 3,500 troops, needs a new UN mandate at the end of May. Moving half a million people out of Kenya is impossible, at least without immense cruelty. So the chances are that the threat of closure is a desperate appeal for more funds. But whether any will be forthcoming is still an open question. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21698675-or-are-refugees-bargaining-chips-kenya-says-go-home/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sierra Leone’s first post-war traffic light + +Amber for recovery + +After years of war, progress of sorts + +May 14th 2016 | FREETOWN | From the print edition + + + +MULTI-COLOURED minibuses, shabby motorbike-taxis, white four-wheel-drives and battered jeeps stream through the centre of Freetown, overtaking on both sides, hooting as they go. A few strategically positioned cops try to control the flow by waving sticks and yelling at bad drivers over a cacophony of horns. They act as inefficient human traffic lights, with the added power to stop helmetless bikers and extract small bribes from them with the threat of a visit to the police station. + +Until this month, Sierra Leone had not seen a real traffic light in more than 14 years. They were all stolen and sold for scrap during a civil war that lasted, off and on, from 1991 to 2002. During that period rebel armies rampaged through the country, terrorising civilians and sometimes chopping off their hands. Hungry for booty, they grabbed whatever they could carry off, from livestock to diamonds, aid shipments, televisions, cars—and traffic lights. + +So Sierra Leone’s first post-war traffic light, which now stands proudly at a busy crossroads in downtown Freetown, is more than just a tool to ease congestion. The president’s spokesman, Abdulai Bayraytay, says it represents “a transformation. We are moving forward as a country; the light is part of our reconstruction effort.” Erected on President Ernest Bai Koroma’s personal instructions, it is supposed to be the first of many that will appear around the country in the years to come. + +As well as demonstrating the nation’s recovery, Mr Bayraytay believes that the light will also help reduce corruption. “The traffic police are perceived as being very corrupt, and if we limit human contact in road services there will be less misconduct,” he says. + +For all the government’s efforts to portray a single traffic light as a symbol of progress, it also serves as a reminder that the country’s recovery has a long way to go. Growth has averaged 5.1% a year since the war ended. But if you stroll to the heaving junction where the light is, you will see that it works fitfully, blinking only with an amber bulb. Road users, many of whom have never seen a traffic light before, are cheerfully oblivious. + +It may be just a matter of time until the light is working properly. But a cynic might speculate that it is purely for show. Sierra Leone is gearing up for elections, with parliamentary and presidential polls due next year. Symbols are becoming rather more important than anything so mundane as managing the traffic. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21698672-after-years-war-progress-sorts-amber-recovery/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Fighting Islamic State in Libya + +The scramble for Sirte + +Libya’s armed groups take aim at the jihadists, and each other + +May 14th 2016 | CAIRO | From the print edition + + + +ISLAMIC STATE (IS) in Libya is a popular target these days. From the east and south, the army of Khalifa Haftar, Libya’s most potent warlord, is moving on the coastal city of Sirte, which is controlled by some 5,000 jihadists. To the west, the UN-backed administration of Fayez al-Serraj has created an anti-IS command centre in Tripoli, the capital. And a rival government in the west is also preparing for the fight, as are tribes around Sirte. + +It is a shame, then, that these groups are failing to work together. The main divide, as ever, is between the east, where General Haftar backs yet another government, and the west, where Mr Serraj is struggling to establish his authority. Each side sees the fight against IS as an opportunity to bolster its standing—at the other’s expense. They are both scrambling for Sirte and may soon take aim at each other, as well as the jihadists. The UN warns of civil war again. + +America and Europe want Libya’s armed groups to unite under Mr Serraj, who was installed as prime minister after politicians from both sides of the country signed an agreement in December. But that deal has still not been approved by the parliament in the east, where some oppose handing control of the army to the new administration without guaranteeing the future of General Haftar. + +Mr Serraj has hunkered down at a naval base since arriving in Tripoli on March 30th. After a smooth start, in which he was handed control of state institutions and backed by several militias, he has struggled to make progress. Citizens still suffer from power cuts, cash shortages and a lack of security. Worse, IS is on the move. On May 5th the jihadists took Abu Grain, 130km west of Sirte, without much of a fight from the forces aligned with Mr Serraj. + +Needing to reassert some authority, Mr Serraj announced his new-command centre the following day. He has filled it with army officers from Misrata, home to dozens of linked militia groups that form the main rivals to General Haftar’s forces. Their focus is meant to be on the west of the country, to avoid an inter-regional conflict. But Misratan forces have already skirmished with General Haftar’s troops near Zillah, south of Sirte. + +It is, for now, “a rhetorical race to Sirte”, says Jason Pack of Libya-Analysis, a consultancy. No one has actually attacked the jihadists. General Haftar, who is backed by Egypt and the UAE, is still consolidating his supply lines. But he seems eager to prove himself an indispensable ally in the West’s fight against IS—and to increase his influence in future negotiations over the shape of Libya’s government. Some believe he is hoping for Mr Serraj to fail, and then to assume the role of strongman. + +On his way to Sirte General Haftar may try to snatch up oil facilities along the coast, which are protected by the semi-official Petroleum Facilities Guard. The black stuff is yet another cause of dispute between east and west. The national oil firm, which has pledged its allegiance to Mr Serraj, is the only body allowed to export oil, says the UN. But the eastern government has set up a parallel institution and tried: on April 25th a tanker carrying its first shipment was turned back from Malta. + +The eastern government has since blocked all oil shipments from the port of Marsa el-Hariga. If its allies gain control of facilities in Brega, nearly all Libya’s already diminished oil exports could be cut off. That would deny Mr Serraj a critical source of revenue, and legitimacy—he, of course, has to pay salaries and run the state. Libya’s foreign reserves, used to keep it afloat, are running perilously low. + +General Haftar is raising tensions in other ways. He has refused to meet Martin Kobler, the UN’s envoy to Libya. And he has struck an alliance with commanders who served under Muammar Qaddafi, Libya’s late dictator. IS, for its part, is likely to put up a vicious defence of its stronghold. America, Britain and France, which have troops on the ground in Libya, may eventually be forced to choose between backing Mr Haftar in his fight against IS in Sirte, or preserving the legitimacy of Mr Serraj. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21698671-libyas-armed-groups-take-aim-jihadists-and-each-other-scramble/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Israeli agriculture + +Desert wines + +How to grow grapes where the ground is a griddle + +May 14th 2016 | BE’ER SHEVA | From the print edition + +The desert shall rejoice + +DANIEL KISH once speared fish for a living. Now he makes wine in Israel’s Negev desert. Sipping on Shoshanna, a spicy blend of petite sirah, zinfandel, merlot and shiraz named after his mother, he explains why winemaking there can be so hard. The ground is rocky and parched. The sun is fearfully hot. And the local Thomson’s gazelles adore grapes. “You’ve opened a restaurant in the desert. So of course animals are going to eat,” he says. Mr Kish produces between 6,000 and 7,000 bottles of wine a year; he reckons each costs 45 shekels ($12) to make. They sell for just over twice that at his vineyard on Kish Farm. Keeping the process kosher is costly. + +A region’s climate determines its terroir—the environmental elements that affect the quality of grapes, such as rainfall, temperature and soil conditions. Consequently, vineyards and their produce serve as a particularly sensitive means of measuring climate change. Most grapes grow between temperatures of 12°C and 22°C. So research in recent years suggests that, in a warmer world, grapes will cope better at higher latitudes and elevations. + +A study published last month in Nature Climate Change, a journal, found that grapes across France are now harvested two weeks earlier than they were 500 years ago. This trend could mean that wine gets worse, as it did after Europe’s heatwave in 2003. Grapes exposed to too much sun become sweeter and less acidic; eventually, they become raisins. Some spots, such as California’s Napa Valley, may get too hot for vines altogether. This will squeeze the juice out of an industry that generates more than $1 billion a year in taxes in America. + +Israel’s deserts can serve as laboratories for growing vines in warmer conditions. Intense sunshine there can mean that one side of a grape can warm to 50°C in the summer, while the side in shadow will experience temperatures of just 30°C. Aaron Fait, an Italian academic at Ben Gurion University, is using nets of different densities and colours to protect the growing clusters. The temperature, weight, size and chemical composition of the grapes are monitored and conditions tweaked accordingly. + +Dr Fait also researches the combinations of cultivars and root stocks that will allow water to be used most efficiently; certain Australian types are particularly hardy. And trimming, or using trellises to force vines into different growth-patterns, can help manage the efficiency of their water use. Dr Fait already advises vintners in Bordeaux on how to beat the heat. “These new strategies for irrigation and shading will keep the wine industry going,” he reckons. L’chaim! + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21698670-how-grow-grapes-where-ground-griddle-desert-wines/print + + + + + +Previous Articles Sections Next + + + +Europe + + + + + +Russia and Syria: The withdrawal that wasn’t + +German football: Red Bull gives you wingers + +Austrian politics: Waltzing out of the door + +France’s recovery: Ça va + +Schools in Finland: Helsinking + +Charlemagne: Europa all’italiana + + + + + +Articles Sections Next + +Russia and Syria + +The withdrawal that wasn’t + +Syria still provides a useful stage for Russian strategy—and propaganda + +May 14th 2016 | LATAKIA, MOSCOW AND PALMYRA | From the print edition + + + +VLADIMIR PUTIN stares out from a poster hanging at Russian army installations throughout Syria. “Russia’s armed forces are the guarantor of world security,” the posters declare. It is a good summary of the thinking behind Russia’s mission, which has never been mainly about Syria. When it intervened in Syria last year, Russia sought to provide TV spectacles for the masses at home, re-establish itself as a global power and force the West into taking account of Russian interests. + +So when Mr Putin said in March that “the main part” of Russia’s forces could now leave Syria, their mission having been accomplished, he was partly telling the truth. Russia today hardly looks like the mere “regional power” that Barack Obama once dubbed it. Any path to peace in Syria now runs through Moscow. “Only Russia and the United States of America are in a state to stop the war in Syria, even though they have different political interests and goals,” wrote Valery Gerasimov, chief of Russia’s general staff, in a recent article. + +The curious thing about Russia’s withdrawal, however, is that it has not actually happened. To leave would be to abandon Russian influence and hand Syria over to Mr Assad’s other ally, Iran. Rather than withdrawing his forces, Mr Putin has retrenched. The March announcement was really “a way to reconceptualise the presence as permanent, rather than as part of a specific mission,” says Dmitry Gorenburg, an expert on the Russian armed forces. Russia did recall a handful of aircraft—a signal to Syria’s stubborn president, Bashar al-Assad, not to take it for granted. But its footprint in Syria remains heavy. + + + +The Khmeimim airbase near the Syrian port of Latakia hums with fighters and bombers taking off. New attack helicopters have arrived for close air support. Powerful S-400 anti-aircraft missiles maintain an air-defence perimeter in the eastern Mediterranean that constrains even NATO. Just as America’s bases in Iraq had KFC franchises, Russia has tried to make the desert home: Slavic women serve kasha (porridge) in the mess tent; a container unit holds a library of 2,000 Russian books. + +On the ground, Russia seems to be running the show. When Russian and Syrian forces carry out joint missions, they operate “on Russian terms”, says Dmitri Trenin of the Carnegie Moscow Centre, a think-tank. A Russian defence-ministry convoy that took journalists on a recent press tour rolled nonchalantly past dozens of checkpoints. Throughout the tour, Syrian officers deferred to the Russians. + +A glance at the Syrian forces explains the deference. The Russians are well-equipped and disciplined; the Syrians are dishevelled. During rehearsals for a Victory Day parade at the Russian airbase, a small Syrian unit struggled to keep step, arms and legs swinging out of sync. Mr Assad has supplemented his forces with fighters from the Lebanese militia Hizbullah, foreign paramilitaries and thugs. At Syrian checkpoints, irregulars in mismatched uniforms and shabby sneakers keep watch. + +The bombing campaign has been massive, but Russia has also done much else. Palmyra, recently recaptured from Islamic State (IS), now hosts a small Russian base, ostensibly for sappers clearing the area of mines. Russian special forces are involved in intelligence and targeting. Instructors train Syrian counterparts. Russian officers have waded into local politics, brokering ceasefires. The Russians are here for the long haul: when the defence ministry ordered medals for the Syrian campaign, it asked for over 10,000. + + + +Syria’s war, violence beyond control + +Mr Putin has framed his intervention in Syria as a battle between good and evil. In fact, Syrian and Russian forces have as often targeted moderate rebels as extremists. Mr Assad’s plan has always been to convince the world he is fighting jihadists rather than his own angry citizens. And indeed, he has helped stoke the rise of IS and, by killing moderates, he has driven some of his people into the welcoming arms of the extremists. + +On May 5th Russia brought its world-renowned Mariinsky Theatre orchestra to give a concert in Palmyra’s Roman amphitheatre, on the stage where IS executed dozens of people last year. The orchestra delivered a sublime performance of Bach, Shchedrin and Prokofiev, even as bombs were falling on Aleppo, Syria’s largest city. Many Syrians were disgusted. + +It was no accident that the concert took place just before Victory Day, the Russian holiday marking the end of the second world war. Mr Putin called the Russian soldiers in Syria “worthy successors of the great patriotic war heroes”. The concert was dedicated in part to Alexander Prokhorenko, a special-forces soldier who, Russian television reported, had called in air strikes against his own position when surrounded by IS during the battle for Palmyra. Even liberal commentators normally critical of Mr Putin gushed. + +In Syria and in Western capitals, this charm offensive is less effective. Even some supporters of Mr Assad are wary of Russia’s growing control over their country. The West sees Russia’s talk of fighting terrorism as a smokescreen for supporting Mr Assad’s autocratic regime. Philip Hammond, the British foreign secretary, called the concert “tasteless”. Few believe Russia’s claim that it is working towards a fair political solution in Syria. But Russia is not concerned with winning over the West. Instead, by proving itself indispensable, Russia believes it can compel the West to collaborate on Russian terms. Or as Mr Trenin says, to “love us as we are”—bombs, cellists and all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21698688-syria-still-provides-useful-stage-russian-strategyand-propaganda-withdrawal-wasnt/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +German football + +Red Bull gives you wingers + +In the Bundesliga, East-West tension is very much alive + +May 14th 2016 | LEIPZIG | From the print edition + +Someone’s had enough caffeine today + +ON MAY 8th the sold-out Red Bull Arena, an old communist stadium with a new roof and a new name, rejoiced at the triumph of German football’s boldest corporate experiment. RB Leipzig, a team owned by Red Bull, an Austrian fizzy-drink maker, beat Karlsruhe SC to win promotion to the Bundesliga, Germany’s premier league. For Leipzig, the only sour note came when the coach suffered a hamstring injury trying to escape a Bierdusche (beer shower) from his players. But in the rest of Germany, many fret that the team is sabotaging traditional Fussballkultur. + +Germany has so far avoided the worst excesses of modern football. Tickets are cheap, and clubs have to be majority-owned by their fans. But RB Leipzig bucks the model. Red Bull bought the team, then a small town side, in 2009. Barred from renaming it after its product, it altered the colours to resemble the Red Bull logo and renamed it “RasenBallsport [literally, “lawn ball sports”] Leipzig”. To circumvent fan ownership, it arbitrarily rejects membership applications: whereas Bayern Münich has 270,000 members, RB Leipzig has only 636. + +Red Bull’s cash has allowed the club to buy talent and rise through four divisions in seven years. This has outraged fans across Germany. RB Leipzig’s first competitive game ended with the team bus fleeing an angry mob. The stadium is boycotted by other teams’ fans. Before last year’s away match at Karlsruhe SC, anonymous letters were sent to RB Leipzig fans’ homes warning them to stay at home. “What is being done (by RB Leipzig) makes me want to throw up,” a rival coach recently told journalists. + + + +INTERACTIVE: Footballing pay and performance + +Leipzigers do not care. Red Bull has brought elite football back to a parched region. East German clubs were crushed by reunification: unable to compete, they slipped down the divisions. RB Leipzig will be the first eastern club to play in the Bundesliga since 2009. Of Germany’s 23-man World Cup squad in 2014, only Toni Kroos, a midfielder, was not born in the West. “In no other sector of society is the East so discriminated against,” wrote Die Zeit, a newspaper. + +RB Leipzig’s rise mirrors that of Leipzig itself, Germany’s fastest-growing city. Known as “Hypezig”, it has a reputation as a cheaper, edgier Berlin. The club boosts the city as well as Red Bull. + +Other German clubs are hardly free of corporate influence. Schalke 04’s shirts boast Gazprom’s logo; Volkswagen pumps money into VfL Wolfsburg. Some commentators wonder whether more corporate cash might make the Bundesliga more fun to watch: this year Bayern Münich cantered to their fourth straight first-division title. But most Germans still prefer their flat, egalitarian meritocracy over bubbly, caffeinated commercialism. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21698690-bundesliga-east-west-tension-very-much-alive-red-bull-gives-you-wingers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Austrian politics + +Waltzing out of the door + +As the far right rises, a chancellor departs + +May 14th 2016 | VIENNA | From the print edition + +No more chances for the chancellor + +FOR seven and a half years, Austria’s chancellor, Werner Faymann, survived the fall-out of the world financial crisis, turmoil in the euro zone, a wave of refugees and more than a dozen electoral setbacks for his Social Democratic party. As of last week, he was the European Union’s second-longest-serving head of government, after Germany’s Angela Merkel. + +But the first round of Austria’s presidential elections last month, where his party’s candidate won a dismal 11% of the vote, was one defeat too many. At the traditional May Day parade, party stalwarts turned away and young activists booed him. On May 9th Mr Faymann stepped down. A politician better at infighting than public speaking, he leaves behind a divided party and a precarious government. + +The coalition, with the centre-right People’s Party as junior partners, enjoys a slim majority in parliament. But it is under attack from the far-right Freedom Party, which is well ahead in the opinion polls. Norbert Hofer, its soft-spoken candidate for the federal presidency, got 35% in the first round and is the favourite to win the run-off on May 22nd. The position is mostly ceremonial, but can exercise real power in uncertain times. Mr Hofer has threatened to try to block EU trade agreements, and to dismiss parliament if it raises taxes or relaxes immigration barriers. + +The Freedom Party has been riding a wave of discontent with both governing parties, which have been ruling jointly or in alternation since 1945. It got its biggest boost last year, when about 1m migrants from the Middle East came through the country. Though most moved on to Germany and Sweden, 90,000 people applied for asylum in Austria last year, a large number for a nation of 8m citizens. + +Mr Faymann at first stood by Mrs Merkel in her determination to keep the doors open for refugees. But under pressure from public opinion and his coalition partner, he agreed in January to erect border controls and cap the number of asylum-seekers allowed in, triggering a wave of border closures through the Balkans. The volte-face split the party: left-wingers accused Mr Faymann of kissing up to the Freedom Party, while centrists said the party should start to cooperate with the far right. + +This rift puts Mr Faymann’s successor in a tricky position. The most likely candidate is Christian Kern, the boss of the state-owned railway company, who has strong roots in the party but no experience of day-to-day politics. He will be more willing to undertake business-friendly economic reforms than Mr Faymann was, says Thomas Hofer, a political analyst, “but it will be a hard sell within the party.” + +The refugee policy, however, is unlikely to change. The People’s Party says it will remain in the coalition only if the borders remain shut for most asylum-seekers. Reinhold Mitterlehner, the party leader, is under pressure because of poor polls and must compete for popularity with Sebastian Kurz, the foreign minister, a charismatic 29-year-old who takes hard-line positions on immigration. Both parties will want to avoid snap elections before their term ends in 2018. + +A victory for the far-right presidential candidate may, paradoxically, boost the fortunes of the coalition, says Mr Hofer. It would bring its parties closer together, fearing a far-right power grab. Neither Social Democrats nor conservatives will want to play junior partner to a populist Freedom Party and its rabble-rousing leader, Heinz-Christian Strache. Thanks to a lack of good alternatives, the old coalition could live on, warts and all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21698691-far-right-rises-chancellor-departs-waltzing-out-door/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +France’s recovery + +Ça va + +If the economy is running again, François Hollande will be, too + +May 14th 2016 | PARIS | From the print edition + + + +FOR reasons either of irrepressible optimism or self-delusion, François Hollande regularly claims to spot economic improvements. Shortly after he was elected president, in 2012, he said that France’s unemployment would start to fall the following year. Alas, it kept rising. In his election manifesto, he forecast an imminent economic upturn. Instead France went through two more years of near-zero growth. So when Mr Hollande declared on television recently, “Ça va mieux!” (things are improving), he was widely ridiculed. “Are you joking?” asked his dumbfounded interviewer. + +Yet there are signs that, this time, Mr Hollande may be right. The French economy, the second-biggest in the euro zone, grew faster than expected in the first quarter of 2016, at a quarterly rate of 0.5%. This puts growth on track to reach 1.5% this year, in line with the government’s forecast. The uptick was driven mostly by a rebound in consumer spending, the traditional motor of the French economy, along with low oil prices. But private-sector investment is beginning to recover, too. In the first quarter, investment in machinery, vehicles and the like was up by a healthy 2.6%, the second consecutive increase at that pace. + +Since October, the business-confidence index compiled by Insee, the statistics body, has climbed back above its long-term average. This year manufacturing bosses expect to increase investment by 7%, according to Insee, which would mark the biggest rise since 2011. Bank lending is strong. After a long slump, even the construction and housing sector is beginning to show signs of life. In an April survey 74% of property-industry respondents expected an improvement in the coming 12 months, up from 59% a year ago, according to Crédit Foncier, a lender. + +No economist expects a sudden turnaround. Exports dropped back a bit in the first quarter, despite the weak currency. Industrial output was disappointing in March. The European Commission forecasts growth of only 1.7% in 2017. Nor does the rest of the euro zone, where growth is expected to reach no more than 1.6% this year, offer much support. But the commission’s spring forecast is now for France to “move slowly towards a more self-sustained recovery”. Bruno Cavalier, chief economist at Oddo Securities, who is habitually cautious about the French economy, says that he is now “relatively upbeat on France.” + +All of this is welcome, both for France and for the fragile euro zone. The missing feature of the French recovery, however, is jobs. The latest unemployment figures, for the fourth quarter of 2015, showed just a modest dip. And youth unemployment, at 24%, has barely moved. A €2 billion ($2.3 billion) government training scheme for the unemployed should help improve the numbers. The European Commission expects only “limited” job creation this year and next, with unemployment receding a bit, to 10.1%. Any fall would be better than none, but firms remain wary of taking on workers under the country’s rigid labour code before they are sure about the upturn. Next year, France is expected to end up with a jobless rate above the euro-zone average for the first time since 2007. + + + +Explore our interactive guide to Europe's troubled economies + +The political stakes are high. Mr Hollande not only promised to curb joblessness under his presidency: he vowed not to seek re-election in 2017 unless he succeeded. Right now another run seems improbable. He remains France’s most unpopular president ever, with an approval rating of just 13%. Fully 73% of respondents told a poll that they do not feel, as he does, that “things are improving”. And there is a rebellion on the left of his own party over his U-turn towards a more business-friendly economic policy. This week, fearing it could not secure a parliamentary majority, the government invoked a rarely-used article of the constitution to force its labour-law reforms through without a vote, prompting a vote of censure. + +Indeed, it would suit some on the left if Mr Hollande did not run again. Arnaud Montebourg, a left-wing former industry minister fired for insubordination, rates his chances as a challenger. Such rivals could use Mr Hollande’s failure to curb joblessness to bolster their case for an alternative Socialist candidate. Neither growth nor the labour-market reforms will be enough to make a serious dent in French unemployment. But the resolutely optimistic Mr Hollande may reckon that even a soupçon of job growth is enough to let him run again, however doubtful his chances. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21698689-if-economy-running-again-fran-ois-hollande-will-be-too-va/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schools in Finland + +Helsinking + +Europe’s top-performing school system rethinks its approach + +May 14th 2016 | HELSINKI | From the print edition + +Finns no longer win + +THERE are no cars in the car park at Hiidenkivi Comprehensive School; most pupils walk or cycle to school. Inside they sit at tables of four in groups of mixed abilities. They have a say in what they learn and where: many work slouched against a wall in the corridor. Tests are rare. Lunch is free. The youngest pupils go home by noon with little or no homework. + +Tens of thousands of visiting wonks have taken similar notes since 2000, when Finland came at or near the top for reading, maths and science in the Programme for International Student Assessment (PISA), an influential triennial test of 15-year-olds in 60 or so countries. Teenagers consistently score higher only in Japan, Singapore, South Korea and the richest parts of China. But unlike these places, Finland is said to have cracked schooling without working its pupils into the ground. + +Pasi Sahlberg, a former official at the education ministry, says Finland is inoculated from the Global Education Reform Movement, or “GERM”—a scornful term for those who call for competition between schools, standardised tests, accountability for teachers and a focus on basic knowledge. These views hold sway in many of America’s “no excuses” charter schools, and in government in England. The Finnish model is preferred in Scotland, in Sweden and by defenders of America’s public schools. + +Inside the country, however, educators are worried. PISA scores fell in 2009 and 2012 (the next results will be published in December). Data suggest the slide began around the turn of the century. Children of immigrants tend to score worse, but native Finns’ scores have dipped, too. The problem is worst among girls from non-Finnish-speaking households and native boys: one in eight 15-year-old boys cannot read at the level necessary to keep studying. + +A separate problem is that when Finnish children are in school, they are surprisingly glum. About half of 14- and 15-year-olds feel that their teachers do not care about their lives. Finnish pupils are more likely than the average OECD student to say that their classroom environment is bad for learning. Tuomas Kurtilla, the country’s ombudsman for children, says 20-25% of Finnish girls aged 14 and 15 receive school counselling. + +Mr Sahlberg frets that Finnish education is repeating Nokia’s error: failing to innovate when on top. Literacy has traditionally been prized, says Sirkku Kupiainen of the University of Helsinki; until about 50 years ago the Lutheran church often would not marry Finns unless they could read. But between 2000 and 2009 the share of 15-year-olds reading more than 30 minutes per day fell from a half to a third. Teachers bemoan the siren song of the smartphone. + +Finland is hardly alone in facing shifts in youth culture, notes Tim Oates of Cambridge Assessment, a testing company. Some countries, like England, have responded by tightening discipline. But Finland is taking a sensitive and “pupil-led” approach. In August its 313 municipalities will roll out their versions of a new national curriculum meant to restore the “joy and meaningfulness of learning”. + +This will mean more art, music and “phenomenon-based learning”: team projects that combine subjects. Hiidenkivi, for example, is planning a module about the origin of the Earth, combining the Big Bang with religious lessons and Finnish poetry. + +Finnishing school + +Sceptics have two main concerns. The first is inequality. Finland’s gap between rich and poor pupils is smaller than in most OECD countries, but it has widened since 2000. Mr Kurttila says well-off parents are renting flats near good schools and entering pupils for competitive music classes to game the system. Critics of “phenomenon-based learning” say it will make things worse by reducing the time poorer pupils spend on core subjects. + +Opponents also think the new curriculum undermines what they say led to Finland’s previous success: an idiosyncratic mix of culture, history and traditional education. Gabriel Heller Sahlgren of the Centre for the Study of Market Reform of Education, a think-tank, says the key question is what led to the surge in Finnish performance between 1965 and 2000, not what is happening in schools today. + +Some of Finland’s strengths are hard to copy. Teachers have exceptionally high social status: only doctors are more sought-after as partners. (This stems from their role defending Finnish culture against Russian repression in the 19th century.) Finland industrialised later than other Nordic countries and launched mass education only in the 1960s. Ms Kupiainen says this meant the parents of the “PISA generation” were upwardly mobile, and passed on a belief in the power of education. Younger parents, she says, worry that their children have not inherited their diligence. + +Defenders of the reforms insist that policy mattered in Finland’s rise. They point to the support given to laggards, and to rigorous teacher training. Finns themselves generally care less about staying top of PISA than visitors assume; and Finland still performs well, if not as well as before. + +But both defenders and opponents of the new curriculum agree that children’s will to succeed in school has diminished. “Ten years ago education was highly valued among all Finns,” says Ilppo Kivivuori, deputy head teacher at Hiidenkivi. “Now that is less clear.” So is whether the reforms can turn things round. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21698679-europes-top-performing-school-system-rethinks-its-approach-helsinking/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Europa all’italiana + +Matteo Renzi hopes he can transform Europe. It would be pretty to think so + +May 14th 2016 | From the print edition + + + +ITALY is Europe’s great underachiever. Despite being roughly the size of Britain or France, it has often adopted the prickly and unambitious stance of a medium-sized country towards the European Union. Its prime ministers, by turns weak or clownish, have been unable to place their mark on a country many see as ungovernable. The Silvio Berlusconi years heaped ignominy upon ineptitude, raising fears that Italy, the euro zone’s third-largest economy, could tumble out of the single currency, bringing the entire edifice down with it. So when Matteo Renzi, a hyperactive 39-year-old, took office in February 2014 vowing to change Italy, he could count on a lot of goodwill from his fellow EU leaders. + +It is still there, more or less. Italy’s partners look approvingly upon Mr Renzi’s flurry of activity, from last year’s Jobs Act, designed to reduce firing costs and encourage firms to recruit permanent staff, to political reforms that should guarantee stronger governments and cut legislative logjams. They have tolerated the periodic outrage Mr Renzi directs at Germany and the European Commission. And they have welcomed Italy’s recent “migration compact”, which proposes to stem the flows of people by increasing development spending and investment in Africa. + +Now Mr Renzi’s team has a plan for Europe. It goes like this. First, regain credibility by passing reforms. Second, polish Italy’s pro-EU credentials: Mr Renzi recently laid flowers on the grave of Altiero Spinelli, an early enthusiast for Euro-federalism. Finally, advance an alternative vision to Germany’s dreary emphasis on fiscal restraint. Last year Mr Renzi accused Germany’s austerity politics of “destroying growth” in Europe; now his team will offer proposals on everything from economic governance to integrating transport systems. “We believe to save Europe, we must change it,” says Sandro Gozi, the Europe minister. + +In the short term, Italy is content to go with the European grain. It needs to exploit flexibility clauses to avoid being censured by the commission over its growing structural budget deficit. On migration, officials note that large parts of the EU have finally come round to Italy’s way of thinking: Mr Gozi speaks of a new “Rome-Berlin-Stockholm axis”. On foreign policy, Italy will lean dovish on Russia (without breaking ranks on sanctions) and keep attention focused on the chaos in Libya. + +But this is just the overture. In the run-up to the 60th anniversary next March of the Treaty of Rome, the EU’s founding document, Italian officials want to lay the groundwork for ambitious moves towards European integration, particularly inside the euro zone. Giant stimulus or common unemployment-insurance schemes will spook Berlin. But some in Rome suspect the days of German hegemony are numbered. Some optimists even think that, should Britain vote to leave the EU next month, the fear of disintegration could jolt the euro zone into action. In the ministries and palazzos of Rome, the talk is of common solutions, overcoming nationalism and More Europe. Outside Brussels, Charlemagne has never heard such unabashed mania for federalism. + +Alas, this heady stuff finds few takers elsewhere. In part, Mr Renzi’s problem is style. He has a back-slapping approach that ill suits the slow coalition-building necessary to get things done in Brussels. Some of his fellow leaders find his histrionics infuriating. His decision this week to change Italy’s EU ambassador for the second time in as many months looked disorganised. + +But his bigger problems are at home. Italy’s voters have lost their traditional Euro-enthusiasm: in one recent poll 48% said they wanted to quit the EU. Mr Renzi’s centre-left Democratic Party is besieged by populist outfits. One, the Five Star Movement, topped a national poll for the first time this week, and is on course to win control of Rome in elections next month. In October Italians will vote on a reform of the Senate. Mr Renzi says he will resign if the referendum fails, a gamble that could backfire. + +The economic news is grimmer still. Last year Italy grew by a pitiful 0.8%. That nonetheless represented an advance on three years of recession; GDP remains far below its 2008 peak. The commission has cut its 2016 growth forecast for Italy from 1.4% to 1.1%. Banks are weighed down by bad loans. Unemployment is stubbornly high at 11.4%. And then there is the gargantuan public debt (133% of GDP), which every Italian prime minister must haul around like a ball and chain. Deep-seated structural problems remain, from an inept bureaucracy to bloated pensions. Mr Renzi’s team plead that reforms take time. Voters may not be patient. + +All this leaves Italy’s position in Europe weaker than the Palazzo Chigi would hope. Germany is not yet ready to listen to instructions from an economic laggard; Angela Merkel quickly squashed Italy’s proposal for joint bonds to finance its Africa plans. Like a proud padrone, Mr Renzi may demand respect for Italy’s position. But behind him, rather than a powerful family, his euro-zone partners see a vast debt pile, a floundering economy and an increasingly restive electorate. + +Bella istoria + +Europe needs Italy’s ideas, particularly at a time when France, the traditional foil to Germany, is distracted and Britain has one foot out of the door. But perhaps Mr Renzi came to power at the wrong time: too early for an EU consumed with fighting endless fires (and upcoming elections in France and Germany) to listen to his ambitious proposals; too late for an Italy bearing a legacy of debt and mistrust that cannot be cast off quickly. + +Mr Renzi is still young, note his admirers. If he survives his referendum and the next election—which many expect to be brought forward to next year—he may see his strategy start to work. His reforms could bear fruit, the political threat within might calm, and the Germans may start to see sense. The fiscal bean-counters will be put in their place, and great investments unleashed across the continent. It is an attractive story for a Europe lacking leadership. It almost sounds like a fairy tale. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21698667-matteo-renzi-hopes-he-can-transform-europe-it-would-be-pretty-think-so-europa-allitaliana/print + + + + + +Previous Articles Sections Next + + + +Britain + + + + + +Energy policy: Power hungry + +Brexit brief: Security concerns + +Public transport in London: Going underground + +Corporate bonds: Not so sterling + +Predicting election results: Fluttering in + +Private higher education: Could do better + +Leisure activities: Dreading water + +Bagehot: Donald Trump’s nightmare + + + + + +Articles Sections Next + +Energy policy + +Power hungry + +The Hinkley Point nuclear shambles highlights the flaws of British energy policy + +May 14th 2016 | From the print edition + + + +FOR months a profound somnolence has settled over Hinkley Point C, where the government hopes to install an £18 billion ($26 billion) nuclear power plant. On a recent weekend the security guards were not on the gate. Dozens of diggers and bulldozers were lined up as if on sale. A sign hung at the entrance displaying the core values of the project. One of them was “Know how far we’ve come, how far we’ve got to go, and how we’re going to get there.” + +In fact, no one has a clue when or how the world’s most expensive power station will get anywhere. EDF, the French contractor, has once again postponed a decision to go ahead—until September. There are growing fears that the French nuclear technology it intends to use is flawed. The British government, which has offered a huge subsidy to ensure that nuclear power helps keep the lights on and emissions down for decades to come, insists it will go ahead. But that conviction is shared only by local villagers, who shrug off the delays as a fact of life. “This is Somerset. We invented the word mañana and sold it to the Spanish,” a female Land Rover driver says jauntily. + +The innumerable delays over Hinkley Point matter, though, because they reflect what many consider to be a crisis in British energy policy: the inability to build large power plants of any kind at a time when many coal-fired ones are closing and existing nuclear ones are on their last legs. Britain, once a model of energy deregulation, is now able to get the power it needs only when the government meddles in the market with subsidies and other inducements. + +In his book, “Empires in Collision,” David Howell, a Tory former energy secretary, calls it “a very British fiasco”. He blames a combination of EU energy policy and overzealous greenery by Liberal Democrats in the former coalition government for putting Britain at risk of blackouts, pushing up energy bills and making energy-intensive industries such as steel uncompetitive. + +But the current government is also at fault for continuing a series of interventions that Dieter Helm of Oxford University only half-jokingly says bring back memories of the pre-privatisation Central Electricity Generating Board. Since taking office last year Amber Rudd, the energy secretary, has offered new subsidies for offshore wind while removing them from onshore wind and solar power. She has proposed 2025 as a deadline for scrapping Britain’s coal-fired plants, which still provide nearly a quarter of the nation’s electricity. By the same year, she hopes to see less government involvement in the energy market, while saying it is “imperative” to build new gas-fired power plants. + +Meanwhile investors are leery of investing in big gas plants when there is so much uncertainty about government policy, including whether or not Hinkley Point—which could supply 7% of the country’s electricity—will be built. Peter Atherton of Jefferies, an investment bank, says Carrington, a combined-cycle gas-turbine plant in Manchester, given the green light in 2012, may be the last big gas plant to be built in Britain without subsidies. “Now everyone sits down and says, ‘have we got a government contract?’ ”. He says it is an “absolute dog’s dinner of interlocking policies and interventions—and calling it a dog’s dinner is unkind to Pedigree Chum.” + + + +This year more than 6,000 megawatts (MW) of power generation could be lost, or almost twice Hinkley Point’s proposed 3,200MW capacity. That would lead to potentially the biggest supply shortfall in decades (see chart). On May 6th the Department of Energy said that the gap is the result of low fossil-fuel prices that have pushed down wholesale power prices, damaging the profitability of coal and gas plants. Under normal conditions, it says, the market can cope with up to three hours in which supply fails to match demand. National Grid, the system operator, makes up the shortfall with stop gap measures. But with a 6,000MW shortage, that timespan could increase to 38 hours, it said. + +As a result it has brought forward a market-based subsidy scheme that aims to secure temporary supplies to prevent blackouts in winter when demand is highest. It held the first two “capacity” auctions in 2014 and 2015, aiming to bridge a gap in the winters of 2018-19 and 2019-20. Now it has scheduled another one early next year to smooth things out in the winter of 2017-18. On May 9th, for the first time since 2008, National Grid issued a summer alert that it urgently needed 1,500MW of extra power because of a mix of plant breakdowns, a drop in wind power and other factors. It paid one operator £1,250 per MW/hour for its electricity—30 times the normal price. + +Such ad-hoc interventions push up energy bills. They have also handed juicy rewards to owners of small-scale diesel generators—a feature of life more reminiscent of countries like Nigeria. To be fair, governments across Europe are facing similar power-generation problems (though few have such a small cushion of capacity). The growth of renewable energy, which last year accounted for almost a quarter of Britain’s electricity supply, is becoming so abundant it is distorting electricity markets. Because it is intermittent, it needs backup supplies when there is no wind or sun. But when there is, it is so cheap that fossil-fuel plants struggle to compete. + +Carbon targets are also complicating life for policymakers. One reason the Tory government remains committed to Hinkley Point is to avoid missing its 2030 emissions-reduction goals. Ideally, it should rely more on undersea power lines that connect it to the Netherlands and elsewhere. Last year it imported about 6% of its electricity. However, a vote this summer to leave the EU would make it harder to build more, analysts say. + +In the long-run there may be no option but to muddle through until renewables work without subsidies, and backup technologies such as battery storage or nuclear power become cheaper and more efficient. For now, the strain on the grid is lightened by feeble electricity demand in Britain, which is still more than 10% below its level before the financial crisis in 2008-09. But that could change if more people start plugging in their cars rather than filling them up, and switching on industrial plants rather than stoking their furnaces. The country with the cheapest and most abundant electricity will prosper in such a future. At this rate, it won’t be Britain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698673-hinkley-point-nuclear-shambles-highlights-flaws-british-energy-policy-power-hungry/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit brief + +Security concerns + +Is Britain safer in the European Union than outside it? + +May 14th 2016 | From the print edition + +Spooked by Brexit, Mr Bond? + +MOST debate over Brexit has been about economics, trade and migration. But when David Cameron called the EU referendum in February he cited a new factor, asserting that membership made Britain safer. This week the prime minister went further, hinting that Brexit might increase the risk of conflict—and adding that, every time Britain turned its back on Europe, it had come to regret it. + +In the past 25 years the EU has developed its common foreign and security policy. Examples of joint action include a common response to Iran’s nuclear ambitions and sanctions on Russia after it invaded Ukraine. Polls suggest that most voters support such co-operation. Sir Simon Fraser, a former head of the Foreign Office, believes that “Brexit would diminish Britain’s role in the world.” Some fear questions over its place on the UN Security Council, though Britain could veto any change. + +Europe also has a role in security and intelligence co-operation. In March Sir Richard Dearlove, a former head of MI6, the foreign-intelligence service, argued that “the truth about Brexit from a national security perspective is that the cost to Britain would be low”. He set off a huge debate. Theresa May, the home secretary, pointing to the European Arrest Warrant and access to intelligence databases, insisted that being in the EU made Britain “more secure from crime and terrorism.” Pauline Neville-Jones, a former national security adviser, said Brexit would weaken border control and police co-operation. + + + +Many of Sir Richard’s old colleagues have now weighed in. Lord Evans, a former boss of MI5, the security service, and John Sawers, another former head of MI6, wrote in the Sunday Times on May 8th that the EU “matters to our security” and that, by reducing data sharing, Brexit “could undermine our ability to protect ourselves”. On May 11th Eliza Manningham-Buller, another former MI5 boss, warned that “if we isolate ourselves we would lose influence…and put ourselves in greater peril.” + +Brexiteers reject this on three grounds. On foreign and defence policy, they insist that NATO is what matters and the EU could undermine it. Second, they say that, for intelligence, the key group is the “Five Eyes” linking Britain, America, Canada, Australia and New Zealand; and that post-Brexit it would be easy to replicate co-operation with Europe. And third, they say the EU is damaging not just because some members are unreliable but because the European Court of Justice (ECJ) can rule in security cases. This, plus migration, makes the EU bad for Britain’s safety. + +On the first point, the EU has civilian tools that NATO finds useful. Brexit also raises the risk of the EU wastefully opening its own military headquarters, a move long resisted by Britain. As for Five Eyes, all the other members want Britain to stay in the EU, partly because it makes it easier to co-operate with European colleagues. Nor are the two groups mutually exclusive: in practice, the security services work with foreign agencies all over the world. Third, Lady Manningham-Buller is clear that the ECJ has no jurisdiction in security matters, which are a national prerogative. The judges who have stopped the extradition of terrorists, for example, have been British or from the European Court of Human Rights, which is not part of the EU. + + + +INTERACTIVE: The Economist's “Brexit” poll-tracker + +Post-Brexit, Britain would find it harder to keep close foreign-policy and security links with the EU, not least because it would no longer be in the room. There is a broader geopolitical point, too. Partly because its foreign-policy role has grown, the EU has become a key piece of the West’s defence and security architecture. Brexit would weaken the EU—and so the West. + +Mr Cameron may have exaggerated the risk of armed conflict in Europe. But the people keenest on Brexit are the West’s enemies. That is why several former Pentagon and NATO bosses called this week for Britain to stay in the EU. Britons are unlikely to have security uppermost in their in mind on June 23rd. But Brexit could yet cause much collateral damage. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698629-britain-safer-european-union-outside-it-security-concerns/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Public transport in London + +Going underground + +The capital’s new mayor needs to protect investment in public transport + +May 14th 2016 | From the print edition + +Squeezing on, then as now + +ON MAY 7th, in the medieval splendour of Southwark Cathedral on the south bank of the Thames, Sadiq Khan of the Labour Party was sworn in as London’s new mayor, the first Muslim to hold the post. Although the campaign came to be dominated by accusations that Mr Khan was tolerant of Islamic extremism (see Bagehot), it is the more mundane issues of transport and housing that will be filling his in-tray. Transport for London (TfL), the organisation that runs the capital’s roads, railways, buses and shared bicycles takes up £10.7 billion ($15.5 billion) of City Hall’s budget of £17 billion. But there are questions over whether TfL has enough resources to build the public-transport capacity the booming capital needs. + +The new mayor’s flagship transport policy is to freeze all fares on London’s public transport system, including those for buses and the Underground. He says this will cost £450m in revenue over four years. TfL claimed £1.9 billion over five years. Whatever the case, TfL is already under pressure, both financially and in demand for its services. In November the Treasury announced that it planned to phase out, by 2019, the annual operational grant of £700m to TfL, leaving a large hole in the body’s revenue predictions. + + + +Meanwhile demand for public transport is rising fast. As London’s economy has boomed after the financial crisis, its roads reached full capacity. Bus and Tube usage has increased much faster than population growth since 2001. (see chart). Significant investment is under way, but more supply will simply create extra demand. For instance, although a signalling upgrade meant that rush-hour capacity on the Northern Line increased by nearly 20% in 2014, regular passengers complain that trains are no less crowded. Crossrail, a new rail project through London that will boost the capacity of the Underground by 10%, is not a permanent solution. With London-wide passenger volumes growing by 3% a year, when it opens in 2018 “it will be immediately full”, Sir Peter Hendy, the then boss of TfL, forecast in 2013. + +The new mayor will need to protect transport investment in London if he wants to meet his other pledges, for instance on boosting house-building from 25,000 units last year to 80,000 by the end of his term. Developers no longer want to build on sites without public-transport links. Only 350 houses of a total of 10,800 given planning permission in 2007 have been built at Barking Riverside in east London; it lacks a rail connection to the city centre. + +Mr Khan says that he hopes to pay for his fares freeze through reorganising TfL’s maintenance division, saving money on contractors and raising revenue from other sources such as developing TfL’s surplus land. But the organisation is already in the midst of an austerity drive; in 2013 it targeted £16 billion of savings by 2021, of which only a quarter has yet been identified. And it already hopes to generate £3.4 billion of revenue from commercial development by the same year. How fast this programme can be expanded with London’s strict planning laws is not clear. + +It would therefore be undesirable for Mr Khan to cut investment. But there are few other ways the shortfall could be met. He could raise council tax, or business rates, over which he will gain some control in April next year. But his costly pledges on house-building, and other competing demands, give limited room for manoeuvre. + +TfL could borrow more. But the fare freeze may damage its creditworthiness, says Jennifer Wong of Moody’s, a ratings agency. Mr Khan would therefore be wise to forge a good relationship with George Osborne, the Tory chancellor of the exchequer, who has pledged to boost grants for transport investment 50% by 2020 and who can lend TfL money for capital projects through the Public Works Loan Board. But with projects such as HS2, a high-speed railway, and other devolved bodies such as Transport for the North competing for cash, Mr Khan will need to lobby hard. + +Whatever happens, he will still need to make difficult decisions over his financial priorities. In part, this is what Mr Osborne, the architect of England’s devolution revolution, intended. Rather than local authorities simply lobbying the Treasury to fund as many of their projects as possible, the point of devolving budgets is to force locally elected officials to take responsibility for decisions instead. On transport, it will ultimately be London’s electorate in 2020 that decides whether Mr Khan tackled the right priorities or not. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698680-capitals-new-mayor-needs-protect-investment-public-transport-going-underground/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Corporate bonds + +Not so sterling + +Brexit or not, business investment may be held back in future years + +May 14th 2016 | From the print edition + +FEARS over Brexit are hitting business investment. The Bank of England, in a statement on monetary policy in April, said that firms were holding off on capital spending until after the vote on June 23rd. As businesses delay buying new computers and machinery, Britain’s measly productivity will remain stagnant, so pay-packets will not grow. + +In the event of a “yes” vote that keeps Britain in the EU, the market jitters will disappear and investment will improve. But whether Britain stays in Europe or not, there is something else that may constrain investment by British businesses in the coming years: a shrinking sterling corporate-bond market. + +Only around 100 British non-financial companies issue bonds (the rest raise smaller sums via bank loans or from family and friends). However, though small in number, bond-issuing British firms have a big economic impact. A report from the Bank of England calculates that publicly listed British companies that issue bonds accounted for a third of business investment in 2012. + +So it is worrying that two of the bank’s economists have found that the market for corporate bonds denominated in sterling has shrunk in recent years. In the early 2000s sterling took up as much as 6% of the investment-grade corporate-bond market. Now it takes up less than 2%. With a less liquid market, investors worry that they will struggle to sell on sterling bonds, so they demand a higher interest rate. The cost of issuing sterling corporate bonds has risen relative to those in other currencies, such as the euro. Small wonder that bond issuance in sterling by British non-financial firms is half what it was in 2013. + +What is going on? Pension reform may be a culprit, say the Bank of England researchers. Until April 2015 people with defined-contribution pensions had to purchase an annuity upon retirement. Insurance firms thus needed to buy sterling debt with long maturities. Such products ensured that there would be enough funds available to pay the promised pensions over a long timeframe. Now, however, Britons are given great flexibility over how to use their pension savings: people over 55 can withdraw all their pension in one go if they like. The reform reduces the demand for annuities—by 50-75% according to some estimates—and so firms looking to issue sterling-denominated bonds are faced with a smaller market. + +Increased concentration in the investor base for sterling corporate bonds, thanks to a series of recent mergers, may have made it a tougher place to sell bonds, too, pushing yields up. Simultaneously, it has become relatively more attractive to issue corporate bonds in other currencies. Yields in euro-denominated bonds have fallen recently, thanks in part to a €1.5 trillion ($1.7 trillion) programme of quantitative easing (printing money to buy bonds) by the European Central Bank. The ECB’s plan to buy corporate debt from June has forced yields down, says David Riley of BlueBay Asset Management. The Bank of England, which has also used QE, no longer holds corporate bonds. Worries over Brexit have further pushed up the cost of issuing sterling bonds relative to euro ones, with investors demanding higher rates in case the pound slumps. + +Some British businesses happily issue debt in foreign currencies. But the bank researchers argue that firms with little presence outside Britain, particularly those with low credit ratings, can have a hard time finding foreign investors. They might find it even trickier if Britain votes to leave the EU. Such firms will thus be stuck with a small, costlier sterling corporate-bond market. In the coming years, business investment may look lacklustre. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698681-brexit-or-not-business-investment-may-be-held-back-future-years-not-so-sterling/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Predicting election results + +Fluttering in + +The polls may be evenly split, but bettors are leaning towards Remain + +May 14th 2016 | From the print edition + + + +IF THE referendum on June 23rd regarding Britain’s EU membership were a horse race, you might be wary about picking a favourite. Throughout 2016, public support for the Remain and Leave campaigns has moved up and down but is still too close to call. + +By contrast, the Brexit betting markets have remained stable. Betfair—an exchange that allows punters to wager against each other leading to more efficient odds than traditional bookmakers—says the probability of Britain leaving the EU has remained below 40% throughout 2016. Fully 72% of the total money accepted so far by William Hill, a bookmaker, has been on a Remain victory. + +Do the gamblers know something the pollsters do not? Neither foresaw an outright Conservative majority in the general election of May 2015, though the punters were closer to the final outcome. Justin Wolfers of the University of Michigan has shown that betting markets tend to be less volatile in the run-up to a vote, and a study at the University of Iowa found that bookmakers’ odds provided more accurate predictions overall than polls before American presidential victories from 1988 to 2004. + +Punters’ greater accuracy is to be expected: betting odds are meant to reflect the risk of an eventual outcome, whereas polls measure public opinion at a specific time. Polls are fiddly, too: they have to be weighted according to the likelihood of respondents turning out, the impact of undecided voters and what type of people are answering the questions. Referendum polls have often over-predicted the proportion of voters yearning for change—and therefore, in this case, voting Leave—as such people are more likely to participate in surveys. + +Betting markets are not immune from failure. The odds on Donald Trump winning the Republican nomination were still long even months after voter surveys had shown he had sizeable support. Nor is a 68% chance of Remain winning—the Betfair odds as The Economist went to press—a guarantee that Brexit will fail. It is still a two-horse race. But the punters have clearly chosen a front-runner, even if the pollsters have not. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698683-polls-may-be-evenly-split-bettors-are-leaning-towards-remain-fluttering/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Private higher education + +Could do better + +The government hopes to encourage more private higher education + +May 14th 2016 | From the print edition + +AT UCFB, a private higher-education provider, around 50 students sit listening to a talk on football-club finances. Looking ahead, they see a lecturer and a projection of a balance sheet. But if they turn to their right, they get a box-office view of the inside of Wembley stadium, featuring 90,000 seats and a groundsman slowly mowing an immaculate green pitch. The unusual location is “a spoonful of sugar to go with the education,” explains Sharona Walker, the chief marketing officer. + +UCFB was established in Burnley Football Club’s stadium in 2011. In 2014 it opened its Wembley outpost; one more is due to open at the Etihad stadium, home of Manchester City, later this year. It offers degrees in sporty topics such as international football business. In 2011 it took on 50 students. Next year it plans to accept as many as 1,000, most paying £9,000 ($13,000) a year for tuition. The early signs suggest that it may be more than just a clever use of space: some 91% of its first two cohorts found a job or went into further study within six months of graduating. + +There are hundreds of private higher-education providers in England. Typically they fill market niches, offering specialist vocational education. Although they do not receive direct government funding, as traditional universities do, around 140 of them receive indirect support in the form of government loans to students to cover living expenses and tuition fees (loans are capped at £6,000 compared with £9,000 at traditional universities). Eight institutions have the right to award their own degrees; others provide degrees that are validated by partner universities or offer alternative qualifications. In 2014-15, £534m of student support went to those at private establishments, 4% of the total spent on support for students across higher education. + +That may soon rise. In a forthcoming bill, the government will seek to make it easier for new private providers to enter the market and for some existing institutions to grow. Changes could include a reduction in the wait for institutions to be granted degree-awarding powers and the relaxation of restrictions on student numbers, put in place to control government spending, for the best providers. The government may also seek to standardise regulation, which would expose some providers to greater scrutiny in return for allowing their students to borrow up to £9,000. “I am determined to tackle the perception that these challenger institutions are in some way inferior,” says Jo Johnson, the universities minister. + +At their best, private providers offer flexible, innovative education. Whereas traditional institutions pay lip-service to the idea of work-focused courses, says Peter Crisp, dean of BPP Law School, private ones are more likely to put them in place. Supporters argue that private providers are less bureaucratic and are therefore able to adapt better to changing student demand. Some offer different course lengths and new methods of teaching. This, the government hopes, pushes innovation in the traditional sector. + +Yet a shadow hangs over the plans for expansion. In 2012, the coalition government increased the tuition-fee loan available to students at private institutions from £3,375 to £6,000. This led to an explosion in the number of students taking up such support, from 6,500 students in 2010-11 to 53,000 in 2013-14, many of whom lacked the skills to benefit from higher education. + +In 2012-13 the 18 higher-education establishments with the highest drop-out rates were all private providers. In 2013-14, a government investigation found that half of the EU students scrutinised could not demonstrate they had lived in England long enough to qualify for support. Dodgy recruitment practices—often advertising the availability of visas—were rife. Last year a report by a House of Commons committee warned that the government had “failed to protect the interests of legitimate students, the taxpayer and...providers who may be performing well.” + +The government says it has cracked down on the suspect establishments. It has also introduced a cap on recruitment, more stringent English-language tests and tougher quality assessments. But many high-quality providers complain that increased regulation leaves them struggling to compete. “Fantastic alternative providers have been tarred by the same brush,” says Alex Proudfoot of StudyUK, a lobby group. Meanwhile, critics argue that the government only intervenes in the case of fraud, rather than in cases of substandard education, and that it won’t be possible properly to assess the success, or otherwise, of the sector until more data on completion rates become available. + +The challenge for the government is to find a way to level the playing field for good providers, while making life even harder for dubious ones, says Nick Hillman of the Higher Education Policy Institute. Despite the government’s optimistic rhetoric, few reckon the changes will prompt much of an influx of new providers. But bringing private providers into a common regulatory system should benefit high-quality institutions. After what happened last time the government sought to encourage the sector to grow, a more careful approach is probably for the best. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698685-government-hopes-encourage-more-private-higher-education-could-do-better/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Leisure activities + +Dreading water + +The number of people swimming has taken a dip + +May 14th 2016 | From the print edition + + + +PERHAPS surprisingly, in the land of cricket and Premier League football, swimming has long been the most popular sport. More than 2.5m English adults take the plunge at least once a week, according to Sport England, the country’s community sports body. That is more than football, cricket, hockey, netball and both codes of rugby combined. + +Wish I’d brought my bike + +But while many Britons make waves, few have come to rule them. Team GB have won just three Olympic gold medals in the past 30 years, and two of them went to Rebecca Adlington in Beijing in 2008. Britain’s athletics stars, by contrast, collected three gold medals in a single evening at the London games in 2012. And Chris Hoy picked up three cycling golds on his own in Beijing. The contrasting fortunes of the sports’ elite athletes are reflected in participation levels. Inspired by Mo Farah, a runner, Jessica Ennis-Hill, a heptathlete, and Chris Froome and Sir Bradley Wiggins, two Tour de France cycling champions, more Britons are running and cycling than ever before (see chart). + +Swimming, meanwhile, has taken a dive. In England, 750,000 fewer people are getting their togs on than a decade ago. The Amateur Swimming Association says that one in five English adults cannot swim, and half of all primary schoolchildren are unable to paddle 25 metres unaided, although it is a requirement in the national curriculum. + +Some promising young swimmers are coming through the system now—Adam Peaty and James Guy both became world champions last year. Perhaps a big haul of gold medals at this summer’s Olympics in Rio de Janeiro might tempt more Britons to dive in. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698686-number-people-swimming-has-taken-dip-dreading-water/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Donald Trump’s nightmare + +Sadiq Khan’s win in London was a victory for enlightened, grown-up indifference + +May 14th 2016 | From the print edition + + + +EVENTUALLY, every senior politician in Britain is invited to Buckingham Palace to join the Privy Council, the body that notionally advises the queen. In 2009 Sadiq Khan, then transport minister, was asked on which version of the Bible he wanted to swear his oath. He replied that, as a Muslim, he would like to use a Koran. Buckingham Palace had none, so he brought his own. Afterwards, when the palace tried to return it, he asked: “Can I leave it here for the next person?” + +On May 5th Londoners voted to make Mr Khan their mayor. Except for the direct vote for the Portuguese and French presidents, he thus holds the biggest personal mandate in Europe. His landslide over the Conservatives (he took 57% of the vote to 43% for Zac Goldsmith, his posh Tory rival) was a rebuke to hardliners of all sorts. At a stroke it became harder for Islamic State’s recruiters to tour public housing estates in Europe and convince young Muslims from immigrant backgrounds that they have no place in the liberal West. The de facto capital of that liberal West had just entrusted its future to a mosque-going, gay-marriage-supporting, proudly Muslim family man with precisely such a hinterland. + +His win was also a rebuke to Western nativists like Donald Trump and Nigel Farage, the leader of the UK Independence Party. It gave the lie to the nonsense spouted by visitors to Europe who see a woman wearing a niqab and assume the continent is under sharia law. Mr Trump announced on May 10th that Mr Khan would be exempt from his putative entry ban on non-American Muslims, which he then called “just a suggestion”. London’s mayor rejected the exemption: “This isn’t just about me. It’s about my friends, my family and everyone who comes from a background similar to mine, anywhere in the world.” Within days he had used the guff about “Londonistan” and “Eurabia” to become a global symbol of tolerance and religious pluralism. + +Bagehot first crossed paths with Mr Khan almost a decade ago on the south London political scene, and long saw him in terms of the internal politics of the Labour Party: as a typical social democrat who, more ideologically flexible than most, had settled on the party’s centre-left at a time when, after a decade of liberal-right dominance under Tony Blair, that was trendy. On the terraced Victorian streets of SW16, Mr Khan was just “Sadiq”, the guy from the neighbouring constituency; the machine politician who had made Tooting—a mix of hard-up estates and comfortable suburbs—relatively safe for Labour when a lesser practitioner might have lost it to the Conservatives. + +Mr Khan’s win on May 5th was truer to the MP-next-door that Bagehot knows than to the cosmopolitan emblem—or hardline Muslim—of global headlines. And therein lies the real hammer-blow to the Trumps and Farages. For the opposite of nativist populism is not hyper-liberalism but a battle for the epithet of “pragmatist”. It is a struggle over the sort of voter who simply yawns at grunting caveman obsessions about who is part of the tribe; about who belongs and who does not. The ultimate rebuke to a Trump rally is not the protest outside it but the citizen who strolls past, neither appalled nor enthused, and carries on with his life. Where once, “progressive” meant raising your fist, now it means shrugging your shoulders. + +London’s election was strikingly normal. The capital is a conventional Labour city and Mr Khan a conventional Labour politician. His win was merely the natural order of things. Mr Goldsmith’s hints about his rival’s links with reactionary Muslims—which in defter hands might have raised valid questions about Mr Khan’s willingness to flex his principles to suit his electorate—looked crass and crazed. They had little effect. More interested in Mr Khan’s pledge to let them change buses without paying extra fares, Londoners rolled their eyes, voted Labour and inadvertently made history. To veterans of the capital’s politics the most interesting thing was not the election of a Muslim but the signs that Mr Khan did better than Labour usually does among white suburbanites and that Mr Goldsmith (despite his best efforts) benefited from the ongoing structural rise in the non-white Tory vote. + +Keep Khan and carry on + +According to Sunder Katwala of British Future, a think-tank, Mr Khan’s achievement alludes to the “depolarisation” of society. It will be judged on how he uses it. As mayor he has few big policy levers to pull. Talking to Bagehot before the election, he insisted that he wanted to strengthen these. That is encouraging: devolution is to be welcomed. But the greatest impact he could have as mayor would be further to normalise his initial achievement. On that, the signs are as good as they could be: as one generation gives way to the next, and non-white Britons move out of the cities and into the suburbs, ever more British voters use civic factors (social and political behaviour) rather than ethnic ones (family roots and race) to define their national identity. + +According to an estimate published by Demos, a think-tank, by 2045 Britain will be as proportionally non-white as the United States. The country has much work to do to prepare itself for this shift. Pockets of segregation must be integrated. In some corners of Britain, Muslims are dangerously cut-off and not like Mr Khan at all. The old, simplistic ideal of multiculturalism must give way to something more sophisticated: integration not just as a local responsibility but a national one that should occupy even the prime minister and his cabinet. + +As mayor, Mr Khan has a unique platform, not confined to the city or even Britain, that he should use to promote a pluralistic sort of nationhood, ease tensions between ethnic and religious groups and highlight failures and successes of integration. Donald Trump will probably lose to Hillary Clinton. But his final defeat, in Britain at least, will come when Mr Khan’s copy of the Koran in Buckingham Palace is well-thumbed—and no one cares. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21698682-sadiq-khans-win-london-was-victory-enlightened-grown-up-indifference-donald-trumps/print + + + + + +Previous Articles Sections Next + + + +International + + + + + +Infectious diseases: Yellow plague + +Malaria vaccines: Buzzing + + + + + +Articles Sections Next + +Infectious diseases + +Yellow plague + +An outbreak of yellow fever in Angola could go global + +May 14th 2016 | From the print edition + + + +IT OCCUPIES a strange place on the spectrum of infectious tropical diseases. Not as important as malaria. Not as terrifying as Ebola. Not as revolting as elephantiasis. Yet yellow fever is a grave illness, incurable once contracted. It kills 80,000 Africans a year. And that is a scandal, both because it can be prevented by a single inoculation and also because yellow fever now risks spreading to Asia, where it has never before taken hold. + +This is the background to the latest epidemic of the disease, in Angola. Since December, around 2,300 suspected cases have been reported there, with nearly 300 deaths. Set against 80,000 deaths, this may not sound like many. But experience suggests that, for each case brought to the authorities’ attention in a country where health care is as fragmentary as it is in Angola, between 50 and 500 probably go unreported. + +Yellow fever is spread by Aedes aegypti, the mosquito that also carries dengue and Zika. Its early symptoms—a high temperature, nausea, vomiting and muscle pain—are reasonably mild and usually last only a few days. In about 15% of cases, however, the disease later returns with a vengeance. Patients experience severe abdominal pain, become jaundiced and bleed internally and from their eyes, mouth and nose. About half of these people die. + +The UN and the World Health Organisation (WHO) have shipped 9m doses of vaccine to Angola, enough for about a third of the population. But that is around a fifth of all the vaccine held worldwide at any one time. If the epidemic spreads, stocks will rapidly run out. + +And spread it might. Almost 6m people in Luanda, Angola’s capital, should now be immune, and the number of Angolan cases being reported to the WHO has indeed dipped in recent weeks. Yet vaccination rates outside Luanda remain low, and the efforts have not stopped the disease from crossing borders. + +Laboratory analyses have linked a few cases in Kenya to the Angolan outbreak. More worrying is the Democratic Republic of Congo (DRC). On May 2nd the WHO reported 453 suspected cases of the disease there, including some in the capital, Kinshasa. Less than 30% of the country’s population was thought to have been vaccinated before today’s outbreak. A booming trade in forged vaccination certificates could also let infected people slip past border checkpoints from Angola into Zambia and Namibia, which reported its first case on April 28th. + +The best way to contain the disease now is to vaccinate all those at risk as soon as possible. Every day increases the chance that one of the thousands of Asian workers in Angola will carry the disease home, sparking a full-scale outbreak on a continent that has yet to experience one. + +Deployment of the vaccine in all African countries where yellow fever is endemic could slash the number of cases. The Yellow Fever Initiative, which is led by the WHO and UNICEF and funded by GAVI, an international public-private alliance that provides vaccines to poor countries, aims to cover the continent by 2020, at a cost of $300m. More than 100m people have been vaccinated since it started in 2007. With more funding, it might have averted this outbreak: Angola was not among the 12 countries that were considered most susceptible to the disease. + +Production of yellow-fever vaccine has increased in the past five years, but it would be difficult to raise further. It has only four sources: Sanofi Pasteur, a French drug company, and institutes in Brazil, Senegal and Russia. “That leaves us in a very vulnerable position,” says Peter Piot, the director of the London School of Hygiene and Tropical Medicine. If yellow fever did take hold in Asia, he says, then the numbers at immediate risk would rise from tens of millions to 100m or more. + +The world’s emergency stockpile of 11m doses, which is held on top of normal supply to enable a rapid response to outbreaks, is already being depleted to control the one in Africa. If the disease takes hold in Asia, says William Perea of the WHO, there would be little choice but to limit inoculations to a fifth of a standard dose so as to make supplies of the vaccine stretch further. Small studies give reason to hope that this would protect adults, but the efficacy of a low dose for children is unknown. + +Ill winds + +International trade and migration mean that the chances of yellow fever spreading to Asia are higher than ever before, warns John Woodall of the Programme for Monitoring Emerging Diseases, an online-alert service. Cool weather has meant that up till now there have been few mosquitoes in China to spread the disease. Even so, the country has already reported its first 11 cases, and summer is approaching. All those diagnosed had returned from Angola, home to an estimated 100,000 Chinese workers. + +Once yellow fever is established in a tropical country, it is almost impossible to eradicate. Monkeys infected by the virus act as a reservoir for the disease. People who travel to the jungle can carry it back to towns and cities, where mosquitoes quickly breed—A. aegypti lays its eggs in standing water, meaning that even a discarded food tin could be a breeding ground. + +Why Asia has never had a large outbreak of yellow fever is something of a mystery. A. aegypti is found across much of southern Asia (see map), and the continent’s jungles have monkeys that would seem an ideal reservoir for the disease. One possibility is that antibodies against dengue, a related disease, partially protect survivors against yellow fever. A second is that the Asian type of A. aegypti may be less able to carry the virus than its African cousin. But it is not immune. The fear is that a traveller who has returned from Africa with yellow fever will be bitten by an indigenous mosquito, which then spreads the disease. + + + +America, which has not had an outbreak in more than a century, is at risk, too. Yellow fever used to be common there: Philadelphia suffered one of the country’s worst outbreaks in 1793, when the disease killed 5,000 people, then about a tenth of the city’s population. In New Orleans in 1853, 9,000 died. The port cities of Europe also suffered outbreaks: one in Barcelona in 1821 killed thousands. + +But by the middle of the 20th century yellow fever was gone from the northern hemisphere, as fumigation was used to beat the mosquito back. In Cuba the same remedy, and more effective sanitation, also removed the source of many of America’s epidemics. Vaccination campaigns in France’s west African colonies between 1933 and 1961 caused yellow fever virtually to disappear from the continent—until decolonisation, when vaccination rates plummeted and the disease reappeared. + +In South American cities yellow fever was once kept at bay by mosquito-control measures. But international arrivals add to the threat from travellers who have visited remote jungle areas, in some of which the disease is endemic. For many places now free of yellow fever, a few infected visitors at the height of summer, and some bad luck, could mean its unwelcome return. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21698597-outbreak-yellow-fever-angola-could-go-global-yellow-plague/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Malaria vaccines + +Buzzing + +Another blow is struck in the long fight against malaria + +May 14th 2016 | From the print edition + +Bring out the big guns + +THE toll of malaria is hard to comprehend. In Africa, parts of the Middle East, southern Asia and Melanesia, humans have been killed by the parasite, which is transmitted by mosquitoes, for thousands of years. Its bloody traces are visible on the human genome itself, in the form of mutations that allow some people to survive infection. Yet despite much recent progress, malaria still kills more than 400,000 people a year. Most are children. Most live in Africa. + +Several drugs are available that prevent infection while they are being taken. Others fight the parasite in the body, after it has been transmitted. The cheapest and most widely used of these is a combination of artemisinin, a substance derived from the sweet wormwood plant, and modern pharmaceuticals such as mefloquine and lumefantrine. But there are signs that resistant strains are emerging. + +So it was a big step when the first vaccine against malaria—and the first against any parasitic disease—was licensed last year. It took the developers, GlaxoSmithKline, a drug company, and the Walter Reed Army Institute of Research, a biomedical research arm of America’s Department of Defence, three decades to find a candidate promising enough to test in large groups in affected areas. The parasite that causes malaria is a moving target. It has an intricate life-cycle: after infecting a human, it moves between the liver and blood, changing its form all the while. Large-scale implementation pilots are expected as early as next year. + +But RTS,S, as the vaccine is known, is only partly effective. Trials involving 15,000 babies and young children in seven African countries showed that four doses in early childhood—a demanding regimen—will cut cases in children, but only by 27-39%. Researchers insisted, though, that this was only to be expected of a first-generation vaccine, and that subsequent versions would be better. + + + +INTERACTIVE: The shrinking malaria map + +They have now been proved right. On May 9th the results of a small, early-stage trial of another vaccine, known as PfSPZ, were published in Nature Medicine, a journal. Five of nine volunteers were completely protected 14 months afterwards. Stephen Hoffman, the boss of Sanaria, the firm developing the vaccine, says it hopes to increase this share, though this might demand multiple doses. “It’s not perfect, but it shows just how huge a challenge malaria poses,” says Mike Turner of the Wellcome Trust, a British medical-research charity. + +A year of moderate protection is still worth having, and might make the new vaccine useful in the worst-affected countries—such as the Democratic Republic of Congo and Nigeria, which together account for two-fifths of malaria deaths. It will also appeal to visitors and migrant workers in malarial regions. The goal of a single-dose, highly effective vaccine is still some way off. But the recent advances give hope that malaria will one day be defeated. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21698654-another-blow-struck-long-fight-against-malaria-buzzing/print + + + + + +Previous Articles Sections Next + + + +Special report: The Arab world + + + + + +The Arab world: The clash within a civilisation + +Sykes-Picot and its aftermath: Unintended consequences + +The nature of the state: Mamluks and maliks + +The economy: Black gold, white gold + +Religion: The new strife + +Religious subdivisions: Which Islam? + +Foreign intervention: From Beirut to Baghdad + +Israel and Palestine: Israel’s villa in the jungle + +The future: What is the Arabic for democracy? + + + + + +Articles Sections Next + +The Arab world + +The clash within a civilisation + +A hundred years after the Sykes-Picot agreement carved up the Ottoman empire, a new Arab history is being written in blood. Anton La Guardia examines the failures of the region’s states + +May 14th 2016 | From the print edition + + + +CLEAVING TO A barren mountainside above the plain of Nineveh, the Syriac Orthodox monastery of Mar Mattai (pictured above) offers a bleak view of the cataclysm that grips the Arab world. Established in the fourth century near the city of Mosul, it stands on a natural boundary. Here, the Mesopotamian plain begins to crease into the Zagros mountains, and Arab farmers come up against Kurdish tribes. Beneath, the folded rocks stretching southward to Oman hold some of the richest stores of oil. + +Mar Mattai has seen the passage of many armies: Sassanian, Arab, Seljuk, Mongol, Safavid and Ottoman. The British incorporated Mosul into a new entity called Iraq, which they ruled when the Europeans dismembered the defeated Ottoman empire after the first world war. Their creation, though, would always prove violently restless. + +Now Mar Mattai stands witness to the disintegration of Iraq, and of much of the modern Arab order. On the ridge of a nearby hill a line of crude black banners, proclaiming “La illaha illa allah” (there is no God but God), delineates the frontier between two of the new worlds that are emerging from the wreckage. To the west the bloodthirsty jihadist group that calls itself Islamic State (IS)—known as Daesh to most Arabs—controls Mosul and long stretches of the Tigris and Euphrates valleys, out to Raqqa and Deir Ezzor in Syria. To the east Kurdish fighters, the Peshmerga (“those who confront death”), hold the cities of Erbil, Sulaimani and Kirkuk, and the mountain fastness beyond. On one side Daesh claims to have restored the pure law of God and the ancient Islamic caliphate; on the other the Kurds live by modern man-made democracy (of sorts) and nationalism, hoping soon to win their own state. + +An American drone buzzes overhead. Explosions rumble in the distance. Mosul, the prize of the war, lies in the haze. The detritus of improvised ordnance fired by the jihadists, including a cooking-gas canister welded on a rocket, suggests they may be short of material. But their readiness to die in suicide missions remains a powerful weapon. “The Peshmerga have limited capacity, but we are defending the whole of humanity and the democratic world,” says General Bahram Yassin, the local Kurdish commander. + +This is less a clash of civilisations than a clash within a civilisation. Increasingly the Arabs are a nation of refugees, exiles and migrants + +A century ago on May 16th, European powers secretly concluded the Sykes-Picot agreement that led to the modern Arab states (see article). The colonisers would leave behind a dystopian system, prone to wars and coups, held together by secret policemen, torturers and petrodollars, and supported by cold-war sponsors and foreign soldiers. Arabs suffered poverty in a region of plentiful oil, and oppression in the name of Arab greatness. A land of great monotheistic religions has brought forth many who kill in the name of God. + + + +This appalling world is now being swept away, but what is replacing it is often worse. One odious figure, Saddam Hussein, was toppled when America invaded Iraq in 2003, releasing its sectarian demons. Other leaders were ousted by their own people in the Arab uprisings of 2011: Zine el-Abidine Ben Ali of Tunisia fell in January that year, then Hosni Mubarak in Egypt in February. In Libya, Muammar Qaddafi was overthrown with help from Western air forces, then killed in October. In Yemen, Ali Abdullah Saleh, gravely wounded by a bomb, stepped down in November. + +Only Tunisia has made a democratic transition, albeit a shaky one. In Egypt the army led a counter-revolution. In Syria Bashar al-Assad’s rump state has bombed and gassed its people in a murderous civil war that has progressively merged with the one in Iraq. Libya splintered into two rival administrations. In Yemen Houthi rebels toppled the government, and are in turn being pushed back by a Saudi-led coalition. + +In places non-state militias are stronger than states, whereas state forces have degenerated into ragtag militias. Sectarianism has become acute. The contest between Saudi Arabia, the self-appointed champion of the Sunnis, and Iran, the leading Shia power, makes everything worse. Outsiders have been sucked in. America leads the air campaign against IS and is sending more special forces; Russian forces prop up Mr Assad. This is less a clash of civilisations than a clash within a civilisation. Increasingly the Arabs are a nation of refugees, exiles and migrants. + +This special report will examine the factors that led to the collapse of the Arab order. First, the region’s autocratic political model has failed, though monarchies have stood up better than republics. Second, the rentier economic system, based on natural resources, has become unsustainable, not just in oil-producing states but everywhere. Third, Islam, and the Sunni variety in particular, is in tumult over the place of religion in politics and the role of jihad (holy war). And fourth, destabilising interventions by America have been followed, under President Barack Obama, by destabilising detachment from the region. + +The Arab world is suffering a crisis of legitimacy. Arab states were seen as the illegitimate offspring of colonialism, and many of their leaders as playthings of the imperialists. The main ideologies of the Arab world—Arabism, Islamism and now salafi-jihadism—sought to overcome the hated Sykes-Picot borders. Nationalist leaders such as Gamal Abdel Nasser of Egypt, who came to power in a coup in 1952, promised Arab unity and the liberation of Palestine but delivered neither. + +Too little, too late + +Except for oil monarchies that built glittering cities in the desert, most Arab economies were unable to deliver lasting prosperity. Their state-led models failed to harness the power of globalisation, their weaknesses concealed by oil money sloshing through the region. Regimes that belatedly sought to copy China’s model of relative economic liberalism combined with firm political control ended up with an upside-down version of the Soviet Union’s. In Russia the fall of communism led to crony capitalism; in the Arab world partial liberalisation in the 1990s brought first cronyism, then popular resentment that eventually brought down regimes. + +Instead of trying to achieve legitimacy through democracy and the rule of law, rulers mostly relied on the power of the mukhabarat, the ubiquitous secret police, often the best-organised organ of state. In countries steeped in Islam, leaders benefited for too long from a religious tradition of obedience to the ruler, even a bad one, to prevent discord among Muslims. But now there is discord aplenty. Repression, jail and torture fed a doctrine that Arab rulers are, in fact, unbelievers. + +Amid such upheaval, it is tempting to reach for historical parallels. Early on, some saw the Arab uprisings as a replay of the democratisation that followed the fall of communism in Europe after 1989; later a better comparison would be with the violent break-up of the former Yugoslavia in the 1990s. + +It could be argued that the current mess is the latest phase in the collapse of the Ottoman empire. Its European provinces broke away in the 19th century, the Arab ones in the 20th, and the resulting Arab states are now crumbling in the 21st. Arabs today are still confronted with the same question as their forefathers in Ottoman times as they grappled with modernity and European supremacy: why has a world of glorious, cosmopolitan Islamic empires become so abject? + +For those who think it is because Western civilisation has proved superior, the remedy is to adopt Western norms of secularism, rationalism and, above all, democracy. Yet for those who believe that Muslims have suffered because they failed to keep God’s ordinances, the only response is to return to the religious purity of the early caliphs. As Khaled al-Dakhil, a Saudi commentator, sums it up: “We have a chronic problem of governance that is more than 1,400 years old. Who is the rightful successor to the Prophet? The question is still hanging over our heads.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21698444-hundred-years-after-sykes-picot-agreement-carved-up-ottoman-empire-new-arab/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Sykes-Picot and its aftermath + +Unintended consequences + +The Sykes-Picot carve-up led to a century of turbulence + +May 14th 2016 | From the print edition + + + +THE MODERN FRONTIERS of the Arab world only vaguely resemble the blue and red grease-pencil lines secretly drawn on a map of the Levant in May 1916, at the height of the first world war. Sir Mark Sykes and François Georges-Picot were appointed by the British and French governments respectively to decide how to apportion the lands of the Ottoman empire, which had entered the war on the side of Germany and the central powers. The Russian foreign minister, Sergei Sazonov, was also involved. The war was not going well at the time. The British had withdrawn from Gallipoli in January 1916 and their forces had just surrendered at the siege of Kut in Mesopotamia in April. + +Still, the Allies agreed that Russia would get Istanbul, the sea passages from the Black Sea to the Mediterranean and Armenia; the British would get Basra and southern Mesopotamia; and the French a slice in the middle, including Lebanon, Syria and Cilicia (in modern-day Turkey). Palestine would be an international territory. In between the French- and British-ruled blocs, large swathes of territory, mostly desert, would be allocated to the two powers’ respective spheres of influence. Italian claims were added in 1917. + +But after the defeat of the Ottomans in 1918 these lines changed markedly with the fortunes of war and diplomacy (see map). The Turks, under Kemal Pasha Ataturk, pushed foreign troops out of Anatolia. Mosul was at first apportioned to France, then claimed by Turkey and subsequently handed to Britain, which attached it to the future Iraq. One reason for the tussle was the presence of oil. Even before the war, several Arab territories—Egypt, north Africa and stretches of the Arabian Gulf—had already been parcelled off as colonies or protectorates. + +Even so, Sykes-Picot has become a byword for imperial treachery. George Antonius, an Arab historian, called it a shocking document, the product of “greed allied to suspicion and so leading to stupidity”. It was, in fact, one of three separate and irreconcilable wartime commitments that Britain made to France, the Arabs and the Jews. The resulting contradictions have been causing grief ever since. + +In the end the Arabs, who had been led to expect a great Hashemite kingdom ruled from Damascus, got several statelets instead. The Maronite Christians got greater Lebanon, but could not control it. The Kurds, who wanted a state for themselves, failed to get one and were split up among four countries. The Jews got a slice of Palestine. + +The Hashemites, who had led an Arab revolt against the Ottomans with help from the British (notably T.E. Lawrence), were evicted from Syria by the French. They also lost their ancestral fief of the Hejaz, with its holy cities of Mecca and Medina, to Abdel Aziz bin Saud, a chieftain from the Nejd, who was backed by Britain. Together with his Wahhabi religious zealots, he founded Saudi Arabia. One branch of the Hashemites went on to rule Iraq, but the king, Faisal II, was murdered in 1958; another branch survives in a little kingdom called Transjordan, now plain Jordan, hurriedly partitioned off from Palestine by the British. + +Israel, forged in war in 1948, fought and won more battles against Arab states in 1956, 1967 and 1973. But its invasion of Lebanon in 1982 was a fiasco. The Palestinians, scattered across the Middle East, fought a civil war in Jordan in 1970 and helped start the one in Lebanon in 1975. Syria intervened in 1976 and did not leave Lebanon until forced out by an uprising in 2005. More than two decades of “peace process” between Israel and Palestine, starting with the Oslo accords of 1993, have produced an unhappy archipelago of autonomous areas in the Israeli-occupied West Bank and Gaza Strip. + +Morocco marched into the western Sahara when the Spanish departed in 1975. The year after Iran’s Islamic revolution of 1979, Iraq started a war that lasted eight years. It then invaded Kuwait in 1990, but was evicted by an American-led coalition. + +The Suez Canal and vast oil reserves kept the region at the forefront of cold-war geopolitics. France and Britain colluded with Israel in the war against Egypt in 1956 but were forced back by America. Yet America soon became the predominant external power, acting as Israel’s main armourer and protector. After Egypt defected from the Soviet camp, America oversaw the Egyptian-Israeli peace treaty of 1979. It intervened in Lebanon in 1958 and again in 1982. American warships protected oil tankers in the Gulf during the Iran-Iraq war. And having pushed Iraq out of Kuwait in 1991, America stayed on in Saudi Arabia to maintain no-fly zones over Iraq. In response to al-Qaeda’s attacks on Washington and New York in September 2001, America invaded Afghanistan in the same year and then Iraq in 2003. + +“Lots of countries have strange borders,” says Rami Khouri of the American University of Beirut. “Yet for Arabs, Sykes-Picot is a symbol of a much deeper grievance against colonial tradition. It is about a whole century in which Western powers have played with us and were involved militarily.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21698442-sykes-picot-carve-up-led-century-turbulence-unintended-consequences/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The nature of the state + +Mamluks and maliks + +Why Arab monarchies have survived uprisings better than republics + +May 14th 2016 | From the print edition + +Best of friends + +IN HIS CAIRO office overlooking the Nile, a businessman keeps his mobile phone in a glass jar on his desk. Elsewhere in the city a writer keeps hers in the fridge. If smartphones were once the tools of young revolutionaries across the Arab world, the fear is that they have become the means for the mukhabarat, the secret police, to eavesdrop on dissenters by hacking into their telephones and turning them into bugging devices. These days a journalist working across the Arab world needs a phone packed with the latest encrypted communications apps. Egyptians like Signal; Saudis prefer Telegram; the Lebanese are content with the more common WhatsApp. + +The deep state in Egypt was dislocated only slightly by the uprising that swept away Hosni Mubarak in 2011. Now it is back with a vengeance, the army having toppled the elected Islamist president, Muhammad Morsi. Under Abdel-Fattah al-Sisi, the general who claims to be a son of the revolution, Egypt is more repressive than it had been under Mr Mubarak, and the economy is doing considerably worse. Protests are growing, particularly over Mr Sisi’s deal with King Salman of Saudi Arabia (both pictured) to hand over two islands in the Red Sea. + +Many draw parallels with the repression during Gamal Abdel Nasser’s military rule, minus his heady rhetoric of Arab nationalism. Nasser, too, tried to crush the Muslim Brotherhood. And as with Nasser, there is a danger that Mr Sisi will turn political Islamists into violent jihadists. Islamic State (IS) has declared the Sinai peninsula, once a winter-holiday playground, one of its “provinces”. In October 2015 it brought down a Russian airliner that had taken off from Sharm-el-Sheikh. + +Strikingly, all the Arab leaders who were overthrown in 2011 were heading republics, not monarchies. Arab presidents, it seems, are hard but brittle. Nasser’s Egypt was typical of what Jean-Pierre Filiu, a former French diplomat, calls the “Mamluk state”, after the self-perpetuating caste of slave-soldiers who ruled Egypt from the 13th to the 16th century. Mr Filiu applies the label to several other republics—among them Algeria, Syria and Yemen—with a long and mournful history of military domination of the state. + +These “Mamluk” republics, mostly socialist-leaning with a penchant for central control of the economy, at first modelled themselves on the authoritarian nationalism of Turkey under Ataturk, though they did not fully share his militant secularism. Their internal-security systems, though, were more akin to those of the Soviet Union, with which they often aligned. + +Radical nationalism also served to hide the sometimes narrow sectarian support base of the regimes: the minority Sunnis in Iraq and the Alawites in Syria. It is perhaps no surprise, then, that their regimes were among the most vile. Iraq was called the “Republic of Fear” by a dissident writer, Kanan Makiya; Syria was labelled “The State of Barbarity” by the late Michel Seurat, a French Arabist. Under Saddam Hussein, Iraq gassed the rebellious Kurds at Halabja in 1988; under Hafez al-Assad, Syria flattened the city of Hama in 1982 to crush an uprising by the Muslim Brotherhood. Algeria waged a dirty and bloody war against jihadists that started in 1992 and lasted a decade. + +Fear and loathing + +Under Mr Mubarak, Egypt was ruled with a lighter touch, perhaps because he was keen to maintain the support of his Western allies. Mr Sisi has had fewer scruples about shedding blood. Thousands have been killed in his suppression of the Muslim Brotherhood, and tens of thousands have been jailed. + +According to one conspiracy theory, the Egyptian uprising of 2011 was manipulated throughout by the generals. They used the protesters to get rid of Hosni Mubarak, then the Muslim Brotherhood to sideline liberals, and finally exploited liberal protesters to get rid of the Brothers and introduce direct military rule. In reality their response seems to have been much more improvised, but the theory shows how the deep state is perceived. + +And indeed the repression is both arbitrary and vicious. The courts are a law unto themselves. Mr Sisi’s quest for international respectability has not been helped by the torture and murder in February of an Italian PhD student conducting research on Egyptian trade unions, thought to have been committed by members of the secret police. + +“ I do not think there is a state in Egypt today,” says Yezid Sayigh of the Carnegie Middle East Centre, a think-tank in Beirut. “There is a coalition of interest groups and institutions, each of which is above the state. They are working at cross-purposes and often undermining Sisi.” + +The legitimacy of many republics has rested on two objectives: Arab unity and the liberation of Palestine. Neither has been achieved. And for all their republicanism, their rulers often succumbed to the temptation of establishing their own dynasties. In Syria, Hafez al-Assad was succeeded by his son, Bashar. Egypt’s Hosni Mubarak wanted to install his son, Gamal. In Yemen, Ali Abdullah Saleh was thought to be grooming his son, Ahmad. In Tunisia, the ousted president, Zine el-Abidine Ben Ali, was reckoned to be rooting for his son-in-law, Sakher El Materi. + +Some mock these states as jumlikiyat, an Arabic neologism combining jumhuriyat (republics) and malakiyat (monarchies). “It reached the absurd point that the state became like a car or apartment that they could give to their kids,” says Ghassan Salamé, professor emeritus at Sciences Po, a university in Paris. “This was a big trigger for the uprisings.” + +The genuine Arab dynasties have fared much better, at least so far. In the days of nationalist tumult they seemed an endangered species: five Arab monarchs were toppled, from King Farouk of Egypt in 1952 to King Idris of Libya in 1969, and the rest felt threatened for decades. But now there seems to be something in the nature of Arab monarchy—maliks, emirs and sultans—that is more resilient than presidential autocracy. + +Mr Salamé sees three main sources of legitimacy for Arab rulers: representation (none is freely elected), achievements (most republics have few to boast about) and provenance (currently the best qualification). “I rule you because I created you,” as Mr Salamé puts it. That is certainly true of the Saudi royal family, which, uniquely, has given its name to its country and can trace its rule in the central Nejd region back to the 18th century. + +For the six oil-producing states of the Gulf Co-operation Council (GCC)—Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman—the key to survival has been money. Throughout the turbulence of the Arab spring the monarchies were splurging out, raising salaries and launching new projects to maintain popular support. + + + +Moreover, all GCC states enjoy unspoken diplomatic and military support from outside as allies of the West (Qatar has a large American air base and Bahrain a naval one). After widespread protests in Bahrain, where a minority Sunni family rules a mostly Shia population, other Gulf states sent forces to the island to help shore up the monarchy. + +Morocco and Jordan do not produce oil, but their kings, Mohammed VI and Abdullah II, derive some authority from religion, pointing to their descent from the Prophet Muhammad. They also claim political legitimacy: Morocco’s former sultan, Mohammed V, was exiled to Madagascar by the French, and the demand for his return became the rallying cry for Moroccan nationalists. The Hashemites, for their part, raised the flag of revolt against Turkish rule (with British help) in 1916. + +Perhaps more important than heritage, though, has been the ability of both monarchies to adapt to changing times. Unlike the ruling families of the Gulf, where royals hold posts throughout the government bureaucracy, those of Morocco and Jordan tend to stand more aloof from day-to-day government. They have also shown a knack for co-opting some critics, or at least maintaining dialogue with them. During the Arab spring both made a show of responding to demands for greater freedom. Both countries introduced limited constitutional reforms and held parliamentary elections. Jordan is more tense. The Muslim Brotherhood boycotted the ballot, and the government is trying to split the movement. In Morocco, the Brotherhood-inspired Justice and Development for the first time won the largest number of votes of any party. Its leader, Abdelilah Benkirane, became prime minister at the head of a four-party coalition. + +Arab history since the emergence of Islam in the 7th century is dominated by three empires: Umayyad, Abbasid and Ottoman. “The idea of dynasties is in the mindset of the people. If you held a referendum in Jordan, a vast majority would vote for the monarchy,” says Oraib Rantawi, director of the Al-Quds Centre for Political Studies, a think-tank in Jordan. Political parties in Jordan and Morocco have mostly agreed to abide by the rules, above all acceptance of the monarchy. Elsewhere, says Mr Rantawi, “bloody regimes create bloody oppositions.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21698437-why-arab-monarchies-have-survived-uprisings-better-republics-mamluks-and-maliks/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The economy + +Black gold, white gold + +The rentier system is in trouble, in the big oil-producing states and beyond + +May 14th 2016 | From the print edition + +Profitable at almost any price + +FROM THE AIR, the red sand dunes of the Empty Quarter stretch out beyond the bend of the earth, like countless piles of powdered brick. Between the mounds the winds have exposed patches of grey: salt flats that encrust the rock, and great riches of oil. The Empty Quarter was once the passage for camel caravans carrying precious frankincense across the southern Arabian peninsula. These days Saudi Aramco, the giant state-owned oil company, has laid roads and pipelines in the wilderness to carry the much-prized Arabian extra light crude and gas to the refineries and export terminals hundreds of kilometres further north. + +Shaybah, a small town of 1,500 people, emerges from the sand. Those who work there say the winds never move the dunes, yet they quickly cover anything that has cut through them, such as the airstrip, which must be cleared regularly. Everything, including sand for construction (the local stuff being too fine), had to be brought by long convoys of lorries. Drilling through the dunes is impossible, so oil wells start from the patches of salt flats and then push out horizontally to get at the oil. Aramco is one part of the Saudi state that works impressively well. In fact, it is more of a state within a state, with its own schools and air services. + +Aramco’s executives dismiss the idea that the slump in oil prices, from a peak of about $115 a barrel in 2014 to little more than $45, spells doom for Saudi Arabia’s oil economy. Shaybah was developed when oil was at $15 a barrel, and its fields would still be profitable at $10 a barrel, Aramco claims. The company continues to drill exploration wells to keep up its proven reserves and is investing both upstream and downstream. Producers of more expensive oil, including some from shale in America, will be driven out of business long before before Aramco is in trouble, its managers say; as global production falls and demand recovers, the price is bound to rise again. + + + +Abundant and easily accessible, oil has been the basis of the Gulf’s rentier model of the state: the ruling family collects the rent from oil and distributes the proceeds generously, in the form of public goods, welfare and subsidies, in return for compliance from the population. + +This model applies across much of the Arab world. Its economies can be divided into three broad categories: resource-rich, labour-poor Gulf sheikhdoms with lots of oil and gas but few people; resource-rich, labour-abundant states, such as Algeria and Iraq, that have natural resources and larger populations; and resource-poor, labour-abundant countries, notably Egypt, that have little or no oil and gas but lots of mouths to feed (see charts). + + + +It was once thought that the middle group, with the resources and manpower to industrialise, would do best; in fact it has done as badly as the oil-poor grouping. And those middling states tend to be more nakedly authoritarian: they may not have enough oil to buy the quiescence of their people, but plenty to pay for the machinery of repression. + +To a degree the whole Arab world is an oil-driven economy: all three groups tend to rise and fall with the price of oil. Millions of Arabs from resource-poor countries are guest workers in oil-producing states. Conversely, high-spending Gulfies like to holiday in places like Cairo and Beirut. Grants and loans from Gulf states help sustain poorer Arab countries. + +Some countries, such as Egypt and Jordan, also enjoy “strategic rents”: subsidies provided by Gulf states and the West because their stability is deemed essential to regional order. Egypt, for instance, has been heavily supported by Saudi Arabia and the United Arab Emirates since the coup in 2013. + +Saudis may not be the richest people in the Gulf, but their country remains the world’s largest exporter of oil. And for all of Aramco’s bullish talk about the prospects for oil, there is anxiety about the future. The regional contest with Iran is keeping output high and oil prices low. Saudi Arabia says it will curtail production only if Iran does; Iran insists it has every right to return to pre-sanctions levels of output. The inconclusive war in Yemen, and support for governments and Sunni groups elsewhere, do not come cheap. + +The Saudi budget deficit is forecast to reach 13.5% of GDP this year even after a raft of money-saving measures, including cuts to energy subsidies. The government is drawing down its large pile of reserves and is borrowing on international capital markets. But as Simon Williams, an analyst at HSBC, a bank, points out, “Saudi reserves of wealth do not offer a solution. They only buy time.” + +What goes for Saudi Arabia applies, to a greater or lesser extent, to all members of the Gulf Co-operation Council. Qatar, the wealthiest of them, is likely to be least affected; Bahrain and Oman, with less oil, will be in deeper trouble. Plans to start taxing Gulf citizens are in the pipeline, starting with a 5% value-added tax in 2018. + +Beyond oil + +Saudi Arabia and other Gulf states will have to do what they have long promised but for the most part failed to achieve: diversify away from oil. Not every country can become a tourism and services centre like Dubai. Prince Muhammad bin Salman, the Saudi ruler’s 30-year-old son and the power behind the throne, has spoken most ambitiously about the change he wants to bring about through his “Vision 2030”, a plan to wean his country off oil by that date, if not sooner. + +To listen to Saudi ministers, their answer to the ineffectiveness of the Arab state is to sidestep it as much as possible. Prince Muhammad intends to make wholesale use of the private sector, even to provide basic services such as education and health care, and wants to sell stakes in state assets including Aramco, the crown jewel and probably the biggest company in the world. The government talks of selling valuable land to developers, mining other sorts of minerals, creating a defence industry and greatly expanding tourism—but for pious Muslims, not the Western sort. + +All this is likely to bring wrenching social change for which Saudi society may not be prepared. A generation of men that expected to be paid for do-nothing government jobs will have to learn to work. The talents of women, who already make up the majority of new university graduates, will have to be harnessed better. But for now even the limited reforms to give women more opportunities have gone into reverse. To achieve its goals, Saudi Arabia will have to promote transparency and international norms, which will mean overcoming resistance from the powerful religious establishment and the sprawling royal family. + +But perhaps the biggest problem looming for Saudi Arabia is the need to find jobs for a rapidly rising population. Real output per person in the Gulf is lower today than it was in the 1970s (partly because of migration). Well over half of Saudis are 30 or younger. Public-sector jobs are a form of unemployment benefit that was unsustainable even when oil prices were high. This is a common problem across the Arab world. An abundance of young workers should prove a boon, but in many Arab countries the peak of the youth bulge in the 1990s coincided with a long period of stagnant output, high debt and painful economic adjustment. + +Import-substitution models under which countries sought to promote domestic production behind protectionist barriers survived longer in the Arab world than elsewhere because oil and other rents masked the inefficiencies of its economies. Where Arab countries belatedly started to promote non-oil exports, they found that more competitive Asian countries had got there first. Still, the macroeconomic numbers gave few hints of the looming political explosion in 2011. In the preceding years growth had picked up, unemployment was stable (though high) and inequality seemed manageable. + +The crisis seems to have been precipitated by two factors. First, the economic adjustment brought cutbacks in public-sector jobs and services; and second, part-liberalisation appeared to favour only the well-connected. This fed resentment of corruption. Of the three slogans of Egypt’s revolution—“bread, freedom, social justice”—two had an economic component. “Middle-class families were not able to maintain their living standards,” notes Amr Adly of the Carnegie Middle East Centre, a think-tank in Beirut. “People did not have the same opportunities as their parents, even though they were better educated.” + +The turmoil of the five years since the Arab uprisings has dealt a blow to all the non-oil Arab economies, even if lower oil prices have provided some slight compensation. HSBC estimates that collectively they have lost about 15% of potential GDP. Egypt’s budget deficit has widened to more than 10% of GDP. Manufacturing has stagnated and tourism has suffered (see chart). Part of the crisis stems from the country’s self-inflicted shortage of dollars, induced by the government’s reluctance to allow the currency to fall to its market value. In a bid to keep down domestic prices for staples—Egypt imports much of its food—the central bank is, in effect, rationing the supply of dollars. This is at the expense of manufacturing industry, which cannot import the components it needs and finds its exports priced out by the high exchange rate. + + + +Rather than unfetter the economy, Egypt persists in announcing grandiose projects: the expansion of the Suez Canal, a gleaming new city in the desert and even a bridge over the Red Sea to link Egypt with Saudi Arabia. If all this is to become reality, it will have to be financed by the Gulf. An audiotape of an unflattering conversation leaked last year allegedly captured Mr Sisi exclaiming: “Man, they have money like rice.” + +For all of Egypt’s considerable advantages—comparatively early industrialisation in the 19th century, extensive irrigated agriculture thanks to the waters of the Nile, good transport provided by the Suez Canal, a large internal market and proximity to European ones—the country has been unable to seize the opportunity of globalisation. “We are still trapped in the time of Gamal Abdel Nasser, with state-led development and state-dependent workers,” says Mr Adly. + +An instructive example is Egypt’s troubled cotton industry, once the country’s “white gold”. Premium-quality long-staple Egyptian cotton was brought to European markets in the early 19th century by a Frenchman, Louis Alexis Jumel, who gave his name to luxury cotton. Production of Egyptian cotton for British and French mills increased rapidly, boosted by the interruption of cotton trade with America during the civil war of 1861-65. + +Under Nasser the industry was nationalised. Egypt tried to boost industrialisation by building a vast state-owned mill at Mahalla, in the Nile delta. The production of cotton was favoured over domestic food crops, and farmers had to sell below international market prices. + +The premium varieties were exported for foreign currency, and the lower-quality medium- and short-staple cotton was used to make cheap clothes for local consumption. But as international textiles markets opened up, the inefficient Egyptian mills began to lose money. Growing labour unrest at the mills, culminating in a deadly riot in 2008, was an important precursor to the Tahrir Square demonstrations in 2011. + +A rising star in the west + +In Morocco, by contrast, the mood is hopeful. A smaller country than Egypt, and far from the upheavals to the east, it has been more successful than most other Arab states at holding on to its all-important tourist industry. It is building up its manufacturing sector by seeking to link into the European supply chain, doing for French industry, in particular, what eastern Europe has done for German companies. Renault-Nissan and PSA Peugeot Citroën have built new car-assembly plants in Morocco, and plans are in hand to develop a wider network of local suppliers. + +Even more ambitiously, Morocco is working to build an aircraft industry, based outside Casablanca’s international airport. Emerging from the embryo of Royal Air Maroc’s engine-maintenance business, an early step was the manufacture of high-specification electrical wiring for aircraft. On the factory floor of Matis Aerospace, red-veiled women are hunched over the cables—Boeing on one side of the main aisle, Airbus on the other. + +Nearby a subsidiary of Safran, a French technology group, is making carbon-fibre casings for jet engines. Bombardier, a Canadian aircraft-maker, is setting up shop to make parts for its airframes. The government is part-funding a vocational training school for the aeronautical industry. + +Hamid Benbrahim el-Andaloussi, the president of GIMAS, the aerospace industry’s trade body, says Moroccan factories can make components 30% more cheaply than European or American ones without any loss of quality. At present the industry consists of about 100 companies with 11,500 employees and $1 billion-worth of exports; by 2020, he predicts, it will more than double in size. + +Morocco still has far to go. Much of its agriculture, which employs about 40% of the workforce, is rain-fed, and a drought this season has knocked back growth from 4.5% in 2015 to a forecast 2% or less this year. Foreign investors must contend with entrenched incumbents, including the royal family’s large holdings through firms that go by such names as Ergis and Siger (anagrams of “Regis”, Latin for “of the king”). Even so, Morocco shows a dynamism that is sorely needed across the Arab region. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21698438-rentier-system-trouble-big-oil-producing-states-and-beyond-black-gold/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Religion + +The new strife + +There is but one God, yet different forms of Islam are fighting for their own version of him + +May 14th 2016 | From the print edition + +Still mourning for Hussein + +THE BOMBASTIC POSTERS and statues of Saddam Hussein disappeared long ago. Now the most visible iconography in Baghdad is of Ali and his son, Hussein (pictured)—revered by Shias as two of the rightful leaders of Islam after the death of the Prophet Muhammad. Once the seat of the great Sunni caliphate under the Abbasid dynasty, Baghdad has become a visibly Shia city. + +In Saddam’s time Shias were arrested for trying to go on the 100km pilgrimage from the capital to Karbala; now the city’s main roads are closed to cars for Ashura, a big Shia festival, because so many people set off on the long walk. The coffins of Shia fighters killed in battles against the Sunni jihadists are loaded onto cars and taxis and driven in procession to be buried in Najaf, another holy city in the south about 160km away. Sunnis in Baghdad—those that remain, that is, after years of communal violence that has driven many of them out—find such Shia triumphalism distasteful, even deliberately intimidating. + +The two branches of Islam split during the great fitna, or strife, over the succession to the Prophet Muhammad. Sunnis claim that the leadership passed down the line of the four rashidun (rightly guided or perfect) caliphs who had been the Prophet’s companions: Abu Bakr, Omar, Uthman and only then to Ali, the Prophet’s cousin and son-in-law. After that the mantle passed to the Umayyads in Damascus, followed by the Abbasids in Baghdad. Shias say the succession was usurped. It should have passed through the family of the Prophet, first to Ali and later Hussein. But Ali was murdered in Kufa and buried nearby in Najaf, whereas Hussein was killed in a battle against the Umayyads in Karbala and buried there—hence the importance to Shias of the two cities. Shia leadership then passed down a chain of imams that broke off at different points, according to their sect—eg, the Zaydi “Fivers”, the Ismaili “Seveners” and the majority “Twelvers”. Twelver Shiism became the state religion of the Persian Safavid empire, which is why hardline Sunni Arabs tend to regard the Shias as foreign enemies, even non-Muslims. + +Shias are given to emotional commemorations of the martyrdom of Ali and Hussein, including public self-flagellation. They are often accused of revelling in al-madhlumiya, or “victimhood”. These days, though, it is often Sunni Arabs who feel and behave like the underdogs. Though they make up the majority of Muslim Arabs, Sunnis often feel disenfranchised in the Arab heartland—sidelined by the Shia majority in Iraq, under murderous attack by the regime of Bashar al-Assad in Syria (dominated by Alawites, an offshoot of Shiism), intimidated in Lebanon by Hizbullah (a powerful Shia militia), and dispersed and occupied by Israel in Palestine. In Yemen, they have been ejected from power by Houthi fighters, issued from the Zaydis. + +International brigades of Sunnis and Shias now confront each other in Syria. Those fighting for Mr Assad include Shia recruits from Iraq, Afghanistan and Pakistan, led by Hizbullah and senior officers of Iran’s Revolutionary Guards Corps (IRGC). Against these stand two broad groups: the jihadists of Islamic State, made up of volunteers from many countries, and looser alliances of Syrian Sunni rebel groups supported to varying degrees by neighbouring Sunni states, mainly Saudi Arabia, Turkey and Jordan. Suicide-bombings, the poor man’s guided missile, were first adopted by proto-Hizbullah in 1983; they were copied by Palestinian Islamists and are now a favourite tactic of Sunni jihadists. + +Islam is more than ever the cause for which everyone claims to be fighting. But which Islam? Eugene Rogan of Oxford University argues that the fate of the Arab world will be determined by the contest between three versions of Islam: the Muslim Brotherhood and salafi-jihadism (both Sunni) and the Shia doctrine of the “rule of the jurisprudent”. At least two other trends are important, too (see box, next page). + +Islam holds great political power. Muhammad was not only a religious prophet but also a temporal ruler and warrior. Islam was spread by both the word and the sword. For many Muslims Islam is not just a personal faith but also a blueprint for organising a perfect society. The Western notion of separating religion from politics is regarded as nonsensical. Muslims regard their religion as God’s final revelation and the Koran as his actual word. Some groups thus tend towards literalism. Muslim reformers seek to play down the “sword verses”—eg, “slay the idolaters wherever you find them”—but jihadist ideologues dismiss this as fake Islam. + +It is often said that Shias cannot believe they have won power and Sunnis cannot accept they have lost it, which perhaps makes the strife more vicious + +In the early years after independence, Arab monarchies enlisted the support of the Muslim Brotherhood against nationalists and leftists. Islamism flourished after the 1967 war, when Israel’s victory discredited nationalists. The year 1979 was particularly eventful: Egypt signed a peace treaty with Israel (for which its president, Anwar Sadat, was assassinated by Islamists); Ayatollah Khomeini came to power in Iran, energising Muslim radicals of all sorts; Juhayman al-Otaybi led a group of radical gunmen in seizing the grand mosque in Mecca and calling for the overthrow of the House of Saud; and the Soviet Union invaded Afghanistan, which prompted the Saudis (and America) to support those waging jihad against the communists. + +The arrival of American troops in Saudi Arabia in 1990 to eject Iraqi forces from Kuwait, and for years to keep Saddam in check, set Osama bin Laden on the road of jihad against America. Al-Qaeda’s attack on that country in 2001 provoked George W. Bush’s decision to topple Saddam, overturning the sectarian balance in Iraq and in the region. + +It is often said that Shias cannot believe they have won power and Sunnis cannot accept they have lost it, which perhaps makes the strife more vicious. Iraqi jihadists deliberately provoked the Shias. An intercepted letter from the late Abu Musab al-Zarqawi, the leader of al-Qaeda in Iraq and forefather of today’s Islamic State, argued in 2004 that the fight against American occupiers would be easy. The real danger, he said, was the Shias, “the crafty and malicious scorpion”. He would goad the Shias into a sectarian war that would “awaken” the Sunni world. + +Zarqawi’s other obsession was to declare an “Islamic state”. This had been a distant objective for both al-Qaeda and for the Brotherhood, but Zarqawi and his followers wanted to hasten its coming. Various incarnations of his group carried the name, though many senior recruits came from Saddam’s Baath party. After breaking away from al-Qaeda in early 2014, and capturing Mosul in June that year, the “caliphate” was declared by IS’s leader, Abu Bakr al-Baghdadi: “Rush, O Muslims, to your state. Yes, it is your state.” His pretensions to a caliphate, disregard of Islamic tradition and sectarian tactics were disavowed even by al-Qaeda. Though weakened, it is IS that makes the headlines and gets the recruits. According to Stephane Lacroix of Sciences Po in Paris, “Al-Qaeda and Islamic State are like Trotsky and Stalin: one wants to wait for world revolution, the other wants to build ‘socialism in one country’.” + +The emergence of IS was a startling comeback for a group that had been all but destroyed by America’s military “surge” in Iraq in 2007-08. Its revival was rekindled by three factors: America’s withdrawal in 2011; the disenfranchisement of Sunnis by the Shia prime minister, Nuri al-Maliki, who packed the army with loyalists and cut off the Sunni tribal forces created by America; and the violent breakdown of Syria, which allowed IS to establish a strong base. + +Marching for the caliphate + +The merging of the Syrian and Iraqi wars into one conflict makes for strange alliances. Iran acted to defend both the governments in Baghdad and in Damascus; America is allied with Iraq but, at least in theory, against the Syrian regime. Russia says it is fighting IS but is mostly saving Bashar al-Assad from other rebels; Syrian Kurds are allied with America against IS; and with Russia against other rebels. + +Sunni rulers, especially the Al Sauds, see themselves encircled by malign Shias, from Iran’s perceived attempt to stir up Shias in Bahrain to Iraq, Syria, Lebanon and Yemen. “Iran wants to re-establish the Persian empire,” says one senior Saudi official. Saudi Arabia went to war in Yemen after the Houthis seized the capital, Sana’a, and moved to take the port city of Aden. In Syria, meanwhile, Saudi Arabia had worked closely with Turkey to turn the mainstream Syrian rebels into a more coherent force, helped by deliveries of American-made anti-tank missiles. One reason the Al Sauds act as the champion of the Sunni cause, says one insider in Riyadh, is that they are trying to draw young Sunnis away from Daesh. + +Iran, for its part, is grateful to Syria as the only Arab country that stuck with it during the long war against Iraq, and sees it as a vital bridge to Hizbullah. But it usually favours strong client militias within weak states, as in Lebanon. And these days Hizbullah’s claim to be the main shield against Israel for all Muslims is unconvincing; instead it has become the spear-tip of the Shias. + +Even where there is no Shia-Sunni sectarian divide, there are still proxy conflicts. Turkey and Qatar are the prime supporters of the Muslim Brotherhood; Egypt, the United Arab Emirates and, to a lesser extent, Saudi Arabia oppose them. In the divided politics of Libya, the pro-Brotherhood allies support the “Dawn” government in Tripoli, while the others back the “Dignity” coalition in Benghazi. + +Since the coup in Egypt in 2013 the Brotherhood has been on the back foot. Its exiles in Istanbul and Doha bemoan the incompetence of Muhammad Morsi, Egypt’s short-lived Brotherhood president. By forcing through a contested constitution and alienating liberals he created the climate for the army to oust him. Some fellow Brothers from other countries had urged him to be more conciliatory. “Had the Muslim Brotherhood played their cards differently, they might have avoided the coup entirely,” says H.A. Hellyer of the Atlantic Council, an American think-tank. “They were thrilled—wrongly—by the idea they were living in a new age, and no longer needed to hold back.” + +In Tunisia, Ennahda, a party inspired by the Brotherhood but no longer part of it, moved more cannily. It had won a plurality of votes in the constituent-assembly election of 2011 and ruled in a broad coalition. As jihadist violence gathered pace and Mr Morsi was overthrown, Ennahda eventually yielded on several points of the constitution, allowing it to become more secular than the party had wanted. It handed over to a technocratic government in January 2014, after the constitution was agreed upon. + +Morocco largely avoided street protests in 2011, and the king appointed an Islamist-led government in November of that year. As part of a broad counter-radicalisation effort after a spate of terrorist attacks in Casablanca in 2003, the Moroccan state has been gradually seizing direct control of the mosque. A new school for imams, including foreign ones from sub-Saharan Africa as well as France and Belgium, opened in Rabat in 2015. It seeks to promote a moderate form of Islam, based on Morocco’s Maliki school of thought and, crucially, acceptance of the king’s traditional status as “Commander of the Faithful”. + +It has also begun a pioneering programme to train women as mourchidas (spiritual counsellors). One of them, who did not want to be named, explained that her task was to work with women and children on a range of issues, including literacy and fighting drug abuse. “We sometimes come across preachers who promote a radical message. We have to intervene to tell them to change their discourse. When we started there was more religious radicalism; we have noticed that it has dropped.” + +The risk is that all this will be dismissed by some Muslims as phoney “state Islam”. Still, the campaign seems to be having some impact. Take the experience of Abdelkrim Chadli, a Salafist preacher who was arrested after a series of suicide-bombings in Casablanca in 2003, accused of inspiring jihadists (which he denies) through his writings. Pardoned by the king in 2011, he is now urging fellow salafists to join a royalist shell party called the Democratic and Social Movement (founded by a former police commissioner). Within three or four years, he hopes, it could win elections and hasten the process of Islamising society. It is a striking transformation of Islamists’ stance, brought about in part by fear of the sort of chaos seen elsewhere, in part by the firm limits set by the king, and in part by his good sense in giving Islamists a political outlet. “Today all salafists are the first defenders of the monarchy,” says Mr Chadli, “We consider Morocco to be an Islamic model—even with the drinking bars.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21698440-there-one-god-yet-different-forms-islam-are-fighting-their-own-version/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Religious subdivisions + +Which Islam? + +Five main strands of Muslim politics + +May 14th 2016 | From the print edition + +The Muslim Brotherhood. Founded in Egypt in 1928 during the struggle against British rule, the Brotherhood is a broad-based Sunni movement with branches in many countries. It seeks to transform society through da’awa (proselytising) and by winning power through elections. Although a Brotherhood government was toppled in Egypt in 2013, moderate offshoots are still in power in Tunisia and Morocco. Its armed Palestinian branch, Hamas, rules the Gaza Strip. It can be pragmatic and gradualist in its approach to sharia (Islamic law). + +Quietist salafism. An ultra-conservative Sunni movement that seeks to emulate the Prophet Muhammad and his earliest followers, al-salaf al-salih (the pious forefathers). It seeks to strip Islam of the traditions accumulated over the centuries. Salafists increasingly take part in elections. They are financed by petrodollars from countries such as Saudi Arabia, whose royal family rules in alliance with the puritanical salafi movement, the Wahhabis. The quietist brand of salafism can be intolerant on social matters and might support military jihad abroad. But such salafists generally do not challenge Sunni Arab rulers directly in their own countries. “Hard on the people and soft on rulers,” sums up one ex-Wahhabi in Saudi Arabia. + +Salafi-jihadism. Al-Qaeda and Islamic State (IS), among others, have elevated violent jihad as the main pillar of Sunni Islam. They typically denounce elections as placing man’s law above God’s. Their main foes are the “near enemy” (Arab rulers), the “far enemy” (the West) and Shias. Their ideology is an extreme hybrid of the more radical doctrines of the Muslim Brotherhood and the salafists, and their tactics are more aggressive than either. Traditional Sunni Islam usually forbids rebellion against a ruler, even an evil one, because, as the Koran puts it, “fitna is worse than killing.” One way out of the conundrum is takfir, or the declaration that certain people, or categories, are unbelievers—some of whom may or even should be killed. + +Muslim Brotherhood extremists, such as Sayyid Qutb, limited takfir to Arab rulers such as Gamal Abdel Nasser (who had Qutb jailed, tortured and executed). For salafists, the unbelievers potentially extend to a much wider group, including the Shias. The question is whether non-violent Islamism acts as a barrier to jihadists, or a gateway. + +Rule of the jurisprudent. Velayat-e-faqih (rule of the jurisprudent) is a doctrine that supreme political leadership should be exercised by a senior Shia Islamic scholar. It was adopted in the constitution of Iran after the Islamic revolution of 1979 and embodied by the late Ayatollah Ruhollah Khomeini. Overseen by the supreme leader, the system allows for semi-democratic elections for the day-to-day offices of government—though the candidates have to be vetted by the religious authorities. + +Iran sponsors a range of parties and militias, ranging from Hizbullah in Lebanon to several Shia parties that dominate the current Iraqi coalition, whether or not they explicitly subscribe to velayat-e-faqih. + +The Marjaa. A distinct and sometimes rival Shia trend revolves around the Marjaa (religious reference), the group of the most senior Shia figures. Grand Ayatollah Ali Sistani, based in Najaf in Iraq, is the spiritual leader of most Shias, especially Iraqi ones. He appears to regard velayat-e-faqih as an aberration from Shiism’s quietist tradition and has backed democracy as the means to consolidate Shias’ empowerment. He tried to restrain Shia militia reprisals for jihadist attacks and gave his blessing to the replacement of Iraq’s divisive former prime minister, Nuri al-Maliki, by the more inclusive Haider al-Abadi. An undeclared battle for the succession to the 85-year-old cleric has started. “Thank God Sistani is here,” says a Western diplomat. “But for how much longer?” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21698443-five-main-strands-muslim-politics-which-islam/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Foreign intervention + +From Beirut to Baghdad + +America is tired of policing the Arab world, and vice versa. But pulling out could be just as bad + +May 14th 2016 | From the print edition + +The end of an embassy, and an era + +THE LEBANESE ARE doing their best to forget about their civil war—if only the fighting across the border in Syria were not so worryingly close to home. Their monument to the victims of the war of 1975-90—a great tower of tanks and artillery pieces stacked atop each other and semi-encased in concrete—is tucked out of sight, up the mountain overlooking Beirut. The old front line through the city centre is being built over; even the Ottoman-era stone buildings are being allowed to rot, to be replaced by luxury flats for rich visitors from the Gulf. + +The outside world, too, has mostly forgotten about the Lebanese war. Yet it contains many forewarnings about the agony the Arab world today. Its strife was once thought of as exceptional. Now much of the Fertile Crescent is a bigger and nastier version of Lebanon: an ancient land with myriad quarrelling ethnic and religious groups. Those who thought the Syrian dictator, Bashar al-Assad, would quickly be overthrown did not reckon with the network of minorities—among them Christians and Kurds along with his Alawites—that he could call on for survival. + +If Arabs are said to remember too much history, Americans remember too little. Lebanon was a warning about the dangers of military intervention in pursuit of a grandiose mission in the Middle East. When George W. Bush recklessly invaded Iraq in 2003—thinking that removing Saddam Hussein would make the world safer from terrorists and spread democracy to cure the ills of the Arab world—he did not heed the lessons of America’s blunders in Lebanon two decades earlier. + +Then America sent forces to Beirut at the head of a multinational force to oversee the evacuation of Palestinian fighters after Israel invaded in 1982. Provoked by Palestinian attacks, Israel sought to use military supremacy to transform the region: it would evict the PLO and Syrians from Lebanon; install a new Lebanese president, Bashir Gemayel, under whom a peace treaty with the Jewish state would be signed; and push Palestinian radicals to adopt the idea that Jordan—not the Israeli-occupied territories—is Palestine. Having facilitated the departure of the PLO in August 1982, American and European forces left Lebanon. But they returned after a bomb (presumably planted by Syria) killed Gemayel and, in revenge, Phalangist militias from his Maronite Christian community massacred hundreds, if not thousands, of Palestinian civilians in front of Israeli forces. + +America’s effort to broker a short-lived settlement between Israel and Lebanon in May 1983, and reinforce Lebanese government forces against Syria and its allied militias, sucked it deeper into the war. In place of Palestinian groups there emerged a new and more vicious religious force, Hizbullah, an Iranian-sponsored Shia militia. It pioneered the use of spectacular suicide-bombers in the Arab world. The American embassy on the corniche was blown up in April 1983 and the US marine base was destroyed in October that year. The French and the Israelis were also attacked, and the international forces soon withdrew. In 2000 Hizbullah harried the Israelis out of south Lebanon, earning kudos across the Arab world. + +There is little left of America’s traumatised passage through Beirut. The ruins of the embassy building have been replaced by a block of luxury flats. The old Marines base is now a car park. American diplomats work and live in an improvised fortified compound on the slopes of Mount Lebanon, with anti-sniper walls to protect them as they walk from one building to another. + +Among those who survived the 1983 embassy bombing was the then head of the political section, Ryan Crocker. He later served as America’s ambassador to Iraq and was celebrated as “America’s Lawrence of Arabia” for his role during the American “surge” of forces that helped to salvage the failing military enterprise. “In all my time I have learnt two things,” he says. “Be careful what you get into, and be at least as careful what you get out of.” He thinks that the American intervention in Lebanon set in motion a chain of events America could not control, as did its invasion of Iraq. America’s hurried departure from Lebanon also set a precedent, showing that the superpower could be defeated by terrorism and proxy actors. “Syria, Iran and Hizbullah learnt the lesson and played it back to us in Iraq,” says Mr Crocker. Syria facilitated attacks on American troops in Iraq by al-Qaeda, and Iran supported the Mahdi Army, a Shia militia. + +Under Barack Obama, elected on a promise to end the war in Iraq, America’s full withdrawal from the country in December 2011 now looks reckless. Mr Obama declared at the time that America was leaving behind a stable country. But Iraq’s Shia, Sunni and Kurdish politicians reverted to narrow sectarian instincts in which, as Mr Crocker puts it, “compromise is a concession, a concession is a defeat and defeat is death.” + +Mr Obama’s reluctance to be drawn into another war in Syria is understandable. “Don’t do stupid shit” became his mantra. But Syria perhaps also shows the dangers of extreme inaction. Mr Obama resisted pressure to take military action against the Syrian president, Bashar al-Assad, even after Mr Assad in 2013 crossed Mr Obama’s “red line” by using chemical weapons. It was only when the jihadists of Islamic State, having taken control of eastern Syria, swept across Iraq in 2014 that Mr Obama felt compelled to send American forces back into Iraq. + +If Mr Obama has had a priority in the Middle East, it has been to pursue an agreement with Iran to halt its nuclear programme, or at least suspend it for a decade or more. Mr Obama has sometimes entertained the hope that the deal might strengthen moderates in Tehran and make Iran a more tractable partner. More realistically, he wants to achieve a more balanced relationship between Iran and the Arabs, saying that they will have to “share” the region. To America’s traditional allies, both Arab monarchies and Israel, this looks as though America is abandoning the Middle East to Iranian influence: its inaction in Syria has emboldened America’s foes, they say; its readiness to dump Hosni Mubarak in Egypt has rattled its friends. + +Mr Obama is plainly weary of America’s long commitment to the region, from defending the Gulf’s oil supplies to trying to mediate a seemingly impossible peace between Israel and the Palestinians. Asked whether Saudi Arabia was America’s friend, Mr Obama once replied: “It’s complicated.” His relations with Israel, too, have been far from straightforward. By trying to pull back from the region, Mr Obama has left space for others to step in. Saudi Arabia is engaged in an increasingly bitter proxy contest with Iran. Russia has also moved in, deploying aircraft and other forces to support the Syrian regime. For the moment, it is Russia that is playing the role of hegemon in the Middle East, seeking to set the rules of the war and the peace to follow. + +America’s friends hope that the new president to be elected in November will take a more active role. Certainly Hillary Clinton, the Democratic front-runner, has sounded more hawkish. She has advocated arming anti-Assad rebels and imposing no-fly zones in Syria. Donald Trump, the Republican candidate, has sharply criticised the Iran deal and speaks of the need to wage “a war against radical Islam”, yet also says America should refrain from intervening abroad and work better with Russia. + +In reality, the options for intervention have narrowed, now that Russia is on the ground and in the air in Syria. The American public has little wish to place large numbers of troops at risk in another Arab country. And America can now do without Arab oil, though it remains exposed to global energy prices and its effects on the world economy. So the next president’s actions may not differ much from those of Mr Obama, who is sending more special forces to Syria. Having long denounced American interference, Arabs may find that its absence is even worse. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21698441-america-tired-policing-arab-world-and-vice-versa-pulling-out-could-be-just/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Israel and Palestine + +Israel’s villa in the jungle + +Israel’s foes have weakened, but Palestinians are winning the battle of the womb + +May 14th 2016 | From the print edition + + + +SURPRISINGLY, PERHAPS, ISRAEL claims to be taking no sides in the Syrian conflict that rages in full sight of its outposts on the Golan Heights. If shot at it will shoot back; anyone smuggling advanced weapons to Hizbullah in Lebanon will be a fair target; and if Hizbullah comes too close to the Golan border, it will also be hit. For the most part, though, Israel’s view is best summed up by a quip in 1980 by Israel’s then prime minister, Menachem Begin, on the outbreak of the Iran-Iraq war: “We wish both sides the greatest success.” + +Israeli security folk see much good news in the Arab world’s convulsions. Israel’s deterrence is holding. No state directly threatens it. There is no Syrian army to speak of; Iran’s nuclear programme has probably been neutralised for a decade or more by its accord with America; and Abdel-Fattah al-Sisi is the most pro-Israeli Egyptian leader ever. Friendly Arab monarchies have survived and are moving towards a tacit alliance with Israel against Iran. + +The Palestinians are weak and divided. The nationalist Fatah movement that rules the West Bank is at daggers drawn with Hamas, which holds Gaza. Both are co-operating (up to a point in the case of Hamas) to prevent attacks on Israel. At a time when the frontiers of the Middle East are being questioned as never before, the “1967 border”, which defines the Israeli-occupied territories, might become less inviolable (Israel says the world should now recognise its annexation of the Golan). Verily, says one securocrat, this is a land of miracles. + +Yet there are still worries aplenty. Radical factions in the ungoverned spaces around Israel might turn their guns on it. Jordan, which implicitly protects Israel’s flank to the east, may yet be consumed by turmoil all around. And by saving the Syrian regime, Russia is strengthening Israel’s arch-foe, Iran. + +Arabs, too, recognise that events are favouring Israel. Some otherwise sensible Arabs even suspect that the turbulence, including the emergence of Islamic State, are all somehow part of a Zionist conspiracy. That said, these days conversations about the state of the Arab world can go on for hours before the word “Palestine” is uttered. + +Compared with his ever more right-wing coalition, the Israeli prime minister, Binyamin Netanyahu, comes across as a moderate. He pays some lip service to the “two-state solution”, the creation of a Palestinian state in the West Bank and Gaza Strip (and part of Jerusalem) alongside Israel, but the “peace process” is at a dead end. Many in his government say this is no time for territorial concessions. Palestinians retort that the failure to reach a just settlement is sure to feed radicalism. + +Never mind that the Arab world’s attention may be turned away from Palestine, says Husam Zomlot, a senior Palestinian official: “Israel has 99% of the day-to-day cards, but the Palestinians have the strategic cards.” The occupied land Palestinians claim is disappearing under Israeli roads and settlements in the West Bank. But the Palestinians are winning what some call the “battle of the womb”. The number of Arabs between the Mediterranean and the Jordan river (in Israel and the occupied territories) roughly equals that of Jews, at about 6.3m each, and may soon overtake it. + +If Israel holds on to the occupied territories permanently, it cannot be both a full democracy and a Jewish state; the comparisons with apartheid are bound to intensify. An idea gaining strength among the pro-settler nationalist-religious right is to allow Gaza to become near-independent, even with its own sea port. That would hive off nearly 2m Palestinians. Some think Hamas might just be tempted to take this opportunity to claim an achievement after three damaging wars with Israel since 2008. + +All this might explain why Israeli right-wingers are, unusually, complaining that Mr Sisi has been too tough on the Palestinians by cutting traffic and tunnels between Gaza and the restive Sinai peninsula. Just as some Israelis want to turn Gaza into Palestine, Egypt is dumping it back in Israel’s lap. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21698439-israels-foes-have-weakened-palestinians-are-winning-battle-womb-israels/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The future + +What is the Arabic for democracy? + +Endless obstacles to political freedom remain + +May 14th 2016 | From the print edition + +If only + +“THE REVOLUTION WAS for nothing. We changed one family of thieves for many families of thieves. This country depends on tourism. Now there are no tourists.” Such is the harsh judgment of one stallholder on Avenue Habib Bourguiba in Tunis, scene of many protests during the 2011 revolution. + +On the face of it, Tunisia has made an admirable transition to democracy. Its political parties have kept the consensus for pluralism, contested two rounds of elections and abided by the result. But the economy has languished, and protests are simmering once more in the deprived interior of the country. To an extent, Tunisia has been unlucky. It is feeling the instability next door in Libya: migrant workers have lost their jobs there, while the all-important tourism industry has been ruined by repeated terrorist attacks. An attempt in March by Islamic State to seize the town of Ben Guerdane, close to the Libyan border, rattled the country. But the coalition is fractious. It is struggling to enact economic reforms. And the ruling party, Nidaa Tounes, has split after little more than a year in power. In part this is because of the return of a bad old habit: President Beji Caid Essebsi seems to be trying to install his son, Hafedh, as his political heir. + +Still, Tunisia counts as success compared with the mess in other countries that cast off their leaders in 2011. For all the disappointment and sorrow in the years after the Arab uprisings, it is difficult to imagine the region reverting to the immobility of the decades before 2011. Authoritarianism is back, but many states are too weak and fragmented, and access to information too ubiquitous, for it to go unchallenged for long. + +This special report has argued that the collapse of the post-colonial Arab system is, at its heart, a crisis of legitimacy. The impact of colonialism, often blamed by Arabs for their woes, should not be an impediment; the world is full of countries with bleak histories and odd borders. Arab governments will have to regain the trust of their citizens. First, they will have to deliver better standards of living by overcoming the rentier system. Gulf states will have to get over their dependence on oil. All should do much less subsidising and controlling of production, and much more safeguarding of the market to make sure that cronies do not capture the economy. Second, governments have to gain consent through democracy. Monarchies have done better, but they still cannot claim the right to rule on the basis of inheritance. + +That said, democracy in the Arab world faces two peculiar hurdles. The first is the fear of Islamist parties taking power. But suppressing them can be worse. Algeria lamentably cancelled a general election to head off a victory by Islamists in 1992, unleashing a long insurgency. With their semi-autonomy, Palestinians fell into a pale version of Arab authoritarianism; the refusal by the nationalist Fatah movement to accept the victory by Hamas in the parliamentary election of 2006 led to internal strife, and the severing of Gaza from the West Bank. The military coup against the Muslim Brotherhood in Egypt, meanwhile, has created an even more oppressive and dysfunctional state. + +Tunisia’s luck was to have a better army (it stayed in barracks) and better Islamists (more able to work with secularists). “Any state has an army; in Egypt the army has a state,” notes Rached Ghannouchi, the leader of Ennahda in Tunisia. He no longer likes to be called a political Islamist; he prefers “Muslim democrat” because, he says, there are Muslims who are not democrats. He stresses the need for co-operation with other parties: in Egypt the post-revolution constitution was forced through by Islamists; in Tunisia, though, it passed with the backing of secularists. “In a normal, stable democracy, ruling with 51% is enough. But in a nascent democracy of transition it’s not enough. You need consensus.” + +A second stumbling block for democracy is the diversity of Arab peoples. In good times it makes for an admirable multiculturalism. But these days all groups behave like embattled minorities. In “Representative Government”, John Stuart Mill argued in 1861 that “free institutions are next to impossible in a country made up of different nationalities” because, as he put it, “the same incidents, the same acts, the same system of government, affect them in different ways; and each fears more injury to itself from the other nationalities than from the common arbiter, the state.” In the Arab world each group fears that rivals will capture the state, its economic resources and above all its guns. + +For all the disappointment after the Arab uprisings, it is hard to imagine the region reverting to the immobility before 2011 + +In theory, secession, federalism and decentralisation might offer some reassurance to minorities. Under a modern-day Sykes-Picot agreement, Iraq might be broken up into a Kurdistan in the north, Shiastan in the south and Sunnistan in the west. Syria could split into an Alawistan along the Mediterranean and a Sunnistan to the west, which might merge with the Iraqi one (as Daesh has already done). In Saudi Arabia the more liberal Hijazis on the Red Sea and the Shias in the Eastern Province might be glad to be rid of the Wahhabis from the central Nejd. + +One problem with such notions is that most of the oil would be in the hands of Shias. A bigger difficulty is that homogeneity is impossible in lands where ethnicity and sect can change from one village to the next. Shifting the lines may create as many injustices as it resolves, and could lead to new atrocities as each side tries to grab what it can and cleanse territory of unwanted minorities. The partition of Palestine, the exchange of populations between Turkey and Greece and the Balkan wars are a warning of how easily this can happen. + +Troublesome as they have been, the post-colonial borders have proved durable partly because few have dared to change them; and a century has been long enough for national identities to take root to some degree. The spread of the Arab uprisings may have demonstrated the strong bonds among Arabs in different countries, but the demand on the street was for change within national frontiers, not the abolition of the modern state. Even in Ottoman times, large parts of the empire were more or less autonomous. Attempts to merge modern states failed—notably the fusing of Egypt and Syria in the United Arab Republic of 1958-61. For the most part, Arabs seem content with multiple national, linguistic and religious identities. + +Especially in the highly heterogeneous Fertile Crescent, part of the solution will lie in devolving a range of powers from central government to regions and provinces to ensure that specific groups do not feel tyrannised by the majority, or even by other minorities. Most Arabs reject federalism. “We have reached the point where maps are being drawn,” bemoans Walid Jumblatt, Lebanon’s Druze leader. “This is the old Zionist dream to dislocate the whole Middle East into sectarian cantons. I want to be part of a greater Arab world.” + +So far, attempts to decentralise power have not worked well. The peculiar communally based politics of Lebanon under the Taif accords of 1991 may have kept the peace, but has led to paralysis. The country has been unable to elect a president for the past two years, or even pick up the rubbish in some areas. + +Nor has Iraq’s federal model salved its wounds. The Kurdish region and the federal government in Baghdad are waging a bureaucratic war over oil revenues. And even among the Shia there have been turbulent protests against the corrupt muhasasa spoils system under which power is distributed to maintain ethno-sectarian balance and each party seeks to milk the central government through contracts and appointments. Many Shias, who once supported federalism, now embrace centralisation. But some Sunni Arabs, now the underdogs, belatedly advocate the creation of a Sunni federal region. + +Arab states could do with more supranational integration to open markets and spur growth. As a political body, the Arab League is a failure. But many Arabs admire the European Union, even as it loses its appeal to a growing number of Europeans, not least because of Arab refugees. European history provides some solace to Arabs: before the continent united, it waged wars even bloodier than those the Arabs are enduring. And as some are starting to acknowledge, there is another lesson from Europe: democracy is the basis for future unity. + +Democratic progress and economic reform should be encouraged in Tunisia and Morocco. These are small countries, but the uprisings of 2011 show that small countries can serve as a model for others. Next, pressure needs to be exerted on Egypt to return to the path of reform. One in four Arabs is Egyptian. If the country does well, it will lift the region; its collapse would be a threat to all, including Europe. + +It will be hard to make real progress before the many Arab wars are stopped. Optimists hope that the political ruin can be reconstructed, piece by piece. A UN-sponsored unity government is trying to establish itself in Libya. Maybe the latest ceasefire in Yemen will hold. Perhaps the Syrian peace talks will get somewhere. There may be some hope in the sight of Iraqi Shias denouncing their politicians and the sectarian muhasasa system. And in Syria, when ceasefires allow a breathing space, citizens have taken to the streets in rebel-held towns to demand freedom in defiance of both the regime and powerful jihadists-tinged militias. But right now it is easier to see new crises erupting than existing ones being resolved. To take a few: Algeria could fall apart once its near-invisible president, Abdelaziz Bouteflika, passes away; Lebanon and Jordan might succumb to war contagion; and the cold war between Iran and Saudi Arabia might turn hot over some incident. + +If the civil war in Lebanon is anything to go by, the war in Syria could last for another decade. The Lebanese agony was brought to a close in 1990 by sudden geopolitical change: Syria was permitted to crush the last remaining Christian resistance in Lebanon in return for joining the war to liberate Kuwait from Saddam. But in Syria there seems to be no external force—not even Russia—that is willing or able to tip the balance sufficiently to ensure a victory by any one side. Outside powers will not be able to fix the Arab world, even if they wanted to. But the attacks in Paris, Brussels and Istanbul show that the world cannot afford to ignore the Arabs’ existential crisis. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21698436-endless-obstacles-political-freedom-remain-what-arabic-democracy/print + + + + + +Previous Articles Sections Next + + + +Business + + + + + +Office communication: The Slack generation + +Binod Chaudhary: Peak tycoon + +French weapons-makers: Going great guns + +Crocodile farming: Snappy dressers + +Planemakers: The eye of the storm + +Tobacco firms: Snuffed out + +Schumpeter: Island story + + + + + +Articles Sections Next + +Office communication + +The Slack generation + +How workplace messaging could replace other missives + +May 14th 2016 | SAN FRANCISCO | From the print edition + + + +STEWART BUTTERFIELD, the boss of Slack, a messaging company, has been wonderfully unlucky in certain ventures. In 2002 he and a band of colleagues created an online-video game called “Game Neverending”. It never took off, but the tools they used to design it turned into Flickr, the web’s first popular photo-sharing website. Yahoo bought it in 2005 for a reported $35m. + +Four years later Mr Butterfield tried to create another online game, called Glitch. It flopped as well. But Mr Butterfield and his team developed an internal messaging system to collaborate on it, which became the basis for Slack. In Silicon Valley, such a change in strategy is called a “pivot”; anywhere else it is called good fortune. Today Slack is one of the fastest-rising startups around, with $540m in funding and a valuation of around $3.8 billion.“I guess the lesson should be, pursue your dream and hope it fails, so you can do something else,” says Cal Henderson, Slack’s chief technology officer. + +It is rare for business software to arouse emotion besides annoyance. But some positively gush about how Slack has simplified office communication. Instead of individual e-mails arriving in a central inbox and requiring attention, Slack structures textual conversations within threads (called “channels”) where groups within firms can update each other in real time. It is casual and reflects how people actually communicate, eschewing e-mail’s outdated formalities, says Chris Becherer of Pandora, an online-music firm that uses Slack. + +Its other selling-point is efficiency. A survey of users, admittedly conducted by the firm itself, suggests that team productivity increases by around a third when they start using the software, primarily by reducing internal e-mail and meetings. Slack has decided to open itself up to other apps, becoming a platform by which employees can log into and use other software tools. Today it has 2.7m daily active users, up from 1m last June. Around 800,000 of them are paying subscribers; their firms pay around $80 or more a year for each employee using the service. The firm has $75m in annual recurring revenue and is breaking even, says Mr Butterfield. + +Slack’s rise points to three important changes in the workplace. First, people are completing work across different devices from wherever they are, so they need software that can work seamlessly on mobile devices. Messaging naturally lends itself to this format. Second, communication is becoming more open. Just as offices went from closed, hived-off rooms to open-plan, Slack is the virtual equivalent, fostering a collaborative work environment, says Venkatesh Rao of Ribbonfarm, a consultancy. Slack’s default setting is to make conversations public within a firm. + +Third, software firms are trying to automate functions that used to be done by people in order to make employees more productive. Slack has made a big push into “bots”, algorithms that can automate menial tasks which used to be done by humans. Slack offers bots that compile lunch orders and projects’ progress reports, or generate analytics on demand. In the future employees will be able to chat with software agents to get more done, working alongside bots as well as their peers. + +Mr Butterfield is not the typical leader of a striving startup. Called “Dharma” by his hippie parents, he spent his early years on a commune with no running water or electricity; he changed his name to Daniel Stewart when he was 12. A self-professed introvert, which is fitting for a company that sells itself on textual communication, he values efficiency and candour. After Yahoo bought Flickr, he worked there for a few years. “Everything was horrible, ugly, slow, difficult to use and confusing,” he says, frankly. + +Dharma chameleon + +In retrospect, Flickr was sold too soon. The sale marked the beginning of the technology industry’s resurgence after its crash in the early 2000s. Now Mr Butterfield has a second chance. Investors do not want to see him sell Slack too early. Earlier this year there were reports that Microsoft considered bidding around $8 billion for the company. Mr Butterfield says that Slack has never received a formal offer from anyone and is planning to go public. Last year it started submitting itself to voluntary audits, in what appears to be preparation for a public debut. But it seems even more likely that a large tech giant will see the strategic value of Slack and try to snap it up first for an even splashier sum. + +Mr Butterfield says that Slack could achieve $10 billion in revenue if it signs up 100m knowledge workers, of which there are around 850m worldwide. That is far easier said than done. For one thing, Slack still needs to woo larger companies outside the technology world. Currently it holds particular appeal among workers at firms in the internet, media and advertising industries, and among teams of software developers within larger firms. Conquering traditional businesses may prove harder. Slack’s yearly minimum of $80 per employee is steep for companies with tens of thousands of workers. + +For another, Slack has rising competition to fend off. Already, rival products are taking aim at the market for workplace collaboration, including one, Atlassian, from an Australian software company, which is called HipChat, and bundled with its other services. There is also Symphony, a rival startup backed by several banks that specialises in highly regulated industries such as financial services, which require more compliance controls. Tech giants such as Microsoft, Oracle and Facebook have collaborative work apps, but these are only modestly successful. + +Slack’s greatest challenge may be people’s own habits. To some, its endless stream of chatter may be worse even than e-mail, because the barriers to commenting rapidly are lower. The introverted Mr Butterfield should welcome the chance to appeal to people who do not want constant interaction, even when it comes in textual form. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21698659-how-workplace-messaging-could-replace-other-missives-slack-generation/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Binod Chaudhary + +Peak tycoon + +How to win friends and influence people in Nepal + +May 14th 2016 | KATHMANDU | From the print edition + +Used his noodles + +REACHING the top is difficult in Nepal, as any mountaineer will tell you. But scaling the heights of business is scarcely easier: the landlocked kingdom, which in recent decades has swung between kleptocratic monarchy and chaotic democracy, can be as tough for entrepreneurs as the upper Himalayas are to trekkers. Only the hardiest—and those perhaps willing to take a few cunning short cuts along the way—will succeed. Binod Chaudhary, whose interests range from noodles to cement by way of hotels and banking, has trodden the trail and come out as Nepal’s sole billionaire, according to Forbes. + +Most tycoons seek to downplay the role of political connections in their ascent. Not Mr Chaudhary. In an autobiography recently updated for an English translation, he offers candid advice: “In Nepal, you do not need great ideas to become a great person. All you need to do is to hobnob with the right people.” His account of which palms were greased or whose son-in-law co-opted leaves little to the imagination. + +The Chaudhary Group (CG) he now runs traces its roots back to the 1880s, when Binod’s grandfather migrated from India to sell textiles. Forays into construction and Nepal’s first department store provided a base from which the current patriarch, now 61 years old, could build. An astute early investment was Copper Floor, Kathmandu’s most elegant nightclub in the 1970s, which gave Mr Chaudhary access to the connections he came to depend on, starting with the royal family. + +Financing the royalists’ campaign in a pro-democracy referendum in 1980 was rewarded with lucrative licences to import booze and sell paper, for example. Two years later, handing over half a steelmaking venture to the then-king’s brother “was the main reason for my success”, he writes, exposing himself better than many investigative journalists might have managed. + +The profits generated by such quid pro quo deals helped finance an industrial mini-empire in a country in which few things are made domestically. A knack for efficient execution has undoubtedly been part of the mix, as even critics acknowledge. The group’s Wai Wai instant noodles, originally a means to soak up excess flour at a biscuit factory, have proved a hit in Nepal and beyond: over two billion packets are now sold every year. + +CG claims 10,000 employees, many of them based at an industrial park in the south of the country turning out cigarettes, assembling televisions and lots more besides. Nabil Bank, a lender taken over by an offshore CG proxy in a manner that peeved Nepal’s central bank (“My detractors’ allegation that I circumvented the law is not completely untrue,” concedes Mr Chaudhary), is one of the few listed entities of an otherwise privately-held group. + +But Nepal is smaller than Mr Chaudhary’s ambitions. Despite a ban on Nepalis investing abroad, CG has diversified internationally, notably since its royal chums were given the boot in 1990. CG now has eight noodle plants in India, and more are in the works in Serbia, Kenya, Saudi Arabia and Bangladesh. Hotels dotted around Asia, power projects and cement plants in East Africa and property developments in the Gulf add up to a group with a self-assessed value of $2 billion. + +Even outside Nepal, much still depends on relationships. CG seeks opportunities where others fear to tread, often for good reason. Mr Chaudhary says his group thrives in places which operate today in ways similar to the Nepal of the 1970s. Iraq and Afghanistan are seen as ripe for investment. Conversely, CG is a “misfit” in fuddy-duddy America, too regulated and structured for Mr Chaudhary’s taste. The group’s single investment there, a share of a Hilton hotel near JFK airport in New York, has clearly disappointed him. + +Prodded on whether all this makes for sound business in an age obsessed with corporate governance, Mr Chaudhary is unapologetic: when in Rome, do as the Romans do. Tough environments deliver good returns. He wishes things might be different, he says, but they are not. While businessmen like him have good intentions, when there is no other way of getting things done, what other options exist? + +Though two of his sons are abroad, in India and Singapore, the eldest and heir-apparent looks after the business in Nepal from Kathmandu. Power, telecoms and infrastructure are priorities for Mr Chaudhary’s first-born, not coincidentally sectors where relationships with government matter. CG still has connections that count: during the interview, Mr Chaudhary twice offered to introduce your correspondent to the prime minister of Nepal, with whom he was meeting next. + +Having served in parliament before and advised governments of all stripes, Mr Chaudhary today barely hides his own political ambitions. He admires tycoons who thrived in office, such as Thaksin Shinawatra, the former Thai prime minister, and praises the showmanship of Donald Trump. In the right circumstances, he thinks he could help Nepal’s economy. But serving as prime minister wouldn’t promote CG’s interests, he says. Business and politics, after all, are best left separate. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21698664-how-win-friends-and-influence-people-nepal-peak-tycoon/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +French weapons-makers + +Going great guns + +Booming exports lift the spirits of Gallic defence firms + +May 14th 2016 | PARIS | From the print edition + + + +BIG European defence firms had cause for gloom not long ago. Austerity limited military spending on the continent, and no obvious external threat justified raising it. Terrorism deserved most attention. Officials in NATO countries promised to devote 2% of GDP to defence, but Europeans generally fell well short, with Germany allocating just over 1% to it. Exports of weaponry were steady but unspectacular. + +How times change. On May 4th François Hollande, France’s president, attended a ceremony in Qatar to mark the sale of 24 Rafale combat jets, plus missiles, to the United Arab Emirates, worth an estimated €6.3 billion ($7.2 billion). Though a bigger order for 70 jets had previously been considered, that was still a boost to Dassault Aviation, the jet’s builder, and MBDA, a pan-European missile-maker. In April last year India’s prime minister, Narendra Modi, came to France to order 36 Rafale jets, worth some $9 billion. Political turbulence in India has since stalled that deal, but another, agreed with Egypt last year, should see 24 jets, plus a frigate, sold for €5.2 billion. Malaysia is also wondering whether to buy Rafale jets. + +More substantial was the decision by Australia’s government, late in April, to award DCNS, France’s naval shipbuilding firm, a huge tender to replace its ageing fleet of submarines with 12 Shortfin Barracuda A1 boats. The firm, founded in 1631, pushed aside rivals from Japan and Germany, nabbing a contract worth A$50 billion ($37 billion) over several decades. Much of the “steel bashing” will happen in South Australia, concedes one man who helped to lead the bid, but “hundreds” of high-end jobs for French designers, instructors, engineers and others are now secured in places like Cherbourg. Thales, a hefty defence-electronics firm, expects to provide the sonar system for the submarines, at roughly €100m a boat. + +All this dealmaking adds up to a boom in Gallic military exports. Orders from abroad had typically been worth roughly €7 billion a year in the decade to 2016 (see chart). But export orders rose to €8.2 billion in 2014 and then to a record €16 billion last year, according to the defence ministry. Depending on how the Australian deal is measured, 2016 will probably exceed that. + +Various factors explain brightening prospects for the arms firms. First, in Europe, Russian aggression has proved a spur to NATO members. Douglas Barrie, of the International Institute for Strategic Studies in London, notes that since fighting began in Ukraine in February 2014, “14 of the 26 NATO member states have increased defence spending.” Several European countries are expected to reach the 2%-of-GDP target for defence spending before too long. + +Second, particular French success could be a quirk of timing. Defence acquisitions are cyclical and decisions on relatively mature products, in particular the Rafales, have chanced to occur at roughly the same time. Other considerations helped. Potential clients were able to see French firms’ hardware in regular use—thanks partly to French military activity in west Africa and Syria, where jets fly frequent raids. + +Third, French politicians cannily played on old diplomatic relationships with allies in the Middle East and Asia, which accounted for nearly 70% of exports from 2010 to 2014. Egypt has been heavily re-equipping its armed forces with French gear in the face of regional instability and to avoid over-reliance on kit from America alone. Nor did the French bidders hesitate to promise—unlike their Japanese rivals, say—to build submarines in Australia, and to transfer “everything, in terms of technology” to its ally, says a figure involved in the bid. DCNS is unlikely to be so forthcoming as it tries to sell similar submarines to India and Malaysia. + +Longer-term prospects for the French firms depend on developing newer technology, and on their readiness to share this with others. Some in the industry suggest sales of satellites with military uses, optronics (night vision), cyber-security and other communications systems will prove to be the next boom areas. Mr Barrie points out that French firms, which tend to have “more liberal” policies on releasing technology to others, have another advantage. They can sell systems unrestricted by International Traffic in Arms Regulations, known as ITAR, a set of export-control rules that limit activities of American rivals. But even if rapid growth in exports by defence firms cannot be sustained, at least one corner of the French economy has offered some recent cause for cheer. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21698662-booming-exports-lift-spirits-gallic-defence-firms-going-great-guns/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Crocodile farming + +Snappy dressers + +Why breeding the brutes may help their wild brethren + +May 14th 2016 | SINGAPORE | From the print edition + + + +SOME 30,000 crocodiles bask at Izintaba, a farm sprawled across 100 acres near the South African city of Pretoria. Sold to tanners for bags, belts and watch straps, the best croc skins can fetch more than $600. The job requires long hours but is not particularly dangerous, says Pit Süssmann, its manager. He worries more about armed thieves, who sometimes come prowling for cars and equipment. + +Business is good for farmers of crocodilians, who will gather this month with conservationists and other boffins at a biennial powwow not far from Mr Süssmann’s farm. Worldwide exports of croc skins jumped by about 30% to 1.8m in 2013, the last year for which data are readily available (see chart). + + + +That is partly owing to increasing demand, which had fallen during the financial crisis as exotic-skin lovers dumped crocs for cheaper reptiles, such as pythons. It was probably also boosted by clement weather in America, a big producer, where many farmers rely not on captive breeding but on eggs collected in controlled harvests from the wild. + +Over 20 countries export crocodilian skins, according to statistics from the UN Environment Programme. More than half the global tally is from caimans and alligators farmed in Colombia and the United States. The skins are largely sold to tanners in Italy and France, and also in Singapore. + +The industry has grown apace since the late 1970s, when conservationists began loosening an export ban designed to defend the animals from hunting (the trade is still controlled under CITES, an intergovernmental effort to protect endangered creatures). Grahame Webb, a biologist, says that many of the 5,000 or so farms are tiny set-ups in Asian villages. The largest outfits, however, now boast as many as 70,000 crocs. Some are getting snapped up by big leather-buyers at fashion houses such as Hermès and Louis Vuitton. + +Crocodile farming is tricky. The industry’s novelty means that research into feeds and disease prevention remains limited, at least compared with more ancient forms of husbandry. Space and attention are crucial, because even the slightest scarring—from scraps with rivals, for example—can greatly reduce the value of skins. The need to keep hatchlings warm eats up capital, as does the several years it can take a new farm to start producing. Regulatory costs make it very difficult to earn much cash from exporting cheap incidentals, such as crocodile teeth. + +There are other headwinds, too. A slower economy in Russia has dragged down demand for macho kit such as croc-skin waistcoats, which sell for as much as $80,000, reckons Geoff McClure, an Australian consultant. Mr Süssmann faces stiff competition in South Africa, where croc-skin exports have tripled in a decade; ambitious businessmen in low-wage countries such as Vietnam and Cambodia are also hoping for a bigger bite. + +The greatest challenge is persuading consumers, and some lawmakers, that croc-farming is not a grubby trade. Last year PETA, an animal-rights charity, said it had found evidence of cruelty at a Texan farm—prompting Jane Birkin, a singer, to ask Hermès to remove her brand temporarily from a bag named in her honour. + +The industry’s best argument is that, with a few exceptions, wild crocodile populations have rebounded strongly in the decades since farming was sanctioned. Mr Webb says that those in Australia’s Northern Territory are now 20 times more numerous than they were at their lowest point. Don Ashley, a consultant in Louisiana, says the trade encourages landowners to protect precious wetlands. Environmentalists caution that farming is unlikely to benefit other endangered species, such as tigers and rhinos, and may only create demand for the ineffectual “medicines” made from them. But the results for crocodiles, at least, are worth smiling about. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21698705-why-breeding-brutes-may-help-their-wild-brethren-snappy-dressers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Planemakers + +The eye of the storm + +Building a new plane to take on Airbus would be a huge risk for Boeing + +May 14th 2016 | SEATTLE | From the print edition + + + +BOEING’S factory at Everett, near Seattle, is the largest building in the world, as befits the world’s biggest planemaker. From within its cavernous halls a new passenger jet emerges every working day. After an empty fuselage enters at one end of the factory, it can take as little as a month for some models to emerge as a working aircraft at the other end. Still, Boeing’s lead in the field of commercial airliners, which looked almost unassailable a decade ago, is under threat from Airbus. + +Since 2012 the European firm has won more orders than Boeing, and may eventually outpace it in annual deliveries. For Boeing, which celebrates its centenary this year, staying ahead of a competitor which has been in business for less than half that time is a matter of pride as much as it is a commercial imperative. + +One option under consideration at Boeing is to build a new plane for the “middle of the market”, to replace its ageing 757. An aircraft that would carry between 220 and 280 passengers on routes up to 5,000 miles would plug a gap in its fleet, between short-haul narrow-body jets and wide-bodied planes for long-haul travel. But Boeing should be wary of the risks involved. Airbus has outclimbed its American counterpart largely because Boeing made such a mess of developing another new plane, the 787 Dreamliner, a long-haul jet that entered service in 2011. + +The Dreamliner programme, announced in 2003, was supposed to cost $6 billion and see the plane take to the air in 2008. The final bill was closer to $32 billion; and the 787 arrived three years late, the result of a combination of technical failures and supply-chain snafus. With engineers, designers and other resources diverted into getting the Dreamliner aloft, plans for the rest of its fleet were delayed. + +That gave Airbus an opportunity to take a lead in narrow-bodied jets. Boeing’s 737 and Airbus’s A320 family of planes typically carry 120-200 passengers on shorter hops of up to 3,000 miles. These planes are the biggest sellers at both firms. Two-thirds of the planes delivered by Boeing last year and nearly four-fifths of Airbus’s were narrow-bodies. + +In 2010 Airbus took Boeing by surprise with the announcement that it would update its A320 with new engines and tweaks to its design, making it 20% more fuel-efficient than previous models. Preoccupied with the 787, Boeing was slow to respond with its own revamp, the 737MAX. Airbus now has 5,479 orders for its family of A320neo planes, the first of which entered service this year. Boeing has just over 3,000 orders for its new plane, the 737MAX, which is not destined for first delivery until next year. + +Boeing’s troubles with the 787 also helped Airbus in the market for wide-bodied jets. Boeing remains ahead of Airbus, with 1,357 orders for its fleet compared with 1,267 for Airbus’s range. Although the pair sell far fewer of them, wide-bodied planes bring handsome rewards. Some 80% of Boeing’s revenues came from wide-bodies in 2014, though they account for just a third of production by number of planes. The delays and cost overruns of the Dreamliner programme mean that, although it is selling well, it is not profitable and a write-down is likely. There have been knock-on effects: a new variant of Boeing’s 777, the 777X, is not due until 2020, giving Airbus’s A350 time to win orders. + +Analysts think Boeing’s engineers have enough to do until 2020 revamping the 737 and 777 successfully, without other distractions, says Jason Gursky of Citi, a bank. And the damage inflicted by the 787 will make Boeing think twice about designing a new plane to sit between its long- and short-haul models. Airbus’s experience with the A380 superjumbo, developed at huge expense but not yet with enough orders to justify its existence, offers another warning. It is also unclear that the market will be big enough to justify a new plane: some airlines are already ordering long-range versions of Airbus’s A321neo or smaller versions of the A330 to plug the gap. (Putting a new engine on the plane, a much less risky option, is impossible with the 757, because the airframe is too old to accommodate new fuel-efficient engines.) + +Cutting aside + +Other routes to boosting Boeing’s market share lie open. Cost reduction is one. Airbus out-competes Boeing by using a fifth fewer employees to build each plane. So Boeing is slimming. In March the firm said it would cut the workforce in its commercial-jet division by 10%—a loss of 8,000 jobs—and investors are demanding more. Machines are replacing manpower: robots rather than humans now rivet together and seal the wings for the 737 and 777. + +Changing working practices will improve productivity too, says Walter Odisho, Boeing’s vice-president for manufacturing. Moving production lines of the sort seen in car factories are being rolled out by the planemaker in Seattle. And to save time workers spend walking round the factory floor, employees are being given hand-held computers and automated trollies, so they can communicate with their managers and get the tools they need without stepping off the production line. + +The planemaker says that it is unlikely for several years to take a firm decision on whether to proceed with a new plane. But Boeing has two overriding instincts: developing new planes and beating Airbus. It will need to resist the first for a while in order to do the second. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21698706-building-new-plane-take-airbus-would-be-huge-risk-boeing-eye-storm/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Tobacco firms + +Snuffed out + +How not to regulate e-cigarettes + +May 14th 2016 | NEW YORK | From the print edition + +Thank you for vaping + +THE interests of cigarette-makers and regulators rarely align. To date, most rules have been bad news for Big Tobacco. Change came on May 5th, when America’s Food and Drug Administration (FDA) announced new requirements for electronic cigarettes. + +The vapour industry is small—less than 0.1% of the tobacco market—but expanding fast. Global sales grew 11 times over in the five years to 2014, according to Euromonitor, a data firm. In America sales soared even more rapidly. To some, that raises an exciting prospect. E-cigarettes might help smokers inhale nicotine without the deadly stuff that comes from burning tobacco. On April 28th Britain’s Royal College of Physicians argued that e-cigarettes could help prevent death and disease. + +Yet e-cigarettes are not totally harmless. Nicotine seems to meddle with the development of adolescent brains, for example. Some vapour devices deliver dangerous chemicals, including formaldehyde. The evidence for e-cigarettes’ broad effects is still slight. Smokers may give up traditional cigarettes for electronic ones, but teenagers may do the opposite. + +This month regulations in America and Europe were settled, after years of debate. To be effective, the rules should serve three goals: promote a basic standard of quality, nudge tobacco-smokers to try the electronic kind and discourage non-smokers, particularly children, from taking up e-cigarettes. The new rules, however, do something rather different. + +On May 4th the European Court of Justice upheld a broad set of tobacco regulations. E-cigarette-makers must, among other things, notify regulators before they introduce a new product; cap nicotine levels; and warn users of nicotine addiction. John Britton of the Royal College of Physicians supports quality control, but says limiting nicotine may make e-cigarettes less appealing to tobacco-smokers. + + + +In many rich countries, smoking is being firmly stubbed out + +The FDA goes further. Uncontroversially, it bans the sale of e-cigarettes to children. In 2011, 1.5% of teenagers had smoked an e-cigarette in the past 30 days; in 2015, 16% had. More incendiary, e-cigarettes that were not on the market in 2007—that is, almost all of them—must be approved by the FDA as “appropriate for the protection of the public health”. Products still unapproved by August 8th 2019 must be pulled from store shelves. + +The FDA “recommends” that companies provide certain information when they apply—such as clinical evidence of health risks, research on which flavours appeal to various consumers and details on the training of workers who make them. In all, the FDA reckons that preparing an application might take up to 5,000 hours, though the average is estimated to be closer to 1,700. + +Under this standard, the FDA may indeed protect Americans from the perils of e-cigarettes. But the agency also shelters Big Tobacco. Because it will be costly to bring new devices to market, the rules will discourage product tweaks that might prompt smokers to ditch tobacco in favour of e-cigarettes. Large tobacco firms also may be the only ones with the resources to apply at all. + +Cigarette-makers have started selling vapour products. Reynolds American markets Vuse, for example; Altria’s Nu Mark sells MarkTen and Green Smoke. Combustible cigarettes still account for the vast majority of Big Tobacco’s sales and profits. That leaves the vapour market in an awkward position. E-cigarettes may help smokers give up tobacco; but the vapour market may well be run by firms keen to sell it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21698704-how-not-regulate-e-cigarettes-snuffed-out/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Island story + +Globalisation may be out of favour. Jamaica provides a surprising example of its value + +May 14th 2016 | From the print edition + + + +[T IS EASY to succumb to the romance of Jamaica over dinner with Chris Blackwell in GoldenEye, his boutique hotel in the grounds of Ian Fleming’s Caribbean retreat. Mr Blackwell’s mother was Fleming’s mistress, muse and supposedly the model for Pussy Galore. Mr Blackwell’s record label, Island Records, turned Bob Marley, among many others, into a star. In 1989 he sold Island for £180m ($300m) and bought eight hotels in Miami Beach, which was then run-down. Now he is focusing on his Jamaican properties instead. + +There are some reasons to think that Mr Blackwell’s nose for the market has not deserted him. Jamaica has produced a striking number of global superstars (such as Marley and Usain Bolt) and global brands (including Blue Mountain coffee and Jamaican Lion marijuana). The weather is warm, the beaches idyllic. A brand new toll road, built by a Chinese company, links the south with the north. But there is a darker story. Over the past 30 years Jamaica’s growth rate per person has averaged just 1%. A third of young people are unemployed. One of the island’s most famous products, marijuana, is illegal and controlled by criminal gangs. The murder rate is ten times that of the United States. On the weekend upon which Schumpeter arrived, the dumped bodies of two American missionaries were discovered. + +How can Jamaica’s virtues be encouraged to triumph over its vices? A surprising answer lies in globalisation. It has not been kind to the country in the past: Jamaica served as a fulcrum of the slave trade and a haven for pirates. Yet today four global forces, the IMF, mass tourism, the communications revolution and social entreprise, promise something much better. Taken separately, none of these would put an end to stagnation; taken together, they just might. + +The IMF reform programme is imposing some much-needed discipline. The government’s record of economic management has been catastrophic. That 1% growth rate conceals wild swings; the country’s accumulated public debt recently reached 140% of GDP. Thanks to the IMF’s straitjacket, Jamaica has now reduced its public debt to 126% of GDP and trimmed its public-sector wage bill from 11% of GDP to 10%. + +Jamaica can capitalise on this discipline only if the private sector becomes more dynamic. In the past business life has been dominated by cliques. But more recently the country’s insular ways have come under assault from two industries that connect Jamaica to the outside world. + +The first is tourism. Gordon “Butch” Stewart is a white Jamaican whose rich local accent attests to his family’s deep Caribbean roots. The son of a bar owner, he got his start in business importing air-conditioners. Now he operates from a suite of offices in the back of an electronics shop. But he is nonetheless a tourism magnate: he owns 19 hotels in the Caribbean, under the Sandals and Beaches brands. + +Mr Stewart’s hotels are designed to capitalise on Jamaica’s biggest assets (sun, beaches and cheap labour) despite its biggest problems (violence and aggressive begging) by creating gated communities along the northern coast. Guests pay a single lump sum, and then forget their wallets. The biggest hotels have over 500 rooms and more than a dozen restaurants; the poshest provide personal butlers. Those with sea-legs can stay offshore in the safety and comfort of liners operated by companies such as Carnival Cruises. The government may not want tourists to be walled off from the rest of Jamaica, but it can hardly expect the industry to adopt a different model if it can’t provide law and order. + +The second dynamic industry centres on connectivity. Fifteen years ago Denis O’Brien, an Irish telecoms entrepreneur who sold his business to BT for $2.8 billion, decided that the Caribbean was ripe for technological innovation: incumbents such as Cable & Wireless were sleepy, service was poor and costs were exorbitant. His company, Digicel, quickly established itself as a pace-setter in bringing mobile-phone services to the region, having learned how to operate in even tougher markets such as Papua New Guinea. The firm is rapidly transforming itself from a mobile-phone company into a digital giant, wiring the region with fibre-optic cable, creating its own TV channels and establishing call centres. Broadband gives Jamaica a chance to take advantage of some of its most important resources—the English language and a time-zone shared with America’s east coast—and to capture its share of the growing market in outsourced knowledge work, such as accounting or legal tasks. + +Let’s get together and feel all right + +Jamaica is even learning from global models in dealing with its two biggest problems: poverty and crime. Poor areas such as Trench Town used to be run by government bosses whose job was to bring benefits (notably public housing) in return for votes. Today social entrepreneurs offer a different model, using methods drawn from global business. Henley Morgan, a former consultant, has established a social company, the Agency for Inner-City Renewal (AIR), complete with a CEO, a chairman and various business divisions, to try to revive Trench Town. AIR provides training, acts as a middle man between companies and locals and teaches people how to establish businesses. It has also formed an alliance with Sagicor, an insurance company, to offer micro-loans. Trench Town is no longer a war zone: Marley’s old neighbourhood is being dolled up; local recording studios churn out gangsta reggae; a few intrepid tourists venture into the area. + +Turning round a country with a history of mismanagement and violence will be painful. The government needs to resist resorting to its bad old ways. In particular, abandoning the IMF’s programme just when it is beginning to work would be disastrous. Betting on globalisation does not guarantee a boost in the growth rate. Betting against it does guarantee sclerosis. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21698639-globalisation-may-be-out-favour-jamaica-provides-surprising-example-its-value-island/print + + + + + +Previous Articles Sections Next + + + +Finance and economics + + + + + +Inequality in China: Up on the farm + +Buttonwood: A chronic problem + +Saudi Arabia’s oil policy: Beyond OPEC + +European banks: Triple whammy + +Lending Club: Membership revoked + +Value-added tax in Europe: Freedom fighters + +Stockmarket regulation in Canada: Not seeing the wood or the trees + +The appeal of the euro: SELL signals + +Free exchange: A fare shake + + + + + +Articles Sections Next + +Inequality in China + +Up on the farm + +Rising rural incomes are making China more equal + +May 14th 2016 | HANGBU | From the print edition + + + +THE main street of Hangbu, a town in Anhui, one of China’s poorer provinces, features the usual mix of rural businesses. Shops selling seeds and fertiliser; others stocked with tools and machinery; a few simple restaurants and a motel. And then there is a shop with a shiny display of iPhones and iPads. + +The gadgets are a clue that rural China, long overshadowed by the country’s booming cities, is beginning to do better. More controversially, it also suggests that inequality, epitomised by a huge gap in wealth between cities and the countryside, may be declining. “I would not have opened up if people didn’t have money to buy,” says Yuan Yue, owner of the shop selling iPhones. “The money comes from sweat and toil, but incomes are rising.” + +The gains from China’s remarkable growth of the past 35 years have not been evenly shared. Studies, both official and independent, show that the country has changed from a very equal society into a deeply unequal one. The most commonly used measure of income inequality is the Gini coefficient, a number between 0 and 1 (0 means that all people have the same income, while 1 means that one person has everything). Officially, China’s Gini went from less than 0.3 in the 1980s, making it one of the world’s most equal countries, to nearly 0.5 today, making it one of the least. + +Other sources indicate that the deterioration has been even more severe. In a widely cited survey, China’s Southwestern University of Finance and Economics concluded that the Gini had soared to 0.61 by 2010, in the same league as the world’s most unequal countries, such as South Africa. The discrepancy arises in large part because private surveys try to capture a broader range of income sources, including business and investment revenue, whereas official numbers focus on wages. + +However, China’s Gini, though high, has started to decline. Officially it has been falling for seven years, from 0.49 in 2008 to 0.46 last year. The Southwestern University survey records only a tiny dip, from 0.61 in 2010 to 0.6 in 2014, but nevertheless corroborates the view that the worst might be past. “Even if official data understate the degree of inequality, the trend of lessening inequality is believable,” says Li Shi of Beijing Normal University. + + + +From a national perspective, the biggest contributor to rising inequality had been the chasm between the countryside and cities. Now it appears to be the main reason for the decline in inequality. In 2009 the average urban income was 3.3 times higher than the average rural income. The gap has since narrowed to 2.7 times, following six consecutive years in which rural incomes have grown more quickly (see chart). Many of these rural folk in fact work in urban areas, staffing factories or toiling in basic service jobs, but China’s restrictive residency system prevents them from settling permanently in cities. + +One explanation for the improving fortunes of such migrants is China’s demographic shift. The country’s working-age population has started to shrink. That has helped fuel wage growth for blue-collar workers. Another factor is that companies searching for cheap labour have moved farther inland, reaching parts of the country that are relatively deprived. Mr Yuan says he started selling iPhones in Hangbu after the arrival of a small cluster of electronics factories just outside the town. Along the road to Hangbu’s industrial zone, a man sits at a stall trying to recruit workers. Salaries of 3,000 yuan ($460) a month are just a bit lower than the norm for similar jobs in cities. “Trying to find employees is basically a year-round activity. It comes down to salary. If they aren’t happy, they leave,” says the recruiter. + +This exemplifies a theory laid out in 1955 by Simon Kuznets, a Nobel-prize-winning economist. He argued that as a country starts developing, a big gap opens between those lucky enough to work in better-paid jobs and those languishing in agriculture. But as growth continues, enough people are eventually absorbed into modern parts of the economy to reduce inequality again. Although the theory breaks down as countries get even richer, China seems to be following it for now. + + + +Household income inequality: ladders to climb + +Yet the shift has not occurred entirely spontaneously. It stems in part from redistributive policies. Over the past decade China has expanded basic health insurance and welfare, made the first nine years of school free in rural areas and abolished a centuries-old agricultural tax. + +Much more can still be done. Government spending on rural areas is still too low, especially through the state pension system. More fundamentally, Chinese law condemns country people to second-class status. In addition to the restrictions on moving to cities, they cannot sell their land, depriving them of what would otherwise be their most valuable asset. Without changes, inequality will continue to plague China. “If we purely rely on economic development, inequality won’t truly fall,” says Gan Li of the Southwestern University of Finance and Economics. + +Moreover, the idea that income inequality may be declining is not obvious to many. Inequality of wealth (what people own, as opposed to what they earn) remains extreme. China has more dollar billionaires (596) than America (537), according to the 2015 Hurun rich list. A study by Peking University earlier this year found that the top 1% of Chinese households controlled a third of the country’s assets. + +Ostentatious displays of wealth are less frequent since Xi Jinping took over the Communist Party in late 2012 and began a crackdown on corruption. But sports cars, ritzy restaurants and luxury clothing stores are still common in big cities. They are reminders of the riches of a small urban elite, even if the odd rural iPhone points to rising incomes in the countryside. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698674-rising-rural-incomes-are-making-china-more-equal-up-farm/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +A chronic problem + +Ideas for reducing the debt burden + +May 14th 2016 | From the print edition + + + +DEBT levels grew spectacularly in the rich world from 1982 to 2007. When the financial crisis broke, worries about the ability of borrowers to repay or refinance that debt caused the biggest economic downturn since the 1930s. + +It could have been worse. The danger was that, as private-sector borrowers scrambled to reduce their debts, the resulting contraction in credit would drive the world into depression. Fortunately, this outcome was averted. First, the governments of rich countries allowed their debts to rise, offsetting the reduction in private debt. In addition, emerging markets (notably China) continued to borrow. So there was no global deleveraging; quite the reverse (see chart). Central banks also helped, slashing interest rates to zero and below. Although lower policy rates have not always resulted in cheaper borrowing costs (in Greece, for example), debt-servicing costs have fallen in most developed countries. + +Although this approach has staved off disaster, it has not got rid of the problem, as a research note from Manoj Pradhan, an economist at Morgan Stanley, makes clear. “High debt forces interest rates to stay low, which encourages yet more debt,” Mr Pradhan writes. Central banks dare not push interest rates up too quickly for fear of causing another crisis; hence the stop-start nature of the Federal Reserve’s statements on monetary policy. The developed world seems stuck with sluggish growth and low rates. + +In health terms, the disease is chronic, not acute. A lurch into another global crisis, Mr Pradhan reckons, would require three ingredients. First, the assets financed by the debt build-up would need to fall sharply in price or prove uneconomic. Second, the debtors would have to be concentrated in big, globalised economies. Lastly, global investors would have to be heavily exposed to the debt in question. All this was the case in 2007-08, as debt secured by American housing turned bad, raising doubts about the health of the Western banking system. + +This time round the debtors are in different places. Some of them are emerging-market governments and commodity producers. But, except for China, none of these is crucial to the world economy. And China’s debts are mainly in domestic hands, rather than widely dispersed in the portfolios of international banks, pension funds and insurance companies. + +Large, rich countries are systemically important, and their government debt is at the heart of most institutional portfolios. If a President Trump were to follow through on his confusing statements about buying back Treasury bonds for less than face value, that would trigger a crisis. In the absence of such a cataclysm, and with the support of central banks, governments that have borrowed in their own currency should not face an imminent problem. + +But that doesn’t mean getting rid of the debt will be easy. Debt has been inflated away in the past, but central banks are still struggling to meet their current inflation targets of 2% or so. It is not clear that governments, which set the mandates central banks must follow, would be willing to put up with the high rates of inflation needed to reduce the real value of debt substantially, even if central banks could find a way of generating it. Debt forgiveness (the old idea of a jubilee) sounds good in theory. But writing off either private-sector or government debt could cripple the financial sector, creating the very crisis the measure was designed to avoid. + +Morgan Stanley has some alternative suggestions. One would be to replace debt with equity-like capital. In the public sector, governments could issue GDP-linked bonds, akin to the inflation-linked debt that America, Britain and others already offer. If a bond’s repayment value is linked to real GDP, then governments would be spared the crippling surge in debt-to-GDP ratios that occurs during recessions. Governments could also issue irredeemable debt, or “consols”, which eliminate the risk of a refinancing crisis. + +In the private sector, equalising the tax treatment of equity and debt would be a good idea, although tricky to implement. Creating “shared-responsibility mortgages”, in which lenders take an equity stake in the homes they finance, would make borrowers less vulnerable to house-price declines. + +All these ideas seem sensible, but they can be applied only to newly issued debt, not to the mass of obligations that has already been accrued. So they will help only over the long term. The next global debt crisis will almost certainly occur before they become widespread. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698669-ideas-reducing-debt-burden-chronic-problem/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Saudi Arabia’s oil policy + +Beyond OPEC + +The kingdom’s new oilman-in-chief will have less time for the cartel + +May 14th 2016 | From the print edition + + + +KHALID AL-FALIH is a busy man. When he met The Economist in Riyadh in April, he was sitting in the sprawling office from which he was running the health ministry. But the subject was the part-privatisation of Saudi Aramco, the world’s biggest oil company, whose board he also chairs. And then there was the big football match—Manchester City v Real Madrid—to rush home to watch. + +Since then his focus has narrowed a little. On May 7th the 55-year-old was moved from the health ministry to what had been known as the oil ministry, but is being renamed the Ministry of Energy, Industry and Mineral Resources. That gives him oversight of the kingdom’s ambitious drive to take its economy beyond oil. It also makes him the de facto head of OPEC, the oil cartel. He is only the fifth person to head the ministry, after legendary predecessors such as Ali al-Naimi, who kept prices from rocketing during the second Gulf war, and Zaki Yamani, who devised the Arab oil embargo of 1973. Those men were defined chiefly by their influence over OPEC, and hence over global oil markets. Mr Falih will hope for a different legacy. + +Speculation is already rife that his appointment marks the start of a new Saudi push to pump more oil. The abrupt removal of Mr Naimi follows his effort last month to forge an agreement to freeze oil production between OPEC and non-OPEC producers such as Russia—an effort that was foiled by Muhammad bin Salman, the deputy crown prince. King Salman’s son, and the power behind the throne, saw no reason to freeze output unless Iran, the kingdom’s strategic rival, did likewise. Shortly afterwards Amin Nasser, Aramco’s chief executive, cheered oil-price bears by saying the company would raise output by 250,000 barrels a day from its Shaybah oilfield. + + + +INTERACTIVE: Explore how oil prices affect OPEC and non-OPEC production and viability + +But Mr Falih (pictured) comes across as too measured to create uproar. Although Prince Muhammad calls the shots, it is possible that he will listen to the soft-spoken, Texas-educated technocrat who has been in the oil industry longer than the 30-year-old prince has been alive. The new minister may want to expand Saudi Arabia’s output, but not so much to intensify the price war as to give himself the capacity to respond to seasonal surges in domestic demand and to fend off competition from Iran and Iraq to export to China and India. Mr Falih says Saudi Arabia will look at the “most responsive ways” to meet its customers’ needs. For instance, it typically sells oil through long-term contracts, but recently made its first spot sale in response to Asian demand. + +What is more, shaping the global oil market may become less of a priority because Mr Falih has a huge new responsibility at home: preparing an initial public offering of Aramco. He is also in charge of plans to develop domestic refining, petrochemicals and other industries and to boost the production of renewable energy. This will require big improvements in the rule of law and corporate governance—not Saudi Arabia’s strengths. Prince Muhammad says he is agnostic about oil prices, because his aim is to move beyond oil. Whether or not he achieves that, Mr Falih’s focus will be beyond OPEC. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698695-kingdoms-new-oilman-chief-will-have-less-time-cartel-beyond-opec/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +European banks + +Triple whammy + +Low interest rates, market turmoil and restructuring: it’s too much + +May 14th 2016 | From the print edition + + + +IF YOU think America’s banks are having a rough year, take a look at Europe (see chart). American lenders’ share prices, having rallied from their trough in mid-February, are 6% lower than at the start of 2016; European ones are over 20% down. So miserable has the first quarter been that investors have applauded figures that beat dire expectations. On May 10th Credit Suisse, a Swiss giant, reported a second successive quarterly loss—and was rewarded with a 5% bounce in its shares. + +Europe’s banks are struggling with a triple squeeze. First, ultra-low interest rates are thinning their staple diet, the margin between borrowing and lending. Monetary policymakers argue that by stimulating the economy and hence demand for loans, super-cheap money is also good for banks. For most, not yet. Commerzbank, which styles itself as German companies’ house bank, calls demand for loans “subdued”: the operating profit of its Mittelstand division fell by more than 40%, year on year, in the first quarter. + +Second, other rations have also been short. The market turmoil of the first six weeks of the year walloped investment-banking revenues on both sides of the Atlantic. The Europeans broadly came off worse; Barclays’ 4% decline almost counts as a triumph. European banks lack the scale of the Americans, and that may be counting against them. Huw van Steenis, an analyst at Morgan Stanley, expects that this year their investment-banking revenues will tumble by 12%, twice as fast as those of their American rivals. + +Market volatility dampened non-interest earnings in retail banking, too. With their savings earning zilch, Europeans should be keener to buy mutual funds in search of higher returns. That would mean more commission for banks, which in Europe are big sellers of investment products. But jumpy share prices have given savers pause. (American banks, by contrast, rely more on credit-card and account fees, so have not suffered in the same way.) + +Rich customers have been as unadventurous as humbler ones. In the first quarter UBS, Switzerland’s biggest bank, which a few years ago scaled back its investment bank to concentrate on wealth management, attracted a staggering SFr29 billion ($29.3 billion) of net new money, the most for eight years, much of it from Asian clients. But because the wealthy too sought the safety of cash, UBS did not scoop the juicy transaction fees that come with shuffling portfolios. Pre-tax profit at its wealth-management divisions fell by 23%. That said, the squeeze on non-interest revenues should ease, now that markets are steadier. + +The third cause of European banks’ pain is bad timing, often their own. With income tight—and with regulators demanding that they build up their capital ratios—control of costs matters all the more. More basically, so does choosing which businesses to be in and which to quit. Alas, only now are some of Europe’s biggest lenders, under new leaders, taking on the spring-cleaning American banks carried out within a few years of the financial crisis. For both investors and bankers, that is making 2016 extra-painful. + +Deutsche Bank, Germany’s biggest, will slough off Postbank, a retail business it bought in 2008 and never fully integrated, and is cutting back its once-swaggering investment bank. It will not pay a dividend for 2016 and although it eked out a first-quarter profit of €236m ($260m) it expects only to break even this year. + +Credit Suisse is hurting most. Its boss, Tidjane Thiam, an ex-insurer, is tilting it, like UBS, further from investment banking towards wealth management, with special emphasis on Asia. He has made an uncertain start. Having announced one strategic overhaul, he had a second crack in March, speeding up the disposal of investment bankers and ditching risky products he at first planned to keep. On his watch the share price has dived by more than 40%. It jumped this week partly because the cull is ahead of schedule. Parsimony used to be a dirty word in banking. It isn’t now. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698696-low-interest-rates-market-turmoil-and-restructuring-its-too-much-triple-whammy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lending Club + +Membership revoked + +The sacking of the CEO of the leading peer-to-peer lender jolts the industry + +May 14th 2016 | New York | From the print edition + + + +FEW companies can claim to have started an industry. Lending Club was not the first peer-to-peer, or marketplace, lender to match investors and borrowers online. But it is the industry’s flagship firm—the first to go public and the largest in terms of the loans it has facilitated. In the process, Lending Club and its founder, Renaud Laplanche, also helped to foster broader enthusiasm for fintech. + +This week Mr Laplanche abruptly resigned, for reasons that remain unclear. According to the company, Mr Laplanche mishandled an investigation into problems in a $22m loan portfolio that had been purchased by Jefferies, an investment bank; and was insufficiently forthcoming about his own stake in Cirrix Capital, which purchased Lending Club loans and received a separate investment directly from the company. + +Mr Laplanche’s sudden departure comes at a particularly difficult time. The firm’s shares have been heading south ever since its 2014 listing (see chart). The peer-to-peer business model is based on fees; that means they have to keep bringing in new investors and borrowers. But institutional money, on which peer-to-peer firms have been growing more reliant, are suspicious about credit quality. A review of the fourth-quarter book of both Lending Club and Prosper, a rival lender, by PeerIQ, an analytics firm, shows a slight uptick in defaults. Both firms have raised interest rates in response, but over time that risks putting off borrowers. + +Investors’ concerns will only be aggravated by the idea that Lending Club’s operating model is not as squeaky-clean as had been thought. From its inception, it had described itself as a neutral marketplace that avoided taking credit risks. The involvement of the company and Mr Laplanche in a fund holding these loans suggests it was not quite as neutral as it claimed. Worse still, the possibility that data tied to loans could be erroneous, and perhaps intentionally so, adds to concerns. Both Jefferies and Goldman Sachs have reportedly put off purchases of Lending Club loans that would have been packaged up for resale. + +Rivals are not rejoicing in Lending Club’s travails. One groused that it was a gift for the banking lobby and regulators vexed by the rise of an efficient market for credit that they did not control. On the day after Mr Laplanche’s exit, the Treasury issued a white paper calling for tougher oversight of peer-to-peer lenders. Institutional investors will demand more in the way of disclosure, asset reviews and independent evaluations. That will encourage Lending Club and others to turn back towards less flighty retail investors. Mr Laplanche built an industry; his departure will continue to shape it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698698-sacking-ceo-leading-peer-peer-lender-jolts/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Value-added tax in Europe + +Freedom fighters + +Reforms to VAT may lead to a more democratic but convoluted system + +May 14th 2016 | From the print edition + +Depends on where you are + +IN THE battle to smash the patriarchy, feminist campaigners have found an unlikely ally: the European Commission. Their gripe is with the tampon tax, the minimum 5% rate of value-added tax (VAT) on sanitary products imposed by European law. This is tantamount, in their eyes, to a tax on women—and worse, one which European governments have no power to undo. But new proposals on VAT reform from the commission may change that. + +The European Union has no authority over income and payroll taxes, but great authority over VAT. Members must apply a standard VAT rate of no less than 15%; they can have up to two concessionary rates, of at least 5%, but these can only be applied to certain goods, including food, books and medical equipment. There are numerous exceptions to these rules (Ireland exempts tampons from all VAT, for instance), but they were negotiated by the countries concerned upon joining the EU. + +Depends on where you are + +This system of centrally imposed exceptions is an odd compromise between two sensible but incompatible goals. It is not very flexible or democratic, as governments have only limited scope to modify the system. But it is not simple or coherent either: rates on a single item can vary wildly (see chart). Moreover, the past 40 years have seen 750 court decisions interpreting VAT law. Surely the European Court of Justice has better things to do than mull Poland’s refusal to levy VAT on disinfectants or France’s low rate on early performances at theatres with bars? + +The effort to minimise the variation in rates stems from a time when VAT was charged according to the rate in a product’s country of origin, rather than where it was bought. The commission did not want countries to give their manufacturers a leg-up (or to poach firms from other members) by setting lower VAT rates on their wares. But since it is now the VAT rate in the purchaser’s country that applies, there is no longer any risk of that. Consumers, after all, are relatively immobile, despite the odd cross-border shopping trip. + +The commission has proposed two options for reform, both of which hand more VAT-setting power to national governments. The first would maintain a central list of items on which reduced rates are allowed, but expand it and review it more often. It would also rationalise the rules, by letting any country charge the lowest rate on a given item that applies anywhere else in the EU. Britain, for example, could exempt tampons from VAT, as Ireland does. + +The second option is more radical: it would scrap the list, and transfer VAT-setting powers to national governments. There would be limits—if countries started applying sweeping carve-outs in an effort to entice shoppers over the border, the commission might intervene—but otherwise countries would be free to adopt as many rates and exemptions as they liked. + +No country currently applies the minimum 15% standard rate (the average is 21%), so it seems unlikely that governments would take the opportunity to lower rates across the board. Rather, they would probably tinker: since the crisis there has been an increase in the number of countries using two reduced rates, from 14 out of 28 in 2007 to 19 this year. Analysis from the Centre for Social and Economic Research found that in 2013 countries sacrificed a median of 11.3% of potential VAT revenue via reduced rates. If the current restrictions were lifted, discounts and exemptions would presumably proliferate, to the delight of special interests. + +Although such concessions may be good politics, they are sloppy economics. The more exemptions there are, the higher the standard rate has to be to raise the same amount of revenue. Different rates also distort people’s spending, penalising some industries and rewarding others. It is an inefficient way to redistribute: when Sir James Mirrlees, a Nobel-prize-winning economist, reviewed Britain’s tax system, he found that the government could scrap all concessionary rates, compensate the losers and still bring in £3 billion ($4.8 billion) more. + +Grzegorz Poniatowski, an economist, notes that a proliferation of reduced rates provides more scope for tax dodging by misclassifying products as low-rate items. For Patrick Gibbels of the European Small Business Alliance, “there is too much fragmentation.” Encouraging a multitude of different systems could create an administrative burden, which would be particularly onerous for small businesses of the sort that Europeans are keen to cultivate. He prefers the first, more cautious option. + +But Pierre Moscovici, the commissioner in charge of VAT, prefers the more radical option. Even if governments do not use the extra freedom wisely, there is a case for letting them make their own mistakes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698694-reforms-vat-may-lead-more-democratic-convoluted-system-freedom-fighters/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Stockmarket regulation in Canada + +Not seeing the wood or the trees + +Regulators hunt for the foreign assets of a Canadian firm—again + +May 14th 2016 | OTTAWA | From the print edition + +Securities regulators disagree + +TWENTY years ago, when the rich lode of gold discovered in Indonesia by Bre-X Minerals turned out to be fictitious, prompting the company’s collapse, Canadian securities regulators passed a flurry of new rules meant to prevent further such embarrassments. Yet there are more than a few similarities between Bre-X and Sino-Forest, the company whose hearing for fraud in front of the Ontario Securities Commission enters its final phase this week, including the likelihood that shareholders will not recover any of the billions the firm was once thought to be worth. + +Both firms had Canadian headquarters and Canadian directors and were listed on the Toronto Stock Exchange. In both cases, the company’s assets (timber plantations in China in the case of Sino-Forest) were on the other side of the world, making it hard to confirm their value. Each soared to a market capitalisation of C$6 billion ($4.7 billion at current rates). + +Underwriters, analysts and regulators long ignored signs of trouble, before suddenly losing faith. That happened with Bre-X when its chief geologist fell or jumped out of a helicopter en route to meet the due-diligence team of a prospective buyer. The trigger for Sino-Forest’s bust was less spectacular but just as damaging: a report published in 2011 by Muddy Waters, an American research firm, which labelled it “a multibillion-dollar Ponzi scheme”. Lawyers for senior managers of Sino-Forest say that any overstatement of assets was unintentional, and that Canadian regulators do not understand Chinese business culture. + +There have been lots of cases in which foreign assets used to raise money on Canadian exchanges were not what they seemed, says Neil Gross of the Canadian Foundation for Advancement of Investor Rights, an advocacy group. “We’re getting a rerun of a bad movie we’ve seen before,” he says. Various reasons are put forward for the sequels, including a lack of vigilance on the part of regulators, fines that pale in comparison with the money to be made and a preference for relatively lenient regulatory enforcement rather than criminal prosecutions. But the biggest problem is Canada’s fragmented securities regulation. Alone among big economies, Canada does not have a national securities regulator, but 13 separate ones in each of its ten provinces and three territories. + +The provincial securities commissions have limited powers, budgets and staff, so naturally struggle to get to the bottom of complicated frauds that span the globe. One remedy, says Anita Anand of the University of Toronto, would be greater use of criminal sanctions in cases of securities fraud. Underwriters, analysts, advisers and exchange staff would be more vigilant, she argues, if they faced the prospect of a long stint in jail. Deterrence is important because of the difficulty in collecting financial penalties once a fraud is proved; the money has usually vanished long before the justice system renders its verdict and would anyway be especially hard to recover from abroad. But criminal prosecutions require a higher burden of proof than the balance of probability enshrined in securities law. Collecting the necessary evidence would be tricky without a tough national regulator. + +The Supreme Court knocked back an effort by the previous government to create such a body. But the new government is trying again. On May 5th it released for consultation a draft law that would grant the federal government a role in addressing systemic risks in capital markets and criminal enforcement—both areas which the Supreme Court conceded were under federal jurisdiction. Most provinces support the idea, but Alberta and Quebec, always steadfast defenders of provincial prerogative, show no signs of relenting. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698697-regulators-hunt-foreign-assets-canadian-firmagain-not-seeing-wood/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The appeal of the euro + +SELL signals + +Joining the euro is still attractive to some + +May 14th 2016 | VILNIUS | From the print edition + +Another blissful day in the euro zone + +HAS the euro crisis dissuaded other countries from adopting the single currency? Not a bit of it. Since 2009, when euro-zone GDP shrank by 5%, four countries—Slovakia, Estonia, Latvia and Lithuania (let’s call them the “SELLs”) have joined. Their experience suggests that the euro still has its benefits, but also some familiar risks. + +Many thought that joining the euro would spur the SELLs’ foreign trade, by removing the friction of exchanging currencies. The Slovakian central bank, for example, predicted a boost of 50%. That was wildly over-optimistic: the euro has made little difference to Slovakia’s imports and exports. The problem may have been a confusion of cause and effect. Growing trade between nations is likelier to lead to the formation of a currency union than vice versa. Baltic firms, meanwhile, have not significantly increased exports to the euro zone, even though the closure of its largest market, Russia, thanks to sanctions in 2014-15, forced many to search for new trading partners. Instead they have exported more to places like the United Arab Emirates and Saudi Arabia. + +Happily, a perceived downside of adopting the euro was also overblown. The worry was that shopkeepers would use the changeover as an excuse to put up prices, particularly if doing so got them to a price ending in a “99”. But the changeover in Slovakia seems to have boosted inflation by just 0.3 percentage points. In Estonia large retailers joined a snappily titled campaign, “The € will not increase the price”. (In fact, a prod to inflation would have been no bad thing for the SELLs, which have fallen into deflation in the past year, thanks to cheaper prices for energy and food.) + +The euro does seem to have helped the SELLs’ financial stability. Their banks and central banks now have access to emergency funding from the European Central Bank. They are also less vulnerable to turmoil associated with “currency mismatch”. On average, roughly 70% of their private-sector debt was denominated in foreign currency (largely euros) prior to joining. Any depreciation of their currencies would have made those debts much harder to bear—a risk the adoption of the euro has eliminated. + +Rimantas Sadzius, Lithuania’s finance minister, says euro membership also allows his government to borrow more cheaply. Debt-interest payments have indeed fallen. But had Lithuania joined a decade ago, Mr Sadzius would have been even happier. In the early 2000s, according to the IMF, euro membership was associated with a two-notch improvement in the credit ratings handed out by Standard and Poor’s. Since the crisis this premium has shrunk dramatically. + +Even as some benefits have dwindled, some drawbacks have got bigger. As a condition of joining, the SELLs are supposed to contribute to the euro zone’s bail-out funds. For the man on the street the thought of rescuing Greece is an unwelcome one: its minimum wage is 70% higher than Slovakia’s and it is richer than the Baltics. In fact, for the most part members of the euro zone do not pay directly for bail-outs; instead, they guarantee loans or provide collateral for them. And the bail-out funds have benefits as well as costs. The SELLs could turn to them too if they ran into trouble. + + + +Explore our interactive guide to Europe's troubled economies + +The big question for the future is whether the SELLs can avoid the mistakes made by other euro-zone countries. In the 2000s low borrowing costs helped inflate a credit bubble in southern Europe. Happily, the SELLs are not on a borrowing binge, as the Baltics were in the 2000s. Their current accounts are more or less in balance. Private-sector debt has actually fallen since the crisis. Their big banks are now supervised by the ECB. Local management has improved too, says Erik Berglof of the London School of Economics. + +Despite this, the SELLs face a familiar problem: declining international competitiveness. Ageing populations and emigration are creating a shortage of skilled workers. The population of the SELLs is expected to decline by 4% by 2030. The result is that wages are rising faster than productivity. In the past year the minimum wage across the SELLs has risen by 9% on average. Joining the club may have contributed, by inducing workers to push for wages more in keeping with the rest of the euro zone, says Robert Juodka of PR1MUS, a Lithuanian law firm. + +Governments in the SELLs say they are trying to respond by bringing in structural reforms, such as freeing labour and product markets, to boost productivity and thus maintain competitiveness. With devaluation not an option, such reforms have assumed new importance. There is still plenty to do. Much of Lithuania’s labour code is inherited from Soviet times, says Rokas Grajauskas of Danske Bank, which makes hiring and firing difficult. The Slovakian labour market has in recent years become considerably less competitive, according to the World Economic Forum, in part because of misguided tax changes. The euro zone’s newest members may avoid the same problems that befell southern Europeans in the 2000s—but the single-currency club still makes its members pay their dues. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698699-joining-euro-still-attractive-some-sell-signals/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +A fare shake + +Jacking up prices may not be the only way to balance supply and demand for taxis + +May 14th 2016 | From the print edition + + + +IT IS a familiar ritual for many: after a late night out you reach for your smartphone to hail an Uber home, only to find—disaster—that the fare will be three times the normal rate. Like many things beloved by economists, “surge pricing” of the sort that occasionally afflicts Uber-users is both efficient and deeply unpopular. From a consumer’s perspective, surge pricing is annoying at best and downright offensive when applied during emergencies. Extreme fare surges often lead to outpourings of public criticism: when a snowstorm paralysed New York in 2013, celebrities, including Salman Rushdie, took to social media to rail against triple-digit fares for relatively short rides. Some city governments have banned the practice altogether: Delhi’s did so in April. + +Uber is sticking with surge pricing for now, but Jeff Schneider, one of its machine-learning experts, recently suggested that the company is interested in developing systems that rely on technology, rather than price, to allocate cars. Even if such a technological fix proves elusive, however, local governments do not need to regulate or ban surge pricing to reduce its sting. + +Surge (or dynamic) pricing relies on frequent price adjustments to match supply and demand. Such systems are sometimes used to set motorway tolls (which rise and fall with demand in an effort to keep traffic flowing), or to adjust the price of energy in electricity markets. A lower-tech version is common after natural disasters, when shopkeepers raise the price of necessities like bottled water and batteries as supplies run low. People understandably detest such practices. It offends the sensibilities of non-economists that the same journey should cost different amounts from one day or hour to the next—and more, invariably, when the need is most desperate. + +Yet surge fares also demonstrate the elegance with which prices moderate a marketplace. When demand in an area spikes and the waiting time for a car rises, surge pricing kicks in; users requesting cars are informed that the fare will be a multiple of the normal rate. As the multiple rises, the market goes to work. Higher fares ration available cars by willingness to pay: to richer users, in some cases, but also to those less able to wait out the surge period or with fewer good alternatives. Charging extra to those without good alternatives sounds like gouging, yet without surge pricing such riders would be less likely to get a ride at all, since there would be no incentive for all the other people requesting cars to drop out. Surge pricing also boosts supply, at least locally. The extra money is shared with drivers, who therefore have an incentive to travel to areas with high demand to help relieve the crush. + +A recent analysis published by Uber illustrates how the system is intended to work. Jonathan Hall, head of economic research at Uber, Cory Kendrick, a data scientist at the firm, and Chris Nosko, of the University of Chicago, compared two high-demand cases in New York city to illustrate how surge pricing is intended to work. In March 2015 it kicked in after a sold-out concert by Ariana Grande, a singer, in an arena in the middle of Manhattan. As the show came to an end, the number of people in the area opening the Uber app quadrupled in just a few minutes. Uber’s algorithm swiftly applied surge pricing; the average waiting time for a car rose only modestly, while the “completion rate”—the share of requests for rides that are met—never fell below 100%. On New Year’s Eve in 2014, in contrast, Uber’s surge-pricing algorithm broke down for 26 minutes, leaving New York without surge pricing. The average wait time for a car soared from about two minutes to roughly eight, while the completion rate dropped below 25% (see chart). + +The comparison may overstate the power of surge pricing. Even without the help of algorithms, cab drivers know to converge on a venue as an event finishes; more Uber drivers than normal were surely in the area at the end of Ms Grande’s concert in expectation of the extra business. Yet the possibility of earning a surge fare may also strengthen drivers’ incentives to anticipate and respond pre-emptively to high demand. Ironically, the better Uber’s surge-pricing algorithm works, the less the company will need to use it, since drivers’ pre-emptive responses will tend to eliminate the demand imbalances that make surge pricing necessary in the first place. + +There are tantalising hints that Uber hopes to follow this logic to its conclusion. Mr Schneider noted that clever machine-learning tools could process Uber’s piles of data and determine when and where demand is likely to outstrip the supply of cars. There would be no need to wait until demand starts to rise, nor for drivers to scan concert schedules. The ability to anticipate demand would be of some use to Uber today: it could tell drivers where they are likely to be needed. But they would presumably not respond as rapidly as they do to the inducement of surge fares. Eventually, however, Uber hopes to replace its human drivers with autonomous vehicles, which could be directed around the city by the company’s computers without any pecuniary incentives. (The company still has an incentive to maximise earnings, though, so it might opt to keep surge pricing even if technology made it redundant, at the risk of further public rage.) + +Apps and downs + +Whether Uber remains a big part of the transport network in future, and whether it retains surge pricing, depends in part on how well local governments manage the transport system as a whole. In districts or cities where travellers have appealing alternatives, in the form of good public transport or private competitors to Uber, users will be more sensitive to price. Surge pricing will therefore not generate a big financial windfall for Uber (or its drivers). But where public transport is thin on the ground, or where Uber has little private competition, it is a different story. In other words, surge pricing is really only as painful as local officials allow it to be. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21698656-jacking-up-prices-may-not-be-only-way-balance-supply-and-demand-taxis/print + + + + + +Previous Articles Sections Next + + + +Science and technology + + + + + +Life and the Earth: The curious lightness of an early atmosphere + +Plant science: Botany at bay + +Climate change: Good vibrations + +Anthropology: Not what they were + +Recycling: A cracking yarn + +Recycling: Technology correspondent’s job + + + + + +Articles Sections Next + +Life and the Earth + +The curious lightness of an early atmosphere + +Two new studies suggest that the young Earth may have been even less like today’s than was previously thought + +May 14th 2016 | From the print edition + + + +“THE past is a foreign country. They do things differently there.” So wrote L.P. Hartley, in “The Go-Between”. He was speaking of human affairs, but replace the word “country” with “planet” and you have a succinct description of Earth almost 3 billion years ago. Viewed from the present it was then, indeed, a foreign planet. Just how foreign has been shown by two geological studies published this week. + +Both hail from Australia, a land rich in ancient rocks. One is the result of painstaking measurements of little balls of quartz, calcite and chlorite found in lava that erupted 2.74 billion years ago, during the Archaean aeon. The other used saws and acid to winkle tiny meteorites out of limestone a mere 20m years younger. Though the questions the teams asked of their rocks seem, at first glance, to have little in common, and neither group was aware of the other’s efforts, by a quirk of scientific synchronicity their findings complement each other, shedding an intriguing new light on the planet that Earth once was. + +Sanjoy Som and his colleagues at the University of Washington, in Seattle, were looking at lava to measure ancient atmospheric pressures. They chose lava as their barometer because it traps gas bubbles as it solidifies, and the size of those bubbles depends on the pressure they experienced. + +At the top of a flow, this is the air pressure. At the base, it is the air pressure plus the weight of the lava above. So bubbles at the bottom—or rather, the mineral infills that have taken their places—are smaller. Measure how much smaller and, if you know the mass of the lava in between, you can calculate the atmospheric pressure experienced by the bubbles at the top. As the team report in Nature Geoscience, this suggests an air pressure no more than half of today’s, and probably only a quarter. + +The limestone investigators at Monash University, in Melbourne, were also looking for spherical inclusions. Their prey, however, were not bubbles but micrometeorites. When Andrew Tomkins started the study, his objective was to calculate the rate at which the ancient Earth was being bombarded by space dust. Soon, though, he became less interested in counting the grains than in analysing their chemistry. As he and his colleagues report in Nature, this showed that the atmosphere which had melted them as they hit it may have been as rich in oxygen as today’s is. And that was completely unexpected. + +Thin pickings + +Viewed separately, these results are both weird. There is no obvious reason why the Archaean atmosphere should have been so much thinner then than it is today. And there is strong geochemical evidence that at this time it was oxygen-free. Put the results together, though, and in one way, at least, they reinforce each other. + +Geochemistry mostly deals with the lower atmosphere. Micrometeorites are influenced by what happens at very high altitudes—75km or above. And it is quite possible to have oxygen at extreme altitude even if there is none lower down; you just have to generate it in situ, rather than have it waft up from below. Ultraviolet light drives a lot of chemistry in the upper atmosphere, and is quite capable of producing oxygen from sulphur dioxide or carbon dioxide. Dr Tomkins and his colleagues plumped for carbon dioxide as the most probable source of the oxygen for which they see evidence, but note that there is a problem: the chemistry of the micrometeorites suggests there was not much carbon monoxide around, while ultraviolet destruction of carbon dioxide would have produced a fair bit of it. + +An alternative source of oxygen is water. Normally you would not expect water in the upper atmosphere; today’s stratosphere is more or less bone dry. But calculations by Raymond Pierrehumbert, a modeller of atmospheres at Oxford University, and his colleague Robin Wordsworth, at Harvard, suggest that the thinner an atmosphere is, the more water vapour leaks into its upper levels. And Dr Som’s results indicate that at this point in history the atmosphere may have been thin indeed. + +That extra water, split by ultraviolet, might thus provide enough oxygen to account for Dr Tomkins’s results—which would also provide independent support for Dr Som’s. This does not, however, explain why the atmosphere was so much thinner than today’s. + +Dr Som’s colleague David Catling lays the responsibility for that at the door of life itself. Life has a deep and abiding interest in nitrogen, the gas that makes up most of the atmosphere. Some bacteria specialise in taking atmospheric nitrogen and turning it into the sort of biological compounds necessary for building proteins and DNA; if they did not, there would be hardly any life on Earth. + +Today almost all the nitrogen thus used is returned to the atmosphere through other biological pathways. But those pathways depend on there being oxygen around, because they need oxidised forms of nitrogen to work with. In the oxygen-free Archaean the mechanisms restoring life’s used nitrogen to the atmosphere are likely to have been a lot less effective. Ammonium ions, a reactive form of nitrogen, could have built up in the oceans, or been absorbed into various minerals; nitrogen-rich organic molecules could have accumulated in sediments. + +This leads Dr Catling to suggest that air pressure on the early Earth might have followed a U-shaped curve. It could have started quite high, with most of the nitrogen in the atmosphere. When bacteria learned how to use that nitrogen the amount in the atmosphere would have dropped, possibly quite steeply, as the element shifted into the oceans and sediments. After the Archaean, when oxygen provided by photosynthesis changed the atmosphere’s chemistry, the nitrogen would have been flushed out of those sumps and returned to the air. How deep, wide and asymmetric that U might be are now subjects for further inquiry. + +No pressure, then + +The idea that changes in life’s nitrogen cycle could alter atmospheric pressure, possibly in step with changes in the oxygen level, is fascinating to those who study the early Earth. But the low pressures in the Archaean that the idea seeks to explain are also a problem for them. + +Studies of stellar evolution suggest that in the solar system’s early days the sun was a lot less bright, and thus less warming, than now. Despite this, Earth was at least reasonably temperate. This implies that the ancient atmosphere must have provided the planet with a considerably stronger greenhouse effect than today’s does. What sort of greenhouse could have been strong enough to deal with this faint-young-sun problem, as it is known, has been a subject for academic debate for decades. Some think that a fairly straightforward mixture of carbon dioxide and methane in the nitrogen could do the trick. Others do not. + +Everybody agrees, though, that a thinner atmosphere of the sort Dr Som describes would make the conundrum harder to explain. Greenhouse gases absorb more heat at higher pressures, so one solution to the faint-young-sun problem has been to suggest that Archaean air pressure, rather than being a quarter of today’s value, might have been twice as high as it is now. Dr Pierrehumbert says it is going to be “very hard to reconcile” low atmospheric pressure with an unfrozen Earth. + +It may of course be that Dr Som’s result is wrong—it relies on but a single example, after all. His group and others will be trying to replicate it using lavas elsewhere. And other techniques can furnish “palaeo-barometers”; indeed, Dr Catling says he is working on one such. But however the details pan out, the idea that air pressure may have changed—and changed a lot—during the early history of the Earth is now firmly in play. The past may be a foreign country, but geologists are painstakingly assembling the dictionary needed to translate what is written there into language the present can understand. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21698640-two-new-studies-suggest-young-earth-may-have-been-even-less-todays/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Plant science + +Botany at bay + +A report on the state of the world’s vegetation gives cause for concern + +May 14th 2016 | From the print edition + +Next time, a triffid? + +WITH a maximum height of 4mm,Ledermanniella lunda is one of the smallest flowering plants known to science. Its existence was reported to the world in 2015 by an expedition run by the Royal Botanic Gardens, Kew, which had found it growing on rocks in a set of rapids on the Luachimo river, in Angola. It may, though, hold another record—for the swiftest passage from discovery to extinction. Satellite images show that the water at the site of its discovery has turned the colour of milky coffee as a result of diamond-mining upstream. Worse, a recently refurbished hydroelectric dam may by now have flooded those rapids. + +Ledermanniella lunda is, or was, tiny and inoffensive. In contrast, another of last year’s discoveries is the stuff of nightmares—a carnivorous plant 1½ metres tall. Drosera magnifica (pictured) is a giant sundew, part of a group that trap insects and other unfortunate small animals on leaves covered with droplets of sweet and sticky goo. It is possibly the first botanical find made via Facebook. Its discoverer, Paulo Gonello of São Paulo University, in Brazil, saw its picture, taken by smartphone, on his news feed. + +Such are some of the titbits revealed in “The State of the World’s Plants 2016”, the first of what it is hoped will be an annual series, put out by the Royal Botanic Gardens. Whether Ledermanniella lunda survives elsewhere than its now-wrecked home on the Luachimo is not known. It might. But either way, its precarious state is far from being an isolated example. According to the report, about a fifth of vascular plants (things botanical that are not algae, mosses or liverworts) are threatened with extinction. + + + +Cataloguing the world’s plants + +To conclude that, you have first to know how many species there actually are. The report’s authors therefore trawled the world’s botanical records, reconciling species names and deleting duplicates. They estimate that science recognises 391,000 vascular plants. Of these, 369,000 are flowering plants. The rest are conifers, cycads, ferns and so on, whose heydays were back in times like the Carboniferous or the Jurassic, before flowering plants began taking over everything during the Cretaceous. + +According to the report, about 31,000 plant species are useful. More than 17,000 are employed medically and 9,000 are food for humans or fodder for animals. The authors suggest particular attention be paid to these, with wild relatives of crops catalogued so that their genetic virtues are known and available to breeders. + +Satellites to record extinctions. Smartphones to record discoveries. It is all a far cry from the time of Kew’s foundation, in 1759. Then, an expedition in search of new species that might make useful crops or militarily important medicines was as likely as not to go off on board one of His Majesty’s warships, in case of interference by the French. Now, botanists can only dream of such political clout. Yet plants, and the photosynthesis that powers them, remain the very staff of human life. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21698643-report-state-worlds-vegetation-gives-cause-concern-botany/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Climate change + +Good vibrations + +A new way to understand the behaviour of ice sheets + +May 14th 2016 | From the print edition + +Through thick and thin + +POUR some water into a partly full bathtub and the level in the tub will rise. Calculating how much it will rise is straightforward, as long as the surface area of what was already there and the amount being added are known. The same should apply to working out how much the sea level will rise as the world’s ice sheets melt in response to rising global temperatures. But in practice it is not that easy. Though geographers know the surface area of the oceans, measuring how the masses of the world’s ice sheets are changing has proved hard. Aurélien Mordret of the Massachusetts Institute of Technology, however, thinks he has found a way to make it simpler. He proposes to do it using the vibrations created by ocean waves. + +At the moment, geographers monitor the mass of ice sheets in two ways. One employs aircraft to fly over such sheets and reflect laser beams from their surfaces, to record their topography. The other uses satellites to track gravitational fluctuations caused by variations in the amount of ice present. Both techniques work, but both have limitations. Laser overflights create high-resolution images but are expensive, so can be done only a few times a year. Satellites pass overhead more often, but generate fuzzier pictures. + +Dr Mordret, however, knew from work conducted by other research groups that vibrations created by waves crashing onto the shore are transmitted inland through the Earth’s crust, sometimes travelling thousands of kilometres from the coast. These vibrations can be picked up by seismometers of the sort used to monitor earthquakes. He also knew that the speed at which the vibrations propagate varies with the amount of pressure being exerted on the crust by mountains or glaciers sitting above. That gave him his idea. + +Propagation speeds vary because many types of rock have small voids within their structure. These lower the velocity of passing vibrations. The greater the proportion of a rock’s volume that is void, the more slowly vibrations will travel through it. If a piece of rock is dry, compressing it will shrink the voids and speed the vibrations up. Water, though, is famously incompressible—more so than most rock-forming minerals. If the voids are filled with water, they will thus resist compression. So, putting pressure on wet rock increases the relative volume of the voids, which slows down any passing vibrations. + +Since an icy overburden will both fill the voids with water and compress the rock, Dr Mordret reasoned that changes in the speed of transmission in rocks under ice sheets will reflect the thickness of the overlying sheet. To test this idea, he and a team of colleagues set up an experiment which made use of existing earthquake sensors at seven monitoring stations in western Greenland, an island almost completely covered by ice sheets. + +Using these devices, they were able to detect the crashing of ocean waves at all seven sites, and monitor the velocity at which the resultant vibrations were travelling throughout 2012, when an enormous amount of snow and ice melted during the warm months, and 2013, when there was not much melt and a lot of snow from the winter remained throughout the year. + +The researchers found, as they had predicted, that the velocity of the vibrations was slowest several months after winter, when the crust was at its most compressed, after which it rose. But it rose differently in the two years in question. Between June and September of 2012 the velocity of the vibrations increased by 0.1%. By contrast, during the same months of 2013 the velocity increased by only 0.05%. To double check that their findings made sense, the team compared them with data collected by monthly satellite scans. The satellites generated much the same picture, albeit at lower resolution. + +Based on these results Dr Mordret and his colleagues argue in this week’s Science Advances that if more sensors are put into place, then Greenland’s ice sheets (and, presumably, those of other places) can be monitored on a daily basis. This will yield a far higher-resolution image of how they are changing and help researchers better predict how much the level of the oceanic bathtub will rise. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21698641-new-way-understand-behaviour-ice-sheets-good-vibrations/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Anthropology + +Not what they were + +Researchers can now watch human evolution unfold + +May 14th 2016 | From the print edition + +STUDYING recent human evolution can be frustrating. Take lactose tolerance—the ability of some people, particularly of European descent, to digest this sugar, found in milk, even into adulthood. In the evolutionary past the gene for lactase, the enzyme that does the digesting, normally got switched off in adults. But one variant (known as an allele) of the gene that does the switching off instead leaves the system running, conferring adult lactose tolerance. That lets this allele’s bearers consume a diet rich in dairy products, a useful trick for a species beginning to domesticate milk-producing animals. Genetic analysis shows that lactose tolerance emerged between 5,000 and 10,000 years ago. In evolutionary terms, it is thus extremely recent. In human terms, though, that timescale means how it spread and how this process intertwined with the rise of dairy farming are lost in the mists of prehistory. + +It would be nice, therefore, to have a technique that could look at human evolution on a scale of centuries, rather than millennia. And on May 7th a team led by Jonathan Pritchard, a biologist at Stanford University, announced they had come up with one. In a paper posted to bioRxiv, they describe it, and also how they have used it to track ways the inhabitants of Britain have altered over the past 2,000 years. + +The team’s technique looks for changes not in alleles themselves, but in the DNA that surrounds those alleles. If a particular allele is more beneficial than other variants of a gene, it will tend, as lactose tolerance did, to spread through the population. As it does so, it will carry with it neighbouring DNA which is not strictly part of the gene and does not affect its function. This DNA can thus mutate without damaging the allele. And it is the amount of mutation this peripheral DNA has undergone which is the giveaway. DNA neighbouring an allele that has recently spread quickly will have had less time to accumulate mutations than that near one which evolution has been ignoring. By looking for evidence of mutations around particular alleles, Dr Pritchard and his team can reconstruct their history. Apply the method to lots of people, and it is possible to discern what evolution has been up to. + +To test their method, the researchers turned to 3,195 genomes taken from the UK10K project, which has collected the genetic data of 10,000 Britons. The largest signal they found did indeed come from the allele for lactose tolerance, suggesting that evolution has continued to press the case for milk digestion well into recorded human history. They also found evidence of strong selection for blond hair and blue eyes. This, they speculate, may be a consequence of the sexual preferences of ancient Britons rather than any environmental influence. + +Lactose tolerance and hair- and eye-colour are traits strongly influenced by small numbers of genes. But Dr Pritchard’s method can also detect “polygenic” selection, in which the accumulated effects of thousands of small variants conspire to produce a big change in a particular trait. One example is height, which is influenced by the combined actions of thousands of different genes. + +Dr Pritchard and his colleagues found that in Britain evolution has, of late, been extremely keen on taller people. Selection for increased height appears to have taken place across nearly the entire human genome. They also found evidence that other ancient evolutionary pressures still operate in comparatively modern populations. Human babies have big heads to contain their outsized brains. Women, in turn, need wide hips to give safe birth to their big-headed offspring. Genetic variations associated with head circumference in infants, and wider hips in women, seem to have become noticeably more common even over the past couple of millennia. + +Dr Pritchard’s technique thus adds evolutionary biology to the armoury of archaeological anthropology. His results confirm that modern Britons are subtly but definitely different from those who tried (unsuccessfully) to fight off the Romans. The effects of two thousand years of evolution, covering a hundred or so generations, are such that if ancient Britons were given all the benefits of a modern diet and modern medicine, they would still end up shorter than their modern counterparts, have narrower hips, and give birth to babies with slightly smaller heads. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21698645-researchers-can-now-watch-human-evolution-unfold-not-what-they-were/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Recycling + +A cracking yarn + +How to put broken eggshells to use + +May 14th 2016 | LEICESTER | From the print edition + +Waste not, want not + +LIKE any other businessman, Pankaj Pancholi abhors waste. In his case it was the mountain of broken eggshells he was paying some £45,000 ($64,000) a year to have carted away to be buried as landfill. Mr Pancholi is the founder of Just Egg, of Leicester, Britain, a firm that hard-boils up to 1.5m eggs a week for sale in supermarkets and for use in such foodstuffs as sandwiches, mayonnaise and Scotch eggs (a British culinary classic consisting of an egg wrapped in sausage meat). Surely, thought Mr Pancholi, the shells could be used for something, thus earning revenue rather than draining it? So, he teamed up with Andy Abbott of the University of Leicester, to hatch a plan to recycle them. + +Pure eggshells consist almost entirely of a tough, crystalline form of calcium carbonate (the chemical of which chalk is composed). Just Eggs’s automated peeling equipment, though, removes not only the shell but also the membrane beneath, which is attached to the shell. The shells can contain broken bits of egg, too. All that makes the leftovers a potentially smelly industrial by-product, which is why they are buried. What Dr Abbott and his colleagues in the university’s chemistry department whisked up was a way to cleanse the shells and grind them into a fine powder that might be added to various plastics as a filler material to make them more hard-wearing. + +What worked in a laboratory, however, had to be scaled up into an industrial process that could cope with the output from Just Egg’s busy production line. For that, Mike McNamara of Delta Engineering, a firm based near Grimsby, put together the necessary equipment to go into a special extension to Mr Pancholi’s factory. The whole caboodle has just been switched on. + +The process begins with the shells travelling along a conveyor belt, to be tipped into tanks where they are mixed with water and attacked by rotating blades. The chopped material is then washed with a solvent to remove leftover protein. (Both the water and the solvent are recycled.) After this, the shells are dried and ground into a fine powder, the consistency of which can be varied according to the type of plastic to be filled. + +Mr Pancholi is now egging Dr Abbott on to ask if flakes of membrane the process generates as waste can be useful, too. These flakes are rich in keratin, which is also the main substance of human skin, so they may have medical applications in, for example, wound dressings. + +Moreover, Dr Abbot and Mr Pancholi are not the only ones enthralled by eggshells. Vijaya Rangari of Tuskegee University, Alabama, told a recent meeting of the American Chemical Society about his use of ultrasound to break eggshells up into particles mere billionths of a metre across. He and his colleagues found that by mixing such particles into polymers, including some derived from cornstarch, they could bolster both the strength and the flexibility of biodegradable plastics, making them more suitable for use as food packaging—including egg cartons. Faced with ever increasing costs for transport and landfill, finding such useful roles for shells makes Mr Pancholi eggstatic. (This is eggcruciating—Ed.) + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21698644-how-put-broken-eggshells-use-cracking-yarn/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Technology correspondent’s job + +May 14th 2016 | From the print edition + +The Economist is looking for a technology correspondent to work at its headquarters in London. Knowledge of the field, an ability to write informatively, succinctly and wittily, and an insatiable curiosity are more important attributes than prior journalistic experience. The successful candidate will understand that the terms “technology” and “information technology” are not identical. An engineering degree, or background in engineering, would be an advantage. Applicants should send a CV, a brief letter introducing themselves, and an article of about 600 words which they think would be suitable for publication, to techjob@economist.com. The closing date for applications is May 27th 2016. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21698642-technology-correspondents-job/print + + + + + +Previous Articles Sections Next + + + +Books and arts + + + + + +China’s Cultural Revolution: In the heat of the sun + +Globalisation: Bridges versus borders + +Britain and Europe: Historians and Brexit + +Nigerian crime and corruption: No fantasy + +Fiction: Gloom with a view + +French television drama: Mishap on the Med + + + + + +Articles Sections Next + +China’s Cultural Revolution + +In the heat of the sun + +How Mao’s call for “disorder under heaven” tore China asunder + +May 14th 2016 | From the print edition + + + +The Cultural Revolution: A People’s History 1962-1976. By Frank Dikötter. Bloomsbury; 382 pages; $32 and £25. + +The Cowshed. By Ji Xianlin. Introduction by Zha Jianying. New York Review of Books; 188 pages; $24.95 and £14.99. + +FIFTY years ago the Great Proletarian Cultural Revolution, as it was officially known, plunged China into Maoist madness. It left well over 1m people dead and wrecked the lives of many millions of others. It was Mao Zedong, then 72, who launched the “red terror”, as young participants proudly called it, partly to purge the party of officials who were sceptical about his radical policies. He feared that such waverers might expose him to the kind of posthumous condemnation that was heaped upon Josef Stalin after the Soviet leader’s death. Another of Mao’s motives was a Utopian one. He appeared to believe that people power, no matter how bloody, could turn China into a socialist paradise. + +The Communist Party does not like to dwell on what happened. In 1981 it issued a formal pronouncement on the late chairman’s rule. It called him a “great” and “outstanding” leader, but said the Cultural Revolution, from 1966 until his death in 1976, had been a “catastrophe”, initiated and led by him. That, the party hoped, would be the end of the discussion. It did not want Chinese people to examine evidence that the Cultural Revolution was not just an aberration of Mao’s—the act of a man sadly misguided by his fanatical wife, Jiang Qing, and other members of the “Gang of Four”—but an event that had his imprint all over it, and one that revealed a profound flaw in Communist rule itself. + +A new history of the period by Frank Dikötter of the University of Hong Kong describes the Cultural Revolution as “an old man settling personal scores at the end of his life”. But, as he notes, there were other forces at work, too: Mao’s colleagues settling scores of their own; citizens taking aim at anyone they disliked; and the support given by different military leaders to various factions, resulting in widespread armed clashes. + +The book is the final volume in a trilogy about the horrors of Mao’s rule. The other two (“Mao’s Great Famine” and “The Tragedy of Liberation”) made illuminating use of numerous local archives in China to which Mr Dikötter had gained unusual access. These archives appear not to have shed as much light on the Cultural Revolution as they did on these earlier events. The book’s strength is more in the telling: the interweaving of insight from local documents with detail from a wide range of published memoirs and histories. + +One work that Mr Dikötter omits from his lengthy bibliography is “The Cowshed”, the story of what happened during the period to an eminent scholar at Peking University, Ji Xianlin. It was published in 1998 in China, a rare exception to the party-imposed reign of silence. An English translation has now been released for the first time. With dozens of other academics, Mr Ji was kept under the thumb of a clique of Red Guards who had been his students and colleagues. For nine months he was shunted into a shanty—nicknamed the cowshed—on the university campus. He was forced to do hard labour, moving and stacking coal, and was given so little food he was always on the brink of collapse. + +In his own introduction, Mr Ji, who died in 2009, says he felt compelled to write about his experiences because so many of the perpetrators of the Cultural Revolution were now pretending to be “upstanding citizens”. Some, he writes, are “waiting for the right opportunity to make a grab for power again”. + +For all his praise of Mao, it is very hard to imagine China’s president, Xi Jinping, launching another Cultural Revolution. China at that time was dirt poor and all but cut off from the rest of the world; Mao did not worry about the global impact, or the economic one, of the “great disorder under heaven” he boasted of having created. Mr Xi appears to fear chaos more than anything else. And few Chinese people, leaders included, would be willing to sacrifice the enormous wealth the country has created since Mao’s death. + +As Mr Dikötter describes, even during the Cultural Revolution there were signs that commitment to it was sometimes only skin deep. As general literacy declined, he notes, “opportunities to read forbidden literature paradoxically increased”. Red Guards quietly pocketed the sensitive works they confiscated; a “thriving black market” in such material sprang up. An illicit, hand-copied, book, “The Heart of a Maiden”, describing a student’s sexual encounters, “may well have been one of the most studied texts after the Chairman’s ‘Little Red Book’,” Mr Dikötter says. + +But it is the pain, not the stolen pleasures, that persists in public memory. In a foreword to the English edition of “The Cowshed”, Zha Jianying, a China-born journalist who went on to live partly in America, says that during the 70th anniversary of the Holocaust last year, her thoughts often turned to China. A friend whose family was battered by the Red Guards told her: “We are the Jews in this country.” The analogy between the Holocaust and the Cultural Revolution is a bit stretched, Ms Zha says. Still, she encourages readers to imagine the impossible: that the Jews of Germany still had to live with Hitler’s portrait hanging in the main square of Berlin, and their tormentors went on unpunished. That, she says, is contemporary China. At least to some, mostly now elderly, Chinese, it is. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21698632-how-maos-call-disorder-under-heaven-tore-china-asunder-heat-sun/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Globalisation + +Bridges versus borders + +How capitalism reshapes geography + +May 14th 2016 | From the print edition + + + +Connectography: Mapping the Future of Global Civilisation. By Parag Khanna. Random House; 466 pages; $30. Weidenfeld & Nicolson; £20. + +THE lines on a map of the world often bear little relation to reality. This can be a frightening realisation: Syria’s boundaries, for instance, do not correspond to how power is really exercised in the Middle East. But there is another, less pernicious, force which can erase national borders: global supply chains. + +Parag Khanna wants to show how connected the world really is. Large chunks of his new book, “Connectography” (an apparent portmanteau of “connective cartography”), describe the infrastructure that knits the world together: container ships twice the length of an aircraft-carrier, motorways traversing entire continents. By some estimates, he says, people will “build more infrastructures in the next 40 years alone than it has in the past 4,000”. Theirs is a “non-state” world, he argues. European companies do research in America, manufacturing in China and back-office work in the Middle East. Factor all this in and as much as 40% of American exports contain imports. Products should carry the label “made everywhere”, he says. + +Dubai is the locus classicus of Mr Khanna’s vision. As much as 90% of its population is foreign-born, more than double the rate in New York. Low taxes, openness to immigrants and good transport connections mean that people from all over the world converge on Dubai to do business. And what is true in Dubai is increasingly true everywhere. “[T]he supply of everything can meet demand for anything; anything or anyone can get nearly anywhere,” he gushes. + +For those who fear that the world is becoming too inward-looking, “Connectography” is a refreshing, optimistic vision. (For people who dislike Dubai, the future will seem somewhat bleaker.) Yet in neither case does it matter. This cartoonish version of globalisation bears little relation to reality. Folk like Mr Khanna can jet around striking deals wherever they please, but most people have no such luck. The millions of refugees fleeing Syria are part of no global supply chain. The author enthuses about a “global expatriate horde”, yet his own data show that the number of migrants as a proportion of the world’s population is hardly higher than it was 50 years ago. One of the many maps included in the book, showing the railways, roads and electricity cables of Africa, implies that moving around and trading on the continent is a breeze. It is not. + +“Connectography” takes little notice of recent developments. Global trade growth has slowed since the financial crisis. Mr Khanna also ignores a trend much discussed by economists: the “reshoring” of certain economic activities to rich countries as fears grow about political instability and as China gets too expensive. The Trans-Pacific Partnership, a potential deal between America and 11 other countries to free up trade, gets a glowing review—yet by failing to discuss the tortuous negotiations over the agreement he tells only half the story. Supply chains do not simply trample over governments. Just ask Russia or Ukraine, where a conflict over borders has prompted them to cut economic ties. + +A bullish, exaggerated thesis is acceptable in a short article, but this book is more than 400 pages long. It is stuffed with sweeping, sometimes bizarre statements (“China wants to be a giant Germany”, or “Try to imagine Ethiopia’s nearly 100m people today without Chinese investment”) and jargon aplenty. Mr Khanna lists over 400 people in a nine-page acknowledgments section, and it feels as though he has included a few ideas from each one. + +Perhaps the most convincing point in the book concerns policy prescriptions. To become part of global supply chains, Mr Khanna argues, it is essential to invest in infrastructure. China, in particular, has built a sprawling network of ports, canals and the like across the world to acquire and transport natural resources. By contrast, rich countries, especially America, now underfund capital goods, in an attempt to reduce public spending. This short-term skimping bodes ill for future growth. A reminder of the importance of infrastructure is helpful, but most of Mr Khanna’s ideas are half-baked. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21698630-how-capitalism-reshapes-geography-bridges-versus-borders/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Britain and Europe + +Historians and Brexit + +For and against Britain leaving Europe + +May 14th 2016 | From the print edition + +Britain’s Europe: A Thousand Years of Conflict and Co-operation. By Brendan Simms. Allen Lane; 352 pages; £20. + +The EU: An Obituary. By John Gillingham. Verso; 281 pages; $19.95 and £12.99. + +NEXT month Britons will vote on whether to leave the European Union. In the debate, some now use history to support their view. This week the British prime minister warned that Brexit posed a threat to peace. David Cameron cited the battles of Blenheim, Trafalgar and Waterloo and even the Spanish Armada as evidence that Britain can never afford to turn its back on Europe. But Michael Gove, the pro-Brexit justice secretary, wants Britain to disentangle itself from the continent. He prefers to rely on “Our Island Story”, a children’s history book from 1905 by Henrietta Elizabeth Marshall that plays up the British Empire. + +In his spirited new book, “Britain’s Europe”, Brendan Simms, a historian at Cambridge University, argues that the whole notion of an island story is wrong. Britain’s history, he says, is above all about continental Europe. This is not just harking back to the Romans and Normans, or the 100 years’ war. Even in the 19th and 20th centuries, Europe mattered above all. Through repeated wars, the British found that the Low Countries were a vital national interest, that security was to be found on the Rhine or even the Elbe—and that the continent must never be allowed to fall under single control. + +Mr Simms makes a powerful case. He quotes Edmund Burke, an 18th-century Anglo-Irish statesman and philosopher, as saying that Britain, far from being an island, was always part of Europe. Even its empire, the world’s biggest, was largely a product of European rivalries. In 1759, a glorious year of British victories from Canada to India, Britain still had more troops in Europe than anywhere else. And British concerns to stop any particular country dominating the continent were at the root of the Napoleonic wars and, a century later, both world wars. + +The question this raises is why Britain then chose in the 1950s to stand aside from the nascent European project. As Mr Simms tells it, the answer lies partly in post-imperial illusions and partly in nervousness over sharing sovereignty. It may also have been because the club was dominated by France, and Charles de Gaulle was bent on keeping out baleful Anglo-Saxon influence. Contrary to claims by Mr Gove and his fellow Brexiteers, such influence has indeed grown further since Britain belatedly joined in 1973. + +Only at the end of Mr Simms’s book does he become less persuasive. He describes Britain as the last European great power on the strange basis that France and Germany cannot be because they are locked in a failing single currency. He goes on to argue that the euro zone must become a full federation reorganised on Anglo-American principles, what he calls a “British Europe” (albeit without Britain). He is right that Britain is unlikely to join the euro, but the odds of a full-blown European federation seem almost equally tiny. + +John Gillingham, a longtime American historian of the EU, is much more of a Eurosceptic. His two villains in “The EU: An Obituary”, both French, are Jean Monnet, the project’s first guiding spirit, and Jacques Delors, who as president of the European Commission from 1985 to 1995 pushed for the single currency. Mr Gillingham homes in on Europe’s economic woes, suggesting they cannot be ended unless the euro is abandoned. Unlike Mr Simms, he concludes that Brexit could be helpful because it would have a cathartic effect, forcing a rethink of the entire EU, which cannot otherwise be reformed. + +His thesis might be more persuasive if his book were not littered with errors: Economic Council for European Council, Caucuses for Caucasus, Fritz Fischler for Franz Fischler. But even without these, it seems too apocalyptic to declare that the EU is dying or even already dead. As both authors say, it is certainly in deep trouble. But the political commitment to keeping both the euro and the EU going remains very strong—and it would surely survive even a vote for Brexit on June 23rd. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21698635-and-against-britain-leaving-europe-historians-and-brexit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nigerian crime and corruption + +No fantasy + +Why it became so ubiquitous + +May 14th 2016 | From the print edition + +A president who knows his people + +This Present Darkness: A History of Nigerian Organised Crime. By Stephen Ellis. Oxford University Press; $29.95. Hurst; 312 pages; £20. + +“FANTASTICALLY corrupt” said David Cameron, Britain’s prime minister, talking about Nigeria with the Queen on May 10th. Their conversation, at a party, two days before an international summit on graft, has sparked a fuss. A spokesman for Nigeria’s president, Muhammadu Buhari, retorted he was “shocked”, though Mr Buhari later agreed with Mr Cameron’s assessment, adding that Nigeria wanted back stolen assets held in British banks. + +Mr Buhari was elected last year to fight corruption. For decades Nigeria has suffered a doubly dubious reputation: recognised as a kleptocracy and notorious for its armies of imaginative criminals, formed into organisations with international reach. The two groups work in tandem: dodgy officials enable the crooks’ shady business; rich criminals often enter politics. In 1995 Colin Powell, a retired American general, said that Nigerians were “scammers” who “tend not to be honest”. + +This state of affairs is ably documented and explained by Stephen Ellis—a British expert on African affairs, who died last year—in an excellent history of Nigerian organised crime, “This Present Darkness”. He sees four main areas where gangsters flourish. The biggest crooks of all are the “oil- management mafia”, who divert at least 10% of oil production for private gain. One estimate, in 2013, suggested that was worth $6.7 billion a year. Others are much higher. The central-bank governor said in 2013 that $1 billion in revenues were lost each month from Nigeria’s state oil company (though since then the oil price has collapsed). Ellis suggests dubious oil trading in Switzerland might enable the diversions. + +Better-known frauds internationally, though smaller business, are “419” advanced-fee scams (named for a code in Nigerian law), that continue to dupe large numbers of victims. Private colleges in Lagos offer courses in credit-card and advanced-fee fraud, says Ellis. Gangs such as the “Yahoo Boys” send e-mails from Nigeria, but Nigerians abroad are most effective. Ellis describes 150 fraudsters (90% of them Nigerian) found in the Netherlands in 2008 after duping victims of over €150m ($171.2m). Extrovert Nigerians excel at this crime, says Ellis (a victim himself), because they are “top class” at creating trust. + +Two other activities both involve smuggling. Southern Igbos dominate trade in hard drugs, proving adept at creating networks of buyers and sellers in the diaspora. Ellis describes “barons” who contract middle-ranking “strikers”, who run small-fry couriers. They proved successful in North America. Meanwhile people from Edo state mostly control trafficking of sex workers, notably to Europe. One diplomat told the author that 30,000 Nigerian women, mostly from Edo, are prostitutes in Italy. Most are bound by large debts, spiritual ceremonies and intense social pressure. + +Ellis’s great contribution is in explaining why Nigerian crime became so ubiquitous. When the oil price fell in the 1980s, educated Nigerians flocked abroad (at least 15m are overseas), forming networks in which crime thrives. Strong student and secret societies bind people together. Importantly, he says, Nigerians show unusual agility in business and have strong social skills. Add a weak, corrupt state and organising crime appears all too easy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21698631-why-it-became-so-ubiquitous-no-fantasy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Fiction + +Gloom with a view + +A biting satire about America’s financial future + +May 14th 2016 | From the print edition + +The Mandibles: A Family, 2029-2047. By Lionel Shriver. Borough Press; 400 pages; £16.99. To be published in America next month by Harper; $27.99. + +LIONEL SHRIVER has built a literary career on fictionalising her fears. She has written about her brother’s obesity (“Big Brother”), her parents’ death and sibling inheritance (“A Perfectly Good Family”), and children (“We Need to Talk About Kevin”, which won the Orange prize for fiction in 2005). Her latest book, “The Mandibles”, is about the financial world and the American economy. “The more we become economically literate, the more frightened we get. I’m writing out of that fear and exploring that fear,” she says. + +Set between 2029 and 2047, the novel follows four generations of the Mandible family as they fend for themselves after the dashing, 97-year-old Douglas Mandible has his fortune wiped out. The dollar’s dominance as a reserve currency is undermined by a new currency, the “bancor”. Linking money to identity, Willing Mandible, the novel’s emergent protagonist, feels that he is “American as an adjective. He was no longer American as a noun.” + +Drawing on Ms Shriver’s interest in the financial crisis of 2008 and global demography (an essay she wrote for Macmillan’s “Encyclopedia of Population” was recently reprinted as the lead article in the Population and Development Review) and the financial crisis of 2008, “The Mandibles” presents a bleak future for America. The GDP of Mexico is bigger than that of its northern neighbour and it arms its border to keep “Ameri-trash” out; the United States forces its citizens to be microchipped to ensure the people pay their taxes. Myanmar, meanwhile, looks to America for cheap labour, and white American women undergo facial surgery to resemble the Asians buying up half of Brooklyn. Ms Shriver has created an alter ego who is also her zaniest heroine: a slim, chilli-flake-eating exercise addict called Enola Mandi, an author who totes around a box of her own literary papers entitled “Foul Matter”. + +“The Mandibles” is not perfect. Too much exposition and fact-heavy dialogue blunts its Orwellian bite. But what remains is a powerful work investigating the fragility of the financial world. Prescient, imaginative and funny, it also asks deep questions. Near the end, Willing Mandible asks: “What do you make of the proposition that the definition of a truly free society is a place where you can still get away with something?” What indeed? + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21698634-biting-satire-about-americas-financial-future-gloom-view/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +French television drama + +Mishap on the Med + +“Marseille” was meant to be France’s answer to “House of Cards”. Oops + +May 14th 2016 | PARIS | From the print edition + + + +BELLY first, Gérard Depardieu (pictured) sways across the small screen, buttoned improbably into a waistcoat and a darkish suit. He is Robert Taro, the fictional mayor of Marseille, an old-school politician at the end of his career, wrestling with a cocaine habit, spiritual decline and a political protégé-turned-adversary named Lucas Barrès (Benoît Magimel). This young challenger’s treacherous decision to oppose the mayor’s legacy project, a regeneration scheme to build a glitzy casino in the city’s marina, sets up their rivalry. “I’m going to grab Marseille from your grasp,” hisses Barrès, “and you’ll end up alone, all alone, with nothing.” + +Heavy expectations greeted “Marseille” when it was launched by Netflix to subscribers on May 5th, with the first two episodes shown on network French television from May 12th. The eight-part series is the American content-streaming company’s first European production, written and performed in French, and its flagship effort to establish itself on the continent. “Marseille” promised not only Mr Depardieu’s first role in a major contemporary TV series, but glossy big-budget cinematography, and an established writer (Dan Franck, a French novelist) and producer (Florent Siri, who directed “Hostage”, a thriller starring Bruce Willis). + +French critics, however, have been savage. In Le Monde, Pierre Sérisier called it “cowshit”, and wrote that “to watch it is to suffer.” Pierre Langlais, a reviewer for Télérama, called “Marseille” an “in-house turkey”. This realisation, he went on, is “at first surprising, then dismaying and finally hilarious, thanks to the poverty of the screenplay, the laziness of the dialogue, the heaviness of the direction, and the weakness of the acting”. + +This is harsh. But “Marseille” is certainly not “House of Cards” à la française. There is just enough to look at to distract from the laboured treatment. The setting, for one thing: a sun-bleached multicultural Mediterranean port which mixes fabulous villas with brutalist tower blocks, and where drugs disrespect the boundaries between the two. It is refreshing, particularly for a foreign-financed production, to move away from the cobblestones and boulevards of Paris to the gritty contradictions of France’s neglected second city. And it is striking to see a French series adopt the multiple story-arc structure common to the best American TV-drama series. + +Yet “Marseille” disappoints. Its quirks feel more like gimmicks. It has neither the characterisation nor pace of the Danish political drama, “Borgen”, and none of the fine texture of HBO’s “The Wire”. Its attempt to capture the gang culture of the city’s peripheral housing projects—the notorious quartiers nord—lacks genuine menace or desolation. Mr Depardieu has his moments, but he cannot sustain the show by himself. + +All of which is a shame, because there were hopes that Netflix’s investment might mark the emergence of quality French television fiction from the long shadow of the big screen. Drama on the small screen in France has struggled to earn the industry’s respect, large budgets or critical approval. This attitude lingers despite the creation of some promising recent TV series, such as “Baron Noir” (a political drama on Canal Plus partly set in the northern city of Dunkirk) and “Le Bureau des Légendes” (a series set in the intelligence services, starring Mathieu Kassovitz), or even the long-established critical success of “Engrenages” (a legal and police drama known in English as “Spiral”). + +For now, the big screen remains the medium of choice for French directors and screenwriters. It is cinema that most often makes well-observed light political drama, such as Bertrand Tavernier’s “Quai d’Orsay” (2013), based on a fictional Dominique de Villepin, when he was foreign minister. And it is film that still finds aching drama in the peripheral housing estates of the city’s banlieues, beginning with the magnificent rage of Mr Kassovitz’s “La Haine” 20 years ago, and continuing with the desolate energy of “Entre les Murs” (2008), say, or the defiant girl power of “Bande de Filles” (2014). “Marseille”, for all its promise, does not look set to alter that equation. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21698633-marseille-was-meant-be-frances-answer-house-cards-oops-mishap-med/print + + + + + +Previous Articles Sections Next + + + +Obituary + + + + + +Obituary: Lucy Kibaki: Cherchez l’autre femme + + + + + +Articles Sections Next + +Obituary: Lucy Kibaki + +Cherchez l’autre femme + +Lucy Kibaki, “Mama Lucy”, Kenya’s First Lady from 2002 to 2013, died on April 26th, aged 82 + +May 14th 2016 | From the print edition + + + +SHE had once been a headmistress, and you could tell. Her lips seemed perpetually pursed in disapproval, and she could chill at a glance. Grown men, from the toughest political operator to the chefs who cooked her husband’s food, quavered in her presence. For when Lucy Kibaki was in a temper, and she often was, there was no telling how things might unfold. The sack, a lash of the tongue, a public snub ostentatiously dealt, a flurry of fists; all were possible, unless you fled out of her way. + +Her most infamous outburst came late one night in 2005, when she and her bodyguards burst into the offices of the Daily Nation, Kenya’s biggest newspaper. She had clearly been stewing all day over press reports of a visit she had made to a police station in an attempt to have her tenant, the World Bank’s representative, arrested for refusing to turn his music down. + +Marching around the newsroom, she confiscated pens and notebooks from bewildered night editors, chased one journalist round his desk and then dealt a hefty slap to the face of a cameraman filming the scene. Summoning the Nairobi police chief, she demanded the arrest of the reporter who had written the offending article. That he worked at a different newspaper bothered her not a jot. She was still scolding just before dawn, five hours later. Her voice rising ever higher, she demanded to know how the press could have had the temerity to write that she had gone to the police station in her shorts. It was disrespectful, and anyway, the First Lady had the right to wear whatever she pleased when out and about; even a bikini. + +Not so female officials at State House, the presidential seat in Nairobi. These were told to wear their hair frumpy and their dresses below the knee. Terrified that her husband Mwai’s eye would wander, Lucy could not tolerate even the most august of female dignitaries if she thought them pretty. The president had to meet Condoleezza Rice, then America’s secretary of state, at an office in the city centre for fear his wife would make a scene. + +The source of all this angst was plain to see. Her bigamist husband’s second wife, Mary Wambui, persecuted her. She was not so much bothered that there were “three of us” in the marriage, polygamy being common enough in Kenya. It was that her rival was so uppity, and so unbecoming too, with her rural accent and obvious lack of education. Rather than being invisible, as became the junior wife, Mary would flaunt her position, tipping off the press when she was going shopping so that she would be filmed with the state bodyguards and cavalcade of limousines the president had given her. The goad worked. The First Lady could browbeat others; rarely did she get the better of Mary, a politician in her own right and more skilled, devious and ambitious than she was. + +If that Other Woman was ever placed on the same footing as herself, she would turn into a hellcat. She flounced out of a New Year’s Eve reception after the doddery old vice-president introduced her as the “second lady” and, when the deputy secretary to the cabinet made a similar gaffe at a garden party, she slapped his face and then had him removed by the police. + +She was a liability to the president, no question. But Mwai always forgave her, for he needed her. After he suffered a car accident and a stroke around the time he took office, she became his gatekeeper, controlling his diary and itinerary and sacking aides who got in her way. With her as chatelaine, State House became stifling and joyless. She shut down the bar where her husband and his powerful coterie of golf-club friends would meet. Her strict Presbyterian upbringing gave her a distaste for alcohol, and the buddies were no help in her battle to keep Mwai sober. Besides, they were much too close to Mary. + +Lucy aligned herself instead with a faction of corrupt chauvinists from the First Family’s dominant Kikuyu tribe. Unwilling to share power, they were determined to scupper the constitutional reforms Mwai had promised; she helped them largely to spite Mary and those who sided with her. The reforms were shelved, laying the ground for the violence after her husband’s disputed re-election in 2007, when more than 1,000 people were killed. + +The people’s friend + +In some ways, though, Lucy was more politically astute than Mwai was. She had the common touch that he, genial but patrician, so patently lacked. He was awful on the stump, and when his ramblings lost the crowd he would turn to her to come to his rescue. On one occasion, fresh from his first presidential victory, he bewilderingly upbraided his constituency supporters as idle drunkards. Taking the microphone, she gently defused the situation, telling her husband that he was wrong: the people before him were hardworking, honest folk. + +This explained why, for all her flaws, many Kenyans adored her. “I am Lucy, and I will never change,” she said. They did not want her to. She empathised with the poor as no elected politician could. She was passionate about women’s rights in a country where few existed: marry late, she would tell female students, have a career first. To public delight she would berate ministers for their failings, especially if ordinary people suffered as a result. In response Kenyans gave “Mama Lucy” exactly what she wanted: unquestioning respect. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21698625-lucy-kibaki-mama-lucy-kenyas-first-lady-2002-2013-died-april-26th-aged-82/print + + + + + +Articles Sections Next + + + +Economic and financial indicators + + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Looking for the exit + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +May 14th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21698663-interactive-indicators/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +May 14th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21698661-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +May 14th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21698665-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +May 14th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21698668-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Looking for the exit + +May 14th 2016 | From the print edition + + + +First Grexit, now Brexit. Google Trends looks at the number of queries for a certain word or phrase as a proportion of the total number of Google searches. Each data point is then indexed to the peak number of such searches over a defined timeframe. Grexit searches peaked last July, when Greece held a referendum to decide whether or not to accept bail-out terms; interest in Brexit rocketed in February after Britain’s prime minister, David Cameron, secured a deal with the EU that paved the way for an in-out referendum next month. The Irish are the most interested in Brexit after the Brits. Of the next eight most-interested countries, six are EU members that have trade surpluses with Britain. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21698660-looking-exit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +May 14th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21698647-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +TE20160514 + +The world this week + + + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + + + +The breakdown of Arab states: The war within + + + + + +An election in the Philippines: The dangers of Duterte Harry + + + + + +Yellow fever: A preventable tragedy + + + + + +Second homes: Stay away + + + + + +Banks and state aid: The rule of flaw + + + + + +Letters + + + + + +On GDP, nuclear energy, Andrew Jackson, women and Islam, young voters: Letters to the editor + + + + + +Briefing + + + + + +The Philippines: Fist of iron + + + + + +United States + + + + + +Death and money: Looking up + + + + + +The Republicans: Learning to love the Don + + + + + +The campaigns: Heard on the trail + + + + + +Scourge, rather than saviour: Scourge, not saviour + + + + + +Zombie campaigns: Greenback from the dead + + + + + +Campus life: Unclubbable + + + + + +The Supreme Court: Slowing down + + + + + +Lexington: Citizen Brandeis + + + + + +The Americas + + + + + +Brazil’s political crisis: An unplanned presidency + + + + + +Bello: Mercosur’s missed boat + + + + + +The Fort McMurray fire: The green and the black + + + + + +Asia + + + + + +India’s water nightmare: Unholy woes + + + + + +Child poverty in Japan: Hidden blight + + + + + +Taiwan readies for a new president: Sizing Tsai up + + + + + +Kim Jong Un thrills North Koreans with hours of brilliance: Sport of Kims + + + + + +Banyan: Despotic in Dhaka + + + + + +China + + + + + +The Cultural Revolution, 50 years on: It was the worst of times + + + + + +Xi Jinping and the Cultural Revolution: Mao, diluted + + + + + +Middle East and Africa + + + + + +The Democratic Republic of Congo: The guide to the promised land? + + + + + +Zimbabwe’s new currency: Who wants to be a trillionaire? + + + + + +Closing the world’s largest refugee camp: Kenya says go home + + + + + +Sierra Leone’s first post-war traffic light: Amber for recovery + + + + + +Fighting Islamic State in Libya: The scramble for Sirte + + + + + +Israeli agriculture: Desert wines + + + + + +Europe + + + + + +Russia and Syria: The withdrawal that wasn’t + + + + + +German football: Red Bull gives you wingers + + + + + +Austrian politics: Waltzing out of the door + + + + + +France’s recovery: Ça va + + + + + +Schools in Finland: Helsinking + + + + + +Charlemagne: Europa all’italiana + + + + + +Britain + + + + + +Energy policy: Power hungry + + + + + +Brexit brief: Security concerns + + + + + +Public transport in London: Going underground + + + + + +Corporate bonds: Not so sterling + + + + + +Predicting election results: Fluttering in + + + + + +Private higher education: Could do better + + + + + +Leisure activities: Dreading water + + + + + +Bagehot: Donald Trump’s nightmare + + + + + +International + + + + + +Infectious diseases: Yellow plague + + + + + +Malaria vaccines: Buzzing + + + + + +Special report: The Arab world + + + + + +The Arab world: The clash within a civilisation + + + + + +Sykes-Picot and its aftermath: Unintended consequences + + + + + +The nature of the state: Mamluks and maliks + + + + + +The economy: Black gold, white gold + + + + + +Religion: The new strife + + + + + +Religious subdivisions: Which Islam? + + + + + +Foreign intervention: From Beirut to Baghdad + + + + + +Israel and Palestine: Israel’s villa in the jungle + + + + + +The future: What is the Arabic for democracy? + + + + + +Business + + + + + +Office communication: The Slack generation + + + + + +Binod Chaudhary: Peak tycoon + + + + + +French weapons-makers: Going great guns + + + + + +Crocodile farming: Snappy dressers + + + + + +Planemakers: The eye of the storm + + + + + +Tobacco firms: Snuffed out + + + + + +Schumpeter: Island story + + + + + +Finance and economics + + + + + +Inequality in China: Up on the farm + + + + + +Buttonwood: A chronic problem + + + + + +Saudi Arabia’s oil policy: Beyond OPEC + + + + + +European banks: Triple whammy + + + + + +Lending Club: Membership revoked + + + + + +Value-added tax in Europe: Freedom fighters + + + + + +Stockmarket regulation in Canada: Not seeing the wood or the trees + + + + + +The appeal of the euro: SELL signals + + + + + +Free exchange: A fare shake + + + + + +Science and technology + + + + + +Life and the Earth: The curious lightness of an early atmosphere + + + + + +Plant science: Botany at bay + + + + + +Climate change: Good vibrations + + + + + +Anthropology: Not what they were + + + + + +Recycling: A cracking yarn + + + + + +Recycling: Technology correspondent’s job + + + + + +Books and arts + + + + + +China’s Cultural Revolution: In the heat of the sun + + + + + +Globalisation: Bridges versus borders + + + + + +Britain and Europe: Historians and Brexit + + + + + +Nigerian crime and corruption: No fantasy + + + + + +Fiction: Gloom with a view + + + + + +French television drama: Mishap on the Med + + + + + +Obituary + + + + + +Obituary: Lucy Kibaki: Cherchez l’autre femme + + + + + +Economic and financial indicators + + + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Looking for the exit + + + + + +Markets + + + + + +Table of Contents + +TE20160514 + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +The breakdown of Arab states: The war within + + + + + +An election in the Philippines: The dangers of Duterte Harry + + + + + +Yellow fever: A preventable tragedy + + + + + +Second homes: Stay away + + + + + +Banks and state aid: The rule of flaw + + + + + +Letters + + + +On GDP, nuclear energy, Andrew Jackson, women and Islam, young voters: Letters to the editor + + + + + +Briefing + + + +The Philippines: Fist of iron + + + + + +United States + + + +Death and money: Looking up + + + + + +The Republicans: Learning to love the Don + + + + + +The campaigns: Heard on the trail + + + + + +Scourge, rather than saviour: Scourge, not saviour + + + + + +Zombie campaigns: Greenback from the dead + + + + + +Campus life: Unclubbable + + + + + +The Supreme Court: Slowing down + + + + + +Lexington: Citizen Brandeis + + + + + +The Americas + + + +Brazil’s political crisis: An unplanned presidency + + + + + +Bello: Mercosur’s missed boat + + + + + +The Fort McMurray fire: The green and the black + + + + + +Asia + + + +India’s water nightmare: Unholy woes + + + + + +Child poverty in Japan: Hidden blight + + + + + +Taiwan readies for a new president: Sizing Tsai up + + + + + +Kim Jong Un thrills North Koreans with hours of brilliance: Sport of Kims + + + + + +Banyan: Despotic in Dhaka + + + + + +China + + + +The Cultural Revolution, 50 years on: It was the worst of times + + + + + +Xi Jinping and the Cultural Revolution: Mao, diluted + + + + + +Middle East and Africa + + + +The Democratic Republic of Congo: The guide to the promised land? + + + + + +Zimbabwe’s new currency: Who wants to be a trillionaire? + + + + + +Closing the world’s largest refugee camp: Kenya says go home + + + + + +Sierra Leone’s first post-war traffic light: Amber for recovery + + + + + +Fighting Islamic State in Libya: The scramble for Sirte + + + + + +Israeli agriculture: Desert wines + + + + + +Europe + + + +Russia and Syria: The withdrawal that wasn’t + + + + + +German football: Red Bull gives you wingers + + + + + +Austrian politics: Waltzing out of the door + + + + + +France’s recovery: Ça va + + + + + +Schools in Finland: Helsinking + + + + + +Charlemagne: Europa all’italiana + + + + + +Britain + + + +Energy policy: Power hungry + + + + + +Brexit brief: Security concerns + + + + + +Public transport in London: Going underground + + + + + +Corporate bonds: Not so sterling + + + + + +Predicting election results: Fluttering in + + + + + +Private higher education: Could do better + + + + + +Leisure activities: Dreading water + + + + + +Bagehot: Donald Trump’s nightmare + + + + + +International + + + +Infectious diseases: Yellow plague + + + + + +Malaria vaccines: Buzzing + + + + + +Special report: The Arab world + + + +The Arab world: The clash within a civilisation + + + + + +Sykes-Picot and its aftermath: Unintended consequences + + + + + +The nature of the state: Mamluks and maliks + + + + + +The economy: Black gold, white gold + + + + + +Religion: The new strife + + + + + +Religious subdivisions: Which Islam? + + + + + +Foreign intervention: From Beirut to Baghdad + + + + + +Israel and Palestine: Israel’s villa in the jungle + + + + + +The future: What is the Arabic for democracy? + + + + + +Business + + + +Office communication: The Slack generation + + + + + +Binod Chaudhary: Peak tycoon + + + + + +French weapons-makers: Going great guns + + + + + +Crocodile farming: Snappy dressers + + + + + +Planemakers: The eye of the storm + + + + + +Tobacco firms: Snuffed out + + + + + +Schumpeter: Island story + + + + + +Finance and economics + + + +Inequality in China: Up on the farm + + + + + +Buttonwood: A chronic problem + + + + + +Saudi Arabia’s oil policy: Beyond OPEC + + + + + +European banks: Triple whammy + + + + + +Lending Club: Membership revoked + + + + + +Value-added tax in Europe: Freedom fighters + + + + + +Stockmarket regulation in Canada: Not seeing the wood or the trees + + + + + +The appeal of the euro: SELL signals + + + + + +Free exchange: A fare shake + + + + + +Science and technology + + + +Life and the Earth: The curious lightness of an early atmosphere + + + + + +Plant science: Botany at bay + + + + + +Climate change: Good vibrations + + + + + +Anthropology: Not what they were + + + + + +Recycling: A cracking yarn + + + + + +Recycling: Technology correspondent’s job + + + + + +Books and arts + + + +China’s Cultural Revolution: In the heat of the sun + + + + + +Globalisation: Bridges versus borders + + + + + +Britain and Europe: Historians and Brexit + + + + + +Nigerian crime and corruption: No fantasy + + + + + +Fiction: Gloom with a view + + + + + +French television drama: Mishap on the Med + + + + + +Obituary + + + +Obituary: Lucy Kibaki: Cherchez l’autre femme + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Looking for the exit + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.05.21.TXT b/homeworks/B20769/homework1/data2/2016.05.21.TXT new file mode 100644 index 0000000..23e40b8 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.05.21.TXT @@ -0,0 +1,3680 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Politics this week + +May 21st 2016 | From the print edition + + + +Brazil’s interim president, Michel Temer, appointed economic reformers to his cabinet after taking over from Dilma Rousseff, who has been suspended while the Senate conducts an impeachment trial. Henrique Meirelles, the new finance minister, proposed a constitutional amendment to give autonomy to the central bank he used to head and nominated Ilan Goldfajn, an economist, to lead it. All the new ministers are white men, making the cabinet the least diverse in many years. + +A60-day state of emergency was declared in Venezuela, giving the army and police wider powers. Police tear-gassed demonstrators calling for a referendum to recall President Nicolás Maduro from office and protesting against widespread shortages. Henrique Capriles, an opposition leader, said the army was faced with a choice of supporting the constitution or the president. See article. + +Mexico’s president, Enrique Peña Nieto, proposed a constitutional amendment to legalise same-sex marriage. + +Danilo Medina, the president of the Dominican Republic, declared himself the victor of the presidential election. His opponent accused Mr Medina’s party of paying people not to vote. + +Not helping relations + +America’s Senate unanimously passed a bill that would allow relatives of those killed in the September 11th 2001 terror attacks to sue Saudi Arabia over any alleged involvement in the plot. The official commission report into the attacks found no evidence of Saudi government involvement “as an institution”. The bill now goes to the House. Barack Obama has said he will veto it, but given the wide support for the legislation Congress may have enough votes to override any veto. + +California lifted its mandatory restrictions on residential water use following a wet winter. Local districts will now set their own rules. + +Pfizer, America’s biggest pharmaceuticals company, objected to the use of its drugs for lethal injections andrestricted their sale to a select group of wholesalers to ensure they are used for patient care and “not for any penal purposes”. Death-penalty states have found it increasingly difficult to find drugs to execute prisoners. See article. + +Power play + + + +Hillary Clinton eked out a narrow win in the Democratic primary in Kentucky, but Bernie Sanders thrashed her in Oregon. Given Mrs Clinton’s huge lead in the race Mr Sanders is under pressure to quit. But he shows no sign of backing down and some of his supporters threaten to disrupt the national convention. See article. + +Afghanistan’s Hazara minority staged a big march in Kabul to protest against a plan to route a new electricity-transmission line away from two provinces with large Hazara populations. The government says homes in the two provinces will be adequately supplied with energy. It is the second such show of strength by the Hazara in the Afghan capital in recent months. + +Scores of people were missing and 350,000 were displaced in central Sri Lanka after heavy rains caused flooding and landslides. Southern India was put on high alert as the rains threatened to move north. + +Safe, but not sound + +One of the 219 schoolgirls abducted and enslaved more than two years ago in Chibok, Nigeria, has been found and returned to her family. The girls were kidnapped by militants from Boko Haram. Apart from those who escaped immediately, no others have been liberated. + +Rwanda expelled 1,500 citizens of neighbouring Burundi as relations between the two countries frayed. Violence in Burundi broke out after its President Pierre Nkurunziza said in April 2015 that he would run for a third term in office. Burundi accuses Rwanda’s government of supporting rebels and has expelled thousands of Rwandans. + +America and other permanent members of the UN Security Council were preparing to allow weapons to be supplied to the internationally recognised government of Libya to fight Islamic State and other extremist groups. + +At least 77 people were killed when four bombs exploded in Baghdad, the capital of Iraq. The bombs targeted mainly Shia neighbourhoods. Two were claimed by IS. + +An Egyptian passenger jet en route from Paris to Cairo went missing over the Mediterranean with 66 people on board. See article. + +Not so funny + +In Germany a court in Hamburg ruled that Jan Böhmermann, a comedian, could not repeat parts of a poem he had recited on television which mocks Recep Tayyip Erdogan, the president of Turkey, calling him a zoophile (among much else). Mr Böhmermann still faces the possibility of being charged under an arcane German law which prohibits insults aimed at heads of state. + +Three senior editors at RBC, an independent media group in Russia, were sacked. RBC covered the allegations from the Panama papers leak. Vladimir Putin’s spokesman claimed that accusations of political pressure leading to the dismissals were “absurd”. + +The European Commission postponed a decision on fining Spain and Portugal for missing their fiscal targets. Spain will have until next year to bring its deficit down; Portugal will have to trim its this year. Unless both countries follow through, resentment towards seemingly profligate southern Europeans from voters in northern Europe will rise. + +A deal was agreed between the British Medical Association, representing junior doctors, and the government, negotiating for the health service in England, in a long-running dispute over new contractual terms. Who has won is unclear. The government claims it has maintained its cost-neutrality aim; the BMA has a contract it feels serves doctors and patients. What is clear is that the new contract is as complicated as the old one. See article. + + + +The tradition of tossing hats in the air after graduation could be under threat in England, as a university said the practice presented an “unacceptable risk” to students and moved to ban it on health-and-safety grounds (it offered to superimpose the hats onto commemorative photos). Disappointed students griped that graduation celebrations will become as flat as their mortarboards. + + + + + +Business this week + +May 21st 2016 | From the print edition + +The wave of consolidation continued in the agricultural seeds and chemicals business as Monsanto, a global group based in America, confirmed that it had received a takeover approach from Bayer, one of Germany’s biggest companies. Last year Monsanto tried unsuccessfully to buy Syngenta; the Swiss firm is now in the process of being bought by ChemChina, a state-owned entity. Bayer’s bid for Monsanto could run into regulatory problems, as could ChemChina’s for Syngenta. + +Berkshire Hathaway, the investment company led by Warren Buffett, disclosed that it had bought a $1 billion stake in Apple. Four years ago Mr Buffett famously said that he avoided investing in technology companies because he wasn’t sure how to value them. However, Berkshire’s decision to take a bite of Apple was not taken by the 85-year-old but by his putative successors at the firm. + +Meanwhile, Apple bought a $1 billion stake in Didi Chuxing, a ride-sharing app and fierce competitor to Uber in China. The investment shores up Apple’s position in China as it comes under increasing pressure from rivals producing low-cost smartphones. Didi’s leading investors are Alibaba and Tencent, China’s foremost internet companies. See article. + +Aye, robots + +Underscoring the growing importance of robotics to industrial manufacturers, Midea, a Chinese maker of household appliances, launched a takeover bid for Kuka, a German pioneer in robotics and automation. Midea says it will buy more than 30% of Kuka’s stock, at which point under German takeover rules it must make an offer for all the shares. + +A month after its proposed merger with Allergan collapsed, Pfizer agreed to buy Anacor, a biotech company, in a $5.2 billion deal. Anacor has developed a new blockbuster treatment for eczema that is awaiting regulatory approval. + +Gannett, the publisher of USA Today and a host of regional newspapers, increased its offer for Tribune Publishing, which counts the Los Angeles Times and Chicago Tribune among its titles, to $864m. + +Volkswagen’s woes over its emissions-cheating scandal mounted when Norway’s sovereign-wealth fund, the world’s largest, said it would join one of the lawsuits being readied in Germany. The fund is the fourth-biggest investor in VW. It lost around $600m in the value of its stake after the scandal broke. + +Volkswagen is not the only carmaker to have come under fire for alleged wrongdoing. South Korea is fining Nissan for falsifying emissions tests, which the Japanese company denies. It recently took a stake in Mitsubishi Motors, which faces its own problems after admitting that it doctored fuel-economy trials in Japan. Mitsubishi’s president stepped down this week. Also in Japan, Suzuki Motors, disclosed that it had not abided by fuel-economy rules. + +Japan’s economy grew by an annualised 1.7% in the first quarter, helped by the extra day in the leap year. It had shrunk in the previous quarter. The government is thought to be considering scrapping a forthcoming sales-tax rise to keep the economy on track. + +Steely determination + +America added further tariffs on Chinese steel imports to the ones it announced in March. The 522% duty applies to cold-rolled flat steel, which is used in the production of cars among other things. As its economy slows domestic demand for steel in China has fallen. But China is accused by America and others of saturating markets with cheap exports to keep its mills going while it restructures the industry, by cutting production by up to 150m tonnes a year, and of unfairly supporting steelmakers with tax rebates. The Chinese government expressed “strong dissatisfaction” with America’s decision. + + + +Oil prices flirted with $50 a barrel for the first time in six months. Prices have now risen by 70% since mid-January, boosted in part recently by attacks by militants on Nigeria’s oil infrastructure, which have reduced the country’s output. But the effects of plunging oil prices over the past two years continued to be felt. Moody’s downgraded its credit rating for Saudi Arabia over concerns about its overreliance on oil revenues. + +Buoyed by bullion + +London’s market in storing gold welcomed a new entrant when ICBC Standard Bank of China acquired a vault in the city from Barclays. The vault, in an undisclosed location, holds up to 2,000 tonnes of gold and other precious metals placed there by investors and governments. The move strengthens China’s role in running the market’s infrastructure. It accounts for a fifth of the world’s demand for gold, but trading in the metal is based mostly in London and New York. + + + + + +KAL's cartoon + +May 21st 2016 | From the print edition + + + +More KAL's cartoons + + + + + +Leaders + + + + +Antibiotics: When the drugs don’t work + +The referendum craze: Let the people fail to decide + +Federal Reserve: The right kind of reform + +The UN: Get the best + +Virginity tests: Hands off + + + + + +Antibiotics + +When the drugs don’t work + +How to combat the dangerous rise of antibiotic resistance + +May 21st 2016 | From the print edition + + + +SOME people describe Darwinian evolution as “only a theory”. Try explaining that to the friends and relatives of the 700,000 people killed each year by drug-resistant infections. Resistance to antimicrobial medicines, such as antibiotics and antimalarials, is caused by the survival of the fittest. Unfortunately, fit microbes mean unfit human beings. Drug-resistance is not only one of the clearest examples of evolution in action, it is also the one with the biggest immediate human cost. And it is getting worse. Stretching today’s trends out to 2050, the 700,000 deaths could reach 10m. + +Cynics might be forgiven for thinking that they have heard this argument before. People have fretted about resistance since antibiotics began being used in large quantities during the late 1940s. Their conclusion that bacterial diseases might again become epidemic as a result has proved false and will remain so. That is because the decline of common 19th-century infections such as tuberculosis and cholera was thanks to better housing, drains and clean water, not penicillin. + +The real danger is more subtle—but grave nonetheless. The fact that improvements in public health like those the Victorians pioneered should eventually drive down tuberculosis rates in India hardly makes up for the loss of 60,000 newborn children every year to drug-resistant infections. Wherever there is endemic infection, there is resistance to its treatment. This is true in the rich world, too. Drug-resistant versions of organisms such as Staphylococcus aureus are increasing the risk of post-operative infection. The day could come when elective surgery is unwise and organ transplants, which stop rejection with immunosuppression, are downright dangerous. Imagine that everyone in the tropics was vulnerable once again to malaria and that every pin prick could lead to a fatal infection. It is old diseases, not new ones, that need to be feared. + +Common failings + +The spread of resistance is an example of the tragedy of the commons; the costs of what is being lost are not seen by the people who are responsible. You keep cattle? Add antibiotics to their feed to enhance growth. The cost in terms of increased resistance is borne by society as a whole. You have a sore throat? Take antibiotics in case it is bacterial. If it is viral, and hence untreatable by drugs, no harm done—except to someone else who later catches a resistant infection. + +The lack of an incentive to do the right thing is hard to correct. In some health-care systems, doctors are rewarded for writing prescriptions. Patients suffer no immediate harm when they neglect to complete drug courses after their symptoms have cleared up, leaving the most drug-resistant bugs alive. Because many people mistakenly believe that human beings, not bacteria, develop resistance, they do not realise that they are doing anything wrong. + +If you cannot easily change behaviour, can you create new drugs instead? Perversely, the market fails here, too. Doctors want to save the best drugs for the hardest cases that are resistant to everything else. It makes no sense to prescribe an expensive patented medicine for the sniffles when something that costs cents will do the job. + +Reserving new drugs for emergencies is sensible public policy. But it keeps sales low, and therefore discourages drug firms from research and development. Artemisinin, a malaria treatment which has replaced earlier therapies to which the parasite became resistant—and which now faces resistance problems itself—was brought to the world not by a Western pharmaceutical company, but by Chinese academics. + +Sugar the pill + +Because antimicrobial resistance has no single solution, it must be fought on many fronts (see article). Start with consumption. The use of antibiotics to accelerate growth in farm animals can be banned by agriculture ministries, as it has in the European Union. All the better if governments jointly agree to enforce such rules widely. In both people and animals, policy should be to vaccinate more so as to stop infections before they start. That should appeal to cash-strapped health systems, because prophylaxis is cheaper than treatment. By the same logic, hospitals and other breeding grounds for resistant bugs should prevent infections by practising better hygiene. Governments should educate the public about how antibiotics work and how they can help halt the spread of resistance. Such policies cannot reverse the tragedy of the commons, but they can make it a lot less tragic. + +Policy can also sharpen the incentives to innovate. In a declaration in January, 85 pharmaceutical and diagnostic companies pledged to act against drug resistance. The small print reveals that the declaration is, in part, a plea for money. But it also recognises the need for “new commercial models” to encourage innovation by decoupling payments from sales. + +That thought is taken up this week in the last of a series of reports commissioned by the British government and the Wellcome Trust, a medical charity. Among the many recommendations from its author, Jim O’Neill, an economist, is the payment of what he calls “market-entry rewards” to firms that shepherd new antibiotics to the point of usability. This would guarantee prizes of $800m-1.3 billion for new drugs, on top of revenues from sales. + +Another of Lord O’Neill’s suggestions is to expand a basic-research fund set up by the British and Chinese governments in order to sponsor the development of cheap diagnostic techniques. If doctors could tell instantaneously whether an infection was viral or bacterial, they would no longer be tempted to administer antibiotics just in case. If they knew which antibiotics would eradicate an infection, they could avoid prescribing a drug that suffers from partial resistance, and thereby limit the further selection of resistant strains. + +Combining policies to accomplish many things at once demands political leadership, but recent global campaigns against HIV/AIDS and malaria show that it is possible. Enough time has been wasted issuing warnings about antibiotic resistance. The moment has come to do something about it. + + + + + +The referendum craze + +Let the people fail to decide + +Putting big political issues directly to the voters is not more democratic, and usually gets worse results + +May 21st 2016 | From the print edition + + + +REFERENDUMS are supposed to get citizens engaged in politics and make governments responsive. If they worked, Europeans ought to be feeling particularly satisfied with their democracies. For referendums are on the rise. Not counting Switzerland, which has always run lots of them, big plebiscites are three times more common in Europe now than they were in the 1970s (see article). Britain is preparing one on withdrawing from the European Union. Dutch campaigners have just won a referendum against the EU-Ukraine association agreement, and plan to take on EU trade treaties with Canada and America. Italians are to vote on changing their constitution, and Hungarians on the EU’s refugee-sharing scheme. + +Despite this direct democracy, Europeans are alienated from politics and furious with their governments. Referendum-mania has not slowed the rise of populist, Eurosceptic parties which attack the establishment as corrupt and out of touch. Plebiscites meant to settle thorny issues instead often aggravate them: after Scotland’s independence referendum failed in 2014, membership of the Scottish National Party quadrupled, suggesting another confrontation is coming. + +Referendums, it turns out, are a tricky instrument. They can bring the alienated back into politics, especially where the issues being voted on are local and clear. On rare occasions they can settle once-in-a-generation national questions, such as whether a country should be part of a larger union. But, much of the time, plebiscites lead to bad politics and bad policy. + +The most problematic are those on propositions that voters do not understand or subjects which are beyond governments’ control. In 2015 Alexis Tsipras, prime minister of Greece, called a referendum on the bail-out offered by his country’s creditors. His citizens—many of whom did not realise that refusal meant default—voted no. Mr Tsipras had to take the deal anyway, exacerbating the public’s cynicism about politics. + +Plebiscites that ask a country’s voters what they think of a policy set by other countries often disappoint. The Dutch rejected the EU-Ukraine agreement, but may be stuck with much of it unless the EU’s other 27 members agree to changes. Switzerland does domestic referendums well, but is in hot water over one that restricts immigration from the EU. That requires changes to its trade deal with the EU; Brussels will not budge. + +Because referendums treat each issue in isolation, they allow voters to ignore the trade-offs inherent in policy choices and can thus render government incoherent. California, which has had referendums for a century, has been crippled by voters’ simultaneous demands for high spending and low taxes. A second danger is that fringe groups or vested interests use referendums to exercise outsize influence, particularly if few signatures are needed to call one and voter turnout is low. + +Votey McVoteface + +These dangers can be mitigated. Requiring minimum turnouts can guard against the tyranny of the few. (Italy’s 50% threshold is about right.) But the bigger point is that plebiscites are a worse form of democracy than representative government. James Madison was right when he wrote that democracies in which citizens voted directly on laws would be torn apart by factions. The founders of democratic states created parliaments for a reason. + +Today’s fashion for plebiscites has similarities to the optimism of the early internet age, when everyone thought that more communication meant better democracy. Social-media echo chambers and armies of trolls hired by repressive governments have cured that illusion. More scepticism is warranted about referendums, too. Fewer would be better. + + + + + +Federal Reserve + +The right kind of reform + +America’s next president should modernise the Federal Reserve system + +May 21st 2016 | From the print edition + + + +PERHAPS it was inevitable in the aftermath of the worst financial crisis in almost a century, but America is boiling over with schemes to remake the Federal Reserve. Some Republicans want the central bank’s monetary-policy decisions to be “audited” by the Government Accountability Office, an arm of Congress. Others wish to use a formula to put monetary policy on autopilot and to haul the chairman in front of Congress every time the Fed steps in. The most extreme sceptics peddle conspiracy theories about how the Fed “debases” the dollar. They propose abolishing the central bank entirely. + +Any of these schemes would be disastrous—either because they would jeopardise the central bank’s independence, or because they would cast monetary policy adrift. + +Fortunately, the likely presidential candidates have no desire to “end the Fed”. Donald Trump says he might replace Janet Yellen, the Fed’s chairman, with a Republican when her term ends. That would be unwise, but hardly revolutionary. Hillary Clinton wants to change the rules about who sits on the boards of the 12 powerful regional banks in the Fed system. + +She is right. The Fed is not broken, but it is anachronistic. The system of regional Feds gives commercial banks influence over their regulators and dishes out public money to their private shareholders. The next president and Congress should give it a thorough overhaul. + +The Federal Reserve system, created in 1913, owes a lot to the efforts of Carter Glass, who gave his name to the more famous Glass-Steagall Act, which separated investment banking from the duller retail kind. Thanks to his efforts, the country has not one monetary authority but a network of regional banks overseen by a board of governors in Washington, DC. + +Glass’s aim when founding the Fed was to avoid giving too much economic power to Washington bureaucrats. The regional banks would be like the states, while the board of governors would be like Congress. To placate bankers who wanted the government to stay out of their business, banks would themselves capitalise each regional Fed and appoint two-thirds of its directors. The directors would, in turn, elect a president who, on a rotating basis, would assume one of five voting seats on the FOMC, the committee that sets interest rates for the whole country. Such sops were necessary in part because, until 1980, membership of the Fed system was voluntary. + +The sops are still being dished out today. The system provides sweetheart deals to banks, most of which earn a risk-free 6% annual dividend on their compulsory investments in the regional Feds. This is more than three times what the government currently pays for capital on the ten-year debt market. Although the dividend was recently cut for the 70 largest banks, roughly 1,900 smaller banks in the Fed system, which also own part of the regional Feds’ stock, continue to benefit. Banks holding shares issued before 1942 receive their dividends tax-free. + +The most important job of a regional Fed is to oversee the banks in its district. As a result, Glass’s system comes perilously close to letting bankers serve as their own regulators—not so much a revolving door between Wall Street and government, as a shared executive suite. The bankers who sit on the boards of regional Feds are not directly responsible for regulation and they no longer vote for a regional Fed’s president, but banks appoint outside directors who do. And bankers can take part in a vote to dismiss a regional-Fed president. + +This is all the more worrying since political gridlock has given the regional Feds growing representation on the FOMC. The system is designed so that the Washington board of governors, which is appointed by the president and confirmed by the Senate, has a majority. But the White House has filled vacancies slowly, in part because of an unco-operative Senate—which in 2010, for instance, decided that Peter Diamond, a Nobel-prize-winning economist, was unqualified for the job. Hence, for most of Barack Obama’s presidency, regional Feds have matched governors in voting power. This matters because banks tend to profit from higher interest rates. Regional-Fed presidents tend to be the most hawkish members of the FOMC, as their dissenting opinions suggest (see chart). + +Amend the Fed + +The next president can put this right by taking Mrs Clinton’s proposal—and then going further. The private sector should be kicked out of the Fed entirely, the reserve banks capitalised with public money and the central bank’s profit kept for taxpayers. The Fed would not want for expertise without bankers on its regional boards: it already hires plenty of ex-bankers and can always consult the firms it regulates. + +Some fear that any reform attempts would provide an opening for all those other barmy ideas. That is not an idle worry. But private-sector involvement in the Fed arms the critics and conspiracy theorists. It reinforces the corrosive notion that self-serving elites write economic policy. In the long run, reform would protect the Fed from undesirable meddling. + + + + + +The UN + +Get the best + +A soggy consensus holds that the next UN boss should be an eastern European woman. Nonsense + +May 21st 2016 | From the print edition + + + +THE UN is often accused of meddling, only to be called upon when disaster strikes—and then blamed for not stepping in sooner. Sometimes the sneering is deserved. The UN is unwieldy, and hamstrung by big-power rivalries and small-power greed. Yet it matters. It is often the only outfit that can get combatants round a table and go into the most dangerous places. That can make the difference between life and death. + +So it matters, too, who is the UN’s secretary-general. The job was described by the first to hold it as the “most impossible…on this earth”. Yet the person in charge can affect the lives of some of the world’s least fortunate, which is why the next incumbent must be the best on offer (see article). + +The idea has taken hold that a woman should get the job, because none has done it before; and that she should be from eastern Europe, because that part of the world has never had the honour. Several eastern European women qualify as candidates. But if one of them succeeds it should be because of her ability, rather than her gender or her home country. + +Whoever is chosen will have to tackle grave problems. The UN is bloated, seemingly unaccountable, dogged by bureaucracy and tangled in institutional rivalries. Its main aims—to make peace, to save the poor through economic development and to promote human rights—should reinforce each other, but are often opposed. Too many subsidiary agencies and programmes overlap and should be closed down. America and other rich countries pay more than they should. Countries that were once poor or supplicant, such as China and India, pay too little. Too many jobs, at the top and bottom, are handed out by regional bargaining rather than merit. Too few people are fired. Sexual abuse by peacekeepers and corruption in procurement have been dealt with too lightly. The secretary-general is, among other things, the “chief administrative officer”. The organisation needs a good kicking. + +But his—or her—biggest challenge is to stop people killing each other. The UN has 16 peacekeeping missions across the world. Often they are devilishly hard, as in Congo, where peacekeeping is undercut by local politics and corruption (see article). The task has grown because the UN’s responsibility to protect civilians, enshrined in 2005 through the good office of the secretary-general of the day, Kofi Annan, means that it can intervene in conflicts within countries as well as those between them. This responsibility was invoked in 2011 over Libya, prompting grumbles, especially from Russia, that the Western sponsors of action there were stretching the mandate. This, in turn, has prevented the UN from agreeing to act more robustly over Syria. + +Miracle-workers please apply + +The outgoing secretary-general, Ban Ki-moon, whose term finishes at the end of this year, is widely regarded as a failure in both administration and governance. In his defence, he has tried to streamline the multiplicity of UN bodies, for instance welding four agencies promoting women’s rights into one. He is credited with overseeing a climate-change deal in December in Paris and a global agreement on development goals a few months earlier. Moreover, no secretary-general can weave magic in places like Syria if the world’s main powers are at loggerheads, as America has been with Russia. But whereas Mr Annan used a mixture of cunning, courage, charm and idealism to bring antagonists together and pick up the pieces after disasters such as Iraq, Mr Ban has been plodding, protocol-conscious and loth to stand up to the big powers. + +Whoever succeeds him will find the job hard enough. A Bulgarian front-runner, Irina Bokova, was a diplomat for the former communist regime; America may object. If she bows out another Bulgarian, Kristalina Georgieva, the EU’s respected budget boss, would be better. + +But it makes sense to spread the net as wide as possible. What about António Guterres, a former UN commissioner for refugees, or Helen Clark, who leads the development programme? Both are successful ex-prime ministers (of Portugal and New Zealand), who have run their UN briefs well: Ms Clark was undiplomatic, and brave, in pruning staff and budgets. Other candidates may appear. Most tantalising is Angela Merkel, Germany’s chancellor—and, as it happens, an eastern European woman—though few think she would exchange her present burden for one in the UN’s New York headquarters. If she did, The Economist would be glad to endorse her. + + + + + +Virginity tests + +Hands off + +So-called virginity tests are nonsensical, degrading and still too common + +May 21st 2016 | From the print edition + + + +WHAT does it take to be a good soldier? Courage? Loyalty? Respect for the Geneva Conventions? Yes, yes, but for the Indonesian army, if a new recruit is a woman, she must also be a virgin. Those who have sex before marriage are immoral, top brass insist, and so cannot be trusted to defend the country. Also, male officers might wish to marry their female comrades-in-arms, so it is essential that they be pure. Hence the “virginity tests” to which new recruits are subjected: doctors check to see if their hymens are intact. + +Until recently, virginity tests were also compulsory for female police officers in Indonesia. Senior officers say they were ended last year, after complaints from groups such as Human Rights Watch. But there are worries that, at least in some parts of the country, they have been rebranded as “reproductive-health tests” (see article). Fear of undergoing such a test is one reason why so few Indonesian women have joined the police; only 3% of the force is female. And that means the police are less good at protecting women, many of whom are reluctant to report rape or domestic violence to a male officer. + +Unscientific, unethical, underreported + +Virginity tests are unscientific—women’s physiologies vary a great deal, whether or not they have ever had sex. More to the point, the tests are degrading and unnecessary. Whether or not a woman is sexually active has no bearing on her ability to aim a rifle or to perform any other job. Yet in many parts of the world virginity testing continues. Sometimes it is demanded by prospective husbands, which is bad enough. Sometimes it is sponsored by governments, which is worse. They do so for three reasons, all bad. + +In some cases, the aim is to intimidate. In Iran, for example, Atena Farghadani, a dissident cartoonist, was accused of “illegitimate sexual relations” because she shook hands with her male lawyer. She was then subjected to a “virginity and pregnancy test”. Egypt’s security forces have carried out virginity tests on women arrested for taking part in anti-government protests. In 2011 a little-known general called Abdel-Fattah al-Sisi said such tests were necessary to ensure that female detainees could not subsequently accuse their jailers of raping them. Mr Sisi is now president of Egypt. + +In other cases virginity tests are administered in the false belief that they provide useful evidence in criminal cases. A study in Afghanistan found that 90% of a sample of female detainees had undergone such tests, some as often as four times. Most had been accused of “moral” crimes such as non-marital sex, but some of non-sexual crimes such as theft. The Indian Supreme Court ruled in 2013 that virginity tests could not be used as evidence in rape cases, but some Indian courts still allow it, on the assumption that a woman who is used to sex is more likely to have consented to the sex act in question. + +A third rationale is to encourage virtue and discourage vice, as defined by (usually male) traditionalists. Even when national governments ban or discourage virginity tests, local bigwigs sometimes carry on regardless. In the Indian state of Madhya Pradesh in 2013, district officials made hundreds of women undergo virginity tests before taking part in a mass wedding, although Indian law forbids this. Each year in South Africa, hundreds of young women have virginity tests before dancing for the Zulu king. And to curb the spread of HIV, a Zulu mayor has offered scholarships for female university students who present certificates of virginity. + +Enough, already. Sex between consenting adults is none of the state’s business. Virginity tests are pointless and traumatic. The time to end this outdated practice is now. + + + + + +Letters + + + + +On Donald Trump, London, diamonds, underdogs: Letters to the editor + + + + + +On Donald Trump, London, diamonds, underdogs + +Letters to the editor + +May 21st 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +A populist choice + +You say that Donald Trump’s idea of making America’s allies pay for the “hegemonic protection” that America gives them is a “Roman vision of foreign policy” (“Trump’s triumph”, May 7th). You then assert that this is a “terrifying world-view” for people “who believe in the gains from globalisation and the American-led liberal order.” + +Could you explain these “gains” to the working men and women of America who believe they have been betrayed by their leaders and forsaken by the 21st-century’s robber barons. “Globalisation” has been used as an excuse to lower the living standards of the working and middle class. Could you then justify why American taxpayers should be subsidising the defence costs of European and Middle Eastern allies. + +Many in America believe, rightly or wrongly, that as crass as he is, as ill-mannered as he can be, and as untutored in the dark arts of the Beltway and international politics as he is, Mr Trump has a point and is their champion. No one, journalist or otherwise, has yet articulated conclusively just how it is that Mr Trump is, in their view, wrong. + +BARRY VAUGHAN + +Los Angeles + +The real problem here is human nature and the susceptibility of voters to demagoguery. Modern culture, education and leadership sometimes fail in their role of protecting us from ourselves, from traits that have evolved to support our survival in primitive conditions but that seriously endanger us in a modern mass society. Such traits include tribalism and a reliance on the wonderful but error prone “System 1” thinking (based on instinct) that Daniel Kahneman describes in “Thinking, Fast and Slow”. + +The results are bizarre. We even find voters whose System 1 “gut feel” is titillated by Mr Trump’s hatred, know his plans are wrong and dangerous, but who will vote for him because they think he doesn’t really mean it. In effect, they support this skilled politician because they think he is lying. This lazy mentality is a destructive decline into deep mediocrity, and no way to make America great. + +PETER LOVELY + +Portland, Oregon + + + +* The Economist laments the pending Republican nomination of Donald Trump and declares him a tragedy for the country. This is a mistaken view. Mr Trump represents the final surge and thrashing of a dying animal (or party), unable to evolve in a rapidly changing environment. The occasional injection of random disruption into a process forces an end to complacency and the creation of more effective and sustainable approaches necessary to continue growing. + + + +As disturbing as it may be to watch, Trump is the most important event in the evolution of democracy in America for some time. In the unfortunate event that he actually becomes president, the test of random disruption passes on to the system of checks and balances built into the political system by our founders, in order to limit the damage that nearsighted, narcissistic, politically and economically incompetent populists can inflict on an understandably frustrated public that temporarily grants him (or her) power over their lives and country. + + + +ROGER BREWER + +Honolulu, Hawaii + + + + + +A boom with a view + + + +Regarding your call for Britain’s capital to build more (“Little London”, April 30th). If you stand on Hampstead Heath at the statutory viewpoint for St Paul’s Cathedral, you can count 125 tall construction cranes on building sites in the city. The statutory view itself has already been seriously marred by the erection of the Shard building behind St Paul’s and the cranes presage the transformation of the historic and famous London skyline into that of Kuala Lumpur or Bangkok. + +But that is not enough for The Economist: what the capital now urgently requires is the destruction of the green belt. Just think how much affordable housing could be crammed onto the 400 acres (160 hectares) of Hampstead Heath after its 7m annual (NIMBY) visitors have been told to clear off. + +A big part of the short-term solution to London’s housing shortage lies in incentivising, or compelling, the use of its vast stock of existing but unoccupied residential property, a policy for which there is popular, but as yet insufficient, political support. In the most densely populated corner of the country, the green belt and open spaces in and around London—many preserved as the result of local campaigns over two centuries—are what give its residents a quality of life that cannot be replicated in other major cities. + +It is only the narrow ideal of economic growth at whatever cost that leads you to your reckless advocacy of the developers’ case. + +MARC HUTCHINSON + +Chair + +The Heath & Hampstead Society + +London + + + + + +Shine bright like a diamond + +* With regards to the history of the Koh-i-Noor diamond (“Rock in a hard place”, April 23rd), the famed diamond was in the possession of Sikh (not Punjabi) ruler, Ranjit Singh, from 1813 until his death in 1839 when it was passed on to his son, Duleep Singh. The diamond was forcibly taken away from the young maharaja (not “signed away”) by the East India Company after the 2nd Anglo-Sikh war in 1849. Hence, it should be returned to the rightful owners, the Sikhs and not the Indian government. The British should also return Ranjit Singh’s golden throne which is on permanent display at the V&A museum to the Sikhs. Having said that, Indian artefacts are well kept and well dispalyed in British museums but they should inform the tourists visiting the Tower of London to whom the Koh-i-noor belonged and how it was taken away by the British rulers. + + + +RAJINDAR SINGH + +Colorado Springs, Colorado + + + + + +Defending the underdog + +Leicester City becoming champions of the English Premier League was a source of celebration and inspiration for almost everyone, except The Economist (“Underdogs are overrated”, May 7th). We are warned not to let this example turn our heads; we should not have confidence in ourselves and not dream the impossible (we’ll only end up being disappointed). The underdog is represented by the likes of Lance Armstrong, Donald Trump and North Korea, but curiously not by Mahatma Gandhi, Nelson Mandela or Aung San Suu Kyi. Our civilisation, you say, rests on certainties such as the understanding of nature through science and the delivery of justice through law, and not on the unexpected. You missed the mark. + +Our civilisation, science and laws have all been forged by people who followed new paths outside received wisdom. The strength of science is its absence of certainty and its progress depends precisely on people who dream the impossible. It is hard to understand why you think we should stick with the status quo and follow the predictable path. Perhaps the unstated purpose concerns the Brexit debate? But no, I mustn’t dream. + +JASPER KIRKBY + +CERN physicist + +Geneva + +You are right that a key factor underlining our prosperity is predictability and an underdog’s success can be seen as undermining that. But surely a more plausible view is that a huge amount of the “expert” prediction with which we are constantly barraged, even when widely shared, is wrong. Think Malthusian famine, the Marxist Utopia, the “end of history”, the exhaustion of the natural resources of the planet, the 2008 crash and (currently) the end of the American century. Any underdog’s triumph is a salutary, and Socratic, reminder of how little our experts really know. + +SIR TONY BRENTON + +Cambridge, Cambridgeshire + +Leicester’s win is a call to action for forecasters from all disciplines to review the inputs and analysis of their models and acknowledge the things they don’t know when making predictions about the future. Maybe Brexit forecasters on both sides of the argument could learn from it as a cautionary tale and be more humble in instead of declaring their rock-solid certainty of the future effect of an In or Out vote. However, I predict that this will not happen. + +RUPERT SPIEGELBERG + +London + +A football match has no value if its outcome is not thrilling. If Arsenal were to win each match not even an oligarch would invest in a sport that would become as dull as a Soviet election. + +ERIK CHRISTIANSEN + +Saint-Mandé, France + +“Making the world more predictable” is a predictably boring task. What is the point of prediction markets if all they forecast is the obvious? Leicester City and Donald Trump show that the world is full of unpredictable surprises, some nice, some not so nice. + +JANET NELSON + +Paris + +You were obviously inspired by a spiteful Arsenal fan. + +GIOVANNI MANFREDI + +Rome + +* Letters appear online only + + + + + +Briefing + + + + +Antibiotic resistance: The grim prospect + + + + + +Antibiotic resistance + +The grim prospect + +The evolution of pathogens is making many medical problems worse. Time to take drug resistance seriously + +May 21st 2016 | From the print edition + + + +FEW, nowadays, would regard gardening as dangerous. But on March 14th 1941 a British policeman called Albert Alexander died of it. Early that year he had been scratched on the face by a rose. The wound became infected by bacteria, probably Staphylococcus aureus with an admixture of various Streptococci, and turned septic. The sepsis spread. First, he lost an eye. Then, he lost his life. + +What made Alexander doubly unlucky was that he was almost cured. The hospital treating him, the Radcliffe Infirmary in Oxford, was a few hundred metres from a university laboratory where Howard Florey and Ernst Chain were brewing up extracts of a mould called Penicillium chrysogenum. Repeated injections of this extract came close to abolishing Alexander’s infection, but the two scientists ran out of their home-brewed drug before the bacteria had all been killed. When the treatment stopped the sepsis roared back. + +Penicillin is now available in copious amounts, as are other bacteria-killing antibiotics. A thorn scratch today seems a minor irritant, not a potential killer. But that may be too sanguine. A study by America’s Centres for Disease Control (CDC) found that the number of cases of sepsis rose from 621,000 to 1,141,00 between 2000 and 2008, with deaths rising from 154,000 to 207,000. One reason for that is the emergence of MRSA (pictured being attacked by a white blood cell)—a variety of Staphylococcus aureus that cannot be killed with methicillin, one of penicillin’s most effective descendants. This could just be a taste of things to come. Three years ago the CDC produced a list of 18 antibiotic-resistant microbes that threaten the health of Americans (see table). Five of them (including MRSA) cause sepsis. + + + +When people hear about antibiotic resistance creating “superbugs”, they tend to think of new diseases and pandemics spreading out of control. The real threat is less flamboyant, but still serious: existing problems getting worse, sometimes dramatically. Infections acquired in hospital are a prime example. They are already a problem, but with more antibiotic resistance they could become a much worse one. Elective surgery, such as hip replacements, now routine, would come to carry what might be seen as unacceptable risk. So might Caesarean sections. The risks of procedures which suppress the immune system, such as organ transplants and cancer chemotherapies, would increase. + +Such worsenings would not be restricted to hospitals. “Multi-drug resistant” and “extensively drug resistant” strains of tuberculosis cause 200,000 deaths a year, mostly in poor countries. Most people who die of tuberculosis at the moment do not die of one of these strains. But they are responsible for more than an eighth of fatal cases, and those cases might otherwise be susceptible to treatment. + +Neisseria gonorrhoeae is another bug that has repeatedly developed resistance to antibiotics. When penicillin was first introduced it worked very well against gonorrhoea. When its effectiveness began to fall, it was replaced by tetracyclines. Those gave way to fluoroquinolones, and those, in turn, to cephalosporins. Now, some strains can be tackled only with a combination of ceftriaxone, a cephalosporin, and azythromicin, an azalide. There is nothing else in the locker. + +If worries about microbial resistance are cast wider to include not just antibiotics (which attack bacteria) but drugs against parasites, like malaria, and viruses, like HIV, the problem multiplies, particularly in poor countries. In the case of malaria, resistance to drugs that kill the parasite responsible has been a problem for decades. Since the turn of the century deployment of a new medicine, artemisinin, has provided some respite. But now parasites resistant to artemisinin are turning up. And the same is true for first-line drug combinations against HIV, which go back to the 1990s. Such resistance can be dealt with by other medicines, kept in reserve for the purpose. But it still makes things worse, complicating treatment. + +This trend is longstanding; Alexander Fleming, who first noticed penicillin’s effects, warned of the dangers of resistance almost as soon as the drug had been shown to be a success. But the fact that these are old worries does not mean that they are not serious ones, nor that they cannot get worse. This week sees the publication of the final recommendations of a review on resistance to antimicrobial drugs led by Jim O’Neill, formerly chief economist at Goldman Sachs, on behalf of the British government and the Wellcome Trust, a medical charity. According to Lord O’Neill and his colleagues 700,000 people die each year from infection by drug-resistant pathogens and parasites. And they say that if things carry on as they are that figure will rise to 10m by 2050, knocking 2-3.5% off global GDP. Already the cost to the American health-care system of dealing with infections resistant to one or more antibiotics is $20 billion a year. + +Evolution in action + +Drug resistance is a simple-to-understand, yet often misunderstood, phenomenon. Antibiotics mostly kill bugs by either blocking the synthesis of new proteins or interfering with the making of cell walls. Any variation in the bacteria’s genome that makes one of these drugs a less effective killer will be of benefit to the bugs that have it, and as a result it will spread through the population. The genetic variation may change the bug’s physiology, for example increasing the production of proteins that flush harmful molecules out of the bacterium. It may cause the production of an enzyme that destroys the drug. Or it may change the shape of the molecule that the drug is aimed at, making it less susceptible to damage. + +Humans are not the first of Earth’s creatures to want to kill bugs. Fungi don’t make penicillin for fun, they do it to protect themselves from certain bacteria. The existence of these natural bug-killers has been a great help to human medicine; many of the 20-odd classes of antibiotic used medically are derived from them. But it also means that today’s bugs are not facing entirely new threats. There are often resistance genes tailored to abiding threats lurking, at a low level, in bacterial populations, waiting for their hour to come. + +When it does, the gene can spread to other bacteria quickly. Bacteria keep some of their genes on little loops of DNA called plastids that can be swapped quite easily; think of them as programs on USB sticks. These plastids allow resistance to pass not just from individual to individual but from species to species. (Genes that make diseases virulent can spread the same way.) + +The genes needed for resistance can thus be quite readily available. But like any biological attribute, resistance is not a free good. Building extra bacterial bilge pumps or special drug-smashing enzymes costs a micro-organism energy and materials; changing the shape of molecules to make them drug-proof is likely to leave them working less well than they did. Simply copying the DNA of the resistance gene imposes a metabolic load. And different antibiotics require different resistance genes; the more a bug needs to use, the greater the costs. So resistance tends to be sustained at a high level only when actively provoked by the presence of the drugs in question. That leads to an important corollary: expose the bacteria to fewer drugs and resistance should abate. + + + +INTERACTIVE: Clinical trial simulator - Run your own trials and play the system in favour of your own drug + +This is where the aforementioned misunderstanding comes in. The public tends to think that it is the person taking the drugs who becomes resistant to their effects, not the microbes. Last year research published by the World Health Organisation showed that three-quarters of people in poor and middle-income countries misunderstood the problem that way. A survey carried out earlier in 2015 by the Wellcome Trust suggested a similar prevalence of misunderstanding in Britain. + +Such ignorance has consequences. If you know that resistance is an attribute of the bacteria, then using drugs rarely but definitively makes sense. Do not use them when not needed; when you do use them, use them in such a way as to kill off all the bacteria, rather than leaving behind a small resistant rump. If you mistakenly think resistance is an attribute of people, on the other hand, you will have no compunction about using antibiotics, provided they seem to have some effect. And you will not think twice about stopping the course when the symptoms subside, rather than carrying it on until all the bacteria are gone. These problems are at their worst in places where antibiotics are easily bought over the counter. + +Lord O’Neill argues that public-awareness campaigns might put things right. But this seems a little optimistic. Even when prescriptions are needed and experts are involved things still go wrong. In America some 40m people are prescribed antibiotics for respiratory problems every year. In 2013 a paper published in the Journal of Antimicrobial Chemotherapy estimated that two-thirds of those people may well not have needed the antibiotics they got. + +Some of this is down to “pester power”: having gone to the doctor, a patient wants something tangible to show for it, even if his sore throat is probably viral and antibiotics will do him no good. Sometimes, though, it is the other way around. If a doctor cannot be sure of the cause, prescribing an antibiotic may help. The real chance of healing a specific person outweighs the imperceptible increase to the threat of bacterial resistance. + +Know your enemy + +This suggests one way to reduce the development of resistance would be to have diagnostic kits that ruled bacterial infection in or out on the spot. Such kits would have to be very quick, cheap and convenient indeed to supplant pre-emptive antibiotics. But if they could also tell to which antibiotics an infection was susceptible they would increase their value. If a doctor were to know for sure whether a dose of gonorrhoea could be dealt with by penicillin—which is the case doe as many as 80% in England and Wales—he would not have to prescribe more expensive antibiotics just in case; good for the purse and good for public health. + +Resistance is not only encouraged and spread in medical settings. In many places, more antibiotics are given to farm animals than to people. In America 70% of those sold end up in beasts and fowl. Some of this is to treat disease; most is not. For reasons only dimly understood, many animals put on weight faster when fed these drugs. A lot of these drugs pass into the soil and watercourses, where they further encourage resistance. The bacteria that become resistant this way are unlikely to be human pathogens. But their resistance genes can quite easily get into bugs that are. + +Some of the antibiotics farmers use are those that doctors hold in reserve for the most difficult cases. Colistin is not much used in people because it can damage their kidneys, but it is a vital last line of defence against Acinetobacter, Pseudomonas aeruginosa, Klebsiella and Enterobacter, two of which are specifically mentioned on the CDC watch list. Last year bacteria with plasmids bearing colistin-resistant genes were discovered, to general horror, in hospital patients in China. Agricultural use of colistin is thought to be the culprit. + +The cost of banning antibiotics as growth enhancers would not be great: an American government study suggests it might reduce the bottom line of those who currently use them by less than 1%. The European Union has already enacted such a ban. Despite practical difficulties—the difference between a growth-enhancing dose and a veterinarially defensible prophylaxis may often be in the eye of the beholder—more should follow. + +Lord O’Neill favours such prohibitions. He also likes the idea of using more vaccination to head off the need for treatment, both in livestock and in people. Hospital hygiene is another focus; there is some evidence that staff are more careless about cleanliness than they were in pre-antibiotic days, when they saw deaths like Albert Alexander’s on a more regular basis. + +All these steps would make existing antibiotics more effective; another approach is to create more such drugs, or their functional equivalents. In the decades after penicillin came to market drug companies fell over each other to develop new antibiotic molecules. Since then, interest has waned. The pipeline of potential new products at various stages of clinical trial is barely 40 strong. Only a fraction of them will reach market; each will represent a big investment (see chart 2). + + + +There are reasons for drug firms not to invest in antibiotics. Such companies increasingly prefer treatments for chronic diseases, not acute ones; the customers stick around longer. And despite the growing problem of resistance, most antibiotics still work for most things most of the time. Given that the incumbents are also cheap, because they are off-patent, new drugs cannot earn back their development costs. Even if they could, it would be poor public policy to let them; much better for new drugs to be used only sparingly, to forestall the development of further resistance. That further puts the kibosh on sales. + +Some of the gap might be plugged by reviving old drugs that have fallen out of use; drugs bugs have not recently seen are drugs they are less likely to be resistant to. Another possibility is to revamp the incentives, rewarding the development of antibiotics destined to sit behind “use only in emergency” glass. The O’Neill report suggests one-off payments of between $800m and $1.3 billion to firms that develop drugs which meet predefined criteria of unmet need, to be paid on top of sales revenue. At this year’s meeting of the World Economic Forum in Davos, 85 companies said that if governments offered them money with such conditions attached they would do everything they could to earn it. + +Whatever happened to the phage way? + +It is possible, though, that the problem goes deeper than incentives. Some think the supply of raw materials for research—molecules capable of being turned into antibiotic medicines—may itself be close to exhaustion. The intensive efforts of the mid-20th century may have more or less emptied nature’s store. + +In the late 1990s established drug companies and biotech startups ransacked then-revolutionary genome sequences from bacteria for targets against which they could screen chemicals by the zillion in the search for new drugs. According to David Payne, a researcher at GlaxoSmithKline who wrote about this gold rush last year, his firm looked at 70 apparently promising targets this way. On the basis of experience in other therapeutic areas the company expected to find almost as many “lead compounds”—molecules that looked worth the effort of taking further—as it had targets. Instead it came away with six. Given the attrition rate for lead compounds in subsequent development the whole undertaking was pretty-much wasted effort. + +Today’s far more powerful genomics might tell a different story, but it seems wise to look at alternative approaches. One possibility would be to use specially formulated antibodies, instead of conventional “small-molecule” drugs. On the plus side this could provide weapons bacteria have never come across before (yeasts and other microbes do not make antibodies). On the minus side, therapeutic antibodies tend to be very expensive. + + + +Another option is to co-opt viruses, known as bacteriophages, that prey on bacteria. Bacteria have defences against phages, just as they have resistance genes against natural antibiotics (indeed, biotech’s hot new genome-editing tool, CRISPR-Cas9, is based on a system bacteria use to slice up the genes of viruses that attack them). Phages have been looked at as therapies for decades; better understanding of bacterial genomes may mean that they can now be used in more cunning ways than was previously possible. + +There are also ecological approaches. Some bits of the body—notably the skin and the gut—are permanently and unproblematically inhabited by bacteria. There is some evidence that manipulating these native populations can make them less welcoming to outsiders. This approach has had early success against Clostridium difficile, the bug at the top of the CDC danger list. And there are also drugs that might be aimed at the patient, not the bug, in an attempt to make his immune response more appropriate and effective. + +These possibilities show that there is no reason for panic. But there is strong reason for action. Florey and Chain were motivated by a crisis: sepsis took a heavy toll among the wounded of the second world war. Today’s steady worsening is no crisis; this war is a subtle one, to be fought on behavioural, regulatory and economic fronts, as well as medical ones. But war it nevertheless is. An appropriate response is called for. + + + + + +United States + + + + +Facebook and politics: Censors and sensibility + +Feuding Democrats: Hillary’s heartbern + +Homegrown jihad: Minnesota martyrs + +The campaigns: Heard on the trail + +Pretend medicine: The quack-up + +Overtime pay: Half or quits + +The bathroom wars: The plughole of history + +Lexington: Building redemption + + + + + +Facebook and politics + +Censors and sensibility + +The social network’s power has made it controversial with conservatives. But its importance to politics will continue to grow + +May 21st 2016 | SAN FRANCISCO | From the print edition + + + +WHY does a company that “allowed voices to be heard in Iran and Egypt…silence the voices of anyone here?”. Glenn Beck, a conservative commentator, asked that question recently in a post (published on Facebook, of course). On May 18th he and a handful of other conservatives met Mark Zuckerberg, the boss of the world’s most popular social network, to discuss reports that Facebook has stopped conservative news being prominently displayed on the platform. Mr Zuckerberg denies bias. John Thune, a Republican senator, has asked Facebook to submit more information about how it ranks topics and posts by May 24th. + +Such disquiet about liberal bias reflects long-running mistrust between conservatives and Democratic-leaning Silicon Valley. It is overblown. The alleged censorship concerns a feature on Facebook’s desktop version called “trending topics”, which relies on curators to help select the news items to highlight in one section of Facebook. It does not apply to the personalised, central “newsfeed”, where users spend most of their time and where content is chosen by algorithms. The social network’s priority is to get people to spend as long as possible on Facebook, which means showing the most relevant content to each user. The more time people spend, the more ads Facebook can sell. It has no interest in alienating conservative users. + +Yet the hullabaloo points to an indisputable fact: Facebook is a juggernaut, with growing political influence. The social network has 1.6 billion monthly users, around 200m of them in America. On average, Americans spend 30% of their mobile-internet time on Facebook’s platforms, which include Instagram and WhatsApp. Around 90% of American adults who use Facebook pass the equivalent of two workdays a month on the social network. Facebook is no longer just a destination for virtual socialising but a media company that can shape public opinion. + +Facebook can transform people’s moods and political behaviour. One study, published in 2014, showed that users’ moods could be influenced by whether the posts they saw on Facebook were joyful or depressing. Another study, published in Nature in 2012, determined that around 340,000 people probably turned up to vote in the congressional elections of 2010 because of a message they saw on Facebook, and were especially likely to do so if a friend shared the call-to-action. + +This week your correspondent spent more time than usual on Facebook, researching and procrastinating, and was targeted with an ad to register for next month’s California primaries. Appeals to vote or donate money to a natural disaster are not uncommon. Mr Zuckerberg, who is 32, is an idealist and talks frequently about connecting people, improving education and changing immigration policy. In public remarks last month he criticised “fearful voices for building walls and distancing people they view as others.” + +Mr Zuckerberg is entitled to his own opinion, but his political views are unlikely to shape the news that the service offers to users. Like Google, which uses an algorithm to rank its results, Facebook has refined algorithms to generate a personalised newsfeed based on what they know about each user, with the goal of keeping them interested for as long as possible. + +Whereas regulations stipulate that television networks cannot discriminate against advertisers (and have to offer the lowest rate to all candidates), no similar rules apply to Facebook or its digital peers. Facebook’s opacity about how it ranks content and posts will continue to enrage those who suspect foul play. Politicians may put pressure on Facebook to reveal more about how its algorithms work. The firm is not required to do so. Users will have to take on faith—as they do with Google—that the company’s business model limits the opportunities for bias. + +Not choosing sides is vastly profitable, and Facebook stands to benefit by selling advertising to everyone. This year candidates in all elections (including local and state elections, not to mention the presidency) will probably spend more than $1 billion on digital advertising (see chart), more than 50 times what they spent in 2008, according to Borrell Associates, which tracks marketing spending. Facebook, along with Google, stands to capture the lion’s share of that. + + + +Although Barack Obama’s victory in 2008 was called the “Facebook election”, it is this year’s race that will prove Facebook’s real power. In 2008 political posts on social media spread virally, and Facebook did not have the ability to sell highly targeted ads. Today it does. Candidates can upload their voter lists and find people they are trying to reach on Facebook, or create groupings of people who are similar to those they want to reach—say, female independents in a swing state who care about education. Ted Cruz’s campaign in Iowa identified 167 different categories of voters it wanted to target, based on their assumed political priorities and, apparently, their personalities. “It allows us to reconnect with an electorate that has become cynical about advertising because it’s become overly generic,” says Chris Wilson, who worked on Mr Cruz’s digital efforts. + +Political advertising on digital channels can be preferable to spending huge sums on television, where there is no way to see if anyone watched the ad and it is harder to target specific groups of people. Facebook has already made a difference in recent elections abroad, including in Canada and Britain. Jim Messina, a leading Democratic strategist who also worked on David Cameron’s re-election campaign, claims that Facebook is “more than seven times more effective at converting undecided voters than direct mail”. + +The shift towards tailored digital ads, which Facebook and Google have led, may be good for campaigns that want to reach specific people. So too may the rise of personalised feeds of information online, which users enjoy. But both trends raise some troubling questions. If the future of political advertising is more direct, highly targeted ads, people who are unlikely to vote may be ignored, because they are not deemed worth paying to reach. “We don’t think it’s weird if a company only targets white people or black people if that’s who their customers are. But if a political campaign does that, it feels creepy,” says Eitan Hersh, a professor at Yale who has written a book called “Hacking the Electorate”. + +Facebook and platforms like it may make it even easier for campaigns to say different things to different voter groups, without anyone noticing. And as more people spend time on networks that feed them only news that confirms their world-view, it furthers the ideological fragmentation America already suffers from. “The paradox of social media”, says Don Baer of Burson-Marsteller, a communications firm, “is that we are able to reach more and more people in ways that appeal to each of them individually, but less able to reach people as citizens of one country.” + + + + + +Feuding Democrats + +Hillary’s heartbern + +Bernie Sanders can’t win but won’t quit + +May 21st 2016 | WASHINGTON, DC | From the print edition + +Sandblasted + +AS VICTORY laps go, Hillary Clinton is having a stinker. The former secretary of state has all but won the Democratic primaries; there is no serious chance that Bernie Sanders can close her sizeable delegate lead before the contest ends in Washington, DC, on June 14th. Yet the Vermont senator’s persistence, demonstrated by his 21st victory, in Oregon on May 17th, is making her look weak and her party divided. + +The alacrity with which Mrs Clinton trumpeted an ignobly small win in Kentucky on the same day was another indicator of that. She had originally been expected to win Kentucky with ease. Yet Mr Sanders’s victories in neighbouring Indiana and West Virginia gave the lie to that. Many Kentuckians took umbrage at her perceived insensitivity to the sufferings of the state’s miners, after she appeared to welcome—as most Democrats do—the demise of America’s coal industry. She duly lost big in Kentucky coal country and won the state by less than 2,000 votes. + +These twin primaries encapsulate the latter stage of the Democratic campaign: bad headlines for Mrs Clinton but, because the Democrats distribute their delegates in proportion to vote share, a tiny net advantage for Mr Sanders, which changes nothing. This dreary cycle, as far as Mrs Clinton is concerned, followed even more damaging events in Nevada on May 14th, when a crowd of Sanders supporters hurled chairs and abuse at Democratic officials whom they accused of fixing the selection of delegates to the Democratic National Convention to her advantage. Invited to condemn his supporters, Mr Sanders denounced the violence but said he agreed the process had been fixed—a response Debbie Wasserman Schultz, a Democratic bigwig, called “anything but acceptable”. + +There is little doubt that Mrs Clinton is being hurt by this protracted rowing. Her victory is apparent; to defeat her, it would not be sufficient for Mr Sanders to win most of the outstanding 781 delegates (which is anyway unlikely; 475 are up for grabs in California on June 7th and Mrs Clinton has a healthy lead there). He would also need to persuade many of the 525 senior Democratic officers, or superdelegates, who have endorsed her to turn coat, which is currently unimaginable. Yet Mrs Clinton has not seen the poll bounce presumptive nominees customarily enjoy—unlike her probable opponent in November, Donald Trump. In late March, she led him by over 11 percentage points in head-to-head polls; she now leads him by five points. + +She would dearly like to concentrate her attention and resources on widening that gap. Instead it is Mr Trump who, having swept his opponents from the field, is free to depict her primary efforts to his advantage. “Crooked Hillary can’t close the deal with Bernie Sanders. Will be another bad day for her!” he tweeted, pretty accurately as it would turn out, on May 17th. Mr Sanders’s claim that the Democrats have fixed their rules in Mrs Clinton’s favour is, in this context, especially damaging. It is just the sort of attack Mr Trump, a fellow outsider who hopes to win over many disgruntled Sandernistas, will use against Mrs Clinton in November. + + + +America's primary agenda: our interactive 2016 election calendar + +If a Democratic victory then were his main concern, Mr Sanders would quit the race. Yet, celebrating his victory in Oregon, he vowed to fight on “until the last ballot is cast.” You can see why he might. A former independent, he joined the Democratic Party only last year and has little love for it. A political nonentity for most of his career, he is also revelling in his success. He has won 40% of the Democratic vote and is harrying Mrs Clinton to the end. He hopes especially to make Mrs Clinton adopt his leftist agenda as, on May 10th, she showed signs of doing: she said she would expand Medicare, which he would make universal, at least a bit. + +To leave an enduring mark on American politics, as opposed to the primaries, however, Mr Sanders might do better to try boosting his opponent’s chances against Mr Trump. That would mean endorsing her fulsomely when he does admit defeat. Yet the longer he continues to fight and castigate her, as a representative of the unfair “status quo”, the harder this will be. + + + + + +Homegrown jihad + +Minnesota martyrs + +The largest trial of would-be jihadis casts some light on their motives + +May 21st 2016 | MINNEAPOLIS | From the print edition + +Aspiring Timberwolves + +“I LOVE you and I am doing this for all of us.” Ifrah Nur cries as she remembers a Facebook message from Abdi Nur, her younger brother, in Syria. He believed that the whole Nur family would go to heaven if he died a martyr as a fighter for Islamic State. Ms Nur says she has not heard from her brother for a year and half, and does not know whether he is dead or alive. + +The testimony of Ms Nur on May 17th, in America’s largest trial of people allegedly recruited by IS, was the most powerful of the statements from FBI agents, work colleagues and family members. Guled Omar (aged 21), Mohamed Farah and Abdirahman Daud (both aged 22), stand accused of conspiracy to commit murder outside America, which carries a maximum sentence of life in prison, and of conspiracy to provide material support to a terrorist organisation, which carries a maximum of 15 years. All three were in touch with Mr Nur, who went to join IS in May 2014. Six other young Somali-Americans have already pleaded guilty to trying to join IS. + +The presiding judge, Michael Davis, launched an unusual experiment before the trial started. He recruited Daniel Koehler, the head of the German Institute on Radicalisation and De-radicalisation Studies (GIRDS), to assess six of the men to find out why they became radicalised and whether they might be open to a change of mind. Mr Koehler has so far met five of the six. “Some of them are very difficult cases, though I would never say impossible,” he says. He is also training a group of Minnesotan probation officers in how to change the minds of would-be jihadis. + +Such an approach is necessary. Intention, rather than action, is often on trial in these cases, and that can be hard to prove. Abdullahi Yusuf, the first participant in a jihadi rehabilitation programme, is part of Judge Davis’s experiment. A day before his friend Mr Nur left the country, he tried to leave for Syria via Turkey but was stopped by FBI agents at the airport. He went back to community college and a job at Best Buy, a retailer, but was arrested in November 2014. In February Mr Yusuf pleaded guilty to intending to fight for IS. While awaiting sentencing he is receiving counselling from Heartland Democracy, a non-profit group. His mentor there is Ahmed Amin, a Somali-American who moved to America when he was 12 and teaches at Roosevelt High School. “Abdullahi is articulate, smart and comes from a stable family,” says Mr Amin, who tries to see him at least every other week. “It’s hard to understand how he could fall for IS.” + +Mr Amin has set his charge a reading list, which includes “Reservation Blues” by Sherman Alexie, a native-american writer whose protagonists struggle with a sense of powerlessness and alienation in a white society, and some works by Michel Foucault, a French post-modernist. There have been some setbacks with Mr Yusuf’s re-education. Judge Davis had allowed him to move to a halfway house, but he had to return to jail after a box cutter was found under his bed. (He says it wasn’t his.) + +When Mr Yusuf took the stand to testify against his former friends, he repeatedly contradicted himself and had to own up to “a history of lying” when it was in his interest. A man in the audience whispered to Mr Yusuf’s mother that her son was a spy. A disturbance ensued, and Judge Davis ordered scores of people to leave the courtroom. “The Somali community is deeply divided about the trial,” says Mr Amin. Many are upset about what they see as government over-reach and harsh treatment of misguided young men. Others are aware that the trial is drawing attention to a problem among young Somali-Americans that they wish would go away. + + + + + +The campaigns + +Heard on the trail + +May 21st 2016 | From the print edition + + + +Unhappy returns + +“It’s none of your business.” + +Donald Trump responds to a question about his tax rate. ABC News + +In sickness and in health + +“His own wife endorsed him”. + +Mr Trump’s spokeswoman says the candidate has at least one woman’s vote. CNN + +Hold your enthusiasm + +“It’s not like ‘none of the above’ is a potential option.” + +Greg Abbott, governor of Texas, on why he’ll support Mr Trump. MSNBC + +Straight up with a twist + +“Either way, I don’t care. Hanging, shooting—I’d prefer [President Obama] be hung from the portico of the White House, or as I call it, the white mosque.” + +Anthony Senecal, Mr Trump’s former butler. The Trump campaign quickly disowned him. CNN + +Miller lite + +“It was not me on the phone. And it doesn’t sound like me on the phone, I will tell you that, and it was not me on the phone. And when was this? Twenty-five years ago?” + +The Washington Post discovered a tape from 1991 that suggests Mr Trump posed as his own spokesman, John Miller. NBC + +Bikram Donald + +“No, I am not softening my stance…but I am always flexible on issues. I am totally flexible on very, very many issues.” + +Mr Trump is flexible. NBC News + +Pick me, pick me (1) + +“We’re pretty busy, but we could certainly be lured into a new path.” + +Newt Gingrich continues his campaign to be Mr Trump’s running-mate. Fox News + +Pick me, pick me (2) + +“It’d be Trump’s best life insurance. The Zio NeoCon Mossad boys would not dare touch him if I was heartbeat from presidency.” + +David Duke, former Grand Wizard of the Ku Klux Klan, offers himself. Twitter + +Makers and takers + +“I don’t think they sent a gift. Some people didn’t send gifts.” + +Melania Trump rates the Clintons, who attended her wedding to the Republican nominee, as guests. DuJour + +TransAm-bition + +“I think I would have been the best president, but it was the right thing not just for my family but for me.” + +Vice-president Joe Biden, who ruled himself out in October, showing some Trumpian modesty. ABC News + + + + + +Pretend medicine + +The quack-up + +The appeal of unproven alternative treatments is undimmed + +May 21st 2016 | From the print edition + + + +WHEN Jim Laidler and his wife Louise, both doctors in Oregon, were informed that their two sons were on the autism spectrum, they were devastated. Conventional medicine offered no cure for the developmental disorder; intensive behavioural treatments might help, but they might not. Then the Laidlers heard about alternative therapies including chelation, a treatment in which patients ingest or are injected with chemicals that remove heavy metals from their bodies. The Food and Drug Administration had approved the technique for lead and mercury poisoning, but some doctors suggested it could cure autism. Mr Laidler was sceptical of some of the claims made by chelation champions, but he also knew science was fluid. Some treatments now accepted as standard once would have seemed outlandish. Besides, looking to alternative therapies allowed the Laidlers to feel something conventional medicine did not offer: hope. + +Mr Laidler, who has since disavowed alternative autism interventions including chelation and special diets, recalls the physical and financial strain of shuttling back and forth from treatments and travelling with suitcases full of special foods. When Mrs Laidler secretly took one of their sons off his supplement regimen and found no change in behaviour, he had an epiphany: what he had perceived as improvements due to treatment were really just natural fluctuations. + +Alternative treatments have long seduced Americans. In the decades leading up to 1950, thousands submitted themselves to the high-voltage shocks of “violet-ray generators”. Essentially a suitcase kitted out with an electrical control box and coils, the machine was hawked as a panacea for ailments from heart disease to paralysis. Others relied on Micro-Dynameter machines, which claimed to identify disease by measuring the electrical currents coursing through the human body. It was later revealed that they could not differentiate between a live person and a cadaver. These devices, as well as foot-powered breast-enlargement pumps, metal pods promising rejuvenation, and the Relaxacisor, a machine that promised to slim and tone women’s bodies through electrical shocks while they lay idle, are displayed in a wing at the Science Museum of Minnesota dedicated to quackery. + +Today alternative medicine is just as popular. A study by the Centres for Disease Control and Prevention in 2012 established that one-third of adults use some sort of alternative treatment, mostly in addition to conventional medicine. The annual bill for such “complementary” interventions is about $34 billion. Despite the fact that the great majority of alternative treatments are either unproven or known to be rubbish, the discipline has also become more intertwined with conventional medicine. A recent study showed that 42% of American hospitals provided some sort of alternative therapies, up from 27% in 2005. Georgetown University offers masters degrees in complementary medicine, and the University of Arizona trains its medical students in the practice. + +The government is also more involved than it once was. In the 1990s, inspired by a senator who believed bee pollen had cured his hay fever, Congress created a new branch within the National Institutes of Health to study unconventional health practices. It was called the National Centre for Complementary and Integrative Health, and in the decade to 2015 it received over $1.2 billion to investigate such questions as the health benefits of saunas and whether acupuncture works to alleviate pain related to fibromyalgia. Supporters of the centre say such trials will help sort out the effective treatments from the phoney ones. “We are looking at what the public is using—natural remedies and alternative pain treatments—and subjecting those to the scientific method to figure out what works and what doesn’t work,” says Dr David Shurtleff, the centre’s deputy director. + +Stephen Barrett, a retired psychiatrist and director of quackwatch.com, believes the centre should be abolished. Chelation is the branch of quackery that most alarms him at the moment. He adds that the growth of misleading medical titles is also of concern. The Pastoral Medical Association in Texas licenses practitioners to provide “Bible-based” health services in 50 states and 30 countries. The requirements to obtain such accreditation are accommodating; many of the people listed in the association’s directory have no medical training and offer practices such as hair-mineral analysis and “raindrop therapy”, where patients are massaged with various oils meant to bring about “balance and electrical alignment”. + +Sick people often seek help when they feel most ill. Like Mr Laidler, they may mistake the natural cycle of a condition for improvement caused by treatment. And while the web makes it easy for a layman researching crystal therapy (where a “healer” places small crystals at various points on patients’ bodies) to determine quickly that such a treatment has never been proved effective, it has also encouraged quacks. So long as they include disclaimers, anyone can slap up free websites offering treatments to help with baldness and pudginess, the flu and cancer. At best, people will waste money chasing such promises. At worst, they could get hurt. + + + + + +Overtime pay + +Half or quits + +May 21st 2016 | From the print edition + + + +Currently, employees earning over $23,660 are not eligible for overtime pay, a mandatory 50% wage bump for work in excess of 40 hours per week. Inflation has put most over this level: in 1975 62% of full-time salaried workers were eligible; today just 7% are. From December, the White House has announced, the threshold will rise to $47,476. That will probably boost the earnings of existing employees slightly, though firms are likely to cut wages for new recruits to keep costs down. They may also be discouraged from allocating workers more than 40 hours. That will hurt some. A slightly higher federal minimum wage would be a less risky route to higher pay. But changes to overtime rules, unlike the minimum wage, do not require the consent of Congress. + + + + + +The bathroom wars + +The plughole of history + +How access to public restrooms became a central issue in American politics + +May 21st 2016 | ATLANTA | From the print edition + +Wee the people + +OXFORD, Alabama, may be less prestigious than its namesakes in neighbouring Mississippi or in England, but it recently achieved a national distinction, albeit an ambiguous and fleeting one. At a meeting last month its councillors voted for a new ordinance, unprecedented among municipalities, imposing fines or jail time on anyone using a restroom that did not correspond with the sex indicated on their birth certificate. The measure was framed as a response to an announcement by Target, the retailer, that customers in its stores may use restrooms according with their self-perceived gender identity. A week later, amid threats of boycotts and litigation, the councillors rescinded it. + +If the city’s citizens are baffled by this farrago, they are not alone. Possibly not since Elvis Presley died in one have America’s bathrooms loomed so large, as rows over access to them erupt in statehouses and school districts across the South and beyond. As in Oxford, they typically involve political grandstanding, corporate disapproval, transgender activism and legal blowback; the fiercest surrounds a new North Carolinian law containing a public-sector bathroom rule, now the subject of tit-for-tat litigation by the state and the federal Justice Department. Amid these controversies, many conservatives agree with Ted Cruz that America has “gone off the deep end” (a petition urging a boycott of Target has drawn 1.25m signatures); a phalanx of liberals backs transgender rights; but, judging by the erratic opinion polls, lots of Americans are simply mystified. + +That is not surprising. If gay rights have advanced quickly, the transgender movement—which cohered into an organised campaign only at the turn of the century—has made warp-speed progress. It is only a few years since mainstream psychiatry classified gender dysphoria as a “disorder”; now the Pentagon wonders whether to pay for surgery for transgender troops. And despite the appearance of Caitlyn Jenner, formerly the Olympian Bruce, on the cover of Vanity Fair, only a minority of Americans, if a growing one, say they know a transgender individual: 35% of likely voters, according to a recent survey by the Human Rights Campaign (HRC), a lobby group (which seems high). That reflects their small numbers: the best estimate is of 700,000 transgender adults. “People are still getting to know us,” says Jay Brown of the HRC. One such is Dennis Daugaard, South Dakota’s governor, who reportedly had never met a transgender person when a bathroom bill landed on his desk earlier this year. He talked to some and vetoed it. + +The newfangled vocabulary and shifting pronouns of transgenderism, plus its sexual, sartorial and medical nuances, can be alienating—quite apart from the unsettling question of toilet-usage. That issue matters to transgender people as it does to everyone else: it is hard to go to work if you have nowhere to take a leak. Bathroom access has been a particular flashpoint in schools, where transgender teenagers are liable to bullying and mental-health problems. In guidelines issued on May 13th, Barack Obama’s administration reiterated its view that pupils may use bathrooms according to their self-identified gender. That is one manifestation of its insistence that gender identity is protected under the sex-discrimination provisos in civil-rights law. (Mr Obama, says Mara Keisling of the National Centre for Transgender Equality, is “by far the best president on trans issues—and no one’s in second place.”) + +Still, bathrooms are hardly the most pressing concern for transgender activists. Hate crimes, the treatment of transgender prisoners, health-insurance coverage and the difficulty, in some states, of tweaking driving licences and birth certificates, are more urgent. Bathrooms have ascended to prominence less because of their importance to the trans lobby than because of their value to its opponents. For them, the putative infiltration of bathrooms by perverts and predators—the rationale for measure’s like Oxford’s—is a nicely combustible emblem for wider social upheavals. The restroom door is their way back into a broader fight that, especially after the Supreme Court’s ruling on gay marriage, they had seemed fated to lose. + +Consider North Carolina’s law. Its defenders protest that it has been misunderstood, and they are right: it is much more sweeping than is commonly recognised. It mandates a statewide discrimination policy that omits sexuality as a criterion, squashing a more liberal ordinance passed in Charlotte. (With the Obama administration and some big companies, liberal cities are among the gay and transgender movements’ key allies.) The law also makes it impossible to sue for discrimination in state courts; by the by, it prevents cities instituting their own minimum wages. + +Of spigots and pivots + +Yet the aspect its supporters stress is the bit about bathrooms, with all their ickiness and primal sensitivity. The same distracting emphasis was deployed by conservatives in Houston to vote down a new anti-discrimination policy last year. As campaigners often point out, this approach has form: scaremongering about bathroom safety was a tactic in resistance to racial desegregation. Loretta Lynch, the attorney-general, drew an analogy between the two cases in a recent statement that elated trans advocates: “We stand with you,” she assured them; “history is on your side.” + +Never mind that many transgender people use bathrooms of their choice already; that stopping them from doing so is impractical; or that voyeurism and molestation, the spectres raised by traditionalists, are anyway illegal. Or, indeed, that transgender restroom-goers are far more likely to suffer assault than to perpetrate it: these stringent rules may be a solution in search of a problem, but, for their proponents, they offer a lurid pretext to push back against change, and maybe win a few votes. In this way, says Jody Herman of UCLA, trans people are “getting caught in the crossfire” of the gay-marriage decision. + +Perhaps, then, America’s suddenly fraught bathrooms should be seen as an improbable pivot in its history: the site of a skirmish between a rapidly rising new orthodoxy and its resilient predecessor, which may seem as preposterous in the future as it would have done in the past. In this battle transgender activists are avatars for reform as well as its champions; combatants in America’s culture wars, but also their victims. + + + + + +Lexington + +Building redemption + +A new museum on the National Mall does justice to black history + +May 21st 2016 | From the print edition + + + +THE skyline of Washington, DC, has never seen the like of the National Museum of African American History and Culture, which will be opened in September by Barack Obama. The museum marches upwards in three sharp-angled tiers that, its architects say, pay homage to wood carvings found across west Africa at the time of the Atlantic slave trade. Its outer skin of dark, bronze-coloured, cast-aluminium panels is at once handsome and a shock on a National Mall dominated by monuments in cool, white marble. + +Further surprises lurk below. Most of the 400,000-square-foot museum—the founding of which was first proposed more than 100 years ago by black veterans of the civil war—lies underground. Visits begin with a ride down into the earth, emerging into a large history gallery. With its towering walls of rough, clay-coloured cement, the gallery offers an unexpected sensation of standing at the bottom of a freshly dug trench. + +On a recent preview tour led by the museum’s curators and architects, the underground hall looked both impressive and a bit eerie. Its largest artefacts include a rare wooden slave-cabin from the early 1800s, a segregation-era railway carriage, a watch-tower from an infamous Louisiana prison and a gleaming blue-and-yellow biplane, used to train pioneering black pilots for army service during the second world war. The underground hall feels a bit like an archaeological dig—a place of precious treasures, painstakingly unearthed. But the same space also feels something like a reopened grave, dug out to exhume evidence of old crimes. That uneasy mix of atmospheres is to the museum’s credit: black American history should provoke both pride and horror. + +The museum, which is part of the Smithsonian Institution, works hard to convey the everyday viciousness of slavery for its victims. This is not easy: few slave possessions survive today. But staff have scoured archives to find black voices, testifying to the resilience of slaves, their religious beliefs, friendships, family ties and aspirations—even if that aspiration, as one curator notes, may have been just to be able to read. One long wall of the history gallery has been turned into a giant timeline, marked with the dates of legal landmarks and major events. + +The slave cabin of weathered timber, crated up and transported from Edisto Island, South Carolina, stands at the wall’s midpoint, near the date of the Emancipation Proclamation. From the cabin’s front door can be seen dates going back to colonial times—fittingly, for settlers brought the first Africans to tiny Edisto Island in the 17th century. From the cabin’s back door can be seen the dates of the nearly century-long era of segregation, stretching away from the end of the civil war to the time of civil-rights struggles in the 1960s. Objects on display, some of them gathered from public roadshows around the country, will include a shawl belonging to Harriet Tubman, the abolitionist and organiser of dozens of slave escapes. The terrors of nameless victims will be captured too, through such objects as an amulet in the shape of miniature shackles from what is now Guinea-Bissau, intended to protect the wearer from being enslaved. + +Ramps lead upwards to galleries recording the black American experience of everything from the armed forces to sports, business, education and music (Chuck Berry has donated a red beast of a Cadillac that carried him onstage at a 1986 concert). As visitors climb they move forward in time. They will also move farther away from the easy political consensus that surrounds the deepest galleries, with their tales of enslavement and violently enforced segregation. Visitors of all sorts can shudder, as one, at slave shackles small enough to fit a young child’s wrists, and wince at the glass-topped coffin that once held Emmett Till, the 14-year-old whose lynching in Mississippi in 1955 (allegedly for whistling at a white woman) was one of the sparks that inflamed the civil-rights movement. + +That consensus is likely to break down once visitors reach displays recalling how some Black Power activists denounced the Vietnam war as “Western imperialism”, or accused mainstream civil-rights leaders of selling out. Opinion will divide further at seeing Mr Obama’s election to the presidency recorded in a gallery called: “A Changing America—1968 and beyond”. There will be mention of the Black Lives Matter movement, with its claims of endemic police racism. + +The fire next time + +The museum aims to start conversations about race but not to “bludgeon” visitors, says a curator. The risks are obvious in a country in which opinions often divide along starkly racial lines. Yet there are reasons to hope. Arguably the largest obstacle to constructive conversation involves not intolerance, but a more subtle barrier: impatience at having to discuss race at all. The 2015 edition of the American Values Survey, a large poll, found that about six in ten white Americans say the country has already made the changes needed to give blacks equal rights with whites. Only 12% of blacks agree. + +Though the museum’s final displays have yet to be installed, one message already stands out from a preview tour: that America is not done with the slow, difficult work of racial equality, and history helps explain why. That is not the same as calling America an irredeemably racist place. Instead, the premise of the project is that “the country is not finished”, says David Adjaye, a Ghanaian-British architect and the museum’s lead designer. Other countries may be capable of building a museum about racial history, Mr Adjaye suggests. But, he adds, “I don’t know of any other country that is capable of looking so clearly down into itself”—let alone building that museum in the ceremonial heart of its capital. The project is only partially about the past, in other words. It is also a bet on future self-improvement. In that, the latest arrival on the National Mall could hardly be more all-American. + + + + + +The Americas + + + + +Crime in El Salvador: The gangs that cost 16% of GDP + +Venezuela: Trouble on the streets + +Bello: Lessons of the fall + + + + + +Crime in El Salvador + +The gangs that cost 16% of GDP + +The country’s gangs specialise in extortion. But they may be branching out + +May 21st 2016 | SAN SALVADOR | From the print edition + + + +ON THE 15th day of each month a bus driver in San Salvador tucks a small package wrapped in a black plastic bag under his seat and sets out on his route. At a predetermined spot between the hillside slum where the route begins and the bustling urban street where it ends, two teenaged boys in baggy clothes board the bus, retrieve the package and hop off. They will deliver the bag—which contains $550 in cash—to the Mara Salvatrucha, one of El Salvador’s main gangs. Similar exchanges take place on most bus routes throughout the country. + +Such extortion is an unavoidable feature of life in El Salvador. A vast, meticulously organised network touches every business, from kerbside tortilla-sellers to multinationals. Large stretches of country, including the centre of the capital city, are controlled by the Mara Salvatrucha gang and two factions of Barrio 18 (see map). Salvadorean authorities estimate that 60,000-70,000 people belong to gangs and that half a million more—relatives, business partners, corrupt politicians and police—are financially dependent on them. + + + +Salvadoreans pay $756m a year, about 3% of GDP, to gangs, according to a study by the country’s central bank and the UN Development Programme. El Salvador’s shockingly high murder rate is largely due to wars between them for control of territory (see chart). The study estimates that the total cost of violence, including the amount households spend on extra security and the lost income of people deterred from working, is nearly 16% of GDP, the highest level in Central America. + +El Salvador’s gangs have neither the wealth nor the political clout of Mexico’s drug-traffickers (nor of their Colombian peers in the late 1980s). But many people fear that their influence will grow. Gangs may now be using the money harvested from extortion to build up capital, warns Alex Segovia, an economist and onetime adviser to Mauricio Funes, El Salvador’s president from 2009 to 2014. If so, they are likely to become more entrenched, to infiltrate legitimate businesses and to wield more power over various levels of government and the police. + + + +Today’s gangland has its origins in Los Angeles, where the Mara Salvatrucha and Barrio 18 formed and from which they were deported by Bill Clinton’s administration in the 1990s. Their early Salvadorean scams were modest. La cora involved shaking down merchants for a quarter-dollar at a time. Francisco Flores, El Salvador’s president in the early 2000s, responded with a “mano dura” (iron fist), locking up thousands of gangsters, separately by gang, which increased the prison population by half. + +Prisons became “24/7 gang meetings”, one gangster told José Miguel Cruz, a political scientist. The gangs’ leaders began co-ordinating their activities nationwide, plotting revenge against their captors and vying with one another for dominance. Viejo Lin, a leader of Barrio 18, issued an order to “go to war”. Its rivals responded. “We needed money to buy guns to protect ourselves from the police and from los números [Barrio 18],” said a member of Mara Salvatrucha, who was imprisoned under mano dura. + +Extortion, which requires nothing more than muscle and a mobile phone, was the obvious way to make money. “Colombia has drugs, but the only resource El Salvador can exploit is its people,” says Mr Cruz. The 12-year war between El Salvador’s right-wing government and leftist guerrillas, which ended in 1992, had left ex-combatants without work, assault weapons without proper oversight and tens of thousands of Salvadoreans accustomed to taking orders from guerrillas or local security forces. The emerging extortion networks did not lack manpower. + +With buses, the involuntary partnership begins when a “neighbourhood kid approaches you with a ringing mobile phone”, says the route’s “negotiator”. On the line is a gang leader, calling from jail to discuss la renta. At first, the negotiator simply paid the Mara Salvatrucha, the gang that controls most of the territory through which the route passes. But in 2014 the caller was from Barrio 18, which controls the hillside area that abuts the route office, where 30 buses spend the night. The zone was in dispute, the gangster pointed out. He dropped the name of a recent murder victim, and “offered to make sure my drivers stayed safe, for a small contribution”, the negotiator recalled. + +He hung up and ignored subsequent calls, until one night the route office was machinegunned, nearly killing a bus driver who was taking a shower. Since then, the negotiator has paid both gangs. The $350 for Barrio 18 is slipped into the apron of an old woman who climbs the hill with a wooden cane on the first Friday of each month. + +The negotiator says the bus route is lucky to pay just two gangs. Others pay up to four (the two factions of Barrio 18, which has split, and two autonomous “cliques” of the Mara Salvatrucha). A client who owns 32 minibuses pays roughly $1,500 per bus per year—about 3% of revenue—to three gangs, an expense that appears in the account books as “special collaboration”. That does not include perks, like Christmas “bonuses”, excursions to the beach for gangsters and their families and pocket money that couriers swipe from drivers’ coin boxes. + +Taxation without representation + +A tough negotiator can bargain down la renta: Barrio 18 demanded $1,800 at first for the old lady’s packet. But those who refuse to pay can expect no mercy. In 2015, 93 transport workers were murdered and 134 buses were attacked. Since 2004 gangs have murdered more than 1,000 transport employees. El Salvador’s transport sector, which includes taxis and pickup trucks as well as buses, paid out an estimated $26m to gangs last year. The proceeds mainly go to supporting locked-up “homies” (lingo from Los Angeles days), paying footsoldiers and buying arms. + +Transport is the most visible victim, but extortion spreads far beyond it. Gangsters control the entrances to urban slums, checking identity cards and demanding payment from residents. Their presence in wealthy neighbourhoods like the Zona Rosa in San Salvador, known for its expensive restaurants and shopping malls, is harder to spot but no less lucrative. Small and medium-sized businesses suffer most. The National Council of Small Businesses, which has more than 10,000 members, says that 79% make extortion payments but only 16% report the crime. Ernesto Vilanova, the group’s president and the owner of a beach guesthouse, says business owners pay $30m to gangs and spend $140m a year for private security. Extortion forces seven to ten shops a week to shut down, the council estimates. + +Bigger firms can afford more security and summon help from the government. La Constancia Industries, El Salvador’s largest brewing and bottling firm, closed its Agua Cristal plant in March, cutting off hundreds of thousands of households from their main source of potable water. The company blamed gang violence in the vicinity, which may have been triggered by a dispute over protection payments. Within days, the government sent police and soldiers to guard the factory. + +The number of reported cases of extortion dropped from more than 4,500 in 2009 to around 2,900 in 2015. That is probably because few cases are prosecuted, and many Salvadoreans have come to see extortion as inevitable. Rather than diminishing, the extortion racket is mutating, believes Allan Hernández, who leads the attorney-general’s specialised crime-fighting units. The transition started in 2012, when a truce between gangs and the government cut El Salvador’s murder rate in half at the price of tolerating continued extortion and other crimes. Critics of the policy, like Mr Hernández, say it gave gangs legitimacy. “You see the government sitting down with them…You see the churches sitting down with them,” he laments. The result: “The line between the authorities and the delinquents became blurry.” + +That between gangs and legitimate enterprise may also be fading. Juan Flores, a former mid-level member of the Sureños faction of Barrio 18, says it has invested proceeds from extortion in nightclubs and other businesses. Recent court cases have revealed gangs’ business dealings with mayors and entrepreneurs. One showed that a notorious leader of the Mara Salvatrucha, Chepe Furia, rented out his dump truck to the mayor of a town on the border with Guatemala and employed local police officers. So far in 2016, five police officers have been arrested for extortion. Some analysts worry that gangs will become full-scale drug-trafficking networks to rival those of Mexico, Honduras and Guatemala. “As they grow they’ll turn into true mafias,” says Rodrigo Ávila, a former director of the national police. + +Budding alliances between gangs and the economic and political elite will make dismantling the extortion networks harder. Since the breakdown of the truce between gangs and the government in 2014, the authorities have sought to regain control of territory by using such means as evicting gangsters with rapid-response battalions and putting imprisoned leaders in solitary confinement. A better approach, say human-rights groups, would be to provide actual and potential gang members with skills and jobs. + +In a country where a quarter of people aged 15 to 29 are neither working nor in school, that is hard. The government has spent little money on programmes to employ gangsters or youngsters at risk of becoming one. It has shut down most of the pilot projects from the truce era, like bakeries and chicken farms run by former gang members, which in some places reduced extortion on a local level. A law that would provide public money to support gangsters who want a way out has been stalled in the legislature for six years. “It’s not popular to talk about gang members as humans,” says Henry Campos, a former vice-minister of security who helped draft the legislation. + +Rodrigo Bolaños, who manages one of the few businesses that openly employ ex-gangsters, hopes the private sector will solve the problem. His factory, League Central America, produces varsity-themed sweatshirts, boxer shorts and the like for universities in the United States and Canada. It employs 550 people with disabilities, addictions and other problems, including around 40 former gang members. “There has to be a shift in the mentality of business owners,” says Mr Bolaños. He hopes to persuade 40 enterprises to adopt his “inclusion model”, putting 25,000 people, among them ex-gangsters, to work over the next five years. + +But even the inclusive Mr Bolaños is careful about whom he hires. Mr Flores, the ex-Sureños gangster, whose back, chest and arms are scattered with tattoos and scars from bullet wounds, became an evangelical Christian after he left prison in 2010. Such a religious awakening is the only reason for leaving a gang that its bosses will accept, and a necessary qualification for employment as far as Mr Bolaños is concerned. “We take them when they’re already decontaminated,” he says. + +Mr Flores now earns $245 a month, and gets such fringe benefits as subsidised food, health insurance and English classes. It takes more than just a job to replace the sense of belonging that gangs give their members. “You’re safe, your homies take care of you and there’s a sense that you’re in it together, for better or for worse,” says Mr Flores. For many young Salvadoreans, the prospect of life outside a gang is even more forbidding than the violent routine within one. “If there were more dignified alternatives,” says the born-again garment worker, more gangsters would leave. + + + + + +Venezuela + +Trouble on the streets + +The country is poised between chaos and dictatorship + +May 21st 2016 | CARACAS | From the print edition + +No food, but plenty of tear gas in reserve + +“THIS government is going to fall!” chanted hundreds of protesters alongside the Avenida Libertador in central Caracas. Staring them down were ranks of security forces—from the police, the national guard and the feared, black-uniformed SEBIN (secret police)—charged with making sure that does not happen. Looming above was a huge grinning portrait of the late president, Hugo Chávez. + +The protesters’ aim on May 18th was, as it has been on two previous occasions this month, to march to the offices of the National Electoral Council (CNE). The supposedly independent, but nakedly biased, institution has been delaying its consideration of a petition it was handed weeks ago, the first stage of a process to recall Venezuela’s president, Nicolás Maduro, through a referendum. With government forces blocking all routes to the CNE, the protesters were never likely to get close. + +When a handful broke through the cordon, some attacking the police, the authorities had the excuse they needed. Multiple, deafening volleys of acrid tear gas burst above the crowd. At least 18 people were wounded and 26 detained. Pamela, a retired agricultural engineer in her 70s, was standing outside her home overlooking the avenue, holding a small handwritten cardboard sign saying “Maduro. Resign Now!” Tears in her eyes, she retreated inside. “This breaks my heart,” she said. + +The regime may feel the day was a success. The protests were not huge. The poor have yet to stream down from the barrios en masse to demand the president’s ouster. But they are enraged and the government is worried. Almost 70% of Venezuelans want Mr Maduro to leave office this year, according to a recent poll. That demand is fuelled by the appalling deterioration of living standards under his incompetent rule. Venezuela is suffering the world’s deepest recession. Self-defeating price and currency controls and rampant corruption are causing shortages of everything from medicines to rice. “I am here because I am sick of queuing from dawn,” said José Galeano, a protester who describes himself as a poor man. “This has to end.” + +Across Venezuela, small protests are now commonplace. Social media are awash with videos of shoppers plundering supermarkets and brawling with each other. As crime soars, the lynching of petty criminals is becoming more common. + +The desperation such incidents reveal is dismissed by the increasingly delusional Mr Maduro during his endless television appearances. The shortages, he says, are the consequence of an “economic war” waged by enemies at home and abroad. Some in Caracas joke that he must be the only man who can claim to fight a fictional war, and then lose it. But they fear the direction his rule might now take. + +After the May 18th protests he threatened to supersede the current economic state of emergency (announced five days earlier) with a “state of internal commotion”. Whereas the first gives him powers such as instructing the army to supervise the production and distribution of food, the second would give him the ability to impose something closer to military rule across the country. + +Many in the opposition think this could signal the start of an “auto-coup”, in which the government escalates the crisis so that it has an excuse to suspend democracy and constitutional norms. Mr Maduro has already indicated that he will govern without regard to the National Assembly, which came under the control of the opposition after elections last December. “It is a matter of time before it disappears,” he said blithely at a press conference on May 17th. During the same event, held to rebut supposed lies told about him by international media, he refused to provide any information about the economy. + + + +In graphics: A political and economic guide to Venezuela + + + +Henrique Capriles, the governor of the state of Miranda, who was narrowly defeated by Mr Maduro in a presidential election in 2013 after Chávez’s death, is leading the opposition’s efforts to expose the president’s rule as unstable and lawless. He urged Venezuelans to ignore the state of emergency. “If Maduro wants to apply the decree, then he should start bringing out the tanks,” he said on May 18th. His intent was not to provoke such a crackdown but to forestall one. He appealed directly to the army to make a choice between the constitution and Mr Maduro. + +If Mr Capriles hopes that the army will desert the president, he is likely to be disappointed. Chávez, a former commando, made sure that the military had a large stake in his “Bolivarian” revolution and its profits. Mr Maduro has done the same. Dozens of high-ranking officers occupy senior positions in ministries. Mr Maduro recently approved the creation of a military company, CAMIMPEG, to provide services to the state oil company PDVSA. + +Mr Capriles’s warnings about the increasingly dictatorial nature of Mr Maduro’s rule are now being echoed by worried outsiders. The secretary-general of the Organisation of American States (OAS), Luis Almagro, a former minister in Uruguay’s left-leaning government, has written an open letter to Mr Maduro in response to his wild claims that the OAS was plotting to depose him. The Venezuelan leader must hold a recall referendum in 2016, Mr Almagro wrote, or risk becoming “just another petty dictator” of the sort that has plagued Latin American history. Mr Almagro’s former boss, the former Uruguayan president José Mujica, went one stage further, calling Mr Maduro “crazy as a goat”. + +The main hope for avoiding either a naked dictatorship or a descent into chaos may be international mediation. Early in May it was reported that Pope Francis, who played an important role in the rapprochement between Cuba and the United States, had written a personal letter to Mr Maduro. Its contents have not been revealed. The pope’s spokesman would only say that he was “following the situation with a lot of attention and participation”. José Luis Zapatero, a former prime minister of Spain, and Martín Torrijos, a former president of Panama, have held a meeting with Mr Maduro and, as The Economist went to press, were expected to see the opposition. Venezuela’s neighbours are appalled by the prospect that the country might implode. They may not be able to stop it. + + + + + +Bello + +Lessons of the fall + +Impeachment may give the Brazilian Workers’ Party a brighter future + +May 21st 2016 | From the print edition + + + +ON A bright and breezy morning in Brasília on May 12th, hours after the Senate had voted to start her impeachment for budgetary misdemeanours and thus suspend her as president, Dilma Rousseff walked down the front ramp of the Planalto palace to address a few hundred supporters of the Workers’ Party (PT). As she vowed defiance, behind her left shoulder stood Luiz Inácio Lula da Silva, her predecessor as president and the PT’s founding leader. He looked downcast and pensive, several times wiping his brow and his eyes with a handkerchief. No doubt he was contemplating the probable end of more than 13 years of PT rule. + +Behind Ms Rousseff’s impeachment lies a double political failure. The PT once claimed a monopoly on ethical politics; in the public mind, it is now identified with leading a scheme to loot Petrobras, the state-controlled oil company, of more than $2.4 billion to fill its own campaign coffers and the back pockets of allies. And Ms Rousseff, whom Lula sold to the country as a top-notch manager, proved to be an incompetent steward of the economy. + +So what went wrong for Latin America’s biggest left-wing party? The answer starts with the PT’s ideological ambiguity. Formed in 1980 by dissident trade unionists (such as Lula), radical priests, grassroots social movements and Marxist intellectuals, the PT claimed to be a new kind of party, of radical democracy and the dispossessed. + +Instead of evolving towards European-style social democracy, it remained trapped in the politics of the cold war. According to José de Souza Martins, a sociologist at the University of São Paulo (and a man of the left), the PT adopted “a fatal Manichean political pedagogy which, ideologically, divided Brazil into two big antagonistic and irreconcilable countries”. It stood for “the people” and “the poor”; those who opposed it were defined as the “rich”, even as Lula embraced Brazil’s corporate state of vested interests and national business champions (against which he had once rebelled). Instead of building a consensus for progressive reforms of public spending and of the political system, Lula allied himself with conservative rent-a-parties and, eventually, the pork-barrel barons of the Party of the Brazilian Democratic Movement (PMDB). The PT’s drive to remain in power indefinitely led to the Petrobras corruption scheme. + +This polarising politics worked while the economy boomed, when there was enough money to shower subsidies on corporate Brazil as well as on social programmes. It rebounded against the PT when things fell apart under Ms Rousseff. When millions took to the streets in 2013 to demand better public services and cleaner politics, the party and the government were unable to respond. + +Now the PT finds itself out in the cold. Its social movements will be deprived of state funds, its militants of cushy public jobs. Its brand has been badly damaged. It faces a clobbering in municipal elections in October: already it has lost 130 of its mayors to defections. + + + +Waxing and waning: Brazil's economic woes, in charts + +Yet, ironically, impeachment may offer the PT a lifeline. It provides a new narrative of political victimhood. While Ms Rousseff has not been accused of corruption, many of her accusers have been. Michel Temer of the PMDB, Ms Rousseff’s vice-president and now the interim president, is doing his best to vindicate the PT’s claim that he is a relic of a corrupt and reactionary order. In naming a cabinet composed purely of white men, he is taking Brazil back to the early 1980s. In adopting the national slogan, “Order and Progress”, as his own, he is harking back to the elitist positivists of the late 19th century. Mr Temer has named a highly competent economic team. But the steps needed to restore economic growth, such as public-spending and pension cuts, will be very unpopular. + +Wounded though he is, Lula remains Brazil’s most formidable politician. His sights are now set on the next presidential election. A poll in April gave him 21% support (up from 17% in March), putting him at the front of a crowded field. Lula can count on the memory of social progress under his presidency. No other party has the PT’s connections to the grassroots and the poor. + +Brazil, with its inequalities of wealth and power, needs an effective left. The PT’s failure is thus a tragedy. Freed from the compromises of power, it will veer further left, reconnecting with social movements and harassing Mr Temer’s administration. If it wants to govern again, the party needs to learn some deeper lessons. Two stand out: it has no God-given right to power and, since Brazil’s fiscal resources are not infinite, it should be more careful in using them. + + + + + +Asia + + + + +Barack Obama in Vietnam: Cash for questions + +Virginity testing in Indonesia: Taking the cop out of copulation + +Sanctions on Myanmar: Not clear yet + +Justice in India: Dropping the scales + +Banyan: Rebuilding bridges + + + + + +Barack Obama in Vietnam + +Cash for questions + +Can freer trade soften Vietnam’s thuggish ways? + +May 21st 2016 | HANOI | From the print edition + + + +WHEN she was sent to prison for helping organise a strike at a shoe factory in Vietnam’s Mekong-delta region, Do Thi Minh Hanh was only 25. In the four years that followed the young labour activist was shuffled through six different jails, enduring beatings from guards and other inmates. Released in 2014, Ms Hanh carries on with her campaigning. But she says that police stationed near her house often prevent her from travelling to meet workers. Women, their identities hidden by face masks, are sometimes enlisted to manhandle her back into her home. + +Ms Hanh is one of many outcasts hoping that Barack Obama’s three-day visit to Vietnam, which begins on May 23rd, will bring a little succour. Mr Obama is the third American president to visit the country since the Vietnam war, and the tour will further deepen ties that have improved during his two terms—some analysts even think that the White House may ease an arms embargo. Mr Obama’s visit is a chance to celebrate the signing of the Trans-Pacific Partnership (TPP), an American-led free-trade pact agreed upon late last year that Vietnam is expected to ratify soon. As a condition of entry, the ruling Communist Party of Vietnam has made some surprising commitments, including to tolerate the kind of independent labour-organising that has made Ms Hanh a pariah. But that is a promise on paper only. + +No nation stands to gain more from the TPP than Vietnam, which, the World Bank guesses, will get a GDP boost of 10% by 2030. Lower foreign tariffs would increase exports such as garments and shoes. The deal would also spur local production of fabric and much else that is currently imported. The TPP is popular with ordinary Vietnamese. They like any effort that reduces their dependence on China, Vietnam’s big northern neighbour, with which it has a big trade deficit and a bitter territorial dispute. Meanwhile, reformers in government hope that TPP membership will hasten the privatisation of bloated state-owned enterprises, which have long weighed on the economy but which vested interests make difficult to slim. + +A giant step for a paranoid party + +More sensitive is the obligation to liberalise Vietnam’s labour laws. A side agreement signed with America—and designed to satisfy critics in the American Congress—requires Vietnam to pass a law allowing workers to form independent trade unions at the factory level by the time the TPP comes into force; and after five years these unions must be allowed to form national and industrial federations. Some of the valuable tariff exemptions on offer to Vietnam will be held back until after this five-year target has been met. + +The stipulations stand to end a monopoly long held by the Vietnam General Confederation of Labour, a fusty arm of the party under which all unions are presently herded. Its affiliates and its 8,000 full-time staff transmit the party line and organise morale-raising shindigs. It is common to find union leaders holding down jobs in company personnel departments. But the confederation has become less effective at averting strikes, which have grown to 4,000 in the past ten years, a fourfold increase on the previous decade. + +Tolerating independent unions would be a big step for a paranoid one-party state in which churches and chess clubs receive formal supervision. There are few signs that the state is ready to make the leap. In the past few weeks police have carted away activists protesting against pollution that appears to have caused tonnes of dead fish to wash up on beaches in north-central Vietnam. The authorities claim that the demonstrations have been instigated by “terrorists” abroad. + +The indications are that the party will find ways to neuter its pledge on unions, for fear of midwifing movements which may one day threaten its control. Activists warn that an official summary of Vietnam’s labour agreement with America omits details such as the right of independent unions to collect fees from employers, as the state’s labour federation does. The summary also hints that authorities will continue to hobble groups deemed to endanger “societal orderliness”. + +A partial implementation of the agreement may yet be better than nothing. A debate about labour laws might at least help reformers fashion the state-run union into a more effective body, thinks Erwin Schweisshelm of the Friedrich Ebert Foundation, a German think-tank. But much relies on America’s convincing the government that it is prepared to withhold Vietnam’s tariff exemptions should progress be deemed insufficient. The deal’s critics in the West claim that America has done a bad job of enforcing labour-rights clauses in previous free-trade agreements, for example with Peru and Colombia. Supporters counter that the wording of the deal with Vietnam lays out the obligations, and potential sanctions, more explicitly than do previous agreements. + +The one certainty is that none of this will be tested if, as is increasingly feared, America’s own lawmakers end up not ratifying the TPP. Activists in Vietnam are not holding their breath. In November, weeks after the terms of the TPP were made public, plain-clothes policemen spirited Ms Hanh away from a meeting with fired factory workers to a police station; she says she was choked and beaten about the head. The government accuses her and others like her of aiming to overthrow it. She says she only wants workers to know their rights. + + + + + +Virginity testing in Indonesia + +Taking the cop out of copulation + +The unintended consequences of an outrageous tradition + +May 21st 2016 | JAKARTA | From the print edition + +It’s no way to recruit an army + +WHEN Sri Rumiati joined the police, she had to take a virginity test. It was uncomfortable and humiliating, she recalls. Not to mention unscientific and irrelevant to police work. + +Ms Rumiati, who is now a commissioner, has campaigned to have such tests for female recruits abolished. Officially they ended last year, after Human Rights Watch, a pressure group, condemned the practice. Badrodin Haiti, Indonesia’s national police chief, insists that there are now no virginity tests, but what there is, he says, “is a test for reproductive health, which is part of the overall health examination.” The police website warns female cadets to expect a “pregnancy test”. + +However, Dr Musyafak, the chief medical officer of Jakarta’s metropolitan police, says that the new tests still involve a doctor examining the cadet to see if her hymen is intact. Whenever possible, female doctors conduct the tests, but in rural provinces, where female doctors are rare, cadets may have to endure being examined by a man. + +“Failing” the test no longer affects the overall fitness score that helps determine whether a cadet can become a fully fledged police officer, says Dr Musyafak. However, in as vast an archipelagic nation as Indonesia, is it hard to tell how uniformly this reform is enforced. Meanwhile, the Indonesian army continues to subject female recruits to virginity tests. + +Two assumptions lie behind such tests, both wrong. First, that you can tell if a woman is a virgin by probing her hymen. Such tests reveal nothing about a woman’s sexual history. The second assumption is that virgins make better police officers or soldiers, because they are more “moral”. As a senior policeman told reporters in 2014: “If [a candidate] turns out to be a prostitute, then how could we accept her for the job?” + + + +Indonesia in graphics: Tiger, tiger, almost bright + +Such attitudes are not the only reason why only 3% of Indonesian police officers are female—there are also not nearly enough police-academy places for women—but they do not help. “If I applied for a job and they said ‘Take a virginity test’, I’d look for a different job,” says Zakiatun Nisa, a feminist activist in Jakarta. “If an employer wants you to take a test like that, it’s a sign that the employer is screwed up.” + +“We need more policewomen,” says Ms Rumiati. “Many precincts have none.” She says this makes it difficult for women to report domestic abuse or rape. Indriyati Suparno, of the National Commission on Violence Against Women, agrees. Women in Indonesia are often reluctant to talk about intimate problems, she says. “It’s hard to talk about domestic violence even with your best friend. So how can you talk about it with the police?” + +Last year a woman who had reported to the police that her husband was abusing her was jailed for five months for defaming him. (Her husband cited her Facebook posts complaining about his alleged behaviour.) Judging by official statistics, Indonesia is a very safe place to be a woman. For instance, in 2013 fewer rapes were reported among its 250m citizens than among Sweden’s 10m. Perhaps Indonesian men are signally less violent than Swedes. Or maybe a lot of Indonesian women are too intimidated to report what is happening to them. + + + + + +Sanctions on Myanmar + +Not clear yet + +America tweaks sanctions on a not wholly democratic country + +May 21st 2016 | YANGON | From the print edition + +Aung San Suu Kyi in a pas de deux + +MYANMAR’S journey towards democracy was never going to be easy. Yes, Aung San Suu Kyi’s National League for Democracy (NLD) won a general election in November in a landslide. And the army, defying precedent and the predictions of many old Myanmar hands, respected the result. But it had already rewritten the constitution in ways that stopped Miss Suu Kyi from becoming president. It retains control of the powerful ministries of defence, border affairs and the interior. And so the country’s new democracy is an awkward pas de deux between an inexperienced government with a huge mandate and armed forces that have called the shots in Myanmar for most of the time since independence. This is why any alteration of American sanctions imposed on the country was bound to be closely watched. + +On May 17th Barack Obama’s administration announced changes to a sanctions regime whose purpose for decades was to push a closed, repressive Myanmar run by the generals to change. The new measures take three state-owned banks and seven state enterprises off its blacklist, lift some restrictions on trade with Myanmar, make it easier for American companies to move money in and out of the country, and widen the scope of the kinds of business Americans in Myanmar may conduct. Yet plenty of sanctions remain in place, including on dozens of individuals and Burmese companies close to the armed forces. And six companies controlled by one tycoon, Steven Law of the Asia World group, founded by his father allegedly as a drug-running front but now the country’s biggest conglomerate, are new to the blacklist. + +The tweaks reflect an awkward balance. After the election American businesses wanted sanctions revoked entirely, arguing that a profound democratic transformation had taken place. Yet not even the government of Miss Suu Kyi—who, during her years under house arrest, did more than anyone to persuade the West to impose sanctions—wants that to happen. Those state logging and mining enterprises now able to trade with America are ones that report to her rather than the army. + +Meanwhile, as Miss Suu Kyi’s style of governing emerges (she rules as the only “state councillor”), it carries worrying echoes of the opaque and authoritarian generals of the bad old days. Her government boasts of a 100-day plan, yet has not released it. Admittedly, the government is grappling with the thorny task of merging 36 ministries into 21 to create a more streamlined government. Yet Miss Suu Kyi has been notably unforthcoming about her goals: for instance, how many people should be lifted out of poverty, or what policies are to change. As for an overarching vision for her country, there is none. + + + +Myanmar in graphics: An unfinished peace + +Hundreds of laws are under review in parliament, but no one knows precisely which ones. And even those laws that have been amended remain surprisingly draconian. A new law on peaceful assembly replaces the requirement for permission for a demonstration with a requirement to notify authorities. Yet violators may still be jailed. + +Further, Miss Suu Kyi unsettled Western diplomats (who not long ago used unequivocally to adore her) when she asked the new American ambassador not to refer to a persecuted Muslim minority by their name, the Rohingyas. Burman chauvinists had demonstrated in Yangon and Mandalay against the new ambassador’s use of the word, which in their eyes graces the Rohingyas with the dignity of citizenship which they wish to deny to them. Meanwhile, her religious-affairs minister has referred to Muslims and Hindus in a Buddhist country as mere “associate citizens”. + +Such attitudes bode ill for what Miss Suu Kyi says is a priority, bringing several civil wars involving ethnic minorities, mostly in Myanmar’s border regions, to a close. On May 16th the government set up committees to prepare for peace talks, but much remains unclear, including the status of agreements reached with the last government, and the scope the army will allow Miss Suu Kyi in the peace process. Myanmar is no normal country yet, and the sanctions by and large remain. + + + + + +Justice in India + +Dropping the scales + +Overburdened yet overactive, India’s courts are failing to do justice + +May 21st 2016 | DELHI | From the print edition + +Enough to make a grown judge cry + +IT MIGHT seem natural for senior figures from three furiously sparring political parties to meet in front of a judge. Yet a recent case before India’s Supreme Court found three lawmakers fighting not against each other but against the law itself. They were arguing that a 156-year-old statute that holds defamation to be a criminal offence is both unconstitutional and a danger to free speech (which it is). The petition failed. A two-judge panel’s 268-page ruling on May 13th upheld the colonial-era law. + +This was hardly the first time that India’s top judges have failed to oblige politicians. Universally frustrating yet desperately needed, the country’s courts are a paradox. The complexity of India’s federal system, with its relatively weak executive and a slow-moving Parliament, places an unusually large burden on the judicial pillar. Even more than in America, where judges can seem to legislate from the bench, India’s courts flex their muscles. + +In recent months higher courts have tossed out legislation aimed at creating more public oversight of their own appointments, blocked a central government bid to impose direct rule on a state whose legislature had become deadlocked, and ordered the creation of a new agency to manage disaster relief, despite the existence of similar bodies already. They have ordered a state-owned airline to provide a service to a mountain resort, Shimla, on grounds of public interest, and have slapped a ban on the registration of big diesel cars in the capital, Delhi, until judges decide whether they pollute too much. + +Small wonder that the finance minister, Arun Jaitley, of the ruling Bharatiya Janata Party, recently drew loud applause in Parliament by accusing courts of subverting other branches of government. “Step by step, brick by brick, the edifice of India’s legislature is being destroyed,” he warned. But in case anyone might think that the judiciary has it in only for the legislature and for big business, the Supreme Court recently demanded an investigation into wife-swapping among navy officers. + +Yet for all its power, Indian justice remains erratic, opaque, undermanned and, above all, slow. Last month T.S. Thakur, the chief justice, burst into tears at a public meeting that included the prime minister, Narendra Modi, as he pleaded for more resources. The statistics are indeed distressing. India has more than 22m legal cases pending, 6m of which have been stuck in the courts for five years or longer. (The Supreme Court nevertheless deals with 47,000 cases a year; America’s dismisses 8,000 a year and hears only about 80.) + +To manage the huge caseload India has only 16,000 courtrooms and barely as many working judges—14 of them per million people compared with 107 in America. As far back as 1987 a government-advisory body, the Law Commission of India, recommended a fivefold increase in the number of judges. That target has not remotely been reached. Thousands of existing judicial positions have remained vacant including, until this month, nearly half the jobs in higher courts and six out of the 31 judgeships in the Supreme Court itself. + +Such manpower shortages do not just mean delays. They generate systemic miscarriages of justice. A government report in 2014 revealed that two-thirds of the 400,000 inmates in Indian prisons—where the official occupancy rate is 117%—had yet to be convicted of any crime. It is also estimated that more than half of prisoners who could seek release on bail do not do so. Either they cannot afford it or they have not been made to understand that this is a right. + +Mr Thakur’s display of emotion seems to have had some effect. Critics of Mr Modi’s government had accused it of delaying the appointment of top judges out of pique at the Supreme Court’s quashing of a bill granting politicians more say in the matter. For whatever reason, that bottleneck has now gone, and in short order five new Supreme Court judges and a further 150 High Court judges have been approved. Filling the lower benches is a tougher task, and generating swifter justice a tougher one still. India’s judges and politicians should fix those things first. + + + + + +Banyan + +Rebuilding bridges + +As the G7 gathers in Japan, religion, politics and the bomb will all help Shinzo Abe + +May 21st 2016 | From the print edition + + + +NOT long after the atom-bombing of Hiroshima and Nagasaki and Japan’s surrender in the second world war, American soldiers reached one of the holiest shrines of the state religion, Shinto, at Ise in Mie prefecture on the main Japanese island of Honshu. When a guard tried to stop them trundling their Jeeps to the shrine over the 100-metre-long Uji bridge, made of precious cypress wood, he was rebuffed with a pistol. Any damage to the bridge would have been repaired anyway since, like the rest of the 1,300-year-old shrine, it is rebuilt once every 20 years. So, among the countless humiliations endured by a defeated nation, this was a petty one, now forgotten. It will be expiated on May 26th, when Shinzo Abe, Japan’s prime minister, is expected to use the bridge to welcome fellow leaders from the rich world’s club, the G7, to their annual summit, on an island near the shrine. + +It seems an odd site—remote, little-known abroad and holy to a religion disestablished after the war, with the constitution of 1947 decreeing that “no religious organisation shall receive any privileges from the state, nor exercise any political authority”. Mie did not even compete for the privilege of hosting the summit, but was cajoled into doing so by Mr Abe’s office. Yet for the prime minister’s life mission of “escaping the post-war regime” by making his country strong and proud again, it is a subtle choice. + +The summit will bring Mr Abe other political benefits, especially now that, on its margins, Barack Obama is to become the first serving American president to visit Hiroshima. The White House has made clear that Mr Obama will not apologise for the death and destruction inflicted on Hiroshima on August 6th 1945 and, three days later, on Nagasaki. But a poll suggests that nine-tenths of Japanese welcome his visit. For the left, it is a reminder of the awfulness of war and the importance of the pacifist provisions in the constitution. For many on the right, it recognises Japan’s victimhood and the unfairness of a world which demands apologies for its wartime crimes. The latest, an agreement with South Korea in December over the handling of the cases of so-called “comfort women”—sex slaves for the Japanese army—was probably what allowed Mr Obama’s visit. Nevertheless, whatever he does in Hiroshima, he will upset China—which fears another attempt to whitewash Japan’s history—and quite a few Americans, too. (The proportion of Americans who think the bombing justified because it ended the war has fallen from 85% in 1945 to 56% last year, but that is still a majority.) Later this year Mr Abe may visit Pearl Harbour, site of the infamous surprise attack on Hawaii that brought America into the war. + +Compared with these wartime commemorations, the events at the shrine at Ise will be less controversial. But the nationalists who form a big part of Mr Abe’s support base will applaud. Mr Obama may not perform the rituals expected of less-exalted worshippers: purifying hands and mouth with water from a wooden ladle dipped in a stone trough; bowing deeply, clapping and praying before the main sanctuary, the divine palace of Amaterasu, sun goddess and mythical ancestor to Japan’s emperors. Even so, the G7 will have given an international badge of respectability to Shinto, which Japan’s pre-war politicians had forged into a tool of aggressive imperialism. Beginning the summit at Yasukuni, the Shinto shrine in Tokyo that honours Japan’s war dead, including 14 Class A war criminals, would be unthinkable. Even Mr Abe stays away these days, having provoked regional fury by going there in December 2013. + +Mr Abe shows no deep interest in Shinto itself, says a scholar at the university in Tokyo where future Shinto priests study. But he is a member of Shinto Seiji Renmei, the religion’s powerful political wing, which campaigns to restore much of the nation’s pre-war religious, social and political order. In 2013 Mr Abe took part in the ancient ceremony marking the rebuilding of Ise, only the second prime minister ever to do so. Taking nine cabinet ministers with him, he turned a religious rite into a political statement. + +In this sense the Ise summit fits into Mr Abe’s long-term nationalist project, which has already seen his government increase the defence budget, relax a ban on weapons exports and reinterpret the constitution to allow Japan to take part in collective self-defence. America has welcomed all this: Japan is becoming a more formidable ally at a time of shared anxiety about Chinese ambitions in Asia. So Mr Obama may not be too worried if the summit, and his own visit to Hiroshima, bring Mr Abe political benefits. Even in advance, the prime minister’s approval ratings have risen above 50% for the first time in months. + +The summit may also give Mr Abe cover for going back on his commitment to raise Japan’s consumption tax from 8% to 10% in April next year. A statement from world leaders that, with the world economy still fragile, fiscal stimulus is the order of the day might provide an excuse for deferring a tax hike. Seeking voters’ approval for such a volte-face might, in turn, be a pretext to call a snap election for the lower house of the Diet, or parliament, in July, along with one scheduled for the upper house. Such a “double election” has been the subject of fevered speculation. A statesmanlike image cultivated at the summit might encourage Mr Abe to take advantage of the opposition’s present disarray. + +Disturbing the post-war order + +The problem for America in dealing with Mr Abe, however, is that it is impossible to separate those of his policies it likes from the broader nationalist agenda of some of his unappealing fans. That includes a revisionist view of history, in which Japan’s only important mistake in the second world war was to lose it; a rejection of the American-imposed constitution and its renunciation of war; and perhaps a revival of Shinto as a state religion. In helping Mr Abe, America is unintentionally also boosting forces that want to take Japan in a direction feared by many around the region, and indeed in the country itself. + + + + + +China + + + + +A new railway to Tibet: Doubling down + +Economic policy: On whose authority? + + + + + +A new railway to Tibet + +Doubling down + +Plans for a new railway line into Tibet pose a huge technological challenge—and a political one + +May 21st 2016 | LITANG | From the print edition + + + +“A COLOSSAL roller-coaster” is how a senior engineer described it. He was talking about the railway that China plans to build from the lowlands of the south-west, across some of the world’s most forbidding terrain, into Tibet. Of all the country’s railway-building feats in recent years, this will be the most remarkable: a 1,600-kilometre (1,000-mile) track that will pass through snow-capped mountains in a region racked by earthquakes, with nearly half of it running through tunnels or over bridges. It will also be dogged all the way by controversy. + +Chinese officials have dreamed of such a railway line for a century. In 1912, shortly after he took over as China’s first president, Sun Yat-sen called for a trans-Tibetan line, not least to help prevent Tibet from falling under the sway of Britain (which had already invaded Tibet from India a decade earlier). Mao Zedong revived the idea in the 1950s. In the years since, many exploratory surveys have been carried out. + +But it is only after building the world’s second-longest railway network—including, in the past few years, by far the biggest high-speed one—that China’s government has felt ready to take on the challenge. It had a warm-up with the construction of the first railway into Tibet, which opened in 2006. That line, connecting Lhasa with Golmud in Qinghai province to the north (and extended two years ago from Lhasa to Tibet’s second city, Shigatse), was proclaimed to be a huge accomplishment. It included the highest-altitude stretch in the world, parts of it across permafrost. It required ingenious heat-regulating technology to keep the track from buckling. + +China further honed its skills with the opening of a high-speed line across the Tibetan plateau in 2014—though in Qinghai province, rather than in Tibet proper. But neither track had anything like the natural barriers that the Sichuan-Tibet line will face. It will be just under half as long again as the existing line to Tibet, but will take three times longer to build. The second line’s estimated cost of 105 billion yuan ($16 billion) is several times more than the first one. Lhasa is about 3,200 metres (10,500 feet) higher than Chengdu, yet by the time the track goes up and down on the way there—crossing 14 mountains, two of them higher than Mont Blanc, western Europe’s highest mountain—the cumulative ascent will be 14,000 metres. The existing road from Chengdu to Lhasa that follows the proposed route into Tibet is a narrow highway notable for the wreckage of lorries that have careered off it. Some Chinese drivers regard the navigation of Highway 318 as the ultimate proof of their vehicles’, and their own, endurance. + +Work on easier stretches of the railway line, closest to Lhasa and Chengdu respectively, began in 2014. Now the government appears to be getting ready for the tougher parts. A national three-year “plan of action”, adopted in March for major transport-infrastructure projects, mentions the most difficult stretch: a 1,000km link between Kangding in Sichuan and the Tibetan prefecture of Linzhi (Nyingchi in Tibetan). The plan says this should be “pushed forward” by 2018. It will involve 16 bridges to carry the track over the Yarlung Tsangpo river, known downstream as the Brahmaputra. Dai Bin of Southwest Jiaotong University in Chengdu says the Chengdu-Lhasa line could be finished by around 2030. + + + +In Litang, a town high up in Sichuan on that difficult stretch, a Tibetan monk speaks approvingly of the project, which will bring more tourists to the remote community and its 16th-century monastery (rebuilt since the Chinese air force bombed it in 1956 to crush an uprising). But the impact on Tibet of the Golmud-Lhasa line still reverberates. It fuelled a tourism boom in Lhasa that attracted waves of ethnic Han Chinese from other parts of China to work in industries such as catering and transport. The resentment it created among Tibetans, who felt excluded from the new jobs, was a big cause of rioting in Lhasa in 2008 that ignited protests across the plateau. The new line will cut through some of the most restive areas. Since 2011 more than 110 Tibetans are reported to have killed themselves by setting themselves on fire in protest at China’s crackdown after the unrest. Some of the self-immolations have happened in Tibetan-inhabited parts of Sichuan, including near Litang. + +With spectacular views, the new line is sure to be a big draw. It is also sure to attract many migrant workers from Sichuan, a province of 80m people, to cash in on Tibet’s tourism. The journey time from Chengdu to Lhasa is a gruelling three days by road, or more than 40 hours by train through Qinghai. The new line will reduce it to a mere 15 hours. + +Officials see other benefits. The route will cross a region rich in natural resources, from timber to copper. It will also, to India’s consternation, pass close to the contested border between the two countries. (China says India occupies “south Tibet”, and launched a brief invasion of India there in 1962.) A Chinese government website, China Tibet News, said in 2014 that building the Sichuan-Tibet railway had become “extremely urgent”, not just for developing Tibet but also to meet “the needs of national-defence-building”. + +Communist party officials in Tibet hope that the new line will be just the start of a railway-building spree in the once-isolated region. On May 16th Tibet Daily, the government mouthpiece in Tibet, said that work would start in the coming five years on around 2,000km of track. It would include a line from Shigatse to Yadong (or Dromo), near the border with India and Bhutan, and another one to Jilong (or Gyirong), near the border with Nepal. China’s railway chief talks of “the extreme importance of railway-building for Tibet’s development and stability”. The region’s recent history offers scant evidence. + + + + + +Economic policy + +On whose authority? + +A mysterious article prompts a flurry of speculation + +May 21st 2016 | SHANGHAI | From the print edition + + + +WHEN a newspaper bases an entire story on a single, anonymous source, you would expect doubts about credibility to arise. Yet there were no questions about the credibility of an “authoritative person” who opined at length about the Chinese economy in the People’s Daily earlier this month. Not just any old source gets front-page treatment in the Communist Party’s mouthpiece. In this case, it is the third time in the past year that this “authoritative person” has had an outing to discuss the state of the economy. On this occasion, he delivered a stark warning about relying on debt to fuel economic growth. That, he said, could lead to crisis and to a collapse in growth. + +Speculation is rife over who the person might be. For Pekingologists, it is a fine parlour game. There are two dominant theories. Both see the fingerprints of Liu He, a Harvard-trained economic adviser to Xi Jinping, China’s powerful president. Mr Liu has been a strong proponent of such structural reforms as cutting off funding for state-owned industries blighted by overcapacity. His views chime with the authoritative person’s message of tough love. + +Writing under pseudonyms or anonymity to challenge those in charge is an ancient communist tradition. Some speculate that Mr Liu used the article to criticise the way in which the prime minister, Li Keqiang, has (mis-)managed the economy. The authoritative person cautioned against asking banks to swap loans for equity in troubled borrowers, an idea that Mr Li had pushed. But the problem with this argument is that Mr Liu already wields tremendous influence thanks to being close to Mr Xi. Why would he resort to attacks in print to push back against Mr Li? + +So a second possibility is that Mr Xi wanted the article not to criticise Mr Li but rather to deliver a shock to underlings who had strayed from his prescribed programme of slower but sounder growth. Supporting the notion that Mr Xi himself was involved was the publication the following day in the People’s Daily of a speech he gave on the economy. The speech, actually delivered in January, echoed many of the themes raised by the authoritative person, albeit in gentler tones. The authoritative person could be less diplomatic. Among other broadsides, the person heaped scorn on officials who described, in terms of economic performance, a “red-letter start” to the year. That was a phrase used by Zhang Gaoli, a member of the Politburo’s seven-man Standing Committee, China’s top decision-making body. + +If the first theory is true—that Mr Liu was rebuffing Mr Li—the saga would point to divisions about economic policy in the highest echelons of the party. Slowing growth has stabilised in recent months, but that is in large part thanks to a gusher of new credit. In this scenario, Mr Xi would seem to be far more hawkish than Mr Li as he fights to rein in China’s credit-fuelled stimulus. If the second theory holds, Mr Xi and Mr Li generally see eye-to-eye on the economy but are struggling to get other officials to curb a reliance on debt. In this scenario, no matter how ambitious or justifiable their policy, the business of implementation remains precarious. Whichever theory is nearer the truth, it is clearly easier for China to talk about changing its growth model than actually to change it. + + + + + +Middle East and Africa + + + + +Mental health in the Middle East: Mindfield + +Israel’s atomic angst: A textile factory with a difference + +Uganda’s president for life: The “people’s president” is jailed + +Sloshed in the slow lane: How to drive drunk in Kenya + +Protests in Kenya: Of kicking and Kikuyu + +Nigerian petrol subsidies: A fuel and your money + + + + + +Mental health in the Middle East + +Mindfield + +Wars and terrorism are stressful. The traumatised have nowhere to turn + +May 21st 2016 | AMMAN AND CAIRO | From the print edition + + + +WHEN Neda told her children that she might have to kill them, they assented. Such was their suffering after Islamic State kidnapped and enslaved them, along with thousands of other Yazidis, a religious minority, in northern Iraq in 2014. Neda’s husband was taken and presumably killed; her eldest son, just 13 years old, was forced to fight with the jihadists. She shaved off the hair and eyebrows of her two young daughters to make them look boyish and sickly, so that IS rapists might leave them alone. Neda herself was raped, beaten and sold several times before she was bought and freed by relatives last year. + +As Neda (not her real name) recounted her ordeal to aid workers at the Mamilyan camp for internally displaced people in the Kurdistan region of Iraq, she showed little emotion, the aid workers said. That is probably a coping mechanism. “If they give in one time and cry, they will not be able to stop crying for a while,” says Rezhna Mohammed, the director of psychological services for the SEED Foundation, which runs a centre in the camp. Neda, though, has only asked for cash (to repay her liberators). Few people in the Middle East seek or receive help for their mental suffering. + +Yet the region needs such care. Globally, one in ten people are thought to suffer from a mental disorder at any given time. The rate rises to one in six in areas affected by war. Ailments such as post-traumatic stress disorder and depression are common in the Middle East. War compounds these problems by making treatment harder to obtain. Take Syria, where mental-health care was delivered out of three hospitals in Damascus and Aleppo before the war. One has been destroyed and the other two are now inaccessible, says the World Health Organisation (WHO). + +There were only about 70 psychiatrists serving 23m Syrians before the war. Most have fled. In America there are 1.2 psychiatrists per 10,000 people; no Arab country has more than 0.5, and most have far fewer (see chart). The WHO reports that the number of sick is outpacing the already paltry number of psychiatric beds, and the number of day-care facilities is one-tenth of the global median. Even where there are plans to address such deficiencies, they are rarely implemented fully. The upshot is that more than three-quarters of people who need care do not receive it. + + + +Yet the region was once at the forefront of mental-health care. Indeed, the first psychiatric hospitals are thought to have been built during the eighth century in Baghdad and Cairo, where doctors experimented with treatments such as occupational and music therapy. Today’s treatments are often more primitive. Many sufferers of mental illness rely on traditional healers to expel their evil jinnis (spirits). This is accomplished through such methods as whipping patients’ feet, spitting holy fluids into their mouths or praying. + +Those seeking professional help risk being ostracised. This is, in part, a legacy of the asylum system that countries such as Egypt adopted in the 19th century. “It was the first step in segregating mental patients,” says Nasser Loza, a former general secretary of mental health in Egypt. One early asylum was in an old royal palace. But over time the facilities became more like prisons, where patients (and, sometimes, dissidents) were locked up and forgotten. People knew little about the places, except that those inside were “crazy”. + +From 2006 to 2011 Dr Loza opened up Egypt’s psychiatric hospitals to public scrutiny, to increase pressure for reform. A law passed in 2009 aimed to speed up care, protect patients’ rights and give them more say in their treatment. “We changed as much as we could,” he says. But there are new signs of neglect. Last year 11 patients died at Khanka psychiatric hospital, north of Cairo, because of poor ventilation during a heatwave. At a recent party for staff inside the notorious Abbasiya psychiatric hospital in Cairo, patients were left unattended as a DJ played a song featuring the lyrics, ana fee el laborya (I went mad). + +An alternative to asylums is to treat people through local clinics. The WHO points to examples such as Iraq, which rebuilt its mental-health system after the invasion of 2003 to allow for more care outside hospitals. In 2008-09 Jordan used cash from donors to build three local mental-health centres. These were so popular that they led to much broader reforms. Lebanon has followed suit, integrating mental health into primary care. Even Syria has made efforts to decentralise treatment. + +But the improvements have been small and fleeting. Consider Iraq. Its mental-health system is still so understaffed that therapy is often performed by those with a mere undergraduate degree, or by foreigners who do not know the culture. Renewed fighting has cut off care—and caused refugees to flood into Jordan, where reforms have been undermined by a lack of funds. In Syria, the government offers threadbare care in loyal areas and none in rebel towns. In the Gulf, where there is more money, relatively little is spent on mental health. The proportion of people in the region who need mental-health care but don’t get it “is as large as ever”, admits the WHO. + +Even where therapy is available, many refuse it because of the stigma. The SEED Foundation tries to make things easier at its centre in the Mamilyan camp. Cooking and knitting classes provide an opportunity to talk to residents—and cover for those seeking treatment. It is nothing like an asylum. Still, Neda refuses help. She cries every day and two of her children do not talk. But that doesn’t mean they are crazy, she tells Mrs Mohammed. + + + + + +Israel’s atomic angst + +A textile factory with a difference + +One of the world’s oldest nuclear plants helped build the Jewish state’s secret nuclear arsenal + +May 21st 2016 | From the print edition + +Tough times in the garment trade + +WITH its cupola dully glinting in the sun across kilometres of an exclusion zone in the Negev Desert, the nuclear reactor near the Israeli town of Dimona has for decades been the subject of intense speculation. Its bland official name, the Centre for Nuclear Research, belies a martial purpose. Foreign intelligence services, atomic scientists and a former Israeli employee claim that it is the source of fissile material used to make Israel’s nuclear weapons. + +The country’s atomic secrets have always been closely guarded, so little is known about the plant at Dimona. However, officials at the Israel Atomic Energy Commission (IAEC) admitted at a scientific conference last month that the reactor is showing its age. An ultrasound inspection of the aluminium core found 1,537 small defects and cracks, they said. The lifetime of such a reactor is usually around 40 years. At 53, Dimona is one of the world’s oldest operating nuclear plants. + +The reactor, which was supplied by France, was switched on 15 years after the establishment of the state of Israel. The embattled country’s first prime minister, David Ben-Gurion, insisted that Israel needed a nuclear deterrent. The programme was spearheaded by his assistant, Shimon Peres, and the main components were first activated in 1963. The government claimed that Dimona was a “textile plant”. + +Many of the ancillary systems in the reactor have been renewed or replaced, but the core itself cannot be swapped out. The flaws that have been detected are closely monitored and there is no serious suggestion that the reactor is unsafe. Yet in most other countries it would have been deactivated long ago. Safety concerns will only increase with time. + +Israel has never used its reactors for generating electricity. Along with the United States, France, Russia and China, it is one of the few countries believed to have acquired the nuclear “triad”. It can deliver nuclear weapons as bombs dropped from an aircraft, as warheads on a land-launched missile (since the 1970s) and on missiles fired from submarines. + +The third leg of the triad is thought to have been added in 1999, when Israel received the first of six planned submarines. These were built and largely paid for by Germany. If, as reported, they can launch nuclear-tipped cruise missiles, this would give Israel a “second-strike” capability, allowing it to retaliate even if an enemy were to destroy its air bases and missile silos in a nuclear “first strike”. In January Prime Minister Binyamin Netanyahu said: “Our submarine fleet will act as a deterrent to our enemies who want to destroy us.” + + + +INTERACTIVE MAP: Our guide to the world's nuclear-power producers + +Nuclear experts estimate that Israel has between 80 and 200 warheads, more than enough to deter would-be attackers. The dilemma facing Israel is whether to close the ageing reactor that helped make them. If it does, it would be unlikely to get the materials needed to build a new one, since it has never signed the nuclear non-proliferation treaty. Yet Uzi Even, a former member of the IAEC and Dimona scientist, argues that the reactor should be shuttered. (A smaller and older reactor, supplied by America in 1960 for research purposes, is scheduled to be deactivated in 2018 and replaced by a particle accelerator.) + +Dimona’s defenders say it has both symbolic value (as a reminder that Israel will defend itself fiercely) and practical uses, too. It is a source of materials needed to maintain nuclear warheads, such as tritium (which decays, but could theoretically be produced or procured by other means). It is also the centre of a “secret kingdom” of scientists whose capabilities the government is loath to give up. + +For nearly six decades, Israel’s policy of “nuclear opacity” has served it well. Its Arab neighbours are convinced it is a nuclear power, but Israel clings to the ambiguous formulation that it “will not be the first to introduce nuclear weapons to the region”, neither acknowledging nor denying its capabilities. With powerful neighbours still openly advocating its destruction, the Jewish state will keep its doomsday weapons. But its ageing reactor? Perhaps not. + + + + + +Uganda’s president for life + +The “people’s president” is jailed + +Yoweri Museveni clamps down on the opposition + +May 21st 2016 | KAMPALA | From the print edition + +IN A shaky video, Kizza Besigye, the main opposition leader in Uganda, holds aloft a Bible and is sworn in as head of a “people’s government”. It is more amateur dramatics than revolution. The production may have been shoddy, but the timing of its release was provocative, coming the day before the re-inauguration of Yoweri Museveni as president. Within a few hours of the footage being released, Mr Besigye had been whisked away by helicopter to a remote prison. On May 13th he was charged with treason: police claimed to have found 20 machetes at his party headquarters. + +Mr Museveni has held power for 30 years and Mr Besigye, a former ally, has spent half that time trying to dislodge him. February’s election was the fourth contest between the two, with the usual result. The playing field was uneven, with state institutions bent to Mr Museveni’s will. + +Mr Besigye claimed “a creeping military coup”, and promised to respond with “defiance”. His following in the cities raises the possibility of mass unrest. But Mr Museveni is having none of it. Protests have been banned, as has live coverage of them. Policemen patrol the capital and plain-clothes thugs beat demonstrators. Even before his most recent arrest Mr Besigye’s movements were restricted—at one point he was under house arrest for 43 days—and party activists are frequently detained. + +Mr Besigye has been charged with treason before, in 2005. That case dragged on for five years before charges were dropped. Treason is a capital offence, but the state doesn’t expect a conviction, says Peter Magelah, a lawyer at Chapter Four, a human-rights group in Kampala. The aim is to keep Mr Besigye off the streets. + +Such repression is not new, says Frederick Golooba-Mutebi, a Ugandan political analyst. He thinks that tempers may cool now the election has passed. But some analysts detect a hardening mood in the cities. People are chafing under the most restrictive political climate in a decade. Recent laws give police wide powers to halt public gatherings and shut down civil-society groups. The resurgence of Mr Besigye—who just a year ago seemed a spent force—has worried the regime. + +Yet for all Mr Besigye’s charisma, the threat from the opposition is limited. It is poorly organised and weakly represented in parliament. That makes it easier for Mr Museveni, who is now 71, to remove a constitutional restriction forbidding presidential candidates who are over the age of 75. That would allow him to run again in 2021. + +Though Western donors tut about civil liberties, Mr Museveni can afford to ignore them if, as he hopes, oil starts to flow in a few years. He was always suspicious of political competition, which he blames for Uganda’s violent past, and sees less reason than ever to change course. + + + + + +Sloshed in the slow lane + +How to drive drunk in Kenya + +Clever tricks for beating the breathalyser (but not death) + +May 21st 2016 | NAIROBI | From the print edition + + + +AT A bar off Langata road, a main highway in Nairobi, Kenya’s capital, business has been struggling of late. The problem, the manager says, is that his bar is inconveniently positioned between two crossroads where officers from the police and the National Transport and Safety Authority (NTSA) often put up roadblocks to check if drivers have been drinking. “It is right what the government is doing,” he says. “But it is really squeezing us. These people with their alcoblow have taken away all of our customers.” + +The “alcoblow”—what Kenyans call a breathalyser— is relatively new in Nairobi. An effort to introduce the devices in 2006 was thwarted when drivers got a court to declare that their rights were being violated. But a traffic act in 2012 toughened penalties for drunk-driving; since then, breathalysers have been used at traffic stops. In March the NTSA acquired 45 new vehicles, from which officers can patrol and pull over drivers they suspect of imbibing. + +Yet in a country where getting round annoying rules is a national sport, and where cops are seen as extractors of bribes rather than upholders of the law, many people find ingenious ways to get away with driving drunk. In the bar on Langata road, the manager admits that when the police are around he will use the speakers to issue updates about where the road blocks are. The information comes from a network of drivers who, on a Saturday night, run a thriving business driving tired and emotional customers in their own cars past the checkpoints (but not all the way home). + + + +It is not just this bar. On Facebook, to which a growing number of Kenyans are addicted, a page called “alcoblow watch” provides updates on where officers are. Others go further. Drive on Nairobi’s roads late at night at a weekend, and you may see dizzy drivers reversing backwards up a dual carriageway to an exit or doing perilous U-turns ahead of the police checkpoints. + +Amusing as these dodges may be, the consequences are not. In 2013 as many as 13,000 people died on Kenya’s roads. In Britain, which has a somewhat bigger population and vastly more cars, the figure was 1,700. Of the ten most dangerous countries in the world for road deaths, only two, Iran and Thailand, are not in Africa. And the number of Africans who can afford to buy cars and lots more beer is only going up. + + + + + +Protests in Kenya + +Of kicking and Kikuyu + +Protests and repression bode ill for elections next year + +May 21st 2016 | NAIROBI | From the print edition + +A boot stamping on a human face—for now + +THE picture resembles something from a futuristic dystopia. A police officer in camouflage and purple body armour, a riot shield in his hand, holds his booted foot over the head of a protester, (see article) apparently ready to stomp it into the kerb. The scene was captured on May 16th in downtown Nairobi, the capital of what is meant to be one of Africa’s most stable and hopeful countries. It is an ugly glimpse of a potentially difficult year ahead, as Kenya prepares for presidential elections scheduled for August 2017. + +The protests were organised in Nairobi by the main opposition party, CORD, and its leader, Raila Odinga. They were to demonstrate against Kenya’s Independent Electoral and Boundaries Commission (IEBC), which Mr Odinga accuses of being corrupt and biased towards Jubilee, the ruling alliance of Uhuru Kenyatta, the president. Protests were also broken up in Kisumu and Kisii, two cities near Lake Victoria. Police used tear gas and water cannon as well as their batons. At least 15 people were arrested and, according to local television reports, one victim died. + +Mr Odinga has a point about the IEBC. It is “a thoroughly corrupt, incompetent organisation with heavily compromised commissioners”, says John Githongo, a journalist and veteran anti-corruption campaigner. In particular, members of the commission are alleged to have received kickbacks from a British firm in exchange for contracts to print ballot papers. In 2013 two of the firm’s executives went to prison in Britain for paying bribes, but none of the recipients has ever been punished. + +Yet the protests—and the government’s thuggish response—will unnerve investors in Kenya more than the specific allegations. Kenya’s politics tend to be fought on tribal lines. Mr Kenyatta, who took power in 2013, is from the Kikuyu tribe, which has dominated government for 29 of the 52 years since independence. He won power by building a coalition with the support of his deputy president, William Ruto, who is from the Kalenjin-speaking subgroup. Mr Odinga is from the Luo, a large group who have never held power (though one of their sons is president of the United States). + +In 2007 allegations that the election was rigged led to about 1,200 murders. Luos and Kalenjins killed Kikuyus, whom they accused of stealing the vote. Bands of Kikuyus then retaliated, rampaging through rival neighbourhoods. The violence was clearly organised, yet no one has been prosecuted for organising it. + +Some fret that mayhem will break out again. Elections in 2013 passed off relatively peacefully, largely because people feared a repeat of 2007, says Mr Githongo. But next year may be different. Although Mr Kenyatta’s and Mr Ruto’s partnership ought to be strong enough for the pair to win a second term, it is not guaranteed. Suspicions that the vote will be rigged in their favour could well spark killings. + +The police, meanwhile, are suspected of other misdeeds. Jacob Juma, a businessman who had been a prominent critic of the government, was murdered in his car on May 5th. Mr Odinga has alleged that the police were responsible. The government dismisses his claim as political opportunism. But it will need to convince a lot of Kenyans of its honesty if the next election is to pass without much bloodshed. + + + + + +Nigerian petrol subsidies + +A fuel and your money + +Petrol prices are now a bit more realistic. Will the naira be next? + +May 21st 2016 | LAGOS | From the print edition + + + +NIGERIA’S previous attempt to reduce the vast sums it squanders on fuel subsidies did not go well: protesters poured onto the streets after the price of fuel doubled in 2012. Shops, schools and petrol stations shut and the government was forced into an embarrassing U-turn. Now a new administration led by Muhammadu Buhari, a former military ruler, is taking another shot at reform. Last week the official price of petrol was jacked up 67%, to 145 naira per litre ($0.43 at black-market rates). Restrictions on who can import the stuff were also lifted. + +The new petrol price is still well below a true market price, but it is a start. Price controls fuel a huge racket: importers are paid the difference between the market rate and the Nigerian one. The government argues that the subsidy helps the poor. In fact the scheme is a cash machine that spews public money into the hands of fuel importers, employees of the state-owned oil company and government officials who collude to pocket cash paid to subsidise fictitious imports. In 2011 (the peak year), some $14 billion in hard currency was squandered on petrol subsidies. Truckloads of Nigerian petrol are smuggled abroad and sold at market prices, leaving Nigerian pumps dry. + +Since 2014 the government’s finances have been thrown into disarray, thanks to a collapse in the price of oil, which accounted for 90% of federal revenues, and disruptions to production by militants who blow up pipes and kidnap oil workers. The fiscal deficit almost doubled to 4% of GDP in 2015 and economic growth slumped to 2.7%, the slowest since 1995. + +Because oil is cheap, the subsidy payments have fallen too, easing pressure for reform. But there are still good reasons to end subsidies and free prices completely. That should end petrol shortages at a stroke. It would also give investors an incentive to build oil refineries in Nigeria, which would be lunacy now. + +Another pressing reason to deregulate is that Nigeria faces a chronic shortage of dollars. Since oil prices slumped, the trade deficit has ballooned. An open economy would adjust to such a shock by allowing its currency to devalue, making imports costlier and locally produced goods more attractive (although higher inflation would be a nasty side-effect). Instead Nigeria has insisted on defending its currency, the naira, keeping the official exchange rate pegged at 197 to the dollar. (On the black market it trades for 340.) + +The country needs about $18m-worth of fuel imports each day (and tens of millions of dollars more to feed and clothe its people and buy spare parts for factories). Reserves have fallen to $27 billion—the equivalent of about seven months’ supply. The central bank cannot provide enough dollars at the official rate to pay for all these imports and it releases only about $200m a week. This has opened new avenues for graft: people with access to cheap dollars can nearly double their money in minutes by selling them on the black market. + +Businesses without connections typically have to buy dollars there. That has translated into higher prices for almost everything, including petrol, which was supposed to sell at an official rate of 87 naira per litre for the past year but in fact sold last month at an average of almost 163 naira (see chart). + +The only way to match the supply of and demand for fuel and dollars is to let the market determine the price of both. Some analysts think that the government’s raising of fuel prices is a prelude to letting the currency slide. The central bank denies it. + +One lonely union has organised a strike against pricey petrol, but it lacks support. Protesters were reportedly stoned in Jos, a city in the centre of the country, when they encouraged traders to close their shops. A reversal seems unlikely. “I protested in 2012 but I wouldn’t do it again,” one civil servant says as his car snakes through a queue in the capital. “Nigerians have been ripped off. Something had to change.” + + + + + +Europe + + + + +Azerbaijan: Baku to the future + +Nagorno-Karabakh: A squalid little war + +Turkey v Islamic State: Poking the wolf + +Steak in France: ever rarer: The raw and the cooked + +Plebiscites in Europe: Referendumania + +Charlemagne: Vexed in Vienna + + + + + +Azerbaijan + +Baku to the future + +A post-Soviet autocracy tries to transmute black gold into modernity + +May 21st 2016 | BAKU | From the print edition + + + +NEXT month around two dozen Formula One racecars will speed through the gleaming centre of Baku, the capital of Azerbaijan. They will zoom along the shore of the oil-rich Caspian Sea, past five-star hotels and shops displaying Brioni suits and Chopard watches. They will also race past the less attractive side of Azerbaijan: its sputtering economy, oppressive political system and simmering conflict with Armenia. At such speed, it will be hard to spot the signs of insecurity in this former Soviet republic of 10m people squeezed between Iran, Turkey and Russia. + +Formula One’s European Grand Prix is a fitting vanity project for Azerbaijan. The country has transformed itself from a failing state in the early 1990s to a rich and corrupt oil economy. Between 2003 and 2015 oil and gas revenues were $119 billion; the cash was spent on infrastructure, weapons and ostentatious follies. Some of the money the country earned from oil and gold mines has been funnelled into powerful people’s offshore accounts. But enough of it trickled down to fuel strong domestic demand, largely satisfied by imports. + + + +When the oil price crashed, the music stopped. Baku’s taxi-drivers now grumble about rising prices and the money being wasted on the Grand Prix. Azerbaijan had to devalue its currency twice last year, after its central bank burned through some $10 billion of foreign-currency reserves trying to defend the manat. Banks are weighed down by some $2 billion of unpaid loans, say some analysts. The State Oil Fund of Azerbaijan (SOFAZ), which takes in all of the country’s oil and gas revenues, is still sitting on $35 billion—roughly equal to a year’s GDP—but spending has been cut back and the budget now conservatively assumes a price of $25 a barrel. + +Azerbaijan has also been hit by the recession in neighbouring Russia, where hundreds of Azerbaijanis once worked. The economy was 3.5% smaller in the first quarter than a year earlier. Inflation is in double digits. Rising bread prices caused riots in several regions, quickly pacified with cash and police truncheons. + +Azerbaijan’s political clans, who control much of its economy, have been jolted out of their comfort zone. For much of his rule the legitimacy of Ilham Aliyev, the autocratic president who inherited his post from his father, rested on Western-operated oil and gas projects. Now he must choose between modernising the country or becoming more dictatorial. + +Spooked by the Maidan revolution in Kiev in 2014, Azerbaijan copied some of Russia’s repressive practices. Non-governmental organisations were deemed agents of foreign influence; dissidents were jailed. But Russia’s annexation of Crimea and the war in eastern Ukraine worry Mr Aliyev, too. Azerbaijan’s Nagorno-Karabakh region is occupied by Russian-backed Armenia (see article), and has long resisted the presence of Russian troops in the region. Struggling to cope with cheap oil and the need to finance energy projects, Mr Aliyev is now seeking to repair relations with the West. + +Shortly before his trip to Washington, DC, for a nuclear-security summit in March, Mr Aliyev released a number of political prisoners. But he kept two prominent ones in jail: Ilgar Mammadov, leader of REAL (“republican alternative”), a pro-Western opposition movement; and Khadija Ismayilova, an investigative journalist and anti-corruption activist. To dodge the security services, REAL cells now masquerade as cyclists’ associations or book clubs. Natiq Jafarly, the group’s secretary, says there has been an inflow of new members from small businesses and even from the state oil firm, Socar. + + + +To appeal to the middle class, Mr Aliyev is trying to modernise the country while maintaining a tight grip on politics. He has launched a “one-stop shop” public-services bureau that largely eliminates the need to pay bribes for official documents. Mr Aliyev has sacked the chief of Azerbaijan’s security service, the organisation which succeeded the local KGB (once headed by Mr Aliyev’s father). He has also promised to reform the economy. “We were planning to do reforms in about ten years’ time. Now we have to do them a lot sooner,” says Natiq Amirov, Mr Aliyev’s assistant for economic reforms. The country has built plenty of infrastructure, he says; what it lacks is human capital. + +Azerbaijan has been talking about diversifying its economy for years. Now that “empty rhetoric” is starting to inch towards reality, says a Western diplomat. The model for the reforms is Malaysia. Much of the elite believes it can import economic reforms without touching the political system—just as London-style taxis have been brought over to cruise Baku’s streets, and the first lady’s favourite restaurant has been imported from Marbella, chef, cutlery and all. + +Azerbaijan lacks a bureaucracy capable of reform. (The very word scares public-sector workers, says Mr Amirov.) But it does have bright young Western-educated talent. Taleh Ziyadov, who holds a doctorate from Cambridge University, heads the free-trade zone at Baku’s new port, a point on China’s “One Belt, One Road” infrastructure link to Europe. “We don’t have time to wait for the whole country to reform,” says Mr Ziyadov. + +The training ground for this new elite is the Azerbaijan Diplomatic Academy (ADA), a leafy, modern campus next to a zoo. The curriculum is entirely in English; many of the staff are international. Its director, Hafiz Pashayev, is the 75-year-olduncle of Azerbaijan’s first lady and a former ambassador to Washington. Its mission, he says, is “to create a special milieu where students are free to think”. + +Mr Pashayev, a former Soviet physicist, is well aware that ADA’s graduates will eventually press the existing elite for more power, just as the Soviet intelligentsia did in the 1980s. But as a member of one of the country’s powerful families, he hopes to foster a managed succession of the elite, rather than a radical break of the kind that happened in Georgia or Ukraine. + +That a clan-based autocracy can pull off such a modernisation programme seems doubtful, but nationalism is a strong motivator. “Our objective is to propel the country to the top position in the world,” says Mr Pashayev grandiosely. ADA might succeed. But in a country of oil wells and fast cars, the lure of rent-seeking and corruption is strong. + + + + + +Nagorno-Karabakh + +A squalid little war + +Twenty years on, Azerbaijan and Armenia are fighting in the same trenches + +May 21st 2016 | SARIJALY | From the print edition + +Heroes of the motherland + +THE road to Agdam, a small town that was once part of Azerbaijan, runs out abruptly and turns into a front line. Soldiers walk nervously along the mound of earth that separates Azerbaijan from Nagorno-Karabakh, a disputed territory controlled by Armenia since the two countries fought a war in the early 1990s. That war left at least 20,000 dead and a million displaced. Most of the conscripts are younger than the conflict, and have seen Armenians only through a slit window in a machinegun redoubt. + +The conflict has been simmering ever since, and in early April it erupted again. Azerbaijan’s well-equipped troops staged an offensive, retaking a couple of hills. Total deaths, on both sides, were estimated at 200. But the psychological effect of the“four-day war”, as it is now called in Azerbaijan, vastly exceeded the military gains. Baku was filled with national flags as crowds celebrated Azerbaijan’s first “victory” since the humiliating defeat 20 years ago. + +“Psychologically, it was like Stalingrad. It proved that we can achieve victories,” says Fariz Ismailzade, a vice-rector of ADA university in Baku. Many were furious that Azerbaijan’s army stopped after Russian interference. + +Russia is both a mediator and a party in the conflict: it has military bases in Armenia and sells arms to both sides. The standoff allows Moscow to keep the entire region on tenterhooks. “Had it not been for Russia, we would have probably settled the conflict by now,” says Elkhan Shahinoglu, the head of the Atlas Political Research Centre in Baku. + +Both Azerbaijan and Armenia are weary of Russia. Serzh Sargsyan, Armenia’s president, shunned a Russian invitation to come to Moscow for talks with his counterpart in Azerbaijan, Ilham Aliyev. Armenia, meanwhile, was angry that Russia did not back it fully in the clash. Instead Mr Aliyev and Mr Sargsyan met in Vienna on May 17th, along with the foreign ministers of Russia, France and America, and agreed to hold more substantial talks next month. + +Turkey, Iran and Russia all have interests in the South Caucasus, and none wants a full-blown war. But the patriotic euphoria in Azerbaijan and Armenia may not be entirely controllable. In the Caucasus emotions often run too hot for reason to prevail. + + + + + +Turkey v Islamic State + +Poking the wolf + +The jihadists may be goading Turkey to invade Syria + +May 21st 2016 | GAZIANTEP | From the print edition + +Islamic State is not winning hearts and minds + +THERE are no sirens or warnings of any kind. In Kilis, a border town of about 200,000 in Turkey’s south, rockets fired by Islamic State (IS) terrorists from nearby Syria fall from the sky, tearing through buildings and cars. “You have a few seconds to take cover and then, boom,” says Mustafa Cerrah, an estate agent, standing near the site of a blast that killed four Syrian refugee children. Since the start of the year, the rockets have left 21 locals dead. + +Turkey has responded by pounding IS positions with artillery. “Turkey has done as much as it can, but it is still not enough,” says the town’s mayor, Hasan Kara. The only way to prevent attacks, he says, echoing the national government’s position since the start of the bloodshed, is to establish a safe zone in northern Syria. Western states are lukewarm about the idea. “Our security is not a priority for many of our allies,” complains a Turkish official. + +IS has been doing more than firing rockets. Since last year, suicide-bombers linked to the group have killed more than 150 people across Turkey. On May 1st a homegrown jihadist detonated a car bomb in front of a police headquarters in Gaziantep, a southern Turkish city, killing two officials. Weeks earlier, IS shelled a border post about 80km east of Kilis and a Turkish training base in northern Iraq. Its propaganda increasingly calls for attacks on Turkish forces. A recent edition of an IS magazine featured a photograph of a captured Turkish soldier believed to be held in the group’s Syrian stronghold, Raqqa. + + + +Despite a wave of arrests, IS’s network in Turkey is strong, especially in large urban areas. In Gaziantep, Syrians opposed to the group fear for their safety. For IS, says Abd Hakawati, a journalist who fled Syria last year, “nothing is impossible here. No one knows who is next.” IS loyalists have killed four Syrian activists in Gaziantep and Sanliurfa, another city close to the border, since last October. Mr Hakawati has been threatened several times, including by a man who held a knife to his throat. “I’ve been sentenced to death,” he says. + +Most observers see IS’s latest attacks as retaliation against Turkey and America, who have been trying to clear the group from a 98km-long strip of land along the border, with assistance from Syrian rebel allies. Aaron Stein, a senior fellow at the Atlantic Council, says that the rocket attacks ramped up when the offensive started. “They’re trying to show that there is a price to be paid,” says a Western diplomat. + +Some officials think IS may be goading Turkey into a ground operation in Syria. Turkey’s president, Recep Tayyip Erdogan, has not ruled one out. “We will not hesitate to take the required steps,” he announced on May 12th. A few days earlier, a small team of Turkish special forces crossed into Syria to help target coalition air strikes. + +Mr Erdogan does not like to lose face. But Turkey is unlikely to invade. Osman Bahadir Dincer, a military analyst in Ankara, thinks it would be a “huge disaster”. Turkish troops risk getting bogged down in a fight with Russian, Iranian and Kurdish forces. Since last summer Mr Erdogan’s government has lost over 300 policemen and troops to clashes with Kurdistan Workers’ Party insurgents at home. “The risk of acting alone in Syria is too high for Turkey to handle,” says Mr Dincer. + + + + + +Steak in France: ever rarer + +The raw and the cooked + +Beef remains an anthropological key to French identity + +May 21st 2016 | PARIS | From the print edition + + + +“THERE is no alimentary constraint which does not make the Frenchman dream of steak,” wrote Roland Barthes, a French literary theorist, in 1957. Rare, in a lightly charred crust, it is the “comfortable bourgeois meal”. Flat and yellow-edged “like the sole of a shoe”, it forms the “bachelor’s bohemian snack”. An expression of muscular full-bloodedness and patriotic values, wrote Barthes, steak “communicates its national glamour” to the humble frites (chips) with which it shares a plate. + +The French still tuck into more steak than any other European country, bar Denmark. They put away 25 kilograms (55 pounds) of beef per head every year, the equivalent of two generously cut steaks each week—fully a third more than the British (whom the French have long liked to call les rosbifs). A butcher’s display in France is a sumptuous celebration of scarlet bovine flesh. The habit is deeply rooted. Honoré de Balzac ate a steak a day while writing his novels. Auguste Escoffier, a French chef who brought fine dining to London in the 1890s, meticulously listed the cooking instructions (and sauces) for each cut. Do not flatten raw steak, he ordered, or this will “break the fibres, prompting the blood to separate from the flesh during cooking” and hence drain it of its glorious flavour. + +Yet today steak consumption has gone into an unprecedented decline, as poultry sales have overtaken beef. Since 1990 beef consumption in France has dropped by 20%, while that of poultry has risen by a quarter. One reason is simply that beef is pricier. Health concerns about excessive intake of red meat have also played a part. Recent reports exposing cruelty to animals at a few French slaughterhouses will not have helped, either. + +Above all, the rise of le sandwich, now commonly consumed at lunch by office workers in Paris, has robbed traditional brasseries of sit-down clientele. Over 2 billion sandwiches are sold each year in France, with home-grown chains such as Cojean or Paul competing with foreign brands like Pret A Manger. “We still buy quality meat at the butcher,” says Denis Lerouge of Interbev, a meat-industry lobby, “but we are increasingly replacing steak-frites at lunchtime with a chicken salad.” + +It is hard nonetheless to imagine steak losing its place on the menu, or in the French mind, altogether. In contrast to its place in Anglo-Hispanic culture in North and South America, steak in France is not linked to the masculinity of horseback cattle-ranching. It has more to do with French rural tradition and terroir: the sense of local identity that links what is on the plate to its regional origin, such as the Charolais or Limousin breeds of cattle. “At the weekend people still want to bring the family together around a rôti de boeuf,” says a Paris butcher, tying up a fresh cut with cotton twine and a firm butcher’s knot. Red meat remains linked in the popular imagination to strength and virility, as Patrick Rambourg, a food historian, notes. As for vegetarians, in France they are still as rare as, well, a perfectly cooked steak. + + + + + +Plebiscites in Europe + +Referendumania + +Direct democracy is spreading across Europe. That is not always a good thing + +May 21st 2016 | From the print edition + + + +JAN HERFKENS, a 25-year-old law student in Amsterdam, did not want to vote in the Netherlands’ recent referendum on the European Union’s trade deal with Ukraine. “We already have one big referendum,” he says, meaning the general election; he would rather elect representatives to handle policy issues than vote on them himself. The rejection by 61% of voters of the trade deal only created “disorder and chaos” for the government, he thinks. + +Mr Herfkens seems to be in the minority. Europe is seeing a rising tide of referendums. In the 1970s, on average, three were held each year. Now the figure is eight (not counting Switzerland and Liechtenstein, two countries with long traditions of direct democracy). Britain’s referendum on whether to leave the EU is due on June 23rd. Italy will hold one on its constitution before October; Viktor Orban, Hungary’s prime minister, plans one on the EU’s migrant relocation scheme. In the Netherlands activists are preparing to take on the EU’s trade deal with Canada and the Transatlantic Trade and Investment Partnership, another trade proposal. + +Fans of direct democracy argue that it engages citizens. Referendums “stimulate debate”, claims Anne-Marie Mineur, a Dutch socialist MEP. In Switzerland voters get pamphlets full of charts on the issues each time they go to the polls. Since Scotland’s referendum vote in 2014 to stay in the United Kingdom, interest in politics has surged there, says Matt Qvortrup of Coventry University. Certainly, membership of the pro-independence Scottish National Party has soared: it has gone from 25,000 before the vote to over 100,000 now. More than three-fifths of Ireland’s population voted in its referendum on same-sex marriage last year, and hundreds of young expatriates still on the voting register flew back to take part. + +But the recent referendums are not just wholesome exercises in civic engagement. They also reflect widespread alienation from politics and anger at the governing class. Support for old political parties has withered, while populist, anti-EU parties are gaining ground. Governments derided as elitist and out of touch find it hard to resist calls to submit controversial issues to a popular vote. The most vulnerable target is the EU—and not just in Britain. According to Ipsos-MORI, a pollster, 58% of Italians and 55% of the French now want a referendum on EU membership (though slightly fewer actually want to leave). + +Some referendums are called by mainstream politicians trying to fend off pressure from populists, as with Brexit. Others are pushed by populist leaders mustering ammunition against EU policies they dislike. Mr Orban, who is fighting against the European Commission’s plan to distribute refugees among member states, intends to ask his compatriots: “Do you agree that the European Union should have the power to impose the compulsory settlement of non-Hungarian citizens in Hungary without the consent of the National Assembly of Hungary?” (Note the scrupulously neutral wording.) Still other referendums are pushed by single-issue groups, often with an anti-EU slant. The Dutch Ukraine vote was launched by Eurosceptic activists taking advantage of a new law that grants a referendum on any issue that can attract 300,000 supporting signatures. The vote became a proxy for discontent with the EU, not just the trade deal. + +Referendum fever poses several problems. For a start, it makes it increasingly hard to agree on transnational policies. Treaties are generally signed by governments and then ratified by legislatures. Adding referendums to the mix hugely complicates matters. “It’s almost impossible now to see how 28 states would ratify an EU reform treaty,” says Stefan Lehne of Carnegie Europe, a think-tank. Minorities of voters in smaller countries may be able to stymie Europe-wide policies; just 32% of Dutch voters took part in the Ukraine referendum. This could cripple the European project. “Europe cannot exist as a union of referendums,” says Ivan Krastev, head of the Centre for Liberal Strategies, a Bulgarian think-tank. + +Referendums can lead to incoherent policies. Voters looking at issues in isolation may approve measures that conflict with each other, such as voting for higher spending and big tax cuts, as they often have in California. Direct democracy cannot magically abolish maths. + +Liberals cheered when an Irish plebiscite legalised gay marriage in 2015. But some argue that human rights should not be subject to majority vote. What a majority gives, it can also take away. + +The idea that referendums foster engagement is questionable, too. As they have proliferated, the median turnout for nationwide referendums has fallen from 71% in the early 1990s to 41% in the past few years (see chart). Of eight referendums in Slovakia since 1994, only one on EU membership had a turnout higher than the threshold of 50% required for the result to be valid. Such apathy can be costly. In Italy a referendum in April pushed by local governments (and opposed by Matteo Renzi, the prime minister), on whether or not offshore oil rigs should continue operating, did not reach the 50% turnout required—but still cost around €300m ($340m). + + + +Paradoxically, then, referendums may end up increasing voters’ alienation. In countries such as Switzerland, the political system has adjusted to them. But elsewhere, thinks Catherine Fieschi, director of Counterpoint, a British think-tank, they tend to make politicians look as if they do not know what they are doing. This is especially likely when governments cannot provide the result that voters demand (as in the Netherlands’ Ukraine vote—the 27 other EU members have little interest in renegotiating the treaty just to satisfy a few Dutch voters). + +Direct democracy is fine for things that don’t matter, such as the Eurovision song contest. But it is no way to run a country, let alone a continent. + + + + + +Charlemagne + +Vexed in Vienna + +One of Europe’s most steadfastly dull countries has suddenly turned interesting + +May 21st 2016 | From the print edition + + + +WHAT is Austria’s problem? In Vienna the streets are clean, the trams rattle reliably past and the bow-tied waiters still dispense their Sachertorte with supercilious smirks. The country is well-run, prosperous and secure. There are no neglected banlieues. Even the refugees who poured through last year have stopped coming. And yet Austria is on the verge of electing a far-right president from a party with an unsavoury past. + +Last month, for the first time in post-war Austria, voters in the first round of a presidential election spurned the candidates backed by the centre-left Social Democrats (SPÖ) and centre-right People’s Party (ÖVP), which run the country in a “grand coalition”. In Sunday’s run-off they must choose between Norbert Hofer, the fresh-faced candidate of the far-right Freedom Party (FPÖ), or Alexander Van der Bellen, an aged professor backed by the Greens. Mr Hofer is the favourite, and the rest of Europe is alarmed. + +The FPÖ operates from a familiar populist-right playbook. The suits have grown sharper while the outright racism has been cloaked. The hostility has shifted from Jews to Muslims, a strategy that resonates with voters of Serbian background, whom the party has assiduously cultivated. Its leaders prefer social media to the traditional kind. Its base is poorly educated rural men. It has no good words for America but plenty for Vladimir Putin. + +If he wins, Mr Hofer is unlikely to wreak constitutional havoc. But should Heinz-Christian Strache, the FPÖ’s chairman, become chancellor at the next federal election (due in September 2018, if not sooner), some fear a Hungarian-style attack on independent institutions. Others worry about squabbles with neighbours; Mr Strache has mused that the German-speakers of South Tyrol, across the Italian border, might like to rejoin their Austrian brethren. What do voters see in this outfit? + +For decades Austria was a living example of the old saw that there is no point in voting because the government always gets in. The Second Republic, established after the war, has been run almost without interruption by either, or (usually) both, the SPÖ and the ÖVP. Under Austria’s Proporz system, jobs, housing and business licences were doled out on the basis of party membership. Laws are written by party-affiliated labour or business groups and handed to parliament to rubber-stamp. Even now two motoring associations and two mountain-trekking clubs exist, to ensure that Austrians need never dally with another political tribe when their cars break down or when on an Alpine stroll. + +This arrangement worked when growth was high and jobs plentiful. But when the system faltered, cronyism made an easy target for genuine opposition parties. Austria, which never went through a thorough German-style post-Nazi reckoning, was not inoculated against a xenophobic party like the FPÖ. The party chugged along for years as a political also-ran, until hostility to the clubbiness of Austrian politics lifted it into the major league. + +The FPÖ became a serious force in the late 1980s under a charismatic leader, Jörg Haider, who was not averse to praising Nazi Germany. In 1999 it won 27% of the vote and joined an ÖVP-led coalition. (Austria’s horrified EU partners briefly cut diplomatic links.) But after a flurry of early reforms the government turned out to be no less wedded to the methods of patronage than its predecessors. The extent of the corruption the FPÖ practised while in office is only now emerging. + +The party split, and for a while sank. Mr Haider died in a car crash in 2008. But last year’s refugee crisis revived it. Austria’s hapless social-democrat chancellor, Werner Faymann, initially supported Germany’s open-door policy before pirouetting gracelessly towards border closures and asylum quotas, as the FPÖ had advocated from the start. The grand coalition fed the discontent with aimless rows. The FPÖ has now topped polls for over a year. On May 9th, under pressure from his disgruntled party, Mr Faymann abruptly resigned. + +After being sworn in this week his successor, Christian Kern, admitted that the grand coalition was losing voters’ trust. His speech also revealed the constraints on the government. Mr Kern backed Mr Van der Bellen for president but was unable to offer the SPÖ’s formal support, because many of its members hope to join the FPÖ in coalition. The ÖVP feels the same. The government now has its last chance to show that it has not run out of ideas. There is plenty to do, from schools reform to slashing red tape to constitutional changes. Some 90,000 asylum-seekers need integrating. “The ÖVP, and in particular the SPÖ, thought reforms would lose them elections,” says Franz Schellhorn, director of Agenda Austria, a think-tank. “Now the opposite is true.” + +The best lack all conviction + +The centre is struggling to hold all over Europe. In Austria the mainstream parties did their best to turn politics into dull mush, yet it has suddenly turned hard and consequential. The SPÖ and ÖVP, having brought rising living standards and preserved social peace for decades, are visibly out of ideas. Many Austrians cannot take apocalyptic talk of the FPÖ’s rise seriously. In France voters unite behind candidates they dislike to block the far-right National Front. But Mr Van der Bellen can rely on no such coalition to propel him to the presidency. For voters of a conservative bent Mr Hofer may actually represent the safer option. + +So in many respects this is an Austrian story as much as a European one. But these days every European election carries a larger meaning. Far-right parties across Europe will cheer a victory for Mr Hofer on Sunday; liberals will lament it. Austria is not about to return to the 1930s. But the election of Western Europe’s first far-right head of state would still mark a solemn moment. Austria’s do-nothing coalition is on the front line of a struggle that many other centrist parties across Europe are facing. Some appear to have given up. This is Austria’s problem. But it is also Europe’s. + + + + + +Britain + + + + +Faith and race: Integration nation + +The murder of an Ahmadi: Preparing for the worst + +Brexit brief: We plough the fields and scarper + +Brexit and the Bank of England: He can, Carney + +NHS disputes: Do resuscitate + +Data in schools: Heads in the clouds + +Drinking habits: More tea, totally + +Bagehot: The Cameron legacy + + + + + +Faith and race + +Integration nation + +Are Britons of different backgrounds coming together or drifting further apart? + +May 21st 2016 | BURNLEY AND NEWHAM | From the print edition + + + +BENEATH a photograph of the queen, flanked by union flags, Britain’s newest citizens pose for an overeager cameraman in the registry office of Newham council. In a short ceremony, officiated by a man who fled the Sri Lankan civil war in the 1980s, six Bangladeshis, two Indians, a Pakistani, an Afghan, a Pole and a Hungarian have just sworn allegiance to the crown, pledging to give their loyalty to Britain and to “uphold its democratic values”. They all stand for the national anthem, a small child blows a loud raspberry, and their new life begins. + +The ceremony is emblematic of the best of multi-ethnic Britain, of immigrants promising fealty to their new country and its values. Yet the mere fact that these ceremonies exist is symptomatic of deeper fears that the picture of a happily integrating country might not be so rosy after all. Citizenship tests were introduced in 2002 because of a realisation by the then Labour government that the laissez-faire approach to immigration and ethnocultural diversity had not necessarily led to the integration and social cohesion that had been expected. The tests and ceremonies were to start inculcating a sense of common values that had previously been lacking. Since then, however, a small band of critics has been warning that politicians still remain far too complacent about the problems provoked by Britain’s diverse society. + +The most celebrated of these critics is Trevor Phillips, a former head of the Equality and Human Rights Commission, responsible for enforcing non-discrimination laws. Once a supporter of what he calls “organic integration”, the old model described by Roy Jenkins, Labour’s home secretary in the 1960s, as “equal opportunity, accompanied by cultural diversity, in an atmosphere of mutual tolerance”, Mr Phillips has since become one of its fiercest critics. His views carry extra weight because he is black. Now, in his latest, most provocative pamphlet, “Race and Faith: The Deafening Silence”, he warns that Britain is “sleepwalking to catastrophe” because politicians are too squeamish to face up to the threats from the multicultural society. + +Mr Phillips’s main complaint is that in the name of multiculturalism, Britain has allowed some minority groups to drift so far away from the mainstream of the dominant majority that they now hold values and ambitions that are far away from Britain’s liberal ideals. This reluctance to tackle the “dark side of the diverse society”, he argues, has encouraged authorities to “shy away from confronting wicked acts for fear of having to address their ethnic or cultural component”. He cites the example of the recent abuse of young white girls in Rotherham by men of mainly Pakistani origin, to which police turned a blind eye. + +Indeed, notwithstanding the election of Sadiq Khan as the new mayor of London, it is Muslims, argues Mr Phillips, who seem to have diverged most. Polling that he commissioned for a television documentary showed that, although 86% of Muslims felt a strong sense of belonging to Britain, 32% refused to condemn people who would take part in violence against those who mock the prophet and only 52% thought that homosexuality should be legal. Consequently, Mr Phillips wants Britain to abandon organic integration in favour of a more muscular approach. His calls come as the government, in the Queen’s Speech on May 18th, outlined plans to monitor internet use and new powers of intervention to disrupt extremists’ activities and tackle radicalisation of children (see article). + +Whether to take Mr Phillips’s calls seriously depends on how far Britain is actually integrating on present trends. Here the evidence is mixed, and hotly contested. On the positive side, the number of people claiming a mixed-race background doubled, to 1.2m, between 2001 and 2011. There has been a decline in racial prejudice. In terms of residence, the data indicate that every ethnic minority has become less ghettoised, and that the black Africans, who used to be among the most clustered, are spreading out the most quickly. + +However, as Eric Kaufmann of Birkbeck, University of London, points out, there is often a movement of minorities towards “superdiverse” areas, such as Newham, where white Britons remain the biggest ethnic group but now make up only 17% of the population. From 2001 to 2011, the proportion of ethnic minorities who live in wards where whites are in a minority rose from 25% to 41%. Indeed, the only exception to the pattern of decreasing segregation for most districts is the white British (see chart), although segregation remains relatively low for this group, too, as it is large and evenly spread throughout most districts. Yet overall, as Mr Kaufmann observes, minorities are entering white areas but whites are often avoiding minority areas, producing a growing number of zones where minorities are relatively isolated from whites. + + + +Inter-marriage, a good marker of integration, remains low, although it is rising slowly. Afro-Caribbeans are inter-marrying, and that might have something to do with the fact they are an older immigrant group. Inter-marriage shifts identities more than anything, says Mr Kaufmann. In all, this points to two separate problems, a white shift to the suburbs, and the stubborn but isolated non-integration of mainly Pakistani-origin groups in the former mill towns of the north such as Bradford, Oldham and Burnley. Here, poverty and economic decline has led to the surly separation of a left-behind, resentful white working class and a Muslim minority. + +Burnley, for example, remains divided into its Bangladeshi, Pakistani and white British districts, and there is little evidence of mixing. It was from Bradford that one man recently travelled to kill an Ahmadi Muslim, setting off alarms that the sectarian divisions of Pakistan have been allowed to spread unchecked into the Muslim community in Britain (see article). + +However, Sir Robin Wales, the mayor of Newham, remains optimistic. He has pioneered a “nudge” approach to integration, rather than a muscular one. The council organises hundreds of events to encourage people to mix in neighbourhoods, and free English language tuition is offered to anyone who wants it. It does not fund single-ethnic or single-religious activities of any sort, to discourage sectarianism. Even white Britons are returning to the borough, he claims. This may be to do with the relatively cheap housing there but, if true, would show that the likes of Mr Phillips don’t have to despair quite yet. + + + + + +The murder of an Ahmadi + +Preparing for the worst + +Muslims divide over how to respond to a sectarian killing + +May 21st 2016 | From the print edition + + + +THERE are few signs of life at the Stockwell Green mosque in south London at the moment. The gates are padlocked and the telephones have been disconnected. And some hope it will stay that way. + +For the mosque is at the centre of a dispute within Britain’s Muslim community over how it should respond to the murder of a Muslim shopkeeper in Glasgow on March 24th. The killing was particularly shocking because the victim, Asad Shah, was a member of the pacifist Ahmadiya sect, and his assailant was a Sunni Muslim from Bradford. The Ahmadiya have long been harassed and discriminated against by mainstream Muslims in Pakistan and Indonesia, and this has often turned to violence. But this was the first time it had happened in Britain. + +The weeks since have led to some self-examination among Muslims. But to prevent another atrocity, outsiders say the bigotry that might have contributed to it now has to be tackled head-on, beginning with the Stockwell mosque. + +The Ahmadi consider themselves Muslims, but differ from the Sunni and Shia because they believe Mirza Ghulam Ahmad, a 19th-century Indian who founded their tradition, was a latter-day prophet. In many Muslims’ eyes, this makes them blasphemers. Pakistan’s Ahmadis, of whom there may be 4m, were declared to be non-Muslims by the government in 1974; in effect, their faith has been criminalised. There are about 25,000 Ahmadis in Britain, which has become something of a refuge from the violence of Pakistan. + +Yet it is now clear that the sectarianism of Pakistan has pursued them to Britain, particularly in the form of the Khatme Nubuwwat movement, with which the Stockwell Green mosque is associated. The purpose of the movement (meaning “finality of the Prophethood”), which one official says started in Britain in 1983, is to refute the claims of the Ahmadiya, and to inform all Muslims that they are in fact “traitors to Islam”, as the Khatme Nubuwwat Academy’s website reminds everyone. The same website helpfully lists all the fatwas against the Ahmadi in Urdu, English and Arabic. Readers learn that the “dangerous” Ahmadiya (called by a derogatory term) are a “destructive” sect with a “filthy agenda” that helps Zionism. Muslims are urged not to have anything to do with them. + +One imam at the academy, a modest place in east London, argues that all this is merely “academic”, a learned refutation of Ahmadiya doctrine. However, after the death of Mr Shah the Ahmadi are asking whether this sort of propaganda is brainwashing young Muslims and inciting them to violence. The Muslim Council of Britain (MCB) has been criticised in the past for not acting to counter it. This is partly because it does not recognise the Ahmadis as Muslims either; but it has condemned Mr Shah’s murder, and insists that the Ahmadis can be argued against “without vilifying or demonising them”. To this end, it has suspended the Stockwell Green mosque’s membership of the MCB and has set up a panel to investigate whether it was inciting hatred. Leaflets calling for the killing of Ahmadis if they did not convert to mainstream Islam were found in the mosque after the murder of Mr Shah. + +This response is too lame for some, however. One activist, Sadaf Ahmed, has launched a petition for the government to conduct an official investigation into the activities of Khatme Nubuwwat. She points out that the group’s speakers travel freely to Britain to vilify the Ahmadis. Qari Hanif Qureshi, a hate preacher who called for the death of Salmaan Taseer, an ex-governor of Punjab who challenged Pakistan’s blasphemy laws and was murdered for it in 2011, spoke on May 4th at Luton mosque. Ms Ahmed argues that “If we replace the word Ahmadi in any of the Khatme Nubuwwat’s speeches or literature with Jew or Muslim or Hindu, we’d be disgusted at their hateful rhetoric.” + +Many Ahmadis are concerned that too much casual denigration—posters in shops urging Muslims to “beware” of them, for instance—goes unpunished in the name of free speech. They fear that if the authorities, both Muslim and secular, don’t crack down now, then tolerance of such intolerance will simply lead to more murders. + + + + + +Brexit brief + +We plough the fields and scarper + +Although agriculture could lose out, most farmers seem to back Brexit + +May 21st 2016 | From the print edition + + + +AGRICULTURE has long troubled Britain’s relations with the European project. It was partly concerns for French farming that led Charles de Gaulle to veto British efforts to join in the 1960s. The excesses of the common agricultural policy (CAP), with its beef mountains and wine lakes, drove up Britain’s budget contribution in the 1980s, before Margaret Thatcher won a rebate. But one corollary was that British farmers did well from membership. Even now, after several rounds of CAP reform, EU subsidies via direct farm payments make up 54% of British farmers’ income. And the EU takes 62% of British agricultural exports. + +One might thus expect farmers to back staying in. In April the National Farmers Union came out in favour, citing a report into Brexit that it had commissioned from Wageningen University in the Netherlands. The report concluded that two plausible post-Brexit outcomes would mean higher food prices, but a third option of total trade liberalisation would lead to big price (and wage) cuts. The precise effect on farmers’ incomes would depend on whether direct farm payments continued, which is unknowable. Despite this, two recent polls by Farmers Weekly have found big majorities (58% of all farmers and 62% of young ones) backing Brexit. Why? + +One reason is that, like lots of older rural voters, farmers are Eurosceptic and fretful about sovereignty and immigration (though, ironically, many rely on seasonal migrant workers at harvest time). More global competition, lower food prices and the relative strength of sterling have also made farmers’ lives harder. + +Getting fleeced? + +Reform of the CAP also continues, not usually to producers’ benefit. Although agricultural spending takes 40% of the EU budget, that is down from nearly three-quarters 30 years ago. Most price supports have gone, as have milk quotas. The British government is leading efforts to phase out direct farm payments in the next budget round. And more emphasis on greenery has meant a mass of environmental regulations on things like pesticide use and crop rotation that farmers find irksome. + +They also complain loudly about DEFRA, the Whitehall department in charge. Many accuse it of adding extra rules to those from the EU. Its Rural Payments Agency (RPA) has been slow to pay out subsidies, thanks to computer glitches and other snafus. One Oxfordshire farmer says he has told the prime minister that both DEFRA and the RPA are not fit for purpose. Many farmers believe their more politically powerful European counterparts get better treatment. + +Lastly, some pro-Brexit farmers take heart from the Leave campaign’s promises to cut red tape and maintain or even increase farm subsidies. Yet promises to reduce regulation should be taken with a pinch of salt. The British government has been at the forefront of those calling for green rules and DEFRA has shown that home-grown regulation can be as burdensome as anything from Brussels. + + + +INTERACTIVE: The Economist's “Brexit” poll-tracker + +Promises of more money rely on the claim that leaving the EU will save Britain’s EU budget payments of £350m ($510m) a week. But when the rebate and EU spending in Britain is accounted for, the net payment is only £120m a week. Moreover, Brexiteers have promised help to many others who are worried about losing EU cash: universities, scientists and researchers, and regions like Cornwall, Wales or Scotland (agricultural policy is a devolved responsibility). And the official Leave campaign wants to divert EU budget payments to the National Health Service. + +For farmers, as for other businesses, Brexit would bring uncertainty. They might do well (Norway and Switzerland, both non-EU members, subsidise their farmers even more lavishly). A fall in sterling could be helpful. But free-market Brexiteers might also try to scrap agricultural protection, as New Zealand did in the 1980s. As one farmer looking out over 5,000 acres of Wiltshire concludes: “We really need the French to fight our corner, and they won’t help us outside the EU.” + + + + + +Brexit and the Bank of England + +He can, Carney + +The governor is right to intervene in the debate over Europe + +May 21st 2016 | From the print edition + +BREXITEERS are livid about comments made at a press conference on May 12th by Mark Carney, the governor of the Bank of England. He presented the bank’s latest inflation report, and then went on to concede that a vote to leave the European Union could “possibly” tip Britain into a “technical recession” (defined as two consecutive quarters of negative growth) and destabilise financial markets. Jacob Rees-Mogg, a Conservative MP and prominent Brexit campaigner, said that the governor “should be fired” for his comments. + +The accusation against Mr Carney is that, by focusing on the problems associated with Brexit, he has taken a political position and thus compromised the bank’s independence. But this is to misunderstand how the Bank of England works. Every inflation report sets out the big risks facing the British economy—the usual suspects recently have been the euro crisis and China’s slowdown. The nine-member monetary-policy committee thinks the referendum is currently the biggest threat to financial stability (look at the currency markets and it is hard to disagree). Britain’s current-account deficit, at an all-time high of 7% of GDP, will be an obvious weakness if Britain votes Leave. + +That logic also explains why Mr Carney did not weigh in so heavily in the run-up to the vote on Scottish independence, a seeming inconsistency for which even those voting Remain have rebuked him. Back then Mr Carney merely said that an independent Scotland could not share the pound. His intervention was minimal because Scottish independence was not a big risk to Britain’s overall economic outlook. As the minutes from the bank’s financial-policy committee in September 2014 show, the biggest problems in the event of a “yes” vote for independence would have been encountered by financial firms with headquarters in Scotland. + +Leave campaigners also claim that by stressing the dangers of Brexit, Mr Carney has all but ensured economic turmoil if there is indeed a vote to Leave: Andrea Leadsom, another Conservative MP, said that Mr Carney’s words were “incredibly dangerous”. In fact, the opposite is true. Decades of evidence show that investors get most scared if they think central bankers have ignored risks, not when they are being transparent. + +Mr Carney’s sincerity this time, however, is coloured by what has gone before. In October the bank published a report on the benefits of EU membership that “went beyond its remit”, says Tony Yates of Birmingham University, because it talked about topics—economic “dynamism” and “openness”—that do not pertain to monetary policy. To be on the safe side this time, the bank kept its discussion of the possible impact of Brexit to the bare minimum. It did not provide any quantitative estimates of the impact of a Leave vote on inflation or interest rates—forecasts that many Britons would like to see. Mr Carney’s job is to provide independent assessments of the risks to the British economy. Last week he said too little, not too much. + + + + + +NHS disputes + +Do resuscitate + +Junior doctors agree on a deal with the government + +May 21st 2016 | From the print edition + +Trust me, I’m a doctor + +FULFILLING the Conservative Party’s desire for a “seven-day NHS” was never going to be easy. But it has taken three years of acrimonious talks and five waves of industrial action, including the first all-out strike in NHS history, to reach a deal. On May 18th, after ten days of negotiations at ACAS, a conciliation service, the government and the British Medical Association (BMA) that represents around 50,000 junior doctors, announced they had agreed on the outline of a revised contract. + +The deal, if approved by a ballot of the BMA’s members in June or July, would mean the government no longer needs to impose a contract on doctors without their consent, the “nuclear option” that Jeremy Hunt, the health secretary, had threatened if an agreement could not be reached. It also saves the government from the prospect of more strikes before the EU referendum on June 23rd. + +The dispute centred on the government’s desire to make it cheaper to roster doctors at weekends by ending automatic overtime pay. Mr Hunt had wanted to pay them more on Saturday but make it still part of their basic hours, and to adjust other weekend payments. Under the proposed deal, doctors would receive a basic pay rise of 10-11% (not 13.5% as previously proposed) but there would be no automatic premium for working on Saturday and Sunday. A sliding scale would mean doctors working the most weekends would earn more—an extra 10% if they work one in two, reducing to 3% for doing one in eight. So the doctors with most to lose—those working the most weekends—may be mollified. A similar system will apply to on-call duties. Extra pay for nightshifts is also reduced from 50% to 37%. + +The chair of the BMA junior-doctor committee, Johann Malawana, called it “a good deal for junior doctors”, representing “the best and final way of resolving the dispute”. Mr Hunt also praised the deal as the way to deliver “a safer seven-day NHS”. He said it will reduce the cost of employing junior doctors at the weekend by a third. The government may now try to reform contracts of other NHS staff. + +Although 57% of the public supported the junior doctors in their strike in April, one survey suggested that had fallen by seven percentage points from March. And although there is relief that the stand-off could be resolved, there has also been a backlash from some doctors on social media, claiming that the deal is hardly any better than before. + +Ministers maintain that it is cost-neutral. Whether that is true or not may be irrelevant because of the magnitude of the broader problem. As demand for the NHS grows and funding falls, the service is in trouble. Most hospitals are in deficit. So even if Mr Hunt believes he has secured a deal around weekend working, it could be a Pyrrhic victory if it does not resolve long-term funding. + + + + + +Data in schools + +Heads in the clouds + +Pupil data are too hard to access, meaning that schools are losing out + +May 21st 2016 | From the print edition + + + +WHEN Carly Mitchell wants to track how her pupils are doing, she opens a spreadsheet. The head teacher of Oasis Academy South Bank in London uses the data to see how test scores compare with those of similar children. Ms Mitchell can then order extra tuition for laggards or sit them next to hard-working peers. + +Those spreadsheets are made by a colleague, whom Ms Mitchell calls a “bona fide genius”. Not every head teacher is so lucky. “Data-driven instruction” is one of the five characteristics of high-performing schools, says Roland Fryer of Harvard University. Yet too many teachers in England see data as a burden not a benefit. They often cite data input and management as a major cause of their heavy workloads. + +One company, Capita SIMS, has dominated the market in pupil data for three decades, and is accused of making it hard for others to access the data fully. Four out of five English schools, including Ms Mitchell’s, use the company to keep their pupil records. They do this on a Management Information System (MIS): a type of database. The company says it is popular because it makes schools easier to run. Critics say the company makes it too hard for startups that want to interact with its MIS and use the data. It has dominated the market for so long partly because it had first-mover advantage and schools are “unsophisticated buyers”, says Jonathan Simons of Policy Exchange, a think-tank, and because plenty of schools are not ambitious with their data. + +Teachers are not technophobes. About half of classroom teachers in England are under 35 years old; they came of age with Google and Facebook. But they complain that many educational products are irrelevant. This partly reflects inertia in the procurement market. Five years ago, Naimish Gohil was an assistant head at a school in London. His app, Show My Homework, which tracks when work is set, submitted and marked, is today used by 30% of secondary schools. He says selling to them is “a hard slog”. They are closed for a quarter of the year. Head teachers can be hard to pin down. The market is fragmented and, unlike America, most English secondary schools or school chains do their own procurement. Even as his company has grown to 70 people, Mr Gohil spends three days a week selling face-to-face. + +This is all a huge frustration to Capita SIMS’ competitors, who believe the tools are available now to produce “hyper-personalised” profiles of pupils. Parents could, for example, see whether their children’s grades put them on track to win admission to a specific university course. + +What is missing, says James Weatherill of Arbor Education, a rival analytics company, is a way of easily accessing and combining data. Part of the problem lies with other data sources, like the Department for Education and testing companies. But it can be particularly tricky to access an MIS. Though third parties can export MIS data from Capita SIMS for nothing, this often has to be done manually. And this is only for historical data. The company charges for real-time access. (Capita SIMS says this allows the company to make sure “correct protocols” in data use are followed.) + +“It is like we have invented the car but we haven’t yet built the roads,” says Joshua Perry, the founder of Assembly, a non-profit venture trying to make it easier for startups to connect to MIS and other data sources. It has recently made its Application Programming Interface, a way of integrating computer systems, available to any developer, in the hope that it will lead to the equivalent of an app store for education. This would make it easier for teachers to use helpful software without having to input a lot of the data themselves. + +The government is trying to keep up. Although it has partly embraced “open data” by uploading lots of statistics, there is more it can do to make sure these are easy to use. The Department for Education is investigating how to ensure common standards for data users and developers. And as more cloud-based rivals to Capita SIMS emerge, schools should have more options. That way data can flow more freely, to the benefit of teacher and pupil alike. + + + + + +Drinking habits + +More tea, totally + +The English are easing up on the booze + +May 21st 2016 | From the print edition + +Those were the days + +SHAKESPEARE wrote that nobody was as “potent in potting” as the English, and the British reputation for alcoholic excess has lasted into the 21st century. A report by the World Health Organisation showed that British drinkers were twice as likely to binge as those in Germany, and five times more than those in Italy. + + + +Daily chart: The staggering variances in alcohol guidelines across the world + +But the reputation may be less deserved these days. Many countries, including Russia, America and France, saw alcohol consumption per person decline by between 6% and 12% in the decade up to 2014. In 2005, the average British adult guzzled 173 litres of alcoholic beverages per year according to the IWSR, a market analysis company, including 220 pints of beer and 160 medium-sized (175ml) glasses of wine. By 2014, that had decreased to 135 litres—a 22% fall. Official figures, which show only self-reported boozing, underestimate drinking (see chart). + + + +The sobering up has occurred in both rich and poor households, though disproportionately among the young. The Health and Social Care Information Centre has found that binge-drinking by 16- to 24-year-olds fell by ten percentage points from 2005 to 2013. Britons under 30 are drinking half as much as they did in 2000, though those aged 65 and above are actually quaffing more. + +These trends are a sign of generational change, notes Andrew Russell of Drinkaware, an independent charity which aims to reduce alcohol-related harm. Young people are more conscious of the health risks of getting plastered, and under more pressure to succeed academically than their predecessors. The price of liquor has risen no faster than the overall rate of inflation since 2000, but wage growth has been slow for under-30s, making alcohol less affordable. + +Producers and sellers of alcoholic beverages have suffered. The British Beer and Pub Association calculates that Britain has 9,000 fewer pubs than it had at the start of the century. Tax breaks have encouraged a large number of microbreweries to open, though they are competing for a much smaller market. + +Aspiring beverage-makers might want to turn to energy drinks instead, consumption of which increased by 57% between 2008 and 2014. Britons, it would seem, are keener on buzzing around doing other stuff than they are on nursing a pint down at the Dog and Duck. + + + + + +Bagehot + +The Cameron legacy + +The PM wants to be remembered for capturing the centre ground. Brexiteers have other plans + +May 21st 2016 | From the print edition + + + +SOME time after his short, early-1960s stint in 10 Downing Street, Alec Douglas-Home got talking to an old lady at Berwick railway station. “My husband and I think it was a great tragedy that you were never prime minister,” she told him. To which came the embarrassed response: “As a matter of fact, I was.” + +Like Douglas-Home, David Cameron is an old-Etonian, “noblesse-oblige” sort of one-nation Conservative. But no such obscurity awaits him. His is already a substantial premiership; if he hangs on for nine months, he will have outlasted any post-war prime minister except Tony Blair and Margaret Thatcher. But for what will he be known? Now is a good time to ask. If he loses the EU referendum on June 23rd, he will probably go. If he wins, he has pledged to stand down before the 2020 election and will come under pressure from his Eurosceptic MPs to do so sooner. + +Already there are two schools of Cameronology. The first considers him the far-sighted strategist who restored the Tories’ old knack for winning majorities; who not only marched his tribe into the centre ground but had it pitch its wigwams there and force the Labour Party into the left-wing wilderness; who made Britain fairer and safer in tumultuous times. At its conference last October he told his party that it could be “incredibly proud of our journey: the journey of the modern, compassionate, one-nation Conservative Party.” + +The second school of Cameronology views the prime minister as an out-of-touch toff prone to complacency. It treats the litany of negative clichés about his party—its “nasty” instincts on poverty, migrants and health care; its cultural dysphoria in modern Britain; its bug-eyed neuroticism about the EU—as a roll-call of ogres Mr Cameron has declined to confront. Tim Bale, a historian of the Conservative Party, reckons that he has mostly “disappointed those who thought he might drag his party towards the centre and into the 21st century”. + +Posterity will draw on both schools in judging Mr Cameron’s premiership. But in what proportions? The Queen’s Speech on May 18th should be understood in the context of that debate. As the monarch announced the bills to go before Parliament in what may be the last session of the Cameron era, it was easy to imagine the prime minister pondering his place in the history books. It is clear, for example, that he wants to go down as a leader who made Britain secure in the age of Islamic State. There will be a crackdown on extremist websites, hardliners will be kept from working with children, and the state will strong-arm councils failing to tackle radicalisation. + +The heart of the Queen’s Speech was its raft of compassionate social reforms: it proposed, for instance, to improve prisoner rehabilitation, build 1m new homes (believe that when you see it) and help the low-paid establish a rainy-day fund. All this revived the sunny centrism which defined Mr Cameron’s early leadership from 2005, much of which had been shelved as the financial crisis set in and harshened the mood. It even came with a slogan: “Improving life chances”. + +The slogan should have been “Love-bombing Harlow”. Thanks partly to Robert Halfon, its energetic Conservative MP, that Essex town has become a byword for upwardly mobile but financially insecure voters—often the first generation in their families to hold white-collar jobs—who dislike government meddling but think the state should make it easier for people like them to pull themselves up by their bootstraps. Philosophically individualistic, yet too close to hardship to be libertarians, these folk suspect Labour of being too soft and the Tories of being out-of-touch. Electorally decisive, they are the landlords of the political centre; politicians are merely their tenants. Mr Cameron wants to bequeath his party a long lease. + +All of which is admirable—bearing favourable comparison with a Labour Party which has lost interest in that kind of real estate—but perhaps unrealistic. For today the air is thick with insults and lurid claims flying between Tories on opposite sides of the EU debate. George Osborne, the chancellor of the exchequer, has called his pro-Brexit colleagues “economically illiterate”. On the day of the Queen’s Speech Iain Duncan Smith, a Eurosceptic who in March resigned as welfare secretary, toured the television studios calling Mr Cameron’s one-nation overtures a sham. + +The thirty years war + +Downing Street is doing what it can to make June 24th the “sanity day” when normal service resumes and the government gets back to chiselling out Mr Cameron’s legacy. There is talk of big jobs for Brexiteers in a “reconciliation reshuffle”; Michael Gove is spoken of as deputy prime minister and Boris Johnson as home secretary (for whom room would be made by moving Theresa May to the Treasury and Mr Osborne to the Foreign Office). + +But the Brexiteers have other plans. One rumour has it that, in the event of a Remain win, 100 MPs could endorse a vote of no confidence in Mr Cameron, double the number needed to trigger a leadership election. Meanwhile his government still has a small majority and has lately performed successive U-turns as its bolder wheezes (most recently forcing state schools to become semi-autonomous academies) have fallen foul of the arithmetic. So its ability to whip through centrist, Harlow-friendly legislation in the coming months is doubtful; certain Tory MPs even talk of stymying such measures in revenge for a Remain win, or to force a second referendum. + +That is pathetic. Yet the blithe premise of Mr Cameron’s decision to call a referendum—that the vote would “clear the air” in the Conservative Party—was always bunkum. It is baffling that, as one who lived through the Tory Euro-battles of the 1990s, he did not foresee the psychodrama now unfolding. The prime minister deserves a better place in the history books than the one that may now await him. But it would serve him right. + +Economist.com/blogs/bagehot + + + + + +International + + + + +The United Nations: Master, mistress or mouse? + +UN peacekeeping in Congo: Never-ending mission + +Boots—and cash—on the ground: Who fights, and who pays + + + + + +The United Nations + +Master, mistress or mouse? + +Despite an unprecedented push to pick the UN’s next boss by open contest, the choice will probably be a stitch-up + +May 21st 2016 | NEW YORK | From the print edition + + + +THE job of secretary-general to the UN is something of a poisoned chalice. The only one of its eight holders to date who is widely admired is Dag Hammarskjold, a Swede who died in an air crash in 1961, trying to end the first of post-independence Congo’s horrors. Kofi Annan, a shrewd and charming Ghanaian who held the post in 1997-2006, is seen as next best, despite patchy success in the world’s trouble spots. South Korea’s Ban Ki-moon, his outgoing successor (pictured above at the UN’s headquarters in New York), is viewed as the dullest—and among the worst. + +In Mr Ban’s defence, he is decent and dogged. He can claim some credit for new development goals set last year and for overseeing a climate-change agreement in Paris in December. But he is painfully ineloquent, addicted to protocol and lacking in spontaneity and depth. Even after nine years in the job he is apt to stumble, most recently by calling Morocco’s presence in Western Sahara “an occupation”. Though most unbiased observers would agree, the diplomatic lapse gave the Moroccans an excuse to kick out UN staff trying to keep the peace in the area. + +Overall Mr Ban personifies the defect to which the UN is prone: plumping for the lowest common denominator. He got the job because none of the permanent members of the Security Council—America, Britain, China, France and Russia—found him too objectionable. China wanted an Asian; America regarded him as broadly in its camp; Russia found him acceptably nondescript. It is an error the UN looks set to repeat when he steps down by the end of this year. + +UN-watchers say there is almost a consensus that Mr Ban’s successor should be an eastern European woman—because no one satisfying either criterion has ever been chosen. Bulgaria has nominated Irina Bokova, the head of UNESCO, the UN’s cultural arm. But early in her career she was a loyal Muscovite Communist, so America may block her. If Bulgaria then names Kristalina Georgieva, the European Union’s budget commissioner, who may also fancy a shot, the Russians may block her because of the sanctions imposed by the EU on Russia over its actions in Ukraine. + +At some point, presumably, a sufficiently inoffensive woman from the favoured region could be found. However, nine candidates (seven from eastern Europe, of whom three are women) have broken with precedent by declaring their candidacy rather than lobbying behind the scenes. In recent weeks they have all set out their stalls in public hearings before the UN General Assembly in New York. + +Only two, both from outside eastern Europe, really impressed: António Guterres, a former Portuguese prime minister who has run the UN’s commission for refugees deftly; and Helen Clark, a former prime minister of New Zealand who leads the UN’s development programme. The Americans are said to dislike Ms Clark for trying to curb their nuclear tests in the Pacific. The Russians may well shun them both. A few late runners may emerge. Kevin Rudd, a former Australian prime minister who speaks Chinese, wants to have a go, but is thinly supported. Susana Malcorra, a long-serving UN official who is Argentina’s foreign minister, may yet jump in. So conceivably could Michelle Bachelet, Chile’s president, who previously headed the UN’s agency for promoting women. Angela Merkel is speculated about wistfully, but most think that she would rather stay as Germany’s chancellor, however onerous the job has become. + +Many ordinary members want the Big Five to give them two finalists to choose between, rather than a single name to be rubber-stamped. But that would require an elastic interpretation of the UN’s charter. At least the public hearings, which may resume if more candidates come forward, have probably knocked out the palpably implausible of the nine, ie, most of them. + +The margins matter + +No secretary-general could have ended, let alone prevented, all the many conflicts during Mr Ban’s tenure, such as the recent ones in Burundi and eastern Congo (see article). The UN can only be as effective as the warring parties or the big powers permit. But its boss matters because, for all its faults, the UN is the last resort when chaos breaks out. Though it has often failed to stop conflicts erupting, its secretary-general is often the only person who can call combatants to the negotiating table, and it is the sole entity with the capacity to pick up the pieces afterwards. It can make a difference only at the margin. But in some of the world’s most benighted places, that may be the margin between life and death. + +The secretary-general is also the UN’s “chief administrative officer”. In this respect, too, under Mr Ban it has floundered. Anthony Banbury, a long-serving American UN official, penned a tale of woe in the New York Times soon after he had retired in disgust in March. It was failing, he wrote, “thanks to colossal mismanagement”. Budgets for peacekeeping and other missions, he complained, were sloppily drawn up and poorly supervised. The most obvious defect, he wrote, is a “sclerotic personnel system”, whereby “it takes on average 213 days to recruit someone”. + +Hiring is often political rather than on merit. Informal regional quotas often entrench the incompetent and even the corrupt. In the Iraqi “oil for food” scandal, before Mr Ban’s era, several senior officials were either implicated in or failed to stop rampant graft. More recently peacekeepers in the Central African Republic sexually abused civilians they were supposed to protect. Countries such as the Democratic Republic of Congo, whose armies are notoriously prone to atrocities, were asked to contribute troops—for reasons of political expediency. A Swedish official in the UN’s human rights commission, Anders Kompass, was suspended (though later exonerated) for exposing sexual abuse by French soldiers after senior people refused to act. + +The UN’s mode of governance is equally open to criticism. Countries that have grown in population, or economic or military heft, since it was founded in 1945, demand more of a voice—and not only when it comes to choosing a secretary-general. Many want to increase the number of permanent Security Council members. Brazil, Germany, India and Japan have hinted that they might, in return for admission, even at first forgo the right of veto that the Big Five hold. But each potential candidate has a rival. Pakistan cannot abide the notion of India being a permanent member. China is against Japan. Argentina and Mexico would block Brazil. Nigeria and South Africa would each howl if the other won a permanent seat for Africa. And why no permanent Arab member? + +Despite the UN’s glaring faults, deplored ever more vociferously by its critics, most reforms are likely to be blocked. The Big Five are still prone to veto any dilution of their power. Poor countries do not want the administration streamlined or the budget squeezed: they do not pay for the UN and many see it as a gravy train which gives their people cushy jobs. As for a suggestion to strengthen the secretary-general’s independence by giving him or her only a single seven-year term rather than five-year stints with no term limits, as now, neither the Americans nor the Russians actually want someone strong or independent. The world needs a well-run UN, led by someone clever and tough, yet idealistic. Sadly, it probably will not get it. + + + + + +UN peacekeeping in Congo + +Never-ending mission + +A long and costly operation can do little to bring peace—but cannot end either + +May 21st 2016 | BENI | From the print edition + + + +AT A UN outpost about 20 miles north of Beni, a scrubby city in the north-east of the Democratic Republic of Congo, South African soldiers live in a veritable fort. Surrounded by barbed wire and equipped with armoured cars, they are a picture of military efficiency. A suave French general, Jean Baillaud, talks to the troops and to Congolese officers about the state of defences and patrols. A South African captain goes through the incidents of the past few months. + +This corner of Congo has seen brutal violence in the past decade. For the past two years armed men have been coming out of the forest to hack up villagers with machetes, hoes and knives. The latest incident, on May 3rd, a few days before General Baillaud visited, left 17 people dead, including three pregnant women. + +The UN’s blue-helmeted troops are supposed to be working with the Congolese army to stop the bloodshed. MONUSCO, the French acronym by which the mission is known, is the longest and most expensive peacekeeping operation in the organisation’s history. Almost 19,000 soldiers and 800 civilians have a mandate to protect the population, neutralise armed groups and stabilise the state. The aim is to help Congo recover from a war that killed anywhere from 500,000 to 5m people. + +The mission has succeeded, in that Congo is no longer a gaping hole in Africa for its neighbours to fight over. But as the violence in Beni shows, it has not brought peace either. Congo is a study in the UN’s failures, and the way the organisation is hamstrung by politics. + +The base in Beni houses soldiers from the Force Intervention Brigade (FIB), who make up about 3,000 of the 19,000 peacekeepers in Congo. They are active combat troops whose role is to attack the 30-60 armed groups (again, nobody is sure) that plague the east of the country. The FIB was created in 2013, after events that humiliated the UN and the Congolese army. In April 2012 a group of defectors, most of them Tutsi, formed an armed group, M23. This seized Goma, a city of 1m on the Rwandan border that is home to most of the UN’s operations in Congo. Without firing a shot, Congolese soldiers fled to nearby towns, where they raped and pillaged. UN soldiers stood by, and when, days afterwards, M23 agreed to leave, the UN’s headquarters were stoned and many of its vehicles torched. + +Congo’s president, Joseph Kabila, who took power in 2001 after his father was murdered, called for regional support to defeat the group. The prospect of armed men from across the continent flooding back into Congo led the UN to say they could come—but under its own command. Most of the peacekeepers in Congo are from South Asia, but the FIB’s troops are from Malawi, South Africa and Tanzania. In 2013, together with Congolese forces, they quickly defeated the rebels and pushed them into Rwanda, which was widely thought to have sponsored them. + +The defeat of M23 was a fine moment for the UN. But it has not led to further progress. UN generals had hoped that the FIB could take on another group of Rwandan rebels, the Democratic Forces for the Liberation of Rwanda, or FDLR, many of whom are remnants of the Hutu army that fled Rwanda after committing genocide there in 1994. But before the operation began, Congo said its forces would be led by two generals suspected of human-rights abuses. The UN objected; Congo refused to shift; and the operation was cancelled. The fact was that Mr Kabila did not particularly want to fight the FDLR, says Jason Stearns of the Congo Research Group at New York University. + +Since then, Congo’s government and the UN forces have all but stopped co-operating. Beni is a case in point. Most of the killers are thought to be from the Allied Democratic Forces (ADF), a group originating in Uganda whose founders fled into Congo in the 1980s. According to the Congolese army, they are Islamist ideologues who murder in revenge for attacks on their bases. “Their humanity exists no longer, they just want to exterminate the whole world,” said Leon Mushale, a Congolese general, after the massacre. + +Yet most observers say that, far from being a foreign Islamist insurgency, the ADF is now an entrenched criminal group that funds itself by illegal gold-mining and logging. Allies in the Congolese army warn the ADF of attacks, sell it weapons and uniforms, and refuse to intervene when it kills civilians. According to a leaked document from the UN Group of Experts, in one case Congolese forces may even have taken part in an ADF ambush on the UN that led to two Tanzanian soldiers’ deaths. + +Emily Paddon Rhoads, who studies peacekeeping in Congo, says the mission against M23 succeeded only because the government wanted to defeat Rwanda-backed rebels—and regional allies were willing to send troops. For most other armed groups, neither of these holds true. And since Mr Kabila won elections in 2006, the UN’s default position, she says, has been to support the government. + +Congo is one of the world’s poorest countries, but conditions for its soldiers are still shocking. They live in wooden huts covered in tarpaulin dug into trenches. When it rains the ground becomes a bog. Rations—and pay—arrive infrequently. Many soldiers are former rebels who have been integrated, sometimes unwillingly, into the army. They are terrified of ambush from men who come and go from the bush “like the wind”. Few seem keen to fight. + +In private, some UN officials say that all this mistreatment is not incompetence but strategy. Mr Kabila, says one, keeps the army weak and divided so that it does not seek to depose him. Money goes instead to the presidential guard and the police, who are more loyal. Far from Kinshasa, generals operate relatively freely—and, as the M23 rebellion showed, can quickly switch sides. To keep them happy, corrupt businesses, such as logging or mining, are tolerated. There are even suggestions that soldiers are paid late to discourage desertion, which would mean abandoning back pay. + +The UN is in a bind. If Mr Kabila is unwilling to strengthen and reform the army, rebel groups will never be defeated. Worse, now that the president is nearing the end of his second term, the biggest threat to Congo’s security is in fact his own government. According to the constitution, which was drawn up in 2006 with the help of the UN, he ought to step down in December, after elections. Instead, he seems determined to stay, and is suppressing opposition. He has also been trying to get the UN to cut its forces, which it has refused to do. Both Western governments and Mr Kabila himself seem to think it will be harder for him to stay if 19,000 troops are watching. + +Yet whether UN troops would be willing, if things turn nastier, to put themselves between civilians and gunfire is far from clear. When asked, General Baillaud dodged the question. In January 2015 some 40 people protesting against an attempt by Mr Kabila to change the constitution were killed by police. Well-armed Congolese soldiers have marched through Lubumbashi, an opposition stronghold in the south-east. But most UN forces remain in eastern Congo, where protests are less frequent. Troops from India, Bangladesh and Pakistan interpret their mandate to protect civilians extremely narrowly. + +At the margin, the UN’s presence in Congo is probably helpful. It brings not just troops, but monitoring staff who can raise the alarm about political murders and repression. Without it, there would be fewer aid agencies. And there might well be more fighting. Many UN troops, though, are far from saints. Tanzanian peacekeepers have repeatedly been accused of rape. UN bases are plastered with posters warning against molesting children and smuggling. + +Until Congo gets a government able and willing to protect its people, rather than prey on them, the UN will be needed. Yet its presence seems sure to prop up a government that is one of the main causes of its people’s misery. And so the mission goes on, endlessly. + + + + + +Boots—and cash—on the ground + +Who fights, and who pays + +May 21st 2016 | From the print edition + + + +The UN’s first peacekeeping mission, which started in 1948, was to keep a truce after the creation of Israel. Seven decades later, that mission continues, and the total number of peacekeeping operations worldwide has grown to 16, deploying more than 100,000 military personnel. Most are in Africa; the largest, in the Democratic Republic of Congo, involves 18,900 blue helmets. + +Contributions to the cost of peacekeeping are worked out using a complicated formula that includes economic heft; America pays more than a quarter of the total, and the top ten countries account for four-fifths between them. But when it comes to personnel, the pattern is very different. Since some of its men were killed when a helicopter was shot down in Somalia in 1993, America has almost stopped sending troops; it now has only 74 military personnel involved in peacekeeping, only half of them soldiers. + +Altogether, the top ten budget contributors supply only 6% of personnel; African and Asian countries provide the lion’s share. Tiny Rwanda contributes 6,140 military personnel but almost no money. The UN pays countries $1,330 a month per soldier, meaning that peacekeeping is lucrative for poor nations. + + + + + +Business + + + + +Oil and climate change: Greens in pinstriped suits + +Telecoms: Seeking another path + +Biotechnology: Seedy business + +Buffett, Apple and Didi Chuxing: $1 billion stakes on the menu + +Agriculture in Cyprus: Cheese in our time + +Political consultants: Risk premiums + +Amazon’s clothing coup: Sitting pretty + +Schumpeter: The emporium strikes back + + + + + +Oil and climate change + +Greens in pinstriped suits + +Climate-conscious shareholders are putting Big Oil on the spot + +May 21st 2016 | From the print edition + + + +OIL firms find it hard to determine who their environmentalist adversaries are these days. They used to be easy to spot, with beards and dungarees. Now they spout forth corrupted Shakespeare to disrupt concert performances, or wear nuns’ habits at annual general meetings (AGMs). Increasingly others sport pinstripes, representing trillions of dollars of pension and other money. + +As four of the five largest private oil companies prepare to meet shareholders next week, it is the green brigade in ties and suits that most worries them. At AGMs on May 25th CalPERS, the California state pension fund, with $294 billion of assets under management, plans to pressure ExxonMobil and Chevron, America’s two biggest oil companies. It wants the energy firms to outline risks to their business plans thanks to more-stringent-than-expected climate-change policies agreed in Paris in December. At ExxonMobil they will be joined by Norway’s Norges Bank Investment Management, the world’s largest sovereign-wealth fund, the New York City Pension Fund, global asset managers such as HSBC and BMO, which have about $650 billion of funds, and an ecumenical array of endowment-rich church groups. + +Even Pope Francis will play a cameo role. The Sisters of St Dominic of Caldwell, New Jersey will invoke his encyclical about climate change in their proposal to commit ExxonMobil to support the Paris goal of limiting global warming to less than 2°C above pre-industrial levels. + +ExxonMobil, the world’s largest private oil company, gives these resolutions short shrift. It argues that more energy is necessary to alleviate global poverty, and that technology—coupled with a carbon tax—will mitigate the environmental risks. It may hope that a recent rebound in oil prices to around $50 a barrel will pacify shareholders. But their frustrations have been fanned by a decade of wasteful spending in the oil and gas industry (see chart). Some believe that more restrained capital allocation would boost returns, as well as helping the planet. + + + +Most, if not all, of the investors’ resolutions will fail, says Heidi Welsh of the Sustainable Investments Institute, an American research firm. Such is the relatively docile nature of owner activism in America. But she says pressure from investors, ranging from those with concerns about the long-term economic impact of climate change to those with more moral preoccupations, is “coming to a head”. + +This month, an unexpectedly high 49% of shareholders backed a resolution urging Occidental Petroleum, another American oil firm, to stress-test a two-degree scenario. Some 42% voted for climate-related resolutions at Anadarko, a rival, and AES, a utility. Robert McCormick of Glass Lewis, a proxy advisory firm, says such a large vote suggests that usually placid asset managers, such as mutual funds, may have joined the green revolt alongside pension funds—more established rebels. He notes that the resolutions, even if passed, would be non-binding. But if they are ignored, shareholders can express their frustration in subsequent years by refusing to support a company’s board nominees, he says. + +The pressure on the American supermajors follows the “Aiming for A” campaign by institutional investors in Britain that last year forced Royal Dutch Shell and BP, the biggest European oil firms, to agree to reveal how stringent climate-change policies would affect their investment portfolios. Change across the Atlantic has proved harder to effect. Anne Simpson of CalPERS says shareholders have weaker rights in America, which has a more litigious corporate culture and where it is harder to challenge boards than in Britain. She talks of a “shut up or sell up” mentality. + +Hence CalPERS is seeking “proxy access” at ExxonMobil that would give large shareholders the right to nominate board members. This is a growing trend in corporate America (a majority supported proxy access at Chevron last year), and Ms Simpson says it is aimed at installing a “climate-competent” board at ExxonMobil. The firm continues to reject it, even though last year the proposal gathered 49.4% of shareholder support. “If we can’t hold boards accountable we may as well sit and whistle,” she says, adding: “If we don’t win this year, we will be back next year.” + +Yet even when firms agree to such resolutions, there is no guarantee their level of disclosure will satisfy investors. On May 11th Shell issued two reports on its assessment of climate-change risks in response to last year’s vote. Full of pretty pictures and snazzy charts, they revealed little about how climate policies would alter future plans for developing oil- and gasfields. + +James Leaton of the Carbon Tracker Initiative, an investment-focused NGO, says that in one report Shell tried to downplay the role of private oil companies in generating greenhouse gases, seeking to shift the blame instead to national state-controlled firms with larger reserves. “We don’t need 50 pages of glossy documents,” he says. “Give us two pages and tell us what high-cost projects you would cancel.” + +On the same day as the reports were published, Shell informed its employees that it was creating a “New Energies” business to invest in green technologies. But it and BP insist that hydrocarbons will still account for at least 75% of the world’s energy for decades to come. Their response to global warming is to promote natural gas over coal and, eventually, oil; renewable energy remains a tiny share of their investment budgets. “Rumours of the death of oil are a little premature,” says Peter Mather, head of BP’s British business. + +The only supermajor that wins high marks from shareholders for what they say is a more committed response to climate change is Total SA, a French company, which like Shell hosts its AGM on May 24th. It plans to set out its ambition to develop an energy mix by 2035 consistent with Paris-style global-warming limits, including a pledge to invest $500m a year in renewables, and a “symbolic objective” to raise their share to 20% of its portfolio, from 3%. In an effort to complement its acquisition of SunPower, an American solar-energy company, in 2011, it launched an offer this month to acquire Saft, a French battery-maker, which will bolster its expertise in electricity storage. + +But Total is likely to remain an oil and gas company above all else. Alongside its renewables aspirations, it claims that one of its most exciting ventures is producing natural gas in the pristine Russian Arctic. It does not see this as a contradiction. In fact, it argues that the focus on natural gas actually reflects its commitment to a two-degree global-warming scenario. From under their habits, French nuns may murmur growing disapproval in response. + + + + + +Telecoms + +Seeking another path + +With in-country mergers blocked, mobile-phone firms in Europe must now find other ways to grow + +May 21st 2016 | PARIS | From the print edition + + + +THREE was a magic number. At least, that was what mobile-phone operators and regulators in Europe believed a few years ago. Letting just a trio of rival companies compete inside each national market would supposedly produce decent outcomes. Customers would see enough competition to deliver low prices and innovative service; firms, despite mature markets with already high penetration rates, would get profits plump enough to allow them to invest in infrastructure, such as for rolling out 4G and 5G services. + +Allowing so few operators was intended to bring other boons. One argument of proponents was that if companies could bulk up in-country they would try cross-border mergers next, creating European rivals to American giants such as AT&T and Verizon. Another was that having just three firms would actually limit the dominance of the biggest fish—usually the former monopoly, such as Deutsche Telekom or British Telecom—because the two smaller players would challenge the biggest, not scrap with other minnows. Another claim, just as hard to prove, was that regulators, by waving through mergers, would encourage dynamic markets. Mergers offered an exit for those who invest in, or launch, smaller telecoms firms. Blocking mergers, in contrast, would deter them. + +For a time European regulators accepted the received wisdom. So mergers took place in Austria in 2013, then in Ireland in 2014, reducing those markets to three operators from four. Firms in bigger countries prepared to move. Orange, France’s leading operator, held talks from January to buy Bouygues, the third-largest, for an expected €10 billion ($11.3 billion). In Britain CK Hutchison, which operates the brand Three, agreed last year to pay £10.25 billion ($15 billion) for O2, the second-ranked operator, owned by Spain’s Telefónica. And in Italy another merger involving Hutchison was proposed. In each case, the number of operators would have fallen to three. + +None of these big mergers is now likely. French officials quietly scotched the Orange-Bouyges deal in April, before it troubled Europe’s regulators: they apparently fretted that Martin Bouygues, a billionaire industrialist, would get too much clout in the newly merged firm. Orange is partly state-owned and is seen as a national champion. Last week the EU’s competition commissioner, Margrethe Vestager, scrapped the British merger, anxious that a lack of competition would hurt consumers. Most in the industry expect she will block the proposed Italian merger between Hutchison and VimpelCom too. In March she launched an “in depth” study into the effect it would have on competition. + +Ms Vestager is not alone in doubting the magic of three operators. Britain’s regulator also opposed the Three/O2 merger. And research last year by the OECD suggests users prosper with four operators. After Austria lost its fourth, costs for consumers promptly rose. When France gained a disruptive and innovative fourth player, Free, in 2012, prices fell quicker than before, even as spending on infrastructure rose. In both countries four operators offered customers better international roaming deals than three did. As for spending on networks, other analysis from OFCOM , Britain’s communications regulator, has found “no linkage between consolidation or higher concentration in mobile markets and an increase in investment”. + +Some in the industry are dismayed. “Both EU and UK regulators seem only concerned with consumer pricing and don’t think of the bigger picture,” complains Bengt Nordstrom, who advises firms on mergers. He warns that blocking unions of smaller firms will mostly help market leaders, which he says typically grab over 50% of industry revenues already. And markets dominated by former monopolies, he worries, will foster too little competition in building networks and laying fibre cables to prepare Europe for future digital growth. + +If in-country mergers are off the table, firms need other ways to prosper. One option might be for more to share networks, thereby cutting costs. Another is for more mergers of fixed-line and mobile business. In Britain BT, a fixed-line operator, has bought EE, a mobile firm. In the Netherlands Liberty Global combines fixed and mobile. Vodafone, the most successful example of a pan-European mobile firm, present in 14 countries, is in fixed-lines too. Vodafone’s boss, Vittorio Colao, said on May 17th his firm had just enjoyed the “first quarter of positive revenue growth in Europe since December 2010”, after spending £19 billion on infrastructure. + +Yet fixed-mobile mergers are no cure-all, argues James Barford of Enders Analysis, a consultancy. Whereas in-country mergers of mobile companies offer lots of efficiencies, combining fixed and mobile delivers more modest benefits. Worse, these tend to accrue to more dominant firms, notably old fixed-line incumbents. + +What really counts, says Mr Barford, is how firms are placed to transmit huge quantities of data to customers, mostly for watching video clips and TV. He estimates that telecoms firms already make about half of their revenues from data, and mobile-data volumes are rising by 60% to 70% a year. The mobile business is increasingly about transmitting bytes, which depends on how much of the spectrum a firm controls and how efficiently it is used. Small firms with rights to the spectrum could thus look for new sorts of partners. Outsiders—perhaps private-equity firms with deep pockets, says Mr Nordstrom—may want to team up with them to roll out television, internet, mobile, fixed and other flashy services. So there is life beyond in-country mergers. + + + + + +Biotechnology + +Seedy business + +It’s eat or be eaten for the firms that make seeds and chemicals for farmers + +May 21st 2016 | NEW YORK | From the print edition + + + +WHEN DuPont and Dow Chemical agreed to merge in December, the $130 billion deal seemed to be a prime example of American managers’ ruthless pursuit of shareholder value and dedication to building monopoly positions. The two chemicals firms, with a combined 300-odd years under their belts, had both been beaten up by activist investors in the 20 months or so leading up to the deal. + +Partly in response, the companies said they would combine and then split into three new firms, focused on agriculture, speciality products (used, for example, in electronics), and materials (used in plastics). Huge cost cuts are planned when the deal closes, supposedly later this year. The unspoken message to investors is that the three new firms, with higher market shares, will also be able to raise prices. + +What has become clearer since then is that Dow-DuPont is also part of a global trend: a wave of consolidation in the agricultural seeds and chemicals industry. In February ChemChina, a state-owned Chinese firm that has been on a buying spree, agreed to pay $43 billion for Syngenta, a big Swiss firm that specialises in selling chemicals to farmers. This week Monsanto, an American seeds firm valued at $42 billion, confirmed that it had received an unsolicited takeover approach from Bayer, a pharmaceuticals and chemicals concern that is one of Germany’s biggest firms by market value. Monsanto has gone from hunter to hunted, having tried and failed to buy Syngenta a year ago. Overall, the deal-making could exceed $200 billion: it is the stuff of investment bankers’ dreams. + +Three trends explain the surge in activity. First, a slump in sales: the agricultural-product industry’s top line, growing at 2% in 2014, fell by 10% in 2015. With crop prices low, farmers are spending less. Second, bosses think that selling bundles of products to farmers will be more profitable in the long run. Monsanto talks of having a footprint of millions of acres around the world upon which seeds, bug-killers and nutrients can be used, helped by better mapping and data-crunching. The third trend is specific to Syngenta: China’s government wants to modernise its farms and to own the intellectual property involved, for example seed patents. + +Merger waves have struck many other industries—think of oil in the 1990s or steel in the early 2000s. Often the grand themes used to justify deals make some sense, but the numbers don’t add up. The present binge already looks alarming. ChemChina will borrow a cool $35 billion to buy Syngenta which, based on its 2015 profits, will make its new Chinese owner a hopeless 3% return on capital. Were Bayer to try to buy Monsanto with cash, the combined firm would have net debt of a queasy four times its gross operating profits, and the purchase would generate a roughly 6% return on capital, using 2015 figures. The lavish cost savings promised by Dow and DuPont have failed to excite, with both firms’ shares trading roughly in line with the stockmarket since the deal was launched. + +One explanation is that investors worry that antitrust regulators will block the all-American combination, or impose tough conditions on it. Competition concerns could yet scupper the entire wave of dealmaking. The ChemChina deal, meanwhile, could attract attention from spooks. Europe has been relaxed about Chinese takeovers. Last year ChemChina bought Pirelli, a fading Italian industrial champion. But Syngenta makes 27% of its sales in North America, so its purchase will be vetted in America by a national-security committee known as CFIUS. This has a track record of protectionist behaviour towards Chinese firms. Syngenta’s shares trade at a hefty discount to the Chinese offer, because of fears that the deal may be blocked. + +All the proposed deals could be squashed or end in acrimony, allowing other combinations to be attempted. Firms on the sidelines, most notably Germany’s BASF, could be tempted to pile in. So for bosses there is still everything to play for. Investors may not like it much, but in the obscure world of chemicals times like this happen only once in a generation. + + + + + +Buffett, Apple and Didi Chuxing + +$1 billion stakes on the menu + +The meaning of two odd, and connected, investments + +May 21st 2016 | NEW YORK | From the print edition + + + +USUALLY it is a good sign when Berkshire Hathaway, the investment vehicle of Warren Buffett, takes a stake in a firm. Berkshire’s purchase of $1 billion of Apple shares, disclosed on May 16th, may be an exception, however. Mr Buffett typically likes firms that are mature. This is a label that Apple is desperate to avoid—especially since it reported a 13% fall in its sales in the quarter that ended in March, compared with the previous year. + +Mr Buffett is also famously, even proudly, ignorant about technology. Berkshire’s annual meeting was not webcast until this year and its other bet on the industry, a stake in struggling IBM, has cost it dearly. The new investment by Mr Buffett, who is 85, comes weeks after the veteran corporate raider Carl Icahn, who is 80, sold a $5 billion stake in Apple. The sight of two octogenarians grappling over the firm’s fate does not enhance its aura as a temple of innovation. + +The investment does highlight how much Mr Buffett’s firm has changed. A billion dollars is now a drop in the ocean: equivalent to just 0.3% of Berkshire’s market capitalisation. As Berkshire has got larger, it has shifted away from Mr Buffett’s long-standing strategy of buying and holding cheap shares towards buying and holding entire companies, such as BNSF, a rail group, and Kraft Heinz (which Berkshire co-owns with 3G, a buy-out fund). Investments in shares now comprise only a fifth of Berkshire’s assets; Apple will be among its smallest positions. + +Perhaps Mr Buffett is just being opportunistic, as he has been before: he invested in Goldman Sachs, a large bank, in the depths of the financial crisis. Or perhaps he will steadily build a much bigger stake in Apple, which is now one of the cheapest big stocks in America, trading on a miserly 11 times earnings, compared with 29 for Alphabet and 72 for Facebook. + +If Mr Buffett’s attraction to Apple sends an ambiguous signal about its growth prospects, so too does Apple’s decision to take a $1 billion stake in Didi Chuxing, mainland China’s answer to the car-hailing app Uber, which was announced on May 12th. Tim Cook, Apple’s boss, said the deal would help his firm learn more both about China and about new services, such as entertainment systems for cars. But the transaction can also be interpreted in two other ways. + +The first is that it allows Apple to curry favour with China’s government. The company generates $59 billion of sales in the country, or a quarter of its total, so China is almost as important to it as America is. Yet its status with China’s rulers is precarious: last month Apple’s film and book online stores were banned there. Didi, meanwhile, is losing billions of dollars a year in a price war with Uber. China’s government is no doubt keen to see its home-grown offering survive. So by giving Didi a dollop of cash and its support, Apple will win brownie points in Beijing. It certainly won’t be the last American tech firm to seek them. + +The second interpretation of Apple’s tactic is simply that, as the firm stops growing, it will become increasingly tempted by speculative bets on things that are only tangentially related to its core area of expertise. If you add up Apple’s spare cash and the money it is expected to make over the next two years, you get to about $300 billion. Mr Cook has so far promised to return about $100 billion of that in dividends and buy-backs, leaving him a vast pile of money to play with. Before he embarks upon any spending spree, Apple’s boss should remember that only one man in history has invested billions of dollars of other people’s money successfully over the long run: Warren Buffett. Perhaps Mr Cook should turn to his new shareholder for advice. + + + + + +Agriculture in Cyprus + +Cheese in our time + +What a hullaballoo over halloumi—or hellim—says about reunification + +May 21st 2016 | LIMASSOL | From the print edition + +Curds and wahey! + +OVER the past four decades, officials negotiating an end to Europe’s oldest frozen conflict, the dispute between the internationally recognised Republic of Cyprus and the self-declared Turkish Republic of Northern Cyprus (TRNC), have had plenty to chew on. A deal now appears possible; leaders on both sides say it could come by the end of the year. Reunification hinges on a dizzying number of issues, including property, governance and the withdrawal of Turkish troops from the northern part of the island. Yet there is one area where Greek and Turkish Cypriots already see eye to eye: cheesemaking. + +Love of the salty, rubbery cheese known as halloumi in the south and hellim in the north enriches the island. Last year, the Greek south exported €103m ($116m) worth of the stuff, much of it to Britain. In the TRNC, hellim made up a full quarter of all exports. + +Last July the two sides filed a joint application to have the cheese declared a Protected Designation of Origin (PDO) product by the European Union. This status would place halloumi and hellim on a footing with such lauded delicacies as Parma ham, champagne and Roquefort cheese, banning dairy producers outside Cyprus from using either name. A decision is expected later this year. + +For Turkish Cypriot cheesemakers, however, PDO status will count for little without a peace settlement. It might allow hellim to be sold in the southern part of the island. But as Cyprus has been a member of the EU since 2004, the bloc’s laws apply only in the Greek part of the island. As a result hellim, like other northern products, remains frozen out of Europe’s single market. + +Much of it ends up in Turkey, the only country to recognise the TRNC. Exports to cheese lovers in other parts of the world have to be sent through Turkish ports, where handling, storage and insurance costs all eat away at profits. “A Greek Cypriot company pays less than $2,500 for a shipping container to Saudi Arabia,” explains Candan Avunduk of Meric Sut, a Turkish Cypriot dairy producer. “We pay $6,000.” + +Even in the case of a peace deal, other delays may be in store thanks to strict hygiene regulations. Meeting European health standards will probably take the local dairy sector at least three years, estimates Fikri Toros, head of the Turkish Cypriot chamber of commerce. For cheese enthusiasts in Europe, it will be worth the wait. + + + + + +Political consultants + +Risk premiums + +Policy wonks win big when the going gets tough + +May 21st 2016 | SÃO PAULO | From the print edition + + + +MERELY keeping up with fevered events in Brazil has proved a challenge of late. The president suspended from office pending impeachment over dodgy government accounting; a caretaker administration left to tackle the worst recession since the 1930s; all amid an operatic bribery scandal with twists and turns that make Brazil’s telenovelas (soap operas) look logical. Staying ahead, as investors and businesses often need to, can seem a forlorn hope. + +Luckily, help is at hand. From niche boutiques to big strategy consultants, a growing number of outfits offer to make sense of it all. Swathes of Brazil’s economy may lie idle, but political-risk advisers report being busier than ever. + +In fact, the risk business is booming everywhere, not just Brazil. With the Middle East in flames, Russia in adventurist mood and China paving over disputed reefs, geopolitics is again a concern of bosses everywhere. The threat of Brexit and the migrant crisis make even dull European countries appear too exciting, if anything. In America, meanwhile, the prospect of a President Trump invites probing. + +Helpfully for political-risk analysts, the latest surge in global uncertainty has coincided with the maturing of their industry. In its current form it dates to the mid-1990s. Back then pitches to clients would elicit bemusement, recalls Ian Bremmer, founder of Eurasia Group, a veteran purveyor of real-time political science with headquarters in New York. Stratfor, which has been flogging geopolitical foresight for two decades from its base in Austin, Texas, recently notched up a record 550,000 subscribers. “We no longer have to justify our existence,” says Mr Bremmer gleefully. + +Demand for such analysis got a fillip with the financial crisis, as multinationals pared back in-house strategy departments charged with providing it (among other things). These have shrunk by half, reckons Joel Whitaker of Frontier, an adviser based in Washington DC. He puts this down to boards’ growing short-termism and pressure to cut costs. Reliance on outside counsel has risen as a result. + +Financial firms, which tend to read political scenarios the same way (broadly: sell statist, buy pro-business), were early adopters of generic subscription forecasts first offered by Stratfor and Eurasia. They still use these, but ever more bosses want assessments of company-specific risks too. That is a boon to firms such as Brazil’s Prospectiva, which has been demystifying the country’s confused trade and industrial policies for 14 years. It has grown by 20% to 30% a year since 2012, says Ricardo Mendes, a partner. Bespoke advice now makes up a fifth of Frontier’s revenues, up from nothing 18 months ago. At Stratfor it has outpaced subscriptions in the past five years and accounts for a third of sales. + +Larger consultancies are dabbling too. Britain’s Control Risks has 100 political analysts in dozens of offices around the world, up from 30 in London ten years ago; they supplement its main business advising companies on how to keep workers safe and fight fraud. Giant management-consulting firms, such as McKinsey, are bundling political-risk analysis with other prescriptions for corporate betterment. Like the risks themselves, then, risk advisers are becoming more diverse. As important, they no longer simply assist Western firms thinking of investing in exotic places. Eurasia opened an outpost in São Paulo, its first outside the rich world, in late 2014—in principle to cater to Brazilian companies spying opportunities in other markets. In practice it helps perplexed Brazilian bosses make sense of the political crisis at home. + +“Political risk” is not something you say out loud in China, yet Chinese companies increasingly feel the need to factor it into their investment decisions—including in developed nations facing new troubles. So do other multinationals. To firms such as Bimbo, a large Mexican baker which Frontier is advising as it looks to expand north, “the US is an emerging market”, notes Mr Whitaker. And it is just as uncertain. + + + + + +Amazon’s clothing coup + +Sitting pretty + +Amazon looks set to conquer America’s clothing market + +May 21st 2016 | From the print edition + + + +Times are tough for America’s department stores. This month Macy’s, Kohl’s, JC Penney and Nordstrom all reported slumping sales. Foreign tourists are spending less; consumers are buying other types of goods. Even if they drift back, one threat looks likely to stay: Amazon. In 2011 the online retailer accounted for 1.4% of American sales of clothing, handbags and shoes. Next year Cowen, a financial services firm, expects it to overtake Macy’s as America’s top seller of apparel. Shoppers like the Amazon’s huge selection (about 19m items), easy shipping and partnerships with brands such as Adidas. Not all traditional retailers are floundering; on May 17th TJX reported a 7% bump in comparable sales. The firm’s stores satisfy those keen to hunt for discounted designer clothes—a quest hard to mimic online. But Cowen expects even TJX’s clothing sales to be less than half of Amazon’s by 2020. + + + + + +Schumpeter + +The emporium strikes back + +Platforms are the future—but not for everyone + +May 21st 2016 | From the print edition + + + +“INTERESTING thesis, but don’t use the word ‘platform’ in the title. No one knows what it means.” That was the reaction of a professor at MIT in 2000 upon reading the dissertation of Annabelle Gawer, now co-director of the Centre for Digital Economy at the University of Surrey. She ignored the advice and kept the title. + +If anyone were to counsel Ms Gawer against using the word today, it would be for the opposite reason: overuse. Academic papers on the concept are now legion. Books are multiplying, too: after “Platform Revolution” in March, this month will see the release of “Matchmakers” (with the p-word in the subtitle). Rare is the startup that does not want to be a platform. A rapidly growing number of incumbent firms, too, are striving to build platforms. Yet the professor’s problem remains pertinent: confusion still reigns over what exactly platforms are. And this, combined with the hype, hides the fact that they are not for everyone. + +Broadly defined, platforms are a type of marketplace where people and businesses trade under a set of rules set by the owner or operator. Among the first were the emporiums in ancient Greece, designated places near docks where traders could exchange merchandise. More recently, digitisation and the internet have given rise to a new type that is both marketplace and shared base. Operating systems are an example, such as Windows for personal computers and Android for smartphones; these programs provide basic services that applications developed by others need to run. Another version is e-commerce sites, including Amazon and eBay, which connect sellers and buyers (hence the title “Matchmakers”). Social networks, too, are platforms: they bring together consumers, advertisers and software developers. + +These modern platforms have three things in common. They are “multi-sided”, meaning they have more than one group of customers. They exhibit strong “network effects”: a growing group of one sort of customer attracts more of the other, which again draws in more of the first and so on. And they are controlled by one company, which can dictate the terms of trade, such as what type of businesses are allowed on its digital property and what they have to pay for the privilege. + + + + + +Finance and economics + + + + +Swedbank: Bank to basics + +Buttonwood: Into the unknown + +Pacific economies: The leeward side of fortune + +Quinoa: Against the grain + +Insurance in China: Safe or sorry? + +Crypto-investing: The DAO of accrue + +Free exchange: Murder most foul + + + + + +Swedbank + +Bank to basics + +Swedbank’s success is built on old-fashioned thrift and modern technology + +May 21st 2016 | STOCKHOLM | From the print edition + + + +TWO years ago Swedbank, Sweden’s biggest retail bank, moved from its offices in the centre of Stockholm to a drab business park outside the city. Employees fretted about leaving their prime location, a few doors from the Riksbank, the central bank, and a stone’s throw from Parliament. The move, which has saved $25m-odd a year, was symbolic not only of the bank’s thrift, but also of its desire to retreat from the exciting but risky end of banking. Instead, much like the Scandinavian furniture in its office, it is returning to something simpler and more straightforward. That strategy has made Swedbank not only one of the safest banks in Europe, as judged by the thickness of its cushion of capital, but also one of the most profitable. + +European banks are struggling. Economic growth is low; regulators demand ever more capital, and negative interest rates, which most banks do not dare to pass on to depositors, squeeze margins. All this, bankers tell aggrieved shareholders, has inevitably pushed returns far below their pre-crisis levels. Yet Swedbank has defied the inevitable. It is nearly twice as profitable as the average European bank, despite holding twice as much capital on a risk-weighted basis (see chart). Last month it announced profits for the first quarter of SKr4.31 billion ($510m), well above market expectations and virtually the same as last year (SKr4.32 billion), before Sweden and the euro zone adopted negative rates. This was doubly unexpected given the sudden departure of the bank’s CEO in February, amid criticism of his policing of suspected conflicts of interest among the staff. + + + +Underlying the bank’s success is the idea that in the post-crisis world, running a retail bank is not that different from running a utility. The business strategy is simple: sell lots of dull, low-risk products while keeping operating costs as low as possible. Of its 8m customers, 7m are households. Mortgages make up 60% of its loan book. Although there is plenty that banks cannot control, Swedbank focuses relentlessly on what it can: cost and risk. + +“Hard and sweaty work” is the only way forward, says Goran Bronner, the bank’s CFO. Swedbank has cut its staff by a third since 2009; slashed the number of branches in Sweden (it also operates in the Baltic states) from over 1,000 in 1997 to 275 today, and made all but eight of those completely cashless. Discipline on spending pervades the bank, from procurement (switching phone companies recently reduced its telecom bills by 58%) to staffing (it is moving part of the workforce to the Baltics, where wages are up to 70% lower). It is over halfway through a two-year plan to reduce group expenditure by SKr1.4 billion. The $1.6m salary of the new CEO, Birgitte Bonnesen, is modest for the industry. + +As a result of this frugality, Swedbank has a cost-to-income ratio of 43%, meaning that 57% of the money it takes in can be distributed to shareholders or reinvested. This is over 16 percentage points more than the average for the EU as a whole. The Baltic branches are even more efficient, thanks in part to even greater use of digital banking than in Sweden. + +The bank’s efforts to move customers from branches and phones to websites and apps are crucial to its success. In the future people may well only visit a branch once every five years, suggests Ms Bonnesen, who believes “extreme efficiency”, abetted by technology, is the nub of retail banking. Across the road from Swedbank’s headquarters, in a converted warehouse, 200 developers and business managers flit from breakout areas to meeting pods, planning this lean but customer-pleasing future. One of their most popular creations is the “shake for balance” function on Swedbank’s app, which allows users to shake their phones to find out how much money they have in their account. It is used 30m times a month. + +It helps that Swedbank’s biggest market is Sweden. Its economy has grown faster than most of Europe. Swedes have also been easier to wean off expensive cash and human contact than other Europeans, thanks to their digital savvy. And the Swedish banking bust of the 1990s instilled a wariness of lax lending in local bankers long before the global financial crisis. + +Nonetheless, Swedbank still lent too freely to borrowers in the Baltics, Russia and Ukraine in the early 2000s. Some 20% of loans in those countries had soured by 2009 (compared to 3% for the bank as a whole). What makes the bank remarkable, says Alexander Ekbom of Standard & Poor’s, a rating agency, is how it responded. It promptly sold its Russian and Ukrainian business and wrote off bad loans in the Baltics. Only 0.4% of its current lending is in default. + +This experience made Swedbank the conservative, slightly boring bank that it is today. It says it has no ambition to expand to new markets or to trim its capital. It avoids risky assets, preferring those with solid collateral, such as property. Any new business must have a risk-adjusted return of at least 20% to be considered worthwhile. In Sweden it tries to steer clear of lending to industries exposed to private consumption, which tends to suffer in downturns. Much of its corporate lending goes to farming, forestry and housing co-operatives, which it considers safer. + +Despite this obsession with risk management, the bank faces some risks that are hard to control. Because Swedes don’t keep much money in the bank, Swedish banks rely heavily on wholesale funding, making them vulnerable to investors’ mood swings. And Swedbank’s impressive risk-adjusted capital ratio is largely the result of the very favourable treatment that mortgages in rich countries still receive under the Basel banking rules compared to other types of lending. If global regulators’ approach to mortgages were ever to change, Swedbank would look much less strong: its leverage ratio, an unweighted measure of capital, is pedestrian. + +By the same token, if Swedes ever defaulted on their mortgages in large numbers, Swedbank would be in big trouble. Swedish house prices, and thus mortgage lending, are swelling at a tremendous pace, generating fears of a bubble. Swedish policymakers and bankers seem remarkably sanguine that, even if there were a correction, households would not default on their mortgages, although the broader economy would suffer as households cut back on other spending. But even if these grim scenarios were to materialise, Swedbank would be starting in a much stronger place than most European banks. + + + + + +Buttonwood + +Into the unknown + +Investors fear Brexit, but don’t think it’s likely + +May 21st 2016 | From the print edition + + + +IN A month’s time, on June 23rd, Britain will vote on whether to leave the European Union. For many voters, polling day will be a blessed relief after a campaign that will have dominated the news for four months. Mind you, if they vote to leave, they will suffer many years of further debate about the exit negotiations. + +Financial markets have been bemused observers of the campaign. Most investors, like most economists, think Britain would be worse off outside the EU. A recent survey of global fund managers by Bank of America Merrill Lynch (BofA) found that Brexit was the biggest market risk, ahead of a Chinese devaluation; however, 71% of those managers thought it unlikely that Britons would vote to leave. Despite the closeness of most opinion polls, gambling markets have consistently favoured a Remain vote; the odds on Leave are down to 25%. + +If Britain does vote to leave, the nature of the subsequent trade relationship with the EU will be all-important. Fitch, a credit-rating agency, says a quick deal guaranteeing free trade with the EU would be only mildly negative. But that would probably require Britain to accept free movement of labour and a contribution to the EU budget—the very things that Brexit campaigners want to stop. At the other end of the scale, a scenario that involved protracted negotiations and Scottish independence would put Britain’s credit rating under great pressure. + +So it is a difficult trade for investors: an event which they think is unlikely, but which could have grim consequences. The pound would probably be the biggest casualty of a Brexit vote; indeed, it took a hit on the day the referendum was announced. Since then it has recovered against the dollar, which has dropped against most currencies as the Federal Reserve has sounded more dovish on further rate increases. But the pound has still weakened against the euro during the campaign (see chart). + +The problem for currency traders is that the risks go both ways: a vote to remain in the EU would probably push the pound up, making life hard for those who had gambled on Brexit. This uncertainty shows up in the options market, where traders can hedge against currency swings. The premium they must pay to insure against lurches by the pound (known in the jargon as implied volatility) has risen sharply. + + + +INTERACTIVE: The Economist's “Brexit” poll-tracker + +Fund managers polled by BofA are already less enthusiastic about British equities than they have been for more than seven years. But the impact of Brexit on individual stocks will vary. More than 78% of the revenues of FTSE 100 companies come from outside Britain, according to BlackRock, a fund-management group. Such companies will see the value of their foreign earnings rise if sterling declines. But companies in the FTSE 250 index (medium-sided groups) generate nearly 60% of their revenues at home. So the performance of the FTSE 250 has lagged the large-cap index so far this year. + +On the surface it might seem that British government bonds, or gilts, should be suffering in the run-up to the poll. International investors who hold gilts would lose out if a Leave vote led to a fall in sterling; they might be expected to demand a higher yield to compensate for that risk. In fact, the yield on the ten-year bond is close to its level on the day the poll was announced. In part, that is because the British bond market is part of a global bond market, where yields have remained low. Also, a Brexit vote would have an adverse effect on confidence and economic activity, so it would probably be followed by an interest-rate cut from the Bank of England, or even an expansion of its bond-buying programme (quantitative easing). Both events would be good for gilts, driving yields down, not up. + +Investors’ confidence that the Remain side will win means that the markets’ reaction in the event of a Leave vote is likely to be dramatic. Erik Nielsen, chief economist at UniCredit, an Italian bank, thinks the pound could fall 10-15% in trade-weighted terms. The news would probably drag down the euro against the dollar, too, since the long-term stability of the EU would be in doubt. Indeed, even Federal Reserve governors have said that the British poll might affect their policy decisions, because of the potential impact on confidence. Many fingers will be crossed on the night of June 23rd. + +Economist.com/blogs/buttonwood + + + + + +Pacific economies + +The leeward side of fortune + +The economic deck is stacked against the tiny countries of the Pacific + +May 21st 2016 | DILI | From the print edition + +Life in Vanuatu is not all fruity cocktails + +THE phrase “Pacific island” conjures images of white-sand beaches, turquoise seas and cocktails served in halved coconuts. Alas, the reality is not quite so blissful. Most of the countries of the Pacific are poor and poorly run. Their tiny size and remoteness are obstacles enough to prosperity. Now, thanks to global warming, they must also contend with rising seas and increasingly frequent and severe storms. + +The biggest regional economies belong to the predominantly Melanesian countries closest to Asia: Fiji, Papua New Guinea (PNG) and Timor-Leste (which considers itself both a Pacific and a South-East Asian country). Fiji’s leading export has long been sugar; sugar cane covers three-quarters of its arable land. But output is falling, and its future is uncertain: for years Fijian sugar has benefited from preferential access to the European Union, but that is scheduled to end next year. Competing on the open market against bigger producers with lower production and transport costs, such as Brazil and India, will be difficult. Fortunately, Fiji has a robust and growing tourism industry and, like many Pacific countries, reliable remittances from overseas workers. + +PNG, culturally one of the world’s most diverse states (its 7.5m people speak more than 800 languages), relies on exports of minerals and, since 2014, natural gas. The economy grew by 10% last year as gas production increased. But with commodity prices low, a large gold and copper mine recently closing and drought battering the country’s farms, growth has decreased markedly: the Asian Development Bank predicts a rate of 4.3% this year. + +Timor-Leste has tried to insure against such external risks: in 2005, a couple of years after it became fully independent, it passed a law requiring its petroleum and natural-gas revenues to be put into a sovereign-wealth fund. The government, subject to parliamentary approval, is supposed to transfer no more than an “estimated sustainable income” from the fund into its budget each year. But the government has made excess withdrawals to fund budgets every year since 2009, and top-up funds will soon become scarce. + +If Timor-Leste can reach an agreement with Australia on how to divide Greater Sunrise, a gasfield in the Timor Sea between the two countries, then its gas will last another 15 years. If not, its known fields will be exhausted in four. Timor-Leste has a tiny private sector; recent growth has come from public spending made possible by money from the petroleum fund and from taxing oil and gas firms. It is among the most oil-dependent countries in the world: the industry accounts for around three-quarters of GDP. + +The rest of the region consists of far-flung islands which rely on four main sources of income. One is tourism, though this is less developed than one might expect for an area composed of Elysian islands with pristine beaches and rainbow coral. Second is the sale of fishing rights in the vast stretches of ocean that fall within their territory. Remittances from workers abroad is a third. Finally, improved connectivity has created a modest outsourcing industry, strongest in Fiji, offering services such as call centres and data processing. + +The outsourcing business relies on new fibre-optic cables. Flying and shipping goods and people around the region has become cheaper, too. But these only restrain geography rather than vanquish it. Manufacturing will always be limited to a small degree of import-substitution: transport costs are just too high to follow the conventional East Asian path of industrialisation. And Pacific countries suffer from devastating cyclones, which are likely to grow stronger and more frequent in the years ahead. Eight countries in the region lose an average of 2% or more of GDP each year to storms. In time the low-lying atolls of Kiribati, Vanuatu and Tuvalu may disappear entirely beneath rising seas. + + + + + +Quinoa + +Against the grain + +The fad for the Andean staple has not hurt the poor—yet + +May 21st 2016 | From the print edition + +Watch out or a vegan will snatch it + +IS THE global fad for quinoa a bane or boon to the peasants of the Andes? For centuries they were more or less the only people to grow or eat the stuff. Dieticians in the rich world have known how nutritious it is for a long time: in 1993 a study by NASA, America’s space agency, stated: “While no single food can supply all the essential life-sustaining nutrients, quinoa comes as close as any other in the plant or animal kingdom.” But it took adulation from the likes of Oprah Winfrey (who in 2008 included it in her 21-day “cleanse” diet) to give the grain global appeal. Now, wherever yuppies can be found, it can be too, usually lurking near Puy lentils or goji berries in a salad. The UN even branded 2013 the International Year of Quinoa. + +As demand galloped ahead, supply could not keep pace. So between 2000 and its peak in 2014, the average price of quinoa exports from Peru and Bolivia more than tripled, to $6-7 a kilogram. That panicked the Guardian, a British newspaper, among other hand-wringers: in 2013 it ran the headline “Can vegans stomach the unpalatable truth about quinoa?” It accused heedless Western hipsters of pricing poor Andeans out of their staple food. Given that 16% of Bolivians and 7.5% of Peruvians are undernourished, according to the UN, that is a serious charge. + +Happily, the food fadsters are not guilty. Although average quinoa consumption in Peru fell as quinoa prices rose, it did so steadily, and much less abruptly, than the movement in the price. This suggests that the switch was as much to do with changing preferences as prices. Young Peruvians are keener to indulge in food fads of their own—for more Western food—than to gorge on their grandparents’ staple. + +Not so keen on quinoa + +In any case, only a tiny portion of Peruvian household spending is devoted to quinoa. In countries like Bangladesh, Malawi and Vietnam, sharp increases in the price of staple foods can plunge the poor into even deeper poverty, as they often spend more than a third of their income on them. But a study by Andrew Stevens at the University of California found that quinoa accounted for a mere 0.5% of household spending, on average. + +For farmers, meanwhile, higher prices meant higher incomes. Peruvian and Bolivian quinoa-growers need all the money they can get. Before the boom, many were barely scraping by. Another study, published in March, found that the total household spending of the typical quinoa-growing family (including consumption of their own crop) was only 40% of that of the typical quinoa-consuming family. + +Surging prices helped lift quinoa farmers’ household expenditure by 46% between 2004 and 2013 (compared with an increase of around 30% for non-producing households). Better still, even households that did not produce quinoa enjoyed a boost to their consumption. It seems that by spending their newfound income, flush quinoa producers benefited the local economy more broadly. For every 25% increase in the price, household consumption increased by 1.75%. + +Although concerns for the poorest Peruvians were misplaced in 2013, there may be cause to worry now. The high prices of 2013-14 prompted many more people to start growing quinoa, from entrepreneurial Bolivian taxi drivers to large agribusinesses. European farmers got in on the act, too. Quinoa is now grown in around 50 countries, according to James Livingstone-Wallace, founder of Quinola, a quinoa supplier. + +That means a lot more supply: the combined volume of quinoa exports from Peru and Bolivia to the European Union rose by 227% between 2012 and 2015. Prices, naturally, have plummeted—by 40% between September 2014 and August 2015 alone. Following that drop, wages in the two regions that had traditionally produced the most quinoa fell by 5%, and total food consumption by 10%, according to a new report from the International Trade Centre, a development agency. + +The same study suggests that many Andean farmers are hoarding quinoa, in the hope that prices will rise again. But European farmers are doing the same, according to Freek Jan Koekoek, a consultant. In other words, there is a real chance that prices could fall further, as farmers despair and sell their stocks. + +If that happens, the marginal producers likely to be pushed out of business by the glut are the original ones: poor Andean farmers. They grow quinoa because little else thrives on their steep, barren plots. Their new competitors, tilling better soil with modern farming equipment, manage yields that are up to eight times higher. An ox takes six days to plough land a tractor can handle in two hours, explains Mr Livingstone-Wallace. “With their current methods, it’s unlikely they’ll be able to compete on price,” he says. + +The “Fairtrade” price of quinoa (which is meant to correspond to the minimum required to give farmers a decent standard of living) is around $2.60 a kilo; the current market rate is less than $2, suggesting that Andean growers are already struggling. The idea that the Andes might cease to be the world’s main source of quinoa is not far-fetched. The potato, after all, originated there, but now 15 other countries, including Bangladesh and Belarus, produce more potatoes than Peru does. + +Yet Peru still produces around 4,000 varieties of potato, which foodies are trying to brand and market to Western consumers. The main hope of Andean producers is to carve out a niche in the market with their authentic, organic, “heirloom” quinoa, appealing to the same consumers who were warned away back in 2013. + + + + + +Insurance in China + +Safe or sorry? + +Regulators try to tame the unruly parts of an important industry + +May 21st 2016 | SHANGHAI | From the print edition + + + +Fast growth is, in one respect, just what China’s insurance industry needs. The population will get much older in the coming decades, but the public pension scheme is still in its infancy. By supplementing public coverage with private policies, the government hopes that people may just manage to escape penury in their old age. At the moment the government covers roughly a third of medical expenses and insurance companies less than a tenth, leaving individuals to pick up more than half the tab themselves, according to Enhance International, an insurance consultancy. That is an especially heavy burden, naturally, for the elderly. + +But excessively rapid growth, built on flimsy business models, risks doing more harm than good. There have been plenty of worrying signs. The most aggressive firms have scaled up by offering guaranteed returns of 6% or more on short-term investment products, an extremely risky strategy for what is supposed to be a sober and reliable industry. To deliver these returns despite a lacklustre stockmarket, they have piled on debt and cut into their own margins. Moreover, these short-term products do not necessarily help investors through retirement: people are free to cash out when their policies mature, leaving them with no coverage against death, illness or accidents. + +Regulators appear to have had enough. In March they announced their strictest rules yet to curb speculative behaviour. They barred insurers from selling products with maturities of less than one year and began to phase out those with maturities of less than three years. These measures, though somewhat crude, should help prevent mismatches between long-term assets and short-term liabilities. + +This month regulators turned their attention to some of the insurers that have been among the boldest in expanding. First they sent inspectors to Sino Life Insurance Co, which has run down its capital in recent quarters. Then they went to Anbang, which has increased its assets some 50-fold over the past two years. That inspection was a particularly important signal about the clout of regulators. Many observers had assumed that Anbang would receive preferential treatment, thanks to strong political connections (its chairman is married to the granddaughter of Deng Xiaoping, a revered former leader). But regulators blocked its $14 billion bid earlier this year for Starwood, a big international hotel chain, and now seem to be clipping its wings at home. + +More fundamentally, China has also overhauled solvency rules, which should force insurers to change the way they operate. Capital requirements had been based on simple gauges of size. Now they are much closer to the norm in developed markets, varying in line with how quickly policies turn over and how premiums are invested. Firms that rely excessively on short policies or that invest heavily in the stockmarket must hold a much bigger cushion. + +The heyday of rapid expansion by opportunistic firms is over, predicts Lee Yuan Siong of Ping An Insurance, one of China’s biggest providers. “The government saw the danger early enough before it got out of control.” If the new rules work, insurers will need to focus on persuading people to buy their policies for protection rather than as an investment. That is a safer bet, but a harder sell. + + + + + +Crypto-investing + +The DAO of accrue + +A new, automated investment fund has attracted stacks of digital money + +May 21st 2016 | From the print edition + + + +IT SOUNDS like a cult, but it wants to be a venture-capital fund of sorts. As The Economist went to press, the DAO (short for decentralised autonomous organisation) had already raised the equivalent of nearly $150m to invest in startups. This, say its fans, makes it the biggest crowdfunding effort ever. + +To understand the DAO it helps to keep in mind the concept of “smart contracts”. These are business rules encoded in programs that execute themselves automatically under certain conditions: for example, funds are only transferred if the majority of owners have digitally signed off on a transaction. Such contracts can also be combined to form wholly digital firms that are not based anywhere in the real world, but on a “blockchain”, the sort of globally distributed ledger that underpins crypto-currencies such as bitcoin. + +The DAO literally lives in the ether, meaning on the blockchain of Ethereum, one of bitcoin’s rival crypto-currencies. Investors send digital coins (called “ether”) to the fund, which allows them to take part in votes on whether to put money in a given project. Candidates for investment put themselves forward, providing not only a business plan, but also smart contracts that define the relationship between them and the DAO. Once a proposal is approved, funds flow automatically: firms get money under the rules specified in the smart contracts. + +Schemes of this kind have not done well. The crowd may have wisdom, but not a lot of commitment. Similar but smaller vehicles operated by a firm called BitShares, for instance, are suffering from a lack of participation in votes, in large part because it takes time and energy to consider proposals. Investors in the DAO can also withdraw money not yet committed to a project at will. This means that the $150m in ether could quickly vanish into the, er, blue if investors got nervous. + +Yet it would be unfair to dismiss the DAO as no more than a public-relations exercise for Ethereum and Slock.it, a maker of electronic locks controlled via the blockchain, which has developed the fund’s smart contracts and hopes to be the beneficiary of its first investment. Many of the DAO’s investors are believers, and it will provide an interesting test both of how regulators deal with a stateless fund and, in particular, what happens at such outfits when a dispute arises. + +Moreover, if you believe that Ethereum is the future, it makes sense to invest in a fund that could increase demand for the currency—in particular if there are not many other ways to spend ether (the DAO, which will stop accepting new funds on May 28th, has already attracted nearly 14% of all ether ever issued). In the strange world of crypto-currencies, faith and rationality go together like yin and yang. + + + + + +Free exchange + +Murder most foul + +When periods of economic growth come to an end, old age is rarely to blame + +May 21st 2016 | From the print edition + + + +IN JUNE America’s economic expansion will be seven years old. That is practically geriatric: only three previous ones lasted longer. The record boom of the 1990s survived only ten years. + +It is tempting to look at that ten-year mark as something like the maximum lifespan of an expansion in America, and to worry, correspondingly, that the current expansion’s days are running short. But are they? At a press conference in December Janet Yellen, chairman of America’s Federal Reserve, declared: “I think it’s a myth that expansions die of old age.” Yet die they do. Either Ms Yellen is wrong, or someone is bumping off otherwise healthy expansions before their time. + +Like death, recessions (commonly defined as two consecutive quarters of falling GDP) are a part of life. Supply shocks occasionally prompt them: soaring oil prices in 1973 hit consumers in rich economies like an enormous tax rise, for instance, diminishing their purchasing power and thus prompting GDP to fall. More often, weak demand is to blame. Financial-market wobbles or rising interest rates cause people to cling tighter to their cash. Fear proves contagious, leading to a spiral of self-fulfilling pessimism. + +But not all expansions are as short-lived as America’s (see chart). The Netherlands holds the record: its longest, which ended in 2008, lasted nearly 26 years. Australia may surpass that early next year: its continuing expansion dates back to 1991. If expansions have a natural lifespan, it is longer than a decade. + +Earlier this year Glenn Rudebusch of the Federal Reserve Bank of San Francisco constructed an actuarial table for America’s historical expansions, much as a life-insurance company would for people. In rich countries the probability of a person’s death rises gradually from middle age until the mid-80s, then quite steeply thereafter. Expansions, however, do not seem to become more vulnerable with age. There have been only 12 American expansions since the end of the second world war; the universe of people who have lived and died is somewhat larger. But the data available suggest that there was a time when cycles aged like people. Before the second world war, Mr Rudebusch notes, the odds of tipping into recession rose as an expansion got older. Yet since the 1940s age has not withered them: an expansion in its 40th month is just as vulnerable, statistically, as one in its 80th (each has about a 75% chance of surviving the next year). + +The notion of ageless recoveries is counter-intuitive. Finite business cycles seem to make sense: an economy just coming out of recession should have plenty of opportunities for investment, for example, which, once exhausted, make the onset of a new downturn more likely. Yet economists reckon cycles need not unfold like that; instead, it is possible for the composition of growth to change even as expansion continues. A booming tech sector might siphon off capital that would otherwise flow to infrastructure or housing. Those industries, in turn, could power growth once the tech boom runs its course. If all domestic investment opportunities are used up, capital should flow towards foreign investments, reducing the value of the currency and so helping exporters to spur the economy forward. As long as the end of a boom in one sector does not engender self-fulfilling pessimism in the rest of economy, the show should go on. + +Why, then, should an economy ever find itself in recession? In the pre-war era, when age mattered more, governments and central banks played a much smaller part in stabilising the economy. Economic shocks (from earthquakes to financial crises) come along every so often; the longer an expansion goes on, the greater the chance that a really nasty mishap will occur, pushing the economy into a downturn. + +Yet after the Depression, governments took on the job of countering pessimism. Bigger welfare states provided bigger “automatic stabilisers”, meaning spending on things like unemployment benefits, which pump more money into an economy as growth weakens. Central banks began manipulating interest rates more vigorously to keep growth on track, and eventually adopted targets to help instil the expectation of steady growth. + +Ms Yellen, in the ballroom, with the premature rate rise + +Post-war expansions are longer (and recessions shorter) than was once the case, but business-cycle immortality remains elusive. The end of some expansions is clearly the result of foul play. In the early 1980s, for instance, both America and Britain suffered recessions that were deliberately induced in order to bring down raging inflation. + +In other cases the culprit is human error. As central bankers freely admit, their control over the economy is imperfect. Policy works on a delay. Since not every shock can be anticipated, a bad blow may start a recession before a central bank can adequately respond. Or an inflation-averse central bank may discover, after it is too late to adjust course, that it raised interest rates once too often. What’s more, with interest rates in many economies near zero, central bankers find themselves increasingly reliant on unconventional tools, for which the margin of error is larger. + +But there is a difference between misfortune and recklessness. Central banks that worry more about high inflation than low will tend to err on the hawkish side, and will find themselves steering into recession with some regularity. The Reserve Bank of Australia, which targets an inflation rate of between 2% and 3%, has given itself a floor to defend as well as a ceiling. That seems to help it from sinking into recession by mistake. The Fed, which has begun raising interest rates even as its preferred inflation measure remains below its target, has not absorbed this lesson—and Ms Yellen’s comments about the natural life of expansions should not be considered an alibi. + + + + + +Science and technology + + + + +Improvised weapons: Hell’s kitchens + +Dogs and cancer: Best-friend genetics + +Clinical trials: Better with bitcoin + +Robotics: The fantastic voyage + +Forest fires: Burning benefits + + + + + +Improvised weapons + +Hell’s kitchens + +Makeshift weapons are becoming more dangerous with highly sophisticated, commercially available kit + +May 21st 2016 | From the print edition + + + +THE “hell cannons” of Aleppo pack a deadly punch. Cobbled together in Syria by militant groups fighting to overthrow the autocratic regime of Bashar al-Assad, they use an explosive charge at the bottom of a pipe to hurl a propane cylinder crammed with 40kg or more of explosives and shrapnel. A finned tail welded to the cylinder shields it from the launch blast and provides stability in flight. The Ahrar al-Sham brigade reckon the cannons can hit targets 1.5km away. Fuses detonate the cylinder upon impact or, using a timer, after it punches into a building. This is all the better to demolish several floors with a single strike. + +The use of improvised weapons in conflict has a long and bloody history: from the Irish shillelagh, a walking stick that doubles as a club—especially effective when the knob at the top is loaded with lead—to the Molotov cocktail, as the glass petrol bombs the Finnish army hurled at Russian tanks during the second world war came to be known. + +The modern equivalents are more high-tech and, like Aleppo’s hell cannons, far deadlier. This comes from a combination of more sophisticated and easily available “off-the-shelf” equipment, and the internet providing a ready medium to spread new weapon-making ideas. The upshot is a reshuffling of the cards in modern warfare, says Yiftah Shapir, a weapons expert at Tel Aviv University and a former lieutenant colonel in Israel’s air force. Any side that begins with a technological advantage will see it erode quickly as the underdogs improve their improvisation capabilities. + +The ominous consequences have led America’s Defence Advanced Research Projects Agency (DARPA), an arm of the Pentagon, to try to keep up with developments by soliciting worldwide for new ways to make weapons using commercially available materials and technologies. More than 20 experts are now reviewing hundreds of submissions. To better assess the risks, some of the most promising designs will be built as prototypes and tested. This could earn their inventors awards of up to $130,000. + +Fire in the hole + +The DARPA experts need to move fast. Only a few years ago the Syrian rebels were lobbing small bombs with slingshots made from lengths of rubber tubing. Now some of the hell cannons are being mounted on vehicles and fitted with recoil springs to absorb the launch explosion. This improves stability, which in turn enables greater accuracy with follow-up shots. Some designs are no longer fired by lighting a fuse, but at a safe distance with a car battery wired to the propellant charge. Bigger cannons heave oxygen cylinders and, astonishingly, even large household water-heaters packed with enough explosives to destroy a cluster of buildings. + +Improvised weaponry typically is not as fearsome as that made by defence companies. But it is a lot cheaper and often effective enough, says Vincent Desportes, formerly a general in the French army and a military attaché to the United States. Despite receiving arms shipments from Iran and Russia, Syria’s regime still uses its own improvised “barrel bombs”—devastating devices made by filling oil drums with explosives and scrap metal. Hizbullah, a Lebanese militia fighting to keep Mr Assad in power, also weaponises non-military materials. The group uses Google Earth to find and hit targets with rockets more accurately, adds Mr Shapir. + +Even defence firms are turning to more commercially available equipment to make weapons. Lasers used to cut and weld materials in industry, for example, are now so powerful that Boeing bought a 10kW model to put into its High Energy Laser Mobile Demonstrator (HEL MD), a system it has assembled for the American army to shoot down drones and incoming mortar shells by firing a laser beam at them. Just think of HEL MD as “a welding torch” with a reach of kilometres, says David DeYoung, head of the Boeing unit that built it. While the off-the-shelf laser is powerful enough for its role, IPG Photonics of Massachusetts is now selling a 20kW laser. + +Smartphones are useful in making weapons. They contain GPS navigation and frequency-hopping technology, which transmits signals that are hard to intercept or jam (both were military developments). Other useful things inside include accelerometers, compasses, gyroscopes, motion detectors and sensors for orientation, measuring magnetic fields and capturing reflected infra-red light (to turn off the screen when it detects the phone is close to the ear, saving battery power and preventing inadvertent touches). All of that can be used for missile guidance and communications, adds Mr Shapir. The guidance and remote-control systems sold with consumer drones offer additional capabilities. + +Some of the improvised weapons suggested to DARPA are highly advanced, says John Main, head of Improv, as the agency’s programme has been named. Once Improv’s own analysis of the proposals is complete DARPA may make some of the plans publicly available to raise awareness of potential risks. Two decades ago, assessing threats from an adversary involved getting ten experts in a room for a few days. Now, says Mr Main, thanks to the profusion of information and readily available advanced technologies, we need “a very, very large ‘red team’” of hundreds of outside technologists to brainstorm the types of attacks that might be concocted. + +Part of the problem is that anyone can buy not just sophisticated hardware but also a 3D printer to make basic weapon components, says Rear-Admiral Brian Brakke, deputy director of operations at the Pentagon’s Joint Improvised-Threat Defeat Agency. In Iraq and Syria, Islamic State has been working on dropping improvised bombs from remotely controlled model aircraft. These might carry bigger payloads than the small quadcopters widely sold as drones to hobbyists and commercial operators. The jihadist group has also begun developing remote-control systems for driverless vehicles to deliver huge improvised explosive devices without suicide-volunteers, Mr Brakke believes. + +Of considerable concern is that many manufacturers of improvised weapons may not respect bans on devices deemed by many nations to be beyond the pale. Some of the barrel bombs being dropped by Syria’s air force contain chlorine, an ingredient prohibited by the 1997 Chemical Weapons Convention. + +The new minefield + +Half a century of conflict has left the Colombian countryside littered with improvised mines. Many have been fashioned by FARC guerrillas without the use of any metal, which is prohibited by the 1996 Anti-Personal Mine Ban Convention because the devices cannot be found with metal detectors. Some rely on pressure from a foot pushing down on a syringe which squirts a reactive agent into a glass jar filled with explosive, says Camilo Serna Villegas, chief technologist with the Colombia Campaign to Ban Landmines, an NGO based in Bogotá. With peace efforts now in progress, FARC and government forces have begun clearing some minefields, but it is a painfully slow process that can involve ground being searched by hand. + +The risk of nasty biological attacks has risen, too. Commercial drones used for spraying new biopesticides derived from natural materials could be adapted to spray more sinister stuff, says Piers Millett, a former deputy head of the United Nation’s implementation team for the Biological Weapons Convention. + +Recent developments in biotechnology have moved the boundaries as well. So-called “biohacking” groups have begun experimenting with homespun processes, much as early computer hackers did with information technology. The biohackers see DNA as a form of software that can be manipulated to design new biological processes and devices. Some of the amateur labs are still relatively crude, but nevertheless there is concern that they could be used to create killer bugs or provide training for bioterrorists. America’s FBI has been watching developments and even organising some biohacker gatherings. That may seem reckless, but the idea is to encourage responsible behaviour and self-policing rather than risk a crackdown that drives the movement underground. + +The array of deadly things that can now be improvised with modern materials and technologies is terrifying. At least knowing what is possible will provide some idea of where the dangers now lurk. That, in turn, should help deliver some defence against the weapons-improvisers. + + + + + +Dogs and cancer + +Best-friend genetics + +A canine cancer that travelled the world provides a new insight into the disease + +May 21st 2016 | From the print edition + +One man and his dog + +DOGS have long been man’s closest animal companion. The story of how they accompanied traders and settlers to every corner of the globe has now been pieced together in an unusual way by a group studying a unique genetic tag associated with a canine cancer. And in the process, this has turned up surprising new evidence about how cancer cells survive. + +Transmissible cancers are rare. One of them, canine transmissible venereal tumour (CTVT), spreads between dogs through the transfer of living cells during mating. The disease, which usually appears as genital tumours in both male and female dogs, is believed to have originated in a single dog some 11,000 years ago and survived by spreading to other dogs. It is now found in dogs worldwide. + +Since that founder dog first spawned CTVT, however, the disease has changed its genetic nature, according to Andrea Strakova, Máire Ní Leathlobhair and Elizabeth Murchison of the University of Cambridge’s Department of Veterinary Medicine and an international team of colleagues. They looked at the DNA of mitochondria in 449 tumours in dogs from 39 countries. Mitochondria are units within cells that act as power plants, turning the energy contained in sugar into a form of fuel which a cell can use. Mitochondria have their own genome, which is likely to be a hangover from a time when they may have existed as free-living organisms. Previous studies have shown that mitochondrial DNA has been able to transfer from body cells in infected dogs into the cells in their tumours, and hence to the tumours of dogs that were subsequently infected. + +As the group report in eLife, they found evidence of the cancer having “stolen” mitochondrial DNA from the cells of its host on at least five occasions during the long history of the disease. This may well have been done to help the tumour survive, says Ms Strakova. By mapping the points at which mitochondrial DNA made the transfer it was possible to work out how the tumours are related to each other. + +Of the five main branches of the family tree (known as “clades”) which the researchers came up with, the oldest arose 1,000-2,000 years ago, probably in India, where the clade still persists. One of the most common clades spread from Russia or China around 1,000 years ago, but did not arrive in the Americas until within the last 500 years, suggesting it was taken there by European colonialists. Contemporary art shows conquistadors used dogs both for protection and as a source of food. The disease arrived in Australia around the turn of the 20th century, most likely among dogs accompanying European settlers. + +Yet the study also found an exceptional dog in Nicaragua in which its tumour had not just mingled with some mitochondrial DNA from its canine host but actually spliced the two sequences together. This so-called “recombination” of DNA in mitochondria is extremely unusual. It could be happening on a much wider scale, the researchers believe, perhaps even in human cancers, where it would be much more difficult to detect because the tumour’s mitochondrial DNA is likely to be very similar to the mitochondrial DNA in the patient’s normal cells. It is not yet known what the significance of mitochondrial DNA recombination in cancer could be. But it might be that the genetic changes it bestows somehow help cancer cells. If so, blocking the process could provide another way to fight the disease. That would be one more debt man owes to his dogs. + + + + + +Clinical trials + +Better with bitcoin + +Blockchain technology could improve the reliability of medical trials + +May 21st 2016 | From the print edition + + + +CLINICAL trials are a murky old world. The pharmaceutical industry is keen to get new drugs to market and researchers are just as keen to report positive results. This can produce some rather unpleasant side-effects. Selective reporting of data from trials is rife. In one infamous example, a 2001 study reported that paroxetine, an antidepressant, was safe and effective for treating the illness in teenagers. It later emerged, however, that this was based on new measures of the drug’s effectiveness, introduced only after the drug had failed to show any significant improvement in the outcomes that had been specified when the trial was first drawn up. Later studies showed that the drug increased the risk of suicidal behaviour in children. + +How to guard against such things got Greg Irving, a family doctor and a researcher at the University of Cambridge, thinking. He came up with a way to improve the reporting of clinical trials with the blockchain technology underlying bitcoin, a digital currency. The blockchain is a database that acts as a public ledger of all transactions with the currency, and is thought to be almost completely tamper-proof because it is validated and stored independently on thousands of different computers worldwide. This provides a way, Dr Irving reckons, to check that results have not been fudged. + +Since 2007 America’s drugs regulator has required that all clinical trials are registered in ClinicalTrials.gov, a publicly accessible database. So, Dr Irving used a recent example to demonstrate how his idea might work. He saved a copy of the study protocol, including the planned analysis and clinical outcomes it was supposed to test, to a text file. He then fed that file into an algorithm called an SHA256, which boils the data down into a unique string of characters known in cryptography as a “hash”. Even a small change to the original file, such as the addition of a full stop, would result in a completely different hash. (Conversely, it is impossible to use the code to reconstruct the contents of the original file.) Such strings are also used in bitcoin transactions. + +To add a record of the codified protocol to bitcoin’s public ledger, its hash must be used in a bitcoin transaction. To do that Dr Irving used the hash generated from the trial protocol as a “private key”—essentially a password that allows someone to spend bitcoins in his online wallet. Bitcoin users usually randomly generate a hash for the same purpose. He then transferred a small sum of money from his bitcoin wallet to a second bitcoin wallet. The transaction created a “public key”—a second string of characters that is time-stamped and entered in the blockchain’s ledger. + +Anyone with a copy of the trial protocol should be able to reproduce the above steps to check if they resulted in the same public key. This would prove that the copy of the protocol matched the original. To show that this was the case, Dr Irving gave his protocol to John Holden, also a general practitioner, who used it successfully. Though the process might seem to be convoluted, Dr Irving and Dr Holden say it took less than five minutes. + +Dr Irving believes the method could prevent “hidden outcome switching”, the egregious and statistically flawed practice of secretly changing the focus of a clinical trial to fit the results. A study last year of 137 trials found 60 reported on outcomes they were not looking for, according to their original protocol. The COMPare project, which monitors clinical trials, found only nine out of 67 studies it has so far looked at had reported their results properly. + +With about 20,000 studies registered each year on ClinicalTrails.gov alone, such problems are likely to be the tip of a very large iceberg, Dr Irving contends. Public keys for protocols should be uploaded to trial registries, he argues, and included in research papers. Researchers and medical journals could speedily check whether the right results were being reported. Ultimately, the process could be automated. + +Another benefit, paradoxically, is that the protocol for studies could be hidden until completed. This might be useful for commercially sensitive trials of new therapies. As long as the public key was uploaded to a registry when the trial began, the protocol could be verified later without the worry that it had been changed during the study. Dr Irving would now like to test his ideas on a small number of trials. And, of course, to report the results properly. + + + + + +Robotics + +The fantastic voyage + +Sending tiny robots into the body to collect foreign objects + +May 21st 2016 | From the print edition + +Ice and an origami slice + +ROBOTIC surgery is one thing, but sending a robot inside the body to carry out an operation quite another. It has long been a goal of some researchers to produce tiny robotic devices which are capable of travelling through the body to deliver drugs or to make repairs without the need for a single incision. That possibility has just got a bit closer. + +In a presentation this week to the International Conference on Robotics and Automation in Stockholm, Daniela Rus and Shuhei Miyashita of the Massachusetts Institute of Technology described a robot they have developed that can be swallowed and used to collect dangerous objects ingested accidentally. The device is based on foldable robot technology that their team of researchers have been working on for years. The basic idea is to make robots that fold up, a bit like origami, into small structures less than a few millimetres in diameter so that they can be swallowed like tablets. Then, once inside the body, the capsules enclosing the robots dissolve, allowing the devices to unfold, reconfigure themselves and get to work. + +To test their latest version, Dr Rus and Dr Miyashita designed a robot as a battery retriever. This might seem to be an odd task, but more than 3,500 people in America alone, most of them children, accidentally swallow the tiny button cells used in small electronic devices every year. Because these batteries contain a charge, they have an unpleasant tendency to burn holes in the stomach. They can be removed surgically, but it is a tricky and unpleasant procedure. + +To start with, the researchers created an artificial oesophagus and stomach made out of silicone. It was closely modelled on that found in a pig and filled with simulated gastric fluid. The robot itself is made from several layers of different materials, including pig intestine, and contains a little magnet. This is folded up and encased in a 10mm x 27mm capsule of ice. Once this reaches the stomach the ice melts and the robot unfolds. It is moved and steered with the use of a magnetic field outside the body. + +In their tests, the robot was able to latch onto a button battery with its own magnet. Dragging it along, the robot could then be guided towards the intestines where it would eventually be excreted through the anus. After the robot had done its work, the researchers sent in another robot loaded with medication to deliver it to the site of the battery burn to speed up healing. + +The team sent their robots on dozens of missions, each time successfully extracting the offending object. They got pretty good at it too, averaging five minutes to conduct the entire process. + +Since the artificial stomach was transparent on one side, the researchers were able to see the batteries and visually guide the robots. The next step will be to try this procedure in pigs. That will require help with guidance from imaging systems such as ultrasound and magnetic resonance imaging. It will be a bit more of a challenge, but Dr Rus and Dr Miyashita are determined to succeed. + + + + + +Forest fires + +Burning benefits + +Controlled fires can both help prevent combustion and reduce insect attacks + +May 21st 2016 | From the print edition + +Terrifying, but cleansing + +THE giant wildfire that raged recently through the Canadian province of Alberta, forcing more than 80,000 people to flee their homes, was caused in part by global warming producing drier conditions. Yet conservation efforts to prevent burning have not helped either, say some experts. Forests can regenerate after being burnt, with much of the tinder-like underbrush being cleared away and dense tree canopies broken up so that young trees can get the sunlight they need to grow. Now a new study finds that fires, whether started naturally or under controlled conditions, can also thwart nasty insect infestations. + +Like many useful discoveries, this one came about somewhat by accident. Sharon Hood of the US Forest Service was working with the University of Montana and colleagues on the ecology of a forest in western Montana that had been managed in a number of ways to make it more resistant to fire. They were monitoring areas that had been thinned to open up the canopy, exposed to controlled burns to remove ground growth, or both. To provide a control area for comparison, the team also kept an eye on part of the forest that had not seen a blaze since the 1800s. They were planning to monitor the forest for many years to come, but then the beetles arrived. + +These were mountain pine beetles, a pest in North America. The beetles lay their eggs in the phloem layer inside the trees’ bark, which conducts nutrients from the leaves down to the roots. When the eggs hatch, the larvae feed off the phloem, draining the tree of its vital resources. If the number of beetles is low, trees are able to defend themselves effectively by flooding the areas under attack with an insecticidal resin. However, in great numbers the beetles tend to use chemical signalling compounds called pheromones to concentrate their invasion on one tree at a time, which exhausts resin levels and ultimately kills the tree. Beetle outbreaks have taken place for millennia, but recently have been getting much larger and lasting a lot longer. + +Dr Hood knew the beetles were particularly problematic in forests where fires had been suppressed for a long time, although no one was sure why. The arrival of the beetles in 2005, just five years after the team began their monitoring, provided a golden opportunity to find out. So the researchers compared a 2012 survey of the forest with the findings from 2005. They found 720 of 2,189 trees had died during that time. Obvious evidence in the form of larval tunnels and bore holes showed that the beetles were responsible for their demise. However, the distribution of the dead trees was not evenly spread among the various zones. + +As Dr Hood reports in Ecological Applications, the death toll was 50% in the control zone, 39% in the area intentionally burned, 14% in the one both thinned and burned, and nearly zero where it was merely thinned. There are two main reasons for this, she argues. First, the trees in the burn-only zone had particularly low levels of chemical compounds known as monoterpenes that the beetles use to make their pheromones. Without these chemicals, Dr Hood speculates that the beetles found it more difficult to co-ordinate their attacks. Second, trees living in the thinned-only forests were healthier overall due to reduced competition for resources and had larger supplies of resin available to them. Thus they were in a much better position to fend off the beetles. Thinning and controlled burning may well be a good way to reduce wildfires and insect infestations, but organising this over the vast swathes of land that have been subject to fire suppression for over a century will not be easy. + + + + + +Books and arts + + + + +Greece and Egypt: Deep rising + +Johnson: Prevailing winds + +Victorian crime: Boys’ own + +Free speech: A right, not a duty + +Man Booker International Prize: Dendrophilia + +Benedict Anderson: Indonesian scholar + + + + + +Greece and Egypt + +Deep rising + +Treasures excavated from the Mediterranean show that when it came to subduing Egypt, the ancient Greeks knew how to win hearts and minds + +May 21st 2016 | From the print edition + +Rise and shine + +SOME time, probably in the eighth century AD, earthquakes, floods and subsidence caused the Egyptian coast at Alexandria and towards the Nile delta to sink beneath the waves. Tantalising references in ancient Greek and Egyptian texts to cities and temples along that coast were all that was left of them. Then in 1933 a Royal Air Force pilot, flying over Aboukir Bay east of Alexandria, thought he saw something. He told Prince Omar Toussoun, an Egyptian scholar, who found marble and red granite columns two kilometres offshore. At last, here was concrete evidence. Wars prevented further investigation, but from the 1960s onwards teams of underwater archaeologists have been mapping and excavating a whole submerged Graeco-Egyptian world near Alexandria, the city founded by Alexander the Great after he took Egypt from the Persians in 332BC. + +Now, for the first time, an exhibition arranged in collaboration with the Egyptian Ministry of Antiquities highlights the excavations begun in the 1990s by an underwater team headed by Franck Goddio, founder of the Institut Européen d’Archéologie Sous-Marine (IEASM). Using new nuclear magnetic-resonance technology, Mr Goddio has located two more sunken cities, Canopus and Thonis-Heracleion, near the western branch of the Nile delta. The cities date back to the seventh century BC, long before the foundation of Alexandria, and their excavation adds to what was already known—that there was extensive commercial and religious interchange between Egypt and the rest of the eastern Mediterranean in the first millennium BC. + +Some of this had been learned from work at Naukratis—a harbour city upriver from Canopus and Thonis-Heracleion, which was a trading post to the rest of Egypt. Writing in the fifth century BC, Herodotus reported that during the previous century the Egyptian king Amasis granted Greek traders and sailors special privileges at Naukratis, allowing them to set up sanctuaries to their gods there. Never submerged, Naukratis has been extensively researched ever since two British archaeologists, Flinders Petrie and David Hogarth, began excavations from the 1880s onwards. + +The show draws as much on Naukratis as on the “sunken cities” of its title, revealing Greeks and Egyptians living side by side, their temples within waving distance, their styles and practices distinct but occasionally overlapping. Archaically smiling alabaster and limestone youths in Egyptian poses, made in Cyprus and found in a Greek sanctuary at Naukratis, give a sense of the sheer cosmopolitanism of the place. And it is there in the smaller things too—a small limestone figure of Horus the child, Greek coins, scarabs and amulets designed for both Greek and Egyptian markets. + +Differences, of course, remained. The Greeks always thought the Egyptians strange and exotic. Herodotus said they did everything in reverse and Strabo, a Greek geographer from the first century BC, could never get used to animal worship. For their part, the Egyptians kept foreign trade under tight control. One of the most impressive exhibits, pulled good as new from the sea at Thonis-Heracleion, is an inscribed stone slab, the twin of one found at Naukratis in 1899. Its delicately carved hieroglyphs, here beautifully lit, describe hefty taxes on imports and exports payable to an Egyptian goddess. + +This, then, was the background to Alexander the Great and the Ptolemaic dynasty that followed him, who managed as foreigners to rule Egypt for 300 years until 31BC. The existing traffic and mutual accommodation between Greeks and Egyptians smoothed the way, and led to a remarkably canny piece of political diplomacy by the conquerors to go further still—to honour the Egyptian gods outright and to Egyptianise themselves for their subjects. It was a propaganda project, executed with a stylish sense of theatre that is mirrored in the whole design and atmosphere of the exhibition itself. + +For a moment at the entrance, visitors find themselves in a region of dim, green, subaqueous light before coming up for air, as it were, to a grand welcome from a huge, faintly smiling pink granite statue. A quick swivel to the left brings another coup de théâtre: a long perspective leads the eye through an opening to a graceful woman in clinging draperies and, beyond, to two more towering pink-granite figures: a Pharaoh and his consort. Scattered through the rooms are videos of them and others lying among the flickering fish, gazing at strange, slow, goggle-faced divers. + +But, as it becomes clear, that towering pair in the distance turn out to be Ptolemies in pharaonic regalia. The consort even wears the horns of Hathor, the Egyptian goddess associated with Isis, who together with her brother Osiris and their son Horus made up a divine trinity that was sacred to the Egyptians. Each of these Egyptian gods also corresponded to a Greek deity (there is a helpful chart in the exhibition). And it was precisely by exploiting this fluid system of divine correlations that Alexander and the Ptolemies managed to gain sanction from both sides and legitimise their political power. + +Much of this show is about the Osiris cult. There is a magnificent statue of a bull, the Apis, revered in Egypt as an aspect of Osiris and known in its mummified form as Osiris-Apis. The Ptolemies honoured this animal deity, but they also had their own Greek version, Serapis, with a human form. A massive sycamore carving of him sits across from the bull, with flowing drapery and loosely curling hair and beard. Such pragmatic and aesthetic shifts between the two cultures are at the heart of the show. Alexandrian workshops could do you Greek-style, Egyptian-style or Graeco-Egyptian-style to order. The Rosetta Stone (not included in the show) stipulated that temple statues of Ptolemy V should be “made in the native way”. As for that graceful woman with clinging drapery seen earlier—she stands on a borderline. She was Arsinoe II, a Ptolemy. Her marriage to her brother Ptolemy II reflected the sacred union of Isis and her brother Osiris. The sculptor, using black Egyptian stone, has posed her “in the native way”, and her garment is tied in the Isis fashion. But her lifelike flesh and the fine lines of her dress proclaim her exquisitely Greek. + +“Sunken Cities: Egypt’s Lost Worlds” is at the British Museum from May 19th until November 27th + + + + + +Johnson + +Prevailing winds + +The “usage wars” are coming to an end, and good sense is winning + +May 21st 2016 | From the print edition + + + +FOR half a century, language experts have fallen into two camps, with most lexicographers and academic linguists on one side, and traditionalist writers and editors on the other. Should language experts aim to describe the state of the language accurately? (Webster’s Third New International Dictionary, in 1961, shocked the world by including common but disparaged “ain’t” and “irregardless”.) Or should they prescribe how the language should be used (“Irregardless ain’t a word”)? Over the decades, the two sides have traded insults; prescribers are authoritarians in denial about the real world and describers are permissivists with no standards. + +Two authors in the past two years have made clear that it is time to move on. Steven Pinker is a describer, a linguist and cognitive scientist. But in 2014 he published “The Sense of Style”, a guide to good writing that ended with a section of prescriptions: do this, not that. They were grounded in description, not dogma—but prescriptions they were nonetheless. + +Now come two new books by Bryan Garner, a proud prescriptivist who reaches the same point from the opposite direction. Mr Garner has tangled with Mr Pinker and other descriptive linguists. His explicit aim is to tell people what they should and shouldn’t do. But he has also called himself a “descriptive prescriber”, and this is clearer than ever before in the fourth edition of his masterly usage dictionary, “Garner’s Modern English Usage”, and a new book, “The Chicago Guide to Grammar, Usage, and Punctuation”. These new books rely not on mere clippings, but on big data: millions of books scanned by Google. This lets Mr Garner compare “he pleaded guilty” with the upstart “he pled guilty”. “Pled” is gaining ground, but “pleaded” is still three times as common in books. On this basis, Mr Garner prescribes: stick with “pleaded”. But he allowed Google’s data to change his mind, too: “run the gantlet”, however traditional, has long been outnumbered by examples of “run the gauntlet”, so he has accepted the newer usage. + +The conflict between description and prescription should never have become so bitter. Mr Pinker is a fine English stylist; it is no surprise that he has opinions on whether some words and formations are better than others. And Mr Garner is a deeply read man (and a lawyer), so it should come as no surprise that he marshals evidence. But both camps were ill-served by less thoughtful standard-bearers. Many clueless prescribers really did push dud rules: the ban on split infinitives, the ban on ending sentences with prepositions, the notion that “since” cannot mean “because” and so many more. These were passed down from teachers to students over generations. When academic linguists began systematically investigating English by looking at texts and listening to speakers, they found that many such “rules” were anything but, and some began taunting the rule-promoters. They also sought to defend non-standard dialects, where for example double negatives (“I ain’t got no”) are ordinary, not ignorant. + +In the pushback against a history of prejudices, prescription represented authority and tradition, and description represented democracy and progress. But sensible writers on both sides have come to agree, however tacitly, that there is a variety, called standard English, with rules that can be found by looking at large volumes of the stuff. The best prescribers are becoming ever more informed, and the describers more comfortable with the idea of giving people “right” and “wrong” judgments on standard English. + +A sensible consensus emerges on most usages. Linguistic liberals and conservatives may still disagree on smaller issues: Mr Garner prefers the traditional “healthful” when talking about things like diets and exercise; most people prefer “healthy”. Mr Pinker defends “more unique”, whereas many pundits still reserve “unique” to mean an unscalable “one of a kind”. On these issues, reasonable people can disagree: Johnson is one of those who will reserve “He literally exploded laughing” to refer to a bloody scene requiring a mop, even though he knows many great writers have used “literally” figuratively. + +In the end, the test of a good pundit is one who will declare the methods and evidence that went into a judgment call. On that, the best descriptivists and prescriptivists should be ready to sign an armistice in the long and—not literally—bloody usage wars. + + + + + +Victorian crime + +Boys’ own + +A gripping true-crime story from the past + +May 21st 2016 | From the print edition + +Morality tales + +The Wicked Boy: The Mystery of a Victorian Child Murderer. By Kate Summerscale. Bloomsbury; 378 pages; £16.99. To be published in America by Penguin in July; $28. + +ON A Sunday afternoon, George Orwell believed, nothing is more pleasurable than to settle down with a good, true, murder story. Kate Summerscale has a nose for such stories. In the bestselling prizewinner, “The Suspicions of Mr Whicher”, she explored the mystery of a Victorian infant found with his throat cut. In her new book, “The Wicked Boy”, the victim is a working-class wife and mother. Within a few pages her murderer has been identified. The challenge, to which Ms Summerscale rises wonderfully well, is to sustain the reader’s interest in him for the remaining 50-odd years of his life. + +The story begins in the summer of 1895, during a heatwave. On Monday July 8th, two young East End boys, 13-year-old Robert Coombes and his younger brother, Nattie, set out to watch W.G. Grace play at Lord’s cricket ground. There seemed to be nothing odd in their behaviour, except perhaps that when they came home they did not go upstairs to sleep, but hunkered down uncomfortably in the back parlour. During his father’s frequent absences at sea, Robert was used to sleeping beside his mother. But by that Monday night Emily Coombes was dead, lying on her bed with two gaping wounds near her heart, her body festering in the heat. It was not until nearly a fortnight after the murder that the milkman noticed a noxious smell and raised the alarm. Emily was found badly decomposed and swarming with maggots. + +Robert openly admitted killing his mother, but why did he do it? At his trial he said it was because she had been beating Nattie. Emily was known to vacillate between doting indulgence and violent rages; Robert was prone to headaches and excitability, and addicted to the cheap, lurid tales of violence known as “penny bloods”. As he faced the prospect of hanging, he became “skittish, excited”, but despite the urgings of the gutter press, who branded him a “half-formed monster”, the jury was merciful. He was declared insane and sent to Broadmoor, joining 11 other men committed for matricide. + +In the most evocative section of the book, late-Victorian Broadmoor is portrayed as a pastoral idyll, where patients, free of all responsibility, entered a “suspended existence, with little reference to the past or the future”. The tranquil setting and dependable pattern of the days seem to have had a steadying effect on Robert. He learned tailoring and to play the violin and cornet, and in 1912, when he was 30, he was released. He emigrated to Australia, then served with distinction as a stretcher-bearer at Gallipoli. + +And there this strange tale might end, except that through a mixture of serendipity and meticulous research, Ms Summerscale is able to add one final, heart-stopping twist. She writes throughout with measured restraint; but in her last paragraph she allows her feelings to show. The murderer Robert Coombes has won her admiration and affection—even love. + + + + + +Free speech + +A right, not a duty + +A British scholar makes a timely and forceful case for freedom of expression + +May 21st 2016 | From the print edition + +Free Speech: Ten Principles for a Connected World. By Timothy Garton Ash. Yale University Press; 491 pages; $30. Atlantic Books; £20. + +ON MARCH 31st Jan Böhmermann, a German comedian, read out a satirical poem on live television. He had admitted beforehand that the verses—in which Recep Tayyip Erdogan, the president of Turkey, is described as a zoophile and paedophile, among much else—would land him in trouble. He was right: Mr Böhmermann may now face charges under an arcane German law which criminalises insults against foreign heads of state. Angela Merkel, Germany’s chancellor, may repeal the law, but not before the authoritarian Mr Erdogan has been able to exploit it. + +Mr Böhmermann’s case makes the publication of “Free Speech” by Timothy Garton Ash, an academic at Oxford University, particularly timely. In 2011 Mr Garton Ash created freespeechdebate.com with students at his university. Before that, he had personal experience of how free speech can be curtailed while travelling in eastern Europe before the fall of the Berlin Wall: he describes a Polish censor’s verdict he received in 1989 for an article on the “total bankruptcy” of socialism, and watching a woman swallow a piece of cigarette paper after asking him to memorise the message on it, eating her words. The result is a powerful, comprehensive book. + +The starting point of “Free Speech” is twofold: that increasing urbanisation and the spread of the internet makes the world a “global city”. This has increased the possibilities for freedom of expression, but also the consequences that stem from it. A video posted online in one country can be found offensive in another, years later, and lead to protests and violence. + +Mr Garton Ash argues forcefully that despite, or perhaps because of, these trends there is an increasing need for freer speech, and that “unnoticed by many of us, a great power struggle over the shape, terms and limits of global freedom of expression is raging around us, inside that box in your pocket and perhaps even inside our heads.” The book is organised around ten sensible “principles”, among them that everyone should be able to express themselves; that they should not threaten violence; that there should be a free press and that people should be able to protect their privacy. + +Mr Garton Ash goes to the Wikimedia Foundation in San Francisco and gives talks on free speech just off Tahrir Square in central Cairo. He writes about the “trigger warning” and “no platforming” debates taking place in universities such as Oxford. The role of the state, in enforcing hate-speech laws and invading people’s privacy, is probed and found wanting. Examples abound of people whose speech has been curbed: from dissidents in China being locked up or harassed to anticlerical writers in Europe being prosecuted under blasphemy or hate-speech laws. + +Mr Garton Ash does not call for total freedom of speech. He believes child pornography should be banned, for example, and that those who post “revenge porn” should be prosecuted. Overall he makes the case that people have a right, but not a duty, to offend. Better education and a more civil society should help people become more tolerant of one another, and also of their differences. The alternative is a higher degree of state intervention that would stoke resentment, particularly among young people, and end up isolating people from each other. “Only with freedom of expression”, he argues, “can I understand what it is to be you.” + + + + + +Man Booker International Prize + +Dendrophilia + +South Korean novel wins the world’s biggest translation award + +May 21st 2016 | From the print edition + +The Vegetarian. By Han Kang. Translated by Deborah Smith. Hogarth; 192 pages; $21. Portobello; £7.99. + +ONE of the most erotic literary novels of the season is a slim South Korean work about a woman who forsakes eating meat. On May 16th “The Vegetarian” by Han Kang won the 2016 Man Booker International Prize (MBIP) for fiction after a fiercely contested final judges’ meeting that pitched books from Angola, Austria, China, Italy and Turkey, as well as South Korea. Translated by Deborah Smith, a young English scholar who began learning Korean only seven years ago, “The Vegetarian” has been praised on both sides of the Atlantic as strange, visionary and transgressive. + +Written in three parts, each with a different narrator, the book begins quite plainly. “Before my wife turned vegetarian, I’d always thought of her as completely unremarkable in every way.” This subversive act, inspired by a dream, fractures the family life of the heroine, Yeong-hye. Her rebellion takes on increasingly bizarre and frightening forms. Seemingly ordinary relationships turn into a maelstrom of violence, shame and desire. + +At the awards dinner at the Victoria & Albert Museum in London, Boyd Tonkin, chairman of the 2016 MBIP judges, said: “In a style both lyrical and lacerating, [the story] reveals the impact of this great refusal both on the heroine herself and on those around her.” As Yeong-hye’s father tries to force-feed her and her husband divorces her, the novella veers from domestic drama to artistic parable and on, in a long, drawn-out silent scream, to a meditation on literally becoming a tree. “I wanted to describe a woman who desperately didn’t want to belong to the human race,” Ms Kang said afterwards. “Humans commit such violence.” + +After the Booker Prize Foundation changed the rules in 2013 to allow any author writing in English and published in Britain to vie for its long-standing annual Man Booker Prize for fiction, the rules for the MBIP were also adjusted. The prize used to be given every two years for a body of work, written in English or translated. Starting in 2016, it will be given for a single translated book published in Britain within a particular year. For the 2016 prize the judges read 155 submissions. + +The £50,000 prize, divided equally between author and translator, comes at a moment of increasing interest in translated fiction in Britain. The six autobiographical novels by Karl Ove Knausgaard, “My Struggle”, and the four Neapolitan novels of Elena Ferrante (the last of which, “The Story of the Lost Child”, was also shortlisted for this year’s MBIP alongside “The Vegetarian”) have given erstwhile insular Britons a taste for foreign fiction. + +A new survey by Nielsen Book, commissioned by the MBIP, showed that although literary fiction accounted for only 7% of fiction sales in Britain in 2015, translated fiction sales have doubled in the past 15 years, from 1.3m to 2.5m copies, at a time when the overall market for fiction fell from 51.6m in 2001 to 49.7m. Moreover, translated literary fiction now sells better than books originally written in English. In 2001 the average sale of a literary fiction title written in English was 1,153 copies, whereas the average for a translated title was only 482 copies. By 2015, the position was reversed: the average sale for a fiction title written in English was just 263 copies, whereas the average for a translated title was more than twice that—531 copies. + + + + + +Benedict Anderson + +Indonesian scholar + +The inner life of a restless intellect + +May 21st 2016 | From the print edition + +Chronicle of a life unforetold + +A Life Beyond Boundaries. By Benedict Anderson. Verso; 205 pages; $24.95 and £14.99. + +IN SOUTH-EAST Asia Benedict Anderson, who died last December aged 79, was an intellectual giant. In 1966 he was part of a team at Cornell University that published an influential report on what really happened during the violent takeover of Indonesia in October of the previous year. The report was leaked to the Washington Post and Anderson was eventually barred from entering the country. + +He remained cut off from Indonesia for 27 years until the fall of Suharto’s dictatorship. But he found new passions, studying Thailand and the Philippines. In 1983 his meandering studies and wide reading led him to write the book he is most famous for, “Imagined Communities”, which explores the enduring allure of nationalism. + +Outside South-East Asian circles, Anderson’s prolific and diverse output is more obscure. This should change with the publication of his memoir, “A Life Beyond Boundaries”. As the title suggests, Anderson is an enemy of the bubble, whether nation, school or language. He returns again and again to an image in Thai and Indonesian cultures of a frog who lives its entire life under half of a coconut shell. “Sitting quietly under the shell, before long the frog begins to feel that the coconut bowl encloses the entire universe,” he writes. “The moral judgment in the image is that the frog is narrow-minded, provincial, stay-at-home and self-satisfied for no good reason. For my part, I stayed nowhere long enough to settle down in one place, unlike the proverbial frog.” + +Reading Anderson feels like emerging from the coconut shell. You come away wanting to see films by Apichatpong Weerasethakul, a Thai film-maker he admired, to learn Tagalog on the side or to read a grand Filipino novel, “Noli Me Tangere” (“Touch me not”), by José Rizal, which Anderson tried to translate line by line in an effort to learn Spanish. He praised Indonesia’s great young novelist, Eka Kurniawan. + +Born in 1936 in Kunming, in Yunnan province, to an Irish father and an English mother, Anderson (pictured in China with his nanny) moved to Ireland, along with his two siblings, in 1945 after a brief period in America. His father died soon after; his mother became a guiding force. Anderson went to Eton and then to Cambridge, before going to Cornell as a teaching assistant. There, he met George Kahin, a leading expert on Indonesia whose lectures set Anderson on his path. This willingness to be open to new experiences and challenges was the key to his brilliance. + +“Scholars who feel comfortable with their position in a discipline, department or university will try neither to sail out of harbour nor to look for a wind,” he writes, paraphrasing an expression in Indonesia. “But what is to be cherished is the readiness to look for that wind and the courage to follow it when it blows in your direction.” Although “A Life Beyond Boundaries” is about the life of a scholar, it is asides like these that give the book a universal touch. Anderson went to three privileged institutions of learning. They could have given him many opportunities to remain in his bubble. But he just wasn’t that kind of frog. + + + + + +Obituary + + + + +Obituary: Daniel Berrigan: Blessed are the peacemakers + + + + + +Obituary: Daniel Berrigan + +Blessed are the peacemakers + +Daniel Berrigan SJ, priest, poet and anti-war activist, died on April 30th, aged 94 + +May 21st 2016 | From the print edition + + + +TO DO good. On every occasion to do the right thing as he saw it and Christ taught it, no matter how disruptive and no matter what the cost. This was Daniel Berrigan’s motivation. He was not concerned with the outcome of it, let alone success. A good action must go somewhere; do it, let it go. If God willed, it might mean lives saved, swords beaten into ploughshares and the world smiling with peace. + +In the febrile America of the Vietnam-war years, however, it more often meant obloquy, humiliation, scorn, the hand of a federal agent on his collar. Between 1970 and 1995 he spent a quarter of his time in prison, in denim garb he liked to think of as the vestments of a new Catholic church. He was declared the enemy both of that church (by Francis Cardinal Spellman, Archbishop of New York) and of the state (by J. Edgar Hoover, head of the FBI). But then, as he liked to say, if you were serious about Jesus, you had better start considering whether you’d look good on wood. + +The best act, one he wished he had done much sooner, was carried out on May 17th 1968 in a parking lot in Catonsville, Maryland. He and eight others, mostly in religious orders, one his priest-brother Philip, made a blaze there of 378 stolen files of young men about to be drafted to fight in Vietnam. The fire was set with napalm they had made at home, from soap-shards and kerosene. He apologised over the pyre for “the angering of the orderlies in the front parlour of the charnel house”; but they had not, like the government, burned children. Only papers: or, as he saw them, hunting licences to track, rape and char human beings. + +This destruction of government property won him three years in jail, which he refused to accept. It was morally inconsistent to bow to an illegitimate system, so he went on the run instead, living exultantly for four months in “felonious vagrancy”, the first-ever priest on the FBI’s most-wanted list. Come, Holy Spirit! Like a Pentecost, Catonsville lit up people’s hearts, a spreading fire of protest across America. It also made him that “pumped-up absurdity”, a celebrity-priest with a bad Beatles haircut and a black polo-neck, puckishly turning up wherever trouble beckoned. + +He had been warned about that. The two chief influences in his life—Dorothy Day, founder of the Catholic Worker Movement, and Thomas Merton, a Trappist philosopher—pushed him to work among outcasts and to labour for peace, but not in the public eye. His Jesuit superiors, embarrassed by his fervour, tried to restrain him by sending him abroad, to France and Latin America. Contact with worker-priests there just fired him all the more. How could he be quiet, when all around him in the 20th century men continued to ignore God’s fundamental precept, Thou shalt not kill? How could he be invisible, when lepers, beggars and the downtrodden cried for something to be done? Outraged love drove him to be loud, turning lessons into lectures at Yale and Cornell, addressing crowds and writing 50 books, many of them poetry, as this, called “Miracles”: + +Were I God almighty, I would ordain, + +rain fall lightly where old men trod, + +no death in childbirth, neither infant nor mother, + +ditches firm fenced against the errant blind, + +aircraft come to ground like any feather. + +No mischance, malice, knives, set against life, + +tears dried... + +Vietnam over, he did not rest. In 1980 he led a group into GE’s missile plant in Pennsylvania to attack the eggshell-thin warheads with hammers: the most violent gesture in a life dedicated to non-violence, to opening hand and heart to the enemy. He too struggled mightily to replace his own anger, “the death game”, with love. In his 80s he took part in Occupy Wall Street and marched against war in Iraq. Fearlessly he stood in the path of governments and corporations: for “powers and dominations” remained subject to Christ, to his gentleness. Day by day he listened (“Want to rap?”), shared whatever he ate and held the hands of the dying in an AIDS hospice in Greenwich Village. “Let’s re-member each other,” he would say. + +Ad Majorem Dei Gloriam + +To many—to himself sometimes—it seemed odd that he was a Jesuit, submitting himself to their discipline, authority and institutional life. It did not fit with the thin boy, a poor feeder and never brawny, who had so feared his father’s heavy judgment-tread and his rages like an uncontrolled cyclone. It did not fit with his teenage suspicions of a distant, blind-as-a-bat deity, or even with his later hope that God would just stop imagining these flawed creatures called men. Oddly, though, the Jesuits had room for his sort, with only moments of squirming; and from the age of 18 his loyalty never swerved. + +He merely wished they might be more like him: an order of uncompromising peacemakers who no longer oiled the ecclesiastical machinery or sided, like the whole church, with warmaking governments. His hope sometimes seemed forlorn indeed that universal peace would come. But he was never without belief that all was tending, despite appearances, towards the resurrection; that saving compassionate grace, like some divine ship, “its sails/silken and tough in the wind” was beating on and on, towards the good. + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +South Korea + +Markets + + + + + +Interactive indicators + +May 21st 2016 | From the print edition + + + + + +Output, prices and jobs + +May 21st 2016 | From the print edition + + + + + +Trade, exchange rates, budget balances and interest rates + +May 21st 2016 | From the print edition + + + + + +The Economist commodity-price index + +May 21st 2016 | From the print edition + + + + + +South Korea + +May 21st 2016 | From the print edition + + + + + +Markets + +May 21st 2016 | From the print edition + + + + + +Table of Contents + +The Economist + +The world this week + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + +Antibiotics: When the drugs don’t work + + + + + +The referendum craze: Let the people fail to decide + + + + + +Federal Reserve: The right kind of reform + + + + + +The UN: Get the best + + + + + +Virginity tests: Hands off + + + + + +Letters + +On Donald Trump, London, diamonds, underdogs: Letters to the editor + + + + + +Briefing + +Antibiotic resistance: The grim prospect + + + + + +United States + +Facebook and politics: Censors and sensibility + + + + + +Feuding Democrats: Hillary’s heartbern + + + + + +Homegrown jihad: Minnesota martyrs + + + + + +The campaigns: Heard on the trail + + + + + +Pretend medicine: The quack-up + + + + + +Overtime pay: Half or quits + + + + + +The bathroom wars: The plughole of history + + + + + +Lexington: Building redemption + + + + + +The Americas + +Crime in El Salvador: The gangs that cost 16% of GDP + + + + + +Venezuela: Trouble on the streets + + + + + +Bello: Lessons of the fall + + + + + +Asia + +Barack Obama in Vietnam: Cash for questions + + + + + +Virginity testing in Indonesia: Taking the cop out of copulation + + + + + +Sanctions on Myanmar: Not clear yet + + + + + +Justice in India: Dropping the scales + + + + + +Banyan: Rebuilding bridges + + + + + +China + +A new railway to Tibet: Doubling down + + + + + +Economic policy: On whose authority? + + + + + +Middle East and Africa + +Mental health in the Middle East: Mindfield + + + + + +Israel’s atomic angst: A textile factory with a difference + + + + + +Uganda’s president for life: The “people’s president” is jailed + + + + + +Sloshed in the slow lane: How to drive drunk in Kenya + + + + + +Protests in Kenya: Of kicking and Kikuyu + + + + + +Nigerian petrol subsidies: A fuel and your money + + + + + +Europe + +Azerbaijan: Baku to the future + + + + + +Nagorno-Karabakh: A squalid little war + + + + + +Turkey v Islamic State: Poking the wolf + + + + + +Steak in France: ever rarer: The raw and the cooked + + + + + +Plebiscites in Europe: Referendumania + + + + + +Charlemagne: Vexed in Vienna + + + + + +Britain + +Faith and race: Integration nation + + + + + +The murder of an Ahmadi: Preparing for the worst + + + + + +Brexit brief: We plough the fields and scarper + + + + + +Brexit and the Bank of England: He can, Carney + + + + + +NHS disputes: Do resuscitate + + + + + +Data in schools: Heads in the clouds + + + + + +Drinking habits: More tea, totally + + + + + +Bagehot: The Cameron legacy + + + + + +International + +The United Nations: Master, mistress or mouse? + + + + + +UN peacekeeping in Congo: Never-ending mission + + + + + +Boots—and cash—on the ground: Who fights, and who pays + + + + + +Business + +Oil and climate change: Greens in pinstriped suits + + + + + +Telecoms: Seeking another path + + + + + +Biotechnology: Seedy business + + + + + +Buffett, Apple and Didi Chuxing: $1 billion stakes on the menu + + + + + +Agriculture in Cyprus: Cheese in our time + + + + + +Political consultants: Risk premiums + + + + + +Amazon’s clothing coup: Sitting pretty + + + + + +Schumpeter: The emporium strikes back + + + + + +Finance and economics + +Swedbank: Bank to basics + + + + + +Buttonwood: Into the unknown + + + + + +Pacific economies: The leeward side of fortune + + + + + +Quinoa: Against the grain + + + + + +Insurance in China: Safe or sorry? + + + + + +Crypto-investing: The DAO of accrue + + + + + +Free exchange: Murder most foul + + + + + +Science and technology + +Improvised weapons: Hell’s kitchens + + + + + +Dogs and cancer: Best-friend genetics + + + + + +Clinical trials: Better with bitcoin + + + + + +Robotics: The fantastic voyage + + + + + +Forest fires: Burning benefits + + + + + +Books and arts + +Greece and Egypt: Deep rising + + + + + +Johnson: Prevailing winds + + + + + +Victorian crime: Boys’ own + + + + + +Free speech: A right, not a duty + + + + + +Man Booker International Prize: Dendrophilia + + + + + +Benedict Anderson: Indonesian scholar + + + + + +Obituary + +Obituary: Daniel Berrigan: Blessed are the peacemakers + + + + + +Economic and financial indicators + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +South Korea + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.05.28.TXT b/homeworks/B20769/homework1/data2/2016.05.28.TXT new file mode 100644 index 0000000..ee54a1c --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.05.28.TXT @@ -0,0 +1,5595 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: Migration + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +May 28th 2016 | From the print edition + + + +Alexander Van der Bellen, a former head of the Green party, won Austria’s presidential election by just 31,000 votes, defeating Norbert Hofer of the Freedom Party. Had he won this (largely ceremonial) post, Mr Hofer would have been the first far-right head of state in the European Union. His surprisingly high support reflected voter anger over immigration. As in several European countries, the far right has been making ground. See here and here. + +In Brussels Greece’s creditors agreed on a deal to secure debt relief for the country. The measures, which were thrashed out in late-night talks after months of wrangling, are intended to restructure Greek debt, which is currently 180% of GDP. Greece will receive €10 billion ($11 billion) in aid to help it avoid a default, starting with €7.5 billion next month. See article. + +After being detained in Russia for two years Nadia Savchenko, a Ukrainian pilot, was released from jail and sent home. She was exchanged for two Russian prisoners captured in Ukraine. On her return home Ms Savchenko ironically thanked those who had “wished me evil”, and was greeted as a national hero. + +In Turkey Binali Yildirim was sworn in as prime minister following the ouster of his predecessor, Ahmet Davutoglu. Mr Yildirim is a loyal supporter of Recep Tayyip Erdogan, the president, and vowed to continue with an overhaul of the constitution which is handing more powers to the presidency. See article. + +New government, old problems + +Romero Jucá, Brazil’s planning minister, stepped aside after tapes were leaked in which he appeared to suggest that the impeachment of the president, Dilma Rousseff, would blunt an investigation into the multibillion-dollar scandal centred on Petrobras, the state-controlled oil company. Mr Jucá, one of the targets of the investigation, says his remarks were misinterpreted. He was only recently appointed by the interim president, Michel Temer. The new government proposed several reform measures, including a cap on the growth of public spending. + +Cuba’s Communist government said it would legalise small and medium-sized enterprises. That builds on earlier reforms, which allow “self-employed” Cubans to own restaurants, bed-and-breakfasts and other small businesses. + + + +Coca-Cola stopped producing sugary drinks in Venezuela because it cannot obtain sugar. Price controls have made growing sugar cane unprofitable and the country suffers from a shortage of foreign exchange. + +The push back + +Iraq’s government announced the start of an operation to retake Fallujah, a city just a 30-minute drive from Baghdad that has been held by Islamic State for the past two years. See article. + +Avigdor Lieberman, who leads Israel’s nationalist Yisrael Beiteinu party, joined Binyamin Netanyahu’s coalition government, and became defence minister. Mr Lieberman, who lives in a Jewish settlement in the West Bank, has repeatedly derided efforts to secure peace with the Palestinians. See article. + +A series of bombings hit two government strongholds on Syria’s coast, killing as many as 100 people. + +The government and opposition leaders in Burundi started talks to resolve a crisis in which more than 1,000 people are thought to have been killed. But the government excluded key opposition figures from the talks, reducing the chances of a successful outcome. + +The monetary-policy committee of Nigeria’s central bank voted to allow the currency, the naira, to float against the dollar. The country has previously maintained an overinflated peg against the dollar that is 40% higher than the black-market rate, leading to a shortage of hard currency. + +Communications breakdown + +In a report to Congress Hillary Clinton was criticised by the State Department’s inspector-general for using a private e-mail server when she was secretary of state. Mrs Clinton should have discussed the security risks with officials, the report said, though it recognised that the department had a history of dealing inadequately with electronic messages. The issue continues to dog Mrs Clinton’s campaign. See article. + +A bill that would help Puerto Rico manage its $70 billion debt pile was introduced in Congress. The legislation would set up a financial control board and restructure some debt. It has bipartisan support, but is opposed by some of the American territory’s creditors. The governor of Puerto Rico welcomed parts of the bill, but worries that a financial control board would be too powerful. + +Arms deal + +During a visit to Vietnam, Barack Obama announced an end to America’s embargo on the sale of weapons to the communist country. He said this would remove a “lingering vestige of the cold war”. China, however, worries that America’s efforts to improve its relationship with Vietnam is aimed at keeping it in check. See article. + + + +Tsai Ing-wen was sworn in as Taiwan’s new president. She is the island’s first female leader, and the second from the Democratic Progressive Party, which favours independence from China. Ms Tsai called for “positive dialogue” across the Taiwan Strait, but did not mention the “one China” notion that China insists Taiwan must accept. + +In Afghanistan the Taliban named a new leader to replace Mullah Akhtar Mansour who was killed by an American drone. He is Hibatullah Akhundzada, a hardline religious scholar who served as Mullah Mansour’s deputy. See article. + +Protests by hundreds of parents of university applicants spread to a fourth province in China. They are angry about plans to reduce the number of places reserved for local students. Parents worry that this will mean greater competition for places and reduce their privileges, which is indeed the point. + +China’s Communist Party stepped up its efforts to persuade members to write out the party’s constitution by hand. Two newly weds have become famous for doing so on their wedding night. The aim is to remind members of their communist ideals, but the army’s newspaper warned that some people were— believe it or not—just going through the motions when transcribing the document’s 15,000 characters. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21699502-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +May 28th 2016 | From the print edition + +Faced with a future where ride-hailing could reduce car ownership, Toyota and Volkswagen became the latest carmakers to invest in startups that provide such services. Toyota formed a partnership with Uber, the biggest ride-sharing app, to develop “mobility services”. And Volkswagen invested $300m in Gett, the Israeli outfit behind the largest taxi-hailing app in Europe. Unlike Uber, Gett signs up only regulated drivers in the cities in which it operates, such as London’s black-cab drivers. See article. + +Prompted by the market dominance of Facebook, Google and the like, the European Commission set out suggestions for regulating online platforms. The proposals target specific problems such as the ability to move personal data from site to site. The commission also wants to make it easier for consumers to shop online by removing “geoblocking” tools that prevent shoppers in one country getting deals offered in another. See here and here. + +Hewlett Packard Enterprise, the smaller of the two businesses to emerge from Hewlett Packard’s split last year, announced that it is spinning off its enterprise-services unit. The unit grew out of HP’s takeover in 2008 of EDS, an IT outsourcing company founded by Ross Perot. + +If it could turn back time + +Also picking up the pieces from a takeover that hasn’t worked out, Microsoft announced more job cuts at the mobile-phone business it acquired from Nokia two years ago and will take another write-down, of $950m. Never a big player in the business, its share of the global smartphone market shrank again in the first three months of the year, to 0.7%, according to Gartner, a research firm. + +Alibaba, China’s biggest e-commerce company, disclosed that it is being investigated by America’s Securities and Exchange Commission over the way it accounts for revenue, including sales from Singles’ Day, China’s version of Black Friday. See article. + + + +The drama over Sumner Redstone’s control of Viacom continued. The 92-year-old mogul removed Philippe Dauman, Viacom’s chairman, from a trust that will decide what happens to Mr Redstone’s holdings when he dies. Mr Dauman filed a lawsuit to thwart the move, arguing that Mr Redstone was mentally incompetent and being manipulated by his daughter, Shari. + +Federico Ghizzoni is to step down as chief executive of UniCredit, Italy’s biggest bank. Speculation had increased about his future as the bank’s problems mounted. Mr Ghizzoni was heavily criticised when UniCredit agreed to underwrite Banca Popolare di Vicenza’s disastrous capital-raising, which ended with a government-orchestrated rescue from a fund backed by it and other Italian financial firms. See article. + +Approaching vessels + +The Singapore Exchange (SGX) declared an interest in taking over the Baltic Exchange in London, which would combine the two leading maritime-industry hubs. The latter compiles the Baltic Dry Index, which measures the costs of shipping commodities, and has developed derivatives for shipowners to insure against fluctuations in freight prices. Founded in 1744, it also provides a code of practice for the shipping market. + +BSI, a Swiss bank, was ordered to close its business in Singapore after regulators identified serious anti-money-laundering lapses in connection with a corruption scandal at 1MDB, a Malaysian state investment fund. At the same time Switzerland fined the bank SFr95m ($96m), opened a criminal probe and approved a takeover of BSI by EFG International, which is based in Zurich, that would see it “integrated and thereafter dissolved”. + +Bayer presented its$62 billion takeover bid for Monsanto, the latest attempt at consolidation in the agricultural seeds and chemicals business. The American company said the initial proposal from its German rival was “inadequate”, but believes in the “substantial benefits” of a deal. + +Europe’s antitrust regulator approved Anheuser Busch InBev’s $108 billion merger with SABMiller, after getting the assurances it wanted that the newly combined beer giant will sell SABMiller’s European brands. The deal still needs to be cleared by competition authorities in America, China and South Africa. + +In, out, shake it all about + +The European Central Bank warned that the rise of populist parties in Europe could slow the pace of economic reforms. Populists on the left and right ends of the political spectrum have made gains in elections by running against spending cuts. Another big concern of the ECB is the potential risk posed by the vote in Britain on whether to leave the European Union, which will be held on June 23rd. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21699498-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +May 28th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21699506-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +North Korea’s nuclear programme: A nuclear nightmare + +Austria’s presidential election: Disaster averted—for now + +Online platforms: Nostrums for rostrums + +American elections: Voting wrongs + +Opioids: The ecstasy and the agony + + + + + +Articles Sections Next + +North Korea’s nuclear programme + +A nuclear nightmare + +It is past time for the world to get serious about North Korea’s nuclear ambitions + +May 28th 2016 | From the print edition + + + +BARACK OBAMA began his presidency with an impassioned plea for a world without nuclear weapons. This week, in his last year in office (and as we went to press), he was to become the first American president to visit Hiroshima, site of one of only two nuclear attacks. Mr Obama has made progress on nuclear-arms reduction and non-proliferation. He signed a strategic-arms-control treaty (New START) with Russia in 2010. A series of nuclear-security summits helped stop fissile material getting into the wrong hands. Most important, he secured a deal in July to curtail and then constrain Iran’s nuclear programme for at least the next 10-15 years. + +But in one area, his failure is glaring. On Mr Obama’s watch the nuclear-weapons and missile programme of North Korea has become steadily more alarming. Its nuclear missiles already threaten South Korea and Japan. Sometime during the second term of Mr Obama’s successor, they are likely also to be able to strike New York. Mr Obama put North Korea on the back burner. Whoever becomes America’s next president will not have that luxury. + +The other Manhattan project + +The taboo against nuclear weapons rests on three pillars: policies to prevent proliferation, norms against the first use of nukes (especially against non-nuclear powers) and deterrence. North Korea has taken a sledgehammer to all of them. + +No country in history has spent such a large share of its wealth on nuclear weapons. North Korea is thought to have a stockpile of around 20 devices. Every six weeks or so it adds another. This year the pace of ballistic missile testing has been unprecedented (see article). An underground nuclear detonation in January, claimed by the regime to be an H-bomb (but more likely a souped-up A-bomb), has been followed by tests of the technologies behind nuclear-armed missiles. Although three tests of a 4,000-kilometre (2,500-mile) missile failed in April, North Korean engineers learn from their mistakes. Few would bet against them succeeding in the end. + +North Korea is not bound by any global rules. Its hereditary dictator, Kim Jong Un, imposes forced labour on hundreds of thousands of his people in the gulag, including whole families, without trial or hope of release. Mr Kim frequently threatens to drench Seoul, the South’s capital, in “a sea of fire”. Nuclear weapons are central to his regime’s identity and survival. + +Deterrence is based on the belief that states act rationally. But Mr Kim is so opaque and so little is known about how decisions come about in the capital, Pyongyang, that deterring North Korea is fraught with difficulty. Were his regime on the point of collapse, who is to say whether Mr Kim would pull down the temple by unleashing a nuclear attack? + +The mix of unpredictability, ruthlessness and fragility frustrates policymaking towards Mr Kim. Many outsiders want to force him to behave better. In March, following the recent weapons test, the UN Security Council strengthened sanctions. China is infuriated by Mr Kim’s taunts and provocations (it did not even know about the nuclear test until after it had happened). It agreed to tougher measures, including limiting financial transactions and searching vessels for contraband. + +But China does not want to overthrow Mr Kim. It worries that the collapse of a regime on its north-eastern border would create a flood of refugees and eliminate the buffer protecting it from American troops stationed in South Korea. About 90% of North Korea’s trade, worth about $6 billion a year, is with China. It will continue to import North Korean coal and iron ore (and send back fuel oil, food and consumer goods) as long as the money is not spent on military activities—an unenforceable condition. + +Protected by China, Mr Kim can pursue his nuclear programme with impunity. The sanctions are unlikely to stop him. If anything, they may spur him to strengthen and upgrade his arsenal before China adopts harsher ones. + +Understandably, therefore, Mr Obama has preferred to devote his efforts to Iran. Because the mullahs depend on sales of oil and gas to the outside world, embargoes on Iran’s energy exports and exclusion from the international payments system changed their strategic calculus. But this logic will not work with North Korea. + +Can anything stop Mr Kim? Perhaps he will decide to shelve his “nukes first” policy in favour of Chinese-style economic reform and rapprochement with South Korea. It is a nice idea, and Mr Kim has shown some interest in economic development. But nothing suggests he would barter his nuclear weapons to give his people a better life. + +Perhaps dissent over Mr Kim’s rule among the North Korean elite will lead to a palace coup. A successor might be ready for an Iran-type deal to boost his standing both at home and abroad. That is a possibility, but Mr Kim has so far shown himself able to crush any challengers to his dominance. + +The last hope is that tougher sanctions will contribute to the collapse of the regime—which, in turn, could lead to reunification with the South and denuclearisation of the Korean peninsula. That would be the best outcome, but it is also the one that carries the most danger. Moreover, it is precisely the situation China seeks to avoid. + +Fat boy + +Without any good options, what should America’s next president do? A priority is to strengthen missile defence. New THAAD anti-missile systems should be sent to South Korea and Japan, while America soothes objections that their radar could be used against China’s nuclear weapons. China should also be cajoled into accepting that sanctions can be harsher, without provoking an implosion. Were that to lead initially only to a freeze on testing, it would be worth having. Because a sudden, unforeseen collapse of Mr Kim’s regime is possible at any time, America needs worked-out plans to seize or destroy North Korea’s nuclear missiles before they can be used. For this China’s co-operation, or at least acquiescence, is vital. So clear and present is the danger that even rivals who clash elsewhere in Asia must urgently find new ways to work together. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21699445-it-past-time-world-get-serious-about-north-koreas-nuclear-ambitions-nuclear/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Austria’s presidential election + +Disaster averted—for now + +Europe’s far right is no longer a fringe + +May 28th 2016 | From the print edition + + + +AUSTRIA dodged a bullet this week. So did Europe. Norbert Hofer, a talented politician with a winning smile, nearly became the first far-right head of state in western Europe since the end of the second world war—but failed, by a nerve-jangling 0.6% of the vote (see article). + +This is scant cause for relief. Mr Hofer has shown that well-packaged extremism is a vote-winner. He sounds so reasonable. Austria must maintain border controls for as long as the European Union cannot enforce its external frontiers, he says. Of course he supports the EU, but only on the basis of subsidiarity (“national where possible, European where necessary”). It is easy to forget that his Austrian Freedom Party (FPÖ) was partly founded by ex-Nazis, and that its manifesto—much of which Mr Hofer wrote—bangs on about Europe’s Christian culture and the German ethno-linguistic Heimat. Or that his party demonises “fake” asylum-seekers and vows to outlaw the distribution of free copies of the Koran. + +The FPÖ’s popularity, like that of xenophobic parties across Europe, is in part an angry reaction to the recent influx of Middle Eastern refugees. Alexander Van der Bellen, the former Green Party leader who narrowly beat Mr Hofer, owes his victory to a broad alliance of voters trying to block the far right. Yet a fringe party that draws half the vote is no longer a fringe. And Austria is a harbinger: all over Europe, far-right parties are becoming too big to ignore (see chart). + +In France Marine Le Pen will probably come first in the initial round of next year’s presidential election. In the Netherlands Geert Wilders is polling far ahead of any rival. Far-right parties in Denmark and Switzerland have been winning pluralities for years, and Sweden’s may soon. This is not the 1930s. Ms Le Pen is unlikely to win the second round of the presidential election. In Denmark and the Netherlands, populists have quit or refused to join coalitions for fear of being blamed for unpopular decisions. But they still influence policy, and force the centre-right and -left into grand alliances, leaving the populists as voters’ only plausible alternative. + + + +In graphics: The rise of the far right in Europe + +How can mainstream parties beat them? Not by peddling diluted versions of their Eurosceptic or anti-immigrant policies. Austria’s Social Democrats switched from welcoming asylum-seekers to tightening border controls, and were flattened for it. Voters prefer real populists to centrists who fake it. Besides, extreme policies fuel irrational fears rather than extinguish them. Look at France and eastern Europe: the far right is thriving, though few Syrian refugees have arrived. + +Stick to your guns + +Moderates cannot defeat extremists by abandoning their ideals. Rather, they must fight for them. Voters are deserting mainstream parties because they stand for so little. They are hungry for politicians with clear values. Radicals of the left have understood this: witness the passionate support aroused by Britain’s Jeremy Corbyn and Spain’s Pablo Iglesias. The world needs leaders who can make an equally rousing argument for moderation. The mushmouths that France’s mainstream parties appear set to nominate next year will not do. + +Responsible parties must also bring results. As our special report this week makes clear, the task of integrating refugees, economically and socially, is more urgent than ever. And Mr Hofer is right about one thing: to open its internal borders, the EU must secure its external ones. Extreme nationalist parties cannot integrate new immigrants, nor build an effective Europe of shared asylum burdens and orderly borders. Only the parties of tolerance and liberal values can do that. They need to convince voters of it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21699443-europes-far-right-no-longer-fringe-disaster-avertedfor-now/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Online platforms + +Nostrums for rostrums + +The growing power of online platforms is worrisome. But regulators should tread carefully + +May 28th 2016 | From the print edition + + + +IN 1949 Frank McNamara, an executive at a struggling finance company, had the idea of a charge card to settle the tab at high-class eateries. First, he had to solve a tricky problem. Restaurants would not accept a charge card as payment unless customers wanted to use one; and diners would not carry a card unless restaurants accepted it. His solution was to give away his card to a few hundred well-heeled New Yorkers: once the elite of Manhattan’s gourmands were signed up, he could persuade a few upscale restaurants to accept his new charge card and also to pay him a commission. Within a year, the Diners Club card was accepted in hundreds of places and carried by over 40,000 people. + +The Diners Club may not seem to have much in common with digital giants like Facebook, Google, Uber and Amazon. But such businesses are all examples of “platforms”: they act as matchmakers between various entities and they typically charge different prices to different actors in the market. Google connects websites, consumers and advertisers, who foot the bill. Facebook does something similar for its members. Uber matches passengers and drivers, who pay the ride-hailing app a slice of the fare. Amazon brings together shoppers with retailers, who pay a fee. + +The growing clout of online platforms is a boon to society but a headache for trustbusters. Platforms benefit from the power of networks: the more potential matches there are on one side of a platform, the greater the number that flock to the other side. The consequence may be a monopoly. That is normally a red flag for trustbusters, who are scrambling to keep pace with the rise of platforms (see article). But they should tread carefully. The nature of platforms means established rules of regulation often do not apply. + +Think different + +In a conventional, “one-sided” market, prices are related to the cost of supplying goods and services. If a business can charge a big mark-up over its marginal cost of production, a wise regulator would strive to ensure there are enough firms vying for business or, where that is not possible, to set prices in line with the monopolist’s costs. Such precepts are little use in regulating platforms. Their prices are set with an eye to the widest participation. Often consumers pay nothing for platform services—or are even charged a negative price (think of the rewards systems run by some payment cards). Pushing down prices on one side of the platform may cause charges on the other side to rise, a bit like a waterbed. That in turn may drive some consumers away from the platform, leaving everyone worse off. Such uncertainties mean that regulators must not act precipitously. + +But they are right to be thinking about the unique economics of platforms. Tech giants like to claim there is no need for special regulation. The winner-takes-all aspect of networks may mean there is less competition inside the market, but there is still fierce rivalry for the market, because countless startups are vying to be the next Google or Facebook. Unfortunately, incumbents may be able to subvert this rivalry. + +One of their strategies is to use mergers. “Shoot-out” acquisitions is the name given to purchases of startups with the aim of eliminating a potential rival. Many claim that Facebook’s acquisition of WhatsApp was in this category. A recent parliamentary report in Britain noted that Google had made 187 purchases of other tech firms. Trustbusters tend to ignore mergers of businesses in unrelated markets and big firms hoovering up small fry. Buyers of firms with an EU-wide turnover of less than €100m do not have to notify the European Commission. Rules that take into account how markets may develop over longer periods will be fiendish to craft. But they are needed. + +A second concern is talent. Tech firms are jealous of their secrets. When their best people leave, they take ideas with them. Yet clauses in job contracts that restrict what types of work employees can do once they leave a company are also a means of thwarting the emergence of rivals. California has shown the way by clamping down on such practices. + +A third issue is the power of personal data. Google is such an effective search engine in part because its algorithms draw on vast logs of past queries. Amazon can use customers’ trading history to guide its marketing with greater precision. These data troves raise barriers to entry to the next Google or Amazon. There are no easy fixes, however. Even defining who owns information is complex; making data portable is tricky. + +As Frank McNamara and his heirs have found, a successful platform company finds ways of balancing the interests of the parties it brings together. Regulators of online platforms face a similar balancing act—between the incentives for new firms to emerge and the benefits to consumers of large incumbents. That will require new ways of thinking and careful judgment. In the meantime, however, the priority for trustbusters must be to ensure they do no harm. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21699447-growing-power-online-platforms-worrisome-regulators-should-tread/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +American elections + +Voting wrongs + +America’s electoral laws are a recipe for chaos + +May 28th 2016 | From the print edition + + + +IT IS the morning of November 9th, the day after the election, and America is waking up to find out who is the new president. The result turns on the vote in North Carolina, where the ballot papers are being recounted. Even when the tally is in, the result will be in doubt. North Carolina’s new voting laws are subject to a legal challenge, which could take weeks for the courts to resolve. Both sides complain that the election is being stolen; the acrimony, sharpened by allegations of racial discrimination, makes Florida’s hanging chads and the Supreme Court’s ruling in favour of George W. Bush in 2000 seem like a church picnic. + +This is not as fanciful as it sounds. America organises its democracy differently from other rich countries. Each state writes its own voting laws, there is no national register of eligible voters and no form of ID that is both acceptable in all polling booths and held by everyone. Across the country, 17 states have new voting laws that, in November, will be tested for the first time in a presidential contest. In several states these laws face legal challenges, which allege that they have been designed in order to discourage African-Americans and Latinos from voting. It is past time to start worrying about where these challenges might lead. + +The X factor + +The new laws date largely from a Supreme Court decision in 2013. Before then, many states in the South, and a couple elsewhere, that had spent much of the 20th century finding ingenious ways to prevent minorities from voting, had to clear any changes to their voting laws with the Justice Department or a federal court. Three years ago, the Supreme Court ruled the country had “changed dramatically” and that the formula for choosing which states were covered was outdated. That allowed all the states to write laws unsupervised. + +Handed power over the rules for electing themselves, Republican politicians in southern statehouses have, unsurprisingly, tilted them in their own favour. Early voting, which non-whites (who lean Democratic) are keen on, has been restricted. Another change has been to limit the kinds of ID that are acceptable at a polling station. In Texas student IDs are out, handgun licences are in. + +The authors of these laws protest that they have nothing to do with race or political advantage and claim that they are necessary to guard against voter fraud. Yet there is scant evidence of fraud. To claim otherwise is cynical and corrosive. In the 12 years before Alabama passed its new voter-ID law there was one documented case of impersonation. + +The second argument made, in southern states, is that the new voting laws merely bring them in line with those elsewhere in the country, some of which do not allow early voting at all. This is true, but tantamount to an admission of guilt: politicians in some safely Democratic districts in the north have not been above fiddling with election rules and redrawing district boundaries to protect incumbents either. Indeed, it is an argument for a more general change. + +The worst of all the arguments for the new voting laws is that casting a ballot should not be made too easy, because if people are not clever enough to understand the rules governing elections they should not be entrusted with choosing the government. Any political party that hopes for lower turnout has lost its way. William F. Buckley, a conservative pundit, once wrote that he would rather be governed by the first 2,000 people listed in the Boston telephone directory than by 2,000 members of Harvard’s faculty. Republican lawmakers must decide whether they still believe in the good sense of those they aspire to govern, or whether they lost that faith somewhere on the way to the statehouse. + +The new voting laws suggest the Supreme Court underestimated the grip the past still has on the present. Were politicians really concerned about voter fraud they would hand over the running of elections and voter registers to non-partisan bodies. Unfortunately, this will not happen. Why disarm when you have all the bullets? As a second best, therefore, the courts should expedite cases on voting laws to reduce the chances of legal challenges after the election. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21699446-americas-electoral-laws-are-recipe-chaos-voting-wrongs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Opioids + +The ecstasy and the agony + +Americans take too many painkillers. Most other people don’t get enough + +May 28th 2016 | From the print edition + + + +“PLEASURE is oft a visitant; but pain clings cruelly,” wrote John Keats. Nowadays pain can often be shrugged off: opioids, a class of drugs that includes morphine and other derivatives of the opium poppy, can dramatically ease the agony of broken bones, third-degree burns or terminal cancer. But the mismanagement of these drugs has caused a pain crisis (see article). It has two faces: one in America and a few other rich countries; the other in the developing world. + +In America for decades doctors prescribed too many opioids for chronic pain in the mistaken belief that the risks were manageable. Millions of patients became hooked. Nearly 20,000 Americans died from opioid overdoses in 2014. A belated crackdown is now forcing prescription-opioid addicts to endure withdrawal symptoms, buy their fix on the black market or turn to heroin—which gives a similar high (and is now popular among middle-aged Americans with back problems). + +In the developing world, by contrast, even horrifying pain is often untreated. More than 7m people die yearly of cancer, HIV, accidents or war wounds with little or no pain relief. Four-fifths of humanity live in countries where opioids are hard to obtain; they use less than a tenth of the world’s morphine, the opioid most widely used for trauma and terminal pain. + +Opioids are tricky. Take too much, or mix them with alcohol or sleeping pills, and you may stop breathing. Long-term patients often need more and more. But for much acute pain, and certainly for the terminally ill, they are often the best treatment. And they are cheap: enough morphine to soothe a cancer patient for a month should cost just $2-5. + +In poor countries many people think of pain as inevitable, as it has been for most of human existence. So they seldom ask for pain relief, and seldom get it if they do. The drug war declared by America in the 1970s has made matters worse. It led to laws that put keeping drugs out of the wrong hands ahead of getting them into the right ones. The UN says both goals matter. But through the 1980s and 1990s, as the war on drugs raged, it preached about the menace of illegal highs with barely a whisper about the horror of unrelieved pain. + +American policy has been especially misguided. By keeping cocaine and heroin illegal, drug warriors have empowered criminal gangs that torture and kill. Even as American fee-for-service doctors overprescribed opioids at home, America spread its harsh approach to illegal drugs worldwide. Poor countries, scared of getting on Uncle Sam’s wrong side for not trying hard enough to control narcotics, have written laws even more restrictive than those recommended by the UN. One passed in India in 1985 saw legitimate morphine use plunge by 97% in seven years. In Armenia morphine is only available to cancer patients, who must rush from ministry to ministry filling in forms to receive a few days’ supply. + +Opioids should be more widely available. That entails risks. One is addiction: doctors need training to minimise it. Long-term use is perilous; use by the terminally ill is not. Another risk—that the drugs will leak onto the black market—is real, but less serious than America’s example might suggest. Many American buyers of street opioids were first hooked by their doctors; other countries can avoid that mistake. They can also avoid the mix of fee-for-service provision and direct-to-consumer drug advertising that aggravated America’s lax prescribing. And they should copy Britain’s centralised system for prescription records, which stops patients from doctor-hopping their way to addiction. + +Biting on a stick is not good enough + +Above all, the global bodies that monitor narcotics should recognise that easing suffering is as important as preventing addiction. Forcing people in great pain to jump through hoops to get relief should be recognised as an infraction of international rules. The UN has, belatedly, started to talk of unrelieved pain as a problem. As the cause of needless suffering, it should be trying harder to bring solace. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21699448-americans-take-too-many-painkillers-most-other-people-dont-get-enough-ecstasy-and-agony/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On genomics, migrants, China, London, Brexit, cronies, country living: Letters to the editor + + + + + +Articles Sections Next + +On genomics, migrants, China, London, Brexit, cronies, country living + +Letters to the editor + +May 28th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Risk rewards in science + +You note current efforts to harness the promise of genomic medicine aimed at sequencing more genomes, to understand labyrinthine genetic susceptibilities arising from variation in multiple genes (“Encore une fois”, May 7th). However, it is also noteworthy that the initial sequencing of the human genome in 2000 enabled entirely new fields of discovery, including transcriptomics (the large-scale study of RNA molecules), proteomics (the same for proteins) and big-data science in biology. These innovations have revolutionised translational research and may now do the same for clinical medicine. Yet they would have been impossible without substantial funding for risky science, from governments, investors and philanthropic bodies. + +Rather than failing to live up to their potential, the large-scale efforts to sequence the human genome, and the resulting “omics technologies”, have yielded tremendous economic and scientific benefits for society. + +PROFESSOR THOMAS VONDRISKA + +David Geffen School of Medicine + +University of California, Los Angeles + + + + + +Suffer the children + +It is not only a humanitarian imperative to help unaccompanied child migrants who arrive in Europe (“Under-age and at risk”, May 7th). European states also have a legal obligation to do so, having ratified the 1989 Convention on the Rights of the Child. Every child has a right to adequate shelter, to a caregiver and to an education. It is shameful that many of the world’s richest countries, which see themselves as the cradle of human rights, deny children those very rights. + +The children who arrive in Europe without their parents have fled their homes in fear of their lives. They have entrusted themselves to gangs of smugglers and put themselves at risk of abuse and child labour. With borders closing around them, some are trapped in Serbia and Macedonia, with no way forward and no way back. Many have been illegally detained in Greece. + +We all need to see those children for what they are: not as migrants, financial burdens or threats to society but as children in need of protection. They have rights and they deserve to be given a future. + +VITO ANGELILLO + +Director-general + +Terre des Hommes + +Zurich + + + + + +Foolish academics + +“It was the worst of times” (May 14th) marked 50 years since the start of the Cultural Revolution in China. Your article brought back memories of Western intellectuals at the time who supported Mao Zedong’s eradication of old customs, culture, habits and ideas. I recall one of my fellow graduate students in London, an avowed Maoist, bursting into the college’s common room to announce that in China mathematics teachers were now being sent to the land to labour along with the peasants. + +In a challenging tone, he asked whether we did not think that was wonderful. “Certainly”, responded one of our finest scholars with wide-eyed, possibly disingenuous innocence, “as long as the peasants reciprocate by going to the towns to teach algebra and calculus.” They never spoke to each other again. + +MICHAEL SINGER + +Dickson Poon School of Law + +King’s College London + +Mao believed that knowledge was too powerful a tool, leading to wisdom, thoughts and questions which could undermine his rule. Both my great-aunt and uncle were teachers at the Beijing Dance Academy. Both were denounced as intellectuals and sent to be reformed. What made it worse was not the forced hardship, but the confiscation of all the books, art works and other culturally related items they possessed. They managed to hide some, but many more were destroyed. This is the real reason behind the atrocity. Purging his rivals at the same time was just convenient for Mao. + +LOUISA VAN DIJK + +The Hague + + + + + +On the right track + +There is a way for the new mayor of London to realise his objective of connecting the development of housing to public transport (“Going underground”, May 14th). He could compulsorily purchase land to build rail connections and homes and then sell or rent the new homes in partnership with a developer to pay for the railway. Crucially, he should keep in public ownership any stations and other commercial properties in the area to provide ongoing rental income. + +This is the strategy used by the Mass Transit Railway Corporation in Hong Kong. MTRC is 77% owned by the Hong Kong government. It already runs light-rail services in London and will operate Crossrail. It has also won a contract to extend Stockholm’s urban network to the city’s commuter belt by using the profit from rising land-values to pay for the railway. Its profits help pay for public services in Hong Kong by way of dividends. + +We don’t need to hand London’s underground to the MTRC. We could leave it to Transport for London, allowing it in time to become a profitable business as opposed to one with a permanent public subsidy. + +ANDREW PURVES + +London + + + + + +Secure borders + +* The Brexit brief on “Security concerns” (May 7th) did not examine how the security of Northern Ireland would be affected by Britain leaving the European Union. There is currently an open border between the province and the republic of Ireland. If the United Kingdom leaves the EU the only land access point to the UK from the EU would be through the Irish border. One of the primary objectives of Brexit is to stem migration, so surely the border would have security checkpoints again. + + + +MICHAEL RYAN + +Killiney, Ireland + + + + + +Tech cronies + +The technology industry should have been included in your crony-capitalism index (“The party winds down”, May 7th). Microsoft was innovative in its early years, but if it isn’t now a monopolist, I don’t know what is. You cited Google as a potential candidate because it is involved in anti-competitive litigation. But litigation is the wrong test. The American government takes the view that there is a difference between a monopoly that is established through its own growth and one that is established through acquisitions. The government brings many cases against mergers that would have resulted in a company taking enough market share to extract rents, but fewer against those that gained their monopoly position through growth. + +There is no reason why there should be any difference in the government’s treatment of a monopoly. Yet there is, despite the lack of litigation. The fact that more anti-competitive cases aren’t brought against such technology companies suggests that cronies have managed to convince government about the merits of this false distinction. + +ANDY EDSTROM + +Los Angeles + + + + + +The great escape + + + +Your review of Adrian Tinniswood’s “The Long Weekend” asserts that the “English country house casts a long, rose-tinted shadow” (“Partying, hunting, shooting”, May 7th). I think that’s right. “Country House”, a song released by Blur in 1995, comes to mind, describing the leisured life of a modern-day nouveau-riche on his landed estate who is “reading Balzac and knocking back Prozac”. + +RICHARD SPENCER + +Woodland Hills, California + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21699425-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +North Korea’s nuclear weapons: By the rockets’ red glare + + + + + +Articles Sections Next + +North Korea’s nuclear weapons + +By the rockets’ red glare + +Kim Jong Un is on the home straight to making his country a serious nuclear power. Nobody knows how to stop him + +May 28th 2016 | From the print edition + + + +IN JANUARY North Korea detonated a nuclear device underground, its fourth such test and the first, it claimed, to show that it could build a thermonuclear weapon. In February it successfully launched a satellite. It has since been testing missile technology at a hectic pace. In March, its leader, Kim Jong Un, posed with a model of a nuclear weapon core and the re-entry vehicle of a long-range missile. On May 7th he told the congress of the Korean Workers’ Party in Pyongyang that his nuclear-weapons and missile programmes had brought the country “dignity and national power”. He boasts of his ability to “burn Manhattan down to ashes”. + +The nuclear test, most experts believe, did not in fact demonstrate the ability to build a thermonuclear hydrogen bomb. The satellite does not seem to be working. Some of the missile tests failed. Mr Kim says a lot of nasty things. But there is a limit as to how much you can downplay this sequence of events. As Mark Fitzpatrick of the International Institute for Strategic Studies, a think-tank, puts it: “Just because Pyongyang wants us to pay attention, that doesn’t mean we shouldn’t.” + +It is always tempting for America and other countries to put North Korea’s nuclear ambitions on the back burner of policy priorities, in large part because of a chronic absence of good options for dealing with them. But only an extreme optimist can today doubt that North Korea has developed missiles that threaten not just its southern neighbour but also Japan and, soon, the American base on Guam. Many experts, such as John Schilling, who writes about missile technology at 38 North, a website on North Korea run from Johns Hopkins University, believe that North Korea is on track to have a nuclear-capable missile with the range to reach the continental United States by early next decade—which is to say, within America’s next two presidential terms. Stopping that from happening needs to be a front-burner priority. + +The history of unsuccessful responses to North Korea’s nuclear ambitions began in 1994, when Mr Kim’s father, Kim Jong Il, threatened to pull out of the nuclear Non-Proliferation Treaty (NPT) (see timeline). The Clinton administration promised him two proliferation-resistant reactors—that is, reactors from which North Korea would not have been able to derive weapons-gradenuclear material—economic aid and an easing of sanctions if he agreed to freeze and then dismantle the country’s nuclear-weapons programme. This “Agreed framework” collapsed in 2002 when evidence of North Korean cheating became impossible to ignore. North Korea duly quit the NPT. + + + +The next diplomatic efforts were the “Six-party talks”, which included China, Japan, Russia and South Korea as well as America and North Korea. They appeared to bear fruit in 2005 when America confirmed its recognition of North Korea as a sovereign state that it had no intention of invading, and North Korea agreed to return to the NPT, thus putting all its nuclear facilities under the oversight of the International Atomic Energy Agency (IAEA), and to forsake “all nuclear weapons and existing nuclear programmes”. + +So different from Iran + +Despite North Korea carrying out its first nuclear weapon test in 2006, the six-party-talks process somehow limped on until April 2009. Then, over a period of little more than seven weeks, North Korea tried to launch a satellite with a three-stage Unha-2 rocket in defiance of UN Security Council Resolution 1718, chucked IAEA inspectors out of its Yongbyon reactor complex and carried out a second underground nuclear test. Since then it has been pretty much downhill all the way. A final attempt at a deal based on aid in exchange for a testing moratorium in early 2012 was stillborn when North Korea announced a new missile launch only a fortnight later. + +Faced with such a record of duplicity and intransigence, Barack Obama had apparently long since concluded that if he was to achieve anything in the sphere of nuclear non-proliferation, Iran offered at least a chance of success; with North Korea there was virtually none. + +It was a cool calculation typical of the president. For a start, North Korea was a lot further down the road to a nuclear-weapons capability than Iran, which had remained within the NPT and was still a few years from being able to test a device. And Mr Obama realised there was also much more leverage to be had over Iran than North Korea. Bill Clinton had come close to authorising an air strike on Yongbyon in 1994, but pulled back in the belief it would trigger a new war on the peninsula that, by some estimates, could cost a million lives. After the nuclear test in 2006 the military option was off the table for good. That was never true of Iran. The Iranian leadership could not fully discount the threat of a pre-emptive strike by either Israel or America. + +Whizz for atoms: a science and technology centre in Pyongyang + +Sanctions were also a much more potent weapon against Iran than they ever could be with North Korea. Iran was vulnerable because it is dependent on oil and gas exports. And even though the country is only minimally democratic, its leadership has to pay attention to falling living standards and the anger they can bring. That helped make the removal of sanctions a greater priority than pressing ahead with the nuclear programme. + +By contrast, sanctions have had a relatively low impact on North Korea’s closed economy. In large part that is because 90% of the trade it does is with China, which refuses to cut it off because of fears that a subsequent economic collapse would bring with it a torrent of refugees and the demise of a useful buffer against a close American ally. Nor does Mr Kim have to worry much about the political consequences of hardship for his people. So effective is the regime’s brutal system of control—anyone suspected of disloyalty may be killed or banished to a frozen gulag—that there was little sign of dissent even when hundreds of thousands died of starvation during the 1990s. + +Lastly, Iran always (if implausibly) denied that it was seeking the capability to make nuclear weapons—the supreme leader Ali Khamenei even issued a fatwa that described possessing nuclear weapons as a “grave sin”. Mr Kim believes that nuclear weapons are essential. Like his father before him he has built them into the national narrative and iconography, seeing them as fundamental to the dynasty’s survival. Even without nuclear weapons, Iran is a regional power that America has to take seriously. North Korea has no other claim to fame except its nastiness. Its ruler sees nuclear weapons as the key to gaining the respect he demands from the outside world. They are not bargaining chips to be traded for other benefits. + +You can observe a lot just by watching + +That is why the evidence of an almost manic amount of nuclear-weapons-related testing since January is so alarming, and why interpreting what it means both in terms of political signalling and technical progress has become urgent. Gary Samore, Mr Obama’s arms-control adviser until 2013 and now research director at Harvard’s Belfer Centre, cautions how little outsiders really know for sure about North Korea’s capabilities. Jonathan Pollack, a Korea expert at the Brookings Institution, agrees the data are limited. Nevertheless, he says: “In the words of Yogi Berra, you can observe a lot by watching.” + +David Albright, the president of the Institute for Science and International Security, a think-tank, and a former IAEA inspector in Iraq, has carried out detailed analysis of what is known of North Korea’s capacity to reprocess plutonium and enrich uranium. If the country is producing bombs similar in yield to the one that America dropped on Hiroshima—that is, of 10 to 20 kilotons, which would be small by modern standards, but would therefore require less-capable missiles for their delivery—his central projection is that it can produce enough fissile material for around seven warheads a year and that its current stockpile is about 20. + +Here's one I made earlier... + +Mr Albright, like most analysts, is deeply sceptical that the device tested in January was, as Mr Kim claimed, a true hydrogen bomb. In hydrogen bombs a “primary”, which gets its power from nuclear fission in uranium or plutonium, sets off a “secondary”, which gets its power from the fusion of deuterium and tritium. Such bombs have yields in the hundreds of kilotons, or megatons. Estimates based on seismology suggest this year’s test, like its predecessors, had a yield of no more than ten kilotons, though the fact that the bomb was more deeply buried than the first three suggests its makers may have expected something bigger. Mr Albright suspects the engineers were trying a technique developed by South Africa’s defunct nuclear programme in which a lithium, deuterium and tritium tablet at the centre of a fission device boosts its yield with a bit of fusion. + +...(which just happens to fit inside this) + +The next issue is whether the North Koreans have graduated from devices that can be tested to devices that can be fitted onto either its existing medium-range Nodong missile (developed from the Soviet-era Scud C) or its two missiles under development, the Musudan intermediate-range ballistic missile (IRBM) and the KN-08 intercontinental ballistic missile (ICBM). Mr Schilling thinks that they would not have carried out four nuclear tests on something they did not think they could deliver. On March 9th, Mr Kim was photographed paying a visit to what may have been the Chamjin missile factory outside Pyongyang. In a hall packed with several ballistic missiles, Mr Kim posed beside a plausible-looking re-entry vehicle that would be consistent in size with a fission device about 60cm in diameter and weighing up to 300 kilograms. Both American and South Korean officials are convinced that North Korea can indeed make a warhead small enough to fit on the Nodong, which can reach targets in Japan, including American bases (see map). + + + +A further question concerns the re-entry vehicle Mr Kim was proudly showing off: would it survive its passage through the Earth’s atmosphere? Until recently, Western intelligence believed that North Korea had not yet mastered this technology. But on March 15th pictures appeared in the North Korean media of what appeared to be a nose-cone from a KN-08 placed on an engine test stand one and a half metres beneath an ignited Scud rocket motor. Another picture (above, right) showed Mr Kim examining the re-entry vehicle after it had seemingly passed its test. + +Another ground test on April 9th has, according to Mr Schilling, put to rest any doubts about North Korea’s ability to build an ICBM sooner rather than later. Two engines from Soviet-era R-27 submarine-launched ballistic missiles were coupled together to provide the propulsive power and range for a warhead carried by a KN-08 to hit the east coast of the United States. It is not known how many R-27s North Korea has, but up to 150 went missing from Russia in the post-Soviet 1990s. Mr Schilling reckons flight testing of a KN-08 enhanced in this way could begin soon, leading to a “limited operational capability by 2020”. + +Other recent tests include a large solid-fuelled rocket motor of the kind needed to launch a mobile medium-range missile at very short notice (liquid-fuelled rockets, like those on the KN-08, take much longer to prepare for flight and are harder to move around) and the launch of a ballistic missile apparently from a submerged submarine in late April. + +Not all North Korea’s tests meet with success. Three recent test fires of the Musudan flopped. Michael Elleman, a missile expert at the IISS, speculates that perhaps the missiles were solid-fuelled and the engines still at an early stage of development. Mr Elleman reckons that getting the Musudans working, and thus being able to threaten the American base in Guam over 3,000km away, must be a priority. He cautions that a string of failures is not grounds for optimism; the North Korean approach is to try it, find out what went wrong, find a fix and then validate it. “Their systems never work first time,” says Mr Schilling, “but they persevere.” + +Some of what Mr Fitzpatrick describes as “this extraordinary amount of activity” may have been related to the seventh congress of the Workers’ Party, a sanctification of Mr Kim’s leadership. A less frenzied pace of testing may now resume. Since 2013, Mr Kim has talked of his byungjin policy of combining nuclear deterrence with economic development. Mr Pollack says that if Mr Kim wants the sort of bells-and-whistles deterrent deployed by the large nuclear powers, with submarine-launched and mobile missiles, the ruinous expense would make such a policy impossible. If, on the other hand, Mr Kim just wants what Mr Pollack calls a “don’t fuck with us” deterrent—one that keeps outside powers from interfering with his regime—he probably has one now. + +Given what he has been testing, it seems likely that Mr Kim has his heart set on the former. His talk of economic reform—he laid out the first new five-year plan for decades at the congress—is short on specifics. If his enthusiasm for growth has led him to be worried by the supposedly tougher sanctions agreed to by the UN Security Council in Resolution 2270 on March 2nd in response to the nuclear test, he has shown no sign of it. + +Deterrence, defence, despair + +These latest sanctions reflect China’s increased willingness to co-operate with America and others on North Korea, a new mood born of frustration and annoyance that Mr Kim continues his nuclear provocations when China has asked him to stop. Still, unlike the sanctions on Iran, those on North Korea remain focused on hobbling the nuclear programme and denying luxury goods to Mr Kim and his cronies, rather than on damaging the general economy. North Korea is free to buy fuel oil and sell iron ore and coal as long as the revenues are not used to fund military activities. This is not a condition that can be practically enforced. + +Chun Yung-woo, South Korea’s former chief negotiator at the six-party talks and national-security adviser to President Lee Myung-bak until 2013, says that although China has toughened its stance towards North Korea, it has “not fundamentally changed its policy of putting stability before denuclearisation—it will only implement sanctions that are tolerable to North Korea”. He hopes that the next American president, with support from Congress, will put China on the spot by applying a “secondary boycott” to any Chinese businesses trading with North Korea. + +Another South Korean official, who talks regularly to the Chinese, is more sympathetic to their dilemma. The official says Beijing has been disturbed by an almost complete lack of communication with the North Korean regime since Mr Kim executed his uncle, Jang Song Taek, in 2013. Jang was the one senior figure in Pyongyang with whom the Chinese had close ties. The Chinese are changing their tactics, if not their strategy, in response to what they see as continuing provocations, looking for a sanctions “sweet-spot”—harsh enough to change Mr Kim’s mind but not so punitive as to risk the collapse of the regime. However, if Mr Kim believes he is now on the “home straight”, his instinct may be to sprint for the finishing line and talk afterwards. Mr Chun thinks that North Korea will never denuclearise; if it agreed to stop testing it would be because it had achieved the nuclear power and status it craves. + +The rest of the world will not agree to that. Still, Mr Fitzpatrick says that some kind of high-level engagement is overdue: he thinks it preposterous that the only American who knows Mr Kim is Dennis Rodman, a retired basketball player. Peace-treaty talks with North Korea to bring about a formal end to the Korean war, he reckons, would not require recognition of North Korea’s nuclear status and could be part of an agreement to freeze nuclear-weapons development. + +Mr Samore thinks Mr Kim’s behaviour may eventually exasperate China so much that it will bring into play sanctions which really hurt. In the absence of such leverage, though, the focus must be on strengthening deterrence and containment. That means resisting or defusing Chinese displeasure over the proposed fielding of the THAAD (terminal high-altitude area defence) ballistic-missile defence system in South Korea. The Chinese oppose THAAD on the basis that its powerful AN/TPY-2 radar could undermine the effectiveness of their nuclear deterrent against America, a claim that Mr Samore rejects. + +China fears that, over time, a regional network of anti-missile systems deployed by America’s allies might come to threaten the deterrent effect of its relatively small strategic nuclear forces. In this instance that concern seems far-fetched. The THAAD system is designed to destroy missiles during the terminal phase of their trajectories, when they are coming back down; it can do nothing against missiles during their boost or midcourse phase, so Chinese missiles aimed at America would have nothing to fear from a THAAD battery in South Korea. Still, the Chinese claim to be worried that THAAD’s radars, if used in “look mode” rather than “terminal mode”, could reach deep into their territory. + +Americans point out that using the radar that way would decouple it from the missile-defence system it was deployed with, which would defeat its purpose. More generally, they say that this is just something China will have to put up with. As America’s defence secretary, Ash Carter, said last month: “It’s a necessary thing. It’s between us and the South Koreans, it’s part of protecting our own forces on the Korean peninsula and protecting South Korea. It has nothing to do with the Chinese.” The message to China was clear: as you have done such a lousy job persuading your ally to rein in his nukes, you will have to accept the consequences. + +Mr Elleman has calculated that, faced with 50-missile salvoes, a layered defence consisting of two THAAD batteries and South Korea’s existing Patriot systems would be able to stop all but 10% of what was fired. He and Michael Zagurek, in a paper for 38 North, base their calculations on what is known in the jargon as “single-shot probability of kill” (SSPK). With two layers of defence, the SSPK of each interceptor need only be a bit over 0.7 for 90% of the incoming missiles to be destroyed. + +Is THAAD the best you can do? + +That would be an impressively effective defence against conventionally armed missiles. But only one or two nuclear warheads need to get through for the casualties to be immense (420,000 killed and injured in Seoul for each 20 kiloton warhead, reckon Mr Elleman and Mr Zagurek). And if nuclear-tipped missiles were launched alongside or behind conventional decoys the system would be clueless as to which was which. If Mr Kim were to add submarine-launched missiles to his arsenal, defence would be harder still; they could be fired out of sight of THAAD’s radar. + +Like tougher sanctions, THAAD is well worth deploying. But neither can fully contain the threat. Nor is it certain that conventional deterrence (which rests upon the assumption that the regime to be deterred is sufficiently rational not to invite its own destruction) will necessarily work against North Korea. Another reason the Chinese give for their unwillingness to tighten the screw on the regime is that they fear its imminent collapse could result in a last act of suicidal nuclear defiance by Mr Kim. That may just be what Mr Kim wants his adversaries to believe. But if it is a bluff, it is not one that anybody wishes to call. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21699449-kim-jong-un-home-straight-making-his-country-serious-nuclear-power-nobody-knows/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Voting rights: The fire next time + +The Libertarian Party: Guns, weed and relevance + +The campaigns: Heard on the trail + +Hillary Clinton’s e-mails: Already indicted + +Disability lawsuits: Frequent filers + +Soccer flourishes: Kick turn + +Lexington: Oh, Oklahoma + + + + + +Articles Sections Next + +Voting rights + +The fire next time + +Today’s voting-rights disputes are less clear-cut than those of the civil-rights era, but they are inflammatory all the same + +May 28th 2016 | UNION SPRINGS, ALABAMA | From the print edition + + + +THE 45-mile drive from Union Springs, seat of Bullock County, Alabama, to Montgomery, the state capital, might not seem very arduous. But for some locals, the distance itself is not the main obstacle. Going to Montgomery, as some now must to get a driver’s licence, means the best part of a day off work for two people, the test-sitter and his chauffeur (there is no public transport). That is a stretch for employees in inflexible, minimum-wage jobs—and there are lots of them in Union Springs, a tidy town in which the missing letters on the shuttered department store’s façade betray a quiet decline, surrounded by the sort of spacious but dilapidated poverty characteristic of Alabama’s Black Belt. + +To some, this trek is not just an inconvenience but a scandal. The state’s voters must now show one of several eligible photo-IDs to cast a ballot, of which driving licences are the most common kind. Last year, supposedly to save money, the issuing office in Union Springs, formerly open for a day each week, was closed, along with others in mostly black, Democratic-leaning counties. After an outcry, the service was reinstated for a day per month; at other times, applicants head to Montgomery. For James Poe, a funeral-home director and head of the NAACP in Bullock County, the combination of a new voter-ID law and reduced hours is “insanity”. Such impediments may not be as flagrant as when, as a young man in Union Springs, he had to interpret the constitution in order to vote, but, he thinks, they are obnoxious all the same. + +For Mr Poe, the explanation of what he calls “a slick Jim Crow” is simple: “Republicans want fewer people to vote.” Far from it, insists John Merrill, who as a Republican legislator helped craft the new law and now oversees its implementation as Alabama’s secretary of state. Anyone without a driving licence can apply for a free, alternative ID—in Union Springs, at the friendly registrar’s office in the courthouse. True, fewer than 8,000 have been issued, but that, Mr Merrill says, is because not many people need them (others disagree). He pledges to ensure that anyone who wants an ID gets one, even if he has to go to their house himself. Turnout soared in the recent primary, he points out (though only on the Republican side). As for racial discrimination at the polls: “That day is over.” + +Across the Edmund Pettus bridge + +The nuances, malleable data and emotive claims in the row over Alabama’s voting law are typical of similar disputes raging across the South, in and out of court, and elsewhere. Some might not be resolved before the presidential election and may cloud its outcome. At their heart is the question of how far America has escaped the racial traumas of its past. + +Altogether 17 states will have new rules in place for this presidential election. Reverend William Barber, a civil-rights activist who is leading the fight against North Carolina’s changes (among the most sweeping), shares Mr Poe’s outrage. These are, he says, summarising the general complaint, “an all-out retrogressive attack on voting rights”, which his generation must defend, just as a previous one secured the passage of the Voting Rights Act (VRA) in 1965. Thus his slogan: “This is our Selma.” + +Yet if this patchwork of initiatives is indeed an assault on hallowed rights, it is, metaphorically speaking, a crime without a body or incontrovertible smoking gun. That is partly due to the fiddly nature of the reforms. Chief among them are requirements for photo-IDs which, surveys suggest, minority citizens are more likely to lack (in Texas, which has the toughest ID law, you can vote with a gun licence but not a student or employee card). Other revisions include the curtailment of early-voting periods and the ending of election-day registration and out-of-precinct voting. North Carolina’s law contains all these elements: all, say its critics, will disproportionately affect minorities. Elsewhere there are conflicts over the need to produce proof of citizenship to register to vote (recently discounted by a court in Kansas) and the pruning of electoral rolls. + +Innocent or insidious, these tweaks are not as luridly discriminatory as the blatant, often bloody shenanigans of the past. Moreover their impact is difficult to prove conclusively. A study by the Government Accountability Office found that, in Kansas, tighter ID laws led to a drop in turnout of roughly 2% between 2008 and 2012, and slightly more in Tennessee; younger and black voters were more likely to be affected. Researchers at the University of California, San Diego, also calculated that strict ID laws depress minority turnout, notably among Hispanics. There are worrisome projections: Arturo Vargas of the NALEO Educational Fund, a Latino lobby group, reckons 875,000 Latino voters could be impeded by new regulations in November, 90% of them in Texas. + +But, as in Alabama, there is contrary evidence, too. For instance, in the congressional elections of 2014, the first held under North Carolina’s new regime, black turnout rose—a bump Mr Barber’s side attributes to an exciting Senate race and an energetic get-out-the-vote push. As it happens, Alabama’s turnout crashed in 2014, which officials ascribe to that year’s dull, incumbent-heavy races. Those explanations point up a basic evidential hitch: electoral behaviour is driven by many factors, from the political (a historic black candidate) to the personal (getting stuck at work). Demonstrating a single rule’s consequences is tricky; proving why people fail to vote is particularly fraught. And lots of these measures are yet to be tested. + +A rainstorm with no umbrella + +Hardly surprising, then, that opponents of these changes, including the federal government, have sometimes struggled to persuade courts that they violate the VRA or are unconstitutional. “They’re wasting a lot of money,” says Christian Adams of the Public Interest Legal Foundation, which joined Virginia in a successful defence of voter-ID; a federal court recently upheld North Carolina’s law. On the other hand, Texas’s has been judged discriminatory, as, this week, were Ohio’s cuts to early voting; several states, including Alabama, face ongoing litigation. + +Perhaps if the burden of proof fell more squarely on the laws’ proponents, the outcomes of these cases might be more consistent—especially if circumstantial evidence weighed more heavily. Exhibit A might be their incriminating timing. + +The key date, say activists, was June 25th 2013. That was when the Supreme Court neutralised the aspect of the VRA that required nine mostly southern states with records of discrimination, plus parts of six others, to clear changes to their voting practices with the Justice Department or a federal court before they took effect. Edward Blum, a pro-reform campaigner who helped bring the suit, argues that, having “done what it was designed to do”, the relevant section of the VRA had become an infringement of state sovereignty; in various southern states, he notes, black turnout is now higher than in other bits of America. A narrow majority of the court duly ruled that, while prejudice persisted, the country had “changed dramatically”, and that the formula used to apply the pre-clearance requirement was outdated. Dissenting, Ruth Bader Ginsburg adduced the 700-odd discriminatory measures blocked by the Justice Department between 1982 and 2006; she likened the decision to “throwing away your umbrella in a rainstorm because you are not getting wet”. + +Not all the places now embroiled in controversy had been fingered for preclearance. But several were, and their new laws might have been rejected—as some apparently realised. Alabama, recipient of 24 objections by the Justice Department since 1990, passed its voter-ID law in 2011, but held it back; it announced that it would implement it the day after the ruling. North Carolina’s legislators rushed theirs through a month later, one remarking that the VRA “headache” had been lifted. Texas’s law was blocked, then revived. That telling opportunism lies behind Mr Barber’s view that black voters now have “less protection than on August 7th, 1965”, the day after the Voting Rights Act was signed. + +Exhibit B in the circumstantial case against the new laws is the ropey rationale for passing them. The main reason cited for the ID requirements is the need to combat fraud. That sounds reasonable, except that the kind of impersonation they prevent is vanishingly rare. In Alabama, argues the NAACP’s Legal Defence Fund, there was one documented case of voter-impersonation in the 12 years before the ID law was passed. The laws’ supporters, such as Mr Adams, dismiss these quibbles: “How much criminal activity is OK?”, he demands. Mr Merrill, in Alabama, says the state should always try to improve, just as its triumphant college football team constantly recruits new players. + +Still marching + +If there were no other cause for suspicion, that perfectionist argument might wash. But there is, including—Exhibit C—the roster of implicated states. Several feature growing minority populations, tightening political competition, or both. In 2008 Barack Obama won North Carolina by a whisker; Wisconsin and Virginia, two other swing states, are also involved. The history, like the geography, is fishy. As Richard Hasen of the University of California recounts, the tinkering began after the debacle in Florida in 2000, which showed that “in close elections, the rules matter”. Mr Obama’s election gave it another impetus; the Republicans’ statehouse victories in 2010, and then the Supreme Court’s ruling, facilitated further spurts. This, alleges Mr Vargas, the Latino advocate, is “the status quo trying to hold on to its political power for as long as possible”. + +After the end of history + +“Voting in the South,” says Mr Barber, “has always been about the issue of race.” If that remains true, and if election regimes cannot be assessed in isolation from history, practices that are permissible in one part of the country—New York has no early voting, for example—might indeed be deemed discriminatory in another. Occasional inopportune comments by bigoted politicians, such as the legislators in Alabama caught referring to black voters as “aborigines”, bolster that gloomy analysis. A milder judgment is that, these days, race is a proxy for partisanship, since minority Americans mostly vote Democratic, rather than a target in itself; though as Wendy Weiser of the Brennan Centre for Justice says, it is scant consolation for black people to be disenfranchised for their party allegiance rather than simply for their skin colour. + +At the least, many of these reforms imply a wilful failure to understand the constraints of poverty, especially the rural, poorly educated sort. In Alabama applicants for a free voter ID must swear, on pain of prosecution, that they have no other valid kind. That, for some, is offputting, as is the paperwork required, in some states that provide such loopholes, to vote without an ID. Early voting, same-day registration and out-of-precinct voting are useful to people leading hard-pressed, sometimes disrupted lives. + +In truth, though, as some activists acknowledge, these hurdles are not the only barrier to greater minority influence. Nationwide turnout was already low among Latinos and black youngsters—a disengagement that, in down-at-heel places such as Bullock County, is at once tragic and understandable. The possible closure of a nearby prison is a bigger preoccupation in Union Springs than the election. “We don’t have any industries trying to knock the door down,” laments Saint Thomas, the mayor. “You just about got to beg ‘em.” Mr Poe of the NAACP offered free rides to Montgomery for anyone keen to get their ID there. No one, he says disconsolately, has taken him up on it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21699451-todays-voting-rights-disputes-are-less-clear-cut-those-civil-rights-era/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Libertarian Party + +Guns, weed and relevance + +Gary Johnson could launch the Libertarians on a big third-party run + +May 28th 2016 | WASHINGTON, DC | From the print edition + + + +AS THE likely presidential nominee of the Libertarian Party, Gary Johnson has a lot to be modest about; and he is. “Everybody I meet seems to like me,” says the two-term former Republican governor of New Mexico. “But I’m a Libertarian, so doesn’t that denote there are some loose screws out there?” He leaves the question hanging. + +Tiny, electorally trifling and obsessed with guns and weed, cherished emblems of its 11,000 members’ freedom, the party has never mattered in national politics. It is by some measures America’s third-biggest—yet not flattered by that comparison. In 2012 Mitt Romney crashed to defeat with 61m votes; Mr Johnson, who ran for the Libertarians after failing to be noticed in the Republican primaries, won 1.3m. Yet he could be about to improve on that. + +Mr Johnson and his running-mate, Bill Weld, a former governor of Massachusetts, are expected to emerge from the Libertarians’ convention in Orlando on 30th May with the party’s ticket. If so, he could feasibly launch the biggest third-party run since Ralph Nader won almost 3% of the vote for the Green Party in 2000—including 100,000 votes in Florida that may have cost Al Gore the presidency. Or he could do better; a poll by Monmouth University put Mr Johnson on 11% in a three-way race with Donald Trump and Hillary Clinton. That was especially creditable given how little he is known; he figured in almost no national polls in 2012. It has encouraged Mr Johnson to think he could register the 15% vote-share that would guarantee him inclusion in this year’s televised debates. + +With publicity, he could catch on. He has the accomplishments of a chest-beating conservative hero—he is a self-made millionaire, triathlete and razor-beaked deficit hawk; he vetoed 750 spending bills in New Mexico. He is also a sometime dope smoker (he resparked his youthful habit in 2005 to manage the pain from a paragliding accident), who comes across as almost goofily unaffected. He speaks in horror of the disdain many Americans show for Mexican immigrants—whom he calls “the cream of the crop”—as if it were borne of some crazy misunderstanding, rather than embedded nativist resentment and economic anxiety. Voters sick of political polish might like the mix: he really is authentic. Yet Mr Johnson’s main cause for hope is the unpopularity of the likely Republican and Democratic alternatives. + +Around 60% of voters dislike Donald Trump and 55% Hillary Clinton. That should encourage more Americans to vote as freely of the old duopoly as they increasingly claim to be; 42% say they are independent voters, up from 30% a decade ago. And the Libertarians’ voguish message of fiscal conservatism, social liberalism and anti-interventionism has something for the disaffected of both big parties. Compared with a straightforward Trump-Clinton match-up, the Monmouth poll suggested Mr Johnson could take 6% of the vote from Mrs Clinton and 4% from Mr Trump. + +The particular unease of many Republicans with their presumptive candidate—along with their failure hitherto to launch a conservative rival to him—explains a surge of interest in the Libertarian confab in Orlando. After Mr Trump sewed up their nomination in Indiana this month, Google reported a 5,000-fold increase in online searches for Mr Johnson. He is not to all Republican tastes; Mr Trump’s most outspoken critics in the party tend to hold neoconservative views on security. Yet even they hope he might bring disenchanted Republicans to the polls in November, and thereby retain their support for Republican candidates in the coterminous congressional contests. + +Mr Johnson rejects Mr Trump utterly: “There’s nothing about Donald Trump that appeals to me.” Yet he sounds most hopeful of picking up support from disaffected Democrats, especially followers of Senator Bernie Sanders, whom he says he agrees with on almost everything—including the evil of crony capitalism and virtues of pot—except the economy. Yet how would he woo them? + +Mr Johnson’s suggestion is unconventional. On the basis that, he argues, with some support from surveys, Americans are more libertarian than they know, he would point them to an online quiz, “Isidewith.com”, to help them work out where they stand. “I say, “Take the quiz, and whoever you pair up with, I think you should knock yourself out over them.” His own experience with the quiz, he sweetly relates, suggest he agrees with 73% of Mr Sanders’s proposals, 63% of Mrs Clinton’s and 57% of Mr Trump’s. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21699452-gary-johnson-could-launch-libertarians-big-third-party-run-guns-weed-and/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +May 28th 2016 | From the print edition + + + +Lindsey Graham (Senator from South Carolina) + +“He’s a race-baiting, xenophobic, religious bigot.” December 8th 2015, CNN + +“We talked about national security, and told some jokes. [Trump’s] very cordial, he’s a funny guy, and he’s from New York. He can take a punch.” May 12th 2016 + +John McCain (Senator from Arizona) + +“I think he may owe an apology to the families of those who have sacrificed in conflict and those who have undergone the prison experience in serving their country.” July 20th 2015, MSNBC + +“You have to listen to people that have chosen the nominee of our Republican Party. I think it would be foolish to ignore them.” May 7th 2016, CNN + +Bobby Jindal (former governor of Louisiana) + +“But you know why [Trump] hasn’t read the Bible? Because he’s not in it.” September 10th 2015 + +“I think electing Donald Trump would be the second-worst thing we could do this November, better only than electing Hillary Clinton.” May 8th 2016, Wall Street Journal + +Chris Christie (Governor of New Jersey) + +“A crisis for Donald is when his favourite restaurant on the Upper East Side isn’t open.” January 30th 2016 + +“There is no-one who is better prepared to provide America with the strong leadership that it needs both at home and around the world, than Donald Trump.” February 26th 2016 + +Rand Paul (Senator from Kentucky) + +“Donald Trump is a delusional narcissist and an orange-faced windbag.” January 25th 2016, The Nightly Show + +“I took a pledge when I ran for president to not run as an independent candidate and to support the Republican nominee. I stand by that pledge.” May 17th 2016, Breitbart.com + +Rick Perry (former Texas Governor) + +“Donald Trump’s candidacy is a cancer on conservatism, and it must be clearly diagnosed, excised and discarded.” July 22nd 2015 + +“I`m going to support him and help him and do what I can. He is one of the most talented people who has ever run for president I have ever seen.” May 5th 2016, CNN + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21699453-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Hillary Clinton’s e-mails + +Already indicted + +The Democratic front-runner is mired in a scandal of her own nurturing + +May 28th 2016 | WASHINGTON, DC | From the print edition + + + +COULD Hillary Clinton’s bid for the presidency be undone by her unusual e-mail arrangements as secretary of state? A report by an internal watchdog of the State Department, the inspector-general, into her use of a private e-mail account for official business, suggests it could be. The report, which was released on May 25th, does not allege Mrs Clinton broke any law: that would have stoked fears of a campaign-ending indictment by the FBI, which is also investigating the matter. Yet it raises concerns about her conduct and uncandid response to the scandal—upon which Donald Trump, her unconscionable Republican rival, will now feast. + +Ever since Mrs Clinton’s e-mail server became a matter of public debate last year, she has said she broke no rules. To the contrary, the State Department report says she was under an “obligation” to seek clearance for her e-mail system, did not, and it would have been denied if she had done, due to “security risks”. + +Her e-mail rig was not a secret, exactly. The report notes “some awareness” of it among senior diplomats. It points instead to the impunity with which Mrs Clinton’s affairs were handled. When two IT whizzes expressed fears that her e-mails might not be preserved, their boss “instructed the staff never to speak of the secretary’s personal e-mail system again.” + +In Mrs Clinton’s defence, the report notes that the department has “longstanding, systemic weaknesses” in its record-keeping. Colin Powell, Mrs Clinton’s predecessor but one, also used a private e-mail account and broke record-keeping rules. Yet the report suggests he had more of an excuse; it was hard to send e-mails outside the State Department’s system in his time. He also sent fewer e-mails than Mrs Clinton, for whom secrecy—not mere “convenience”, as she has claimed—seems to have been a motivating factor. E-mails included in the report show her fear that, if she adopted an official e-mail account as an aide had advised her to, her personal e-mails could be published: “I don’t want any risk of the personal being accessible”. + +On the evidence available, that says a lot about the origins of this scandal. Out of a neuralgic concern for confidentiality, Mrs Clinton overrode rules that her advisers considered to be less important than they were. She was no doubt motivated by years of political smears (which Mr Trump, who has already suggested she may be a murderer, is now dredging up); her staff was lulled by the State Department’s history of laxity and supplication to its boss. + +Yet if it may be possible to take a tolerant view of how this started, there is no excusing the mess Mrs Clinton has made of it. A more agile politician would immediately have recognised the scandal’s potential to exacerbate the poor trust ratings that are her biggest weakness. She would then have taken urgent measures to confess her carelessness, express remorse and make a fulsome display of handing over whatever materials the investigators required. Instead Mrs Clinton obfuscated, denied and watched the scandal grow. The most significant indictment to arise from it may well concern her skills as a politician. But with the latest polls giving Mr Trump a narrow lead, that is not at all reassuring. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21699454-democratic-front-runner-mired-scandal-her-own-nurturing-already-indicted/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Disability lawsuits + +Frequent filers + +Laws meant to help the disabled have had unintended consequences + +May 28th 2016 | SANTA BARBARA | From the print edition + +Paralegal paradise + +FOR an inkling of how good intentions can go awry, consider Title III of the Americans with Disabilities Act (ADA). Passed by Congress in 1990 with the laudable aim of giving the disabled equal access to places of business, it has been supplemented with new Department of Justice standards (in 2010, for example, the DOJ said that miniature horses can qualify as service animals). The hundreds of pages of technical requirements have become so “frankly overwhelming” that a good 95% of Arizona businesses haven’t fully complied, says Peter Strojnik, a lawyer in Phoenix. He has sued more than 500 since starting in February, and says he will hit thousands more in the state and hire staff to begin out-of-state suits. + +Businesses that brave court instead usually lose. Lawyers need only show that a violation once existed—a bathroom mirror, stall partition, or sign improperly positioned can be enough, as is having handicapped parking marked with faded paint. Violators must pay all legal fees. Mr Strojnik uses the money taken in to pay helpers, including testers who hunt for infractions and serve as plaintiffs, and puts the remaining proceeds into his charity, Advocates for Individuals with Disabilities. People should give attorneys like him who enforce the law a break, he says, and instead “be grumpy at Congress”. + +The money machine has sped up in the past couple of years, with some plaintiffs now filing more than two dozen lawsuits a week, says Richard Hunt, a Dallas lawyer who defends businesses and teaches disability law at Southern Methodist University. Small businesses typically settle for $3,500 to $7,500. That’s a bargain compared to the cost of a court fight, Mr Hunt says, and, for the lawyer and plaintiff, good money for a few hours’ work. + +California offers a bigger bonanza. The state’s Unruh Act awards a disabled plaintiff up to $4,000 for each time he or she visited, or wished to visit, an offending business. This increases the cost of losing a lawsuit, so California’s small businesses typically pay settlements of $15,000 to $20,000, says Tom Scott, head of the Sacramento branch of the National Federation of Independent Business. + +Nearly all California businesses have at least one violation, perhaps of a state building code, says Marejka Sacks, a paralegal at Moore Law Firm in San Jose. Her team cuts businesses slack for “the little minutiae stuff,” she says, but has still sued more than 1,000 since switching from criminal law to ADA infractions in 2009. Proving that a violation has caused a handicapped person difficulty, discomfort, or embarrassment is “not a difficult threshold”, she says. Nineteen of every 20 businesses paid up to avoid trial. + +Serial filers say they provide a valuable service because Congress did not fund a dedicated enforcement bureaucracy. Why do businesses think it’s OK to risk our safety for profit?, asks Eric Wong of the Disability Support Alliance, himself a wheelchair user. He says that those who think there are thousands of wasteful lawsuits share “the delusional rationalisations of serial ADA violators”. + +What’s next? Omar Weaver Rosales, a Texas lawyer, has sued about 450 businesses in the past two years; more than 70% paid up to avoid a trial. But even more lucrative pastures are coming into view. In March a California judge ordered Colorado retailer Bag’n Baggage to pay $4,000 in damages and legal fees thought to exceed $100,000 because its website didn’t accommodate screen-reading software used by a blind plaintiff. Mr Rosales says extending ADA rules to websites will allow him to begin suing companies that use colour combinations problematic for the colour-blind and layouts that are confusing for people with a limited field of vision. + +The DOJ is supporting a National Association of the Deaf lawsuit against Harvard for not subtitling or transcribing videos and audio files posted online. As such cases multiply, content may be taken offline. Paying an accessibility consultant to spot the bits of website coding and metadata that might trip up a blind user’s screen-reading software can cost $50,000 for a website with 100 pages. Reflecting on the implications of this, Bill Norkunas, a Florida disability-access consultant who was struck with polio as a child (and who helped Senator Ted Kennedy draft the ADA), says that removing videos that lack subtitles would deprive wheelchair users and the blind, who could at least listen to them. Mr Norkunas hopes that won’t happen, but reckons it very well might. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21699486-laws-meant-help-disabled-have-had-unintended-consequences-frequent-filers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Soccer flourishes + +Kick turn + +More and more Americans like watching people kick round balls + +May 28th 2016 | From the print edition + + + +DESPITE its name, the Copa America has never been played north of the Rio Grande before. On June 3rd the international soccer tournament kicks off in Santa Clara, California. Games will take place in ten cities across the country over the next four weeks. It is the latest effort to cement the sport into the mainstream consciousness. Soccer still lags behind America’s four leading sports: baseball, basketball, hockey and American football. But several measures suggest that the game is gaining ground. + +Much of the hard running took place in the 1990s, when the successful hosting of the World Cup coincided with a surge of young players and the formation of Major League Soccer (MLS). According to a poll for ESPN, soccer has become the second-most popular sport for 12-24 year olds, after American football, and is the standout leader among Hispanics of the same age. Last year soccer-playing among boys in high school grew more than any other sport, according to the National Federation of State High School Associations (perhaps capitalising on fears over the safety of American football, where numbers fell). + +The success of the national teams, in particular the women’s side, has been a boon. Last year, the Women’s World Cup final attracted a domestic TV audience of 27m—roughly the same as the record-setting college American football championship game in 2015. Until recently, the challenge had been to keep people interested between World Cups. A rise in the number of games from other countries that are broadcast live has helped. According to Stephen Master of Nielsen, which measures such things, there is now more live soccer available on American TV than in any other country. + +Partly as a result, average attendances at MLS games have grown by 56% since 2001. In the past five years they have risen 29%. More people go to MLS games than go to an NBA games or National Hockey League ones (though both basketball and hockey are played in smaller stadiums with higher ticket prices). When it comes to revenue, soccer is still a minnow: MLS generates just half the revenue of Japanese baseball and a tenth of what the NBA does. + +There is also depth to this growth among fans. In May FC Cincinnati, a freshly minted team playing in the third tier (the United Soccer League, or USL), registered one crowd of more than 23,000. In 2015, newly formed New York City FC sold 15,000 season tickets before they had kicked a ball. The league is set to grow from 20 to 24 teams over the next two seasons, and one of the youngest, most eclectic fan bases of all American sports—52% of MLS fans are aged 18-34, the highest proportion of any professional sports league. + +Viewing figures for MLS also have a long way to go before they can compete regularly with the big four. But TV audiences are growing (tying domestic fixtures in with English Premier League games, which attract larger audiences, has worked well) and networks see the potential, signing a $90m-a-year deal to 2022 for broadcasting rights. + +Still, MLS has still not fully dispelled its image as a retirement home for clapped-out European stars. Only Sebastian Giovinco, a player for Toronto FC, can be considered a foreign star in his prime. With a new surge of spending on soccer in China, it may become even more difficult to attract stardust. America churns out more world-beating athletes than any other country, but none of them play soccer. Yet. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21699484-more-and-more-americans-watching-people-kick-round-balls-kick-turn/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Oh, Oklahoma + +What happens when voters distrust their politicians so much that they bind their hands + +May 28th 2016 | From the print edition + + + +SOME weeks ago Oklahoma’s teacher of the year for 2016, Shawn Sheehan, dined in Washington, DC, with counterparts from California and Washington state. The mood was jolly until the high-flyers, all finalists for national teacher of the year, compared salaries. When Mr Sheehan—a young teacher of mathematics and special education—revealed his pay, his table-mates “sort of went silent”. For in state rankings of teachers’ pay Oklahoma comes 48th. Washington’s teacher of the year has since been urging Mr Sheehan to move to the West Coast. “He’s been sending me house listings,” he says, ruefully. + +Oklahomans dislike such stories. They are sternly conservative: God-fearing, tornado-lashed prairie folk, so proud of their mineral wealth that an oil well stands next to the State Capitol, where feebler types might plant flowers. They scorn big government—the state is in the bottom third for tax revenue per person. But Oklahomans care about their public schools, which educate the vast majority of their kids, and which (notably via sport) are social anchors for many towns. So they wince when good teachers are lured elsewhere. Even now, as slumping oil and gas prices have been followed by a deep budget crisis, the Republican governor, Mary Fallin, says she wants to give teachers a raise, an ambition echoed by legislators from both parties. A poll last year found 98% of Oklahomans back higher classroom pay, dividing only over whether to raise salaries across-the-board, or on merit. + +That consensus makes raising teachers’ pay a good test of basic governance. Alas, legislators negotiating a new budget have spent May failing it. Democrats blocked a scheme involving higher cigarette taxes, because they wanted some of the revenues for health care. Republicans introduced and withdrew a proposal to increase teachers’ pay while cutting their other benefits. Worse, with days left to fill a $1.3 billion hole in the budget, Republicans devoted long hours to further loosening gun laws, to arguing about transgender pupils in school bathrooms and to passing a law that sought to make performing almost all abortions a felony. That attempt to criminalise abortion was certain to be struck down as unconstitutional in the courts. Governor Fallin vetoed the law, calling it ambiguously worded. The only doctor in the state senate, a Republican who personally opposes abortion, was crisper in his diagnosis, calling the proposal “insane”. + +Budget negotiations ended without a pay rise for teachers (and indeed resulted in a 16% cut to higher education), so the matter is now in the hands of voters. A bipartisan group wants to ask them to increase education funding by adding a penny in the dollar to state sales taxes in November. Their ballot measure, State Question 779, is backed by a former Democratic governor, David Boren, and a group of business bosses and former members of Ms Fallin’s cabinet. It aims to raise $615m, enough for a $5,000 increase per teacher. Even supporters admit that sales taxes are a clumsy way to raise money, because the poor spend a larger share of their incomes on day-to-day shopping. Mr Boren, an old-fashioned centrist who is now president of the University of Oklahoma, calls sales taxes “regressive” and would have been “thrilled” if lawmakers had acted. Mr Sheehan, another backer of the initiative, worries about the impact on low-income families, though he argues that schools are often their best ladder out of poverty. The ballot initiative amounts to voters telling legislators: “you guys are not doing your job,” says the teacher, who is running as an independent for the state senate in November. + +Mr Boren sees a problem of political culture. For 25 years both Democrats and Republicans have won elections in Oklahoma by promising tax cuts. In the 1990s voters amended the state constitution so the legislature can only increase taxes if super-majorities of three-in-four members agree, or if voters say yes in a referendum. After living through three boom-and-bust commodities cycles, the 75-year-old ex-governor fretted as he saw Republicans cut state income taxes twice, against a backdrop of surging oil production and revenues. “Oklahomans got sold on a free lunch,” says Mr Boren. Businesses wanted a free lunch too, he adds: demanding tax breaks and subsidies, while still expecting a well-trained workforce. Republicans do not wholly disagree. Senator Rob Standridge represents the district that Mr Sheehan is contesting, near Oklahoma City. Though Mr Standridge defends low tax rates, he laments that states get into bidding wars to woo employers: “We spend way too much on incentives.” + +Bound and gagged + +The campaign behind the ballot initiative polled voters to ask if they would tolerate higher income, property or sales taxes to invest in education. Income taxes divided voters along partisan lines, with Republicans rejecting rises. As for property taxes, Oklahomans like them low—Mr Boren links this to their history as land-rich, cash-poor homesteaders. Most backed higher sales taxes. People tell Mr Boren that they like sales tax because “everybody pays it,” unlike fiddlier taxes that the rich can dodge. + +The Oklahoma Council of Public Affairs, a smaller-government group that tried to block the measure in court, says Oklahoma cities could end up with some of the country’s highest sales taxes. It points to polls showing an option that Oklahomans like better: paying teachers by cutting tax credits for wind and renewable energies, and other corporate subsidies. But that risks clashes between special interests: scrapping tax breaks for wind energy is a priority for Oklahoma’s mighty oil and gas industry. + +A narrow question of public policy—how to stop Texas and other neighbours pinching Oklahoma teachers—has exposed broad, not very cheering truths about democracy. Elected politicians have prospered by urging voters to distrust them. Voters duly bound legislators’ hands to limit government mischief. Now Oklahoma is struggling to deliver a policy with near-universal support. Hope that someone learns a lesson from all this. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21699450-what-happens-when-voters-distrust-their-politicians-so-much-they-bind-their-hands-oh/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Mexico’s regional elections: The view from Veracruz + +Bello: Chávez’s little blue book + +Anglo-Argentine relations: Ending estrangement + +Brazilian culture: Way, José + + + + + +Articles Sections Next + +Mexico’s regional elections + +The view from Veracruz + +An electoral contest in a troubled state is a test for the country’s ruling party + +May 28th 2016 | VERACRUZ | From the print edition + + + +VERACRUZ calls itself “four times heroic” to commemorate the occasions in the 19th and 20th centuries on which it resisted foreign assaults. The election campaign taking place in the port city on the Gulf of Mexico, and in the surrounding state of the same name, is less edifying. Héctor Yunes Landa, the candidate of the ruling Institutional Revolutionary Party (PRI) for the governorship of the state, calls his rival, Miguel Ángel Yunes Linares, “a pervert, sexually sick”. He warns voters to “take care of the safety of your children.” Mr Yunes Linares, who leads a coalition that includes the conservative National Action Party and the left-wing Party of the Democratic Revolution, denies reports that he belonged to a paedophile ring. He says his opponent, who is also his cousin, is waging a “dirty war”. + +With 8.1m people, Veracruz is Mexico’s third most populous state. Its mix of cities and rural settlements, indigenous and non-indigenous folk—and its oil, farming and manufacturing—make it a microcosm of the country as a whole. It is also among the most troubled of the 12 states that will elect new governors on June 5th (most are also holding municipal elections, as is a 13th state). Veracruz’s economy has grown the least over the past five years (see chart). It has a reputation for corruption. A federal auditor found irregularities in the use of 14 billion pesos ($1 billion) of federal money transferred to Veracruz in 2014, the highest level of suspect spending in Mexico. + + + +Although the state is not especially violent by Mexican standards, it is perilous for journalists who inquire into allegations of corruption and ties between the government and organised crime. An estimated 18 reporters have disappeared or been murdered during the tenure of the current governor, Javier Duarte, who accuses journalists in turn of consorting with organised crime. Many are afraid to do their jobs. + +Mr Duarte is loathed; his disapproval rating among veracruzanos stands at 83%, by one poll. Mr Yunes Linares has pledged to throw him in jail if he wins. Although the governor cannot run for re-election his unpopularity and the state’s poor economic performance may bring to an end 80 years of unbroken rule by the PRI. Many Mexicans would see in that result a harbinger of the country’s presidential election in 2018. Mexico’s president, Enrique Peña Nieto, belongs to the same party as Mr Duarte and, like him, is widely blamed for corruption and lawlessness (though he is not quite as unpopular). + +In Veracruz, voters may opt for neither of the brawling cousins and choose instead the candidate of the hard-left Morena party, Cuitláhuac García Jiménez. That would give hope to Morena’s populist leader, Andrés Manuel López Obrador, a twice-defeated presidential candidate who plans to run again in 2018. Those with a stake in Mexico’s stability will worry. + +The state elections will not be a straightforward referendum on Mr Peña’s presidency. The PRI, which governed Mexico as a one-party state for most of the 20th century, runs nine of the 12 states being contested, some of them, such as Chihuahua, much better run than Veracruz. The party’s national leader, Manlio Fabio Beltrones, expects the PRI to win nine governorships, though perhaps not the ones it has now. In four states besides Veracruz the PRI has never been out of power. Regional issues will matter more than national ones in most places. But that does not mean that Mr Peña, who cannot run again in 2018, or Mr Beltrones, who may try to succeed him as president, will be able to shrug off losses in Veracruz or the other states where the PRI now rules. + +The mud-fight in Veracruz shows why some voters are disenchanted with mainstream parties, but also why those parties continue to win elections. As its long rule of Veracruz suggests, the PRI remains a formidable machine, sometimes steamrollering legal norms as well as political opponents. A functionary in Veracruz of Prospera, a federal social programme, resigned on May 10th after he was caught on tape discussing how to buy votes for the PRI. “Normal democratic politics are not in place in the likes of Veracruz,” says Jesús Silva-Herzog, a political scientist at Tecnológico de Monterrey, a university. + +The same can be said of some other states. In Oaxaca a tip-off led to the discovery this month of a warehouse packed with fridges, children’s bicycles and groceries, along with PRI campaign literature, apparently intended for distribution to voters. In Tamaulipas 52 candidates for municipal office have quit, saying they were threatened by gangs that back rival candidates. Such episodes help explain why, according to Latinobarómetro, a polling group, just 19% of Mexicans are satisfied with democracy, the lowest level among the 18 Latin American countries surveyed. + +Mr Peña is not a bruiser like Mr Duarte. The president has taken big steps towards modernising Mexico, including opening energy and telecoms to competition and raising standards for state schools. And yet he cannot divorce himself entirely from the sleaze in Veracruz and other states. As a PRI man, he profits from the sharp-elbowed electoral tactics of its operatives. In 2018, the machine will work just as hard for the party’s presidential nominee as it has in the state elections. + +Mr Peña’s standing with voters has been hurt by his mishandling of the murder of 43 students in September 2014, a crime that shocked Mexicans; by a recent double-digit rise in the number of homicides; and by a conflict-of-interest scandal related to the building of his wife’s house. The PRI’s failure to approve a draft anti-corruption bill in Congress in April has opened him, and the party, to accusations that the PRI is blasé about graft. + +In the state of Nuevo León last year Jaime Rodríguez Calderón, better known as “El Bronco”, became the first governor to be elected without the support of a political party. Next month veracruzanos may elect Mr García, the left-wing Morena candidate, who rails against corruption in the parties backing the Yunes cousins. In 2018 voters may turn on the same parties’ candidates in the presidential election. That could let in mavericks, such as El Bronco, or even provide Mr López Obrador with an opportunity to carry out his dangerous programme of left-wing anti-reform. Veracruz, Mexico’s microcosm, may prove to be a model for its future politics as well. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21699489-electoral-contest-troubled-state-test-countrys-ruling-party-view/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +Chávez’s little blue book + +Outsiders should push Nicolás Maduro to hold a recall referendum this year + +May 28th 2016 | From the print edition + + + +TIME was when Hugo Chávez was immensely proud of the new constitution he gave Venezuela in 1999, at the start of his 14 years of rule. He had it printed in a little blue book, and would hand out copies to everyone he met. Now the government of Chávez’s chosen successor, Nicolás Maduro, is tearing it up. + +That process began after an election in December in which the opposition won control of the National Assembly with 7.7m votes (56% of the total). That is a bigger (and fresher) mandate than Mr Maduro’s own. The regime has illegally neutered the assembly. The supreme tribunal, packed with chavista puppets, threw out an amnesty law for political prisoners approved by the assembly, which has the constitutional right to grant one. The assembly has twice used its constitutional power to reject Mr Maduro’s decrees granting himself emergency powers. The president has pressed on regardless. “It’s a matter of time” before the assembly “disappears”, he said this month. + +Article 72 of the constitution declares that all elected officeholders are subject to recall via referendum after the halfway point of their terms. This article is part of Title 4, on political rights. Yet this month Mr Maduro, who won a narrow and disputed victory in a presidential election in April 2013, said that the recall referendum against him, which the opposition demands, was merely “a constitutional option”, not an “obligation”. “There won’t be a referendum” this year, insisted Aristóbulo Istúriz, the vice-president. The timing matters. If the president is recalled in year four of his term, a new election follows; if it is later, the vice-president, who is appointed by the president, serves out the term. The electoral authority, which in practice acts as a branch of the government, is stalling the referendum process. + +Why is Mr Maduro ripping up Chávez’s little blue book? Venezuela is in desperate straits, because of the fall in the oil price and years of mismanagement. As it struggles to avoid a debt default, which would cut off credit to the oil industry, Mr Maduro’s government has applied a python squeeze to imports. Coca-Cola this week announced it would halt production in the country because of sugar shortages. Many Venezuelans spend hours queuing for the scarce food available at officially controlled prices. Patients are dying needlessly because of shortages of drugs. + +The government knows it would almost certainly lose a referendum. Datanalisis, a pollster, finds that 64% want Mr Maduro to go. Electoral defeat would destroy the founding myth of chavismo: that it embodies a popular revolution. Mr Maduro would prefer to be pushed out by a military coup, which would make him a victim, argues Henrique Capriles, the opposition presidential candidate in 2013. Many analysts believe that the regime’s strategy is to hang on until 2017, in the hope that the oil price will continue its recent partial recovery and/or with a view to replacing Mr Maduro but keeping power. + + + +In graphics: A political and economic guide to Venezuela + +In ignoring the demand for political change the regime is “playing with fire”, Margarita López Maya, a Venezuelan political scientist, told Prodavinci, a website. On the streets, desperation is mounting. Incidents of looting rose in March and April, to more than one a day. Although the security forces usually react swiftly, on May 11th a wholesale market in Maracay, about 80km (50 miles) west of Caracas, was looted for three hours. + +Mr Maduro’s strategy depends on military support. Many officers are involved in business, legal and illegal. They and the president are “hostages to one another”, says Ms López. Some in the army are worried. Two retired generals who were close to Chávez recently called for the referendum to take place. + +To deny Venezuelans a recall referendum in 2016, wrote Luis Almagro, the secretary-general of the Organisation of American States (OAS), in an open letter to Mr Maduro this month, “would make you just another petty dictator”. Changes of government in Argentina and Brazil have deprived Mr Maduro of allies. Several countries in the region are calling for dialogue in Venezuela. But Mr Maduro has shown he is not interested in talks he cannot control. A diplomat from the Vatican this month cancelled a trip to Venezuela. According to a source in Caracas, that was because Mr Maduro rejected a five-point plan for mediation by the pope. + +Mr Almagro has proposed invoking the OAS’s Democratic Charter, which could lead to Venezuela’s suspension from the organisation. He may not have the votes to make that happen. But absent a referendum, it is the right course. Latin America’s tacit acceptance of unconstitutional government in Venezuela sets a dangerous precedent. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21699492-outsiders-should-push-nicol-s-maduro-hold-recall-referendum-year-ch-vezs-little-blue/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Anglo-Argentine relations + +Ending estrangement + +A new start for an old relationship + +May 28th 2016 | BUENOS AIRES | From the print edition + +Don’t chime for me, Argentina + +WITH its green bell tower and royal coat of arms, the Torre Monumental in Buenos Aires would not look out of place in a British market town. The 60-metre (200-foot) Palladian clock tower was a gift from the city’s British community to mark the centenary of Argentina’s 1810 revolution (though it was completed in 1916). On May 24th this year around 200 people gathered to commemorate its centenary. + +The celebration comes at a rare moment of warmth in Anglo-Argentine relations. Argentina’s newish president, Mauricio Macri, has reasserted his country’s claim to the Falkland Islands (known in Argentina as the Malvinas), which belong to Britain. But, unlike his pugilistic predecessor, Cristina Fernández de Kirchner, he wants to co-operate with Britain on such areas as trade and fighting drug-trafficking. Argentina’s foreign minister, Susana Malcorra, met her counterpart in London on May 12th, the first such meeting since 2002. Flights to the Falklands may resume after a 13-year interruption. + +A hundred years ago Britain and Argentina were complementary economic superpowers. Britain built Argentina’s railway, which helped make Argentina one of the world’s ten richest countries, and bought 40% of its exports, mainly beef and grain. In 1914 Harrods, a fancy department store, opened its first overseas branch in Buenos Aires. + +Signs of this former commercial camaraderie are everywhere. Red post boxes appear on street corners. Football, the national sport, is an English invention, as are some Argentine teams. The original Newell’s Old Boys, Lionel Messi’s first club, were the pupils of a Kent-born teacher. Posh porteños (Buenos Aires residents) play cricket at the Hurlingham Club. + +The Falklands war, triggered by Argentina’s invasion of the islands in 1982, ended the bonhomie. Signs of Britishness were expunged. Bar Británico, once frequented by British railway workers, changed its sign to read Bar tánico. The Torre de los Ingleses became the Torre Monumental. + +Diplomatic relations were restored in 1989 but Ms Fernández and her late husband, Néstor Kirchner, who was president before her, interrupted the rapprochement. In 2012 Argentine veterans broke into the tower. Now the city government wants to repair the damage. Mr Macri hopes to do the same for Argentina’s battered relationship with Britain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21699488-new-start-old-relationship-ending-estrangement/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brazilian culture + +Way, José + +A guide to cutting corners + +May 28th 2016 | SÃO PAULO | From the print edition + +BRAZILIANS delight in Portuguese words that seem to have no equivalent in other languages. Saudade is yearning for an absent person or a place left behind. Cafuné is the act of running one’s fingers through a lover’s hair. More newsworthy is jeitinho, a diminutive of jeito (“way”). It is a way around something, often a law or rule. The impeachment of Dilma Rousseff, an unpopular president who has not personally been accused of serious wrongdoing, is a jeitinho around the constitution. (Many of the politicians who voted to impeach her are themselves indefatigable explorers of such byways, for example around campaign-finance laws.) + +Jeitinho, which has connotations of ingenuity as well as illegality, is a marker of national identity, says Livia Barbosa, an anthropologist. Two-thirds of Brazilians confess to seeking out such shortcuts, according to a survey conducted in 2006 by Alberto Almeida, a political scientist. Daily life is criss-crossed with them. A restaurateur offers policemen a packed lunch to entice them to patrol his street, saving 10,000 reais ($3,000) a month in private-security fees. Laranjas (“oranges”) act as cut-rate shell companies, hiding business activities from taxmen and investigators. + +To spare busy students from having to accept internships, required for many university courses, professors approve fictitious ones, complete with made-up reports. Brazilians bring along children or old people to jump queues at banks, clinics and government offices; some parents lend out their children for that purpose. The material world has its own sort of jeitinhos, jury-rigged contrivances called gambiarras. An iron could serve as a skillet; a sawed-off styrofoam cup, affixed to a fork, becomes a spoon. + +Keith Rosenn, a legal scholar at the University of Miami in Florida, points out that in the parts of Latin America governed by Spain rule-bending was tolerated. Charged with executing laws ill-suited to local conditions, colonial administrators could tell the king, obedezco pero no cumplo (I obey but do not comply), without fear of punishment. Though Portugal’s monarchs offered their Brazilian “captains” no such leeway, they took it anyway. Hence, the resort to jeitinho. Modern laws are no more sensible. Brazil passed more than 75,000, many of them pointless, in the ten years to 2010. More than half of Brazilians think there is little reason to comply with many of them. + +Some scholars think that Catholics, tempted to regard confession as an alternative to compliance, are especially prone to jeitinho-like behaviour. Others suggest that mestiço (mixed-race) societies like Brazil’s are liable to be flexible, about the law as much as ethnicity. Perhaps inequality plays a role: the rich and powerful flout the law, so why shouldn’t ordinary folk? + +That may be getting harder, and not just for politicians caught up in the judiciary’s unrelenting investigation into the bribery scandals surrounding Petrobras, the state-controlled oil company. Nowadays, cameras rather than police officers enforce speed limits. E-Poupatempo (e-save time), an internet portal set up by the state of São Paulo, expedites such tasks as filing police reports. It allows little scope for jeitinho. Roberto DaMatta, an anthropologist, thinks Brazil may be moving towards Anglo-Saxon norms, in which laws “are either obeyed or do not exist”. If that happens, the satisfaction many Brazilians will feel may be tinged with saudades. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21699494-guide-cutting-corners-way-jos/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +America and Vietnam: Pull the other one + +War in Afghanistan: Taliban reshuffled + +India’s deep south: Southern comfort + + + + + +Articles Sections Next + +America and Vietnam + +Pull the other one + +America’s president plays the Vietnam card + +May 28th 2016 | SINGAPORE | From the print edition + + + +BARACK OBAMA fooled no one this week when, having announced that America was lifting its embargo on selling weapons to Vietnam, he denied that the decision was “based on China or any other considerations”. It was a tactful fib, to portray the move as merely part of Mr Obama’s legacy-building mission of reconciliation with historic enemies, to be followed days later by a historic visit to the site of America’s atom-bombing of Hiroshima. But at a time of increased tension in the South China Sea, where Vietnam is among the countries disputing territory with China, America’s policies there are bound to be seen in a different context. The headline in Global Times, a fire-breathing Chinese tabloid, read simply: “Washington uses past foe to counter China”. + +The American president made his announcement a few hours into his first state visit to Vietnam, following a meeting with the country’s new president, Tran Dai Quang, in Hanoi. Official enthusiasm was mirrored in the thick crowds lining the streets in the capital and in Ho Chi Minh City to greet Mr Obama, whose visit between May 23rd and 25th was only the third by an American leader since the end of the Vietnam war in 1975. His star power contrasted with the indifference most Vietnamese show for the stiff apparatchiks of the ruling Communist Party. Locals in Hanoi gawped at Mr Obama tucking into bun cha, a cheap meal of grilled pork and rice noodles bought from a street stall. + +The end of the arms ban will have little immediate impact. America had already twice loosened it, first in 2007 and again in 2014, allowing the sale of needed patrol vessels. It will take years for the Vietnamese, short on cash and largely reliant on Russian weaponry, to integrate American hardware. Moreover, weapon sales to Vietnam (like to anywhere else) will still need to be approved case by case, and the first purchases are likely to be of relatively inoffensive systems, such as radar. China’s press has warned that America risks turning the region into a “tinderbox of conflicts”, yet its diplomats, not normally slow to accuse America of stoking tensions, played down the decision. A spokeswoman for the foreign ministry welcomed the normalisation of ties between Vietnam and America, and painted the arms ban as a kooky anachronism. + +America’s move is partly a sop to conservative factions within Vietnam’s Communist Party in need of reassurance. Behind this week’s smiles they still fret that America harbours hope of overthrowing the party. Bigwigs in government feel bounced into their friendship with America by virulent anti-Chinese sentiment among ordinary Vietnamese, some of whom accuse the cadres of going soft on Vietnam’s overbearing northern neighbour. Trust earned by dropping the embargo might eventually gain advantages for America’s own armed forces, such as a return to Cam Ranh Bay, once an American naval base on the south-eastern coast. + +America had previously insisted that lifting the embargo would depend on Vietnam’s progress on human rights, which even Mr Obama admits has been only “modest”. The regime’s thuggishness makes even a largely symbolic concession hard to swallow. The party was seen to have eased up on critics during 2015, when it was negotiating access to the American-led Trans-Pacific Partnership (TPP), a free-trade deal—but it has since reverted to form, and its new leadership, reshuffled in January, contains several former secret policemen. Mr Obama’s arrival in Vietnam coincided with a ludicrous parliamentary “election”, boasting a 96% turnout, and with a crackdown on environmentalists who have been gathering in the cities to protest about polluted canals and seas. The authorities even sabotaged Mr Obama’s efforts to meet critics of the party by briefly detaining several campaigners whom the president had invited to his hotel for a chat. + +China plays the Gambia gambit + +Boosters say that improving Vietnam’s human-rights record is bound to be a long slog, and that gaining the regime’s trust is a prerequisite. They say that arms sales are far from America’s only bargaining chip: the terms of the TPP, for example, oblige Vietnam to begin tolerating independent unions, a reform that could loosen the Communists’ monopoly on public life. But that deal will have no impact if, as seems all too possible, America’s Congress refuses to ratify it. + + + +So Mr Obama is taking the long-term view that closer partnership with Vietnam is worth sacrificing some principles for. America and its regional friends are alarmed by China’s forcefulness in the South China Sea—notably its building boom, turning disputed rocks and reefs into artificial islands, which may well, despite Chinese denials, become military bases. Both diplomacy and American displays of might have failed to stop this. + +America currently has an aircraft-carrier battle group in the South China Sea to remind the world of its military strength. To Chinese protests, it has sent ships and planes close to Chinese-claimed rocks and reefs. Meanwhile, the Philippines has challenged China’s territorial claims at an international tribunal in The Hague, which is expected to rule soon. China has said it will ignore the ruling. The Philippines’ new president, Rodrigo Duterte, has not made clear how he would react to a decision in his country’s favour. + +Although nobody expects America and China to go to war over some remote rocks and man-made islands, an accidental clash in or over the South China Sea remains a risk. On May 17th Chinese fighter jets dangerously intercepted an American reconnaissance plane over the sea. China denies its planes did anything provocative. + +China does seem to worry about its image, however. Its foreign minister, Wang Yi, recently toured the smallest South-East Asian countries—Brunei, Cambodia and Laos—and announced that China had reached “consensus” with them on handling disputes in the sea. This was news to the countries concerned, and alarmed their fellow members of the Association of South-East Asian Nations, who saw a blatant attempt to divide them. China has also lobbied G7 countries in the hope that the statement their leaders issue on May 27th after their summit in Japan will not scold China over the South China Sea. Already China’s newest diplomatic partner, the Gambia, in distant west Africa has, bizarrely, confirmed China’s “indisputable sovereignty” over the sea. So that’s that, then. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21699475-americas-president-plays-vietnam-card-pull-other-one/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Taliban reshuffled + +All latest updates + +Taliban reshuffled + +The divided terrorist group will press on with its spring offensive in Afghanistan + +May 25th 2016 | ISLAMABAD AND KABUL | Asia + +Out of a clear blue sky + +FOR the second time in under a year, senior men from the Afghan Taliban have descended on Quetta, capital of Balochistan, the largest but least populated of Pakistan’s four provinces, to elect a new supreme leader. The first time was hurriedly to choose a successor to Mullah Muhammad Omar, the Taliban’s founding leader, after attempts to hide his death in a Karachi hospital two years earlier were exposed. But now that successor, Mullah Akhtar Mansour, who was involved in the cover-up of Omar’s death and in a ruthless purge of rivals afterwards, is himself dead. He was killed on May 21st, on a lonely road in Balochistan, by an American drone. + +For his Pakistani hosts, Mullah Mansour’s death has embarrassing echoes of Osama bin Laden, who was killed by American special forces five years ago in his secret home near a Pakistani military academy. But Mullah Mansour was no fearful recluse. He had the backing of a Pakistani state that gives sanctuary to Taliban leaders as a means of maintaining influence in Afghanistan. And whereas American drone strikes against militants in the tribal area of North Waziristan are long-established and carried out under rules secretly agreed with Pakistan, Balochistan was considered to be off-limits. No longer. The Americans, whose strikes are usually clandestine, were quick to announce Mullah Mansour’s elimination (so much for Pakistani feelings). They said he was an “obstacle to peace and reconciliation” who had stopped more reasonable Taliban leaders from “participating in peace talks with the Afghan government”. + +Mullah Mansour got about. On his final day he had travelled 450 kilometres (280 miles) by taxi from the border with Iran (he was struck shortly after stopping for lunch). His Pakistani passport (under an assumed name) that was found at the scene showed that he had also frequently flown from Karachi to Dubai and Bahrain. That American spooks tracked him after a lengthy stay in Iran may lead comrades to wonder about traitors in their midst. + +In Afghanistan, people sick of endless Taliban attacks emanating from Pakistan were delighted. Afghan leaders had long wanted America to take the war against the Taliban to Pakistan. That it has now done so is a boost for President Ashraf Ghani. His attempts to befriend Pakistan in hopes of support for peace talks earned him scorn at home. The talks have gone nowhere, violence has escalated and the Taliban have grabbed more territory than at any time since their ouster in 2001. + + + +The peace talks, hosted by Pakistan in the capital, Islamabad, involve Afghanistan, America and China. But in five meetings, there has been ever less to talk about. Mullah Mansour was more interested in sending militants to Kabul than envoys to the talks (in April over 60 Afghans were killed in one attack alone in the Afghan capital). The Afghan government, believing Pakistan had promised to use force against “irreconcilable” insurgents, did not even bother to send a senior official, bar its ambassador, to the last meeting on May 18th. It is not clear how much of a reputation Pakistan can salvage as a self-proclaimed peace broker, especially as Mullah Mansour’s sojourns in Iran suggest that he may have been slipping from the Pakistani orbit. Some in the Pakistani establishment may even have been happy for the Americans to kill him. + +But America remains royally fed up with Pakistan, not least because of its reluctance to go after a key Taliban ally, the Haqqani network, sheltering in North Waziristan. In February the American Congress refused to give Pakistan financial help to buy eight F-16 fighter jets. As for China, a key Pakistani ally, it has promised billions of dollars in roads and more, but is likely to remain uncomfortable about its investments until the region’s Islamist insurgencies are stamped out. Meanwhile, on May 23rd the leaders of Iran, India and Afghanistan signed a deal to create a transit hub at the Iranian port of Chabahar on the Arabian Sea. That would challenge Pakistan’s own port joint-venture with the Chinese at Gwadar, 170km farther east. + +On May 24th the Taliban appointed as their new leader Haibatullah Akhundzada, a former head of the courts with little military experience but with a line in fatwas endorsing executions and amputations. He inherits a death sentence from America, and a squabbling outfit at war with itself as well as with the Afghan government and its sponsors. + +Mullah Mansour was viewed by some field commanders as being too close to Pakistan. Mr Akhundzada may need to prove his credentials by redoubling a Taliban offensive in Afghanistan that has been raging since last summer. With the spring fighting season under way, and a profitable opium harvest gathered, the Taliban are well placed to tighten their pincer around Lashkar Gah, the capital of Helmand province in the south, and to expand their offensive in the north. They may even attempt to retake Kunduz, the northern provincial capital that was briefly captured last year. Peace will have to wait. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21699408-americans-killing-mullah-akhtar-mansour-will-deepen-divisions-within-taliban-not-end/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +India’s deep south + +Southern comfort + +Tamil Nadu and Kerala dance to a different tune from the rest of India + +May 28th 2016 | COIMBATORE | From the print edition + +Coimbatore: bobbin and weavin’ + +MAHATMA GANDHI would not have enjoyed Texfair 2016 in Coimbatore in the southern state of Tamil Nadu. The man hated machines and factories, and promoted Indian independence by urging every household to spin its own cotton yarn. But on display at the textile fair were bobbins, rollers, waste balers, quality-control sensors and much, much more. + +Indeed, India is vying with China to be the world’s biggest producer of yarn, with over 45m spindles twirling around the clock. But what is striking about the trade fair is how so much of the modern wizardry on show is made not in better-known industrial centres around the world but in Coimbatore itself, a city of just 1.6m some 500 kilometres (310 miles) south-west of Chennai, the Tamil Nadu capital. + +The fast-growing city is an inelegant sprawl stretching into groves of coconut palms. It teems with technical institutes, bustling factories and civic spirit. Earnest and ambitious, Coimbatore evokes the American Midwest of a century ago. A regional manufacturers’ group that was founded in 1933 during Gandhi’s homespun campaign has now designed, built and marketed a hand-held, battery-operated cotton picker that it claims is six times more efficient than human fingers. + +Gandhi would have been appalled. But the gadget says something about the quiet success of parts of India’s deep south. Mill owners worry that with day wages in Tamil Nadu and neighbouring Kerala to the west now far higher than those in northern India, local cotton may grow uncompetitive. Tea planters in the hills west of Coimbatore are already squeezed. One landowner, in Kerala’s Wayanad region, where silver oaks shade trim ranks of tea bushes, says that his pickers get 300 rupees (about $4.50) a day, nearly three times the wage in Darjeeling in India’s north. + +It may not sound like much, but it is also more than the average Indian earns. And as a whole, GDP per person in Tamil Nadu and Kerala is 68% and 41% higher respectively than the national average of $1,390 a year. With the south’s booming new industries, better education and higher wages contrasted with declining industries in the north and east, India is undergoing a shift a bit like the American one from the rustbelt to the sunbelt in the 1980s. Kerala shares in this new industrialisation less than Tamil Nadu, but that is balanced by another source of prosperity: remittances from abroad. As many as one in ten of Kerala’s 35m people work in the rich Arab countries of the Persian Gulf. Their remittances boost local incomes, property prices and demand for better schools. Kerala, under leftist governments for the past six decades, already has India’s best state education and its highest literacy rate. Its school district has again topped nationwide exams for 17-year-olds, followed by Chennai region, covering the rest of southern India. + +Yet India’s deep south has not transmuted growing prosperity into greater political clout. It remains largely aloof from broader political trends, including a slugging match between the Bharatiya Janata Party (BJP), in office nationally under Narendra Modi, the prime minister, and Congress, the once-dominant centre-left party that worships Gandhi. In elections across four Indian states that wrapped up on May 19th, attention elsewhere focused largely on the fortunes of those two parties. The BJP’s capture from Congress of Assam in the north-east was seen as a big boost for Mr Modi. Congress’s failure to take any state was seen as a sign of decay. + +Voters in both Kerala and Tamil Nadu, which has 72m people, paid hardly any attention at all. In both states the contest was between long-established state-level parties. Keralites and Tamils alike admit that in terms of policy not much distinguishes the rival parties. For a generation, power in Kerala has alternated between two left-of-centre coalitions. Tamil Nadu, meanwhile, has been in thrall to parties that both make “Dravidian progress”—a reference to South India’s linguistic and racial separateness from the “Aryan”, Hindi-dominated north—part of their name. + + + +A continent masquerading as a country: Explore India in our interactive map + +Elections are often bidding wars. In Tamil Nadu this has meant offers of household goods or simple cash. The favoured lure in Kerala, where politics is so staid that rival party bands traditionally deliver a joint crescendo in village squares to mark the end of campaigning, has been promises of ever more generous welfare. + +In practice, voters often punish the party in power. But this year voters in Tamil Nadu re-elected the incumbent government for the first time in a generation. The AIADMK, whose boss is a former actress known as Jayalalithaa, had the stronger party machine and a track record of generosity. It secured victory over the DMK, from which it split in 1972. The outcome in Kerala was more traditional. The corruption-tainted ruling coalition, led by a local affiliate of Congress, was trounced by the communist-led Left Front. + +Interestingly, gains were made by a newcomer to Keralite politics since the last state elections in 2011: Mr Modi’s BJP. It picked up just one seat in the 140-member state assembly, but almost doubled its proportion of votes, to 15%. To some, the Hindu-nationalist party’s entry reflects the impatience of Kerala’s growing (and mostly Hindu) middle class with the handout politics that tends, on paper at least, to favour religious minorities in a state that is 27% Muslim and 18% Christian. But Keralites fed up with both Congress and the hammer-and-sickle mob, both of which have failed to foster industrialisation and jobs, may have felt they had nowhere else to go. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21699490-tamil-nadu-and-kerala-dance-different-tune-rest-india-southern-comfort/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Retirement: China’s Florida + +Social media: The dark art of astroturfing + +Banyan: Rocking boats, shaking mountains + + + + + +Articles Sections Next + +Retirement + +China’s Florida + +People used to retire where they lived and worked. That is beginning to change + +May 28th 2016 | SANYA | From the print edition + + + +THE cheongsam modelling contest starts at 7pm; at 8pm it is group dances in the style of ethnic Uighurs from China’s far west, and of fan-waving north-easterners from provinces adjoining Russia and North Korea. Participants and spectators alike are pensioners: retired miners, teachers and industrial workers. They sit in the evening cool, gossiping and applauding. A man in a Hawaiian shirt keeps the beat with castanets. Fei Liyue, a former construction manager, says that he and his relatives come every evening. He is 3,200km (2,000 miles) from his home in the bleak oil city of Daqing. + +Almost everyone is, like Mr Fei, from the rust belt of the north-east, a region that is gripped in winter by an Arctic chill. But the scene here is by the beach in the subtropical city of Sanya in Hainan, an island province as far south from their native region as it is possible to go without leaving the country (see map). Palm fronds and bougainvillea rustle in the breeze. Bikini-clad tourists dash by. The crowds of elderly visitors (some are pictured) are something new in Sanya. They may herald a profound social change. + + + +Chinese people used to live, work, retire and die where they were born. The country’s filial traditions reflect this: children are supposed to look after their parents. The bureaucracy enforces it: everyone has a hukou (household registration) which provides subsidised health and education, almost always in a person’s place of birth. + +Thanks to the migration of workers, however, 260m people, about one-fifth of the population, now live somewhere other than their birthplace. In the past five years, the pattern of retirement has also begun to change. Increasing numbers spend some or all of their pensionable years away from where they used to work. Neither filial tradition nor the hukou system have proved strong enough to prevent this. + +In the 1950s and 1960s Americans flocked from cold industrial cities, such as New York and Chicago, to subtropical Florida. Now Chinese people are moving from the industrial heartland of Heilongjiang, Jilin and Liaoning (the three north-eastern provinces) to Hainan. And just as movement to America’s sunbelt helped transform a backward region, so the same thing could happen in China. + +Fifty years ago Sanya was a small fishing village. Ye Yaer, who was born there in 1961, survived on discarded ends of sugar cane and did not get a pair of shoes until he was 12. Every day his mother walked 25km to the nearest market town, carrying those of her children too young to walk as well as 20 kilos of fish to sell. Now Mr Ye is a successful fish-dealer whose business extends across southern China; Sanya is full of five-star resorts. And as happened in Florida, a retirement business is being built on the back of Hainan’s tourism. + +According to Sanya’s government, 400,000-500,000 pensioners head to the city each year, perhaps half of them from the north-east. That compares with the city’s total population (those resident for six months or longer) of 749,000. The incomers are not the new rich. Huang Cheng of Sanya University says one-third of the sun-seeking pensioners have a monthly income of 2,000-3,000 yuan ($305-460), about the average for a working person. A quarter receive only 1,000-2,000 yuan a month. Most come for six months and return to the north-east in summer. “It’s too hot here then,” says Mr Fei, the oil-city man, though he admits he is thinking of settling in Sanya full-time. Rather like Florida’s “snowbirds”, many rent an apartment just for the winter. + +Fewer than 100,000 migrant pensioners live on the island year round, thinks Mr Huang. But there are signs that more are settling. Half of those he interviewed said they had bought property in Sanya. The number staying permanently started to soar in 2010 when the city’s retirement boom began. Hua Hong Investments, a local property company, is about to open the city’s first American-style residential care home, with medical services, an indoor golf driving-range and calligraphy classes. + +The winter pensioners are “awesome”, enthuses Wu Qifa, a farmer in Danzhou, a village on the edge of Sanya, who rents out rooms to them. “We couldn’t survive without them.” The village pharmacy is unusually well stocked with heart medicines, blood-pressure pills and pain relief for knee and hip joints. + +Li Wen, from Heilongjiang, followed the seniors down to Sanya and opened a restaurant there offering north-eastern cuisine. It has been doing a roaring trade, he says, though this year business has slackened, reflecting an economic slowdown in the north-east. Thanks to tourism and the retirees, Sanya’s economy grew more than tenfold between 2000 and 2013, almost twice as fast as the country as a whole. + +But with so many moving in, problems are inevitable. Medical services—poor at the best of times—are overwhelmed in winter. Doctors among the retired visitors have been drafted in to help. Everyone complains about traffic. In winter the price of vegetables typically doubles, and that of seafood triples, says Mr Huang. In summer most pensioners go home, hurting firms that cater to them. + +Not surprisingly, given the pressure on public services, relations between locals and the newcomers are “sensitive”, say volunteers at the Sanya Association for Resettling Retirees. “I would as soon befriend an Iraqi as a north-easterner,” fumes one Sanya resident. It did not help when in 2014 Li Boqing, a deputy mayor who is himself from the north-east, said that: “If immigrants left the city, Sanya would become a ghost town overnight.” + +The city government, however, does not want its hospitals and roads clogged up, and so is trying to control the flood of incomers. One method is requiring that new apartments be 80 square metres or larger. Typically, pensioners rent spaces far smaller than that. There are other factors that may curb the influx. Huang Huang of the China Tourism Academy in Beijing says that those in early retirement (which usually begins at the age of 60 for men, 55 for female civil servants and 50 for other women) will normally be well enough to seek a cleaner, warmer environment away from their children. As they become less active, however, many will migrate back to be near their families. At the last stage, when they need frequent medical assistance, they will probably enter old-age institutions. It is unclear whether the government will build these in big population centres or in places like Sanya. + +Pensioners themselves are looking beyond Sanya’s overcrowded streets. Some are moving to villages along the coast, or hill towns in Yunnan, a subtropical province on the mainland. In Guangxi province, bordering on Yunnan, the village of Bama attracts those keen to learn the secret of longevity—it is said to have an unusually large population of centenarians. + +China has about 220m people over 60. If they prove as mobile as American retirees (1.1% of whom move from one state to another each year), that would mean over 2m pensioners upping sticks annually, potentially making a huge difference to the economies and social structures of their destinations. To judge by the experience of Sanya, few places are ready for it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21699471-people-used-retire-where-they-lived-and-worked-beginning-change-chinas-florida/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Social media + +The dark art of astroturfing + +On the internet, nobody knows you’re a running dog + +May 28th 2016 | BEIJING | From the print edition + + + +“THE people’s police love the people, the people love the people’s police” is a well-known ditty that officials claim is cherished and accurate. Earlier this month, however, Global Times, a newspaper in Beijing, said that police were struggling to convince the public that they had acted properly in the case of a 29-year-old man who died in the capital while in their custody. Disdain for and distrust of the police is, in fact, widespread. But it is rare for an organ so closely linked to the Communist Party to admit that officers have a credibility problem. + +Police said they had detained the man, Lei Yang, on May 7th during a raid on a brothel; that he had resisted arrest and died of a heart attack. His family and friends used social media to challenge this account. They said that Mr Lei was fit and had no record of heart trouble; that he was on his way to the airport to pick up relatives when he disappeared; and that timings and other details given by the police were implausible. These counterclaims created a firestorm online, and even in state-linked media. + +The case is the latest illustration of how social media—despite huge efforts by the government to block access to online information that it considers sensitive—play an important role in China’s public and political life. Censors tried hard to delete posts critical of the police handling of Mr Lei’s case. But it proved impossible to keep up with the deluge. + +Such efforts by the censors are relatively easy for internet users to detect. More difficult to monitor are the government’s attempts to influence online discussion by intervening surreptitiously with posts and comments they disguise to look like they come from the public. A new study published by Harvard University offers a rare analysis of how this works. On the basis of a leaked e-mail archive from a local government’s propaganda office, the authors conclude that 488m such bogus posts appear each year, about one out of every 178 of the messages that are posted each year on commercial sites. + +Contrary to popular belief, those involved in this effort avoid arguing with sceptics of the government. Instead, the scholars write, they try to distract the public and change the subject. Most of their posts gush with praise for China, the party or other symbols of the regime (such as the much-loved police). + +The authors describe this as a “massive secretive operation”. But its existence has long been suspected. The government’s online cheerleaders are commonly disparaged as belonging to the “50-Cent Party”, a reference to the amount, equivalent to eight American cents, that they are rumoured to receive for each pro-government post. The scholars believe, though, that most 50-centers are government or party officials, and that they are paid nothing extra for their online scribblings. + +Their posts were clearly of little use during another recent scandal that came to light thanks to a furore on social media. It involved the death of a student who spent vast sums of borrowed money for an ineffective course of cancer treatment at an army hospital. He had learned about it from Baidu, China’s largest search engine, which did not make clear that advertising payments skewed its search results. + +In an e-mail reportedly sent to his staff Baidu’s CEO, Robin Li, wrote that as a result of the scandal, Baidu faced a crisis in public trust. “Baidu could go bankrupt in just 30 days if we lose our users’ support,” he wrote. The episode was a huge embarrassment to the party too. But if its leaders have the same worries as Mr Li, they have yet to become public. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21699481-internet-nobody-knows-youre-running-dog-dark-art-astroturfing/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Rocking boats, shaking mountains + +To bewilderment in China, neither Hong Kong nor Taiwan seems to want to follow its script + +May 28th 2016 | From the print edition + + + +THE “China dream” of the president, Xi Jinping, is of a rejuvenated, rich and strong country that will once again enjoy the respect and fealty in Asia commanded by the empires of old. That last part is not happening: from a recalcitrant young despot, North Korea’s Kim Jong Un, on its north-eastern border, to those ungrateful Vietnamese Communists to the south, flirting with America, insolent insubordination abounds. And perhaps most alarming of all, the people of “inalienable” territories wrested from the motherland by predatory imperialists—Hong Kong and Taiwan—show no enthusiasm at all for a return to its bosom. + +Events in recent weeks have highlighted China’s difficulties in both places. In Hong Kong a visiting senior official from Beijing, Zhang Dejiang, had to scurry around under high security to avoid meeting protesters. Paving stones were glued down in case they became projectiles. And in Taiwan President Tsai Ing-wen, at her swearing-in on May 20th, rejected months of intense Chinese pressure to pay lip service to the notion that there is “one China”. + +Mr Zhang presented a friendly face in Hong Kong, prompting the Big Lychee, an acerbic local blog, to note: “Few sights are more painful to behold than a senior Chinese Communist Party official attempting to be nice. They do it with undisguised distaste, only when the usual thuggish methods like violence and bribery have failed.” As for Ms Tsai’s performance, China did not mask its disappointment. Its Taiwan-affairs body, unabashed at treating a popularly elected leader like an underperforming fourth-grader, called it “an incomplete test answer”. Some democracy-loving Chinese citizens showed more sympathy, with supportive posts online (soon deleted), and a rally (soon dispersed) by a handful of people in the city of Chongqing to mark the inauguration. + +In Hong Kong and Taiwan China’s tactics are much the same. It uses economic sticks and carrots combined with occasional heavy-handed displays of power. It ignores or suppresses views it does not like and appeals to pan-Chinese patriotism. But it should know by now that these methods do not work. For example, to help Hong Kong recover from the SARS epidemic in 2003, China eased restrictions on the numbers of mainland visitors. The resulting throngs of Chinese tourists soon became yet another of the locals’ grievances. Similarly, in Taiwan, a massive expansion of trade and tourism links with China under Ms Tsai’s predecessor, Ma Ying-jeou of the Kuomintang (KMT), caused huge protests in 2014. Yet Mr Zhang spent his time urging Hong Kongers to focus on the economy and not to “rock the boat”. He dodged issues that have angered people, notably China’s refusal to allow proper elections for Hong Kong’s chief executive. That decision, also in 2014, triggered large demonstrations, too. + +China’s approach to Ms Tsai suggests it has few new ideas, either, on how to handle Taiwan. She was elected in January despite China’s warnings. It abhors her Democratic Progressive Party, which leans towards formal as well as functional independence from China. So China insists that Ms Tsai must accept what is known as the “1992 consensus”—that there is only “one China”, however defined, of which Taiwan is part. Mr Xi last year thundered that if Taiwan rejects this “the earth will move and the mountains shake.” To emphasise the point, last November he made a remarkable concession for a Chinese leader by travelling to Singapore to meet Mr Ma, then Taiwan’s president. That was a reminder of the importance to China’s leaders of reclaiming Taiwan: the unfinished item in its agenda of national recovery from a “century of humiliation”. Since 1981 they have been trying to woo Taiwan with a “one-country, two-systems” arrangement comparable to the one later offered to Hong Kong, but giving Taiwan even greater leeway. Hong Kong’s enjoyment of 50 years of autonomy after its reversion to Chinese sovereignty in 1997 was supposed to be an advertisement of the advantages of this arrangement. It has turned instead into a warning of its dangers. + +Since January, China has turned to its usual battery of economic, diplomatic and strong-arm methods to bring Ms Tsai into line. Tour operators report a sharp drop in the number of Chinese tourists. China has signalled an end to the “diplomatic truce” it had been observing by not competing with Taiwan for recognition from poor countries: in March it established ties with Taiwan’s former partner, the Gambia. It has also bullied Kenya into sending Taiwan citizens, detained on suspicion of fraud, to China. And, just before Ms Tsai’s swearing-in, it staged military exercises on the coast opposite Taiwan, as if rehearsing an invasion. + +The pageantry around the inauguration included a re-enactment of the brutal suppression of an uprising against mainland (then KMT) rule in 1947—a defining event for the island’s independence movement. But in her speech Ms Tsai bent over backwards to keep to her promise not to upset the status quo. She even acknowledged the “historical fact” of the meeting in 1992 at which the alleged consensus was reached. But she did not repeat the “one China” fiction. Struggling to appease both her pro-independence supporters and Taiwan’s domineering neighbour, she gave neither quite what they wanted. + +Straitened circumstances + +It is Hong Kong that seems to be learning from Taiwan, not the other way round. A small but vocal independence movement has sprung up there. But China is not changing course in either place. Its response to Ms Tsai’s speech was to resort to threats about cutting off contacts and to belittle her. The lack of specifics, however, has left China room for manoeuvre. It would be heartening to think that this means China’s leaders realise that the best way to win hearts and minds in Hong Kong and Taiwan is not to bribe, browbeat and bully, but to make China itself look a more attractive sovereign power. More likely, however, is that China has too many problems to deal with, at home and on its periphery, to risk another crisis in the Taiwan Strait just now. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21699480-bewilderment-china-neither-hong-kong-nor-taiwan-seems-want-follow-its-script-rocking/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Iranian politics after the nuclear deal: Who’s in charge? + +The campaign against Islamic State: Fallujah, again + +Israeli politics: He’s back! + +Tanzania: Government by gesture + +Reading the Torah in Abuja: Who wants to be a Jew? + + + + + +Articles Sections Next + +Iranian politics after the nuclear deal + +Who’s in charge? + +The supreme leader is clipping the wings of the reformist president + +May 28th 2016 | TEHRAN | From the print edition + + + +ABOVE the grimy car-choked streets of Tehran, Iran’s down-at-heel capital, a new poster campaign is under way. Beside the brooding black-turbaned features of Iran’s supreme leader, Ayatollah Ali Khamenei, slogans extol the virtues of the “resistance economy”. The regime, it seems, is not ready to let go of the isolationist days of Iran’s worst confrontations with the West. + +Anyone who hoped that the signing last July of a nuclear deal between Iran and six world powers would strengthen the hands of the country’s reformists at the expense of the religious conservatives is starting to think again. The deal, which Mr Khamenei had been persuaded would boost a stagnant economy (see chart) by ending most international sanctions and reintegrating Iran into the global financial system, has so far fallen far short of what was hoped. The backlash has begun. + + + +Iranian oil exports have, it is true, grown by 60% since the formal lifting of sanctions in January. Iranian and Western trade delegations scurry back and forth. But Iran is struggling to repatriate its earnings, and to turn its memoranda of understanding into contracts. Although John Kerry, the American secretary of state, insists the way is open for legitimate trade with Iran, Treasury officials say any dealings that “touch” America—for instance by trading with Iran in dollars—risk falling foul of America’s remaining sanctions if they involve entities linked to the army or the Revolutionary Guards. Given the opacity of Iran, that might mean any sizeable firm. + +Without cast-iron assurances big banks, spooked by the gigantic fine of $9 billion levied on BNP-Paribas in 2014, are steering clear. SWIFT, the global bank transactions network, has been reconnected to Iran, but remains dormant—“a newly built highway no one is using”, says an Iranian official. Visitors to Iran still have to bring large wads of cash, since international credit cards do not work there. + +Iran-minded fund managers, jubilant a year ago when an outline of the nuclear deal was first settled, now lament the lack of business. American investors visiting Tehran will not even leave their business cards for fear of possible repercussions. Despite Iran’s stability in a volatile region, its educated population, its well-developed road network and its potential as a regional hub, most Western companies continue to regard it as toxic. Few expect any change this side of the American elections, and perhaps for many months thereafter. + +Mr Khamenei has seemingly turned on the government of President Hassan Rohani. Mr Rohani had reckoned the agreement would rapidly attract $50 billion worth of foreign investment, see funds frozen by foreign governments speedily released and spur growth to 8% a year. “We thought we would revive relations with the banks immediately after the deal,” says the central bank’s governor, Valliollah Seif. Many businessmen echo the supreme leader’s derision: “How come they didn’t negotiate the process of financial reintegration—which banks would transfer the frozen assets, how much and when?” asks a market analyst, aghast. Mr Khamenei’s advisers level accusations of incompetence, and suspect Mr Rohani has fallen into an American trap. + +The supreme leader is seeking to rein in the president. Some of Mr Rohani’s planned visits abroad, including to Belgium and Austria last month, have been cancelled at the last minute. “I urge you to come and see for yourself,” said Mr Seif, wooing investors at a conference in London earlier this month. But Westerners whom the president’s office has invited to Iran find their meetings blocked by the supreme leader’s men. Puncturing public hope of an end to revolutionary isolation, Mr Khamenei recently criticised the teaching of English. + +Mr Khamenei is also resorting to force. “Don’t be bashful,” he recently exhorted some 7,000 undercover police mobilised to uphold puritanical codes—even though the country’s mores are closer to those of Central Asia than the sex-segregated Arab world. (“White marriage”—the term for unmarried couples living together—is increasingly commonplace.) A fresh catch of activists has been put behind bars, including journalists, human-rights monitors and models who had appeared on social media unveiled. “The empire,” says a diplomat in Tehran, “is trying to strike back.” + +Mr Rohani refuses to buckle. Emboldened by the conviction that he represents the popular mood, the president these days sounds more like an opposition leader, for all that he is a former head of the National Security Council and an Islamic clergyman. Along with his vice-president, he distances himself from talk of the “resistance economy”; he insists on the virtues of English and of pivoting towards global economic engagement. This means news bulletins can be schizophrenic. Headlines celebrate the latest trade deals alongside the supreme leader’s fulminations against Western plans for “colonialist inculcation”. + +It is, however, hardly an even fight. Beyt-e-Rahbar, the supreme leader’s headquarters, commands the armed forces, the 128,000-strong Revolutionary Guard Corps (IRGC), the networks of spies, the vast state-owned firms that dominate the economy, the judiciary, the sprawling state media and the bodies that vet and veto elected bodies. Presidential decisions are diluted or simply ignored by civil servants appointed by Mr Rohani’s predecessors. Even the cabinet is a coalition, including ministers wary of privatisation. + +Some in Mr Rohani’s camp think little will change before Mr Khamenei dies or retires (he is 76, and thought to suffer from prostate cancer). Even then things might not improve. This week came the news that a veteran conservative from Tehran, Ayatollah Ahmad Jannati, has been appointed as the head of the Assembly of Experts, which will pick the next supreme leader when the moment arrives. + +“Mr Rohani believes in economic liberalisation, but it doesn’t percolate down the pyramid,” says a member of Iran’s chamber of commerce. And for all Mr Rohani’s success in sharply increasing the number of reformist parliamentarians, the president still lacks a majority in the Majlis following elections held in February and concluded with run-offs in April. Some 80-85 independents hold the balance of power, and may bend as much towards Mr Khamenei as Mr Rohani. When your correspondent visited parliament recently, a preacher was giving sermons about the dangers of English spies. + +Still, there are a few hopeful signs: three-quarters of the fractious old parliament lost their seats, including Gholam Ali Haddad-Adel, a veteran loyalist and a close relative of Mr Khamenei. The clerical contingent collapsed to 6%, half that of the last election in 2012 and just a tenth of its strength in the first post-revolution election in 1980. For the first time women outnumber clergymen in the Majlis. + +Mr Khamenei has won every power struggle he has faced, including with Mr Rohani’s predecessors as president, the hardline Mahmoud Ahmadinejad and the reformist Muhammad Khatami (whose name he still bans from appearing in print). But the leader seems crankier than before. Mr Rohani enjoys the support of Ayatollah Ali Akbar Hashemi Rafsanjani, the veteran kingmaker. After the latest testing of ballistic missiles, timed to undermine one of Mr Rohani’s trips abroad, Mr Rafsanjani tweeted that Iran would be better engaging in dialogue than conducting missiles tests. “Those who say the future is in negotiations not missiles are either ignorant or traitors,” snapped back an irked Mr Khamenei. + +So bad have things become that many observers now wonder whether Mr Khamenei will let Mr Rohani stand for a second term next year: his hand-picked Guardian Council could decide to bar him. Mr Khamenei’s problem is that there is no obvious alternative. For want of anyone more like-minded, he is healing his rift with Mr Ahmadinejad, perhaps hoping that the ex-president can recover his populist touch. Although Iran’s middle class blames Mr Ahmadinejad for squandering the money that rolled in during the oil-boom years, poor Iranians remember a time of generous welfare handouts and the reconstruction of Shia shrines, like Qom’s opulent Jamkaran. “When he goes walkabout in the provinces, Ahmadinejad is ten times more popular than Rohani,” insists Hamid Reza Tareghi, a confidant of Mr Khamenei who derides Mr Rohani’s supporters as counter-revolutionaries. + +Qassem Suleimani, the head of the IRGC’s foreign legion, the Quds force, has been mentioned as another possible candidate. He is popular among reformists as well as hardliners, having led the fight against the Sunni jihadists in Iraq and Syria. But entering politics might cost the Revolutionary Guard its most popular leader. + +The electorate itself may lose interest. Though Iranians voted in droves in the last election, Mr Khamenei’s recent actions demonstrate the limits of the ballot box in determining Iran’s course. Nor does the prospect of change from within inspire much hope. Down an alley of Tehran’s bazaar, a wizened peddler sells tea from a cart and compares the Shah’s reign with the current incumbents. Forget the people, he says, this lot struggle to rule themselves. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21699462-supreme-leader-clipping-wings-reformist-president-whos/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaign against Islamic State + +Fallujah, again + +Why retaking the jihadist stronghold has become a priority + +May 28th 2016 | From the print edition + +Will the plan survive contact with the enemy? + +FALLUJAH is a place with bad memories for the American soldiers who served in Iraq. Two battles in 2004, the second of which was the bloodiest of the whole war, confirmed it as the stronghold of the insurgency that arose to challenge the American occupation. It was also the first big city to fall to Islamic State (IS) at the outset of its rampage across Iraq in 2014. Now there is to be a third battle of Fallujah. On May 22nd Iraq’s prime minister, Haider al-Abadi, declared that an offensive to retake the city, which lies only half an hour’s drive west of Baghdad, had begun. + +For the American-led coalition fighting IS, the decision to go for Fallujah makes little military sense. The priority remains wresting back Mosul, Iraq’s second-biggest city, which fell to IS two years ago. Preparatory operations are well under way, although few believe that the security forces will be ready to move in before the end of the year. The Americans fear that Fallujah will become a distraction that will delay the assault on Mosul even further. + +Though the military logic is dubious, there are good political reasons for Mr Abadi’s announcement. His feeble government has endured an even more than usually torrid few weeks. Twice since the end of April mobs loyal to Muqtada al-Sadr, a turbulent cleric and militia boss, have breached the heavily fortified “green zone” and ransacked parliament in protest against corruption and sectarianism. Meanwhile, the security situation in Baghdad has steadily worsened with a series of bombings carried out by IS against Shia areas of the city. On May 18th IS boasted that it had killed 522 Baghdadis in a month. + + + +Mr Abadi had to be seen to be doing something. According to Michael Knights, an Iraq expert at the Washington Institute for Near East Policy, it is unlikely that the IS bombing campaign is being orchestrated from Fallujah, which has been tightly sealed off for months. It is more plausible that the bombs are being brought in from Diyala province to the east and from the south along the Tigris river. But Fallujah is still an irritant that can and probably should be dealt with. + +Mr Knights says that the Fallujah offensive ought not to delay the retaking of Mosul. The forces in the north will largely be regular army divisions retrained by the coalition, and Kurdish peshmerga fighters. The Fallujah operation depends on so-called Popular Mobilisation Units, mainly Shia militias, most of which are supported directly by Iran, and local police. The spearhead, as with the retaking of Ramadi last December, will be elite counter-terrorism units backed up by coalition air power. + +It looks probable that Fallujah will be back in government hands before long. That its retaking will have any effect on the IS bombing campaign in Baghdad is less likely. The Americans say that as IS loses territory, it is inevitably returning to its old terrorist ways. That is not much comfort to the city’s long-suffering inhabitants. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21699461-why-retaking-jihadist-stronghold-has-become-priority-fallujah-again/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Israeli politics + +He’s back! + +Avigdor Lieberman returns to government, more powerful than ever + +May 28th 2016 | JERUSALEM | From the print edition + +Get ready for fireworks + +EVER since his fourth election victory in March 2015 Binyamin Netanyahu has been trying to broaden his coalition, which, with only 61 members, had the slimmest of majorities in Israel’s 120-member parliament. For most of the past year he has held on-and-off talks with the leader of the centre-left Zionist Union, Yitzhak Herzog. But last week, as the negotiations hit a snag, the prime minister astounded the country by concluding a deal with Avigdor Lieberman (pictured left), the leader of Yisrael Beitenu (Israel is Our Home), a right-wing nationalist party. + +The renewed alliance with Mr Lieberman, a former foreign minister, who has repeatedly fallen out with Mr Netanyahu and who recently called him “a liar and a fraudster” and accused him of being incapable of making decisions, shows the lengths the prime minister is prepared to go to preserve his rule. In return for bringing his five Knesset members into the coalition, Mr Lieberman will be appointed defence minister, traditionally the most important job in Israel after the prime minister’s. He is also getting 1.4 billion shekels ($360m) to boost pensions for low-income retirees, mainly immigrants from the former Soviet Union, the Moldovan-born Mr Lieberman’s core constituency. + +Another concession to coalition partners agreed upon this month was the decision to continue public funding for ultra-Orthodox schools that do not teach basic secular subjects, including maths and English. This move, which by the end of the decade could deprive as many as 20% of Israeli schoolchildren of basic skills, was a demand by the “Haredi” parties, Shas and United Torah Judaism, who together are represented by 13 members of Mr Netanyahu’s coalition. + +The deal with Yisrael Beitenu precipitated the resignation of the well-respected defence minister Moshe Yaalon, not only from the ministry, but also from the Knesset, citing “difficult disagreements on moral and professional matters” with Mr Netanyahu and attacking the “extreme and dangerous elements that have taken over Israel and the Likud Party”. + +Mr Yaalon, a former general, had recently clashed with the prime minister over military criticism of an increasingly anti-Arab atmosphere in parts of Israeli society. Mr Yaalon has now joined a growing group of disgruntled former ministers sworn to removing Mr Netanyahu. This club of rebels, which until recently included Mr Lieberman himself, may prove a bigger threat than the official opposition to Mr Netanyahu’s rule. Mr Herzog, who failed to close a deal largely because of fears that his party would not go along with him, is facing calls for an early leadership election. + +Mr Lieberman is hardly a safe pair of hands. In the past he has threatened Egypt (saying he would bomb the Aswan Dam on the Nile) and called for the beheading of “traitors” among Arab citizens of Israel. He has said that, if named defence minister, he would order the killing of the Hamas leader, Ismail Haniyeh, within 48 hours if he did not accept Israel’s demands for the return of the bodies of two Israeli soldiers killed in Gaza in 2014. Mr Netanyahu may not get the stability he so craves. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21699467-avigdor-lieberman-returns-government-more-powerful-ever-hes-back/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Tanzania + +Government by gesture + +A president who looks good but governs impulsively + +May 28th 2016 | DAR ES SALAAM | From the print edition + + + +WHEN opening parliament after his election last year, Tanzania’s president, John Magufuli, repeated a campaign promise: parents would no longer have to pay for secondary education. “And when I say free education, I indeed mean free,” he assured MPs. This year the government started expelling foreign workers without proper permits, including thousands of Kenyan teachers. Schools that were already straining to cope with a huge influx of new pupils are now at breaking point. + +The president, nicknamed “the Bulldozer”, has delighted Tanzanians with an anti-corruption drive and public displays of austerity. Within weeks of taking office last November he had banned all but the most urgent foreign travel for government officials. He spent Tanzania’s Independence Day picking up litter by hand. He has fired officials suspected of incompetence or dishonesty and purged 10,000 “ghost workers” from the public payroll. However, he has a worrying tendency not to think things through. + +Take, for example, his efforts to extract more tax from people using the port at Dar es Salaam, a gateway for the region. He has enforced VAT on the costs of moving goods that arrive at the port overland to neighbouring countries such as Zambia and Malawi. Shipping firms have immediately switched routes and now unload in Kenya, Mozambique or South Africa, leaving a once bustling harbour almost empty. + +Mr Magufuli remains popular with ordinary Tanzanians. Twitter users at #WhatWouldMagufuliDo celebrate his thriftiness by suggesting amusing things he might approve of, such as wearing a curtain instead of buying new clothes and heating showers with a candle. The president has mended fences with neighbours, too. In April Uganda decided that a $4 billion oil pipeline would go through Tanzania, scrapping a previous agreement with Kenya. A month later Rwanda decided to build a railway to Dar es Salaam instead of the Kenyan port of Mombasa. + +However, some Tanzanians, especially businessfolk, are having doubts about Mr Magufuli’s flair for the dramatic. When he thinks a public official has misbehaved he fires him on the spot, rather than following due process. More important is that he shows little interest in wider reforms aimed at spurring economic growth. If anything he seems to be making it tougher to invest in a country that already scores dismally on the World Bank’s ease of doing business index, where it is ranked 139th out of 189. “What Africa needs is strong institutions, not strong men or women,” says Zitto Kabwe, an opposition leader. + +Surprisingly Tanzania even makes it hard for honest companies to pay their taxes (there it ranks 150th). Little wonder many less scrupulous ones don’t bother: last year fewer than 500 companies contributed an astonishing 43% of government revenues. Many others paid nothing. + +Instead of addressing these deeper structural issues Mr Magufuli has continued to live up to his nickname of “Bulldozer”: one foreign firm was given seven days to settle a $5m bill, says its boss. The country’s revenue authority then took the money directly from its bank account. By contrast, the government is painfully slow to pay its own bills: it still owes the same company $30m. Acacia Mining, a gold producer, is owed $98m in VAT rebates—effectively an interest-free loan to the government. “The country has become totally uninvestable,” says a bigwig at a private-equity firm with holdings across Africa. “You pay your taxes for five years and have the returns to prove it and then some guy arrives with his own calculation and says you haven’t paid your tax.” + +Mr Magufuli’s zeal may be admired, but his party, which has ruled Tanzania since independence, is thuggish and undemocratic: it suppressed dissent during the elections last year and then cancelled a vote held in Zanzibar after the opposition probably won it. Frustrated, America suspended $472m of aid. The Bulldozer merely harrumphed that Tanzania would soon no longer need aid and told the revenue authority to squeeze even harder. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21699470-president-who-looks-good-governs-impulsively-government-gesture/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Reading the Torah in Abuja + +Who wants to be a Jew? + +The unlikely spread of Judaism in Africa + +May 28th 2016 | LAGOS | From the print edition + + + +AS THE sun sets on a Friday in a smart new suburb of Lagos, Harim Obidike dons his kippah and opens up a prayer book. It is the start of shabbat, the Jewish holy day, and as he croons through the psalms, a gaggle of youngsters sing along. “We are Israelites,” he says after bread has been broken and the candles lit. + +Nigeria is a devout country split loosely between a Muslim north and a Christian south: two halves which were brought together by colonialists and still butt heads today. A couple of decades ago, modern Judaism was almost unheard of. But this household is one of a growing number that are taking to the Torah. In Abuja, the capital, there are at least four small communities of Igbo-speakers that have opened synagogues. (Jews joke that every town needs at least two so that members can hold a grudge, and refuse to attend one of them.) In one, on the outskirts of the city, there is a gospel lilt to the songs: members taught themselves to read Hebrew and then had to make up the tunes, says one. + +It might seem odd that people would sign up to join a small faith whose members have suffered centuries of oppression. Yet Uri Palti, Israel’s ambassador to Nigeria, reckons there are more than 40 such communities across the country. Daniel Lis, an academic, thinks there may be thousands of Nigerians who practise Judaism. Millions more of the Igbo tribe believe that they are descended from biblical Israelites. Across Africa as a whole there may be thousands more self-declared Jews. One community in eastern Uganda, the Abayudaya, adopted the faith almost a century ago. Its rabbi was recently elected the country’s first Jewish member of parliament. + +Yet the embrace by these communities of the laws of Moses has not been warmly reciprocated by the Orthodox establishment in Israel. Unlike proselytising religions such as Christianity, the guardians of Orthodox Judaism go out of their way to make conversion difficult, insisting on a two-year programme of study and lifestyle changes. + +Still, officialdom is shifting. Israel’s Jewish Agency last month recognised the Abayudaya as Jews, meaning that they are allowed to emigrate to Israel. There is a precedent. Since the 1980s more than 90,000 Ethiopian Jews (known to some as Falashas) did so after Israel’s rabbis accepted them into the fold. + +Such a stamp of approval seems a little less likely in the case of Nigeria. Some fear it would open Israel’s gates to thousands of economic migrants. Yet this does not trouble the likes of Mr Obidike. Nigeria’s Semites argue that they are descended from one of Israel’s lost tribes and that cultural similarities such as circumcision are proof of their pedigree. Others at his synagogue do not worry much about officialdom’s response. “We are Jewish,” says one old lady who switched from Catholicism. “Whether you are recognised or not is no matter.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21699472-unlikely-spread-judaism-africa-who-wants-be-jew/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Visa liberalisation: Europe’s murky deal with Turkey + +Crimea’s Tatars: 1944 all over again + +Greece gets its bail-out: Temporary relief + +Austria’s presidential squeaker: So long, farewell? + +German nationality: Name, date of birth, migration background + +Charlemagne: Of creeps and crèches + + + + + +Articles Sections Next + +Visa liberalisation + +Europe’s murky deal with Turkey + +The EU is gambling its reputation to secure its borders + +May 28th 2016 | BRUSSELS AND ISTANBUL | From the print edition + + + +IT WAS meant to be a game-changer. When a deal between the European Union and Turkey was struck in March with the aim of limiting the numbers of asylum-seekers coming to Europe, many in Brussels felt cautiously optimistic. Angela Merkel, the German chancellor, claimed it offered a “sustainable, pan-European solution”. In exchange for visa-free travel for some of its citizens, €6 billion ($7 billion) in refugee aid and revived talks on possible future accession to the EU, Turkey was to take back migrants who had made their way to Greece and try to secure its borders. Faced with perhaps another million refugees making their way to Europe this year, it appeared to be the only way to bring some order to the chaos. + +The number of refugees coming to Europe has indeed dropped (see chart). Yet the agreement is looking more and more murky. It risks undermining both the reputation of the EU and its relationship with Turkey, from whose shores hundreds of thousands of refugees set off last year on their journey to Europe. + + + +Since the agreement Recep Tayyip Erdogan, Turkey’s president, has become even more openly and arrogantly autocratic, as if to show that he can flout European norms with impunity. On May 22nd he replaced the prime minister, Ahmet Davutoglu, who was the engineer of the migrant deal, with a loyalist, Binali Yildirim. The ousting was as smooth as it was ruthless. Save for a few vague references to party unity, no one in the ruling Justice and Development party bothered to offer a reason for Mr Davutoglu’s departure. + +Mr Yildirim pledged to enshrine Mr Erdogan’s status as the party’s leader and executive president. Two days earlier Turkey’s parliament lifted the immunity of its members, opening the way for 50 of 59 MPs from the pro-Kurdish Peoples’ Democratic Party to face prosecution, mostly on spurious terror charges. Mr Erdogan accuses them of peddling propaganda for the Kurdistan Workers Party, an outlawed militia—an accusation they strenuously deny. + +Mr Erdogan has also clamped down more forcefully on the press and potential dissidents. According to a report in May, nearly 900 Turkish journalists have lost their jobs in the first four months of the year, and 33 were detained. Prosecutors have opened more than 1,800 cases against people suspected of insulting Mr Erdogan since he was elected president in 2014. His reach even extends beyond Turkey. In April he exploited a German prohibition on insulting foreign heads of state to demand that Jan Böhmermann, a comedian, be prosecuted for reading a satirical poem on television that depicted Mr Erdogan in various obscene acts. + +All this has spooked officials in Brussels. On May 23rd Mrs Merkel admitted that visa-free travel would not happen by July, as had been agreed on (somewhat unrealistically) in March. Turkey still needs to meet the EU’s final seven conditions (out of 72). These include issuing biometric passports; cracking down on corruption; becoming more co-operative with extradition requests; and, most controversially, narrowing the broad anti-terror laws it has used to harass journalists, academics and politicians. The EU’s Council of Ministers is developing new rules that would make it easier for Europe to suspend visa liberalisation for six months, or rescind it altogether, if circumstances change. Such contortions may make visa-free travel more politically palatable to Europeans wary of illegal immigration from Turkey. But they also make the deal look cynical. + +The problem, says Marc Pierini of Carnegie Europe, a Brussels think-tank, is that the issues of visa liberalisation, EU accession and immigration should not have been mixed up in the first place. Turkey has been seeking visa-free travel for years. Including it in the refugee deal makes it a reward for doing Europe’s dirty work, rather than a way of granting Turkey more equal footing with the EU. The deal also gives Mr Erdogan a bargaining chip: if no visa-free travel is forthcoming, he could let refugees through to Europe once more. Even a few thousand would cause chaos: Greece is still overwhelmed by the 50,000 refugees stuck there since March. + +If visa liberalisation does go ahead, Europe could lose much of its leverage over Turkey. “Europeans overstate the attraction of what they are offering,” says Hugh Pope of the International Crisis Group, an NGO. The idea of accession is less of a draw than it was in the mid-2000s, when Turkey was pushing through reforms. Support for the EU has increased: according to one poll 62% of Turks want to join the EU, up from 42% in 2015. But nearly seven out of ten believe Turkey will never be allowed in. + +Most damaging, European leaders seem to be lowering standards in order to make the deal work. Few spoke out when the offices of Zaman, a formerly critical newspaper, were seized by the government in March. Other abuses, including the shelling of residential neighbourhoods during clashes with Kurdish insurgents, have been raised only hesitantly. + +If visa liberalisation is granted after Turkey merely tweaks its laws, that would further undermine the EU. Many in Brussels are unhappy that it has sacrificed its principles to such an extent, says Marietje Schaake, a Dutch MEP. It sends the message that “if we need you badly enough, then everything can be talked about”. Yet it is not clear the EU can get a better deal. The message this one sends may be accurate. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21699466-eu-gambling-its-reputation-secure-its-borders-europes-murky-deal-turkey/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Crimea’s Tatars + +1944 all over again + +A Eurovision win provides symbolic victory over Russian repression + +May 28th 2016 | BAKHCHISARAY AND SIMFEROPOL | From the print edition + +A Tatar’s courage never flags + +ON May 14th Crimea’s indigenous Tatars sat glued to their screens, watching as Jamala, a Ukrainian singer of Tatar descent, won the Eurovision song contest. Jamala’s song “1944” commemorated Stalin’s brutal deportation of the entire Crimean Tatar population. For Russia’s government, the song was an infuriating breach of the contest’s ban on politics. For Tatars, it was a gesture of defiance. Most Tatars refuse to accept Russia’s annexation of the peninsula in 2014. As a result, they have been singled out for punishment. + +In Crimea every Tatar family has stories of the deportation. Eighty-one-year-old Refat Selyamiev still clearly remembers May 18th, 1944, when Soviet soldiers came to his family’s house, led his mother and her three children out and brought them to a local cemetery. They expected to be murdered. Instead they, along with the rest of Crimea’s 200,000 Tatars, were taken to the train station, bundled into cattle cars and shipped to Uzbekistan. Stalin claimed the Tatars had collaborated with the Germans. + +The trip took 18 days. Mr Selyamiev remembers the thirst, the diet of salted herring, and the dead (8,000 in total during the journey) being chucked out of carriages at train stops. Three months into the exile his mother died, aged 32. He was put into an orphanage. His father, who had been with the Soviet army fighting the Germans, came to collect him. + + + +Mr Selyamiev’s latest experience of Russian state violence is much more recent. On February 12th a dozen armed men in balaclavas broke into his house, forced his son to the floor and placed his two grandsons facing the wall, guns pointed at their backs. Other armed men, accompanied by a dog, searched the premises. His son was taken to the police station, where he was interrogated over alleged sabotage of railway tracks, then released. + +Crimean Tatars who refuse to accept Russian annexation see it as a continuation of Stalinism. (As if to prove them right, Russia’s Communist Party has peppered roadways with billboards featuring Stalin’s portrait and the words “It is our victory!”) Governed by Sergei Aksyonov, a Russian puppet nicknamed “Goblin”, the peninsula has become dangerous for the Tatars. Their houses and mosques have been searched and some of their men abducted, tortured and killed. The Mejlis, their representative body, has been outlawed. Some 15,000 have fled, mostly to Ukraine. Nariman Dzhelalov, the deputy head of the Mejlis, calls it a “hybrid deportation”—a reference to Vladimir Putin’s “hybrid war” of dirty tricks and disinformation when grabbing Crimea in the first place. + +Russia has long practised similar methods in the North Caucasus. Abdurashid Dzhepparov, a Tatar activist whose son and nephew were abducted two years ago and never found, says the goal is either to intimidate or to provoke a revolt that would serve as a pretext for mass repression. Prosecutors have charged several observant Muslims with terrorism and adherence to Hizb ut-Tahrir, a pan-Islamic political organisation that was banned in Russia in 2004 but not in Ukraine. In an Orwellian twist, Tatars who opposed Russia’s annexation have been charged with “threatening Russian territorial integrity”. + +The Russian government is also trying to co-opt Tatar leaders. A few members of the Mejlis have switched sides, launching a pro-government movement called Kyrym. Other Tatars face a difficult moral choice. Lenur Islyamov, once Crimea’s biggest businessman and the owner of ATR, the Tatars’ TV channel, has moved to Ukraine. He has organised a blockade of goods to Crimea and put together a military battalion which, he says, would be ready to defend Crimean Tatars. + +On the other side, Remzi Ilyasov, a former Mejlis member, now serves as a vice-speaker of the Russian-installed Crimean parliament. He says the Tatars should accept Russian rule, and Mr Islyamov endangers the lives of ordinary Tatars. + +Mustafa Dzhemilev, formerly the head of the Mejlis and, before that, the leader of a nonviolent Tatar resistance movement against Soviet rule, now lives in exile in Kiev, barred from entering his homeland. He is resolute: “If an enemy comes to your land, you have to resist.” Anyway, he argues improbably, it is only a matter of time before Crimea is returned to Ukraine. “The Soviet government was trying to break us but in the end broke up itself. And Russia is not even the Soviet Union.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21699474-eurovision-win-provides-symbolic-victory-over-russian-repression-1944-all-over-again/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Greece gets its bail-out + +Temporary relief + +The EU, the IMF and Greece agree to disburse now and argue later + +May 28th 2016 | ATHENS | From the print edition + + + +THERE was plenty of shouting in parliament as Greece’s government, led by the leftist Syriza party, pushed through a €1.8 billion ($2 billion) package of tax increases on May 22nd. Protestors, among them a former Syriza cabinet minister, hoisted a banner outside the building declaring “They (the measures) shall not pass”. But Alexis Tsipras, the prime minister, rallied his lawmakers: there were no defections. Afterwards Panos Kammenos, defence minister and leader of the right-wing Independent Greeks, Syriza’s coalition partner, blasted the rise in value-added taxes on small Aegean islands—which he had just voted for—as “criminal”. + +From next year Greeks will have to pay more for the small pleasures that have made life bearable during the country’s seven-year recession: cigarettes, coffee and even craft beer. VAT will rise to 24% on groceries, mobile phone calls and most consumer goods. “Just surviving has become a challenge,” sighed Stelios Paterakis, a retired army officer living on a pension of €800 a month. + +The tax increases completed a package of reforms that Greece agreed to after six months of negotiations with its creditors, the European Union and the International Monetary Fund. Their passage could mark a turning point. Last year Greece’s economy suffered tremendous damage while the newly-elected Mr Tsipras battled the EU and the IMF, demanding a debt write-off and better loan terms. According to the Lisbon Council, a think-tank, the six-month confrontation cost Greece more than €40 billion in lost output and revenues before Mr Tsipras capitulated, accepting harsh conditionality in return for an €86 billion bail-out. + +But having accepted the bail-out, the government dragged its feet over the conditions. The May 22nd vote finally satisfied Greece’s creditors that they had been met. In the early hours of May 25th, after a grueling 11-hour meeting, Eurozone finance ministers hashed out a deal to disburse €10.3 billion of funds to cover Greece’s debt repayments for the rest of the year. + +Deep divisions remain between the EU and IMF, which insists that Greece’s creditors must reduce its huge debt load to make it sustainable. Germany will not hear of it. The deal struck in Brussels delays the issue until 2018, after the current bail-out ends (and after Germany’s election next year). Meanwhile Greece must plod on with pension and tax reforms, and speed up privatising state property. + +In sum, the deal extends the long Greek and European tradition of down-road can-kicking. Yet for Greek businesspeople, any agreement is a welcome promise of financial stability. Yields on Greek bonds are at their lowest since November. Finance ministry officials think the government can return to capital markets early next year. The European Central Bank is set to accept Greek government bonds again as collateral for loans, allowing Greek banks to borrow at cheaper rates. That will free up billions in desperately needed liquidity for borrowers. Kostis Michalos, chairman of the Athens chamber of commerce, summed up the mood: “I have to admit, I’m beginning to feel optimistic.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21699468-eu-imf-and-greece-agree-disburse-now-and-argue-later-temporary-relief/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Austria’s presidential squeaker + +So long, farewell? + +The far right lost in Austria, but it is a growing force in Europe + +May 28th 2016 | VIENNA | From the print edition + + + +“THERE are two possibilities,” predicted Norbert Hofer, who had just become the standard-bearer of Europe’s hard right. It was May 22nd, voting in Austria’s presidential run-off had ceased and the Freedom Party of Austria (FPÖ) candidate seemed to be ahead. “The first: I become president. The second: I become president, and Heinz-Christian Strache becomes chancellor!” In the beer garden in Vienna’s Prater amusement park, his supporters roared, drowning out shrieks from the adjacent roller coaster. Mr Strache, the FPÖ’s leader, grinned. + +Once absentee ballots were counted the next day, a third scenario materialised. Mr Hofer (who carries a Glock pistol, supposedly to fend off refugees) narrowly lost to Alexander Van der Bellen, Austria’s 72-year-former Green Party leader. Just 31,000 votes averted the election of western Europe’s first far-right head of state since 1945. How had a man who talks of the “Muslim invasion” of Europe come so close? + +The answer is part local, part European. The FPÖ epitomises Austria’s failure fully to come to terms with its complicity in the Third Reich. Founded by former SS officers, the party has close links with Austria’s Burschenschaften, secretive fraternities that embrace pan-Germanist ideology. The FPÖ has traded its earlier anti-Semitism for Islamophobia; “Vienna must not become Istanbul” runs one slogan. Yet it enjoys some respectability. It has formed regional governments with both the centre-right ÖVP and the centre-left SPÖ, and in 2000 joined a national government as a junior partner. + +Voters in Austria are fed up with the two mainstream parties, which have spent decades parcelling out state jobs to their supporters and have been in coalition together since 2007. The unemployment rate has risen slightly, to 5.7%. When the migrant crisis broke, the SPÖ-ÖVP government first endorsed Angela Merkel’s pro-refugee policies, then reversed course. The FPÖ, with its dark warnings about foreign criminals, has looked more sure of itself. The two establishment parties together obtained just 22% of the vote in the first round of the presidential contest. Mr Van der Bellen won thanks more to strong anti-FPÖ turnout than to his own appeal. + + + +In graphics: The rise of the far right in Europe + +The continental dimension is the refugee crisis. Across Europe, parties of the populist right have made strides (see chart) by whipping up angst about the newcomers. Some, like Poland’s Law and Justice party and Viktor Orbán in Hungary, are post-Soviet nationalists. Others, like Alternative for Germany, the Danish People’s Party, the Party for Freedom (PVV) in the Netherlands and the UK Independence Party, are break-outs from the mainstream right. Then there are openly racist outfits like Hungary’s Jobbik and Greece’s Golden Dawn. The FPÖ, like Marine Le Pen’s National Front in France, is in a fourth category: hard-right parties reaching new voters by smoothing over their extremism. + +Mainstream European politicians—not unlike American ones currently discombobulated by Donald Trump—lack a formula for beating these upstarts. The populist right is using the refugee crisis to woo older, poorer and more nostalgic voters with talk of national pride and the decadence of elites. In Austria, at least, the centrists have an example of what not to do. The country suffers from an over-cosy establishment and a deficit of mainstream opposition voices. The SPÖ and ÖVP have pandered to the anti-refugee right rather than confront it. The result on May 23rd could easily have gone the other way. Moderates elsewhere should be scared. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21699478-far-right-lost-austria-it-growing-force-europe-so-long-farewell/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +German nationality + +Name, date of birth, migration background + +Of all the ways European countries classify ethnicity, Germany’s may be the worst + +May 28th 2016 | BERLIN | From the print edition + +All cheering for the same team + +IN TERMS of diversity, the German squad that will travel to France for the UEFA football championship next month leads the national trend. About one in five Germans has a so-called “migration background”, but nearly half the national team does. The names on the jerseys include Boateng (Ghanaian), Mustafi (Albanian via Macedonia), Bellarabi (Moroccan), and Khedira (Tunisian). Even some of the German names belie foreign origins. Antonio Rüdiger’s mother is from Sierra Leone. Bernd Leno has Russian roots. + +When Germans talk about ethnic origins, they contrast the term “migration background” with its cheeky antonym, bio-deutsch (“organic German”). This reflects attitudes toward nationality that are both controversial and in flux. By tradition, Germanness has always been an ethnic identity, based on shared descent or “blood”. But today Germany is becoming a multi-ethnic society like other Western countries. This raises the question of how the state should officially treat the categories of “bio” and “migrant”. + +The pressing issue this year is how to count them. Since 1957 Germany has conducted an annual “micro-census” of 1% of the population. A new law in 2005 added a complex tangle of questions every fourth year meant to determine whether a household has foreign origins. Bureaucrats decide whether to assign the label “migration background” based on the questionnaire, which has become controversial. Because the law expires this year, moreover, a new version is now wending its way through the committees of the Bundestag. This has scholars and policymakers pondering how identity should be measured. + +The rest of Europe takes wildly differing approaches. At one extreme is France, which has traditionally defined citizenship as a choice. It thus officially ignores descent and ethnicity in its census questions. This was always a bit hypocritical, says Patrick Simon of the National Institute for Demographic Studies in Paris; the French used racial categories in their empire and, when it ended in the 1950s, began applying them to the ex-colonials who came to France. But they soon reverted to treating nationality as a binary matter of having or not having citizenship, regardless of descent. + +Britain in 1991 and Ireland in 2010 took a different path. Like other English-speaking countries, they accepted that their societies were already multi-ethnic. Policymakers wanted to compile statistics for different groups in the hope that this might help them monitor discrimination. So they included questions about ethnicity in their censuses. But respondents self-identify by choosing from a menu of options, including “black British” and “mixed”. Ethnicity is subjective, not scientific. + +The countries of eastern Europe reflect yet another tradition. They are young states that broke out of collapsing multi-ethnic empires. Their emphasis is therefore on counting centuries-old national minorities, rather than new migrants. Hungary, for example, has a list of official ethnicities, from Magyar and Slovenian to Serb or Roma. But these countries also use self-identification. One drawback is that some groups, especially Roma, may prefer not to “out” themselves for fear of stigmatisation, and thus go undercounted, says Linda Supik, an ethnologist in Essen. + +Germany, the Netherlands and the Scandinavian countries form a final bloc. In the past, these societies were relatively homogenous. Today, they have a well-intentioned reluctance to admit the existence of an ethnic mainstream, which could imply that other groups are second-class citizens. Their censuses do not ask directly about ethnicity, but use proxies—such as the birthplace of parents—and then assign a seemingly objective category. + +In the German case this approach harks back awkwardly to old notions of blood identity, argues Anne-Kathrin Will at the Otto-von-Guericke University in Magdeburg. To have a “migrant background”, it is enough for one parent to be born abroad. And the German system, unlike the Dutch, passes the status on to the children. Many Germans with just one foreign-born grandparent are classified as having a migrant background. But parents or grandparents who migrated to Germany before the 1950s are excluded, in order to exempt the millions of ethnic Germans who fled from eastern Europe just after the second world war. Although they were migrants, they and their progeny are not considered to have a “migration background”—in effect, they are deemed bio-Deutsche. + +All approaches have their problems. The French notion that the state should deliberately ignore the ethnicity of its citizens is naive, says Mr Simon. Refusing to collect data on how many citizens have African or Arab backgrounds makes it much harder for policymakers to identify or fight discrimination. By contrast, the problem with self-identification is that categories are subjective and culturally fluid. This makes it hard to compare data over time. + +But most scholars think that bureaucratic decisions made through pseudo-objective proxy questions are the worst option. When parental birth is the only criterion, ethnic information is lost with each generation. A fourth-generation German citizen who is black may want to identify with his ethnic group—as many Latino Americans do, for example. By contrast, a German child who has one foreign grandparent may not view ethnicity as relevant to her identity at all. The ultimate challenge, says Mr Simon, is to rethink the meaning of “mainstream”. The aim is to make society more cohesive. Germany’s classification system seems to be dividing it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21699473-all-ways-european-countries-classify-ethnicity-germanys-may-be-worst-name-date/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Of creeps and crèches + +French working women get universal child care—and universal harassment + +May 28th 2016 | From the print edition + + + +THERE is a scene in “Marseille”, a new television drama billed as a French version of “House of Cards”, in which an ambitious deputy mayor holds a campaign meeting in his office. A photo is selected for election leaflets. New polls provoke cheers. As the male staff file out, the deputy mayor shuts the door behind them, detaining the sole young woman on his team. “A good poll should be celebrated,” he mutters, pinning her to his desk and unbuttoning her shirt: “Isn’t this what you wanted?” + +Sex and smoking feature to excess in “Marseille”. Perhaps the French writers are catering to what they think Americans expect from a drama about French politics. Yet there is something about the casual indifference of this scene, of no great narrative consequence, that makes it unusually plausible. Five years after the DSK affair—when Dominique Strauss-Kahn, the former IMF chief and Socialist politician, was arrested on rape charges (later dropped)—France again faces claims of predatory sexism. + +This month Denis Baupin resigned as deputy speaker of parliament after claims of years of sexual aggression and harassment (which he denies). Days later Michel Sapin, the finance minister, apologised for inappropriately touching a female journalist. Such caddish behaviour would hardly be rare: parliament, nearly three-quarters male, sometimes echoes like a farmyard. One opposition deputy clucked like a hen (une poule is used to mean “chick”) when a female deputy spoke. Others whistled when a female minister took the floor in a dress. “We thought the DSK affair had changed the situation and that macho habits…were heading for extinction. Alas,” wrote a group of female journalists last year in Libération, a newspaper. + +What’s the French for “chauvinism”? + +Of course, every country suffers from sexism. And France has at least made an effort to combat discrimination. Although women did not get the vote until 1944, today parité, or equal rights, is a national creed. Half of government ministers are female. Electoral rules require party lists to be made up equally of men and women. Next year a quota will require women to make up at least 40% of big companies’ board members. + +What makes France different, though, is a tolerance of sexual entitlement, mixed with complex codes about femininity. Like Italians, the French have traditionally treated male seduction as part of the political game. Infidelity by public figures is seen as normal, and disapproval as a puritan obsession of uptight Americans or northern Europeans. No French president has been hounded from office for sexual dalliances, including the current one, who was photographed heading for a tryst on a scooter. Both the wife and the mistress of another, François Mitterrand, attended his funeral, to general indifference. + +Moreover, even some women ridicule the notion that commenting on their appearance is sexist. France, after all, values elegance and aesthetics in all corners of life, whether of cakes in a pâtisserie window, or neatly polished nails. Admiring a woman’s look is not always meant as a sexual advance. Nor is a feminine dress sense—the Christian Louboutin heels, the Dior silk skirt—automatically interpreted as a statement of sexual availability. + +French law defines sexual harassment with apparent clarity. In practice, however, the rules are far from clear-cut. The cultural celebration of femininity in France, deplored back in 1949 by Simone de Beauvoir in “The Second Sex”, blurs the lines and complicates judgment. There is a self-censoring culture of silence over predatory behaviour. + +A younger generation, however, is not so indulgent. This month 17 female former ministers, from left and right, declared that the “taboo and law of silence” was no longer acceptable. Women need to overcome their fear that society will judge that “they were asking for it”, says Caroline de Haas, a young French feminist. Even if codes of seduction in France make it difficult to decrypt certain words or gestures, argues Clémentine Autain, a feminist politician, one phrase is unambiguous: “No means no.” + +For a country that launched post-war feminist theory, France sometimes seems to be fighting yesterday’s feminist battles, and not just in politics. Corporate France, too, has its share of womanising chancers, as well as clubbish male practices. Only one CAC40 firm, Engie, is run by a woman. In America this might prompt a debate over whether the problem is female assertiveness (see Sheryl Sandberg) or corporate demands (see Anne-Marie Slaughter). In France the discussion is stuck on chauvinism. + +Yet, if drawing the line between harassment, prejudice and Gallic charm makes France a complicated place to be a professional woman, it is also in other ways one of the most supportive in Europe. France stands out for its policies on working parenthood. On weekday mornings Paris’s sidewalks throng with tiny children, one hand clutching a comfort blanket, the other tucked into that of a besuited parent. They are off for a long day at école maternelle, or nursery, which the French state provides free to all children. Over 99% of three- to five-year-olds attend nursery, the highest rate among OECD countries apart from Malta. + +France’s pro-natalist policies, historically inspired by the need to breed soldiers to keep Germany at bay, guarantee Scandinavian levels of spending on family benefits and crèches. Train travel is subsidised for big families. Generous paid holidays, and the cult of the month of August, help mothers, too. + +As a result, far more mothers of small children work full-time in France than in Germany or Britain, all professional categories included. By actively supporting working motherhood, France makes it easier for women to stay on the career ladder after childbirth, even if statistics show they still do most of the housework. In short, between good child care and infuriating male chauvinism, French working women have both the best and the worst of it. Which is not quite the same as having it all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21699477-french-working-women-get-universal-child-careand-universal-harassment-creeps-and-cr-ches/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Rural Britain: Countryside blues + +Brexit brief: Yes, we have no straight bananas + +Not in the family way: Teenage pregnancy + +Brexit and science: The European experiment + +Drugs policy: Illegal highs + +Working women: On the up + +Hydraulic fracturing: Finally fracking + +Football managers: They think it’s all over + +Bagehot: The continental imperative + + + + + +Articles Sections Next + +Rural Britain + +Countryside blues + +Britain’s rural areas are struggling. Cyclical and structural factors explain why + +May 28th 2016 | OKEHAMPTON AND JOHN O’GROATS | From the print edition + + + +A VISIT to Okehampton—a small town in England’s most rural parliamentary constituency of Central Devon—fulfils a very English yearning for long shadows on cricket grounds and warm beer. It is near to Dartmoor, a wild national park; cream teas are served in its 1950s-themed railway station, from where tourists can catch a train along the moor to Exeter every Sunday. You might be forgiven for thinking that rural areas like Okehampton must be big winners from Britain’s rapid shift to the online economy. Why live in a cramped city when you can be just as productive working from a pretty village? + +Since 1999 the proportion of British households with an internet connection has increased from 15% to 90%. Most adults now have a smartphone and in 2015, 13% of retail sales were online, up from 3% in 2007. Yet many places like Okehampton are not booming. The economic output of “predominantly rural” areas in England (a classification based on the number of people living outside settlements with more than 10,000 people) accounts for about one-fifth of the country’s total. But output is probably lower today than it was in 2006, official figures suggest—in effect, a decade-long rural recession. The percentage of rural folk who are employed is lower now than it was in 2008-09. In recent years population growth has been far slower in rural areas than in urban ones. + +On Okehampton’s high street, there are plenty of empty shops. Since 2010 the rate of business creation in Central Devon has been one of the lowest in the country. Its position on a ranking of “multiple deprivation”, a rounded measure of poverty in English constituencies, has worsened by eight places since 2010. This is not just chance: the average “highly” rural area in England deteriorated by 14 places over the same period. Highly urban areas, meanwhile, improved by 11 places on average (though urban areas still tend to be more deprived than rural ones). In the decade to 2013 (the latest available data) suicides in highly rural parts of England rose by 3%, while falling by 10% in urban areas. + +The poor performance of rural areas is in part because of government policy. Firms in the countryside struggle to break into the online economy; in Okehampton the internet can be painfully slow. The previous Labour government promised that everyone in the country would have broadband by 2012. Having missed that target, the Conservative government estimated that by the end of 2015 less than 1% of all premises would have access to speeds of under 2Mbps—good enough for basic internet use, but not for streaming videos. The average download speed in urban areas is at least three times what it is in rural ones, according to a report from Ofcom, the telecommunications regulator. A recent study by the universities of Aberdeen and Oxford argues that low-quality internet imposes extra costs on rural businesses. + +The countryside has lost out from government policy in another way, too. Since 2010 the number of public-sector workers across Britain has fallen by about 15%, as the government has trimmed public spending. This is a troubling development, since rural parts often rely heavily on the state for economic growth. For instance, without the spark generated by a growth of government jobs, private-sector employment in the Scottish Highlands would have fallen in the 2000s. + +The pace of public-sector job losses in England since 2009 has been roughly 50% faster in rural areas than in highly urban parts. This may be the result of the government consolidating jobs in urban areas to make them more efficient. In parts of Leeds and Coventry, two mid-ranking cities, public-sector employment has recently risen. + +Down, on the farm + +However, structural economic changes, beyond the remit of any politician, may be even more important than government policies. Agriculture may be one weakness. Total income from farming is estimated to have fallen in 2014-15 by a whopping 29% in real terms. Yet over a longer timeframe farming has performed decently. Average farm incomes are roughly double what they were a decade ago. + +Changes to Britain’s manufacturing sector have probably had a bigger impact on rural areas. From the 1960s to the 1980s manufacturing employment grew rapidly in the countryside, according to a paper by David Keeble of Cambridge University, as firms looking to expand left the cities in search of cheaper land. Places like Powys, in central Wales, and the Highlands and Islands of Scotland benefited, even as overall manufacturing employment started its long decline. Rural areas ended up about a third more dependent on manufacturing employment than highly urban places. + +However, recently the pressure of foreign competition has made production even in rural areas unviable. Manufacturing employment in the Highlands and Islands has fallen by about 20% since 2004, a similar magnitude to the average rural area. In 2013-14 a maker of electronic goods near Okehampton, which had been there for 50 years and employed at least 250 people, closed. + +Nationally, the service sector has more than compensated for the continued fall in manufacturing jobs. But high-value service-sector industries are much better suited to urban areas. Such are the benefits of close personal relationships, in industries like banking, or the rapid sharing of ideas, in industries like advertising, that no matter how good technology is, dynamic firms still want to be clustered. + +In the past decade the economies of Britain’s five biggest cities have grown 12 percentage points faster in real terms than the rest of the country. Even if every rural area were hooked up to ultrafast broadband, places like London, Manchester and Glasgow have other advantages which make them an irresistible draw. + +To convince rural folk that it was not just concerned about cities, last summer the government set out ten measures to improve rural productivity, including vague promises about “encouraging long-term investment” and giving such areas “greater local control”. Access to superfast internet will soon be a legal right. All this will help, yet the economics continue to tilt in favour of cities. Small towns and villages may be the spiritual heart of the nation, but economically they will continue to struggle. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699482-britains-rural-areas-are-struggling-cyclical-and-structural-factors-explain-why-countryside/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit brief + +Yes, we have no straight bananas + +Brexiteers carp at European Union red tape, but how much of it would they tear up? + +May 28th 2016 | From the print edition + + + +EVERYBODY complains about EU regulation. Myths abound over curvature of cucumbers, how many bananas are allowed in a bunch or whether children may blow up balloons. More legitimate gripes include rules limiting working time to 48 hours a week, enforcing parental leave or regulating vacuum-cleaner power. Brexiteers say much red tape is imposed against British wishes and hobbles small firms that do not trade with the EU. They promise liberation after a vote to leave. + + + +Membership of the EU, especially its single market, brings with it many rules. Some are ill-judged, uncosted and not subject to cost-benefit analysis. The working-time directive was a needless intrusion into an issue better decided at national level. And regulation imposes costs. Open Europe, a London-based think-tank, using official figures, says the annual cost to the economy of the EU’s 100 most expensive rules is £33 billion ($49 billion) a year. + +Yet regulation also brings benefits, put in this case by the government at £59 billion (surely an exaggeration). It predates EU membership: the first rules on cucumbers came in the 1960s, before Britain joined. Moreover, the EU single market works only thanks to common rules. That is why in the 1980s Margaret Thatcher accepted more voting by majority (not unanimity) on single-market laws. Carolyn Fairbairn, director-general of the Confederation of British Industry, says such rules should really be seen as standardisation, not regulation. More will be needed to extend the single market to areas like digital, energy and services. Brexiteers have often made fun of extensive rules on road haulage, only to realise that road hauliers find them helpful. + +It is also misleading to claim EU rules are always imposed on an unwilling government. Analysis by the London School of Economics finds Britain siding with the majority in 87% of EU votes. On climate change and financial regulation, Britain has led the push for tougher action. When businesses complain about red tape, they even find that the government has added extra rules to “gold-plate” those from the EU. The costliest burdens are home-grown not EU-inspired, notably tight planning controls, the new living wage and the apprenticeship levy. By international standards, Britain remains lightly regulated. According to the OECD think-tank, it has the least-regulated labour market and the second least-regulated product market in Europe. It also comes high in the World Bank’s rankings for ease of doing business. + + + +INTERACTIVE: The Economist's “Brexit” poll-tracker + +Despite what Brexiteers promise, it is not clear that a vote to leave would mean a bonfire of EU regulations. Were Britain to seek close links to the single market from outside, like Norway and Switzerland, it would have to observe most EU rules without having a say in them (Norway applies 93 of the 100 most expensive EU regulations). Even if it left the single market and traded from outside, exporters to the EU would have to comply with most EU regulations—and that includes small firms that supply big exporters. If EU-US talks on a transatlantic free-trade deal succeed, most of the world is likely to have to adopt their joint standards. + +In short, even if Britain left the EU, it would not find it easy to scrap many of its regulations. Open Europe puts the maximum feasible saving at around £12.8 billion. And Raoul Ruparel, its director, concedes it would be politically challenging to realise that much. Most of the gains would come from ending EU climate-change, financial-services and employment rules. Yet Britain has long supported the first two; and it seems fanciful to expect workers and unions to accept a dilution of employment rights that business is not even calling for. + +One more point is lost in this debate: that the EU is proposing far fewer rules now. The European Commission’s better regulation agenda limits new regulations and even withdraws existing ones. Most EU members want less red tape. It is ironic that Britain should consider Brexit just when the EU has come round to a more competitive, less intrusive approach. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699483-brexiteers-carp-european-union-red-tape-how-much-it-would-they-tear-up-yes-we-have/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Not in the family way + +Teenage pregnancy + +May 28th 2016 | From the print edition + + + +IN THE 1990s, Britain had the highest teenage-pregnancy rate in the rich world, except America. It is still higher than much of western Europe, but between 2000 and 2014, the rate halved. This partly reflects youngsters staying in education longer, and better access to contraception. But according to a paper published by the Lancet, a journal, policy mattered, too. In 2000 the government launched a new strategy of better sex education and a media campaign. More money was spent in poor areas, which then saw the largest decline. Policymakers may soon know the true importance of the strategy; its funding was cut in 2010. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699485-teenage-pregnancy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit and science + +The European experiment + +Most scientists want to stay in the EU + +May 28th 2016 | From the print edition + + + +SCIENCE shows little regard for politics. Subatomic particles smashing together in underground colliders cross borders in a flash. Cells in a dish grow with stubborn disregard for international treaties. So British scientists might be expected to be similarly equanimous about the forthcoming referendum on the country’s membership of the EU. They are not. Britain is a research powerhouse. With just 1% of the world’s population, it has 4% of its researchers and produces 16% of the world’s most “highly cited” (influential) journal articles. So many researchers are worried by the prospect of life outside the bloc. + +An informal survey of 666 British researchers by the journal Nature found 80% support staying in the EU. Over 150 fellows of the Royal Society, Britain’s national academy of sciences, wrote in March to the Times, warning that Brexit could be a “disaster for science”. + +Money partly explains their Europhilia. About 10% of the cash that pays for research in British universities comes from the EU. As the government has scaled back funding for science (about a 6% cut in real terms in the four years to 2013/14), the country’s universities have benefited from increasing amounts of EU research cash (over 60% more during the same period). + +A report published last week added more fuel to fears that a Leave vote would affect funding. The analysis from Digital Science, a technology company, suggests Brexit would cost British science £1 billion. Work in the fields of nanotechnology, forestry sciences and evolutionary biology, which each receive more than half their funding from Europe, would be most at risk. + +European funding is also appealing because it eases collaboration between research teams in different countries. Without it, labs working on a common project would each have to apply for funding from their own nation’s funding agencies. That is a cumbersome process and the odds of every partner securing money are slim. Under Horizon 2020, Europe’s current science programme, they can apply together. + +In the event of a Leave vote, Britain could pay to take part in Horizon 2020. Sixteen countries already do so (including, most recently, Georgia and Armenia). Such countries have little power to influence EU research priorities. They are also relatively small players, winning only 7% of Europe’s research pot altogether. By contrast, Britain took over 18% (€8.8 billion out of €47.5 billion) between 2007 and 2013 while contributing about 11% (€5.4 billion). It is difficult to imagine Britain being allowed back in to the club on the same terms. + +Scientists For Britain, a pro-Brexit group, argues that the government could plug any funding hole. Yet spending cuts are expected until at least 2018. Others claim that stemming EU migration could allow in more highly qualified people, including researchers. “We have clamped down on Indian scientists because we cannot clamp down on Romanian fruit pickers,” says Matt Ridley, a science writer. Yet should Britain choose to halt EU immigration, there is no guarantee the government will allow more scientists to enter the country from the EU or elsewhere. + +Most convincingly, scientists who favour Brexit cite the stifling effect of some EU regulations. The clinical-trials directive of 2001, is widely blamed for a steep fall in the number of therapies tested on patients in Europe. It set out rules for running drug trials across the continent. The result was burdensome. In 2007-2011, trials cost more to run and were often delayed. The result was a 25% drop in applications to carry out such studies in the EU. + +The story, however, did not end there. New legislation, reflecting the concerns of researchers and drugmakers, was approved by the EU in 2014. Britain’s medical research charities, biotech sector and pharmaceutical industry, which played a key role in the process, strongly support the new rules—and favour staying in Europe. Getting EU science policy right can be difficult and slow, but Britain can argue for its own scientific interests from within. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699504-most-scientists-want-stay-eu-european-experiment/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Drugs policy + +Illegal highs + +Critics say banning “legal highs” will just force them underground + +May 28th 2016 | NEWCASTLE | From the print edition + + + +GLASSY-EYED young men stumbling through the streets is not an unusual sight in Newcastle, a city well known for its partying. But in recent years an increasing number have been worse for wear due to “legal highs”—drugs freely available in so-called “head shops”, newsagents and takeaways, which mimic the effects of illicit narcotics while falling outside current drugs laws. After May 26th, however, the government is hoping that will change, as it has passed the Psychoactive Substances Act banning such drugs and giving authorities the power to imprison suppliers for up to seven years. Like many drugs laws, it has proved controversial. + +According to the European Monitoring Centre for Drugs and Drug Addiction (EMCDDA), an EU agency, the use of legal highs, also called new psychoactive substances (NPS), has increased greatly across Europe, with two original substances detected every week. The north-east of England has felt the brunt of it. It has the highest death rate from drug misuse in England, nearly three times that of London. Newcastle has the country’s highest proportion of people accessing drug-treatment services for addiction to NPS, accounting for one in every three people seeking help. Legal highs have changed the fabric of the city, say local politicians and charities: begging and petty crime has become more prevalent as users try to feed their addiction. + +The number of deaths is still low. Heroin and cocaine killed 952 and 247 people respectively in England and Wales last year. In 2014, 82 people died from NPS use, more than triple the number in 2009. Ambulance services in the North East had 263 callouts in January alone linked to NPS use—more than eight incidents per day. + +In its annual report last month, the EMCDDA questioned the efficacy of any laws banning legal highs. Many experts agree. The ban may dissuade some casual users who were attracted to the “legal” status of NPS, reckons Adele Irving of Northumbria University. But she says it will not greatly decrease use. The government’s former drugs tsar, David Nutt, has gone further, calling the law “a completely nonsense piece of legislation”. Deaths from NPS will increase, he predicts. + +Ireland introduced its own ban in 2010 and, in the first five years following its introduction, saw just four successful prosecutions against shops selling synthetic drugs. In the same period, use by 15- to 24-year-olds rose by six percentage points. Activists in Britain say that, by forcing the closure of head shops, the new law will cause sales to migrate to street-corner dealers, who also offer harder drugs. + +Some social workers believe that NPS could have been managed better had a ban been enacted two years ago, when synthetic drugs were little known among the general population. The new law is coming too late, says Ollie Batchelor of Changing Lives, a Newcastle charity. Now people are addicted, they will find the drugs, whether they are legal or not, he says. Mr Batchelor agrees something must be done, since NPS users become more addicted and more unpredictable in their behaviour than many other drug users. But few charity workers like him believe crude legislation is the answer. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699500-critics-say-banning-legal-highs-will-just-force-them-underground-illegal-highs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Working women + +On the up + +The financial crisis has helped boost women’s role in the workplace + +May 28th 2016 | From the print edition + + + +EVERYTHING Fred Astaire did, Ginger Rogers did backwards and in high heels. Women’s ability to keep up with, if not out-perform, the guys in spite of multiple inconveniences has continued, even in tough times. A slew of recent statistics show that the global financial crisis marked the start of a major shift in women’s role in the workforce. + +In 2008-10, almost a million full-time jobs disappeared, affecting men more than women (full-time jobs account for a smaller chunk of the female workforce). Many women switched to self-employment. This meant they experienced a shorter and shallower employment downturn. Since 2008, the number of self-employed women has increased by more than 454,000 compared with just 382,000 for men. + +Women are now taking on higher-level jobs, too. In 2008 less than 12% of FTSE100 directors were women; by 2015 that was 26%. Five years ago, a fifth of boards in the top 100 companies were all male. Now all have women at board level. After the recession, the proportion of women involved in business startups climbed to 8% of the female workforce. Today 20% of all small- and medium-sized enterprises are mainly managed by women, up from just 12% a decade earlier. + +An employed professional (with a degree or equivalent) is now more likely to be a woman than a man, and female inactivity overall has decreased. But there are still areas where they lag behind. The female employment rate is at a record high of 70%, above that of France (67%) and America (66%), but it is still lower than for men in every region of Britain and behind Germany and most Scandinavian countries. + +Economically inactive women are five times more likely than men to say family commitments prevent them working. Before the age of 40 women suffer only minor disparities in pay. But interruptions to working life have a significant impact on earnings in the latter half of a woman’s career. Four decades after the Equal Pay Act, the gender pay gap was still 9.4% last year (though that is half what it was in 1997). + +Full-time work for women has recovered much better than for men. Only one in nine women who are now working part-time say it is because they can’t find a full-time job, compared with a quarter of men. This may be to do with government policies. Some are pushing women into work—the state pension age for women has been rising since 2010—while other policies are helping them: the extension of paternity leave, for instance. In 2010 the government offered 15 hours a week of free child care for three- and four-year-olds. After the first year, 95% of those eligible had taken up the offer. From next year up to 30 hours will be available. There are still many barriers to overcome. But the dance towards full equality goes on. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699501-financial-crisis-has-helped-boost-womens-role-workplace-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Hydraulic fracturing + +Finally fracking + +A victory for the onshore oil and gas industry + +May 28th 2016 | From the print edition + +Outvoted + +IT WAS a long time coming, but all the sweeter for that. On May 23rd, the North Yorkshire County Council gave the go-ahead for a company to start hydraulic fracturing, or “fracking”, for shale gas in the village of Kirby Misperton, near Malton. + +It is the first time since 2011 that permission has been given for fracking in Britain, and the industry hopes that this decision will pave the way for numerous other such planning decisions to go their way in the coming months. The news will certainly cheer the government, which has strongly supported fracking. While Britain has lagged, other countries, notably America, have raced ahead with the shale-gas revolution, transforming energy markets. The hope is that Britain, too, can now begin to join in. + +Most importantly, the permission to frack at Kirby Misperton will help resolve the question of how much shale gas there actually is under North Yorkshire, and the north of England more generally. Exploration can now begin properly. Companies such as Third Energy, the company just approved in Yorkshire, and Cuadrilla, which was turned down for permission to frack in Lancashire last year, believe that the deposits are substantial. + +There are also thought to be similarly rich deposits in Britain’s other main shale formations, in the Weald Basin in southern England, and the Midland valley of Scotland. Even by conservative estimates, there could be enough shale gas to transform Britain’s own energy market. Without fracking, by 2019 Britain is expected to import about 70% of its gas. But if even 10% of the British Geological Survey’s estimate of deposits are recoverable, that could make the country self-sufficient in gas for up to 50 years. This would, of course, be a boon to the balance of trade, and the government hopes that fracking will also create jobs and boost manufacturing. + +Scaling up + +Ken Cronin, head of United Kingdom Onshore Oil and Gas, the industry lobby group, argues that just as important as this week’s green light to frack in Yorkshire was the permission to drill the well in the first place, two years ago. Despite the public focus on the process of fracking—injecting a water mixture at high pressure to fracture rocks and thereby release trapped gas underground—most of the environmental risks, he says, are in the design and drilling of the wells beforehand. Indeed, once fracking is under way there is little to see. + +Indeed, fracking was initially suspended in 2011 after drilling by Cuadrilla in Lancashire was believed to have caused earth tremors near Blackpool. It was this that provoked the creation of local protest groups across the north. Consequently, after the decision in Yorkshire, Cuadrilla should have a better chance of winning its appeals against the bans on its drilling at the two sites in Lancashire, with four wells proposed apiece. + +However, the recent victory will not open the flood gates immediately. Fracking remains controversial, with many activists and environmental groups still bitterly opposed to it. As well as the physical impact on some of the most beautiful parts of the countryside (Kirby Misperton itself is very close to the North York Moors national park), protesters also warn of possible water contamination and much else. Indeed, the Conservative-controlled committee only approved Third Energy’s application after a long, fraught debate, and by a majority of 7-4. More than 4,300 objections to the application were received, against only 36 representations of support. Protest groups are considering possible legal action against the decision, and if fracking does start there could be mass protests at the site. + +Even if councils do defy the protesters and give out all the required permissions to drill, this initial exploration phase could take up to four years. As in America, says Quentin Fisher, an expert on fracking at the University of Leeds, it will then take thousands of wells to make fracking economically viable, as each individual well yields relatively little. That, in turn, will require the development of a large-scale onshore drilling infrastructure. Fracking in Britain still has a long way to go. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699503-victory-onshore-oil-and-gas-industry-finally-fracking/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Football managers + +They think it’s all over + +Can the Special One do better than the Dutchman? + +May 28th 2016 | From the print edition + +You want me to stay how long? + +LOUIS VAN GAAL could be forgiven for feeling a little miffed when, on May 23rd, he was shown the door by Manchester United football club. The prickly Dutchman had, two days before, won the FA Cup (England’s oldest knock-out competition) after just two years in the job. But it is qualification for the lucrative European Champions League that counts, and, having failed in that by finishing fifth in the English Premier League (EPL), Mr van Gaal was out. He was the 56th manager to be sacked across England’s four divisions this season. + +The following day a fellow manager, Steve Bruce of Hull City, called the reduced lifespan of the football manager “ludicrous”. It is indeed short. The median current EPL manager has spent just 11 months in the role, less time than in most other major sports (see chart). Yet their time in the job has not shortened by much. In 1992, it was just one year and three months. And continental managers do not fare much better. In Germany median tenure is now one year and two months; in Spain just over a year. Only occasionally does a manager defy gravity. Arsenal’s Arsène Wenger has been in the job for 19 years, almost as long as all the other EPL managers combined, despite winning very little in the past decade. Sir Alex Ferguson coached Manchester United for 26 years. (He won quite a lot). + + + +The other accusation against Mr van Gaal was that he was a boring tactician. His team scored only 49 goals this season in the EPL, their lowest total for a quarter of a century, and also managed the highest number of back passes. Not quite in the best tradition of Charlton, Cantona and Beckham. As The Economist went to press, it seemed almost certain that Mr van Gaal would be succeeded by José Mourinho (pictured), a former manager of Chelsea, who once described himself as “a special one”. Whatever his team’s style, his tenure won’t be boring. Famous for his abrasiveness, he, too, was sacked by Chelsea, after two-and-a-half years. Hostilities resume in August. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699505-can-special-one-do-better-dutchman-they-think-its-all-over/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +The continental imperative + +To wash its hands of Europe would be a betrayal of Britain’s past, and future + +May 28th 2016 | From the print edition + + + +BREXITEERS rarely hesitate to profess their love of Europe. Daniel Hannan, a campaigning MEP, stresses that he speaks Spanish and French. Sarah Vine, a journalist married to Michael Gove, the anti-EU justice secretary, points to her husband’s penchant for a glass of Bordeaux. “I love Europe!” Boris Johnson protested, unbidden, in a recent conversation with Bagehot. To prove his point, the former mayor of London inflicted a rendition of “Ode to Joy”, in the original German, on a startled crowd of supporters. Such declarations are often accompanied by what might be called the pro-European case for Brexit. Britain voting to leave the EU on June 23rd would produce a “domino effect” and “the democratic liberation of a whole continent”, gushed Mr Gove in a speech in April. It would be a helpful “wake-up call” concurs Liam Fox, a former defence secretary. + +Such overtures have a semi-official slogan: “Love Europe, Hate the EU”. It is even available on sweatshirts. Which is all very jolly. It also bears no relation to the reality of Brexit and the campaign being fought in its pursuit. Take Mr Gove’s dream of a sunny European spring. This rests on the Utopian premise that the dark forces of European history—nationalism, fragmentation, demagoguery—would simply dissipate in the pandemonium of the EU’s sudden collapse. Hardly any mainstream figure on mainland Europe agrees that Brexit, let alone the EU’s dissolution, would lead to more democracy and dynamism (it would do the opposite, argues Radek Sikorski, the Anglophile former foreign minister of Poland). It is also why hard-right populists like Marine Le Pen in France and Lutz Bachmann, the founder of Germany’s anti-Islam Pegida movement, have both endorsed a Leave vote. + +Moreover, for people who claim to love Europe, Brexiteers seem rather energised by its woes. The continent’s economic decline, relative to the likes of China, is frequently and gleefully invoked (Britain is “shackled to a corpse” runs the over-used metaphor); in an article for the Daily Mail on May 22nd Steve Hilton, a former adviser to David Cameron, described the union’s member states as “ungovernable”. Meanwhile Vote Leave, the official Out campaign, warns of “terrorists and gangsters” roaming the continent. Leave.eu, another Out campaign group, has shared a video purporting to show migrant youths in Greece, France and Hungary attacking police cars, scrambling over fences and fighting over food. “ANOTHER far-right party emerges in Europe” bellowed the Daily Express, one of the Leave camp’s favourite media outlets, on May 25th above an article on Denmark’s ultra-conservative New Civil Party. + +A simple message runs through all this: Europe is sliding into stagnation, turmoil and extremism. Britain must inoculate itself by getting out of the EU (or as Mr Hannan calls it: “the elderly, creaking, sclerotic economies on the western tip of the Eurasian landmass”) while it can. Europe has plenty of problems but such exaggerations will become yet more lurid as the campaign enters its final weeks; expect more blood-curdling warnings of the chaos should Turkey join the EU. + +The insinuation that Britain should abandon its neighbours in their hour of need—anti-democratic forces on the march, decline and disintegration threatening—is a betrayal of the blood, sweat and treasure that the country has dedicated to the pursuit of peace and prosperity on the continent. Europe today has been shaped much more by its island neighbour than it might admit; by Britons who sheltered from bombs rather than suing for peace, who landed on the beaches of Normandy, prosecuted Nazi war criminals, built new states from the rubble (the architecture of modern Germany was designed by British civil servants), helped defeat communism and—though not involved from the start—helped to shape the institutions and scope of today’s EU. + + + +INTERACTIVE: The Economist's “Brexit” poll-tracker + +Europe bears the stamp of British endeavour and influence, and is all the better for it. That is not a case for glorious, self-satisfied isolation, but for Britain staying in and rolling up its sleeves. Such was the argument of a letter to the Guardian on May 25th in which over 300 academic historians pointed to Britain’s past and future “irreplaceable role” in Europe. “The lesson of history is that British isolationism has often been associated with continental disintegration,” observed one of them, Niall Ferguson, at a speech in Downing Street ahead of its publication. + +Fog in the channel + +Britain’s past achievements were more than philanthropic; they were also self-interested. For just as plant seeds and spores blow across the English Channel (the same varieties of flowers and fungi bloom in Kent as do in Flanders), so, too, do the continent’s triumphs and traumas. Europe’s economic sluggishness is Britain’s problem, too: it still sells more services to Luxembourg than to India, for example. No country can truly insulate itself from pollution, criminal networks or mass migrations. And in any case, some 2.2m Britons live in the same European countries wracked by the apocalyptic crises so prominent in the pro-Brexit campaign’s arguments. Citing unemployment, terrorism or instability on the continent as a reason for Britain to withdraw from the EU is like spotting your neighbour’s house on fire and resolving to put a better lock on your door. + +Which is a round-about way of saying that Britain, though an island with an island’s outlook, is also a European country. Its connections with the continent grew up over millennia of shared history; of the ebb and flow of people, ideas and goods. The result in 2016 is a large moral, economic and political stake in the success of the mainland, the dominant institution of whose common civic life is currently—like it or not—the EU. To be “pro-European”, really, is not to have a passion for Beethoven, or to be able to conjugate a passé simple. It is to possess a concern, both selfish and munificent, for an old continent that encompasses Britain now as in the past. “Love Europe? Make the EU better.” + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699499-wash-its-hands-europe-would-be-betrayal-britains-past-and-future-continental/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Opioids: The problem of pain + + + + + +Articles Sections Next + +Opioids + +The problem of pain + +Americans are increasingly addicted to opioids. Meanwhile people in poor countries die in agony without them + +May 28th 2016 | KANO AND THIRUVANANTHAPURAM | From the print edition + + + +DEVIN LYALL had experimented with drugs recreationally as a teenager before a doctor in her hometown of North Wilkesboro, North Carolina prescribed her opioid painkillers after an ankle surgery. But it was only when she began taking Vicodin—one of the most popular prescription opioids—that she became an addict. She relished the sense of invincibility it gave her and began swapping her pills for stronger opioids on the black market. When that became a hassle, she found a doctor who would prescribe her harder stuff, such as Roxicodone. It was not difficult, she recalls from her office at the North Wilkesboro addiction-treatment centre she opened in February, after three years of sobriety. “It was easy to figure out which doctors were prescribing what,” she says. + +Opioid painkillers stimulate receptors in the brain and elsewhere to produce a powerful pain-numbing effect. They also lessen anxiety and depression—two common side-effects of intense pain. The sensation they induce is often described as euphoria. Some, such as morphine, are made from the opium poppy; others, such as oxycodone, are semi-synthetic or synthetic. They are highly addictive: even brief use can be followed by withdrawal symptoms. As a result, for most of the 20th century they were usually reserved for acute pain, after a serious accident or surgery, say, and palliative care, a branch of medicine dedicated to curbing the pain of those with illnesses such as cancer or AIDS. + +But in the 1980s a series of papers by American researchers claimed that opioids could be used safely for longer periods. The evidence was slight, but, combined with a formidable marketing effort by drug firms, it led to American doctors prescribing opioids with abandon for chronic, non-terminal pain. According to America’s Centres for Disease Control (CDC), between 1994 and 2006 the share of American adults who had used prescription opioids in a given month jumped from 3.4% to nearly 7%. In 2012 doctors wrote 282m prescriptions for opioids—enough for a bottle each for every adult. Americans guzzle six times more prescription opioids per person than 20 years ago. + +Everybody hurts + +These doctors doubtless wanted to help patients in pain to lead happier, more active lives. However, America’s fee-for-service health model also gave them a financial incentive to provide patients with what they asked for—especially if it led to repeat prescriptions. Whatever the motivation, haphazard clinical practice and spotty oversight led to addiction and death. In 1999-2014 more than 165,000 Americans died from prescription-opioid overdoses. The typical victim was poor, white and single—though wealthy people are not immune. A definitive diagnosis will have to wait until the results of his autopsy, but some suspect that Prince, a musician who died unexpectedly last month, was a victim of prescription painkillers. + +Opioids kill by slowing the respiratory system. A person who has taken too many—or who combines a standard dose with depressants such as alcohol, anti-anxiety pills or sleeping aids—may lose consciousness and stop breathing. According to the National Safety Council, an American non-profit, the difference between an effective and a lethal dose is “small and unpredictable”. Data are patchy, but state statistics suggest that many victims of opioid poisoning have legitimate prescriptions for chronic pain. + +Newer evidence suggests that other drugs might be better for chronic pain. Andrew Kolodny of Physicians for Responsible Opioid Prescribing, an advocacy and research group, says that a combination of non-opioids, such as paracetamol and ibuprofen, can relieve acute pain at least as well—and certainly more safely. + +A handful of other rich countries are struggling with opioid misuse, too. Canadians are increasingly getting hooked on and killed by the drugs, says Benedikt Fischer, who studies prescription-drug misuse at the University of Toronto’s Centre for Addiction and Mental Health. Britain, by contrast, has largely avoided creating opioid addicts. According to Cathy Stannard, a pain specialist at Southmead Hospital in Bristol, its publicly funded national health-care system means doctors have no incentive to over-prescribe. And prescription records are held centrally, so a patient bouncing from doctor to doctor in search of pain pills would quickly be spotted. + +America is at last starting to wake up to its opioid scourge. The CDC recently released guidelines that urged increased caution when prescribing opioids to non-cancer patients, and according to IMS Health, a consultancy, prescriptions have declined by 12% nationally since the peak in 2012. In February the president, Barack Obama, said he would seek $1.1 billion in new funding for opioid-addiction treatments. Congress responded by passing 18 opioid-related bills in May. In many states doctors must now check databases to ensure that patients have not already been prescribed opioids elsewhere (though they can still get hold of pills in more than one state without triggering an alarm). The Drug Enforcement Agency (DEA) has cracked down on “pill mills” that reaped handsome profits from prescribing opioids to anyone who showed up to claim them. + + + +Tighter prescribing is essential. But it has caused unintended harm. Heather Ratcliff of Petaluma, California, suffers from Ehlers-Danlos Syndrome, a degenerative disease; her tendons and ligaments do not properly secure her bones. A hearty laugh or unexpected sneeze is enough to dislocate her ribs. She tried acupuncture, osteopathic manipulative treatment and several other pain-relief methods before finally turning to opioids. “I hate them,” she says. “I hate how they make me feel—foggy-headed and slow. I hate how people assume people who consistently use opioids are addicts. But I need them.” + +Of late, Ms Ratcliff has found her medication harder to get. Her hydrocodone was cut off by a doctor when she tested positive for cannabis—even though she had previously disclosed her use of the drug, and had a medical licence for it. She says that these days doctors and pharmacists are jumpier about DEA scrutiny, which in extreme cases can lead to licences being revoked. On one occasion a pharmacist refused to fill a prescription. + +The squeeze has also caused a startling heroin problem. People cut off from prescription opioids sometimes turn to heroin, which offers a similar high and is cheap and easy to score on the street. According to the American government’s National Survey on Drug Use and Health, four out of five heroin users had progressed from opioid pain-relievers. In 2014 nearly as many Americans died from heroin and prescription opioids as from traffic accidents. Pregnant users are giving birth to addicted babies. They suffer the same symptoms as an adult undergoing withdrawal: tremors, vomiting and fever. + +If in America the problem is over-prescription, in Russia it is the opposite: opioids are too hard to come by. In 2014 a retired admiral in Moscow with pancreatic cancer shot himself when his wife tried but failed to procure opioids for him. He left a note saying that the blame lay entirely with the health ministry and the government. He was one of about 40 Russians to have committed suicide in a single year because of unbearable pain, estimates the Lancet, a British medical journal. + +Globally, such situations are far more common than the overuse seen in America. In poor and middle-income countries, people suffering from cancer and other terminal illnesses often die excruciating deaths with minimal relief. The International Narcotics Control Board (INCB), an independent monitor that oversees the implementation of UN drug conventions, estimates that 92% of all morphine, an opioid commonly used to control the pain caused by cancer, is consumed in America, Canada, New Zealand, Australia, and parts of western Europe—which between them hold only 17% of the world’s population. “It’s an absurd situation,” says Dr Fischer, the Canadian professor. “We’re spraying [opioids] from a fire-hose while the majority of the world doesn’t have them.” + +House of pain + +Access to pain relief in Nigeria has improved a bit since the country started importing morphine in 2012. But pharmacists from hospitals outside Lagos, the commercial capital, must travel there to buy morphine. Smaller hospitals struggle to pay for the trip. Aminu Kano, a hospital in the country’s north, is one of those that manages to procure opiates. Even so, a visit turns up distressing scenes. A burns victim lies deathly still under crisp white sheets, the skin on his face peeled back. More than half his body was set alight when a gas hob exploded in his house, but he is given no morphine. His brother says that at night he wakes up screaming from the pain. + +Down a leafy walkway, a mother straps her three-year-old daughter to her back. One side of the child’s face presses up against her; on the other, a growth the size of an orange protrudes from the socket where her eye should be. She has a rare kind of cancer called retinoblastoma. Her family must pay 120,000 naira ($600) each time she receives chemotherapy. When the money runs out, the pair leave. “At home there is no help for her pain,” the mother says. “The pain will be eating her, and all I can do to cool her down is pet her.” + +Most palliative-care professionals, in Nigeria and elsewhere in the developing world, are found in cities. That makes it hard for rural patients to get treatment for their suffering. Gayatri Palat, a professor of pain and palliative medicine at the MNJ Institute of Oncology and Regional Cancer Centre in Hyderabad, India, recalls a former patient, a child with cancer. He had visited several clinics nearer his home in search of pain relief before stumbling into her hospital, ragged and short of breath. It had taken him more than 12 hours to get there, and he died soon afterwards. In Tenkasi, a rural town in India’s humid south, Samuel Samudra, a gaunt 60-year-old, was discharged from surgery for throat cancer. By the time he arrived at Pallium India, a small palliative-care hospital in Thiruvananthapuram, the state capital of Kerala, the operative wound on his throat was infested with maggots. For pain relief, he had only over-the-counter pills. + +When illness strikes, patients in poor countries expect to suffer. Even when the tumour on his hip grew to the size of a football, Mato Samaile, a frail 50-year-old Nigerian cattle farmer, was reluctant to go to hospital. “When I found the lump I said to my son: ‘We can’t leave the farm. We should stay until after the rain falls,’” he says from his bed in Aminu Kano. “People are brought up to tolerate pain,” says Amina Ibrahim, a surgeon at the hospital. “If you don’t you are a coward. That is just our culture. So even doctors are not liberal on painkillers.” + +Though Colombia produces its own opioid painkillers, some regional governments either cannot afford to buy them from the federal government, or regard them as a low priority. + +And patients often associate morphine with imminent death, says Marta Ximena León of the palliative care and pain group at the University of La Sabana in Colombia. She recalls meeting cancer patients who begged not to be given the drugs. “They felt that if they were prescribed morphine, that meant there was nothing else that could be done for them,” she says. + +Doctors in many places are also wary. In India, Dr Palat explains, their training includes very little about pain management. A report in 2009 by Human Rights Watch, a pressure group, found that of some 300 Indian medical colleges, only five taught palliative care. The consequence is that few doctors know how to prescribe opioids safely. Even for patients with advanced cancer, they avoid morphine, says Dr Palat: “They’re afraid it will cause addiction in healthier patients or respiratory depression in those with terminal illnesses.” Similar worries in India’s north-eastern neighbour, Nepal, meant that 50% of the country’s supply of sustained-release morphine tablets went unused in 2011. M.R. Rajagopal, the head of Pallium India, says that news of the opioid crisis in America has only heightened such fears. + +Show me where it hurts + +Pain management is simply not a priority for governments in much of the developing world, says Meg O’Brien, the managing director of global cancer treatment at the American Cancer Society. Many focus on life-threatening epidemics rather than treating pain, she says. “No one gets in trouble if, at the end of the year, pain relief has not been procured.” + + + +The lack of opioids across the developing world is particularly striking, because the drugs are cheap to make, and the raw ingredients plentiful. Estimates suggest that the global harvest of opium poppies, from which natural and semi-synthetic opioid medications such as morphine and codeine are prepared, together with the chemicals for synthetic ones, should be enough to satisfy all the demand in the world. Few opioids are patented; a monthly dose of morphine should cost just $2-5. + +But paltry prices can work against developing countries, says James Cleary, a palliative-care specialist at the University of Wisconsin: they mean drug firms have little incentive to bring them to new markets. Tariffs, import licences and high costs for small-scale local production mean that morphine can cost twice as much in poor places as rich ones. Some countries, such as Jamaica, subsidise opioid painkillers. Many others do not. + +Untreated suffering used to be the norm in the developed world, too. Even after the advent of modern painkillers, it took changing attitudes on the part of patients, doctors and governments before they became widely used. Opioids are now understood to be the most effective and humane treatment for terminal pain, and also appropriate in many cases of acute pain. + +The rest of the world would probably have seen the same progression in recent years—had it not been for the “war on drugs” that America launched with such fanfare half a century ago. The INCB has a dual mandate: to increase access to controlled substances for medical purposes and to stop their illicit use. Many governments, however, pay little attention to the first of those aims and focus instead on the second. With no impetus for wider prescribing from doctors, patients or governments, inertia and bureaucracy rule. + +To try to stop leakage onto the black market, the INCB requires countries wishing to import opioid painkillers to provide estimates of the quantity they expect to use in the coming year. If the board deems the request reasonable, it is approved. But many countries decide how much to ask for by looking at past consumption, thereby underestimating current need. Senegal, for example, has asked for a similar morphine quota each year since the 1960s. In 2013 it applied for only 1 kilo of morphine—about enough to soothe the pain of 200 patients with advanced cancer. + +The Russian admiral who committed suicide appears to have been denied opioid painkillers because his stacks of paperwork were missing one essential signature. Shortly after his death, his daughter wrote on her Facebook page: “To get a five days’ supply of [morphine], one has to spend many hours dashing between many doctors’ office in the clinic, [even] spend a few days. By the day’s end, one signature was still required and the clinic closed. My father was outraged. It was the last straw.” + +In a recent report Human Rights Watch detailed the Byzantine process cancer patients must follow to procure morphine in Armenia. First patients are diagnosed by an oncologist and their diagnosis is confirmed through a biopsy, a procedure only a few Armenian hospitals perform. The oncologist must then try a series of weaker pain medicines before asking a panel for permission to use morphine. Five specialists assess the situation and either confirm or deny the prescription, which then needs to be authorised with four stamps and three signatures. A patient lucky enough to receive an authorised prescription must travel to one of the few clinics or pharmacies where morphine is stored and will receive only enough for a few days. + +Such rules are far more restrictive than anything in the UN’s drug conventions, says Diederik Lohman, who works on palliative care for Human Rights Watch. “Countries have been told ‘you have to crack down on drugs: the harsher the better,’” he explains. “For many years, drug strategies published by the international community and the United States did not mention the medical importance of certain controlled substances.” A 1998 UN declaration begins: “Drugs destroy lives and communities, undermine sustainable human development, and generate crime.” Nowhere does it refer to medical uses. For most patients in the developing world, untreated pain is the status quo and therefore they do not agitate against severe controls as their peers in the rich world might. + +A handful of countries, including India, Ukraine and Colombia, have recently amended their laws to make it easier for patients who need them to be given opioids, though doctors say that implementation is slow. Some others have started producing their own morphine, or importing morphine powder which is less controlled and can be whizzed into orally administered syrup. Such changes mean that, since 2003, opioid consumption has increased in most regions. But much more must be done. The first step is to ensure that doctors—and patients—know that it is not necessary to die in pain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21699363-americans-are-increasingly-addicted-opioids-meanwhile-people-poor-countries-die/print + + + + + +Articles Sections Next + + + + + +Special report: Migration + + + + +Migration: Looking for a home + +The language of migration: Terminological exactitudes + +Politics: Welcome, up to a point + +Integration: A working solution + +Demographics: Not so fast + +Resettlement: Bring me your huddled masses + +Lebanon’s and Jordan’s plight: Caught by geography + +Refugee camps in Africa: From here to eternity + +Looking ahead: How to do better + + + + + +Articles Sections Next + +Migration + +Looking for a home + + + +The migrant crisis in Europe last year was only one part of a worldwide problem. The rich world must get better at managing refugees, says Tom Nuttall + +May 28th 2016 | From the print edition + + + +LIKE COUNTLESS STUDENTS of German before him, Ahmed is struggling with his verb placement. Eager to learn, he listens patiently as the earnest volunteers from Über den Tellerrand kochen (Cook Outside the Box), a Berlin-based outfit that began by offering refugees a space to prepare food and has since branched out into language classes, explain the fiendish intricacies of the grammar. But before long they have moved on to the difference between Sie and Du, and Ahmed is floundering. “I love the German people,” he says later. “But I just can’t speak their language.” + +That is not his only problem. Deposited by Germany’s refugee office in Hoppegarten, a distant suburb of the capital best known for horseracing, Ahmed, a 24-year-old Syrian refugee, cannot afford to commute to Berlin proper. Even if he could, he might still find it hard to get a job, though as a refugee he has full access to Germany’s labour market. A barman by training—he claims to mix a killer mojito—Ahmed would face a lot of competition in job-poor Berlin, and his lack of German is a handicap. It is also hindering his search for accommodation closer to town, which, within reason, the state would pay for. For now, it seems, he is stuck. + +Ahmed arrived in Germany last November, joining hundreds of thousands of Syrians and other asylum-seekers on the migrant trail via Turkey, Greece and the Balkans. Like many of his compatriots, he had fled not Syria itself but Lebanon, where he and his family had been leading a clandestine life for years, safe from harm but struggling to get by and unable to return home. As his story suggests, Germany (along with several other European countries) faces a huge challenge integrating its newcomers, most of whom arrived with few language skills or qualifications, into its labour market and wider society. That will take time, resources and political capital. In some countries it will test assumptions about welfare, housing and employment. + +But last year’s drama was also a sharp reminder to Europe that it cannot insulate itself from the troubles of its wider neighbourhood. For years Syrian refugees had been building up in Turkey, Lebanon and Jordan, not to mention the millions displaced inside the country itself. Of the estimated total of 13m displaced by the war (7m inside Syria, 6m outside), around 1m have gone to Europe. Lebanon now hosts 1.07m registered Syrians (the total number is closer to 1.5m), a staggering burden for a country of 4.5m. In Jordan 1.3m refugees swallow up one-quarter of public spending. Governments and officials in the Middle East had warned Europe about a wave of refugees. But without a robust system of international rules that could have eased the burden on the refugee-hosting countries, or any political interest in Europe in resolving the problem, it was left to Ahmed and many others like him to vote with their feet, bringing chaos in their wake. What was Lebanon’s problem is now Germany’s. Belatedly, the rich world has learned that the current system of international protection for refugees is broken. And Europe, which is where the global refugee regime began 65 years ago, and where its limits have now been most starkly exposed, will have to be the catalyst for change. + +The 60m question + +Thanks in part to the explosion of refugees from Syria, the United Nations High Commissioner for Refugees (UNHCR), the UN’s refugee body, now puts the world’s displaced population at a post-war record of 60m, of whom 20m are stranded outside their own countries (the map shows only registered refugees, for whom firm figures are available). Except for a couple of bright spots, such as the possible return of up to 6m internally displaced Colombians after a peace deal between the government and the guerrillas, the problem is getting worse. New conflicts in places like South Sudan are creating fresh refugee problems; older ones, such as Somalia’s, grind on with no solution in sight. + + + +Still, there is no iron law that says the globally displaced must continue to rise in number. Conflicts can be resolved, just as they can break out. Perhaps more worrying is that a record 45% of the world’s refugees are now in “protracted situations” that have lasted five years or more. Syrians are the latest recruits to this wretched club, and the welcome is wearing thin in the countries to which most have fled. Indeed, dismal prospects in Turkey, Jordan and Lebanon partly explain last year’s exodus to Europe. + + + +Shocked to learn that they were legally obliged to help the people streaming across their borders, a growing number of European politicians and officials are pressing for revisions to the UN’s 1951 Refugee Convention and its 1967 protocol, which make up the main framework for international protection of people fleeing persecution and provide the basis for the work of the UNHCR. The convention is one of the most potent instruments of international law ever devised. The primary obligation that it places on signatories is the duty of non-refoulement, meaning they may not return people to countries where they are at risk. + +But as James Hathaway, an expert on refugee law at the University of Michigan, points out, it has also proved to be an extremely versatile device. Over the decades regional and international law has built on the convention’s foundations, extending the scope of protection beyond the original definition of a refugee as someone who faces a “well-founded fear of being persecuted”. Notably, many parts of the world now offer protection to those fleeing war-torn countries like Syria. + +And yet the politicians who established the refugee regime in the early 1950s, with the horrors of the second world war still fresh in the mind, had modest ambitions. The convention covered only Europeans who had been displaced before 1951, including millions during the war and many more in post-war ethnic cleansing. (The UNHCR had no role in helping the millions displaced by India’s partition, or the Arab-Israeli war of 1948.) By 1950 resettlement and repatriation efforts had reduced Europe’s refugee population to less than half a million. The UNHCR was small, poor and feeble. Few expected it to last for long. + +However, it turned out to be a rather useful adjunct to Western foreign policy, particularly for refugees fleeing communist or Soviet-backed states. In 1956 the high commissioner used his good offices to help hundreds of thousands of Hungarians who fled the Soviet tanks, even though they were not covered by the convention. Many were resettled in America or other countries outside Europe. The UNHCR helped victims of fighting in Africa and Asia in the 1950s and 1960s, and the 1967 protocol to the convention removed its geographical and temporal limits. Agreements in Africa and Asia extended the scope of protection. Later, the European Union created new forms of protection that fell short of full refugee status, to help victims of war and other forms of violence that did not meet the convention’s strict definition. The result was an international mesh of laws and institutions to help displaced people around the globe. + +Magic number + +In time the UNHCR identified three “durable solutions” for refugees beyond providing immediate sanctuary: voluntary repatriation, integration in the country that offered asylum and resettlement to another country, usually in the rich world. All are now floundering. Most refugees would dearly love to return home, but that would require resolution of the conflicts they fled in the first place, and there is little sign of that for Somalis, Syrians or Afghans. Returns are at their lowest since 1983, according to UNHCR figures. + +That leaves integration and resettlement. Western governments can play a crucial role in both. To promote integration in countries that may be resistant to opening their labour markets or overburdening public services, they can provide financial and logistical support. For the Syrian refugees in Turkey, Jordan and Lebanon, that can mean anything from cheap loans to the creation of special economic zones to assistance for overburdened towns and villages. In parts of Africa, this report will show, there are glimmers of a new approach that may offer refugees an alternative to mouldering in camps. + +But today’s politics has turned against resettlement, in which vulnerable refugees are moved to rich countries that volunteer to accept them, usually with the help of the UNHCR. Too often such rich countries, having clamped down on irregular flows, promise generous resettlement to compensate but fail to follow through. Australia, for example, is often accused of not living up to its vow to increase its resettlement quotas now that it has more or less eliminated spontaneous arrivals of asylum-seekers by turning them back at sea. There are worrying signs that the EU may follow suit. Vague promises of mass resettlement of refugees from Turkey to Europe have not materialised. America, which traditionally takes a large share of resettled refugees, has slightly increased its quotas but has been deterred by probably ill-founded security concerns since last November’s terrorist attacks in Paris. Canada’s new prime minister, Justin Trudeau, speedily made good (at great expense) on an election promise to resettle 25,000 Syrians, and then promised to take more. But this alone is a drop in the ocean. + +As Peter Sutherland, the UN’s special migration representative, notes, it seems unfair for a country’s proximity to war zones to define its responsibility to refugees. To ward off this danger, the 1951 convention calls on signatories to act in a “spirit of international co-operation”, but places no specific obligations on countries and regions not faced with a refugee influx. Last year’s crisis in Europe revealed the weaknesses of the global refugee regime. Europe learned that its carefully constructed asylum and border rules were no match for migrants who flouted them en masse. But it also found that the arrival of modest numbers of uninvited foreigners quickly upset its comfortable political and economic balance. To keep them out, in March the EU signed a deal with Turkey that skates close to the edge of international law by obliging asylum-seekers who reach Greece to return to Turkey, where some may face inadequate protection or even refoulement. + +All this shows up a glaring difference in the treatment of refugees between the rich and the poor world. In Europe, asylum-seekers are treated generously by global standards, even if some countries have tightened their rules. In most EU countries they can work before they obtain refugee status (or some lesser protection), and certainly afterwards. They are promised housing, freedom of movement and protection from official harassment. Public services generally work well and benefits are adequate. After five years refugees in EU states can usually become permanent residents (which gives them freedom of movement throughout the EU), and in some cases full citizens. And even those whose bids for asylum fail are often granted some of these privileges, partly because governments find it so hard to send them back. + +Fortune favours the brave + +Unwilling to unwind these protections, European governments have simply made it harder for asylum-seekers to reach their borders in the first place. The overall effect has been something akin to a dystopian television game show: the refugees must brave untold hardships to reach their destination, but a glittering prize awaits them once they arrive. + +It seems unfair that proximity to war zones should define responsibility to refugees + +For the 86% of the world’s refugees who fetch up in the developing world, the reverse applies: the journey is often (though not always) less arduous, but conditions are likely to be far worse. By accidents of geography countries that border war zones, such as Lebanon, Jordan and Kenya, find themselves the involuntary hosts of millions of refugees, some languishing in camps, others scratching a meagre existence on the fringes of cities. Some of these countries, particularly in the Middle East, never signed the 1951 convention. Others, mainly in Africa, simply ignore its provisions, denying refugees the right to work or travel, sometimes for decades at a stretch. This leaves the hard-working but largely unaccountable (and often underfunded) humanitarian organisations that care for them, including the UNHCR, to serve as surrogate states, a role for which they are rarely suited. The effect of this approach can be seen in places like Dadaab, a collection of five camps near Kenya’s border with Somalia described later in this special report (and now threatened with closure). There, a second and third generation of refugees is growing up entirely dependent on the rations, sanitation services and schooling provided by NGOs. + +Europe’s dilemma + +This special report will argue that the Refugee Convention, and the further protections embodied in regional agreements, should be retained. But it will also show that fresh thinking is desperately needed to make them work, especially for refugees in protracted situations. Developing countries will continue to host the lion’s share of the world’s refugees, and that need not spell disaster: Syrians may have a better chance of economic and social integration in Lebanon or Jordan than in Europe, and will be more likely to return home if peace is made. Such countries can also usually host refugees at a small fraction of the cost in Europe or America. But they cannot be left to cope with the problem alone, and when their limits are breached others will feel the consequences, as Europe learned last year. + + + +A new compact between rich and poor world is therefore needed. Europe will be the Petri dish. Other regions, including North America and Australasia but also wealthier parts of the Middle East, Asia and even Latin America, may follow. A UN refugee summit in New York in September, devoted to exploring fresh avenues for international protection, offers a chance to start the conversation. + +But it will be hard for rich countries to extend more help to refugees when their own voters are fretting about a loss of control. For European governments in particular, that means two things. First, they must ensure that the integration of refugees like Ahmed proceeds as smoothly as possible, which is harder than many suggest. Second, they need to restore confidence in border management and their ability to control irregular migratory flows. Europe’s response to last year’s crisis was improvised, chaotic, divisive and expensive. The damage was immense, and the loss of confidence will be hard to repair. + +Western governments have been muddying the waters on migration for decades, pretending that the “guest workers” they had imported to ease labour shortages would return home; relying on armies of undocumented migrant workers; and making unrealistic promises about their ability to control borders. This has fostered distrust, allowing anti-immigrant populists to flourish, and shrunk the political space for sensible and compassionate policies. It has exposed the West to charges of hypocrisy, not always unwarranted. The hope must be that Europe’s troubles last year will jolt politicians into taking a more far-sighted approach towards refugee management, including better co-operation among themselves and more help for the poor countries that bear the heaviest load. The fear is that, by spooking voters and polluting politics, it will do the opposite. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21699307-migrant-crisis-europe-last-year-was-only-one-part-worldwide-problem-rich/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The language of migration + +Terminological exactitudes + +The way people talk about migration is carefully modulated + +May 28th 2016 | From the print edition + +WORDS MATTER. OR, as Twitter-savvy migration campaigners on both sides of the Atlantic put it, #wordsmatter. Political advocates have long sought to advance words and phrases likely to generate sympathy for their cause: “pro-life” versus “pro-choice”, “spending cuts” versus “savings”. As opinion has divided over migration, it is no surprise that the political battle has spread to linguistics. + +Broadly, the best term for those who move permanently from one country to another, for whatever reason, is “migrants”. If they are fleeing persecution or violence, they can present themselves as asylum-seekers; once their claim has been accepted, they become refugees, with all the protections that entails. But for some, the term has become loaded. + +The English-language service of Al-Jazeera, a broadcaster, was cheered by refugee-rights campaigners last summer when it vowed to stop calling the people streaming across the Aegean “migrants”, a “reductive” word it said enabled “hate speech and thinly veiled racism”. The UNHCR, as the custodian of a legal framework that relies on a careful distinction between refugees and others, preferred the phrase “refugees and migrants”. For nationalist demagogues like Hungary’s Viktor Orban, “migrant” was about as polite as it got. + +America has experienced similar battles. Latino campaigners have long urged politicians and journalists to “drop the I-word” when referring to America’s estimated 11m illegal immigrants. “Undocumented” is now in wide use, but this perceived concession to political correctness irritates some. Donald Trump rouses his crowds by reverting to the controversial term “illegals”. + +Other languages have their own versions of this war of words. In German, those who object to the standard term for refugees, Flüchtlinge (declared word of the year for 2015 by the Society for the German Language), now use the PC term Geflüchtete (those who have fled). Germans expelled from Czechoslovakia and other east European countries after the second world war became known as Vertriebene (driven out), a term that conferred victimhood. Mexicans who unofficially live in the United States call themselves sin papeles (“without papers”). + +In Europe the picture is clouded by mixed motives and imperfect data. Afghans make up the second-largest group of arrivals, but around one-third of their asylum claims are rejected. How should they be categorised? Few Syrians leaving homes in Turkey and Lebanon are fleeing for their lives, but most win some form of protection in Europe. And many Africans who emigrate for economic reasons encounter the sort of persecution on their journeys that provides grounds for asylum. The distinction between “refugees” and “migrants” matters to lawyers as well as linguists. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21699314-way-people-talk-about-migration-carefully-modulated-terminological-exactitudes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Politics + +Welcome, up to a point + +Politicians must keep better control of migration, and tell the truth + +May 28th 2016 | From the print edition + + + +THE EARLY STAGES of Europe’s refugee crisis produced heartwarming images. Volunteers flocked to Greek islands to help the refugees clambering ashore from their overloaded rubber dinghies. Locals lined the platforms of German railway stations, applauding the migrants as they stepped off the trains. “I’ve never been so proud of my country,” says Kadidja Bedoui of We Do What We Can, a voluntary outfit in Sweden, which at the peak was receiving over 10,000 migrants a week. + +But as the people kept coming, more voters started to believe populists who claimed that governments had lost control. The Sweden Democrats, an anti-immigrant party that had gained notoriety with a television spot showing burqa-clad Muslims overtaking a shuffling pensioner in a race for public funds, topped polls. Eventually Sweden’s overwhelmed government slammed on the brakes, erecting border controls and tightening asylum rules. Other European countries saw the chaos in Sweden and Germany as an example of what not to do. + +International law obliges governments to help refugees who reach their borders, but domestic politics constrains their room for manoeuvre. Europe presents a double challenge. First, it is a rich region with a commitment to human rights that happens to sit next to two poor, troubled and crowded ones: Africa and the Middle East. Second, it is a (largely) borderless club of geographically concentrated states with widely varying economies, benefit systems and labour markets. Asylum-seekers shop around, leaving some EU countries to bear a far heavier burden than others. That sets governments against one another. + +The EU’s progress on migration and asylum rules has been agonisingly slow + +Over the years the EU has taken halting steps to manage this problem. The 2004 Qualification Directive, built on the framework of the 1951 Refugee Convention, extended the scope of protection beyond the definition in the convention and provided for common grounds on which it could be granted. Other rules guaranteed minimum reception standards for asylum-seekers across the EU and set out which country was responsible for each asylum claim (usually the first one a migrant sets foot in). Member countries were unwilling to sacrifice too much sovereignty (for example, by allowing EU officials to adjudicate asylum claims), but the rudiments of a common asylum policy worked well enough when the number of arrivals was limited. + +But all that changed when over 1m asylum-seekers reached Europe last year. Most of them had travelled across safe countries; indeed, a good number hailed from them, particularly those Africans who sailed to Italy from Libya. European governments had to decide whether to follow through on the promise of comprehensive protection implied in the EU’s asylum directives—and in the rhetoric of some of their leaders. + +The answer turned out to be no. A Eurobarometer poll last July, even before the arrivals peaked, found that immigration had become Europeans’ biggest concern, far ahead of the economic issues that usually dominate such surveys. Populist parties like the Sweden Democrats linked governments’ handling of migration to their established claim that elite parties are incompetent or treacherous. Once the Willkommenskultur in Germany and elsewhere receded and the backlash began, panicked governments put up border controls and struck questionable deals with third countries to keep migrants out. A series of sexual assaults by migrants on German women in Cologne on New Year’s Eve further darkened the mood. + + + +Other rich countries have not faced irregular arrivals on anything like Europe’s scale, leaving them largely free to design their own refugee policies. The United States, which signed the 1967 protocol to the Refugee Convention but not the original document, has traditionally taken in the bulk of refugees resettled by the UNHCR. But for decades its response was driven by foreign-policy considerations; between 1956 and 1968 all but 1,000 of the 233,000 refugees it admitted came from communist countries, according to Gil Loescher, a refugee analyst. + +America continued to resettle refugees after the end of the cold war, and remains the UNHCR’s biggest donor by far. But today security fears, sharpened after last year’s terrorist attacks in Paris and the mass killings in San Bernardino, California, make it harder for the Obama administration to take in more than its current plan for 10,000 Syrians (on top of 75,000 refugees from elsewhere). Lingering memories of the large numbers of illegal immigrants who arrived in America from Mexico and Central America in search of jobs in the 1990s may also have limited politicians’ options. + +Pick and choose + +Canada has taken a different approach. Its physical remoteness from any refugee streams has allowed it to pursue a generous but selective immigration policy, based mainly on its own economic needs. One-fifth of its population is now foreign-born, the highest rate in the G8, and nearly half the immigrants have a tertiary education. Last year Justin Trudeau, the newly elected prime minister, declared Canada the world’s first “post-national” state. Public confidence in the country’s migration policy allowed Mr Trudeau to campaign on a pledge to resettle 25,000 Syrian refugees, a rapidly executed policy that proved so popular that the quota was increased to 35,000. A grateful Filippo Grandi, head of the UNHCR, calls Mr Trudeau one of his two “saviours” (the other is Jim Yong Kim, the president of the World Bank). + +But geographical seclusion can cut both ways. Japan showers money on the UNHCR but until 2010 accepted no refugees at all, in keeping with a closed-door migration policy that few voters seem minded to overturn. Australia does resettle thousands of refugees each year, but has taken a tough line on spontaneous arrivals since a surge in boat people from South-East Asia three years ago. The navy now intercepts all asylum-seekers at sea and either sends them back to their port of departure or directs them to detention centres in Papua New Guinea and Nauru. This expensive and legally dubious policy enjoys bipartisan political support, and Australia bristles at international criticism. Politicians have hinted at revising or even withdrawing from the 1951 convention, which Australia signed. + +EU officials often fume about the opprobrium heaped upon Europe over migration while rich Gulf or Asian states look the other way. Every time spontaneous arrivals to Europe surge, so do calls for barriers to be erected, navies to be dispatched, laws to be scrapped—and allegations that Europe has succumbed to a new age of prejudice. That is unfair. In Britain, for example, where concerns about migration have been rising for years (as has immigration itself), standard measures of xenophobia have been declining: just 15% of people worry about a relative marrying someone of a different race, down from 50% in the mid-1980s, according to research by British Future, a think-tank. + +Instead, the hostility springs from a fear that governments have lost the ability to manage who may or may not cross their borders, supposedly one of their primary responsibilities to citizens. “Nothing erodes public acceptance of migration like the perception that it is out of control,” says Paul Scheffer, a Dutch analyst. That is why Europe, having messed up its initial response to the migrant crisis, had no alternative but to strike its deal with Turkey in March. + +Voters have also grown tired of confusing and contradictory messages. Rare is the politician who can speak honestly about immigration. When foreign workers first arrived in large numbers in western Europe decades ago, political leaders, especially in Germany, insisted that theirs were not immigration countries. But over the years voters watched a different story unfold as the sights and sounds of the streets changed and governments started to write integration policies. In countries like Spain and America, politicians’ reluctance to acknowledge that they needed foreign workers led to growing irregular immigration and, later, to embarrassing amnesties. America is still battling this legacy. Immigration from Mexico to the United States went into reverse at least two years ago, yet 38% of American voters agree with Donald Trump’s proposal to build a giant wall along the country’s southern border. + +Politicians still struggle to talk about immigration, says Sunder Katwala of British Future. He thinks they should avoid dismissing public anxiety by spouting facts and figures, which preaches to the converted but confirms sceptics’ fears about detached elites. But they should also resist aping the rabble-rousing of populists who will never command majority support. The messages that resonate best with voters acknowledge the pressures of migration while calling for the benefits to be harnessed. Some politicians are getting the message. Since Sweden’s mainstream parties lifted the taboo that once surrounded debates on immigration, support for the Sweden Democrats has slid. + +Most importantly, politicians should remember that unrealistic promises may come back to haunt them. David Cameron, Britain’s prime minister, will never live down his doomed vow in 2010 to reduce annual net immigration to his country to below 100,000 (“no ifs, no buts”). Politicians in Sweden and Germany may be repeating that mistake by pledging to send back tens of thousands of failed asylum-seekers, which on past form they will find hard to do. Designed largely to deter new migrants, such talk instead risks further eroding public trust. + +But many liberals also need to come clean. The police and media cover-up after Cologne shattered many Germans’ confidence in their government’s policy. All sides need to accept that rich countries cannot remain immune from the global increase in mobility, and that certain sectors would collapse without migrant labour; but also that refugees are not invariably a great boon to economies, as advocates suggest. But to ensure the maximum benefit from the arrangements for everyone, the newcomers have to be properly integrated. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21699310-politicians-must-keep-better-control-migration-and-tell-truth-welcome-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Integration + +A working solution + +The best way to settle newcomers is to find them jobs + +May 28th 2016 | From the print edition + + + +YEHYA IS ONE of the lucky ones. A refugee from the northern Syrian city of Aleppo, he reached the Netherlands in June 2015, before the rush of arrivals swamped the asylum system. He obtained protection in just two months, entitling him to begin integration classes at Implacement, an Amsterdam-based firm that offers refugees three-month courses on language, computer literacy and a basic introduction to Dutch life, taking in everything from taxes to transsexuals (“Muslims find that a bit strange,” admits an administrator). + +Classes like these began in the early 1980s, springing from a Dutch integration policy written by Rinus Penninx, an academic who feared that the guest workers the Netherlands had been importing, largely from Turkey and Morocco, and their descendants were in danger of becoming an underclass. Initially legal, economic and social integration was encouraged, but culture, religion and customs were to be left out as part of a laissez-faire approach that later, in the Netherlands and elsewhere, became known as multiculturalism. + +It’s compulsory + +In time that changed as some Dutch voters grew anxious about the cultural distance between some groups of migrants and mainstream society. In 2004 the debate sharpened after a Dutch-Moroccan Islamist murdered Theo van Gogh, a controversial film-maker. Integration became, and remains, contested political territory. The government shifted the burden of integration to the migrants themselves, which Mr Penninx frowns on. Today the “Integration in the Netherlands” website baldly states: “You have three years to integrate…You must pass the integration exam within this period of time.” This exam, which tests language skills and knowledge of Dutch society, is compulsory for any migrant who seeks to obtain permanent residence. Failure to integrate can incur a fine of up to €1,250 ($1,410). After last year’s influx, other countries, such as Germany and Belgium, are mulling tightening integration requirements for refugees. + +Many European governments face a dilemma: better conditions for asylum-seekers should help their integration, but may also attract more of them. Under the strict Dutch approach, asylum-seekers may not receive anything more than basic state assistance until their claim has been processed. After last year’s surge in asylum applications to 59,000, that can take a year or more after arrival. Limited employment rights are offered after six months. This delay infuriates local politicians, who want to get on with integration while asylum-seekers are still motivated. + +Integration is one of the three “durable solutions” the UNHCR seeks for refugees. In the poor world, most governments fear unsettling their own citizens by allowing refugees to flood labour markets. That is less of a concern in the developed world; indeed, there is evidence that over time refugees may spur low-skilled natives to move into more productive employment. But the record of rich countries in integrating immigrants into the workforce is mixed. America does well; its flexible labour market creates large numbers of low-skilled jobs, and officials aim to get resettled refugees into work quickly. Last year the Migration Policy Institute, a think-tank, found that in the United States, between 2009 and 2011 male refugees were more likely to be employed than their locally born counterparts; female refugees fared as well as American women. + +In Europe the results are patchier. Some of the more visible signs of failure to integrate earlier immigrants—from the banlieues that ring French cities to the divided towns of northern England—make it harder for governments to take in new ones. The country to watch is Germany, which took in 1.1m asylum-seekers last year. Some will be refused protection, and others will return home voluntarily. But Germany still faces the biggest integration challenge in Europe; failure will discredit Angela Merkel, the chancellor, and hamper her attempts to organise a pan-European resettlement scheme for Syrians. The Cologne assaults stoked concerns about cultural clashes. But the challenge of finding employment for hundreds of thousands of people may prove tougher. + +“What is integration? It’s a job, and speaking German,” says Achim Dercks of the Association of German Chambers of Commerce and Industry (DIHK). Recognising the power of work to integrate newcomers, in 2014 Germany cut the waiting period before asylum-seekers can look for a job to three months. By EU law most countries must open their labour markets to asylum-seekers after nine months, though several do not. All refugees are entitled to work once their claim has been approved. + +Access to the labour market is of little use if migrants cannot speak the language. That mattered less for the Turkish and Moroccan guest workers who manned Dutch and German assembly lines in the 1960s and 1970s. But today even basic jobs require linguistic fluency, if only to understand health and safety rules, so most governments lay on language classes for newcomers. That delays entry into the labour market. + +A bigger problem is that refugees have tended to flock to countries with little need for low- or unskilled labour. Half of those who have arrived in Sweden in the past two years have nine years or less of schooling, says Susanne Spector, a labour-market economist at the Confederation of Swedish Enterprise, but 95% of jobs require more than that, and the few basic jobs available attract an average of three applicants each. Germany’s Federal Employment Agency reckons that only 10% of the recent arrivals will be ready to work after one year, 50% after five years and 70% after 15. (Mr Dercks is more optimistic.) + +That leaves a lot of migrants drawing unemployment benefit; and long-term welfare dependency, particularly of non-citizens, drains treasuries and fosters resentment. Christina Merker-Siesjo, who runs Yalla Trappan, a social enterprise for migrant women in Rosengard, a refugee-heavy district of Malmo, says Sweden’s generous benefits can induce passivity among newcomers. Better to get them involved in some form of activity as soon as possible, whether paid or voluntary. + +A recent IMF report urges countries to make labour markets more flexible to speed up the integration of refugees. Germany’s Hartz labour and welfare reforms, introduced between 2003 and 2005 by the then chancellor, Gerhard Schröder, made it more attractive to take the sort of low-skilled work that may suit many refugees, but plenty more can be done to loosen up what remains a tightly regulated labour market. From this summer a new “3+2” rule will protect refugees on three-year vocational courses from deportation for two years after completing their training, removing a disincentive to recruiting them. Germany may not be crying out for low-skilled labour, but its tradition of vocational training can provide a bridge into work for some. The country could also do a better job of recognising the qualifications of skilled refugees, such as doctors. + +In Sweden nearly 20% of the non-Europeans who immigrated in 2002-12 were asylum-seekers and refugees, and last year’s influx will have pushed the number higher. This helps explain why unemployment for immigrants, at 16%, is almost three times that for natives. Employment rates for refugees are lower than for native Swedes even after ten years. Ms Spector says that in the long run the best thing the government could do for immigrants is to allow much greater variation in pay to encourage employers to create more low-skilled work. + +The lesser of two evils? + +That would be a hard sell in a country that cherishes its collective-bargaining traditions, in which employers and unions negotiate annual wage deals. But some opposition parties have urged a reduction in pay to get more refugees into work. Sweden may ultimately have to choose between unemployment ranks swollen by refugees or a looser approach to employment and benefit rules, including stronger incentives to work. That will be tricky. The Hartz reforms, though widely credited with keeping German unemployment low, were blamed in part for Mr Schröder’s defeat at the polls in 2005. + +Last year’s influx of refugees included many children, and educating them will be crucial for long-term integration. Countries must balance their specific needs—especially language learning, which calls for segregated teaching—against the social value of teaching them in the same classrooms as everyone else. Germany has recruited new teachers and set up one-year “welcome classes” for newcomers with a focus on language teaching. + +Housing presents another challenge. In most countries asylum-seekers are placed in reception centres until their cases are heard (unless they can find their own accommodation). Once accepted, they are usually free to live where they like. But cities that are popular with refugees, such as Berlin, may not offer the best work opportunities or be well placed to provide welfare support. To avoid overconcentration, the German government is considering obliging refugees to stay put for their first two years. + +Canada has tried an alternative to the usual state-led integration model. Since 1978 it has allowed voluntary groups, such as churches or diaspora organisations, to sponsor refugees privately, supporting them financially for a year and introducing them to life in their new home. One-third of the 25,000 Syrian refugees Canada has recently taken in were resettled this way. Privately sponsored refugees tend to integrate more quickly; one study found that after a year 76% had jobs, compared with 45% of those backed by the state. The British government is now considering a scheme along Canadian lines. + +But in the poor countries where most refugees live, integration poses an entirely different set of problems. In long-established refugee camps NGOs usually provide services like health care and education, sometimes to a higher standard than is available to the country’s ordinary residents, but governments rarely allow the refugees to work. Labour-market restrictions have forced most of the working-age Syrian refugees in Turkey, Lebanon and Jordan into black-market jobs, with the attendant exploitation. Little wonder that so many aspire to a better life in the West, either braving dangerous journeys to get there or accepting a long wait for a state-backed resettlement. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21699306-best-way-settle-newcomers-find-them-jobs-working-solution/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Demographics + +Not so fast + +Refugees cannot solve Europe’s demographic woes + +May 28th 2016 | From the print edition + + + +A CONSPIRACY THEORY took hold in Germany last year: it was self-interest, said critics, not compassion, that led Angela Merkel to open the door to hundreds of thousands of refugees. Greying Germany, expected to lose 10m of its current population of 81m by 2060, desperately needed an injection of young workers to boost its labour force and prop up its pension schemes. Who better to provide it than the young migrants streaming across the border? And what was good for Germany was good for its neighbours. Nine of the world’s ten countries with the highest share of over-65s are European (the tenth is Japan). Nor are more babies likely to bring relief: the fertility rate in all EU countries is below—often far below—the replacement rate of 2.1 children per woman. + +Four-fifths of asylum applicants in the EU last year were younger than 35. Thanks to immigration, Germany’s population stopped falling in 2011 and has been rising slightly but steadily ever since. Young immigrants can help ageing societies in two ways: they lower the dependency ratio (the proportion of the non-working young and old to people of working age), and they often have more children than the native population, at least initially. America’s open immigration policy has helped it maintain a relatively healthy age structure. By contrast, the population of Japan, which allows almost no immigration, is declining by hundreds of thousands a year. Last year, as the magnitude of the refugee inflows became clear, Vítor Constâncio, a vice-president of the European Central Bank, said that immigrants could stop Europe from committing “demographic suicide”. + +But migrants are no demographic panacea. The scale of immigration needed to compensate for Europe’s rising age profile is politically implausible. Germany’s Federal Statistics Office recently calculated that the country would need to accept 470,000 working-age migrants a year to offset its demographic decline. And the migrants would have to keep coming, because they age, too, and their fertility rates tend quickly to converge with those of the native population. Besides, they do not always stick around. The fertility fillip Spain got from high immigration before the financial crisis, for example, evaporated when foreign workers went home after the 2008 crash. + +Indeed, demographics can present a threat as well as an opportunity. Population forecasts for the Arab world and, in particular, sub-Saharan Africa foreshadow growing migration pressures. Thirteen of the 15 countries with a total fertility rate (roughly, numbers of children per woman) above five are in Africa. In 2050, according to UN forecasts, the population of Africa will be three times that of Europe, compared with less than twice as much today. The continent already struggles to find jobs for the 11m young men and women that reach working age every year. Governments are often content to see young people leave: emigrants relieve pressure on labour markets and send home juicy remittances. Europe will remain the destination of choice for most of them, but they may not be a good fit for the jobs on offer there. + +Better, then, to help developing countries create jobs for their own? The king of Morocco supposedly once told EU leaders that if they did not want his people, they would have to scrap their agricultural subsidies and take his oranges instead. This apocryphal story got things upside-down: emigration in poor countries tends to rise with income per person, up to around $7,500 a year, as people acquire the means to leave. The African migrants who reach Europe via Italy are often among the richer and better-educated. So as Africa gets wealthier, more of its people may decide to chance their hand elsewhere. Some will go to richer parts of their own continent, but plenty will seek the bountiful lands to their north. Europe, look out. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21699309-refugees-cannot-solve-europes-demographic-woes-not-so-fast/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Resettlement + +Bring me your huddled masses + +It worked for the Indochinese. Why not the Syrians? + +May 28th 2016 | From the print edition + + + +NINE COUNTRIES HOST most of the world’s refugees. None of them is wealthy. All border war zones, from Syria to South Sudan. The simplest way for rich countries to help the poor ones that shoulder the lion’s share of the global refugee burden is through resettlement, the UNHCR’s second “durable solution”: accepting refugees directly from the countries they have fled to. Many countries have had annual resettlement quotas for decades, agreed with and implemented through the UNHCR. America, for example, plans to take in 85,000 refugees this year. But the numbers are nothing like enough to accommodate the most acute refugee emergency: the 5m or so Syrians stranded in Turkey, Lebanon and Jordan, not to mention the 7m displaced inside Syria, many of whom could still flee. + +That is why some Europeans have sought a new approach: eliminate, or at least drastically reduce, irregular migrant flows, and launch a mass refugee-resettlement scheme instead. It is a beguiling idea: replace chaos with order, destroy the business models of the smugglers who thrive on illegality, and have countries choose refugees rather than the other way around. + +Mass resettlement was supposed to play a large part in the controversial agreement struck between the European Union and Turkey on March 18th. The deal committed the Europeans to taking in one Syrian refugee from Turkey for every irregular Syrian sent back from Greece. Larger numbers would be resettled under a separate “voluntary humanitarian admissions” scheme, which could also include Jordan and Lebanon. The more ambitious speak of resettling 250,000 Syrians a year to Europe. If that inspired America and other rich countries to step up their efforts, the burden on Syria’s neighbours might become more manageable and the chaos of irregular migration could be brought under control. + +Some Europeans are now arguing for a new approach: drastically cut back irregular migrant flows and put in place a mass refugee-resettlement scheme instead + +It has been done before. Almost all of the 180,000 Hungarians who fled to Austria after the Soviets suppressed the 1956 uprising were quickly resettled, some as far afield as Nicaragua and New Zealand. But for most the model is the Indochinese “boat-people” crisis that began in the 1970s, which gave rise to perhaps the most successful mass resettlement in history. Millions of refugees scrambled on to boats to flee the communist governments that took over in Vietnam, Laos and Cambodia following the American military withdrawal in 1973. When overburdened South-East Asian countries started to turn refugees away, the international community took action. Between 1975 and 1995 about 1.3m Indochinese refugees were moved to rich countries, mainly the United States, Canada and Australia. + +Most settled in well. In America, the median household income of immigrants from South-East Asia is now higher than that of people born in the country. Filippo Grandi, the UN’s refugee chief, notes proudly that the refugee co-ordinator who showed him around Illinois on a recent visit was an evacuee from Vietnam. The response to the Indochinese boat people suggests that co-ordinated global action with a big dollop of political will can resolve refugee crises. Could it work for Syrians? + +Probably not. The numbers are far larger today, and Syrians are not the only people seeking refuge. America’s generosity towards the boat people sprang in part from a desire to show solidarity with the victims of communist regimes. (The same had been true of the Hungarians.) The West may sympathise with the victims of Bashar al-Assad’s barrel bombs, but sees little geopolitical gain in helping them. Even the Indochinese effort was neither quick nor easy. It involved several false starts and lots of arm-twisting, and took years to complete. And Europe’s political will has been sapped by the chaos of last year’s mass arrivals. + +But if Europe cannot muster the will for mass resettlement, the danger is of drift towards an Australian-style solution in which a “hard” rejection policy is unleavened by generosity and neighbours are left to bear the burden. Australia boasts that it has eliminated the unplanned arrival of asylum-seekers by sea. But its politicians’ promises to boost the resettlement of refugees have not been kept: quotas fell from 20,000 in 2012-13 to 13,750 in 2014-15 (although numbers are due to rise again). Campaigners devote their energy to undoing Australia’s offshoring deals with Papua New Guinea and Nauru rather than boosting resettlement numbers. Europe may be moving in this direction: the push for resettlement has got lost in the row over the deal with Turkey. + +Chaos into order + +If Europe cannot do it, what about the rest of the world? Canada’s programme, described earlier in this report, is generous but pricey, and highly selective: single men are placed at the back of the queue. America is already struggling to meet its pledge to resettle 10,000 Syrians this year. Barack Obama would probably like to take more, but that will be hard in an election year dominated by Trumpian immigration demagoguery. And fears of terrorism have clouded the issue, despite elaborate screening protocols for refugees that can take two years or more. After last November’s attacks in Paris, Republican governors fell over themselves to declare their states closed to refugees. + +In other regions the picture is dimmer still. Japan and South Korea, never known for generosity towards refugees, have not agreed to accept any Syrians at all. The same goes for the rich Gulf states, none of which has signed the Refugee Convention. Some, such as Saudi Arabia, host large numbers of Syrians on work visas, but these offer nothing like the protection afforded by refugee status. Brazil is a brighter spot; it has issued humanitarian visas to over 8,000 Syrians under an open-door policy, although barely a quarter of them have made the journey so far, not least because they have to find their own air fares. + +With the usual routes apparently blocked, Mr Grandi has tried to expand the criteria for resettlement through “additional pathways”—university scholarships, expanded family reunion and humanitarian visas. Over the next three years the UNHCR hopes to move at least 450,000 Syrian refugees to the West, mainly from Turkey, Jordan and Lebanon. But a recent conference in Geneva failed to attract many new resettlement pledges. + +It seems clear that there will be no Indochinese-style mass resettlement solution to Syria’s refugee crisis. That may not be a disaster. Resettlement is in some ways an admission of defeat. Refugees who have been accepted into a third country are less likely to return to their original homes than those who remain where they were first granted asylum. “I’m not a big fan of [resettlement], but what are the alternatives?” asks Mr Grandi. For those in the world’s most “protracted refugee situations”, that is a crucial question. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21699308-it-worked-indochinese-why-not-syrians-bring-me-your-huddled-masses/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lebanon’s and Jordan’s plight + +Caught by geography + +Syria’s neighbours bear a heavy burden + +May 28th 2016 | From the print edition + + + +LOOK AT US, we’re just sitting here,” says Hassan al-Barouk, a refugee from al-Qusayr, a Syrian town near Homs. The air inside the tent in which your correspondent encounters Mr al-Barouk and a cluster of other refugees, part of a small camp outside the Lebanese town of Saadnayel, is thick with hopelessness. There is no talk of adventuring to Europe, no question of an organised resettlement to a country that might offer a future. Instead the complaints pour forth. The Lebanese authorities make it impossible to register, which denies refugees the ability to move freely. Schools arbitrarily stop Syrian children from attending classes. Work is forbidden. The main way of passing the time is swapping WhatsApp messages with friends and family back home, as the regular phone chirrups testify. Everyone in the tent says they want to return home to Syria, but no one believes it can happen soon. + + + +Refugees like the 24 families in this “informal tented settlement” (the Lebanese government does not allow official refugee camps) make up 15-20% of the Syrians in Lebanon. Most of the rest rent their homes, which are often just garages or disused warehouses. The camp-dwellers are the poorest of the bunch, obliged to sell assets and take on debt to pay their bills, including annual rent of $300-$1,000 a year per tent. NGOs are on hand to help, but food rations have been cut for lack of funding. Only emergency medical treatment is covered. Some towns here in the Bekaa valley, an agricultural region in Lebanon’s east, have more refugees than locals. And they are not going away. + +A troubled land + +Lebanon has more refugees per head of population than any other country; its near-neighbour Jordan has one-third the number. Riven by sectarian strife between its Sunni, Shia and Christian populations, and with a 15-year civil war in living memory, Lebanon is a minnow in a volatile region with irascible giants like Iran and Saudi Arabia tugging at its politics. Its fractious parliament has been unable to elect a president since 2014, and struggles to hold legislative sessions more than once a year. At times the state is unable to perform basic functions, as the mountains of uncollected rubbish bags on some streets testify. + +Lebanon’s economy was spluttering even before the Syrian refugees crossed over, and the 1.5m now inside its borders—more than the total number of asylum-seekers who reached Europe last year—make up over one-quarter of its population, disrupting the labour market, overburdening water and sanitation systems and, since the vast majority are Sunni, upsetting the sectarian balance. The public debt has swelled. Lebanon’s attempts to distance itself from Syria’s strife have faltered as Hizbullah, the Shia militia, has intervened to help the Assad regime and Sunni terrorists have scrapped with Lebanese troops in the country’s north-east. Add to all this the apparently insoluble problem of the half-million Palestinian refugees living in the country, and you might reasonably ask how Lebanon is managing. + +To answer that, Nasser Yassin, an academic at the American University of Beirut, points to the extensive and long-standing informal networks between Syrians and Lebanese. Under a deal struck in 1993 Syrians could work in Lebanon without visas; perhaps half a million were doing so before the war. (Jordan had a similar arrangement.) Many of the scruffy refugee settlements around Lebanese towns grew out of informal housing plots for Syrian farm workers. Syrians working illegally for low pay on farms or building sites are competing mostly against each other (or Palestinians); few Lebanese are interested in such jobs. Europe, suggests Mr Yassin, could learn a thing or two from Lebanon about the value of informal mechanisms. + +Perhaps half the Lebanese economy is underground, and the authorities tend to turn a blind eye to Syrians who work without permits. The owner of a large, popular Syrian restaurant in the middle of Beirut says finance-ministry officials told him to find a Lebanese business partner to get round ownership restrictions. He, and many other Syrians like him, are useful sources of employment for refugees. Some Syrian capital has followed refugees over the border, and private landlords benefit from lots of new tenants who are pushing up rents. Every refugee has a story to tell about ill-treatment at the hands of locals, but there have been no widespread protests or reports of systematic persecution. The wide dispersal of refugees around the country may have helped. + +Thus has Lebanon stayed afloat for now. But, notes Mr Yassin, the country is storing up trouble. Life has become much tougher for refugees since the government tightened its rules last year. Registered Syrians must now pay $200 to renew residency permits and sign a pledge not to work; the non-registered require a Lebanese sponsor. Most refugees do not have official papers, and over two-thirds live below the official poverty line. Some schools are “double-shifting” (Lebanese in the morning, Syrians in the afternoon), but most refugee children are not in school at all. Many must toil in the fields to help keep their families going. + +Little wonder so many Syrians grabbed the chance to leave for Europe when it came last year. In January, as Turkey prepared to reintroduce visas for Syrians travelling from third countries, the queues at Beirut airport stretched around the block. But now that that valve has been shut, a large, idle population could start to pose a security threat. Jabhat al-Nusra, a Syrian al-Qaeda affiliate, has sought to recruit among refugees. + +Can the UN’s “durable solution” of integration work here? Not according to one French official, who says Lebanon would collapse if forced to offer citizenship to all the refugees it has taken in. That may be true, but there is plenty of ground between the extremes of mass naturalisation and permanent limbo. Fortunately the West has started to rethink its approach. A recent donor conference in London raised $11 billion for Syrian refugees, and promised more help for host communities. + +This is already bearing fruit in some quarters. The deputy mayor of Majdal Anjar, a town in the Bekaa that took in 25,000 refugees, boasts about the shiny new rubbish-collection vehicle he has been sent, courtesy of the UN. Donors such as Britain speak enthusiastically of funding sewage systems, irrigation projects and flood walls for particularly burdened regions. The EU plans to relax trade barriers on certain goods from Jordan to create jobs for both locals and refugees. In exchange for all this largesse, donors want the beneficiaries to do more for the refugees they host, in particular by opening up their labour markets. At the London conference the Lebanese government promised to ease formal restrictions in a few sectors. This summer Jordan plans to launch a pilot programme that will offer work to 150,000 refugees in low-tax special economic zones. + +Charges that the West hopes to manage its refugee problem by throwing money at it may be justified. But money goes further in the region than it does at home: Mr Yassin estimates it can cost 40 times as much to host a refugee in Britain than it does in Lebanon. And although the NGOs are skint, fresh forms of financing are emerging. The World Bank recently relaxed its rules on providing cheap loans to middle-income countries facing humanitarian crises, such as Jordan and Lebanon. + +A hologram government + +In some ways Lebanon is a special case. What Rabih Shibli, also at the American University of Beirut, calls its “hologram government” makes it difficult for foreign diplomats to extract reliable commitments. And like most other Middle Eastern countries, Lebanon held back from signing the Refugee Convention. But more than five years into the Syrian crisis, there are signs that the government may relax some of its strictures, particularly if its own citizens can see some benefit. Here, and elsewhere in the region, donors can encourage this by working with the grain of successful regional and local programmes. A more predictable funding structure would help, so that refugees do not see wild swings in their financial support, and municipalities can better plan their provision of public services. And the West’s resettlement efforts should extend beyond Turkey to Jordan and Lebanon. + +All told, the refugees in Lebanon and Jordan are probably still better off than the hundreds of thousands in Kenya’s Dadaab camp 4,000km to the south, near the Somali border, who have lived there all their lives. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21699315-syrias-neighbours-bear-heavy-burden-caught-geography/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Refugee camps in Africa + +From here to eternity + +Kenya’s Dadaab camp has become many refugees’ permanent home—but the goverment wants to shut it + +May 28th 2016 | From the print edition + + + +“STATUS DETERMINATION”. “IMPLEMENTING partners”. “Well-founded fears”. One of the first things you notice about Dadaab, a sprawling collection of refugee camps in the Kenyan desert 90km (56 miles) from the Somali border, is the jargon. It comes thick and fast in conversation with the NGO workers running the field offices and health clinics. It is on the posters in agency compounds and the donated t-shirts sported by toddlers. You even hear it from some of the younger refugees, because the quickest way to get a water pipe fixed or a latrine built is to use the language of rights and repression. In Dadaab, the world’s largest agglomeration of refugees, the bureaucracy is almost as stifling as the heat. + +It was not supposed to be like this. The refugee-protection regime established after the second world war promised livelihoods and security offered by stable states, not NGOs. But although many Europeans may imagine refugees as people on the move—crossing the Mediterranean in overloaded rubber dinghies or trudging through the Balkans—Dadaab is closer to the reality of most of the world’s displaced people. Some 345,000 refugees, 95% of them Somalis who have fled across the border, are spread across five camps, their lives governed by dozens of NGOs that have little understanding of development or state-building, and a Kenyan police and security presence that at times can feel more like an occupying force. + +Back in 1991, when the UNHCR first consolidated the informal settlements established by Somalis fleeing civil war into an organised refugee camp, no one expected Dadaab to last this long. But over time the camps grew (some now resemble cities), informal economies emerged and people got used to the life. Somalia’s endless strife made return home difficult for most. + +In many respects the NGOs that run the place do a fine job. The schools they operate are overstretched, but that is partly because they have attracted lots of pupils. There are no funds for treating chronic conditions, but the clinics are clean and well run; a cholera outbreak late last year was quickly contained. Many refugees dislike the maize, beans and flour they are given—“donkey food”, says one—but now that the UNHCR has introduced a biometric system to cut fraud, it is at least distributed efficiently. There are flourishing secondary markets for UN rations. In some ways the services are better than those available to some Kenyans, so thousands of locals, mainly ethnic Somalis, have passed themselves off as refugees to gain access to the camps. + +But agencies can do only so much. Few refugees are able to work. Once children finish school there is little chance of higher education except for the lucky few who obtain scholarships to places like Canada. “What’s the point?” asks Deka Abdullahi, an ambitious 18-year-old at Hagadera Secondary School, who complains that her hard work will leave her no better off than girls who quit school years ago. Many refugees have simply pressed pause on life, idling away the hours by chewing the fat (or the khat). A second generation has grown up with no knowledge of life outside Dadaab; a third is already 10,000 strong. + + + +The “docile, disempowered” refugees, writes Ben Rawlence in City of Thorns, an account of life in Dadaab, “do as they are told. They hesitate before authority and plead for their rights in the language of mercy.” Their lives are shaped by external forces that reach the camps through two main tribunes: the agencies and NGOs that sustain them, and the Kenyan government, which wants to close them. Then there is the violence of Somalia’s al-Shabab insurgency, which has spilled over into the camps in previous years. + +Dadaab is a much safer place these days, but that is not how Kenya’s politicians see things. The government says the camps harbour al-Shabab terrorists. In May it abruptly disbanded its department for refugee affairs and said it would close Dadaab by May 2017, without explaining how such a massive operation might be carried out. Some saw the announcement as a ruse to extract more money from donors, who have been distracted by the Syrian crisis. Since 2010 the UNHCR’s funding for Dadaab has fallen from $223 to $148 per person a year (excluding food). The World Food Programme cut its rations by 30% last year. Previous pledges to close Dadaab have come and gone, yet this time the government seems more determined. + +The Kenyan government has clamped down on refugees’ freedom of movement + +Aid groups warn that closing Dadaab could trigger a humanitarian catastrophe, particular if refugees were sent into danger zones across the Somali border. But the government has rarely been interested in outsiders’ views. For years donors have urged Kenya to allow refugees to integrate, by loosening restrictions on work, opening up to investment in infrastructure or allowing them to move out of the camps. But even if the government does retreat from its plan, there is no prospect of local integration for the denizens of Dadaab, and only a lucky few will be resettled. + +That leaves the UNHCR’s third “durable solution”: voluntary repatriation. In 2013 the UNHCR and the Somali government bowed to Kenyan pressure and backed returns for Somalis in Dadaab. Under this “tripartite agreement” the UNHCR arranges journeys back to Somalia for willing refugees. They are given a $100 voucher for food, and agents follow up with phone calls to check on their progress. “The world is looking at the Middle East, not at us,” says Abdisaid Aden, a former businessman, as he prepares to board a repatriation flight to Mogadishu after five years in Dadaab. He blames cuts in the camps for his decision to leave. Over 14,000 refugees have returned since the scheme took effect in December 2014. But that is not fast enough for the government. + +Almost all those who have been repatriated are from the second influx of Somali refugees, who arrived in Dadaab in 2010-11 fleeing drought as much as violence. The first, much larger wave, dating to 1991-92, will be harder to persuade. With settled lives in the camps, they have more to lose and, in most cases, little to return to: most have sold, or lost, what assets they had in Somalia. “I’m not going anywhere,” grins Bishar Barre, a tailor who has lived in Hagadera, the largest of the five camps, since 1992. His small clothes-repair outfit keeps him busy, and his ten children have places in the camp’s schools. He says he will leave only if everyone else does. + +Try another way + +Elsewhere in Kenya things may be more promising. In Kalobeyei, a settlement outside Kakuma, another refugee camp, in the remote north-west, a plan is afoot to grant refugees small plots of land and allow them to sell their produce. (Kakuma was also slated for closure in May, but the government appears to have backtracked, as there are no suggestions of terrorist links to the camp.) Cash vouchers may replace food rations to encourage local economic integration. It is early days, but agencies hope Kalobeyei may be built up to accommodate 60,000 people. The experiment was inspired by a model over the border in Uganda, where refugees from Congo, Rwanda and elsewhere have long been granted a degree of self-reliance. From beginnings in farming, some have now diversified into commerce and manufacturing. One-fifth of refugees in Uganda employ people outside their family, and of those 40% are Ugandans, according to research by Oxford University’s Refugee Studies Centre. This approach has provided refugees with livelihoods and hope, and helped secure some support from their Ugandan hosts. + +Alas, back in Dadaab the residents have no such ambitions. Instead they are left to pray for more generous donors, a gradual improvement back home and mercy at the hands of their Kenyan hosts. Around the world, from Pakistan to Gaza, over 11m refugees are living in such “protracted situations”. “We don’t have a future,” says Victoria, a South Sudanese woman, as she concludes a phone conversation with an NGO about a broken water tap. “We’re just refugees.” This is life for hundreds of thousands in Dadaab. Syrians entering their fifth year of displacement in neighbouring countries fear they might be going the same way. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21699312-kenyas-dadaab-camp-has-become-many-refugees-permanent-homebut-goverment-wants-shut/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Looking ahead + +How to do better + +Spontaneous migrant flows cannot be prevented, but they can be handled more competently + +May 28th 2016 | From the print edition + + + +THE REFUGEE CONVENTION says that states should do “everything within their power to prevent [refugees] from becoming a cause of tension” between them. They have manifestly failed. Chaotic flows set governments against one another. Countries hosting lots of refugees bitterly resent the rest of the world for failing to do its bit. Refugees, bar the lucky few who have made it to developed countries, are increasingly locked in limbo, wards of a system run by NGOs that offers them no hope of building a meaningful life. + +That does not mean the world should rip up the convention and start again, as some urge. A tapestry of international law has been woven around the idea that there is a specific class of people who deserve the protection of states other than their own. Starting from scratch is more likely to undermine that idea than expand on it. A legal definition of refugees is needed to secure consent in countries that protect them. Without it the right to asylum, and the prospect of resettlement, will evaporate. + +Instead, suggests James Hathaway of the University of Michigan, view the convention as a beautiful house with a worn carpet. It needs renovation, not reconstruction. That means two things. First, recognition that refugees will eventually need more than humanitarian protection. Second, a new compact between the rich world, which has the resources to manage the problem, and the poor, which bears the brunt of it. Countries like Lebanon and Kenya are providing a global good and deserve more help. + +The starting point must be a new approach to protracted situations to place integration at the heart of refugee policy. That does not mean giving refugees immediate citizenship rights (although in due course they should be offered to some). The possibility of a return home should never be blocked off. But over time, granting refugees a degree of self-determination can reduce the distressing waste of human potential in places like Dadaab, and reduce friction between refugees and their hosts. + +For too long Western politicians have been profusely thanking refugee-hosting countries for their generosity while chastising them for not allowing their guests to work or move around freely. Such hypocrisy has not gone unnoticed in the developing world. So in a related change, the West should introduce long-term development thinking into refugee policy, the better to align the interests of refugees with those of the communities that host them. + +Some refugee aid should be shifted from humanitarian agencies to development budgets, politically difficult though that might be. The World Bank has already changed its rules to help middle-income countries facing large refugee burdens. Individual rich countries, or clubs of them, could offer trade preferences to countries with large refugee populations, as they do for the world’s poorest. But governments are not the only actors. Jordan’s economic zones show how the private sector may be encouraged to help both locals and refugees. + +Be prepared + +Managing the world’s stock of refugees is one thing; dealing with sudden flows from conflict areas that can strain economies, infrastructure and social cohesion is another. Countries like Lebanon and Jordan, dealt a poor hand by geography, should not be left to cope on their own. + +It is impossible to tell where or when the next wave of displacement will appear, but educated guesses can be made. The UNHCR is worried about women and children fleeing gangs in Central America and heading for the United States. In north-east Nigeria Boko Haram has displaced 2.2m people. The Middle East is as flammable as ever. And other potential sources of large population shifts loom, notably climate change, which might generate fresh waves of migration as arable land degrades and water scarcity leads to conflict and flight. + + + +Help from the rich world should begin with the traditional responses: more resettlement and more help for humanitarian bodies. Acutely overstretched countries should be given particular support. David Miliband, head of the International Rescue Committee, a humanitarian group, wants rich countries to accept 10% of the world’s refugees, concentrating on the most vulnerable. More money is needed, too. Last year the UNHCR was able to meet only half the needs it had budgeted for, and several of its projects were left massively underfunded. + +But fresh thinking is also needed to help countries avoid sinking into protracted situations. Places like Lebanon should not have to hold out the begging bowl at hastily convened donor conferences every year or two. Agencies have learned to move equipment and personnel near conflict zones in preparation for a wave of refugees. An expanded global fund for displacement, overseen by an independent authority that can spring into action when required, would make such planning and response easier. Governments might prefer the predictability of regularly paying into a fund to ad hoc donor events. And once refugee problems turn from acute to chronic, the response should shift from humanitarian to development. + +The International Organisation for Migration, which may soon be folded into the UN, could help match global migration supply and demand as part of a tighter international migration regime. But global governance has its limits. The international system is prone to inertia and turf wars. The UNHCR, the traditional guardian of the rules governing refugee movements, no longer carries the clout it once did, and may find it difficult to embrace fresh approaches to protection. So the political energy for change will have to come from governments, often acting together. The next American president, if so inclined, might encourage a rethink of the global protection scheme, perhaps with the help of a new UN secretary-general. + +The new approach should work with the grain of international politics. Bilateral relationships often yield better results than sluggish international bodies can offer. Spain’s deals with West African countries such as Senegal, which combine police and patrol co-operation, repatriation deals and lots of aid, slashed illegal immigration some years ago. Some countries will be well placed to accept particular refugee groups because of historical or colonial ties, as in the successful resettlement in Britain of the Ugandan Indians expelled by Idi Amin in 1972. Rich countries seeking to plug particular gaps in their labour markets might be encouraged to take in refugees. + +It’s everyone’s problem + +All these changes would make it clearer that legal responsibilities to refugees cannot be separated from politics. Too often national politicians and international officials talk past each other: accusations of xenophobia fly in one direction, dismissals of starry-eyed idealism in the other. In the West, the first principles of international refugee law are wearily revisited every time numbers surge. + +Migration is an intrinsically ambivalent business, both for the governments that must manage it and for the migrants themselves + +Lawyers and NGOs need to accept that the treaties and rules they cherish will wither without the continued consent of the democracies that drew them up. Politicians, for their part, should acknowledge that aid agencies manage a problem they would otherwise struggle to keep a lid on. The disorderly flows into Europe last year were the outcome of a problem allowed to fester. “Refugees are convincing governments of the need to act,” says Mr Grandi of the UNHCR. If nothing is done, “they will come anyway.” European leaders no doubt regret having paid so little attention to illegal migration until a year ago. Many fear the next wave, from Libya, Turkey or even Russia. A pre-emptive approach might be seen as a form of insurance. So there is a strong case for Europe leading the way. + +But first the EU must get its own house in order, using the breathing space that the deal with Turkey has granted (provided it holds). Rather than squabbling about plans drawn up in Brussels to spread refugees around member countries, it should think about different ways in which countries may contribute, be it in cash or in kind. There is a case for generating common resources to manage this common problem, whether by issuing bonds, as Italy has proposed, or through a new tax, as Germany might prefer. At the same time the EU must continue its slow trudge towards a harmonised asylum system. + +The advantages of co-operation are less obvious to countries isolated from the direct consequences of regional unrest, such as Australia, Japan and, to a degree, America. But they, too, have an interest in preserving the liberal order that is threatened by vast refugee flows. They do not want to see the EU, its greatest champion, tear itself apart. Another refugee crisis in the Middle East could topple governments, with unpredictable consequences in a combustible region. And even the status quo might not be stable. Some refugee populations, if left to rot, can turn to what aid groups call “negative coping strategies,” from drug abuse to crime to the threat of terrorism across borders. Many will be exploited, especially children. + +In the end, though, nothing can force a government to do more for refugees outside its borders. The policies of the next age of refugee management still depend on a spirit of compassion and humanitarianism. Migration is an intrinsically ambivalent business, both for the governments that must manage it and for the migrants themselves. The hopes they have invested in a new homeland will always be tempered by regret for what they have lost and by fear of what may lie ahead. As for policymakers, there is nothing they can do to prevent unpredictable refugee flows. But they could certainly make a better job of managing + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21699311-spontaneous-migrant-flows-cannot-be-prevented-they-can-be-handled-more/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Regulating technology companies: Taming the beasts + +Alibaba: Under scrutiny + +Oil-price reporting: Striking it rich + +American media: Sumner’s lease + +Alcohol in China: Proof positive + +The future of carmakers: Upward mobility + +Schumpeter: Life in the fast lane + + + + + +Articles Sections Next + +Regulating technology companies + +Taming the beasts + +European governments are not alone in wondering how to deal with digital giants + +May 28th 2016 | BRUSSELS AND PARIS | From the print edition + + + +TALK to Axelle Lemaire, a French secretary of state in charge of all things digital, and one topic quickly comes up: online platforms of the kind operated by tech giants such as Facebook, Google and Uber. “France is very open to them,” she insists, “but consumers have to be protected.” + +Ms Lemaire’s words will soon be put into action. The French parliament is about to pass a law, sponsored by her, which will create the principle of loyauté des plateformes, best translated as platform fairness. Once it takes effect, operators of online marketplaces will, among other things, be required to signal when an offer is given prominence because the operator has struck a deal with the firm in question, as opposed to it being the best available. + +In Brussels, too, the regulation of platforms is on the agenda. On May 25th the European Commission announced plans for how it intends to deal with such services. Its proposals cover everything from what tech firms should do to rid their digital properties of objectionable content, such as hate speech, to whether users can move data they have accumulated on one platform to another. + +Here we go again, many will say. As usual, Europe is putting regulation above innovation, and being protectionist to boot, since most platforms are either American or Asian (see chart). European firms earned only about 5% of the profits of the 50 biggest listed platforms, which reached a total of $1.6 trillion in the past four years; more than 80% ended up in America. The commission has been going after American tech firms for a while, say critics—it will soon decide how to punish Google for abusing its dominance in internet search, for example. This week’s plan fits a pattern. + + + +But it is not only Europe that is suffering from growing platform anxiety. Although worries vary, politicians and regulators around the world are waking up to the power of these online matchmakers, whose role is to bring together different groups—advertisers and consumers in the case of Facebook and Google, merchants and buyers in the case of Amazon, drivers and passengers in the case of Uber. Platforms exhibit what is known as “network effects”: the bigger the number of one kind of customer, the more attractive these services are for the other sort, and vice versa. + +Facebook, the world’s biggest social network, symbolises the rise of global platforms. It now boasts over 1.65 billion active users a month worldwide—more than the population of China. On average, they spend about 50 minutes per day on the site and the other two big services Facebook owns, Instagram and WhatsApp. For many of its users, the social network is not only useful for connecting with friends and relatives but also an important news source. + +Platforms have also started to emerge in other sectors. Industrial machines and their products are packed with sensors and connected to the internet, digitising the real world and creating opportunities for matchmakers to connect manufacturers with suppliers. (This is where the EU sees a chance to close the gap with America.) + +If Europe, predictably, is reacting to the rise of platforms through the rule book, America’s response also fits a stereotype. Regulators have largely given the country’s platforms free rein—which may not be unconnected to the fact that they are now fervent lobbyists. In 2013, for instance, the Federal Trade Commission (FTC), which had been scrutinising Google, decided to take no action. But private actors are flexing their muscles. + +The platlash + +Platform operators have faced a barrage of class-action suits from private litigants. Last month Uber, a taxi-hailing service, settled one brought by drivers, promising no longer to kick them off its app without warning or recourse. After pressure from consumer groups, Google announced on May 11th that it would ban adverts for payday lenders, which are widely viewed as exploiting their customers. + +The debate about the power of platforms has grown more heated thanks to reports this month that Facebook employees have kept news topics on issues close to conservatives’ hearts away from prominent display. Many, on both right and left, have called for Facebook, which denies the allegations, to be reined in. When a group of conservatives recently met Mark Zuckerberg, the firm’s boss, some demanded that it should have a more politically diverse workforce and take into consideration the impact on businesses when it changes the algorithm that decides if their Facebook page is shown in people’s newsfeeds. + +Now the regulatory winds may be shifting. The FTC seems to be having second thoughts: it is not only looking again into Google’s search business, but is investigating whether the firm abuses its dominance in mobile operating systems. Whoever is elected president in November is unlikely to ignore the question of platforms. “If I become president, oh do they have problems,” Donald Trump has said of Amazon, accusing it of evading taxes. + +The mood is changing in Asia too, albeit more slowly. In recent years the size of Naver, a web portal in South Korea, has prompted debate about whether it should be regulated. After an investigation by the country’s watchdogs, the firm has agreed, among other things, to help smaller online firms sell their wares. + +The Chinese government is making life harder for platforms—and not just big Western ones, many of which are banned in the country or kept out by its Great Firewall. Alibaba, Baidu, Tencent and other big Chinese internet firms already know what is expected of them when it comes to keeping their services free of politically sensitive content. But other concerns are also increasingly to the fore: earlier this year Baidu got into hot water after the death of a student who said he had received misleading information on a cancer treatment from the company’s search engine. The government may seek even greater control over online-video platforms by insisting on taking minority equity stakes. + +The European Commission’s plans don’t go that far but some proposals could end up being very interventionist (the details are still being worked out). For instance, the commission intends to create a “level playing field” for conventional telecoms carriers and firms that offer communication services over the internet, such as messaging apps. The question is whether levelling the field would involve lightening the regulatory burden on incumbents, such as the requirement to offer universal service, or applying such rules to newcomers. If the commission’s intentions for on-demand video services, such as Netflix, are any guide, the newcomers are likely to face new responsibilities: it wants to ensure that 20% of content is European. + +In most other respects, however, the plans are a far cry from the fiery rhetoric in late 2014, when the European Parliament passed a resolution for Google to be broken up. In fact, they are notable as much for what they do not say as what they do. They do not, for instance, seek to make platforms responsible for illegal activities on their properties. Such “platform liability” would hurt small (mostly European) ones more than big (mostly American) ones, because there are economies of scale in policing this sort of thing. Instead, the commission is betting mainly on self-regulation to keep platforms clean (although it says it might take “additional measures” should such voluntary efforts fall short). + +Another notable absence is a plan to apply new competition rules across all types of platform. Last year France and Germany, in particular, had demanded such “horizontal legislation” to strengthen the rights of smaller businesses that have come to rely on platforms—for instance, to keep platforms from imposing unfair terms and conditions or changing them unilaterally. But given the diversity of platforms, the commission has opted to stick with existing competition law and look at problems on a case-by-case basis. (In a nod to more interventionist member states, however, it plans to revisit the question next year). + +The most interesting questions concern how platforms collect data from users and connected devices. These help firms improve services and target ads. But they can also be a source of market power—something antitrust experts have only now started looking into. “Exclusive access to multiple sources of user data may confer an unmatchable advantage,” warns an influential report by a committee in Britain’s House of Lords. Germany’s competition authority is investigating whether Facebook has abused its dominance to impose weak privacy rules on users. + +Sensibly, given how little is known about the mechanics of data markets, the commission intends to take only limited steps. For instance, it wants online firms to give users the option to log in using government-issued IDs rather than credentials provided by big platforms. This could make it harder for these to track users as they move around the internet, limiting their ability to scoop up data from sites belonging to others. Another proposal is to make it easier, for both consumers and businesses, to transfer data if they want to switch platforms. + +Regulators still have much to learn about how to deal with platforms. But they have no choice but to get more expert. As Martin Bailey, who heads the commission’s efforts to create a single digital market, told the Lords committee: “There is hardly an area of economic and, arguably, social interaction these days that is left untouched by platforms in some way.” That is true far beyond the borders of Europe. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21699465-european-governments-are-not-alone-wondering-how-deal-digital-giants-taming/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Alibaba + +Under scrutiny + +American regulators are investigating China’s e-commerce giant + +May 28th 2016 | SHANGHAI | From the print edition + +Ma ponders + +“WE HAVE from time to time been subject to PRC and foreign government inquiries and investigations.” So declared form 20-F, a regulatory filing submitted by Alibaba, China’s biggest e-commerce firm, to America’s Securities and Exchange Commission (SEC) on May 24th. It is tempting to dismiss this as boilerplate language. All foreign firms listed in America (Alibaba trades on the New York Stock Exchange) are required to file this document regularly. In fact, it is not inconsequential. The filing revealed that Alibaba is the target of an ongoing SEC investigation into its accounting practices. The company’s shares fell sharply after the news became public. + +The SEC appears to have three areas of concern. It wants to know more about the Cainiao Network, a logistics joint venture worth $7.7 billion in which Alibaba has a 47% stake. The agency also wants data on “Singles’ Day”, an annual marketing promotion that last year apparently generated $14.3 billion in gross merchandise value (GMV) on one day. As GMV is not a recognised term in GAAP, the accounting standard used in America, the SEC may be digging into this claim. + +Most intriguingly, the American regulator is also scrutinising how the company has handled its many related-party transactions. Jack Ma, the firm’s founder, caused outrage when he unilaterally spun off AliPay, Alibaba’s lucrative online-payments arm, in 2011 into an entity that he controlled. That business, now known as Ant Financial Services Group, is valued at $60 billion and is heading for a public flotation. + +Where will this SEC action lead? It could be a routine inspection of the sort most public companies can expect from time to time. Alibaba certainly denies any wrongdoing, noting that it is co-operating with the authorities and voluntarily disclosing the fact that it is under investigation. But if the regulators do uncover evidence of real misconduct, things could get nasty for China’s most celebrated firm. + +The only certainty, argues Vasu Muthyala of Kobre & Kim, a law firm, is that Chinese firms face greater scrutiny. Mr Muthyala, a former prosecutor who previously served at the SEC, says: “As Chinese business looks west for new capital, customers and business partners, there will inevitably be an increase in interest from American regulators.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21699464-american-regulators-are-investigating-chinas-e-commerce-giant-under-scrutiny/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Oil-price reporting + +Striking it rich + +A niche business straddling journalism and oil is proving surprisingly lucrative + +May 28th 2016 | From the print edition + +Keeping a close eye on the barrels + +TWO lines of business have stood out of late for their inability to make money: journalism and oil. So when it emerged on May 23rd that Argus Media, a British firm that reports global commodities prices, is to be sold to an American investment firm for $1.4 billion, it aroused a variety of emotions. One was surprise. “Data about oil markets now seem to be worth more than oil itself,” exclaimed one executive of a commodities exchange. Another, in the words of an employee at S&P Global Platts, Argus’s main rival, was “jealousy”. The sale has turned some of Argus’s 750 scribblers, a quarter of whom are said to own shares or options, into millionaires. + +Argus began in 1970 as a newsletter reporting on petroleum-product prices in the Netherlands. General Atlantic, which is buying out the family of Jan Nasmyth, its late founder, has made the most aggressive move so far in an industry that is fast consolidating. Its leaders, Platts and Argus, are battling for dominance over reporting prices of the most widely used oil benchmarks, such as Dated Brent and West Texas Intermediate (WTI), against which billions of dollars-worth of oil are priced each day. + +The benchmarks are used by oil companies, oil-producing countries, derivatives traders and others to decide at what level they should price hundreds of different grades of oil. Their providers make money by selling subscriptions to their information; the more prominent the benchmark, the more subscribers it generates. + +In recent years, Platts has made the running in the oil markets with its Brent assessment, based on four grades of North Sea crude, which is used as a reference for petrol prices stretching from Europe to Asia. WTI, which sets the price of different grades of oil traded in the Americas, is assessed at a landlocked hub in Oklahoma and has not got the same global reach. + +General Atlantic says its interest in Argus grew after 2009, when big producers like Saudi Arabia began using its sour-crude index rather than a rival from Platts to price imports into the United States—an indication that Platts’s leadership of the market was not impregnable. In December America lifted a ban on crude exports, giving WTI a new lease of life. General Atlantic hopes Argus’s WTI physical assessment will become an international rival to Brent. “The battleground is global,” says Adrian Binks, who will remain Argus’s boss after over 30 years leading the company. + +Asia is a further bone of contention as trade flows have shifted east. Platts’s long-established Dubai benchmark, used to price Middle Eastern crude bound for Asia, has been whipped around in the past year by aggressive trading from two big Chinese oil firms, Unipec and China Oil. India’s Reliance is also muscling in, and there is a vigorous new source of demand from China’s so-called “teapot” refiners, recently permitted to import oil. Big oil traders like Royal Dutch Shell, long used to calling the shots on Brent crude, have complained about undue Chinese influence on prices in Asia. Platts says it has addressed the problem by adding crudes to make the benchmark more liquid this year. + +There are also calls for stronger regulation as the industry consolidates. “There’s a huge tension between the economic value of these businesses—both to their shareholders and the broader economy—and the lack of oversight provided by host governments,” says Owain Johnson, managing director of the Dubai Mercantile Exchange (DME). + +The companies argue that they are media outlets covering physical commodities, and should not be regulated like futures markets such as the Chicago Mercantile Exchange, where WTI futures are traded, or the DME. Though their benchmarks carry enormous weight, they are gathered by journalists who sit in newsrooms, watching screens and contacting traders by phone and instant messenger. They say they police themselves based on principles set by the International Organisation of Securities Commissions in 2012. + +They may be partially reassured that General Atlantic, an investor in Airbnb and Uber, disrupters of hotel and taxi services respectively, understands the importance of trying to keep regulators at bay. In the meantime, it has created a rare species at Argus: the rich and happy journalist. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21699479-niche-business-straddling-journalism-and-oil-proving-surprisingly-lucrative-striking-it/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +American media + +Sumner’s lease + +The future of Viacom is shrouded in uncertainty and mired in litigation + +May 28th 2016 | NEW YORK | From the print edition + + + +UNDER normal circumstances, a nasty public power struggle between a company’s controlling shareholder and its chief executive might put a dampener on the share price. But the circumstances at Viacom, a media conglomerate, are anything but normal. Sumner Redstone (pictured), an ailing 92-year-old mogul, recently kept control of his $42 billion media empire after a humiliating legal battle to prise it from his hands. Now the focus has shifted to the leadership of Philippe Dauman, the CEO of Viacom, prompting another round of lawsuits. Although the drama makes the firm’s future more uncertain, investors seem more excited. + +Like many a television soap opera, recent events have been absorbingly far-fetched. First came a lawsuit by Manuela Herzer, a former lover of Mr Redstone’s who had been written out of his will. Her reinstatement would have threatened the tycoon’s control of Viacom and another media giant, CBS. A judge threw out that lawsuit on May 9th. Then, on May 20th, Mr Redstone ejected Mr Dauman from a trust that will decide the fate of his holdings after his death. Three days later Mr Dauman filed a lawsuit to block the move, arguing that Mr Redstone was mentally incompetent and that Shari Redstone, his daughter, was pulling the strings in an “unlawful corporate takeover”. Mr Redstone’s lawyers filed their own suit in response. + +The share price has surged as the lawsuits have flown. The removal of Mr Dauman from the trust raises the prospect of his dismissal from the firm. That seems to promise the change in strategy at Viacom that many believe is overdue. Eric Jackson, an activist investor who has blasted Mr Dauman’s leadership, believes the share price, currently around $42, could rise by another $10 or more if Mr Dauman is fired. A long-standing confidant of Mr Redstone, and a spring chicken by comparison at 62, Mr Dauman has fallen out of favour as Viacom has floundered. The company’s share price fell by close to 40% over the past year. For nearly a decade before that under Mr Dauman it was the worst performer in its peer group. Since September 2006 Viacom’s shares have nudged up a little while Disney’s have more than tripled in value. + +All parts of Viacom are underperforming. Its movie business, Paramount, has lagged behind the other big Hollywood studios for four years in a row; in April it reported a quarterly loss of $136m after disappointing box-office receipts for “Zoolander 2”. The company’s portfolio of cable channels, including MTV, Nickelodeon and Comedy Central, has lost more viewers in America than its big competitors—a decline of 35% over the past five years, by one measure. The cable networks remain lucrative but profits are falling as subscribers turn off and advertisers turn away. + +Mr Dauman’s critics claim that he has run the company like the lawyer he is at a time when it required a creative leader. They say he never came up with a strategy for growth, resisting efforts to embrace the digital era. He pushed an aggressive buy-back programme to support the share price, which Mr Redstone was known to watch assiduously. If he kept Mr Redstone’s confidence, former executives say, he lost that of his workforce. Senior bosses and talented TV stars have left to work elsewhere. The 52nd floor of the Viacom building in New York, where Mr Dauman’s office is located, is a mirthless place, “like the gallows”, says one former employee. + +If Mr Dauman is to keep his job it will require some fancy footwork. Ms Herzer’s lawsuit had challenged Mr Redstone’s competence to write her out of his will, which he did last autumn; she accused Shari Redstone of manipulating her father to her own benefit. If Ms Herzer had won her suit, control of Viacom and CBS might have gone to the trust on which Mr Dauman and an ally on Viacom’s board, George Abrams, held seats (Mr Abrams was also removed on May 20th). + +At the time, Mr Dauman, in support of Mr Redstone and his daughter, gave sworn testimony on the nonagenarian’s “engaged and attentive” state of mind (though the decisive testimony was Mr Redstone’s own, in which he repeatedly called his former paramour a “fucking bitch”, in a lucid but deeply unpleasant videotaped tirade). Now, to regain his position at the trust, and, perhaps, to remain in the 52nd-floor suite, Mr Dauman is having to make the opposite case. Fortunately for him, lawyers are good at presenting either side of an argument. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21699495-future-viacom-shrouded-uncertainty-and-mired-litigation-sumners-lease/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Alcohol in China + +Proof positive + +Sales of baijiu, China’s national tipple, are on the rebound + +May 28th 2016 | SHANGHAI | From the print edition + + + +AVENUE PÉTAIN, a tree-lined boulevard of grand mansions and Art Deco towers in Shanghai’s old French concession, was once one of the city’s most prestigious residential streets. Hengshan Road, as it is now called, is today full of bars and restaurants. The most intriguing used to be the Moutai club, a secretive outfit catering to political bigwigs that decorated its walls with pictures of Deng Xiaoping and other luminaries quaffing firewater. Their glasses may have contained a special blend of Moutai, an expensive brand of baijiu, a liquor distilled from sorghum. + +Alas, this pleasure palace has since shut down. A crackdown on corruption by the government of President Xi Jinping has made it risky for officials to schmooze with businessmen over bottles of baijiu. Sales of China’s national spirit (and the world’s most popular hard liquor), which rose at double-digit rates from 2007 to 2012, were dealt a big blow. Annual growth in sales plunged to barely 3% in 2014 as purchases for official banquets and other forms of ostentatious boozing plummeted. + +Baijiu is now making a comeback. Sales last year rose by roughly 7% (see chart). In a recent report, “The Hangover Fades”, Citigroup, a bank, estimates that profits for the three biggest manufacturers of baijiu—Moutai, Wuliangye and Yanghe—have jumped since the second half of last year. The bank also notes that baijiu continues to outperform beer on sales volume growth, “suggesting that Chinese consumers’ preference for baijiu remains intact.” + +What explains the revival, given that the corruption crackdown continues? Andy Luo, a former manager of the defunct Moutai club, believes a boom in private consumption is the answer. Mr Luo, who now runs a popular restaurant in Shanghai, says the businessmen that frequent his current establishment prefer to drink baijiu, rather than whisky or other foreign spirits, with their Chinese food. “It’s a habit!” he insists. He also senses a shift towards swigging pricier premium brands. + +If Mr Luo’s professional odyssey traces the fortunes of China’s national drink, then the future holds peril as well as promise for baijiu. He is right that private consumption is behind the recent renaissance. Fully half of all baijiu purchases in 2012 were made by the government, but that figure had collapsed to just a small fraction of the total by last year. But Mr Luo also observes that many younger patrons prefer to sip wine at business dinners, even rebuffing their elders’ offers of baijiu. + +As foreign businessmen know all too well, drinking vast quantities of this foul-smelling, throat-burning local brew has long been an unavoidable part of doing business in China. Toasts of gan bei and endless rounds of baijiu are still popular with the old guard, to be sure. But the drink’s resurgence may only be temporary. Mr Luo offers this prediction: “it may take years, but these old habits will fade away.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21699487-sales-baijiu-chinas-national-tipple-are-rebound-proof-positive/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The future of carmakers + +Upward mobility + +Making vehicles may prove easier than selling services + +May 28th 2016 | From the print edition + +Rivals in the pink + +CAR companies have long talked a good game when it comes to harnessing technology that threatens to undermine the business of making and selling vehicles. In the 1990s, as the dotcom boom was in full swing, Jac Nasser, then boss of Ford, said that the new business models the internet would enable meant that his firm would outsource the dull task of assembling cars and reinvent itself as a mobility company, selling transport as a service. Mr Nasser was too early with this insight. Only now are most big carmakers teaming up with tech firms that offer transport services, on the road to becoming mobility providers. But they in turn may have left it too late. + +In the scramble to reinvent themselves, conventional carmakers have turned their attention of late to ride-hailing apps. These services allow people to use smartphone apps to summon a car and driver to ferry them to their next destination. On May 24th both Toyota and Volkswagen announced tie-ups with taxi-hailing apps. The Japanese firm has made a small, undisclosed investment in Uber, the world’s biggest ride-hailing firm, with operations in over 70 countries. VW announced an investment of $300m in Gett, an Israeli firm that is popular in Europe. Matthias Müller, VW’s boss, has much bigger aspirations. He declared that the German carmaker aims to be a world-leading mobility provider by 2025. + +VW will not lack for company. In January General Motors invested $500m in Lyft, Uber’s closest rival in America, partly to embrace ride-hailing and partly to share in the development of self-driving robotaxis. Last year Mark Fields, the boss of Ford, perhaps forgetting Mr Nasser’s earlier pronouncement, said that henceforth his firm would be a mobility company as well as a carmaker. Rumours abound that Ford is planning its own ride-hailing app and a vehicle to go with it—perhaps an on-demand minibus service. + +Though the latest battleground is ride-hailing, car companies have their eyes on other ways of making money from mobility. People who might hitherto have wanted to own a car may no longer do so, preferring to pay to drive when they need to. Young city-dwellers are turning their backs on owning a costly asset that sits largely unused while losing value. Membership of car clubs, which let people book vehicles by app for short periods, is growing fast. ZipCar, the world’s largest, is owned by Avis Budget, a car-hire firm. More carmakers are copying Daimler’s Car2Go and BMW’s Drive Now apps. Ford, for example, is testing car-sharing services in America, Britain, Germany and India. + +Car-sharing and ride-hailing schemes may eventually make carmakers money. For mass-market firms, used to slim margins, it might even prove a boon, though premium carmakers, used to fatter profits, may not agree. Carmakers will not only take a cut of the fares but will jostle to supply vehicles. Indeed Toyota’s deal includes a financing scheme for Uber drivers to acquire its cars. GM offers a similar scheme to help Lyft’s drivers get on the road. + +But their chances of profiting from usership rather than ownership depend on two things. First, carmakers need to change how they operate. Mastering the complicated business of manufacturing cars has kept new competitors largely at bay. But simultaneously running a service business that depends on constant engagement with customers and crunching large quantities of data is a far cry from designing a new SUV. Indeed the flurry of investments by carmakers has been driven as much by the desire to learn how these new businesses work as for immediate profits. + +Second, big tech firms, adept at handling data and selling services, cannot get too far ahead. Google leads the field in self-driving vehicles. Apple is rumoured to be planning to build its own car and recently invested in Didi Chuxing, China’s answer to Uber. A host of startups are plotting ways to profit from offering services that will move customers from A to B. + +Instead of owning a car, the future could include a monthly subscription to an app that combines car-sharing, taxis, buses, trains, bicycles and anything else on wheels, including on single journeys where multiple modes of transport are the quickest or cheapest option. More efficient use of public transport, more car-sharing and more ride-hailing will mean that people who might have bought a car may no longer do so, stifling the growth in vehicle sales that was expected as the middle classes take to the roads in developing countries. Carmakers face selling fewer vehicles while freewheeling competitors, unencumbered by a vast manufacturing business, mop up the profits from selling transport to customers on the move. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21699491-making-vehicles-may-prove-easier-selling-services-upward-mobility/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Life in the fast lane + +Business people are racing to learn from Formula One drivers + +May 28th 2016 | From the print edition + + + +ON THE face of it business executives and Formula One drivers have nothing in common, other than the fact that they do their jobs sitting down. Racing drivers hurtle round a track, touching speeds of 350km an hour. Office-bound managers may occasionally wheel their chairs from one side of their desks to the other. Drivers risk a high-speed pile-up if they lose concentration. Executives merely risk spilling coffee on a Hermès tie. + +Yet one of the motor-racing world’s gurus now spends much of his time talking to chief executives. Aki Hintsa, a Finnish surgeon, was chief medical officer for the McLaren F1 team for 11 years. His clients have included two former world champions, Sebastian Vettel and Mika Hakkinen, as well as Lewis Hamilton, the current holder. Dr Hintsa’s relationship with the business world started informally when a CEO friend turned to him in despair, complaining of burnout. His business, Hintsa Performance, employs 30 people, applying his methods from discreet offices in Geneva and Helsinki. It earns more than 80% of its revenues from working with management teams and individual bosses. + +Can business people really learn from Formula One? Dr Hintsa argues that the two worlds have more in common than you might think. Drivers sit atop a pyramid of 500-700 employees, from engineers to marketing departments, whose livelihoods depend on them. Surrounded by sycophants, drivers can easily lose control of their egos. They live horribly peripatetic lives—races are run in every corner of the world. Dr Hintsa says that his grand-prix experience forced him to focus on two problems that also plague executives always on the move. + +The first is lack of sleep. A growing body of evidence shows that shortage of shut-eye cripples individuals and poisons organisations. One study shows that staying awake for 20 hours has the same impact on the performance of various cognitive tasks as a blood-alcohol level of 0.1%, well over the limit for driving a car in most countries. Another study shows that being deprived of sleep leads people to adopt a more negative attitude or tone of voice. Employees are also more likely to report disengagement from work if a bad night’s sleep makes their bosses grouchy. + +Yet sleep deprivation is commonplace in the business world—and is sometimes worn as a badge of honour. A recent survey of 196 business leaders by McKinsey, a management consultancy, revealed that 66% were dissatisfied with the quantity of sleep they got and 55% were dissatisfied with the quality. Too many companies are run by people who are dazed by a lack of sleep. + +The second problem shared by those in the driving seat, whether of a racing car or a multinational firm, is constant travelling. Life on the road not only makes sleep harder to manage by cutting the amount of resting time available and confusing the body clock. It has other debilitating effects. Spending long periods in pressurised airline cabins dehydrates the body and messes up circulation. Time in airports and hotels encourages overeating. Airports specialise in junk food; airlines serve over-salted and over-flavoured meals to compensate for the fact that flying dulls the taste buds. Deals are done over extravagant dinners washed down with too much wine by businessmen who then find themselves raiding the minibar at odd times of the night. + +Dr Hintsa provides detailed instructions about how to overcome these difficulties. Bringing healthy snacks when travelling reduces the likelihood that frazzled bosses will delve into the minibar. Dimming the lights gradually in the evening prepares the mind for sleep. Switching off screens two hours before bed saves bombarding the brain with blue light, which tells it to stay awake. Reading a book is better than goggling at a device. + +His advice for coping with jet lag is complicated. His clients receive detailed charts that tell them on what side of the plane to sit and when to wear sunglasses after landing (when travelling east it is wise to wear shades on arrival to minimise exposure to daylight). The main thing is to decide whether to adapt the environment to your body, or your body to the environment. On a short trip, he advises sticking as closely as possible to a normal schedule and adjust meetings and bedtime accordingly. On longer jaunts, start adjusting to the new time zone a week in advance. And pay attention to light: bright lights send the brain instructions to wake up and dimmer lights tell it to close down. + +Sleeping your way to success + +Dr Hintsa is riding a wave of interest in how to improve the personal performance of executives. Hintsa Performance has a number of direct competitors such as Tignum, based in Phoenix, Arizona. Big management consultancies have started paying attention to the subject of shut-eye: the latest edition of the McKinsey Quarterly contains an article on how “sleep-awareness programmes can produce better leaders”. Caroline Webb, a former McKinsey consultant, has written a book, “How to Have a Good Day”, that suggests ways of using recent findings from economics and behavioural science to improve working life. Google has established a trend for providing workers with sleep pods, nap rooms and healthy snacks. The Boston Consulting Group has experimented with a “time off” policy: employees spend an evening every week without e-mail or their smartphone, in order to catch up on sleep. Some airlines and hotels are using “smart lighting” to help customers adjust to new time zones. + +There are good strategic reasons for this. Companies recognise that, in a world where you can buy so much computer power off the shelf, their competitive advantage lies in the quality of their employees. But the main reason for the interest in firms like Dr Hintsa’s is individual angst rather than a corporate master plan. From the CEO down, people are so hassled by the pace of business life that they are turning to anyone who can help them get their lives under control and their batteries recharged. Everyone could do with the occasional pit-stop. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21699456-business-people-are-racing-learn-formula-one-drivers-life-fast-lane/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Banks and Brexit: Wait and hope + +Buttonwood: Ignorance isn’t bliss + +Quicken Loans: A new foundation + +Japan’s giant pension fund: That sinking feeling + +Short-term lending: A pink slip + +Cyberattacks on banks: Heist finance + +Free exchange: Make me + + + + + +Articles Sections Next + +Banks and Brexit + +Wait and hope + +A British departure from the European Union would be costly for the world’s banks. Best not to worry until they have to + +May 28th 2016 | From the print edition + + + +OPINION polls suggest that Brexit won’t happen. Ladbrokes, a bookmaker, is offering 4-to-1 against. But pollsters and bookies have been wrong before: what if on June 23rd Britain chooses to quit the European Union? The world’s biggest banks, for which London is a second home if not their first, have plenty of other worries: profits are thin, regulators nagging, investors impatient. The referendum is an extra headache they could do without. Banks must nevertheless be braced for turmoil should the odds be upset. And if Britain votes to leave, they will face an awkward decision: should they shift business away from Europe’s financial capital? + +Banks do not have to answer that question yet. They hope they never will. Already under pressure to cut costs, they are not spending oodles on contingency plans and won’t until they have to. For now, they regard the referendum chiefly as a market event, with a known date, which could cause volatility and strain liquidity. The most obvious place to look for trouble is in the exchange rate, where there has been some pre-poll turbulence. Between the turn of the year and early April sterling slid by 9% against the euro. Now it is only 3% down—and in fact a mite stronger against both the euro and the dollar than when the referendum was called in February. + +After a vote to leave, such moves would look like gentle undulations. Options markets have been pricing in an immediate drop of 4% in the pound. Looking six months or a year ahead, economists, moistened forefingers aloft, guess sterling might plunge by 15% or even 30%. The OECD, the IMF, the Treasury and others predict severe damage to Britain’s economy (scaremongering, cry Brexiteers); the euro zone could suffer too. None of this is good for London-based banks—though sharp traders may profit from gyrating currencies—or for their corporate customers. + +Repo plan + +In readying themselves, banks have been helped by the strengthening of supervision since the financial crisis. Regular inspection of their defences, both internally and by central banks, has become routine. Supervisors are promising ample liquidity. The Bank of England will hold three extra “repo” auctions around the referendum, in effect an offer to lend money to any banks that can provide common securities as collateral. Big British banks have access to foreign currency through other central banks; the Bank of England has swap lines with its peers in the G7 and Switzerland. + +Volatility, in short, can be managed. The EU’s “passport” rules, under which a financial firm in one member may serve customers in the other 27 without setting up local operations, are another matter. European subsidiaries of non-EU banks receive the same treatment, which allows American, Swiss and Japanese firms to cater to the whole of Europe from their bases in London. Goldman Sachs is probably the most extreme example, with 6,000 of its 6,500 European staff in the British capital; it is building a new London office, due to open in 2019. Partly thanks to the passport, notes TheCityUK, a trade body that opposes Brexit, London boasts around 70% of the market for euro-denominated interest-rate derivatives, 90% of European prime brokerage (assisting hedge funds with trading) and more besides. + +Without a deal to renew or replace them, banks’ passports will expire if Britain leaves. Such a deal could be struck. The EU’s rules allow for non-members’ regulatory systems to be deemed “equivalent” to its own; Britain would be desperate to keep its financial industry; banks would surely lobby hard. Even so, legal costs are likely to rise, simply because banks would have to comply with two separate (though consistent) sets of rules. And agreement may not come easily. No other non-member, TheCityUK points out, has full passport rights. Britain’s ex-partners may well be unforgiving: French and German politicians will not want to look soft before elections due next year, and will anyway be hoping to poach financial firms. + +Nothing would be decided quickly. Britain would remain a member for two years (possibly more) after starting the exit procedure, while it negotiated the terms of its departure. But the clock would be ticking: banks would have to make plans. Since the crisis, supervisors have preferred banks to have separately capitalised entities in separate jurisdictions. EU regulators may press them to make their minds up, and move capital and people—most likely, to places where they already have subsidiaries. The head of at least one euro-zone bank fears it would become much harder to clear euro transactions in London. + +Banks are loth to talk about what they might do (at least in public, and so close to the poll), and no one will make firm plans before they have to. But HSBC said in February that it might shift 1,000 people, around one-fifth of its staff in London, to Paris, where it has a subsidiary, formerly Crédit Commercial de France. Deutsche Bank’s co-chief executive, John Cryan, told the Financial Times last month that it “would be odd” to trade European government bonds and currency in a non-EU branch of a German bank. Others suggest that operations will be built up in Dublin (partly because of Ireland’s liberal labour laws) and Luxembourg. + +London has defied gloomy predictions before. It became the euro zone’s financial capital even though Britain stayed out of the single currency. Its pull is probably too strong for any big bank to leave altogether, or for a sudden decline. Besides banking expertise, it boasts an army of accountants, lawyers and other auxiliaries. People like to live in its huge, bubbling melting-pot. + +But at the very least, there is likely to be a fragmentation of Europe’s financial industry if Britain quits: more business in other centres, less in London, and probably less overall. Economies of scale in Britain would be lost, while other places would be too small to compensate. That means higher costs that financial firms can ill afford after eight grinding post-crisis years. No wonder they hope that Britons will vote the problem away. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21699460-british-departure-european-union-would-be-costly-worlds-banks/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Ignorance isn’t bliss + +Dealing with the problem of public misperceptions + +May 28th 2016 | From the print edition + + + +IT IS not the “unknown unknowns” that catch people out, but the truths they hold to be self-evident that turn out to be completely wrong. On many issues, the gap between public perceptions and reality is very wide. The polling company Ipsos Mori found that Americans think 33% of the population are immigrants, for example, when the actual number is 14%. A 2013 poll found that Britons thought 24% of the population was Muslim—almost five times the correct figure of 5%. + +Misperceptions about economic policy are common, too. Asked to name the top two or three areas of government spending, 26% of Britons cited foreign aid, more than picked pensions or education. In fact, aid spending is a small fraction of the other two and only 1% of the total. + +Some of this is to do with innumeracy. Only a quarter of Britons could work out that the odds of throwing two consecutive heads in a coin toss was 25%. People are also heavily influenced by anecdotal evidence and by fears for themselves or their families—hence the tendency to overestimate the prevalence of crime or teenage pregnancy. (Asked how many teenage girls get pregnant each year, Americans plumped for 24%; the actual figure is 3%.) + +More worrying is the possibility that people simply do not trust the official numbers. When Britons were asked why they overestimated the percentage of immigrants within the population, two answers dominated. One camp said that the government undercounted the numbers because of illegal immigration; a second group simply insisted their own answer was right, regardless of the evidence. + +This points to the difficulty facing mainstream politicians who are trying to halt the rise of populists like Donald Trump. Reasoned presentation of the facts may not help since the source of the information, whether it is the government or the mainstream media, will always be suspect. Those advocating that Britons vote to leave the European Union in next month’s referendum, for example, dismiss warnings about the economic impact from the IMF, OECD and Bank of England on the grounds that, “They would say that, wouldn’t they?” + +If public misperceptions can distort economic debate, they are also a problem when it comes to financial markets. Financial products are often complex and buyers can be confused by the terminology. One survey found that only half of Americans knew that mutual funds did not offer a guaranteed return. A lack of mathematical knowledge is a further difficulty. Another survey asked 50-somethings questions that related to financial literacy; asked to calculate how much each of five prize-winners would get from a lottery jackpot of $2m, only 56% of respondents could answer the question. More than two-fifths did not know the difference between simple and compound interest. + +The trend has been for individuals to shoulder more responsibility for their financial well-being than they did in the past. This is particularly true in the case of pensions, where companies are retreating from the paternalistic approach of offering pensions linked to a worker’s final salary. In the brave new world of defined-contribution schemes, workers get a pot at retirement which they must eke out for the rest of their lives. + +These are difficult calculations to make. A survey by the Society of Actuaries found that around 40% of Americans underestimated the average life expectancy of retired people by five years or more. Around 77% of Americans are very or somewhat confident that they are well prepared for retirement but only 63% say they have saved any money towards it, according to the Employee Benefit Research Institute. + +These misapprehensions illustrate the problem with the idea of caveat emptor, or buyer beware, when it comes to retail customers of financial services. Investment products are not the same as other goods. First, the price is not immediately obvious, given the impact of annual charges and fees on a customer’s long-term return. Second, the usefulness of the product may only become apparent after several years. A mutual fund is not like a corked wine that people can hand back to the waiter right away. By the time customers find out things have gone wrong, their financial future may be badly damaged. Third, there is an asymmetry of information between the seller and the buyer. + +Educating children and adults to be financially literate might help in the long term. Until then regulators, just like politicians, must deal with the public as they are, not how they might like them to be. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21699455-dealing-problem-public-misperceptions-ignorance-isnt-bliss/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Quicken Loans + +A new foundation + +One of America’s biggest mortgage lenders is not like the others + +May 28th 2016 | DETROIT | From the print edition + +Lift-off in eight minutes + +WELLS FARGO, America’s biggest provider of retail mortgages, drums up custom, and cheap funds to lend, through its 6,246 branches. The third- (Bank of America) and fourth-biggest (JPMorgan Chase) providers follow a similar model. But the second-biggest mortgage firm, Quicken Loans, does business completely differently. It does not have any branches, interacting with its customers online and by telephone instead. Nor does it take deposits, relying on wholesale funding to finance its lending. Despite (or perhaps because of) breaking all these conventions, it is the fastest-growing firm in the industry: its new lending has risen from $12 billion in 2008 to $79 billion last year. + +America’s 50 states all have slightly different laws regarding mortgages. Local bylaws in many cities and counties also affect property purchases. Then there are overlapping federal rules, especially regarding mortgages to be securitised and sold through Fannie Mae and Freddie Mac, two government-backed entities. So although mortgages may seem much the same to borrowers across the country, the firms that offer them have long assumed that they need a local presence to conform with the tangle of rules. As a result, the mortgage business is absurdly fragmented. Even Wells has only a 7% market share. + +In the late 1990s Dan Gilbert, Quicken’s founder, began to question this logic. He was struck by the ease of buying a sofa online; if something so big and cumbersome could be sold without bricks and mortar, then surely an intangible product like a mortgage could, whatever the legal intricacies. He began selling off Quicken’s 28 branches in 1998 and ultimately centralised the firm’s operations in downtown Detroit. From a growing collection of grand old buildings, including a former outpost of the Federal Reserve, Quicken began to market mortgages to customers all over the country. Applications are handled by employees schooled in the legal niceties of the relevant jurisdiction, but based in Detroit. + + + +It helps that Quicken can sell its mortgages through Fannie and Freddie, and so does not need a huge balance-sheet to finance them. But because it relies on relatively expensive wholesale funding, it would struggle to compete with other providers on price. Its interest rates are typically 0.25-0.4 percentage points higher than the cheapest alternatives. + +Instead Quicken aims to compete on service. It claims customers can fill out an online application and receive a decision on its latest offering, Rocket Mortgage, within eight minutes. The underlying software conducts a quick electronic sweep of the applicant’s financial records, along with any available data about the property to be purchased. For customers who are confused or whose applications are unusually complicated, help is available by phone or e-mail. + +Quicken tries to ensure good customer service by keeping its own employees happy. Desks and chairs are fancy, adjustable, ergonomic affairs; the bathrooms have televisions set to sports channels. Some workers scoot around the bright open-plan offices on hoverboards. New recruits receive an eight-hour induction from Mr Gilbert and others, built around 19 principles (“isms” in Quicken-speak). They are told that “a penny saved is a penny earned” is terrible advice; that they should only say “no” when they have exhausted the possibility of saying “yes”, and so on. Show indifference to a customer and, Mr Gilbert writes, “I will find you… and I will personally root you out.” + +It is hard to say precisely how well all this works, since Quicken, as a private firm, releases little financial data. But a good test of its values came last year, when the government sued it, claiming it had fiddled data on mortgages for poorer house-buyers backed by the government, which caused the government losses when the loans went bad. Other financial firms hit with similar complaints have grumbled about a shakedown and settled. Quicken is contesting the lawsuit, saying the government’s case rests on 55 mortgages out of 246,000, and that it has got its facts wrong about 47 of those. As with so many things Quicken does, no other big financial firm would have dared behave in that way. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21699457-one-americas-biggest-mortgage-lenders-not-others-new-foundation/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Japan’s giant pension fund + +That sinking feeling + +Volatile stockmarkets spell pressure for the GPIF and its new leadership + +May 28th 2016 | TOKYO | From the print edition + + + +THE fear that a creaking pension system will fail to provide for swelling ranks of retirees is held by some economists to be one reason why many Japanese prefer hoarding their cash to spending it. Any meddling with the ¥140 trillion ($1.27 trillion) pot that funds the state pension is politically fraught—as Hiromichi Mizuno, the first chief investment officer of the ultra-conservative Government Pension Investment Fund (GPIF), is finding out. + +In October 2014 the GPIF made an historic shift in its asset allocation, trimming its pile of Japanese government bonds and doubling its holding of stocks (see chart). For the next three quarters, its returns duly rose along with stockmarkets. In the financial year that ended on March 31st 2015 the fund made its highest-ever return, of 12.27%. The intention, however, was not so much to juice returns as to prepare for the return of inflation. The Bank of Japan’s massive monetary easing was supposed to be on the verge of pushing prices up again after a decade of deflation, thereby eroding the value of Japanese bonds. + +Since those heady beginnings, however, Japanese shares, and some foreign ones, have sunk. The yen has also strengthened, lowering the value of foreign assets. That has left the fund, which is the world’s biggest pension pot, with a loss that analysts estimate at over ¥5 trillion for the most recent fiscal year. + +In the meantime, the inflation on which the new investment strategy was premised has not appeared. “We built a new portfolio allocation on a base case that the BoJ would generate 2% inflation within two years, but the base case may have changed,” says Mr Mizuno. Prices are currently falling, and the BoJ now says it may not reach its target before early 2018. + +Mr Mizuno was unprepared for the bashing now coming the GPIF’s way. He joined from a private-equity firm in London and told friends last year that moving to the GPIF was rather like swapping a Ferrari for a tricycle. It has come as a shock that not only is the GPIF unsophisticated in its investing approach (it has recently been barred from developing the kind of in-house share-buying capability that other, large institutional investors possess), but also that politicians and the media are so ready to accuse it of gambling. + +Shinzo Abe, Japan’s prime minister, was among the most ardent advocates of the shift in the fund’s asset allocation. He recently noted that long-term results, not short-term volatility, are what matter. But it does not help that he has also raised the prospect of lower pensions if the GPIF’s losses grow. Many critics of the shift, including its president at the time, Takahiro Mitani, claimed the government instigated it to pump up the stockmarket. The GPIF, which normally publishes its annual results in early July, has postponed them until the end of the month, after an election for the upper house of the Diet. The delay is a clear sign of political interference, says Jesper Koll of WisdomTree, an exchange-traded fund manager in Tokyo. + +Mr Mizuno says the GPIF may have to adjust its portfolio again in light of the lack of inflation. In all likelihood, that would entail a shift out of equities and back into Japanese government bonds. Such a move would be a big embarrassment for the BoJ. But the GPIF may yet decide to stick to its current allocation. Later this year, notes Takatoshi Ito, an adviser to the government on the fund, the powers of its board will be strengthened, making it easier to withstand public criticism about short-term losses. And should Japan ever vanquish inflation, its pensioners will still want a hedge against all those expensive government bonds. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21699469-volatile-stockmarkets-spell-pressure-gpif-and-its-new-leadership/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Short-term lending + +A pink slip + +New regulations may kill off much of America’s payday-loan industry + +May 28th 2016 | From the print edition + + + +“WHAT rate of interest...can naturally be more proper than another?” asked Jeremy Bentham in “Defence of Usury” in 1787. Anything less than 36%, answer American activists who want to curtail payday lending—pricey, short-term credit typically used as an advance on a pay cheque. When the Consumer Financial Protection Bureau (CFPB) unveils its proposals for regulating the industry on June 2nd, it will not set such an interest-rate cap (the Dodd-Frank act, which established the agency, forbids it from doing so). But the regulator will probably impose tough new requirements that could wipe out much of the supply of high-cost, short-term credit. + +Around 12m Americans turn to payday lenders in any given year. The typical loan is about $350 and costs about $15 every two weeks for each $100 borrowed. At that interest rate, a $100 loan, with both principal and interest rolled over for a year, would explode into a debt of almost $3,800. + +The CFPB’s studies of the market make for uncomfortable reading. Nearly half of customers borrow or roll over debt at least ten times per year. About half of those who borrow online incur bank fees averaging $185, on top of the cost of the payday loan, when automated repayments from their bank accounts leave them overdrawn or fail entirely. Richard Cordray, the agency’s director, alleges that many loans “ensnare” borrowers in debt traps. + +Last year the agency floated some ideas to improve the market, such as mandatory affordability checks and limits on rollovers. Critics say such rules will force lenders to cut off credit to needy borrowers, or to shut down entirely. Thomas Miller, a professor of finance at Mississippi State University, estimates that preventing anyone from using payday loans more than six times a year—another possibility—would cause 60% of the industry to disappear. + +That might harm those who need short-term credit to cover unexpected outlays, such as replacing a broken boiler. People typically need emergency credit because they have few savings; this means they probably have low credit scores, too. That leaves them with few other options. + +A recent episode illustrates this point. Many states already have usury laws which, in theory, cap interest rates. In New York, for instance, charging a rate of more than 25% is a criminal offence. But most banks can avoid the caps by lending across state lines. New Yorkers can still borrow at 30% interest on credit cards issued by banks in, say, Utah. Last year, however, a federal court ruled that banks that sell on their loans cannot always make use of the loophole. One effect of the ruling was that all of a sudden, interest-rate caps applied to online, peer-to-peer lenders, who had previously channelled their loans through banks to avoid usury laws. + +A recent paper finds that this crimped lending to those with low credit scores. In the seven months following the ruling, online peer-to-peer loan volumes for those with the lowest credit scores grew by 124% in states not yet affected by the decision. In states where the ruling applied, they shrank by 48% (see chart). + +That suggests sky-high interest rates on payday loans do reflect underlying risks, not simply an attempt to exploit borrowers. In 2005 a study by researchers at the Federal Deposit Insurance Corporation, another regulator, found that payday lenders were not unusually profitable. Bob DeYoung, a professor of finance at the University of Kansas, compares payday loans to short-term car rentals, arguing that if you divide the fee charged by the value of the car, you get a similarly high “interest rate”. + +Elizabeth Warren, the senator whose efforts led to the founding of the CFPB, has long argued that financial products should be regulated like toasters: those that often cause fires should be banned. It seems certain that people who regularly turn to payday loans to cover recurring expenses are doing themselves no good. The trick, though, is to protect them without burning the entire industry to the ground. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21699476-new-regulations-may-kill-much-americas-payday-loan-industry-pink-slip/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cyberattacks on banks + +Heist finance + +Recent hacks highlight the vulnerability of the cross-border payments system + +May 28th 2016 | From the print edition + + + +BARELY an eyebrow is raised these days when the credit-card details of retailers’ customers are stolen en masse; such crimes are attempted or committed daily. But when banks’ own funds are pinched, it is time to pay attention—especially when the theft involves hijacking banks’ connections to the global payments system. This week the Society for Worldwide Interbank Financial Telecommunications (SWIFT), a network that thousands of banks around the world use to move money, described a recent spate of cyber-heists, which netted $90m. Gottfried Leibbrandt, SWIFT’s boss, described them as a “watershed moment”. The threat now, he said, is not just to banks’ reputations, but to the very existence of those that fail to protect themselves. + +Investigators are still trying to piece together how thieves pulled off a spectacular hack that siphoned $81m out of Bangladesh’s central bank in February, let alone who was behind it. This was one of the biggest-ever bank robberies, but it could have been worse: $850m of the bogus transfer requests were blocked. The stolen money went to a bank in the Philippines, then on to casinos. Where most of it went from there is unclear. Some ended up with a Chinese operator of junkets for gamblers (who denies knowing it was stolen). + +The scam sent banks and SWIFT scrambling to check for other infiltrations. Their probes have turned up at least one similar, albeit smaller, case: hackers tried unsuccessfully to nab $1m from Tien Phong Bank, in Vietnam, in December. Another case has come to light through court filings: Ecuador’s Banco del Austro is suing Wells Fargo for waving through fake transfers of $12m ($3m of which was later recovered) to accounts in Hong Kong. The American bank is fighting the action. + +Experts say there are likely to be dozens of other actual or attempted breaches of this kind that have yet to be detected. Cyber-criminals have become very good at covering their tracks. In the Bangladesh break-in, for instance, they wrote malware to interfere with a machine whose printouts the bank relied on to check transactions. Jens Monrad of FireEye, a cybersecurity firm that is conducting an audit of the theft, says the median time it takes for targeted companies to realise their systems have been compromised is 146 days. + + + +Banks’ coffers being raided by cybercrooks is bad enough. Worse, the thefts expose weaknesses in a vital bit of financial plumbing: banks’ connections to the SWIFT network. In each of the cases that have come to light, the thieves hacked into the bank’s system, used malware to log on to the SWIFT network using the bank’s unique code, and re-routed transactions to new beneficiaries. + +SWIFT, a co-operative owned and used by 11,000 financial firms, processes 25m messages a day, covering half of all big cross-border transfers. Were it to be compromised, trust in the global payments system could evaporate. SWIFT insists its network and core messaging services were not breached; the security problems were at the banks themselves, it says. Officials at SWIFT express frustration that targeted banks can be slow to share information with it about hacks, meaning other banks don’t get intelligence they could act on. + +Nevertheless, calls have grown for SWIFT to do more (with some geeks even suggesting it be replaced by blockchain technology). Mr Leibbrandt responded on May 24th by announcing a “customer security” plan, aimed at encouraging better network security, information-sharing and fraud detection. He also called for a new wave of innovation in cyber-security—covering “pattern recognition, monitoring, anomaly detection, authentication, biometrics”—to meet the growing threat from “hoodies hunkering over keyboards”. + +But SWIFT has no power over banks. That is down to regulators, whose performance in this area varies greatly. Among the most switched-on is the Bank of England, which runs a widely respected resilience-testing programme for big banks that includes mock attacks. British banks that fail to beef up their defences may even be forced to hold extra capital. + +Standards in some emerging markets are much lower. Security at Bangladesh’s central bank was outdated and inadequate. One investigation found evidence of infiltration by three different groups. It is unlikely to be a coincidence that the hackers have targeted banks in relatively undeveloped markets rather than bigger (but much better protected) prizes in countries like Britain and America. + +Not that banks in bastions of high finance can rest on their laurels. Even if their cyber-defences are strong, there is always the risk from accomplices on the inside (help from whom has not been ruled out in Bangladesh). Several big banks, including JPMorgan Chase, have begun to whittle down the number of employees with access to the SWIFT gateway. As experts never tire of saying, cyber-security is about people as much as it is about technology. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21699458-recent-hacks-highlight-vulnerability-cross-border-payments-system-heist/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Make me + +Compulsory voting is hardest to enact in the places where it would make most difference + +May 28th 2016 | From the print edition + + + +“IF VOTING made any difference they wouldn’t let us do it,” quipped Mark Twain, an American writer. Some governments, however, think voting makes such a difference that they oblige voters to do it. Voting is compulsory in 26 countries around the world, from Argentina to Belgium. To those elsewhere worried about declining voter turnout, compulsory voting may seem tempting. But it is not a shortcut to a healthy democracy. + +Turnout has fallen from around 85% of eligible voters across the OECD in the late 1940s to 65% today, according to the Institute for Democracy and Electoral Assistance (IDEA), an NGO. For many, the changing composition of the voting electorate is as worrying as its dwindling size. Voters in Britain and America are disproportionately rich, well-educated and old. That, studies suggest, skews policymaking. In late-19th-century America, for example, rules barring most blacks in the South from voting seem to have resulted in a much lower ratio of teachers to children in black schools. Government spending on health, in contrast, jumped by a third when women got the vote. Health spending also rose by a third in Brazil, when the introduction of electronic voting made it easier for the less educated to vote. + +But boosting turnout is tricky. Making it easier to vote, by extending voting hours, say, or reducing bureaucracy, sometimes helps, but often only marginally. Allowing voters to register on polling day increases turnout by 5-7 percentage points; making election day a holiday seems to make no difference. One study found that after the American state of Oregon abandoned polling stations in favour of postal voting, turnout jumped by ten percentage points. Subsequent research failed to find such large effects, however, and there is some evidence that postal voting exacerbates the skew in who actually casts a ballot. + +Efforts to cajole voters also have only a limited impact. Contact with a canvasser seems to be relatively effective, raising the chances of someone voting by around 4.3 percentage points according to one paper. But from Madonna’s threat to spank non-voters in her video “Rock the Vote”, to worthy letters calling on citizens to perform their civic duties, it is hard to find a tactic that boosts turnout by more than a few percentage points. + +Indeed, in a world of voluntary voting, the real mystery is why so many voters turn out at all. Although votes matter in bulk, the chance of any individual vote deciding the outcome is minuscule. For voters, therefore, the potential benefit of participating is tiny relative to the cost of trudging to a polling booth and waiting in line. This is a classic collective-action problem, in which individuals have an incentive to free-ride on others’ sense of civic duty. + +Making voting mandatory seems like a quick fix. Voters still have the right to abstain by leaving their ballot blank or otherwise spoiling it. The punishment for failing to vote is usually quite mild: in Australia, where voting has been mandatory since 1924, non-voters must either provide an excuse for their absence, or pay a A$20 ($14) fine. + +Best of all, it works, both by increasing turnout and by reducing the skew in the electorate. Turnout in countries with compulsory voting is on average seven percentage points higher than in those where it is voluntary. Australia and Belgium both boast voting rates of more than 90%. In the parts of Switzerland where voting is mandatory, the turnout is more representative of the population as a whole than elsewhere. The results are different as a result, with leftist policy positions in referendums winning up to 20 percentage points more support. By the same token, when voting became compulsory in Australia it raised turnout by 24 percentage points, and increased the Labor party’s share of the vote by 7-10 percentage points. There is an air of a festival about voting in Australia: in 2013 19% of polling booths featured “sausage sizzles”—barbecues to reward voters with a sausage on bread. + +A spoiled ballot + +Yet mandatory voting does not necessarily yield a democratic paradise. In places where turnout is already relatively high, compulsory voting may not do much to alter politics. In Austria, for instance, introducing it in some regions had little effect on the relative support for left- and right-wing parties or on the level of public spending. + +And in places where turnout is low, and so the impact of mandatory voting might be big, it is politically difficult to enact. Barack Obama recently told a group of students that mandatory voting could have a “transformative” effect on American politics. That is doubtless true: in 2012 voters were split pretty evenly between Mr Obama and his main rival for the presidency, Mitt Romney; according to opinion polls, non-voters favoured Mr Obama by a margin of 35 percentage points. More generally, Republicans tend to do better among the most consistent voters. It is hard to imagine them supporting a step that could massively diminish their electoral fortunes. + +Republicans might dress up their resistance as a matter of principle. For starters, voting and compulsion are an odd mix. Forcing apathetic voters into polling stations might mean a more uninformed electorate, which protects inept politicians and rewards inflammatory ones. It might also take some of the spark out of politics: the Dutch scrapped it in 1967, on the ground that it made politicians complacent. It would be far better, surely, to try to get non-voters interested in politics than to drag them to the polls against their will. Indeed, Mr Obama himself has been good at that: his candidacy inspired many Americans to vote for the first time. It is hard to see coercion as a good substitute for an inspirational candidate, or even for the hard slog of education. Then again, the odd sausage sizzle wouldn’t hurt. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21699459/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Human evolution: Of bairns and brains + +Global warming: In the red + +Drone countermeasures: Hacked off + +Product design: The replicator + +Additive manufacturing: Alloy angels + +Additive manufacturing: Correction: The grim prospect + + + + + +Articles Sections Next + +Human evolution + +Of bairns and brains + +Babies are born helpless, which might explain why humans are so clever + +May 28th 2016 | From the print edition + + + +HUMAN intelligence is a biological mystery. Evolution is usually a stingy process, giving animals just what they need to thrive in their niche and no more. But humans stand out. Not only are they much cleverer than their closest living relatives, the chimpanzees, they are also much cleverer than seems strictly necessary. The ability to do geometry, or to prove Pythagoras’s theorem, has turned out to be rather handy over the past few thousand years. But it is hard to imagine that a brain capable of such feats was required to survive on the prehistoric plains of east Africa, especially given the steep price at which it was bought. Humans’ outsized, power-hungry brains suck up around a quarter of their body’s oxygen supplies. + +Sexy brains + +There are many theories to explain this mystery. Perhaps intelligence is a result of sexual selection. Like a peacock’s tail, in other words, it is an ornament that, by virtue of being expensive to own, proves its bearers’ fitness. It was simply humanity’s good fortune that those big sexy brains turned out to be useful for lots of other things, from thinking up agriculture to building internal-combustion engines. Another idea is that human cleverness arose out of the mental demands of living in groups whose members are sometimes allies and sometimes rivals. + +Now, though, researchers from Rochester University, in New York, have come up with another idea. In Proceedings of the National Academies of Science, Steven Piantadosi and Celeste Kidd suggest that humans may have become so clever thanks to another evolutionarily odd characteristic: namely that their babies are so helpless. + +Compared with other animals, says Dr Kidd, some of whose young can stand up and move around within minutes of being born, human infants take a year to learn even to walk, and need constant supervision for many years afterwards. That helplessness is thought to be one consequence of intelligence—or, at least, of brain size. In order to keep their heads small enough to make live birth possible, human children must be born at an earlier stage of development than other animals. But Dr Piantadosi and Dr Kidd, both of whom study child development, wondered if it might be a cause as well as a consequence of intelligence as well. + +Their idea is that helpless babies require intelligent parents to look after them. But to get big-brained parents you must start with big-headed—and therefore helpless—babies. The result is a feedback loop, in which the pressure for clever parents requires ever-more incompetent infants, requiring ever-brighter parents to ensure they survive childhood. + +It is an elegant idea. The self-reinforcing nature of the process would explain why intelligence is so strikingly overdeveloped in humans compared even with chimpanzees. It also offers an answer to another evolutionary puzzle, namely why high intelligence developed first in primates, a newish branch of the mammals, a group that is itself relatively young. Animals that lay eggs rather than experiencing pregnancy do not face the trade-off between head size at birth and infant competence that drives the entire process. + +To test their theory, Dr Piantadosi and Dr Kidd turned first to a computer model of evolution. This confirmed that the idea worked, at least in principle. They then went looking for evidence to support the theory in the real world. To do that they gathered data from 23 different species of primate, from chimps and gorillas to the Madagascan mouse lemur, a diminutive primate less than 30cm long. + +The scientists compared the age at which an animal weaned its young (a convenient proxy for how competent those young were) with their scores on a standardised test of primate intelligence. Sure enough, they found a strong correlation: across all the animals tested, weaning age predicted about 78% of the eventual score in intelligence. That correlation held even after controlling for a slew of other factors, including the average body weight of babies compared with adults or brain size as a percentage of total body mass. + +The researchers point to other snippets of data that seem to support their conclusions: a study of Serbian women published in 2008, for instance, found that babies born to mothers with higher IQs had a better chance of surviving than those born to low-IQ women, which bolsters the idea that looking after human babies is indeed cognitively taxing. But although their theory is intriguing, Dr Piantadosi and Dr Kidd admit that none of this adds up to definitive proof. + +That, unfortunately, can be the fate of many who study human evolution. Any such feedback loop would be a slow process (at least as reckoned by the humans themselves), most of which would have taken place in the distant past. There are gaps in the theory, too. Even if such a process could drastically boost intelligence, something would need to get it going in the first place. It may be that some other factor—perhaps sexual selection, or the demands of a complex environment, or some mixture of the two—was required to jump-start the process. Dr Piantadosi and Dr Kidd’s idea seems a plausible addition to the list of explanations. But unless human intelligence turns out to be up to the task of building a time machine, it is unlikely that anyone will ever know for sure. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21699433-babies-are-born-helpless-which-might-explain-why-humans-are-so-clever-bairns/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Global warming + +In the red + +The end of El Niño sees temperatures soar across the world + +May 28th 2016 | From the print edition + + + +CONDITIONS in India are road-meltingly hot: on May 19th residents of Phalodi, a city in the north of the country, had to cope with temperatures of 51°C—the highest since records there began. Records are tumbling elsewhere, too. According to the latest data from America’s National Oceanic and Atmospheric Administration, 13 of the 15 highest monthly temperature anomalies have occurred since February 2015. The average temperature over land and ocean surfaces in April was 1.10°C above last century’s average (see map). The current year will almost certainly be the warmest on record, and probably by the largest margin to date. + +A Pacific-wide climatic phenomenon known as El Niño (“The Boy” in Spanish) helps explain the heat. In non-Niño years, trade winds blow warm water to the west, where it pools in the western tropical Pacific. Cooler water is drawn up from the depths to the surface in the Pacific’s east as a result, in a process known as upwelling. Every two to seven years, the pool of warm water sloshes back eastwards when the trade winds weaken or even reverse; this is El Niño in action. The interaction of the Pacific Ocean and the atmosphere is part of a cycle called El Niño Southern Oscillation (ENSO). + +This spilling of the warm pool across the tropical Pacific pushes up global surface temperatures. The consequent increase in atmospheric heat and moisture brings deluges to south-eastern South America and western North America, and drought to India, Australia, Indonesia and southern Africa. Niño-like conditions first began in mid-2014, but the full event did not emerge for another year. It then proved one of the strongest ever recorded. + +On May 24th Australia’s Bureau of Meteorology (BOM) declared El Niño finished, as surface temperatures across the tropical Pacific have cooled over the past two weeks. What follows? Temperature peaks typically occur towards the end of El Niño, according to Kevin Trenberth from the National Centre for Atmospheric Research in Boulder, Colorado. BOM says that there is a 50% chance that La Niña, another phase of ENSO and one associated with unusually low surface temperatures in the eastern Pacific, will form this year. Cooler weather for south-eastern Asia and western South America could accompany it. + +But each event has its own quirks. And future Niños may hold greater surprises, thanks to increasing concentrations of heat-trapping gases in the atmosphere. Resultant ocean warming means the barrier to extreme Niños “is now lower”, says Eric Guilyardi, a meteorologist at the University of Reading in Britain. Between 1999 and 2012, 69 zettajoules of heat (or 69 x 1021 joules—a vast quantity of energy) have been sequestered in the oceans between 300 metres and 1,500 metres down, according to a 2014 study in Science. Still warmer oceans in years to come will probably mean that the weather events unleashed by strong Niños will intensify. + +Blaming climate change for particular storms remains tenuous. But America’s National Academies of Science, Engineering and Medicine released a report in March laying out where scientists can more confidently attribute the probability or severity of weird weather to climate change. It says the most dependable attribution findings are for events related to an aspect of temperature; a warmer climate means that unusually hot days become more likely while unusually cold ones become less so. India’s scorching temperatures may reflect such trends. Limiting global warming to less than 2°C above pre-industrial temperatures, agreed at UN climate talks last year, appears impossible. + +The way we live now + +The sweltering temperatures in recent months may help settle debates over a supposed “pause” in global warming that occurred between 1998 and 2013. During that period the Earth’s surface temperature rose at a rate of 0.04°C a decade, rather than the 0.18°C increase of the 1990s. + +Fluctuating solar output, atmospheric pollution, incomplete data and volcanic activity were all posited as possible factors. Some saw the stasis as evidence that previous temperature rises were thanks to natural cycles, not man-made warming. Others later argued that the hiatus never happened at all: inconsistent methods of measuring ocean surface temperature or inadequate statistical analysis were to blame. The complexity of climate systems means temperature variations cannot be explained by a single cause. But those who pinned the pause on the ocean’s heat-storing may have known best. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21699434-end-el-ni-o-sees-temperatures-soar-across-world-red/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Drone countermeasures + +Hacked off + +Guarding against rogue drones could be a legal nightmare + +May 28th 2016 | From the print edition + +Drone alert + +A BLACK package suspended in mid-air under a hovering drone is picked up by the CCTV cameras surrounding Wandsworth prison in south London one evening earlier this year. As it moves closer to one of the windows, a prisoner leans out to snare the delivery with a stick and pull it inside. Prison officers later recover the package and find it is stuffed with drugs and mobile phones. + +Such events are becoming increasingly common, not just in the use of drones to deliver contraband but in all sorts of other nefarious activities, from paparazzi spying on celebrities to burglars casing properties. More worrying still are reports of drones being flown near aircraft. Security experts fret about ways terrorists could use drones to drop bombs or biological weapons. + +What is needed, many reckon, are drone countermeasures. These already exist for military drones—including shooting them down with lasers. But that is a dangerous way to deal with small consumer drones flying in public areas. So, other answers are being sought in a challenge organised by MITRE, an American non-profit organisation that runs R&D centres funded by the federal government. It has drawn up a list of ten contenders to take part in a trial in August of “non-kinetic” systems capable of detecting and intercepting small drones weighing less than 5lbs (2.3kg). These systems must be good value and capable of wide deployment. The challenge is offering $100,000 of prizes and a chance to catch the eye of federal agencies. + +The hurdles posed by the challenge are not what you might expect. “The technology aspects are sometimes the easy part,” says Duane Blackburn, a policy analyst at MITRE. Various rules and regulations mean that interfering with a drone could be a legal nightmare. For example, detecting a small hovering quadcopter drone at any reasonable distance requires a relatively powerful radar. Yet such transmitters are strictly controlled in America under Federal Communication Commission (FCC) regulations, making such equipment difficult and expensive to acquire. + +The contenders think they can get around that by detecting the radio communications between a drone and its operator. Although drones can fly independently, some form of radio is used by an operator to relay commands, such as to go up or down, left or right, and to provide a video link from the drone’s camera. + +Mesmer, a system developed by Department 13, a technology company based near Baltimore, can detect these signals and even use them to identify the type of drone. Mesmer then employs its own signals to take command of the drone itself, ordering it to divert, land or return to base. + +The Dronebuster from Radio Hill, a company based in New Jersey, uses a “point-and-shoot” device which can be aimed at an intruding drone to jam either its communications or GPS system. Commercial drones are preprogrammed to land or return to base when they lose either of these signals. Lockheed Martin, a big American defence group, has a contender called ICARUS that employs multiple sensors to alert an operator to a drone threat and provide a selection of counter-measures, including taking command. The system also works automatically. + +Yet such systems could also open up a legal can of worms. For one thing, intercepting signals used by a drone might be considered an illegal “wiretap”, according to FCC regulations. Jamming signals is also against the law. Alex Heshmaty of Legal Words, a British legal-services company, says that interfering with the software of a third-party drone without permission might breach anti-hacking laws. + +Even if these rules can be circumvented, the Federal Aviation Administration makes it illegal to interfere with an aircraft in flight—and drones are considered to be aircraft. Similar rules exist in many other countries, including Britain. Andrew Charlton, a drone expert and head of a Swiss aviation consultancy, reckons that workable countermeasures against small drones will emerge, but in order to deploy them widely countries will have to review rules and regulations drawn up in an era of manned flight. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21699436-guarding-against-rogue-drones-could-be-legal-nightmare-hacked/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Product design + +The replicator + +Designing in the digital and physical worlds at the same time + +May 28th 2016 | LANCASTER | From the print edition + + + +WHEN great designs are turned into products compromises are made. The beautifully sculpted “concept” cars that regularly appear at motor shows never get built, at least not in the form they left the design studio, because they are inevitably too difficult and expensive to engineer for mass production. For decades this has meant products have had to be “designed for manufacture”, which essentially means their components must incorporate features that can be readily shaped by machines in order to be glued, screwed or welded together by people or robots. Now a combination of powerful computer-aided design (CAD) software and new manufacturing methods is changing the game. + +Instead of being created with technical drawings and blueprints, most new products are today conceived in CAD systems in a three-dimensional virtual form. As these systems get cleverer some of the design processes themselves are being automated: algorithms suggest the most efficient shapes to save weight, or to provide strength or flexibility according to the loads and stresses placed upon them. Components and even entire products can be tested in their digital form, often using virtual reality. When something physical is finally built the same software drives the equipment that produces it, whether automated lathes and milling machines that cut and drill material or, in the case of additive manufacturing, 3D printers that build up objects layer-by-layer in a way never before possible. + +This digital dimension gives designers a greater level of freedom to create new things (see article). But not all designers are skilled in using CAD systems. Even those who are might want to set aside the computer mouse for a saw, a file or a welding torch to get hands-on with their ideas. The ability to do both is becoming possible. A machine developed at the University of Lancaster in Britain provides a glimpse of a future in which product designers will be able to work in both digital and physical forms—at the same time. + +The ReForm is a desktop machine developed by Jason Alexander, Christian Weichel (now at Bosch, a German components group) and John Hardy (now co-founder of HE Inventions, a Manchester startup) to pick up any changes made to a physical model of a product and reflect those changes back into the digital model, or vice versa. “I like to think of it as the closest implementation yet of a Star Trek replicator,” says Dr Hardy, referring to the device that could create just about anything in the science-fiction TV series. + +Tea, Earl Grey, hot + +Inside ReForm is a fast-spinning milling head, which cuts shapes out of material in the traditional subtractive manner, and a 3D-printing extrusion head, which builds material in layers up additively. Overseeing proceedings is a 3D scanner, which projects a pattern of light onto the object being worked upon. A pair of cameras, positioned in the machine at different viewpoints, detects minute differences in the pattern of light reflected from the object to determine its shape in a digital form. At present the machine works with modelling clay. That might seem a bit old-fashioned, but it is still widely used: despite all their new digital tools, car designers, for one, continue to make full-sized replicas of new models in clay. + +The machine can be used in a number of ways. A digital CAD design can be sent to ReForm and it will set about milling it from a block of clay or printing it, after the machine itself determines which process will be the fastest. It could be a combination of both. Alternatively, an object can be placed inside ReForm to be scanned, after which a replica will be made either additively or subtractively. + +Changes can then be made to the object, cutting a bit off here, say, adding a bit there or drilling a hole. That could be done virtually on a computer screen or by removing the physical model and doing the work manually. Once placed back into the machine, the scanner detects the changes and updates the digital model. + +An image of the object is projected onto the viewing window at the front of the machine. This allows a designer to view the digital version overlaid on the actual clay object inside. It is used to produce a digital preview of what any changes will look like before cutting or printing begins. And if a designer thinks he has really messed up, there is an “undo” button which will let him scroll back through images of previous iterations, choose one and leave it to the machine to return the object to that original state. + +Machines like ReForm will allow people with no technical knowledge to engage in product design, says Dr Alexander. With further development, he believes it will be possible to integrate other manufacturing techniques into ReForm, such as making things in plastic or metal or at much larger scale, with milling and extrusion heads mounted on robotic arms. + +One intriguing possibility the team is thinking about is 3D printing electrical circuits, a process that is just beginning to be used in some factories. 3D-printed electronics would give ReForm the ability to make prototypes and even one-off products that are more functional. And it could also be used to follow up the software updates that many devices now demand with hardware updates, too. This would be done by putting a mobile phone, say, into the machine, cutting out a previous version of any circuitry and printing new electronics in its place. With a machine like ReForm it might no longer be necessary to throw any device away. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21699435-designing-digital-and-physical-worlds-same-time-replicator/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Additive manufacturing + +Alloy angels + +3D printing produces a curious lightweight motorcycle + +May 28th 2016 | From the print edition + +One printed for the road + +ONE of the great advantages of 3D printing is being able to escape the constraints of traditional production processes, and to make things with unique shapes. The powerful computer-aided design programs that are used to run 3D printers help engineers achieve this. Algorithms calculate the most efficient structure required to achieve the lightest weight and yet still handle all the loads and stresses that will be placed upon the object. Often the result is rather like something that nature might come up with—which is hardly surprising as nature has had millions of years of practice in creating highly efficient structures. + +The latest example of this bionic design trend is the Light Rider, which is claimed to be the world’s first 3D-printed motorcycle. The substantial part of its structure was printed by APWorks, a company based near Munich, using a proprietary material called Scalmalloy, an aluminium-magnesium-scandium alloy that was specially developed for 3D printing by Airbus, a European aerospace group that owns APWorks. + +The motorcycle is driven by a 6kW electric motor and battery. It reaches a top speed of 80kph and hits 45kph in three seconds. That will not exactly excite serious bikers, but its 3D-printed frame could get their attention. It weighs just 6kg, which makes the Light Rider some 30% lighter than conventionally manufactured electric motorcycles. + +Then there is the frame’s shape, which looks like an organic exoskeleton. This complex and hollow structure could not have been made with anything other than a 3D printer, says Joachim Zettler, APWorks’ boss. The process involved using a laser to melt together thousands of individual layers of the powdered alloy, each layer only some 60 microns (millionths of a metre) thick. The company is offering a limited production run of just 50 Light Riders. At some €50,000 ($56,000) each, it is not just the bike that is exotic but also the price. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21699432-3d-printing-produces-curious-lightweight-motorcycle-alloy-angels/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Correction: The grim prospect + +May 28th 2016 | From the print edition + +In last week’s briefing on antibiotic resistance ("The grim prospect"), the word “plasmids” was incorrectly rendered as “plastids” on two occasions. Plastids are plant-cell organelles, not found in bacteria. Be assured that we do know the difference. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21699437-correction-grim-prospect/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Dawn of the oil industry: Guts, greed and gushers + +Genetics: Mix and match + +Jacobean history: Forgotten hero + +Mali: Paper trail + +The invention of dating: Love’s labour + +Opera: Fiery angel + + + + + +Articles Sections Next + +Dawn of the oil industry + +Guts, greed and gushers + +ExxonMobil and Royal Dutch Shell dominate world oil. A century ago, they were born fighting each other + +May 28th 2016 | From the print edition + + + +Breaking Rockefeller: The Incredible Story of the Ambitious Rivals Who Toppled an Oil Empire. By Peter Doran. Viking; 352 pages; $28. + +JUST over 100 years ago Standard Oil, from which both Exxon and Mobil sprang, was the undisputed leader of the global oil industry. American trustbusters were soon hot on the heels of its competition-killing owner, John D. Rockefeller. So too was a scrappy Anglo-Dutch company, the product of a merger of Shell Oil with Royal Dutch in 1907, which had defied fearsome odds to muscle onto Standard’s home turf in America. + +That amalgamation had been the work of two men: Marcus Samuel, a brilliant Jewish merchant who built the Shell Transportation and Trading Company from his father’s business selling seashells in Houndsditch, East London, and Henri Deterding, a Dutch wheeler-dealer who built Royal Dutch from unpromising beginnings in the swamps of Sumatra into an Asian powerhouse. These two egos, for years bitter rivals, eventually joined forces to confront a “hammerlock on the planet’s oil market”. Their story, though not new, is grippingly retold in “Breaking Rockefeller”. + +Rockefeller’s life is vivid enough, though he is more of a presence snaking menacingly through the book than a central character. From his grand Manhattan office on 26 Broadway, the fastidiously punctual former book-keeper, with an eye permanently on the ledger, launched a “cut-to-kill” strategy whenever competition threatened his stranglehold on the kerosene industry. He would slash prices in one district to snuff out rivals, and raise them elsewhere to recoup his profits. Such was his dominance of global petroleum that he could do this with impunity throughout America, Europe and Asia. + +The guts, greed and gusto of this cast of characters are what gives the book its vigour. The colourful backwaters where they waged their counter-offensives, from London’s East End, to Baku in the Caspian, to Spindletop, Texas, add historical flavour. Peter Doran, a Washington-based scholar on European affairs, admits he has borrowed heavily from such books as “The Prize” by Daniel Yergin to tell his story. Samuel ordered almost all of his papers to be burned when he died, so some of the lively personality traits found here may be more the result of imaginative storytelling than documentary rigour. + +But the book is timely in an era when America’s shale revolution has upset the OPEC cartel’s efforts to control the world’s oil markets, and eastern Europe struggles to free its gas markets from dependence on Russia’s Gazprom. It is a vivid reminder of the dangers of monopolies, and of the merits of no-holds barred competition and technological upheaval. + +Samuel’s great coup was to commission the first modern oil tanker, which enabled him to ship hydrocarbons through the Suez Canal. Thus he could undercut Rockefeller in the Far East with cheap Russian fuel. Royal Dutch’s triumph came from applying new geological methods to find gushers of crude in the Dutch colonies of the East Indies, enabling it to fight Shell in Asia. + +Their tie-up, arranged by another intriguing Londoner, Fred “Shady” Lane, followed the Russian revolution of 1905, which knocked out Shell’s Caspian production and almost broke the company. But the timing proved superb. Instead of fighting each other, jointly they became a match for Standard. Its empire was under attack from Ida Tarbell, an American investigative journalist whose father had been ruined by Rockefeller. Her 19-part series starting in 1902 revealed Standard’s secret contracts, kickback schemes, Rockefeller’s “unholy alliance” between oil refiners and producers, and the extent of its monopoly. + +Within a decade, the Supreme Court had ordered Standard Oil to be dismantled, though the bits into which it was broken were so valuable that “in the span of a few months at the end of 1911, Rockefeller went from being a very rich man to a fabulously wealthy one,” Mr Doran writes. His end, as a cheeky old man playing golf and seducing girls in the back seat of his car in Florida, is described with humour. + +So is the retirement of Samuel, or Viscount Bearsted as he became, who helped persuade Winston Churchill to commission oil-burning dreadnoughts just before the first world war. Having climbed the social ladder as a Jew in Victorian England was a source of lifelong pride: “You can’t think what pleasure it gives me to put ‘The Honourable’ on my children’s envelopes,” he said after being made a peer. + +The book acknowledges that Royal Dutch Shell could not have toppled Standard Oil alone. “The trustbusters weakened Rockefeller’s monopoly. Free marketeers like Deterding [and Samuel] provided a competitive alternative to it.” Thanks to the competition that they engendered, the oil industry has become more vigorous ever since. The author does not dwell on the challenges to oil’s supremacy that have arisen lately as a result of climate change. But if Royal Dutch Shell’s challenge to Standard Oil is any lesson, companies that develop alternative forms of energy will only become true challengers to Big Oil with guts, greed and better technology. They are not quite there yet. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21699429-exxonmobil-and-royal-dutch-shell-dominate-world-oil-century-ago-they-were-born/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Genetics + +Mix and match + +May 28th 2016 | From the print edition + + + +The Gene: An Intimate History. By Siddhartha Mukherjee. Scribner; 592 pages; $32. Bodley Head; £25. + +THE first human with a genome that has been permanently modified in a lab could be born by the end of this decade. However innocuous the changes made, the baby’s birth will mark the first time that humanity has selectively interceded to change the genetic inheritance of future generations. That is an eventuality, Siddhartha Mukherjee argues in his new book, “The Gene”, for which the world is almost wholly unprepared. + +The book begins in the tranquil gardens of St Thomas’s Abbey in Brno in the mid-19th century. It was here that Gregor Mendel, an Augustinian friar, began experiments with pea plants to see how biological traits are passed on from parents to offspring. As he bred peas with different characteristics—with purple or white flowers, or tall or dwarf plants—Mendel noticed that no purple-white flowers emerged, nor any plants of medium height. Instead, the original traits reappeared in different ratios after each cross. Mendel realised that these traits were being determined by independent particles of information, which every plant inherited from its parents. He had identified one of the fundamental characteristics of a gene, a discovery which would become a pillar of modern genetics. + +“The Gene” ranges across 150 years, taking in every major advance in the field. It traces Charles Darwin’s thinking as he began to formulate his theory of evolution on his voyage to the Galápagos islands, and follows the thread all the way to contemporary China, where scientists are carrying out cutting-edge, but ethically troubling, genetic experiments with human embryos. Dr Mukherjee does not neglect the catastrophic missteps that science has taken, including the global rise of the eugenics movement, from the campaign by Francis Galton, Darwin’s half-cousin, to make it the “national religion” of Britain, to the atrocities committed by Nazi doctors in the second world war, which largely brought eugenics programmes to a halt. + +Its grand scope means “The Gene” cannot explore the science to the same depth as other books such as Steven Rose’s classic, “The Chemistry of Life”. Nor is its narrative driven by a single powerful idea, as is Richard Dawkins’s “The Selfish Gene”, published 40 years ago. + +Nonetheless, Dr Mukherjee uses personal experience to particularly good effect. In “The Emperor of All Maladies”, his earlier Pulitzer-winning history of cancer, it was his work as an oncologist that illuminated the science of the disease. In “The Gene” his family comes to the fore. He writes tenderly, for example, of his two mentally ill uncles: Rajesh, once “the most promising” of the brothers, and Jagu, who “resembled a Bengali Jim Morrison”. It is a poignant way to examine the genetics of schizophrenia: his own family’s history of mental illness leads him to studies of other families “achingly similar” to his own. + +Returning to his uncles in the final chapter, Dr Mukherjee notes that mental illness can be accompanied by exceptional talents. He concludes his history with a 13-point manifesto for the post-genomic world. “Normalcy”, he writes, “is the antithesis of evolution.” This, then, is perhaps the most powerful lesson of Dr Mukherjee’s book: genetics is starting to reveal how much the human race has to gain from tinkering with its genome, but still has precious little to say about how much we might lose. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21699426-mix-and-match/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Jacobean history + +Forgotten hero + +May 28th 2016 | From the print edition + + + +A Stain in the Blood: The Remarkable Voyage of Sir Kenelm Digby. By Joe Moshenska. William Heinemann; 553 pages; £20. + +WHATEVER became of Sir Kenelm Digby? A cook, alchemist and philosopher and the inventor of the modern wine bottle, his life seems to have sunk without a trace. His recipes, set out in “The Closet of the Eminently Learned Sir Kenelme Digbie Kt. Opened”, were published and republished. His life was first told by John Aubrey, the great biographer of Digby’s age, but only one biography has appeared since the 1950s, written by a distant descendant of Digby’s. + +He was the son of Everard Digby, a Gunpowder Plotter condemned to death for conspiring to blow up King James I. Yet Kenelm charmed his way into becoming a courtier to James’s son Charles I. He had a bookish, sheltered upbringing. Despite that, he went on to marry Venetia Stanley, a famous 17th-century beauty painted by Van Dyck and elegised by Ben Jonson. Such was his fame for the occult that it was later rumoured that he had murdered her with wine laced with viper venom. In a bid to remove the “stain in his blood” as the son of a Gunpowder Plotter, he decided to reinvent himself as a pirate. It is an extraordinary story. + +Joe Moshenska, a specialist in the Renaissance period at Cambridge University, digs up the first half of that life story, focusing on the voyage to reclaim his honour. Charles I commissioned Digby to be a privateer, free to sink enemy ships or seize their loot. Charles was keen for extra cash raised through non-parliamentary means, like his predecessors. Digby acted as ship-sinker, but partly as diplomat as well. He returned with looted wool bales, wine crates, currants (highly sought-after commodities at the time), ancient Greek marbles and Arabic manuscripts. In Algiers he persuaded the city governors to free 50 English slaves and open the port to all English vessels. + +The romance between Digby and Stanley is just as fascinating. It was said that he faked his death in order to escape the affections of the Queen Regent of France. When Stanley heard he had died, she collapsed in grief and was persuaded to get engaged to a devious suitor. She later forgave Digby, and married him. + +Mr Moshenska’s biography gives a wider picture of England’s place in the world. It is not hard to see Digby as an early product of the idea of empire. He brought back treasure but he also brought back ancient learning, as well as foreign fauna and flora. That an intellectual would become an ocean-faring buccaneer may seem incongruous, but it would lay the foundations of an English imperialism. Colonialists would go hand-in-hand with botanists and astronomers in their conquest of the globe. + +The book also connects the English national story with a European one. Digby returned from his travels with continental recipes, philosophy and science. Around the same time Inigo Jones returned with ideas for classical architecture. Charles I, inspired partly by the opulence of the Spanish Habsburg court where he first met Digby, had Van Dyck and Rubens paint his and his father’s image. + +Mr Moshenska depicts an age that sits between superstition and a scientific revolution. Digby indulged in horoscopes and alchemy, and discussed Galileo’s new ideas with Florentine academics. He advanced a theory that wounds would heal if a powder was applied to the weapon that caused the injury. (Unsurprisingly it worked better than spreading mustard on the open wound, a common alternative.) His book on the weapon-salve, though much mocked, went through 29 English editions. Digby went on to write the first paper which the new Royal Society formally asked to publish, and he came up with a crude theory of photosynthesis. + +In his short biography Mr Moshenska successfully brings back to life a forgotten self-made man who was at the same time braggadocio and philosopher, and who seemed to live so many lives. Readers curious to learn more can only await the second half of the story. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21699428-forgotten-hero/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Mali + +Paper trail + +May 28th 2016 | From the print edition + +Displaced but not destroyed + +The Bad-Ass Librarians of Timbuktu. By Joshua Hammer. Simon & Schuster; 278 pages; $26. + +JOSHUA HAMMER’S new book, “The Bad-Ass Librarians of Timbuktu”, traces the story of hundreds of thousands of medieval texts as they are rescued in 2012 from near-destruction by jihadists linked to al-Qaeda in Mali. It is at once a history, caper and thriller, featuring a superherolibrarian, Abdel Kader Haidara, as the saviour of an entire culture’s heritage. + +Some of the book’s most compelling passages are lists, sometimes as much as a paragraph in length. The spices, minerals, animals, fabrics and books carried into Timbuktu in the Middle Ages give a heady taste of what the city once was. The printing process swirls to life in red, gold and black inks, on paper from Fez or distant Venice. Three craftsmen were needed to create a manuscript: one for the words, another for the proofreading and a third to dash in the delicate intonation markings. Yet the tension, whether to share the texts or hide them, is ever-present. These millions of pages become the endangered species of the story, threatened by wave after wave of invaders. + +Mr Hammer’s book is not strictly about the manuscripts, for their escape does not really start until halfway through the book. It is mostly a history of jihad in Mali, which for centuries lay on the trade route across the Sahara. One day, a short sandy drive from his hero librarian’s home, a “butterscotch-and-peach painted concrete mosque” appeared to Mr Hammer: an outpost of the puritan, Saudi-funded Wahhabi ideologues taking root across the Sahel. He first sees the new mosque on a visit to Timbuktu before the war, when he also spots American special forces drinking beer in the heat. Trouble was brewing. + +The story picks up speed as it begins to chart the opening salvos of Mali’s own Arab spring. France and America watch a weak region, infested with criminals, moulder. Military officials want to strike extremist groups as they form, they tell the author, whereas diplomats prefer development. Hostages are taken from Mali and neighbours, and traded for huge ransoms. The Tuaregs who supported the Libyan leader, Muammar Qaddafi, come home armed and ready for revolution. Just as the fight is brewing, a world-renowned music festival in Timbuktu welcomes Bono to the stage. Four days later, after the tourists leave, the shooting begins. + +Life becomes awful in Timbuktu, with brutal sharia punishments meted out by young soldiers. Many Malians refuse to be cowed. Here the caper begins at last. Mr Haidara, the dogged manuscript collector who has spent a lifetime gathering north Africa’s most important works into central libraries, faces a difficult, at times insane, task: how to smuggle nearly half a million ancient texts from under the jihadi occupiers’ noses down a 1,000km route to Bamako. He develops an ulcer as a result of the stress. + +The reader last encounters the troves of manuscripts as they arrive at safe houses in Bamako; “not one had been lost”, according to Mr Haidara. Here the author leaves them, as fragile, tantalising and inaccessible as they were in the desert. What of their future? For the ancient books themselves, this chapter is one among many. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21699430-paper-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The invention of dating + +Love’s labour + +May 28th 2016 | From the print edition + + + +Labour of Love: The Invention of Dating. By Moira Weigel. Farrar, Straus & Giroux; 292 pages; $26. + +UNTIL the start of the 20th century, the rules of courtship were fairly straightforward. Male suitors called on eligible women under the watchful eyes of concerned adults. Keen chaps visited regularly and with the intent to marry. It was a dance to which everyone knew the steps. Modern pursuers are not so lucky. Who pays? When can one text? Just how aloof should one be? Whether you are hoping for a relationship or just casual sex, dating “often feels like the worst, most precarious form of contemporary labour: an unpaid internship,” writes Moira Weigel in “Labour of Love”, an occasionally amusing and often provocative look at the work of wooing. + +The rules of love, Ms Weigel argues, are shaped by economics. The concept of “dating” only came about at the dawn of the industrial age, when new opportunities lured young people to cities in droves. Working women were soon exposed to an array of potential mates, but many lived in tenements or boarding houses that were unfit for hosting callers. So men offered to escort romantic prospects to restaurants or dance halls, luring poorly paid women with the prospect of a “free treat”. Policing vice squads initially found these transactions suspect, and often arrested ladies who partook in them. But as these practices spread among the working classes, saloons and amusement parks sprang up to earn their business. By the mid-1910s even the middle classes considered “dating” a legitimate way to woo. + +Shifting demographics also played a role. Falling birth-rates allowed parents to dote on fewer children, who were increasingly likely to go to school. Young people began mixing in new ways, particularly once American colleges went co-ed in the 1920s. Cars granted young lovers unprecedented privacy, leading one University of Michigan professor to sniff in 1928: “What is vulgarly known as ‘petting’ is the rule rather than the exception.” Perhaps it is the destiny of parents to be horrified by the habits of their children. In the 1950s many were appalled that young people were “going steady” when they should have been dutifully shopping around. Yet a shortage of American men after the second world war made it wiser for women to get cosy with one instead of playing the field. + +The mating marketplace has spurred countless businesses. In the 1920s even respectable ladies began painting their faces, and the cosmetics industry exploded. As late as the 1960s most drinking establishments barred unaccompanied women, leading one enterprising New Yorker to open a place called T.G.I. Friday’s, and the “singles bar” was born (the place became so popular it needed velvet ropes). The videotape dating services used by time-poor yuppies in the 1980s set the stage for the boom in high-tech mate-shopping by the turn of the 21st century. And the desire to keep dating well into one’s 40s before settling on a partner has boosted demand for fertility treatments. + +In this lively tour of changing romantic mores, Ms Weigel occasionally rambles off-course. She tends to bury thinly argued points beneath grand statements, and she reserves most of her sympathy for women. But she is right to note that modern courtship is full of mixed messages. Women who are pushed to “lean in” at work are often told to pull back to appeal to men. Men who may answer to women at the office are encouraged to seem invincible after hours, and pay for the pleasure, too. Ms Weigel argues that this arrangement sustains the fiction that men are still in control of courtship—and may also explain why, in these uncertain economic times, the labour of love is so terribly confusing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21699427-loves-labour/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Opera + +Fiery angel + +How Ermonela Jaho became the world’s most acclaimed soprano + +May 28th 2016 | From the print edition + +The Traviata of Tirana + +WHENEVER dictators stifle dissent, the art which most often survives is music. So it is no surprise that the soprano who earlier this month carried off the annual prize for the singer most esteemed by the readers of Opera Magazine, the industry’s bible, should have been born and bred in Enver Hoxha’s Albania. Ermonela Jaho recalls with affectionate amusement the paranoid, isolationist atmosphere in which she grew up: with one television channel and one state-approved comedian (Norman Wisdom, a Londoner); with baby boys being named Adriatik after the sea they had to cross to make their fortune; with hundreds of thousands of pill-box bomb-shelters studding the landscape; but also with a heady form of polyphony which has been sung at village weddings since antiquity. + +Ms Jaho has great magnetism on stage, her singing complemented by a particular physical presence. When she sang the title role in Giacomo Puccini’s “Suor Angelica” at Covent Garden in 2011 she drew an ecstatic audience response every night; reviewing her reprise of the role in March, the critics ran out of superlatives. Angelica has been committed to a convent as punishment for an illicit affair. In this cruel drama she learns that her illegitimate son has died; she takes poison and dies praying for salvation. Ms Jaho’s performance took on a compelling momentum as shock reduced her to a seemingly lifeless corpse, before she gave way first to volcanic grief and then to wounded-animal rage. + +“But that anger is also my anger,” she said afterwards. “When I sing, I draw on everything I have seen and heard in my life.” Her father taught philosophy and flew Russian fighters; her mother was a teacher, but her family was poor and her mother could never pursue the singing career she yearned for. A sense of failure pervaded her life. Born in 1974, Ms Jaho always wanted to be a singer. Her first ambition was to take up pop, until at 14 she went to a performance of “La Traviata”. “In that moment I saw a new horizon, a big door opening, and I wanted to go through it.” She has now sung “La Traviata” 232 times. + +In person Ms Jaho is forceful and humorous, her ideas tumbling out seemingly unstoppably. She possesses an earthy beauty, with no hint of divadom, though she frequently refers to herself in the third person, as though watching her own progress with an objective eye. In later life she wants to spend more time as a voice teacher—something she already does whenever she travels back to Tirana—inculcating in younger singers the discipline which has allowed her to reach the heights without straining (and ruining) her voice. + +Along the way, she has had a series of lucky breaks. The first was when Katia Ricciarelli, an Italian soprano, spotted her in a master-class at the Tirana conservatoire, and invited her to study in Italy, where she began her career. She married a childhood friend who was living in New York, and still lives there during the two months each year when she is not travelling. + +Her breaks in London have followed a time-honoured pattern, stepping in for Anna Netrebko as Violetta in “La Traviata” at Covent Garden in 2008, and for Anja Harteros as Suor Angelica in 2011. When that invitation came through, at exceptionally short notice, she hesitated: she wanted to make the role her own, but her parents had both recently died, and she was too traumatised even to cry, she says. Singing the part was cathartic. + +In the coming two years in London, New York, Washington and Paris she will again sing the title roles in “La Traviata” and “Madam Butterfly”, but she knows her vocal limits—she will never do Wagner. Next month Opera Rara will release its recording of Ruggero Leoncavallo’s “Zazà”, which depends on the charisma of its star. Only when the record company discovered Ms Jaho did it feel confident enough to go ahead with the recording. It will be her recording debut, and she finds the work full of echoes of her mother’s plight: “Some of Zazà’s lines I heard like a refrain from my mother, when I was a child. Singing this part was like having a knife go through my soul.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21699431-how-ermonela-jaho-became-worlds-most-acclaimed-soprano-fiery-angel/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Fritz Stern: Another German + + + + + +Articles Sections Next + +Obituary: Fritz Stern + +Another German + +Fritz Stern, a German-born American historian, died on May 18th, aged 90 + +May 28th 2016 | From the print edition + + + +WHAT made Germany go mad? Having fled the Nazis as a boy, Fritz Stern spent the rest of his life trying to understand and explain the murderous frenzy which beset his homeland. + +His life spanned five states of Germany: the Weimar Republic, Hitler’s Nazi Reich, the prosperous, guilt-ridden Federal Republic, the harshly run communist East, and finally the reunified country, which bestowed on him its highest honours. His impeccable credentials—American, Jewish, a refugee from Hitler—meant he could praise something that modern Germans could not. He termed it anderes Deutschland (“another Germany”): not a state, but a place of noble ideas and brave behaviour, a cultural powerhouse and a force for European unity. After the Stern family’s flight from Breslau, now Polish Wroclaw, Germany could no longer be his fatherland, but German, precise and expressive, was still his mother-tongue—and there was nowhere else, he said fondly, where he could use it in the same way. + +Fritz was seven when Hitler came to power: bad news, the boy could tell, from his father’s reaction when he brought up the morning newspaper. But it was nothing that affected the family personally. In the early Nazi years left-wingers, not Jews, bore the brunt of persecution. The prosperous, professional Sterns were surely neither; the family had long ago converted to Lutheranism. Only when rebuked for making an anti-Semitic remark to his (piously Christian) sister did he even become aware of his family’s roots. + +The Sterns were spared any personal humiliation: they emigrated unhurriedly and reluctantly, with their furniture and other possessions, in 1938, a fortunate six weeks before the furies of Kristallnacht. The young man initially wanted to follow his father into medicine, but found the humanities beguiling. Albert Einstein, a family friend, advised him to stick with medicine: it was a science; history wasn’t. He ignored that, and a career in American academia, chiefly at Columbia University, quickly blossomed. + +He made his name with a book on cultural despair, published in 1961, which traced the Nazis’ roots to a 19th-century German revulsion against modernity and liberalism. The trauma of defeat in the first world war turned fashionable cultural malcontents into a political force that ultimately became a murderous ideology. Hitler’s rise, he argued, owed less to the Austrian corporal’s personality, his thuggish supporters and brutish ideas, than to his opponents’ cowardice and the weakness of Germany’s “gatekeepers”—the guardians of its cultural and moral standards. + +Another big book looked at money and power in imperial Germany, focusing on the previously unexplored relationship between Bismarck and his banker, a Prussian Jew called Gerson von Bleichröder. The picture painted was unflattering to both: the Iron Chancellor’s brutal opportunism matched by the financier’s fawning subservience. But the moral dilemmas of the Hitler era were the most fascinating. He wrote an insightful study of two anti-Nazi notables: the Protestant pastor Dietrich Bonhoeffer and his friend, the intelligence officer Hans von Dohnanyi. + +Stern fans + +Distinguished in the English-speaking world, the silver-tongued professor was revered in Germany. Die Welt called him the country’s “Guardian Angel”: combining an insider’s knowledge with an outsider’s clout. Though originally lukewarm about reunification, in 1990, at a—literally—historic seminar, he helped persuade Margaret Thatcher, then the British prime minister, that it posed no threat to Europe. + +The Stern professorial wrath descended on Daniel Goldhagen, an American author whose book “Hitler’s Willing Executioners” sweepingly blamed the Holocaust on Germans’ “eliminationist mindset”. His blistering review in Foreign Affairs called it “astoundingly repetitive”, “simplistic” and a “potpourri of half-truths and assertions” (and full of “vaporous, dreary jargon”, to boot). Anti-Semitism was inexcusable, but—historically—Germany was far from unique. Its misdeeds must be criticised, but always with scrupulous facts and logic. + +Some judgments would have been hard for a non-Jewish, non-refugee to make: for example that Hitler would today be hailed as a German national hero had he died in 1936. His expertise was mostly from on high, and from afar, with little time actually living in Germany (a five-month stint in 1992 as the American ambassador’s adviser was the longest stay of his adult life). Some thought his delight in prizes and lectures excessive. Yet a self-questioning German soul permits no complacency: after receiving a particularly grand prize, he was asked by his wife “are you happy?” He replied sombrely: “if not now, when?” + +He ended his life worrying that democracy was disintegrating, just as it had in his youth. Authoritarian tendencies in Poland were distressing. So too were developments closer to home. When the Sterns arrived in America FDR was president. Now Donald Trump—a “nobody” but for his wealth and ambition—exemplified “stultification” and an ominously “dysfunctional, destructive” politics. A life spent studying how quickly and terribly things can go wrong, and the cost of righting them, sharpens the senses for such things. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21699407-fritz-stern-german-born-american-historian-died-may-18th-aged-90-another-german/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +African growth + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +May 28th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21699424-interactive-indicators/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +May 28th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21699444-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +May 28th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21699438-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +May 28th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21699440-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +African growth + +May 28th 2016 | From the print edition + + + + + +Africa’s economy is projected to expand by 3.7% in 2016, according to a report by the OECD, a rich-country club. East Africa is predicted to be the continent’s fastest-growing region: Ethiopia, in particular, has averaged double-digit growth since 2005 and its economy is expected to swell further in 2016, bolstered by public-sector investment. West Africa will be helped by the end of the Ebola outbreak. Oil exporters have been hit by the falling price of crude: the OECD expects growth to remain subdued in Angola and Nigeria while Equatorial Guinea is forecast to remain in recession. South Africa is another gloomy spot: drought and power shortages mean its low-growth trajectory is set to continue. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21699439-african-growth/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +May 28th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21699441-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Thu, 26 May 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +North Korea’s nuclear programme: A nuclear nightmare + + + + + +Austria’s presidential election: Disaster averted—for now + + + + + +Online platforms: Nostrums for rostrums + + + + + +American elections: Voting wrongs + + + + + +Opioids: The ecstasy and the agony + + + + + +Letters + + + +On genomics, migrants, China, London, Brexit, cronies, country living: Letters to the editor + + + + + +Briefing + + + +North Korea’s nuclear weapons: By the rockets’ red glare + + + + + +United States + + + +Voting rights: The fire next time + + + + + +The Libertarian Party: Guns, weed and relevance + + + + + +The campaigns: Heard on the trail + + + + + +Hillary Clinton’s e-mails: Already indicted + + + + + +Disability lawsuits: Frequent filers + + + + + +Soccer flourishes: Kick turn + + + + + +Lexington: Oh, Oklahoma + + + + + +The Americas + + + +Mexico’s regional elections: The view from Veracruz + + + + + +Bello: Chávez’s little blue book + + + + + +Anglo-Argentine relations: Ending estrangement + + + + + +Brazilian culture: Way, José + + + + + +Asia + + + +America and Vietnam: Pull the other one + + + + + +War in Afghanistan: Taliban reshuffled + + + + + +India’s deep south: Southern comfort + + + + + +China + + + +Retirement: China’s Florida + + + + + +Social media: The dark art of astroturfing + + + + + +Banyan: Rocking boats, shaking mountains + + + + + +Middle East and Africa + + + +Iranian politics after the nuclear deal: Who’s in charge? + + + + + +The campaign against Islamic State: Fallujah, again + + + + + +Israeli politics: He’s back! + + + + + +Tanzania: Government by gesture + + + + + +Reading the Torah in Abuja: Who wants to be a Jew? + + + + + +Europe + + + +Visa liberalisation: Europe’s murky deal with Turkey + + + + + +Crimea’s Tatars: 1944 all over again + + + + + +Greece gets its bail-out: Temporary relief + + + + + +Austria’s presidential squeaker: So long, farewell? + + + + + +German nationality: Name, date of birth, migration background + + + + + +Charlemagne: Of creeps and crèches + + + + + +Britain + + + +Rural Britain: Countryside blues + + + + + +Brexit brief: Yes, we have no straight bananas + + + + + +Not in the family way: Teenage pregnancy + + + + + +Brexit and science: The European experiment + + + + + +Drugs policy: Illegal highs + + + + + +Working women: On the up + + + + + +Hydraulic fracturing: Finally fracking + + + + + +Football managers: They think it’s all over + + + + + +Bagehot: The continental imperative + + + + + +International + + + +Opioids: The problem of pain + + + + + +Special report: Migration + + + +Migration: Looking for a home + + + + + +The language of migration: Terminological exactitudes + + + + + +Politics: Welcome, up to a point + + + + + +Integration: A working solution + + + + + +Demographics: Not so fast + + + + + +Resettlement: Bring me your huddled masses + + + + + +Lebanon’s and Jordan’s plight: Caught by geography + + + + + +Refugee camps in Africa: From here to eternity + + + + + +Looking ahead: How to do better + + + + + +Business + + + +Regulating technology companies: Taming the beasts + + + + + +Alibaba: Under scrutiny + + + + + +Oil-price reporting: Striking it rich + + + + + +American media: Sumner’s lease + + + + + +Alcohol in China: Proof positive + + + + + +The future of carmakers: Upward mobility + + + + + +Schumpeter: Life in the fast lane + + + + + +Finance and economics + + + +Banks and Brexit: Wait and hope + + + + + +Buttonwood: Ignorance isn’t bliss + + + + + +Quicken Loans: A new foundation + + + + + +Japan’s giant pension fund: That sinking feeling + + + + + +Short-term lending: A pink slip + + + + + +Cyberattacks on banks: Heist finance + + + + + +Free exchange: Make me + + + + + +Science and technology + + + +Human evolution: Of bairns and brains + + + + + +Global warming: In the red + + + + + +Drone countermeasures: Hacked off + + + + + +Product design: The replicator + + + + + +Additive manufacturing: Alloy angels + + + + + +Additive manufacturing: Correction: The grim prospect + + + + + +Books and arts + + + +Dawn of the oil industry: Guts, greed and gushers + + + + + +Genetics: Mix and match + + + + + +Jacobean history: Forgotten hero + + + + + +Mali: Paper trail + + + + + +The invention of dating: Love’s labour + + + + + +Opera: Fiery angel + + + + + +Obituary + + + +Obituary: Fritz Stern: Another German + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +African growth + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.06.04.TXT b/homeworks/B20769/homework1/data2/2016.06.04.TXT new file mode 100644 index 0000000..5bf0969 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.06.04.TXT @@ -0,0 +1,5270 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Jun 4th 2016 | From the print edition + + + +Industrial unrest spread throughout France. A week after a blockade of oil refineries led to panic at the petrol pumps, the country was crippled by another round of strikes, as transport workers joined the picket lines. The dispute, over the government’s modest reforms to loosen labour-market restrictions, has pitted unionised workers against the Socialist government of François Hollande. See here and here. + +The UN’s refugee agency reported that at least 880 migrants were feared drowned in a single week in the Mediterranean. In the first five months of 2016, 2,510 had died trying to make the crossing to Europe, up by 35% compared with the same period last year. + + + +In Brussels the European Commission issued a formal objection to changes made by the Polish government in December to Poland’s constitutional court, which potentially endanger the rule of law. The government, led by the Eurosceptical Law and Justice party, now has to address the criticisms; failure to do so could lead to sanctions or to Poland losing its voting rights in the European Union. + +After two decades of work, Switzerland officially opened the Gotthard base train tunnel, the world’s longest, at an event attended by European leaders, including Angela Merkel. At 57.5km (35 miles) the Gotthard base is 7km longer than the Channel Tunnel. When it starts operating in December it will increase the capacity for transporting freight along the Rotterdam-to-Genoa corridor. + +Breaking the rules + +Luis Almagro, the secretary-general of the Organisation of American States, called an emergency meeting to consider suspending Venezuela under the organisation’s “democratic charter”. He is the first head of the OAS to invoke the charter against the will of a member state. But a group of countries led by Argentina is seeking to delay the meeting in order to allow more time for mediation between Venezuela’s populist government and the opposition. + +Brazil’s interim anti-corruption minister, Fabiano Silveira, resigned after recordings were leaked in which he appears to advise a high-ranking politician on how to defend himself in an investigation of the multibillion-dollar Petrobras scandal. He is the second minister to resign in similar circumstances since Michel Temer became Brazil’s interim president in May. See article. + +Still defiant, but going to jail + + + +Hissène Habré, the president of Chad from 1982 to 1990, was found guilty of crimes against humanity, rape and torture by a court in Senegal set up under the auspices of the African Union. Around 40,000 people died under the dictator’s reign of terror before he fled Chad for exile in Senegal. He is the first ex-head of state to be convicted in another country’s national court-system, rather than at a special tribunal. See article. + +Uganda announced it has cut all military ties with North Korea after international pressure. It used to buy rifles and hire military instructors from the dictatorship. + +Mohamed Kuno, the plotter behind the attacks on Garissa University in Kenya last year in which 148 people were murdered, was killed in Somalia, according to officials. + +Fighter jets bombed Idlib, a rebel-held provincial capital in northern Syria, killing over 20 people. Russia denied it was responsible for what was the heaviest bombardment of the city since a partial ceasefire was declared last February. See article. + +Iran said it was banning its citizens from joining the pilgrimage to Mecca in September in protest at Saudi Arabia’s “obstacles”. Hundreds of Iranians were among some 2,400 pilgrims killed in last year’s stampede at Mecca, but the two countries have failed to agree on compensation. + +Libyan forces pushed Islamic State fighters back from two coastal towns near oil installations, reducing its control of the Mediterranean shore. + +Escalating tensions + +South Korean officials said that North Korea tried to launch a missile from its east coast, which flew for a few seconds before exploding. China urged calm. Barack Obama called North Korea “a big worry”. + +Rodrigo Duterte, president-elect of the Philippines, was embroiled in more controversy. Just days after a reporter was killed in Manila he said, “If you’re an upright journalist, nothing will happen to you,” but “just because you’re a journalist, you are not exempted from assassination if you’re a son of a bitch.” + +Prosecutors in Singapore opened a money-laundering probe into 1MDB, a Malaysian state-investment firm. It is the city-state’s biggest-ever inquiry of its kind. Bail was denied to a former wealth manager at the branch of a Swiss private bank, who faces charges in connection with the investigation. + +China’s capital, Beijing, is planning to introduce a congestion charge, possibly later this year, according to state media. The rapid growth of a car-owning middle class has reduced traffic in parts of the city to a crawl during peak hours. Cars are already sometimes banned from being used at certain periods of the week. + +America’s defence secretary, Ashton Carter, said China could be erecting a “great wall of self-isolation” by undercutting principles that other countries have sought to establish for use of the seas, the internet and management of the global economy, which reflected “the region’s distant past, rather than the principled future”. China responded by saying that some Americans’ minds were “stuck in the cold war”. + +Not letting the memory fade + + + +Barack Obama visited Hiroshima, the first president of the United States to go there since America dropped an atom bomb on the city in August 1945. Mr Obama called again for a world free of nuclear weapons, though under his administration America has upgraded its nukes, as have Russia and China. + +Donald Trump, the putative Republican candidate for president, announced that he would be in Scotland at the reopening of one of his golf courses on June 24th. The date, a day after Britain votes on whether to remain in the EU, may not be a coincidence. Although Mr Trump appears not to know the meaning of “Brexit” in interviews, he has expressed a desire that Britain should leave the club (Europe, not his golf club). + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21699980-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Jun 4th 2016 | From the print edition + + + +In its latest twice-yearly global assessment, the OECD warned that the world economy is “stuck in a low-growth trap”. The organisation said monetary policy alone could no longer be relied on to deliver growth and governments should be using the fiscal tools at their disposal, such as increases in investment spending, to stimulate demand. It also pointed to several downside risks to global growth, the most immediate of which would be if Britain votes to leave the European Union in a referendum on June 23rd. + +The OECD forecast that Brazil’s economy will shrink by 4.3% this year. Official data this week showed that the country’s GDP contracted by 5.4% in the first quarter compared with the same period last year. Although bad, many economists were expecting the figure to be much worse. See article. + +Shinzo Abe, Japan’s prime minister, delayed a controversial rise in the country’s sales tax until 2019. The increase, from 8% to 10%, was supposed to take place next April, having already been postponed once. An initial rise in the tax in 2014 was widely blamed for throwing Japan into recession. See article. + +Tiger, tiger, burning bright + +India’s economy grew by 7.9% in the first three months of the year compared with the same quarter in 2015. For the fiscal year ending March 31st GDP rose by 7.6%, the fastest pace in five years. The government was quick to take the credit, pointing to its pro-business reforms. But India’s impressive figures came with the usual warnings about their reliability. Other indicators, such as weak private investment and exports, suggest the economic picture is more mixed. See here and here. + +Consumer spending in America grew by 1% in April compared with March, the biggest increase in nearly seven years. The data will be taken as more evidence that the economy is racing ahead by those who want the Federal Reserve to lift interest rates again this month. + +Martin Senn, who stepped down as chief executive of Zurich Insurance in December, committed suicide at his holiday home in Klosters. Three years ago the company’s finance director also took his own life, prompting soul-searching about the stresses faced by busy executives. An independent investigation into that incident concluded that the insurer’s leadership was not putting undue pressure on management. + +Yusuf Alireza unexpectedly quit as chief executive of Noble Group, Asia’s biggest commodities-trading firm. Noble, which is based in Hong Kong, has been hit by the slump in commodity prices and faces allegations from a research outfit that it overstated its assets, which the company denies. On the day that Mr Alireza’s departure was announced Noble also said it would sell its profitable American retail-energy business; the proceeds will go towards repairing its balance-sheet. + +Debt spirals + +The Obama administration detailed new rules to regulate providers of payday loans. Such lending is aimed at people on low incomes and attracts very high interest rates. The government wants lenders to do more to assess a borrower’s ability to repay. + +Saudi Arabia’s sovereign-wealth fund ploughed $3.5 billion into Uber and got a seat on its board. It is the taxi-hailing app’s biggest single infusion of cash, and brings the total from its latest round of financing to $5 billion. The privately held firm is estimated to be worth more than General Motors. + +SoftBank, a multinational telecoms and internet group that is based in Japan, decided to sell $7.9 billion-worth of the shares it holds in Alibaba, which will reduce its stake in the Chinese e-commerce company from 32% to 28%. SoftBank needs to repay the debt it accumulated to fund a number of big acquisitions, including the Sprint network in America. It is reportedly looking to offload some of its other stakes, including in Supercell, a Finnish mobile-gaming firm. + +A jury in California rejected Oracle’s $9 billion claim that Googleinfringed its copyright onJava by wiring the software into Android phones. Oracle took ownership of Java when it bought Sun Microsystems in 2010 and it has been battling with Google in the courts ever since. The jury found that Google’s use of Java came under the “fair use” element of copyright law. + +High maintenance + +A former director at Barclays in New York was charged with allegedly passing inside information on forthcoming mergers to his plumber, who has pleaded guilty to using the illegal tips to make money on the markets. The director has yet to enter a plea. The plumber repaid the banker in part by refurbishing his bathroom, but this apparently did not include plugging financial leaks. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21699968-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Jun 4th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21699994-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Free speech: Under attack + +Strikes in France: Don’t cave in, Mr Hollande + +Rethinking the welfare state: Basically flawed + +Indian banking: Of banks and bureaucrats + +Shopping in America: Between Bentonville and Bezos + +Fighting corruption: Cleaning up + + + + + +Articles Sections Next + +Free speech + +Under attack + +Curbs on free speech are growing tighter. It is time to speak out + +Jun 4th 2016 | From the print edition + + + +IN A sense, this is a golden age for free speech. Your smartphone can call up newspapers from the other side of world in seconds. More than a billion tweets, Facebook posts and blog updates are published every single day. Anyone with access to the internet can be a publisher, and anyone who can reach Wikipedia enters a digital haven where America’s First Amendment reigns. + +However, watchdogs report that speaking out is becoming more dangerous—and they are right. As our report shows, curbs on free speech have grown tighter. Without the contest of ideas, the world is timid and ignorant. + +Free speech is under attack in three ways. First, repression by governments has increased. Several countries have reimposed cold-war controls or introduced new ones. After the collapse of the Soviet Union, Russia enjoyed a free-for-all of vigorous debate. Under Vladimir Putin, the muzzle has tightened again. All the main television-news outlets are now controlled by the state or by Mr Putin’s cronies. Journalists who ask awkward questions are no longer likely to be sent to labour camps, but several have been murdered. + +China’s leader, Xi Jinping, ordered a crackdown after he took over in 2012, toughening up censorship of social media, arresting hundreds of dissidents and replacing liberal debate in universities with extra Marxism. In the Middle East the overthrow of despots during the Arab spring let people speak freely for the first time in generations. This has lasted in Tunisia, but Syria and Libya are more dangerous for journalists than they were before the uprisings; and Egypt is ruled by a man who says, with a straight face: “Don’t listen to anyone but me.” + +Words, sticks and stones + +Second, a worrying number of non-state actors are enforcing censorship by assassination. Reporters in Mexico who investigate crime or corruption are often murdered, and sometimes tortured first. Jihadists slaughter those they think have insulted their faith. When authors and artists say anything that might be deemed disrespectful of Islam, they take risks. Secular bloggers in Bangladesh are hacked to death in the street (see article); French cartoonists are gunned down in their offices. The jihadists hurt Muslims more than any others, not least by making it harder for them to have an honest discussion about how to organise their societies. + +Third, the idea has spread that people and groups have a right not to be offended. This may sound innocuous. Politeness is a virtue, after all. But if I have a right not to be offended, that means someone must police what you say about me, or about the things I hold dear, such as my ethnic group, religion, or even political beliefs. Since offence is subjective, the power to police it is both vast and arbitrary. + +Nevertheless, many students in America and Europe believe that someone should exercise it. Some retreat into the absolutism of identity politics, arguing that men have no right to speak about feminism nor whites to speak about slavery. Others have blocked thoughtful, well-known speakers, such as Condoleezza Rice and Ayaan Hirsi Ali, from being heard on campus (see article). + +Concern for the victims of discrimination is laudable. And student protest is often, in itself, an act of free speech. But university is a place where students are supposed to learn how to think. That mission is impossible if uncomfortable ideas are off-limits. And protest can easily stray into preciousness: the University of California, for example, suggests that it is a racist “micro-aggression” to say that “America is a land of opportunity”, because it could be taken to imply that those who do not succeed have only themselves to blame. + +The inconvenient truth + +Intolerance among Western liberals also has wholly unintended consequences. Even despots know that locking up mouthy but non-violent dissidents is disreputable. Nearly all countries have laws that protect freedom of speech. So authoritarians are always looking out for respectable-sounding excuses to trample on it. National security is one. Russia recently sentenced Vadim Tyumentsev, a blogger, to five years in prison for promoting “extremism”, after he criticised Russian policy in Ukraine. “Hate speech” is another. China locks up campaigners for Tibetan independence for “inciting ethnic hatred”; Saudi Arabia flogs blasphemers; Indians can be jailed for up to three years for promoting disharmony “on grounds of religion, race...caste...or any other ground whatsoever”. + +The threat to free speech on Western campuses is very different from that faced by atheists in Afghanistan or democrats in China. But when progressive thinkers agree that offensive words should be censored, it helps authoritarian regimes to justify their own much harsher restrictions and intolerant religious groups their violence. When human-rights campaigners object to what is happening under oppressive regimes, despots can point out that liberal democracies such as France and Spain also criminalise those who “glorify” or “defend” terrorism, and that many Western countries make it a crime to insult a religion or to incite racial hatred. + +One strongman who has enjoyed tweaking the West for hypocrisy is Recep Tayyip Erdogan, president of Turkey. At home, he will tolerate no insults to his person, faith or policies. Abroad, he demands the same courtesy—and in Germany he has found it. In March a German comedian recited a satirical poem about him “shagging goats and oppressing minorities” (only the more serious charge is true). Mr Erdogan invoked an old, neglected German law against insulting foreign heads of state. Amazingly, Angela Merkel, the German chancellor, has let the prosecution proceed. Even more amazingly, nine other European countries still have similar laws, and 13 bar insults against their own head of state. + +Opinion polls reveal that in many countries support for free speech is lukewarm and conditional. If words are upsetting, people would rather the government or some other authority made the speaker shut up. A group of Islamic countries are lobbying to make insulting religion a crime under international law. They have every reason to expect that they will succeed. + +So it is worth spelling out why free expression is the bedrock of all liberties. Free speech is the best defence against bad government. Politicians who err (that is, all of them) should be subjected to unfettered criticism. Those who hear it may respond to it; those who silence it may never find out how their policies misfired. As Amartya Sen, a Nobel laureate, has pointed out, no democracy with a free press ever endured famine. + +In all areas of life, free debate sorts good ideas from bad ones. Science cannot develop unless old certainties are queried. Taboos are the enemy of understanding. When China’s government orders economists to offer optimistic forecasts, it guarantees that its own policymaking will be ill-informed. When American social-science faculties hire only left-wing professors, their research deserves to be taken less seriously. + +The law should recognise the right to free speech as nearly absolute. Exceptions should be rare. Child pornography should be banned, since its production involves harm to children. States need to keep some things secret: free speech does not mean the right to publish nuclear launch codes. But in most areas where campaigners are calling for enforced civility (or worse, deference) they should be resisted. + +Blasphemy laws are an anachronism. A religion should be open to debate. Laws against hate speech are unworkably subjective and widely abused. Banning words or arguments which one group finds offensive does not lead to social harmony. On the contrary, it gives everyone an incentive to take offence—a fact that opportunistic politicians with ethnic-based support are quick to exploit. + +Incitement to violence should be banned. However, it should be narrowly defined as instances when the speaker intends to goad those who agree with him to commit violence, and when his words are likely to have an immediate effect. Shouting “Let’s kill the Jews” to an angry mob outside a synagogue qualifies. Drunkenly posting “I wish all the Jews were dead” on an obscure Facebook page probably does not. Saying something offensive about a group whose members then start a riot certainly does not count. They should have responded with words, or by ignoring the fool who insulted them. + +In volatile countries, such as Rwanda and Burundi, words that incite violence will differ from those that would do so in a stable democracy. But the principles remain the same. The police should deal with serious and imminent threats, not arrest every bigot with a laptop or a megaphone. (The governments of Rwanda and Burundi, alas, show no such restraint.) + +Areopagitica online + +Facebook, Twitter and other digital giants should, as private organisations, be free to decide what they allow to be published on their platforms. By the same logic, a private university should be free, as far as the law is concerned, to enforce a speech code on its students. If you don’t like a Christian college’s rules against swearing, pornography and expressing disbelief in God, you can go somewhere else. However, any public college, and any college that aspires to help students grow intellectually, should aim to expose them to challenging ideas. The world outside campus will often offend them; they must learn to fight back using peaceful protests, rhetoric and reason. + +These are good rules for everyone. Never try to silence views with which you disagree. Answer objectionable speech with more speech. Win the argument without resorting to force. And grow a tougher hide. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21699909-curbs-free-speech-are-growing-tighter-it-time-speak-out-under-attack/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Strikes in France + +Don’t cave in, Mr Hollande + +The game that really matters is the political one, not football + +Jun 4th 2016 | From the print edition + + + +FRANCE has been looking forward to staging a big spectacle this month. Euro 2016, an international football tournament second in importance only to the World Cup, kicks off in the Stade de France near Paris on June 10th, the first of 51 matches around the country ending with the final on July 10th. But a spectacle of a different sort is attracting attention to France early, and for the wrong reasons: industrial unrest, which threatens to spread chaos and spoil the party. + +Last week a blockade of oil refineries led to panic among motorists as petrol stations ran dry. This week the havoc spread to the railways. Pilots at Air France have voted to disrupt flights. A national day of strikes is threatened on June 14th, when the Senate, the upper house, is due to consider the changes to France’s labour laws which are at the centre of the dispute. + +At issue are modest reforms designed to tackle the country’s high unemployment, which remains stubbornly at 10%. The law would ease rigid collective-bargaining rules and make firing workers slightly less complex. But this is not the direction of change that France’s Socialist president, François Hollande, promised when he was elected four years ago, pledging to fight austerity and soak the rich (see article). Fearful of a rebellion by left-wingers in his own party, his prime minister, Manuel Valls, decided to ram the measures through the National Assembly using executive powers that allow a law to be approved by a motion of confidence, rather than voted on directly. The country’s biggest union, the hard-left Confédération Générale du Travail (CGT), has opted to confront the government in the time-honoured French way—and at a moment of maximum pressure, with Euro 2016 looming. + +This time, no surrender + +The last thing the government wanted was further trouble for a tournament already beset by heightened concerns over terrorist attacks (this week the State Department warned would-be American travellers that Euro 2016 was a potential target). Mr Hollande, his approval rating at a dismal 13%, is poorly placed for a showdown. And the labour reforms, already diluted to an extent that has cost the support of the main employers’ groups, might seem an odd cause for the Socialist leader to fight for. At this point, with mass protests growing, past French administrations would have climbed down. Ten years ago it was a centre-right president, Jacques Chirac, who abandoned a controversial labour reform after weeks of student demonstrations. That followed similar retreats in 1986, 1994 and 1995. + +Caving in once again in 2016 would be a mistake. The government should resist even the sort of messy compromise that seems to be tempting it as a means of avoiding disruption at Euro 2016—making concessions to the CGT on restructuring efforts for the national railways, say, in exchange for its acquiescence on the labour laws. Such a compromise would be against the spirit of the reforms, which aim to dilute the role of national law and branch agreements. + +Mr Valls says that he is determined to hold his ground. If he and Mr Hollande want to show that they are serious about the change France needs, this is their moment. For once, they must be frank with the French about why these labour-market reforms are a step towards job creation and growth, and in everyone’s interest. Disruption of the coming football tournament would be a shame. But for the sake of France’s future, it is the political game that the government has to win. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21699916-game-really-matters-political-one-not-football-dont-cave-mr-hollande/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Rethinking the welfare state + +Basically flawed + +Proponents of a basic income underestimate how disruptive it would be + +Jun 4th 2016 | From the print edition + + + +WORK is one of society’s most important institutions. It is the main mechanism through which spending power is allocated. It provides people with meaning, structure and identity. Yet work is a less generous, and less certain, provider of these benefits than it once was. Since 2000 economic growth across the rich world has failed to generate decent pay increases for most workers. Now there is growing fear of a more fundamental threat to the world of work: the possibility that new technologies, from machine learning to driverless cars, will cause havoc to employment. + +Such worries have revived interest in an old idea: the payment of a “universal basic income”, an unconditional government payment given to all citizens, as a supplement to or replacement for wages (see article). On June 5th Swiss citizens will decide in a referendum whether to require their government to adopt a basic income. Finland and the Netherlands are planning limited experiments in which some citizens are paid a monthly income of roughly €1,000 ($1,100). People from all points on the ideological spectrum, from trade unionists to libertarians, are supporters. It is an idea whose day may come. But not soon. + +The basic income is an answer to a problem that has not yet materialised. Worries that technological advance would mean the end of employment have, thus far, always proved misguided; as jobs on the farm were destroyed, work in the factory was created. Today’s angst over robots and artificial intelligence may well turn out to be another in a long line of such scares. A much-quoted study suggesting that 47% of today’s jobs could be automated in the next two decades looks too gloomy, for example (see article). Machines may one day be a match for many workers at most tasks. But that is not a reason to rush to adopt a basic income immediately. + +If the need for a basic income is unproven, the costs are certain. Its universality is designed to encourage citizens to think of the payment as a basic right. However, universality also means that the policy would be fantastically costly. An economy as rich as America’s could afford to pay citizens a basic income worth about $10,000 a year if it began collecting about as much tax as a share of GDP as Germany (35%, as opposed to the current 26%) and replaced all other welfare programmes (including Social Security, or pensions, but not including health care) with the basic-income payment. + +Such a big jump in the size of the state should make anyone wary. Even if levied efficiently, on an immovable asset like land, tax rises on this scale would have unpredictable effects on growth and wealth creation. Yet an income of $10,000 is still extremely low: it would leave many poorer people, such as those who rely on the state pension, worse off than they are now—at the same time as billionaires started getting more money from the state. + +A universal basic income would also destroy the conditionality on which modern welfare states are built. During an experiment with a basic-income-like programme in Manitoba, Canada, most people continued to work. But over time, the stigma against leaving the workforce would surely erode: large segments of society could drift into an alienated idleness. Tensions between those who continue to work and pay taxes and those opting out weaken the current system; under a basic income, they could rip the welfare state apart. + + + +Household income inequality: ladders to climb + +Lastly, a basic income would make it almost impossible for countries to have open borders. The right to an income would encourage rich-world governments either to shut the doors to immigrants, or to create second-class citizenries without access to state support. + +Basic questions + +Make no mistake: modern welfare states leave plenty to be desired. Disability benefits are for many people an unsatisfactory version of a basic income, providing those who will no longer work with enough to get by. But rather than upend society with radical welfare reforms premised on a job-killing technological revolution that has not yet happened, governments should make better use of the tools they already have. + +Labour-market reforms—to crack down on occupational licensing, say—would boost employment growth. More generous wage subsidies, such as an earned-income tax credit, would help people stay out of poverty. Long-overdue public investment in infrastructure would foster demand. Relaxing planning restrictions would create jobs in construction, and homes for workers in places with robust economies. + +A universal basic income might just make sense in a world of technological upheaval. But before governments begin planning for a world without work, they should strive to make today’s system function better. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21699907-proponents-basic-income-underestimate-how-disruptive-it-would-be-basically-flawed/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Indian banking + +Of banks and bureaucrats + +Proposed reforms to India’s financial system are welcome but insufficient + +Jun 4th 2016 | From the print edition + + + +BANKS are usually reliable barometers of the health of the economies they help finance. So news in recent days that India’s lenders have lost over 200 billion rupees ($3 billion) in the most recent quarter sits oddly with zippy growth in GDP of 7.9%. A revving economy may help the banks overcome their weakness. Far likelier is the opposite outcome: that the Indian economy ends up being damaged by its lenders. + +Most of the trouble lies in India’s state-owned banks, a network of 27 listed but government-controlled entities that account for 70% of India’s banking system by assets (see article). Their share prices have tumbled ever since the Reserve Bank of India (RBI), the central bank and regulator, sensibly forced them to confess to past mistakes. A staggering 17% of the loans they made in a mini credit boom around 2011 have either had to be written off or are likely to be. + +Corporate lending, particularly to powerful Indian conglomerates, is at the root of the problem. Some of the dodgy loans have soured because of bad luck: mining projects have been hit by slumping commodity prices. Some reflect bad judgment: loans to infrastructure developers have proved bankers to be wildly optimistic about the ability to get stuff built in bureaucratic India. And some reflect bad faith: politicians in the previous government leant shamelessly on public banks to supply money to their cronies in business. + +To its credit, the government of Narendra Modi, in office since 2014, has cracked down on this kind of corruption. Along with Raghuram Rajan, governor of the RBI, it has been willing to air the financial system’s problems. A recently passed (but not yet operational) bankruptcy law will give banks power to foreclose on defaulting borrowers, many of them tycoons who have historically run rings around their bankers. The government even wants to consolidate the 27 banks into less than half that number, over the objection of trade unions. + +It needs to be still bolder. The priority is to be more scrupulous about cleansing the financial system of sour loans. The option of setting up a “bad bank” to remove the dud assets from ailing lenders’ balance-sheets has been ruled out. The funds earmarked to recapitalise the banks, which now have the most threadbare equity cushions in Asia, are insufficient. Credit-rating agencies are warning that the banking miasma is a threat to India’s sovereign rating. + +Muddling through is a tried-and-tested strategy when it comes to struggling banks. Europe is a past master at this approach and the result is a banking industry that has been unable to support growth. This ossification may be starting in India, where loans to industry are growing by a meagre 2% a year. By contrast, America forced recapitalisations on its banks after the 2007-08 financial crisis—a painful exercise for all sides, but one that was rewarded with a swift return to health. America is the example for India to follow. An early confirmation of a second three-year term for Mr Rajan, who will otherwise depart in September, would send the right message. + +Banks, not bureaucrats + +A government that describes itself as “pro-market” should also lay out a path to the privatisation of state-owned lenders. It is no coincidence that private-sector banks have experienced only a small fraction of the losses of state-backed rivals. Mr Modi should also aim to scrap socialist-era rules that force all banks to make a fifth of their loans to support farming and that dictate where they can open branches. The government has made some welcome changes. But until it abandons its belief that a state-owned banking system is the right way to allocate credit, India’s banks will hold the economy back. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21699911-proposed-reforms-indias-financial-system-are-welcome-insufficient-banks-and-bureaucrats/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Shopping in America + +Between Bentonville and Bezos + +Lessons from the two giants of American retailing + +Jun 4th 2016 | From the print edition + + + +FOR decades a titan has towered over America’s shopping landscape. Walmart is not just the world’s biggest retailer but the biggest private employer and, by sales, the biggest company. Last year its tills rang up takings of $482 billion, about twice Apple’s revenue. But now the beast of Bentonville must cope with an unfamiliar sensation. After ruling as the undisputed disrupter of American retailing, Walmart finds itself being disrupted. + +The source of the commotion is online shopping, specifically online shopping at Amazon. E-commerce accounted for $1 in every $10 that American shoppers spent last year, up by 15% from 2014. Amazon’s North American sales grew at about twice that rate. Walmart’s share of America’s retail sales, which stands at 10.6%, is still more than twice Amazon’s, but it peaked in 2009 at nearly 12%. In January Walmart said it would close 154 American stores. It may need to shut more. + +Walmart’s “supercentres” once offered an unmatched combination of squeezed prices and expansive choice, but this formula is losing its magic (see article). Discounters and other competitors are rivalling Walmart’s low prices at the same time as Amazon’s warehouses can beat its range. + +Amazon is also offering something different. Whereas Walmart has strived to help Americans save money, Amazon is obsessed with helping them save time. Amazon has become a new kind of big-box retailer, with warehouses placed strategically around America to speed deliveries to customers. Innovations such as Dash, which lets you press a button in your kitchen to order soap or coffee, could turn Amazon from an online store into something like a utility. + +Walmart is fighting back. It is spending billions in the hope of growing even larger. It is offering more goods to more customers, in stores and online. With its legendary attention to detail, it is making its operations even more efficient. For instance, it will save more than 35 truckloads of buttercream icing this year, after spotting that its bakers were leaving too much icing in the bottom of their tubs. By using 27 different boxes rather than 12 to deliver online goods, the firm reckons it can save 7.2m cubic feet of cardboard boxes a year. + +Last month sunny results sent up its share price by 10%. Yet far from offering comfort to other retailers hoping to knit together physical and online businesses, Walmart’s fightback shows how hard it will be for them to repel Amazon. + +Other retailers cannot rival Walmart’s size—still its most potent weapon. Nine out of ten Americans live within ten miles of a store owned by Walmart. That gives it a unique advantage in e-commerce, because it can both ship from its stores and let consumers pick up baskets of goods that they ordered online. Its vast grocery business, which is harder to move online than non-perishable goods, provides further protection. Although investments have squeezed Walmart’s profits, the firm can afford to invest more than any other in information technology. + +Space race + +For smaller, worse-managed firms selling clothing, shoes and so on, the prognosis is bleaker. Since April 1st shares in some of America’s most famous retailers, including Macy’s, Gap and J.C. Penney, have plunged by more than 25%, in part because of the march of online firms. In the age of Amazon only those that offer better service, greater convenience or an experience that is hard to mimic online will do well. TJX, which offers brand-name goods at a discount, is thriving, because customers prefer hunting for treasures that are physically there in front of them. Customers come to Nike’s shops not just for trainers but for running clubs. Walmart is betting that it has the brawn and the brains to be in this group. However, others have less cause for hope. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21699913-lessons-two-giants-american-retailing-between-bentonville-and-bezos/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Fighting corruption + +Cleaning up + +More visible scandals may mean that a country is becoming less corrupt + +Jun 4th 2016 | From the print edition + + + +A CAR slams into a tree at speed, and is crushed. Inside, the Romanian police find the body of the chief executive of a company that makes detergents for hospitals—one under investigation for watering down its products and leaving patients to die from drug-resistant infections. The Hexi Pharma scandal (see article) sounds like something out of “The Third Man”. For many foreigners, it confirms Romania’s reputation as a kleptocracy riddled with malfeasance and graft. + +Romania is certainly rotten. But the Hexi Pharma affair is evidence of how much the country is doing to tackle corruption. After investigative journalists exposed the case in late April, it was quickly taken up by the judiciary. This has become much more independent under pressure from the European Union, which Romania joined in 2007. The new general prosecutor, appointed in April by a president elected on an anti-corruption platform, is pursuing Hexi Pharma zealously. Laura Codruta Kovesi, the dauntless head of the country’s anti-corruption directorate, says her agency is also investigating. Last year it prosecuted over 1,250 officials and helped force the prime minister from power. At last month’s global corruption-fighting summit in London, Ms Kovesi was treated as if she were a rock star. + +It is a common paradox: the world often becomes aware of corruption when someone is doing something about it. That leads people to conclude that things are getting worse when they are, in fact, getting better. The incentives for countries can thus be perverse. Investors long shrugged off the graft that permeated Brazil’s political system. Then, in 2014, crusading prosecutors revealed that the state-owned oil company, Petrobras, had funnelled hundreds of millions of dollars to officials and parties in exchange for contracts. The next year Brazil’s score on the Corruption Perceptions Index compiled by Transparency International, a global watchdog, fell by five points. + +Guatemala has suffered a similar fate. Since 2008 the country has hosted a pioneering UN-backed independent prosecuting agency known as CICIG. Last year it uncovered graft at the customs agency and brought down the president and vice-president. Yet in 2015 the country’s score on Transparency International’s index got worse. Dan Hough, a corruption expert at Sussex University, notes that Britain’s score on the Transparency International index declined after the parliamentary expenses scandal of 2009, though the excesses had been taking place for decades—and, in the scheme of things, Britain was not especially venal. It was the exposure, not the activity, that created the perception of corruption. + +Make an honest country of them + +The tendency to see countries as dirtier when they start to clean up will not surprise students of British or American history. The impression that both countries were unusually sleazy in the late 1800s is largely due to the rise of reform and progressive movements dedicated to making politics honest. The question is whether countries such as Romania, Brazil, Guatemala or China will be able to follow the same path. + +They may not. The Orange revolution in Ukraine and the mani pulite (clean hands) prosecutions in Italy failed to sanitise those countries’ politics. Still, if a country like Romania is embroiled in scandals, voters and investors should applaud, not despair. When crooks make the front page, it is often because someone honest has put them there. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21699917-more-visible-scandals-may-mean-country-becoming-less-corrupt-cleaning-up/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On anti-Semitism, Brexit, Ban Ki-moon, Jordan, referendums, egg shells: Letters to the editor + + + + + +Articles Sections Next + +On anti-Semitism, Brexit, Ban Ki-moon, Jordan, referendums, egg shells + +Letters to the editor + +Jun 4th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Anti-Semitism and the left + +The Anti-Defamation League’s research confirms Bagehot’s assertion that anti-Semitic opinions are not widespread among the British public, but are disturbingly prevalent in Britain’s Muslim population (May 7th). ADL’s Global 100 poll, released in 2014, showed just 8% of British respondents agreeing with a majority of the 11 anti-Semitic stereotypes presented, compared with 27% in Germany and 37% in France. Our follow-up poll in 2015 showed a slight increase to 12%, though the score for British Muslims was 54%. + +Although we did not ask about political affiliation in our polls, we have long observed on the far-left in Britain, as in America and elsewhere, a demonisation of Israel with Nazi analogies and conspiracy theories and broad tolerance within those political circles for anti-Semitic statements. If these noxious attitudes cannot be eliminated, they must be criticised and kept out of the political mainstream. + +ERIC HORODAS + +Chair + +International Affairs + +Anti-Defamation League + +New York + +It is quite devastating that only 52% of British Muslims think homosexuality should be legal (“Integration nation”, May 21st). However, in 1983 68% of British Catholics said homosexuality was mostly or always wrong, according to the British Social Attitudes study. By 2013 the figure had dropped to 2%. Will living in an increasingly liberal Britain cause Muslim attitudes to change, just as it did for Catholics? + +TIM RICHARDSON + +Melbourne, Australia + + + + + +Farmers’ views on Brexit + +Your Brexit brief on agriculture (“We plough the fields and scarper”, May 21st) referred to two surveys which suggested most farmers back the Leave campaign. The surveys had a potential for self-selecting bias. Farmers certainly have diverse views on whether Britain should continue its membership of the EU. Our own telephone poll suggests over half the members of the National Farmers’ Union plan to vote to remain in the EU and over a quarter may vote to leave. But many are undecided. + +Because farmers want more information we commissioned our own impact assessment, referred to in your article, of potential Brexit scenarios. Farmers’ key concerns are access to the single market, fairness with respect to farm-support payments, proportionate and science-based rules and access to labour. + +There is a lot of uncertainty. We need the best possible access to the EU single market and as yet no clear model of future trade with the EU has emerged. The Leave campaign has officially committed to continuing farm-support payment at its current rate, but they have also suggested other uses for the money. + +For those who advocate that we stay within the EU, it is clear that there is massive scope for improvements. We want to see proportionate and science-based regulations that allow us to compete fairly in the EU and international markets. What is the EU’s strategy for achieving this? + +MEURIG RAYMOND + +President + +National Farmers’ Union + +Stoneleigh Park, Warwickshire + +I think we need a referendum to decide if we should Remain in or Leave the Eurovision Song Contest. + +RAY ROBERTS + +Budapest + + + + + +* Bagehot reported (21st May) that in a “reconciliation reshuffle” Boris Johnson may become home secretary. This would only add to the already considerable entity that is Mr Johnson’s ego, in particular the side of it that is convinced he is the modern-day Churchill—who was also home secretary from early 1910 to late 1911. If he has to be given a position, far better would be secretary of state for energy and climate change, perhaps then he would give up the EU fight and return to his work on London’s air quality. + +It would also be a great blow to Mr Johnson’s ego to discover that his seniors think he would be far better suited to a post once held by Ed Miliband, than one held by Churchill, the political colossus he tries to imitate. + +GABRIEL OSBORNE + +Bristol + + + + + +Ban Ki-moon’s record + +Your readers deserve a more complete portrait of Ban Ki-moon’s tenure as UN secretary-general (“Master, mistress or mouse?”, May 21st). He has indeed helped secure consensus on the landmark agreement on climate change. But Mr Ban has also championed women’s equality and backed his words with actions, shattering glass-ceilings across the UN by appointing a record number of women to high-level positions. + +In the face of often unrelenting opposition, Mr Ban is a staunch advocate of human rights on contentious issues such as xenophobia in Europe, the persecution of gays and lesbians in Africa or the denial of the Holocaust in Iran. He has modernised the UN by strengthening peacekeeping operations, streamlining the bureaucracy and overhauling its IT systems. Never has so much information about UN budgets and activities, and even personal financial disclosures of senior officials, been so readily available. + +As one who grew up as a recipient of UN aid in war-ravaged Korea, Ban Ki-moon speaks from the heart. This helps him connect where it counts most: with the suffering peoples of the world. + +STEPHANE DUJARRIC + +Spokesman for the UN secretary-general + +New York + + + + + +Blessed are the peaSEZsemakers + +* Your article misses key flaws in the “Jordan Compact’s” proposed model for addressing the refugee crisis in host countries (“Peace, bread and work”, May 7th). The model suggests that the establishment of special economic zones (SEZs) with investment incentives such as access to EU markets will deliver a virtuous cycle of foreign direct investment, export-led growth and employment opportunities for Jordanians and Syrian refugees. Provided refugees can work in the zones legally, they will convert from a burden to a “development opportunity”. However, six SEZs already exist in Jordan. In addition to exemption from income tax and customs duties they enjoy highly liberalised trade relations with the EU thanks to a series of free trade agreements since 1997. Yet they are nearly empty: the largest has the capacity to employ 100,000 people, but currently only employs 10,000. + + + +Jordan must take advantage of the current surge in international support by boldly reforming its wider business environment, including tackling its inefficient public sector, costly energy supply and mediocre education system. The key reform proposed in the “Jordan Compact” is a minor trade concession for SEZs exports to the EU that will mainly apply to textiles. This will not attract the promised foreign investment that will lift Jordan from the crisis. + + + +HANNAH TIMMIS + +Manager + +Afghanistan, Middle East & North Africa + +Adam Smith International + +London + + + + + +Show some initiative + +James Madison may have had a sceptical regard for referendums (“Let the people fail to decide”, May 21st). But Thomas Jefferson was more insightful: + +I know of no safe depository of the ultimate powers of the society but the people themselves: and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion by education. + +David Cameron’s principal shortcoming, and that of the many politicians who default to plebiscites when they lack the courage to decide, is the failure to educate. + +GREG PARSTON + +London + + + +Referendums may indeed be the best way to decide “once-in-a-generation national questions”. It is, however, unfair if those who support a change, such as the Leave campaign on Britain and the EU and the Yes campaign on Scottish independence, then clamour for a second referendum if they do not get their way the first time. Their opponents have no such option: if they lose, the decision is irrevocable. There should, therefore, be a rule that such a referendum can only be held every, say, 30 years. + +ANTONY BLACK + +Dundee + + + + + +I am the eggman + + + +Recycling egg shells for use in plastics put me in mind of the war years (“A cracking yarn”, May 14th). My aunt lived in the country and kept chickens. She would wash and grate the shells until they were very fine and she would then put the eggshell powder into various foods, such as homemade jams. She said she would get extra calcium for her bones. She never got osteoporosis or any other bone problem and lived until she was 88. + +I never ate her eggs as she fed her hens on fish meal made from fish bones she grated and I could taste the fish. + +ROSEMARIE PALLISER + +Aigues-Mortes, France + +All yolks aside, but shelling out money for the R&D of new products is not really such an eggcellent idea. As a poultry grower, I feed the shells of my chicken’s eggs back to them for the minerals needed for the next clutch. Since your scientist has to keep buying unshelled eggs, selling them back to a supplier might be a more albumentary solution. + +VI NOVIELLO + +Long Branch, New Jersey + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21699889-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Universal basic incomes: Sighing for paradise to come + + + + + +Articles Sections Next + +Universal basic incomes + +Sighing for paradise to come + +Arguments for a state stipend payable to all citizens are being heard more widely + +Jun 4th 2016 | Maricá, Olten and Zurich | From the print edition + + + +THE future is a paradise of technological abundance, some say, in which paid work is optional and no one goes without. A tiny glimpse at what that future might look like is on offer in the village of Maricá, a small seaside town just a short drive from Rio de Janeiro. In December 2015 each of the town’s 150,000 residents became eligible to receive a monthly payment worth just under $3, financed with the help of Maricá’s share of Rio state’s oil royalties. + +The sum is small but for Washington Quaquá, the mayor of Maricá and architect of the payments plan, the idea is a big one. He says he is guided by “an ethical precept” that may realise his lifelong dream of an egalitarian society. His programme is an example of a “universal basic income”: a no-strings cash payment to everybody in a given jurisdiction. + +The idea has a long pedigree, endorsed by great figures of the enlightenment such as the Marquis de Condorcet and Thomas Paine. Three centuries on, a handful of governments around the world, mostly in rich countries, are launching experimental basic-income programmes, or at least considering the idea. Finland will roll out a trial programme next year, in which some citizens will receive unconditional cash grants of up to €800 ($900) per month. Similar programmes are being mulled in several Dutch cities. On June 5th the Swiss will vote on a constitutional change to introduce a basic income for all citizens. + +Political activists and thinkers across a broad array of ideologies, from libertarians to social liberals to the hard left, are intrigued, or even keen. The Cato Institute, an American think-tank which spends much of its time calling for a smaller state, published a sympathetic analysis of the policy in 2015. It feels that, though it might prefer a world with no government redistribution, a basic income is the simplest, least intrusive and least condescending way to provide redistribution if redistribution there must be. + +American liberals including Paul Krugman, an economist and columnist, and Robert Reich, a former labour secretary, are also interested. Along with writers such as Anthony Atkinson, a British economist, and Andy Stern, an American union leader, they see a basic income (in some form) as a way of expanding the welfare state to reduce growing inequality (see chart 1). The idea also has some support in the further reaches of the left as, in the words of a paper published in 1986, “A capitalist road to communism”. + + + +Unsurprisingly, given the Utopian and libertarian flavour of the idea, Silicon Valley is interested, too. This is not, though, simply faddishness. The idea of a universal basic income has long been tied up with worries about accelerating technological change. The basic income, or “social credit”, put forward in the 1920s by C.H. Douglas, a British polymath, was born of the worry that technology was opening up a gap between total output and the income earned by workers. He suggested that governments could make up the gap by issuing every citizen with a “national dividend”. (The first novel by Robert Heinlein, a canonical 20th-century science-fiction writer much rated in libertarian circles, consists largely of arguments in favour of social credit and nudism, both of which he saw as central to his Utopia.) + +Some of the people behind today’s technological change see universal basic income in similar terms—a way of assuring a living for all in a world of robots and artificial intelligence. To the extent that such disruption is part of their business model, this beneficence is also a way to neutralise complaints about the havoc their innovations may wreak. Albert Wenger, a partner at Union Square Ventures, a technology-oriented venture-capital firm, argues in favour of the policy in a new book “World After Capital”. Sam Altman, the founder of Y Combinator, a startup incubator, plans to pilot a basic income of $1,000-2,000 a month in Oakland, a city in California. “Fifty years from now...it will seem ridiculous that we used fear of not being able to eat as a way to motivate people,” is how Mr Altman puts it. + +Startup statists + +Backers make other arguments, too. Workers could take more time to train and explore different careers. The security of a basic income could boost enterprise, because leaving a job and using up savings to open a business are more palatable prospects in such a world. So is finding fulfilment in unremunerated ways. + +A basic income could also help to right certain old injustices. Women do the lion’s share of the world’s unpaid labour. In most of the world, they work more hours a day than men do, but command a lower share of financial resources, largely because they take on more unpaid child care and responsibilities for the family home. A universal basic income would shift purchasing power toward people who do work which, though valuable to society, is not rewarded financially. + +As well as offering the possibility of a simpler and perhaps fairer welfare state, supporters of a universal basic income say it answers fears that paid work will break down as a mechanism for distributing purchasing power. In recent years, across many rich economies, the wages earned by the typical worker have grown pitifully slowly—and by less than GDP per person (see chart 2). + + + +Low wages appear to be necessary to coax firms into taking on new employees, often in very low-productivity jobs that could potentially be done by machines instead. This could be a temporary phenomenon; the workers at the bottom of the income scale may eventually shift into better-paid work, or future generations may cleverly invent new sources of employment for themselves. If it is a permanent state of affairs, though, then a basic income might be a way of making sure that everyone shares in society’s progress, at least to some extent. + +But how such a step might be made to work, and what harmful effects it might have, are still open questions. The Swiss government, which is arguing for a “no” vote in this month’s referendum, worries that a basic income would be ruinously expensive and morally corrosive, leaving the country with unsustainable public finances and a society of unmotivated loafers. Both supporters and critics agree that universal basic incomes would challenge the centrality of paid work to the way people live. A world with them in place could be as different from today’s as that of public education and guaranteed pensions was in the 1950s, compared with a century before, when the loss of a job could mean starvation for a worker and his family. + +Welfare review + +The reforms introduced by Otto von Bismarck, the German chancellor who created the world’s first modern welfare state, were intended to undermine support for socialism and build working-class backing for the German empire. The system he put in place was conceived as an insurance against the woes of hardship, rather than as a natural entitlement. Over the following century, as trade unions sought a better deal for labourers, work was a central principle of organisation. Those reforms created the developed countries’ modern welfare systems: some sort of unemployment benefit, health-care provision, universal education and state pensions. + +Universal-income ideas such as those championed by Douglas were for the most part peripheral during the rise of the welfare state. In the 1970s, in part because of flaws that were becoming apparent in the existing structures, they briefly interested mainstream policymakers. They were experimented with in Canada, where Douglas’s ideas had always had a following. In Alaska a basic income was discussed as a way to distribute oil riches. George McGovern, the Democratic candidate in the 1972 American election, proposed a “demogrant” of $1,000 ($5,700 at today’s prices) to every citizen, a policy drawn up by James Tobin, an economist. + +McGovern lost 49 of the 50 states, but a reform to the welfare state that was similar, in some ways, still went ahead. In 1975 Congress created the Earned Income Tax Credit (EITC). It was a sort of “negative income tax”, an idea promulgated by the economist Milton Friedman, which provided support in inverse proportion to a worker’s income. Like Tobin’s demogrant, Friedman’s idea was in part a response to worries about the “poverty trap” in existing welfare systems. The way that benefit programmes cut off at particular income thresholds provided a strong incentive for recipients not to earn too much. + +The demogrant avoided the trap by not phasing out benefits as incomes rose. The EITC lessened it by tapering away only gradually. For the unemployed, this increased incentives to work by amplifying the income earned by the lowest-paid. Two things made the second policy much easier to sell: it was cheaper, and it was only available to those in work. Britain, France and others adopted EITC-like working-tax credits in the 1990s and 2000s. Wage subsidies were increasingly seen as important for battling poverty. + +Today three decades of unequal economic growth, the pain that followed the financial crisis in 2008 and the disruptive potential of digital technologies have once again focused attention on the welfare of the struggling working class. One response, in much of the developed world, has been to raise minimum wages. But economists warn that minimum pay can only rise so much before employment suffers. Rising labour costs encourage firms to look for labour-saving alternatives, an investment in productivity which might be good for GDP but would exacerbate the shortage of jobs for less-skilled workers. + +Populist politicians argue, wrongly if seductively, that the key to boosting worker welfare is to undo the liberalising measures of the previous generation. Supporters of a universal basic income, on the other hand, claim that the re-engineering of the welfare system they envisage could allow societies to enjoy the fruits of dynamic economies while also ensuring they are widely spread. + +Their argument runs as follows. The wage-subsidy approach to welfare has gained ground because it has real effects on poverty, it maintains incentives to work and it doesn’t cost all that much. America’s spending on its EITC programme, for example, is just 8% of its spending on public pensions. But it has three problems, too. Though such subsidies reduce the poverty-trap effect, they do not eliminate it; generous wage subsidies that phase out as incomes rise reduce the incentive to find better-paying work, because some of the gain received from a raise is offset by a reduction in benefits. A gently sloping phase-out answers the problem to some extent, but it also increases costs, with more of the workforce qualifying for at least some of the benefit. + +Those cost increases highlight a second concern, of political economy. The targeting which keeps these programmes cheap also limits their constituencies. That makes them cuttable. In recent years austerity-minded governments have been more willing to gut means-tested welfare payments than to take an axe to entitlements such as universal pensions. It is harder to build broad support for programmes which, by design, are aimed at a small underprivileged part of the citizenry. Programmes for the poor, who have little to spend on lobbying and also tend to vote less, are vulnerable to being chopped. + +Perhaps most importantly, such tax-credit policies begin to break down if there is no prospect of jobs that make use of people’s skills. When manufacturing jobs that were the keystone to a regional economy move abroad, for example, people with few prospects look for alternative means of support, such as disability benefits. In most age groups in Britain the share of population claiming disability benefits is systematically and substantially above the level of the 1980s, despite efforts to control growth in disability-benefit costs. Since 1988, America’s disability payments have risen from one in ten of every social-security dollar spent to one in five. Those unable to find work or get on such programmes sink deeper into poverty. In America many are slipping through the cracks of a conditional welfare system: the number of people living in extreme poverty rose sharply between 1996 and 2011, from 636,000 to 1.5m, according to Luke Shaefer of the University of Michigan and Kathryn Edin of Harvard University. + +A universal basic income might solve these problems. As Tobin argued, a flat basic-income payment eliminates the poverty trap. Since the benefit would not phase out, there would be no reduced incentive to seek additional work hours or income. Because it would be paid to all citizens, its advocates hope that it would enjoy the political support of an entitlement programme, and come to be seen as a right of citizenship. And it would clearly benefit people with no prospect of work, and thus most of those in extreme poverty. + + + +But that still leaves very hard questions, of which the toughest is cost. Any universal basic income generous enough to make a dent in poverty would be very expensive. As Mr Atkinson notes, a universal basic income worth a given percentage of the average income (measured as GDP per person) requires a proportional rise in tax collection as a share of GDP. In other words, a basic income of 15% of average income would require tax revenues of 15% of national income dedicated to it. That is a lot of tax for not much basic income (only about $8,000 in America, in this example). + +Some of the money needed could be drawn from other welfare programmes displaced by the basic income. The most generous states in the OECD, a club of mostly rich countries, spend nearly a third of GDP on social programmes. In Finland, where such spending, less the share devoted to health, accounts for about a quarter of GDP, dividing what is spent across all citizens would yield a payment of close to $10,000 for every man, woman and child; in America the same exercise would yield a payment per person of about $6,000 (see chart 3). + + + +This would transfer a lot of money from today’s welfare recipients to people already in work. The largest group of losers would be old-age pensioners, the people who, in most countries, already enjoy a basic income (one that in America costs more than ten times as much as EITC does). + +It is possible that providing a less generous basic income to all could help sever the link between receipt of a pension and retirement, encouraging more of a balance between work and leisure for adults of all ages. It might also help the governments of countries with ageing populations manage demographic change, by encouraging older workers to stay working for longer, and by balancing the fiscal burden of government income support across people’s lives. But politically, the scope for reductions in pensions is likely to be slim. It is hard to see how a universal basic income of even moderate ambition would not require new forms and levels of taxation. + +As a share of GDP, taxes on income and profits in the OECD range from about 12% in America and Britain to 33% of GDP in Denmark. The share has fallen as often as it has risen over the past decade or two. It is plausible that the tax take, especially in the countries with the lowest share, could go up without many adverse effects. If America is unlikely to become Denmark, it might nevertheless become Australia, with a 15% share of GDP taken in such taxes. That would represent half a trillion extra dollars a year. + +Raising taxes on income and profits has its risks, though. It increases incentives for avoidance and evasion, and reduces the incentives for the most productive workers to work and for companies to invest. An alternative would be to increase income through more efficient taxes, such as value-added tax (VAT). Most European countries raise at least 10% of GDP through taxes on goods and services, primarily VAT. America, in contrast, raises only 4.5% through taxes on goods and services, none of which is collected in VAT form. But although a VAT is efficient, it is also regressive, hitting poorer people relatively harder. + +In some places payments for natural resources could provide some funding. Oil revenue pays for most of the Maricá scheme, and allows Alaska’s Permanent Fund to pay an annual dividend to each of the state’s citizens (last year’s was $2,072). Not every state has a commodity that it can tax that way; but every single state has perhaps the lowest-hanging of all taxable fruit—land. + +A land tax has the advantage of being progressive. Unlike taxes on income, land taxes do nothing to encourage apathy or avoidance; rather, they provide an incentive to owners to get the most out of their property. And they can also be lucrative. The sum value of all land in America, according to one recent estimate, is about $23 trillion, or 1.6 times GDP. A land-value tax of 5% would raise a little over $1 trillion, which works out at about $3,500 for every American, or $8,500 for every American household. + +Thomas Paine would have relished such a prospect. His case for a basic income justified it as a quid pro quo for the existence of private property. Before the advent of private property, he believed, all men had been able to support themselves through hunting and forage. When that resort is taken from them, they should be compensated by means of a “natural inheritance” of £15 to be paid to all men every year, financed from a “ground rent” charged to property owners. + +What might have seemed like common sense to Paine, though, might not be so immediately appealing to those hit by a trillion-dollar land-tax bill. Acceptable levels of taxation do change over time. The original growth of the welfare state provides an illuminating example. At the turn of the 20th century, government spending was about 15% of GDP in Britain and less than 10% of GDP in America. By 1960, those percentages had risen to nearly 35% in Britain and 30% in America. + +But the fact that such an increase has been carried off once does not mean it can be again. Today’s combination of stagnant pay and falling labour-force participation is serious, but it is not on a par with, say, the Depression or the world wars that bracketed it, which drove the expansion of the state’s role in the economy (see chart 4). Things will need to become a lot worse to generate political support for the radical changes to budgets and tax systems a universal basic income requires. + + + +And what do you do? + +Cost is not the only concern about a universal basic income. Many worry that a general disengagement from work might prove alienating, and money for nothing socially corrosive. (Some on the left also fear that, by weakening the power of labour and the sense of solidarity that comes with it, a basic income would lead to the political and economic irrelevance of the working class.) + +People rely on work to provide order to their day and purpose to their lives, not just for money to pay for food and shelter, and may not find purposeful, satisfying alternatives in its absence. Analysis of time use by Americans who suffered a loss of work during the recent recession found that about half of the spare time went to leisure, mostly sleeping and watching television. In general retirees who continue to work part-time are happier than those who do not work, though it is worth noting that this is not the case for those who feel forced to keep working to make ends meet. + +In experiments with a guaranteed income in Manitoba, a Canadian province, in the 1970s overall labour-market participation did not change very much. Later analysis has suggested that there were widespread non-economic benefits—less use of mental-health services, fewer hospital visits and so on. But such experiments, limited in space and duration and subject to what is known as the “Hawthorne effect”—change that comes about simply because people know there is an intervention afoot—may not be good guides to the effects of a universal system. + +Plenty also fret that a world of universal incomes would mean even higher hurdles to migration than today’s. The evidence that benefits are a draw to immigrants is thin—they care more about jobs than the generosity of the welfare system. But if rich countries began offering basic incomes generous enough to live on, migrants might instead be drawn by the money on offer. (The payments being considered in Finland and the Netherlands are vastly larger than the tiny income available in Maricá, for example.) Rich countries would face the choice of paying generous benefits to immigrants, shutting borders, or tolerating the growth of a second-class citizenry of foreign workers without recourse to the welfare state. + + + +These, then, are the questions swirling around Switzerland ahead of its referendum. The Swiss initiative does not look likely to pass, both because of its expense and the fear of subsidising layabouts. Though surveys show that only 2% of the Swiss think that a universal income would stop them working themselves, about a third think it would scupper the work ethic of others. + +Payment protection + +Hans Peter Rubi, a 64-year-old in the small town of Olten, has no such worries. He was given a pension of SFr2,600 on being sent into early retirement, and became an entrepreneur. “After doing nothing, you get bored—people want more. After a while of boredom you might become innovative.” He has used his pension to start an exotic ice-cream parlour. The avocado ice cream is proving difficult to perfect, and the innovation of staying open through the winter (Olten’s established ice-creamery closes) has yet to pay off. He needs a good summer for the business to be profitable; but he can afford to fail. “My security now is that I have my basic income. It gives a security to take a basic challenge.” + + + +Household income inequality: ladders to climb + +In a world of universal basic incomes, it is possible that the streets would be lined with mostly empty ice-cream shops, as people used society’s largesse on projects no one really needs. It is also possible that such stipends would give workers the boost in incomes they have been missing in recent decades, and the additional leisure time to enjoy it, thus helping to make businesses like Mr Rubi’s profitable. + +It may be, too, that the need for a universal basic income never becomes truly urgent. Silicon Valley visionaries could be wrong in their belief that a thriving 21st-century economy will be one where jobs go to robots faster than new jobs can be created, and that a universal income is the way to make that transition humane. The capitalist system has been remarkably good at finding new ways to work as it gets rid of old ones. + +But the past is not always a good guide to the future. The welfare system grew up to service a model of industrial modernity. It is failing the poorest in society and may be at risk from technological upheaval. It may yet need a radical redesign. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21699910-arguments-state-stipend-payable-all-citizens-are-being-heard-more-widely-sighing/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Bernie Sanders: California, here we come + +The campaigns: Heard on the trail + +Chicago: Predictable policing + +Refugees: Their own public Idaho + +Lexington: Trumpology + + + + + +Articles Sections Next + +Bernie Sanders + +California, here we come + +The Democratic challenger thinks he still has a shot at the nomination. He’s wrong + +Jun 4th 2016 | OAKLAND | From the print edition + + + +IN A dismal primary season, the enthusiasm and moral purpose of Bernie Sanders’s clamorous supporters has been uplifting. Reflected in the vast crowds that have flocked to hear the crotchety senator from Vermont, and the vaster sums he has raised—over $210m so far, mostly in donations of less than $30—it suggests that America’s democracy remains vigorous. It is also a tribute to the clarity and justified outrage with which he has described problems from corrupt campaign financing to choking student debt. Yet all things have their measure, and the outpouring of Bernie-love offered up by a crowd of 20,000 Sandernistas, at an open-air rally in Oakland on May 30th, seemed mostly inane. + +As Mr Sanders clambered onto a wooden stage, wearing his customary $99 suit, with a face burnt purple by the sun and broadly grinning, his adorers screamed and showered him with flowers. “Bern-ie! Bern-ie!” they chanted, yelling louder whenever the senator waved or chortled to acknowledge the adulation of which he, a septuagenarian social democrat, is such an unlikely object. Feeling the Bern has become for the most devoted Sandernistas an all-consuming pleasure; “Bernie or bust”, “Bern the system”, their slogans read. “He’s the only politician who speaks of the downtrodden,” said Jennifer, an actor, who swore she would write Bernie onto the ballot paper in November even if his rival, Hillary Clinton, wins the Democratic nomination. And if that should hand victory to Mr Trump? “That’s her problem,” she shrugged. + +As almost anyone would, Mr Sanders, who a year ago was hardly known to most voters, shows signs of believing the hype. He revels in the adulation more visibly than he used to. More important, and bizarrely, he appears sincerely to believe he can win. With a big turnout in California, the biggest Democratic primary, he told the crowd in Oakland, “We are going to capture a very good majority” of the state’s 475 pledged delegates, “then we will go into the Democratic convention with a great deal of momentum and we will come out with the nomination.” He is currently trailing Hillary Clinton in the Golden State by around seven percentage points: a formidable gap, given her advantage with the Hispanic voters who make up over a quarter of its electorate, but closable. All the same, Mr Sanders’s prediction seems so unlikely as to be almost delusional. + + + +He has done unexpectedly well; but Mrs Clinton has never looked especially threatened by him. Mr Sanders has won almost 10m votes; she has won 13m. The senator’s best, perhaps only, hope of victory lay in mobilising his advantage among white liberals and in caucuses, where the result can be swayed by a small number of well-organised diehards, for an early assault. He aimed to win the first three contests, in Iowa, New Hampshire and Nevada. This, he hoped, would shatter the aura of inevitability that was his opponent’s greatest advantage. But Mrs Clinton won in Iowa and Nevada, gained massive momentum in the southern states that followed, and so built a lead of around 300 pledged delegates—twice as big as Mr Obama ever managed over her in 2008. And that is without factoring in her much bigger advantage among the 715 Democratic officer-bearers, or “superdelegates”, who will also vote for the candidate at the convention; 543 have already come out for her. + +In short, Mr Sanders appears to have lost. Yet he is hurting Mrs Clinton by refusing to acknowledge this. The excitement around his campaign always showed up her woodenness as a campaigner; it takes a lot of loud pop music to work up an atmosphere at Mrs Clinton’s rallies. His persistence in winning clusters of smallish states that play to his strengths—typically those, recently including Washington, Utah and Idaho, that hold caucuses—has meanwhile given his supporters, and some journalists, an exaggeratedly rosy view of his progress. For the most part, this has been to Mrs Clinton’s advantage; it suits her to be seen fighting. Yet it is has latterly denied her the boost in the polls that is customary for a presumptive nominee, and which her Republican rival, Donald Trump, is now enjoying. Having trailed Mrs Clinton in head-to-head polling by double digits in April, he is now more or less level-pegging with her. + +Desperate to heal their feuding party, and turn its fire on Mr Trump, Democratic bigwigs have for weeks implored Mr Sanders to bow out. If the way the Republicans are rallying to Mr Trump is a guide, the reunification could happen rapidly—indeed the Democrats’ primary wounds look less deep than the Republicans’ did. Asked whether they would support Mrs Clinton in November, many of those in Oakland recoiled at the question: “Of course we would!” said Annette, a teacher, as behind her a hawker did brisk trade in “Fuck Trump” posters and badges. It is also apparent that some of Mr Sanders’s advisers are turning their thoughts to what he might demand as the price of his surrender. There is talk of making Mrs Clinton raise her pledge of a $12 minimum wage to the $15 Mr Sanders is promising. + + + +America's primary agenda: our interactive 2016 election calendar + +A defeated candidate is not generally in a position to make such demands. But Mr Sanders, who only joined the Democratic party last year and is aggrieved by its leaders’ preference for Mrs Clinton, seems minded to test that. Having implanted surrogates into the convention’s rule-making committee, he expects to influence its policy agenda; that is normally inconsequential but, in the event of an aggressive loser, could be fraught. “If he does lose, the party is going to have to help him help Clinton,” says Tad Devine, a Sanders adviser. + +Painfully for Mrs Clinton, Mr Sanders meanwhile persists in criticising her personally, especially over her fund-raising on Wall Street, thereby softening her up for Mr Trump. How long can it go on? Mr Sanders has no serious chance of overhauling Mrs Clinton’s lead of 268 delegates in the nine remaining votes, the last of which, Washington, DC, is on June 14th. He would need to secure 68% of the delegates available, which, given that the Democrats hand them out in proportion to vote share, not all to the winner, is almost unimaginable. To justify his pledge to fight on, he therefore needs at least to win most of the remaining states; above all California. + +It is by far the biggest prize of the Democratic primaries. Winning it handsomely would also bolster Mr Sanders’s only serious argument for turncoat superdelegate votes: that he is likelier than Mrs Clinton to beat Mr Trump. The polls, which give Mr Sanders a double-digit lead over the Republican, give some support to that. Yet if Mr Sanders loses California, on the night that Mrs Clinton is likely to cross the requisite threshold of 2,383 delegates, counting superdelegates, they would be immaterial. Mr Sanders would have lost his last shred of an excuse for fighting on. Even his closest advisers admit this. According to Mr Devine, “California is the sine qua non.” + + + +Heard on the trail + +The latest quips and quotes from the campaigns + + + +Trumpology + +Asked to choose between conservative principle and nastiness, Trump voters pick the latter + + + +Guns, weed and relevance + +Gary Johnson could launch the Libertarians on a big third-party run + + + +A Trump presidency could undermine the rule of law + +Donald Trump's tirade against a federal judge + + + +The fire next time + +Voter ID laws may be an issue at the election + + + + + +More US election coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21699914-democratic-challenger-thinks-he-still-has-shot-nomination-hes/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +Jun 4th 2016 | From the print edition + + + + + +Patience is a virtue + +“I don’t have a timeline in my mind and I have not made a decision.” + +The Speaker of the House, Paul Ryan, still resists the charms of Donald Trump + +Life, liberty and narcissism + +“I want a statue in Washington, DC. Maybe share it with Jefferson.” + +Mr Trump’s aspirations go beyond merely becoming president + +Peace, love and understanding + +“We’re not buying tanks. We’re not buying grenade-launchers. We’re not militarising our police department.” + +Cleveland city councillors reassure groups who plan to protest at the Republican convention in July + +Crybaby + +“Instead of being, like, ‘Thank you very much, Mr Trump,’ or ‘Trump did a good job,’ Everybody’s saying, ‘Well, who got it?...And you make me look very bad.” + +Mr Trump on the press fact-checking his claims about fundraising for veterans + +Black is the new orange + +“You don’t want to look like one of those anarchist photographers.” + +A former commando advises journalists attending the Republican convention not to wear black. The New Yorker + +Un-conventional + +“I don’t think freewheeling crazy is unique to Libertarians.” + +Gary Johnson, the Libertarian Party candidate, remarking on the convention speaker who stripped down to his thong + +Lactose intolerant + +“Feel the Bern: Hot cinnamon ice cream with hot cinnamon swirl and red hot candy.” + +An ice-cream shop in Rehoboth Beach, Delaware, has produced a terrifying Sanders-themed ice cream. Politico Playbook + +The gentleman’s for turning + +“I want to be helpful. I don’t want to be harmful, because I don’t want Hillary Clinton to be president.” + +Senator Marco Rubio is now supporting his former rival. CNN + +Miles to go before... + +“That’s how I can sleep at night.” + +Mitt Romney, Republican candidate in 2012, explains his continued objections to Mr Trump. Wall Street Journal + +Friends like these + +“There are many positive aspects to Trump’s ‘inflammatory policies’.” + +North Korea’s state news outlet, DPRK Today, is thrilled by the prospect of a Trump presidency. NK News + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21699908-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Chicago + +Predictable policing + +A hot summer awaits the city’s new police chief + +Jun 4th 2016 | CHICAGO | From the print edition + + + +IT WAS Eddie Johnson’s first big test. Memorial Day weekend usually marks the start of the most violent period of the year, as the crime rate rises along with the temperature (see chart). Thousands of officers patrolled the city’s parks, beaches and neighbourhoods, including Mr Johnson, the boss of Chicago’s besieged police force since April, who worked a night shift. Fixed-wing aeroplanes circled the area’s expressways, which have recently seen a spike in shootings. In the run-up to the weekend Mr Johnson launched one of the biggest anti-gang raids in Chicago’s history, resulting in the arrest of 140 gang members and the seizure of numerous guns, as well as drugs apparently worth tens of thousands of dollars. + +Considering the steep rise in gun violence this year, the sheer size of Chicago’s territory, the complexity of its social problems, the large number of fractious gangs with ever-younger members and the recent breakdown in trust between residents and the Chicago Police Department (CPD), Mr Johnson has taken on perhaps the toughest job in law enforcement in the country. The results of the Memorial Day operations were mixed: killings were down this year, with six murders, including one of a 15-year-old girl, between Friday morning and Tuesday morning, compared with 12 last year. Shootings were higher: 63 compared with 56. + +From the start of the year until mid-May, the number of murders increased by 62% to 216. Shootings also rose by 60%. Many theories compete to explain why. One is the low morale of CPD officers, many of whom feel they are unfairly vilified and “are all being grouped with Jason,” says a former cop, referring to Jason Van Dyke, a white police officer who shot a black teenager 16 times as he lay in the road in 2014. A task-force subsequently appointed by the mayor to look at race and policing concluded in April that the CPD has “no regard for the sanctity of life” when it comes to black Chicagoans. + +Mr Johnson reckons that the problem is lack of confidence in the justice system. He argues that trust has broken down—between the police and the policed, between the police and an “overburdened and broken” judiciary, as well as between the officers and their leaders. In some ways, though, the CPD has suffered from an excess of trust, among officers at least. On May 31st the city paid out $2m to settle a lawsuit with two police officers who say they were targeted by colleagues and even suffered death threats after they informed on corrupt cops who ran a criminal fief in a housing complex on the South Side. + + + +Daily chart: Revisiting the world's most violent cities + +Trust will take time to rebuild, but Mr Johnson hopes that technology will pay dividends sooner. The CPD confiscates 150-200 guns per week on average, more than New York and Los Angeles combined. (Though Chicago and Illinois have strict gun laws, it is easy to buy a gun in Indiana or Wisconsin, a short drive from the city.) The department wants to make more use of the CPD’s “Strategic Subject List” (SSL), which is based on a computer algorithm developed by the Illinois Institute of Technology that calculates the propensity of individuals to get shot or shoot. The fourth iteration of the SSL, the one now in use, has become really good in its murderous predictions, according to Mr Johnson. + +The software looks at ten variables, including a person’s previous arrests and convictions, gang affiliations and involvement in shootings. People are ranked according to their probability of becoming a “party to violence” (PVE), either as victim or assailant. According to the CPD, a mere 1,400 people are responsible for most of the gun violence in a city of 2.7m. Of the 140 arrested in the recent gang raid, 117 were already on the SSL. Three-quarters of shooting victims and more than 80% of those arrested for shootings so far this year were also found to be on the list. + +The SSL is a work in progress: the police department is constantly updating the list and fine-tuning its technology. It is also trying to use its data to prevent crime. The SSL score ranges from one to 500, with higher scores representing greater risk. Since 2013 officers, social workers and community leaders have visited the homes of more than 1,300 people with high scores; this year the CPD aims to reach 1,500 people likely to be involved in violence and to meet gang members every other week. Mr Johnson’s next big test will be the weekend of the 4th of July. Last year ten people were killed and 55 shot while everyone else was celebrating Independence Day. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21699912-hot-summer-awaits-citys-new-police-chief-predictable-policing/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Refugees + +Their own public Idaho + +Twin Falls, a conservative city in Idaho, likes refugees + +Jun 4th 2016 | TWIN FALLS | From the print edition + + + +THIS has not been a great election season for cool appeals to reason. Few public debates have strayed as far from Socratic ideals of truth-seeking as those involving refugees, and in particular whether America is running intolerable risks by granting asylum to Muslims from such terror-wracked regions as the Middle East. Strikingly, some of the loudest calls to bar new refugee arrivals have come from communities that are rarely, if ever, sent refugees from Syria or other high-risk countries. + +After terrorist outrages in Paris, California and Brussels, in some cases involving attackers who arrived as asylum-seekers, more than two dozen governors and numerous members of Congress have decried the decision, made by Barack Obama in September 2015, to increase the number of Syrians admitted as refugees in fiscal 2016 to 10,000, up from 2,000 the previous year. Donald Trump, the presumptive Republican presidential nominee, has gone further, calling—loudly but vaguely—for a temporary national entry ban on Muslims “until we find out what’s going on.” What’s going on is that whereas 158,655 Syrians completed asylum applications in Germany in 2015, Mr Obama’s much more modest target may be missed. Between October 1st, the start of the current fiscal year, and May 23rd, a total of 2,235 Syrian refugees were resettled in America. + +A distinctively different sort of refugee debate has gripped the small rural city of Twin Falls, Idaho for the past several months. Twin Falls knows more about asylum-seekers than many towns its size. Idaho, with just 1.6m people, has taken over 20,000 refugees since 1970s, with most placed in Boise and Twin Falls. The Twin Falls refugee resettlement centre is managed by the College of Southern Idaho (CSI). Go back to the 1980s and the centre brought Vietnamese boat people and Cambodians, among others. In the 1990s war in the Balkans sent waves of refugees from Bosnia (several Bosnian families stayed, and provide much oomph to the local soccer league). The most recent arrivals have come from Iraq, Afghanistan and Sudan, as well as from Congo, Eritrea, Nepal and Iran. At the same time residents cheerfully call Twin Falls “ultraconservative”: the city and surrounding county, in the heart of Idaho’s dairy belt, gave the Republican candidate, Mitt Romney, more than 70% of their vote in the 2012 presidential elections. Though it is a young town, barely a century old, it has links to dark chapters of history: from 1942 to 1945 there was an internment camp for Japanese-Americans in the high desert 17 miles to the north. + +National alarm over Syrian arrivals found an echo in Twin Falls late last year. A group of locals launched a petition drive to put a formal ballot initiative before county voters, asking them whether they wanted the refugee centre closed. Rick Martin, the owner of a small repair service for medical devices, was the prime mover behind the petition. He denies being anti-immigrant, recalling a school friend from his childhood in Twin Falls, a Hmong whose father had fought with the Americans in South-East Asia. But rumours that Syrian refugees might be coming galvanised Mr Martin, who believes that Islam is “a violent religion, antithetical to American values.” His grievances are broad: he says refugees take up much-needed affordable housing and drive down wages, and may have brought polygamy to Twin Falls. But insecurity tops his list: Syrians have already reached Twin Falls, he asserts, and there is a “very, very high potential that [Islamic State] sympathisers are in our community right now.” + +What happened to Mr Martin’s campaign was less predictable. His ballot initiative failed woefully. He and his fellow-organisers had six months to collect 3,842 local residents’ signatures, but by the final deadline in early April secured only 894. Mr Martin blames cold winter weather for slow signature-gathering: “Most of our volunteers are elderly,” he notes. He also blames city power-brokers for intimidating the silent majority that he feels backed his cause, notably the city newspaper, the Times-News, which he says falsely portrayed his campaign as “bigoted”. His next plan is to try to have anti-refugee trustees elected to the board of the CSI, a long shot. + +City elders and defenders of the refugee centre have a different take. They say that they quelled public alarm with the least fashionable of tools: facts. In particular, supporters of the refugee programme point to the impact of a public forum attended by more than 700 people, organised by the Times-News, and addressed by Twin Falls school, public safety and medical officials, as well as by an invited speaker from the federal government, Larry Bartlett, director of the State Department’s Office of Refugee Admissions. + +Patiently, the panellists set out the costs and benefits of receiving a few hundred refugees in Twin Falls each year. Refugees are not a burden on the public purse: they are helped to find work fast, and typically the newcomers pay more in federal taxes in a single year than they receive in their one-off resettlement grants. On average, refugees make over a dollar more per hour than the state’s minimum wage, and provide a useful boost to a healthy local economy. Unemployment in Twin Falls, a city of about 47,000 people, stands at 3.4%, well below the national average, thanks to expansion by such employers as Chobani, a yogurt-maker. + +Latter-day saints + +Refugees are screened for health problems and commit crimes at an exceedingly low rate, panellists added. Asked for safety guarantees, Mr Bartlett of the State Department assured the forum that, while nothing in life is “100%” guaranteed, background checks for refugees by several security and intelligence agencies are strong, and are under review to become stronger. A less diplomatic speaker might have added that terror groups trying to infiltrate America would find it much easier to send militants who hold European passports, who can visit without visas. + +Wiley Dobbs, superintendent of the Twin Falls school district, told the forum how special services for refugees and immigrant children, including two centres that prepare newcomers to learn in American schools, account for 0.42% of his budget. “There was a lot of false information out there,” Mr Dobbs recalls. “The neat thing is, we were just sharing the facts.” + +Lonely work in Twin Falls + +Culture also matters. Perhaps a quarter of the city’s residents are Mormons, and many churches of all denominations have long worked with refugees. Not least because so many young Mormon adults serve as missionaries around the world, Twin Falls families “appreciate having diversity” in their schools and neighbourhoods, says Bill Brulotte, who directs federal programmes in the school district. + +Twin Falls may offer some other lessons, suggests the mayor, Shawn Barigar. His is a handsome city, built on the southern edge of the Snake river canyon, a meadow-bottomed gorge which at that moment glows a vivid green behind him in the evening light. The scene is peaceful now, but the debate at times became “Who can scream the loudest?” he recalls, with a “handful of very vocal opponents” shouting at city council meetings about al-Qaeda plots. Mr Barigar is a fifth-generation resident of farming stock, and also heads the local chamber of commerce. Local businesses have long seen refugees as high-quality employees in a sparsely populated corner of the country. But refugee-supporters were “apathetic”, the mayor says. They did not fully realise that helping to integrate newcomers might be their responsibility, too. + +Bob Naerebout, executive director of the Idaho Dairymen’s Association, an industry group, agrees. Some of his members employ scores of refugees, in dairy farms and cheese plants. To date, no Syrians have actually reached Twin Falls. But Mr Naerebout thinks refugee-supporters could explain Syrian arrivals to the city. They just need to “speak out and do the education”. When those who back the refugee centre stay silent, “we leave a void,” he now realises. And in the present political climate, a void free of facts is a perilous thing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21699874-twin-falls-conservative-city-idaho-likes-refugees-their-own-public-idaho/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Trumpology + +Asked to choose between conservative principle and nastiness, Trump voters pick the latter + +Jun 4th 2016 | From the print edition + + + +IN AT least one sense, Donald Trump’s rise is terrific news for principled conservatives. Right-wingers have long endured allegations that many of their cherished ideas—promoting free markets or seeking to devolve power away from Washington—are cover for a cruder, nastier agenda. However unfairly, when American conservatives promote individual liberty and limited government, they are charged by critics with appealing to the worst, I-got-mine instincts of their supporters. When Republicans suggest that government safety-nets will have to be trimmed back before they grow unaffordable, Democrats and their allies do not see hard-headed prudence. Instead conservatives are accused of having, or pandering to, hard hearts. + +Here is the good news for conservatives. Mr Trump shows that their principles and heartlessness are not the same thing. The presumptive Republican nominee’s campaign fairly drips with nastiness, but is strikingly uninterested in limiting the powers or costs of government. Short of designing himself a uniform involving ermine and red velvet, he could hardly make it clearer that he dreams of reigning over, rather than governing, America. + +He has promised not to devolve power from Washington but to concentrate it in the Oval Office, where a President Trump would bully and browbeat global friends, foes and corporate bosses alike. At rallies he asks roaring crowds to imagine him lifting the telephone to impose punitive taxes on businesses or trading partners who defy him. Individual liberty would look rather different in his promised America, as police and federal agents began door-to-door raids to round up and deport 11m undocumented migrants. Nor does balancing the public finances hold any terrors for Mr Trump. He opposes raising the retirement age, promising to “save Social Security and Medicare without cuts.” At the same time, he promises to slash taxes and to raise spending on defence. Eliminating waste, and a booming economy, will make America rich enough to eliminate budget deficits, he promises vaguely, and, anyway, he understands how to manage debt “better than probably anybody.” + +The bad news for Republicans is that, when millions of primary voters were invited to choose between candidates representing most major strains of conservative thought, and Mr Trump’s mix of nonsense and nastiness, they chose the latter. The past few weeks have been filled with the grisly spectacle of Republicans and conservative pundits reconciling themselves to the businessman’s victory, and explaining why, though he may be a bit rough around the edges, Mr Trump is conservative in the ways that really matter. Some take a narrowly partisan path from the #NeverTrump camp to Oh, Never Mind. Senator Marco Rubio of Florida, who during his presidential campaign called Mr Trump a “con man”, will now speak on his behalf if asked: “because I don’t want Hillary Clinton to be president.” The Senate majority leader, Mitch McConnell of Kentucky, told USA Today that he wants to win the election, adding: “and I have to say Donald Trump has done a good job so far of winning elections.” To Mr McConnell’s credit, he did then tell NPR that, under him, the Senate would block a Muslim entry ban proposed by President Trump, calling that a “very bad idea”. + +Some conservative thinkers, such as the Speaker of the House of Representatives, Paul Ryan, have signalled that they want concessions on policy and on tone before endorsing Mr Trump. Trump-supporting politicians and columnists have started trying to shame hold-outs into joining them, by casting surrender to the businessman as an act of class contrition. For too long conservative elites have “ignored” the preferences of grassroots activists, they say. If Republican primary voters want mass deportations of migrants in America without legal papers, a halt to global free-trade deals and a promise not to touch old-age pensions, they argue, then that is what the Republican Party now stands for. + +That is self-serving cant. Republicans in Congress and in governors’ mansions have not ignored the wishes of Trump supporters who favour protectionism or nativism or oppose reforming Social Security. Republicans who believe in free markets and limited government should (and, until five minutes ago, did) disagree with those Trump voters, because they think that the businessman’s policies would do more harm than good. If Republicans are sounding a tactical retreat now, it is because they do not know how to win in November without Mr Trump’s followers. + +Compassion for us, conservatism for them + +Apologists for Mr Trump claim that, if you squint a bit, their new champion fits onto the conservative end of a left-right political spectrum. In fact Mr Trump uses a different spectrum: one which divides the world into Ins and Outs. Time and again he presents life as a zero-sum contest between his supporters and some undeserving Other. He was at it again over the Memorial Day weekend, not only telling old soldiers at a motorcycle rally in Washington, DC, that he would improve medical care by the Veterans Administration—a laudable goal, given that agency’s deficiencies—but growling that “illegal immigrants are taken much better care of by this country—better than our veterans.” + +No promise is too rash or too expensive when Mr Trump is addressing those he treats as In-groups. To Out-groups—such as the Muslims he says he would temporarily ban, or the millions of immigrants he claims he would deport—he presents the hardest of hearts. Sympathise, by all means, with hard-pressed voters who long to believe his empty promises, for not all of them are bigots. But then condemn Mr Trump for playing divide-and-rule, and for assuring Americans that others must lose if they are to win again. The businessman is running as a left-winger’s caricature of selfish, unprincipled conservatism. If elected Republicans embrace that travesty, they have themselves to blame for the damage that Mr Trump will surely do their cause. + + + +California, here we come + +The Democratic challenger thinks he still has a shot at the nomination. He’s wrong + + + +Heard on the trail + +The latest quips and quotes from the campaigns + + + +Guns, weed and relevance + +Gary Johnson could launch the Libertarians on a big third-party run + + + +A Trump presidency could undermine the rule of law + +Donald Trump's tirade against a federal judge + + + +The fire next time + +Voter ID laws may be an issue at the election + + + + + +More US election coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21699918-asked-choose-between-conservative-principle-and-nastiness-trump-voters-pick/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Brazil’s economy: Nowhere to go but up + +Poverty in Argentina: Gutted community + +Bello: Fujimori versus anti-Fujimorismo + + + + + +Articles Sections Next + +Brazil’s economy + +Nowhere to go but up + +The interim government proposes some reforms + +Jun 4th 2016 | RIO DE JANEIRO | From the print edition + + + +WITH bearded baristas and furniture cobbled together from wooden crates, Curto Café in Rio de Janeiro is a typical outpost of Brazil’s nascent hipster scene. Aficionados of its organic coffee do not pay set prices; instead they pay what they think reasonable—or what they can afford. This, says Gabriel Magalhães, one of Curto’s founders, is less and less. Like other Brazilians, cariocas (as Rio residents are known) are pinching their pennies. + + + +Brazil is suffering its worst recession since the 1930s, perhaps of all time. On June 1st the government reported that GDP contracted by 0.3% in real terms in the first quarter of this year; it is 5.4% smaller than it was a year earlier (see chart). Over that period GDP per person dropped by more than it did during the hyperinflationary “lost decade” from 1981 to 1992, notes Alberto Ramos of Goldman Sachs, an investment bank. Over two years the number of jobless Brazilians rose from 7m to 11m. It is a “downright depression”, says Mr Ramos. + +The task of pulling Brazil out of this morass falls to Michel Temer, who took over as interim president after the Senate voted in May to try President Dilma Rousseff on impeachment charges. Politically, his government has had a rough start. Two of the ministers in his all-white, all-male cabinet, including the one in charge of fighting corruption, had to step aside after recordings were leaked in which they appeared to criticise prosecutors’ investigation of the massive corruption scandal surrounding Petrobras, the state-controlled oil company. They say they were misinterpreted. + +Mr Temer’s economic programme is faring better. His heavyweight team, led by Henrique Meirelles, a former governor of the Central Bank, has proposed the most ambitious overhaul of Brazil’s economic governance in decades. Public spending, including on the unaffordable pension system, is to be slashed, though the government has yet to say just how. Enterprise-crushing regulations are to be lifted, starting in the oil and gas sector. Mr Meirelles says the government will consider reforming Mussolini-era labour laws and the Byzantine tax code. Privatisation, long a taboo, is a possibility for the first time since the 1990s. Such ideas are a radical break from the left-wing interventionism practised by Ms Rousseff’s government, which is largely responsible for the economic mess. They offer hope of a way out of it. + +The centrepiece of Mr Temer’s plan is a constitutional amendment to freeze public spending in real terms. Even health and education—which consume more than a quarter of government revenue without providing commensurate benefits—may not be spared. The government is expected to present a draft to Congress within the next two weeks. + +The idea is to cure the government of one of its principal vices. Public spending has grown by an annual average of 6% for the past 20 years, much faster than GDP. The central government’s primary fiscal balance (before interest payments) went from a surplus of 2.2% of GDP in 2010 to a deficit of 2.3% in the year to April 2016, the highest level yet. This, and the prospect of deficits stretching far into the future, keeps interest rates high, which further worsens the deficit. The government’s interest bill is a massive 7% of GDP. Brazil’s high taxes thus pay for past profligacy rather than effective government. + +The spending cap, if approved by majorities of three-fifths in both houses of Congress, will lead to lower deficits as soon as growth and tax revenues revive. It could help even sooner, says Arthur Carvalho of Morgan Stanley, an investment bank. That is because confidence that Brazil will reduce its debt could lower long-term interest rates, cutting the government’s interest bill. As important, the spending cap will force the government to undertake other reforms, though in the long run it may prove impossible to maintain as the population grows. Currently, the constitution and other legislation protect 90% of spending from cuts, no matter how unproductive it is. If the government is not to breach its self-imposed ceiling, those laws will have to change. + +Such prospects are already stirring hopes among unhappy entrepreneurs and investors. Bond yields have fallen from about 17% in January to 13%; the cost of insuring against default is down by a third since December. With more than a third of industrial capacity idle, production could revive quickly if sentiment improves. “In six months we may look back at today as an inflection point,” says Marcelo Carvalho of BNP Paribas, a bank. But only if Mr Temer delivers what he has promised. + + + +Waxing and waning: Brazil's economic woes, in charts + +That “will be tough”, admits Mr Meirelles, the finance minister. He hopes to enact some reforms, including the spending cap, before next year’s budget is submitted to Congress, which must happen by August 31st. With important local elections looming in October, few politicians will be in the mood to vote for less spending on schools and hospitals. + +But members of Mr Temer’s team, several of whom left lucrative private-sector jobs to help rescue the economy, dispute that. They think the political and economic crisis has made both voters and congressmen more receptive to proposals for radical change. A billboard put up by the National Confederation of Industry at the airport in Brasília, the national capital, demands: “Pension reform now!” + +In theory, Mr Temer can count on 356 votes in the 513-seat lower house of Congress, and 56 in the 81-seat Senate, more than enough to amend the constitution. Unlike Ms Rousseff, who also enjoyed solid nominal majorities in Congress, Mr Temer knows how to charm and cajole his allies. Unencumbered by past commitments, he has more perks and patronage to offer politicians who formerly supported Ms Rousseff. + +Despite watching two ministers sink into the quicksand of the Petrobras scandal, Mr Temer has managed to keep his government functioning. That may be in part because Brazilians have low expectations. A handful of other members of his cabinet are under investigation, as is Renan Calheiros, the president of the Senate and a member of Mr Temer’s Party of the Brazilian Democratic Movement, who features in the leaked recordings. But neither Congress nor the voters are demanding the toppling of Mr Temer’s government. The howls of rage from Ms Rousseff and her allies have so far had little effect. + +A survey published this week by IMD, a business school, puts Brazil in last place out of 61 countries in the efficiency of its government, behind war-torn Ukraine and, astoundingly, bankrupt and autocratic Venezuela. Brazilians are not expecting moral purity from Mr Temer’s interim government, which will probably continue in office until after elections are held in 2018. But they are hoping for relief from their economic pain. The early signs are that Mr Temer knows how to provide it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21699948-interim-government-proposes-some-reforms-nowhere-go-up/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Poverty in Argentina + +Gutted community + +Scandal strikes a famous social project + +Jun 4th 2016 | SAN SALVADOR DE JUJUY | From the print edition + +The pools are not the only things that have been drained + +EL CANTRI is a cheeky name for a housing project built for the poorest people in Jujuy, one of Argentina’s poorest provinces. The message is that its 15,000 inhabitants are no less entitled to comfort than residents of a posh gated community—known in Argentina as “countries”. A playground is equipped with dinosaur-shaped slides; a vast aquatic park has giant plastic sea lions. There is a full-scale replica of the Kalasasaya, a pre-Columbian temple, constructed out of breeze blocks. El Cantri has two factories, a clinic and a sports centre. On top of each house is a water tank stencilled with images of such popular heroes as Che Guevara and Eva Perón. + +The settlement was built by Túpac Amaru, a social movement that for 17 years has provided housing and other services to 70,000 poor jujeños. The group thrived during the dozen years when Argentina was governed by the populist Kirchners: the late Néstor Kirchner and then his wife, Cristina Fernández de Kirchner. It was the third-largest employer in a remote agricultural province, in which 45% of the land is owned by just five companies, according to Carlos Aramayo at the National University of Jujuy. Túpac Amaru’s firebrand leader, Milagro Sala, is a celebrity. Pope Francis invited her to the Vatican in 2014. + +Argentina’s elections last October brought about a change of regime, and a dramatic reversal of fortunes for Ms Sala and her movement. Gerardo Morales became the first non-Peronist governor of Jujuy in more than 30 years. He is an ally of the new centre-right president, Mauricio Macri, who is more likely to bet on free enterprise and new infrastructure than on left-wing social movements. + +A clash was not long in coming. On December 10th, the day he took office, Mr Morales said that all co-operatives must register with the government in order to continue receiving money. Four days later Ms Sala and her supporters set up camp outside his office, demanding a meeting. Police arrested her on January 16th, saying she had incited violence. Since then the charges have mounted up: she is accused of fraud, extortion and conspiracy. Judges have ordered her to stay in prison while prosecutors investigate. It is not certain that the Túpac Amaru movement, named after the leader of an uprising against the Spanish in 1780, will survive the onslaught. + +Joaquín Millón, Jujuy’s new anti-corruption investigator, alleges that more than half of the 1.3 billion pesos ($90m) funnelled by the national planning ministry through the provincial government and municipal authorities to Túpac Amaru from 2004 to 2015 has gone missing. The co-operative movement was contracted to build some 8,500 houses; after touring more than 30 projects, Mr Millón concluded that 2,300 were either incomplete or non-existent. Residents of El Cantri told Jujuy’s prosecutor, Mariano Miranda, that the movement illegally withheld title deeds to their homes and threatened to evict them if they did not support Ms Sala. She denies all the allegations. + +The scandal raises awkward questions for Ms Fernández. Allegations have emerged linking her family to the scandal in Jujuy. In April a provincial deputy who is a former Túpac Amaru member told a judge that Ms Sala had delivered suitcases of cash to Ms Fernández’s son, Máximo Kirchner, in the Quinta de Olivos, the president’s official residence. They both deny it. + +Human-rights groups have leapt to Ms Sala’s defence. Amnesty International criticised her initial arrest, saying she had been “criminalised for peacefully exercising her rights to freedom of expression and protest”. In March the UN’s Working Group on Arbitrary Detention urged Argentina’s government to justify her detention in writing. Mr Miranda bristles at the criticism. “They say that she’s a political prisoner, but she’s guaranteed due process,” he fumes. “Amnesty International hasn’t tried living near Milagro Sala.” + +The beneficiaries of her work are beginning to lose faith. El Cantri’s pastel-painted terraced houses are showing signs of neglect. The clothing factory, opened in 2008 by Ms Fernández, supposedly employs 146 people, but just a handful could be seen during a recent tour. The water park, the community’s hub, has been drained. Since Túpac Amaru’s refusal to register, so too have its coffers. “Ninety percent of people here are against Milagro Sala,” says a man who lives close to El Cantri. “But that doesn’t mean they oppose Túpac Amaru.” + +If the movement fails, Jujuy will need something to replace it. More than half of jujeños are poor and jobs are scarce. At three o’clock one recent afternoon the benefits queue at San Salvador de Jujuy’s post office stretched around the block. The last passenger train to Buenos Aires departed in 1993. Jujuy is among the ten provinces that are to benefit from Plan Belgrano, a scheme promoted by Mr Macri to reduce poverty, encourage enterprise and improve infrastructure in the north. “For decades Argentina turned its back on the north,” declared the president during a visit to Jujuy on May 16th. He pointedly promised to back projects “that aren’t synonymous with corruption”. + +For residents of El Cantri, such schemes mean little compared with the tangible reality of their imperilled community. Daniela Calderón, a teacher at the newly opened primary school, bursts into tears as she watches her pupils playing happily in the playground. “They’re gradually dismembering our organisation,” she laments. “But we’ll be back, stronger.” Given Túpac Amaru’s monumental problems, that may prove a forlorn hope. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21699717-scandal-strikes-famous-social-project-gutted-community/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +Fujimori versus anti-Fujimorismo + +The split imperatives of Peru’s presidential election + +Jun 4th 2016 | From the print edition + + + +PERHAPS it is a sign of the times in Latin America that both the candidates in Peru’s run-off ballot for the presidency, on June 5th, support the continuation of the free-market policies that have made the country one of the region’s most successful economies. After all, Peru is heading for economic growth of around 4% this year, while the region as a whole faces its second year of recession. What is at stake in the election is something more basic, if the campaign rhetoric is to be believed: what kind of government do Peruvians want, and for whom should it govern? + +Pedro Pablo Kuczynski, a liberal former economy minister, argues that victory for his opponent, Keiko Fujimori, means “the return of dictatorship, corruption and lies”, as he put it in the final campaign debate on May 29th. “I am convinced that freedom is at serious risk in Peru,” he declared. That claim is based mainly on heredity. Ms Fujimori’s father, Alberto, ran the country as an elected autocrat for ten years. In 1992 he sent troops to shut down Congress. He is serving long prison sentences for corruption and human-rights abuses. + +In a country with almost no real political parties, “anti-Fujimorismo” has become the most powerful political ideology. That is why Mr Kuczynski has a chance in the run-off ballot, despite having won only 21% of the vote in the first round in April, when Ms Fujimori secured 40%. He has other electoral disadvantages: he is 77, and he has spent long periods working in the United States, as an investment banker and businessman. He is fit—he goes to the gym most days. “It’s age versus lack of experience,” he says of the contest. He has a deep-rooted commitment to public service: he set up an NGO to campaign for drinking water for all, and his father ran a leper colony in the Peruvian Amazon. + +Ms Fujimori insists she is her own woman. In person, she displays both charm and sharper political instincts than her opponent. She has pledged to rule as a democrat. After narrowly losing the election in 2011, she has spent the past five years campaigning incessantly, visiting remote Andean villages and urban shantytowns. Her pitch is that she is a truer representative of Peruvian society and that she alone can offer effective government. Her party, Popular Force, is better established than most. It has won a majority of the seats in Congress. Her aides portray Mr Kuczynski and his team of advisers as desk-bound and naive. “He can do a good government for big companies,” says José Chlimper, Ms Fujimori’s running-mate. She stresses a need for government to help small business. + +Underlying the campaign are Peru’s cleavages of race and class. Fujimorismo represents more than just nostalgia for Mr Fujimori’s achievements of vanquishing the terrorism of the Shining Path and launching economic growth. It is also in part a rejection of Peru’s traditional “white” elites. It stands for popular capitalism and an emerging middle class, though Ms Fujimori’s opinion-poll lead among poorer Peruvians also stems from her father’s clientelism. + +Fujimorismo represents Peru’s vast informal economy, too, and the values of a society where growth has brought higher incomes but not (yet) widespread adherence to the rule of law. In May a television programme aired a report in which an official of the United States Drug Enforcement Administration (DEA) said that the agency was investigating Joaquín Ramírez, the general secretary of Popular Force, apparently for laundering drug money. A former bus-fare collector who now possesses a business empire spanning property and football clubs, Mr Ramírez is the chief financier of Ms Fujimori’s campaign. Peruvian prosecutors have been investigating Mr Ramírez, who denies wrongdoing, since 2014. Ms Fujimori waited for three days after the DEA story broke before asking him to “step aside”. + +This revelation would have doomed many a candidate. Yet in the next fortnight Ms Fujimori opened up a small but probably decisive lead of four to six points in the opinion polls. Either many Peruvians don’t care about Mr Ramírez’s conduct, or they accept his claim that he is maligned as a self-made cholo con plata (a man of mixed race with money). But if Ms Fujimori is to provide Peru with the more effective state it needs, not least to fight rising crime, she must choose aides who are above suspicion. + +The main reason for believing that her victory, assuming it happens, would not entail political regression is not just that she is not her father. Peruvian democracy is stronger than it was in the 1990s, and both the media and civil society are less biddable than they were. But Peruvians will need to be alert. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21699825-split-imperatives-perus-presidential-election-fujimori-versus-anti-fujimorismo/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Japanese politics: Postpone and be damned + +Africans in India: They don’t love us + +Banyan: Dialogue of the deaf + + + + + +Articles Sections Next + +Japanese politics + +Postpone and be damned + +Doubts about the prime minister’s economic record are growing + +Jun 4th 2016 | TOKYO | From the print edition + + + +ALL things considered, the month of May ended well for Shinzo Abe, Japan’s prime minister. He hosted his fellow leaders from the rich world’s club, the G7, at a summit at Ise in Mie prefecture last week. It went well. He welcomed them at a Shinto shrine founded 1,300 years ago. Just after the summit Barack Obama became the first sitting American president to visit Hiroshima, which an American atom bomb levelled on August 6th 1945. Japanese of all ages and backgrounds were moved by his speech, and by his embrace of a survivor. Mr Abe basked in the reflected political glow. + +That gave the prime minister ample cover to announce, on June 1st, that he would put off raising Japan’s consumption tax from 8% to 10% from April of next year to October 2019. This marks the second such dodge; the previous one occurred in November 2014. Mr Abe’s advisers would have preferred to postpone it indefinitely, but settled for a point after his term as president of the Liberal Democratic Party (LDP) is currently due to end, in September 2018. + +Economically, the postponement looks prudent. Japan’s economy is struggling. Many worried that a second tax increase would knock it flat. When Mr Abe raised the rate from 5% to 8% in April 2014, the economy tipped back into recession. + +But politically it carries risks. Mr Abe had promised that the rise would be carried out “without fail”. He said that nothing short of a massive natural disaster or an economic cataclysm similar to the global crisis sparked in 2008 by the collapse of Lehman Brothers, an investment bank, would prevent it from going ahead. Neither kind of calamity has materialised. At the G7 summit Mr Abe tried to persuade his fellow leaders that the global economy could be on the brink of a Lehman-scale crisis, in a vain effort to justify the postponement. He found no takers. + +The precedent that Mr Abe set after the first delay, when he called a snap general election to seek voters’ approval, seemed to demand another poll. It could have coincided with one that will be held for half of the seats in the upper house of parliament on July 10th. The possibility of such a rare “double” election prompted fevered speculation for weeks. + +But in the end Mr Abe decided to hold off, despite his approval rating having risen above 50% (see chart) after the summit and Mr Obama’s visit to Hiroshima. The LDP and its coalition already hold just over two-thirds of the lower house, with 326 out of 475 seats. Party strategists reckoned the risks were all on the downside. Tax rises, of course, are never popular, but neither are leaders who fail to keep their promises. + + + +The delay adds to voters’ impression that Mr Abe’s economic policies are going astray. On May 31st the main opposition parties—the Democratic Party, the Japan Communist Party, and two smaller groups—filed a no-confidence motion against the government, citing its failure to enact the promised tax rise as evidence that “Abenomics” is failing (thanks to the government’s majorities in both houses, it was swiftly voted down). + +Quantitative easing, which the Bank of Japan (BoJ) began in 2013, weakened the yen while boosting corporate profits and share prices. But an uptick in the currency, even as the central bank introduced negative interest rates from January onwards, has sunk the stockmarket. A recent BoJ survey showed that businesses are gloomier than they have been for three years. Mild deflation has returned. Fears that Japan had recently fallen into recession were assuaged by the news that, in the first quarter, GDP expanded by an annualised 1.7%. But the extra day of activity provided by a leap year contributed to the figures. Underlying private demand remains weak. + +To reverse these trends Japan must hack through the web of regulations hindering growth. The latest “Japan Revitalisation Strategy” proposed by Mr Abe’s government falls well short of the task. With such woolly goals as restoring consumer confidence and bringing about a “fourth industrial revolution” through IT and artificial intelligence, it has been roundly criticised. + +Meaningful reforms—such as preventing Japan’s vast, quasi-statist system of farm co-operatives from gouging hard-up farmers with high prices for farm supplies—are stalling. Resistance is also building to liberalisation of the electricity market, a long process that began on April 1st. Structural reform has been painfully slow, says Yoichi Funabashi, chairman of the Rebuild Japan Initiative Foundation, a think-tank, because the vested interests of the LDP still hold sway. + +Meanwhile, shelving the tax increase will leave Japan’s finance ministry less able to convince markets that Japan will tame its swelling debt—now more than 240% of GDP, more than in any other rich country. Mr Abe pledged to keep a longstanding goal of eliminating the primary budget deficit by the fiscal year 2020. Economists doubt he can do this. + +Even so, in the election for the upper house due in less than two months, the LDP is expected to do well. Mr Abe’s ultimate goal—winning a coalition to give him two-thirds of the seats, enough to let him rewrite Japan’s pacifist constitution—may prove elusive. But the LDP could still win a majority on its own, allowing it to govern more independently of Komeito, a Buddhist-backed party that sits to its left in several policy areas. Not since 1989 has the LDP held majorities in both chambers. For all the doubts surrounding Mr Abe’s handling of the economy, voters seem unconvinced that the opposition could do better. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21699938-doubts-about-prime-ministers-economic-record-are-growing-postpone-and-be-damned/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Africans in India + +They don’t love us + +The murder of a Congolese migrant makes Africans in India nervous + +Jun 4th 2016 | DELHI | From the print edition + +Disgruntled in Delhi + +YANN, a 31-year-old student from Kinshasa, does not wish to be seen speaking with a white foreigner. He fears attracting crowds of Indians, angered at the prospect that he might be complaining about India (he worries that similar, perhaps even angrier, crowds would appear if he were seen speaking to an Indian woman). He lives in one of the crowded villages that sprawl south through India’s capital, and the drive back to his windowless one-room flat happens to wind down Nelson Mandela Marg and cross Africa Avenue, official names given in a spirit of post-colonial camaraderie. Also on the way he passes the brick-strewn gully where an acquaintance, another Congolese named Masonga Kitanda Olivier, was beaten to death by three Indian men on May 20th. + +Yann came to India three years ago to study IT networks. “On my second day here,” he says, “that’s when I realised, ‘I am black.’” People laughed at him, and called him “kalu” (“blackie”). Children point at him and treat him like a monster. Officials are no better: when he brought his documents to the foreigner-registration office, “They say, first thing, ‘When are you leaving? When are you leaving my country?’” + +Until recently, though, he had felt physically safe. Then Mr Olivier was killed, and just days later four separate groups of Africans were publicly beaten in villages in the south of Delhi. Each attack has its own proximate cause (Yann thinks Mr Olivier was mistaken for an Ivorian friend of his who had made someone cross), but no one doubts that India’s resident African population has gone from feeling unwelcome to endangered. + +Except, maybe, the government. V.K. Singh, a minister of state and retired general, tweeted complaints that the press were “blowing up [a] minor scuffle as [an] attack”. The foreign minister, Sushma Swaraj, clarified that the attacks were “criminal acts”, but were “not racial”. Goa’s minister for tourism chose this moment to opine that Nigerians make trouble in India and ought to be deported. African diplomats are outraged—not just at the attacks, but at what they see as official indifference. A statement on behalf of envoys from 42 African countries lamented the lack of “diligent prosecution”. + +Africans have a long history on the Indian subcontinent. Ethiopians traded with south India in Roman times. African cavalrymen came to serve Islamic rulers; one of them, Malik Ambar, became a sultan in his own right. And the Portuguese brought slaves from east Africa, including some who escaped to form communities sprinkled along India’s west coast, adopting Indian language and dress while preserving elements of their earlier cultures. + +But the current wave of globalised migrants is new, as are stereotypes that have followed them—that they are all drug dealers or prostitutes. In fact most Africans in India are middle-class; they come for higher education and medical care. In 2014 an estimated 20,000 Nigerians visited for medical treatment. According to the Association of African Students in India, around 25,000 Africans study in Indian public universities, attracted by high standards, low prices and the prevalence of English. In all, experts believe at least 40,000 Africans study and work in India, mainly in the large cities of Delhi, Mumbai, Bangalore and Pune. + +Some Indians argue, absurdly, that as fellow victims of Western prejudice, they cannot be guilty of racism. Priyanka Chopra (now a star on American television) decries double standards in Hollywood—complaining that Indian actors are made to speak in stereotypical accents. But she herself played a character in a Hindi film whose descent to rock bottom is confirmed when she falls into bed with a black man. Last February, after a Sudanese driver hit an Indian woman with a car in Bangalore, a group of Tanzanian students were attacked; one was stripped and frog-marched through the streets. When she complained to a policeman, she says he told her, “You all look alike,” and implied that because they were both African she must know the man who hit the Indian with his car. + +Anti-African prejudice may be linked to India’s stubborn, caste-related bias in favour of lighter skin. (Potential brides are advertised as having “rosy” or “wheatish” complexions.) The problems faced by Africans are not so different from those borne by light-skinned Indian nationals from the north-east. Other Indians sometimes call them “chinky”. Landlords sometimes refuse to rent to them; thugs occasionally attack them in the streets. + +Money provides some insulation to professionals of African descent. Nelson Igunma, a Nigerian-American from New York who worked for internet start-ups across southern India, said he experienced some “micro-aggressions”—like being asked at a dinner party whether he plays basketball—but nothing worse. Now back in New York, he is looking for a way to return to India. Like Mr Igunma, Yann says he admires Indians for their intelligence and the richness of their culture. Still, he wakes up afraid every day: “I love India, but they don’t love us.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21699936-murder-congolese-migrant-makes-africans-india-nervous-they-dont-love-us/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Dialogue of the deaf + +As China and America continue to talk past each other, Asia frets + +Jun 4th 2016 | From the print edition + + + +IN EAST ASIA, relations between China and America make the strategic weather. “When they are stable, the region is calm; when they are roiled, the region is uneasy,” noted Bilahari Kausikan, a Singaporean diplomat, in a recent lecture. In truth, ever since Richard Nixon went to China in 1972 and opened the modern era in Sino-American relations, the sky has rarely been entirely clear; but nor has it often been clouded by so many disparate disagreements as now. As the two countries’ bureaucrats from a range of ministries gather in Beijing on June 5th for their eighth annual mass date, the “Strategic and Economic Dialogue” (S&ED), rivalry is trumping co-operation. The best that can be expected this year is that the dialogue helps stem a slide into something more dangerous. + +An implicit challenge by China to the American-led world order has become explicit, as will be apparent at this year’s Shangri-La Dialogue, an annual high-level powwow on regional security to be held in Singapore from June 3rd to 5th. The venue China has chosen for this contest is the South China Sea, where its territorial claims overlap with those of Brunei, Malaysia, the Philippines and Vietnam (and are mirrored by those of Taiwan). That is where it has been throwing its weight around most alarmingly. + +China’s building over the past three years of artificial islands on some much-disputed rocks and reefs has perturbed the littoral states and exposed the hollowness of America’s naval predominance. American might has not deterred the construction spree; and it is hard to see how, short of full-blown war, the new islands will ever be either dismantled or snatched from Chinese control. America and China accuse each other of “militarising” the sea. Having insisted its island-building in the Spratly archipelago was for purely civilian purposes, the Chinese defence ministry used a row last month over its fighter-jets’ dangerous buzzing of an American reconnaissance plane to argue for “the total correctness and utter necessity of China’s construction of defensive facilities on the relevant islands”. + +In fact, despite sending warships on “freedom-of-navigation operations” near Chinese-claimed features, and having an aircraft-carrier group on patrol in the sea, America seems to be trying very hard not to provoke China too much. China is also anxious to avoid conflict. The prime concern of the ruling Communist Party is to retain power. As a way of losing it, fighting a war with America might be the most certain as well as the most catastrophic. Yet, at a time of slowing economic growth, the party increasingly relies on its appeal to Chinese nationalism. In this sense, as Mr Kausikan noted elsewhere in his lectures, “the very insignificance of the territories in dispute in the South China Sea may well be part of their attraction to Beijing.” Nobody expects America to go to war over a Spratly. + +What alarms America is that Chinese behaviour in the South China Sea seems to fit a pattern. In a speech on May 27th Ash Carter, the defence secretary, made a point belaboured by American leaders: that “On the seas, in cyberspace, in the global economy and elsewhere, China has benefited from the principles and systems that others have worked to establish and uphold, including us.” What, Americans wonder, is China’s problem? No country has gained more from the current order. Yet now, said Mr Carter, “China sometimes plays by its own rules, undercutting those principles.” The result: a “Great Wall of self-isolation”. Chinese analysts counter that America, too, plays by its own rules. A foreign-ministry spokeswoman accused Mr Carter of being stuck in “the cold-war era”, and implied his officials were typecasting China as a Hollywood villain. + +Indeed, as Mr Carter suggested, it is not just in its maritime adventurism that China is at odds with America. Old differences widen, as new ones crop up. It is hard for American leaders to ignore human-rights lobbyists, at a time when China is conducting one of its harshest crackdowns on dissent in recent years. Nor is American business brimming with enthusiasm for China. Rather, it grumbles about cyber-espionage, the theft of intellectual property, the stalling of negotiations on a bilateral investment treaty and a general perception that the trajectory of economic policy in China is no longer towards gradually increasing openness, but towards greater autarky and protectionism. It does not help that massive Chinese overcapacity in industries such as steel is generating trade disputes and fuelling anti-Chinese tirades in America’s election campaign. + +It used to be argued that, despite manifold areas of tension between China and America, the relationship was so complex and multilayered there would always be mitigating areas of mutual benefit. One of the reasons why relations are so fraught now is that such bright spots are so few. Most hopeful are shared commitments to move to cleaner energy and limit carbon emissions. Last year’s S&ED saw a “breakthrough”, on curtailing the ivory trade to protect elephants. The two countries are also co-operating for now in trying to curb North Korea’s nuclear ambitions. But the suspicion lingers that China worries more about the enforcement of sanctions that might topple the odious regime in Pyongyang than about North Korea’s weapons of mass destruction. + +One no-trump + +A final reason for scepticism about the S&ED’s prospects is the leadership politics of the two countries. It is a forum for bureaucrats. But China’s have to some extent been sidelined under the presidency of Xi Jinping, who has grabbed power for small party groups that he heads. So, in Beijing, the Americans may be talking to the wrong people. And, on their own side, Barack Obama’s presidency is ending. China may have taken his cautious foreign policy into account in pushing its claims in the South China Sea. It doubtless suspects that under either Donald Trump or Hillary Clinton, America is likely to be less of a pushover. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21699915-china-and-america-continue-talk-past-each-other-asia-frets-dialogue-deaf/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Education: The class ceiling + +Remembering Tiananmen: Squaring off + + + + + +Articles Sections Next + +Education + +The class ceiling + +China’s education system is deeply unfair + +Jun 4th 2016 | BEIJING | From the print edition + + + +NO CAR may honk nor lorry rumble near secondary schools on the two days next week when students are taking their university entrance exams, known as gaokao. Teenagers have been cramming for years for these tests, which they believe (with justification) will determine their entire future. Yet it is at an earlier stage of education that an individual’s life chances in China are usually mapped out, often in ways that are deeply unfair. + +To give more students access to higher education, the government has increased its investment in the sector fivefold since 1997. The number of universities has nearly doubled. In 1998 46% of secondary-school graduates went on to university. Now 88% of them do. About 7m people—roughly one-third of those aged between 18 and 22—now gain entry to some form of higher institution each year. + +China’s universities offer more opportunity for social mobility than those in many other countries, says James Lee of Hong Kong University of Science and Technology. But the social backgrounds of those admitted have been changing. Until 1993, more than 40% of students were the children of farmers or factory workers. Now universities are crammed with people from wealthy, urban backgrounds. That is partly because a far bigger share of young people are middle-class. But it is also because rural Chinese face bigger hurdles getting into them than they used to. + +The problem lies with inequality of access to senior high schools, which take students for the final three years of their secondary education. Students from rural backgrounds who go to such schools perform as well in the university entrance exams as those from urban areas. But most never get there. Less than 10% of young people in the countryside go to senior high schools compared with 70% of their urban counterparts. The result is that a third of urban youngsters complete tertiary education, compared with only 8% of young rural adults. + +One reason is that junior high schools in the countryside are far weaker academically than urban ones. Local governments invest less in them per student than they do in cities. Urban parents tend to be better educated and thus better able to help children with their studies. Rural pupils often suffer from a “poverty of expectations”, says Jean Wei-Jun Yeung of the National University of Singapore: they are not encouraged to think they can succeed, so they do not try to. + +Expense is a huge deterrent for many. Governments cover the costs of schooling for the nine years of compulsory education up to the age of around 15. But at senior high schools, families must pay tuition and other expenses; these outlays are among the highest in the world (measured by purchasing-power parity). Many students drop out of junior high school—which is free—because rising wages in low-skilled industrial work make the prospect of staying at school even less attractive. Millions enter the workforce every year who are barely literate or numerate. Poor nutrition is also a handicap. Stanford University’s Rural Education Action Programme has found that a high incidence of anaemia and intestinal worms in rural areas affects educational performance. + +Since the 1990s more than 200m people have moved from the countryside to work in cities. Many have left their children behind because of the difficulty of getting them into urban schools: the country’s system of hukou, or household registration, makes it hard for migrant children to enjoy subsidised education in places other than their parents’ birthplace. + +But migrant children who do attend schools in cities usually get a worse education than their city-born counterparts. State schools that accept migrant pupils often operate what Pei-chia Lan of National Taiwan University refers to as “apartheid school models”. In these, migrant children are taught separately from urban ones in the same school, and are even kept apart from them in the playground. Since they are forced to take senior high-school exams in the hometown of their hukou, many have little choice but to return to the countryside to attend junior high school. + +Unnatural selection + +Children from poor backgrounds who do make it as far as the gaokao face another difficulty: competition with better-prepared candidates from 700 or so feeder (usually known as “keypoint”) schools. These receive more funding per student than average schools, have better teachers and plusher facilities. They are supposed to train the brightest students, but many get in with the help of money and connections. Hoping to make the system fairer, some feeder schools now allocate places on the basis of pupils’ proximity. Inevitably, this has sent local house prices skyrocketing, reinforcing the schools’ privileged intake by a different means. Hua Ye of Sun Yat-sen University in the southern city of Guangzhou found that those who are fortunate enough to attend a keypoint school are 3.5 times more likely to enter tertiary education than those who go to an ordinary senior high school. + +Some of the feeder schools channel their pupils into the best universities via an alternative route to the gaokao. The Ministry of Education introduced this in 2003 to reward people with “special talents” that are tricky to assess through standardised tests, such as innovative thinking, creativity, or skills in sport or art. This was supposed to make the types of students attending university more varied. Instead it has increased inequality, by giving advantages to those who have benefited from the superior facilities of keypoint schools. + +Elite universities often make agreements with such schools to take a large share of their best graduates. Some of the 90 institutions qualified to do so recruited over 30% of their intake this way in 2010 (the most recent year for which figures are available); Fudan University in Shanghai took almost 60%. Many of those admitted are genuinely bright, but the families of some bribe universities with sums equivalent to many years’ wages for the average urban worker. Last year Cai Rongsheng of Renmin University in Beijing admitted to selling university places for a total of 23.3m yuan ($3.27m) between 2005-13 (ironically, the university was the first to offer an MA in anti-corruption studies). In 2015 the government made recruitment from keypoint schools more difficult. Quotas for university recruitment using non-gaokao qualifications were capped at 5%. Places may be offered only after students have taken the entry exams. + +The government is trying to reduce other unfairnesses, too. But it has been tough going: those who benefit from unequal opportunities are unsurprisingly reluctant to cede their privileges. This was evident from the outcry that followed an announcement last month that 12 provinces and cities would have to reduce quotas for local students at their universities. These allow universities to accept local students even though they may have lower gaokao scores than those from elsewhere. The news triggered protests in three cities by parents who worried about losing a precious advantage for their children. + +In China meritocratic exams have been revered since imperial times, when any man could sit them to enter the civil service. For centuries they enabled the poor but talented to rise to high office. The gaokao is similarly intended to be a great leveller. But society has become increasingly divided between those with degrees and those who never even went to senior high. That will mean growing numbers for whom social advancement will remain a distant dream. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21699923-chinas-education-system-deeply-unfair-class-ceiling/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Remembering Tiananmen + +Squaring off + +A museum of China’s democracy movement in 1989 is in trouble + +Jun 4th 2016 | HONG KONG | From the print edition + +Time to move along + +OUTSIDE China, the bloodshed in Beijing on the night of June 3rd 1989 and the morning after was a defining moment in the country’s modern history. The word “Tiananmen” instantly evokes those horrific hours, when hundreds of pro-democracy protesters were gunned down or crushed by tanks in the streets around the vast central square. Inside China, however, most people have only a hazy notion of what happened. That is because the Communist Party allows barely any mention of the massacre. On the anniversary four years ago censors even blocked internet searches for the term “Shanghai stock exchange”, because the index that day fell 64.89 points, the digits oddly coincidental with those of the date most associated with the killings. + +The only large-scale commemorations in China are in Hong Kong, which was not under Chinese rule when the bloodshed occurred, and still enjoys some autonomy. But even in the former British colony there are some who side with the party and prefer to airbrush the event. An umbrella group of pro-democracy organisations, known as the Hong Kong Alliance in Support of Patriotic Democratic Movements in China, believes that a “June 4th Museum” it opened two years ago—the world’s first relating to the unrest of 1989—has fallen victim to such people’s concerns. + +The cramped, mazelike display, on the fifth floor of a nondescript office building in Hong Kong’s Kowloon district, includes a bullet-pierced helmet that was worn by a student who was taking photographs of the army’s assault. There is also a two-metre replica of the “Goddess of Democracy”, a plaster statue that was erected by student demonstrators on Tiananmen, opposite the portrait of Mao that hangs at the entrance to the Forbidden City (see picture). + +The building’s owners are clearly unhappy with the museum and the stream of visitors to it. In the middle of last year they deployed security guards at the entrance to the building, who began keeping records of visitors’ identity cards. This scared some people off. Mainlanders once made up half of the trickle of visitors. Their proportion fell to a quarter. + +Now the landlord is taking legal action against the alliance, accusing it of violating the terms of the lease by using the space for an exhibition. The alliance’s chairman, Albert Ho, says he believes that the Chinese government and other “pro-China enterprises” with “infinite resources” are behind these moves. Rather than fight a costly and protracted battle, the alliance is looking for new premises to house the exhibits. It plans to sell the existing space after an annual vigil on June 4th marking the crushing of the unrest in 1989. + +About 130,000 people took part in that event last year, but organisers say there may be fewer this time. Interest among young Hong Kongers is waning. In the past two years several student unions have withdrawn their support, saying their priority is to fight for democracy in Hong Kong, not the rest of China. Students who took part in the city’s “Occupy Central” protests in 2014 are preparing to contest elections to the legislature in September. One group, Demosisto, wants a referendum on whether Hong Kong should be independent. Hong Kong’s refusal to forget Tiananmen irks the Communist Party. These days, however, it is the territory’s small but increasingly vocal separatist movement that alarms it far more. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21699926-museum-chinas-democracy-movement-1989-trouble-squaring/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Railways in Africa: Puffed out + +Crimes against humanity: One dictator down + +Nigeria’s life coaches: Yes you can! + +Palestine: A museum without exhibits + +Syria’s war: Never-ending horror + +Western Sahara: A forgotten leader of a lost cause + +Innovation in the Arab world: From zero to not much more + +Qatar: The other Wahhabi state + + + + + +Articles Sections Next + +Railways in Africa + +Puffed out + +Africa’s new railways risk going the way of the old ones + +Jun 4th 2016 | LUBUMBASHI | From the print edition + + + +THE railway station at Lubumbashi, the Democratic Republic of Congo’s second city and the centre of its mining trade, has seen better days. Outside the 1920s Belgian-built whitewashed station, hawkers sell bus tickets south to Zambia and South Africa. Travellers would do much better buying one than going inside—trains in Congo are not for the faint-hearted. + +In the ticket hall, standing by a timetable on a blackboard, Baudouin Kalubi, the station master, explains that the next train will depart the following morning to Kindu, about 1,600km (1,000 miles) north. From there passengers can get on buses towards the Congo river. The train is, Mr Kalubi proudly explains, an express, with a new Chinese locomotive. That means it should go at an average speed of 15kph. “It is not the TGV,” he admits, referring to France’s high-speed trains. Yet in Congo there are so few roads that if you can’t afford to fly, the train is all that is left. + +Over the past half-century, Africa’s mostly colonial railways have mostly atrophied. According to the International Union of Railways, in 2014 sub-Saharan African trains carried about 158 billion tonne-kilometres of freight, or roughly half of what Australia’s railways carried. Of that, 84% was in South Africa, which has a modern network. Elsewhere, railways that built nations carry a fraction of what they did even in the 1980s. + +To remedy this, many African countries are investing vast sums of money—and hope—in new lines. In Kenya a Chinese firm is building one roughly alongside the route of the old track. Another project connects Djibouti’s port to Addis Ababa in Ethiopia. Still more are proposed. Rwanda wants one going through Tanzania; Uganda wants one going to Sudan; others are planned in Nigeria, Guinea and Ghana. Yet there is reason to worry that the new lines will end up much like the old. + +The Kenyan project is perhaps the most ambitious. Unlike the old line, which is on a 1,067mm gauge, the new railway is built to a modern “standard gauge” (1,435mm), which ought to increase capacity. Travellers on the ancient British-era passenger trains, which run three times a week from Nairobi to Mombasa, now have their view of the elephants of Tsavo National Park impeded by an enormous embankment for the new line. The idea is that it will carry as much as half of the cargo unloaded at the port of Mombasa, or about ten times as much as the current railway shifts. + + + +Drivers on the main road to the capital ought to cheer if the line results in fewer smoke-spewing trucks coming out of the port, but the business case for it is shaky. The new track is costing Kenya about $4 billion, mostly funded by a loan from the Chinese ExIm bank, but how it will be repaid is unclear. + +Although only a year remains before completion, not only are tariffs and rates undecided, but it is not even clear who will run the railway. Kenyan officials have apparently taken to skipping trade conferences of late to avoid answering questions. + +Could this be because the new railway is a dud investment? Its fastest trains will do a fairly mediocre 80kph. Much as with the old railway, parts of the new line will be single-track, forcing trains to stop, often for hours, to let others pass. Most absurdly, it is built to a lower standard of load-bearing than most other new freight railways. Some fret it may not be possible to load four full containers onto each wagon, as is done on other new lines. “They’re getting a third-rate railway for the cost of a very expensive one,” says a consultant. + +Repaying the loans taken out to build the line will require hefty fees or huge volumes of traffic. But truckers—who now handle more than 95% of the freight moved from Mombasa port—will compete fiercely on price, and shipping companies may look for other ports if levies rise. + +Rehabilitating the older line might have cost just 5% as much as building a new one on a new right of way, reckons Pierre Pozzo di Borgo of the International Finance Corporation, part of the World Bank. But efforts to mend rather than buy have generally not gone well either. Since the 1990s many African railways have been handed over to private concessions to boost investment and improve management. But the reality has been disappointing. Competition from truckers (who don’t have to pay their share to maintain roads, even though they do the most damage to them) has shifted cargo from rail to tarmac, shredding the business plans of concessionaires. Many are struggling to cover their running costs, never mind invest. + +When the railway that runs from Dakar in Senegal to Mali was first put into private hands, the average age of track was 37 years on the Senegalese side and 51 years on the Malian side. When Tanzania’s network was concessioned in 2001, over half of the network still had the original colonial rails—more than 90 years old. And new lines, too, become old. In the 1970s, in a spirit of socialist co-operation, China built a brand-new line connecting Dar es Salaam, Tanzania’s commercial capital, to Zambia and its copper fields. It has since fallen into disrepair as bad as that of Tanzania’s colonial-era lines. If the latest generation of railways cannot make money either, the temptation then will be to skimp on maintenance. + +If only governments were as enthusiastic about maintaining infrastructure as they are about building it. On a continent where almost everything is reused, from mobile-phone parts to plastic bags, governments seem to prefer to buy shiny new things, however expensive. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21699919-africas-new-railways-risk-going-way-old-ones-puffed-out/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Crimes against humanity + +One dictator down + +Chad’s former president has been convicted. Who’s next? + +Jun 4th 2016 | LAGOS | From the print edition + +Nicer than what you did to the opposition + +HISSENE HABRE sat shrouded in sunglasses, a turban and a big white boubou on May 30th, as a court in Senegal found him guilty of crimes against humanity, rape and torture. Victims cheered after judges sentenced Chad’s ex-dictator (pictured) to life imprisonment. He raised his fists and shouted: “Down with France-Afrique!”—hinting absurdly that his conviction was a French colonial plot. + +Perhaps 40,000 people died in Chad during Mr Habré’s reign of terror between 1982 and 1990. Armed by America (and supported with hundreds of millions of dollars in aid because of his opposition to Muammar Qadaffi’s regime in Libya), his political police crushed any tribe they deemed a threat to his rule. Simply belonging to one was enough to have you locked away in one of his prisons, the most sinister of which was a swimming pool covered in concrete. Torture was routine: a favourite technique was to tie all four limbs behind the back to induce paralysis; another was to force a victim’s mouth around the exhaust pipe of a running vehicle. + +Prosecutors had little difficulty linking such crimes back to Mr Habré. One woman testified that he had raped her himself. One underling recalled how prisoners’ paperwork was sent to the president and returned with annotations. “E” stood for “exécuter”, he said. The dictator showed no “compassion” or “regret”, one of three judges concluded. Now 73, he will almost certainly die in a Senegalese jail. + +This is a landmark for African justice, and a coup for the victims who have pursued it with help from Human Rights Watch, a watchdog. Mr Habré grabbed $11m from public coffers in the last days of his regime and has lived in cosy exile in Senegal for most of the 26 years since. + +The court that finally tried him, known as the Extraordinary African Chambers (EAC), is the first in Africa to sentence an African leader following due process. And it is the first anywhere in which a national court has used the principle of universal jurisdiction (meaning it can hear a case regardless of where the crimes took place) to convict an ex-head of state for human-rights abuses. + +Lawyers hope it will not be the last. Usually war crimes are investigated by international tribunals such as the International Criminal Court (ICC), rather than national courts. In 2012, a special tribunal in The Hague sentenced Charles Taylor, a former president of Liberia, to 50 years in jail for supporting hand-chopping rebels in neighbouring Sierra Leone. But the ICC is unpopular with African governments, which (wrongly) accuse it of racism. It also costs a fortune (the annual budget is more than $100m) and has a dismal record for convictions (two so far). If more African courts could try human-rights abusers, either in their home countries or in those where they have taken refuge, then perhaps fewer tyrants would escape justice. + +There is reason to hope this may be happening. Laurent Gbagbo, the ex-president of Côte d’Ivoire, is currently on trial in The Hague for abuses committed after he refused to relinquish power in 2010. His wife Simone faces judges at home, where she is accused of organising abuses against the opposition. Hers is the first human-rights trial to take place in the country. + +Yet not all courts are created equal. Mrs Gbagbo’s case is already riddled with allegations of irregularities and incomplete investigations. Côte d’Ivoire has ignored the ICC’s request that she be extradited to Europe. In other respects, the continent’s appetite for accountability is rather light. The African Union, for instance, wants its own court for human-rights abuses but thinks it ought to offer immunity to heads of state. Mr Habré would no doubt agree. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21699871-chads-former-president-has-been-convicted-whos-next-one-dictator-down/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nigeria’s life coaches + +Yes you can! + +Help for hopeful Nigerians + +Jun 4th 2016 | LAGOS | From the print edition + + + +FROM the young hawker offering to sell motorists a toilet seat as he snakes through the never-ending jam that is normal traffic in Lagos, to the legions of scammers who make their living writing thousands of e-mails in the hopes of conning a few people out of some cash, Nigerians cannot be said to lack optimism. Yet in a country where poverty is rife, even the world’s most diligent transformers of lemons into lemonade need some help to see a nearly empty glass as half-full. + +The pastors of Pentecostal mega-churches promise their congregations God-sent fortunes in return for a 10% tithe. If that sounds a bit dear, then a cut-price option is to subscribe to a service that sends inspirational text messages to your phone. This includes pearls such as: “Changing a face can change nothing, but facing a change can change everything.” + +Bookworms can read their way to success. Jumia, an online retailer, says that motivational and self-help books are its bestsellers. In the tiny airports of the north, vendors offer such handy literature as “Fat-Proofing your Children”; in Lagos street vendors hawk the same. “Everyone wants to become the big man,” says a taxi-driver, as he crams a “Guide to the Corporate Machiavelli” and “The Power of Self-Discipline” into the seat pockets of his old SUV. “I want words that inspire me.” + +But the kings of this trade are the motivational speakers. “You come to me if you want to get stuff done,” says the suavely-suited Steve Harris from a coffee spot in one of Lagos’s smarter corners. “I’m the guy who’s going to make it happen.” + +Over the past few years a handful of life coaches like him have won semi-celebrity status, often trading on their own rise through the social ranks. Mr Harris says he briefly tried his hand at 419, a kind of fraud, after dropping out of university. “It’s not what you don’t have that limits you,” he preaches to captivated audiences in a crisp American accent. “It’s what you have but don’t know how to use.” Ogbo Awoke Ogbo, another speaker, spent two unemployed years squatting in a Lagos slum; eventually, he earned big bucks in oil. He tells his clients that shoddy schools should not stop them. “Self-development is a choice,” he says from a steamy office. + +As well as inspirational quotes, such gurus offer practical advice on money management or health. Mr Harris turns away private clients if he thinks their problems cannot be solved in 90 days. Romantic assistance is popular too. Around Valentine’s Day, life coaches lecture women depressed by their lack of luck in love. Sam Adeyemi, a pastor, attracts hundreds of thousands of online hits when he preaches about how to find a spouse (“To find the right mate, you need to become the right mate,” is one of his gems). Popular coaches can command thousands of dollars for a speech, but bigger rewards come when they write books, set up online courses or start consultancies. Businesses pay handsomely for lessons in teamwork or customer care. “Nigerians are searching for answers, but they haven’t been given them,” Mr Ogbo says. “Through us they see a way out.” And what of those Nigerians so inspired by their idols that they, too, want to become motivational speakers? Well, there’s a book for that too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21699934-help-hopeful-nigerians-yes-you-can/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Palestine + +A museum without exhibits + +For a people without a state + +Jun 4th 2016 | BIRZEIT | From the print edition + + + +THE Palestinians’ new national museum is a striking monument to the state they don’t yet have. Designed by a firm in Dublin, the museum itself is angular and modern, with glass curtain walls topped by smooth white limestone. From afar it looks almost like a low-slung bunker perched on a hill north of Ramallah; inside, though, it is light and airy. A terraced garden stretches out below, filled with dozens of local species: almond and fig trees, mint and za’atar. + +Only one thing is missing—the exhibits. When the first visitors arrive in June, they will tour an empty building. The curators had spent years planning an inaugural exhibition, “Never Part”, about the personal effects that Palestinian refugees took when they fled their homes. But the museum’s director, Jack Persekian, resigned in December, citing “disagreements” with management, and the show was postponed. + +The saga of the $24m museum feels like a microcosm of Palestine’s broader problems. The idea of building it was first conceived in 1997, but the plans were soon suspended amid the violence of the second intifada, or Palestinian uprising. The organisers did not break ground until 2013, and the project, which they aimed to complete within a year, was plagued by a series of cost overruns and delays. + +The museum blames many of those on Israel, which controls the border between Jordan and the occupied West Bank. The Austrian-made emergency-exit signs were inexplicably delayed by Israeli customs authorities; so were light fixtures from Germany. The Jordanian landscaper, meanwhile, has not been able to get a visa, so he supervises the grounds via video chat. + +These are common complaints among developers in the area. Bashar al-Masri, a wealthy businessman who is building Palestine’s first planned city, keeps six months of inventory on hand to cope with the inevitable delays at the border. The need for vast warehouses, filled with everything from cement to marble, adds to the cost and the logistical challenges. + +The museum is run by a private organisation, which at least spares it from the West Bank’s incessant political feuding. Mahmoud Abbas, the unpopular president, is in the 11th year of a four-year term, and is increasingly paranoid about his grip on power. Last year he sacked Yasser Abed Rabbo, a vocal critic who was, in effect, the number-two man in the Palestine Liberation Organisation. In an added fit of pique, Mr Abbas also booted him from his job as director of the Mahmoud Darwish Foundation, which runs a museum dedicated to Palestine’s national poet. + +Over the past decade the Palestinians have built many of the trappings of a state: a police force, a central bank. At the inauguration ceremony on May 18th, Mr Abbas called the museum another important step. “The only thing left is declaring independence, which you will all declare soon,” he said. Yet the peace process is comatose, Israel’s government is unyielding and the Palestinians are hopelessly divided between Mr Abbas and the Islamist group Hamas, which controls Gaza. + +Few believe him—including, it seems, the museum’s directors. Without an independent state, the 1.8m people in Gaza cannot visit, nor can the 3m refugees who live in neighbouring countries. So the curators are planning a series of satellite shows. The first exhibition in Palestine’s national museum, about the history of local embroidery, will be in Beirut. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21699935-people-without-state-museum-without-exhibits/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Syria’s war + +Never-ending horror + +The conflict has become ever more intractable + +Jun 4th 2016 | BEIRUT | From the print edition + + + +SYRIA’S war is now into its sixth year. Even when it seems it could not get any worse, it does. On May 31st air strikes around the national hospital in Idlib, a rebel-held part of north-western Syria, destroyed one of the few remaining health-care facilities in opposition territory. At least 23 people died and scores were injured in strikes allegedly carried out by Russia, which joined the war last year to prop up Bashar al-Assad, the country’s blood-spattered dictator. + +The strikes occurred despite the declaration of a ceasefire that supposedly came into force on February 27th, and in the face of unconvincing Syrian and Russian claims that their bombs are aimed only at extremists. In fact Mr Assad and his allies appear to be intensifying a strategy of squeezing the moderate opposition and deliberately targeting civilians who live in rebel-held areas. Human-rights groups protest that the rules of war are being brazenly flouted. + +As worrying is an offensive by jihadists of Islamic State (IS), who have been closing in on Azaz and Marea, two towns north of Aleppo close to the Turkish border. These bastions of the opposition are now being threatened by two factions: IS on one side and the regime and its Kurdish allies on the other. The UN says thousands of Syrians are trapped, and that civilians have been denied safe passage away from the fighting by Syrian and allied Kurdish forces. + +This is bad news for America and its Western allies, who had hoped to train and support moderate Syrian Arab opposition groups to fight IS. The last such outfit funded by a $500m Pentagon programme is now in danger of being obliterated by IS in the east of the country. All the other so-called moderate Arab groups that had received American help have disappointed. Some have been taken over by jihadists. Others have seen their members defect to groups such as IS and the local affiliate of al-Qaeda—or be kidnapped by them. + +A newer American plan to support the Syrian Democratic Force, a group made up largely of Kurds, is faring somewhat better. This week the group occupied nine villages along the Euphrates close to Manbij (see map). But it is unlikely that it can take the Arab city of Raqqa, the capital of the self-proclaimed IS caliphate. + +Attempts to stop the fighting through diplomacy are also in disarray. On May 29th Muhammad Alloush, a member of the Syrian opposition’s High Negotiations Committee, gave up, saying the talks were a “failure”. Staffan de Mistura, the UN envoy, has said negotiations, which fell apart yet again in April, will not restart for at least another three weeks. + +For civilians trapped by the fighting there is little respite. On April 17th the International Syrian Support Group, a club of 20-odd countries including Britain and Russia, said they would carry out air drops of food and medical supplies to 1m Syrians in besieged towns, starting on June 1st, if Mr Assad continued to refuse access to aid convoys. Yet those hopes appear to have been dashed: Mr Mistura said recently that air drops could take place only with the co-operation of the government that is trying to block them. Unfortunately, the long charade of talks followed by broken ceasefires suits Mr Assad only too well. While Syria burns, he keeps his crown. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21699940-conflict-has-become-ever-more-intractable-never-ending-horror/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Western Sahara + +A forgotten leader of a lost cause + +Muhammad Abdelaziz has died, but his people’s grievances still fester + +Jun 4th 2016 | From the print edition + + + +FOR forty years Muhammad Abdelaziz led his exiled people in the wilderness, promising to take them across the 1,600-mile-long Morrocan wall that bisects their homeland, and onwards to an independent Western Sahara. He died on May 31st as far from his goal as when he began. Neither 15 years of guerrilla war nor 25 years of UN-mediated talks reversed their exodus. Mr Abdelaziz leaves behind 100,000 refugees encamped in the world’s harshest desert, and perhaps four times that number under a repressive Moroccan thumb. + +For most of his time as leader of the Sahrawis, the world ignored their plight. Western Sahara, a former Spanish colony, had never been a state. The UN first promised the Sahrawis a referendum on self-determination in the 1960s and has often repeated that promise, but never kept it. + +Morocco sent 300,000 settlers into Western Sahara after the Spanish withdrew in 1975, chasing out large numbers of Sahrawis and annexing the territory. A UN peacekeeping mission was established in 1991 to count voters, but otherwise outsiders have largely looked the other way. For Europe, Morocco’s assistance in suppressing terrorism and migration out of Africa has made it too important an ally to risk a showdown over a forgotten cause. Its buoyant economy and the inclusion of Islamists in its political system have earned it praise, too. And who wants to revive one of the Middle East’s few dormant conflicts? + +Mr Abdelaziz was an old-fashioned Marxist who, like Muammar Qaddafi of Libya, took power while only in his 20s. American admirers hailed him as a Sahrawi George Washington, but his ten successive election victories started to look about as credible as the fictional Sahrawi Arab Democratic Republic he professed to lead: even Zimbabwe’s Robert Mugabe has not lasted as long in office. + +Mr Abdelaziz’s armed force, the Polisario Front, has not fought in a generation. His people are in camps where for half the year the temperature exceeds 50 degrees; other elements batter them for the rest. Rains in October 2015 washed away 18,000 tents and mud huts. Now that he is dead, Morocco hopes that a steady trickle of Sahrawis back to Western Sahara from exile in Algeria may yet become a flood. + +In this they will probably be disappointed. Frustrated, resentful and now rudderless, a third generation of Sahrawi refugees are again rattling sabres. + +Some refugees resort to smuggling drugs and fuel to get by; and in the Sahara the line between smugglers and jihadists is often blurry. A man called Abu Walid al-Sahrawi has declared his allegiance to Islamic State (IS), and threatened to attack Morocco’s tourism industry, the last in north Africa that has so far escaped this fate. Morocco’s ongoing spat with Algeria, which continues to harbour Polisario, increases uncertainty. Both states face a common threat from IS, but they detest each other too much to join forces against it. + +For the first time in years, Western powers sound unnerved. In March Morocco’s King Muhammad expelled much of the UN’s Saharan mission after Ban Ki-moon, the UN secretary-general, described Western Sahara as occupied territory. The UN Security Council responded by giving him 90 days to let the UN mission return. Morocco is celebrating the death of Mr Abdelaziz, a man it called a mercenary, a traitor and a terrorist. But his cause will not die with him. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21699943-muhammad-abdelaziz-has-died-his-peoples-grievances-still-fester-forgotten/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Innovation in the Arab world + +From zero to not much more + +How to be creative in a stifling region + +Jun 4th 2016 | BEIRUT | From the print edition + + + +MANY people try to keep a poker face when playing cards, but not when looking at adverts. Hamzeh al-Fuqha, an Emirati, turned this simple fact into a money-spinner. SmartAd, founded in 2012, uses facial recognition technology to tell businesses how people respond to their marketing. The software, used by Burger King among others, can also tell the age and sex of the viewer. It is a rare example of real innovation coming from the Arab world. + +The region was once famed for its science and mathematics (including the invention of the zero). Yet it has fallen badly behind on measures of creativity, such as patents filed or academic papers published. Its rulers say they want to encourage more research and development (R&D), but few seem to try very hard. + +Arab countries produce 5.9% of the world’s GDP, but the region’s governments account for less than 1% of total global R&D spending, according to UNESCO. Bahrain spends just 0.04% of GDP; Egypt spends 0.7% (see chart). By contrast India spends about 0.8% and Britain 1.6%. + +Much of this is wasted. In Egypt government officials and scientists don’t talk much, so money is poorly allocated. Incentives are skewed, too. Promotions for professors depend on whom they know rather than what they discover. + +The bigger deficit, however, is that private companies barely spend on R&D, which accounts for much of the cash elsewhere, says Nazar Hassan of UNESCO. Chinese companies, for instance, spend almost four times more than their government, and American ones more than two and a half times. Israeli firms are global leaders, contributing at least three-quarters of the country’s total R&D outlay. By contrast, in much of the Arab world the private sector’s contribution is less than 5%. + +Rana Dajani, a Jordanian scientist, reckons the biggest problem is “the lack of an environment that encourages freethinking and exploration”. Schools emphasise rote learning. Rulers stifle political debate. + +Many areas of research are hampered not only by oppressive politics, but also by a perceived clash between Islam and science. Medicine is one area that can be controversial, particularly in fields of research that involve embryos. Yet such barriers are not insurmountable. + +After years of consultation with scientists and theologians Jordan passed a law in 2014 allowing stem-cell research. Among its provisions was that embryos could only be created from the sperm and eggs of married couples. To allay concerns that it might lead to abortions (which are banned in the kingdom) only state institutions may do such research. + +Others are also making progress. Morocco’s technology parks and incubators have helped it become the Arab world’s leading exporter of high-tech products and software. It applies for the second-largest number of patents, after Egypt, despite its much smaller population. + +And private innovators are trying their hand at tech startups, albeit in low-risk niches such as online retailing or Arabic versions of apps developed elsewhere. Careem, for instance, is the Saudi version of Uber, an American car-hailing app. + +Ms Dajani notes that Arab scientists and innovators achieve far more abroad than at home. (For example, Steve Jobs, the founder of Apple, was half-Syrian.) To foster creativity, the Middle East needs to allow more critical thinking. Such freedom might have other benefits, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21699955-how-be-creative-stifling-region-zero-not-much-more/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Qatar + +The other Wahhabi state + +A kinder, gentler puritanism (for some) + +Jun 4th 2016 | DOHA | From the print edition + + + +MIGHT soccer fans yet cheer a Wahhabi state? Qatar, the World Cup’s hosts in 2022, adheres to the same puritanical creed as its overbearing neighbour, Saudi Arabia. But nightclubs on hotel rooftops loom above the national mosque of Ibn Abdel Wahhab, the 18th century zealot who gave Wahhabism its name. Bars advertise happy hours on its beaches and a state-owned distribution centre supplies not just liquor but pork. + +Like the Al Sauds, Qatar’s ruling clan, Al Thani, originates from the peninsula’s Nejd interior, whence the Wahhabis sprung. Qatar once offered a refuge for Wahhabi preachers whom even Saudi Arabia considered extreme, and Osama bin Laden is said to have stopped by. But with the dawn of a new millennium Qatar has entered a different league. Women drive and there are no religious police forcing businesses to shut during prayer times. + +The emirate has opened branches of American universities and a “Church City”—unthinkable in Saudi Arabia—where priests count their congregations of migrant workers in thousands. And unlike Saudi literalism, Qatar’s serene Museum of Islamic Art portrays Islam in all its manifold forms: its current exhibition, “Qajar Women”, breaks three conservative Sunni taboos, portraying the unveiled female figure, Iranian culture and enlightened Shias. + +Such is his embrace of global culture that some locals worry that Qatar’s emir, Tamim bin Hamad Al Thani, has forsaken his own in a country whose 300,000 citizens are less than 15% of the population (although most migrants are still treated like serfs). “We’re not an Islamic state,” complains a Qatari cleric in a state-funded Islamic centre, who says his ilk are oppressed. Qatar foolishly imagines that un-Islamic practices can be shut away in gated communities like embassies, he says. + +Other signs of a backlash are evident. The education ministry has reinstated Arabic as the language of science tuition in schools. Plans to offer co-ed lectures at Qatar’s segregated public university (to cut costs, mind you) have been shelved, after conservatives threatened a boycott. Qataris are still banned from the country’s bars and from its liquor stores, but many sneak in after shedding their national dress. And though Church City lies far beyond Doha’s horizon, its churches cannot erect crucifixes on their domes. “Religious complex”, reads the innocuous sign at its gates. + +This cosmopolitan version of Wahhabism is largely a product of the current emir and his family. Although frowned on by puritans, it has caused few open ructions. A more tolerant Wahhabism might yet take root in the desert. Even conservative women now drive. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21699960-kinder-gentler-puritanism-some-other-wahhabi-state/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +France on strike: Aux barricades + +Turkey’s Kurds: War of attrition + +Germany and the Armenian genocide: Name and shame + +Corruption in Romania: Death of an antiseptic salesman + +Russia’s empty elections: United Russia, divided Putin + +Charlemagne: For the love of pizza + + + + + +Articles Sections Next + +France on strike + +Aux barricades + +France tries to end its strikes before Europe’s football championship starts + +Jun 4th 2016 | GRANDPUITS | From the print edition + + + +AN ERUPTION of steel piping in the middle of wheatfields, the Grandpuits refinery is the chief petrol supplier to the Paris region. But no crude has flowed in, and no petrol tanker driven out, since unions began a strike there on May 17th. On a weekday, striking workers in lemon-yellow jackets from the Confédération Générale du Travail (CGT), a hardline French union, huddle on the picket line in a show of masculine solidarity, defiantly cooking sausages despite the beating rain. A little fridge, under a canvas awning, is stocked with beer. A brazier, in an old oil drum, is flaming. “We’ve got fresh baguettes, and all the meat sauces,” declares one striker. “We’ll hold out to the very end.” + +For the past two weeks a battle over the survival of a reformist French government, and with it the future of the Socialist Party, has been playing out at refineries, oil depots and on the transport network. Last week strikes and oil blockades brought petrol shortages. Some 2,300 petrol stations—a fifth of the total—either ran dry, or rationed sales at the pump. This week, after riot police cleared most of the blocked refineries, petrol distribution eased. But work stoppages spread to the railways and ports, with Air France pilots also voting to join the strikes. + +France is no stranger to the theatre of industrial action and political stand-off. But this conflict, unusually, pits the left against the left. On one side stands President François Hollande’s Socialist government, now friendlier to business under Manuel Valls, the reformist prime minister, and with it the pragmatic unionists of the Confédération Française Démocratique du Travail (CFDT). On the other is the CGT, the country’s biggest union, historically tied to the Communist Party, along with parliamentary rebels from the governing Socialist Party. + + + +The central grievance is Mr Valls’s attempt to inject flexibility into France’s 3,280-page labour code. This began as a bold effort to loosen the labour market and encourage job creation in a country with 10% unemployment. But, after protests, the final bill was more modest. It will ease redundancy rules and partly decentralise collective bargaining, making it simpler for firms to negotiate working time directly with their staff and undercut sector-wide agreements. Because Socialist rebels rejected even the softer version, Mr Valls used an express procedure to push the bill through parliament without a vote, surviving a motion of no-confidence that this triggered. + +For the CGT this was a mobilising moment, a sort of last gasp for a movement nostalgic for glorious victories of the past. The union may look fierce, but it has drawn ever-fewer protesters on to the streets. Less than 3% of workers are paid-up members. Its new leader, Philippe Martinez, a former Renault technician who sports a Mexican moustache and is nicknamed Zapata, spotted a chance to make his mark. He was photographed histrionically throwing a tyre on a barricade outside a blocked oil depot. The showdown is turning into a battle of wills between two men—Mr Valls and Mr Martinez, both of Spanish origin—and two competing visions of the left. Mr Valls’s behaviour was anti-democratic, said Mr Martinez, for whom the labour law marks a “return to the 19th century”. + +Past centre-right governments have ceded to paralysing French strikes and protests, notably in 1995 and 2006. But this is the first time a Socialist government has clashed over economic reform with those who helped to bring it to power. Which makes it both more symbolic, as a test of what sort of left France wants, and more complex to manage. Mr Hollande, the most unpopular modern president, has already shelved a bill to strip citizenship from terrorists because of opposition on the left. He can ill afford another climb-down. His woes have dragged down the once-popular Mr Valls, who nonetheless seems determined to prove that France can reform and is mindful of his place in history. “I don’t want to join the list of all those who have backed down and cost France wasted time,” he says, insisting that the CGT cannot “hold France hostage”. + + + +Pressure to end the conflict, however, is building. The labour law moves to the Senate on June 14th, when a national strike is planned. Four days earlier the European championship, an international football tournament, kicks off in France. The country is still under a state of emergency, and there were already worries about security. The government is betting on popular impatience to squeeze the CGT. Although there is a lingering romantic sympathy for resistance, public support for strikes tends to ebb with time. Fully 63% say they have a poor opinion of the CGT. More worrying, the government is meddling in unrelated labour disputes, including on the railways, in order to contain discontent. + +There is an underlying lesson in all this. For years in opposition, the French Socialist Party shied away from critical self-examination. It never made a choice between traditional tax-and-spend socialism and a more moderate German or Scandinavian social democracy. For 11 of those years, Mr Hollande was the party leader. Yet he embraced ambiguity, and campaigned for election in 2012 vowing to squeeze the rich and fight high finance, before converting to more market-friendly economics halfway through his term. + +Little wonder Mr Hollande’s voters feel betrayed. The CGT may be unrepresentative, misguided and bloody-minded, but it has a point. On the Grandpuits picket line, the strikers fume when they hear the president’s name. “In the past, each time we had a Socialist government, it improved conditions for the workers,” says David Picoron, a CGT rep. “But this is a government for the bosses. We never voted for that.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21699946-france-tries-end-its-strikes-europes-football-championship-starts-aux-barricades/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Turkey’s Kurds + +War of attrition + +The HDP, once the hope of Turkey’s Kurds, has been cornered + +Jun 4th 2016 | ANKARA AND DIYARBAKIR | From the print edition + +Destroying the souk to save it + +ASKED how he is feeling these days, Selahattin Demirtas forgoes the pleasantries. “I’m trying to be doing well, given the circumstances,” he says, taking a seat at his office in the Turkish capital, Ankara. Amid unrelenting bloodshed in the Kurdish southeast, Mr Demirtas’s mood has darkened. Only last June, his People’s Democratic Party (HDP) pulled off a major election upset, denying the ruling Justice and Development (AK) party the parliamentary majority it had held for 12 years. Today, the man once hailed as the Kurdish Obama and the saviour of Turkey’s hapless opposition faces spurious terror charges from the government and dwindling support among both Kurds and Turks. If Turkey’s president, Recep Tayyip Erdogan, were to call a snap vote, say pollsters, the HDP would probably miss the 10% threshold needed to make it into parliament. + +This is largely Mr Erdogan’s doing. He has marched Turks back to the ballot box to reclaim his majority, unleashed mortars and tanks against militants in Kurdish cities, locked the HDP out of the mainstream media and stripped its MPs, including Mr Demirtas, of their parliamentary immunity from prosecution. At least 50 of the group’s 59 MPs face charges of supporting the outlawed Kurdistan Workers’ Party, or PKK. (They have asked the constitutional court to restore their immunity.) Mr Erdogan has pledged to wipe out the PKK, which Turkey labels a terrorist group but which many Kurds consider a champion of their national cause. Having already left over a thousand dead since last year, the violence now threatens to spiral into a civil war, warns Mr Demirtas. + +Yet the HDP also has itself to blame. In urban areas across the southeast, it has ceded ground to militants linked to the PKK. It has also alienated many of its sympathisers in Turkey’s west. In December, amid a diplomatic crisis after Turkey shot down a Russian jet, Mr Demirtas came in for some flak for paying an official visit to Moscow. In February another HDP deputy attended a wake for a PKK suicide bomber who killed 29 people. + +In the southeastern city of Diyarbakir, the destruction wrought by months of clashes is easy to see from an aeroplane window. Swathes of what was once a residential neighbourhood are now empty fields. Officials claim that the area, having been rigged with explosives by the insurgents, had to be razed to the ground. Human-rights groups blame disproportionate force by Turkish troops. Many locals are as disappointed with their HDP politicians as they are livid with Mr Erdogan. “They entrusted Kurdish autonomy to young kids with guns,” complains a businessman. + +Uncharacteristically for a Turkish politician, Mr Demirtas admits to making mistakes. “People know who destroyed all these towns,” he says, referring to Mr Erdogan, “but it was our duty as a party to protect them.” Mr Demirtas says the HDP will continue to push for a negotiated solution to the Kurdish conflict, now in its fourth decade, but rules out a deal with Mr Erdogan. + +None of this bodes well for the southeast. The army has cleared the insurgents from most cities, but deadly blasts rock the region each day. Outside Diyarbakir, a PKK truck packed with explosives killed at least 16 villagers last week. Allegations of atrocities are galvanising young Kurds: in the town of Cizre over 100 people were killed in February while hiding from Turkish forces in basements. (The circumstances are unclear, but many were burnt to death.) Seeing their representatives evicted from parliament “would put people in a position where they can no longer tell the PKK to put down their arms,” says Mehmet Kaya, head of the Tigris Communal Research Centre, a Diyarbakir think-tank. Whatever the HDP’s mistakes over the past year, disenfranchising the millions of Kurds who voted it into office will only make matters worse. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21699949-hdp-once-hope-turkeys-kurds-has-been-cornered-war-attrition/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Germany and the Armenian genocide + +Name and shame + +Deciding what to call a century-old Turkish atrocity + +Jun 4th 2016 | BERLIN | From the print edition + +The past is present + +TURKEY considers the Ottoman Empire’s mass murder of well over a million Armenians and other Christians in 1915-17 a tragedy. But “genocide”? Armenia and many historians say it was. Turkey insists it was not—and berates any country, from France to the Vatican, that uses the word. Nonetheless, more than 20 countries have officially recognised the killings as genocide. On June 2nd it was Germany’s turn, when its Bundestag passed a resolution calling the killings “genocide” no fewer than four times. + +That vote could not have come at a worse time for Angela Merkel, the German chancellor. She is the main architect of a deal reached in March between Turkey and the European Union, under which Turkey promised to take back refugees who cross to the Greek islands; in return, the EU will pay Turkey €6 billion ($6.7 billion) in aid, allow Turks to enter without visas and revive talks to accept Turkey as a member state one day. Mrs Merkel, more than any other EU leader, needed this deal: she wants an orderly and “European” solution to the refugee crisis, rather than brute border closings by individual member states. + +But Recep Tayyip Erdogan, Turkey’s president, clearly interpreted Mrs Merkel’s efforts as weakness. Since the deal he has pressed ahead in his quest to become an autocrat, rejecting European criticisms with threats to scupper the refugee deal and let hundreds of thousands of refugees make their way to Greece again. This has exposed Mrs Merkel to criticism in Germany that she has sold out to a dictator. Even members of her own coalition accuse her of kow-towing. Voters share the misgivings. In a poll in April, 68% opposed Turkish membership of the EU, and 79% said that Turkey “cannot be trusted”. + +Some see the souring of the relationship as retribution for Mrs Merkel’s past diplomatic mistakes. She “showed zero point zero interest in Turkey until she rediscovered it in the refugee crisis”, says Cem Özdemir, a son of Turkish immigrants and co-leader of the Green Party who is also the driving force behind the genocide resolution. In 2007 Mrs Merkel, along with other European leaders, in effect slammed the door shut for Turkey’s ambitions to join the EU. At that time Mr Erdogan, then prime minister, was still claiming to modernise Turkey and bring it into line with EU norms on civil liberties. Stung by Mrs Merkel’s rejection, Mr Erdogan turned against the West and decided to become a neo-Ottoman sultan instead, thinks Joschka Fischer, a former foreign minister. + +That psychology explains much of the recent German-Turkish antics. Mr Erdogan went ballistic in May after a German comedian ridiculed him (see article). An orchestra in Dresden has been performing a series of concerts called “Aghet”, Armenian for “catastrophe” (referring to the genocide). The European Commission gave the project €200,000; after Turkish protests, the commission removed advertisements for “Aghet” from its website. Many Germans are enraged that Turkey tries to muzzle free speech abroad. + +Turkey will respond to the Bundestag’s resolution with its usual sound and fury. In late May, three groups in parliament, including Mr Erdogan’s ruling Justice and Development (AK) party, condemned the draft as a “distortion of historical facts”. Turkey withdrew its ambassadors to Austria, Luxembourg, and the Vatican last year after similar pronouncements about the 1915 killings. Mr Erdogan has warned of a deterioration in ties with Berlin, albeit without mentioning the refugee deal. + +Mr Özdemir originally meant to put the genocide resolution to a vote on April 24, 2015, the centenary of its start. Anxious to avoid provoking Turkey, Mrs Merkel kept delaying, he says, even though the new timing looks even worse. This spring Mr Özdemir pushed ahead again. The resolution is necessary to acknowledge Germany’s complicity in the genocide as the Ottoman Empire’s main ally at the time, he says. As for Turkey, he thinks, if it had dealt honestly with its past and its minorities, it might already be an EU member. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21699952-deciding-what-call-century-old-turkish-atrocity-name-and-shame/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Corruption in Romania + +Death of an antiseptic salesman + +Romania’s latest scandal features watered-down disinfectant in hospitals + +Jun 4th 2016 | BUCHAREST | From the print edition + +Something smells bad + +UNTIL a month ago Dan Condrea was, to all appearances, a successful Romanian businessman. His company, Hexi Pharma, made a healthy income supplying disinfectant to Romanian hospitals. That was before a team of journalists revealed that Hexi Pharma had been diluting its products, possibly causing patients to die from antibiotic-resistant infections. On May 22nd Mr Condrea drove his car into a tree. Witnesses said he was going over 60mph, and police said there were no signs of an attempt to brake. It took over a week to confirm that the badly damaged body was his. + +The public reaction since the scandal broke in late April has been furious. The health minister was forced to resign on May 9th after he tried to play down the seriousness of the situation. The health ministry has withdrawn all Hexi Pharma products from hospitals. + +Journalists began looking into hospital supplies after another scandal, a fire in Bucharest last October at a nightclub that violated safety regulations. The fire left 27 dead at the scene; a further 37 died later, and doctors said many had succumbed to infections picked up in hospital. Reporters at Gazeta Sporturilor, a sports newspaper, found that disinfectant supplied by Hexi Pharma had been diluted, in some cases to just one-tenth of the concentration on the label. + +“People here didn’t realise what a killing machine many Romanian hospitals are,” says Alina Mungiu-Pippidi, a Romanian corruption expert. Over the past nine years Hexi Pharma has had contracts to supply more than 350 hospitals across Romania, including two of Bucharest’s biggest emergency hospitals. The disinfectant it sold was often heavily marked up in price. + +Hexi Pharma was indicted last month, and Mr Condrea had been due to be questioned by prosecutors the day after the crash. Many have asked how a small company managed to win so many public contracts. A report by the same group of journalists accuses hospital directors of taking a 30% cut of contracts with Hexi Pharma, and suggested that this practice is widespread in the Romanian health-care sector. + +Romania ranks near the bottom in Europe on Transparency International’s Corruption Perceptions Index, yet recently the country has been trying to clean up its act. Last year Romania’s National Anti-corruption Directorate (DNA) prosecuted more than 1,250 people, including a former prime minister, five ministers and 16 members of parliament. The DNA’s director, Laura Codruta Kovesi, says the health-care sector is a priority target. For many in Romania, however, the Hexi Pharma scandal is proof that change is not happening fast enough. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21699880-romanias-latest-scandal-features-watered-down-disinfectant-hospitals-death-antiseptic/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Russia’s empty elections + +United Russia, divided Putin + +The president has crushed the opposition, but technocrats and security hawks are fighting for his favour + +Jun 4th 2016 | MOSCOW | From the print edition + +Puny liberals, you cannot defeat me + +WITH three months left until parliamentary elections, United Russia, Russia’s ruling party, has come up with a new slogan: Vazhno Vybrat’ Pravil’no. The message (“It is vital to choose correctly”) is an ominous reminder to voters that some choices may be “wrong”, and its acronym—VVP—hints at the correct one: Vladimir Vladimirovich Putin. The party is not using his image in its campaign, for fear of dragging down his popularity. + +In the last parliamentary elections in 2011, when a majority voted against United Russia, the Kremlin tampered with the results. This sparked mass protests in large cities. More than 100,000 people took to the streets of central Moscow clamouring for “Russia without Putin”. Alexei Navalny, a popular blogger, was transformed into a viable opposition leader. Mr Putin’s hold on power never looked shakier. + +Since then, the Kremlin has been doing everything in its power to prevent a repeat. Anyone with an independent position has been “sent a signal that it will end badly”, says Maria Lipman, editor of Counterpoint, a journal. Opposition leaders have been systematically trashed by the state media. Russian nationalist movements that once opposed the government have been co-opted or crushed. NGOs, including election-monitoring groups, have been declared “foreign agents” and forced to close. The remains of the independent media have come under attack. Many of the activists of the protests in 2011 and 2012 have been pushed out of the country. Some will watch the vote from prison. Boris Nemtsov, the most respected and recognised Russian liberal, has been murdered. + +The screws are being tightened everywhere. The Duma passed a law last year allowing the police to open fire on crowds. Pro-government vigilantes have stepped up attacks on opposition leaders. (Mr Navalny was recently beaten up by thugs dressed as Cossacks.) + +Ideologically, Mr Putin’s expansionist nationalism, expressed in the annexation of Crimea and the war in Ukraine, has trumped the demands for modernisation voiced by the protesters five years ago. Many of those who once cheered for reform have embraced the new imperialism. “There is no doubt that our support base has been reduced,” says Mr Navalny. + +Pick a candidate, any candidate + +The Kremlin has also learned the risks of blatant rigging. To give these elections a veneer of respectability, Mr Putin replaced Vladimir Churov, the too-obviously-loyal head of the election commission (nicknamed “the magician”, for his ability to make troublesome results disappear) with Ella Pamfilova, a more respected human-rights ombudsman. Ballot-stuffing will be unnecessary: the only serious opposition, Mr Navalny’s Progress Party, has been barred from registering. + +Big protests are unlikely. Polls show Russians are unhappy with the faltering economy but are less willing to wave placards than they were five years ago, when growth was solid. “Dissatisfaction is breeding apathy,” says Lev Gudkov, head of the Levada Centre, an independent pollster. + +But although elections have been rendered meaningless, a real fight for Russia’s future is unfolding in the corridors of the Kremlin. Technocrats are trying to win Mr Putin over by persuading him that their economic reforms will help him hold on to power. Mikhail Dmitriev, a former deputy economics minister, notes a strong demand within the Kremlin for deregulation and reduction of bureaucracy. + +The technocratic camp took heart when Mr Putin appointed Alexei Kudrin, a former finance minister, to head the Centre for Strategic Research, a think-tank charged with devising reforms. Mr Kudrin’s influence, says Mr Dmitriev, is greater than any minister’s. The technocrats also include German Gref, a former minister who now heads Sberbank, Russia’s largest state-owned bank. + + + +Oil price and Russian politics: a history + +The economic downturn may have created an impetus for change from within. Russia’s notoriously corrupt customs department is being improved. The country has moved up 73 places in the World Bank’s ease-of-doing-business index over the past few years. The strategy of the technocrats, says Kirill Rogov, a political analyst, is to convince Mr Putin that he is a reformer at heart—and that the reforms made so far are working. + +Most liberals, however, see the technocrats’ optimism as wishful thinking. Russia’s lack of property rights, the arbitrary power of its security services and the geopolitical tension created by its imperial adventures outweigh any reforms. In April Mr Putin announced the creation of a new “National Guard” that will absorb the country’s riot-control units and answer to his former bodyguard. The new force is seen as an insurance policy against unrest. + +The replacement of open politics with Byzantine court manoeuvring is nothing new in Russia. Even during the presidency of Boris Yeltsin in the 1990s, the real struggle was not between Mr Yeltsin and the Communists who challenged him in the presidential elections. Rather it took place inside the Kremlin, between economic liberals and security types, including Mr Yeltsin’s bodyguard, who struggled to gain the president’s ear. The fight for Mr Putin’s favour is all the more important, since few liberals believe he will step down when his current term expires in 2018. The question is not whether Mr Putin will run, but which incarnation of Mr Putin will win. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21699944-president-has-crushed-opposition-technocrats-and-security-hawks-are-fighting-his/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +For the love of pizza + +Italy’s pride in “genuine” food reveals much about its economic woes + +Jun 4th 2016 | From the print edition + + + +CALL it pizza, pitta or fougasse: when Europe’s holidaymakers head for the Mediterranean this summer, they will feast on some type of flatbread with condiments. Such dishes have age-old roots. In the “Aeneid”, Virgil’s heroes forage for a meal of forest fruit laid on pieces of hard bread on the grass. Famished, they eat the bread, too: “See, we devour the plates on which we fed.” + +Of all these edible platters, it is pizza that has become the world’s favourite fast food, plain dough onto which each country bakes its own flavours: mussels in the Netherlands, Teriyaki chicken and seaweed in Japan. Born in Naples, the modern pizza was the poor man’s meal. One 19th-century American visitor, Samuel Morse (inventor of the telegraph), thought it “like a piece of bread that had been taken reeking out of the sewer”. For Alexandre Dumas, it was “the gastronomic thermometer of the market”: if fish pizza was cheap, there had been a good catch; if oil pizza was dear, there had been a bad olive harvest. + +These days pizza is a gastronomic mirror, reflecting Italy’s anxiety about globalisation. Italians are rightly proud of their food, yet dismayed at its bastardisation by the rest of the world. They fear that the best in Italian civiltà is being looted by others. It is America, not Italy, that has turned everything from pizza to cappuccino into profitable global franchises; Domino’s and Starbucks are even trying to penetrate Italy. + +Now Naples is fighting to reclaim “real” pizza. Last month hundreds of red-capped pizzaioli gathered to bake the world’s longest pizza, 1,853.88 metres of it, snaking along the waterfront with the city’s fabled vistas of Mount Vesuvius and Capri. It was all in support of Italy’s bid to have the art of Neapolitan pizza recognised by UNESCO as a treasure in the world’s “intangible cultural heritage”, alongside Mongolian knuckle-bone shooting and Brazil’s capoeira dance. A ruling is expected next year. + +In 2010 the European Union registered Neapolitan pizza as a Traditional Speciality Guaranteed (TSG) product. It stipulates that certified “Pizza Napoletana TSG” must consist of a base of twice-leavened, hand-shaped dough (no rolling pin), no wider than 35cm. It must be 0.4cm thick at the centre and 1cm-2cm around the rim. It may be garnished in just three ways: with tomatoes and extra-virgin olive oil, or with certified mozzarella from either buffalo’s or cow’s milk. It must be baked in a wood-fired oven and eaten on the spot, not frozen or vacuum-packed. + +This is culinary dogmatism. European food-inspectors surely have better things to do than take a ruler to pizza. The pizzaioli say they want only acknowledgment of their tradition. One oft-heard fear is that, Heaven forfend, America might try to gain recognition for its own inferior pizza. Should Hamburg then copyright the hamburger, or Crimea steak tartare? Tellingly, Italy is the most assiduous state in claiming EU “geographical indications” (GI), be they the stringent Protected Designation of Origin (eg, Chianti Classico), the looser Protected Geographical Indication (eg, Cantucci Toscani) or the weakest appellation, TSG. Excluding TSGs, Italy has secured protection for 924 food products, wines and other drinks, more than France (754) or Spain (361). + +Chefs and farmers, pizza-makers included, have every right to brand their dish and set their own standards. The state must obviously ensure that food is safe. Governments have an interest, too, in guaranteeing the quality of some premium appellations—Champagne, say. But the profligate use of state-enforced GIs smacks of producers trying to gouge consumers. Italy betrays an innate protectionism: rather than compete on global markets, producers want to enshrine “heritage”, ask for Europe’s help and maximise the rents they can extract from “quality” products. They complicate trade deals as the EU seeks to stop others from using terms such as “feta”. Hosuk Lee-Makiyama, a fellow of OPEN, a new British think-tank, says the value of geographical indications in trade deals is unproven; they are mostly a sop to farm lobbies to compensate for cuts in subsidies. + +Above all, the name-craze limits scale, productivity and innovation. Take Roberto Brazzale, whose family has made Parmesan-style “grana” cheese for generations. He shifted part of his work to the Czech Republic where, he argues, the milk is superior and costs are lower. His “Gran Moravia”, made by Italian methods and aged in Italy, is indistinguishable from the official “Grana Padano”, yet may not be identified as such. The Po valley cannot produce enough milk to satisfy the potential global demand for Italian grana, he argues; and decreeing the use of animal rather than vegetable rennet means official cheesemakers struggle to sell to vegetarians and observant Muslims and Jews. + +Slow food, slow economy + +At its best Italy’s love of tradition makes for idyllic holidays, wonderful wines and delightful Slow Food. Italians like to think that their art, culture and way of life will lift them out of economic torpor. But the sacralisation of heritage is a millstone. Italy has seen almost no productivity growth in more than a decade, in part because its firms remain small: on average they count seven employees, about the size of a family-run pizzeria. Artisan products offer no salvation. Italy has no global food chains to speak of (or even big retailers, such as France’s Carrefour). It may be home to espresso, but the next-door Swiss invented Nespresso. + +If pizza embodies Italy’s woes on a plate, it also offers hope. Look closely at a Neapolitan pizza: the succulent tomatoes came from the New World; the best mozzarella is made from the milk of the buffalo, an Asian beast that may have arrived in Italy with the barbarian tribes who conquered Rome; the aromatic basil originates from India. Neapolitan migrants carried pizza across Italy and America. The genius of Italy lies in its inventiveness and adaptability—not in a hallowed land, nor in an imagined tradition canonised by the state. That way lies paralysis and cultural fossilisation. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21699922-italys-pride-genuine-food-reveals-much-about-its-economic-woes-love-pizza/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Brexit and the union: Tug of war + +Retail: Modesty sells + +Brexit brief: If it were done + +Policy-making: Lost in transit + +Public services: Pay up + +Agriculture: Casting asparagus + +Teaching assistants: Help needed + +Bagehot: Pity the Brexpats + + + + + +Articles Sections Next + +Brexit and the union + +Tug of war + +Brexit could lead to a second Scottish independence referendum. But the place to fret about most is Northern Ireland + +Jun 4th 2016 | BELFAST AND EDINBURGH | From the print edition + + + +IT IS ironic that Brexiteers who yearn for British independence from the European Union are often fervently against any nation’s independence from the United Kingdom. Yet Brexit would have big repercussions for Scotland and Northern Ireland, and to some extent Wales. In all three the debate has been more subdued than in England, perhaps because majorities of voters look likely to back the Remain side (unlike the 1975 referendum, when they were all less keen than England on Europe). But this means that Brexit, were it to happen, would be imposed by English voters against the wishes of many along the Celtic fringe. + +It would certainly rile the Scots, who see Brussels as a sort of alternative power centre to London. A recent debate in the Scottish parliament found all five main parties there backing Remain. Opinion polls suggest that as many as 75% of Scottish voters might agree. Remainers have tried to use the Scottish card to strengthen their hand in England by warning that Brexit would trigger a second independence referendum which (despite losing the first one in 2014 by 55-45%) a resurgent Scottish Nationalist Party (SNP) might win. + +Nicola Sturgeon, the SNP leader and first minister of Scotland, has declared Brexit would be a “material change” that could lead to unstoppable demands for another referendum. Yet there are reasons to doubt it would happen soon. The SNP remains dominant in Scotland, after sweeping 56 of the 59 Scottish seats at Westminster in the 2015 general election. But a month ago it lost its overall majority in the Scottish parliament, when the Conservatives leapt into second place. And even if she were able to call a second referendum, Ms Sturgeon cannot risk it unless she is certain of winning. The example of Quebec suggests that two lost votes can sink hopes of independence for decades. + +Moreover, the uncertainties that defeated independence in 2014 remain. Oil prices are half as high as then, so an independent Scotland would face even bigger economic and fiscal difficulties. After Brexit, the EU might be more welcoming to a Scotland seeking membership, but it would still object to its keeping the pound instead of adopting the euro. And if a post-Brexit United Kingdom ended free movement of people from the EU, that might mean erecting a border between north and south. England is by far Scotland’s largest trading partner. Any border (or customs) controls along Hadrian’s Wall could be very damaging. Such considerations will surely lead Ms Sturgeon to think hard before pressing for a second independence referendum. She certainly will not move fast. + +In contrast, Brexit would create immediate headaches for Northern Ireland, starting with the economy. Farming matters more in Northern Ireland than on the mainland, and it depends more on EU subsidies. Links to Ireland are crucial: it takes 34% of Northern Irish exports. Brussels has provided massive support to Northern Ireland since the Good Friday Agreement of 1998. Many in Belfast are sceptical of Leavers’ promises to make up for any money lost by Brexit. Claire Hanna, a member of the Social Democratic and Labour Party in the assembly, points out that, unlike Britain overall, Northern Ireland is a substantial net beneficiary from the EU budget. + +Ireland is the EU country most worried about Brexit. Irish ministers regularly state their opposition. Relations between the two nations are better than at any time in their history, and economic links have become closer. Travel and trade across the border are easier than ever. Britain is Ireland’s biggest export market, and Britain exports more to Ireland than to China, India and Brazil combined. Dublin to London is the world’s second-busiest international air route (after Hong Kong to Taipei). + +Don’t shake it all about + +Leavers say there is no reason why any of this should be affected by Brexit. Trade would continue. The common travel area between north and south began in 1922, not 1973. The Good Friday Agreement and the Northern Irish peace process did not rely on the EU. Most Northern Irish voters, especially nationalists who want a united Ireland, back Remain, though Arlene Foster, leader of the Democratic Unionists and first minister, supports Leave as, more vocally, does the secretary of state for Northern Ireland, Theresa Villiers. + +Yet many in Belfast and Dublin find this attitude irresponsible. The common travel area worked only when both countries were either out of or in the European project, not when one was in and the other out. If a post-Brexit Britain restricted free movement or left the EU’s single market, there would be consequences for its only land border with another EU country, the 300-mile (480km) line dividing Northern Ireland from Ireland. Britain and Ireland might still not want to restore a hard border with customs and passport checks, but, as Cathy Gormley-Heenan of the University of Ulster points out, the other 26 EU countries would also have a say, because it would be their border, too. + + + +INTERACTIVE: The Economist's “Brexit” poll-tracker + +Nationalists in the north have already said that, post-Brexit, they would demand a referendum to redraw the border with the south. Memories of a hard border are unhappy. Even the British army found smuggling hard to stop; post-Brexit, that might include people-trafficking. Any suggestion of imposing passport controls on travellers from Northern Ireland to mainland Britain in order to prevent a back door for Europeans into the UK would be anathema to unionists in the north. But the biggest concern over Brexit concerns the peace process itself. + +Edward Burke at the University of Portsmouth says it is wrong to claim the EU played no role in peace in Northern Ireland. The Good Friday Agreement of 1998 relied heavily on Britain and Ireland both being members and signatories to the European Convention on Human Rights (which some Brexiteers want to leave). But even more important was the psychological factor. As Ms Gormley-Heenan puts it, the EU gave cover to both nationalists and unionists to accept a compromise that fell short of unification but gave Ireland, via Brussels, a disguised say in the province. Would a post-Brexit Britain concede a bigger role to Dublin instead? + +That does not mean Brexit would bring a return to the troubled years of violence. Yet the situation in the province remains tense, as west Belfast’s intimidating “peace walls” between such places as the (Protestant) Shankill and (Catholic) Ardoyne estates show. Brexit could trigger a backlash from nationalists who, as in Scotland, have become strong supporters of the EU as a counterweight to London. + +Destabilising Northern Ireland would be a high price to pay for Brexit. But even if Remain won, doubts over the union’s future would persist. A new House of Lords report into the union argues that today’s constitutional settlement is unstable, and criticises the government for having no strategy for the future. The ultimate irony, says John Curtice of Strathclyde University, would be if, in an extremely tight vote, Britain ended up remaining in the EU only because nationalists in Northern Ireland, Scotland and Wales outvoted the English. That would surely rekindle English nationalism in virulent form, creating the biggest threat of all to the United Kingdom. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699972-brexit-could-lead-second-scottish-independence-referendum-place-fret-about-most/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Retail + +Modesty sells + +British Muslims are a growing market + +Jun 4th 2016 | From the print edition + +Summer fashions + +THE aisles of many Tesco supermarkets are undergoing a rapid transformation this week. Ramadan, the most holy period in the Muslim calendar, begins on June 6th, and the shelves of Britain’s biggest grocer are filling up with halal meat, dates and soft drinks, to help the country’s 3m Muslims break their daily fast with opulent sundown dinners. + +Ramadan is now big business for Britain’s supermarkets; it is probably the third-biggest sales period for them after Christmas and Easter. Tesco has led the way in targeting the Muslim consumer market in recent years and is reaping the benefit. It sells about half of all halal food in Britain’s supermarkets, and expects to make about £30m ($43m) this year on Ramadan sales. + +Yet for all this, argues Shelina Janmohamed, vice-president of Ogilvy Noor, an Islamic branding agency, the growing Muslim retail market remains woefully underserved by mainstream shops. There are an estimated 10,000 Muslim millionaires in Britain. Overall the spending power of the country’s Muslims is thought to be over £20 billion. + +But for a people of whom 90% say their faith affects their consumption, many complain that the high street still largely ignores them, particularly when it comes to fashion and fun—things like entertainment, travel and cosmetics. So young Muslim entrepreneurs, who believe, as Ms Janmohamed puts it, that “faith and modern life can go hand in hand”, have been starting up their own businesses to fill the gap. + +Nazmin Alim, a Londoner, used to work in an accountancy firm, so had to look smart, as the profession demanded, and modest, as did her religion. Yet, due to the vagaries of fashion, the ready availability of long skirts, for instance, could not be guaranteed. So she decided to make her own stylish, but modest, clothes. Aab, as she called her company (derived from the Persian word for water), started online but has grown rapidly; she opened two shops last year, now has about 60,000 names on the customer database and is launching a new collection every two weeks. Nazia Nasreen, a young mother from Birmingham, struggled to find well-made Islamic toys and books to teach the faith to her children, so she commissioned her own to sell. She started two years ago with four products, and now has 200. For these smaller businesses, too, Ramadan is the peak sales period. Aab’s website has already crashed once because of the high demand. + +Many of these startups appeal to a relatively new cohort of young, affluent Muslims, second- or third-generation immigrants who want to maintain the values of their faith while participating in the consumer culture in which they have grown up. Ms Janmohamed calls them Muslim futurists. Others, like Navid Akhtar, use the phrase global urban Muslims, or “gummies”, as most of them live in cities such as London. A filmmaker, Mr Akhtar launched a video-on-demand service last year called Alchemiya, which offers Islamic-themed documentaries. The biggest interest has come from schools, he says, to teach children about positive aspects of Islam. + +Another feature of this new Muslim market is that it is driven strongly by women. As they bear most of the burden of the faith in terms of modesty, so they have the greatest incentive to look for products that preserve it but offer them some style and luxury at the same time. As well as clothes there is a burgeoning market for cosmetics without alcohol-based ingredients, and for upmarket holidays for Muslims at hotels with private swimming-pools. + +There is a flourishing crossover market as well. The London Beard Company was started by Abrar Mirza last year to exploit the fashion for the hipster beard in trendy parts of east London. He sells premium organic oils for grooming beards that appeal to Muslims and to customers of all faiths, hipster or not. Mr Mirza says that sales could triple over Ramadan and that about half of his customers are women buying his concoctions as gifts for their men. + +Many of these startups have attracted interest abroad. Businesses in Muslim countries like Dubai and Turkey, for instance, are interested in franchising Aab. There is nothing modest about the potential of this new British export. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699971-british-muslims-are-growing-market-modesty-sells/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit brief + +If it were done + +There is some dispute over the mechanics of how to leave the EU + +Jun 4th 2016 | From the print edition + + + +WHAT would happen after a vote for Brexit on June 23rd? The short answer is that nobody can be sure, because there is no precedent. Greenland voted to leave the club in 1982, but it is part of Denmark, has only 50,000 people and fishing was the only big issue. Even so it took three years to establish a new relationship. + +If there is a Brexit vote, David Cameron has promised that Britain would “straightaway” invoke Article 50 of the Lisbon treaty, which sets a two-year timetable to agree the terms of departure. The other 27 EU countries would decide (by majority vote, without British participation) what offer to make. There would almost certainly be parallel negotiations on a new trade deal, which would need unanimous approval by all 27 countries and their national parliaments. The European Parliament would have to endorse both deals. If no agreement is struck within two years, the timetable can be extended, but only by unanimity—if that is not done, Britain would have to leave with no deal at all. + +If this seems designed to give more bargaining power to the EU than to a post-Brexit Britain, that was part of the intention of article 50. Worse, the EU in its current fragile state would not wish to be generous, for fear that others might follow. The argument that the big British trade deficit makes the EU more dependent on Britain than the other way round might carry some weight with big German or Dutch exporters, but not with countries like Romania or Slovenia that export little to Britain. + +Given all this, some Brexiteers have been searching for an alternative to the immediate use of article 50. One idea is to put it off and negotiate a new relationship informally. Most diplomats reckon the EU would simply refuse to negotiate until Britain invokes article 50. Another proposal is not to use the article at all but instead repeal the 1972 European Communities Act that gives effect to EU laws, or pass a new act taking Britain out of the jurisdiction of the European Court of Justice. But unilateral action would put Britain in breach of European and international law. As Alan Renwick at the UCL constitution unit adds, it would not be conducive to a friendly climate for further negotiations. + +Greenland did it + +The fact is that article 50 is the only legal way to leave the EU. It might not have to be invoked instantly, but Britons who had just voted to leave would expect it to be done quickly. And, once invoked, the two-year clock starts ticking. So some Brexiteers have raised another possibility: that a vote for Brexit could produce a new offer of better membership terms, including the ending of free movement of people, that could lead to a second referendum. Many point to Denmark and Ireland, which each had to vote twice before ratifying EU treaties. + + + +INTERACTIVE: The Economist's “Brexit” poll-tracker + +Mr Cameron has ruled out a second referendum. Yet nothing in Brussels is wholly predictable, EU lawyers can be versatile and Mr Cameron might no longer be prime minister. On the face of it, an invocation of article 50 cannot be withdrawn. But a political event such as a new government could change that. Even so, European politics militates strongly against a new deal. A Brexit vote would mean the withdrawal of the reforms to the EU negotiated by Mr Cameron in February. And other EU leaders are unlikely to offer a better deal to a new Eurosceptic leader for fear of seeming to give in to blackmail, especially since several face tight elections next year. + +How long might withdrawal take? Trade negotiations are increasingly complex and time-consuming. The EU/Canada deal, favoured as a model by some, has taken seven years and still not been ratified. The white paper on withdrawal says a vote to leave “would be the start, not the end, of a process” and suggests the process could take up to ten years. In a sour post-Brexit atmosphere, those ten years would feel long and painful for everybody—but the pain is likely to be worse for Britain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699969-there-some-dispute-over-mechanics-how-leave-eu-if-it-were-done/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Policy-making + +Lost in transit + +Chaos in government research + +Jun 4th 2016 | From the print edition + + + +EXPERT advice is crucial in shaping and improving policy. The government spends about £2.5 billion ($3.6 billion) each year commissioning expert advice, internally and from outside academics. Yet a new report has found that only four out of 24 government departments (plus the Environment Agency and Public Health England) were able to provide a full list of the studies they had funded. + +The inquiry by Sense about Science, a charitable trust, was led by Sir Stephen Sedley, a former judge, who sent Freedom of Information requests to ministries and interviewed government officials and politicians. It found that millions of pounds of “ghost research” is simply being lost because it is not published, and no records of its commissioning are kept. + +The report finds plenty of examples where publication of evidence is delayed for political reasons. In one case, a 200-page report on mental health, which found links between the recession and depression, was delayed because its publication coincided with a politician’s speech on the economy. Another report for the government, which showed that a 45p minimum price for alcohol would cut significantly the number of deaths and crimes caused by drinking, was not published until the day of the policy announcement (when the Home Office rejected the idea). + +But the main gripe is the sheer disorganisation of it all. The report’s afterword states that “Sir Stephen looked for suppression and found chaos”. It recommends that research should be published before policy announcements to allow for open debate, unless doing so would endanger the public in some way. A register of all externally-commissioned studies should be set up, and contracts with researchers should include a clause to publish work promptly. Any delays should be explained. + +Though the findings suggest a cavalier attitude to evidence in Whitehall, just last year the World Wide Web foundation ranked Britain’s government as the most transparent in the world, ahead of America and France, suggesting other countries may be equally adept at “forgetting” inconvenient facts. Mounting piles of ghost research are likely to feed the public’s cynicism and low regard for politicians. They may also mean poorer government policies. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699974-chaos-government-research-lost-transit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Public services + +Pay up + +Payment by results is much criticised. But it is wrong to conclude it has failed + +Jun 4th 2016 | From the print edition + + + +IT WAS supposed to be one of the coalition government’s most radical policies. In 2012 David Cameron, the prime minister, promised to put “rocket-boosters” under a scheme of public-service provision called “payment-by-results” (PBR). Under the scheme, the government pays a provider to deliver a public service, but only if it achieves a successful outcome. With £1 ($1.44) in every £3 the government spends on services going to a private firm, putting in the right incentives makes a big difference. There is, however, a groundswell of opposition to the move. + +Such schemes are not new—in the Napoleonic wars sailors were remunerated if they captured an enemy ship—but the government is now using them more widely, including in welfare, housing and criminal justice. A report in 2015 by the National Audit Office (NAO), an independent watchdog, identified 52 programmes worth about £15 billion. + +It may seem obvious to pay providers by results, rather than upfront. It means the state pays for services only if they work. If they don’t work, the private sector bears the consequences, helping to cut wasteful public spending. PBR is also supposed to encourage innovation, since it focuses only on ends, not means. + +In reality, things have not always worked out so well. PBR can create strange behavioural incentives, including a phenomenon known as “creaming”. Given the emphasis on meeting targets, providers are often tempted to focus on the easiest-to-help people, says Russell Webster, an expert on PBR. Take the case of the “work programme”, a policy to help the unemployed where 80% of the budget is linked to PBR. Despite higher payments for certain groups, it has proved most lucrative to target youngsters, who pick up skills quickly. In 2011-15 a third of 18- to 24-year-olds in the programme moved into work for a “sustained” period (at least three or six months, depending on the person), compared with a quarter of 25- to 49-year-olds. + +In addition, the economics of PBR can work against innovation. Providers of public services must pay their employees and suppliers. It is difficult, especially for small firms, to wait around for a payment based on how they have done. Over 80% of providers report concerns about financial risk from PBR, according to the Institute for Government (IFG), a think-tank, which says such firms are unwilling to take on further risks by doing things differently. + +Toby Lowe of Newcastle University Business School argues that all this means that payment-by-results is “doomed to fail”. Yet, in spite of its problems, PBR shows promise. A report by the NAO found performance in the work programme was similar to past schemes, but cost 2% less. Performance has improved further since. In 2015 the government claimed that, thanks to its “troubled families” programme, where households with complex needs are supported by local authorities, 100,000 had been “turned around”. That is a self-serving and vague claim, but those who work on the programme tend to view it positively. The NAO noted that the “outcomes focus” of the programme led to more integrated local services (eg, police and social services) for helping families. + +In a criminal-justice programme known as “transforming rehabilitation”, in which ex-prisoners are supervised, users of the service were generally positive about the help they received compared with what they had been offered before, according to the NAO. Another scheme is the “new-homes bonus”, under which the government rewards councils with a payment equivalent to six years’ council tax for each additional new home they build. An independent report found that it was “perceived to have helped push housing up the policy agenda” of planning officers. + +The question, then, is not whether to get rid of PBR, but how to make it work better. It is not inevitable that it should create odd incentives, but this is made more likely by poor contracting between the government and the provider, says Julian McCrae of the IFG. The NAO has complained that public-sector bodies that commission PBR projects, lacking a common source of shared expertise, have had to “reinvent the wheel” with each new project. It is small wonder that mistakes have been made. + +Happily, that is changing. New Economy, an organisation which works with Manchester’s local government, published data last year for a range of costs within government (the average cost of an ambulance call-out, for instance, is £223). With these data to hand, deciding the level of payouts for projects that reduce such expenses gets easier. Meanwhile, the Cabinet Office, which is responsible for making PBR work, has teamed up with Oxford University to form a research centre to generate data on PBR projects. The centre will also offer training to local-government staff, helping them to strike better deals with the private sector. + +To alleviate the big-business bias of PBR, the government is also pushing “social-impact bonds”. SIBs work by using private investors to fund social programmes, with the investors paid back from public funds, plus a return on top, if targets are met. With investors funding programmes for longer, providers struggle less with cashflow. There are now 32 social-impact bonds in Britain, according to the Cabinet Office. The most famous, a scheme in Peterborough where ex-prisoners are given support, seems promising: reoffending fell by 8%, according to preliminary analysis. At the spending review in November the government pledged £105m towards developing SIBs. Payment-by-results may not be the revolutionary force that Mr Cameron had hoped, but it is helping the state gradually to become leaner. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699970-payment-results-much-criticised-it-wrong-conclude-it-has-failed-pay-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Agriculture + +Casting asparagus + +A British vegetable enjoys a boom + +Jun 4th 2016 | From the print edition + +Quintessentially English + +“ASPARAGUS”, wrote Marcel Proust, “transform[s] my humble chamber-pot into a flask of perfume.” The fragrance of success has also clung to the elegant vegetable in recent years. While farming in Britain is a shadow of its former self, the asparagus industry has boomed (see chart). For none of the other 20 or so vegetables tracked by official government figures has the increase in home-grown production been so dramatic over the past decade (indeed, production of many crops, like cauliflowers and leeks, has fallen). + +A few factors explain the boom. Growers and suppliers have worked out how to get the vegetable to the buyer in perfect condition, says Chris Chinn of the Asparagus Growers Association. A marketing gimmick has also helped to fix home-grown asparagus in the minds of consumers as quintessentially English: farmers like to start the harvest of their crops on April 23rd, St George’s Day. + +The asparagus industry may also have been an inadvertent beneficiary of Britain’s measly pay growth. Real wages are still 4% lower than in 2008. Low pay has encouraged farms to shift away from activities that need expensive machinery to those that require more labour. Asparagus is one of the most labour-intensive crops around, says Mr Chinn. One asparagus farmer in Suffolk says he often tries to employ locals, but finds their working attitude suboptimal compared with eastern Europeans. + + + +Although the past decade has been good to them, things have been tougher for asparagus farmers recently. They usually begin harvesting in April, yet chilly weather (temperatures were 0.9°C below the average for that month) meant that many could not start until May. Now farmers face the opposite problem: with warm temperatures in May, yields will shoot up, creating an asparagus glut and lower prices. Overall, though, it is a success story not to be sniffed at. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699973-british-vegetable-enjoys-boom-casting-asparagus/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Teaching assistants + +Help needed + +English schools are filled with teaching assistants—but too many are poorly used + +Jun 4th 2016 | From the print edition + +No assistants required then + +BY MOST measures, English schools are good, if not top of the class. In the influential Programme for International Student Assessment, or PISA, rankings, for example, England sits just above mid-table, alongside France and Iceland, though far below heavyweights such as Singapore and Finland. But there is at least one measure in which English schools lead the way: the number of teaching assistants. They make up one-quarter of the English schools workforce. No other country has such a high proportion. + +Assistants provide support to children most in need of help, often those with conditions such as dyslexia or ADHD. Wages are low and many work part-time. In 2000 there were 79,000 of them in English schools. There are now 255,000. + +What explains the growth? The move to include disabled children in mainstream education provided the initial impetus in the 1990s. A compact made with unions in 2003 to reduce the workload of teachers by hiring more support staff added to the growth. The “pupil premium”, a policy introduced in 2011 to divert funding to schools with more children from low-income families, cemented it, since many use the funds to employ additional teaching support staff. + +“There had, reasonably, been a long-standing assumption”, says Rob Webster of the University College London Institute of Education (IOE), “that if you gave struggling children more one-to-one and group help that would boost their progress.” That assumption was, however, overturned by a study carried out by the IOE in 2003-09. It found that although assistants helped to reduce stress among teachers and improved classroom discipline, they did little to improve pupil attainment—in fact, they reduced it. This was largely because the pupils they spent the most time with were the ones most in need of interaction with teachers. The assistants were often doing little more than “babysitting”, says one educationalist, and that was encouraging dependency. + + + +Do shorter hours or higher wages make better teachers? + +But further research has shown that assistants can have a positive impact. Short, snappy sessions, with assistants following strict guidelines, can work, says Jonathan Sharples of the Education Endowment Foundation, a charity. One literacy programme, which involved daily 20-minute sessions over a ten-week period, led to three to four additional months’ progress compared with pupils who continued to work with assistants as before. Other studies found similar results. “It’s by far the most consistent positive evidence I’ve seen from randomised control trials,” says Mr Sharples. + +Some schools have rethought their approach. St Mary’s Church of England primary school in Barnet, north London, now ensures teaching assistants are present before and after school, allowing them to discuss lessons in advance and assess their success afterwards. As a result, they no longer end up just echoing the teacher or doing work for struggling pupils. “There is no tolerance for going into lessons blind,” says Maria Constantinou, the deputy head. + +Longer hours and stricter responsibilities are part of a trend towards a more professional approach to the role. Increasing numbers of schools invest in developing the skills of assistants; others are hiring assistants with a view to them becoming teachers later, which brings in more highly-qualified staff. + +Despite such improvements, most education experts reckon that the majority of schools probably do not use their assistants wisely. That may begin to change. Falling budgets may mean that head teachers become cannier in how they use these extra pairs of willing hands. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699975-english-schools-are-filled-teaching-assistantsbut-too-many-are-poorly-used-help-needed/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Pity the Brexpats + +Britain’s diaspora could pay a high price for a vote to leave the European Union on June 23rd + +Jun 4th 2016 | From the print edition + + + +“OF THOSE British expats in this room, how many are considering applying for German citizenship?” comes a voice from the crowd. Nervous laughter ripples around the packed basement bar near the Reichstag in Berlin, then most of those present raise a hand. “We keep on being asked about that,” responds Jon Worth, the British Berliner hosting this meeting for expatriates worried about Brexit. “It’s become a matter of the head rather than the heart. If having a German passport makes it easier to stay here, then it’s a no-brainer to apply.” + +That is a measure of the uncertainty among Britain’s continental expats, estimated by the UN to number about 1.3m. Questions for a panel of experts at the event—including a Briton who recently obtained a German passport, partly as insurance against Brexit—are detailed and urgent. When would postal votes be sent out? Would self-employed Britons have to apply for a German work permit after Brexit? “At the moment we have plenty of questions, but far too few answers,” observes Mr Worth, who has organised similarly popular gatherings in Hamburg and Cologne (others have followed in Munich and Copenhagen). + +The confusion comes in two varieties. The first, more immediate sort concerns the mechanics of voting in the referendum. Unlike, say, the Netherlands, Britain has no central office recording where expats are, sending out ballots, then collecting and distributing them to the right local authorities in time. It shows. British embassies have publicised the wrong deadline for registration (the correct one is June 7th); postal votes have been sent abroad with too little postage; expat voter details have been mislaid by local councils. Small wonder that, of the roughly 5m Britons around the world, only about 200,000 are registered. + +Then there is the more long-term source of uncertainty: what would Brexit mean for Britons on the continent? As the Leave and Remain campaigns have traded lurid claims—comparing the EU to Hitler, claiming that a vote for Brexit would embolden Islamic State—the practical implications for the hundreds of thousands of expats in other EU states have been largely ignored. The Leave campaign, in particular, belittles them and their livelihoods with its assertions (breathtaking in their misplaced breeziness) that they “have nothing to fear” from Britain leaving the EU. + +Brexiteers point to the Vienna Convention on the Law of Treaties, under which “vested” (acquired) rights are deemed to outlive the treaty conferring them. They note it applied when Greenland withdrew from the EU in 1985. Yet there is no certainty about how it would be interpreted in Britain’s case. Lawyers retort that the convention refers to state rights, not individual ones, so offers no post-Brexit guarantee of a Briton’s freedom to reside, work, trade and use public services in another EU country. The convention is not mentioned in Article 50 of the Lisbon treaty (which codifies the process of leaving the union), nor is France even a signatory. On June 1st Spain’s prime minister warned that leaving the EU could cost Britons the right to live and work in his country. And the Greenland precedent? “Scarcely relevant,” says a House of Commons report, because of the tiny number involved. + +That means protections for expats need to be secured as part of Britain’s exit negotiations. But will they be? If the country sought an arrangement similar to Norway’s, whereby it kept the trade benefits of EU membership in exchange for preserving freedom of movement, this might well be possible. But the Leave campaign is increasingly defining a pro-Brexit vote on June 23rd as a mandate for a draconian clamp-down: on June 1st Vote Leave, the official Out campaign, proposed slamming the door on all EU citizens except those with particular skills. If this happened, reciprocal restrictions would presumably apply to Britons planning to move to the continent. How it would affect those who have already done so is unclear. In the event of Brexit, European leaders are likely to try to discourage copycats by pointedly restricting the full benefits of EU citizenship to full EU citizens. + +Don’t let’s be beastly to the Anglo-Germans + +All this is part of a wider story: Britain tends to disregard its diaspora. The country limits its expats’ voting rights (which are withdrawn after 15 years abroad) and certain welfare payments. It freezes their pensions and makes relatively little effort to find out where they are, what they are doing or even how many of them exist. And this in a technological age when other governments are going to new lengths to engage their emigrants. Ireland is building a giant database of its diaspora, to help nurture and woo it; New Zealand runs a social network for far-flung Kiwis. Mexico, India and China see their emigrants as soft-power warriors and try to lure high-flyers, with their international experience and connections, back home. France and Italy both have overseas parliamentary constituencies and let their expats vote in embassies. + +Overlooked and poorly represented, perhaps Britain’s expats can blame their image problem. In the popular imagination at home they are the bacon-and-eggs brigade: witness “Benidorm”, a cheesy television comedy about ageing, lobster-skinned dipsomaniacs on the Spanish Costas. Yet why should such Britons, many of whom have paid into the welfare state for decades before moving abroad, be treated as second-class citizens? + +And in any case the profile of the British diaspora is evolving: improvements in technology, cheap travel and the high cost of living in Britain are propelling highly skilled workers overseas in search of opportunities. Statistics show that British emigrants are increasingly likely to be university-educated and to hold a professional job. Thus the typical expat is becoming more like those scientists, entrepreneurs and lawyers with whom Bagehot mingled in Berlin. Such folk are not deserters. They are stimulants to trade, promoters of British culture and values, and vessels of worldly contacts and knowledge. All of which Britain will need more than ever if, on June 23rd, it votes for Brexit. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21699967-britains-diaspora-could-pay-high-price-vote-leave-european-union-june-23rd-pity/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Free speech: The muzzle grows tighter + +Free speech in Bangladesh: Muted by machetes + +Campus protests and free speech: The colliding of the American mind + +A youthful trend: Don’t be so offensive + + + + + +Articles Sections Next + +Free speech + +The muzzle grows tighter + +Freedom of speech is in retreat + +Jun 4th 2016 | BEIJING, CAIRO, MADRID, MEXICO CITY AND PARIS | From the print edition + + + +IN JULY 2012 a man calling himself Sam Bacile posted a short video on YouTube. It showed the Prophet Muhammad bedding various women, taking part in gory battles and declaring: “Every non-Muslim is an infidel. Their lands, their women, their children are our spoils.” + +The film was, as Salman Rushdie, a British author, later put it, “crap”. “The Innocence of Muslims” could have remained forever obscure, had someone not dubbed it into Arabic and reposted it in September that year. An Egyptian chat-show host denounced it and before long, this short, crap film was sparking riots across the Muslim world—and beyond. A group linked to al-Qaeda murdered America’s ambassador in Libya. Protests erupted in Afghanistan, Australia, Britain, France and India. Pakistan’s railways minister offered a $100,000 bounty to whoever killed the film-maker—and was not sacked. By the end of the month at least 50 people had died. + +Barack Obama and Hillary Clinton condemned both the video and the reaction to it. General Martin Dempsey, then chairman of America’s joint chiefs of staff, contacted Terry Jones, a pastor in Florida who had previously burned a Koran in public, and asked him not to promote the video. + +“Consider for a moment: the most senior officer of the mightiest armed forces the world has ever seen feels it necessary to contact some backwoods Florida pastor to beg him not to promote a 13-minute D-movie YouTube upload. Such are the power asymmetries in this connected world,” writes Timothy Garton Ash in “Free Speech”, a fine new book on the subject. The story of “The Innocence of Muslims” illustrates several points about how freedom of speech has evolved in recent years. + +First, social media make it easy for anyone to publish anything to a potentially global audience. This is a huge boost for freedom of speech, and has led to a vast increase in the volume of material published. But when words and pictures move so rapidly across borders, conflict often results. Different nations have different notions of what may and may not be said. If the pseudonymous Mr Bacile had made his video in the early 1990s, Muslims far away would probably never have heard of it, and no one would have died. + +Second, technology firms are having to grapple with horribly complex decisions about censorship. The big global ones such as Facebook and Twitter aspire to be politically neutral, but do not permit “hate speech” or obscenity on their platforms. In America the White House asked Google, which owns YouTube, to “review” whether “The Innocence of Muslims” violated YouTube’s guidelines against hate speech. The company decided that it did not, since it attacked a religion (ie, a set of ideas) rather than the people who held those beliefs. The White House did not force Google to censor the video; indeed, thanks to America’s constitutional guarantee of free speech, it had no legal power to do so. + +In other countries, however, governments have far more power to silence speech. At least 21 asked Google to block or consider blocking the video. In countries where YouTube has a legal presence and a local version, such as India, Malaysia and Saudi Arabia, it complied. In countries where it did not have a legal presence, it refused. Some governments, such as Pakistan’s and Bangladesh’s, responded by blocking YouTube completely. + +Shut up or I’ll kill you + +The third recent change is that, whereas the threats to free speech used to come almost entirely from governments, now non-state actors are nearly as intimidating. In the Mexican state of Veracruz, for example, at least 17 journalists have disappeared or been murdered since 2010, presumably by drug-traffickers. The gangs’ reach is long: one journalist fled to Mexico City, where he was tracked down and butchered. And their methods are brutal: in February the body of a reporter was found dumped by the roadside, handcuffed, half-naked and with a plastic bag over her head. + +Globally, the willingness of some Muslims to murder people they think have insulted the Prophet has chilled discussion of one of the world’s great religions—even in places where Muslims are a minority, such as Europe. Radical Islamists are attempting to enforce a global speech code, in which frank discussion of their beliefs is punishable by death. + +This began in 1989 with a threat from a state: Ayatollah Khomeini, Iran’s leader, issued a fatwa condemning Mr Rushdie to death for a novel that he thought insulted Islam. He invited devout Muslims everywhere to carry out the sentence. It was almost certainly one of them who murdered Mr Rushdie’s Japanese translator in 1991, though the killer was never caught. + +Since then, the notion that individual Muslims have a duty to defend their faith by assassinating its critics has spread. Most Muslims are peaceful, but it takes only a few to enforce what Mr Garton Ash calls “the assassin’s veto”. The Islamist who murdered Theo Van Gogh, a Dutch filmmaker, for making a film about the abuse of Muslim women, said he could not live “in any country where free speech is allowed”. In 2015 two gunmen stormed the offices of Charlie Hebdo, a French paper which had published cartoons of Muhammad, killing 12 people. Many speakers and writers across the world are terrified of offending Islamists. A satirical musical called “The Book of Mormon” is an international hit; no theatre would dare stage a similar treatment of the Koran. + +Islamist intimidation is the most extreme example of a broader, and worrying, trend. From the mosques of Cairo to the classrooms at Yale, all sorts of people and groups are claiming a right not to be offended. This is quite different from believing that people should, in general, be polite. A right not to be offended implies a power to police other people’s speech. “Taking offence has never been easier, or indeed more popular,” observes Flemming Rose, an editor at Jyllands-Posten, a Danish paper. He should know. After his paper published cartoons of Muhammad in 2005, at least 200 people died. + +The zealots who hack atheists to death in Bangladesh (see article) are far more frightening than the American students who shout down speakers with whom they disagree (see article). But they are on the same spectrum: both use a subjective definition of “offensive” to suppress debate. They may do this by disrupting speeches they object to; Mr Garton Ash calls this “the heckler’s veto”. Or they may enlist the power of the state to silence speakers who offend them. Politicians have gleefully jumped on the bandwagon, and are increasingly using laws against “hate speech” to punish dissidents. + +This article will argue that free speech is in retreat. Granted, technology has given millions a megaphone, and speaking out is easier than it was during the cold war, when most people lived under authoritarian states. But in the past few years restrictions on what people can say or write have grown more onerous. + + + +Freedom House, an American think-tank, compiles an annual index of freedom of expression. This “declined to its lowest point in 12 years in 2015, as political, criminal and terrorist forces sought to co-opt or silence the media in their broader struggle for power”. The share of the world’s populace living in countries with a free press fell from 38% in 2005 to 31% in 2015; the share who had to make do with only “partly free” media rose from 28% to 36%. Other watchdogs are similarly glum. Reporters Without Borders’ global index of press freedom has declined by 14% since 2013. + +Uncle Xi is watching you + +Among big countries, China scores worst. Speech there has hardly ever been free. Under Mao Zedong, the slightest whisper of dissent was savagely punished. After he died in 1976, people were gradually allowed more freedom to criticise the government, so long as they did not challenge the party’s monopoly on power. Digital technology accelerated this process. By the time Xi Jinping came to power in 2012, hundreds of millions of Chinese were happily sharing their views on social media. + +Mr Xi found this unnerving, so he cracked down. China’s thousands of censors have ramped up efforts to block subversive online messages. Hundreds of lawyers and activists have been harassed or jailed. Liberal debate on university campuses has been suppressed (students and teachers are being urged to pay more attention to Marxism-Leninism). According to the Committee to Protect Journalists, a watchdog in New York, at least 49 journalists were in prison in China in December 2015. In April that year Gao Yu, an elderly reporter, was given a stiff sentence for “leaking state secrets”—namely, a party document warning against “Western” ideas such as media freedom. + +Many Chinese stay one step ahead of the censors, using software to jump over the Great Firewall of China and reach foreign websites. Nonetheless, Mr Xi’s crackdown will surely weaken his country. If information does not flow freely, it is hard to innovate or make sound decisions. In recent months, as the stockmarket has wobbled, the party has pressed economists to put on a happy face. Analysts who predict turmoil are warned to shut up or recant. How policymakers are to understand the economy when no one is allowed to discuss it honestly is anyone’s guess. + +In China the state is the source of nearly all censorship. Private organisations play a role, but largely at the party’s behest or to avoid upsetting it. Baidu, the Chinese answer to Google, blocks potentially subversive search results. Google refuses to do so, and is therefore unable to operate in China. Wikipedia, YouTube, Facebook and Twitter are also blocked. + +In the Muslim world, by contrast, speech is under attack from state and non-state actors in roughly equal measure. The assassin’s veto is exercised keenly in such places as Bangladesh, Iraq, Nigeria, Somalia and Syria. In several Arab countries, after a brief flowering of free debate during the Arab spring, regimes even more repressive than the old ones have taken charge. + +Consider Egypt, the Arab world’s most populous country. In 2011 mass protests led to the overthrow of Hosni Mubarak, a dictator. For a while, Egyptians were free to say what they wanted. But a Muslim Brotherhood government elected in 2012 curbed secular speech, and the coup that toppled it in 2013 made matters worse, says Muhammad Abdel-Salam of the Association for Freedom of Thought and Expression, an Egyptian pressure group. + +Media outlets supportive of the Muslim Brotherhood, which Abdel-Fattah al-Sisi, Egypt’s present ruler, has branded a terrorist organisation, have been closed down. A new law makes it illegal for journalists to publish “untrue news or data” (ie, anything that contradicts the official line). “Don’t listen to anyone but me,” warned Mr Sisi in February. “I am dead serious.” + +Foreign reporters have been branded as spies and run out of the country. Local reporters have it much worse. Mahmoud Abou Zeid, a photographer, was arrested while snapping the authorities gunning down Islamist protesters in 2013. He has been in jail ever since, accused of “damaging national unity”. He has been beaten, tortured and denied medical care. + +On May 7th an Egyptian court recommended the death penalty for three journalists it accuses of spying. They deny the charges; one says he is being punished for publishing an embarrassing leaked document. The regime is incompetent as well as oppressive: in May an internal memo on how to squash the press was accidentally sent to the press. + +Claiming to act as Egypt’s father, Mr Sisi is anxious that his children not be exposed to adult material. Saucy writers are jailed. Rights groups say that the number of prosecutions involving “contempt of religion” and “debauchery” (often used to prosecute homosexuals) are at all-time highs. + +The authorities mine Facebook and Twitter for information on future protests, which are illegal, and for evidence against dissidents. Amr Nohan, a student, was sentenced to three years in prison for posting a photo of Mr Sisi with Mickey Mouse ears. Others are locked up for running websites without a licence. Asked why someone would need one, an assistant minister said: “You cannot drive without a licence. You cannot administer a website without a licence. It’s the same.” + +All over the world, the spread of organised violence has prompted governments to curb speech they think may foster terrorism. Even in liberal democracies they are starting to punish not only those who deliberately incite violence, but also speakers who are merely intemperate or shocking. + + + +In February, for example, two puppeteers were arrested in Madrid. Their show, “The Witch and Don Cristóbal”, was provocative: a nun was stabbed by a crucifix; a judge was hanged with a noose. What upset the police, however, was a scene where a puppet policeman accused a witch of supporting terrorism and shoved a sign reading “Up Alk-ETA” (a reference to al-Qaeda and ETA, a Basque separatist group) into her hands. The puppeteers are now awaiting trial and face up to three years in prison for “glorifying terrorism”. They are said to be surprised. + +In much of Europe anti-terror laws are being used more zealously than before. This is partly because governments are more scared of terrorism, but also because they have started to police social media, where words that might reveal extremist sympathies are easily searchable. ETA laid down its arms in 2011; yet the number of Spaniards accused of glorifying terrorism has risen fivefold since then. + +France criminalised “the defence of terrorism” in 2014 and has enforced the law more aggressively since the attacks on Paris last year. In the days after the Charlie Hebdo massacre, prosecutors opened 69 cases for “defence of terrorism”. One man was sentenced to a year in prison for shouting in the street: “I’m proud to be Muslim. I don’t like Charlie. They were right to do it.” + +Many countries have introduced or revived laws against “hate speech” that are often broad and vague. In France Brigitte Bardot, an actress, has been convicted five times of incitement to racial hatred because, as an animal lover, she complains about halal slaughter methods. In India section 153A of the criminal code, which was introduced under British rule, punishes with up to three years in jail those who promote disharmony “on grounds of religion, race, place of birth, residence, language, caste or community or any other ground whatsoever”. + +Such laws are handy tools for those in power to harass their enemies. And far from promoting harmony between different groups, they encourage them to file charges against each other. This is especially dangerous when cynical politicians get involved. Those who rely on votes from a certain group often find it useful to demand the punishment of someone who has allegedly insulted its members, especially just before an election. For example, when an Indian intellectual called Ashis Nandy made a subtle point about lower castes and corruption at a literary festival in 2013, local politicians professed outrage and he was charged under India’s “Prevention of Atrocities Act”. + +Many countries still have laws against blasphemy, including 14 in Europe. Rita Maestre, a left-wing Spanish politician, was convicted in March of insulting religious feelings during a protest in a Catholic chapel, during which women bared their chests, kissed one another and allegedly shouted “Get your rosaries out of my ovaries!” She was fined €4,320 ($4,812). + +Islamic governments such as those of Pakistan and Saudi Arabia, which punish blasphemy against Islam ferociously, are keen for a ban on insulting religion to be written into international law. They argue that this is a natural extension of the Western concept of “hate speech”. Some Western authorities agree: Danish police in February filed preliminary charges against a man for burning a Koran, thus, in effect, reviving a law against blasphemy that had not been used to convict anyone since 1946. + +Europe is full of archaic laws that criminalise certain kinds of political speech. It is a crime to insult the “honour” of the state in nine EU countries; to insult state symbols such as flags in 16; and to say offensive things about government bodies in 13. Libel can be criminal in 23 EU states. Bulgaria, France, Germany, Italy, the Netherlands and Portugal all punish it more harshly when it is directed at public officials. Some of these laws are seldom invoked, and France got rid of its law against insulting the head of state in 2013, five years after a protester was arrested for waving a banner that said “Piss off, you jerk” to President Nicolas Sarkozy. (The banner was merely quoting Mr Sarkozy, who had said the same thing to a different protester.) + +In Germany, however, Jan Böhmermann, a comedian, is awaiting charges for insulting a foreign head of state, after he recited a scurrilous poem about Recep Tayyip Erdogan, the president of Turkey, and some frisky livestock. Angela Merkel, Germany’s chancellor, is now considering repealing the law. Poland and Portugal, among others, have similar laws against insulting foreign heads of state. Icelanders can in theory get six years in prison for it. + + + +“These are the kinds of provisions we are constantly fighting in countries where freedom of expression is not as open,” says Scott Griffen of the International Press Institute. Autocratic regimes are quick to borrow excuses from the West for cracking down on free speech. China and Russia accuse dissidents of “promoting terrorism”, “endangering national security” or “inciting ethnic hatred”. This can mean simply expressing sympathy for Tibetans on social media—for which Pu Zhiqiang, a Chinese lawyer, was locked up for 19 months. Rwanda’s government, borrowing from European laws against Holocaust denial, brands its opponents as apologists for the 1994 genocide and silences them. Europeans may laugh at Thailand’s lèse-majesté laws—a Thai was recently prosecuted for being sarcastic about the king’s dog. But when 13 European democracies also have laws against insulting the head of state, it is hard to avoid charges of hypocrisy. + +A determined regime can usually think of ways to muzzle a voice that annoys it. Khadija Ismayilova, a journalist in Azerbaijan who revealed scandalous details about the ruling family’s wealth, received photos in the post in 2012 showing her having sex with her boyfriend. A secret camera had been installed in her flat. A letter threatened to post the video online if she did not stop investigating corruption. She refused, and it was posted on a website purporting to belong to an opposition party. When this did not silence Ms Ismayilova, she was charged with tax evasion and driving a colleague to attempt suicide. No evidence supported these charges, but she was sentenced to seven years in jail. + +However, after an appeal to international law and a campaign to persuade donors, such as America, to take notice, Ms Ismayilova was released on May 25th. Even oppressive governments can sometimes be shamed into behaving better. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21699906-freedom-speech-retreat-muzzle-grows-tighter/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Free speech in Bangladesh + +Muted by machetes + +Where the state sits by as Islamists murder secular speakers + +Jun 4th 2016 | DHAKA | From the print edition + + + +ON APRIL 14th the police prevented Xulhaz Mannan, the editor of Roopbaan, a gay-rights magazine, from organising a “rainbow rally” and arrested several of his supporters. Mr Mannan had argued that if more gay people in Bangladesh were open about their sexuality, their neighbours would learn to accept them. Eleven days later half a dozen men posing as couriers knocked on his door, carrying a parcel full of machetes. They slashed him and a friend to death. A local group affiliated to al-Qaeda claimed responsibility. Promoting tolerance of homosexuality was “American imperialism”, they said. + +Bangladesh has become one of the most dangerous places on Earth to suggest in public that gay people might have rights or that Islam might not have all the answers. Since April eight people deemed anti-Islamic have been slaughtered. Rezaul Karim Siddique, a professor who celebrated indigenous music and literature, was all but beheaded on his way to work. Nazimuddin Samad, a young blogger who criticised Islamism, was hacked and shot to death on the street by men shouting “Allahu akbar!” + +Bangladesh’s supposedly secular government seems keener to denounce the dead than to catch their killers. “Our society does not allow any movement that promotes unnatural sex,” said the home minister, Asaduzzaman Khan Kamal, after Mr Mannan’s murder. Sheikh Hasina, the prime minister, has likened the slain bloggers’ writing to “porn”. Those who silence secular voices with steel are seldom caught. Liberals complain of a culture of impunity. “We are very worried about our lives. Things are not getting better,” frets a surviving colleague of Mr Mannan. “If the government doesn’t support us, naturally the police won’t support us, either.” + +The killers are highly motivated and well organised. Some appear to have been inspired by the triumphal snuff videos of Islamic State. The government accuses opposition parties of being behind the campaign of terror, but offers little evidence to support this charge. + +Maruf Rosul, a blogger and secular activist, says he gets death threats all the time. They say things like: “You are an atheist pig. We will kill you.” Those making the threats cannot be identified since they use fake Twitter accounts or make phone calls from encrypted sources over the internet. “Last night I got a threat on [my] mobile [phone] from a Middle East number. This is common.” Mr Rosul admits to feeling afraid, but says he is determined to keep “fighting for a society based on pluralism and equal rights”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21699904-where-state-sits-islamists-murder-secular-speakers-muted-machetes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Campus protests and free speech + +The colliding of the American mind + +University protesters believe they are fighting for justice; their critics think free speech is imperilled + +Jun 4th 2016 | PRINCETON AND YALE | From the print edition + + + +VISITING some American universities these days feels like touring the scene of an earthquake, or a small war. Though administrators insist the protests that dominoed across campuses in the past year were therapeutic, grievances seethe. Fears for jobs, and of harm—both reputational and physical—endure. “The campus is traumatised,” says Reuben Faloughi, one of the leaders of the protests which, last November, forced the University of Missouri’s president to resign. + +As Mr Faloughi knows, some external observers “just think the kids got upset and had a fit”: that these disturbances conform to the old quip about academic quarrels being so vicious because the stakes are so low. That view is mistaken, and not only because of the impact on the participants. As Eshe Sherley, an activist at Yale, says, “Things that happen in the university don’t just stay there.” Rather, the people and ideas they produce ripple across the country. And just as the energy and issues involved are bound to spread beyond campus, they did not originate there either. + +The protesters believe they are pursuing social and racial justice, in part by changing the way America remembers its past—debates that are convulsing the country at large. For others the right at stake is freedom of speech, a principle imperilled around the world. As Nicholas Christakis, a Yale professor caught up in the turmoil, puts it: “If we can’t get that right at our elite universities, we’re doomed.” How far these values are compatible, and whether their advocates can listen to each other, are quandaries these events have dramatised. + +The students are revolting + +New-wave feminists and sexuality campaigners have added to the ruckus. So too have supporters and opponents of Israel, in a row that typifies how protecting one group’s rights can allegedly impinge on another’s. The Amcha Initiative, for example, aims to combat anti-Semitism at American universities, a job Tammi Rossman-Benjamin, its director, thinks the authorities are often unwilling to do. She wants them to decry prejudice against Jews as they would other forms of bigotry. Yet the initiative has been accused of stifling free expression. Official disapproval of the kind she seeks is, for some, tantamount to censorship; in the overlap between criticism of Israel and anti-Semitism, the line between legitimate and hateful opinion is contested. + +Still, the main grievance racking American campuses is alleged racism. Several student groups demand more pluralistic curriculums, cultural-awareness training for staff, more diverse faculties and extra facilities for minorities. The flashpoints have sometimes been ugly. At Yale, after Erika Christakis, who is Dr Christakis’s wife and was then a residential college’s associate master, suggested in an e-mail that students might be allowed to pick and police their own Halloween costumes, the couple were cruelly harassed. In Missouri student protesters barracked and obstructed journalists; some professors lent a hand. Demonstrators at Princeton occupied the office of its president, Christopher Eisgruber. “They took quite good care of it,” he says, adding that threats to the students led the university to consult the FBI. + + + +Some of these tactics are thuggish; thuggery, moreover, committed over seemingly piffling complaints. For instance, with its hammocks strung between blossoming trees, the courtyard of Yale’s Silliman College—where students claiming to feel endangered jeered Dr Christakis—is idyllic, despite its proximity to gritty bits of New Haven. Taken in isolation, these incidents can seem the lamentable fruit of modernity’s least appetising traits: mollycoddling parenting, a sub-Freudian narcissism, a hypochondriacal sense of entitlement and a social-media ecosystem that reinforces insularity and cultivates an expectation of instant response. As Mr Eisgruber says, recent demands “often involve an expectation of immediacy” that a slow college bureaucracy is ill-equipped to satisfy. + +Those YouTube highlights, however, are a caricature. Clumsy and excitable as these demonstrations have sometimes been, dismissing them all as trivial is lazy. Peter Salovey, Yale’s president, notes that within a week of the Halloween kerfuffle, students were discussing broader concerns. Belittling them all as “crybullies” or “snowflake” protesters (for their exquisite fragility) ignores the breadth of their outlook, which is generally more historical than parochial. This wave of student activism coincides with the Black Lives Matter phenomenon, and they evince a shared rage at racialised political rhetoric and police abuses, to which even Ivy League students, or their families, can be exposed. + +“We feel unsafe here,” says Ms Sherley at Yale, “like we feel unsafe everywhere.” Last year, for example, a black student at Yale, who happened to be the son of a New York Times columnist, was detained at gunpoint outside the library. Even the gripe about Halloween costumes is tangentially related: the stereotypes they reinforce—of black people as gangsters, say—can contribute to real-world injustice, the students argue. They know that today’s biases do not match up to full-blown segregation. Still, as Brea Baker, head of the Yale chapter of the NAACP, a black lobby group, says, “Better doesn’t mean good.” + +Woodrow must wobble + +Students and their sympathisers think that free speech is sometimes invoked to deflect these claims; or, so Princeton’s Black Justice League maintains, as a “justification for the marginalisation of others”. Echoing debates over memorials across the nation, many students have demanded that the slavery-tainted names of college buildings be changed. Some Princetonians want the public-policy school to honour someone other than Woodrow Wilson, a president who was a segregationist, albeit an idealistic promoter of world peace. Some Yalies object to Calhoun College commemorating a pro-slavery ideologue and statesman. + +These requests are regarded by others as efforts to sanitise history. Announcing its recent decision to retain Calhoun’s name, Yale said that doing so would serve as a teaching aid. Princeton, too, has chosen to keep Wilson’s name, though a dining-hall mural of him, smiling and holding a baseball, has been scrubbed out. Both made compensating offers of explicatory artwork and exhibitions, while Yale promised to name a new college after Pauli Murray, a civil-rights leader. Whatever the merits of these demands—stronger in the case of Calhoun—they are not an infringement of free speech but an exercise of it. After all, whom institutions choose to celebrate and how they depict the past are choices to be debated, not immutable facts. + +For all that, free speech is hardly a red herring. One ominous turn lies in the claim made by some protesters for the supremacy of their subjective judgments. Ms Baker argues that black people know best when they are being racially demeaned in the same way that women can best distinguish between a compliment and harassment. That may often be true. White, middle-aged deans would be rash to secondguess the experiences of black youngsters. + +The powerful riposte is that, to function, society relies on impartial adjudication of wrongs, especially in an era of multiculturalism, with its attendant frictions. Prejudice may indeed abound, but for officials to intervene it must be proven, not merely alleged. In any case, the idea that any group’s experience is inaccessible to others is not just pessimistic but anti-intellectual: history, anthropology, literature and many other fields of inquiry are premised on the faith that different sorts of people can, in fact, understand each other. + +Next consider the swelling range of opinion deemed to fall outside civilised discourse. To be sure, some opinions do, and the boundary shifts with time. The trouble now, says Zach Wood, a student at Williams College in Massachusetts, is that many people want to banish views that remain widely held among their compatriots, believing that, on neuralgic topics such as homosexuality, “It’s all said and done.” He runs a campus group that hosts challenging speakers. “Silence does nothing,” he reasons. Two of its invitations—to Suzanne Venker, author of “The War on Men”, and John Derbyshire, a racist provocateur—have recently been rescinded: Ms Venker was disinvited under pressure from other students, Mr Derbyshire by the college’s leadership. Mr Wood has been insulted, ostracised and (he is black) told he has “sold out his race”. Other prominent figures deterred or blocked from addressing university audiences include Condoleezza Rice, a former secretary of state, Ayaan Hirsi Ali, a former Muslim, and Jason Riley, an African-American journalist who wrote a book called “Please Stop Helping Us: How Liberals Make It Harder For Blacks To Succeed”. + +Activists are entitled to their protests. But when, as at Williams, they decry counter-arguments as tantamount to violence, they stray into censorship. On campuses across America not only have speakers been disinvited or shouted down for espousing assorted heresies (a practice known as “no-platforming” in Britain); administrators have also been urged to dismiss staff who, like the Christakises, are held to have transgressed. Dissenters, and those who simply worry about saying the wrong thing, are increasingly inclined to keep their mouths shut. Much to their bafflement, the targets are often themselves left-leaning. + +This creeping intolerance chimes with the paternalism of “trigger warnings”, whereby students are alerted to potentially upsetting passages in novels or other texts, as if solidarity in suffering were not one of art’s chief purposes. Theoretically, if not yet in practice, trigger warnings may oust great literature in favour of socialist-realist tedium. Then there are “safe spaces”, dedicated sanctuaries in which minorities can recuperate. Sebastian Marotta, a student who is part of a Princeton free-speech group, reckons a movement avowedly committed to diversity may perversely result in “self-segregation based on beliefs and identity”. As Ms Christakis summarised in her ill-fated Halloween e-mail, others fear that, with the connivance of teachers and their overlords, America’s universities “have become places of censure and prohibition”. + +At the heart of this dispute is the role of the university itself. Should it shield youngsters from the fraught world they will soon enter or, by exposing them to its affronts, prepare them for it? This has a corollary: whether a student is an adult, or an in-betweener needing special protection and privileges (such as the right to spend a lot of time in the library and getting drunk). All of the above, say diplomatic university bosses. Some students, though, seem to emphasise incubation over preparation; hence their requests for more reprimands and intrusion, for supposedly improving bans and rules. What really distinguishes them from their predecessors, say their critics, is not solipsism, impatience or a certainty that can slide from admirable passion into self-righteousness, but the expectation that all their problems should be magicked away. Whereas, as Dr Christakis says, universities “cannot readily deliver utopia, much as we might want to”. + +The new activism thus illustrates what, beyond the groves of academe, may be America’s biggest political problem: opponents’ rising tendency to talk past each other, so that disagreement escalates into conflict. Nevertheless, beyond the viral clips, for those who care to notice there are signs this divide can partially be bridged. + +The students’ new-fangled vocabulary, such as the perpetual admonition of “privilege” and “micro-aggressions”, often mystifies their elders. Yet buried within the jargon are old-fashioned values that the most conservative fogey could embrace. Cultural “re-education” sounds Maoist, but helping staff to cope with students from different backgrounds is common sense. Campus Jewish centres are well-established “safe spaces”, to which no one much objects; places where minorities are able to feel inconspicuous or comfortable are perfectly sound ideas, provided people do not spend all their time in them. If sparingly deployed, trigger warnings, too, can be benign. A gentle alert to the impending description of rape, for example, may be less liberal craziness than good manners. + +In the aftermath of the nastiness towards journalists at the University of Missouri, Mr Faloughi and others distributed flyers around campus urging students to respect the media and the First Amendment. “We’re students, we don’t know everything,” Mr Faloughi acknowledges. Yet sometimes, when they identify injustices that society has blithely tolerated, or opportunities for progress it has missed, angry students can turn out to be right. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21699905-university-protesters-believe-they-are-fighting-justice-their-critics-think-free/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A youthful trend + +Don’t be so offensive + +Young westerners are less keen than their parents on free speech + +Jun 4th 2016 | From the print edition + +STRIDENCY on campus is not only an American problem. Throughout the West it is the young who are most ambivalent about free speech. A recent survey found that two-thirds of British students endorsed the National Union of Students’ “no-platform” policy. Speakers “no-platformed” in Britain include Peter Tatchell, a gay-rights activist who was a hero on campuses in the 1990s but has upset some of today’s students by favouring free speech even for homophobes. + +Academics who think education requires the free flow of ideas are appalled. “A university is not a ‘safe space’,” tweeted Richard Dawkins, a biologist at Oxford. “If you need a safe space, leave, go home, hug your teddy & suck your thumb until ready for university.” + +According to a survey last year by the Pew Research Centre, 47% of British 18- to 29-year-olds think the government should be able to stop people from saying things that offend other people’s religious beliefs, compared with 32% of those over 50. Fully 55% of French youngsters think that the government should intervene to prevent people from saying offensive things about minority groups, compared with 43% of their compatriots aged 30-49. In Germany 21% of 18- to 29-year-olds think the government should be able to stop the media from publishing information about large political protests, compared with only 9% of 30- to 49-year-olds. Young Americans are less likely to favour unfettered free speech than their elders are, but they are less censorious than young Europeans. + +Overall, the global trend in academia is towards muzzling opinions deemed offensive. Students these days grow up “in a rough-and-tumble world on the internet”, notes another Oxford professor, “where abuse is universal”. Social-media sites such as Facebook and Twitter now make it possible to report offensive speech or images (this week they agreed to a code in Europe whereby they would block “illegal hate speech”). Years of clicking “report spam or abuse” may now have normalised the idea of silencing speech one disagrees with rather than debating it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21699903-young-westerners-are-less-keen-their-parents-free-speech-dont-be-so-offensive/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Walmart: Thinking outside the box + +Digital celebrities: From smartphone to silver screen + +Price-fixing: No truck with cartels + +French manufacturers in Morocco: Factories in the sun + +Apple in India: Forbidden fruit + +Schumpeter: The evolution of Mr Thiel + + + + + +Articles Sections Next + +Walmart + +Thinking outside the box + +As American shoppers move online, Walmart fights to defend its dominance + +Jun 4th 2016 | BENTONVILLE, ARKANSAS AND SAN BRUNO, CALIFORNIA | From the print edition + +Business is picking up + +THERE is little outward sign that Walmart’s “supercentre” in Rogers, Arkansas differs from any other of the giant retailer’s outlets. Walmart conquered America with such “big box” stores—vast concrete blocks in an ocean of parking spaces. Inside stretches aisle upon aisle of merchandise, from Patti LaBelle sweet-potato pies to Ruger rifles and ScentSationals Wax Warmers, shaped like owls. But this particular store, near Walmart’s headquarters in Bentonville, is different. It is where the world’s biggest retailer hones some of the new ideas which, it hopes, will help it keep its crown. + +Recently the company has had lots of such brainwaves, from vegetables in plastic bins etched to look like wood, to wands that let customers scan items as they shop, thereby speeding up check-out. They are part of a multibillion-dollar bid to keep thriving as America’s retail industry is upended. And for the first time in decades, it is not Walmart that is doing the upending. + +Since April share prices for some of America’s best-known retailers, including Macy’s and Gap, have plunged by more than 25%. Some of their problems are fleeting, but one is not. Rather than driving to a big box, many Americans are shopping online instead. American e-commerce accounted for 10.4% of retail sales last year, up from 9.3% in 2014, according to Morgan Stanley, a bank. Amazon is the force behind this, with sales in North America rising by nearly 30% in 2015. The choice for bricks-and-mortar retailers is clear: evolve or decline. + +Amid this tumult Walmart remains a titan. It is not just the world’s biggest retailer but also its largest private employer and company, measured by revenue. Last year it raked in $482 billion. Walmart’s empire is global, but America is its particular dominion, accounting for three-quarters of its sales. And on home turf Walmart still towers above Amazon, accounting for 10.6% of America’s retail sales, more than twice Amazon’s share, according to Cowen, a financial-services firm (see chart 1). Yet Amazon is still growing fast, and Walmart may be past its peak. In 2009 Walmart commanded 11.6% of American retail sales. By 2018 Cowen reckons its share will be stuck at 10.6%, whereas Amazon’s will have jumped. + + + +Walmart is spending furiously to fight back against Amazon’s online onslaught. “We will win with a strategy that only Walmart can execute,” Doug McMillon, its chief executive, said in his annual letter to shareholders, shoppers and staff. To that end, Walmart is spending $2.7 billion to raise workers’ wages, which should improve service in its shops. It will devote more than $1 billion to e-commerce this year. Last year it poured a staggering $10.5 billion into information technology, more than any other company on the planet, according to an estimate by the International Data Corporation, a research firm. + +These investments have squeezed profits, but the firm is banking on growth. Walmart’s leaders aim to prove that an old-fashioned retailer can continue to dominate in the age of e-commerce. Walmart may show how to merge physical and online retail. It is sure to boast of its progress at its annual meeting on June 3rd: it was one of the few American retailers to post cheering first-quarter results in May. Yet its reign as undisputed retail champion is over. + +Since Sam Walton opened his first shop over five decades ago, the firm has thrived with a simple strategy, zealously executed: operate with the lowest costs, sell at the cheapest prices and watch sales grow. The success of this formula has given Walmart a unique place in America’s economy as well as its psyche. + +Value proposition + +Walmart is ubiquitous. Some 90% of Americans now live within ten miles of one of its stores. Nearly four out of five of them shopped at Walmart last year. That means its customers outnumber the voters in America’s presidential election in 2012 by almost two to one. Each week 140m Americans march through its doors in search of “everyday low prices” on a vast array of goods. For the products that Americans use as freely as air—food, toothpaste, soap, paper towels—Walmart is king, ringing up sales worth about twice what its closest rivals take. + +Walmart’s scale has changed not just how Americans shop but also how companies in its supply chain do business. Walmart is such an important buyer that consumer-goods companies such as Procter & Gamble have offices near Bentonville. When Walmart sets a goal, companies usually find ways to meet it. In its bid to promote sustainability, for example, Walmart wanted General Mills, a big food company, to fit its Hamburger Helper noodles into a smaller box. General Mills replaced curved noodles with straight ones, which lie flatter. The switch took 500 lorries off the road each year and freed shelf space for other goods. Walmart worked with makers of detergent to develop concentrated versions, in smaller bottles. Over three years the switch saved more than 57,000 tonnes of cardboard, 43,000 tonnes of plastic resin and 400m gallons of water. + +The company has its detractors. In a ranking of shoppers’ satisfaction with big retailers, Walmart has usually come last, according to the American Consumer Satisfaction Index. Unions and other critics have accused Walmart of obliterating small businesses, denuding towns of local shops and encouraging suppliers to manufacture abroad. One study estimates that Walmart brought 11% of Chinese imports into America in 2013 and helped displace over 400,000 American jobs between 2001 and 2013. But China was sure to be a manufacturing powerhouse, regardless of Walmart’s existence. Walmart points out that two-thirds of its products are “sourced” in America and says the study’s methods are flawed. + +In its home town of Bentonville Walmart seems a very American company, its culture a blend of sunny encouragement and hard-nosed capitalism. Sam Walton’s legacy looms large. American town squares are often ghostly, but Bentonville’s centre is cheerful, with a Walmart museum in Walton’s original five-and-dime shop. At its headquarters, many employees still refer to him as “Mr Sam”. Giant quotes from Walton are painted on office walls—“Get involved. Get serious. Get exercised. Get involved in what we’ve got going.” + +Bentonville believers + +When staff do good work, they may berewarded with the company cheer, wiggling their hips to signify the hyphen that originally punctuated “Walmart”. Saturday meetings are no longer weekly, as they were in Walton’s day, but are nevertheless “like going to church”, according to one employee. Walton’s obsessive focus on efficiency remains. Most meetings begin at least two minutes early; on time is considered late. They end with each employee sure of his or her tasks, or “go-dos”. + +This culture has sustained Walmart’s reign. Nevertheless, the low prices and broad range that made Walmart distinctive for so long seem less of an advantage these days. A growing band of competitors threaten to match or beat its prices, notes Matthew Fassler of Goldman Sachs. Aldi, a German discounter, offers rock-bottom deals by selling mostly private-label goods in bleak stores. As for choice, Amazon offers about 1.8m items of women’s clothing alone, which makes a supercentre’s range of 120,000 goods look paltry. + +Amazon competes not only on price and range, but also on convenience. As customers shop for millions of products from the comfort of their homes, the allure of a trip to a shop that stocks both firearms and underarm deodorants is waning. What Walmart did for Americans’ wallets, Amazon is doing for their time. For a $99 annual fee, Amazon Prime guarantees free shipping in two days. Once shipping is fast and costs nothing extra, customers tend to start buying more online. + +Amazon has many more ways to lure customers. It is rolling out Prime Pantry, delivering a box of household goods for a flat shipping fee of $5.99, as well as same-day shipping or even home delivery within two hours. Amazon Dash lets consumers hit a button placed wherever they like, to buy common items, like razors or soap, eliminating the hassle of visiting Amazon’s website or app. Consumers can also use a new piece of technology to scan and order items already in their cupboard. Amazon shopping could become almost as easy as flicking a light switch. + +That is a dark thought for all retailers. Pharmacy chains such as Walgreens and CVS face the threat of consumers turning to Amazon for bleach, shampoo and other household supplies. Department stores are floundering as shoppers buy more dresses, shoes and jackets online. Cowen expects Amazon to overtake Macy’s as America’s biggest clothes seller next year. + +Walmart appears less vulnerable to this assault than other retailers. Groceries account for more than half of its revenue in America. Food is hard to sell online—margins are low and logistics complex—and so far Amazon is testing grocery sales in only a few parts of the country. Nevertheless, Amazon and Walmart increasingly compete for the same customer. + + + +Amazon customers are still on average wealthier than Walmart’s, but that gap is narrowing (see chart 2). As Amazon reaches a broader swathe of consumers, the company will increasingly serve the type of shopper who goes to Walmart. In the second quarter of 2014 some 8% of those who bought household goods at Walmart also bought them from Amazon, according to Cowen. By last year 12% shopped at both. Amazon recently said it would let shoppers pay $10.99 a month for Prime, rather than a one-off annual fee of $99. That may help it win customers with a wider range of incomes. + +Clicks versus bricks + +The challenge for Walmart, and for all other retailers in the e-commerce era, is to protect both sales and profits. But these goals nay be mutually exclusive. Retailers face pressure to offer both free shipping and competitive prices, which generally makes selling a product online less profitable than doing so in existing stores. To expand sales online, retailers must spend on technology, which squeezes margins further. Making matters even worse, retailers are often not gaining new customers but simply selling the same item to the same person online for less profit. “You pour from one bucket into a less profitable bucket,” explains Simeon Gutman of Morgan Stanley. + +This makes stores themselves less productive, creating yet another dilemma. America has more retail space per person than any other country and double the amount of Australia, the next-closest market (see chart 3). As e-commerce sales rise, some retailers may need to cut their networks down to size. Yet stores still account for the vast majority of retailers’ sales. Closing underperforming shops may end up sending consumers to competitors’ shops—or to Amazon. + + + +Walmart itself is bolting some doors for the last time. In January it said it would shut 269 shops worldwide, including 154 in America. That is a small fraction of the total. Most closures were not of supercentres but of “express” shops, an ill-fated try at running small convenience stores. Companies specialising in smaller formats, such as Aldi and Dollar General, are growing quickly. Walmart is keeping its medium-sized grocery stores but dumped its express shops this year. + +Its plans, to the surprise of some investors, include opening up to 60 supercentres and 95 grocery stores this year. The addition of another 10m square feet of retail space is a slower pace of expansion, but is still almost as much as the combined additions planned by the 23 other big American retailers that Morgan Stanley monitors. Faced with a rapidly changing market, Walmart is trying to do what it has always done best: grow. + +It is building more stores because, instead of reinventing itself, it wants to carry on offering more goods at low prices to more consumers, more conveniently. “The best thing you can do is always something that makes what you already do better,” explains Neil Ashe, head of Walmart’s e-commerce effort. That means making its operations more expansive and efficient by combining Walmart’s growing number of physical assets, including its logistics network and more than 5,200 American stores, with a growing e-commerce business and array of new digital and analytical tools. + +To that end its e-commerce hub is not in Bentonville but San Bruno, California, which has more tech talent. Walmart has built a new technology platform, changing everything from how its website works to how the company manages customer payments and analyses data. The flurry of activity in San Bruno has helped Walmart.com’s selection rise from 2m items less than four years ago to over 10m today. + +Walmart is scrutinising the minutiae of e-commerce as closely as it monitors every aspect of its business. For example, in the past year Walmart has combed through data to learn how to pack its boxes more efficiently. Using 27 different boxes rather than the 12 they use now, the company has concluded, would lower the total volume of boxes shipped by about one-third. Packing more into each lorry could save fuel and 7.2m cubic feet of space taken up by cardboard boxes, enough to fill about 82 Olympic swimming pools. + +Walmart’s main differentiator online, however, may be its stores. It is combining sales figures from its shops and data from its website to discern which goods to keep where; its algorithms weigh up billions of variables. Like Amazon before it, the company is building large warehouses to serve its e-commerce business, but it is also shipping products from store distribution centres and from stores themselves. It is letting customers buy online, then collect from stores at no charge. + +Some of these strategies are not unique to Walmart, but its scale and logistical skills help the company implement them better than others. For example, Walmart is already expert at the complexities of handling perishable items. It has tried delivering groceries, but is expanding a pickup service instead, betting that this will be both convenient for shoppers and profitable for the company. Such a service may work especially well in America’s sprawling suburbs, where delivery would be expensive. In Rogers, online shoppers park in special bays and their Walmart app signals their arrival. Staff roll out crates of groceries, load them briskly into the waiting vehicles and send shoppers on their way. + +As for the stores themselves, Walmart is trying to boost sales by making them more attractive, easier places to visit. The company raised its minimum wage to $10 this year, as part of an effort to improve customer service. In Rogers, signs for different departments are easier to read. Customers can use an app to pinpoint this salsa or that pram, view an expanded selection online and, as of this summer, pay for them. + +Store operations continue to get better. Staff are armed with hand-held devices with apps to simplify common tasks, like managing inventory. The company fretted that bakers were leaving too much icing at the bottom of tubs, so Walmart gave them new scrapers. The company reckons this will save more than 35 lorryloads of buttercream icing each year. + +These efforts are likely to intensify but may not do enough to keep it in the lead. Walmart says that customers who shop both in stores and online spend more than those who shop only in stores. Yet the e-commerce business is not growing as quickly as the company would like. Its sales in the first quarter of this year rose by 7% globally. American online sales were slightly better, but the company will not say by how much. Meanwhile, Amazon’s North American e-commerce sales jumped by 27%. + +Get serious + +Even as Walmart pushes forward, it is in the unfamiliar position of trying to catch up. As Amazon Prime offers more functions, Walmart is still testing a $49 annual fee for free delivery. The shipping costs and technology investments required by e-commerce may make Walmart less profitable in the long term. So would the decline of the mighty supercentre, which is showing signs of age. In the most recent quarter sales at Walmart’s medium-sized, less profitable grocery stores rose seven times as fast as the broader American business. + +The most troubling change would be if the company’s virtuous cycle of scale and low prices were to start breaking down. In October Walmart said it would cut its prices, beginning this year. The company is confident that this will propel sales higher—as low prices have for more than 50 years. However, Mr Fassler of Goldman Sachs argues that competitors’ low prices and shoppers’ preference for convenience may mean that its familiar trick will not boost market share as it once did. Walmart conquered America with its big boxes. It must now contend with millions of small ones, piled high on America’s doorsteps. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21699961-american-shoppers-move-online-walmart-fights-defend-its-dominance-thinking-outside/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Digital celebrities + +From smartphone to silver screen + +Stars of social media are trying to break into the mainstream + +Jun 4th 2016 | LOS ANGELES | From the print edition + +Famous, for six-and-a-half seconds + +THE conceit of a new film, “Airplane Mode”, is clever enough. Put some of the biggest stars of YouTube, Vine, Snapchat, Facebook and Instagram on a plane to Australia without internet access. Faced by a few hours without the views, loops and likes that connect them with the outside world, madness follows. But will their millions of young fans follow the digital hotshots offline, to the cinema? + +Over the past decade each new social-media platform has given rise to a subculture of celebrities, worshipped by teenagers and children but largely unknown to anyone else. Once YouTube was the main stage for this new type of star. Now every platform has them, including an array of new apps unfamiliar to grown-ups (ask a child about musical.ly, for example). Through projects like “Airplane Mode”, which recently finished shooting on a budget of more than $2m, these digital stars are trying to convert their massive online followings into mainstream fame. + +The numbers alone make that seem a reasonable ambition. The low-brow escapades of these digital luminaries have earned them each millions of fans. Logan Paul, a co-writer and star of “Airplane Mode”, has 10m likes on his Facebook page. Amanda Cerny, a former Playboy model, has 4.5m followers on Instagram, and says her Snapchat videos get up to 2m “opens”, making her one of the world’s most-snapped women not named Kardashian (Snapchat does not disclose such data). Andrew “King Bach” Bachelor (pictured) is the most-followed individual on Vine with 16m acolytes and Lele Pons, 19, is the most-viewed woman on Vine, with 189m loops of her videos in April, according to Tubular, a social-media rankings service. + +The attention is lucrative. These stars earn most of their money through “branded content” deals with large companies—the biggest names can earn over $100,000 for a single campaign. Talent agencies have taken note. Mr Bachelor studied as an actor and says he turned to Vine after repeated rejection for roles because he was not famous enough: “Oh, I’ll be famous, just you wait,” he thought then. He signed with United Talent Agency in 2013 and has appeared in a couple of minor roles, including a comedy film that flopped at the box office. Creative Artists Agency represents Ms Cerny and Mr Paul. Ms Cerny has been cast in a scripted virtual-reality series and Mr Paul appeared in an episode of a popular television series. + +But turning the adulation of all those fans into a long career will be tough. The videos these fledgling personalities have thrived on until now—snippets as short as six-and-a-half seconds (the maximum on Vine)—appeal to the adolescent sensibilities of their fans. In a recent 53-second Facebook video, Mr Paul and Ms Cerny demonstrate things girls do that “guys should be cool with” (like taking hours to get dressed). Though no masterpiece, it has been watched 15m times. But the lifespan as a digital big shot can be short—a few years at most before their audience ages and moves on. “Airplane Mode” is assured a high-flying social-media campaign but that may not be enough to get the next stage of its stars’ careers off the ground. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21699958-stars-social-media-are-trying-break-mainstream-smartphone-silver-screen/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Price-fixing + +No truck with cartels + +Expensive times for companies accused of collusion + +Jun 4th 2016 | From the print edition + + + +MARGRETHE VESTAGER, the European Union’s competition commissioner, has taken a forceful stance on mergers and market dominance, as lawyers at Google and other big firms in her sights can attest. Now she has trained her eye on corporate cartels, too. Her office is working on a case against truckmakers that could result in the largest-ever fine for collusive behaviour. The looming penalty provides the latest evidence that policing price-fixers, once an enforcement backwater, has become a priority for trustbusters. + +Six truckmakers—DAF, Daimler, Iveco, MAN, Scania and Volvo-Renault—are suspected of having fixed prices in several ways between 1997 and 2011, including by delaying the introduction of new emissions technologies. They face fines well above the previous EU record of €1.4 billion ($1.8 billion), levied on makers of television and computer-monitor tubes in 2012. The truck companies have already set aside $2.6 billion between them. + +While this remains a mainly European case, several alleged conspiracies are being probed simultaneously on both sides of the Atlantic, with European regulators co-ordinating their assaults with counterparts in America in some cases. These involve, among others, car parts, air freight and financial benchmarks, such as LIBOR and foreign-exchange rates. The LIBOR case alone, in which banks are accused of manipulating the reported rate at which they borrow in money markets, has resulted in $9 billion in penalties so far. America’s Department of Justice has led the car-parts investigations: as of mid-May it had charged 40 firms and extracted more than $2.7 billion in criminal fines. + +Europe’s national competition watchdogs have grown busier, too. In May Germany’s cartel office fined several supermarket chains, including Lidl and Metro, €90.5m for fixing the prices of beer, sweets and coffee in cahoots with manufacturers. Britain’s competition authority has recently announced probes in sectors ranging from water tanks to model agencies. Those caught colluding on catwalks or elsewhere face fines of up to 10% of their turnover. + +With evidence hard to spot from the outside, regulators are doing more to encourage whistle-blowing. Firms that expose price-fixing rings can expect leniency: in the truck case, MAN was the first to step forward and may avoid a fine altogether. + +For individuals, too, the stakes have risen. America in particular has gone after managers it suspects of participating in price-rigging. Some 59 have been charged in the car-parts case (though around 20 of them have avoided prosecution by staying put in Japan). In April a senior executive at Nishikawa Rubber, which makes sealing products, pleaded guilty and is expected to serve 18 months in prison. The average sentence in American price-fixing cases has risen from eight months in the 1990s to more than two years. + +Government probes often set off further attacks, from private litigants. Europe’s thousands of hauliers will be watching the truck case closely. The rewards can be rich. After America and the EU slapped penalties of $3 billion on airlines for suspected collusion in air-freight surcharges, plaintiffs’ lawyers pursued 28 carriers for damages. All have now settled (without admitting wrongdoing), agreeing to pay a combined $1.2 billion. This, minus lawyers’ fees, will be shared among thousands of freight-forwarding firms. + +Such cases tend to be long and painful. The air-cargo litigation rumbled on for a decade. Hausfeld, one of the plaintiffs’ representatives, says its lawyers spent 35,000 hours on the case, in which 18m pages of documents were filed. Not that they will go unrewarded: the lawyers’ cut is expected to be 25%. Class-action lawyers can be so persistent that firms will cough up just to get rid of them, in some cases even after being cleared by multiple government probes (as was the case with Air New Zealand, which is paying $35m into the pot). + +The air-freight case shows that firms that refuse to settle quickly are gambling. The first airlines to settle got away with paying 2% of relevant sales in the period in question. That rose as the case went on. The last holdout, Air India, agreed last month to pay over 10% of relevant sales despite India’s competition commission having found no evidence of wrongdoing. + +Private lawsuits against alleged colluders, long common in America, are catching on in Europe, encouraged by legal reforms. The EU’s antitrust-damages directive, which member states are to implement by the end of 2016, will make it easier for companies and citizens to bring claims for breaches of EU competition law in national courts. Anticipating more business, Hausfeld opened a Berlin office in January. + +The biggest private settlements are likely to be in finance. They already top $2 billion in foreign-exchange cases. Plaintiffs got more good news in May, when an American appeals court overturned a lower-court ruling which had dismissed a batch of private lawsuits alleging that big banks including Bank of America and HSBC had illegally manipulated LIBOR. + +It is not all one-way traffic. In December the EU’s General Court overturned nearly €800m of air-cargo fines against 11 airlines. But although the court ruled that the European Commission’s arguments had been “contradictory”, it did not find that there was insufficient evidence to prove a conspiracy. The commission may bring the case again if it can work out a way to deal with these objections. Ms Vestager is not the type to be fazed by setbacks. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21699957-expensive-times-companies-accused-collusion-no-truck-cartels/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +French manufacturers in Morocco + +Factories in the sun + +European firms bring carmaking and an aerospace industry to north Africa + +Jun 4th 2016 | CASABLANCA | From the print edition + + + +CONSIDERING the help provided to big foreign manufacturers in Morocco over the past few years, it would have taken a serious effort by them to fail. Renault, a French carmaker, for example, is thriving: of 2.8m cars it made globally last year, one in ten trundled out from its two shiny assembly plants in Tangier and Casablanca. It hopes eventually to make 400,000 cars a year. The government provided land, excellent roads and power supply, tax advantages and a dedicated railway line to get the vehicles to an enormous port in Tangier. Official efforts to snip red tape and make it easier for firms to operate, and a penchant for signing free-trade deals, help to explain why foreign-direct investment is soaring, even as it shrivels for its neighbours. + +One of Morocco’s main draws is a supply of cheap labour. But it has also spent heavily on infrastructure, and not only for Renault. Its road network, railways, airports and ports are modern and well-maintained. It is handily close to the European home of many of the firms that have invested. But most of all, unlike Algeria, Tunisia and Egypt, which to varying degrees can match these other advantages, it offers political stability. The king, Mohammed VI, has championed a plan to industrialise quickly and create jobs for young Moroccans. “We are trying to do in ten years what Britain or France took 80 years to do,” says a Moroccan businessman working with Safran, a French industrial group. + +The country’s welcome mat has brought jobs. Four years ago Renault invested €1.6 billion ($2.1 billion) in its main car plant, Africa’s largest, and it now employs nearly 10,000 staff locally. The firm is one of Morocco’s biggest companies. It produces vehicles such as the Lodgy, an entry-level people-carrier sold in Europe. Rapid growth proved possible partly because the king ordained it (his decrees get otherwise languorous civil servants to jump)—for example, in providing generous subsidies for training. Other firms are being lured by Morocco’s largesse. PSA Peugeot Citroën will open an assembly plant in Kenitra, on the Atlantic coast, in 2019, and plans to make 200,000 cars a year. + +Domestic sales account for a modest part of production. Marc Nassif, general manager for Renault in Morocco, says locals bought 125,000 cars last year, about two-fifths of them from his firm. More important are car exports that earned Morocco a hefty €4.8 billion last year, making them the country’s biggest single export. That is not a bad record for a country that, until recently, relied mostly on textiles and tourists for hard currency. + +Shifting production to lower-cost countries is an old strategy for European carmakers. Renault already has “huge facilities” in Slovenia, Romania, Turkey and Russia, as well as Spain, says Mr Nassif. As wages rise there, cheaper north Africa is more tempting. By one estimate monthly labour costs for Renault workers in Romania or Turkey are around €950, compared with €350 in Morocco. + +Other factors also help to explain Renault’s expansion. Carmakers are relying on sales in new markets to keep growing. African consumers are a long-term bet. To make vehicles that will appeal to their customers, carmakers like to keep production close so they can tweak to satisfy local tastes. “The main point is you must manufacture where you sell,” says Mr Nassif. + +Cheap and well-trained locals and official munificence explain a boom in another manufacturing industry, aerospace. Its growth was also ordained by Morocco’s king just over a decade ago. Now some 100 firms, including Bombardier, Safran, UTC, Hexcel and Eaton, employ 11,500 people, mostly in a tax-free zone by Casablanca airport. An industry veteran says the goal is to double that workforce, at least, by the end of this decade. + +Hamid Benbrahim el-Andaloussi, who heads the industry’s trade body, says a starting monthly salary in aerospace is equivalent to $400 or less, rising to $800 for middle managers. Fitting wiring is more akin to craft than mass production, so high-quality workers are crucial, too. Morocco’s government funds a facility run by the firms—similar to support for the car industry—to train some 800 workers each year. It is being expanded. + +In Safran’s factory in Casablanca, workers assemble nacelles—structures encasing engines under aircraft wings—and fit honeycomb composites that help to muffle the screams of jet engines. The boss of Safran Nacelles in Morocco, Thierry Fradet, praises his expanding factory’s location, saying finished goods can reach Toulouse, Airbus’s headquarters, in southern France within three days, by lorry and ship. + +Such industries are reshaping Morocco’s economy. But assembly does not bring the bigger gains of higher-value work, such as research and design, nor create a wider system of local suppliers. Mr Nassif expects local firms will eventually supply two-thirds of components at Renault’s Tangier plant, though he does not say when. Creating a supply chain is hard in aerospace, says a manager at Matis, a joint venture between Safran and Boeing for aircraft wiring. Suppliers are expected to share in the investment costs and risks of developing new components. The next job—getting small, local firms to flourish—will prove tougher than luring big foreign ones in the first place. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21699959-european-firms-bring-carmaking-and-aerospace-industry-north-africa-factories-sun/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Apple in India + +Forbidden fruit + +The trials and tribulations of doing business in India + +Jun 4th 2016 | MUMBAI | From the print edition + +Limited connection + +MAKING the case that Apple’s gizmos are not “cutting-edge” is a way to goad devotees into an online tirade about the quality of the iPhone’s camera or the slimness of MacBooks. Such debates can usually be ignored by non-geeks. But not in India: a ministerial decision deeming that the tech giant’s products are not “cutting-edge” has, in effect, kiboshed plans to open stores there. It is a second reversal for Apple in a country it says is important to its prospects. + +Apple’s application to sell its gadgets through its own stores was rejected because the devices in question are made outside India. Foreign-investment approval is guaranteed only if 30% of a shop’s goods are sourced domestically. The tech firm unexpectedly failed to qualify for an exemption for products that are “state of the art”. Where Apple stumbled is not clear, given the raft of agencies and officials who need to chime in before the finance minister signs off on each new investment proposal. + +Arun Jaitley, the current finance minister, backed the decision on the ground that the government of India was concerned with job creation. Perhaps sensing such an argument might crop up, Tim Cook, Apple’s boss, visited India for the first time in May to unveil a development facility creating up to 4,000 jobs. Many thought this investment—to say nothing of a visit to Narendra Modi, the prime minister, and Mr Cook’s attendance at a cricket match—would clinch it for Apple. + +Quite the contrary. Another one of Apple’s plans was to sell refurbished second-hand iPhones in the country, possibly the only way to square high prices with Indian consumers’ thin wallets. But after furious lobbying by Apple’s rivals, that too has been rejected by ministers on environmental grounds—despite the firm promising to do the refurbishment in India. + +These setbacks (which may yet prove temporary) are an annoyance for Mr Cook. A regulatory filing suggested Apple crossed the $1 billion sales mark in India for the first time last year, albeit out of $234 billion worldwide. He has recently contrasted the firm’s 56% rise in iPhone sales in India with slipping shipments globally. That has much to do with Apple’s tiny share of the smartphone market in India—around 2%, analysts reckon—and saturation elsewhere. + +India’s smartphone market is growing at 30% a year, according to Strategy Analytics, a research firm, as growth rates in other big markets such as China and America now languish in single figures. Even if it gets its way with the government, Apple may not benefit that much. Whereas in India the latest iPhone sells for over 50,000 rupees ($740), the most popular smartphones are handsets from Indian or Chinese brands costing just 1,000 rupees. Try finding anything much for that price in an Apple store. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21699956-trials-and-tribulations-doing-business-india-forbidden-fruit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +The evolution of Mr Thiel + +The tech billionaire has morphed from a libertarian into a corporate Nietzschean + +Jun 4th 2016 | From the print edition + + + +PETER THIEL is no stranger to the limelight. He is arguably the world’s most successful technology investor, as a co-founder of PayPal, the first outside investor in Facebook and the eminence behind a dozen or so Silicon Valley startups. The self-proclaimed libertarian has used his fortune to fund a wide variety of idiosyncratic causes such as establishing private islands outside government control, paying young people to start firms instead of going to university and waging war on death. Mr Thiel is lampooned in HBO’s “Silicon Valley”, a brilliantly observed television-comedy series, and portrayed briefly in “The Social Network”, a film about Mark Zuckerberg. + +Yet even by Mr Thiel’s standards the past fortnight has been a remarkable one. He has admitted secretly funding Hulk Hogan, a professional wrestler (whose real name is Terry Gene Bollea), in his lawsuit against Gawker, a scurrilous website, for invading his privacy by publishing a sex tape. Mr Bollea is one of several beneficiaries of Mr Thiel’s legal largesse. In 2007 Gawker’s Valleywag blog published a piece entitled “Peter Thiel is totally gay, people”. Since his outing Mr Thiel, who clearly thinks revenge is a dish best served cold, has secretly funded a team of lawyers to find “victims” of Gawker and help them bring cases against the website. + +A Florida jury has awarded Mr Bollea $140m in damages (legal experts think that the sum will be reduced or the judgment reversed on appeal). Mr Thiel told the New York Times that his funding of court cases is “one of my greater philanthropic things that I’ve done”. But many commentators have been brutal. They condemn Mr Thiel for abandoning his libertarian principles and trying to gag Gawker. They agonise about so-called third-party lawsuits, whereby outsiders pay for one side in a legal dispute in order to make a point. And they fear the menace of billionaires turning the legal system into an instrument of their whims. + +It is not hard to find holes in these arguments. Gawker’s invasion of Mr Bollea’s privacy served no public interest. The same principle that allows Mr Thiel to pay for cases against Gawker also allows all sorts of “white knights” to hold big corporations to account. Even Mr Thiel’s resort to anonymity is defensible: if a legal case is a good one, it should not matter whether it is known who is paying for it. If Gawker can justify its behaviour on free-speech grounds, then Mr Thiel can certainly justify his on the grounds of oiling the wheels of justice. + +Yet Mr Thiel’s behaviour still gives pause, particularly his promise of “deterrence” for Gawker. He is using his considerable wealth to pursue a vendetta against it. What happens if other billionaires use their money to bankrupt news organisations, for example, simply because they happen to disagree with their politics? Mr Thiel is also helping to fuel a litigation machine that most of his fellow libertarians rightly regard as a scourge on American business and society. Mr Thiel is blessed with one of the most interesting minds in American business. The Gawker case suggests that it is evolving in an odd direction. + +At his best, Mr Thiel was a mixture of libertarian and contrarian. As a student at Stanford University in the late 1980s and early 1990s he railed against the new academic orthodoxies of multiculturalism and diversity and political correctness, founding a conservative magazine, Stanford Review, and publishing an establishment-baiting book, “The Diversity Myth”. He even defended a fellow law student, Keith Rabois, who decided to test the limits of free speech on campus by standing outside a teacher’s residence and shouting “Faggot! Faggot! Hope you die of AIDS!” When he was a young tyro in Silicon Valley, his libertarian vision inspired many of his business decisions. He hoped that PayPal would help create a new world currency, free from government control and dilution, and that Facebook would help people form spontaneous communities outside traditional nation states. + +There is a darker element in his thinking today. In an essay written in 2009 for the Cato Institute, a libertarian think-tank, he declared that he no longer believed that “freedom and democracy are compatible”, putting some of the blame for growing statism on the rise of welfare dependency and the enfranchisement of women. He added a grandiloquent coda: “The fate of our world may depend on the effort of a single person who builds or propagates the machinery of freedom that makes the world safe for capitalism”. In a book, “Zero to One”, published in 2014, he pooh-poohed competition and celebrated the power of “creative monopolists” who add “entirely new categories of abundance to the world”. He is now not so much a libertarian as a corporate Nietzschean, who believes in the power of gifted entrepreneurs to change the world through the sheer force of will and intellect. + +Touchy Thiely + +There are lots of reasons for Mr Thiel’s Nietzschean turn. One is his contrarian spirit: the same orneriness that turned him into a scold of political correctness may now lie behind his willingness to act as a delegate for Donald Trump at the Republican Convention. A second is philosophy: a powerful current in libertarianism is less interested in the wisdom of crowds than the brilliance of great men. Ayn Rand’s book, “Atlas Shrugged”, describes a world where the creative minority of business geniuses has retreated from the world, and left the masses to enjoy the fruits of socialism. A third is pessimism: Mr Thiel is so worried that the technology revolution has failed to bring about the expected improvements in productivity that he thinks Silicon Valley and America as a whole need a good shaking. + +The most important reason, however, is the march of time. So often it has turned genius into crankiness and caused clever men to waste their energy on silly causes. It would be a terrible irony if a man who has declared his opposition to “the ideology of the inevitability of the death” had fallen victim to one of the classic symptoms of advancing years. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21699954-tech-billionaire-has-morphed-libertarian-corporate-nietzschean-evolution/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Reforming Indian banks: Bureaucrats at the till + +Buttonwood: Working hard for the money + +China’s currency: Bending, not breaking + +Automation: I’m afraid I can’t do that + +Crypto-currencies: Etherised + +Aircraft finance: Crowded skies + +SMEs in developing countries: Caught in the middle + +Free exchange: Tales from Silicon wadi + + + + + +Articles Sections Next + +Reforming Indian banks + +Bureaucrats at the till + +The financial sector in India is being improved rather than overhauled + +Jun 4th 2016 | MUMBAI | From the print edition + + + +INDIA’S biggest banks tend to have official-sounding names, worthy of a central bank. There is State Bank of India, Union Bank of India, Bank of India and even Central Bank of India (the actual central bank is called the Reserve Bank of India, or RBI). That is because, starting in 1969, the entire financial system was nationalised. Although the government has grudgingly permitted private-sector banks over the past 20 years, the 27 public-sector banks (PSBs), which are listed but majority-owned by the government, still account for 70% of lending. That is a worry, because the PSBs are in terrible shape, having lent freely to companies that cannot pay them back. In response, both the government and the RBI are imposing various reforms—but not the most obvious one. + +Indian banks dodged the global financial meltdown in 2008. But they promptly embarked on a frenzy of lending to big companies, sowing the seeds of a home-made crisis. The PSBs gleefully funded infrastructure projects that never got the required permits, mines with an output made much less valuable by slumping commodity prices, and tycoons whose main qualification was friendship with government ministers. PSBs have tried to gloss over the problem for years, but the RBI is now forcing them to admit the true extent of the damage. + +The reckoning has been brutal: 3 trillion rupees ($44 billion) of loans have been recognised as “non-performing” by banks in the past two quarters, the vast bulk of them at PSBs; 17% of all loans there have either been written off, provisioned for or categorised as impaired, according to Credit Suisse, a bank. More losses are in the pipeline. The revelations have driven the combined market capitalisation of the 27 PSBs down to that of a single well-run private lender, HDFC Bank, founded in 1994. + +Tidying up a mess on this scale is never easy, but it is proving particularly tricky in India. The absence of a bankruptcy law (one was enacted in May but it will take months, if not years, to become operational) leaves bankers powerless in the face of defaults. Indian lenders recover just 25% of their money from delinquent borrowers on average, and only after four years of haggling, compared with 80% in America in half the time. A creaky judicial system piles delays upon delays. + +Worse, as quasi-bureaucrats, Indian bankers are loth to do the one thing that would help a recovery, which is to sell iffy loans to outside investors and move on. Such investors exist, albeit in limited numbers, but doing business with them can be treacherous: if the borrower’s fortunes recover after a sale and it pays back the new owner of the loans in full, bankers fear government auditors will accuse them of selling the distressed loans on the cheap. Best for the bankers to do nothing, and hope that the situation somehow improves. + +The government wants to change this dynamic. A new “bank board bureau”, headed by an unimpeachable former government auditor, has been created to insulate bankers from government meddling, and so give them cover to sell assets at less than face value. Much of what it suggests is sensible: giving longer terms to PSBs’ bosses, for example, and ensuring they are not judged merely on how quickly they increase the bank’s loan book—part of the reason the PSBs ran into trouble before. The government also wants to halve the number of PSBs through mergers. + +That is not enough to solve the PSBs’ problems, however. By almost any measure, they lag behind their private counterparts. Costs gobble up 57% of their revenue, compared with 43% at private banks. Net interest margins, the difference between the rate a bank pays depositors and the one it charges clients, stand at 2.4% in PSBs and 3.9% in the private sector. No PSB is valued at more than the value of its assets minus debt (some trade closer to 20% of their book value), unlike almost every private bank. Less than 5% of private banks’ loans have soured, compared with the 17% figure at the PSBs. + +The state-owned banks’ defenders point out that private-sector banks, by and large, focus on consumer loans, which have done better than corporate lending. That is as much a matter of skill as luck, however. The largely untroubled private banks are steadily gaining market share, making 58% of new loans last year despite accounting for just 30% of the existing stock, according to Credit Suisse. The corollary is that lending to industry (excluding infrastructure), which the PSBs dominate, has all but stalled (see chart). That bodes ill for the economy, especially since India’s capital markets are too puny to take up much of the slack. + + + +Analysts estimate that PSBs will need $30 billion-50 billion in fresh capital. To date the government, which is trying to cut the budget deficit, has offered just $11 billion spread over several years. A heftier package will come later, an official says, when banks are in better shape. The shortage of capital makes it harder for banks to sell dud loans, since the losses involved might push some below the minimum levels. Meanwhile, struggling PSBs are not passing on the central bank’s interest-rate cuts to consumers in full. + +The government may sell down its stakes in PSBs to raise extra capital, but is determined to remain a majority shareholder. That means their staff will remain de facto bureaucrats, subject to elaborate rules on hiring and firing and limited to government pay scales. Arundhati Bhattacharya, the well-regarded boss of State Bank of India, the biggest PSB, makes $35,000 a year in pay and bonuses. (The boss of US Bancorp, which is of a similar size to SBI, made $11.6m last year.) The obvious solution is full privatisation—but that would require parliamentary approval the government is unwilling to fight for. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21699933-financial-sector-india-being-improved-rather-overhauled-bureaucrats/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Working hard for the money + +There are more explanations than solutions for the productivity slowdown + +Jun 4th 2016 | From the print edition + + + +ECONOMIC growth stems from two main sources: putting more people to work or enabling workers to operate more efficiently (ie, better productivity). With the workforce in many developed economies likely to stagnate or decline in the next two decades as the baby-boomer generation retires, a lot is riding on improvements in productivity. + +So the recent progress of productivity in developed economies is cause for severe disappointment. As the chart shows, growth is well below its level in the late 20th century; the brief surge that was seen in places like America and Canada at the time of the dotcom boom has also dissipated. A combination of productivity growth of 1% or so and a stagnant workforce implies very sluggish GDP growth. + +A new paper* from the OECD tries to understand this puzzling slowdown in productivity. It cites a number of possible explanations. There is the “progress is over” thesis, for example: that modern advances in information technology are nothing like as revolutionary as the spread of electricity or the car. Another possibility is the shift from a manufacturing to a services economy, where many workers may be less productive (and their jobs hard to automate). And then there is the question of mismeasurement: some activities, such as free internet-search engines, may not show up in GDP statistics; productivity in service industries is hard to measure. + +The role of technology lies at the heart of the puzzle. There were clearly gains in the late 1990s and early 2000s, as the internet reduced transaction costs and allowed companies to track their sales and inventories in real time. There may of course be further gains to come, as companies adopt such technologies as 3D printing or driverless vehicles. + +However, most countries have seen a slowdown in technology investment (as a proportion of GDP) since the dotcom boom. Even with interest rates at record lows, it would seem there are fewer attractive high-tech projects around. + +It may not just have been technology that caused America’s productivity surge in 1996-2004. Another possible factor is the spread of “global value chains”—business networks linking suppliers in many countries. Companies that want to be part of a global value chain must be as efficient as possible; otherwise competitors will overtake them. Global trade expanded rapidly in the late 1990s and early 2000s as value chains were formed. But since the financial crisis trade growth has been even more sluggish than GDP growth. This may be slowing the development of value chains, and thus productivity. + +A further factor may be a slower rate of new business formation. In the medium term, you would expect new businesses to be more efficient than the old ones they replace. But according to the latest data (2012-13), new firms account for a much smaller share of companies in most countries than before the crisis. + +Another factor is the mismatch between the skills of the workforce and the needs of industry. In the wake of the recession of 2008-09, many workers were forced to take lower-paying jobs. A survey conducted in 2013 found that more than 20% of workers in rich countries thought they were overqualified for their job (in England and Japan it was over 30%). The ready availability of workers may also have persuaded firms to hire more staff, rather than making capital investments. + +At the same time, however, employers also complain of skill shortages. Perhaps Western education systems are not turning out the sort of graduates modern businesses are looking for. Perhaps governments need to encourage more training in the workplace. + +The OECD thinks these fundamental factors are more plausible explanations of the slowdown than mismeasurement, especially as the decline is both long-lasting and has affected emerging, as well as developed, economies. + +Slowing productivity is one of the biggest problems facing rich countries. But it is remarkable how little it features in public debate. Rather than figure out how to make domestic production more efficient, politicians like Donald Trump focus on keeping out goods and people from abroad. When governments do try to improve productivity (such as the reforms to the labour market the French government is pursuing) they face huge resistance. That suggests the problem is not going to go away. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21699939-there-are-more-explanations-solutions-productivity-slowdown-working/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +China’s currency + +Bending, not breaking + +As the Fed mulls a rate rise, the yuan comes under pressure again + +Jun 4th 2016 | From the print edition + + + +AS CASH poured out of China at the start of this year, hedge funds lined up to bet against the yuan. Many thought it only a matter of time before the government ran down its foreign-exchange reserves, forcing a big depreciation. Publicly, Chinese officials scoffed. “Declare currency war against China? Tee hee,” was the front-page headline in a Communist Party newspaper. Privately, they took the threat more seriously. They fought back on multiple fronts, intervening both at home and abroad to prop up the yuan, while tightening capital controls. The battles have gone China’s way so far: it has slowed the outflow of cash and the yuan is right where it found itself in early January. + +Yet the Chinese authorities’ apparent success prompts two questions. The first, of immediate concern, is whether the stability will endure when the Federal Reserve raises interest rates again. For all China’s forceful actions to prop up the yuan, the biggest factor in its favour was arguably external, as the Fed turned dovish. At the beginning of the year investors were braced for a succession of rate rises in America, believing these would drive the dollar, already strong, even higher. But volatile markets and a patch of weaker data stayed the Fed’s hand. That restraint halted the dollar’s ascent and restored the lure of other currencies. The yuan was one obvious beneficiary, gaining 2% against the dollar from mid-January to mid-March. + +This reprieve will soon be over. Janet Yellen, the Fed’s chairman, said last week that a rate rise is probable in the coming months. The dollar has started to climb higher against just about every currency, including the yuan. From May 30th to June 1st, the Chinese central bank set the yuan’s opening rate at its weakest level against the dollar in more than five years. That may be a good thing for China’s exporters, but the worry is that depreciation will trigger a resumption of the capital outflows that the bank has worked to curtail. + +Yet China is in a better position than half a year ago to resist the pressure. Extensive capital controls remain intact, limiting speculators’ room for manoeuvre. The Chinese economy is itself stronger, thanks to a revival of the property market. And even if the Fed raises rates in June or July, it is expected to proceed cautiously thereafter, suggesting that any dollar rally will only go so far. Against this backdrop, the yuan will probably soften but is unlikely to tumble, says Zhang Lu of CEBM, an advisory firm. + +The second question about China’s defence of the yuan is a more fundamental one: has it given up its goal of reforming the currency? For years it pegged the yuan to the dollar and intervened to limit its fluctuations. Last August the central bank introduced a new “exchange-rate mechanism”. It still sets a daily level against the dollar around which the yuan can move up or down by no more than 2%, but that is now based on two factors: the previous day’s closing rate and the value of a basket of currencies, not just the dollar. If implemented in full, the new system would give market forces a bigger role. + +In practice, the central bank has retained considerable power. It can influence the yuan’s closing rate against the dollar by intervening directly or instructing state-owned banks to do so. In setting the daily rate it can also choose whether to focus on the dollar or on the basket, as suits its purposes. That is indeed how it has steered the yuan since January. When the dollar has been weak, the central bank has tethered the yuan to it, thereby allowing depreciation against the basket of currencies. When the dollar has strengthened, as in recent weeks, it has let the yuan creep down against it, thereby limiting its appreciation against the basket. + +In other words, the central bank has hardly ceded control of the exchange rate to the market. That is not to say that its reforms are meaningless. The yuan’s daily exchange rate against the dollar has indeed been much more closely bound to the previous day’s closing level than in the past: the average difference between the two has been 0.009 yuan since August, compared with 0.06 yuan over the two years leading up to that (see chart). What is more, against the basket of currencies, the yuan has been broadly stable: its level today is almost exactly the same as at the start of 2015. Taken together, the revamped exchange-rate system has started to earn credibility in the eyes of some analysts and traders. It is certainly true that China has only gone part-way in freeing the yuan. But that is all it ever promised to do. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21699937-fed-mulls-rate-rise-yuan-comes-under-pressure-again-bending-not/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Automation + +I’m afraid I can’t do that + +Reasons to be less afraid about the march of the machines + +Jun 4th 2016 | From the print edition + + + +ARE robots coming to steal our jobs? For those manning the tills at pizza restaurants, the answer seems to be yes. In late May Pizza Hut announced that by the end of the year a robot called Pepper would start taking orders and payment at some of its Asian restaurants, providing a “fun, frictionless user experience”. + +There is plenty of research to suggest that restaurant workers are not the only ones at risk. One widely cited paper by Carl Frey and Michael Osborne at Oxford University found that as many as 47% of Americans work in jobs that will be highly susceptible to automation over the next two decades. But a new working paper by Melanie Arntz, Terry Gregory and Ulrich Zierahn of the Centre for European Economic Research paints a slightly brighter picture. The earlier study quizzed experts on the chance that a particular occupation could be automated, and then totted up the proportion of American workers in such jobs. But the newer study suggests that this method was too blunt. + +Digging into more detailed data, the researchers find that many jobs involve bundles of tasks, only some of which machines can easily handle. Take clerks in book-keeping, accounting and auditing: the earlier study said the odds of computers supplanting them over the next 20 years were 98%. But the newer study finds that three-quarters of those jobs involve some group work or face-to-face interaction—tasks robot struggle with. Applying a similar analysis to all jobs, they find that only 9%, not 47%, are at high risk of automation. + +Some caveats are in order: employers could restructure jobs to disentangle tasks that are more or less easy to automate. If that proves difficult, another possibility is that they simply forgo the human interaction now built into many occupations. A smile and some chit-chat once seemed an integral part of paying for groceries, until automated tills became commonplace. And finally, even if the 9% figure is closer to the truth, that still threatens the livelihood of millions. For the poorest quarter of the population, the proportion of jobs at risk rises to 26%, since more of them work in the sort of routine jobs most susceptible to automation. + +Even so, the authors offer a few more reasons not to panic about robot-induced unemployment. Both studies look only at what is technically possible. If labour is cheap, businesses will have little reason to invest in fancy machines. Nissan, a car manufacturer, uses robots more intensively in Japan than in lower-wage India. For a robot army to be worrisome, it has to be worth someone’s while to build it. + +Even if a wave of automation sweeps over the workforce, total employment may not fall. Innovation could lower prices and thus stimulate incomes indirectly, boosting demand for new jobs elsewhere. That is what happened in the past, at any rate: when automatic teller machines (ATMs) were introduced, the number of cashiers in America actually rose, since the device helped to cut costs, enabling banks to open new branches. From the Luddites to Keynes, many have worried needlessly about mass technological unemployment. + +Even if things are different this time, then at least the transition is likely to be slow. The Boston Consulting Group forecasts that only 25% of cars sold in 2035 will have any self-driving features, for example. If the robots do steal our jobs, we should at least be able to see them coming. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21699930-reasons-be-less-afraid-about-march-machines-im-afraid-i-cant-do/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Crypto-currencies + +Etherised + +Bitcoin’s resurgence may be short-lived + +Jun 4th 2016 | From the print edition + + + +BITCOIN is back. Fans (and holders) of the crypto-currency were celebrating after its price jumped more than 20% in the five days to May 31st, to nearly $550—a level it last reached in August 2014. They should contain their elation: the factors driving the rally are not unalloyed positives, and the competition is doing even better (see chart). + +Most trading in bitcoin takes place in China: Huobi and OKCoin, two Chinese exchanges, are thought to account for more than 90% of transactions. The currency seems to have become an outlet for Chinese savers frustrated with their limited investment options and searching for high-yielding assets. The Chinese authorities are worried enough to have banned banks from dealing in bitcoin, but individuals are still free to speculate and have been doing so with gusto. Bitcoin’s newfound popularity in China is unlikely to diminish its volatility, however, and thus boost its acceptance as a reliable international payment system. + +China has also become the global hub for bitcoin mining, the process by which heavy-duty computing power is used to process transactions involving bitcoin, earning those doing the processing some new bitcoin as compensation. Over 80% of new bitcoin are now minted in data centres in places like Sichuan and Inner Mongolia. + +All this virtual mining may be playing a part in bitcoin’s rally. Operators of bitcoin mines get 25 bitcoin (about $13,500) for every “block” of transactions they process. But this payment is set to halve on or around July 10th. That is because the maximum number of bitcoin that can ever be produced is limited to 21m. As the number in circulation gets closer to the limit, the rate at which miners can produce them automatically declines, according to a pre-ordained formula. That makes life harder for miners: on May 29th, one of the biggest, KnCMiner, declared bankruptcy, blaming the coming change. The reduced issuance of new bitcoin should also push up the price, an outcome the current rally seems to be anticipating. + +Bitcoin’s resurgence has come just as champions of crypto-currencies have started to gravitate to another system, Ethereum, whose digital tokens are called “ether”. This has both political and technical causes. Bitcoin’s developers have yet to agree on how to increase the capacity of their network, which can only process seven transactions per second. And Ethereum makes it easier for users to create self-executing “smart contracts”, something of a fad in the world of crypto-currencies. Last week Coinbase, one of the biggest bitcoin exchanges, declared bitcoin “stagnant” and said it would start to trade ether too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21699932-bitcoins-resurgence-may-be-short-lived-etherised/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Aircraft finance + +Crowded skies + +The air-leasing sector may soon face harder times + +Jun 4th 2016 | MIAMI | From the print edition + + + +EIGHTEEN months of relatively low oil prices have helped many parts of the aviation industry. Cheaper jet fuel has contributed to record profits at airlines in America; the world’s biggest planemakers, Airbus and Boeing, have compiled fat order books thanks to growing demand for air travel. But one part of the industry may be hurt by cheaper oil: leasing firms, which invest in planes and hire them out to airlines and other operators. + +When oil prices were high, airlines were desperate to replace gas-guzzling planes with new, fuel-efficient ones. Given the daunting commercial outlook, many preferred to lease their new jets, leaving the leasing firms to stump up the capital required to buy planes. Leasing firms are now responsible for about 40% of the big planemakers’ sales. + +As a result, leasing has become voguish. Cheerleaders claim that average annual returns have topped 10% in recent years—an astronomical figure in a world of low yields. Investors have been keen to pile in, allowing the leasing firms to raise money for new jets directly by issuing bonds, rather than via bank loans. Boeing forecasts that 53% of the aircraft it sells to lessors this year will be financed this way, up from about 33% four years ago. Big leasing firms have been raising other forms of capital, too: BOC Aviation, China’s largest, floated in Hong Kong on June 1st. + +But the oil price began falling in 2014. Despite a recent rally, it is still less than half what it was then. Cheap fuel makes older, less efficient planes profitable to run again. That has stoked fears that the world will soon have more planes than it knows what to do with. The number of new orders seems to be slowing. Richard Anderson, until last month the boss of Delta, America’s second-biggest airline, has muttered about an aircraft “bubble”. The airline bought a used Boeing 777 for $7.7m in December—a 97% discount to the listed price for a new one. + +The leasing firms themselves insist they are not short of customers. Although demand for cargo planes has stalled, that for passenger aircraft is still rising. International passenger volumes grew by 4.6% year on year in April, with aircraft-utilisation rates reaching near-record levels, according to IATA, an industry group. But the share price of America’s biggest listed lessors fell at the start of the year, because of fears that profits will come under pressure. + +Airlines, meanwhile, are beginning to ask whether it makes sense to keep leasing planes. Most of them are now profitable enough to borrow cheaply and interest rates are extremely low. Ryanair, a European low-cost airline, has been issuing bonds to buy new aircraft since 2014. Norwegian Air Shuttle, another low-cost carrier, now treats its fleet of more than 100 planes like a lessor, hiring some of them out to other operators. With more planes around, and fewer customers, the leasing business is bound to get harder. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21699942-air-leasing-sector-may-soon-face-harder-times-crowded-skies/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +SMEs in developing countries + +Caught in the middle + +Big and tiny firms often find it easier to borrow than medium-sized ones + +Jun 4th 2016 | KAMPALA | From the print edition + +It takes dough to make bread + +THE name of the Grand Global Hotel suggests no want of ambition. But the project ran into financial problems before building work had even finished, says its owner, Emmanuel Tugume. His bank raised interest rates, and would not make allowances for delays in construction. Mr Tugume eventually got a loan from GroFin, a specialist business lender, and now his hotel is thriving. But his experience with Uganda’s banks still rankles. “They do not adjust to people like us,” he says. “They look after the big-time clients.” + +Small and medium-sized enterprises (SMEs) all over the world grumble about access to finance, but the problem is worse in developing regions. Around two-thirds of SMEs in poor countries cannot borrow as much as they would like, compared with a sixth in the rich world, says the International Finance Corporation, the corporate-lending arm of the World Bank. It put the “credit gap” for small but formal businesses in developing countries at around $1 trillion in 2011. Throw in informal firms, and the shortfall is even greater. + +Plenty of outfits lend to very poor people hoping to start a business. But such “micro-credit” is typically minute, fleeting and expensive. It channels funds to tiny, unproductive businesses, often with no employees. More substantial firms, with greater potential for growth, have to look elsewhere. “The poor are being stuffed with micro-credit,” says Milford Bateman, a consultant, “while SMEs are being starved.” + +Banks are hardly rushing to step in. They remain the biggest source of finance for SMEs in the developing world: commercial banks supply around 58% of their funding, while state-owned ones stump up 30%. But they are often reluctant to lend more. Many small-business owners have little collateral, patchy records and non-existent credit histories. It takes time for customers to arrive or crops to grow. Far safer, many banks conclude, to lend to established clients or to the government. + +That leaves a gap—the so-called “missing middle”—for newer, more specialist lenders. GroFin, which helped Mr Tugume, tries to limit defaults the old-fashioned way, by trying hard to get to know its borrowers. “Every business has records,” says Arigye Munyangabo, one of its managers in Uganda, “but sometimes they are in the customer’s head.” Regular visits and business mentoring help tease out that hidden information. GroFin charges slightly above-market rates, but has no shortage of clients: in 12 years, it has provided $260m of funding to SMEs across Africa and the Middle East. + +Other firms are experimenting with different lending models. EFTA, in Tanzania, offers small businesses hire-purchase schemes for equipment. The business can use the equipment while paying off the loan, but EFTA owns it until the three-year lease period is over. This arrangement sidesteps the need for collateral: EFTA can just take back the machinery if the borrower doesn’t pay (it installs devices in tractors that can disable them remotely). Only 5-6% of its loans by value end in repossession. + +These specialist lenders are nimble, and often get a leg-up from development agencies and philanthropists. But most of them are relatively small. If lending to SMEs is really to grow, banks will have to become more enthusiastic. One factor that might help is the data revolution, which is making it easier to weigh risks. + +Digitisation, for example, is assisting businesses to keep better records and banks to monitor them. Commercial Bank of Africa is partnering with Strands, a fintech software company, to help businesses take their payments and records online: one advantage will be more detailed data for credit decisions. Numida, a startup in Uganda, is developing an app that allows traders to track transactions on their phones. Lenders, it hopes, will agree cheaper loans for clients that are willing to share these records. + +Others are looking for new kinds of data altogether. The Entrepreneurial Finance Lab, a spin-off from a research initiative at Harvard University, is trying out psychometric testing as a way of assessing credit risk. Would-be borrowers complete a short online survey and the software quickly generates an alternative credit score, based on attributes like conscientiousness and confidence. “We want to collateralise people’s human capital,” says Asim Khwaja, a Harvard professor and co-founder of the project. Trials in Latin America suggest that this approach can help to reduce defaults, thereby paving the way for more lending. + +Whizzy data are cheaper than the relationship banking of old. As smartphones spread, gathering and digesting information about a small business’s performance will vastly reduce the need for the labour-intensive approach of firms like GroFin. But algorithms can only go so far. Developing countries also need better institutions, from registries of collateral to commercial courts. Nimrod Zalk, an adviser to the South African government on industrial policy, stresses the need for big companies to nurture SME suppliers. He talks admiringly of the role played by KfW, a development bank, in financing German manufacturers. Such changes take time, however. Building a financial ecosystem is a lot harder than downloading an app. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21699931-big-and-tiny-firms-often-find-it-easier-borrow-medium-sized-ones-caught/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Tales from Silicon wadi + +Military insecurity can boost an economy, up to a point + +Jun 4th 2016 | TEL AVIV | From the print edition + + + +STANDING amid the skyscrapers of Tel Aviv, looking west over the sun-warmed Mediterranean, one can almost forget how unlikely Israel’s recent economic success has been. The country is a fortress: a tiny island of prosperity in a troubled region. Its neighbours are hostile; Syria, in the midst of a devastatingly bloody civil war, is a failed state. Israel itself is not only mired in conflict in the Palestinian territories, but riven by internal divisions between observant and secular Jews and between Jews and Arabs. International ire over the treatment of Palestinians leads to calls for boycotts of Israeli goods and divestment from Israeli companies. Yet over the past two decades, this small country, with a population of around 8m, has engineered an economic miracle (see left-hand chart). Israel is testimony to the advantages, and limitations, of fortress economies. + +Since the 1990s Israel’s economy has been on a tear; between 2004 and 2013 growth in real GDP averaged about 4% a year. Output per person is similar to that in Italy. A nimble tech sector deserves much of the credit. The joke among foreign investors once ran that the best way to make a small fortune in Israel was to begin with a large one. No longer. Relative to the size of the population, there are more researchers working in R&D in Israel than in any other country (see right-hand chart). Venture-capital investment per person is the highest in the world. Israeli startups have increasingly hit it big in recent years, as with Google’s acquisition of Waze, which uses crowdsourced data to monitor traffic, for more than $1 billion in 2013. Cyber-security now generates more export revenue than arms do. Officials from Asia visit to study the tech sector, in the hope of replicating its success. + +Israel’s experience follows a familiar script: that of the small, embattled country on the up and up. China’s previously hopeless nationalists somehow built an economic powerhouse after they had been relegated to the island of Formosa (now Taiwan). Having been booted out of Malaysia, Singapore subsequently became far richer and more productive than its neighbour. In fact, there is good reason to believe that Israel’s success stems at least in part from its geopolitical troubles. + +Economic development requires a balance between individual freedom and the power of the state. The authorities must be able to collect taxes, for instance, and enforce property rights. External threats have often accelerated the development of the state. National defence is among the purest examples of a public good, and national survival provides a strong motivation to set up a strong state with the authority and legitimacy needed to ensure it. Historically, the expense of war has often prompted governments to improve their capacity to raise revenue. Britain first levied income tax during the Napoleonic wars; other countries instituted it during the arms race before the first world war. + +External threats are hardly a sure-fire road to riches. Actual war is destructive. Torsten Persson, of Stockholm University, and Timothy Besley, of the London School of Economics, reckon the underlying institutional strength of the threatened country is crucial. Democracies respond better to external pressure; countries made rich by natural resources do worse. From its earliest days the state of Israel has been democratic (and short on resource wealth)—and has faced a near-constant existential crisis. + +The strength and capacity of the Israeli state is most clearly visible in its armed forces, which are arguably the most important public institution in Israeli society. Most Jewish Israelis are conscripted into the military; about 100,000 new recruits, fresh out of secondary school, are drafted each year for a term of service of about two years. The most talented young people in each cohort are assigned to technical units within the Israel Defence Forces (IDF), such as Unit 8200, a signals-intelligence force similar to America’s National Security Agency. Those recruits, in turn, are able to hone their technical skills in the service. + +Since the 1990s, when the government became more serious about commercialising the technologies being developed within the IDF, personal relationships built during military service have been critical to the growth of Israel’s tech cluster. Friends from the service start firms together after getting out, invest in each others’ ventures and provide technical and business advice. The personal networks nurtured by the IDF increase the return to staying in Israel for skilled engineers, helping the country retain talent that might otherwise go abroad. Like America’s army and its tech sector, the IDF and Israel’s startups have developed a symbiotic relationship; the IDF supplies talent and expertise to the private sector and is in turn a buyer of private firms’ inventions. + +The digital partition + +Yet it would be odd if fortress economies did not face constraints on their growth. The ingenuity and nimbleness of the Israeli tech sector does not extend to industries less closely linked to the work of the IDF: across the economy as a whole, Israel’s productivity is among the lowest in the rich world. The paucity of trade with its neighbours is partly to blame. There is no difficulty in selling high-tech services to distant clients, but manufactured goods are another story. Another problem is a dearth of competition in the low-tech parts of the economy. + +The underpinnings of the tech sector’s success also limit the number of Israelis who are able to participate in it, and thus benefit from it directly. Ultra-orthodox and Arab Israelis do not have to serve in the army and study in segregated school systems, which are generally much worse than those other Israelis attend. These groups, unsurprisingly, are under-represented in tech. As you pass from predominantly Jewish areas into Arab ones, let alone into the Palestinian territories, the quality of infrastructure deteriorates dramatically. Israeli tech firms that operate in the Palestinian territories keep their presence there quiet, lest investors, customers or activists object. Within walls, there is only ever so much room to grow. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21699920-military-insecurity-can-boost-economy-up-point-tales-silicon-wadi/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Chinese science: Schrödinger’s panda + +An update on AIDS: HIV’s slow retrenchment + +Zika and the Olympics: Should I stay or should I go? + +Avoiding sunburn: Patched up + +Black holes: We want information + +Jumping to attention: Peppered moths + + + + + +Articles Sections Next + +Chinese science + +Schrödinger’s panda + +Fraud, bureaucracy and an obsession with quantity over quality still hold Chinese science back + +Jun 4th 2016 | BEIJING | From the print edition + + + +CHINA seems to swing from insecurity about its science to hubris. In 2015, when Tu Youyou, a pharmacologist, became the first scientist to win a Nobel prize for work carried out in China, the state media’s reaction was not to celebrate her ground-breaking medicinal chemistry. Rather, they claimed that the award was a recognition of traditional Chinese medicine—something she said had little to do with the work that won her the award. + +This week Xi Jinping, China’s president, fell into the opposite trap, of overconfidence. Addressing a sea of scientists at a joint meeting in Beijing of the Chinese Academy of Sciences, the Chinese Academy of Engineering and the China Association for Science and Technology (see picture above), he repeated his government’s aim that China should become a leading scientific innovator by 2030 and a dominant scientific country by 2049 (a date chosen because it is the 100th anniversary of the communist takeover). + +China already spends lavishly on research and development, and publishes reams of scientific papers. Spending on R&D has more than doubled as a share of the economy since 2000, reaching 2.1% of GDP in 2014, just below the rich-world average, according to the Organisation for Economic Co-operation and Development (OECD), an inter-governmental think-tank. Meanwhile, GDP itself has trebled. The OECD thus says China will be the world’s largest R&D spender by 2019. In terms of scientific papers published in English, the country is second only to the United States, and its output is rising by 20% a year. + +But much of the published work is insubstantial, and a worrying amount is fraudulent. The process of selecting which projects should benefit from the vast pool of money available is often bureaucratic and wasteful. That, at least, is a widespread view of China’s scientific establishment outside China. Much of the criticism is justified, though becoming less so. + +Mine’s bigger than yours + +China should be about to reap some rewards from its massive investment in big—indeed, colossal—science. The world’s largest single-aperture radio telescope, being built in Guizhou province, is due to open in September. The Five-hundred-metre Aperture Spherical Telescope (Tianyan, in Chinese) dwarfs all other such instruments; the next-largest has a diameter of 305 metres. China is also building an underground neutrino observatory, its second, in Guangdong province. And it is expanding 25-fold its dark-matter-investigating Jinping underground laboratory, in Sichuan province, making that the world’s largest subterranean lab. + +As the Large Hadron Collider (LHC) in Europe has shown, in some areas of science size matters. The enormous collecting area of Tianyan, for example, means that it will be able to pick up signals from deeper areas of space. Naturally, China is talking about building an even larger particle collider than the LHC. + +There is evidence, too, that the quality of Chinese scientists’ work is improving. Nature, one of the world’s foremost scientific journals, keeps track of the number of articles published in 68 respected periodicals. It takes into account the relative contribution of each author and makes adjustments for the over-representation of papers on astronomy and astrophysics in its sample journals. The result is an index of a country’s or an institution’s production of high-quality research papers. + +According to Nature, China’s score in this index rose by 44% between 2012 and 2015, leaving it second behind America, whose score fell by 8% in that period. Among institutions, the Chinese Academy of Sciences had by far the highest score, almost double that of second-ranked Harvard University, though this is partly because the academy, with 68,000 employees and 104 institutions, is so large. China’s research output is dominated by chemistry and the physical sciences. Over 60% of China’s index number is accounted for by articles on chemistry. + +These findings are consistent with a study from 2014 in the Proceedings of the National Academy of Sciences, by Yu Xie of Peking University and others. Dr Yu found that Chinese scientific papers are being cited more often. In 2011 American scientists had about three times more articles in the 1% of most frequently cited papers than Chinese scientists did. That is a big improvement for China: in 2001 the Americans had 15 times as many. + +But as President Xi admitted to the assembled academicians this week, science and technology remains “a bottleneck” for economic growth in China. The biggest problems are fraud and the academies of science and engineering themselves. + +In 2014 China’s anti-corruption watchdog said it had “uncovered fraud in research grants managed by China’s Ministry of Science and Technology”. In April the British Journal of Clinical Pharmacology retracted an article by scientists from Dalian University, in Liaoning province, because it suspected the peer-review process had been subverted. In 2015 BioMed Central retracted more than 40 papers submitted by Chinese researchers. + +The prevalence of fraud reflects poor oversight and a dodgy research culture. Both are rooted in problems in the academies, which are dominated by bureaucrats rather than research scientists. In 2010 two Chinese university deans wrote in Nature’s rival Science that “to obtain major grants in China, it is an open secret that doing good research is not as important as schmoozing with powerful bureaucrats and their favourite experts”. + +That is starting to change. The Academy of Sciences altered its criteria for membership in 2014, requiring prospective members to be nominated by other academicians or academic institutions and to be elected by all members. Previously, nominations could come from ministries, the Communist Party, the army and even from companies; the electorate was restricted and thus easier to influence. + +But the system remains hierarchical and politicised. Even Ms Tu fell foul of it. Having begun her career in the Cultural Revolution, when scientists were deemed one of “nine black categories”, she does not have a doctorate and did not study abroad. She has been turned down by the Academy of Sciences four times. Chinese science has a way to go before it can lead the world in quality, as well as quantity. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21699898-fraud-bureaucracy-and-obsession-quantity-over-quality-still-hold-chinese/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +An update on AIDS + +HIV’s slow retrenchment + +The battle against the human immunodeficiency virus continues + +Jun 4th 2016 | From the print edition + + + +THE latest dispatch from the war on HIV, the “Global AIDS Update 2016”, just published by UNAIDS, the UN agency responsible for combating the virus, brings qualified good news. Last year, it estimates, there were 1.1m AIDS-related deaths, down from a peak of 2m in 2005 and a figure of 1.2m in 2014. Last year also saw 2.1m new infections, down from a peak of 3.4m in 1998 but up from 2014’s estimate of 2.0m. + +By the end of 2015 some 17m people were taking anti-retroviral (ARV) drugs—2m more than the target number for that year, set by the UN in 2011. This accounts for the falling death rate. Some hoped the drug roll-out might also lead to an increased fall-off in the rate of new infections. That hope was based on the idea, experimentally demonstrated at small scale among cohabiting couples, that taking ARVs makes an infected individual less likely to pass the virus on. There is, though, no sign of such an acceleration in the downward trend of new infections. This year’s uptick aside, it has remained fairly steady since the turn of the century, despite the fraction of infected people on ARVs having risen from 3% in 2000 to 46% in 2015. + +The next UN target is that, by 2020, 90% of those infected should have been diagnosed and know their status, 90% of those so diagnosed should be on ARVs, and 90% of those on ARVs should have suppressed viral loads. That is ambitious, but history suggests those in the field will rise to the challenge. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21699897-battle-against-human-immunodeficiency-virus-continues-hivs-slow/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Zika and the Olympics + +Should I stay or should I go? + +A call to stop or move the Olympics because of Zika is mistaken + +Jun 4th 2016 | From the print edition + + + +AS THE Olympic torch relay nears Rio de Janeiro in the countdown to the games supposed to start there on August 5th, a proposal to postpone or move the event has ignited controversy. An open letter posted online on May 27th and now signed by more than 200 academics and health experts, mostly bioethicists, argues that holding the games as planned is “unethical” because it will speed up the spread of the Zika virus. The reasons the experts put forward, however, do not warrant such drastic action. + +Most Zika infections pass with no symptoms. Though the virus can cause a neurological condition that may lead to temporary paralysis or death, this is rare. Zika is at its most dangerous during pregnancy, because it can cause severe brain damage to the unborn baby. Pregnant women are therefore advised to avoid travel to areas where Zika is being transmitted, including Rio de Janeiro. + +That is not the letter-writers’ concern, though. They worry that many of the 500,000 foreigners expected to flock to Rio for the games will get infected, and then spread Zika back home. But, though 500,000 is a huge number, it is less than 0.25% of all those who travel each year to places already affected by Zika, according to America’s Centres for Disease Control and Prevention (CDC). The World Health Organisation (WHO) agrees. Cancelling or moving the Olympics will not significantly alter the spread of Zika, it said on May 28th. The virus is now present in nearly 60 countries and territories, and people will continue to travel to and from these, games or no games. Although it is impossible to predict how many of those visiting Rio for the Olympics will be infected, Mike Turner, director of infectious diseases at the Wellcome Trust, a British health charity, reckons the risk is “close to zero” for those who take the recommended precautions. + +Such precautions are simple. Visitors are most likely to catch Zika through the bite of Aedes aegypti, a mosquito that transmits the virus. Wearing trousers and long-sleeved shirts reduces the target area mosquitoes can attack and wearing repellent drives them away. Sexual transmission of Zika, which is known to occur for up to two months after infection, is much rarer and condoms can prevent it. + +Most fans and athletes will probably be diligent about slathering on repellent, and may even compromise their sartorial elegance to avoid the mosquitoes’ attentions. Less certain is whether A. aegypti will be a rare sight at Olympic venues, as promised. It is a tricky creature to get rid of (the CDC’s director, Tom Frieden, calls it “the cockroach of mosquitoes”). Rio’s authorities have stepped up insecticide-spraying campaigns and the mopping-up of spots of stagnant water in which the insect can breed. The state’s allotment of federal money for this task is 45% more than the amount it got in 2015. But El Niño has brought a summer much warmer and rainier than usual—so mosquitoes in Rio de Janeiro have been more plentiful. + +So far this year, the number of cases there of dengue, another disease transmitted by A. aegypti, have been nearly twice those in the same period last year. Dengue rates, though, swing wildly from year to year depending on how rainy it is, so that does not necessarily mean mosquito control is ineffective. And, as Wanderson Oliveira of the federal health ministry’s unit for monitoring and emergency response points out, mosquitoes will be much less of a problem when the games start because August is a dry month when the insects’ numbers fall “vertiginously”. + +The authors of the open letter doubt the WHO’s impartiality to make the right call about Rio, suspecting it of secretly being in cahoots with the Olympics’ organisers and citing a now-expired agreement between the two to improve healthy lifestyles by way of evidence. That smacks of paranoia. + +A more sensible reason for jittery nerves is Brazil’s shaky relationship with the truth when it comes to promulgating official information. Tourists and athletes might be more assured that Zika is under control if data relating to it were monitored by foreign experts working alongside local authorities, much as voting in many countries with rickety electoral systems is observed by outsiders. At first, Mr Oliveira is a little indignant at the suggestion (“This didn’t happen in London [in 2012],” he says) but then he admits the idea could be considered. “Any expert is welcome to get in touch with us,” he says. Please form an orderly queue. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21699895-call-stop-or-move-olympics-because-zika-mistaken-should-i-stay-or/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Avoiding sunburn + +Patched up + +How to avoid solar overexposure, and still get a tan + +Jun 4th 2016 | From the print edition + +I was down by Bondi pier... + +SUN cream is a fickle friend. It protects against burn-inducing ultraviolet (UV) light, but only for a period. And the first most people know of when that period is up is the sickening sensation that their skin is starting to catch fire—by which time it is too late to act. But Justin Gooding of the University of New South Wales, in Sydney, Australia, now thinks he has a solution for those who might otherwise risk overdoing it on Bondi Beach: a stick-on UV sensor that can be tuned to give warning when a new slap of protection would be advisable. + +Dr Gooding’s invention, described in this month’s ACS Sensors, is based on titanium oxide. This is a compound well known to shed high-energy electrons if hit by UV. When those electrons interact with water and molecular oxygen, they generate reactive groups of atoms called free-radicals. Dr Gooding suspected that these radicals could be used to trigger changes in the sorts of dyes employed to colour food. + +To test this idea, he and his colleagues filled the cartridges of an inkjet printer with a series of solutions consisting of three ingredients. One was titanium dioxide. The second was one of several food dyes, including lemon yellow and sunset yellow, green and blue. The third was polyvinylpyrrolidone, a substance which bound the other two components together to form a suitable “ink” for printing. The researchers then sprayed this ink onto sheets of paper, put those sheets under a lamp that mimicked the sun’s output, UV and all, and waited to see what happened. As a control, they put similar sheets under the lamp when it was masked with a filter that intercepted the UV part of its output. + +As they had hoped, all of the sheets exposed to the unfiltered light changed colour. The changes most noticeable to the naked eye were that the green dye turned red and the blue turned yellow. By contrast, the control sheets remained unaffected. + +The principle established, the next question Dr Gooding and his colleagues needed to address was how to modulate the dyes’ responses so that they would give appropriate and timely warning of potential overexposure. That task was made harder by the fact that darker skin and higher-factor sun cream permit longer safe-exposure periods. + +To start with, they tried tinkering with the mixture of ingredients in the ink. This worked, but only to a point. The maximum by which such tinkering could delay the colour change was half an hour. Given that strong sun creams and darkly pigmented skin delay burn times by up to five hours, the researchers realised that they needed a different approach if they were going to create a useful product. They therefore started experimenting with cheap, non-toxic UV-filtering films of various opacities, and found that the strongest of these could delay the sensor’s colour change by 9½ hours—nearly twice what was needed. + +As a result, it is possible to work out, for any combination of skin tone and sun-cream protection factor (from ten to 50), what strength of filter is required to cause a particular colour change to happen sufficiently in advance of a burn beginning to form to provide useful warning. The colour change is gradual, so in a commercial product a reference strip showing the warning colour would need to be included in the sensor, to let the wearer calibrate what was going on. That done, though, the upshot would be something that could safely and easily be stuck onto the skin like a plaster, and could be printed in huge volumes at little cost. After use it would leave behind a sensor-shaped patch of light-coloured skin. But that is probably better than the look of lobster thermidor. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21699896-how-avoid-solar-overexposure-and-still-get-tan-patched-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Black holes + +We want information + +Even Stephen Hawking sometimes turns out to be wrong. Who better to put him right than himself? + +Jun 4th 2016 | From the print edition + + + +ARE black holes bald or hairy? On that strange and esoteric question may hang the future of the universe’s past. The present, the past and the future are all connected by physical laws, a phenomenon called “causal determinism”. With complete information about a system’s present, it ought therefore be possible to determine all its past and future states. In theory, that applies to any system, up to and including the entire universe. + +In 1976, however, an up-and-coming Cambridge-based cosmologist called Stephen Hawking challenged this idea by showing that black holes (which are part of the universe, albeit a rather odd part) should evaporate over the course of time, and eventually vanish. That would cause information about anything they had swallowed (and thus a part of the universe’s past) to be lost, meaning the future could not be determined, even in principle. The naive might think this information loss had happened already, as a consequence of the swallowing. But even though it is inside the hole the information continues to exist for as long as the hole does. Causal determinism is not violated. + +A black hole’s disappearance, though, really would mean the information’s loss. This, in turn, would mean the end of causal determinism—and with it the assumptions which underpin the whole of modern physics. Fortunately, 40 years on from his pushy original paper, the now-venerable Dr Hawking thinks he has found a way to permit black holes to evaporate while preserving causal determinism. + +Soft particles, the magic ingredient he invokes, form ethereal hairy coats around such holes. These retain records of what has been swallowed and then imprint this information on the radiation that is carrying away the black hole’s substance and causing its evaporation. In a manner analogous to the modulation of a television or radio signal, that radiation (known as Hawking radiation in honour of the man who conceived of it) carries data about a black hole’s meals out into space even after the hole itself is defunct. Causal determinism is therefore preserved. + +Soft particles are the area of expertise of Andrew Strominger of Harvard University, one of Dr Hawking’s co-authors on the causal-determinism-rescuing paper, to be published next week in Physical Review Letters. A soft particle is one that has virtually no energy. Dr Strominger showed a few years ago that the vacuum of space teems with them. The calculations he, Dr Hawking and Malcolm Perry, also at Cambridge, have made suggest that when matter falls into black holes it leaves ghostly traces in the form of two sorts of soft particle—photons (the particles of light) and gravitons (the particles, still hypothetical, that theory suggests transmit gravity)—which then hang around the event horizon, the hole’s point of no return. The number and distribution of these particles holds information that would otherwise be lost when a black hole evaporated away. + +Hair transplant + +The Hawking radiation itself is a consequence of the fact that a vacuum is not actually empty space. Rather, because of quantum uncertainty, pairs of particles (one of matter and one of antimatter) are constantly popping in and out of existence in it. These particles (which are distinct from the soft variety whose emergence Dr Strominger studied) normally annihilate each other soon after they pop up, leaving nothing behind. However, if they appear at a black hole’s event horizon one member of the pair may be pulled in while the other is not. The stranded particle is thus “forced” to become real and acquire energy, which it takes from the black hole. That reduces the hole’s mass (because energy and mass are equivalent, by E=mc2). Given enough such events, the hole will vanish. The wrinkle the new paper introduces is that the behaviour of the now-real Hawking-radiation particle is affected by the soft particles it encounters when it materialises. This causes the modulation that preserves causal determinism. + +Previous attempts to explain the Hawking radiation while retaining causal determinism have involved throwing some other cherished physical axiom overboard. One jettisoned the principle of equivalence between acceleration and gravity that lies at the heart of general relativity; others violated aspects of quantum field theory, which describes the interactions of subatomic particles. The cure, in other words, was worse than the disease. The soft-particle explanation does not do this. It fits with all established laws of physics. + +As yet, the new explanation is incomplete. So far, the researchers have only computed the effects caused by one property of matter falling into a black hole, its electric charge. They have not shown the effect of its mass, which would also be important. Their calculations therefore account only for part of the information that is lost. But they have established a principle that may lead to a full accounting of the matter. That would let physicists sleep easy in their beds, in the knowledge that reality is once again behaving, at least approximately, how they think it ought to. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21699899-even-stephen-hawking-sometimes-turns-out-be-wrong-who-better-put-him-right/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Jumping to attention + +Peppered moths + +Jun 4th 2016 | From the print edition + + + +The peppered moth is one of the most famous animals in evolutionary biology. Victorian collections show how a melanic version of this normally speckled species spread through sooty urban areas because its black wings camouflaged resting moths from hungry birds (see picture above). The exact genetic change involved, however, remained elusive. But, in a paper in Nature, Arjen van’t Hof of Liverpool University, in England, and his colleagues, say they have nailed it down. It is a transposable element—a piece of DNA that leaps from place to place in the genome. In this case it has leapt into a gene called cortex, which controls cell division. That promotes cortex’s expression. Just why this makes wings black, though, has yet to be worked out. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21699900-peppered-moths/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Developing economies: The long road + +Johnson: Get over it + +Human life: Live long and prosper + +Psychology: Character-driven + +Contemporary art museums: Home of the brave + + + + + +Articles Sections Next + +Developing economies + +The long road + +Making sense of euphoria and despair about emerging markets + +Jun 4th 2016 | From the print edition + + + +The Rise and Fall of Nations: Forces of Change in the Post-Crisis World. By Ruchir Sharma. W.W. Norton; 466 pages; $27.95. Allen Lane; £25. + +GLOBALISATION has gone into reverse gear. Trade volumes have stagnated and the value of the capital flows sloshing around the world has dropped by over half since 2007. The West is angry and inward-looking. Disappointment festers in the emerging world. In the boom years between 2003 and 2010 it appeared that a new era of openness and global supply chains would help emerging countries to grow at turbocharged rates for decades, closing the gap with the rich world. Today that idea is out of fashion. Brazil’s economy is shrinking, China’s debts are terrifying and Russia is a rusting autocracy. Emerging countries are growing at 4%, half as fast as in 2006. + +Into the wreckage steps Ruchir Sharma, a fund manager and author of the bestselling “Breakout Nations”, which came out in 2012. His new book, “The Rise and Fall of Nations”, has three aims: to assess the crash; to dismantle the analysis that led investors and economists to get overexcited; and to offer a new framework for thinking about emerging countries. The result is ambitious. It covers four-fifths of the world’s population and 40% of its GDP, and though it is sometimes rambling, it is also entertaining, acute and disarmingly honest. Instead of pious statements about poverty, or portentous mutterings on the importance of American leadership, Mr Sharma sees the world from the ruthless and restless perspective of an investor. + +The emerging-market slump, he argues, is not over yet. Commodity-exporting economies, such as Russia, Brazil and South Africa, have yet to adjust fully. Some multinational firms cannot admit that their investments abroad will not return a decent profit. To counteract the global slowdown after the crisis of 2008-09, most emerging economies went on borrowing binges. China, in Mr Sharma’s view, is almost certain to face a crunch of some kind. No country, he says, has “ever survived a debt binge of such a scale without suffering a severe economic slowdown”. + +Plenty of executives and forecasters mistook a commodity-driven boom for a step-change in long-term prospects. On paper there are some reasons why GDP per person might increase much faster in emerging economies than in rich ones: for example, they might be able to leapfrog generations of technology, learning from rich countries’ experience. But history suggests that sustaining fast growth is terribly hard in practice. Since 1945 most countries’ spurts of success have been followed by periods of mediocre growth or worse. + +Some forecasters then compounded this error by making projections over a dizzyingly long time. At the height of the emerging-market boom, it became routine for bosses and bankers to discuss the relative size of the GDPs of America and India and China in 2050. Mr Sharma thinks that looking beyond a horizon of between five and ten years is useless, and even then things are murky. + +What organising idea should replace the belief that the emerging world will one day converge with the rich world? Mr Sharma’s proposal is cycles. Countries’ prospects rise and fall over cycles of up to ten years. Spurts of fast growth contain the seeds of their own destruction: exuberant investors sponsor frothy projects and politicians become complacent. After a slump banks and firms eventually purge their balance sheets and reformers are emboldened, allowing growth to pick up again. + +It is hardly a novel way of thinking about the world, but Mr Sharma has ten tests for working out where countries are on this rollercoaster ride. For example, a country at the beginning of a rising cycle will often have an expanding manufacturing base, stable debts, low inflation, a cheap currency that boosts exports, a state that builds bridges but does not meddle, few crony billionaires, and hungry leaders who have not been in office long enough to become lazy or corrupt. + +For investors, the trick is to bet on a country before the next cycle of hype begins (and then sell before it peaks). Fittingly, Mr Sharma is keen on countries that few investors think about much: Pakistan and Romania, for example. + +He has a knack for sharp comparisons between countries. Australia’s history of high immigration is contrasted with Japan’s insularity. The puny trade links between India, Pakistan, Bangladesh and Sri Lanka are compared with the umbilical cords that bind South-East Asia and which have made it richer. He is pithy, too. In countries with rotten financial systems, “a shake-up of banking is a shake-up of society”. China’s periodic attempts to perk up its economy are like watching “a ping-pong ball bouncing down stairs”. + +The book has two limitations. First, it is an unashamedly business-class view of the world. Mr Sharma name-drops and networks like mad, often to entertaining effect. Visiting China less than a year after the collapse of Lehman Brothers, he finds an air of “triumphant self-satisfaction”. In 2015 Najib Razak, Malaysia’s prime minister, gets confused while addressing a room full of investors in New York, despite an aide’s attempts to keep him on-message. Yet there is little first-hand reporting on the slower currents of change in the emerging world—such as the shift from the countryside to cities—that continue regardless of where currencies and shares trade. + +The second flaw is that Mr Sharma doesn’t tackle whether it makes sense for most people to compare countries as he does. His point is that although no grand theory explains the world, an experienced observer can make informed guesses about which places are on the up or in decline. This is a useful skill for a portfolio manager, shifting money around the world. But it is of less use to people in government, or to companies, whose time horizons are longer. If Mr Sharma is right that global capital flows will remain depressed, and that developing economies face a pedestrian future, then the hot money chasing them will recede—as, perhaps, will the influence of famous fund managers. Until then, Mr Sharma’s book is a fine guide to the great emerging market boom and bust. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21699885-making-sense-euphoria-and-despair-about-emerging-markets-long-road/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +Get over it + +When it comes to language, some users are more peevish than others + +Jun 4th 2016 | From the print edition + + + +WHO doesn’t have their own little language peeve? “Literally” should be reserved for literal situations; there are plenty of ways to intensify a statement rather than saying, “We literally walked a million miles.” “To beg the question” is an old term from logic that means “to assume one’s own conclusion in an argument”; today, most people use it to mean “to prompt the question”. Two clauses connected by a comma, the “comma splice”, is jarring in good writing; people should avoid it. + +But some people take peeves to another level entirely. They choose words or phrases that have a widely understood, long-standing second meaning, and treat the second, perhaps metaphorical or new meaning, with a shocked seriousness that should be reserved for the apocalypse. + +Someone has recently created a new Twitter account, @over_morethan, dedicated to the idea that “over” may not be used with numbers: one thing may physically only sit over another thing, in this view. But to write, as The Economist has recently, of “over two-thirds”, “over 150 fellows of the Royal Society” or “over a year” is to take a pure preposition and debase it with metaphorical usage. The purists would say that these should be “more than two- thirds”, “more than 150 fellows” and “more than a year”. + +And it wasn’t just @over_morethan. Using “over” with numbers was even banned by the Associated Press (AP) stylebook, which many American newspapers use as their own, and which thus gives it a kind of sanctified status. According to one account, there was an audible gasp at the meeting of the American Copy Editors’ Society when AP announced that it was abandoning the “rule”. Never mind that, as Jonathan Owen, an editor, pointed out, languages from Swedish to ancient Greek can use their “over” preposition in exactly the same way, or that “over” has been used like this for centuries in English. Some people are quite simply attached to this pseudo-rule—no “over” with numbers—and they have treated AP’s more-than-justifiable abandonment as a lowering of intellectual standards. + +Then take Bryan Henderson, a man who has “corrected” tens of thousands of Wikipedia articles, removing “comprised of”. His rationale was that a “whole comprises the parts”, so the phrase “comprised of” is meaningless gobbledygook probably inspired by confusion with “composed of”. If it is meaningless, a lot of native speakers seem to disagree: the phrase turns up almost 4,000 hits on The Economist’s website and 63m results on Google. Odd that a meaningless phrase can be used so meaningfully by so many people. + +The case for making language rules based on how speakers actually use their language—rather than a dreamed-up ideal for how it should be used—is straightforward. Language is an arbitrary system of signs agreed on by a community. If English-speakers agree that the sound “dog” should go with a barking four-legged mammal, then that ends the discussion about what a “dog” is. + +Most English-speakers have no problem with “over” plus a number. The anonymous Twitter pundit has clearly enjoyed herself (it turned out to be a woman, even though in Johnson’s experience it is men who complain most about grammar), correcting the New York Times, Time magazine, Newsweek, along with AP, for using “over” with a number. It does not seem to have occurred to her to wonder why such a variety of publications—which agree on barely anything else—should agree that “over” can be used with a number. And they can hardly be accused of confusing their readers. The same could be said for the thousands of Wikipedia editors that Mr Henderson has corrected—nearly all highly educated native-speakers keen on sharing knowledge. They know their readers will understand; who says they cannot use their language properly? + +Language change happens slowly. “Over” with a number seems to have ancient roots; “comprised of” began rising in English books more than (or is that “over”) a century ago; and nobody is confused by either. Of Johnson’s own peeves, it seems that careful writers still mostly use “literally” literally—something worth fighting for. But “to beg the question” meaning “to prompt the question” is fully mainstream. It is all well and good to oppose a change that has not yet taken hold, or one that still confuses people. But when the language has truly moved on, so should its guardians. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21699888-when-it-comes-language-some-users-are-more-peevish-others-get-over-it/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Human life + +Live long and prosper + +How to plan for a long, long life + +Jun 4th 2016 | From the print edition + + + +The 100-Year Life: Living and Working in an Age of Longevity. By Lynda Gratton & Andrew Scott. Bloomsbury; 264 pages; $28 and £18.99. + +IT USED to be rare to live to 100. But the progress of science has meant that over the past two centuries every year has added three months to average life expectancy, at least in rich countries. If “The 100-Year Life” by Lynda Gratton and Andrew Scott is correct, half the children born in the rich world today are likely to live to 100. + +Predicting future life expectancies is not easy. Some say there are fundamental limits to the continued extension of the average lifespan, and that further gains may become disproportionately hard to achieve. It is certainly true that reducing child mortality or cardiac diseases in middle age—the low-hanging fruit of increased longevity—have all been reached. + +How to look after all these elderly folk is a different problem. Governments around the world are already struggling to support growing numbers of retired people who depend on a shrinking working population. Eighteen OECD countries have raised pension ages. At the same time, workers are being asked to dig deeper into their own pockets. None of this is enough. + +The book suggests that even greater difficulties lie ahead. Looking at three hypothetical people, born in different eras, the authors map out the scale of the problem and what it might mean for a working life. Jack, born in 1945, worked for 42 years and was retired for eight. He had to save only a small percentage of his salary in a pension every month, which was topped up by the government and by his company. Jimmy was born in 1971 and has a life expectancy of 85. If he works for 44 years and retires for 20, he will be likely to need to save a whopping 17% of his income during his working life. From here the numbers grow more unsettling. Jane, born in 1998, will need to finance 35 years of retirement on the same 44 years of work. This will mean she must save 25% of her income—an improbable sum given other commitments such as mortgages, university fees and child care. The upshot of all of this continued extension of longevity is that working to 70 or even past 80 may not only become less unusual, but may be necessary in the future. + +While one can certainly quibble with the assumptions built into each of these scenarios, the scale of the problem is perfectly clear. It is going to be nearly impossible for workers to save enough money during the current span of a working life to fund retirements of increasing length. And if people have to work longer, it is unclear whether their education or the places where they work are geared to support such a future. + +How best to adjust education so it prepares the youth of today for longer working lives and many different jobs? Online courses and retraining are becoming increasingly popular—and increasingly important—for this reason. But universities may need to rethink the model of handing a big dollop of education once, in youth, and forcing graduates to repay that cost over decades. If people must retrain throughout their lives, as well as save more for retirement, a costly, one-shot education at the start might become an unmanageable burden. + +The authors use a little too much management-speak. Even so, the book is useful. Too few people are considering the issue that if the world is unprepared, longevity will be both a gift and a curse. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21699886-how-plan-long-long-life-live-long-and-prosper/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Psychology + +Character-driven + +Why never giving up is a worthwhile goal + +Jun 4th 2016 | From the print edition + +The test will be when the gloves come off + +Grit: The Power of Passion and Perseverance. By Angela Duckworth. Scribner; 352 pages; $28. Vermilion; £20. + +FRIEDRICH NIETZSCHE, a German philosopher, once stated that there was a universal tendency to see success as the result of innate talent, rather than effort. Today it is still common to think of the straight-A pupil as having a “gift” for learning, or of the sports star as miraculously skilful. Angela Duckworth, a professor of psychology at the University of Pennsylvania, believes that talent is overrated. More important, she suggests, is a blend of persistence and passion—or “grit”. “Our potential is one thing,” she writes. “What we do with it is quite another.” + +That character matters is not a new idea. But “Grit”, Ms Duckworth’s first book, is part of a broader trend which is influencing organisations from sports teams to schools. Over the past two decades more and more scholars have analysed traits like curiosity and self-control. Such faculties are at least as important as raw cognitive ability to grades and pay, they say. And since these attributes are seen as independent of and more malleable than intelligence, they are a voguish area for education reformers. This year, for example, nine school districts in California will begin testing pupils on their character. + +“Talent counts, [but] effort counts twice,” insists Ms Duckworth in the first and best part of her book. Much of her work is based on her Grit Scale, a questionnaire which asks people how much they agree with such statements as “I am diligent. I never give up.” At West Point, an American military college, grit scores predict dropouts better than academic records. Grittier salespeople stay in their jobs, grittier swimmers win more medals and grittier pupils persevere with university. + +Some critics have suggested that Ms Duckworth’s work is a rebranding of earlier research on conscientiousness. She argues, however, that grit is about more than that. It also involves finding and fostering a purpose. How to build grit is less well understood, she concedes. “Goof around” until you find something you love, she suggests, and then practise so that it becomes a habit. Parents, teachers and bosses can help by giving praise for effort and displaying grit themselves. Ms Duckworth’s own family obeys the “hard thing rule”: everyone must pick a difficult task, like learning the piano, which they can abandon but only at a natural stopping point, say the end of term. She adds homilies of successful people such as Jamie Dimon, chief executive of JPMorgan Chase, and Ta-Nehisi Coates, a writer, who she says are “paragons of grit”. + +All this is mildly inspirational, if vague. The author’s relentless message simplifies a complex story. Traumatic childhoods, bad parenting, awful schools and a lack of extra-curricular opportunities can make it harder for children to develop grit; success for poor pupils is not simply a matter of them pulling themselves together. Ms Duckworth knows that. She has warned schools against grading pupils on grit in high-stakes tests. In 2013 she co-founded the Character Lab, a research centre which tries to ensure that policies to encourage grit are based on science. She has a tough task ahead, but is determined to see it through. That’s grit for you. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21699890-why-never-giving-up-worthwhile-goal-character-driven/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Contemporary art museums + +Home of the brave + +It all started with Tate Modern + +Jun 4th 2016 | From the print edition + + + +THE view north from the top of Tate Modern’s new twisted ten-storey extension (pictured), which opens on June 17th, is among the finest in London: a perfectly aligned panorama of St Paul’s Cathedral in all its Baroque beauty. And such is the democracy of the museum that the public will get to enjoy it too, from a generous balcony that wraps right around the building. They won’t have to pay. They won’t even have to look at any art on the way up. “Museums now are places where people come to meet each other and have a conversation and a good time,” says Sir Nicholas Serota, director of the Tate Galleries. “I’m happy about that.” + +The eating and meeting places have been part of Tate’s appeal ever since this former power station, converted by Herzog and de Meuron, a Swiss firm, opened in 2000. People flock to the projects in the Turbine Hall, among them Carsten Holler’s scream-inducing slides and Olafur Eliasson’s Weather Project emulating the glory of the rising sun. With over 5m visitors a year, twice the number going to the Museum of Modern Art (MoMA) in New York, and with only half the exhibition space, an extension quickly became inevitable. + +Tate Modern’s original permanent exhibition was sniffed at for its patchy content and occasional holes. This forced the gallery to put on thematic rather than chronological displays, some of them quite baffling. But over the past 16 years, Frances Morris, first as a curator and now as director of Tate Modern, has been building up a wide-ranging collection, roaming first through Latin America and then on to the rest of the world. + +Sculptures by Saloua Raouda Choucair from Lebanon and the modernist paintings of Ibrahim El-Salahi from Sudan would be out of Tate’s reach if the board hadn’t started buying before the market caught on. “It’s a way of collecting geared to what they could afford, but it’s ended up being a lot of good work from under-represented areas,” says Matthew Slotover, co-founder of the Frieze art fairs. “It now feels very forward looking. MoMA [with its predominantly American and European collection] is struggling to catch up.” Ms Morris and Sir Nicholas, on the other hand, would prefer it to be seen as a new way to look at the history of art and a rethink of the modernist canon, rather than a matter of economics. “Modernism didn’t just happen in Paris, or New York,” says Ms Morris. + +Modernism even happened in London, though it wasn’t much loved there. But by the time Tate Modern emerged, YBAs (for Young British Artists) like Tracey Emin and Damien Hirst, who had been snaffled up by Charles Saatchi in the 1980s and 1990s, had finally created an appetite for contemporary art in a city which, thanks to Margaret Thatcher’s financial deregulation in 1986, was becoming very much richer. It was Tate, though, that put London on the international art map, with a string of after-effects: the Frieze art fair which arrived in 2002, a proliferation of contemporary-art dealers and eventually the arrival of big-name American galleries like Pace and David Zwirner that could no longer avoid having a presence in the city. + +Thin, besuited and outwardly cool, Sir Nicholas describes his job as “balancing the books and being creative and brave”, but his strongest play has been to develop enduring relationships around the world and create an enviable network of influence, balancing a subtle showmanship with a love of art. Cy Twombly, an American artist who died in 2011, left three swirly paintings from his Bacchus series (worth in the region of £30m at auction) to the Tate, based solely on his long-standing friendship with the director. Board members such as Howard Davies, a banker, and Janet de Botton, a well-known collector, step down, but never really leave. When Hannah Rothschild was appointed chairman of the National Gallery, she stayed on as the “liaison” trustee between the two institutions. “You don’t turn down a chance to keep learning from the master,” she says of Tate’s boss. + +It is hard to believe that when Tate Modern opened, its senior team worried that the Turbine Hall was too big and wondered if people would come. If they could have seen into the future, they would have observed what could be called the “Tate effect”. When the new San Francisco Museum of Modern Art opened last month, its director Neal Benezra described a ground floor space with windows onto the street as “our Turbine Hall”. It is doubtful that the HangarBicocca, a 15,000-square-metre former factory in Milan which opened in 2004, would have happened without Tate’s example (its curatorial programme, incidentally, is currently in the hands of a former Tate Modern director, Vicente Todoli). Or the Power Station in Shanghai. Or the massive Art Mill in Qatar. + +And perhaps, when the Guggenheim Museum of Art made its whole interior over to a James Turrell light installation in 2013, that was the Tate effect too. Over 5,000 visitors came each day (more than any other exhibition in New York that year), lying on their backs on the floor, selfie-ing furiously as the colours moved through the rainbow. It is interesting to see Tate Modern broaden its brief, but many people go for the entertainment rather than for a lesson in art history. Could that be the ultimate Tate effect? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21699887-it-all-started-tate-modern-home-brave/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Jane Fawcett: The deb who sank the Bismarck + + + + + +Articles Sections Next + +Obituary: Jane Fawcett + +The deb who sank the Bismarck + +Jane Fawcett (née Janet Caroline Hughes), codebreaker and saviour of Victorian buildings, died on May 21st, aged 95 + +Jun 4th 2016 | From the print edition + + + +A DRAUGHTY wooden hut, in the company of the best brains of Britain, was not quite the billet Jane Fawcett had imagined for herself. At Miss Ironside’s School for Girls in Kensington the drill had been to sit up straight, learn to curtsey and not bother her head about exams, for Mr Right was bound to come along eventually. After that, in 1939, she was a deb, parading en masse in a long white frock and an obvious sulk. A complete waste of time, she thought. Now, aged 19, just a chicken in the Bletchley Park code-breaking team, she was spending hours on a horrid hard chair, bent over a machine on a wobbly trestletable. Lights hung down on strings, and a frightful old stove smoked in the middle of the room. She was also saving the country, and it was terribly exciting. But she could not breathe a word about that. + +She had told her parents she was working for the Foreign Office. They probably presumed it was as a typist, the kiss of death. She had been recruited for Bletchley because the government then believed that the upper classes were better at keeping secrets. Such an odd idea; she’d supposed the whole country was making common cause. She often didn’t think much of aristocrats, despite moving in that world herself. + +It was certainly a relief, though, when her father rescued her from her first lodgings, in a fume-ridden council house with a lorry-driver’s family. Couldn’t have Jane there, he said. She moved to Liscombe Park, the Elizabethan mansion of a family friend, where a much jollier time was had, though the trip to Bletchley down pitch-black country lanes for night shifts was hairy, to say the least. Bletchley Park itself, a pile of best “lavatory Gothic” as she later described it, was sociable for a spy-centre; she danced Scottish reels on the lawn and sang madrigals. Those gave brief respite from the gruelling days and nights spent tracking what the Germans were up to. + +Her enemy was the German Enigma machine, a fiendish configuration of rotors which changed every day to set the code for Nazi military communications. Bletchley Park’s code-breaker, known as the Bombe, was being ever-upgraded to compete with it by a group of laconic, obsessive men (including Alan Turing, “desperately screwed up”, and Gordon Welchman, “always in the depths of the deepest thought”). Of course, they never noticed her. Yet women, two-thirds of the workforce, were treated pretty much as equals at Bletchley. They could notch up their own victories, and May 25th 1941 was hers. + +The day was going as usual. When an Enigma code was broken, she would check the decoded message to see, one, if it was plausible German, and two, if it was of any interest. (She had all of six months of German, picked up in dull Zurich, where she had been sent to get over her heartbreak that she was too tall to be a ballerina. She soon went off to St Moritz instead.) In May 1941 they were all trying to trace the Germans’ best battleship, the Bismarck, which had just destroyed HMS Hood with the loss of more than 1,400 lives. They thought it was still off Norway. But the decoded message, spooling on a paper strip out of her machine, told her that the Bismarck was going to Brest. The message was passed straight to Whitehall, and they were all “absolutely on their toes” to know what would come through next. It was a distress call, as Hitler’s finest ship was sunk by the Royal Navy. That earned her a rousing cheer in the Bletchley Park dining room. + +A red-brick victory + +And that was all she got. No one outside the circle knew anything of it; they were all sworn to absolute secrecy for life. That was sometimes very hard. Her fiancé Ted, a naval officer, came back from the war a hero; she felt like an also-ran. Nonetheless, not being one to brood, she became a professional singer for 15 years while bringing up two children; and then, unexpectedly, got the chance to charge off to war again. Which, of course, she did. + +This time the secret central command was in her own house in Kensington. There, as secretary from 1964 to 1976, she ran the affairs of the Victorian Society. Once more, it was David against Goliath: a small group led by another obsessive intellectual, Nikolaus Pevsner, fighting tooth and nail to persuade the whole government, the whole of the British public, all academe and almost all architects that Britain’s Victorian buildings were worth saving. Once more, too, it was she who did most of the hard slog. She wrote books, lectured, managed the rickety finances and tormented British Rail while the men, especially John Betjeman, the poet, grabbed the attention. Well, never mind; she counted saving the rampant red-brick London Midland Hotel beside St Pancras as one of her special achievements. And she was even happier to see how good it looked inside when it reopened in 2011. She had feared the redo would be very vulgar. + +The refurbishment that pleased her less was of Hut 6 at Bletchley. At last, the great secret got out; the place became a museum, and she went to see it. The lawns were too neat, the lights were wrong and the tables no longer wobbled. It was all much too clean and rather sterile. Still, that didn’t stop her seizing the hand of the Duchess of Cambridge and chatting away briskly for ages, as one well-bred gel to another, about the best time of her life, spent there. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21699884-jane-fawcett-n-e-janet-caroline-hughes-codebreaker-and-saviour-victorian-buildings-died/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Manufacturing activity + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Jun 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21699953-interactive-indicators/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Jun 4th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21699929-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Jun 4th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21699925-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Jun 4th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21699928-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Manufacturing activity + +Jun 4th 2016 | From the print edition + + + +The latest round of manufacturing data from Markit, a research firm, paints a gloomy picture. In America the purchasing managers’ index (PMI) dropped slightly in May to 50.7, its worst reading since 2009 and only just above the 50 threshold that indicates expansion in manufacturing activity. The euro area’s PMI also fell, confounding expectations that activity there would recover after fresh monetary stimulus. In Brazil manufacturing firms are shedding jobs at the fastest rate on record; China’s index was below 50 for the 15th month in a row. Britain’s score edged up to 50.1 from April’s low of 49.4, but over a third of managers think that the possibility of Brexit has hurt their business. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21699927-manufacturing-activity/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Jun 4th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21699924-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Thu, 02 Jun 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Free speech: Under attack + + + + + +Strikes in France: Don’t cave in, Mr Hollande + + + + + +Rethinking the welfare state: Basically flawed + + + + + +Indian banking: Of banks and bureaucrats + + + + + +Shopping in America: Between Bentonville and Bezos + + + + + +Fighting corruption: Cleaning up + + + + + +Letters + + + +On anti-Semitism, Brexit, Ban Ki-moon, Jordan, referendums, egg shells: Letters to the editor + + + + + +Briefing + + + +Universal basic incomes: Sighing for paradise to come + + + + + +United States + + + +Bernie Sanders: California, here we come + + + + + +The campaigns: Heard on the trail + + + + + +Chicago: Predictable policing + + + + + +Refugees: Their own public Idaho + + + + + +Lexington: Trumpology + + + + + +The Americas + + + +Brazil’s economy: Nowhere to go but up + + + + + +Poverty in Argentina: Gutted community + + + + + +Bello: Fujimori versus anti-Fujimorismo + + + + + +Asia + + + +Japanese politics: Postpone and be damned + + + + + +Africans in India: They don’t love us + + + + + +Banyan: Dialogue of the deaf + + + + + +China + + + +Education: The class ceiling + + + + + +Remembering Tiananmen: Squaring off + + + + + +Middle East and Africa + + + +Railways in Africa: Puffed out + + + + + +Crimes against humanity: One dictator down + + + + + +Nigeria’s life coaches: Yes you can! + + + + + +Palestine: A museum without exhibits + + + + + +Syria’s war: Never-ending horror + + + + + +Western Sahara: A forgotten leader of a lost cause + + + + + +Innovation in the Arab world: From zero to not much more + + + + + +Qatar: The other Wahhabi state + + + + + +Europe + + + +France on strike: Aux barricades + + + + + +Turkey’s Kurds: War of attrition + + + + + +Germany and the Armenian genocide: Name and shame + + + + + +Corruption in Romania: Death of an antiseptic salesman + + + + + +Russia’s empty elections: United Russia, divided Putin + + + + + +Charlemagne: For the love of pizza + + + + + +Britain + + + +Brexit and the union: Tug of war + + + + + +Retail: Modesty sells + + + + + +Brexit brief: If it were done + + + + + +Policy-making: Lost in transit + + + + + +Public services: Pay up + + + + + +Agriculture: Casting asparagus + + + + + +Teaching assistants: Help needed + + + + + +Bagehot: Pity the Brexpats + + + + + +International + + + +Free speech: The muzzle grows tighter + + + + + +Free speech in Bangladesh: Muted by machetes + + + + + +Campus protests and free speech: The colliding of the American mind + + + + + +A youthful trend: Don’t be so offensive + + + + + +Business + + + +Walmart: Thinking outside the box + + + + + +Digital celebrities: From smartphone to silver screen + + + + + +Price-fixing: No truck with cartels + + + + + +French manufacturers in Morocco: Factories in the sun + + + + + +Apple in India: Forbidden fruit + + + + + +Schumpeter: The evolution of Mr Thiel + + + + + +Finance and economics + + + +Reforming Indian banks: Bureaucrats at the till + + + + + +Buttonwood: Working hard for the money + + + + + +China’s currency: Bending, not breaking + + + + + +Automation: I’m afraid I can’t do that + + + + + +Crypto-currencies: Etherised + + + + + +Aircraft finance: Crowded skies + + + + + +SMEs in developing countries: Caught in the middle + + + + + +Free exchange: Tales from Silicon wadi + + + + + +Science and technology + + + +Chinese science: Schrödinger’s panda + + + + + +An update on AIDS: HIV’s slow retrenchment + + + + + +Zika and the Olympics: Should I stay or should I go? + + + + + +Avoiding sunburn: Patched up + + + + + +Black holes: We want information + + + + + +Jumping to attention: Peppered moths + + + + + +Books and arts + + + +Developing economies: The long road + + + + + +Johnson: Get over it + + + + + +Human life: Live long and prosper + + + + + +Psychology: Character-driven + + + + + +Contemporary art museums: Home of the brave + + + + + +Obituary + + + +Obituary: Jane Fawcett: The deb who sank the Bismarck + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Manufacturing activity + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.06.11.TXT b/homeworks/B20769/homework1/data2/2016.06.11.TXT new file mode 100644 index 0000000..f1e38c3 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.06.11.TXT @@ -0,0 +1,6814 @@ +2016-06-11 + + + +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Technology Quarterly + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +| Next section | Main menu | + + + + +* * * + + + +The world this week + + + +Politics this week [Fri, 10 Jun 14:21] + +Business this week [Fri, 10 Jun 14:21] + +KAL’s cartoon [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Politics this week + +Jun 11th 2016 | From the print edition + + + +Hillary Clinton claimed the Democratic nomination for president after winning four more states. In California, the biggest prize of all, she walloped Bernie Sanders, her rival, by 56% to 43%. Before the primaries the Associated Press estimated that she had secured enough support from superdelegates—party politicians and bigwigs—to push her over the finishing line. See article. + +Donald Trump, the Republican candidate, said that a judge overseeing a civil-fraud case against the now defunct Trump University would not give him a fair hearing because he was of Mexican descent. Paul Ryan, the Speaker of the House of Representatives, who only recently and somewhat reluctantly threw his support behind Mr Trump, described it as a “textbook definition of a racist comment”. See article. + +Power surge + +Cabinet officials from America and China held talks in Beijing. China agreed to cut steel output, co-operate on combating climate change and enforce sanctions on North Korea aimed at persuading it to abandon its nuclear-weapons programme. Big differences remained, however, not least over China’s territorial ambitions in the South China Sea. See article. + + + +Hundreds of lawyers in China signed a statement condemning police for allegedly attacking one of their peers in a court in the southern city of Nanning. The city’s government denied the allegation, but ordered the court to apologise and pay compensation. + +In Hong Kong thousands of people attended an annual vigil to commemorate the crushing of the Tiananmen Square protests in Beijing in 1989. Some student groups, which had joined previous vigils, stayed away, saying they preferred to focus on democratic reform in Hong Kong. + +At least 19 people were killed in attacks on an army base, checkpoint and gun shops in Aktobe, in north-western Kazakhstan. Islamic militants were blamed. + +Tax-free threshold + +Saudi Arabia’s government published more details of its plans to reduce the country’s budget deficit and rebalance the economy away from oil. It alarmed the country’s 10m expats by suggesting it might impose an income tax on them, though it ruled out taxing its own 20m nationals. + +The UN warned that up to 90,000 civilians could be trapped inside Fallujah, a city near Baghdad held by Islamic State that Iraqi forces are trying to retake. IS has fired on residents trying to flee. + +Two Palestinian gunmen opened fire in a restaurant in Tel Aviv, killing four people. A wave of violence against Israelis that has lasted for over a year had only recently started to abate. The government suspended entry permits for Palestinians from Gaza and the West Bank. + +South Africa’s economy contracted by an annualised 1.2% in the first three months of 2016, a far steeper fall than had been forecast by economists. The slumping economy will add to pressure on the ruling African National Congress in local elections in August. + +Militants in Nigeria’s oil-producing regions attacked pipelines and oil wells, reducing the country’s oil output to its lowest level in nearly three decades. A militant group, calling itself the Niger Delta Avengers, started the attacks after the government stopped paying such groups to protect pipelines. + +At least 18 people with albinism have been killed in Malawi since the end of 2014, according to Amnesty International. The victims are thought to have been murdered because of a false belief that their body parts have magical properties. See here and here. + +D-Day is June 23rd + + + +Britain’s prime minister, David Cameron, and the leader of the anti-European UKIP, Nigel Farage, represented each side of the Brexit campaign in a TV debate. Immigration was a big issue for the audience, as was the economy. The Electoral Commission extended the deadline for voter registration after a surge in applications caused its website to crash. Over half a million people applied on the final day. Encouragingly for Mr Cameron and the Remainers, registrations among under-35-year-olds, a group that polls show are strongly pro-EU, accounted for most of the demand. + +A car bomb in Istanbul, targeting a police bus, killed 11 people, the fourth bomb attack in Turkey’s largest city this year. No group claimed responsibility for the incident, but Turkey’s president, Recep Tayyip Erdogan, suggested the outlawed Kurdistan Workers’ Party was to blame. + +Swiss voters rejected a plan to bring in a universal basic income; only 23% were in favour. The bill proposed giving each adult SFr2,500 ($2,560) per month unconditionally. Finland and the Netherlands are considering similar programmes. + +Germany’s president, Joachim Gauck, announced that he will not run for re-election next year because at 76 he is too old. His decision will make the political landscape even more complicated for Angela Merkel, the chancellor, who has struggled to rally support for her open-doors refugee policy. + +The EU’s popularity is in decline, according to a survey from Pew. In almost all of the ten countries covered, enthusiasm for the European project has waned. Despite the forthcoming Brexit vote, it is French opinions, not British, that have turned most sharply. Only 38% of French people view the EU favourably now, compared with 69% in 2004. + +Dead voters walking + +Haiti’s electoral council scrapped the results of last year’s first round of voting in the presidential election and set a new date for elections on October 9th. It said it had uncovered widespread fraud, including the use of “zombie votes”. The interim president, Jocelerme Privert, said he would stay in power until a run-off is held in January, which means he will be in office six months past his parliamentary mandate. + + + +In Peru’s presidential election, Pedro Pablo Kuczynski seemed to have defeated Keiko Fujimori by just 39,000 votes out of the 18m cast. Ms Fujimori, whose father, Alberto, was president from 1990 to 2000, had led the opinion polls for months. Mr Kuczynski is a 77-year-old liberal economist who wants to stimulate the economy through tax cuts and investment, particularly in sanitation and health care. See here. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21700462-politics-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Business this week + +Jun 11th 2016 | From the print edition + + + +Janet Yellen, the chairman of the Federal Reserve, dropped a strong hint that the central bank won’t raise interest rates at its June meeting, a reversal of previous indications that it would. After figures showed that only 38,000 new jobs were created in May, Ms Yellen said in a speech that current monetary policy is “generally appropriate” and omitted to mention that rates will rise “in the coming months”, a phrase that Fed-watchers interpret as a sure sign of an impending increase. + +In a surprise move the Bank of Korea cut its benchmark interest rate for the first time in a year, to a record low of 1.25%. South Korea’s export-led economy is reeling from the slowdown in China. Along with the government the central bank is pumping $9.5 billion into state-run development banks that have run up big losses from loans to the weakened shipbuilding industry. + +A long player + +In a long-running legal saga Guy Hands, the founder of Terra Firma Capital Partners, went back to court to resume his fight with Citigroup over the advice its British arm gave to him in the calamitous buy-out of EMI in 2007. Citi eventually seized control of the record label to recoup loans it had made to finance the bid. Mr Hands claims the bank’s guidance on the deal was misleading. A jury in New York sided with Citi in 2010, but that verdict was reversed on appeal. The next chapter in the case is being heard by a judge in London. + +A labour tribunal in France ordered Société Générale to compensate Jérôme Kerviel, a rogue trader at the French bank, €450,000 ($512,000) because he was sacked without “real or serious cause”. Mr Kerviel lost the French bank €4.9 billion through his dodgy trades and was found guilty in 2010, a conviction that was upheld on appeal. SocGen said the tribunal’s decision was “incomprehensible”. + +After talks in Beijing with American Treasury officials, the Chinese government announced plans to make it easier and cheaper for businesses in the United States to invest in China using the yuan. The proposal gives America a quota of up to 250 billion yuan ($38 billion) to invest in Chinese shares and bonds. China hopes to boost foreign investment in the country after last year’s stockmarket meltdown dented confidence. + +The European Central Bank (ECB) started adding corporate bonds to the debt it is buying through its quantitative-easing programme, a policy change that was announced in March. Meanwhile, the yield on German ten-year government bonds dropped to a new low of 0.035% and threatened to fall into negative territory. + +The ECB reported that none of the seven EU states that are supposed eventually to adopt the euro—Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania and Sweden—is on track to do so. Given the euro zone’s problems, that is probably because they would rather not join at the moment. + + + +Needs some strong medicine + +Bogged down in federal investigations into its business practices, Valeant reported a quarterly loss of $374m and reduced its profit forecast for the year. The drugmaker also disclosed that it is selling some of its products at a loss. Its share price, which has been hammered over the past year, fell by a further 14%. + +A few days after its chief executive quit, Noble Group, Asia’s biggest commodities-trading firm, announced that Richard Elman would step down as chairman. The company, which has been hit hard by the slump in commodity prices, also announced a new $500m rights issue, which unnerved investors already worried about its ability to tap banks for loans. + +A few days after the collapse of British Home Stores, a committee in Parliament grilled Dominic Chappell, the retail chain’s former owner, and Darren Topp, a former chief executive. The committee is investigating what led to the bankruptcy. BHS’s debt of more than £1 billion ($1.5 billion), half of which is a pension shortfall, crippled the business. In startling revelations Mr Chappell was accused of having “his fingers in the till” and threatening, on more than one occasion, to kill Mr Topp (Mr Chappell denied this). Up to 11,000 jobs and 163 stores will go as a result of BHS’s demise. + +The new bogeymen + +In a bad PR week for British retailing, Mike Ashley, the boss of Sports Direct and a one-time suitor of BHS, was also hauled in front of MPs. He was questioned, among other things, about an alleged culture of fear at the firm’s main warehouse. Unions told the committee that an employee gave birth in the toilet rather than miss a day’s work for fear of being disciplined. Mr Ashley conceded that he wouldn’t want his family to work there. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21700466-business-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +KAL’s cartoon + +Jun 11th 2016 | From the print edition + + + +More KAL’s cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21700471-kals-cartoon/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Leaders + + + +Education: How to make a good teacher [Fri, 10 Jun 14:21] + +Brexit: Jeremy Corbyn, saboteur [Fri, 10 Jun 14:21] + +Fund management: Slow-motion revolution [Fri, 10 Jun 14:21] + +Agricultural technology: Feeding the ten billion [Fri, 10 Jun 14:21] + +The trade in albino bones: For the colour of their skin [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Education + +How to make a good teacher + +What matters in schools is teachers. Fortunately, teaching can be taught + +Jun 11th 2016 | From the print edition + + + +FORGET smart uniforms and small classes. The secret to stellar grades and thriving students is teachers. One American study found that in a single year’s teaching the top 10% of teachers impart three times as much learning to their pupils as the worst 10% do. Another suggests that, if black pupils were taught by the best quarter of teachers, the gap between their achievement and that of white pupils would disappear. + +But efforts to ensure that every teacher can teach are hobbled by the tenacious myth that good teachers are born, not made. Classroom heroes like Robin Williams in “Dead Poets Society” or Michelle Pfeiffer in “Dangerous Minds” are endowed with exceptional, innate inspirational powers. Government policies, which often start from the same assumption, seek to raise teaching standards by attracting high-flying graduates to join the profession and prodding bad teachers to leave. Teachers’ unions, meanwhile, insist that if only their members were set free from central diktat, excellence would follow. + +The premise that teaching ability is something you either have or don’t is mistaken. A new breed of teacher-trainers is founding a rigorous science of pedagogy. The aim is to make ordinary teachers great, just as sports coaches help athletes of all abilities to improve their personal best (see article). Done right, this will revolutionise schools and change lives. + +Quis docebit ipsos doctores? + +Education has a history of lurching from one miracle solution to the next. The best of them even do some good. Teach for America, and the dozens of organisations it has inspired in other countries, have brought ambitious, energetic new graduates into the profession. And dismissing teachers for bad performance has boosted results in Washington, DC, and elsewhere. But each approach has its limits. Teaching is a mass profession: it cannot grab all the top graduates, year after year. When poor teachers are fired, new ones are needed—and they will have been trained in the very same system that failed to make fine teachers out of their predecessors. + +By contrast, the idea of improving the average teacher could revolutionise the entire profession. Around the world, few teachers are well enough prepared before being let loose on children. In poor countries many get little training of any kind. A recent report found 31 countries in which more than a quarter of primary-school teachers had not reached (minimal) national standards. In rich countries the problem is more subtle. Teachers qualify following a long, specialised course. This will often involve airy discussions of theory—on ecopedagogy, possibly, or conscientisation (don’t ask). Some of these courses, including masters degrees in education, have no effect on how well their graduates’ pupils end up being taught. + +What teachers fail to learn in universities and teacher-training colleges they rarely pick up on the job. They become better teachers in their first few years as they get to grips with real pupils in real classrooms, but after that improvements tail off. This is largely because schools neglect their most important pupils: teachers themselves. Across the OECD club of mostly rich countries, two-fifths of teachers say they have never had a chance to learn by sitting in on another teacher’s lessons; nor have they been asked to give feedback on their peers. + +Those who can, learn + +If this is to change, teachers need to learn how to impart knowledge and prepare young minds to receive and retain it. Good teachers set clear goals, enforce high standards of behaviour and manage their lesson time wisely. They use tried-and-tested instructional techniques to ensure that all the brains are working all of the time, for example asking questions in the classroom with “cold calling” rather than relying on the same eager pupils to put up their hands. + +Instilling these techniques is easier said than done. With teaching as with other complex skills, the route to mastery is not abstruse theory but intense, guided practice grounded in subject-matter knowledge and pedagogical methods. Trainees should spend more time in the classroom. The places where pupils do best, for example Finland, Singapore and Shanghai, put novice teachers through a demanding apprenticeship. In America high-performing charter schools teach trainees in the classroom and bring them on with coaching and feedback. + + + +Do shorter hours or higher wages make better teachers? + +Teacher-training institutions need to be more rigorous—rather as a century ago medical schools raised the calibre of doctors by introducing systematic curriculums and providing clinical experience. It is essential that teacher-training colleges start to collect and publish data on how their graduates perform in the classroom. Courses that produce teachers who go on to do little or nothing to improve their pupils’ learning should not receive subsidies or see their graduates become teachers. They would then have to improve to survive. + +Big changes are needed in schools, too, to ensure that teachers improve throughout their careers. Instructors in the best ones hone their craft through observation and coaching. They accept critical feedback—which their unions should not resist, but welcome as only proper for people doing such an important job. The best head teachers hold novices’ hands by, say, giving them high-quality lesson plans and arranging for more experienced teachers to cover for them when they need time for further study and practice. + +Money is less important than you might think. Teachers in top-of-the-class Finland, for example, earn about the OECD average. But ensuring that the best stay in the classroom will probably, in most places, mean paying more. People who thrive in front of pupils should not have to become managers to earn a pay rise. And more flexibility on salaries would make it easier to attract the best teachers to the worst schools. + +Improving the quality of the average teacher would raise the profession’s prestige, setting up a virtuous cycle in which more talented graduates clamoured to join it. But the biggest gains will come from preparing new teachers better, and upgrading the ones already in classrooms. The lesson is clear; it now just needs to be taught. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21700383-what-matters-schools-teachers-fortunately-teaching-can-be-taught-how-make-good/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Brexit + +Jeremy Corbyn, saboteur + +Lacklustre and poorly led, the Labour Party is letting down the Remain campaign + +Jun 11th 2016 | From the print edition + + + +IN 1975 a Labour government, split on Britain’s membership of the European Economic Community (as it then was), put the matter to a referendum. Most of its supporters wanted to leave, so it fell to the pro-European Conservatives to trumpet the case for staying. Margaret Thatcher, their leader, campaigned in a hideous sweater bespangled with European flags and railed against “the parochial politics of ‘minding our own business’”. On the day, two-thirds of Britons voted to remain. + +The intervening decades have reversed the politics. The party of David Cameron, the Tory prime minister, is now deeply divided on Europe, so to win the referendum on June 23rd he needs the pro-Remain Labour Party to beat the drum. + +Yet with polls narrowing—as we went to press five of the most recent eight had put Leave ahead (see article)—it is failing to do so. Jeremy Corbyn, its leader, is no Thatcher. Hailing from the rump of the old Eurosceptic left, he sees the EU as a capitalist conspiracy. He voted to leave in 1975 and probably would again if Labour’s pro-EU MPs and supporters let him. + +Mr Corbyn did not make his first pro-EU intervention until mid-April, fully two months after Mr Cameron called the referendum. Since then he has been a bit player at best. When researchers at Loughborough University ranked the ten most reported-on politicians in the second half of May, he did not even make the list (partly by his own design: he had spent part of the period on holiday). By refusing to campaign alongside Tories—doing so would “discredit” the party, sniffs John McDonnell, his shadow chancellor—he has ruled himself out of every important Remain event and televised debate. + +When Mr Corbyn does bother to intervene, he is a study in reluctance. His “pro-EU” speeches are litanies of complaints about the union. Voters should back Remain, he says, because the Conservatives would not negotiate the right sort of Brexit. On June 2nd he declared Treasury warnings about the consequences of leaving as “hysterical hype” and “mythmaking”. + +No wonder that few Labour figures are taking it upon themselves to speak up. The most prominent campaigners are not MPs at all but two big faces from the party’s past: Tony Blair and Gordon Brown. And even they were absent from the Loughborough list. Following Mr Corbyn’s lead, the party is on autopilot: in an economics briefing circulated to its MPs on June 6th, the risk of Brexit was point number 16. + +Stand up and be counted + +This is feckless. The choice Britain faces on June 23rd will have profound consequences, not least for Labour voters poorly placed to weather a post-Brexit recession. Yet just 52% of Labour supporters say that they will vote, compared with 69% of Tories. Little more than half of them even know that their party is for staying in the EU. + + + +INTERACTIVE: The Economist’s “Brexit” poll-tracker + +The consequence could be that Britain votes to quit. Most Tory voters want to leave, and Mr Cameron is ill-placed to woo young and working-class voters. Labour MPs confess shock at the Euroscepticism the referendum has uncovered in the party’s heartlands. + +Perhaps Mr Corbyn simply cannot inspire his party and the struggle to uphold the status quo does not interest him. Or perhaps he is deliberately sabotaging the Remain campaign. If Britain left, the Conservative Party could tear itself apart. If there were a snap election, he might stand a chance of forming a Labour government. Yet to treat the future of the country as a question of transient advantage would be shockingly shallow. + +Whether born of apathy or ambition, Mr Corbyn’s behaviour does him no credit. If Britain does vote to leave, it will need a strong opposition leader. Sadly, it will not have one. + + + +Their eyes on Albion + +Most European bosses are twitchy about Brexit; a few spy an opportunity + + + +The charms of variable geometry + +Our final Brexit brief argues that a multispeed Europe suits Britain—and others + + + +Beyond the fringe + +Brexiteers are deliberately vague about the alternatives to European Union membership. That is because most models, such as Iceland’s, are unsatisfactory + + + +The new J-curve + +Britain’s flirtation with Brexit is more complicated than an anti-globalisation vote + + + +Young voters! Your country needs you + + + + + +More Brexit coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21700391-lacklustre-and-poorly-led-labour-party-letting-down-remain-campaign-jeremy-corbyn/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Fund management + +Slow-motion revolution + +The rise of low-cost managers like Vanguard should be celebrated + +Jun 11th 2016 | From the print edition + + + +IN THE past few years, industries including retailing, music and taxis have been spectacularly blown apart by low-cost innovators. Less celebrated is Vanguard, a fund-management group that also fits the disruptive mould. It offers diversified portfolios for retail investors at a fraction of the cost of the industry average, thanks in part to a mutually owned structure that means it cuts fees rather than pays dividends. It now runs more than $3.5 trillion of assets, and takes in another $1 billion or so from investors every working day. + +This is no overnight success: Vanguard was founded in the 1970s. That such a superior model has taken 40 years to reach today’s position is testament to two failings of finance (see article). One lies in incentives in the industry. Many products are sold by brokers or investment advisers and, for a long time, the salesforce was paid by commission. Vanguard does not pay commission, so the business went elsewhere. + +The second failing is investors’ fault. Most of Vanguard’s funds are “passive”. They do nothing more than try to match their benchmark (an index like the S&P 500, say). When this idea was first mooted, people scoffed. Who would settle for mediocrity? Better to pick one of the star “active” managers with a record of beating the market. The law of averages does indeed suggest that some managers outperform. But though you can spot such titans in retrospect, it is hard in advance. Otherwise, why would anyone give money to the also-rans? + +Regulators have belatedly tackled the incentives problem by requiring advisers to be paid by fees, rather than commissions. And an era of low interest rates and low returns has made investors more aware of the damage from charges. Too many savers have suffered the drip-drip of fees on their long-term returns in the vain pursuit of outperformance—money for old hope. A 25-year-old saver who invests in a pension for 40 years on an annual charge of 1% will take a 25% hit on the average dollar deposited in their pot, irrespective of returns; for those who pay 1.5% a year, the loss is 38%. The total fees on the average Vanguard tracker are 0.08% a year. + +Money is gushing into passive funds. In America they raked in $400 billion in 2015; actively managed funds endured outflows. Because of economies of scale, it costs little more to run a $10 billion index fund than to manage a pot of $1 billion. + +Are there risks from the disruption of fund management? Critics of big tracker managers like Vanguard and BlackRock argue they make financial markets more volatile. In theory, tracker funds could lead to swings as investors pile in and out of all shares simultaneously. But the evidence that retail investors withdraw en masse from tracker funds when the market falls is thin—they did not during the financial crisis. And new types of tracker funds are emerging that invest in stocks based on different criteria such as dividend yield; that should reduce the tendency to herd. + +Another worry is that tracker managers will be less vigilant in rooting out bad management practices at the firms they invest in, as they do not have the option of selling if they are unhappy. It is true that passive funds could do more to hold companies in their portfolios to account (even if more vigilant governance adds a small cost). But problems of inadequate governance afflict active managers as well as passive ones. + +A third—somewhat contradictory—concern is that a stockmarket dominated by tracker managers would lead to collusion. As such funds grow, they take big ownership positions in firms that compete with each other. Vanguard owns 5% of American stocks, for example; it is among the top three shareholders in the four biggest banks in America. If firms share a large shareholder, they might feel less obliged to compete. But trackers do not seek to attract investment by boosting their returns, unlike actively managed funds. As a result, they have less reason to encourage collusion. + +The trackers of my tears + +If passive funds go from accounting for roughly 30% of global stockmarkets to, say, 70-80%, then some of these worries would have more bite. But that will take a long time; despite the surge of money into passive funds, the share of actively managed stocks has only fallen from 78% to 70% in the past six years. For the foreseeable future any risks from tracker funds are far outweighed by their ability to offer cheap, diversified funds to retail investors. The real problem is not the rise of Vanguard and the other tracker funds; it is the rotten deal that retail investors have received from the fund-management industry for far too long. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21700390-rise-low-cost-managers-vanguard-should-be-celebrated-slow-motion-revolution/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Agricultural technology + +Feeding the ten billion + +Growing enough food for future generations will be a challenge. Here’s how to meet it + +Jun 11th 2016 | From the print edition + + + +ONE of the extraordinary things about the modern world is that so much of it takes food for granted. For most of recorded history, the struggle to eat has been the main focus of human activity, and all but a handful of people were either farmers or farm workers. Starvation was an ever-present threat. Even the best years rarely yielded much of a surplus to carry over as an insurance against leaner times. In the worst, none but the powerful could be sure of a full stomach. + +Now most people in rich countries never have to worry about where the next meal is coming from. In 1900 two in every five American workers laboured on a farm; now one in 50 does. Even in poor places such as India, where famine still struck until the mid-20th century, the assumption that everyone will have something to eat is increasingly built into the rhythm of life. + +That assumption, though, leads to complacency. Famine has ended in much of the world, but it still stalks parts of Africa—Ethiopia, Mozambique and Zimbabwe, to name three, depend on handouts of food. And millions of people still suffer from famine’s lesser cousin, malnutrition. According to the UN’s Food and Agriculture Organisation (FAO), some 2 billion of the world’s 7.3 billion people do not have enough to eat. Moreover, by 2050, the total population is projected to grow to almost 10 billion. Add this to the rising demand for meat, fish, milk and eggs, which is born of prosperity and which requires extra fodder to satisfy, and 70% more food will be needed in 2050 than was produced in 2009, the year the FAO did the calculation. That is a tall order. But it is not impossible. + +Quornucopia + +Since the time of Thomas Malthus, an economist writing a little over 200 years ago, people have fretted that population growth would outstrip food supply. So far, it has not. But neo-Malthusians spot worrying signs. One is that in some places the productivity of staples such as rice and wheat has reached a plateau. Neither new strains nor fancy agrochemicals are raising yields. + +Nor is there much unfarmed land left that is suitable to be brought under the plough. A source of food Malthus did not foresee was the cultivation of the American prairies. This, and similar extensions of agricultural land, such as the opening up of the cerrado in Brazil, helped the food supply greatly. But such new lands are pretty much used up. Neo-Malthusians also point to climate change. They suggest that, if global temperatures continue to rise, some places will become unfarmable—particularly poor, tropical regions. + +These are legitimate concerns. But they can be overcome by two things: the application and dissemination of technology, and the implementation of sensible government policies. + +Agricultural technology is changing fast (see Technology Quarterly). Much of this change is brought about by rich-world farmers and by affluent farmers in middle-income places like Brazil. Techniques developed in the West—especially genome-based breeding that can create crops with special properties almost to order—are being adapted to make tropical crops, such as cassava, hitherto untouched by scientific progress, both more productive and more nutritious. Such smart breeding, in alliance with new, precise techniques of genetic modification, should break through the yield plateaus. It can also produce crops with properties such as drought- and heat-resistance that will mitigate the effects of global warming. Drought-resistant maize created in this way is already on the market. + +Technology is of little use, though, if it is not adopted. In the developing world that applies as much to existing farming techniques as it does to the latest advances in genetic modification. Yield plateaus are a phenomenon only of the most intensively farmed parts of the world. Extending to the smallholders and subsistence farmers of Africa and Asia the best of today’s agricultural practices, in such simple matters as how much fertiliser to apply and when, would get humanity quite a long way towards a requisite 70% increase in output. So would things like better roads, to allow for the carriage of surpluses to markets. This would encourage productivity growth and reduce waste. + +Indeed, government policy to reduce waste more generally would make a huge difference. The FAO says that about a third of food is lost during or after harvest. In rich countries a lot of that is thrown away by consumers. In poor ones it does not reach consumers in the first place. Bad harvesting practices, poor storage and slow transport mean that food is damaged, spoiled or lost to pests. Changing that, which is mostly a question of building things like better, pest-proof grain silos and monitoring their contents properly, would take another big bite out of the 70% increase. + +The neo-Malthusians may throw up their hands in despair, but consider this: despite all the apparent obstacles, from yield plateaus to climate change, in the six years following the FAO analysis cereal production rose by 11%. If growth like that continues it should not only be possible to feed the 10 billion, but to feed them well. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21700394-growing-enough-food-future-generations-will-be-challenge-heres-how-meet-it-feeding/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The trade in albino bones + +For the colour of their skin + +Superstition is fuelling a grisly trade in human body parts. Tanzania shows how it can be curbed + +Jun 11th 2016 | From the print edition + + + +TO BE born with albinism is hard luck. This genetic condition, in which people lack pigments in their skin, hair and eyes, affects one in 20,000 worldwide and is more common in Africa. Albinos’ pale skin is easily burned by the sun, and is vulnerable to cancer. Because their eyes are sensitive to harsh light, most albinos suffer from poor vision. However, these discomforts are trivial compared with the mistreatment that albinos often suffer at the hands of others. + +For centuries people have believed that albinos are cursed. In parts of Africa babies born with albinism were once routinely killed. That ghastly tradition has died out, but others persist. In Swahili many people call albinos zeru (ghost) or nguruwe (pig). Children with the condition are often bullied at school and forced to eat separately from their peers. Many drop out. Those who complete school struggle to find work and die younger than their neighbours, not least because many end up taking unskilled jobs in the fields where they are exposed to the sun. Women are at higher risk of rape because of a myth that sex with an albino can cure HIV. + +Worst of all, many albinos are murdered by people who think that their bones contain gold or have magical powers (see article). Some witchdoctors claim that amulets made from albino bones can cure disease or bring great wealth to those who wear them. A gruesome trade in their body parts has spurred killings in Tanzania, Burundi, Mozambique, Zambia and South Africa. Sometimes family members sell their albino nephews or cousins for cash. + +In Malawi, the country worst affected, at least 18 people (and probably many more) have been killed since the end of 2014, according to Amnesty International, a human-rights group. The pace of killings seems to be escalating. In April four people, including a 23-month-old baby, were murdered and dismembered. All that was left of the child when her body was found was a skull and a few teeth. + +The government of Malawi has done little to prevent such horrors. Police officers who investigate killings are poorly trained and sometimes prejudiced against the victims. One man recently caught with human bones was fined less than $30. Murder is hard to prove, so the authorities sometimes charge people found with human body parts with grave-robbery instead. Many albinos in Malawi are now too frightened to venture outdoors, let alone travel to the nearest town. + +Je suis un noir; ma peau est blanche + +Superstitions die hard, in any part of the world. Yet the senseless killing of albinos can be curbed. Tanzania, once one of the most dangerous countries in Africa for people with albinism, has sharply reduced the number of murders by clamping down on demand. It has banned unlicensed witchdoctors and increased penalties for those caught trading in body parts. It investigates albino murders energetically: in recent years it has arrested and convicted several “albino hunters”. The police have issued mobile phones to many albinos so that they can call an emergency number if they feel unsafe. The recent appointment of an albino lawyer to the cabinet may also have helped reduce the stigma attached to the condition. + +Stamping out this horror is not beyond hope; it requires good policing and political will. As Salif Keita, a great albino musician, has often pointed out, people should never be judged by the colour of their skin. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21700395-superstition-fuelling-grisly-trade-human-body-parts-tanzania-shows-how-it-can-be/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Letters + + + +Bacteria, Hainan, cotton industry, the Arab world, Essex, Brazil, quinoa, the far right: Letters to the editor [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Bacteria, Hainan, cotton industry, the Arab world, Essex, Brazil, quinoa, the far right + +Letters to the editor + +Jun 11th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +The threat from TB + +There is no better example of “When the drugs don’t work” (May 21st) than tuberculosis. Drug-resistant TB (DR-TB) takes up to two years to treat. TB has been a global health emergency since 1993, but by 2050 one person could die from DR-TB every 12 seconds if we continue on the current trajectory. The economic price is enormous. Taking no action will cost $16.7 trillion by 2050, roughly equal to the annual economic output of the European Union. + +Global stability and progress will be hampered. It is not a case of just low- or middle-income countries facing deaths and economic damage: we will all suffer the consequences. World leaders need urgently to step up and form a global coalition to implement the recommendations from Lord O’Neill’s review in full. + +AARON OXLEY + +Executive director + +RESULTS UK + +London + + + + + +* Bacteria are the champions of survival (“The grim prospect”, May 21st). But research that would help us adapt is being hindered by intellectual property rights, regulatory testing, and so on. Paul Ewald discusses this in “The Evolution of Infectious Disease”. He points out that bacteria respond to “threats” by developing resistance. When they are not threatened, but constrained, by clean water, bed nets, condoms, soap and water, they develop in a more friendly, commensal manner. + +However, threats are not recognised by individual bacteria but by biofilms, where quorum sensing comes into play. So mechanisms that in effect free bacteria are not likely to lead to resistance. We can also address their ability to adhere to their host, which applies the same non-threatening pressures. I proposed that in 2003 using xylitol. Nathan Sharon, a pioneer researcher in bacterial adherence, did the same with mannose and other sugars in 2006. Bacteria adhere to sugar complexes on our cell surfaces. + +Introducing competing sugars to their environment prevents their adherence without threatening the bacterial community. No threat—no resistance. The problem is that the sugars cannot be made into drugs because their wide availability precludes the profits needed for regulatory passage. + +A. H. “LON” JONES + +Plainview, Texas + + + + + +Miami in China + +The island of Hainan has a rival as “China’s Florida” (May 28th): the hundreds of miles between Shenzhen and Shantou. On that southern coast Huidong has beautiful beaches, temperate climate and is only an hour’s drive from Shenzhen. The area is getting ready for the increase in Chinese pensioners you wrote about. One new development alone is being built to accommodate 100,000 households. Demand is high from Shenzhen and Hong Kong, where 35,000 people are on a waiting list for nursing services. The nursing beds in Huidong are expected to be eligible for a Hong Kong government subsidy of $1,300 per person. + +Given the rapid increase in family wealth, mobility and the demands created by a rapidly ageing population, a huge age-care industry is developing in China. The growth of retirement facilities is being driven by the government’s accelerating use of public- private partnerships, where the government contributes the facility and entrepreneurs deliver the services. China is one of the last, and most exciting, global markets for businesses providing medical- and aged-care services. + +ANDREW OKSNER + +Campanile LLC + +Hong Kong + + + + + +Garment fact stories + + + +Mahatma Gandhi’s championing of hand-woven cloth was not, as you suggest, because of opposition to industrialisation (“Southern comfort”, May 28th). Rather, it was a pragmatic tool to hurt the British colonial economy. He would have been delighted to see that the textiles industry, which was a central part of the Indian economy before it was destroyed by cheap British cotton imports in the 19th and 20th centuries, is once again flourishing. + +The demise of the Indian industry came about not only because of better technology in Britain but also as a result of policies that discouraged industrial activity in India. The British required India to be a producer of raw material and a market for cheap finished goods, not a competitor. That is what Gandhi was targeting. + +TARUN KHANNA + +Berlin + + + + + +Arab history + +The ancient empires you mentioned in your special report on the Arab world (May 14th) were not Arab at all, but Muslim, founded and run by Kurds, Persians and Turks, among others, but rarely Arabs. The empires covered vast areas where people spoke Arabic dialects, but there was no pan-Arab identity. That is a 20th-century construct. It would be more productive to acknowledge the diversity of the Arab world rather than ignore it. Maybe then we might begin to understand why the government in Tunis is democratic, whereas the one in Cairo is despotic. + +MARO SCIACCHITANO + +Portland, Oregon + +At the very least, the powers that carved up Arab nations after the first world war should have heeded the report of the American King-Crane Commission, with its thorough descriptions of Arab political aspirations. The report was ignored because it did not fit British and French colonial ambitions. + +HENRIK CARLBORG + +Solna, Sweden + +Prince Muhammad’s reform plan for Saudi Arabia is commendable and long overdue. However, this vision to a large extent overlooks women whose contribution to Saudi modernisation is constrained by Wahhabism and conservative clerics. Weaning the country off oil and modernising and diversifying the economy are ambitious goals. The real challenge lies in liberating half the population so that they too can effectively participate and contribute to the liberalisation of their country’s economy and the modernisation of their society. + +JAROSLAV KINACH + +Kiev, Ukraine + + + + + +Essex is not the only way + +Bagehot (May 21st) suggested that upwardly mobile residents of Essex are the “landlords of the political centre” in Britain. This analysis of the electoral battleground is, dare I say, a metropolitan view. Essex has as many Labour members of Parliament as Surrey, Kent, Hertfordshire, and Buckinghamshire—that is to say, zero. It will be solidly Tory for at least a generation. + +The Midlands is where the magic happens. Modern British elections are won and lost in the sort of proudly unfashionable places that most political advisers would struggle to locate on a map: Redditch, Telford, Peterborough, Corby, and Nuneaton, our very own Ohio. To Londoners, Essex probably seems remote and provincial. To us genuine provincials, it looks like a true-blue home county. + +HARRY HOLT + +Nottingham + + + + + +According to the law in Brazil + +“Way, José” (May 28th) described jeitinho in Brazil as a way of circumventing a law, and went on to say that Dilma Rousseff’s impeachment is a jeitinho round the constitution. Ms Rousseff and her allies claim that an impeachment triggered by budgetary misdemeanours is a coup, and that dodgy accounting practices by former presidents went unchecked by the budget watchdog and Congress. But her suspension from office is not a way around the law. It is the opposite: a law being enforced strictly. + +The time when presidents could benefit from reckless accounting and unimpeded profligacy with taxpayers’ money will certainly not cause any saudade in Brazil. + +BRUNO TROCCOLI + +Santiago, Chile + + + + + +Q is for quinoa + +* Poor Andean farmers are not marginal producers of quinoa once their broader socio-economic contribution to society is taken into account (“Against the grain”, May 21st). Niche market-focused poverty alleviation strategies based on production of the 10-15 main commercial varieties need to be replaced with broader strategies that permit farmers to play a role selling not only agricultural products but also ecosystem conservation services of national and global importance. For example, maintaining the genes of thousands of quinoa varieties for future climate change adaptation, as well as for combating emerging pests and diseases. Recognising the importance of “going with the diversity grain” would also help to ensure that Peruvians can make healthy food consumption choices that are compatible with living in a megabiodiverse country. + + + +ADAM G. DRUCKER + +MARLENI RAMIREZ + +Bioversity International (CGIAR) + +Lima + + + + + +Quiet desperation + +Your leader about the rise of the far right in Europe called on politicians to make an “equally rousing argument for moderation” (“Disaster averted—for now”, May 28th). This understandable but forlorn wish reminds me of the joke about what centrists chant at protest marches: “What do we want? Gradual improvement! When do we want it? As soon as economic conditions allow!” + +PAUL MOSS + +London + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21700366-letters-editor/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Briefing + + + +Education reform: Teaching the teachers [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Education reform + +Teaching the teachers + +Great teaching has long been seen as an innate skill. But reformers are showing that the best teachers are made, not born + +Jun 11th 2016 | BOSTON, NEWARK AND NEW YORK | From the print edition + + + +TO THE 11- and 12-year-olds in his maths class, Jimmy Cavanagh seems like a born teacher. He is warm but firm. His voice is strong. Correct answers make him smile. And yet it is not his pep that explains why his pupils at North Star Academy in Newark, New Jersey, can expect to go to university, despite 80% of their families needing help to pay for school meals. + +Mr Cavanagh is the product of a new way of training teachers. Rather than spending their time musing on the meaning of education, he and his peers have been drilled in the craft of the classroom. Their dozens of honed techniques cover everything from discipline to making sure all children are thinking hard. Not a second is wasted. North Star teachers may seem naturals. They are anything but. + +Like many of his North Star colleagues are or have been, Mr Cavanagh is enrolled at the Relay Graduate School of Education. Along with similar institutions around the world, Relay is applying lessons from cognitive science, medical education and sports training to the business of supplying better teachers. Like doctors on the wards of teaching hospitals, its students often train at excellent institutions, learning from experienced high-calibre peers. Their technique is calibrated, practised, coached and relentlessly assessed like that of a top-flight athlete. Jamey Verrilli, who runs Relay’s Newark branch (there are seven others), says the approach shows teaching for what it is: not an innate gift, nor a refuge for those who, as the old saw has it, “can’t do”, but “an incredibly intricate, complex and beautiful craft”. + +Hello, Mr Chips + +There can be few crafts more necessary. Many factors shape a child’s success, but in schools nothing matters as much as the quality of teaching. In a study updated last year, John Hattie of the University of Melbourne crunched the results of more than 65,000 research papers on the effects of hundreds of interventions on the learning of 250m pupils. He found that aspects of schools that parents care about a lot, such as class sizes, uniforms and streaming by ability, make little or no difference to whether children learn (see chart). What matters is “teacher expertise”. All of the 20 most powerful ways to improve school-time learning identified by the study depended on what a teacher did in the classroom. + + + +Eric Hanushek, an economist at Stanford University, has estimated that during an academic year pupils taught by teachers at the 90th percentile for effectiveness learn 1.5 years’ worth of material. Those taught by teachers at the 10th percentile learn half a year’s worth. Similar results have been found in countries from Britain to Ecuador. “No other attribute of schools comes close to having this much influence on student achievement,” he says. + +Rich families find it easier to compensate for bad teachers, so good teaching helps poor kids the most. Having a high-quality teacher in primary school could “substantially offset” the influence of poverty on school test scores, according to a paper co-authored by Mr Hanushek. Thomas Kane of Harvard University estimates that if African-American children were all taught by the top 25% of teachers, the gap between blacks and whites would close within eight years. He adds that if the average American teacher were as good as those at the top quartile the gap in test scores between America and Asian countries would be closed within four years. + +Such studies emphasise the power of good teaching. But a question has dogged policymakers: are great teachers born or made? Prejudices played out in popular culture suggest the former. Bad teachers are portrayed as lazy and kid-hating. Edna Krabappel of “The Simpsons” treats lessons as obstacles to cigarette breaks. Good and inspiring teachers, meanwhile, such as Michelle Pfeiffer’s marine-turned-educator in “Dangerous Minds” (pictured), or J.K. Rowling’s Minerva McGonagall, are portrayed as endowed with supernatural gifts (literally so, in the case of the head of Gryffindor). In 2011 a survey of attitudes to education found that such portrayals reflect what people believe: 70% of Americans thought the ability to teach was more the result of innate talent than training. + +Elizabeth Green, the author of “Building A Better Teacher”, calls this the “myth of the natural-born teacher”. Such a belief makes finding a good teacher like panning for gold: get rid of all those that don’t cut it; keep the shiny ones. This is in part why, for the past two decades, increasing the “accountability” of teachers has been a priority for educational reformers. + +There is a good deal of sense in this. In cities such as Washington, DC, performance-related pay and (more important) dismissing the worst teachers have boosted test scores. But relying on hiring and firing without addressing the ways that teachers actually teach is unlikely to work. Education-policy wonks have neglected what one of them once called the “black box of the production process” and others might call “the classroom”. Open that black box, and two important truths pop out. A fair chunk of what teachers (and others) believe about teaching is wrong. And ways of teaching better—often much better—can be learned. Grit can become gold. + +Multipliciamus + +In 2014 Rob Coe of Durham University, in England, noted in a report on what makes great teaching that many commonly used classroom techniques do not work. Unearned praise, grouping by ability and accepting or encouraging children’s different “learning styles” are widely espoused but bad ideas. So too is the notion that pupils can discover complex ideas all by themselves. Teachers must impart knowledge and critical thinking. + +Those who do so embody six aspects of great teaching, as identified by Mr Coe. The first and second concern their motives and how they get on with their peers. The third and fourth involve using time well, fostering good behaviour and high expectations. Most important, though, are the fifth and sixth aspects, high-quality instruction and so-called “pedagogical content knowledge”—a blend of subject knowledge and teaching craft. Its essence is defined by Charles Chew, one of Singapore’s “principal master teachers”, an elite group that guides the island’s schools: “I don’t teach physics; I teach my pupils how to learn physics.” + +Branches of the learning tree + +Teachers like Mr Chew ask probing questions of all students. They assign short writing tasks that get children thinking and allow teachers to check for progress. Their classes are planned—with a clear sense of the goal and how to reach it—and teacher-led but interactive. They anticipate errors, such as the tendency to mix up remainders and decimals. They space out and vary ways in which children practise things, cognitive science having shown that this aids long-term retention. + +These techniques work. In a report published in February the OECD found a link between the use of such “cognitive activation” strategies and high test scores among its club of mostly rich countries. The use of memorisation or pupil-led learning was common among laggards. A recent study by David Reynolds compared maths teaching in Nanjing and Southampton, where he works. It found that in China, “whole-class interaction” was used 72% of the time, compared with only 24% in England. Earlier studies by James Stigler, a psychologist at UCLA, found that American classrooms rang to the sound of “what” questions. In Japan teachers asked more “why” and “how” questions that check students understand what they are learning. + +But a better awareness of how to teach will not on its own lead to great teaching. According to Marie Hamer, the head of initial teacher training at Ark, a group of English schools: “Too often teachers are told what to improve, but not given clear guidance on how to make that change.” The new types of training used at Relay and elsewhere are intended to address that. + +David Steiner of the Johns Hopkins Institute for Education Policy, in Baltimore, characterises many of America’s teacher-training institutions as “sclerotic”. It can be easier to earn a teaching qualification than to make the grades American colleges require of their athletes. According to Mr Hattie none of Australia’s 450 education training programmes has ever had to prove its impact—nor has any ever had its accreditation removed. Some countries are much more selective. Winning acceptance to take an education degree in Finland is about as competitive as getting into MIT. But even in Finland, teachers are not typically to be found in the top third of graduates for numeracy or literacy skills. + +In America and Britain training has been heavy on theory and light on classroom practice. Rod Lucero of the American Association of Colleges for Teacher Education (AACTE), a body representing more than half of the country’s teacher-training providers, says that most courses have a classroom placement. But he concedes that it falls short of “clinical practice”. After finishing an undergraduate degree in education “I didn’t feel I was anywhere near ready,” says Jazmine Wheeler, now a first-year student at the Sposato Graduate School of Education, a college which grew out of the Match charter schools in Boston. + +This fits with a pattern Mr Kane’s research reveals to be “almost constant”: new teachers lack classroom management and instruction skills. As a result they struggle at first before improving over the subsequent three to five years. The new teaching schools believe that those skills which teachers now pick up haphazardly can be systematically imparted in advance. “Surgeons start on cadavers, not on live patients,” Mr Kane notes. + +“We have thought a lot about how to teach 22-year-olds,” says Scott McCue, who runs Sposato. He and his colleagues have crunched good teaching into a “taxonomy” of things to do and say. “Of the 5,000 or so things that go into amazing teaching,” says Orin Gutlerner, Sposato’s founding director, “we want to make sure you can do the most important 250.” + +The curriculum of the new schools is influenced by people like Doug Lemov. A former English teacher and the founder of a school in Boston, Mr Lemov used test-score data to identify some of the best teachers in America. After visiting them and analysing videos of their classes to find out precisely what they did, he created a list of 62 techniques. Many involve the basics of getting pupils’ attention. “Threshold” has teachers meeting pupils at the door; “strong voice” explains that the most effective teachers stand still when talking, use a formal register, deploy an economy of language and do not finish their sentences until they have their classes’ full attention. + +But most of Mr Lemov’s techniques are meant to increase the number of pupils in a class who are thinking and the amount of time that they do so. Techniques such as his “cold call” and “turn and talk”, where pupils have to explain their thoughts quickly to a peer, give the kinds of cognitive workouts common in classrooms in Shanghai and Singapore, which regularly top international comparisons. + +Trainees at Sposato undertake residencies at Match schools. They spend 20 hours per week studying and practising, and 40-50 tutoring or assisting teachers. Mr Gutlerner says that the most powerful predictor of residents’ success is how well they respond to the feedback they get after classes. + +This new approach resembles in some ways the more collective ethos seen in the best Asian schools. Few other professionals are so isolated in their work, or get so little feedback, as Western teachers. Today 40% of teachers in the OECD have never taught alongside another teacher, observed another or given feedback. Simon Burgess of the University of Bristol says teaching is still “a closed-door profession”, adding that teaching unions have made it hard for observers to take notes in classes. Pupils suffer as a result, says Pasi Sahlberg, a former senior official at Finland’s education department. He attributes much of his country’s success to Finnish teachers’ culture of collaboration. + +Mr Schneebly needs his feedback + +As well as being isolated, teachers lack well defined ways of getting better. Mr Gutlerner points out that teaching, alone among the professions, asks the same of novices as of 20-year veterans. Much of what passes for “professional development” is woeful, as are the systems for assessing it. In 2011 a study in England found that only 1% of training courses enabled teachers to turn bad practice into good teaching. The story in America is similar. This is not for want of cash. The New Teacher Project, a group that helps cities recruit teachers, estimates that in some parts of America schools shell out about $18,000 per teacher per year on professional development, 4-15 times as much as is spent in other sectors. + +The New Teacher Project suggests that after the burst of improvement at the start of their careers teachers rarely get a great deal better. This may, in part, be because they do not know they need to get better. Three out of five low-performing teachers in America think they are doing a great job. Overconfidence is common elsewhere: nine out of ten teachers in the OECD say they are well prepared. Teachers in England congratulate themselves on their use of cognitive-activation strategies, despite the fact that pupil surveys suggest they rely more on rote learning than teachers almost everywhere else. + +It need not be this way. In a vast study published in March, Roland Fryer of Harvard University found that “managed professional development”, where teachers receive precise instruction together with specific, regular feedback under the mentorship of a lead teacher, had large positive effects. Matthew Kraft and John Papay, of Harvard and Brown universities, have found that teachers in the best quarter of schools ranked by their levels of support improved by 38% more over a decade than those in the lowest quarter. + +Such environments are present in schools such as Match and North Star—and in areas such as Shanghai and Singapore. Getting the incentives right helps. In Shanghai teachers will not be promoted unless they can prove they are collaborative. Their mentors will not be promoted unless they can show that their student-teachers improve. It helps to have time. Teachers in Shanghai teach for only 10-12 hours a week, less than half the American average of 27 hours. + +No dark sarcasm + +In many countries the way to get ahead in a school is to move into management. Mr Fryer says that American school districts “pay people in inverse proportion to the value they add”. District superintendents make more money than teachers although their impact on pupils’ lives is less. Singapore has a separate career track for teachers, so that the best do not leave the classroom. Australia may soon follow suit. + + + +Do shorter hours or higher wages make better teachers? + +The new models of teacher training that will start those careers have yet to be thoroughly evaluated. Early evidence is encouraging, however. Relay and Sposato both make their trainees’ graduation dependent on improved outcomes for students. A blind evaluation that Relay undertook of its teachers rated them as higher than average, especially in classroom management. At Ark, in England, recent graduates are seen by the schools that have hired them as among the best cohorts that they have received. + +Mr Steiner notes, though, that it is not yet clear whether these new teachers are “school-proof”: effective in schools that lack the intense culture of feedback and practice of places like Match. This is a big caveat: across the OECD two-thirds of teachers believe their schools to be hostile to innovation. + +If the new approaches can be made to work at scale, that should change. Relay will be in 12 cities by next academic year, training 2,000 teachers and 400 head teachers, including those from government-run schools. This year AACTE launched its own commission investigating ways in which its colleges could move to a similar model. In England Matthew Hood, an entrepreneurial assistant head teacher, has plans for a Relay-like “Institute for Advanced Teaching”. + +This way, reformers hope, they can finally improve education on a large scale. Until now, the job of the teacher has been comparatively neglected, with all the focus on structural changes. But disruptions to school systems are irrelevant if they do not change how and what children learn. For that, what matters is what teachers do and think. The answer, after all, was in the classroom. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21700385-great-teaching-has-long-been-seen-innate-skill-reformers-are-showing-best/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +United States + + + +Hillary Clinton: Madam presumptive nominee [Fri, 10 Jun 14:21] + +The campaigns: Heard on the trail [Fri, 10 Jun 14:21] + +Republicans and welfare: Ryan’s ramble [Fri, 10 Jun 14:21] + +Chicago’s museum wars: Light against dark [Fri, 10 Jun 14:21] + +Swimming religiously: Scruples and splashes [Fri, 10 Jun 14:21] + +Cannabis in the capital: Federal haze [Fri, 10 Jun 14:21] + +Delta lives: Standin’ at the crossroads [Fri, 10 Jun 14:21] + +Lexington: Playground tactics [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Hillary Clinton + +Madam presumptive nominee + +The former First Lady takes a big step towards getting her old house back + +Jun 11th 2016 | SANTA ANA, CALIFORNIA AND WASHINGTON, DC | From the print edition + + + +AS IF weary of a primary tussle in which the outcome has long been obvious, Democratic voters knocked it on the head on June 7th. Bernie Sanders, whose refusal to admit defeat defies electoral mathematics, hoped to win at least four of the last six states up for grabs, including the biggest, California. But Hillary Clinton whupped him; she won the Golden State by a 13-point margin, also New Jersey, New Mexico and South Dakota. + +In the process, the former secretary of state secured a big majority of the 4,765 delegates who will attend the Democrats’ National Convention in July. That makes her the prospective nominee, the first woman to hold the role for either big party and, given how spectacularly ill-chosen her Republican counterpart, Donald Trump, seems, the favourite to be America’s next president. For a politician whose woodenness as a campaigner has been as conspicuous as her toughness, and for the 15.5m Democrats who have voted for her, it is an impressive achievement. + +Even before these last primaries (only Washington, DC, on June 14th, is still to vote) the Associated Press reckoned Mrs Clinton had the 2,383 delegates required for the nomination. Nervously, her campaign team tried to downplay this. The reckoning was based on Mrs Clinton’s big lead among superdelegates—the 715-odd Democratic office-bearers who may vote at the convention as they please—which Mr Sanders has decried as an establishment stitch-up. Mrs Clinton’s aides also feared that declaring victory before the primaries would make her supporters complacent. They worried too much. + +Just as the Republican primary contest ended last month with a flurry of unexpectedly big wins for Mr Trump, as resistance to his candidacy crumbled, so Mrs Clinton outperformed her polling in almost every state; recent polls in California had suggested she was barely ahead. She has secured almost 400 more regular delegates, the sort awarded at primaries and caucuses than Mr Sanders, and 3.5m more votes. No wonder Mrs Clinton appeared ecstatic, even tearful, at a celebratory rally in New York, before California’s polls had even closed. Movingly, she recalled that her mother was born on the day, June 4th 1919, Congress voted to give women the vote: “I wish she could see her daughter become the Democratic Party’s nominee!” + +Mr Trump probably had a hand in Mrs Clinton’s late surge, by offending, and so rallying, the non-white voters who are among her main supporters. As his party’s nominee, endorsed in recent weeks by most senior Republicans (though many of them privately despise him), the celebrity builder had been expected to tone down his signature boorishness; he himself had sworn to be “very presidential at the appropriate time”. Apparently unable to control himself, he has instead levelled bigoted abuse at a federal judge presiding over allegations of fraud against one of his failed businesses, Trump University. Mr Trump accused Gonzalo Curiel of being biased against him on account of his tough line on illegal immigration because, he says, the judge is “Mexican” (as it happens, Mr Curiel is from Indiana). No exit polls were conducted in California, where Hispanics account for over a quarter of the electorate, but Mrs Clinton won all the most Hispanic districts there. + +At a polling station in Santa Ana, a largely-Hispanic area south of Los Angeles, most voters said they were for Mrs Clinton—and often they mentioned Mr Trump disparagingly in the same breath. Anita Hernandez, a retired school secretary, said that choosing Mrs Clinton was in the end an “easy decision”, though she had once been tempted by Mr Sanders: “I think he should stop and let her do her thing.” Another retiree, Leo Luna, voted the same way—despite personally preferring the senator from Vermont. “We have to unify ourselves behind a strong candidate,” he said. “I think there’s a lot at stake…remember, we are all basically the sons and daughters of immigrants.” + + + +America’s primary agenda: our interactive 2016 election calendar + +Amazingly, on June 8th Mr Sanders reiterated his pledge to fight on to the convention. Perhaps he may rethink that. His retinue, which was never large, is thinning; on the same day, Jeff Merkley, Mr Sanders’s only supporter among his fellow senators, and Raul Grijalva, one of his handful of backers in the House of Representatives, suggested he should quit. His campaign was meanwhile laying off most of its employees. As The Economist went to press, Mr Sanders was due to hold talks with Barack Obama, who would like him to withdraw ahead of the president’s imminent endorsement of Mrs Clinton. Even before polling ended in California, a close adviser to Mr Sanders hinted that he might stay in for the Washington, DC, primary, then quit. Little-known before he announced his presidential run last year, Mr Sanders has fought an astonishingly effective and, for many of his 12m supporters, inspiring campaign: it is over already. + +Mrs Clinton in a sense signalled that on June 2nd with what was billed as a speech about foreign policy, but was actually an excoriation of almost everything Mr Trump has said on the subject. Her rival’s “ideas aren’t just different,” she said. “They’re not even really ideas, just a series of bizarre rants, personal feuds and outright lies.” + +This was a response to Mr Trump’s increasingly vicious attacks on her; he has called Mrs Clinton an enabler of an adulterous husband and hinted she could be a murderer. It was also manna for many Clinton supporters. Deeply frustrated by her failings as a campaigner—which have been exacerbated by Mrs Clinton’s need to tiptoe around Mr Sanders, whose supporters she covets and with whose ideas she sympathises—they have been longing for her to stick it to Mr Trump. + +Emotionally tough and intellectually rigorous in a prosecutorial sort of way, Mrs Clinton is better at winning voters’ regard than their love. Even so, they might be forgiven for wondering what she stands for. Her policy platform is built on all sorts of worthy centre-left nudges and nurdles, but no talismanic idea. Even Bill Clinton, who claims to know her best, praises Mrs Clinton as an incrementalist, not a visionary; “Everything she touched she made better,” he says of her early career. + +Yet as an argument for a third Democratic term, not the new broom that Mr Obama was in the right time and place to promise, moderate improvement is at least credible. And then, a real partisan punch-up, unpredecented in its viciousness, is what many voters seem to want from this election. The Democrats have picked the right woman to deliver it. + + + +Heard on the trail + +The latest quips and quotes from the campaigns + + + +Barack Obama endorses Hillary Clinton + +Mr Obama praised the “judgement…toughness… commitment to our values” of his former secretary of state + + + +Playground tactics + +Protesters who use violence against Donald Trump’s supporters are doing his work + + + +How Hillary Clinton won the Democratic nomination + +She had to work that bit harder than Bernie Sanders to secure pledged delegates + + + +What does Donald Trump see in Muhammad Ali and his legacy? + +Critics of Mr Trump see pure hypocrisy in his praise for the boxer + + + + + +More US election coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21700408-former-first-lady-takes-big-step-towards-getting-her-old-house-back-madam-presumptive/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The campaigns + +Heard on the trail + +Jun 11th 2016 | From the print edition + + + +Potty humour + +“At the start, orders were for around 100 rolls a time, but now we’re getting orders for 5,000 rolls.” + +Qingdao Wellpaper Industrial in China has been selling presidential-candidate toilet paper. Mr Trump is outselling Mrs Clinton. China Daily + +Viva Mexico + +“Donald Trump is a brand—a big brand—and when you are asking a [sponsor] to invest millions of dollars in branding a tournament and they’re going to share that brand with a host…it’s a difficult conversation.” + +The PGA is moving the World Golf Championship from a Trump-owned golf course in Miami to Mexico City—not Mr Trump’s favourite place—because of problems with finding sponsorship + + + +Pop Muzak + +“Feel It in Your Guts.” + +Bernie Sanders and Thurston Moore, a founder of Sonic Youth, have produced a single about inequality and human rights. Entertainment Weekly + +The flayed woman + +“Donald Trump will peel her skin off in a debate setting.” + +Rick Perry’s imagination has turned Titianesque. Fox News + +Escape plan + +“Make dating great again. Maple Match makes it easy for Americans to find the ideal Canadian partner to save them from the unfathomable horror of a Trump presidency.” + +Canada continues to tease Americans. www.maplematch.com + +Benghazi! + +“I made lot of money with Qaddafi.” + +Mr Trump explains why he didn’t support intervention in Libya. CBS News + +Outreach (1) + +“But we’re building a wall. He’s a Mexican. We’re building a wall between here and Mexico.” + +Mr Trump attacks the judge hearing a lawsuit against Trump University. The judge, born in Indiana, is of Mexican ancestry. CNN + +Outreach (2) + +“I was the one that really broke the glass ceiling on behalf of women, more than anybody in the construction industry.” + +Mr Trump on why women should support him. Fox News + +Outreach (3) + +“Oh, look at my African-American over here—look at him. Are you the greatest?” + +Mr Trump exploits Ali-fervour + + + + + +Madam presumptive nominee + +As if weary of a primary tussle in which the outcome has long been obvious, Democratic voters knocked it on the head on June 7th + + + +Barack Obama endorses Hillary Clinton + +Mr Obama praised the “judgement…toughness… commitment to our values” of his former secretary of state + + + +Playground tactics + +Protesters who use violence against Donald Trump’s supporters are doing his work + + + +How Hillary Clinton won the Democratic nomination + +She had to work that bit harder than Bernie Sanders to secure pledged delegates + + + +What does Donald Trump see in Muhammad Ali and his legacy? + +Critics of Mr Trump see pure hypocrisy in his praise for the boxer + + + + + +More US election coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21700411-heard-trail/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Republicans and welfare + +Ryan’s ramble + +The Speaker launches a Republican anti-poverty agenda + +Jun 11th 2016 | WASHINGTON, DC | From the print edition + + + +PAUL RYAN, the Republican Speaker of the House of Representatives, is known for his love of detailed policy. Donald Trump, his party’s presumptive nominee for president, does not share this fondness. So it was fitting that on June 7th, while Mr Trump was busy fighting—or basking in—the scandal over his latest remarks on race, Mr Ryan was launching a policy paper. The report, on poverty and welfare, was somewhat overshadowed by the Speaker using the question-and-answer session to wade into the row about Mr Trump’s pronouncements. But there is time for wonkery yet: the paper is the first of six which will form a new agenda for Republicans, dubbed “A Better Way”. The policies are supposed to be implemented if the party takes back the White House, though how much of it Mr Trump supports is anyone’s guess. + +The paper has three notable themes. The first is simplification. Mr Ryan sees the welfare system as a sprawling mess. More than 80 federal welfare programmes sit atop one another, with little attention paid to their compatibility, and without government agencies much co-operating in their administration. Each programme—be it food stamps, housing subsidies, or Medicare—has its own eligibility rules. As low-earners’ incomes increase, benefits are withdrawn in a hodgepodge fashion. As a result, the marginal tax rate, including both taxes and withdrawn benefits, jumps around erratically. Sometimes it exceeds 100%, meaning workers are better-off earning less. Mr Ryan wants to consolidate the programmes. Such a simplification—and a reduction in marginal tax rates—would be welcome. + +The second theme is value for money. The paper complains that not enough programmes are rigorously evaluated, and calls for the government to open up its data to researchers. It also notes that states can simply shift claimants towards federally-funded programmes (such as disability benefits) rather than helping them find work. Mr Ryan wants to fix this, perhaps by gradually reducing the share of the bill the federal government foots for any given individual, the longer they stay on the welfare-rolls. + +The third—and probably the most divisive—idea is to ramp up work requirements. In 1996, welfare reform under President Bill Clinton and the Republican Speaker, Newt Gingrich, required states to ensure that sufficient numbers of their cash welfare recipients were in work, training and the like. Mr Ryan suggests expanding that to cover housing subsidies, too. + +The left will see this as an attempt to unpick yet another part of the safety net. Under the 1996 reform, one way states could satisfy work requirements was by shrinking their welfare-rolls, whether or not those who lost their benefits found a job. Unsurprisingly, cash welfare became much harder to come by. In 1996, Temporary Assistance for Needy Families—as cash-welfare is called—benefitted 68 families for every 100 families in poverty, according to the Centre for Budget and Policy Priorities, a left-leaning think-tank. Today, the figure is just 26. + +Mr Ryan also bemoans the numbers of adults without dependents who claim food stamps (or, more formally, “Supplemental Nutrition Assistance”) without working or preparing to work. This is a red herring. The 1996 reforms already bar able-bodied adults without children from receiving food stamps while unemployed for more than three months in any three-year period. True, this rule was mostly suspended during the recession. But work requirements are now back in force in more than 40 states. There is little more Republicans could do on this front. + +One part of the plan will please Democrats: Mr Ryan wants to expand the Earned Income Tax Credit, a wage top-up for low earners (though he also complains about high rate of erroneous payments, which reached 27% in 2014). That is unlikely to be enough to placate the left, though: Elizabeth Warren, a Democratic senator, dismissed the paper as “an agenda for creating poverty”. Don’t expect another bipartisan welfare deal. Despite the two men’s differences, Mr Ryan must pin all his hopes on Mr Trump. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21700420-speaker-launches-republican-anti-poverty-agenda-ryans-ramble/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Chicago’s museum wars + +Light against dark + +George Lucas is threatening to take his museum to another city + +Jun 11th 2016 | CHICAGO | From the print edition + + + +BOTH sides are stubborn in their battle over the site of the planned Lucas Museum of Narrative Art. George Lucas, the creator of “Star Wars”, his wife, Mellody Hobson, and the city government have set their heart on Chicago’s lakeshore as the site for the museum’s futuristic building. Friends of the Parks, a non-profit organisation, says Mr Lucas can build his museum anywhere he chooses, but not east of Lake Shore Drive, the expressway running along the shoreline of Lake Michigan, an area of (mostly) open views that is owned by the public. The battle reached fever pitch in early May when Rahm Emanuel, the mayor of Chicago, petitioned a federal appeal court to throw out a long-winded lawsuit, filed in 2014 by Friends of the Parks in a district court, to block use of the site. In February an Illinois district-court judge refused to dismiss the suit. On May 10th he postponed its hearing to June 15th. + +The Lucas family is in no mood to wait any longer for the construction of the museum, which was supposed to start in the spring. Ms Hobson says they are now looking at other cities, and blasts Friends of the Park for slamming the door on more than $2 billion in economic benefits for the state, as well as thousands of jobs and educational opportunities for children. “As an African-American who has spent my entire life in this city I love, it saddens me that young black and brown children will be denied the chance to benefit from what this museum will offer,” says Ms Hobson. + +That this should become another argument about race is a sign of how bitter the dispute has become. The site, south of the Soldier Field football stadium, is already heavily developed. It lies within walking distance of the Shedd Aquarium, the Adler Planetarium and the Field Museum of Natural History, and serves as a hardly used car park. Mr Emanuel mocks the parks’ protectors as “Friends of the Parking Lot”. + +The parks’ guardians argue that a mandate—which dates back to 1836 and says Chicago’s lakefront must remain public and “remain forever open, clear and free of any buildings, or other obstruction whatever”—is at stake. They also rejected on principle Mr Emanuel’s Plan B, which would involve the demolition of one of the hideous buildings of the McCormick convention centre on the lakeshore and replace it with the (much smaller) Lucas museum as well as additional parkland. Many think this is pigheaded. + +Few dispute the attraction of the project. According to a recent survey, 73% of the city’s parents say the Lucas museum should be built in their city and 81% say they would probably visit it. The museum will focus on storytelling throughout the ages, from prehistoric times to today, through paintings and sculptures, photography, cartoons, advertising, digital technology and cinema, explains Don Bacigalupi, its founding boss. It will have three film theatres, lecture halls, a vast library and, no doubt, an even bigger gift shop. + +Ms Hobson and her husband have already directed much of their philanthropy towards the South Side, and their museum would almost certainly be a boon for the troubled neighbourhood. “You get this chance once in a couple of generations,” says Steve Koch, deputy mayor of Chicago. “To blow it would be such a great shame.” + +All depends now on the decision of the appellate court. Construction is estimated to take three and a half years. “A 2020 opening would be fine,” says a hopeful Mr Bacigalupi. Should Chicago lose the museum, Los Angeles and San Francisco already have their avid eyes on it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21700419-george-lucas-threatening-take-his-museum-another-city-light-against-dark/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Swimming religiously + +Scruples and splashes + +A battle over women-only bathing hours roils a public pool + +Jun 11th 2016 | NEW YORK | From the print edition + + + +IN WILLIAMSBURG, an eclectic neighbourhood in Brooklyn, the bathing times at a public swimming pool are dividing hipsters from Hasidic Jews. For 20 years, to accommodate local Orthodox Jewish women whose religious modesty prevents them from swimming in mixed company, the Metropolitan Recreation Centre has reserved time four days each week for a “women’s swim”. But an anonymous complaint this spring prompted New York City’s human-rights commission to scuttle the arrangement, finding that the women’s-only times—a total of 7.25 hours out of the pool’s 90-hour weekly schedule—amounted to illegal discrimination. That decision was put on hold after Dov Hikind, an assemblyman representing another Brooklyn neighbourhood with large numbers of Hasidic Jews, complained. + +“Everybody into the pool,” the New York Times editorialised, in response to Mr Hikind’s successful intervention. Continuing to allow women to enjoy exclusive hours in the pool this summer while the city tries to find a compromise is “a capitulation to a theocratic view of government services”. Donna Lieberman, executive director of the New York Civil Liberties Union, said that while New Yorkers “have every right to limit their swimming in accordance with their religious beliefs”, Orthodox Jews “have no right to impose a regime of gender discrimination on a public pool”. People whose religious scruples prevent them from splashing with members of the opposite sex, the Times advised, should “find their own private place to swim when and with whom they see fit.” + +This is far from the first dispute over who may swim in public pools. Though most municipal pools were desegregated after the second world war, racial tensions continued in the waters. Whites often stopped swimming once blacks were allowed in. New pools were built in white neighbourhoods to, in effect, rope others out. And some cities opted to drain their pools for good rather than operate them as integrated facilities, a strategy that was blessed by the Supreme Court in Palmer v Thompson (1971). At private pools and country clubs, both blacks and Jews found themselves unable to wallow well into the 1960s, prompting Groucho Marx to plead: “My daughter’s only half Jewish—can she wade in up to her knees?” + +Unlike these moves to exclude undesirables from the water, the sex-segregated swimming times in Williamsburg cater to people whose beliefs would otherwise keep them at home. A similar aim has moved other cities, including Seattle and St Louis Park, Minnesota, to introduce female-only swimming times—to serve both Jewish and Muslim women. The Times may have condemned the arrangement in Brooklyn as religious intrusion into secular space, but a few months ago it hailed a Saturday-night women-only swimming programme in Toronto as reflecting “an ethos of inclusion” for the city’s Muslims. + +In these gender-bending times, agreeing to reserve time for women is itself a fraught proposition. Bill de Blasio, New York’s mayor, was asked whether transgender women were allowed to swim during female-only hours. He had no quick answer. That, he said, is under review. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21700421-battle-over-women-only-bathing-hours-roils-public-pool-scruples-and-splashes/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Cannabis in the capital + +Federal haze + +The District’s odd governance makes for even odder drug laws + +Jun 11th 2016 | WASHINGTON, DC | From the print edition + + + +ON A street corner five blocks from Congress, a transaction of uncertain legality is taking place. A man in his 20s, wearing a red Stanford University hooded top, is handing your correspondent a bottle of fruit juice. The cost? $55. The juice’s steep price does not reflect yet another innovation in artisanal pulping. Rather, it explains the free gift that accompanies the juice—a branded green bag containing about an eighth of an ounce (3.5 grams) of cannabis. + +Since 2015 it has been legal to own, grow and use cannabis privately in Washington, DC. Generous souls are allowed to give small amounts to whomever they like. It is illegal, however, to sell it. Small businesses have sprung up seeking to exploit this dichotomy. With names such as HighSpeed, Kush Gods and 24/7 Strong Supply, their main objective is clear. The most notorious business, Kush Gods, sends cars emblazoned with cannabis leaves around the city to solicit “donations” from passers-by in return for cannabis-infused edibles or pre-rolled joints. The four states that have legalised cannabis for recreational use have also set up systems to tax and regulate it. In DC, which has not, something like a barter economy has sprung up instead. + +Unusual though this may be, it arises from a familiar political tussle between the federal government and the place it calls home. The city is a federal jurisdiction; its budget must be approved by the congressmen who sit on Capitol Hill, some of whom are not keen on creeping marijuana legalisation. Shortly after the legalisation ballot was passed, a congressional rider was attached to DC’s budget forbidding the use of federal or local funds for regulating the market. + + + +INTERACTIVE MAP: Marijuana and the disjointed states of America + +Able to legalise cannabis but unable to tax or regulate it, DC finds itself in a strange hinterland of legality. And because nearly 30% of the District consists of federal land, on which cannabis is still classed as a Schedule 1 drug (along with heroin and LSD), it can be legal to possess cannabis on one side of a street and illegal on the other. + +Yet, despite initial threats from disgruntled congressmen, a hazy entente has sprung up within the city. In April a 51-foot-long inflatable joint was paraded near the White House by activists seeking to persuade Barack Obama to change the federal laws on cannabis. The parade was followed by a mass “smoke-in”, but the plumes emanating from the crowd did not trigger any arrests—despite the fact that everyone was standing on federal land. Across the city there have been regular cannabis seed-and-food giveaways, which have gone largely unmolested by local authorities. Clubs have sprung up offering in-home gardening services for those who want to cultivate their own plants. + +Some of the thin ice under the cannabis economy occasionally gives way. Earlier this year the proprietor of Kush Gods pleaded guilty to marijuana distribution. Yet within days of being ordered to shut down his company and the app through which he made contact with “donors”, the firm’s cars could again be seen soliciting donations across the city. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21700410-districts-odd-governance-makes-even-odder-drug-laws-federal-haze/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Delta lives + +Standin’ at the crossroads + +The mayor of the hometown of the blues is a man of many parts + +Jun 11th 2016 | CLARKSDALE, MISSISSIPPI | From the print edition + +Bill Luckett: actor, bartender, lawyer, politician + +BILL LUCKETT was already in his 60s when his acting career took off. He was mooching around film sets and premières, and the parts began rolling in. He has played a judge, a chef, a restaurateur and a newscaster, and has forthcoming roles as a pick-up driver and a homeless man. His melodious southern accent may help. So might the fact that, as a professional trial lawyer, “I’ve been an actor a long time.” + +Mr Luckett was introduced to the film business by his friend Morgan Freeman. They met 20-odd years ago when Mr Freeman was building a house in the Mississippi Delta, and Mr Luckett helped with both the paperwork and the construction: as well as a lawyer, he is an army-trained civil engineer (he was an officer in the Mississippi National Guard). The poorest part of America’s poorest state, the Delta is a place where many people multi-task to get by; but, even here, Mr Luckett’s versatility stands out. He is also a property developer, “two-bit contractor”, “frustrated architect”, sometime housepainter, landlord, handyman, motorcyclist and fisherman. + +And nightclub-owner. He and Mr Freeman opened a high-end restaurant in Clarksdale in 2000; it closed a few years ago, though while it lasted, Mr Luckett says, they at least had somewhere good to eat themselves. They invested in a barbecue business over in Arkansas, which also folded. (They co-own several planes, too, and Mr Luckett flies them: he is a qualified jet pilot.) But Ground Zero, the blues bar they established in 2001, is still going. Back then there was nowhere reliably to hear the Delta’s world-famous art form in its spiritual hometown. They fitted out Ground Zero to look like a juke joint, of the kind sharecroppers once patronised, which required old beer signs, Christmas lights and pool tables. The rampant graffiti dates to opening night, when a young woman danced on the bar and Mr Luckett drew the outline of her bare feet. + +Ground Zero is next to the Delta Blues Museum, where the prize exhibit is the former slave cabin in which a young Muddy Waters lived, and close to the crossroads where, legend has it, Robert Johnson sold his soul to the devil. Mr Luckett is a gregarious presence. “How y’all doin’?” he asks each table of tourists as he works the room. “Where y’all from?” Fifteen years on, though, the club has yet to break even. But it has achieved another avowed aim, which was to spur Clarksdale’s revival. + +Compared with much of the rest of the Delta—a sultry plain punctuated by disused cotton gins and rusted petrol pumps, where the towns are as run-down as the soil and culture are rich—Clarksdale is humming. Once, says Mr Luckett, you could have fired a rifle in the evening and not hit anyone. Now there is live blues every night. Agricultural mechanisation means it is still a place people leave but, these days, some are moving in. For example, Robin Colonas, a merchant mariner from Seattle, has salvaged an open-air concert venue from the husk of an old cinema where Ike Turner was an usher (Sam Cooke was born next door). + +Now, having galvanised Clarksdale’s development, Mr Luckett is trying to boost it further through his other late-blooming career: as a groundbreaking politician. + +Fell down on my knees + +In 2013 he was elected Clarksdale’s mayor. One of his opponents was the scion of a black political dynasty; another was tarnished by his fondness for a website called sugardaddyforme.com. A third was murdered during the campaign (for non-political reasons). In a city that is 79% black, Mr Luckett was variously assailed as “a white honky” and, ludicrously—given his lifetime membership of the NAACP—as a racist. “True or not, it doesn’t matter in politics,” he laments. But none of it washed, and, impressively for a white politician in the Delta, he won in a landslide. + +When a statewide row broke out about Mississippi’s flag, which includes the Confederate stars-and-bars, Mr Luckett took it down from city hall. Other challenges have ranged from the trivial—an official who, he says, expected the fire department to fill up his swimming pool, supporters who want him to “fix their [traffic] tickets”—to the critical. Clarksdale has been flooded twice in the past six months, once following a tornado. Crime remains worrying; Mr Luckett was caught up in it last year, when one of his legal clients fatally shot an adversary at a deposition. He says he still jumps at unexpected bangs. Above all, the blues can’t feed everyone: 38% of Clarksdale’s 17,000 residents still live in poverty. Many, says Ms Colonas, can’t afford to visit the new venues, and lack the skills to work in them. + +Mr Luckett hopes to attract film productions, for which Clarksdale’s time-warped shopfronts may be a draw. But as he rages against Mississippi’s woeful education system, he knows these blights demand bigger tools than a mayor can wield. And, in fact, he has run for higher office. In the governor’s election of 2011 he made it to a Democratic primary run-off, losing, he believes, because of cynical Republican support for his less viable rival, who was then duly walloped. He didn’t mind the mudslinging, but his law practice suffered and he disliked all the begging phone calls. “What it takes to get elected”, he concludes, “is a lot of money.” + +Still, he hasn’t ruled out another tilt, and likes to think the Democrats can still compete in Mississippi, with the right candidate. “Why are we a red state,” he asks, “when we’re the poorest state in the nation?” Meanwhile, he has the mayoralty and his proliferating acting gigs. In a scene he has just shot, for a film called “Kudzu Zombies”, he plays a defeated politician in a place then overrun by monsters. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21700400-mayor-hometown-blues-man-many-parts-standin-crossroads/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Lexington + +Playground tactics + +Protesters who use violence against Donald Trump’s supporters are doing his work + +Jun 11th 2016 | From the print edition + + + +FOR those who long to see President Donald Trump in the White House, violent protests outside some recent Trump rallies, often in cities with big immigrant populations, prove that their hero cannot take power soon enough. For everyone else, such violence is a cause for alarm. Not only is it wrong, as a point of principle, for protesters to sucker-punch Trump supporters on live television. From a narrowly political perspective, history suggests that demagogues gain votes when unrest grips the streets. Sure enough, Mr Trump has carefully blamed trouble outside his rallies on “thugs” and “agitators…sent by the Democratic Party”. Mr Trump also takes pains to point out when protesters wave the Mexican flag, a gesture that feeds his habit of questioning the loyalty of American Hispanics (including Gonzalo Curiel, an Indiana-born federal judge whom Mr Trump, disgracefully, dubs a biased “Mexican” and who is hearing a lawsuit against him). + +Still the protests keep coming. Recent weeks have seen violence outside Trump rallies in such west-coast cities as Costa Mesa and San Jose and, farther inland, in Albuquerque. Never mind that Mr Trump has in his day praised violence meted out by his backers—“I’d like to punch him in the face,” he said of a protester in February. Because the latest demonstrations look like a gift to Mr Trump, a gulf of bafflement has opened between those who hope to beat him at the ballot box and those who seem more eager to defeat him on the streets. To simplify, the first group watches the second abandoning the moral high ground and wonders: What are they thinking? Being a literal-minded sort, Lexington decided to find some of the flag-waving protesters and ask them. No single spokesman can sum up a protest movement. Still, pieces of the puzzle emerged from interviews with organisers and activists in southern California. + +For a start, campaigners say that protesters are victims of aggression. Gabby Hernandez, an organiser with a Mexican-American rights group, Chicanos Unidos de Orange County, came to an interview on June 6th with her daughters, students at a mostly white high school in the affluent seaside city of Newport Beach. Her younger daughter, 15-year-old Alexia Alvarez, described how students have long led rather separate lives at school. But with Mr Trump in the news, 16-year-old Angelina describes segregation taking a nastier turn. Chalk graffiti appeared saying “Fuck Illegals” and “Go Back to Mexico” in corners of the school where Hispanic pupils gather, while “Trump 2016” slogans appeared where whites hang out. Students began wearing Trump T-shirts to class. When the Alvarez sisters and four Hispanic peers wore “Dump Trump” T-shirts to school, the principal told them to change—officially to “prevent disturbances”—but later backed down. + +On April 28th Ms Hernandez took her daughters to protest against a Trump rally in Costa Mesa, near their school. Angelina recognised classmates turning out for Mr Trump: “More kids than I would expect,” she says. “You lose friends.” Alexia is proud of a home-made sign reading: “If you’re ugly and you know it, vote for Trump”. But the whimsical mood did not last. Ms Hernandez found herself in shouting matches with grown men confronting her daughters. At one point, Ms Hernandez says, a 40-something, Trump-supporting woman hit one of her daughters’ teenage friends. She accuses the police of letting the woman walk off, and telling the protesters to file a report the next day. + +In their interviews, the organisers do not deny that some protesters struck back. What they resist is any suggestion that anti-Trump demonstrators should share the blame if the businessman wins the election. “It is unfair to put it on us that we are enabling Trump,” says Ms Hernandez. More to the point, she says, Mr Trump is enabling whites to vent long-suppressed prejudices. + +Carolyn Torres, a history teacher who also works with Chicanos Unidos, goes further. If protests hurt the Democratic Party, she says: “That is not our issue.” Ms Torres charges Mrs Clinton with supporting the deportation of Central American children fleeing violence and working with her husband, Bill Clinton, to pass crime bills that built a “prison-industrial complex”. As for Barack Obama, notes Ms Torres, deportations have reached record levels under his presidency. Asked if her cause might not gain from wooing moderate voters, she calls that “respectability politics”. Real change, she says, is not won by “nicely asking”. + +What’s in a flag? + +Naui Huitzilopochtli, a school administrator and campaigner for indigenous Americans, recalls joining youths waving Mexico’s banner in 1994 during huge marches against Proposition 187, a Californian ballot initiative that sought to deny state services, including schooling, to undocumented immigrants. He waved the flag because his family was under attack, he says. He heard warnings that this was counter-productive and calls that a double-standard. When Jewish-Americans wave Israeli flags, he says, conservatives never say: “Why don’t you go back to Israel?” Mr Huitzilopochtli agrees that Mexican flags helped to pass Proposition 187, by angering white Californians. But in the long term, he argues, that historic defeat galvanised non-whites to vote and to enter politics: “I see the positive.” + +Can Mrs Clinton head off more protests? Hairo Cortes, a student and organiser from Orange County Immigrant Youth United, took several activists to the Costa Mesa rally. Meeting in the city of Santa Ana on June 7th, over cups of cinnamon-infused café de olla, Mr Cortes spelled out the (politically impossible) policy Mrs Clinton would have to embrace to win his group’s support—to stop all, or almost all, deportations. Ultimately, Mr Cortes says his cause is larger than the next election. “Trump is dangerous,” he says. “But being better than Trump is not good enough.” The campaigners’ logic is clear enough: President Trump is not the worst that could happen. For their sakes, and America’s, hope the businessman never proves them wrong. + + + +Madam presumptive nominee + +As if weary of a primary tussle in which the outcome has long been obvious, Democratic voters knocked it on the head on June 7th + + + +Heard on the trail + +The latest quips and quotes from the campaigns + + + +Barack Obama endorses Hillary Clinton + +Mr Obama praised the “judgement…toughness… commitment to our values” of his former secretary of state + + + +How Hillary Clinton won the Democratic nomination + +She had to work that bit harder than Bernie Sanders to secure pledged delegates + + + +What does Donald Trump see in Muhammad Ali and his legacy? + +Critics of Mr Trump see pure hypocrisy in his praise for the boxer + + + + + +More US election coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21700403-protesters-who-use-violence-against-donald-trumps-supporters-are-doing-his-work-playground/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +The Americas + + + +Peru’s election: The fortunate president [Fri, 10 Jun 14:21] + +Corruption in Guatemala: Bad apples everywhere [Fri, 10 Jun 14:21] + +Canada’s daunting logistics: Airships in the Arctic [Fri, 10 Jun 14:21] + +Bello: The Mexican blues [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Peru’s election + +The fortunate president + +Anti-Fujimorismo achieves an unlikely victory for an economic liberal + +Jun 11th 2016 | LIMA | From the print edition + + + +IT COULD hardly have been closer. As the final votes were counted in the run-off ballot for Peru’s presidency, Pedro Pablo Kuczynski, a liberal economist, seemed to have defeated Keiko Fujimori by just 39,000 out of almost 18m votes, a margin of 0.2%. After months in which Ms Fujimori had led opinion polls, this was a surprising reversal. It shows how deeply divided Peru is about the legacy of Ms Fujimori’s father, Alberto, who ruled it as an autocrat from 1990 to 2000; he is serving long prison terms for corruption and complicity in human-rights abuses. + +With such a narrow mandate, Mr Kuczynski’s first task when he takes office on July 28th will be to show that he can govern a country facing an economic slowdown and characterised by frequent social conflicts. It helps that he has few real policy differences with Ms Fujimori. + +Fortune smiled on Mr Kuczynski throughout the race, with the force of the Andean sun. He was an unlikely victor. At 77, he is among the oldest presidential-election winners in Latin American history. He has alternated periods as an official in Peru—manager of the Central Bank in the 1960s, mining minister in the 1980s and economy and prime minister in the early 2000s—with long stints abroad: he studied at Oxford and Princeton, and worked at the World Bank and as a businessman and banker in the United States. His hired campaign guru resigned in despair at the candidate’s lack of political instincts. + +In February Mr Kuczynski’s support in the opinion polls was 9% and falling. His chance came when the electoral authority disqualified two other candidates on technicalities. In the first ballot in April, he won just 21% of the vote, well behind Ms Fujimori’s 40%. A week before the run-off vote on June 5th Ms Fujimori led by five points. + +In the end strong anti-Fujimori sentiment brought Mr Kuczynski his razor-thin victory. Ms Fujimori is an effective grass-roots campaigner. She built on her father’s support among the poor, who remember his crushing of hyperinflation and terrorism, and his opening of schools and health clinics. But the other half of Peru abhors Fujimorismo, seeing it as the legacy of a corrupt dictatorship. + +Wind at his back + +Two things pushed Mr Kuczynski over the line. One was a last-minute, grudging endorsement by Verónika Mendoza, a defeated left-wing candidate. Second, the damage done by the revelation in May that the United States’ Drug Enforcement Administration was investigating Joaquín Ramírez, the general secretary of Ms Fujimori’s party, Popular Force, was magnified when Ms Fujimori took three days to suspend him. The affair seemed to bolster Mr Kuczynski’s claim that, if his opponent won, Peru risked becoming a “narco-state”. + +The two candidates broadly agreed on maintaining the free-market policies that have helped turn Peru into the fastest-growing of Latin America’s larger economies in this century. But that will not make Mr Kuczynski’s task much easier. Popular Force won 73 of the 130 seats in Peru’s congressional election, also in April; the new president’s party has only 18. Ms Mendoza’s party was interested only in stopping Ms Fujimori, not in helping Mr Kuczynski. + +With the mining boom of the 2000s fading, annual GDP growth has slowed, to 2.8% during the past two years. That is still healthy by regional standards. And growth might edge up in 2016, thanks to rising copper output from new mines. But labour-intensive industries, such as construction and manufacturing, are in recession. + +Mr Kuczynski’s plan to stimulate the economy focuses on tax cuts and public investment, especially in drinking water, sanitation and health care. His economic adviser, Alfredo Thorne, proposes to cut value-added tax from 18% to 15% and grant big companies a tax break on reinvestment. He says this will pay for itself by curbing evasion and encouraging Peru’s vast array of informal businesses to go legal. He wants to promote formal jobs by cutting severance pay, replacing it with unemployment insurance for new hires. + + + +Mr Kuczynski plans to run a fiscal deficit of up to 3% of GDP; because Peru’s public debt is low and its credit rating strong, this can easily be financed, he says. Tax revenue would increase and the budget would be in balance by 2021, he argues. Others think the plan threatens economic stability. “It’s very risky to go for such a big deficit when the results of tax cuts and formalisation are very uncertain,” says Elmer Cuba, Ms Fujimori’s economic adviser. + +Another goal is to free up some $22 billion in investment in mining and energy projects stalled by local opposition. The new team proposes to raise public investment in the affected areas. It also needs to build on the efforts of Ollanta Humala, the outgoing president, to improve education, health and social protection. The other big issue is rising crime. Mr Kuczynski’s security adviser, Gino Costa, wants to reform the national police, boosting its intelligence branch and integrating its operations more closely with municipal forces. + +Mr Kuczynski’s prospects turn partly on whether he can strike a deal with Popular Force on issues requiring legislation, such as taxes and reform of municipal water companies. The price of that might be to pardon Mr Fujimori, or at least grant him house arrest. That would be controversial. Carlos Bruce, a congressman in Mr Kuczynski’s party, says the new president might offer Ms Fujimori’s party cabinet posts. + +For Ms Fujimori, a second narrow defeat will be hard to swallow. In 2011 Mr Humala, a former army officer running on a centre-left platform, beat her by three percentage points. This time she took more care to distance herself from her father, to no avail. Fujimorismo will not vanish, but it might split. Oddly, Ms Fujimori’s brother Kenji, a congressman, failed to vote for her. + +Peru is not easy to govern. Mr Humala will leave office isolated and unpopular. Ms Fujimori’s criticism of Mr Kuczynski’s team as elitist technocrats, out of touch with Peruvian life, carried much truth. Unless he finds some skilful political operators, fortune may cease to smile on him. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21700412-anti-fujimorismo-achieves-unlikely-victory-economic-liberal-fortunate-president/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Corruption in Guatemala + +Bad apples everywhere + +An ousted president is accused of masterminding kleptocracy + +Jun 11th 2016 | From the print edition + +WHEN Otto Pérez Molina resigned as Guatemala’s president last September and was promptly jailed on corruption charges, it was seen as the ultimate triumph for the International Commission against Impunity in Guatemala (CICIG), a UN-backed body of independent prosecutors and investigators, many of them foreign. Now it seems the scandal that led to Mr Pérez’s downfall—a kickback scheme at the customs agency—was just the tip of the iceberg. On June 2nd CICIG and local officials arrested 25 people and issued warrants for 27 more as they unveiled an accusation of jaw-dropping scope: Mr Pérez’s entire political party had been a mere front for a plan to capture and run the Guatemalan state for personal enrichment. + +Political parties have long been weak in Guatemala. Every president since 1985, when regular elections resumed, has belonged to a different party, most of which are now defunct. So there was nothing unusual about Mr Pérez, a former general, founding the Patriotic Party (PP) in 2001 as a vehicle for his political ambitions. + +But according to CICIG, by 2008 the PP was accepting illegal campaign contributions as down-payments for favours if it ever took power. The party courted donors, set up shell companies and appointed frontmen to run them, and covered its tracks with receipts for vague services like “use of machinery for 1,000 hours”. + +After Mr Pérez won the presidential election of 2011, the commission charges, he delivered on his promises. His government signed at least 450 contracts from which officials skimmed off more than $65m as part of the scheme, while Mr Pérez and his vice-president, Roxana Baldetti, enjoyed vacation homes, yachts, helicopters and designer clothing. The 58 named conspirators (counting those already in jail) come from virtually every part of the Guatemalan elite, including the former bosses of two large banks and the wife of a media magnate. An ex-football star who served as Mr Pérez’s culture minister was also detained. In the words of Plaza Pública, a local news website: “The Patriotic Party wasn’t a political party. In reality, it was a criminal gang whose objective was to take power to rob the state.” + +In the past, investigators confronting such entrenched power would have had little hope of making such spectacular claims stick. But CICIG, which was set up in 2007 to aid the country’s prosecutors, has a formidable record of obtaining hard evidence such as wiretaps and bank-transfer records. It has used these techniques not just to take down Mr Pérez, but also to solve murders and ferret out drug traffickers lurking among the police. + +Moreover, Guatemala’s own prosecutors have begun to absorb the foreigners’ professionalism and fearlessness. Mr Pérez did not deny the allegations when asked by reporters, simply saying he would “listen to the charges”, while Ms Baldetti has not responded—though they both said they were innocent of the original customs-bribery allegations. + +If CICIG, whose current mandate runs until late 2017, can secure convictions in the case, it would be a big step towards ending impunity in a country where the powerful have historically been above the law. At the same time, it would also confirm Guatemalans’ suspicions about the extent of the rot at the heart of their state. Foreigners have proven indispensable in bringing corrupt politicians to book. But only Guatemalans can find some honest ones to replace them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21700418-ousted-president-accused-masterminding-kleptocracy-bad-apples-everywhere/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Canada’s daunting logistics + +Airships in the Arctic + +Dirigibles are being floated as the future mules of the great white north + +Jun 11th 2016 | OTTAWA | From the print edition + +The answer to inflated prices? + +EACH year around this time Craig and Cathy Welsh list all the food, drink, clothing and furniture they need for the next year. They then fly 2,000 km (1,250 miles) south to Ottawa from their home in Iqaluit, buy the non-perishables and put them on a ship that will call once the sea ice melts around July. Estimating quantities can be tricky: one bulk toothpaste purchase lasted more than eight years. Yet local prices are so high that they still save money. + +Canada’s transport network, like its people, is squeezed along its southern border. The Arctic depends on air freight, seasonal sea shipments and ice roads. Living costs are exorbitant, but building new infrastructure is even more so: the latest proposal, for a 7,000-km corridor of roads, pipelines and railways has a non-starter price tag of C$100 billion ($80 billion). Now, soaring above such unrealistic options, an old technology is being touted as a new solution: airships. + +Also known as dirigibles or (without a rigid structure) blimps, their basic design hasn’t changed in 150 years: a bag of lighter-than-air gas, plus a propulsion system. Airships fell out of fashion after the 1937 Hindenburg disaster, which killed 36 people, and all but vanished in the jet age. Now they are getting a long-overdue makeover. Dirigibles are far slower than planes: they max out at just 110kph (70mph). But they consume much less fuel and cost about half as much to make. They are also easier to fly in dense, cold air than in hotter, more turbulent southern climes, says Grant Cool, who markets them for Lockheed Martin. + +Moreover, dirigibles do not need an airport to unload. One lighter-than-air model in development by LTA Aérostructures of Montreal would lower up to 70 tonnes of cargo to the ground, requiring only a mooring mast. A heavier-than-air hybrid from Lockheed Martin can land on any flat land or ice. John Laitin of Sabina Gold and Silver, a mining firm, says he paid C$1.90 per tonne per km for Arctic air freight in 2013. Airship makers say they could run that route for C$1.07. + +So why aren’t airships already a fixture in the Arctic sky? Until recently, there was little need: remote towns and camps could safely rely on winter ice roads. But climate change now means these melt unpredictably. Another reason was high oil prices. Although expensive fuel increased airships’ cost advantage over planes, the commodities boom boosted resource firms in the north. When it burst, these companies rushed to cut costs. A final factor is politics. The previous prime minister, Stephen Harper, was a fossil-fuel fan. His successor, Justin Trudeau, vows to tax carbon. + +Nonetheless, it will take time for cargo airships to get off the ground. The 40 or so in the world today are all used for observation, tourism or advertising. The first mover is Britain’s Hybrid Air Vehicles, which hopes to fly its Airlander at the Farnborough Air Show in July. Lockheed has built a scaled prototype, and signed a letter of intent with Straightline Aviation of Britain to supply 12 airships for $480m. But Mr Welsh has learned to be patient. “I am looking out the window,” he says, “and I still do not see any Zeppelins.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21700417-dirigibles-are-being-floated-future-mules-great-white-north-airships-arctic/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Bello + +The Mexican blues + +Intellectuals find fundamental flaws in the country’s democracy + +Jun 11th 2016 | From the print edition + + + +ON JUNE 5th voters in 12 Mexican states unexpectedly gave the Institutional Revolutionary Party (PRI) of President Enrique Peña Nieto a good kicking. In elections for governors, by a preliminary count, the PRI lost seven states to the conservative National Action Party (PAN). In four of those states, the PRI had never before lost power. “After 86 years in which they governed Veracruz, we beat the PRI,” exclaimed Miguel Ángel Yunes, the PAN candidate in that state. This is how democracy is supposed to work: angry voters get to kick the bums out. + +For Mexico, this is still a novelty. It was only in 2000 that seven decades of one-party rule by the PRI finally ended when Vicente Fox of the PAN won the presidency. Yet hopes of a deep and lasting transformation that Mr Fox’s victory raised have given way to disillusion. In striking unison, several of the country’s leading thinkers published jeremiads on the state of Mexican democracy last month. + +“The goddess who was going to cure all evils gave birth to an unrecognisable creature which today prompts rejection and mistrust among the majority of Mexicans,” wrote Héctor Aguilar Camín, a historian and novelist, in an essay in Nexos, a monthly journal. In Letras Libres, Enrique Krauze, another historian, declared in a similar vein: “Many of us thought that democracy…would bring an era of peace, prosperity and justice. That was naive.” + +This intellectual gloom contains a recognition that many things in Mexico are not going so badly. The economy is solid, if not stellar. A dozen of Mexico’s 32 states, mainly in the north, are growing at Asian rates. Consumption has expanded steadily, as has home-ownership, and an open economy has brought Mexicans cheaper, better goods, as Luis Rubio, a political scientist, points out. These improvements are being boosted by the structural reforms—of energy, the labour market, education, banking and telecommunications—launched by Mr Peña. + +Such achievements are more than cancelled out in the public mind by two, linked, failings: crime and corruption. Mr Peña at first played down the battle against organised crime, but the murder rate is rising again and extortion is an everyday misery. According to Latinobarómetro, a regionwide poll, in 2015 57% of Mexican respondents said they or a relative had been a victim of crime in the past year, compared with 44% in the region as a whole. Crime routinely goes unpunished: only a quarter of murders are solved. + +Corruption is equally ubiquitous. It costs Mexico as much as 10% of GDP, according to a study by IMCO, a think-tank. From 2000 to 2013 41 state governors were implicated in corruption scandals; only two have been jailed. In a horror that still shocks Mexico, crime and corruption came together in the murder in 2014 of 43 student teachers in the state of Guerrero at the hands of local police, politicians and drug traffickers. + +It has become commonplace to say that in Mexico democracy did not bring the rule of law. But why did it not? The answer lies in a largely unreformed political system. Under one-party rule, it was a top-down affair based on an imperial presidency. Instead of a systematic redesign, Mr Fox’s victory brought fragmentation and institutional decay. Since 2000 no president has had a majority in Congress. Mr Aguilar notes that power and much federal money have passed to state governors, with no oversight. The cost of politics has rocketed, he adds: office is auctioned to the highest bidder, repaid by siphoning public money and bribes from contractors, developers and organised crime. Freed from the tutelage of the presidency, many local governments fail to fight crime, writes Mr Krauze. + +Mexicans are fed up with crime and corruption; fairly or not, they blame the unpopular Mr Peña. He acknowledged recently that society is “ill-humoured”. But Mexico’s constitution does not provide for a presidential run-off; PRI strategists have calculated that they can keep power in 2018 with just 30% or so of the vote. + +The gubernatorial elections should shake them out of their complacency. Some Mexicans believe that political alternation at the state level is the key to progress. Others argue that the country needs deeper political reform. At a minimum, this should include some recentralisation, with a stronger federal police force and more control over public funds; genuine autonomy and accountability of prosecutors and the courts; and steps to cut the cost of politics. A fragmented political system needs a mechanism to produce a majority, such as a run-off. The problem is that in democracies it is easier to kick the bums out than to devise ways to stop them getting in in the first place. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21700416-intellectuals-find-fundamental-flaws-countrys-democracy-mexican-blues/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Asia + + + +South Korea’s working women: Of careers and carers [Fri, 10 Jun 14:21] + +Indian diplomacy: Modi on the move [Fri, 10 Jun 14:21] + +Japan and money politics: Shameless shogun [Fri, 10 Jun 14:21] + +Afghanistan-Pakistan relations: Frontier stand-off [Fri, 10 Jun 14:21] + +War in Afghanistan: The general’s words [Fri, 10 Jun 14:21] + +Banyan: Foreign lives [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +South Korea’s working women + +Of careers and carers + +Conservative workplaces are holding South Korean women back + +Jun 11th 2016 | SEOUL | From the print edition + + + +WHEN Moon Su-jong, a web designer at a mid-sized South Korean chaebol, or conglomerate, joined a late-night company booze-up and declined alcohol, her bosses guessed that she was pregnant. (What other reason could there be for not drinking?) Far from congratulating her, they were outraged. They berated her for burdening her colleagues, who would have to shoulder her work in her absence, and asked her when she would quit. + +Ms Moon complained to the human-resources manager, who agreed that she was harming the company by getting pregnant. Her boss added that the firm should hire more men. She quit five months later. She left her next employer, too, after her second baby. Her mother-in-law was no longer able to help out with the child care, so Ms Moon went freelance. + +Such experiences are so common in South Korea that they are the subject of a new television drama, “Working Mum, House Daddy”. Its spunky protagonist, Mi-so, struggles to combine long, rigid work hours with child care. She loses out on a promotion to a colleague whose mother-in-law looks after her grandchild (South Koreans call this a “mum lifeline”). + +Women in South Korea find it hard to juggle family and a career. In a poll of 3,000 firms last year, over 80% of private ones said that only one-third of female employees returned to work after maternity leave. Public policy is not the problem. South Korean law requires that private companies offer one year of paid maternity leave. Park Geun-hye, the first woman to lead an East Asian country when she assumed South Korea’s presidency in 2013, has vowed to create 1.7m jobs for women, lift their employment rate by seven percentage points, to 62%, and name and shame companies with too few female employees. + +But many South Koreans are reluctant to accept that women have careers, and firms often fail to accommodate the needs of working mothers. The share of working-age South Korean women who have jobs crept above 50% in 2000, and has risen only five percentage points in the past two decades. The gap between the median earnings of men and women in full-time employment is the worst in the OECD, a group of mostly rich countries (see chart). It has shrunk by just three percentage points in ten years. Working women are paid only 63% of what working men get. The few female bosses in its ten biggest chaebol are all relatives of one of their main shareholding families. + + + +Some South Koreans argue that men need jobs more than women, since they are the chief breadwinners. Man of Korea, a male-rights group, wants to abolish the country’s Ministry of Gender and Family, which it says oppresses men, for example by creating women-only parking spaces. + +That South Korea now has men’s-rights groups is a sign that women have made advances—the stubblier sex no longer takes its dominance for granted. As recently as 1990, sex-selective abortions stemming from a Confucian preference for sons meant that 117 boys were born for every 100 girls. Girls often left school and took menial jobs to support their brothers’ education. Now the cultural preference has reversed: more parents say they would prefer daughters, and the sex ratio at birth is normal again. Three-quarters of women go to university, compared with just two-thirds of men. + +But the workplace has been slow to adapt, and huge numbers of capable female candidates are being overlooked or sidelined. A survey of human-resources teams by Saramin, a job-seeking portal, found that one-third of firms had rejected female job applicants who were at least as well qualified as the male candidates. One-third of respondents agreed that “only a man could do the job.” + +Women have started to fight back. In January an employee at a brewery in the conservative city of Daegu sued her boss for forcing her to resign before her marriage. And foreign firms in South Korea have seen an opportunity. Since female talent is undervalued, it is relatively cheap. A study in 2010 found that foreign multinationals hire lots of South Korean women with degrees, and that this boosts their return on assets. + + + +INTERACTIVE: The best—and worst—places to be a working woman + +One way to make it easier for working mothers would be for their husbands to do more at home. Currently South Korean women do 83% of unpaid work; American women do 62%. The law promotes a fairer division of labour: South Korean fathers are entitled to 53 weeks of paid paternity leave—more than any others in the OECD. Yet barely 2% used any of it in 2014. An architect in Seoul (who asked not to be named) took a full year off work so that his wife could pursue her “dream job” in one of the country’s biggest publishing firms, but he is exceptional. (At his wife’s firm, her female colleagues brag about how their contractions started while they were still at their desks.) + +Many fathers—64% of male employees surveyed in 2014—said they would share the burden of child care if only it became socially acceptable and financially possible (by law they are paid 40% of their regular wage on leave but, as it is capped at 1m won—$860—a month, they rarely get that much). They know their bosses mean it when they joke that their desks might be gone when they return. + +With a fertility rate of around 1.2 babies per woman, South Korea’s labour force is set to shrink dramatically. If the country fails to make use of half its talent pool, stagnation looms. An OECD study estimated that if the labour-force participation rate for men and women was the same by 2030, GDP growth would increase by 0.9 percentage points annually. Since 2010 growth has fallen from 6.5% to 2.6%. + +In one episode of “Working Mum, House Daddy”, the office is dumbfounded when Mi-so’s husband comes into work with their second baby strapped to his chest and says he will take leave in her place to avoid her losing her job. The boss is incredulous: “Do you think this will end with you? Once you do this, others will follow!” Maybe they will. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21700461-conservative-workplaces-are-holding-south-korean-women-back-careers-and-carers/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Indian diplomacy + +Modi on the move + +Once diffident, India is beginning to join the dance + +Jun 11th 2016 | DELHI | From the print edition + +India joins the clubs + +NARENDRA MODI is a masterful salesman. On his frequent foreign tours the Indian prime minister touts his brand not only in words but physically. The beatific smile, the warm hugs and the trademark folkloric dress project the reassuring humility of a big but benign country. Yet behind the soft-focus India that Mr Modi personifies, the contours of a harder-edged regional power are emerging under his leadership. + +For many Indians, it is about time. Traditional Indian diplomacy has been “non-aligned”. In practice this has often meant disengagement from the wider world and skittish caution closer to home. Such has been the case in India’s dealings with China: its generous economic and military aid to Pakistan, India’s eternal rival, and its energetic efforts to prise smaller neighbours such as Nepal and Sri Lanka from India’s orbit have until recently resulted in little more than head-scratching in the Indian capital, Delhi. C. Raja Mohan of the Carnegie Endowment for International Peace, a think-tank, says there has been a shift in Indian diplomatic thinking: “Now the word is: ‘We will push back.’” + +Mr Modi has signalled this on his recent travels. Last month saw him in Iran where, between cuddly photo-sessions with similarly grizzled Iranian leaders, India pledged to develop port and rail links between Iran and Afghanistan. It is no coincidence that this route, which will ease traffic between Central Asia and the Arabian Sea, runs parallel to China’s own $46 billion scheme to build energy and transport infrastructure through the length of Pakistan, linking China to the sea. + +On June 4th Mr Modi stopped in Afghanistan to inaugurate a hydroelectric station. One of numerous Indian aid projects, it is intended not only to shore up Afghanistan’s Western-backed government, but also to show off India’s generous, responsible behaviour, in contrast with that of another neighbour, Pakistan, whose intelligence services have long been accused of covertly sponsoring the Taliban. + +From Afghanistan he went to Switzerland, America and Mexico. His aim in these countries was to put the seal on what has been a long and complicated Indian diplomatic effort. India has been trying for decades to gain international recognition as a nuclear state. It will soon gain entry to the 34-nation Missile Technology Control Regime (MTCR), whose aim is to keep irresponsible countries from acquiring missiles with which to deliver weapons of mass destruction. + +But despite its good record in preventing nuclear proliferation (unlike Pakistan), and in the acceptance of international safeguards on civilian nuclear power, India remains shut out of the 48-nation Nuclear Suppliers Group (NSG). Non-membership is humiliating to a country of India’s size. It is also costly, denying India access both to useful civilian technology and to markets in which to sell its own. + +Hoping to woo India a decade ago, America broke ranks and signed a bilateral accord on civilian nuclear power. The superpower also wielded its clout in 2008 to coax the NSG, and particularly a recalcitrant China, to grant limited exemptions for nuclear-technology trade with India. Now, under Mr Modi, India is stepping up its efforts to gain full admission to the nuclear elite. It sees the two meetings of the NSG that are due to be held later this month as an opportunity for progress. + +Switzerland and Mexico are among the smaller powers that had looked askance at India’s efforts. But now they, along with traditionally nuclear-averse countries such as Japan, back Indian membership of the NSG. Italy dropped objections to Indian entry into the MTCR after India sent home an Italian marine facing murder charges for killing two Indian fishermen he mistook for pirates. + +China worries about signs that Western countries are cosying up to its giant neighbour. It fears that Mr Modi will exploit better ties with America as a source of advantage. For years the Pentagon has pursued India as part of an effort to counterbalance growing Chinese strength, but only in recent months have Indian military officials begun to show eagerness for co-operation. This month the two countries will hold their annual naval exercises not in Indian waters, but in the Sea of Japan, with the Japanese navy, near islands claimed by both Japan and China. In a wide-ranging speech before a joint session of Congress on June 8th, Mr Modi said that America was India’s “indispensable partner”. An outright military alliance between India and America remains unlikely, but even the remote prospect of one will concentrate Chinese minds. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21700459-once-diffident-india-beginning-join-dance-modi-move/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Japan and money politics + +Shameless shogun + +Japan fondly recalls a corrupt former prime minister + +Jun 11th 2016 | TOKYO | From the print edition + +Kaku-san paid cash + +IT WAS a favourite boast of the late Kakuei Tanaka, a former leader of Japan, that he won his first cabinet job in 1957 by giving the then prime minister, Nobusuke Kishi, a small backpack filled with ¥3m (perhaps $70,000 in today’s money). As Tanaka’s stature in Japanese politics grew, so did the size of his bribes: eventually he needed large metal suitcases. Two years after he resigned as prime minister in 1974, following accusations of dodgy property deals, he was arrested for pocketing $1.8m in bribes ($8.7m today) from America’s Lockheed Corporation, a defence contractor. + +Forty years on, Japan is gripped by nostalgia for Kaku-san, as he is fondly known. A slew of recent books and articles lionise him. In this year’s “Genius”, a bestselling book about Tanaka written in the first person, as if he were still alive and doling out construction contracts, Shintaro Ishihara, a retired right-wing politician and former Tokyo governor, argues that politicos nowadays just lack his class. Others praise his common touch and ability to get things done: he was known as “the bulldozer with a computer”. An editor at one of the Japanese tabloids that have been churning out articles praising Kaku-san believes his readers would vote for him if he were alive today. + +What does this mania for a dead, corrupt politician say about contemporary Japan? Mainly it highlights the Japanese public’s profound disenchantment with today’s careful politics and bland politicians. Contemporary leaders, writes Eiji Oshita, an author, are “tasteless like distilled water”. + +It suggests a particular distaste for the current prime minister, Shinzo Abe, who is Kishi’s grandson, and unlike Kaku-san often struggles to connect with ordinary folk. Akira Nakano, an 87-year-old businessman from Tokyo who recently bought Mr Ishihara’s book, dislikes Mr Abe but complains that there is no viable opposition to vote for. + +The mania also shows that Japan has a deep tolerance for bribery scandals, especially those involving popular politicians. Jitsuwa Bunka Taboo, which is better known for nude pictures and gossip about gangsters, was among the few publications to bring up Kaku-san’s corruption. Of all the greedy politicians who had a knack for lining up supporters, it wrote, Tanaka was the worst. The more common view is Mr Ishihara’s: that was how politics worked back then, and Kaku-san was an effective politician. Few may want to live in such times, but many miss them, and the characters they bred. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21700458-japan-fondly-recalls-corrupt-former-prime-minister-shameless-shogun/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Afghanistan-Pakistan relations + +Frontier stand-off + +Why Pakistan has tightened controls along a porous border + +Jun 11th 2016 | ISLAMABAD | From the print edition + +A slower crossing + +FOR more than a century, travellers, traders, tribesmen and the occasional terrorist have wandered freely across the Afghanistan-Pakistan border. That came to an abrupt end on June 1st. For the first time, Pakistan imposed full border controls at Torkham near the Khyber Pass, used by around 15,000 people daily. This is sure to cause hardship for the 40m Pushtuns living on both side of the border. It also shows how regional power dynamics are shifting. + +Despite the government’s warning, people were surprised—many did not even have passports to hold their newly required visas. One traveller reported seeing pregnant women lying by the road, desperate to get to a hospital in Peshawar, on the Pakistan side. Commerce will also suffer. Peshawar’s private hospitals rely on fees from a steady stream of Afghan patients. Afghan carpets are really Afghan-Pakistani carpets: woven in Afghanistan, but usually cut, cleaned and sold in Pakistan. + +For Afghanistan, the closure inflames the old wound over the Durand Line, which defines the border. The line was agreed in 1893 between the then-king of Afghanistan and the British Raj. It sliced through Pushtun communities. Afghanistan still refuses to recognise it, or give up claims to a big chunk of Pakistani territory. + +Some Afghans believe the border closure is intended to punish them. The goodwill following Ashraf Ghani’s election as president of Afghanistan has ebbed. His term began with a charm offensive: he sent cadets for officer training in Pakistan, called on Pakistan’s army chief in Islamabad, and dropped a longstanding request for Indian military aid, including attack helicopters. But after a series of Taliban attacks he has returned to the anti-Pakistan rhetoric typical of Afghan politicians; he accuses Pakistan of sponsoring and sheltering Taliban leaders. + + + +Pakistan, meanwhile, has taken umbrage at India’s rising influence in Afghanistan. Minimising the old enemy’s presence on its western flank has long been an obsession for Pakistani leaders. Narendra Modi, India’s prime minister, opened Afghanistan’s new parliament building in December. On June 4th he inaugurated a restored dam near the western city of Herat. India financed both structures. + +In May Messrs Modi and Ghani, along with Hassan Rohani, Iran’s president, struck a partnership to develop Iran’s Chabahar port (see article). The port project will compete with Pakistan’s China-backed port in Gwadar, just 170km east of Chabahar. A retired Pakistani defence secretary reflected establishment views when he told a conference that the Chabahar development represented a “security threat to Pakistan”. + +Pakistan’s building of fences and fortifications has triggered cross-border skirmishing in the past. And it has periodically shut the border when it wanted to express annoyance at Afghanistan. On May 10th the border was closed for four days after Afghan forces blocked Pakistan’s efforts to erect border fencing. But this time passport controls look set to become permanent. Officials promise to extend them to the six other border crossings in due course. + +Pakistan’s army insists that tighter controls are a security measure, unrelated to the region’s power politics. The army believes that three terrorist attacks in and near Peshawar, including the gruesome slaughter of more than 130 boys at the city’s Army Public School, involved terrorists who had freely crossed into the country at Torkham. Some in Pakistan have even started to question the “easement rights” granted to tribes divided by the border, maintaining that they were intended to let tribesmen travel short distances across the border, not have unfettered access to all of Pakistan. Demands that Afghan refugees, some of whom have lived in Pakistan since the Soviet invasion of the 1980s, return home have grown louder. + +The potential damage to cross-border trade and diplomatic relations does not bother Pakistan’s defence establishment, says Rahimullah Yousafzai, a Peshawar-based watcher of frontier affairs. “Pakistan is going to be much less big-hearted than before,” he predicts. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21700457-why-pakistan-has-tightened-controls-along-porous-border-frontier-stand/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +War in Afghanistan + +The general’s words + +Barack Obama faces an unpleasant decision + +Jun 11th 2016 | From the print edition + + + +THIS week General John Nicholson, the commander of America’s forces in Afghanistan, completed a review of what will be needed to contain the growing insurgent threat posed by the Taliban and its allies. After reading his recommendations, Barack Obama will have to make a decision he surely hoped to pass on to the next president: whether to ramp up American troop numbers in Afghanistan again. + +General Nicholson has probably asked Mr Obama at least to halt his planned reduction of America’s troop levels from 9,800 to 5,500 by the end of the year. Mr Obama has often seemed to think he could end the war in Afghanistan simply by declaring it over. But the enemy has not cooperated. Afghan forces have fought bravely since the end of 2014, when NATO combat troops formally left. But they were not ready to cope with the sudden departure of their allies, while the Taliban remained resilient and capable. + +The Afghans are suffering losses that American commanders warn are unsustainable (see table). Not since 2001 have the Taliban held as much territory as they now do. Civilian casualties are mounting, as Afghan soldiers have been stretched thin across multiple fronts. Michael O’Hanlon of the Brookings Institution, a think-tank, says that the loss of American air power has particularly hampered the Afghan army’s ability to carry out attacks: units in trouble can no longer call in reinforcements or air strikes. + +Even current troop levels—6,954 Americans to train and help Afghan forces and 2,850 on separate counter-terrorism missions, with NATO contributing a further 5,859 soldiers—appear inadequate. Mr Obama’s administration understands this, at least tacitly. The House Armed Services Committee recently revealed that 26,000 military contractors are in Afghanistan—an unusually high number. They do a lot of jobs that troops would normally do, allowing Mr Obama to hold the headline figure for troops deployed below 10,000. + +Nor is it just a question of numbers: what the White House lets its soldiers do also matters. American special forces go discreetly into action with their Afghan counterparts. But most troops in the “train and assist” mission are not embedded with Afghan combat units, where they would be in harm’s way but also of most practical help. + +Restrictions on air power are even more frustrating for field commanders. American combat aircraft may only be used against designated terrorist groups, such as al-Qaeda and Islamic State, or when either NATO troops are imperilled or “strategic collapse is imminent” (for example, if a big city is about to be captured). + +Few can see the sense of this. David Petraeus, a former commander in Afghanistan, and Mr O’Hanlon recently urged Mr Obama to change the rules of engagement. They pointed out that America is dropping and firing 20 times more bombs and missiles in Iraq and Syria (neither especially intense air campaigns) than in Afghanistan. Anthony Cordesman of the Centre for Strategic and International Studies says that “US and allied air power is critical” to prevent the Afghan army’s defeat. + +To bolster his case, General Nicholson points to “overt cooperation between the Taliban and designated terrorist organisations”. He fears that if the Taliban returned to power in some parts of the country, “they would offer sanctuary to these groups.” He already has the bipartisan support of 10 of the 26 members of the Senate Armed Services Committee, who wrote to Mr Obama on May 26th urging him to give General Nicholson’s advice “extraordinary weight”. On June 3rd, 13 senior diplomats and retired generals, who oversaw military operations and policy in Afghanistan under both the Bush and Obama administrations, sent the president an open letter calling on him to maintain current force levels. + +Whatever Mr Obama decides, his successor will still have to make some difficult choices. It would be better if those choices were informed by sober realism rather than wishful thinking. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21700456-barack-obama-faces-unpleasant-decision-generals-words/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Banyan + +Foreign lives + +Migrant labour brings enormous economic benefits, and wrenching heartache + +Jun 11th 2016 | From the print edition + + + +EATING chips in a Singapore McDonald’s with his press clippings proudly spread in front of him, Mohammed Mukul Hossine is revelling in his status as a published poet. The 25-year-old Bangladeshi’s day job is working on the piling for a new block of luxury flats. With a father back home undertaking the haj this year, and one of his eight siblings still in school, he needs the money. His book of poems, “Me Migrant”, which he paid to have translated from Bengali to English, and which were then “transcreated” by Cyril Wong, a Singaporean poet, will not be a bestseller. But it has drawn some attention to a large, often overlooked slice of Singapore’s population: its 1m “work permit” holders—migrant workers on two-year contracts. The poems suggest, unsurprisingly, that their lives are pretty miserable. + +The International Labour Organisation estimates that the Asia-Pacific region was host in 2013 to 25.8m migrant workers. They have done wonders for both their home and destination countries. Rapidly ageing societies such as Japan, Singapore, South Korea and Taiwan are short of workers. Younger, poorer places such as Bangladesh, India, Nepal and the Philippines need the money their emigrants send home. So Cambodians work on South Korean farms; young Chinese men work in Tokyo’s convenience stores; and South Asians toil on Singapore’s building sites. The World Bank estimates that of the ten countries that receive the most in remittances from overseas workers, five are in Asia. In the Philippines, remittances are equal to 10% of GDP. + +In Singapore 1.4m workers, or 38% of the workforce, are foreigners on time-limited passes. Most come without their families. Many of the 326,000 construction workers live in dormitories; the 232,000 domestic workers live in their employers’ homes. Many can repeatedly renew their two-year contracts. But they are given virtually no hope of becoming “permanent residents”—as other long-staying foreigners can—let alone Singaporean citizens. Women who become pregnant are sent home; workers who overstay are caned and deported (“law and order so accurate here,” notes one of Mr Mukul’s poems in praise of “beloved Singapore”). Some politicians say that, since their stays are limited and they impose little burden on local infrastructure, pass-holders should not really be counted as part of the population at all. + +Some of course suffer exploitation and misfortune. Mr Mukul’s first visit to Singapore in 2008 came after his father had sold land to pay the S$10,000 ($7,400) fee demanded by job agents in Bangladesh. But his employer went bust and he had to return home penniless. It is a typical story, says Jolovan Wham of HOME, a charity that works with migrant workers. Singapore limits agents’ fees to two months’ wages, but cannot police what happens in the home countries. So many workers toil for months to repay their debts. If they fall ill, are injured or find themselves in dispute with their employers, they have few resources, though local NGOs help—it was through one, HealthServe, that Mr Mukul found the cash to have his book published. + +His book is not full of anger (despite one poem in which he declares “I want to announce war.”) Rather it is about homesickness, missing his family—especially his mother—and the isolation of the migrant’s life. His own favourite is called simply “Loneliness”, and finishes: “Stranded immigrant, unending solitude.” In this Mr Mukul is also typical: he is far from the only migrant worker-poet; and that loneliness reflects the preoccupations of many others: missing spouses, and children growing up not knowing one parent; thwarted romances; lost homes. + +Though literature is particularly central to Bengali culture, workers from many nations have taken up writing. Shivaji Das, a Singapore-based writer and management consultant, helps organise poetry competitions in Singapore and Malaysia with entries in Chinese, Tagalog, Bahasa Indonesia, Tamil as well as Bengali. A winner from last year’s contest in Singapore was N. Rengarajan, a 29-year-old construction worker from southern India, whose poem on the pluses and minuses of migrant life sums up many of the recurring themes. Translated from the Tamil, it concludes: “Living in a foreign land/ we can buy everything that has a price/ but love and affection./ Ours is not a foreign life/ our lives are foreign to us.” + +In Singapore, migrant workers rarely make the news. When they do, it is sometimes for a good deed noted by a politically correct pro-government organ. But many in Singapore were shaken when, in December 2013, a traffic accident in the part of town known as Little India degenerated into a riot, as South Asian migrants vented their frustrations. And in the past few months, another sort of story has appeared: of the pre-emptive arrests and sometimes deportation of a few “radicalised” Bangladeshis plotting terrorist attacks at home. + +Twenty years of schoolin’, and they put you on the day shift + +Mr Das notes that the reaction of many people to the poetry is surprise. Migrants can write! They even have emotions! So it not only gives those who are interested a platform and a chance to share their work and their feelings. It also helps to change public attitudes. Singapore is a sought-after and hence expensive destination for migrants, compared with, say, the Middle East. So some who come are well educated and even, at home, comfortably off. They are, through self-selection, adventurous and ambitious. Unenviable though their lives in Singapore seem, many are there through repeated choices, suggesting both the lack of opportunity they felt at home, and that Singapore’s treatment of migrants is seen as better than most. + +Mr Mukul, a high-school graduate who has been writing songs and poetry since he was 12, found construction work hard, fainting on the fourth day of his first job, humping sacks of cement. Yet he keeps coming and keeps writing, and now dreams the impossible dream: of becoming Singaporean. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21700460-migrant-labour-brings-enormous-economic-benefits-and-wrenching-heartache-foreign-lives/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +China + + + +Wenzhou’s economy: It once was lost [Fri, 10 Jun 14:21] + +China-United States relations: Aerial chicken [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Wenzhou’s economy + +It once was lost + +A city renowned for its business acumen battles to recover from a financial crisis + +Jun 11th 2016 | WENZHOU | From the print edition + + + +DEBT in China can be life-threatening. Walking around the factory floor of his father’s company, a manufacturer of small electrical parts, Fan Lele looks relaxed these days. Five years ago, he could not come near it. After a few investments went bad, he found himself 10m yuan ($1.5m) in arrears to his creditors, many of whom were former friends. Mr Fan feared they might hurt or even kill him, so he went into hiding for months, skipping from city to city. Eventually, his father dug deep to pay them off. He secured Mr Fan’s safe return and managed, barely, to keep his company afloat. + +In this eastern city, home to some of China’s boldest risk-takers, such tales are almost banal. Virtually everyone in business in Wenzhou, which is to say almost everyone in Wenzhou, has a horror story about the financial crisis that struck in mid-2011. Dozens of investors, big and small, fled their debts. The most desperate jumped off buildings. Large, unlicensed underground banks collapsed, as did hundreds of firms. By official (very conservative) reckoning property prices fell some 25% over the next few years (see chart). + + + +These days, Wenzhou is quietly getting back to work. Housing prices have started to rise again. The city’s economic growth topped 8% last year, the fastest since 2011. But with bad loans still clogging its bank system, many of the city’s scars remain unhealed. Wenzhou is an outlier at the wild end of the Chinese economy. Yet its trajectory—from painful downturn to halting recovery—may suggest what lies ahead for the most debt-laden parts of the country. + +Wenzhou has long stood apart from the rest of China. It is a port city in Zhejiang province, separated from the interior by mountains, with a dialect unintelligible to most outsiders. The legacy of foreign missionaries in the 19th century is evident in a large Christian community (Wenzhou is sometimes called the “Jerusalem of the East”). When China began to open up to private commerce in the 1980s, Wenzhou was one of the first to seize the new opportunities. Its people became renowned for their aggressive brand of capitalism, and also their golden touch. + +Families pooled their cash and organised informal lending societies, backed by the trust born of their tight-knit community. With that capital, they started small factories. By the late 1990s Wenzhou had become a manufacturing centre for a dizzying array of small products: from cigarette lighters to valves. As Wenzhounese fanned out around the country for business, their money followed. Whenever asset prices spiked, whether for holiday homes on the southern island of Hainan or coal mines in the industrial north, Chinese media pointed to speculators from Wenzhou as the cause. These accounts often contained a kernel of truth. + +Then came 2011. China had propelled its economy through the global financial crisis by flooding it with cash. Regulators were starting to rein in the excesses. Across the nation, lending to small businesses slowed; property prices and the stockmarket dipped. Companies in Wenzhou, which had been counting on a steady flow of financing to fund their bets on stocks and property, were in trouble. The dense networks of trust that had helped propel Wenzhou to wealth turned into liabilities. By the end of 2011 at least 40 small-business owners had reneged on their debts and fled the city, police said at the time. Mr Fan was one of them. + +Five years on, Wenzhou is still trying to clean up the mess. In 2012, to much fanfare, the central government designated the city as a “special financial zone”. The idea was to bring transparency to underground banking. It set up a “registration centre” at which lenders were urged to declare their loans so that it would be easier to monitor them. By April, about 32 billion yuan in loans had been registered at the centre—a good start, but less than 5% of official bank lending in Wenzhou. It is likely that many underground loans are still hidden. + +The city also gave private businesses the right to establish lending companies, trying to steer them into the formal financial system. These have fared poorly. One businessman says he and his partners are closing up shop after less than two years. He estimates that about 20% of their 200m yuan in loans has already gone bad. “The government said it was reform,” he sighs. “But we wonder if they were just lying to us, getting companies to take our loans to pay back state banks.” + +There has been progress in other areas, however. One is bankruptcy, a legal process that has been slow to catch on in China (hence bitter disputes when firms go bust). The central government introduced a new law in 2007 allowing the restructuring of troubled companies, using methods similar to Chapter 11 proceedings in America. Businesses in other parts of China, fearing a stigma, have been reluctant to use it. Courts have lacked expertise to administer it. But Wenzhou has got over its inhibitions. With less than 1% of China’s GDP, it has accounted for nearly a tenth of bankruptcy cases nationwide over the past three years. It established one of China’s first courts dedicated to handling such cases. “Other cities hear ‘bankruptcy’ and get scared. Here, we are tasting how sweet it can be,” says Zhou Guang, who heads the Wenzhou Lawyers’ Association. + +In one case held up by the city as a model, Haihe, a drug firm with a history going back to 1670, was salvaged after going bust. Its previous owners had run up unsustainable debts punting on property. Its creditors took control and eventually sold it to investors. The lenders only managed to recover a small portion of what they were owed but, crucially from Wenzhou’s perspective, Haihe is back in business. It now has plans to expand. + +State-run banks also appear to be healthier. They say that nearly 5% of their loans were bad in early 2014; at the end of last year, 3.8% were. That is still more than double the national average and probably an understatement, since banks regularly hide their bad loans. Part of the clean-up also reflects an asset shift rather than a real solution: Wenzhou is the first city in China to create its own “bad bank” to take over failed loans. But these caveats aside, the city is justifiably proud. It is just about the only city in China where banks have reported an improvement in lending quality over the past two years. + +Even the city’s underground lenders—at least those still in business—have learned lessons. Yan Yipan has transformed his law firm into an intermediary that connects borrowers and creditors, helping to structure legally binding deals between them. From a stylish wood-clad tea room in his office, he says that the city offers a glimpse of what awaits the rest of the country as growth slows and debt-laden companies sputter. “Wenzhou was the first to fall into trouble but it is also the first to get back up again,” he says. “When the economy was going well, no one thought there could ever be problems. Now we are much more rational.” + +Yet the prevailing mood is gloomier than before the crisis. At Mr Fan’s company, Tietong, the concern is not loan sharks but rather the problems of small businesses anywhere in China. A manufacturer of metal wiring for light switches, Tietong is squeezed between rising wage costs and falling demand amid an industrial slowdown. To survive, it has been trying to break into new markets. It has recognised that its products are not good enough for rich countries, so it is focusing on developing ones—only to find that its prices are often too high for them. That is a common experience in Wenzhou, where the economy is dominated by small businesses like Mr Fan’s. + +Wenzhou’s identity as a relatively independent, easy-going city has also started to fade. In the past two years, officials in Zhejiang have been waging their biggest crackdown on open displays of Christian belief in years. This has involved the demolition of several churches and the removal of hundreds of rooftop crosses from others, with Wenzhou a main target. At some churches, Christians have protested and scuffled with police. The chill has extended to the city’s business atmosphere: provincial and central officials now watch Wenzhou more closely. That may be reasonable, given the turmoil of 2011, but it is a change nonetheless. + +There has also been a loss of trust between people themselves. Zhang Xiaoyan, an adviser to the local government, says the “spiritual damage” from the crisis is worse than the material damage. “It used to be that Wenzhounese would lend to each other with no questions asked and not even so much as an IOU. It was like a blood bond. This is no more,” she says. In place of the trust-based system, the city is trying to foster a modern economy based on contracts and credit records. If successful, Wenzhou may well emerge more resilient, though nothing like its former rumbustious self. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21700451-city-renowned-its-business-acumen-battles-recover-financial-crisis-it-once-was-lost/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +China-United States relations + +Aerial chicken + +A rocky patch could get rockier + +Jun 11th 2016 | BEIJING | From the print edition + +What the hell ADIZ? + +BARACK OBAMA’S “pivot” to Asia has been his most important foreign-policy shift. But the continent is causing him more pain than gain, at least to judge by the final cabinet-level meeting of his presidency between China and America. The gathering, called the Strategic and Economic Dialogue, was held in Beijing on June 6th and 7th. It showed that some progress is being made by the mutually suspicious powers. But it has been only tentative. Remaining problems are intractable and dangerous. + +In one friendly-sounding gesture, China pledged to cut excess steel production, which has been depressing global prices and upsetting steelmakers in America and elsewhere. But the country had already said it would reduce capacity by 100m-150m tonnes by 2020. China admits this will not eliminate the glut. + +China also agreed to enforce sanctions that were imposed on North Korea by the UN in March. That would please America, which believes China is half-hearted about stepping up pressure on the North to stop making nuclear bombs. But the two countries showed little sign of agreeing on what to do next. America wants more pressure, China more talks. + +Tension at the meeting was inevitable. An international tribunal is preparing to rule soon on rival claims by the Philippines (an American ally) and China in the South China Sea. China will be furious if, as is expected, the ruling favours the Philippines. It says it will not abide by the verdict, and is reported to be planning to declare an Air Defence Identification Zone (ADIZ) in the South China Sea. This would require planes to identify themselves, or face a military response. + +On his way to Beijing, America’s secretary of state John Kerry (pictured, with President Xi Jinping) warned against the ADIZ idea. During his talks, in a reminder of the risks involved, Chinese fighter jets buzzed an American spy plane in the ADIZ that China already has in the East China Sea. The Pentagon called the interception “unsafe”. That would also apply to the relationship more generally. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21700454-rocky-patch-could-get-rockier-aerial-chicken/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Middle East and Africa + + + +Morocco: The pluses and minuses of monarchy [Fri, 10 Jun 14:21] + +Public spaces in the Middle East: No bed of roses [Fri, 10 Jun 14:21] + +Ramadan in Saudi Arabia: Taking it to heart [Fri, 10 Jun 14:21] + +Trade in east Africa: Worth celebrating [Fri, 10 Jun 14:21] + +The killing of albinos: Murder for profit [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Morocco + +The pluses and minuses of monarchy + +Morocco is doing well, but its king still needs to adapt + +Jun 11th 2016 | CASABLANCA | From the print edition + + + +ON THE night of February 19th 2011, Abouamar Tafnout, an activist from Casablanca, suddenly grew nervous. He had just watched a documentary on the civil war in Algeria. We don’t want that, he thought. Thousands of Moroccans were preparing to hit the streets the next day to challenge King Mohammed VI and the ruling elite, known to locals by the nickname makhzen (“the storehouse”), which controls much of the economy. Mr Tafnout, just 20 years old at the time, had helped to organise the protests. “I was afraid—afraid for the country,” he says. + +But most of Morocco’s protesters, like Mr Tafnout, did not want a messy revolution. Rather, they pushed for a more constrained monarchy. When the king increased wages and pensions, and promised to relinquish some power, many were satisfied. A revision to the constitution, strengthening parliament, was passed by referendum in July 2011. Elections were held that November. Some blood was shed, but Morocco’s version of the Arab spring went rather smoothly. + +Five years on, Morocco is stable, relatively free and increasingly prosperous. Compare that with the rest of the region and it is little wonder that Moroccans are loth to upset the status quo. “Gradualism” is a popular word, even among those who would like to see their country become more like Spain, where the monarchy is largely ceremonial. + +The king still dominates the state, but he is popular. His granting of more rights to women and efforts to tackle poverty have gone down well. Critics say he is a cunning politician. Most Moroccans credit him for the country’s stability. And he has capitalised on the calm by positioning Morocco as a hub for European manufacturers. Tax breaks and good logistics lure business. Car production, led by Renault, a big French producer, has more than doubled since 2011. The aeronautics industry has also taken off. + +Renault’s factory has a direct train line to the commercial port of Tanger-Med, 40km (25 miles) east of Tangier, which is expanding. By the time construction is completed, in 2018, it is expected to be the busiest port on the Mediterranean. Morocco is looking south, too. Casablanca Finance City, a public-private initiative, helps local and international firms that want to use the country as a base for their operations in Africa. It is building fancy new office space on the site of an old airport in the city. + + + +As it upgrades its roads and infrastructure, Morocco is bound to experience catch-up growth—GDP grew 4.5% in 2015. But its government has also been clever. Tighter fiscal policy, including cuts to energy subsidies, has helped Morocco reduce its current-account and budget deficits. A drought may slow growth this year, but analysts are still bullish. “We think Morocco could record GDP growth of 5-6% over the next five to ten years,” writes Jason Tuvey of Capital Economics, a consultancy. + +But not everything is rosy. The monarchy can certainly get things done: big projects, such as the largest solar plant in the world and 1,500km of high-speed rail lines are moving ahead; but the average Moroccan must deal with a stifling bureaucracy. “The further you get away from the king, the harder things become,” says Merouan Mekouar of York University in Canada. Members of the royal court use their proximity to advance their own projects and win contracts. Morocco ranks a woeful 88th in the world in Transparency International’s corruption perceptions index. + +The problem is compounded by a lack of accountability. Take the high-speed rail lines, which should more than halve travel time between Morocco’s big cities. Some have questioned whether the billions of dollars might be better used to help the poor, given that Morocco is in the bottom third of the UN’s human development index. Others wonder if a slowdown in global maritime trade makes the Tanger-Med expansion unwise, or ask why an initiative to boost tourism, Plan Azur, has failed to produce many results. No one in the royal palace seems to be checking. + +Don’t expect parliament to provide answers, either. Although the revised constitution gives the government more power over policy and appointments, the king is still firmly in charge. Moreover, “the regime has largely succeeded in taming opposition forces,” says Mohamed Daadaoui of Oklahoma City University. It has co-opted the Justice and Development Party (PJD), a mildly Islamist group that won the election in 2011. The PJD has not pushed for substantial democratic reforms. Yet it still faces a challenge from the Party of Authenticity and Modernity, which is even more supportive of the king, at parliamentary elections scheduled for October. + +Journalists and activists criticise the monarchy, which puts them at risk. News outlets have been forced to close and journalists jailed in recent years. Reporters Without Borders, a pressure group, considers Morocco less free even than Algeria or Afghanistan. Consider the case of Ali Anouzla, a critic of the king, who has been accused of “inciting” terrorism. His alleged crime was to link to a video by al-Qaeda in the Islamic Maghreb, which he criticised. + +In general, freedom of expression is curtailed by three red lines. Critical discussion of Islam, the monarchy or the disputed territory of Western Sahara is banned. Even so, protests are common in Morocco, over such things as employment and pay. But they are often broken up by police, who tend to use heavy-handed tactics. When protesters questioned the enormous royal budget in 2012 they were beaten. + +Many Moroccans are ill-equipped to question their king. Almost a third of the population is illiterate. Others protest in a different way. About 1,500 Moroccans are thought to have joined Islamic State (IS) in Iraq and Syria. Hundreds more are training in Libya, leading to fears that they may return to launch attacks in Morocco. Youth in rural areas, where poverty is widespread, are seen as particularly vulnerable to the terrorists’ message. So the king—who also holds the title, “commander of the faithful”—has created a new religious training institute in Rabat, the capital, to promote his moderate brand of Islam. + +The threat of terrorism has also been used as an excuse to silence critics, while the turbulence of the region is cited to dim the ardour of reformists. But by comparing itself with the Arab world, Morocco is setting a low bar. Many of its citizens speak French and Spanish, and would rather look to Europe for inspiration. + +The king has encouraged such thoughts on economic matters. But he is thwarting Morocco’s political progress. Little effort has been put into building the institutions, like an independent judiciary, that would be needed in a constitutional monarchy. Still, Moroccans are hopeful. “Sometime in the near future, Morocco will be a democratic state,” says Mr Tafnout. “The monarchy is smart enough to know that.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21700393-morocco-doing-well-its-king-still-needs-adapt-pluses-and-minuses/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Public spaces in the Middle East + +No bed of roses + +Parks are disappearing throughout the Arab world + +Jun 11th 2016 | BEIRUT | From the print edition + +How things used to be + +“THE city has adorned herself with flowers of sweet scented herbs,” waxed the great Arab traveller, Ibn Jubayr, when he visited 12th-century Damascus. “It is encircled by gardens as the moon by its halo.” Later European travellers were no less entranced by the dazzling turquoise square—Naqsh e-Jahan, “the image of the world”—that Abbas I built in Isfahan in the 17th century, leaving behind accounts of its splendours as well as of a host of other such leafy delights as drinking excursions on the banks of the Barrada River that flows through Syria’s capital. The Prophet Muhammad is even said to have shied from entering Damascus, otherwise called al-Fayha, “the fragrant”, for fear of entering Paradise twice. + +He would have no need for hesitation today. Amid the bloodshed, car fumes and noise, residents are hard-placed to find anything fragrant in the sprawling cities of the Arab world. The number of places where people can mingle, picnic on cool watermelon by the rivers and fly kites has shrunk while their populations have soared. Per person, the amount of land devoted to parks, squares and other public spaces in Riyadh, for instance, has fallen by 80% in half a century. Public spaces now comprise just 2% of the area of Middle Eastern cities compared with 12% in the average European city, according to UN Habitat, an agency that monitors urban development in part through satellite imagery. They make up just 0.5% of Beirut. + +“Historically parks were places for poetry, debates and tales of debauchery on the edge of the city, but the cities swallowed them as they grew,” says Nasser Rabbat, an expert on Islamic architecture at the Massachusetts Institute of Technology, who co-wrote a new book on Islamic gardens. + +Greed is partly to blame, says Jala Makhzoumi, an Iraqi urban planner who has drafted plans for re-greening capitals across the Arab world. Unaccountable tycoons find ways to turn public spaces private. Local governments are often unwilling or unable to stop them. Developers, for instance, have recently fenced off one of Beirut’s last stretches of natural waterfront to build more gated high-rises. Its prime beach is now earmarked for a luxury hotel. Warlords-cum-politicians have appropriated Baghdad’s finest palm groves, and carved its plushest neighbourhoods into walled enclaves. + +Carelessness is another culprit. Half of the Arab world’s modern cities are, in effect, unplanned, says Eduardo Moreno, the research director at UN Habitat. Palestinian refugees have turned much of Beirut’s largest green space, the once-forested Horsh Beirut, into a camp; Israel set fire to the rest in its invasion of 1982. Closed for decades, the Horsh reopened last year, but only on a Saturday, and only if you get a ticket from the local government in advance. + +Nicer cities might attract more tourists—a huge boon for countries that need to diversify their economies as oil revenues plummet. But since the 2011 Arab spring, when the people took over squares to stage protests, security concerns have trumped any other. Egypt’s generals have ringed the roundabout in Cairo’s Tahrir Square with iron grating. Bahrain’s King Hamad has levelled the Pearl roundabout where his subjects protested, and turned it into a traffic junction. “The ruling class across the Arab world are very much aware of potential of public space for people to gather, share their grievances and ultimately protest,” says Mr Rabbat. + +Municipal officials point to the plethora of private malls as safe, clean spaces where families can mix and consume. But the environment there is as regulated as the air-conditioning. Security guards in Riyadh prevent the entry of single men, and stand ready to evict anyone who might even consider causing a disturbance. “Urban values of civil participation are almost absent in the Arab urban context,” sighs Rami Nasrullah, a Palestinian city planner who researches Arab urban growth. + +Some Arabs hope things will change. Over the past year, tens of thousands of people have repeatedly thronged to Baghdad’s Freedom Square, next to the Green Zone, the vast enclave where the government rules. The Aga Khan has turned a Cairo rubbish dump into the city’s largest park (though you need a ticket to enter). In an attempt to greenify a square in Gaza, one of the world’s most densely populated areas, for its rallies, the Palestinian Islamist movement, Hamas, dragged tons of turf through its tunnels under the border with Egypt. Environmentalists in Lebanon have, at least, stopped the construction of a highway through Ashrafiya, Beirut’s Maronite core. But when last summer they began to mass in the city’s Martyrs’ Square to protest at a pile-up of rubbish, riot police quickly dispersed them. For now, the Arabs’ best open place is cyberspace. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21700399-parks-are-disappearing-throughout-arab-world-no-bed-roses/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Ramadan in Saudi Arabia + +Taking it to heart + +The kingdom treats the holy month more seriously than anywhere else + +Jun 11th 2016 | RIYADH | From the print edition + + + +RIYADH, the drab Saudi capital, looks uncharacteristically festive. The endless sprawl of ugly concrete buildings with light-reflecting glass is decked out in fairy lights and brightly coloured material. This is, after all, Ramadan in the country where the strictest form of Sunni Islam prevails. + +But the Islamic month for fasting, reflection and celebration is also far more austere here than anywhere else. In most places going without food and drink from sunrise to sunset is a matter of personal conscience, and no laws enforce its observance. Not so in Saudi Arabia, where the Koran is considered a constitutional document. + +Restaurants and cafés are forced to shut their doors until iftar, the daily breaking of the fast at sunset. The lobby of Al Faisaliah, a posh hotel in Riyadh, is usually bustling with meetings over coffee; now it is deathly quiet. Anyone caught drinking or eating in public is punished; foreigners lose their jobs and are deported. + +Most Saudis are religious, and appear to revel in the holy month. “It’s not hard to fast because I love Ramadan,” says a female bank clerk. “Fasting is easy—and good for you,” says an economist, although he adds that he drinks water on the sly during the day. + + + +The varying daily fasting lengths of Ramadan around the world + +Foreigners, who are about a third of the country’s population of 30m, must find ways to cope in the 40°C heat. Many aren’t Muslim. Unlike Saudi citizens, many work on sweaty building sites, so going without water is a bit of a problem. They eat at home or sneak water and food during trips to the bathroom. Some hotels discreetly put on room service for “non-Muslim guests”. + +Come iftar time Saudi Arabia cheers up. Lavish buffets abound; people lounge about long into the night. This is the time for family and friends, food and television—and often, the pious grumble, for overindulgence. + +Other countries in the region are more relaxed. Lebanon, with its large Christian population, continues more or less as normal during the holy month. No one frowns on non-Muslims (or indeed non-fasting Muslims) taking refreshment in public. In Egypt, restaurants are open during the day, but quieter than usual. + +Some Muslims prefer the Saudi approach to Ramadan. This year Dar al-Ifta, an Egyptian government body, suggested that fasting should be compulsory. Few who have experienced a Saudi Ramadan would agree. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21700396-kingdom-treats-holy-month-more-seriously-anywhere-else-taking-it/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Trade in east Africa + +Worth celebrating + + + +Regional co-operation has been good for at least part of the continent + +Jun 11th 2016 | From the print edition + + + +WHEN the first East African Community (EAC) collapsed in 1977, some in the Kenyan government celebrated with champagne. Since its resurrection in 2000, officials are more often found toasting its success. A regional club of six countries, the EAC is now the most integrated trading bloc on the continent. Its members agreed on a customs union in 2005, and a common market in 2010. The region is richer and more peaceful as a result, argues a new paper* from the International Growth Centre, a research organisation. + +Many things boost trade, from growth to international deals. The researchers use some fancy modelling to pick out the effect of the EAC. They find that bilateral trade between member countries was a whopping 213% higher in 2011 than it would otherwise have been. Trade gains from other regional blocs in the continent are smaller: around 110% in the Southern African Development Community (SADC), and 80% in the Common Market for Eastern and Southern Africa (COMESA). + +Those numbers for the EAC are all the more impressive because the available data stop before the EAC’s common market had properly come into effect. Progress on that front has sometimes stuttered. A 2014 “scorecard” identified 51 non-tariff barriers. Full implementation could double the income gains seen so far, say the researchers. Not surprisingly, it is landlocked Rwanda which would see the biggest benefits. Tanzania, which has dragged its feet on integration, would profit the least. + +The researchers are warier of the EAC’s other grand project: creating a common currency by 2024. The impact on trade would be small, they say, and not worth the risks. A study last year by the IMF found that east African economies move out of sync with each other, using exchange rates to absorb shocks. Greater convergence might make a common currency viable; without it, a single currency would mean that wages might have to do the work of adjustment, as Greece has become painfully aware. The euro crisis should give policymakers pause for thought. + +Political convergence matters too. Recent squabbles over railways and an oil pipeline show the difficulty of coaxing headstrong leaders to cooperate. But interdependence has reduced the risk of war, the researchers argue. Regional trade blocs make sense for Africa. National economies are small: at market exchange rates, the combined GDP of the EAC, home to 170m people, is less than New Zealand’s. Regional groupings have more clout, and could one day form a continental free-trade area (a planned link-up between the EAC, COMESA and SADC is a start). Then the champagne corks would really start popping. + + + +*‘Regional Trade Agreements and the pacification of Eastern Africa’, Thierry Mayer and Mathias Thoenig, International Growth Centre Working Paper, April 2016 + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21700398-regional-co-operation-has-been-good-least-part-continent-worth/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The killing of albinos + +Murder for profit + +A horrific trade in body parts + +Jun 11th 2016 | LILONGWE | From the print edition + +No magical powers + +“I AM desperate to save my child,” says Martha Phiri, looking at her nine-year-old daughter Esther. The child, who has albinism, scribbles away in a book, oblivious to her mother’s concerns. People with the genetic disorder, which is characterised by an absence of pigment in the skin, hair and eyes, have long suffered from discrimination in Malawi, where superstition about the condition runs deep. + +But in the past two years taunts have turned into deadly attacks. On May 23rd, 38-year-old Fletcher Masina became at least the 18th person with albinism to be murdered in Malawi since the end of 2014 (others have disappeared and probably been killed). The killings are barbaric. Bodies are abandoned with limbs cut off and organs ripped out. More than 60 related cases have been recorded. These range from murders to the theft of bones from the graves of people with albinism. Attacks are driven by the belief that albino body parts can be used in witchcraft to bring wealth and cure disease. The UN warns that Malawi’s estimated 10,000 albinos face “extinction” if the killings continue. + +A relatively peaceful country, Malawi has never seen such violence before. It is Malawi’s neighbour Tanzania that had previously been associated with attacks on albinos. But the Tanzanian government has in recent years done something about it. It has arrested unlicensed traditional healers and imposed stiffer penalties on “albino hunters” and those who trade in body parts. Thanks to the crackdown and to a campaign by a Canadian charity to teach Tanzanians that their albino neighbours have no magic powers, attacks against Tanzanian albinos have fallen. The government has registered people with the condition, so that it can monitor and track them, and has established safe houses for children at risk of attack. + +The Malawian government suggests that foreign witchdoctors from Tanzania and elsewhere are behind the attacks on its soil. In Malawi people with albinism are not monitored, crimes go uninvestigated and penalties are mild. It is typically not the witchdoctors themselves who abduct and kill. More commonly, it is locals who are swayed by promises of large sums of money. In many cases relatives are involved. “Some parents or relatives don’t really value a child with albinism. They get tempted by the offer of money,” says Bonface Massah, head of the Association of People with Albinism in Malawi. + +As for the source of demand for albino body parts, speculation abounds. Dr Mary Shawa of the Ministry of Gender, Disability and Social Welfare in Malawi denies that there is a market and insists that the murderers are opportunists acting on rumours of payments. But there is plenty of evidence to suggest that there is indeed an organised trade: many of those arrested in Malawi in possession of bones have said they were to be sold to buyers in neighbouring countries. + +People with albinism, for their part, live in fear. Many do not go out at night and are wary about whom they meet. In January two women offered Ms Phiri 1m kwacha ($1,450) for Esther so they could extract the gold they believed was in her bones. Esther now rarely leaves the house. + +“I’m scared. What if I’m next?” says Clement Gweza, 24, a teacher living in a remote village in Dedza district, where two of the murders have taken place. “I can’t live like I used to.” + +In a new report Amnesty International, a human-rights group, says the Malawian government has failed to protect albinos. It criticises the government for, among other things, not trying hard to investigate why Malawi has seen a rise in attacks or to work out where demand is coming from. Peter Mutharika, Malawi’s president, says he is “ashamed” by the attacks; but he seems to have done little about them. + +Thanks to corruption, public funds do not go as far as they should. In 2013 the country’s main donors—who provided more than a third of government spending—stopped writing cheques after they found that officials had been looting the treasury. Meanwhile incompetent police investigations and lenient sentences do very little to deter continued attacks. In 2015 a man was fined 20,000 kwacha, or $29, for possessing human bones. Police assumed he had dug up a grave, rather than investigating a potential murder. + +There has yet to be a murder conviction for any of the killings, most of which remain unsolved. “We are talking about 18 lives lost,” says Mr Massah. “That is tragic for a small country. How much longer must we wait for help?” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21700294-horrific-trade-body-parts-murder-profit/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Europe + + + +Rome elects a mayor: Five-star surprise [Fri, 10 Jun 14:21] + +European football championships: Paris match [Fri, 10 Jun 14:21] + +Poland’s anti-government rallies: From Facebook to the streets [Fri, 10 Jun 14:21] + +Iran’s Turkish connection: Golden squeal [Fri, 10 Jun 14:21] + +How men and women vote: The lefter sex [Fri, 10 Jun 14:21] + +Charlemagne: The politics of alienation [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Rome elects a mayor + +Five-star surprise + +Italy’s populists are getting serious. That is bad news for Matteo Renzi + +Jun 11th 2016 | ROME | From the print edition + + + +“THIS isn’t populism,” said Alessandro Di Battista of the Five Star Movement (M5S) as the first-round results of Italy’s local elections on June 5th came in. “It isn’t a protest. It’s good politics.” The M5S candidate for mayor of Rome, Virginia Raggi (pictured), had taken 35% of the votes. Mr Di Battista, one of the party’s leaders, was relishing its biggest breakthrough since the general election of 2013, when it won a quarter of the ballot. + +The race now moves to a run-off on June 19th. But with a ten-point lead in the first round over the candidate of the governing Democratic Party (PD), Ms Raggi is well placed to become Rome’s first woman mayor. It was a good showing in M5S’s first electoral test without its co-founders: Beppe Grillo, who has resumed his career as a comedian, and Gianroberto Casaleggio, an internet entrepreneur who died in April. Running the movement is now the job of a five-person directorate that includes Mr Di Battista. + +The face of M5S that voters saw in these elections was a new one. The populist Mr Grillo and his amusing (and sometimes disquieting) rants, his mistrust of the euro and ambiguity on immigration, were all pushed to the sidelines. In his place were candidates like Chiara Appendino, a company executive and graduate of Milan’s business-oriented Bocconi university. She won through to the second round in Turin against a formidable rival: the PD’s ex-leader, Piero Fassino. + +In Rome Ms Raggi, a 37-year-old lawyer and consumer activist,projected a moderation that would reassure the most conventional of voters. But Mr Di Battista was wrong to claim her win was not a protest vote: the city is seething with discontent. Rome is plagued by overflowing rubbish bins, untended parks and gardens, inadequate public transport and roads dotted with potholes. City politicians from the mainstream parties are on trial along with organised criminals, accused of jointly skimming municipal contracts. Romans are not accustomed to being ashamed of their city. Yet for the past seven months it has been subject to the sort of direct, central-government administration normally reserved for Mafia-ridden villages in the rural Mezzogiorno. Ms Raggi’s very lack of experience in office was an asset. + + + +Elsewhere, M5S’s results were anything but spectacular. In Milan, it got 10%; in Naples, less. If anything, the elections were a setback for the mainstream parties more than a victory for their maverick rival. The Italian right, made up of the strident, populist Northern League and Silvio Berlusconi’s more moderate Forza Italia party, did well where they united to back one candidate: in Milan, the right finished less than a percentage point behind the PD. Wherever the parties ran separate candidates, however, they paid dearly for it. On election night Mr Berlusconi suffered a heart problem, which was blamed on the stress of the campaign; two days later he checked himself into a hospital for tests. + +Mr Renzi, whose default mode is boundless optimism, admitted he was disappointed with the PD’s results. The governing party’s candidate failed to make the run-off in Naples, whose radical left mayor, a former magistrate, Luigi de Magistris, looks certain to be re-elected. The PD could yet lose Milan and possibly even Turin, one of its strongholds. + +Most governments suffer mid-term setbacks, but this one is peculiarly ill-timed for Mr Renzi. He has introduced some valuable reforms, including an overhaul of Italy’s labour laws. But his overriding aim has been to change Italy’s constitution and its electoral law to give himself a second five-year term, undisturbed by party revolts, in which to impose a more comprehensive programme of change. His critics, including some in his own party, see that as disturbingly akin to one-man rule. + +The electoral law has already been altered in parliament. But the constitutional reform has to be approved by a referendum in the autumn. To win it, Mr Renzi needs momentum. And the local election results have broken his stride. They have also stripped him of a reputation for invincibility acquired at the European elections in 2014, when his party took more than 40% of the vote in a ballot that saw other centre-left parties routed. + +Mr Renzi’s explanation for the PD’s poor showing, given after a meeting of the party leadership, focused entirely on politics and on himself personally, and not at all on whether his policies were working. He had been giving too much attention to his government and not enough to his party, he said. That would now change. In particular, he said, he would “take a flamethrower” to the PD in the south, where some activists have been shown to have unsavoury connections. + +He did not attribute the PD’s setbacks to anger at Italy’s lethargic recovery from recession. On June 6th the Bank of Italy reduced its expectations for GDP growth this year to a modest 1.1%, the latest in a stream of downward revisions by forecasters. In April unemployment rose to 11.7%. Mr Renzi’s chief response has been a barrage of optimistic rhetoric. His reaction to the local elections suggests he will stick with that approach. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21700426-italys-populists-are-getting-serious-bad-news-matteo-renzi-five-star-surprise/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +European football championships + +Paris match + +Amidst racial tension and terror warnings, France hosts a tournament + +Jun 11th 2016 | PARIS | From the print edition + + + +ALMOST all French aspirations, and anxieties, seem to crowd into the game of football. Ever since the country won the world cup in 1998, with a multi-racial team made up of black, blanc, beur (“black, white and Arab”), the French have yearned to recapture that moment of post-colonial conviviality and national euphoria. On June 10th, when Europe’s biggest football tournament kicks off at the Stade de France outside Paris, the hosts once again hope to find unity as a nation through victory on the pitch. The tricolour flags are ready. Yet the French have an ambiguous relationship with football, which has become a touchstone for wider unease about wealth, capitalism, foreigners and race. + +The latest controversy was prompted by allegations of racism over the selection of the French tournament squad. Karim Benzema, a French striker of Algerian origin, charged that he was left out because the manager, Didier Deschamps, bowed to racist pressure (a claim undercut by the fact that half of those who made the team are black). Eric Cantona, a former French player, made the same allegation. Jamel Debbouze, a French actor of Moroccan origin, said excluding Mr Benzema sent a poor message to kids in the banlieues, or outer-city estates, who have “none of our representatives (ie, players of Arab descent) on the French team”. In fact one player, Adil Rami, has Moroccan parents. + +Support poured in, however, for Mr Deschamps, a popular manager and captain of the victorious 1998 team. He had originally suspended Mr Benzema due to a police investigation into the player’s role in blackmailing a fellow player (over a video known as “la sextape”). The claims of racism were “nonsense”, said Kingsley Coman, a young black player. A livid Guy Stéphan, Mr Deschamps’s deputy, conceded that France had “problems with integration”, but said the football team could not take on responsibility for all such ills. Mr Debbouze apologised. Even Manuel Valls, the prime minister, got involved, declaring that “players are not selected according to their skin colour or origin”. + +“Football in France has the power to unite, but also reflects social tensions,” says Darren Tulett, a football presenter in France. Although big tournaments inspire national passion, and victory would improve the national mood, the Paris elite tends to prefer rugby to football. Some French clubs reflect the country’s industrial working-class history. Sochaux, for example, in eastern France, was founded in the 1920s by the Peugeot family to provide sport for the carmaker’s workers. + + + +INTERACTIVE: Footballing pay and performance + +But football’s great base of support, and talent, is today found in the multi-racial banlieues, where many French-born youngsters of North African and African descent grow up playing for local after-school clubs. Young players can be propelled rapidly into a world of fabulous riches, embodied today by the Qatari-owned club, Paris Saint-Germain. This inspires some jealousy and antipathy towards the players in certain parts of society, says Pascal Boniface, director of the Institute of International and Strategic Relations and a writer on football. + +While the French prepare to fall back in love with their national team, which their bookmakers have as favourite to win, more immediate worries concern security. The memory of the November attacks in Paris, which killed 130 people, has not yet faded. (Those attacks began with a bombing at the Stade de France; sports events are easy targets for terrorists.) The country remains under a state of emergency for the duration of the tournament. The government has put 90,000 police, gendarmes and security agents on the streets. Just days before the opening match, Bernard Cazeneuve, the interior minister, unveiled a smartphone app that can alert people in case of a terrorist attack. France, in short, is steeling itself for the best, and the worst. As Mr Cazeneuve put it: “100% precaution does not mean 0% risk.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21700423-amidst-racial-tension-and-terror-warnings-france-hosts-tournament-paris-match/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Poland’s anti-government rallies + +From Facebook to the streets + +A new mass movement is proving more effective than the official opposition + +Jun 11th 2016 | WARSAW | From the print edition + +Kijowski: much Liked + +AT THE head of a march of thousands in Warsaw on June 4th, Mateusz Kijowski cut a striking figure. The red jeans, ponytail and earrings of the leader of a new Polish mass movement contrasted with the sober suits of the two former presidents who flanked him. Since December, when he founded it, the Committee for the Defence of Democracy (KOD) has turned the formerly obscure 47-year-old IT specialist into one of the most powerful figures in Polish politics. KOD is now in the vanguard of resistance to Poland’s ruling Law and Justice party (PiS), filling a void left by a weak and divided political opposition. + +KOD has brought large numbers of Poles onto the streets in nationwide demonstrations; exact figures are fiercely disputed. It has drawn international attention, piled pressure on the government and made Mr Kijowski reviled by PiS supporters. And it has become a conduit for anger at abuse of the rule of law. Since taking power last year, PiS has tried to reorganise Poland’s constitutional court, seized direct control of the state broadcasting channels and the security services, and purged the bosses of state-owned companies. The European Union is reviewing whether its moves violate EU statutes. “We want to have a government that respects the law,” says Mr Kijowski. “We are not fighting against the result of the election, we are fighting against a government that breaks the constitution.” + +KOD was born when Mr Kijowski shared an article on Facebook by Krzysztof Lozinski, a journalist, calling for a new political movement to fight the government. The enormous response prompted him to form a group, never dreaming that it would move offline and grow into a mass movement. + +“I thought we might get 50 to 100 people when we started,” he says. KOD now has around 230,000 Facebook followers, and the number continues to rise. A survey by TNS, a pollster, found that 1.5m Poles, about 5% of the population, have taken part in KOD events, and that 40% approve of its actions. Before founding KOD, Mr Kijowski says, he had attended only two political-party meetings. As a blogger and activist he had focused on non-partisan issues such as fathers’ rights and combating rape. + +KOD’s success has made Mr Kijowski a target. When it emerged that he had fallen behind on alimony payments to his first wife, critics argued he was unfit to take the moral high ground. Some government sympathisers claim KOD must have received support and funding from unnamed outside sources in order to grow so fast. (They have, however, provided no evidence.) Other criticism has come from his own side. Earlier this year a senior member of KOD quit, saying Mr Kijowski ran it autocratically, at odds with its stated ideals, and had treated her “like a slave”. + +The attacks have made life difficult at times, Mr Kijowski concedes. Yet so far he has managed to defy those who thought KOD would run out of steam. Many Poles are genuinely infuriated by the government’s actions. And the organisation’s name recalls an earlier era when the people defied their rulers: KOR was the Polish acronym for the Workers’ Defence Committee, Poland’s first big anti-communist group, established in 1976. + +But Mr Kijowski has also played a shrewd political game. He has helped broker a loose coalition between opposition parties which has put its weight behind KOD. The renunciation of plans to turn KOD into a party has helped to defray suspicions that its founder aspires to power. Its goals, says Mr Kijowski, lie beyond its dispute with the government: “Our job is to create and support civic society, and this is a job that will never finish.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21700424-new-mass-movement-proving-more-effective-official-opposition-facebook/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Iran’s Turkish connection + +Golden squeal + +Did officials help evade sanctions? + +Jun 11th 2016 | ISTANBUL | From the print edition + + + +EARLIER this year, FBI agents detained Reza Zarrab (pictured), a Turkish gold trader, at Miami’s international airport. His lawyer said he was on a family trip to Disney World. Turkey’s president, Recep Tayyip Erdogan, batted away questions about the arrest. “This issue is of no concern to our country,” he said. + +It now appears otherwise. The investigation into Mr Zarrab, who is accused of using his gold business to help Iran’s government skirt American sanctions, has dredged up embarrassing details about the young businessman’s relationship with senior Turkish officials. In their bid to stop the court accepting Mr Zarrab’s offer of a $50m bail package, American prosecutors alleged that he had paid three Turkish ministers and the head of Halkbank, a state lender, tens of millions of dollars in bribes to keep his business running and hobble competitors. They also pointed to more than $4.5m in donations by Mr Zarrab to a charity founded by Mr Erdogan’s wife. “If the defendant were able to reach Turkish soil, he could cause the highest levels of Turkish government to block his return to the United States,” they concluded. + +Similar allegations against Mr Zarrab and others, including the cabinet ministers named in the court document, surfaced during a sweeping corruption investigation that rocked Mr Erdogan’s government in 2013. After the Turkish president (then the prime minister) called the investigation a coup attempt, the charges against Mr Zarrab and the others were dropped. Many of the prosecutors and police officers involved were reassigned or themselves arrested, on conspiracy and terror charges. In 2015 Turkish officials presented Mr Zarrab with a “top exporter” award. + +After combing through Mr Zarrab’s e-mail account and smartphone, American investigators say they have found evidence that supports the claims made during the 2013 probe. They may end up with much more if Mr Zarrab, who faces up to 75 years behind bars, cracks and agrees to a plea bargain. + +The investigation has already sent Turkish stocks tumbling. Shares in Halkbank have fallen by 20% since Mr Zarrab’s arrest. But it is unlikely to put much of a dent in Mr Erdogan’s reputation at home. He emerged almost unscathed from the 2013 scandal. Many of his voters felt corruption was a small price to pay for a government that delivered prosperity. “The original investigation had limited impact,” says Naz Masraff of Eurasia Group, a consultancy. “This one would have even less.” + +Abroad, however, the case may turn into a major headache. If found to have flouted American sanctions, Turkish banks may be barred from doing international business, says Atilla Yesilada of Global Source Partners, a firm of analysts. “Anything that implicates them would blow up like dynamite.” + +And if the American lawyer in charge of the case, Preet Bharara, delivers strong evidence that senior Turkish officials took kickbacks from Mr Zarrab to help Iran evade sanctions, American courts would be able to try them. As the investigation proceeds, Mr Zarrab’s suspected accomplices might want to give Disney World a wide berth. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21700422-did-officials-help-evade-sanctions-golden-squeal/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +How men and women vote + +The lefter sex + +Europe’s far right is not such a hit with the ladies + +Jun 11th 2016 | From the print edition + +Leans left, puts ballot in centre + +IF WOMEN’S votes had not counted (as was the case until 1918), Norbert Hofer, the far-right candidate, would have won a landslide victory in Austria’s presidential election on May 22nd. According to exit polls, 60% of men supported him. But female voters favoured the Green Party candidate, Alexander Van der Bellen, by a similar margin. The ladies’ affections proved more valuable than the men’s: Mr Van der Bellen won by a sliver, 50.3% to 49.7%. + +In many countries women are more likely than men to lean left, and the gap may be widening. In America, Barack Obama had a 12-point margin among female voters in 2012, but lost men to Mitt Romney by eight. This year 60% of women view Donald Trump unfavourably; only 48% feel that way about Hillary Clinton. + +It was not always thus. In Europe, women were long seen as bastions of conservatism. In particular, Christian Democrat and Catholic parties benefited from the support of devout female voters. (Women are slightly more likely to be religious than men.) In 1968 the Christian Democrats won more than 50% of the female vote in Italy but less than 30% of the men. Research shows that in six European countries—Belgium, Britain, France, Italy, the Netherlands and West Germany—female voters skewed conservative in the early 1970s by between two and 14 percentage points. + + + +This began to reverse in the 1980s and 1990s, according to a paper published in 2000 by Ronald Inglehart and Pippa Norris, two political scientists. In Austria, Ireland, Switzerland and most of Scandinavia, female voters moved to the left. This may have been the result of a decline in religious belief; the shift of women into the workforce, where they found themselves in low-paid jobs; and the rise of feminist issues such as abortion. Women were also less hawkish than men on defence, and more concerned about social equality and the environment. + +European women have not swung all the way to the far left; they have mostly drifted to the centre. Mattia Forni of Ipsos Mori, a polling group, says that female voters tend to vote for reassuring politicians, rather than disruptive or insurgent leaders. In Italy the 2013 election saw the surge of the left-wing Five Star Movement, led by Beppe Grillo, a fiery and unpredictable eurosceptic comedian. He got more votes from men (29%) than from women (22%). By contrast, the more mainstream Matteo Renzi of the centre-left Democratic Party did somewhat better with the ladies. + +Women’s moderation shows up on the right, too. In a recent German opinion poll for Ipsos Mori, 35% of female voters favoured the centre-right Christian Democrat party of that model of motherly reassurance, Angela Merkel; male support was 31%. Only 12% of German women backed the far-right AfD party, against 16% of men. + +An exception is France, where Marine Le Pen has closed most of the gap between the sexes’ willingness to vote for her far-right National Front. She has done so by cultivating a more mainstream image and shedding some of the party’s thuggish associations. When her irascible father, Jean-Marie, led the party, its vote was heavily male. But in 2012 Ms Le Pen scored almost as highly among women (17%) as among men (19%). + +Women are not monolithic. The young and the old often differ: Austrian women under 29 favoured Mr Van der Bellen by more than 30 percentage points, while those aged over 60 preferred him by only ten. In the 2015 British election, the Labour Party enjoyed a plurality in every female age group under 55. In the 18-24 age range, women backed Labour over Conservatives by 44% to 24%. But women aged over 55 (a much bigger group) backed the Tories over Labour, by 45% to 27%. When the figures were aggregated, the Conservatives had a four-point lead among women and an eight-point lead among men. + +Mr Inglehart and Ms Norris expect that in the long term women’s leftward political skew will only increase, as conservative older voters die and are replaced by more progressive young ones. But will it? Both men and women tend to become more conservative as they grow older. This could be for economic reasons: as people become richer they are more likely to resent high taxes. Or it could be for psychological or cultural reasons: as they age, people grow more set in their ways and resistant to social change. + +But that is an issue for the long term. In the meantime, women may be Europe’s best defence against the far right. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21700425-europes-far-right-not-such-hit-ladies-lefter-sex/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Charlemagne + +The politics of alienation + +Even well-meaning parties based on ethnicity are a terrible idea + +Jun 11th 2016 | From the print edition + + + +NO CITY in the Netherlands is so quintessentially Dutch as The Hague. The Binnenhof, the seat of government, is a quaint Gothic fortress straight out of a Brothers Grimm fairy tale. A mile to the west stands the beaux-arts Peace Palace, headquarters of the World Court; to the north is the glass-walled finance ministry, a temple of Calvinist fiscal transparency. But walk—or, rather, bicycle—just a mile eastwards, and a less traditional Netherlands comes into view, one of Ghanaian barber shops and Turkish tea houses. Women wear headscarves; men in djellabas duck into a storefront mosque for evening prayers. + +Across from the mosque is Amin’s Moroccan butcher’s shop, where on a recent afternoon, behind a refrigerated counter full of shawarma, Jamal, the owner’s 31-year-old son, was installing a computer. Jamal is just the sort of person who could bridge the gap between the country’s traditional identity and its new immigrant communities. He came to the Netherlands with his family at age two, earned a business degree from Erasmus University, and worked in data analysis for several mid-sized companies. But last year he gave up on the corporate world and went back to his father’s shop. In Dutch society “racial profiling is everywhere,” he says; at his last company, he watched in dismay as white colleagues invented reasons to reject ethnic job applicants. + +Like most Dutch with immigrant backgrounds, Jamal has in the past voted for the centre-left Labour Party. But now he is considering switching to Denk (“Think”), a new party that pitches itself explicitly to Muslims and ethnic minorities. After a decade of relentless insults from the anti-Muslim, anti-immigrant politician Geert Wilders (currently leading in the polls), many of his targets feel that neither Labour nor any other mainstream party is sticking up for them. Denk will not win more than a few seats in next year’s general election, but it is posing a crucial question: at a time of rising xenophobia, can Europe’s minorities rely on the broad centre-left parties for which they usually vote? Should they start their own parties? Or would that only make polarisation worse? + +Throughout Europe, Muslims and non-whites tend to vote for the centre-left. In Austria 68% of ethnic-minority voters picked the Social Democrats in the recent general election, against 32% of whites. One study in France found that 93% of Muslims voted for the Socialist, François Hollande, in the 2012 presidential election. But minorities often feel that centre-left parties take them for granted and offer little in return. The Muslims who turned out for Mr Hollande in 2012 stayed home during municipal elections in 2014. (Many blamed the Socialists’ legalisation of gay marriage.) In France and elsewhere, when centre-left parties try to look tough on immigration or terrorism, minorities feel betrayed. + +That was how Denk got its start. In 2014 the Netherlands’ Labour deputy prime minister, Lodewijk Asscher, approved extra scrutiny of Turkish-Dutch civic groups to make sure they were not fomenting radical Islam. Soon after, Dutch media reported a poll claiming that 87% of young Turkish-Dutch sympathised with Islamic State. The poll was rubbish—a later study found interviewees had not understood the questions—but rather than dismiss the results, Mr Asscher called them “troubling”. + +Many Turkish-Dutch Labour stalwarts were infuriated. Party leaders seemed to know nothing about their constituency. “Anyone could see that poll was a mess,” says Munire Manisa, a district council member in Amsterdam. Her solution was to meet Mr Asscher and, among other things, get him to commission the study which debunked the poll. But two ambitious Turkish-Dutch Labour MPs, Tunahan Kuzu and Selcuk Ozturk, seized the occasion to break with the party and form a new one. + +Denk has now signed up candidates from the Netherlands’ other two big minority groups: Moroccan-Dutch and Afro-Caribbean. In April it enlisted Farid Azarkan, a former top civil servant who heads the country’s main Moroccan-Dutch civil-society group. Then in May it recruited Sylvana Simons, a Surinamese-born television host who has campaigned against the racially insensitive Dutch custom of Zwarte Piet, a black-faced figure who distributes cookies during the children’s holiday of St Nicholas’ Day. Ms Simons called for the “decolonisation” of education and language. Dutch traditionalists responded with floods of racist invective on Facebook, and Denk scored a publicity coup. + +Denk charges that the condescension of parties like Labour towards Dutch minorities is leading to their growing alienation. “People don’t feel recognised, and they don’t feel safe,” says Mr Azarkan. A long-running study of Amsterdam municipal elections shows that from the mid-1990s until 2006, when Mr Wilders’s party appeared, Turkish-Dutch voter turnout was about 50%. By the 2014 elections it had fallen to 34%. Among Moroccan-Dutch voters it fell from 37% in 2006 to just 24% in 2014. “They don’t feel represented by the Labour Party,” says Floris Vermeulen of the University of Amsterdam, who co-heads the study, “but they have nowhere else to go.” + +Ethnic politicians need enemies, too + +The danger, however, is that Denk’s approach of representing only ethnic minorities will widen the divisions in Dutch society. “(The Denk MPs’) speech is drenched with ‘us-against-them’ rhetoric,” says Ahmed Marcouch, a Moroccan-Dutch Labour MP. When the Dutch parliament recently considered a resolution to recognise the Armenian genocide, Denk took the unusual step of forcing individual voting, so that they could use video of Turkish-Dutch MPs from other parties voting for the motion as campaign material with their constituents. + +This sort of divisive politics seems inevitable if parties are ethnically defined. And that is perhaps why Jamal, in the end, will hesitate to vote for Denk. “The question is, does Denk think of itself as a party that’s only for the immigrants?” he asks. “A political party is supposed to bring people together.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21700455-even-well-meaning-parties-based-ethnicity-are-terrible-idea-politics-alienation/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Britain + + + +Consequences of Brexit: Beyond the fringe [Fri, 10 Jun 14:21] + +Brexit brief: The charms of variable geometry [Fri, 10 Jun 14:21] + +Airport expansion: Up in the Eire [Fri, 10 Jun 14:21] + +Technology in prisons: Screens behind bars [Fri, 10 Jun 14:21] + +Industrial evolution: The digital economy [Fri, 10 Jun 14:21] + +University fundraising: Mortarboard in hand [Fri, 10 Jun 14:21] + +Taxes and benefits: The echo chamber [Fri, 10 Jun 14:21] + +Corporate governance: Shocking shopping [Fri, 10 Jun 14:21] + +Bagehot: The new J-curve [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Consequences of Brexit + +Beyond the fringe + +Brexiteers are deliberately vague about the alternatives to European Union membership. That is because most models, such as Iceland’s, are unsatisfactory + +Jun 11th 2016 | REYKJAVIK | From the print edition + + + +AS THE referendum on June 23rd draws near, the campaign is becoming increasingly bitter. David Cameron has accused fellow Tories like Michael Gove, the justice secretary, and Boris Johnson, the former mayor of London, of “resorting to total untruths”. The Brexiteers retort that the prime minister is panicking after polls put the Leave side narrowly ahead. + +The economy is still the Leavers’ weakest point. They are especially vulnerable to the charge of not setting out a preferred alternative trading relationship with the EU. Mr Gove has talked airily of a free-trade area from Iceland to Turkey, implying that a post-Brexit Britain would automatically be in it. Yet this is overly simplistic. The EU’s single market is far deeper than a free-trade area, and most trade deals with the EU are incomplete and come with costs. + +The Leave campaign’s reticence may seem odd, as there are obvious examples of European countries outside the EU. Iceland, Liechtenstein and Norway are in the European Economic Area (EEA). This gives them access to the single market, although exports are subject to checks for rules of origin that Open Europe, a think-tank, says would, if applied to Britain, cost it almost 1% of GDP. Switzerland has two bilateral deals with the EU that achieve broadly the same result (though, crucially, they do not include most financial services). These four countries are richer and have lower unemployment than the EU. If they can have the heaven of free trade without the hell of EU membership, why can’t Britain? + +Iceland may help offer an answer. The reason it has stood aside from the EU is fish, which still make up one-third of exports (though tourism has just overtaken it in its share of GDP). Icelanders know that the EU’s common fisheries policy was a disaster, whereas they have managed their fish stocks well. Moreover, their highly protected farmers do not want European competition. The solution is the EEA, which excludes fisheries and farming but allows them to sell freely to the European market. + +Even so, after its banking meltdown in 2008, Iceland applied to join the EU, because it needed financial stability. Many Icelanders wanted to dump the unreliable krona for the euro. But the euro crisis and a change of government scuppered the idea. Iceland is no longer formally a candidate. Lilja Alfredsdottir, the foreign minister, says the country has recovered from its financial crash and is now happy to remain in the EEA. Indeed, she argues that it has done better than euro-crisis countries because it was able to devalue and kept greater control over the policy response than, say, Greece or Ireland. By retaining precious sovereignty, she says, Iceland has the best of both worlds. + +Yet many Icelanders disagree, and not just because it was really the IMF that dictated policy in 2008-09, as it did for the euro zone. Politicians like Benedikt Johannesson, who has just founded a new political party, are calling for a referendum on the resumption of EU membership talks. Critics highlight three other awkward facts about the EEA. First, its members (and Switzerland) are obliged to accept free movement of people—indeed, unlike Britain, all are in the Schengen passport-free travel zone (see table). Second, all have to make large payments into the EU budget: in Norway’s case, some 80-90% what Britain pays per head, in Iceland’s only slightly less and in Switzerland’s about half as much. + + + +Third and most contentious, EEA members (and Switzerland) must observe almost all the EU’s rules and regulations if they are to keep access to the single market. Norway implements almost 75% of EU legislation, despite having no say in any of it. A big Norwegian report in 2012 concluded mildly that “this raises democratic problems.” Baldur Thorhallsson, a political scientist at the University of Iceland, is more emphatic: he says EEA countries suffer a double democratic deficit, part arising from the EU’s own failings, the rest from the fact that they are not even at the table to discuss legislative proposals. + +Ms Lilja Alfredsdottir responds that a small country like Iceland would have little influence even if it were in the EU. But Olafur Stephensen of the Icelandic Federation of Trade says this is not the real point. What EEA countries lack, he says, is detailed knowledge of what is going on as well as contacts with the Brussels institutions and with other EU countries. This works to their disadvantage. Businesses in Iceland often criticise the government for its tardiness in implementing EU rules it has only just heard about, which can create problems for sellers into the single market. + +What about the ability of EEA countries and Switzerland to strike trade deals with other countries? Brexiteers point to deals that Iceland and Switzerland (but not the EU) have managed to do with China. Yet these are shallow and one-sided. Switzerland has promised to cut tariffs on Chinese goods immediately, while China has promised to reciprocate only over the next 5-15 years. European countries outside the EU will also be excluded from the EU-Canada free-trade agreement, and from a putative Transatlantic Trade and Investment Partnership with America. + +If these countries offer a poor model for Brexiteers, are others better? Turkey is in a customs union with the EU, but only for some goods, and not for services; it, too, falls outside EU trade deals with other countries. Balkan countries (Mr Gove has cited Albania) have association agreements that give access to the single market, but these are part of the process of accession, and they too exclude services. A Canadian-style free-trade deal is more promising as it excludes free movement of labour, EU rules or payments into the EU budget. But it does not include all goods (car exports are subject to tariffs, for example), nor does it include financial services. + +So Brexiteers may hope instead for a bespoke deal for Britain that gives access to the single market without EU rules, free movement of people or budget contributions. But this is a delusion. The EU cannot be generous to a post-Brexit Britain for fear that others (including the EEA) might demand the same. As evidence, consider what happened when the Swiss voted in early 2014 to restrict migration from the EU. The EU has refused even to discuss it: if the Swiss impose restrictions, they will lose access to the single market immediately. + +Finally, some Brexiteers suggest giving up the single market and falling back on World Trade Organisation rules, and unilaterally abolishing tariffs. Yet as the WTO’s director-general says, this is not a simple or cost-free option. It would mean tariffs on British exports to the EU, and no direct access for financial services. It would require Britain to renegotiate access to the 53 countries that have free-trade deals with the EU. And farmers, manufacturers and others would fight unilateral scrapping of tariffs, which would also mean a loss of leverage to open other markets. + +It is hard not to conclude that, even if EU membership has unsatisfactory aspects, it beats all plausible alternatives. No wonder the markets are nervous about the result. + + + +Their eyes on Albion + +Most European bosses are twitchy about Brexit; a few spy an opportunity + + + +Jeremy Corbyn, saboteur + +Lacklustre and poorly led, the Labour Party is letting down the Remain campaign + + + +The charms of variable geometry + +Our final Brexit brief argues that a multispeed Europe suits Britain—and others + + + +The new J-curve + +Britain’s flirtation with Brexit is more complicated than an anti-globalisation vote + + + +Young voters! Your country needs you + + + + + +More Brexit coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21700386-brexiteers-are-deliberately-vague-about-alternatives-european-union-membership/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Brexit brief + +The charms of variable geometry + +Our final Brexit brief argues that a multispeed Europe suits Britain—and others + +Jun 11th 2016 | From the print edition + +THE original idea of the European Union was that all members should move at the same speed towards the goal of “ever closer union”. But as the club expanded, it became clear that not everybody either wanted or would be able to proceed as quickly as their fellows. This led to a rash of plans to allow those who wanted to go faster not to be held back by the slowest. + +The labels for these ideas have differed substantially. In 1994 two German Christian Democrats (one of them the present finance minister, Wolfgang Schaüble) suggested a “hard core” of the original six (minus Italy) that would integrate further and faster than the laggards. Jacques Chirac, France’s president, spoke of pioneer groups. Others floated the notion of a Europe of flexibility, concentric circles or moving at two speeds. Britain preferred to talk of variable geometry, to signify different groupings within the same broad club. It may have chosen to opt out of the single currency, but it was more serious than others about security and foreign policy. + + + +The 1997 Amsterdam treaty set up a system of “enhanced co-operation”, whereby a minimum number of countries (now fixed at nine of the 28) may adopt common policies so long as they remain open to new members and do not discriminate inside the single market. Yet in practice it has barely been used. A divorce reform and the European patent are rare examples. But the latest attempt by a group of euro-zone countries to agree to impose a financial transactions tax is close to collapse. + +Britain has more opt-outs than any other country—from the Schengen passport-free zone, the euro and most EU policies in justice and home affairs (see table). Partly as a result, it has been hostile to anything that smacks of first- and second-class memberships. Its worry focuses on the single currency, a key subgroup of the wider EU. As more countries join (there are now 19 in the euro and only nine out), the British have resisted efforts to formalise this division, objecting to any plans to set up new euro-zone institutions or to give legal status to meetings of euro finance ministers or heads of government. + + + +Yet the present government has also subtly shifted its position. As one former minister puts it, the old policy was to drive in the fast lane but as slowly as possible, holding everybody else back. Now the government is happy to pull over and let the others accelerate away, especially if that is deemed necessary to shore up the euro. This explains why, in his February renegotiation with the EU, David Cameron promised not to block future treaty changes that euro-zone countries might want to make for the single currency. + + + +INTERACTIVE: The Economist’s “Brexit” poll-tracker + +In exchange the prime minister won two concessions. The first is a formal recognition that the goal of ever closer union does not apply to every country. The second is a legally binding mechanism to allow nations that are not in the euro to challenge decisions by the euro group (which now makes up on its own a big enough majority to pass EU legislation) that they judge to be against their interests, if necessary by taking the issue to a full EU summit. + +These concessions may seem esoteric, but Charles Grant of the Centre for European Reform, a think-tank in London, thinks they are important—and not just for Britain. What the EU has conceded is, in effect, that its members are now moving not just at different speeds but towards different ultimate destinations. This is why true believers in a federal Europe hated the deal given to Mr Cameron. But some other non-euro countries, like Sweden, Poland and Hungary, liked it. Indeed, if Brexit prevails on June 23rd, they may try to secure the same deal for themselves. In the EU, it seems, variable geometry is here to stay. + + + +Their eyes on Albion + +Most European bosses are twitchy about Brexit; a few spy an opportunity + + + +Jeremy Corbyn, saboteur + +Lacklustre and poorly led, the Labour Party is letting down the Remain campaign + + + +Beyond the fringe + +Brexiteers are deliberately vague about the alternatives to European Union membership. That is because most models, such as Iceland’s, are unsatisfactory + + + +The new J-curve + +Britain’s flirtation with Brexit is more complicated than an anti-globalisation vote + + + +Young voters! Your country needs you + + + + + +More Brexit coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21700384-our-final-brexit-brief-argues-multispeed-europe-suits-britainand-others-charms/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Airport expansion + +Up in the Eire + +One airport is taking advantage of Britain’s dithering over runway expansion + +Jun 11th 2016 | BIRMINGHAM AND DUBLIN | From the print edition + +Soaring over Dublin + +AT THIS week’s inaugural British-Irish Airports Conference, held in a cavernous exhibition hall next to Birmingham airport, Britain’s aviation bosses were keen to show off their expansion plans. They had much to celebrate at the event’s 1950s-themed gala party featuring old-style air stewardesses dancing with hula hoops. Last year more than 250m passengers travelled through British airports, exceeding the record set before the financial crisis for the first time. + +But the strain on runways, most notably at London’s Heathrow and Gatwick airports, is showing. Amid signs that a government decision on which of the two to expand could be delayed yet again, competitors are seeking a bigger chunk of the British market. None more so than Dublin. + +No new full-length runways have been built in southern England since the second world war. NIMBYs and tight budgets have repeatedly scuppered plans to increase capacity. But the need for another runway is now particularly acute. Both of Heathrow’s are at full capacity and Gatwick’s is at 85%. Last July a commission of experts, set up by the government to break the political deadlock, recommended that a third runway should be built at Heathrow, a plan it favoured over extending its existing runway or building a second at Gatwick. + +The government was supposed to nod through the choice in December. But it has delayed a decision twice already, partly to appease voters in May’s London mayoral elections and the upcoming referendum on EU membership. On June 7th, the transport secretary said the decision could be postponed until September or later, as the Cabinet—which will ultimately make the choice—will be busy after the EU poll. + +Business leaders are weary of delays. They say congestion raises ticket prices and damages the capital’s competitiveness. The CBI, a business group, says a lack of capacity between now and 2030 will cost the British economy £31 billion ($47 billion) in lost trade with the BRIC economies alone. Britain is already losing out from having fewer direct routes to fast growing cities than its competitors, claims John Holland-Kaye, Heathrow’s boss. Charles de Gaulle airport (CDG) in Paris has more routes to China than Heathrow does. + +Many alternative hubs will not benefit much from London’s delays. CDG will be full by the mid-2020s, while strict noise regulation is slowing growth in Amsterdam. Nor is there much evidence that other British airports will gain much from the delay. Birmingham and Stansted have done well to attract domestic and short-haul traffic, but both are struggling to set up and keep the long-haul routes that are Heathrow’s bread and butter; planned new routes from Birmingham to China were scrapped last month. Smaller airports support expansion in the south-east as it will benefit them: congestion at Heathrow has cut its number of domestic connections from 18 in 1990 to just eight today. + +Across the Irish Sea, however, Dublin airport has seen an opportunity to capitalise on London’s dithering. In April it announced plans to build a second runway by 2020, five years before one could open at Heathrow or Gatwick. Kevin Toland, chief executive of daa, its parent company, says the airport wants to become a “gateway” linking Europe to North America—similar to Heathrow’s current role. + + + +Dublin is already growing faster than its London rivals (see chart) and is increasingly successful at attracting transfer passengers, whose numbers rose by 50% in the first four months of the year. And with 23 routes to British airports, it is much better connected to the rest of Britain than is Heathrow. Some airlines already see it as a cheaper alternative to a third runway at Heathrow. IAG, a group of airlines that owns British Airways, Heathrow’s biggest carrier, and opposes expansion there on the grounds of cost, recently bought Aer Lingus, one of Ireland’s largest, partly to use Dublin as a cheaper secondary hub. + +The relative ease of building a second runway in Dublin—which will cost just €320m, or £258m, rather than £18.6 billion for Heathrow’s—is partly due to good long-term planning, claims Mr Toland. The airport started to buy up land for a second runway in the 1960s, has been working with local-authority planners on the project since the 1970s and has plenty of spare capacity in its new terminal. With mounting evidence that airport capacity matters for economic growth, Britain would do well to follow Dublin’s example: just choose somewhere and get building. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21700452-one-airport-taking-advantage-britains-dithering-over-runway-expansion-up-eire/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Technology in prisons + +Screens behind bars + +Prisons are about to become more open to technology + +Jun 11th 2016 | NORWICH | From the print edition + +Better get back on your iPad, Fletch + +IN THE corner of a fluorescent-lit room at HMP Wayland, a low-security prison in the east of England, a small team of prison staff records interviews against a makeshift green wall. They are part of the prison’s new media centre. This year Wayland will become the first public prison to take part in a government-funded programme to improve rehabilitation by using technology throughout the jail. The pilot will allow inmates to take courses and access other online resources. + +In England and Wales, nearly half of all prisoners re-offend within a year of release. This places pressure on a prison system that is already near maximum capacity. A big part of the problem is ex-cons’ inability to find work: prisoners with sentences of more than a year who find employment within 12 months of release are 5.6 percentage points less likely to re-offend than those who do not. + +Yet security concerns mean that there is currently a near complete ban on all internet use. With life in the outside world now lived much more online, some prisoners struggle to adapt when released. So Wayland is pioneering “blended learning”—a form of education that integrates classwork with digital resources—through the creation of its own television channel. Most offenders at Wayland now have a television in their cell but can watch only the prison channel, which shows a mix of specially programmed educational material. Bad behaviour leads to a loss of television privileges. + +“Self-service” technology is already used in some prisons: screens in cells or in public areas allow inmates to complete a range of administrative tasks independently, such as arranging visits by relatives and topping up phone credit. Cynthia McDougall of the University of York has found that in six out of seven private prisons using this basic technology, reoffending rates were five percentage points lower than in sample places where the technology was not used. The plans at Wayland go much further, encouraging inmates to interact with online content. + +Andy Wright, who is in charge of reducing recidivism, imagines prisoners discussing their homework with tutors over Skype or contacting family members using a personal telephone in their cell. In both instances, inmates would have access to a limited number of security-cleared contacts only. Such communication is crucial to successful rehabilitation, he says. It may also help keep order. “Many of the violent incidents that occur in prison stem from arguments over phone access,” notes Mr Wright. Removing the queues and allowing inmates to call their family when they are feeling low could lead to a reduction in such incidents, he says. + +Others are similarly hopeful. Rod Clark, head of Prisoners’ Education Trust, a charity, says that the move towards digital technology reinforces what his trust has been advocating for years. Reductions in staff mean that there is also more incentive to experiment with online programmes. + +Some countries have already recognised the potential of technology in improving rehabilitation. Australia uses e-books and tablets that allow prisoners to complete distance learning in their cells. Belgium is piloting a secure digital platform known as the Prison Cloud. + +Such reforms provoke grumbling from those demanding a tougher justice system. In a British government survey analysing public perceptions of sentencing in 2008-2011, three-quarters of those questioned believed sentences were too lenient. Wayland must show a fall in reoffending rates as a result of its new programme if it wants to silence the doubters. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21700469-prisons-are-about-become-more-open-technology-screens-behind-bars/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Industrial evolution + +The digital economy + +Jun 11th 2016 | From the print edition + + + +Sometimes it feels as though the digital world is swallowing everything. Personally and socially it may be, but commercially not yet. Businesses that are part of the digital economy have grown by 30% in the past five years and the digital sector has outperformed the economy overall. But it is still small in many ways. Just 5% of jobs and 9% of businesses form part of the digital workplace, and it still contributes only 7% of the national output, similar to America, but behind South Korea which leads the world at more than 11%. What is more, the digital sector’s economic contribution of £118 billion ($194 billion) in 2014 is still below that of manufacturing (£151 billion). The industrial revolution lives on. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21700468-digital-economy/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +University fundraising + +Mortarboard in hand + +British universities are getting better at asking for money + +Jun 11th 2016 | BIRMINGHAM | From the print edition + +THE construction of the University of Birmingham did not turn out as its founders intended. Rising costs forced grandees to chose between building a music hall and a bell tower. They plumped for the latter. “Old Joe”, a 100-metre-tall, red-brick tower, has dominated Birmingham’s campus since 1908, a monument to the philanthropy which funded it. But in 2012 the university opened a music hall, finally completing the hemicycle of buildings facing the tower. Once again benefactors were to thank: seats in the auditorium are inscribed with the names of those who gave more than £1,000 ($1,440). + +University philanthropy is enjoying a revival. Although fundraising accounts for only 3% of universities’ £29 billion annual income, it is growing fast. In 2004-05 the median university raised £311,000 from donations. In 2014-15 it raised £1,283,000, according to the Council for Advancement and Support of Education, a think-tank. + +Such figures are dragged down by newer universities that lack rich graduates, money to spend on fundraising and the lustre of prestigious rivals (it is less glamorous to have a building named after you at a former polytechnic than at Oxford, notes one wonk). Though British universities raise more than those in Europe, which rely more heavily on public funding, they still lag far behind their American counterparts. Last year the University of Pennsylvania raised $517m (£357m); University College London (UCL), which ranks just above it in the Times Higher Education world rankings, raised £42m. + +One explanation for the growth is that universities have learned from other charities. Their appeals to alumni used not to stray far beyond the idea that, since students had a jolly time at university, they probably ought to extend the opportunity to others, says Adrian Beney of More Partnership, a fundraising consultancy. Now they focus on the impact their work has in areas such as medical research or advancing human rights, which helps to bring in money from alumni and non-alumni alike. Leicester University has developed expertise in heart disease, for instance, partly as a result of support from a local south Asian community that suffers from high rates of cardiovascular illness. + +Most significant of all, though, is simply an increased focus on fundraising beyond traditional centres, particularly Oxford and Cambridge. UCL now employs 70 people for the task, twice as many as in 2012. Universities think a lot about where their research overlaps with the interests of big donors. And they have got better at keeping in touch with alumni, who also help with the recruitment of students. As a result, while the amount raised by Oxbridge has grown by 24% in the past five years, the amount raised by others in the Russell Group of top universities has grown by 53%, albeit from a much lower base. + +Will donations continue to flow to universities? Higher tuition fees mean that students now pay for a bigger share of their education, and there is a slight dip in donations from the cohorts who were subject to fee rises. But heftier fees also reduce taxpayer spending on higher education. That may lead to even more generous donations from those who paid less for their time at university. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21700465-british-universities-are-getting-better-asking-money-mortarboard-hand/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Taxes and benefits + +The echo chamber + +Debunking two persistent myths about the welfare state + +Jun 11th 2016 | From the print edition + +EACH year, a release of data from the Office for National Statistics (ONS) on Britain’s tax-and-benefits system provokes ritual outrage on both the right and the left. Conservatives point to figures which supposedly show many Britons dependent on the welfare state. Lefties look at the same data in a different way and conclude that the welfare state is nastily regressive. In reality, neither camp is correct. + +The right-wing case first. The data appear to show that “half of households receive more in benefits than they pay in taxes”, as the Daily Telegraph has claimed on numerous occasions. Indeed, the ONS figures reveal that in 2014-15, 13.6m households fell into that category. It might appear as though welfare dependency is a scourge, but dig deeper and the reality is quite different. For one, the figure counts retired households, roughly 90% of whom fall into that category thanks to a generous state pension. Of working households, 37% get more in benefits than they pay in tax. + +Furthermore, the ONS’s definition of “benefits” includes familiar payments like housing benefit and unemployment benefit, but also so-called “benefits in kind”, such as the NHS, education and public transport. (The average household receives slightly more benefits in kind than it does in cash benefits.) Strip out benefits in kind, and you could instead argue that about a quarter of working households are net beneficiaries from the welfare state. Moreover, the proportion of households in this category is likely to be falling, thanks to six years of fiscal retrenchment by the Conservative government (in April a four-year freeze began on things like tax credits and some housing benefit). The welfare state certainly redistributes income to poor folk, but it has not created a large class of feckless dependants. + +Far from seeing the welfare state as a soft touch, commentators at the other end of the political spectrum look at the same ONS data and conclude that it is too hard on the poor. The data show that in 2014-15 a household in the bottom fifth of the income distribution paid £5,200 ($7,550) in tax, equivalent to 37% of their gross income, while someone in the top fifth paid £29,800, just 34% of their gross income. “The poorest families…are losing more of their income in tax than any other income group”, the Independent complained. + +However, this factoid is practically meaningless because it focuses just on taxation, and ignores benefits. In 2014-15 cash benefits accounted for £7,700 of the £13,800 average gross income of the poorest fifth of households. At the other end of the scale, the richest fifth of households received £2,900 a year in cash from the state. Thus the “net tax rate” of the rich (ie, taxes paid less benefits received, as a proportion of gross income) of the rich is strongly positive, while it is negative for the poorest groups. Britain’s welfare state is not perfect, but it is not the basket case that critics on right and left assume. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21700470-debunking-two-persistent-myths-about-welfare-state-echo-chamber/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Corporate governance + +Shocking shopping + +A bad few days for the image of Britain’s retail sector + +Jun 11th 2016 | From the print edition + +Mike Ashley is coming to town + +PARLIAMENTARY committees are normally sleepy affairs. Backbench MPs get the chance to grill the occasional bigwig. By replying to questions succinctly witnesses typically escape without letting slip anything too revealing. + +Those in front of the business select committee this week took a different approach. On June 6th Mike Ashley, the boss of the Sports Direct sportswear chain, provided evidence about working conditions in his shops. He admitted that his company was under government investigation over allegations he had paid workers less than the minimum wage, that it was “unacceptable” to have docked staff 15 minutes’ pay when they were one minute late and said that he would place disciplinary procedures under review. Sports Direct may receive a hefty fine. Mr Ashley could be disbarred as a company director. But he refused to genuflect: “I’m not Father Christmas,” he insisted, while promising improvements. + +Next up, on June 8th, were former executives of BHS, a chain of fusty department stores that filed for administration in April (and which Mr Ashley admitted he would have liked to have bought), followed by Dominic Chappell, BHS’s former owner. One adviser claimed Mr Chappell was a “premier league liar”. An executive claimed the former boss “had his fingers in the till” and had threatened to kill him when he questioned a transfer of £1.5m ($2.2m), a charge Mr Chappell denies. + +He sought to blame the collapse of BHS on Sir Phillip Green, from whom he bought the company in March 2015. Sir Phillip continued to run the firm until its demise. He went “insane,” calling in administrators at a hint of interest from Mr Ashley, said Mr Chappell. + +The overall impression in both cases was of a company out of control. Indeed, Mr Ashley hinted as much, admitting he may have struggled to keep on top of things as his firm grew from “an inflatable [dinghy]” to “an oil tanker”. Founders who stay in charge for too long are a common problem for British firms, says John Van Reenen of the London School of Economics Centre for Economic Performance, and poor management partly explains low British productivity. + +Yet, although such cases are worrying, they are not typical of large British companies. The structure of most boards provides protection against such mismanagement. The splitting of the roles of CEO and chairman tends to disperse power, and there are usually plenty of external members. Mr Ashley is well-known precisely because he is unusual. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21700467-bad-few-days-image-britains-retail-sector-shocking-shopping/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Bagehot + +The new J-curve + +Britain’s flirtation with Brexit is more complicated than an anti-globalisation vote + +Jun 11th 2016 | From the print edition + + + +RUSHDEN is deepest England. Mock-Tudor estates mingle with pubs and meadows. In the Windmill social club pro-Brexit activists gather and are joined by poker players and country-music buffs from the room next door. Bolts of lightning over the Northamptonshire hills light up the hall as Brexiteers slate the status quo. “You’re not living in a democracy any more, ladies and gentlemen!” burrs Derek Clark, a former member of the European Parliament for the UK Independence Party, ahead of a televised debate between Nigel Farage, UKIP leader, and David Cameron. + +This is insurgent Britain: the segment of the country that mistrusts the power of Brussels and the IMF. One bank, an old buffer tells Bagehot, is at the heart of it all. “Mark Carney?” he says of the Bank of England governor: “Even he is Goldman Sachs.” Then he turns to the Bilderberg Group. This gathering of influential Western public figures, he insists, decided in 1953 to form the EU and has indoctrinated every British prime minister since. + +Whipping a six-inch-thick wad of European Parliament committee papers from a suitcase and flinging the bag to the floor, Mr Clark laments how complicated it all is and decries the role of “so-called experts” in public life. Watching this scene, Bagehot cannot but ruminate on the much-cited observation that Western electorates are losing faith in globalisation. He is reminded of a quote by Antonio Gramsci, the Italian political theorist: “In this interregnum a great variety of morbid symptoms appear.” If Britain is living through a political transition, what is on the other side? + +After all, for a place fed up with globalisation, Rushden seems to have benefited handsomely from the outside world. Cheap consumer goods fill its shops. Fancy technology is de rigueur in its new-build homes. Thanks to the local proliferation of financial-services and logistics firms (many of them providing backoffice functions to big London companies), unemployment here in east Northamptonshire is only 3.4%. It is hard to see the insurgent sentiment in these parts as a product of deprivation. + +In this sense Rushden is like the other Eurosceptic parts of Europe. Where right-wing populism—like the Brexit campaign—is gaining ground on the continent, it is often in the most developed, economically globalised regions. Places whose residents live a longer, more internationally interdependent and more materially wealthy life than almost anywhere else: Denmark, Sweden, the Netherlands and provincial Germany. It is in such prosperous parts, rather than the truly struggling and unemployment-stricken ones like Greece and Spain, where the politics of national identity and right-populism are most obviously on the rise. + +What is going on? In Rushden part of the explanation is that David Cameron, like mainstream leaders elsewhere, has played his hand badly in the past: too often pandering to populists rather than confronting them. + +Yet that is insufficient. Two other ingredients are necessary for populist politics to thrive. First, a catalyst: nationalist Euroscepticism is an expression of fury at an establishment that, in straitened times, appears to do too much for spendthrift southern Europeans and migrants, and too little for local strivers. But second, it helps when the strivers in question have a cushion of economic security that is large enough for them to decide that national identity and sovereignty matter more than greater growth. The Leave campaign has acknowledged this. One of its recent posters reads: “It’s not just the economy, stupid.” “We need to value people’s quality of life and standards of living and not just national GDP figures,” argued Mr Farage in his debate with Mr Cameron, to loud cheers from the crowd in Rushden. + +To be sure, the dissatisfaction is real. But it may be less revolutionary than it seems at first glance. When they gave examples of the evils of the union, speakers at the event in Northamptonshire cited damage to local roads caused by heavy European trucks, annoying regulations and new housing on the green belt. For all the anger (some even talked of civil unrest if the Leave campaign loses on June 23rd), these were not the complaints of a society that is on the brink. + +Driven round the bend + + + +INTERACTIVE: The Economist’s “Brexit” poll-tracker + +Ian Bremmer of the Eurasia Group, a political consultancy, has talked of the “J-curve”. His point is that as countries open up they become more volatile before they become more stable. Perhaps Britain’s debate on Brexit reveals a second J-curve towards the top of the development path: where folk feel safe enough to challenge the globalised establishment but not rich enough to be part of it. Hence it is the lower-middle class of wealthy and sophisticated societies, rather than citizens of poorer ones, who seem to be the vanguard of populist politics. It is notable that in Britain, as in other northern European countries, this is storming ahead a few years after the economic crisis, once some growth has returned and unemployment has fallen. It takes a dab of security to rebel against the system. + +But, as with developing countries on the J-curve, the country will one day emerge from its limbo. In Mr Bremmer’s scheme, growing openness powers countries through the bend. For this new J-curve it is growing economic and cultural confidence about globalisation among the majority. Increasing numbers of Britain’s young people are going to university. Its immigrant population is growing and integrating successfully. The prevailing conception of nationality is becoming more civic (a function of values, not background) and less nativist. With each generation, the world’s integration is becoming steadily less controversial. + +Robert Ford of the University of Manchester claims that if the EU referendum were being held in ten or 20 years it would be much less close. Remain would win comfortably. In Gramsci’s terms: “The crisis consists precisely in the fact that the old is dying and the new cannot be born.” Like all such periods, this will pass. But in the meantime: watch out for those morbid symptoms. + + + +Their eyes on Albion + +Most European bosses are twitchy about Brexit; a few spy an opportunity + + + +Jeremy Corbyn, saboteur + +Lacklustre and poorly led, the Labour Party is letting down the Remain campaign + + + +The charms of variable geometry + +Our final Brexit brief argues that a multispeed Europe suits Britain—and others + + + +Beyond the fringe + +Brexiteers are deliberately vague about the alternatives to European Union membership. That is because most models, such as Iceland’s, are unsatisfactory + + + +Young voters! Your country needs you + + + + + +More Brexit coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21700407-britains-flirtation-brexit-more-complicated-anti-globalisation-vote-new/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +International + + + +Foreign aid: Misplaced charity [Fri, 10 Jun 14:21] + +Where does the aid go?: Size matters [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Foreign aid + +Misplaced charity + +Aid is best spent in poor, well-governed countries. That isn’t where it goes + +Jun 11th 2016 | From the print edition + + + +NOT long ago Malawi was a donor darling. Being dirt poor and ravaged by AIDS, it was needy; with just 17m inhabitants, a dollop of aid might visibly improve it. Better still, it was more-or-less democratic and its leader, Joyce Banda, was welcome at Westminster and the White House. In 2012 Western countries showered $1.17 billion on it, and foreign aid accounted for 28% of gross national income. + +The following year corrupt officials, businessmen and politicians pinched at least $30m from the Malawian treasury. A bureaucrat investigating the thefts was shot three times (he survived, somehow). Germany said it would help pay for an investigation; later, burglars raided the home of a German official and stole documents relating to the scandal. Malawi is no longer a donor darling. It now resembles a clingy lover, which would be dumped were it not so needy. It still gets a lot of foreign aid ($930m in 2014), but donors try to keep the cash out of the government’s hands. + +Foreign aid can work wonders. It set South Korea and Taiwan on the path to riches, helped extinguish smallpox in the 1970s and has almost eliminated polio. Unfortunately, as Malawi shows, it is liable to be snaffled by crooks. Aid can also burden weak bureaucracies, distort markets, prop up dictators and help prolong civil wars. Taxpayers in rich countries dislike their cash being spent on Mercedes-Benzes. So donors strive to send the right sort of aid to the places where it will do the most good. How are they doing? + +A decade ago governments rich and poor set out to define good aid. They declared that aid should be for improving the lot of poor people—and not, implicitly, for propping up friendly dictators or winning business for exporters. It should be co-ordinated; otherwise, says William Easterly of New York University, “the poor health minister is dealing with dozens of different donors and dozens of different forms to fill out.” It should be transparent. Where possible, it should flow through governments. + +These are high-minded ideals, reflecting the time they were laid down: the cold war was over and the West had plenty of money. They are nonetheless sound. Aid-watchers, who row bitterly over whether the world needs more foreign aid or less, mostly agree with them. They tend to add that aid should go to relatively free, well-governed countries. + +By almost all of these measures, foreign aid is failing. It is as co-ordinated as a demolition derby. Much goes neither to poor people nor to well-run countries, and on some measures the targeting is getting worse. Donors try to reward decent regimes and punish bad ones, but their efforts are undermined by other countries and by their own impatience. It is extraordinary that so many clever, well-intentioned people have made such a mess. + +Official development aid, which includes grants, loans, technical advice and debt forgiveness, is worth about $130 billion a year. The channels originating in Berlin, London, Paris, Tokyo and Washington are deep and fast-flowing; others are rivulets, though the Nordic countries are generous for their size. More than two-fifths flows through multilateral outfits such as the World Bank, the UN and the Global Fund. Last year 9% was spent on refugees in donor countries, reflecting the surge of migrants to Europe. + +As the aid river twists and braids, it inundates some places and not others. India contains some 275m people living on less than $1.90 a day. It got $4.8 billion in “country programmable aid” (the most routine kind) in 2014, which is $17 per poor person. Vietnam also got $4.8 billion; but, because it is much smaller and rather better off, that works out to $1,658 per poor person (see map). By this measure South-East Asia and South America fare especially well. + + + +Western countries have mostly been shamed out of the cold war-era habit of funnelling aid to friendly regimes and former colonies. But aid is still used more-or-less explicitly as a tool of foreign policy—and increasingly so, says Owen Barder of the Centre for Global Development, a think-tank. Today’s enemy is not communism but radical Islam. Afghanistan, Egypt, Jordan, Syria and Turkey each got more net aid than Bangladesh in 2014, although none contains nearly as many poor people. This week the EU promised more aid to African and Middle Eastern countries that clamp down on migrants. + +Rewarding failure + +A better reason not to give much aid to the poorest countries is that many are badly run. But that is not why they get so little. Claudia Williamson of Mississippi State University has created a yardstick that measures both poverty and the quality of government. On her measure, the targeting of aid worsened between 2004 and 2012. “Aid goes to middle-income countries that are also poorly governed,” she says. + +Donors often reward democratic reforms; they also try to punish corruption and backsliding, as in Malawi. Between 2009 and 2014, 12 countries improved by at least two points on a 14-point scale produced by Freedom House, a think-tank, suggesting they became notably more democratic and liberal. Ten of them received more net aid in 2014 than five years earlier. Of the nine aid-receiving countries that worsened by two points or more on the same scale, six got less. + +But such inducements tend to be subtle, whereas the surge of aid into strategically important states is often huge. Net foreign aid to Turkey, an increasingly autocratic country that is not poor, rose more than tenfold between 2004 and 2014, to $3.4 billion. Besides, donors often have short attention spans. Two academics, Darren Hawkins and Jay Goodliffe, have shown that donors tend to reward countries that are becoming more like them. Once countries have joined the democratic club, aid drops. American aid to Peru followed that pattern. “You get penalised for achieving too high a level of democratic governance,” says Brad Parks of AidData, another think-tank. + +Even if Western countries sent clear, consistent signals, they might struggle to be heard. Aid has become less important to many poor countries than foreign investment or remittances. And donors have become far more diverse. Several countries that used to receive aid now hand it out; a few, including India and Turkey, do both. China distributed roughly $3.4 billion last year, according to the OECD. Although that is puny next to America or Britain, China is important because it can act as a shock absorber, moving into a country when others are pulling out. Last month it promised Malawi more food aid and 100 police cars. + +For corrupt dictators, Chinese aid is even better than the Western kind. China tends not to fuss over democracy, and it seldom objects to loans being spent on pointless grand projects: after all, it builds a lot of those at home. The money is easier to snaffle. One study found that Chinese aid is highly likely to flow to the districts where African leaders were born. + +In one big way, though, the proliferation of donors harms poor countries. Aid now comes from ever more directions, in ever smaller packages: according to AidData, the average project was worth $1.9m in 2013, down from $5.3m in 2000. Mozambique has 27 substantial donors in the field of health alone, not counting most non-Western or private givers. Belgium, France, Italy, Japan and Sweden each supplied less than $1m. Such fragmentation strains poor countries, both because of the endless report-writing and because civil servants are hired away to manage donors’ projects. + +Donors would probably do more good by concentrating on a few projects in a few countries. But they strive to achieve the opposite. To them, and to the politicians who control the purse strings, plastering the world with flags is a sign of success. Erik Solheim, chairman of the OECD’s Development Assistance Committee, remembers trying to persuade his own country, Norway, to focus on what it really knows about (managing an oil boom) rather than on things like tropical agriculture. He did not succeed. + +A decade ago the approved cure for fragmentation was for donors to pay aid directly to poor countries to use as they please. This has become deeply unfashionable. A donor who funds a government feels responsible for every dismal thing that government does, whether it is passing anti-gay laws or stealing the cash. Once lost, trust is hard to recover. Donors seem disinclined to resume direct budget support to Malawi: one describes it as “in the past”. Britain’s department for international development, which used to proselytise about the virtues of budget support, said last year that it would stop doing it. Increasingly, donors also earmark the funds they provide to multilateral outfits. + +The situation is a mess in almost every way. Which is why it is good news that a great deal of progress has been made on one of the ideals agreed on in Paris a decade ago. Donors have become far more open about where their aid goes and how it is spent. It is because of the advances in transparency that we know just how badly things are going. But knowledge and the willingness to change are not the same. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21700323-development-aid-best-spent-poor-well-governed-countries-isnt-where-it/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Where does the aid go? + +Size matters + +Jun 11th 2016 | From the print edition + + + +Why do donors lavish money on some countries and not others? Being well-governed (represented by the dark circles) seems to make no difference; nor, strangely, does being poor (the smallest circles). What helps is to be small. Among 56 low- and middle-income countries, the top ten aid recipients per person include seven of the ten least populous. The ten receiving the least aid include the six biggest. In 2014 Samoa received $458 per person; India made do with $3.69. Smaller countries tend to have less bureaucracy, so aid can be put to use more quickly. But the main reason is probably that a little cash can have a more visible effect in a small country. Jesus told his followers to do good secretly, and be rewarded in heaven. Some donors, it seems, cannot wait. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21700327-size-matters/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Technology Quarterly + + + +The future of agriculture: Factory fresh [Fri, 10 Jun 14:21] + +Smart farms: Silicon Valley meets Central Valley [Fri, 10 Jun 14:21] + +Agricultural biotechnology: Bugs in the system [Fri, 10 Jun 14:21] + +Brain scan: Caleb Harper [Fri, 10 Jun 14:21] + +Crops of the future: Tinker and tailor [Fri, 10 Jun 14:21] + +Fish farming: Catch of the day [Fri, 10 Jun 14:21] + +Animal husbandry: Stock answers [Fri, 10 Jun 14:21] + +Towards 2050: Vorsprung durch Technik [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +The future of agriculture + +Factory fresh + +If agriculture is to continue to feed the world, it needs to become more like manufacturing,says Geoffrey Carr. Fortunately, that is already beginning to happen + +Jun 11th 2016 | From the print edition + + + +TOM ROGERS is an almond farmer in Madera County, in California’s Central Valley. Almonds are delicious and nutritious. They are also lucrative. Californian farmers, who between them grow 80% of the world’s supply of these nuts, earn $11 billion from doing so. But almonds are thirsty. A calculation by a pair of Dutch researchers six years ago suggested that growing a single one of them consumes around a gallon of water. This is merely an American gallon of 3.8 litres, not an imperial one of 4.5 litres, but it is still a tidy amount of H2O. And water has to be paid for. + +Technology, however, has come to Mr Rogers’s aid. His farm is wired up like a lab rat. Or, to be more accurate, it is wirelessed up. Moisture sensors planted throughout the nut groves keep track of what is going on in the soil. They send their results to a computer in the cloud (the network of servers that does an increasing amount of the world’s heavy-duty computing) to be crunched. The results are passed back to the farm’s irrigation system—a grid of drip tapes (hoses with holes punched in them) that are filled by pumps. + +The system resembles the hydroponics used to grow vegetables in greenhouses. Every half-hour a carefully calibrated pulse of water based on the cloud’s calculations, and mixed with an appropriate dose of fertiliser if scheduled, is pushed through the tapes, delivering a precise sprinkling to each tree. The pulses alternate between one side of the tree trunk and the other, which experience has shown encourages water uptake. Before this system was in place, Mr Rogers would have irrigated his farm about once a week. With the new little-but-often technique, he uses 20% less water than he used to. That both saves money and brings kudos, for California has suffered a four-year-long drought and there is social and political, as well as financial, pressure to conserve water. + +Mr Rogers’s farm, and similar ones that grow other high-value but thirsty crops like pistachios, walnuts and grapes, are at the leading edge of this type of precision agriculture, known as “smart farming”. But it is not only fruit and nut farmers who benefit from being precise. So-called row crops—the maize and soyabeans that cover much of America’s Midwest—are being teched up, too. Sowing, watering, fertilising and harvesting are all computer-controlled. Even the soil they grow in is monitored to within an inch of its life. + +Farms, then, are becoming more like factories: tightly controlled operations for turning out reliable products, immune as far as possible from the vagaries of nature. Thanks to better understanding of DNA, the plants and animals raised on a farm are also tightly controlled. Precise genetic manipulation, known as “genome editing”, makes it possible to change a crop or stock animal’s genome down to the level of a single genetic “letter”. This technology, it is hoped, will be more acceptable to consumers than the shifting of whole genes between species that underpinned early genetic engineering, because it simply imitates the process of mutation on which crop breeding has always depended, but in a far more controllable way. + + + +Understanding a crop’s DNA sequence also means that breeding itself can be made more precise. You do not need to grow a plant to maturity to find out whether it will have the characteristics you want. A quick look at its genome beforehand will tell you. + +People will want to eat better than they do now + +Such technological changes, in hardware, software and “liveware”, are reaching beyond field, orchard and byre. Fish farming will also get a boost from them. And indoor horticulture, already the most controlled and precise type of agriculture, is about to become yet more so. + +In the short run, these improvements will boost farmers’ profits, by cutting costs and increasing yields, and should also benefit consumers (meaning everyone who eats food) in the form of lower prices. In the longer run, though, they may help provide the answer to an increasingly urgent question: how can the world be fed in future without putting irreparable strain on the Earth’s soils and oceans? Between now and 2050 the planet’s population is likely to rise to 9.7 billion, from 7.3 billion now. Those people will not only need to eat, they will want to eat better than people do now (see chart), because by then most are likely to have middling incomes, and many will be well off. + + + +The Food and Agriculture Organisation, the United Nations’ agency charged with thinking about such matters, published a report in 2009 which suggested that by 2050 agricultural production will have to rise by 70% to meet projected demand. Since most land suitable for farming is already farmed, this growth must come from higher yields. Agriculture has undergone yield-enhancing shifts in the past, including mechanisation before the second world war and the introduction of new crop varieties and agricultural chemicals in the green revolution of the 1950s and 1960s. Yet yields of important crops such as rice and wheat have now stopped rising in some intensively farmed parts of the world, a phenomenon called yield plateauing. The spread of existing best practice can no doubt bring yields elsewhere up to these plateaus. But to go beyond them will require improved technology. + +This will be a challenge. Farmers are famously and sensibly sceptical of change, since the cost of getting things wrong (messing up an entire season’s harvest) is so high. Yet if precision farming and genomics play out as many hope they will, another such change is in the offing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21700167/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Smart farms + +Silicon Valley meets Central Valley + +In various guises, information technology is taking over agriculture + +Jun 11th 2016 | From the print edition + +The farmhands of tomorrow + +ONE way to view farming is as a branch of matrix algebra. A farmer must constantly juggle a set of variables, such as the weather, his soil’s moisture levels and nutrient content, competition to his crops from weeds, threats to their health from pests and diseases, and the costs of taking action to deal with these things. If he does the algebra correctly, or if it is done on his behalf, he will optimise his yield and maximise his profit. + +The job of smart farming, then, is twofold. One is to measure the variables going into the matrix as accurately as is cost-effective. The other is to relieve the farmer of as much of the burden of processing the matrix as he is comfortable with ceding to a machine. + +An early example of cost-effective precision in farming was the decision made in 2001 by John Deere, the world’s largest manufacturer of agricultural equipment, to fit its tractors and other mobile machines with global-positioning-system (GPS) sensors, so that they could be located to within a few centimetres anywhere on Earth. This made it possible to stop them either covering the same ground twice or missing out patches as they shuttled up and down fields, which had been a frequent problem. Dealing with this both reduced fuel bills and improved the uniformity and effectiveness of things like fertiliser, herbicide and pesticide spraying. + +Since then, other techniques have been added. High-density soil sampling, carried out every few years to track properties such as mineral content and porosity, can predict the fertility of different parts of a field. Accurate contour mapping helps indicate how water moves around. And detectors planted in the soil can monitor moisture levels at multiple depths. Some detectors are also able to indicate nutrient content. + +All of this permits variable-rate seeding, meaning the density of plants grown can be tailored to local conditions. And that density itself is under precise control. John Deere’s equipment can plant individual seeds to within an accuracy of 3cm. Moreover, when a crop is harvested, the rate at which grains or beans flow into the harvester’s tank can be measured from moment to moment. That information, when combined with GPS data, creates a yield map that shows which bits of land were more or less productive—and thus how accurate the soil and sensor-based predictions were (see chart). This information can then be fed into the following season’s planting pattern. + + + +Farmers also gather information by flying planes over their land. Airborne instruments are able to measure the amount of plant cover and to distinguish between crops and weeds. Using a technique called multispectral analysis, which looks at how strongly plants absorb or reflect different wavelengths of sunlight, they can discover which crops are flourishing and which not. + +Sensors attached to moving machinery can even take measurements on the run. For example, multispectral sensors mounted on a tractor’s spraying booms can estimate the nitrogen needs of crops about to be sprayed, and adjust the dose accordingly. A modern farm, then, produces data aplenty. But they need interpreting, and for that, information technology is essential. + +Over the past few decades large corporations have grown up to supply the needs of commercial farming, especially in the Americas and Europe. Some are equipment-makers, such as John Deere. Others sell seeds or agricultural chemicals. These look like getting larger still. Dow and DuPont, two American giants, are planning to merge. Monsanto, another big American firm, is the subject of a takeover bid by Bayer, a German one. And Syngenta, a Swiss company, is being bid for by ChemChina, a Chinese one. + +Business models are changing, too. These firms, no longer content merely to sell machinery, seed or chemicals, are all trying to develop matrix-crunching software platforms that will act as farm-management systems. These proprietary platforms will collect data from individual farms and process them in the cloud, allowing for the farm’s history, the known behaviour of individual crops strains and the local weather forecast. They will then make recommendations to the farmer, perhaps pointing him towards some of the firm’s other products. + +But whereas making machinery, breeding new crops or manufacturing agrochemicals all have high barriers to entry, a data-based farm-management system can be put together by any businessman, even without a track record in agriculture. And many are having a go. For example, Trimble Navigation, based in Sunnyvale, at the southern end of Silicon Valley, reckons that as an established geographical-information company it is well placed to move into the smart-farming market, with a system called Connected Farms. It has bought in outside expertise in the shape of AGRI-TREND, a Canadian agricultural consultancy, which it acquired last year. + +By contrast, Farmobile of Overland Park, Kansas, is a startup. It is aimed at those who value privacy, making a feature of not using clients’ data to improve its products, as many farm-management systems do. Farmers Business Network, of Davenport, Iowa, uses almost the opposite model, acting as a co-operative data pool. Data in the pool are anonymised, but everyone who joins is encouraged to add to the pool, and in turn gets to share what is there. The idea is that all participants will benefit from better solutions to the matrix. + +Some firms focus on market niches. iTK, based in Montpellier, France, for example, specialises in grapes and has built mathematical models that describe the behaviour of all the main varieties. It is now expanding into California. + +Thanks to this proliferation of farm-management software, it is possible to put more and more data to good use if the sensors are available to provide them. And better, cheaper sensors, too, are on their way. Moisture sensors, for example, usually work by measuring either the conductivity or the capacitance of soil, but a firm called WaterBit, based in Santa Clara, California, is using a different technology which it says can do the job at a tenth of the price of the existing products. And a sensor sold by John Deere can spectroscopically measure the nitrogen, phosphorous and potassium composition of liquid manure as it is being sprayed, permitting the spray rate to be adjusted in real time. This gets round the problem that liquid manure, though a good fertiliser, is not standardised, so is more difficult than commercial fertiliser to apply in the right quantities. + +Things are changing in the air, too. In a recapitulation of the early days of manned flight, the makers of unmanned agricultural drones are testing a wide range of designs to find out which is best suited to the task of flying multispectral cameras over farms. Some firms, such as Agribotix in Boulder, Colorado, prefer quadcopters, a four-rotored modern design that has become the industry standard for small drones, though it has limited range and endurance. A popular alternative, the AgDrone, built by HoneyComb of Wilsonville, Oregon, is a single-engine flying wing that looks as if it has escaped from a 1950s air show. Another, the Lancaster 5, from PrecisionHawk of Raleigh, North Carolina, vaguely resembles a scale model of the eponymous second-world-war bomber. And the offering by Delair-Tech, based in Toulouse, France, sports the long, narrow wings of a glider to keep it aloft for long periods. + +Even an endurance drone, though, may be pushed to survey a large estate in one go. For a synoptic view of their holding, therefore, some farmers turn to satellites. Planet Labs, a firm in San Francisco, provides such a service using devices called CubeSats, measuring a few centimetres across. It keeps a fleet of about 30 of these in orbit, which it refreshes as old ones die by putting new ones into space, piggybacking on commercial launches. Thanks to modern optics, even a satellite this small can be fitted with a multispectral camera, though it has a resolution per pixel of only 3.5 metres (about ten feet). That is not bad from outer space, but not nearly as good as a drone’s camera can manage. + +Satellite coverage, though, has the advantage of being both broad and frequent, whereas a drone can offer only one or the other of these qualities. Planet Lab’s constellation will be able to take a picture of a given bit of the Earth’s surface at least once a week, so that areas in trouble can be identified quickly and a more detailed examination made. + +The best solution is to integrate aerial and satellite coverage. That is what Mavrx, also based in San Francisco, is trying to do. Instead of drones, it has an Uber-like arrangement with about 100 light-aircraft pilots around America. Each of the firm’s contracted planes has been fitted with a multispectral camera and stands ready to make specific sorties at Mavrx’s request. Mavrx’s cameras have a resolution of 20cm a pixel, meaning they can pretty much take in individual plants. + +The firm has also outsourced its satellite photography. Its raw material is drawn from Landsat and other public satellite programmes. It also has access to these programmes’ libraries, some of which go back 30 years. It can thus check the performance of a particular field over decades, calculate how much biomass that field has supported from year to year and correlate this with records of the field’s yields in those years, showing how productive the plants there have been. Then, knowing the field’s biomass in the current season, it can predict what the yield will be. Mavrx’s method can be scaled up to cover entire regions and even countries, forecasting the size of the harvests before they are gathered. That is powerful financial and political information. + +A truly automated, factory-like farm, however, would have to cut people out of the loop altogether. That means introducing robots on the ground as well as in the air, and there are plenty of hopeful agricultural-robot makers trying to do so. + +At the University of Sydney, the Australian Centre for Field Robotics has developed RIPPA (Robot for Intelligent Perception and Precision Application), a four-wheeled, solar-powered device that identifies weeds in fields of vegetables and zaps them individually. At the moment it does this with precise, and precisely aimed, doses of herbicide. But it, or something similar, could instead use a beam of microwaves, or even a laser. That would allow the crops concerned to be recognised as “organic” by customers who disapprove of chemical treatments. + +For the less fussy, Rowbot Systems of Minneapolis is developing a bot that can travel between rows of partly grown maize plants, allowing it to apply supplementary side dressings of fertiliser to the plants without crushing them. Indeed, it might be possible in future to match the dose to the plant in farms where individual plants’ needs have been assessed by airborne multispectral cameras. + +Robots are also of interest to growers of fruit and vegetables that are currently picked by hand. Fruit-picking is a time-consuming business which, even though the pickers are not well rewarded, would be a lot faster and cheaper if it were automated. And robot pickers are starting to appear. + +The SW6010, made by AGROBOT, a Spanish firm, uses a camera to recognise strawberries and work out which are ripe for the plucking. Those that are have their stems severed by blades and are caught in baskets before being passed on by a conveyor belt for packing by a human operator sitting on the robot. In the Netherlands, researchers at Wageningen University are working on a robot harvester for larger produce such as peppers. + +All these devices, and others like them, still exude a whiff of the Heath Robinson. But robotics is developing rapidly, and the control systems needed to run such machines are getting better and cheaper by the day. Some think that in a decade or so many farms in rich countries will be largely robot-operated. + +Yet others wonder just how far farmers will let their farms be robotised. Self-guiding agricultural machinery such as that sold by John Deere is all but robotic already. It is like an airliner, in which the pilot usually has little to do between landing and take-off because computers do the work for him. Yet Deere has no plans to hand over complete control to the cloud, because that is not what its customers want. + +Tunnel vision + +If total control still seems some way off in outdoor farming, it is already close for crops grown in an entirely artificial environment. In a warren of tunnels beneath Clapham, in south London, Growing Underground is doing exactly what its name suggests. It is rearing around 20 types of salad plants, intended for sale to the chefs and sandwich shops of the city, in subterranean voids that began life as second-world-war bomb shelters. + +In many ways, Growing Underground’s farm resembles any other indoor hydroponic operation. But there is one big difference. A conventional greenhouse, with its glass or polycarbonate walls, is designed to admit as much sunlight as possible. Growing Underground specifically excludes it. Instead, illumination is provided by light-emitting diodes (LEDs). These, in the minimalist spirit of hydroponics, have had their spectra precisely tuned so that the light they emit is optimal for the plants’ photosynthesis. + +As you would expect, sensors watch everything—temperature, humidity, illumination—and send the data directly to Cambridge University’s engineering department where they are crunched, along with information on the plants’ growth, to work out the best regimes for future crops. + +For now Steven Dring, Growing Underground’s boss, is confining output to herbs and vegetables such as small lettuces and samphire that can be brought to harvestable size quickly. He has reduced the cycle for coriander from 21 to 14 days. But tests suggest that the system also works for other, chunkier crops. Carrots and radishes have already been successfully grown this way, though they may not command a sufficient premium to make their underground cultivation worthwhile. But pak choi, a Chinese vegetable popular with trendy urbanites who live in inner-London suburbs like Clapham, is also amenable. At the moment growing it takes five weeks from start to finish. Get that down to three, which Mr Dring thinks he can, and it would be profitable. + + + +The firms that make the LEDs could also be on to a good thing. Mr Dring’s come from Valoya, a Finnish firm. In Sweden, Heliospectra is in the same business. Philips, a Dutch electrical giant, has also joined in. In conventional greenhouses such lights are used to supplement the sun, but increasingly they do duty in windowless operations like Mr Dring’s. Though unlike sunlight they do not come free, they are so efficient and long-lasting that their spectral advantages seem clinching (see chart). + +This kind of farming does not have to take place underground. Operations like Mr Dring’s are cropping up in buildings on the surface as well. Old meatpacking plants, factories and warehouses the world over are being turned into “vertical farms”. Though they are never going to fill the whole world’s bellies, they are more than a fad. Rather, they are a modern version of the market gardens that once flourished on the edge of cities before the land they occupied was swallowed by urban sprawl. And with their precise control of inputs, and thus outputs (see article), they also represent the ultimate in what farming could become. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21700165/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Agricultural biotechnology + +Bugs in the system + +Bacteria and fungi can help crops and soil + +Jun 11th 2016 | From the print edition + +MICROBES, though they get a bad press as agents of disease, play a beneficial role in agriculture. For example, they fix nitrogen from the air into soluble nitrates that act as natural fertiliser. Understanding and exploiting such organisms for farming is a rapidly developing part of agricultural biotechnology. + +At the moment, the lead is being taken by a collaboration between Monsanto and Novozymes, a Danish firm. This consortium, called BioAg, began in 2013 and has a dozen microbe-based products on the market. These include fungicides, insecticides and bugs that liberate nitrogen, phosphorous and potassium compounds from the soil, making them soluble and thus easier for crops to take up. Last year researchers at the two firms tested a further 2,000 microbes. The top-performing strains boosted maize and soyabean yields by about 3%. + +In November 2015 Syngenta and DSM, a Dutch company, formed a similar partnership, and earlier that year, in April, DuPont bought Taxon Biosciences, a Californian microbes firm. Hopeful startups abound. One is Boston-based Indigo, whose researchers are conducting field tests of some of its library of 40,000 microbes to see if they can alleviate stress induced by drought and salinity in cotton, maize, soyabeans and wheat. Another is Adaptive Symbiotic Technologies, of Seattle. The scientists who set up this firm study fungi that live symbiotically within plants. They have found one, whose natural partner is a grass, which confers drought-, heat- and salinity-resistance when transferred to crops such as maize, rice and wheat. + +The big prize, however, would be to persuade the roots of crops such as wheat to form partnerships with nitrogen-fixing soil bacteria, much as legumes such as soyabeans do. In legumes, the plants’ roots grow special nodules where the bacteria in question live. If wheat rhizomes could be encouraged, by genomic breeding or genome editing, to behave likewise, the benefits for everyone except fertiliser companies would be enormous. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21700472/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Brain scan + +Caleb Harper + +The founder of the Open Agriculture Initiative at MIT’s Media Lab is building a “catalogue of climates” to help plants grow better + +Jun 11th 2016 | From the print edition + + + +PLANT breeders are understandably excited about manipulating botanical genomics (see article). But it is a crop’s phenotype—its physical instantiation—that people actually eat, and this is the product of both genes and environment. + +Optimising phenotypes by manipulating the environment is the task Caleb Harper has set himself. Dr Harper is the founder of the Open Agriculture Initiative (OAI) at the Massachusetts Institute of Technology’s Media Lab. At first sight, that seems odd. The Media Lab is an information-technology laboratory, best known for having helped develop things like electronic paper, wireless networks and even modern karaoke machines. It is very much about bits and bytes, and not much hitherto about proteins and lipids. + +However, environmental information is still information. It informs how a plant grows, which is what interests Dr Harper. As he once put it, “people say they like peppers from Mexico. What they actually like is peppers grown in the conditions that prevail in Mexico.” He reckons that if you can replicate the conditions in which a botanical product grew, you can replicate that product. But this means you have to understand those conditions properly in the first place. + +To help with this, he and his colleagues at the OAI have developed what they call the Personal Food Computer: a standardised tabletop device that can control illumination, carbon-dioxide levels, humidity, air temperature, root-zone temperature, and the acidity and dissolved-oxygen content of water delivered to the roots, as well as its nutrient content and any other aspect of its chemistry. + +Plant phenotypes are monitored during growth by web cameras linked to software and by sensors that can detect areas of active photosynthesis. After harvesting they are examined by lidar (the optical equivalent of radar) to record their shape in detail, and by gas chromatography/mass spectroscopy to understand their chemical composition. + +The idea is that Personal Food Computers can be built by anyone who chooses to, and form part of an “open science” network that gathers data on growing conditions and works out those conditions’ phenotypic effects. Of particular interest are matters such as flavour and astringency that are governed by chemicals called secondary metabolites. These are often parts of plant-defence mechanisms, so in one experiment the computers are looking at the effect of adding crushed arthropod exoskeletons to the water supply, which may mimic attack by insects or mites. The hope is that this will change flavours in controllable ways. + +Though Dr Harper is from a rural background, his career before the OAI was conventionally Media Lab-like. In particular, he designed environmental-control systems for data centres and operating theatres—keeping heat, humidity and so on within the tight limits needed for optimal function. But the jump from controlling those environments to controlling miniature farms was not enormous. + +Some three dozen Personal Food Computers already exist and about 100 more are under construction the world over. This geographical dispersion is important. Dr Harper’s goal is to decouple climate from geography by building a “catalogue of climates”. That would allow indoor urban farms to be programmed to imitate whatever climate was required in order to turn out crops for instant local consumption. This would certainly appeal to those who worry about “food miles”—the cost in terms of carbon dioxide of shipping edible items around the world. How it will go down with farmers in places whose climates are being imitated in rich-country cities remains to be seen. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21700166/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Crops of the future + +Tinker and tailor + +Farms need better products. Improved genomic understanding will provide them + +Jun 11th 2016 | From the print edition + +Looking for better cassava + +C4 SOUNDS like the name of a failed electric car from the 1970s. In fact, it is one of the most crucial concepts in plant molecular biology. Plants have inherited their photosynthetic abilities from bacteria that took up symbiotic residence in the cells of their ancestors about a billion years ago. Those bacteria’s descendants, called chloroplasts, sit inside cells absorbing sunlight and using its energy to split water into hydrogen and oxygen. The hydrogen then combines with carbon dioxide to form small intermediate molecules, which are subsequently assembled into sugars. This form of photosynthesis is known as C3, because these intermediates contain three carbon atoms. Since the arrival of chloroplasts, though, evolution has discovered another way to photosynthesise, using a four-carbon intermediate. C4 photosynthesis is often more efficient than the C3 sort, especially in tropical climes. Several important crops that started in the tropics use it, notably maize, millet, sorghum and sugar cane. + +C4 photosynthesis is so useful that it has evolved on at least 60 separate occasions. Unfortunately, none of these involved the ancestors of rice, the second most important crop on Earth, after wheat. Yet rice, pre-eminently a tropical plant, would produce yields around 50% bigger than at present if it took the C4 route. At the International Rice Research Institute in Los Banos, outside Manila, researchers are trying to show it how. + +The C4 Rice Project, co-ordinated by Paul Quick, is a global endeavour, also involving biologists at 18 other laboratories in Asia, Australia, Europe and North America. Their task involves adding five alien enzymes to rice, to give it an extra biochemical pathway, and then reorganising some of the cells in the plant’s leaves to create special compartments in which carbon dioxide can be concentrated in ways the standard C3 mechanism does not require. Both of these things have frequently happened naturally in other plants, which suggests that doing them artificially is not out of the question. The team has already created strains of rice which contain genes plucked from maize plants for the extra enzymes, and are now tweaking them to improve their efficacy. The harder part, which may take another decade, will be finding out what genetic changes are needed to bring about the compartmentalisation. + +The C4 Rice Project thus aims to break through the yield plateaus and return the world to the sort of growth rates seen in the heady days of the Green Revolution. Other groups, similarly motivated, are working on making many types of crops resistant to drought, heat, cold and salt; on inducing greater immunity to infection and infestation; on improving nutritional value; on making more efficient use of resources such as water and phosphorous; and even on giving to plants that do not have it the ability to fix nitrogen, an essential ingredient of proteins, directly from the air instead of absorbing it in the form of nitrates. Such innovations should be a bonanza. Unfortunately, for reasons both technical and social, they have so far not been. But that should soon change. + +The early days of genetically engineered crops saw two huge successes and one spectacular failure. The successes were the transfer into a range of plants, particularly maize, soyabeans and cotton, of two types of gene. Both came from bacteria. One protected its host from the attentions of pesky insect larvae. The other protected it from specific herbicides, meaning those herbicides could be used more effectively to keep fields free from weeds. Both are beloved of farmers. + +The spectacular failure is that neither is beloved of consumers. Some are indifferent to them; many actively hostile. Even though over decades there has been no evidence that eating genetically modified crops is harmful to health, and little that they harm the environment, they have been treated as pariahs. + +Since people do not eat cotton, and soyabeans and maize are used mainly as animal fodder, the anti-GM lobby’s impact on those crops has been muted. But the idea of extending either the range of crops modified or the range of modifications available has (with a few exceptions) been thought commercially too risky to try. Moreover, transgenics, as the technique of moving genes from one species to another is called, is haphazard. Where the moved gene will end up is hard to control. That matters, for genes work better in some places than others. + +Spell it for me + +The search has therefore been on for a better way than transgenics of doing things. And one is now emerging that, its supporters hope, may kill both the technical and the social birds with a single stone. Genome editing, as this approach is known, tweaks existing DNA in situ by adding, subtracting or substituting a piece that may be as small as a single genetic “letter” (or nucleotide). That not only makes the technique precise, it also resembles the natural process of mutation, which is the basis of the variety all conventional plant-breeding relies on. That may raise fewer objections among consumers, and also holds out the hope that regulators will treat it differently from transgenics. + + + +After a couple of false starts, most researchers agree that a technique called CRISPR/Cas9, derived from a way that bacteria chop up the genes of invading viruses, is the one that will make editing crop genomes a realistic prospect. Transgenic technology has steered clear of wheat, which is eaten mainly by people. But DuPont’s seed division, Pioneer, is already trying to use CRISPR/Cas9 to stop wheat from self-pollinating, in order to make the development of hybrids easier. Similarly, researchers at the Chinese Academy of Sciences are using it to try to develop wheat plants that are resistant to powdery mildew, a serious hazard. + +Genome editing resembles the natural process of mutation + +Not all current attempts at agricultural genome editing use CRISPR/Cas9. Cibus, in San Diego, for example, employs a proprietary technique it calls the Rapid Trait Development System (RTDS). This co-opts a cell’s natural DNA repair mechanism to make single-nucleotide changes to genomes. RTDS has already created one commercial product, a form of rape resistant to a class of herbicides that conventional transgenics cannot protect against. But at the moment CRISPR/Cas9 seems to be sweeping most things before it—and even if it stumbles for some reason, other bacterial antiviral mechanisms might step in. + +Whether consumers will accept genome editing remains to be seen. No one, however, is likely to object to a second rapidly developing method of crop improvement: a souped-up breeding technique called genomic selection. + +Genomic selection is a superior version of marker-assisted selection, a process which has itself been replacing conventional crop-breeding techniques. Both genomic selection and markerassisted selection rely on recognising pieces of DNA called markers found in or near places called quantitative trait loci (QTLs). A QTL is part of a genome that has, because of a gene or genes within it, a measurable, predictable effect on a phenotype. If the marker is present, then so is the QTL. By extension, a plant with the marker should show the QTL’s phenotypic effect. + +The difference between conventional marker-assisted selection and the genomic version is that the former relied on a few hundred markers (such as places where the DNA stuttered and repeated itself) that could be picked up by the technology then available. Now, improved detection methods mean single-nucleotide polymorphisms, or SNPs (pronounced “snips”), can be used as markers. A SNP is a place where a single genetic letter varies in an otherwise unchanging part of the genome, and there are thousands of them. + +Add in the enormous amounts of computing power available to link SNPs with QTLs—and, indeed, to analyse the interactions between QTLs themselves—and the upshot is a system that can tell a breeder which individual plants are worth raising to maturity, and which should then be crossed with each other to come up with the best results. + +Crop strains created this way are already coming to market. AQUAmax and Artesian are drought-tolerant strains of maize developed, respectively, by DuPont and Syngenta. These two, intriguingly, are competitors with another drought-tolerant maize strain, DroughtGuard, developed by Monsanto using the transgenic approach. + +Genomic selection also offers opportunities for the scientific improvement of crops that seed companies usually neglect. The NextGen Cassava Project, a pan-African group, plans to zap susceptibility to cassava mosaic virus this way and then systematically to improve the yield and nutritional properties of the crop. The project’s researchers have identified 40,000 cassava SNPs, and have now gone through three generations of genomic selection using them. Besides making cassava resistant to the virus, they also hope to double yields and to increase the proportion of starch (and thus the nutritional value) of the resulting strains. If modern techniques can similarly be brought to bear on other unimproved crops of little interest to the big seed companies, such as millet and yams, the yield-bonuses could be enormous. + +For the longer term, some researchers have more radical ambitions. A manifesto published last year by Donald Ort, of the United States Department of Agriculture’s Agricultural Research Service, and his colleagues proposes not merely recapitulating evolution but actually redesigning the photosynthetic process in ways evolution has not yet discovered. Dr Ort suggests tweaking chlorophyll molecules in order to capture a wider range of frequencies and deploy the resulting energy more efficiently. He is also looking at improving the way plants absorb carbon dioxide. The result, he hopes, will be faster-growing, higher-yielding crops. + +Such ideas are controversial and could take decades to come to fruition. But they are not fantastic. A combination of transgenics (importing new forms of chlorophyll from photosynthetic bacteria), genome editing (to supercharge existing plant enzymes) and genomic selection (to optimise the resulting mixture) might well be able to achieve them. + +Those who see this as an unnatural, perhaps even monstrous approach to crop improvement should recall that it is precisely what happened when the ancestors of modern plants themselves came into existence, through the combination of a bacterium and its host and their subsequent mutual adjustment to live in symbiosis. It was this evolutionary leap which greened the Earth in the first place. That something similar might re-green it is at least worth considering. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21700172/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Fish farming + +Catch of the day + +Farming marine fish inland will relieve pressure on the oceans + +Jun 11th 2016 | From the print edition + +How big was yours? + +IN THE basement of a building on a wharf in Baltimore’s inner harbour, a group of aquaculturists at the Institute of Marine and Environmental Technology is trying to create an artificial ecosystem. Yonathan Zohar and his colleagues hope to liberate the raising of ocean fish from the ocean itself so that fish farms can be built inland. Fresh fish, served the day it comes out of the brine (even if the brine in question is a judicious mixture of tap water and salts), would thus become accessible to millions of landlubbers who must now have their fish shipped in from afar, deep-frozen. Equally important, marine-fish farmers would no longer have to find suitable coastal sites for penning stock while it grows to marketable size, exposing the crowded animals to disease and polluting the marine environment. + +People have raised freshwater fish in ponds since time immemorial, but farming species such as salmon that live mainly in saltwater dates back only a few decades, as does the parallel transformation of freshwater aquaculture to operate on an industrial scale. Now fish farming is booming. As the chart on the next page shows, human consumption of farmed fish has overtaken that of beef. Indeed, one way of supplying mankind with enough animal protein in future may be through aquaculture. To keep the boom going, though, technologists like Dr Zohar must become ever more inventive. + +His ecosystem, which is about to undergo commercial trials, constantly recycles the same supply of brine, purified by three sets of bacteria. One set turns ammonia excreted by the fish into nitrate ions. A second converts these ions into nitrogen (a harmless gas that makes up 78% of the air) and water. A third, working on the solid waste filtered from the water, transforms it into methane, which—via a special generator—provides part of the power that keeps the whole operation running. The upshot is a closed system that can be set up anywhere, generates no pollution and can be kept disease-free. It is also escape-proof. That means old-world species such as sea bream and sea bass, which cannot now be grown in America because they might get out and breed in the wild, could be delivered fresh to the table anywhere. + +Besides transforming the design of fish farms, Dr Zohar is also working on extending the range of species that they can grow. He has spent decades studying the hormone system that triggers spawning and can now stimulate it on demand. He has also examined the needs of hatchling fry, often completely different from those of adult fish, that must be met if they are to thrive. At the moment he is trying to do this for one of the most desirable species of all, the bluefin tuna. If he succeeds, and thus provides an alternative to the plummeting wild populations of this animal, sushi lovers around the world will be for ever in his debt. + +Gone fishin’ + +Fish farmers used to dream of fitting their charges with transgenes to make them grow more quickly. Indeed, over the past couple of decades researchers have treated more than 35 fish species in this way. They have often been spectacularly successful. Only one firm, though, has persisted to the point of regulatory approval. AquaBounty’s transgenic Atlantic salmon, now cleared in both America and Canada, has the desirable property of rapid growth. Its transgene, taken from a chinook salmon, causes it to put on weight all year round, not just in spring and summer. That halves the time the fish will take to reach marketable size. Whether people will be willing to eat the result, though, is an experiment in its own right—one that all those other researchers, only too aware of widespread public rejection of transgenic crops, have been unwilling to conduct. + +That may be wise. There is so much natural variation in wild fish that conventional selective breeding can make a big difference without any high-tech intervention. Back in 2007 a report by researchers at Akvaforsk, now part of the Norwegian Institute of Food, Fisheries and Aquaculture Research (NOFIMA), showed that three decades of selective breeding by the country’s salmon farmers had resulted in fish which grew twice as fast as their wild progenitors. Admittedly starting from a lower base, those farmers had done what AquaBounty has achieved, but without the aid of a transgene. + +If conventional selection can yield such improvements, it is tempting not to bother with anything more complicated. Tempting, but wrong. For, as understanding of piscine DNA improves, the sort of genomic selection being applied to crops can also be applied to fish. + + + +Researchers at SalmoBreed of Bergen, in Norway, have employed it not to create bigger, faster-growing fish but to attack two of fish farming’s banes—infestation and infection. By tracking SNPs (single-nucleotide polymorphisms, a variation of a single genetic letter in a genome used as a marker) they have produced varieties of salmon resistant to sea lice and also to pancreas disease, a viral illness. They are now looking into a third problem, amoebic gill disease. In Japan, similar work has led to the development of flounders resistant to viral lymphocystis, trout immune to “cold-water” disease, a bacterial infection, and amberjack that evade the attentions of a group of parasitic worms called the monogenea. + +Altering nature, then, is crucial to the success of fish farming. But nurture can also give a helping hand, for example by optimising what is fed to the animals. As with any product, one key to success is to get costs down. And here, environmental and commercial considerations coincide. + +A common complaint by green types is that fish farming does not relieve as much pressure on the oceans as it appears to, because a lot of the feed it uses is made of fish meal. That simply transfers fishing pressure from species eaten by people directly to those that get turned into such meal. But fish meal is expensive, so researchers are trying to reduce the amount being used by substituting plant matter, such as soya. In this they have been successful. According to a paper published last year by researchers at NOFIMA, 90% of salmon feed used in Norway in 1990 was fish meal. In 2013 the comparable figure was 30%. Indeed, a report published in 2014 by the European Parliament found that fish-meal consumption in aquaculture peaked in 2005. + +It’s a gas + +Feeding carnivores like salmon on plants is one way to reduce both costs and environmental harm. Another, which at first sight seems exotic, is to make fish food out of natural gas. This is the proposed business of Calysta, a Californian firm. Calysta feeds the gas—or, rather, its principal component, methane—to bacteria called methanotrophs. These metabolise the methane, extract energy from it and use the atoms thus liberated, along with oxygen from water and nitrogen from the air, to build their bodies. Calysta then turns these bodies into protein pellets that are sold as fish food, a process that puts no strain at all on either sea or field. + +Even conventional fish foods, though, are low-strain compared with feed for farm animals. Because fish are cold-blooded, they do not have to eat to stay warm. They thus convert more of their food into body mass. For conservationists, and for those who worry whether there will be enough food in future to feed the growing human population, that makes fish a particularly attractive form of animal protein. + +Nevertheless, demand for the legged and winged sort is growing too. Novel technologies are therefore being applied to animal husbandry as well. And some imaginative researchers are even trying to grow meat and other animal products in factories, cutting the animals out of the loop altogether. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21700168/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Animal husbandry + +Stock answers + +Technology can improve not only productivity but animal welfare too + +Jun 11th 2016 | From the print edition + +The $350,000 hamburger + +IF THE future of farming is to be more factory-like, some might argue that the treatment of stock animals such as chickens and pigs has led the way. Those are not, though, happy precedents. Crop plants, unsentient as they are, cause no welfare qualms in those who worry about other aspects of modern farming. Even fish, as long as they are kept healthy, rarely raise the ire of protesters. Birds and mammals are different. There are moral limits to how they can be treated. They are also individually valuable in a way that crop plants and fish are not. For both these reasons, they are worth monitoring one at a time. + +Cattle, in particular, are getting their own private sensors. Devices that sit inside an animal’s rumen, measuring stomach acidity and looking for digestive problems, have been available for several years. They have now been joined by movement detectors such as that developed by Smartbell, a small firm in Cambridge, England. This sensor hangs around a cow’s neck, recording its wearer’s movement and transmitting that information to the cloud. An animal’s general activity level is a good indication of its fitness, so the system can give early warning of any trouble. In particular, it immediately shows when its wearer is going lame—a problem that about a fifth of British cattle suffer at some point in their lives. If picked up early, lameness is easily treated. If permitted to linger, it often means the animal has to be destroyed. + +Movement detectors can also show if a cow is ready for insemination. When she is in oestrus, her pattern of movement changes, and the detector will pick this up and alert her owner. Good breeding is crucial to animal husbandry, and marker-assisted genomic selection will ensure that the semen used for such insemination continues to yield better and better offspring. What is less clear—and is actively debated—is whether genome editing has a role to play here. Transgenics has given an even wider berth to terrestrial animals than it has to fish, and for the same reason: wary consumers. Some people hope, though, that this wariness will not apply to animals whose DNA has merely been tweaked, rather than imported from another species, especially if the edits in question will improve animal welfare as well as farmers’ profits. + +Following this line of thinking, Recombinetics, a firm in St Paul, Minnesota, is trying to use genome editing of the sort now being employed on crops to create a strain of hornless Holstein cattle. Holsteins are a popular breed for milking, but their horns make them dangerous to work with, so they are normally dehorned as calves, which is messy, and painful for the animal. Scott Fahrenkrug, Recombinetics’ founder, therefore had the idea of introducing into Holsteins a DNA sequence that makes certain beef cattle hornless. This involved deleting a sequence of ten nucleotides and replacing it with 212 others. + +Bruce Whitelaw at the Roslin Institute, in Scotland, has similarly edited resistance to African swine fever into pigs, by altering a gene that helps regulate immune responses to this illness to make it resemble the version found in warthogs. These wild African pigs have co-evolved with the virus and are thus less susceptible to it than are non-African domesticated animals. Randall Prather at the University of Missouri has similarly created pigs that cannot catch porcine reproductive and respiratory syndrome, an illness that costs American farmers alone more than $600m a year. And at the International Livestock Research Institute in Nairobi, Steve Kemp and his colleagues are considering editing resistance to sleeping sickness, a huge killer of livestock, into African cattle. All this would make the animals healthier and hence happier as well. + +Not all such work is welfare-oriented, though. Dr Fahrenkrug has also been working on a famous mutation that increases muscle mass. This mutation, in the gene for a protein called myostatin, is found naturally in Belgian Blue cattle. Myostatin inhibits the development of muscle cells. The Belgian-Blue mutation disrupts myostatin’s structure, and thus function. Hence the animals’ oversize muscles. Two years ago, in collaboration with researchers at Texas A&M University, Dr Fahrenkrug edited the myostatin gene of a member of another breed of cattle to do likewise. + +Where’s the beef? + +There may, though, be an even better way to grow muscle, the animal tissue most wanted by consumers, than on animals themselves. At least two groups of researchers think it can be manufactured directly. In 2013 Mark Post of Maastricht University, in the Netherlands, unveiled the first hamburger made from muscle cells grown in laboratory cultures. In February this year a Californian firm called Memphis Meats followed suit with the first meatball. + +Dr Post’s original hamburger, which weighed 140 grams, was assembled from strips of muscle cells grown in Petri dishes. Including all the set-up costs, it was said to have cost €250,000 ($350,000), or $2.5m a kilogram. Scaling up the process will bring that figure down a lot. This means growing the cells in reactor vessels filled with nutrient broth. But, because such cells are supposed to be parts of bodies, they cannot simply float around in the broth in the way that, for example, yeast cells used in biotechnology can. To thrive, they must be attached to something, so the idea is to grow them on small spheres floating in the vessels. Fat cells, which add juiciness to meat, would be cultured separately. + +Do this successfully, Dr Post reckons, and the cost would fall to $65 a kilogram. Add in technological improvements already under way, and he hopes that Mosa Meat, the firm he has founded to exploit his work commercially, will have hamburger mince ready for sale (albeit at the pricey end of the market) in five years’ time. + +Meanwhile researchers at Clara Foods, in San Francisco, are developing synthetic egg white, using transgenic yeast to secrete the required proteins. Indeed, they hope to improve on natural egg white by tweaking the protein mix to make it easier to whip into meringues, for example. They also hope their synthetic white will be acceptable to people who do not currently eat eggs, including vegans and some vegetarians. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21700169/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Towards 2050 + +Vorsprung durch Technik + +Technology will transform farmers’ lives in both the rich and the poor world + +Jun 11th 2016 | From the print edition + + + +ONE of the greatest unsung triumphs of human progress is that most people are no longer working on the land. That is not to demean farming. Rather, it is to praise the monumental productivity growth in the industry, achieved almost entirely by the application of technology in the form of farm machinery, fertilisers and other agrochemicals, along with scientifically improved crops and livestock. In 1900 around 41% of America’s labour force worked on a farm; now the proportion is below 2%. The effect is less marked in poorer countries, but the direction of travel is the same. The share of city-dwellers in the world’s total population reached 50% in 2007 and is still rising relentlessly, yet the shrinking proportion of people living in the countryside is still able to feed the urban majority. + +No crystal ball can predict whether that will continue, but on past form it seems perfectly plausible that by 2050 the planet will grow 70% more food than it did in 2009, as the Food and Agriculture Organisation (FAO) says it needs to. Even though some crops in some parts of the world have reached a productivity plateau, cereal production increased by 11% in the six years after the FAO made that prediction. The Malthusian fear that population growth will outstrip food supply, now 218 years old, has not yet come true. + +Yet just as Thomas Malthus has his modern-day apologists, so does his mythical contemporary, Ned Ludd. Neo-Luddism is an ever-present threat that can certainly slow down the development of new technologies—as has indeed happened with transgenics. But while it is fine for the well-fed to be prissy about not eating food containing genetically modified ingredients, their fears have cast a shadow over the development of transgenic crops that might help those whose bellies are not so full. That is unconscionable. With luck, the new generation of genome-edited plants, and maybe even animals, will not provoke such a reaction. + +Regardless of whether it does, though, some other trends seem near-certain to continue into the future. Precision agriculture will spread from its North American heartland to become routine in Europe and those parts of South America, such as Brazil, where large arable farms predominate. And someone, perhaps in China, will work out how to apply to rice the sort of precision techniques now applied to soyabeans, maize and other crops. + +The technological rationale for precision suggests farms should continue to consolidate, though in an industry in which sentiment and family continuity have always played a big part, this may not happen as fast as it otherwise would. Still, regardless of the speed at which they arrive, these large holdings will come more and more to resemble manufacturing operations, wringing every last ounce of efficiency out of land and machinery. + +Such large-scale farms will probably continue to be served by large-scale corporations that provide seeds, stock, machines and management plans. But, in the case of the management plans, there is an opening for new firms with better ideas to nip in and steal at least part of the market. + +Other openings for entrepreneurs are available, too. Both inland fish farming and urban vertical farming—though niche operations compared with Midwestern soyabean cultivation or Scottish sea-loch salmon farms—are waves of the future in the service of gustatorially sophisticated urbanites. And in these businesses, the idea of farm as factory is brought to its logical conclusion. + +It is in the poorer parts of the world, though, that the battle for full bellies will be won or lost; and in Africa, in particular, the scope for change is both enormous and unpredictable. Though the problems of African farming are by no means purely technological—better roads, better education and better governments would all help a great deal—technology nevertheless has a big part to play. Organisations such as the NextGen Cassava Project, which apply the latest breeding techniques to reduce the susceptibility of crops to disease and increase their yield and nutritional value, offer Africans an opportunity to leap into the future. Crops could similarly jump from 18th- to 21st-century levels of potential in a matter of years, even if converting that potential into productivity still requires the developments listed earlier. + +Looking further into the future, the picture is hazier. Large-scale genetic engineering of the sort needed to create C4 rice, or nitrogen-fixing wheat, or enhanced photosynthetic pathways, will certainly cause qualms, and maybe not just among the neo-Luddites. And they may not be needed. It is a general technological truth that there are more ideas than applications, and perfectly decent ones fall by the wayside because others have got there first. But it is good to know that the big ideas are there, available to be drawn on in case other yield plateaus threaten the required rise in the food supply. It means that the people of 2050, whether they live in Los Angeles, Lucknow or Lusaka, will at least be able to face whatever other problems befall them on a full stomach. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21700170/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Business + + + +The internet of things: Where the smart is [Fri, 10 Jun 14:21] + +The internet of things: Job opening [Fri, 10 Jun 14:21] + +Google’s other businesses: Alpha minus [Fri, 10 Jun 14:21] + +Marketing rebates: Trust me [Fri, 10 Jun 14:21] + +Fosun: Bloated but still bingeing [Fri, 10 Jun 14:21] + +Household chemicals in South Korea: The germ of an idea [Fri, 10 Jun 14:21] + +Airlines in South America: No El Dorado [Fri, 10 Jun 14:21] + +Schumpeter: Their eyes on Albion [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +The internet of things + +Where the smart is + +Connected homes will take longer to materialise than expected + +Jun 11th 2016 | SAN FRANCISCO | From the print edition + + + +THE fanfare has gone on for years. Analysts have repeatedly predicted that the “internet of things”, which adds sensors and internet capability to everyday physical objects, could transform the lives of individuals as dramatically as the spread of the mobile internet. Providers have focused on the home, touting products such as coffee pots that turn on when the alarm clock rings, lighting and blinds that adjust to the time of day, and fridges that send an alert when the milk runs out. But so far consumers have been largely resistant to making their homes “smart”. + +That’s not for want of trying by tech firms, which have poured cash into their efforts to connect everyday objects to the internet. In 2014 Google made the biggest statement of intent so far, spending $3.2 billion to acquire Nest, a smart thermostat-maker, and $550m to buy Dropcam, which makes home-security cameras. Nest absorbed Dropcam; it is now one of the best-known smart-home brands. But it is also a warning about how long it will take for such gadgets to enter the mainstream. + +Nest has undoubtedly disappointed Google. It sold just 1.3m smart thermostats in 2015, and only 2.5m in total over the past few years, according to Strategy Analytics, a research firm. For a couple of years the firm has mainly tweaked existing products rather than introducing new ones. That may explain why Tony Fadell, Nest’s founder and boss, stepped down on June 3rd to take an advisory role at Google’s parent company, Alphabet (see article). Mr Fadell, a former executive at Apple and designer of the iPod, failed to bring his magic touch to the smart home. + +Nest’s problems are symptomatic. Only 6% of American households have a smart-home device, including internet-connected appliances, home-monitoring systems, speakers or lighting, according to Frank Gillett of Forrester, a research firm. Breakneck growth is not expected; by 2021 the number will be just over 15% (see chart). Too few consumers are convinced that the internet has a role to play in every corner of their lives. A survey conducted in Britain by PricewaterhouseCoopers, a consulting firm, found that 72% of people have no plans to adopt smart-home technology in the next two to five years and that they are unwilling to pay for it. Last year consumers globally spent around $60 billion on hardware and services for the smart home, a fraction of the total outlay on domestic gadgets. + + + +There are several reasons for muted enthusiasm. Businesses have an incentive to embrace the internet of things: there are cost savings to be had from embedding sensors in equipment and factories, analysing the data thus produced and improving efficiency. A lot of smart devices for the home, in contrast, remain “fun but not essential”, says Adam Sager of Canary, a startup that makes cameras that lets people monitor what is happening in their house. + +Many smart gadgets are still too expensive. One of Samsung’s smart fridges, with cameras within that check for rotting food and enable consumers to see what they are short of while shopping (through an app on their phone), sells for a cool $5,000. People who can afford that probably don’t do their own shopping. Appliances such as fridges are also ones that households replace infrequently: that slows the take-up of new devices. + +The technology is not perfect yet, either. The smartphone, the link between the customer and smart-home device, has raised consumers’ expectations, explains Jamie Siminoff, the boss of Ring, a startup that makes a doorbell that can be answered remotely. Smartphones have trained users to expect a level of quality and seamless ease of use that smart-home devices struggle to replicate. And a lack of standardisation means that gadgets from different firms cannot communicate with each other. + +There are exceptions. Devices that are easy to install and offer obvious benefits are gaining in popularity, such as motion sensors that send alerts when windows and doors are opened and cameras to monitor activity. Some devices, such as smart smoke detectors, are in homes because insurance companies offer financial incentives for using them. The smart-home sector is vibrant with startups and big firms betting that the hesitancy is temporary. But consumer apathy has forced firms to rethink how they might woo customers. + +Perhaps the biggest surprise is that Amazon, which failed miserably in its ambition to develop a smartphone, is showing the way. Amazon Echo is a smart speaker that can recognise and respond to voice commands. It shares information about the weather and sports scores, plays music and turns lights on and off. The device, which costs around $180, is not yet a big seller. Amazon does not release sales figures, but Strategy Analytics estimates that fewer than 1m Echos have been sold since it was released in November 2014. Yet the Echo is the talk of Silicon Valley. + +Talk to your appliance + +An interface that relies on voice commands could overcome one of the drawbacks of the piecemeal approach to the smart home, by becoming the standard integrator of all the other bits of smart kit. Echo is open to outside developers, who can come up with all manner of devices and services that hook up with it. Echo’s success may have come as a surprise, but competitors have cottoned on that it may be a crucial piece of equipment. Google has announced plans to build a stand-alone hub like Echo, called Google Home, which will also rely on voice commands. + +Apple is also expected to announce new smart-home capabilities: there are rumours it could launch a stand-alone hub in the Echo vein at its annual developers’ conference on June 13th. Its smart-home platform, called HomeKit, has been a failure so far. That Apple, despite its large base of affluent acolytes, has not yet cracked the smart home is a sign of its difficulty, points out Geoff Blaber at CCS Insight, which tracks mobile-industry trends. + +Each tech giant has a different reason for trying to overcome the indifference of consumers, and to embed itself more deeply in the home. The Echo can help Amazon learn how people spend their time, and make it easier for them to spend money too by suggesting things they might buy. Google, whose main business is advertising, also wants to draw from a fresh well of data; by learning as much about users as possible, it can target them with appropriate ads. Apple, with a track record of simplifying and creating ecosystems where others before it could not, wants its devices to be the gateway through which people go to organise their lives. + +If the tech giants retain their ambition to sit at the centre of the smart home, uncertainty prevails over where the profits lie. “It remains unclear what the economic model for the smart home will be,” says Andy Hobsbawm of Evrythng, an internet-of-things platform. Some firms will try to make enough profit just from hardware. Others will try to sell services, such as archiving security videos, as well as devices, and charge a fee. The products that fill houses are diverse, personal and durable. That should give plenty of companies a shot at lodging themselves in the home—but only when consumers decide to put out the welcome mat. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21700380-connected-homes-will-take-longer-materialise-expected-where-smart/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Job opening + +Jun 11th 2016 | From the print edition + +THE ECONOMIST is looking for an investigative reporter to work at its headquarters in London. Research and analytical skills, an ability to write informatively, succinctly and wittily, and insatiable curiosity are essential. Prior investigative experience would be an advantage. Applicants should send a CV, a brief letter introducing themselves and an article of about 600 words that they think would be suitable for publication in the business section to investigatejob@economist.com. The closing date for applications is July 1st 2016. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21700504-job-opening/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Google’s other businesses + +Alpha minus + +Alphabet is still working out how to treat its internal startups + +Jun 11th 2016 | From the print edition + +Who’s the Terminator now? + +“EMPOWERING great entrepreneurs and [allowing] companies to flourish.” This was one of the reasons Larry Page, the co-founder of Google, gave when he announced almost a year ago that the firm would restructure itself. Google, which comprises the internet-search and advertising business, now sits as a subsidiary in a holding company called Alphabet, alongside the “other bets”, a dozen startup businesses that range from fibre networks and smart cities to robotics and life sciences. Yet for now at least, the flourishing is limited and the entrepreneurs seem somewhat less than empowered. + +When Tony Fadell, the boss of Nest, which makes wireless thermostats and other “smart home” devices (see article), resigned last week, it was not only because of Nest’s disappointing results and his abrasive management style, but the fact that he no longer got along with Mr Page. Even before Alphabet was launched, Andy Rubin, who ran the company’s robotics business, also stepped down, apparently because he was bored (he now runs an incubator of hardware startups called Playground). One of the firms he persuaded Google to buy is Boston Dynamics, a maker of artificial dogs and other scary-looking mechanical beasts (see picture). Its founder, Marc Raibert, is known to cherish his autonomy. + +That may help explain why Boston Dynamics is now up for sale. An uncertain path to profitability may also play its part in that decision. The firm’s automatons are a hit on YouTube, but internally Alphabet thinks it will take another decade before they can be put to commercial use. + + + +Daily chart: Alphabet becomes the world’s largest listed company + +Herding entrepreneurs is hard. And bets on new technologies are risky. Yet Alphabet is grappling with a problem that has already troubled many other big tech firms: how much freedom, money and time to give internal startups. As much as it is designed to give entrepreneurs their head, the holding structure is also meant to create more clarity about how much is invested in riskier bets. As such, it marks the beginning of what Mr Fadell has called a “fiscal discipline era”. + +The core Google business is growing nicely and is highly profitable, but the other “moonshot” businesses keep losing money. How much exactly is hard to say because Alphabet only publishes consolidated numbers for these ventures. In 2015 the combined losses for the non-Google businesses hit $3.6 billion on revenue of just $448m. That is a drop in the bucket for Alphabet: it generated $75 billion in revenues and $16.3 billion in profits last year. But a structure that focuses investors’ attention on how these other bets are going may limit flexibility as much as enable it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21700404-alphabet-still-working-out-how-treat-its-internal-startups-alpha-minus/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Marketing rebates + +Trust me + +Advertising agencies are accused of serving themselves + +Jun 11th 2016 | From the print edition + +JUNE is usually a cheerful month for admen: they are scheduled to celebrate their feats at the humbly titled Cannes Lions International Festival of Creativity, which starts on June 18th. Yet the get-together this year may be abuzz with darker talk. On June 7th America’s Association of National Advertisers (ANA), a trade group for marketers, published a report accusing advertising agencies of accepting rebates, or kickbacks, from media companies. A group representing American ad agencies slammed the report as “anonymous, inconclusive, and one-sided”. The brawl is sure to continue. + +The ANA’s report is the culmination of years of conjecture about such rebates, whereby media companies reward agencies for buying chunks of ad space by giving them cash, fees or other benefits. In some countries advertisers know of such rebates and plan for them. In America the practice has haunted the industry. + +Big advertising holding companies such as WPP, which owns several big ad agencies, deny the existence of rebates. Others in the industry say rebates are a shadowy practice, undermining clients’ interests. Last year a former WPP executive declared rebates to be widespread. In October the ANA hired an independent company, K2, to investigate. + +Its report has fanned advertisers’ fears. Based on interviews with 150 anonymous sources, K2 found that rebates are delivered both in cash and in subtler forms. For example, media firms pay fees to agencies for services, such as research, that are often nominal or not provided at all. This is worrisome for clients for at least two reasons. Unbeknown to them, agencies might pocket rebates that should presumably be theirs. Or a client might find itself spending money on a certain ad, not because it fits its marketing strategy but because it allowed the agency to gain a rebate. + +Such findings would stretch even the strongest bond between advertiser and agency. But the relationship is already frayed. Advertisers have long squeezed fees to agencies and remain wary of wasting money. The complexity of the digital ad industry is partly to blame. It is hard to track which fees are paid to which vendors. Too often ads are fraudulently funneled to robots rather than people. + +There is broader concern, too, over conflicts of interest. K2 pointed to holding companies directing advertisers’ spending to firms in which they had invested, as well as buying media space and reselling it to clients at a 90% mark-up. K2’s report reinforces the fear that an agency’s remit to serve clients might clash with a holding company’s duty to shareholders. “There may be lots of transactions that are not necessarily done with the best interest of the marketer in mind,” argues Bob Liodice, president of the ANA. + +Whether the report will lead to legal action remains unclear. K2 did not condemn any company by name, nor label any activity as fraudulent in its study. Agencies may not even have violated the terms of their contracts. + +Nevertheless, the relationship between advertiser and ad agency may become increasingly hostile. Advertisers are likely to become stingier with their budgets, reckons Brian Wieser of Pivotal Research Group, a research firm. They may also seek stricter terms. In April a British advertisers’ trade group published a new template for contracts, including broad rights to audit agencies. The ANA is now developing its own scheme, to be finalised by the end of June. Advertisers are likely to think much longer and harder before signing on the dotted line. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21700427-advertising-agencies-are-accused-serving-themselves-trust-me/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Fosun + +Bloated but still bingeing + +China’s leading industrial conglomerate needs to shed debt + +Jun 11th 2016 | SHANGHAI | From the print edition + +Aiming high + +GUO GUANGCHANG made headlines around the world in December when the billionaire industrialist suddenly disappeared, supposedly to co-operate “voluntarily” with Chinese anti-corruption investigators at a secret location. Shares in his company, Fosun, China’s biggest private-sector conglomerate, tumbled. Potential takeovers abroad began to unravel. He was released without accusation of wrongdoing, but the incident served as a warning about political risk in China. Mr Guo recently downplayed the incident: “Half a year has already passed…we are back to normal.” + +That is not the good news it seems, because “normal” involves an even bigger risk. Fosun has vast debts after an orgy of foreign acquisitions that has cost, by one estimate, around $30 billion. In recent years, it has acquired France’s Club Med, a resort operator, and bought stakes in Britain’s Thomas Cook, a travel agent, and in Canada’s Cirque du Soleil, an entertainment troupe. + +Fosun has also been buying insurance firms worldwide. That is not going entirely smoothly. It confirmed on June 4th that one recent acquisition, of Bermuda-based Ironshore, is being reviewed by an American agency that handles national-security matters. Inspired by Warren Buffett’s business model, Mr Guo is buying insurers to use the “float”, money held to pay future claims, to invest in other businesses in the meantime. + +This binge led Standard & Poor’s to downgrade Fosun’s debt to negative on June 4th. The ratings agency pointed to the rise in the firm’s ratio of debt to EBITDA (a measure of profitability) for its industrial operations from 9.1 in 2014 to 16.8 last year. It also noted that industrial operations still accounted for over four-fifths of Fosun’s consolidated revenues at the end of 2015, suggesting that a transformation into China’s Berkshire Hathaway has not quite come off, yet. + +Mr Guo is understandably keen to reassure investors. In his most recent letter to shareholders, he vowed the firm would “optimise the debt structure so as to reduce financing cost”. He also claimed recently that he has a “clear plan” to upgrade his firm’s debt to investment-grade “as soon as possible”. This too is not the good news it seems. His plan involves lots of new acquisitions. + +The Chinese tycoon says he plans to shift his focus to deals in big emerging markets. On June 6th reports emerged that Fosun’s offer of $1.3 billion to acquire India’s Gland Pharma is the highest bid from the firm’s suitors. But it continues to expand in the rich world, too. News surfaced this week that it is bidding for a stake in Compagnie des Alpes, another European tourism firm. + +Despite the mountain of debt, Mr Guo vows to turn his firm into “the world’s leading service provider…of health, wealth and happiness” within a decade. If he means it, investors in Fosun may end up less worried about the disappearance of Mr Guo than that of their money. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21700406-chinas-leading-industrial-conglomerate-needs-shed-debt-bloated-still-bingeing/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Household chemicals in South Korea + +The germ of an idea + +A probe into deadly disinfectants spurs South Koreans to go green + +Jun 11th 2016 | SEOUL | From the print edition + +No more soft-soaping + +“HARMLESS to humans”, assured the slogan on humidifier disinfectants sold to South Koreans in the early 2000s by Oxy, a local unit of Reckitt Benckiser, an Anglo-Dutch consumer-goods company. A widening criminal investigation by South Korea’s government into dozens of cases of lung disease, some of them fatal, suggests the opposite. It is now examining compensation claims by another 750 victims, on top of the 530 lodged since 2011. + +Chemical sanitisation in homes and offices is prized as a sign of the country’s rapid progress since its economic take-off in the 1980s lifted millions from squalor and disease. Killing germs, says Lee Duck-hwan, a professor of chemistry and communication at Sogang University in Seoul, became the “single most important topic of daily discussions” in the 1980s. Since then, everything from baby soap to washing machines has claimed to act as a steriliser—something Mr Lee decries as “phobia marketing”. So it is a particular blow when it turns out that products which should improve cleanliness might do harm. + +The government suspended sales of the disinfectants sold by Oxy and three other local companies in 2011, after an investigation into the deaths that year of four pregnant women suggested poisonous chemicals in their products were the cause. A government study recently revealed that exposure to the sterilisers had multiplied the risk of severe lung damage by 116 times. Prosecutors charged three executives at Oxy in May with shirking toxicity tests on the disinfectant. On June 7th John Lee, formerly head of the local unit of Reckitt Benckiser and now boss of Google Korea, was summoned again by prosecutors for another round of questions about the toxic steriliser. South Koreans are incensed that it has taken so long for the government to act, despite their protest campaigns. In the decade after 2001 South Koreans bought over 4.5m of Oxy’s suspect products. + +In quick succession in late April, two South Korean retailers who sold the disinfectants under their own brands—Lotte Mart and Homeplus—issued apologies and promised compensation, followed by Oxy itself, which, for the first time, accepted the “fullest responsibility”. Retailers have stopped ordering Reckitt Benckiser products altogether. The government recently said that it had reviewed 15,000 products, from deodorisers to detergents, and had banned seven biocides, the compounds that kill germs, for containing prohibited chemicals. + +Nevertheless, the scandal is starting to change the way South Koreans shop. Consumers are shunning laundry liquids, wet wipes and air fresheners. E-Mart, another retailer, says sales of bleach fell by 38% in the three weeks following Lotte’s apology; dehumidifying detergents dropped by almost half. Long-standing customers of Dure Co-op, a network of organic shops in the Seoul region, say even they use chemical detergents because they are more effective at killing germs. But since the scandal they have dumped their Oxy products in a dedicated box at the entrance to the store. Those who do can buy Dure’s alternative cleaning products at half-price, among them an air freshener made from citric acid and plant-derived anti-microbials. + +The manager of the co-operative says that more have been buying up “green” household products, especially since the “no-poo” movement, which renounces shampoo, caught on in South Korea last year. South Korean newspapers now refer to this new group as the “no-chemi clan”. Some even make their own products: Bae In-suk is one of ten mothers who meet up regularly in Seoul to make facial soaps since the Oxy scandal has mushroomed. + +Mr Lee says the government’s recent promise to catalogue the level of toxicity of every household biocide is impractical. So too, he says, is the no-chemi movement—it is better to educate consumers about how to use products safely. Hwahae, a cosmetics-reviewing app launched in 2013 (by three men who wanted to know what exactly was in their facial products) has already clocked up 2.5m downloads. It lets consumers read up on 1.9m ingredients in 62,000 items. It is always good to know what you are rubbing on your face. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21700428-probe-deadly-disinfectants-spurs-south-koreans-go-green-germ-idea/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Airlines in South America + +No El Dorado + +Why the continent’s airlines are losing so much money + +Jun 11th 2016 | From the print edition + + + +WHEN phone footage came to light last year of a stripper opening the throttle during the take-off of a commercial jet operated by Aerolíneas Argentina, the public outcry was predictably fierce. Argentina’s state-owned flag carrier swiftly sacked the pilots who had invited her into the cockpit and the lady herself was banned from the airline for five years. Endangering the safety of passengers is a serious concern. Yet the company’s assault on the public finances is almost as reckless: Argentines have tolerated vast subsidies and huge losses at their national airline. + +Even without the drag of state ownership, other South American airlines have recently either lost money or made only meagre profits (see chart). Airlines in Latin America as a whole (whose performance is flattered by the inclusion of Mexico’s mostly profitable flyers) even surpassed Africa’s beleaguered carriers in their ability to lose money in 2015, according to IATA, an industry body. That marks them out at a time when the tailwinds of growing passenger numbers and cheap fuel have carried many other airlines to unusual heights of profitability. + + + +The region’s airlines don’t lose money because flights are cheap. Air fares are eye-wateringly pricey—an internal flight in Brazil can cost as much as one to Europe. Travellers have not benefited from the ascent of low-cost carriers (LCCs) because budget airlines are thin on the ground. Outside Brazil’s domestic market, where Azul and Gol carry passengers between the country’s far-flung cities, there are few LCCs and their impact has been limited. As a result, the continent’s growing middle-classes have not taken to the skies as enthusiastically as in the rest of the world. + +This is partly attributable to a lack of infrastructure. There are few secondary airports of the sort frequented by LCCs in Europe or specialist low-cost terminals at bigger airports that are common in Asia. That lands LCCs with the same high airport fees as big carriers. Gol, the largest Brazilian LCC, made a loss of 4.29 billion reais ($1.3 billion) in 2015. + +In some countries, budget carriers have been kept at bay by state-run incumbents. Cash-rich left-wing governments in the region set up or revived flag carriers as money poured in when commodity prices were high. In Bolivia and Venezuela state-owned airlines are virtually the only means of domestic air travel. Appointing cronies has ensured inept management. + +The standard of service on state airlines is often woeful. Aerolíneas cancels three times more flights than the industry average, and loses roughly twice as many bags. Venezuelan travellers have the added problem that foreign airlines are leaving the country in a dispute over how to repatriate money from sales because the government cannot find the dollars to pay them for tickets issued in the country. + +Elsewhere publicly listed airlines provide much better service but are just as hard to dislodge. LAN Chile set up subsidiaries in Peru, Argentina, Ecuador and Colombia before merging with TAM, Brazil’s biggest airline, in 2012. LATAM is now the largest airline across swathes of the continent. In smaller markets such as Peru, Chile, and Ecuador LATAM and Avianca, a Colombian carrier, already have big networks that leave little space for LCCs to operate domestically. Barriers to entry are high: dealing with a slew of differing regulations makes setting up new cross-border routes expensive. + +Why then are the incumbents not making more money? LATAM lost $219m in 2015; Avianca lost $140m. As passenger numbers grew during the commodities boom, most airlines ordered lots of expensive new planes. But just as they arrive on the tarmac, demand for air travel is stumbling. South America is still reeling from the bursting of the commodities bubble. This has hit domestic and cross-border air travel alike. Worries about the spread of the Zika virus have also deterred visitors to the continent. In 2016 growth in passenger traffic in Latin America is likely to lag every other region, according to IATA. + +Some of the continent’s politicians have woken up to the industry’s structural problems. In Argentina, Mauricio Macri, the victor in November’s presidential election, has announced plans to withdraw a $500m subsidy from Aerolíneas. The airline’s new management plans to cut capacity and return to profit by 2020. Brazil is negotiating with the EU for an “open-skies” deal that would boost competition by allowing airlines from those countries to serve any airport in Brazil. Before her impeachment the country’s president, Dilma Rousseff, was said to be considering raising the share foreigners can own in local airlines from 20% to 100%, allowing better-run foreign carriers to buy domestic ones. + +Michel Temer, Brazil’s interim president, is also said to be considering a relaxation of foreign-ownership rules. And intrepid budget carriers will doubtless try to overcome the difficulties and set up routes in more countries. But unless more politicians in the region turn their attention to aviation, South America will continue to be the continent of sky-high fares and limited choice. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21700453-why-continents-airlines-are-losing-so-much-money-no-el-dorado/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Schumpeter + +Their eyes on Albion + +Most European bosses are twitchy about Brexit; a few spy an opportunity + +Jun 11th 2016 | From the print edition + + + +YOU do not have to be British to take a view on Britain’s place in Europe. Almost every global economic institution has predicted damage if Britain leaves the European Union. Barack Obama pooh-poohed Brexiteers’ hopes of striking a quick bilateral trade deal with America, deflating those who claim exporters would flourish outside the EU. Jamie Dimon, the boss of JPMorgan Chase, a big American bank, has called Brexit a “terrible deal for the British economy”. Those with European accents are no more impressed. Angela Merkel, Germany’s chancellor, has warned Britons that trading with the EU itself might prove hard from outside the fold. On May 31st Europe’s biggest businesses chimed in: leaders of 51 large firms—claiming collectively to have created jobs for some 7m people—said a split would diminish both Britain and Europe as a whole. + +These big firms, convened as a “European Round Table of Industrialists”, are led by Benoît Potier, a knight of the French Legion of Honour and the boss of Air Liquide, an industrial giant. Lectures from a titled Frenchman who knows about gases are unlikely to win over wavering voters in the referendum on June 23rd. Those tempted by Brexit are swayed by emotions: fears of foreigners; romantic ideas of sovereignty; Trumpian calls to reverse globalisation. Rational comments from moderate business folk, let alone French ones, pluck few heartstrings. + +Nor is it clear that this group of bosses speaks for everyone on the continent. Schumpeter has spent the past six months asking owners, CEOs, bankers and others in European business what they make of Brexit. They fall into three groups. One lot, a minority, assumes it is not—and never was—a serious prospect, despite some polls in Britain now suggesting the Leave camp is ahead. A phlegmatic Swedish banker, paid to assess political risk and how currencies might move, says he and colleagues rate the chance of rupture at almost zero. Consumer-research and polling companies across Europe recently concluded that few of the businesses they work for expect any change. + +Those who rely on British custom—French property agents selling holiday homes, for example—count Brexit as only one worry of many, along with falling bank bonuses in London, strikes, floods and terrorism. “Spaniards are more worried about the Euro 2016 soccer tournament,” says José Maria de Areilza, a professor at ESADE, a business school in Barcelona. + +A second and larger camp sees Britain’s departure as realistic and a serious threat, for a variety of reasons. Jacob and Marcus Wallenberg, two Swedish industrialists, voiced their fears a year ago that without London as a counterweight to Paris and Berlin the EU would gradually become unfriendlier to business. Others worry about the direct impact on investments in Britain. Both BMW and Nissan have said Brexit would hurt their operations in the country. A representative of one big multinational firm says it has been weighing up contingencies for months, as 80% of production at its British car plants goes to the EU. Given thin profit margins and the risk of tariffs, currency swings or other barriers to trade, it would shift new investment to the continent. + +The first secession since Greenland quit the European Economic Community in 1985 might do even broader damage, by some reckonings. The Paris-based boss of a big car-parts supplier says the main risk is the triggering of wider instability, the “unravelling” of continental institutions and talk of exit by others. Confindustria, Italy’s bosses’ association, says that it does not know of a single CEO in favour of Brexit but that some fret about an “avalanche effect” of turbulence in capital markets and uncertainty in trade negotiations that could cost businesses dearly. + +There is a third group, however. This camp, the least outspoken, is contrarian. Some spy short-term opportunities: a few hedge funds are commissioning private exit polls on the day of the referendum in order to make bets in the currency markets. But others think that Brexit will yield bigger, long-term payoffs. + + + +INTERACTIVE: The Economist’s “Brexit” poll-tracker + +Many in this third group serve the finance industry. Brexit would weaken London, as jobs and business drift to Paris or Frankfurt. HSBC has said it might shift 1,000 investment bankers from London to Paris, if Britain goes it alone. JPMorgan Chase reckons 4,000 staff might be moved to the continent. Property will be needed and IT systems procured from local firms. French lawyers and accountants might replace British ones. And as bankers arrive everyone from estate agents with palatial homes on their books to bar owners can expect a boost to their business. + +Other businesses also see advantages from Brexit. Some firms in Switzerland like the idea of another economy becoming semi-detached, believing it could be easier for the Swiss to negotiate with the EU if Britain were in a similar position. A poll of 185 companies in March by the British-Swiss Chamber of Commerce found 13.5% believed Brexit would improve their fortunes. Universities on the continent, especially those that teach in English, could profit if EU students turn away from Britain. “No way will I send my daughter to study in London after Brexit,” says the mother of one teenager in Paris, predicting that fees in Britain would soar without EU caps. Jean-Christophe Babin, boss of Bulgari, a luxury-goods firm, says he would be untroubled by Brexit for different reasons: if the pound slumped, tourists would boost sales at his new flagship shop in London. + +Lose an island, seize an opportunity + +Polls suggest that public opinion in Europe expects and favours Britain voting to remain in the EU. Even the traditionally snooty French want their neighbours to stay, despite resenting Britain’s exemption on EU financial regulation, and its absence from the Schengen area for passport-free travel and the single currency. Most businesses on the continent are in the Remain camp, too. They see Brexit as, at best, a pain; and at worst, a threat. But the few that stand to gain would happily wave farewell to the Brits. + + + +Jeremy Corbyn, saboteur + +Lacklustre and poorly led, the Labour Party is letting down the Remain campaign + + + +The charms of variable geometry + +Our final Brexit brief argues that a multispeed Europe suits Britain—and others + + + +Beyond the fringe + +Brexiteers are deliberately vague about the alternatives to European Union membership. That is because most models, such as Iceland’s, are unsatisfactory + + + +The new J-curve + +Britain’s flirtation with Brexit is more complicated than an anti-globalisation vote + + + +Young voters! Your country needs you + + + + + +More Brexit coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21700382-most-european-bosses-are-twitchy-about-brexit-few-spy-opportunity-their-eyes-albion/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Finance and economics + + + +Asset management: Index we trust [Fri, 10 Jun 14:21] + +Buttonwood: Secret agents [Fri, 10 Jun 14:21] + +Banks v investors: Of snowballs and red ink [Fri, 10 Jun 14:21] + +Dollar imperialism: The Fed’s tributaries [Fri, 10 Jun 14:21] + +America’s economy: When barometers go wrong [Fri, 10 Jun 14:21] + +The ECB buys corporate bonds: Unyielding [Fri, 10 Jun 14:21] + +Free exchange: Sibyl faulty [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Asset management + +Index we trust + +Vanguard has radically changed money management by being boring and cheap + +Jun 11th 2016 | From the print edition + + + +WHEN John Bogle set up Vanguard Group 40 years ago, there was no shortage of scepticism. The firm was launching the first retail investment fund that aimed simply to mimic the performance of a stock index (the S&P 500, in this case), rather than to identify individual companies that seemed likely to outperform. Posters on Wall Street warned that index-tracking was “un-American”; the chairman of Fidelity, a rival, said investors would never be satisfied with “just average returns”; and the Securities and Exchange Commission (SEC), Wall Street’s main regulator, opposed the firm’s unusual ownership structure. The fund attracted just $11m of the $150m Vanguard had been hoping for, and suffered net outflows for its first 83 months. “We were conceived in hell and born in strife,” Mr Bogle recalls. + +Vanguard now manages over $3.5 trillion on behalf of some 20m investors. Every working day its coffers swell by another billion dollars or so. One dollar in every five invested in mutual or exchange-traded funds (ETFs) in America now goes to Vanguard, as does one in every two invested in passive, index-tracking funds, according to Morningstar, a data provider. Vanguard’s investors own around 5% of every public company in America and about 1% in nearly every public company abroad. Although BlackRock, a rival, manages even more money, Vanguard had net retail inflows of $252 billion in 2015, more than any other asset manager. + +Impressive as they are, however, these statistics still understate Vanguard’s influence. By inventing index-tracking, and providing it at very low cost, the firm has forced change on an industry known for its high margins and overcomplicated products. Delighted investors and disgruntled money managers speak of “the Vanguard effect”, the pressure that the giant’s meagre fees put on others to cut costs. Some rivals now sell passive products priced specifically to match or undercut it. + +Ask any employee for the secret of Vanguard’s success, and they will point to its ownership structure. The firm is entirely owned by the investors in its funds. It has no shareholders to please (and remunerate), unlike the listed BlackRock or Fidelity, a privately owned rival. Instead of paying dividends, it cuts fees. Mr Bogle’s rationale for this set-up is simple: “No man can serve two masters.” The incentives of the firm and its customers are completely aligned, he says. Competitors implicitly agree. “How are we supposed to compete when there’s a non-profit disrupting the game?” complains one. + +Bill McNabb, Vanguard’s current CEO, says the ownership structure permits a virtuous cycle, whereby its low fees improve the net performance of its funds, which in turn attracts more investors to them, which increases economies of scale, allowing further cuts in fees. Even as the assets Vanguard manages grew from $2 trillion to $3 trillion, its staff of 14,000 or so barely increased. Meanwhile, fees as a percentage of assets under management have dropped from 0.68% in 1983 to 0.12% today (see chart). This compares with an industry average of 0.61% (or 0.77%, when excluding Vanguard itself). Fees on its passive products, at 0.08% a year, are less than half the average for the industry of 0.18%. Its actively managed products are even more keenly priced, at 0.17% compared with an average of 0.78%. + + + +The index-trackers account for over 70% of Vanguard’s assets and over 90% of last year’s growth. Investors are gradually absorbing the idea that, in the long run, beating the market consistently is impossible, Mr McNabb says. That makes being cheap more important than being astute. Last year investors in America withdrew $145 billion from active funds of different kinds and put $398 billion into passive ones. + +“In an industry with serious trust issues, Vanguard has proven an exception to the rule,” says Ben Johnson of Morningstar. Its investors stay with it roughly twice as long as the industry average. The firm actively shuns short-term “hot money” because it brings extra trading costs. Mr McNabb tells the tale of the CEO of a foundation who wanted to park $40m with a Vanguard fund for a few months. When the fund turned him away, he “went ballistic”, complaining to the SEC, but Vanguard did not budge. + +Vanguard also insists on keeping things simple. It offers only 70 different ETFs, compared with 383 at BlackRock. It steers clear of voguish products, such as funds of distressed energy firms. It refused, presciently, to set up an internet fund in the late 1990s. + +But Vanguard’s conservatism can also be a weakness. It has been slow to expand abroad: its customer base is 95% American. It was slow to get into ETFs as well, allowing BlackRock to become the biggest provider, although Vanguard is catching up. BlackRock is also a one-stop shop for all manner of investments, including alternatives such as private equity and hedge funds, whereas Vanguard caters only to the mainstream. This may be one of the reasons why it does less well with the biggest institutional investors, which want lots of investment options and the kind of bespoke service that Vanguard does not offer. + +There is always a chance that a clever fintech startup, or a tech giant like Apple, might create a cheaper or simpler way for individuals to invest, luring away some of Vanguard’s customers. As it is, it is getting harder for Vanguard to keep cutting fees: to shave its average fee by a hundredth of a percentage point, it needs to attract an extra $560 billion in assets under management. And heavier regulation is always a risk. Last year the industry’s giants won an important battle when they convinced regulators that, unlike banks, fund managers should not be subject to more onerous rules simply because they are big. But talk of rules intended to stem panic in collapsing markets has not gone away. + +Nonetheless, there is plenty of room for Vanguard to keep growing. Only a third of American equities are held by index-tracking funds, and a smaller share elsewhere. Regulators in America and beyond are discouraging or barring financial advisers from receiving commissions from firms whose products they recommend—a move that should push even more money to Vanguard as advisers lose the incentive to offer expensive products (Vanguard refuses to pay commissions). + +As the move from defined-benefit to defined-contribution pensions continues, and as Asia sets up its retirement systems, there will be growing demand for the sort of “DIY” investing that has underpinned Vanguard’s success. With interest rates and investment returns expected to be low for years to come, keeping fees down will be more important than ever. As Tim Buckley, the firm’s chief investment officer, puts it: “The biggest advantage Vanguard has, aside from its structure, is the greed of our competitors.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21700401-vanguard-has-radically-changed-money-management-being-boring-and-cheap-index-we/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Buttonwood + +Secret agents + + + +A new book argues that the finance industry needs reform + +Jun 11th 2016 | From the print edition + + + +WHAT is the purpose of the finance industry? Everyone knows that it provides a very good living for many of its employees and that it is prone to occasional crises that can disrupt the global economy. But what good does it do the rest of humanity? + +A new book* by Stephen Davis, Jon Lukomnik and David Pitt-Watson lists four main roles for the industry: providing safe custody for assets, a payments system, intermediation between savers and borrowers, and risk reduction (insurance). Its performance should be judged by its success or failure in providing those services. + +The financial crisis in 2007-08, when many banks had to be rescued by governments, shows that finance does not always do a bang-up job of providing safe custody. Banks were allowed to gear up their balance-sheets in pursuit of short-term profits—not a good deal from society’s point of view. There has also been an explosion in the volume of securities trading in recent decades. But it is not clear how that helps the economy: liquid markets are a virtue, but do deals really need to be executed in milliseconds? + +Another important issue is how efficiently the finance industry provides those services. The authors refer to a recent paper** by Thomas Philippon of New York University which tried to measure the unit cost of financial services over time. This is a tricky business given the complexity of the industry; Mr Philippon divides the income of the sector by the quantity of the assets it intermediates. On that reckoning, the costs of intermediation have stayed roughly constant at between 1.5-2% (see chart). In other words, finance is no more efficient than it was at the end of the 19th century. + +Financial titans might splutter into their champagne at Mr Philippon’s finding, and point to the reduction in trading spreads or even the rise of firms like Vanguard. But it is the cost to the end-user that is the key. Mr Philippon’s data suggest that money saved in one area has been offset by new charges elsewhere. + +In particular, Messrs Davis, Lukomnik and Pitt-Watson point to the multiple layers of intermediaries that take a chunk out of a saver’s money. Invest your pension in a mutual fund and you may pay a record-keeper to check your savings are going to the right place; the mutual-fund manager; the third-party research firms that fund managers pay to help them select stocks; the platform on which the mutual fund is listed; the broker who handles the fund’s orders to buy and sell when it trades shares and bonds; a custodian to look after those securities; and an agent to price them for reporting purposes. + +Those charges add up, and make an enormous difference. If a 25-year-old saves for 40 years for a pension, paying fees of 1% a year, the accumulated charges will reduce his or her retirement pot by a quarter (based on the average dollar being in the pension for 25 years). Annual charges of 1.5% will result in a 38% cut. In a world where many people have defined-contribution pensions, and there is no pledge from the employer to provide a decent income in retirement, such charges are very important. But employees may not be fully aware of the “price” they are paying for the management of their savings. + +Why hasn’t regulation eliminated these problems? The authors think regulators have pursued a policy of “whack-a-mole”: identifying specific problems after they surface and then producing elaborate rules in response. The result is too much detail: new American credit cards come with 31 pages of legalese. Instead regulators should adopt a more systemic approach, focusing on the “fiduciary duty” intermediaries owe to their clients and making sure that clients are aware of all the costs that are loaded onto them. + +In the authors’ ideal world, banks should hold more capital to ensure the safety of deposits; stock exchanges should be prevented from giving high-frequency traders faster access to market prices; and executives should be paid bonuses linked to the long-term growth of the business rather than the share price. Above all, they argue, the interests of the underlying clients of the finance industry—the depositors, the workers and the pensioners—should come first. Everyone is a capitalist these days. That means keeping a much closer eye on those who manage that capital. + +Economist.com/blogs/buttonwood + +* “What They do With Your Money: How the Financial System Fails Us and How to Fix It”, Yale University Press + +** “Has the US Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation” http://pages.stern.nyu.edu/~tphilipp/papers/Finance_Efficiency.pdf + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21700402-new-book-argues-finance-industry-needs-reform-secret-agents/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Banks v investors + +Of snowballs and red ink + +Investors are going to court to reclaim losses from ill-advised derivatives deals + +Jun 11th 2016 | From the print edition + +It was the trades that went off the rails + +IT HAS been called “the worst trade ever”. Shortly before the financial meltdown of 2008, Metro do Porto and three other Portuguese public-transport companies entered into a series of interest-rate swaps with Santander, a Spanish bank, in hopes of reducing interest payments on their debts. But they soon discovered why these particular derivatives were dubbed “snowball swaps”. + +The firms’ losses exploded to several times the underlying debts, and by all accounts continue to swell today. They sued Santander, but in March an English court ruled the bank’s way. Though some documents “do the bank no credit”, the judge concluded, the transport companies could have been in no doubt about the scale of risk they were taking on. Santander did not coax them into signing contracts it thought would be contrary to their interests. The companies were not its clients, owed a fiduciary duty, but its counterparties, on the opposite side of the trades. + +In the go-go years before the crisis public-sector entities were sold plenty of complex derivatives that subsequently went badly wrong. Were they stupid? Were the banks that flogged the swaps and options evil? Or was it a bit of both? The snowballs case shows how difficult it can be for the likes of Metro do Porto to claim they were hoodwinked. They may be not be as financially sophisticated as their counterparties, but nor are they widows and orphans; they have plenty of money to hire experts to scrutinise term sheets. + +That hasn’t stopped others from looking for ways to bring cases. Barring a last-minute settlement, on June 13th the Libyan Investment Authority, a sovereign-wealth fund, will face off against Goldman Sachs in London’s High Court. The LIA sued after losing more than $1 billion in a series of options trades that the bank arranged for it in 2008. Goldman, meanwhile, made an estimated profit of well over $200m. + +Having watched several mis-selling cases bite the dust, the LIA is taking a novel legal approach. It argues that Goldman exercised “undue influence” to coerce its managers—whose financial expertise at the time was “extremely limited”—into “inherently unsuitable” trades, and that the deal was therefore an “unconscionable bargain”. In part, the undue influence came from Goldman arranging an internship for the brother of an LIA executive at around the time of the trades, and offering “lavish and exotic” hospitality in Morocco, the LIA claims. Though undue influence can be argued in commercial settings, it is typically reserved for cases involving nefarious youths fleecing aged relatives. + +In a witness statement, Catherine McDougall, who was seconded to the LIA at the time from Allen & Overy, a law firm, says it was “readily apparent” that Goldman “had unfairly taken advantage of the LIA’s lack of financial sophistication”. She was “particularly shocked” when she saw a Goldman banker “explaining the basics of a put and call” to Mustafa Zarti, the LIA’s deputy chief, “when he had just sold $1 billion worth of complex derivatives” to the authority. (On discovering the toxicity of the trades, Mr Zarti would later lose his cool, shouting at the Goldman team “curses…along the lines of ‘Fuck your mother, fuck you and get out of my country’”, Ms McDougall recalls.) + +Goldman is girding for battle in court, though with some of the internal e-mails that are set to be aired said to be unedifying, not to say culturally insensitive, the bank may not be relishing the prospect of a public face-off. Goldman vigorously denies the LIA’s claims that it improperly encouraged or influenced the fund or abused a position of trust. It says their relationship was at all times an arm’s length one. It calls the case “a paradigm of buyer’s remorse”. + +As for the internship, Goldman insists it was a normal part of training programmes it offered to the LIA and did not breach Goldman’s compliance rules. Internships have become touchy issues for banks since regulators, led by America’s SEC, began a couple of years ago to look into whether hiring relatives of government officials or senior corporate managers might constitute bribery. + +The LIA’s other big battle, against Société Générale, a French bank, involves alleged bribery of a more blatant sort. The Libyans are suing for $1.5 billion over five disputed trades, some of them heavily loss-making, in a case set for trial early next year. The transaction at the heart of the case is a payment of $58m by the bank to a Panamanian company called Leinada that was owned by Walid al-Giahmi, a friend of one of the sons of Muammar Qaddafi, Libya’s then dictator. The LIA claims this was a bribe, intended to help sway the fund’s decisions, and that SocGen knew or suspected the payment was dodgy. America’s Department of Justice is investigating. + +Here the Libyans’ legal tack is different again. They are not arguing mis-selling or undue influence, but that the payment to Leinada rendered the trades invalid because they were “part of a fraudulent and corrupt scheme”. + +The French bank firmly denies the allegations. It has said the payment was for legitimate services, “including introductory, market intelligence and follow-up services, which made it easier for Société Générale to navigate the unfamiliar and difficult Libyan market”. The bank says it is co-operating with the American probe. A lawyer for Mr Giahmi, a co-defendant, did not respond to a request for comment. + +These cases may establish new legal avenues for investors who claim to have been duped by unscrupulous bankers. And, as one lawyer puts it, there will be “plenty of pyrotechnics” along the way. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21700409-investors-are-going-court-reclaim-losses-ill-advised-derivatives/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Dollar imperialism + +The Fed’s tributaries + +Which emerging markets are most in thrall to America’s central bank? + +Jun 11th 2016 | HONG KONG | From the print edition + + + +OUTSIDE the Federal Reserve’s imposing building in Washington, DC, water cascades from two fountains shaped like chalices. Inside, the Fed’s decision-making generates equally prodigious spillovers, channelling the flow of capital around the world. The consequences, especially for emerging economies, can be monumental but they are rarely elegant. + +Until last week many emerging economies had been bracing themselves for an imminent rise in the Fed’s benchmark interest rate, perhaps as early as this month. Higher rates could draw more money into America from emerging markets, weakening their currencies and raising their bond yields. Even the expectation of tighter money can be enough to cause trouble. In such circumstances, central banks far from the Fed often feel compelled to raise rates too, even if economic conditions at home do not entirely warrant it. In 2014 Arvind Subramanian, now the chief economic adviser to India’s government, complained of “dollar imperialism”. + +On June 3rd, however, the emperor granted a reprieve. Surprisingly bad jobs figures released that day ended all talk of a Fed rate hike this month (see article). American bond yields duly fell and the dollar weakened; emerging markets rallied. The numbers provided a useful test of the Fed’s sway. Normally, this is hard to measure, since expectations of a rate rise cannot be observed directly and tend to evolve only gradually. The shift on June 3rd, however, was unusually stark. + +Which emerging markets benefited the most? The Turkish lira and Brazilian real ended June 3rd over 1.5% stronger than the day before; the Russian rouble gained over 2%; and the South African rand climbed by over 3%. The impact was surprisingly weak, by contrast, on Mexico’s peso and India’s rupee. Nor was there much effect on China’s currency, which does not float freely, although China may yet benefit from a slower flow of capital out of the country. + +The ranking of emerging-market thraldom was broadly similar for government-bond yields (see chart). Yields fell by about 0.2 percentage points on June 3rd in Brazil and Turkey. They narrowed by about half that in Russia and South Africa, as well as in Thailand when its markets opened on June 6th. China again remained in splendid isolation. And India was strangely unmoved. Its central-bank chief, Raghuram Rajan, is among the most prominent critics of the Fed’s unilateral monetary power, along with his compatriot, Mr Subramanian. Yet India, on the basis of this small experiment, seems newly immune to it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21700413-which-emerging-markets-are-most-thrall-americas-central-bank-feds/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +America’s economy + +When barometers go wrong + +A weak jobs report belies the resilience of America’s economy + +Jun 11th 2016 | WASHINGTON, DC | From the print edition + +AMERICA’s labour market has become a reliable source of comfort when other economic indicators dismay. When growth slowed to just 0.8% in the first quarter of the year, economists were mostly unperturbed, because payrolls were growing by over 150,000 workers a month. Wage growth was picking up. Even labour-force participation was rising, after a long period of decline. + +So the news on June 3rd that the economy created a mere 38,000 new jobs in May—the lowest total since 2010—was a nasty shock. Three days later Janet Yellen, the Fed’s chairman, hinted that she no longer favours raising interest rates this summer. This abrupt change of direction followed weeks of warnings from Fed officials that a rate rise was coming, perhaps as soon as the conclusion of the Fed’s next meeting on June 15th. That now looks all but impossible. + +The consensus forecast was for about 160,000 new jobs in May. Even accounting for 35,000 striking workers at Verizon, a telecoms firm, the shortfall was substantial (though the estimate, which has a wide margin of error, may yet be revised up). A labour-market slowdown that had seemed gentle now looks pronounced: between March and May, the economy created on average 116,000 jobs per month, compared with 222,000 in the year to February. The fizzing labour market had been tempting Americans who had given up on work back into the labour force. But participation has now handed back two-thirds of its gains since September. + +The report, taken alone, was dire. But on the whole, there is much less cause for gloom. The American economy may have slowed, but remains fundamentally strong, as it is buttressed by a healthy consumer. Personal consumption, adjusted for inflation, is up by 3% in the past year, having surged in April. The University of Michigan’s consumer-confidence index, which was due to be updated as The Economist went to press, grew strongly in May. Even before that, confidence exceeded its average during the 2003-07 boom. According to a recent Fed survey, 69% of Americans say they are “doing okay” or “living comfortably”, up from 62% in 2013. What is more, the rise has been most pronounced among those with only a high-school education. + +Rising wage growth helps explain consumers’ cheer. Since early 2015 growth in average hourly earnings has perked up from about 2% to around 2.5%. Admittedly, this is sluggish compared with wage growth before the financial crisis, which often exceeded 3%. And wage growth has plateaued as the labour market has slowed (see chart 1). + + + +But demographic change is keeping average wage growth artificially low. The financial crisis struck when the oldest baby-boomers were nearing retirement age. As well-paid boomers retire, average wages fall. In addition, many low-wage workers, who were disproportionately likely to lose their jobs during the recession, are now returning to work, which also pulls average wages down. + +Recent work by researchers at the San Francisco Fed suggests that, as of the end of 2015, these biases in entries and exits from the workforce were reducing growth in median weekly earnings by about two percentage points. Those in steady employment are faring well: the Atlanta Fed’s wage index, which tracks the same individuals over time, thereby ignoring retirements and new workers, shows wage growth of 3.4% over the past year. + +At the same time, Americans have been leaving petrol stations with fatter wallets, thanks to cheaper oil. Consumers did save more of the petrol-price windfall than expected. But that means that now oil prices are firming—on June 7th Brent crude surpassed $50 a barrel for the first time since October—consumers will not have to rein in spending much in response, argues Andrew Hunter of Capital Economics, a consultancy. Indeed, savings tumbled in April as consumption rose. + +Somewhat higher oil prices should also help put an end to another drag on the economy: pallid investment, which was partly responsible for the first quarter’s slow growth. Investment in oil rigs and the like has fallen by almost 70% over the past two years, adjusted for inflation, as investors have mothballed shale-oil and -gas projects. But in the week to June 3rd, the rig count rose for the first time since August. Even if oil prices were to fall again, energy investment cannot drag down growth for much longer, as it has already fallen so far. + +Other business investment has disappointed, too. But rising house-building has picked up some of the slack (see chart 2). Adjusted for inflation, residential investment is up by 11% on a year ago. Government spending is also rising, after four years of pulling down growth as politicians trimmed budgets. An investment spree by state and local governments has contributed to the turnaround. + + + +A dangerous world + +Threats remain. The world economy is a worry. Europe has not yet secured its recovery (see next story), Brexit is a growing concern, and the Chinese economy remains fragile. Financial markets, which tanked early in the year on account of the world economic outlook, are sturdy for now—after Ms Yellen’s dovish comments, the S&P 500 rose close to a record high. But the world economy could yet shake markets again. + +Even if it doesn’t, the contrast between American vigour and torpor abroad will delay interest-rate rises, argues Mark McClellan of the Bank Credit Analyst, a newsletter, because the Fed cannot tighten monetary policy without sending the dollar on a tear. That could itself cause renewed financial-market wobbles, particularly in emerging markets with dollar-denominated debts (see article). It would also dampen inflation, which remains below the Fed’s 2% target, as the dollar’s strength made imports cheaper. + +Where next, then, for Ms Yellen? She rightly says that raising interest rates is not a goal in itself, and describes today’s near-zero rates as only “modestly” accommodative—a reminder that the so-called “natural” rate of interest, the rate which neither stimulates nor dampens the economy, is probably much lower than it used to be. The Fed will probably need convincing that the latest labour-market report was an aberration before tightening policy. The next few months should provide such reassurance. Come what may, expect Ms Yellen to take only baby-steps. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21700414-weak-jobs-report-belies-resilience-americas-economy-when-barometers-go/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The ECB buys corporate bonds + +Unyielding + +Quantitative easing in the euro area enters a new phase + +Jun 11th 2016 | From the print edition + + + +TRY and try again. On June 8th the European Central Bank (ECB) started buying corporate bonds, in its latest effort to gin up inflation in the euro area. Prices declined slightly in May compared with the same month a year before; the ECB’s inflation target is just under 2%. The scheme has already helped boost the zone’s corporate-bond market. Doing the same to its economy looks a tall order. + +The purchases form part of the ECB’s quantitative-easing programme, under which it is already buying €80 billion-worth ($91 billion) of public-sector bonds, covered bonds and asset-backed securities monthly. (Government debt, of which the ECB has amassed more than €800 billion, accounts for most.) To qualify, corporate bonds must be investment-grade and issued by euro-area firms other than banks. + +Analysts reckon that €600 billion-plus of bonds fit these criteria. The bank hasn’t yet said whose debt, or how much, it will buy; from mid-July it will report holdings weekly. According to Bloomberg, first-day purchases included bonds issued by Anheuser-Busch InBev, the world’s biggest brewer; Generali, an Italian insurer; Siemens, a German engineering giant; and Telefónica, a Spanish telecoms firm. + +The ECB is likely to be a hefty buyer. It can acquire bonds in the primary or secondary market, and can hold up to 70% of an issue. Some analysts guess it might snap up €5 billion-10 billion a month. That may be a stretch. Even if it bought a quarter of the likely total of this year’s eligible issues, calculates Suki Mann of CreditMarketDaily.com, a website, that would still only work out at €4 billion a month. + + + +Yields tumbled in anticipation of the ECB’s entry. According to Bank of America Merrill Lynch, yields on investment-grade bonds have slid under 1%, their lowest for a year; those on high-yield (junk) bonds have fallen, too. + +That suggests the ECB is achieving its objective: directly reducing companies’ financing costs. But if it buys less than expected, the rally could go into reverse. And whether cheaper borrowing will spark investment and inflation is questionable: in March, when the ECB unveiled its plan, investment-grade yields were a less-than-prohibitive 1.3%. The ECB is also funnelling cash into banks as fast as it can: another lending-incentive scheme starts this month. But it is lack of demand, not of funds, that is holding Europe back. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21700415-quantitative-easing-euro-area-enters-new-phase-unyielding/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Free exchange + +Sibyl faulty + +Central banks have got better at telling markets what they are up to. They must get better still + +Jun 11th 2016 | From the print edition + + + +AT TIMES markets and central banks resemble nothing so much as a quarrelsome couple. They pout at each other. They remonstrate. Above all, they struggle to communicate. Officials at the Federal Reserve and traders in financial markets have been talking past each other for much of the year—most recently in May, when the Fed sought to convince traders that a summer rate rise might be on the cards. The miscommunication is not entirely the fault of the central bank; a shaky world economy makes confident and clear messaging difficult. But that fragility also leaves central banks with less room for error. They should do better. + +Not long ago, central bankers thought their job was best done in secrecy. A few reckoned the public could not be trusted to understand the finer points of monetary policy; others felt that catching markets unawares maximised the impact of a change in policy. In the 1980s central bankers rarely saw fit to inform the public of their near-term goals or even about past interventions. When called upon to speak in public, they did so with a practised opacity. Alan Greenspan, chairman of the Fed from 1987 to 2006, was an expert in “mumbling with great incoherence”. + +In the 1990s, however, economists came to see transparency as a way to amplify rather than diminish the power of monetary policy. A better understanding of what a central bank is up to, they reasoned, should help investors anticipate its actions, thereby avoiding destabilising lurches in markets. That, in turn, should help central banks keep the economy running smoothly. + +As a first step, central banks clarified their policy goals by setting explicit targets for inflation. The Reserve Bank of New Zealand adopted one in 1990—an innovation many have followed. Next central bankers began revealing more about their assumptions and deliberations. A reform of the Bank of England in 1998 required it to explain its decisions, via the publication of minutes of its meetings and a detailed inflation report. In 1999 the Bank of Japan pioneered the tactic of “forward guidance”, when it promised to leave its interest rate at zero “until deflationary concerns subside” (they never did). Clear communication can be extraordinarily powerful. When Mario Draghi, president of the European Central Bank, declared in 2012 that he would do “whatever it takes” to save the euro, market sentiment abruptly reversed. + +Unfortunately, central bankers tend to muck up their communications in three critical ways. First, they often obscure their message with lots of unhelpful noise. More information is better, but only to the extent that it makes future policy actions more predictable. Between meetings, Fed officials barnstorm around the country giving speeches. But their individual assessments of the economy are often a poor guide to the thinking of the monetary-policy committee as a whole. + +When the Fed concludes its next meeting on June 15th, it will assault markets with a barrage of information: a statement about economic conditions, a summary of members’ economic projections (including an anonymised “dot plot”, showing where each member thinks interest rates ought to go over the next three years), and a press conference with the chairman, Janet Yellen. But these snippets often conflict: the dots suggest rates will rise steadily in coming years, keeping inflation consistently below 2%, even though Ms Yellen insists that the Fed is just as willing to overshoot its 2% target as undershoot it. This sort of ambiguity reduces both the power and the precision of Fed policy. (Despite that, the Bank of Japan announced a plan in 2015 to adopt many of the Fed’s communication strategies, including the dots.) + +In a paper published in 2012, economists at the Federal Reserve Bank of Chicago described a second common flaw with forward guidance that can be even more damaging than cacophony. They distinguish between “Delphic” guidance—economic forecasts—and the “Odyssean” sort—a pledge to behave in a certain way (so named because one example might be promising to resist the siren song of rate increases even if inflation picks up). Some forward guidance could be read either way: the statement that rates are likely to remain low for a long time could mean that the central bank expects growth to be too weak to justify rate rises, in which case investors have good reason to stay pessimistic. But it could also represent a commitment not to raise rates even as growth accelerates, lifting expectations of future inflation and providing an incentive to borrow and invest in the present. A failure to distinguish between the two risks steering markets in the wrong direction. + +Not so crystal clear + +Now that the Fed has started tightening, it risks making a third mistake: being vague about how many times it intends to raise rates in order to avoid upsetting markets. Recent research by Jeremy Stein (a former Fed governor) and Adi Sunderam, both of Harvard University, suggests that markets see through attempts to serve big rate rises in small doses and begin reacting strongly to small rate shifts (thereby inducing still more caution in central bankers and more market overreaction). That does not mean that central bankers should raise rates steeply in one go, or commit to a particular path for hikes, when they are unsure how the economy as a whole will react. Rather, they should combine guidance about their preferred trajectory for interest rates with a clear statement about what would and would not trigger deviations from that plan. + +It is only natural for central banks to be a little tentative in their initial experiments with a relatively new technique such as forward guidance. But in general things would work better if they were more coherent and more forthright. Indeed, the effort to speak more clearly might help monetary-policy committees to think more clearly. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21700392-central-banks-have-got-better-telling-markets-what-they-are-up-they-must-get/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Science and technology + + + +Cancer treatment: On target [Fri, 10 Jun 14:21] + +The international pharmaceutical market: Priced out [Fri, 10 Jun 14:21] + +Carbon capture and storage: Turning air into stone [Fri, 10 Jun 14:21] + +Fixing potholes: The hole story [Fri, 10 Jun 14:21] + +Human evolution: Hobbit forming [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Cancer treatment + +On target + +The personalisation of cancer treatments is leading to better outcomes for patients. It will also pave the way to cures + +Jun 11th 2016 | CHICAGO | From the print edition + + + +“CURE” is not a word much used by oncologists. The best they normally talk of is “remission”. But the past five years have begun to change that. More than 70 new drugs have come to market, and describing the consequences of some of them as revolutionary is not hyperbole—at least for those patients lucky enough to respond positively to them. Being given a diagnosis of advanced melanoma, for example, was once tantamount to being handed a death warrant. Median life expectancy after such news was six to nine months. But recently developed “immuno-oncology” drugs, which co-opt the immune system to fight tumours, are so effective that, in around a fifth of cases, there is talk among experts that the patients involved have actually been cured. + +This sort of upbeat news is reinvigorating the study of cancer. At this year’s meeting of the American Society of Clinical Oncology (ASCO), held this week in Chicago, doctors had a spring in their step. Not only do they have new drugs to deploy, they are also developing better ways of using existing ones. They are getting better at diagnosis, too, finding methods to study the weak spots of cancers in parts of the body conventional biopsies cannot reach, and also to pin down tumours that were previously unlocatable. The upshot is that they are beginning to be able to tailor treatments to the needs of individual patients, an approach called personalised medicine. + +These days cancer is seen less as a disease of specific organs, and more as one of molecular mechanisms caused by the mutation of specific genes. The implication of this change of viewpoint is that the best treatment for, say, colorectal cancer may turn out to be something already approved for use against tumours in an entirely different part of the body, such as the breast (pictured above, in a magnetic-resonance-imaging, or MRI, scan; the tumour is in the right-hand breast, from the reader’s point of view). One study presented at ASCO found that 29 of 129 patients responded to drugs that had originally been approved for use on cancers found in parts of the body different from where those patients’ own tumours were. Therapies designed for breast and gastric cancers involving a gene called HER2 were particularly useful. These HER2 drugs act on a growth-promoting protein that is overproduced in HER2-positive tumours. Seven of 20 patients with colorectal cancer, three of eight with bladder cancer and three of six with bile-duct cancer responded well to these drugs. + +Metaphysicians + +Another study, a “meta-analysis” of almost 350 early-stage drug trials which gathered the results of these small experiments together in a statistically meaningful way, tried to work out how much benefit there was in matching the molecular characteristics of the tumour of a patient with his treatment. Such matching proved worthwhile. Using it caused tumours to shrink by an average of 31%. Established treatments without such matching resulted in an average shrinkage of only 5%. + +Work published in the New England Journal of Medicine, to coincide with the ASCO meeting, also showed the value of the molecular approach. Elli Papaemmanuil of Memorial Sloan Kettering Cancer Centre in New York, and her colleagues, have produced a molecular classification of acute myeloid leukaemia. They have divided this disease into 11 classes, each with distinct diagnostic features and clinical outcomes, based on which mutated genes seem to be driving the cancer’s development. While this work has not yet led to better treatments, it seems almost bound to in the future. + +ASCO itself sees so much value in the personalised, molecular approach to diagnosis and treatment that, despite its being a professional body for doctors rather than a research organisation in its own right, it has decided to run a clinical trial (its first ever) to look at this approach’s potential. TAPUR, as the trial is called, will offer patients a genetic test and then select drugs that look to be good matches, but which are not approved for the specific cancer a patient is suffering from. + +The National Cancer Institute, an American government agency, is trying something similar with a trial it calls MATCH. This involves sending tumour biopsies to gene-testing laboratories that then scan them for more than 4,000 possible variants of 143 pertinent genes. Indeed, personalised treatment is becoming so fashionable that even America’s vice-president has got involved. On June 6th Joe Biden announced a project intended to set up a way of sharing genomic and clinical data between cancer researchers, in order to help advance the field. + +Taking biopsies such as those that form part of the MATCH trial is a routine part of cancer therapy. It, too, though, is ripe for improvement. Some tissues (blood, lymph and skin, for example) are easy to get at, but many tumours are deep in the body, or in vital organs, or both. Sampling these is invasive and potentially dangerous. Researchers have therefore wondered for a long time whether something as simple as a blood test might replace such a biopsy. This hope is based on the knowledge that tumours shed pieces of genetic material, known as circulating tumour DNA (ctDNA), into the bloodstream. + +Until recently scientific instruments have not been sensitive enough to detect ctDNA routinely and reliably. That is now changing. “Liquid biopsies”, which will not only diagnose hard-to-get-at solid tumours but also monitor the progress of their treatment, are on the verge of reality. At the ASCO meeting researchers sponsored by Guardant Health, a diagnostics company, announced the results of one of the largest liquid-biopsy studies so far. + +Liquid asset + +This study looked for the ctDNA of six relevant genes in 15,000 patients suffering from one of 50 types of tumour. The test was not perfect. Only 83% of patients had sufficient ctDNA for it to show up. But in those cases where ctDNA was detected the mutations indicated were also present in conventional biopsies between 94% and 100% of the time. The test, in other words, is reliable. Moreover, in almost two-thirds of the cases where ctDNA was detected, the results led to suggestions about how the patients involved should be treated. + +If liquid biopsy can be made routine, the clinical consequences will be vast. Conventional biopsies can be both costly and slow to process. Also, the heterogeneity of many tumours, caused by progressive mutation over the course of time, is hard to sample by nipping out one bit of the tumour. If ctDNA is shed by all parts of a tumour, though, a liquid biopsy will be able to capture these differences. It will, as well, be able to follow them as they progress because, unlike conventional biopsy, it can be done frequently without harming the patient. That is important. What constitutes the best treatment can change as the tumour itself changes. + +Many researchers therefore feel it is only a matter of time before liquid biopsies become a standard part of therapy. They are already coming to market. Foundation Medicine, of Cambridge, Massachusetts, launched a commercial liquid biopsy in May. Qiagen, a German firm, followed suit on June 1st. Genomic Health, of Redwood City, California, says it will offer a test later this year. And Myriad Genetics, based in Salt Lake City, is also developing such tests. + +Such is the excitement over liquid biopsies that some wonder if they might be used to catch cancers even before symptoms are apparent. The earlier a tumour is spotted, the easier it is to cure. The biggest maker of DNA-sequencing machines, Illumina, based in San Diego, has said that it will form an offshoot, Grail, to develop just such a test. The proposed test will use “ultra-deep sequencing”, a technique that reads the DNA in a sample tens of thousands of times over, in order to pick up rare signals such as that from ctDNA. + +Yet one of the flaws of ctDNA is that it does not reveal where in the body a cancer is. Some argue that MRI is now sophisticated enough to screen individuals for the presence of most cancers. The Health Nucleus, a firm based in San Diego, is offering full-body scans using it for just this purpose. David Karow, a clinical radiologist who works both there and at the nearby San Diego campus of the University of California, is optimistic about the potential of the technique for wider use. He has been part of a study published in Clinical Cancer Research which suggests that a souped-up form of MRI might become the standard method for prostate-cancer screening. His research indicates that such MRI can differentiate between benign and malignant growths, and can distinguish among the latter between those that just need to be monitored, and the “aggressive” ones that need to be treated. + +Personalised cancer treatment, long talked of, is thus now becoming real. By detecting problems earlier and getting therapies right first time, it will save lives that might otherwise be lost. Better knowledge of the underlying processes of cancer, meanwhile, will extend the range of lives that medicine can aspire to save. There is still a long way to go. But gradually and inexorably the appeals court of oncology is tearing up cancer’s death warrants. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21700125-personalisation-cancer-treatments-leading-better-outcomes/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The international pharmaceutical market + +Priced out + +Cancer drugs cost more in America than elsewhere, but that may be just + +Jun 11th 2016 | Chicago | From the print edition + + + +MANY Americans think they pay over the odds for drugs—particularly for cancer drugs. Some go so far as to suggest that other countries free-ride on their largesse, and that Americans are thus subsidising drug development, a situation which, they say, needs to be fixed by changing trade agreements. + +A study unveiled at the American Society of Clinical Oncology’s meeting in Chicago this week looked into the matter. Daniel Goldstein of the Rabin Medical Centre, in Israel, and his colleagues examined the prices of 15 generic and eight patented cancer drugs in six countries (America, Australia, Britain, China, India and South Africa). They found that the highest prices were, indeed, paid by Americans. The median monthly retail price in the United States was $8,694 for patented drugs like Avastin, Gleevec and Herceptin, and $654 for generic drugs like docetaxel and paclitaxel. Of the countries looked at, India paid the least for its patented drugs ($1,515 a month), and South Africa the least for generics (a tiddly $120). + +The story, though, does not end there. Dr Goldstein went on to look at how the prices of these drugs measured up in terms of affordability. To express this he calculated the monthly price as a percentage of gross domestic product per person at purchasing-power parity (GDPcapPPP). + +On this measure (see chart), America did middlingly well. India and China were the least able to afford cancer medications. Generic drugs were least affordable in China, where they cost 48% of GDPcapPPP, and patented drugs were least affordable in India, where they were 313%. Americans, by contrast, paid 192% of GDPcapPPP for their patented drugs and a titchy 14% for generics. But Australia, Britain and South Africa all did as well or better than that. + +The morals of this story seem twofold. First, just because drugs are cheaper elsewhere does not mean that people who live there can afford to pay for them, let alone pay more than they already do. Were prices higher in China and India, sales might well be lower. Drug companies know that, and set their prices accordingly. Second, it helps to have national purchasing arrangements, as Australia, Britain and South Africa all do. If Americans truly want lower drug prices, they should stop grumbling and become better negotiators, not blame those foreigners who are. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21700373-cancer-drugs-cost-more-america-elsewhere-may-be-just-priced-out/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Carbon capture and storage + +Turning air into stone + +How to keep waste carbon dioxide in the ground + +Jun 11th 2016 | From the print edition + + + +THIS year the world’s power stations, farms, cars and the like will generate the equivalent of nearly 37 billion tonnes of waste carbon dioxide. All of it will be dumped into the atmosphere, where it will trap infra-red radiation and warm the planet. Earth is already about 0.85°C warmer than last century’s average temperature. Thanks to the combined influence of greenhouse-gas emissions and El Niño, a heat-releasing oceanic phenomenon, 2016 looks set to be the warmest year on record, and by a long way. + +It would be better, then, to find some method of disposing of CO2. One idea, carbon capture and storage (CCS), involves collecting the gas from power stations and factories and burying it underground where it can do no harm. But CCS is expensive and mostly untried. One worry is whether the buried gas will stay put. Even small fissures in the rocks that confine it could let it leak out over the course of time, undoing much of the benefit. And even if cracks are not there to begin with, the very drilling necessary to bury the gas might create them. + +A paper just published in Science offers a possible solution. By burying CO2 in the right sort of rock, a team of alchemists led by Juerg Matter, a geologist at Southampton University, in Britain, was able to transmute it into stone. Specifically, the researchers turned it into carbonate minerals such as calcite and magnesite. Since these minerals are stable, the carbon they contain should stay locked away indefinitely. + +Dr Matter’s project, called CarbFix, is based in Iceland, a country well-endowed with both environmentalism and basalt. That last, a volcanic rock, is vital to the process, for it is full of elements which will readily react with carbon dioxide. Indeed, this is just what happens in nature. Over geological timescales (ie, millions of years) carbon dioxide is removed from the air by exactly this sort of weathering. Dr Matter’s scheme, which has been running since 2009, simply speeds things up. + +Between January and March 2012 he and his team worked at the Hellisheidi geothermal power station, near Reykjavik. Despite its green reputation, geothermal energy—which uses hot groundwater to drive steam turbines—is not entirely emissions-free. Underground gases, especially CO2 and hydrogen sulphide (H2S), often hitch a ride to the surface, too. The H2S, a noxious pollutant, must be scrubbed from the power-station exhaust before it is released, and the researchers worked with remainder, almost pure carbon dioxide. + +They collected 175 tonnes of it, mixed it with a mildly radioactive tracker chemical, dissolved the mixture in water and pumped it into a layer of basalt half a kilometre below the surface. They then kept an eye on what was happening via a series of monitoring wells. In the event, it took a bit less than two years for 95% of the injected CO2 to be mineralised. + +They followed this success by burying unscrubbed exhaust gas. After a few teething troubles, that worked too. The H2S reacted with iron in the basalt to make pyrites, so if exhaust gas were sequestered routinely, scrubbing might not be needed. This was enough to persuade Reykjavik Energy, the power station’s owners, to run a larger test that is going on at the moment and is burying nearly 10,000 tonnes of CO2 and around 7,300 tonnes of H2S. + +Whether CarbFix-like schemes will work at the scale required for fossil-fuel power stations remains to be seen. In these, the main additional pollutant is sulphur dioxide, which has different chemical characteristics from hydrogen sulphide. Scrubbing may therefore still be needed. Another constraint is the supply of basalt. Though this rock is common, it is found predominantly on the ocean floor. Indeed, geologically speaking, Iceland itself is a piece of ocean floor; it just happens to be above sea level. There are some large basaltic regions on dry land, but they are not necessarily in convenient places. + +Nevertheless, if the will were there, pipelines from industrial areas could be built to carry exhaust gases to this basalt. It has not, after all, proved hard to do the reverse—carrying natural gas by pipeline whence it is found to where it is used. It is just a question of devising suitable sticks and carrots to assist the process. How much those sticks and carrots would cost is crucial. But Dr Matter’s proof of the principle of chemical sequestration in rock suggests it would be worth finding out. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21700371-how-keep-waste-carbon-dioxide-ground-turning-air-stone/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Fixing potholes + +The hole story + +Researchers are inventing new ways to prevent a motoring curse + +Jun 11th 2016 | From the print edition + +Instant duck pond + +POTHOLES are a scourge of rich and poor countries alike. The American Automobile Association recently calculated that 16m drivers in the United States suffered pothole damage to their vehicles in the past five years. That damage ranged from punctures, via bent wheels, to broken suspensions. The bill to fix it was about $3 billion a year. In India, meanwhile, the cost of potholes is often paid in a harsher currency than dollars. There, more than 3,000 people a year are killed in accidents involving them. Yet cash-strapped governments often ignore the problem, letting roads deteriorate. In Britain, for example, some £12 billion ($17 billion) would be needed to make all roads pothole-free. Ways of repairing potholes more cheaply and enduringly would thus be welcome. And several groups of researchers are working on it. + +The most common cause of potholes is water penetrating cracks in a road’s surface and weakening its foundation. This is a particular problem with asphalt surfaces. These are made from an aggregate of materials bound together by sticky bitumen. The constant pounding of traffic disintegrates the road surface above the weakened area. In cold climates the destruction is aggravated by water in the cracks freezing and thawing. The shattered asphalt then peels away, leaving a pothole. + +To make matters worse, any repairs that do happen are usually a lash-up. To save money, the material used for the patch is frequently “worked cold”. This means it is not heated with specialist equipment to make the bitumen in it soft enough to flow into the shape required and meld properly with the edges of the pothole. Instead the stuff is simply shovelled off the back of a lorry and pounded down. That can work as a temporary fix until the road can be resurfaced properly, but often as not this job gets delayed almost indefinitely, which results in more cracks appearing around the fill and yet more potholes. + +What is needed is a material that can be used as readily as a cold patch, but which works as well as a hot one. Larry Zanko and his colleagues at the University of Minnesota Duluth, think they know what it is. They are mixing asphalt with ground iron ore that contains magnetite—an iron oxide which, as its name suggests, is magnetic. A phenomenon called ferromagnetic resonance means that when magnetite is zapped with microwaves of an appropriate frequency it gets hot. + +Dr Zanko and his colleagues built an experimental repair vehicle equipped with a microwave generator on the end of a hydraulic arm. Using this on asphalt that contained between 1% and 2% magnetite, he found he could heat the material in a patch to 100°C in about ten minutes. At that temperature it could be tamped down to produce a more effective repair. The heat also drives out moisture, further improving adhesion, says Dr Zanko. He and his team are now trying to raise the money needed to develop the technology into a commercial pothole-fixing system. + +An even better approach, however, would be to stop potholes forming in the first place, by sealing the cracks that cause them before any damage is done. Etienne Jeoffroy of ETH Zurich, a Swiss university, has been attempting to do just that. He also mixes iron oxide into the asphalt, but in this case it does not start off magnetic. Rather, he uses a magnetic field to heat it. + +The process he employs is one also used to treat certain tumours. The tumour in question is injected with iron-oxide nanoparticles, which are less than 100 nanometres (billionths of a metre) across. These are then subjected to an alternating magnetic field, which heats them up and cooks the diseased tissue. In his experiments, Dr Jeoffroy found that it takes just a few seconds to heat pieces of nanoparticle-containing bitumen this way. Thus softened, the bitumen seeps into incipient cracks, sealing them up. + +Maintenance of roads containing such nanoparticles might therefore require no more than driving over them once a year with a special vehicle which generates an appropriate magnetic field. That would, though, require building roads this way in the first place—or, at least, resurfacing them with nanoparticle-containing asphalt when such maintenance falls due. Stopping potholes growing in existing surfaces, by contrast, means eternal vigilance. And that is what Phil Purnell of the University of Leeds, in Britain, hopes to automate. + +As part of a wider project of automating the inspection and maintenance of infrastructure, Dr Purnell and his colleagues are looking at automatic systems which might be fitted to vehicles that ply regular routes, such as buses, to examine roads routinely for signs of damage. In one version of the future such a system would then activate a robotic repair vehicle when it came across a crack that needed fixing. This robot would come to the crack and fill it with a fast-setting bonding material (asphalt would not be needed, since no hole would yet have formed). That is not quite as neat as using nanoparticles and magnetic fields to create a self-healing highway. But if it does the job, who cares? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21700370-researchers-are-inventing-new-ways-prevent-motoring-curse-hole-story/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Human evolution + +Hobbit forming + +More on the diminutive ancient inhabitants of Flores + +Jun 11th 2016 | From the print edition + +The memory of bones + +THE folklores of many places speak of “little people”—human-like but not truly human creatures who live on the edge of humanity’s ken. They seemed mere legends, but in 2003 scientists found some (or, rather, their fossil remains) on Flores, an island in Indonesia. These remains, of individuals just over a metre tall, date from 60,000-100,000 years ago. They were called Homo floresiensis by their finders and “hobbits” by the press, after the fictional hominids invented by J.R.R. Tolkien. Now, some more, older, fossils have turned up. + +The latest discoveries, published in this week’s Nature by Gerrit van den Bergh of the University of Wollongong, in Australia, and Yousuke Kaifu of Japan’s National Museum of Nature and Science, go back 700,000 years. Dr van den Bergh and Dr Kaifu have recovered part of a jaw bone (pictured), six isolated adult teeth (five of which are pictured) and two milk teeth from a second site on Flores. One of the adult teeth, they believe, shows that Homo floresiensis descended from Homo erectus, a tall species widespread in East and South-East Asia, and not, as some have suggested, from a smaller type, Homo habilis, at the moment known only from Africa. + +Such scant remains risk overinterpretation. But they do confirm Homo floresiensis as a real species (some experts thought the first set of specimens might have been dwarfed by disease rather than by evolution), and one with a long history. That history, indeed, overlapped with the spread out of Africa of Homo sapiens, which began about 70,000 years ago, via southern Arabia, and which reached Australia (presumably by way of Flores) around 50,000 years ago. For those proto-Australians, then, tales of the little people in the forests would not have been mere legends. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21700354-more-diminutive-ancient-inhabitants-flores-hobbit-forming/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Books and arts + + + +Palestine: The view on the ground [Fri, 10 Jun 14:21] + +Literary history: Born to be Wilde [Fri, 10 Jun 14:21] + +Alternative medicine: Straight and crooked thinking [Fri, 10 Jun 14:21] + +Emil Zatopek: Feet of fire [Fri, 10 Jun 14:21] + +Brazil: Rich upon rich [Fri, 10 Jun 14:21] + +Robert Rauschenberg: Ripe for reassessment [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Palestine + +The view on the ground + +An elegant and moving account of the trials of the Tamimi family, a tale that is symbolic of the daily lives of many Palestinians + +Jun 11th 2016 | From the print edition + + + +The Way to the Spring: Life and Death in Palestine. By Ben Ehrenreich. Penguin Press; 428 pages; $28. To be published in Britain by Granta in August; £14.99. + +IN THIS book of many stories, few of them happy, it falls to one young Palestinian to get the measure of things. A man puts out a sweet one day, he says. An ant comes to investigate, but finds it too heavy to carry home. So it leaves and returns with many ants; but meanwhile the man takes the sweet away. The ants look around a bit, and finding nothing, file off. The man then replaces the sweet, and the same ant finds it again. It races off to get the others, but before they can return, the man hides it again. Deceived a second time, the ants turn on the first ant and kill it. This is how, in Palestine, hopes can be crushed only so many times before they turn to despair and then rage. + +That anger is never far from the surface in “The Way to the Spring”, a new memoir by Ben Ehrenreich, an American writer. It draws on the many months he spent in the occupied West Bank, off and on, from the time of the Arab spring in 2011 to Israel’s bloody incursion into Gaza in 2014. Yet he also calls it a tale of love, and even of hope. Mr Ehrenreich is the author of two well-received novels (“Ether” and “The Suitors”) and he brings a novelist’s eye to his subject, framing the bulk of his book around one village, Nabi Saleh, 30 miles (48km) north-west of Ramallah, the seat of the Palestinian Authority in the West Bank, and around a group of a few dozen protesters, most of them confusingly from the same extended Tamimi family. + +The spring of the title is a real, not a metaphorical Arab spring; a water source used by the Tamimis and others in Nabi Saleh for many decades until, in 1976, the first Israeli settlers arrived and established a community they later called Halamish. Slowly Halamish expanded, as more and more of the land was taken, often for “military needs”, until in 2008 the spring itself was seized. + +In 2009 the villagers of Nabi Saleh began what became a long series of marches to their spring; they were opposed by armed settlers, and then by the Israeli army as well, which, the author recounts, fired tear-gas grenades, often directly at the protesters at face or chest height, and rubber-coated bullets. The Tamimis, and Mr Ehrenreich, make a point of always calling them that, not “rubber bullets”. Consisting of a thin layer of rubber around a steel core, a rubber-coated bullet can break a jawbone. It can penetrate the flesh. + +The Nabi Saleh marches, of course, achieved nothing. But they generated some media attention, and they drew activists and observers not just from Israel but from around the world. They have been, as Bassem Tamimi says, “a way to tell the world that we have the right to work our land…the spring is the face of the occupation, the occupation is illegal and we have the right to struggle against it.” + +It is in the author’s descriptions of the Tamimis that the hope, and the love, are to be found; the dedication day after day to an effort that yields only failure, sometimes arrest and injury, and even death; and the concern that the Tamimis share for each other, waiting outside detention centres and hospitals for news of a relative. + +This is also a cause for rage. As Mr Ehrenreich documents, the clan is divided over tactics. And there are much deeper divisions in Palestinian society as a whole. The government of Mahmoud Abbas, who succeeded Yasser Arafat as leader of the Fatah movement after the latter’s death in 2004, draws the hatred of many Palestinians for dealing with the Israelis, and for accepting that his Palestinian Authority gets to control only a fraction of the West Bank, even if the result is that the politically favoured of Ramallah get jobs and money. “It doesn’t matter if it’s a gold cage or an iron cage,” says Bassem. “It’s a cage.” + +And of course, many have it far worse than in Nabi Saleh. There is Sa’adat Sabri, as the book describes, who lives in a house completely fenced in by Israeli security barriers, with a gate he could go in and out of only when the authorities let him. And there is Hebron, the only city in the West Bank where Israelis still live, and where the Palestinian Arabs run a daily gauntlet of checks, searches and barriers. + +Many Israelis hate what their government does in the West Bank. But many, too, condone or support it for reasons ranging from fear of terrorism to mistrust of neighbouring Arab states and the conviction that the land from the river to the sea is theirs by right. They may well hate this book; there is little wider context in it, no attempt to investigate, or even to acknowledge, the other side. (One of the exceptions comes from an Israeli in Hebron, who says that “when someone wants to kill, we’ll kill him first…we’re not the religion that gives the second cheek to anyone.”) + +Mr Ehrenreich did not set out to write an objective book; he does not even think it is possible. This is simply a description, detailed and sometimes too much so, of what the facts on the ground look like if you are one of a particular group of Palestinians in the West Bank. It should be read by friends and foes of Israel alike. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21700364-elegant-and-moving-account-trials-tamimi-family-tale-symbolic/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Literary history + +Born to be Wilde + +Oscar Wilde came from a wild and eccentric family + +Jun 11th 2016 | From the print edition + +Fine and dandy + +The Fall of the House of Wilde. By Emer O’Sullivan. Bloomsbury; 495 pages; £25. To be published in America in October; $35. + +AS A child, Oscar Wilde announced that he would like to be remembered as the hero of a “cause célèbre and to go down to posterity as the defendant in such a case as ‘Regina Versus Wilde’”. He succeeded, of course, and his notoriety poses a problem for biographers unlikely to discover anything new about the great aesthete. They increasingly turn to the lesser-canonised figures in his sphere; in 2011 came Franny Moyle’s account of Wilde’s wife, Constance Lloyd. Then “Wilde’s Women” by Eleanor Fitzsimons. Now Emer O’Sullivan, the author of a new book “The Fall of the House of Wilde”, places Oscar in the context of his immediate family, stating that “it is to No.1 Merrion Square we need to look for the formation of Oscar’s mind.” + +This approach can reap rewards. Some familial ties are plain to see; Oscar’s renowned style and turn of phrase finds its origins in his mother, Jane; she deplores those who “paraphrase a Poet into the prose of everyday life” and rebukes the subtitle of “Lady Windermere’s Fan” on the grounds that “no one cares for a good woman.” Jane’s salons attracted intellectual figures, with attendants seeking to display their wit and conversational skill. Oscar emulated these events—notably in his drawing-room dramas, where style was paramount—but also in his salons, named “Tea and Beauties”, in London. + +The Wildes prized independent thinking. Sir William, a renowned polymath and doctor, controversially advocated interracial coupling, arguing that it encouraged diversity of thought and the progression of society. His wife Jane wrote poems raging with republican spirit, felt passionately about the “bondage of women” and translated a deeply unpopular work on temptation. Oscar inherited this sense of intellectual daring and the need to push boundaries. In one of his first pieces of professional writing, he praises the patent homoeroticism of paintings by Spencer Stanhope. Other reviewers, likely fearful of social condemnation, turned a blind eye. + +Yet Ms O’Sullivan often strains to make parallels that aren’t there. Much is made, for example, of Oscar’s affair with Robbie Ross, two years into his marriage with Lloyd. This is the exact time, Ms O’Sullivan notes, at which a patient of William’s called Mary Travers aroused suspicion from Jane. According to Ms O’Sullivan, this may be an echo of the memory or significant “of an order underlying the chaos of human relationships”. That father and son shared a wandering eye does not warrant such sweeping statements. + +At the same time, obvious parallels are ignored or suffer from a lack of information. Jane’s lifelong interest in women’s rights and the undervalued intellects of wives surely influenced Oscar’s decision to edit Woman’s World, a magazine which provided more varied reading material for an emerging class of educated women. How his family responded to Oscar’s trial and imprisonment—the climax of any biography of the writer—readers can only guess: “what Jane or Willie [Oscar’s brother] thought about Oscar’s pending trial is nowhere recorded.” Similarly, the impact of the trial upon Oscar’s children—who dropped the surname “Wilde” as a result of the scandal—is barely mentioned. + +Readers may finish the book longing for more detail on Jane Wilde, who is repeatedly lauded as a literary force in her own right (though with little textual support). It is her fate that is the most disquieting. Oscar achieved his aim to be remembered by history—his grave in Paris is a site of pilgrimage. Jane, however, paid the price of his fame. Once voted the greatest living Irishwoman by her contemporaries, Jane Wilde was buried in poverty “without fanfare—without name or record…in soil to which she did not belong”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21700361-oscar-wilde-came-wild-and-eccentric-family-born-be-wilde/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Alternative medicine + +Straight and crooked thinking + +A more imaginative response to psychosomatic illness may be beneficial + +Jun 11th 2016 | From the print edition + + + +It’s All in Your Head: True Stories of Imaginary Illness. By Suzanne O’Sullivan. Chatto & Windus; 336 pages; £16.99. To be published in America by Other Press in January. + +Cure: A Journey into the Science of Mind Over Body. By Jo Marchant. Crown; 320 pages; $26. Canongate; £16.99. + +ABOUT a third of the patients seen by general practitioners in Britain have physical symptoms for which no cause can be found, including unrelenting pain, blindness, seizures and paralysis, according to the Royal College of Psychiatrists. Those who are later told that their suffering is due purely to psychological reasons often react with anger and denial; many refuse to see a psychiatrist; few ever recover. + +“It’s All in Your Head”, which won this year’s Wellcome Book Prize, is an illuminating account of psychosomatic disease by Suzanne O’Sullivan, a neurologist. Psychosomatic illness is not fully understood, but stress and traumatic events, such as rape and domestic violence, are suspected to be a cause. That may be why it is more common in women than men. Ms O’Sullivan unravels her patients’ past to explain how memories lodged in the subconscious—from a child’s death to a broken bone—can command debilitating physical illness, in some cases many years later. + +Psychosomatic diseases are ubiquitous and cost health systems a fortune (twice the cost of treating diabetes in America in 2002, for example), yet medical textbooks relegate them to footnotes. Patients reject the diagnosis as laden with stigma. Ms O’Sullivan’s book is a plea for change. Huge suffering could be averted if patients, doctors and everyone else stopped viewing them as diseases that are not “real”. + +Ms O’Sullivan’s book says almost nothing about what cures exist, mentioning specific treatments such as meditation only in passing. Where she leaves off, Jo Marchant picks up in “Cure”, a thought-provoking exploration of how the mind can affect the body and can be harnessed to help treat physical illness. + +People’s brains are wired to signal pain and exhaustion as a warning to the body when a physical cause exists, but sometimes also when there is none. Altitude sickness, for example, can strike even when blood oxygen is normal, triggered by an expectation of becoming sick. The brain may also be able to control the immune system, causing the body to reject a transplant or to turn on itself (as it does with autoimmune disorders such as Crohn’s disease). + +Many patients for whom no other treatments work are helped out of their misery by a placebo—be it a sugar pill or a mock procedure that mimics surgery. Strikingly, that is the case even when they know that a placebo is all they are given. It can provide relief for conditions considered to be purely physical, including chronic, degenerative and terminal ones, as well as some that may be psychosomatic, such as irritable-bowel and chronic-fatigue syndromes. That argues for a change to the current approach, which rejects everything that is “no better than a placebo” as useless. + +Ms Marchant talks to sufferers and scientists, and tries out some of the treatments that promise to trick the mind into curative action, including meditation, taking a mail-order placebo for a headache and floating through a virtual-reality ice canyon (which can relieve the excruciating pain suffered by burn victims by distracting them while their wounds are scrubbed). The evidence so far, she cautions, is often from a few small studies. These treatments, if proven to work in more and larger trials, would not help everyone. Some would be effective in combination with existing drugs that tackle the physical symptoms: a placebo can help people with arthritis cope with lower doses of pain medication, for example, and stress-relieving meditation can boost the effect of blood-pressure drugs. + +Two things hold back this new field. The first is a pervasive view in medical science that it is all outlandish. A recurring confession from the researchers Ms Marchant meets is that they fear for their academic reputation if they study alternative treatments (one describes the experience as coming “out of the closet”; “Everyone looked at me sort of funny,” says another). + +Connected to that, probably, is lack of funding for research. Pharmaceutical companies shun such treatments because they are not moneymakers. Only 0.2% of the $30 billion annual budget of America’s National Institutes of Health goes toward testing mind-body therapies. Ms Marchant’s book makes a convincing case why that is short-sighted. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21700362-more-imaginative-response-psychosomatic-illness-may-be-beneficial-straight-and/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Emil Zatopek + +Feet of fire + +The life of a great runner—and a good man + +Jun 11th 2016 | From the print edition + + + +Today We Die a Little! The Inimitable Emil Zatopek, the Greatest Olympic Runner of All Time. By Richard Askwith. Nation; 457 pages; $26.99. Yellow Jersey; £16.99. + +FEW athletes are good enough to win an Olympic gold medal. Few people are brave enough to stand up to a tyrannical regime. Emil Zatopek did both. The “Czech Locomotive” was the greatest long-distance runner of his era, and arguably of all time. He won four golds and a silver at the 1948 and 1952 games in London and Helsinki, including the treble of the 5,000 metres, 10,000 metres and marathon at the latter—an achievement that has never been matched. The Helsinki marathon was his first ever race at that distance; he broke the Olympic record by six minutes. + +But equally famous were Zatopek’s generosity and courage. In sport, that meant sharing training tips with whoever asked, pushing himself harder than anybody had before, and giving away one of his medals to an athlete he thought more deserving. Beyond running, he was known for welcoming travellers into his modest home in Prague, and publicly criticising the Russian invasion of Czechoslovakia in 1968 at great personal risk. + +This was not, as Richard Askwith reveals in a new biography, “Today We Die a Little!”, the first time that he had resisted. Remarkably, Zatopek threatened to withdraw from the Helsinki games after the Communist Party had prevented the son of a political dissident from competing. Eventually, the party backed down, such was his importance to Czechoslovak propaganda. Mr Askwith says he can think of only one other world-famous athlete who risked the best years of his career by resisting a government: when Muhammad Ali, the great American boxer who died on June 3rd, refused to serve in the Vietnam war (see article). Ali was barred from competing; Zatopek was more fortunate. + +Strangely, given the myths surrounding Zatopek, his defiance before Helsinki has been largely forgotten. It is one of many illuminating episodes that Mr Askwith has rescued from obscurity, while scrutinising popular tales. Yes, as a factory worker and then a soldier Zatopek used to train in army boots in the snow or on the spot, sprinting up to 32km (20 miles) a day. But probably not, as rumour had it, with his wife Dana, an Olympic javelin champion, on his back. He did indeed work in a uranium mine after his dismissal from the army in 1968. But as a labourer in exile, not a concentration-camp inmate. + +Mr Askwith, who has written two other books about running, is best when describing Zatopek on the track: chatting with his rivals in various languages while jostling for the front, scrunching his face and flailing his arms (“like a man wrestling with an octopus”, according to a contemporary sportswriter) while accelerating for the finish. He is thorough, too, with his subject’s political life. Zatopek was not a hardcore dissident. He benefited from his working-class background, believed in communism, fulfilled his propagandist duties and added his name to public letters condemning political prisoners. He recanted his criticism of the regime in 1971 as a broken man, unable to find respectable employment. + +Mr Askwith devotes much effort to defending his subject’s concessions to authority. A general willingness to yield to ruthless tyranny does not make Zatopek’s occasional acts of defiance any less courageous, he argues. Yet the author struggles to accept the fallibility of an Olympian hero, ultimately arguing that “it matters little how much of the Emil legend was real”. It is an odd conclusion to an otherwise rigorous account of someone who was not, as some believed, a saint—but, like Muhammad Ali, a great athlete and a good man. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21700365-life-great-runnerand-good-man-feet-fire/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Brazil + +Rich upon rich + +The lives of those whom Brazil made rich + +Jun 11th 2016 | From the print edition + + + +Brazillionaires: The Godfathers of Modern Brazil. By Alex Cuadros. Spiegel & Grau; 368 pages; $28. Profile; £10.99. + +ONE evening in 2012 Wanderson Pereira dos Santos, a poor, black labourer, was cycling home in Rio de Janeiro. Thor Batista, a rich, white socialite, was driving his SLR McLaren along the same road. Mr Batista says he was driving with due care; Mr Pereira dos Santos is not around to give his version of events. A collision between the two left his body scattered across the highway. + +When Alex Cuadros, an American journalist, moved to São Paulo in 2010, Mr Batista’s father, Eike, was worth $27 billion, making him Brazil’s richest man. Father and son were staples of Mr Cuadros’s job writing about the richest people in South America’s largest economy for Bloomberg news agency. His explorations of vast fortunes, and the access his beat gave him to their owners, provided the material for this book. + +As the collision on that Rio road illustrates, the lives of billionaires allow Mr Cuadros to explore Brazil’s vertiginous social and financial inequality, much of it closely aligned with race. And the story of Mr Batista senior mirrors another aspect of Brazil: its tendency to boom and bust. His fortune rested on oil, mining and logistics companies he set up during the commodity boom; when his oil wells turned out dry and investor sentiment towards Brazil soured, his empire collapsed. By 2015, when Brazil’s best lawyers managed to get Thor’s conviction for killing Mr Pereira overturned, his father’s cars, yachts and planes had been repossessed. + +Among the other larger-than-life characters in the book is Paulo Maluf, a former mayor of São Paulo so notorious for corruption that malufar has come to mean “to steal from the public purse”. Roberto Marinho, a media mogul who died in 2003, helped make and break governments—and shaped popular taste with his television channel’s wildly popular telenovelas. Edir Macedo, a televangelist, built a vast fortune on donations from the poor adherents of his prosperity gospel. Initially, Mr Cuadros writes, he was not enthusiastic about the billionaires beat. Poor people seemed more interesting. In this excellent book he has managed to use billionaires to illuminate the lives of both rich and poor Brazilians, and all those in between. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21700363-lives-those-whom-brazil-made-rich-rich-upon-rich/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Robert Rauschenberg + +Ripe for reassessment + +A year of Robert Rauschenberg exhibitions begins in Beijing next week + +Jun 11th 2016 | From the print edition + +Sum of its parts + +WHEN Robert Rauschenberg’s work was shown at the National Art Museum of China in Beijing in 1985, it attracted 300,000 visitors in just 18 days. Young art students travelled from all over the country to marvel at the art of the American master, and its effect was electric. It inspired a generation of avant-garde Chinese artists, who until 1979 had almost never seen Western art, to find their own way to challenge orthodoxy. + +One was Song Dong, just 19 and studying oil painting which he quickly abandoned. Now he is known for his performances and his ephemeral—sometimes edible—installations. Another was Huang Yong Ping, now 62 and a French citizen, who set up a group known as the Xiamen Dada, thrilled by the Dadaist provocations he had seen in Rauschenberg’s juxtapositions of found objects and imagery. Ai Weiwei, Xu Bing and Cai Guo-Qiang, three of China’s best known artists, all cite Rauschenberg as an influence. + +Just over 30 years later, Rauschenberg’s greatest piece, “The Quarter Mile”, also known as “Two-Furlong Piece”, a masterwork made up of 190 parts stretching 305 metres long, will be exhibited in its entirety for the first time. Again, the showcase is in Beijing, this time at the Ullens Centre for Contemporary Art (UCCA). And it will be interesting to see how the work will affect a new generation whose global vision is less restricted than that of its forebears. + +Rauschenberg first visited China in 1982 to work with the world’s oldest paper mill. “He wanted to make paper of an incredible thickness,” explains Philip Tinari, a 37-year-old Mandarin-speaking American who is an expert on 1990s Chinese contemporary art and director of UCCA. “He pushed these hidebound artisans to do something radical and new.” + +He also amassed a huge amount of photography and new ideas during the visit, which found their way into “The Quarter Mile”. “He often said it was autobiographical,” said David White, who started working with the artist in 1980 and is now a senior curator for the Robert Rauschenberg Foundation. “But it’s a series of experiments too.” Rauschenberg continued to work on the piece for 17 years, until 1998. + +If crossing boundaries across different media is now commonplace, Rauschenberg was there at the start. In 1950s New York, when Abstract Expressionism ruled and the (male) painter was king, he was reimagining the day-to-day, defying the restrictions of canvas and the very tenets of sculpture and painting. Even more than Andy Warhol, it was he who prefigured pop with a famous collage incorporating the face of John Kennedy. From there he went on to work freely in performance with the masters of the avant-garde—Merce Cunningham in dance and John Cage in music—first creating scenery, and then the lighting to do it justice. He forged links between art and science setting up E.A.T. (Experiments in Art and Technology) and delved deeply into lithography, then creating series of works on metal sheets. He worked right up until he died in 2008. + +Those unable to get to Beijing in the next two months will still be able to reassess for themselves where Rauschenberg stands in the canon. The first retrospective since the artist’s death will open at Tate Modern in December, before travelling to the Museum of Art in New York (MoMA) and later to San Francisco. The show will demonstrate not just the range of Rauschenberg’s practice, but also his consistency as an artist. “The youth culture of the 1950s and 1960s, civil rights, Janis Joplin, Reagan and on, this was an artist who continued to respond to the present,” says the exhibition’s co-curator, Achim Borchardt-Hume. “Younger artists, East and West, are still fascinated by that.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21700367-year-robert-rauschenberg-exhibitions-begins-beijing-next-week-ripe/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Obituary + + + +Obituary: Muhammad Ali: The greatest [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Obituary: Muhammad Ali + +The greatest + +Muhammad Ali, heavyweight boxer, died on June 3rd, aged 74 + +Jun 11th 2016 | From the print edition + + + +PURE skill was much of it. The brutal delicacy of the ring-craft, so rare in the heavyweight division. Among the lumbering sloggers he dodged and danced, floating like a butterfly, stinging like a bee. Faced with a solid, flat-footed opponent, as all seemed to be compared with him, he would circle, torment and mesmerise, throwing short punches at speed. All that weaving, skipping, leaning leisurely away, before coming in for the kill. Flooring Sonny Liston once with a punch so fast that no one quite saw it (see above). Taunting George Foreman to exhaustion by sinking into the slack ropes, just letting him punch himself out while his own fine, hard body absorbed the blows. He always knew when his rivals would topple. He would mimic their shuffling desperation and his own artistry, pummelling the air with fast, precise, furious fists. Let the old guard complain that he ducked and dipped too much, held his hands too low and his chin cocked too high; he won fights. + +And what fights. Fifty-six of them in his career, and only five defeats. One against Liston in 1964, when he was 22 and the odds were 7-1 against him, that left the world heavyweight champion too beat up after six rounds to come out of his corner. One against Cleveland Williams that was watched by the biggest indoor crowd yet seen in boxing, 35,460 people. The Rumble in the Jungle in Kinshasa in 1974, at which 60,000 Congolese cried “Ali, boumayé! Ali, kill him!” The Thrilla in Manila against Joe Frazier the next year, fought in 100-degree heat, to retain his title when he was 33 years old. Boxing had never been so entertaining or so global. In the whole bruised and bloody history of the sport, there had never been such a star. + +He was handsome, and knew it. “Ain’t I pretty?” he would pout and shout, daring anyone to think him effeminate also. Perfect musculature, long legs, regular features and not a mark on his face, just to prove how agile he was. Most heavyweights, black or white, wore their damage as a ruined mask. His looks lasted for most of his career, though as he got older and slower the beauty thickened. + +And in the face, that motor-mouth. His comic bragging made him the darling of sports reporters, irresistible copy. How did he train? Why, he handcuffed lightning, threw thunder in jail, murdered a rock, wrestled alligators, tussled with a whale. How would he despatch his opponents? Launch them into space like human satellites, pound them flat to hearthrugs, hit them so hard they’d wonder where October and November went. And what about him? He was king of all kings, young, brash, full of dash, shaker-up of the world, the greatest! No ring could contain him. + +But this was not his chief importance. In one person, he displayed every aspect of the struggles of blacks in mid-20th century America. Because he was a star but not a saint, as Martin Luther King was, he drew attention to their cause as no one else could: the frustrations of it, the temptations, the contradictions and the wrong turnings. In the end there came a kind of calm, when his gloves were hung up in the office of the first black president. How long a slog and punishment it had taken to get there. + +A black God + +Start with his childhood, in the separate worlds of the segregated South. That nice middle-class home on Grand Avenue which counted for nothing, because in Louisville, Kentucky black middle-class was nothing like white. His mother’s lowly job, cleaning bathrooms for white folks. The different water fountains and lunch counters, the seats at the back of the bus, the sense of being a dog to be kicked around. When he learned to box at 12—skinny in satin trunks, his defensive pose already good—it was mostly to whip the thief who had stolen his brand-new bike, and also because it seemed the fastest way, almost the only way, for a black youth to make it in America. + +Yet boxing, of all sports, still carried the stain of slavery on it: of the days when a whole crowd of white plantation-owners would sit around watching their two strongest slaves grapple and bloody each other. (His own first promoters in Louisville were all white men, several of them racehorse-breeders. They assessed him like blood-stock.) The black champions who emerged were meant to be noble, patient, heroic specimens of their race, making no trouble and playing no part in any political controversy. An uppity, lippy black like him, jabbering from six months old and always the orator at the centre of a crowd of boys, became an instant threat both to white men and, worse, white women. + +But he wasn’t likely to keep quiet about that. Denied entry to diners on a southern tour, he made one of his raps of it: “Man, it was really a letdown drag, For all those miles I had to eat out of a bag.” Told in a Louisville hamburger joint, when he went in wearing his Olympic gold medal, that they still didn’t serve niggers, he said that was fine; he didn’t eat them. But under the joshing lay depth upon depth of furious resentment. Fury that made him throw that gold medal into the Ohio river, because it had earned him no more respect from whites than he had had before. Fury that made him shout, at the peak of his career, that he was the part of America whites refused to recognise: “But get used to me: black, confident, cocky; my name, not yours; my religion, not yours; my goals, my own. Get used to me.” + +Anger, defiance and pride, all rolled up, led him to convert to the Nation of Islam. As a teenager, already the greatest that ever lived, barely literate but fanatically building up his lean, muscled body with raw-egg milkshakes and exercise, he couldn’t resist the teaching that man was originally created black, by a black God, and that blacks were the finest people on Earth. As time went on, he also agreed with Malcolm X that non-violent protest would get blacks nowhere. It took a coward to sit but it took a man to stand, as when, battered almost to death, a boxer came out of his corner. Violence called for violence, jab to jab, punch to punch; segregation demanded counter-segregation. Blacks and whites had no business marrying or living together. For a decade he railed against immorality like a true-dyed Muslim fanatic, though many, seeing him disappear into the tour van with yet another girl, wondered how deep it really went. + +His brand-new identity was the vital thing. By casting off his “slave name” of Cassius Clay, something he had never chosen and never wanted, he became a new sort of black man, his proper self: Muhammad Ali, “worthy of all praise, most high”. When the press ignored it, thinking it a stunt, he was incensed. If boxing rivals called him “Cassius” or “Clay” he would beat them within an inch of their lives, crying “What’s my name?” “What’s my name?” Black heavyweights who were not new men like him, still managed by white mobsters and dutifully silent about politics, he called Uncle Toms and “great white hopes” and mimicked their grunts and shuffles, ouf, ouf, ouf, like bears or apes. It became a habit, turned most viciously against Frazier and Foreman, funny and appalling both at once. + +In his own incarnation the threatening black fighter became a different being. He was tall, lithe, graceful, effortlessly eloquent—but also perilously loud, defiant, empowered. He was just as dangerous. Older boxers like Joe Louis, his closest rival for title of “best-ever”, wanted to be champions of all Americans, smothering their black frustrations to make everyone accept them. He was the undefeatable champion of his people, 30m oppressed blacks, and he was smothering nothing. + +This was the spirit in which he refused in 1967 to be drafted for the Vietnam war. Why should he go 10,000 miles to shoot “some darker people”, some poor hungry folk in the mud who wanted only their own freedom, their own justice? He had no quarrel with the Vietcong; they had never called him nigger, or lynched him, or put the dogs on him: “The real enemy of my people is here.” His punishment for saying so, the loss of his title and three and a half years out of boxing at his peak, was crushing, but he accepted it calmly, as the sort of thing a fresh Negro had always had to accept for speaking out, for 400 years; and went on saying the same thing in mosques and on college campuses, wherever they would listen to him. Barely able to read, he had to memorise everything he wanted to say, but it was in his mouth already: some peace-talk, some race-talk, and a lot about himself as the greatest fighter in the world. + + + +Carrying the torch + +There was no way out of this self-imposed exile, this sharp turn towards confrontation and even segregation, unless America changed. As it gradually happened, with war-weariness spreading and racial injustice eroding, so he changed too. He slowed as a fighter: allowed back in the ring in 1970, his status as a conscientious objector now established, his reflexes were duller and his body forced to absorb blows he could have evaded in his prime; Frazier’s defeat of him over 15 rounds the next year was the worst battering of his life. He wasn’t going to cry. Instead, it was America’s turn to regret the fights that might have been, the encounters that—to listen to him—would send his rivals flying out of the ring until even radar couldn’t track them. + +His radicalism, too, grew softer, until in 1975 he abandoned the Nation of Islam for the more orthodox, peaceful sort. Kindness, friendship and peace were his mantras now, with complimentary poems written even to the boxers he had scorned. More amenable, even extravagantly embraced, he could be invited to the White House, offered missions to Africa and asked in 1996 to carry the Olympic torch to open the games in Atlanta before a global audience of perhaps 3 billion people, the image of all black men being celebrated and respected in one man, whom the world adored. When the games ended he was given a gold medal, to replace the one he had thrown in the Ohio river. + +Yet change was also forced upon him. In Atlanta his hand shook as he lit the flame and his mouth trembled as he repeatedly kissed the medal, the unavoidable signs of Parkinson’s disease. Its rigid, numbing cloak was his vesture for 30 years. Like so many before him, he had gone on fighting long after he should have hung up his gloves. He had taken too many hard punches to that handsome, taunting head. His doctor told him to stop, but he ignored him. By the late 1970s, the days when he had to book 50 hotel rooms for his away matches were over. The hangers-on had slunk away, though not before he had given them, as well as Black Muslim charities, much of his fortune. By the mid-1990s, when he was signing boxing memorabilia for money, his wife had to spell out the letters for him one by one. He said simply: “I sign my name, we eat.” + +In old age, though, he was neither mad nor broke, as some boxers were. He was placid, serene and, in the face of his relentless illness, brave. That, too, became an image of the centuries-long endurance of blacks and their spiritual patience. He spent much of his time in contemplation, rising at dawn and kneeling to face Mecca to pray so long as his body was up to it. Conquering the world, as he had done time after time with pure punching skill, did not now seem the source of true happiness. Nonetheless, he still loved to watch film of his old bouts —“Soooh fast! Soooh pretty!”—and think what they had done for the self-esteem of his people. And his words, being now so few rather than so many, carried all the more conviction. He hoped to be remembered “as a man who never looked down on those who looked up to him.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21700356-muhammad-ali-heavyweight-boxer-died-june-3rd-aged-74-greatest/print + + + + + +| Section Menu | Main Menu | + + + + + +| Main menu | Previous section | + + + + +* * * + + + +Economic and financial indicators + + + +Interactive indicators [Fri, 10 Jun 14:21] + +Output, prices and jobs [Fri, 10 Jun 14:21] + +Trade, exchange rates, budget balances and interest rates [Fri, 10 Jun 14:21] + +The Economist commodity-price index [Fri, 10 Jun 14:21] + +The Economist poll of forecasters, June averages [Fri, 10 Jun 14:21] + +Markets [Fri, 10 Jun 14:21] + + + + + +* * * + + + +| Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Interactive indicators + +Jun 11th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21700372/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Output, prices and jobs + +Jun 11th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21700389-output-prices-and-jobs/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Trade, exchange rates, budget balances and interest rates + +Jun 11th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21700377-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The Economist commodity-price index + +Jun 11th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21700378-economist-commodity-price-index/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The Economist poll of forecasters, June averages + +Jun 11th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21700379-economist-poll-forecasters-june-averages/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Markets + +Jun 11th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21700376-markets/print + + + + + +| Section Menu | Main Menu | + + + +Table of Contents + +The world this week + +Politics this week + + + +Business this week + + + +KAL's cartoon + + + +Leaders + +Education: How to make a good teacher + + + +Brexit: Jeremy Corbyn, saboteur + + + +Fund management: Slow-motion revolution + + + +Agricultural technology: Feeding the ten billion + + + +The trade in albino bones: For the colour of their skin + + + +Letters + +Bacteria, Hainan, cotton industry, the Arab world, Essex, Brazil, quinoa, the far right: Letters to the editor + + + +Briefing + +Education reform: Teaching the teachers + + + +United States + +Hillary Clinton: Madam presumptive nominee + + + +The campaigns: Heard on the trail + + + +Republicans and welfare: Ryan’s ramble + + + +Chicago’s museum wars: Light against dark + + + +Swimming religiously: Scruples and splashes + + + +Cannabis in the capital: Federal haze + + + +Delta lives: Standin’ at the crossroads + + + +Lexington: Playground tactics + + + +The Americas + +Peru’s election: The fortunate president + + + +Corruption in Guatemala: Bad apples everywhere + + + +Canada’s daunting logistics: Airships in the Arctic + + + +Bello: The Mexican blues + + + +Asia + +South Korea’s working women: Of careers and carers + + + +Indian diplomacy: Modi on the move + + + +Japan and money politics: Shameless shogun + + + +Afghanistan-Pakistan relations: Frontier stand-off + + + +War in Afghanistan: The general’s words + + + +Banyan: Foreign lives + + + +China + +Wenzhou’s economy: It once was lost + + + +China-United States relations: Aerial chicken + + + +Middle East and Africa + +Morocco: The pluses and minuses of monarchy + + + +Public spaces in the Middle East: No bed of roses + + + +Ramadan in Saudi Arabia: Taking it to heart + + + +Trade in east Africa: Worth celebrating + + + +The killing of albinos: Murder for profit + + + +Europe + +Rome elects a mayor: Five-star surprise + + + +European football championships: Paris match + + + +Poland’s anti-government rallies: From Facebook to the streets + + + +Iran’s Turkish connection: Golden squeal + + + +How men and women vote: The lefter sex + + + +Charlemagne: The politics of alienation + + + +Britain + +Consequences of Brexit: Beyond the fringe + + + +Brexit brief: The charms of variable geometry + + + +Airport expansion: Up in the Eire + + + +Technology in prisons: Screens behind bars + + + +Industrial evolution: The digital economy + + + +University fundraising: Mortarboard in hand + + + +Taxes and benefits: The echo chamber + + + +Corporate governance: Shocking shopping + + + +Bagehot: The new J-curve + + + +International + +Foreign aid: Misplaced charity + + + +Where does the aid go?: Size matters + + + +Technology Quarterly + +The future of agriculture: Factory fresh + + + +Smart farms: Silicon Valley meets Central Valley + + + +Agricultural biotechnology: Bugs in the system + + + +Brain scan: Caleb Harper + + + +Crops of the future: Tinker and tailor + + + +Fish farming: Catch of the day + + + +Animal husbandry: Stock answers + + + +Towards 2050: Vorsprung durch Technik + + + +Business + +The internet of things: Where the smart is + + + +The internet of things: Job opening + + + +Google’s other businesses: Alpha minus + + + +Marketing rebates: Trust me + + + +Fosun: Bloated but still bingeing + + + +Household chemicals in South Korea: The germ of an idea + + + +Airlines in South America: No El Dorado + + + +Schumpeter: Their eyes on Albion + + + +Finance and economics + +Asset management: Index we trust + + + +Buttonwood: Secret agents + + + +Banks v investors: Of snowballs and red ink + + + +Dollar imperialism: The Fed’s tributaries + + + +America’s economy: When barometers go wrong + + + +The ECB buys corporate bonds: Unyielding + + + +Free exchange: Sibyl faulty + + + +Science and technology + +Cancer treatment: On target + + + +The international pharmaceutical market: Priced out + + + +Carbon capture and storage: Turning air into stone + + + +Fixing potholes: The hole story + + + +Human evolution: Hobbit forming + + + +Books and arts + +Palestine: The view on the ground + + + +Literary history: Born to be Wilde + + + +Alternative medicine: Straight and crooked thinking + + + +Emil Zatopek: Feet of fire + + + +Brazil: Rich upon rich + + + +Robert Rauschenberg: Ripe for reassessment + + + +Obituary + +Obituary: Muhammad Ali: The greatest + + + +Economic and financial indicators + +Interactive indicators + + + +Output, prices and jobs + + + +Trade, exchange rates, budget balances and interest rates + + + +The Economist commodity-price index + + + +The Economist poll of forecasters, June averages + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.06.18.TXT b/homeworks/B20769/homework1/data2/2016.06.18.TXT new file mode 100644 index 0000000..aa2bb31 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.06.18.TXT @@ -0,0 +1,5163 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Essay + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Jun 18th 2016 | From the print edition + + + +A gunman, apparently inspired by Islamic State, attacked a gay nightclub in Orlando, Florida, killing 49 people. The suspect, Omar Mateen, died in a shoot-out with police, who stormed the building. He was born in New York to Afghan parents and had attracted the attention of the FBI for a possible connection to a suicide-bomber in Syria, though no evidence of a link to terrorism was found at the time. The mass shooting, the deadliest in modern American history, prompted the usual calls for stricter gun-control laws and concomitant resistance from gun-rights groups. The share prices of gunmakers soared. See here and here. + +Donald Trump used the atrocity to air his idea of a temporary ban on Muslims entering America, and suggested he would expand this to citizens of any country with a record of committing terrorism against America. But in a move that seems to modify his strong support for gun rights, he said he would ask the National Rifle Association to back a ban on people who are on terrorist watch-lists from buying guns. See article. + +The Democratic primary in Washington, DC, brought America’s presidential primary season to a close. Hillary Clinton took almost 80% of the vote in the city. Afterwards, she met Bernie Sanders in private to discuss policy ideas they have in common. + +Nice work if you can get it + +A former government official in Argentina, José López, was caught by police trying to hide $7m in cash in a monastery while carrying a rifle. He served as public-works minister during the presidency of Cristina Fernández, who left office in December. + +A Mexican soldier was murdered while guarding the perimeter of a prison where Joaquín “El Chapo” Guzmán, Mexico’s most powerful drug- trafficker, is being held. The soldier’s body showed signs of torture. Mr Guzmán’s lawyers are resisting the government’s efforts to extradite him to the United States. + +The money-go-round + +Nigeria announced that it will allow the naira to float from June 20th. For the past 15 months it has been struggling to hold the currency at an artificially high level. Businesses, which have been unable to get the foreign exchange they need, celebrated. See article. + +A Kenyan court ordered police to arrest eight politicians, both pro- and anti-government, and investigate them over alleged hate speech. This was interpreted as a sign, following weeks of sometimes violent protests, of growing tension as elections loom next year. + +It was reported that Ethiopia and Eritreahave clashed on their border. Having fought a war in 1998-2000, the UN urged “maximum restraint”. + + + +In Bahrain a court banned the country’s main Shia opposition group. This came a day after police arrested Nabeel Rajab, one of the most prominent anti-government activists in the Arab world, nearly a year after he had been freed from his previous spell behind bars. + +Rounding up the rowdies + +Around 11,000 people were arrested in Bangladesh in a crackdown against Islamic militants. More than 40 atheists, secular activists and members of religious minorities have been murdered in the past three years. Sheikh Hasina, the prime minister, vowed that “each and every killer will be brought to book.” See article. + +The governor of Tokyo resigned after an apology failed to quell public anger over revelations that he spent public funds on comic books, a hotel suite and silk shirts. + +Indonesia’s doctors’ association chose not to co-operate with a presidential decree ordering chemical castration for child molesters, saying it violates doctors’ ethical code and will prove ineffective. + +A court in China jailed the son and wife of the country’s retired security chief, Zhou Yongkang, who was sentenced to life in prison last year for corruption, abuse of power and leaking state secrets. The son, Zhou Bin, was imprisoned for 18 years for taking 222m yuan ($33.7m) in bribes. The wife, Jia Xiaoye, was given a nine-year sentence, also for taking bribes. + +The Chinese Communist Party’s discipline-enforcement agency published a rare public criticism of another powerful party organ, the Publicity Department, which controls the media. It said some of the department’s leaders lacked sufficient “political awareness”, and it called on them to step up their efforts to promote the party’s ideology. President Xi Jinping recently reminded the media that they had to obey the party. + +Unpredictable killers + +In a Paris suburb a policeman and his partner, a police official, were killed in their home by an Islamist who had been monitored by the French intelligence service, raising concerns about how the country is managing to deal with “lone wolf” terrorists. + + + +Britain’s forthcoming referendum on whether to leave the European Union was too close to call. A worried Remain camp pressed Labour’s big guns to push hard to convince its supporters of the merits of staying in the union. Despite a late rush to register to vote, mostly by younger people, who tend to be EU-friendly, several polls showed a swing towards Leave. Ipsos MORI reported a big jump in concern among the public about immigration, the ace card for the Leave campaign. Expect a tired and exasperated David Cameron on June 24th, the day after the referendum, whichever way Britain votes. See here. + +Hansjörg Haber, the EU’s envoy to Turkey, resigned amid growing tension over a recent deal on migration. The European Commission announced that the country would not be granted visa-free travel in June, as previously thought, because it still did not meet all of the deal’s conditions. + +Russia—mired in recession, criticised over its invasion of Ukraine and at the centre of a doping scandal—could at least point to football hooliganism as something it exports well. Around 300 Russians turned the streets of Marseille into a battlefield when they fought English supporters at the European championships. The Russians were a different class of hooligan from the traditional English sort, abstaining from alcohol before a fight and well-versed in martial arts. Disturbingly, one Russian MP, who is also an official in the country’s football association, praised the actions of his compatriots, tweeting: “Well done lads, keep it up!” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21700703-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Jun 18th 2016 | From the print edition + +Microsoft said it would buy LinkedIn for $26.2 billion, which equals the combined amount Microsoft has paid for its next four largest acquisitions. The leading site for professional social-networking, LinkedIn has struggled to get its customers to use the site repeatedly. Microsoft, which is grappling to reinvent itself for the online age, might add LinkedIn to its Office software, so that, say, a profile pops up of someone completing a task similar to the one being worked on. Whether that will entice more people to use its products is an open question. + +Symantec, best known for its computer antivirus software, agreed to pay $4.7 billion for Blue Coat, a cyber-security firm that specialises in blocking malicious attacks. + +Swallowing the whole Pi + +The main distributor of components for the Raspberry Pi computer, Premier Farnell of Britain, was bought by Dätwyler, a Swiss rival, for £615m ($870m). The Raspberry Pi is sold cheaply as a batch of components that children (and adults) use to build the computer and learn coding. + +Gawker sought bankruptcy protection in light of the $140m in damages it has been ordered to pay to Hulk Hogan, a wrestler, for publishing a sex video in which he features. + +The Federal Reserve left interest rates on hold. Until recently it had been expected to raise rates this month, but it was unsettled by weak jobs data, among other things. However, the Fed did indicate that it plans two rate increases this year, so the guessing game about when that will happen starts all over again. + +Markets responded negatively to the Bank of Japan’s decision to hold off on any further easing to monetary policy. Before the decision Fitch lowered its outlook on Japan’s sovereign debt following the government’s decision to postpone a rise in the sales tax. Fitch said the delay prompted it to question Japan’s “commitment to fiscal consolidation”. + + + +Brexit jitters + +The prospect of Britain leaving the European Union weighed heavily on markets as opinion polls suggested the result of the referendum on June 23rd will be much closer than had been thought. Investors’ desire for safety drove the yield on German ten-year government bonds below zero for the first time. The pound continued its steep descent, falling at one point below $1.41. See here. + +An appeals court supported the Obama administration’s position that broadband providers should be classified as utilities and thus cannot offer faster speeds for certain content services over others. The ruling is a victory for “net neutrality”, the concept that telecom firms should not create fast or slow lanes for internet traffic that enable them to charge a premium. AT&T was not happy with the decision; it is taking the case to the Supreme Court. + +The Iranian government is ready to buy new passenger jets for Iranair from Boeing, according to Iran’s state media, a significant step since the lifting of most sanctions six months ago. Boeing would need final approval from the American government and Congress would almost certainly oppose the sale. + +The leading ride-hailing firms hauled in yet more capital. Didi, China’s biggest taxi app, said it raised $7.3 billion in its latest round of funding (including $1 billion from Apple). It is now estimated to be worth $25 billion. And for the first time, Uber was said to be seeking a leveraged loan of up to $2 billion. + +The kerfuffle over the collapse of BHS showed little sign of abating. Sir Philip Green, the retail chain’s former owner, appeared before a committee in Parliament to explain why he had sold the business for £1 last year to a former racing driver who had been declared bankrupt. Sir Philip said little about how he would fulfil his promise to plug the company’s pension hole of £571m ($810m). + +Guy Hands dropped his lawsuit against Citigroup, just three days after resuming his long-running legal feud with the bank over the advice it gave his private-equity firm in the disastrous buy-out of EMI. After a grilling in the witness box, Mr Hands said “memories of these events after nine years are no longer sufficient to meet the high demands of proof” for a fraud claim. His firm will pay Citi’s legal costs. + +One for customer relations + +Goldman Sachs was taken to court by Libya’s sovereign-wealth fund for allegedly taking advantage of its unfamiliarity with markets in 2008 to push it into buying risky, financial products. The trial began by presenting e-mails between Goldman bankers that disparaged their clients, referring to them as desert-dwellers with camels. Goldman’s lawyer said the bank had been diligent and that the Libyans were feeling “buyer’s remorse”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21700695-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Jun 18th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21700694-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Britain’s EU referendum: Divided we fall + +The Orlando attack: Aftermath of a tragedy + +India’s central bank: A second helping of Raghu + +South Africa: Cracking the monolith + +Female genital mutilation: An agonising choice + + + + + +Articles Sections Next + +Britain’s EU referendum + +Divided we fall + +A vote to leave the European Union would diminish both Britain and Europe + +Jun 18th 2016 | From the print edition + + + +THE peevishness of the campaigning has obscured the importance of what is at stake. A vote to quit the European Union on June 23rd, which polls say is a growing possibility, would do grave and lasting harm to the politics and economy of Britain. The loss of one of the EU’s biggest members would gouge a deep wound in the rest of Europe. And, with the likes of Donald Trump and Marine Le Pen fuelling economic nationalism and xenophobia, it would mark a defeat for the liberal order that has underpinned the West’s prosperity. + +That, clearly, is not the argument of the voices calling to leave. As with Eurosceptics across the EU, their story is about liberation and history. Quitting the sclerotic, undemocratic EU, the Brexiteers say, would set Britain free to reclaim its sovereign destiny as an outward-looking power. Many of these people claim the mantle of liberalism—the creed that this newspaper has long championed. They sign up to the argument that free trade leads to prosperity. They make the right noises about small government and red tape. They say that their rejection of unlimited EU migration stems not from xenophobia so much as a desire to pick people with the most to offer. + +Singapore on steroids + +The liberal Leavers are peddling an illusion. On contact with the reality of Brexit, their plans will fall apart. If Britain leaves the EU, it is likely to end up poorer, less open and less innovative. Far from reclaiming its global outlook, it will become less influential and more parochial. And without Britain, all of Europe would be worse off. + +Start with the economy. Even those voting Leave accept that there will be short-term damage (see article). More important, Britain is unlikely to thrive in the longer run either. Almost half of its exports go to Europe. Access to the single market is vital for the City and to attract foreign direct investment. Yet to maintain that access, Britain will have to observe EU regulations, contribute to the budget and accept the free movement of people—the very things that Leave says it must avoid. To pretend otherwise is to mislead. + +Those who advocate leaving make much of the chance to trade more easily with the rest of the world. That, too, is uncertain. Europe has dozens of trade pacts that Britain would need to replace. It would be a smaller, weaker negotiating partner. The timetable would not be under its control, and the slow, grinding history of trade liberalisation shows that mercantilists tend to have the upper hand. + +Nor is unshackling Britain from the EU likely to release a spate of liberal reforms at home. As the campaign has run its course, the Brexit side has stoked voters’ prejudices and pandered to a Little England mentality (see article). Despite Leave’s free-market rhetoric, when a loss-making steelworks at Port Talbot in Wales was in danger of closing, Brexiteers clamoured for state aid and tariff protection that even the supposedly protectionist EU would never allow. + +The pandering has been still more shameless over immigration. Leave has warned that millions of Turks are about to invade Britain, which is blatantly false. It has blamed strains on public services like health care and education on immigration, when immigrants, who are net contributors to the exchequer, help Britain foot the bill. It suggests that Britain cannot keep out murderers, rapists and terrorists when, in fact, it can. + +Britons like to think of themselves as bracingly free-market. They are quick to blame their woes on red tape from Brussels. In reality, though, they are as addicted to regulation as anyone else. Many of the biggest obstacles to growth—too few new houses, poor infrastructure and a skills gap—stem from British-made regulations. In six years of government, the Tories have failed to dismantle them. Leaving the EU would not make it any easier. + +How to make friends and irritate people + +All this should lead to victory for Remain. Indeed, economists, businesspeople and statesmen from around the world have queued up to warn Britain that leaving would be a mistake (though Mr Trump is a fan). Yet in the post-truth politics that is rocking Western democracies, illusions are more alluring than authority. + +Thus the Leave campaign scorns the almost universally gloomy economic forecasts of Britain’s prospects outside the EU as the work of “experts” (as if knowledge was a hindrance to understanding). And it dismisses the Remain camp for representing the elite (as if Boris Johnson, its figurehead and an Oxford-educated old Etonian, personified the common man). + +The most corrosive of these illusions is that the EU is run by unaccountable bureaucrats who trample on Britain’s sovereignty as they plot a superstate. As our essay explains, the EU is too often seen through the prism of a short period of intense integration in the 1980s—which laid down plans for, among other things, the single market and the euro. In reality, Brussels is dominated by governments who guard their power jealously. Making them more accountable is an argument about democracy, not sovereignty. The answer is not to storm out but to stay and work to create the Europe that Britain wants. + +Some Britons despair of their country’s ability to affect what happens in Brussels. Yet Britain has played a decisive role in Europe—ask the French, who spent the 1960s keeping it out of the club. Competition policy, the single market and enlargement to the east were all championed by Britain, and are profoundly in its interests. So long as Britain does not run away and hide, it has every reason to think that it will continue to have a powerful influence, even over the vexed subject of immigration. + +True, David Cameron, the prime minister, failed to win deep reform of Britain’s relations with the EU before the referendum. But he put himself in a weak position by asking for help at the last minute, when governments were at loggerheads over the single currency and refugees. + +Some Britons see this as a reason to get out, before the doomed edifice comes tumbling down. Yet the idea that quitting would spare Britain is the greatest illusion of all. Even if Britain can leave the EU it cannot leave Europe. The lesson going back centuries is that, because Britain is affected by what happens in Europe, it needs influence there. If Germany is too powerful, Britain should work with France to counterbalance it. If France wants the EU to be less liberal, Britain should work with the Dutch and the Nordics to stop it. If the EU is prospering, Britain needs to share in the good times. If the EU is failing, it has an interest in seeing the pieces land in the right place. + +Over the years this newspaper has found much to criticise in the EU. It is an imperfect, at times maddening club. But it is far better than the alternative. We believe that leaving would be a terrible error. It would weaken Europe and it would impoverish and diminish Britain. Our vote goes to Remain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21700637-vote-leave-european-union-would-diminish-both-britain-and-europe-divided-we-fall/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Orlando attack + +Aftermath of a tragedy + +The right lessons to learn from a deadly massacre + +Jun 18th 2016 | From the print edition + + + +WHEN Omar Mateen killed 49 people in a gay nightclub in Orlando on June 12th, did he commit the bloodiest mass shooting in modern American history, the worst ever attack on gay Americans or the deadliest act of Islamist terrorism since 9/11? America’s polarised political culture demands that people choose between these interpretations. For those on the left, Mr Mateen’s killing spree focuses attention on the problem of easy access to guns and on homophobia. For those on the right it shows that America has a problem with homegrown jihadis. For anyone not beholden to either camp the answer seems obvious: the attack was all three of these things. + +It was also an early test of how a President Trump might handle a crisis if elected in November. One of the finest moments of George W. Bush’s presidency was when he went to an Islamic centre six days after 9/11 and issued a call for tolerance and unity. Mr Trump’s first thought was to exploit the shooting to score a point: “Appreciate the congrats for being right on radical Islamic terrorism,” he tweeted. It got worse. The Republican nominee first implied that the president might secretly be in league with Islamic State (IS). Then he gave a speech which suggested that American Muslims are a fifth column who “know what’s going on” but choose not to tell the police about impending attacks. + +Aside from its jarring dissonance with the idea that the United States is a melting pot where everyone is American first, the speech was corrosive, because it sought to turn Americans against each other, and foolish, because America needs co-operation from Muslims at home and abroad to prevent attacks. + +It was also plain wrong. America’s Muslims are prosperous, well-educated and, with the exception of recent arrivals from Somalia, well-integrated. There is already a lot of co-operation between mosques and the FBI. Home-grown acts of terrorism are, fortunately, rare, and they are not confined to those who claim to be acting in the name of Islam. + +Seen another way, the attack was a crime motivated by a mixture of hatred against gay people with—judging by reports that Mr Mateen himself visited the club—an element of self-loathing. The speed at which most Americans have become tolerant of gay people is astonishing. In 2003 Florida still had a law against sodomy. Thirteen years later it was legal for the men and women at the Pulse nightclub not only to go home with whomever they pleased, but to marry them as well. + +American Muslims are slightly more likely to support gay marriage than evangelical Christians are. But rapid social change always leaves some people behind. When America abandoned racial segregation, a small, fanatical group of white supremacists remained. Something similar may happen with gay Americans, who find their sexuality is met with indifference from parents, friends and colleagues, but with occasional, shocking acts of violence from bigoted strangers. + +The silver bullet they won’t fire + +Lastly, the shooting shows that America has a unique vulnerability to lone-wolf attacks because of its gun laws. In France two people were killed the day after the Florida attacks by a man who claimed inspiration from IS. He wielded a knife. Armed with an assault-rifle and a semi-automatic pistol he could have killed many more. In America Mr Mateen was able to walk into a local gun store and buy everything he needed to kill or wound 102 people, without breaking any law. + +Mass shootings do sometimes happen in countries with strict gun laws. But they are far more frequent in America, which has seen 37 incidents in which at least four people were killed in the past decade alone. These numbers do not take account of the more humdrum shootings that make the news only if someone famous is involved (the night before the shooting at Pulse a singer was shot dead in Florida by a fan) or if the victim is a child or a policeman. + +Is it too much to hope that anything will change after this week’s carnage? Public support for tighter gun laws is high, but gun-owners are determined not to relinquish their weapons or to be prevented from buying more (see article). Polling suggests that most people with guns think that firearms make them and their families safer. They are impervious to statistics on accidental deaths of children. Even if gun purchases were banned tomorrow, about 300m firearms would remain. + +After previous mass shootings, such as the one in Newtown, Connecticut, when 20 children died, Republican-controlled state legislatures passed looser gun laws. Florida’s state legislature has debated doing away with the state’s ban on guns in schools and colleges, on the ground that it is always safer to arm more people. The Orlando shooting ought to erode support for permissive gun laws. Sadly, experience suggests it is likely to have the opposite effect. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21700636-right-lessons-learn-deadly-massacre-aftermath-tragedy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +India’s central bank + +A second helping of Raghu + +The governor of the Reserve Bank of India should be asked to serve a second term + +Jun 18th 2016 | From the print edition + + + +WHEN Raghuram Rajan was put in charge of the Reserve Bank of India (RBI) three years ago he warned that the job of a central banker was not to chase votes or Facebook “likes”. With just weeks until the expiry of his term in September, and with no news on whether he might be kept on, the endorsements have built up anyway. Nearly 60,000 well-wishers have signed an online petition asking Narendra Modi, India’s prime minister, to extend his tenure. Various Rajandevoted pages on Facebook have a combined fandom of over 250,000 people. Janet Yellen and Mario Draghi, his all-powerful counterparts in America and Europe respectively, cannot muster 10,000 thumbs-up between them. + +Such adulation makes many suspicious. Mr Rajan has come under sometimes ugly attack from within Mr Modi’s BJP party. One member of parliament has described him as “mentally not fully Indian” on account of his international career. (Mr Rajan came to global prominence as chief economist of the IMF and is a plausible candidate for the fund’s top job.) The criticism has made a swift reappointment politically tricky. Many guess that a second Rajan term is on the cards: sitting RBI governors are ritually reappointed, to bring their term to five years. But few expect word to come before August, despite some previous governors getting the nod as much as seven months in advance. + +That would be a mistake. Mr Modi should stop dithering and reappoint Mr Rajan as soon as he can. The case for extending his tenure rests both on his performance and on the challenges that await (see article). Mr Rajan was appointed in the midst of an incipient balance-of-payments crisis, which he did well to defuse. On his watch inflation has fallen from over 10% to under 6%. That is in part because of help from tumbling commodity prices, but Mr Rajan has also gradually instilled expectations of single-digit consumer-price rises. In the past three years the government has agreed to the introduction of an inflation-targeting regime and the creation of a monetary-policy committee. And under his leadership the RBI has forced state-owned banks to recognise trillions of rupees of dud loans made in a mini-credit-boom five years ago. That has earned Mr Rajan the enmity of a few (not least some of India’s most powerful tycoons) who had hoped their debts would be quietly forgotten. + +Greater trials are to come. Whoever runs the RBI next year may face the first proper test of the new inflation-targeting regime, particularly if India pays more for crude oil (which it imports in large quantities) or if, against expectations, food prices are pushed up by a third year of drought. Having an experienced governor like Mr Rajan would bed the system down. + +A sharper focus will also be needed on banks. Recognising the bad loans was a necessary first step, but it will be years before they are dealt with properly. A new bankruptcy law due to come into force over the next couple of years should help banks stay out of trouble—if the RBI can make sure it is properly implemented. A set of new banks given freshly minted licences will require sound supervision. + +Last days of Rajan? + +Mr Modi may be calculating that a short delay is economically costless. Not so. Talk of “Rexit” while the government refuses to make a decision on the governor’s future has shaken the rupee. International investors the government has tried so hard to woo are perplexed. Despite enviable growth numbers, India is not in such good shape that it can afford self-inflicted harm, especially with the global economy in a sorry state. Mr Rajan should be asked to stay on without further ado. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21700654-governor-reserve-bank-india-should-be-asked-serve-second-term-second-helping/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +South Africa + +Cracking the monolith + +Voters should stop giving the African National Congress a blank cheque + +Jun 18th 2016 | From the print edition + + + +A GOVERNMENT without a serious opposition is a dangerous thing, even in a democracy. Unless voters have a genuine alternative, the ruling party has little incentive to govern well. And if one party has all the power, those who wish to abuse public office to enrich themselves will surely join it. + +Since democracy came to South Africa with the dismantling of apartheid and the holding of the first all-race elections in 1994, the country has been utterly dominated by one party. South Africans owe a vast debt of gratitude to the African National Congress (ANC) for its long years of struggle against white rule. But that does not give the liberators a right to govern for ever. Like any political party, they should be judged by results. And owing to policy drift, cronyism and corruption, the results are not good. + +Unemployment stands at 26.7%, by the government’s own reckoning; add in discouraged workers who no longer bother to register and the number is more like 35%. The economy shrank by an annualised 1.2% in the first quarter of this year, after growing by only 0.4% in the quarter before. South African bonds are rated one notch above junk, and a further downgrade is expected by the end of 2016. In the past year the rand has lost 15% of its value against the dollar. + +Politically, the situation looks awful, too. In March the president, Jacob Zuma, was found guilty by the country’s highest court of having violated the constitution by refusing an order to pay back money he took from the state to build himself a private mansion. Corruption charges against him, dropped in 2009, are likely to be reinstated soon. Last year the president fired his respected finance minister, apparently because he had refused to sign off on a nuclear-power deal with Russia that Mr Zuma favoured. Rumours planted by the president’s cronies last month suggested that the current, also impressive, finance minister, Pravin Gordhan, faced imminent arrest (he has so far survived, but is weakened and consequently less likely to challenge Mr Zuma’s excesses). + +Until the ANC faces a genuine threat at the ballot box, none of this is likely to change. It won 62% of the vote at the most recent general election, in 2014. Its nearest rival, the Democratic Alliance (DA), managed barely a third of that. Still, the ruling party is not as secure as it once was: a breakaway far-left group, the Economic Freedom Fighters (EFF), took a surprising 6%. And now the ANC faces what could be its toughest test yet (see article). Municipal elections are due on August 3rd. The DA has run Cape Town well and honestly for many years. It has high hopes of breaking out of that enclave and taking power in several other big cities. The greatest prize would be Johannesburg, the country’s commercial capital. That race may be beyond its reach, but others are not. If the DA can take, and make a good fist of running, a slate of municipalities, that will stand it in excellent stead at the 2019 general election. + +Incremental reformers v revolutionary hucksters + +To do so, it must overcome two obstacles. First, it must persuade black South Africans, who are 80% of the population, that it is not just a party for white and coloured (mixed-race) people. Here it has made progress: it is now led by a black politician and is the closest thing South Africa has to a post-racial party. Second, it must persuade voters that the best alternative to the ANC is the DA’s platform of incremental liberal reform, rather than the EFF’s wild promises of revolution, nationalisation and jobs for all. South Africa needs an opposition, but not one that sees Zimbabwe as a role model. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21700650-voters-should-stop-giving-african-national-congress-blank-cheque-cracking-monolith/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Female genital mutilation + +An agonising choice + +After 30 years of attempts to eradicate a barbaric practice, it continues. Time to try a new approach + +Jun 18th 2016 | From the print edition + + + +OF ALL the ways in which women and girls are made to suffer because of their sex, infibulation is perhaps the worst. Each year 400,000 are subjected to this atrocity in which the external genitals are excised and the vagina stitched almost completely closed (see article). More than 4m undergo some form of female genital mutilation (FGM) each year—a range of practices, from infibulation at one end, through incisions or pricks that hurt but cause no lasting damage, to the merely symbolic, such as rubbing the genitals with herbs. + +For three decades campaigners, led by the UN, have tried to end all FGM. They have pushed for bans and prosecutions; trained medical practitioners to refuse requests for it; lobbied religious leaders to oppose it (though FGM is not mentioned in the Koran, many Muslims regard it as part of their faith); and tried to persuade parents of its dangers. They have had some success. Between 1985 and 2015 the countries where FGM is most common saw the share of girls cut fall from 51% to 37%. + +There are good arguments for a blanket ban on FGM. One is that medical procedures with no possible benefit are unethical—especially when inflicted without consent, on children. Another is revulsion at FGM’s misogynist roots: the motive is generally to cleanse the girl of some supposed impurity and tame her sexual desires, thus ensuring her virginity until marriage and fidelity thereafter. + +But progress has been slow, especially in the African countries where the worst forms are common. On current trends, most girls in Somalia and Djibouti will see their own daughters mutilated, too. + +It is therefore time to consider a new approach. Instead of trying to stamp FGM out entirely, governments should ban the worst forms, permit those that cause no long-lasting harm and try to persuade parents to choose the least nasty version, or none at all. However distasteful, it is better to have a symbolic nick from a trained health worker than to be butchered in a back room by a village elder. If health workers also advised parents that even minor rituals are unnecessary, progress towards eradication could continue. + +Might “harm reduction” lend spurious legitimacy to all types of FGM? Yes, but it has worked in other fields. Shooting galleries for heroin reduced HIV without increasing drug-taking. Free housing keeps homeless alcoholics out of hospital and, by making their lives less chaotic, helps them drink less. + +A different comparison, with male circumcision, is also instructive. Unless botched, that procedure causes no lasting pain or impairment—but it also has no medical justification (except to slow the spread of HIV in countries where it is common). Nonetheless, circumcision is widely accepted, because of its cultural and religious significance. Activists focus on unhygienic traditional versions. + +From worse to merely bad + +No one knows whether parents could be persuaded to abandon the worst horrors of FGM for versions that, while still pointless and painful, would not leave their daughters damaged for life. That is because no one has tried. Various Western doctors have advocated offering minor forms of genital cutting to sub-Saharan immigrants, in the hope of sparing their daughters from a trip home for infibulation. Each time the outrage—from the UN, activists and many other medics—has forced them to retract. + +Faced with the urgency of saving 400,000 girls from severe mutilation each year, arguments without evidence are not good enough. There is only one way to find out whether FGM can be ameliorated more quickly than ended: try it and see. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21700658-after-30-years-attempts-eradicate-barbaric-practice-it-continues-time-try-new/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On Brexit, populism, Donald Trump, women, language: Letters to the editor + + + + + +Articles Sections Next + +On Brexit, populism, Donald Trump, women, language + +Letters to the editor + +Jun 18th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +In or out? + +Like Bagehot (May 28th) I have felt the powerful emotional draw to stay in Europe: proximity, familiarity and convenience. But my worst business decisions have sprung from the heart and ignored the logic of engaging with businesses that speak my language and share my vision, values and rules. We got married to Europe after our first proposal was rejected by Charles de Gaulle and we paid a hefty dowry to win his hand. We hoped to change our spouse to our better ways. Our hearts swayed us to save that marriage even if the spouse did not become who we hoped. + +My business head suggests we should end our struggling, restricted relationship with a declining Europe, without excluding or forgoing our European trade and travel, and enjoy a restored broad trading relationship with the vaster, growing global common-market of the English-speaking world that we abandoned and which is where our history truly lies. Restoring that trade relationship would do more to tackle world poverty, curb conflict and moderate migration than our membership of the European Union can ever achieve. It is not our role to prevent conflict in Europe; it is to prevent it in the world. + +Divorce is emotionally painful, costly and comes with uncertain prospects but, if the relationship has soured, it is best for both parties: if one is brave enough to let the head rule the heart. + +IAN GORDON + +Managing director + +IDG Security + +Singapore + + + +As you noted (“Yes, we have no straight bananas”, May 28th), EU standards and regulations are essential to the proper functioning of the single market. The EU’s environmental rules focus on issues like climate change and air pollution that are better tackled at a cross-border rather than at a national level. The environmental rules have also had a positive impact on British businesses by giving them a level playing-field with their competitors in the EU, reducing the cost of complying with varying regulations in different member states and driving innovation by setting standards, such as on energy efficiency, that apply across the single market and its 500m consumers. + +It would be a shame if British businesses, which are often at the cutting edge of sustainability and low-carbon innovation, lost the opportunity to influence these rules in the future. + +NICK MOLHO + +Executive director + +Aldersgate Group + +London + + + +Why do London-centric journalists think Hadrian’s Wall is on the border with Scotland (“Tug of war”, June 4th)? It is in the south of the English county of Northumberland, as any glance at a map would show. Unless there is some Machiavellian plan to cede vast areas of northern England to Scotland, it would be more appropriate to place post-Brexit customs controls along the River Tweed. + +DAVID HURRELL + +Alnwick, Northumberland + +* If most of Northumberland is to be shunted into Scotland in this way its inhabitants may well feel gratified if, in the event of Brexit, Scotland eventually breaks away from a doomed UK. Better to be with the pro-EU Caledonians than the rump, paranoid and insular state, which would remain, forever isolated and shunned in bitter austerity. + + + +STEPHEN SMITH + +Hawick, Scottish Borders + +Take care your criticism of Britain’s opposition leader doesn’t become a phobia (“Jeremy Corbyn, saboteur”, June 11th). A politician who steps out of the limelight is rare indeed, and has many virtues. We have seen the opposite in our prime minister whose policy is based on knee-jerk reactions, not only in an unnecessary referendum on the EU which has all but paralysed Westminster for three months, but on education, airport runways, high-speed trains, the Arab crises, renewable energy…the list is unending. He covers his mistakes as well as he covers his balding crown. With increasing difficulty. + +MIKE DONOVAN + +Ross-on-Wye, Herefordshire + +I find EU referendum politics to be thoroughly fatiguing and eagerly await a conclusion. Averse to upheaval, I will be backing Brinertia. + +SUJATA BISWAS + +Oxford + + + + + +An unpopular tag + +The Economist’s addiction to the epithet “populist” has spun out of control. You put that label on pitches and policies as different as hard-wired xenophobes, plutocratophobes, economic chancers, thoughtful progressives, trade protectionists and political opportunists. Your recent list includes (among many others) Pat Buchanan, Marine Le Pen, the Kirchners, Jeremy Corbyn, assorted middle-European cryptofascists, the Sun, a long-established centrist Irish political party, Latin American presidents who cap the pay of senior civil servants, and the chief minister of Sarawak who (good grief!) did away with road tolls and brought in new protections for the environment (“Rumbles in the jungle”, May 7th). + +What do the members of this vast, ever-growing universe actually have in common? First, they seek to appeal to people (find me the politician who doesn’t). And second, The Economist doesn’t approve of them. I suggest restraint. + +BRYAN DUNLAP + +New York + + + + + +Mr Trump should take a nap + +Schumpeter’s column from the May 28th issue mentioned two studies, one which found that staying awake for 20 hours has the same effect on performing cognitive tasks as having a blood-alcohol level of 0.1%, and the other suggesting that being deprived of sleep leads people to adopt a more negative attitude. + +PolitiFact awarded Donald Trump the title of “Liar of the Year”. This was because apparently only 2% of what he says is true, 22% is either mainly true or half true, and the other 86% is either mostly false, false or so false it rates a “pants on fire”. Mr Trump claims he only gets up to four hours sleep a night. If that is true, it would certainly explain a lot. + +SIMON CLEWS + +Surrey, Canada + + + + + +Smash the glass ceiling + + + +* The role of women in the workplace and labour market remains a significant issue in need of discussion and, more importantly, action. It is fantastic that progress has been made since the financial crisis (“On the up”, May 28th), but we mustn’t neglect the factors that continue to hold women back. + + + +Chief among them is unconscious bias in recruitment and people decisions, such as promotions and personal development, which continue to overlook and disadvantage female candidates. This is a factor which many of us recognise in theory, but is impossible to tackle without the intervention of technology to counter our human impulses and prejudices. With decisions about people increasingly made using automated, online systems and processes, there is a huge opportunity for companies to harness the power of machine learning to outsmart unconscious bias at source, picking up and weeding out the tell-tale signals to give women the level playing field they deserve and increase diversity at all levels. + + + +KIRSTIE KELLY + +Company director + +LaunchPad Recruits + +London + + + + + +Definition and meaning + +After reading Johnson’s attack on “language guardians” (June 4th) I confess sympathy for the poor crusader who removed “comprised of” from Wikipedia articles. I feel the same about “forthcoming” and “forthright”. The former, properly used, has a timing component, as in “the forthcoming book is much anticipated”. Lately, though, it has become a synonym for “forthright”, meaning honest and frank, to the point it has virtually displaced it. + +JEFF MERCER + +Chicago + +I nervously differ from Johnson. The word “of” in “comprised of” is surely redundant, as in “water comprises hydrogen and oxygen”. + +BARRY LEWIS + +New York + +I disagree that the degradation of meaning simply means that language has “moved on”. If we use “comprise” interchangeably for “compose”, or “begs the question” for “prompts the question” we lose the shades of meaning which help intelligent discourse. Indeed, we head inevitably to something that is doubleplusungood. + +MICHAEL CORGAN + +Associate professor of international relations + +Boston University + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21700607-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Brexit: What if? + +In their words (I): Heard from overseas + +The referendum campaign: The Battle of Evermore + +In their words (II): Heard on the trail + + + + + +Articles Sections Next + +Brexit + +What if? + +The aftermath of a vote to leave the European Union will depend on unpredictable responses in all sorts of places. It is unlikely to be pretty + +Jun 18th 2016 | BERLIN, LONDON, PARIS AND ROME | From the print edition + + + +BEFORE the campaigning for Britain’s referendum on the European Union hit its stride, some people quaintly imagined that it might settle things once and for all, lancing the boil of an argument that has been festering for the best part of a generation. Fat chance. A victory for Remain would leave Britain divided, the losers embittered and political life coarsened (see article). A victory for Leave, which is what the latest opinion polls predict, would see economic turmoil and political strife as the winning side learned that, for all it might have talked of taking back control, it remained at the mercy of economic forces and the members of the union it had spurned. + +David Cameron says that if Britain votes to leave he will immediately invoke Article 50 of the Lisbon treaty, which sets out the rules for negotiating a member state’s departure. That would give the two sides two years to finalise a deal—a timetable that can be extended only with the consent of all concerned. If no agreement were reached Britain would have to fall back on trading with the EU under World Trade Organisation (WTO) rules, which would imply tariffs and no special deal for financial services. + +Mr Cameron also says he will stay on as prime minister and represent Britain in those negotiations; some in the Leave camp, such as Michael Gove, the justice secretary, say that they, too, would like him to stay. But it is hard to imagine that the victorious Leavers would really be happy seeing the leader of the Remain campaign negotiating Britain’s new deal with the EU. The odds are that the Tories would be looking for a new leader within days. + +All or nothing at all + +What sort of deal might that new leader try to get? Some want no deal at all. A group called Economists for Brexit (EFB) suggests simply abolishing all import tariffs. The ensuing rise in trade, it says, would boost GDP by 4%. Yet this prediction relies on small changes in trade costs having implausibly large effects on how much trade goes on, say researchers at the London School of Economics. Besides, the EFB assumptions are politically implausible. + +At the other end of the range of options is a deal in which Britain, while leaving the EU in accord with the will of its people, remains part of the EU’s single market. This is the arrangement Norway has, by dint of the European Economic Area; Switzerland, though not a member of the EEA, has something similar. In Norway’s case the deal means accepting the free movement of labour and observing almost all EU regulations while having no say in writing them. And it contributes heavily to the EU budget for this privilege. + +The Leave campaign’s strongest cards are the public’s distaste for immigration, its desire for self-determination and its dislike of sending money to Brussels (see article). This suggests that the Norwegian option would be unacceptable to the pro-Leave majority of the Tory rank and file, who will get the final say in the choice of the next party leader. The prospective leader who wins their support is likely to have to promise blocks on the free movement of labour. That probably means getting nothing more than a bespoke free-trade deal for some sectors at best, with WTO rules the fallback option. + +Once that leader becomes prime minister, though, he or she will have to deal with the will of Parliament. Fewer than 150 Conservative MPs and only a handful from Labour are openly backing Leave; even if some others are playing a waiting game, that suggests a large majority for Remain among the 650 members of the House of Commons. Those MPs might well prefer a Norwegian option to WTO rules. If push came to shove—and the campaign has shown a marked tendency for pushing and shoving—a Tory leader committed to a right-out-of-the-single-market version of Brexit might not be able to win a vote of confidence. An autumn general election could then follow. + +Whether MPs go that far will depend in part on how dire the economic response to a Leave vote turns out to be; the worse things look, the more important it will seem to try and stay in the single market. Estimates of Britain’s economic growth this year have already dropped to 2%, barely above what is expected of the euro-zone (though were Brexit to come about, the euro-zone’s growth would be hit, too). Investors have been selling sterling assets at the fastest rate since the financial crisis of 2007-08; the pound has dropped by 7.5% over the past 12 months. This is part of a broader move into safer assets (see article), but it also reflects Brexit fears. + +The National Institute for Social and Economic Research (NIESR), a think-tank, predicts a 2.9% fall in GDP in the short run and worse in the long run, brought about by factors like lower trade and falling foreign direct investment. The knock-on effects would hit productivity and wages; a further fall in sterling would push up prices. Tighter controls on migration would make things worse. + +Wonks are poor forecasters, say Brexiteers. Indeed, the Leave camp claims that recent data suggest Brexit might help the economy. In April exports rose to their highest level for three years in nominal terms. A Brexit-induced slump in sterling, the argument goes, would boost the economy further. This is not necessarily true. Foreign orders do not respond instantly to depreciation—which also raises the cost of imported inputs. The hit to confidence and credit from Brexit would hurt exporters more than a weak pound would help. In 2008-09, when sterling slumped, exports barely responded. + +On June 14th George Osborne, the chancellor, said that in light of these likely effects a Leave vote would necessitate an emergency budget to raise taxes and cut spending. Mr Osborne’s announcement feels more like an attempt to frighten voters—or perhaps a scorched-earth strategy—than a politically plausible plan. But at some point a deficit swollen by Brexit would have to be dealt with. + +The severity of the prompt economic fallout may determine what sort of deal Britain tries to get. But the results of any negotiations will depend on how generous its EU partners would be. The terms of any new trade deal would have to be agreed on unanimously, which could make the complexity of the negotiations overwhelming. Donald Tusk, president of the European Council, says it might easily take seven years. And the three biggest economies, Germany, France and Italy, while all wanting Britain to remain, are not willing to let it leave unscathed. + +France is the foremost scold. Although its president, François Hollande, has kept quiet during the referendum campaign, for fear of provoking greater pro-Brexit feeling, he made his views clear at a Franco-British summit in Amiens in March. “I don’t want to scare you,” he said, but a Brexit vote would have “consequences”. + +The kindness of soon-to-be strangers + +French politicians see playing hardball in the negotiations rather as Voltaire saw the execution of Admiral Byng following his loss of Minorca; the sort of thing that has to be done “pour encourager les autres”. The worse Britain does on its own, the more it will encourage others to stick with the EU. This includes the others at home; France’s populist National Front is promising voters their own referendum. In 2005 the French voted down the draft EU constitution, shocking their political leaders. Today they are second only to Greece in their Euroscepticism. A new Pew poll finds that 61% of French voters have an unfavourable view of the EU; the British figure is just 48%. + +The French government is also working on ideas to breathe life into the European project that will focus on defence and security co-operation. There is irritation in Paris that the government has put European initiatives on hold for many months to avoid upsetting British voters. “This can’t go on for ever,” says one minister. France wants to present these ideas to the European Council at the end of June and hopes for Germany’s support. Thomas de Maizière, the German interior minister, sat in on a French cabinet meeting on June 15th; Mrs Merkel was due to watch the Germany-Poland football match with Mr Hollande at the Stade de France the next day. + +Like the French, German politicians are cautious in discussing Brexit for fear that foreign warnings could boost the Leave campaign. But the country is keen for Britain to stay. Germany wants the EU to move in a broadly Anglo-Saxon direction (see article). It would like it to concentrate on cutting bureaucracy, returning powers to governments (while limiting state intervention) and co-operating more in foreign policy rather than pushing deeper integration. “In Berlin everyone’s keeping fingers crossed,” says David McAllister, a German member of the European Parliament who has a Scottish father. If Brexit wins, he says, he will cry for days. + +Wolfgang Schäuble, Germany’s finance minister, has warned that Britain cannot expect favourable treatment after an exit vote. “In is in. Out is out,” he says. But many expect Germany, which has a big trade surplus with Britain and would not want to damage its own exporters, to take a softer line than France. “Germany will play the good cop, and France will play the bad cop,” says Yves Bertoncini, director of the Jacques Delors Institute. But this does not mean Germany will truly be on Britain’s side, any more than good cops really side with crooks. The National Front and Frexit frighten Germany, too. + +Matteo Renzi, the Italian prime minister, has played down Brexit, saying that it would be a disaster for the British, but not a huge drama for Italy and the EU. But Italy would definitely like Britain to stay. For one thing Mr Renzi often finds himself on the same side as Britain in the council; he would feel more isolated without it. There is also scarcely a middle-class family in Italy’s big cities that does not have a child working or studying in Britain. + +And, as in France, there is a fear that Brexit would encourage Euroscepticism at home, both in the xenophobic Northern League and the populist Five Star Movement. Given the sick state of Italy’s economy, which has barely grown since it joined the euro, they might easily be convinced to leave. + +Would Mr Renzi’s government join others in taking a tough line? “We are not particularly tough. It is not in our DNA,” says Marta Dassu at the Aspen Institute, who is also a former junior foreign minister. “But I think we would wish to align our positions with those of France and Germany. We would want to stay in the core.” + +If Brexit means that this core fears for its continued cohesion, or is unable to persuade all the other members of the EU to accept a new trading arrangement, the chances of Britain getting a good deal from its former partners will be slim indeed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21700692-aftermath-vote-leave-european-union-will-depend-unpredictable-responses/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +In their words (I) + +Heard from overseas + +Jun 18th 2016 | From the print edition + + + +“The US and the world need your outsized influence to continue—including within Europe.” + +Barack Obama, American president, April 23rd. + +“I...would hope and wish for the UK to stay part and parcel of the EU.” + +Angela Merkel, German chancellor, June 2nd. + +“I don’t want to scare you but…there will be consequences in many areas.” + +François Hollande, French president, March 3rd. + +“Brexit would be a defeat for Europe, but it would be a disaster for the United Kingdom.” + +Matteo Renzi, Italian prime minister, May 27th. + +“A vote to leave would make the UK aless attractive destination for Japanese investment.” + +Shinzo Abe, Japanese prime minister, May 5th. + +“From our point of view, it is an unalloyed plus for Britain to remain in the EU.” + +Malcolm Turnbull, Australian prime minister, May 1st. + +“It is possible to live outside the EU. One is free or one is not.” + +Marine Le Pen, leader of the French National Front, April 20th. + +“I know Great Britain very well…I would say they’re better off without it.” + +Donald Trump, Republican candidate for the American presidency, May 5th. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21700693-heard-overseas/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The referendum campaign + +The Battle of Evermore + +It has been a bad-tempered and unenlightening campaign, during which few have changed their minds. But Vote Leave now has an edge + +Jun 18th 2016 | From the print edition + +Waiting for the angels of Avalon + +APPEARING alongside David Cameron on April 23rd, Barack Obama urged Britain to stay in the European Union. If it were to leave and seek a trade deal with America, the president warned, it would find itself “in the back of the queue”. The prime minister was visibly pleased. Yet days later several opinion polls had switched towards Leave. In retrospect, this seems the closest thing to a turning-point that the campaign has seen. The mood became clearer. Voters were signalling that they were no longer heeding warnings about economic damage or the sage advice of world leaders, even those whom, in general, they respected. They were attracted instead to the romance, excitement and perhaps sheer uncertainty of Brexit. + +After months of polling that was broadly even-stevens, the Leave campaign has begun to open up a small lead. Since the end of May, the odds of Leave winning the vote on June 23rd have narrowed from around 6 to 1 to about 2 to 1, far higher than anyone expected when the referendum was called, despite the fact that the leaders of all the main parties in Parliament oppose Brexit. How did this come about? + +A large part of the answer is a string of tactical mistakes on the part of Mr Cameron. When he became Tory leader in 2005 he reassured the party’s members, who have a strongly Eurosceptic cast, that he was one of them. At the same time, he warned that the issue was not going to work for them at the polls; if the Tories wanted to be elected again, they must stop “banging on about Europe”. + +Yet after he became prime minister in 2010, Mr Cameron found it helpful to convince his party of his bona fides by ignoring his own advice. In January 2013 he went beyond his previous pledge to hold a referendum on any new EU treaty, promising that a future Conservative government would seek fundamental reforms in Britain’s relationship with the EU and then hold a referendum on whether to stay in. + +Leading a coalition government at the time, he may have made the promise expecting never to have the backing of Parliament that would be necessary to keep it. But when the Tories won a small overall majority in May 2015, he found himself on the spot. His renegotiation of Britain’s membership, which culminated in a deal between EU heads of government secured in the small hours of February 20th, was not without substance. But it fell well short of fundamental reform, and it has subsequently proved more of a handicap than a boost. To prove he was in earnest, Mr Cameron had said that, should the negotiation not yield what he wanted, he himself would vote Leave. This means that, when he now talks of the grim economic consequences of Brexit, he has no answer to why he was willing to countenance such consequences just a few months ago. + +Harold Wilson, the Labour prime minister who offered a similar renegotiation-followed-by-referendum deal at the general election of October 1974, wisely avoided putting himself in such a position. His campaign had other advantages, too. Wilson could rely on the Conservative opposition to campaign staunchly for an In vote. This time support from the Labour leader, Jeremy Corbyn, has been muted at best. He refused to appear with Tory campaigners and is fighting for Remain not on the basis that EU membership is a good thing in itself but that Brexit might presage an attack on workers’ rights. + +In 1975 Wilson also had the near unanimous backing of Fleet Street. This time a Reuters Institute study finds 45% of newspaper articles for Leave and only 27% for Remain (the rest being uncommitted). On June 14th the Sun, Britain’s biggest-selling daily, came out for Brexit. The broadcasters, in particular the state-owned BBC, have been almost neurotic in offsetting each Remain argument with a damning comment from Leave. That has done wonders for the Leave camp’s credibility. + + + +But perhaps Wilson’s greatest advantage was a weakness. In 1975 Britain’s economy was in such poor shape that even to think of pulling away from a more successful continent seemed madness. Today things are not so bad in Britain—and they look worse across the channel. The euro-zone’s ills lend rhetorical credence to the Leavers’ slogan that Britain is shackled to a corpse, and that goes some way to defusing the argument on which Remain has relied most strongly: that Brexit would be bad for the economy. + +As Jagjit Chadha, director of the National Institute for Economic and Social Research think-tank, says, when it comes to forecasts, economists usually disagree. But on Brexit they do not. A host of studies in Britain—by his own institute, the Treasury, the Institute of Fiscal Studies, Oxford Economics, PricewaterhouseCoopers, the Centre for European Reform and the Centre for Economic Performance at the London School of Economics—agree with international bodies—the IMF and the OECD rich-country think-tank—that Brexit would mean less trade, lower foreign direct investment and slower productivity growth. Even pro-Brexit economists concede that the immediate shock following a leave vote would be negative, bearing out the Treasury’s claim that it would mean a “do-it-yourself” recession. The few economists who produce positive results for Brexit do so by filling their models with wholly incredible assumptions. + +This advantage on the economy was widely seen as making Remain a pretty sure thing when the campaign began. That it no longer seems so reflects a number of factors. The Remain campaign has been less vigorous and ruthless than the Leave one. Stuart Rose, a former boss of Marks & Spencer, has been an ineffective chairman of Britain Stronger in Europe. The self-effacing Will Straw, its executive director, is hardly an attack dog, unlike his counterparts at Vote Leave, Matthew Elliott and the pugnacious Dominic Cummings. + +Both sides have resorted to exaggeration and misrepresentation, with the participants openly accusing each other of lying. Labour could have adjudicated. But with it mostly off the field, these arguments have often been “blue on blue”. Members of Mr Cameron’s cabinet have trashed each other and Leavers freely accuse Remainers of wanting to join the euro. This excites Leave voters in the Tory rank and file, turns off non-Tories and makes the prime minister’s purported belief that an open debate would foster party unity look more misguided than ever. + +Although disciplined, dishonest campaigning has worked to the Leave campaign’s advantage, playing to widespread hostility to immigration has been its biggest winner. That the migration numbers released on May 26th showed a net inflow of 330,000 during 2015 would have been an embarrassment for Mr Cameron at any time; the Conservative manifestos for both the 2010 and the 2015 elections promised utterly unrealistically to get the numbers down to “the tens of thousands”. In the context of the referendum campaign they were a terrible blow. + +Not that it is clear what Brexiteers would actually do about immigration. They have suggested an Australian-style “points” system for would-be migrants, but as Remainers say, this is designed for countries with proportionately more migrants than Britain, not fewer. Although some Brexiteers talk of admitting more non-EU migrants, it is hard to believe that voters for Brexit would welcome this. Indeed, since non-EU immigration still makes up over half the total, to reach the target the Tories have repeatedly promised, non-EU immigration would have to be cut, not increased. + +To fight the hordes, and sing and cry + +Compared with the economy and immigration, most other concerns have been sideshows. Brexit poses a clear risk to the United Kingdom, with Scotland potentially demanding a second independence referendum and Northern Ireland destabilised by the reimposition of border controls with Ireland. But this seems not to have swayed many English voters. Mr Cameron has drummed up an impressive number of former spooks to say that Brexit would undermine domestic security and make it harder to co-operate in the fight against terrorism. Foreign-policy gurus are clear that it would weaken Britain’s standing in the world and damage the West’s standing in general; many say the only world leader who would welcome it is Russia’s Vladimir Putin. But again, voters seem either unconvinced or unmoved. Mr Cameron’s suggestion that Brexit might be a threat to peace in Europe persuaded few. + +Though the specifics of foreign relations seem to carry little weight, the more abstract issue of sovereignty and the Leavers’ slogan of “taking back control” does well for Brexiteers. Yet their attempt to portray staying in as a riskier and more dangerous choice than leaving—characterised by Michael Gove, the justice secretary, as being locked in the boot of a car, bent on a wild ride to political union—is harder to credit. Britain is not in the euro and has been promised an exemption from the goal of ever closer union. If the EU evolved in a way that Britain found uncomfortable, it would always retain the option of leaving; in this, sovereignty is unaffected. But the rhetoric of sovereignty has proved appealing in a way these facts have not. + +And then there is the plethora of half-truths, irrelevancies and downright lies (see article). Both sides have dirty hands here, but the Leavers’ are grubbier. Their attempts to portray Turkey’s accession to the EU as imminent and a done deal were deeply misleading; but their biggest lie of all has been about money. As the House of Commons Treasury committee has said, the claim on the Brexit “battle bus” that Britain sends £350m a week to Brussels that could be spent on the National Health Service instead is simply untrue. In fact, the gross sum is around £250m, and it falls to £120m after netting off EU spending in Britain. Leavers have recently promised that recipients of EU money—farmers, distressed regions, scientific researchers and the like—will be compensated post-Brexit, which makes a nonsense of their previous promises to divert most of the cash to the National Health Service and other deserving causes. + +Those who actually work in the NHS, for their part, are fearful of Brexit. A smaller economy would hit the public finances, which is why the IFS has said that Brexit would require two more years of austerity. And tighter immigration controls would play havoc with NHS staffing: 10% of its doctors come from the EU. Chris Hopson, chief executive of NHS Providers, which represents managers of NHS hospitals and trusts, reports that 75% of his members believe that Brexit would have a negative impact on the NHS. + +Nobody’s fault but mine + +That said, other downsides of Brexit are routinely exaggerated by Remainers. The claim that 3m jobs which depend on trade with the EU might disappear is ludicrous. There is similarly little reason to believe that France would scrap the bilateral deal that put the border with Britain in Calais. + +Neither side provides much by way of uplifting or optimistic arguments. Some Leavers have tried. They paint a picture of a Britain “in control of its destiny” becoming more not less liberal and more not less open to the world: a sort of sovereignty-blessed Singapore on steroids. But this is not a picture that inspires the voters on whom they are relying. Many of those backing Brexit are more than likely to be against globalisation and free trade as well as immigration; they believe that they have been losers from all three. + +To court these voters the Leave campaign has taken on a steadily more populist and anti-elite tone, even though most of its leaders are themselves part of that elite. Thus the response of many to claims that business, the City of London, the universities and much of the establishment favour Remain is to see this as yet another reason to vote Leave. The appeal of giving a kick in the teeth to Mr Cameron and his Tory government is also clear. + +That the richer and better-educated are keener on Remain, and the poorer and less-educated are for Leave is one of the three clearest psephological features of the electorate. The others are that young people are more likely than the old to vote Remain, as are people in big cities, especially London, and in Scotland. Combined with what is expected in terms of turnout, these factors help to explain why the result is so hard to predict. Old people are more likely to vote than the young, which is taken to favour Brexit; but the better-off and better educated also vote more than the less well-off, which will go some way to offsetting that effect. + +What may make the most difference is the greater enthusiasm that the Leavers have generated. And this is perhaps Mr Cameron’s greatest failing of all. By not evincing, over a decade of party leadership, any positive feelings about Britain’s EU membership, he has ensured that the main message from Remainers is the negative one that Brexit would be damaging. If his side loses on June 23rd, he will have only himself to blame. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21700690-it-has-been-bad-tempered-and-unenlightening-campaign-during-which-few-have-changed-their/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +In their words (II) + +Heard on the trail + +Jun 18th 2016 | From the print edition + + + +“To be in a reformed European Union… would be the best of both worlds.” + +David Cameron, February 2nd + +“We’ve got the best lyrics, but we’re still struggling for a tune.” + +Alan Johnson, Labour MP and Remain campaigner, February 26th + +“Queen backs Brexit.” + +The Sun, March 8th (The Independent Press Standards Organisation later ruled the headline “significantly misleading”) + +“The fundamental problem remains: that they have an ideal that we do not share. They want to create a truly federal union, e pluribus unum, when most British people do not.” + +Boris Johnson, former mayor of London and Leave campaigner, March 16th + +“[It is]perfectly possible to be critical and still be convinced we need to remain a member.” + +Jeremy Corbyn, Labour Party leader, April 14th + +“Assessing and reporting major risks does not mean becoming involved in politics; rather it would be political to suppress important judgments.” + +Mark Carney, governor of the Bank of England, on a bank report outlining the consequences of Brexit, April 19th + +“There is another view of Britain that is more in tune with our patriotic ideas about ourself. It is of a Britain that has always been outward looking and not inward looking. It is a Britain that, for all its faults, has been internationalist not isolationist.” + +Gordon Brown, former Labour prime minister, May 10th + +“Napoleon, Hitler, various people tried this out, and it ends tragically. The EU is an attempt to do this by different methods.” + +Boris Johnson, May 15th + +“People in this country have had enough of experts.” + +Michael Gove, justice secretary and Leave campaigner, June 2nd + +“Leaving is quitting and I don’t think we’re quitters. We’re fighters. We fight in these organisations.” + +David Cameron, June 7th + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21700691-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +United States + + + + +The Orlando shooting: Vigils and vigilantes + +Watergate II: The Donald’s dirty linen + +Computing boot-camps: Risks and rewards + +The manosphere: Balls to all that + +College towns: A roaring trade + +Scandinavian-Americans: Founding Vikings + +Lexington: How others do it + + + + + +Articles Sections Next + +The Orlando shooting + +Vigils and vigilantes + +Reactions to a mass-murder show the stark choice facing voters in November + +Jun 18th 2016 | WASHINGTON, DC | From the print edition + + + +THE murder by shooting in the early hours of June 12th of 49 people at a gay nightclub in Orlando, Florida, by a 29-year-old Afghan-American who dedicated his act of evil to Islamic State (IS) was seized upon by partisans as vindication of everything that they already believe about the fight against terrorism, the presence of Muslims in America and the prevalence of powerful guns in private hands. + +Such massacres are common enough in America that there is a grim familiarity to the images of SWAT teams on suburban streets, the press briefings by police chiefs and mayors fighting back tears, makeshift shrines of candles and flowers and then—all too soon—the competing, sombre-yet-outraged statements by politicians. + +This slaughter stands out, though. Judged in terms of human loss, it marked the bloodiest mass shooting in modern American history. Weighed as a crime, it showed the ever-more daunting task faced by law-enforcement agencies as they try to track “lone wolf” attackers. Once spooks had to hunt terrorist gangs. Then they had to adapt to a search for members of loose terrorist franchises. Now the threat comes from individuals who act like fans following favourite sociopaths on social media. + +The killer in Orlando, Omar Mateen, who was shot dead by police, declared allegiance to IS by telephoning a 911 emergency call centre. Witnesses in the club say that he ascribed his murderous anger to American bombing of Afghanistan, his parents’ home country, though he was born in New York. It emerged that Mr Mateen had been investigated for ten months by the FBI after boasting of terrorist links while working as a security guard. After interviewing Mr Mateen and placing him under surveillance, the FBI concluded that his boasts were not credible, not least because he claimed ties to two groups, Hizbullah and al-Qaeda, that are sworn foes. + +Similar attacks have seen questions asked about missed clues or dots not connected. Much remains unclear about Mr Mateen’s motives and actions before the massacre—including how his murderous homophobia co-existed with an apparent history of visiting gay clubs and using gay hook-up apps, and whether his wife knew anything of his plans. But as the killing became fodder for political debate, the arguments soon swirled away from the circumstances of his crime and up into a tempest of claims and counter-claims, levelled in duelling speeches and statements by Donald Trump, Hillary Clinton and Barack Obama. That points to a final way in which the attack at the Pulse nightclub stands apart from other mass shootings. For it fell into a general-election campaign already marked by Mr Trump’s demagogic appeals to anti-Muslim sentiment. + + + +Hours after the Orlando shooting, the property developer took to Twitter to report that he was being praised for his foresight. “Appreciate the congrats for being right on radical Islamic terrorism,” he wrote. Soon afterwards he called on Mr Obama and Mrs Clinton to use the words “radical Islam” to describe the terror attacks, or resign as president and quit the race for the White House respectively. + +It is a standard Republican talking-point to demand that the president and his aides should admit that the country is “at war” with “radical Islam”—the underlying charge being that in its eagerness not to appear bigoted the Obama administration wilfully ignores religious ties that might help to identify bad actors, and that the government fails to use all tools of American power by treating terrorism as a matter for civilian law enforcement. + +The public mood is sufficiently jumpy that on June 13th Mrs Clinton bowed to that pressure and assured a television interviewer that she was willing to use the words “radical Islamism”. But Mr Trump was only getting started. Interviewed on Fox News, he hinted that Mr Obama might be a secret terrorist sympathiser, saying: “We’re led by a man that either is not tough, not smart, or he’s got something else in mind”. When the president refuses to use the words radical Islamic terrorism, “there’s something going on,” he added. Earlier in the week Mr Trump announced that the Washington Post, whose coverage he dislikes, would henceforth be banned from his campaign events. + +Mr Trump does not just say that the Middle East has been made less stable by the policies of Mr Obama and Mrs Clinton—the stuff of everyday politics. In a speech the day after the Orlando killings he charged that Mrs Clinton “wants to allow radical Islamic terrorists to pour into our country.” Mr Trump claimed that no systems exist to vet Middle Eastern immigrants. Without caveats, he also cast Muslim-Americans as a fifth column, accusing them of knowing about bad actors in their midst but failing to report them. “The Muslims have to work with us…They know what’s going on,” he growled. + +After terror attacks in California late last year, Mr Trump floated a Muslim entry ban: a religious exclusion sure to be challenged in the courts. This week he refined that to a ban on immigration from “areas of the world where there is a proven history of terrorism” against America or allies, until arrivals can be screened “perfectly”. + +That drew a counter-blast from Mr Obama, who condemned suggestions that “entire religious communities are complicit in violence” and challenging other Republicans to say whether they agreed. There’s “no magic” to the phrase “radical Islam”, Mr Obama went on, suggesting that using those words would make it harder to recruit Muslim allies. + +In a rebuke to Mr Trump, the Republican Speaker of the House of Representatives, Paul Ryan, said that a Muslim ban would not be in the national interest. Democrats plan to keep putting Republicans on the spot. Citing the ease with which Mr Mateen bought his weapons, they have renewed calls for a ban on gun purchases by those on FBI terrorist watch-lists. Citing worries about those placed on such lists by mistake, congressional Republicans blocked such a move last year, offering a weaker alternative that would delay gun sales while prosecutors try to convince a judge that a buyer has terrorist links. Mr Trump says he wants to discuss gun bans for those on terror watch-lists. Many voters support this. Mr Trump prides himself on his feel for public opinion. He has said in interviews that though he does not hope for terrorist attacks, they harm Mrs Clinton more than him. After this week it is clearer than ever what a win for him would mean for America. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21700639-reactions-mass-murder-show-stark-choice-facing-voters-november-vigils-and/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Watergate II + +The Donald’s dirty linen + +Russian hackers infiltrate the Democratic Party’s computer system + +Jun 18th 2016 | WASHINGTON, DC | From the print edition + +Washington’s most interesting book club + +DONALD TRUMP says he would “get along very well” with Vladimir Putin. He must now be hoping the Russian government hackers who appear to be in possession of some of his most embarrassing secrets will reciprocate that good will. + +The Democratic National Committee (DNC) revealed on June 14th that two groups of Russian hackers had infiltrated its computer systems and snooped on its communications for almost a year. One had stolen an “opposition file”, containing research on Mr Trump’s vulnerabilities going back many years. Given that Mr Trump has so far been accused, with varying degrees of certainty, of hiring illegal immigrants, paying no tax, driving his businesses’ suppliers to bankruptcy by not paying them, interacting with the mafia and groping women, the mind boggles. What was the DNC holding back? + +The incident inevitably recalls the Watergate scandal of 1972, when the DNC’s offices were burgled in an effort to steal campaign secrets, which was later linked to President Richard Nixon. Yet the comparison mainly highlights how much more vulnerable to infiltration America’s institutions have become. + +The DNC called in a cyber-security firm, CrowdStrike, in April after noticing odd things afoot in its computer network. The firm discovered two groups of state-backed Russian hackers, which it codenamed Fancy Bear and Cozy Bear, inside the network. It says the first group was a tool of Russian military intelligence and the second, most likely, of Russia’s main spy agency, the Federal Security Service. Both groups, which did not appear to be co-operating, had “superb operational tradecraft”, according to CrowdStrike’s chief technology officer, Dmitri Alperovitch. + +The mismatch between the skills of the best Russian and Chinese state-backed hackers and the amateurish defences of the average American computer network is pitiful. The DNC’s arrangements appear to have been especially creaky; last year, a computer firm hired by the party temporarily gave Senator Bernie Sanders’s campaign team access to the voter records of his rival, Hillary Clinton, who is now the presumptive Democratic nominee. The DNC has now joined a distinguished list of American organisations embarrassed by foreign hackers—the White House, the Office of Personnel Management, the State Department. + +The revelation is especially unwelcome for Mrs Clinton—because it also recalls her own slapdash cyber-security regime. There is no evidence that the private internet server she used as secretary of state, which was protected by off-the-shelf anti-virus software and is being investigated by the FBI as a possible security breach, was hacked. Yet an investigation into Mrs Clinton’s e-mails revealed a suspicion by State Department technicians that hackers had at least tried to infiltrate it. And the e-mail account of a Clinton confidant, Sidney Blumenthal, was hacked and e-mails he purportedly sent to Mrs Clinton made public. + +In a way, the incident is therefore a gauge of the relative strengths of Mr Trump’s and Mrs Clinton’s candidacies. Mr Trump is soiled and compromised; yet the millions of Americans who support his invectives against immigrants and Muslims seem not to mind. Even the prospect of his grubbier secrets being in the hands of the Russians therefore seems less worrying than it should. Mrs Clinton is less obviously tainted. Yet she seems incapable, because of the furious conviction of her opponents and her own shortcomings as a politician, to shake off a popular suspicion that she is. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21700644-russian-hackers-infiltrate-democratic-partys-computer-system-donalds-dirty-linen/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Computing boot-camps + +Risks and rewards + +Should for-profit crash courses get federal funds? + +Jun 18th 2016 | NEW YORK | From the print edition + + + +LIBERAL-ARTS degrees and computer savvy rarely sit comfortably together. But computer-programming is increasingly where the jobs are. This logic guided Adam Enbar and Avi Flombaum in 2012 to found Flatiron, one of many coding boot-camps sprinkled across America. The camps offer intensive courses in web development, usually lasting three to six months. They aim to prepare students for software-engineering jobs, while offering career advice and the chance to network: in short, vocational school for the information age. + +They have emerged to fill a pressing demand for coders. Software-engineering jobs will grow at a rate of 18.8% by 2024—nearly triple the rate of overall job growth, according to the Bureau of Labour Statistics. So boot-camps are multiplying. In 2015 more than 16,000 students graduated from them, a 138% increase from the year before, according to Course Report, an organisation that tracks the industry. They are also big business: publicly traded for-profit education companies are crowding in. + +Most boot-camp students are between 22 and 35 and have a college degree. Some have developed an interest in programming since graduation, or see it as a route to higher pay. Sarah Natow, a Harvard graduate, worked in museum fundraising until, dissatisfied with the non-profit sector, she gave up her job and started a course at General Assembly, a boot-camp in New York. She felt she needed “some skill set that would give me an entrée into some other area”, and General Assembly offered a fairly quick fix: three months for $13,500, as opposed to hundreds of thousands of dollars for a two-year masters programme. + +The first job after a boot-camp may not pay that well, explains Natacha Springer, who worked in biotech for ten years, took time off to bring up children, and then attended Flatiron. But she saw a 40% salary increase when she started her second job, and now works as a software engineer for a salary in six figures. + +Boot-camps claim that over 95% of graduates find jobs as software engineers; starting salaries, they say, average around $65,000. Such claims are seldom independently verified. As the camps proliferate and more second-rate schools enter the market, quality may suffer. Critics also argue that no crash course can compare with a computer-science degree. They contend that three months’ study of algorithms and data structures is barely enough to get an entry-level job. + +Until now, worries about quality have mattered only to those who can afford boot-camps or can secure private loans to attend: tuition fees range from $10,000 to $20,000. That is about to change. Last year the Department of Education announced a pilot programme to make federal funds available to boot-camps, which are currently unaccredited and whose students are therefore ineligible for federal aid. As part of the programme, up to ten accredited colleges will work in partnership with “non-traditional providers”, like boot-camps, and the quality of the camps will be assessed by a third party. The goal is both to open the boot-camps to students from poorer backgrounds, and to improve oversight of the courses offered. + +Many who follow the education business worry about federal involvement. For-profit education companies have a mixed history in America; they have been known to take federal money while over-promising, offering sub-standard instruction and saddling unsuspecting students with debt. So far, says Barmak Nassirian of the American Association of State Colleges and Universities, boot-camps have not been proved to do much for low-income students without a college degree. + +Mr Nassirian is right. The vast majority of today’s boot-camp students are sophisticated consumers who have gone through college. They view the courses as an expensive but necessary add-on, and judge their quality by how much private investment they attract. That is how for-profit education companies should work. To offer these companies the open spigot of federal funding seems too risky, both for taxpayers and for student borrowers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21700643-should-profit-crash-courses-get-federal-funds-risks-and-rewards/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The manosphere + +Balls to all that + +The rebalancing of the sexes has spawned 21st-century misogyny + +Jun 18th 2016 | From the print edition + +W. BRADFORD WILCOX, an academic at the University of Virginia who holds robust views on the benefits of marriage for adults and children, is used to sparking debates. But, after publishing a video about the economics of marriage, he was surprised to field criticism online from a character called “Turd Flinging Monkey”. In his own 15-minute broadcast, the chimp equated marriage to slavery. TFM, as he’s sometimes called for short, is a YouTube character created by a disciple of the Men Going Their Own Way movement. An online fraternity, MGTOW believe that marriage fails basic cost-benefit analysis. Why sacrifice sexual freedom for a wife who may later divorce you and take your children and assets? Better to eschew “gynocentric” conventions in favour of self-sovereignty, the logic goes. + +“Save a male and stop a wedding™” is an unregistered trademark of MGTOW.com, one of many websites and blogs that form the manosphere, a diffuse and nebulous corner of the internet. The groups sometimes overlap and sometimes feud; their aims range from fighting for fathers’ rights in family courts, where they believe men get raw deals, to trading in tips about how to seduce women. One keyboard Don Juan, Roosh V, has won fame (and ire) for publishing books like “Day Bang: How to Casually Pick up Girls During the Day” and “Bang Poland: How To Make Love With Polish Girls in Poland”. + +Dedicated members of the manosphere groups tend to see the world as divided between consumers of blue pills and red pills, a concept borrowed from the “Matrix” films. If Neo, the film’s hero, takes the blue pill, he will remain blissfully ignorant of the powerlessness of humans. Gulping down the red pill will mean reckoning with the truth and seeing “how deep the rabbit hole [went]”. In the manosphere, blue-pill thinkers are those who uncritically accept the idea that society discriminates against women. “Red Pillers”, by contrast, recognise that it is men who are worse-off. As proof, they point to false rape accusations, disparities in the length of prison sentences—63% longer for men, on average—and gaps in college enrolment, where women outnumber men by 12%. + +Such grievances led Paul Elam, a 50-something Texan truck driver, to found AVoiceForMen.com in 2009. The site is among the most popular in the manosphere, though Mr Elam objects to this categorisation. “We consistently clash with other groups—like pick-up artists—considered part of the manosphere,” he explains. + +Mr Elam had his red-pill epiphany after reading “The Myth of Male Power” by Warren Farrell. At the time he was working as a substance-abuse counsellor in Houston, Texas. He noticed his colleagues asked every woman who came into the centre whether she had suffered harm at the hands of a significant other, and every man whether he had perpetrated such harm. The questions were never posed the other way round. When Mr Elam inquired why, he says his male and female colleagues snapped at him. “The idea of men taking care of themselves frightens people. People have always relied on men to create safe societies,” Mr Elam says. “When they say ‘What about me?’ that creates fear. The impulse is to think ‘Well then, who’s going to take care of us?’” + +Interest in such ideas is not robust enough to make them mainstream, but it is too widespread for the manosphere to be considered just a fringe. The popular Red-Pill group on Reddit, a platform for online discussion groups, has grown from 19 followers in 2012 to more than 155,000 today. The “Men’s Rights” Reddit group has also seen its subscriber base double to over 100,000 in the same period. + +Observers of the manosphere disagree over exactly what fuels it. Barbara Risman, the head of the sociology department at the University of Illinois at Chicago, attributes its rise to a fear that as women become more liberated, men are struggling with feeling dispensable. “Previous men’s movements dealt with an expansion of the idea of what men could be. This is different. This is about men feeling as though they’ve lost dominance.” + +For his part, Mr Wilcox, the simian provoker and professor, thinks the movement is related to the decline of the traditional family unit. The percentage of Americans over 18 who are married has dropped precipitously in the past half century from 72% in 1960 to 50% in 2014. “Family breakdown can be a breeding ground for misogyny,” he says. Mr Elam retorts that Mr Wilcox’s views are sexist towards men. “You would never tell a woman to ‘woman up’ and get married if she didn’t want to. But that’s what he’s telling men to do.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21700659-rebalancing-sexes-has-spawned-21st-century-misogyny-balls-all/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +College towns + +A roaring trade + +Chinese tiger mums start a college-town housing boom + +Jun 18th 2016 | NEW YORK | From the print edition + + + +EVERYONE knows that Chinese students are flooding American campuses. Less widely known is that their mothers are coming, too. Last year 394,669 pupils from China were studying at American universities, secondary and primary schools, the largest contingent of all international students. Increasingly their parents are moving in with them, buying local properties or investing at least $500,000 in businesses to try to qualify for a green card. + +The tiger mums usually come to America alone, leaving their husbands behind. “When I wasn’t here, my son would survive on instant noodles and energy drinks for several days without eating fruit or vegetables,” says Wenxue Hu, mother of a masters student studying applied mathematics at the University of Pennsylvania. She gave up her job as a corporate finance director in Shenzhen to cook for him in Philadelphia. Through a local church she met other Chinese tiger mums, most of whom entered with a tourist visa that allows them to stay up to six months each time. New Haven, Connecticut now boasts a “Yale Chinese grandparents’ village”, with 15 residents. The old folk live under the same roof as their grandchildren, mostly PhD and post-doctoral students at Yale who are too busy to take care of their own offspring. + +Although some parents rent, many others decide to buy. These Chinese dads and mums now make up a majority of Chinese buyers in America’s housing market. Last year China became the largest source of foreign property investment in America, pouring in $28.6 billion. Roughly 70% of inquiries from the Chinese indicated that education was the chief motive, says Matthew Moore, president of the American division of www.juwai.com, a Chinese international-property website. In Chicago estate agents anticipate more Chinese parents buying expensive condominiums. In Irvine, California, about 70-80% of buyers of new-builds are Chinese parents whose children attend, or plan to attend, nearby colleges, says Peggy Fong Chen, the CEO of ReMax Omega Irvine. Other college towns such as Los Angeles, Seattle, Boston and Dallas, see a similar trend. + +Parents of younger children often venture into smaller towns with good primary and secondary schools. In New Jersey, towns like Millburn, Westfield and Princeton have seen prices rising 20-30% higher than in other places, partly because of interest from Chinese buyers. “If you want to make money in real estate,” says Steven Lawson, the CEO of Windham Realty Group, “buy where the Chinese are buying, because they perpetuate the priceincrease.” + +For the rising middle class in China, parking their wealth overseas also makes good business sense. The near-bubble in housing prices at home and the depreciation of the yuan have made them nervous, so diversification becomes pressing. As property prices shoot up in some college towns, more Chinese buyers are drawn in, says Susan Wachter, a real-estate professor at the Wharton School of the University of Pennsylvania. Ownership, rather than renting, becomes more attractive, because their children can rent extra bedrooms to classmates to cover utility and tax bills, while also being able to benefit from future price rises. + +Some tiger mums also try to help their children get married by making the down-payment or even meeting the full cost. In Chinese culture, owning a property gives a sense of security and helps to attract a spouse. For these children, having a tiger mum is good fortune indeed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21700660-chinese-tiger-mums-start-college-town-housing-boom-roaring-trade/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Scandinavian-Americans + +Founding Vikings + +After prospering quietly for 150 years, Scandinavian-Americans and their ancestral lands are more popular than ever + +Jun 18th 2016 | CHICAGO AND MINNEAPOLIS | From the print edition + +Honey, I’m home + +IN HIS glowing description of bilateral relations between Norway and America, Kare Aas, Norway’s ambassador in Washington, DC, has only a couple of quibbles. “Americans don’t recognise that a Norwegian discovered America long before Columbus,” says Mr Aas. Indeed, almost 500 years before he left for the New World, a Viking ship steered by Leif Eriksson crossed the Atlantic and reached North America, where the Norsemen remained for one winter. “They should also eat more fish,” adds Mr Aas—whose country is the world’s second-largest exporter of seafood. + +Relations between America and the Nordic countries have never been better. In May, for the first time, Barack Obama hosted a Nordic summit in Washington with the leaders of Sweden, Denmark, Norway, Finland and Iceland. Their talks about Russia’s expansionism, the fight against Islamic State, climate change and refugees went so well that, as Mr Obama commented, “There was probably too much agreement.” The lovefest was mutual: the Nordics were delighted by their welcome at the White House. + +Scandinavia is popular even in the campaign for the presidency. Bernie Sanders, the self-proclaimed democratic socialist who challenged Hillary Clinton for the Democratic nomination, said in the first primary debate last October that America should look to Denmark, Sweden and Norway “and learn from what they have accomplished for their working people.” (Mrs Clinton replied that she loved Denmark, but “We are not Denmark.”) + +Bjorn Lyrvall, Sweden’s ambassador, says he is flattered by the attention, but some Scandinavians are slightly irritated by Mr Sanders’s praise. According to Daniel Schatz, a visiting fellow at Columbia University, his country’s economic success is due to its sound institutions and social cohesion, rather than the welfare state so admired by Mr Sanders. During the heyday of Swedish socialism and big government, Sweden’s economic growth actually fell from second in the world in 1970 to the second-lowest in the OECD in 1990. The country recovered only after it decentralised, deregulated its economy and lowered its punishing tax rates. + +More than 11m Americans claim to have Scandinavian ancestry. This pales against the 46m who say they have German roots or the 33m who trace their ancestry to Ireland, but the 5m Norwegian-Americans are roughly equivalent to the whole population of Norway. No country, except Ireland, lost as high a percentage of its population to America as Norway. The scope of Swedish immigration is similarly vast: between 1880 and 1920 around 20-25% of the population left for America. + +Swedes and Norwegians left their homelands to escape grinding poverty, restrictions on religious freedom and the compulsory military draft. Arable land was scarce and few other jobs were available. The mass exodus, the often harrowing journeys and tough new beginnings made a deep impression on their collective psyche. “Giants in the Earth”, a novel by Ole Edvart Rolvaag, a Norwegian-American, describes Norwegian homesteaders’ hardscrabble life in today’s South Dakota, and was a great success both in America and back in Norway. A tetralogy by Vilhelm Moberg about Swedish emigration to America is among the bestselling novels in Sweden. Former members of Abba, Sweden’s foremost pop troubadours, based “Kristina fran Duvemala”, a symphonic extravaganza, on his novels. + +Most Scandinavian immigrants managed to build better lives as farmers, mostly in the upper Midwest, where the landscape and climate resembled home, as fishermen on the north-west coast or with jobs in rapidly industrialising cities. Chicago was an especially popular destination for Swedes. “Chicago was the second-largest Swedish city after Stockholm at the turn of the 20th century,” says Lennart Pehrson, an expert on Swedish emigration to America. The new arrivals were hardworking, disciplined and more literate than other immigrant groups. Many worked in construction; it was said that the Swedes built Chicago. Andrew Lanquist, for instance, built two much-loved landmarks: the Wrigley Building on the Chicago river and Wrigley Field, the principal baseball park. + +Some of the newcomers from the North succeeded beyond their wildest dreams. Charles Walgreen, the son of a Swedish immigrant, set up Walgreen’s, America’s largest chain of drugstores. Swedish-born Johan Nordstrom created Nordstrom, an exclusive retail empire. Eric Wickman founded Greyhound, America’s biggest bus line. Alexander Samuelson, another Swedish immigrant, designed the curvy Coca-Cola bottle. On a gastronomic level, much of the cinnamon in American baked goods can be credited to, or blamed on, Scandinavians. + +According to a study from the Institute of Economic Affairs, Swedish-Americans are considerably richer than the average American—as are other Scandinavian-Americans. The poverty rate of Americans with Swedish ancestry is only 6.7%, half the national average. Swedish-Americans are better off even than their cousins at home: their average income is 50% higher than theirs, a number used by opponents of the Swedish model as an argument against the shackles of big government. + +Their success in America seems solidly grounded in old national virtues. They have more trust in each other and in government; they tend to obey rules (leading to many jokes about “squareheads” and “dumb blondes”). The Protestant work ethic is strong: in Minneapolis in particular, the number of Lutheran churches is striking. Scandinavian-Americans also display a keen civic sense, whether in shovelling snow or helping elderly neighbours, from which everyone benefits. + +There have been ups and downs in diplomatic relations over the years; but Russian expansionism is now bringing America’s security policy closer to the Nordics, even though Sweden and Finland are not members of NATO and, at least in theory, are non-aligned. On June 8th Ash Carter, America’s defence secretary, and his Swedish counterpart, Peter Hultqvist, promised to co-operate more closely in a statement of intent signed in Washington. + +If Mrs Clinton wins in November, the honeymoon between America and the Nordics is likely to continue. Under Donald Trump, the Republican nominee for the presidency, relations would probably sour: even though Mr Trump used to pretend his ancestors were Swedish, rather than German, because he thought it would make him more popular. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21700686-after-prospering-quietly-150-years-scandinavian-americans-and-their-ancestral-lands/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +How others do it + +Radicalisation is a problem far too complex for simplistic Trumpian solutions + +Jun 18th 2016 | From the print edition + + + +DISTRUST anyone suggesting simple ways to prevent radical Islamists from gaining recruits in an open society. For, like all extreme belief-systems, radical Islamism confronts pluralists with a paradox—namely, how do liberal, tolerant majorities protect their values while defending the rights of less tolerant minorities, or fractions of minorities? + +Years of reporting on four continents leads Lexington to a practical observation: no single approach has a perfect record of preventing radicalisation, and every silver-bullet idea has been tried somewhere, usually more than once. It is understandable that violent attacks by fanatics alarm people who live in diverse, open societies. But in recent years many Western countries have learned a lot about thwarting terror attacks, often through bitter experience. Radicalisation within Muslim communities is a different though related problem. It is both rarer than demagogic politicians claim, and harder to prevent than they pretend. + +A posting in China offered a glimpse of a model based on iron-fisted repression—a situation complicated by the fact that the Muslim religion and ethnic identities often overlap, notably among the Uighur minority in China’s far west. The country has mostly avoided spectacular terrorist attacks, but it is a brutally secured, unhappy peace. + +More pluralistic models were on view during years reporting in Europe. Some conservatives, especially in America, portray the continent as too decadent and enfeebled to defend itself against a stealthy Islamic conquest, growling that it has become “Eurabia”. That is a gross exaggeration. Proud Dutch assumptions about their melting-pot, rather American model—multiculturalism with invisible partitions—were certainly shaken by the murder in 2004 of Theo van Gogh, the flamboyant maker of “Submission”, a film accusing Islam of sanctioning violence against women, by Mohammed Bouyeri, a young Moroccan-Dutch man. Mr van Gogh was shot as he cycled to work, then had his throat slit as he begged for mercy. + +Covering the murder trial in 2005 offered scenes resembling a parody of European softness, as when two policemen appeared in court to ask for €3,000 ($3,360) to compensate them for emotional distress suffered when shot at by the killer: at their testimony Mr Bouyeri rolled his eyes in amusement. But in truth more muscular law and order would not have deterred the killer. The court heard that he hoped to die in a gun battle with police, and would have begged for the death penalty if the Netherlands had it. Some on the left blame poverty and Western racism for extremism. In fact Mr Bouyeri once looked like an integration success story: he had helped to run a community centre, before quitting because men and women mixed there, and had even been consulted by officials about improving relations with the police. His radicalisation was his own work, accelerated by worshipping at a mosque favoured by extremists. + +Belgium’s model has for too long been non-benign neglect. Squabbling local, regional and federal governments ignored radical imams trained and funded from abroad, and allowed extremists to operate in plain sight. Bids to then impose secularism by fiat had unintended consequences. In 2009 the Dutch-speaking region of Flanders banned religious symbols, including headscarves, in hundreds of schools. A headmistress from the port city of Antwerp expressed relief at the ruling. Her school was eager to accommodate Muslim students. It was one of the last in the city to ban headscarves. Alas, that position attracted the most conservative Muslim families to cluster there, creating an oppressive atmosphere as older brothers policed their sisters’ modesty. Young, moderate Muslims fretted that banning headscarves would make it harder for girls from conservative families to be “emancipated” through education in mainstream schools. + +France’s model promotes a secular, collective national identity, backed by draconian powers for counter-terror spooks, police and judges. President François Hollande says France is “at war” since terror attacks in Paris last year, deploying 10,000 troops on the streets. Yet the economy is divided between insiders and outsiders; immigrant-heavy suburbs seethe with distrust of the state. + +Britain’s model involves muddling around such questions as headscarves in schools, spasms of alarm that multiculturalism undermines British values, and trust in high-quality police and intelligence services. Still, an interview in 2004 with a remarkable FBI special agent, born in London to a Pakistani Muslim family that later emigrated to Chicago, offered a warning against British complacency. A counter-terrorism specialist, she found extremism’s grip tighter in Britain than in America, with young Britons “a little vengeful…more anti-Western” than Americans. + +Anti-Muslim, anti-American + +History helps to explain rates of radicalisation. It matters how Muslim immigrants arrived: some European governments recruited guest-workers en masse from specific source-countries to staff particular industries, creating jobless ghettos when those industries collapsed. This was not the case in America, whose Muslims made their own way and arrived mostly well-educated and ready to flourish. The country is fortunate that its 3.3m Muslims are notably diverse and integrated. In surveys they stand out for rejecting extremism by much larger margins than most Muslim publics around the world. + +Such details leave the presumptive Republican presidential nominee, Donald Trump, unmoved. He claims, falsely, that “no system” currently exists to vet Muslim immigrants from the Middle East, or to prevent them “trying to take over our children”. Mr Trump is not puzzling out how to make diversity work or to counter radicalisation. He is pretending that the non-Muslim majority can be rid of a minority that alarms them. To be clear: that is an un-American rejection of pluralism, not a bid to make it work. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21700645-radicalisation-problem-far-too-complex-simplistic-trumpian-solutions-how-others-do/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Criminal justice in Mexico: Trials and errors + +Bello: The Venezuela test + +Gay rights in the Caribbean: Not everyone’s island paradise + +Poverty in Latin America: Don’t look down + + + + + +Articles Sections Next + +Criminal justice in Mexico + +Trials and errors + +The right reform has been introduced, but perfecting it could take years + +Jun 18th 2016 | MEXICO CITY | From the print edition + + + +IN 2005 José Antonio Zúñiga, a Mexican street vendor of computer services, was sentenced to 20 years in prison for murder. His conviction relied on the account of a lone witness, who did not mention Mr Zúñiga until his third statement to police. Other stallholders said he was at work during the murder. The court excluded statements supporting him, and ignored contradictions in the prosecution’s case and a test that showed he had not fired the gun. + +Mr Zúñiga had the good fortune to have two campaigning lawyers take on his case, who succeeded in overturning the verdict. In 2011 his story was featured in a documentary, “Presumed Guilty”. But he is a rare exception among the wrongly convicted in Mexico. Overall, says an attorney in the film, “from the moment they accuse someone, the prosecution has won.” + +The message of “Presumed Guilty” would surprise most foreign observers of Mexico’s drug war. The popular perception is that the country’s courts fail to convict enough people. Around three-quarters of murders go unsolved, and the public has grown inured to the spectacle of masked soldiers parading recently arrested “traffickers” or “hit men” before the cameras, only to see them released days later. + +But a hidden consequence of letting the guilty go free is that innocent people are often punished in their stead. Historically around 95% of criminal verdicts in Mexico have been convictions. And 90% of those have been based on confessions, which police have a nasty habit of beating out of prisoners. A study of 80 suspects arrested in connection with the killing of 43 student teachers in September 2014 alleged that 17 had been tortured. Separately, three police officers and two soldiers are facing torture charges after an online video showed a female suspect being asphyxiated with a plastic bag. Security experts generally say that only by safeguarding defendants’ rights and building public trust in the justice system can the state hope to amass the evidence necessary to capture and convict the real culprits and deter organised crime. + +A very long goodbye + +Felipe Calderón, Mexico’s conservative president from 2006 to 2012, is best known for deploying the country’s army against its drug gangs. But he simultaneously took these arguments to heart by launching a root-and-branch transformation of its courts, which is scheduled to be fully implemented by June 18th. Miguel Ángel Osorio Chong, the interior minister, has declared it bids “goodbye to impunity”. + +The new system scraps the “inquisitorial” approach, in which a prosecutor presents written evidence that the defence has little opportunity to contest, in favour of a more transparent “adversarial” model, where lawyers argue their cases orally before a judge. It establishes basic rights for defendants, like the presumption of innocence and the provision of a lawyer, and excludes confessions from court unless a defence attorney was present when they were given. It allows alternative approaches to justice, such as mediation, for less serious cases. And it fights corruption by requiring the involvement of three separate judges: one to ensure the rights of the accused are observed before the trial, another to preside in court and a third to guarantee the sentence is carried out correctly. + +The policy has been a long time coming. It became law in June 2008. When Mr Calderón left office in 2012, just under 30% of Mexicans lived in areas covered by the new rules. His successor, the centrist Enrique Peña Nieto, belongs to a different political party, but has proved an eager reformer. In addition to passing economic liberalisation that Mr Calderón supported but could not get through Congress, he increased federal transfers to the states to speed up the justice reform, and introduced a national penal code to ensure the uniform application of criminal law across the country. By June 7th 93% of Mexicans lived in regions where the new model has taken effect; the government says that figure will reach 100% by June 18th. + +Evidence from states that have instituted the changes is encouraging. In particular, they seem to have streamlined the judicial process: the average time to resolve a case has dropped from 180 days to 34. In Mexico City, prison overcrowding fell by 70% in the system’s first four months, mainly because many types of crime could be dealt with through mediation rather than by the courts. And three of the earlier-adopting states, Baja California, Morelos and Nuevo León, have reduced the share of defendants put in pre-trial custody—and thus housed next to convicted criminals—by around 20 percentage points. About 40% of Mexico’s total prison population is awaiting trial, and the new availability of different bail measures (such as periodic reporting) and a presumption of innocence should grant many of them at least temporary freedom. + +Nonetheless, Mr Peña will need to keep expectations in check now that the adversarial approach is in place. Even if implemented perfectly, it will not reduce crime on its own: security in Morelos, one of the first to set it up, has been deteriorating. The emphasis on challenging evidence in court means that police officers will have to get better at protecting a crime scene and preventing contamination. Corrupt officers will gain a new means of sabotaging legal proceedings, by mishandling evidence and claiming it was a mistake. + +Moreover, the roll-out has been patchy. Chihuahua, in the north, instituted its own reform in 2007, before the policy was adopted nationwide, whereas Sonora, its neighbour, only did so recently. Many states that developed their own codes will have to adjust them to comply with new national standards. In some places the two systems will run in parallel, since crimes committed before the launch of the reforms will still be tried the old way. CIDAC, a think-tank, predicts it will take 11 years for the new model to operate effectively. + +Yet despite such growing pains, there is wide consensus that the reforms are necessary if not sufficient to establish the rule of law in every corner of Mexico. Their implementation, says David Shirk of the University of San Diego, represents a “milestone in the marathon to a better criminal-justice system”. That is reason for hope. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21700682-right-reform-has-been-introduced-perfecting-it-could-take-years-trials-and-errors/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +The Venezuela test + +Why Latin American governments refuse to stick up for democracy + +Jun 18th 2016 | From the print edition + + + +AS THE police in Venezuela shoot hungry looters, the Organisation of American States (OAS) dithers. The world’s oldest regional body, based in a grand mansion a few blocks from the White House, is supposed to uphold democracy in the Americas. Back in 2001 it adopted a high-flown Democratic Charter, committing the 34 active member states to representative government, and declaring that any country where the democratic order is interrrupted or altered could be suspended from the body. + +The aim was to prevent not only a repetition of Latin America’s military dictatorships of the 1970s and 1980s but also the 1992 “self-coup” by Alberto Fujimori, a Peruvian president, who shut down his country’s Congress. This week the OAS’s General Assembly convened in the Dominican Republic facing a “self-coup” in Venezuela. But for various reasons, the assembled foreign ministers’ resolve to apply their charter is about as stiff as a piña colada without the rum. + +Nicolás Maduro, Venezuela’s leftist president, has neutered the opposition-controlled National Assembly and locked up scores of political prisoners. He flatly refuses to allow a recall referendum against him this year, as the opposition demands and the constitution allows. (His electoral commission has disallowed more than 1m voters’ signatures supporting one.) Food riots and looting are now almost daily events in Venezuela, thanks to the government’s mismanagement. + +All this prompted Luis Almagro, the OAS’s secretary-general, to invoke the Democratic Charter last month as he called for a meeting that could lead to Venezuela’s suspension. A former foreign minister of Uruguay and himself a left-winger, Mr Almagro has become a vocal critic of Mr Maduro. But has he done his homework? + +At the instigation of Argentina, the initial response of the OAS’s permanent council was a declaration backing talks between the government and the opposition organised by a clutch of ex-presidents. Though an excellent idea in principle, it came as no surprise to observers of Mr Maduro, whose aim is to buy time, that this is going nowhere. That, too, may be the fate of bilateral talks agreed in Santo Domingo by John Kerry, the United States’ secretary of state, and his Venezuelan counterpart. + +Argentina has back-pedalled. Last year the country’s new liberal president, Mauricio Macri, called for Venezuela’s suspension from Mercosur, a trade group, for violating its democracy clause. But Susana Malcorra, Mr Macri’s foreign minister, is a candidate for secretary-general of the UN. Venezuela is currently a non-permanent member of the Security Council and, her critics say, she doesn’t want to offend it. + +Yet the reasons for caution, from Argentina and others, go deeper. Latin Americans are allergic to intervening in each other’s internal affairs, partly because the United States did so in the past. They have invoked the democracy clauses in their various regional agreements only when left-wing presidents of small countries (Honduras and Paraguay) were pushed out. The region’s culture of presidentialism makes them reluctant to punish an elected leader, however dictatorial. + +Second, Latin American diplomats worry that suspending Venezuela from the OAS would not restore democracy. “They think that power in Caracas still lies with the regime,” says Matias Spektor, a professor of international relations in São Paulo. Polls show that Mr Maduro has the support of only a quarter of Venezuelans, but he has the backing of the army. Political changes in the region mean that Mr Maduro has fewer allies. But he knows that Barack Obama is on the way out in the United States and that Brazil’s interim government is weak. + +Third, much of South America is ambivalent about the OAS itself, seeing it as a cold-war anachronism. The organisation now shares the diplomatic stage with other regional bodies that exclude the United States and Canada. Even so, suspension from the OAS would matter to Mr Maduro. Himself a former foreign minister, he has been lobbying hard to prevent this outcome, says Michael Shifter of the Inter-American Dialogue, a think-tank in Washington, DC. + +The OAS will decide on June 23rd whether to sustain Mr Almagro’s initiative. He looks likely to fall short of the 18 votes he needs. Even Mr Kerry said he would not support Venezuela’s suspension. The hope is that Mr Almagro’s proposal will force Mr Maduro into a real dialogue, one based on respecting his own constitution. If not, the OAS will merely have demonstrated that Latin America’s commitment to collective action to uphold democracy is a dead letter. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21700684-why-latin-american-governments-refuse-stick-up-democracy-venezuela-test/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Gay rights in the Caribbean + +Not everyone’s island paradise + +Discriminatory laws have proved hard to repeal + +Jun 18th 2016 | PORT OF SPAIN | From the print edition + + + +A RAINBOW flag flew at half-mast alongside the Stars and Stripes on June 13th at the American embassy in Kingston, Jamaica. It honoured the 49 people killed the day before in a gay club in Orlando. Marlene Malahoo Forte, the island’s attorney-general, took issue with the gesture. The rainbow banner was “disrespectful of Jamaica’s laws”, she tweeted. + +Gay male sex in Jamaica carries a ten-year prison sentence, though the country graciously tolerates rainbow flags. The embassy tweeted back: “We’re listening. Explain the legal reasoning? It was an attack of terror !!and!! hate.” Ms Malahoo Forte later said she had been “misconstrued”. But the incident drew attention to Victorian sexual laws in a region that lures tourists with a free-and-easy image—and to the failure of attempts to change them. + +Organised religion has historically played a much larger role in Catholic Latin America than in the English-speaking Caribbean. But the islands are far less gay-friendly. Trinidad & Tobago and Belize prohibit homosexuals from crossing their borders (though they seldom check). Eleven countries in the region ban gay sex, and attacks on gay people often go unpunished. Last month two gay men were shot dead at home in Jamaica’s tourist capital, Montego Bay. And three years ago Dwayne Jones, a teenager, was killed by a mob in the same city for wearing women’s clothes to a party. No witnesses have come forward, and there have been no arrests. + +Politicians in many countries admit in private that these laws are antiquated, and that openness is needed to fight HIV. But efforts to modernise them have flopped. In 2001 Guyana’s legislature passed a constitutional amendment banning discrimination based on sexual orientation, but the president blocked it. In a referendum on June 7th in the Bahamas, voters refused to ban discrimination by sex. Even though the proposal did not mention homosexuality, the “no” side, backed by fundamentalist Christians, warned that it might pave the way for gay marriage, and seems to have been widely believed. Caribbean governments have sought to block regionwide efforts to protect sexual minorities. At a meeting of the Organisation of American States from June 13th to 15th, Jamaica and Barbados formally objected to the gay-rights chunk of a human-rights resolution. + +Frustrated at the ballot box, reformers have also been foiled in the courts. Belizean judges have yet to rule on a case they heard in 2013 seeking to overturn anti-gay laws. And on June 10th the Caribbean Court of Justice decided that bans on travel by gays can stay in place because they are not enforced. Ms Malahoo Forte’s own department is now preparing to fend off a challenge to Jamaica’s homophobic laws. + +The political power of Caribbean churches frustrates gay-rights activists. Fundamentalist Protestants are well-organised and sometimes publicly subsidised. Politicians fear they can muster votes that can swing first-past-the-post elections in small countries. + +Their distaste for homosexuals is widely shared. Following the recent murders in Montego Bay, one resident told a local newspaper that “we are really not into the fish [gay] thing around here...nobody [is] crying about it.” Catchy, gay-bashing dance-hall tunes—like Sizzla’s “To the Point”, which declares “sodomite and batty boy me say a death fi dem”—have vanished from the radio, but remain popular at parties. Far from seeking to thwart the popular will, Andrew Holness, Jamaica’s prime minister, has called for a referendum to validate its discriminatory laws. One 2014 poll found that 91% of respondents opposed repeal. + +On June 23rd Bermuda, a British overseas territory, will vote on whether to allow civil unions, gay marriage or neither of the two. With the Orlando attack fresh in their minds, there is hope that islanders may buck the regional trend. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21700683-discriminatory-laws-have-proved-hard-repeal-not-everyones-island-paradise/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Poverty in Latin America + +Don’t look down + +Escaping poverty was easy enough. Staying out of it looks harder + +Jun 18th 2016 | From the print edition + + + +IN THE first decade of the new millennium Latin America grew more equal. A report on poverty published on June 14th by the United Nations Development Programme found that between 2003 and 2013 nearly half the region’s population moved up the income ladder, and one in five joined the middle class, defined as having between $10 and $50 a day of purchasing power. Conversely, only 1% dropped into a lower group, and the share of people living on less than $2.50 a day fell by half, to 11.5%. As a result, Latin America’s Gini coefficient, which runs from zero (where everyone earns the same) to one (where a single fat cat gets all the cash), declined from 0.55 in 1994 to 0.49 in 2013. + +Unfortunately, the end of the global commodity boom has spelled the end of Latin America’s long growth spurt. In 2014-15, GDP increased by just 0.6% annually. As a result, the gains achieved by the region’s lower classes now look precarious. In the past, a bit over 10% of people just above the poverty line have wound up falling beneath it. If the same proportion slide back in the coming years, more than a third of those who escaped poverty in the past decade will relinquish their progress. + +The report’s central message is that without robust economic growth, the policies that helped reduce poverty (such as conditional cash transfers, which give families money for vaccinating children and sending them to school) may not be enough to keep their beneficiaries from becoming poor again. It lists four factors that prevent downward mobility. Not all jobs are created equal: formal employment with benefits and severance provides a better cushion than piecemeal gigs. Owning assets, such as a car or house, is another buffer. Help with caring for children and old people is essential, whether by friends, family or the state. And formal safety nets, like pensions and unemployment insurance, do their jobs as advertised. + +Such counsel would have been even more useful in 2006, when the region enjoyed windfall tax revenues. Today, these indicators look troubling. Most workers are either self-employed or in businesses with fewer than five staff. Nearly half of this group has no job-based pension. Just 12.5% of people in the region’s bottom three wealth quintiles own a car. Without these safeguards, poverty reduction in Latin America could prove as fleeting as the commodity boom that made it possible. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21700677-escaping-poverty-was-easy-enough-staying-out-it-looks-harder-dont-look-down/print + + + + + +Previous Articles Sections Next + + + + + +Essay + + + + +Europe: Between the borders + + + + + +Articles Sections Next + +Europe + +Between the borders + +The idea of European unity is more complicated than its supporters or critics allow + +Jun 18th 2016 | From the print edition + + + +OF ALL the glories contained in the French foreign ministry, the most glorious is the Salon de l’Horloge. Sumptuous in gold and marble, graced by chandeliers and silks, washed with light slanting up from the River Seine, this is where old men thrashed out the Treaty of Versailles after the first world war. The Kellogg-Briand pact was signed here in 1928, pledging to outlaw the aggressive resort to arms for ever. And, on April 18th 1951, exalted by the trappings of empire, ministers from West Germany, Italy, France and the three Benelux countries put their names to the Treaty of Paris, the founding document of what, four decades later, was to become the European Union. + +Fitted out in the trappings of a scheme to manage the production of coal and steel, the treaty was at its heart a Franco-German peace accord. In keeping with its surroundings, its physical instantiation was sumptuous and symbolic. In his memoirs Jean Monnet, its progenitor, describes a document printed in France on Dutch paper with German ink, gathered in a binding from Belgium and Luxembourg and decorated with a bookmark woven from Italian silk. What Monnet does not say is that, because the negotiations had been so frantic, the sheet of paper the ministers actually signed had been left blank. + +Were they alive today, those ministers would be amazed by how their successors have crammed that empty page full to bursting with institutions and countries. The community started out with six members, four languages, 177m people and (in 2014 money) $1.6 trillion in annual output. Today’s EU has 28 members, 24 languages, 505m people and a GDP of $19 trillion. + +More generous than Versailles and more practical than Kellogg-Briand, the Treaty of Paris has blossomed into a unique supranational form of government. The EU has a court, a parliament, an executive and a president (several presidents, in fact), an apparatus much of which can be traced back to that spring day in 1951. And it has been fundamental to a great historical shift. In a continent whose history is written in blood, the idea of France, Germany or any of the large European states taking up arms against each other has become unthinkable. + +And yet those ministers would also be dismayed by how much today’s Europeans have to complain about. A common currency they never envisaged has done great damage and provoked roiling discord. Unemployment in the euro zone has been 10% or more since September 2009 (excepting a blessed few months in 2011 when it dipped as low as 9.8%); among the young it hovers at around 20% across the EU. A flow of migrants comparable only to the post-war Exodus still fresh in the minds of those men in the Salon de l’Horloge is closing borders and deepening divisions. Eurosceptic parties are rising across the continent, including in Germany. Last month in Austria a far-right, anti-migrant, Eurosceptic candidate only just missed being elected head of state. If Britain votes to leave the EU on June 23rd, it will break a European taboo; there will be growing pressure for similar referendums elsewhere. + +Only a few years ago pundits were writing books with titles like “The European Dream” and “Why Europe will run the 21st Century”. Yet today Jan Zielonka, professor of European politics at Oxford, reports that when he talks to European policymakers he is “stunned by their scepticism”. In May the president of the commission, Jean-Claude Juncker, lamented that: “in former times we were working together…we were in charge of a big piece of history. This has totally gone.” Donald Tusk, president of the European Council, is even bleaker, saying that: “the idea of one EU state, one vision…was an illusion.” + +It always was. The myth around which the EU has grown is that ministers and their officials always planned gradually, but inexorably, to subordinate the nation state to a higher European order. In the words of Vaclav Klaus, a former prime minister of the Czech Republic, countries would “dissolve in Europe like a lump of sugar in a cup of coffee”. But although Monnet and some of those around him did indeed dream of a European superstate, the politicians who made use of their ideas did not. The pooling of sovereignty found in the treaties first of Paris and then of Rome—which created the European Economic Community in 1957—was designed to save the nation state, not bury it. Europe’s governments have jealously guarded their powers ever since. + +If one key aspect of Europe has stayed constant, another has come full circle. Monnet’s scheme was an answer to the problem of Germany: too large to co-exist as a first among equals, too small to dominate its neighbours without resort to force. It was, for a long time, a good answer. For 65 years Germany has been prepared to subsume itself in Europe and, in exchange, has been allowed to act as a full member of the Western alliance. Today, by dint of unification and EU enlargement as well as its mighty economy, Germany runs Europe. + +Nobody thinks Europe’s great power is about to take up arms. But what sort of union does it want? What sort of union will its partners—especially France—be prepared to accept? And what sort of reform could bring such a new Europe about? The Treaty of Paris was made possible by an unrepeatable, galvanising set of circumstances born of two world wars and the new Soviet threat. No comparable external forces are at play today; nor is there any obvious internal dynamic that can replace them. + +“WHAT is Europe?” asked Winston Churchill in May 1947. “A rubble-heap, a charnel house, a breeding ground for pestilence and hate.” + +The war in Europe had killed 36.5m people. In many countries more civilians had died than soldiers. In his epic account of the aftermath, “Postwar”, the historian Tony Judt records that, in Yugoslavia, war destroyed 25% of vineyards, 50% of livestock, 60% of the roads, 75% of railway bridges, 30% of industry and 20% of homes. + +Liberation and defeat had been hard. Allied victories over Germany’s occupying forces did not save the 16,000 people who starved in the Dutch “hunger winter” of 1944/45. In the three weeks after Soviet troops took Vienna 87,000 women were reported to have been raped. The daily ration in the American zone of occupied Germany in June 1945 was 860 calories, a third of what is recommended today. The intergovernmental arrangements that grew up in the 1950s would have been impossible without these enormities. + +The post-war desolation was unlike anything since the Thirty Years War of the 17th century, a religious paroxysm which killed a similar share of the continent’s population. The Treaty of Westphalia, signed at that war’s end in 1648, shaped how Europe thought about conflict for the next three centuries: states should not interfere in each other’s domestic affairs; the way to contain countries’ ambitions was by maintaining a balance of power. + +As the modern state evolved, that balance became harder to manage. In the 18th century Britain forged its constituent countries into a United Kingdom with imperial reach. Revolutionary France became the first nation to harness all the state’s resources to the waging of war; Napoleon’s Grande Armée conquered the continent. As the 19th century wore on, governments exploited Blut und Boden—blood and soil—as a tool to create national identities that increased their power. Compilations of folklore, tales of illustrious forebears, genealogies of language and theories of race were all put to work bolstering these identities. “The educated, multilingual cosmopolitan elite of Europe grew weaker,” writes the historian Norman Davies, “the half-educated national masses, who thought of themselves only as Frenchmen, Germans, English or Russians, grew stronger.” + +After 1814 Germany invaded France five times. After 1914 the antagonisms and ambitions of European nation-states with colonies on almost every continent twice dragged the whole world into war. Far-fetched as it seems today, the dread in 1945 was that Germany would rise up yet again, as a Fourth Reich. Fear of Germany was compounded by fear of Russia, especially after the Soviet Union backed a Communist coup in Prague in 1948. + +This, then, was the context for the Treaty of Paris. All across Europe states had failed their people. Some European countries had embraced Fascism. Others had crumbled. War had become total. The very idea of Europe had failed. + +Beset by hunger, exhaustion and fear, governments desperate to ensure peace sought to extend their care of ordinary people.As a British historian, Alan Milward, has argued, to be legitimate in this fractured world the state had to strive to bring prosperity, employment and welfare to new voters—factory workers if they were not to be tempted by Bolshevism, and farm workers if they were not to be tempted by Fascism, as they had been when agricultural wages collapsed in the 1930s. + +It was from this need to prevent war and safeguard the state that the European communities arose. The link was clearest in France. Prosperity required West German raw materials; France had depended on German coal since the 1890s, and by the 1930s had become the world’s largest coal importer. At the same time Germany had to be kept from renewed aggression. In 1945 Charles de Gaulle felt the best way to meet these goals would be to put the coal and steel industries in the Ruhr and Rhineland permanently under French control. France would guarantee its own safety by keeping West Germany as an agrarian state. + +This was vetoed by the Americans and the British, partly because they worried that a poor, suppressed West Germany would either rebel or fall under Soviet influence. As a fallback, in 1946 and 1947, France flirted with the Soviet Union about an alliance in the East, an old strategy based on the balance-of-power logic of the Treaty of Westphalia. Stalin was not interested. + +So it was that in 1949 France’s foreign minister, Robert Schuman, resorted to what European mythmaking casts as a bold new vision and history records as a third choice close to a last resort: Monnet’s plan for a Coal and Steel Community. The scheme, which Schuman presented in a “declaration” in the Salon de l’Horloge, was a trade treaty with a novel twist. It created a High Authority, which stood above the six governments, to administer its provisions. All the participants were equal and the pact was open to new members. + + + +“A leap in the dark” – Robert Schuman on the Treaty of Paris + +Schuman told the press the plan was “a leap in the dark”. Yet what is striking is not how far-reaching it was, but how tentative. The idea of European union had a long history—Victor Hugo had talked of a United States of Europe as early as 1849. Perry Anderson, a historian, has counted at least 600 publications between the wars proposing a united Europe. Next to almost all such schemes, the Treaty of Paris, with its focus on schedules of heavy-industrial output, was as dry as coal dust. + +Why was it so modest? In part for the simple reason that the states wished to give up as little as possible. But in part, too, it was the tenor of the times. Grand schemes to remake society were tainted by Nazism and Bolshevism. In the second world war Albert Speer, Hitler’s chief architect, had drawn up plans for a pan-European political order. Pierre Pucheu, executed for his role as a senior administrator in Vichy France, had called for a single currency. There was a general suspicion of politics and passion. Raymond Aron, a French philosopher, thought that modern society was “to be observed without transports of enthusiasm or indignation”. “Where the first world war had a politicising, radicalising effect,” Judt writes, “its successor produced the opposite outcome: a deep longing for normality.” + +IN THOSE early years the states guarded their privileges jealously—to the fury of Monnet and his band of federalists. Take, for instance, a proposal in 1950 to create a European army as an alternative to West German rearmament under NATO (which had been created the previous year). During the Korean war, seen as a sign of menacing Soviet ambition, the idea made progress. But the six governments found it hard to agree on how a European army should be run; French Gaullists hated the loss of sovereignty. America threatened an “agonising reappraisal” of relations if France voted against the defence treaty. Nevertheless in August 1954, after the Korean war was over, the French National Assembly rejected the European Defence Community by 319 votes to 264. The victors celebrated with a rousing chorus of the “Marseillaise”. + +The same fate almost befell negotiations to broaden the Coal and Steel Community into the European Economic Community, a free-trade area known as the “common market”. At a conference in Messina in 1955 the French agreed to study the plan only after a desperate late-night session between the enthusiastic Belgian delegate and his reluctant French colleague. A year later, the French prime minister, Guy Mollet, was still wavering. True to France’s perennial concerns about where its energy would come from he wanted an agreement on nuclear power (known as Euratom), but he was unsure whether the common market was a price worth paying. + +On November 6th 1956 Konrad Adenauer, West Germany’s first post-war chancellor, visited Paris in an attempt to persuade the French to embrace the deal. He might have failed had it not been for the fact Anthony Eden, the British prime minister, telephoned Mollet during their meeting to say that Britain, under pressure from the Americans, had called off its military operation with the French and Israelis in Suez. Mollet was incensed; Adenauer seized the moment: “Europe will be your revenge.” + +Other American encouragements for European institution-building were more deliberate. Writing in 1948 the diplomat George Kennan summed up the view in Washington: if Germany was restored without European integration, there would be a German attempt to dominate. If Germany was not restored, there would be domination by Russia. America required a strong, prosperous Europe that settled the German question, and worked to that end. Without its support the enterprise might have failed. + +So, too, might it have done without Monnet. He was a remarkable man. Born in the department of Charente in western France, he left school at 16 and went to work in the family cognac business in London. Later he became deputy secretary-general of the League of Nations, served a stint in Shanghai and, during the second world war, acted for the British in Washington (John Maynard Keynes thought his success at procuring arms and equipment shortened the fighting by a year). Time and again, Monnet was able to call on his formidable American diplomatic and political connections to help clear away obstacles to his plan. + +But he was not able to turn the politicians who were gingerly using his ideas into true believers. De Gaulle, whom Monnet suspected of bugging his phone, was an early and enduring sceptic. He dismissed Europe as “ce machin”—this thingummy—and put a break on anything that diluted national governments’ power that was to last long after the general retired to rural seclusion in Colombey-les-Deux-Eglises in 1969. In the early 1970s, the French foreign minister, Michel Jobert, asked Edouard Balladur, later to be finance minister and prime minister, what the term European Union actually meant. “Nothing,” Mr Balladur replied, “but then that is the beauty of it.” + +Today the European project is seen through the haze of the 1980s, at a stage when the original common market had attracted new members in the north—Britain, Ireland and Denmark—and in the newly democratic south—Spain, Portugal and Greece. Jacques Delors, another French finance minister, oversaw a burst of integration during his tenure as president of the European communities. It brought the single market, the European Union, limits on the scope of governmental vetoes, extra powers for the European Parliament and, eventually, the single currency. The collapse of the Warsaw Pact and, later, EU membership for the former Communist countries only cemented the impression that Europe’s advance was part of the order of things. + + + +It suits the EU’s devotees and its critics alike to treat the strengthening and deepening of the Delors years as a default condition. The period conforms to the founding myth of an ever-closer union run out of Brussels by a powerful bureaucracy, something devotees treat as inevitable and critics as conspiracy. In fact, though, Mr Delors was the exception. His achievements were possible chiefly because the member states wanted to use the EU machinery as a way of catching up with the economic liberalisation that was bearing fruit in America and Britain under Ronald Reagan and Margaret Thatcher. For her part, Thatcher went along; she saw the single market as the sort of Europe that Britain wanted. + +The EU was not predestined, but makeshift. In the frantic politics of the post-war world other Europes were possible. But the one that actually came into being has been oddly durable. The fretful union of today, dominated by governments that scrap and bicker and backslide, is not an aberration. It is how things began. That blank piece of paper in the Salon de l’Horloge was not so much a symbol of Europe’s unwritten potential as of how integration would be hard-fought and uncertain. Even if some countries are ready to give up certain powers from time to time, others are not, and nothing happens without a consensus. Leaders rarely act without a crisis to spur them on, and as a result their remedies are often inadequate. + +Pro-Europeans look back to a golden age when statesmen were fired up by a common purpose. But such elite enthusiasm was never universal, and prevailed only briefly. Things might have been different had the idea of Europe won over Europe’s people. + +OVER lunch in an Alsatian restaurant, André Klein declares that nationalism is the disease and Europe the cure. A kindly man dressed in a round-collared Alsatian tweed jacket, Mr Klein is a native of the town of Colmar, where the cobbled streets are lined with half-timbered houses. + + + +“ + +People here feel deeply that they are European – André Klein + +When he was born, in 1938, his home town was in France, as it is today; but for almost half the previous century it had been in Germany, and it soon was again. His first memory is of being dug choking from the rubble after an Allied bomb fell on his house. He was educated at the Ecole Nationale d’Adminstration—ENA—alma mater of many of the republic’s top civil servants and politicians. Though he is too self-effacing to say so, he is a model citizen of the EU. “I am European more than French,” he says. “People here feel deeply that they are European. It is necessary for peace. They and their ancestors have seen too much conflict.” + +For much of history his part of the world was a contested borderland. The Rhine, 20km east of Colmar, was the Roman frontier. The town has been part of the Holy Roman Empire and of a league of city states; in the Thirty Years War it was briefly conquered by the Swedes before the Treaty of Westphalia gave it to France. The subsequent centuries of turn and turnabout between Germany and France strengthened people’s regional identity; their links to whichever capital city claimed them at the time never grew that strong. + +Now that this borderland finds itself in the heart of Europe, the frontiers barely exist. Not far down the A35 is EuroAirport, serving France, Switzerland and Germany. On a recent Sunday French and German protesters met on the banks of the Rhine to demonstrate in two languages against the nearby nuclear power station at Fessenheim. “Radioaktivität kennt keine Grenzen”, one banner read: radioactivity knows no borders. + +One border that is pointedly ignored by subatomic particles lies between France and Switzerland at Meyrin, 300km from Colmar. The mighty accelerators of CERN, a joint European physics laboratory, straddle the frontier there, their beams of protons whirling between the two countries at almost the speed of light. For several years Mr Klein worked as an administrator at CERN. He reminisces about an international meeting at the lab during the cold war. The atmosphere was frosty, but when the chairman took off his jacket and the rest followed, Chinese, Russians, Americans and Europeans were suddenly just physicists. Mr Klein sees no conflict in multiple identities. He is simultaneously a native of Colmar, an Alsatian, a Frenchman and a European. + +Marco Zanni often drives past Colmar on his way from Milan to the European Parliament in Strasbourg where, at the age of just 29, he is an MEP for Italy’s Five Star Movement. He, too, sees himself as a European. He studied business in Barcelona alongside people from across Europe. He was an investment banker in Italy. He is polyglot. + + + +“We don’t have a European people.” – Marco Zanni + +But Mr Zanni thinks that the EU—and especially the euro—is driving Europe apart. His father, an engineer who worked for Italcementi, a building-materials multinational, had to delay retirement because of Italy’s pension cuts during the euro crisis. He remembers a Greek student mocking a German classmate in the university in Barcelona, thanking him sarcastically for paying his taxes. The euro zone’s one-size-fits-all regime, he says, means debtors cannot decide their mix of policies. An obsession with austerity is preventing countries from restoring economic growth. The European Central Bank (ECB) is out of anyone’s control. “This is the time to say the euro failed,” Mr Zanni believes. The project is turning “Italians and Germans one against each other.” There is “no community”, he says. “We don’t have a European people.” + +Somewhere between the 78-year-old from Alsace and the 29-year-old from Milan, Europe has lost its way. Plenty of people still support the EU, some with passion: young Balts who see it as a path to prosperity and a source of security; Belgians who hope for a way to cope with their divisions; Italians and Romanians who seek a bulwark against their own crooked politicians. But a European identity remains elusive. + + + +When, in 1861, Massimo d’Azeglio, an Italian statesman, said “We have made Italy. Now we must make Italians,” he was outlining what seemed like a reasonable project. Germany was doing much the same with Germans; Britain had done something similar with Britons. But the tools which forged nations in the 19th century—forebears, symbols, cultural achievements—look unacceptably clumsy when used by Brussels today. + +The EU created a pantheon of European heroes. Erasmus and Galileo made it, but for some reason Grundtvig and Comenius never caught on. It has something that looks like a flag but which, according to Luuk van Middelaar, a Dutch historian, is officially a “logo”, because the member states balked at flag-hood. It has borrowed an anthem, “The Ode to Joy”, from Beethoven, but it remains a creature of the concert hall rather than the heart. + +In 1977 the commission proposed “European Rooms” in museums, but was beaten back by member states. In 1990 “Europe—A History of its Peoples” was published simultaneously in eight languages, laughably depicting Homo erectus as “the first Europeans” and lamenting Europe’s being “outstripped by the Neolithic revolution” in the Middle East in 8000BC. An accompanying textbook caused rancour: the British were upset that Sir Francis Drake, whom they see as a hero for sinking the Spanish Armada, was dismissed as “a pirate”; Germans found accounts of Gaul being raided by “barbarians” from across the Rhine degrading, and had the term replaced by “Germanic tribes”. + +For many years such silliness did not matter. After France rejected plans for a European army in 1954, Europe focused on what Mr Van Middelaar calls the “low politics” of tariffs and trade, rather than the high politics of grand strategy. Such an arrangement never needed much support from voters, and those voters did not care that the European project was technical and remote. + +But the EU has since entered people’s lives. Mr Delors’s burst of integration began in 1986 with the Single European Act, the first ambitious reworking of the Treaty of Rome. This created a single market, with consumer protection and product regulation. Six years later, the Maastricht treaty, a flawed attempt to deepen the union as a response to the perceived crisis of German unification, provided for an end to the franc, the lira and the escudo. When the eastern countries joined the EU, the rules on freedom of movement brought Polish plumbers and Romanian roofers into everyday contact with Parisians and Londoners. + +The EU therefore needed popular legitimacy. One approach to providing it has been to create new political power structures in the hope that political identity would follow. Thus in 2009 the directly elected European Parliament was given the role of adopting EU legislation alongside governments. It also now helps choose the president of the commission. + +But a parliament does not produce a people. A survey in 2014, before the most recent elections, found that one in ten Britons could name their MEP in Strasbourg, compared with half who could name their MP in Westminster. Many voters treat elections to the European Parliament as national polls that offer a chance to register a protest against incumbent governments at home. As a result about a third of the institution meant to embody the spirit of European union turns out to be Eurosceptic. At the same time, the parliament knows that most of the clout still lies with the member states. It therefore obsesses about EU process and, as if it were a lobby group rather than a legislature, spends its time campaigning for more powers and bigger budgets. That only makes it more remote. + +In 2001 the EU tried to put this right with a constitution to establish the union as a covenant directly between Europeans, rather than a deal stitched up between their governments. The spirit of Philadelphia was never far from the mind of the convention—especially that of its president and would-be Madison, the former president of France, Valéry Giscard d’Estaing. + +However the constitution’s 446 articles and 36 supplementary protocols spread over more than 500 pages. In Mr Anderson’s damning judgment, it was “an impenetrable scheme for the redistribution of oligarchic power”. In 2005 voters in the Netherlands and—to the great surprise of their rulers—France roundly rejected it. It was then converted into the Lisbon treaty. Voters in Ireland gave that the thumbs down, too, before being bullied into ratifying it. + +The changes that sprung from Maastricht and the creation of the euro could not be justified on the basis that a single European electorate had voted for them: such an electorate didn’t exist. Instead, the EU has had to fall back on what is known as “output legitimacy”—the idea that Europe is justified by results. And it does indeed bring many benefits. Not only peace and markets, but weight in negotiations over such things as trade and climate change and influence in disputes with Iran and Russia, not to mention the automatic right to travel and work abroad. + +But output legitimacy fades. Long-standing benefits like peace are soon taken for granted. Governments erode trust in “Brussels” by blaming the EU for decent but unpopular deals that they have signed up to. And output legitimacy is also by its nature weakest when most needed. The time when a system requires propping up is when it is resented—which is when any faith that it is doing good will be at a low ebb. + +WRITING about world order, Henry Kissinger, a former American secretary of state, observes that a geopolitical system must balance power and possess legitimacy if it is to be stable. The system faces challenges when power shifts or the sources of legitimacy alter. The Soviet Union collapsed when Russian power declined; imperial China was overthrown when the Qing dynasty could no longer command loyalty. + +As Europe developed, champions of Monnet’s dream thought the source of its legitimacy should shift from governments to the citizens. But the citizens have resisted. At the same time power has shifted. After the fall of the Soviet Union first reunification and, later, the accession of the countries of central and eastern Europe increasingly put Germany in charge. The euro has strengthened Germany further. When the euro system has required someone to write a cheque, the pen has been brandished by Angela Merkel. + +Monnet once said that Europe’s six founding countries had produced “a ferment of change”, starting “a process of continuous reform which can shape tomorrow’s world more lastingly than the principles of revolution so widespread outside the West.” It is an appealing vision; but the ferment has lost its fizz. A new settlement is needed. Unfortunately (in this respect) the forces at play today lack the nation-shaking urgency that brought the community together in the Salon de l’Horloge. And having failed to create enough Europeans like Mr Klein, the EU lacks the popular legitimacy it needs to bring about reform. + +There is no lack of advice about how to make up for these deficiencies. One commentator thinks the missing ingredient is religious faith. Another reckons the EU went awry when it stopped being “boring”. Despite many countries’ chilly welcome to Syrian migrants, some still believe in the EU’s importance as a moral exemplar for a world trapped in the zero-sum calculus of the Westphalian state. There are those who call for a dramatic transfer of powers and politics to the centre. They are countered by fans of a radical decentralisation, down to the level of the region and city. Still others are drawing up blueprints for the EU’s dismantling. + +Brexit is not the EU’s greatest problem. Whether Britain stays or goes, the union will have to grapple with migration and the euro, which are even more complex. Its progress will be hampered by economic stagnation. Unemployment will continue to feed populism and frustration with the elites. The fight will go on between debtors and creditors over austerity, debt relief and the ECB. To the extent that people feel economically hard-pressed, they will be even less inclined to accept immigrants. The Germans won’t accept freeriding, the easterners won’t accept a collective response, and the migrants will keep coming. + +Those who look to solve this with a leap of integration are likely to be disappointed. The politics of pooling sovereignty has rarely been easy. Delay usually prevails. But Eurosceptics who see the EU as a house of cards are likely to be disappointed, too. When faced with an inescapable choice, leaders usually find a compromise to tide themselves over until the next crisis. They value the EU greatly and they rightly fear the consequences of its failure. + +As ever, France and Germany will play an outsize part in deciding whether the deep problems of migration and the euro culminate in the development of a new stability or in collapse. France did not sign up to Europe as the junior partner, but Germany’s pre-eminence has turned it into one. Perhaps, with its growing population, it will recover its vitality. Or perhaps, weighed down by economic stagnation and the burden of the far-right, anti-EU National Front, it will become a disgruntled and disruptive force. If France rebels, muddling through will fail. + +More important still is Germany. It no longer needs Europe as absolution for the second world war, and it has become too big to be just one power among many. At the same time, it is too small to carry the EU’s burdens alone. This is the German question today. German voters balk at a “transfer union” that sees their savings used to bail out countries in trouble. If transfers and debt relief are the price for holding Europe together, will Germany pay up? Or will it go its own way, with a coterie of close, like-minded followers? What are the borders of the possible? + +IF YOU take a train from Warsaw through the pine forests and the lakes to Poland’s frontier with Belarus, you come eventually to Krasnogruda. Once it was the family house of the poet Czeslaw Milosz. Today it is home to Fundacja Pogranicze, the Borderlands Institute, a place teetering on Europe’s rim. + +Settled by Poles, Lithuanians, Russian Orthodox, Roma, Belorussians, Ukrainians and the odd Tartar, this soil has soaked up a lot of blood—as much as Alsace, maybe more. It is a long way from the statesmen and their aides wrangling over treaties and laying down history in the Salon de l’Horloge. + +Krzysztof Czyzewski, the institute’s director, explains that nationalism here has separated families. People have had to decide whether they are, say, Polish or Lithuanian, when they are often a bit of both. When such borderlands are troubled, people are easily persuaded to retreat into their identities, seeing all others through narrow windows of hostility—as when Yugoslavia tore itself apart in the 1990s. + +But in peaceful times, the borderlands are strong. Their people can navigate complex, nested identities that are ethnic, national—and European. + +Mr Czyzewski calls himself a bridge-builder. His work is to bring people back together. Not for him the ossified culture of nation-states and the doomed, top-down schemes to create Europeans that fit the remit of Brussels. Other Europes are possible. He believes that people need an Agora, a common space where differences can coexist—a place of peaceful borders peacefully crossed, be it central, like Colmar, or liminal, like Krasnogruda. + +Between the water and the sky + +Security and the slow accretion of confidence can help people move past nationalism to embrace a new European landscape of regions, cultures and cities. This is the Europe that is to be found in Colmar and CERN; in the student bars of universities—even, perhaps particularly, if the students from Germany and Greece mock and goad each other there; in old battlefields as well stocked with holiday homes as with past glory and in the football stadiums where Europe’s great clubs vie for the cup. + +After more than 60 years of integration, nation-states persist, stubborn and seemingly immovable. They will not go away. But at its best, in its lasting peace, Europe reveals something between and beyond them. If the EU is to thrive, its supporters must have it take on something of the patchwork vision Mr Czyzewski lays out among the lakes and forests. Like him and Mr Klein, they must start to understand that the ethnic mosaic of the borderlands is the most European identity of all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21700623/print + + + + + +Articles Sections Next + + + + + +Asia + + + + +Mass arrests in Bangladesh: Round up the usual suspects + +Indian elections: The wrong ink + +Politics in Papua New Guinea: University challenge + +A spending scandal in Tokyo: Another one bites the dust + +Australia’s election: Time of Nick + +Banyan: The lost continent + + + + + +Articles Sections Next + +Mass arrests in Bangladesh + +Round up the usual suspects + +A spate of assassinations provokes a heavy-handed response + +Jun 18th 2016 | From the print edition + + + +OVER the past three years, Islamist terrorists have killed more than 40 people in Bangladesh, usually by hacking them to death with machetes. The victims had offended their murderers by being gay, non-Muslim or critical of Islamist parties. The government has done shamefully little to end the carnage. + +However, a recent murder seems to have shocked it into action. On June 5th the wife of a police officer investigating a militant group was hacked and shot dead in front of her six-year-old son. Five days later Sheikh Hasina, the prime minister, promised to catch “each and every killer” and accused the main opposition party, the Bangladesh Nationalist Party (BNP), and its Islamist ally, Jamaat-e-Islami, of orchestrating the murders. A wave of arrests followed. By the time The Economist went to press more than 11,000 people had been rounded up. + +In Dhaka theories about the “real reason” the government sprang into action abound. Some cite self-preservation: in May anonymous jihadists published a hit list that included not just secular bloggers and Hindu intellectuals but also the state telecoms minister and one of Sheikh Hasina’s closest aides, whose close ties to India led militants to brand him the “anti-Islam adviser”. + +Some believe Sheikh Hasina ordered the arrests to please foreign governments that have complained about Bangladesh’s reluctance to pursue the assassins. Still others see the arrests as a sop to the police, who have been given a lucrative opportunity: the average bribe to spring someone after an arrest is between 8,000 and 20,000 taka ($102-255), while up to 100,000 taka can be extracted from a Jamaat activist. The average policeman’s salary is just $250 a month. + +Sticking to the script + +The arrests are politically convenient. BNP members say that this week’s dragnet caught more than 2,100 of its activists. The ongoing trial on corruption charges of the party leader, Khaleda Zia, who has twice served as prime minister, has left the BNP reeling. Many believe the government wanted to scoop up what was left of the enfeebled opposition before a verdict in Mrs Zia’s trial, expected in the coming months. Most expect her to be convicted and possibly jailed; many are furious. + +A Bangladeshi official says the rising death toll and broadening range of targets made the crackdown “an absolute necessity”. On June 7th a Hindu priest was found dead, nearly beheaded, in south-western Bangladesh, just weeks after an elderly Buddhist monk was hacked to death in the country’s south-east. But in private, senior police officers complain that mass arrests are no substitute for proper investigation. + +Of the thousands arrested, only a few hundred at most are believed to be members of militant groups. Few high-ranking figures from Jama’atul Mujahideen Bangladesh or Ansarullah Bangla Team—the two outfits that have claimed most of the murders—have been arrested. Perhaps the police do not know who the leaders are, or where they are hiding. But some Bangladeshis speculate that they are deliberately leaving them alone. Hefazat-e-Islam, a fundamentalist group, has staged huge rallies calling for the murder of atheist bloggers. One of its followers was arrested for the killing of one such blogger, Washiqur Rahman. Yet Mufti Fayezullah, a Hefazat leader, says its activists were not targeted in the crackdown. + +Nobody seriously suggests that the government is in league with the terrorists. But it has been slow to deal with the threat, long denying that al-Qaeda and Islamic State were active in Bangladesh, even as followers of both groups claimed credit for murders. Instead, the government has blamed the opposition party. + +The ruling party, the Awami League, has allowed its own religious wing, the Olema League, to grow ever bolder. Earlier this year, with Hefazat, it campaigned to defeat a petition calling for the removal of a constitutional provision recognising Islam as the state religion. The challenge took 28 years to wend its way through the legal system; the country’s highest court spent all of two minutes dismissing it. Doubtless the judges did so for sound legal reasons, but had they come to a different decision, they might have been murdered. + +Zillur Rahman, an academic in Dhaka, says that the Awami League “wants to be seen as a champion of secularism and a protector of Islam”. It should be possible to be both. On June 14th around 100,000 Muslim clerics in Bangladesh issued a fatwa (Islamic religious edict) ruling the murder of “non-Muslims, minorities and secular activists…forbidden in Islam”. Yet still the government is reluctant to speak up for secularism and tolerance. + +India, which almost completely surrounds Bangladesh, will be watching with great interest what happens next. Its border with Bangladesh has traditionally been as calm as its border with Pakistan is restive. It fears instability and radicalism on both sides. + +India’s government is also concerned for the safety of Bangladesh’s Hindu population, which has declined markedly in recent years. Many have fled across the border; India has vowed to make it easier for them to claim citizenship. More may follow. Five days into the crackdown, a Hindu college teacher in a town near Dhaka answered the door at his home and was hacked nearly to death by three men with machetes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21700669-spate-assassinations-provokes-heavy-handed-response-round-up-usual-suspects/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Indian elections + +The wrong ink + +What upper-house elections say about Indian democracy + +Jun 18th 2016 | DELHI | From the print edition + + + +FOR a country that votes as often and noisily as India, elections to the Rajya Sabha, its upper house of parliament, are oddly staid. The body’s 245 members are not elected all at once to their six-year terms. Instead, each state renews one-third of its senators (whose total number depends on the state’s population) every two years. And they are not elected by the public but indirectly by state assemblies, using a system so bafflingly complex that in practice parties often avoid a vote by agreeing among themselves how to apportion seats. In the election that ended on June 11th, 30 of the 57 contested slots were filled this way. + +Even so, Rajya Sabha polls are seldom devoid of drama. If parties fail to make deals, or if their members rebel, the results can be unpredictable. This election season began with a scandal in the southern state of Karnataka. Posing as aides to a candidate, journalists secretly filmed four state assembly members demanding bribes of up to 100m rupees (around $1.5m) each in exchange for supporting him. Those deputies are now under investigation. + +Elections closed with a whiff of skulduggery in Haryana, a state adjacent to the capital, Delhi. Two of its five seats were in play. The first was a shoo-in for a candidate from the ruling Bharatiya Janata Party (BJP), which also governs Haryana. The second seat seemed sure to go to R.K. Anand, a lawyer with the backing of both a strong local party and Congress, the national rival to the BJP. Yet because of an odd procedural error it went instead to Subhash Chandra, a media mogul rated by Forbes magazine as India’s 15th-richest man. He happens also to be a strong supporter of the BJP. + +Mr Chandra was lucky indeed. Voting rules for the Rajya Sabha require state assembly members to vote in turn, filling out ballots with a particular kind of pen and ink. For some reason no fewer than 13 Congress party members in the 90-seat Haryana assembly used a single pen with the wrong ink, rendering their votes invalid. The unfortunate Mr Anand contends that someone switched the pen in the balloting booth, causing him to lose. + +Both the cash-for-votes sting and the iffy ink point to wider problems with the Rajya Sabha. India’s upper house is a powerful body. Even a prime minister as strong as Narendra Modi, who holds solid control of the Lok Sabha (lower house) has been unable to pass a goods-and-services tax, which economists see as crucial to India’s fiscal health. The slow pace of change in the composition of the Rajya Sabha means that Congress, despite its waning influence nationally, can still block the tax in the upper house, just as Mr Modi’s party blocked it when Congress was in power. India’s parliament under Mr Modi, who came into office in 2014, has introduced and passed far fewer bills than the previous two (see chart). The biggest impediment has been the Rajya Sabha. + + + +The Rajya Sabha was intended, like America’s Senate, to represent the interest of states (its name means “states council” in Hindi). Following a 2006 Supreme Court ruling, however, its members no longer need to show ties to the states they ostensibly represent. Instead, national parties such as Congress and the BJP place their own strongmen as state representatives. Manmohan Singh, a former prime minister from the western state of Punjab, has since 1991 “represented” the north-eastern state of Assam. + +Parties are also understandably tempted to field wealthy donors as candidates. As a result the Rajya Sabha has become something of a rich man’s club: a 2013 survey of members’ declared assets found they averaged $3m, in a country where the average annual per capita GDP is $1,581. + +Despite their bitter rivalry, both Congress and the BJP supported the Rajya Sabha membership of Vijay Mallya, a beer and airline magnate whose flamboyant lifestyle caused him to be dubbed “The King of Good Times”. Elected in 2002, Mr Mallya conveniently served in committees on commerce and aviation until forced to resign from the legislature in May this year, following his sudden departure to London. Banks claim he owes them more than $1 billion; India’s attorney-general has called him a “fugitive from justice”. Mr Mallya says he plans to remain in “forced exile” in Britain. + +As expected, this year’s election produced a slight increase in upper-house seats for the BJP and a slight loss to Congress, with the balance held by regional parties. At this rate, Mr Modi’s ambition to control both legislative houses will not soon be achieved—certainly not before India’s next general election in 2019. It may be no bad thing that India’s constitutional system puts brakes on such ambitions. But without some reform of the Rajya Sabha India risks what Baijayant “Jay” Panda, an MP, calls “a logjam of far too many checks and not enough balance.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21700668-what-upper-house-elections-say-about-indian-democracy-wrong-ink/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Politics in Papua New Guinea + +University challenge + +As student protests spread, a defiant prime minister digs in + +Jun 18th 2016 | WELLINGTON | From the print edition + + + +CORRUPTION scandals are a familiar story in Papua New Guinea (PNG), a remote, mountainous country of 7.7m with an economy that depends on mineral resources and logging. One led to the suspension of the previous prime minister. Another threatens the current one, Peter O’Neill. On June 8th police opened fire on unarmed University of Papua New Guinea students protesting against Mr O’Neill’s refusal to present himself for questioning on corruption charges. Dozens were injured, though none were killed. + +Protests soon spread from Port Moresby, the capital, across the country, and show no signs of abating. Clashes have left students hospitalised in Goroka, the capital of the country’s Eastern Highlands province, and Lae, PNG’s second-largest city. Calls for Mr O’Neill to resign will probably grow louder in the run-up to general elections, scheduled for next June. + +Many hoped for better from Mr O’Neill. In 2011 he set up an anti-corruption body called Taskforce Sweep. Its investigations led to dozens of officials being arrested. However, Mr O’Neill’s enthusiasm for Taskforce Sweep waned when it started investigating him, alleging that he authorised fraudulent payments of 72m kina ($22.8m) to Paraka Lawyers, a local law firm. Both deny wrongdoing. + +In June 2014 arrest warrants were issued for Mr O’Neill and his finance minister, James Marape. The prime minister responded by disbanding Taskforce Sweep and firing his attorney-general. When the courts resurrected the body Mr O’Neill simply cut its funding. In July 2015 an anti-corruption unit within the police force brought fresh charges against Gari Baki and Ano Pala, respectively the new police commissioner and attorney-general, alleging that they conspired with Mr O’Neill to scupper the Paraka investigations. Neither has been convicted. + +In 2008 PNG’s ombudsman looked into how Mr O’Neill’s predecessor, Sir Michael Somare, had acquired a large apartment and a beach house in the Australian state of Queensland. In 2011 he was suspended from office for failing to submit required financial statements. + + + +Since Mr Somare’s time the stakes have grown. The past decade’s commodity boom poured rivers of extra cash into public coffers. Lower oil and gas prices since 2014 have squeezed budgets just as the government was ramping up infrastructure spending, leading to severe cuts to health and education. Meanwhile, politicians have grown more adroit at using state institutions to quash investigations into their alleged misconduct. Incumbency confers big advantages. The fear is that some politicians may steal and take kickbacks not only to enrich themselves but also to buy protection and win elections. + +The students’ demands that the prime minister step down came just weeks before the last date when Mr O’Neill’s government can be dislodged in a no-confidence vote before the next election. Mr O’Neill has easily defeated no-confidence challenges before, but this time his reputation is less shiny and his supporters may be less loyal. + +Claiming that the protests were stirred up by “outside agitators”, Mr O’Neill adjourned parliament until August 2nd—after the no-confidence risk passes. No doubt it seemed a shrewd move. But if Mr O’Neill’s critics cannot make themselves heard in parliament, they may do so on the streets. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21700667-student-protests-spread-defiant-prime-minister-digs-university-challenge/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A spending scandal in Tokyo + +Another one bites the dust + +A row over public funds topples Tokyo’s governor + +Jun 18th 2016 | TOKYO | From the print edition + + + +AN ITALIAN meal costing ¥80,000 ($752). Mystery novels, comic books, Chinese silk shirts and a holiday for his family. Antique art. The most expensive suite at the five-star Conrad London St James hotel. These were some of the uses to which Yoichi Masuzoe put public funds when he was governor of Tokyo. + +At first Mr Masuzoe tried to apologise his way out of a scandal that gripped the city for weeks and filled the galleries of the Metropolitan Assembly, the city’s parliament, with annoyed Tokyoites. The spending was not illegal, but a looming no-confidence motion in the Diet and warnings that he could hurt the Liberal Democratic Party (LDP) in impending upper-house elections prompted Mr Masuzoe to resign on June 15th. The LDP may be relieved, but his resignation is yet another embarrassment for the city as it prepares to host the Olympics in 2020. + +He is the second consecutive LDP-backed governor to quit amid a row over money. Mr Masuzoe’s predecessor, Naoki Inose, resigned after the propriety of a ¥50m loan he received from a medical institution was challenged. Ironically, Mr Masuzoe, a TV commentator and ex-cabinet member, entered office promising to run a clean administration and to restore the city government’s tainted reputation ahead of the Olympics. + +Koichi Nakano, a political scientist at Sophia University in Tokyo, said that had Mr Masuzoe remained in office, it would have “drawn more attention to the sort of old-fashioned money politics represented by the LDP, and they could have suffered” at the ballot box. + +To the ire of many Tokyoites, Mr Masuzoe’s spendthrift ways will now trigger another city election this summer, projected to cost around ¥5 billion. His resignation complicates the city’s preparation for the Olympics. Three years ago the Japanese capital’s reputation for efficiency and its residents’ enthusiasm for the Games gave Tokyo’s bid an edge over rival applications from Madrid and Istanbul. + +But the Olympic plans have been plagued by cost overruns and administrative bungling. Japan’s Olympic committee has been ensnared in a bribery investigation. The design for the Olympic stadium was scuppered last year by criticism that it was too grandiose and environmentally destructive. Mr Masuzoe and the central government fought bitterly over the city’s share of the price tag. He memorably compared the central government’s bland reassurances that the preparations were going swimmingly to Japan’s Imperial Army insisting that it was winning the second world war. + +Among the candidates being touted as his successor is Yuriko Koike, a female LDP legislator who previously served as defence and environment minister. Kenji Utsunomiya, a former head of Japan’s bar association, is also expected to make a bid, as will others. But the appeal of overseeing an economy larger than the Netherlands’, could quickly fade if Olympic preparations continue to go awry. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21700675-row-over-public-funds-topples-tokyos-governor-another-one-bites-dust/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Australia’s election + +Time of Nick + +Chasing votes in Australia’s rust belt + +Jun 18th 2016 | WHYALLA | From the print edition + +Mr X marks the spot + +ELECTRICITY pylons on the long, barren highway leading north of Whyalla, an industrial city in the state of South Australia, are festooned with campaign posters. Australia is just weeks away from a general election: Malcolm Turnbull, the prime minister, is seeking a second term for his conservative Liberal-National coalition against a revived Labor Party, led by Bill Shorten. But most posters on the Whyalla highway depict neither of these major-party candidates. Instead, they show the grinning face of Nick Xenophon, an independent senator from Adelaide, the state capital, whose influence reaches far beyond his home state. + +By calling an election for July 2nd, Mr Turnbull hoped to strengthen his position with a solid mandate. Strong leaders are in short supply: in the past decade Australia has had three governments and five prime ministers. Mr Turnbull began the campaign with a hefty lead, but polls have tightened. And South Australia—abundant in red desert, farms and mines, but with just 8% of Australia’s 24m people—has emerged as a fierce battleground. + +For more than a century iron ore has been dug out of the state’s mountains. In recent years Chinese demand triggered a boom: when the financial crash eight years ago sent other countries into recession, South Australia kept building. Investors snapped up tidy little houses on the edge of the desert at Whyalla, then a boomtown. “We didn’t really feel the crisis here,” says Peter Calliss, an estate agent. + +That has changed: today South Australia is weathering a nasty downturn. Collapsing ore prices and a global steel glut pushed Arrium, a large steelmaker in Whyalla, into administration in April. The state shed thousands of manufacturing jobs in the past decade; no state has a higher unemployment rate (6.9%). More will go when General Motors leaves Adelaide next year, bringing to an end 69 years of carmaking in Australia. + + + +Mr Turnbull has promised to stanch the flow of job losses. Australia will build 12 new submarines in Adelaide, which will employ around 3,000 people. At a campaign stop in June, he vowed to bring “the jobs of the future” to the state. But many locals still blame his predecessor for destroying the jobs of the present: Tony Abbott, whom Mr Turnbull unseated as Liberal leader last September, refused the car industry’s pleas for more subsidies. The industry had long been uncompetitive, but to many South Australians it was part of their identity. + +Enter Mr Xenophon. He first won election to state parliament in 1997 on an anti-gambling platform. Since moving up to the federal parliament eight years ago, he has emerged as a popular national figure. His views are eclectic: suspicious of foreign investment, free trade and carbon taxes; but resolutely pro-immigration. This year, for the first time, he is fielding candidates for all of South Australia’s lower house seats, and for the upper house in all six states. + +A recent poll gave the Nick Xenophon Team 22% of first votes in South Australia. That may be enough to snatch at least Mayo, a prized Liberal lower-house seat near Adelaide. Mr Xenophon’s candidate there is Rebekha Sharkie, who once worked for the seat’s Liberal member. + +She left the Liberals four years ago, amid what she saw as the party’s rightward drift: “They seemed to have forgotten middle Australia.” She was also dismayed by Mr Abbott’s speaking under a “Ditch the Witch” sign aimed at Julia Gillard, then the prime minister. Ms Sharkie reckons her moderate politics will play well in South Australia. + +Polls show they may do so nationally, too. Mr Xenophon’s team could win enough Senate seats to hold bargaining power with whichever major party wins the lower house. Liberal and Labor, old archenemies, are even discussing deals that could involve asking their supporters to cast their second votes tactically to thwart Mr Xenophon and the Australian Greens, another small party, under the lower house’s preferential voting system. + +Mr Xenophon ascribes his rising popularity to a “changing old order in politics”. He rails against free-trade agreements, blaming them for job losses and castigating Australia’s “lousy negotiators”. He wants the Trans-Pacific Partnership, a 12-nation trade pact that Australia has agreed to, but not yet ratified, “taken off the table”. + +That is unlikely to happen. Still, his economic populism resonates in South Australia. Ian Walkden, who owns an office-supply business in Whyalla, predicts a swing towards Mr Xenophon’s slate. “Lost manufacturing is not just about Whyalla,” he says. “It’s about South Australia and the whole of Australia.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21700679-chasing-votes-australias-rust-belt-time-nick/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +The lost continent + +Europe’s frustrating search for strategic relevance in Asia + +Jun 18th 2016 | From the print edition + + + +WHEN American strategists role-play scenarios about a crisis with China—probably, these days, a flare-up in the South China Sea—they know they can rely on their friends in Europe. As America sends another carrier strike group and Chinese submarines slink out of their bases, the European Union (EU) stiffens the sinews, summons up the blood and proceeds to…issue a stiff statement. Europe’s irrelevance to Asian security has been lamented for years at regional conferences and in countless papers. Given its size, wealth and ties with the region, including hefty arms sales, one might expect the EU to play a bigger role in the region’s defence and security. But it is not clear either that it should, or that it will ever be willing to. + +The EU itself sometimes displays a puppyish eagerness to have its military pretensions stroked: “Please, please, don’t just look at us as a big free-trade area,” pleaded Federica Mogherini, the EU’s high representative for foreign affairs, at the annual Shangri-La Dialogue in Singapore last year. She insisted that the EU is also “a foreign-policy community, a security and defence provider”. Its diplomats like to boast of the success of Operation Atalanta, in which, since 2008, an EU naval force has helped protect ships off the Horn of Africa from pirates. + +So far that is a one-off. But at the Shangri-La Dialogue earlier this month, France’s defence minister, Jean-Yves Le Drian, suggested a European role in the region’s most pressing security worry: tension over China’s territorial expansion in the South China Sea. Mr Le Drian proposed that European navies “co-ordinate to ensure a presence that is as regular and visible as possible in the maritime areas in Asia”. So pleased was the minister with his idea that he intends shortly to explain it to his European colleagues. He would have been more convincing had he done this before unveiling it. If EU defence ministers cannot co-ordinate their statements, what hope for their navies? Many dismissed his proposal as an empty flourish that would soon be forgotten. + +Cynicism about Europe is especially acute within ASEAN, the Association of South-East Asian Nations. It has a long history of bickering with the EU, first over Timor-Leste when it was under Indonesian rule, and then Myanmar under its former military junta. Former European colonies saw Europe’s preaching about human rights as hypocritical. More generally, Asians were irked that the Europeans appeared not to have grasped that their continent was in terminal decline. These perceptions have become even more entrenched as the EU has grappled with its internal agonies of economic distress, mass migration and the risk of Brexit. Europe, the story goes, is too preoccupied with its own woes to give thrusting, emerging Asia the attention and respect it deserves. + +It does not help that the EU is excluded from the two ASEAN-centred groups that are establishing themselves as the most important forums for discussing security issues: the East Asia Summit and the cumbersomely named ASEAN Defence Ministers’ Meeting Plus. Besides the ten ASEAN members, these include eight other countries, among them America, China, India, Japan and Russia, but not the EU. It is a Catch-22: the EU is not deemed sufficiently engaged in Asian security to qualify for membership; yet without it, contributing to the debate is difficult. + +Asian EU-doubters point out that the tiny military presence in Asia is anyway not in the EU’s name but in that of two member-states: France, which has 8,000 security personnel in the region to protect its territories in the Indian and Pacific oceans; and Britain, which maintains a Gurkha garrison in Brunei and some residual facilities in Singapore. The other European defence minister to speak at Shangri-La this year, Britain’s Michael Fallon, did not mention the EU’s security role in Asia, stressing instead the hope that it would “flex its financial, diplomatic and legal muscles, as it has been doing with Russia”. He also spoke of Britain’s pride in belonging to “the only formal multilateral defence arrangement in South-East Asia”, the Five Power Defence Arrangements linking it with Malaysia, Singapore, Australia and New Zealand—a legacy of Britain’s hasty withdrawal from “East of Suez” nearly half a century ago. + +That points to another Asian complaint: that the EU is divided and cannot speak with one voice. ASEAN diplomats, for example, joke that Britain, in its determination to become China’s “best friend in Europe”, might thwart EU consensus at China’s behest, just as small countries such as Laos and Cambodia sometimes do in ASEAN. This week, for example, ASEAN scrambled to retract a statement by its foreign ministers that implicitly criticised China’s maritime expansionism. Similarly, some European officials worry that Chinese cash and favours to some of the EU’s eastern members in particular may make those stiff statements a little more flaccid in future. + +China will seek to lure the EU as a whole away from following America’s China policies; and, as it does with ASEAN, it will seek to exploit internal tensions. A new paper by the International Institute for Strategic Studies, the London-based think-tank that organises the Shangri-La Dialogue, calls this “negative strategic spillover” from competition between EU members for China’s commercial favour. + +Come on in, the water’s lovely + +None of this, however, seems a good reason either to exclude the EU from the forums where Asian security is discussed, or to react unenthusiastically when Europeans do suggest greater involvement. A European military presence in the South China Sea would show that what is at stake there is not just a competition between America and China: it is the future of a rules-based global system. Europeans, so used to talk of their sliding global standing, and so befuddled by their internal troubles, tend to forget that Asia needs them as much as they need Asia. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21700666-europes-frustrating-search-strategic-relevance-asia-lost-continent/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Traffic: The great crawl + +Reality television: You’re stir-fried squid + +Reality television: Prize + + + + + +Articles Sections Next + +Traffic + +The great crawl + +The Chinese love their cars but do not want to pay more for driving them + +Jun 18th 2016 | BEIJING | From the print edition + + + +LATE last month a black-and-white photograph of a professor from Beijing Jiaotong University spread on social media. His image was edged by a black frame, like those displayed at funerals in China, and trimmed with white flowers of mourning. Though Mao Baohua is still very much alive, he had angered netizens enough to depict him as dead. His crime? To suggest that Beijing should follow the likes of London and Stockholm, by charging drivers 20-50 yuan ($3-7.50) to enter the capital’s busiest areas in the hope of easing traffic flow in the gridlocked city. + +Most Chinese urbanites see buying a vehicle as a rite of passage: a symbol of wealth, status and autonomy, as it once was in America. Hence their outrage at any restraint on driving. Since car ownership is more concentrated among middle- and high-income earners in China than it is in richer countries, any attack on driving is, in effect, essentially aimed at the middle class, a group the Communist Party is keen to keep on side. That makes it hard to push through changes its members dislike. + +Since 2009 officials in Beijing and the southern city of Guangzhou have repeatedly aired the idea of introducing congestion charges. Netizens have fought back, accusing their governments of being lazy, brutal and greedy. Many also gripe that the policy would be “unfair” because the fee would have less impact on the super-rich. Complaints about the inequality of congestion charging echo those made in London and other cities before they launched such schemes. But the party, nervous of being accused of straying from socialism, is particularly sensitive to accusations that it is favouring the wealthiest. + +Because of such objections, city governments have not pushed their proposals very hard. But that is now changing in Beijing, where officials face a dilemma. Traffic jams in the city and appalling air pollution—30% of which comes from vehicle fumes, by official reckoning—may end up causing as much popular resentment as any surcharge. The local government is trying to work out how close it is to this tipping point. It is conducting surveys to “pressure test” how people would react to a congestion fee, says Yuan Yue of Horizon, China’s biggest polling company (the results will not be made public). It is likely that a concrete plan for a congestion charge will be announced soon. Beijing’s environmental and transport departments (not usual partners) are collaborating on a draft. State media have recently published a flurry of articles about this, not all in favour. + +Public opinion is not the only challenge a congestion scheme faces. The urban planners who conceived Beijing’s layout, and that of other Chinese cities, never imagined that so many people would want to drive. The capital now has 3.6m privately owned cars: the number per 1,000 people in Beijing has increased an astonishing 21-fold since 2000, according to our sister company, the Economist Intelligence Unit (see chart). On most days large tracts of the capital are now bumper to bumper amid a cacophony of car horns. Beijingers have the longest average commute of any city in China, according to data collected by Baidu, a Chinese search engine. The problem is not confined to Beijing. The capital has higher vehicle ownership than any other Chinese city, but car use is rising rapidly across the country. Many second- and third-tier cities are already clogged. + + + +Beijing’s congestion scheme would be the first outside the rich world, where a handful of cities now charge drivers to enter a designated area. (Singapore has a different form of road pricing, with tolls on individual arterial roads.) Such measures have been credited with reductions in downtown car-use, improved traffic flow and greater use of public transport. They have also cut pollution, including emissions of the tiny PM2.5 particles that are particularly dangerous to health and abundant in Beijing’s air. + +Transport planners reckon a congestion zone would have similar effects in Beijing, and complement existing attempts to restrict car use. In 2008, after Beijing staged the Olympic games, the city launched the current system whereby each car is banned from the urban core one workday per week, depending on the last digit of its licence plate. Beijing is now one of 11 Chinese cities with similar restrictions. + +But some drivers choose to pay the 100 yuan fine, which is far higher than the congestion charge that Beijing is now mulling (around the sums suggested by Professor Mao). People also drive without plates, or buy second cars, to bypass the rules. In 2011 the capital introduced a lottery for obtaining new licence plates (six other cities do this). In Beijing the scheme has slowed the increase in car ownership, but not enough to cut congestion; some residents use vehicles registered elsewhere. Also in 2011 the capital raised parking fees, hoping to deter drivers. But people often park on pavements and traffic islands instead, usually with impunity. + +Making it easier for cars to drive on side streets through residential areas would help, but the middle class rebuffs this too. Many wealthier residents live in gated communities, which have become common since urban housing, once almost entirely state-owned, was privatised in the 1990s. Recent proposals to open these areas to through-traffic provoked an uproar on social media. Middle-class Chinese see living in a compound with private, quiet roads as a sign of their upward mobility. + +If congestion charging in Beijing is to encourage the use of public transport, the city will have to work fast to enable this. It has spent a lot of money in recent years trying to make the transport system better: the metro network has expanded from three lines in 2002 to 18 now, making it one of the most extensive in the world. But these efforts have failed to keep up with demand. The subway is so overcrowded that on an average day the authorities limit entrance to more than a fifth of stations at some point. Public transport accounted for half of all journeys last year (despite a target of 65% set in 2010), compared with 85% of trips in London even before the British capital launched its congestion charge in 2003. Taxis are relatively cheap in China, making them a popular alternative. Middle-class people often look down on public transport as the poor person’s choice. Some cities, including Guangzhou, have tried to tackle this (with some success) by introducing “bus rapid-transit” systems with modern-looking stops. + +A congestion charge in Beijing may not do as much to cut pollution as some hope. The city says that only 4% of motor vehicles in Beijing are heavy-duty, but they contribute more than half of the poisonous nitrogen oxides produced by the capital’s traffic, and more than 90% of their emissions of PM2.5 and other toxic particles. + +Congestion charging would certainly deter some drivers from using their cars in the city centre. It might even discourage others from buying cars: at the current rate of registration, there could be another half a million more in Beijing by 2020. Beijing could claim a victory of sorts just by managing to get such a scheme in place, against the wishes of a networked middle class. But that may prove harder than navigating Beijing’s traffic-snarled streets. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21700676-chinese-love-their-cars-do-not-want-pay-more-driving-them-great-crawl/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Reality television + +You’re stir-fried squid + +That is, “you’re fired” in Chinese: officials meet “The Apprentice” + +Jun 18th 2016 | BEIJING | From the print edition + + + +CHINA doesn’t have free elections. It has reality television instead. The latest such show even has the flavour of a political contest: the competitors are all high-ranking officials. It has been a big hit. + +Since May the programme, “Sights of Shanxi”, has been airing live every Friday on a channel in the northern province of that name. In the show, local cities bid to play host to a tourism-development conference. The contestants have to tell four judges why their city is such a great place, in front of a studio audience of 100 people and a panel of experts. The judges grill the contestants, who advance or fail according to votes cast by the audience in the studio, the judges and internet users. + +What makes this special is that, for the first time, local bigwigs are not just speaking in public, which is rare enough, but competing against one another and being judged by ordinary folk, which is unheard of. One tourism official from Shanxi told a newspaper in Shanghai that “in the past all we had to do was hand in a report.” But because it was on TV, he said, the process now had to be taken more seriously. “Top officials have to be involved.” Of the 11 contestants, three are municipal Communist Party bosses, five are city mayors and three are vice-mayors. + +For most of them, it has been their first experience of speaking to live cameras. They have taken to it like naturals. The mayor of Yangquan city learned a bit of English to spice up his bid (“Seeing is believing,” he said. “Open and inclusive Yangquan people welcome you to come!”). The party chief of Yucheng suffered a slipped disc but soldiered on, rehearsing her speech flat on her back. The deputy mayor of Linfen handed out virtual-reality glasses to the judges as part of his pitch (it worked: he won his round). + +Viewers love seeing judges take officials to task. “You would do better to tell us just one or two things instead of so many that we forget them,” said one judge. “What did you mean by your slogan?” asked another. “I didn’t get it.” + +“This is awesome,” tweeted one microblogger. “Does CCTV [the national state-run broadcaster] want to pull together all the provinces and do something similar?” asked another commentator, hopefully. The show’s director, Gong Qiaoli, called the officials “cute and friendly”, terms not often applied to Chinese bureaucrats. So far 8.3m people have voted online. + +The government itself is partly responsible for the show’s success. The head of Shanxi television, Tao Yixiao, says that his colleagues originally wanted to limit the audience’s contribution to the scoring. It was the provincial vice-governor, Wang Yixin, who insisted that the votes of the studio audience and panellists, as well as those of viewers at home, should be given more weight. When some of the cities started to get cold feet about taking part, Mr Wang urged them on. + +The government has good reason to be encouraging them. Shanxi’s economy is struggling; tourism is its favoured way of diversifying away from its traditional coal-mining business. In other words, appealing to an audience actually helps its broader aims. Perhaps the idea will catch on and some reality-television host will one day make the great leap into nationwide politics, perhaps even running for president. Oh, wait… + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21700687-youre-fired-chinese-officials-meet-apprentice-youre-stir-fried-squid/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Prize + +Jun 18th 2016 | From the print edition + +Our correspondent in Beijing, Rosie Blau, has won the “excellence in lifestyle coverage” award from the Society of Publishers in Asia for her Christmas story “Park life”, published in our December 19th edition. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21700681-prize/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +South Africa: In need of an opposition + +A virtual turf war: The scramble for .africa + +Nigeria floats its currency: Free at last + +The Muslim Brotherhood: Sibling rivalry + +Arabic publishing: Plus de kutub, please + + + + + +Articles Sections Next + +South Africa + +In need of an opposition + +The African National Congress is failing its people. Is there an alternative? + +Jun 18th 2016 | JOHANNESBURG | From the print edition + + + +ROWS of black marble headstones mark the graves of those who died in the Sharpeville massacre of 1960, when South African police fired into a crowd of demonstrators, killing 69 of them including James Buti Bessie, who was 12. It is a solemn yet peaceful place. Last month police invaded it. They were chasing looters who were hiding among the graves after a mob of 200 ransacked two nearby supermarkets. + +The looting had spilled over from a day of what South Africans call “service delivery” protests—expressions of outrage at the government’s failure to provide housing, running water, acceptable schools or, as in Sharpeville, reliable electricity. Service delivery protests take many forms—roads, even motorways, can be blocked for hours, sometimes by burning tyres; buildings can become targets, too. In May protesters set fire to more than 20 schools in Limpopo province, in an argument over local-government boundaries. + +South Africans have cause to be angry. The economy is in dire shape: thanks partly to slowing sales of iron ore and platinum, it shrank by an annualised 1.2% in the first quarter of this year, after growing by only 0.4% in the quarter before. The rand has lost about 15% of its value against the dollar in the past year; over the past five years it has halved. Unless there is a dramatic change in policy or circumstance, a downgrading of the country’s sovereign debt to junk is expected before the end of the year. + +Own goals, like a new visa regime that makes it harder for tourists to take advantage of the cheap rand, are depressingly common. A new bill that will make it easier for the state to force whites to sell land for redistribution to blacks (paying a “fair” price that the government will determine) was passed by parliament last month. Mining investment has slowed to a trickle, in part because of “empowerment” rules that require mining firms to ensure that 26% of their shares are held by black investors. The appointment of political hacks (“cadre deployment”) to state-owned firms has made them less efficient—and less able to supply South Africans with electricity, transport and unbiased television news. + + + +Politically, the president is weakened: he has been condemned by the country’s Constitutional Court for failing to pay back public money he spent on his home, is at risk of having corruption charges against him reinstated, and at war with his own finance minister as the economy crumbles. It is said that the five most senior party officials below Mr Zuma have privately urged him to step aside. There are rumours that the party will try to push him out before his term ends in 2019, as happened to his predecessor, Thabo Mbeki. + +All this ought to bode ill for the ruling African National Congress (ANC), which has held power since South Africa’s first democratic vote in 1994. National elections are not due until 2019, but municipal ones will take place on August 3rd. The largest opposition party, the Democratic Alliance (DA), hopes for a breakthrough that could set it on a path to a much bigger victory in 2019. The going, however, will be hard. + +The DA’s biggest problem is that most blacks see it as a white party. It won 22% of the total vote in 2014 but only about 6% of the black electorate, a serious weakness in a country that is 80% black. It governs Cape Town and the province that includes it, but it has yet to break out of that enclave, where the population is mostly coloured (mixed-race) or white. + +The party hopes that things are about to change. A year ago it elected its first black leader, Mmusi Maimane, who is only 36. In previous local and provincial elections he helped boost the DA vote in Johannesburg and the surrounding Gauteng province, which also includes Pretoria, the capital. It has selected a slate of black candidates to run for mayor in most of the municipal elections in August, notably Herman Mashaba, a cosmetics magnate who is one of South Africa’s most successful self-made black businessmen. He hopes to be mayor of Johannesburg. + +But the fact remains that the DA’s chairman and two of its three deputy chairmen are white, as are many other senior officials. “It’s a white party with a black face,” scoffs Zwelinzima Vavi, a trade union leader who has nonetheless turned against the ANC, which he says “is neither pro-worker, pro-poor nor pro-business. It is only pro-Zuma.” + +The DA insists that it is neither white nor black, but that thing that South Africa most badly needs: a non-racial party. It has steadily increased its vote share at election after election since democracy arrived. “We are now challenging the ANC in its heartland, in Pretoria, in Johannesburg, in Port Elizabeth,” Mr Maimane says. “I’m angry about the failure of black South Africans in this country—but our record in the Western Cape shows that we can deliver better services for South African people than anyone else.” + +Opinion on that is divided. Much of Cape Town is as sleekly prosperous as anywhere in the developed world, but it also includes some of the most deprived and dangerous districts in the country. In Khayelitsha township, for instance, Virginia, a trader in the scruffy marketplace behind the main road complains that at the age of 46 she still lives in a corrugated-iron shack with no running water, no power and only a communal toilet. “The DA have done nothing at all for us,” she says. A rival seller, though, disagrees. “Mmusi is young, he’s modern: we need new blood in this country, we’ve had enough of the old men who have been stealing from us for so many years.” + +The DA’s hopes are highest in Nelson Mandela Bay, the municipality that contains Port Elizabeth. The party has a strong chance of winning outright or coming close enough to form a mayoral government there with the help of some of the dozen or so tiny parties that snap at the heels of the larger ones. Port Elizabeth is the sixth-largest city in the country. + +The really important battles will come in Tshwane, the metropolitan area centred on Pretoria, the capital, and the Johannesburg municipality, the country’s largest, which includes South Africa’s commercial capital and its far poorer (and all-black) sister city, Soweto. No one expects the DA to win either of these contests outright. But it still may be able to form local administrations there, if only it can settle the trickiest problem the DA now faces: what to do about the Economic Freedom Fighters (EFF), a recently-formed party led by a renegade ANC leader, Julius Malema. + +Mr Malema’s EFF is hardly an ideal fit for the DA, which likes to project itself as sober, economically responsible, tough on corruption and wedded to the rule of law. Mr Malema, who was turfed out of the ANC in 2012, is none of these things. He is given to disrupting parliament with protests, once called on his supporters to “kill the Boer” (a reference to white South Africans of Dutch ancestry) and recently urged them to burn down ANC offices. He was once indicted for corruption, which he denies; the charges never came to court. Whereas the DA espouses liberalism, Mr Malema offers revolutionary swagger. He vows to nationalise mines and banks, seize white land without compensation and build bigger houses for the poor so that they can have sex without being disturbed by their children. Formed only the previous year, his EFF won 6.4% in the 2014 election, and is on track nearly to double that in August. The DA’s internal polls say it is running at 35% or so in its target areas. Together, the DA and the EFF have a chance of breaking the ANC’s majorities in Johannesburg and Pretoria. + +What then? Opinion within the DA is divided. Going into local coalitions with the EFF could be a disaster, alienating the DA’s core vote and perhaps leading to chaotic government followed by spectacular divorce. Mr Maimane refuses to say much about it. “The time for talking about coalitions is after the election,” he says, adding that if the party were to form any with the EFF it would insist on holding the jobs of mayor and municipal treasurer. The DA has co-operated with the EFF on a case-by-case basis in parliament, he notes. + +The DA has a golden opportunity to show South Africans that it can govern outside the Western Cape. Until it can do this, its chances of national office will remain slender. So a lot is at stake in August. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/21700603-african-national-congress-failing-its-people-there/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +A virtual turf war + +The scramble for .africa + +Lawyers in California are denying Africans their own domain + +Jun 18th 2016 | From the print edition + + + +THE ruler-straight lines and strange squiggles of Africa’s borders are a reminder of how the continent was carved up by European powers around a conference table in Berlin at the end of the 19th century—with scant regard for the wishes of its inhabitants. (Several squiggles represent the shifting of a port or mountain into a different country.) Now a virtual version of this scramble for Africa is taking place in a court in California, over ownership of the continent’s internet address, or technically its “generic top-level domain” (gTLD). + +The .africa name, which would grace the end of web and e-mail addresses, was meant to have joined existing ones such as .com about two years ago, when the web’s address book was opened up to thousands of new names. These included some flippant ones such as .cool or .rich as well as company brands such as .barclays. It would have joined regional names such as .asia or .eu that had been allocated a few years earlier. But a dispute over who should control the .africa address has dragged on for years and been further delayed by a recent ruling. + +At issue was a decision by the Internet Corporation for Assigned Names and Numbers (ICANN), a non-profit organisation that manages the web’s address book, to give control of the name to ZA Central Registry (ZACR), a South African non-profit that was one of two applicants for the name. ZACR’s ace was not just that it had the support of almost three-quarters of African countries (it needed 60%) but that it had been chosen by the African Union to look after the address book for the continent. + +The other applicant, DotConnectAfrica (DCA), a Mauritius-registered non-profit, was turned down because, among other things, it could not prove that it had enough support and because several African governments objected to it. Although it was clearly the weaker of the two applicants, DCA was thrown a legal lifeline when ICANN blundered, failing to halt its selection process when DCA appealed against the decision. Instead it went ahead and gave the rights to ZACR, opening the way to a further string of appeals and reconsiderations that have finally landed before a court in America. Judges there ordered ICANN not to hand out the name to anyone while the case drags tortuously on. + +At stake is more than the money that would flow to whoever gets the right to sell .africa website addresses, but also an important principle over who should control regional names that are, in a sense, a virtual commons. African states have every right to feel aggrieved that, having decided who should control the web address of the continent, they are as powerless to enforce their wishes as they were in Berlin in 1884. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21700661-lawyers-california-are-denying-africans-their-own-domain-scramble/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nigeria floats its currency + +Free at last + +A slumping economy and high inflation prompt a much-needed reform + +Jun 18th 2016 | LAGOS | From the print edition + + + +BARE shelves in supermarkets and soaring inflation would worry any central-bank governor. For Godwin Emefiele in Nigeria, the added twist is that both problems are partly his fault. The central bank’s policy of trying to maintain the value of the naira, Nigeria’s currency, in the face of a slump in the price of oil, which used to account for about 90% of the country’s export earnings, has failed miserably. Now it is being scrapped. + +Mr Emefiele tried heroically to conserve the country’s dwindling reserves of foreign exchange. In effect, he banned the import of a huge range of goods, from tinned fish to toothpicks; arbitrarily rationed the supply of dollars from the central bank to importers; and threatened to clamp down on people trading dollars on the black market. Mr Emefiele maintained this policy even as other oil exporters such as Russia, Angola and Kazakhstan allowed their currencies to slide to make exports more competitive and to dampen demand for imports. + +Despite the central bank’s best efforts to defend the peg of 197 naira to the dollar, it continued its slide on the black market, where a dollar costs more than 360 naira. Since most importers have to get their dollars on the black market, rather than through the tiny allocations released by the central bank, the price of almost everything in Nigeria has soared. In May annual inflation jumped to almost 16%. + +Foreign investors have pulled back, and reserves have slumped. Factories have closed their rusty doors, shedding tens of thousands of jobs. In recent weeks airlines including United, an American carrier, and Iberia, a Spanish one, have stopped flying to Nigeria because they cannot take money from ticket sales out of the country. Ramming home the foolishness of the policy was the revelation that the economy shrank in the 12 months to March, its first contraction in over a decade. + +On June 15th Mr Emefiele finally relented. After patting itself on the back for “eliminating speculators” (in reality only those with pals in the central bank had access to cheap dollars they could sell for a quick profit on the black market) and stoking domestic production (manufacturing contracted by 7% in the 12 months to March), the central bank explained that it would introduce a “flexible interbank exchange-rate market” starting on June 20th. If the currency is allowed to find its natural home, it may settle somewhere between 280 and 350 naira to the dollar, traders reckon. + +Many people were surprised by the extent of the currency’s liberalisation after so much talk of the central bank introducing some sort of two-tiered exchange rate. Some see the hand of the president, Muhammadu Buhari, in the new policy. Mr Buhari had previously blocked proposals to devalue the currency, saying it would “kill” the naira and hurt the poor. Yet in recent weeks he has softened his stance, and is thought to have insisted that the central bank should go for a fully-floating exchange rate rather than some sort of dual rate, which would only have fuelled yet more corruption. + +Even so, private-sector bankers are wary. They fret about lingering controls. The central bank says it will intervene in the market “as the need arises”. The new policy “sounds almost too good to be true,” says Alan Cameron, an economist at Exotix, a bond-trading firm in London. “Having seen so many false dawns in the past six months, I think many will need to see the new system operating before they believe it.” + +But if Nigeria does what it says it will, it can expect a surge of investment. Some big private-equity firms say they have been eyeing up deals, but waiting for news on the currency. Nigeria will have an easier time borrowing $1 billion abroad to help meet a budget deficit of about 2% of GDP. A second quarter of negative growth looks inevitable, and with it a recession. But the worst may soon be over. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21700662-slumping-economy-and-high-inflation-prompt-much-needed-reform-free-last/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Muslim Brotherhood + +Sibling rivalry + +Egypt’s main Islamist movement is tearing itself apart + +Jun 18th 2016 | CAIRO AND ISTANBUL | From the print edition + +The Brotherhood bemoans the loss of its leader + +WHOM does one call when one wants to talk to the Muslim Brotherhood, Egypt’s main Islamist group? Most of its leaders are in prison, many of them sentenced to death. Other members are in hiding from the regime of Abdel-Fattah al-Sisi, the general-turned-president who toppled the Brotherhood-led government in 2013 and then banned the group over alleged terrorism. Hundreds more have fled Mr Sisi’s persecution for more sympathetic countries such as Turkey and Qatar. + +To make matters more difficult, the Brotherhood cannot agree on who speaks for it these days. Late last year Muhammad Montasser, a pseudonym for the group’s combative spokesman, was sacked by some of its leaders. But other leaders rejected the move, which, they said, did not follow procedure. The disagreement is symptomatic of a deep conflict inside the Brotherhood over its leadership and priorities. After 88 years of religious, political and social activity, which inspired the creation of similar groups across the region, the Brotherhood is tearing itself apart. + +On one side are several members of the Brotherhood’s old governing council, known as the “guidance office”, such as Mahmoud Ezzat, the acting “supreme guide”, and Mahmoud Hussein, the secretary-general. Referred to as the “old guard”, they have prioritised the group’s survival and advocated a gradualist approach to changing the state. But many members want to take a more confrontational stance. They are represented by new (though still old) leaders such as Ahmed Abdel-Rahman, who heads a Brotherhood office in Istanbul, and Muhammad Kamal in Egypt, whose place in the guidance office was suspended by the old guard. + +Whereas some members of the Muslim Brotherhood turned to violence after Mr Sisi’s coup, the old guard publicly opposes such action—and implies that its rivals do not. That is “totally wrong”, says Amr Darrag, a leader living in Istanbul who sides with the more confrontational wing of the organisation. He sees the group’s “stagnation” under old leaders as being a force pushing young people towards violence. Others accuse the old guard of negotiating with the regime, a charge it denies. + +There are echoes of old debates over how to take on Egypt’s past authoritarians, such as Gamal Abdel Nasser and Anwar Sadat. The Brotherhood’s founder, Hassan al-Banna, favoured violence in some circumstances; but during its long history the group has mostly preferred a peaceful approach. Even during the uprising against Hosni Mubarak in 2011, the Brotherhood’s leaders kept a low profile. Many members, though, joined the protests. The division appeared again after the coup that ousted the Muslim Brotherhood government of Muhammad Morsi, as many of the rank and file rejected their leaders’ gradualism. + +The new leaders say they want to reform the group’s centralised decision-making process and empower women and young members. But the divide does not fall neatly along generational lines. Many members are fed up with both sides, which have traded accusations in public. Mr Hussein, for example, has been accused of taking bribes from the Turkish government. Others invoke the blood of Brotherhood martyrs to rally support. “The narratives used are very polarising,” says Abdelrahman Ayyash, a former member. “There is no chance of reconciliation.” + +That might please Mr Sisi, who seems intent on crushing the group. But his actions are driving people towards extremism, say members. When the internal debate over violence heated up last year, Mahmoud Ghozlan, a member of the old guard, wrote a forceful response titled “Our Strength is Our Peacefulness”. Several days later he was arrested along with a Brotherhood cleric who had denounced violence. Both face a possible death sentence. Members inside Egypt must wonder if there is any other way to confront such a ruthless regime. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21700673-egypts-main-islamist-movement-tearing-itself-apart-sibling-rivalry/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Arabic publishing + +Plus de kutub, please + +The industry is even more troubled in the Middle East than elsewhere + +Jun 18th 2016 | BEIRUT | From the print edition + + + +TO JUDGE by Librairie Antoine in Beirut, books are faring well in the Middle East. The bright, airy branch in Beirut Souks, a shopping centre, has ceiling-to-floor shelves on all three levels. Yet even if the bookshop is as swish as any on a British or American high street, publishing in Arabic is struggling. + +One reason jumps out: most of Antoine’s books are in foreign languages rather than Arabic. French and English each account for about 40% of sales; Arabic, for only 20%, according to the company. “People aren’t reading as much in Arabic, not just here but across the region,” says Emile Tyan, Librairie Antoine’s commercial director, who also heads HachetteAntoine, a joint venture with a French publisher. + +Most books in Arabic are written in a formal variant that is rarely spoken, difficult and often taught badly. Mastering it takes a lot of study—and that is time many parents think would be more usefully spent learning English. HachetteAntoine has improved sales of Arabic books by using glossy covers and attractive fonts—something that has been rare for local books. But that cannot turn the tide. + +Piracy is another huge problem. Few Middle Eastern countries have copyright laws or the will to pursue people when they violate them. “As soon as we publish a bestseller, five or ten companies will pop up and reprint it, in paper and online,” says Rana Idriss, the director of Dar al-Adab, a Lebanese publisher that represents famous Arabic writers such as Adonis, a pseudonymous exiled Syrian poet, and Elias Khoury, a novelist, as well as holding the rights to foreign authors including the Italian Elena Ferrante. + +As with so much else in the region, the turmoil since 2011 has shaken things up—mostly for the worse. Arab authors are producing some cracking, if depressing, tales of imprisonment, war, the loss of relatives and life in exile. But on the whole, people are now reading and buying less. Iraq used to be a huge market (a Middle Eastern saying goes that books are written in Cairo, published in Beirut and read in Baghdad). Syria and Egypt were big, too although the latter makes little money because books have to be priced so cheaply. + +One bright spot for publishers is, surprisingly, the Gulf; particularly its women. A growing middle class and a big community of bored expats are hungry for diversion. They read everything from romance (especially popular in Saudi Arabia) to non-fiction tracts such as self-help books. Yet publishers face big problems there from censorship. “It’s the big three—sex, politics and religion,” says Ms Idriss—the stuff a lot of good stories are made of. + +The biggest challenge is that Arabs simply do not read much, whether about war or peace, in English or in Arabic, despite having achieved near-universal literacy since the 1960s. Statistics are missing or misleading. But anecdotally, the situation is getting worse. Mr Tyan says that, in a region of 380m people, the book market is about a quarter as big as Belgium’s (a country of about 11m people). Rania Zaghir, an author and publisher of children’s books (in Arabic only) blames poor schooling. “Education is dull and archaic, and leaves children with a bad relationship with books from an early age,” she says. + +Ms Zaghir is trying to change that—which also helps her find ways of making money. She knocked on the door of NGOs to persuade them to buy books to distribute to refugees, of whom there are over 1m in Lebanon. She encourages young readers by holding events, readings and puppet shows based on her books. “You have to be creative to make sure reading is loved,” she says. “I consider myself Bookwoman, like Superwoman, rather than an author or publisher.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21700672-industry-even-more-troubled-middle-east-elsewhere-plus-de/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Drugs in Europe: Not mind-stretching enough + +Nadia Savchenko: The maid of Kiev + +Orthodox Christian summit: The autumn of the patriarchs + +Migrant-smuggling: Tracking traffickers + +The Balkans’ EU dreams: Applications deferred + +Charlemagne: The sleep of union + + + + + +Articles Sections Next + +Drugs in Europe + +Not mind-stretching enough + +Liberal drug policies have spread across Europe. But some early adopters are slipping behind + +Jun 18th 2016 | AMSTERDAM, LISBON AND PRAGUE | From the print edition + + + +ON A cobbled street lined with tourist shops in central Prague, a darkened storefront advertises cannabis-flavoured beer and absinthe ice cream. Inside, chocolate bars featuring Bob Marley’s face are for sale alongside “mushroom cookies” and glass bongs. Nothing stronger is on offer. But in a country where the possession of drugs is mostly tolerated, it is not hard to find the real stuff elsewhere: dealers loiter in the city’s main square, and barmen sell cannabis under the counter. + +On paper, most European countries still have strict laws on drug-taking (see map). But over the past few decades most have relaxed their enforcement of those laws, fining or warning recreational drug users rather than sending them to jail. Three countries have led the way. In the Netherlands, although possession of drugs is technically illegal, cannabis has been officially tolerated since the 1970s, and is sold in around 600 “coffee shops” across the country. In the Czech Republic possession of small amounts of any illicit drug (one gram of cocaine, around ten grams of cannabis) was decriminalised in the 1990s. Portugal decriminalised the possession of all drugs for personal use in 2001. + + + +Yet over the past few years these countries’ reforms have lost momentum, or even slipped backwards. Most drug-policy experts consider this a shame. The reformist countries’ experiences not only show how well liberal drug policies work; they suggest they need to go further. + +Countries adopt liberal drug policies for different reasons. In the Netherlands policymakers responded to a sharp increase in heroin consumption in the 1970s by drawing a line between hard and soft drugs. A similar heroin epidemic in Portugal in the 1980s and 1990s caused a steep rise in HIV/AIDs rates, so the government decided to treat drug-taking as a public-health problem. By contrast, the shift in the Czech Republic was made quietly by reformers after the Velvet revolution of 1989. Drugs such as heroin and cocaine were always rare there; the chief hard drug remains homemade speed known locally as “pervitin”, after the brand name of the methamphetamines distributed to Nazi soldiers in the second world war. + +Those opposed to decriminalising drug-taking have always argued that it will lead to more consumption, or that soft drugs such as cannabis are gateways to harder drugs. Evidence for both is shaky. Lifetime cannabis use—a measure of whether adults have ever tried it—is high in the Czech Republic, but in the Netherlands it is around the European Union average; in Portugal it is far lower. The French, who have some of the toughest cannabis laws (users can get up to a year in jail or a hefty fine), are the biggest tokers in the EU. The lifetime prevalence of illicit drug-taking among adults has been falling in Portugal, from 12% in 2007 to 9.5% in 2012. Among those between the ages of 15 and 34, the year-on-year evidence is also mixed. After Portugal introduced lighter controls, cannabis use among youngsters dropped slightly; in some other places that introduced lighter punishments it fell steeply (see chart). + + + +Even more cheering data come from the public-health side. In 2014 there were just 40 new HIV cases associated with injecting drugs in Portugal, compared with 1,482 in 2000. In the Czech Republic a mere 0.3% of HIV infections are related to drug-taking, compared with 30% in Italy and 6% in France. Figures on drug-related deaths can be under-reported, but in the Netherlands, Portugal and the Czech Republic, rates of drug-induced fatality are far lower than in countries such as Britain and Sweden that have harsher drug laws. + +This has helped encourage others to go further. A handful of American states and Uruguay have legalised cannabis production and consumption; from next year Canada will follow suit. + +But Europe’s trailblazers are falling back. One reason is the squeeze on public finances. In Portugal in 2012, in the throes of an EU and IMF bail-out, the government closed the autonomous drug agency and merged its staff of 1,700 with the national health service—a move which was criticised by specialists as potentially weakening harm-reduction services. In the Czech Republic cash for prevention services, such as school programmes, fell from €2.5m in 2010 to €1.5m in 2014, and funds for harm reduction, such as needle exchanges, fell in 2011. Money for treatment facilities and sobering-up stations was also trimmed. + +Those funds are sorely needed. In a suburb of Prague, the city’s largest drug contact centre offers a needle-exchange system, mostly for methamphetamine addicts. With pictures of Gandhi and Sid Vicious on the walls, the place looks a little like a youth hostel. Each day around 100 people visit and around 3,500 needles are exchanged, says David Pesek, who runs the centre; every week, a few users move into abstinence programmes. But there are an estimated 10,000 hard-core injecting drug addicts in Prague, and the existing centres cannot keep up. + +The second problem is complacency—meaning that politicians in countries with harm-reduction policies often think the drug problem has been solved—or even a backlash against liberal reforms. In the Netherlands cultivation of cannabis remains illegal and much of the country’s production is done by organised criminals. In recent years some municipalities have tried to force coffee shops to serve only residents with Dutch ID cards to prevent the influx of foreign drug-takers, but the policy has largely failed. In Portugal and the Czech Republic many who work with drug-takers worry that, now that most of them are off the streets, non-users will resent public funds being spent on them. + +This is a bad time to be turning back the clock. In America and elsewhere, opioid consumption has reached epidemic levels, largely because of overprescription of painkillers. Europe has not seen such a resurgence yet, though there are some worrying signs. European countries remain strangely divided over drug policy, ignoring the continent’s successes. Few countries are pushing for new reforms, says Tom Blickman, a drug-policy expert in Amsterdam. In Europe, where thanks to open borders each country’s policies affect its neighbours, “everyone is keeping each other in check,” he says. This results in harsh (but spottily implemented) penalties in some places, looser laws elsewhere and a sense that Europe is no longer a place where policymakers can take risks. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21700648-liberal-drug-policies-have-spread-across-europe-some-early-adopters-are-slipping-behind-not/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Nadia Savchenko + +The maid of Kiev + +She was a soldier, a pilot and a prisoner in Russia. Now she is an MP, and a force in Ukrainian politics + +Jun 18th 2016 | KIEV | From the print edition + +More popular than the president + +AT THREE o’clock in the morning on May 25th, guards roused Nadia Savchenko in her prison cell in southern Russia, told her to pack her things and whisked her to an airport. “I didn’t know if I was flying to Ukraine or to Siberia,” says the Ukrainian military pilot, who spent nearly two years in Russian captivity on fabricated charges. Only when she saw yellow and blue stripes on the plane did she realise that she was heading home. + +Ms Savchenko descended on Ukraine a ready-made heroine. She tops polls as the most trusted politician in the country, far above the president, Petro Poroshenko. Supporters have created “Savchenko for President” Facebook groups, and she has not demurred: “If you want me to be your president,” she said at her first press conference, “I will become the president.” Russian commentators have gleefully predicted she might bring down Mr Poroshenko and his government. Yet the 35-year-old Ms Savchenko is neither saviour nor saboteur; she is a soldier in an unexpected position. + +Revolutions often thrust people into unforeseen roles, but few are forced to make leaps as audacious as Ms Savchenko’s. Born in Kiev, she initially studied design (she passed the time in prison with origami). But childhood dreams of flying led her to the army. She served as a paratrooper with Ukrainian peacekeepers in Iraq, and later became the first female pilot in Ukraine’s air force. When protests broke out in Kiev in late 2013, Ms Savchenko began going there on weekends from her base in western Ukraine. What drew her to the Maidan were not calls for European integration but anger that the then president, Viktor Yanukovych, had sent riot police to attack his own people. + +After Mr Yanukovych fled and fighting erupted in eastern Ukraine, Ms Savchenko decided, like many at the time, to make for the front line on her own. She joined up with the Aidar Battalion, a volunteer force that would later become notorious for human-rights abuses. In June 2014 she was taken prisoner during a botched mission, smuggled into Russia and arrested for allegedly directing artillery fire that killed two Russian television journalists. + +Her defiance of her captors made her a cause célèbre. In the autumn of 2014 political parties recruited her to join Ukraine’s parliament. Ms Savchenko did not take the offers seriously (“I never expected to return alive”), but agreed to join the party of a former prime minister, Yulia Tymoshenko, out of “female solidarity”. After she was elected, her trial became a diplomatic flashpoint, and her eventual release was the product of high-level international negotiations. (In return for Ms Savchenko, Ukraine freed two Russian soldiers captured in eastern Ukraine last year.) + +During her first weeks back, she has displayed an independent streak and a tireless work ethic. She admits that she knows little about economics or world affairs: “I’ve never been to Europe; I’ve only been abroad at war in Iraq, and in prison in Russia.” She says she gets along best with a group of young reformist MPs who call themselves the “EuroOptimists”. Yet she also took a trip back to the front, donning a flak jacket alongside Dmytro Yarosh, a far-right nationalist leader. (Ms Savchenko’s views on what makes someone a Ukrainian—“it’s in the genetic code of a people”—sound highly nationalistic.) + +If anything, the hopes pinned on Ms Savchenko point not so much to her promise but to Ukraine’s dearth of leaders. Aware of how risky politics can be, she seems keen not to miss her chance. She has told parliament she will not let them forget those “who died for Ukraine on Maidan” and in Donbass, and suggested negotiating directly with the leaders of the separatist republics to free prisoners—a position that would be anathema for most Ukrainian politicians. She has come out against the Minsk peace agreements in their current form, putting her at odds with Mr Poroshenko. Yet she says it is too early for her to chide the president: “In order to criticise someone, you have to do something yourself first.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21700655-she-was-soldier-pilot-and-prisoner-russia-now-she-mp-and-force-ukrainian/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Orthodox Christian summit + +The autumn of the patriarchs + +Amid shrieking family rows, the Christian east strives to find its voice + +Jun 18th 2016 | From the print edition + + + +IN THE early centuries of eastern Christian history, when doctrines were hammered out at seven disputatious bishops’ councils, theological arguments were on everyone’s mind. As one account of Constantinople put it: “Ask the price of bread, and you are told that the Father is greater than the Son; ask about your bath, and you are told the Son was made out of nothing.” + +This month, as the 270th Patriarch of Constantinople, Orthodoxy’s first among equals, flew to Crete to convene the first full-blown gathering of the world’s Orthodox bishops for many centuries (some would say nearly 1,300 years), he hoped for a calmer spirit. The intention was for the leaders of the 14 churches which make up global Orthodox Christianity to send a message of encouragement and concern, not only about theology but about earthly woes from pollution to inequality. + +But before the Holy and Great Council was due to open on June 16th, a consensus which had been carefully built by Patriarch Bartholomew, an ethnic Greek who lives in Istanbul, began to fray. On various grounds, the patriarchates of Bulgaria, Georgia and Antioch (which is based in Syria) pulled out. Antioch is at odds with the Patriarchate of Jerusalem over who has jurisdiction over a handful of faithful in Qatar. The Patriarchate of Moscow, the largest, said it too would opt out unless the absentees could be wooed back. It sought an emergency session to revise the agenda, or a postponement. + +The hosts said they were “astonished”. In liberal-minded church circles that approve of Bartholomew’s bridge-building diplomacy, there were fears that Moscow was egging on the rejectionists. But theological niceties aside, Moscow has geopolitical reasons to avoid a rupture with Constantinople. Many Ukrainians want Patriarch Bartholomew to bless the existence of an independent Ukrainian Orthodox church; Moscow, which now oversees the biggest church structure in Ukraine, would abhor that. The betting was that Moscow’s representatives might make an appearance in Crete without taking part in the council. + +As the depleted council began, Metropolitan Kallistos Ware (also an emeritus professor at Oxford University) said he still hoped it could avoid being mired in Orthodoxy’s internal woes and “speak in a firm, prophetic voice” to humanity. He thought the council could be the first in a series of global Orthodox gatherings rather than a once-in-a-millennium affair. + +One of the problems, though, is that Orthodoxy’s own vocabulary (including the refusal of some Orthodox to use the word “church” of any organisations but their own) is now arcane to a world where the Trinity has ceased to be bath-time conversation. Outsiders may still be fascinated by the spirit of Orthodox Christianity, as expressed through cultural mediums like art or liturgical chants. But when the Orthodox speak in prose, even sympathetic listeners find them hard to understand. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21700651-amid-shrieking-family-rows-christian-east-strives-find-its-voice-autumn/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Migrant-smuggling + +Tracking traffickers + +Catching people-smugglers is hard, convicting them even harder + +Jun 18th 2016 | ROME | From the print edition + +Kingpin or pawn? + +WHAT’S in a name? For an Eritrean man hauled before a judge in Palermo, Sicily, on June 10th, the answer could be many years in an Italian jail. If, as he claims, he is Medhanie Tesfamariam Berhe, he is a refugee and a victim of mistaken identity. But if, as the prosecution maintains, he is Medhanie Yehdego Mered, then—according to British and Italian investigators—he is a ruthless criminal, one of the masterminds behind the best-organised route funnelling migrants from Africa to Europe. Britain’s National Crime Agency (NCA) said it had tracked him to the Sudanese capital, Khartoum, where he was arrested on May 24th. + +Mr Mered (or Mr Berhe) was extradited to Italy and jailed. Prosecutors in Sicily, who first identified Mr Mered as a key figure in the migrant-smuggling business, want him tried on charges of running an operation in 2013 that ended in the deaths of 359 people, when a boat capsized off the Italian island of Lampedusa. Yet defence witnesses say the jailed man fled Eritrea for Sudan in the hope of joining relatives in Europe or America. The defendant’s counsel has asked the court for a scientific comparison of his client’s voice with that of Mr Mered, who was wiretapped by Italian police in 2014. + +The arrest of migrant-smugglers is not unusual. According to the Italian interior ministry, more than 500 were taken into custody in each of the past two years, having been discovered escorting irregular migrants across the Mediterranean. But those detained were minor players in an illegal business with an annual turnover which the European border agency, Frontex, puts at €4 billion ($4.5 billion). + +The real challenge has long been to disrupt the organisers. That is what makes the case in Palermo so important: it is either a farce, or the most important breakthrough so far in the war on migrant-smuggling. + +The difficulties of bringing a people-smuggling kingpin to book are immense. Peter Roberts of the Royal United Services Institute, a think-tank, has studied the smugglers’ methods. He says their networks involve up to 25 layers of intermediaries and facilitators, among them an ever-changing cast of lorry drivers, travel agents, money changers, people with access to safe houses and fishermen, along with bribeable officials, soldiers and police officers. In Libya they also involve the warring militias through whose territory the migrants pass. Identifying individuals is difficult. “You have to be on the ground, and there are going to be a lot of dead ends,” says Mr Roberts. + +In recent years almost all the migrants reaching Italy have set off from the Libyan coast. Some, notably Bangladeshis, came to work in Libya but decided that the risk of staying in a country that has descended into anarchy was greater than that of crossing the Mediterranean in a fragile boat. According to Frontex, the others—asylum-seekers and economic migrants—arrived from east Africa via Sudan, or from west Africa through Niger. + +The transit areas include violent places where a Western investigator would be dangerously conspicuous and where officials are often in the pay of the smugglers. One theory about the latest operation is that Sudanese officials might have pointed investigators to the wrong man. Against this background, and given that terrorism has been a higher priority for many European police forces and intelligence agencies, it is easy to understand why the war on migrant-smugglers has so far yielded modest results. + +The operation against Mr Mered shows that could now be changing. “For the first time, they are using the tools they have,” says Kristina Touzenis of the International Organisation for Migration. Chief among these is the UN Convention against Transnational Organised Crime, which came into force in 2003. It allows states to prosecute activities that took place abroad, but were carried out with a view to committing a crime on their territory. And while unauthorised immigration is not a criminal offence in most countries, facilitating it for gain is. + +The involvement of the NCA suggests Britain has moved the investigation of migrant smuggling up its agenda. The same may be true of France, which is concerned about links between the trade in human beings, terrorist funding and arms trafficking. Yet experts say much still needs to be done. No one European agency is responsible for fighting the people-smugglers. That might be worth changing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21700680-catching-people-smugglers-hard-convicting-them-even-harder-tracking-traffickers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Balkans’ EU dreams + +Applications deferred + +A region still enthusiastic about the European Union is being rebuffed + +Jun 18th 2016 | BRUSSELS AND BUDVA | From the print edition + + + +FOR all the Euroscepticism that has swept across the continent in recent years, there is one region where majorities still long to join the European Union: the western Balkans. From Sarajevo to Skopje, governments all want in. Even Serbs, who resented European countries’ role in the wars of former Yugoslavia in the 1990s, now want to join their club: polls show a plurality would vote for accession, though support has declined in recent years. + +But although the Balkans may be eager to join the EU, the converse is not necessarily true. The region has slipped “below the radar and is neglected”, worries Tanja Miscevic, Serbia’s chief accession negotiator. Brussels has no vision for the Balkans. And whatever the result of Britain’s Brexit referendum, the tensions it has unleashed may put any further EU enlargement on indefinite hold. + +Most Balkan countries that want to join the club are doing well at fulfilling the criteria. Officials in Brussels list many advances made by Serbia, Montenegro, Kosovo, Bosnia and Albania. (Macedonia is going backwards.) The glass is “more than half full”, says an EU official. The union’s member states, however, are increasingly sceptical about admitting new members. Balkan governments were alarmed by Dutch voters’ rejection of an EU association agreement with Ukraine in April. What if their countries meet all of the EU’s arduous requirements, only to have accession scuppered by a referendum in one state? + +Meanwhile, says Ms Miscevic, the EU has been losing its credibility in the region. Macedonia has been in a deep political crisis for more than a year; a deal negotiated by an EU mission did not stick, and an exasperated Germany is now sending its own envoy to sort out the mess. Kosovo’s government has tried to curb the powers of the EU’s police and justice mission in the country. In Serbia pro-government media have accused the EU of being behind anti-government protests. Aleksandar Vucic, the prime minister-designate, says Serbia aims to join the union, but relations with Brussels have been frosty. + +The country which has made the most progress towards joining the EU is Montenegro. According to Daliborka Uljarevic, a civic activist, the EU integration process is the most powerful motor of reform in the region. But, she adds, while her country has assiduously changed its laws to meet EU requirements, it is only fitfully applying them: “When it comes to the rule of law, then we are failing.” This applies in varying degrees across the Balkans. + +For all its shortcomings, the EU integration process has done much good. Some changes are diplomatic: Serbia’s relationship with Kosovo, which declared independence from it in 2008, has been transformed by EU-led talks, although many of the agreements negotiated have not yet been implemented. Others have to do with governance. In Montenegro one of the country’s most powerful figures was convicted last month of corruption in his hometown of Budva; several associates were arrested with him. They may simply be scapegoats intended to show the EU that the country is serious about tackling corruption. But it is also possible that real change is afoot. + +What is clear is that the western Balkan states, an enclave surrounded by the EU, need friends. If the EU is too preoccupied by its own problems to accept them, Russia is ready to step in. Serbia is negotiating a trade agreement with the Russian-dominated Eurasian Economic Union. In a planned visit to Serbia, Dmitry Medvedev, the Russian prime minister, will discuss expanding a Russian-funded humanitarian emergency centre to include an abandoned airport in the country’s north. + +Western officials fear that Russia’s real aim is less to help put out forest fires than to create a potential military airbase. If the EU’s Balkan enlargement process becomes nothing more than words, others will move in to fill the political and economic vacuum, to Europe’s disadvantage. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21700685-region-still-enthusiastic-about-european-union-being-rebuffed-applications-deferred/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +The sleep of union + +Brexit will not kill European Utopianism. It was already dead + +Jun 18th 2016 | From the print edition + + + +WHAT a difference a couple of opinion polls make. Few brows in Brussels have remained unfurrowed by the declining fortunes of the campaign to keep Britain inside the European Union. The prospect of Brexit, which to the panjandrums of the EU was always such a patent absurdity that it could never come to pass, has suddenly roared into plain view. “We’re reaching the point of no return,” says one diplomat. + +Some Europeans have already begun to draw harsh lessons from the British experience. Wolfgang Schäuble, Germany’s finance minister and a decades-long champion of European integration, says that a Brexit, or even a narrow vote to “Bremain”, would be a warning to the EU “not to continue with business as usual”. Donald Tusk, who as president of the European Council chairs meetings of EU leaders in Brussels, argues that Utopian calls for a federal Europe are hastening the EU’s disintegration. Even Jean-Claude Juncker, the increasingly absent president of the European Commission (the bit of the EU that proposes laws) and a dyed-in-the-wool federalist, admits that the EU has become a meddlesome presence in the lives of its citizens. + +Such debates will have no effect on the British referendum: the campaign is now locked into a domestic political logic that intersects only occasionally with reality. But in wider Europe they will resonate beyond June 23rd, regardless of the vote’s outcome. Britain’s is not the only European ruling class to have been shocked by a jolt of populist rage. Governments in Denmark and the Netherlands have lately lost referendums on EU matters; others, notably in France, conduct EU policy with at least one eye on their own Eurosceptic forces. Belatedly, and partially, Brussels is waking up to the threat. + +A Brexit might not lead to a cascade of membership referendums, but it would be a huge fillip to anti-EU forces elsewhere, not least by demonstrating that membership is reversible. (This is one reason why other EU countries would offer Britain a lousy trade deal if it votes to leave.) Post-Brexit, Eurosceptic governments seeking concessions from the EU could also threaten to quit the club. Mainstream politicians would see political mileage in taking on Brussels: recent polls show anti-EU sentiment growing all over Europe. All this would give pause to the centralisers Mr Tusk decries. + +Then again, the federalists’ strength has always been exaggerated, especially in Britain. The history of the EU is not, as supporters and detractors sometimes suggest, a Whiggish march towards ever-closer union, marked by a steady accretion of powers and a withering of the nation-state. As described in “The European Union: A Citizen’s Guide”, a provocative new book by Chris Bickerton, a Cambridge academic, the EU’s integration has proceeded in fits and starts, consumed by crises like de Gaulle’s “empty chair” of 1965, or even reversals, like the failed attempt to construct a west European army in the early 1950s. The great push came in the 1980s, when Jacques Delors, a French Socialist in charge of the European Commission, joined forces with Margaret Thatcher, Britain’s right-wing prime minister, to create the single market, a product of a peculiar alliance forged in unusual times. + +It has been a bumpy ride since then. The single currency and the Schengen system of open borders are the most potent symbols of European integration. But each has been sorely tested by crises that have set nation against nation. Indeed, in recent years, as the EU has become largely a crisis-management forum, power has flowed back from Brussels institutions to national governments, particularly to a visibly reluctant Germany. “More Europe,” once the clarion call for federalists across the continent, now carries the quaint ring of an ancient hunting cry. Nightmares long ago replaced dreams as the nocturnal currency of Brussels. + +The EU’s legislative machinery has largely been halted during the referendum campaign, lest it rouse Britain’s fearsome tabloids to anger over kettle regulation or another matter of vital national interest. It will soon kick back into gear, but at nothing like the pace of previous eras. Sometimes lost in the Brexit debate is the fact that the EU simply does a lot less these days. Much to the chagrin of green groups and other NGOs, the commission has slashed its number of legislative proposals. The increasing number of empty “resolutions” issued by the European Parliament tells you something about the lightening workload of MEPs. The EU budget is tiny—around 1% of GDP—and likely to remain so. The Brexiteers that rail against the insatiable appetites of Brussels are pushing at an open door. + +Can’t live with the EU, can’t live without it + +Britain is not in the euro, and has little to do with EU migration policy. But the rest of Europe faces a conundrum: to prevent crises, it needs more of the centralisation that Eurosceptics hate. The euro zone, particularly the banking union, remains half-built and may not withstand another financial crisis. The layers of dust grow thicker on last year’s Five Presidents’ Report, a stalled road map for euro-zone integration. On migration, last year’s drama exposed the weakness of a borderless space with wildly varying asylum policies. Naval patrols and foreign deals can go only so far; in time the EU will have to integrate its asylum policies. + +Do not expect drastic action if Britain votes to leave. The differences between creditors and debtors that have long stymied euro-zone integration are as entrenched as ever: Germany firmly opposes a common deposit-insurance scheme, for example. Upcoming elections in France and Germany will stay politicians’ hands for at least 18 months. If Brexit unleashes financial chaos the euro zone will, as always, turn first to the European Central Bank. Still, whether or not Britain remains, the dilemma confronting the EU is growing more acute. To see off the next crisis, the train of integration will have to keep moving. But ever more voters are standing athwart the locomotive, yelling “Stop!” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21700641-brexit-will-not-kill-european-utopianism-it-was-already-dead-sleep-union/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Retailers in trouble: High noon on the high street + +Trump comes to Britain: Waiting for Donald + +The demise of BHS: Green sees red + +Bagehot: The Nigel Farage Show + + + + + +Articles Sections Next + +Retailers in trouble + +High noon on the high street + +Many shops are struggling to survive in Britain’s fast-changing and ruthlessly competitive marketplace + +Jun 18th 2016 | From the print edition + + + +THE original Hard Rock Café still occupies the same incongruous spot in Mayfair, a posh district of London, that it did in 1971, when it opened. Remarkably, the Hard Rock has survived the vagaries of pop fashion and still pulls in a youthful mix of tourists and locals to eat, buy T-shirts and swoon over John Lennon’s glasses. Hamish Dodds, its worldwide boss, says that the restaurant business is doing fine. The retail side, however, is distinctly “soggy”. + +This is a common refrain now on Britain’s high streets, although other retail executives will use words such as disappointing or weak. The first few months of this year were unseasonably poor, with a slight pickup in May. But that small improvement cannot mask the more ominous longer-term trend, that since mid-2014, according to the British Retail Consortium (BRC), a trade group, sales growth has been slowing. Non-food sales have been particularly worrying (see chart), and some sectors, such as clothing, have been contracting. BDO, an accountancy firm, runs a High-Street Sales Tracker that measures the performance of about 85 high-street chains. This recorded the biggest drop in sales in April since the depths of the recession in 2009, and overall BDO’s figures have shown a decline since early 2015. + + + +Partly as a consequence, there have been some prominent high-street casualties this year, such as Austin Reed, a menswear brand, and BHS, a chain of department stores. But these two are only the most visible of the crop. By May there had been 14, affecting 989 stores and over 20,000 employees, already more than in the whole of 2015. If the current rate of attrition is kept up, this could be the worst year since 2012, when the economy was still struggling to come out of recession. Furthermore, all this has been happening as disposable household income has been rising, with median household income and GDP per person recovering last year to pre-recession levels. + +Fear of a Brexit has probably dampened consumer spending in the very short term, but retailers acknowledge that deeper secular trends are at work that will reshape the British high street for ever, and quickly. The nimble ones who adapt to these trends will survive; Sir Ian Cheshire, the new chairman of Debenhams department stores, for example, says that he could be operating on a very different business model within just ten years. But many will probably not—the BRC has predicted that thousands of shops and almost 1m retail jobs could go by 2025. + +So what is going on? One profound change is that consumers now want to spend their money on “experiences”, such as eating out, holidays, cinema or going to the gym, rather than products such as clothes or food—hence the differing fortunes of the restaurant and retail businesses at the Hard Rock Café. Figures show a strong rise in spending on recreation and culture in the first nine months of last year, compared, for instance, with the fall in spending on food and drink. At Debenhams two of the best performers now are swimwear and holidays, bought from in-house travel shops. + +Online shopping is also transforming the high street. Consumers, especially the young, now expect “omnichannel” retailing, to be able to switch seamlessly between purchasing on their laptops, on their mobiles and in bricks-and-mortar stores. Retailers that are slow to develop a good online offering will struggle, or worse. Indeed, appearing before a parliamentary committee on June 15th, Sir Philip Green, the former boss of BHS, highlighted the store’s slowness to embrace the internet as the reason for its recent collapse (see article). + +Britain’s struggling supermarkets, such as Tesco, have done reasonably well online, but they now face a new challenge from AmazonFresh, a potentially dangerous rival, which launched on June 9th. This is a British version of the online giant’s fresh-food service in America. The initial roll-out has been confined to parts of London, but shoppers will be able to choose from a surprisingly large range of products, including about 20,000 items. + +Britain’s online grocery market was worth £8.6 billion ($12.2 billion) last year, and is expected to grow to £15 billion by 2020, so AmazonFresh’s move had been widely expected. Responding to it, however, will cost supermarkets yet more money in a very competitive environment, where market share is often maintained by slashing prices. That’s nice for customers, who have been enjoying shop-price deflation, but means that companies will strain to be profitable. The government has added to the pressure on retail margins by introducing a “living wage”, which came into effect on April 1st, and a levy to pay for apprenticeships. + +To survive at all, retailers have to be clearer than ever about who their customers are. Sir Ian argues that it is possible to make money from clothes, but only in certain precise categories; at the high end, at the discount end (such as Primark) and in specialist brands. The rest are “getting hammered”. Equally, retailers could still do more to stay in touch with their increasingly fickle customers, argues Fiona Davis of Women in Retail, a lobby group. It published research on June 7th, in conjunction with Elixirr, a consultancy, showing that despite the fact that 85% of all retail purchases are made or influenced by women, only 20% of executive teams and only 10% of executive boards are female. The latter figures were based on a survey of all retailers in the FTSE 350. + +This might explain, argues Ms Davis, why fashion stores, in particular, lose their way. “Having more women around the board table means you have more customers around the table,” she argues. Indeed, more diversity in general would help. Many retailers have not kept up with Britain’s evolving consumer market, and the results are all too evident. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21700699-many-shops-are-struggling-survive-britains-fast-changing-and-ruthlessly-competitive/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Trump comes to Britain + +Waiting for Donald + +Scotland prepares to welcome a controversial investor + +Jun 18th 2016 | ABERDEEN | From the print edition + +A wood in the rough + +THE MacLeod House and Lodge, just outside Aberdeen, is what a poor man might imagine a rich man’s hotel to look like. Owned by Donald Trump, many of its fittings—the lamps, the bed-covers, the radiators—are golden. + +The cleaners are making everything even shinier in anticipation of the arrival of the man himself, who is expected in Scotland on June 23rd. Mr Trump’s visit coincides with Britain’s referendum on the EU; he says he is coming for the official reopening of another of his hotels, in Ayrshire. + +Many Scots are not looking forward to hosting Mr Trump, whose mother was born on the tiny Isle of Lewis in the Outer Hebrides. Nicola Sturgeon, the first minister, is likely to avoid meeting him. Organisers of the Scottish Open golf tournament were rumoured to be considering his hotel as their venue for 2017, but have announced they are going elsewhere. In January members of Britain’s Parliament spent three hours trashing him, as they debated whether to try to ban him from the country (they decided not to). + +Despite all this, Mr Trump has a few cautious fans around Aberdeen. The golf course attached to the hotel is “really tough to play”, enthuses one local golfer. In the Beachside Coffee Shop in nearby Balmedie, another says Mr Trump’s investments have drawn tourists, benefiting the local economy. + +Most of all, though, Mr Trump has become an ally of conservationists. For years there have been plans to build turbines in the sea near to the golf course. Mr Trump’s interests dovetail with those of the activists: he fears the turbines will spoil the views from his hotel. + +In 2012 he appeared in front of a Scottish parliamentary committee. The nation’s pro-wind policy led to other people “laughing at what Scotland is doing”, he said, while the turbines themselves were “made in China” who then got Scotland to pay it “a lot of money”. Last year the Supreme Court ruled against him, however, and the turbines will go ahead. Mr Trump himself is likely to continue generating controversy, at home and abroad. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21700698-scotland-prepares-welcome-controversial-investor-waiting-donald/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The demise of BHS + +Green sees red + +MPs learn more about showbiz than business from the former head of BHS + +Jun 18th 2016 | From the print edition + +IT WAS billed as the heavyweight confrontation of the season. In one corner, Sir Philip Green, the perma-tanned billionaire king of retail, who controlled BHS, a chain of department stores, for 15 years until last year, collecting £600m ($850m) in dividends, rent and interest payments while he was at the helm before selling it for £1 to a former bankrupt and seeing it collapse soon afterwards. In the other, Frank Field, Labour MP, soft-spoken pensions expert and chair of a parliamentary committee investigating BHS’s failure. + +There was plenty of trash-talk beforehand. Sir Philip had demanded the resignation of a “biased” Mr Field. The Labour politician had said he would laugh at any suggestion that the Monaco-based capitalist could offer less than £600m to plug BHS’s pensions gap. Other MPs had demanded that Sir Philip be stripped of his knighthood. No one was sure whether he would even turn up for the bout. When he did, on June 15th, it was a six-hour wrangle on the ropes with few knockout punches. + +Sir Philip prefaced many of his replies “with due respect”, or “respectfully, sir”, clearly suggesting that in fact he had very little respect for any of his parliamentary interrogators. At one point he demanded that an MP stop staring at him as it was “really disturbing”. By turns playing the victim and the ingenu, he castigated another MP for rudeness, responding “I don’t remember” to many questions. In all, it was a masterclass in bluster, with little explanation of how a very successful retailer actually runs any of his businesses, or of what went wrong at BHS. “Nothing is more sad than how this has ended,” he proffered. + +Sir Philip did, however, promise that he would sort out BHS’s pension fund, which was in surplus when he bought the business in 2000 but is now £571m in deficit. This was the main reason why he had been hauled before the committee. Although he said he did not know how that deficit had come about, he accepted blame for the “mess” that now affects 20,000 people in the scheme. He said his plan would offer BHS pensioners a “better outcome” than compensation available from the Pension Protection Fund, the scheme that helps finance pensions after company insolvencies. He offered no details. Mr Field will no doubt be following up on Sir Philip’s pledges, especially as it seems the pensions regulator has, as yet, also received no details of any resolution. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21700696-mps-learn-more-about-showbiz-business-former-head-bhs-green-sees-red/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +The Nigel Farage Show + +Parochial and vacuous, Britain’s dismal referendum campaign has been a populist’s dream + +Jun 18th 2016 | From the print edition + + + +“HITLER did it with gas! Merkel does it with paperwork!” From the bow of his trawler, bespangled with anti-EU banners and bobbing on the grey Thames outside the Houses of Parliament, a rubicund fisherman bellowed at the crowds on Westminster Bridge. Baffled tourists posed for selfies as he ranted in the background. Leave supporters cheered and babbled: “When will Nigel arrive?” Word rippled through the assembly that the leader of the UK Independence Party (UKIP), along with his pro-Brexit flotilla of fishing boats, had been held up at Tower Bridge. Yet another establishment stitch-up. “We want our country back!” they chanted. + +Then it was glimpsed around the bend in the Thames: a Dunkirk of trawlers, barges and dinghies, buzzed by speedboats with “In” flags (“Cameron paid them,” a matronly Middle England type informed Bagehot as others cried “Traitors!”) and a cruiser from which Sir Bob Geldof, an ageing Irish rocker, yelled “Farage! You’re a fraud!” Last of all came the flagship, emitting a boozy whiff as, to loud cheers, it swooshed under the bridge. Holding court on deck, surrounded by cameras and wine-slurping, blazer-wearing “Kippers”, was the man himself: a male Britannia with a ciggy between his fingers and a smirk across his face. This was “The Nigel Farage Show”, and he knew it. + +Such has been Britain’s EU referendum. David Cameron first promised the vote in 2013, spooked by UKIP’s success in local elections and importuned by UKIP-inclined MPs on his Conservative benches. The result has been an unedifying campaign that has both bolstered Mr Farage and carried his imprint. It has been divisive, misleading, unburdened by facts and prone to personality politics and gimmicks. What might have been a hard-nosed debate about Britain’s future, about the pros and cons of EU membership, has turned into a poisonous row about the merits of what is ultimately Mr Farage’s vision of England: a hazy confabulation of content without modernity; of warm beer, bowler hats, faces blackened by coal dust; of bread-and-dripping, fish-and-chips, hope-and-glory. + +The outcome has been a contest with the logical architecture of an Escher drawing: Remain and (in particular) Leave issuing assertions that double back on themselves, Möbius-strip arguments that lead everywhere and nowhere. Knowledge has been scorned (“I think people in this country have had enough of experts,” huffs Michael Gove, the pro-Leave justice secretary). Basic facts have fallen by the wayside: Mr Cameron claims Brexit would help Islamic State; Leave implies Turkey, with its 77m Muslims, is about to join the EU. The complicated reality of an evolving union and Britain’s relationship with it has been ignored. + +Instead that chant on Westminster Bridge—“We want our country back!”—has echoed through the campaign. Back from whom? Johnny Foreigner, mostly, as well as a conniving, cartoonishly evil establishment; at a recent Leave event your columnist witnessed Tories and Kippers urge their supporters to take pens into the polling booth on June 23rd to prevent the intelligence services from doctoring their votes. The referendum has been marked by a pin-striped nihilism dressed up as common sense. + +Thus it is easy to forget that it was meant to reunite the Tory tribe. Mr Cameron issued his pledge in 2013 to “settle” the Europe issue. Today that aspiration reads like a joke. As trawlermen outside the Palace of Westminster came alongside Sir Bob’s craft and attempted to board it (prompting an intervention from policemen in a speedboat), inside the House of Commons Mr Cameron was skirmishing with his own buccaneering MPs. David Nuttall, one of the 131 (of 330) to back Brexit, pointedly asked when the prime minister would meet his pledge to cut net immigration to tens of thousands (from over 300,000 today). + +The mood in the Conservative base is even more vitriolic. Most members want to quit the EU. Many of them hold their leader in utter contempt following a campaign in which they believe he has betrayed his principles and abused his position. On June 12th your columnist attended a pro-Brexit Tory rally in Leigh-on-Sea, in Essex, organised by David Amess, the local MP. The star speaker was Ann Widdecombe, the sturdy doyenne of the Conservative right, who paraded about the hall badmouthing the prime minister: “The claims Cameron has been making do not stand up!” she trilled, to applause and shouts of “hear, hear!” + +To some extent the referendum has revealed things that were already present: the growing void between cosmopolitan and nativist parts of the country, the diminishing faith in politics, the rise of populism, the inadequacy of the left-right partisan spectrum in an age when open-closed is a more salient divide. Yet it is hard not to conclude that the campaign has exacerbated all of these trends. Polls suggest that trust in senior politicians of all stripes has fallen. And that is just the start. If Remain wins on June 23rd, Brexiteers will tell voters they were conned. If Leave wins, Mr Cameron will go and his successor will negotiate a Brexit that does not remotely resemble the promises of the Leave campaign, which trades on the lie that Britain can have full access to the European single market without being bound by its regulations and free-movement rules. + +The neverendum never ends + +Either way, politics is coarsened. Voters will believe their leaders less. Short of a total reconfiguration of the party-political landscape (possible but unlikely), the existing Westminster outfits will look increasingly at odds with political reality. The currency of facts will be debased, that of stunts inflated, that of conviction sidelined. It will be de rigueur to question an opponent’s motives before his arguments, to sneer at experts, prefer volume to accuracy and disparage concession, compromise and moderation. Mr Farage’s style of politics has defined this referendum. It will live on in the muscle memory of the nation. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21700697-parochial-and-vacuous-britains-dismal-referendum-campaign-has-been-populists-dream-nigel/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Female genital cutting: The unkindest cut + +Male circumcision: Snip snap + + + + + +Articles Sections Next + +Female genital cutting + +The unkindest cut + +A rite of passage ranges from symbolic to awful. Where should the line be drawn? + +Jun 18th 2016 | DJIBOUTI AND JAKARTA | From the print edition + + + +AT a midwife’s clinic in Jakarta, Indonesia’s capital, services for baby girls include an incision with a needle to the fold of skin above the clitoris. The clinic’s laser, popular with well-off clients, is out of action. Other midwives prefer a needle-prick to draw a drop of blood. Some just dab on iodine. About half of Indonesian girls have had one of these procedures, collectively known as sunat, the local term for ritual female circumcision. Some midwives offer it free as part of their delivery package. + +Santinam, a security guard in Jakarta, took his infant girls to a traditional circumciser in the village he comes from. They were not hurt, he says, just cut a little, “nothing even like the way boys are circumcised.” The UN disagrees with his take. It counts such cuts and pricks as female genital mutilation (FGM), even if they cause no lasting harm to health or sexual sensation. + +Globally, over 4m girls a year undergo ritual tampering with their genitals, the UN estimates. This ranges from the symbolic, such as rubbing with turmeric or other herbs, through singeing or excising part of the clitoris, to grotesque mutilation (see chart 1). About 400,000 suffer infibulation, in which the vaginal lips and external parts of the clitoris are removed, and the vagina stitched almost closed. + + + +Groups as disparate as the Masai in Kenya, Jews in Ethiopia and Coptic Christians in Egypt practise FGM in some form. Cutting is often done in the name of Islam, even though the Koran does not mention it. It is commonly believed to “tame” a girl’s sexual drive—ensuring that she remains a virgin until marriage and is faithful to her husband. A common myth in Sudan is that an uncut clitoris will grow into a third leg. + +FGM is one of the toughest social norms to change because a girl’s marriage prospects depend on it. Many parents know it is harmful but have it done for fear that they or their children will be ostracised. In Djibouti, says Fathia Hassan of UNICEF, the UN’s children’s agency, parents hardly ever admit that their daughter is intact. Research among Somalis living in Sweden found that women were convinced the men favoured infibulation; in fact, men were opposed—but never spoke about it. + +The limited data that exist suggest that FGM is becoming less common (see chart 2) and may be shifting to less harmful forms. This is thanks partly to education and urbanisation, and partly to decades of campaigning by the UN and activists publicising the harms. Progress, however, is slow: most girls in Somalia and Djibouti, for example, will probably see their daughters cut, too. + + + +One approach is to try to persuade entire villages to pledge publicly that they are abandoning the practice. In many countries, UNICEF has recruited volunteers to explain the risks to women. Mariam Mohamed is a volunteer in Djibouti. Only the youngest of her four daughters has not been cut, she says. “We had no idea that this was hurting the girls’ health.” But change is slow: the campaign reaches less than 3% of women a year. Many refuse to listen; some take their daughters to Somalia, where no one questions the procedure. + +Indonesia’s most senior clerics support sunat. In Bandung, the third-biggest city, an Islamic charity organises group circumcision ceremonies. Elsewhere, religious leaders are increasingly vocally opposed, but their words often fall on deaf ears. In Egypt 61% of girls are cut in defiance of a decade-old fatwa (religious edict) by senior Islamic clerics. Djibouti’s Islamic High Council also plans to issue a fatwa this year, reiterating a statement in 2014. The problem is that, in private, some imams stray from the official line, says Abdurahman Ali, the head of its fatwa department. + +In most places FGM is against the law. Though campaigners think that without a shift in attitudes laws can do little, they push for prosecutions to make parents think twice. In Djibouti, though FGM has been illegal since 1995, nearly 80% of women are cut and no cases were brought to court until last year when a circumciser and a mother were given symbolic sentences. Egypt also saw its first court case last year, after a 13-year-old girl died from complications. Her father and the doctor were given prison sentences. + +Activists worry that cutting is becoming increasingly medicalised. In Egypt, where the usual practice is to remove part of the clitoris, four-fifths of procedures are now done by doctors; in Sudan over half are done by health workers. Campaigners are partly to blame, says Vivian Fouad, who works on Egypt’s national programme to abolish FGM: for years they intoned that cutting causes deadly infections, which led parents to assume that all is fine if done by a doctor, instead of a traditional circumciser (who, very often, is an old woman with poor eyesight and a rusty blade). + +Failure to protect + +The survival of FGM despite 30 years of eradication efforts has led some to suggest a different strategy: focusing on the types that cause long-term harm and permitting the rest, if carried out by medical personnel. But every time the idea is raised, it is scuppered by a storm of outrage. + +The debate goes back at least 20 years. In 1996 a doctor in Seattle’s Harborview Hospital asked a pregnant woman, a recent immigrant from Somalia, a routine question about her labour and delivery plans: did she want the baby circumcised if a boy. “Yes,” she said, “and also if it’s a girl.” After discussions with local Somali parents, the hospital decided to offer a ritual nick—to avoid greater harm if the parents looked elsewhere. But after widespread criticism, it withdrew the offer. + +In 2004 a similar attempt by a hospital in Florence met the same fate. In 2010 the American Academy of Paediatrics supported Harborview’s approach—only to retract less than a month later. Similarly, Indonesia has issued and then withdrawn guidelines for doctors. + +The latest row is about a paper published earlier this year in the Journal of Medical Ethics. The authors, gynaecologists Kavita Arora and Allan Jacobs, argue that some types of cutting, such as those common in Indonesia, do not harm physical functioning and should not be described as “mutilation”. Some, they say, are less invasive than male circumcision, which is near-ubiquitous in America (see article); others, though more severe, resemble labiaplasty, a surgical reduction of the vaginal lips that some Western women undergo for cosmetic reasons. Applying the “yuk factor” to all pricks and cuts is unhelpful, says Dr Arora. If even a few parents switched from major to minor forms of cutting, great suffering would be averted. + +Nafissatou Diop of UNFPA, the UN’s population agency, disagrees. Accepting cutting by doctors would grant spurious respectability to all forms of FGM, she says. And the agency knows of girls who have already been cut being subjected to further mutilation at the insistence of relatives unsatisfied with the initial result. + +In Indonesia, opinions on whether the practice should be regulated are split. In 2010, pressed by Islamic organisations that lobbied for medicalisation to prevent infections, the health ministry issued guidelines telling doctors to give a light scratch to the skin covering the clitoris. Four years later, under pressure from anti-FGM activists, it withdrew the guidelines but stopped short of a ban. Eni Gustina, of its family-health department, doubts that a ban can achieve much while sunat is such a popular tradition. But guidelines, she says, may distract health workers from pressing the message that sunat has no health benefits. + +Emi Nurjasmi of the Indonesian midwives’ association sees things differently. The methods used by midwives vary, she says, because the procedure is not taught in midwifery school and there is no official standard. The association tells midwives to advise mothers against sunat and, if pressed, to dab the genitals with iodine. + +The issue is becoming ever more urgent in the West, as rising numbers of immigrants arrive from places where FGM is common. Some girls are taken to their countries of origin for the procedure; school holidays have been dubbed “the cutting season”. There is no easy way to protect all girls from the custom. But redrawing the line to separate the harmless and atrocious might help. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21700631-rite-passage-ranges-symbolic-awful-where-should-line-be-drawn/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Male circumcision + +Snip snap + +Why more than half of newborn boys in America are circumcised + +Jun 18th 2016 | From the print edition + + + +SEXUAL, health and aesthetic norms do not vary much across the West. Male circumcision is an exception. Over half of American boys are snipped, compared with 2-3% in Finland and Britain. The procedure is justified in America on grounds given little credence in Europe: that it makes genitals cleaner, nicer-looking and more socially acceptable. + +Circumcision first became popular in the late 19th century as a supposed cure for masturbation—and health problems from headaches to tuberculosis. After the second world war it became associated in America with hygiene and wealth; in other rich countries governments (which paid for most health care) were unconvinced of its merits. + +Over 80% of American men are circumcised. Parents worry that uncircumcised boys will be teased in the changing rooms; fathers often want their sons to look the same as them “down there”. Many parents think foreskins are hard to clean, says Georganne Chapin of Intact America, a group lobbying against infant circumcision. But if men can become astrophysicists or master carpenters, she says, surely they can learn to wash? + +American doctors routinely ask new mothers whether they want their sons circumcised before they go home. Insurers often pay, so providers have an incentive to promote it. Parents who want to decide on rational grounds get little help. The American Academy of Paediatrics says the benefits “outweigh the risks” but also that they are too low to justify routine circumcision. Most parents go with the flow. + +European doctors’ associations take a different line. The Nordic ones insist that there are no health benefits for young boys. The Royal Dutch Medical Association urges a “strong policy of deterrence”; it stops short of recommending a ban only for fear of driving circumcision for religious reasons underground. + +On the whole, European countries view the snip as an infringement on the child’s bodily integrity that cannot be justified on medical grounds. It is true that circumcision can help prevent some sexually transmitted infections—but the evidence is from African countries where HIV/AIDS is common. Other infections can be fought in other ways, for example with vaccines or antibiotics. America puts parents’ wishes first—even if future generations may find their reasons as odd as the Victorians’ desire to check “excessive lust”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21700632-why-more-half-newborn-boys-america-are-circumcised-snip-snap/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Technology deals: LinkedUp + +The internet: Reweaving the web + +Shanghai Disneyland: Lord of the jungle + +The Panama Canal: Wider impact + +Nuclear power: Keeping on the northern lights + +The economics of Broadway: No business like show business + +Schumpeter: The imperial CFO + + + + + +Articles Sections Next + +Technology deals + +LinkedUp + +Microsoft’s purchase of LinkedIn is one of the most expensive tech deals in history. It may not be one of the smartest + +Jun 18th 2016 | SAN FRANCISCO | From the print edition + + + +“IMAGINE a world where we’re no longer looking up to tech titans such as Apple, Google, Microsoft, Amazon and Facebook...because we are one of them.” So wrote Jeff Weiner, boss of LinkedIn, in an open letter on June 13th. Not much imagination is necessary. Microsoft had just announced it would pay $26.2 billion to buy the professional social network, making it the third-largest acquisition in the history of the tech industry. The deal was accompanied by substantial promises from Mr Weiner and Microsoft’s boss, Satya Nadella, that the deal would transform businesses’ and workers’ productivity worldwide. Those pledges seem fanciful. + +Microsoft is paying a high price for a firm that has suffered its fair share of setbacks. Although LinkedIn is the largest professional social network by far, with around 430m registered users and 100m visitors to its site each month, some analysts have questioned how much bigger it can become. LinkedIn makes most of its money by selling subscriptions to corporate recruiters, who prowl through its database of executives looking for prospective employees. Revenue growth has been slower than expected, and rolling out new businesses and improving existing ones has proved pricey. + +Concerns over the pace of progress came to the fore in February, when LinkedIn’s share price sank by more than 40% in a day, shedding $11 billion from its market value, after the firm reported that forecasts of revenues for 2016 were lower than expected. LinkedIn had also revealed that it made a net loss of around $165m in 2015, despite revenues of $3 billion, in large part because of excessive stock-based compensation. The decline was the biggest one-day fall since the company went public in 2011. Its share price has not fully recovered. + +Despite these worries, Microsoft paid a generous 50% premium over LinkedIn’s share price to acquire the firm. Michael Cusumano at MIT’s Sloan School of Management reckons that the social network would have cost considerably less in a year’s time. Mr Nadella may have felt that he could not wait. + + + +Unassailable during the desktop-computing era, Microsoft is still the world’s largest software-maker, but now has to compete with rivals such as Google and Amazon as computing shifts towards mobile devices and the cloud. Unlike his predecessor, Steve Ballmer, who was slow to invest in these areas, Mr Nadella has a grand scheme to reposition Microsoft. This involves putting less emphasis on Windows, the firm’s flagship operating system, as well as beefing up cloud computing and putting the firm at the forefront of advances in machine learning and artificial intelligence. + + + +Acquiring LinkedIn is an element of this masterplan. The social-network firm has an enviable team of data scientists, a commodity coveted by tech firms. These boffins design algorithms to find patterns in big piles of digital information. LinkedIn will be useful to Microsoft for other reasons, too. The firm gathers detailed information about its users, including their employment history, education and whom they know. These data could prove valuable to Microsoft as it attempts to build offerings for managing relationships with customers and to compete with Salesforce, a firm it reportedly tried to buy last year. + +The two firms could not agree on a price at the time. Salesforce’s current market value is around $55 billion. LinkedIn is a cheaper substitute. It will also dovetail with Microsoft’s existing products in Office, its collection of business applications and services that includes Word, Excel and Outlook, an e-mail system. The latter might gain in popularity if LinkedIn keeps users’ details up to date and offers alerts if a contact moves firms. Such extra features should, in theory, encourage companies to buy new cloud services from Microsoft. + +Even so, the deal’s rationale looks questionable. Mr Nadella has suggested that with LinkedIn, Microsoft will become the platform for managing workers’ personal details from around the web. He also promises that Microsoft will become better at predicting what information users might find useful, suggesting news articles related to a project someone is working on or recommending a friend of a friend online who might be able to help an employee with a task at work. In this vision, LinkedIn’s “newsfeed” will become a focus for information-sharing at the office. + +Is it worth it, let me work it + +There are three hitches in Microsoft’s plans. The first is financial. It is shelling out the equivalent of around $260 for each monthly active user of LinkedIn. To keep shareholders happy, it will need to add users to LinkedIn’s platform more quickly or be clearer about how it can make more money from their data. + +The second is operational. Microsoft’s record with big deals is poor. Its purchase of Skype in 2011 for $8.5 billion has been no runaway success. Microsoft squandered over $6.3 billion on aQuantive, an online-advertising firm that it bought in 2007, and $7.6 billion on Nokia’s handset business in 2014. Both misfortunes happened before Mr Nadella took over, but “the historic playbook says it’s not going to work,” reckons Brent Thill, an analyst at UBS, a bank. Mr Nadella intends to keep LinkedIn as an independent company, perhaps because he has seen the pitfalls of integrating large acquisitions at first hand. + +The third hitch is behavioural. Mr Nadella wants LinkedIn to become the place to go for news and other details about people’s work lives, but firms are unlikely to want to give their employees more of an excuse to spend time on social media. Some bosses regard LinkedIn with hostility because it makes money from recruiters out to poach their staff. They will not want to let LinkedIn further embed itself at their companies. Already some large firms block or restrict access to LinkedIn on their networks. Users may also grow uncomfortable if Microsoft deploys their data elsewhere and could stop using the service. Mr Nadella has acknowledged they will have to treat what they know about users “tastefully”. + +The deal has been welcomed for other reasons, however. It could signal an impending tech buying spree. In the days after LinkedIn’s purchase, investors looked around to see which other firms Mr Nadella and his peers might have their eyes on. Optimists pushed up the share price of Twitter, another social-media firm whose growth prospects have been questioned, in the hope that a buyer might make a move. But not every tech firm is lucky enough to have Mr Nadella coveting it. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21700605-it-one-most-expensive-tech-deals-history-it-may-not-be-smartest-making-sense/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The internet + +Reweaving the web + +A slew of startups is trying to decentralise the online world + +Jun 18th 2016 | From the print edition + + + +TIM BERNERS-LEE ends “Weaving the Web”, a book written in the late 1990s, on an optimistic note: “The experience of seeing the web take off by the grassroots effort of thousands gives me tremendous hope that…we can collectively make our world what we want.” Nearly two decades later the inventor of the web no longer sounds as cheerful. “The problem is the dominance of one search engine, one big social network, one Twitter for micro-blogging,” he declared on June 7th at a conference in San Francisco. + +Mr Berners-Lee’s observation that the internet has become heavily centralised is not new, yet in recent months warnings such as his have grown louder. Pundits estimate that Google’s many sites attract an estimated 40% of all traffic on the web. Facebook’s apps are similarly dominant on smartphones. Together these two firms will soon rake in two-thirds of all online-advertising revenues. The takeover of LinkedIn, a social network for professionals, by Microsoft, a software and cloud-computing giant, will only reinforce such worries. + +In recent years, other “control points” have emerged, according to Yochai Benkler of Harvard University. Smartphones, which now generate more than half of online traffic, are not as open a platform as the internet: access to the two dominant mobile operating systems, Android and iOS, is regulated by Google and Apple, respectively. Cloud computing, too, is a centralised affair, with Amazon leading the pack, followed by Microsoft and Google. These same companies, as well as Facebook, are in control of ever-growing piles of personal and other data. Such information may ultimately allow these online giants “to predict, shape and ‘nudge’ the behaviours of hundreds of millions of people,” notes Mr Benkler in a recent paper. + +Now a new band of entrepreneurs and venture-capital firms is emerging with a mission to “re-decentralise” the internet. This is not the first time that new technology has pushed against the centralising forces of the internet. In the early 2000s “peer-to-peer” services such as Napster and Kazaa, for instance, allowed users to share music files rather than download them from a central server. But lawsuits from record labels and, in some cases, a failure to find ways to profit from these services meant these technologies ended up being limited to a few services, such as Skype, which offers free internet calling. + +If decentralisation is now making a comeback, it is largely because of the rise of bitcoin, a crypto-currency, and its underlying technology, the blockchain. This is a globally distributed database, which is maintained not by a single actor, such as a bank, but collaboratively by many. + +Bitcoin and the blockchain have “shown what is possible,” says Juan Benet, who invented the InterPlanetary File System, one of a number of efforts to build an infrastructure for a more decentralised internet. IFPS eliminates the need for websites to have a central server; instead, files are stored all over the web. BigchainDB, another such project, is developing a globally distributed database, which is faster and bigger than the blockchain (although it also makes use of it). And Storj offers a form of collaborative cloud storage: data are spread over the computers that have signed up to the service. + +Distributed applications are cropping up, too. Blockstack Labs’ offering, called Onename, which is also based on the blockchain, allows users to register their online identity; the idea is that they do not have to rely on log-ins provided by Facebook or Google. IndieWeb allows people to maintain information they want to share with the world without using centralised social networks. OpenBazaar is a collection of independent online shops. + +Such services are likely to multiply. One reason is that investors are showing interest. BlueYard, a venture-capital firm, recently invited other venture capitalists and entrepreneurs to a conference in Berlin. “We used to spend a lot of time investing in firms with network effects,” explained Brad Burnham of Union Square Ventures, referring to the mechanics of online markets, which allow successful firms to become dominant. “Now we are spending a lot of time figuring out how we could undo those effects.” His firm has invested in both Blockstack Labs and OpenBazaar, in the hope that they will curb the momentum of Facebook and Amazon. + +The second is that the technology to build decentralised applications, which is still in its infancy, will get better. For instance, bitcoin’s blockchain is no longer the only game in town. It now competes with Ethereum, a similar system that offers more scope for developers to write applications. They can, for instance, design “smart contracts”, business rules encoded in programs that execute themselves automatically: funds are transferred, for example, only if the majority of owners have digitally signed off a transaction. Consensys, a firm that designs such contracts, has used them to create a local marketplace for renewable energy in Brooklyn without the need for a central utility. + +Whether these new businesses will take the world by storm is unclear. A big hurdle—which previous efforts at decentralised technology failed to clear—is to be as convenient and seductive as centralised incumbents. Regulators are likely to mount resistance against projects that transcend national jurisdictions. Initiatives such as the DAO, a novel investment vehicle that lets its shareholders vote on how to spend their money, is not based in any country—not even a tax haven—but on Ethereum’s blockchain. + +Then there is the question of how decentralised services will earn their keep. Most are based on open-source software, which anybody can use without charge, so startups will have to make money with add-on services, such as updates, maintenance and subscriptions. More fundamentally, an internet that eschews control points may be one that affords firms less opportunity to build profits. To create a return that makes venture capitalists happy, the new tech firms will almost certainly come under pressure to get ever bigger. Decentralisation might fit the vision of the web’s founding father, but the internet became centralised for a reason. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21700642-slew-startups-trying-decentralise-online-world-reweaving-web/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Shanghai Disneyland + +Lord of the jungle + +Disney takes a big gamble with a new theme park in China + +Jun 18th 2016 | SHANGHAI | From the print edition + +The magic middle kingdom + +A BOLD reimagining of the tale of Tarzan is one of the principal attractions at Shanghai Disneyland, a theme park twice the size of California’s original Disneyland, that opened on June 16th. Even more impressive than the acrobatic stunts on display are the gyrations performed behind the scenes by Robert Iger, chairman of the Walt Disney Company, to ensure that his firm’s vast investment in China brings equally huge rewards. + +In pursuit of bumper returns Mr Iger boasted this week that the new park is “by far the most creatively ambitious and technically advanced” his firm has ever built. As evidence, he pointed out that it has the world’s tallest Storybook Castle; puts on more live shows than any new Disney park, all in Chinese; and that its heart-stopping “Tron” and “Pirates of the Caribbean” rides (based on blockbuster films) feature advanced technologies that Disney is launching in China. Disney has certainly had long enough to conjure this up; over 15 years has passed from inception to opening day. + +After such a long wait, will it make money? Disney already runs four of the world’s five biggest theme parks. But despite its expertise, it has occasionally misfired outside America. Disneyland Paris was initially snubbed for being too American and Hong Kong Disneyland has suffered from being too small. With $5.5 billion invested by Disney and its Chinese partners (state entities that hold a controlling stake), much hangs in the balance. + +Disney faces several hurdles. The first is China’s economy, which has slowed since the project was conceived. Household incomes are still rising, however, and interest is healthy. Even before the official opening, 1m punters had turned up for a look. Over 300m people live within three hours by car or train, a huge catchment area for a park that hopes to attract 10m to 12m people in its first year. + +A second challenge is politics. China has turned the screws on foreign firms of late and is squeezing all media companies through tighter control of content. This led to regulators scuppering Disney’s joint effort with Alibaba, a local e-commerce giant, to promote its content online in China. Clearly, the firm is not untouchable. + +Still, Mr Iger deserves credit for his deft dealings with government. No other firm has persuaded Chinese officials to shut down over 150 factories, clear nearly 1,000 acres of prime land, build a new metro link and paint its mascots on commercial jets. In November, regulators launched a year-long campaign to stamp out counterfeiting of Disney merchandise. President Xi Jinping even revealed last year that in party meetings, “I voted for Disney.” + +Not everyone is as welcoming. Disney “shouldn’t have entered China,” declares Wang Jianlin, a well-connected property and entertainment magnate. Dalian Wanda, his firm, has just opened a $3 billion theme park in Nanchang in south-eastern China, and recently started work on its 11th park. Dozens of other theme parks are now under construction across the country. + +The formidable Mr Wang believes that Disney cannot succeed in China as a “lone tiger” against a pack of local wolves that understand Chinese consumers far better. But Carl Yin, general manager at Spring Tour, one of the country’s biggest travel agencies, argues that many Chinese consumers will favour Disney over Wanda because it offers them an “authentic experience of a lifestyle” and not “just rides”. + +That points to the third and thorniest problem: balancing cultures. Having learned from its earlier fumbles (Euro Disney initially refused to serve wine, a cardinal offence in France), Mr Iger has bent over backwards to respect local culture in the Shanghai resort. The food on sale is 90% Asian. The park is stuffed with traditional gardens and tea houses. The peony, China’s national flower, and other local totems are found everywhere. + +Ask park-goers why they have come, however, and none mentions savouring local culture. They want more burgers and pizzas. At the premiere in the park of the Mandarin version of “The Lion King”, a glamorous celebrity couple glided by on the red carpet until the lady suddenly broke free of her beau and her bouncers, muttering something about cake. She had just spotted the Cheesecake Factory, an American dessert chain with a cult following whose first outlet in the country is in the resort. + +The risk is that Disney goes too far in localising the park as it grows—Mr Iger confirmed this week it will expand soon—and strays from its winning formula. Wolfgang Puck, an Austrian-born celebrity restaurateur, was inspecting his massive new eatery inside the resort this week. Asked if Chinese culture will influence his offerings, the dapper chef said no: “You must be true to who you are, that is what people expect.” Disney might do well to take note. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21700652-disney-takes-big-gamble-new-theme-park-china-lord-jungle/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Panama Canal + +Wider impact + +What the expansion of Panama’s waterway means for world trade + +Jun 18th 2016 | PANAMA CITY AND ROTTERDAM | From the print edition + +Pulling power + +WORKERS at a fish market in Panama City disagree on the benefits of the country’s newly widened canal. One optimistically hopes the government will have more funds to pay for air-conditioning in their broiling workplace. Another draws a finger across his throat and says, “The people will get nothing.” A third calls it “the biggest opportunity” in Panama. The last verdict is certainly true of the government’s take. The revenue it receives each year from the Panama Canal Authority (ACP) is expected to double to around $2 billion in 2021. This is a country that knows how to reap the benefits of its geography. + +The ACP will be able to charge more for passage to bigger ships now that massive new locks have been built at both the Pacific and Atlantic ends of the canal and channels have been deepened and widened. The $5 billion venture will be inaugurated on June 26th when the first vessel officially sails through. The widening of the canal was initially mooted before the second world war, but became more urgent as ever larger ships were unable to use it. + +Over 960m cubic metres of cargo passed through the canal in 2015, a new record and an amount that Francisco Miguez of the ACP calls “the maximum we could do in the existing locks”. The expansion increases capacity to 1.7 billion cubic metres. The biggest container ships that could use the old canal, known as Panamaxes, can carry around 5,000 TEUs (20-foot equivalent units, or a standard shipping container). Neo-Panamaxes that will squeeze through the new locks can carry around 13,000 TEUs. Although the world’s largest ships have space for nearly 20,000 TEUs, the majority of the global fleet will now fit through the canal. + +The expansion will not only fill the coffers of the ACP and the Panamanian government. It will also change how freight moves around the world. Traffic could divert from the Suez Canal. Larger vessels, which currently ply that route between Asia and America’s east coast, now have the option of going through Panama. America’s east-coast ports should get busier. In the past, many containers heading from Asia to the eastern seaboard would arrive at west-coast ports, such as Los Angeles and Long Beach, and then travel to their destinations by road or rail. Bigger ships may now sail directly to ports in the Gulf of Mexico or the east coast, though shipping times will be longer. And vessels carrying liquefied natural gas from America’s shale beds will be able to pass through the locks for the first time, heading to Asia. They are expected to account for 20% of cargo by volume by 2020. + +East-coast ports are preparing for the windfall, says Mika Vehvilainen of Cargotec, a maker of cargo-handling equipment. Ports in Baltimore, Charleston, Miami, New York and Savannah are updating facilities to accommodate the Neo-Panamaxes. The Port Authority of New York and New Jersey plans to spend $2.7 billion on enlarging its terminals and shipping lanes, and a further $1.3 billion to raise a bridge by 20 metres. + +Shipping lines’ costs will also fall, in part through economies of scale but also because ports are automating facilities at the same time as preparing them for Neo-Panamaxes, says Kim Fejfer, boss of APM Terminals, the ports division of Denmark’s Maersk Group, the world’s biggest shipping firm. Ports in the Gulf of Mexico are already embracing these new technologies. + +Customers may not, however, benefit much from the reduction in shipping costs. Rates have already fallen over the past two years—by up to 40% for containers on some routes, and slightly less for bulk commodities such as coal. The response, industry consolidation, may mute incentives to pass savings on. Earlier this year China’s two biggest shipping lines merged to form the world’s fourth-largest operator. Firms are also building alliances to manage capacity. In January 2015 Maersk and MSC, the world’s largest shippers, launched 2M, an alliance to share space on their vessels. In May this year, six other shipping lines with a global market share of 18% launched “The Alliance”. There are rumours of a huge tie-up between several medium-sized firms. + +Widening the Panama Canal may not bring cool air to sweaty fishmongers. But it should certainly give some parts of the shipping industry a boost. Whether the benefits of lower costs trickle down to consumers will depend on the internal machinations of the shipping industry. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21700657-what-expansion-panamas-waterway-means-world-trade-wider-impact/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nuclear power + +Keeping on the northern lights + +Sweden’s tax cut provides a rare bit of cheer for the nuclear industry + +Jun 18th 2016 | From the print edition + +An unusual glow + +THE list of candidates for the most beleaguered part of Europe’s nuclear-power industry is long. But since last year Sweden, which generates about 40% of its electricity through nuclear energy, has been a strong contender. A tax increased to punitive levels in 2015 by the anti-nuclear Green Party hit its operators so hard that they threatened to close all ten of the country’s plants unless it was scrapped. On June 10th the government, including the Greens, caved in and threw them a lifeline. It has promised to phase out the tax from next year and will allowed operators to replace ageing reactors with new ones. + +This was a rare piece of good news for an industry that looks like it is on its last legs in much of western Europe. Germany is decommissioning all of its reactors and France is cutting the share of nuclear in the energy mix to half, from 75%, by 2025. The country’s main power provider, Electricité de France (EDF), is under fire for the shortcomings of the as-yet-unfinished European Pressurised Reactors (EPRs) under construction in Finland and France. Its proposed EPR scheme at Hinkley Point in Britain has become a political embarrassment on both sides of the Channel. Unsurprisingly no one trumpeted the news from Sweden more loudly than Jean-Bernard Lévy, EDF’s chairman. It will not pull the nuclear industry out the mire, however. + +The immediate beneficiaries are Sweden’s three nuclear-energy providers, Vattenfall, a state-owned utility, Uniper, carved out of Germany’s Eon, and Fortum, a Finnish utility. The so-called capacity tax on nuclear installations cost the equivalent of about €7 ($7.90) per megawatt hour, around a third of current wholesale electricity prices in the region. Fitch, a ratings agency, said the tax made Swedish nuclear plants unprofitable at current prices. + +Despite their losses, operators still needed to make big investments in upgrading the cooling systems of their nuclear-power plants by 2020, ordered after Japan’s Fukushima disaster in 2011. Last year they shocked the country by announcing the closure of four of the ten plants in operation because they could not afford to keep them running. It sent a message, says Roland Vetter of CF Partners, an investment firm, that unless operators were spared the tax, baseload electricity supply in Sweden was in jeopardy. The country generates the rest of its power from hydro schemes and renewables, which are subject to weather conditions. “In the short run it was all about keeping the lights on,” he says. + +Whether it actually leads to the construction of new power plants is another matter. The agreement to support the nuclear operators included a pledge to generate all electricity from renewable sources (which excludes nuclear) by 2040. That may have helped win over the Greens, but it is unlikely to generate enthusiasm for building new plants, not least because renewables will continue to be subsidised and the bigger their role in the energy mix, the more they suppress wholesale prices. + +On June 15th Vattenfall announced that it was upgrading safety features on three reactors at its Forsmark plant following the tax cut, enabling them to continue producing electricity until the 2040s. Uniper says it has no plans to build new plants. “No investor would risk private money on building new nuclear today,” a spokesman says. “But who knows about the future.” + +In fact there are few places in the rich world where there is an appetite to build nuclear-power plants. Even in Britain, which is offering a huge subsidy to EDF, the French firm is unable to commit to going ahead with Hinkley Point. + +It may be different in the developing world. This month India reaffirmed a decision, taken in 2013, to buy six nuclear-power plants from Westinghouse, owned by Japan’s Toshiba, after talks between India’s prime minister, Narendra Modi, and Barack Obama. But in reality the deal remains stuck, as long as it remains unclear whether Westinghouse (or any other supplier) would have to accept liability in case of a nuclear accident. Nowhere is nuclear a particularly cheap and easy option. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21700678-swedens-tax-cut-provides-rare-bit-cheer-nuclear-industry-keeping-northern/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The economics of Broadway + +No business like show business + +Our analysis of the art and science of creating a hit show + +Jun 18th 2016 | From the print edition + +Bastard, orphan, hero, scholar + +“HAMILTON”, a hip-hop musical about one of America’s founding fathers and the architect of its financial system, is an unlikely smash. Lin-Manuel Miranda’s creation has been the hottest ticket on Broadway since the show started in July last year. On June 12th it won 11 Tony awards, theatre’s equivalent of Oscars. Michelle Obama called it “the best piece of art in any form that I have ever seen in my life”. Its success is widely credited with convincing the Treasury to keep Alexander Hamilton on the $10 bill. But if its cultural heft is clear, its commercial achievements may be just as remarkable. + +“Hamilton” serves as a reminder that although Broadway is rarely regarded as a big business in the same way as Hollywood is, the most successful musicals can outperform the silver screen. No film has ever banked $1 billion at the box office in North America, but three musicals—“The Phantom of the Opera”, “The Lion King” and “Wicked”—have exceeded this benchmark on Broadway, admittedly over long runs. The gap widens further when counting performances worldwide. Andrew Lloyd Webber’s “Phantom”, began life on the London stage in 1986 before transferring to Broadway and beyond. It has earned $6 billion globally, more than twice the worldwide take of “Avatar”, the film industry’s record-holder. + +“Hamilton” may cement Broadway’s lead. Revenues of $80m since opening last summer, averaging $1.7m a week, put it on track to break the billion-dollar barrier in just over a decade. Once productions open in Chicago, Los Angeles and London, returns could triple for the show’s creators and backers. + +At first glance, it is hard to fathom how theatre can compete with film’s economies of scale. Many more people can see a movie; the biggest venues on Broadway seat fewer than 2,000 people a night. But scarcity also means prices are high: $100 a ticket for two hours of entertainment is common, about five times what it costs to go to the cinema. And popular shows run and run. “Phantom” still takes over $1m in a good week. + +Theatre is a risky business, however. Just one in five shows make a profit and musicals, though usually far more lucrative than straight theatre, are lucky if they run for six months. Actors and landlords must be paid regardless of how many seats are filled. Even popular shows can shut down early if cash is tight after a few bad weeks. That makes investing a gamble. + +So what can would-be backers trying to replicate the success of “Hamilton” learn from Broadway’s biggest hits and misses? The data are detailed enough to make some suggestions. The Broadway League, a trade group, has published weekly revenue and attendance figures for every show going back to 1984. The Economist has analysed data from past shows alongside various attributes, including genre, cast size, reception by critics and star-quality of actors involved, to estimate the probability of a show selling out in a given week and potential revenues in that week. We limited our data mostly to those available to investors at the start of a show’s run. + +Given what people knew about “Hamilton” when it first launched, there was little hope of foreseeing the scale of its success. Two approaches appear relatively reliable paths to triumph on Broadway. One is to put successful films on the stage. Disney’s “The Lion King” has delivered steady profits since 1997. Musicals based on films have grossed $145,000 more on average during their opening weeks than those that were not. “Hamilton”, by contrast, is based on a stodgy 832-page biography. + +A second tried-and-tested approach is to bring in a Hollywood star: “Lucky Guy”, with Tom Hanks, rapidly sold out its entire three-month spell in 2013. James Ulmer, an entertainment analyst, has compiled an index which rates Hollywood actors on their “bankability”. Using those data, we were able to calculate the total star power of the casts for each of the Broadway shows in our database. The presence of a well-known actor can be expected to elevate a musical’s probability of selling out in its opening week from 21% to 59%, while an A-list actor can bring the odds up to 92%. Yet “Hamilton” has no big stars. + +One thing that “Hamilton” does have is a proven hitmaker in Mr Miranda. His previous musical, “In the Heights”, won four Tony awards and its total revenues exceeded $100m. But the past success of a show’s writers and composers matters little. Even Broadway’s biggest winners have trouble repeating past glories. Lord Lloyd Webber’s “School of Rock”, has played to houses that are just over 70% full since it opened in December. For a typical musical, a celebrated impresario increases the probability of selling out in its opening week by just four percentage points. + +Good reviews do not contribute as much to success as the critics would like. Data from Jeffrey Simonoff of New York University and DidHeLikeIt.com, a review aggregator, show that, all else being equal, a musical with a rave review in the New York Times is less than six percentage points more likely to sell out in a given week than one with a neutral review. + +Our model would have projected a reasonable performance for Hamilton at best, taking perhaps $1.3m a week while paying rent, wages, marketing and the like of around $600,000. Despite not conforming to the template for commercial triumph, it has achieved the highest average weekly revenues of any Broadway show ever and is one of the biggest outliers of the past 30 years (see chart). + + + +The reason it has not done even better is Broadway’s squeamishness over charging high prices. Demand for “Hamilton” far exceeds supply but the additional revenues either go to scalpers or are not realised at all, as lucky theatregoers enjoy a bargain. + +In order to “take the air out of” brokers, on June 9th Hamilton’s producer, Jeffrey Seller, raised the price of “premium” tickets to $849, and cranked up most seats closer to $200. Coincidentally, the next week “Hamilton” broke the $2m-a-week barrier for the first time. One producer estimates the show could quintuple its revenue if it charged what the market would bear. Such pricing would bolster the industry’s economics just as Hamilton solidified America’s financial system. And by paving the way for bigger profits, more shows would get funded in the hope of achieving Hamiltonian riches. + +Dig deeper: A list of sources and an account of our methodology + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21700674-our-analysis-art-and-science-creating-hit-show-no-business-show-business/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +The imperial CFO + +Chief finance officers are amassing a worrying amount of power + +Jun 18th 2016 | From the print edition + + + +THE days of imperial CEOs have long gone. Today’s chief executives do their best to contain their egos and, instead, project a modest image. They talk about “servant leadership” and make a point of cultivating their “stakeholders”. Many bosses leave the limelight to company founders and big-name investors. And yet a new authority figure has emerged within companies, much less exuberant than old-fashioned autocratic CEOs but just as determined to amass power: the imperial CFO. + +Chief financial officers barely existed 50 years ago: company accounts were administered by mysterious people called “comptrollers”. Today, CFOs are at the heart of all the world’s big firms. They are the only corporate officers other than the boss who are able to monitor every corner of an organisation. They are the only executive other than the chief who is feared by everybody: a “no” from the CFO means that your precious project is dead. Russell Reynolds, a search firm, calls them “co-pilots”. At one high-profile company, Twitter, the CFO, Anthony Noto, is arguably doing most of the piloting. + +Finance chiefs play a growing role in shaping the scope and direction of a company. They no longer wield the red pen just on the basis of what they see in the accounts. They do so through the prism of corporate strategy, which they are deeply involved in setting. They allocate capital with a view to bringing that strategy to life—evaluating how well a particular scheme fits into a firm’s long-term vision and counting out the beans accordingly. + +CFOs also play a growing role in overseeing corporate operations. Two decades ago, they seldom took their noses out of their spreadsheets. They now spend much of their time inspecting operations—dropping in here, there and everywhere to see what the accounts mean in practice. This detailed knowledge of the corporate landscape increases their influence. + +The other province colonised by CFOs is external relations. They spend plenty of time talking to investors, board directors, regulators and other stakeholders. Analysts will often pay more attention to the views of the finance supremo than to those of the ultimate boss. Ruth Porat, who is currently CFO of Alphabet, Google’s parent company, and previously had the same job at Morgan Stanley, a bank, is particularly influential on Wall Street. The same can even be true of boards: Leo Apotheker’s days as CEO of Hewlett-Packard were numbered when his CFO, Cathie Lesjak, told the board that she strongly opposed his decision to buy Autonomy, a software company. + +These rising powers are well rewarded for their growing clout. In 2014 the median pay for a CFO at an S&P 500 company was $3.8m. (The highest-paid, Patrick Pichette, Google’s CFO until last year, took home $43.8m.) Though this was lower than the top dog’s remuneration, the gap is narrowing, with CFOs winning slightly larger pay increases than their bosses, particularly in bigger companies. CFOs are also gaining power within what might be called the shadow ruling class—a network of boards, chairmanships and quangos that hire the CEOs and mark their report cards. EY, a consultancy, says that in 2012 almost 50% of CFOs at the 350 largest global firms sat on the boards of other companies, compared with a figure of 36% in 2002. + +Several things explain the rise of the CFO. The shareholder-value movement played a role in promoting them and giving them a bigger role in setting corporate goals. Andrew Fastow, who was convicted for his role in the demise of Enron, was an ominous early occupant of the co-pilot’s seat. The Sarbanes-Oxley legislation that was brought in to clear up that mess codified the CFO’s role as the CEO’s partner at the top of the corporate pyramid. The financial crisis of 2008 focused even more attention on managing costs. CFOs also have more powerful tools than ever to monitor what is happening in their organisations. They have access to lots of data and computing power, which allow them to build up a timely picture of what is going on. + +It is hard to work out whether an imperial CFO is a good thing. Encouragingly, there is growing diversity and professionalism. Women hold 13% of CFO positions at America’s leading companies, against only just under 5% of the top jobs. Today’s finance chiefs are better trained than their predecessors, and more likely to have degrees and experience in a broad range of corporate functions. Sarbanes-Oxley and other legislation has forced CFOs to be more careful about following the rules. + +Emperor’s new clothes + +But the example of Mr Fastow should serve as a warning. CFOs have shorter job tenures than CEOs—a little over five years on average at American listed companies, compared with seven years for the boss. They also owe a higher proportion of their pay to performance than any other corporate officer other than the CEO. At the same time they are subjected to a welter of conflicting pressures—acting as spin-doctors and bean-counters as well as corporate strategists and auditors. EY, in a recent report on finance bosses, begins with a warning that “it’s become a job that may be too big for any one individual to do well.” The growing number of tools at a CFO’s disposal may allow them to measure corporate performance more accurately but it also enables them to shuffle figures to produce the best results. + +In 2013 Mr Fastow explained his behaviour on the ground that he thought “that’s how the game is played…You have a complex set of rules and the objective is to use the rules to your advantage.” Finance chiefs may expend more of their efforts nowadays satisfying regulations, but they also spend a great deal of time using devices such as “internal charges” (transfer pricing) to concentrate the company’s profits in countries with the lowest taxes. The term “imperial” is never a good thing when applied to a corporate officer—in particular when that individual’s principal job is to keep his company on the straight and narrow. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21700633-chief-finance-officers-are-amassing-worrying-amount-power-imperial-cfo/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Oil supply: Rigonomics + +Buttonwood: Feeling low + +India’s central bank: A governor with a view + +Investment banking: Diving into the mire + +International data flows: Priceless + +Emerging-market indices: Stocks and stones + +Free Exchange: A history of violence + + + + + +Articles Sections Next + +Oil supply + +Rigonomics + +Is $50 a barrel enough to revive global oil production? + +Jun 18th 2016 | From the print edition + + + +IN THE wilds of western Texas, a flicker of life has returned to the fracking, or hydraulic-fracturing, industry. In the past four weeks nine idled oil rigs have been put back to work in the Permian basin, the richest of America’s shale-oil provinces. That is only a tiny fraction of the 429 that had been taken out of service over the previous 18 months as the oil price plunged, at one point hitting a low of under $30 a barrel. But it is the first four-week rise in a year. + +In recent weeks the oil price has recovered to around $50 a barrel (see chart). Scott Sheffield, boss of Pioneer Natural Resources, one of the top producers in the Permian, points out that futures prices for delivery in a year’s time have also risen above $50 a barrel, which allows him to lock in a decent profit on any new wells he can bring into production by then. Hence he may soon raise the number of rigs his firm has drilling in the Permian from 12 to at least 17 and perhaps as many as 22. “The Permian has bottomed out,” he says. + + + +In addition to drilling more wells, some firms are planning to frack mothballed ones—wells that have been drilled but not yet pumped full of sand, water and chemicals to open up fissures allowing oil trapped in shale to flow out. Others are simply pushing their pumps harder, which uses more energy but may be worth it at $50 a barrel. + +All this supports the claim that fracking has brought a new dynamic to global oil markets: the ability to flex output up and down more quickly than conventional oil drilling, rather like factories responding to changes in demand. Conventional oilfields take years to develop and then produce oil for decades, leaving oil output relatively unresponsive to short-term price movements. Shale wells, in contrast, take just a few weeks to drill and frack, and have a lifespan of only a few years, so production quickly falls if drilling abates. + +Shale-oil supply did indeed prove more elastic than the conventional sort when prices were falling, albeit with a delay. When the rout started in 2014, it took the shale-oil industry months to accept the fact that it was more than a temporary decline. But the number of rigs, and hence production, eventually plummeted, helping to bring the market closer to balance. + +Shale-oil seems to be moderating prices on the way back up, too. On June 10th, the day Baker Hughes, an American oil-services provider, reported that for a second week in a row there had been a tiny uptick in drilling in America, West Texas Intermediate (WTI), the American crude-oil benchmark, fell back below $50 a barrel. If shale-oil is indeed acting like the valve on a pressure cooker, regulating the market when it gets too hot or cold, the result should be a less volatile oil price. + +But the valve may not function perfectly. One question is the sustainability of the recent price rise. Shale-oil executives remember with chagrin the false rally of early 2015, which led them to maintain output longer than they should have. They note that the oil industry is still producing almost 1m barrels a day (b/d) more than the world is consuming. The International Energy Agency, an industry forecaster, said on June 14th that demand will not match supply until next year. “You don’t want to add rigs and then bring them back down again,” says Mr Sheffield. + +Another concern is how quickly supply can really be ramped up. Rigs have been idled for so long that it may take months of maintenance before they can be brought back into service. Workers may also have found new jobs, making it hard to entice them back. Financial strains are considerable, too: about 70 shale-related firms have gone bust in America since the start of last year, and those on financial life support will focus more on paying down debt than on investing in more production. + +If production does start to race ahead, the recent decline in shale-oil firms’ costs may reverse. Per Magnus Nysveen of Rystad Energy, a consultancy, says producers have become so much more efficient and drilling contractors so much cheaper that American shale firms can, on average, make a healthy 10% return with WTI at $39 a barrel, down from $82 in 2013. But he reckons there is little room left to squeeze out additional costs. What’s more, shale-oil firms’ service contracts are of short duration, so if rigs or workers become scarce, prices can rise very quickly. For every $1 increase in the oil price, Mr Nysveen expects a $1 increase in costs. + +Mr Sheffield disputes this. He says the number of unused rigs is so high that the industry will be able to restart several hundred before costs start to rise. But he agrees that $50 is not enough to boost output significantly. R.T. Dukes of Wood Mackenzie, a consultancy, says that if the price stays at $50 until the end of the year, investment in shale production will remain “flat to down”. If it is between $50-60, investment will be “flat to up”. Only above $60 a barrel will it be “up across the board”, he says. “We don’t expect supply to turn on a dime, but we do think declines will slow down.” + +Even if America’s oil industry does revive, it is still only about 1m b/d below its peak last June, meaning higher production could be dwarfed by cutbacks elsewhere in the 95m b/d global oil industry. Wood Mackenzie calculates that oil and gas producers have promised to cut at least $1 trillion from their planned investment in exploration and production in 2015-20, reducing projected output by the equivalent of a whopping 7 billion b/d. + +Industry bulls, including top executives among the biggest producers, believe that in focusing on smaller shale firms as potential swing producers, the markets are missing a longer-term supply drought caused by the evaporation of investment in conventional wells. This, they add, may be exacerbated by a recent upswing in demand in America, China and elsewhere, fuelled by lower prices. This could cause a sudden surge in prices, to as much as $80 a barrel. + +Yet not everyone has discounted the possibility that oil prices will plummet again. A lot depends on whether Saudi Arabia has the capacity to raise production substantially, as its deputy crown prince, Muhammad bin Salman, has indicated it will. Some argue that ahead of the planned initial public offering of Saudi Aramco, the state oil company, it would make sense for the kingdom to pump more oil to increase the company’s value. What is more, with copious reserves still in the ground, the Saudis may see logic in stepping up production in order to extract as much value as they can before technology and climate change dampen the world’s appetite for oil. A price of $50 a barrel may well be sustainable, but the battle of the sheikhs and the shalemen is not over yet. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21700649-50-barrel-enough-revive-global-oil-production-rigonomics/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Feeling low + +Bond markets keep defying expectations + +Jun 18th 2016 | From the print edition + + + +WHATEVER happened to the power of the bond markets? Bond traders were supposed to act as “vigilantes”, keeping spendthrift governments in check. But despite high levels of government debt, they have not been selling bonds, pushing yields higher. In fact, the cost of government borrowing is as low, or lower, than it has ever been. In many countries, investors have driven the price of government bonds so high that they are, in effect, paying for the privilege of lending to the government. Around $10 trillion-worth of bonds now have negative yields. + +Bill Gross, a veteran bond manager at Janus Capital, warned recently that negative yields were a “supernova” that would explode at some point. He is not the first to argue that bonds have become ridiculously overvalued. Pessimists have been calling the top of the bond market since 2011. + +In January almost two-thirds of global fund managers were gloomy about the outlook for government bonds. So far, however, this year has been another disappointment for the bears. Since the start of 2016, ten-year Treasury yields have dropped from 2.27% to 1.59%, British gilt yields of the same maturity have fallen from 1.96% to 1.24%, and the equivalent German yields have plunged from 0.63% into negative territory. + +This was supposed to be the year when the economic recovery was so well established that monetary policy, in America at least, returned to normal. But after pushing up rates last December, the Fed has since stood pat. A month ago there were growing expectations of a rate rise in June; it didn’t happen. America’s GDP growth rate in the first quarter was disappointing. The latest non-farm payroll numbers showed the economy generated only 38,000 net new jobs in May. + +It is not just the Fed that has boosted bond markets. Both the European Central Bank and the Bank of Japan continue to purchase bonds through their quantitative-easing (QE) programmes. Just as importantly, both central banks have imposed negative rates on at least some of the reserves commercial banks keep with them. In that context, even a marginally negative nominal bond yield may look attractive. + +Investors tend to head for the perceived safety of government bonds when they judge the political or economic outlook to be risky. Toby Nangle of Columbia Threadneedle, a fund-management group, says that investors, contemplating the short-term dangers of Brexit, a Trump presidency and a China slowdown, are opting for the safety of government bonds despite their low yields. + +The approach of Britain’s referendum on EU membership on June 23rd has focused minds. Recent opinion polls have suggested that Britain may well vote to leave the EU, with one showing the Leave camp ten points ahead. In the gambling markets, the probability of a Leave vote has risen from a low of 17% to 37%. + +Donald Trump’s erratic policy statements make it hard for investors to get a handle on what will happen if the businessman wins the White House in November. His stated intention to reduce taxes without compensating spending cuts seems likely to inflate the deficit; that should be bad news for bonds. In the short term, however, those worries are offset by the broader uncertainty about what a Trump presidency would mean—and uncertainty is good for bonds. + +On China, the recent data have been rather mixed. Investment in fixed assets was up by 7.5% in the year to May, the second-lowest reading since 2012. Investment in manufacturing grew by only 1.3%, says Société Générale, a bank. The IMF recently warned about the economic impact of China’s rising corporate debt. But the Chinese consumer looks strong: retail sales were up by 10% in the year to May. + +If Britain votes to remain in the EU, if the American economy perks up (and the Fed tightens policy), and if the Chinese economy stabilises at a growth rate of 6.5-7%, then it is not hard to imagine bond yields heading back to their levels at the start of the year. But Japan has shown that bond yields can stay low for a very long time. There is no sign yet of the sustained rise in inflation or in productivity that would bring GDP growth, or bond yields, back to what were seen as normal levels a decade ago. And there is a lot of demand for government bonds—from pension funds, insurance companies and central banks, and as collateral for interbank transactions. There may be a few bond-market vigilantes around, but they have been effectively neutered. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21700653-bond-markets-keep-defying-expectations-feeling-low/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +India’s central bank + +A governor with a view + +There are challenges ahead if Raghuram Rajan stays at India’s central bank + +Jun 18th 2016 | MUMBAI | From the print edition + +You cut the deficit, I’ll cut rates + +RAGHURAM RAJAN need not even leave his office atop the Reserve Bank of India’s (RBI) tower in Mumbai to gauge two factors central to India’s prosperity. Looking down, the ships sailing to nearby docks provide clues as to the buoyancy of foreign trade: the imposition of steel tariffs earlier this year, a knock-on effect from China’s slowdown, all but stopped traffic for a time, he notes. Looking up, the skies also offer troubling portents. Mumbai should have been drenched by seasonal rain for over a week by now. The belated onset of the monsoon has already pushed up food prices, hampering the central bank’s crusade against inflation. + +Indian policymakers have no control over the weather or the health of the global economy. But they can eliminate a third source of concern. Mr Rajan’s three-year term expires in September, but the government has prevaricated about granting him a second one. Both locals and foreign investors are wondering whether they are dealing with a lame-duck central banker. The rupee has gyrated, bond investors have quailed and tongues have wagged despite the admonition of Narendra Modi, the prime minister, to pay no attention to “this administrative subject”. + +Though a relative newcomer to the cut and thrust of Indian policymaking, Mr Rajan (pictured on the left below, with Mr Modi) knows better than to offer any comment on his reappointment. “What is important is to not personalise this office. It will survive any governor, it is bigger than any governor,” he says. + +Yet he has suffered a spate of ad hominem attacks, some from within the ruling BJP party. One complaint hinges on his supposed lack of patriotism, as evidenced by his American work permit (he is on leave from the University of Chicago). Another depicts him as a stooge of the Congress party, which appointed him to the job but is now in opposition. Amid all the jibes, relatively little attention has been paid to Mr Rajan’s performance in the job. His record so far is good—though many of his reforms have yet to be tested. + +Shortly before he took over in 2013 the “taper tantrum” struck. The Federal Reserve held out the prospect of tighter monetary policy in America, prompting money to flee emerging markets. The rupee was falling, causing inflation to rise. Wary Indians were importing more gold as a result, putting further pressure on the exchange rate. Mr Rajan’s arrival, and prompt adoption of an informal inflation target, helped to restore calm. + +Progress towards meeting that target—essentially halving inflation from 10% to 5% (see chart)—has been made easier by tumbling commodity prices, especially oil. Despite a recent jump, food prices are lower than they might be after two years of drought thanks to sound government policy. But many wonder if the structural rigidities that make India’s the highest inflation rate in Asia have been tackled. + + + +Mr Rajan favours incremental reforms over wholesale ones. He has made it easier to move money in and out of India, but not abolished capital controls in the way you might have expected from a former IMF chief economist. He does not try to dictate the level of the rupee, but still stage-manages it. Licences for new banks are no longer rationed in the manner of the “licence raj”; they are instead awarded to all those who show they are fit and proper. But the existing banks, which the RBI oversees, are in grim shape. + +Lenders remain bound by intricate rules that dictate what assets they can hold (over half must consist of government bonds, reserves at the central bank or loans to particular industries, such as agriculture). Meanwhile state-owned lenders, which make up 70% of the banking system, have huge problems with bad loans. Some will breach regulatory standards on capital absent promised new money from government. Even healthy banks are foiling monetary policy by not passing lower interest rates on to clients. But Mr Rajan largely inherited this mess and has at least forced bankers to admit to their bad debts. + +Mr Rajan’s stature has helped attract investors. Domestically, it has given him a confidence to speak his mind. When government ministers gloat that India has the world’s fastest-growing economy, he likes to point out how low a bar that is. When ministers publicly urge him to cut interest rates, he pushes back by demanding a more balanced budget first. + +The RBI is not technically independent, which makes the process of appointing its boss especially sensitive. The governor’s three-year term is the shortest of any G20 country. Recent governors have been given second terms as much as seven months in advance. If Mr Modi wants to curb speculation about the job, he could do so easily by reappointing Mr Rajan now. It would be a deserved extension. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21700670-there-are-challenges-ahead-if-raghuram-rajan-stays-indias-central-bank/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Investment banking + +Diving into the mire + +Wells Fargo leaps into a swamp from which most banks are retreating + +Jun 18th 2016 | New York | From the print edition + + + +WHEN Wells Fargo’s competitors were spending fortunes building up big investment-banking operations in the 1980s and 1990s, the bank’s chief executive at the time, Richard Kovacevich, refused to follow suit, joking that the business would be a good one to get into were it not for all the people who worked in it. Instead he concentrated on building up a nationwide network of branches (“stores” in Wells-speak) to take in deposits and sell mortgages, credit cards and insurance. This strategy was vindicated when the financial crisis struck, turning once lucrative investment-banking franchises into millstones. Wells, meanwhile, became the most profitable big bank in America. + +But an odd thing happened in the process. Wells’s strength during the crisis allowed it to snap up Wachovia, a regional bank whose dense network in the eastern part of country perfectly complemented Wells’s in the west. Wachovia also happened to have a sizeable investment bank. + +Many assumed Wells would promptly sell the unit, or shut it down. Instead, it has expanded it, even as other banks have been hacking away frantically at their investment-banking arms. In the first quarter of 2007, before the takeover of Wachovia, Wells had no investment-banking revenue at all; Wachovia underwrote $831m-worth of share offerings, putting it twelfth in the American rankings. In the first quarter of this year, Wells underwrote $1.23 billion of share offerings, putting it ninth in the rankings (see chart). It recently bought six stories of a skyscraper under construction in Manhattan, which will include two big trading floors. + +Wells’s investment-banking operation is still far smaller than those of the giants of Wall Street: JPMorgan Chase, Goldman Sachs, Morgan Stanley and Bank of America. But its equity underwriting in America has surpassed that of Deutsche Bank, which had sought to elbow in to the top ranks. Jamie Dimon, the boss of JPMorgan Chase, recently noted that Wells was “actively”, “aggressively” and “successfully” building an American investment bank. + +There are clear limits to Wells’s ambition. The Wachovia deal notwithstanding, it is not fond of takeovers, which it believes bring unforeseen problems and employees who will bolt unless rewarded (those dreadful investment bankers again), at a cost that would make its existing staff bitter. It also has limited interest in expanding abroad, since it does not want to have to navigate multiple regulatory regimes. Fully 95% of the employees of its investment bank are in America; 90% of its revenues originate there. + +Instead, Wells hopes to grow in America by helping more of its corporate customers buy derivatives, issue debt or equity, or navigate takeovers. Investment banking currently produces about 5% of the bank’s revenues; it says it would like the number to rise to as much as 15%, but no higher. + +Wells’s sudden enthusiasm for the business may seem counterintuitive, but it has always sold itself as a fast-growing company. Retail and commercial banking are competitive businesses; last year Wells’s revenues were up by a mere 2%—and that was still better than most of its rivals. Regulators are also trying to discourage America’s biggest banks from growing much bigger (Wells is already the third-biggest by assets, with a balance-sheet of $1.8 trillion). There is talk of requiring the biggest ones to hold even more capital, beyond the surcharge already imposed on “systemically important” ones. In that sort of climate, a business which could make more efficient use of existing clients and which holds out the promise (often forlorn) of higher returns on capital is hard to ignore. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21700671-wells-fargo-leaps-swamp-which-most-banks-are-retreating-diving/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +International data flows + +Priceless + +Trade in data seems very important, but there are no good, er, data on it + +Jun 18th 2016 | From the print edition + + + +ALTHOUGH trade in goods and services is sluggish, international flows of data are exploding. According to the McKinsey Global Institute, a think-tank within a consultancy, data zipped across borders at a rate of 211 terabits per second in 2014. That is equivalent to 1.3 Libraries of Congress per second, and 45 times more than in 2005. McKinsey reckons that this torrent contributed more to global growth in 2014 than trade in goods. + +The data deluge is changing trade in three main ways. First, it is spurring conventional trade in goods and services, through orders on internet platforms like Amazon and eBay. Second, a growing share of the products being traded is digital, from music files to insurance policies. And third, data are increasingly important lubricants for global supply chains. Companies ship vast datasets around the globe, using them to improve the efficiency of their operations. + +Yet quantifying and valuing these flows is difficult. The McKinsey study yields impressive numbers, but relies on rough measures, which are valued using statistical correlations rather than precise measurements. Experts agree that data flows are growing at an amazing pace, but also that measuring them is dispiritingly difficult. + +Statisticians face three big problems. First, current trade data does not usually record how services are provided. On May 25th America’s Bureau of Economic Analysis published new estimates showing that around half of American exports of services could be delivered digitally, and that the fraction was increasing. But whether they actually are or not is unknown. + +Second, there is no clear correlation between the volume of data and its value. Twitter feeds are not as valuable as digital design files. According to Cisco, a maker of networking gear, video accounted for 70% of global internet traffic in 2015, a share it thinks will increase to 82% by 2020. If growing data volumes reflect growing cat-video consumption, then “So what?” asks Robert Atkinson of the Information Technology and Innovation Foundation. On top of that, there may be lots of double-counting. Data flowing through America could be in transit from Canada to Mexico. + +Finally, identifying where exactly data are adding value is nightmarish. International e-commerce, which accounts for as much as 12% of all trade in goods and services, according to McKinsey, is enabled by international data flows. But none of that value is attributed to the data involved. + +More fundamentally, bytes shuttling across borders are mostly unpriced. Data are rarely valuable in themselves; they tend to generate value only indirectly. Google relies on global data flows to support e-mails and its search engine, but generates revenues from clicks on adverts. Companies like Caterpillar or Boeing use data transmitted by sensors in their products to improve efficiency, but the data is not priced as it flows. When cash is so disconnected from data, teasing out the latter’s value requires lots of head-scratching. + +For now, policymakers have to rely on anecdotal evidence from companies claiming to use data to make savings and generate value. Another hint is the willingness of companies like Microsoft and Facebook to invest in new cables to carry data around the world. (Telegeography, a research firm, estimates that a transatlantic cable costs $200m-300m to build). + +Knowing what to measure and how to measure it both present huge headaches for statisticians. Governments and international agencies are increasingly focusing on this informational black hole: they are considering options from simply asking firms how much their data are worth to demanding more detailed information on the nature of data flows from internet firms. It does not help that such flows are constantly evolving: at the moment, most data traffic is to people, but this may soon be superseded by inter-gadget traffic. + +The volume and value of data are not just academic concerns. Governments around the world, keen to protect their citizens’ privacy or bolster national security, are restricting flows in various ways with little sense of the economic consequences. China, India, Indonesia and Russia, among others, have imposed rules about where firms can store data about their local customers. A better sense of the costs of such moves might prompt a change of heart. + +One thing is clear: there is a gulf between the experience of firms, which insist data flows are crucial, and policymakers, who have no sense of their macroeconomic importance, says Joshua Meltzer of the Brookings Institution, a think-tank. The present situation, in Mr Atkinson’s view, is “like setting tariffs without knowing how much you’re exporting”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21700700-trade-data-seems-very-important-there-are-no-good-er-data-it-priceless/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Emerging-market indices + +Stocks and stones + +Emerging markets can be rich or poor, as long as they are liquid + +Jun 18th 2016 | HONG KONG | From the print edition + + + +IN JULY 2008 outraged investors in Karachi, Pakistan’s commercial capital, pelted the local stock exchange with stones after a plunge in share prices. In Lahore investors blocked the road to the city’s exchange with burning tyres. In Islamabad a mob set fire to share certificates. The panicked exchanges simply prohibited further declines, imposing a “floor rule” that barred prices from falling below the level of August 27th 2008. + +Emerging markets are, by definition, edgier places to invest than developed ones. But not anything goes. A prominent emerging-market benchmark compiled by MSCI, an index provider, includes only 23 stockmarkets that satisfy its criteria for size, liquidity and openness to foreign investors. Those that do not make the cut are relegated to an index of “frontier markets” or left out of MSCI’s international indices altogether. That was Pakistan’s fate in December 2008, when it was stripped of emerging-market status. + +The countries that still carry that status are an odd mix. Some are surprisingly wealthy: Qataris are richer than Americans. Others are strikingly poor. India, for example, has a GDP per person of only $1,600 at market exchange rates, lower than all but two of the frontier markets (see chart). Indeed MSCI does not take income per person into account when distinguishing emerging from frontier markets. India qualifies for other reasons. Because of its sheer size and institutional sophistication, its stockmarket is relatively vast. It boasts no fewer than 73 listings that meet MSCI’s criteria for heft and liquidity. + +China is the biggest emerging market by far, accounting for about a quarter of the index’s value. But only Chinese stocks listed in Hong Kong and America qualify for inclusion. Mainland shares will remain ineligible for now, MSCI decided on June 14th, largely because China permits foreign investors to repatriate only 20% of their holdings each month and insists on vetting all products linked to its shares. + +Other emerging markets suffer from smallness. Only three of Peru’s listed companies are big enough (with a market capitalisation of at least $1.27 billion) and liquid enough (with at least 15% of its shares changing hands each year) to qualify. If the number of eligible firms falls below three, MSCI said this week, Peru would be ejected from the emerging-market club. + +What about Pakistan? It long ago rescinded the floor rule, and now boasts nine eligible firms. This week, therefore, MSCI said it would readmit Pakistan to its emerging-market index in May 2017. It will be the poorest member. The news was enough to lift the Karachi Stock Exchange to a record, over 322% higher than the floor set back in 2008. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21700701-emerging-markets-can-be-rich-or-poor-long-they-are-liquid-stocks-and-stones/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free Exchange + +A history of violence + +Evidence is growing that gun violence in America is a product of weak gun laws + +Jun 18th 2016 | From the print edition + + + +WITH awful, numbing regularity Americans use high-powered, high-capacity firearms to carry out mass shootings. And with awful regularity, efforts to reform America’s gun laws in the wake of such tragedies fail. (Indeed, a recent paper published by the Harvard Business School found that a mass shooting leads to a 75% rise in measures easing gun control in states with Republican-controlled legislatures.) More than 30,000 people die in shootings in America each year; no other rich country suffers anywhere near that level of gun violence. + +Opponents of gun control argue that such figures have things backwards. In their view, widespread gun ownership deters crime, and thus benefits society. Advocates of tighter restrictions on gun ownership disagree: they believe the spur to gun crime from the ready availability of weapons far outweighs the deterrent effects. Social scientists have long struggled to adjudicate, since, on the surface at least, the data are ambiguous. + +Pro-gun groups point out that rates of gun ownership tend to be highest in rural, sparsely populated states, where crime rates are low. By the same token, over the past two decades, as the number of guns in America has risen sharply, crime rates have fallen. Yet even as the number of guns in America has grown, the share of households with a gun has dropped steadily. Research published in 2000 by Mark Duggan of the University of Chicago concluded that the homicide rate had been falling in tandem with the proportion of households where guns were kept. What’s more, the homicide rate was falling with a lag, suggesting that reduced gun ownership was causing the decline, and was not simply a side-effect of a falling crime rate. + +Other studies have reached similar conclusions. An analysis published in 2014, for example, using detailed county-level data assembled by the National Research Council, a government-funded body, suggested that laws that allow people to carry weapons are associated with a substantial rise in the incidence of assaults with a firearm. It also found evidence that such laws might also lead to increases in other crimes, like rape and robbery. A recent survey of 130 studies concluded that strict gun-control laws do indeed reduce deaths caused by firearms. + +Links between gun ownership and violence are less well established than they might be, in part because lobbyists for gun rights have pushed to reduce public funding for research on the issue. In 2013 the Journal of American Medicine published an article on this phenomenon, describing how in 1996, for instance, Congress ordered the Centres for Disease Control to spend less money contemplating how to reduce shootings. + +The main difficulty for academics studying the link between guns and gun crime, however, is the lack of a true counterfactual. A researcher cannot hold all other things constant while varying the stringency of gun laws in order to isolate the effect of those laws on the incidence of violence. That leaves open the possibility that any reductions in crime following a tightening of gun laws may be rooted in other, unrelated causes. Crime rates have tumbled in many rich countries in recent decades, complicating any analysis of the role of guns. + +Nonetheless, some events can come close to offering an informative counterfactual. The aftermath of a mass shooting in Australia provides one example. In 1996 a gunman killed 32 people with a semi-automatic weapon much like the one used in the Orlando shooting on June 12th. Australia’s lawmakers quickly passed strict and sweeping gun-control rules. Semi-automatic rifles and pump-action shotguns were banned, and the government offered to buy weapons already in circulation from their owners (a programme of comparable scale in America would reclaim an estimated 90m guns). + +Australia has suffered only two shooting sprees since then, claiming a total of seven lives. A decline in the rate of killings with guns, which was already under way before these rules came in, accelerated rapidly. Total gun deaths including suicides also fell. Before the change in the law the rate of deaths from firearms in Australia was about a quarter of that in America; afterwards, it fell to about a tenth of the American rate. In 2014 America suffered about 10.5 fatal shootings per 100,000 people; Australia recorded just 1. + +The safety catch + +It is not just the relationship between gun ownership and gun violence that is becoming clearer. Evidence is also building that even relatively modest gun-control measures reduce gun deaths. An analysis published in 2015 in the Annual Review of Public Health noted that state laws banning possession of a gun by individuals under a restraining order for domestic violence reduce the incidence of “intimate partner homicide” by 10%. The same analysis reports that firearm homicide rates rose by 25% in the five years after Missouri repealed its law requiring permits to purchase a gun, even as the national rate nationwide fell. + +Public-opinion surveys show widespread support for tighter controls on gun-ownership in America. Indeed, nearly half of Republicans, the party most sympathetic to gun ownership, favour a ban on “assault-style” weapons. Their will is frustrated, however, by a political system that enables passionate minorities to stymie legislation. + +In 2013, in the wake of the Sandy Hook massacre, in which 20 schoolchildren were shot dead, two senators, one Democrat and one Republican, introduced a measure that would have required background checks on most gun sales. It failed to move forward despite a majority vote in its favour, because supporters were unable to assemble the supermajority needed to overcome a procedural hurdle. Seemingly intractable disputes in American politics do sometimes give way to overdue reform. More probably, America will make scant progress in dealing with its gun problem until it begins to resolve its broader political problem. + +Visit our Free exchange economics blog + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21700596-evidence-growing-gun-violence-america-product-weak-gun-laws-guns/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Software: Engines of creation + +Detecting scientific sloppiness: Come again? + +Presenting scientific results: Graphic details + +Cleaning the environment: It’s the pits + + + + + +Articles Sections Next + +Software + +Engines of creation + +The slick graphics of modern video-games are spreading ever further outside their native industry + +Jun 18th 2016 | From the print edition + + + +JUNE 22nd is the 20th birthday of “Quake”. Its release, by a Texan firm called id Software, was a milestone in the history of video games. “Quake”, a grim and gory fantasy “shoot-’em-up”, pioneered many now-commonplace features of computerised play. Its most striking innovation was its fully three-dimensional world. This was drawn by a piece of software, called a game engine, regarded at the time as jaw-dropping. + +These days “Quake” looks like a muddy brown mess. Two decades of advances in processing power, allied with cut-throat competition between games designers, have advanced the art tremendously. Game engines are now a product in their own right. Besides drawing the graphics, they handle tasks like simulating physics (such as gravity, say, or object collisions) and connecting players to each other online. They are, in other words, the platforms upon which games are built. Most games companies buy them pre-made, off the shelf. And not just games companies. Game engines have become so good at creating high-quality facsimiles of reality that they are attracting the attention of firms that, until now, have had nothing to do with video gaming at all. + +One such outsider is PLP Architecture, a big London partnership. PLP has been experimenting with two leading game engines, Unity (made by Unity Technologies, of San Francisco) and Unreal (made by Epic Games, of Cary, North Carolina). Architecture businesses have long used graphics to give their customers virtual tours of as-yet-unbuilt edifices. But, says Richard Woolsgrove, who is in charge of “visualisation” at PLP, these were often just pre-cooked animations. Game engines, by contrast, let clients wander wherever they like. Mr Woolsgrove’s group has created virtual versions of proposed buildings using one or other of the engines it is testing, and invited people to walk around and inside them, using a video-game controller to do so. The ability to explore a virtual building in this way, Mr Woolsgrove says, gets clients much more excited than they were by the old approach. + +Game on + +Architects are not the only non-gamers interested in extending the uses of game engines. NASA, America’s space agency, is a fan. It is experimenting with a virtual-reality (VR) system based on Unreal to train astronauts for stints on the International Space Station. And this year’s Game Developers’ Conference, an industry shindig held every March in San Francisco, featured an eclectic range of firms, from McLaren, a British sports-car company, to Disney, an American entertainment giant, talking about how they were using game engines either to sell products or to help design those products in the first place. + +According to Clive Downie, Unity Technologies’ chief marketing officer, the main advantage game engines give organisations is the ability to do instantaneously what used to take minutes or even hours. Before such engines were applied to the task, creating high-quality renderings required computers to crunch tediously through the calculations needed to simulate how light rays bounce around rooms and interact with objects. Some individual frames of “Toy Story”, the first fully computer-animated film, took 30 hours to produce. Game engines avoid all that by employing a host of mathematical shortcuts to make images 30 times a second or more. The price is a lower-quality image. But as computing power has grown, the trade-off between speed and quality has become less and less noticeable (see picture: the game-engine version is above, the photograph from life is below). + +If artists want to add to the renderings, speed also lets them tweak their creations on the fly. If the lighting is not quite right, or a piece of virtual furniture is made of the wrong material, that can be changed without waiting while the scene is laboriously redrawn. This dramatically speeds up the production process. + +One way to think of a video game is as a primitive sort of virtual reality, in which a consistent, computerised world is generated and then presented to the player through a screen. “Proper” virtual reality, in which the illusion is made all-consuming by being supplied through a headset that blocks out the real world, is all the rage this year. Two retail headsets, one from Facebook and one from HTC, have already been launched; a third, from Sony, is expected before the end of the year. For now, VR is aimed mostly at gamers. But Tim Sweeney, Epic’s founder, points out that even non-gaming VR applications—such as a relaxing beach simulation or a shared virtual workspace—require slick, fast, computer-generated imagery of exactly the sort that his company sells. + +The same is true of VR’s cousin, augmented reality (AR), in which computer-generated imagery is painted on top of the real world. Again, big firms are cooking up consumer products. Google is working on a new version of its delayed Glass headset, and Microsoft is preparing for the release of an AR product dubbed the HoloLens. Game engines could become to VR and AR what Windows is to the PC—the base layer on which other products are built. + +Nor need those products be intended only for retail consumers. Ncam is a special-effects firm based in Soho, an arty district of London. It makes its living developing game-engine-based technology that lets film and TV directors drop virtual objects straight into scenes in real-time. A recent demonstration involved Nic Hatch, Ncam’s boss, setting up one of the firm’s special cameras in the lobby of its office and pointing the lens at the empty middle of the room. A TV connected to the camera showed the same lobby, but with a convincing-looking McLaren sports car sitting in it. This was generated by Unreal from computer models supplied by McLaren’s designers. The firm also has clips of commentators walking around other virtual vehicles, explaining the finer points to viewers, and of weather forecasters sharing studios with computer-generated tornadoes that are, apparently, crossing the American Midwest. + +The killer app of this sort of technology, though, will probably come in the film industry, on the “green screens” in front of which actors have to perform when computer-generated scenes are to be added later in a process called post-production. Green-screening requires actors to move around obstacles that are not there, and to interact with empty space where computer-generated characters will eventually stand. This is hard. Done badly, the results can look wooden and artificial. Technology like Ncam’s lets directors see what the special effects will look like while scenes are being filmed. They can thus manage the actors sensibly, telling them exactly where to look and how to behave. + +I’m the king of the swingers + +Ncam’s products have already been employed in big-budget films such as “White House Down”. A remake of “The Jungle Book”, released this year by Disney, used Unity. Mr Downie points to “Adam”, a short sci-fi movie shot entirely in Unity, and speculates that the first feature film made from start to finish in a game engine may not be far away. Mr Hatch thinks game engines may one day make conventional post-production obsolete. + +Game engines may arrive on TV screens even quicker, though, if Future Universe, a small company based in Oslo, has its way. Future Universe plans to use game engines to merge video games with live television. According to Bard-Anders Kasin, one of the firm’s founders, their first endeavour will be a green-screened game show, with a game engine drawing a virtual world around the contestants. When the result is broadcast, viewers with tablets or smartphones will be able to jump into the action—such as a car race—and play alongside those in the studio. + +Future Universe’s approach has attracted interest from TV networks. Mr Hatch says he knows of at least ten big TV companies that are actively experimenting with game engines. He speculates about using the engines to do everything from training car mechanics to building theme parks. “Imagine,” he posits, “if your kids could drop into a scene with Olaf and Elsa [a snowman and a princess from “Frozen”, a Disney film released in 2013].” Parents, worried about the costs of film spin-offs, may be less than delighted by that particular augmentation of reality. The prospect of a virtual sunlounger on a Caribbean island of their choice may help to ease the pain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21700618-slick-graphics-modern-video-games-are-spreading-ever-further-outside-their/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Detecting scientific sloppiness + +Come again? + +A surprisingly simple test to check research papers for errors + +Jun 18th 2016 | From the print edition + + + +“HOW extremely stupid not to have thought of that!” Many statisticians, confronted with the GRIM test might find themselves echoing Thomas Huxley’s words when he read about the idea of natural selection. The GRIM test, short for granularity-related inconsistency of means, is a simple way of checking whether the results of small studies of the sort beloved of psychologists (those with fewer than 100 participants) could be correct, even in principle. It has just been posted in PeerJ Preprints by Nicholas Brown of the University Medical Centre Groningen, in the Netherlands, and James Heathers of Poznan University of Medical Sciences, in Poland. + +To understand the GRIM test, consider an experiment in which participants were asked to assess something (someone else’s friendliness, say) on an integer scale of one to seven. The resulting paper says there were 49 participants and the mean of their assessments was 5.93. It might appear that multiplying these numbers should give an integer product—ie, a whole number—since the mean is the result of dividing one integer by another. If the product is not an integer (as in this case, where the answer is 290.57), something looks wrong. + +There is a wrinkle, though. Usually, the published value of the mean is rounded to two decimal places, for convenience. That rounding clearly affects whether the product of it and the sample size will be an integer. The GRIM test gets around this by rounding the product itself to the nearest integer (ie, 291), which is what the result would have to have been if the original numbers were accurate and the mean had not been rounded. That rounded product is then redivided by the sample size and the result of the calculation rounded to two decimal places. If this figure is not exactly the same as the original mean (and it is not, for it is 5.94) then either the original mean or the sample size is incorrect. + +When Mr Brown and Dr Heathers test-drove their method on 71 suitable papers published in three leading psychology journals over the past five years, what they found justified the pessimistic sounding label they gave it. Just over half the papers they looked at failed the test. Of those, 16 contained more than one error. The two researchers got in touch with the authors of these, and also of five others where the lone errors looked particularly egregious, and asked them for their data—the availability of which was a precondition of publication in two of the journals. Only nine groups complied, but in these nine cases examination of the data showed that there were, indeed, errors. + +The mistakes picked up looked accidental. Most were typos or the inclusion of the wrong spreadsheet cells in a calculation. Nevertheless, in three cases they were serious enough to change the main conclusion of the paper concerned. + +That, plus the failure of 12 groups to make their data available at all, is alarming. But if knowledge that the GRIM test might be applied to their work makes future researchers less careless and more open, then Mr Brown’s and Dr Heathers’s maths will have paid dividends. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21700620-surprisingly-simple-test-check-research-papers-errors-come-again/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Presenting scientific results + +Graphic details + +A scientific study of the importance of diagrams to science + +Jun 18th 2016 | From the print edition + + + +A PICTURE is said to be worth a thousand words. That metaphor might be expected to pertain a fortiori in the case of scientific papers, where a figure can brilliantly illuminate an idea that might otherwise be baffling. Papers with figures in them should thus be easier to grasp than those without. They should therefore reach larger audiences and, in turn, be more influential simply by virtue of being more widely read. But are they? Bill Howe and his colleagues at the University of Washington, in Seattle, decided to find out. + +First, they trained a computer algorithm to distinguish between various sorts of figures—which they defined as diagrams, equations, photographs, plots (such as bar charts and scatter graphs) and tables. They exposed their algorithm to between 400 and 600 images of each of these types of figure until it could distinguish them with an accuracy greater than 90%. Then they set it loose on the more-than-650,000 papers (containing more than 10m figures) stored on PubMed Central, an online archive of biomedical-research articles. + +To measure each paper’s influence, they calculated its article-level Eigenfactor score—a modified version of the PageRank algorithm Google uses to provide the most relevant results for internet searches. Eigenfactor scoring gives a better measure than simply noting the number of times a paper is cited elsewhere, because it weights citations by their influence. A citation in a paper that is itself highly cited is worth more than one in a paper that is not. + +As the team describe in a paper posted on arXiv, they found that figures did indeed matter—but not all in the same way. An average paper in PubMed Central has about one diagram for every three pages and gets 1.67 citations. Papers with more diagrams per page and, to a lesser extent, plots per page tended to be more influential (on average, a paper accrued two more citations for every extra diagram per page, and one more for every extra plot per page). By contrast, including photographs and equations seemed to decrease the chances of a paper being cited by others. That agrees with a study from 2012, whose authors counted (by hand) the number of mathematical expressions in over 600 biology papers and found that each additional equation per page reduced the number of citations a paper received by 22%. + +This does not mean that researchers should rush to include more diagrams in their next paper. Dr Howe has not shown what is behind the effect, which may merely be one of correlation, rather than causation. It could, for example, be that papers with lots of diagrams tend to be those that illustrate new concepts, and thus start a whole new field of inquiry. Such papers will certainly be cited a lot. On the other hand, the presence of equations really might reduce citations. Biologists (as are most of those who write and read the papers in PubMed Central) are notoriously maths-averse. If that is the case, looking in a physics archive would probably produce a different result. + +Figuring it out + +Dr Howe and his colleagues do, however, believe that the study of diagrams can result in new insights. A figure showing new metabolic pathways in a cell, for example, may summarise hundreds of experiments. Since illustrations can convey important scientific concepts in this way, they think that browsing through related figures from different papers may help researchers come up with new theories. As Dr Howe puts it, “the unit of scientific currency is closer to the figure than to the paper.” + +With this thought in mind, the team have created a website (viziometrics.org) where the millions of images sorted by their program can be searched using key words. Their next plan is to extract the information from particular types of scientific figure, to create comprehensive “super” figures: a giant network of all the known chemical processes in a cell for example, or the best-available tree of life. At just one such super-figure per paper, though, the citation records of articles containing such all-embracing diagrams may very well undermine the correlation that prompted their creation in the first place. Call it the ultimate marriage of chart and science. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21700617-scientific-study-importance-diagrams-science-graphic-details/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cleaning the environment + +It’s the pits + +Syrian researchers use date stones to suck up toxic materials + +Jun 18th 2016 | From the print edition + +Tinker, tailor, soldier, cleaner + +TO DISCOVER how to use a waste material to clean up hazardous chemicals is a notable achievement. To do so while working in a war zone is doubly impressive. But that, with a little help from some foreign friends, is just what Abdulsamie Hanano of Syria’s Atomic Energy Commission, in Damascus, has done. Over the past four years Dr Hanano, who works in the commission’s molecular-biology department, and his colleagues have developed a way to use the stones (or pits) of dates, a waste product of the fruit-packing industry, to clean up dioxins, a particularly nasty and persistent type of organic pollutant that can lead to reproductive and developmental problems, damage the immune system, and even cause cancer. Dioxins are produced mainly as a by-product of industrial processes. + +Dr Hanano lit on date stones for this task for three reasons. One was that they are rich in oils of a sort that have an affinity for dioxins. The second was that, though they are not unique in this oil-richness, unlike other oil-rich seeds (olives, rape, sesame and so on) they have no commercial value. The third was that, despite lacking commercial value, they are abundant. + +It was not the oil per se that Dr Hanano wanted, though. Rather, he intended to extract in one piece the droplets into which this oil is packaged within a stone. Besides oil, these droplets contain special proteins that help to hold them together. And each droplet is surrounded by a membrane composed of a substance called a phospholipid which, unlike oil, is attractive to water. This means that when the droplets are shaken up with water, they form a stable emulsion. + +To gather the droplets, Dr Hanano and his colleagues first softened up their date stones by soaking them in water for two weeks. That done, they ground them up and centrifuged the result. This process separated the droplets from the rest of the gunk as a creamy emulsion. It was then a question of testing the emulsion’s ability to extract dioxins from water. As the group report in Frontiers in Plant Science, it did this well. The droplets’ phospholipid membranes proved no barrier to the passage of dioxins, which accumulated satisfactorily in the oil. One of Dr Hanano’s collaborators, Denis Murphy of the University of South Wales, in Britain, describes the droplets as acting like little magnets for dioxins. “Within a minute,” he says, “virtually all the dioxins are sucked out of a solution. It is very fast.” + +In particular, the droplets absorbed 2,3,7,8-tetrachlorodibenzo-p-dioxin, an extremely toxic herbicide that was one of the constituents of Agent Orange, used to destroy vegetation by American forces during the Vietnam war. And, once the dioxins are inside the droplets, their affinity for the oil is such that they never leave. Disposing of them is just a matter of scooping up the droplets (which will eventually rise to the top of any water containing them) and destroying them safely in, say, a furnace. + +Dr Hanano’s first idea for a practical use for his creation is to clean up fish farms. Though dioxin pollution in most parts of the sea is fairly low level, it tends to be higher near the coast, where fish farms are located, because of run-off from the land. Moreover dioxins, like certain other marine pollutants such as mercury and cadmium, are never destroyed or excreted, so accumulate progressively in the flesh of fish and shellfish. Cartridges containing dioxin-absorbing droplets, through which the impounded water of a fish farm was cycled, would help to stop that happening. + +Remediating polluted land might also, the researchers hope, be on the cards, although they have yet to work out how to recover the droplets once the emulsion has been sprayed on the affected ground. If they can do so, however, the group are likely to have plenty of customers. Substances like 2,3,7,8-tetrachlorodibenzo-p-dioxin are so long-lived that even today the Vietnamese are still trying to clean up the mess Agent Orange created. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21700619-syrian-researchers-use-date-stones-suck-up-toxic-materials-its-pits/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +The Venetian ghetto: Hidden secrets + +The Arab unravelling: Tales of spring and winter + +The boundaries of science: Circle in a circle + +Cambodia: Buried treasure + +American fiction: Axemen + +Johnson: Double-plus effective + + + + + +Articles Sections Next + +The Venetian ghetto + +Hidden secrets + +The Venice ghetto gave the world an odious word, but its synagogues shouldbe restored + +Jun 18th 2016 | From the print edition + + + +IN 1516, when the Venetian authorities ordered the city’s Jews into an area near a foundry, they gave them just 48 hours to move. They also forced them to pay their new landlords 30% more rent than the outgoing Christian tenants. A Venetian word meaning “foundry” may have given rise to the term “ghetto”, which over the years has taken on wholly negative connotations. The 500th anniversary of that fateful event scarcely invites celebration. Yet it has inspired in Venice itself several intriguing, and controversial, initiatives of which the highlight is an exhibition opening at the Doge’s Palace on June 19th. + +Some visitors will find the show surprising, even shocking. The curator, Donatella Calabi, argues that viewing the Venetian ghetto through the prism of the Nazi-imposed ghettos of the Shoah is misleading. Her exhibition shows how the ghetto was created at a time of crisis in the old Venetian republic, or La Serenissima, when its governors became wary, not just of Jews but of all deemed to be outsiders. In confining them, they were doing what they also did to non-native merchants including Greeks, Turks, Armenians, Persians and, ironically, Germans. The Turks particularly, says Ms Calabi, were subject to rules “stricter perhaps than those imposed on the Jews”. Quarantining foreigners was done partly for their own safety (murderous clashes between merchant communities were not uncommon) and was “the same as the discrimination exercised at the time in all the great commercial cities: London, Seville and Antwerp”. + +But, as some Venetian Jews have argued, most of their forebears were not outsiders (some arrived in the 14th century). Nor were they citizens of an empire, the Ottoman, intermittently at war with Venice. Moreover, with the passage of time, the confinement of Venice’s Jews continued, though the original motive was gone. + +The exhibition does not gloss over the hostility they attracted. Two unobjectionable depictions of Jews by Carpaccio alongside Bellini’s “Drunkenness of Noah” highlight the latter’s anti-Semitism: the patriarch’s sons have caricature Jewish noses and the bulbous tip of Ham’s is cruelly emphasised by light. Another exhibit tells of the Jews’ Channel in the lagoon, dug so they could remove their dead for burial without crossing the centre of Venice, where louts would stone the waterborne hearses. + +It is evidence of how much worse conditions became for Jews elsewhere in the Mediterranean that successive waves of refugees fled to the Venetian ghetto. In the 17th century its population reached 6,000. + +The intermingling of different Jewish traditions produced five synagogues, each with its own rites, and the development of a rich, hybrid cultural life made even more varied by contact with the surrounding Christians. The first complete edition of the Babylonian Talmud was published in Venice, by a Christian (Jews being forbidden to work as printers). And among the ghetto’s residents was Sara Copia Sullam (c.1592–1641), a poet and essayist whose literary salon was open equally to Jewish and Christian intellectuals. The exhibits at the Doge’s Palace include an ornate Venetian Jewish marriage contract which has an imagined representation of Jerusalem. But this Jerusalem has a canal in it with a bridge under which a little boat is about to disappear. + +Beit Venezia, an NGO set up to breathe new life into the ghetto’s multicultural heritage, has seized on the quincentenary to sponsor an international symposium on the ghetto as a global metaphor and, more provocatively, to put on the first staging in the ghetto of “The Merchant of Venice”. The play opens on July 26th. On the second day of its run, a mock court hearing is to be held, with real lawyers and a jury led by Ruth Bader Ginsburg of the American Supreme Court. + +From the square where the play will be staged, the dome of the Scola Canton, one of the synagogues, can be seen tilting alarmingly. It is the most visible sign of the deterioration of what David Landau, an arts philanthropist who settled in Venice seven years ago, calls “the most important Jewish heritage site in Europe”. + +The wall behind the German synagogue, the oldest and arguably prettiest, is crumbling into an adjoining canal. A crack has opened in the floor that Marcella Ansaldi, the curator of the nearby Jewish Museum, says is growing alarmingly. Woodworm is eating at the timber skirting boards. “We may soon have to stop visits,” she says. At the Italian synagogue, the windows can no longer be opened because the frames are so crooked they could not be shut again. + +Restoring three of the five synagogues and linking them to the museum would cost an estimated €12m ($13.5m). Venetian Heritage, an American NGO, has raised €1m. The city’s Jewish community has asked Mr Landau to help find the rest. Persuading anyone, let alone fellow Jews, to pay for the preservation of a locality with such hateful associations as a ghetto will not be easy. But it would be tragic to lose to decay and neglect such a beautiful and culturally variegated corner of Europe. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21700613-venice-ghetto-gave-world-odious-word-its-synagogues-shouldbe/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Arab unravelling + +Tales of spring and winter + +How the Arab world rose up and fell apart + +Jun 18th 2016 | From the print edition + +Let’s make a deal + +A Rage for Order: The Middle East in Turmoil, from Tahrir Square to ISIS. By Robert Worth. Farrar, Straus and Giroux; 259 pages; $26. To be published in Britain by Picador in September; £20. + +IT HAS become fashionable to trace the turmoil of the Arab world back to the deal hashed out a century ago by Mark Sykes of Britain and François Georges-Picot of France. As the first world war raged, the two diplomats proposed to carve up the Arab lands of the Ottoman empire. Their countries would each get a sphere of influence, which they outlined in blue and red pencil on a now notorious map of the Levant. The modern borders of the Middle East were thus set, with little regard for local concerns, thereby sowing the seeds of future ethnic and sectarian conflict. + +That, at least, is what many pundits said on the deal’s centenary last month. In fact, the Sykes-Picot agreement did not establish any borders: the contours of the modern Middle East emerged as a result of several conferences and conflicts, many of which took place after the Great War ended. To be sure, the West deserves much blame for the region’s crumbling geopolitical architecture. But indigenous forces are most responsible for the Arab spring and its bloody aftermath. So the best way to make sense of the past six years is to ask the Arab people what happened. + +Robert Worth has done just that. In his new book, “A Rage for Order”, he shares many of the stories that he collected while covering the Arab uprisings and their fallout as a reporter for the New York Times. Today’s conflicts are often viewed through wide-angle lenses: for example, that Sunnis are seen fighting Shias, secularists fighting Islamists or rebels fighting regimes. Mr Worth narrows the field of view, using personal narratives to illuminate the larger dynamics. This is a common technique, but Mr Worth does it better than most. + +Much of the fighting now seems inevitable. But consider the story of Aliaa Ali and Noura Kanafani, two young Syrian women who used to laugh off their sectarian differences. Ms Kanafani, a Sunni, had even rejected a marriage proposal from a man who was intolerant of Alawites, an offshoot of Shiism to which Ms Ali—and Bashar al-Assad, Syria’s dictator—belong. Only after their country sank into civil war in 2011 did they too begin to turn on each other. It started with little arguments over politics. Each clung to a sense of victimhood, inflamed by the voices around them. As the violence escalated, they retreated into their sects and gradually redefined each other as enemies. + +Others, though, moved in the opposite direction, towards understanding. The Tunisians were first to topple their dictator. But their democracy got off to a rough start under the quasi-Islamist Ennahda party, which alienated much of the electorate. It was saved, in part, by the budding alliance, then friendship, between Rachid Ghannouchi, the septuagenarian leader of Ennahda, and Beji Caid Essebsi, the octogenarian leader of the secularist opposition (pictured). Mr Worth tells this story beautifully. Over the course of many meetings the two leaders “were edging toward each other, sideways, like two ancient crabs”. In the end, Mr Ghannouchi’s party relinquished power, and he later supported the presidential run of Mr Essebsi. + +Mr Worth weaves together his stories with subtlety. The story of Mr Ghannouchi runs naturally alongside that of Muhammad Beltagy, a member of the Egyptian Muslim Brotherhood, who could not convince his colleagues to compromise. After a tumultuous time in office, the Brotherhood was forced from power in 2013 and later banned by Egypt’s new authoritarian regime. After a show trial, Mr Beltagy was sentenced to death last year, along with dozens of other Brotherhood leaders, including the first democratically elected president, Muhammad Morsi. + +Other stories relate the aspirations of Arab revolutionaries, who “had dreamed of building new countries that would confer genuine citizenship and something more: karama, dignity, the rallying cry of all the uprisings”, writes Mr Worth. But when most of their efforts failed, some looked elsewhere for karama. One of the final subjects of the book is Ahmed Darrawi, a former spokesman for the Egyptian youth movement, who disappeared in 2013. He resurfaced months later in Syria. “I found justice in jihad, and dignity and bravery in leaving my old life for ever,” he wrote on Twitter. A short time after pledging his allegiance to Islamic State, he blew himself up in Iraq. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21700612-how-arab-world-rose-up-and-fell-apart-tales-spring-and-winter/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The boundaries of science + +Circle in a circle + +Jun 18th 2016 | From the print edition + +A smashing scientific success + +What We Cannot Know. By Marcus du Sautoy. 4th Estate; 440 pages; £20. To be published in America by Viking Penguin in April 2017. + +“EVERYONE by nature desires to know,” wrote Aristotle more than 2,000 years ago. But are there limits to what human beings can know? This is the question that Marcus du Sautoy, the British mathematician who succeeeded Richard Dawkins as the Simonyi professor for the public understanding of science at Oxford University, explores in “What We Cannot Know”, his fascinating book on the limits of scientific knowledge. + +As Mr du Sautoy argues, this is a golden age of scientific knowledge. Remarkable achievements stretch across the sciences, from the Large Hadron Collider and the sequencing of the human genome to the proof of Fermat’s Last Theorem. And the rate of progress is accelerating: the number of scientific publications has doubled every nine years since the second world war. But even bigger challenges await. Can cancer be cured? Ageing beaten? Is there a “Theory of Everything” that will include all of physics? Can we know it all? + +One limit to people’s knowledge is practical. In theory, if you throw a die, Newton’s laws of motion make it possible to predict what number will come up. But the calculations are too long to be practicable. What is more, many natural systems, such as the weather, are “chaotic” or sensitive to small changes: a tiny nudge now can lead to vastly different behaviour later. Since people cannot measure with complete accuracy, they can’t forecast far into the future. The problem was memorably articulated by Edward Lorenz, an American scientist, in 1972 in a famous paper called “Does the Flap of a Butterfly’s Wings in Brazil Set Off a Tornado in Texas?” + +Even if the future cannot be predicted, people can still hope to uncover the laws of physics. As Stephen Hawking wrote in his 1988 bestseller “A Brief History of Time”, “I still believe there are grounds for cautious optimism that we may be near the end of the search for the ultimate laws of nature.” But how can people know when they have got there? They have been wrong before: Lord Kelvin, a great physicist, confidently announced in 1900: “There is nothing new to be discovered in physics now.” Just a few years later, physics was upended by the new theories of relativity and quantum physics. + +Quantum physics presents particular limits on human knowledge, as it suggests that there is a basic randomness or uncertainty in the universe. For example, electrons exist as a “wave function”, smeared out across space, and do not have a definite position until you observe them (which “collapses” the wave function). At the same time there seems to be an absolute limit on how much people can know. This is quantified by Heisenberg’s Uncertainty Principle, which says that there is a trade-off between knowing the position and momentum of a particle. So the more you know about where an electron is, the less you know about which way it is going. Even scientists find this weird. As Niels Bohr, a Danish physicist, said: “If quantum physics hasn’t profoundly shocked you, you haven’t understood it yet.” + +Mr du Sautoy probes these limits throughout his book. He talks about the origins of the universe in the Big Bang, the discovery of subatomic particles (starting with the positron in the 1930s) and the disappearance of matter and information into black holes. There are also fascinating details about the human brain, where his discussion ranges from the structure of neurons to the problem of consciousness. + +Eventually, he turns to his own field of mathematics. If people cannot know everything about the physical world, then perhaps they can at least rely on mathematical truth? But even here there are limits. Mathematicians have shown that some theorems have proofs so long that it would take the lifetime of the universe to finish them. And no mathematical system is complete: as Kurt Gödel, an Austrian logician, showed in the 1930s, there are always true statements that the system is not strong enough to prove. + +Where does this leave us? In the end, Mr du Sautoy has an optimistic message. There may be things people will never know, but they don’t know what they are. And ultimately, it is the desire to know the unknown that inspires humankind’s search for knowledge in the first place. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21700611-circle-circle/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cambodia + +Buried treasure + +Jun 18th 2016 | From the print edition + + + +It may not look like much now, but in the 12th century, Preah Khan of Kompong Svay (pictured) was part of the world’s largest urban settlement and one of its most powerful empires. Found beneath the forest floor near Angkor Wat using lidar (like radar, but with lasers), these cities of the Khmer Empire show complex water systems built centuries before the underlying technology was believed to have existed, as well as highways connecting major settlements. The lack of evidence of a substantial relocated population nearby casts doubt on the widely accepted theory that the Khmer Empire collapsed when the Siamese invaded. More maps will be published in the coming months. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21700614-buried-treasure/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +American fiction + +Axemen + +Jun 18th 2016 | From the print edition + + + +Barkskins. By Annie Proulx. Simon & Schuster; 717 pages; $32. Fourth Estate; £18.99. + +ANNIE PROULX’S new work is a tribute to the world’s boreal forests, an intricately detailed narrative of geography, history and humanity that is both exhilarating and mesmerising. “Barkskins” spans 320 years and swoops from North America to France, the Netherlands, China and New Zealand, interweaving two families and their descendants. But readers must work for their reward; this is not a novel to peck at or flick through, but one to read slowly and to savour as a long and fulfilling feast. + +The book took Ms Proulx five years to write, but it was born some 30 years ago when the now 80-year-old Pulitzer prizewinning author saw a Michigan roadsign that proclaimed the surrounding bare scrub landscape to have once been the finest white pine forest in the world. The result, based on years of research, is a brutal portrayal of three centuries of man’s desire to make money from the forest, a resource mistakenly perceived as having no beginning or end and which “twists around as a snake swallows its own tail”. + +“Barkskins” starts in 1693 with the arrival of two Frenchmen, René Sel and Charles Duquet, in New France, the colonial territory that France held in North America, to wrest a living as indentured woodcutters, or barkskins, in exchange for land. Sel settles to the thump of his axe, marries Mari, a native Mi’kmaw woman, and fathers three children with her. Duquet, disillusioned by the hardship, runs away, and goes on to plant the sapling that will eventually yield Duke & Sons, one of the biggest logging companies in the world. + +The chapters alternate between the achievements and disappointments of Sel’s and Duquet’s descendants. They combine scenes of intimate domesticity—to do with relationships, houses and food—with issues that still make headlines today. Ms Proulx ranges across land ownership, the exploitation of natural resources, immigration, inheritance, international trade, mechanisation, and economic booms and busts. Deeply moving is the story of the decimation of the native Mi’kmaq people, “whose customs had fallen off like flakes of dead skin”. + +Clearly the author still possesses the descriptive powers that characterised her earlier books, especially “The Shipping News” (1993), in which she paints in great detail the bleak, claustrophobic winters of Newfoundland. In “Barkskins” a river is so full of fish it “seemed made of hard muscle”; shadows of moonlit trees have a “blackness so profound they seemed gashes into the underworld”; the life and body of a woodsman is “shaped to the pleasure of the axe”. + +Vivid characters people this bold, visionary novel as dark humour mixes with vengeance and violence and the “smoke-thickened” decades slide by. Standing watch is the forest, its “cold purity” defiantly proud in the face of destruction. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21700609-axemen/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +Double-plus effective + +Why Donald Trump’s rhetoric—with apologies to Orwell—works so well + +Jun 18th 2016 | From the print edition + + + +IT IS easy to make fun of the way Donald Trump uses the English language. His tweets tend to follow the same structure: two brief statements, then a single emotive word or phrase and an exclamation mark. (On June 12th, after the Orlando shootings: “We must be smart!”) He invents playground nicknames for his opponents (Little Marco, Lyin’ Ted, Crooked Hillary). His vocabulary is earthy: “big-league”, to describe how he would do things, or “schlonged”, for someone beaten badly. During the primary campaign, his swearing was so criticised that he promised to stop (and actually did). + +How did this man become the presidential nominee of the party of Abraham Lincoln? He must be doing something right: after all, language is virtually all a politician has to wield influence with (handshakes and hugs aside). Something about the way he talks and writes swept more experienced politicians aside. + +First, he keeps it simple. Journalists sometimes attack politicians for simple language, even going so far as to use a misleading scale used to estimate the difficulty of a reading passage in American schools. These critics say Trump “uses the simple language of a ten-year-old”. But the “Flesch-Kincaid” reading-level test measures only the length of sentences and words, and says nothing about content. At worst, it measures exactly the wrong thing in political speech: short sentences containing common words are, all things being equal, a good thing. “Never use a long word when a short one will do,” Orwell wrote in “Politics and the English Language”. Simplicity is not stupidity; making language easy to apprehend is intrinsic to making it appealing. Countless psychological studies have shown that what is easy to process is seen as more truthful. “I’m going to build a big, beautiful wall and Mexico is going to pay for it” may be preposterous, but it is easy to understand, and the human brain, in its weakness, likes easy things. + +Another Trump tactic is repetition. This, too, may be incorrectly seen as childish. Trump does often say exactly the same thing several times in a row in a crude, hammer-blow fashion. But in more sophisticated guise, repetition is a venerable rhetorical tool. Mark Antony sarcastically repeats the taunt that Brutus is “an honourable man” after Brutus murders Caesar. Winston Churchill rallied Britain with, “We shall fight on the beaches, we shall fight on the landing grounds, we shall fight in the fields and in the streets…” And the most beloved rhetorical repetition of the 20th century is the great refrain, “I have a dream.” Mr Trump is certainly no Martin Luther King, but he knows how to leave an audience remembering what he said. + +Yet the most effective way Trump beguiles his audience is perhaps the simplest: he does not give speeches. Instead, he talks. (Only rarely, when even he realises that his mouth can get him into trouble—as in his first speech after the Orlando shootings—does he resort to a teleprompter.) He does not even seem to have a “stump speech”. Bored reporters following ordinary candidates on the trail know that, even though they speak without notes, politicians reheat the same hash in town after town. Mr Trump, as noted above, repeats many tropes. But he also genuinely speaks off the cuff, avoiding the standard sunny string of clichés, which makes him fascinating to journalists. A Trump speech may actually make news. This is what happened when a barely planned digression about a fraud case generated a controversy: Mr Trump rambled that the judge ruling against him was conflicted because he was “a Mexican” (actually an American-born son of Mexican parents). + +This unscripted quality is powerful. Even a valid argument is weakened if it sounds canned. Even an invalid one sounds stronger if it appears spontaneous, especially to voters disgusted with the professional politicians. This reveals a dangerous double edge to Orwell’s famous rules for clear and honest English. An honest speaker would do well to keep words and sentences short and concrete, and to avoid clichés, as Orwell advises. But a demagogue can use these tools, too. Orwell believed in the talismanic power of clear language to make lies and appalling talk plain. But some voters cannot recognise a lie, and others want to hear appalling things. If there are enough of these, then a looseness with the facts, a smash-mouth approach to opponents and a mesmerisingly demotic style make a dangerously effective cocktail. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21700610-why-donald-trumps-rhetoricwith-apologies-orwellworks-so-well-double-plus-effective/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Manohar Aich: Raising the temple + + + + + +Articles Sections Next + +Obituary: Manohar Aich + +Raising the temple + +Manohar Aich, India’s first Mr Universe, died on June 5th, aged 104 + +Jun 18th 2016 | From the print edition + + + +HAD you wandered in 1950 past Sealdah railway station in Kolkata, weaving through the newspaper-hawkers, basket-carriers and mule-drivers, you might have spotted Manohar Aich sitting under a tree. He was selling green coconuts from a great pile beside him, their tops chopped off to expose the white meat. You might have haggled with him, as with any street merchant. What you could not have ignored, if you came close, was the 46-centimetre bicep that rippled under his shirt, and the perfect V-shaped chest that gleamed as he tossed the waste rind aside. For Mr Aich had started his day at the wrestlers’ training ground, doing thousands of press-ups, sit-ups and leg-raises, and the rupees he was now accumulating were to pay for his trip to the Mr Universe contest in London—which, in 1952, he won. + +In the short-height category, to be sure. He was only 4 feet 11 inches (1.5 metres) tall, and weighed seven stone (44.5kg); but he could break a spring of 275lb tension, and rip up a 1,500-page book with his small bare hands. After winning the Mr Hercules title in 1950, he had become “the pocket Hercules”. He was neat for a bodybuilder, nothing freakish, because his diet and training were all natural. No carb-loading or miracle supplements: just rice, pulses, milk, fish and vegetables. (“A small amount of rice doubles up power,” he declared; “a full portion may bring doom.”) As for equipment, he had almost none, extolling instead the jack-knifing press-ups and deep knee-bends of dand baithak on an earth floor. He shook his head over modern gyms and fitness clubs with their motorised treadmills, even though his sons eventually ran two of them out of his house in Kolkata. Young bodybuilders, he thought, were just lazy. + +Discipline and exercise were the mantra of his life. At 12 he had black fever; his parents, being poor villagers of Bengal, could not afford medicine for him, so he began to do exercises instead, feebly copying the older boys with their dumb-bells. That was the start of it. At the end of his school career, to make some sort of living, he joined forces with P.C. Sorcar, the great magician; so after Sorcar had mysteriously filled the stage with birds, silk scarves and chairs, cut a lady in two with a buzz-saw and vanished a Ford car full of passengers, the bodybuilding boy would come in to bend metal bars with his neck and recline on the points of swords. That show went all round India, and made him famous. + +Still, he could barely afford the London trip in 1951; an awful lot of coconuts had to be shifted to finance it. So when he came second in the contest that year, he stayed on to try again, “annealing myself in the flame of my strong will”, and working as a guard for British Rail to get by. (To his delight, when he secured the title, BR paid for his ticket home.) And so it went. When he was Mr Universe and touring everywhere, it was still a struggle to put his four children through school. There was no money in bodybuilding, he would sigh. + +What he found instead was respect. The body—though illusory, changeable and subject to decay, as the “Bhagavad Gita” taught him—was nonetheless the holy shrine in which the spirit lived. As such, he worshipped it. By improving his body with every stretch and squat, tearing muscle to increase it, he built a perfect temple around his true Self. Moreover, by controlling the body he controlled the equally unruly mind, keeping it pure from “ignoble strife”. By repeating “Strong, and strong, and strong” he was ill no more than twice in his life, and never lost his cool. + +Except once. That happened when he had joined the Indian Air Force, an arm of Britain’s Royal Air Force, in 1941, as a physical-training instructor. He was well-liked by the officers, but the Quit India movement was already stirring in him; and when one of the Britishers made some comment about Indians needing their colonial rulers, he slapped him. The result was a five-year spell in jail. Yet even prison, once he had accepted it, could be used to advantage: he discovered weights there, and trained with them for 12 hours a day. The man who emerged from the Alipore Presidency Jail was no starveling, but glistened and bulged with perfect tone. + +Chants to the drum + +The stardom that soon arrived was greeted with the same equanimity. Posters of him posing filled his simple house, together with his gold medals from three Asian championships. When not touring, he taught, passing on his techniques to future champions. As a national hero, he could have eased up; instead, the discipline continued unsparingly, with bodybuilding until he was 93 and, as a centenarian, 90 minutes’ exercise each morning. And first things first: he began each day at 4am with songs or chants to the shoulder drum. + +On his 100th birthday he was given an award, as he had long hoped he might be, by the state of West Bengal. If anyone asked—and many did—he would roll up his sleeves and mischievously flex his biceps for them. He had loved his bodybuilder’s life, and in his next one hoped to do the same thing again. But this particular body, so exhaustively perfected, he would now leave to the R.G. Kar Medical College to make what use they could of it before it was thrown away; as the green coconut grew to perfection, gave up its goodness and ended in the gutter, with the rest. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21700601-manohar-aich-indias-first-mr-universe-died-june-5th-aged-104-raising-temple/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +World GDP + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Jun 18th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21700629/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Jun 18th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21700634-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Jun 18th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21700628-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Jun 18th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21700627-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +World GDP + +Jun 18th 2016 | From the print edition + + + +The world economy grew by 2.7% in the first quarter of 2016 compared with a year earlier, according to our estimates. The growth rate rose for the first time since the third quarter of 2014, largely owing to a livelier performance by the BRIC economies (Brazil, Russia, India and China), whose contribution to world GDP rose from 1.4 to 1.6 percentage points. But the gloom could return if Britain votes to leave the European Union on June 23rd. In the past five years Britain has contributed the most to EU GDP growth. According to the OECD, a think-tank, GDP growth in the EU would be one percentage point lower in 2018 than it would be if Britain chooses to remain. By common consent, Britain’s economy would suffer, too. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21700630-world-gdp/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Jun 18th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21700626-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Britain’s EU referendum: Divided we fall + + + + + +The Orlando attack: Aftermath of a tragedy + + + + + +India’s central bank: A second helping of Raghu + + + + + +South Africa: Cracking the monolith + + + + + +Female genital mutilation: An agonising choice + + + + + +Letters + + + +On Brexit, populism, Donald Trump, women, language: Letters to the editor + + + + + +Briefing + + + +Brexit: What if? + + + + + +In their words (I): Heard from overseas + + + + + +The referendum campaign: The Battle of Evermore + + + + + +In their words (II): Heard on the trail + + + + + +United States + + + +The Orlando shooting: Vigils and vigilantes + + + + + +Watergate II: The Donald’s dirty linen + + + + + +Computing boot-camps: Risks and rewards + + + + + +The manosphere: Balls to all that + + + + + +College towns: A roaring trade + + + + + +Scandinavian-Americans: Founding Vikings + + + + + +Lexington: How others do it + + + + + +The Americas + + + +Criminal justice in Mexico: Trials and errors + + + + + +Bello: The Venezuela test + + + + + +Gay rights in the Caribbean: Not everyone’s island paradise + + + + + +Poverty in Latin America: Don’t look down + + + + + +Essay + + + +Europe: Between the borders + + + + + +Asia + + + +Mass arrests in Bangladesh: Round up the usual suspects + + + + + +Indian elections: The wrong ink + + + + + +Politics in Papua New Guinea: University challenge + + + + + +A spending scandal in Tokyo: Another one bites the dust + + + + + +Australia’s election: Time of Nick + + + + + +Banyan: The lost continent + + + + + +China + + + +Traffic: The great crawl + + + + + +Reality television: You’re stir-fried squid + + + + + +Reality television: Prize + + + + + +Middle East and Africa + + + +South Africa: In need of an opposition + + + + + +A virtual turf war: The scramble for .africa + + + + + +Nigeria floats its currency: Free at last + + + + + +The Muslim Brotherhood: Sibling rivalry + + + + + +Arabic publishing: Plus de kutub, please + + + + + +Europe + + + +Drugs in Europe: Not mind-stretching enough + + + + + +Nadia Savchenko: The maid of Kiev + + + + + +Orthodox Christian summit: The autumn of the patriarchs + + + + + +Migrant-smuggling: Tracking traffickers + + + + + +The Balkans’ EU dreams: Applications deferred + + + + + +Charlemagne: The sleep of union + + + + + +Britain + + + +Retailers in trouble: High noon on the high street + + + + + +Trump comes to Britain: Waiting for Donald + + + + + +The demise of BHS: Green sees red + + + + + +Bagehot: The Nigel Farage Show + + + + + +International + + + +Female genital cutting: The unkindest cut + + + + + +Male circumcision: Snip snap + + + + + +Business + + + +Technology deals: LinkedUp + + + + + +The internet: Reweaving the web + + + + + +Shanghai Disneyland: Lord of the jungle + + + + + +The Panama Canal: Wider impact + + + + + +Nuclear power: Keeping on the northern lights + + + + + +The economics of Broadway: No business like show business + + + + + +Schumpeter: The imperial CFO + + + + + +Finance and economics + + + +Oil supply: Rigonomics + + + + + +Buttonwood: Feeling low + + + + + +India’s central bank: A governor with a view + + + + + +Investment banking: Diving into the mire + + + + + +International data flows: Priceless + + + + + +Emerging-market indices: Stocks and stones + + + + + +Free Exchange: A history of violence + + + + + +Science and technology + + + +Software: Engines of creation + + + + + +Detecting scientific sloppiness: Come again? + + + + + +Presenting scientific results: Graphic details + + + + + +Cleaning the environment: It’s the pits + + + + + +Books and arts + + + +The Venetian ghetto: Hidden secrets + + + + + +The Arab unravelling: Tales of spring and winter + + + + + +The boundaries of science: Circle in a circle + + + + + +Cambodia: Buried treasure + + + + + +American fiction: Axemen + + + + + +Johnson: Double-plus effective + + + + + +Obituary + + + +Obituary: Manohar Aich: Raising the temple + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +World GDP + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.06.25.TXT b/homeworks/B20769/homework1/data2/2016.06.25.TXT new file mode 100644 index 0000000..1490bfb --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.06.25.TXT @@ -0,0 +1,5347 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: Artificial intelligence + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Jun 25th 2016 | From the print edition + + + +Once again, America’s Senate shot down gun-control proposals. Four measures introduced in response to the massacre at a gay nightclub in Orlando were thrown out. Democratic members of the House of Representatives protested by staging a sit-in on the floor of their debating chamber. Republicans tried to stop it. See here and here. + +The presidential campaigns of Hillary Clinton and Donald Trump, the presumptive nominees for the Democrats and the Republicans, continued. A British man attempted to shoot Mr Trump at a campaign rally by grabbing a gun from a Secret Service agent. He was swiftly arrested. + +Time for peace + +Colombia’s government and the FARC guerrilla group announced that they had reached an agreement on a bilateral ceasefire. The accord is a big step toward ending a war that has dragged on for more than 50 years. It is expected to bring a formal end to the fighting, with a final peace deal to be signed later this summer. + + + +Six people were killed and over 100 injured in clashes between teachers and police in Oaxaca, a state in southern Mexico. The protests began when two officials of the radical CNTE teachers’ union were arrested on charges of corruption. + +The Brazilian state of Rio de Janeiro said it is suffering from a “public calamity” in its finances that could prevent it from fulfilling its commitment to support the Olympic games to be held in August in the state’s capital city. Rio’s interim governor, Francisco Dornelles, blamed the shortage of money on a decline in tax revenues caused by Brazil’s recession and low oil prices. The declaration permits the state to tap the federal government for extra money. See article. + +Canada enacted a law that allows people with terminal illnesses to end their lives with the assistance of a doctor or nurse. The country’s Liberal government rejected proposals that would have extended the right to people with nonfatal “grievous and irremediable” diseases. See article. + +A grave situation + + + +Prosecutors in Poland said that they would exhume the bodies of all the uncremated victims of the plane crash in 2010 in Russia that killed Lech Kaczynski, the then president, and 95 others. Previous investigations blamed pilot error but have failed to dispel conspiracy theories. The current government, led by Law and Justice, a nationalist party, believes criminal negligence at a minimum was involved. + +The French government reversed a decision to ban a trade-union march in Paris against its unpopular labour reforms. It feared a repeat of the vandalism and rioting that marred previous protests, but was accused of infringing the right to demonstrate. + +Italy’s highest court made it easier for gay people to adopt their partners’ children. The move followed on from the recognition of same-sex civil unions (but not marriage) in May. Campaigners cheered the move, but want it to go further, with both partners in a same-sex union being recognised as a child’s parents at birth. + +Fall out + +Iraq’s president said his forces have recaptured Fallujah from Islamic State, which seized the city, just 60km from Baghdad in January 2014. Fighting is still continuing in parts of it; it may be many months before civilians can return. See article. + +Boeing, a planemaker, said that it has reached an agreement to sell 100 planes to Iran Air, a state-owned airline, in a deal worth up to $25 billion. Iran complains that sanctions still hamper investment almost a year after it reached a deal over its nuclear programme. + +An Egyptian court overturned a decision by the government to hand two islands in the Red Sea to Saudi Arabia. The government is likely to appeal. + +Jean-Pierre Bemba, a former vice-president of the Democratic Republic of Congo, was sentenced to 18 years in prison by the International Criminal Court in The Hague. He had earlier been found guilty of heading a campaign of rape and murder in the neighbouring Central African Republic. + +Moise Katumbi, widely expected to run against President Joseph Kabila of Congo, was sentenced in absentia to 36 months in prison over a property deal. He protests his innocence. + +A mushrooming problem + + + +North Korea carried out two mid-range missile tests on Tuesday, one of which succeeded, according to American and South Korean military officials. Japan’s defence minister called the missiles “a serious threat”. + +Shinzo Abe, Japan’s prime minister, kicked off an upper-house election campaign by touting his plans to boost the country’s economy. + +Since Rodrigo Duterte was elected president of the Philippines on May 9th, the country’s police have killed at least 40 suspected criminals, more than in the preceding four months combined. The tough-talking former mayor has spoken approvingly of extrajudicial killings in the past. + +Thousands of residents of the village of Wukan in southern China staged demonstrations against the arrest of their village chief, Lin Zulian, on corruption charges. Wukan became a cause célèbre in 2011 when Mr Lin led prolonged protests against the alleged seizure of land by local officials. In a remarkable concession, the government later allowed him to stand for election as village chief; he won by a landslide. Villagers believe his recent arrest is linked with his plans to renew a campaign for the return of the land. + +Wu Jianmin, a retired Chinese diplomat who had served as ambassador to France and the United Nations, died in a car crash while travelling to Wuhan. Mr Wu had recently aroused controversy in China because of his public criticism of the country’s nationalists, which was rare from someone of his rank. + +Hot dog, anyone? + +The southern Chinese city of Yulin went ahead with its annual dog-meat festival, despite widespread criticism by animal lovers in China and abroad. Dog ownership has increased rapidly in China in recent years, fuelling opposition to the tradition of eating them. The state news agency, Xinhua, said a poll showed that 64% of people aged 16 to 50 believed the festival should not be held. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21701224-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Jun 25th 2016 | From the print edition + + + +Raghuram Rajan, the respected governor of India’s central bank, announced that he would be stepping down in September rather than staying on for a customary second term. Mr Rajan’s efforts to clean up the country’s banks may have turned some of India’s tycoons against him; his star power may also have annoyed government figures. Any sign that India will wobble on cleaning up the ailing banking sector or inflation-targeting will hurt its ability to attract foreign investment. The country is to relax some rules on foreign ownership in an effort to reassure investors. See article. + +Germany’s highest court decided that a European Central Bank scheme to buy troubled countries’ bonds on secondary markets is constitutional. In 2014 the Constitutional Court in Karlsruhe deferred a ruling on whether such “Outright Monetary Transactions”—which have not yet been invoked—are tantamount to state financing, and thus outside the ECB’s mandate. Meanwhile, 30-year German bond yields fell to 0.65%, the lowest level on record. See article. + +Abu Dhabi said it planned to merge the National Bank of Abu Dhabi and First Gulf Bank. A tie-up would create the Gulf’s largest lender. Further consolidation among the region’s banks could be on the cards because the low oil price has taken its toll on deposits. + +Oi, a Brazilian telecoms firm, applied for “judicial recuperation”, Brazil’s equivalent of Chapter 11 bankruptcy. The company has debts of 65.4 billion reais ($19.3 billion) and had failed to agree on a restructuring deal with its creditors. With the Brazilian economy in recession, and many large firms heavily in debt, Oi’s troubles might be a grim portent of things to come. See article. + +Slow motion + +American regulators approved an application by IEX to operate as a public stock exchange. IEX has been designed to mitigate the impact of high-frequency trading by delaying trades by 350 microseconds. Several of America’s bourses had lobbied against certification, arguing that such a “speed bump” to slow down trades would give the exchange an unfair advantage. See article. + +Tencent, a Chinese technology firm, launched a bid to buy an 84% stake in Supercell, the Finnish maker of computer games responsible for “Clash of Clans”, in a deal worth $8.6 billion. The move is the latest in a line of investments in gaming firms by Tencent, which owns the WeChat messaging app. The firm is buying its stake from SoftBank, a Japanese telecoms firm. + +Meanwhile, Nikesh Arora, the president of SoftBank, resigned. Mr Arora cited the decision of the firm’s founder and chief executive, Masayoshi Son, to extend his tenure for perhaps as long as another ten years. Mr Arora had been considered the likely candidate to succeed him. + +German prosecutors launched an investigation into whether Martin Winterkorn, the former boss of Volkswagen, was complicit in manipulating the market in relation to the diesel-emissions scandal at the firm. He is suspected of waiting too long to disclose that VW faced an inquiry into its use of devices designed to cheat on emissions tests. Mr Winterkorn has denied personal wrongdoing. Another unnamed executive at the firm is also under investigation. + +Mitsubishi is another carmaker currently ruing cheating on vehicle tests. The Japanese firm said it expected to post a loss of ¥145 billion ($1.4 billion) this year, after it admitted it had been falsifying fuel-efficiency data for 25 years. Mitsubishi said it would pay affected customers $1,000 in compensation, at a total cost of perhaps $600m. + +Walmart said it would partner with JD.com, a Chinese e-commerce firm. The American retailer hopes the tie-up will help it to revive the fortunes of Yihaodian, its struggling Chinese online marketplace. + +Are friends electric? + +Tesla Motors, an electric-car-maker, made a $2.8 billion bid to buy SolarCity, a solar-power firm. Elon Musk is the largest shareholder in both firms, chief executive of the former and chairman of the latter. Mr Musk is keen to consolidate his businesses, though some questioned why, given their overlapping interests, Tesla was paying a premium to buy the firm. Mr Musk is to recuse himself from voting on the deal. See article. + +China topped a new ranking of the world’s supercomputers. The country is now home to 167 of the world’s 500 most powerful machines, overtaking America for the first time. The top-ranked computer is the Sunway TaihuLight, which uses its 93 petaflops for weather forecasting among other things. + +Instagram hit 500m users. Some 95m photos and videos are posted on the Facebook-owned app every day. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21701225-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Jun 25th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21701226-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Artificial intelligence: March of the machines + +Guns in America: Control, alt, delete + +Executive pay: Cheques need balances + +America and Iran: Sanctions busting + +The Niger Delta Avengers: Danegeld in the Delta + + + + + +Articles Sections Next + +Artificial intelligence + +March of the machines + +What history tells us about the future of artificial intelligence—and how society should respond + +Jun 25th 2016 | From the print edition + + + +EXPERTS warn that “the substitution of machinery for human labour” may “render the population redundant”. They worry that “the discovery of this mighty power” has come “before we knew how to employ it rightly”. Such fears are expressed today by those who worry that advances in artificial intelligence (AI) could destroy millions of jobs and pose a “Terminator”-style threat to humanity. But these are in fact the words of commentators discussing mechanisation and steam power two centuries ago. Back then the controversy over the dangers posed by machines was known as the “machinery question”. Now a very similar debate is under way. + +After many false dawns, AI has made extraordinary progress in the past few years, thanks to a versatile technique called “deep learning”. Given enough data, large (or “deep”) neural networks, modelled on the brain’s architecture, can be trained to do all kinds of things. They power Google’s search engine, Facebook’s automatic photo tagging, Apple’s voice assistant, Amazon’s shopping recommendations and Tesla’s self-driving cars. But this rapid progress has also led to concerns about safety and job losses. Stephen Hawking, Elon Musk and others wonder whether AI could get out of control, precipitating a sci-fi conflict between people and machines. Others worry that AI will cause widespread unemployment, by automating cognitive tasks that could previously be done only by people. After 200 years, the machinery question is back. It needs to be answered. + +Machinery questions and answers + +The most alarming scenario is of rogue AI turning evil, as seen in countless sci-fi films. It is the modern expression of an old fear, going back to “Frankenstein” (1818) and beyond. But although AI systems are impressive, they can perform only very specific tasks: a general AI capable of outwitting its human creators remains a distant and uncertain prospect. Worrying about it is like worrying about overpopulation on Mars before colonists have even set foot there, says Andrew Ng, an AI researcher. The more pressing aspect of the machinery question is what impact AI might have on people’s jobs and way of life. + +This fear also has a long history. Panics about “technological unemployment” struck in the 1960s (when firms first installed computers and robots) and the 1980s (when PCs landed on desks). Each time, it seemed that widespread automation of skilled workers’ jobs was just around the corner. + +Each time, in fact, technology ultimately created more jobs than it destroyed, as the automation of one chore increased demand for people to do the related tasks that were still beyond machines. Replacing some bank tellers with ATMs, for example, made it cheaper to open new branches, creating many more new jobs in sales and customer service. Similarly, e-commerce has increased overall employment in retailing. As with the introduction of computing into offices, AI will not so much replace workers directly as require them to gain new skills to complement it (see our special report in this issue). Although a much-cited paper suggests that up to 47% of American jobs face potential automation in the next decade or two, other studies estimate that less than 10% will actually go. + +Even if job losses in the short term are likely to be more than offset by the creation of new jobs in the long term, the experience of the 19th century shows that the transition can be traumatic. Economic growth took off after centuries of stagnant living standards, but decades passed before this was fully reflected in higher wages. The rapid shift of growing populations from farms to urban factories contributed to unrest across Europe. Governments took a century to respond with new education and welfare systems. + +This time the transition is likely to be faster, as technologies diffuse more quickly than they did 200 years ago. Income inequality is already growing, because high-skill workers benefit disproportionately when technology complements their jobs. This poses two challenges for employers and policymakers: how to help existing workers acquire new skills; and how to prepare future generations for a workplace stuffed full of AI. + +An intelligent response + +As technology changes the skills needed for each profession, workers will have to adjust. That will mean making education and training flexible enough to teach new skills quickly and efficiently. It will require a greater emphasis on lifelong learning and on-the-job training, and wider use of online learning and video-game-style simulation. AI may itself help, by personalising computer-based learning and by identifying workers’ skills gaps and opportunities for retraining. + +Social and character skills will matter more, too. When jobs are perishable, technologies come and go and people’s working lives are longer, social skills are a foundation. They can give humans an edge, helping them do work that calls for empathy and human interaction—traits that are beyond machines. + +And welfare systems will have to be updated, to smooth the transitions between jobs and to support workers while they pick up new skills. One scheme widely touted as a panacea is a “basic income”, paid to everybody regardless of their situation. But that would not make sense without strong evidence that this technological revolution, unlike previous ones, is eroding the demand for labour. Instead countries should learn from Denmark’s “flexicurity” system, which lets firms hire and fire easily, while supporting unemployed workers as they retrain and look for new jobs. Benefits, pensions and health care should follow individual workers, rather than being tied (as often today) to employers. + +Despite the march of technology, there is little sign that industrial-era education and welfare systems are yet being modernised and made flexible. Policymakers need to get going now because, the longer they delay, the greater the burden on the welfare state. John Stuart Mill wrote in the 1840s that “there cannot be a more legitimate object of the legislator’s care” than looking after those whose livelihoods are disrupted by technology. That was true in the era of the steam engine, and it remains true in the era of artificial intelligence. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21701119-what-history-tells-us-about-future-artificial-intelligenceand-how-society-should/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Guns in America + +Control, alt, delete + +The impasse on gun control will not last for ever + +Jun 25th 2016 | From the print edition + + + +FIRST comes grief, then outrage and then failed gun-control bills in Congress: the ritual that follows a mass shooting in America is wearyingly familiar. After 49 people were murdered in Orlando, the cycle hit warp speed. Less than ten days after the bodies arrived in the morgue, the Senate voted against introducing universal background checks on gun purchases, a measure that has the support of close to 90% of Americans. In a sign of their frustration, House Democrats staged a sit-in in Congress, as part of an attempt to get a vote on gun control (which they would almost certainly lose). Will America ever follow other rich countries and introduce far-reaching restrictions on gun ownership? + +There are powerful reasons for pessimism. The vetoes wielded in Congress by those who take an expansive view of gun rights is one. The prevailing interpretation of the Second Amendment is another. Add that half of gun owners now say they own firearms for self-protection, up from a quarter at the beginning of the century, stir in lobbying by the National Rifle Association (NRA), and change looks impossible. Indeed, mass shootings tend to be followed by a spike in gun sales and a renewed desire in many states to loosen gun laws. + +But pessimism can sink too deep. The near absolutist position on gun rights, which leads lawmakers to pass bills like the one in Florida that makes it difficult for doctors to ask patients whether they have a gun at home, is the product of a particular moment in the history of gun ownership. Though it might not seem so after the Orlando shooting, forces are pushing against the notion that more guns are always better and that people who decline to carry a weapon are failing in their duty as citizens. Look far enough into the future and it is possible to see how America might one day confront its gun problem. + +Some states have made a start. On the day that the Senate rejected four gun-control measures, the Supreme Court decided not to query the bans on some semi-automatic weapons adopted in New York and Connecticut. Banned guns can be smuggled across state lines, but such laws do make it slightly harder to kill lots of people in a confined space quickly. All told, 18 states have laws mandating background checks. National policy changes often bubble up from the states. In time, gun laws may follow the same trajectory. + +The Glock block + +The place of guns in American life is not fixed—which is why the NRA fights every proposed curb. Since the shootings at Fort Hood, San Bernardino and now Orlando, the availability of guns has been discussed in the same sentence as terrorism. Perhaps not coincidentally, support for universal background checks has risen. + + + +Counting America's mass shootings + +Until the 1990s, many who owned rifles and shotguns for hunting thought handguns disreputable. As crime went up, the idea of gun ownership as self-protection took hold. Now that crime rates are lower, gun owners’ views might revert. + +The most enthusiastic owners, who take a libertarian position, tend to be white. African-Americans and Hispanics are more likely to think that guns are wielded by gangs. As the country becomes less white, support for the absolutist view of the Second Amendment may weaken. A new Supreme Court, with justices appointed by a Democrat, could embody that. + +It is a mistake to view gun violence as a natural phenomenon like the twisters that tear across the plains states or the hurricanes sent north and west from the Caribbean. Gun violence is the product of a set of American choices that, compared with other rich countries, are harmful and extreme. Although after Orlando it may not seem so, such choices can be unchosen. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21701120-impasse-gun-control-will-not-last-ever-control-alt-delete/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Executive pay + +Cheques need balances + +The right ways to fix a flawed system + +Jun 25th 2016 | From the print edition + + + +VOLKSWAGEN has had a pig of a year. The revelation that it was systematically cheating on emissions tests landed the carmaker with its largest-ever annual loss. The scandal cost Martin Winterkorn, the man in charge at the time, his job; this week it emerged that prosecutors are investigating him for possible market manipulation. But his bonuses survived: he received €5.9m ($6.5m) in performance-related pay for 2015. + +Bouts of public anger about fat cats are nothing new. But in an era of populist campaigns, idiocies such as VW’s pay policies strike a powerful chord. Both of America’s presumptive presidential candidates have lashed out at levels of CEO compensation. Investors in Europe have rebelled this year against pay packages that hand managers huge rewards even though the share price has dived. + +The fury is understandable. But the debate about how to fix the system for setting executive pay is marred by muddled thinking and divergent objectives. Politicians, newly sensitive to concerns about gaping income inequality, care about curbing the vast sums that accrue to bosses. Shareholders, who want executives’ incentives to be in sync with theirs, fret more about the structure of the boss’s pay than its scale. + +Contrary to popular perception, executive pay is set more by market forces than by a cigar-chomping boardroom cartel. In recent decades, the rewards at the top have gone up in numerous professions, from film stars to financiers, as the most talented apply their skills on a bigger, globalised stage. Rising levels of disclosure mean that executives and boards respond to an observable price for talent. Bosses’ pay has rocketed even as shareholders have won more control over boards. And compensation is more tightly linked to performance. In 2000 only a fifth of large, listed American firms offered performance-based awards; now four-fifths do. + +Even so, there is plenty to worry about. One characteristic of a well-functioning market is liquidity, but senior executives do not leave their jobs very often: between 2001 and 2014 the average tenure of a CEO at an S&P 500 firm was close to nine years. Markets work best when buyers and sellers know the precise qualities of what is being traded, but boards cannot measure how much value a great CEO adds. Competitive markets have homogeneous products; the evidence that managers can transfer their talents to lots of different firms is slim. + +The frictions do not stop there. Executive pay has an upward bias. Boards are incentivised to pay their executives at or above the average rate in order to signal they have above-average ambitions—or to assure investors that their new boss is of above-average calibre. That produces a ratchet effect, as a pay jump in one firm sends remuneration higher in companies that benchmark themselves against it. + +One check on the upward bias is for shareholders to have more power over the companies they invest in. The pantomime of holding advisory votes on pay should end, for example; if investors strike down pay policies, firms should be bound to respond. Shareholders should use their clout to demand greater simplicity—it is no good firms producing detailed remuneration policies if no one understands them. They should press for longer vesting periods for stock awards, so that executives do not engineer short-term bumps in share prices at the cost of lasting success. And CEOs should be judged on their plans for an internal succession that will spare firms the unnecessary risk of hiring an outsider. + +State of pay + +Changes such as these would reduce the chance of executives making hay while shareholders suffer. But they would not do much to bring down the level of pay. For shareholders eager to squeeze even a slightly better performance out of a company, a high salary is only a rounding error: CEO pay in 2014 was around 0.5% of net income at S&P 500 firms. It suits investors to tie pay to performance, but that means executives demand higher absolute amounts for success to compensate for the risk that they will receive no payout. + +If the scale of pay is deemed to be a problem, it will thus fall to the state to act. Direct intervention in setting compensation is no answer, not only because the bar to interfering in a private contract between firm and employee ought to be high, but also because government meddling in this area tends to have unfortunate unintended consequences. Bill Clinton’s attempt to clamp down on pay in the 1990s left a loophole for the use of stock options that firms marched through. Bonus caps imposed on European banks after the financial crisis encouraged higher salaries. More important, even if it were possible to meddle benignly, the case for focusing a pay policy only on the corner office is weak. Plenty of the highest earners in society are not corporate executives. Politicians who want to shift the market’s distribution of income have a better tool already at hand: a higher marginal rate of income tax. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21701122-right-ways-fix-flawed-system-cheques-need-balances/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +America and Iran + +Sanctions busting + +Iran says that the West is not honouring its side of the nuclear deal. Poppycock + +Jun 25th 2016 | From the print edition + + + +THE Supreme Leader, Ayatollah Ali Khamenei, is not happy. “Anyone who has ever trusted the Americans was eventually slapped by them,” he declared earlier this month. “The experience of nuclear talks proved that even if we compromise, the United States will not stop its destructive role.” + +This was the latest in a stream of attacks by Iranian hardliners on the deal reached a year ago. Some of this is politics: they never wanted the deal and have tried to sabotage it in order to damage their rival, Iran’s reformist president, Hassan Rohani. But the charge that the West has failed to honour its side of the bargain—lifting most sanctions in return for strong curbs on Iran’s nuclear programme—is growing. It is also wrong. + +Even the most hawkish critics of Iran agree that it has done its bit. Within months of the deal being signed last July, Iran began to dismantle almost all of its centrifuges, which could be used to enrich uranium to weapons-grade purity, and to move its stockpile of low-enriched uranium out of the country. That work has been speedily completed. Iran’s apparent compliance with the intrusive inspection regime under the deal has also been a milestone for non-proliferation. + +The West, too, has kept to the letter of the deal. The sanctions imposed on Iran as its nuclear programme intensified in the 2000s have been lifted. Iran is increasing its production of oil and foreign investment is rising. + +The problem lies outside the accord. Iran has tested nuclear-capable ballistic missiles and is waging wars, directly and by proxy, around the Middle East. America maintains its unilateral sanctions, which were imposed long before the nuclear crisis. They concern Iran’s dire human-rights record; its support for terrorist organisations, including Hamas in Gaza and Hizbullah in Lebanon and Syria; and its development of long-range missiles. These sanctions were excluded from the nuclear negotiations. For Iran to suggest otherwise is untrue. + +America’s non-nuclear sanctions are hurting Iran in two ways. The “primary” ones ban American companies and individuals from dealing with the regime, subject only to a tightly controlled list of exceptions which include food, medicine and commercial airliners (Boeing has just signed a big order with Iran). Any transaction that passes through an American bank or insurance company, even tangentially, or uses the dollar, or involves an American citizen working for a foreign company, is theoretically subject to sanctions. This is creating a chilling effect on the financing of even non-American trade and investment: all remember the $9 billion fine slapped on BNP-Paribas in 2014 for sanctions evasion. + +Under “secondary” provisions, America reserves the right to punish foreign firms if they do business with anyone on a list of designated people and institutions, among them Iran’s Islamic Revolutionary Guards Corps. This Praetorian guard has a murky hand in practically every aspect of Iran’s state-dominated economy. The risk of getting caught up unwittingly in an American sanctions prosecution is all too real. + +Fix it quickly + + + +In graphics: The implications and consequences of Iran's nuclear deal + +Perhaps the Supreme Leader did not understand the nuclear deal, or perhaps Mr Rohani oversold it. More likely, Iran is trying to extract extra concessions that it has not negotiated. Some had hoped that the nuclear accord, though limited, would help open the Iranian economy, normalise the revolutionary regime and ease fraught relations with America and the Sunni Arab world. That will not happen for a long time, if only because Iranian hardliners draw strength from their enmity with the Great Satan. + +Even so, the unravelling of the nuclear deal would hurt reformists and fuel the fires of the Middle East. The Obama administration can help preserve its only real diplomatic success in the region by issuing clearer guidance on exactly how foreign banks must act to comply with sanctions. It could also allow Americans working for foreign firms to advise on such issues, and permit some kinds of dollar transactions. + +But the burden falls mostly on Iran. It must clean up its opaque corporate culture. It should bring its accounting and banking rules up to date, so that investors know whom they are dealing with. If that pushes the Guards out of business, so much the better. For Iran to find jobs for millions of educated, underemployed young Iranians, it will have to give up the hardliners’ cherished idea of a “resistance economy”. Ironically, sanctions could yet prove a route to prosperity. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21701118-iran-says-west-not-honouring-its-side-nuclear-deal-poppycock-sanctions/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Niger Delta Avengers + +Danegeld in the Delta + +Nigeria’s turbulent oilfields cannot be pacified by bribing rebels + +Jun 25th 2016 | From the print edition + + + +A THOUSAND years ago an English king called Aethelred (“the Unready”) used to pay marauding Vikings sacks full of precious coins not to attack his kingdom. The trouble was, the Vikings got a taste for Danegeld, as it was later known, and kept coming back for more. King Aethelred learned a harsh lesson: when you reward bad behaviour, you get more of it. + +Nigeria’s rulers have yet to learn from history. In recent weeks a group of heavily armed and masked men calling themselves the Niger Delta Avengers has caused havoc in the region where Nigeria’s oil is pumped. With speedboats and submachine guns rather than longboats and battle-axes, they are every bit as fearsome as the Danes of old, and nearly as disruptive. They claim to fight for justice (and a bigger share of oil revenues) for the people of the Niger Delta. By blowing up pipelines they have helped crash oil production from 2.2m barrels per day to 1.5m. This has hobbled the Nigerian economy and gutted the budget—petrodollars account for nearly all of the country’s exports and the vast bulk of government revenues. It has also set off global ripples. The squeeze on Nigerian oil output is one reason why the price of crude has rallied in recent weeks. + +Intriguingly, for such an influential group, no one knows who the Niger Delta Avengers are or where they got their seed money. There is less mystery about why they are holding the state to ransom: because it has worked in the past. + +The Nigerian army never defeated the previous group that mounted a serious insurgency in the Delta, the Movement for the Emancipation of the Niger Delta. Instead, in 2009, the government negotiated an amnesty with the rebels, who laid down their weapons in return for a monthly stipend of several hundred dollars each—in a region where most people make less than a dollar a day. This is far more than the UN offers other African rebels to disarm. And Nigeria’s plan to provide job training for ex-rebels, which has succeeded in other countries, was a shambles. The deal gave the region’s many jobless young men an incentive to take up arms, in the hope of being paid to lay them down again. + +These Avengers are not superheroes + +It is unclear how Nigeria’s president, Muhammadu Buhari, will tackle the Avengers, or even whether the government is talking to them. However he proceeds, Mr Buhari should not try to buy them off. Rather, he should arrest those who have committed acts of violence or extortion. And he should work to improve the appalling governance in the Delta region, so that locals have less cause to hate the government. + +Alas, the Nigerian security services are not good at hunting down rebels. As a recent study by the International Crisis Group, a think-tank, points out, the army is overstretched, has a woeful human-rights record and is hollowed out by corruption. Officers sometimes even sell their own side’s weapons to insurgents. Urgent reforms are needed to military recruitment, training and procurement. + +The people of the Niger Delta have genuine grievances. In theory the region gets a generous share of the nation’s oil revenues. In practice much of the money is stolen, by federal or local bigwigs, before it reaches schools or clinics. The national budget crisis has made matters worse as many local officials have not been paid for months. Cleaning up this mess will be staggeringly hard, not least because Mr Buhari, a northern Muslim who replaced a president from the Delta, is not popular there. The task will be close to impossible unless it is part of a nationwide push to fight graft. Mr Buhari’s anti-corruption zeal seems genuine and he has shown he can make tough decisions. This week, for example, he allowed the Nigerian currency to float. He should be resolute in the Delta, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21701124-nigerias-turbulent-oilfields-cannot-be-pacified-bribing-rebels-danegeld-delta/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On free speech, central banks, Israel, teaching, potholes, cheese: Letters to the editor + + + + + +Articles Sections Next + +On free speech, central banks, Israel, teaching, potholes, cheese + +Letters to the editor + +Jun 25th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + +How free is free speech? + + + +Authoritarian regimes will always try to muzzle free speech (“Under attack”, June 4th). But as a resident of the United States, where freedom of speech, however offensive, is constitutionally protected from government sanction or censorship, I find it particularly astonishing that in England, the land of the Magna Carta and Bill of Rights, the government is allowed to prosecute people under the 2003 Communications Act for “grossly offensive” postings on the internet. + +A sick joke about a child murder victim on Facebook is offensive, but allowing the Crown Prosecution Service to convict and jail the drunken teenager responsible for writing mere words sets a frightening precedent for arbitrary and selective prosecutions. Giving the police the power to prosecute a Muslim for saying British soldiers “should die and go to hell” or a man who set up a Facebook fan page for the killer of two police officers in Manchester can lead to the suppression of anti-government rhetoric. The danger should be self-evident. + +MARK HARDIMAN + +Partner + +Nelson Hardiman + +Los Angeles + + + +Your article on the state of free speech was spot-on (“The muzzle grows tighter”, June 4th). But Rita Maestre, the spokesperson for Madrid’s city council, was convicted not so much because she insulted the religious feelings of Catholics, but because she staged a protest at a place of worship, thus disrupting the right of others to practise their religion. Spanish law is not alone in banning this kind of behaviour. + +Every religion should be subject to public debate, even scorn, but it is as important to ensure the religious freedom of those who seek to exercise it within the law. + +GONZALO URDIALES + +Madrid + +I agree wholeheartedly that freedom of speech needs to be protected. But one needs to differentiate between speech for the purpose of debate, or the discussion of uncomfortable ideas, and speech which is intended to insult or inflame passions. For example, Western societies permit caricatures of Prophet Muhammad under the guise of free speech, even though they insult a person revered by Muslims. There was even a special contest organised in the United States for such cartoons with a prize for “the most insulting”. I fail to see where the free debate that is supposed to separate the good ideas from the bad ones comes in. This is hate speech and needs to be curbed. + +TARIQ-UR-RAHMAN + +Islamabad, Pakistan + +Perhaps Clark Kerr, president of the University of California from 1958 to 1967, said it best when defending free speech on campus: + +The university is not engaged in making ideas safe for students. It is engaged in making students safe for ideas. Thus it permits the freest expression of views before students, trusting to their good sense in passing judgment on these views. Only in this way can it best serve American democracy. + +DAVID HALLIGAN + +Berkeley, California + + + + + +Don’t shoot the messenger + +You provided an excellent summary (Free exchange, June 11th) of the evolution of central banks’ transparency, but your analysis of the problems they face in communicating with the public was too simple. Central banks’ messages sometimes are obscured by noise, and that is largely because policy is set by a committee. The chairman can explain why a policy decision was made, but can say little about future decisions that the committee has not yet discussed. There is therefore no substitute for hearing the views of individual members, although they sometimes conflict. + +The resulting ambiguity reduces the power and precision of policy. That is not because central banks are poor communicators, but because the world is a complex place. + +STEFAN GERLACH + +Former deputy-governor + +Central Bank of Ireland, 2011-15 + +Zurich + + + + + +Putting it in perspective + +Your review of Ben Ehrenreich’s book on Palestine states that “a rubber-coated bullet can break a jawbone” and “penetrate the flesh” (“The view on the ground”, June 11th). As much damage has also been done by the rocks Palestinians have slung at Israelis and by the boulders dropped on their heads. According to the review, Mr Ehrenreich ignored lethal attacks against Israelis by offering the excuse that he did not seek to write an “objective book” nor did he think that was possible. + +Objectivity is not a binary choice, but a matter of degree. I cannot paint a perfect picture, but I should aspire to do my best. Above all, I would not want to deliberately distort a picture, which is exactly what Mr Ehrenreich has done. + +H.V. SAVITCH + +Alexandria, Virginia + + + + + +Core subjects + +“Teaching the teachers” (June 11th) listed general “what works” strategies to reform education. At a recent mathematics education study group in Kingston, Canada, a video was shown of a lesson in which all the statistically effective “what works” strategies you listed were in evidence. Nevertheless the lesson was ineffective because it lacked any mathematical coherence, meaning and clarity. In our experience this is all too common. + +Training, observation and inspection regimes focus on teacher behaviour without paying attention to subject content. This vital aspect was overlooked in your briefing, possibly because it is easier for generalists to focus on teacher behaviour in order to measure performance than it is to take the specifics of subject disciplines into account. To teach any subject well requires a particular depth of knowledge that has to be internalised, during training, alongside general classroom techniques. + +ANNE WATSON + +JOHN MASON + +Emeritus professors of mathematics education + +University of Oxford + + + + + +Road rage + +Technology is certainly the solution to mending potholes (“The hole story”, June 11th). But another big part of the problem is local councils. There exists already in the commercial sphere a wealth of innovative technological solutions for road repair that are greener and cheaper than the conventional method of man and shovel. Sadly it has always been my experience that councils view potholes through a Keynesian lens: holes to be filled equals work for the boys. Embracing new technology would put them all out of a job. + +ANDREW JORDAN + +Former road-repair technician + +London + + + + + +The daily rind + +How could you publish an article about halloumi/hellim and reunification in Cyprus without using the phrase “blessed are the cheesemakers” (“Cheese in our time”, May 21st)? + +KERRY NOBLE + +London + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21701088-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Executive pay: Neither rigged nor fair + + + + + +Articles Sections Next + +Executive pay + +Neither rigged nor fair + +Bosses’ pay in the rich world is not a fix. But it is flawed + +Jun 25th 2016 | From the print edition + + + +IN SEPTEMBER 2012 Marissa Mayer, newly installed as the CEO of Yahoo, an internet firm, and positively glowing with star power, met members of the company’s compensation committee. She told the committee that she was in discussions with a potential candidate to be her right-hand man, and wanted to get guidance on “compensation parameters”. + +Ms Mayer described the candidate’s expected compensation package as “$15m per year (with $40 million as part of that up front in a four-year grant) and a $16m or more make-whole payment.” Ms Mayer was authorised to continue negotiations in that meeting, and in one that followed. Just one tiny detail was missing: no one apart from Ms Mayer actually knew who the candidate was. + +When his identity emerged, at the same time as the committee approved a draft offer letter, it was revealed to be Henrique de Castro, a former colleague of Ms Mayer’s at Google. Further negotiations followed, during which Ms Mayer made changes to the offer that the committee did not sign off and that increased payouts due to Mr de Castro if he were sacked without cause. + +Those payouts turned out to be more than just theoretical. In his first year at Yahoo, during which advertising revenues declined in every quarter, Mr de Castro made $39.2m, putting him behind only eight CEOs of listed American firms in the income charts. By his 14th month, Ms Mayer had decided to fire him without cause, triggering a severance payment worth almost $60m. Mr de Castro may not have impressed as a chief operating officer, but you must admire his negotiating skills. + + + +Seeing what goes on inside firms when they make pay decisions is unusual. These details have come out only thanks to a court opinion issued in February in a case brought by investors in Yahoo who were miffed by the saga. And the scale of Mr de Castro’s earnings was extraordinary. For those who think the system of executive pay in the rich world is working as it should, such egregious stories are just that—anomalies. “In a sample of lots of firms, some things will always look bad, and some unreported things will be great,” says Steven Kaplan of the University of Chicago Booth School of Business. + +For critics, however, the exceptions are informative. “The market view of pay says that deviations are at the margin; that they are second-order, limited and transient,” says Lucian Bebchuk, an academic at Harvard Business School. “I think they are first order, and that the self-correcting mechanisms of the market cannot be relied on.” + +Many would agree. In his doorstopper, “Capital in the Twenty-First Century”, Thomas Piketty, an economist, pins much of the blame for wider income inequality on pay rises for executives, managers and financial professionals. This month the French parliament handed shareholders a binding vote on CEO pay, following a row over compensation for the head of Renault, a carmaker. Shareholders elsewhere seem to be getting antsier too. British investors have delivered stinging protest votes against a string of firms. Shareholders have berated Volkswagen, a German carmaker, for paying bonuses to bosses who presided over its largest-ever annual loss. + +This wave of dissent should not, however, obscure the fact that the concerns which animate shareholders and policymakers are very different. Public anger is fuelled by the size of bosses’ pay cheques. Shareholders tend to care less about how much money managers take home, and more about whether pay and performance are genuinely in sync. + +America is a case in point. Both of America’s presidential candidates are gunning for bosses: Hillary Clinton has run ads lamenting excessive pay; Donald Trump has described CEO pay as a “complete joke”. But investors in America are notably less ruffled. As of June 16th, 1,623 firms in the Russell 3000 group of firms had held “say-on-pay” votes, according to Semler Brossy, a pay consultancy; just 1.5% had been rebuffed by shareholders. + +Forget about the price tag + +These different perspectives reflect divergent views on the way that executive pay is set. Critics claim that executive compensation is essentially a rigged game, in which boards packed with insiders parcel out rewards to their friends. Defenders argue that the market is setting pay, as firms strive to keep hold of talented executives in a competitive world. The truth lies somewhere in between. Compensation is not the work of a cartel, but it is light years from being an ideal market. + +The notion that the market is efficient at setting executive pay rests on three arguments. The first is that competitive pressures are at work. Inside the firm, the “tournament theory” of pay holds that big awards high up a company are worthwhile because they motivate ambitious middle managers to take risks and put in the hours in order to climb the greasy pole to the top. And outside the firm, there are observable prices for the labour of senior executives, thanks largely to disclosures by listed firms. For example, the median pay level of an S&P 500 chief executive in 2015 was $10.4m, according to Equilar, a research firm, a rise of 1% over the 2014 figure. (In practice, executives do not benchmark themselves against pan-industry figures but against their peers.) + +These sorts of pay packages seem outrageous to many, especially when compared with wages elsewhere in the economy. Peter Drucker, the doyen of management theorists, reckoned that exceeding a 20-1 multiple of pay within a firm between executives and the average worker was bad for morale. Mr Drucker was worrying about the gap back in the 1980s, when the economy-wide difference between CEOs of big American firms and average workers was in the 40-1 range. How quaint that seems: depending on how you count things, the multiple now is somewhere between 140-1 and 335-1. + +Even those who defend the market view of pay often say that these multiples may be too high from a social or ethical perspective. But their argument is that, from an economic perspective, they make sense. Pay is not set in isolation. Just like other parts of the labour market, what others pay sets an external market price. “You can argue that CEOs of public firms are in some senses underpaid,” says Mr Kaplan, who points out that a senior partner at a blue-chip law firm or consultancy could earn several million dollars a year with none of the scrutiny, more job security and far fewer people to manage. Overpaid or underpaid, executives certainly know what the going rate is. + +That transparency explains why it is hard for compensation committees to swing the axe on pay unilaterally, for fear that managers will go elsewhere. If executives do leave, firms are jolted into action. A paper published in 2015 by Huasheng Gao of Nanyang Business School and colleagues looked at 510 job-hops in S&P 1500 firms between 1993 and 2011, in which an executive leaves one firm and joins another the following year. Total compensation for the executives left behind jumps by 46% on average. + + + +What this does not explain is why pay suddenly took off in the mid-1970s and kept on rising (see chart 1). Until then, executives in America were used only to modest bumps in pay; after then, massive salary increases became the norm. Here adherents to the market view of pay make their second argument: that returns to talent rose as firms globalised, became more complex and crucially, got bigger. + +As companies grow, the impact of a top team which is a bit more talented is correspondingly more valuable. Driving up the value of Apple by 1% has a much bigger dollar effect than increasing the value of a much smaller firm by the same proportion. Firms should be willing to pay more for superstars as a result. According to research by Xavier Gabaix, Augustin Landier and Julien Sauvagnat, a trio of French academics, between 1980 and 2011 the average value of American firms rose by 425%; during the same period, the average rise in CEO pay in America’s largest firms was 405%. + +The third argument made on behalf of the market view concerns governance. The conventional critique of pay at listed firms is that shareholders are not able to run the firms directly; that enables managers, whose interests are different, to cream off more pay than they should. But the explosion of pay in the 1990s coincided with moves towards better governance, and shareholders have continued to accumulate power since. In Britain investors have had an advisory vote on pay since 2003; a law passed in 2013 gave them a binding vote on firms’ remuneration policies once every three years. In America a rule change in 2006 prompted fuller disclosure of items such as the use of pay consultants; the Dodd-Frank act of 2010 handed advisory say-on-pay votes to shareholders in public companies. From Australia to Switzerland, the Netherlands to Sweden, the trend is strongly towards a louder shareholder voice. + +Pay packages have changed as a result. Compensation for the suits comes in three flavours. First, a share of fixed pay, the salary that most employees take home; second, an annual bonus, paid on the basis of short-term performance targets; and third, stock-based long-term incentives (LTIs), which pay out over periods of multiple years. Over time, more and more of an executive’s pay has come from these last two variable elements of compensation. And LTIs increasingly include specific performance triggers, often based on performing better than a group of competitors, rather than just requiring executives to stay with a firm for a certain period. In 2000 about 20% of large listed firms in America included performance-based awards in their pay packages; by 2015, that share had gone up to 80%, according to Equilar. As a result, unlike most workers, CEOs can see their pay move up and down year to year. + +This, then, is the nub of the case that executive pay is no fix. There is competition for talent, and firms are willing to pay up for it. Talented executives can have an outsize impact on shareholder returns. And managers enjoyed huge gains even as shareholders won more control over the boards who set pay. + +Welcome to Lake Wobegon + +The system of executive pay also suffers from flaws that push corner-office compensation higher than it would go in a truly efficient market. Well-functioning markets generally assume lots of transactions. But for executives, certainly right at the top of firms, it is a “thin market”, with relatively few transactions, buyers and sellers. Analysis by the Conference Board, a research group, finds the average tenure of a CEO at an S&P 500 company close to nine years between 2001 and 2014. Over the past five years, the average number of CEO departures in this group has been 48. + +That matters for a couple of reasons. One is that the risk of the most senior executives leaving for other competitors may not be as great as assumed. Almost half the departures last year were for retirements, for instance. Once people reach the very top of the tree, they tend not to move to other CEO roles. Yet these are also the roles that pay most—indeed, the pay gap with other senior executives inside firms has gone up over time. + +The other implication of this lumpy market is that pay is not the expression of constant bargaining between a deep pool of buyers and sellers of executive talent, but of the outcomes of sporadic negotiations between boards and managers. Powerful CEOs, like Ms Mayer at Yahoo, can often command acquiescence. Research from ISS, a shareholder-advisory firm, shows that board structure has a statistically significant effect on compensation. Large American firms led by a chairman who is also the CEO or another current executive paid their bosses $3.7m more on average over the three prior fiscal years than did firms led by an independent chairman. + + + +Another flaw in the system is imperfect information. Most parts of the labour market suffer from this problem, but it is particularly hard to measure how an executive’s decisions affect a firm’s performance. The best-available proxy is the share price, which explains why stock and options made up 62% of the average pay for S&P 500 bosses last year, according to Equilar. That should bring the interests of shareholders and managers into line, but there are other effects, too. Share prices move around for all sorts of reasons: executives may benefit from market movements that they have little to do with. Because share prices have grown faster than GDP, consumer prices and wages, their use as a proxy has caused bosses’ pay to pull away from that of average workers (see chart 2). + +Although share-price increases are precisely what shareholders want from their chief executive, the effects can sometimes be perverse for investors. Stock options, which have value only if they go above a certain price, seem to be especially liable to manipulation that boosts share prices in the short run, but harms them in the longer term. Academics at the Mendoza College of Business at the University of Notre Dame found that option-heavy pay plans were correlated with a higher likelihood of product recalls. Executives, the researchers speculated, were being tempted to push out products to juice up the share price, content in the knowledge that they had nothing to lose. + +Another classical trait of well-functioning markets is homogeneity of products. When you buy a certain type of fridge, it doesn’t matter if it is one that came out of the factory on Tuesday or Friday. They are, to all intents and purposes, identical. Clearly, no one thinks that is true of people generally, nor of individual executives. But the very idea of a market price does rest on the idea that the very top bosses are, to some extent, interchangeable. + + + +Yet the evidence behind this assumption is flimsy. The bulk of firms still appoint their executives from inside the ranks (see chart 3). And when boards do look outside, the rewards are not great. A research paper by academics from the University of Texas system looked at 192 S&P 1500 CEOs who had been hired from outside between 1993 and 2005. Their analysis showed that boards at these firms tended to go for hires whose prior employers had performed strongly, and that they paid a premium to entice these executives away. But there was no strong relationship between the performance of past and subsequent employers. + +A very particular set of skills + +Adding to these frictions is another specific trait of executive pay. In other parts of the labour market, you might assume that firms are generally aiming to pay as little as possible, and individuals are trying to drive up the price. But when it comes to the corner office, the incentives to bear down on pay are less clear. The amounts involved matter enormously to the individual concerned, much less to the compensation committee (which does not want to be responsible for encouraging executives to look elsewhere) or to the shareholders (for whom a payment of a few million dollars is well worth it if an executive can bring about a small extra uptick in market value). + +A number of issues exacerbate this unusual coincidence of interests. Perhaps the biggest, ironically, is the shift to performance-related pay. However valid the arguments for this kind of compensation structure, it introduces more risk for the executive. Managers behave just like everyone else: when a payoff is uncertain and a long way into the future, it counts for less in their mind. As a result, they are incentivised to demand a higher absolute amount to compensate. Research by Sandy Pepper of the London School of Economics shows that the typical discount rate that managers apply to deferred bonuses is 30%, far in excess of the risk-free interest rate used in accounting valuations of LTIs. To get executives like Mr de Castro to move jobs, you have to pay them more. + +Now think about the interests of the compensation committee and the wider board of directors. The signal sent by a firm’s hiring decisions matters. No firm wants to unveil a dud as their new leader; any firm that aspires to grow faster than the market average will be prepared to pay at or above the market rate. Executives are more like luxury goods than they are standard ones: paying more to land a big name can add prestige. + +Any upward movement in one firm tends to ripple among its peers. Pay packages for executives often centre on a limited number of competitor firms. When compensation committees review their policies each year, they survey their peers’ as well. Some firms are willing to underpay, but this is rare. “The prevalent practice is to be at or above the median, which means pay goes higher,” says one compensation consultant, who defends this upward momentum nonetheless. “Some call it the ratchet effect, I call it a market effect. It’s competitive and talent can move.” + +As for shareholders, the incentives to kick up a real fuss about executive pay are blunted by a few factors. First, dispersed ownership means that it is often hard for one investor to have a big impact: even a very large shareholder like a Fidelity or a BlackRock will often own only 3-4% of the firm. Second, passive investors are condemned to own the shares of some of the biggest firms, which means they value maintaining decent relationships with these firms. Third, many shareholders would much prefer managers not to be distracted by a row over pay. As a result, it takes a lot for institutional investors (public pension funds are much readier to dissent) to come out in open opposition to a firm. “Not voting ‘no’ does not mean we agree with the board,” is the contorted phrasing of one large investor. + +What all this suggests is that executive pay is a hybrid of different factors. Market forces play their part. But so do governance frictions, the mechanical relationship between firms in peer groups, and the signalling effects of lavish compensation. That will keep pay high, and the debate toxic. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21701109-bosses-pay-rich-world-not-fix-it-flawed-neither-rigged-nor-fair/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Minimum wages: Maximin + +The Trump campaign: Poor Donald + +After Orlando: Of docs and Glocks + +Oakland’s police: Too many chiefs + +The Fourth Amendment: Amended + +Catholic hospitals: Gloria in expansion + +Suing the Church: Bully pulpit + +Lexington: Cory Booker + + + + + +Articles Sections Next + +Minimum wages + +Maximin + +Some cities have raised minimum wages dramatically. They may regret it + +Jun 25th 2016 | EMERYVILLE, CALIFORNIA | From the print edition + + + +EMERYVILLE, a tiny city of 12,000 lying on the eastern shore of the San Francisco bay, is rather cruelly known by residents of its bigger neighbours primarily as a place to buy furniture. A huge IKEA, a Swedish homeware shop, greets visitors to the city, which has no fewer than four shopping centres. But Emeryville has a better claim to fame; its many shoppers are served by some of the best-paid retail staff in the country. Since July 2015 the city’s minimum wage, for all but the smallest firms, has been $14.44 an hour, nearly double the federal minimum of $7.25 and almost 50% higher than the state minimum of $10. Emeryville is one of dozens of cities across America to have boosted its minimum wage in recent years, but it has gone further than almost any other towards the $15 campaigners seek. + +That goal emerged in New York in 2012, when 200 fast-food workers went on strike demanding higher pay and a union. Those strikes were repeated, grew, and then spread nationwide (the last national strike was in April). At the same time, local politicians began to take action. After more than a decade with barely any changes to local minimum wages, they rose significantly in a handful of places in 2013. The next year 12 localities raised them, including Bay-area cities Berkeley, Oakland and San Francisco. In 2015, sixteen more, including Emeryville, followed suit. + +Most areas have not gone as far as Emeryville, but many promise to do so eventually. On June 21st, the city council in Washington, DC, the latest city to follow the trend, voted unanimously to raise the minimum wage to $15 by 2020. Only California and New York have taken comparable action at the state level. But, thanks mainly to local laws, almost 17m workers have benefited from higher minimum wages since the “fight for $15” began, according to the National Employment Law Project. At least 10m of those will eventually receive $15 an hour. + +Campaigners claim that higher local minimum wages are necessary to alleviate poverty, particularly as minimum wages are often not adjusted for years at the state and federal levels. Prices are already 10% higher than in 2009, the last time lawmakers upped the federal rate. This argument carries particularly weight in Emeryville, where a one-bedroom flat commands rent greater than $2,000 per month, owing to an influx of rich techies into the area. Dianne Martinez, the city’s mayor, says $14.44 was picked based on an estimate of what it now costs to live in her city. + +These justified concerns about poverty are often mixed up with anger about stagnant median incomes or inequality. Here, the thinking is sloppier. Minimum wages exert little pressure on middle-America’s earnings; neither do they restrain the pay of bankers or CEOs. Until recently it looked like low minimum wages did cause middle-earners to pull further away from very low-earners during the 1980s. But a recent study by economists David Autor, Alan Manning and Christopher Smith suggests that minimum wages explain only 30-40% of this trend. + +Minimum-wages, then, are best viewed as one route to helping the lowest earners. Since nobody thinks that low pay is desirable, the argument against minimum-wages is that they destroy jobs. Campaigners deny this, with some justification. A canonical study in 1993 found that employment in New Jersey restaurants increased, rather than fell, in response to a minimum wage rise. More recent research, from 2010, examined all county-pairs that straddle a state border and found that, for the period from 1990 to 2006, differences in minimum wages had no effect on employment in low-wage sectors. + +Other economists dispute these findings. But some jobs clearly can survive higher minimum wages. In 2015 more than half of workers earning at or below the federal minimum wage worked in restaurants, bars and the like. Such service jobs cannot be moved overseas, and many, such as cleaning the floor of a McDonalds, are hard to automate. These jobs will survive if firms can tolerate lower profits or raise their prices sufficiently. Soaring demand for services in fast-growing, high-income areas like New York and San Francisco typically enables them to do so. Seattle began raising its minimum wage in April 2015, initially from the state minimum, $9.32, to $11 for large firms. Yet the proportion of jobs in the Seattle area in the food service and preparation industry has grown from 7.2% in April 2015 to 7.4% today. + +But in other industries, raising prices is harder. Match Analysis, an Emeryville business with around 35 local staff, collects data on soccer matches, which it sells globally alongside analytical software. The firm’s competitors hire exclusively in countries with lower wages, such as India and Russia, says Mark Brunkhart, who founded the business in 2000. That means it cannot raise prices; instead, the higher minimum wage has forced the firm to shed 13 data-collection jobs. This has mainly been achieved with a hiring freeze, but this month Mr Brunkhart had to lay-off six staff. These were the first redundancies in the firm’s history. + +Some retail workers, who make up 13% of workers whose pay is at or below the federal minimum wage, are also under threat because of automation. Big shops are unlikely to speak out against minimum-wage changes because of the bad press it generates. But they are not immune to incentives. Target, one of the retail behemoths in Emeryville, has in the past month installed self-service checkouts, perhaps because of higher labour costs. + +Caution is warranted because economists’ experience with minimum wages is limited to where they have been set modestly, relative to incomes. The average minimum-wage to median-income ratio in the OECD, a club of mostly-rich countries, is 50%. The highest, 68%, is in Turkey. Median hourly wages vary hugely by state, from less than $14 in Mississippi to over $22 in Alaska. That means even Hillary Clinton’s proposed $12 federal minimum-wage exceeds 75% of the median hourly wage in fully 16 states—well beyond the rates that have been well-studied. + +Decentralised minimum-wage setting might therefore be desirable. But 19 states ban cities from raising minimum wages on their own; in February this stopped Birmingham, Alabama, from raising its rate to $10.10. In Emeryville, the minimum-wage to median-income ratio is around 85%, according to our calculations (see chart). Ms Martinez promises an economic impact study, but says “there are times where you have to take a leap of faith”. + + + +A further claim campaigners make is that minimum wages will reduce welfare payments. These currently subsidise firms like McDonalds, the argument goes, because the only reason such firms can only pay so-called “poverty wages” is because the government picks up the rest of the tab for housing, feeding and clothing their employees. Research suggests that about a third of the Earned Income Tax Credit (EITC) bill does indeed flow to firms’ coffers, by lowering pre-tax wages. The minimum wage stops the leakage. Yet this is not necessarily good: subsidising firms to hire unskilled workers might be desirable if their jobs are under threat from automation and outsourcing. + +The Fight for $15 campaign is often guilty of a bait-and-switch, justifying much higher minimum wages with reference only to food-service giants like McDonalds, but then endorsing them across the whole economy. Unlike the campaigners, those unskilled workers who lose out, through redundancies or slower hiring, do not have loud voices. Politicians, at all levels of government, must remember that. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21701126-some-cities-have-raised-minimum-wages-dramatically-they-may-regret-it-maximin/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Trump campaign + +Poor Donald + +The Republican nominee’s campaign is impoverished + +Jun 25th 2016 | WASHINGTON, DC | From the print edition + +Let’s expense it + +THROUGHOUT the presidential primary contest, Donald Trump’s claim to be self-funding his campaign always drew loud cheers. Part boast—“I’m like, really rich” he would smirk—and part a badge of incorruptibility, the claim allowed the property developer to paint all his Republican rivals as puppets of special interests. Voters at campaign rallies would reliably cite his supposedly vast wealth, and the independence it brought, as one of their biggest reasons for trusting the businessman. + +Loyal Trump supporters forgave their champion when he secured the nomination and abruptly changed his tune, boasting in early May that he would create a “world-class finance organisation” to solicit donors and fill war chests for himself and for the Republican Party. The same Trump loyalists will doubtless shrug off headlines that greeted the release of campaign-finance reports for the month of May, showing that he raised just $3.1m from donors and has just $1.3m cash on hand—sums dwarfed by Mrs Clinton’s campaign, which raised over $26m in May and started June with $42.5m in cash on hand. Mr Trump himself sounded defiant, asserting that he could spend “unlimited” sums of his own money if needs be. + +The donor drought could still break—a small army of deep-pocketed Americans would commit millions if they were sure that their money would keep Mrs Clinton out of the White House. The real danger for Mr Trump is that his money woes point to a larger fear among conservatives: that his presidential campaign represents a bad investment. Mrs Clinton needs to fund a formidable political machine that employs almost 700 people at her Brooklyn headquarters and in field offices across the country. The Trump campaign employs a tenth of that number. The Clinton campaign and allied groups are estimated to have reserved $117m in television advertising, according to Kantar Media/CMAG, an ad-tracking firm, as the Democrats prepare for a summer airwar intended to define Mr Trump in voters’ minds. As of June 20th, the Trump campaign was not thought to have reserved any TV airtime, reflecting its candidate’s confidence, to date, in his ability to earn free publicity. + +Mr Trump boasts that he is keeping his campaign “lean”, delving into conspiracy theories to suggest that Mrs Clinton will spend money from “the Middle East” and “from people you don’t want her to have money from.” + +But the fine print of Federal Election Commission filings show considerable largesse directed to Mr Trump’s own businesses and the travel expenses of his family members. His largest expenditures in May included $350,000 for the use of his private aircraft and $423,000 for the use of Mar-a-Lago, his Florida resort (the campaign spent just $48,000 on data management). While he is obliged to reimburse his companies to avoid making illegal in-kind donations to his campaign, the extent to which Mr Trump’s brand and political ambitions overlap is unusual. Donors are reported to be anxious for Mr Trump to write off almost $46m that he has lent to his campaign, rather than find their dollars being used to repay his loans. + +Team Trump’s resemblance to a fractious family business only increased with the abrupt firing on June 20th of its campaign manager, Corey Lewandowski, a short-tempered, grudge-bearing schemer who had lost the trust of the candidate’s adult children. Mr Lewandowski was more henchman than strategist, jealously guarding access to the candidate and espousing the principle: “Let Trump be Trump”. That has been Mr Trump’s guiding principle, too. Mr Lewandowski’s sacking will matter if the tycoon has understood that the primary election is over, and he must act like a disciplined nominee for national office. He does not have much time. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21701129-republican-nominees-campaign-impoverished-poor-donald/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +After Orlando + +Of docs and Glocks + +Beyond the farrago in Congress there are reasons for hope on gun control + +Jun 25th 2016 | ATLANTA | From the print edition + +Don’t tell the doctor + +SEXUAL proclivities, diet, booze: doctors often talk to patients about squirm-inducing subjects. In Florida they inquire about the safety of swimming pools. But, according to a state law considered this week by the Eleventh Circuit court of appeals in Atlanta, they may lose their licences if they ask or “harass” their patients about guns. That is, unless they believe “in good faith” that the questions are medically relevant: a vague proviso which, in a case known as Docs v Glocks that pits a coalition of doctors against Florida, its lawyer struggled to explain. + +The law, signed in 2011, is symptomatic of the perfervid politics of guns in the years since self-defence began ousting hunting as the main rationale for owning them; an era in which gun rights—not just defending them from any restraint, but advancing them in increasingly eccentric ways—have become a preoccupation and litmus test for many Republicans. Like previous horrors, the shooting to death of 49 people at a gay nightclub in Orlando seems not to have changed the mood. Not in Congress, anyway, where four proposals to expand background checks for gun-buyers, or stop terrorist suspects arming themselves, failed. The Senate is yet to vote on a narrow plan affecting people banned from flying; Democrats staged a long sit-in on the floor of the House of Representatives to protest the inaction. + +So, while some politicians want to recommence waterboarding, several would apparently rather let suspected terrorists buy guns than support measures sponsored by their opponents. For gun-control advocates, the popular response to Orlando is almost as depressing. Shares in gun companies have risen again, as Americans again seem to infer that a clampdown on ownership is imminent, or that guns will keep them safe—despite the evidence that they are far likelier to be fired in accidents, rows or suicides than against an assailant, let alone a terrorist. Not only swivel-eyed survivalists are reaching this conclusion: Gwen Patton of Pink Pistols, a pro-gun gay group, says several new chapters have been founded, while Facebook membership has quadrupled. + +All this makes despair about gun-control understandable. Yet there are two reasons for optimism: less conspicuous than the antics in Congress, but important. + +A gloomy mantra has it that, after the slaughter of children in Newtown in 2012, nothing changed. In fact, as Laura Cutilletta of the Law Centre to Prevent Gun Violence enumerates, a lot has—but in statehouses, not Washington, DC. Twenty states have since changed their laws to keep guns away from domestic abusers; nine have extended background checks, while at least 20 have mandated that mental-health records be submitted for them. Five have reined in the use of the so-called assault rifles implicated in Newtown, Orlando and other atrocities, or of large-capacity magazines. California enacted restraining orders whereby families or police can ask a court to suspend a dangerous person’s gun rights. Washington state may vote on a similar measure in November. + + + +In graphics: America's guns + +As Ms Cutilletta says, the deadlock in Congress “has overshadowed the fact that states have done so much.” Nor is progress confined to Democratic states: domestic-violence gun laws have been passed, for example, in Louisiana and South Carolina. True, gun-rights enthusiasts in Florida and elsewhere are still pushing further liberalisations, such as “constitutional carry” (carrying concealed weapons without a permit), “campus carry” (guns in college) and “open carry” (macho posturing). But such gambits are mostly failing. In part that reflects the growing clout of the gun-control movement, which is consolidating around Everytown for Gun Safety, an umbrella outfit kickstarted by Michael Bloomberg that boasts 3m members—still lagging the National Rifle Association’s 5m. + +The other source of hope is the courts. In the case of the Supreme Court, the influence has been passive, though that may change when its empty seat is filled. This week it refused to hear a challenge to bans on assault weapons in Connecticut and New York; it has also declined to hear challenges to concealed-carry rules in New York and Maryland, among others. Many such complaints have failed in lower courts, too. On June 9th, for instance, federal judges upheld limits on concealed carry in California. Meanwhile the families of Newtown’s victims have made progress in their claim against the makers and distributors of the rifle used in the massacre, despite a law of 2005 that conferred broad immunity on the industry. This week the defendants tried again to nix the suit. + +In Docs v Glocks, the judges seemed sceptical that Florida’s rules could serve any purpose without restricting doctors’ first-amendment right to free speech. One suggested the statute was “illusory.” They have yet to rule; but, just possibly, the hysterical era that produced such outlandish legislation may be waning. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21701128-beyond-farrago-congress-there-are-reasons-hope-gun-control-docs-and-glocks/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Oakland’s police + +Too many chiefs + +A sex scandal prompts a purge at Oakland’s police department + +Jun 25th 2016 | From the print edition + +Bump City + +THINGS seemed to be looking up for Oakland’s police department. Between January and the middle of March seven people were murdered in the notoriously violent northern Californian city—11 fewer than over the same period in 2015. Rapes, assaults and burglaries were down too. The department was closer to complying with the 51 reforms it was ordered by a court to implement in 2003, following a police misconduct settlement. The leader of the White House’s task-force on policing had even praised Oakland’s force, which was once a byword for abuse of power. + +Then, in May, several Oakland police officers were accused of sleeping with a prostitute, who was possibly underage at the time. Separately, an investigation was launched into other Oakland officers for sending racist text messages. On June 9th, Sean Whent, Oakland’s police chief, resigned. In the nine days that followed, a replacement chief was appointed and sacked, and the replacement’s replacement, who became chief automatically, stepped down. For now, Oakland’s police department is being led by a civilian. + +The turmoil has its roots in a suicide note found beside the body of Brendan O’Brien, a police officer who shot himself in September. The note, which has not been released, prompted an internal investigation. The probe mostly went unnoticed until May, when reports surfaced that three officers had slept with a woman named Celeste Guap. Ms Guap later said she had sex with more than 20 officers from four different police departments in the area, none of whom she says paid her (though several gave advanced warning of undercover prostitution stings). + +This is not the Oakland police department’s first brush with ignominy. In the early 2000s, four officers who called themselves “the Riders” were accused of assaulting, robbing and planting evidence on suspects while they worked the night shift in West Oakland, a neighbourhood plagued by high crime. Since then, the department has been under federal supervision. The mayor, Libby Schaaf, who won office in part with promises to continue with reforms, issued a terse statement about the shenanigans: “As the Mayor of Oakland I am here to run a police department not a frat house.” + +Eugene O’Donnell, a former New York city cop and professor at John Jay College of Criminal Justice, reckons that the Oakland mayor’s office needs to directly increase scrutiny of its police, rather than rely on the federal monitor. Recruiting better officers would also help, though he expects they will be hard to find. Distrust of police in the post-Ferguson era mean fewer young Americans want to work in law enforcement; the dubious reputation of Oakland’s police probably makes it even harder to attract motivated rookies. + +Ray Long, the general manager of Bay Bridge Auto Body, a car repair shop in East Oakland, is similarly pessimistic. The neighbourhood where he tends to cars is so violent he has become desensitised to it. “Someone got shot in front of the shop recently in broad daylight and I don’t think I even put down my lunch,” he sighs. He says it took the police two hours to arrive and that when they did, they were laughing and joking around. “You can cut off the head, but that doesn’t fix the problem.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21701171-sex-scandal-prompts-purge-oaklands-police-department-too-many-chiefs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Fourth Amendment + +Amended + +The Supreme Court weakens the law against unreasonable searches + +Jun 25th 2016 | NEW YORK | From the print edition + +FANS of television shows such as “Law and Order” are familiar with the so-called “exclusionary rule”: when police obtain evidence of a crime through illegal means, the evidence is usually inadmissible in court. This rule, an outgrowth of the Fourth Amendment bar on “unreasonable searches and seizures”, deters police from violating citizens’ constitutional rights when undertaking criminal investigations. But the rule just became something closer to a suggestion: on June 20th the Supreme Court divided along gender lines in a 5-3 decision that introduces a loophole in rules for obtaining evidence that were developed more than 50 years ago. + +The case, Utah v Strieff, involves a dodgy drug bust. Responding to an anonymous tip that drugs were being sold from a house in South Salt Lake City, Utah, detective Doug Fackrell started keeping an eye on the property. He didn’t see much from his unmarked car, but he did notice—in the several hours he spent watching over the course of a week—people visiting the home and then quickly leaving. + +Without keeping track of how long one such visitor spent at the house, Mr Fackrell decided to stop the man, Edward Strieff, for questioning. The detective discovered, after a colleague ran his name through a database, that Mr Strieff had an open warrant for a traffic violation. Mr Strieff was arrested on the traffic warrant and searched. Mr Fackrell discovered a baggie of methamphetamine and drug paraphernalia in his pockets. He was then charged with drug possession. Mr Strieff challenged the charges by denying that the evidence against him was obtained lawfully. + +The five men on the Supreme Court ruled against Mr Strieff. In an opinion written by Justice Clarence Thomas, the court quoted its own ruling in a case in 2006 that, “suppression of evidence...has always been our last resort, not our first impulse.” One circumstance in which the exclusionary rule does not apply is when “the connection between unconstitutional police conduct and the evidence...has been interrupted by some intervening circumstance.” Since it was the traffic fine (not the illegal questioning) that gave rise to the arrest, and since Mr Fackrell was “at most negligent” in questioning the suspect, his “errors in judgment hardly rise to a purposeful or flagrant violation of Mr Strieff’s Fourth Amendment rights,” the court held. The drugs can be used as evidence. Two biting dissents from Justices Elena Kagan and Sonia Sotomayor took sharp issue with this holding. “Do not be soothed by the opinion’s technical language”, Justice Sotomayor warned. “This case allows the police to stop you on the street, demand your identification, and check it for outstanding traffic warrants.” + +The exclusionary rule has long been contested. Introduced in 1914 for federal prosecutions, it was not applied to all courts until the Supreme Court ruled on Mapp v Ohio 1961. Justice Tom Clark wrote in that case that police would have no incentive to stick to the Fourth Amendment when searching suspects if all the evidence they collect is admissible no matter how they come by it. Benjamin Cardozo, a Supreme Court justice in the 1930s, opposed it, asking why “the criminal is to go free because the constable has blundered”? Now begins the wait to see whether police forces change their behaviour to take advantage of the new powers the Court has just handed them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21701170-supreme-court-weakens-law-against-unreasonable-searches-amended/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Catholic hospitals + +Gloria in expansion + +Catholic hospitals are gaining market share, and influence over gynaecology + +Jun 25th 2016 | From the print edition + + + +CATHOLIC hospitals have been a force in American medicine since the Industrial Revolution, when nuns arrived from Europe to tend to immigrant communities. They are still flourishing. The total number of Catholic acute-care hospitals, where patients receive short-term treatment for urgent health conditions, increased by 8% from 2001 to 2016. In the same period, the number of beds in such hospitals grew by 18%. One in six acute-care beds lies within a Catholic hospital. + +Over the past two decades, economic pressures have driven health-care providers to consolidate. To achieve scale and increase their bargaining power with insurance companies, independent hospitals have merged to form larger systems. Catholic hospitals look to each other for potential partnerships first, says Lois Uttley, the director of MergerWatch, an advocacy group. Of the ten largest non-profit health systems in America, six are Catholic. To ensure their survival, Catholic hospitals have also overhauled their leadership. While in 1968 there were 770 religious officials—often nuns—running hospitals, today there are only four; the rest are laypeople. + +Catholic hospitals generally follow the health-care directives laid out by the Conference of Catholic Bishops, which ban “contraceptive intervention” of any sort. Abortions are rarely administered in any sort of hospital, but secular hospitals usually provide emergency abortions in cases where pregnancies go awry. When future pregnancies are undesired, or would carry health risks, women also rely on hospitals to tie their Fallopian tubes, a process called “tubal ligation”. Catholic hospitals seldom provide either of these services. In Arizona in 2010, a nurse at a Catholic hospital was demoted after she approved an emergency abortion for a woman suffering from perilously high blood pressure. + +Some hospitals have found creative ways to reconcile religious interests and reproductive emergencies. In Austin, Texas, the fifth floor of Brackenridge Hospital, which is affiliated with the Catholic Ascension Health system, operates as a women’s hospital, which is separately incorporated and managed. It provides maternity services, sterilisations, emergency contraception for rape victims and family planning services. A Catholic hospital in Troy, New York, has carved out a similar facility. + +But most Catholic hospitals have not made such accommodations. The American Civil Liberties Union (ACLU) tells the stories of several women with pregnancy complications who were denied emergency abortions at Catholic hospitals. One, Mindy Swank of Illinois, recalls how she was refused an abortion when her waters broke prematurely at 20 weeks and testing showed her fetus had a very low probability of survival. It was only when she began rapidly losing blood seven weeks later that the hospital induced labour. Her baby died shortly after. The Catholic Health Association called the report’s claims “unsubstantiated and irresponsible”. + +In some rural areas patients have little choice over hospitals. According to MergerWatch, almost 50 Catholic facilities are at least 35 miles or 45 minutes away from a competitor. This worries Douglas Laycock of the University of Virginia. “One has a presumptive right to live by one’s own moral commitments,” he says. “One does not have a right to use a monopoly position to block others from exercising the same liberty.” Kevin Fitzgerald of the Centre for Clinical Bioethics at Georgetown University retorts that Catholic hospitals are prominent in many rural areas because nuns were once the only carers intrepid enough to hunker down there. “To those who complain ‘Well, it shouldn’t be that way’, I say: no one is keeping you from starting a hospital there.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21701172-catholic-hospitals-are-gaining-market-share-and-influence-over-gynaecology-gloria/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Suing the Church + +Bully pulpit + +The Catholic Church is lobbying to prevent changes to statutes of limitations + +Jun 25th 2016 | PHILADELPHIA | From the print edition + + + +ABOVE the announcement for confessions on Tuesday at 7pm, the weekly bulletin for St Rose of Lima’s church near Philadelphia had an unusual notice for parishioners with the heading, “JUST SO YOU ARE AWARE”. It stated that Nick Miccarelli voted in favour of House Bill 1947. The legislation would abolish the criminal statute of limitations for future child sexual abuse cases, including rape, incest and statutory sexual assault. In addition to sitting in the statehouse, Mr Miccarelli is a member of the parish. + +Many states are revising their statutes of limitations for assault. Delaware has done so—a wave of lawsuits followed—as has California. New York’s statehouse considered a bill this month that would have extended its statute of limitations by five years. Pennsylvania’s bill would allow civil cases for child sexual abuse to be filed against public and private institutions, and extend the statute of limitations for civil cases from 30 to 50 years (the average male victim does not come forward until he is in his late 30s, women come forward even later on average). The state senate’s judiciary committee is considering whether to send the bill to the floor for a vote. + +Mr Miccarelli, the lawmaker and parishioner, was not the only representative singled out by the church for supporting the bill. Martina White, who represents a district in Philadelphia, has been disinvited from several church events. Another was told by a priest that he had betrayed his faith. Earlier this month a letter written by Charles Chaput, the Archbishop of Philadelphia, was distributed at Sunday services saying the bill was a “clear attack” on the church and “poses serious dangers” for parishes, charities and schools. Archbishop Chaput helped defeat a similar bill in Colorado when he was Denver’s Archbishop. + +Pennsylvania’s bill is timely. In March the state’s attorney general released a 147-page grand jury report exposing a decades long cover-up of child sex abuse in Altoona-Johnstown diocese, in central Pennsylvania. The abuse stretches back to the 1940s and involved at least 50 priests, according to the report. Many parishioners think the administrators who covered it up deserve to be punished too. Mr Miccarelli is unrepentant. “Frankly, I would rather be chastised from the altar than to be damned for not allowing justice to be done.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21701173-catholic-church-lobbying-prevent-changes-statutes-limitations-bully-pulpit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Cory Booker + +The senator from New Jersey thinks Americans must love one another or die + +Jun 25th 2016 | From the print edition + + + +NOT knowing his place has led Cory Booker to success all his life. Breaking barriers of race, class, ideology and age helps explain why, as a first-term senator from New Jersey, he is more famous than colleagues 20 years his senior, and appears on lists of possible vice-presidential running mates for Hillary Clinton. + +Early in his career the habit almost got Mr Booker shot, he recalls in a new book, “United: Thoughts on Finding Common Ground and Advancing the Common Good”. A young graduate of Stanford, Oxford, and Yale Law School, eager to offer legal help to a troubled neighbourhood, he moved into a crime-blighted housing complex in Newark, New Jersey. Especially after he was elected to the city council, his presence was deemed bad for business by local drug dealers. They debated scaring him away with violence, an ex-gang boss told Mr Booker later—adding soothingly: “They were just going to shoot you in the leg.” + +Other moments of boundary-crossing were happier. Just before he was born in 1969 civil-rights lawyers helped his parents, both pioneering black executives with IBM, overcome invisible (and by then illegal) racial barriers to buy a home in the overwhelmingly white New Jersey town of Harrington Park—though not before an incensed real-estate agent tried to defend those barriers by setting his Doberman on them. + +When Mr Booker began his rise in Democratic politics, his suburban childhood saw him denounced as too privileged to understand riot-scarred, post-industrial Newark. The incumbent mayor, a old-school black Democrat later jailed for corruption, called Mr Booker “a Republican who took money from the KKK.” By the time Mr Booker was elected mayor in 2006 his struggles against machine politics had been filmed for an Oscar-nominated documentary. He represents a distinctive strand of Democratic politics: a sort of social-justice centrism. His see-what-works pragmatism, and his use of data to drive reforms of city government, including policing, earned praise from such peers as New York’s then-mayor, Michael Bloomberg, a Republican-turned-independent. He raised hefty sums from philanthropists: Mark Zuckerberg of Facebook gave $100m to shake up failing schools. + +During the 2012 presidential election Mr Booker drew fire from the left for his response to campaign adverts attacking the Republican candidate, Mitt Romney, for a career in private equity. Noting that private-equity firms helped businesses grow in New Jersey, Mr Booker called the Democratic attacks “nauseating”. Ease with Wall Street bosses aligns him with Mrs Clinton and other centrist Democrats. Like them, he has sharply criticised tough-on-crime bills passed during Bill Clinton’s presidency, though he carefully calls this a bipartisan mistake. + +A vegan, shaven-headed former college football player, he earned headlines as mayor for chasing a robber in the street and for rescuing a neighbour from a fire. When Mr Booker was elected to the Senate in 2013, critics questioned his legacy in Newark, pointing to the backlash against his education reforms, and his failure to make a lasting difference to crime rates, notably after a second-term budget crunch saw scores of police officers laid off. + +Mr Booker now comes close to disavowing his action-man image. Rushing past police to chase a robber as mayor was “stupid”, he says: the act of a “chest-pounding politician”. He regrets that when first elected to the nine-member council, he was obnoxious and self-righteous, losing many votes by 8-1 margins. + +Those confessions behind him, he sets out to make readers care about Newark. Like many on the left, Mr Booker argues that America is damaged by yawning gaps between the rich and poor, whites and non-whites, or safe and unsafe neighbourhoods. Appealing to conservatives, he talks about the staggering costs of both crime—a single gunshot wound can easily cost taxpayers $100,000 in uncollectable medical fees, an emergency-room doctor tells him—and of a criminal-justice system that jails too many non-violent offenders. He insists that both parties have good reason to back criminal-justice reform. His central argument, though, has as much to do with psychology as politics. He is sure that injustices persist because many social and economic barriers prevent Americans from seeing one another, and from understanding what fellow citizens endure. + +No one exists alone + +Speaking in Newark on June 20th, after a rally to call for new laws to stop terrorists buying guns, Mr Booker expresses faith that greater empathy can unjam even the intractable gun debate. He is not making a warm and fuzzy point. “It may be a lot more bloodshed that is finally going to move this country,” he says, noting how it took a “horrific” massacre to change Australian gun laws. + +In a concession to gun owners, he recalls his surprise when shown data that almost all Newark’s gun murders were the work of known criminals. Once a “get guns off our streets kind of guy”, he is now focused on making background checks universal before gun sales: his interest is keeping weapons out of the wrong hands. After that appeal to shared logic, Mr Booker addresses conservative emotions. How can patriotic Americans not support Democratic amendments to push for those on terrorist watch lists to be barred from buying guns, he asks? “In World War Two, you wouldn’t give the Germans and the Japanese access to your weapons,” he says. “I think that this might be the way of going about this issue.” His pitch, though ingenious, seems likely to founder on conservative distrust of government and its works, terrorist watch lists included. + +Might empathy fix Washington? Most vice-presidential speculation weighs something more short-term: Mr Booker’s ability to inspire young and black Democrats to turn out, an ability that pundits set against his relative inexperience. But the senator has spotted a real crisis: partisans seem unable to imagine how others see the world. Those barriers are worth tearing down. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21701130-senator-new-jersey-thinks-americans-must-love-one-another-or-die-cory-booker/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +North American summitry: Three amigos and two spectres + +Bello: Peace, at last, in Colombia + +Brazil’s Olympics: Calamity Janeiro + +Canada: Last rights + + + + + +Articles Sections Next + +North American summitry + +Three amigos and two spectres + +NAFTA’s glory days may be over + +Jun 25th 2016 | MEXICO CITY, OTTAWA AND SACRAMENTO | From the print edition + + + +WHEN Ronald Reagan, running for president in 1979, proposed doing away with trade barriers between the United States, Canada and Mexico, he did so with his usual hyperbole. It would show that Americans were still capable of “dreaming up fantastic deeds and bringing them off to the surprise of an unbelieving world”, he declared. The North American Free-Trade Agreement (NAFTA) signed by his successor, George H.W. Bush, and by his Canadian and Mexican counterparts in 1992 could not live up to such hype. But the benefits were still substantial, especially in the early years. Trade among NAFTA countries nearly quadrupled in nominal terms after the treaty took effect in 1994 (see chart). Northern Mexico industrialised. Productivity jumped in Canada, which had signed a free-trade deal with the United States six years earlier. + + + +But when the “three amigos”, as the leaders of the NAFTA countries call themselves, gather for one of their annual summits in Ottawa on June 29th, the mood will be uneasy rather than celebratory. The biggest reason for that is Donald Trump. Today’s amigos—Barack Obama, Justin Trudeau, Canada’s recently elected Liberal prime minister, and Enrique Peña Nieto, Mexico’s president, are like-minded leaders who can unblushingly call one another friends. No one imagines that Mr Trump, if he is elected the United States’ next president in November, will fit into that club. He has called NAFTA a “disaster”. Just as he wants a wall to bar Mexicans from the United States, he wants high tariffs to keep out the goods they manufacture. + +Although Mr Trump will be the most troubling spectre at the triangular talks, he is not the only one. The proposed Trans-Pacific Partnership (TPP), which would include the three NAFTA partners plus nine other (mostly Asian and Latin American) countries, would largely supersede the North American deal. Mr Obama views it as an improvement because it includes environmental and labour protections that NAFTA lacks. It would also help remove non-tariff barriers that still thwart North American trade. But it would transform NAFTA’s ménage à trois into a clamorous throng of a dozen; the three amigos would become the 12 acquaintances. + +The TPP may founder if the United States does not ratify it; that, too, would be unsettling. If Mr Obama fails to win congressional approval by the end of his presidency in January, Mr Trump would be unlikely to try. His rival, Hillary Clinton, initially a supporter of the TPP, has turned cool. Unnerved by the protectionist mood in the United States, Mr Trudeau and Mr Peña, who will pay a state visit to Canada before the summit, are drawing closer. + +NAFTA needs new impetus. The agreement “was a framework for bigger and better things that was never realised”, says Jennifer Jeffs of the Canadian International Council, a think-tank. Security measures imposed by the United States at its borders after the September 11th terrorist attacks in 2001 continue to impede trade. Progress has been slow on harmonising regulations and product standards. New forms of business, such as e-commerce, have not been incorporated into the agreement (but are part of the TPP). Excess paperwork and ponderous regulation deter small and medium-sized businesses from exporting within North America, says Laura Dawson of the Wilson Centre, a think-tank in Washington, DC. + +They persist in part because NAFTA matters much more to its smaller members, which trade mainly within the group, than it does to the United States. Mr Obama’s pivot to Asia, part of the motivation behind the TPP, was also a pivot away from Canada and Mexico. Mr Trudeau’s Conservative predecessor, Stephen Harper, had testy relations with both of his NAFTA partners. In 2009 he imposed a visa requirement on Mexicans to stem an increase in bogus claims for refugee status. The summit planned for 2015 in Canada was cancelled, partly because of the ill feeling that measure provoked. + +This month’s meeting, with the affable Mr Trudeau presiding, will see a return to bonhomie. Mr Obama will become the first American president to address Canada’s Parliament since Bill Clinton did so in 1995. The new Canadian prime minister has tried harder than his predecessor to allay the United States’ security worries. This month Canada’s government introduced legislation to allow its officials to record travellers’ departures from Canada, a security measure long sought by the United States. Earlier this year Canada agreed to an expansion in the number of airports and train stations where American border guards could pre-clear travellers to the United States. + +Mr Trudeau would be delighted if Mr Obama reciprocated by pushing American lumber producers, who complain that Canada subsidises exports of softwood, to settle their dispute. But the president is unlikely to provoke American voters, who are in a protectionist mood. The three leaders are expected to promise to co-operate more on climate change and to integrate further their energy markets (even though Mr Obama has rejected the proposed Keystone XL pipeline to deliver oil from Alberta’s tar sands). + +But the main progress may be in relations between NAFTA’s two smaller members, which are one another’s third-biggest trading partners. Mr Trudeau has already indicated that he will end the visa requirement for Mexicans. Mexico’s government hopes he will announce that at the summit, though he may wait until the end of the year, when Canada is expected to expand its “electronic travel-authorisation system”, an entry requirement for visitors who do not need visas. Canadian companies are eager to take advantage of Mr Peña’s liberalisation of Mexico’s energy market. Calgary-based TransCanada and the Mexican subsidiary of Sempra Energy, an American firm, recently won a $2.1 billion contract to build and operate an 800km (500-mile) gas pipeline in Mexico. + +Mexicans admit that the terrifying prospect of a Trump presidency is one reason to make better friends with Canada. “If negative sentiment towards Mexico in the US prevails, we’ll be looking for closer ties to other countries that are friends of Mexico,” said the country’s finance minister, Luis Videgaray, to the Globe and Mail, a Canadian newspaper. Vicente Fox, a former Mexican president, was blunter. Mr Trump will “declare a trade war on Canada”, he predicted. + +Even if Mr Trump loses, NAFTA’s glory days may be over. A successful TPP would eventually supplant it; the TPP’s failure would signal less openness to trade. Mexico has signed deals with more than 40 countries, most of them since NAFTA took effect, and Canada is actively seeking new partners. The three amigos will proclaim undying friendship, predicts Carlo Dade of the Canada West Foundation, a think-tank. But, he fears, this month’s reunion may be the last. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21701179-naftas-glory-days-may-be-over-three-amigos-and-two-spectres/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +Peace, at last, in Colombia + +The government declares an end to its war against the FARC + +Jun 25th 2016 | From the print edition + + + +IT HAS been a long time coming. After 52 years of fighting, almost four years of peace negotiations and three months after a final deadline, the Colombian state and the Marxist guerrillas of the so-called Revolutionary Armed Forces of Colombia (FARC) have agreed to a bilateral and “definitive” ceasefire. That is cause for celebration, for Colombia and for the region. But the peace deal is controversial. Putting it into practice will be tricky and it may be made harder by the unpopularity of the government of Juan Manuel Santos, Colombia’s president. + +On June 23rd Mr Santos was due to fly to Havana, the site of the talks, for a ceremony with the FARC’s leader, Rodrigo Londoño (aka “Timochenko”), in the presence of Ban Ki-moon, the UN secretary-general, and five Latin American presidents. In practice, the two sides all but stopped firing a year ago, when the FARC declared a unilateral ceasefire and the government halted offensive actions. But the government’s formal declaration of a ceasefire is historic. + +It is possible because the two sides have agreed on the details of the FARC’s demobilisation. This involves the group’s 6,800 troops and 8,500 militia assembling at 22 fixed points around the country. Only once Colombians have approved the peace deal in a plebiscite, perhaps in October, will the FARC start putting their weapons “beyond use”, watched by international monitors. + +The negotiators have now reached agreement on all five of the points on their original agenda. There are still details to be resolved. Mr Santos hopes the final accord can be signed in July. But both sides are now saying, in effect, that there is no going back. + +For Colombians, the agreement involves “swallowing toads”, in a local metaphor. The FARC claim to have fought a just war against unequal land ownership. In that cause the country suffered bombings, firefights, murders, kidnapping and extortion. Many people find it hard to accept that FARC leaders accused of crimes against humanity will not go to jail provided they confess. But they will face a special tribunal and restrictions on their liberty for up to eight years. Many other points in the agreement involve the government saying it will do things it should do anyway, such as fostering rural development and adopting better ways to fight drug-trafficking and criminal gangs. + +Álvaro Uribe, Mr Santos’s predecessor as president, has launched a campaign of “civil resistance” against the agreement, which he portrays as handing Colombia over to the FARC and “Castro-chavismo”. That is a travesty. But there are legitimate grounds for worry. Nobody knows how much money the FARC has invested from its criminal businesses. Many distrust the sincerity of the FARC’s conversion to democracy. And partly because the peace negotiations have taken so long and missed so many deadlines, Colombians have no love for Mr Santos. In a recent poll his approval rating was just 20%, lower than that of Nicolás Maduro in Venezuela. + + + +Colombia's peace process, in charts + +In the eyes of Colombians, the credibility of the agreement will turn on the integrity of the special tribunal and effective verification of disarmament. Polls suggest that in the plebiscite the agreement will probably be ratified by a margin of around two to one. Just as important will be the government’s ability to flood the areas of FARC influence with quick-starting development projects to employ the guerrilla rank and file, and to impose security, justice and effective administration. There are two further complications. A smaller guerrilla group, the ELN, shows no serious interest in peace; it may recruit FARC renegades and will have to be fought. And criminal gangs whose leaders emerged from right-wing paramilitary groups which demobilised a decade ago are growing in strength. + +Unfortunately, the peace agreement comes when Colombia is facing a sharp economic adjustment. The IMF expects the economy to grow by only 2.5% this year, compared with 4.4% in 2014. To fill a hole in government revenues caused by the oil slump, Mr Santos is preparing to raise taxes later this year. His opponents bridle at the notion of paying taxes to help the FARC. + +But as Mr Santos says, war is more expensive than peace. If the agreement is less than perfect it is because Mr Uribe’s military build-up—which for three years was directed by Mr Santos as defence minister—weakened the FARC but did not defeat them. That Colombia’s conflict has long been an anachronism does not make it any easier to end. Peace with the FARC will improve the lives of Colombians, especially those in remote rural areas. However late in the day, it is a big prize. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21701178-government-declares-end-its-war-against-farc-peace-last-colombia/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brazil’s Olympics + +Calamity Janeiro + +A state financial crisis is another threat to the games + +Jun 25th 2016 | RIO DE JANEIRO | From the print edition + + + +RIO DE JANEIRO does not look like a disaster zone. Beaches are emptier than normal, but that’s because temperatures have dropped to a frigid 23°C. The streets are bustling. Yet on June 17th the acting governor of Rio de Janeiro state, Francisco Dornelles, decreed a “public calamity”. It will, he warned, affect the state’s ability to support the Olympic games, which are to take place in its capital city in August. + +The calamity is financial, not natural. Brazil’s recession has caused tax receipts to plummet. Falling oil prices have pulled down royalties, which provided more than a tenth of Rio’s revenues. The budget deficit this year is expected to exceed 19 billion reais ($5.6 billion), a third of revenue. + +Luckily for sports fans, the games are mainly the responsibility of the city, which is in better fiscal health. The arenas are nearly ready. But the state is in charge of policing and of the metro line linking the Olympic village to the city centre, which is unfinished. Tourists worried about the mosquito-borne Zika virus, which causes birth defects, have another reason to fret. + +The state compounded its woes by raising salaries and pensions during the oil boom and giving big tax breaks to businesses. Lately it has been paying policemen, teachers and doctors in arrears—or not at all. The Rio city morgue, run by the state police, did not accept corpses earlier this month because it could not pay for cleaning (it sent them to other cities). + + + +Waxing and waning: Brazil's economic woes, in charts + +Rio is not the only state in trouble. Since 2010 regional debts, owed mainly to the federal government, have ballooned by a third in real terms, reaching 11% of GDP. Michel Temer, who is serving as Brazil’s interim president while Dilma Rousseff undergoes an impeachment trial, thinks something good can come of the crisis. On June 20th he reached a deal to restructure states’ debts. In return, they agreed to apply a proposed constitutional spending cap to their own budgets. This will reduce Rio’s shortfall this year by 5 billion reais. + +The declaration of a calamity allows Mr Temer to give the state a further 2.9 billion reais for security, which will release money to complete the metro line. That may spare Rio Olympic embarrassment, but it still leaves a huge hole in the budget. “What happens after the Olympics?” wonders a cleaner at the morgue, who returned to work in mid-June, when payments to her firm resumed. Mr Dornelles is no doubt asking himself the same question. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21701177-state-financial-crisis-another-threat-games-calamity-janeiro/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Canada + +Last rights + +The new assisted-dying law is restrictive. It may not be the last word + +Jun 25th 2016 | OTTAWA | From the print edition + +Her cause is marching on + +“I DO not want to die slowly, piece by piece,” said Gloria Taylor, pleading in 2011 to be allowed a medically assisted death. Diagnosed two years before with amyotrophic lateral sclerosis (ALS), which takes away the ability to walk, speak and eventually breathe, Ms Taylor feared ending her days in a hospital, wracked with pain. Her court challenge to Canada’s ban on assisted dying changed the legal landscape, although she did not live to see the outcome (she died of an infection in 2012). Last year the Supreme Court declared the ban unconstitutional and invited Parliament to write new legislation. On June 17th Canada joined a handful of countries in legalising medically assisted suicide. + +Canadians older than 18 who suffer from a “grievous and irremediable condition” and whose death is “reasonably foreseeable” may now ask a doctor or nurse to help end their lives. Those who administer life-ending drugs will not be prosecuted; they can refuse for reasons of conscience or religion. The families of members of the armed forces and veterans who die this way will not be deprived of their pensions. + +Some legislators opposed the law on the ground that life should never be taken deliberately. But the fiercest opposition came from those who think the law does not go far enough. It allows medically assisted suicide only for the terminally ill, stopping short of extending that right to other people suffering intolerable pain or mental suffering. The government is making a “cruel mistake”, said André Pratte, a senator. A lawmaker from the governing Liberal Party is urging provinces to mount a constitutional challenge to the new law. + + + +What do you think of doctor-assisted dying? Take the survey for yourself and compare your answers + +This is not the first time Canada has grappled with assisted dying. Between 1991 and 2010 Parliament failed to pass six proposals to legalise it. In 1993 the Supreme Court turned down the petition of a woman also suffering from ALS. What has changed, said the justices in their decision last year, is that other countries, including the Netherlands, Belgium, Luxembourg, Colombia and Switzerland, plus four American states, have shown that assisted dying can be well regulated. + +In writing its own law, Canada did not copy any foreign model. Unlike Oregon and Washington, where patients have to administer lethal drugs themselves, Canada allows doctors and nurses to perform that function. Switzerland permits non-residents to come to the country to die, whereas Canada restricts assisted death to residents eligible for coverage by a government health plan. In Belgium children and people who are mentally ill can request euthanasia, but in Canada that is still illegal. + +Perhaps not for long. Jody Wilson-Raybould, the justice minister, says the legislation “is not the last step in this journey”. She has promised to study whether to extend the right to die to “mature minors”, people with mental illnesses and those who want to leave instructions in advance in case they fall hopelessly ill. The law calls for a parliamentary review in five years. A constitutional challenge could expand its scope sooner than that. Gloria Taylor’s fight is not yet finished. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21701176-new-assisted-dying-law-restrictive-it-may-not-be-last-word-last-rights/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Australia’s election: Shortening the odds + +Pakistani cinema: Lights, camera, action men + +Law enforcement in Indonesia: Time for Tito + +Addiction in India: Pushing poppies in Punjab + +Endangered species: No rosewood of such virtue + +Japanese-American relations: Rina’s legacy + + + + + +Articles Sections Next + +Australia’s election + +Shortening the odds + +Once the prohibitive favourite, Malcolm Turnbull faces a tight race in his bid for a second term + +Jun 25th 2016 | SYDNEY | From the print edition + + + +IN THEIR last debate before Australia’s general election on July 2nd, Malcolm Turnbull, the Liberal prime minister and head of the conservative coalition government, and Bill Shorten, the Labor opposition leader, faced not just an audience of swing voters, but the entire world: Facebook live-streamed the event. An online viewer named Melissa asked the first question: given the “lies and backflipping” from major-party politicians, and the number of prime ministers Australia has churned through (five in the past decade), why should she vote for either of them? Why not vote for an independent? Many voters are asking themselves the same thing. More than any Australian election in decades, this one could be decided by independents and small parties. + +That is partly owing to surprisingly tight polls. The government’s approval rating soared after Mr Turnbull (pictured left) unseated the snarling Tony Abbott as the Liberal Party’s leader last September. With his sunnier manner and more liberal views, many expected Mr Turnbull to coast to an easy victory as he sought a strong mandate of his own. But Mr Shorten, the first Labor leader in 15 years to survive a full parliamentary term, has proved an unexpectedly deft campaigner: government and opposition are now tied. + +But it also shows how outmoded Australia’s two-party system has grown. The class divisions that produced the Labor-Liberal divide have faded. Australia has grown more diverse and some of its concerns—climate change, immigration, China’s rise—more complex. Many voters have turned, in hope or protest, to outsider candidates, who now garner 28% support, according to the most recent polls. Among these the Australian Greens, an environmental party, and the Nick Xenophon Team, a new centrist party headed by Mr Xenophon, an independent senator from South Australia, are forecast to win seats in both houses of parliament. + +Tony Windsor, also an independent, is challenging Barnaby Joyce, the deputy prime minister and leader of the rural National Party, for the New South Wales seat of New England. Their race shows Australia’s shifting electoral dynamics. Some rural conservatives never forgave Mr Windsor for helping Julia Gillard, a former Labor leader, form a minority government six years ago. But an unlikely alliance of farmers and environmentalists support him. Mr Windsor contends that Mr Turnbull’s government has harmed rural Australians by changing Labor’s plans for a national cable-broadband network. And he accuses both major parties of ignoring the environmental risks posed by a Chinese company’s plan to build a massive coal mine in New England. + + + +Mr Turnbull’s pitch is simpler: trust the Liberals to manage the economy. When the rest of the world sank into recession during the financial crisis eight years ago, Chinese hunger for Australian minerals and meat kept the country afloat. Australia has weathered the commodity boom’s passing better than many expected: growth is a healthy 3.1%. Interest rates are low and the currency is weak, helping investment and exports. A poll by the Lowy Institute, a think-tank, shows that 70% of Australians are optimistic about the economy. Mr Turnbull, a former banker and entrepreneur, argues that his main election pledge—to cut the corporate-tax rate from 30% to 25% over the next decade—will spur investment and create jobs. + +Mr Shorten once supported similar cuts, but now wants them limited to small businesses—to which he will also offer incentives for hiring old people and parents returning to the workforce. Labor vows to match the conservatives’ target of balancing the budget in four years, but admits it will run bigger deficits until then, partly because it will spend more on health and education. Mr Shorten says the campaign is a “referendum” on Medicare, the public health-insurance scheme that he claims the government wants to privatise. (Mr Turnbull calls that the “biggest lie in the whole campaign”.) + + + +Otherwise, Mr Shorten, a lawyer and former union leader, has tried to turn voters’ attention from economic to social issues—particularly gay marriage. Mr Abbott, Mr Turnbull’s predecessor, opposed gay marriage, but was grudgingly planning a plebiscite on it; polls showed a large majority would vote yes. Mr Turnbull, a gay-marriage supporter, said then that instead of going to the expense of holding a national plebiscite, parliament should vote. But dealmaking with his coalition’s conservatives required him to reverse his stand and agree to put gay marriage to a national vote; he “expects” it will happen this year if he wins. Mr Shorten says that would be a “taxpayer-funded platform for homophobia”, and promises to legalise gay marriage within 100 days if Labor wins. + +Mr Shorten has led Labor back into contention just three years after the chaotic rivalry of Ms Gillard and Kevin Rudd, its latest two prime ministers. He has unified his party. But to form a government Labor will have to snatch 19 extra seats in the 150-seat lower house. That will not be easy. Though the parties are tied, in polls that ask voters whom they would prefer as prime minister, Mr Turnbull maintains a comfortable lead. Yet even if he prevails on July 2nd, he may see his majority reduced, and his mandate weaker. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21701125-once-prohibitive-favourite-malcolm-turnbull-faces-tight-race-his-bid-second/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Pakistani cinema + +Lights, camera, action men + +Pakistan’s army gets into the film business + +Jun 25th 2016 | ISLAMABAD | From the print edition + +Better than the badlands + +SOMETIMES the old army dictum “Don’t volunteer for anything” must be broken. As when, for instance, a soldier in Pakistan’s army is given the choice between fighting rebels in the badlands of Waziristan, or volunteering to appear in a film in which he portrays a soldier fighting the same rebels. Whatever thespians may say about the sweat, tears and pain that go into acting, compared with actually fighting in north-western Pakistan, it is at least safer. + +Pakistan’s film industry lacks the size and razzmatazz of Bollywood. This year Pakistan looks likely to screen 48 local films. That is a record, but between April 2014 and March 2015, India released more than 38 times as many. The army, envious of its great rival’s soft power, is trying to rectify that imbalance. Hassan Waqas Rana, a prominent Pakistani director, says that the army “looks at the script, and if they think it is good enough they give you whatever you need.” + +The army does not finance films. Instead it makes low-budget productions look like higher-budget ones, mainly by offering logistical help and access to military land and hardware: guns, explosives, helicopters and the occasional company of soldiers to appear in the background for extra authenticity. “When we were done shooting a battle sequence,” says Mr Rana, “our extras went straight back to an operation.” + +Some credit the army with helping to revive an industry nearly killed off by decades of high taxes. But liberal critics charge it with promoting crude jingoism. Unsurprisingly, the army likes scripts that portray it in a good light. Army-backed films also tend to reflect the institution’s dim views of India and of politicians, whom the generals regard as irredeemably corrupt. Mr Rana’s first film featured a sultry female Indian spy who cooks up terrorist attacks with the Pakistani Taliban—a favourite lunatic trope of Pakistan’s security establishment, which loves to blame India for fomenting jihadism in Pakistan. + +Can help that comes with such strings attached make a creative industry flourish? Some think not: Nadeem Mandviwalla, a cinema-chain owner and film financier, says that Pakistani audiences “won’t accept” relentless India-bashing. Despite official bans, Bollywood films are popular: the government turns a blind eye to distributors who buy the films through third countries. Mr Rana agrees. He resisted calls last year to make a film retaliating against “Phantom”, a Bollywood drama about Indian spies thwarting Pakistani terrorists. “Pakistan needs to get out of this whole anti-Indian thing,” he says. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21701127-pakistans-army-gets-film-business-lights-camera-action-men/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Law enforcement in Indonesia + +Time for Tito + +Jokowi displays his new confidence with a bold choice for police chief + +Jun 25th 2016 | JAKARTA | From the print edition + + + +TWO factors drove Indonesians to elect Joko Widodo, universally known as Jokowi, president in 2014. The first was his reputation for clean governance, earned as mayor of the midsized Javanese city of Solo and then as governor of Jakarta, Indonesia’s capital. The second was his personal background: a former furniture-seller, he is Indonesia’s first president to come from outside the political and military elite, which has long dominated Indonesia’s narrow politics. Voters wanted him to change the system. + +Many of his supporters were therefore angered when, in January 2015, he nominated Budi Gunawan to head the national police force. The appointment was widely seen as a sop to Megawati Sukarnoputri, a former president who heads Jokowi’s party, the PDI-P. Just days after the appointment was announced, Indonesia’s anti-corruption commission declared that Mr Budi was suspected of corruption. After weeks of protests Jokowi dropped Mr Budi and appointed the uncontroversial Badrodin Haiti in his place. + +Mr Haiti will reach the mandatory retirement age of 58 in July. To replace him Jokowi surprised everyone by choosing Tito Karnavian, a respected officer who runs the country’s counter-terrorism agency. Often candidates are appointed based on seniority, but at just 51 Mr Karnavian will be younger than many of his subordinates. Few have better credentials. As a former commander of Densus 88, Indonesia’s American-trained anti-terrorism force, Mr Karnavian battled Jemaah Islamiyah, a regional jihadist outfit, and killed or captured some of South-East Asia’s most wanted militants. He is articulate and intelligent, and seems committed to cleaning up the police force, one of Indonesia’s most notoriously corrupt institutions. + + + +Indonesia in graphics: Tiger, tiger, almost bright + +As important as what Mr Karnavian may do in the top job is what his appointment says about Jokowi. Presumably the PDI-P wanted Jokowi to renominate Mr Budi, who remains close to Ms Megawati. But Jokowi stood firm, and the party’s parliamentarians appear likely, perhaps with some grumbling and reluctance, to support the politically independent Mr Karnavian. Although nobody gets promoted through the police ranks without patrons, Evan Laksmana of the Centre for Strategic and International Studies, a think-tank in Jakarta, says that Mr Karnavian has not aligned himself with any one political group or party. + +Jokowi’s independence appealed to voters, but it hobbled him in a party-reliant political system. At times he seemed overawed in office; he deferred too much to Ms Megawati, and struggled to keep his fractious cabinet from squabbling and setting out often divergent policies. Lately, though, Jokowi’s leadership has been more assured. His ministers have been less inclined to snipe at each other. + +Partly this is because he has silenced or removed some of the more disruptive ministers. But it also reflects external political shifts that have made Jokowi less reliant on Ms Megawati and the PDI-P. Golkar, parliament’s second-largest party, quit the opposition coalition and threw its support behind Jokowi after settling a long-running leadership dispute in May. Perhaps Golkar wants the president to switch parties before 2019; perhaps it just wants cabinet seats. Whatever the reason, Ms Megawati now matters less—she has long treated her protégé less as the president than as a recalcitrant backbencher—and Jokowi now has more room to govern on his own terms. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21701168-jokowi-displays-his-new-confidence-bold-choice-police-chief-time-tito/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Addiction in India + +Pushing poppies in Punjab + +A state’s drugs problem, in life and film + +Jun 25th 2016 | AMRITSAR | From the print edition + +The lands are dry and the kids are high + +IT WAS the lying that proved hardest for Pradeep, a 30-year-old man who has spent the past two years getting off heroin. Whenever he had to leave his family’s house to score, or to nod off somewhere, he had to invent a story. Money was another problem: spending 5,000 rupees ($75) for his daily fix led him to rock bottom due to, as he says in delicate English, “financial disturbance”. He was a shop clerk for 15 years, but after just four months on the needle his savings were gone. + +Today Pradeep looks healthy, with a clear gaze and only faint scars on the backs of his hands. Similarly, Maqboolpura, an area of the city of Amritsar shamed in the national press as a den of addicts and widows, appears tranquil: its brick-lined lanes are tidy, with a few cows lowing and no junkies staggering through the dark. But Punjab is suffering from a hidden epidemic of drug abuse. A recent study found that nearly 20% of the state’s young men use opioids—and not just the traditional poppy husks. P.D. Garg, a psychiatrist who has been treating Punjab’s drug addicts for years, says that injectable heroin appeared five years ago, and quickly became the drug of choice. + +Why Punjab more than other states? Theories abound. Many point to the border with Pakistan, over whose territory Afghan heroin flows. But Punjab’s demand has outpaced that supply. Heroin now also arrives from Rajasthan to the south, while synthetic opioid painkillers creep in from the east. The state bears economic and psychological scars from its agriculture crisis. In the 1960s the green revolution made Punjab rich. It invested in education and infrastructure. But as the state’s water table fell and farming grew more mechanised, jobs in the cities failed to materialise. Today Punjab’s per-capita GDP is middling by Indian standards. Gursharan Singh Kainth, an economist, reckons the state needs an “agro-industrial revolution” to provide better jobs for young men. + +The local head of the Bharatiya Janata Party (BJP), which rules Punjab together with the Shiromani Akali Dal (SAD), says nonsensically that drug use will cease “if honour increases”. The SAD contradicts itself brazenly: it has denied the scale of the state’s drugs problem, while at the same time boasting of how many treatment clinics it has opened. Punjabi voters have had enough: the upstart reformists of the Aam Aadmi Party won their first parliamentary seats in Punjab two years ago. Expect the squabbling to grow fiercer as the 2017 elections draw nearer. + +A new film, “Udta Punjab”, dramatises the state’s struggles with drugs in a brutal, electrifying 148 minutes. One subplot draws a parallel with the real-life case of a convicted drug lord who named the SAD deputy chief’s brother-in-law as his accomplice (the brother-in-law, a state minister, says the accusations are baseless and politically motivated). In the film, a subtle old Sikh villain dismisses his state’s future with a Punjabi couplet—“The lands are dry and the kids are high”—and a shrug. Punjabis say the film feels true to life. + +The film nearly missed its release date of June 17th: India’s film board demanded 89 cuts, including every reference to Punjab. But at the last minute, the Bombay High Court intervened, ruling that just a single shot of a pop star urinating from the stage had to go. The overruled censor was appointed by the BJP, whose coalition partner in Punjab, the SAD, had much to lose from bad publicity. + +Pradeep says he would like to see the film. But he says that these days he is far too busy, working 13 hours a day, making up for lost time. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21701163-states-drugs-problem-life-and-film-pushing-poppies-punjab/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Endangered species + +No rosewood of such virtue + +Illegal logging threatens the survival of a beautiful tree + +Jun 25th 2016 | LAK XAO | From the print edition + + + +MR DENG’S ramshackle lumber yard on the edge of town offers a wide array of wood for sale. One species, however, is conspicuously absent. Asked whether he has any Siamese rosewood, he sends a lad off to retrieve one single foot-long chunk. Five years ago, says Mr Deng, rosewood was plentiful in the forests outside Lak Xao (a Lao town so small that its biggest restaurant is called, almost accurately, the Only One Restaurant). But then Chinese and Vietnamese businessmen started buying up trees by the lorryload. Today? “Finished,” he says. + +On May 13th, hoping to save his country’s dwindling forests, Thongloun Sisoulith, the new prime minister of Laos, banned all timber exports. A government representative says environmental protection is among its top priorities. But a report to be published on June 24th by the Environmental Investigation Agency (EIA), an NGO, suggests the clampdown will not be implemented by local officials—and even if it is, may come too late to save Siamese rosewood from being eradicated in Laos and Cambodia. + +Much like the trade in rhino horn and tiger skins, trade in rosewood is driven by demand from China’s burgeoning middle classes for goods once reserved for the rich: in this case, hongmu, or “redwood”, furniture made in the ornate Qing-dynasty style. Siamese rosewood is among the most highly prized of the 33 types of tree used to make hongmu. + +Five years ago Thailand had roughly 90,000 Siamese rosewood trees—more than anywhere else in the world. But the EIA says “significant volumes, if not most” of those trees were illegally chopped down before trade in Siamese rosewood became regulated under the Convention on International Trade in Endangered Species (CITES), a treaty. + +That grim history seems to be repeating itself in Laos and Cambodia. Between June 2013 and December 2014 Vietnam and China (including Hong Kong) imported more than 76,000 cubic metres of Siamese rosewood—more than the total amount growing in Thailand in 2011. Jago Wadley of the EIA says that Vietnam is a conduit through which the wood enters China. Of the total amount imported, 83% came from Laos and 16% from Cambodia. + +Documentation accompanying the imported wood showed that 85% was harvested in the wild. Corrupt local officials have failed to enforce the restrictions imposed by the central Lao and Cambodian governments. Middlemen pay villagers to cut down the trees; they then sell the timber to Chinese or Vietnamese businessmen. Rosewood exports require a permit from the local CITES management office, which should only issue one if the export is not deemed detrimental to the survival of the species. Cambodia maintains that almost half of its exports during the period covered by the EIA report took place before the ban took effect. A Cambodian government spokesman says that the “competent authorities have never issued any permit which is contrary to the law.” + +In Laos, the situation is clearer: the government has no credible data on how much Siamese rosewood remains, so the EIA cannot determine that exports are not detrimental. It says its investigators met a trader in Shenzhen who had permits issued by Laos’s CITES office, which he said could be bought for “any rosewood logs, regardless of their provenance”. + +In Bolikhamxay province, where Lak Xao sits, Siamese rosewoods have been nearly eradicated. At the corner of Mr Deng’s property stands a rosewood tree, still young and slender. He knows of no others in the region. He says he will never cut it down. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21701167-illegal-logging-threatens-survival-beautiful-tree-no-rosewood-such-virtue/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Japanese-American relations + +Rina’s legacy + +A murder by an American sparks protests in Okinawa + +Jun 25th 2016 | TOKYO | From the print edition + +Outraged in Okinawa + +FLOWERS and tributes left by angry Okinawans surround a makeshift shrine on the country road where Rina Shimabukuro’s body was dumped. The only suspect in her rape and murder, Kenneth Franklin Gadson, a former American marine, led police to this remote spot after he was arrested in April. + +Ms Shimabukuro, who was just 20 when she was killed, has become the latest symbol in a conflict over American military bases that has raged for decades. On June 19th an estimated 65,000 people mourned her at a stadium in Naha, Okinawa’s prefectural capital. A letter from her father urged Okinawans to unite and demand that American soldiers leave. It was among the biggest such protests in years, and one of the most passionate. + +America has 85 military facilities throughout Japan, but three-quarters of the area they occupy is in Okinawa. Futenma, a marine airbase, occupies nearly two square miles in the crowded centre of Ginowan, a small city. In 1996, after three American servicemen were convicted of raping a 12-year-old Japanese girl, America and Japan agreed to close the ageing facility and build a replacement near the quiet fishing village of Henoko. + +Many locals dislike that plan, because it still leaves Okinawa hosting far more American troops than any other part of the country. A recent survey found that 84% of Okinawans oppose the planned Henoko base—the highest share since the government of Shinzo Abe, the current prime minister, took power in 2012. Anti-base politicians led by Takeshi Onaga, Okinawa’s governor, won control of the prefectural assembly in local elections on June 5th. + +A nuclear North Korea and an increasingly assertive China have boosted Okinawa’s military importance. Backed by America, Japan is moving away from the pacifism that took root after the second world war. Henoko is central to Mr Abe’s plans to boost military defences across Okinawa’s 160-island Ryukyu chain. Gavan McCormack, a historian, says Henoko will host “the largest concentration of land, sea and air military power in East Asia”. + +But construction has been stalled since March, when Mr Abe agreed to accept a court proposal that he not force building over local objections. Hideki Yoshikawa, an anti-base activist, says that the winds are blowing in his side’s favour now, but after next month’s election he expects the government to restart construction. + +Mike Mochizuki, a political scientist at George Washington University in Washington, DC, argues that would be a mistake. Passions over Ms Shimabukuro’s death are running so high that if Mr Abe pushes too hard on Henoko he risks losing support for other bases. But it would be difficult for Mr Abe to give up—both for his own political standing and for the effect on Japan’s alliance with America. He may instead opt for the status quo, leaving Futenma open and putting the dispute back where it was in 1995. + +Peter Lee, Futenma’s commanding officer, blames hostile media coverage for obscuring the strengths of the Japan-US military alliance. American soldiers commit fewer crimes per head than locals do. But perception trumps reality. In late May, military officials imposed a one-month curfew and alcohol ban on all service members. A few weeks later an off-duty sailor driving at six times the legal alcohol limit crashed into two cars. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21701166-murder-american-sparks-protests-okinawa-rinas-legacy/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Propaganda: Who draws the party line? + +Grassroots democracy: Unwanted model + +Banyan: In Beijing’s bad books + + + + + +Articles Sections Next + +Propaganda + +Who draws the party line? + +Xi Jinping sends his spin doctors spinning + +Jun 25th 2016 | BEIJING | From the print edition + + + +THE nondescript glazed-brick building at 5 West Chang’an Avenue, near Tiananmen Square, gives no hint of what happens inside. No brass plaque proclaims its purpose. In an office around the corner, a dog-eared card says the reception of the Propaganda Department of the Central Committee of the Communist Party will be open on Tuesdays, Thursdays and Fridays between 8am and 12pm. The staff deals only with party officials; armed guards politely shoo other visitors away. + +In English, the Propaganda Department calls itself the Publicity Department (it adopted this translation in the 1990s, realising how bad the literal one sounded). It is both secretive and vast. It is now at the centre of attempts by Xi Jinping, China’s president, to increase his control over the party, media and universities. It is also at the heart of factional infighting involving Mr Xi, his anti-corruption chief and allies of his two predecessors as president. + +The Publicity Department sounds like the home of spin doctors, spokesmen and censors, and the scope of such activity is indeed vast. With the help of various government agencies, the department supervises 3,300-odd television stations, almost 2,000 newspapers and nearly 10,000 periodicals. The chief editors of these outfits meet regularly at the Publicity Department to receive their instructions. It spends around $10 billion a year trying to get the Chinese government’s opinions into foreign media outlets. According to researchers at Harvard University, propagandists help churn out 488m pro-government tweets a year. + +But this public role is only the half of it. Another crucial function is to steer the government machinery. The country is too large to be governed through a bureaucratic chain of command alone. So the department also sends out signals from on high: Mr Xi’s speeches, and directives given by leaders during their visits to provinces or factories. Such messages tell lower-level officials what the high command is thinking and what is required of them. + +The Publicity Department is the chief signals office. It decides which speeches to print and how much to push a new campaign. To this end it has authority over various government bodies (such as the Ministry of Culture and the Chinese Academy of Social Sciences), runs party-only newspapers (not for public consumption) and influences thousands of training schools for party officials. Every province, county and state-owned enterprise also has its own propagandists. The department has been at the centre of battles between hardliners and reformers since the 1980s, when the then propaganda chief, Deng Liqun, was at loggerheads with Deng Xiaoping. It is not so much a group of spin doctors as a spin National Health Service. + +The department is at the centre of things again because Mr Xi puts so much emphasis on the work it does. He has launched a string of ideological campaigns aimed at making party members better Marxists and more honest officials. He has insisted that universities pay more attention to teaching Marxism and less to other wicked foreign influences. In February he made a widely publicised visit to China’s three main media organisations, People’s Daily (a newspaper), Xinhua (a news agency) and China Central Television, in which he stressed that all media must “love the party, protect the party and serve the party”. This was interpreted as a swipe at the propaganda department’s bosses since it implied that the media should be paying more attention to Mr Xi, who regards himself as the party’s “core”. + +Minitrue’s blues + +So even as they emphasise its work, Mr Xi and his allies have been criticising the department. On June 8th, after a two-month investigation, the Central Commission for Discipline Inspection (CCDI), the party body responsible for fighting graft and enforcing loyalty, launched a stinging attack. + +In a posting on the CCDI’s website, the leader of the investigation said the department “lacked depth in its research into developing contemporary Chinese Marxism”. He said “news propaganda” (a revealing phrase) was “not targeted and effective enough”; he claimed the department was “not forceful enough in co-ordinating ideological and political work at universities” and had failed online “to implement the principle of the party managing the media”. It is unusual for such an attack to be made public. It is unheard of for a party body to attack the reputation of the Publicity Department, the party’s own reputation-maker and breaker. + +The CCDI’s charge sheet strengthened earlier hints that Mr Xi is unhappy with the department’s promotion of his policies. Less clear is which of its shortcomings he is upset about. It could be its failure to beat the drum for economic reform (Mr Xi made a big speech on the subject in January; it did not appear in People’s Daily for four months). Possibly it gave too much encouragement to a mini personality-cult of “Uncle Xi”, violating long-standing party orders against such fawning. + +Or possibly the Publicity Department has been caught up in factional infighting. The two propaganda chiefs are Liu Qibao, the head of the Publicity Department, and his (unrelated) supervisor, Liu Yunshan, a member of the Politburo Standing Committee, the Politburo’s inner circle, who was Liu Qibao’s predecessor. Both are former high-fliers in the Communist Youth League, which has long been a stepping stone to membership of the party elite. + +“Princelings” such as Mr Xi, who have been helped to power by their blood ties to party veterans and their service in the provinces, often resent the cliquish influence of those who emerged through the league’s bureaucracy. They include Mr Xi’s predecessor as president, Hu Jintao, and many of those who rose through the ranks with him and remain in positions of influence. Liu Yunshan has the added disadvantage of being part of “Jiang’s gang”, the group of senior officials close to Jiang Zemin, Mr Hu’s predecessor, which is seen as another rival faction to Mr Xi. + +Leaguers are falling foul of the anti-graft campaign to an extent that can hardly be coincidental. In late May and early June, the CCDI and the country’s chief prosecutors placed under investigation or indicted three allies of Vice-President Li Yuanchao, who was once one of the league’s most senior figures. Just before that, a court in the northern port city of Tianjin charged Ling Jihua with bribery, after a year-long investigation by the CCDI. Mr Ling had been a senior member of the league, and had served as chief aide to Mr Hu when he was president. + +The Publicity Department is fighting its corner. Earlier this year it targeted Ren Zhiqiang, an outspoken property magnate and ally of the CCDI’s boss, Wang Qishan (who was his tutor in high school). Mr Ren had criticised efforts to tighten control of the media. By denouncing him, the Publicity Department could claim to be carrying out Mr Xi’s policies while simultaneously attacking a friend of Mr Wang, whose commission’s report was so damning. + +Like media organisations everywhere, the Publicity Department is struggling to keep pace with changing consumer demands. Unlike most such organisations, it is also having to keep pace with the changing political requirements of its boss, Mr Xi. As an institution, these have made it more important than it was. But its current leaders might prefer a quieter life. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21701169-xi-jinping-sends-his-spin-doctors-spinning-who-draws-party-line/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Grassroots democracy + +Unwanted model + +A village famed for its struggle for democracy is once again in turmoil + +Jun 25th 2016 | WUKAN | From the print edition + +In Wukan, yes we can + +MARCHING by the thousands this week in stifling heat through their small coastal village, residents of Wukan carried Chinese flags and shouted out slogans in support of the Communist Party. That was just to protect themselves from retribution by the riot police, who watched them closely but did not intervene. Their real message was in other chants: “Give us back our land!” and “Free Secretary Lin!” + +The secretary in question was their village chief, Lin Zulian, whom they elected in 2012 in what was widely hailed at the time as a breakthrough for grassroots democracy. Mr Lin had led Wukan in a months-long rebellion against local authorities. Villagers kicked out party officials and police from their offices in protest against the alleged seizure of some of Wukan’s land by corrupt officials who had lined their pockets with the proceeds of selling it. Police responded by blockading the village, turning it into a cause célèbre—including in some of the feistier of China’s heavily censored media. In the end the government backed down: it allowed Wukan to hold unusually free elections and it promised to sort out the land dispute. The “Wukan model” became Chinese reformists’ shorthand for what they hoped would be a new way of defusing unrest. + +They have been disappointed. Villagers did not get their land back, or the money some wanted in lieu of it. Mr Lin, who won another landslide victory in elections two years ago, announced plans on June 18th to launch a new campaign for the return of the land. That was clearly too much for the local government: Mr Lin was promptly arrested on charges of corruption. Angry residents took to the streets again. + +Villagers in China often stage protests over land rights; local authorities usually deal with them either with force, or by promising concessions and then rounding up the ringleaders. Restoring calm to Wukan will be tougher. Because of its fame, journalists have poured in, especially from nearby Hong Kong. Local officials may be reluctant to resort to the usual thuggish tactics in front of such an audience. + +In an effort to undermine support for Mr Lin, the government has tried blackening his name. On June 21st officials released a video showing him confessing to bribe-taking. But that merely stoked the villagers’ anger. His wife, Yang Zhen, says she is certain the confession was coerced. His halting delivery in substandard Mandarin, she believes, was his way of letting villagers know this. “They are trying to deceive everyone, but no one believes it,” she says. Dozens of furious villagers went to a local school where nervous officials had barricaded themselves behind metal doors and barred windows; they kicked the doors and shouted abuse. As The Economist went to press, Wukan was preparing to embark on its sixth consecutive day of protest. + +Many residents say they have lost all faith in the local government, and that only the central authorities in Beijing will be able to find a fair solution. “They took our land. My father and grandfather farmed it, and now I have nothing. No work and no other path forward,” says a 39-year-old villager. “We have a black government, all corrupt. They cannot trick us again with more talk of the ‘Wukan model’. We need our land back,” he fumes. + +But the central government will be reluctant to cave in to the protesters’ demands. “Handling the Wukan problem well means much to the rest of China,” said Global Times, a pro-party paper in Beijing. But it warned that if the “drastic actions” of Wukan’s villagers were copied by others, China would “see mess and disturbance” at the grassroots. In a country where many seethe with grievances similar to Wukan’s, officials do not want the village to become a model for revolt. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21701164-village-famed-its-struggle-democracy-once-again-turmoil-unwanted-model/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +In Beijing’s bad books + +China’s clumsy, baffling handling of Hong Kong alienates its people + +Jun 25th 2016 | From the print edition + + + +OF THE explanations offered for the mysterious disappearance of five Hong Kong booksellers late last year it was both the most lurid and the most plausible. As Lam Wing-kee told it on his return to Hong Kong this month, he was kidnapped last October as he made what was meant to be a short visit to his girlfriend in mainland China. He was blindfolded and bundled onto a train to the port of Ningbo, near Shanghai. There he was detained for months, interrogated and forced to record a televised confession of his crime: selling banned books on the mainland. He had now decided to tell the world his story to show that “Hong Kongers will not bow down before brute force.” Some in Hong Kong show similar defiance; others see bowing down as a better option. + +Mr Lam said he could speak out because he has few ties with people across the border. The girlfriend has denounced him, as have three of his colleagues who have also resurfaced in Hong Kong (one is believed to remain in custody). They denied Mr Lam’s claim that their televised confessions were scripted. One of them, Lee Bo, also maintained that he had crossed the border of his own accord, and had not, as Mr Lam had suggested and many believe, been snatched from Hong Kong. This is the most sensitive allegation. Detaining Hong Kong citizens without trial is bad enough. But they must have known the risks of peddling scurrilous books about Chinese politics on the mainland. Kidnapping a suspect in Hong Kong, however, would be a clear breach of the agreement with Britain under which China resumed sovereignty over Hong Kong in 1997 but promised it 50 years of autonomy under the rubric “one country, two systems”. + +The booksellers’ travails feed into the climate of tetchy disgruntlement that has prevailed in Hong Kong since the failure of the big street protests of the “Umbrella” movement in 2014 to prompt China to allow democratic reform there. Unusually, Hong Kong’s chief executive, Leung Chun-ying, responded to Mr Lam’s story. He said he would write to Beijing and look at procedures for liaising with the mainland’s police. It amounted to a candid admission of the constraints his government faces. + +China’s denial of Hong Kong’s demand for more open politics is having perverse consequences. Street protest is now commonplace. Mr Lam himself led a march on June 18th to the Chinese government’s liaison office in Hong Kong. The next day, Denise Ho, a pop singer facing commercial sanctions for her outspoken criticism of Chinese policies, gave a free street-concert to hundreds of fans. Meanwhile political discourse is becoming shriller. The next election for Hong Kong’s Legislative Council is due to be held on September 4th. The council’s powers are very limited, and its composition is distorted by complex voting arrangements designed to thwart a majority for the “pan-Democrat” parties critical of China’s ruling Communist Party. But the campaign will provide a platform for the many parties that backed the aims of the Umbrella protests: to see a more democratic Hong Kong with a chief executive freely elected by Hong Kong’s people (rather than, as now, first vetted by a committee dominated by the Communists’ placemen). + +This year’s campaign, however, will also be joined by other fringe groups questioning the “one country, two systems” set-up itself. Variously describing themselves as localist, nativist or pro-self-determination, these parties champion Hong Kong’s distinctive identity. Some argue explicitly for its independence. It seems odd that such forces are still so marginal. In Taiwan, the campaign for democracy was always inseparable from that for formal independence from China. In Hong Kong it embodied the hope that China too might see democratic reform. + +In the 1980s, as Britain and China negotiated the future of Hong Kong’s people over their heads, some did call for self-determination. But in the words of one of them, Emily Lau, now chairman of the biggest of the mainstream pan-Democrat parties, they found “no echo”. Some point out that, unlike Taiwan, where only a minority have strong connections with the mainland through immigration in the past century, Hong Kong is a refugee-majority society that naturally sees the mother-country as home. So it was never given the chance of self-determination enjoyed by other British colonies. Britain said its hands were tied by the expiry in 1997 of the lease China had granted on Hong Kong’s mainland adjunct, the “New Territories”. Hong Kong Island and Kowloon, ceded in perpetuity, would be unviable without this hinterland. (Don’t tell Singapore.) China never formally recognised either the lease or the cession, but played along. + +Young passion + +Two decades after the handover, however, the gap in outlook and level of freedom between Hong Kong and China seems to be widening even as the wealth gap narrows. A new generation of activists is agitating not for freedom in China but freedom from China. A rare debate this week held at the Island School, an international high school, on whether Hong Kong needs self-determination, pitted young representatives of two of the nativist groups—Civic Passion and Youngspiration—against speakers from one of the established parties. The establishment probably won the argument, if only on the ground of feasibility: barring unimaginable changes, China is never going to let Hong Kong secede. + +Yet China should be worried that many of Hong Kong’s brightest young people, having seen the futility of trying to improve the current political system, want to replace it altogether. And not just the young: the sexagenarian Mr Lam unsurprisingly now sympathises with the call for independence. How the booksellers were treated will strengthen anti-mainland sentiment and undermine confidence in the rule of law in Hong Kong. For that reason, optimists hope it was an aberration—a security-service blunder. The alternative, that China either doesn’t care or deliberately wants to scare its critics, is even more disturbing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21701161-chinas-clumsy-baffling-handling-hong-kong-alienates-its-people-beijings-bad-books/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +The nuclear deal with Iran: Teething pains or trouble ahead? + +Fighting in Fallujah: Down, but not yet out + +Bahrain’s crackdown: Brutal king, cowardly allies + +The dogs of Gaza: If you want a friend in this town... + +Kenya: Heating up + +Nigeria and its militants: Avengers unite! + + + + + +Articles Sections Next + +The nuclear deal with Iran + +Teething pains or trouble ahead? + +The agreement to curb Iran’s nuclear activities is working, but it may be more fragile than it seems + +Jun 25th 2016 | From the print edition + + + +ON THE face of it, last July’s nuclear deal between Iran and six world powers (known as the Joint Comprehensive Programme of Action) looks to be in good shape. Last weekend Iran announced that Boeing, an American aircraft maker, is to sell 20 airliners to its national carrier for around $25 billion. That followed a deal in January to buy 118 planes worth $27 billion from Boeing’s European rival, Airbus. + +Nothing could better symbolise the transformation of Iran’s relations with the outside world than the re-equipping of its state airline with Western aircraft. However, both deals depend on the US Treasury issuing export licences (Airbus planes have many American-made parts, including engines). The approvals will probably be granted. But the uncertainty feeds a growing Iranian perception that America is using its remaining sanctions to stop Iran from getting its reward for meeting its nuclear obligations. + +On that front, the news is mostly good. A month ago, the International Atomic Energy Agency (IAEA) issued its second report on Iran’s compliance with the deal. The impression it gave was of Iran acquiescing in all the verification and monitoring procedures required. It also appeared to be meeting its commitments in terms of freezing work on its heavy-water reactor at Arak, maintaining its stock of heavy water at permitted levels and continuing to abide by agreed levels and quantities of uranium enrichment. Mark Fitzpatrick, a proliferation expert at the International Institute for Strategic Studies, says the IAEA found “little to complain about”. + +Yet some worry that the IAEA is giving Iran too easy a time. David Albright of the Washington-based Institute for Science and International Security laments a lack of technical detail in the agency’s reporting, and a consequent loss of the promised full transparency. + +Mr Fitzpatrick reckons that the absence of specifics reflects a new co-operative relationship between Iran the IAEA, and that member governments are getting more information than is being put into the public domain. Mr Albright is less confident. He thinks that the IAEA has given in to Iranian pressure for secrecy and that the White House has not pushed back. His fear is that by cutting Iran too much slack, for example over the cap on low-enriched uranium, the calculations on the time it would take from “breaking out” of the deal to producing a nuclear weapon (the deal aims for at least a year) could be affected. + +Mr Albright is particularly worried about reports that Iran’s Atomic Energy Organisation has been shopping on the sly for carbon fibre, a material it would need if it were planning to build advanced uranium centrifuges. He says: “They could be stockpiling for a surge in enrichment when the [nuclear deal] starts to expire in 10 to 15 years; or they could be planning for a breakout capacity at a clandestine facility if the deal collapses.” Mr Fitzpatrick agrees America must ensure that the IAEA provides rapid notification of any backsliding. + +For now, that seems unlikely. The costs of breakout for Iran would be very high. Yet the accusation that America is denying Iran the sanctions relief it has earned, stoked by opponents of the deal, could provide an excuse. John Kerry, America’s secretary of state, is busily encouraging European banks to finance investments in Iran, something their US counterparts are still barred from doing. He fears that if the benefits fail to materialise soon the standing of President Hassan Rohani and other reformers will be damaged. + +Still a risky place to do business + +But without cast-iron legal reassurance from Washington that its enforcement agencies will not come after them, European banks may not want to risk it. Previous sanctions-busters have been hit with multi-billion dollar fines. And business in Iran is uncertain at the best of times: corruption is rife and the Islamic Revolutionary Guards Corps has its fingers in nearly every major deal. + + + +In graphics: The implications and consequences of Iran's nuclear deal + +Iran’s neighbours are also reserving judgment about the nuclear agreement. It has removed, at least for some time, the threat of Iran as a “threshold” nuclear power. A recent report by Robert Einhorn and Richard Nephew (both former negotiators with Iran) for the Brookings Institution, a think-tank, argued that the nuclear deal had reduced the risk of proliferation in the Middle East, with nuclear “hedging”, even for Saudi Arabia, a much lower priority than before. + +But there is also a widely shared belief that the deal has if anything increased Iran’s misbehaviour in the region. The Gulf Arabs, in particular, remain convinced that Iran has only postponed its nuclear ambitions, and will use the next 15 years to develop more advanced centrifuges and missile delivery systems. + +In the short term, the greatest threat to the nuclear deal may well be Iran’s disappointment. The Iranians expected big benefits from sanctions relief; if these do not materialise, their enthusiasm may cool. Other risks lie ahead: the election of a President Trump, perhaps, or hardliners becoming even more assertive in Tehran. If Iran is found to be cheating, too, that would undoubtedly scupper everything. The nuclear deal was not a one-off event. If it is to reach its 15th birthday, it needs to be nurtured by all sides. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21701121-agreement-curb-irans-nuclear-activities-working-it-may-be-more/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Fighting in Fallujah + +Down, but not yet out + +A report from the front line in the war against Islamic State + +Jun 25th 2016 | FALLUJAH | From the print edition + + + +ON JUNE 18th Iraq’s prime minister, Haider al-Abadi, declared that his forces had regained control of Fallujah, a stronghold seized by Islamic State (IS) two and a half years ago that lies just 60km (40 miles) from the capital, Baghdad. Yet the next day the thud of mortars and rockets could still be heard inside the supposedly liberated city, and armoured convoys were still rumbling into the fray. “Daesh is still here,” said Qusay Hamid, an Iraqi special-forces major, using the Arabic acronym for IS as he waited on a sun-baked Fallujah street to move his men into battle near a mosque. + +Lieutenant-General Abdul Wahab al-Saadi, dressed in a T-shirt and black trousers, commands the battle from a plastic table on the concrete floor of a construction site that has been turned into an improvised command post. Officers radio back grid co-ordinates to Australian counterparts, who then guide American Hellfire missiles to strike IS positions in the city. + +The crash of a rocket fired towards Fallujah from a nearby sector controlled by the Iranian-backed Badr organisation punctuates the roar of fighter jets. Two years into the campaign against IS, Iraqi security forces, their Iranian-backed Shia militia allies and the American-led international coalition seem to have settled into an uneasy coexistence. The Shia militias that make up the bulk of Iraq’s “popular mobilisation forces” have been relegated to a supporting role in the fight for Sunni Fallujah, which makes political sense. “Sometimes they come after we’ve cleared the neighbourhoods and they write their own graffiti on the walls to take credit for it,” says one young special-forces fighter, already a veteran of three big battles. + +Fallujah appears to have been damaged far less than Ramadi, the provincial capital, was during a much longer battle earlier this year. In neighbourhoods cleared by special forces and now being handed over to an emergency local police force, most buildings are intact. But it will be at least six months before civilians are allowed to return home. Pockets of IS fighters remain. Neighbourhoods will have to be swept house by house for weapons and explosives. Reconnecting electricity and water will take time. + +Handling refugees will be another huge problem for the Iraqi authorities. Tens of thousands of civilians fled Fallujah as IS retreated last week. Dozens of people died in the process, either from drowning in the Euphrates river or from being hit by shells or bombs. One traumatised family being evacuated by the security forces tells of seeing three of their daughters and their mother torn apart by shelling as they tried to escape on foot. + +Despite months of planning by the Iraqi government and foreign aid organisations, the thousands who have managed to flee have been left to fend for themselves in the desert. “There was nothing here two days ago,” said Karl Schembri, of the Norwegian Refugee Council (NRC), looking out at a dusty field that is now home to hundreds of displaced families. The NRC, one of the few aid groups working in Anbar province, has described the relief effort as chaos. And these are people who have been living on dried dates for weeks, as IS fighters seized and hoarded food for themselves. “It was the only thing we could afford,” says one woman, explaining that she would grind the date stones as a substitute for flour to make bread. + +As families leave Fallujah, Iraqi security forces, relying on information from local committees, are taking their young men and older teenage boys for screening to determine whether they belonged to IS. “They have people with their faces covered come and point out who was Daesh,” says one displaced Fallujah resident, who said he was spared the investigation because he was too old. + +Some of the investigators are intent on revenge rather than justice. Human-rights groups say dozens of the young men taken for questioning have been beaten or tortured; and that some have been killed. Notably absent from the scene are Anbar’s politicians and religious leaders, many of whom waited out the conflict in the comfort of Kurdistan in the north, or in neighbouring Jordan. “We will never again trust our politicians or tribal leaders or imams,” said one Fallujah resident bitterly. “They left us here with this.” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21701084-report-front-line-war-against-islamic-state-down-not-yet/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bahrain’s crackdown + +Brutal king, cowardly allies + +The authorities in Bahrain try to crush dissent, as America and Britain look on + +Jun 25th 2016 | CAIRO | From the print edition + +Who will speak up for the sheikh? + +OVER the past decade, Britain has stripped 27 people of their citizenship on national-security grounds. Bahrain’s native population is 1% of Britain’s, but since 2014 the kingdom has revoked the citizenship of over 300 people for supposedly similar reasons. The latest is Ayatollah Sheikh Isa Qassim, regarded as the spiritual leader of the country’s Shia majority. On June 20th the Sunni-led government said he had been promoting extremism and sectarianism. He was also an outspoken critic of an increasingly ruthless regime. + +This is merely the latest example of a crackdown on peaceful dissent. On June 14th the authorities banned the biggest opposition group, al-Wefaq, having extended the prison term of its leader, Sheikh Ali Salman, from four years to nine. A day earlier they detained Nabeel Rajab, a human-rights activist. Another prominent dissident, Zainab al-Khawaja, fled the country in early June after being told that she would be rearrested. + +The government, which is dominated by the royal family, claims the opposition is sowing discord. But activists blame the authorities themselves. During the Arab spring in 2011, a large portion of the population took to the streets to demand wide-ranging political reforms. The regime, backed by Saudi Arabia and the United Arab Emirates, also Sunni-led monarchies, responded with violence. Amid calls for his overthrow, King Hamad bin Isa al-Khalifa did create a commission that documented the state’s human-rights abuses. He even made some changes, with British assistance, such as setting up a prisons inspectorate. Yet the repression continues. + +Protests are now banned in Manama, the capital, while new laws have made it easier to lock up and revoke the citizenship of critics. Ms Khawaja says she has been arrested 11 times, once for ripping up a picture of the king. Her father, Abdulhadi, a human-rights activist, was arrested in 2011 and sentenced to life in prison for plotting against the state (ie, calling for democracy). “Building 10 in Jaw prison has become known as the torture building, and I have personally been hearing the screams of the victims,” he wrote last year. + +Critics of the government are often accused of serving “foreign interests”. That usually means Iran, which officials say fomented the uprising in 2011. The claim has been debunked; but it wins support in the region. Ayatollah Qassim and al-Wefaq are accused of having ties to foreign powers. Al-Wefaq, which is mainly Shia and seeks a constitutional monarchy, upset the regime by boycotting the general election of 2014. + +Bahrain paid millions of dollars to Western PR firms to clean up its image after 2011. Now it seems contemptuous of foreign opinion. After the authorities prevented opposition members from attending a meeting at the UN this month, the body’s high commissioner for human rights said that “repression will not eliminate people’s grievances; it will increase them.” Bahrain’s foreign minister responded on Twitter: “We will not waste our time listening to the words of a high commissioner who has no strength or power.” + +Juan Méndez, the UN’s special rapporteur on torture, has said that Bahrain considers itself shielded from scrutiny due to its relations with Britain, which is building a naval base in the kingdom, and America, which keeps its Fifth Fleet there. Last year America lifted restrictions on arms sales to Bahrain, in place since 2011, citing progress on human rights. But at least it has condemned the recent crackdown. When Philip Hammond, Britain’s foreign secretary, visited the kingdom last month he wrote approvingly of its “commitment to continuing reforms”. + +America and Britain view Bahrain as a steady ally in a tough neighbourhood. But the kingdom’s stability may be illusory. The state’s actions have provoked the opposition, in particular Shias, who have long complained of discrimination. Left with no other choice, some may become violent or even turn to Iran for help. Bahrain may be bringing on itself exactly what it claims to be preventing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21701147-authorities-bahrain-try-crush-dissent-america-and-britain-look/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The dogs of Gaza + +If you want a friend in this town... + +A new vogue for an unclean animal + +Jun 25th 2016 | JABALIA | From the print edition + + + +FOUR years ago, when Muhammad Abu Khair took in his first dog, it caused a family feud. His daughter brought home a stray that was wandering the streets of Jabalia, a district of Gaza City. He was unhappy about keeping it, a common feeling in Gaza’s conservative society: Islam views dogs as unclean and frowns on owning them as pets. But he relented, hoping to make his daughter happy. His relatives were not so understanding. For a while they stopped visiting the house. + +Today he struggles to keep the visitors away. A group of enthusiasts organised a dog show in a public park in February, the first of its kind in Gaza. The event was covered in local media, and the pictures set off a canine craze across the territory. A Facebook group called “German Shepherds of Gaza,” which posts photos and information about different breeds, has added more than 70,000 members. + +Dozens of owners even hope to earn a living as breeders, though dogs are an impossible indulgence for many in Gaza, where nearly half the population of 1.8m is unemployed and 75,000 families are still internally displaced after a devastating 2014 war with Israel. A small puppy can fetch $500, a larger breed twice as much, if you can find one to buy. + +The agriculture ministry has had no budget for animal vaccines for the past five years, so some pets are getting ill. Rabies is rare, but owners worry about parvovirus, a gastrointestinal bug that is often fatal to puppies. Hamas, the Islamist group that controls Gaza, does little to help; it won’t even issue licences or health certificates for dogs. Some imams try to remind the faithful about the religious prohibition. + +Their edicts, though, are no match for the widely-shared photos of dogs frolicking on the beach. Reliably cheerful and blissfully unaware of history or politics, the dogs offer Gazans a rare escape from the grimness of their lives. + +Mr Abu Khair now owns seven. Most live on the roof of his building, where he built wooden kennels with thatched roofs. He says they helped him through a long bout of depression after he lost his job as an engineer. His favourite, a golden retriever named Mickey, was born in Israel, only to slip across the heavily fortified border into Gaza. “All of us want to go in the other direction,” Mr Abu Khair jokes. As for Mickey, “he gives us a lot of positive feelings. That’s hard to find in Gaza today.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21701146-new-vogue-unclean-animal-if-you-want-friend-town/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Kenya + +Heating up + +A year of increasingly nasty politics + +Jun 25th 2016 | NAIROBI | From the print edition + + + +WHAT is hate speech? In Kenya, a country where most educated people speak three languages—English, Swahili and one of around 40 tribal languages—it is a question people are grappling with. This month Moses Kuria, an MP from Jubilee, the governing party, was recorded appearing to call for Raila Odinga, Kenya’s main opposition leader, to be assassinated. Mr Kuria, from the Kikuyu tribe, said that Mr Odinga should “eat corn”. In Kikuyu, “corn” is slang for bullets, but Mr Kuria says he was misinterpreted. + +Whatever he meant, Mr Kuria’s words have landed him in jail on charges of “hate speech” and inciting violence, together with seven of his colleagues—three others from the government and four from the opposition. All eight are accused of stoking ethnic tension ahead of Kenya’s presidential election. Polling day is still over a year away, but the rhetoric is already heated. + +The government now seems determined to calm things down: the arrests came as President Uhuru Kenyatta agreed to negotiate with the opposition about the make-up of the Independent Electoral and Boundaries Commission (IEBC). That brought an end to a month of bloody protests. But while peace has resumed, few are confident that it will last. + +After the 2007 election, perhaps 1,200 people were killed. The vote was extremely close: Mr Odinga came within two percentage points of the winner, the then-president Mwai Kibaki. Allegations that it was rigged circulated on local radio stations, helping to spark the violence. Afterwards, Mr Odinga became prime minister in a government of national unity intended to heal the divisions. + +In 2013, however, he lost comprehensively. Instead, Mr Kenyatta, like Mr Kibaki a Kikuyu, came to power by building an alliance with William Ruto, a politician from the Rift Valley who had been part of the opposition in 2007. Their coalition, which brought together voters from Mr Ruto’s Kalenjin-speaking people with Mr Kenyatta’s supporters, won comfortably. + +Despite some tensions between the two, Mr Kenyatta and Mr Ruto are fighting together again this time—and most people expect them to win. But Mr Odinga has been trying to cut into Mr Ruto’s base. Two prominent Kalenjin politicians, Isaac Ruto, a governor in the Rift Valley (no relation to William) and Gideon Moi, the son of a former president, Daniel arap Moi, are supporting the opposition. + +Added to that is the dispute over the election commission. Over the past month, supporters of Mr Odinga have marched through Nairobi and other cities protesting at corruption in the IEBC. The police have responded heavy-handedly—according to Human Rights Watch, an NGO, six people were killed by gunfire in the west of the country in protests in late May and early June. Some suspect Mr Odinga’s real aim is to discredit the commission before an election he is likely to lose. + +For the moment, the dispute has cooled. Diplomats from Britain and America stepped in and offered to mediate between the government and Mr Odinga about how to reform the IEBC. Protests are on hold until the negotiations finish. But there is still a year until the election. And in a country where government is still primarily a source of largesse, the costs of losing are far too high. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21701162-year-increasingly-nasty-politics-heating-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nigeria and its militants + +Avengers unite! + +Violence in the Delta has cut oil output by a third. It may get even worse + +Jun 25th 2016 | YENAGOA | From the print edition + + + +IN THE Niger Delta, a gun is an investment that yields excellent returns. Jamnogo Blessing, a gang member, recently turned up in Yenagoa, a turbulent city in the oil-pumping Niger Delta, to buy a stash of weapons from militants who hung up their boots seven years ago. “The only language the government listens to is violence,” he says. Once rearmed, his gang will attack oil companies operating around his home town of Idheze, he adds. + +An army of unemployed young men like Mr Blessing is threatening to rise up in southern Nigeria and blow up oil pipelines. The industry, on which Nigeria depends for nearly all government revenues, could be crippled, as it was for much of the early 2000s. Production has already fallen to about 1.5m barrels a day (b/d), down from 2.2m last year, as attacks gather pace. This has helped push the global oil price back up to almost $50 a barrel. And it could spell disaster for President Muhammadu Buhari, who is trying to stave off recession. His budget assumed almost double that level of output this year. + +Responsibility for much of the damage has been claimed by a mysterious and skilful band called the Niger Delta Avengers. Earlier this year they set off an explosion six metres under water, cutting output by 250,000b/d. Foreign oil firms are giving up on repairs, since the saboteurs just strike again. Local producers who rely on pipelines have been forced to turn off the taps. “We’ve had not a drop of oil for four and a half months,” laments Kola Karim, the boss of Shoreline Energy, one such group. + +The Avengers say they want more local control of resources. This is what gunmen in the Niger Delta always say. And by “local”, they mean they’d like a taste of the money themselves. “It’s just old wine in a new jar,” says Jonjon Oyeinfe, an activist. The last set of militants more or less stopped fighting after they were bought off with an amnesty in 2009, and a monthly stipend of 60,000 naira each (about $400 at the time). That is a huge sum in a region where most people live on less than a dollar a day, and gives other men a reason to take up arms. + +Many Niger Deltans sympathise with the rebels. Until last year a local man, Goodluck Jonathan, was president of Nigeria and showered goodies on his home region. Mr Buhari, who hails from the north, has cancelled a number of pipeline security contracts that had been given to southerners, including Mr Tompolo, and slashed the budget for paying off ex-fighters by 70%. Unemployed former rebels moan that it has been four months since they got their last monthly stipend. They are also furious that a proposed oil-law amendment would scrap the royalty that went to local communities. “Right now everybody in the Niger Delta is an Avenger, because everyone is angry,” says one former fighter, sitting by a swimming pool. Other rebel groups with comic-book titles such as the Niger Delta Suicide Squad seem to pop up almost every day. + +Some of their complaints are fair. Nigeria’s oil business is a labyrinth of patronage and corruption, where politicians skim off profits and cartels steal hundreds of millions of barrels every year. Oil pollution kills fish and impoverishes fishermen. Yet there is no reason to think that it would be better managed if control were devolved to the Delta. For years a hefty 13% of oil revenue has been pumped back into the producing states, but governors have generally squandered it. Another war would only make matters worse. “This will not stop until they do things right,” says the retired militant. “The time will come when Nigeria is producing no oil at all.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21701165-violence-delta-has-cut-oil-output-third-it-may-get-even/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Spain reruns its election: Out, caste + +Russia’s Olympic ban: Doping and punishment + +The EU’s Russia sanctions: Small carrot, medium stick + +Turkey’s embattled liberals: Radiohead and Ramadan + +Charlemagne: Commented out + + + + + +Articles Sections Next + +Spain reruns its election + +Out, caste + +The rise of Podemos and the resistance of Rajoy + +Jun 25th 2016 | SEVILLE | From the print edition + + + +IN THE shade of a futuristic curving roof of wood and concrete slats, some 2,000 people have gathered at the Plaza de la Encarnación in the heart of Seville for a campaign rally by Unidos Podemos (“Together we can”), Spain’s new left-wing party. Among them are Luis Maroto, a teacher, and Reyes Santana, a pharmacist, both in their 30s, and their 14-day-old baby, Rafa. Ms Santana used to vote for the centre-left Socialists, who have governed Spain for 21 of the past 34 years. Unable to open her own business, she still works in her mother’s pharmacy. This time her vote, and that of Mr Maroto, will go to Podemos. “They have restored hope,” he says. + +If the polls are right Podemos, formed only in 2014, will overtake the Socialist party in the election on June 26th to become the main force on the Spanish left. It will thus become the chief adversary of the centre-right People’s Party (PP) of Mariano Rajoy, the prime minister since 2011. That would present Pedro Sánchez, the Socialist leader, with an agonising choice: allow the PP to remain in power, or play second fiddle to Pablo Iglesias (pictured), Podemos’s leader, in a left-wing government. The first option would grate with the Socialists’ traditional supporters. But the second would horrify business and the Socialists’ own regional leaders. They fear Spain would face the sort of severe economic reversals that befell Greece when it put the far left in power last year. + + + +Spain ushers in an era of coalition government + +In a general election last December the rise of Podemos and of Ciudadanos, a new liberal party, upended a stable two-party system. The PP won the most seats, but Mr Rajoy lost his parliamentary majority. Mr Sánchez tried to form a centre-left coalition. He reached agreement with Albert Rivera, the leader of Ciudadanos. But his talks with Mr Iglesias foundered, prompting a new election. + +Spain is not Greece. Its economy grew by 3.2% last year, more than that of any other large country in the Eurozone; it added 450,000 jobs in the second quarter of this year. The unemployment rate is down to 20%, from 26% in 2013. Household spending is reviving. That is why the PP is again likely to come first. Mr Rajoy claims credit for the recovery, and points to his experience compared with the other parties’ young leaders. Coming to office in the depth of recession, his government cut the fiscal deficit, cleaned up the financial system and reformed a rigid labour market. + +But years of recession and austerity left deep scars in society. Income per person is still well below its peak of 2008. Those who find jobs face lower wages and less security. The national statistics institute says that 14% of the population has insufficient income to last until the end of the month. + +In the eyes of many younger Spaniards, the PP and the Socialists share the blame. Both have suffered corruption scandals (the PP more so) which, though minor compared with serious kleptocracies, are rendered intolerable by austerity. That has given rise to a political generation gap. More than half of under-35s voted for the two new parties in December; most over-54s voted for the traditional ones. + +Podemos, in particular, has tapped the frustration of the young. Mr Iglesias has redefined Spanish politics as a struggle against la cásta (“the caste”), by which he means the leaders and hangers-on of the traditional parties who colonised institutions from the courts to the savings banks and the boardrooms of corporate Spain. Last year Podemos found allies among nationalists and leftists in Catalonia, Valencia and Galicia. In May, Mr Iglesias agreed to merge with the United Left (the former Communists), which won 3.7% in December. The electoral system may reward the merged Unidos Podemos (UP) with some 20 extra seats, overtaking the Socialists. + + + +UP promises an end to austerity and an extra €15 billion ($16.9 billion) a year of public spending, even though Spain still has a large fiscal deficit and public debt, of 5.1% and over 100% of GDP respectively. It would increase income tax on those earning above €60,000 and on companies. Podemos’s leaders, a group of university political scientists, advised Venezuela’s Hugo Chávez and are friends of Alexis Tsipras, Greece’s leftist prime minister—links they now play down. Mr Iglesias has rebranded Podemos’s ideology as “new social democracy”, in an attempt to steal the Socialists’ clothes. Though the liturgy of UP’s campaign is that of the Ibero-American far left, it has banned red flags and other communist touches that might cost it votes. + +Its ever-changing programme is not what defines Podemos’s leaders. “What matters to them is power and the message, and ‘when we’re in power we’ll see what we do’,” says José Rodríguez de la Borbolla, a former Socialist leader. As Mr Iglesias puts it, “in Latin America we learned that it’s possible to win.” In his negotiations with Mr Sánchez, he demanded control not of health and education but of hard power: the interior and justice ministries, state television and the intelligence service. Many in Spain worry that this revealed authoritarian tendencies. But others trust in Spanish institutions. “We have democracy. In four years’ time they would go if they make mistakes,” says Mr Maroto, the teacher. + +While the Socialists’ base is among the poor and the old, Podemos represents “an impoverished, fed-up, tired middle class” as well as a generational transition, says Xavier Coller, a sociologist at Pablo de Olavide university in Seville. “We are immersed in a historic process of political change,” Iñigo Errejón, the deputy leader of Podemos, told his fired-up supporters in Seville. “The question is whether they [the traditional parties] will be able to delay this…for four more years.” + +Mr Rajoy’s riposte is a grand coalition of “moderate” parties. If such a coalition pushes through reforms—of the judiciary and of regional financing—it might help to restore the credibility of the old order. But Mr Rivera says his condition for allowing the PP to govern is that Mr Rajoy himself steps down. And Mr Sánchez refuses to contemplate any agreement with the PP. + +A lower turnout this time may give the PP and Ciudadanos a few more seats. Breaking the deadlock may even require a third election. A grand coalition could buy time for economic growth to heal some social scars. But if Mr Errejón is to be proved wrong, it will take a much bigger effort from the PP, and especially the Socialists, to reconnect with a lost generation. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21701140-rise-podemos-and-resistance-rajoy-out-caste/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Russia’s Olympic ban + +Doping and punishment + +Russian athletes’ drug use gets their entire team disqualified + +Jun 25th 2016 | MOSCOW | From the print edition + + + +WHAT does the International Association of Athletics Federations (IAAF), the governing body of global track and field sports, have in common with the Nazis? According to Dmitry Kiselev, Russia’s propagandist-in-chief, they both believe in collective punishment: the Nazis “knowingly took innocents prisoner and shot them for the conduct of others”, while the IAAF last week extended a ban on Russia’s athletics federation for doping, barring the team from this summer’s Olympics. On June 21st the International Olympic Committee (IOC) upheld the ban, while leaving open the possibility that athletes who can prove they are clean might be allowed to compete. + +The initial IAAF ban followed a report last year from the World Anti-Doping Agency (WADA) that detailed a “deeply rooted culture of cheating” in Russian sport. WADA’s findings have been reinforced by whistleblowers: a former director of Russia’s anti-doping laboratory claims that a secret state-run programme hid drug use by Russian champions at the 2014 winter Olympics in Sochi. (The Kremlin calls this “slander”.) Recent re-examinations of samples from the 2008 Beijing and 2012 London games revealed that even more Russian athletes were dirty than had been realised. + +After initial denials, Russian officials opted for a hasty clean-up, hoping to avoid a ban. The minister of sport, Vitaly Mutko, apologised and introduced new anti-doping measures. A Western public-relations firm, Burson-Marsteller, was hired. But the IAAF was not persuaded. Barring an entire team from the Olympics for rule violations is extremely rare. “This is about a Russian system that has failed...and there need to be consequences,” explained Rune Andersen, who headed the IAAF inquiry. + +Yet where international sport sees a disregard for the rules, Russia sees a Western plot. Aleksei Pushkov, chairman of the Russian parliament’s foreign affairs committee, called the IAAF decision “revenge for Russia’s independent foreign policy”. Yelena Isinbaeva, a Russian pole-vaulting champion, charged the IAAF with discriminating against Russians just because they are Russian. One nationalist Duma deputy even suggested hosting a parallel Olympics in Russia. He did not specify who would oversee the drug testing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21701138-russian-athletes-drug-use-gets-their-entire-team-disqualified-doping-and-punishment/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The EU’s Russia sanctions + +Small carrot, medium stick + +Blocking investment has only slightly restrained Russia + +Jun 25th 2016 | ST PETERSBURG AND WASHINGTON, DC | From the print edition + + + +AT last week’s St Petersburg International Economic Forum, Vladimir Putin’s flagship economic conference, a pair of guests raised Russia’s increasingly fervent hopes for a rapprochement with the European Union. Matteo Renzi, Italy’s prime minister, regaled the crowd with references to shared cultural history. The European Commission’s president, Jean-Claude Juncker, chided Russia for its aggression in Ukraine, but also spoke of building bridges. Nonetheless, when the sanctions come up for re-approval at the end of this month, the EU looks set to extend the toughest ones until January 2017. + +The EU is holding the line on sanctions with strong backing from Germany, despite the usual squabbling. But questions remain about their effectiveness. Some Western critics say the sanctions merely allow American and European governments to show that they are doing something, without changing Russia’s behaviour or helping to stabilise Ukraine. + +American diplomats argue that the sanctions deterred Russia from seizing more Ukrainian territory in 2014. In fact, new offensives were launched long after the sanctions were in place. More importantly, Russia’s goal in the Donbas, unlike in Crimea, was not to seize territory. Rather, it sought to destabilise Ukraine, showing both its own people and other former Soviet republics that any revolt would be followed by bloodshed. + +One goal of maintaining sanctions now is to keep up pressure to implement the Minsk peace accord for eastern Ukraine. Yet Russia has done little to end the conflict. America’s chief diplomat on the issue, Victoria Nuland, is meeting officials in Kiev and Moscow this week, but the process remains frozen. The Minsk format, says one senior American official, provides Russia with a framework to change its policy. But the Kremlin shows no sign of doing so. + +Another stated purpose of the sanctions is to convince Mr Putin’s inner circle to persuade him to moderate his policies. Yet asset and travel bans on influential individuals have only reinforced Russia’s fortress mentality. Bans on technology transfers may hurt the oil industry in the long run, but they have yet to bite: Russian oil firms reported record output in 2015. + +Most economists agree that the sanctions matter far less than the collapse in oil prices. Evsey Gurvich and Ilya Prilepsky of Moscow’s Economic Expert Group estimate that cheaper oil cost the Russian economy more than three times what sanctions did. The rouble’s performance against the dollar tracks global oil prices; it has had little correlation with sanctions. + +The most effective sanctions are those restricting lending to key Russian banks and companies. Their deliberate vagueness has a ripple effect: investors refuse to finance even firms that are not directly named. One foreign bank’s compliance department approved only one of 20 deals it closed. Even Chinese lenders, who Moscow hoped would help fill the vacuum left by the West, have been reluctant. The Russian government, which does not fall directly under sanctions, had trouble raising funds last month during its first bond offering since 2013, as Western governments pressured banks not to take part. The Kremlin has been pushing import substitution, in part by imposing its own “counter-sanctions”—import bans on Western food. But the results have been extremely limited, mainly to agriculture. + +What the Russian economy really needs is investment. Foreign direct investment has collapsed (see chart). Yet even sanctions relief might not revive Russia. The World Bank reckons that lifting them would provide only a 0.9% boost to GDP in 2017. Their effect on Russian policy may be paradoxical: the war in Ukraine was partly Mr Putin’s answer to a slowing economy at home. Most importantly, the Kremlin still believes that Ukrainian ineptitude, European divisions or an electoral victory by Donald Trump could bring an end to sanctions all by themselves. While Russia entertains such hopes, sanctions alone will not tame its behaviour. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21701184-blocking-investment-has-only-slightly-restrained-russia-small-carrot-medium-stick/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Turkey’s embattled liberals + +Radiohead and Ramadan + +Islamists are making secular Turks nervous + +Jun 25th 2016 | ISTANBUL | From the print edition + +Fighting for the right to rock + +ON JUNE 17th Radiohead, a British rock band, played an unexpected cameo role in Turkey’s increasingly bitter conflict between secularists and zealots. About two dozen men, some armed with pipes, stormed an Istanbul record shop where fans of the group had gathered to listen to their new album. Incensed by the sight of people drinking beer outdoors during the Muslim fast of Ramadan, the attackers pelted them with glass bottles. “We will burn you in there,” one yelled. + +Radiohead released a statement deploring the violence. Turkey’s president, Recep Tayyip Erdogan, suggested both sides were to blame: “Using brute force to interfere is as wrong as organising an event spilling onto the street during Ramadan.” The next evening in Cihangir, a chic neighbourhood up the hill from the record shop, hundreds of people protested against the attack, which they linked to Mr Erdogan’s pandering to his religious base. They were met by riot police. “Whether I choose to drink is my business,” said Baris Canyazar, one of the young protesters, his eyes smarting from tear gas. “But we are under siege.” + +Until 2002, when their votes propelled Mr Erdogan’s Justice and Development (AK) party into power, Turkey’s conservatives complained of being consigned to second-class status by the country’s secular establishment. Today, it is secularists and liberals who feel the government is trampling on their way of life. Mr Erdogan has pledged to raise “a pious generation”; religious schools have multiplied. Earlier this year, the AK speaker of parliament called for an Islamic constitution. Other party members have campaigned to convert Hagia Sophia (originally a Byzantine church, then a mosque, now a museum) back into a mosque. Repeated tax increases on alcohol have sent prices skyrocketing. + +Turkey remains nominally secular, and Islamic extremism is far from widespread. The share of Turks who support sharia rule has not increased much over the past decade, hovering near 10%. Per capita, Turkey is believed to have been the source of fewer Islamic State (IS) fighters than many European countries. + +But government rhetoric has emboldened the bigots. Mr Erdogan regularly denounces opponents as traitors, and sometimes as atheists. Courts try people for criticising Mr Erdogan, but turn a blind eye to Islamists who preach violence. When extremists vowed to disrupt Istanbul’s gay pride parade, the local governor responded by banning the parade. A few dozen human-rights activists defied the ban; police sprayed them with rubber bullets. + +Pro-AK pundits ridicule Cihangir as a sheltered ghetto of wealthy liberals and expats with tiny dogs. Yet there are signs that non-hipsters, too, are holing up in enclaves, whether religious or secular, across the country. One study this year found that 76% of Turks do not want people with different political convictions as neighbours. + +Mr Erdogan thrives on such divisions. He has shored up nationalist votes by stoking the conflict in the Kurdish south-east, which has killed over a thousand people and forced 500,000 to flee since last summer. A day after the attack on the record shop, he revived a mothballed plan to turn Gezi Park, one of the few green spaces in central Istanbul, into a replica of an Ottoman barracks that once stood there. The gesture was a thumb in the eye of secular civil-society types, who in 2013 staged large protests against the plan. Mr Erdogan accused them of conspiring with Turkey’s enemies to foment a coup, then tear-gassed them off the streets. Eight people died in the unrest. As long as the president exploits Turkey’s culture wars for political gain, they will not subside. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21701183-islamists-are-making-secular-turks-nervous-radiohead-and-ramadan/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Commented out + +Europe must rediscover the virtues of civil political debate + +Jun 25th 2016 | From the print edition + + + +“NEVER read the comments” is useful advice. It is rare for the discussions that take place underneath online articles to resemble Socratic quests for truth. Instead, warring antagonists stake out opposing positions and complex political debates are reduced to a stream of insults and vitriol. + +Easy enough to ignore. But what to do when life starts to resemble the comments box? Exhibit A is the United States, where polarisation has poisoned politics, gummed up lawmaking and bestowed Donald Trump upon the world. In Europe, by contrast, multiparty systems, consensual traditions and memories of war have long mitigated against polarisation. But here, too, the air has begun to grow foul. + +Start with the growing fashion for referendums, which by their nature force voters into opposing tribes. The Brexit campaign has been a carnival of bad-tempered distortion and exaggeration; even the brutal murder one week before the vote of Jo Cox, an anti-Brexit MP, failed to shame many partisans into dialling down the invective. Greece’s quixotic referendum on a bail-out offer one year ago set the country’s pro-European elite on a collision course with the majority, whose resounding Oxi (“No”) was promptly ignored by the rest of the euro zone. Later this year a referendum on constitutional reform in Italy threatens to unsettle the delicate mood, not least because Matteo Renzi, the prime minister, has promised to quit should he lose. + +The British and Greek referendums were held to heal divisions in ruling parties. Neither worked: Greece’s governing party split, and the cleavages among Britain’s Conservatives gape more widely than ever. Worse, they sharpened differences among voters and made arriving at compromise harder. Locked inside their respective echo chambers, particularly on social media, usually even-handed commentators lost their bearings. Straw men bestrode the landscape, and paranoia and conspiracy theories flourished. One British poll found that one-fifth of voters suspected intelligence agents of secretly working to keep Britain in the EU. It will be difficult to pick up the pieces after all this. + +But it does not take referendums to entrench difference. Since winning office (on a minority vote) last October, Poland’s nationalist government has taken to dismissing opponents as communists, thieves or vegetarian cyclists. In Spain, which holds an election on June 26th, Podemos, a surging leftist party, urges voters to wrench control from la casta, the supposedly kleptocratic elite of bankers, politicians and media barons. Most worrying is the polarisation in Turkey, where President Recep Tayyip Erdogan, backed by toadying advisers and belligerent state media, hisses accusations of treachery at anyone who dares oppose his government. Politics shrinks to a binary choice: for or against? + +More secure democracies have not been spared. The refugee crisis in countries like the Netherlands and Germany has at times resembled another referendum: with refugees or against them? Germany’s most recent elections, a clutch of regional votes in March, were interpreted in precisely this fashion. Some saw in the success of the Alternative for Germany (AfD), an anti-immigrant party, a sign that Germans had turned decisively against Angela Merkel’s open-door policy. Others disagreed, noting that politicians who backed Mrs Merkel’s position also did well. Though the atmosphere in Germany has calmed as the arrivals have slowed, a senior member of the Green Party recently felt obliged to remind supporters that not all AfD voters were Nazis. + +This points to a fresh axis of division in many countries: between mainstream parties and populist challengers who seek to break their stranglehold. For Marine Le Pen in France, the main political cleavage today is between “patriots”, of left or right, and “globalists”. Such rhetoric is echoed in other European right-wing populist parties, several of which convened last week in Vienna for a “Patriotic Spring” summit where they slammed Euro-elites, called for restrictions on immigration and urged Brexit. + +The populist challenge has forced mainstream politicians into a defensive crouch, says Cas Mudde of the University of Georgia. Former antagonists now share a common purpose: to keep the newcomers out. Worse, this can lead to a self-righteous form of politics in which neither side feels able to compromise. Identity politics presents a similar conundrum. Many campaigners for Scottish independence defeated in the 2014 referendum took the loss to heart; today over half the supporters of the pro-independence Scottish Nationalist Party say that they consider political attacks on the party to be personal insults. + +Can’t we all just get along? + +Blame social media, blame lazy elites, blame the collapse of trust in institutions: the edges of politics have sharpened for many reasons. That is no excuse for inaction. Perhaps the most urgent task is to establish the contours for debates on immigration. These will vary: concerns about EU migrant workers in Britain have little to do with Germany’s agonies over refugees. But the temperature must be turned down everywhere. Sceptics should allow that welcoming migrants does not violate the precepts of patriotism. Advocates might accept concerns about identity and social change as legitimate, rather than reducing migration to an economic discussion (or, worse, dismissing opponents as xenophobes). The end of the Brexit campaign is a chance for Europe’s leaders to take control of the conversation from the populists. + +If such a plea sounds naive, Charlemagne accepts the charge. Democratic politics must be a contact sport, and blows will be landed. But today’s antagonists are talking past one another and losing interest in the middle ground that most voters still occupy. If there are lessons from Britain’s miserable referendum campaign, let them be this: persuasion trumps browbeating, arguments are better than “narratives”, and compromise need not mean capitulation. Oh, and never read the comments. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21701139-europe-must-rediscover-virtues-civil-political-debate-commented-out/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Working poverty: When a job is not enough + +Born out of his time: Andy Murray and tennis grand slams + +Summer exams: Books versus football + +Bagehot: Whitehall, Inc. + + + + + +Articles Sections Next + +Working poverty + +When a job is not enough + +The number of working poor is growing. Blame high house prices, low productivity and too little full-time work + +Jun 25th 2016 | From the print edition + + + +“WORK remains the best route out of poverty,” the British government argues. The hourly minimum wage for workers aged 25 years or more now stands at £7.20 ($10.60), worth £252 a week to someone who works 35 hours. Unemployment benefit for the same age group is only £73.10 a week at best but Britain is a nation of strivers, not skivers. More working-age people are economically active than before: the employment rate, at 74%, is the highest ever and unemployment, at 5%, is near historical lows. + +All this, you might think, should mean fewer poor people. Not so, it seems. The official measure of “absolute” poverty includes all those in households with income less than 60% of the national median in 2010-11, in constant prices (around £280 a week for a couple with no children today). In calculating absolute poverty it is usual to look at what income remains after rent or mortgage payments; this “after-housing-costs” measure is about £240 a week now. + +Though more Britons than ever before are working, the rate of absolute poverty after housing costs has drifted up over the past decade (see chart). The composition of poor households has also changed. In the early 2000s about 40% of absolutely poor people lived in “working” households, which included people in some sort of employment. Today over half of the poor do. The effect on children, especially, is dismaying: after a sharp fall in the 2000s, absolute child poverty is rising. + + + +Admittedly, the growth of in-work poverty looks a bit worse than it is. There has been a stunning improvement in the lot of the elderly. As the chart shows, the proportion of pensioners in absolute poverty has fallen from 50% in the early 1990s to about 15% today. Oldies enjoy a generous state pension: they are protected by a “triple lock”, which ensures that pensions rise along with prices, earnings or by 2.5%, whichever is higher. Increases in other welfare benefits have helped oldsters too, and they have done better out of private pension schemes than their offspring are ever likely to do. As poor pensioners have become fewer, people in working households constitute an ever-larger chunk of Britain’s poor. + +Yet this is not just a statistical trick: Britain’s workers really are struggling. By the absolute-poverty measure, the number of people in working-poor households has grown by more than 2m over the past decade, a rise in the rate of over one-quarter. Even among households in which all wage-earners have full-time work the proportion in poverty has risen over the period. For parents in full-time work the rate of absolute household poverty has increased from 5% to 8% in the past decade. + +It is hard to pin the rise in working poverty entirely on the government’s austerity programme. After all, the share of non-retired workless families who are in absolute poverty has fallen in recent years. This is a group that relies heavily on state handouts. + +A better explanation must include the soaring cost of housing. Since the depths of the recession in 2009, the average price of a home has increased by a tenth in real terms. In London, where about 13% of the population lives, it has risen by around 50% over the same period. On average London tenants now pay about a third of their disposable income on rent, up from a quarter a decade ago. + + + +Another reason for the swelling ranks of the working poor is the labour market itself. The first difficulty is the relative scarcity of full-time jobs. Though the economy has been growing for six years, many people—particularly those at the bottom end of the labour market, whose skills are least in demand—do not work as many hours as they would like. About one in every 25 people in employment work part-time even though they would prefer full-time employment, up from one in 40 before the recession. Analysis by the Institute for Fiscal Studies, a think-tank, suggests that 21% of employees in the bottom quarter of wage-earners are in “relative” poverty (ie, receive less than 60% of the current median income) if they work at least 30 hours a week. The percentage rises to 28% if they work fewer than 16 hours a week. + +The second difficulty is that median hourly real wages are still 7% below their pre-recession level. This is largely because of measly growth in productivity. In its most recent forecast, in March, the Office for Budget Responsibility, a government watchdog, sharply cut its forecast for future productivity increases. One positive development is that wage growth at the low end of the earnings distribution has outpaced the median in recent years, thus helping reduce relative poverty. + +There are few signs that any of this will change soon, even though the government talks up its poverty-busting measures. Most important among them is the “national living wage” (NLW), which was introduced in April. By 2020 minimum hourly pay will be about £9.00, or 60% of projected median earnings. That will boost overall pay by an estimated £4 billion, according to official estimates. The government has chosen the level of the new NLW carefully. By pushing up wages to at least this level it implies that all workers could escape from relative poverty. + +All right for some + +In reality, however, the NLW is a poor way of dealing with working penury. The new minimum wage is likely to cause some rise in unemployment. Those workers priced out of the labour market will mostly be poor and low skilled. Among those who stand to gain, meanwhile, are second earners in high-income families; many of the poorest Britons do not work at all. A household in the seventh income decile (ie, nearer the rich end of the spectrum) will benefit three times as much as someone in the bottom decile, according to the Resolution Foundation, a think-tank. + +The distributional effects of the new living wage are especially worrying given other measures advocated by the government. The pledge to shave £12 billion from the working-age welfare bill by 2020 will hit the poorest hard. Even if the £4 billion in extra pay expected under the NLW went to the very same people, it could not offset these cuts. This is no time to work your way out of poverty in Britain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21701216-number-working-poor-growing-blame-high-house-prices-low-productivity-and-too-little/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Born out of his time + +Andy Murray and tennis grand slams + +Jun 25th 2016 | From the print edition + + + +Pity Andy Murray, Britain’s number one tennis player and the world’s number two. Another Wimbledon tournament begins on June 27th and he is far from a shoo-in to win it. His overall record is impressive. He has won two grand slams (including Wimbledon in 2013) as well as an Olympic gold medal, and he regularly makes at least the final four in big tournaments. Yet his conversion rate of grand-slam semi-finals to victories, at 19 to two, is the lowest in the modern game (see chart). It is his misfortune to be playing at the same time as outperformers like Roger Federer, Rafael Nadal and Novak Djokovic, whom he has faced in seven of his ten finals. In any other era he might have been at least a John McEnroe. Just not this one. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21701215-andy-murray-and-tennis-grand-slams/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Summer exams + +Books versus football + +A tricky exam season for young Muslim football fans + +Jun 25th 2016 | From the print edition + + + +ON THE evening of June 20th, England and Wales played their final matches in the opening stages of Euro 2016, a big football tournament, both winning through to the next round. The following day pupils sat a crucial history GCSE, an exam taken at age 16. GCSE results influence whether children make it to university two years later. Research has shown that their chances of doing well in the exams are harmed by the timing of such tournaments. + +In the battle for a 16-year-old’s attention, football trumps maths and history, meaning that results suffer in years with big football competitions. Since 1998 the average percentage-point increase in the number of pupils achieving five good grades at GCSE has been only 1.1 in World Cup or European Championship years, compared with 1.5 in years without. A study by academics at the University of Bristol in 2014 found that the negative impact was “large and significant” for all pupils, says Simon Burgess, one of the authors: on average, students do about half a grade worse in one GCSE than expected. Boys and those from poor families fare especially badly. + +Muslim pupils also face a difficult task this summer. GCSEs this year fall during Ramadan, the holiest period in the Muslim calendar, which means that many children take the exams while fasting by day. The Association of School and College Leaders, a trade union, has recommended that fasting pupils have access to resting space and cool classrooms. Some exams have been moved to the morning. Such measures are welcome, says Ibrahim Mogra of the Muslim Council of Britain, but most children will take the situation in their stride anyway. “Fasting in challenging circumstances is seen as part of being a Muslim,” he says. + +In any event pupils from Bangladeshi and Pakistani backgrounds are doing increasingly well in their GCSEs. Educationalists now fret about the performance of poor white boys. Changing exam dates would help. So would less successful British football teams. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21701218-tricky-exam-season-young-muslim-football-fans-books-versus-football/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Whitehall, Inc. + +From its politicians to its public services, Britain’s state is a booming international brand + +Jun 25th 2016 | From the print edition + + + +WALK down Whitehall and it is not hard to imagine its imperial heyday. Stern, grey-stone ministries loom over the buses and taxis. The most majestic is the Foreign Office, completed in 1868 and designed as “a kind of national palace”. From this building one-fifth of the planet and one-quarter of its population was once governed. + +Those days are long gone, but today Britain is establishing a new, looser, more mercurial sort of global administrative network. As new economic powers join the rich world, they want to have rich-world states: responsive, efficient, well-run Leviathans that care for people when they get ill, educate them and keep them safe. In building these machines, such countries are looking disproportionately to Britain. + +Take health care. The National Health Service (NHS) has a strong international brand. Already Moorfields Eye Hospital in London has a branch in Dubai; Great Ormond Street, a children’s hospital, provides training in the United Arab Emirates. At a trade fair in Dubai in 2013 the British government launched Healthcare UK, a new body to help other NHS entities (and private firms) sell services overseas. Since then the value to Britain of foreign health-care contracts has risen from £556m ($816m) in 2013-14 to £3.6 billion in 2015-16. + +Meanwhile more British schools are opening offshoots overseas. The grander “public” (independent) schools have led the way: Harrow, for example, has branches in Beijing and Hong Kong, with another due to open in Shanghai in August. In 2018 the first state school will follow suit, when the Bohunt Education Trust, an academy in Hampshire, opens for business in Wenzhou in eastern China. More are expected to follow. + +Despite punitive visa restrictions, foreigners flock to Britain’s universities, where the proportion of non-EU students has risen from 9% in 2004-05 to 13.5% in 2013-14. The government hopes that new reforms creating a more open market, encouraging new providers and startups, will see this increase further. Total education exports (including fees paid by foreign students in Britain) are on track to hit £30 billion in 2020, up from £18 billion in 2012. + +And then there are Britain’s myriad service-providers that have sprung up over decades of public-sector liberalisation and outsourcing. G4S, a London-based security giant, is the largest of its type in the world. Other “diversified” service companies such as Serco, Interserve and Capita—providing everything from waste collection and call centres to prisons and air-traffic control systems—increasingly operate overseas. Serco runs Dubai’s metro. Britain’s vast defence sector sells all sorts of equipment and kit to foreign governments and security forces. + +Emerging economic powers also need expertise and administrators to run their increasingly sophisticated states. Here too Britain is a top exporter. Two of the world’s largest consultancies—EY and PwC—are based in London. The capital is dotted with smaller practices too, many staffed by former Whitehall types, selling advice to foreign governments. Lord Maude, until recently a trade minister, is reportedly setting up a public-sector procurement consultancy. Alastair Campbell and Peter Mandelson, Tony Blair’s consiglieri, hawk communications and strategy advice about the world. The former prime minister himself has (not uncontroversially) worked for a succession of foreign governments. + +Britons also train foreign leaders. This is not new: Oxford and Cambridge have long turned out presidents as well as prime ministers. But more universities are now offering degrees explicitly focused on public policy. The latest example is Oxford’s six-year-old Blavatnik School of Government, whose gleaming campus—a Guggenheim-esque cylinder of swirling concrete—was opened by Prince William on May 11th. Although the courses and students are impeccably global (88 nationalities and counting), Ngaire Woods, the dean, notes the benefits of being in Britain: “Compared with most other countries, British politicians and civil servants are especially reflective.” Many of the school’s lecturers are former Whitehall officials and in March it announced a partnership with the Cabinet Office: a “Government Outcomes Lab” investigating new ways of commissioning public services. + +Fluent mandarin + +The spread of English as the world’s second language, thanks in part to America’s global pre-eminence, gives Britain a huge advantage. Its own imperial past has made much of Britain’s cultural and administrative life familiar even to peoples on the other side of the world. Speaking to health-care exporters, head teachers bombarded with offers of plum jobs overseas and the instructors of tomorrow’s world leaders, Bagehot repeatedly encounters the claim that the country’s reputation for fair play and high professional standards gives it the edge when rulers in Beijing or Mexico City or New Delhi look abroad for inspiration and advice. + +But Britain does not just have institutions worth emulating; plenty of countries have schools, hospitals and transport systems that outshine Britain’s. Crucially, it is also a sponge for influences from elsewhere. Large numbers of migrants work for the NHS and other bits of the public sector. London-based firms peddling their wares to governments—from Serco to Tony Blair Associates—are overwhelmingly international in their expertise, personnel and operations. Much of the appeal of Britain’s education sector is that it is so global: attending a British university means learning or researching alongside people from many other countries. + +Such is the country’s real genius: an ability to absorb and synthesise, to connect ideas and people. The Blavatnik’s airy atrium, with its Babel of languages, is as good a symbol of Britain’s new role as the forbidding Foreign Office is of its past one. As Ms Woods puts it: “Today you can’t divide the world into those who must teach and those who must learn, empire and colonies. The 21st century is about learning to learn from other countries.” + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21701228-its-politicians-its-public-services-britains-state-booming-international/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Higher education: Flying high + + + + + +Articles Sections Next + +Higher education + +Flying high + +A new crop of hands-on universities is transforming how students learn + +Jun 25th 2016 | HELSINKI AND NEEDHAM, MASSACHUSETTS | From the print edition + + + +WHEN Christine Ortiz imagines her ideal university she sees “no lectures, no classrooms, no majors, no departments”. Students will work on tough practical problems in huge open spaces. If they need to swot up they will consult the internet, not a lecturer. Her vision is far removed from the traditional model of higher education. But it will soon become a reality: in July, after six years as dean of graduate education at MIT, the materials scientist will leave to found a new university. It should open in the next five years. + +It will exemplify a trend that is reshaping how some students learn. Geoff Mulgan of Nesta, a British think-tank, calls it the “rise of the challenge-driven university”. In the past 15 years dozens such institutions have been set up, from Chile to China. Many more are planned. Though they differ in scope, they share an approach. They reject the usual ways of getting young adults to learn: lectures, textbooks, slogs in the library, exams—and professors. Instead students work on projects in teams, trying to solve problems without clear answers. Companies often sponsor the projects and provide instructors. Courses combine arts, humanities and sciences. (The slogan of Zeppelin University, founded in 2003 in Germany, reads: “The problems within our society are ill-disciplined, and so are we!”) + +There have been earlier attempts to disrupt higher education. Experimental College, in Wisconsin, attracted hundreds of free-spirited students when it was founded in 1927 without schedules or mandatory classes. The Experimental University, in Paris, was established by frustrated intellectuals after the protests of 1968. Both closed within a few years. (The Parisians may have been too eager to expand access: one lecturer gave a degree to someone she met on a bus.) Other experiments, however, continue. University College of North Staffordshire, renamed Keele University in 1962, became the first English university to offer dual honours courses when it was set up in 1949 by A.D. Lindsay, an Oxford don who complained about academic over-specialisation. “[The] man who only knows more and more about less and less is becoming a public danger,” he warned. + +Renaissance kids + +Worry about the state of young minds is also behind the latest initiatives. Champions of “deeper learning”, an increasingly popular idea in American education, argue that today’s teaching methods stifle understanding. Tony Wagner, the author of “Creating Innovators”, says that schools and universities are failing to spark young people’s curiosity. He points to research by Richard Arum of New York University and Josipa Roksa of the University of Virginia, who in 2011 estimated that despite four years of study 36% of newly minted American graduates failed to improve their scores on the Collegiate Learning Assessment, a test of critical thinking. Advocates of the new model also often cite the studies of Kyung Hee Kim of the College of William and Mary, which suggest that American scores on a standardised test of creativity have fallen since 1990, even as average IQ scores have risen. + +These tests define critical thinking and creativity narrowly. Nevertheless, some young people do want to be taught in different ways. As tuition fees rise, and pricey master’s degrees become more common, students are behaving more like customers. They do not want to sit in 500-seat lecture halls. About 96% of the 27,000 students polled last year by Zogby, a research firm, said they wanted universities to promote an entrepreneurial environment. + +Rising demand for degrees has made universities complacent, says Nick Hillman of the Higher Education Policy Institute, a think-tank in Britain. Universities have almost all plumped for the same sorts of three- and four-year courses in everything, adds Andy Westwood of Manchester University. François Taddei, director of the Centre for Research and Interdisciplinarity, a university he founded in Paris in 2005, says that although students often complain about teaching, they graduate before they can force changes. Academics, meanwhile, stay put. Governments have entrenched the status quo, adds Mr Mulgan, by offering incentives for universities to rise up international rankings that reward standard education models. + +All this is frustrating employers. About half the companies surveyed last year by the Confederation of British Industry, a lobby group, said graduates are unprepared for business jobs. A report last year by the Association of American Colleges & Universities concluded that students lack applied knowledge, critical thinking and communication skills. + +Complaints from bosses about education are hardly new. But more are now acting on their frustration. Some are offering further education courses—for example, through the Starbucks “University”. Others, as in the case of the McKinsey Academy, are trying to sell versions of their training to outsiders. And a few are offering alternatives to university. For example, PwC, an accountancy firm, will this year hire about 160 school-leavers. Those who complete the dedicated programmes can join the same “graduate scheme” as university-leavers—with less debt. + +Though the line between corporate training and higher education is blurring, for ambitious youngsters choosing a job over a university spot remains rare. But new universities—as well as a few farsighted older ones—are adapting to the changing needs of students and employers. + +One is Olin College, an engineering university in Needham, Massachusetts. During their four years, students complete 20-25 projects (one, to make a device that hops like an insect, is pictured above). They spend about four-fifths of their time in teams and combine ideas from different disciplines, for example biology and history in a course entitled “Six microbes that changed the world”. Richard Miller, Olin’s president, argues that projects strengthen recall and hone communication skills. Since its first class in 2002, Olin has received visits from 658 universities from 45 countries keen to learn about its approach. The Indian School of Design and Innovation in Mumbai, the Singapore University of Technology and Design, and Pohang University, in South Korea, are using a similar teaching model. + +In 2017 the New Model in Technology & Engineering (NMITE) will open in England, the country’s first private non-profit university for about 30 years. As at Olin, which has advised NMITE, lecturers will be hired for their teaching expertise rather than publication records. Students will need good school-leaving qualifications, but not need to have studied maths or physics. They will have to study arts and social science. Classes will be small (20-30 students), and students will get 3.5 hours of contact time with teachers each day. + +Beats sitting in a lecture + +Another example is the Design Factory, part of Aalto University on the outskirts of Helsinki. Inspired by Stanford’s “d.school”, it brings engineering, art and business students together to design, build and market a product (some are pictured here). Kalevi Ekman, its founder, says that he is trying to “bring theory and practice closer together”. His model has expanded to nine other countries, including America, Australia and South Korea. + +The new institutions are technologically savvy. Many use “flipped learning”, whereby students learn the basics through online courses and come to university ready to get their hands dirty. Others go further. One, “42”, is named after the meaning of life—at least according to Deep Thought, a supercomputer in Douglas Adams’s cult novel, “The Hitchhiker’s Guide to the Galaxy”. Specialising in programming, it was founded in Paris in 2013 and in November will open a campus in Fremont, California. Students follow a curriculum based on levels, as in computer games. There are no formal entrance requirements, but students must pass a test of coding skills. + +Though their precise methods differ, “challenge-driven universities” share an openness to the world beyond the ivory towers. Design Factory students make their products for companies such as Kone, Airbus and Philips. If an idea is good, they can turn it into a business at the adjacent “startup sauna”, an incubator run by Aalto students. At Hyper Island, which has sites in countries including England, Singapore and Sweden, master’s degrees in digital media are overseen by experts from the likes of IBM, a computing giant, and IDEO, a design consultancy. The projects are done for companies, including Saatchi & Saatchi, Google and Sony. Last year a Hyper Island team in England designed bespoke emoji for Manchester City Football Club. + +Collaborators are not always businesses. Students linked to Harvard’s Ash Centre for Democratic Governance and Innovation spend semesters working for the city of Somerville, outside Boston. The founders of NMITE say they will work with a nearby special-forces regiment and GCHQ, Britain’s signal-intelligence agency. + +These new-model universities can be expensive. Low staff-to-student ratios make learning more interesting, but come at a cost. Olin was set up with one of the largest university donations ever, a $460m grant from the Franklin W. Olin Foundation, which focused on education. And yet after eight years of not charging tuition the university began doing so in 2010. (Students this year typically received financial aid covering about half of the $61,125 costs.) There is a limit to the size of many of the providers, concedes Tuija Pulkkinen, Aalto’s vice-president. Most of the new ones have fewer than a thousand students. + +Critics worry that students will miss out on core concepts, such as the physics behind engineering. And there have been no thorough evaluations of whether these university teaching approaches improve scores on the sort of tests cited by Mr Wagner. Mr Taddei says institutions like his are not for the average student, but for “ugly ducklings”: bright, but bored by lectures and books. Luke Morris, a mechanical-engineering student at Olin, praises the freedom to pursue personal projects (he is building a racing car) and the lack of competition. “I don’t even know how I am graded,” he says. + +Design for life + +The new approach is only one part of broader changes in higher education. But too often governments get in the way of fresh thinking. Though most Chinese universities offer courses in how to innovate or become an entrepreneur, the education ministry seems lukewarm. The South University of Science and Technology in China opened in 2011 pledging to award its own degrees (rather than being accredited by the ministry) and to admit students who had not sat the gaokao, the national college-entrance exam. But last year it was forced to abandon both pledges. + +More seriously, there remain few incentives for lecturers to teach in novel ways: research is what matters in building an academic career. Student-rating websites have helped shame the worst professors. But governments can do more, too. Britain, for example, is introducing a Teaching Excellence Framework, intended to reward good teaching. This pleases Aalto’s Mr Ekman. “There are very few Da Vincis,” he says. “The rest of us have a responsibility to prepare students for the future.” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21701081-new-crop-hands-universities-transforming-how-students-learn-flying-high/print + + + + + +Articles Sections Next + + + + + +Special report: Artificial intelligence + + + + +Artificial intelligence: The return of the machinery question + +Technology: From not working to neural networking + +The impact on jobs: Automation and anxiety + +Education and policy: Re-educating Rita + +Ethics: Frankenstein’s paperclips + +Conclusion: Answering the machinery question + + + + + +Articles Sections Next + +Artificial intelligence + +The return of the machinery question + +After many false starts, artificial intelligence has taken off. Will it cause mass unemployment or even destroy mankind? History can provide some helpful clues, says Tom Standage + +Jun 25th 2016 | From the print edition + + + +THERE IS SOMETHING familiar about fears that new machines will take everyone’s jobs, benefiting only a select few and upending society. Such concerns sparked furious arguments two centuries ago as industrialisation took hold in Britain. People at the time did not talk of an “industrial revolution” but of the “machinery question”. First posed by the economist David Ricardo in 1821, it concerned the “influence of machinery on the interests of the different classes of society”, and in particular the “opinion entertained by the labouring class, that the employment of machinery is frequently detrimental to their interests”. Thomas Carlyle, writing in 1839, railed against the “demon of mechanism” whose disruptive power was guilty of “oversetting whole multitudes of workmen”. + +Today the machinery question is back with a vengeance, in a new guise. Technologists, economists and philosophers are now debating the implications of artificial intelligence (AI), a fast-moving technology that enables machines to perform tasks that could previously be done only by humans. Its impact could be profound. It threatens workers whose jobs had seemed impossible to automate, from radiologists to legal clerks. A widely cited study by Carl Benedikt Frey and Michael Osborne of Oxford University, published in 2013, found that 47% of jobs in America were at high risk of being “substituted by computer capital” soon. More recently Bank of America Merrill Lynch predicted that by 2025 the “annual creative disruption impact” from AI could amount to $14 trillion-33 trillion, including a $9 trillion reduction in employment costs thanks to AI-enabled automation of knowledge work; cost reductions of $8 trillion in manufacturing and health care; and $2 trillion in efficiency gains from the deployment of self-driving cars and drones. The McKinsey Global Institute, a think-tank, says AI is contributing to a transformation of society “happening ten times faster and at 300 times the scale, or roughly 3,000 times the impact” of the Industrial Revolution. + +Just as people did two centuries ago, many fear that machines will make millions of workers redundant, causing inequality and unrest. Martin Ford, the author of two bestselling books on the dangers of automation, worries that middle-class jobs will vanish, economic mobility will cease and a wealthy plutocracy could “shut itself away in gated communities or in elite cities, perhaps guarded by autonomous military robots and drones”. Others fear that AI poses an existential threat to humanity, because superintelligent computers might not share mankind’s goals and could turn on their creators. Such concerns have been expressed, among others, by Stephen Hawking, a physicist, and more surprisingly by Elon Musk, a billionaire technology entrepreneur who founded SpaceX, a rocket company, and Tesla, a maker of electric cars. Echoing Carlyle, Mr Musk warns that “with artificial intelligence, we’re summoning the demon.” His Tesla cars use the latest AI technology to drive themselves, but Mr Musk frets about a future AI overlord becoming too powerful for humans to control. “It’s fine if you’ve got Marcus Aurelius as the emperor, but not so good if you have Caligula,” he says. + +It’s all Go + +Such concerns have been prompted by astonishing recent progress in AI, a field long notorious for its failure to deliver on its promises. “In the past couple of years it’s just completely exploded,” says Demis Hassabis, the boss and co-founder of DeepMind, an AI startup bought by Google in 2014 for $400m. Earlier this year his firm’s AlphaGo system defeated Lee Sedol, one of the world’s best players of Go, a board game so complex that computers had not been expected to master it for another decade at least. “I was a sceptic for a long time, but the progress now is real. The results are real. It works,” says Marc Andreessen of Andreessen Horowitz, a Silicon Valley venture-capital firm. + +In particular, an AI technique called “deep learning”, which allows systems to learn and improve by crunching lots of examples rather than being explicitly programmed, is already being used to power internet search engines, block spam e-mails, suggest e-mail replies, translate web pages, recognise voice commands, detect credit-card fraud and steer self-driving cars. “This is a big deal,” says Jen-Hsun Huang, chief executive of NVIDIA, a firm whose chips power many AI systems. “Instead of people writing software, we have data writing software.” + + + +Where some see danger, others see opportunity. Investors are piling into the field. Technology giants are buying AI startups and competing to attract the best researchers from academia. In 2015 a record $8.5 billion was spent on AI companies, nearly four times as much as in 2010, according to Quid, a data-analysis company. The number of investment rounds in AI companies in 2015 was 16% up on the year before, when for the technology sector as a whole it declined by 3%, says Nathan Benaich of Playfair Capital, a fund that has 25% of its portfolio invested in AI. “It’s the Uber for X” has given way to “It’s X plus AI” as the default business model for startups. Google, Facebook, IBM, Amazon and Microsoft are trying to establish ecosystems around AI services provided in the cloud. “This technology will be applied in pretty much every industry out there that has any kind of data—anything from genes to images to language,” says Richard Socher, founder of MetaMind, an AI startup recently acquired by Salesforce, a cloud-computing giant. “AI will be everywhere.” + +What will that mean? This special report will examine the rise of this new technology, explore its potential impact on jobs, education and policy, and consider its ethical and regulatory implications. Along the way it will consider the lessons that can be learned from the original response to the machinery question. AI excites fear and enthusiasm in equal measure, and raises a lot of questions. Yet it is worth remembering that many of those questions have been asked, and answered, before. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21700761-after-many-false-starts-artificial-intelligence-has-taken-will-it-cause-mass/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Technology + +From not working to neural networking + +The artificial-intelligence boom is based on an old idea, but with a modern twist + +Jun 25th 2016 | From the print edition + + + +HOW HAS ARTIFICIAL intelligence, associated with hubris and disappointment since its earliest days, suddenly become the hottest field in technology? The term was coined in a research proposal written in 1956 which suggested that significant progress could be made in getting machines to “solve the kinds of problems now reserved for humans…if a carefully selected group of scientists work on it together for a summer”. That proved to be wildly overoptimistic, to say the least, and despite occasional bursts of progress, AI became known for promising much more than it could deliver. Researchers mostly ended up avoiding the term, preferring to talk instead about “expert systems” or “neural networks”. The rehabilitation of “AI”, and the current excitement about the field, can be traced back to 2012 and an online contest called the ImageNet Challenge. + +ImageNet is an online database of millions of images, all labelled by hand. For any given word, such as “balloon” or “strawberry”, ImageNet contains several hundred images. The annual ImageNet contest encourages those in the field to compete and measure their progress in getting computers to recognise and label images automatically. Their systems are first trained using a set of images where the correct labels are provided, and are then challenged to label previously unseen test images. At a follow-up workshop the winners share and discuss their techniques. In 2010 the winning system could correctly label an image 72% of the time (for humans, the average is 95%). In 2012 one team, led by Geoff Hinton at the University of Toronto, achieved a jump in accuracy to 85%, thanks to a novel technique known as “deep learning”. This brought further rapid improvements, producing an accuracy of 96% in the ImageNet Challenge in 2015 and surpassing humans for the first time. + + + +The 2012 results were rightly recognised as a breakthrough, but they relied on “combining pieces that were all there before”, says Yoshua Bengio, a computer scientist at the University of Montreal who, along with Mr Hinton and a few others, is recognised as a pioneer of deep learning. In essence, this technique uses huge amounts of computing power and vast quantities of training data to supercharge an old idea from the dawn of AI: so-called artificial neural networks (ANNs). These are biologically inspired networks of artificial neurons, or brain cells. + +In a biological brain, each neuron can be triggered by other neurons whose outputs feed into it, and its own output can then trigger other neurons in turn. A simple ANN has an input layer of neurons where data can be fed into the network, an output layer where results come out, and possibly a couple of hidden layers in the middle where information is processed. (In practice, ANNs are simulated entirely in software.) Each neuron within the network has a set of “weights” and an “activation function” that controls the firing of its output. Training a neural network involves adjusting the neurons’ weights so that a given input produces the desired output (see diagram). ANNs were starting to achieve some useful results in the early 1990s, for example in recognising handwritten numbers. But attempts to get them to do more complex tasks ran into trouble. + + + +In the past decade new techniques and a simple tweak to the activation function has made training deep networks feasible. At the same time the rise of the internet has made billions of documents, images and videos available for training purposes. All this takes a lot of number-crunching power, which became readily available when several AI research groups realised around 2009 that graphical processing units (GPUs), the specialised chips used in PCs and video-games consoles to generate fancy graphics, were also well suited to running deep-learning algorithms. An AI research group at Stanford University led by Andrew Ng, who subsequently moved to Google and now works for Baidu, a Chinese internet giant, found that GPUs could speed up its deep-learning system nearly a hundredfold. Suddenly, training a four-layer neural network, which had previously taken several weeks, took less than a day. It is a pleasing symmetry, says Jen-Hsun Huang, the boss of NVIDIA, which makes GPUs, that the same chips that are used to conjure up imaginary worlds for gamers can also be used to help computers understand the real world through deep learning. + +What got people excited about this field is that one technique, deep learning, can be applied to so many different domains + +The ImageNet results showed what deep learning could do. Suddenly people started to pay attention, not just within the AI community but across the technology industry as a whole. Deep-learning systems have since become more powerful: networks 20 or 30 layers deep are not uncommon, and researchers at Microsoft have built one with 152 layers. Deeper networks are capable of higher levels of abstraction and produce better results, and these networks have proved to be good at solving a very wide range of problems. + +“What got people excited about this field is that one learning technique, deep learning, can be applied to so many different domains,” says John Giannandrea, head of machine-intelligence research at Google and now in charge of its search engine too. Google is using deep learning to boost the quality of its web-search results, understand commands spoken into smartphones, help people search their photos for particular images, suggest automatic answers to e-mails, improve its service for translating web pages from one language to another, and help its self-driving cars understand their surroundings. + +Learning how to learn + +Deep learning comes in many flavours. The most widely used variety is “supervised learning”, a technique that can be used to train a system with the aid of a labelled set of examples. For e-mail spam filtering, for example, it is possible to assemble an enormous database of example messages, each of which is labelled “spam” or “not spam”. A deep-learning system can be trained using this database, repeatedly working through the examples and adjusting the weights inside the neural network to improve its accuracy in assessing spamminess. The great merit of this approach is that there is no need for a human expert to draw up a list of rules, or for a programmer to implement them in code; the system learns directly from the labelled data. + +Systems trained using labelled data are being used to classify images, recognise speech, spot fraudulent credit-card transactions, identify spam and malware, and target advertisements—all applications in which the right answer is known for a large number of previous cases. Facebook can recognise and tag your friends and family when you upload a photograph, and recently launched a system that describes the contents of photographs for blind users (“two people, smiling, sunglasses, outdoor, water”). There is a huge reservoir of data to which supervised learning can be applied, says Mr Ng. Adoption of the technology has allowed existing firms in financial services, computer security and marketing to relabel themselves as AI companies. + +Another technique, unsupervised learning, involves training a network by exposing it to a huge number of examples, but without telling it what to look for. Instead, the network learns to recognise features and cluster similar examples, thus revealing hidden groups, links or patterns within the data. + + + +Unsupervised learning can be used to search for things when you do not know what they look like: for monitoring network traffic patterns for anomalies that might correspond to a cyber-attack, for example, or examining large numbers of insurance claims to detect new kinds of fraud. In a famous example, when working at Google in 2011, Mr Ng led a project called Google Brain in which a giant unsupervised learning system was asked to look for common patterns in thousands of unlabelled YouTube videos. One day one of Mr Ng’s PhD students had a surprise for him. “I remember him calling me over to his computer and saying, ‘look at this’,” Mr Ng recalls. On the screen was a furry face, a pattern distilled from thousands of examples. The system had discovered cats. + +Reinforcement learning sits somewhere in between supervised and unsupervised learning. It involves training a neural network to interact with an environment with only occasional feedback in the form of a reward. In essence, training involves adjusting the network’s weights to search for a strategy that consistently generates higher rewards. DeepMind is a specialist in this area. In February 2015 it published a paper in Nature describing a reinforcement-learning system capable of learning to play 49 classic Atari video games, using just the on-screen pixels and the game score as inputs, with its output connected to a virtual controller. The system learned to play them all from scratch and achieved human-level performance or better in 29 of them. + +Gaming the system + +Video games are an ideal training ground for AI research, says Demis Hassabis of DeepMind, because “they are like microcosms of the real world, but are cleaner and more constrained.” Gaming engines can also generate large quantities of training data very easily. Mr Hassabis used to work in the video-games industry before taking a PhD in cognitive neuroscience and starting DeepMind. The company now operates as an AI research arm for Google, from offices near King’s Cross station in London. + +DeepMind made headlines in March when its AlphaGo system defeated Lee Sedol, one of the world’s best Go players, by 4-1 in a five-game match in Seoul. AlphaGo is a reinforcement-learning system with some unusual features. It consists of several interconnected modules, including two deep neural networks, each of which specialises in a different thing—just like the modules of the human brain. One of them has been trained by analysing millions of games to suggest a handful of promising moves, which are then evaluated by the other one, guided by a technique that works by random sampling. The system thus combines biologically inspired techniques with non-biologically inspired ones. AI researchers have argued for decades over which approach is superior, but AlphaGo uses both. “It’s a hybrid system because we believe we’re going to need more than deep learning to solve intelligence,” says Mr Hassabis. + +He and other researchers are already looking to the next step, called transfer learning. This would allow a reinforcement-learning system to build on previously acquired knowledge, rather than having to be trained from scratch every time. Humans do this effortlessly, notes Mr Hassabis. Mr Giannandrea recalls that his four-year-old daughter was able to tell that a penny-farthing was a kind of bicycle even though she had never seen one before. “Computers can’t do that,” he says. + +MetaMind, an AI startup recently acquired by Salesforce, is pursuing a related approach called multitask learning, where the same neural-network architecture is used to solve several different kinds of problems in such a way that experience of one thing makes it better at another. Like DeepMind, it is exploring modular architectures; one them, called a “dynamic memory network”, can, among other things, ingest a series of statements and then answer questions about them, deducing the logical connections between them (Kermit is a frog; frogs are green; so Kermit is green). MetaMind has also combined natural-language and image-recognition networks into a single system that can answer questions about images (“What colour is the car?”). Its technology could be used to power automated customer-service chatbots or call-centres for Salesforce’s customers. + +In the past, promising new AI techniques have tended to run out of steam quickly. But deep learning is different. “This stuff actually works,” says Richard Socher of MetaMind. People are using it every day without realising it. The long-term goal to which Mr Hassabis, Mr Socher and others aspire is to build an “artificial general intelligence” (AGI)—a system capable of solving a wide range of tasks—rather than building a new AI system for each problem. For years, AI research has focused on solving specific, narrow problems, says Mr Socher, but now researchers are “taking these more advanced Lego pieces and putting them together in new ways”. Even the most optimistic of them think it will take another decade to attain human-level AGI. But, says Mr Hassabis, “we think we know what the dozen or so key things are that are required to get us close to something like AGI.” + +Meanwhile AI is already useful, and will rapidly become more so. Google’s Smart Reply system, which uses two neural networks to suggest answers to e-mails, went from being a deep-learning research project to a live product in just four months (though initially it had to be discouraged from suggesting the reply “I love you” to nearly every message). “You can publish a paper in a research journal and literally have a company use that system the next month,” says Mr Socher. There is a steady flow of academic papers from AI companies both large and small; AI researchers have been allowed to continue publishing their results in peer-reviewed journals, even after moving into industry. Many of them maintain academic posts alongside working for companies. “If you won’t let them publish, they won’t work for you,” explains Chris Dixon of Andreessen Horowitz. + +Google, Facebook, Microsoft, IBM, Amazon, Baidu and other firms have also made some of their deep-learning software available free on an open-source basis. In part, this is because their researchers want to publish what they are doing, so it helps with recruitment. A more cynical view is that big internet firms can afford to give away their AI software because they have a huge advantage elsewhere: access to reams of user data for training purposes. This gives them an edge in particular areas, says Shivon Zilis of Bloomberg Beta, an investment fund, but startups are finding ways into specific markets. Drone startups, for example, can use simulation data to learn how to fly in crowded environments. And lots of training data can be found on the internet, says Sam Altman, president of Y Combinator, a startup incubator. He notes that humans can learn from modest amounts of data, which “suggests that intelligence is possible without massive training sets”. Startups pursuing less data-hungry approaches to AI include Numenta and Geometric Intelligence. + +Pick and mix + +Companies are lining up to supply shovels to participants in this AI gold rush. The name that comes up most frequently is NVIDIA, says Mr Dixon; every AI startup seems to be using its GPU chips to train neural networks. GPU capacity can also be rented in the cloud from Amazon and Microsoft. IBM and Google, meanwhile, are devising new chips specifically built to run AI software more quickly and efficiently. And Google, Microsoft and IBM are making AI services such as speech recognition, sentence parsing and image analysis freely available online, allowing startups to combine such building blocks to form new AI products and services. More than 300 companies from a range of industries have already built AI-powered apps using IBM’s Watson platform, says Guru Banavar of IBM, doing everything from filtering job candidates to picking wines. + +To most people, all this progress in AI will manifest itself as incremental improvements to internet services they already use every day. Search engines will produce more relevant results; recommendations will be more accurate.Within a few years everything will have intelligence embedded in it to some extent, predicts Mr Hassabis. AI technology will allow computer interfaces to become conversational and predictive, not simply driven by menus and icons. And being able to talk to computers will make them accessible to people who cannot read and write, and cannot currently use the internet, says Mr Bengio. + +Yet steady improvements can lead to sudden changes when a threshold is reached and machines are able to perform tasks previously limited to humans. Self-driving cars are getting better fast; at some point soon they may be able to replace taxi drivers, at least in controlled environments such as city centres. Delivery drones, both wheeled and airborne, could similarly compete with human couriers. Improved vision systems and robotic technology could allow robots to stack supermarket shelves and move items around in warehouses. And there is plenty of scope for unexpected breakthroughs, says Mr Dixon. + +Others are worried, fearing that AI technology could supercharge the existing computerisation and automation of certain tasks, just as steam power, along with new kinds of machinery, seemed poised to make many workers redundant 200 years ago. “Steam has fearfully accelerated a process that was going on already, but too fast,” declared Robert Southey, an English poet. He worried that “the discovery of this mighty power” has come “before we knew how to employ it rightly”. Many people feel the same way about artificial intelligence today. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21700756-artificial-intelligence-boom-based-old-idea-modern-twist-not/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The impact on jobs + +Automation and anxiety + +Will smarter machines cause mass unemployment? + +Jun 25th 2016 | From the print edition + + + +SITTING IN AN office in San Francisco, Igor Barani calls up some medical scans on his screen. He is the chief executive of Enlitic, one of a host of startups applying deep learning to medicine, starting with the analysis of images such as X-rays and CT scans. It is an obvious use of the technology. Deep learning is renowned for its superhuman prowess at certain forms of image recognition; there are large sets of labelled training data to crunch; and there is tremendous potential to make health care more accurate and efficient. + +Dr Barani (who used to be an oncologist) points to some CT scans of a patient’s lungs, taken from three different angles. Red blobs flicker on the screen as Enlitic’s deep-learning system examines and compares them to see if they are blood vessels, harmless imaging artefacts or malignant lung nodules. The system ends up highlighting a particular feature for further investigation. In a test against three expert human radiologists working together, Enlitic’s system was 50% better at classifying malignant tumours and had a false-negative rate (where a cancer is missed) of zero, compared with 7% for the humans. Another of Enlitic’s systems, which examines X-rays to detect wrist fractures, also handily outperformed human experts. The firm’s technology is currently being tested in 40 clinics across Australia. + +A computer that dispenses expert radiology advice is just one example of how jobs currently done by highly trained white-collar workers can be automated, thanks to the advance of deep learning and other forms of artificial intelligence. The idea that manual work can be carried out by machines is already familiar; now ever-smarter machines can perform tasks done by information workers, too. What determines vulnerability to automation, experts say, is not so much whether the work concerned is manual or white-collar but whether or not it is routine. Machines can already do many forms of routine manual labour, and are now able to perform some routine cognitive tasks too. As a result, says Andrew Ng, a highly trained and specialised radiologist may now be in greater danger of being replaced by a machine than his own executive assistant: “She does so many different things that I don’t see a machine being able to automate everything she does any time soon.” + +So which jobs are most vulnerable? In a widely noted study published in 2013, Carl Benedikt Frey and Michael Osborne examined the probability of computerisation for 702 occupations and found that 47% of workers in America had jobs at high risk of potential automation. In particular, they warned that most workers in transport and logistics (such as taxi and delivery drivers) and office support (such as receptionists and security guards) “are likely to be substituted by computer capital”, and that many workers in sales and services (such as cashiers, counter and rental clerks, telemarketers and accountants) also faced a high risk of computerisation. They concluded that “recent developments in machine learning will put a substantial share of employment, across a wide range of occupations, at risk in the near future.” Subsequent studies put the equivalent figure at 35% of the workforce for Britain (where more people work in creative fields less susceptible to automation) and 49% for Japan. + +What determines vulnerability to automation is not so much whether the work concerned is manual or white-collar but whether or not it is routine + +Economists are already worrying about “job polarisation”, where middle-skill jobs (such as those in manufacturing) are declining but both low-skill and high-skill jobs are expanding. In effect, the workforce bifurcates into two groups doing non-routine work: highly paid, skilled workers (such as architects and senior managers) on the one hand and low-paid, unskilled workers (such as cleaners and burger-flippers) on the other. The stagnation of median wages in many Western countries is cited as evidence that automation is already having an effect—though it is hard to disentangle the impact of offshoring, which has also moved many routine jobs (including manufacturing and call-centre work) to low-wage countries in the developing world. Figures published by the Federal Reserve Bank of St Louis show that in America, employment in non-routine cognitive and non-routine manual jobs has grown steadily since the 1980s, whereas employment in routine jobs has been broadly flat (see chart). As more jobs are automated, this trend seems likely to continue. + + + +And this is only the start. “We are just seeing the tip of the iceberg. No office job is safe,” says Sebastian Thrun, an AI professor at Stanford known for his work on self-driving cars. Automation is now “blind to the colour of your collar”, declares Jerry Kaplan, another Stanford academic and author of “Humans Need Not Apply”, a book that predicts upheaval in the labour market. Gloomiest of all is Martin Ford, a software entrepreneur and the bestselling author of “Rise of the Robots”. He warns of the threat of a “jobless future”, pointing out that most jobs can be broken down into a series of routine tasks, more and more of which can be done by machines. + +In previous waves of automation, workers had the option of moving from routine jobs in one industry to routine jobs in another; but now the same “big data” techniques that allow companies to improve their marketing and customer-service operations also give them the raw material to train machine-learning systems to perform the jobs of more and more people. “E-discovery” software can search mountains of legal documents much more quickly than human clerks or paralegals can. Some forms of journalism, such as writing market reports and sports summaries, are also being automated. + +Predictions that automation will make humans redundant have been made before, however, going back to the Industrial Revolution, when textile workers, most famously the Luddites, protested that machines and steam engines would destroy their livelihoods. “Never until now did human invention devise such expedients for dispensing with the labour of the poor,” said a pamphlet at the time. Subsequent outbreaks of concern occurred in the 1920s (“March of the machine makes idle hands”, declared a New York Times headline in 1928), the 1930s (when John Maynard Keynes coined the term “technological unemployment”) and 1940s, when the New York Times referred to the revival of such worries as the renewal of an “old argument”. + +As computers began to appear in offices and robots on factory floors, President John F. Kennedy declared that the major domestic challenge of the 1960s was to “maintain full employment at a time when automation…is replacing men”. In 1964 a group of Nobel prizewinners, known as the Ad Hoc Committee on the Triple Revolution, sent President Lyndon Johnson a memo alerting him to the danger of a revolution triggered by “the combination of the computer and the automated self-regulating machine”. This, they said, was leading to a new era of production “which requires progressively less human labour” and threatened to divide society into a skilled elite and an unskilled underclass. The advent of personal computers in the 1980s provoked further hand-wringing over potential job losses. + +Yet in the past technology has always ended up creating more jobs than it destroys. That is because of the way automation works in practice, explains David Autor, an economist at the Massachusetts Institute of Technology. Automating a particular task, so that it can be done more quickly or cheaply, increases the demand for human workers to do the other tasks around it that have not been automated. + +There are many historical examples of this in weaving, says James Bessen, an economist at the Boston University School of Law. During the Industrial Revolution more and more tasks in the weaving process were automated, prompting workers to focus on the things machines could not do, such as operating a machine, and then tending multiple machines to keep them running smoothly. This caused output to grow explosively. In America during the 19th century the amount of coarse cloth a single weaver could produce in an hour increased by a factor of 50, and the amount of labour required per yard of cloth fell by 98%. This made cloth cheaper and increased demand for it, which in turn created more jobs for weavers: their numbers quadrupled between 1830 and 1900. In other words, technology gradually changed the nature of the weaver’s job, and the skills required to do it, rather than replacing it altogether. + + + +In a more recent example, automated teller machines (ATMs) might have been expected to spell doom for bank tellers by taking over some of their routine tasks, and indeed in America their average number fell from 20 per branch in 1988 to 13 in 2004, Mr Bessen notes. But that reduced the cost of running a bank branch, allowing banks to open more branches in response to customer demand. The number of urban bank branches rose by 43% over the same period, so the total number of employees increased. Rather than destroying jobs, ATMs changed bank employees’ work mix, away from routine tasks and towards things like sales and customer service that machines could not do. + +The same pattern can be seen in industry after industry after the introduction of computers, says Mr Bessen: rather than destroying jobs, automation redefines them, and in ways that reduce costs and boost demand. In a recent analysis of the American workforce between 1982 and 2012, he found that employment grew significantly faster in occupations (for example, graphic design) that made more use of computers, as automation sped up one aspect of a job, enabling workers to do the other parts better. The net effect was that more computer-intensive jobs within an industry displaced less computer-intensive ones. Computers thus reallocate rather than displace jobs, requiring workers to learn new skills. This is true of a wide range of occupations, Mr Bessen found, not just in computer-related fields such as software development but also in administrative work, health care and many other areas. Only manufacturing jobs expanded more slowly than the workforce did over the period of study, but that had more to do with business cycles and offshoring to China than with technology, he says. + +So far, the same seems to be true of fields where AI is being deployed. For example, the introduction of software capable of analysing large volumes of legal documents might have been expected to reduce the number of legal clerks and paralegals, who act as human search engines during the “discovery” phase of a case; in fact automation has reduced the cost of discovery and increased demand for it. “Judges are more willing to allow discovery now, because it’s cheaper and easier,” says Mr Bessen. The number of legal clerks in America increased by 1.1% a year between 2000 and 2013. Similarly, the automation of shopping through e-commerce, along with more accurate recommendations, encourages people to buy more and has increased overall employment in retailing. In radiology, says Dr Barani, Enlitic’s technology empowers practitioners, making average ones into experts. Rather than putting them out of work, the technology increases capacity, which may help in the developing world, where there is a shortage of specialists. + +And while it is easy to see fields in which automation might do away with the need for human labour, it is less obvious where technology might create new jobs. “We can’t predict what jobs will be created in the future, but it’s always been like that,” says Joel Mokyr, an economic historian at Northwestern University. Imagine trying to tell someone a century ago that her great-grandchildren would be video-game designers or cybersecurity specialists, he suggests. “These are jobs that nobody in the past would have predicted.” + +Similarly, just as people worry about the potential impact of self-driving vehicles today, a century ago there was much concern about the impact of the switch from horses to cars, notes Mr Autor. Horse-related jobs declined, but entirely new jobs were created in the motel and fast-food industries that arose to serve motorists and truck drivers. As those industries decline, new ones will emerge. Self-driving vehicles will give people more time to consume goods and services, increasing demand elsewhere in the economy; and autonomous vehicles might greatly expand demand for products (such as food) delivered locally. + +Only humans need apply + +There will also be some new jobs created in the field of AI itself. Self-driving vehicles may need remote operators to cope with emergencies, or ride-along concierges who knock on doors and manhandle packages. Corporate chatbot and customer-service AIs will need to be built and trained and have dialogue written for them (AI firms are said to be busy hiring poets); they will have to be constantly updated and maintained, just as websites are today. And no matter how advanced artificial intelligence becomes, some jobs are always likely to be better done by humans, notably those involving empathy or social interaction. Doctors, therapists, hairdressers and personal trainers fall into that category. An analysis of the British workforce by Deloitte, a consultancy, highlighted a profound shift over the past two decades towards “caring” jobs: the number of nursing assistants increased by 909%, teaching assistants by 580% and careworkers by 168%. + +Focusing only on what is lost misses “a central economic mechanism by which automation affects the demand for labour”, notes Mr Autor: that it raises the value of the tasks that can be done only by humans. Ultimately, he says, those worried that automation will cause mass unemployment are succumbing to what economists call the “lump of labour” fallacy. “This notion that there’s only a finite amount of work to do, and therefore that if you automate some of it there’s less for people to do, is just totally wrong,” he says. Those sounding warnings about technological unemployment “basically ignore the issue of the economic response to automation”, says Mr Bessen. + +But couldn’t this time be different? As Mr Ford points out in “Rise of the Robots”, the impact of automation this time around is broader-based: not every industry was affected two centuries ago, but every industry uses computers today. During previous waves of automation, he argues, workers could switch from one kind of routine work to another; but this time many workers will have to switch from routine, unskilled jobs to non-routine, skilled jobs to stay ahead of automation. That makes it more important than ever to help workers acquire new skills quickly. But so far, says Mr Autor, there is “zero evidence” that AI is having a new and significantly different impact on employment. And while everyone worries about AI, says Mr Mokyr, far more labour is being replaced by cheap workers overseas. + +Another difference is that whereas the shift from agriculture to industry typically took decades, software can be deployed much more rapidly. Google can invent something like Smart Reply and have millions of people using it just a few months later. Even so, most firms tend to implement new technology more slowly, not least for non-technological reasons. Enlitic and other companies developing AI for use in medicine, for example, must grapple with complex regulations and a fragmented marketplace, particularly in America (which is why many startups are testing their technology elsewhere). It takes time for processes to change, standards to emerge and people to learn new skills. “The distinction between invention and implementation is critical, and too often ignored,” observes Mr Bessen. + +What of the worry that new, high-tech industries are less labour-intensive than earlier ones? Mr Frey cites a paper he co-wrote last year showing that only 0.5% of American workers are employed in industries that have emerged since 2000. “Technology might create fewer and fewer jobs, while exposing a growing share of them to automation,” he says. An oft-cited example is that of Instagram, a photo-sharing app. When it was bought by Facebook in 2012 for $1 billion, it had tens of millions of users, but only 13 employees. Kodak, which once employed 145,000 people making photographic products, went into bankruptcy at around the same time. But such comparisons are misleading, says Marc Andreessen. It was smartphones, not Instagram, that undermined Kodak, and far more people are employed by the smartphone industry and its surrounding ecosystems than ever worked for Kodak or the traditional photography industry. + +Is this time different? + +So who is right: the pessimists (many of them techie types), who say this time is different and machines really will take all the jobs, or the optimists (mostly economists and historians), who insist that in the end technology always creates more jobs than it destroys? The truth probably lies somewhere in between. AI will not cause mass unemployment, but it will speed up the existing trend of computer-related automation, disrupting labour markets just as technological change has done before, and requiring workers to learn new skills more quickly than in the past. Mr Bessen predicts a “difficult transition” rather than a “sharp break with history”. But despite the wide range of views expressed, pretty much everyone agrees on the prescription: that companies and governments will need to make it easier for workers to acquire new skills and switch jobs as needed. That would provide the best defence in the event that the pessimists are right and the impact of artificial intelligence proves to be more rapid and more dramatic than the optimists expect. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21700758-will-smarter-machines-cause-mass-unemployment-automation-and-anxiety/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Education and policy + +Re-educating Rita + +Artificial intelligence will have implications for policymakers in education, welfare and geopolitics + +Jun 25th 2016 | From the print edition + + + +IN JULY 2011 Sebastian Thrun, who among other things is a professor at Stanford, posted a short video on YouTube, announcing that he and a colleague, Peter Norvig, were making their “Introduction to Artificial Intelligence” course available free online. By the time the course began in October, 160,000 people in 190 countries had signed up for it. At the same time Andrew Ng, also a Stanford professor, made one of his courses, on machine learning, available free online, for which 100,000 people enrolled. Both courses ran for ten weeks. Mr Thrun’s was completed by 23,000 people; Mr Ng’s by 13,000. + +Such online courses, with short video lectures, discussion boards for students and systems to grade their coursework automatically, became known as Massive Open Online Courses (MOOCs). In 2012 Mr Thrun founded an online-education startup called Udacity, and Mr Ng co-founded another, called Coursera. That same year Harvard University and the Massachusetts Institute of Technology got together to form edX, a non-profit MOOC provider, headed by Anant Agarwal, the head of MIT’s artificial-intelligence laboratory. Some thought that MOOCs would replace traditional university teaching. The initial hype around MOOCs has since died down somewhat (though millions of students have taken online courses of some kind). But the MOOC boom illustrated the enormous potential for delivering education online, in bite-sized chunks. + +The fact that Udacity, Coursera and edX all emerged from AI labs highlights the conviction within the AI community that education systems need an overhaul. Mr Thrun says he founded Udacity as an “antidote to the ongoing AI revolution”, which will require workers to acquire new skills throughout their careers. Similarly, Mr Ng thinks that given the potential impact of their work on the labour market, AI researchers “have an ethical responsibility to step up and address the problems we cause”; Coursera, he says, is his contribution. Moreover, AI technology has great potential in education. “Adaptive learning”—software that tailors courses for each student individually, presenting concepts in the order he will find easiest to understand and enabling him to work at his own pace—has seemed to be just around the corner for years. But new machine-learning techniques might at last help it deliver on its promise. + +Adapt and survive + +At the moment, adaptive-learning techniques work best in areas where large numbers of pupils have to learn the same material and a lot of data can be collected, says Mr Ng. Geekie, a Brazilian adaptive-learning startup, guides pupils through the high-school syllabus in thousands of the country’s schools. Other startups working in this area include Knewton, Smart Sparrow and DreamBox. Education giants are also paying attention. McGraw-Hill bought ALEKS, another adaptive-learning system, in 2013; Pearson recently announced an expansion of its partnership with Knewton. In a report published in February, Pearson suggests that AI could make learning “more personalised, flexible, inclusive and engaging”. Such systems do not replace teachers, but allow them to act as mentors rather than lecturers. + +Even outside the AI community, there is a broad consensus that technological progress, and artificial intelligence in particular, will require big changes in the way education is delivered, just as the Industrial Revolution did in the 19th century. As factory jobs overtook agricultural ones, literacy and numeracy became much more important. Employers realised that more educated workers were more productive, but were reluctant to train them themselves because they might defect to another employer. That prompted the introduction of universal state education on a factory model, with schools supplying workers with the right qualifications to work in factories. Industrialisation thus transformed both the need for education and offered a model for providing it. The rise of artificial intelligence could well do the same again, making it necessary to transform educational practices and, with adaptive learning, offering a way of doing so. + +“The old system will have to be very seriously revised,” says Joel Mokyr of Northwestern University. Since 1945, he points out, educational systems have encouraged specialisation, so students learn more and more about less and less. But as knowledge becomes obsolete more quickly, the most important thing will be learning to relearn, rather than learning how to do one thing very well. Mr Mokyr thinks that education currently treats people too much like clay—“shape it, then bake it, and that’s the way it stays”—rather than like putty, which can be reshaped. In future, as more tasks become susceptible to automation, the tasks where human skills are most valuable will constantly shift. “You need to keep learning your entire life—that’s been obvious for a long time,” says Mr Ng. “What you learn in college isn’t enough to keep you going for the next 40 years.” + +Education will therefore have to be interwoven with full-time work. “People will have to continuously learn new skills to stay current,” says Mr Thrun. Hence his firm’s focus on “nanodegrees” which can be completed in a few months, alongside a job. Studying for a nanodegree in, say, data science or website programming costs $200 a month, but students who complete a course within 12 months get a 50% refund. A host of websites now offer courses in all kinds of skills, from user-experience design to project management to leadership. Some, like Udacity, charge by the course; others, like Lynda.com, which is owned by LinkedIn, a business-networking site, charge a monthly fee for access to all courses. (It is not difficult to imagine LinkedIn comparing the skill sets of its users against those required to apply for a particular job—and then offering users the courses necessary to fill the gaps.) Users and their potential employers sometimes find it difficult to tell which ones offer good value. More co-operation between government, training providers and employers over certification would help. + +America and other developed countries should also put more emphasis on vocational and technical education, as Germany does, rather than encouraging everyone to go to university, says David Autor at MIT. But that does not simply mean offering more apprenticeships, which typically involve five to seven years of training. “That doesn’t make sense if the skills you need are changing every three to five years,” says James Bessen at the Boston University School of Law. So the traditional apprenticeship model will have to be tweaked. Community colleges are setting up all kinds of schemes that combine education with learning on the job, says Mr Bessen. For example, Siemens, a German industrial giant, has launched a four-year “earn and learn” programme for apprentices at its wind-turbine factory in Charlotte, North Carolina. Apprentices graduate with a degree in mechatronics from a local community college, certification from the local department of labour—and no student debt. + +As on-the-job skills come and go, having a solid foundation of basic literacy and numeracy skills will become even more vital. But teaching “soft” skills, too, will be increasingly important. In a paper published in 2013, James Heckman and Tim Kautz of America’s National Bureau of Economic Research argue for more emphasis on “character skills” such as perseverance, sociability and curiosity, which are highly valued by employers and correlate closely with employees’ ability to adapt to new situations and acquire new skills. Character is a skill, not a trait, they say, and schemes that teach it are both lasting and cost-effective. + +Basic attraction + +Concerns about AI and automation have also led to calls for a stronger safety net to protect people from labour-market disruption and help them switch to new jobs. In particular, many AI commentators support the idea of a universal basic income: a dramatic simplification of the welfare system that involves paying a fixed amount (say, $10,000 a year) to everyone, regardless of their situation, and doing away with all other welfare payments. Similar ideas were touted during the Industrial Revolution by Thomas Paine and John Stuart Mill, among others. Its chief merit, say its supporters, is that people who are not working, or are working part-time, are not penalised if they decide to work more, because their welfare payments do not decline as their incomes rise. It gives people more freedom to decide how many hours they wish to work, and might also encourage them to retrain by providing them with a small guaranteed income while they do so. Those who predict apocalyptic job destruction see it as a way to keep the consumer economy going and support the non-working population. If most jobs are automated away, an alternative mechanism for redistributing wealth will be needed. + + + +Compared with the complexity of overhauling the education system, a basic income appears to offer a simple, attractive and easily understood solution. The idea enjoys broad support within the technology industry: Y Combinator, a startup incubator, is even funding a study of the idea in Oakland, California. Sam Altman, its president, argues that in a world of rapid technological change, a basic income could help ensure “a smooth transition to the jobs of the future”. The idea seems to appeal to techie types in part because of its simplicity and elegance (replacing existing welfare and tax systems, which are like badly written programming code, with a single line) and in part because of its Utopianism. A more cynical view is that it could help stifle complaints about technology causing disruption and inequality, allowing geeks to go on inventing the future unhindered. Mr Altman says that in his experience the techies who support basic income do so for “fairly charitable reasons”. + +Automation could have a much bigger impact in developing economies than in rich ones + +Though it is an attractive idea in principle, the devil is in the details. A universal basic income that replaced existing welfare budgets would be steeply regressive. Divide existing spending on social, pension and welfare schemes (excluding health care) equally, and each citizen would get a basic income of around $6,000 a year in America and $6,200 in Britain, for example (at purchasing-power parity). Compared with existing welfare schemes, that would reduce income for the poorest, while giving the rich money they do not need. But means-testing a basic income risks undermining its simplicity, and thus its low administrative cost. Funding a basic income that would provide a reasonable living would require much higher taxes than at present. Negative income taxes, or schemes such as earned-income tax credits, might be a less elegant but more practical approach. + +Many countries, notably Finland and the Netherlands, are planning to experiment with limited forms of basic income next year. A big concern among economists is that a basic income could actually discourage some people from retraining, or indeed working at all—why not play video games all day?—though studies of previous experiments with a basic income suggest that it encourages people to reduce their working hours slightly, rather than giving up work altogether. Another problem is that a basic income is not compatible with open borders and free movement of workers; without restrictions on immigration or entitlement it might attract lots of freeloaders from abroad and cause domestic taxpayers to flee. + +This points to another area where policymakers may have to grapple with the impact of advancing automation: its geopolitical implications as it benefits people in some countries more than others. Automation could have a much bigger impact in developing economies than in rich ones, says Mr Autor, because much of what they provide is essentially embodied labour: cheap goods made by low-wage workers, cheap services such as operating call-centres, or doing domestic and construction work overseas. If automation makes rich countries more self-sufficient in these areas, they will have less need for the products and services that have been driving exports and growth in the developing world. Automation could “erode the comparative advantage of much of the developing world”, says Mr Autor. Another worry, he says, is that rich countries own the technologies and patents associated with robots and AI, and stand to benefit if they cause a surge in productivity. For the developing world, “it’s not clear that they are on the winning side of the bargain” if machines end up outperforming humans in a wide range of activities. + +The risk is that automation could deny poorer countries the opportunity for economic development through industrialisation. Economists talk of “premature deindustrialisation”; Dani Rodrik of Harvard University notes that manufacturing employment in Britain peaked at 45% just before the first world war, but has already peaked in Brazil, India and China with a share of no more than 15%. This is because manufacturing is much more automated than it used to be. China recently overtook America as the largest market for industrial automation, according to a report by Citi, a bank, and Oxford University’s Martin School. Industrial automation may mean that other emerging economies, such as those in Africa and South America, will find it harder to achieve economic growth by moving workers from fields to factories, and will need to find new growth models. Without manufacturing jobs to build a middle class, observes Tyler Cowen, an economist at George Mason University, such countries “may have high income inequality baked into their core economic structures”. + +During the Industrial Revolution, John Stuart Mill wrote that “there cannot be a more legitimate object of the legislator’s care” than looking after those whose livelihoods are disrupted by machines. At the moment it is mostly rich countries that worry about the effects of automation on education, welfare and development. But policymakers in developing countries will increasingly need to consider them too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21700760-artificial-intelligence-will-have-implications-policymakers-education-welfare-and/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Ethics + +Frankenstein’s paperclips + +Techies do not believe that artificial intelligence will run out of control, but there are other ethical worries + +Jun 25th 2016 | From the print edition + + + +AS DOOMSDAY SCENARIOS go, it does not sound terribly frightening. The “paperclip maximiser” is a thought experiment proposed by Nick Bostrom, a philosopher at Oxford University. Imagine an artificial intelligence, he says, which decides to amass as many paperclips as possible. It devotes all its energy to acquiring paperclips, and to improving itself so that it can get paperclips in new ways, while resisting any attempt to divert it from this goal. Eventually it “starts transforming first all of Earth and then increasing portions of space into paperclip manufacturing facilities”. This apparently silly scenario is intended to make the serious point that AIs need not have human-like motives or psyches. They might be able to avoid some kinds of human error or bias while making other kinds of mistake, such as fixating on paperclips. And although their goals might seem innocuous to start with, they could prove dangerous if AIs were able to design their own successors and thus repeatedly improve themselves. Even a “fettered superintelligence”, running on an isolated computer, might persuade its human handlers to set it free. Advanced AI is not just another technology, Mr Bostrom argues, but poses an existential threat to humanity. + +The idea of machines that turn on their creators is not new, going back to Mary Shelley’s “Frankenstein” (1818) and earlier; nor is the concept of an AI undergoing an “intelligence explosion” through repeated self-improvement, which was first suggested in 1965. But recent progress in AI has caused renewed concern, and Mr Bostrom has become the best-known proponent of the dangers of advanced AI or, as he prefers to call it, “superintelligence”, the title of his bestselling book. + +His interest in AI grew out of his analysis of existential threats to humanity. Unlike pandemic disease, an asteroid strike or a supervolcano, the emergence of superintelligence is something that mankind has some control over. Mr Bostrom’s book prompted Elon Musk to declare that AI is “potentially more dangerous than nukes”. Worries about its safety have also been expressed by Stephen Hawking, a physicist, and Lord Rees, a former head of the Royal Society, Britain’s foremost scientific body. All three of them, and many others in the AI community, signed an open letter calling for research to ensure that AI systems are “robust and beneficial”—ie, do not turn evil. Few would disagree that AI needs to be developed in ways that benefit humanity, but agreement on how to go about it is harder to reach. + +Mr Musk thinks openness is the key. He was one of the co-founders in December 2015 of OpenAI, a new research institute with more than $1 billion in funding that will carry out AI research and make all its results public. “We think AI is going to have a massive effect on the future of civilisation, and we’re trying to take the set of actions that will steer that to a good future,” he says. In his view, AI should be as widely distributed as possible. Rogue AIs in science fiction, such as HAL 9000 in “2001: A Space Odyssey” and SKYNET in the “Terminator” films, are big, centralised machines, which is what makes them so dangerous when they turn evil. A more distributed approach will ensure that the benefits of AI are available to everyone, and the consequences less severe if an AI goes bad, Mr Musk argues. + +Not everyone agrees with this. Some claim that Mr Musk’s real worry is market concentration—a Facebook or Google monopoly in AI, say—though he dismisses such concerns as “petty”. For the time being, Google, Facebook and other firms are making much of their AI source code and research freely available in any case. And Mr Bostrom is not sure that making AI technology as widely available as possible is necessarily a good thing. In a recent paper he notes that the existence of multiple AIs “does not guarantee that they will act in the interests of humans or remain under human control”, and that proliferation could make the technology harder to control and regulate. + +Fears about AIs going rogue are not widely shared by people at the cutting edge of AI research. “A lot of the alarmism comes from people not working directly at the coal face, so they think a lot about more science-fiction scenarios,” says Demis Hassabis of DeepMind. “I don’t think it’s helpful when you use very emotive terms, because it creates hysteria.” Mr Hassabis considers the paperclip scenario to be “unrealistic”, but thinks Mr Bostrom is right to highlight the question of AI motivation. How to specify the right goals and values for AIs, and ensure they remain stable over time, are interesting research questions, he says. (DeepMind has just published a paper with Mr Bostrom’s Future of Humanity Institute about adding “off switches” to AI systems.) A meeting of AI experts held in 2009 in Asilomar, California, also concluded that AI safety was a matter for research, but not immediate concern. The meeting’s venue was significant, because biologists met there in 1975 to draw up voluntary guidelines to ensure the safety of recombinant DNA technology. + +Sci-fi scenarios + +Mr Bostrom responds that several AI researchers do in fact share his concerns, but stresses that he merely wishes to highlight the potential risks posed by AI; he is not claiming that it is dangerous now. For his part, Andrew Ng of Baidu says worrying about superintelligent AIs today “is like worrying about overpopulation on Mars when we have not even set foot on the planet yet”, a subtle dig at Mr Musk. (When he is not worrying about AIs, Mr Musk is trying to establish a colony on Mars, as an insurance policy against human life being wiped out on Earth.) AI scares people, says Marc Andreessen, because it combines two deep-seated fears: the Luddite worry that machines will take all the jobs, and the Frankenstein scenario that AIs will “wake up” and do unintended things. Both “keep popping up over and over again”. And decades of science fiction have made it a more tangible fear than, say, climate change, which poses a much greater threat. + + + +AI researchers point to several technical reasons why fear of AI is overblown, at least in its current form. First, intelligence is not the same as sentience or consciousness, says Mr Ng, though all three concepts are commonly elided. The idea that machines will “one day wake up and change their minds about what they will do” is just not realistic, says Francesca Rossi, who works on the ethics of AI at IBM. Second, an “intelligence explosion” is considered unlikely, because it would require an AI to make each version of itself in less time than the previous version as its intelligence grows. Yet most computing problems, even much simpler ones than designing an AI, take much longer as you scale them up. + +Third, although machines can learn from their past experiences or environments, they are not learning all the time. A self-driving car, for example, is not constantly retraining itself on each journey. Instead, deep-learning systems have a training phase in which neural-network parameters are adjusted to build a computational model that can perform a particular task, a number-crunching process that may take several days. The resulting model is then deployed in a live system, where it can run using much less computing horsepower, allowing deep-learning models to be used in cars, drones, apps and other products. But those cars, drones and so on do not learn in the wild. Instead, the data they gather while out on a mission are sent back and used to improve the model, which then has to be redeployed. So an individual system cannot learn bad behaviour in a particular environment and “go rogue”, because it is not actually learning at the time. + +The black-box problem + +Amid worries about rogue AIs, there is a risk that nearer-term ethical and regulatory concerns about AI technologies are being overlooked. Facial-recognition systems based on deep learning could make surveillance systems far more powerful, for example. Google’s FaceNet can determine with 99.6% accuracy whether two pictures show the same person (humans score around 98%). Facebook’s DeepFace is almost as good. When the social-network giant recently launched an app called Moments, which automatically gathers together photos of the same person, it had to disable some of its facial-recognition features in Europe to avoid violating Irish privacy laws. + +In Russia, meanwhile, there has been a recent outcry over an app called FindFace, which lets users take photos of strangers and then determines their identity from profile pictures on social networks. The app’s creators say it is merely a way to make contact with people glimpsed on the street or in a bar. Russian police have started using it to identify suspects and witnesses. The risk is clear: the end of public anonymity. Gigapixel images of a large crowd, taken from hundreds of metres away, can be analysed to find out who went on a march or protest, even years later. In effect, deep learning has made it impossible to attend a public gathering without leaving a record, unless you are prepared to wear a mask. (A Japanese firm has just started selling Privacy Visor, a funny-looking set of goggles designed to thwart facial-recognition systems.) + +Deep learning, with its ability to spot patterns and find clusters of similar examples, has obvious potential to fight crime—and allow authoritarian governments to spy on their citizens. Chinese authorities are analysing people’s social-media profiles to assess who might be a dissident, says Patrick Lin, a specialist in the ethics of AI at Stanford Law School. In America, meanwhile, police in Fresno, California, have been testing a system called “Beware” that works out how dangerous a suspect is likely to be, based on an analysis of police files, property records and social-media posts. Another system, called COMPAS, provides guidance when sentencing criminals, by predicting how likely they are to reoffend. Such systems, which are sure to be powered by deep learning soon if they are not already, challenge “basic notions about due process”, says Mr Lin. + +A related concern is that as machine-learning systems are embedded into more and more business processes, they could be unwittingly discriminatory against particular groups of people. In one infamous example, Google had to apologise when the automatic tagging system in its Photos app labelled black people as “gorillas”. COMPAS has been accused of discriminating against black people. AI technology “is already touching people’s lives, so it’s important that it does not incorporate biases”, says Richard Socher of MetaMind. Nobody sets out to make a system racist, he says, but “if it trains on terrible data it will make terrible predictions.” Increasingly it is not just intellectual work, but also moral thinking and decision-making, says Mr Lin, that is being done “by what are in effect black boxes”. + +Fortunately there are ways to look inside these black boxes and determine how they reach their conclusions. An image-processing neural network, for example, can be made to highlight the regions of an input image which most influenced its decision. And many researchers are working on varieties of a technique called “rule extraction” which allows neural networks to explain their reasoning, in effect. The field in which this problem has received most attention is undoubtedly that of self-driving cars. + +Such vehicles raise other ethical issues, too, particularly when it comes to how they should behave in emergencies. For example, should a self-driving car risk injuring its occupants to avoid hitting a child who steps out in front of it? Such questions are no longer theoretical. Issues such as who is responsible in an accident, how much testing is required and how to set standards need to be discussed now, says Mr Hassabis. Mr Ng comes at the question from a different angle, suggesting that AI researchers have a moral imperative to build self-driving cars as quickly as possible in order to save lives: most of the 3,000 people who die in car accidents every day are victims of driver error. But even if self-driving cars are much safer, says Daniel Susskind, an economist at Oxford University, attitudes will have to change. People seem to tolerate road deaths caused by humans, but hold machines to much higher standards. “We compare machines to perfection, not to humans doing the same tasks,” he says. + +Killer app + +Many people are worried about the military use of AI, in particular in autonomous weapons that make life-and-death decisions without human intervention. Yoshua Bengio of the University of Montreal says he would like an “outright ban” on the military use of AI. Life-and-death decisions should be made by humans, he says, not machines—not least because machines cannot be held to account afterwards. Mr Hassabis agrees. When Google acquired his firm, he insisted on a guarantee that its technology would not be used for military purposes. He and Mr Bengio have both signed an open letter calling for a ban on “offensive autonomous weapons”. (Ronald Arkin of the Georgia Institute of Technology, by contrast, argues that AI-powered military robots might in fact be ethically superior to human soldiers; they would not rape, pillage or make poor judgments under stress.) + +Another of Mr Hassabis’s ideas, since borrowed by other AI firms, was to establish an ethics board at DeepMind, including some independent observers (though the company has been criticised for refusing to name the board’s members). Even if AI firms disagree with the alarmists, it makes sense for them to demonstrate that there are at least some things they think are worth worrying about, and to get involved in regulation before it is imposed from outside. But AI seems unlikely to end up with its own regulatory agency on the lines of America’s Federal Aviation Authority or Food and Drug Administration, because it can be applied to so many fields. It seems most likely that AI will require existing laws to be updated, rather than entirely new laws to be passed. The most famous rules governing the behaviour of AI systems are of course the “Three Laws of Robotics” from Isaac Asimov’s robot stories. What made the stories interesting was that the robots went wrong in unexpected ways, because the laws simply do not work in practice. It will soon be time to agree on laws that do. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21700762-techies-do-not-believe-artificial-intelligence-will-run-out-control-there-are/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Conclusion + +Answering the machinery question + +Glimpses of an AI-enabled future + +Jun 25th 2016 | From the print edition + + + +THE ORIGINAL MACHINERY question, which had seemed so vital and urgent, eventually resolved itself. Despite the fears expressed by David Ricardo, among others, that “substitution of machinery for human labour…may render the population redundant”, the overall effect of mechanisation turned out to be job creation on an unprecedented scale. Machines allowed individual workers to produce more, reducing the price of many goods, increasing demand and generating a need for more workers. Entirely new jobs were created to oversee the machines. As companies got bigger, they required managers, accountants and other support staff. And whole new and hitherto unimagined industries sprang up with the arrival of the railways, telegraphy and electrification. + +To be sure, all this took time. Industrialisation caused pervasive labour-market upheaval as some jobs vanished, others changed beyond recognition and totally new ones emerged. Conditions in factories were grim, and it took several decades before economic growth was reflected in significant wage gains for workers—a delay known as “Engels’ pause”. + +Worries about unemployment gave way to a much wider argument about employment conditions, fuelling the rise of socialist and communist ideas and creating the modern labour movement. By the end of the 19th century the machinery question had faded away, because the answer was so obvious. In 1896 Arthur Hadley, an American economist, articulated the view of the time when he observed that rather than destroying jobs, mechanisation had brought about “a conspicuous increase of employment in those lines where improvements in machinery have been greatest”. + +The debates about whether AI will destroy jobs, and whether it might destroy humanity, are really arguments about the rate of change + +What does all this tell us today? Historical analogies are never perfect, but they can be informative. Artificial intelligence is now prompting many of the same concerns as mechanisation did two centuries ago. The 19th-century experience of industrialisation suggests that jobs will be redefined, rather than destroyed; that new industries will emerge; that work and leisure will be transformed; that education and welfare systems will have to change; and that there will be geopolitical and regulatory consequences. + + + +In many ways, the two big debates about AI—whether it will destroy jobs, and whether it might destroy humanity—are really arguments about the rate of change. If you believe that AI is improving so rapidly that human-level artificial general intelligence (AGI) is just around the corner, you are more likely to worry about unexpected and widespread job losses and the possibility that the technology may suddenly get out of control. It seems more probable, however, that AI will improve steadily, and that its impact over the next decade or two, while significant, will not be on the same scale as the epochal shift from a mostly agricultural to a mostly industrial economy. + +AGI is probably still a couple of decades away, perhaps more, so the debate about what it might or might not be able to do, and how society should respond to it, is still entirely theoretical. This special report has therefore focused on the practical effects of AI in the nearer term. These are likely to be a broadening and quickening of the spread of computers into the workplace and everyday life, requiring people to update their skills faster and more frequently than they do at the moment. Provided educational systems are upgraded and made more flexible, which is beginning to happen, that should be entirely feasible. + +So far the debate has been dominated by the gloomy possibilities of massive job losses and rogue AIs. More positive scenarios, in which AI dramatically changes the world for the better, tend to attract less attention. So here are three examples. First, AI could transform transport and urban life, starting with self-driving vehicles. Being able to summon one at will could remove the need to own a car, greatly reduce the number of vehicles on the roads and all but eliminate road deaths. Urban environments will enjoy a renaissance as pollution declines and space previously devoted to parking is reallocated to parks, housing and bicycle paths. + +Second, AI could soon enable people to converse with a wide range of things: their home and their car, most obviously, just as people talk to a disembodied computer in “Star Trek”, but also AI avatars of companies and other organisations, information services, AI advisers and tutors. A host of AI-powered personal assistants, such as Alexa, Cortana, Siri and Viv, are already jostling for position, and could become an important new way to interact with computers and access information, like the web browser and touchscreen before them. Speech alone is not always the best way to interact with a computer, so such conversations will often be accompanied by graphics (perhaps in the form of “augmented reality” overlays on people’s vision). AI also has huge potential to help humans talk to one another, by facilitating real-time translation between people using different languages. Basic versions of this technology exist today, and will get better. + +The indefatigable helper + +Third, AI could make a big difference by turbocharging scientific and medical research. “The thing that excites me the most is using AI to help speed up scientific breakthroughs,” says Demis Hassabis of DeepMind. An AI could act as a relentless research assistant, he reckons, in fields from cancer research to climate change, helping solve problems by sifting through data, reading thousands of scientific papers and suggesting hypotheses or pointing out correlations that might be worth investigating. IBM is already working in this area, using its Watson AI technology to analyse large volumes of medical data. Deep learning will be used to analyse the data from the “100,000 Genomes” project now under way in England’s National Health Service; the same techniques can help physicists sift reams of data from particle colliders for new discoveries. + +After years of frustration with AI’s slow rate of progress, it is ironic that many now think it is moving too quickly. Yet a sober assessment suggests that AI should be welcomed, not feared. In the 1840s John Stuart Mill wrote that “the proof of the ultimate benefit to labourers of mechanical inventions…will hereafter be seen to be conclusive.” A future economist may say the same of the benefits of AI, not just for labourers but for everyone. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21700759-glimpses-ai-enabled-future-answering-machinery-question/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Health care: All about the base + +Security businesses in Europe: Silver linings + +YouTube and copyright: Free and easy listening + +3D printing: Print my ride + +Elon Musk’s empire: Clouds appear + +SoftBank: Short and sweet + +Telecoms: Oi boy + +Schumpeter: Sleepy giant + + + + + +Articles Sections Next + +Health care + +All about the base + +New businesses eye the opportunities in managing genome data + +Jun 25th 2016 | SAN DIEGO | From the print edition + + + +THE project to understand the human genome has long promised to revolutionise the way that diseases are diagnosed, drugs are designed and even the way that medicine is practised. An ability to interpret human genetic information holds the promise of doing everything from predicting which drugs will work on a particular patient to identifying a person’s predisposition to develop diseases. + +Genomic information is already transforming some medical practices. Sequencing has changed the way that fetuses are screened for Down’s syndrome, from a risky invasive test to one where abnormalities in fetal DNA can be picked up from blood drawn from the mother. In time this sort of method will extend to other genetic disorders and other medical applications. One area of promise is treating some types of cancer. Using blood tests to detect genetic changes in tumours could allow doctors to discover more quickly when drugs are no longer effective. This is so promising that there is already speculation that performing such “liquid” biopsies could be a $11 billion business by 2022. + +Realising the vast potential of genomic medicine is a commercial project as well as a scientific one. It relies on a small but growing group of companies that are vying to produce data more cheaply, analyse them more quickly, store them securely and then to translate them all into useful information. + +These tasks have proved harder than expected. As genome data have started to be collected and sifted, nuggets of genetic gold are emerging. Yet creating and using this torrent of information is an endeavour of enormous scale and complexity. Each human genome comprises about a hundred gigabytes of data. The amount gathered is doubling every seven months; by 2025 it could require more storage capacity than for every YouTube video on the planet, or for all the information astronomers have drawn from the heavens. + +One firm in particular has been at the heart of this nascent genomic-data industry. Illumina, based in San Diego, is the main provider of the machines that sequence genetic information. Its dominance, and its role in reducing costs (see chart), has led to comparisons with Intel’s grip on chipmaking. It controls 70% of a market worth $3.3 billion in 2015, according to Research and Markets, a research firm. As its customers, now mainly researchers, expand to include medical practitioners, that market could grow to between $12 billion and $20 billion by 2020. + + + +Illumina’s continued dominance is by no means assured. Pacific Biosciences, based in Menlo Park, California, has developed a machine that does a similar job. It is selling well because it is better at some jobs than Illumina’s machines. Thermo Fisher, of Waltham, Massachusetts, is another rival; its machine should appeal to clinics because it is easier to operate and more efficient at targeting those sequences that are likely to be of most interest. + +Pore man, rich man + +New technologies threaten both Illumina and its current competitors. Oxford Nanopore, a small British company, has pioneered a new method of sequencing. It passes DNA through tiny holes, whose changing electrical resistance is recorded as different molecular “letters”, or bases, pass by. Existing methods tag the four letters of DNA with a different marker and then read the sequence of tags. + +Using pores is not yet as accurate as using markers, but is allowing sequencing machines to be built that are small, portable and quicker at reading data. That would eventually allow for new services such as diagnostics in the field and on-the-spot testing for infections. Although it is unclear whether the technology can compete in the business of sequencing entire human genomes, the British minnow does seem to pose a threat. In February Illumina filed two lawsuits against the company for patent infringement. + +Once sequenced, genetic data are the raw materials for other business ventures. One flourishing area of activity lies in making sense of it all. Craig Venter, a pioneer of genomics and boss of Human Longevity Inc (HLI), also in San Diego, is assembling the largest and most comprehensive database of genomic and clinical data in order to hunt through it for targets for new drugs. + +Understanding the genetic basis of a disease or disorder can be critical in identifying therapies that will fix these problems. With this in mind HLI recently signed a ten-year deal reportedly worth hundreds of millions of dollars with AstraZeneca, a British drug company, to sequence half a million genomes. The potential to find targets for drugs is such that Mr Venter thinks HLI might one day transform itself into a pharmaceutical company. + +The race to identify promising targets is likely to encourage more of these partnerships as drugmakers try to get their hands on data that will help them improve their drug pipelines. Indeed, in another deal ten companies, including AbbVie, Biogen, Roche, Takeda and GSK, have partnered with Genomics England, a company set up by the British government to sequence the genomes of 100,000 patients. + +Genome data have to be stored as well as analysed. That relies on cloud-computing firms. Mr Venter says his company pays Amazon $1m a month for computing and storage. This is not yet a big business, but it is growing. According to one estimate, cloud-computing firms could charge $1 billion a year by 2018 as the quantities of digital information continue to grow. Firms including Amazon and Google are jostling to become the platform of choice for managing genome sequences. + +One way to attract business is for the cloud firms also to offer tools to make sense of the data. In February Microsoft announced a collaboration with Spiral Genetics, which has developed methods for managing and analysing genome sequences. In May Huawei launched China Precision Medicine Cloud which, by including tools from Wuxi NextCODE, an analytics firm, allows thousands of complete human genomes to be analysed in one go. Plenty of other companies are offering ways of slicing and dicing data in the cloud, including DNAnexus, Seven Bridges and Illumina’s BaseSpace. + +As genetic testing becomes ever cheaper, it will open up new opportunities. Invitae, based in San Francisco, is already trying to set itself up as the Amazon of genome sequencing by making the process of ordering medical-grade tests so easy and cheap that testing for genetically inherited diseases becomes as simple as ordering books online. Other applications stretch beyond medicine. Genome sequencing could be used to check if food is safe to eat, for example, or to clamp down on the illegal trade in wildlife or to monitor the spread of antibiotic resistance. + +But profits are not guaranteed to flow quickly. Health-care providers and governments are an obvious source of sales, but they are notoriously slow to spend their money on new forms of testing. And the business of direct-to-consumer genetic testing relies on convincing individuals that such tests are worthwhile and regulators that they are safe and accurate. Genomics has long blended huge promise and practical difficulties. That won’t change. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21701143-new-businesses-eye-opportunities-managing-genome-data-all-about-base/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Security businesses in Europe + +Silver linings + +Migration, terrorism and austerity help contractors to prosper + +Jun 25th 2016 | PARIS | From the print edition + +A leg up for security firms + +REFUGEES arriving on Aegean islands are whisked to “hotspots”—registration centres run by the European Asylum Support Office. It is often a traumatic moment. Those who fear being sent back to Turkey can turn angry or violent. “We have had a number of riots, staff have had to be evacuated quickly,” says an EASO spokesman, Jean-Pierre Schembri. So, for the first time, a private-security firm, G4S, has been contracted to guard the hotspots, backing up the Greek police. “We felt we needed additional security,” Mr Schembri adds. + +Austrian officials, struggling with a refugee influx late in 2015, brought in ORS Services, a Swiss firm that was already running some of its camps, to take control of all of them. ORS also runs asylum centres across Switzerland. In Germany, where security firms employ 235,000 people, business is booming after over a million refugees arrived last year. Revenues for German security firms reached €7 billion ($7.9 billion) last year, up by 15% from 2014 as staff were hired for refugee shelters. This year will be a bumper one, too. + +“More missions previously done by the police, or by public authorities, are now given to private companies,” says Catherine Piana, head of COESS, a pan-European industry lobby group based in Brussels. She estimates there are 2.2m licensed guards in Europe, roughly as many as there are police. Infrastructure, such as airports, ports, nuclear plants and hospitals, is mostly protected by privately contracted firms these days. + +Migration is not the only reason why such firms are flourishing. Anxiety over terrorism is a second explanation for a recent upsurge in demand—and, perhaps counter-intuitively, for why more people seek jobs as guards, despite low pay. Olivier Duran of SNES, a body representing small French security companies, suggests that after a privately employed guard foiled a bomb attack at Stade de France during the terrorist assaults in November, there has been a surge in job applications—mostly from immigrants, who say they want to serve their new country. + +CNAPS, a French organisation of bigger contractors, calls this an exceptional “year of maximum mobilisation”, because of the terror attacks and because France is hosting the Euro 2016 football tournament, which has brought hundreds of thousands of fans to French cities. Among 90,000 extra security personnel deployed to police the football, around 15,000 are private staff, working for around 60 firms. + +Whether or not this turns out to be a good year, the long-term growth prospects for the private security industry are helped by lower public spending in Europe. James Kelly, who heads BSIA, an association for 450 private-security firms in Britain, says austerity has lifted demand for their services. He says that G4S, for example, conducts “street to suite” operations: its staff collects suspects arrested by the police, takes them into custody and processes paperwork. He predicts that private contractors, operating under the police code, will conduct arrests before too long. + +Such intimate co-operation between police and private firms is less common elsewhere in Europe but is on the rise. Mr Duran says that private guards operating side by side with police at the Euro 2016 tournament will spread “the concept of co-working”. He points to courts, ministries and public offices that are now largely guarded by private operators, often under the authority of a policeman. He also suggests that counter-terrorism efforts would be boosted if France’s 150,000 private guards—mostly drawn from immigrant communities—were encouraged to be extra “eyes and ears” for the police. + +Private security firms can find other ways to expand. Diversification is one possibility, as they supply receptionists, maintenance workers and other staff in roles other than security. In security itself, customers increasingly demand technology rather than more human guards, says Ms Piana, so bigger companies, with access to capital, may be better placed to grow. Such firms offer hardware, like surveillance cameras and electronic gates, as well as algorithms and analytics to assess the huge quantities of data that are gathered. In Britain some equipment is mostly deployed by private firms: an industry body estimates that 96% of CCTV cameras are privately owned and operated. + +What hampers growth, at least according to bigger firms, is a lack of harmonisation that makes it harder for firms to operate across borders. They also want stricter rules to raise standards by, for example, requiring more training for guards. “We want more regulation, we champion it, to remove cowboys,” says Mr Kelly, who foresees industry consolidation as firms such as G4S and Securitas look for more economies of scale. + +Not all rules are welcome. Companies in France, for example, complain that strong unions and strict labour laws make it costly to hire staff. But with no let-up in sight to migration, terrorism and austerity, a gloomy continent makes the prospects for Europe’s private security firms look reassuringly bright. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21700844-migration-terrorism-and-austerity-help-contractors-prosper-private-security-firms-are/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +YouTube and copyright + +Free and easy listening + +The music industry lobbies Congress to keep YouTube at bay + +Jun 25th 2016 | SAN BRUNO, CALIFORNIA | From the print edition + +A chorus of disapproval + +IN LOVE or in business, it is not a good idea to be on the wrong side of Taylor Swift. She has slated ex-boyfriends in her songs. And last year she publicly criticised Apple Music’s plan not to pay artists during the streaming service’s launch period. Apple quickly relented. Now Ms Swift has joined nearly 200 musicians and record labels in a campaign aimed at the largest streaming service, YouTube. They complain that it gives away too much of their work for free. + +Their call for a change in copyright law is sure to fail, but the underlying gripe with Google’s streaming service will find sympathetic ears. Streaming of music via on-demand video services more than doubled in America last year, to 172.4 billion songs, according to Nielsen, a research firm. Ms Swift, Sir Paul McCartney, U2 and others signed a letter, published in several Washington periodicals on June 20th, asking Congress to make it more difficult and costly for those streaming services to host versions of songs uploaded by users. Google and Facebook, among others, will vigorously oppose any change to the Digital Millennium Copyright Act, which grants them “safe harbour” from liability for copyright infringement. + +A more realistic goal for the music industry is to persuade YouTube to pay more for playing their songs. The service is the leading destination for on-demand music but a small source of revenue. IFPI, a trade body, reckons that 900m people used ad-supported user-upload services such as YouTube to listen to music last year, but that the industry got only $634m from those streams. Subscription-based services, including Spotify, paid $2.3 billion to musicians in 2015. + +YouTube executives argue that they are creating a new source of revenue for the industry, even if it seems small now. Many of those free-riders are unlikely ever to pay for a subscription service, they suggest. A popular user-uploaded video promotes the original work and generates ad revenue for the industry. YouTube can take down such videos, but the company notes that labels and publishers usually want to make what money they can from them. + +Music executives might warm to these arguments if YouTube comes up with more cash for them. That is not out of the question. Analysts reckon YouTube collected up to $9 billion in advertising revenue in 2015, some $5 billion of which would have been due to content creators and rights-holders. Those figures could double or even triple by 2020. By then YouTube might be making money. (Alphabet, Google’s parent company, does not break out YouTube’s results but it is widely reckoned to make a loss.) + +Three big record labels—Universal Music Group, Warner Music and Sony Music Entertainment—are negotiating new deals with YouTube that they hope will lead to a bigger slice of the pie. Some music publishers will seek new terms soon, too. Their lobbying may not sway Congress, even with Ms Swift’s help. But it does not hurt to have the singer on their side of the bargaining table. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21701174-music-industry-lobbies-congress-keep-youtube-bay-free-and-easy-listening/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +3D printing + +Print my ride + +A mass-market carmaker starts customising vehicles individually + +Jun 25th 2016 | From the print edition + +A bumper business + +ANOTHER milestone has been passed in the adoption of additive manufacturing, popularly known as 3D printing. Daihatsu, a Japanese manufacturer of small cars and a subsidiary of Toyota, an industry giant, announced on June 20th that it would begin offering car buyers the opportunity to customise their vehicles with 3D-printed parts. This brings to drivers with more modest budgets the kind of individual tailoring of vehicles hitherto restricted to the luxury limousines and sports cars of the super-rich. + +The service is available only to buyers of the Daihatsu Copen, a tiny convertible two-seater. Customers ordering this car from their local dealer can choose one of 15 “effect skins”, decorative panels embellished with intricate patterns in ten different colours. The buyers can then use a website to tinker with the designs further to create exactly the look they want. The skins are printed in a thermoplastic material using additive-manufacturing machines from Stratasys, an American company. The results are then stuck on the front and rear body panels. + +Copen buyers will like selecting unique add-ons rather than choosing from a list of standard accessories, reckons Osamu Fujishita of Daihatsu. The company is testing the service in a few markets but plans to make it widely available by early 2017. “I think the Copen project is just the start,” adds Mr Fujishita. + +Other carmakers are watching closely. Generally, personal customisation is available only where money is no object—on cars such as Rolls-Royces and Ferraris. But 3D printers change the economics of production. Since software, rather than skilled craftsmen working in wood or metal, is behind the process, changes can be made easily and cheaply; traditional machine tools used in mass-production factories make design alterations expensive and slow. And 3D printing saves on retooling costs to make small runs of parts (and spares if they suffer damage later). + +The aerospace industry is already well advanced in using 3D printers for custom parts. Airlines often specify customised fittings for the interiors of their aircraft; Airbus prints internal cabin fittings for some variants of its new A350XWB commercial jet, for instance. Specialised parts are 3D-printed for racing cars too, but until Daihatsu’s move, mainstream carmakers have mainly used 3D machines to make prototype vehicles rather than production parts. + +Local Motors, a tiny Arizona company, shows where things may head next. It prints substantial parts for a variety of vehicles using “large-area” 3D printers that can cope with bigger jobs than standard machines. Local Motors prints cars using a blend of plastic and lightweight carbon fibre. One of its vehicles, the LM3D roadster, is 75% printed. The firm’s latest creation is an autonomous electric minibus which can carry 12 passengers. + +Local Motors reckons that the use of 3D printing will make it possible to produce vehicles to individual designs in microfactories anywhere in the world to cater to local motoring tastes. This would represent a return to an earlier age of motoring when coach builders would be engaged to design and fabricate bespoke bodies for Bugattis, Duesenbergs or Rollers. The wheel is turning back. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21701182-mass-market-carmaker-starts-customising-vehicles-individually-print-my-ride/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Elon Musk’s empire + +Clouds appear + +Tesla’s purchase of SolarCity is a bold bet, but a worrying one + +Jun 25th 2016 | From the print edition + + + +ELON MUSK, a South African entrepreneur, embodies the creative daring of Silicon Valley. He has defied sceptics and overcome setbacks over the years, all the while pushing on with innovations of improbable ambition. Yet even a man of his self-belief will have been taken aback by the negative response to an announcement on June 21st that Tesla Motors, the electric-carmaker and battery-manufacturer he runs, would buy SolarCity, a company that makes solar panels and that counts Mr Musk as its largest shareholder. Tesla will pay with up to $2.8 billion of its own shares if investors vote the deal through (Mr Musk says he will not take part in the ballot). + +Mr Musk’s pitch is that combining Tesla and SolarCity creates a vertically integrated energy company that can sell consumers all they need for green living. The rich and virtuous can already buy an electric car from Tesla, and a Powerwall, a battery that stores solar energy and powers the home at night. A combination of Tesla and SolarCity could put solar panels in the carmaker’s retail stores, expanding SolarCity’s range of customers and helping them charge their cars in a cleaner way. + +Investors were unconvinced. The day after the announcement Tesla’s shares fell by around 10%, shedding some $3 billion from its market value. Some think the deal looks suspiciously like a bail-out for SolarCity, which has been losing money and failing to hit targets. The firm’s debts and the fears of some analysts that California, its biggest market, is becoming swamped with solar panels make any synergies pale in comparison with the risks. + +SolarCity and the larger, more successful Tesla, are also ravenous for new capital. The carmaker recently announced plans, met with widespread incredulity, to double its production target for 2020 to 1m cars. Combined, the pair would burn $2.8 billion in cash between them in 2016 alone, says Barclays, a bank. + +The deal shows how Mr Musk, chairman of SolarCity and boss of both Tesla and SpaceX, a rocketry firm he founded, is willing to combine his professional and personal interests. That has advantages. Mr Musk is one of the world’s busiest bosses. Combining two of the three firms he cares about could, in theory, focus his energies, streamline decision-making and bring his assertive personality more effectively to bear on promoting the companies. + +There is a downside, though. SolarCity was founded in 2006 by two of Mr Musk’s cousins, Lyndon and Peter Rive. Lyndon is the current boss. When SolarCity was trying to raise money this year and last, SpaceX quietly bought most of the bonds on offer. Mr Musk has also taken out around $500m in personal credit lines and bought shares in Tesla and SolarCity when they needed capital. This network of ties—allied to Mr Musk’s tendency to make expansive promises and willingness to use unconventional manoeuvres—makes some investors uncomfortable. + +Mr Musk’s risk-taking has paid off in the past. He put around $180m (which he got from the sale in 2002 of PayPal, a firm he co-founded) into Tesla and SpaceX, and struggled to keep them afloat when they ran into trouble in 2008, forcing him to borrow money from friends. His confident, all-in bets have made him a Silicon Valley star. This latest one is a high-stakes strategy that could tarnish his image, whether or not shareholders vote against it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21701181-teslas-purchase-solarcity-bold-bet-worrying-one-clouds-appear/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +SoftBank + +Short and sweet + +Nikesh Arora exits the Japanese telecoms firm + +Jun 25th 2016 | TOKYO | From the print edition + + + +THE unpredictable ways of “Masa” Son, the founder of SoftBank, a Japanese telecoms and technology firm, are well known in Japan. Even so, the news that he would immediately part company with Nikesh Arora, a former Google executive he named just over a year ago as his successor, was a shock. “He and I love each other,” gushed Mr Arora in one of a hail of explanatory tweets afterwards. Circumstance would suggest otherwise. + +SoftBank’s official reason for Mr Arora’s resignation is that Mr Son decided he wanted to carry on as chief executive for another five years or more. Mr Arora wanted to take over sooner. But his brief record at the company must have had something to do with his departure. + +Mr Son believed his protégé’s connections in Silicon Valley could land him the right tech deals. Mr Arora’s investment spree include a $1 billion punt on Coupang, a loss-making South Korean unicorn. Hundreds of millions also went into an array of cash-bleeding ride-hailing firms in Asia, including India’s Ola. But the mood has shifted. Now SoftBank’s activities are widely viewed as symptoms of the frothiness and mania that have gripped the tech sector. + +Mr Arora’s free rein to back startups particularly annoyed shareholders. One group of disgruntled investors led a campaign to oust him. They judged his continued role as an adviser to Silver Lake, an American technology-investment firm, to cause a conflict of interest. When they listed their complaints earlier this year, Mr Son pledged “complete trust” in Mr Arora. On June 20th, a special committee of SoftBank board members concluded that the various complaints were “without merit”. Yet a day later he resigned. + +Mr Arora’s rapid rise had also irked the executives who helped Mr Son build his cash-generating mobile-telecoms empire after buying Vodafone’s struggling Japanese mobile unit in 2006. A particular issue was Mr Arora’s pay. In the 2014 fiscal year he took home ¥16.5 billion ($156m), and last year he pocketed ¥8 billion, in a country in which bosses receive on average around ¥100m a year. + +Mr Son’s gamble on Mr Arora was one of two big recent bets. The other was the acquisition of Sprint, an ailing American telecoms firm that SoftBank bought for $22 billion in 2013. Mr Son is taking steps to reduce risk by selling assets and paying down some of the debts his firm has accumulated, in part through buying Sprint. SoftBank has agreed to sell some of its stake in Alibaba, a Chinese e-commerce giant, for $10 billion, and is to dispose of a stake in Supercell, a Finnish game developer. + +Mr Son will now need to decide what to do about SoftBank’s internet-investment strategy. With the aid of Mr Arora, he had planned to invest as much as $10 billion over the next decade on startups in India, the country of Mr Arora’s birth. After his anointed successor’s premature exit, Mr Son will struggle to attract another plugged-in technology superstar to Tokyo. His shareholders may not be too sorry. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21701220-nikesh-arora-exits-japanese-telecoms-firm-short-and-sweet/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Telecoms + +Oi boy + +Another casualty of Brazil’s battered economy + +Jun 25th 2016 | São Paulo | From the print edition + +A bad call + +“OI” IS a cheerful, informal greeting in Brazilian Portuguese. But after the telecoms operator of the same name made the largest bankruptcy-protection filing in Brazilian history on June 20th, the country may finally be saying goodbye to its hopes of creating a strong, state-backed national champion. Brazil’s interim government says it will not bail out the company, which is in debt to the tune of 65 billion reais ($19 billion). State-controlled banks have not been prepared to forgive what the firm owes to them. Parts of the company could be sold off to foreign buyers. + +Oi was once treated more favourably by the government. The product of a state-sponsored merger eight years ago aimed at building a homegrown giant in a market dominated by foreign firms, Oi was even regarded as a potential global player. It is the country’s largest fixed-line firm, but has struggled to compete with international rivals in the much more lucrative mobile market, where it is Brazil’s fourth-largest operator, despite lots of official funding and regulatory changes in its favour. + +Like many firms in the country, Oi piled on debt during the boom years. It has subsequently been caught out as the economy has floundered because of the misguided interventionism of Dilma Rousseff, who had to step aside from the presidency in May after Brazil’s Senate voted to hold an impeachment trial against her, compounded by the falling prices of commodities. + +Mismanagement has not helped Oi. As the company has struggled to digest a merger with Portugal Telecom, it has chewed through six chief executives in five years. Now its three larger mobile competitors—Spain’s Telefónica; América Móvil, belonging to Carlos Slim, a Mexican billionaire; and TIM Participações—are poised to make gains at Oi’s expense, as the firm goes through Brazil’s complicated bankruptcy process. + +The firm’s predicament is the latest shock to hit the country’s battered economy. The interim president, Michel Temer, has a more pro-business outlook than Ms Rousseff. Privatisations are seriously being considered for the first time this century. But time is running out for a string of heavily indebted Brazilian companies, from steelmakers to construction firms. The question is whether they can restructure their debts and avoid the fate of Oi. If they fail several big firms will be saying “tchau” instead. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21701219-another-casualty-brazils-battered-economy-oi-boy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Sleepy giant + +China Inc needs better management to become more productive + +Jun 25th 2016 | From the print edition + + + +CHINESE business leaders will gather on June 26th in Tianjin, a charmless industrial city near Beijing, for the annual “Summer Davos” conference. This talking shop for big shots, organised by the World Economic Forum, will feature endless discussions about the fourth industrial revolution, panels on the internet of things and briefings on other whizzy topics that occupy the minds of business leaders the world over. China’s bosses will lap it up. The country wants to shift from its position as the world’s sweatshop to become a powerhouse of creativity and invention. The priority for corporate chiefs, runs the fashionable refrain, must now be to embrace trailblazing innovation and technology. In fact, a better bet would be to concentrate on the nuts and bolts of management. + +China does need to shift from brawn to brain, but Chinese companies are not going to turn into Google or Apple overnight. Most of them, especially those controlled by the state, will continue to plod on in unsexy industries, such as steel or cement, for some time yet. For this cohort of firms, the central problem is not a lack of futuristic thinking or transformative innovation but how to get better at what they do. + +Many are struggling just to get by, according to a report released on June 23rd by the McKinsey Global Institute (MGI), a think-tank. It calculates that over four-fifths of all “economic profits” (which take into account the cost of capital) generated in China come from one industry: finance. And that is not the result of the brilliance of China’s bankers, but rather of state-run banks being guaranteed profits by the regulatory system. By the same measure, almost half of the 20 biggest industries make a loss. + +That points to China Inc’s dirty secret. Outside the country, its firms are often portrayed as mighty enterprises poised to conquer the world. China’s best are indeed world-beaters (think of Huawei, a telecoms-equipment giant, or Haier, an innovative white-goods goliath). Export-oriented manufacturers (nearly all of them private) have sharpened up dramatically. Mainly thanks to their efforts, productivity in China rose sharply between 1990 and 2010, outpacing many countries. + +But that growth rate should not distract from the absolute levels of productivity, which are still abysmal. Across a variety of industries, in services and manufacturing, Chinese labour productivity is still just 15-30% of the OECD average despite those two decades of improvement. This is not just because the economy is biased toward heavy industry and dominated by stodgy state-owned enterprises (SOEs) that overinvest and underperform. Productivity lags behind badly at firms across the economy. + +The boffins at MGI scrutinised the financial performance of some 10,000 Chinese and American companies. They found that three-quarters of the gap in returns between the two groups is explained by the performance of individual companies, not merely the mix of businesses in the Chinese economy. If local firms could improve performance by enough to match the average return on equity of American firms, it would lift the economy-wide return on invested capital in China from 7.4% to 10.2%. + +How might this happen? Some things only the government can do. Letting failing firms go bust would be the most powerful reform of all. At the moment, no big company, public or private, can go bankrupt in China. Official subsidies, cheap loans and the inevitable bail-outs from local officials, worried about jobs and social upheaval, ensure survival. Another way to boost productivity would be to open up to competition the many parts of the economy (energy, telecoms, banking, airlines) that are run by oligopolistic SOEs. + +Rather than wait for liberal reforms that may never come, however, managers in China must crack on with their own productivity efforts. The country has some extraordinarily efficient factories run by contract manufacturers such as Taiwan’s Foxconn and America’s Flex (formerly Flextronics). But it has a far greater number of poor performers. Globally proven management techniques like Six Sigma, a data-driven approach to running a company, and “lean manufacturing” have been tried only in name. They must now be taken up in earnest. + +Technology need not be right at the cutting edge to help corporate officers do the basics better. More automation would boost productivity. Although China is the world’s biggest buyer of industrial robots, it still has only 36 per 10,000 manufacturing workers—half the global level and less than a tenth of the proportion in South Korea. Digital technology is another path to productivity gains. China’s logistics industry, for example, is a fragmented, over-regulated and corruption-riddled mess. Digital platforms that co-ordinate scheduling, warehousing and deliveries could boost the efforts of the 700,000 firms in this business. + +Boards have a role to play, too, in realigning incentives for managers so that long-term productivity gains are rewarded. Most firms pay executives a salary and bonus that is determined by short-term performance. A study of firms listed on Chinese stock exchanges by BCG, another consultancy, found no correlation between executive pay and company performance. + +Be normal + +In the end, the most important thing managers in China need to change is their outlook. After a long period of double-digit growth, many firms are still on an expansionist course. But with the economy now slowing, bosses must shift away from the strategy of growing at all costs to an approach that emphasises the boring stuff: cost cutting, restructuring and operational efficiencies. As MGI’s Jonathan Woetzel puts it, companies in China need to do more everyday “blocking and tackling”. This sort of talk may not impress the Davos set, but the resulting productivity gains are much more likely than all the guff in Tianjin to spark China’s next industrial revolution. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21701151-china-inc-needs-better-management-become-more-productive-sleepy-giant/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +India’s economy: Two stumbles forward, one back + +Buttonwood: The next leap + +Mexico’s special economic zones: How the bottom half lives + +IEX, unleashed: Speed bumps in the night + +Regulating banks: Capital hill + +The DAO: Theft is property + +German banks: Turn of the screw + +Free exchange: A running start + + + + + +Articles Sections Next + +India’s economy + +Two stumbles forward, one back + +The government takes a long, winding path towards reform + +Jun 25th 2016 | MUMBAI | From the print edition + + + +LAST November, two days after India’s ruling party suffered a drubbing at local polls in the state of Bihar, the government unexpectedly opened a dozen new industries to foreign direct investment (FDI). A gushing official called it “the biggest path-breaking and the most radical changes in the FDI regime ever undertaken”. + +On June 20th, two days after Raghuram Rajan, the respected governor of India’s central bank, abruptly announced that he would soon step down, the government covered its embarrassment with another impromptu salute to FDI. The slim package of enticements, amounting to a slight lowering of barriers in some of the same industries, has made India “the most open economy in the world for FDI,” said the office of Narendra Modi, the prime minister. + +Hyperbole is not unexpected from a government keen to burnish its liberalising credentials. But it has not lived up to its cheery slogans (“Startup India”, “We Unobstacle”, “Minimum Government, Maximum Governance”). Two years after clinching a sweeping electoral mandate, and with the opposition in disarray, Mr Modi’s reform agenda should be in full swing. Instead, as with previous governments, his ill-focused initiatives have run up against India’s statist bureaucracy. + +To be fair, much of what has been done is useful. Corruption has been stemmed, at least at ministerial level. A vital bankruptcy law has been approved. Yet for all the evidence that Mr Modi’s team is doing a better job running the existing economic machinery, it has shown limited appetite for overhauling it. + +Pessimists see Mr Rajan’s departure as evidence of a further wilting of ambition. After all, as a former chief economist of the IMF, he is an enthusiastic advocate of structural reform. Then again, at the central bank he has focused chiefly on bringing down inflation. Optimists hope he is being eased out because of his habit of speaking his mind, thereby occasionally contradicting the government line, rather than to pave the way for retrograde policies. + +Thanks to a mix of lower oil prices and prudent fiscal policies (and perhaps also flawed statistics) the economy grew by 7.9% in the first quarter, compared with the same period the year before, the fastest pace among big economies. Ministers think further acceleration is possible. + +That may prove difficult. India’s public-sector banks, which hold 70% of the industry’s assets, are stuffed with bad loans; the central bank reckons that some 17.7% are “stressed”. That Mr Rajan forced them to disclose this fact will not have endeared him to politically connected tycoons now being badgered to repay the banks. Bank shares rose after he said he was leaving, presumably in the hope that his successor will go easy on them. Rating agencies fret that they will still need recapitalising, blowing a hole in the government’s finances. In the meantime, credit to industry has all but ground to a halt. + +India’s overweening bureaucracy is another drag on growth. Copious red-tape and poor infrastructure put India 130th out of 189 countries in the World Bank’s “Ease of doing business” rankings. Getting permits to build a warehouse in Mumbai involves 40 steps and costs more than 25% of its value, compared with less than 2% in rich countries. It takes 1,420 days, on average, to enforce a contract. + +A slew of liberalising reforms in 1991, when India was in far worse shape than now, were left unfinished as the economy gradually recovered. Whereas product markets were freed from the “licence Raj”, which no longer dictates how much of what each factory can produce, inputs such as land, labour and capital are still heavily regulated. Having once sought to prise those open, the Modi government now encourages state governments to take the lead with their own reforms. + +One result is that there is no proper market for land: businesses that want to set up shop are best off wooing state governments to provide some. Chief ministers with a presidential approach (a model Mr Modi espoused in his previous job running Gujarat) scurry around scouting for plots on behalf of the private sector in a manner that would have seemed familiar to the central planners of yore. + +That India is pro-business but not necessarily pro-market is a frequent refrain. “The government wants to create jobs, not the environment in which job-creation flourishes,” says one investor. Special economic zones are set up as sops, sometimes to entice single companies. Even big foreign investors are essentially told what to do: Walmart can only open cash-and-carry stores closed to the general public, Amazon must sell mostly other merchants’ goods rather than its own, and so on. + +If businesses cannot get things done themselves, even the most energetic politician will struggle to set up enough factories to generate jobs for the 1.1m Indians joining the labour market every month. Most will end up in the informal sector, where nearly nine in ten Indians now work. The problems snowball from there: informal wages are just a tenth of those in the formal sector, and tax-dodging is rampant. India has just 49m income-tax payers out of a population of 1.2 billion. + +Evidence of the mistrust of markets is abundant. Indian farmers need more fertiliser, but imports are taboo and price controls discourage investment in new factories. No matter: the government has leaned on Coal India and a power utility, of all companies, to try their hand at it. If venture capitalists are wary of funding Indian startups, the state will do it in their stead, badly. A government fund launched five months ago for this purpose has so far made just one investment (each requires the approval of several ministers). + +Hopes that privatisation might return the commanding heights of India’s economy, nationalised in the 1960s, to private hands have dimmed. Aside from dominating banking and insurance the government also owns an airline, hotels, utilities, a maker of photographic film and, until last month, several watch-making factories. Ministers run industries rather than regulate them. This month your correspondent witnessed an audience-member at a public event ask the telecoms minister why his (state-supplied) broadband connection was so slow. The minister promised to look into it. It would have been better, surely, to pass the buck to the private sector. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21701133-government-takes-long-winding-path-towards-reform-two-stumbles-forward-one/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +The next leap + +Helicopter money sounds radical. It may not be that much of a departure + +Jun 25th 2016 | From the print edition + + + +WOULD “helicopter money” (the use of newly created money to finance government spending or tax cuts) be a revolutionary break from existing monetary policy? Its advocates argue that the tactic would give the global economy a much-needed boost; its detractors see it as a further step on the path towards fiscal irresponsibility and hyperinflation. + +A paper from Toby Nangle of Columbia Threadneedle, a fund-management group, argues that helicopter money is not as radical a leap as you might think. Money is created in two ways. By far the largest proportion is generated by the banking sector when it lends to consumers or businesses. The bank creates a deposit in the name of the borrower which can then be spent. Mr Nangle refers to this as “inside money”. The other type, which he calls “outside money”, is that created by the government and central bank, including the notes and coins that everyone carries around. + +Mr Nangle’s insight involves looking at outside money in a different way. In the conventional view, the government collects taxes from the private sector and uses the proceeds to finance its spending, covering any shortfall by borrowing in the bond markets. Instead, he suggests, look at the process through a monetary lens. The government creates money to pay its bills—public-sector wages, defence equipment and so on. Doing this without limit would quickly undermine confidence in its currency. So governments offset this monetary expansion by “sterilisation”—taking money out of the system through taxes or debt issuance. + +Now think about quantitative easing (QE), the creation of new money to buy government bonds. In effect, this is undoing, or reversing, the sterilisation process. The aim was to prevent excessive monetary tightening. In Britain, the chart shows that bank credit (inside money) was shrinking after the financial crisis but, thanks to QE, the Bank of England partially offset this by creating outside money. + +In addition, QE in effect reduces government debt held by the private sector, at least for as long as central banks hold on to their respective governments’ bonds and remit the interest payments back to the treasury in question. In accounting terms, one bit of the government owes money to another bit. On a net basis, the ratio of government debt to GDP in Japan has been falling, not rising. + +The only difference between the current situation and the use of helicopter money is that, in theory, central banks plan to unwind their bond purchases in the long term. Government bonds will eventually end up back in the private sector. (Either the central bank will sell the bonds in the market, or it will fail to reinvest when the bonds mature.) + +However, it is almost eight years since the failure of Lehman Brothers and no central bank has started to unwind QE. In the circumstances, would the use of helicopter money be that much of a policy shift? + +Mr Nangle’s argument is ingenious but raises questions. If helicopter money is so similar to QE, then would it really be effective? After all, despite several rounds of QE, developed economies have not reattained their pre-crisis growth rates. The essential difference, enthusiasts argue, is that the expansion of the money supply would be avowedly permanent, and thus would have a more stimulatory effect. + +That difference might well cause helicopter money to be seen in a different light by the markets. The idea of financing government spending by printing money is regarded with horror by many bond investors because it is a drug to which governments would quickly become addicted. Why bother with the unpopularity of raising taxes or the need to placate bond markets when a friendly central bank can fund all your spending promises? The first government to try it might see considerable downward pressure on its currency. Mild depreciation would be welcome; a rapid plunge would not. + +In the end, Mr Nangle comes out against helicopter money because it would be harder to reverse than QE. Instead of selling government bonds to the market, the central bank would have to push up short-term interest rates, perhaps by a lot, since this would probably be its main tool. The impact on small firms and mortgage-holders might be crippling. + +But the debate isn’t going to go away. With short- and long-term rates close to historic lows, there isn’t a lot central banks can do on the rates front if more monetary stimulus is needed. Expect to see lots of sophisticated arguments in favour of helicopter money in order to quell the doubts of the markets. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21701135-helicopter-money-sounds-radical-it-may-not-be-much-departure-next/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Mexico’s special economic zones + +How the bottom half lives + +Free-trade areas aim to boost growth in the impoverished south + +Jun 25th 2016 | MEXICO CITY | From the print edition + + + +THERE is not just one Mexico, a common line runs, but two of them. The northern half of the country—the states bordering America and the Bajío region to the south of them—is the “North American” Mexico, an area of higher productivity, faster growth and greater levels of foreign investment. To the south is the country’s “Central American” heartland—a greener region more geared towards agriculture than to manufacturing, where nine of the ten states with the highest incidence of extreme poverty are located. For decades successive governments have debated how to encourage more investment in the south and thus bring the two Mexicos closer together. The current one thinks it has an answer: special economic zones. + +Special economic zones are geographically defined areas that enjoy lower taxes or less exacting regulation than the rest of a country. The intention is to promote investment in deprived areas with incentives that might be unaffordable, unpopular or unnecessary if applied nationally. First used in Ireland in 1959, they now number over 4,300 globally. Roughly half, according to Abraham Zamora of Banobras, a state development bank, have been successful. Which half Mexico’s will fall in is not yet clear. + +The law creating the zones was signed at the end of May; they should be up and running in 2018. “They will undoubtedly constitute a milestone in public policies for alleviating poverty and inequality,” Enrique Peña Nieto, Mexico’s president, has said, a mite prematurely. + +The first three zones are intended to bring benefits to five different states. One is a corridor of land stretching between Coatzacoalcos in Veracruz and Salina Cruz in Oaxaca, across the isthmus of Tehuantepec (the narrowest part of Mexico). It may yield a new route for firms looking to move goods between the Gulf of Mexico and the Pacific Ocean. The others are both linked to existing Pacific ports: Puerto Chiapas in the state of Chiapas next to the Guatemalan border, and Lázaro Cárdenas on the border between the south-western states of Michoacán and Guerrero (see map). Private administrators will run the zones on 40-year contracts, managing the infrastructure inside them and recruiting the tenants. One of their priorities will be to find “anchor” tenants able to attract other occupants to the zone, perhaps as suppliers. + +Successful economic zones tend to capitalise on the strengths of the local economy. For example, the agricultural bent of the region around Puerto Chiapas, it is hoped, may spur investments in agribusiness. In general, though, zones must offer three enticements to would-be investors: alluring tax breaks, good infrastructure and a decent workforce. By putting two of the zones in (or possibly next to—the details are not yet known) existing ports, the Mexican government is at least trying to ensure that infrastructure will be less of an issue. Those zones should not be held back by the isolation that has bedevilled similar schemes elsewhere. + +The tax breaks may be more of a problem. Special economic zones have to be special, after all, quips Gerardo Corrochano of the World Bank. Mexico’s will benefit from a broad exemption from VAT, which is levied at 16% elsewhere in the country. That should encourage not only companies operating in the zones, but also those wanting to sell services to them. But the income-tax and customs regimes are still hazy. Another concern is that some incentives could be removed after just eight years. Without more clarity on tax, says Emilio Arteaga, a trade lawyer, it is hard to be optimistic about the zones. + +Mexico has long made shrewd use of tax breaks to spur development. Its maquila regime, established in the 1960s, allows firms to import materials for manufacture or repair duty-free, as long as they re-export the finished product. These factories have been able to tap the country’s unemployed farmers for labour; the location of the vast majority of them, near the American border, helps to minimise transport costs. Between 1980 and 2000 they boosted the share of international trade in Mexico’s GDP from 11% to 32%. + +The new zones offer a less convincing business case, however. The government wants to use them to reduce poverty in the region; investors will be more concerned about returns. Whether they can do both depends on how alluring a regime the finance ministry can come up with. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21701134-free-trade-areas-aim-boost-growth-impoverished-south-how-bottom-half/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +IEX, unleashed + +Speed bumps in the night + +American regulators approve a controversial new stock exchange + +Jun 25th 2016 | New York | From the print edition + + + +IT IS a ruse familiar to officials the world over: if you have embarrassing or controversial news, release it on a Friday, the later the better. The decision on June 17th, a Friday, by the Securities and Exchange Commission (SEC), Wall Street’s main regulator, to approve a new stock exchange sounds mundane. But the fact that the briefing explaining the agency’s reasoning was scheduled for 8pm gives a sense of the awkwardness of the topic. + +IEX, the newly approved exchange, has one distinctive feature. Whereas most share-trading venues pride themselves on the speed with which trades can be executed, IEX promises to slow down transactions deliberately, with a “speed bump” of 350 millionths of a second. This idea has been controversial for two reasons. First, it is hard to reconcile with rules that oblige an exchange to execute a trade immediately, at the best available price, even if that means sending it to a rival market. Second, by attempting to slow things down, IEX is taking aim at a system it believes is rigged to favour ultra-fast high-frequency traders (HFTs) at the expense of the investors and companies that stockmarkets are supposed to nurture. + +At the moment share-trading orders bounce between 13 exchanges (at which bids and offers are made public), more than 40 dark pools (where they are not) and an indeterminate number of brokers. Big asset managers suspect this sprawling, fragmented system allows HFTs to nip in ahead of them and take advantage of their orders—an idea that was given credence in a 2014 book by Michael Lewis called “Flash Boys”, which cast IEX in the role of hero. + + + +By slowing down HFTs along with everyone else, IEX’s speed bump is supposed to protect less nimble investors. Its application received lots of support from big asset managers, at any rate. But the SEC was hesitant, asking IEX to modify its application five times and deferring a decision on it twice. In the end, at the same time as it approved IEX’s application, the SEC issued an “updated” interpretation of its best-price rule, allowing for delays in execution of up to a thousandth of a second. Critics fear even more fragmentation; backers hope for a fairer system. The SEC has promised to study the effects of the speed bump, and revise its rules again if necessary. Keep your Friday evenings free. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21701137-american-regulators-approve-controversial-new-stock-exchange-speed-bumps/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Regulating banks + +Capital hill + +Republicans offer an alternative to America’s convoluted bank regulations + +Jun 25th 2016 | Washington, DC | From the print edition + + + +THE Republican nominee for president may be all blather and bombast, but the party’s leadership in the House of Representatives is trying to make up for that by producing lots of weighty policy proposals. The latest, which Jeb Hensarling, chairman of the Financial Services Committee, plans to unveil this week, concerns financial regulation. Mr Hensarling wants to replace the Dodd-Frank act, the sprawling overhaul of America’s financial system instituted in the wake of the crisis of 2007-08, with something much simpler. His bill will not become law as long as Barack Obama wields a presidential veto, but it does add heft to the growing calls for reform. + +Mr Hensarling says he is not targeting all of Dodd-Frank, “just 89.7%”. The alphabet soup of financial regulators would be vigorously stirred. For instance, the Consumer Finance Protection Bureau, an agency spawned by Dodd-Frank, would survive but with diminished independence and authority. Its funding would come from Congress rather than the Federal Reserve (and could therefore be cut if it strays); it would not be allowed to prohibit arbitration clauses in financial contracts; and it would no longer have a single boss but a bipartisan panel of supervisors. The bit of the Fed that regulates financial institutions, as opposed to setting interest rates, would also be subjected to Congress’s budgetary oversight. All regulators would be required to conduct cost-benefit analyses on any proposed new rule. + +Bank supervision would get an even bigger shake-up. Mr Hensarling’s plan is based on three principles: that hefty capital requirements, rather than intrusive regulation, are the best way to make banks safe; that failing banks should not be bailed out; and that banks will always find a way to game complicated rules, so simple ones are preferable. So confident is Mr Hensarling in the appeal of his ideas that he would give banks a choice of operating under the current regulatory regime or opting out. The opt-outs, however, would have to fund themselves with equity worth 10% of assets, without any adjustment for their perceived risk. That is far more equity than the biggest banks have at the moment, especially ones with investment-banking operations, but not such a leap for more straightforward retail banks. At the same time, the Volcker rule, which aims to stop banks from trading on their own account, would be repealed. + +No bank with 10% capital, Mr Hensarling says, failed during the financial crisis. The new requirement would approach the 13-16% levels of equity funding banks used before the creation of the Federal Reserve and government-backed deposit insurance in order to convince customers of their solidity. Big banks would probably be unenthusiastic, since they would have to shrink or raise lots of capital, curbing profits either way. But Mr Hensarling believes that small banks would be thrilled: “Speak to any community banker and they will tell you they are withering on the vine and the number one culprit is Dodd-Frank,” he says. “The sheer weight, volume, complexity and cost uncertainty of a regulatory burden cannot be amortised over a small earnings base.” + +Elizabeth Warren, a Democratic senator and acerbic critic of big financial institutions, was quick to label the proposal a “wet kiss for the Wall Street banks”. She and her party have been slower, however, to admit Dodd-Frank’s flaws, let alone suggest any improvements. Mr Hensarling concedes that Dodd-Frank is unassailable for the moment. But he says he wants to show his fellow members of Congress, and voters, that there is a simpler, fairer, less interventionist way to keep wayward financial institutions in check. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21701149-republicans-offer-alternative-americas-convoluted-bank-regulations-capital/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The DAO + +Theft is property + +A cyber-attacker outsmarts a “smart contract” + +Jun 25th 2016 | From the print edition + + + +IS IT theft if no rules are broken? That is what users of the DAO, a futuristic investment fund, were left pondering after June 17th, when an unknown attacker made off with around 3.6m “ether”, an online currency similar to bitcoin. As cyber-heists go, it was a big one: the ether were worth about $55m at the time of the attack, about a third of the DAO’s assets. But the DAO, which stands for Decentralised Anonymous Organisation, does not have rules as such, or staff to enforce them: instead, it has computer code, which is supposed to embody its purpose and to operate automatically. If the attacker found a flaw in the code, whose fault is that? Indeed, some cyber-libertarians are arguing that whereas the heist was not a crime, altering digital ledgers to retrieve the lost ether would be an affront to the whole project. + +Like bitcoin, ether relies on a “blockchain”—a public ledger, distributed among lots of the system’s users, which records all transactions. Bitcoin’s blockchain handles mainly financial transactions, but ether’s can run computer code, including self-executing “smart contracts”, like those underpinning the DAO. + +The DAO is controlled by the votes of its members (anyone who has transferred ether to it) and by “the steadfast iron will of immutable code”, with transactions occurring automatically once enough members have voted for them. Those seeking investment set up a similar contract that pays out under fixed conditions. The DAO carries a disclaimer on its website explaining that its description of all this is only a summary of the underlying code, which is the real rulebook. + +And that is where the problem lies. The attacker was able to siphon the money by exploiting a glitch in the code that caused it to process the same transaction many times. Writing bug-free code is hard, and such an outcome is presumably not what its authors intended. But by the DAO’s philosophy, that is irrelevant: all that matters is what the code allows. In effect, says Emin Gun Sirer of Cornell University, the attacker simply read the terms and conditions more closely than anyone else. Others soon followed suit, hitting the DAO with a blizzard of attacks and counter-attacks. + +The blockchain could be modified to retrieve the missing funds. But doing so would require the assent of a majority of users, and not everyone is convinced. After all, if partial humans can alter smart contracts, how would they be any different from the boring old paper sort? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21701136-cyber-attacker-outsmarts-smart-contract-theft-property/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +German banks + +Turn of the screw + +Ultra-low interest rates are slowly squeezing Germany’s banks + +Jun 25th 2016 | FRANKFURT | From the print edition + +If only rates were as buoyant + +BANKS the world over are groaning under the burden of low, even negative, interest rates. The gripes from Germany are among the loudest. In March, when the European Central Bank cut its main lending rate to zero and its deposit rate to -0.4%, the head of the savings banks’ association called the policy “dangerous”. At the co-operative banks’ annual conference this month, a Bundesbank official earned loud applause just for not being from the ECB. + +Germany’s banking system comprises three “pillars”. In the private-sector column, Deutsche Bank, the country’s biggest, expects no profit this year. That is mainly because of its investment-banking woes, but low interest rates have also weighed it down: it wants to sell Postbank, a retail operation it took over in 2010. Commerzbank, ranked second, specialises in serving the Mittelstand, Germany’s battalion of family-owned firms. It has felt the interest-rate squeeze even more. Analysts at Morgan Stanley place it among the worst-hit of Europe’s listed lenders. + +Most Germans, however, entrust their savings to the other two pillars. One includes 409 savings banks (Sparkassen), mostly municipally owned; the other, 1,021 co-operatives. These conservative, mainly small, local banks are the most vocal complainers—even though at first blush they have little to moan about. Savings banks’ combined earnings declined only slightly last year, to €4.6 billion ($5.1 billion) from €4.8 billion in 2014. Deposits and loans grew; mortgages soared by 23.3%. Capital cushions are reassuringly plump: their tier-1 ratio rose from 14.5% in 2014 to 14.8%. Co-ops had a similar story to tell. But trouble is brewing. + + + +The ECB has flattened long-term rates as well as short ones, by buying public-sector bonds and, starting this month, corporate debt. Ten-year German government-bond yields are near zero—and recently dipped below, thanks in part to markets’ fears about this week’s Brexit referendum. For banks, this means ever thinner margins from taking in short-term deposits and making longer-term loans—from which, says McKinsey, a consulting firm, German banks earn 70% of their revenue. + +Lenders have been well insulated so far, because most loans on their books were made when interest rates were higher: 80% of loans last longer than five years. Rising bond prices (the corollary of falling rates) have provided further padding as banks’ portfolios gain in value: that effect alone has brought the savings banks €19.4 billion over the past five years. But as old loans mature, they are being replaced by new ones at today’s ultra-low rates. The mortgage boom is thus a mixed blessing: rates are typically fixed for ten years or more. + +With no increase in ECB rates in sight, the screw is tightening. Half of the 1,500 banks surveyed by the Bundesbank last year—before the latest rate cuts—expected net interest income to fall by at least 20% by 2019. Although banks would prefer higher rates, too sudden an increase would also be awkward, pressuring them to pay more for deposits while locked into loans at rock-bottom rates. + +Banks are seeking ways to alleviate the pain. Commerzbank is charging big companies for deposits, above thresholds negotiated case by case. (It is also reported to be pondering stashing cash in vaults rather than be charged by the ECB.) Bankers warn of an end to free personal current accounts. But with so many banks to choose from, scope for raising fees is limited. + +Selling investment products and advice seems more promising; and commission income has risen, as some savers seek out higher returns. Yet low rates have made many Germans, already a cautious lot, even less adventurous. They are stuffing more, not less, into the bank—but into instant-access accounts: with rates so low they may as well keep cash on hand. + +Low rates are not banks’ only worry. Both bankers and politicians vehemently oppose a proposed deposit-insurance scheme for the euro zone: the savings banks and co-ops have always looked out for each other, and don’t see why they should insure Greeks and Italians, too. Smaller institutions complain about an increase in regulation since the financial crisis—even though they weathered the storm far better than many larger ones. The savings banks’ association claims that red tape costs its members 10% of earnings—and some as much as 20%. + +Another concern is the march of technology. Germans have been slow to take up digital banking, but their banks—reliant on simple deposits and loans, and still carrying the costs of dense branch networks—are vulnerable to digital competition nonetheless. Number26, a Berlin startup, has signed up over 200,000 customers across Europe for its smartphone-based current account within months. The savings banks plan to hit back this year with Yomo, a smartphone app aimed at young adults. + +McKinsey reckons that low rates, regulation and digitisation together could cut German banks’ return on equity from an already wretched 4% in 2013 to -2% within a few years if they do nothing in response. The pressure is starting to tell. This month the Sparkasse Köln-Bonn, one of the biggest savings banks, said it would close 22 of its 106 branches. Some rural banks have replaced branches with buses. + +All this is likely to thin the crowded ranks of Germany’s lenders. Consolidation has been under way for decades: since 1999 the number of co-ops has fallen by half; on August 1st their two remaining “central” banks, DZ Bank and WGZ Bank, which provide co-ops with wholesale and investment-banking services, are to join forces. The pace of mergers has steadied in recent years. Negative rates may speed it up again. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21701148-ultra-low-interest-rates-are-slowly-squeezing-germanys-banks-turn-screw/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +A running start + +Poor children fall behind early in life. Better pre-school education could help + +Jun 25th 2016 | From the print edition + + + +IN 1965 Lyndon Johnson introduced “Head Start” as part of his “War on Poverty”. Conceived as an intensive summer school for poor three- and four-year-olds, the programme now serves almost 1m children a year, all year round. That still leaves roughly half of American children of that age receiving no formal schooling at all, compared with just 10% or less in much of industrialised Europe and Asia—an imbalance politicians on the left, including Hillary Clinton, are eager to address. Not before time: research on early-childhood education suggests it is a smart investment. + +By the time pupils begin primary school, there is a huge gap in achievement between rich and poor. In a 2011 paper Sean Reardon of Stanford University examined the difference in test scores in maths and reading between children from families in the 90th percentile of the income distribution and those in the 10th. He found that at age six it was already greater than one standard deviation and had barely diminished by the age of 18, leaving it equivalent to several extra years of secondary schooling. The gap was twice that between black and white students, and growing. + +Research by Meredith Phillips of the University of California, Los Angeles, suggests that is because wealthier families are, in effect, home schooling their children. By the age of six, she estimates, children of wealthy parents have spent as much as 1,300 more hours in enriching activities than those of poorer families. Poorer parents are strapped for money and time; roughly 35% of children in America live in single-parent homes. + +Proponents argue that good public pre-schooling would therefore be a social and economic boon. It would boost social mobility, they say, while also saving public money in the long run by reducing the need for remedial education, poverty assistance, state-funded health care and the like. The effectiveness of public pre-school education has long been a subject of debate, however. Head Start, for instance, has not prevented the divergence in fortunes between rich children and poor. Studies of preschools for the disadvantaged have often established only a passing improvement in test scores. + +The value of pre-school has become clearer in recent years as participants in several long-run studies have grown into adulthood. The Perry Pre-school Project, for instance, divided 123 children in Michigan in the early 1960s into treatment and control groups, and then tracked their performance as they aged. A similar programme initiated in North Carolina in the 1970s tested the impact of pre-schooling on 111 children, again divided into a test and a control group. Although pupils’ early advantage on measures of cognitive ability eventually erodes, participants nonetheless fare much better than peers over the long run. The high-school graduation rate among girls in the Perry Project who had attended pre-school, for instance, was 52 percentage points higher than that of the control group. Preschoolers from both studies were more likely to be employed as adults and to earn higher wages. They were also healthier, less likely to smoke and less likely to be arrested. + +By the same token, a paper published in 2014 by Pedro Carneiro, of University College London, and Rita Ginja, of Uppsala University in Sweden, uses local-level shifts in the eligibility criteria for Head Start to tease out the links between participation in the programme and local socioeconomic trends. Head Start was associated with lower rates of obesity and smoking, reduced incidence of depression and less time spent in prison. + +Such studies imply that pre-schooling is providing more than a good grounding in finger-painting, or even an early exposure to letters and numbers. Proponents argue that intensive, hands-on programmes help children develop important habits, such as conscientiousness, which do not show up on tests but are clearly useful later in life. The successful cultivation of such skills makes early-childhood education a particularly good investment, because it enables those who receive it to capitalise on subsequent instruction in education or work training, for example. Indeed, one study estimates that spending on pre-schooling for poor children yields a return of 7-10% a year in terms of longer life expectancy, higher earnings, lower crime and reduced public spending. + +One for all + +Whether governments should provide pre-schooling for all is a trickier question. An expansion of free nursery places in Britain led to an enormous rise in the share of three-year-olds enrolled, from 37% to 88%. Yet only one in four of those enrolled would not otherwise have gone to pre-school. Although scores on assessment tests for this group rose substantially, they represented a small enough share of total participants that the average scores among all British children barely budged. Evaluations of universal pre-schooling in Quebec, where the government introduced highly subsidised early-childhood education for all in 1997, find that shifting children from private nurseries or lavish care at home into public facilities actually reduced children’s scores on measures of social development. + +Those in favour of universality argue that it broadens political support for public pre-schooling. The benefits of early-childhood education take decades to materialise, after all, during which time backing for means-tested programmes might wane whereas support for universal pre-schooling would not. Supporters also reckon that mixing students of different backgrounds improves the experience of poorer children. Yet as with universal primary and secondary schools, richer parents will often opt out of the public system, or segregate themselves from poorer children by moving to expensive neighbourhoods. In strict economic terms, money focused on the disadvantaged is money better spent—provided society remains committed to the investment. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21701131-poor-children-fall-behind-early-life-better-pre-school-education-could-help/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Passenger drones: Those incredible flying machines + +Surveillance: Halting the hate + +Social media and sport: What the deuce, Watson? + +Climate research: Monsooner or later + +Zoology: Flight compass + + + + + +Articles Sections Next + +Passenger drones + +Those incredible flying machines + +Personal robotic aircraft are hovering over the horizon + +Jun 25th 2016 | From the print edition + + + +FLYING a helicopter is tricky, especially when hovering. You use your left hand to raise and lower the collective-pitch lever (to climb or descend), your right hand to move the cyclic-pitch joystick (to go forwards, backwards and sideways) and both feet to work the anti-torque pedals (to point the nose). At first it all seems like an impossible dance, but with plenty of practice and careful co-ordination it can be mastered. Flying a drone, by comparison, is easy-peasy. Some can be operated with little or no experience using only a smartphone app. So, it was a matter of time before resourceful folk started to think about building simple-to-operate drones that are large enough for people to fly in. + +One passenger drone undergoing flight tests is the Volocopter VC200 (pictured above). With 18 separate rotors it might seem to be an ungainly contraption, but its makers, e-volo, a company based in Karlsruhe, Germany, claim it is more stable than a conventional helicopter. It is certainly more straightforward to fly and can be operated with just one hand. Twisting the joystick makes the Volocopter turn left or right and pushing an “up” or “down” button makes it climb or descend. To land, the pilot needs only to keep his finger pressing the down button until the aircraft is safely on the ground. + +The idea behind the Volocopter and similar craft under development is that, like a drone, they are packed with sensors, including gyroscopes, accelerometers and magnetometers which, combined with an on-board computer system, means the aircraft flies largely autonomously. The pilot—or operator as they might more accurately be called—provides only basic commands, leaving the aircraft itself to take care of any necessary manoeuvres, balancing itself during a hover, automatically holding its position and compensating for changing conditions, such as a sudden cross wind. + +The technology is sufficiently advanced that there is nothing to stop passenger drones taking to the air, provided they can meet the same safety standards as other light aircraft and are flown by trained pilots. At a price for a small machine likely to be similar to that of an upmarket car—and a fraction of the cost of a new helicopter—they could prove extremely popular in recreational and sport aviation. + +The next step is to persuade aviation authorities that, because the craft are so heavily automated, they can be safely and reliably flown by people with only a little training. Convincing officials of that could take a few years, but it is possible. Aviation authorities have in the past worked with companies and flying enthusiasts to develop special training programmes for other new types of aircraft, such as powered hang-gliders and microlights. + +Some envisage going further still, allowing passenger drones to provide autonomous air-taxi services. A bit like using an Uber app to call a cab, a pilotless drone would be summoned to whisk you away to your destination. That raises so many tricky questions, around insurance, infrastructure and public liability, that such services are many years away. But the journey to that destination may well have begun. + +Unmanned drones can already be flown under existing guidelines. This week America’s Federal Aviation Administration (FAA) finalised its rules for civil drones weighing less than 55lbs (25kg). They must be kept in line of sight, below 400 feet (122 metres) and away from people. To use a drone for commercial purposes the operator must undertake an approved training course. Exemptions to the line-of-sight rule will be allowed for some flights, such as those making deliveries. But heavier drones need to be registered like conventional aircraft and face tougher regulation. + +Let’s twist again + +The attraction of drones is their ease of operation. Unlike most helicopters, hovering drones use multiple rotors. Many drones are based on a design called a quadcopter, which employs four rotors on arms set 90 degrees to each other. Each rotor is directly driven by an electric motor. By turning two of the rotors clockwise and two anticlockwise it counters the twisting effects of torque produced by a single-rotor helicopter (without a tailrotor to push against the torque, a helicopter would spin hopelessly round and round). Moreover, whereas a helicopter needs to vary the pitch of its blades (the angle at which they attack the air) in order to manoeuvre, the multiple rotors on a drone have a fixed pitch. The drone instead manoeuvres by independently changing the speed of one or more of its rotors under computer control. As this set-up requires fewer and less complex moving parts than a helicopter, it makes drones simpler, cheaper to build and maintain, and potentially more reliable. + +Ehang, a dronemaker based in Guangzhou, China, is using the quadcopter design for a single-seat drone it is developing, but with an added twist. The Ehang 184 has a total of eight rotors, two on each corner but with one rotor facing up and the other facing down, each powered by its own motor. This builds in an extra margin of safety so that should a motor or rotor fail, the aircraft would still fly. Huazhi Hu, the company’s founder, aims to begin flight tests of the 184 in Nevada later this year to obtain an airworthiness certificate from the FAA. + +Ehang’s eventual intention is that passengers need only enter their destination on the 184’s control screen, strap in and let the drone fly them the entire journey autonomously. The craft is designed to nip along at up to 100kph and fly for 23 minutes before its batteries need recharging. With existing battery technology, passenger drones are still a long way from beating conventional helicopters in both endurance and load-carrying abilities. But batteries are getting better. And even big aerospace companies, such as Airbus, believe that electric and hybrid power systems will be used in future passenger aircraft. + +Flying chips + +The 18 rotors lifting the Volocopter take the concept further. Ascending Technologies, a German dronemaker bought earlier this year by Intel, a giant chipmaker, gave e-volo a hand with the electronic systems that control them (the craft contains more than 100 microcontrollers). The greater number of rotors provides both more efficiency in lift and higher levels of redundancy in the event of a failure. And, just in case of a big emergency, there is also a parachute—one that will gently carry to the ground the entire drone with its passengers remaining in their seats. + +The VC200 gained permission to fly from German authorities earlier this year. It has an all-in weight of 450kg and, in its present form, a flight duration of 30 minutes. After completing a series of flight tests the VC200 should be fully certified by 2017 in a category of aircraft known as an “ultralight”. The company have taken this route because it will get the VC200 into the air sooner and allow valuable flight experience to be built up while discussions continue about creating a possible new class of aircraft for passenger drones. + +Apart from recreational flyers, other users might include the emergency services with, say, a paramedic flying directly to an incident without having to rely upon a helicopter and a professional pilot, says Florian Reuter, an e-volo director. A four-seater version, the VC400, is also planned along with hybrid versions that will be fitted with petrol-powered range-extenders. The ultimate aim, adds Mr Reuter, is for Volocopters to provide air-shuttle services in congested places, such as cities. With more experience of operating such flights regulators would be in a position to consider whether passenger services could enjoy complete autonomy. + +A rather different approach is being taken by Malloy Aeronautics, a British company. It is developing a drone you can sit on like a motorbike. The Hoverbike is now in its third incarnation, having begun with two rotors, one at the front and another at the rear, but progressing to four. However, it does not look like a typical quadcopter. Instead, it has a pair of rotors at the front and another pair at the back. Each is slightly offset and partially overlapping. So far, the company is carrying out test flights of the craft as an unmanned drone in order to develop its software and systems fully before fitting a seat and handlebars to produce a passenger version. Malloy has, though, flown a one-third scale remote-controlled prototype with a dummy pilot (see picture below). + +Watch out! There's a biker about + +The idea behind the Hoverbike is to produce a rugged and simple air vehicle which, because it is oblong rather than square, would be more easily transportable in vehicles or other aircraft, and would be able to operate and land in difficult surroundings, such as on the side of a mountain, says Grant Stapleton, a Malloy director. The company is also working with America’s Army Research Laboratory on the Hoverbike concept. It would have basic controls, such as a throttle grip for the right hand—as on a motorbike—with the handlebars used to provide other commands. + +The market for passenger drones in their various forms could be huge. Beside military and commercial operations, they would have a large number of leisure uses. They also open up new possibilities for a combination of manned and unmanned flight. Mr Stapleton already knows what he wants to do with his: fly up a mountain, land and snowboard down, with the Hoverbike programmed to meet him at the bottom ready for another go. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21701080-personal-robotic-aircraft-are-cheaper-and-safer-helicopterand-much-easier/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Surveillance + +Halting the hate + +A new technique for removing radical propaganda + +Jun 25th 2016 | From the print edition + + + +AMERICAN officials referred to Anwar al-Awlaki as a senior recruiter for al-Qaeda. After being connected to numerous terrorist attacks, in 2011 he became one of the first United States citizens to be killed by an American drone. Yet Awlaki’s online lectures continue to inspire Islamic extremists nearly five years after his death. His videos are thought to have helped radicalise those responsible for the attack this month on a gay nightclub in Orlando, for the shootings in 2015 at the Inland Regional Centre in San Bernardino and for the Boston Marathon bombings in 2013. + +Once such extremist videos appear online they never disappear. YouTube removed hundreds of Awlaki’s videos in 2010. But a search of the platform reveals thousands of copies remain in circulation. Now a new technology promises to help prevent extremist videos from spreading on the internet. + +The technique, known as “robust hashing”, was developed by Hany Farid at Dartmouth College in Hanover, New Hampshire, working in partnership with Microsoft. In essence, it boils down a photograph, video or audio file into a unique numeric code. + +To generate a code for a photo, for example, the image is first converted to black and white, changed to a standard size and then broken up into squares. Dr Farid’s algorithm then calculates the variation in intensity (the brightness of the pixels) across each of the cells in this grid. Finally, the intensity distribution of each cell is combined to create a 144-digit signature (or “hash”) for each photo. The technique can identify photographs even if they have been altered in minor ways (if a photograph’s colour is changed, for example, or if marks are made on it). Dr Farid estimates that his software can check up to 50m images a day. Importantly, there is no way to reconstruct a photograph from its hash. + +An earlier version of the technology, called “PhotoDNA”, has already been successfully deployed to remove child pornography from social-media sites but is able to create hashes only for photographs. Working with the Counter Extremism Project (CEP), a non-profit organisation, Dr Farid has been able to extend robust hashing to video and audio files. + +Dr Farid has not published his work. The reason for that is he fears it would help people to try to circumvent the technology or allow repressive regimes to use it to suppress dissent. Instead, he and the CEP hope to set up the National Office for Reporting Extremism (NORex). This body would help maintain a database of extremist imagery and assign robust hashes to the most brutal or dangerous. Social-media companies have yet to sign up but if past experience is a guide, they soon will. + +In 2009 Microsoft donated PhotoDNA to the National Centre for Missing & Exploited Children, an American organisation which has built a registry of hashes from its database of abusive images. The technology, which removes hundreds of thousands of photographs each year, is used by nearly all social-media companies, including Facebook and Twitter. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21701112-new-technique-removing-radical-propaganda-halting-hate/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Social media and sport + +What the deuce, Watson? + +Finding out the hot topics at Wimbledon + +Jun 25th 2016 | From the print edition + + + +WHEN the 2016 Wimbledon Championships start on June 27th millions of tennis fans will begin posting on social networks such as Twitter, Facebook and Instagram about everything from the matches to the attire, hairdos and headbands of their favourite players. The contest’s organiser, the All England Lawn Tennis Club (AELTC), would quite like to know what the hottest topics are. So it is using a powerful computer to find out. + +That computer is Watson, an IBM machine which in 2011 famously won the American TV quiz “Jeopardy!” and nowadays resides as a cloud-computing service. The idea, says Alexandra Willis, the AELTC’s digital supremo, is to use its machine learning and natural language-processing techniques to discover the most pressing topics of conversation among the vast output from fans. Knowing that, the club’s editorial team—which provides content for Wimbledon’s mobile app, its website and its video feeds—can respond quickly with relevant articles, posts, tweets, statistics and images. + +The computer system is capable of analysing vast amounts of unstructured text and inferring meaning from it. It has also been trained on all the results of every Wimbledon match since 1877. So if, for instance, fans start tweeting: “Has a Chinese player ever got to the third round before?”, Watson would soon come up with an answer. Similarly, by comparing a player’s performance on any of the 19 courts to past games, it can notify the editorial team and commentators of any records about to be broken or new milestones reached. + +The system was discreetly tested at last year’s Wimbledon, by seeing if it could answer questions posed by the 3,500 journalists covering the event. It also did a stint at the US Masters golf competition in Augusta, Georgia, earlier this year, where Facebook and Twitter feeds were plugged in to train the system up. IBM will face stiff competition in the field of social-media analysis from a number of specialist firms, reckons Peter Bentley, a computer scientist at University College London. But for the tennis, at least, it is seeded first. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21701114-finding-out-hot-topics-wimbledon-what-deuce-watson/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Climate research + +Monsooner or later + +Forecasting India’s monsoon is tricky. Robots may help + +Jun 25th 2016 | From the print edition + +FARMERS throughout the ages have gleaned clues about the weather from the natural environment. Animal movements and the colour of the sky have been considered augurs. For one of the world’s most important weather events, India’s monsoon, forecasting methods are becoming rather more refined. About half of the country’s population—600m people—depend upon the rain it brings. Scientists want a better understanding of the processes by which the Indian Ocean interacts with the atmosphere, and underwater robots can help in their quest. + +Monsoon climates typically have two distinct seasons: wet and dry. In India the rainy onslaught begins when moist air is carried northwards from the Indian Ocean during the summer. The winds transporting it come from an area of high atmospheric pressure in the southern Indian Ocean, and cross the equator before raging over the land. As the air gathers moisture during the journey, atmospheric convection forms storm clouds which arrive first in southern India around early June (as they did this year). The monsoon creeps north and west, showering Pakistan about a month later. By September it is in retreat and it is normally gone by December. + +Information about when and where the monsoon will arrive is important for farmers, especially as almost two-thirds of India’s fields lack irrigation systems. The expected arrival of rains dictates when seed-sowing should start: crops such as rice, soyabean and cotton are normally grown during the wet season between June and September. The event is critical even for Indians who do not farm. A sense of the monsoon’s duration ahead of time allows utilities to plan hydropower generation, as the rains fill dams and reservoirs. + +The complexity of climate systems makes forecasting the monsoon tough. It is erratic anyway: four years in every ten, it is abnormal. Furthermore, humans are changing the environment. Clearing forest and vegetation means less water is stored in the land, for example. Air pollution is a huge problem, too, much of it caused by cooking at home. The polluting aerosols, such as black carbon, released by this and other activities interact with sunlight. Some of these tiny particles—many less than one tenth of the width of a human hair—scatter it, while others absorb it. Both effects alter the heating of the atmospheric column, and thus the heating of the land relative to the ocean—a phenomenon which helps drive the monsoon. + +The heat trapped by greenhouse gases is likely to lead to even greater variability in the monsoon. Rainfall extremes are expected to increase, thanks partly to the fact that a warmer atmosphere can hold more moisture (about 7% more for every 1°C of warming). And the world is sweltering. This year is almost certain to be the hottest ever recorded; 370 months in a row have now been either warm or warmer-than-average, according to the World Meteorological Organisation, a UN agency. + +Bobbing along + +Climate models attempt to simulate many of the processes which are driving the monsoon, says Hugh Coe of the South West Asian Aerosol Monsoon Interactions project, a research initiative, but how such processes really work has yet to be examined thoroughly. That is why scientists from the University of East Anglia in Britain, working alongside researchers from the Indian Institute of Science and other bodies, are releasing seven underwater robots into the Bay of Bengal as part of an £8m ($11.8m) project. They will glide underwater for a month—having set sail on June 24th—across a 400km sweep of international water. + +Oceanographers have been using sea gliders for a number of years and they have steadily been getting better. Their use in the Bay of Bengal is novel. The torpedo-shaped gliders do not have an engine and instead manoeuvre vertically by changing their buoyancy. They use electrical power to pump oil back and forth between a bladder inside a pressurised part of their hull and another bladder in a usually flooded region of the hull. To dive, oil is transferred from the external bladder to the internal one. This does not change the craft’s mass but decreases its volume, which lowers its buoyancy and makes it slowly sink. To surface, the oil is pumped back again. To move forward, the pitch of the craft is changed by pumping fluid towards the bow, which makes it dive, or sent towards the stern to ascend. A pair of short stubby wings on the craft provide a lifting force that translates vertical motion into forward motion. + +The sea gliders will measure ocean temperatures, salinity and currents to discover how exactly salty, warm water from the Arabian Sea churns with surface water from the Ganges river. This mixing dictates how heat is delivered to the atmosphere according to Ben Webber from the University of East Anglia. Findings will be communicated via satellite when the sea gliders periodically surface. As the data should help improve rainfall prediction for future monsoons, that is good news for scientists, farmers and robot fans. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21701115-forecasting-indias-monsoon-tricky-robots-may-help-monsooner-or-later/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Zoology + +Flight compass + +Deer use magnetic alignment to know which way to run + +Jun 25th 2016 | From the print edition + +About to head north + +WHETHER it is a herd of gazelle, a court of kangaroos or a crash of rhinos, the sight of a group of animals turning from a predator and bolting in unison in the same direction is one of the most majestic in nature. It is also one of the least understood. Now a group of researchers think they have come up with the reason why such animals seem instantly to know which way to run and not crash chaotically into one another: they use a sort of compass. + +To investigate this, Petr Obleser, a PhD student at the Czech University of Life Sciences in Prague, and his supervisor, Hynek Burda, studied roe deer commonly found on hunting grounds in South Bohemia and West Moravia in the Czech Republic. That some animals have an innate awareness of Earth’s magnetic field is well known: many use it to guide their migration. Herdsmen and hunters have also long observed that grazing animals often tend to align themselves facing either north or south, which the researchers suspected was in readiness to escape in either of those directions should a threat emerge. + +And that is largely what the roe deer did, Mr Obleser, Dr Burda and their colleagues report in Behavioral Ecology and Sociobiology. For their experiment, Mr Obleser began the arduous task of slowly walking through the wilderness areas at set times and in set locations for 46 days between April and August 2014. + +Whenever he saw a roe deer, he immediately stopped and assessed whether the deer had seen him first by studying where its ears and eyes were directed. If the deer had not yet noticed him, he began recording information on the weather, position of the sun, visibility, light levels, surrounding habitat and if the deer was on its own or in a group. He also used a laser rangefinder to measure the distance between the animal and its nearest source of cover, as well as a compass to determine its geomagnetic orientation. Then he crept closer and closer. When the deer ultimately fled, he measured the direction of its flight. If the monitored deer was with others, which was often the case, the rest of the deer were ignored, so that accurate measurements of just an individual were obtained. In this way he accumulated data on 188 deer. + +Mr Obleser found the deer were more likely to orient themselves in a northern or southern direction while standing and that they have a strong tendency to bolt in those directions as well. More specifically, it was found that when the deer were approached from the south, 52% of those studies ran north, 17% to the south and 31% either east or west. The results from northern approaches were not much different, with 67% racing to the south, 12% north and 21% east or west. Yet what proved fascinating were the results from eastern and western approaches. The researchers speculated that coming from the west ought to drive the majority of the deer eastward, but only 42% went that way while 50% headed north or south. An eastern approach caused 40% to go to the west and 43% north or south. + +Intriguingly, the tendency to run north or south did not appear to be related to weather, the position of the sun or any other environmental conditions. Even when the nearest cover was to the east or the west, the deer still preferred to initially bolt north or south before curving around and heading for the safe haven. Moreover, when deer were in a group, their tendency to move along the north-south axis grew stronger. Deer, the researchers argue, are not only sensitive to Earth’s magnetic field but also make use of it when it is time to run away. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21701113-deer-use-magnetic-alignment-know-which-way-run-flight-compass/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Wagner’s “Ring” cycle: Getting into Valhalla + +Transgender memoir: Daddy dearest + +A memoir of Australia: Ancestral voices + +Cricket in Pakistan: Balls of fury + +Reading poetry: War of words + +Sculpture parks in Britain: Training the eye + + + + + +Articles Sections Next + +Wagner’s “Ring” cycle + +Getting into Valhalla + +How to understand the most daunting opera ever written + +Jun 25th 2016 | From the print edition + + + +The Ring of Truth: The Wisdom of Wagner’s Ring of the Nibelung. By Roger Scruton. Allen Lane; 400 pages; £25. + +IT IS gargantuan in every way. The “Ring of the Nibelung”, known as the “Ring” cycle, lasts about 15 hours and is performed over four evenings. A new instrument, the “Wagner tuba”, was invented for it; a concert hall, the Bayreuth Festspielhaus, constructed for its premiere. Its composer, Richard Wagner (1813-83), began writing the opera in 1848, a year when Europe was torn by nationalist and democratic revolutions, but did not finish it until 26 years later. The finished product is considered the finest piece of musical theatre ever written, a sweeping artistic expression of a period in which the world was swiftly moving towards modernity. Sir Roger Scruton, a newly knighted English philosopher, tries to make sense of it in his latest book, “The Ring of Truth”. + +Based on a knitting together of German and Icelandic tales, the opera revolves around a ring, fashioned in gold from the Rhine by Alberich, a dwarf, that grants the power to rule the world. The struggles over the ring lead to love, betrayal and death, as well as the end of the rule of the gods. (Many of these themes are also found in J.R.R. Tolkien’s “Lord of the Rings”; Tolkien unconvincingly denied that he had been influenced by Wagner.) + +The “Ring” cycle is notable for its 150 or so leitmotifs, musical phrases associated with an idea or character. They do not simply accompany the libretto but also reveal the subconscious feelings of the characters or what will happen later in the story. For instance, the “nature” leitmotif, a rising major arpeggio, opens the opera and is associated with the majesty and life of the rushing river Rhine. But later Wagner flips it on its head—with the notes now moving downwards—to signify its opposite: the inevitable decay and death of the gods. + +Rising out of the foment of the mid-19th century, the “Ring” is often seen as a work with strong Marxist overtones. George Bernard Shaw, an Irish playwright and critic, argued that the Tarnhelm, a magic helmet central to the drama, is really the top hat of the capitalist class. Siegfried, a mortal who “knows no fear” and who undermines the system, is said to represent Mikhail Bakunin, a Russian anarchist. Wagner was no fan of industrialisation: his depiction, to the sound of 18 anvils, of Alberich’s enslaved dwarves mining more gold, is terrifying. But it is unclear whether he read Marx. In any case Sir Roger has no time for sweeping theoretical interpretations. “[I]t is a vast diminution of Wagner’s drama to pin such a thin Marxist allegory to its extraordinary and believable characters,” he sniffs. + +He is keener on a rich, historical account. Wagner lived at a time of philosophical changes that have had a lasting impact on how we see ourselves. The Enlightenment, a movement which gripped Europe from the 18th century, loosened the hold of the Church in favour of rational thought. The works of Hegel were particularly important ingredients in the “Ring”. “Like the Hegelians, Wagner saw the contest over religion as the decisive episode in the emergence of the modern world,” Sir Roger writes. + +On one level, the story is about Siegfried realising his freedom as an individual, in which he breaks from the stifling rule of the gods—an optimistic account associated with the ideas of Ludwig Feuerbach, one of Hegel’s disciples, who heavily influenced Marx. Yet Siegfried struggles in his condition of freedom. “Götterdämmerung” (or “Twilight of the Gods”), the final, five-hour opera, explores the disconcerting idea that without the gods we are left alone. We know that we cannot live up to the perfect standards set by our old masters; and yet all we have to enforce good behaviour is ourselves. To revolutionaries watching the “Ring”, this was a wake-up call: the opera showed that socialist dreams were every bit as illusory as the religion they had set out to replace. + +Sir Roger is not always so attuned to historical and philosophical context. Take his discussion of anti-Semitism, which looms large in the popular understanding of Wagner. Scholars enjoy mining the operas for evidence of how anti-Jewish Wagner “really” was (Alberich, the money-grabbing dwarf, is a particularly controversial character). But in Sir Roger’s view, these critics’ single-minded focus on Wagner’s anti-Semitism means that they fail to understand the many other ideas explored in the operas. While this has some truth, in his own analysis he overcompensates, choosing to ignore the anti-Semitism theme almost entirely. It is a bizarre choice, which leaves the discussion incomplete. + +The “Ring” cycle may be a European work nearing its 140th birthday, but Sir Roger is surely right to argue that it still has “relevance to the world in which we live”. The existential consequences of throwing off the yoke of religion is debated in many countries. Europe is swept by movements seeking to break free from certain structures of society towards some nebulous alternative. Moreover, Sir Roger successfully shows just how important the “Ring” was to the history of music and philosophy. After reading this book, only the most unadventurous reader would turn down the chance to see Wagner’s masterpiece. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21701100-how-understand-most-daunting-opera-ever-written-getting-valhalla/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Transgender memoir + +Daddy dearest + +A renowned feminist ponders what it means for her father to become a woman + +Jun 25th 2016 | From the print edition + + + +In the Darkroom. By Susan Faludi. Metropolitan Books; 417 pages; $32. William Collins; £16.99. + +SUSAN FALUDI had been estranged from her father for 25 years when she received an e-mail announcing “interesting news”. “I’ve had enough of impersonating a macho aggressive man that I have never been inside,” her father wrote. Several pictures were attached. One featured her father in a platinum wig and ruffled blouse. Another showed her parent with fellow “post-op girls” in a Thai hospital. Ms Faludi’s father, who had been Istvan Friedman as a persecuted Jew in Budapest, then Steven Faludi as an “imperious patriarch” in America, was now Stefánie, a coquettish septuagenarian with a taste for frilly aprons, glittery heels and male attention. + +“Write my story,” Ms Faludi’s father asked (“or rather, dared”) when they reconnected in 2004. Stefánie’s choice of biographer was inspired. As the bestselling author of several books about gender, sex and power, Ms Faludi was well placed to meditate on the meaning of her father’s transformation. “In the Darkroom” is a fascinating chronicle of a decade spent trying to understand a parent who had always been inscrutable. + +Having hoped her father’s transition would offer a glimpse of “the real Steven”, Ms Faludi is disappointed to find Stefánie no less hot-tempered, long-winded, enigmatic and uninterested in the past as Steven had been. “It’s not my life anymore,” Stefánie says dismissively about her childhood. Although Steven had returned to live in Budapest after his marriage collapsed, Stefánie never wishes to revisit her youth and rarely leaves the house. Instead of disclosures, Stefánie prefers superficial exposures, proudly parading before her daughter in negligees and barely tied robes. With frustration, Ms Faludi finds that the sex-change “had only added a barricade, another false front to hide behind”. + +But as a Pulitzer-prize-winning journalist, Ms Faludi has made a career of stripping away artifice. She pores over old letters and documents and patiently tracks down family members and schoolmates. The person who emerges is often just as overbearing and oppressive as the father she grew up with, even after the transition. “Stefánie had this very dominating style, like a hammer coming down,” recalls a transgender woman who runs an inn for post-operative trans women in Thailand. Yet Ms Faludi also learns that her father was a hero, having masqueraded as a Nazi sympathiser in order to save his parents during the war. + +As a feminist, Ms Faludi is startled to find Stefánie embracing a “florid femininity” that she herself had rejected. The author is discomfited by the stereotypically girlish memoirs of trans women, who thrill to become “the exact sort of girl I’d always thought of as false”. And she pointedly wonders why trans people claim to be flouting the binary system of sexes even as they confess “a desire to be one sex only, the one that they had an operation to become, which was always the binary opposite of the one they’d been.” + +Budapest is an odd place for a Jewish trans woman. Although Hungary passed anti-discrimination laws in order to join the European Union, legal tolerance is undercut by prejudice and intensifying anti-Semitism. Intriguingly, Ms Faludi compares her father’s “rebirth” in old age to Hungary’s own revisionism. She finds the country keen to scrub away any evidence of the “shrapnel scars on seemingly every building and on my father’s character”. Two-thirds of the country’s 825,000 Jews were sent to their deaths during the war, but there is little mention of this in its history books or museums. Hungarians, including her father, prefer to lament their fate at the hand of the Soviets. Ms Faludi questions whether her father’s sex-change had anything to do with the emasculations of Hungarian Jews during the war. But an old schoolmate of her father’s cautions against pat conclusions. “In the end, the mind is a black box”. + +Ultimately this book is an act of love, a way to get close to a parent who had always been remote. Months before dying in 2015, the elder Faludi read a draft. “I’m glad,” Stefánie said. “You know more about my life than I do.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21701101-renowned-feminist-ponders-what-it-means-her-father-become-woman-daddy-dearest/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A memoir of Australia + +Ancestral voices + +A young Scottish writer discovers brutal truths about an ancestor + +Jun 25th 2016 | From the print edition + + + +Thicker Than Water: History, Secrets and Guilt. By Cal Flyn. William Collins; 366 pages; £16.99. + +CAL FLYN never caught the family-history bug until she stumbled across her three-times great-uncle, Angus McMillan. A Skye man, he had been dispossessed in the Highland Clearances, and in 1837 had spent his savings on a passage to Australia. There he became something of a hero, responsible for “discovering” Gippsland, an area of 14,000 square miles (36,260 square km) of fertile plain tucked into Australia’s south-east corner. His memory was honoured with plaques and cairns. Ms Flyn basked in reflected glory. She felt a real sense of kinship with McMillan: like him, she is a Highlander, like him a restless soul. + +Then she discovered something horrifying. In July 1843 a group of men called the Highland Brigade, under McMillan’s leadership, surrounded a Gunai encampment at Warrigal Creek and proceeded to slaughter the people. They then fished a wounded child from the creek and ordered him at gunpoint to guide them to other settlements. Further massacres are commemorated in chilling place names: Butchers Creek, Skull Creek, Slaughterhouse Gully. As many as 200 Gunai died that day. + +Ms Flyn might have stopped her researches there and then, but she felt conflicted. She had “intergenerational guilt”, a sense that she was somehow implicated in the “Gippsland massacres”, and a desire to understand what inspired them. She had read the diary McMillan kept on his journey to Australia, in which he resolved to “work for the good and advantage of mankind…[to be] sweet and benevolent, quiet, peaceably contented…charitable even of aliens”. What had happened between his arrival and the massacres that earned him the title “the butcher of Gippsland”? At 27, the age at which McMillan left Scotland, Ms Flyn flew to Australia to find out. + +Tracing McMillan’s footsteps, she conjures up the landscape of Gippsland, plaiting together travelogue, history, diaries and reflections. She also risks censure as she struggles to comprehend McMillan’s atrocities. He was a “mass murderer”, she is clear about that. But he saw himself as part of an armed conflict, however lopsided, and launched the massacre at Warrigal Creek in response to the gruesome murder of a white youth by the Gunai. And if McMillan considered them hardly human, he was not alone. In 1838 another group of white settlers led the Myall Creek massacre. When prosecuted, they argued that they had not realised that killing an Aboriginal man was a crime. The Sydney Herald supported them: indigenous Australians were “black animals” then. + +McMillan has come to symbolise some of the very worst excesses of Australia’s violent colonial past. So it is a tribute to Ms Flyn’s empathy for his “moral ambivalence” that when she comes to write of his death—possibly suicide—aged 54, the reader feels pity as well as relief. In the end, he remains an enigma. “They were unknown then, now they are unknowable,” Ms Flynn writes of those who died. The same is true of the “butcher” who ended so many of their lives. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21701102-young-scottish-writer-discovers-brutal-truths-about-ancestor-ancestral-voices/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cricket in Pakistan + +Balls of fury + +How a sport made a nation + +Jun 25th 2016 | From the print edition + +The A team + +White on Green: Celebrating the Drama of Pakistan Cricket. By Richard Heller and Peter Oborne. Simon & Schuster; 354 pages; £20. + +SPORT does not just provide a window into countries; it helps shape them. In Pakistan, cricket and politics have always been intertwined. In the nation’s first Test, in 1952, they were led by Abdul Kardar, who had previously played for India—a small legacy of partition. + +Ever since, cricket has been “a bridge to understanding the collective subconscious of Pakistan”. So argue Richard Heller and Peter Oborne in “White on Green”. The book is really an anthology of the best moments in Pakistani cricket. Often these resonate way beyond the pitch. During partition in 1947, Abdul Aziz Durani, a cricket coach, fled to Karachi, leaving his 12-year-old son with relatives in India. The boy would go on to play 29 Tests for India, but would barely see his father, who became one of Pakistan’s best-regarded coaches. + +Very different is the tale of Dr A.Q. Khan, who gave Pakistan its first nuclear bomb, sold nuclear secrets to North Korea and is a patron of domestic cricket. Misbah-ul-Haq, the current captain, played 19 first-class matches for Khan Research Laboratories, the side Mr Khan helped found. + +The tensions between the competing visions for Pakistan as a secular nation and a Muslim one have also played out through cricket. The three founding fathers of Pakistan cricket were a Christian, a Parsi and a Muslim, in keeping with Muhammad Ali Jinnah’s vision of Pakistan as a secular state. Three Christians played for Pakistan in the 1950s. But at times—particularly under the captaincy of Inzamam-ul-Haq in the mid-2000s, who led team prayers as the influence of the revivalist Islamic movement Tableeghi-Jamaat spread within the side—Pakistani cricket has seemed anything but secular. + +At every turn, the authors’ warmth for Pakistan and its cricket shines through. They recount stories about many of the sport’s biggest figures (even General Pervez Musharraf is interviewed about his involvement), but the book is best when finding unlikely heroes. Foremost among these are the Khan sisters of Karachi, “Pakistan’s cricketing suffragettes”, who ignored death threats to form Pakistan’s first international women’s cricket team. The squad took part in the 1997 Women’s World Cup only after the side managed to defy the Pakistan Cricket Board’s ban on them leaving the country. Such opposition would be unimaginable today: the women’s squad receive contracts from the Board, enjoy mainstream support in the country and, for all their continued challenges, have become a symbol of female empowerment in Pakistan. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21701099-how-sport-made-nation-balls-fury/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Reading poetry + +War of words + +Why even poets hate poetry + +Jun 25th 2016 | From the print edition + + + +The Hatred of Poetry. By Ben Lerner. Farrar, Straus & Giroux; 86 pages; $12. Fitzcarraldo; £9.99. + +POETRY has always occupied an ambivalent space in society. In the ancient world Plato banned poets from his ideal republic; today they have to navigate the “embarrassment or suspicion or anger” that follows when they admit to their profession in public. Ben Lerner understands this hatred: as a poet he has been on the receiving end of it, but also, more interestingly, he has felt it himself. + +Long before he published his two acclaimed novels, “Leaving the Atocha Station” and “10:04”, Mr Lerner was known as a poet. Yet the biographical details that are woven into this short and spirited discussion suggest an uneasy relationship with the form. As a boy, charged with learning a poem, Mr Lerner tried to game the system by asking his librarian which was the shortest; later in life he confesses that he has never heard what Sir Philip Sidney described as “the planet-like music of poetry”, nor experienced the “trance-like state” widely said by critics to be induced by John Keats (“I’ve never seen any critic in a trance-like state,” he adds, not unfairly.) + +Yet Mr Lerner does not see all this as a problem; indeed, he believes it to be central to the art form. Poets and non-poets alike hate poetry, he argues, because poetry will always fail to deliver on the transcendental demands people have invested in it. As a result they enjoy pronouncing upon the abstract powers and possibilities of poetry more than they actually like to sit down and read it. As Keats wrote in “Ode on a Grecian Urn”, “Heard melodies are sweet, but those unheard/Are sweeter.” Mr Lerner takes his cue from Keats, but is a little more frank when he describes “the fatal problem with poetry: poems”. + +This inevitable sense of falling short is expressed in some of the best poetry ever written, he says, and he elaborates his point with energised discussions of Keats, Walt Whitman and Emily Dickinson. But it is also inadvertently present in some of the worst poetry ever written. “Alas! I am very sorry to say/That 90 lives have been taken away”, wrote William Topaz McGonagall, a Scottish poet, in a notoriously underwhelming response to the Tay Bridge disaster of 1879. “When called upon to memorialise a faulty bridge, McGonagall constructs another,” writes Mr Lerner, as he dissects McGonagall’s swirling metrical confusion with poetically informed glee across a number of pages. + +But McGonagall’s literary ineptitude is well known, and Mr Lerner’s essay becomes most interesting when he ventures into more contemporary territory, attacking with polemic zeal what he sees as confused critical assaults on modern poetry: the belief in a “vague past the nostalgists can never quite pinpoint” when poetry could still unite everyone, or in a “capacity to transcend history” that often seems to rely on its poetic purveyors being “white men of a certain class”. The hatred of poetry, Mr Lerner shows, can suddenly and revealingly become a vehicle for bitter politics. Yet he also sees communal redemption in the strange bond people have with this ancient art form: if we constantly think poetry is an embarrassing failure, then that means that we still, somewhere, have faith that it can succeed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21701103-why-even-poets-hate-poetry-war-words/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sculpture parks in Britain + +Training the eye + +Outdoor sculpture is all the rage + +Jun 25th 2016 | From the print edition + +First sculpt your mound + +THIRTY years ago, outdoor sculpture in Britain was chiefly classical statuary ornamenting a private landscaped garden (complete with ha-ha) or the odd Henry Moore. Now people are driving hundreds of miles out of their way in search of it. From the exquisite New Art Centre at Roche Court near Salisbury to the biennial selling exhibition at Asthall Manor outside Oxford, sculpture parks are the hot new British summer destination, combining culture with bracing fresh air. The three most important are the Yorkshire Sculpture Park (YSP) near Wakefield, Jupiter Artland near Edinburgh and the Cass Sculpture Foundation in West Sussex. In contrast to YSP, which is publicly funded, Jupiter Artland and Cass are private ventures—but based on very different models. + +At YSP a massive stainless-steel sculpture of a camel’s pelvis gleams in the sunshine. Clever siting of the piece—part of a solo show of work by Not Vital, a Swiss artist—ensures that the visitor’s eye is drawn not only to the sculpture itself, but also through it to the landscape beyond, an essential element if you are thinking of creating a sculpture park. Founded in 1977, YSP’s 500 acres (202 hectares) of rolling green park and woodland last year attracted over 500,000 visitors. From the beginning the focus has been on exhibitions, complemented by a collection that includes pieces by Anthony Caro, Joan Miró and Barbara Hepworth, mostly on long-term loan. A 20-year survey of Andy Goldsworthy’s work in 2007 proved popular. More often than not, though, YSP is introducing visitors to artists, such as Not Vital, that they have probably never heard of—and it has managed to take its audience with it. + +On a smaller scale, Jupiter Artland is also attracting big numbers. On July 6th it will hear whether it has won the Art Fund Museum of the Year award, for which four other entities have also been shortlisted. Created by Nicky Wilson, an artist, and her husband Robert, who is chairman of Nelsons, a homeopathic health-care company, it attracted 8,000 visitors when it opened for the summer in 2009. Twelve thousand would probably be the limit, Mr Wilson told an interviewer the following year. Yet the numbers continue to rise: 70,000 visited last summer. And no wonder. + +The magic begins when the wooded driveway rounds a bend and Charles Jencks’s “Life Mounds” (pictured), a series of majestic green earthworks, rise up on either side. It continues as, armed with the state-of-the-art Jupiter Artland app, you go in search of Anya Gallaccio’s underground amethyst folly; Anish Kapoor’s disturbing “Suck”; or “Separation in the Evening” by a rising Glasgow-based star, Sara Barker. + +The completion of the Jencks project—a multi-year undertaking that Mrs Wilson helped map out—signalled the start of the park. Once they had “Life Mounds”, the Wilsons felt they should open to the public. And they continue to commission. Next month Christian Boltanski will install “Animitas”, a mass of small Japanese bells on long stalks that will chime “the music of the souls” as they sway in the breeze on an island in Jupiter’s duck pond. + +Cass commissions work too, but not in order to collect it. The foundation came into being in 1992, when Wilfred Cass (now 91, and still much involved) and his wife Jeannette embarked on a retirement project that would promote monumental outdoor sculpture. Mr Cass, who had fled Nazi Germany as a child and later found his calling as a rescuer of failing companies, wanted a way to speculate on behalf of artists. So began a process whereby the foundation commissions sculpture with a view to selling it, supporting the artist through the fabrication process and displaying the results in its elegant parkland. When works sell, half the proceeds go to the artist and half back into the kitty to fund the next round of commissions. + +Having initially focused on Britain, Cass has this year gone international in a big way. Next month an exhibition entitled “A Beautiful Disorder” will showcase the work of 18 contemporary artists from greater China. Whereas most pieces had still to arrive, a visit in mid-May revealed at least one treat in store in the form of Jennifer Wen Ma’s “Molar”, an immersive “landscape” in which dramatic clusters of black “leaves” and glass “fruit” overhang dark pools of Chinese ink. + +Though their models differ considerably, Cass, Jupiter and YSP are united in their pursuit of the new. Mr Cass’s response to Storm King, a sculpture park in upstate New York, was that it had great art, but most of it was 40 years old: his park would not be full of outdated works. And the pursuit of the new includes nurturing the next generation. When Mr Wilson says, “One of our roles is to encourage younger artists— to give them that rite of passage of moving into the outdoors,” he speaks essentially for all three organisations. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21701098-outdoor-sculpture-all-rage-training-eye/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Jo Cox: Star turn + + + + + +Articles Sections Next + +Jo Cox + +Star turn + +Jo Cox, the first British MP to be murdered since 1990, died on June 16th, aged 41 + +Jun 25th 2016 | From the print edition + + + +OUT-OF-TOUCH and self-centred at best; deceitful and crooked at worst: Britons have developed smoulderingly low opinions of their rulers. Jo Cox—idealistic, diligent, likeable and rooted in her Yorkshire constituency—was a living rebuttal of that cynicism. + +Britain’s political class is easily caricatured as an inbred elite. But she was the first member of her family to go to university. True, she found Cambridge daunting: it mattered so much how you talked and whom you knew. Other undergraduates had posh professional parents and had taken sunny gap years. Her only foreign travel had been package holidays in Spain, with summers spent packing toothpaste in the factory where her father worked; indeed she had assumed, until school pointed its head girl farther afield, that she would spend her life working there. + +For all her brains and charm, Cambridge jolted her confidence—setting her back five years, she said. But when in 2015 she reached the House of Commons, mastering the ways of that self-satisfied, mysterious and privileged institution was easy. + +Also unlike a stereotypical politician, she had a real life. She had been an aid worker for ten years. She had met rape victims in Darfur in Sudan, and talked to child soldiers about how they had been forced to kill their family members. She commuted to the House of Commons by bicycle, from the houseboat she shared with her husband and two young children, its view of Tower Bridge the only luxury she allowed herself to enjoy. (She wasn’t a TV star and wouldn’t dress like one, she firmly told a constituent who wondered if she might like to vary her trademark, unfussy blue blazers and red dresses.) + +Principles mattered; tribalism did not. She was Labour “to the core”, but one of the most moving of many tributes after her murder was by Andrew Mitchell, her Conservative co-chair of the all-party Friends of Syria group. He called her a “five-foot bundle of Yorkshire grit”, and recalled her ferocious scolding of the Russian ambassador for his country’s role in Syria’s civil war. She and her Tory counterpart would text each other across the floor of the House of Commons, oblivious to the baying partisanship that raged about them. Other such friendships abounded. + +Like many Labour moderates, she nominated the left-wing no-hoper, Jeremy Corbyn, for the party leadership, with the aim of making the contest livelier and more representative of the movement’s grass roots. Also like many, she regretted it later: the party needed a forward-looking election-winner, not a throwback bound by the comforting nostrums of the past. + +But unlike many self-styled Labour modernisers, she did not plot against the hapless party leader. Back-stabbing was not her style: there was work to do. A lot of that involved championing unpopular causes. Working-class Labour voters, like the ones who put her in Parliament, tend increasingly to be pro-Brexit and nativist. Mrs Cox was a fervent pro-European. Her Batley and Spen constituency, she said fondly in her maiden speech, was not just a great maker of traditional biscuits but also “deeply enhanced” by immigration. + +Fired up + +She bemoaned British foreign policy’s missing moral compass. Whereas many Labourites droned or ranted at the prime minister’s weekly question-and-answer session, she asked him, calmly and devastatingly, whether he had “led public opinion on the refugee crisis or followed it”. That unsettled Mr Cameron, and (aides now say) helped change British policy. Her plainly spoken ambition to be foreign secretary one day looked more than plausible. + +Helping her constituents was her most rewarding job, yet also prompted the tragic circumstances of her death. Though Westminster and Whitehall are tightly guarded, British politicians have scant protection when they venture outside. Only a handful of senior ministers have police bodyguards. Constituents wanting to meet their representatives simply make appointments for their regular surgeries (advice sessions)—or, as in the case of Mrs Cox’s assailant, wait outside in the street. + +Trust and openness come at a cost. Five politicians were assassinated during the Troubles in Northern Ireland, the last of them Ian Gow, blown up by a car bomb outside his home in 1990. In 2000 a regular visitor to the Cheltenham constituency office of Nigel Jones, then a Liberal Democrat MP, entered in a frenzy, wielding a sword, wounding the lawmaker and killing his assistant, Andrew Pennington. In 2010 an Islamist extremist walked into a constituency surgery to stab and nearly kill the Labour MP Stephen Timms. A recent survey showed four out of five MPs saying that they had experienced intrusive or aggressive behaviour. Mrs Cox herself had complained to the police about abuse—although not involving the 52-year-old gardener with, seemingly, far-right views and psychiatric problems who is now charged with her shooting and stabbing. + +The toxic echo-chamber of social media, plus untreated mental illness, help turn stalkers and oddballs into murderous maniacs. One of Mrs Cox’s political precepts was that ignoring problems makes them worse—something to ponder as Britain thinks about its lawmakers, belatedly and sombrely, in a perhaps kinder light. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21700740-force-life-amid-britains-political-malaise-she-died-after-attack-her-constituency/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Foreign direct investment + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Jun 23rd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21701214/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Jun 25th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21701145-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Jun 25th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21701150-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Jun 25th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21701144-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Foreign direct investment + +Jun 25th 2016 | From the print edition + + + +Global inflows of foreign direct investment (FDI) were $1.8 trillion in 2015, up by 38% on the year before. After three years of contraction, FDI flows to developed economies almost doubled, to $962 billion, the highest level since 2007. M&A deals involving companies in the United States and Ireland helped boost flows into these two countries; in Europe as a whole, deal-making was up by 36%. Canadian inflows were adversely affected by low commodity prices; a slump in Britain can be explained by a fall in intra-company loans. The global outlook for 2016 is not cheery, however: weak aggregate demand and policy measures to curb tax evasion suggest that flows could decline by 10-15% this year. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21701141-foreign-direct-investment/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Jun 25th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21701142-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Thu, 23 Jun 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Artificial intelligence: March of the machines + + + + + +Guns in America: Control, alt, delete + + + + + +Executive pay: Cheques need balances + + + + + +America and Iran: Sanctions busting + + + + + +The Niger Delta Avengers: Danegeld in the Delta + + + + + +Letters + + + +On free speech, central banks, Israel, teaching, potholes, cheese: Letters to the editor + + + + + +Briefing + + + +Executive pay: Neither rigged nor fair + + + + + +United States + + + +Minimum wages: Maximin + + + + + +The Trump campaign: Poor Donald + + + + + +After Orlando: Of docs and Glocks + + + + + +Oakland’s police: Too many chiefs + + + + + +The Fourth Amendment: Amended + + + + + +Catholic hospitals: Gloria in expansion + + + + + +Suing the Church: Bully pulpit + + + + + +Lexington: Cory Booker + + + + + +The Americas + + + +North American summitry: Three amigos and two spectres + + + + + +Bello: Peace, at last, in Colombia + + + + + +Brazil’s Olympics: Calamity Janeiro + + + + + +Canada: Last rights + + + + + +Asia + + + +Australia’s election: Shortening the odds + + + + + +Pakistani cinema: Lights, camera, action men + + + + + +Law enforcement in Indonesia: Time for Tito + + + + + +Addiction in India: Pushing poppies in Punjab + + + + + +Endangered species: No rosewood of such virtue + + + + + +Japanese-American relations: Rina’s legacy + + + + + +China + + + +Propaganda: Who draws the party line? + + + + + +Grassroots democracy: Unwanted model + + + + + +Banyan: In Beijing’s bad books + + + + + +Middle East and Africa + + + +The nuclear deal with Iran: Teething pains or trouble ahead? + + + + + +Fighting in Fallujah: Down, but not yet out + + + + + +Bahrain’s crackdown: Brutal king, cowardly allies + + + + + +The dogs of Gaza: If you want a friend in this town... + + + + + +Kenya: Heating up + + + + + +Nigeria and its militants: Avengers unite! + + + + + +Europe + + + +Spain reruns its election: Out, caste + + + + + +Russia’s Olympic ban: Doping and punishment + + + + + +The EU’s Russia sanctions: Small carrot, medium stick + + + + + +Turkey’s embattled liberals: Radiohead and Ramadan + + + + + +Charlemagne: Commented out + + + + + +Britain + + + +Working poverty: When a job is not enough + + + + + +Born out of his time: Andy Murray and tennis grand slams + + + + + +Summer exams: Books versus football + + + + + +Bagehot: Whitehall, Inc. + + + + + +International + + + +Higher education: Flying high + + + + + +Special report: Artificial intelligence + + + +Artificial intelligence: The return of the machinery question + + + + + +Technology: From not working to neural networking + + + + + +The impact on jobs: Automation and anxiety + + + + + +Education and policy: Re-educating Rita + + + + + +Ethics: Frankenstein’s paperclips + + + + + +Conclusion: Answering the machinery question + + + + + +Business + + + +Health care: All about the base + + + + + +Security businesses in Europe: Silver linings + + + + + +YouTube and copyright: Free and easy listening + + + + + +3D printing: Print my ride + + + + + +Elon Musk’s empire: Clouds appear + + + + + +SoftBank: Short and sweet + + + + + +Telecoms: Oi boy + + + + + +Schumpeter: Sleepy giant + + + + + +Finance and economics + + + +India’s economy: Two stumbles forward, one back + + + + + +Buttonwood: The next leap + + + + + +Mexico’s special economic zones: How the bottom half lives + + + + + +IEX, unleashed: Speed bumps in the night + + + + + +Regulating banks: Capital hill + + + + + +The DAO: Theft is property + + + + + +German banks: Turn of the screw + + + + + +Free exchange: A running start + + + + + +Science and technology + + + +Passenger drones: Those incredible flying machines + + + + + +Surveillance: Halting the hate + + + + + +Social media and sport: What the deuce, Watson? + + + + + +Climate research: Monsooner or later + + + + + +Zoology: Flight compass + + + + + +Books and arts + + + +Wagner’s “Ring” cycle: Getting into Valhalla + + + + + +Transgender memoir: Daddy dearest + + + + + +A memoir of Australia: Ancestral voices + + + + + +Cricket in Pakistan: Balls of fury + + + + + +Reading poetry: War of words + + + + + +Sculpture parks in Britain: Training the eye + + + + + +Obituary + + + +Jo Cox: Star turn + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Foreign direct investment + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.07.02.TXT b/homeworks/B20769/homework1/data2/2016.07.02.TXT new file mode 100644 index 0000000..1536ce4 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.07.02.TXT @@ -0,0 +1,5356 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Jul 2nd 2016 | From the print edition + + + +In a shock result, the British voted by a slender margin in a referendum to leave the European Union. After 33.6m votes were counted, 52% had opted to break away from the union after four decades. Turmoil ensued. David Cameron, Britain’s prime minister, never an enthusiast for the EU but who nonetheless campaigned vigorously to remain, announced his resignation. The vote exposed deep divisions in British society, notably over immigration. An e-petition to the government, calling for a second referendum gathered over 4m signatures, mostly from Remainers. See article. + +Mr Cameron was not the only party leader whose position became untenable. The opposition Labour Party imploded when two-thirds of the shadow cabinet resigned over the underwhelming support Jeremy Corbyn, the party’s leader, gave to the Remain campaign. Mr Corbyn lost a vote of no confidence among the party’s MPs by 172 to 40 but refused to go, claiming he had the backing of the party’s grassroots. Adding to the imbroglio, one new appointment to the shadow cabinet resigned within two days. See article. + +The referendum split the country. Many English cities, including London, voted to remain. So did Scotland. Its first minister, Nicola Sturgeon, promised to fight for Scotland’s place in the EU, but France and Spain suggested they would oppose any kind of subnational deal. Politicians in Northern Ireland, which also voted to remain, said they were concerned that the reintroduction of “hard borders” with the south could unravel the province’s fragile peace. See article. + + + +In its second election in six months, Spain once again voted for a fragmented parliament. Following relatively successful results for his conservative People’s Party, the prime minister, Mariano Rajoy, called for a grand coalition—a request that opposition parties have refused. Spain’s far-left Podemos party fared badly. See article. + + + +Three suicide-bombers killed 41 people and injured nearly 240 in an attack at Turkey’s busiest airport. Police fired shots at two of them as they approached the security checkpoint at Ataturk’s international terminal. Turkey’s prime minister, Binali Yildirim, blamed Islamic State for the attack—the fifth bombing in Istanbul since December. See here and here. + +Frenemies again + +Israel and Turkey agreed to normalise relations, ending a six-year break caused by the killing by Israeli troops of ten Turkish activists on a ship carrying supplies to the blockaded Gaza Strip. Meanwhile, Turkey’s president, Recep Tayyip Erdogan, spoke to Vladimir Putin for the first time since Turkey shot down a Russian fighter jet near the Syrian border in November. They promised to meet soon and work to thwart terrorism. See article. + +The Iraqi government said it had cleared out the last pockets of Islamic State resistance in Fallujah, a city close to Baghdad that IS seized in early 2014. + +Bukola Saraki, the head of the senate in Nigeria, was charged with illegally changing the rules to get himself elected to the post amid a clampdown on corruption by Muhammadu Buhari, the president. Mr Saraki says he is not guilty. + +Gunmen from the Shabab, a Somali jihadist group, attacked a hotel in the centre of the capital, Mogadishu, killing 15 people. The group has mounted several assaults on hotels as well as on large army bases in the past few months, even as it has lost ground to forces from the African Union. + +The UN agreed to bolster its forces in Mali with 2,500 more soldiers (taking the total to about 15,000) to combat jihadist groups. + +What a coincidence + +Lim Guan Eng, the chief minister of the Malaysian state of Penang and a leading opposition politician, was arrested on corruption charges. Mr Lim has been a vocal critic of Najib Razak, Malaysia’s scandal-plagued prime minister. + +Indonesia’s parliament approved a controversial tax amnesty. Supporters say it will boost government coffers; opponents claim the low rates for repatriated funds ahead of OECD disclosure laws in effect reward those with hidden assets. + +The Taliban attacked a police convoy on the outskirts of Kabul, the capital of Afghanistan, killing up to 40 people. + +America, Japan and South Korea held their first-ever trilateral missile-defence drills, one week after North Korea tested its intermediate-range ballistic missile. + +Free movement of people + +Canada’s prime minister, Justin Trudeau, said that from December 1st Mexicans will no longer need visas to enter the country. Mr Trudeau’s predecessor, Stephen Harper, imposed the visa requirement in 2009 to stop bogus claims for refugee status. Mexico said it would end restrictions on imports of Canadian beef from October 1st. + +The expanded Panama Canal was officially opened. Started in 2007 and costing $5.3 billion, the new locks can take ships that are up to 366 metres long and 49 metres wide, which means they can handle around 80% of the world’s cargo carriers compared with 45% for the old canal. + +Free to choose + +America’s Supreme Court overturned a law in Texas designed to restrict abortions. The court ruled that Texas had placed an “undue burden” on a woman’s right to seek an abortion. The court also unanimously rescinded the conviction of Bob McDonnell, a former Republican governor of Virginia, for corruption. It relied on an absurdly broad definition of “official act”. See article. + +After a two-year acrimonious and partisan investigation, a committee in the House of Representatives issued its report into the terrorist attack on the American consulate in the Libyan city of Benghazi in 2012. It found no evidence that Hillary Clinton, who was secretary of state at the time, had not followed procedure in responding to the incident. + + + +Donald Trump made his strongest attack yet on free trade, threatening to withdraw America from NAFTA and impose stiff tariffs on Chinese goods, if he is elected president. Speaking in the Midwest, which has haemorrhaged industrial jobs and is a crucial battleground in the election, the Republican decried “a leadership class that worships globalism”. Visiting Britain the day after Brexit, Mr Trump said the result was a “great thing”, because the people have “taken back their country”. See article. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21701542-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Jul 2nd 2016 | From the print edition + + + +A referendum vote in Britain to leave the European Union battered global stockmarkets, wiping $3 trillion off global share-price values over two days. The FTSE 250, a share index comprising mostly British companies and investment trusts, fell by 14% over three days. The pound plunged to its lowest level in three decades. The share prices of British housebuilders and banks were hit particularly hard; trading in Barclays and Royal Bank of Scotland was suspended. The Bank of England gave assurances that it was prepared to pump £250 billion ($350 billion) into the financial system if needed and would consider other measures to deal with a “period of uncertainty and adjustment”. See here and here. + +Toast for Brexit + +Standard & Poor’s stripped Britain of its top AAA credit rating after the vote, reducing it by one notch. Fitch also downgraded Britain; Moody’s, which already had Britain one notch down, lowered its outlook to “negative”. + +By mid-week a sense of calm returned and markets rose cautiously. Oil prices also bounced back; Brent crude had dropped 6%, to below $48 a barrel, following the vote. + + + +Brexit raised questions about the viability of Anglo-European mergers that have been proposed, notably the deal between the London Stock Exchange and Deutsche Börse. The combined group plans to have its headquarters in London, but some German politicians now want it to be based in Frankfurt. The City’s leading position in clearing trades conducted in euros, a key element in the LSE/DB merger, is also under threat. + +The market turbulence spread to Italy’s already beleaguered banks, which saw their share prices fall further. Matteo Renzi, the prime minister, said that Brexit presented “exceptional circumstances” that would justify bailing them out, a measure that would contravene EU rules limiting state aid to the banking industry. + +America’s economy grew by slightly more than had been thought in the first quarter: an annualised 1.1%, according to a revised estimate. That was better than the 0.8% recorded in an initial estimate but still the slowest pace in a year. + +Nearly all the 33 banks and financial companies subject to the Federal Reserve’s annual stress tests passed them. Just two had their plans laying out how they would cope in a severe financial crisis rejected: the American units of Deutsche Bank and Santander. + +American regulators said that General Electric would no longer be classified as “systemically important” to America’s financial system. The company had worked hard to remove its “too big to fail” status—and the restrictions that come with it—by selling off most of GE Capital. + +Two of China’s biggest steelmakers, Baosteel and Wuhan, announced plans for a joint “strategic restructuring”, which was interpreted by many as a merger. It is the most significant step yet in the government’s push to consolidate the steel industry and reduce capacity in light of the country’s economic slowdown. + +Car deals + +Volkswagen reached a settlement with American authorities for cheating in emissions tests on its diesel cars. The German carmaker will pay $15.3 billion to settle claims with the Justice Department, California and other states. Around $10 billion of that is for a programme through which 475,000 car owners can sell their vehicle back to VW or get it fixed to meet emissions standards. VW still faces a possible criminal investigation in America. + +VW was not the only blue-chip European company with a bruised image in America this week. IKEA recalled 29m chests of drawers after the products were linked to the deaths of six children by tipping over and crushing them. The chests had not been secured to the wall (as advised in assembly instructions), but the consumer safety commission warned they did not conform to industry standards. A child dies every two weeks in America from furniture or televisions toppling over on them. + +Airbnb reportedly launched a new round of fund-raising that could value it at $30 billion, the latest in a string of similar exercises by privately held startups such as Uber and Didi Chuxing. Meanwhile, the home-rental website sued San Francisco, its home town, over a decision to fine the firm $1,000 a day for each renter on its site who is not registered with the city. Some 80% of the renters required to register have not done so; Airbnb says it is not responsible for their failure to comply with the law. + +A political brew + +Boston Beer Company, which owns the Samuel Adams brand, applied for the Brexit trademark. It hopes to market a cider under that name. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21701546-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Jul 2nd 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21701538-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + +Leaders + + + + + +Liberalism after Brexit: The politics of anger + +Brexit’s fallout: Adrift + +The attack on Ataturk airport: Turkey’s agony + +Diamonds: Shine on + +Cities: The right kind of sprawl + + + + + +Articles Sections Next + +Liberalism after Brexit + +The politics of anger + +The triumph of the Brexit campaign is a warning to the liberal international order + +Jul 2nd 2016 | From the print edition + + + +MANY Brexiteers built their campaign on optimism. Outside the European Union, Britain would be free to open up to the world. But what secured their victory was anger. + +Anger stirred up a winning turnout in the depressed, down-at-heel cities of England (see article). Anger at immigration, globalisation, social liberalism and even feminism, polling shows, translated into a vote to reject the EU. As if victory were a licence to spread hatred, anger has since lashed Britain’s streets with an outburst of racist abuse. + +Across Western democracies, from the America of Donald Trump to the France of Marine Le Pen, large numbers of people are enraged. If they cannot find a voice within the mainstream, they will make themselves heard from without. Unless they believe that the global order works to their benefit, Brexit risks becoming just the start of an unravelling of globalisation and the prosperity it has created. + +The rest of history + +Today’s crisis in liberalism—in the free-market, British sense—was born in 1989, out of the ashes of the Soviet Union. At the time the thinker Francis Fukuyama declared “the end of history”, the moment when no ideology was left to challenge democracy, markets and global co-operation as a way of organising society. It was liberalism’s greatest triumph, but it also engendered a narrow, technocratic politics obsessed by process. In the ensuing quarter-century the majority has prospered, but plenty of voters feel as if they have been left behind. + +Their anger is justified. Proponents of globalisation, including this newspaper, must acknowledge that technocrats have made mistakes and ordinary people paid the price. The move to a flawed European currency, a technocratic scheme par excellence, led to stagnation and unemployment and is driving Europe apart. Elaborate financial instruments bamboozled regulators, crashed the world economy and ended up with taxpayer-funded bail-outs of banks, and later on, budget cuts. + +Even when globalisation has been hugely beneficial, policymakers have not done enough to help the losers. Trade with China has lifted hundreds of millions of people out of poverty and brought immense gains for Western consumers. But many factory workers who have lost their jobs have been unable to find a decently paid replacement. + +Rather than spread the benefits of globalisation, politicians have focused elsewhere. The left moved on to arguments about culture—race, greenery, human rights and sexual politics. The right preached meritocratic self-advancement, but failed to win everyone the chance to partake in it. Proud industrial communities that look to family and nation suffered alienation and decay. Mendacious campaigning mirrored by partisan media amplified the sense of betrayal. + +Less obviously, the intellectual underpinnings of liberalism have been neglected. When Mr Trump called for protectionism this week, urging Americans to “take back control” (see article), he was both parroting the Brexiteers and exploiting how almost no politician has been willing to make the full-throated case for trade liberalisation as a boost to prosperity rather than a cost or a concession. Liberalism depends on a belief in progress but, for many voters, progress is what happens to other people. While American GDP per person grew by 14% in 2001-15, median wages grew by only 2%. Liberals believe in the benefits of pooling sovereignty for the common good. But, as Brexit shows, when people feel they do not control their lives or share in the fruits of globalisation, they strike out. The distant, baffling, overbearing EU makes an irresistible target. + +Back to the future + +Now that history has stormed back with a vengeance, liberalism needs to fight its ground all over again. Part of the task is to find the language to make a principled, enlightened case and to take on people like Ms Le Pen and Mr Trump. The flow of goods, ideas, capital and people is essential for prosperity. The power of a hectoring, bullying, discriminatory state is a threat to human happiness. The virtues of tolerance and compromise are conditions for people to realise their full potential. + +Just as important is the need for policies to ensure the diffusion of prosperity. The argument for helping those mired in deprivation is strong. But a culture of compensation turns angry people into resentful objects of state charity. Hence, liberals also need to restore social mobility and ensure that economic growth translates into rising wages. That means a relentless focus on dismantling privilege by battling special interests, exposing incumbent companies to competition and breaking down restrictive practices. Most of all, the West needs an education system that works for everyone, of whatever social background and whatever age. + +The fight for liberalism is at its most fraught with immigration. Given that most governments manage who comes to work and live in their country, the EU’s total freedom of movement is an anomaly. Just as global trade rules allow countries to counter surges of goods, so there is a case for rules to cope with surges in people. But it would be illiberal and self-defeating to give in to the idea that immigration is merely something to tolerate. Sooner than curb numbers, governments should first invest in schools, hospitals and housing. In Britain new migrants from the EU contribute more to the exchequer than they take out. Without them, industries such as care homes and the building trade would be short of labour. Without their ideas and their energy, Britain would be much the poorer. + +Liberalism has been challenged before. At the end of the 19th century, liberals embraced a broader role for the state, realising that political and economic freedoms are diminished if basic human needs are unmet. In the 1970s liberals concluded that the embrace of the state had become smothering and oppressive. That rekindled an interest in markets. + +When Margaret Thatcher was prime minister, amid the triumph of Soviet collapse, an aide slipped Mr Fukuyama’s essay on history into her papers. The next morning she declared herself unimpressed. Never take history for granted, she said. Never let up. For liberals today that must be the rallying cry. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21701478-triumph-brexit-campaign-warning-liberal-international-order-politics/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit’s fallout + +Adrift + +Leaderless and divided, Britain has its first taste of life unmoored from Europe + +Jul 2nd 2016 | From the print edition + + + +THE campaign to leave the European Union repeatedly urged Britain to “Take back control”. It is now a week since voters narrowly opted for Brexit, and the country has seldom looked so wildly off the rails. The prime minister has handed in his notice. The leader of the opposition is struggling to survive a coup. The pound hit a 31-year low against the dollar and banks lost a third of their value, before stabilising. Meanwhile there is talk in Scotland and Northern Ireland of secession. + +Every one of these calamities was predicted in the event of a Leave victory, and yet still the country seems transfixed by what it has brought upon itself. It is time to snap out of the daze. The country needs a new leader, a coherent approach to negotiating with the EU, and a fair settlement with those nations within its own union that voted Remain. The damage to Britain’s prosperity and to its standing in the world is already grave, and will become far worse if the country now fails to “take back control” of its future. + +The sick man of nowhere + +Brexit’s grisly first week, and the misery ahead, have already provoked buyer’s remorse. More than 4m people have signed a petition calling for a re-run of the vote. An instant rejection of the result would be wrong. Although we regret the Brexit vote, 34m people have cast their ballot and the result was clear. A straight rematch would be no fairer than allowing England’s footballers another crack at Iceland, which inflicted a second humiliation a week after the referendum. + +And yet Britain’s fate is still highly uncertain. Although Britons opted to leave the EU, Brexit comes in 57 varieties. The mildest sort would be an arrangement like Norway’s, involving continuing access to Europe’s “single market” in return for the free movement of people from EU countries and a contribution to the EU budget. At the opposite extreme, Britain could cut its ties entirely, meaning no more payments into the EU budget and no more unlimited migration—but no special access to the market which buys nearly half Britain’s exports, either. Voters were told they could have it all. They cannot. + +The Norwegian option would do the least damage to the economy. It would also be the best chance to preserve the union with Scotland and Northern Ireland, both of which voted Remain. The ruling Scottish Nationalists, who lost an independence referendum in 2014, always said that Britain’s leaving the EU would justify another ballot on independence. They are right—especially since in 2014 many Scots voted to stay in Britain in order to remain in the EU. But independence would be painful: it might mean promising one day to adopt the euro and hardening the border with England, with which Scotland trades more than it does with the EU. Under a Norwegian-style deal, Scots might prefer to stick with England. The Nationalists should wait to see a deal before asking for a new referendum. + +In Northern Ireland Brexit raises other problems. One is the prospect of resurrecting the border between north and south, a dismal piece of symbolism which might be avoided if Britain got a Norwegian settlement. Another shamefully overlooked snag is that Britain’s exit from Europe will break the Good Friday Agreement of 1998, in which Northern Ireland’s peace process was underpinned by the EU. This treaty has kept the peace in the UK’s most troubled region for nearly 20 years. Fixing the mess will be an urgent task for the prime minister. + +Point of no Breturn + +Who should that be? Tory party members, who have the final say, may favour one of the victorious Leave campaigners, a mediocre bunch who have disgraced themselves during the campaign: lying about inflated budget payments and phantom Turkish migrants, before vanishing after the vote when the Brexit hit the fan. None of them would make a worthy prime minister. And yet the very falseness of the prospectus they flogged may be their best qualification for the job. Britain’s next leader must explain to 17m voters that the illusion they were promised—all the EU’s benefits with none of its obligations—does not exist. Only when the authors of the Brexit fantasy themselves return from Brussels without this magical deal might Leave voters accept that a compromise is necessary. + +European leaders are in no mood to negotiate with their bolshie neighbour. That is why Britain should delay as long as it can before invoking Article 50 of the Lisbon treaty, the mechanism for a Brexit negotiation, which sets a two-year deadline. For every extra month that the cost of Brexit sinks in, the possibility of a fudge will increase. Angela Merkel, a champion procrastinator who, like her French and Dutch counterparts, faces angry elections next year, may also feel that accommodating some British demands, such as allowing an emergency brake on the free movement of people during “surges” (perhaps applied across the EU), would be possible, though she may find it hard to sell the idea to other European leaders. + +Given that nearly half of British voters did not want out, it is likely that a majority might prefer a Norwegian compromise to complete isolation. Whatever deal takes shape in Brussels will be so far from what was promised by the Leave campaign that it will surely have to be put to the British public again, through a general election, another referendum or both. It is even possible that the whole notion of Brexit may stall. A thin majority have said they would prefer life outside the EU to life inside. But it may be that, when faced with the question of whether to endorse a Norway-like deal that entails many of the costs of being in the single market without having a say in the rules, many would rather stay in the EU after all. + +Negotiating over Brexit will stretch the tolerance of both British voters and European leaders. Yet the EU specialises in muddled compromises and talking its way around referendums. After months of economic hardship, and a recession-induced fall in immigration, British voters may be ready to think differently about the balance between immigration, the economy and their place in Europe. By far the most likely outcome of this sorry situation remains Brexit. But it would be wrong completely to discount the possibility of an inelegant, humiliating, and yet welcome, Breversal. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21701479-leaderless-and-divided-britain-has-its-first-taste-life-unmoored-europe-adrift/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The attack on Ataturk airport + +Turkey’s agony + +How Turkey has made itself a soft target + +Jul 2nd 2016 | From the print edition + + + +THEY came by taxi, opened fire on innocent passengers and blew themselves up when the Turkish police shot back. Three terrorists assaulted Istanbul’s Ataturk airport on June 28th, killing at least 42 people and wounding over 200 more. The attack on Europe’s third-busiest airport was even deadlier than the one in Brussels in March, where both the airport and a metro train were hit. No one claimed responsibility for the carnage, but the evidence pointed strongly to Islamic State (IS). + +If so, it demonstrated IS’s growing operational sophistication. This was urban commando warfare, much like the attack on Mumbai in 2008 by Lashkar-e-Taiba, a Pakistani jihadist group. Western security agencies have long dreaded the arrival of that kind of terrorism in Europe. The three black-clad terrorists carried automatic weapons and wore suicide vests. By starting their assault outside the airport’s security perimeter, they avoided the security checks inside the terminal. Few airports, save Israel’s Ben Gurion, have the kind of layered defences that might have thwarted such tactics. + +This atrocity could have taken place anywhere in Europe. Yet Turkey has made itself especially vulnerable, due to the misconceived policies of its president, Recep Tayyip Erdogan. We do not mean the deal announced this week to normalise relations with Israel (see article): that was a rare example of sensible pragmatism on Mr Erdogan’s part and happened too recently to be a plausible pretext for this week’s attack. (Complex terrorist operations typically require months of planning.) + +It is Mr Erdogan’s catastrophic Syrian policy that has put his country at risk. In the past nine months nearly 250 people have been killed in nine terrorist attacks in Turkey. The main culprit is thought to be IS, though some killings were carried out by an offshoot of the Kurdistan Workers’ Party (PKK). In October presumed IS supporters blew up 102 people in Ankara. IS grew strong in Turkey after 2011, when Mr Erdogan’s government encouraged tens of thousands of foreign fighters to use Turkey as a jumping-off point to enter Syria and try to overthrow its president, Bashar Assad, whom Mr Erdogan detests. Turkey knew that most were hardcore jihadists. Many joined IS, helping to create the monster of today. They were also allowed to establish a terrorist infrastructure inside Turkey, which they are now using to attack their hosts. + +Time to get serious about IS + +Rather than recognise his mistake, Mr Erdogan has doubled down. His greatest fear is that Syria’s Kurds might carve out their own state, from where they could inspire Kurdish separatists inside Turkey. Last year he fanned a needless confrontation with the PKK, which had been started by IS, judging that this would pay electoral dividends—and indeed it has cut support for one of the main opposition parties, the moderate, largely Kurdish HDP. But Mr Erdogan has been wrong about pretty much everything else. As well as dealing with IS, he is now fighting a full-scale guerrilla war in south-eastern Turkey. + +If Mr Erdogan is shrewd, he will apply more of the pragmatism he has shown this week both with Israel and with Russia, which received an apology for the shooting down of one of its fighter jets. He should stop stoking conflict within Turkey between Islamic conservatives and Western secularists, and between ethnic Turkish nationalists and Turkish Kurds. He must make defeating IS his priority in Syria. The last thing Turkey needs from Mr Erdogan is more divisive authoritarianism. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21701489-how-turkey-has-made-itself-soft-target-turkeys-agony/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Diamonds + +Shine on + +Even the ring finger cannot escape the effects of technological change + +Jul 2nd 2016 | From the print edition + + + +BY ANY standards, the journey taken by the Lesedi La Rona, an enormous rough diamond on auction in London this week, has been epic. The stone was forged 2.5 billion years ago in molten rocks hundreds of kilometres beneath the Earth’s surface, then thrust up out of the planet’s mantle by volcanic eruptions. There, the diamond lay for millennia, while humans evolved, nation-states formed and technologies developed, until it was unearthed last year by miners in Botswana. The vastness of time and the power of nature give diamonds their mystique. But they could not stop the auction from flopping (see article). And they cannot protect the industry from a trio of forces that are upending businesses everywhere. + +One is new technology. Synthetic diamonds can be made in laboratories, using either large presses to simulate the pressures and temperatures experienced deep underground, or a process called chemical vapour deposition to grow diamonds as carbon atoms settle on top of each other. Such man-made stones are virtually indistinguishable from the natural sort. They already dominate the market for industrial use; as technology improves and costs decline, they will become more competitive in the jewellery market, too. + +That process will be helped by the second force, the rising power of the socially aware consumer. In 2003 the diamond industry responded to concerns that sales of illicit stones were being used to finance warfare in Africa by launching the Kimberley Process certification scheme. This was designed to make diamonds traceable, but focuses only on the ones that pay for rebel armies. Man-made diamonds spare millennials and others the headache of worrying that they are supporting human-rights abuses under repressive regimes such as Zimbabwe’s. Adding Hollywood glamour to the moral appeal is Leonardo DiCaprio, an investor in a synthetic-diamonds startup. + +Lucy in the lab with substrates + +The third factor is the reshaping of the financial industry in the wake of the 2007-08 crisis. New rules requiring both greater transparency and tighter credit standards have caused banks to pull back from lending to the “midstream” bit of the diamond industry, which trades, cuts and polishes rough stones. Standard Chartered, an emerging-markets bank, this month said it would be shutting down its diamond-financing unit. Other lenders have also cut their exposure. + +For consumers, the advantages of having a wider choice of gems are clear. For the incumbents in the diamond industry, however, the temptation is to resist change rather than embrace it. Diamond bourses in India and Israel have restricted the trading of synthetics. Some in the industry have argued that the rise of man-made diamonds is more likely to impoverish artisanal miners in Africa than nasty regimes. + +In fact, everyone may have a chance to keep some of their sparkle. An inexhaustible supply of cheap lab-grown stones might seem certain to make them all less precious. But true romantics will still balk at making a proposal with a ring made in a lab. A diamond producers’ association has already unveiled a new marketing slogan, “Real is Rare”, to satisfy another one of the millennials’ cravings—for authenticity. That will help the natural-diamond bit of the industry to keep its prices high. + +Better still, additional competition from synthetic producers will add to the pressure on the mainstream industry to beef up its certification processes—both to reassure ethical buyers of the provenance of their diamonds and to prove that a pricey diamond is indeed natural. What the Kimberley Process failed to do, technology might. A more legitimate diamond industry might even be one that banks are happier to lend to. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21701490-even-ring-finger-cannot-escape-effects-technological-change-shine/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cities + +The right kind of sprawl + +Growing cities in Africa and Asia are bound to spread out. They do not have to do it so messily + +Jul 2nd 2016 | From the print edition + + + +EVERY year the world’s urban population swells by about 75m people. That extraordinary growth—equivalent to adding eight Londons—is a wonderful thing. Cities throw people together, encouraging the exchange of ideas. The people who move there tend to grow richer, freer and more tolerant. What is rather less wonderful is the way in which many of the world’s fastest-growing cities are expanding. + +The trouble is not, as is often claimed, that cities in poor and middle-income countries are spreading like oil slicks. Most of them need to expand. Western cities can often accommodate their growing populations by squeezing more people in. But many poor cities are incredibly dense already: Dhaka, the capital of Bangladesh, is nine times as tightly packed as Paris, if you include their suburbs. And no Western city has ever added inhabitants as quickly as the poor and emerging-world champions are doing. African and Asian metropolises are bound to sprawl even if sensible pro-density reforms are passed, such as scrapping height restrictions on buildings. + +The real problem is that these metropolises are spreading in the wrong way. Frequently, small housing developments or even individual houses are plonked down wherever a builder can cut a deal with a farmer (see article). In the huge, jumbled districts that result, far too little space is set aside for roads. Manhattan is 36% road (overall, almost half of that capitalist temple is public space). In some unplanned African suburbs as little as 5% of the land is road. Even middle-class districts often lack sewers and mains water. As for amenities like public parks, forget it. + +Suburbs can eventually be retrofitted with roads and sewers. But that will be horrifically complicated and expensive—too much so for poor countries. It would be vastly cheaper and better to do sprawl properly from the start. + +Urban and national officials should begin by admitting two things: their cities are going to become very much larger; and this growth will be too quick to be controlled by comprehensive urban plans. Officials in poor countries often spend many years drawing up detailed plans; by the time they are finished, the city has changed so much that their designs cannot possibly be implemented. + +It is wiser to keep things simple. At a minimum, work out where the main thoroughfares and parks will go as the city expands. Again, New York is a good model. In 1811, when the city was still confined to the southern tip of Manhattan, it planned for a sevenfold expansion and laid out a street grid. + +Make way + +Acquiring rights of way for future roads and amenities can be both costly and politically difficult (though not nearly as much as waiting until it is too late). Almost all fast-growing cities are in countries where landholdings are small, and small farmers do not take kindly to being booted off their land. But a few countries have developed a promising technique known as land readjustment. Instead of evicting farmers in the path of a new road, officials offer to reorganise a whole district. Everybody loses some land, and the biggest winners—those closest to the new road—compensate those who fare less well. Japanese cities used this technique when they were growing quickly. Today the Indian state of Gujarat makes it work. + +Increasingly, the world’s fastest-growing cities will be African. And those are especially hard to corral. Many African countries persist with some form of collective land ownership, which is anathema to professional developers: why buy land that you cannot formally own? Until farmers are given full rights to their lands, including the ability to transfer legal title, cities are likely to grow in a messy way. Good planning and secure property rights make for a better kind of sprawl. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21701491-growing-cities-africa-and-asia-are-bound-spread-out-they-do-not-have-do-it-so/print + + + + + +Previous Articles Sections Next + + + +Letters + + + + + +On Brexit: Letters to the editor + + + + + +Articles Sections Next + +On Brexit + +Letters to the editor + +Jul 2nd 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Irreconcilable differences + +Your reaction to the result of Britain’s referendum on the European Union floats roundly inside the grieving London bubble (“A tragic split”, June 25th). More than 17.4m people voted to leave. The distribution of their votes across all of England belies the insulting image being peddled that Brexiters are angry, semi-literate, racist northerners. The middle-class cognoscenti is in shock, unable to comprehend that the entire nation actually does not share their near-fascistic Weltanschauung. Had Remain won, no one would now be discussing the need to heal a divided nation. Instead it would be “common sense triumphing over isolationism”, “tolerance overcoming hate”, and so on. I voted Leave on the basis of Tony Benn’s inarguable case regarding democratic accountability and I am delighted with the outcome. + +STEPHEN HAND + +Chipping Sodbury, Gloucestershire + +In the same edition, you reported on excessive executive pay, increasing levels of poverty among low-paid workers and your astonishment at the vote to leave the EU. Perhaps you should have joined the dots. + +PETER SWAIN + +London + +There are various economic, political and financial reasons for the widespread anger across Europe, but foremost among them is the right for workers to live and work in any member country. This has increased the draw of economic migrants from the newest and poorest member states of eastern Europe and illegal migrants coming from north Africa and elsewhere. Yet the authorities seem unable to determine between refugees and economic migrants. It will wreck the EU. + +France and Germany must take responsibility for refusing Greek, Italian, British and others’ requests to suspend the entitlement to freedom of movement, at least temporarily. Revoking that right would have almost certainly helped Remain win the referendum, but Brussels gambled, refused and lost. Pride goes before a very large fall. + +MARK JEFFRIES + +Chichester, West Sussex + + + +Many of the three million European citizens who live in Britain consider it home. The uncertainty we now face is difficult to bear. We receive reassuring messages. Our employers tell us that everything will remain the same until “the government decides otherwise”. Will we lose our right to live and work in the United Kingdom? “Not necessarily.” That just isn’t good enough. Most of us don’t care about the immediate future. We care about the end result. Should we remain in the hope that those who live here at the time of the split will be allowed to stay? Will companies be reluctant to hire Europeans as long as the uncertainty lasts? Although I do not want Article 50 to be initiated, it has become unavoidable. And given that it is inevitable, it is better to do it today than tomorrow. We need to resolve this as soon as possible. + +DENNIE VAN DOLDER + +Nottingham + +Either the EU is a club, that member states can join and leave according to their people’s wishes, or it is a greater project of political union that sets points of no return. If the latter applies there should be no institutional possibility to leave depending on a popular vote, just as no British county, French département, German Land or Italian region is free to choose whether to stay or leave its country. The EU’s perpetual inconsistency that on the one hand pursues integration and on the other keeps the handbrake within reach through procedures such as Article 50 of the Lisbon treaty is what really endangers its survival. + +If the EU is to fail it should do so convincingly instead of slowly bleeding to death. + +VITTORIO DE VECCHI LAJOLO + +Turin + + + +To the 48%: my sincere condolences. I am a convinced European of British origin, cognisant of the failings and weaknesses of Brussels, but wishing to strive for improvement. After 20 years of living and working in France I am now obliged to seek French nationality. + +To the political class in Brussels: the model doesn’t work! You know it but your preening self-interest, general incompetence and apparent lack of will to change means that nothing advances. Your handling of the refugee crisis is a glaring example. This vote is as much a castigation of you and your shenanigans as it is of any other factors brought to the debate. Recognise it and do something about it. Nationalism is on the rise and you are largely to blame. + +I don’t think we have even begun to understand the consequences of this dangerous and irresponsible farce in Britain. It is a turning-point in European history. + +NIGEL EVANS + +Paris + +* If the EU’s democratic model was offered to Americans they would rightfully laugh it out of town. The essential issue behind Britain’s choice to leave the EU was not near-unbridled immigration (although that is no small consideration in an already densely populated country). Rather it was the EU’s weak democratic institutions and lack of political checks and balances. + +When Britain joined what was then the Common Market four decades ago, it was simply a free-trade area. Since then it has transformed itself into a far larger and more ambitious group. But in trying to form that union the EU has failed to build the democratic institutions necessary for it to gain support. It took America several attempts and nearly 250 years to get its own constitution right, and it’s still evolving. But the EU’s current “constitution” has big flaws. Worse, unlike the US, it is resistant to change and improvement, not least because the bureaucracy that runs it seems to exercise more power than its employer, the legislators. + +Where I fault Britain is in not far more vigorously and noisily protesting against the EU’s faults, and its unwillingness to adopt any proffered sound solutions. Britain shouldn’t have adopted a standoffish “sulk” as its political position. + +MICHAEL NORTHMORE + +New York + + + +A subsequent referendum would offer the opportunity to continue to leave on a more defined path, or to reconsider the benefits of EU membership from an unexpected, but stronger, negotiating position. It would also better inform those who used their vote to protest against wider issues on June 23rd and now find themselves faced with the unintended consequences. + +JAMES DOVE-DIXON + +Otterford, Somerset + +Votey McVoteface? + +VILNIS VESMA + +Newent, Gloucestershire + + + +True Englishmen do not flip “a middle finger at the establishment” (Bagehot, “The improbable revolutionaries”, June 25th). That’s for Americans and their satellites. The English wave two fingers (middle and index), with the back of the hand towards the adversary. The practice started after English bowmen captured by the French had those two fingers cut off so that they could no longer pull a bow. Free bowmen would stick up their fingers to the French to show they could still do battle. + +ROGER BROAD + +London + +The Economist launched a China section in 2012 to account for the country’s increased influence on the world, 70 years after a United States section was started for the same reason. Britain’s influence on geopolitics and the world economy has declined over the past half century, and you have pointed out that Brexit would further diminish that influence (“Divided we fall”, June 18th). So is it time for The Economist to move the Britain section, somewhat ironically, into Europe? + +DAN HANRAHAN + +Melbourne, Australia + +“Brexit will not kill European Utopianism. It was already dead”, says Charlemagne (June 18th). European Utopianism was very much alive recently, when the European Parliament announced a proposal to tax robots as “electronic persons”. + +ELIEZER GREISDORF + +Toronto + + + +Hooray! Now we can all go to Tesco and buy bananas again in any shape we want. Just like in the real world. Life doesn’t get much better than that. + +ROGER LEWIS + +Aberystwyth, Ceredigion + +* Letter appears online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21701458-letters-editor/print + + + + + +Articles Sections Next + + + +Briefing + + + + + +Brexit: An aggravating absence + +The negotiations: Article 50 ways to leave your lover + +The economic fallout: Managing chaos + + + + + +Articles Sections Next + +Brexit + +An aggravating absence + +Britain’s decision to leave the European Union will cause soul searching across the continent—and beyond + +Jul 2nd 2016 | BERLIN, BRUSSELS, PARIS, ROME AND WARSAW | From the print edition + + + +IT WAS a gathering unlike any the European family had ever seen. In the Justus Lipsius building in Brussels his fellow leaders commiserated with Britain’s prime minister, David Cameron (not pictured, above) over his failure to keep his country in the EU. Fractious as the marriage with Britain has sometimes been, there was resigned sorrow and regret at the decision to end it. Donald Tusk, the president of the European Council, who chaired the gathering, described his feelings thus: “I felt as if someone very close to me left our home, and in the same second I felt also how dear and precious this home was to me.” + +A few hours earlier, in the packed chamber of the European Parliament, the kids had been at each others’ throats. The Parliament likes to think of itself as the guardian of the European ideal. But its role as a sump for protest votes means it also provides a European stage and stipends for those who would destroy the union (including some, like Nigel Farage of the UK Independence Party, unable to secure a place in their own nations’ parliaments). Unsurprisingly, things can get heated. + +Euro-federalists accused Mr Farage of lies like those of Nazi propagandists; Mr Farage, reminding MEPs that they had laughed at him 17 years ago, when he was first elected on a get-Britain-out ticket, crowed “You’re not laughing now, are you?” “Long live free nations! Long live the United Kingdom! Long live France!” declared a jubilant Marine Le Pen, leader of France’s National Front (FN). The Brexit vote, she announced, was “by far the most important historic event known by our continent since the fall of the Berlin Wall.” + +On that she may be right. The EU has suffered many upsets in recent years, including the huge challenges of the debt crisis in the euro zone and the mass influx of refugees and other migrants. But Brexit is qualitatively different. It strikes at the very idea of a union, rather than its shoddy or misguided implementation. + +Until the referendum on June 23rd, the EU could always boast that, for all its flaws, it was still a club that many wanted to join and none had left. The union has been fruitful and multiplied since its precursor, the European Coal and Steel Community, was formed by six members in 1951. In 2013 Croatia became the 28th member of the EU; in 2015 Lithuania was the 19th to join the euro. The EU is the world’s biggest single market, counting some 500m rich-world consumers. It stabilised new democracies in southern and eastern Europe, and though it failed to bring peace in the former Yugoslavia it has done much to sustain the peace that eventually arrived. The protesters of Ukraine’s Maidan were shot holding aloft the union’s blue flag with its circle of stars. + +And now the British have voted to leave. True, the nation’s membership had often been half-hearted. Britain had stayed out of the euro and of the Schengen free-travel area. But that barely softens the blow of the union’s second-biggest economy and a leader in some of its major reforms deciding to walk away. The decision leaves more in its wake than regret and resignation. It leaves two big questions. Will anyone else follow Britain out of the union? And what reforms are needed if the institution is to cohere and survive? + +Will the French let her? + +Eurosceptics across Europe are moved by dissatisfactions similar to those of Britain’s Leave voters: resentment of globalisation; estrangement from elites; a sense that the EU is distant, undemocratic and overbearing; and, above all, a conviction that the cherished openness of the EU has let in too many foreigners who take away jobs, benefits and national identity (see chart 1). Popular support for the EU has collapsed across the continent, nowhere more strikingly than in France, where the FN has prepared posters featuring a pair of chained wrists breaking free, under the caption: “Brexit: and now France!” Ms Le Pen talks of a “People’s spring” in Europe, a phrase redolent, rather unfortunately, of the Arab one on the far side of the Mediterranean. + + + +Once the driving force of the EU, the French are now among its most Eurosceptic citizens. A recent survey of major EU countries by the Pew Research Centre finds that they have a more unfavourable view of the union than is found in any other country bar Greece (see chart 2). Ms Le Pen thinks this national mood could help her win the presidential election next spring. Polls suggest that she will make it into the second round of the election, but until now the assumption has been that she would go on to lose to a candidate of the centre-right because a big enough chunk of left-wing voters would hold their noses and vote for her opponent. Left-wing voters who got behind a centre-right candidate in just this way blocked her bid to win the presidency of a region last December. + + + +The Brexit vote could alter the equation. Ms Le Pen’s strategy has been to win respectability by turning her party, previously seen as a creature of the extremist fringe, into a mainstream nationalist alternative to left and right, and the British vote makes the party’s Euroscepticism seem less exceptional. It puts questions of identity, immigration and national sovereignty at the centre of the debate, where she can shape the agenda and peel away votes from not only the centre-right but the left, too. The FN is already the most popular party among working-class voters, and it will not have escaped Ms Le Pen’s notice that a third of Britain’s Labour Party supporters went against their party’s policy and voted with Mr Farage, whose UKIP did well in many former Labour strongholds at last year’s election. Less of the French left may be relied on to vote against Ms Le Pen than was once expected. + +Voters elsewhere will also soon be making themselves heard. Italy’s centre-left prime minister, Matteo Renzi, has staked his future on a constitutional referendum this autumn. The vote is not directly about Europe; Mr Renzi wants Italy to replace its dysfunctional legislature with a unicameral parliament and an electoral system that produces stable majorities. If he loses and resigns as a result, Italy could fall into political and economic chaos; alarmed markets might trigger a banking crisis (see article). + +Such chaos, and any subsequent increase in austerity, could play to Euroscepticism in Italy and elsewhere. The Five Star Movement, which recently won control of Rome and Turin, two of Italy’s most important cities, has been fiercely critical of the euro and of the austerity policies associated with it. It has tiptoed away from the frank Euroscepticism of its founder, Beppe Grillo, but could return to it. The Northern League called for a referendum on Italy’s membership of the euro two years ago, and might now up its demand to a full exit. It has not been doing particularly well at the polls of late, but an economic crisis could change that. + +Ms Le Pen is on a roll + +Germany and the Netherlands will also have elections next year, and in both populists look set to do well even in the absence of a new crisis. In the Netherlands polls give the anti-EU and anti-immigrant Party for Freedom (PVV), led by Geert Wilders, a comfortable lead; the Liberal party of the prime minister, Mark Rutte, languishes in second place, and the Labour Party, which governs with the Liberals in a centrist grand coalition, has fallen to below 10%. Though Mr Wilders will not win an outright majority, he may end up able to force a referendum on membership of the euro. On current form he seems unlikely to win it. But events could change things. Mr Rutte probably had that in mind when he emphasised in Brussels the heavy cost Britain—frequently his ally in internal EU debates—was paying for its choice: “England has collapsed politically, monetarily, constitutionally and economically.” + +Obligations and privileges + +Anti-EU movements have made less of an impact in Germany, which has long felt a special reparative responsibility for peaceful European integration. Alternative for Germany, which started life as a protest against the euro and bail-outs for indebted southern states, is polling at 10-14% and will no doubt break into the Bundestag in the 2017 elections. But though the party now takes a hard anti-immigrant stance, too, it still does not want to leave the EU. + +If Germany is united in its support for the EU, though, it is to some extent divided over what to do next about Britain—as is the rest of the union. The Social Democratic Party, the junior partner in the grand coalition led by Angela Merkel’s Christian Democrats, wants to see action quickly. In this it is lining up with its fellow socialists in France, who want to see Britain beginning to pay for the “consequences” of its action as soon as possible. At the other end of the spectrum, the Netherlands and Poland are content to give Britain time, perhaps in the unspoken hope that it might yet reconsider. “The quality of the process is more important than timing,” says Konrad Szymanski, Poland’s minister for European affairs. Poland has long regarded Britain as the natural champion of market-oriented easterners, despite its voters’ turn against the free movement of workers. + +The ever-cautious Mrs Merkel, keen to keep Britain as a close partner in both trade and geopolitics, tends to the go-slow-and-gentle side of the debate over how to negotiate Brexit (see article). “There is no reason now to be especially nasty during the negotiations,” she has said. But, as ever, there is also a limit to her willingness to accommodate Britain. “Anyone who wants to leave this family can’t expect to get rid of all obligations while holding on to privileges,” she said on June 28th. + +Her stance underlines the fact that, despite differences over presentation and timing, at heart the EU has a fairly well settled, and tough, line on how to treat Britain. Serious splits in the coming months are unlikely. Possibilities such as the creation of alternative forms of membership for reluctant or problematic countries, such as some version of the “privileged partnership” once suggested for Turkey, would be hard to sell; Europe’s leaders are nervous about encouraging halfway houses for fear that existing members might find them attractive, too. “Married or divorced, but not something in between,” says Xavier Bettel, Luxembourg’s prime minister. + +Distracting though dealing with the departing Brits may be, holding the remaining EU together will be the highest priority. As always, the instinctive response of many politicians to a crisis is “more Europe”. In a recent joint paper Jean-Marc Ayrault and Frank-Walter Steinmeier, the foreign ministers of France and Germany, called for closer co-operation on defence, security and intelligence-sharing; the joint patrolling of external borders; a common migration and asylum policy, the harmonisation of corporation tax; and euro-zone reforms. They said their countries would “move further towards political union in Europe.” + +More Europe, more trouble + +Their respective leaders, though, avoided endorsing such extensive commitments. Wolfgang Schäuble, Germany’s finance minister and a longtime champion of integration, says that centralising EU powers further after Brexit would be “crazy”; if anything, he wants to clip the wings of the commission. Others go considerably further in their calls for the repatriation of powers, not to mention a bonfire of EU regulations (of which, in fairness, Brussels now produces far fewer than once it did). Poland has called for a more inter-governmental system, transferring powers from the commission to the European Council, where national leaders sit. More freewheeling governments, including those of the Netherlands and the Nordic states, would like the EU to focus on growth-promoting liberalisation of markets such as those for digital and other services. They know their cause will be weakened by Britain’s departure (see article). + +Though its direction is not set, there is a general recognition that some kind of reform is unavoidable. At the same time, the obstacles seem insurmountable. Given that most EU policies are delicate compromises, it is hard to reach agreement on which should be altered or abandoned lest a house of cards come tumbling down. And it is inevitable that the core goals of some nations and governments will contradict those of others. France wants a more “social” Europe with higher minimum wages and the protection of workers across the union in order to prevent what it calls “social dumping”. Such ideas are anathema to German conservatives. + +Divergent interests have precluded reform in the area which most cries out for it: the single currency. Options from a proper banking union to a common budget and joint Eurobonds were examined in a report last year by the “five presidents”—those of the European Council, the parliament, the European Central Bank, the Eurogroup and the commission. But they have mostly been ignored. Germany resists shared liabilities, fearing it will be left to pay the bill for the fecklessness of others. Instead it emphasises more central control of national economic policies; this is resented in its turn by those who chafe against austerity, such as France, Italy and, obviously, Greece. And any shift in focus to the euro-zone core raises the ire of the nine non-euro countries. The departure of Britain will not magically heal these divisions. + +The EU is just one pillar of Europe’s post-war order. Might Brexit also undermine NATO, the military alliance that has its headquarters at the other end of Brussels and joins Europe to America? Philip Gordon, a former American assistant secretary of state in charge of European relations, says the Brexit vote is a “real setback”. Though Germany may be richer and France more gung-ho, no other big European country so often shares America’s basic instincts about the world and how to keep it prosperous and safe. + +Within hours of the Brexit vote, Britain assured Jens Stoltenberg, NATO’s secretary-general, that the country’s commitment to the alliance was unchanged. Jonathan Eyal of RUSI, a think-tank, believes that Britain will want to “puff up” its NATO role. Perhaps it will make new gestures towards the collective defence of NATO’s eastern border against a resurgent Russian military threat. + +Although a reduced British interest in European security would be deeply unwelcome in America, Brexit per se is being presented as something of passing moment. Barack Obama, who publicly (and perhaps counterproductively) urged Britain to remain in the EU, now says that if Britain ends up being “affiliated to Europe like Norway is” the average American would not notice much change. Many on the right greeted Brexit as a welcome display of independence by an old ally. + +Russia rejoices + +But the last thing that America needs is further economic turmoil and navel-gazing in a major trading partner and an indispensable ally when the “free West” needs to act as one, for instance by sanctioning Russia or Iran. This possibility of such weakened distraction is one reason Russia sees Brexit as a victory—even though it had little to do with it. Dmitry Trenin, the head of the Carnegie Moscow Centre, a think-tank, also expects a Britain-free EU to be less fundamentally close to America—something Russia will welcome. + +The Kremlin feels threatened by European institutions that attract former Soviet republics, such as Ukraine and Georgia, and is delighted to see them weakened. Dmitry Kiselev, a television presenter and Vladimir Putin’s chief propagandist, greeted the news with a rapture matched only by that of Ms Le Pen: “Brexit is a turning-point in the history of the EU…The number of EU members is declining. All questions about the expansion are closed for a very long time, if not for ever.” + +In private, some in Brussels will doubtless agree. They may also nod their heads at the assessment of Yang Chengxu, a former Chinese ambassador to Vienna, that the Brexit vote “yet again reflected the drawbacks of Western democracy”. National referendums—in France and the Netherlands in 2005, in Ireland in 2008—have stymied integrationists before, though never on this scale. And some of the upcoming votes may well make their lives harder still. The answer, though, is not to avoid the voters. It is to fashion a Europe that they want to vote for. That is not an easy task; nor is it one, in the long run, to which there is a workable alternative. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21701545-britains-decision-leave-european-union-will-cause-soul-searching-across-continentand/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The negotiations + +Article 50 ways to leave your lover + +There is no deal on offer that will satisfy both Brexiteers and voters + +Jul 2nd 2016 | From the print edition + +Ms Sturgeon would like to see more of Mr Junker + +ON JUNE 29th, 27 heads of government convened for the second day of an EU summit. David Cameron was not of their number. It was a harbinger of things to come. European law recognises only one way for a country to leave the EU: by invoking Article 50 of the Lisbon treaty. And this provision gives no vote to the seceding country when it comes to the final terms of departure. They are fixed by a majority in the European Council. + +Aware that this stacks the cards in favour of the EU, many Brexiteers want to find some way to put off invoking Article 50 until an outline agreement has been reached. But EU leaders are not willing to countenance such procrastination. They are ready to wait until a new Tory leader and prime minister is in place (see article), or until after an election, if one is held shortly thereafter—but not longer. + +The negotiations under Article 50, once they get started, will be only one part of the proceedings. As Robin Niblett, director of the Chatham House think-tank, explains, Article 50 is about exit, not about a changed trade relationship; those negotiations will have to be separate. The two sets of talks may proceed in parallel, but a trade deal is likely to take more than the two years fixed by Article 50. It will also require approval by the legislatures of every member state, as well as the European Parliament. So it is unlikely to be settled before Brexit happens, unless Britain goes for a pre-cooked arrangement, such as joining Norway and some other countries in the European Economic Area (EEA). + +Some variant of this option is backed by a number of Leavers. Its advantages would be speed and broadly unchanged access to the European single market for goods and services. But its disadvantages would be huge: Norway and other EEA members make large payments into the EU budget and observe all single-market regulations with no say in drawing them up. And, critically, EEA members accept free movement of labour. + +Boris Johnson, a leading Brexiteer, has claimed that Britain could secure limits on migration and still retain access to the single market on broadly Norwegian terms. Yet the EU could not possibly accept this. If Britain got such a deal, it would have to be offered to other EEA countries—some have been refused such consideration when they asked for it in the past—and probably to EU members, too. It would need unanimous agreement, including from places like Poland, Romania and the Baltic trio that would hardly welcome their citizens being treated as second-class. And Brussels hates to be seen giving in to any form of blackmail: if it concedes to Britain on a core principle, countries from Hungary to Portugal might make demands of their own. + +This being the EU there could yet be some fudge. Liechtenstein, a tiny EEA country, retains some residence controls; many EU countries also restrict welfare benefits for migrants. An emergency brake on immigrant surges or new controls on benefits might be agreed on. But this is far short of a system that chooses among would-be migrants according to their skills—the sort of system many in Britain now expect. If British negotiators treat the need for such control as a red line, they will have to accept the loss of full access to the single market. That is what Angela Merkel, the German chancellor, means when she says Britain cannot “cherry-pick” the benefits without the obligations. Among Tory leadership hopefuls, the justice secretary, Michael Gove, says he is fine with that. + +Make a new plan, Stan + +If not Norway (or Norway-lite), there are only two other options: a Canada-type free-trade deal, which would eliminate most tariffs on goods; or normal World Trade Organisation rules. Either would take time, not least because, since Brussels has taken care of trade negotiations since 1974, Whitehall lacks experience. Neither would cover most services (including, crucially, financial services). In either case banks in London could well lose many of the “passporting” rights that let them trade across the EU—much to the delight of rivals in Paris and Frankfurt (see article). + +A further complication comes from two of the nations of the United Kingdom having not voted to leave at all (see article). Northern Ireland’s peace agreement and border with the Republic pose unique problems. And Scotland’s first minister, Nicola Sturgeon, visited Brussels this week to talk to the European Commission’s president, Jean-Claude Juncker, about how the EU membership of an independent Scotland might be ensured. + +Given all the problems, some wonder if the vote might somehow be overturned. Other countries have rerun referendums to produce the “right” result. Yet unless the EU accepts migration controls, it is hard to see how this could work for Brexit. Many countries are fed up with pesky Brits and some want to be shot of them. And angry British voters who backed Brexit would surely be angrier still were their wishes ignored. + +The economic fallout from Brexit (see article) and the failure of Brexiteers to honour promises such as more money for the health service might lead some voters to regret their choice. Charles Grant of the Centre for European Reform, another think-tank, says it is unwise to talk too soon about a second referendum, since that looks undemocratic. But if a new election were held before Article 50 negotiations were complete, some parties might campaign, and conceivably win, on the basis of staying in or accepting an EEA deal. + +Such a course of events, sadly, remains unlikely. The Israeli diplomat Abba Eban used to say that nations will always do the right thing after they exhaust all the alternatives. Britain and Europe look likely to put his conclusion to a severe test; but exhaustion, at least, can be guaranteed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21701543-there-no-deal-offer-will-satisfy-both-brexiteers-and-voters-article-50-ways-leave/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The economic fallout + +Managing chaos + +How Brexit will affect growth in Britain, Europe and the wider world + +Jul 2nd 2016 | LONDON AND WASHINGTON, DC | From the print edition + +Carney, calming + +BUSINESSES and financial markets hate uncertainty. The vote for Brexit gives rise to a surfeit of it. Ahead of the referendum, most economists agreed that leaving the EU would be costly for Britain’s economy in the longer term. Now that the result is in, analysis has shifted to gauging how the economy will react in the immediate future. Forecasts for economic growth are being revised down—markedly for Britain, materially for Europe, and modestly for the world. + +A lot depends on the kind of trade deal Britain can negotiate with the EU and how quickly its outline will emerge. The longer this takes, the worse will be the economic impact. No single narrative can hope to do justice to the many permutations that are possible. But three broad scenarios cover most of the terrain. + +Begin with the most benign of possible outcomes. The 27 other members of the EU, led by Germany and France, quickly agree on a common negotiating position that seeks to keep Britain as closely attached to Europe as possible without it being a member. In Britain either the leadership contest now taking place in the ruling Conservative party or a subsequent general election produces a prime minister with a strong mandate who can command a parliamentary majority. Both sides converge on a trade deal for Britain similar to the one enjoyed by Norway, with unfettered access to the single market and with some of the burdens of full EU membership (see article). The fine details might take years to iron out fully, but agreement on a deal’s outline would give enough certainty to businesses in Britain to resume some investment. + +In this event, the British economy would suffer a rotten few months, but a bounce-back might be evident by the end of 2016. Sterling would rally in anticipation. The spillovers to Europe and the global economy would be small and transitory. The path would be similar if Britain could quickly find a way to reverse its decision to leave. + +In the second case, which is also the most likely, discussions are considerably longer drawn-out. Both sides come to a settled idea of the deal they each want by the autumn, but they remain divided on issues such as the free movement of labour, payments to the EU budget and compliance with its regulations. + +The middle way + +In this unsettled state of affairs, businesses in Britain (and, to a lesser degree, other countries with which it has close ties) defer whatever spending they can. The biggest casualties will be capital projects with big upfront costs whose profitability depends either on friction-free trading with Europe, or on access to other export markets which Britain enjoys only because of trade deals negotiated by the EU. The pound remains weak, indeed falls further. + +That in turn pushes up the costs of imported goods to the detriment of real incomes. Hours worked and wage growth fall, even if jobs do not immediately go (though hiring freezes are likely): just as companies value the option of holding off on big investments, they tend to hang on to workers for as long as they can during downturns because they are costly to rehire if the economy picks up. Consumer spending power is reduced. In principle Britain’s exporters ought to get a lift from a cheaper pound, but recent evidence suggests they might not. Sterling’s weakness in the years after the global financial crisis put a brake on consumer spending (because of higher inflation) but appeared to do little to boost exports. + + + +Brexit: taking stock + +In this middling scenario, the combined effects of business uncertainty and a weaker pound would be likely to cut the economy’s growth rate (compared with a situation in which Britain had voted to remain in the EU) by 1-2 percentage points in the next 12-18 months, with the worst impact coming in the second half of this year. A recession in Britain would hurt exporters in the rest of Europe, where some freezing of capital spending is also likely. + +A decent rule of thumb is that the reduction in GDP growth in Europe will be between a third and a half as big as the loss to Britain’s rate of growth. As long as the reaction in financial markets is broadly commensurate with the hit to the economy in Europe, and panic is contained, further spillover into the world economy will be fairly limited, say forecasters. In the “medium-stress” scenario set out by economists at Morgan Stanley, a bank, the impact of Brexit takes a cumulative 1.5 percentage-points off Britain’s growth rate in 2016 and 2017, half as much off growth in the euro area and 0.5 percentage points off global growth. The Bank of England’s governor, Mark Carney, and his counterparts will do what they can to underpin confidence and demand in the real economy and to keep banks afloat with cheap funding. The Federal Reserve is unlikely to raise interest rates before December at the earliest. + +Yet a worse outcome is all too easy to imagine. Informal trade talks might stall. The politics in Europe could easily sour. Agitation for referendums in other parts of the EU might grow, despite the convulsions in Britain’s polity. Were the Brexit vote, or the negotiations with Britain, to stir broader anti-EU or anti-euro sentiment, worried business leaders across Europe would be more likely to cut back on investment. Europe’s fragile banks might be spooked by tumbling stock prices into choking credit to firms and householders. As business conditions worsened, anxious consumers would defer planned spending on holidays and big-ticket durable goods until their job prospects were clearer. + +If stockmarkets or house prices fall hard in a panic, that would detract further from spending in countries, notably Britain, where changes in household wealth have a material impact on consumption. Along with Australia and Canada, housing in Britain is already richly valued against rents and incomes compared with the long-run average, thanks in part to brisk demand from foreign buyers (see chart 1). A weaker pound makes British assets tempting to foreign bargain-hunters. But Brexit might just as easily prompt a rethink about the enduring worth of buying property there, especially if London loses ground as a financial centre (see article). Even before the Brexit vote, there were signs that the housing market was beginning to lose momentum. + + + +For now many forecasters are treating the Brexit vote as a regional economic event, rather than a global one. Britain accounts for a bit less than 4% of world GDP; it is not big enough to make the global economic weather as America or China can. Even so, there are worries that the Brexit vote might disturb some existing faultlines in the world economy in a way that amplifies its impact. Three concerns in particular are Italy, China and world trade. + +Careful with those banks + +Start with Italy. It is the weakest big link in the euro-area economy (Greece and Portugal are troubled tiddlers by comparison). Banks are fragile across the currency zone, but Italy’s are particularly brittle, weighed down with bad loans built up over a long period of economic stagnation. Brussels has prevented a state-backed “bad bank” from purchasing some of those iffy loans because it would contravene newish EU rules on state aid to banks. This closes off an indirect way of building up their capital. Instead banks must either seek new capital from private investors, which is insufficiently forthcoming, or “bail in” their bondholders in a way that imposes losses. Since bank bonds in Italy are widely held by small depositors, a broad bail-in would be politically impossible. + +Matteo Renzi, Italy’s reform-minded prime minister, says he will resign if the result of a referendum on constitutional reform goes against him in October. He is already losing popularity. It is a volatile situation. If Mr Renzi goes Italy will be set adrift again, and fears that it might leave the euro—as both the Five Star Movement and the Northern League wish to do—would return. Brexit might make the economics more combustible, says Laurence Boone, chief economist of AXA, an insurance firm. A weaker economy puts greater pressure on Italy’s tottering banks, shares in which plunged in the days after the British referendum (see chart 2). The European Central Bank can smother symptoms of anxiety by buying government bonds, but cannot do much more to cure the underlying problems. If the stresses intensify, the least-bad option might be for Italy to defy the EU and recapitalise its banks. That would reignite fears of EU disintegration. + + + +The line from Brexit to China’s economy is less direct and relies on broader financial contagion. The EU imports more from China than anywhere else; weaker growth will be unwelcome when China is wrestling with mountainous debts and oversupply in heavy industry. The degree to which decreased European demand would exacerbate those problems may not be that bad in itself, but there is an additional risk: that European weakness sees the dollar strengthen further as investors flock to the safety of American assets, and that this renews fears about a devaluation of the yuan. + +So far, the authorities have allowed the yuan to partly track the falls in the euro and sterling, as part of a strategy to follow a basket of currencies, and not just the dollar. This week the yuan reached its lowest value against the dollar since 2010, without prompting panic. It has helped that the currencies of other exporters, notably Japan, have risen against the euro as hot money flows out of Europe and into Asia. + +A third area of global concern is trade. If Britain, long a champion of free trade, can vote to revoke a regional trade deal, how much faith can businesses put in other trade agreements? That alone might have a chilling effect on investment worldwide. + + + +The WTO recently warned that trade-protection measures in the G20 are rising at their fastest rate since 2009, when they were first tracked, in part in response to a glut of global steel capacity, much of it in China (see chart 3). Though the Brexit vote was shaped by concerns about the free movement of labour, rather than of goods and services, the appetite for new trade deals was already weak. The prime minister of France, Manuel Valls, said this week that a long-discussed Transatlantic Trade and Investment Partnership (TTIP) between the EU and America would, in its current form, be “a breeding ground for populism”. There is scarcely more enthusiasm on the other side of the Atlantic, where the presidential candidates are either cool or hostile to the Trans-Pacific Partnership (TPP), a trade deal with Pacific-rim nations that has yet to be ratified. The Republican leader in the Senate, Mitch McConnell, says that “by any objective analysis this is, shall I say, a down period for trade agreements around the world.” + +A silver lining? + +A few optimists reckon that if Brexit is sufficiently painful for Britain’s economy, it might in time bolster the case for free trade. The fate of other countries that have had to quickly realign their export markets is not encouraging. When Britain joined the EU in 1973 its erstwhile trading partners in the Commonwealth suffered: by 2000 New Zealand had slipped from 8th to 22nd in country rankings of income per person, for instance. Other voices in Washington say there is a potential lifeboat for Britain. The TPP is an “open platform” agreement, meaning that other countries are allowed to apply to join it, once completed. An independent Britain might ask to join and—subject to a vote in Congress and agreement from the pact’s other members—enjoy trading access to America, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore, Vietnam and—yes—New Zealand. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21701539-how-brexit-will-affect-growth-britain-europe-and-wider-world-managing-chaos/print + + + + + +Previous Articles Sections Next + + + +United States + + + + + +Voters in the industrial Midwest: Rustproofing + +The Supreme Court: Two left feats + +Puerto Rico: Exodus postponed + +Crime and punishment: Billy the kid + +Lexington: More than a hobby + + + + + +Articles Sections Next + +Voters in the industrial Midwest + +Rustproofing + +Can Donald Trump flip the old manufacturing regions of the Midwest? + +Jul 2nd 2016 | ELKHART, INDIANA | From the print edition + + + +“MANY Pennsylvania towns once thriving and humming are now in a state of despair,” said Donald Trump in “Declaring America’s Economic Independence”, a speech he made on June 28th about jobs and the evils of free trade. This wave of globalisation has wiped out the middle class, claimed the presumptive Republican nominee for the presidency, tagging NAFTA “the worst trade deal in history”, and blaming China’s entrance into the World Trade Organisation for “the greatest jobs theft in history”. But it doesn’t have to be that way, he reassured his audience, for he alone can turn things round. + +It was no coincidence that Mr Trump chose a Pennsylvania-based company, Alumisource, as the site for his speech, which the frequently unscripted candidate read from a teleprompter, using quotations from Washington, Hamilton and Lincoln and providing no fewer than 128 footnotes for the curious. Winning the rustbelt, especially in Ohio and western Pennsylvania, is central to his 15-state strategy, announced at the end of last month. In the evening of June 28th Mr Trump spoke at a rally at Ohio State University in St Clairsville. + +The Midwest matters so much to Mr Trump because his candidacy has repeatedly upended conventional wisdom. Before the primaries, most elected Republicans were sure the party needed to nominate someone palatable to Hispanic voters. Mr Trump’s proposed wall to deter Mexicans has put habitual swing-states such as Colorado off limits and made Florida, which has plenty of Hispanic voters, look like hostile territory too. To compensate for this, he needs to take back states in the Midwest and north-east that Barack Obama won in 2012. + +How likely is it that Mr Trump can win over America’s heartland? Places like Elkhart, a town of 50,000 in northern Indiana, explain why Mr Trump’s campaign thinks the Midwest is such friendly turf. Elkhart used to be one of the hardest-hit of the many down-on-their-luck midwestern manufacturing towns. The town lost 24,000 jobs when the recession struck, and unemployment shot up to more than 20% of the workforce. One of the biggest makers of recreational vehicles, Elkhart proudly calls itself the “RV capital of the world”. But its overreliance on one industry making a non-essential product means business dries up very quickly during an economic downturn. + + + +Mr Obama’s first trip to the Midwest after he was elected was to Elkhart, which he intended to make a showcase for his $800 billion stimulus package. He returned several times in subsequent years. On the face of it, his plan worked like a charm. When he visited again at the beginning of June, to take stock of Elkhart’s economic progress, he found that unemployment stood at just 4.1%, high-school graduation rates had jumped to 88% and the rate of mortgages that were late or about to foreclose had fallen by more than half, to 3.7%. “Today we could easily use another 15,000 workers in the county,” says Mark Dobson of the Economic Development Corporation of Elkhart County. + +And yet Elkharters, who in the primaries voted in droves for Mr Trump and for Bernie Sanders, the other insurgent candidate, give Mr Obama scant credit for the turnaround. “President Obama had nothing to do with our recovery,” says Kyle Hannon of the Greater Elkhart Chamber of Commerce. He admits that the stimulus funds helped to improve infrastructure and were good for local building companies, but insists “We did it ourselves” when referring to the recovery of the RV industry, which had record sales in 2015 and is expecting another sterling year in 2016. + +Many Elkharters still find it frustratingly hard to make ends meet, which may explain their penchant for Mr Trump. Plenty of jobs are available now, but many are poorly paid or part-time. An analysis by the Pew Research Centre found that the median household income of Elkharters has dropped by 10%, from $76,000 a year in 2008 to $68,000 in 2014 (see chart). Even more startling is that median income was $78,000 in 1999, which means that incomes have fallen considerably throughout the new century. (Sixty-one percent of local households are middle-income, compared with 51% nationwide.) + + + +Indiana, of which Elkhart is part, begins 2016 in the Republican column (Mitt Romney won the state in 2012). Mr Trump’s midwestern strategy depends on winning all such states in the region (the Dakotas, Nebraska, Kansas and Missouri) and then adding some combination of Ohio, Iowa and Michigan. The latter seems like a stretch: Michigan last voted for a Republican presidential candidate in 1988. To make the plan work, says Henry Olsen at the Ethics and Public Policy Centre, a conservative think-tank, Mr Trump would have to take almost all the Romney vote and around 5% of the Obama vote in the Midwest. + +Mr Trump’s message blasting international trade, illegal immigration and corporate outsourcing go down well in the rustbelt bits of the Midwest, which are on average whiter, less educated and older than the rest of the country—and are still smarting from the loss of 6m manufacturing jobs between 2000 and 2009. “The era of economic surrender will finally be over,” promised Mr Trump, vowing to renegotiate NAFTA and to withdraw America from the Trans-Pacific Partnership, a trade deal still in the making. + +The plan has three flaws. First, peeling off blue-collar Democratic voters would not on its own be enough if, in so doing, Mr Trump alienates Republicans in the suburbs of midwestern cities who voted for Mr Romney. Second, blue-collar workers of Anglo-Saxon, Italian and eastern European origin in, say, Michigan and Pennsylvania take to Mr Trump much more than those of Scandinavian or German extraction, who are the majority in Minnesota and Wisconsin. Third, the Midwest and the rustbelt are not one and the same. And Mr Trump’s strength in the region is likely to run through the rustbelt, whose centre lies farther to the east. Mr Trump may win Pennsylvania, with its 20 electoral-college votes, but he may also waste votes in those bits of the rustbelt attached to states that lean strongly Democratic: polls put Hillary Clinton up by 20 points in New York. + +Even if he is ultimately unsuccessful, Mr Trump’s rustbelt rhetoric will affect the sort of campaign his Democratic rival runs. Rather than explain the ways in which the Midwest benefits from trade, Mrs Clinton, who was in Indiana on June 26th and then went on to Ohio and Illinois on June 27th, delighted in pointing out that Trump furniture is made in Turkey, instead of Cleveland, Ohio, and that Trump barware is made in Slovenia, instead of Toledo, Ohio. This is good politics, but it makes a gloomy spectacle for those who think trade makes America, and the world, richer. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21701486-can-donald-trump-flip-old-manufacturing-regions-midwest-rustproofing/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Supreme Court + +Two left feats + +Anthony Kennedy drifts left to save abortion rights and affirmative action + +Jul 2nd 2016 | NEW YORK | From the print edition + +Justice Kennedy’s new friends + +LAST June, the Supreme Court capped its most liberal term in decades by backing a right to same-sex marriage and rescuing Obamacare from a second near-death experience. One year later, contrary to expectations, the justices have delivered another series of rulings to vex conservatives. These outcomes owe something to the death of Antonin Scalia halfway through the term. But it is unlikely that the court’s rulings in two of the most politicised issues of recent decades—abortion and affirmative action—would have come out the other way had Scalia lived. The justice responsible for steering the court to the left was Anthony Kennedy, Scalia’s fellow Ronald Reagan nominee. + +On June 23rd Justice Kennedy surprised many when he wrote the majority opinion in Fisher v University of Texas, reaffirming the principle that public universities may give limited consideration to race when admitting students. He had never voted before to uphold a race-based affirmative action policy. But by a 4-3 vote (Elena Kagan recused herself), Justice Kennedy and three liberal colleagues rebuffed Abigail Fisher, a white woman who felt she was the victim of discrimination when the University of Texas (UT) rejected her application in 2008. In 2013, when the justices first ruled in Fisher, they asked the 5th Circuit Court of Appeals to give UT’s admissions policy a closer look. It complied, approving the university’s programme anew and prompting Ms Fisher’s final appeal. + +The admissions protocol at issue in Fisher is complex and, as Justice Kennedy writes, “sui generis”. For nearly two decades, UT has filled three-quarters of its places with Texas public-high-school students who finished in the top tenth of their graduating classes. In 2005, having achieved only modest success boosting diversity with this measure, UT started considering applicants’ race as one factor in the calculation for the remaining quarter of its incoming classes. (Ms Fisher had no quarrel with the top 10% plan; she challenged only the university’s consideration of race for those admitted as part of the “holistic review”.) + +In his opinion, Justice Kennedy dispatched Ms Fisher’s arguments before concluding that the admissions scheme was a narrowly tailored means of advancing the university’s interest in cultivating a broadly diverse student body. Justice Samuel Alito, dissenting along with two fellow-conservatives, noted that “something strange has happened since our prior decision in this case”. But Mr Kennedy’s opinions in race cases show he has been edging towards this stance in Fisher. When he dissented from a 2003 ruling in favour of race-conscious admissions at a public law school, Mr Kennedy objected to its “predominant” use of race, noting that more “modest” attempts to bolster diversity posed no constitutional difficulty. In 2014, he deferred to Michigan’s voters, who scrapped affirmative-action at publicly funded universities in a referendum, writing that “it is demeaning to the democratic process to presume that the voters are not capable of deciding an issue of this sensitivity on decent and rational grounds.” And in 2015 he wrote that “much progress remains to be made in our nation’s continuing struggle against racial isolation.” + +It was again Justice Kennedy to the rescue in Whole Woman’s Health v Hellerstedt, the most significant abortion ruling the court has handed down in a generation. On June 27th, by a 5-3 vote, the justices struck down the central provisions of a law that Texas Republicans had pitched as a measure to protect women’s health. By requiring abortion providers to have admitting privileges at a nearby hospital and mandating that clinics had to be retrofitted as “ambulatory surgical centres”, legislators said they were just trying to make the procedure safer. + +In the oral argument on March 2nd, however, this goal was exposed as a poorly veiled excuse to limit access to abortion. Since the Texas statehouse passed the law in 2013, the number of abortion clinics in the state has fallen from 41 to 19. Had the justices upheld the law, that number would likely have halved again. In his majority opinion, Justice Stephen Breyer surveyed the record and found nothing showing that the new law advanced Texas’s legitimate interest in protecting women’s health. Texas imposed an “undue burden” on the right to choose by needlessly placing “a substantial obstacle in the path of women seeking an abortion”. The state’s lawyer did not help his argument by suggesting at one point that Texan women with no abortion clinics nearby could always drive to neighbouring New Mexico. + +Bigger than Texas + +The votes of Justice Breyer and the court’s three female justices were not in doubt. The question-mark was Justice Kennedy, who refused to kill Roe v Wade in 1992 but wrote a widely criticised opinion in a case upholding a federal ban on “partial-birth” abortion in 2007. In Hellerstedt he voted with the liberals. The court’s decision bodes ill for recent attempts in many other states, from Louisiana and Mississippi to Kansas and Nebraska, to impose similar regulations on abortion providers. + +Though Justice Kennedy dislikes being called a swing justice, the title fits him. No other member of the court can lay claim to saving Roe v Wade, affirmative action and marriage equality while also gutting the Voting Rights Act, striking down campaign-finance laws (in Citizens United v FEC) and upholding the use of death-penalty drugs that carry a risk of inflicting something that looks a lot like torture. But this jumble of decisions seems odd mainly because justices habitually align their positions more closely with those of one political party or another. Justice Kennedy’s refreshing eclecticism reflects a judicial tendency that sidesteps ideology and does not fret unduly about consistency. More than anything, he has a knack for finding himself in the majority: in this term’s 75 cases, he has dissented only twice. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21701498-anthony-kennedy-drifts-left-save-abortion-rights-and-affirmative-action-two-left-feats/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Puerto Rico + +Exodus postponed + +A last-minute bill seems to have averted an economic disaster + +Jul 2nd 2016 | WASHINGTON, DC | From the print edition + + + +IN RECENT years it has usually been the House of Representatives which has waited until the last moment to avert an economic catastrophe, a government shutdown or a default. This week it was the Senate’s turn. On June 29th the upper house passed a bill, already approved by the House and backed by the president, allowing Puerto Rico to restructure its debts, two days before the Caribbean territory was set to default on a $2 billion payment. + +Default was the only option left for the island. The government does not have the money to pay the bill, according to Puerto Rico’s governor, Alejandro García Padilla. Nobody sane would lend it to them. But default was not itself the main worry; few will shed tears for the territory’s creditors. The real problem is that investors in Puerto Rican debt have filed lawsuits arguing that the island must pay them before buying things like fuel for police cars and medicine for hospitals. A concurring judge could kill-off the island’s public services, which the debt crisis has already wounded badly. For example, the neonatal unit in the island’s largest hospital, which Jack Lew, the Treasury secretary, visited in May, can only get hold of supplies if it pays cash-on-delivery. “The government of Puerto Rico is about to collapse” warned Pedro Pierluisi, the territory’s non-voting congressman, on June 23rd. + +The bill halts the lawsuits until at least February 2017. In the meantime, it permits a debt restructuring, hitherto impossible partly because Puerto Rico is a mere territory (were it a state, its public utilities, which bear much of its debt, could have declared bankruptcy). A two-thirds majority of bondholders will be enough to force all to accept a reduction in what they are owed. A “financial oversight board” will chaperone the island through the process and also monitor its budget, rewriting it if that is deemed necessary. + +Crucially, the bill covers the so-called “general obligation” bonds which the Puerto Rican constitution says must be paid prior to any other spending. The island is used to avoiding its own rules; a hole in the constitution’s balanced-budget requirement was one of the factors which caused the fiscal crisis in the first place. + +In the Senate, the cross-party bill faced more opposition from the left than it had in the House, where over four in five Democrats backed it on June 9th. Just under a third of Democratic senators, including Bernie Sanders, who has yet to end his campaign formally, voted against the deal. They objected to some of the small print, which loosens minimum-wage and overtime regulations, and the rules for appointing members to the oversight board. + +Some of these objections are flimsy, especially given the urgent need for the bill. Take the minimum-wage. Currently, firms can pay under-20s $4.25 an hour, rather than the federal minimum of $7.25, for the first 90 days of their employment. The bill temporarily broadens the eligibility for this exemption in Puerto Rico to include under-25s—hardly the stuff of laissez-faire dreams. The governor will have the power effectively to drop the 90-day limit for four years, but Mr García Padilla says that will never happen. In any case, a lower minimum wage would probably benefit Puerto Rico, where the median hourly wage is just $9.61, compared to $17.40 nationally. + + + +Republican critics, meanwhile, view the bill as unfair to creditors. In fact, it is good for them. The territory’s inhabitants are American citizens; faced with an anarchic lack of services (and, simultaneously, the onset of the Zika virus) they would surely have left en masse for the mainland. To some extent that has already happened: the population has shrunk by 7% since 2010 (see chart). Without a deal, the creditors would have been left picking at a skeleton. With it, Puerto Rico might grow enough to pay at least some of its debts. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21701500-last-minute-bill-seems-have-averted-economic-disaster-exodus-postponed/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Crime and punishment + +Billy the kid + +A tale of repentance, redemption and reinvention + +Jul 2nd 2016 | LONDON, KENTUCKY | From the print edition + +Nabbed: Burchfield in 1975, Arnold in 2016 + +“EVERYBODY can change,” Bill insists; “everybody has the ability to turn their life around and do something good with it.” His own experience, after a youthful spell behind bars, vindicates that optimism: in many ways he is a heartening model of rehabilitation. In jail he realised that “I need to do better than this”; at liberty, he has “done everything I could to do the right thing.” Those who know him best think he has succeeded. He is “a very giving, caring person,” says his pastor, Charles Shelton, who recalls Bill taking in strangers who had broken down on the road. “Just a good man,” Mr Shelton attests. The only wrinkle is the way he gained his freedom. + +That, and his crime, were a secret he guarded for 37 years until, on the evening of June 15th, two local detectives visited his home on the outskirts of London, a small town in Laurel County, Kentucky, in the foothills of the Appalachian mountains. Bill recognised the men and wasn’t alarmed by their appearance on his doorstep: “I didn’t think nothing about it,” he says, “until they told me what they were there for.” Namely, their hunch that the paunchy, grandfatherly 67-year-old was not, in fact, Harold “Bill” Arnold, as his outward life suggested, but Bill Burchfield, who had escaped from prison in Georgia in 1979. At that point, Mr Arnold/Burchfield recounts, he thought, “Here we go.” + +Which of his surnames to use is only the most obvious question raised by this tale of redemption and recapture. Bill’s story—a warped parody of the American ideal of self-invention—also underscores doubts about the purpose of prison, to which he now seems destined to return. Meanwhile the confusion over his name points to deeper mysteries, philosophical rather than legal, concerning the nature of identity and its mutation over time. + +Initially he denied being Bill Burchfield, but then the detectives took him into town to be fingerprinted. He followed behind them, obediently driving himself. “It was very strange,” he says in the Laurel County Correctional Facility. Yet, frank in the manner of a man with nothing more to lose, he acknowledges that “in the back of my mind, I expected this to happen.” The fingerprints confirmed that he was Burchfield; he gave up the pretence, and ultimately agreed to be extradited to Georgia. + +Prison works + +It was in Dalton, Georgia, another town in the Appalachian foothills, that Bill’s wife, Vera Sue, was fatally shot on 5th July 1973. She had two children from a previous relationship, Bill says; according to court records, he was a truck driver with a sixth-grade education and a previous conviction for theft. In his account, it was an accident. He blames himself for having a gun in his hand, but says it went off when she tried to wrestle it away. A bullet hit her in the neck. “I was blessed to have her for a few years,” Bill says, momentarily breaking down—a breach in what, for a man in his bizarre predicament, is impressive composure. Her death was “the most tragic thing that ever happened in my life”. Evidently his metamorphosis did not wipe clean his conscience: the shooting, he says, is “something you live with every day”. + +Bill’s version of those events is hard to assess because there wasn’t a trial. He denied the original accusation of murder, then pleaded guilty to a reduced charge of voluntary manslaughter. “I was young and scared,” he says, devastated by his bereavement and advised by his court-appointed lawyers that, if he didn’t cop a plea, he would never be released. (Of the two defence lawyers named in court papers, one has died and the other says he has no recollection of the case.) The decision “was a terrible mistake”, Bill now believes. The judge gave him 15 years’ hard labour. + +That rose to 16 years after he escaped—for the first time—from the Jackson County Correctional Institute in 1975; on that occasion he was soon picked up in Detroit. Then, on October 22nd 1979, he fled again, this time from a work detail at the county landfill. The Jackson Herald reported that he asked permission to relieve himself in some bushes, then vanished. + +Since he may face fresh charges over the breakout, Bill can’t discuss it. But afterwards, he says, he borrowed a vehicle and drove to California. He slept in the car, then in a cheap motel and took any work he could find. He washed dishes and pumped gas until he landed a job on an oil rig. He had two children. It was a hard life, and when, around 30 years ago, the oil work fell away, he moved back east to London, a quiet town with a picturesque setting and an abundance of churches, and a prosperous one by the hardscrabble standards of eastern Kentucky. It is directly up the interstate from Bill’s old home in Dalton. + +Like thousands of Americans who start again in new places, albeit with a twist, he built a different life. He had assumed the identity of a cousin from Georgia, Harold Arnold, who died as a teenager, though informally he retained his first name: a tell-tale clue within his alias that apparently no one clocked. The protracted deceit seems an astonishing exercise in discipline: “That’s a feat in today’s world,” agrees Gilbert Acciardo of the Laurel County sheriff’s office, which collared him. As Bill tells it, though, the striking thing is not how arduous the impersonation was, but—logistically at least—how easy. He applied for a Social Security number in his cousin’s name and got one; nobody ever objected that the real Harold Arnold was dead. He was careful “to stay inside the law”. + +Otherwise, fugitive though he was, he lived “like a normal human being. I wasn’t out there trying to duck and dive and hide.” The deceit was “part of my everyday life”. His basic method was to “work hard, and when you get off from work, go home”. He drove trucks, as he had in Georgia; among other businesses he ran a petrol station and café, on a road that winds towards the mountains from the car workshops, farm-equipment dealers and anytown drive-throughs on the edge of London. The café was popular with police and US marshals: they gathered there for coffee and for Bill’s fish lunches on Fridays. He wasn’t shaken by the uniforms—“It wasn’t, ‘Oh my God, they’re a cop’.” Most, he says, were “super-nice people”. + + + +He married twice more and had two more children. His first Kentucky wife died of cancer; Bill is said to have cared for her lovingly, as he did for a half-brother who came to live with him and died recently. (Whether and which of his relatives knew the truth is another subject he is wary of.) He and his most recent wife, Jean, divorced but remained on good terms. She answered the door at his home near the café, and before tearfully closing it described him as “the most kind, the most wonderful man you could ever meet. He helped so many people in the community.” + +That estimation seems to be widely shared. When a ghastly crime occurs, it is normal for the suspect’s neighbours to say how mild and considerate he seemed. In this case that sentiment is based on long acquaintance after the offence rather than brief knowledge before it. Sitting beside a fruit stall in his wheelchair, between the café and a little stream, Tim Johnson says that “Bill Arnold is as good a man as I’ve ever met.” Bill, he says, gave him a trailer that he had previously used as a cigarette kiosk: “I never know’d anybody that’d say he’d wronged them.” + +By any other name + +Mr Johnson and others report that Bill would sometimes give free meals to struggling locals, and that he held Thanksgiving dinners for the indigent. Mr Shelton, the pastor, baptised Bill, who subsequently became a deacon in their church. Bill, he summarises, is “more like a brother to me than a friend”. “I’ve always tried to treat people the way I wanted to be treated,” Bill comments of all the testimonials. “I think my cousin would be proud.” + +Still, the affection can’t have been universal: someone had enough of a grudge against him to tip off the authorities in Georgia, though they won’t disclose who and Bill has “no idea”. As a result he may have to serve the ten remaining years of his old sentences, plus any additional punishment for the escape. Contemplating that prospect, he says he considers God’s forgiveness more important than Georgia’s, but hopes that earthly powers may show mercy too. “My health is gone,” he says—he has had several heart attacks, bypass surgery and back problems—“I won’t be around many more years, at the best.” He understands that prisoners can’t simply be allowed to abscond, since “the world is a bad, evil place”, but would like Georgia to say “We don’t want him.” + +“Shouldn’t [his] debt be mitigated by the life that he has lived?” asks Jason Kincer, his lawyer. And indeed the idea of returning him to jail, harmless and greying as he is, for something that happened 43 years ago, seems perverse. No one would be safer; he is as rehabilitated as he can be. On the other hand, lots of prisoners wind up inside for one-off misjudgments; many leave behind dependents and disregarded good deeds, just as Bill may do now. His case is extraordinary, but the quirks in the penitential system it highlights are routine. + +His neighbours seem unequivocal. A petition calling him “a true and faithful friend of all citizens of Laurel County” and requesting his release has garnered hundreds of signatures. At the same time there is the disorientation of learning that he is not quite who they thought he was—another acute instance of a familiar syndrome. “I never had a hint of anything like that,” says Mr Shelton, struggling over which of Bill’s surnames to use. “It’s a different person they’re incarcerating”, he thinks. In all their years of intimacy, Mr Johnson is sure that “at some point he would have mentioned something that big”. He thought the whole farrago was a practical joke, or a mistake, or a miscarriage of justice. “If he is the person they say he is, he is reformed,” Mr Johnson says. “He’s still Bill Arnold to me.” + +As perhaps he should be. The law’s view is clear and inevitable, but in other ways Bill’s identity is fuzzy. After all, he has been Bill Arnold for longer than he was ever Bill Burchfield, an incarnation he now believes he has sloughed off, as people often feel of their unrecognisable, younger selves. “You are who people know you to be,” Bill figures. “I’m Bill Arnold, I’m not Billy Burchfield. Maybe not on paper, but in here,” he says, gesturing to his dicky heart through his prison smock. “That’s who I am today, and who I will always be.” If somehow he does scrape through this, there is something he wants to do: change his name officially, eschew Bill Burchfield for ever and live as Bill Arnold, in peace. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21701499-tale-repentance-redemption-and-reinvention-billy-kid/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +More than a hobby + +Steve Green, the man building the Bible museum in Washington, explains what he is up to + +Jul 2nd 2016 | From the print edition + + + +WHEN British Jews were asked to bring one treasure representing their faith to a Diamond Jubilee ceremony for Queen Elizabeth, four years ago, they chose a Hebrew Bible from 1189. Long admired as a rare manuscript, its true significance was discovered more recently when scholars pondered clues—distinctively English bookmaking techniques, an Anglo-Norman term for “seagull” in a list of non-kosher birds jotted in a margin—and concluded that this is the only known book to survive from the tiny, embattled Jewish community of medieval England. That history lends poignancy to neat pen-and-ink drawings hidden on a final page, showing two dogs hunting a lion: a coded lament over the persecution of Jews. In the year after that Bible was neatly dated by a scribe, England saw a wave of anti-Semitic riots, ending in the massacre of every Jew in the city of York. + +Today that remarkable book lives in a business park near Oklahoma City airport, after its sale at auction last year for $3.6m. It is one of more than 40,000 biblical texts and artefacts, including fragments of the Dead Sea Scrolls and sections from the Gutenberg Bible, collected since 2009 by the Green family, billionaire owners of Hobby Lobby, a chain of craft shops, in a buying spree without modern precedent. The finest items are destined for a 430,000 square-foot Museum of the Bible to be opened in Washington, DC, in the autumn of 2017. The project has inspired excitement among evangelical Christians. Along with ancient scrolls, Bibles and prayer-books, planned features include “The Nazareth Jesus Knew”, with costumed actors in a recreated first-century synagogue, village square and carpenter’s shop. There will be a rooftop restaurant serving “Foods of the Bible”, walk-through light-shows simulating the parting of the Red Sea, and—for restless teenagers—a flight simulator offering a swooping ride through Washington to see Bible verses on the capital’s buildings and monuments. A live video feed will bring images of an archaeological dig in Israel. + +Sceptics worry that the new museum, housed in a converted brick warehouse just off the National Mall and to be topped with a swooping turf and glass roof to resemble an open book, will present a narrow, Sunday School vision of the Bible, downplaying debates about its origins, disputed passages and other ambiguities. Social liberals recall with suspicion the Green family’s victory in a landmark Supreme Court case in 2014, confirming the right of Hobby Lobby, as a family-run company administered on Christian principles, to opt out of a law obliging employers to offer contraceptives that may target fertilised eggs, such as the morning-after pill. The world of biblical scholarship and archaeology is best described as wary, as artefacts are bought up by the Green Collection and released for study by researchers who join the Green Scholars Initiative, a private academic programme. + +Lexington visited the Hobby Lobby corporate campus in Oklahoma, and a discreet building labelled “The Book” where much of the Green Collection is stored. Selected treasures were explained by curators, including that medieval Hebrew Bible with its doodle of a cornered lion: a jarring, haunting cry of anguish to see in a bland conference room, eight centuries later. The host was Steve Green, president of Hobby Lobby and chairman of the Bible museum. Asked if his family’s buying-power alarms some, Mr Green readily agrees. Critics suspect a “proselytising” mission to push his family’s Protestant faith, he suggests, adding that: “If somebody that was of a totally different faith than me started doing this, I would question, OK, what is their agenda?” + +Mr Green likes to say that his family are not collectors but educators. They have lent artefacts to travelling exhibitions and to museums as varied as the Vatican and the Creation Museum in Kentucky, with its tales of a 6,000 year-old Earth, denunciations of Darwinian evolution and dioramas showing ancient children with dinosaurs. But his new Museum of the Bible will not espouse any faith, he says. It will “present the facts of this book”, from its origins to its impact on world history, art and literature. A “narrative floor” will tell the Bible’s best-known stories but will not make claims about their truth: the goal, Mr Green says, is to be “respectful” of all visitors including atheists. + +Walking the line + +Explaining how researchers are selected to work on his family’s collection, Mr Green draws a distinction between scholars who seek after facts and those who try too hard to prove or disprove the Bible—a step that he calls “crossing a line of faith”. He says he avoids scholars that are “antagonistic and are going to come to a conclusion that this book is not what it claims to be. And on the other end, I don’t want those that are going to embellish and say, this proves that it is what it claims to be.” + +Arguably, even talking about the “facts” of the Bible is a statement of faith, and one with unusual resonance in America: 31% of Americans call the Bible the “actual word of God” to be taken literally, according to polling by the Pew Research Centre. Mr Green ascribes America’s success to the “biblical worldview” of the country’s Founders—a worldview that, in his telling, overlaps with aspiration and rugged individualism. Without a state church, denominations have had to compete for believers, he says, and that makes churches strong, just as the country has grown strong by embracing economic competition. The Bible talks of private property rights, he adds: “Thou shalt not steal means there are things that are yours, not mine.” It tells believers to be the best they can: “The Scripture says, whatever your hand finds to do, do it with all your might.” + +Like many conservatives, Mr Green frets that America is “walking away” from its founding values, and becoming less and less Christian. Maybe. Still, his solution—a spectacular, privately-funded Bible museum that hopes for a million visitors a year—is hard to imagine in any other country. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21701487-steve-green-man-building-bible-museum-washington-explains-what-he-up/print + + + + + +Previous Articles Sections Next + + + +The Americas + + + + + +Brazilian trade: Of legumes and liberalisation + +Colombia’s war: Unpopular is the peacemaker + +Argentina: Erasing the Kirchner cult + +Bello: Those spendthrift Latins + + + + + +Articles Sections Next + +Brazilian trade + +Of legumes and liberalisation + +A big protectionist economy starts to open up + +Jul 2nd 2016 | SÃO PAULO | From the print edition + + + +FEW Brazilians get through a day without eating beans. They gobble up 3.4m tonnes a year, a ladle a day for each person. So when prices rise, as they did by a fifth recently after bad weather damaged the domestic harvest, they gripe. On June 24th the government suspended its 10% tariff on imports. Blairo Maggi, the agriculture minister, hopes that Chinese and Mexican farmers will fill the leguminous gap. + +In a country prone to protectionist folly, Brazil’s market-minded response to the bean shortage is refreshing. It may portend a greater opening to trade. Though Brazil is the world’s ninth-largest economy, its trade is just 1.2% of the global total; in only five countries does trade account for a lower share of GDP. Brazil’s new centrist government sees exports as one way to pull the country out of its deep recession. Politicians and company bosses are starting to regard trade as a way to boost productivity, and thus growth, in the long run, too. + +Of late, the government has tucked into liberalisation as if it were an appetising feijoada (bean-and-meat stew). In April Brazil signed an investment treaty with Peru that, if ratified, will allow firms from both countries to compete freely for government contracts. In June Brazil asked to join 23 members of the World Trade Organisation (WTO) in negotiating a pact on trade in services. The government is preparing legislation to raise the ceiling on foreign ownership of airlines from 20%. Mr Maggi talks of lifting a presidential decree from 2010 that bars foreign ownership of farms, which discourages foreign investors from lending to farmers. “All the taboos have gone,” says Ricardo Mendes of Prospectiva, a consultancy that specialises in trade policy. + +Brazil has been a reluctant globaliser. Ever since the 1950s, when many poor-country governments championed domestic production as a substitute for imports, Brazilian industry has been shielded from foreign competition. The left-wing Workers’ Party (PT), which governed from 2003 until May this year, continued the cosseting. From 2000 to 2013 Brazil was a party to a tenth of all disputes filed at the WTO, usually as the plaintiff. During that period it erected more trade barriers—from tariffs to subsidies to local-content rules—than most other countries. + +Attitudes started to shift in 2012 as the economy weakened, prompting firms to seek growth abroad. Dilma Rousseff, the PT president, began to liberalise trade after her re-election in 2014. The government has enacted two dozen pro-trade measures and just three restrictive ones since the start of 2015, according to the WTO. + +Michel Temer, who became acting president in May after Ms Rousseff was forced to step aside while the Senate conducts an impeachment trial against her, is going further. Although his Party of the Brazilian Democratic Movement is close to competition-shy industry, he has a liberal streak. He plans to dismantle local-content rules in the oil-and-gas sector (which force companies to use substandard, and often more expensive, domestic technology). He replaced Ms Rousseff’s liberalising trade minister but kept the ministry’s technocrats to avoid disrupting negotiations. + + + +Waxing and waning: Brazil's economic woes, in charts + +On June 24th Mr Temer renewed a bilateral automotive arrangement with Argentina for four years (rather than the usual one). For the first time the two countries, the main constituents of Mercosur, a South American trade group, have agreed in principle to free trade in cars and car parts from 2020. Brazil’s new trade minister, Marcos Pereira, wants to conclude an ambitious trade deal with Mexico by the end of 2016. Mr Temer took Apex, the export-promotion agency, away from Mr Pereira and gave it to the foreign minister, José Serra, an economist. It has a new mission, “inserting Brazil into global supply chains”, which implies greater openness to imports. + +Curb your enthusiasm + +Brazil opened partially in the early 1990s but later attempts to liberalise fizzled. The government of Fernando Henrique Cardoso signed ten bilateral investment treaties in the late 1990s and ratified none. A Free-Trade Area of the Americas, supported by Mr Cardoso, was blocked by his successor. Industries will not give up protection without a fight. + +Another worry is that Brazil’s move towards openness comes at a time when its biggest trading partners are moving in the opposite direction. It is safe to say that the European Union’s first priority will not now be to conclude its trade deal with Mercosur. One presidential candidate in the United States is a raging protectionist; the other is ambivalent. This makes Brazil’s change of attitude all the more welcome. Brazilian businesses will not become competitive unless they compete, acknowledges Mr Maggi. It has taken Brazil a long time to learn that lesson. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21701510-big-protectionist-economy-starts-open-up-legumes-and-liberalisation/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Colombia’s war + +Unpopular is the peacemaker + +The president has convinced the FARC to make peace. Can he persuade voters? + +Jul 2nd 2016 | BOGOTÁ | From the print edition + +A strategist, not a salesman + +JUAN MANUEL SANTOS, Colombia’s president, could be a candidate for the Nobel peace prize. But a few days after signing a ceasefire agreement with the FARC, effectively ending Colombia’s 52-year-war against the guerrilla group, he is eager to talk about his military credentials. He joined the navy at 16, helped lead a military campaign against the FARC as defence minister in the late 2000s and in 2011 ordered a raid that killed their top commander. “No Colombian has hit the FARC harder than I have,” insists Mr Santos in an interview at Casa de Nariño, the presidential palace in Bogotá. + +The reason for this tough talk is that many Colombians are sceptical of the deal he signed in Havana on June 23rd with the FARC’s “maximum leader”, Rodrigo Londoño, known as Timochenko. The FARC have massacred Colombians, kidnapped them for ransom, sold cocaine on a grand scale and committed other crimes in the course of a war in which perhaps 220,000 people died (though there are no reliable figures). Guerrillas who confess will be subject to eight years of “restrictions on liberty” (not jail) and community service. That is not punishment enough, many Colombians believe. Álvaro Uribe, who was president when Mr Santos was defence minister and now leads the opposition to him, accuses his former protégé of “wounding” the concept of peace. + +The popular mood matters. After a final peace deal is signed, probably this summer, it will be put to a referendum. Polls suggest that “yes” will win. But if the margin of victory is thin, Mr Santos will have difficulty putting into practice the policies required to implement the accord. The government must undertake expensive rural-development programmes; low oil prices and weak economic growth have reduced the revenues needed to pay for them. Mr Santos, whose approval rating after four years of daily dealings with the FARC is a dismal 21%, will have to court further unpopularity by raising taxes. + +That makes it all the more vital for Mr Santos to persuade Colombians that the peace is a just one. He has a strong case. The latest agreement sets out details of the FARC’s demobilisation to 23 rural zones and the surrender of their weapons. By assenting to ratification by plebiscite rather than by a constituent assembly to rewrite the constitution, the FARC have recognised the legitimacy of Colombian democracy and the rule of law. The peace deal will mark the first time in any country that demobilised guerrilla commanders have agreed to be investigated and punished. “There is no impunity,” Mr Santos insists. + +He is not a natural salesman. Though he comes from a prominent political family, which founded El Tiempo, Colombia’s largest newspaper, he is not a gifted communicator. A friend described a younger Mr Santos as a “cyborg”, programmed in childhood to become president. Neither telegenic nor eloquent in public, he seems more comfortable among bankers than peasants. He often stumbles when explaining to Colombians how peace can transform their lives. + +A reputation for slipperiness compounds the problem. Mr Santos, who fixes his own political position in “the extreme centre”, headed ministries in both Conservative and Liberal governments. He campaigned for the presidency in 2010 as a hardliner on security, then enraged many voters by opening talks with the FARC. + + + +Colombia's peace process, in charts + +This flexibility helped him secure peace, according to Juanita León, editor of La Silla Vacía, a political website. The transitional-justice fudge kept the FARC from abandoning the talks. When crises threatened the peace process, for example in 2014 when the FARC kidnapped an army general, Mr Santos kept a cool head. He is a strategic thinker. + +In Bogotá, Colombia’s capital, Mr Santos’s meeting with Timochenko was broadcast on giant outdoor screens like a World Cup football match. Yet it is in the cities where hostility to the peace deal is strongest. Many urban Colombians admire Mr Uribe, who pushed the FARC into remote mountain and jungle areas. They “no longer feel the war”, says Mr Santos. It is different in conflict zones. There “people are enthusiastic about peace.” + +Now Mr Santos faces a showdown with Mr Uribe, whose father was killed by the FARC and who has vowed to campaign against the peace deal in the referendum contest. Mr Uribe “has lived off war”, Mr Santos says. “If there’s peace in Colombia it is like losing his political oxygen.” The battle between them will be one of the toughest Colombia’s peacemaking president has fought. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21701530-president-has-convinced-farc-make-peace-can-he-persuade-voters-unpopular/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Argentina + +Erasing the Kirchner cult + +The new president puts his predecessor in her place + +Jul 2nd 2016 | BUENOS AIRES | From the print edition + +WEDGED behind the Casa Rosada, Argentina’s presidential palace, the Museo del Bicentenario (bicentenary museum) tells the story of the country’s leaders since the revolution against Spanish rule in 1810. Until recently, half its floorspace was devoted to exhibits about Cristina Fernández de Kirchner, who was president when she opened the museum in 2011, and her late husband, Néstor Kirchner, who preceded her in office. On display were Kirchner’s trademark loafers and a football shirt emblazoned with the legend “100% K”. Founding fathers like Domingo Sarmiento, Argentina’s seventh president, were “practically non-existent” says Luciano de Privitellio, director of cultural programmes at the Casa Rosada. + +On the orders of Ms Fernández’s recently elected successor, Mauricio Macri, the museum has undergone a seven-week overhaul; it reopened on June 28th. Mr Privitellio claims it is now more even-handed. All of Argentina’s former presidents, including brutal 20th-century dictators, are represented with paintings, video screens and artefacts (Sarmiento’s desk and the dinner jacket of Carlos Menem, for example). “You can’t leave out the ones you don’t like,” says Mr Privitellio. + +The rearrangement is part of a broader effort to banish the soft cult of personality that Ms Fernández had created around herself and her husband, who died in 2010. It’s a big job—166 public spaces are named after Kirchner, according to Clarín, a newspaper. His body lies in a three-storey cement mausoleum in Río Gallegos, in the province of Santa Cruz, which he governed. Visitors can look down reverentially upon his coffin, an idea borrowed from Napoleon’s tomb. Last year Ms Fernández inaugurated the Néstor Kirchner Cultural Centre (CCK), housed in a palace in Buenos Aires that once served as the headquarters of the post office. + +Rather than knocking the monuments down, the government is changing their purpose. It dropped the idea of renaming the CCK, but closed its “Néstor Kirchner experience”, an exhibition that extolled the late president’s deeds. A marble image of Kirchner, unveiled by Ms Fernández at the entrance to the Casa Rosada on her last day in office, has joined the chronologically arranged row of presidential busts (from which the dictators have been culled). + +The downgrading extends to figures venerated by the populist Peronist movement, founded by the mid-20th-century strongman Juan Perón, to which the Kirchners belong. Mr Privitellio has removed portraits and photographs of 43 leftist luminaries, including Che Guevara and Venezuela’s Hugo Chávez. Especially painful to Ms Fernández must be the desanctifying of Eva “Evita” Perón, Juan’s popular wife, who died young. Her image, etched on 100-peso notes since 2012, is to be replaced next year by that of a Taruca, an Andean deer. + +Kirchneristas detect authoritarian impulses behind the restoration of dictators’ portraits and the removal of leftist imagery. They accuse Mr Macri of erasing the Kirchners from history in order to write his own version. If his government “could ban the letter K from the alphabet, they would”, Ms Fernández fumed. + +Argentines will not soon put back the symbols that Mr Macri is taking down. Ms Fernández and her coterie have been at the centre of corruption scandals since she left office. On June 14th José López, a former public-works minister, was caught by police hurling nearly $9m in cash over the wall of a convent, apparently intending to bury it on the convent’s grounds. Ms Fernández says this has nothing to do with her, but nearly 64% of Argentines doubt that, according to a recent poll. No one has written a musical about Ms Fernández, but she is in no danger of being forgotten. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21701531-new-president-puts-his-predecessor-her-place-erasing-kirchner-cult/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +Those spendthrift Latins + +Why the region needs to save more, and how it can do so + +Jul 2nd 2016 | From the print edition + + + +LATIN AMERICANS are well known for their love of the fiesta and, when they can afford it, their conspicuous consumption. Perhaps that is one reason why they regularly figure in opinion polls as among the world’s happiest people. Yet economists frown when households—and governments—spend with little regard for tomorrow. Latin Americans save much less than the experts think they ought to. Compared with residents of developed countries, and especially those of emerging Asia, Latin Americans stand out for their lack of thrift (see chart). + +Foreigners have often been prepared to lend some of their spare cash to Latin America. But foreign capital is not a perfect substitute for local savings. For a start it can be fickle, disappearing just when the region needs it most, as happened in the late 1990s. Second, in some Latin American countries, including Brazil, reliance on foreign savings helped to push up the value of the currency, killing off otherwise viable businesses, points out Augusto de la Torre of the World Bank. + +Many economists believe that if Latin America’s economies are to grow at 5% a year or more, they need to invest around 25% of GDP. Some countries came close to that during the commodity supercycle of 2003-13. But now that the commodity boom is over, growth has slumped and so has investment. Not surprisingly, the attention of economists has turned once again to why Latin America saves so little and how it might save more, and thus invest more. The Inter-American Development Bank (IDB) devotes its latest report to this subject. + +The IDB identifies three main problem areas: the financial system, pensions and government spending. Although Latin America’s financial systems are more solid than they were in the past and have grown, they remain “small, expensive and inefficient”, the IDB says. On average bank loans to the private sector are equal to only 30% of GDP in Latin America, compared with 80-100% in rich countries or in emerging Asia. No wonder Latin American companies find it so difficult to grow. + +The pension problem is severe. Although the population is ageing, only 45% of Latin American workers contribute to any kind of pension scheme, the IDB says. In the 1990s, at the urging of neoliberal economists, many countries wound down their traditional pay-as-you-go pension systems. Instead, they switched to a system of fully funded individual pension accounts, managed by private pension funds (known as AFPs in Spanish) in which workers eventually receive a pension depending on the value of their investment. + +There were good reasons for the switch. The old systems were often mismanaged. But the new one hasn’t worked as intended: few workers contribute enough to get a pension. “The AFPs have failed,” says Santiago Levy of the IDB. He favours a small universal pension funded by an earmarked consumption tax, augmented by voluntary schemes. + +Another problem is that Latin American governments save too little, and favour current spending over public investment. Subsidies and pay for bureaucrats take priority over transport, energy and water infrastructure. + +The region’s low propensity to save has historic roots. Generations of Latin Americans have seen their governments wipe out their savings, either through inflation or by simply confiscating them. That is why so much capital has flown the region over the past half-century. Argentina is a notorious example. Its new president, Mauricio Macri, has tried to bring capital back by declaring an amnesty for people who repatriate undeclared foreign savings. Among the first to reveal their foreign nest-eggs were several of his ministers. As Mr Levy stresses, another factor in low savings is the prevalence of informal jobs. (Underground employers seldom enroll their staff in pension plans.) + +Some economists argue that Latin Americans have developed their own common-sense instruments of saving. They invest in building their own houses and in educating their children. They trust that rental income and family solidarity will provide for them in old age. But this kind of saving does not result in capital that the financial system can turn into productive investment. + +Awkwardly, nobody really knows whether higher savings are a consequence or a cause of higher growth (they may well be both). Some Latin Americans might thus object that the IDB is putting the cart (higher savings) before the horse (faster growth). No matter. Better banks, better pensions, more prudent governments and more financial literacy would help the region in both good times and bad, even if they mean fewer fiestas. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21701438/print + + + + + +Previous Articles Sections Next + + + +Asia + + + + + +Central Asia: Stans undelivered + +China and Taiwan: Great stonewall + +Politics in Japan: Master plan + +Indonesia and the South China Sea: Annoyed in Natuna + +Indian social media: A pulpit for bullies + +Banyan: The forest and the trees + + + + + +Articles Sections Next + +Central Asia + +Stans undelivered + +The five former Soviet republics struggle to survive the new Great Game + +Jul 2nd 2016 | ASTANA, BISHKEK AND DUSHANBE | From the print edition + + + +TAJIKISTAN has the vainest ruler in Central Asia. Emomali Rahmon flies what may be the world’s largest flag atop what used to be the world’s tallest flagpole. His capital boasts that it will soon host the region’s biggest mosque, mainly paid for by Qatar. It already has the world’s largest teahouse, mainly Chinese-financed and mostly empty; and an immense national library—sadly devoid of books, according to whispering sceptics. + +Gurbanguly Berdymukhammedov, a dentist who now runs Turkmenistan, is nearly as big-headed. He calls himself Arkadag (“the Protector”). He moved the 39-foot-tall, gold-plated statue of his predecessor, Saparmurat Niyazov, that rotated to catch the sun, and erected a gold-plated statue of himself, bravely astride a golden horse on a majestic cliff-top (pictured). + +Such absurd extravagances can only happen in a dictatorship—and indeed all five of the once-Soviet Central Asian countries (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan) suffer under repressive, cronyist governments. Their rulers fear “colour revolutions”, which toppled regimes in the former Soviet countries of Ukraine and Georgia as well as a decade ago in Kyrgyzstan (“the tulip revolution”), and they fear jihadism: all five countries are Muslim in heritage. Once the Russian and British empires vied for influence here in what was known as the “Great Game”. Today a more complex battle for power and wealth in this fractious region is under way between China, Russia and the West. + +For Russia, this is something of a home game. In all five countries Russian remains the lingua franca. Two of the five leaders—Nursultan Nazarbayev in Kazakhstan and Islam Karimov in Uzbekistan—were Communist Party bosses. Mr Berdymukhammedov inherited his job from one; Mr Rahmon was a party bigwig. Only Kyrgyzstan has had multiple leaders and two revolutions, but its current president, Almazbek Atambayev, may be even more pro-Russian than his neighbours. As in Russia, power in all five countries rests with small, now obscenely wealthy, cliques close to the president. Their leaders all ruthlessly suppress dissent. + + + +Though most Central Asians wear their religion lightly or not at all, Islamism appeals to a small but growing number of the young and disaffected. In Aktobe, a mining town in north-western Kazakhstan, 25 people (including the assailants) were killed in an Islamist attack in early June. No one knows precisely how many fighters have gone from Central Asia to fight for Islamic State (IS) in Syria and Iraq, but the International Crisis Group, a Brussels-based NGO, has put the figure at up to 4,000. The rulers tend to exaggerate it to justify repression. + +Many of the fighters had migrated to Russia for work—as millions of Central Asians have—and laboured in grim conditions for low pay, when they were radicalised by Muslim fanatics with Russian citizenship from the Caucasus. With Russia’s economy slumping, many migrants lost their jobs and have been enticed by IS’s promises of higher pay, heroism and paradise to follow. + +The Fergana Valley, which stretches across the eastern tip of Uzbekistan and spills into Kyrgyzstan and Tajikistan, often seethes with discontent. Uzbekistan and Tajikistan may have contributed more than 1,000 IS fighters each. Human Rights Watch, a monitoring group, reckons Uzbekistan has up to 12,000 political prisoners, many of whom become Islamists in jail. In Tajikistan, whole families have sometimes followed young men to war. Tajikistan’s government now tars almost any group promoting Islam, however mild, with the brush of jihadist subversion. The Kazakhs and Kyrgyz, with their nomadic heritage, have been less seduced by IS’s puritanical version of Islam, but each has lost several hundred men to Iraq and Syria. Turkmenistan may also be affected. Afghanistan’s Taliban are said to have attacked villages in Turkmenistan where the two countries share a border. + +The big worry is what happens when these angry young men come home. Mr Nazarbayev’s foreign minister said IS had inspired the Aktobe gunmen. Violent Islamism may have limited appeal, but the more fiercely the non-violent version is repressed, the more appealing extremist jihad seems. And if social discontent rises, the Islamists will latch onto it. + +The pretty good game + +Against this messy backdrop, talk of a new Great Game has been buzzing for more than a decade. The main players are a militantly nationalist Russia, a mercantile China, an initially hopeful but now bruised America and a warily interested Europe. Turkey, the Saudis, Qatar and perhaps soon Iran are competing in what a senior Kazakhstani official calls “the more dangerous Little Game”. Central Asia enjoys its many suitors: “Happiness”, says a Kazakhstani minister half-jokingly, “is a multiplicity of pipelines”. + +America and Europe are more cautious. Chevron still runs the region’s most productive oilfield, and EU sanctions against Russia may have piqued European interest in Central Asian oil and gas. But few American or European companies dare enter a market with such weak legal and banking institutions and rampant corruption. + +Four of the five (Turkmenistan is the odd man out) are members of the Shanghai Co-operation Organisation, a regional intergovernmental group promoted by China. The same quartet has joined the Asian Infrastructure Investment Bank, a Chinese-led international lender, as founding members. And the region figures heavily in China’s “One Belt, One Road” project (see article). Though many ordinary Central Asians feel nervous about Chinese economic inroads, most business leaders and politicians encourage them. “I want China to get closer to Central Asia,” says Djoomart Otorbaev, a modernising recent prime minister of Kyrgyzstan. China has the same idea: in the past decade its trade and investment have left Russia in second place. + +But Russia remains the pre-eminent influence. Most people watch Russian and Russian-language television channels. With the usual programmes comes relentless anti-Americanism, which many locals seem to swallow, along with conspiracy theories claiming that the West seeks to destabilise Central Asia. Indeed, many poorer locals sound nostalgic for the Soviet Union. “We used to have jobs and factories and no goods in the shops,” is a common complaint. “Now we have goods but no jobs or factories.” + +Russia has been wooing the quintet to join the Eurasian Economic Union (EEU), its supposed answer to the European Union (EU), and the Collective Security Treaty Organisation (CSTO), its longer-standing answer to NATO. The EEU, which Kazakhstan and Kyrgyzstan have joined, may have taken a bit of trade away from China, but it is more a vehicle for Russian influence than a genuine free-trading bloc. Russia remains determined to keep the former republics as reliant as possible on its road and rail routes and pipelines. + + + +It also dominates regional security. Russia operates a huge missile-launching base in south-western Kazakhstan and holds much sway over the country’s uranium, of which Kazakhstan is the world’s biggest producer. In Kyrgyzstan Russia has an airbase at Kant, near the capital, Bishkek, and tests torpedoes near Lake Issyk-Kul. Russia’s biggest military base abroad, hosting 7,000-odd personnel, is in Tajikistan. + +The Americans and the Chinese have made some token sallies. John Kerry, America’s secretary of state, visited all five countries last year in the hope of “resetting” relations, after America lost access to the Karshi-Khanabad airbase in south-eastern Uzbekistan in 2005 and was ejected from Manas, near Bishkek, two years ago. China has sold some military stuff, including drones and anti-missile systems. + +Though the five countries share a common history, their post-Soviet paths have diverged, and they are often at loggerheads with each other. A former minister from Kyrgyzstan laments: “There is zero harmonisation between us.” The Tajiks resent Uzbekistan ruling the great cities of Samarkand and Bukhara that were historically Tajik; all four of his neighbours, to varying degrees, loathe Mr Karimov. Like Turkmenistan, Uzbekistan is increasingly closed and inward-looking. + +Greatest country in the world + +Kazakhstan and its leader are easily the most impressive of the five (whatever impression you may have gleaned from the film “Borat”). A few years ago Mr Nazarbayev pondered changing his country’s name to Kazakh Yeli (“Land of the Kazakhs”), considering the -stan suffix to be tainted. Its commercial capital, Almaty, is the region’s most sophisticated and vibrant city. Last year Kazakhstan’s GDP per person overtook Russia’s. Mr Nazarbayev has cannily opened up to the West while staying cosy with Russia yet bolstering economic links with China. He encourages students to learn English. A planned financial hub in Astana, the capital he boldly plonked down nearer his country’s geographical heart 19 years ago, will be conducted under English law. + +But all is not well. Falling oil prices have hit Kazakhstan hard. Outside Astana and Almaty, many cities are grim: Aktobe is one of many to suffer mass lay-offs. The banking sector is ropy, the tax system a Byzantine nightmare. Contracts are insecure, and well-connected Kazakhs often skim 10% off the top of every deal. All of this deters investment. + +As the economy falters, discontent is rising, and the ruling circle’s corruption is growing more irksome. In April a series of protests erupted against land-reform proposals. Mr Nazarbayev has ruthlessly restricted political space, exiling, co-opting, banning, harassing or imprisoning opponents. He turns 76 next week and has no apparent successor. A daughter is keen. + +Yet things are worse elsewhere. Uzbekistan’s Mr Karimov is the nastiest and perhaps most paranoid of the five rulers. Tajikistan may be the least stable. Last month its constitution was amended by referendum—with 97% of voters said to assent— to lower the minimum age for a president to 30, paving the way for Mr Rahmon’s son Rustam to take over. He currently heads the country’s anti-corruption commission (try not to laugh). + +Politically, Kyrgyzstan is the freest, but that does not seem to have made people happier. The president, mindful of the turbulence that overthrew two predecessors, sounds increasingly twitchy. Since March seven politicians have been arrested for allegedly plotting various coups. Its troops have occasionally clashed with Tajikistan’s along a disputed border, while tension in the Fergana Valley riles all three countries that embrace bits of it. + +The level of popular discontent and the degree to which leaders will go to crush its expression vary. But the prospects for prosperity and stability, let alone genuine democracy and human rights, look far less rosy across Central Asia than they did 25 years ago, when the five countries gained their independence. In the past decade many people have got poorer. + +Having seen the Arab spring topple rulers to their south and colour revolutions do the same to their west, the countries’ leaders are on edge. For now they seem safe. In none of the five does a coherent, competent opposition look able to stage a revolution, nor does any appear close to boiling point. But that could change. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21701522-five-former-soviet-republics-struggle-survive-new-great-game-stans-undelivered/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +China and Taiwan + +Great stonewall + +China curbs communications with Taiwan + +Jul 2nd 2016 | TAIPEI | From the print edition + +I can’t talk right now + +IT WAS only six months ago that China and Taiwan achieved a symbolic breakthrough in their decades-long standoff: the two countries’ presidents met for the first time since the end of the Chinese civil war in 1949, both looking chuffed that they had finally broken the ice. Now it is back to normal. On June 25th China shut down a channel for communication between the two sides because of the refusal of Taiwan’s new president, Tsai Ing-wen, to accept that there is but “one China”, and that Taiwan is a part of it. A new chill is descending over the Taiwan Strait. + +When the news broke, Ms Tsai (pictured) was embarking on her first foreign tour since she took office in May—to Panama and Paraguay, among the very few countries that recognise Taiwan’s government, bracketed by transit stops in America. She would not have been surprised. During his meeting with her predecessor, Ma Ying-jeou, China’s president Xi Jinping had said his government was willing to have contact with any political party in Taiwan, as long as it accepted a “consensus” that was reached between the two sides in 1992 on the idea of one China. Ms Tsai’s Democratic Progressive Party (DPP), unlike Mr Ma’s party, the Kuomintang (KMT), finds that notion hard to swallow. + +Taiwanese officials say they will keep trying to talk to their mainland counterparts; after all, it is only a channel that opened up in 2014 between China’s Taiwan Affairs Office and Taiwan’s Mainland Affairs Council that has been shut down. Before then, the two sides had communicated through semi-official bodies; indeed, it was these that agreed in 1992 that there was only one China, and that each side would interpret this as it wished. + +But talks about things like cross-strait trade will now be tricky. China has always insisted that the 1992 agreement should be the basis for such discussions. During the previous DPP presidency, from 2000 to 2008, China barely spoke to Taiwan. It was only after Mr Ma took over as president in 2008 that relations warmed again. Conveniently for Ms Tsai, some in her party are not eager to improve trade and investment ties with China, particularly if it involves opening Taiwan’s markets to competitors from the mainland. + +China has not threatened to roll back any of the trade agreements it reached with Mr Ma’s government. But tour operators say there has been a sharp drop in the number of Chinese visitors since Ms Tsai was elected in January. It appears that China’s travel agencies, under official pressure, are dissuading people from going to the island. That is a blow: Taiwan’s service and retail industries benefit hugely from such tourism. + +A greater threat to Taiwan may simply be that an absence of official contacts between the two sides will lead to dangerous misunderstandings in a region bristling with weaponry. A potential flashpoint has become a little more worrying. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21701525-china-curbs-communications-taiwan-great-stonewall/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Politics in Japan + +Master plan + +Shinzo Abe eyes an expanded majority + +Jul 2nd 2016 | TOKYO | From the print edition + + + +LAST year Japan lowered the voting age from 20 to 18. But Minami, a high-schooler from Tokyo, does not plan to vote in an election for the upper house of the Diet, or parliament, on July 10th. Like many Japanese, she finds politics dull. The upcoming election will probably not change their views. + +The government, led by Shinzo Abe, is likely to trounce the floundering opposition. Mr Abe’s poll ratings have been boosted by the government’s competent handling of earthquakes that struck Kumamoto prefecture in April, and by Barack Obama’s emotional visit to Hiroshima the following month. Low turnout benefits his Liberal Democratic Party (LDP), which runs an effective get-out-the-vote machine. + +Mr Abe also stands to benefit from the post-Brexit-vote financial turmoil. The government can now blame external factors for its economic woes, which include deflation, flaccid consumption and sluggish wages. Before postponing a planned tax hike on June 1st, he warned of an impending economic crisis, and was roundly mocked. Now he seems prudent. Economic upheaval may make his campaign themes of stability and competence all the more appealing. + +The opposition, meanwhile, has more to lose. Half of the 242 seats in the upper house come up for re-election every three years. The opposition Democratic Party (DP) still wields power in the chamber, with the seats it now holds, but it fared poorly in the 2013 contest. Michael Cucek of Temple University says that the upper house is the last place where Japan can plausibly claim still to have a real two-party system. + +That will probably go: the LDP is likely to win an outright majority of seats in the upper house, as it already has in the lower chamber, for the first time in 27 years. That would expand Mr Abe’s authority within his party, and give him more freedom to ignore the views of Komeito, the LDP’s pacifist, social-welfare-minded Buddhist-backed coalition partner. + +The chief risk for the government heading into the election has been that Mr Abe would speak too much of his ultimate goal: securing a two-thirds majority in the upper house, which would let him propose a referendum amending key articles of Japan’s pacifist constitution, which America wrote in 1946. This has long been his goal: Japan lowered its voting age, in fact, because the opposition demanded it as a condition for supporting the bill that allowed a referendum on constitutional change. Mr Abe believes that Article Nine of the constitution, in which Japan renounces war forever, is outdated and dangerous. But revision is unpopular with voters, and Mr Abe is downplaying his wishes on the campaign trail. + +The LDP and Komeito already hold a two-thirds majority in parliament’s lower house. Their strong showing in 2013 means that in the upcoming election they need only win about 77 seats to come within reach—about as well as they did then. They could then count on the support of two small, right-wing parties, which currently have ten seats. + +That may do Mr Abe little good. Public opinion is so strongly against revision that even if the process got under way he would get nowhere. Komeito, too, would dig in against changing Article Nine. But unfortunately for most Japanese, whose priority is the economy, such barriers might not prevent a quest for constitutional change consuming most of the government’s post-election energies. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21701524-shinzo-abe-eyes-expanded-majority-master-plan/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Indonesia and the South China Sea + +Annoyed in Natuna + +China turns a would-be peacemaker into yet another rival + +Jul 2nd 2016 | JAKARTA | From the print edition + + + +ON JUNE 23rd Indonesia’s president, Joko Widodo, flew to the Natuna archipelago in the South China Sea, along with several ministers, to hold a cabinet meeting on board a warship patrolling the surrounding waters. Only days earlier the same warship had fired warning shots at Chinese trawlers, detaining one of them and its crew, in the latest sign of escalating tensions in the area. Mr Joko, universally known as Jokowi, wanted to send a message to China. + +Indonesian diplomats might once have registered their objections in private. But Jokowi has criticised China more openly than his predecessors. After one clash in March, when a Chinese coastguard vessel freed a Chinese trawler from the Indonesian patrol boat that had caught it, Jokowi summoned China’s ambassador for a scolding. The recent visit to the warship was Jokowi’s most public display of sovereignty yet. + +It marks a sharp shift for Indonesia, which for decades positioned itself as a regional peacemaker. Unlike other South-East Asian maritime countries, it claims none of the contested rocks, reefs or islands in the South China Sea. China recognises Indonesian sovereignty over the Natuna islands themselves. But its “nine-dash line” overlaps with Indonesia’s 200-nautical-mile exclusive economic zone surrounding the islands. Luhut Panjaitan, Jokowi’s chief security minister, says that the government’s position is simple: it does not recognise that claim. But Yohanes Sulaiman, a lecturer in government studies at Jenderal Achmad Yani University in Bandung, reckons Indonesia’s policy towards China still lacks clarity. + +Indonesia’s foreign-affairs ministry cheerily insists there is no dispute, even as China’s foreign ministry referred to “overlapping claims for maritime rights and interests” in a statement condemning Indonesia’s actions during the latest skirmish off the Natunas. The thinking seems to be that acknowledging a dispute would both provoke China, which Jokowi sees as a crucial source of trade and investment, and lend credence to its claims. But Indonesia’s uncertain stance seems to be encouraging China to encroach farther into its waters. + +Whether Indonesia’s armed forces are up to the job remains unclear. Although the country is building up its defences on the Natunas, Ryamizard Ryacudu, the defence minister, seems more preoccupied with fighting the phantom threat of homosexuals and others he imagines are waging a “proxy war” than facing up to the real risk of conflict. + +Meanwhile, diplomatic efforts to check Chinese expansion have floundered. Earlier this month foreign ministers from the ten-nation Association of South-East Asian Nations—of which Indonesia is by far the largest member—issued an unusually strong statement expressing “serious concerns” over developments that “have the potential to undermine peace, security and stability”, only to retract it hours later. + +On July 12th an international tribunal in The Hague will rule on a petition brought by the Philippines intended to show that China’s claims have no legal basis. Indonesia will be watching closely, and insists that the ruling be respected. Mr Panjaitan is proud of his country’s good (for now) relations with China. But, he says, “we don’t want to be dictated to by any country about our sovereignty.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21701527-china-turns-would-be-peacemaker-yet-another-rival-annoyed-natuna/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Indian social media + +A pulpit for bullies + +The system tweets back + +Jul 2nd 2016 | DELHI | From the print edition + + + +NARENDRA MODI, India’s prime minister, takes social media seriously, and wants members of his Bharatiya Janata Party (BJP) to do the same. A recent report by the BJP’s digital unit ranked all of its ministers and MPs by the number of their followers and diligence in propagating his government’s message. The implication was clear: those who want to be promoted should do more promoting. So were the results: anodyne obsequiousness. A certain C.T. Ravi, a BJP official from the state of Karnataka, recently tweeted: “Tremendous efforts by Shri @narendramodi & Team has resulted in Positivity trumping Negativity.” + +Subramanian Swamy, a 76-year-old BJP activist who in April was handed one of the party’s upper-house seats, has bucked the trend. He spent weeks tweeting aspersions on the integrity, competence and patriotism of India’s respected central-bank chief, Raghuram Rajan. The barrage, which went unanswered by party bigwigs, subsided when Mr Rajan declared earlier this month that he would not seek another term of office. + +Mr Swamy then turned his digital guns on Arun Jaitley, the finance minister, who is one of Mr Modi’s most trusted advisers. Following a visit to China by Mr Jaitley, Mr Swamy tweet-sneered, “BJP should direct our Ministers to wear traditional and modernised Indian clothes while abroad. In coat and tie they look like waiters.” + +Faced with silence from the prime minister, Mr Swamy’s seeming impunity sparked rumours of growing internal rifts in the BJP. Some whispered that Mr Modi was using the maverick twitterer to soften public opinion for looming cabinet changes. But on June 27th, some two months after Mr Swamy launched his campaign, Mr Modi broke his silence. Alluding to Mr Swamy, Mr Modi said that “such publicity stunts” were inappropriate: “Anyone who believes he is stronger than the system is wrong.” + +Predictably, Mr Modi’s Twitter feed erupted with praise for his performance. “Never seen such a brilliant interview by an Indian PM. So knowledgeable and aware of even minutest details,” gushed one Siddhartha Verma. Mr Swamy’s response was uncharacteristically philosophical: “The world is in general equilibrium. A small change in one parameter effects changes in all variables. So Krishna advised”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21701526-system-tweets-back-pulpit-bullies/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +The forest and the trees + +Our columnist steps out of the shade + +Jul 2nd 2016 | From the print edition + + + +FOR this writer, a Londoner by birth, the weekly task of producing Banyan has been among the happiest spells in a 40-year involvement with Asia that began in August 1976, in what English-speakers then called Peking. China’s capital was a city of bicycles and earthquake shelters, of blue Mao suits and tinny propaganda blaring from loudspeakers, of poorly stocked shops and farmland reeking of nightsoil. The next month, Mao died. China soon began the reforms that have turned Beijing into a smoggy, traffic-clogged but dynamic metropolis. Much of Asia is similarly transformed. Hundreds of millions have lifted themselves out of poverty, albeit at dreadful cost to the environment; cities have mushroomed as farmers have left the land in droves; birth rates have plummeted. A continent’s parents have mostly been confident their children will lead better lives than they have done. + +The “Asia” Banyan covers is a European cartographic concoction. It stretches from Kazakhstan in the north-west to New Zealand, and from the Maldives in the south-west to islands Japan disputes with Russia. Despite its arbitrary borders and bewildering diversity, this Asia is growing in coherence. As he moves on after six years, your columnist remains optimistic about the patch he is leaving. The long-term trends are towards greater prosperity and prolonged peace. But, as in 1976, wrenching transitions loom. + +In China and India, Asia still has the world’s two fastest-growing big economies, and, in Japan, the third-largest overall. A series of economic miracles has made the region the world’s engine of growth. The GDP of China alone has more than doubled since 2009, adding output equivalent to two United Kingdoms. In the process, it has become the biggest trading partner for most of its neighbours, including India. Now, with its “One Belt, One Road” vision of land and sea routes to Europe through central and South-East Asia, China wants to insert itself inextricably into the region’s economic bloodstream. + +All the giants need new miracles. They are at different points on the demographic spectrum. Japan faces a shrinking population and the need for fundamental structural reforms—as well as unprecedented levels of immigration—to sustain its high living standards. China has to cope with a shrinking workforce, curb massive industrial overcapacity, reduce a mountain of corporate debt and shift to a growth model based on consumption rather than investment. India, on the other hand, still needs to find jobs for the 1m or so who join the workforce every month. So it needs either to make a reality of the slogan of its prime minister, Narendra Modi, “Make in India”, or to find a way to prosperity other than the one—a period of labour-intensive manufacturing for export—that served East Asia so well. + +Besides binding Asia into ever-closer economic interdependency, China’s rise is also uniting its neighbourhood in another way: in apprehension of its strategic ambitions. It disputes territory with India, insists that Taiwan must one day be “reunified” with the mainland and in the East and South China Seas aggressively asserts its claims to contested reefs, rocks and islets. And it is challenging the security architecture which has, broadly, kept the peace in the western Pacific since the end of the war in Vietnam in 1975: one that relies on overwhelming American military superiority and a network of bilateral alliances. The arena China has chosen to make this challenge most explicitly is the South China Sea. In 2009 it submitted to the UN a map including its nine-dash line, apparently claiming sovereignty over almost the whole much-disputed sea. Since then, its fishing vessels and coastguard and builders of massive artificial islands have acted as if might makes right, remorselessly ratcheting up tensions. + +China’s maritime assertiveness was an important justification for America’s self-proclaimed “pivot” or “rebalance” towards Asia. But China has chosen its battlefield well. For now, commercial traffic—and one-third of the world’s maritime trade traverses the South China Sea—faces no threat. The territory under dispute is tiny. So, even after a tribunal in The Hague rules on July 12th in a case brought by the Philippines on some aspects of China’s claims, America will try to avoid a crisis. It has too little at stake. But China’s neighbours will have seen China get away with defying America. The message, and its implications for far more dangerous disputes to come, such as Taiwan, will be noted. + +Prospects for peace are also clouded by a pan-Asian (and indeed global) phenomenon—the rise of nationalism. Mr Modi, Xi Jinping in China, Shinzo Abe in Japan, Joko Widodo in Indonesia: all in their very different ways base part of their appeal on the now familiar mantra: Make our country great again! Mr Joko is also an Asian example of another global trend, disenchantment with entrenched elites and the appeal of “outsider” politicians, like Rodrigo Duterte, the Philippines’ new president, or Arvind Kejriwal, Delhi’s chief minister. + +The China question + +Economic growth and peace seem precarious but still, mercifully, more likely than the alternative. A march to freedom, too, will eventually see dictatorships from Pyongyang to Bangkok wither. But despotisms are resilient. The past six years have seen another peaceful transfer of power in Indonesia and the ascent of Aung San Suu Kyi from political detainee to de facto ruler of Myanmar. But these are exceptions. In both places, as elsewhere, the old ruling elites still cling on. And in the communist hold-outs—China, North Korea, Laos and Vietnam—repression and one-party rule are as entrenched as ever. Six years ago, Banyan’s predecessor left with the warning that “political stuntedness” was Asia’s biggest problem. That remains true, and China’s political future remains the biggest question of all. In August 1976 little suggested that the Asian continent was on the cusp of revolutionary change. The same is true now; but as then, the riddle wrapped in a mystery inside an enigma that is China could shock us all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21701528-our-columnist-steps-out-shade-forest-and-trees/print + + + + + +Previous Articles Sections Next + + + +China + + + + + +Foreign policy: Our bulldozers, our rules + + + + + +Articles Sections Next + +Foreign policy + +Our bulldozers, our rules + + + +China’s foreign policy could reshape a good part of the world economy + +Jul 2nd 2016 | BEIJING | From the print edition + + + +THE first revival of the Silk Road—a vast and ancient network of trade routes linking China’s merchants with those of Central Asia, the Middle East, Africa and Europe—took place in the seventh century, after war had made it unusable for hundreds of years. Xi Jinping, China’s president, looks back on that era as a golden age, a time of Pax Sinica, when Chinese luxuries were coveted across the globe and the Silk Road was a conduit for diplomacy and economic expansion. The term itself was coined by a German geographer in the 19th century, but China has adopted it with relish. Mr Xi wants a revival of the Silk Road and the glory that went with it. + +This time cranes and construction crews are replacing caravans and camels. In April a Chinese shipping company, Cosco, took a 67% stake in Greece’s second-largest port, Piraeus, from which Chinese firms are building a high-speed rail network linking the city to Hungary and eventually Germany. In July work is due to start on the third stage of a Chinese-designed nuclear reactor in Pakistan, where China recently announced it would finance a big new highway and put $2 billion into a coal mine in the Thar desert. In the first five months of this year, more than half of China’s contracts overseas were signed with nations along the Silk Road—a first in the country’s modern history. + +Politicians have been almost as busy in the builders’ wake. In June Mr Xi visited Serbia and Poland, scattering projects along the way, before heading to Uzbekistan. Last week Russia’s president, Vladimir Putin, made a brief visit to Beijing; he, Mr Xi and Mongolia’s leader promised to link their infrastructure plans with the new Silk Road. At the time, finance ministers from almost 60 countries were holding the first annual meeting in Beijing of an institution set up to finance some of these projects, the Asian Infrastructure Investment Bank (AIIB). Like a steam train pulling noisily out of a station, China’s biggest foreign-economic policy is slowly gathering speed. + +Chinese officials call that policy “One Belt, One Road”, though they often eviscerate its exotic appeal to foreigners by using the unlovely acronym OBOR. Confusingly, the road refers to ancient maritime routes between China and Europe, while the belt describes the Silk Road’s better-known trails overland (see map). OBOR puzzles many Western policymakers because it is amorphous—it has no official list of member countries, though the rough count is 60—and because most of the projects that sport the label would probably have been built anyway. But OBOR matters for three big reasons. + + + +First, the projects are vast. Official figures say there are 900 deals under way, worth $890 billion, such as a gas pipeline from the Bay of Bengal through Myanmar to south-west China and a rail link between Beijing and Duisburg, a transport hub in Germany. China says it will invest a cumulative $4 trillion in OBOR countries, though it does not say by when. Its officials tetchily reject comparison with the Marshall Plan which, they say, was a means of rewarding America’s friends and excluding its enemies after the second world war. OBOR, they boast, is open to all. But, for what it is worth, the Marshall Plan amounted to $130 billion in current dollars. + +Next, OBOR matters because it is important to Mr Xi. In 2014 the foreign minister, Wang Yi, singled out OBOR as the most important feature of the president’s foreign policy. Mr Xi’s chief foreign adviser, Yang Jiechi, has tied OBOR to China’s much-touted aims of becoming a “moderately well-off society” by 2020 and a “strong, prosperous” one by mid-century. + +Mr Xi seems to see the new Silk Road as a way of extending China’s commercial tentacles and soft power. It also plays a role in his broader foreign-policy thinking. The president has endorsed his predecessors’ view that China faces a “period of strategic opportunity” up to 2020, meaning it can take advantage of a mostly benign security environment to achieve its aim of strengthening its global power without causing conflict. OBOR, officials believe, is a good way of packaging such a strategy. It also fits with Mr Xi’s “Chinese dream” of recreating a great past. It is not too much to say that he expects to be judged as a leader partly on how well he fulfils OBOR’s goals. + +Third, OBOR matters because it is a challenge to the United States and its traditional way of thinking about world trade. In that view, there are two main trading blocs, the trans-Atlantic one and the trans-Pacific one, with Europe in the first, Asia in the second and America the focal point of each. Two proposed regional trade deals, the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership, embody this approach. But OBOR treats Asia and Europe as a single space, and China, not the United States, is its focal point. + +Mr Xi first spoke of a new Silk Road during a visit to Kazakhstan in 2013, a year after he took power. The first contracts bearing OBOR’s name—about 300 of them, including a huge hydropower plant in Pakistan—followed in 2014, though many of those deals were already well advanced. The past two years have seen a frenzy of institution-building. Mr Xi has set up a “small leading group” to oversee OBOR. This is an informal high-level body linking government and party organisations. Its boss is Zhang Gaoli, who is a member of the Politburo Standing Committee, the party’s innermost circle. It also includes the leadership’s chief spin doctor and a deputy prime minister responsible for foreign trade. All the main bits of the bureaucracy have been corralled into OBOR. + +A financial structure to support it has also taken shape. In 2015 the central bank transferred $82 billion to three state-owned “policy banks” for OBOR projects. China’s sovereign wealth fund backed a new Silk Road Fund worth $40 billion and the government set up the AIIB with $100 billion of initial capital. The bank is not formally part of OBOR but the loans approved at its first general meeting—roads in Pakistan, Tajikistan and Uzbekistan, for example—are all in Silk Road countries. + +Now the rest of the Chinese state is mobilising. Two-thirds of China’s provinces have emphasised the importance of OBOR for their development. For example, Fuzhou, the capital of coastal Fujian province, has told its companies to “start businesses in the countries and regions along the maritime Silk Road”; it has set up a free-trade zone to attract firms from such countries in South-East Asia. Many big state-owned enterprises (SOEs) have an OBOR department, if only in the hope of getting money for their projects. + +As a result, China’s foreign direct investment (FDI) is increasingly going along the Silk Road. In 2015, by official reckoning, its FDI in OBOR countries rose twice as fast as the increase in total FDI. Last year 44% of China’s new engineering projects were signed with OBOR countries. In the first five months of 2016, the share was 52%. + +China’s approach to investment seems to be changing, too. Its OBOR contracts are now more likely to involve Chinese firms managing the infrastructure they build, rather than (as in the past) building them and simply handing them over. In theory, this should give China an interest in working for the long term in Silk Road countries. + +Yet while OBOR gathers momentum it is also encountering problems. These are especially glaring in South-East Asia. China is planning a 3,000km (1,900-mile) high-speed rail line from Kunming, in its south-west, to Singapore. But in June talks with Thailand over its section of the line broke down; the Thais said they would build only part of the project, and would finance it themselves. There have been many other such failures. + +Also worrying are signs that there are not yet enough viable projects for the vast sums being earmarked. The Silk Road Fund was set up to invest in infrastructure abroad. But two of its first investments were in initial public offerings by Chinese firms in Hong Kong. + +Problems have arisen too with OBOR’s leadership. Mr Zhang, the most senior person in charge, is thought to be out of favour after blotting his copybook in March by saying that the economy had had “a tremendous start” to 2016. This contradicted the views of people close to Mr Xi who argue that a slowdown is necessary. + +The travails of the European Union—and especially of Britain, which has claimed to be enjoying a “golden age” of relations with China—might make Chinese leaders nervous about Europe’s willingness to support OBOR, though it might also in the long run make it easier for China to exploit rivalry between European countries when doing deals with them. + +More broadly, China has many competing bureaucratic interests at stake in the Silk Road project. Reconciling them will be tough. OBOR is supposed to extend Chinese commercial influence, reduce the Chinese economy’s dependence on investment in infrastructure at home and export a little of China’s vast excess capacity in steel and cement. Tensions between these aims are inevitable. Should China give priority to underperforming provinces or underperforming SOEs? Can it help poor western provinces while reducing its spending on domestic infrastructure? + +Ready or not, here they come + +All that said, there are reasons for thinking the new Silk Road will be paved, albeit not with gold. Most important, Asia needs new infrastructure—about $770 billion a year of it until 2020, according to the Asian Development Bank. This demand should eventually ease today’s worries about a lack of projects. Bert Hofman, the World Bank’s chief in Beijing, adds that individual countries will benefit more if they align their plans with one other and with China. It does not pay to plan and build separately. + +Next, China needs OBOR. At home, its businesses are being squeezed by rising costs and growing demands that they pay more attention to protecting the environment. It makes sense for them to shift some manufacturing overseas—as long as the infrastructure is there. + +Lastly, Xi Jinping needs it. He has made OBOR such a central part of his foreign policy and has gone to such lengths to swing the bureaucracy behind the project that it is too late to step back now. + +None of this means the new Silk Road will be efficient, nor does it mean China’s plans will always be welcome in countries suspicious of its expanding reach. But the building blocks are in place. The first projects are up and running. OBOR is already beginning to challenge the notion of Europe and Asia existing side by side as different trading blocs. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21701505-chinas-foreign-policy-could-reshape-good-part-world-economy-our-bulldozers-our-rules/print + + + + + +Articles Sections Next + + + +Middle East and Africa + + + + + +African entrepreneurs: Opportunities galore + +Shopping in South Africa: Buying on credit is so nice + +Medical drones in Africa: Help from above + +Israel and Turkey: Let’s try again + +The economics of Ramadan: Less work and more pray... + +Beer in the Arab world: Of brewers and bureaucrats + + + + + +Articles Sections Next + +African entrepreneurs + +Opportunities galore + +Africa has enterprising people, but too few businesses + +Jul 2nd 2016 | RUHENGERI | From the print edition + + + +IF ANYTHING explains the poverty in many parts of sub-Saharan Africa, it is not an unwillingness to work hard—most of the continent’s people still sweat to survive tilling fields with medieval tools. Nor is it because of a lack of enterprise and optimism: on the permanently traffic-jammed streets of Lagos, Nigeria’s main commercial city, hawkers gingerly ease their way between cars trying to sell almost anything from snacks to books, pirated DVDs and even toilet seats. Africans are far more likely to be self-employed than people in richer parts of the world, for the simple reason that without social safety nets, many of them must hustle or starve. + +Yet for all Africans’ energy and ingenuity, the region struggles to produce enough of the productive and profitable small businesses it needs to lift hundreds of millions of people out of poverty. The World Bank reckons that sub-Saharan Africa has only a quarter as many small businesses as Asia, relative to its population. Members of the OECD, a club of mostly rich countries, have about eight times as many formal small businesses per person. + +Part of this is explained by the poor climate for enterprise. Indices of entrepreneurial activity place African countries far below even sluggish European ones such as Greece or Italy (see chart). The gap grows even wider if you look at the number of big firms Africa produces. Apart from a handful from South Africa and Nigeria, few African companies have grown large enough to expand into markets beyond the continent, or even beyond their hometowns. Africa has produced just one of the world’s 169 “unicorns”, the label given to privately held tech start-ups with a valuation of more than $1 billion: Africa Internet Group, which adapts foreign business models such as e-commerce and mobile cab-hailing to African circumstances. + + + +Yet the paucity of businesses is not due to a shortage of opportunities to make money. In fact, given a small nudge new entrepreneurs seem able to make it hand over fist. In a tiny hut a few hours north of Kigali, Rwanda’s capital, just before the land starts lifting steeply towards to the volcanoes of the Virunga mountains, a group of men and women in their mid-20s stand proudly around bins of seed potatoes. The group, who were taught how to run their own businesses by TechnoServe, an American non-profit, banded together to borrow money to grow high-quality tubers. The profits from this venture were enough to kick-start others. + +Emmanuel Bunani used his winnings to rent a plot of land to grow garlic for export. He now pays two people to work his fields and another three to shell and dry the garlic. He has also come up with a novel way of making sure he gets a good price from the traders he sells to: he has invited them all to a group on WhatsApp, a mobile phone chat service, and gets them to bid against one another when his crop is ready. + +On another farm a few hours away Thacienne Ahunkuye (pictured), a shy 26-year-old, looks down at her feet as she explains how a year ago she was unemployed and had sat around for four years doing more or less nothing on her parent’s small homestead. Now she earns some $300-$400 a month (in a country with an annual average income of $700) from an egg farm she started after getting some training and help in applying for a small loan to buy 250 chickens. She sells eggs internationally: twice a month a rickety lorry comes up to collect crates of them to take to the Democratic Republic of Congo. + +Yet the success of youngsters such as Mr Bunani and Ms Ahunkuye is also puzzling. If it is really so easy to make money growing garlic or keeping chickens, why aren’t more people doing it? And how can more people be encouraged to do so? + +There are many reasons why Africa has failed to produce many profitable small firms, never mind larger ones, but high among them is access to finance. “There is a myth out there that every good idea can find funding,” says Goolam Ballim, the chief economist of South Africa’s Standard Bank. “But in Africa that simply isn’t true.” For a start banks in many African countries serve mainly to take savings and channel them into the hands of governments rather than entrepreneurs, since treasury bills often pay juicy rates of interest. Government borrowing drives up interest rates for everybody else. (In much of east and west Africa, for instance, people have to pay eye-watering interest rates of 20-45%.) The easy profits from lending to the state also make banks lazy. Many do not bother to learn how to measure and manage the risks of lending to businesses when they can simply hold government paper. + +This is beginning to change, thanks largely to the spread of mobile phones, which is allowing for new ways of lending cheaply. Take Letshego, a Botswana-based microlender with operations in nine other African countries. It signs up customers using their mobile phones and runs its entire operation from a data centre in South Africa, giving it a cost-to-income ratio (a standard measure of efficiency in banking) that is about half that of traditional banks. Lenders are also experimenting with new ways of measuring how risky borrowers are using data from their phones. One discovered that customers who listed their contacts by both name and surname were 16% less likely to default. + +Even if entrepreneurs get access to finance, it is still difficult for them to make and sell things. Ashish Thakkar, an African entrepreneur and philanthropist, says that shortages of electricity, potholed roads and inefficient ports and railways hold back manufacturers. “If someone making shoes in Port Harcourt can’t even get them to Lagos [both are cities in Nigeria] then forget about them going global.” + +Yet that too may change as governments and investors channel huge investments into infrastructure and power. TradeMark East Africa, an NGO funded largely by western governments to encourage trade, reckons that improvements in Kenya’s ports and roads have cut by about 60% the time it takes to ship a container from the port of Mombasa to Kampala, the capital of Uganda, lowering costs too. + +Access to markets is not simply about physical infrastructure, but also about social networks. In many parts of the continent there are so few successful companies that would-be entrepreneurs seldom see inspiring examples or have trusted friends in business to turn to for advice or as suppliers or customers. + +Where such networks exist, for example among Lebanese expatriates in west Africa or Asians in east Africa, business often flourishes. Yet even where they don’t, they can sometimes be replicated using technology. Cherie Blair, a lawyer married to a former British prime minister, has a foundation that helps teach women to run their own businesses. Some, she says, have done so for years but still do not know how to read a balance-sheet, so she connects them with one another and with mentors abroad using an online platform. + +Some investors have figured out how to start businesses without the existing chains of suppliers and customers that allow firms to flourish elsewhere. Take H2O Venture Partners, an investment firm that has started several agricultural businesses in Africa. It found that in many cases it is impossible to start one business—an exchange for trading beans, say—without also setting up other firms in the value chain. So it has started a food-processing company to buy and cook beans, and also firms that sell seeds, fertilisers and tools. + +Many obstacles remain, not least of which are widespread illiteracy and innumeracy. But there are also many opportunities to be exploited in doing simple things for local markets that may in time lead to bigger ones. Often it does not take much to get these off the ground. Ms Ahunkuye says that before she was taught how to hatch a business from eggs, she “was waiting for a job but didn’t know where it would come from”. She adds: “I knew it could be a good business because I had seen others doing it, but I didn’t know where to start.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21701484-africa-has-enterprising-people-too-few-businesses-opportunities-galore/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Shopping in South Africa + +Buying on credit is so nice + +South Africans love to splash out, but many are living beyond their means + +Jul 2nd 2016 | JOHANNESBURG | From the print edition + +We’re worth it + +A QUEUE snaked through the first Starbucks shop south of the Sahara, winding out of the door and down the block. It greeted the American coffee chain’s boss, Howard Schultz, when he visited the Johannesburg store for the first time recently. “I have been to many, many Starbucks openings around the world,” Mr Schultz marvelled. “I have never seen a line like this after a week of our opening.” Few of the South Africans shuffling in line had ever tasted Starbucks, but they felt sure it was worth the hour-long wait. “Celebrities are always drinking it,” said Lebo Nkosi, 26, a shop assistant at a nearby mall, as she waited with her friends. + +Two months after opening, this Starbucks still pulls impressive queues on weekends. Famous international brands are a bit of a novelty in South Africa. Similarly enthusiastic crowds met the launches of the first Krispy Kreme Doughnuts and H&M clothing shops in Africa late last year. Burger King, which opened in 2013, had long queues for months. For big global brands, South Africa’s market offers avid consumers and a stepping stone to the rest of Africa. + +The appetite for venti lattes and grande frappuccinos is remarkable given the parlous state of South Africa’s economy. It is expected to grow just 0.6% this year, down from 1.3% in 2015. So far, though, this hasn’t stopped the country’s aspirational middle class from splurging. When the spiffy new Mall of Africa (home to South Africa’s second Starbucks shop), opened in late April it drew more than 120,000 people and snarled up traffic for miles. It also led to a shoot-out between rival taxi fleets, fighting over who would get to pick up shoppers. + +Not all who splash out on luxuries are truly well-off. Many of the new middle class are living beyond their means. According to the government, nearly half of South Africans with access to credit are struggling to meet their monthly payments; they may have to stop spending. + +Though retail sales beat expectations by rising 4.0% year-on-year in February, they disappointed by growing just 1.5% in April. Burger King opened with a sizzle, but has since scaled back its plans, from 100 stores by the end of June to 75 or 80. With the Mall of Africa’s opening, there may be a glut of retail space. Starbucks was planning to expand slowly. But after seeing the crowds in Johannesburg, a bullish Mr Schultz had second thoughts: “I think this market is going to be larger than we probably thought.” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21701431-south-africans-love-splash-out-many-are-living-beyond-their-means-buying/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Medical drones in Africa + +Help from above + +A new way round an old problem + +Jul 2nd 2016 | KIGALI | From the print edition + +Blood from the sky + +“LAND of a thousand hills” is an apt nickname for Rwanda. The tiny, landlocked country ripples with steep, terraced hillsides. Under its single-minded president, Paul Kagame, it is also determined to become a technology hub for Africa. It is not, therefore, surprising that Rwanda will soon be a laboratory for one of the most hyped technologies around. + +Zipline, a Silicon Valley startup, will start testing delivery drones (otherwise known as Unmanned Aerial Vehicles) at a site 40 minutes drive south-west of the capital, Kigali, in August. If deemed safe by the government, a month or two later the fixed-wing “Zips” will be dropping off blood for transfusions in small boxes with parachutes at 21 hospitals and health centres within a 75km (40 mile) radius. The aim is to open a second hub in the east to cover the rest of the country within a year, and to start delivering vaccines and other medicines as well as blood. + +If all goes well, drones could cut a 3.5-hour trip by car to and from one of the country’s five blood banks to less than 45 minutes, a potentially life-saving difference for a mother haemorrhaging after giving birth. Even more time could be saved during the rainy season, when many of Rwanda’s roads become impassable, says Zipline’s co-founder, Will Hetzler. + +Another firm, Mobisol, wants to use drones to deliver spare parts for its pay-as-you-go solar-power systems in Rwanda and Tanzania. The quadcopters it is developing would land on roofs, where they could be recharged using customers’ excess solar energy. + +Perhaps the most ambitious idea comes from Redline, a 40-person company founded by Jonathan Ledgard, a former journalist for The Economist. Mr Ledgard envisions fixed-wing drones, manufactured for less than $3,000, carrying up to 10kg (22 pound) loads between small cities and towns that are poorly connected by road. A ‘droneport’, designed by Norman Foster, a British architect, could be built for $300,000—less, Mr Ledgard claims, than a new petrol station. Rwandan ministers are supportive, and Redline hopes to start test flights by the end of the year. + +There are plenty of potential pitfalls. Mr Ledgard’s Flying Donkey Challenge, a competition for drones to carry loads around Mount Kenya, was shelved in 2014, after a series of terrorist attacks meant that a nervous Kenyan government was unwilling to give the go-ahead. In South Africa drones have been used to track poachers and tested out as a crime surveillance tool. But strict regulations imposed in July 2015 mean you have to pass skills and theory tests, and be medically examined by a doctor, to get a licence to fly one. + +Malawi’s leaders were keener on a recent study by the UN Children’s Emergency Fund (Unicef) into the feasibility of using drones to transport the HIV test samples of newborn babies. But although all 93 flights in the two-week period in March passed off without a hitch, the cost of the drones from Matternet, another Silicon Valley startup, tends to be more than using motorbikes, thinks Judith Sherman, Unicef’s HIV/AIDS chief in Malawi. “The technology is still immature,” she says. + +Nonetheless, Unicef is working with Malawi’s government to come up with a better way to transport lab samples. Drones may turn out to be the best option for islands in Lake Malawi, for example. The country is also interested in using drones in agriculture, forestry and conservation, as well as disaster surveillance. No one pretends that drones can ever be a complete substitute for good roads. But as drones become cheaper, they could help countries with patchy infrastructure and tricky terrain shift light, valuable goods more quickly. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21701488-new-way-round-old-problem-help-above/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Israel and Turkey + +Let’s try again + +An end to years of tension, sort of + +Jul 2nd 2016 | JERUSALEM | From the print edition + +THERE was no warmth to the announcements of a rapprochement between Israel and Turkey this week. The two governments have spent the past three years of a six-year period of tension negotiating the deal that restores full diplomatic relations. But when it was finally agreed, prime ministers Binyamin Netanyahu and Binali Yildarim gave separate press conferences. There was no festive summit, just a recognition by two regional powers that they cannot afford to remain at loggerheads during such a volatile period. + +Israel agreed three years ago to apologise and to pay compensation for an incident in May 2010, when Israeli naval commandos intercepted a flotilla of boats that was attempting to reach Gaza. It resulted in the deaths of ten Turkish pro-Palestinian activists. (The Israeli commandos were attacked with metal pipes before they started shooting.) Talks then bogged down over each side’s additional demands. The Turkish president, Recep Tayyip Erdogan, eager to present himself as the protector of the Palestinian people, demanded that Israel lift its blockade of the Gaza Strip. Israel insisted that the Turkish government close down a Hamas headquarters in Istanbul which Israeli intelligence officials claim has been used to direct terror operations within Israel. + +In the end, both sides were forced to give up most of their demands. The blockade of Gaza remains, though Turkey will be allowed to carry out various building programmes in the beleaguered strip. Hamas offices in Istanbul will remain open and Israel will have to make do with Turkey’s assurances that they will only be allowed to engage in “political” activities. + +The agreement will not bring Gaza much immediate relief. Aid supplies and building materials from Turkey will have to go through the port of Ashdod, subject to Israeli inspection. Turkey has ambitious plans to erect a new power station and desalination plant. These will be useful to the 1.8m people of Gaza, currently suffering daily electricity outages, and will supply much-needed jobs. However, these plants need constant maintenance and supplies, hard to ensure at a location which has seen air strikes from Israel on average every couple of months over the past decade. Another obstacle is division among the Palestinians: the Fatah-controlled Palestinian Authority refuses to co-operate with its rivals Hamas, who rule Gaza. + +Although the two governments will appoint ambassadors immediately following the agreement’s ratification, it is premature to hope that Israel and Turkey will once again be the close allies they were for decades. There is still much lingering suspicion—Israel’s security establishment is wary of ties built up in recent years between Erdogan loyalists placed at the head of Turkey’s intelligence services, and Iranian officials. “It is hard to see how we can resume the level of relationship we once had while Erdogan is still at the top of the pyramid,” said one senior Israeli officer recently. In the past the armed forces of both countries have carried out joint exercises, while Israel used Turkey’s territory for surveillance and intelligence operations against Syria and Iran. That is not on the cards any time soon. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21701519-end-years-tension-sort-lets-try-again/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The economics of Ramadan + +Less work and more pray... + +…make Muhammad poorer but happier + +Jul 2nd 2016 | CAIRO | From the print edition + +IN MOST Muslim countries life slows down during Ramadan, the holy month in which the faithful fast during daylight hours. Many people nap during the day and feast at night. Working hours are reduced. Businesses open later and close earlier. In general, less gets done. + +There is much anecdotal evidence that Ramadan, which ends on July 5th, has a negative economic effect on Muslim countries. But until recently, no one had properly studied the question. “There is a sensitivity when it comes to Islam,” says Rumy Hasan of the University of Sussex in Britain. But the holy month’s features actually make it easier to study. + +The Islamic calendar is lunar, so Ramadan rotates through the seasons. In Egypt, for example, the holy month now falls during the long days of summer. But in 15 years, it will occur in winter, when the days—and, therefore, the fasts—are shorter. The opposite is true for Muslims in southern locales. This cycle, unrelated to other factors that might affect the economy, “presents a kind of naturally occurring experiment”, wrote Filipe R. Campante and David H. Yanagizawa-Drott of Harvard University in the New York Times. “Religious practice is precisely varied and everything else is left in place.” + +In a study published last year in the Quarterly Journal of Economics, Messrs Campante and Yanagizawa-Drott looked at data from nearly every country over the past 60 years and found that longer fasting times had a deleterious effect on economic growth in predominantly Muslim countries—not just during Ramadan, but throughout the year. If, say, the average Ramadan fast were to increase from 12 hours to 13 hours, output growth in that country for the year would decline by about 0.7 of a percentage point, they found. “It is a robust negative relationship,” says Mr Yanagizawa-Drott. + +Other research suggests that Muslims are less productive during Ramadan. A study by Heather Schofield of the University of Pennsylvania showed that fasting by Indian agriculture workers led to a 20-40% drop in productivity when the holy month fell in the planting or harvesting season. Office workers are said to put off meetings and decisions until after Ramadan, during which trading activity tends to decline on stockmarkets in the Middle East. + +But Messrs Campante and Yanagizawa-Drott found that the most important reason for lower growth was that Muslims choose to work fewer hours. They are seemingly no less productive in years when fasts are longer. Surveys indicate that during those years they value work less and religion and leisure more. “You could say it is a healthy shift in attitudes,” says Mr Yanagizawa-Drott. Indeed, fasting Muslims report being happier in years when the days are longer, despite the economic costs. + +Many merchants do better around Ramadan thanks to an increase in consumption. In this way, it is like holidays everywhere. But making more thorough comparisons is difficult because it is hard to isolate the economic effect of, say, Christmas. Ramadan’s variability gives researchers something to chew on, even as their subjects go without. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21701523-make-muhammad-poorer-happier-less-work-and-more-pray/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Beer in the Arab world + +Of brewers and bureaucrats + +The obstacles faced by craft beers aren’t only what you think + +Jul 2nd 2016 | BEIRUT | From the print edition + +Yes, colonel! + +MAZEN HAJJAR likes to say that barley was first domesticated—in the Middle East, mind you—for the purpose of brewing beer, not baking bread. Bread is now the region’s daily staple; beer barely registers. But the founder of 961, a Lebanese microbrewery, thinks there is a fertile market in the Fertile Crescent. “There is too much light fizzy tasteless stuff,” he says. + +In Lebanon the trend is growing. Colonel Brewery in Batroun, a Christian seaside town, serves its beers in its garden and sells more to 70 Lebanese bars. Beirut Beer is another brand made by a winemaking family. Schtrunz is the latest to join, made by a family with Czech roots. But Lebanon is not the rest of the region. Is there room elsewhere? + +Yes, say producers. Israel has a flourishing craft beer scene, and in the West Bank Taybeh (“tasty” in Arabic) has been producing a range of craft beers since the 1990s. Even Jordan has its own microbrewery, Carakale. Some brews are flavoured with regional herbs and spices such as sumac and thyme. + +Most Arabs are Muslim and most Muslims agree that the Koran bans alcohol. But not all of them shun it, and Lebanon, Jordan and Palestine have sizeable Christian populations. Brewers say there is room to grow. Beer is still underappreciated in a region where wine, arak and whisky hold sway. + +In other Muslim countries, craft brews could replace bad beer. Egypt’s Stella and Sakara could use some competition, as could Morocco’s four tasteless local brands. If alcohol were allowed into Iran or Saudi Arabia, craft beers could displace secretly-produced (and often horrible) home-brews. + +The biggest obstacles to wannabe brewers are the same ones that face any company trying to operate in the Middle East: red tape, lousy infrastructure and sluggish economies. When 961 started to look for export markets, sending a sample abroad with DHL required special government permission. Electricity is unreliable. Carakale took two years to get permission to set up. + +The lure of expanding into virgin territory outweighs those concerns for now, says Jamil Haddad, the founder of Colonel. “I thought about opening in London or Europe,” he says. “But here it’s a new concept and I can do something unique.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21701520-obstacles-faced-craft-beers-arent-only-what-you-think-brewers-and/print + + + + + +Previous Articles Sections Next + + + +Europe + + + + + +A terrorist attack on Istanbul’s airport: Soft target + +NATO’s summit: Trip-wire deterrence + +Spain’s election: Revolution cancelled + +Ireland post-Brexit: Put asunder + +Repression in Russia: Prelude to a purge + +Charlemagne: And shut the door behind you + + + + + +Articles Sections Next + +A terrorist attack on Istanbul’s airport + +Soft target + +Turkey’s friendly turn in foreign policy is punctured by another bombing + +Jul 2nd 2016 | ISTANBUL | From the print edition + + + +THE morning after the suicide attack at Istanbul’s Ataturk International Airport on June 28th, a grim silence hung over the terminal. Taxi drivers waved down the few shocked passengers trickling out of the bomb-scarred building. In contrast with the long closure that followed the attacks at Brussels’ airport in March, flights had already resumed. Turkey is doing its best to maintain an air of normalcy. But with the prime minister, Binali Yildirim, suggesting that Islamic State (IS) was behind the attack, Turkey may find itself drawn ever further into the war in Syria. + +The three suicide bombers who attacked the airport killed at least 42 people and left more than 200 wounded. One struck in front of the arrivals hall entrance on the ground floor. The two others forced their way into the departures hall upstairs, shooting travelers with machine guns. One of them headed back downstairs before detonating his suicide vest. Security-camera footage showed one of the bombers being shot by police, then blowing himself up. + +If IS was responsible, the attack is the latest in a wave of bombings by the terror group that has killed nearly 200 people in Turkey since last summer. The jihadists last struck in late April, when a suicide bomber killed two people outside a police station in Gaziantep, in the country’s south. The interior ministry claims to have foiled dozens of other attacks, including a plan to bomb bars and night clubs in Ankara, the country’s capital, on New Year’s Eve. Prosecutors early this week demanded life sentences for 36 people suspected of involvement in an IS bombing that killed 101 people in Ankara last October. In addition to the terror attacks, rockets fired from IS strongholds in Syria have killed 21 people in Kilis, a town near the border. + +Apart from the murders of at least five Syrian activists, IS has not claimed responsibility for any of its attacks inside Turkey. Its publications and social-media accounts, however, have vilified Turkey ever since the country decided last year to open its airbases to coalition jets operating against IS in Syria. Turkey launched a belated crackdown against home-grown IS sympathisers in early 2015 and has begun using its Syrian proxies to dislodge the extremists from areas just south of the border. Aside from artillery strikes against the group’s strongholds, however, it has avoided challenging IS inside Syria, preferring instead to wage war against Kurdish insurgents at home. Its fighter planes have remained grounded since last autumn, ostensibly for fear of being hit by Russian missiles. + +By targeting Ataturk Airport, one of the world’s busiest, the attackers appeared determined to damage Turkey’s $30 billion-a-year tourism industry. Hotels and resorts are already reeling from a Russian boycott, earlier IS bombings and the war in the Kurdish southeast, as well as attacks by an offshoot of the outlawed Kurdistan Workers’ Party (PKK). Foreign arrivals were down by 35% in the year to May, the largest such drop in decades. + + + +The plague of global terrorism, in charts + +The days leading up to the attack offered hope of a respite. On Monday Mr Yildirim announced a deal to restore diplomatic relations with Israel after a six-year hiatus (see article). On the same day, Turkey’s president, Recep Tayyip Erdogan, signed a letter apologising for the downing of a Russian plane last November. That incident prompted Moscow to impose an embargo on Turkish food products and restrict travel to the country. In a phone call with Mr Erdogan on Wednesday, Vladimir Putin, Russia’s president, agreed to repair ties and lift the tourism sanctions. It may be too late. For Turkish tour operators, the summer season is lost. + +To some in Turkey, the timing suggests that the bombing was a response to the agreement with Israel. Yet security experts find it hard to imagine that the attackers could have planned and pulled off an attack as complex as this one in a matter of days. “It may be that they had this going and decided to accelerate,” says Selim Koru, a researcher at the Economic Policy Research Foundation of Turkey, a think-tank. If it does take credit for the attack, says Mr Koru, IS is likely to use the Israel deal to paint Turkey as part of what it calls the “crusader alliance”. + +If the rapprochement with Israel raises Turkey’s profile as a target for IS militants, the one with Russia frees its hand to go after them. Turkish planes have less reason to worry about being shot down over Syria. More importantly, the attack on June 28th should compel Turkey to crack down harder on jihadists at home and to accept the urgency of defeating IS in Syria, says Henri Barkey, a Middle East expert at the Woodrow Wilson Centre. Doing so may require Mr Erdogan to turn a blind eye to American support for the PKK’s Syrian affiliate, which is the coalition’s most trusted partner in Syria. Turkey’s ruler may now have no choice left but to take the fight directly to IS—or let the Kurds do it for him. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21701517-turkeys-friendly-turn-foreign-policy-punctured-another-bombing-soft-target/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +NATO’s summit + +Trip-wire deterrence + +An ageing alliance hopes that Russia will get the message it is serious + +Jul 2nd 2016 | From the print edition + +Feeling lucky, Putin? + +A LOT of work goes into preparing for NATO’s biennial summits. So the hope is that next week’s summit in Warsaw is not dominated by Brexit. Nobody will be keener than David Cameron, Britain’s soon-to-be-ex-prime minister, to present a picture of business as usual for the 28-member alliance. And there is plenty to do, most of it about Russia. Since Vladimir Putin annexed Crimea in 2014, relations have grown dramatically more antagonistic. + +That year’s summit, in Wales, returned NATO to its cold-war role of territorial defence. The Warsaw summit will, above all, be a progress report on the steps the alliance has since taken, known as the Readiness Action Plan, to reassure its nervous eastern members and re-establish effective deterrence. + +There are also security issues in the south: the threat of Islamic State terrorism, and helping the European Union tackle people-traffickers and illegal migrants. But the summit will be dominated by the threat from Russia. NATO is especially worried about its Baltic enclave of Kaliningrad, which borders Poland and Lithuania. Russia is pouring in mechanised brigades, tanks, long-range air-defence systems and nuclear-capable missiles, making it one of the most militarised parts of Europe. + + + +The new plan consists of a series of interlocking components. The high-readiness NATO Response Force has been tripled in size to 40,000 and given more punch. A spearhead force (known as the Very High Readiness Joint Task Force) of 5,000 ground troops supported by air, sea and special forces, which can be deployed within 48 hours, has been established. Supplies, including heavy weapons, are being pre-positioned in the east. Air policing over the Baltics has been stepped up, as has NATO’s naval presence in the Baltic Sea, the Black Sea and the Mediterranean. + +Additionally, in June the alliance agreed to deploy four multinational battalions in the three Baltic States and Poland. America, Britain and Germany are to lead three of the battalions, which will each have about 1,000 troops, while Canada could lead the fourth. The White House has promised a fourfold boost in funding for the Pentagon’s European Reassurance Initiative to $3.4 billion next year, which will be spent on increasing American forces in the region and pre-positioning more heavy weaponry, including tanks and artillery. + +Yet the eastern members worry that this is little more than the bare minimum. A report by the RAND Corporation, a think-tank, earlier this year concluded after a series of war games that without a big new NATO presence in the Baltics, a Russian invasion force could reach Tallinn (the capital of Estonia) and Riga (the capital of Latvia) within 60 hours. That would leave NATO to choose between escalating the conflict and accepting a fait accompli that would destroy the alliance. In RAND’s view, for real deterrence, NATO needs a force of about seven brigades (each with about 5,000 soldiers), three with heavy armour, on the ground, ready to fight. + +NATO disagrees, insisting that the four battalions are a tripwire for engaging the whole alliance. They will send the message, said one official, that should Russia “try anything”, it will face “a multinational force that includes two nuclear-armed member countries”. They also believe that good intelligence would provide time to respond if deterrence were to fail. + +Jonathan Eyal of RUSI, a London-based think-tank, reckons that there is “no escape” from tripwire deterrence, which worked for 40 years of the cold war when West Berlin was never defensible. The key will be the speed of decision-making. As much as possible, says Mr Eyal, decisions should be in the hands of the Supreme Allied Commander, General Curtis Scaparotti, rather than the Atlantic Council, NATO’s lumbering parliament. + +A bigger concern is the queasiness some NATO members are already showing about standing up to Russian bullying. Italy, Greece and Spain are less than enthusiastic about a build-up; Germany’s foreign minister, Frank-Walter Steinmeier, delighted the Kremlin earlier this month by deploring large-scale NATO exercises in eastern Europe as “war-mongering” and “sabre-rattling”. Mr Steinmeier’s remarks drew a swift response from the alliance’s secretary-general, Jens Stoltenberg. “Strong defence, strong deterrence and NATO unity are the best way to avoid a conflict,” he said. But the damage was done. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21701515-ageing-alliance-hopes-russia-will-get-message-it-serious-trip-wire-deterrence/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Spain’s election + +Revolution cancelled + +Another centre-right government, but a weaker one + +Jul 2nd 2016 | MADRID | From the print edition + +THE idea of re-running a vote when the first result is unsatisfactory has been getting a bad press recently. But Spain’s second general election in six months, on June 26th, showed that if the goal is to break a political deadlock, do-overs can be useful. The big winners were Mariano Rajoy, the prime minister, and his centre-right People’s Party (PP). Though they failed to get an absolute majority, they took 33% of the vote, up from 29% in the December election, which was so splintered that no party could form a government. Now, with 137 seats in the 350-member Cortes (parliament), Mr Rajoy is set to remain prime minister, albeit at the head of a coalition or minority administration. + +The election’s big surprise was that Podemos, a new far-left party dedicated to reversing austerity and defenestrating the traditional political class, stalled. Contrary to all poll forecasts, it failed to overtake the more moderate Socialist Party to become the largest force on the left. Podemos had merged with the old Communists of the United Left party for this election, but the merged force won 1m fewer votes than its constituent parts did last time. + +The long faces of Podemos’s young leaders as the results came in were eloquent. The Socialists did poorly compared to the past, winning 22.7% of the vote and 85 seats (down five). But it felt like a victory for Pedro Sánchez, the party’s leader, who almost certainly did enough to keep his job. Ciudadanos, a new liberal party which won 32 seats (down eight), paid the price for having tried to form a government with Mr Sánchez after the December election. Some of the former PP voters who had supported it switched back. + +Mr Rajoy became prime minister in 2011 with Spain deep in recession. He has set it on the path to economic recovery, cleaning up the banks and reforming the labour market. Budget cuts and corruption scandals hurt the PP, but it has proved resilient. Outwardly stolid and unimaginative, Mr Rajoy is a shrewd strategist who has repeatedly defied rivals and expectations. + +The prime minister wants the Socialists to join him in a German-style “grand coalition”. Socialist leaders have rejected that. The left and right have never worked together in Spain, and the Socialists fear leaving Podemos to monopolise the fruits of opposition. A pact with Ciudadanos and moderate regional parties would put Mr Rajoy within one seat of a majority. But Albert Rivera of Ciudadanos would have to drop his demand for Mr Rajoy to resign. + +Weeks of talks among the party leaders lie ahead. Mr Rajoy can expect at least the abstention of Ciudadanos, and perhaps of the Socialists, to let him form a minority government. Nobody wants a third election. There will be a government by early August, Mr Rajoy said. But it may not be strong enough to push through the reforms—of regional government and the judiciary, for example—that Spain needs. + +Yet Mr Rajoy has reason to be cheerful. “Spain has moved to the right,” says Pablo Simón, a political scientist at Carlos III University in Madrid. One reason, he says, is that whereas in December voters were preoccupied by the PP’s corruption scandals, this time the run-up to the vote was dominated by the failure of the left to reach an agreement to govern. + +The turbulence prompted by Britain’s decision to leave the European Union seems to have influenced the vote. Spain’s stockmarket fell by 12.4% on June 24th. Some who had been prepared to back Podemos seem to have stayed at home, while others switched to the Socialists. Nationalist adventurism in Britain thus deterred left-wing adventurism in Spain. As a result, the country’s traditional political class has been given a new lease on life. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21701516-another-centre-right-government-weaker-one-revolution-cancelled/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Ireland post-Brexit + +Put asunder + +Britain’s departure from the EU risks two decades of progress + +Jul 2nd 2016 | DUBLIN | From the print edition + +All along the watch-tower + +THE road-blocks and army watch-towers that once dotted the 499-kilometre (310-mile) border dividing Northern Ireland from the Irish Republic were among the most hated symbols of its long-running civil conflict. But since the Good Friday peace agreement of 1998, crossing that border has come to mean nothing more than changing currency and remembering that road signs switch between miles and kilometres. The two societies have intertwined, making the question of whether Ireland should eventually be reunited seem less important, and helping to forestall any return to violence. + +All that has been put at risk by Britain’s vote to leave the European Union, and Ireland is worried. The border may return, even more forbidding than before. Post-Brexit, it will be the only land crossing between the United Kingdom and the EU. If migration to Britain is to be controlled, as the Leave campaign promised, not just security and customs checkpoints will be needed, but passport and visa controls. + +The Leave vote, said Enda Kenny, Ireland’s taoiseach (prime minister), was a “political earthquake”. His government had supported the Remain campaign. It is, for now, not reproaching Britain or issuing dire predictions of what an exit may entail, but instead trying quietly to find a way to keep the border open afterwards. It hopes that once negotiations begin in earnest, the contradictions between free trade and restrictions on migration, both promised by the Leave campaign but together unacceptable to the EU, will be resolved in favour of free movement. Mr Kenny regards the pressure from some European governments on Britain to move quickly as a mistake: he wants time to mediate. + +A version of Brexit that ends free trade would hit the Republic’s economy hard, too. That was signalled by market turmoil in Dublin: the Iseq index of Irish shares fell almost a fifth in the first two trading days after the vote. Though 34% of its exports of goods and services go to the euro zone, 16% go to Britain, the most for any single country. A study by the Economic and Social Research Institute in Dublin suggested that firms moving from Britain to Ireland in order to stay in an English-speaking EU member would be unlikely to make up for other jobs lost. And within the EU—where it is determined to stay—Ireland cannot strike a separate free-trade deal with Britain. + +The days since the Leave vote have seen a flood of Britons apply for Irish passports. Birth anywhere on the island of Ireland grants eligibility, as does an Irish parent or grandparent. By some estimates a tenth of Britons are entitled to one. As Britain and Ireland, north and south, grew closer within the EU, few bothered to apply. That so many are now scrambling to do so is an ominous sign of divisions to come. + + + + + +The European Union has agreed on two important questions regarding Brexit + +But many in Brussels still hope that Article 50 will be delayed indefinitely + + + +For America, a frustrating lack of clarity from Britain + + + +The Canadian model for trade deals + + + +Brexit: taking stock + + + +Another country, not my own + + + + + +More Brexit coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21701449-britains-departure-eu-risks-two-decades-progress-put-asunder/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Repression in Russia + +Prelude to a purge + +The Putin regime finds new enemies at home + +Jul 2nd 2016 | MOSCOW | From the print edition + + + +IT LOOKED like a scene from a crime drama. First, the pictures of a burly Russian governor caught at a sushi restaurant in a swanky Moscow hotel, with wads of specially marked euros leaving fluorescent stains on his hands. Next, footage of the same governor in handcuffs, being escorted into the investigator’s office by balaclava-clad, Kalashnikov-wielding agents of the FSB, Russia’s secret police. The arrest on June 24th of Nikita Belykh, the liberal-minded governor of the Kirovsk region, was headline news on Russian state television. It even preceded the report on Vladimir Putin’s triumphal visit to China. + +Mr Belykh is accused of receiving a €400,000 ($445,000) bribe and faces up to 15 years in jail. He has launched a hunger strike to protest against the charges. In the best Soviet tradition, the state media have reported his guilt long before any trial. Mr Belykh claims he was set up. He is the third governor in 15 months to be arrested on corruption charges; there have been similar arrests in Komi and Sakhalin. “This is the Kremlin’s new way of exercising control over regional elites,” says Kirill Rogov, a Russian political analyst. + +After street demonstrations in 2011-2012, the government was forced to restore regional elections that had been abolished in 2004. Meanwhile United Russia, the regime’s dominant political party, proved too weak to provide the Kremlin with effective control over the regions. The security services have evolved as the main tool of governing the country, Mr Rogov argues. + +Some regional bosses remain untouchable, including the all-powerful president of Tatarstan, a predominantly Muslim republic. Mr Belykh, a former businessman, was an easy target: he had neither powerful patrons in the Kremlin nor strong backing from local businessmen. He was not a member of United Russia, and had once led the Union of Right Forces, a liberal party dismantled by the Kremlin. Yet his arrest did not stem from political dissent; he was not an outspoken critic of the government. Rather, it was a sign of the realignment of Russia’s power centres. + +The Kremlin’s growing reliance on the security services represents a shift both from late Soviet practice and from the early years of Mr Putin’s reign. Under Soviet rule, the regions were mainly controlled through Communist Party structures. After the death of Stalin, who subjected the party to mass purges by the secret police, the Soviet leadership took special care to restrict the powers of the KGB. Mr Putin has made the security services far more powerful than any political party. For the regional elites, the FSB’s new brazenness signals that the rules are changing. The governors now “understand that they’re not really in charge in their own regions”, says Mikhail Vinogradov of the St Petersburg Politics Foundation, a think-tank. + +Russia is due to hold parliamentary elections in September. While not truly democratic, they remain a marker of legitimacy for the regime, and local officials will be expected to deliver the desired results. In the early 2000s the Kremlin mainly used soft power—especially money—to buy elites’ loyalty. Now, with the economy in recession and oil revenues in decline, regional authorities are getting “sticks instead of carrots”, says Nikolai Petrov, an expert on regional politics. + +The FSB is also Mr Putin’s answer to growing accusations of corruption within the Kremlin and its entourage. This week, the Spanish Civil Guard arrested half a dozen Russian citizens with alleged ties to high-ranking Russian officials and Colombian drugs cartels, according to El Mundo, a Spanish newspaper. Exposing corrupt officials at the federal level, as the Kremlin had attempted to do in 2012, makes ordinary Russians think the whole system is dirty. Going after regional governors, by contrast, makes it look like only local politicians are crooked and the Kremlin is doing its best to clean things up. This is a handy distraction at a time when Russian living standards are plummeting. + +Last week the Duma, Russia’s parliament, passed sweeping “anti-terror” bills which expanded the FSB’s powers yet further. The new laws criminalise failure to report a crime, and introduce “prophylactic lists” that let officials “put people on special watch lists arbitrarily”, says Tanya Lokshina of Human Rights Watch, a watchdog. The Kremlin need not engage in mass repression: targeted arrests are enough to spread fear. A human-rights activist was charged this week with failing to comply with a law on “foreign agents”. Last week the FSB pressed a library in St Petersburg to stop hosting a popular lecture series. Nikolai Solodnikov, one of the organisers, said the FSB saw it as “extremist activity aimed at undermining social stability”. + +Report thy neighbour + +At United Russia’s party congress a few days later, Mr Putin warned of the threats facing the nation ahead of the elections: “Direct betrayal of the country’s interests...born out of nothing more than a desire to destabilise the situation, divide society and claw a way to power”. + +Mr Putin has long portrayed dissidents as traitors. He may now be gearing up for a purge. His popularity ratings and dominance of Russian politics has always depended on keeping the public occupied with televised news dramas, pitting his regime against a succession of enemies. Previous such dramas have including the war in Ukraine and the bombing of Syria. Pursuing internal enemies and purging the ranks of local governors and officials may be the Kremlin’s way of giving audiences a fresh storyline. In a video of Mr Belykh’s arrest which the prosecutor’s office released (before hurriedly taking it down), a voice behind camera can be heard saying: “We’ve already written the script.” Mr Belykh replies: “You wrote it badly.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21701512-putin-regime-finds-new-enemies-home-prelude-purge/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +And shut the door behind you + +Everyone feels the pain of Britons in Brussels. But the sympathy won’t last + +Jul 2nd 2016 | From the print edition + + + +IN THE prelapsarian days before Britain kicked itself out of the European Union, a charming campaign called “Hug-a-Brit” was waged in Brussels. Designed to convince wavering British voters that they were wanted in Europe, it was only after the referendum that the idea took hold. Since that difficult day Brits in Brussels have been love-bombed by their European counterparts. Colleagues from countries with long histories of bloody tyranny have showered sympathy upon British friends for their country’s self-inflicted wound. Thoughtful Romanians stand ready to adopt British “Remainians”. Greeks, who endured their own referendum-related traumas one year ago, have been especially understanding. Rarely has your columnist felt so appreciated. + +Yet if Britain’s citizens are now the subject of pity abroad, its government has become a target for contempt. There is a hint of steel to comments from some officials, particularly French or Italians. We feel your pain, they say, but if you’re leaving do not linger. Such sentiments have slipped into the speeches of hawkish EU officials. When Jean-Claude Juncker, president of the European Commission, slams David Cameron, Britain’s departing prime minister, for reaping the fruits of years of Euroscepticism, his words find a ready audience across Europe. + +Perhaps, then, it is no surprise that it has not taken long for Brussels to be bleached of British influence. A day after the referendum result Jonathan Hill, Britain’s commissioner, resigned. Mr Cameron says he will appoint a replacement, but Mr Hill’s financial-services portfolio has already been reshuffled; his successor can perhaps look forward to a temporary job managing paperclip distribution. MEPs warn that English may no longer be the lingua franca of European business. The thousands of Britons who work for EU institutions fear for their futures; even if they are allowed to stay on beyond Brexit, they can wave goodbye to promotions. + +Eurosceptics will shrug all this off. Britain is a bit-player in Brussels, they say. Its ministers are always on the wrong side of votes, the euro zone can gang up on everyone else and the EU is turning into a federal superstate with a power-crazed Germany bossing everyone else around. And as for those British Eurocrats, it’s about time they got proper jobs. + +In recent years Britain’s influence in Brussels has indeed diminished. This is partly the work of the euro and refugee crises, neither of which touched Britain directly but which consumed vast amounts of everyone else’s political energy. It is also the result of bad decisions by Mr Cameron, including an ill-chosen battle over Mr Juncker’s appointment, and a general diplomatic disengagement. The steady dwindling of Britons in the upper ranks of the commission, the institutional heart of the EU, has reduced British reach; Brexit will accelerate the decline. + +But draw the camera back and a different picture emerges. The EU may have been formed to bind France and Germany together but in its later decades it has been shaped at least as much by British values, ideas and vigour. Its ambitious expansion eastward, the steady construction of an integrated single market, the focus on international trade—all EU projects that improved the lives of millions and were made in Britain. And yet during the referendum the Remain camp never fully advanced this case, perhaps because it was felt that Brussels-boosting was not a vote-winner. + +At their Brussels summit this week the EU’s leaders quickly arrived at a common line: Brexit must be Britain’s problem, not Europe’s. It is the British economy that will suffer, its currency that will slide, its politics that have already been turned upside-down. (The grisly sight might also help deter Eurosceptics elsewhere.) Some Europeans are even starting to dream again: Matteo Renzi, Italy’s prime minister, told his parliament this week that Brexit offers the beleaguered EU a chance to reset itself. Without the Brits blocking the tracks, the European train can puff back into gear. + +Perhaps. But there is another side to the story. A Europe with the Britain sucked out of it will take a distinctly dirigiste turn, warns Toomas Hendrik Ilves, Estonia’s president. Its ambitions on trade, the digital single market and energy—precisely the sorts of programmes the low-growth EU ought to be focusing on—will shrink without their largest champion, and the band of smaller liberal northern countries who have traditionally looked to Britain for a political steer will find themselves exposed to the protectionist instincts of the southerners. Add to that the time, resources and energy that will be poured into the extraordinarily complex task of disentangling the two partners of this 43-year-old relationship, and it becomes clear that Brexit is good for no one. + +Brexit on ice + +It may be for this reason that Project Denial is in full swing throughout Europe. When the moment comes, say some, no British prime minister will pull the trigger pointing towards his or her head. Others wonder if a lifeline might be thrown to Britain in a year or two; perhaps a concession on migration could be sold to voters in a second referendum. Meanwhile Brexiteers such as Boris Johnson, a possible successor to Mr Cameron, persist in the illusion that they can secure an exit deal for Britain that contains everything they want, including access to the single market, and nothing they dislike, such as free movement for EU workers. + +Europe’s other leaders laugh at that idea. Perhaps they suffer from ideological rigidity; perhaps they are defending core European values. Either way, it illustrates the gulf of mutual incomprehension that has finally doomed this gainful but troubled relationship. Alas, there will be lots more misunderstanding in the years ahead, as Britain attempts to extract the maximum advantages from its withdrawal and the remaining countries close ranks. The best hope for both sides is that they can reach an arrangement that resembles but falls well short of what they have left behind. That will be a sad requiem for a partnership that once promised, and delivered, so much. So don’t forget to hug a Brit. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21701513-everyone-feels-pain-britons-brussels-sympathy-wont-last-and-shut-door/print + + + + + +Previous Articles Sections Next + + + +Britain + + + + + +Post-Brexit politics: Shifting sands + +The United Kingdom: Fragmentation nation + +Brexit, business and the economy: Sifting through the wreckage + +Cornwall and Europe: I owe EU + +Bagehot: Brexitland versus Londonia + + + + + +Articles Sections Next + +Post-Brexit politics + +Shifting sands + +Britain’s political parties plunge into crises of leadership—and philosophy + +Jul 2nd 2016 | From the print edition + + + +“THE will of the British people is an instruction that must be delivered.” With these words David Cameron, flanked by his wife Samantha, announced his resignation on the morning of June 24th. There followed a vacuum. For a couple of days, neither the prime minister nor any of his colleagues had anything to say. George Osborne, the chancellor of the exchequer, was silent. Chaos reigned. The pound tumbled. Firms reviewed their positions. + +The situation has since stabilised. But Britain is nonetheless living through a period of turmoil. Both main parties are now picking new leaders. In the Conservative fold, Mr Cameron is a lame duck; his replacement will be appointed by September 7th. In the Labour camp Jeremy Corbyn has been rejected by three-quarters of his MPs and is clinging on. Britain’s party structures are straining, and may not last. + +Boris Johnson, a Conservative former mayor of London, was the first out of the traps after the referendum. He had backed Brexit, probably opportunistically: Tory party members are Eurosceptic and will choose the next leader of the party from two candidates shortlisted by MPs. + +Yet many Tories doubted Mr Johnson was up to the job. His spell in City Hall was marked by a lack of attention to detail, poor management and a tendency to say what a given audience wanted to hear. In recent years he has swung wildly between Europhilia and Euroscepticism. + +For that reason Michael Gove, the Brexiteer justice secretary, announced on June 30th that he would stand, citing doubts about the former mayor’s abilities. Many had expected Mr Gove to back Mr Johnson. Instead, his decision to enter the race caused Mr Johnson himself to announce hours later that he would not run. That will surely benefit Theresa May. The home secretary is competent and serious, if dull. A poll by YouGov on June 29th put her fractionally ahead of Mr Johnson among the electorate. She backed Remain, but stayed quiet about it during the campaign and melds a certain social liberalism (she backed gay marriage before most of her colleagues) with an authoritarian streak (she clamped down on immigration, making it harder for foreign students at British universities to stay in the country after graduating). + +Then there is Stephen Crabb, the welfare secretary. He is backed by Sajid Javid, the free-market business secretary. Both have impeccable personal stories: they grew up in tough circumstances and are self-made men. Yet Mr Crabb is unlikely to make the final two. + + + +Meanwhile Labour is tearing itself apart. On June 28th Mr Corbyn lost a vote of no confidence among Labour MPs by 172 to 40. He is facing a leadership challenge, probably led by Angela Eagle, the former shadow business secretary, who has resigned, along with two-thirds of her shadow cabinet colleagues, in protest at their leader’s incompetent leadership and tepid role in the anti-Brexit campaign. + +Whether Mr Corbyn survives depends on whether he makes the ballot. Without nominations from his MPs, his best hope is that the party’s lawyers will rule that he has an automatic place on it (the rules are vague). If he clears this hurdle he may win. That would surely produce a formal split, with moderate MPs declaring independence and electing their own leader. + +In other words, Britain’s political spectrum is in flux. The left-right system is giving way to something different. For that reason the Liberal Democrats (who have laid claim to the pro-EU mantle) and the UK Independence Party (now poised to soak up popular resentment at the compromises Britain’s negotiators must reach) are upbeat. The former claims its membership has risen by 10,000 since the referendum. + +Eventually the two main parties will sort themselves out. Labour may split into a pro-market, pro-EU social democratic party and a hard-left, Eurosceptic one. The Tories may end up focusing on Leave voters, and on putting UKIP out of business. Or they may seek to play up their pro-EU credentials and pitch for the centre ground. That depends on the Brexit negotiation process, and how complete a separation is agreed. In any case, the identity crises of its parties, and the uncertainty of its future role in Europe, will intermingle and influence British politics for years to come. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21701544-britains-political-parties-plunge-crises-leadershipand-philosophy-shifting-sands/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The United Kingdom + +Fragmentation nation + +The vote to leave the EU spells trouble for Scotland and Northern Ireland + +Jul 2nd 2016 | BELFAST AND EDINBURGH | From the print edition + + + +FEW of the English people who voted to leave the European Union on June 23rd considered that in doing so they might trigger the break-up of another union: their own. Supporters of the EU in Scotland and Northern Ireland—both of which returned healthy majorities for Remain—are unhappy at being dragged out of Europe by the English. Some now believe the best remedy would be to leave the United Kingdom. + +Scotland’s Nationalist government argues that Brexit provides grounds for a second independence referendum. One reason why 55% voted “no” to independence in the last one, in 2014, was the claim that remaining in Britain was the only way Scotland could stay in the EU. In fact, remaining within the UK has turned out to be a ticket out of Europe. Polls over the past week suggest that some 54-59% of Scots now support independence. + +Yet Nicola Sturgeon, the leader of the Scottish National Party and Scotland’s first minister, is in no rush. Her aim, she told the Scottish Parliament on June 28th, is to “protect Scotland’s relationship with, and place in, the EU” and to secure “continued access to the single market”. She knows that, as happened with Quebec’s push for independence from Canada, losing a second referendum would be fatal to her cause. The slump in the oil price means the financial arguments for independence are weaker than in 2014. Severe austerity would be needed to reduce a deficit of 9.7% of GDP. And an independent Scotland might not inherit Britain’s EU opt-outs and would thus have to join the euro. + +So Ms Sturgeon has a two-track strategy: try to get Scotland a deal with the EU to secure the free movement of goods and people, and at the same time prepare for another independence referendum which, she says, is now “highly likely”. She is doing this with her customary political skill, in stark contrast to the floundering of party leaders in Westminster. She has reached out to Fabian Picardo, the chief minister of Gibraltar, a British dependency on Spain’s southern tip, where 96% voted to Remain, and Sadiq Khan, the mayor of London, another pro-EU stronghold. Yet Spain and France have made clear that they oppose the EU negotiating with Scotland. “If the UK leaves, Scotland leaves,” said Mariano Rajoy, the prime minister of Spain, who has no desire to embolden Catalan separatists at home. + +Much will depend on the kind of deal that Britain does with the EU. Under a Norwegian-style arrangement, allowing the free movement of people, an independent Scotland could be a full member of the EU without needing to set up a hard border with England—something few Scots would want, since Scotland exports four times as much to England as it does to the EU. At the same time, however, such a deal might dampen calls for independence, since a Norwegian deal would not harm Britain’s economy as badly as would total isolation from Europe. + +Twelve miles across the Irish Sea, Brexit is causing other problems. In Northern Ireland, 56% voted to remain in the EU. Most of the support came from Nationalists, largely because EU membership strengthens the north’s links with Ireland. + +Following the result Sinn Fein, the main nationalist party, immediately called for a referendum on Northern Ireland’s reunification with the south, a move that was ruled out by London and Dublin. Yet Brexit presents many other problems. If Britain exits the EU and ends the free movement of people, the hard border between north and south could come back. The psychological and practical impact of reinstituting checkpoints would be great on both sides. And the region would lose not just cross-border trade and EU farm payments but billions of pounds of other EU grants that have helped build a foundation for peace. + +The Good Friday Agreement, the 1998 deal in which Northern Ireland’s peace process was underpinned by the EU, was predicated on free movement between north and south, part of a compromise that persuaded those on both sides to put down their weapons. The moment that Britain leaves the EU it will be in breach of that agreement, which sets out how the governments in Westminster and Dublin are to co-operate in matters pertaining to Northern Ireland. It is “inconceivable” that Sinn Fein, the main nationalist party, would not make representations to the UN, says Jonathan Tonge of the University of Liverpool. + +The power-sharing Northern Ireland Assembly, which is still in reasonable shape despite years of crises, must now be protected. It will face many challenges in any post-Brexit world because of the possibility of new Anglo-Irish tensions, border-security issues and threats to the economy. Northern Ireland is facing its most delicate political moment in years. It will require the full attention of the new British prime minister—whose attention, of course, will be entirely elsewhere. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21701541-vote-leave-eu-spells-trouble-scotland-and-northern-ireland-fragmentation-nation/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit, business and the economy + +Sifting through the wreckage + +As firms mull a move to the continent, policymakers’ options are limited + +Jul 2nd 2016 | From the print edition + +ONE of the first results to be declared on referendum night was that of Sunderland, in north-eastern England. Remarkably, 61% voted to leave the EU, despite the fact that 7,000 local jobs depend on the city’s Nissan car plant, which exports just over half its cars to Europe. Nissan had warned about the risks to carmaking in Britain if the country were to leave the EU, but few listened. It summed up a disastrous night for business and the economy. + +Cars are not the only industry at risk. Banks are talking about moving jobs abroad (see article). Airlines are charting new courses: Ryanair will divert $1 billion of investment in new aeroplanes from Britain towards the rest of the EU, and Wizz, a Hungarian rival, says it will make no more investments in Britain after the winter. + +Pharmaceutical firms are nervous. Brexit would restrict access to European research funds worth $1 billion. Stéphane Boissel, the boss of TxCell, a French biotech company, says he will no longer team up with British researchers, for fear of losing EU funding. The drug industry will suffer from stricter immigration policies. In Cambridge, one-third of researchers are foreign nationals. Much regulatory work in pharma is undertaken by the European Medicines Agency, an EU body based in London—though perhaps not for long. + +An index of big housebuilders has fallen by one-tenth in the past week. Their shares were due a correction: the house-price-to-earnings ratio is over seven to one, well above the long-term average. But they may struggle to find housebuyers as consumer confidence dwindles. The collapse in their shares is consistent with a 5% fall in house prices next year, based on historical data, according to Samuel Tombs of Pantheon Macroeconomics, a consultancy. + +Everywhere companies are drawing in their horns. The Institute of Directors says one-quarter of its members plan to halt recruitment, and 5% plan redundancies. Adzuna, a jobs website, had one-quarter fewer new listings the Monday after Brexit than it had the previous week. + +As businesses pull back, Britain is heading for a Brexit-induced recession in the second half of this year. Standard and Poor’s, which downgraded Britain’s credit rating on June 27th, forecasts a “significant slowdown” in 2016-19. The difference between yields on short- and long-term government bonds has narrowed, suggesting that investors think that the economy will slow and that the Bank of England will cut short-term interest rates. + +This may seem surprising: following the sharp depreciation of the pound—down by one-tenth over the week—imports will get more expensive, and inflation may breach the bank’s 2% target. That would argue for higher rates, which might also help sterling recover. But a one-off depreciation in sterling would generate only a short-term jump in inflation, points out George Buckley of Deutsche Bank. The Bank of England’s rate-setters have ignored this sort of inflation before. + +There is little room for manoeuvre. The base rate is 0.5%, the lowest on record. In the past the bank has been sceptical of pushing rates into negative territory, fearing financial instability: negative rates pose a threat to building societies, which are almost entirely funded by deposits and whose assets are mainly mortgage lending. So the bank may once again deploy quantitative easing (or QE, meaning printing money to buy bonds). Analysts at Barclays Bank foresee a round of QE worth £100 billion-150 billion ($134 billion-202 billion), on top of the £375 billion of QE that the bank has conducted in the past. The bank could also expand the “funding for lending” scheme, which offers cheap money to banks if they boost credit to the “real economy”—that is, firms actually making things, as opposed to fancy finance. + +Brexit will whack the public finances, forcing the government to raise taxes and cut spending, sucking further demand from the economy. Its self-imposed “fiscal charter” obliges it to balance the books by 2020. If growth falls below 1%, as is likely, then the chancellor is allowed to loosen the purse strings. But Britain’s deficit is already 4% of GDP; widening it may unnerve skittish financial markets. What would help the economy more than anything is clarity. That may be a long time coming. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21701547-firms-mull-move-continent-policymakers-options-are-limited-sifting-through/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cornwall and Europe + +I owe EU + +Why did the region that benefits most from EU membership vote against it? + +Jul 2nd 2016 | REDRUTH AND TRURO | From the print edition + +Cornish patsies + +REDRUTH, a hardscrabble town of 14,000, was once at the heart of Cornwall’s mining industry. It sat atop the most bountiful earth in the “old world”, a local museum boasts: to the east, the “Copper Kingdom” of Gwennap; to the west, the Central Mining District. The county was hit by the collapse of mining in the 1980s, and few areas suffered as much as Redruth. It is still among the poorest places in Europe. + +That has made it eligible for hefty support from the European Union. In 2007-13 the EU poured €654m (£534m or $890m) into Cornwall; another €600m or so is due by 2020. The county is the only part of England to qualify for “convergence funding”, which goes to places whose income per person is below 75% of the EU average. The money has helped to pay for roads, a university and high-speed internet. + +Yet on June 23rd 57% of voters in Cornwall opted to leave the EU. Local business owners are “shell-shocked”, says Kim Conchie, head of the Cornwall Chamber of Commerce. Many feel let down by their MPs, almost all of whom supported Brexit. Some businesses have stopped recruiting amid the uncertainty. The council has begged for funding to continue (to some scorn from parts of the country that voted to Remain). As a holiday spot for rich urbanites, Cornwall may look affluent. But “there are areas of great deprivation”, says John Pollard, the council’s leader. + +Steve Double, a local Conservative MP and Brexiteer, remains sanguine. He notes that leading Leave campaigners pledged that post-Brexit there would be enough money around to match EU support, at least until 2020. Others point out that the same funds have been promised elsewhere. Most reckon that European money comes with fewer strings attached, takes a longer-term view and is less reliant on political patronage than Westminster cash. “We’ve bitten the hand that feeds us,” despairs one business owner. + +Yet when asked if they are worried by the consequences of Brexit, Cornish voters demur. The economic situation isn’t a big concern, says one pensioner, since “in two years’ time it will all be ironed out anyway.” Some reckon the area will benefit from the removal of EU fishing quotas and from no longer having to fund high-living Eurocrats. They are unconcerned by warnings from on high: “Everyone is fed up with scaremongering from the government,” complains Harvey Weeks from behind the counter of a greengrocer’s. Those who are worried tend to be those who voted to Remain. Waking up on Friday, “I just thought, ‘My God, you stupid bastards, you’ve gone and done it!’,” says one shopkeeper. + +As elsewhere, much of the debate was about immigration. Cornwall has few migrants, admits Mr Double, but people have been warned by those who moved in from other parts of the country, he claims. Demography partly explains Cornwall’s enthusiasm for leaving: its population is old (24% are over 65, against 18% nationwide) and fewer than average have a university education. Some reckon a sense of Cornish separateness also played a role. “The Cornish are quite anarchic,” says Mr Conchie. They “took the opportunity to give the elites a damn good kicking”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21701548-why-did-region-benefits-most-eu-membership-vote-against-it-i-owe-eu/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Brexitland versus Londonia + +Britain increasingly looks like two countries, divided over globalisation + +Jul 2nd 2016 | From the print edition + + + +NOWHERE in Britain voted for Brexit as keenly as Boston. On June 23rd 77% of the Lincolnshire town’s eligible voters participated in the referendum, fully 76% of them voting to quit the EU. Why? One explanation is obvious. On the train from Grantham, rattling through the big-skied cabbage fields towards Boston, four young men swigging from beer cans joked about its reputation: “You are now entering Boston, one of the worse places in the country for immigration,” said one in a silly voice, adding: “That’s what you would say if you were a tour guide, wouldn’t you?” The town has a higher proportion of EU incomers among its population than any other in Britain (13%), mostly Poles and Lithuanians who work on the surrounding vegetable farms. + +In the marketplace, or “mart” in local slang, no one would talk Brexit without mentioning immigration. “I have a family that comes here, they don’t speak a word of English,” one stallholder told Bagehot. “Rents are going up, schools, hospitals,” riffed Ann, a pub landlady. Several drinkers in The Eagle talked of petty crime and reckless driving: bangers with Polish plates bombing along the Fen roads, their drivers clipping the boggy curbs and flipping into drainage ditches. + +Seen from this perspective, the vote for Brexit looks like—and to some extent is—a cry of fury by those who have borne the burden of European integration without benefiting proportionally from its advantages. In the words of Sue Ransome, a councillor for the UK Independence Party, people have “had enough with the huge numbers” as there has been “no money for infrastructure as a result of mass migration”. Two old codgers chatting on the edge of the mart reckoned everything would change: “We’ll get £1 billion back just from the European Parliament alone.” + +Yet even here, in what newspapers hyperbolically call the most divided town in Britain, Euroscepticism is about more than the transactional costs of immigration. It goes beyond rents and hospital beds. It is unmistakably cultural; ineffably emotional. That side of the story has two parts that define those places that voted for Brexit, whatever their level of immigration. + +The first is a sense of decline. “What a shithole!” hooted one of the lads on the train as it pulled into Boston. That was unfair. The town’s centre is beautiful, faintly Dutch (for centuries these parts had closer links to the Netherlands than the rest of England); the medieval spire of St Botolph’s church (“the Stump”) soaring above Boston’s roofs like something from a Van Eyck painting. But the place has seen better days. At £21,500 ($29,000), the median annual wage is about 80% of the national average. Seven out of ten people are educated only to age 16. The docks are sleepy. Musty memories of better times perfume the town like the whiff of the brassicas. + +The second is a feeling that the world is increasingly unknowable and uncontrollable. In Boston, it is true, this is partly to do with the sudden materialisation of new languages on the streets, of new shops and cafés with names like “Polski Sklep” and “U Ani”. Locals recall the apocalyptic noise when, in 2011, an illegal vodka factory on an industrial estate blew up and killed five. But it also has to do with the wider world: fears of terrorism, the erosion of national identity, the erasure of borders, politicians in the grip of shadowy international forces (not for the first time in recent weeks, your columnist was informed that Goldman Sachs pulls the strings). The Leave campaign won because it harnessed these fears: “It’s time we took back control,” said Harold, a Brexit-voting pensioner, echoing its endlessly parroted slogan: “Vote Leave. Take Control.” + +This potent cocktail—a sense of nostalgia and a thirst for the stable and knowable—defines the 52% of Britons who voted to leave the EU. According to polling by Lord Ashcroft, a Conservative peer, opposition to multiculturalism, social liberalism, feminism, the green movement, the internet and capitalism all translated into votes for Brexit. Leavers distrust experts and politicians. Their main motivation was “the principle that decisions about the UK should be taken in the UK”. They are older, poorer and less educated than average; they live in rural areas and provincial towns like Boston, Rotherham and Clacton. Call it “Brexitland”. + +Just as those who have lost out from globalisation, or at least believe they have, are newly motivated by cultural politics, so too are those in the Remain camp, 4m of whom have signed a petition calling for a new referendum. The 48% who opposed Brexit tend to be young, well qualified, socially liberal and relatively confident in the global order. They are concentrated in London and other cities that share the capital’s thrusting dynamism, like Bristol, Manchester and Cambridge. Call these “Londonia”. + +Londonia calling + +Britain, then, is now two nations. And the gap between them is not just more salient; it is expanding. Using data from the British Election Study, Will Jennings and Gerry Stoker of the University of Southampton have shown that the rift between “cosmopolitan” and “backwater” places has grown since 1997: on everything from immigration and equal opportunities to national identity and trust in politics, Clacton and Cambridge are drifting apart. + +Bagehot suspects this cultural divide will now define British politics. After 150 years, the left-right axis no longer provides a natural structure for debate and conflict. Margaret Thatcher, with her credo of mass ownership, dug its grave. Tony Blair, abandoning the Labour Party’s commitment to common ownership, read its last rites. June 23rd may go down in the history books as the moment the doctors switched off the ventilator. The debates unleashed by that vote—What sort of EU deal should Britain seek? What status should immigrants have? Is Britishness still an inclusive identity?—will dominate the country’s politics for years, maybe decades. Where once the essential battle was capital versus labour, now it is open versus closed. Get used to it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21701540-britain-increasingly-looks-two-countries-divided-over-globalisation-brexitland-versus/print + + + + + +Previous Articles Sections Next + + + +International + + + + + +Urban sprawl: Bourgeois shanty towns + + + + + +Articles Sections Next + +Urban sprawl + +Bourgeois shanty towns + +The great cities of Africa and Asia are spreading fast, and in bizarre ways + +Jul 2nd 2016 | DAR ES SALAAM AND HANGZHOU | From the print edition + + + +INSIDE, Essa Mwaitulo’s house on the edge of Dar es Salaam is the picture of middle-class African domesticity. The sofas are luxurious; the curtains are golden; the walls are shocking pink; the floor, on which Ms Mwaitulo’s daughter has crashed out, is polished stone. “We are free, actually,” she says contentedly, sounding like anyone who has ever moved from a rented city-centre flat to a suburban house of her own. “I can do whatever I want.” + +Step outside, though, and the impression of harmony and control dissolves. The scene around Ms Mwaitulo’s house in Mikwambe is chaotic. Houses are rising higgledy-piggledy. Many are half-finished and look abandoned, although they are not: one has no floor and a tree growing inside. What appears to be a small village square turns out to be a plot on which the owner has not yet got around to building. The neighbourhood has only one paved road, no central water supply and no sewer. It is a kind of bourgeois shanty town. + +A huge and growing number of people live somewhere like Mikwambe. Between 2005 and 2015 the world’s cities swelled by about 750m people, according to the UN. More than four-fifths of that growth was in Africa and Asia; specifically, on the fringes of African and Asian cities. With few exceptions, cities are growing faster in size than in population. Lagos, the capital of Nigeria, is typical: it doubled in population between 1990 and 2010 but tripled in area. In short, almost all urban growth is sprawl. + +In some ways African and Asian cities are following American and European ones. London, Paris and New York all sprawled in the 19th and early 20th centuries while their inner-city slums hollowed out, as though giant hammers were beating the cities from above. The population of Paris increased almost 20-fold between 1800 and 2000 as the metropolis expanded more than 200 times. Commentators wrung their hands: London was likened to an invading army and a giant octopus. + +Not like Levittown + +Next to today’s fast-growing cities, though, it was a rather tame octopus. London took two millennia to grow from fewer than 50,000 people to almost 10m; Shenzhen in China managed that within three decades. And most African and Asian cities are growing more chaotically. Although no two are quite the same, their suburbs tend to be unplanned, with scant space for roads, let alone public parks. Many new suburbanites have a weak claim on the land they build upon. To planners the sprawl seems haphazard, and it has bad consequences, especially in Africa. But it has a logic of its own, and in any case cannot be wished away. Like it or not, this is how the great cities of the 21st century are taking shape. + +Dar es Salaam is a case in point. The British governors who ran Tanzania (then called Tanganyika) until the 1960s envisaged it as a small, orderly city. With 5m people, population growth of more than 5% a year and some of the world’s worst traffic jams, it is now neither of those things. And the colonial rulers made another assumption, with great consequences for the modern metropolis, says Wolfgang Scholz of the Technical University in Dortmund. The city was to be planned, with Western-style owner-occupied homes on large plots, at least in the European areas. The countryside beyond was to be unplanned and African, with property owned collectively. + +Dar es Salaam has swelled so much that almost all building is now in what is technically countryside. Land there can be bought and sold, but only informally; commercial developers will not touch it. The buyers, largely families moving out of the city centre, cannot encumber land that they do not truly own, so they cannot obtain mortgages. They build slowly, adding bricks when they can afford them. The urban fringe is littered with “almost houses” and shops selling building supplies. Ms Mwaitulo’s house, which was financed partly by personal loans, was built in four years—fast by local standards. + +If house-building is slow, installing roads and other infrastructure is much more so. When Ms Mwaitulo arrived, Mikwambe was always dark at night. Homes now have electricity but little else. She gets water from a private borehole and sells some to neighbours. Residents cut informal deals over public space. Aisha Hassan, a farmer who sold most of her land but still lives in Mikwambe, says she asked the homebuilders who bought from her to leave space for a road. The narrow track will be woefully inadequate when the neighbourhood fills up with car owners. + +It is a typical arrangement. Shlomo Angel of New York University has studied seven African cities in detail: Accra, Addis Ababa, Arusha, Ibadan, Johannesburg, Lagos and Luanda. He calculates that only 16% of the land in new residential areas developed since 1990 has been set aside for roads—about half as much as planners think ideal. And 44% of those roads are less than four metres wide. + +“First the people come, then the development comes,” explains one resident of Mikwambe, a teacher in a madrassa. To an extent this is true. As the suburbs of Dar es Salaam fill up, their residents will gain officials’ ears. But retrofitting chaotic districts with roads and sewers will be slow, hard and pricey: some homes must be knocked down and their owners compensated. Dar es Salaam’s new suburbanites are less secure, and less free, than they believe. + +Urbs in rure + +Almost 10,000 km away, in the Chinese province of Zhejiang, another city is spreading. Working the till at a petrol station not far from where she grew up, Chen Xiaomei remembers how, two decades ago, most of Xiaoshan was farmland inhabited by peasants who seldom travelled to the city of Hangzhou, about 20km away. Now Xiaoshan is a sprawling suburb which grew from 1.77m people in 2005 to 2.35m last year. It looks nothing like Mikwambe; nor does it remotely resemble a European or American suburb. + +Homes in Xiaoshan are a mixture of grubby apartment blocks and grandiose four- and five-storey homes decorated in joyous combinations of pastel colours. Locals call these “villas” and many feature European gabled fronts or Chinese pagoda roofs (or both). They are connected to the electricity grid, the sewer system and the road network. Roads account for fully 29% of land area in the newly developed suburbs of Hangzhou, according to Mr Angel. The western edge of Xiaoshan even has a subway line. + +For the past two decades Zhejiang’s economic performance has been among the best in China. Hangzhou’s GDP per person reached $17,000 last year—more than double the national average. Local people who abandoned farm work for city jobs have grown richer, as have migrants from elsewhere in China. Yuan Hong, one of many people who migrated to Xiaoshan from Anhui province, north-west of the city, came to open a small electronics factory in 2004. His pot belly and the gold chain around his neck testify to its success, as does his four-storey house with an exterior of baby-blue tile. + +Xiaoshan looks fairly orderly. Most roads follow a grid pattern, and buildings line the roads. Close to the urban core it has sprouted factories, car dealerships and the odd high-end apartment block. (“Money and cars,” says one shopkeeper. “That’s what we have here.”) On the fringes, though, Xiaoshan is taking on a deeply strange form. Behind the lines of tightly packed houses and apartment blocks are large fields divided into strips. A lattice of urbanity has been overlaid on an agricultural landscape. + + + +Xiaoshan is hardly a farming titan: vendors at a nearby market say their produce is trucked in from elsewhere. The fields remain because government policy makes it hard to convert farmland into housing. So residents build their homes as large as they can and rent rooms to city workers for extra income. Although it would have been roundly condemned as ideological heresy in the days of Chairman Mao, Mr Yuan chuckles at the suggestion that peasants have become landlords. “Yes,” he says, “I suppose you could put it that way.” + +Though prices have wobbled in the past few years, housing in Hangzhou is expensive. Residential floorspace sold for an average of about 16,000 yuan ($2,400) per square metre last year, roughly double the going rate in Hefei, a lower-tier provincial capital in Anhui. As a result, the pressure on land is enormous. Some people in Xiaoshan admit to having built on open land without permission, knowing that they face the risk of demolition without compensation if enforcement toughens. + +So Xiaoshan is not as different from the fringes of Dar es Salaam as it appears. In both, rural areas are turning urban far faster than planners expected, making land-use laws seem ridiculous. Yan Song, who follows Chinese city planning at the University of North Carolina, says that until recently many Chinese cities were spreading because of administrative and zoning changes pushed by the central government. These days much pressure comes from below, driven by the desires of mobile people. Urban sprawl is slipping out of the government’s control. + +The suburbs of Europe and North America, with their well-ordered streets and parks, increasingly seem like exceptions to the global rule. They emerged in strange circumstances: property rights were strong and rural estates were large enough to allow big housing developments. A few suburbs in the emerging world resemble them. Nuvali, south of Manila, is inspired by Irvine in California; Beijing even has a development called Orange County. But such clones tend to be for the rich, whereas the whole point of Western suburbs is that they provided middle-class people with the space and privacy once available only to the elite. + +Perhaps the biggest difference is that Western suburbs emerged fully formed. Willingboro Township, on the edge of Philadelphia—the classic American suburb that Herbert Gans wrote about in “The Levittowners”—still looks much as it did when it was built in the 1950s and 1960s. Mikwambe and Xiaoshan cannot but change drastically over the years. They are opening gambits in a long, unpredictable urban game. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21701483-great-cities-africa-and-asia-are-spreading-fast-and-bizarre-ways-bourgeois/print + + + + + +Articles Sections Next + + + +Business + + + + + +Europe v America: From clout to rout + +The diamond industry: In the rough + +Web browsers: Window dressing + +Terms of use: Ticking all the boxes + +Chinese consumers: From noodles to poodles + +Schumpeter: Squeezing the tube + + + + + +Articles Sections Next + +Europe v America + +From clout to rout + +Why European companies have become a fading force in global business + +Jul 2nd 2016 | From the print edition + + + +IT FEELS indelicate to raise it at a time like this, but European business has a bigger problem on its plate than Britain’s decision to leave the European Union. After a decade of stagnation the continent’s firms have suffered an alarming decline in their global clout. Europe’s slide down the corporate rankings has been brutal, even before the market rout in the wake of Brexit. Of the 50 most valuable firms in the world, only seven are European, compared with 17 in 2006. No fewer than 31 are American, and eight are Chinese (few other emerging-market firms are really big yet). It’s past time that Europe’s bosses, investors and governments paid attention. + +At the turn of the century it seemed natural that European firms would compete head to head with American ones, dividing the world between them, especially given that Japan’s once-aggressive multinationals were in retreat. In the following years Europe’s weight rose, relative to America’s, measured by the profits and value of listed firms. It peaked before the financial crisis (see chart 1). + + + +How things have changed. The seven European firms that do make the cut are often oddities: three are Swiss, suggesting there really is something special about mountain air and rösti; another, AB InBev, a beer firm, is run by Brazilians who happen to have picked Belgium for their main share listing. The continent’s traditional heavyweight champions have become middleweight journeymen. In Britain BP, HSBC, Vodafone and GSK have all slid to the middle of the global rankings of their respective industries. So too have France’s equivalents: Total, BNP Paribas, Orange and Sanofi-Aventis. + +A European firms occupies the top spot in only one out of 24 global sectors (Nestlé in food). European leaders are typically much smaller than their rivals across the Atlantic. Unilever’s market value is three-fifths of Procter & Gamble’s, Airbus is about half as big as Boeing and Siemens is a third of the size of General Electric. Deutsche Bank’s market value is a tenth of JPMorgan Chase’s. Walmart is ten times bigger than Tesco or Carrefour, two of Europe’s largest supermarket chains. + +Europe and America have economies of a similar size, but the aggregate market value of the top 500 European firms is half that of the top 500 American firms. Aggregate profits are 50-65% smaller, depending on the measure used. Of these firms, the median American company is worth $18 billion, with net income of $746m in the past year. The median European firm is worth $8 billion and earned only $440m. + +It wasn’t meant to turn out like this. In the 1980s corporate Europe was held back by a patchwork of national boundaries, the heavy hand of the state and cross-shareholdings with banks and insurance companies. Starting in the late 1980s new ideas emerged to reinvigorate European business. There was a trend towards privatising industries and making them answerable to investors. There was a push to create pan-European firms that would compete across the EU’s single market using, in most countries, a single currency. And there was a drive to take European firms global, exploiting the historical links of their home countries around the world. + +These ideas had an electrifying effect in the 1990s and early 2000s. There were intra-European deals aimed at bulking up that created GlaxoSmithKline, Sanofi-Aventis, TotalFinaElf and Air France-KLM. Other deals aimed for global reach. In Spain, Telefónica, Santander, Repsol and BBVA made huge investments in Latin America, aiming to build a second “home” market. Some went shopping in North America. BP bought Amoco, Vivendi bought Seagram and Unilever purchased Best Foods. Europe even put up a respectable fight against Silicon Valley. As late as 2000 the old continent was dominant in mobile technologies, many of which had been invented there. Nokia, Ericsson and Alcatel were among the most valuable firms in the world. + +Relegated from the big league + +What went wrong? Slow growth in Europe has not helped, and a strong dollar has made American firms’ domestic operations more valuable. But four other factors also explain the slide. First, Europe picked the wrong businesses. It focused on old industries such as commodities and steel, and on banking, where new rules have caused a depression in cross-border lending. Europe has gone backwards in technology—it hasn’t created any firms of the scale of Facebook or Google. From the early 2000s its tech-and-telecoms incumbents proved to be poor at reinventing themselves, even as American contemporaries, including Cisco and Microsoft, learned how to evolve. + +The second explanation is that Europe focused on the wrong parts of the world. The continent’s firms are skewed towards emerging markets, which generate 31% of their revenues, according to Morgan Stanley, a bank. For American firms the figure is 17%. As the developing world has slowed, it has hit corporate Europe disproportionately hard, from banks to cognac distillers and makers of luxury handbags. + +Third, Europe stopped doing deals even as the rest of the world continued to consolidate. The share of global deals by European acquirers fell from a third before the financial crisis to a fifth after it (see chart 2). Meanwhile, American firms have continued to bulk up at home, seeking to dominate their huge domestic market. + + + +Last, European managers’ less aggressive attitude towards shareholder value may account for the difference in market values between Europe and America. European firms generate a lower return on equity and return less cash to shareholders through dividends and buy-backs. That may explain why for every dollar of expected profits and of capital invested, European firms are awarded a lower valuation. + +One response to all of this is that raw size is not the same thing as global heft. Several of America’s most valuable firms, including AT&T and Berkshire Hathaway, are largely domestic. Many others are huge as a result of their businesses at home, but weaker abroad. P&G may be far bigger than Unilever, but its emerging-market business is smaller than that of its Anglo-Dutch rival. Germany’s medium-sized engineering firms dominate specialised product categories without having multi-billion-dollar market capitalisations. + +Yet corporate Europe’s waning scale is still a concern. Investment in research and development (R&D) tends to be disproportionately done by multinational firms. Of the world’s top 50 R&D spenders only 13 are European (down from 19 in 2006) while 26 are American. + +A lack of scale may also make firms vulnerable as takeover targets. GE’s purchase in 2014 of most of Alstom, a symbol of French engineering prowess, is a case in point. Of the firms in Britain’s FTSE 100 index, about a fifth have received bids in the past three years or are viewed as possible targets, among them AstraZeneca, a drugs firm, BP and IHG, a hotel group. Moreover, American companies have a strong incentive to buy overseas because of tax rules that encourage them to stash cash abroad. + +Free-traders may be relaxed about this but foreign ownership could become a political problem. Europe will attract more controversial Chinese deals. Pirelli, an Italian tyre company, was bought by ChemChina in 2015, which is now buying Syngenta, a Swiss seeds firms. A bid for Kuka, a German robot maker, by a Chinese firm has caused a political stink. Europe’s fights with Google, over the right to be forgotten, antitrust and tax, are a sign that the continent’s emerging status as an American technology colony will not be pain-free. + +An obvious response is a renewed push for consolidation within Europe. But such deals are often a nightmare because nationalist emotions boil over. The attempted takeover of BAE Systems, a British defence firm, by Airbus in 2012 collapsed after political arguments; the proposed takeover of the London Stock Exchange by Deutsche Börse could be cancelled after the Brexit vote. The union last year of Lafarge and Holcim, a French cement firm and a Swiss rival, has been mired in rows. + +The difficulty of pushing through recent transactions echoes the past. Many careers have been wrecked by pan-European deals. Of the 50 biggest such transactions attempted in the past 20 years, about a third have failed to materialise. The rest have often been bruising to implement. + +There are some signs of a new wave of European deals. Shell, now the continent’s most powerful energy company, bought BG, a rival, in 2015. A few tycoons are reinvigorating the 1990s idea of European empires. Vincent Bolloré, who controls Vivendi, a French conglomerate, is now investing in Italy and wants to create a European media giant to take on the empires of the Murdoch clan and Netflix. + +But if it wants to create giants, Europe may have to restrain more than its nationalist instincts—it may have to temper its tougher approach to antitrust, too. The secret of some big American firms is that they have created oligopolies at home. For example, America has allowed broadband provision to be dominated by a few firms, and profits are high. Europe has scores of operators and its regulators have pushed prices and margins lower. + +By allowing companies to merge, Europe might be entering a Faustian pact. Helping its firms re-establish global clout could be bad for consumers if competition is diminished. But there is an even worse possible outcome: that Europe’s corporate weakness will eventually lead to a defensive protectionism and the continent will close itself off from the outside world. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21701480-why-european-companies-have-become-fading-force-global-business-clout-rout/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The diamond industry + +In the rough + +A diamond is for ever. But its allure comes and goes + +Jul 2nd 2016 | From the print edition + +“Real is rare”, bidders were rarer + +“I’VE seen grown men with tears in their eyes” in front of it, an auctioneer from Sotheby’s said as he opened bidding on June 29th on the 1,109-carat Lesedi La Rona, the biggest diamond to be discovered in over a century. Within minutes the tears were, if anything, of embarrassment. Bidding, which started at $50m, was desultory. A rough stone that Sotheby’s had put in the same league as the 3,107-carat Cullinan diamond, discovered in South Africa in 1905, failed to make its $70m reserve. “I’m a bit disappointed. There were no private buyers and the diamantaires stayed away,” said Lukas Lundin, chairman of Lucara Diamond, a Canadian firm that unearthed the stone in Botswana last year. + +It was the latest disappointment to befall an industry that has had little to celebrate. Two days before, William Lamb, Lucara’s chief executive, said he believed the auction would symbolise the allure of diamonds and their promise for African development. He hoped to “dispel the rumour that all diamonds are bad”. That reek of notoriety has clung to the industry in recent years, especially among the millennial generation that came of age as evidence of “blood diamonds” emerged from the war in Sierra Leone in the 1990s. + +Since 2003, about 75 countries linked to the diamond supply chain have allied with non-governmental organisations in the Kimberley Process (KP), which aims to ban the export of diamonds to fund conflict. It is still considered a badge of honour within the industry, but this year NGOs have boycotted it, accusing the chair country, the United Arab Emirates, of leniency toward the sale of conflict diamonds from the Central African Republic. + +Financial stresses are also mounting, especially on “sightholders”, the family-run middlemen who buy rough diamonds and ship them to places like Antwerp and Mumbai for cutting and polishing. Since the financial crisis, banks have come under pressure to ensure they are not lending to businesses associated with money-laundering, transfer pricing and terrorist financing. The publicity-shy middlemen have been caught out by the pressures to improve transparency. “Their corporate structures look like bowls of spaghetti,” says Faz Chaudhri, a diamond-industry consultant. + +In June Standard Chartered shut down its $2 billion diamond-financing business, saying it was beyond the bank’s new “risk tolerance”. De Beers, an industry leader, recently told the 80-odd sightholders authorised to buy its rough diamonds to shed an aura of “secrecy and discretion” and from next year produce consolidated accounts under international standards. It said more than $12 billion of bank credit would be subject to tighter norms. + +The reputational headaches have been compounded by a glut of diamonds caused by a slump in consumer demand in China. That has dragged prices of top-quality cut diamonds down from about $12,000 per carat to $7,400 in five years, according to Rapaport-RapNet Diamond Trading Network, a price index. + +Against this backdrop, a technological challenge is also emerging that could make it harder for the industry to win over the millennial customers on whom future sales depend. From China to California, boffins are improving their ability to cultivate diamonds in labs. They are looking beyond the billions of carats of synthetic diamonds produced under high temperature and pressure that are used in industries such as oil drilling. Now they are perfecting gem-quality stones for jewellery. + +Since last year, California-based Diamond Foundry has been producing lab-grown rough diamonds of a quality almost indistinguishable from those dug up from the ground, produced using chemical-vapour deposition, a technology common in semiconductors. In a plasma reactor as hot as the sun, atomised gases produce carbon atoms that attach to the crystal lattice of a natural diamond seed, or substrate, enabling a new diamond to grow. Martin Roscheisen, the firm’s boss, says productivity is the essence; his firm can grow 150-300 gems in a two-week batch, rather than just a handful previously. They can be cut as exquisitely as any diamond and are only slightly less expensive, he says. + +The firm seeks to bolster their appeal by attacking traditional miners at their weakest point—ethical sourcing. The impact is more deeply felt because one of its backers is Leonardo DiCaprio, star of “Blood Diamond”, a film released in 2006. Selling its diamonds as “morally pure” should play on the social conscience of millennials. Diamond miners chuckle at the thought of slipping a lab-grown diamond onto an engagement finger as a symbol of eternal love. But Mr Roscheisen says that buyers will at least know where his stones came from (even if it is California). Buyers of mined diamonds will not. + +Sales of such diamonds are still minuscule compared with the $14 billion of rough stones dug up each year. Frost & Sullivan, a consultancy, estimated in 2014 that they could grow strongly, especially as traditional mines are exhausted (see chart). Industry veterans, however, believe that as production soars, values will plummet. + + + +Yet the ethics-based marketing still troubles the industry. It tars all miners with the same brush, possibly unfairly. It also feeds the industry’s insecurity about the tastes of millennials, who may prefer spending on stunning experiences rather than diamonds, and who are taking longer to forge committed relationships. This month, the Diamond Producers’ Association, an industry body, came up with a slogan, “Real is rare,” aimed at such consumers. + +This may lack the resonance of De Beers’s “A Diamond is Forever”, one of the great slogans of the 20th century. But, by paying a backhanded compliment to the threat from synthetics, it shows the industry is becoming less complacent. These days, any industry that thinks anything can last forever is ripe for toppling. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21701497-diamond-ever-its-allure-comes-and-goes-rough/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Web browsers + +Window dressing + +The world’s most popular computer programs are becoming less boring + +Jul 2nd 2016 | From the print edition + +BROWSERS, pieces of internet software that people probably spend more time with than they do in bed, have long been boring affairs. Save for occasional innovations such as tabs, these programs have remained fundamentally the same since the release of Mosaic, the first mainstream browser, nearly a quarter of a century ago. Just four browsers account for nearly all users: Apple’s Safari, Google’s Chrome, Microsoft’s Internet Explorer and Mozilla’s Firefox. It is difficult to tell them apart. + +New, more interesting browsers have started cropping up. In August internet users will be able to download the first full version of Brave, the brainchild of a co-founder of Mozilla. Mozilla itself is working on a new type of browser which will give users suggestions on where to navigate next. Both are only the latest in a series of such efforts: last year Microsoft unveiled Edge, meant to replace Internet Explorer; March saw the release of Cliqz, a browser developed in Germany; a month later came Vivaldi. + +If most browsers are boring and unwieldy, it is because they are expected to do more than ever before: not just surfing the web, but editing documents, streaming music and much more besides. As a result, priority is given to stability and ease of use. Too many fiddly buttons could scare away novice users. Innovation is outsourced to developers of “plug-ins”, which add features to a browser. + +Building a new browser from scratch is a fiendishly difficult and expensive undertaking. Only Apple, Google and Microsoft have the money and resources to throw at developing a fast “engine”, as the core of a browser is called. Their dominance also scares off investors. Few venture capitalists are foolhardy enough to invest in a product that needs to take on three of the world’s most powerful tech companies. Mozilla is a non-profit which partially relies on volunteer developers and donations. + +Insurgents are trying to overcome the obstacles in three ways. To reduce development costs, their products are based on existing open-source projects, such as Chromium, which also powers Google’s Chrome. They get money from angel investors, who have an appetite for risk. And most important, they aim their products at niche segments. Brave, for instance, is for surfers who prize privacy. It can block annoying online advertisements and privacy-invading “trackers”, which lurk on websites to follow users around. Cliqz also blocks trackers and is integrated with a new search engine. Vivaldi pitches itself as a browser for “power users”. It is packed with customisable features and comes bundled with an e-mail client. + +Such small browser-makers do not need the scale of their competitors to make money (Chrome has more than 1 billion users). Both Vivaldi and Brave say they can break even with a few million users apiece. The easiest source of revenue is search deals. Companies such as Google pay roughly one dollar per user per year to be the default search engine on rival browsers. Vivaldi is also experimenting with charging firms to be featured on its home page. Brave is trying to subvert the dominant online-advertising model: it blocks intrusive advertisements such as self-starting videos, replaces them with less irksome ones and shares the revenues with publishers and users. + +The market for browsers has grown large enough to sustain such niche players. But the chances that these small fry will turn into big businesses are low. Most people will continue using the boring browsers—if only because they are too lazy to install a slightly more interesting one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21701495-worlds-most-popular-computer-programs-are-becoming-less-boring-window-dressing/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Terms of use + +Ticking all the boxes + +A fight over baffling online contracts is heading for the courts + +Jul 2nd 2016 | New York | From the print edition + +Clicking your rights away + +IF A prize were to be awarded for the world’s clunkiest prose, the paragraphs of indecipherable text that make up “terms of use” agreements would surely win. These legal thickets are designed to protect companies from litigious online shoppers and users of web services. Some firms require agreement, as when users are asked to click a box before creating an Apple ID. Other sites explain their policies without seeking customers’ explicit consent. Few consumers read these terms, let alone understand them. Because they involve no negotiation between customer and company, firms often insert language conferring broad protections to lower their risk of liability. But in a new twist, legal disclaimers designed to limit lawsuits are now unleashing litigation. + +A surge of lawsuits in America claims that companies’ online agreements violate consumers’ rights. Consumers are banding together in class actions against targets including Apple, Avis, Bed Bath & Beyond, Toys R Us and Facebook. The cases have a tinge of the bizarre, citing a law passed before companies even had websites. And the lawsuits accuse companies of illegally limiting lawsuits, a convoluted argument even by the standards of American jurisprudence. Nevertheless, the litigation could have broad implications for the firms involved and for future class actions. + +The suits seek to exploit the Truth-in-Consumer Contract, Warranty and Notice Act, enacted in New Jersey 35 years ago. This was intended to prevent companies that do business in the state from using contracts, notices or signs to limit consumer rights protected by law. + +Trial lawyers only recently began to use the TCCWNA to target online agreements. “All firms that seek to represent consumers are constantly mining different data fields for potential ways consumer rights are being violated,” explains Gary Lynch, of Carlson Lynch Sweet Kilpela & Carpenter, a law firm. James Bogan of Kilpatrick Townsend & Stockton, which has defended companies in class actions, describes the use of the TCCWNA as “very creative”. But class-action lawyers such as Mr Lynch may have struck gold. + +The lawsuits vary, but generally include allegations that online terms violate consumers’ rights to seek damages as protected by New Jersey law and fail to explain which provisions cover New Jersey. Unusually in American law, plaintiffs need not show injury or loss in order to sue but merely prove violation of the TCCWNA. Moreover, the lawsuits are aimed not only at firms headquartered in New Jersey but all manner of companies that merely do business in the state. Gavin Rooney of Lowenstein Sandler, another law firm, counts about 40 TCCWNA cases in the recent surge. What is more, the TCCWNA entitles each successful plaintiff to at least $100 in damages, plus fees to lawyers and so on. If a website has millions of visitors, the costs to a company could be staggering. + +Whether the lawsuits will succeed is unclear. Whatever the outcome of individual claims, the barrage of litigation will probably prompt firms to adjust their online terms. “Don’t overreach” Mr Rooney advises clients. For example, a company might no longer add words to terms-of-use agreements that seek to limit liability from gross negligence or fraud. + +That would be good news for consumers. But changes to terms of use do not always serve their interests. A growing number of firms, emboldened by favourable Supreme Court rulings, have adopted clauses that limit class-action suits. Consumers are instead restricted to resolving disputes individually, in arbitration. The TCCWNA cases may inspire more firms to add such caveats. That might limit frivolous suits. But consumers with grave complaints would be unable to sue, either. In the end lawsuits over restrictive contracts may make them more restrictive still. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21701496-fight-over-baffling-online-contracts-heading-courts-ticking-all-boxes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Chinese consumers + +From noodles to poodles + +The tastes of China’s consumers are rapidly changing + +Jul 2nd 2016 | TIANJIN | From the print edition + +Pots of money no more? + +SOARING sales of instant noodles have for years been a reliable indicator of the insatiable appetites of China’s rising consumer class. China is the world’s biggest market for these flash-fried snacks infused with monosodium glutamate (MSG), a chemical that makes flavourless food more palatable. Locals slurp down over 40 billion packets each year. Now comes news of a nasty noodle meltdown. It is less a sign that China’s long consumer boom is waning than that Chinese tastes are changing. + +The volume of instant noodles gobbled last year fell by 12.5%, according to a new report on China’s consumer market from Bain, a consultancy, and Kantar Worldpanel, a market-research firm. The consequences for firms such as Tingyi, whose Master Kong noodles are found everywhere from railway canteens to kitchen cupboards, have been severe. Profits for China’s biggest instant-noodle firm fell by 36% in 2015, to $256m, as hungry Chinese consumers turned their backs on its wares. Even more shocking, the volume of beer sold in China—the world’s biggest guzzler—fell by 3.6% last year, largely because of plunging sales of cheap brands. + +The news is not as dire as it might appear at first glance. Across all categories of fast-moving consumer goods, such as soft drinks and processed foods, growth is slowing rather than going into reverse (see chart). Bain and Kantar reckon that the market for such products increased by 3.5% last year, though that is still the slowest pace of growth in five years. This mix of contraction and expansion reflects a two-speed consumer market. + + + +Brands that cater to blue-collar workers, like instant noodles and bottom-of-the-barrel brews, are being squeezed as a painful downturn in the industrial economy hurts workers in those sectors. This slowdown is affecting sales of many basic consumer goods, ranging from toothpaste to packaged foods. + +But these days non-industrial activities account for more than half of China’s economy. These businesses are faring rather better than the factories of China’s rust belt. Most company bosses remain confident about China’s future. A survey of over 1,200 chief executives worldwide recently published by KPMG, a consulting firm, finds that bosses still consider China the most promising growth market, along with India. Of the 129 bosses surveyed that are running firms in China, half said investing in innovation and launching new products will be the main priority to ensure growth over the next three years—hardly signs of a sinking consumer market. + +The middle classes in the country’s bigger cities, confident urban professionals with jobs in service industries, are indeed still splashing out. This explains a trend towards premium goods from fancier brands. Sales of make-up grew by over 15% last year, for example, and skincare products by 13%, driven by demand for pricier cosmetics to pamper and primp China’s better-off consumers. + +Many such consumers are upgrading, experimenting and exploring. A report released on June 30th by Oliver Wyman, a consultancy, predicts that Chinese will make over 130m trips abroad this year, up from some 120m in 2015, and spend roughly $1,200 each time on shopping. Seduced by the country’s soap operas and K-Pop teen bands, many will visit South Korea. Chinese tourists return home with a taste for cosmetics brands based there, such as Laneige and Innisfree, which are now more popular than European competitors. South Korean cosmetics exports to China surged by 250% last year. + +Brands that promise healthy lifestyles are also thriving. In a recent survey, the top complaint by Chinese consumers was poor food safety and the next biggest grouse was shoddy health care. These attitudes have helped restaurants and supermarkets with names like “Element Fresh” and “Pure and Whole” spread like organic mushrooms across the land. Yoga and running are all the rage (in March thousands of entrants suffered injuries trying to finish a marathon in Qingyuan, a southern city), and fitness firms are booming. Adidas, a German sportswear company, saw sales rise by 18% in China last year. + +The sort of indulgences common among young Western urbanites are also now growing fast in China. “Functional drinks”, favoured by the health-conscious, are going down well. Sales of yogurt rose by over a fifth last year, a striking development in a country full of people who are lactose-intolerant. Tingyi recently introduced Master Soup with no MSG to cater to healthier slurpers. + +A new China is emerging, then. But companies that wish to serve it must remember that the old one has not gone away. Sales of pet food rose by nearly 12% in 2015, a reflection of a softening of Chinese attitudes toward animals. Yet in the southern city of Yulin crowds still flocked recently to an annual festival of lychees and dog meat. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21701534-tastes-chinas-consumers-are-rapidly-changing-noodles-poodles/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Squeezing the tube + +Instead of disrupting their industries, firms should look for opportunities under their noses + +Jul 2nd 2016 | From the print edition + + + +BUSINESS theorists routinely instruct managers to look over the horizon. “Blue Ocean Strategy” is the most successful book on business master-planning in recent years. In it W. Chan Kim and Renée Mauborgne of INSEAD, a business school in France, argue that companies should trawl for profits in “blue oceans” that their rivals ignore rather than “red oceans” that they squabble over. Companies often search for ways to disrupt their industries lest a rival or new entrant does the same and pulls the rug from beneath them. But reinventing a business from the ground up, to avoid being consumed by the fires of new technology, comes with huge risks as well as a potential for great rewards. + +Ships that set sail for blue oceans are often becalmed in the middle of nowhere. AOL-Time Warner’s catastrophic merger in 2000 failed to remake the media business for the internet age. News Corp’s foray into social networking ended with the sale of Myspace for a small fraction of its purchase price. Sometimes being cautious, incremental and pragmatic when others are gambling on bold and visionary thinking is more sensible. Why take the chance when there is lots of money to be made closer to home? That is the argument of “Edge Strategy”, a new book by Alan Lewis and Dan McKone from LEK Consulting. They argue that before turning themselves upside down firms should think harder about profiting from the “edges” of existing businesses. + +The authors focus on three such edges. The first is products: how can you stretch merchandise so that it generates more income or appeals to more people? An obvious way is to make accessories. Apple is praised as revolutionary but one secret of its success is its tight control of the bits and pieces that adorn its main products. Once purchased, an iPhone or iPad needs a fancy leather case or fashionable headphones. Apple’s own accessories come at considerable expense to the user and give the firm a steady revenue stream. + +Another is to link services to products, a tactic made easier by the internet of things. Cars are increasingly connected. Onstar is an in-car service offered by General Motors whose features include automatic calls to emergency services after a crash and over-the-air diagnosis of mechanical problems. Caterpillar can monitor the performance of its excavators, bulldozers and other equipment via sensors, in return for a monthly fee. + +The second edge is the “customer journey”. This sounds nebulous but is, in fact, simple. Customers usually buy goods and services to solve a problem. They purchase pneumatic drills because they want to dig a hole in the road, not because they like the way they look. The authors argue that firms have lots of opportunities to make money if they walk in customers’ shoes and keep their eyes open. ESAB, a company that sells welding equipment, also sells general education in welding, training for specific products and engineering consulting. Whole Foods Market, a swanky grocery store, used to specialise in the raw ingredients needed for healthy eating. It now gets around a fifth of its revenue from selling ready-to-eat foods from an ever-expanding range of sushi bars, barbecue stands, Mexican-food stations and espresso bars. + +The third edge is exploiting underused parts of the enterprise. One example would be farmers renting out marginal land to energy companies for wind turbines: the farmer stays in the business of agriculture but also boosts income by finding a new use for some of his acres. Many firms routinely collect data in the course of running core operations. Sensible ones use the data to provide more services (or sell them to third parties, with due protections for privacy). Cargill, a commodity-trading firm, has used its agricultural expertise and data to develop software that guides farmers on how best to plant their fields on the basis of 250 variables such as soil type, weather conditions and seed performance. Toyota, a Japanese carmaker, sells traffic information generated by its vehicles to local governments and businesses. + +Many of these edge businesses started as an afterthought but have become vast sources of revenue. In the early 2000s Amazon started building servers for its own business. Today it makes $5 billion a year selling cloud-computing capacity to Netflix, Pinterest and the CIA, among many others. UnitedHealthcare sells information culled from its enormous database, OptumInsight, to various customers. OptumInsight’s revenue increased from $956m in 2006 to $6.2 billion in 2015, a much faster rate of growth than its parent company. + +Living on the edge + +The strategy is not new: visit the cinema and you will spend more on popcorn and Coca-Cola than on tickets. Buy a car and a wily salesman will engage in a frenzy of “upselling” leather seats or after-sales services. But that is the point. The authors say that firms risk forgetting about long-established sources of growth in the pursuit of disruption. Rather than obsessing about the new, firms need to make the most of their existing businesses. + +Firms must resist the temptation merely to charge for what hitherto has come free, however. American airlines dramatically increased revenues by charging customers to put their bags in the hold. This scheme earned them $3.5 billion in baggage fees in 2014 alone but came with heaps of complaints from unhappy customers. Lots of other firms are also charging for services formerly included in the price: having paid more than $400 for a hotel room in Manhattan recently, Schumpeter was then asked for an extra $10 to store his bag for a few hours between checking out and going to the airport. What next? Extra charges for soap and sheets? + +In its customer-friendly forms, however, edge strategy is a valuable corrective to the obsession with transformational ideas. Firms are right to worry that their businesses are about to be shaken up by the digital revolution or by upstarts from emerging markets. But their priority should be squeezing more money out of their existing assets, not taking a leap into the unknown. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21701481-instead-disrupting-their-industries-firms-should-look-opportunities-under-their/print + + + + + +Previous Articles Sections Next + + + +Finance and economics + + + + + +Brexit and the City of London: From folly to fragmentation + +Buttonwood: Awaiting the data + +Contrarian investing: Prophets and profiteers + +Reviving South Korea’s economy: Faltering flagship + +Tax avoidance: Grand dodgy + +The AIIB: The infrastructure of power + +Free exchange: The consensus crumbles + + + + + +Articles Sections Next + +Brexit and the City of London + +From folly to fragmentation + +Britain’s vote to quit means an uncertain future for the financial capital of Europe + +Jul 2nd 2016 | From the print edition + + + +THE bleeding stopped on the third day: sterling steadied and stockmarkets perked up on June 28th, after two sessions of carnage (see article). By then Britain’s vote on June 23rd to leave the European Union had taken a heavy toll (see chart). The shares of Lloyds and the Royal Bank of Scotland, Britain’s biggest domestically oriented banks, were down by around 30% and those of Barclays by slightly more. Continental institutions were clobbered too: BNP Paribas, Deutsche Bank and Santander all lost 20%-plus and Italy’s beleaguered UniCredit 30%-odd. American banks with big operations in London also suffered, though not as much. Nor was the damage confined to banks: American insurers copped double-digit losses and Invesco, a big asset manager, shed 22%. A merger of the London Stock Exchange and Deutsche Börse, its German rival, looks likely to collapse. + + + +Markets are worried that growth will slow in Britain and the euro zone, pulling interest rates and bond yields even lower. That would squeeze banks’ margins, and insurers’ and fund managers’ prospective returns—all thin already. Beyond the immediate turmoil is a longer-term concern: what harm might Brexit do to London as a financial centre? + +According to TheCityUK, a trade body, London boasts 250 foreign banks and 200 foreign law firms. Finance and ancillary trades employ 730,000—perhaps surprisingly, more than in 2007-08, when the financial crisis struck. An abundance of clever people—adept in English law as much as in finance—draws in banks, fund managers and so forth; the wealth of employers, in turn, attracts more workers. + +Brexit threatens this happy balance. Britain has not only become politically unstable, with no government or opposition worthy of the name; it also no longer affords the regulatory predictability that investors crave. How the City fares depends on how, and how soon, order is restored. + +The main worry is that financial firms will no longer be able to serve the whole EU from London when Britain leaves, perhaps two years after the formal start of exit talks. Companies from one EU country have “passports” to do business in the other 27, with no need for local branches or subsidiaries. Thus equipped, banks from both outside and inside the EU have made London their second home. Goldman Sachs, for example, has 6,000 of its 6,500 European staff there, against just 200 in Frankfurt. Insurance is more localised, but passporting still matters to some, such as America’s MetLife, which saw its share price fall by 17% in the two days after the vote. London’s asset managers sell mutual funds (UCITS, in Eurojargon) across the whole union; they managed more than €1 trillion ($1.1 trillion) last year. + +A deal that preserves passporting is imaginable, even though no non-member of the EU enjoys full rights at present. In theory, Norway (to some, the most promising model for Britain) has unfettered access to the EU’s single market, although most of the EU’s post-crisis regulation has yet to be incorporated into its deal. But access to the single market requires freedom of movement, which Brexiteers reject. And Norway has no say in setting the EU’s rules. + +Without a Norway-like deal, some wonder whether MIFID 2, a directive that comes into force in 2018 and that allows non-EU members to enjoy some access to the single market, might open a back door to Europe. But the surest way to serve the EU would be to do so from other places. Asset managers would no longer be able to sell UCITS from London. One, M&G, has been planning to replicate funds in Dublin, and will move some staff; another, Columbia Threadneedle, is applying to expand in Luxembourg. Some banks may have to acquire new licences elsewhere, which takes months. It would mean shifting some people. And European regulators would surely want entities on their patch to have their own capital. No bank has yet said it will move anyone, but these are early days. Before the vote HSBC said it could transfer 1,000 of its London staff to Paris and JPMorgan Chase warned that up to 4,000 of its 16,000 jobs in Britain could go. Morgan Stanley has denied a report that it is already working on moving 2,000 investment bankers to Dublin and Frankfurt. + +A second concern is that London could lose its status as the main centre for clearing trades in euro-denominated securities. Around 70% of trading in euro interest-rate swaps takes place in London, four times the share of France and Germany, even though London is outside the euro zone. LCH, part of the London Stock Exchange, clears the lion’s share. The European Central Bank has long wanted clearing in its currency to take place on its turf, in case it ever needs to provide liquidity to a clearing-house in a hurry. Last year the British government won a case at the European Court, thwarting a four-year attempt by the ECB to bring euro-clearing home. + +The ECB has a currency-swap agreement with the Bank of England, to provide liquidity if needed. But it would surely prefer direct oversight. If it tried again, a post-Brexit Britain would no longer have recourse to the European Court. A promise of non-discrimination against EU countries outside the euro zone, negotiated by David Cameron, Britain’s prime minister, before he called the referendum, will be null. It is “unlikely”, writes Angus Armstrong of the National Institute of Economic and Social Research, a think-tank, “that a major central bank would permit a swap line to support such a volume of transactions to take place offshore”. + +Another worry is whether London can hang on to its lead in new areas of activity, such as fintech. No one knows what will happen, says Marta Krupinska of Azimo, an online money-transfer service used mainly by migrant workers. But she points to three possible problems: restricted access to the EU market; an inability to look abroad for talent (three-quarters of Azimo’s London staff are non-Britons); and the feeling that Brexit will make Britain a less attractive place to work. “A place perceived as not welcoming and insular will not attract the right talent.” + +Britain’s efforts to make itself a hub for trading in Chinese assets are also in question. London has been the European focal point for China’s plans to internationalise its currency. But reports from China say it may now shift more toward other European cities. The link between the Shanghai and London stock exchanges, announced when China’s president visited London last year, is also likely to be delayed, though officials say it will still go ahead. + +Undaunted Brexiteers promise an energising cull of regulation. Some hedge funds hope to see the end of the Alternative Investment Fund Managers Directive, which they regard as costly and bureaucratic. Freed from red tape, some fund managers hope to tap fast-growing sources of wealth in Asia, or recall the growth in European issuance of dollar bonds in the 1970s, which bypassed American regulation. But most of London, if it wants EU clients, will have to play by the EU’s rules. And lifting the cap on bankers’ bonuses—another European imposition—may be popular in the City, but much less so among British voters. + +Meanwhile, other cities are hoping to gain from Brexit. The French have long had their eye on euro-clearing, and are pressing their case anew. François Hollande, France’s president, has already said that it must leave London. “I’m very anglophile and very sad for Britain,” says Valérie Pécresse, president of the greater Paris region, “but I absolutely want as many jobs as possible to move to Paris.” Hubertus Väth of Frankfurt Main Finance, which promotes the local financial centre, reports plenty of interest from property brokers. He thinks Frankfurt could take some derivatives-trading business and regulatory activity from London. One European banker recalls that long before the vote a senior Irish politician tried to persuade him to move business to Dublin, using Mr Cameron’s promise of a referendum as an argument. + +The City is not about to crumble. Other centres lack its scale and sheer concentration of expertise. But some business will go elsewhere and Europe’s financial industry will become more fragmented and less efficient. The Brexit shock may already have reduced London’s allure. The longer the political and regulatory vacuum lasts, the more harm it will do. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21701509-britains-vote-quit-means-uncertain-future-financial-capital/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Awaiting the data + +After the shock of Brexit, the next test will be the economic impact + +Jul 2nd 2016 | From the print edition + + + +SHOCK, followed by frantic recalculation. That was how astonished financial markets reacted to the British vote to leave the European Union. + +The initial phase saw a worldwide sell-off in riskier assets, such as equities, and a flight to safe ones, prompting further declines in government-bond yields. After the sell-off, equities started to bounce again on June 28th, in part because central banks may respond with easier monetary policy (or, in the case of the Federal Reserve, slower tightening); in part because Brexit may not have much of an impact on, say, the Chinese economy. + +The biggest casualty of the vote was sterling, which was edging towards $1.50 on Thursday but on June 27th briefly dropped below $1.32, a 31-year low. In trade-weighted terms, the pound has fallen by 11% this year (see chart). Britain has a large current-account deficit (7% of GDP in the fourth quarter of 2015), which needs financing. A big drop in the pound, to make British assets more appealing to foreign investors and imports less appealing to Britons, is a necessary adjustment. + +Equities have not suffered as much. Many companies in London’s FTSE 100 index—the oil and mining giants, for example—have little connection with the British economy. Since much of their income is in foreign currencies, sterling’s weakness will be good for profits. The more domestically oriented FTSE 250 index took the bigger hit, falling by 14% in two days. + +Now the initial shock has passed, investors need to work out what the economic impact will be. David Cameron, Britain’s lame-duck prime minister, did not immediately trigger Article 50—the provision in European treaties about a member state leaving the EU—bequeathing that decision to his successor. That will only prolong the uncertainty over what kind of deal will emerge from the negotiations between Britain and Europe. + +One question is whether consumption will suffer because of the Brexit vote. A survey by Retail Economics found that more than half of consumers planned to reduce their spending on non-essential items. Shares in estate agents, housebuilders and budget airlines have all been hit. + +However, this might be a short-term effect. The biggest risk to consumption was a crisis in the gilts market that forced up mortgage rates. But gilt yields have fallen, partly because of their risk-free status and partly because the markets anticipate further rate cuts from the Bank of England. + +The bigger worry is investment. There have been lots of hints about jobs or corporate headquarters moving abroad, but nothing concrete so far. Many companies may be waiting to see whether Britain decides to join the European Economic Area, alongside Iceland and Norway, which would keep it in the single market. If it does, then the temptation will be to stay. + +But since that deal would require freedom of movement, it seems unlikely that the next prime minister will accept it. In the meantime, of course, the uncertainty means that few businesses will be inclined to invest in new projects. And the longer it takes for a deal to emerge, the longer the hiatus. + + + +Brexit: taking stock + +Almost three-quarters of economists polled by Bloomberg think that Britain is headed for recession either this year or next. But the many anecdotal reports of cancelled contracts may not show up in the economic data until the third-quarter numbers are released; the more detailed estimate is not due until November 25th. Markets may get earlier indications of the trend in business surveys, such as the purchasing managers’ index. That will be the next big test for British equities. + +In the longer term, some hope that the departure from the EU will turn Britain into a more vibrant economy. Chris Watling of Longview Economics is one of the few analysts to spell out what this might mean in practice. He suggests the immediate announcement of trade talks with the rest of the world, the abolition of corporation tax and the creation of new towns to ease the housing shortage. The first would take a long time to achieve; the second would stir fierce political opposition; and the third, both. Again, investors will want to see some concrete plans if they are to believe the campaign promises of some Brexiteers of a more open Britain. + +For the rest of Europe, the question is whether Brexit will encourage other anti-EU movements. The indicator to watch is the German ten-year Bund yield, since it is the safest asset on the continent. It has dropped further into negative territory, hitting -0.12%. That yield needs to move well into positive territory before the risks of the British vote can be said to have been contained. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21701504-after-shock-brexit-next-test-will-be-economic-impact-awaiting/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Contrarian investing + +Prophets and profiteers + +Who made money from the Brexit vote? + +Jul 2nd 2016 | From the print edition + + + +FOUR out of five hedge-fund managers had expected Britain to vote to remain in the European Union, according to a poll by Preqin, a data firm. But a handful saw Brexit coming and invested accordingly. They made hundreds of millions by betting against assets that were likely to suffer from an Out vote. Crispin Odey’s London-based fund, which manages around $10 billion and has had a terrible year, jumped nearly 15% on the day after the vote. That was thanks to short positions on the shares of a number of British firms (including Aberdeen, an asset manager, and Berkeley Group, a builder) and a big investment in gold. Others, such as Atlantic Investment Management, prospered by betting against sterling, which fell this week to its lowest value against the dollar since 1985. + +Another successful approach was to do what hedge funds were originally set up to do: hedge (not many do these days). “Did we see it coming? No,” admits Lukas Daalder of Robeco, a Dutch asset manager, who says he was able to limit damage by recognising the vote was too close to call. He tried to surprise-proof his portfolio by betting that sterling would fall against the dollar and by investing in so-called “flattener trades” (in his case, offsetting bets on 30-year bonds and ten-year ones). + +Many of the funds that rely on quantitative models or automatic trading seemed to perform better than those at which humans were in charge. The NuWave Matrix Fund, whose trades are based on historical market patterns, surged by around 12% on Friday. Some funds simply did well because they always do well in volatile times. Quadratic Capital Management’s unusual strategy of investing almost exclusively in options means that it makes money during upheaval because the price of options increases with volatility. And then there was a tried-and-tested approach to uncertainty: sit it out and look for buying opportunities in the aftermath. Michael Hintze of CQS, another asset manager, had advised those without a view on the outcome of the vote to raise cash and be ready to buy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21701511-who-made-money-brexit-vote-prophets-and-profiteers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Reviving South Korea’s economy + +Faltering flagship + +The impact of a $17 billion pick-me-up is likely to be short-lived + +Jul 2nd 2016 | SEOUL | From the print edition + +A soggy outlook in the shipyards + +HOW best to prop up the companies that power South Korea’s export-driven economy as the rest of the world slows? The government’s previous answer, the so-called “one-shot” bill, aims to help the worst-affected industries to restructure by offering tax breaks for firms that sell subsidiaries and by reducing the red tape around mergers. Parliament approved it in February; it will come into effect in August. But Park Geun-hye, South Korea’s president, thinks more is needed. On June 28th she proposed a stimulus of 20 trillion won ($17 billion). + +South Korea’s exports have fallen every month year-on-year since January 2015. In early June the central bank trimmed its benchmark interest rate by 0.25 percentage points, taking it to an all-time low of 1.25%. Nonetheless the government this week revised down its forecast of GDP growth this year from 3.1%, which it predicted in December, to 2.8%. Ms Park said that the economic situation inside and outside the country was “more serious than ever”. + +Britain’s recent decision to leave the European Union, South Korea’s fourth-biggest market for exports, has rattled it. But the economy, Asia’s fourth-biggest, has been struggling for some time. Growth has slowed from an average of 4.4% between 2001 and 2011 to 2.8% since then. The slowdown in China, the destination for a quarter of South Korea’s exports, has been especially painful. Low oil prices, meanwhile, have hammered shipbuilders, which build lots of rigs and other equipment for the offshore oil industry. + +This week the government said 60,000 people might lose their jobs in the shipbuilding sector, which employs 200,000 in total and accounts for 7.6% of South Korean exports. Earlier in June Ms Park had urged “bone-crushing” efforts to overhaul the industry and prop up its three biggest yards—Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries (which last year reported combined annual losses of 6.4 trillion won)—promising to pump 11 trillion won into state-run lenders saddled with loans to them. + +All this is expected to weigh on already-feeble consumer spending. The interest-rate cut should help a bit, mostly by lowering households’ high debt-servicing costs. Much of the stimulus will go towards retraining and wage subsidies for the long-term unemployed. Some is also aimed at boosting consumption through tax breaks. Lee Doo-won, an economics professor at Yonsei University in Seoul, the capital, says that if the latest injection is delivered promptly, it could add up to 0.4 percentage points to GDP growth this year. + +But the frequency of such packages—three since Ms Park took office in early 2013—suggests that they are hardly cure-alls. A 41 trillion won stimulus in 2014 was followed by another 22 trillion won last July, after an outbreak of Middle East Respiratory Syndrome dampened consumption. Given South Korea’s relatively low debt-to-GDP ratio compared with other rich countries, at around 37%, it could afford to make the latest spree three times bigger, says Frederic Neumann of HSBC, a bank. Moreover, the government has not been quite as loose with its money as the occasional splurges suggest: half the latest package will be financed either with money left unspent from last year’s budget or with this year’s higher-than-expected tax receipts. + +Mo Jongryn, also at Yonsei University, says the money being used to bail out old manufacturers would be better spent goading under-employed South Koreans, such as women and early retirees, into the workforce. There is also scope for greater investment in services, where the productivity of workers is half that in manufacturing; a more dynamic sector would help to ease the strain on traditional exporters. + +In a recent survey of South Koreans by Choson Ilbo, a local newspaper, almost 60% said they expected the economy to be as bad this year as it was in the Asian financial crisis of 1997-98. South Korea has had the worst consumer-confidence levels in the world for four straight quarters, according to Nielsen, a pollster. Yet household credit grew by 11% in the period from January to March compared with the same period last year, one of the fastest rates in the region, according to HSBC, suggesting South Koreans are borrowing to maintain their standard of living. The “extraordinary” measures for which Ms Park called this week are still needed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21701533-impact-17-billion-pick-me-up-likely-be-short-lived-faltering/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Tax avoidance + +Grand dodgy + +The good deeds of the Luxembourg leakers do not go unpunished + +Jul 2nd 2016 | From the print edition + +The tax-dodgers are being scrutinised too + +JUNE 29th was judgment day in a case that has changed the face of corporate tax-planning. Antoine Deltour (pictured) and Raphaël Halet, two ex-employees of PwC, an accounting firm, and Edouard Perrin, a French journalist, had been tried in Luxembourg for their role in leaking documents that revealed sweetheart tax deals the Grand Duchy had offered to dozens of multinationals. The defendants denied the charges, which included theft of documents and violation of secrecy, arguing that their exposure of dodgy tax practices was in the public interest. Luxembourg insisted the deals were both legal and unremarkable. + +The whistle-blowers faced up to ten years behind bars. However, the prosecutor—perhaps sensitive to the strong public and, in some places, political support for them abroad—called for suspended sentences of 18 months. In the end the judge handed Messrs Deltour and Halet suspended sentences of 12 months and nine months, respectively. But a conviction is a conviction; Transparency International, an anti-corruption group, called it “appalling”. Mr Perrin, who had published an article that drew on the leaked documents, was acquitted. + +The “LuxLeaks” affair has highlighted the role played by certain European Union countries, including Ireland and the Netherlands as well as Luxembourg, in facilitating tax avoidance. Luxembourg is not a typical tax haven levying no or minimal income tax; its statutory rate is 29%. Instead, it is a haven “by administrative practice”, argues Omri Marian of the University of California, Irvine, who has studied LuxLeaks in detail. Its tax authority in effect sold tax-avoidance services to large firms by rubber-stamping opaque arrangements that helped them to cut their tax bills dramatically in both their countries of residence and their countries of operation. + +The leaks helped propel multilateral efforts to overhaul international corporate taxation, led by the OECD. Its mostly rich members and a dozen developing countries agreed last year to a raft of reforms. These include increased country-by-country reporting by multinationals of profits, taxes paid and so on, and tighter rules on transferring intellectual property between subsidiaries as a means of parking profits in tax havens. Governments are now expected to make these proposals law. + +In June the European Union agreed on an anti-avoidance directive that incorporates parts of the OECD’s agenda. The EU’s executive, the European Commission, has launched numerous probes targeting cushy tax deals offered by the bloc’s own members to firms such as Apple, Fiat and Starbucks. It argues these could amount to illegal state aid. The commission is expected to announce the results of its probe into Apple’s tax arrangements in Ireland in July. The firm could be forced to pay billions of euros to Dublin. + +Apple denies breaking any laws. It has a point when it says the problem is not corporate illegality or immorality but disparities between national tax systems, which invite gaming. Hence the need for a multilateral approach. But that is hard to achieve. Countries guard their tax sovereignty jealously, even as they rail against tax minimisation. And they still disagree about a lot. America is unhappy with the commission’s investigations, which mostly target American companies. An American official complained recently that they are based on “expansive reinterpretations” of European competition law and have created an “extraordinary mess”. + +Divisions are evident within the EU, too. Member states that like tax competition, such as the Netherlands and Britain (it has not left yet), have pushed to weaken anti-avoidance measures, including the new directive. Diarmid O’Sullivan, a tax-policy expert with ActionAid, a charity, says the directive was “a feeble compromise”. Proposed EU rules known as the “common consolidated corporate tax base”, which would remove many of the national differences that multinationals have exploited to pay less tax, have been diluted to make them more palatable. + +Nevertheless, firms acknowledge that enthusiastic tax avoidance is becoming harder to get away with. Cosy deals with the taxman are under more scrutiny. Convicted criminals though two of them may now be, the LuxLeaks Three deserve praise for their role in bringing that about. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21701532-good-deeds-luxembourg-leakers-do-not-go-unpunished-grand-dodgy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The AIIB + +The infrastructure of power + +Reasons to be enthusiastic about China’s answer to the World Bank + +Jul 2nd 2016 | From the print edition + +AIIB careful with Avicenna + +CHINA’s growing global clout can be unsettling for the incumbents who must make room for it. At the same time, China’s recent financial tumult has been unnerving for the investors exposed to it. This combination of vastness and vulnerability has left some people afraid of China and others afraid for it. Both groups have found reason to worry about the Asia Infrastructure Investment Bank (AIIB), which has just held its initial annual meeting in Beijing and approved its first $509m-worth of projects. + +The AIIB reflects China’s new eagerness to institutionalise its official lending abroad, which has been generous but contentious. Another example is the sprawling “one-belt, one-road” initiative, which aims to revivify trade routes across and around the Eurasian landmass (see article). Harking back nostalgically to the Silk Road, it envisages a web of bilateral agreements between China and the beneficiaries of its largesse. The AIIB is more modern and multilateral in character. It is billed as China’s “21st-century” answer to lenders like the World Bank (always led by Americans) and the Asian Development Bank (dominated by Japan). + +To its critics, the AIIB is early evidence of China’s determination to work around existing institutions rather than through them. Where some see aggression, others see hubris. The AIIB was conceived when China’s foreign-exchange reserves seemed headed inexorably towards $4 trillion. Since then, China’s yuan has fallen and capital has fled. Having lost over $500 billion of hard-currency reserves in 11 months, can China really afford to lend dollars to Tajikistan? + +Neither fear stands up to scrutiny. China’s financial commitment to the AIIB is equivalent to less than one percent of its remaining reserves. Almost 70% of the institution’s $100 billion of capital is drawn from its other 56 participants. It will also raise money by issuing bonds of its own. Far from being a fair-weather folly, the AIIB appears well-timed. Global capital has retreated from emerging markets, leaving a gap the AIIB will help fill. By the same token, the retreating dollars are sheltering in safe assets, such as the highly rated bonds the AIIB proposes to sell. + +Unlike the World Bank, which is pulled hither and thither by its members, the AIIB will keep a tighter focus on infrastructure. It has no sitting board or permanent branch offices in borrowing countries. It is also quick, approving four projects within six months of its launch date. More established multilateral lenders can take a year or two to do the same. Some fear the AIIB will deviate from prevailing norms in other, more troubling ways—undercutting environmental standards, say. But of its first four projects, three are joint ventures with existing institutions, subject to their protocols. Its $217m project to improve slum-life in 154 Indonesian cities, led by a veteran of the World Bank, seems alert to the dangers of soil erosion and groundwater pollution. Likewise, its road-improvement plan in Tajikistan, administered by the European Bank for Reconstruction and Development, will tactfully relocate a monument to Avicenna, a Persian polymath who memorised the Koran by the age of ten. + +Any assessment of the AIIB’s safeguards must also consider the alternative. If the new institution did not exist, China would presumably lend the money bilaterally, escaping any scrutiny by its peers. It has instead invited outside participation, precisely because it wants the respectability such partnerships confer. + +But if China is happy for its new bank to work with existing lenders, why not simply work within them? One reason is that they have been painfully slow to accommodate it. The IMF, for example, agreed in 2010 to give emerging economies a bigger say. But by the time America’s Congress ratified the deal five years later, China’s economy had grown by 80% (and Japan’s had shrunk by a quarter) in dollar terms. If international financial institutions make room for China, it may bypass them anyway, but if they do not, it definitely will. The AIIB’s first solo venture will bring electricity to 2.5m rural homes in Bangladesh. That is not the only kind of power distribution that needs modernising. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21701494-reasons-be-enthusiastic-about-chinas-answer-world-bank-infrastructure/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +The consensus crumbles + +The economists who foresaw the backlash against globalisation + +Jul 2nd 2016 | From the print edition + + + +AFTER the second world war, the leaders of the Western world tried to build institutions to prevent the horrors of the preceding decades from recurring. They sought to foster both prosperity and interdependence, to “make war not only unthinkable but materially impossible”. Their work has borne fruit. There has been no armed conflict in western Europe since. Expanded global trade has raised incomes around the world. Yet, as the Brexit vote demonstrates, globalisation now seems to be receding. Most economists have been blindsided by the backlash. A few saw it coming. It is worth studying their reasoning, in order to work out whether a retrenchment is inevitable or might be avoided. + +Even economists realise that free trade can be a hard sell politically. The political economy of trade is treacherous: its benefits, though substantial, are diffuse, but its costs are often concentrated, giving those affected a strong incentive to push for protectionism. Since 1776, when Adam Smith published “The Wealth of Nations”, those pressing for global openness have won more battles than they have lost. Yet opposition to globalisation seldom disappears, and often regroups. And a position once considered near-heretical, that globalisation itself seems to create forces that erode political support for integration, is gaining currency. + +Dani Rodrik of Harvard University is the author of the best-known such critique. In the late 1990s he pointed out that deeper economic integration required harmonisation of laws and regulations across countries. Differences in rules on employment contracts or product-safety requirements, for instance, act as barriers to trade. Indeed, trade agreements like the Trans-Pacific Partnership focus more on “non-tariff barriers” than they do on tariff reduction. But the consequences often run counter to popular preferences: the French might find themselves barred from supporting a French-language film industry, for example. + +Deeper integration, Mr Rodrik reckoned, will therefore lead either to an erosion of democracy, as national leaders disregard the will of the public, or will cause the dissolution of the nation state, as authority moves to supranational bodies elected to create harmonised rules for everyone to follow. These trade-offs create a “trilemma”, in Mr Rodrik’s view: societies cannot be globally integrated, completely sovereign and democratic—they can opt for only two of the three. In the late 1990s Mr Rodrik speculated that the sovereignty of nation states would be the item societies chose to discard. Yet it now seems that economic integration may be more vulnerable. + +Alberto Alesina of Harvard University and Enrico Spolaore of Tufts University presented a different but related view of the trade-offs entailed by global economic integration in “The Size of Nations”, published in 2003. They note that there are advantages to being a large country. Bigger countries can muster more resources for national defence, for instance. They also have large internal markets. But bigness also carries costs. The larger and more heterogeneous a country, the more difficult it is for the government to satisfy its citizens’ political preferences. There is less variation in political views in Scotland, to take one example, than across Britain as a whole. When policy is made by the British parliament (rather than in Edinburgh, Belfast and so on) the average Briton is slightly less satisfied with the result. + +Global integration, Messrs Alesina and Spolaore argue, reduces the economic cost of breaking up big countries, since the smaller entities that result will not be cut off from bigger markets. Meanwhile the benefits of separatism, in terms of being able to cater better to the preferences of voters, are less diminished. So the global reduction in barriers to trade since the second world war, the pair contend, at least partly explains the simultaneous growth in the number of countries, even if national fractures often involve, or lead to, political instability and violence. + +And then there is the question of how the benefits of globalisation are shared out. Joseph Stiglitz, a Nobel prizewinner, has warned that rent-seeking companies’ influence over trade rules harms workers and erodes support for trade liberalisation. Raghuram Rajan, the head of India’s central bank, has argued that clumsy government efforts to compensate workers hurt by globalisation contributed to the global financial crisis, by facilitating excessive household borrowing, among other things. David Autor, David Dorn and Gordon Hanson have documented how the costs of America’s growing trade with China has fallen disproportionately on certain cities. And so on. + +Open and shut + +Branko Milanovic of the City University of New York believes such costs perpetuate a cycle of globalisation. He argues that periods of global integration and technological progress generate rising inequality, which inevitably triggers two countervailing forces, one beneficial and one harmful. On the one hand, governments tend to respond to rising inequality by increasing redistribution and investing in education; on the other, inequality leads to political upheaval and war. The first great era of globalisation, which ended in 1914, gave way to a long period of declining inequality, in which harmful countervailing forces played a bigger role than beneficial ones. History might repeat itself, he warns. + +Such warnings do not amount to arguments against globalisation. As many of the economists in question are quick to note, the benefits of openness are massive. It is increasingly clear, however, that supporters of economic integration underestimated the risks both that big slices of society would feel left behind and that nationalism would continue to provide an alluring alternative. Either error alone might have undercut support for globalisation—and the six decades of relative peace and prosperity it has brought. In combination, they threaten to reverse it. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21701501-economists-who-foresaw-backlash-against-globalisation-consensus/print + + + + + +Previous Articles Sections Next + + + +Science and technology + + + + + +Planetary science: By Jove! + +Energy storage: Sisyphus’s train set + +Geolocation: Addressing the world + +Card games and psychology: Telling it like it is + +An ancient wing: Palaeontology + + + + + +Articles Sections Next + +Planetary science + +By Jove! + +A mission to Jupiter is designed to investigate the giant planet’s history—and the histories of its cousins in other solar systems + +Jul 2nd 2016 | From the print edition + + + +IN 1543 Nicolaus Copernicus proposed, in a mathematically rigorous way, that the Earth is not the centre of the universe, and thus that all things do not revolve around it. In fact, only the Moon does so. Seven decades later Galileo Galilei provided more direct proof of Earth’s lack of specialness. He looked at Jupiter through a primitive telescope and found that the planet had four moons of its own. + +Four centuries after Galileo’s discovery, it remains impossible to understand the solar system without understanding Jupiter. The sun accounts for 99.8% of the solar system’s mass. But Jupiter, which is more than twice as massive as the other seven planets put together, makes up most of the rest. Its heft shapes the orbits of the other planets, the structure of the asteroid belt and the periods of many comets. And the four moons observed by Galileo (seen to the left-hand side of Jupiter in the picture above) have proved merely the biggest members of an entire solar system in miniature: at the moment Jupiter has 67 known satellites. + +The picture was taken on June 21st by Juno, a probe belonging to NASA, America’s space agency, that is named after the Roman goddess who was both Jupiter’s wife and his sister. If all goes according to plan, Juno will become a 68th satellite of Jupiter on July 4th, arriving almost five years after it was launched. Though Jupiter has had other man-made visitors, all but one of them simply flew past it on their way elsewhere, taking a few photographs to send back home while they gathered energy from the Jovian gravitational field in a so-called slingshot manoeuvre, to speed their journeys up. Only Galileo, which arrived in 1995, has previously gone into orbit around the place. + +Dancing with death + +Doing so is a risky business. Juno, which is, at the moment, moving at around 250,000 kilometres an hour, is one of the fastest man-made objects ever built. When it arrives its guidance computer will have just over 30 minutes to slow the craft down and thread it into a series of long, looping orbits that will cause it to swoop to within 4,500km of the tops of Jupiter’s clouds and then zoom out again to a distance of more than 2.5m km. If anything goes wrong during this deceleration, the probe will have to fix the problem itself. Assistance from Earth will be impossible, for radio signals from mission control in California take nearly an hour to reach it. + +Yet a fix may be needed. Jupiter is a hostile place. Its enormous magnetic field traps and accelerates high-energy particles (mostly protons and electrons) thrown off by the sun. That gives it the fiercest radiation belts of any planet in the solar system. Such radiation plays havoc with electronics. Galileo suffered more than 20 radiation-related glitches over the course of its eight-year mission. These included repeated resets of its main computer, glitches in its cameras and problems with its radio. + +Juno’s electronics are protected by a 200kg titanium vault that has walls a centimetre thick. Its looping orbits are designed to minimise the time it spends in the most radioactive zones. Even so, the radiation will take its toll. NASA expects the craft’s visible-light camera and infra-red instruments to endure for eight orbits or so. Its microwave sensor is rated for 11. Then, in February 2018, when its circuits are on their last legs, it will fire its engine one final time, propel itself into the Jovian atmosphere and destroy itself—a fate already suffered by Galileo. NASA is required by law to ensure that there is no chance any hardy Earthling microbes could hitch a ride to the Jovian moons—especially Europa, which is thought to have beneath its icy surface a liquid-water ocean that might conceivably support life. Juno’s immolation will avoid any possibility of contamination in the future. + +All of this drama is to serve the study of a planet that remains mysterious. Last time, with Galileo, “we learned enough to realise that we don’t understand a lot of things”, says Scott Bolton, an experimental physicist who is the Juno mission’s chief. One particularly mysterious thing is Jupiter’s origin. + +Jupiter belongs to a class of planets called gas giants. (Saturn is another such, and many more have been identified in planetary systems surrounding stars other than the sun.) Researchers know that it was formed from the same primordial cloud of hydrogen and helium (with a scattering of other, heavier elements) as gave birth to the sun. But how exactly this happened is unclear. + +A theory called “core accretion” holds that a rocky core formed first, assembling itself under the influence of gravity from dust grains, then pebbles, then boulders and so on. Once this core acquired sufficient mass, it began attracting hydrogen and helium from the primordial cloud, and would have enough gravity to hold onto them. If this view is correct, Jupiter might be thought of as a rocky planet similar in a way to Earth, but with an absolutely humongous atmosphere. The core-accretion theory, though, has a timing problem. Light exerts pressure, and the pressure of light from the infant sun should, calculations suggest, have driven off most of the hydrogen and helium of the primordial cloud before Jupiter had a chance to grab it. + +A rival hypothesis argues that Jupiter formed without the need for a large rocky core, from a knot in the gas cloud itself. That would make it quite a different beast from an overblown terrestrial planet. One of Juno’s jobs, then, is to try, by measuring subtle variations in Jupiter’s gravitational field, to determine whether the planet has a core, and if so how big it is. This will not, of itself, be enough to resolve the question of how it formed. But it should narrow the range of possibilities. + +Jupiter’s atmosphere is another part of the puzzle. Back in 1995 Galileo dropped a probe into that atmosphere, and this probe reported back comparatively larger helpings of certain heavy elements, including nitrogen and argon, than are found in the sun. This suggests either that Jupiter formed in the cool outer reaches of the early solar system, where such elements would have been more abundant, before migrating to its current position, or that the heavy elements in question were supplied by comets and asteroids from those outer reaches. But there was much less of one heavy element—oxygen—than there should have been. The probe detected little water, the compound into which gas-cloud oxygen is overwhelmingly bundled. So, either astronomers’ theories of why Jupiter is blessed with so many heavy elements are wrong, or else, by sheer bad luck, Galileo’s probe dropped into a particularly dry part of the planet’s atmosphere. + +There is evidence that something like that may, indeed, have happened. Observations by terrestrial telescopes suggested that the probe, which survived for less than an hour before contact was lost, ended up in the downdraft of a giant atmospheric convection cell. This might well have been drier than the surrounding atmosphere because much of the water in it would have condensed and fallen as rain or snow when it was on the upward side of the convention cell. + +Either way, says Dr Bolton, “all we can do is go back and do it again”. And Juno will attempt just that, sampling a different part of the atmosphere with each of its diving loops. Combining measurements from all over the planet should help sort the theoretical sheep from the goats. + +Nor is it theories of the formation of Jupiter alone that are at stake. The chance to poke and prod a gas giant up close could help to shed light on how planetary systems other than the sun’s have formed. One of the big surprises of exoplanetology, as the study of such systems is called, has been the discovery of a type of planet known as “hot Jupiters”. These are gas giants which orbit close to their parental stars—in some cases having orbital periods measured in mere handfuls of days. (By contrast, the orbital period of Mercury, the planet closest to the sun, is 88 days.) Everything researchers think they know about planet formation suggests such worlds could not have formed in their present locations. The radiation from their parent stars would have disassembled them as fast as they formed. + +The assumption, then, is that they must have come into being elsewhere and then migrated closer to their stars. But how that happens, or how common it is, is still unclear. Reconstructing the history of the solar system’s own biggest gas giant could help astronomers understand how billions of other planets in the galaxy came into being, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21701463-mission-jupiter-designed-investigate-giant-planets-historyand/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Energy storage + +Sisyphus’s train set + +A novel idea for storing electricity + +Jul 2nd 2016 | From the print edition + +Ready to rock and roll + +THE easiest way to squirrel electricity away in times of plenty, for use when it is scarce, is to pump water uphill with it. Such pumped storage is widely employed where local geography and hydrology permit, but it does need two basins, at different heights, to act as reservoirs, and a supply of water to fill them. At least one of the basins is likely to have to be artificial. The two must be connected by a tunnel that lets water flow between them. And the tunnel must house turbines attached to electrical devices that can do double duty—as motors to turn the turbine blades when they are pushing water from the lower reservoir to the upper one, and as generators when the blades are rotated in the opposite direction by an aqueous downrush after the upper sluices are opened. + +Where geography does not favour pumped storage, though, the search is on for alternatives. These range from giant batteries, via caverns filled with compressed air, to huge flywheels made of carbon-fibre composites. But one firm looking into the matter eschews all these. It has stuck with the logic of pumped storage, which is to move large amounts of matter up and down hills. The difference is that in its case the matter is solid. + +The firm in question calls itself ARES, which stands for Advanced Rail Energy Storage. A more apt figure from Greek mythology than the god of war, though, might be Sisyphus, who was condemned by the gods to push a rock to the top of a mountain, only for it to roll back down again so that he had to repeat the punishment for eternity. ARES does indeed push rocks uphill, only to let them roll down again. + +The rocks stand in for the water in a pumped-storage system. They are carried up- and downhill by a train that is thus the equivalent of the turbines. The track the train runs on is equivalent to the tunnel. And the motors that drive the train act, like the electrical kit of a pumped-storage turbine, as generators when they run in reverse as the train rolls backwards downhill, pulled by gravity. + +ARES built a prototype of this arrangement in 2013, near a wind farm in Tehachapi, California. Linking a storage system with an intermittent source of supply such as a wind farm is useful, because it can be employed to bolster the farm’s output when the wind is not strong enough, a process called load balancing. + +The prototype proved the principle, and now the company has bigger plans. In March it received approval from America’s Bureau of Land Management to lease land to build a track near Pahrump, Nevada. This would run larger trains than those at Tehachapi, and these would carry their rocks in concrete boxes, rather than loose. Once at the top of the track, the boxes would be raised by jacks built into the wagons carrying them, rotated and then lowered back down onto supports on either side of the track, so that they straddled the track above the height of a train, like bridges. Freed of their burdens, the trains would then run back downhill to fetch more loads. When the time came to generate power, the process would be reversed. + +The hill ARES has chosen has a gradient of about 8%. The track itself is just under 9km (about 5½ miles) long. The company estimates that its proposed system will be able to store 12.5 MWh of energy, and deliver it back to the grid at a rate of up to 50MW. That is still small compared with pumped storage (the Dinorwig facility in Britain, for example, has a capacity of 10.8GWh and a maximum output of 1.8GW), but ARES’s engineers think it is enough to make commercial sense, at least in principle. And if principle turns to practice, it can be enlarged. + +Such a Sisyphean solution is unlikely to beat pumped storage in places where that is possible, but in parched landscapes like Nevada’s it has every chance of doing so. And, since deserts often host power stations that rely on the renewable but intermittent fuel of sunlight, this might give it quite a comfortable niche in a world where using fossil fuels to generate electricity is increasingly frowned on. At the moment, ARES’s plan is simply to draw power from the grid when it is cheap and sell it back when it is expensive. But the logical end of the line for such a railway is as a load-balancer for local solar-power stations. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21701466-novel-idea-storing-electricity-sisyphuss-train-set/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Geolocation + +Addressing the world + +How to find anywhere on the planet + +Jul 2nd 2016 | From the print edition + + + +LAST year, a brush fire threatened the home of Ganhuyag Chuluun Hutagt, who lives in Mongolia’s capital, Ulaanbaatar. Instead of giving the fire brigade his address, though, Mr Ganhuyag had to guide them to the blaze by describing a series of landmarks along the way. That was because, like most buildings in Mongolia, his house does not have an address. Road names and building numbers are so sparse there that fewer than 1% of Mongolians do. But Mr Ganhuyag, who is on the board of the country’s post office, Mongol Post, proposes to do something about it. + +Thanks to his urging, Mongol Post is adopting an ingenious new system of addresses that can locate any place in the country—and, indeed, in the world. Instead of house number, street name, town, province and so on, or the unwieldy co-ordinates of latitude and longitude, this system, the brainchild of Chris Sheldrick, boss of What3Words, a firm based in London, divides the Earth’s surface into nine-metre-square blocks. Each block is then given names consisting of trios of randomly selected, unrelated words. One patch of Siberia, for example, is called, in English, “mirroring.surrendered.epidemics”. But it also has nine other names, in other languages, including Russian. + +Divvying up Earth’s surface into nine-metre-square blocks requires nearly 57 trillion addresses (to be precise, 56,764,364,951,858 of them). That sounds a lot, but Mr Sheldrick realised that 40,000 words would be enough to do the job—indeed, more than enough, since that number actually yields 64 trillion three-word combinations. Moreover, places that are at sea have only English addresses. The other languages, restricted to the land, thus require a mere 25,000 words each. When drawing up a list in a new language, What3Words’ linguists toss out homophones, and also any words that may create offence, such as “fondle”, in English, or, in Arabic, words for alcoholic drinks. Otherwise, words are selected based on their familiarity and frequency of use. + +A way with words + +Besides nailing down locations in Mongolia, Mr Sheldrick’s system is also proving useful in the favelas of Rio de Janeiro. That city’s government has, according to Sila Vieira da Silva, failed to generate addresses fast enough to keep up with the new shacks and alleyways appearing in these shanty towns, and does not bother to bring post into at least 11 of them anyway. Mr Vieira da Silva is one of the owners of Carteiro Amigo, a company that has delivered letters in Rio’s favelas since 2000 by compiling directions to residents who pay for the service. Now, using software licensed from What3Words, Carteiro Amigo is converting to three-word addresses. + +Rich countries, too, can benefit, says Peter Atalla, the boss of Navmii, a London firm that has folded What3Words’ software into navigation apps for motorists. One search in ten that uses Navmii’s app is for a What3Words address. Not only are they easy to memorise, type out and communicate by phone, Mr Atalla says people also like the precision of directing others to, say, a specific entrance rather than an entire building, or to a picnic spot instead of the whole park. Direct Today Couriers, another British outfit, reports that converting standard addresses into What3Words ones has reduced the number of missed deliveries by 83%. Watch.this.space. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21701467-how-find-anywhere-planet-addressing-world/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Card games and psychology + +Telling it like it is + +A person’s gaze changes when he is adding up the points in his hand + +Jul 2nd 2016 | From the print edition + +VINGT-ET-UN, known to Americans as blackjack, is a card game in which players must decide whether the value of the two-card hand they are dealt is likely to be enough to beat the dealer’s unseen hand, or whether they should risk going bust by adding to it, one card at a time, as they seek to get as close as possible to a permitted maximum of 21 points. (Court cards are worth ten; aces score either one or 11, at the holder’s discretion.) + +Making constant calculations is thus an essential part of this game—a fact that Kevin Holmes, a psychologist at Colorado College, in Colorado Springs, has used to test his hypothesis that such calculation will cause players to give away, by their eye movements, the sorts of hand they have. As he reports in Psychonomic Bulletin and Review, it turns out that they do. + +Dr Holmes knew from studies by others that when people are asked to perform a mental calculation and then to point to the location of the answer on an unmarked horizontal line (known as a number line) whose left-hand end represents a numerical value, such as zero, and whose right-hand end represents a larger one, such as 100, they have a tendency to get it wrong. Specifically, they point to the left of the correct location on the line if the problem was a subtraction and to the right if addition was involved. This applies even when the calculations in question result in the same answers. He suspected that this phenomenon might reflect an underlying mental process that would manifest itself in other ways, too—such as the direction of a person’s gaze to the left or to the right while calculating. Since vingt-et-un involves just such calculations, it seemed to him a good basis for an experiment to try the idea out. + +He and his colleagues therefore asked 58 volunteers to play a version of the game on a computer while having their eye movements tracked. Volunteers were told the game’s rules (which differed slightly from the normal ones, in that the initial hand was a single card and aces always counted high). They were also told that their objective was to accumulate as many wins as they could, before being sat in a darkened room in front of a computer screen. After six practice games, to ensure that they understood what was going on, they were presented, one hand at a time, with 52 preset hands in random order. + +The volunteers, all students, played well. They averaged 18.1 points per game, indicating both that they understood the rules and that they were engaged with the problem. And the eye-tracking data revealed that their gazes did indeed shift as the value of their hands grew. Hands of a mere two or three points (ie, an initial deuce or trey) actually caused a leftward veering of the eyes, albeit by a mere 0.1°. As the value of a hand increased, though, the holder’s eyes veered rightward until, if he was lucky enough to accumulate 21 points, they were pointing 0.4° off-centre in that direction. Vertical eye movements, in contrast, showed little relation to hand value. + +To be sure that volunteers were responding to the growing value of a hand, rather than the growing number of cards in it, Dr Holmes and his colleagues checked it really was the accumulated value which was driving the process. They found it was. Volunteers’ gazes inclined no farther to the right if, for example, they held four twos rather than two fours. Nor was the value of the most recently dealt card pertinent. Receiving a high-value card like a ten did not provoke a strong rightward glance unless it followed, say, a seven or an eight, and thus resulted in a reasonably high score. + +The upshot, Dr Holmes believes, is that something about the process of mental arithmetic does indeed involve a left-right mental shift, perhaps along an imaginary number line in the brain, and that this is reflected in involuntary bodily actions. Sadly for gamblers, the involuntary “tell” he has discovered is of no practical use in winning a game, since the dealer’s hand is blind to everyone, dealer included, until all others have played. Casino owners everywhere can breathe a sigh of relief. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21701468-persons-gaze-changes-when-he-adding-up-points-his-hand-telling-it/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +An ancient wing + +Palaeontology + +Jul 2nd 2016 | From the print edition + + + +This photograph is of part of a bird wing preserved in amber from northern Myanmar. It dates from 99m years ago, during the Cretaceous period, and is described in this week’s Nature Communications by Lida Xing of China University of Geosciences, in Beijing, and her colleagues. It is one of two wings, the first known to have been preserved in amber, that her team discovered. Both belonged to juveniles of a group called the Enantiornithes that had claws on their wings (one such is marked with an arrow), probably to help them grip trunks and branches when they climbed trees. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21701469-palaeontology/print + + + + + +Previous Articles Sections Next + + + +Books and arts + + + + + +A tale of technology: Highs and lows + +Football: The time of their lives + +Musical biography: Piano man + +A memoir of Libya: O mio babbino caro + +Johnson: Passive panic + + + + + +Articles Sections Next + +A tale of technology + +Highs and lows + +The strange story of the Iridium project and how it was brought back from the dead + +Jul 2nd 2016 | From the print edition + + + +Eccentric Orbits: The Iridium Story. By John Bloom. Grove Atlantic; 537 pages; $27.50. + +IRIDIUM was among the most ambitious projects in the history of technology. Yet it soon led to one of the world’s biggest bankruptcies. Today, 17 years on, Iridium is a remarkable comeback story: a global communications tool of last resort for soldiers, sailors and others who happen to find themselves in the nine-tenths of the world that does not have terrestrial mobile-phone reception and probably never will. The company has nearly 800,000 paying customers who generate annual revenues of more than $400m. + +In the early 1990s global satellite-phone systems had investors enthralled. No fewer than ten different constellations of these systems were supposed to be built, each costing billions of dollars. If all had been launched as planned, the skies would now be teeming with what are essentially flying wireless base stations. + +The most ambitious of them all, technically, was Iridium. Instead of plastering the Earth with millions of antennae, the idea went, why not put them on a constellation of satellites that could cover the entire planet with a wireless signal? John Bloom’s “Eccentric Orbits”, an exhaustive account of the plan, shows how after years of research in the late 1980s, three talented engineers at Motorola, a tech giant, found an impressive solution: 66 satellites in low orbits. Each would move at nearly 17,000 miles (27,360km) an hour 485 miles above the planet. Despite the speed, they could still communicate with each other and with handsets anywhere on Earth, meaning that a call could be routed around the planet without using a terrestrial network. + +The launch of the constellation took place without major hiccup. The technology worked largely as planned, too. But as a business Iridium was a disaster: less than a year after the first commercial call the company filed for bankruptcy. It was done for by its big phones with their even bigger antennae, costing $3,795 each, calling costs of $4 per minute and a much cheaper terrestrial mobile-phone system. By the time its bosses went to the bankruptcy court in August 1999, Iridium had cost more than $6 billion to build. It had just 63,000 customers and revenues of a few million. + +Not surprisingly, no deep-pocketed buyer emerged. Motorola, Iridium’s biggest shareholder and operator, would have unceremoniously destroyed the constellation had it not been for Dan Colussy, an American businessman who had previously worked for Pan Am, a now-defunct airline, and restructured United Nuclear Corporation. Almost single-handedly he persuaded a hotch-potch of investors (including an elusive Saudi prince and an American media mogul), Motorola, the Pentagon and ultimately the White House to give Iridium a second chance. In November 2000 Mr Colussy took control of Iridium for $25m. + +The side plots in the book are even more interesting. One is the role of America’s military-industrial complex. Iridium would never have seen the light of day without defence spending. The communications system that links the satellites was a child of Ronald Reagan’s “Star Wars” programme. The Pentagon, which needed a portable system to communicate with troops, signed a sizeable contract that allowed Mr Colussy to convince his colleagues to invest. Incidentally, Iridium seems also to be a great global surveillance tool, suggests Mr Bloom: half-a-dozen “government operatives” were stationed at the control centre of the reborn company. (“Colussy didn’t know exactly what they did, and didn’t want to know,” he writes.) + +Iridium is also a stark reminder of how rapidly tech giants can decline. A pioneer of everything from car radios to mobile phones, Motorola had been the Apple of its time. But by the time it launched the satellites, it had become a company dominated by lawyers and accountants. When it set up Iridium as a separate company, Motorola burdened the firm with a monthly operations charge of $45m—and refused to reduce it even in the face of mounting financial troubles. + +Chance too played an important role in Iridium. Only off-the-shelf parts were used for the satellites, which meant that they were equipped with a fuel tank that holds about eight times as much as needed. But engineers then filled them up to the limit, a big reason why the constellation has survived until now, instead of having to be replaced after a few years. Similarly, if Mr Colussy had not joined a friend on his yacht and listened to complaints that his Iridium phone had stopped working because of Motorola’s de-orbiting plans, he would probably never have thought about buying the system. + +Could the world, under the right circumstances, have ended up dominated by wireless phone systems in the sky, rather than on Earth—the original vision behind Iridium and other such systems? Perhaps. But it is hard to imagine a constellation of satellites big enough to serve billions of smartphones and other untethered devices that exist now. Instead of competing with mobile networks, satellite-phone systems have become a complement. + +Most important, the Iridium story will not be over when the original constellation finally starts falling out of the sky at the end of the decade. The firm plans to launch the first next-generation satellites in September—thanks to the French government, which has guaranteed the financing. Exhausting details aside, “Eccentric Orbits” not only offers good corporate drama, but is an enlightening narrative of how new communications infrastructures often come about: with a lot of luck, government help and investors who do not ask too many questions. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21701462-strange-story-iridium-project-and-how-it-was-brought-back-dead-highs/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Football + +The time of their lives + +Memoirs of when football was a beautiful game + +Jul 2nd 2016 | From the print edition + +Football Manager: Game Over + +Fifty Years of Hurt. By Henry Winter. Bantam Press; 388 pages; £20. + +Out of Time: 1966 and the End of Old-Fashioned Britain. By Peter Chapman. Wisden; 268 pages; $30.Bloomsbury; £18.99. + +When We Were Lions: Euro ‘96 and the Last Great British Summer. By Paul Rees. Aurum Press; 328 pages; $28.99 and £18.99. + +ALMOST exactly 50 years ago, England won football’s World Cup for the first and only time. Since then, much effort has gone into repeating this feat. There have been near-misses, in 1990 and 2002, but as Henry Winter notes in “Fifty Years of Hurt”, England have failed to qualify for these tournaments more often than they have reached the semi-finals. For a football-mad country, he argues, this constitutes a national disgrace. Following their ignominious exit on June 27th from Euro 2016, two questions are raised: why is the team now so mediocre, and how did it once become the best in the world? + +Peter Chapman turned 18 and was living in London in 1966. “Out of Time” is a gentle and affectionate portrait of the capital’s gradual awakening to the charm of pop culture at that time. Mr Chapman’s World Cup anecdotes reveal a quaint, even naive, event. England were not expected to do well. The visiting Brazilians were concerned about being accused of doping, owing to the amount of caffeine they drank. On the day of the final, the Times ran a football story on its front page, but it concerned a former international, Stanley Matthews, who had suffered minor injuries in a car crash. When the tournament started, no one thought much of England’s chances. But by the final, this had changed. Mr Chapman was certain England would beat West Germany. His confidence was explicable: England had played eight games against the Germans and won seven. + +Mr Chapman and Mr Winter saw 1966 as a triumph for the England coach, Alf Ramsey. He combined European intellectualism with English brawn. Until then tactics were viewed as “devious plans” employed by “foreigners”, but Ramsey disregarded this prejudice. He was also tough. He threatened to resign if the Football Association interfered with team selection. After an uncertain build-up, Ramsey coaxed the best from creative players, such as Bobby Charlton and Martin Peters, while Alan Ball and Nobby Stiles harassed their opponents into submission. + +Thirty years later, England hosted the 1996 European Championships. As in 1966, the home team were unfancied and interest in the tournament was tepid. Paul Rees, in “When We Were Lions”, says Euro 96 threatened to fall between two stools. “The supporter base was still the working classes, and they were in the process of being priced out of the game. But a bigger, more affluent replacement audience had not yet been tempted.” England, under the tutelage of Terry Venables and soundtracked by the ubiquitous “Three Lions”, were irresistible, or at least until they had to play the Germans. + +Yet it was the Premier League—thanks to the savvy marketing of BSkyB—not the England team that benefited from Euro 96. Ticket prices rose, foreign players were lured in and the grounds sanitised. Mr Rees summarises this transformation succinctly: “In 1985, Chelsea chairman Ken Bates threatened to erect electric fences to deter hooligans from invading the pitch. Thirteen years later he would open a four-star hotel on the site.” + +The success of the Premier League is a problem for England, according to Mr Winter. His book is in two halves. The first runs through a potted history of the England team. His excellent contacts have brought him interviews with key players. In turn, he allows them plenty of airtime and quotes them verbatim. This works well with the articulate Gary Lineker; less so with the garbled Chris Waddle. The second half analyses where the old pros think they went wrong. Many of these arguments are well trodden: the number of foreign players has diluted the talent pool; national-team coaches are suspicious of flair and try to stifle these players with restrictive tactics; players’ appetite for representing England has been diminished by the glamour of the Premier League. + +Mr Winter finds fresher material when speaking to Colin Gordon, a player-turned-agent, who has witnessed some of the vampiric practices of the business. To a promising youngster, his competitors “offer jobs, cars, houses, money. They’ll message 14-year-old kids: ‘What’s going on? Have you got an agent? We’ve got so-and-so, will you meet us?’” Noting the life-changing financial impact of having a child prodigy in the family, even well-intentioned parents have their heads turned. + +There is an elegiac tone to all three works. English football is now unfathomably rich, drawing in the world’s best players. Roy Hodgson (pictured) was comfortably the highest-paid coach at the Euros. But this money has yet to deliver success for the England team. The 1966 win was unexpected, a happy coming together of “spirit, virtuosity and tactical organisation”, according to Mr Winter. Mr Rees quotes Noel Gallagher of Oasis, who hit their peak in 1996 with two enormous concerts in the English countryside: “We flew into Knebworth in a helicopter, but we were all wearing Adidas trainers. It was still a little bit unprofessional. Once [guitarist] Bonehead and [bassist] Guigsy became millionaires, I think they wanted out.” There is an obvious parallel here. English football used to be driven by ambition, even if it was ragged at the edges. Now it has grown fat, its hunger sated. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21701464-memoirs-when-football-was-beautiful-game-time-their-lives/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Musical biography + +Piano man + +A biography of Franz Liszt, who lived life to the full + +Jul 2nd 2016 | From the print edition + +Franz Liszt: Musician, Celebrity, Superstar. By Oliver Hilmes. Translated by Stewart Spencer. Yale University Press; 353 pages; $38 and £25. + +AN INFECTIOUS disease swept through musical Europe in the mid-19th century. It was christened “Lisztomania” by Heinrich Heine, a German poet. Women were its main victims, with fetishism and erotic fantasies the presenting symptoms; the lady who devoutly poured the dregs from Franz Liszt’s tea cup into her scent-bottle was one case. Moreover, clad in black and tossing his shoulder-length locks as he swayed histrionically over the keyboard, Liszt too was addicted to playing his part in this communal rapture. + +Oliver Hilmes oddly suggests at the end of his book that the “real Liszt” may never have existed, and that his personality consisted of “irreconcilable opposites”. But lifelong narcissism combined with a deep sense of artistic purpose would seem to furnish a perfectly adequate explanation for his switchback career. At 16, while earning fabulous sums as a recitalist, he later wrote that he felt sick of being “a performing dog” and yearned to join the priesthood; at 20 he gaily dived into salons in Paris while immersing himself in proto-Marxist philosophy; when he was 35 and at the height of his fame, he suddenly abandoned his virtuoso career to devote himself to conducting, teaching and playing in concerts for charity; at 54 he took orders to become an abbé, but that in no way inhibited his brilliantly successful talent for self-publicity, or for bewitching the female pupils who continued to pursue him almost to the end of his days. Charismatic Olga Janina, like Liszt a cigar-smoker, laid siege to him armed with a revolver (to dispatch him, if he didn’t yield) and bottles of poison (to dispatch herself). + +If this book has a once-over-lightly feel, that is because there were many intertwined strands in Liszt’s extraordinary life, each of which could merit a book in itself. As a musical biography, Mr Hilmes’s account is superficial compared with Alan Walker’s three-volume “Franz Liszt”, which authoritatively analyses Liszt’s achievements as composer, conductor and polemicist, and demonstrates his pivotal importance in the development of European music. + +But Mr Hilmes is illuminating on the emergence—and continuance into old age—of Liszt’s preternatural gifts as a pianist. And by drawing on hitherto unpublished documentary sources he provides a riveting chronicle of the composer’s tangled relationships. He spent 11 sexually tempestuous years with the Countess Marie d’Agoult, followed by 39 tormentedly religious ones with the intellectually formidable (and immensely rich) Princess Carolyne von Sayn-Wittgenstein; his flings on the side tended to be quite serious too. + +But the real tragedy lay in Liszt’s relationship with his daughter Cosima. She waited half her life to punish the father who had deserted her mother and then placed his daughters under a pathologically cruel governess. As wife of the egotistic Richard Wagner, whose music Liszt loyally championed for 40 years, Cosima contemptuously reduced her father to the status of a lackey in the Wagner establishment, denying him all affection in his helpless dying days. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21701460-biography-franz-liszt-who-lived-life-full-piano-man/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A memoir of Libya + +O mio babbino caro + +Tale of a lost father and fatherland + +Jul 2nd 2016 | From the print edition + +Grief is the price he paid for love + +The Return: Fathers, Sons and the Land In Between.By Hisham Matar.Random House; 276 pages; $26.. Buy from Amazon.co.uk (ISBN=unknown) + +“EVEN today,” writes Hisham Matar (pictured) of Libya’s troubled history, “to be Libyan is to live with questions.” The same, of course, could apply to those Western politicians who applauded the fall of Qaddafi, and now see a failed state just across the Mediterranean from Italy, providing fresh territory for Islamic State and exporting desperate migrants to seek a better future in Europe. + +Mr Matar’s questions, however, go well beyond politics. This beautifully written memoir deals with the nature of family, the emotions of exile and the ties that link the present with the past—in particular the son with his father, Jaballa Matar. Is Jaballa still alive somewhere in a post-Qaddafi dungeon, or did he die in the 1996 massacre of 1,270 inmates of Tripoli’s notorious Abu Salim prison? Can the son contrive some certainty from the scraps of conflicting information garnered over the decades since 1990, when his father was kidnapped in Cairo by Egypt’s secret police and handed over to the Qaddafi regime? + +Ultimately, there is no certainty. The snapshots of the past are blurred with age: the heroic father, escaping in 1980 first to Chad and then to Egypt, where he joined his wife and children, and then at times slipping back into Libya in disguise in order to see his own father; the meetings with relatives in Cairo, London and Nairobi, all of them places of exile—and then the return to a Benghazi temporarily euphoric after the death of Qaddafi. + +The search for Jaballa is an obsession that takes the son into the corridors of power. David Miliband, then Britain’s foreign secretary, is “warm and jovial”; in the House of Lords, Peter Mandelson “seemed deliberately without emotion”; Lord Rothschild, formerly an adviser to the Libyan Investment Authority, asks his son Nathaniel to arrange a meeting with his friend, Saif al-Islam—Qaddafi’s favourite son. The press and various human-rights organisations call for information. Desmond Tutu, a Nobel laureate, appeals to Qaddafi “to urgently clarify the fate and whereabouts of Jaballa Matar”. Only Nelson Mandela (“too indebted to Qaddafi to risk upsetting him”, in Mr Matar’s wounding phrase) is unwilling to help. + +Could Saif al-Islam (now detained by one Libyan militia and sentenced to death in absentia by one of the country’s rival governments) have answered Mr Matar’s questions? Quite probably—but Saif’s promise to help was too conditional to be relied on, and was soon overtaken by the uprising against the regime. As one expert from Amnesty International had once warned Mr Matar: “There is no country where the oppressed and the oppressor are so intertwined as in Libya.” + +This book is not the first time that Mr Matar has explored “the land in between” in his search for his father. Much of his memoir appeared in an article in the New Yorker three years ago. But what gradually emerges from this longer version is a more nuanced portrait of the author himself: born in New York, where Jaballa had been posted as a diplomat in the early days of Qaddafi’s rule, but living for most of his life outside a Libya he remembered only as a child. The cities in his life are just temporary anchors as he studies architecture before becoming a poet and writer so talented that his first novel (“In the Country of Men”) was shortlisted for the Man Booker prize, Britain’s most coveted literary award. In his memoir he is both the agent and the observer of a life without roots. + +Should he still hope for certainty? One of Mr Matar’s habits as a poor young man was to study a single painting in the National Gallery. For a time the painting was a work by Velázquez. But at 25, he abruptly switched his attention to Manet’s “The Execution of Maximilian”—unaware that it was the very day of the Abu Salim massacre. With post-Qaddafi Libya in bloody turmoil, it is tempting to wonder what might now capture his attention. Picasso’s “Guernica” is an obvious possibility, but perhaps a better choice would be Cézanne’s portrait of his father reading L’Evénement. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21701465-tale-lost-father-and-fatherland-o-mio-babbino-caro/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +Passive panic + +In partial defence of an unloved grammatical tool + +Jul 2nd 2016 | From the print edition + + + +PITY the passive voice. No feature of the grammar of English has such a bad reputation. Style guides, including that of The Economist, as well as usage books like the celebrated American “Elements of Style”, warn writers off the passive, and automated grammar-checkers often suggest that passive clauses be redrafted. There are just two problems with this advice. One is that a diminishing proportion of the world’s pundits seem to know what the passive voice is. And the other is that the advice is an unwieldy hammer, when not every writing problem is a nail. + +The proper brief against the passive is twofold. One is that it can obscure who did what in a sentence. Barack Obama said recently that “There is no doubt that civilians were killed that shouldn’t have been,” the passive voice hiding who did that killing: drones under the president’s command. Donald Trump, the presumptive Republican nominee to replace Mr Obama as president, tried to slip away from the controversy of his racist comments about a Mexican-American judge: “Questions were raised” about the judge’s impartiality, said Mr Trump. Who raised those questions? Why, Mr Trump. + +The other criticism of the passive voice is that it recurs in the worst kind of prose: leaden academic and bureaucratic writing in particular. A scientific paper often describes how “Participants were selected for certain characteristics…it was noted that they behaved in a certain way… results were analysed…” Besides being dull, these relentless passives make the process seem oddly disembodied, as though the research somehow performed itself. + +But critics of the passive often go wrong. Stephen King, a horror novelist, in an entertaining rant against the passive in his autobiography, refers to it several times as the “passive tense”. It isn’t a tense. Tense has to do with when things happen in time. Voice structures who did what to whom in a sentence. In the typical active sentence, the subject is the doer of the action: he kicked the ball. In the typical passive sentence, the recipient of action becomes the subject: the ball was kicked. + +Where critics have gone wrong is in diagnosing all kinds of vagueness as passive voice, even when there’s no grammatical passive to be found. Mark Carney, governor of the Bank of England, said recently that “there are no immediate plans for the £50 note…The feedback is that the notes need to be smaller; different sizes, but smaller.” A critic in America’s National Review carped: “Excellent use of the passive voice, Governor.” Except that there is no passive at all: “there are no immediate plans…the feedback is…” may be flabby, but passive they aren’t. + +The problem is in confusing action and vigorous writing with the active voice, and weak, vague sentences with the passive. Voice has little to do with content. “The journalist dozed on his desk” is active. “London was destroyed by aliens” is passive. Nor is clarity always an issue. The active voice can be vague: “Someone ate my cake.” The passive can be quite clear: “My cake was eaten by the neighbours’ kids.” (Only the “short passive” omits the miscreant: “The cake was eaten.”) + +The passive can be useful. “I’ll never forget the day my pet hamster was run over” emphasises the speaker’s emotion, and the poor hamster. Only if the villain needs emphasising should this be “I’ll never forget the day Steve ran over my hamster.” And the passive can be good for connecting things: “Jim loved nothing more than his oboe. Then one day it was stolen.” The oboe is the last thing mentioned in the first sentence. While fresh in the readers mind, it should be the subject of the second. + +The advice needed is stylistic, not grammatical. The problem with the “short passive” is that it can be incomplete: where full information is important, the real advice should be “include all needed information” rather than “never use the passive.” Where passive voices plod one after the other, the writer should vary sentence structure and where the passive results in awkward flow, use sentence structure to link information sensibly for the reader’s sake. + +Inexperienced writers can certainly overdo the passive, which can feel “grown up”, serious. Telling them to prefer the active would be good advice. But to demonise a useful grammatical tool takes things too far. Many mistakes have been made in castigating the passive; not to name names, but it is time the language mavens improved their advice. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21701461-partial-defence-unloved-grammatical-tool-passive-panic/print + + + + + +Previous Articles Sections Next + + + +Obituary + + + + + +Obituary: Amjad Sabri: Hate and love + + + + + +Articles Sections Next + +Obituary: Amjad Sabri + +Hate and love + +Amjad Sabri, Pakistan’s favourite qawwali singer, was killed on June 22nd, aged 45 + +Jul 2nd 2016 | From the print edition + + + +HIS father, Ghulam Farid Sabri, sang that way. His uncle, Maqbool Ahmed Sabri, sang that way. His ancestors had done so too, right back to the time of Mian Tansen, a favourite musician at the Mughal court, who received 100,000 gold coins for his first performance. The Sabri house in Karachi was full of the wheeze of portable harmoniums, the patter of drums and the joyous, repetitive mantras of qawwali, the songs of the millions of South Asian followers of the mystical Sufi strain of Islam. So it was no wonder that from early childhood Amjad Sabri joined the chorus, hauled out of bed by his father at 4am to wash, say his prayers, fetch his instrument and sing the first raga of the dawn. The long preparation was worth it, to feel one with the sunrise. + +He knew this was not ordinary music. It was a love song to the prophet Muhammad, to Ali, his son-in-law and closest disciple, to the Sufi saints and above all to God directly, music being the only sure way to evoke and approach Him. Qawwali was a plea to be noticed at the court of heaven, admitted to the presence, absorbed into the heartbeat and the breath, as in his father’s most famous song, “Tajdar-e-haram”, “King of the Holy Sanctuary”: + +What should I tell you, O Prince of Arabia, + +You already know what is in my heart, + +In our separation, O Untaught One, + +Our sleepless nights are so hard to bear + +In your love I’ve lost all consciousness + +Tajdar-e-haram, tajdar-e-haram + + + +As he or his relations sang, the audience would start to sway, clap, sing along, dance and lose themselves in the ecstasy of God. His father would cry “Allah! Allah!” in the midst of his singing, an invocation so powerful that even non-Muslims would start to shout it after him. In adulthood Amjad, always careful to preserve his father’s modulations, did this too, enjoying the effect it had on his listeners. Indeed, his whole performance radiated calm, confidence and joy: a big, burly man with luxuriant long black hair, brown karakul hat, one small gold earring and many chunky rings, effortlessly smiling and gesticulating through his glorious baritone singing. “Bhar do Jholi” was his most famous song, “Fill my Bag”, or “Fulfil my Wish”: + +Fill my bag, O Lord, Fill all our bags, + +O Lord, Fill the bag, + +O Guide, Fill my bag, + +O Lord of Medina, + +I won’t return empty-handed! + +Bhar do jholi, bhar do jholi… + + + +He was not doctrinaire about this. He would sing in Sufi shrines, cross-legged on a mat with a skull-capped chorus, or perform like a rock star, standing at a mic under bright lights in a flamingo-pink cotta. On TV he sang regularly for the morning shows, especially during Ramadan, and would take part in the silly games too, if the presenters asked him. He sang all over South Asia (being a star in India and Bangladesh as well) and took qawwali to Europe and America, where he performed backed by saxophones. Bollywood invited him, and he was happy to sing on film; Bollywood actresses posed with him. The only problem with all his globetrotting, for he liked his food, was the difficulty of finding good halal meals, but he taught himself to cook a fine aloo gosht, beef-and-potato curry, to keep himself going. + +Filling the wine-cup + +Much larger obstacles reared their heads at home. To the Pakistani Taliban the wildness of Sufism, its decadent Persian origins, its veneration of saints, its reminders of an Islam disseminated through art, music and dance, were all anathema. So was its easy openness to all faiths and people, demonstrated in the way its greatest living qawwal would stroll around the narrow, teeming lanes of Liaquatabad in Karachi, shoot a piece or two on the carrom boards, treat some hapless batsman to his off-spin, chat to the man in the cigarette booth and, indeed, mix Hindu ragas naturally with his songs. He also declared that his own favourite qawwal was Aziz Mian, who played on the much-loved Sufi metaphor of drunkenness in God’s love to cry “Let’s drink! Fill my wine-cup to overflowing!” + +So Sufi shrines began to be bombed by the Taliban, and singers shot at. The establishment failed to take the Sufis’ side, preferring to blazon its respect for orthodox religion. It was the high court, not the Taliban, that accused Mr Sabri of blasphemy in 2014 for singing a song that mentioned members of Muhammad’s family on one of those morning shows. The threats came closer, extra-legal this time: six months ago three men burst into his house, retreating only because they did not find him there. Some friends said he had asked for protection; others thought he never would. His last song on TV included the refrain “When I shudder in my dark tomb, dear Prophet, look after me.” + +He was on his way to do another morning show when two men on a motorcycle riddled his car with bullets. The Pakistani Taliban declared that they had done it, killing a blasphemer. It happened close to the underpass that had been named after his father in more tolerant times. + +His father had sung that way. His uncle had sung that way. And his 12-year-old son defiantly performed his “Karam Mangta Hun” (“I ask for Kindness, Lord”) in tribute to him; for the greatest message of Sufi Islam to the world is the unshakable primacy of music, peace and love. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21701453-amjad-sabri-pakistans-favourite-qawwali-singer-was-killed-june-22nd-aged-45-hate-and-love/print + + + + + +Articles Sections Next + + + +Economic and financial indicators + + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +World's biggest banks + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Jul 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21701474/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Economic data + +Jul 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21701492-economic-data-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Jun 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21701551-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Jul 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21701472-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +World's biggest banks + +Jul 2nd 2016 | From the print edition + + + +Industrial and Commercial Bank of China (ICBC) was the biggest bank in the world at the end of last year, according to The Banker, which ranks the top 1,000 banks by Tier-1 capital holdings (mostly common stock and retained earnings). Chinese banks now occupy four of the top five places, as Agricultural Bank of China displaced Bank of America to become the world’s fifth-biggest bank on this measure. That was the only change to the top ten ranking from the previous year. Although Chinese banks were more profitable than those of any other country last year, accounting for 32% of the total profit pool, performance has peaked. Profits fell by 3.5%, the first drop since 2004, and bad loans are rising. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21701473-worlds-biggest-banks/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Jul 2nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21701475-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist + +The world this week + + + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + + + +Liberalism after Brexit: The politics of anger + + + + + +Brexit’s fallout: Adrift + + + + + +The attack on Ataturk airport: Turkey’s agony + + + + + +Diamonds: Shine on + + + + + +Cities: The right kind of sprawl + + + + + +Letters + + + + + +On Brexit: Letters to the editor + + + + + +Briefing + + + + + +Brexit: An aggravating absence + + + + + +The negotiations: Article 50 ways to leave your lover + + + + + +The economic fallout: Managing chaos + + + + + +United States + + + + + +Voters in the industrial Midwest: Rustproofing + + + + + +The Supreme Court: Two left feats + + + + + +Puerto Rico: Exodus postponed + + + + + +Crime and punishment: Billy the kid + + + + + +Lexington: More than a hobby + + + + + +The Americas + + + + + +Brazilian trade: Of legumes and liberalisation + + + + + +Colombia’s war: Unpopular is the peacemaker + + + + + +Argentina: Erasing the Kirchner cult + + + + + +Bello: Those spendthrift Latins + + + + + +Asia + + + + + +Central Asia: Stans undelivered + + + + + +China and Taiwan: Great stonewall + + + + + +Politics in Japan: Master plan + + + + + +Indonesia and the South China Sea: Annoyed in Natuna + + + + + +Indian social media: A pulpit for bullies + + + + + +Banyan: The forest and the trees + + + + + +China + + + + + +Foreign policy: Our bulldozers, our rules + + + + + +Middle East and Africa + + + + + +African entrepreneurs: Opportunities galore + + + + + +Shopping in South Africa: Buying on credit is so nice + + + + + +Medical drones in Africa: Help from above + + + + + +Israel and Turkey: Let’s try again + + + + + +The economics of Ramadan: Less work and more pray... + + + + + +Beer in the Arab world: Of brewers and bureaucrats + + + + + +Europe + + + + + +A terrorist attack on Istanbul’s airport: Soft target + + + + + +NATO’s summit: Trip-wire deterrence + + + + + +Spain’s election: Revolution cancelled + + + + + +Ireland post-Brexit: Put asunder + + + + + +Repression in Russia: Prelude to a purge + + + + + +Charlemagne: And shut the door behind you + + + + + +Britain + + + + + +Post-Brexit politics: Shifting sands + + + + + +The United Kingdom: Fragmentation nation + + + + + +Brexit, business and the economy: Sifting through the wreckage + + + + + +Cornwall and Europe: I owe EU + + + + + +Bagehot: Brexitland versus Londonia + + + + + +International + + + + + +Urban sprawl: Bourgeois shanty towns + + + + + +Business + + + + + +Europe v America: From clout to rout + + + + + +The diamond industry: In the rough + + + + + +Web browsers: Window dressing + + + + + +Terms of use: Ticking all the boxes + + + + + +Chinese consumers: From noodles to poodles + + + + + +Schumpeter: Squeezing the tube + + + + + +Finance and economics + + + + + +Brexit and the City of London: From folly to fragmentation + + + + + +Buttonwood: Awaiting the data + + + + + +Contrarian investing: Prophets and profiteers + + + + + +Reviving South Korea’s economy: Faltering flagship + + + + + +Tax avoidance: Grand dodgy + + + + + +The AIIB: The infrastructure of power + + + + + +Free exchange: The consensus crumbles + + + + + +Science and technology + + + + + +Planetary science: By Jove! + + + + + +Energy storage: Sisyphus’s train set + + + + + +Geolocation: Addressing the world + + + + + +Card games and psychology: Telling it like it is + + + + + +An ancient wing: Palaeontology + + + + + +Books and arts + + + + + +A tale of technology: Highs and lows + + + + + +Football: The time of their lives + + + + + +Musical biography: Piano man + + + + + +A memoir of Libya: O mio babbino caro + + + + + +Johnson: Passive panic + + + + + +Obituary + + + + + +Obituary: Amjad Sabri: Hate and love + + + + + +Economic and financial indicators + + + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +World's biggest banks + + + + + +Markets + + + + + +Table of Contents + +The Economist + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Liberalism after Brexit: The politics of anger + + + + + +Brexit’s fallout: Adrift + + + + + +The attack on Ataturk airport: Turkey’s agony + + + + + +Diamonds: Shine on + + + + + +Cities: The right kind of sprawl + + + + + +Letters + + + +On Brexit: Letters to the editor + + + + + +Briefing + + + +Brexit: An aggravating absence + + + + + +The negotiations: Article 50 ways to leave your lover + + + + + +The economic fallout: Managing chaos + + + + + +United States + + + +Voters in the industrial Midwest: Rustproofing + + + + + +The Supreme Court: Two left feats + + + + + +Puerto Rico: Exodus postponed + + + + + +Crime and punishment: Billy the kid + + + + + +Lexington: More than a hobby + + + + + +The Americas + + + +Brazilian trade: Of legumes and liberalisation + + + + + +Colombia’s war: Unpopular is the peacemaker + + + + + +Argentina: Erasing the Kirchner cult + + + + + +Bello: Those spendthrift Latins + + + + + +Asia + + + +Central Asia: Stans undelivered + + + + + +China and Taiwan: Great stonewall + + + + + +Politics in Japan: Master plan + + + + + +Indonesia and the South China Sea: Annoyed in Natuna + + + + + +Indian social media: A pulpit for bullies + + + + + +Banyan: The forest and the trees + + + + + +China + + + +Foreign policy: Our bulldozers, our rules + + + + + +Middle East and Africa + + + +African entrepreneurs: Opportunities galore + + + + + +Shopping in South Africa: Buying on credit is so nice + + + + + +Medical drones in Africa: Help from above + + + + + +Israel and Turkey: Let’s try again + + + + + +The economics of Ramadan: Less work and more pray... + + + + + +Beer in the Arab world: Of brewers and bureaucrats + + + + + +Europe + + + +A terrorist attack on Istanbul’s airport: Soft target + + + + + +NATO’s summit: Trip-wire deterrence + + + + + +Spain’s election: Revolution cancelled + + + + + +Ireland post-Brexit: Put asunder + + + + + +Repression in Russia: Prelude to a purge + + + + + +Charlemagne: And shut the door behind you + + + + + +Britain + + + +Post-Brexit politics: Shifting sands + + + + + +The United Kingdom: Fragmentation nation + + + + + +Brexit, business and the economy: Sifting through the wreckage + + + + + +Cornwall and Europe: I owe EU + + + + + +Bagehot: Brexitland versus Londonia + + + + + +International + + + +Urban sprawl: Bourgeois shanty towns + + + + + +Business + + + +Europe v America: From clout to rout + + + + + +The diamond industry: In the rough + + + + + +Web browsers: Window dressing + + + + + +Terms of use: Ticking all the boxes + + + + + +Chinese consumers: From noodles to poodles + + + + + +Schumpeter: Squeezing the tube + + + + + +Finance and economics + + + +Brexit and the City of London: From folly to fragmentation + + + + + +Buttonwood: Awaiting the data + + + + + +Contrarian investing: Prophets and profiteers + + + + + +Reviving South Korea’s economy: Faltering flagship + + + + + +Tax avoidance: Grand dodgy + + + + + +The AIIB: The infrastructure of power + + + + + +Free exchange: The consensus crumbles + + + + + +Science and technology + + + +Planetary science: By Jove! + + + + + +Energy storage: Sisyphus’s train set + + + + + +Geolocation: Addressing the world + + + + + +Card games and psychology: Telling it like it is + + + + + +An ancient wing: Palaeontology + + + + + +Books and arts + + + +A tale of technology: Highs and lows + + + + + +Football: The time of their lives + + + + + +Musical biography: Piano man + + + + + +A memoir of Libya: O mio babbino caro + + + + + +Johnson: Passive panic + + + + + +Obituary + + + +Obituary: Amjad Sabri: Hate and love + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +World's biggest banks + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.07.09.TXT b/homeworks/B20769/homework1/data2/2016.07.09.TXT new file mode 100644 index 0000000..cfc16cc --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.07.09.TXT @@ -0,0 +1,3915 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: Chinese society + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Politics this week + +Jul 9th 2016 | From the print edition + + + +At least 250 people were killed by a bomb blast in Baghdad, thought to be the worst attack in Iraq since 2007. When the prime minister, Haider al-Abadi, tried to visit the site of the attack, in a Shia neighbourhood, the crowd chased him away. Islamic State claimed responsibility. There were also three terrorist attacks in Saudi Arabia, including one in the holy city of Medina. See article. + +The Syrian army called a 72-hour truce to celebrate Eid al-Fitr, the festival that marks the end of the holy (and, this year, exceptionally bloody) Muslim month of Ramadan. + +A nationwide strike in protest at the lack of jobs and non-payment of wages for government employees shut down much of Zimbabwe. The government is broke and desperately trying to raise new loans from foreign donors. See article. + + + +Prospects for economic growth in Guinea have been dashed by Rio Tinto’s decision to shelve its planned $20 billion investment in an iron-ore project. The mine, railway and port could have doubled the size of Guinea’s economy. + +The Olympic spirit + +Brazil’s interim president, Michel Temer, insisted in an open letter to the international press that visitors and athletes would be safe during the forthcoming Olympic games. He said the country had ample experience and tens of thousands of security personnel would be deployed. The letter followed a pull-out by some prominent athletes and protests by police in Rio de Janeiro, who said their pay was in arrears. + +In the latest sign of social breakdown in Venezuela, hundreds of women made a co-ordinated crossing of their country’s western border, into Colombia, in search of food. They said they were unable to provide for their families because of Venezuela’s ongoing economic crisis. + +Spreading its poison + +Several jihadists attacked a restaurant in a rich suburb of Dhaka, the capital of Bangladesh, killing 20 people including nine Italians and seven Japanese. Two officers also died. Islamic State claimed responsibility. + +Rodrigo Duterte formally took up his new post as president of the Philippines. In keeping with his swashbuckling image, he told police officers that they had the right to kill suspects who threatened their lives by resisting arrest. But he said he would honour the previous government’s peace accord with Muslim insurgents on the southern island of Mindanao. See article. + + + +Voters in Australia delivered an uncertain verdict in an election called by the prime minister, Malcolm Turnbull. The outcome may allow Mr Turnbull to form a new government with a tiny majority. A hung parliament is also possible, with various independents holding the balance of power. The final outcome rests with postal votes. See article. + +America’s Treasury imposed sanctions on North Korea’s dictator, Kim Jong Un, and other senior officials in the country for the first time, because they “inflict intolerable cruelty and hardship on millions” of people. + +China’s navy began a week-long exercise around the Paracel islands in the South China Sea. Vietnam, which also claims the islands, lodged a protest. Meanwhile, the Chinese defence ministry said two of its fighter jets had encountered “provocative actions” by a pair of Japanese ones over the East China Sea in June. The ministry said the Japanese jets used fire-control radar to “light up” the Chinese planes. Japan denied any provocative behaviour. + +Little comfort + +The long-awaited report into Britain’s reasons for joining the American-led invasion of Iraq was published. After six-and-a-half years, Sir John Chilcot concluded that war had not been a “last resort”, as peaceful options for disarming Saddam Hussein’s regime had not been exhausted at the time. Damningly, his inquiry determined that the evidence on Iraq’s weapons of mass destruction was presented with a certainty that was “not justified”. See here and here. + +Two leading politicians on the victorious Leave side in Britain’s referendum on the EU left the political landscape. Boris Johnson decided not to run for leader of the Conservative Party after his former ally, Michael Gove, launched his own bid. In another surprise Nigel Farage stood down as leader of the UK Independence Party. He will retain his well-paid job as a member of the European Parliament. + +In the Conservative Party’s leadership contest, Theresa May took 165 votes among MPs, just over half the total. She is expected to advance to a run-off among the party’s grassroots. Meanwhile, Labour MPs were still trying to uproot their stubbornly planted leader, Jeremy Corbyn, who was refusing to step down. See article. + +Spain and Portugal should be fined for failing to bring their deficits in line with EU rules, the European Commission has concluded. The final say rests with EU finance ministers. They are in a tough spot. The EU’s right to police national budgets is already contentious. + +In a reversal of its initial position, the commission said an EU-Canada trade deal will be put to national parliaments. The pact, which the commission’s president, Jean-Claude Juncker, had hoped to fast-track, will now be delayed for years. The decision bodes badly for Britain’s post-Brexit trade negotiations with the EU. + +Austria announced that a rerun of the country’s presidential election will take place on October 2nd. In May the Green Party’s Alexander Van der Bellen beat Norbert Hofer, a member of the Eurosceptic Freedom Party, by just 31,000 votes. The constitutional court, however, annulled the results because of irregularities. + +“Extremely careless” + +At the conclusion of a year-long investigation, the director of the FBI, James Comey, lambasted Hillary Clinton for using a private e-mail server while she was secretary of state, describing it as an “extremely careless” way to handle sensitive, classified information. But in a big relief for the Democratic candidate for president, Mr Comey recommended that no charges be brought. + + + +Juno, a space probe built by NASA, reached Jupiter, where it will orbit for the next two years examining the atmosphere and magnetic fields of the biggest planet in the solar system. NASA hopes Juno will help it understand more about how Jupiter was formed. + + + + + +Business this week + +Jul 9th 2016 | From the print edition + + + +Markets had another jittery week pondering the financial fallout from Britain’s vote to leave the EU. Several British commercial-property funds stopped investors cashing out following a rapid increase in redemption requests. Government-bond yields fell further. Yields on America’s ten-year Treasuries dropped to a record low and German bunds fell deeper into negative territory. Japan’s 20-year bond offered a negative yield for the first time. The pound, meanwhile, was at a 30-year-low against the dollar at $1.29. See here, here and here. + +Fears about the health of Italian banks intensified. Monte dei Paschi di Siena, the world’s oldest lender, came under particular pressure, following leaked reports that it will need to raise capital. Shares in Italy’s big banks have halved in value this year. See here. + +A stabilising force + +The Bank of England relaxed capital requirements for banks, as it tried to reassure markets that Britain would avoid a credit crunch. Mark Carney, the central bank’s governor, suggested that the next meeting of the monetary-policy committee on July 14th would move to ease monetary policy, possibly through a cut in interest rates or more quantitative easing. See here. + +George Osborne, Britain’s chancellor of the exchequer, proposed a further cut to corporation tax, to below 15%, as an incentive to stop companies moving away from Britain once it leaves the EU (the rate was due to fall to 17% by 2020). Mr Osborne also ripped up his plan to achieve a budget surplus by 2020, acknowledging that the government had to be “realistic” in the post-Brexit world. + +Shareholders in the London Stock Exchange voted in favour of the proposed merger with Deutsche Börse. Joachim Faber, the chairman of DB’s supervisory board, recommended that DB’s shareholders vote the same way. The head of Germany’s financial regulator, BaFin, and some German politicians have questioned the deal, which would put the headquarters of the combined company in London. + +A jury found three former bankers at Barclays guilty of manipulating LIBOR, a benchmark interest rate (a fourth man pleaded guilty). They were accused of fraudulently submitting false LIBOR rates to exaggerate their trading positions. The trio had argued that they did not know what they were doing was dishonest. + +Two banks in Abu Dhabi, National Bank of Abu Dhabi and First Gulf Bank, said they would merge, creating the Middle East’s largest lender with $175 billion in assets. The emirate has been looking at ways to consolidate its banks following the collapse in the price of oil. See article. + +For the first time, Puerto Rico defaulted on general-obligation bonds, which are supposed to have rock-solid constitutional guarantees of repayments to creditors. The default came a day after Barack Obama signed emergency legislation that creates a fiscal control board for the territory with the power to restructure its crippling debt load. + +Own goal + +In Spain, Lionel Messi, considered by many to be the world’s best footballer, was found guilty of tax evasion and sentenced to 21 months in prison, suspended on condition he does not offend again. He is appealing against the verdict. + +The first death was recorded of a motorist using an autonomous driving mode. Tesla Motors confirmed that a driver who had engaged the autopilot in a Model S sedan had died in May when the car failed to recognise a lorry crossing its path and ploughed under it. Tesla provided a software update to the Model S last October that allows motorists to pass control to the autopilot but has stressed that drivers must keep their hands on the steering wheel. + +The benefits of staying in + +The prime minister of Greece, Alexis Tsipras, met his Chinese counterpart, Li Keqiang, in Beijing to seal a deal by which China’s government-owned COSCO shipping company will take a 67% holding in the Greek port of Piraeus, the home of the country’s shipping lines. Mr Tsipras hopes the deal will boost Piraeus as an entry point for Chinese investment and goods into Europe. + +There was a distinct appetite for takeovers in the food industry this week. Danone, based in France and the world’s biggest maker of yogurts, launched a $12.5 billion bid to buy WhiteWave, an American firm known for its range of healthy products. Hershey, a confectioner, rejected a $23 billion takeover bid from Mondelez, which counts the Cadbury and Oreo brands among its lines. The Hershey Trust would need to give its consent to any deal, which it may do if Mondelez sweetens its offer. + + + + + +KAL's cartoon + +Jul 9th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +Leaders + + + + +Italian banks: The Italian job + +China’s middle class: 225m reasons for China’s leaders to worry + +Hillary Clinton’s e-mails: Notes on a scandal + +Immigration and politics: Aussie rules + +War in Iraq: The dangerous chill of Chilcot + + + + + +Italian banks + +The Italian job + +Italy’s teetering banks will be Europe’s next crisis + +Jul 9th 2016 | From the print edition + + + +INVESTORS around the world are extraordinarily nervous. Yields on ten-year Treasuries fell to their lowest-ever level this week; buyers of 50-year Swiss government bonds are prepared to accept a negative yield. Some of the disquiet stems from Britain’s decision to hurl itself into the unknown. The pound, which hit a 31-year low against the dollar on July 6th, has yet to find a floor; several British commercial-property funds have suspended redemptions as the value of their assets tumbles. But the Brexit vote does not explain all the current unease. Another, potentially more dangerous, financial menace looms on the other side of the Channel—as Italy’s wobbly lenders teeter on the brink of a banking crisis. + +Italy is Europe’s fourth-biggest economy and one of its weakest. Public debt stands at 135% of GDP; the adult employment rate is lower than in any EU country bar Greece. The economy has been moribund for years, suffocated by over-regulation and feeble productivity. Amid stagnation and deflation, Italy’s banks are in deep trouble, burdened by some €360 billion ($400 billion) of souring loans, the equivalent of a fifth of the country’s GDP. Collectively they have provisioned for only 45% of that amount. At best, Italy’s weak banks will throttle the country’s growth; at worst, some will go bust. + +Not surprisingly, investors have fled. Shares in Italy’s biggest banks have fallen by as much as half since April, a sell-off that has intensified since the Brexit vote. The biggest immediate worry is the solvency of Monte dei Paschi di Siena, the world’s oldest bank. Several attempts to clean it up have failed: it is now worth just a tenth of its book value, and could well come up short in a stress test by the European Central Bank later this month (see article). + +Size alone makes Italy’s bank mess dangerous. But it is also an exemplar of the euro area’s wider ills: the tension between rules made in Brussels and the exigencies of national politics; and the conflict between creditors and debtors. Both are the consequence of half-baked financial reforms. Handled badly, the Italian job could be the euro zone’s undoing. + +Hang on lads, I’ve got a great idea + +Italy urgently needs a big, bold bank clean-up. With private capital fleeing and an existing bank-backed rescue-fund largely used up, this will require an injection of government money. The problem is that this is politically all but impossible. New euro-zone rules say banks cannot be bailed out by the state unless their bondholders take losses first. The principle of “bailing in” creditors rather than sticking the bill to taxpayers is a good one. In most countries bank bonds are held by big institutional investors, who know the risks and can afford the loss. But in Italy, thanks in part to a quirk of the tax code, some €200 billion of bank bonds are held by retail investors. When a few small banks were patched up under the new rules in November, one retail bondholder committed suicide. It caused a political storm. Forcing ordinary Italians to take losses again would badly damage Matteo Renzi, the prime minister, dashing his hope of winning a referendum on constitutional reform in the autumn. Mr Renzi wants the rules to be applied flexibly. + +But politics is also in play in the euro zone’s creditor countries. Germany rightly says that Italy’s troubles are largely of its own making. It has been unforgivably slow in getting to grips with its crippled banks, perhaps because its regional lenders are bound up in local politics. Any system that allows member states to pick and choose which rules to comply with is bound to unnerve voters in Germany. Just as Mr Renzi has a lot to gain from watering down or suspending the rules, clemency may have a political cost in Germany, where elections are due to be held next year. “We wrote the rules for the credit system,” said Angela Merkel, in response to Mr Renzi’s appeals for leniency. “We cannot change them every two years.” + +If they planned this jam, they planned a way out + +Nonetheless, the Italian prime minister is right. The market pressure on Italy’s banks will not ease until some confidence is restored, and that will not happen without public funds. If the bail-in rules are applied rigidly in Italy, the outcry from savers will both damage confidence and leave the door to power open for the Five Star Movement, a grouping that blames Italy’s economic troubles on the single currency. The feeling will grow that Italy is getting scant benefit from the supposed pooling of risks across the euro zone, but is damaged by the many constraints it is under—by its inability to devalue its way towards stronger growth, by a fiscal compact that shackles its budget, and now by bail-in rules that came in after other countries had bailed out their banks. If Italians were ever to lose faith in the euro, the single currency would not survive. + +There is no point in following rules to the letter, if doing so leads to the demise of the single currency. So the correct response is to allow the Italian government to plump up the capital cushions of its vulnerable banks with enough public money to quell fears of a systemic crisis. Such a rescue should come with conditions: an overhaul of the Italian banking system that forces tiddlers to merge and slashes overheads by closing the country’s profusion of branches. To give the European bail-in directive a greater chance of being implemented in future, it should be changed so that retail investors who already hold bank bonds are explicitly shielded. + +Some sort of fudge is more likely. There is already talk of a handy clause in the bail-in rule book that would allow a temporary capital injection for Monte dei Paschi. That may be enough to put a floor under stock prices so that Italy’s other banks, such as UniCredit, are able to raise private capital. Europe would doubtless hail such an outcome as an example of rules-based solidarity. But if history is any guide, it would neither return Italian banks to full health nor resolve any of the bloc’s underlying problems. One lesson of Brexit is that glossing over the concerns of voters is not a sustainable strategy. The euro zone’s jerry-built financial architecture does so twice over, by sidestepping the fears of those in creditor and debtor countries. That will not work for ever—which is why investors are right to be so worried. + + + + + +China’s middle class + +225m reasons for China’s leaders to worry + +The Communist Party tied its fortunes to mass affluence. That may now threaten its survival + +Jul 9th 2016 | From the print edition + + + +BEFORE the late 1990s China barely had a middle class. In 2000, 5m households made between $11,500 and $43,000 a year in current dollars; today 225m do. By 2020 the ranks of the Chinese middle class may well outnumber Europeans. This stunning development has boosted growth around the world and transformed China. Paddyfields have given way to skyscrapers, bicycles to traffic jams. An inward-looking nation has grown more cosmopolitan: last year Chinese people took 120m trips abroad, a fourfold rise in a decade. A vast Chinese chattering class has sprung up on social media. + +However, something is missing. In other authoritarian countries that grew rich, the new middle classes demanded political change. In South Korea student-led protests in the 1980s helped end military rule. In Taiwan in the 1990s middle-class demands for democracy led an authoritarian government to allow free elections. + +Many pundits believe that China is an exception to this pattern. Plenty of Chinese cities are now as rich as South Korea and Taiwan were when they began to change. Yet, since tanks crushed protests in Tiananmen Square in 1989, China has seen no big rallies for democracy. China’s president, Xi Jinping, has shown nothing but contempt for democratic politics. + +There is evidence that this approach works. The hardline Mr Xi is widely admired in China as a strongman and a fighter against corruption. Few middle-class Chinese people say they want democracy, and not just because speaking up might get them into trouble. Many look at the chaos that followed the Arab spring, and recoil. Some see Britain’s decision to leave the European Union as a sign that ordinary voters cannot be trusted to resolve complex political questions. The Chinese government may be ruthless towards its critics, but at least it lets its people make money. So long as they keep out of politics, they can say and do pretty much what they want. + +Anxious times + +Scratch the surface, however, and China’s middle class is far from content (see our special report in this issue). Its members are prosperous, but they feel insecure. They worry about who will look after them when they grow old; most couples have only one child, and the public safety-net is rudimentary. They fret that, if they fall ill, hospital bills may wipe out their wealth. If they own a home, as 80% of them do, they fear losing it; property rights in China can be overturned at the whim of a greedy official. They worry about their savings, too; banks offer derisory interest rates and alternative investments are regulated badly or not at all. No Ponzi scheme in history ensnared more investors than the one that collapsed in China in January. + +Many middle-class Chinese are also angry. Plenty scoff when they are force-fed Marxism. Even more rage about corruption, which blights every industry and activity, and about nepotism, which rewards connections over talent and hard work. Nearly all fume about pollution, which clogs their lungs, shortens their lives and harms their children. They cannot help noticing that some polluters with important friends foul the air, soil and water with impunity. + +And some feel frustrated. China has well over 2m non-governmental organisations. Many of those working for them are middle-class people trying to make their society better, independently of the party. Some are agitating for a cleaner environment, for fairer treatment of workers, or for an end to discrimination against women, or gay people, or migrants. None of these groups openly challenges the party’s monopoly of power, but they often object to the way it wields it. + +The party understands that the middle class, which includes many of its 88m members, is the bedrock of its support. When Mr Xi came to power in 2012, he echoed America with inspiring pro-middle-class talk of a “Chinese dream”. The party gauges public opinion in an attempt to respond to expectations and relieve social pressures. + +Even so, it is hard to imagine China’s problems being solved without more transparent, accountable government. Without the rule of law—which Mr Xi professes to believe in—no individual’s property or person can truly be safe. Without a more open system of government, corruption cannot systematically be detected and stamped out. And without freedom of speech, the NGOs will not bring about change. + +The middle rages + +After thousands of years of tumultuous history and more recent memories of the bloody Cultural Revolution of the 1960s, the Chinese often say that they have a deeply ingrained fear of chaos. But nearly half of all people living in cities are under 35. They know little about Mao-era anarchy. When they feel the government is not listening, some are willing to stand up and complain. Take the thousands of middle-class people in the southern Chinese town of Lubu, who protested on July 3rd over plans to build a waste-incinerator there. They battled with police and tried to storm government offices. + +Such protests are common. There were 180,000 in 2010, according to Tsinghua University, since when there have been no good estimates. When growth was rapid, stability followed, but as the economy slows, unrest is likely to spread, especially as the party must make hard choices like shutting factories, restructuring state-owned enterprises and curbing pollution. + +Ultimately the fate of middle-class protests is likely to depend on the party elite. The pro-democracy movement of 1989 took off because some of its members also favoured reform. There is no sign of another Tiananmen, but there are tensions within the leadership. Mr Xi has made enemies with his anti-corruption purges, which seem to hit rivals harder than allies (a recent target is a former chief aide to Hu Jintao, his predecessor—see article). Mr Xi’s colleagues are jockeying for power. + +The party may fend off challenges for many years. China’s vast state-security apparatus moves quickly to crush unrest. Yet to rely on repression alone would be a mistake. China’s middle class will grow and so, too, will its demands for change. The party must start to meet those demands, or the world’s biggest middle class may yet destroy it. + + + + + +Hillary Clinton’s e-mails + +Notes on a scandal + +The Democratic nominee needs to change the way she operates + +Jul 9th 2016 | From the print edition + + + +THE former secretary of state and her colleagues were “extremely careless in their handling of very sensitive, highly classified information”. Hillary Clinton, who in August said she “did not send classified material”, in fact used her home-brew IT system in eight e-mail chains containing material that someone in her position should have known was classified top-secret. There was no direct evidence that her own e-mail account was compromised, but she sent and received e-mails in “the territory of sophisticated adversaries” and the accounts of some people with whom she corresponded were indeed hacked, opening a possible route for foreign spies into Mrs Clinton’s in-box. Delivering his verdict on a year-long investigation, the FBI’s director, James Comey, sounded like someone who was laying out the case for the prosecution. + +It turned out that Mrs Clinton will not be charged—because Mr Comey concluded that her mistakes were neither intentional nor the result of malice towards the United States, and because the attorney-general, Loretta Lynch, said that she would follow the FBI’s lead. In legal terms, the matter is closed. + +At one level, that is a relief. An indictment might have shifted the odds of winning the presidential race decisively in favour of Donald Trump. + +In terms of Mrs Clinton’s character, however, the matter is very much open and it is troubling. Mr Trump’s awfulness does not excuse Mrs Clinton’s shiftiness. Were she an aspiring staffer on the National Security Council, her career would now be over. Were she an ambassador awaiting confirmation, the Senate would reject her. America classifies too much information, admittedly, but much of it is classified for a reason: in some cases, to protect the identities of people who spy for America. Whatever caused Mrs Clinton to bend the rules, whether it was convenience, an IT flub or an active desire to keep her e-mail archive away from congressional subpoenas, her actions deserve condemnation. + +This poses a risk to the campaign. Mrs Clinton is running for office on the grounds of being competent, responsible and prudent—the polar opposite of Mr Trump. To act carelessly and rashly was reckless. To appear reluctant to acknowledge her error, and then to have been found by Mr Comey to be wrong about the details, was unworthy of her. + +Shortly after the primary campaign, the last time a pollster asked the question, Americans were more likely to call Mr Trump than Mrs Clinton honest and trustworthy. The numbers on voting intentions have been stable since the primaries concluded. Mrs Clinton has enjoyed an advantage of about five percentage points in the popular vote. Some believe that Mrs Clinton’s numbers on trust are so poor that they cannot go much lower. Because of her foolish misconduct, that proposition will now be tested. + +Malware + +The scandal ought to influence how Mrs Clinton runs her White House, if she does indeed find herself occupying the Oval Office in January next year. The temptations there will be different: plenty of people will be looking after her smartphones and e-mail servers. But when it comes to policing grey areas such as fundraising, the informal access granted to old friends, or the revolving-door from influence to employment and back again that White House staffers pass through, Mrs Clinton needs someone nearby who is not of her tribe. Whoever it is must impress on her and her entourage that in politics, the appearance of impropriety can cause as much harm as impropriety itself. Unfortunately, there is a lot of evidence that this is something Mrs Clinton tends to overlook. + + + + + +Immigration and politics + +Aussie rules + +A points system would not reconcile Britons to immigration + +Jul 9th 2016 | From the print edition + + + + + +WHAT Switzerland is to watches and France is to beauty products, Australia is to immigration systems: a national guarantee of quality. Before Britain’s referendum on EU membership on June 23rd, Brexiteers invoked the Aussie brand to sell an alternative to the free movement of labour within the European Union. Leave the EU, they said, and Britain could enact an “Australian-style points-based immigration system”. Voters went for it. But they have been sold a dodgy product. + +Albeit grudgingly, all Western countries let in refugees and foreigners whom their citizens have married. They also accept immigrant workers—but in very different ways. America tends to take people with offers of skilled work, as do European countries, at least when screening applicants from outside the EU. Beginning in 1979, though, Australia went in a different direction. It decided to favour people who look good on paper: a young PhD, say, or a greybeard with rare skills who is prepared to live in a snake-infested backwater. Points are assigned to personal characteristics; score enough and you get in. + +If that is what Britons believe to be the Australian points system, here is some news from Down Under: it doesn’t work. Immigrants who look good to government officials often fail to impress employers. A few years after arriving, they are much more likely to be unemployed than people who came in with job offers (see article here and here). And the number of qualified applicants often exceeds the number the government allows in each year, leading to huge backlogs. + +Pointless + +These days Australia has a very different system—as does Canada, which created a points system earlier than Australia but, being Canada, does not boast about it. Although both still use points, they award lots for having a job offer. Their latest innovation is a “pool”. Many would-be immigrants to Australia and Canada no longer apply directly for visas. Instead they express an interest in moving, and if they seem promising the government lets them throw their names in. Companies can trawl that pool for workers; those they sponsor will shoot up the rankings and get in more quickly. + +This is a good way of picking skilled immigrants. It can be quick and effective. It gives bosses some say on who gets in, but not too much say. Companies do not have exactly the same interests as countries: a firm might set its heart on a 64-year-old with an expensive medical condition. And if you let firms choose immigrants, you must decide whether to let them change jobs. No, and they will be exploited by their employer; yes, and you encourage crooked companies to sell visas. + +Unfortunately, a points-based system for skilled workers would not reconcile Britons to immigration. It would make no difference to the numbers of two unpopular types of migrant—spouses from rural Pakistan and refugees. By design, it would not cover the sort of immigrant who trims cabbages for a living, and is blamed both for suppressing working-class wages and for cluttering doctors’ offices. If Britain leaves the European Economic Area, it could bar all unskilled workers. But that is improbable: a quarter of security guards and two-fifths of people working in food processing are immigrants. + +Britain’s problem is not that it has a bad system for choosing skilled immigrants. It is that it routinely lapses into thinking that all immigrants are the same. Politicians set crude targets that include everybody. Amid the hosannas for Australia, Britons seem to have forgotten that their own government created a points-based immigration system in 2008. It was demolished by a politician who was trying to suppress all immigration, in a vain attempt to bring the net number below 100,000 a year. That politician was Theresa May—the front-runner to be Britain’s next prime minister. + + + + + +War in Iraq + +The dangerous chill of Chilcot + +A foreign-policy calamity is laid bare, providing valuable lessons—and one red herring + +Jul 9th 2016 | From the print edition + + + +BRITISH troops spent six years fighting in Iraq; the official inquiry into how they ended up there has taken nearly seven. Sir John Chilcot’s 2.6m-word report, published on July 6th, is—as foreseen—devastating. Assessments of Iraq’s weapons “were presented with a certainty that was not justified”; planning for after the invasion was “wholly inadequate”. The foreign-policy blunder of the century, billed as a war of necessity, in fact was “not a last resort”. + +The report holds many lessons, including for this newspaper, which supported the invasion of Iraq: about the danger of impetuous decision-making; of failing to plan; and of making optimistic assumptions (see article). Yet it also carries a risk that the wrong lesson may be learned. As Britain begins the tortuous, regrettable process of disentangling itself from the rest of Europe, it is already in danger of turning inward. The Chilcot report will be read by many not merely as evidence of a badly conceived mission, thinly planned and poorly executed, but as proof that Britain and its Western allies should hasten their retreat from the wider world. That would be bad for all who share those countries’ liberal values. + +Loud voice, small stick + +The Chilcot report’s first lesson—one that David Cameron might have considered before rashly promising a referendum on membership of the European Union in order to pacify his Conservative Party—is that prime ministers should beware commitments that catch up with them later. Tony Blair promised George W. Bush in July 2002 that British forces would join an American-led invasion, believing spies’ assessments of Saddam Hussein’s chemical- and biological-weapons programmes. By the time he had to keep that promise eight months later, circumstances had changed. UN weapons inspectors wanted more time; the failure to get a second UN Security Council resolution cast doubt on the legality of action. Mr Blair found himself propelled into war by the military deadline set by the Americans. + +The second lesson is the need for realism and planning. A lack of both infected every aspect of Britain’s Iraq-war decision-making. Plans were based on a best-case scenario in which foreign troops would be welcomed as liberators and a pluralist democracy would replace the Baathist system. Nor was there much realism about what influence Britain’s military contribution would buy it with America. Huge weight was placed on intelligence assessments that went unchallenged, and optimistic estimates of troop requirements led to a breakdown of order from which the occupation never recovered. The report describes how in Basra, under-resourced British forces made a “humiliating” agreement with a militia group in which detainees were released in return for a promise by the militia not to target British forces. + + + +British military engagements and deaths, in graphics + +The danger now is that pessimism rather than realism rules. Britain, shrinking away from Europe and bracing for turbulence at home, must not take a back seat in geopolitics. Instead the next government must be active in NATO and support its armed forces and its diplomats. As Syria has tragically shown, inaction can have dire consequences, too. The lesson of Iraq is not that military intervention in itself is wrong but that, if you are going to do it, you had better get it right. To resolve instead that other countries must now be abandoned to their fate would be the Iraq war’s second bloody legacy. + + + + + +Letters + + + + +On female genital mutilation, law, Brexit: Letters to the editor + + + + + +On female genital mutilation, law, Brexit + +Letters to the editor + +Jul 9th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + +No to FGM + + + +We read your article “An agonising choice” (June 18th). Female genital mutilation is a harmful practice and a violation of the human rights of girls and women. It has no health benefits. Health-workers who carry out the practice are actively causing physical and psychological harm. It is crucial that they uphold the Hippocratic oath of “do no harm” and are aware that there is no medical justification for FGM. Promoting lesser forms of FGM potentially results in more and repeated injury. Girls may be subjected to FGM several times, particularly if the family or community are not satisfied with the result of the first procedure. The WHO supports health-workers in upholding the rights of women and girls and in working towards the total abandonment of FGM. With necessary support health-workers can be agents of change in communities where social and cultural norms have proved to be a tenacious obstacle. + +FLAVIA BUSTREO + +Assistant director-general + +Family, Women and Children’s Health + +IAN ASKEW + +Director + +Reproductive Health and Research + +World Health Organisation + +Geneva + +What exactly does The Economist consider a “nick” on the female genitalia of young girls? And, what “form” of FGM do you stand for—“the least nasty version” or none at all? The least nasty version still violates the health and well-being of girls each year. To say that a “symbolic nick” is better than being “butchered in a back room by a village elder” does not fit with the context of what the issue comes down to: humanity. + +We believe in community-led cultural alternatives to FGM through “alternative rites of passage” ceremonies. These have no forms of a cut, so girls are able to continue their education, which makes it less likely that they will become child brides. For us, there is no “least nasty version” of FGM, there is simply no FGM. + +GITHINJI GITAHI + +Global chief executive + +Amref Health Africa + +New York + + + + + +Crime and time + +“Bully pulpit” (June 25th) reported on the Catholic church’s lobbying against expanding the statute of limitations. But it is not an extension of the statute that is the target of opposition, but rather the proposed retroactive “reviver window” which would allow for the filing of claims that have run out of time. The statute of limitations is a cornerstone of the justice system. We should not succumb to mob justice and eliminate it, no matter how repugnant the alleged crime. + +THOMAS STEBBINS + +Executive director + +Lawsuit Reform Alliance of New York + +Albany, New York + +Kazakhstan's future + + + +The Economist’s analysis of the influence of major powers in Central Asia (“Stans undelivered”, July 2nd) did not recognise Kazakhstan’s unique role in the region as a bridge between East and West. + +The “Great Game”you describe our country being subject to makes a neat headline, but that doesn’t make it true. We are not a silent bystander in anyone else’s strategy; we are a young country making its own independent way in the world. + +Rather than a Great Game we believe in a Great Gain, where states co-operate to achieve regional prosperity, stability and security. The continuing threat of international terrorism and violent extremism seen tragically most recently in Turkey, America and my own country is precisely why it is important that states work ever closer together to defeat this evil. + +We will continue to build good relations and strong economic ties with countries, big and small, to the east and west, north and south. We have close links with both Russia and China. Europe is our biggest trading partner and the United States our second biggest foreign investor after Europe. + +Only by remaining relentlessly focused on co-operation with all states will we ensure a Great Gain for all. + +ERLAN IDRISSOV + +Foreign minister of Kazakhstan + +Astana + +Referendum addendum + +In 1962, during the debate on the case for a referendum on whether to join the EEC, Lord Beloff argued that a referendum is meaningful only if clear alternatives are set before the electorate (“Adrift”, July 2nd). In the absence of such clarity, “the electorate would…be doing no more than indicating a very general bias one way or another.” The Brexit referendum failed the Beloff test. The central proposition of the Leave side did not offer a single coherent alternative vision and was largely dependent on the outcome of uncertain negotiations and unpredictable markets. + + + +In these circumstances the referendum result could be interpreted as providing a blank cheque for the government to press ahead with the best deal that it can negotiate, with no requirement for further ratification from the electorate. That is scarcely tenable. The alternative interpretation is that the result simply indicates a bias towards leaving the European Union. This is more plausible. The result was an expression of discontent with the EU, but one that was conditioned by the attractiveness of the over-optimistic and deeply incompatible alternative futures outside the EU, depicted by the Leave campaign. + +There is an old saying in the City of London: You buy on the rumour and sell on the facts. The Leave campaign provided the rumours. The government must now, over the next two years, deliver the facts. Only when the electorate has those facts before it can it sensibly be asked to take a definitive decision on whether to leave. + +JOHN HAVARD + +London + +The Economist and most other serious publications take it as read that the Leave campaign was run almost exclusively on lies but the result must be respected despite the narrowness of the majority. Surely those two conclusions are incompatible? If a share prospectus was as mendacious as the Leave campaign, not only would a buyer be entitled to compensation but the sellers and their advisers would be liable to prosecution. + +JEREMY HICKS + +London + + + +Some people who came to Britain from east Europe, and indeed west Europe, with their valuable skills are now worried about their future after Brexit. David Cameron, Theresa May and Michael Gove must make it clear what they propose to do for migrants. The alternative is a very real prospect of intercommunity friction, maybe even strife. Nationalistic sentiment has been unleashed. Firm action to maintain order must be taken now to stop the problem escalating. This would allay the fears of investors, already disheartened at Britain’s choice to leave the EU. To aid this, a ministry for migrant communities should be set up. + +MAREK LASKIEWICZ + +Leader + +Polish Association in Great Britain + +London + +The European issue has been a festering boil for years and it needed to be lanced. David Cameron pledged to offer a referendum and he put it to Parliament where it was voted through overwhelmingly. It was Parliament that allowed this referendum. + +SUZANNE WEBBER + +Grateley, Hampshire + +Article 50 is, in fact, about a changed trade relationship (“Article 50 ways to leave your lover”, July 2nd). The words “future relationship”, which includes a trade relationship, are there in the text. The central sentence of Article 50 is unambiguous, in spite of all the assertions to the contrary by those who wish it said something different. It does not say, as one European commissioner apparently maintains, that withdrawal must take place first and negotiations for a future relationship can begin only afterwards. Who would jump out of an aeroplane first and think about organising a parachute afterwards? + +What it does say is that the arrangements for withdrawal must take into account the framework for the future relationship. That must therefore be decided first. This is standard procedure in cases of divorce. You cannot get divorced first and think about arrangements for the future (children, family home, etc) either separately or afterwards. + +DAVID PUGSLEY + +Cullompton, Devon + + + +Your analysis is one-sided. The EU has many failures. The UK has no need to be linked to the economic models of Italy, France, Spain, Portugal and Greece. The British economy has the capability to thrive. Britain can and will trade with the rest of the world and with the EU. Not being shackled to second-rate bureaucrats in Brussels will be a massive boost in itself. + +London is the only truly global city on the planet. Anyone who thinks it can be replaced by Paris or Frankfurt is either delusional or naive. + +MARUF H. KHAN-NOORPURI + +Dhaka, Bangladesh + +The prediction by market pundits that Britain would Remain shows the perils of forecasting and reminds me of the adage: those who have knowledge don’t predict and those who predict don’t have knowledge. + +VARAD SESHADRI + +Sunnyvale, California + +Nassim Nicholas Taleb has put it best: “When people vote the way of the intellectual-yet-idiot elite, it is ‘democracy’. Otherwise it is misguided, irrational, swayed by populism and a lack of education.” + +ANAND PANDYA + +Mumbai + + + +A new entry for the Oxford English Dictionary: + +Plebicide n. the self-inflicted ruin of a nation’s prospects or interests via a reckless act of direct democracy. + +BRUCE STEEDMAN + +St Helier, Jersey + + + + + +Briefing + + + + +America’s forests: Ravaged woodlands + + + + + +America’s forests + +Ravaged woodlands + +Stricken trees provide clues about how America will adapt to global warming—but little hope that it can be averted + +Jul 9th 2016 | THE CASCADES, OREGON AND SIERRA NEVADA, CALIFORNIA | From the print edition + + + +IT WAS the dead animals his team found upsetting, says Steve Lydick, surveying, from a high ridge in the western Cascade range, the burnt, blackened valley below. Dotted with charred boles, like used matchsticks protruding from the cracked, depleted soil, its sides drop to a stream from which the Stouts Creek fire, which consumed 25,000 acres of mixed conifer forest in southern Oregon last August, took its name. As the inferno roared through the valley, coyotes, bears, deer and rodents of all kinds rushed for the water. It fell to Mr Lydick’s colleagues in the Bureau of Land Management, a federal agency that manages almost a quarter of a billion acres in America’s 12 western states, to dispose of their remains. “Some found it pretty distressing,” he says. + +It is a grisly image: ash-black water running through singed carcasses. It also seems paradoxically suggestive of how much harder it is to be moved, in any comparable way, by the vaster devastation taking place in America’s forests, owing to fire, pestilence and drought. All are indicators of a warming climate, to which decades of human intervention have made the forests—the fourth most expansive of any country—especially susceptible. These blights are therefore growing, especially in the semi-arid West. + +Among the biggest tracts of public land in America, the western forests have for over a century inspired conflict between ranchers and rangers; loggers and greens; the federal government and some of those who hate it most. As a result they have helped shaped America’s environmental politics. Hence Barack Obama chose Yosemite National Park, in California, to issue his latest exhortation against climate change last month. + +A heavenly place, symbolic of the country (“It’s almost like the spirit of America itself is right here,” the president enthused), Yosemite has all three problems; in 2013 it was scorched by California’s third-biggest wildfire ever, which consumed over a quarter of a million acres in all. Politicised, documented and culturally sensitive, the ravaging of America’s forests is an important gauge of man’s ability to mitigate and adapt to the warming he has caused. + + + +The scale of the tree loss is staggering. Last year over 10m of America’s 766m acres of forest were consumed by wildfires, sparked by lawn mowers, campers or lightning (see chart). This was the biggest area burned since 1960, when records began, despite a firefighting effort that involved over 30,000 people and cost the federal government over $2 billion. + +This year’s fire season was expected to be less severe, winter rain and snow having taken the edge off a four-year drought in California and Oregon that had turned their woods to tinder. Yet it is running at par with the average of the past ten years, which include the five worst years on record. In the year to July 1st, 2.1m acres of America were razed by nearly 26,000 fires; 19 large ones are currently blazing, mainly in the West (see map). + + + +The growth of wildfires is a worldwide problem, with even bigger burns elsewhere. Siberia, Tasmania, Canada and Indonesia have seen record-breaking fires in recent years. According to Greenpeace, fire consumed over 7m acres of Russian forest in the year to May 23rd (the Kremlin offers much lower figures). The area of Canadian forest burning each year has roughly doubled since the 1970s; a wildfire near Fort McMurray, in Alberta, which started in May, has turned 1.5m acres of forest and 2,400 buildings to ash. Now heading north through Saskatchewan, the fire is reckoned to be Canada’s costliest natural disaster. + +The devastation wreaked in American forests by insects is less headline-grabbing, but ecologically as dramatic. Last month the United States Forest Service (USFS), another of the federal agencies that together manage nearly half the land in western states, said that, since October, it had recorded 26m trees killed by the mutually-reinforcing effects of bugs and drought in the southern part of California’s Sierra Nevada range alone. That suggested 66m trees had died there since 2010. + +Such destruction, caused partly by warming, will itself cause more warming. Many American forests are growing denser, in part owing to a reduction in logging, which makes them a significant carbon sink. They suck in greenhouse gases equivalent to around 13% of what America emits by burning fossil fuels. Yet the USFS predicts that within a couple of decades, because of slowing growth and climate-related blights, the forests will become an emissions source. That would have a commensurate impact on the climate; it would also be grim for America, whose long disdain for one of its greatest bounties, the forests on which its economy was built, is belatedly yielding to smarter, more collaborative sorts of forest management. + +In much of the West fire is an important part of the natural system. The trees have evolved with it; slice through a 2,000-year-old giant sequoia, if you must, in one of the scattered groves of the Sierra Nevada where the world’s biggest tree is found, and its stump-rings would show burn-marks every 10-35 years. At such intervals, wildfires expunge disease, remove leaf litter and thin the understorey, creating space for new growth. They also moderate their own system, by preventing a build-up of fuel that can turn a restorative scorching into an inferno. Many plants are adapted to survive and take advantage of frequent burns. The sequoia’s thick bark makes it almost fireproof; it releases its cones in response to the heat of a wildfire and without this it may not reproduce. + +Much of the West is still parched. This is largely a result of the combined effects of La Niña—a cyclical series of weather events that produces drier conditions in the southern forests of the West—and man-made warming. Climate change is estimated to have made California’s drought 15-20% more severe; in Alaska, where the average winter temperature has risen by over 3°C in the past six decades—over twice the average for the rest of America—its impact is greater. By accelerating the melting of winter snow, for example, in Alaska and the mountains of the West—the Rockies, Cascades, Sierra Nevada—hotter temperatures have made the fire season longer. Since 1970 the average duration has increased from 50 to around 125 days; in Alaska, which had its second-biggest year for fires on record in 2015, some of last year’s blazes are still alight. + +Mismanagement is also fuelling the flames. Ever since 3m acres of Idaho, Montana and Washington went up in smoke in 1910, the government has suppressed fire zealously. It was said that any new blaze must be extinguished by 10am the next day. This has stopped some sequoias from reproducing for decades. It also removed the self-moderating effect of frequent fire from a landscape prone to burn. + +Logging, followed by dense modern tree-planting, reinforced the effect. Where most western woods were once dominated by well-spaced large trees, they are now a tangle of smaller specimens, fighting over too little water, atop rising mounds of brush. Guy Fawkes could not have arranged things better. + +The fire-suppression effort is still zealous. It has to be, loose zoning laws having encouraged construction of many houses in the inferno zone. As a result the number of wildfires is falling: from 250,000 in 1981 to 68,000 last year. But when a fire gets going, it can easily turn catastrophic. + +The Stouts Creek fire was started on a searing late-July day by a spark from a mower. Within minutes it entered the surrounding forest, where it vaulted the tangled understorey to the upper branches, becoming a high-severity crown fire—the sort that leaves little but dead animals behind. The heat of the blaze created its own weather system: an anvil-topped pyrocumulus cloud rode the flames, shooting incendiary bolts of lightning into the nearby forest. At its height the fire devoured 1,000 acres an hour; it burned for a month. + +That was a modest blaze by recent standards: a proliferation of mega-fires, which consume over 100,000 acres, is another feature of the new fire regime. Over the past decade there have been on average 10 megafires a year. Last year there were 15, including one in the Sierra Nevada that consumed over 150,000 acres, turned the sky over the Central Valley brown and occupied 4,000 firefighters. The total cost of such a blaze, including lost timber and the effects of pollution, is huge. A decade-old study of three fires in San Diego County, California, put their cost at $2.45 billion. + +On a clifftop in the Sierra National Forest, Ray Porter, a USFS ranger, surveys a canyon, containing 30,000 acres of Ponderosa pine forest, that narrowly escaped last year’s mega-fire. But it has not been spared. + +Six months ago the canyon was green with streaks of rusty brown, denoting where ailing trees had succumbed to mountain bark beetles. A critter that feasts on the inner bark of conifers, it seeks out trees which, because drought-stressed, are losing their ability to repel pests. Having established a beachhead in one, the gregarious Coleoptera releases pheromones to attract a swarm of reinforcements, which usually kills the tree. There is now hardly a dot of green visible in the canyon: almost the entire forest appears dead and brown. “If this is not the worst outbreak in America,” says Mr Porter, “I’d hate to see worse.” + +Beetlemania + +It is unexceptional. Since the 1990s, when such die-offs became more frequent, 42m acres of North American pine forest are estimated to have succumbed to barkbeetles, and the blight is growing. Aerial surveys of the Sierra Nevada show telltale rusty streaks seeping north like poison. Even species rarely affected by beetles, such as whitebark pine, are dying. + +In the boreal forest spruce-beetle populations are also rocketing; in the southern pinyon pine forests a hungry bug called pinyon ips, not formerly known to kill trees, is killing many. Though relatively unscathed by fire, America’s wetter eastern states, where over 80% of the precolonial forest grew, are also bug-riddled. The hemlock woolly adelgid is ravaging their hemlock forests; a southern pine beetle, migrating northward, has reached New York. + +The reasons for the surging pestilence are much the same as those for mega-blazes. Warmer, drier weather, including milder, shorter winters, has caused an explosion in bug populations, as well as in the number of stressed trees they feast on. The tangled state of America’s woods is another pro-beetle development, though its effect is more marginal. Wherever beetle populations soar, primary forests, of which the West has most of America’s last examples, are also dying. + +Both problems, fire and pests, are liable to get worse as the climate warms. The USFS expects the area of forest burned to double by the middle of the century. Even so, it predicts that beetles will often kill more trees in a given year than fire. Even if the climate were stable, this onslaught would make it hard for the forests to regenerate. Mega-fires destroy seed stocks and nutrients over a vast area; when a pine forest dies abruptly from pestilence, it is usually replaced by grasses and shrubs which, in the absence of a natural fire cycle, can stop trees growing. + +Putting out fires + +Mitigating those effects would require a massive intervention to clear dead trees and plant new ones, which is currently unthinkable. Last year the USFS spent more than half its budget on firefighting, to the detriment of its ongoing effort to thin some 80m acres of dangerously overgrown forest. By 2025, the service estimates that 67% of its budget will be consumed by fires. + +Even if the lost forest were replanted much of it would fail: because species distribution is changing as temperatures rise. Broadly speaking, a warmer, drier climate should force trees uphill and to higher latitudes; the Ponderosa pine will climb from the montane to the subalpine zones, displacing or finding refuge among white firs and lodgepole pines. Anticipating this, foresters are replanting trees at the highest elevations of their range. The effect of fire and bug-death has, in this way, created opportunity for a massive experiment in tree migration and regrowth. But it may not be a predictable, or happy, transition. + +Whether a species can migrate may depend as much on factors such as soil type, distance from a seed source, the pace at which it reaches reproductive maturity and the vulnerability of higher-elevation vegetation to infiltration as on temperature alone. The rate of warming will be even more important. It took the Ponderosa pine 11,000 years to migrate from New Mexico to Wyoming after the most recent Ice Age: it will not keep stride with rapid warming. + +A study of USFS data suggests nearly 60% of tree species are experiencing range contraction at both their northern and southern boundaries. Only 20% are making the predicted northward shift. So forest ecosystems will not migrate wholesale—Birnam Wood-to-Dunsinane-style—but in disordered versions of their current states. Climate envelope modelling suggests high-elevation species, such as whitebark pine and Rocky Mountain fir, could be pushed to the brink. + +The losses will be partially offset by new growth: America’s forests will be vast and productive for a long time yet. As its snows melt and permafrost thaws, the Arctic is getting greener, so Alaska should grow more and bigger trees. In the eastern states, where trees have been creeping back ever since the more fertile Midwest was opened to the plough in the mid-19th century, their recovery will continue. Overall, however, they will be younger and more fragile, a probable cause of warming, not a means to prevent it, and perhaps less extensive, especially out West. “I’m just upset my grandkids are not going to see what I saw: beautiful forests in the West,” says Mike Wheelock, a veteran woodsman with Republican bumper-stickers on his truck, whose company helped extinguish the Stouts Creek fire. + +What could avert that decline? Plainly, nothing will, unless global warming is halted or slowed. Mr Obama said as much in his speech at Yosemite, in which he sought to channel the reverence many Americans feel for their national parks into concern for the climate that governs them: “Rising temperatures could mean no more glaciers at Glacier National Park.” To that end, he also invoked two architects of America’s publicly owned forests, Theodore Roosevelt, the founder of 150 of the 154 national forests, and his inspiration, John Muir: “We’ve got to summon that same vision for the future.” + +Bug in the system + +It is not hard to guess what Roosevelt would have done about carbon emissions. A believer in enterprise, and the government’s duty to regulate it, he would have taxed them: “In this great work [of environmental protection],” he declared in 1910, as the vast fires of that year were raging, “the national government must bear a most important part.” The fact that, a century later, America may elect as president a man who claims to believe global warming is a hoax invented by the Chinese looks like a setback not merely for democracy, but for human evolution. Foiled by Donald Trump’s cynical party, Mr Obama has done less to cut emissions than he would have liked. Yet, closer to the woods, there is progress. + +After decades of conflict—which peaked in the 1990s, when a row between loggers and greens over an endangered owl led to violence, a shutdown in logging across the West and the near-collapse of the USFS—many former foes now collaborate to manage forests better. Since 2009, when Congress passed legislation to encourage such partnerships, over a score have been formed between businessmen, greens, politicians and federal agencies to oversee thousands of acres of public forests. One result has been a hardening acceptance of the need to thin them, including by controlled burning. + +Separately, over the past 15 years or so, similar partnerships have been formed in many cities to improve management of their forested watersheds. The best, for example in Denver, Flagstaff and Santa Fe, include provisions for downstream water-users to help pay for forest management. “It turns out that bringing people together to reach a consensus on what is to be done to manage a landscape really works,” says Tom Tidwell, chief of the USFS. + +The watershed of Ashland, a former mill-town in southern Oregon, which was in the thick of the owl crisis, provides a good illustration. “For two decades we couldn’t move in these forests without being sued,” says Donna Mickley, the local USFS ranger. The result, in 2010, was a forest management agreement between the forest service, the city government and two NGOs, the Nature Conservancy and Lomakatsi Restoration Project. + +This looks like a watershed for the Ashland watershed. The foresters and greens work together to survey, thin and improve the forest; the city has introduced a water tax—equivalent to $1.50 on each household bill—to help pay for the work. Locally based, broadly supported and businesslike, the scheme provides a model for managing climate change that is well-suited to American pragmatism and civic traditions. + +A big question is whether such progress can help build a consensus for more serious emissions-cutting. Bipartisan support for the new forest collaborations is encouraging. “It doesn’t seem to make a difference what party the local official is from,” says Mr Tidwell. Yet there is a long way to go. Indeed, the lack of much public disquiet over the arboreal havoc out West is striking. + +“The American, the daily witness of such wonders, does not see anything astonishing in all this,” wrote Alexis de Tocqueville, marvelling at the new continent’s vast forests and their rapid clearance. “This incredible destruction, this even more surprising growth, seem to him the usual progress of things in the world.” That was in 1831; it is largely true today. + + + + + +United States + + + + +Warfare: The queen and her drones + +Stem-cell clinics: A dish called hope + +Competitive eating: Glorious gluttony + +Education: O-levels + +Religious-liberty laws: Left, right + +Lexington: Ride ’em, cowboy! + + + + + +Warfare + +The queen and her drones + +Barack Obama hopes to leave behind settled rules on when drones can be used + +Jul 9th 2016 | From the print edition + + + +ON January 23rd 2009, just three days after his inauguration, President Barack Obama authorised his first drone strikes. The targets were two houses in the Waziristan region of Pakistan, a semi-autonomous area covered by jagged mountains. The first drone dropped a missile on top of one of the homes, searing a hole through the roof and killing five suspected al-Qaeda militants. According to the Bureau of Investigative Journalism, a British-based news outlet that compiles reports on drone strikes, the second hit the wrong target, killing at least five civilians. + +America’s armed forces began using drones away from battlefields in 2002, under George W. Bush. After taking office Mr Obama scaled up the programme, authorising over 470 drone strikes in Pakistan, Yemen, Libya and Somalia. Though journalists and non-governmental organisations reported on the strikes, for years Mr Obama declined to recognise that the military was using armed drones outside Afghanistan, Iraq and Syria, which are considered areas of “active hostilities”. “It was the worst-kept secret in the world,” says Peter Bergen of the New America Foundation, a think-tank. It was not until 2012 that Mr Obama acknowledged, on a social network, that this was happening. + +On July 1st Mr Obama took another step towards transparency by releasing the administration’s estimate of how many “non-combatants” have been killed in drone strikes outside war zones. According to a short document released by the Director of National Intelligence (DNI), between 2,372 and 2,581 combatants and between 64 and 116 non-combatants were killed in such strikes between Mr Obama’s inauguration in 2009 and the end of 2015. These numbers are considerably lower than those compiled by other organisations. The DNI document attempted to explain the gap, stating that, “the government uses post-strike methodologies that have been refined and honed over the years and uses information that is generally unavailable to non-governmental organisations.” “So what they’re saying is, ‘We have more information, we can’t tell you about it, just trust us’,” says Hina Shamsi of the American Civil Liberties Union. + +Along with this tally, Mr Obama issued an executive order requiring future administrations to make such declarations annually. The president wants to leave behind a settled body of laws and norms governing areas such as surveillance and warfare, where technology has made things possible that his predecessors could not do. He is doing so quietly: July 1st was the Friday of the Independence Day weekend, when few Americans had their minds on drone policy. “Short of putting it out on Christmas Day, it’s hard to think of a day when it would get more buried,” says Mr Bergen. + +Their precision compared with manned air strikes is still hotly contested, but the Obama administration’s drone strikes have become more accurate over time. According to the New America Foundation’s calculations, in 2009 drone strikes in Pakistan killed 385 militants and 63 civilians. Since 2013, when Mr Obama published guidance requiring that drone pilots have “near certainty” that non-combatants will not be harmed before firing, drone strikes in Pakistan have killed 352 militants and only six civilians. Although the new guidelines probably played a role in bringing down the non-combatant death-count, technology helped too (see chart). Newer drone models, such as the MQ-9 Reaper, can kill suspected terrorists without harming their friends or family in the next room. + + + +But even if drones were infallible, the intelligence they use to identify targets sometimes falls short. In 2012, 68-year-old Mamana Bibi was wandering through an open field in Pakistan with her young granddaughter when she was killed by a drone strike that seemed to be aimed directly at her. The American government never acknowledged the attack. A year later, a drone mistakenly killed 13 civilians attending a wedding in Yemen. Most recently, an American drone inadvertently killed Warren Weinstein and Giovanni Lo Porto, development workers from America and Italy, respectively. The pair had been kidnapped by al-Qaeda and were being held in a compound on the border of Afghanistan and Pakistan when a drone dropped a bomb on them in January 2015. + +Lawfare + +Beyond expressing horror at such fatal mistakes, plenty of lawyers doubt the legality of the drone programme. America is officially engaged in armed conflict with al-Qaeda and the Taliban in Afghanistan and with IS in Iraq and Syria. In all other countries it is meant to abide by peacetime laws, killing only when immediately necessary to save a life. In Pakistan, Yemen, Libya and Somalia, however, the armed forces seem to be operating according to the more permissive laws of armed conflict, where the requirements for lethal force are lower. Hostilities between a country and a non-state actor, such as the Taliban or IS, are considered armed conflict only when violence passes a specific threshold and the armed group is organised enough to adhere to the laws of war. + +Mr Obama’s advisers have done little to assuage such misgivings. In 2012 John Brennan, who was then a counter-terrorism adviser at the White House, stated: “As a matter of international law, the United States is in an armed conflict with al-Qaeda, the Taliban and associated forces, in response to the 9/11 attacks, and we may also use force consistent with our inherent right of national self-defence.” But some contend that the administration has not proved that its actions outside of Afghanistan, Syria and Iraq pass the objective international law requirements to be considered “armed conflicts” where the laws of war are applicable. + +“Drones have enabled the US to convert the whole world into a war zone, stretching the laws of war far more than they’re meant to be stretched,” argues Elizabeth Beavers of Amnesty International, a pressure group. Mary Ellen O’Connell, of the University of Notre Dame Law School, says that Mr Obama’s use of drones will make it harder for him to criticise other countries for spurning international norms. “He has made international law weaker and easier for other countries to violate.” Considering 19 countries are estimated to possess armed drones, including Iraq and Iran, some clearer rules and norms about their use are overdue. + + + + + +Stem-cell clinics + +A dish called hope + +The flourishing, unregulated industry in expensive, experimental treatments + +Jul 9th 2016 | From the print edition + + + +THE patient testimonials sound incredible: a mother with a severely autistic child, a young man struggling to live with cystic fibrosis and a disabled patient with multiple sclerosis. All claim healing through the power of stem-cell therapies, which are sometimes described in adverts as “miraculous”. A paper published on June 30th by Paul Knoepfler of UC Davis and Leigh Turner of the University of Minnesota in Cell Stem Cell found about 350 businesses in America selling stem-cell therapies for a wide range of ailments, many more than previously thought. This has reignited a long-simmering debate about the oversight of stem-cell clinics or, rather, the lack of it. + +In one corner are patients, injured American football players and proponents of rugged individualism. These include Rick Perry, a former governor of Texas, who received them for a back injury. In the other corner is the drug regulator, the Food and Drug Administration (FDA), which put so much heat on the Texas clinic that treated Mr Perry, Celltex, that it moved to Mexico. Also in the FDA’s corner are a large number of scientists and doctors, who argue that clinical trials are the only standard that allows putative medicines to be distinguished from outright quackery. + +Stem-cell clinics mostly use adult stem cells from the patients themselves (for example, from fat tissue), grown in a dish and then reinjected. These are different from embryonic stem cells and they do not require the destruction of an embryo. However, some companies do advertise placental and amniotic stem cells. The sources of such cells are unknown. + +The promise is real enough. For example, earlier this year a study showed that patients with end-stage heart failure fared far better when given stem cells extracted from their own bone marrow. Stem cells seem to home in on damaged or inflamed tissues and play a variety of roles in repairing them. However, some of the treatments being sold promise to help neurodegenerative diseases for which no cell therapy has yet proved effective. + +Patients have been lining up to receive them, and in some instances paying tens of thousands of dollars. The clinics maintain that what they are doing is safe, though without proper oversight it is hard to know if this is true. Problems have been known to crop up. One clinical trial which injected olfactory stem cells into a woman with paralysis found that, eight years after her unsuccessful treatment, she had developed growths of nasal tissue on her spine. There have been reports of complications, and even a few lawsuits. Another concern is that desperate patients are simply throwing away their money. + +The discovery of a flourishing industry in America will put pressure on the FDA to resolve the impasse over oversight. At the heart of the debate is whether stem cells are biological drugs, and thus regulated by the FDA, or whether they are tissue transplants which are not (and do not require clinical trials). Although they would seem to be tissue transplants, to qualify as such stem cells need to be “minimally” manipulated and also carry out the same functions in the treated tissue as they do in the tissue from which they were extracted. + +The FDA is preparing to pounce. In October it issued draft guidelines. It says most of the stem cells involved will require rigorous approval before they can be used in patients. There will be a hearing on the guidelines in September. This is likely to become a media circus, with patient advocates likely to attend and extol the benefits of the treatments they received. + +It is this sort of feeling that is driving the REGROW Act, an attempt by lawmakers to force the FDA to do away with the need for proper clinical trials for stem cells. This would create a fast-track system, similar to the one already in place in Japan, which grants conditional approval to proposed treatments with few data on safety or efficacy. The Alliance for Regenerative Medicine, a lobby group, opposes the act, saying that scientific trials are needed to ensure safety. The FDA needs to tread carefully, though: too much pressure on these clinics will not cure the problem, but merely drive it back over the border. + + + + + +Competitive eating + +Glorious gluttony + +A tale of inexorable progress + +Jul 9th 2016 | CONEY ISLAND, BROOKLYN | From the print edition + + + +A CENTURY ago, on the corner of Surf and Stillwell Avenues outside Nathan’s Famous hot-dog stall, four immigrants challenged each other to a hot-dog-eating contest to prove who was the most patriotic. Jim Mullen, from Ireland, gulped down 13 dogs and buns in 12 minutes. This legend was undoubtedly made up by some savvy publicist, but Coney Island’s annual eating contest has become legendary. Every July 4th, 40,000 show up in person and more than 1m tune in on ESPN, the sports cable channel, to watch men and women defy digestive limits. + +Last year Joey “Jaws” Chestnut, an eight-time champion, was knocked off the top of the food chain by Matt “Megatoad” Stonie. The boisterous crowd, many wearing foam hot-dog hats and waving American flags, chanted “Brooklyn!” and “USA!” as they watched him attempt to take back the coveted mustard belt. George Shea, the event’s loquacious master of ceremonies and head of Major League Eating, explained that this was more than sport. “Competitive eating”, he said, “is the battleground upon which God and Lucifer wage war for men’s souls.” + +Competitive eating began when America became more settled and more successful. It became a way of celebrating a good harvest or a bumper catch at sea. Town fairs and church picnics held pie-eating contests (no hands allowed). In coastal areas, crawfish and oyster-eating competitions were more common. Speed-eating became as American as baseball. + +Mr Shea and his brother Richard operate more than 80 contests around the world, from hard-boiled eggs and deep-fried asparagus to calamari and Twinkies. They have sponsors like 7-Eleven and (inevitably) Pepto-Bismol; among their national partners is Hooters, home of the chicken-wing contest. Spoilsport scholars decry speed-eating as a self-destructive form of behaviour. But it is wildly popular. + + + +No longer do Nathan’s employees cajole portly passers-by to enter the contest. Today, eaters must qualify to take part. Almost all are slim and fit. Juan “More Bite” Rodriguez is a personal trainer. Eric “Badlands” Booker, the largest competitor at 365lb(166kg), performs better when he loses weight. Most consider themselves athletes and train accordingly. Mr Chestnut runs and lifts weights, besides drinking a gallon of water every day to expand his stomach. Mr Stonie, meanwhile, studies nutrition to understand better how his body works. A “reversal of fortune”, ie, regurgitation, means disqualification. + +Nearly all competitors use a version of the techniques pioneered by Takeru Kobayashi, a Japanese hot-dog guzzler. He arrived on Coney Island in 2001, shattering all records. He ate 50 dogs and buns. The year before, the winner ate a paltry 25 (see chart). Mr Kobayashi’s method was to break the hot dogs in two and stuff them in his mouth with one hand, while his other hand dunked the bun in water to make it easier to swallow. This, coupled with shaking and gyrating, helped a 112lb man consume nearly 8lb of bread and sausage. + +Mr Chestnut says that, like any ageing athlete, he has had to change how he trains. The changes paid off. He took back the mustard belt by wolfing down 70 dogs and buns in ten minutes. Mr Shea summed up his achievement thus: “He is American exceptionalism. He is America itself.” + + + + + +Education + +O-levels + +A visit from Michelle Obama seems to improve test scores + +Jul 9th 2016 | From the print edition + + + +TEENAGE girls are hard to impress. Unless you are Michelle Obama, that is. In 2009, on her first foreign trip as First Lady, Mrs Obama visited Elizabeth Garrett Anderson School, a London state (or public) school for girls, about three-quarters of whom are eligible for free school meals. She told a star-struck assembly that she also came from humble origins, explaining how she worked her way from a poor part of Chicago to the Ivy League, a top law firm and (with help from Barack) the White House. “I’m standing here…because of education,” Mrs Obama said. “I thought being smart was cooler than anything in the world.” And unlike many luminaries asked to rouse pupils, the First Lady kept in touch. Mrs Obama invited the girls to see her again in 2011 when she visited Oxford University. There, she told pupils: “All of us believe that you belong here.” One year later a dozen pupils flew over to the White House. + +Her message seems to have worked. In a paper published on July 1st, Simon Burgess, an economist at the University of Bristol, analysed the school’s exam results in the years after Mrs Obama’s visits. The 15- or 16-year-olds sitting their GCSEs did much better than girls in the previous year. From 2011 to 2012, for example, the boost was equivalent to each pupil moving from eight C to eight A grades. Those improvements were much bigger than the average increases in performance across London state schools, suggesting that the effects were specific to Elizabeth Garrett Anderson. + +It is impossible to prove that Mrs Obama caused the improvement in results. The class of 2012 may have been unusually bright. There may have been a change of teachers. Perhaps it was a fluke. But Mr Burgess thinks not. After controlling for such possibilities and looking at the size of the increase, he concludes: “[The effect] was extremely unlikely to have been generated just by chance.” + +Assuming the First Lady did boost results, this could have broader implications for education. The importance of both parents’ and children’s expectations is well established: see the relative success of Asian-American pupils, or Britons of Indian descent. Less understood is how aspirations can be fostered. One approach has been to offer incentives for pupils to work harder and for parents to check on their children. But the work of Roland Fryer, an economist at Harvard University, has found that paying parents and pupils in return for better grades does not always lead to improved results. + +A newer set of programmes in American schools, however, tries to foster “intrinsic motivation”, which is more durable. One Chicago scheme, Becoming A Man, involves counselling for troublesome teenage boys in “social-cognitive skills” such as self-control. A recent study found that it boosted school attendance and cut crime. And while the message is important, so too is the messenger. Mrs Obama is not only famous, but also carries legitimacy. As one pupil of Elizabeth Garrett Anderson told the Guardian back in 2011, “She made it. And so can we. That’s not just something we’ve heard now. We really actually felt it.” + + + + + +Religious-liberty laws + +Left, right + +Thirty years ago, progressives embraced religious exemptions. No longer + +Jul 9th 2016 | NEW YORK | From the print edition + +Progressive protester + +ONE day after releasing their final rulings of the term, the justices of the Supreme Court returned for an encore on June 28th. The occasion was an event that occurs roughly 7,000 times each year and normally turns few heads: a refusal to hear a case. But in the matter of Stormans v Wiesman, the justices’ “no thanks” was accompanied by a rare and sharp dissent from the court’s three most conservative members. Writing for John Roberts (the chief justice) and Clarence Thomas, Samuel Alito warned that the denial was “ominous”. If the court’s refusal to take up Stormans “is a sign of how religious liberty claims will be treated in the years ahead,” Mr Alito wrote, “those who value religious freedom have cause for great concern.” + +The plaintiffs in Stormans are the devout Christian owners of Ralph’s Thriftway, a grocery and pharmacy in Olympia, Washington. The Stormans family, along with two other pharmacists, brought a lawsuit in 2007 when Washington beefed up its rule requiring pharmacies to fulfil prescriptions for medications approved by the Food and Drug Administration. They claim their rights to free exercise of religion under the First Amendment are violated by a new regulation barring pharmacies from “refus[ing] to deliver a drug or device to a patient because its owner objects to delivery on religious, moral, or other personal grounds.” Most states allow pharmacies to refer women to a nearby drug store where they can get such prescriptions, the plaintiffs pointed out, and Washington could do the same. + +In 2012 a federal district court agreed with the Stormans, noting that “the rules exempt pharmacies and pharmacists from stocking and delivering lawfully prescribed drugs for an almost unlimited variety of secular reasons” but withhold exemptions only “for reasons of conscience”. As a result, “the onus of the rules falls almost exclusively on religious objectors”, forcing them “to choose between their religious beliefs and their livelihood.” + +In its review of this ruling in 2015, the 9th Circuit Court of Appeals roundly disagreed. The rules, it found, “do not create a regime of unfettered discretion that would permit discriminatory treatment of...religiously motivated conduct.” With emergency contraception, time is of the essence, and the state may require all pharmacies to supply it. Besides, the rule applies to pharmacies rather than pharmacists; if a pharmacist cannot, in conscience, supply the pills, a colleague may do so. + +Reaction to the Supreme Court’s decision to let this ruling stand was swift: liberals cheered, the right jeered. “When a woman walks into a pharmacy,” a lawyer from the American Civil Liberties Union said, “she should not fear being turned away because of the religious beliefs of the owner.” A writer in the American Conservative, a magazine, saw it differently: the justices had decided that “Christians can no longer be pharmacists,” he wrote. + +This stark left-right divide is familiar from recent court battles over the contraceptive care provisions of the Affordable Care Act. In 2014, in Burwell v Hobby Lobby Stores, the Supreme Court split along ideological lines when it upheld the right of some companies to refuse to supply their employees with birth control for religious reasons. But it was not always thus. In the Warren and Burger courts of the 1960s, 1970s and 1980s, religious accommodation was a liberal tenet. In a case in 1963 Adell Sherbert, a Seventh-Day Adventist, lost her job in a textile mill because she refused to work on Saturday. When Ms Sherbert was denied unemployment compensation she sued. The Supreme Court found that South Carolina had interfered with her religious liberty while lacking a compelling reason for doing so. Under this formulation, known as the “Sherbert test”, the court went on to vindicate Amish and Jehovah’s Witness litigants, decisions that liberals praised as much-needed judicial protection of vulnerable religious minorities. + +The story took a different turn in 1990, when Antonin Scalia sharply reduced the protections of the free-exercise clause. In Employment Division v Smith, two members of a Native-American church were told they had no First Amendment right to unemployment compensation after being fired for ingesting peyote as part of their religious observance. When someone’s ability to exercise his religion takes a hit from a “generally applicable and otherwise valid” law like a narcotics statute, the court held, that’s tough luck. + +The Smith decision was roundly condemned, leading Congress overwhelmingly to adopt the Religious Freedom Restoration Act (RFRA) in 1993. This restored the principle that the government may not infringe on a right unless it has an exceptionally good reason for doing so and uses a narrowly tailored means to accomplish its goal. The Supreme Court subsequently held this applied only to federal, not state, laws. So while RFRA served as the legal basis for the conservative challenges to Obamacare, it did not provide a safe harbour for the Christian pharmacists in Washington. Instead, the Stormans tried their hand at an ill-fated constitutional claim. + +Douglas Laycock, a law professor at the University of Virginia, thinks Justices Elena Kagan and Stephen Breyer (“and maybe all of them”) might have voted to grant Stormans had the court been at full strength. But with only eight sitting justices, he says, there may have been “reluctance to take on a fundamental issue about the free-exercise clause.” Mr Laycock says that Church of the Lukumi Babalu Aye v Hialeah, a case from 1993 in which the Court reprimanded a Florida town for targeting animal sacrifice in Santería (while permitting the killing of animals for almost any other reason), shows that Smith did not gut the free-exercise clause. The facts leading up to the change in pharmacy rules in Washington, he asserts, “were as bad as Lukumi”. The rule was clearly aimed, he says, to stick it to religiously observant pharmacists. + +Nelson Tebbe, a professor at Brooklyn Law School, disagrees. The “court was wise to pass Stormans over,” he said. The facts are “very messy” and do not make the case a “perfect vehicle” for clarifying the scope of a fundamental right. + +Despite that, the fate of the case sheds a clear light on the transformed political landscape of religious liberty in America. With Christian evangelicals and Catholics opposed to abortion, contraception and gay rights now headlining religious-freedom cases, and tiny religious minorities off centre-stage, liberals regard religious accommodations with increasing suspicion. Conservatives are their new champions. + + + + + +Lexington + +Ride ’em, cowboy! + +The bruising sport of rodeo holds lessons for America’s conservatives + +Jul 9th 2016 | From the print edition + + + +TO THE crowds at the Cody Stampede—a four-day rodeo that draws thousands to Wyoming over the Independence Day weekend—the bull-rider Bryce Barrios is just a name among many, drawing cheers with a confident, prizewinning ride on a bucking, wheeling animal weighing three-quarters of a ton. Among fellow bull-riders Mr Barrios, a 21-year-old Texan who looks like a schoolboy once he doffs his helmet and armoured vest, means a bit more. He was named national Rookie of the Year in 2015: a hint that, just maybe, he will leave the pack of perhaps 600 cowboys who eke out a living on the circuit into the world of champions competing for six-figure purses. + +To devotees of rodeo, young cowboys like Mr Barrios mean something more precious. They see them as guardians of the gritty-yet-chivalrous values of an older America. Among those waiting in the earth-floored, dung-scented arena to greet the bull-riders on July 3rd is Senator John Barrasso of Wyoming, a wiry, genial Republican who as an orthopaedic surgeon spent years patching up rodeo-battered cowboys. “They’re young, they consider themselves bulletproof,” explains Dr Barrasso fondly. He recalls a popular belt buckle that says: “Wyoming Is What America Was”. In the senator’s telling, that America was built on “independence, resilience and self-reliance.” + +Mr Barrios politely tells the senator that this was his second Wyoming rodeo of the day, and that he and two colleagues are now driving eight hours to Denver, there to catch a flight to a contest in Arizona (not all bull-riders are cautious drivers, he admits). Cody is a profitable stop: second place earns Mr Barrios $6,674.30 in prize money. Brought up on a ranch, he missed a season after breaking his leg at 18. All around him men sport alarming splints and braces, strapped to elbows and knees. Rodeo doctors sometimes meet competitors asking for dislocated shoulders to be popped back in for the second time that day. Medical notes are littered with the acronym AMA, as cowboys head to the next event Against Medical Advice. + +As rodeo announcer, Boyd Polhamus guides the Cody Stampede on horseback from the arena floor. Interviewed between shows, he says the sport “takes us back to the values we had as a nation in 1880.” Mr Polhamus paints a romantic portrait of a West “that believed a handshake was as good as a contract, when faith was practised openly.” The announcer is proud that rodeo scorns the all-shall-have-prizes culture: many competitors are thrown off almost at once, or fail to lasso their steer. “If they win, they’ve earned it,” he rumbles. + +On duty as Miss Rodeo America, Katherine Merck rides round the arena in sequinned white boots, an embroidered blue shirt and red cowboy hat. But she must also work, herding steers after roping events. She thinks it matters that cowboys pay their own entry fees for each event ($250 is typical) and mostly walk away with nothing: it makes for “less of an entitlement culture.” + +Elsewhere in this election season, nostalgia for a simpler America has led to resentful politics, and charges that someone has stolen the country’s greatness. In contrast, rodeo folk sound both exceedingly conservative and pretty upbeat about the future. It probably helps that partisan confrontations hardly trouble such one-party towns as Cody (in the 2012 presidential elections the county of which Cody is the seat gave Mitt Romney, the Republican, 76.4% of the vote). Only faint echoes of divisive subjects intrude on the holiday weekend. Among the celebratory parade floats is one that not only salutes the armed forces but—startlingly—recreates a military funeral, complete with a flag-draped coffin, mourning comrades and an honour guard who fire loud funeral volleys as they trundle down Cody’s main street. + +Most important, rodeo is a tradition that has adapted to survive. Go back a generation or two, and competitors were typically ranchers’ children or hired hands. Now many come up through high school and college rodeo teams, with eyes not just on glory but on scholarships awarded to rodeo-athletes who may never work on a farm (Miss Rodeo America is at law school). The industry is “far more aware” of animal welfare, with rules requiring a veterinarian at every professional rodeo, says Del Nose, a former champion and rodeo coach at Northwest College, near Cody. With a good roping horse now costing $50,000-60,000, rodeo cowboys have ever more reason to care for animals, adds Mr Nose’s wife and business partner, Becky. + +Bred to buck + +By custom, Cody’s holiday parades are watched by Wyoming grandees from the roof of the Irma Hotel, built by William “Buffalo Bill” Cody, the scout, soldier and impresario. This year the swells on the Irma include former Vice-President Dick Cheney, once a congressman for Wyoming. His 16-year-old granddaughter competes in rodeo barrel races, a timed horseback charge around three oil drums. Mr Cheney approves of rodeo culture, which teaches his granddaughter to be responsible and look after animals, and to withstand “intense” competition. “I like the people she hangs out with,” he says. + +The competition is growing more intense. Another bigwig on the Irma roof is Jerry Nelson, an oil man with a sideline in breeding champion horses and bulls for professional rodeos. Decades ago broncs might be saddle-horses that proved too mean to ride. Now animals are bred to buck. Mr Nelson has even cloned horses, though he murmurs: “I’m not sure what God makes of that.” The result is that rather than rodeo dumbing-down to stay popular, animals are harder to ride each year. + +The future is not cloudless. “I see ticket sales going up, but the number of events going down,” says Mr Nelson. Smaller events are especially vulnerable. But by being willing to change and focusing on what really matters, an American tradition is surviving. There is a lesson there for conservatives everywhere. + + + + + +The Americas + + + + +Violence in Rio: A sporting chance of safety + +Education protest in Mexico: A battle to feed young minds + +Argentina’s economy: The cost of truth + +Bello: No Brussels here + + + + + +Violence in Rio + +A sporting chance of safety + +Brazil’s carnival city may keep the lid on crime during the Olympics, but the longer term looks murkier + +Jul 9th 2016 | RIO DE JANEIRO | From the print edition + + + +THREE little girls cower, covering their ears. A mother urges calm, as shots ring out. The images were captured by mobile phone on July 4th from a cable car hoisted above Complexo do Alemão, one of Rio de Janeiro’s notorious favelas (shantytowns), and shared on social media. They epitomise worries about lawlessness plaguing a city which, in less than a month, will host South America’s first Olympics. + +It was not an isolated incident. The next day a policeman was killed in a shootout with drug gangs, the 56th officer to die this year in Rio de Janeiro state. Muggings are up. In the past week armed thugs carried out four arrastões (mass hold-ups) in the city. Thieves grabbed a lorry full of kit belonging to German TV networks. + +In a televised interview with CNN the mayor, Eduardo Paes, slammed the state government—long run by his own centrist Party of the Brazilian Democratic Movement (PMDB)—for doing a “terrible, horrible job” on security (a task which falls to states, not federal authorities). Cops fed up with being paid in arrears greet arrivals at Rio’s international airport with a banner in English that reads: “Welcome to Hell”. + +Not without cause, crime has always been as closely associated with this beautiful, hedonistic city as carnivals and Copacabana beach. Rio is by far the most violent place ever to put on the Olympics—though it is also worth recalling that Brazil is the first host country that is neither rich nor autocratic (see chart 1). The hope was that the authorities would use the run-up to the games to make it safer. + + + +They have done so, up to a point. Since the lawless 1990s, crime has fallen across southern Brazil. Thank rising prosperity, better policing and demography, with fewer young men prone to mischief. (A crime wave in the poor north-east has nudged the national murder rate up slightly.) Rio sees half as many violent deaths today as it did while vying for the Olympics in 2007-09 (see chart 2). But since 2012 progress has stalled, and may go into reverse. + + + +Pundits list several factors. After early success in 2008-12, Rio’s “pacification” policy—evicting gang leaders from favelas with heavily armed troops, then creating community-based policing units—has flagged. The policy’s second leg, involving better schools, sanitation and medical care, rarely met expectations. Denizens of the affected areas mistrust the police, who are responsible for a fifth of violent deaths in the state. A report from Human Rights Watch, an advocacy group, says some of these killings resemble executions. + +Some candidates in the state elections of 2014 sensed pacification fatigue and denounced the policy. They lost to Luiz Pezão of the PMDB, which pioneered it. But signs of the policy losing public support have tempted gangs into resuming violence so as to destabilise pacified areas and discredit the whole approach, notes Claudio Ferraz of Rio’s Catholic University. + +Then comes Brazil’s deep recession. With incomes pinched, more Brazilians have turned to crime. As tax revenues collapsed and the oil price depressed royalties, Rio had less money to react. To keep order in vulnerable favelas, resources have had to be shunted from better-off areas in the South Zone, home to Rio’s famous beaches and most of its hotels. On July 3rd the Botafogo neighbourhood saw a rare case of an arrastão in the South Zone. + +As the Olympics’ main organiser, Mr Paes insists that visitors need not fear. The federal government is giving the state 2.9 billion reais ($860m) in emergency help with security. That should cover police wages for the time being. Some 27,000 soldiers and national guardsmen will help keep order. A smaller deployment during Rio’s Pan American games in July 2007 coincided with a dip in crime. The latest spike in robberies may be criminals lining their pockets before an August lull. Mauro Osorio, who runs the Rio Observatory at UFRJ, a university, adds that gangs and police have tended to keep a truce during big events (that may be why the German TV equipment was promptly recovered). + +What happens afterwards is less clear. Pacification could yet work, but it is costly. Francisco Dornelles, the acting governor since Mr Pezão was diagnosed with cancer in March, lacks money and legitimacy. Federal aid will barely dent this year’s state budget deficit, projected at 19 billion reais. Police frustration could boil over—into what, no one knows—especially if pay stops again. Meanwhile, recession goes on biting. With luck, a return to the rampant lawlessness of old can be avoided. But such a nightmare is not inconceivable. + + + + + +Education protest in Mexico + +A battle to feed young minds + +Why teachers are so disobedient + +Jul 9th 2016 | MEXICO CITY | From the print edition + +PEOPLE in one of Mexico’s poorest states breathed a sigh of relief when over 170 tonnes of food were flown in at the start of July to restock local shops. The scarcities in Oaxaca were not caused by a natural disaster or a besieging foreign power. They followed a blockade by teachers, indignant over education reforms, who have once again shown how effectively they can paralyse commerce. In between bursts of lethal clumsiness, the authorities have mostly left the protesting pedagogues free to man their barricades. + +All this causes frustration that goes beyond the shoppers of Oaxaca. Across the country, many Mexicans see fixing education as the most important of 11 structural reforms launched by the president, Enrique Peña Nieto. The need to shake up the system is widely accepted. In many schools, unions are in charge of recruiting, teaching jobs are more or less hereditary and bad teachers are almost impossible to sack. Small wonder some 55% of Mexican 15-year-olds lack basic proficiency in mathematics, according to the 2012 tests of the Programme for International Student Assessment. The mean for the OECD, a club of mostly rich countries, is 23%. + +But Mexico’s militant union, the National Co-ordinator of Education Workers (CNTE), objects in particular to having a unitary test for all teachers. Its power base is in four poorish states, including Oaxaca; it says a country-wide exam is unfair on those who teach in demanding places. Its own influence is at stake. Under the terms of the reform, many of its activists (not all of them are really teachers) would lose their professional status. It has been railing against change since 2013, and sealing off highways is a well-practised tactic. + +This time, it all turned uglier than usual. In early June two CNTE leaders were arrested on charges of money-laundering and aggravated robbery respectively. Union members cried foul and protests intensified. On June 19th police challenged a barricade outside the town of Nochixtlán in north-west Oaxaca; in the resulting clash, eight protesters died. + +The government wobbled. The interior minister, Miguel Ángel Osorio Chong, met union members, but Aurelio Nuño, the education minister, was less keen on parleying. Meanwhile, roadblocks remained; as of July 1st there were 26 of them, with 3,500 people involved. + +For historical reasons, Mexican governments struggle to handle such situations in a measured way. Memories persist of student protesters massacred in 1968 and 1971; the ongoing “national trauma” makes the state queasy about using force, says Francisco Berlín Valenzuela, a political analyst. + +And when the authorities do try cracking down, things can go awry, as the events at Nochixtlán show. An investigation is in progress, but the town has joined the list of places where atrocities have been blamed on state actors, along with Ayotzinapa in the state of Guerrero where 43 students went missing in 2014. As Alejandro Hope, a security analyst, puts it: “The government has no confidence that state and federal police will perform a clean operation.” + +On July 1st Mr Osorio gave an ultimatum of sorts, saying that “before long” decisions would be taken to unblock strategic roads. Four days later, the number of blockades had fallen below ten (or so the government claimed) and the minister met union leaders again, offering a dialogue with the education ministry. + +People sympathetic to the teachers fear more draconian moves. José Gastón García of Oaxaca state’s Universidad del Mar says the government could pass a law likening the teachers’ action to terrorism. But both sides seem keen to avoid more violence, and a negotiated dismantling of the blockades looks more likely. Then real arguments about the future of education in Mexico can begin. + + + + + +Argentina’s economy + +The cost of truth + +The unflattering light of day + +Jul 9th 2016 | BUENOS AIRES | From the print edition + +Looking reality in the face + +DURING her eight years as Argentina’s president, Cristina Fernández de Kirchner had a way of dealing with nasty facts: denying them. When annual inflation reached 27%, she said the number was wrong. “If it were as high as they say it is,” she scoffed in September 2012, “the country would explode.” But truth will out: by the time she left office last year, a 100-peso note—the most valuable—fetched just $10, less than a third of its level when she took office. Unwilling to admit this plunge, Ms Fernández (whose assets have been frozen by a judge probing currency transactions) refused to issue bigger bills. Queues formed at ATMs; with a capacity of just 8,000 notes, some machines had to be refilled twice daily and repaired monthly. + +Mauricio Macri, the country’s president since December, prefers to cast a colder eye on reality. On June 30th a 500-peso note appeared at his government’s behest. The central bank won praise for producing it, with a nice image of a jaguar, so fast. It will be a blow to armoured-truck operators, who did well by moving wads of cash around the country. This helped Brink’s, an American firm in that business, to boost its Argentine revenues by 60% last year. But on the streets of Buenos Aires, the note is welcome. It will soon be possible to withdraw up to 2,400 pesos ($160) per transaction. “Hopefully it will cut queues,” sighed Mariela, a hospital worker, as she waited with 28 others to use a newly-replenished cash dispenser. “This is a waste of time.” + +Not all Mr Macri’s clear-sighted moves are so popular. Some of his efforts to normalise the economy—such as easing currency controls and removing subsidies on electricity, water, gas and transport—have exacerbated the inflation he inherited. On June 15th INDEC, the national statistics institute, revealed that prices went up by 4.2% during May alone. These were the first figures published by INDEC since Mr Macri took office; he has been working to make the agency more reliable. Annual inflation figures will not be out until next June. Worryingly, the picture emerging in the freshly polished mirror is of an economy going the wrong way. New numbers show that growth, private employment, manufacturing and investment have all fallen since Mr Macri came to office. His country is officially in recession. + +All this jars with a pledge in the first half of the year that Argentines would reap the rewards of his economic policies in the second. Some economists, including Ramiro Castiñeira of Econométrica, a consultancy, say the president was too quick to promise progress. He retorts that he was misconstrued. “Things don’t happen from one day to the next,” he said on July 2nd. “I didn’t say that all of Argentina’s problems will be resolved in the second half of the year.” + +Ordinary Argentines seem equally cautious. According to a poll by Management & Fit, a consultancy, 37% believe the economy will recover in the coming months; only 28% think their own situation will get better. Mr Macri, whose approval ratings have fallen to 44%, is hoping that the statistics improve by the year’s end. If not, Argentines may end up trusting him no more than his predecessor. + + + + + +Bello + +No Brussels here + +How Latin America may prosper from a different kind of integration + +Jul 9th 2016 | From the print edition + + + +FOR decades Latin America’s democratic politicians have invoked the European Union (EU) as a model to imitate, though they have proved much better at talking about integration than practising it. Now, just when the European project is suffering a nervous breakdown, there are small signs of more togetherness on the other side of the Atlantic. If this progress is to be sustained, it will be by doing things differently from the Europeans. + +Closer integration would have clear economic benefits. On average, Latin American countries trade less with each other than Asian countries do and also less than one might expect, according to the IMF. It hasn’t helped that in this century politics split the region into rival blocs. Hugo Chávez used Venezuela’s oil money to create ALBA, an anti-American grouping of 11 mostly small countries. Mercosur, a trade group based on Brazil and Argentina, evolved into a protectionist club of mainly leftish governments. In response, in 2011 Chile, Colombia, Mexico and Peru formed the Pacific Alliance of free-market economies. Each has a trade accord with the United States, and also with one or more Asian countries. + +Now Chávez is dead, his oil money has vanished and ALBA is on the defensive. The centre-right has come to power in Argentina, with the election of Mauricio Macri, and in Brazil through the impeachment of Dilma Rousseff. Both governments are seeking to boost trade, notably by negotiating an agreement with the EU (though, without Britain, that may founder on the agricultural protectionism of France and others). + +On June 30th Mr Macri flew to Puerto Varas, in Chile’s lake district, to join the presidents of the Pacific Alliance at their annual meeting. His trip prompted talk of convergence between the alliance and Mercosur in a new era of liberal trade for Latin America. Chile’s centre-left government is especially keen to promote co-ordination between the two blocs. But Heraldo Muñoz, Chile’s foreign minister, stresses that the Pacific Alliance and Mercosur “are two different projects”. + +That is true both formally and geopolitically. Like the EU, Mercosur is a customs union and has a (largely inactive) parliament. It fudges even more than Europe. Its common tariff is full of holes; it has admitted new members, like Venezuela, which do not comply with its rules. The glue of Mercosur is a strategic partnership between Brazil and Argentina, which do a significant amount of trade with each other. That is not going to change. + +The Pacific Alliance’s aim is to create an area of “deep integration” involving the free movement of goods, services, capital and people among its members. Its progress has been cautious but realistic. In May its members abolished tariffs on 92% of their trade in goods and harmonised rules of origin (ie, the amount of local content required to qualify) to encourage the creation of value chains among their countries. Helping business to make the most of that is now a priority, says Mr Muñoz. But the merger of the allies’ stockmarkets has been hampered by tax and regulatory differences. Like Mercosur, the alliance members have abolished tourist visas within the bloc, and are working to recognise each others’ professional qualifications. Work visas are still required, though normally granted. + +The alliance is unique in being based on policy affinity, rather than geography, says José Antonio García Belaunde, who was Peru’s foreign minister at the time of its creation. It takes decisions by consensus and has set clear rules. While trade among the four is still slight, it is likely to grow. The alliance’s brand is powerful: it has attracted 49 observer countries (most recently Argentina). At Puerto Varas the presidents agreed to ask the observers to help with education, innovation, the internationalisation of small businesses and the easing of trade procedures. + +Mercosur looks set to move in the alliance’s more liberal direction. But that doesn’t mean a merger. The alliance is open to new members, but only if they accept its rules. In a world of big blocs, integration has many potential benefits for Latin America. But only if it is well done. The lesson of Brexit is that integration must be “flexible, concrete…and not bureaucratic”, says Mr Muñoz. + +Latin American governments do not want to cede sovereignty to a supranational body. Unlike in Europe, neither history nor geography has encouraged them to do so. Mercosur has a small secretariat; the Pacific Alliance is purely inter-governmental. As Mr García puts it: “There’s no Brussels in the region.” If it is to happen at all, Latin American integration will be very different from the EU. It is time to adjust the rhetoric to that reality. + + + + + +Asia + + + + +Mainstream politics breaks down: The churn down under + +Change of command in the Philippines: Talk Duterte to me + +Cambodian politics: Sex, power and audiotape + +Indian politics: Modi-fication + +Hindi movies: Yes, he Khan + +Terrorism in Asia: Jihad’s new frontier + + + + + +Mainstream politics breaks down + +The churn down under + +A general election leaves Australia without a stable government + +Jul 9th 2016 | SYDNEY | From the print edition + + + +WHEN Malcolm Turnbull sought a second term for his conservative Liberal-National coalition government by calling an early general election, he promised Australians a break from nearly a decade of dysfunctional politics and short-lived national leaders. The prime minister—Australia’s sixth in a decade—asked voters to deliver a mandate for “strong, stable majority government” so that he could take them to the “greatest years in our history”. + +Instead, on July 2nd, they delivered a humiliating verdict. At best, Mr Turnbull may be lucky enough to have a tiny majority with which to form a new government. At worst, he could face a hung parliament with various independents holding the balance of power—and deciding his fate. + +Almost a week after Australians cast their votes, the outcome remained unclear. The government entered the campaign with 90 seats, giving it a majority of 15 in the 150-seat lower chamber, the House of Representatives. With four-fifths of the vote counted, according to the Australian Electoral Commission, Mr Turnbull’s government was leading in 74 seats, two short of a majority. The opposition Labor Party, which had 55, was leading in 71. Independents and small parties were ahead in another five seats. One independent, Bob Katter, said he would support Mr Turnbull. + +The prime minister had much riding on the election. A lawyer and successful businessman, he is a man of no very fervent views, but likes enterprise, is socially liberal and leans, like many Australians, towards republicanism. Last September he unseated the divisive Tony Abbott, a social conservative and ultraroyalist, as the Liberals’ leader and prime minister. At the time, Mr Turnbull promised a “different style of leadership”—one that was more inclusive, less dogmatic and, above all, showed greater economic direction. + + + +At first Mr Turnbull seemed to be rescuing the government from its woeful prospects under Mr Abbott. Opinion polls showed its popularity soaring. His liberal views on gay marriage, support for making Australia a republic and for a market-driven approach to tackling climate change won him widespread support. As prime minister, though, he disappointed many supporters by pushing these issues to one side, and he ignored them in his campaign. Many saw this as a price for appeasing the coalition’s conservative wing in deals that installed him as leader. The economic direction never came. Soon, the government’s popularity had sunk to put it neck-and-neck with Labor. + +As the election results were coming in, a contrite Mr Turnbull took “full responsibility” for the government’s poor performance. But he also suggested that it reflected more than popular dissatisfaction with him. There was, he said, “a level of disillusionment with politics, with government and with the major parties”. Indeed, Liberal and Labor leaders alike have failed to respond to a steady erosion among Australians of traditional political loyalties. + +Until a decade ago, Australia’s post-war governments were mostly long-serving and stable (despite three-year parliamentary terms, among the world’s briefest). But the left-right, class-defined labels that marked out the old Labor-Liberal divide have long faded. A country built upon immigration, first from Europe and more recently from Asia, Australia is, at least in its cities, ethnically very diverse. Meanwhile, the big parties have floundered over complex new issues, including how to deal with climate change (per person, Australians are huge emitters of carbon), changing social mores and asylum-seekers. + +A kaleidoscope nation, with a two-tone politics: no wonder more young Australians than ever have disengaged from politics. Despite compulsory voting, about a third of 18- to 24-year-olds avoided casting their ballots at this election by not registering for the electoral roll, says Alex Oliver of the Lowy Institute, a think-tank in Sydney. Revolving-door leaders turn many others off. In a recent Lowy poll, two-thirds of Australians rated “dysfunction in Australian politics” as being of equal concern as terrorism and threats to national security. + +In their halcyon days the mainstream parties used to share most of the vote between them. This time almost a quarter of votes went to independents and small parties. Ian Marsh, of the University of Technology in Sydney, calls this a “legitimacy crisis” for the big parties. The rise of social media and frequent opinion polling appears to have destabilised them further. + +Who wants to be a prime minister? + +The breakdown of tribal affiliations in how people vote is hardly unique to Australia. Neither are the mainstream parties’ responses, which are as brutal, and as counter-productive, as anywhere in the West: when opinion polls show popularity plunging, governments on both sides have taken to turning on their leaders instead of confronting their policy dilemmas. Labor MPs replaced Kevin Rudd with Julia Gillard, and vice versa, before either had completed a single term as prime minister. Mr Turnbull then took a leaf out of the Labor playbook by ejecting Mr Abbott. + +Josh Frydenberg, a senior minister in Mr Turnbull’s government, says a more frantic polling and media culture has made politics “more personal and aggressive”. Saul Eslake, an economist, puts it more bluntly: instead of offering a “compelling vision”, Australia’s political leaders focus simply on holding on to power. + +Mr Turnbull offered a broad enough vision. A self-made millionaire, he told voters that “opportunities have never been greater, nor our horizons wider”. With the economy growing at 3% and unemployment below 6%, Australia has weathered the end of a commodities boom underwritten by Chinese demand better than many expected. Mr Turnbull proposed as his core policy cuts in company taxes over ten years, arguing that this would stimulate jobs and growth. But voters in regions that have been left behind were unconvinced about how this would help them. + + + +The election’s strongest newcomer was a party founded by Nick Xenophon, a centrist who had entered the Senate, the upper house, eight years ago. His home state of South Australia was once a hub of steelmaking, carmaking and shipbuilding. But manufacturing’s share of jobs has halved in Australia over the past 26 years, and South Australia has been hit especially hard. His platform mixes populist protection for industry with more immigration to stimulate growth (yes, the case can be made). Rebekha Sharkie, a candidate on his slate, took the prized Liberal seat of Mayo, near Adelaide. Another came close to capturing the formerly safe Liberal seat covering the steelmaking city of Whyalla. + +Meanwhile, the opposition leader, Bill Shorten, emerged as a stronger campaigner than anyone had expected. He argued for Labor’s old strengths, such as supporting public health and education, while his shadow treasurer (finance minister), Chris Bowen, worked to persuade voters that Labor could match the coalition in fiscal probity. + +Labor won three Liberal-held seats that cover much of Tasmania, another struggling state. Linda Burney, a Labor candidate who won a suburban constituency of Sydney, becomes Australia’s first indigenous woman to sit in the lower house. + +Whatever the outcome in the House of Representatives, the new Senate could prove among a new government’s biggest headaches. In March Mr Turnbull won parliamentary approval to simplify a convoluted system of proportional representation under which Australians elected the upper house. + +Normally, half the Senate’s 76 members face voters at the same time as the lower house in its three-year cycle. But Mr Turnbull called this election as a “double dissolution”: an election for all members from both houses at the same time. He expected that the voting reforms would rid the Senate of independents and so-called micro-parties that had often blocked government legislation. + +This was another miscalculation. The new Senate might end up with up to nine members unaligned to the big parties, including possibly three of Mr Xenophon’s candidates, depriving the government of a majority there. It could yet doom Mr Turnbull’s planned cuts in corporation tax. + +Mr Turnbull remains “quietly confident” of winning a majority, once all the votes are counted. But even if he does, his slim margin could damage his authority in his divided party and embolden his conservative enemies. Australia’s era of churning political leaders seems far from over. + + + + + +Change of command in the Philippines + +Talk Duterte to me + +Deciphering the new president’s tough-guy language + +Jul 9th 2016 | MANILA | From the print edition + + + +CHIEF among the traits of Rodrigo Duterte that won him the presidential election in May was his forthright manner of speaking. Yet the meaning of his aggressive, expletive-laden talk was often obscure. What would he really do as president? Filipinos are starting to get a glimpse. + +In one respect—his promise to give the police a free hand to kill criminals, notably suspected drug-traffickers—the man sometimes nicknamed “Duterte Harry” seems to have been taken at his word even before his inauguration on June 30th. In the first six weeks after the election, the police shot dead suspected drug-traffickers at the rate of nine a week, over four times the rate in the preceding four months. A day after being sworn in, Mr Duterte reassured officers paraded in front of him that they had the right to kill suspects who threatened their lives by resisting arrest. “Do your duty—and if, in the process, you kill 1,000 persons because you were doing your duty—I will protect you,” he said. He later took aim at their bosses, accusing five serving and former police generals of being “protectors” of drugs gangs. (They deny the claim.) + +In other matters, though, Mr Duterte appears to be more restrained. He and his newly appointed ministers said they would honour the previous government’s peace accord with Muslim insurgents in the southern island of Mindanao, Mr Duterte’s political bailiwick. Until recently he had been vague about his intentions in the region, where the rebel Moro Islamic Liberation Front has agreed to make peace in return for new arrangements for autonomy in predominantly Muslim areas. But in his inauguration speech Mr Duterte declared: “My administration is committed to implement all signed peace agreements.” + +A pressing question is the country’s relations with China and America—particularly the dispute with China over its extensive claims to the islands, reefs and atolls in the South China Sea. On July 12th the Permanent Court of Arbitration (PCA) in The Hague is due to issue a much-anticipated opinion on a complaint against China brought by the former Philippine president, Benigno Aquino. At one point in his election campaign Mr Duterte said he would ride a jet-ski to plant the Philippine flag in areas that it claims as its own, and was ready to die doing it. At other times he said only direct negotiation with China could settle the confrontation. + +In recent days the government has indicated that it prefers the second approach. The foreign minister, Perfecto Yasay, told a press conference that he hoped China would negotiate after the PCA ruling: “I’m hopeful that China would do this, notwithstanding the fact that it has said that it will not respect the decision of the arbitral tribunal,” he said. + + + +A guide to the Philippines, in charts + +Mr Yasay added that the Philippines would stick to a military pact with America called the Enhanced Defence Co-operation Agreement. Under the accord, Mr Aquino had widened the scope of the two countries’ Mutual Defence Treaty of 1951 to allow American forces to operate from Philippine territory. + +America has declined formally to take sides in the many disputes in the South China Sea, but has challenged China’s aggressive island-building by occasionally sailing and flying close to disputed islands in the name of freedom of navigation. Before taking office, Mr Duterte had appeared to question the utility of the alliance. He said America would not die to defend the Philippines. Recently he asked the American ambassador in Manila: “Are you with us or are you not with us?” + +Many of Mr Duterte’s intentions remain obscure—in part because he refuses to talk to journalists, complaining that they misinterpret him. On economic policy the self-proclaimed socialist quoted two American presidents in his inauguration speech: Abraham Lincoln, expressing mildly laissez-faire views; and Franklin Roosevelt, expressing gently left-leaning sentiments. For those puzzling over how the two quotations amount to a coherent policy, the president added, helpfully: “Read between the lines.” + + + + + +Cambodian politics + +Sex, power and audiotape + +A crackdown in Cambodia leads to a curious siege + +Jul 9th 2016 | PHNOM PENH | From the print edition + +Hun Sen, in fined form + +ON A wet afternoon several dozen activists keep watch outside the offices in Phnom Penh of the Cambodia National Rescue Party (CNRP), the main opposition group. For six weeks Kem Sokha, the party’s vice-president, has been holed up inside—sleeping in an office and daring authorities loyal to Hun Sen, prime minister for 31 years, to come and get him. One supporter says he is there to act as an observer, should the government make a move; he thinks plain-clothes police officers are lurking a little way down the street. + +The stand-off is the latest chapter in a strange saga that started in March, when recordings of flirtatious telephone conversations, purportedly between Mr Kem Sokha and his hairdresser, were leaked online. The courts say he has failed to comply with a summons for questioning in connection with the case. The details are murky, but the ruling Cambodia People’s Party (CPP) has suggested that the tapes implicate the opposition politician in soliciting a prostitute. The hairdresser is suing him for $300,000, which she claims he promised to give her. Separately, a social-media starlet and once-vocal opposition supporter claims she was defamed by criticism of her heard on the tapes. + +Several foreign ambassadors have trekked to Mr Kem Sokha’s hideout, embarrassing the government. Perhaps the CPP was hoping to drive Mr Kem Sokha into exile, along with the CNRP leader, Sam Rainsy, who did not return from a foreign trip in November after authorities said he might be made to serve a two-year jail sentence for defamation dating to 2011. The case hinges around a speech in 2008 in which Mr Sam Rainsy claimed that the then foreign minister had colluded with the genocidal Khmer Rouge regime (which the ex-minister denies); many thought Mr Sam Rainsy had been pardoned. + +The legal troubles of Mr Sam Rainsy and Mr Kem Sokha look like being part of a wave of politically motivated prosecutions to neuter the opposition ahead of local elections next year and a national vote in 2018. At least 20 opposition MPs, members and supporters are behind bars on various charges—all of them arrested or convicted within the past 12 months. Three of them are serving 20-year sentences. + +In April four people working for Adhoc, a local human-rights charity, were imprisoned, too. They are accused of trying to influence the testimony of the hairdresser, to whom they had offered legal advice and some financial support. Naly Pilorge of Licadho, another human-rights group, says the crackdown has been uncommonly swift and broad. + +All this highlights the collapse of a truce struck by Cambodia’s two main parties in the middle of 2014. Back then the CNRP agreed to end a boycott of parliament and to wind down large protests that had erupted after a fairly narrow victory won by the CPP in an election the previous year. The opposition was promised seats on the election commission, which had long looked like an arm of the ruling party. Recent proceedings against a member of the newly reformed commission may be an attempt to recapture it for the government. + +Mr Hun Sen insists that the courts are independent and that no Cambodian is above the law. In June he made a great show of paying a fine which netizens thought should have been slapped on him for failing to wear a motorcycle helmet during a public ride-about publicised on his Facebook page (he is pictured arriving at a police station). + +The prime minister growls that his opponents are plotting a “colour revolution” of the sort seen in former Soviet republics—though there is little evidence of that in the small weekly protests staged outside prisons by black-clad human-rights campaigners. Media regulators are said to be renewing a campaign to ensure that all articles mentioning the prime minister include his long-winded royal title, “Lord Prime Minister and Supreme Military Commander”, which had been set aside when foreigners mocked it. + +The Lord Prime Minister’s mood is unlikely to be improved by a report published on July 7th by Global Witness, a campaigning group, which attempts to quantify the scale of the Hun Sen dynasty’s interests in the Cambodian economy. The researchers found that the prime minister’s family members had registered interests in 114 companies across 18 sectors, with a combined share capital of more than $200m; they have “total or substantial” control over 103 of these companies. Global Witness reckons this is probably only the “tip of the iceberg”, since its research relied on government records of only those holdings which had been formally declared. + +A backroom deal is still possible. Statements from senior CPP members suggest that some in the party think the campaign against Mr Kem Sokha has gone too far. Tensions have dropped a notch since the start of his seclusion. On July 1st a court released three environmental activists who had been imprisoned since last August after mounting a campaign against sand dredging, sentencing them to time served. But such tumult so early in the electoral cycle bodes badly, whatever happens next. + + + + + +Indian politics + +Modi-fication + +A swelling cabinet suggests that politics trumps reform + +Jul 9th 2016 | DELHI | From the print edition + +NARENDRA MODI, India’s can-do prime minister, swept to victory two years ago promising “minimum government with maximum governance”. His incoming team boasted just 45 ministers and ministers of state, compared with the unwieldy 77-person crew fielded by the previous government. But on July 5th, following his second reshuffle since taking office, Mr Modi’s council of ministers ballooned to an even wobblier 78. + +Running such a sprawling, untidy republic does require a lot of people. Only 27 of Mr Modi’s ministers will actually sit with him in cabinet meetings. The other 50 are junior ministers, tied to specific portfolios. Government loyalists say the extra hands will make it easier to carry out the prime minister’s ambitious reform agenda. Many among India’s noisy chattering classes fear the opposite is true. + +Elections loom next year in several crucial states. These include the biggest, Uttar Pradesh, with some 200m people, as well as prosperous Punjab and Mr Modi’s home state of Gujarat. Last year his Hindu-nationalist Bharatiya Janata party (BJP) bombed at the polls in Bihar, a state famed for convoluted politics based on group affiliations such as caste and religion. That made Amit Shah, the party’s grizzled president and Mr Modi’s closest henchman, determined to widen the BJP’s appeal well beyond its base among higher-caste Hindus. The party has made special efforts to woo Dalits, or “untouchables”, who make up a crucial bloc of voters in Uttar Pradesh. + +Small wonder that among 19 newly minted ministers, ten are from what India officially classifies as “backward” castes, and three are from Uttar Pradesh. Controversial ministers were moved to less visible posts, and technocrats replaced by figures with more populist appeal. The minister of state for finance, Jayant Sinha, an outspoken former investment banker, will now be a junior minister for civil aviation. Two BJP stalwarts with little background in finance will share his old post. + +With three years to go before a general election, Mr Modi’s choice raises questions about how much he will get done. An editorial in Mint, a financial daily, sniffed: “Jumbo cabinets are not exactly the optimal solution to governance challenges.” + + + + + +Hindi movies + +Yes, he Khan + +India’s biggest film stars have locked up the best release dates + +Jul 9th 2016 | From the print edition + +Salman Khan wrestles with stardom + +AS NIGHT follows day and Eid al-Fitr follows Ramadan, so there is another certainty for India’s Muslims marking the end of the month of fasting: the release of an action-drama extravaganza starring Salman Khan, one of the country’s most bankable stars. “Sultan”, about a down-and-out wrestler, was released worldwide on July 6th. + +Mr Khan, who likes to play the beefed-up good guy with near-superhuman fighting powers, a way with women and a mischievous sense of humour, has won a huge following, especially among India’s 180m Muslims. He represents one of Bollywood’s triumvirate of stars, all called Khan (unrelated to each other). Each dominates a different annual holiday. Shah Rukh Khan, a favourite of the middle classes, is the hero of the Diwali weekend. Aamir Khan, more highbrow, dominates Christmas. Between them, the trio have released a film on 14 of the past 15 big festive weekends, occasionally switching round. Other actors and their producers must launch their films at other, less profitable times, such as Independence Day—or await an off-year for the Khans. + +Holidays have always been popular release dates for Hindi movies—children are out of school and purse strings are loosened. But other factors are encouraging blockbuster weekends. One is that digital piracy makes it vital for films to maximise box-office revenues before they are leaked online. + +Bollywood has become more formalised since it gained “industry status” in 2001, allowing banks to lend to it (as opposed to gangsters and sundry businessmen seeking glamour or legitimacy). As the industry churns out more big films, a successful launch is more important than ever. With a “carpet-bombing” publicity strategy, the opening weekend of a blockbuster can account for as much as 60-70% of box-office takings, says Neeraj Goswamy of Viacom18 Motion Pictures, a big studio. (It also allows makers of duds to recoup some of their money before word gets out that a movie is rubbish.) + +The spread of multiplexes and digital projection makes huge releases possible. In the past, a major Hindi film might be seen on hundreds of screens over several weeks. “Sultan” is rumoured to be Bollywood’s biggest-ever release, with about 5,000 (mostly digital) prints worldwide. + +Beyond the proven success of the Khans at Diwali, Christmas and Eid, Bollywood’s producers still rely on superstition to find success. “Lucky” stars are cast in guest roles. Actors and producers routinely misspell their own names to comply with the arcane rules of numerology, in which letters are assigned a number: Ajay Devgan, an action star, can become Ajay Devgn; and Ritesh Deshmukh turns to Riteish Deshmukh. No big films are released in the first fortnight of the year. That is considered bad luck—even with a Khan topping the bill. + + + + + +Terrorism in Asia + +Jihad’s new frontier + +Islamic State looks east, but struggles to find fertile ground + +Jul 9th 2016 | DELHI, DHAKA AND SINGAPORE | From the print edition + +After the killing in Bangladesh, the mourning + +ISLAMIC STATE’S motto, “Enduring and expanding”, would seem to explain recent grim headlines from across Asia. A restaurant massacre in Bangladesh on July 1st; a grenade attack on a Malaysian nightclub a week earlier; a suicide-bomb in the Indonesian city of Solo on July 5th; and the decapitation in the Philippines of two Western captives, in April and June. All bear the ugly stamp of the jihadists. + +A recent IS video—in Tagalog, Malay and Bahasa Indonesia, as well as Arabic and English—urges jihadists who cannot travel to the so-called caliphate in Iraq and Syria to join the fight instead in the Philippines. Another in Bengali praises the restaurant murderers and promises more such attacks. Squeezed on its own turf, IS is looking east—as well as seeking to wreak havoc in the Middle East and spread fear across Africa and the West. + +Yet while the terror map of Asia now prickles with freshly inserted IS pins, a closer look suggests a slightly less alarming picture. The recent incidents were either claimed by IS or ascribed to the group by local police. No recent terror act in Asia, however, appears to have been the work of trained operatives working within an identifiable command structure. And although, with the exception of the Philippines, all these incidents took place in Muslim-majority countries, no local Asian affiliate of IS appears likely to win many hearts and minds. + +The killings at a smart restaurant in Dhaka, the Bangladeshi capital, were chilling. The attackers spared most of their Muslim captives but systematically slaughtered 20 others, among them nine Italians and seven Japanese aid consultants. IS gleefully posted smiling portraits of the young killers, all striking a similar pose clutching assault rifles. But a closer look reveals that they took turns holding the same gun, a cheap, lower-calibre copy of the ubiquitous Kalashnikov. + +In November the IS online magazine, Dabiq, warned that “soldiers of the Caliphate” would “rise and expand in Bengal”. In April the magazine carried an interview with the “emir of the caliph’s soldiers in Bengal”, who said they were “sharpening their knives to slaughter the atheists, the mockers of the Prophet, and every other apostate in the region”. The ultimate aim, he said, was to attack India and foment chaos there. + +Massacring diners in a neighbouring Muslim country seems an unlikely way to achieve this. A more obvious approach would be to establish terrorist cells in India. In May an IS video featured a fighter in Syria of apparently Indian origin who declared that the group would liberate India’s 180m Muslims from Hindu rule, and called on them to rise up. Indian police say that since the beginning of this year they have busted at least three groups linked to IS. The most dangerous seems to have been a cell in the city of Hyderabad. Police say that five men now in custody wrote e-mails pledging allegiance to Abu Bakr al-Baghdadi, the IS “caliph”. They had stashed precursor chemicals for explosives, though the quantities were modest. + +Elsewhere, IS shows a similar lack of professionalism. Police in Malaysia initially attributed a small grenade explosion on June 28th at a pub near the capital, Kuala Lumpur, to gangland motives. It injured eight patrons. Only when IS claimed responsibility on Facebook did authorities admit that this was, possibly, the group’s first attack in the country. Police have rounded up 15 suspects, two of whom were said to have received orders from a Malaysian recruit in IS territory. Police say they have foiled nine other terror-related plots in the past two years, and arrested some 160 suspects since January 2015. + +Recent incidents in Indonesia have not shed glory upon IS, either. The suicide-bomber in Solo managed only to kill himself and injure a policeman. Again, police assert he was following long-distance orders, this time from a known Indonesian fighter in IS territory. Security in the country has been tightened since January, when jihadists linked to IS killed four people at a busy shopping district in Jakarta, the capital. Two of the four assailants blew themselves up prematurely. Police gunfire quickly dispatched the others. + +In the unruly island of Mindanao in the Philippines, IS seems to have made more headway. This is in the context of a long-standing low-intensity conflict between security forces and Muslim separatist groups that resemble criminal gangs as much as holy warriors. The same group that beheaded two Canadian hostages, and which continues to hold a Norwegian one, has also kidnapped local fishermen for ransom. + +Not a bay in Bengal + +Tellingly, the jihadists’ biggest “success” has been in Bangladesh. Despite a string of brutal, religiously motivated murders in recent years, the ruling party has insisted on blaming political rivals, or even the victims themselves, rather than more obvious culprits. It has also ignored complaints from parents that their teenage children were disappearing, or had been brainwashed, at the hands of jihadist cults. + +Wherever police have taken their work more seriously, IS has not fared well. The bigger challenge, given that the bulk of the world’s 1.6 billion Muslims live in Asia, is how to blunt the appeals that IS now makes in their own languages. Speaking last month, Indonesia’s minister of defence noted that in a survey in December 2015, 96% of Indonesians said they were adamantly opposed to IS’s ideology. Its latest attacks will not have diminished that share. The government’s task, said the minister, was to address the 4% who declined to state their view. + + + + + +China + + + + +Pollution: Beijing v belching chimneys + +Bad planning: A bigwig purged + +Anti-smoking legislation: Butts resist kicks + + + + + +Pollution + +Beijing v belching chimneys + +The central government is pressing heavy industry to clean up + +Jul 9th 2016 | TANGSHAN | From the print edition + + + +SOMETHING has been amiss recently in the city of Tangshan, the source of about one-tenth of China’s steel output and (literally) eye-watering levels of pollution. Through much of May and June, no smoke billowed out of the mills near the railway station, two hours east of Beijing. In the sidings, wagons full of coal and steel girders sat idly. Hundreds of feet up in the air, vividly decorated kites fluttered against an unusually blue sky. A city whose industrial heritage includes China’s first mechanised coal mine, first freight locomotive and first cement plant has found itself in an incongruous position. It is hosting a vast international flower show laid out across an abandoned coalfield, overlooked by a gaudy metal phoenix that appears to be clinging to—or strangling—a smokestack. + +To keep the air clean for the event, the local authorities have sporadically suspended steel production (playing havoc with futures prices in Shanghai). Their efforts look like a crafty way of disguising the effects of the country’s economic slowdown and industrial overcapacity, which have undoubtedly taken a toll on Tangshan’s steel industry. But for the workers, the subtext may be starker still. Bamboos sprout out of railway bridges; children clamber on lotuses sculpted out of steel. A noticeboard among the blossoms suggests that Tangshan’s days as a steel town are numbered (40 years after the city itself was flattened by an earthquake that killed hundreds of thousands of people—the phoenix symbolises its rebirth). The city is striving for “the transformation from industrial...to ecological civilisation”, it says. In other words, it welcomes people to a kitsch, rose-scented future (unlike the Tangshan pictured). + +The country’s industrial bases are coming under pressure from three mutually reinforcing efforts by the central government: to rebalance the economy towards a less energy-hungry mode of growth, to curb pollution and to control carbon emissions that cause global warming. The upside is that on good days citizens can at least breathe cleaner air. Besides, China’s carbon emissions from energy use are estimated to have fallen last year for the first time in 17 years, according to research by BP, an oil company. The question is: can these environmental gains be sustained? + +The goal: less coal + +Two of China’s most influential advisory groups, the National Centre for Climate Change Strategy (NCSC) and the Energy Research Institute (ERI), have suggested ways they can be. On July 7th they said the country should ensure that carbon emissions will peak in 2029. To achieve that, they say, it should price carbon at 60 yuan ($9) a tonne or more (China has several regional carbon markets, but prices are lower than that). They also want the government to require that a minimum share of electricity production must come from renewable energy, such as wind and solar power. Such measures would hasten the shift away from coal and heavy industry. + +Coal is the focus of both the government’s climate goals and its “war on pollution”. Currently, half of the coal burned anywhere is burned in mainland China. However, its use is expected to fall for a third year in a row in 2016, partly because of the slowdown in industrial activity, and also because of the increasing amounts of energy generated by wind and sun, says Lauri Myllyvirta of Greenpeace, an NGO. He adds that pressure from Chinese citizens to curb air pollution has, in recent years, forced the government to limit the use of coal in industrial areas. This year it ordered a three-year suspension of the building of new coal-fired power plants in 15 regions with notable overcapacity. + +That may be too little, too late. Mr Myllyvirta says that in the 15 months before the partial moratorium, local governments had authorised the construction of more than 210 coal-fired power plants, with the potential to generate about 200 gigawatts (more than the total power-generating capacity of Germany), as officials sought to boost investment and economic growth whatever the environmental cost. That is on top of existing overcapacity, which he puts at about 200GW. As the NCSC and ERI pointed out, coal’s share of primary energy use is likely to stay at roughly half, even if their recommendations are adopted. + +But top-down efforts to rationalise coal consumption in power plants and steel mills—however inadequate—are being complemented by pressure from the bottom up. Ma Jun, a prominent environmentalist who heads the Institute of Public and Environmental Affairs, is using the NGO’s “Blue Map” app, with the help of real-time data released by the government, to show which industrial complexes are violating air-quality standards. Users can then denounce polluters through social media. + +Mr Ma says some firms have admitted their mistakes, but in many cases local governments have tried to hide the problem, believing that GDP growth targets are more important than environmental ones. This year the central government launched its first crackdown, sending inspectors to Hebei province, home to Tangshan. Reportedly they closed down 200 companies and ordered the arrest of 123 people, some for allegedly fabricating information about pollution-control measures. On July 5th Hebei responded to the inspectors’ criticisms by pledging to “put environmental protection in a more prominent position”. + +The central government has begun to use environmental law as “a stick” to encourage the shift to a service-oriented economy, says Mr Ma. But the authorities are still so concerned about minimising job losses and maintaining social stability that he is unsure whether their mindset has changed for good. He says it is unclear whether lower pollution levels in Beijing this year are because of a fundamental improvement, or because of the weather (smog is still ever-present). + +Another culprit for air pollution and carbon-dioxide emissions is oil. As an energy source in China it is dwarfed by coal, but its use will rise as China’s consumers become richer and travel more. As the industrial economy has slowed, so has the use of diesel for trucking freight. But oil demand will continue to grow as more people drive cars and fly on planes. In the longer term, however, fuel-efficiency standards will rise, public transport will improve, denser urbanisation may dent the appeal of owning cars and electric vehicles may become more popular. + +Such is the importance of energy-intensive industries such as coal, iron, steel and cement to China’s economy that it is hard to imagine the country continuing to grow unless they rebound. In that case, anti-pollution measures will have to be even tougher. The government is sending the right signals: officials say that high-level inspection teams will be sent to other provinces, too. “In the past environment inspections were like a slap in the face, but now it is like having a knife to the neck,” said a glass-factory manager in Hebei to Xinhua, a state news agency. Few believe that the central government is quite as serious as such words suggest. But local officials will not want to find out the hard way. + + + + + +Bad planning + +A bigwig purged + +Jul 9th 2016 | From the print edition + + + +There was once a zealous official who used party-speak to name each of his five children: Planning, Policy, Guideline, Direction and Completion. Ling Jihua (“Planning”) rose to serve as chief aide to Hu Jintao, who was then China’s president. Now Mr Ling has become one of the highest-ranking officials to be felled in an anti-graft campaign led by Mr Hu’s successor, Xi Jinping. On July 4th he was jailed for life for taking $11.6m in bribes, illegally obtaining state secrets and abusing his power. He had been politically sidelined in 2012 after his son fatally crashed a Ferrari in Beijing while reportedly driving two women (one was naked). But Mr Ling was never tried for what Mr Xi might consider his biggest crime: belonging to the wrong faction. + + + + + +Anti-smoking legislation + +Butts resist kicks + +The state tries to curb tobacco, which it also peddles + +Jul 9th 2016 | BEIJING | From the print edition + + + +CHINA has long been a smoker’s paradise: cigarettes are dirt-cheap and regulations so poorly enforced that even small children can buy them. The country is home to one in three smokers worldwide. Recently, however, there have been some changes. Last year the city of Beijing banned smoking in all indoor public spaces. This helped clear the air in most of the capital’s bars and restaurants. Combined with a slight increase in tobacco taxes nationwide, it contributed to a rare fall in cigarette purchases: people bought around 60 billion fewer of them in 2015 than in the previous year, according to Euromonitor, a market-research firm. + +An anti-smoking law that is now being considered for national implementation, however, looks like less of a step forward. Its first draft, in 2014, proposed to stop smoking in indoor public places countrywide and put the onus on businesses—not just individuals—to comply. Any establishment persistently flouting rules could have its business licence revoked. But a new draft, seen by health professionals, would permit the creation of dedicated smoking areas indoors. Since it is difficult to seal such spaces, that would mean non-smokers would still be exposed to fumes. It would make enforcement hard, too. It is “the kind of smoke-free law you have when you really don’t want a smoke-free law,” says Angela Pratt of the World Health Organisation (WHO) in Beijing. + +The proposed law aims to protect the estimated 700m people in China who are routinely exposed to second-hand smoke. President Xi Jinping appears to back it. His wife is an anti-tobacco campaigner and he has barred officials from smoking in public or buying cigarettes with public money. He apparently encouraged the introduction of the capital’s smoke-free law. + +Yet even Mr Xi appears weak before the arm of his own government that peddles cigarettes. The state-owned China National Tobacco Corporation controls the production and sale of all tobacco in China. That the government profits from puffing perhaps explains why it has taken so few anti-smoking measures since China signed the WHO’s Framework Convention on Tobacco Control in 2003. Packets carry only tiny written health warnings (with no graphic pictures), and taxes remain low. The company’s arguments echo those of tobacco firms elsewhere. It warns that cutting smoking will harm the economy, since tobacco taxes account for 7.5% of fiscal revenue at all levels of government (in Yunnan they account for about half the provincial tax take). Unlike elsewhere, China’s monopoly has a ministerial seat, which means it can shape legislation. + +Until the state divorces itself from the tobacco industry it will be hard to campaign seriously against smoking. Around 1m people die from tobacco-related diseases each year in China, yet public awareness of the dangers remains low, particularly with regard to second-hand smoke. It does not help that the two most famous smokers in China’s recent history—Mao Zedong and Deng Xiaoping—are well known for their longevity, and that many senior officials smoke. Zhongnanhai, the leadership’s headquarters, is also the name of a popular cigarette brand. + +The government wants to pass the national anti-smoking law by November, when Shanghai will host a global conference on health promotion organised by the WHO. The timing of the bill’s launch is intended to show participants that the country is dedicated to healthy living. In its current form it will fail. + + + + + +Middle East and Africa + + + + +Kurdistan: Dream on hold + +Iraq and Syria: Islamic stateless? + +Zimbabwe’s begging bowl: Bailing out bandits + +Divorce in Nigeria: Rings fall apart + + + + + +Kurdistan + +Dream on hold + +Despite a string of military successes, the Kurds are nowhere near independence + +Jul 9th 2016 | ERBIL | From the print edition + + + +PESHMERGA militiamen pile armchairs and sofas high on a removal van as they decamp from the dam above Mosul to the plain below. Mosul, Iraq’s second city and the nerve centre of Islamic State (IS), lies in their sights. Thanks to coalition arms, training and air power, the peshmerga, Iraqi Kurdish troops whose name means “one who confronts death”, now surround it on three sides. Together with Baghdad’s army, they are also closing in from the fourth side, the south. “Whatever we take, we hold,” says a peshmerga intelligence officer, surveying IS dugouts from a trench on the front line. + +For 28,000 square kilometres (11,000 square miles) behind him, Kurdish flags now fly over the remains of deserted and destroyed Sunni Arab villages and towns. Time and again, the peshmerga have chased the jihadists out. In Syria, too, Kurdish forces boast similar gains. Thanks to the war on IS, they control some 600km of Syria’s 800km northern border with Turkey. In March they declared their own autonomous region there, Rojava. In Turkey and even in Iran, Kurdish armed groups have ended years of ceasefire and taken up arms. Rarely in their century-old bid for statehood has the dream of carving a Kurdistan from the rumps of four states appeared so nearly within reach. + +Mayhem in all four has helped their cause. In Iraq the area ruled by the Kurdistan Regional Government (KRG) has been beyond the effective control of Baghdad since 1991; only Kurds over 40 now speak Arabic there. Having struck oil, the KRG’s leaders sell it independently of Baghdad, exporting it through their own pipeline to Turkey. “Iraq is over,” says Heman Hawrami, a confidant of the KRG’s president, Masoud Barzani. “Statehood is the only practical solution.” + +Yet if so, why do they delay declaring it? In a referendum in 2005, 99% of KRG voters chose Kexit. A decade on, Kurdish officials say they need a second vote, but will not name a date. + +Infighting is the main reason for delay. Having taken back control of their territory in Iraq and Syria, the Kurds have proved incapable of sharing it. The alphabet barely has enough letters to cover the acronyms of all their quarrelsome factions. A Syrian analyst counts 45 in Rojava alone. In Iraq there are almost as many. + +An opportunity squandered + +Had they matched IS’s unity and determination, the Kurds could have erased the lines the Western powers drew on the map after dissolving the Ottoman empire, and declared a unified Kurdistan. Instead, on either side of Iraq’s northern border with Syria, Kurdish militias now train their guns on each other, hungry for control of the territories and oilfields they have captured from IS or the Assad regime. The People’s Protection Units (YPG) hold Rojava as well as bases in Mount Sinjar, west of Mosul, on Iraq’s side of the border. Opposing their advance, Mr Barzani has cobbled Syrian Kurdish exiles into his own “Rojava Force”. “We’re upholding Sykes-Picot borders,” says one of its commanders wryly, using the shorthand for the partition of the region into various Arab states but not a Kurdish one. + +Barzani the autocrat + +In Iraqi Kurdistan, the core of their putative state-in-waiting, the two dynasties that fought a nasty civil war back in the 1990s are also at loggerheads again. At a highland checkpoint on their old demarcation line, the smiling portraits of the two old clan leaders, Mr Barzani and Jalal Talabani, face each other some 300 metres apart. But their men now appear to be hell-bent on reviving hostilities. From Erbil, their capital, Mr Barzani’s forces expel dissenters eastward. The banished include the Speaker of the KRG’s parliament, who dismisses Erbil as “occupied” and wants parliament moved to “liberated” Sulaymaniyah, Mr Talabani’s base in the east. Partisan satellite channels fan the flames. In June the offices of Rudaw, a pro-Barzani news agency, was firebombed. Barham Salih, a former KRG prime minister, warns that “Kurdistan is degenerating into warlordism and corrupt fiefdoms.” + +Such rivalries make it all the easier for regional powers to turn the Kurds into their pawns. In 1996 Mr Barzani’s men rode the tanks of their former murderer, Saddam Hussein, into Sulaymaniyah. Mr Talabani needed Iran’s forces to win it back. Today Iraq is preoccupied with its own fighting, and the chief puppeteers are again Turkey and Iran. Trade follows geopolitics: Erbil’s huge malls offer Turkish brands, whereas shelves in Sulaymaniyah are stacked with Iranian goods. Turkey’s pipeline through Erbil gives Mr Barzani control of KRG oil revenues, but also makes him dependent on the Turks. Loth to lose influence, Iran is helping Mr Talabani’s men finance a second pipeline from its refineries in Kermanshah to the oilfields of Kirkuk, which Mr Talabani’s forces control. + +Harder power is at play too. Iran and Turkey are training, arming and directing rival Kurdish militias, say Kurdish intelligence chiefs from both sides. Mr Barzani echoes Turkey in describing the YPG as the Syrian arm of the PKK, the Kurdish armed group waging a bombing campaign against the Turkish state. For three months earlier this year, Mr Barzani joined Turkey in closing the border. He imposed a siege on the YPG at the height of its war with IS. “Our wounded came to the borders and were forced to go back,” protests the YPG’s political representative in Sulaymaniyah. + +While Mr Barzani works with Turkey to thwart the PKK and its ally the YPG, Mr Talabani (with a nod from Iran) helps build them up. Both armed groups operate from his territory, and the PKK is said to have helped him bolster his hold on Kirkuk. Some say their mission to join up the disparate Kurdish dots fits in with Iran’s hopes of pushing west to the Mediterranean like Darius I, an ancient Persian king. + +In the meantime, the rivalry between Turkey and Iran is prising Kurdistan apart. Neither country wants to allow the birth of a Kurdish state that could inspire and lend material assistance to their own Kurdish separatists. Western support for the Kurds, too, has its limits. Since 1991, when the UN set up a modest Kurdish haven in Iraq’s snow-capped mountains, Western powers have been the Kurds’ guarantors. + +Trouble within + +But in their single-minded focus on IS, they have turned a blind eye to Kurdish infighting, sent copious arms and provided the air cover to expand Kurdish control in Syria and Iraq. A slew of Arabic towns have acquired Kurdish names. (Kobani, the Kurdish name for Ain al-Arab, is said to derive from the mispronunciation of Company, after the railway contractors who worked there.) “The US is subsidising Kurdish bad practices,” says Bilal Wahab, a Kurdish academic in Sulaymaniyah. + +Kurdish nervousness is entirely understandable. Twice over the past century, in 1922 and 1946, Kurds have declared their own state only to see stronger powers crush it within months. Even so, they might have done more to prepare their institutions for government. Too often, the leaders of the KRG have replicated the bad practices of their neighbours. Having taken control of the production and sale of oil, the Barzanis seem bent on concentrating power in their own hands. “La Familia” is the nickname Kurds have given to the president, his son and intelligence chief, Masrour, and his nephew and prime minister, Nechirvan. Journalists and judges, who might have been able to hold them to account, collect salaries to do their bidding. And since Mr Barzani began selling his own oil he has dispensed with the need for a budget. Parliamentary requests to scrutinise the accounts are ignored. “I’m not allowed to ask,” says Taha Zanganeh, the deputy oil minister. + +As long the revenues kept rolling in, no one quibbled much. The KRG posted solid growth for years. Its rulers built luxury hotels and apartments, fancying they were creating a second Dubai. In 2013 Mr Barzani won cross-party support for a two-year extension of his second presidential term, before succumbing to hubris. No sooner did he begin exporting oil than Baghdad cut off the money it used to transfer to help fund the KRG, some $10 billion annually. + + + +Oil prices have also plummeted. As the coffers emptied, the critics brayed. Since parliamentarians gathered to debate the future of the presidency last year, Mr Barzani’s party has boycotted parliament, denying it a quorum; he has also barred its Speaker from Erbil. On the streets, the security forces silenced protests by opening fire. In effect, Mr Barzani now rules a one-party state under the faction he has led for 37 years. His rule has been without a mandate for the past year. + +His finances are a shambles, too. The tiny KRG (population around 5m) has an astonishing $20 billion of debt, and its banks have exhausted their liquidity, says Qubad Talabani, the deputy prime minister and son of Jalal, appointed to devise a reform programme. In a bid to survive, he says he has halted 4,000 projects worth $5 billion, built up arrears with contractors and 1.4m government employees and beneficiaries, and cut salaries by up to 75%. The region has plunged into recession. The oil companies have downsized sharply; Total, a French firm, has walked out. Returning exiles educated in the West are leaving again, along with a larger illegal flow. In lieu of salaries, some peshmerga are said to have sold their American weapons to IS. + +Yet the KRG is worth saving. It retains a surprisingly tolerant multi-faith air, where ministers sip vodka and orange on a Ramadan afternoon in restaurants playing Lebanese love songs. It has generously opened its gates to 1.8m refugees and displaced people who thronged to the KRG from more miserable parts of the Middle East. + +Ironically, Baghdad may yet provide a breathing-space. When Mr Barzani went it alone with his oil exports, some Baghdad officials said good riddance, counting up the savings from cutting the KRG’s subsidies. As their economic crisis intensifies, though, Kurdish officials are heading back to Baghdad to seek a share of its IMF loan and continued payments for the displaced. They stand a good chance of getting them. The Talabanis, who have long adopted a more pragmatic approach to Baghdad than the Barzanis, advocate a final attempt to make Iraq work. After all, says the redundant Speaker of the Kurdish parliament, “we don’t need another failed state.” + + + + + +Iraq and Syria + +Islamic stateless? + +The jihadists are losing their caliphate, but they remain deadly + +Jul 9th 2016 | CAIRO | From the print edition + + + +THE self-proclaimed caliphate of Islamic State (IS) is weakening fast. In June the jihadists were kicked out of Fallujah by the Iraqi army, then pounded by air strikes as they fled. American-backed rebels in Syria have surrounded the group’s fighters in the northern city of Manbij and are eyeing Raqqa, its de facto capital. In total, IS is now thought to have lost half of the land it seized in Iraq and 20% of its territory in Syria. It is on the verge of losing its main stronghold in Libya, too. + +The biggest fights are still to come: for Raqqa and Mosul, in northern Iraq, the two biggest cities under IS control. IS fighters are expected to defend them ferociously. More than just land is at stake. Apart from its savagery, IS has distinguished itself from other jihadist groups—and indeed, surpassed the likes of al-Qaeda—by capturing territory and governing it. As it loses that land, and any chance of building an Islamic Utopia, its appeal to disaffected Muslims may dwindle. So the group is adapting. + +In many ways IS is becoming more like a conventional, stateless, terrorist organisation. In an abrupt and remarkable shift, Abu Muhammad al-Adnani, the group’s spokesman, said in May that IS does not fight for territory. It would defend Raqqa and Mosul, of course, but it is also preparing to revert to guerrilla tactics. And Mr Adnani repeated an appeal for followers to hit the group’s enemies abroad. “The smallest action you do in their heartland is better and more enduring to us than what you would [do] if you were with us,” he said. + +Several individuals and groups have responded to his call. Attacks in places such as Orlando, Istanbul, Dhaka, Baghdad and Jeddah have killed hundreds in the past month. Some were directed by IS; others were merely inspired by it. All have distracted attention from the group’s failures in Iraq and Syria, leading some to predict that the attacks will increase. “The next 12 months most likely will be bloodier than the past 12 months,” says Fawaz Gerges of the London School of Economics. + +The group’s strategy is not as reactionary as it may seem. IS has been dispatching volunteers to the West for years. Recent attacks in Paris, Brussels and Istanbul were the work of mature networks. The American-led coalition has put pressure on the group’s finances and diminished its capacity to plot and train, but IS can still sow terror, says John Brennan, the director of the CIA. “The group would have to suffer even heavier losses of territory, manpower and money for its terrorist capacity to decline significantly.” + +Many analysts think that a completely stateless IS would lose most of its appeal. Its setbacks seem already to have had an effect. In February an American intelligence report attributed a big fall in the number of IS fighters to casualties—and desertions. But Will McCants of the Brookings Institution, a think-tank, believes the loss of territory may motivate supporters. He points to the group’s experience in Iraq in the late 2000s, when it appeared defeated. “That was the moment when a lot of jihadists began to take up its flag,” he says. + +Back then IS was affiliated with al-Qaeda. But the groups fell out in 2014—even al-Qaeda thought IS too extreme. They are now fighting each other in Syria, and competing for recruits and affiliates. The results may demonstrate the appeal of IS. Take Boko Haram, the Nigerian jihadist group, which had links to al-Qaeda before declaring its allegiance to IS in March 2015. Now analysts think it may switch sides again. “Moving forward, al-Qaeda is a much stronger brand in almost every region,” says Daveed Gartenstein-Ross of the Foundation for Defence of Democracies, an American think-tank. + +Within the next year or so IS is likely to be pushed out of Raqqa and Mosul. As the pressure mounts, “we judge that it will intensify its global terror campaign to maintain its dominance of the global terrorism agenda,” says Mr Brennan. But it is unlikely to give up its goal of a caliphate, not least because the conditions that allowed IS to form in the first place have not changed much. Divisive and ineffective governments still rule in Syria and Iraq. Who will keep IS from returning to its lost cities? + + + + + +Zimbabwe’s begging bowl + +Bailing out bandits + +The IMF is ready to throw the Mugabe regime a lifeline. Bad idea + +Jul 9th 2016 | From the print edition + + + +“RIGHT now we literally have nothing,” Zimbabwe’s finance minister told French radio. Patrick Chinamasa was touring European capitals this week begging for money from donors. The “we” he was referring to was presumably not President Robert Mugabe’s inner circle, who between them probably have enough money to pay off all of Zimbabwe’s arrears to the IMF. Rather, he meant the government of Zimbabwe, which is indeed broke. + +In 2009 Mr Mugabe’s inept and murderous regime printed so much money that inflation topped 500 billion per cent at its peak. When no one would accept Zimbabwe dollars that did not even make good tissue paper, the government abandoned its own currency and adopted the American one instead. This worked well for a while, largely because the opposition won a share of power between 2009 and 2013. Economic policies improved dramatically and growth was a healthy 10% a year. + +But then Mr Mugabe’s cronies rigged elections in 2013 and took back full control of the country. They celebrated by doubling the size of the civil service. After three years of misrule and dazzling corruption, the treasury is bare again. Government employees have not been paid for weeks. Soldiers and police are restless. Some are helping themselves: there are now more than 20 police roadblocks shaking down tourists between the country’s main crossing-point from South Africa and Victoria Falls, its biggest attraction. This week civil servants took to the streets, and protests have broken out across the country. + + + +The government cannot print money any more, and commercial bankers would rather be buried in a fire-ants’ nest than lend it any. So Mr Chinamasa is asking Western taxpayers to chip in. As The Economist went to press, he was hoping to finalise a deal to borrow about $1 billion to pay off Zimbabwe’s arrears to the World Bank, the IMF and the African Development Bank, which in turn could then start lending to Zimbabwe again. + +Western governments worry that if they let Zimbabwe’s economy collapse, it will cause regional chaos. Far better, some argue, to stump up some cash and thereby strengthen the hand of “reformers” within the ruling party, ZANU-PF, such as Mr Chinamasa. This idea has the backing of the staff and board of the IMF, who say they are impressed by what they have seen so far of Zimbabwe’s economic reforms. Staff at the IMF think that if Zimbabwe gets some cash and speeds up reforms then its economy could leap ahead by about 8% a year. Without this it would bump along, they reckon, at about 4%. + +Many observers think this is naive: that the government has misled them both about the true state of the economy and its own willingness to adopt tough reforms. “The IMF is being taken for a ride,” says Tony Hawkins, a Zimbabwean economist, just as they were “in 1982, 1991 and 1997”. + +After talking to the government, the IMF estimates that Zimbabwe’s economy has grown slowly but steadily since 2013 and is now about 7% bigger than it was then. Yet this is hard to square with other numbers coming out of Zimbabwe. Take beer sales. Delta, a brewer that sells 98% of the lager in Zimbabwe, now sells about 30% less than it did in 2012, despite having cut the price several times (see chart). It seems unlikely that this is because ordinary Zimbabwean drinkers have traded up to champagne. + +The government does not provide anything like timely employment figures (it last checked in 2014), but one proxy comes from the National Social Security Authority, which collects payroll taxes. Last year it took in 7% less revenue than in 2014. Tendai Biti, an opposition politician who served as Mr Chinamasa’s predecessor in the finance ministry between 2009 and 2013, reckons that the economy may be as much as 30% smaller than the official estimates. He also thinks the government is running much larger deficits than it claims (up to a colossal 12% of GDP), by paying civil servants late and not disclosing all of its liabilities. Mr Chinamasa says this is a lie. + +The IMF says the Zimbabwean authorities have “met their commitments” under an IMF staff-monitored programme. But these “commitments” consist mostly of promising to enact reforms, such as curbing public spending and making procurement more transparent, rather than actually doing so. Shortly after the IMF’s board praised Zimbabwe’s progress, the central bank shocked everyone by saying it planned to print new notes, “backed” by a $200m loan, to ease a shortage of hard currency. With a straight face, Mr Chinamasa told the BBC that paying exporters in funny money would incentivise them. + +History teaches that aid money cannot buy reform unless the recipient government actually believes in it. Does that apply to Mr Mugabe’s regime? These are the same people who have been in charge of the country, alone or in coalition, for 36 years. Their policies have included grabbing white-owned commercial farms (the main source of export earnings) and giving them to cronies, and threatening to seize half of all companies owned by white Zimbabweans and foreigners (who seem reluctant to invest despite Mr Chinamasa’s assurance that their money is welcome). + +By Mr Mugabe’s own admission, $15 billion has been stolen from the country’s diamond mines in the past seven years. Global Witness, a watchdog, accuses ruling-party bigwigs of large-scale diamond looting. Mr Chinamasa says Zimbabwe’s economic woes are all the fault of Britain and America. + +The last time the Mugabe regime ran out of money, it lost an election and ended up sharing power. This time, donors risk helping it prolong its misrule. + + + + + +Divorce in Nigeria + +Rings fall apart + +Official statistics vastly understate Nigeria’s divorce rate + +Jul 9th 2016 | From the print edition + + + +JOSEPH ADUWO reckons he is well shot of his spouse. “My wife…fought with nine persons in a day on our street, wearing only bra and underpants. She is a shameless streetfighter,” he told a Lagos court. It duly dissolved their union. + +Official statistics suggest that divorce is exceedingly uncommon in Nigeria. Just 0.2% of men and 0.3% of women have legally untied the knot, according to the National Bureau of Statistics. And well under 1% of couples admit to being separated. Yet such counts exclude the vast majority of Nigerians, whose traditional marriage ceremonies are not governed by modern law, says Chief Robert Clarke, a barrister. + +In the mostly Muslim north of the country, men may take up to four wives (so long as they obey the Koranic injunction to treat all equally). Often the younger wives are not yet 18. When a husband wants to trade one of his spouses for a younger model, he need only repeat the words “I divorce you” three times to be freed. In 2008 one pensioner split from 82 of his 86 partners to put himself back on the right side of Islamic law. + +Regardless of what the Koran says, politicians in Kano, the north’s biggest city, think divorce is breeding “vices in society”. One former governor came up with an innovative solution. In 2013 he married off 1,111 widows and divorcees in a public ceremony costing just under $1m. Another 2,000 brides were lined up by the state government for marriage late last year. + +Couples also marry young farther south, but women there tend to be a little more empowered. Olayinka Akanle, a professor of sociology at the University of Ibadan, reckons that when things fall apart they demand separations more readily than in the north. For instance, one Lagos wife had her marriage dissolved on the basis that her drunken husband confused their cooking pots with the toilet. Another woman complained that her banker spouse spent too long stuck in traffic (hardly his fault, he might reasonably claim; Lagos jams are awful). + +Other deal-breakers include a wife’s failure to bring cooking utensils from her father’s house. “How will a woman get married without a grinding stone?” her husband lamented. One woman filed for divorce having found her husband to be rather too well endowed. And a trader complained that his wife was not as buxom as he had thought. “I detest those small-size boobs,” he said after a disappointing three months. “It is better to end the marriage.” + + + + + +Europe + + + + +France on edge: Hot time, summer in the cité + +German inheritance law: Free will + +Scandinavia and Russia: Just visiting + +The Balkans and the EU: Balking at enlargement + +Labour law: Going posted + +Charlemagne: Looking to Mutti + + + + + +France on edge + +Hot time, summer in the cité + +A season of strikes, terror and football tests France’s sangfroid + +Jul 9th 2016 | PARIS | From the print edition + + + +THIS time, nothing was left to chance. Shopkeepers rolled down their metal shutters. Glass panels at bus shelters were boarded up. Squads of riot police closed off access roads with walls of transparent panels. In the end, this week’s trade-union march, the 12th in four months against a controversial labour law, was more theatrical than menacing. There were Che Guevara flags, clenched fists and stickers that read “work is a crime against humanity”. A middle-aged woman clutched a banner proclaiming: “What power does, the street undoes”. But the numbers were few, and trouble minimal. + +Yet the massive security presence and hermetically sealed streets reflected an anxiety about public order that has become strangely normal this summer. During demonstrations across France these past four months, police have detained 837 people, mostly for violence against the security forces, participation in an armed gathering, or theft and vandalism. As the numbers of protesters have dwindled, the violence, usually caused by infiltrators known as casseurs (vandals), has worsened. Tear gas and water cannons have been deployed on elegant Parisian boulevards. At one demo a police car was set alight with officers inside (they escaped). At another, 15 windows of the Necker children’s hospital were smashed in. + +The street protests will now pause as unionists head off on their summer break. Manuel Valls, the Socialist prime minister, decided this week to use a constitutional provision to force the labour law through parliament without a vote. This could have triggered a no-confidence vote in his government, but it was narrowly averted. Polls suggest that most French people have had enough of demos and strikes, which at one point touched oil refineries, railways, rubbish-collection and Air France pilots. + +A return of calm to the streets may ease daily life during the tourist season. But it does not end apprehension about public security. In reality, union unrest was only one concern in a complex mesh that has made this summer a challenge for France. The underlying threat remains terrorism, and the alert level is still at its highest (“imminent attack”). Last month two police-force members were murdered in a terrorist attack in a suburb west of Paris. “France is today, clearly, the country the most threatened” in Europe by Islamic State (IS), said Patrick Calvar, the head of the internal intelligence service, to a parliamentary commission in May. + +Security services have been especially worried about the Euro 2016 football tournament, the continent’s biggest, which ends on July 10th after 51 matches in ten French cities, and the Tour de France cycle race, which runs until July 24th. This is not because of specific known threats, says a former intelligence boss, but because in France “the threat is permanently high.” Tight perimeter security at football stadiums, and at the walled open-air “fan zones”, has rendered such venues relatively secure—despite hooliganism at early matches. But fears continue over “soft” targets such as public transport, shopping streets and other crowded places. “We know that [IS] is planning new attacks,” said Mr Calvar. + +The French response to this threat has been two-fold: a strengthened military and security presence backed by sweeping powers granted to the police under the state of emergency imposed last November, together with reinforced intelligence. Under Operation Sentinelle, 10,000 soldiers are on patrol across France, putting a strain on the armed forces. Soldiers have become a familiar sight on the Paris underground, and up and down the Champs-Elysées. At the same time, the government has boosted intelligence spending. The number of domestic agents will rise from 3,200 to 4,400 by 2018. + +The call to armes + +A dozen attempted terrorist attacks have been thwarted in France in the past year. The shortcomings of counter-terrorism operations, however, were underlined on July 5th by a cross-party parliamentary inquiry into the attacks in Paris on November 13th. Sébastien Pietrasanta, the Socialist rapporteur, pointed to the “limited impact” of the state of emergency. It enabled the police to make some useful searches and arrests at first, but these no longer justify the emergency powers. The government may lift it after the Tour de France ends. Moreover, said Mr Pietrasanta, Operation Sentinelle was “unsustainable in the long run”, and soldiers were “worn out”. + +On intelligence, the rapporteurs underscored the weakness of French on-the-ground information-gathering. This was exacerbated by the dismantling in 2008 of the Renseignements Généraux, the former network of domestic field agents, and its merger into the new internal service. The consequence has been an over-reliance on communications surveillance, and an under-detection of “weak signals” via informants on the ground. Better co-ordination and streamlining of the various counter-terrorism bodies was also needed. + +The government will now examine the findings. In the meantime, if France enters the sunny season without further calamity, there will be relief but no sense of complacency. More than 1,200 French citizens have participated in jihad in Syria or Iraq—and, worryingly, 244 have returned home. The task for France is immense and imposes real strains, not least of getting the balance right between alerting, and alarming, the public. Even if the state of emergency is lifted after July 26th, the threat will remain at its highest. The long summer of anxiety is not over yet. + + + + + +German inheritance law + +Free will + +Taxes on Germans who inherit businesses often come to nought + +Jul 9th 2016 | BERLIN | From the print edition + + + +WOLFGANG GRUPP embodies the values of the Mittelstand—the mid-sized firms, often family-owned, that employ 60% of German workers. Permanently tanned and dressed to the nines, he is the third generation in his family to run Trigema, Germany’s largest maker of T-shirts and tennis clothes. He takes pride in the fact that all 1,200 of his employees are in Germany, and all are well-paid. He is grooming his son and daughter, educated at a Swiss boarding school and the London School of Economics, to run the firm with the same sense of social duty. + +That is why Mr Grupp insists that businesses such as his must be exempt from inheritance tax. People who inherit cash or shares, he argues, can easily spend it. But when his children inherit Trigema, they “can’t start eating the factory”. Hitting such heirs with tax might force many to sell, he says, and then German business would “soon be finished”—especially if the bargain-hunters come from America, that land of vulture capitalism. + +Such faith in the social superiority of family firms is the reason why Germany exempts most heirs of businesses from inheritance tax, provided they do not lay people off for seven years. That, however, can lead to rather perverse outcomes. Heirs of non-business wealth face a steep tax schedule that rises to 50% at the top. Inheritors of businesses often get away with paying nothing. + +This means that even though Germans pass on more than €200 billion ($221 billion) of wealth each year, their government collects very little inheritance tax: €5 billion to €6 billion a year, less than 1% of overall tax revenues. At a time of anxiety about inequality, favouring Mittelstand heirs seems outrageous to many Germans. In 2014 the country’s constitutional court agreed, ruling that Germany must reform its inheritance tax. + +Think-tanks from across the political spectrum leapt at the chance to propose major reforms. A glance across Europe reveals many options. Countries such as Austria, Portugal or Cyprus no longer have any inheritance tax at all. Others, such as France, Spain and Belgium, tax inheritances at relatively high rates (though with complex loopholes). A third group, including Greece and Germany, is in the middle, combining low tax rates with small exemptions (Greece) or high rates with big and complicated exemptions (Germany). + +All the reform proposals, from both the right and the left, followed the generally sensible taxation principle of broadening the base and lowering the rates. For example, the Greens, an opposition party on the centre-left, are proposing a radically simplified 15% flat tax on inheritances. To avoid the spectre of heirs having to sell the firm to pay tax, this plan would allow them to spread payments over many years. + +Alas, the reformers did not reckon with the lowest-common-denominator politics of Germany’s “grand coalition” between centre-right Christian Democrats, centre-left Social Democrats and the conservative Bavarian party, the CSU. All three already have their eyes fixed on next year’s federal elections. The Social Democrats want to soak the rich; the CSU wants rather to protect family businesses. + +In the resulting compromise the coalition “once again missed an opportunity” for serious reform, says Clemens Fuest of the Ifo Institute, a think-tank in Munich. The new system tightens some loopholes: it will no longer be possible to move the family Van Gogh from the living room to the business’s offices and declare it tax-exempt. And heirs of businesses worth more than €26m will have to show that they cannot pay the tax out of their private wealth to get off free, while those inheriting more than €90m will get no exemptions at all. But there are so many other tweaks that the new system will raise only an additional €235m, a pittance. Stefan Bach of the German Institute for Economic Research thinks the regime is so similar to the old one that it will get into trouble with the constitutional court again. + +There remains a glimmer of hope. Germany’s council of 16 federal states, its analogue of an upper house, must still approve the new law on July 8th. But the states, including most of those where the Greens share power, seem set on blocking it. That could lead to a new round of fudging. Or it may cast Germany’s inheritance tax into legal limbo, says Dieter Janecek, the Greens’ economic spokesman. That might give the flat tax a chance for a comeback. Where there’s a will, there’s a way. + + + + + +Scandinavia and Russia + +Just visiting + +Russian aggression is pushing Finland and Sweden towards NATO + +Jul 9th 2016 | HELSINKI AND SUWALKI | From the print edition + + + +VLADIMIR PUTIN, Russia’s president, rarely visits the European Union these days. When he does, it is unclear whether he wishes to mend fences or issue threats. During a visit on July 1st to Finland, which has a 1,340km (883-mile) border with Russia, Mr Putin did both: he made reassurance sound like a threat. Even as NATO was running military drills in the Baltics and preparing for its summit in Warsaw on July 8th, Mr Putin told his Finnish counterpart, Sauli Niinisto, that he considered Finland a “priority” partner for Russia, spoke of “friendship”—and advised him to keep out of NATO and even follow Britain out of the European Union. + +Coming from a revisionist Russian leader, the word “friendship” has a menacing echo in Finland. After Stalin’s unsuccessful attempts to invade Finland in 1939, 1940 and 1944, the Soviet Union in 1948 imposed a “Friendship Treaty” which limited Finnish sovereignty. It was only abandoned in 1992. But while Finland later joined the EU, it stayed out of NATO—something that many Finns now regret. Mr Putin’s military interventions in Georgia in 2008 and Ukraine in 2014 have overturned the post-cold war order. Now he wants to impress on Finland that the security of its borders depends on Russia. + +It is not just empty rhetoric. Late last year, Russia allowed some 2,000 asylum-seekers of various nationalities through its side of a checkpoint, forcing the Finns to admit them lest they be trapped in no-man’s land. Given how tightly Russia controls its checkpoints, Finnish officials concluded that the Kremlin was sending a signal that it could respond to any move to join NATO by asymmetrical means. Teija Tiilikainen, director of the Finnish Institute of International Affairs, says it “looked like part of a Russian ‘hybrid action’”—the Russian strategy of using non-military methods to achieve military goals. Finland has also been subject to Russian cyber-attacks. + +Perhaps Mr Putin’s most threatening statement was his claim that Russia had “no troops stationed closer than 1,500km from the Finnish border”. (This was a gaffe; while Russian troops are not concentrated on the long stretch of the border, its new Arctic Brigade is stationed a few kilometres from Finnish Lapland.) If Finland were to join the alliance, Mr Putin warned, Russia would bring its troops back. “NATO would probably be happy to fight Russia to the last Finnish soldier,” he quipped. + +Sweden, too, has remained militarily neutral and refrained from joining NATO, though it enjoyed secret American guarantees of protection during the cold war. But Russia’s menacing posture is now driving Finland and Sweden to deepen their military co-operation, and sparking debate in both countries about joining NATO. Sergei Lavrov, Russia’s foreign minister, helped prod the debate during a visit to Helsinki in June by saying that Russia “will never attack a member state of NATO”—hardly reassuring for non-NATO countries. + +Finland does not think Russia will attack it, not least because of Finland’s military strength. But it is nervous about an accidental escalation, or a spillover of the rising tension in the Baltics. NATO has been beefing up its presence there; it is particularly worried about the Suwalki Gap, a 100km stretch along the Polish-Lithuanian border between Belarus and the Russian exclave of Kaliningrad. The gap is currently guarded by a Polish anti-tank artillery squadron equipped with outdated Soviet-era arms. A Russian thrust through to Kaliningrad would cut off overland access from western Europe to the Baltics. + +“At present the Baltic states are effectively indefensible,” says François Heisbourg of the International Institute for Strategic Studies, a think-tank. If Russia takes the gap, the only way to supply them would be through Sweden and Finland. + +Finland knows that joining NATO would be seen as a red line by Moscow, and might provoke an asymmetrical response. Mr Niinisto has promised to hold a referendum on NATO membership should the government decide to favour it. At present, public opinion would most likely be against it. But this could change if Sweden, Finland’s closest ally, were to join. + +In the meantime, Finland’s policy consists of discussing NATO membership and improving its ties and deepening its bilateral military relationship with America, all while trying to maintain a special relationship with Russia. (Mr Niinisto was the first European leader to fly to Sochi to meet Mr Putin after Russia’s seizure of Crimea, a step which raised many eyebrows in Europe.) Finland considers the possibility of joining NATO to be a tool of deterrence. But as Jukka Salovaara, a senior Finnish diplomat, says: “If the situation deteriorated quickly, there would be no time to apply.” + +Finland is justifiably proud of handling its difficult eastern neighbour while transforming itself into a prosperous Western country, with one of the strongest territorial armies in Europe. But what worked against the Soviet Union may not work against Russia, which has made an art of unpredictability and “asymmetrical” action. The risk is Russia may interpret Finland’s ambiguity as a sign of hesitance and weakness rather than strength. + +It was when NATO failed to offer Georgia a membership action plan in 2008, but left the door open, that Russia struck. Shortly thereafter, a joke started making the rounds in Finland. Vladimir Putin lands at Helsinki airport and proceeds to passport control. “Name?” asks the border guard. “Vladimir Vladimirovich Putin,” answers the Russian president. “Occupation?” asks the border guard. “No, just visiting,” answers Mr Putin. After Ukraine, says Risto Penttila, a Finnish policy expert, people stopped laughing. + + + + + +The Balkans and the EU + +Balking at enlargement + +A powder-keg region worries that Brexit may block its path to Europe + +Jul 9th 2016 | PARIS | From the print edition + + + +BACK when the European project was in top gear, it was largely driven by the continent’s fear of Balkanisation. Now, the Balkans fear what they dub “Britainisation”: the risk that Brexit will block their efforts to get into the European Union. On July 4th the leaders of the western Balkan countries met in Paris with François Hollande, Angela Merkel and various EU officials to discuss their accession bids. The Balkan leaders were “in shock”, said a senior diplomat. Since the end of the wars of the 1990s, joining the EU has been their foreign-policy priority. They wanted to know whether Britain’s decision to leave had poisoned Europe’s appetite for enlargement. + +The first omen was not good. After the referendum, Britain failed to grant its consent for Serbia to proceed to the next stage of its membership negotiations. British officials soon reversed the decision, and EU officials put it down to post-referendum chaos. + +The Paris meeting, the third in a series, was a German initiative—like much else in the Balkans these days. It included various feel-good gestures. The EU announced €150m ($167m) in aid for infrastructure and other projects. A youth-exchange organisation was launched to help reconcile the region’s formerly warring nations. But the meat of the conference was the encounter between Mrs Merkel, Mr Hollande and the Balkan leaders, notably those from non-EU countries: Serbia, Albania, Kosovo, Bosnia, Macedonia and Montenegro. + +The EU’s aim in giving these Balkan states a path to membership has been to guarantee the peace in a region that has long been a source of European crises. Mrs Merkel and Mr Hollande insisted that this policy holds, and enlargement will carry on. Edi Rama, Albania’s prime minister, insisted: “No one knows where [Britain] will end up, but it is sure Albania will end up in Europe.” + +Yet even if the EU does not halt enlargement, it may be too preoccupied by Britain’s exit and Euroscepticism elsewhere to make much progress. That would be a shame. As Goran Svilanovic of the Regional Co-operation Council, a Sarajevo-based multilateral body, puts it: “In geopolitics, there is no vacuum.” Russia, Turkey, China and radical Islamists are gaining as EU influence fades. Those worried about migration should recall that Balkan collapse touched off Europe’s previous refugee crisis—and Balkan co-operation was needed to bring order to the current one. “The decision of Great Britain has changed nothing,” said Mrs Merkel. One hopes not. + + + + + +Labour law + +Going posted + +The EU may force labour exporters to pay local union wages + +Jul 9th 2016 | From the print edition + +On the welding floor, no one can tell you’re Hungarian + +THREE years ago, the STX France shipyard in Saint-Nazaire was on the brink of closing down. Then it landed contracts to build a fleet of giant ships for the cruise lines Royal Caribbean and MSC Cruises. Thousands of locals expected to be hired. But many were disappointed: between a quarter and a third of the jobs went to Poles, Hungarians and others from central and eastern Europe. While French workers command high wages under the country’s sectoral labour agreements, these “posted workers”—contracted in their home countries to work in another European Union country—need only receive the local minimum, under EU law. + +That may be about to change. The European Commission is trying to shrink the gap between local and posted workers’ pay. Western European countries have welcomed the move. Eastern ones, unsurprisingly, are trying to block it. + +The number of posted workers in Europe rose by 44% between 2010 and 2014, to 1.92m. Most come from eastern Europe and work in construction or manufacturing; the top destination countries are France, Germany and Belgium. Besides paying posted workers less, employers make their social-security contributions in their home countries, where they are much lower than in the west: the average in Poland is 18% of wages, compared with 38% in France. + +Jean-Claude Juncker, the European Commission’s president, promises to fight the undercutting of local labour standards by foreign workers, which the commission terms “social dumping”. In March, Marianne Thyssen, the EU’s employment commissioner, set out revisions that would force companies to pay their posted workers not the minimum wage, but the same wages guaranteed for local workers under sectoral labour agreements, which are much higher. (In Saxony, a German construction foreman earns over €19 per hour; a foreman posted from Poland may earn just €11.05.) But ten former Soviet-bloc countries (plus Denmark, a frequent odd-man-out on European issues) invoked the EU’s “yellow card” mechanism, which lets them temporarily stop measures that they think intrude on national prerogatives. + +Since then the revision has been frozen. On July 3rd France’s prime minister, Manuel Valls, threatened to stop applying the directive on posted workers altogether unless the changes go ahead. This could mean requiring firms to pay them French union wages or simply deporting them. Britain’s vote to leave the EU lends the issue urgency: since the referendum, Mr Valls has been calling for a Europe with more social benefits as a way to fight rising euroscepticism. + +Supporters of the revisions say posted workers are often exploited. In a typical example, a Bulgarian couple picking fruit on a French farm had to work 16 hours a day in cold weather with only light clothing; their employer deducted the cost of flights home from their wages, in effect trapping them. The EU Agency for Fundamental Rights says this is not unusual. + +Yet many western European countries, and their trade unions, are worried less about the plight of eastern European workers than about competition for their own. In Germany “many good jobs in the construction industry” have been destroyed, says Dietmar Schäfers, vice president of IG BAU, a trade union. Small businesses say it is hard for them to employ posted workers, giving larger firms an advantage. And playing up the threat of low-paid foreign workers is political gold for anti-migrant eurosceptic parties such as France’s National Front. + +Lower wages are, indeed, an eastern European selling point. (One Polish trade-union association calls low pay “one of the competitive advantages of Polish companies”.) Since 1996, as the EU has expanded from 15 to 28 members, the ratio of highest to lowest national median wages has gone from 3:1 to 10:1. But researchers at Belgium’s Leuven University say the use of posted workers is helping to reduce the gap, since migrant workers make more abroad than they would have done at home. It is especially important for European countries hit by severe recessions, like Greece and Spain, whose workers can still find jobs in unaffected countries. And there is no evidence that posted workers drive down wages in destination countries. + +Blocking the extra-national operations of firms from weaker economies risks creating a two-tier economic system. Raising the floor for pay will not eradicate fraud. Companies may simply exploit loopholes, such as a clause excepting postings of less than six months. And it may not do much to stop exploitation. That depends on better enforcement by authorities in sending and receiving countries. (New rules on monitoring, passed in 2014, did not go into effect until June 18th.) + +The commission has until the end of July to review the proposal. If it dismisses the yellow card, the measures will harm the eastern European workers they are supposed to protect. And by restricting the free movement of labour, they would undermine the European project, which is already looking shaky. + + + + + +Charlemagne + +Looking to Mutti + +With Britain stumbling towards the exit, it falls to Angela Merkel to give the European Union new shape + +Jul 9th 2016 | From the print edition + + + +AS IN crises past, Europe this week turned its gaze towards Angela Merkel, looking for clues to how the German chancellor plans to keep the continent from cracking up. Amid all the uncertainty that has followed the Brexit referendum, one thing seems clear: with Britain leaving the European Union, or dithering over how to do so, Germany’s already awkward weight in the remaining club of 27 will grow even heavier. Henry Kissinger’s (probably apocryphal) question about whom to call when you want to call Europe no longer needs asking: obviously, you dial Berlin. That seems reassuring to some, unbearable to many. France, Italy and Spain henceforth “take their lead directly from Chancellor Angela Merkel”, sneers Marine Le Pen, France’s Eurosceptic-in-chief, “without running through Brussels.” + +For all the sudden interest in her views, Mrs Merkel is in no hurry to supply them. Her slow, measured style is one reason she was able to accumulate such power in the first place. The Germans have even coined a verb in her honour: “to merkel” means to delay decisions while time diminishes problems to a manageable size, and opponents make valuable mistakes. Since the referendum on June 23rd she has thus been simultaneously tough on Britain (“no cherry-picking” during negotiations, she promised the Bundestag) and lenient (seeing “no reason to be especially nasty”). If it were up to her, she would say no more for now. + +Domestic politics, however, will force her to break her silence sooner than she would like. Germany’s next federal election is not until September 2017. But the junior partners in Mrs Merkel’s grand coalition, the centre-left Social Democrats (SPD), have taken the Brexit vote as a cue to begin their anti-Merkel campaign early, using the European question to differentiate themselves. + +Now that the pesky Brits can no longer play their habitual obstructionist role, the SPD wants the EU-27 to push hard for deeper European integration and centralisation. In a joint paper Sigmar Gabriel, the SPD’s boss (and Mrs Merkel’s vice-chancellor, as well as her presumptive challenger), and Martin Schulz, president of the European Parliament (and another potential SPD candidate against Mrs Merkel), call for “refounding Europe”. The European Commission in Brussels, so loathed by Eurosceptics everywhere, must become “a real European government”, elaborates Mr Schulz. This new and improved EU, they contend, must pour huge investments into roads, power grids and data cables in southern member states to reduce youth unemployment there and boost growth. This is a form of German hegemony that would delight France, Italy and Greece. + +But they won’t get it. The Social Democrats are only the junior partners in Germany’s coalition, and Mrs Merkel’s Christian Democrats are pulling in the opposite direction. For now it is Wolfgang Schäuble, the finance minister, who is voicing the party’s views. Mr Schäuble, originally a European federalist in favour of ever closer union, has concluded that the referendum signals that Europeans will not stomach yet more centralisation, as he told a German newspaper, Welt am Sonntag. What, he asks pointedly, does “refounding Europe” even mean? Rip up the treaties and start anew? That would take time the EU does not have. And anyway, “Now is not the time for visions.” + +The EU, he thinks, must instead pick a few big problems and prove to its disenchanted citizens that it can solve them: controlling refugee flows and securing the bloc’s external borders, say, or tying national energy grids together. And “if the commission fails to act, then we will just take control and solve problems among our governments,” he adds. In the jargon of Eurocrats, this threatened “intergovernmental” approach is the direct opposite of the “supranational” path favoured by federalists. It moves power from the commission, the EU’s central executive body and civil service, to the European Council, made up of the leaders of the separate member states. + +As in the euro crisis, such a shift raises the profile of those leaders, and especially of Mrs Merkel. Germany’s policy elite is aware, indeed worried, that perceptions of her dominance could elicit a backlash. If other leaders team up to balance her power, it will stir old German fears of isolation. Frank-Walter Steinmeier, the foreign minister and another leading Social Democrat, calls this a recurrent “simultaneity: an expectation of Germany, but also a fear that Germany becomes too strong within Europe.” + +Southerners spend, Germany pays + +Yet insiders say that since the referendum, Mrs Merkel has been preoccupied by a greater fear: that the EU is arriving at a form of German hegemony in which Germany is expected to take on the union’s burdens and responsibilities, while everyone else picks and chooses among its benefits. In the euro crisis German money and guarantees have stood behind the common currency. In the refugee crisis Germany maintained its “welcome culture” while others closed their borders. In the coming Brexit negotiations Britain may demand access to the single market without granting freedom of movement to EU residents, while Germany and its welfare system remain open to all. + +In a Europe overshadowed by Brexit, Germany is thus feeling the dilemma of hegemony that America has known for seven decades: the temptation to use its power in its own interests conflicts with the duty to use that power to preserve global order. In Europe that means containing the EU’s “centrifugal forces”, as Mrs Merkel said repeatedly in the week after the referendum. + +But the order she has in mind seems like the looser Europe once favoured by the British, not that of the federalists. “What is ‘the Union’?” she asked rhetorically at a press conference on June 28th during the European summit. It is the council, the commission and the parliament, she answered, and of those, in German, the first is masculine, the second feminine, the third neuter. Perhaps Germany’s “Mutti” intends to be Europe’s father figure. + + + + + +Britain + + + + +The Conservative leadership: The battle for Downing Street + +Sterling: How low can it go? + +The Brexit procedure: Article of destiny + +The Chilcot report: Iraq’s grim lessons + +Bagehot: ¡Hasta siempre, comandante! + + + + + +The Conservative leadership + +The battle for Downing Street + +Theresa May now seems the most likely person to lead the Tories, and the country, but she will have to fend off a pro-Brexit rival + +Jul 9th 2016 | From the print edition + + + +SOMETIMES a day seems a long time in Britain’s currently febrile politics. This week the leader of the UK Independence Party, Nigel Farage, resigned (for a third time), after achieving the party’s goal of winning the June 23rd referendum on leaving the European Union. The Labour Party continued its drawn-out suicide course (see article). And the race began to succeed David Cameron as Conservative leader and prime minister. + +The favourite is the home secretary, Theresa May. Despite backing the losing Remain side in the referendum, she won the support of 165 Tory MPs, half the total, in the first round of voting on July 5th. The second round was held as we went to press. After an extraordinary bout of mutually assured destruction among Brexiteers had eliminated Boris Johnson, a former mayor of London, it seemed likely that Mrs May’s rival would be Andrea Leadsom, the energy minister. Michael Gove, the justice secretary, was still hoping to edge past her. + +The final choice will be made by a postal ballot of the 150,000-odd Tory party members, with the result coming on September 9th. The race is hard to call because, although Mrs May has a clear lead among MPs, party members may prefer a Brexiteer. Since no candidate wants a general election, the winner will become Britain’s next prime minister. + +In the space of just a few weeks Mrs May has become the preferred choice of the Tory establishment. George Osborne, the chancellor of the exchequer, once held that mantle. But his fervent and at times over-the-top campaigning for Remain blew up his chances. Other Remainers such as Stephen Crabb, the work and pensions secretary, were deemed unready. In contrast, Mrs May’s backing for Remain was cautious and understated, and her previous reputation was as a Eurosceptic. She now says that “Brexit means Brexit”. + +She is seen as brisk and efficient, but not especially warm. She is not a gregarious type or a frequenter of the House of Commons tea room, still less of its bars. Unlike Mr Cameron and lots of Tory MPs, she is state-educated, though like so many she is an Oxford graduate (in geography). Like Germany’s chancellor, Angela Merkel, she is the daughter of a church pastor. Her only frivolity is her famous leopard-print shoes. + +Her political career has been similarly unflashy. When she was picked to chair the Conservative Party in 2002, she told the party conference that too many voters saw the Tories as “plain unattractive” and the “nasty party”. She supported Mr Cameron’s later efforts to detoxify and modernise the party’s image. She now wants “a country that truly works for everyone”. + +What has really made her name is her time as home secretary since May 2010. The Home Office is a notorious graveyard for political careers, and it often sees rapid turnover. Yet in August Mrs May will become the longest-serving home secretary since the 19th century. No politician since Palmerston in 1855 has moved directly from home secretary to prime minister. But Mrs May’s reputation has been enhanced by her stint. She has managed the rare combination of social progressivism (she was an early backer, by Conservative standards, of same-sex marriage) with a hard line on law and order. Nor has she been afraid to challenge vested interests, including the police. She will not have minded much when Kenneth Clarke, a Tory grandee who is a former home secretary as well as chancellor, was picked up on a microphone this week calling her a “bloody difficult woman”. + +Mrs May has also argued strongly against excessive immigration, for instance in a jarringly rabid speech to the 2015 Tory party conference. She has said she wants to take Britain out of the European Convention on Human Rights, though she has dropped that goal in her leadership campaign. But her broader views have been coloured by her experience of the value of co-operation with other European countries on crime and the fight against terrorism. In her pro-Remain speech in April, she stressed the security case for continuing membership of the EU. And in 2014, when she was negotiating a British opt-out from EU co-operation in justice and home affairs, she was careful to opt back in to such sensible measures as the European arrest warrant. + +Her biggest problem with party members will be that most of them voted for Brexit. And the strongest card of her rival will be an insistence that the forthcoming negotiations with the EU should be handled by a Brexiteer. In 2013 Mrs Leadsom said leaving the EU would be a “disaster”, but she claims her time as founder of the pro-reform Fresh Start group turned her in favour of Brexit. She stresses her status as a working mother (Mrs May has no children). Her main weakness is lack of experience (she has never been a cabinet minister); questions have also been raised over her City credentials. She is not much liked in the party, her ministerial record is patchy and, unlike with Mrs May, civil servants who have worked for her have not been impressed. Mr Gove scores better on all these counts. + +Mrs Leadsom also favours getting on quickly with Brexit, promising to trigger Article 50, the legal route to it, as soon as she takes office. Mrs May, more cautiously, wants to defer this until the end of the year (see article). More than her rivals, she understands the value of full access to the EU’s single market and the trade-off that Britain may have to make between preserving this and limiting EU migration. She has had to soften her line that the status of EU nationals already in Britain should be a matter for negotiation; she now says they can stay so long as Britons abroad get reciprocal rights. But the irony she might appreciate most is that a Brexit-induced recession may now cut immigration sharply. + + + + + +Sterling + +How low can it go? + +Already at a 30-year low, the pound is vulnerable to further depreciation + +Jul 9th 2016 | From the print edition + + + +THE day after the EU referendum, sterling fell by 8% against the dollar in a frenetic day of trading. Since then the pound’s drift has been more sedate, but no less persistent: on July 6th it reached $1.29, the lowest level in three decades. It would be no surprise if the pound continued to slide. + +Investors have sold sterling assets in the expectation that the Bank of England will loosen monetary policy to cope with the looming economic slowdown. Indeed, on July 5th the bank reduced capital requirements for banks, in a bid to stave off a credit crunch. In principle this will create £150 billion ($195 billion) of extra lending capacity. At the next meeting of its monetary-policy committee, on July 14th, the bank may also cut interest rates below their current level of 0.5%, or implement extra quantitative easing. + +Though its value has fallen relative to the dollar, by other measures the pound is hardly cheap. The “trade-weighted” sterling index, which is adjusted for the currencies of Britain’s other trading partners, is still about 5% higher than it was at the peak of the financial crisis (see chart). The euro has also been knocked in the post-referendum panic, meaning that sterling’s losses against the currency of its biggest trading partner have been trimmed. + +Political ructions following the Brexit vote may put further pressure on the pound. In the run-up to the referendum, traders talked of a “Brexit premium”. Sterling was weaker against the dollar than the expected path of interest rates in Britain and America implied. But since the referendum the Brexit premium has looked relatively stable, even though a messy divorce from the EU now seems to be on the cards. If investors come to fear a loss of Britain’s political stability, sterling could fall still further. + +However, what may seem like Britain’s biggest vulnerability may turn out not to be so. The current-account deficit is now at an all-time high of 7% of GDP. At its simplest, this measures Britain’s net borrowing from abroad. Were foreigners to pull money from Britain en masse, the pound would plunge. Happily, though, the risk of this is smaller than it was a few years ago. The liabilities Britain has taken on to finance its cumulative current-account deficits are largely made up of equity and long-term debt. Such capital is stickier than deposits or short-term debt, which can vanish in a trice. Still, foreign inflows into areas like London property may tail off (see article). + +Capital Economics, a consultancy, reckons that the pound will end up at around $1.20. If so, moans about the cost of imported gadgets or foreign holidays will only get louder. Unfortunately, the Brexiteers’ retort—that a weak pound is good news for exporters and thus the economy—is unconvincing. The experience of 2008-09, when exports barely responded following sterling’s depreciation, is telling: the hit to confidence and credit from Brexit is likely to hurt exporters more than a weak pound helps them. + + + + + +The Brexit procedure + +Article of destiny + +Who can trigger Article 50? + +Jul 9th 2016 | From the print edition + +FIRST came economic and political turmoil. Now, inevitably, come the lawyers. Mishcon de Reya, a London-based law firm, backed by David Pannick, a senior barrister, is preparing a court challenge to claim that the government cannot lawfully invoke Article 50 of the Lisbon treaty, which allows a country to leave the European Union, without a formal act of Parliament. In theory, such an act might be blocked in one or both parliamentary chambers, since both have a pro-Remain majority. + +The argument is, first, that the June 23rd referendum was not legally binding, which is correct. But second, Mishcon de Reya and Lord Pannick assert that, once Article 50 is invoked, it may lead within two years to formal Brexit without any further parliamentary action. That would contradict the 1972 European Communities Act, which gives supremacy to EU law: hence the need for a new act. Yet most constitutional experts disagree. Foreign policy has always been a matter of royal prerogative, exercised by the prime minister or foreign secretary. Martin Howe, another senior barrister, insists that the Brexit referendum vote not merely permits, but mandates, the invocation of Article 50, without the need for a further parliamentary vote. + + + +Daily chart: Britain votes to leave the European Union + +In the end, political reality will trump the lawyers. The next prime minister may face overwhelming pressure to hold a parliamentary vote before invoking Article 50. It is hard to imagine that MPs would choose to overturn the decision of the referendum. The real issue is exactly when the article should be invoked. + +When it is, a two-year deadline is set, and most of the bargaining power is handed to the other 27 EU countries, which get to agree on the terms for Brexit without Britain having any vote on them. But delaying the process has problems of its own. Other EU leaders are likely to insist that there can be no formal negotiations until Article 50 is invoked, precisely because it gives them greater leverage. And if the formal process is put off until the end of the year it will fall slap in the middle of heated campaigning for the French presidential election next spring. The Netherlands, Germany and (probably) Italy are also heading for tricky elections next year. Domestic political considerations will make it even harder for other EU leaders to be helpful to the next British prime minister, whoever he—or, more likely, she—is. + + + + + +The Chilcot report + +Iraq’s grim lessons + +The official inquiry into the war delivers a scathing verdict on its planning, execution and aftermath + +Jul 6th 2016 | From the print edition + + + +THERE has been no shortage of reports and inquiries into the Iraq war, which broke out in 2003. But after nearly seven years of toil, Sir John Chilcot and his fellow commissioners have published what future historians will regard as the definitive account of what happened and why. The lessons the Iraq Inquiry draws from 2.6m words of painstakingly accumulated evidence have almost as much relevance to American policymakers as they do to their British counterparts. The picture it paints, for all the familiarity of its main elements, is a devastating one of individual and institutional failure. The verdict on Tony Blair, Britain’s prime minister at the time, is not that he is a liar and a war criminal (as many contend), but a man steered by a fatal combination of hubris, wishful thinking and moral fervour into an ultimately disastrous course of action. + +The most damning of the inquiry’s conclusions is the overarching one that, based on Britain’s professed goal of disarming Saddam Hussein (it was never explicitly regime change), military action in March 2003 was not, as Mr Blair claimed, a last resort. The attempt to deal with Iraq’s putative weapons of mass destruction (WMD) without going to war was not yet over: the UN inspection team lead by Hans Blix was getting better co-operation from the Iraqis and was pleading for more time; there was no imminent threat from Saddam; there was strong UN Security Council backing for continued inspections. In short, the inquiry judges, although military intervention might have been required in the future, an adaptive strategy of containment had plenty of life left in it. + +But Mr Blair was in thrall to the military timetable set by George W. Bush, and the promise the prime minister had made him in July the previous year to “be with you, whatever”. If Britain had decided on the eve of the invasion to withdraw its forces, the damage to the relationship with America would have been far greater than if Mr Blair had earlier exercised more caution in his commitment to the enterprise. + +Too good to check + +That lack of caution, combined with a disregard for process that bordered on the feckless, was a recurring theme in the run-up to the war. Mr Blair never had any doubts that the intelligence assessments of Iraq’s WMD and missile programmes were accurate. The belief that the Iraqi regime had chemical and biological weapons, was determined to preserve and enhance them, and had developed sophisticated methods of concealment was deeply ingrained. The intelligence was not fabricated, but nor was it questioned or challenged in the way it should have been, given how much was resting on it. + +Regarding the “dodgy dossier” of September 2002, the inquiry does not suggest intelligence was improperly included in it or that the British government improperly influenced its text. The problem lay in the judgments made by the Joint Intelligence Committee (JIC), which assesses the output of the intelligence-gathering agencies, and “owned” the dossier, and Mr Blair’s use of the words “beyond doubt” in his foreword. By then, MI6 and Mr Blair were pumping each other up. When Mr Blix’s inspectors failed to find any WMD, the JIC, gripped by “groupthink”, put it down to the Iraqis’ talent for subterfuge. As the date of the invasion drew near, concerns about the quality of sources had crept in, but the spooks still reckoned the weapons would be found and they would be vindicated. + +The report warns of the dangers of explicitly using intelligence to support a policy decision without repeatedly testing the assumptions underlying it, and of allowing a degree of certainty to be conveyed which such assessments rarely withstand. + +On the still-vexed question of the legality of the war after the failure to obtain a resolution from the UN Security Council authorising the use of force, the inquiry demurs from expressing an opinion. But it is scathing about the contortions performed by the then-attorney-general, Lord Goldsmith, to come up with the goods. When the armed forces said that they needed more than just his view that a “reasonable case” could be made that resolution 1441 revived the authorisation in a previous resolution dating from the first Gulf war in 1990, he swiftly came up with what he called a “better view”. This was based on little more than Mr Blair assuring him that Iraq had committed further material breaches of resolution 1441. + + + +British military engagements and deaths, in graphics + +After determining that it was neither right nor necessary to invade Iraq in March 2003, the main focus of the inquiry is on the preparations for what followed. It is hard to exaggerate the sheer awfulness of what emerges from the report. Everyone in government, not least Mr Blair, paid constant lip-service to the need for proper planning for the aftermath of the invasion. The Ministry of Defence declared in December 2002 that the post-conflict phase of operations would be “strategically decisive”; the military planners made the case for a major civilian component in the post-conflict deployment. But nothing happened. Both the Foreign Office and the Department for International Development looked away. No individual or department was assigned even to look at the issues or suggest ways of mitigating known risks. + +The assumption was that America would draw up the plan and that the UN would have a big post-conflict role, bringing in other countries to share the burden of peacekeeping and reconstruction. Even in the face of strong resistance from Washington to the idea of the UN taking over (matched only by the UN’s disinclination to do so), the British government sat on its hands, reluctant to contemplate the warning from officials that it could soon find itself “drawn into a huge commitment of UK resources for a highly complex task of administration and law and order for an uncertain period”. + +What made matters worse was the very late decision for British forces to enter Iraq with the Americans from the south, after Turkey said it would not allow the coalition to enter from its territory. The British, who had expected to find themselves working with their old friends the Kurds, were landed with Basra and three other mainly Shiite south-eastern provinces, while the Americans stormed on to Baghdad. There were several consequences, all bad. The larger-than-planned-for force (three brigades) needed for the south had to be cobbled together at the last moment; there was only patchy understanding of the place they would be going to and little time to analyse the risks; and Basra was a long way from Baghdad, where all the post-invasion decisions would be made. + +“With you, whatever”: Blair’s promise + +Astonishingly, despite acceding to British generals’ demand to “go in big” (Britain contributed about 30% of the tanks for the invasion), Mr Blair extracted no promise from Mr Bush about joint decision-making. The result was that the Coalition Provisional Authority in Baghdad was an almost wholly American show and the junior occupying power had virtually no ability to influence policy decisions, such as the disbandment of the Iraqi army and “de-Baathification”, which were to have terrible results. The inquiry leaves it an open question whether a stronger British voice would have made things better. + +It might not have if the performance of the army, once the successful initial military campaign was over, is any guide. Like their American counterparts, British generals were complacent about what they expected to be a fairly benign security environment and were taken by surprise when it deteriorated precipitously after the invasion. A shortage of the right equipment quickly became evident when British soldiers started being blown up by local militias. Yet little was done to improve matters, not because of a lack of money but because the army had not prepared itself psychologically for a long occupation. + +The issue of the lightly armoured Snatch Land Rover illustrated the generals’ thinking. Serviceable in Northern Ireland, they became “mobile coffins” in Iraq because of their lack of resistance to improvised explosive devices. Yet the army resisted replacing them with something better: it thought it would be leaving in a year or so, and wanted to preserve a costly new armoured fighting-vehicle programme which was later cancelled. + + + +Surge, then scram + +A lack of helicopters was exacerbated when the generals succeeded in pushing for the ill-fated deployment of 3,300 troops to Helmand, one of Afghanistan’s most volatile provinces. Less than a year after the invasion of Iraq, they had concluded that there was little more they could achieve there and that Helmand offered the prospect of doing some proper soldiering. The inquiry says that from the middle of 2005, decisions on resources in Iraq were being shaped by the anticipated demands of the campaign in Afghanistan. + +A direct result of this policy was what the report describes as the “humiliating” decision in 2007 to acquiesce to militia dominance in Basra by exchanging detainees in return for an end to the targeting of British forces. Just as the ultimately successful American surge was getting under way, the remaining 4,000 British troops were holed up at Basra airport, preparing to quit. It was a shaming and miserable end to Britain’s involvement in Iraq. + +In a 6,500-word statement issued after the report’s publication, Mr Blair claims that it makes clear “there were no lies, Parliament and Cabinet were not misled, there was no ‘secret deal’ with America, intelligence was not falsified, and the decision was made in good faith.” True, up to a point. But Mr Blair forfeits sympathy when he continues: “The aftermath turned out more hostile, protracted and bloody than we ever imagined.” Hindsight is not an excuse that the inquiry accepts. Before contemplating any similar undertaking, it advises, there must be a clear understanding of the theatre of operations; a hard-headed assessment of risks; realistic objectives; and sufficient resources. It concludes: “All of these elements were lacking in the UK’s approach to its role in post-conflict Iraq.” + + + + + +Bagehot + +¡Hasta siempre, comandante! + +The Labour Party is heading for a split + +Jul 9th 2016 | From the print edition + + + +JEREMY CORBYN’S hero is Salvador Allende. The Labour leader loves to recall his peregrinations in Chile in 1969 and 1970, when the left-winger swept to power on a wave of popular support. “I went on the May Day march in Santiago…and noticed something very different from anything I had experienced,” Mr Corbyn said in 2013. “What Popular Unity and Allende had done was weld together the folk tradition, the song tradition, the artistic tradition and the intellectual tradition.” The problem, he went on, was that the forces of the “deep state” (soldiers, spooks, tycoons) lived on nonetheless, so were able to depose Allende in 1973. + +Corbynistas today fear their man will go the way of his hero: overthrown by his troops (Labour MPs, in his case) in a “coup” backed by shadowy business interests. As The Economist went to press they were closing in on the presidential palace: they just had to settle on a challenger, or a “Pinochet”, in the words of Paul Mason, an excitable pro-Corbyn commentator. Angela Eagle and Owen Smith, soft-left types who recently resigned from Labour’s shadow-ministerial line-up along with 63 of their colleagues, seemed the likeliest putsch leaders. + +This showdown became near-inevitable last September, when Mr Corbyn won his party’s leadership thanks to a surge of new, left-wing members into the party. His formative trip to Chile explains why. It ignited his abiding enthusiasm for Latin American popular movements (he even speaks to his cat, El Gato, in Spanish). If he and his Mexican wife were to leave Britain, he says they might move to the Bolivia of Evo Morales, a leader of indigenous descent propelled to the presidency by Andean peasant farmers. Mr Corbyn is a longtime supporter of Hands Off Venezuela, a British outfit that lobbies for the ailing chavista regime. + +Such movements epitomise Mr Corbyn’s democratic ideal. They consider themselves less election-fighting machines than revolutionary upswells; multitudes that primarily exercise power not through the legislature but through the charismatic influence of their leaders and by taking to the streets to give voice to popular anger. They seek to “prefigure”, or embody, a different sort of society by creating their own deliberative structures: from assemblies and single-issue campaigns to occupations and co-operatives. This style of politics is attractive to those on Labour’s left, like the current leader, who for decades have deemed their party’s boring “parliamentary road to socialism” inadequate, and its leadership hijacked by right-wing entryists such as Tony Blair. For them, MPs owe their first legitimacy not to voters but to the movement: to the members and the leader they have elected. + +Hence the now-unfolding conflict. Over the ten months of his leadership Mr Corbyn has made only token efforts to render his party appealing to the electorate. His priority has been to coddle his left-wing activists: boosting their role in policymaking (through online polls, for example); telling them what they want to hear in his public pronouncements; sponsoring Momentum, a party-within-a-party that hassles and threatens moderate MPs with deselection; and offering an underwhelming reaction to the anti-Semitism infecting parts of Labour’s grassroots. + +The last straw for many MPs was his half-hearted role in the anti-Brexit campaign. Some even accuse him of deliberately sabotaging it. Two days after the vote his shadow foreign secretary, Hilary Benn, told Mr Corbyn he had no faith in his leadership; Mr Corbyn sacked him, triggering waves of shadow-ministerial resignations and, on June 28th, a motion of no confidence in Labour’s leader that was supported by 172 of the party’s 230 MPs, many of them by no means Blairite. Since then Mr Corbyn has rejected successive entreaties to resign, reconstituted his shadow cabinet from the dregs of his parliamentary support and seized on the publication of the Chilcot inquiry into the Iraq war (which he opposed) to rally his supporters. The result is a giant rift in the party, with Mr Corbyn, some trade union leaders and most members on one side, and most MPs on the other. At the time of writing final attempts by Tom Watson, the deputy leader, to negotiate a compromise had come to nothing. + +Always likely from the moment Labour’s members elected a chief so dismissive of his MPs and their mandates, a split now looms. If a moderate takes on Mr Corbyn in a leadership contest and wins, there is talk of Unite, Britain’s largest union, whose bosses are close to Labour’s left, underwriting a new party formed of loyalist MPs and Momentum. More likely, the moderate candidate will lose. Polls of Labour’s members show that, although Mr Corbyn lost support during the referendum campaign, he would still beat Ms Eagle, his most popular prospective challenger. If he clings on, or one of his allies runs in his place and wins, some moderate MPs plan to declare independence. They might forfeit the party’s infrastructure, but would not struggle to find funding and, if larger in number than the rump Parliamentary Labour Party, could form the official opposition. + +Both sides are tooling up. Moderates are taking legal advice about who would keep Labour’s name, logo and assets following a split. Recruitment drives by both sides have increased Labour’s membership by 100,000, or about one-quarter, since June 23rd. + +Viva la revolución + +The coming months will be ugly. They may culminate in centrist MPs abandoning a party that has abandoned them, and at a time when Britain needs a strong, united opposition. Still, the confrontation is welcome. Labour has long been an awkward coalition of anticapitalists and social democrats, undermining and frustrating each other. With the Tories drifting rightward and the centre ground looking sparse, Britain could use a centre-left party capable of holding the government to account and, as Brexit negotiations begin, pressing it to keep the country as open and dynamic as possible. Whether by defeating Mr Corbyn or splintering off, Labour’s moderates now have a chance to create such a force. + + + + + +International + + + + +Immigration systems: What’s the point? + +Marriage and citizenship: Get hitched or hike + + + + + +Immigration systems + +What’s the point? + +The countries that invented points-based immigration systems have concluded they do not work + +Jul 9th 2016 | OTTAWA | From the print edition + + + +BRITAIN’S Conservative Party was languishing in opposition when, in 2005, it hit upon a winning idea. If elected, it would introduce an “Australian-style points system” for work permits. So popular was the pitch that a Labour government created such a system three years later; the immigration minister, Liam Byrne, even flew to Sydney to launch the scheme, although it did not last long. Campaigners for Britain to leave the European Union repeated the promise this year. It was their most detailed policy proposal, and may well have carried them to victory. + +“There’s something deep in the British psyche about the Australian system,” says Mr Byrne. But points-based immigration regimes look most attractive from a distance. The countries that invented them concluded some time ago that they are flawed, and have tweaked them radically. They have also discovered that points systems do not completely cure xenophobia. + +Canada created the world’s first points system, in 1967. Would-be immigrants who scored highest on youth, education, experience and fluency in English or French were offered permanent residency. In 1979 Australia created a similar system. Both countries were abandoning racist schemes that had favoured whites (Australia ran one called “bring out a Briton”). Henceforth, the aim would be to lure talent, wherever it was from. + +The new systems soon attracted admirers. New Zealand built a points-based immigration system in 1991; Britain, the Czech Republic, Denmark and Singapore began to experiment. But it gradually became clear that Australia and Canada were much better at attracting accomplished immigrants than at using their skills. + +Employers were unimpressed with the new arrivals’ qualifications and foreign work experience. In Australia, 13.5% of recently arrived immigrants who had applied from overseas under the points system were unemployed in late 2013, compared with just 1% of those who had come in with a job offer. Pure points systems “don’t work”, says Madeleine Sumption of the Migration Observatory at Oxford University. + +Another problem in Canada was that the number of applicants exceeded the number allowed in each year. At the worst point, applicants for the Federal Skilled Workers programme were waiting up to eight years for a decision. Businesses complained that superb applicants were languishing behind merely decent ones. + +To deal with these flaws Australia and Canada have transformed their immigration systems. Both now weigh local work experience and job offers more heavily. Between 2002-03 and 2014-15 the number of Australian visas granted on the basis of job offers rose five-fold, from 9,700 to 48,300 (see chart). In Canada, the points system has been reworked so that any skilled applicant with a job offer scores higher than any applicant without. + + + +Both countries have also inverted the process of applying for visas. Instead of putting applicants in a queue, they now invite people merely to express an interest in migrating. Those who pass an initial points test are put into a pool, where they can remain for a year or two. Every so often the best candidates are skimmed off and invited to apply for visas. Companies and provinces can trawl the pool, looking for promising immigrants to sponsor. Anybody they pluck out is likely to get a visa quickly. + +These reforms seem to have had some effect. Immigrants to Australia are still less likely than natives to be economically active, but the gap has closed—from 9.8 percentage points in 2002-03 to 6.3 points in 2013-14. Canada’s huge backlog has gone: many of those stuck in the queue were ejected and given their fees back. + +Businesses are less happy, though. In Canada, a firm that wants to offer a job to a foreigner must prove that it tried and failed to hire a Canadian—a slow, costly and sometimes daft process. Kumaran Thillainadarajah, an immigrant entrepreneur who founded a firm as a student, had to explain why he and not a native should be chief executive. The system is too cumbersome, says Sarah Anson-Cartwright of the Canadian Chamber of Commerce. She looks enviously at Britain, which has a fast-track visa scheme for technology workers. + +Less popular still is the surge of temporary foreign workers, many unskilled. Canada created a scheme for them in 1973, mostly targeting agricultural workers and carers. In 2002 it was expanded to other jobs, and employers were allowed to pay immigrants 15% less than Canadians. The number of temporary migrant workers rose two and a half times between 2002 and 2013, to 127,000. + +Amid protests from trade unions, which argued that Canadian workers were being undercut, the government announced a clampdown. Firms would have to explain why they could not hire Canadians, and those with more than ten staff would be barred from employing lots of temporary foreign workers. But the state has quietly retreated on both reforms. Fish-processing factories in eastern Canada no longer need to prove that Canadians do not want their jobs. Meat-packers and mushroom-growers are now demanding equal treatment. + +Britain’s experiment with a points-based system in 2008 was also thwarted by business pleading. The scheme was never as flexible as Australia’s or Canada’s. But at least it was simple—until the lobbying began. Firms moaned that vital foreign workers were blocked because they lacked the required qualifications. Carve-outs were duly created: butchers and ballet dancers were given special treatment and footballers were not required to speak English. What remained of the system was then bulldozed by a Tory-led government that had pledged to slash immigration. + +A simple immigration system that attracts global talent, calms the natives and gives businesses the workers they crave seems an impossible dream. Perhaps it is also a foolish one. Governments cannot know what kind of immigrants their economies will require because they do not know how their economies will evolve. There will always be special pleading and exceptions. As Mr Byrne puts it: “Migration systems are complicated because people are complicated.” + + + + + +Marriage and citizenship + +Get hitched or hike + +As Britain and the European Union prepare to divorce, many of their citizens contemplate tying the knot + +Jul 9th 2016 | From the print edition + + + +DELPHINE was born in Jersey, a crown dependency of the United Kingdom, and holds a British passport. She and her Mexican boyfriend, José, intend to move to Paris from Mexico. When she heard that Britain had voted to leave the European Union, it threw those plans into doubt. Would she still be entitled to live in France? As she fretted, José sent her a message: “I guess you’ll have to marry me, then.” He has French citizenship, passed down from a French grandmother via his mother. After Brexit he will remain an EU citizen. Though he was joking, the pair are now seriously considering tying the knot. + +Migrants between Britain and the 27 countries that will make up the post-Brexit EU fear losing not only the right to move freely, but to stay put. Theresa May, the front-runner to replace the prime minister, David Cameron, who is stepping down in the wake of the Leave vote, says the residency status of EU citizens in Britain may form part of the Brexit negotiations. For many, such comments have kicked off a search to guarantee they can stay where they are living. Neil White, a lawyer, says his firm, 1st4immigration, has been inundated with people requesting help. + +The luckiest will be eligible for a useful second passport. About a tenth of Britons, for example, qualify for Irish citizenship through a parent or grandparent. Anyone already married to a native, and those who have had children in the country where they live, will presumably be able to get permanent residence relatively easily. + +Waiting to see how Brexit pans out, by contrast, may mean jumping through hoops intended to deter visa fraud. All rich countries try to stop “marriages of convenience”—unions whose sole purpose is to get a visa. According to Richard Kurland, an immigration specialist in Vancouver, the going rate for a sham Canadian spouse is C$30,000-50,000 ($23,000-38,000). In America, visa overstayers are banned from applying for a green card for up to ten years—except for fiancés of American citizens. A 2008 report by the Centre for Immigration Studies suggested that Americans willing to pose as a bride or groom charged $5,000-20,000. + +The past few years have seen a big increase in applications for British spousal visas by EU citizens, mostly from the continent’s poorer countries, married to non-EU nationals, says Farzana Robbani of Migrate Me, a firm in London. These are the types of marriages the Home Office thinks most likely to be fake. It has spotted a trend for young women from eastern or southern Europe being lured to Britain to marry men. Ireland is seeing an increase in overseas students whose visas have expired, or whose institution has lost accreditation, arriving from Britain to marry Latvian or Lithuanian women. The woman earns in the region of £8,000 ($10,400), but “the less you pay, the more flaky your fake spouse will be,” says Cathal Malone, an immigration lawyer in Dublin. + +In 2014 police in the north of England discovered a pregnant Slovakian woman who had been tricked into coming to Britain and forced into a sham marriage by an organised-crime ring. Its basic price for a fake bride was £3,000, of which the women received little or nothing. If she had her husband’s baby, the fee could rise to as much as £15,000. In many countries, fathering a child greatly increases the likelihood of being granted leave to remain. + +Officials are trained to look out for warning signs. These include a wide age gap, the lack of a shared language and ignorance of each other’s families. In most countries, only couples who arouse suspicion are interviewed. But deciding whether a marriage is genuine can be difficult: answers to questions such as “What colour is your wife’s toothbrush?” can be memorised. Post-Brexit, many more couples across Europe may face such hurdles. + + + + + +Special report: Chinese society + + + + +Chinese society: The new class war + +Chinese nationalism: East, west, home’s best + +Family, identity and morality: A nation of individuals + +Wealth: Keeping up with the Wangs + +Public opinion: Crowd control + +Civil society: Daring to think, daring to act + +Emigration: The long march abroad + +Looking ahead: The writing on the wall + + + + + +Chinese society + +The new class war + +China’s middle class is larger, richer and more vocal than ever before. That threatens the Communist Party, says Rosie Blau + +Jul 9th 2016 | From the print edition + + + +WHEN 13-YEAR-OLD Xiao Kang began to feel lethargic and his breathing grew wheezy last autumn, his parents assumed he was working too hard at school. Then his fellow classmates at Changzhou Foreign Languages Middle School started complaining too. The private school in a wealthy city on China’s eastern seaboard had moved to a smart new campus in September 2015, close to a site formerly occupied by three chemical factories. Tests showed the soil and water to have concentrations of pollutants tens of thousands of times the legal limits, and over 100 pupils have been diagnosed with growths on their thyroid and lymph glands. Yet the school denies responsibility, and the local authority has put pressure on parents to keep their children in attendance and stopped them from protesting. The toxic school remains open. + +Xiao Kang and his family are beneficiaries of China’s rise. His forebears were farmers and more recently factory workers, but he attends the “best” school in the city (meaning it gets the highest university entrance scores). His father hopes he will become an architect or a designer and may go to study abroad one day. As with many of his generation, all the financial and emotional resources of the boy’s two parents and four grandparents are concentrated on this single child. The family is shocked that the government is so heedless of the youngster’s fate. If a school in any other country was found to be built on poisoned ground, it would immediately be shut, says the boy’s father. Why not in China? + +For most of China’s modern history, its people have concentrated on building a materially comfortable existence. Since 1978 more than 700m people have been lifted out of poverty. For the past four decades almost everyone could be confident that their children’s lives would be better than their own. But the future looks less certain, particularly for the group that appears to be China’s greatest success: the middle class. Millions of middle-income Chinese families like Xiao Kang’s are well fed, well housed and well educated. They have good jobs and plenty of choices in life. But they are now confronting the dark side of China’s 35 years of dazzling growth. + +This special report will lay out the desires and aspirations of this fast-expanding group. Many Chinese today are individualistic, empowered and keen to shape society around them. Through social media, they are changing China’s intellectual landscape. They are investing in new experiences of all kinds. But discontent over corruption, inequality, tainted food and a foul environment is sharp and deep; many worry that their hard-fought gains are ill-protected. For decades the Communist Party has kept control over a population that now numbers 1.4 billion by exceeding people’s expectations. Their lives have improved faster than most of them could have dreamt. Though the state has used coercion and repression, it has also relieved many pressure points. Now it is finding it increasingly hard to manage the complex and competing demands of the middle class; yet to suppress them risks holding back many of the most productive members of society. + +When the Communist Party seized power in 1949, China’s bourgeoisie was tiny. In the Cultural Revolution two decades later, wealth, education and a taste for foreign culture were punished. But after housing was privatised in the 1990s, the government tied its fortunes to this rapidly expanding sector of society, encouraging it to strive for the material trappings of its rich-world peers. + +For the first time in China’s history a huge middle class now sits between the ruling elite and the masses. McKinsey, a consultancy, estimates its size at around 225m households, compared with just 5m in 2000, using an annual income of 75,000-280,000 yuan ($11,500-43,000) as a yardstick. It predicts that between now and 2020 another 50m households will join its ranks. They are spread across the country, but are highly concentrated in urban areas (see map); around 80% of them own property; and they include many of the Communist Party’s 88m members. + + + +Though China’s population as a whole is ageing, the middle class is getting younger. Nearly half of all people living in cities are under 35: they are eight times more likely than country-dwellers to be university graduates; and most are treasured and entitled only children, with no memory of a time when their country was poor. The internet has expanded their horizons, even if the government shuts out many foreign websites and quashes dissenting voices. Today’s young Chinese tend to do what they want, not what society expects—a profound and very recent shift. Most of these young people exercise their autonomy by choosing their own marriage partners or shelling out for a new car. But many have an appetite for civic engagement too: they are the foot-soldiers of China’s non-government organisations, a vast, though often politically sensitive, array of groups seeking to improve society in a variety of ways. + +Pressures on the middle class are growing. Some feel that no matter how able they are, the only way they can succeed is by having the right connections. Housing has been a driver of economic growth, yet property rights are shaky, and the government encourages private investment without adequately regulating financial products. As more people go to university, returns to education are falling and graduate jobs are harder to come by. Many fret that their children may not see the progressive improvements in material well-being they themselves have enjoyed, and more youngsters are going abroad. + +Political scientists have long argued that once individuals reach a certain level of affluence they become interested in non-material values, including political choice. Average income per person in China’s biggest cities is now at roughly the same level as in Taiwan and South Korea when those countries became democracies. When China opened up its markets in the 1980s, democratic demands were widely expected to follow. They did, but were savagely silenced in Tiananmen Square in 1989. Since then, a mixture of political repression, fear of chaos, pride in China’s advance and a huge rise in living standards has kept the country steady. + +China’s middle classes increasingly look and behave like their rich-world peers, but they do not necessarily think like them. Intellectuals privately express a sense of despair that since becoming party chief in 2012, Xi Jinping has shuttered free expression and ramped up ideology. Yet most of the population at large seems unconcerned. If an election were held tomorrow, Mr Xi would very probably win by a large majority—and not just because there is no viable opposition. + + + +However, although few people in China are demanding a vote, many are becoming more and more frustrated by the lack of political accountability and transparency, even if they rarely label them as such. The party is clearly worried. In an internal document in 2013 it listed “seven things that should not be discussed”: universal values, press freedom, civil society, economic liberalism, historical mistakes made by the party, Western constitutional democracy and questioning the nature of socialism with Chinese characteristics. Recently these have often become flashpoints between the middle class and the government. + +No wonder that political trust in China is declining. A series of nationwide surveys from 2003 to the present, commissioned by Anthony Saich of Harvard University, show that the wealthy think less of the government than poorer folk do. Other polls show that richer and better-educated people are more likely to support the rule of law, market allocation of resources and greater individual autonomy; the less-well-off often favour traditional values and authoritarian rule. + +Wang Zhengxu of the University of Nottingham in Britain and You Yu of Xiamen University in China go further. They observe a clear decline in trust in legal institutions, the police and local government between 2002 and 2011, despite a consistently good economic performance and rising social benefits, and reckon that “the era of critical citizens” has arrived in China. + +Many wondered how the party could ever survive after it brutally crushed pro-democracy demonstrators in 1989. Its solution was to make people rich very quickly. Since 1990 the blistering pace of economic growth has been the party’s most important source of legitimacy, delivering its overriding priority: stability. For a while these goals meshed well with each other and with people’s personal aspirations: under an unspoken agreement, people could amass wealth so long as they did not try to amass political power too. The recent slowdown in growth puts a question mark over that compact. + +Kingdom in the middle + +Looking ahead, in a host of areas from taxation to industrial overcapacity to the environment, the party must make an invidious choice: introduce unpopular reforms now and risk short-term instability, or delay reform and jeopardise the country’s future. On present form, stability is likely to win: the mighty party is terrified of its own people. + +The middle class is not the only source of potential instability. In the western province of Xinjiang, repression of ethnic minorities has aggravated an incipient insurgency. Tibet is simmering too. And across China millions of workers in declining industrial sectors risk losing their livelihoods. Many migrants from rural areas working in cities feel rootless and marginalised, denied access to facilities such as health care and education. Divisions within the party elite are also a potential problem. And although dissidents have been silenced for now, they could find their voice again. + +China’s Communist Party has shown extraordinary resilience to destabilising forces and an impressive ability to recreate itself. It has ditched most of its founding principles and tied itself to the middle-class wealth-creators, expanding its membership to include the very group it once suppressed. Since the 1990s the Chinese model has proved so flexible that it appeared to break the democratic world’s monopoly on economic progress. To some it seemed to offer a credible alternative to democracy. + +Now China is beginning to reach the limits of growth without reform. The complexity of middle-class demands, the rush of unintended consequences of economic growth and now a slowing economy are challenging the party’s hold. It has to find new ways to try to appease a population far more vocal and more individualistic than previous generations. + + + + + +Chinese nationalism + +East, west, home’s best + +Do not expect China’s middle class to be liberal + +Jul 9th 2016 | From the print edition + +ACROSS CHINA’S PARKS, elderly folk gather of a morning to sing, dance, play music and exercise. Much of the music is about their country: an anthem from the Cultural Revolution, Peking Opera numbers or songs from one of China’s many ethnic-minority groups. Most of the exercise is rooted in traditional Chinese medicine. China is a hugely patriotic country, but it is also increasingly nationalistic. Its people feel that it is superior to other nations, and that as China rises, others must cower. + +Chinese society is far more connected to global culture than it was just a few decades ago, but exposure does not translate into tolerance. In April Global Times, a jingoistic state newspaper, published a poll showing that an astonishing 85% of respondents supported unifying China with Taiwan by force. In 2012 demonstrations erupted across China about Japan’s claim to sovereignty over disputed islands in the East China Sea; shops were looted, Japanese cars were destroyed and riot police had to be deployed to protect the Japanese embassy in Beijing. + +Such belligerence has been fed by the Communist Party’s own narrative of history, which credits it as saving China from a “century of humiliation” at the hands of Japan and the West. Xi Jinping, China’s president, now claims to be leading the country’s “great rejuvenation”. China’s land reclamation around contested rocks in the South China Sea is controversial abroad, but the vast majority of Chinese people support its territorial claims there, according to a slew of polls. Nationalism has become a glue to hold people together, says Joshua Eisenman of the University of Texas: “The Communist Party of China is no longer communist so it had better be Chinese.” + +At the same time sentiment has become more defensive. More than three-quarters of Chinese surveyed in the 2015 Pew Global Attitudes poll felt their way of life needed to be protected from foreign influence. Mr Xi has tapped this vein too. In 2015 his education minister called for a ban on “textbooks promoting Western values”. More puzzlingly, the Minister for Civil Affairs has proposed renaming “over-the-top, West-worshipping” place names like “Thames Town” near Shanghai, a cobbled recreation of an English market town. + +International news coverage in China mostly makes other countries look stupid, dangerous or crime-ridden (particularly if they have recently overthrown an autocratic government), but that has not deterred the Chinese from wanting to go and see the world for themselves in droves. Last year they took 120m trips abroad, a fourfold increase in a decade. + + + + + +Family, identity and morality + +A nation of individuals + +Chinese people increasingly do what they want, not what they are told + +Jul 9th 2016 | From the print edition + +The apple of their eye + +FOR A TASTE of the traditional Chinese approach to marriage, visit Lu Xun park in Shanghai. Advertisements with details of 20-somethings looking for a mate are plastered over upturned umbrellas. Those describing men often note their salary and where they hold residency rights. Women use more adjectives: beautiful, decent, quiet, “not fat”. What is curious about this marriage market is that almost everyone in the crowd of 300 or so is over 50. None of the youngsters said to be in search of a spouse is present; their parents even write the ads. The young today are picky, says Wang Xianghua, who is looking for a wife for her 30-year-old son, a software engineer at a state-owned enterprise. Women “marry houses”, not men, she says. In contemporary urban China a man is expected to bring a (mortgage-free) property to a union. + +The scene sums up a fundamental change in Chinese society. The older generation sees marriage as essential; many young Chinese say their parents bug them almost daily about finding a spouse. Youngsters want partners too, but they do not define themselves by their marital status, and few wish to be matched. Chinese youths increasingly put their own emotions above social expectations. As they see it, their role in society is no longer about their responsibilities to the family and the wider community but about their own rights. Collective identities and group membership have become secondary to personal preferences. The ramifications reach far beyond private life. + +For nearly 2,000 years the family has been the organising principle of Chinese society. “Confucian values” is shorthand for the idea that a peaceful society was built on the family as an extended, stable unit of several generations under one roof, each with a distinct social role and status. Ties were vertical and hierarchical, defined by respect and obligations flowing from the young to the old, from the kinship group to the emperor. Small wonder that Xi Jinping, China’s president, preaches family values as part of his own vision of a harmonious China. + +He may be disappointed. Like every society that has shifted from agrarian to urban, China has seen a wrenching change in family ties, dispersing kinsfolk across vast distances. In addition, people’s values have been torn up twice in quick succession, first by communism, which during the Cultural Revolution often separated family members or set them against each other, and then by capitalism. Notions of family and identity have struggled to keep up with the country’s accelerated modernisation. + +This raises practical problems. China will get old before it gets rich: one in six of its people is already over 60, and by 2025 nearly one in four will be. The one-child policy pursued over decades, together with delayed child-bearing, will bring a rapid decline in the ratio of working-age adults to the over-65s, from 12:1 now to 2.5:1 by 2050. China’s weak welfare system is still based on the assumption that kin will look after their own, placing the social and financial burden of caring for the elderly squarely on the shoulders of adult children. Yet people’s new mobility, combined with the vast size of the country, makes that particularly hard. A declining share of the population now lives in multi-generation households (see chart), though it is still bigger than in most rich countries. + + + +Growing individualism is transforming every aspect of social behaviour. For hundreds of years marriage was essentially an economic contract between two families, designed to ensure heirs for the groom’s clan. But in the one-child society a child is regarded as the centre of the family, so weddings are focused on the couple, not, as formerly, on the groom’s parents. Even in the 1980s adulthood was still marked by getting married and having a child; putting self-interest above the collective was “basically illegitimate”, says William Jankowiak of the University of Nevada, Las Vegas. Now, he says, coming of age is about achieving autonomy. People are motivated by love, not responsibility. + +That has helped bring about a sexual revolution. According to one study published in 2012, more than 70% of Chinese youngsters now have sex before marriage; ever more of them lose their virginity at a younger age, and lots have had several partners. More than 40% of couples live together before they wed, a dramatic change from the 1980s. They also get married later: in Shanghai and Guangzhou, men on average marry at 30 and women at 28, later than in America. + +Young people used to move straight from living with their parents to their marital home; now 58m of them live alone, and the number is growing fast. “Our generation does not want to live with our parents,” says Zhou Haiming, a social worker in Guangzhou. + +Divorce is getting much more common as education, migration and exposure to different ideas erode traditional norms. The national rate is well above that in Australia and most of Europe; in parts of China it already exceeds that in America. + +Han solo + +All these trends are part of a wider liberalisation. What most distresses the older generation—and the government—is the rise in the number of permanent singletons, a remarkable change from near-universal marriage in the very recent past. This group includes over 8m bachelors in rural areas, often among the poorest. Unable to find wives, they are unhappy victims of a preference for sons that meant many families aborted or abandoned baby girls. Around 2m women over 35 are single too, and the number is rising fast. For them this is more often a conscious choice, a sign of rising status, better job opportunities and a determination to find the right person. That upsets parents who want grandchildren. It also troubles the Communist Party, which sees the family as a path to stability, responsibility and acquiescence. + +Every new generation believes their parents do not understand them, but in China this is often true. Most people in their 50s still have strong memories of being hungry; their children, by contrast, have known only a land of sizzling pork and high-speed trains. The world has radically changed within a single generation. + +Take 34-year-old Zhang Diqi from Harbin in China’s frozen north. In 2013 he packed in his steady job in Beijing working for CCTV, the state broadcaster, to launch shijianpaimai.com, a website auctioning people’s time (“I believe that everyone has a price”). His initiative caused a clash with his father: his parents value quantifiable, visible skills, he says, and do not understand the value of ideas. His mother nags him about finding a wife, but he does not want one: “Marriage is the restructuring of capital,” he says. He last went home to see his parents—a two-hour flight away—two years ago. + +The rise of individualism extends into working life, as Mr Zhang’s example suggests. Hundreds of millions of Chinese now work in small businesses rather than large institutions—the work equivalent of the socialising family. In recent years the party has established small cells within private firms and even foreign enterprises to monitor them. The government is now encouraging “entrepreneurship and innovation”, offering grants for startups, yet it is nervous about their rise. + +The demise of traditional family values has strained conventional notions of trust. Until the 1970s, sometimes later, individuals knew most of the people they encountered in their life—those they bought food from, met through work, and even those they ended up marrying (because most were introduced by family networks). Strangers were treated with a degree of caution unless introduced by someone within the group. It is this relationship of trust that is behind China’s emphasis on guanxi, or personal relationships, often misunderstood by outsiders as fostering corruption. + +Urbanisation, mass migration, the private company and the stretching of supply chains across thousands of miles have wrecked those personal networks. Most people live far from where they were born, work for independent firms and rely on services staffed by strangers. They must depend on institutions far more than on known individuals. But those institutions, or the laws that govern them, often turn out to be weak. + +That has led to a rise in scandals that would have been impossible in former times: things like food contamination, internet scams, bogus ads for financial products, the recent illegal sale of improperly stored vaccines and the like. China Daily, a state mouthpiece, recently lamented that such events indicated a loss of “moral compass” in Chinese society, and that trust had become “a scarce commodity”. + +The long search + +This idea of decline seems to be supported by some shocking incidents. In 2011 a two-year-old girl was run over by a car and lay bleeding in the street for seven minutes before someone came to her aid. This year a video camera caught people walking by as a woman was attacked in a Beijing hotel. In another case a woman was found dead after being trapped in a lift for a month because nobody had checked it before cutting the power. + +Many people look to religion for answers. In the 1990s the state first turned a blind eye to and then crushed Falun Gong, a Chinese discipline of self-improvement and meditation that had millions of followers. Its message was peaceful enough, but in 1999 more than 10,000 Falun Gong followers demonstrated in Beijing, demanding legal recognition and freedom from state interference. The government is still struggling with the tension between the stabilising moral message of most religions and their potentially destabilising capacity to mobilise people and preach some dogma other than its own. + +A rise in the number of self-proclaimed Buddhists is tolerated because most of them enjoy the ritual aspects of the religion but do not get seriously engaged. The Christian church is more challenging. At an estimated 100m, it has more followers than the Communist Party has members. The party oscillates between wanting to embrace and to crush them. + +Rather than fix or regulate the institutions people rely on, the party is instead trying to enforce its own version of morality. Mr Xi sums up his vision in “12 core socialist values” that stand in silent contrast to Western notions of “universal values”. In order to “engrave them on people’s minds”, folksy propaganda posters now preach these ideas from almost every bare patch of wall in China, on TV, at road junctions and in aeroplanes. Judging by the 13th five-year plan released this year, Mr Xi has high hopes for this campaign: “The core socialist values should become people’s firm inner belief, and people’s conscious behaviour, so as to strengthen the whole society.” + +Just in case citizens do not willingly embrace its vision, the government is prepared to enforce it. In 2013 it introduced a law compelling people with elderly parents to visit frequently and ensure that their emotional and financial needs are met. Earlier this year the government of Shanghai, where 30% of the population is over 60, threatened to downgrade the credit rating of neglectful adult offspring, which could bar their access to jobs, loans or even welfare payments. The party claims to know what is best for its people, but a centrally imposed public morality is increasingly at odds with the private sort. + + + + + +Wealth + +Keeping up with the Wangs + +China’s growing wealth is unevenly spread—and good investments are hard to find + +Jul 9th 2016 | From the print edition + +High, and rising + +“FOLDING BEIJING”, A short story by Hao Jingfang, a Chinese science-fiction writer, is set in a futuristic version of China’s capital where inequality is so stark that different social groups are not allowed to use the same ground simultaneously. They take turns occupying the area within Beijing’s sixth ring road, which flips over every 24 hours. One side has clear blue skies, tranquil leafy streets and supermarkets with imported food, where the 5m people of “First Space” people enjoy a whole 24 hours, whereas the 75m people of “Second Space” and “Third Space” get only 12 hours each. This last group is crowded together in a place where construction dust obscures the tops of neon-lit buildings and workers toil “for rewards as thin as the wings of cicadas”. People are beaten and imprisoned if they enter a zone above their station. “There are many things in life we can’t change,” says one character. “All we can do is to accept and endure.” + +Present-day Beijing resembles Ms Hao’s fiction: you can buy handbags that sell for more than some workers make in a year. The People’s Republic has travelled a long way since it was founded on the dream of equality in 1949. Today it is one of the most unequal societies on Earth. + +Until the late 1970s owning private property was almost entirely prohibited and very few people had substantial personal assets. The accumulation of wealth since then has been extraordinary. Between 1990 and 2014 income per person in China increased 13-fold in real terms, whereas globally it less than tripled. After Mao Zedong died, Chinese consumers dreamed of buying the “four rounds” (bicycle, sewing machine, washing machine and wrist watch) and “three electrics” (phone, refrigerator and television); these days they are more likely to yearn for sports-utility vehicles and trips to Thailand. + +The greatest divide in both income and opportunity is between rural and urban areas. Less than 10% of rural youths go to senior high school, compared with 70% of their urban counterparts. Most rural youngsters leave school at 15, whereas a third of urban ones gain degrees. Within cities the main division is between migrant workers and local residents: most migrants lack the urban residence permit that would give them and their children access to public services such as schools and hospitals. + +Most of China’s middle classes own property and have decent jobs, yet they, too, worry that they are being squeezed, both from the bottom and the top. In the 1980s China was among the most equal societies in the world, with a Gini coefficient of 0.3 (the Gini is a standard measure of income inequality in which 0 means total equality and 1 total inequality). By 2008 it had risen to a peak of 0.49. For the past seven years it has been declining slightly as pay for rural and blue-collar jobs has been rising faster than for white-collar ones, but at 0.46 the official figure is still higher than anywhere in the OECD, a club of mainly rich countries (see chart), and many unofficial estimates are higher. + + + +Despite that narrowing of the income gap, in other respects people feel that inequality is getting worse. That is partly because of the way they think about success. Traditionally they compared their lives with those of their parents, which should leave almost everyone feeling better off. But today’s young tend to think horizontally, says Jean Wei-Jun Yeung of the National University of Singapore, and judge themselves against their peers. City folk are far more likely to run into the full spectrum of inequality in their own streets, and thanks to the internet and television they are also well aware of how their global counterparts are doing. That helps explain why a report on well-being in China by researchers from Oxford University in Britain and Monash University in Australia, published last year, found that a rise in rural incomes has a far more positive effect on happiness than in urban ones. + +The middle class’s biggest grievance is that the super-rich have surged ahead and appear to have pulled up the ladder behind them. Beijing now has more billionaires than New York, according to Hurun, a Shanghai luxury publishing company. It calculates that the combined net worth of the country’s 568 billionaires is much the same as Australia’s total GDP. A study by Peking University earlier this year found that the top 1% of Chinese households controlled a third of the country’s assets, many of them in the form of “hidden income”, or undeclared earnings. Wang Xiaolu of the National Economic Research Institute in Beijing reckons that if hidden income is included, the top 10% earned 21 times as much as the bottom 10% in 2011, compared with official estimates of nine times. The distance between the upper and lower ends of the middle class is growing too, according to Boston Consulting Group, a consultancy. + +Many middle-class folk feel that, having fought their way up, they are being rewarded ever less generously for their efforts. Returns to education are declining because universities have expanded rapidly. Last year more than 7m students completed university degrees, compared with fewer than 1m in 2000. That makes society more equal, but middle-class households fret that new graduates are finding it harder to get good jobs. + +The squeezed middle + +The party has helped hundreds of millions of people get richer, but has done little to ensure that their assets serve them well + +Many think the gap between the super-wealthy and the rest is growing because the game is rigged. They see society as unfair, divided between those with connections and those without. A lot of Chinese believe, often correctly, that having personal networks which include powerful people trumps hard work. State-owned enterprises account for only one-third of GDP, but they control key sectors such as energy and finance that affect every company, big or small. Even if no graft is involved, people “who know people” find out about new policies and projects first, says Kong Miao, aged 25, who runs a startup in Beijing: “It’s not a problem of corruption, it’s a problem of information asymmetry.” As long as the government maintains a monopoly on the commanding heights of the economy, this will remain true. + +The party is well aware that inequality is bad for social stability. From 1978 onwards it consistently said that its “chief task” was economic construction, but in 2006 it changed its goal to establishing a “harmonious society” by 2020. It seems reasonable to help the poorest in society move up, but that could make the middling sort feel even more unsettled. + + + +Of all the social groups in China, the middle classes seem to have the most to lose from instability. Most are primarily interested in making money, but some now worry that their precious assets are in jeopardy. The party has helped hundreds of millions of people get richer, but has done little to ensure that their assets serve them well. Pension and insurance schemes are weak. The super-rich often park money abroad, but the merely well off find that harder to do. And the choices on offer at home look less than enticing. It may prove a fatal flaw—not only for the economy, but for confidence in the underlying political system—that the party failed to build a proper legal system at the same time as it launched a roaring economy. + + + +Banks in China frequently offer interest rates below the level of inflation, so people look elsewhere to protect their savings. Around 15% of household financial assets are invested in the stockmarket, not enough to sink the economy when the market plunged last year but plenty to anger large numbers of stockholders. Around 3m people have also invested in peer-to-peer schemes, which have proliferated in recent years. That so many individuals and small businesses are prepared to put their money into products they know little about is a “manifestation of people’s deep desperation in a slowing economy”, says Edward Cunningham of Harvard University. And some of them have been badly burned. + +In 2014 Ding Ning, an entrepreneur who had made a fortune manufacturing screws and tin-openers, started a company called Ezubao. It quickly became China’s largest peer-to-peer lender, attracting 50 billion yuan ($7.6 billion) from nearly 1m investors. It advertised returns of 9-15%, many times what traditional banks could offer. A government body even named it a “Model Enterprise” for e-commerce integrity. Unfortunately it turned out to be the wrong kind of model. Last year the government froze its assets; in February it pronounced the company a Ponzi scheme, the world’s largest by number of depositors. Almost all the money that flowed out to long-term investors came from deposits by new ones. + +When Ezubao collapsed, protesters gathered in several cities, and hundreds of social-media groups formed online to discuss “rights protection”—just the kind of widely dispersed protest the state fears. Depositors were angry not only because they had lost money, but because they felt it had been “deliberate government policy” to encourage investment in such products, says Victor Shih of the University of California, San Diego. The case of Ezubao is unusual—and significant—because the protests were directed at the central government rather than the local authorities or institutions that typically attract such criticism. According to Harvard’s Mr Cunningham, amateur investors in Ezubao believed that the central government had endorsed the scheme, and were furious when they found their trust had been misplaced. “It’s like giving a car to someone who doesn’t have a driver’s licence and letting him rampage around recklessly,” says a 32-year-old investor from Ningbo, near Shanghai, who had put 150,000 yuan into Ezubao after seeing ads in state media and read endorsements from state-owned companies. “The government is irresponsible, I’m truly disappointed in this country.” + +The party has no good explanation. Either it knew about the Ponzi scheme and did not warn investors, or it was oblivious to the scam when it should have known about it. At the very least, it failed to provide adequate regulation: more than a third of the 4,000 peer-to-peer platforms launched in recent years have failed. And since China has no independent judiciary, it lacks any system of trustworthy dispute resolution. + +Things are getting worse. Between 2003 and 2013, courts across China ruled on 1,051 cases of financial fraud and “illegal poolings” of public savings, including Ponzi schemes. Last year there were nearly 4,000 cases, and in the first three months of 2016 alone a further 2,300 were uncovered. In the past year financial frauds have cost investors at least $20 billion. Although the government has belatedly woken up to the problem, so far its main response has been to ban the registration of new companies with the word “finance” in their title. Peer-to-peer schemes still account for only a tiny share of household savings, but their failure shows how hard it is to ensure that savings are safe. + +From homes to castles + +Since there are so few outlets in China for investing profitably and safely, putting savings into property is even more popular than elsewhere. Urban housing was privatised only in the 1990s, but already around 85% of city folk own their homes. Yet property rights are shaky. Time after time, apartment-owners have formed residents’ associations to fight plans to build additional towers close to theirs, usually in vain. In some cases buyers have shelled out for apartments before they were built, only for the developers to disappear with the funds. + +A recent series of cases in Zhejiang province revealed the weakness of China’s legal framework for property rights. Since the party abolished land and property ownership after 1949 there have been no freeholds in China, and leases are typically 70 years for urban residential properties, but some are much shorter. Earlier this year hundreds of people who had signed 20-year leases on property in the wealthy city of Wenzhou in the 1990s were asked to pay a third of their homes’ market value to renew the leases. This provoked an outcry on social media, and Xinhua, the state news agency, warned that a blurry definition of home ownership could cause unrest. The 20-year leases on thousands of other apartments in Wenzhou and other coastal cities are due to expire in 2019. + +Not in my courtyard + +Property owners were dealt another blow in February with China-wide proposals to stop the building of new gated communities and gradually open up the many parts of Chinese cities that have been shut away behind fences and gates since the 1990s. The idea was to relieve pressure on the overcrowded road network and make better use of urban land, but it proved inflammatory. Within 12 hours the news had been forwarded tens of thousands of times on social media. Many complained that the proposal contravened a 2007 property law under which roads within such zones belong to the homeowners. The indignation was not just about money. Owning a residence in a gated community is seen as a sign of upward mobility, a domestic space removed from state control. It is the opposite to the Mao-era danwei or work unit, where the state told everyone where to live and neighbours all knew and monitored each other. Millions of people now question whether their assets are safe from some as yet unsuspected new plan. Even though the Chinese have little appetite for political change, they have a huge thirst for security, transparency and the rule of law. + +The cost of housing is soaring in China’s biggest and most desirable cities. In Shanghai, for example, it rose by 20% over the past year. That is good for those who already own a property, but frustrating for young people hoping to buy in the next few years before getting married. It also raises fears that the next generation will fare less well than the current one, especially in view of slowing growth. And as middle-class certainties are being called into question, people are becoming more vocal. + + + + + +Public opinion + +Crowd control + +The views of Chinese people matter—but only up toa point + +Jul 9th 2016 | From the print edition + +The smell of success + +IN 2011, FOLLOWING a string of serious incidents involving lead and cadmium poisonings in various parts of the country, the Chinese government named contamination by heavy metals as the country’s number one environmental health problem. China’s 12th five-year plan for 2011-15 included a requirement to tackle it. That same year a well-known Chinese property tycoon and blogger started translating hourly tweets with readings from an air-quality monitor on the roof of the American embassy in Beijing and posting them on a Chinese site. That drew attention to a different environmental health problem: the often extraordinarily high concentrations of PM2.5 particles, a category of very tiny pollutants particularly damaging to health. The readings contradicted the government’s persistent claim that the capital was simply “foggy”. + +The turning-point came in January 2013 when a dark blanket of smog choked the capital for weeks on end and the tiny particles averaged over 600 parts per million for a full 24 hours, nearly 25 times the level the World Health Organisation deemed safe. The “airpocalypse” threatened stability as well as health, so the leadership took note. The following year Li Keqiang, the prime minister, declared a “war on pollution”, describing smog as nature’s “red light”. The party is now making a real effort to improve the country’s notoriously foul air. + + + +Perhaps the biggest myth about China is that because its people do not have the vote, their opinions do not matter. For decades the Communist Party claimed to embody and express the will of the masses. Surprisingly, since 1980 it has often done that, for pragmatic reasons. It has remained in power largely by letting its citizens get richer and staying ahead of their expectations, occasionally even bending to some of their demands, as with air pollution, but retaining overall control. + +People are angry about inequality, corruption and environmental degradation, and as the economy slows they are becoming harder to pacify + +That deal is now fraying. The party is finding it harder to keep track of, or respond to, multiplying gripes. Many Chinese, despite being well fed, living in their own homes and now offered the chance of having two children, are looking for something beyond material comforts. Too often, China’s problems today are by-products of economic growth unfettered by regulation or rule of law. People are angry about inequality, corruption and environmental degradation, and as the economy slows and prices and taxes rise they are becoming harder to pacify. The system of making small tweaks to keep things going is reaching its limits; the party’s competing goals are becoming increasingly incompatible. + +The environment is an obvious example. The about-face on air pollution showed that the government is particularly responsive to urban opinion. Repeated polls over the past decade show that concern about smog is far greater in urban than in rural areas, because belching factories usually cluster in cities. The government’s plan on pollution, such as it was, was to get rich first and clean up later if necessary. But the protests about Beijing’s smog demonstrated the limits of using economic growth as a proxy for legitimacy. + +Technocracies are often said to be more efficient than democracies at getting things done because they can focus on things that really matter rather than waste time on such fripperies as elections. China shows this to be wide of the mark. The foul air is just one of a host of urgent environmental problems. The government responded to this one because the public grew restive, an indication that China’s environmental policy is aimed at stability, not sustainability. + +Aside from water and soil contamination, which remain serious threats, another, longer-term environmental challenge poses a far higher risk of unrest: water shortages. The north of the country has two-thirds of the farmland but only a fifth of the available fresh water. Grain-growing areas around Beijing have about as much water per person as arid countries such as Niger and Eritrea. Rather than raise the price of water or import more food, the government has built two 1,200km-long canals to bring water from the (often drought-prone) south of the country. That pricey technical fix will not work for ever. Instead of curtailing demand, which would provoke short-term discontent, the party risks turning a difficult but not insoluble problem into a permanent environmental catastrophe. + +In other arenas, too, the party shies from necessary but unpopular decisions. Yuan Yue, who runs Horizon, a polling company, tests policies for the party to see what the popular response might be. Raising the retirement age, currently 50 for most women and 55-60 for men, would help pay to look after China’s ageing population, but Mr Yuan’s poll found that 70% of those polled, both young and old, are against it. A rise in income tax faces similar resistance. In the same vein the government is reluctant to deal with industrial overcapacity because it fears the destabilising effect of mass lay-offs. For decades the economy has served the cause of stability, but now there is a trade-off between preserving order in the short term and keeping the engine of growth running to safeguard long-term stability. + +After the violent crushing of pro-democracy protests in 1989, the party concentrated on shaping public opinion through the media. It is now trying the same again. President Xi Jinping courts popularity by kissing babies, cultivating a public persona more akin to that of a democratically elected politician. Animated videos about Mr Xi project an image of a hip yet humane party. The press, never free, is becoming more constrained. The president recently called on mainstream news organisations to redouble their efforts to “reflect the party’s will and views”. + +Over the past two decades the party has largely withdrawn from people’s private lives, but its tentacles are spreading again. Liu Xianran, who runs a startup in Beijing, complains he can no longer watch the TV programmes or films he wants because the government has introduced quotas for foreign ones. Online video was freer, but now the party is trying to influence that too, by going for a stake and a board seat at Youku, China’s version of YouTube, and similar firms. + +In May online videos of young female presenters eating bananas in a seductive manner were banned, and TV dramas are censored to edit out previously acceptable plunging necklines. A recent government-sponsored advertisement warned Chinese women against “dangerous love”—dating foreigners—because they might be spies. Mr Xi has spoken out against “weird” buildings and demands that art, architecture and all forms of culture serve the party. + +Information control is now the party’s main battlefront in shaping and responding to public opinion, says Nicholas Bequelin, East Asia director of Amnesty International, a human-rights group, in what he calls “the grand bargain between state and society”. In 2009 the arrival of a Twitter-like microblogging site, Weibo, appeared to usher in a new age of free expression in China, but the authorities got spooked when users showed outrage after a deadly high-speed rail crash in 2011. Several prominent bloggers with a huge following, known as “Big Vs”, were soon silenced. Much traffic has migrated from the public Weibo to WeChat, where only invited members can join conversations (the party lurks as an uninvited guest), but it is so widely used that news of scandals spreads around China instantaneously. + +Technology has created more space for people to express themselves, but also made it easier for the state to shutter discussion. Censorship is moving faster, says Zhou Runan of Sun Yat-sen University; many messages are now deleted in minutes, sometimes seconds. Criticism is often drowned out by pro-party views. A Harvard University team that analysed leaked e-mails from a district internet-propaganda office estimated that government staff post nearly 500m social-media comments a year within China. The country was named the world’s worst abuser of internet freedom in 2015 by Freedom House, an advocacy group in Washington, DC, measured by obstacles to access, limits on content and violation of user rights. + +Great walls of ire + +The space for disagreement, always narrow, has shrunk further under Mr Xi. A year ago about 120 civil-rights lawyers and 50 support staff who defend ordinary citizens against the state were rounded up. In March this year a party journal berated China’s entrepreneurs, long ago co-opted into the party, for “errors in their thinking”, and Mr Xi urged them to “love the Communist Party and actively practise socialist core values”. This was preceded by the disciplining of Ren Zhiqiang, one of China’s most prominent tycoons, for speaking out online against the party’s control of the media. Celebrities also face increasing scrutiny. Now the middle classes fear they may be turning into targets too. + +The Chinese are accustomed to the often thuggish behaviour of their police, usually aimed at the poor and helpless. But in May such violence appeared to be being meted out to a different kind of victim when Lei Yang, a well-educated 29-year-old Beijinger who had been working as an environmentalist for a government-affiliated institute, died in custody in unexplained circumstances. His family spoke out, questioning the police’s account of events. For weeks afterwards social media rang with calls for justice. Former classmates from the prestigious Renmin University in Beijing led a petition: Mr Lei’s death, it said, “was a tragedy arising from the system…We want our most basic rights to personal safety, civil rights and urban order.” + +Popular sentiment has often been an ally of the party, says Ma Tianjie, who blogs about public opinion. In recent decades the state has used it to help push through changes against vested interests. Now the party seems to be bent on criminalising or marginalising many previously acceptable means of expression. Given the choice between accountability and authoritarianism, the party is leaning ever more towards the latter. + + + + + +Civil society + +Daring to think, daring to act + +Civic engagement of all sorts is becoming much more widespread + +Jul 9th 2016 | From the print edition + +Let’s have some colour in our lives + +THE CONVERTED FLAT in a quiet residential neighbourhood in north-east Beijing does not look like a hotbed of revolution. A sticker on the door declares it to be a “safe space”; inside are some armchairs, a meeting table, a rainbow flag and a counselling room. Yet over the past two years this organisation in Beijing, which represents the lesbian, gay, bisexual and transgender community, has attracted increasing attention from the police. On one occasion the head of the centre was questioned for nine hours without a break. It is becoming harder to predict what forms of activism the Communist Party will tolerate, she says: “We often say our government is full of G-spots. You don’t know how and where you touch them.” + +These days many Chinese want to get involved in non-profit organisations and civic groups, but the government does not always make it easy for them. After the party seized power in 1949 it stamped out anything that stood between it and the proletariat. Society was divided into work units, distinct walled communities that provided not just jobs but food, housing, schools, medical services and elder care for the toiling masses. The state claimed to meet every need from first to last gasp. What is now called civil society all but disappeared. + +As the party has retreated from people’s daily lives since the 1990s, a host of civic organisations has sprung up to fill gaps in state coverage. The needs and demands of society have become far more complex, but state provision is surprisingly thin. Some civic outfits work with particular groups, such as the elderly or migrants; others are organised around issues such as the environment or labour. About 550,000 domestic non-government organisations (NGOs) are registered with the government, and a further 2m or so are either unregistered or registered as businesses, often to try to avoid scrutiny or harassment. On top of that, around 7,000 foreign NGOs are operating in China. + +This looks like an outbreak of altruism in a country often charged with lacking a sense of morality. The rise in individualism that has caused some to pursue blind self-interest has had the opposite effect on others, instilling more of a social conscience and increasing civic engagement. Many Chinese are responding to the anomie and inequality caused by their country’s accelerated modernisation by trying to improve the lives of strangers. Such groups meet the demand for such services and provide an outlet for the mainly middle-class individuals who want to do their bit for society and have the capacity for it. Their efforts seem to enjoy widespread support: people’s trust in NGOs is increasing year by year, according to the annual “trust barometer” put together by Edelman, a public-relations firm. + +This urge to engage has recently spread to charitable giving. Total donations have nearly quadrupled since 2007, to $16 billion, though ordinary folk tend to contribute ad hoc when prompted by some crisis or natural disaster, rather than systematically. Giving in China is still paltry compared with America, which collects 25 times the Chinese total from a population a quarter of the size, but it is rising fast. The richest individuals lead the way. According to researchers at Harvard’s Kennedy School, over a third of China’s biggest philanthropists made money in property; nearly 60% of their donations go to education, reflecting a wider Chinese concern; and most give to the province where they work, replicating and reinforcing China’s overall wealth gap. + +A large and growing body of NGOs are essentially service providers for the state. The nine-storey building from which Datong, or “Great Harmony”, a government-sponsored NGO, operates in the southern city of Guangzhou is home to a bevy of similar organisations; their names form the leaves of a tree in the lobby, representing the Guangzhou government that nurtures them. The local government commissions Datong to provide social services for the elderly, children, migrant families and HIV sufferers. Its founder, Liu Jinglin, is a party member, as are some of her social workers. + +Some hoped that by working with the government, NGOs like Datong might influence it from within, but most of them turn out to have little autonomy over their own services. Many are, in effect, arms of the state. “The party wants to take all the credit for sorting out society’s problems,” says Jing Jun of Tsinghua University in Beijing. + +Any size as long as it’s small + +Datong is precisely the kind of civic group that the government hopes will help it increase social stability by alleviating social ills. In March China’s first charity law was passed to allow registration with the government, legalise fundraising and protect donors. It sends a strong signal that the state encourages at least some kinds of civic groups. Despite reservations, most people in the sector see it as an important step forward. + +But the new charity law also sets clear limits. In effect, it caps the size of such civic groups. Institutions have to be in business for two years before they can raise funds, which is longer than some will be able to wait. Charities’ operating costs must not exceed 10% of spending, which will make it hard to find and retain skilled staff. And most of the income must be distributed, so accumulating an endowment will be next to impossible. + + + +The party is wary of civic groups because it views them as a training ground for political participation. It is well aware of the role that trade unions, churches and other civic groups played in bringing down the Soviet bloc. Mass participation is also an unwelcome reminder of China’s own Cultural Revolution. There is a reason why the party calls NGOs “social organisations”: it fears that “non-government” may be misread for “anti-government”. + +The idea of like-minded souls bound by a common cause linking up around the country is anathema to the party + +The party is particularly cautious about foreign NGOs and foreign-funded domestic ones, seeing them as potentially subversive “anti-China forces”. A new law requires international NGOs to register with the public-security bureau; they risk being shut down if they “endanger national security”, a vague term critics worry will be used to justify increased monitoring or harassment. “It’s unfortunate that they decided to see us as criminalised from the get-go,” says the head of one such foreign group. + +The state’s fear that activism will turn into political action explains the ambiguous and at times antagonistic relationship between NGOs and the state. Yang Xiong of the Shanghai Academy of Social Sciences says social organisations are “friends of the government”, and only those working on “religion, politics or the military” are sensitive. In fact the distinction is not as clear-cut as that. + +Since Xi Jinping took office in 2012, the crackdown on civil society has intensified. Tolerance of the more sensitive groups has declined and previously accepted groups have been subjected to greater scrutiny. Leaders of labour-rights groups have been arrested. Courses on civil society at some universities have been closed and professors told to behave. In March 2015 five feminists were imprisoned for over a month, purportedly for planning a campaign against sexual harassment. Their crime was not that they stood up for women’s rights, but that they wanted to stage simultaneous campaigns in several cities. The idea of like-minded souls bound by a common cause linking up around the country is anathema to the party. Most of its responses can be explained by this overriding concern. + +Rather than bow to government repression, the feminists have changed their strategy, becoming active on social media and looking for crowdfunding to pay for ads against harassment. LGBT groups have changed tack too. Although Chinese society is becoming more tolerant of diversity, even at the top, the state worries that such groups are becoming increasingly well organised. In the past LGBT groups have helped stage “performance art” such as faux gay weddings in popular tourist spots to raise awareness. Now they have taken to helping people use the legal system to advance their cause. Individuals have brought cases fighting illegal “gay conversion” therapy, homophobic language in textbooks and pushing for the right to marry. + +Bold star + +Activism is not restricted to the non-profit sector. Luo Changping, a journalist, is known in China for his online exposure of the cheating and corruption of a top party official in 2013, which eventually got the cadre sacked. Mr Luo himself, although not exactly sacked, was moved from his reporting role at Caijing, one of China’s more outspoken magazines, for investigating secret offshore accounts, and transferred to an affiliated research institute. Now he works for Okoer.com, a Chinese-German joint venture that tests the quality of products made in China and other countries. + +Mr Luo is a rare individual in China who is willing to speak truth to power, so inspecting sex toys, soy sauce and biscuits may seem like a comedown. But his work still involves exposing the effects of corruption, negligence and the weak legal system on the lives of ordinary Chinese people, he says. “What I do now is more effective than journalism. One test can affect millions of consumers, but a big media exposé would change nothing.” + +That points to another reason why the party fears such engaged citizens: they lay bare the gross failings of the state, including its institutional inability to protect its citizens. Food safety is a particularly touchy subject in China. Most notoriously, in 2008 vast quantities of baby milk were found to be contaminated with melamine, killing four babies and sending 50,000 to hospital. Every month brings new such scandals. Though individuals sometimes go to jail for their part in them, the underlying failure of regulation and accountability is not dealt with. Since the subject is so controversial, Chinese labs often will not test food samples from private firms or individuals, so Okoer sends all its products to Germany to be analysed. + +Ai Weiwei, a Chinese artist, once remarked that a distinctive feature of dictatorships is that they make individuals feel powerless to change anything in society. Yet although civic engagement is politically sensitive, China today has more and more engaged groups such as parents’ associations at schools and residents’ groups that represent apartment-block tenants. Few of them are interested in liberal causes; they may be NIMBYists, or objecting to migrant children in their middle-class schools. The vast majority are tiny and would never consider themselves part of a broader movement. Yet in pressing for action, they show that their voice matters, that the party cannot direct all social change from the top. Slowly they are shaping China, step by tiny step. + + + + + +Emigration + +The long march abroad + +China’s brightest and wealthiest are leaving the country in droves + +Jul 9th 2016 | From the print edition + +Dreaming of America + +IN FAR WESTERN China on the edge of the Gobi desert, 17-year-olds in a social-studies class are discussing revolution (the Russian one) and the use and abuse of nationalism (Germany, Italy). When the teacher asks what “totalitarianism” is, a girl immediately replies: “One leader, one ideology, no human rights.” These are Chinese pupils in a Chinese classroom studying the second world war, but by attending Lanzhou Oriental Canadian School they have already written themselves out of at least part of a Chinese future. They will all go to university abroad, many to Canada, others to the United States, Australia and Britain. So great is Chinese demand for foreign schooling that even here in Gansu, China’s second-poorest province, a new block is being built to house more students; the hoardings on the building site are plastered with posters about “The Chinese Dream”, a slogan Xi Jinping launched in 2012 to promote the country’s “great revival”. But like hundreds of thousands of people across China, these teenagers and their families harbour a different dream: escape. + +Since the country started opening up in 1978, around 10m Chinese have moved abroad + +The extraordinary outflow of people from China is one of the most striking trends of recent decades. Since the country started opening up in 1978, around 10m Chinese have moved abroad, according to Wang Huiyao of the Centre for China and Globalisation, a think-tank in Beijing. Only India and Russia have a larger diaspora, both built up over a much longer period. The mass exodus of students like those at Lanzhou Oriental is just one part of the story. Since 2001 well over 1m Chinese have become citizens of other countries, most often America; a far larger number have taken up permanent residence abroad, a status often tied to a specific job that may last for years and can turn into citizenship. + +Chinese make up the bulk of individuals who are given investor visas, a fast-track immigration system offered by many countries to the super-wealthy. Others are just moving their money offshore, investing in foreign companies or buying property. Officially Chinese citizens are limited to moving $50,000 abroad a year, but many are finding inventive ways to get round that rule, including overpaying for imports, forging deals with foreign entities and even starting, then losing, fake lawsuits against foreign entities, triggering huge “damages”. + +An export industry + +Studying abroad has become an ambition for the masses: 57% of Chinese parents would send their child overseas to study if the family had the means, according to the Shanghai Academy of Social Sciences. Even Mr Xi sent his daughter to study at Harvard. Nor is this open only to the super-rich. Liang Yuqi from Zhangye, a city close to Lanzhou, is being quietly guided towards a relatively cheap Canadian state university to study psychology. Her parents are government officials who have never been abroad (cadres must hand in their passport) and will pool money from relatives to fund her foreign education. The sacrifice is worth it, says her mother: in middle school Yuqi was “fat” and “mediocre”, now she is confident and asks lots of questions. Many others are spending their all to make the break. More than half a million university students went overseas last year. + +This aspirational market is served by hundreds of international schools in China. Some cater for non-Chinese citizens, often the foreign-born offspring of returning Chinese. Since 2003 a growing number of regular Chinese schools, such as Lanzhou Oriental Middle School, have launched lucrative international programmes for Chinese passport-holders (fees at Lanzhou Oriental’s international arm are 70,000 yuan ($11,000) a year, 11 times the price of a regular education there). Their popularity caused a backlash against the use of public facilities and funds to send kids to study abroad after they finished school. Beijing city government and a number of provincial authorities have stopped approving new international programmes, and the education ministry is pondering nationwide restrictions. But students are leaving younger and younger. Since 2005 the number of Chinese secondary-school pupils in America alone has increased almost 60-fold, to 35,000. + +Of the 4m Chinese who have left to study abroad since 1978, half have not returned, according to the education ministry. By most unofficial counts the share is even larger. In some fields the brain drain is extreme: almost all of China’s best science students go abroad for their PhDs, and 85% of Chinese science and engineering graduates with American PhDs had not returned home five years after leaving, a study by the National Science Foundation found this year. Many of the teenagers at Lanzhou Oriental Canadian School know that they are responsible for their entire family’s future: 16-year-old Hai Yingqi says she has to get a good enough job upon graduation to allow her parents, young brother and all four grandparents to emigrate. + +One, two, flee + +China has long seen education as a passport to success, which helps explain why the middle class is now focusing on foreign schools and universities. One Beijing businesswoman preparing to give birth in America says she wants to avoid sending the child to a Chinese school because she would have to bribe her way into a good primary school, and then “make sure the teacher is happy”—more bribes: “It’s not the money I mind, but the trouble.” Another parent questions how a child can learn values in such a system, and cites the corrupting influence of “patriotic education”, the compulsory propaganda classes all pupils must attend, where there is only one right answer and nothing can be questioned. + +Others find different exit strategies. The super-rich can, in essence, buy foreign residency. Chinese citizens who invest at least £2m ($3m) in Britain are promised permanent residency in five years; Australia offers a similar scheme for A$5m ($3.6m). Around 70,000 Chinese millionaires have emigrated to Canada since 2008 under an immigrant investor scheme. This is no longer in operation, but the country is now encouraging Chinese entrepreneurs and startups. Hong Kong has cracked down on mainland mothers giving birth there to gain Hong Kong passports (and citizenship has become less appealing than it used to be), but birth tourism to America and other countries is increasing. And many of those working for multinational companies eventually transfer elsewhere. + +Businesspeople who have returned to the mainland now lead some of China’s most innovative companies. But most come back only once they have secured an escape route for themselves or their children. The government has sponsored some expensive schemes to lure academics back to China, and some have taken up the invitation, having first made sure that their children were born abroad so they would be able to choose where to live in future. Yao Ming, a famous 2.29-metre-tall basketball player, is one of China’s icons, a true product of the Communist Party (which encouraged his exceptionally tall parents to marry), but his daughter, now six, was born in America. Chen Kaige, one of China’s best-known film directors, has at least two American children; Gong Li, a film star, and Jet Li, a Chinese martial-arts actor, both have Singaporean passports. + +Outflows of capital, even more than people, directly mirror political risk. The torrent of cash flowing out of China almost exactly matches fears about the strength of the economy and the government’s capacity to handle it (see chart). In the second half of 2015, for example, capital moved abroad at an annual rate of $1 trillion in response to a fragile economy, the government’s botched attempt to intervene in the falling stockmarket and a slight but unexpected drop in the yuan. The government temporarily slowed that outflow by stepping up capital controls earlier this year and taking some sensible decisions on the economy. Yet as with so many problems, the party dealt with the immediate crisis, not the underlying cause. + + + +China has long been a land of emigration, establishing small outposts of its people in almost every country in the world. Their main motive was to escape poverty. But those now bowing out are among China’s richest and most skilled. It is a profound indictment of their country that being able to leave it is such a strong sign of success. + + + + + +Looking ahead + +The writing on the wall + +The Communist Party’s policy of balancing freedom of expression with repression is not sustainable + +Jul 9th 2016 | From the print edition + +Walls still have ears + +IN 1970 AN ECONOMIST called Albert Hirschman published a book called “Exit, Voice, and Loyalty” in which he set out two ways in which people can express disappointment in a company, institution or state: they can either vote with their feet (exit) or stay put and speak up (voice). The Chinese Communist Party owes its longevity to having kept the door ajar to both outlets for disillusionment. + +After the Tiananmen Square pro-democracy demonstrations in 1989, it offered a quiet exit by allowing some of the regime’s bravest critics to leave the country. In recent years it has also turned a blind eye to capital outflows. China’s internet firewall is managed in similar fashion: millions of people in China are able to use virtual private networks (VPNs) and the like to leap over the fence and experience the world wide web rather than China’s filtered version. The authorities could crack down on such circumvention tools, and sometimes do so on politically sensitive occasions. But mostly they choose not to, partly for economic reasons (some businesses need VPNs to operate) and partly because they want to maintain stability (which might be upset by wholly effective filtering). + +Exit is still possible: hundreds of thousands of people leave each year to study, work or join family. Many invest in foreign countries or send their money abroad. But the world does not have enough universities, houses or jobs to support 225m extra households; nor would everyone in China want to leave. So although this route is still open, the middle classes are expanding so fast that an ever smaller proportion of them can use it. + +The government has employed the same tactic for voice, appearing both to allow and respond to criticism. Listening to the people on issues such as air pollution relieves tension and reduces pressure, as well as producing some good policies. On the internet low-level dissent is tolerated, but censored quickly once it starts to be widely shared. The government has become expert at dealing with crises—send in officials, launch an investigation, sack a few people—without tackling the underlying problems, which would usually show up far bigger cracks in the foundations. In April Mr Xi even claimed to welcome criticism online. The party is responsive but not accountable. + +This artful balance will be hard to maintain. Disappointment among different groups is growing, in different ways. The middle classes want more autonomy over their personal lives; they want to comment online, even if they are censored or drowned out; many want to help remake their rapidly changing society rather than wait for the government to do so. They are anxious about protecting their property and assets in a country where regulation and the rule of law is weak. They want assurances that the government can safeguard their children’s future. + +Mr Xi’s vision of the “Chinese Dream” has proved largely empty. Meant to echo the American dream, instead it highlights the difference between the two. The American idea that people can be whoever they want to be contrasts with the tightly scripted social and moral codes the Chinese government is vigorously trying to impose. Chinese people with American-style aspirations who hope to be rewarded for ability and hard work are frustrated by the continued monopoly of those with connections (though the journey from rags to riches has become harder in America too). And in China living a life free from interference is impossible because the state intrudes into people’s homes. Chinese nationalism is strong, but on its own it is not enough to nurture the dream. + +The government’s answer has been to silence voices. Some by force, such as those of civil-rights lawyers, labour activists and brave feminists; others by telling them to put up and shut up. That is true of parents whose children have been poisoned by tainted food or toxic soil, investors who have lost money in Ponzi schemes or civil-society groups that are being prevented from trying to make society better. Their call for expression is being met with repression. + +What is happening on the mainland now is reminiscent of what happened in Hong Kong more than a quarter of a century ago. In the 1990s, after the Tiananmen Square protests, many Hong Kongers were afraid of what rule from Beijing might bring. Those who could afford to obtained foreign passports before the territory was returned in 1997, but many lacked the means to leave. So although Hong Kong lost some of its most productive people, it ended up with an increasingly independent, individualist, confident yet potentially restive middle class. + +Even with a far more relaxed government than on the mainland, since 1997 protesters in Hong Kong have repeatedly poured onto the streets, infuriated by mainland attempts to impose its laws and to introduce “patriotic education”, frustrated by not having any real say in who runs the territory and annoyed by the hordes of mainlanders crowding the streets. Many of the underlying causes of this discontent resonate with China’s middle classes: concerns about an ageing population, strained health-care resources, the quality and quantity of graduate jobs, high property prices, low pensions, jobs moving offshore and an inability to determine their own future. + +A slow-burning fuse + +The Chinese people are not likely to rise up and fight for democracy any time soon. But they are looking for change, and agitating (mostly in small ways) for some of the freedoms that go with democracy, though few would describe them that way. The regime has survived by staying ahead of people’s demands and offering some outlets for their dissatisfaction, but now those outlets are shrinking. Giving this group what it wants would destroy the monopoly on power that the party has sought so hard to build and maintain, and for now it shows no sign of doing so. + +But in the longer term it will find it hard to contain these forces. The middle classes are increasingly dominated by those born after 1980, whose expectations are shaped by global travel and the internet. They are no longer so cowed by history or so grateful to the party for the improvements in living standards they have enjoyed. At some point the party’s institutional amnesia may come back to bite it. Those who do not remember the past may be in danger of repeating it. + + + + + +Business + + + + +Consumer goods: Invasion of the bottle snatchers + +Boardroom brawls, Chinese style: Vanke panky + +Israel’s tech industry: Talent search + +Kingfisher Airlines: Flying blind + +After the Brexit vote (I): Rules and Britannia + +After the Brexit vote (II): Picking losers + +Schumpeter: The two faces of USA Inc + + + + + +Consumer goods + +Invasion of the bottle snatchers + +Smaller rivals are assaulting the world’s biggest brands + +Jul 9th 2016 | NEW YORK | From the print edition + + + +THEY make some of the world’s best-loved products. Their logos are instantly recognisable, their advertising jingles seared in shoppers’ brains. For investors, they promise steady returns in turbulent times. They seem to be getting ever bigger: on June 30th Mondelez International made a $23 billion bid for Hershey to create the world’s biggest confectioner; and on July 7th Danone, the world’s largest yogurt maker, agreed to buy WhiteWave Foods, a natural-food group, for $12.5 billion. Yet trouble lurks for the giants in consumer packaged goods (CPG), which also include firms such as General Mills, Nestlé, Procter & Gamble and Unilever. As one executive admits in a moment of candour, “We’re kind of fucked.” + +For a hint of the problem they face, take the example of Daniel Lubetzky, who began peddling his fruit-and-nut bars in health-food stores: his KIND bars are now ubiquitous, stacked in airports and Walmarts. Or that of Michael Dubin and Mark Levine, entrepreneurs irked by expensive razors, who began shipping cheaper ones directly to consumers five years ago. Their Dollar Shave Club now controls 5% of America’s razor market. + +Such stories abound. From 2011 to 2015 large CPG companies lost nearly three percentage points of market share in America, according to a joint study by the Boston Consulting Group and IRI, a consultancy and data provider, respectively. In emerging markets local competitors are a growing headache for multinational giants. Nestlé, the world’s biggest food company, has missed its target of 5-6% sales growth for three years running. + +For a time, size gave CPG companies a staggering advantage. Centralising decisions and consolidating manufacturing helped firms expand margins. Deep pockets meant companies could spend millions on a flashy television advertisement, then see sales rise. Firms distributed goods to a vast network of stores, paying for prominent placement on shelves. + +Yet these advantages are not what they once were. Consolidating factories has made companies more vulnerable to the swing of a particular currency, points out Nik Modi of RBC Capital Markets, a bank. The impact of television adverts is fading, as consumers learn about products on social media and from online reviews. At the same time, barriers to entry are falling for small firms. They can outsource production and advertise online. Distribution is getting easier, too: a young brand may prove itself with online sales, then move into big stores. Financing mirrors the same trend: last year investors poured $3.3 billion into private CPG firms, according to CB Insights, a data firm—up by 58% from 2014 and a whopping 638% since 2011. + +Most troublesome, the lumbering giants are finding it hard to keep up with fast-changing consumer markets. Ali Dibadj of Sanford C. Bernstein, a research firm, points out that some consumers in middle-income countries began by assuming Western products were superior. As their economies grew, local players often proved more attuned to shoppers’ needs. Since 2004 big emerging economies have seen a surge of local and regional companies, according to data compiled by RBC. In China, for example, Yunnan Baiyao Group accounts for 10% of the toothpaste market, with sales growing by 45% each year since 2004. In Brazil Botica Comercial Farmacêutica sells nearly 30% of perfume. And in India Ghari Industries now peddles more than 17% of detergent. + +In America and Europe, the world’s biggest consumer markets, many firms have been similarly leaden-footed. If a shopper wants a basic product, he can choose from cheap, store-brand goods from the likes of Aldi and Walmart. But if a customer wants to pay more for a product, it may not be for a traditional big brand. This may be because shoppers trust little brands more than established ones. One-third of American consumers surveyed by Deloitte, a consultancy, said they would pay at least 10% more for the “craft” version of a good, a greater share than would pay extra for convenience or innovation. Interest in organic products has been a particular challenge for big manufacturers whose packages list such tasty-sounding ingredients as sodium benzoate and Yellow 6. + +All this has provided a big opening for smaller firms. In recent years they contributed to a proliferation of new products (see chart). For instance, America now boasts more than 4,000 craft brewers, up by 200% in the past decade. For a sign of the times, look no further than Wilde, which sells snack bars made of baked meat. The bars, revolting to some, may appeal to the herd of weekend triathletes who want to eat like cave men. + + + +Big companies have been trying to respond. One answer is to focus more. In 2014 Procter & Gamble said it would sell off or consolidate about 100 brands, to devote itself to top products such as Gillette razors and Tide detergent. Mondelez, the seller of Oreo biscuits and Cadbury’s chocolate, is spending more to understand who snacks on what, and why. + +But the most notable strategy has been to buy other firms and cut costs. 3G, a Brazilian private-equity firm, looms over the industry. It has slashed budgets at Heinz, a 147-year-old company it bought in 2013; then Kraft, which it merged with Heinz in 2015; as well as Anheuser-Busch InBev, a beer behemoth poised to swallow SABMiller. Heinz’s profit margin widened from 18% to 28% in just two years, according to Sanford C. Bernstein. + +Big firms are also acquiring or backing smaller rivals. In 2013 two American food companies and a French one—Campbell Soup, Hain Celestial and Danone—each snapped up a maker of organic baby food. Coca-Cola and Unilever, an Anglo-Dutch titan, have long bought companies outright or invested in them. Both General Mills and Campbell have launched their own venture-capital arms. + +Such strategies may eventually make CPG firms even more like big pharmaceutical companies. They may invent few products themselves and instead either acquire small firms or join up with them, then handle marketing, distribution and regulation. That has worked decently well for drugmakers. Yet consumers are more fickle when buying skin cream than a patent-protected cancer drug. A CPG firm may pay a bundle to buy a startup, only to see its products prove a fad. And cutting costs expands margins, but may depress sales. + +Despite such conundrums, executives remain bullish. Tim Cofer, Mondelez’s chief growth officer, maintains that wise cuts and reinvestment will position the firm well. “This is about the scale of a $30 billion global snacking powerhouse,” he declares, “and at the same time the speed, the agility, the dexterity” of a startup. + +Others are gloomier. EY, a consultancy, recently surveyed CPG executives. Eight in ten doubted their company could adapt to customer demand. Kristina Rogers of EY posits that firms may need to rethink their business, not just trim costs and sign deals. “Is the billion-dollar brand,” she wonders, “still a robust model?” + + + + + +Boardroom brawls, Chinese style + +Vanke panky + +Corporate governance in China leaves much to be desired + +Jul 9th 2016 | SHANGHAI | From the print edition + + + +WANG SHI (pictured) is not a man who gives up easily. The chairman of Vanke, one of China’s biggest property firms, cut his teeth in the People’s Liberation Army and climbed Everest at the age of 52. When bombers attacked the Boston marathon in 2013, Mr Wang stayed at the scene and posted dispatches on social media. CCTV, China’s official broadcaster, called him its “front-line correspondent”. + +This steely temperament was again evident this week, as Mr Wang gained the upper hand in his battle against a corporate raider attempting to seize control of his listed company. Baoneng, a private Chinese conglomerate, fired the first salvo last year by raising its stake in Vanke to more than 24%. That made its holding bigger than the one held by China Resources, a state-owned enterprise which has long backed the firm’s leadership, and set the stage for a takeover bid. + +Declaring Yao Zhenhua, Baoneng’s boss, an unwelcome barbarian, Mr Wang asked for trading in Vanke’s shares to be suspended on December 18th and tried to organise an alternative investor to outflank Baoneng. In March he unveiled a convoluted plan to acquire properties held by Shenzhen Metro, a government entity. In return, he planned to issue new shares and grant the state outfit a stake in his company that would be bigger than Baoneng’s. But China Resources, unhappy that its stake would also be diluted, opposed this plan. + +Sensing weakness, Baoneng in late June demanded an extraordinary shareholder meeting to oust Mr Wang and his board. With China Resources no longer at his side, Mr Wang looked as if he might be toppled. But on July 3rd Vanke notified regulators that the firm’s board had officially rejected Baoneng’s demand. Baoneng responded on July 5th by purchasing more of Vanke’s shares, taking its holding to just below 25%. + +Yan Yuejin of E-house, a property-research firm, warns that the public boardroom brawl was “such a joke” that it will prompt regulatory scrutiny. Whatever the outcome, the affair has revealed the sad state of corporate governance in China. Hostile takeovers are extremely rare on the mainland, especially of firms this large. (Vanke’s revenues last year were over $30 billion.) Most private-sector firms are controlled by a dominant shareholder or group, which makes it hard for raiders to seize control by purchasing shares openly. + +But Vanke was unusually exposed to raiders. In 1988 Mr Wang took the decision not to keep a tight grip on Vanke, but rather to donate his shares to charity. In a speech in 2014 he professed his faith in good governance, arguing that he would rather win the trust of his board through his performance than control it through a dominant shareholding. + +Alas, those sentiments were quickly forgotten when a hostile raider emerged. Chen Shimin of the China Europe International Business School in Shanghai sees “a lapse in corporate governance”. Instead of rejecting the bid from Baoneng out of hand and working stealthily to find a white knight, Vanke should have convened a board meeting immediately to discuss a potential takeover. Asked this week for comment, Vanke responded: “We are not in a position to comment on our own corporate governance.” + +Vanke’s failings are more public than those of other Chinese companies, but they are not more egregious. Firms regularly flout rules about the independence of directors by, for example, packing boards with cronies of the chairman. Moreover, the rules and regulations about company behaviour are themselves often vague, and arbitrarily enforced. The Asian Corporate Governance Association, an independent body, rates China’s performance on such matters among the worst in Asia. If Mr Wang wants a task more challenging than climbing Everest, he should rally Chinese business leaders behind the cause of better corporate governance. + + + + + +Israel’s tech industry + +Talent search + +The “startup nation” is running out of steam + +Jul 9th 2016 | JERUSALEM | From the print edition + + + +ISRAEL’S high-tech sector seems to be a land of milk and honey. Scarcely a month passes without another announcement of a foreign tech giant buying a local firm. In 2015 Israeli startups raised a record $4.4 billion in venture capital, up by 30% from the previous year. Yet the country once christened the “startup nation” is losing steam. Between 1998 and 2012 the tech industry grew on average by 9% annually, more than double the rate of Israel’s GDP. In all but one of the past six years, the tech sector has expanded at a slower rate than the overall economy. + +The main cause for the slowdown is a growing shortage of trained workers, according to a recent report by the chief economist of the ministry of finance. This may come as a surprise, given the country’s reputation for having a deep pool of tech talent, mainly because of the Israel Defence Forces (IDF), which rely heavily on technology and churn out thousands of highly skilled workers. But a complex mix of social, educational and business factors is increasingly constraining the size of Israel’s tech workforce. + +There is a limit to the size of any industry a small country of only 8m people can sustain. Until recently, the tech industry was helped by two trends: academics and employees of state-owned industries moving into the private sector and the arrival of tens of thousands of Jewish engineers emigrating from the former Soviet Union. Both these sources of fresh talent have now dried up, even as others remain obstructed. Two growing parts of the Israeli population are underrepresented in the job market: Israeli Arabs and the ultra-Orthodox, who together make up around 25% of the population. Israel’s universities are producing fewer engineers, too: the share of graduates with science degrees is down from 12% in 1998 to 9% in 2014. + +At the same time, demand for skilled tech workers continues to grow, and not just in the private sector. The IDF need to keep their trained operatives longer, for instance to expand their cyber-warfare capabilities. Competition for such personnel is fierce: many are snapped up by firms offering twice the pay the army does. + +Moreover, the Israeli tech industry doesn’t make the best use of the talent available. Many workers want to start their own firm, rather than toiling at a big one, meaning that most firms are tiny with only a handful of employees. Israeli entrepreneurs also tend to seek swift “exits” and quickly sell their startup to foreign companies. As a result, the country’s tech firms are not creating training schemes, points out Yigal Erlich of Yozma, the outfit that seeded many Israeli venture-capital funds. + +The government has started to take action. Naftali Bennett, the education minister and a former high-tech entrepreneur himself, has launched an emergency plan to boost the number of students studying mathematics. For the first time in Israeli history, government economists are considering long-term work visas for foreign engineers. The IDF, for their part, have streamlined their training courses and now provide soldiers with the option of online distance-learning, so they can enhance their skills on the job. “But there is a limit to what we can do. Conscription is down due to demographic reasons and few of the new conscripts arrive with basic tech skills,” says Danny Bren, a former commander of the IDF’s Lotem Unit, the main provider of computer and networking services for the army. + +Israel may have to take still more radical steps. One could be to provide more Israeli Arabs and ultra-Orthodox Jews with the skills necessary to work in the tech industry. Another potential source of talent are the more than 4m Palestinians living in the West Bank and the Gaza Strip, over 50,000 of whom are already allowed to work in Israel, but mainly on building sites and other low-paid jobs. Before Israel imports engineers from Asia, it should consider its closest neighbours. + + + + + +Kingfisher Airlines + +Flying blind + +The dog ate my accounts, honest + +Jul 9th 2016 | MUMBAI | From the print edition + +Have you seen my balance-sheet? + +AN OWNER who is lying low in London, a slew of government agencies investigating fraud, a consortium of 17 banks facing hefty losses: winding up Kingfisher Airlines, an Indian carrier that stopped flying in 2012 under a pile of debts, always looked likely to make the fortunes of a few bankruptcy lawyers. It now seems that forensic accountants may get a fat payday as well, after the airline told a government agency its books had vanished. As with all important documents, it seems, a backup is nowhere to be found, if it ever existed. + +The airline’s missing accounts—apparently stored on servers seized by a vendor who had gone unpaid—is an unwelcome complication for those who had hoped the Kingfisher saga might be inching towards some sort of resolution. To the dismay of Vijay Mallya, the booze scion who founded the airline in 2005 (pictured left, with Prince Charles), the case is now a tangle of bankers’ civil claims and criminal ones from authorities investigating allegations that some of the loan money went towards his foreign property purchases (accusations that Mr Mallya says he has disproved). + +Every week brings fresh news of financial slapstick. Last month it emerged that one of the aggrieved banks froze the accounts of three customers it alleged had guaranteed loans to the carrier in their role as board directors of Kingfisher. In fact, it blocked a destitute farmer, a vegetable stallholder and a security guard with similar names. The actual targets deny being on the hook anyway. + +Mr Mallya, who did in fact personally guarantee the loans, has claimed it was coincidence that he flew to Europe just as government agencies were closing in on him in March. He says proceedings designed formally to brand him an absconder make it harder for him to settle with the banks, many of which are state-owned. Having insisted he cough up the entire 90 billion rupees ($1.3 billion) he owes, including overdue interest, there are now reports that some banks may be happy if they get little more than their principal back. + +That would still equate to a recovery rate of over 50 cents on the dollar, more than double the Indian average in such bankruptcy cases. But the banks’ fear of appearing soft on a hard-partying tycoon will make it difficult for them to settle. They must be seen to hold him to account—a task now made all the trickier by Kingfisher’s own missing accounts. + + + + + +After the Brexit vote (I) + +Rules and Britannia + +Uncertainty, especially about regulation, spreads among industries most exposed to Britain + +Jul 9th 2016 | From the print edition + + + +NO, GOOGLE is unlikely to move jobs to continental Europe, nor invest more there, said Eric Schmidt, the executive chairman of Alphabet (parent of the online giant) at a conference in Paris last week. Just because Britons voted to quit the European Union, businesses need not react hastily. But he added a warning that Britain and the EU must not let a digital gap open up; they need as “great a unification as possible” in technology regulation. + +Tech bosses fret that Britain and the EU will end up with different policies towards their most important resource: data. On July 12th the EU is expected, at last, to approve “Privacy Shield”, an agreement to let companies transfer personal data across the Atlantic. (In October the European Court of Justice struck down an old deal as unsafe.) But if Britain leaves the union, nobody knows whether the new shield will cover it, too. So might the EU block data flows across the Channel, unless Britain negotiates a privacy agreement of its own? Since some in Brussels are suspicious of intrusive British surveillance, that could prove messy. + +Uncertainty leaves not just big cloud-computing firms such as Google unsure where to put data centres. After the Brexit vote, the U-word is muttered everywhere in boardrooms—from carmaking to airlines, energy to telecoms. Shareholders are already feeling the pain, although not all recent losses on stockmarkets are due to Britain’s referendum (see chart). + + + +Before the vote, European corporate leaders gave surprisingly little thought to what a split might mean for them. Matthias Wissmann, head of VDA, a German car lobby, says car firms made “no contingency plans” and the result caught them unaware despite Germany’s export of €89 billion ($99 billion) of goods, especially cars, to Britain each year. A survey, pre-referendum, by BDI, Germany’s industry federation, found that nearly 70% of firms had no clue how to respond to Brexit. The boss of a big French defence firm says nobody, banks aside, made serious plans for it, beyond currency hedging. + +Regulatory uncertainty will dog firms for at least as long as Britain and the EU are negotiating a divorce agreement, which will determine whether British access to the single market will continue. Airlines are particularly exposed. Since the 1990s EU-based ones have been free to fly between any European airports without regulatory approval. Open-skies agreements with America and other third parties give EU airlines flexibility on long-haul routes, too. Outside the single market separate regulations kick in, for example on ownership and the need for official route approval. Firms with extensive continental operations, such as easyJet or IAG, will be sorely tempted to shift headquarters inside the EU. Dreams of a “European Single Sky”, to centralise air-traffic control and cut costs, are fading on the assumption that liberalising Brits will no longer push them. + +Aircraft-makers, too, are facing a lack of regulatory clarity. Britain boasts the world’s second-largest aerospace industry, which, among other things, builds wings for Airbus aircraft. Before the vote, the firm already warned that Brexit could jeopardise future investment. Nobody knows whether the EU’s “launch aid” for aerospace, which helps with the setting up of big new plants, will still apply to Britain. + +Energy is another big source of uncertainty. On July 4th Électricité de France, a French utility, reiterated its plan to build an £18 billion ($23 billion) nuclear-power station, Hinkley Point C, in Britain. The project is underpinned by British state aid, in the form of long-term electricity contracts and a debt guarantee. The European Commission agreed to these subsidies in 2014, but that could change if relations sour. Even before the vote, Austria’s anti-nuclear government had brought the matter to the European Court of Justice. Britain, at least, might be blocked from selling subsidised surplus electricity from Hinkley Point into the European grid, adding to doubts over Hinkley Point’s viability. + +Pharmaceutical companies, for their part, were expecting a “unitary patent system” for Europe by 2018, with an intellectual-property court in Britain specialising in drugs and chemicals. This would have brought work resolving legal disputes into London, and boosted the pharma credentials of a country that is already home to the EU body that approves drugs for the entire European market. That now looks unlikely: Britain may not ratify the agreement, and will probably not get the court. + +Similarly, in the chemicals industry, firms fret that British partners may no longer be covered by a EU framework, REACH, by which chemicals registered centrally can be sold in all member states. An industry insider in Germany says that without shared standards “customers may ask questions about the security of the supply chain”, and may be put off trading with British suppliers or investing in Britain. + +The list goes on. In telecoms it is unclear whether British mobile carriers would be free to levy roaming costs on customers travelling inside the EU; such charges are to be scrapped in the union. For big food firms, such as Mars, worries about currency swings and tariffs are compounded by dismay that standards for factories, labels on packages, product recalls and employment conditions may soon differ in Britain. Matthias Berninger, the firm’s vice-president for public affairs, expects more complexity because British politicians will not “copy and paste European rules”. + +All this uncertainty means that firms planning to invest in Britain are putting decisions on hold. A leading Swedish industrialist, Jacob Wallenberg, says he knows “companies that have withdrawn investment decisions from Britain since the referendum”. Given the British economy’s reliance on inflows from abroad, any slowdown is worrying: Britain holds roughly 7% of the world’s stock of foreign direct investment, some £1 trillion, and more than anywhere except America. Around half of Britain’s foreign direct investment comes from the EU. + +Yet dramatic divestment may not loom. Instead the fear is of a “slow erosion”, says Juergen Maier, head of Siemens’s British operations. “Lots of little decisions” may be made away from Britain, to build plants or run research projects elsewhere. He points to researchers and firms that could be excluded from the EU’s €80 billion Horizon 2020 fund, which supports science and innovation. + +Even if concerns over regulatory gaps prove overdone, there is a second worry: that future policy in the EU, drafted without direct British influence, will become more hostile to business. Mr Wallenberg calls Britain a free-market country and is concerned that new regulations will be dominated by a statist axis of Paris and Berlin. He is not alone. “Europe loses a sensible voice and a counterweight to the protectionists,” says an executive at a German chemicals firm. Surprisingly, perhaps, the chairman of a French industrial company volunteers: “A lot of us don’t like the idea of the Brits out. We like their business-friendly agenda.” + + + + + +After the Brexit vote (II) + +Picking losers + +How different industries are exposed to the turmoil in Britain + +Jul 9th 2016 | From the print edition + + + +SPARE a thought for Brammer, a British supplier of bearings and other industrial gear for factories in Europe. The exporter had boasted revenues of £717m last year (then $960m), but sales dipped before the referendum. Brammer now faces a rout, amid warnings of slumping demand and currency headaches (because the firm has lots of dollar- and euro- denominated debt). By July 5th its share price had tumbled by two-thirds since voting day—more than any firm listed in London. + +If Brammer is a contender to be the company worst-affected by Brexit, it is not alone in the gloom. By one measure of global connectedness—combining indices of cross-border loans, legal relationships, data-storage hubs and so on—Britain’s economy is one of the most open in the world. The earnings generated by foreign firms from their investments in Britain amount to £70 billion, equivalent to about 10% of all of the profits made by the top 500 European listed firms, or roughly 1% of global business profits. + +Plenty of these investors have placed bets on Britain’s domestic market, which had previously been buoyant but now faces the risk of recession. Li Ka-shing, a Hong Kong tycoon, owns utilities and a mobile network; Walmart, an American retailer, controls Asda, a chain of supermarkets; investors from Qatar have piled into commercial property; Ferrovial, a Spanish infrastructure firm, has interests in a string of British airports, including London Heathrow. The new economy is not immune from pessimism. Analysts see earning prospects for Netflix, an online video-service, dampened by slower GDP growth in Britain and the rest of Europe, for example. + +Carmakers face a double whammy. First, the brakes are being slammed on in a market that had been one of the biggest and fastest-growing in Europe. Motorists in Britain bought 2.6m new cars in 2015, but Exane BNP Paribas now expects a 10% decline in demand in the second half of this year, plus a further 10% fall early in 2017. A Europe-wide downturn may follow. Morgan Stanley suggests car sales, once forecast to grow by 5% this year, will now only expand by 3.7%. In 2017 it suggests a 2.2% contraction is possible. + +Second, Brexit threatens carmakers’ access to European export markets. Two-thirds of all vehicles produced in Britain are exported to the EU, and mass-market models, sold with slender margins—such as those made by Toyota, Nissan and Honda—are most vulnerable to currency swings or any future tariffs. Small wonder that Nissan’s boss, Carlos Ghosn, said this week that “we are a little worried”. + + + +INTERACTIVE: Integration within the European Union + +For other exporters, such as Nippon Sheet Glass, which bought Pilkington, a British glassmaker, in 2006, and BASF, a German chemicals giant that operates ten plants in Britain, any loss of access to the big EU market would be disastrous. About 80% of what BASF makes in Britain is exported, largely to continental Europe. Aerospace suppliers, such as GKN Aerospace, which sells 67% of its output to EU customers, are similarly exposed. + +By contrast, firms that are headquartered in London for cultural, legal and tax reasons, but that have little exposure to the British economy and do not use Britain as an export hub—companies such as SABMiller, a brewer, or ArcelorMittal, a steelmaker—will not be fazed by recession and the falling pound. Promises, for instance, to bring corporate tax below 15% in Britain, will cheer them too—even as this annoys the country’s European partners. + +And a select few professions might even prosper from the turmoil and its divorce from the EU: lawyers, headhunters, tax consultants, relocation firms, budding trade negotiators and soothsayers could all be in demand. This week, for example, KPMG, an accounting firm, announced a new “head of Brexit”. (It is not Boris Johnson.) + + + + + +Schumpeter + +The two faces of USA Inc + +American bosses are divided when it comes to Donald Trump + +Jul 9th 2016 | From the print edition + + + +THE leaders of America’s multinational firms are usually a picture of self-control, with sincere handshakes, grown-up hair and scripted sound bites. But ask them about the election and emotion takes over. At a drinks party in Manhattan, a mega-bank’s boss froths that Donald Trump is a madman. Thumping an office table, the head of one of the country’s biggest technology firms, and a rare Republican in Silicon Valley, solemnly vows to vote for Hillary Clinton. The chief of a huge transport firm giggles uneasily that a Trump presidency will destroy free trade—and his firm’s booming business with Mexico. + +The feeling of contempt is mutual. On June 29th Mr Trump laid into the Chamber of Commerce, big business’s favourite lobbying organisation. “It’s totally controlled by the special-interest groups,” he said, to wild cheers from a crowd in Maine. + +Big international firms do not share Mr Trump’s diagnosis of America as a country that has stopped winning. For them, it has been a golden decade. Share prices are near an all-time high; the operating earnings of S&P 500 firms have risen by 137% since the crisis year of 2009. Many of the trends that have hurt Middle America have made USA Inc stronger. Big firms have cut jobs to increase productivity and now make 40% of their sales abroad. They are more dominant at home because of a wave of mergers and their mastery of lobbying. They grumble about tax, but have become superb at avoiding it. The top 50 firms paid a cash tax rate of 24% on their global profits in 2015, compared with an official rate of 39%. Even the big banks have learned to live with more regulation: they are thrashing their European rivals across the globe. + +At the very point that swathes of the public say the economy isn’t working, USA Inc is on top of the world, occupying all of the ten top spots in the global corporate rankings, measured by market value. Bosses of multinational firms think their country has everything to play for. The worst of the job losses attributable to cheap Chinese labour have already happened; with luck, Chinese consumers will start buying more from the rest of the world. America’s lead in technology has never been bigger. New trade deals, such as the proposed Trans-Pacific Partnership, are remarkably skewed towards American interests in areas such as intellectual-property rights. “The American model that got us through the last 30 to 40 years is stronger than ever,” declared Eric Schmidt, the executive chairman of Alphabet, the parent company of Google, to the Economic Club of New York last month. + +The hostility of big firms towards Mr Trump goes beyond free trade. They know that America’s demographics are changing. The fastest-growing cohort of consumers are Hispanic, with their share of overall spending forecast to rise by about two percentage points by 2020, even as the share of white Americans drops by the same amount, according to Morgan Stanley, a bank. Bosses see a much more socially liberal America, too. None of this sits well with Mr Trump’s nativist agenda, which is perhaps why Wells Fargo, JPMorgan Chase, Ford, Coca-Cola and Apple have either cut their support for the Republican convention this month or will not support it at all. + +Yet a thousand miles south of Manhattan, in suburban Florida, the mood is different. The boss of a construction firm says he is fed up. His firm does all its business within America’s borders and profits have not yet recovered to 2006 levels. The Obama administration, in his view, has crippled the economy. More generous welfare benefits means labourers have got lazy. Permits and local taxes have proliferated, raising costs. The crackdown on banks has hobbled lending. Vote for Hillary? Not a chance, he says. Trump it has to be—and if he is psychologically erratic and vulgar, better that than an endless stagnation. + +The construction boss is not alone. Opinion polls suggest that Mr Trump is also popular with small-business owners. His campaign-finance disclosures show hundreds of contributions from the owners of small firms that no one on Wall Street or in Washington, DC, has ever heard of: Biagi Plumbing, James River Air Conditioning, Rosenberger Construction, Allen Unique Autos, Texan Drywall Inc and Podell Fuel Injection. + +A demagogue and a hypocrite, with a point + +The complacent response is that these entrepreneurs are fools who have been deceived. After all, Mr Trump’s business career has been built in the heart of the globalised part of the economy, not slogging it out in the trenches of Middle America. About 66% of the value of his business operations sits in New York, mainly in buildings in glittering Manhattan, according to Economist estimates. Global too-big-too-fail banks are tenants in two of Mr Trump’s most valuable properties. He has courted foreign investors, from Hong Kong to the Middle East, since the 1990s. + +But Mr Trump speaks the language of business owners when he says he will abolish Obamacare, the health-care scheme that companies say has created piles of red tape. When he promises that no firm will pay a tax rate of more than 15%, small and domestically-focused business see not a fiscal absurdity, but a chance that they might enjoy the same treatment that multinationals already enjoy (Apple, America’s biggest firm, paid a cash tax rate of 18% in 2015). And when Mr Trump complains about special interests dominating the economy, and corrupting politics, he is right. Lobbying budgets have reached $3 billion a year. Two-thirds of industries have become more concentrated since the 1990s. With big companies ascendant, the number of new entrant firms being created is at its lowest level since the 1970s. + +A sensible economic agenda for America would please—and annoy—both sides of the divide. It would pursue free trade but also attack oligopolies, lobbying and bureaucracy and reform the corporate tax system. In other words, it would listen to the polished sophisticates who run America’s biggest companies, but also to those business leaders who support Mr Trump. + + + + + +Finance and economics + + + + +Italian banks: Crisis and opportunity + +Buttonwood: Safe as office blocks + +MiFID: Financial tonic + +Banks in oil-exporting countries: Lending at $47 a barrel + +China’s debt: Coming clean + +Taxes in California: Stop dreamin’ + +Free exchange: X marks the knot + + + + + +Italian banks + +Crisis and opportunity + +The Brexit vote has sideswiped Italy’s banks—and is testing Europe’s new rules on tackling troubled lenders + +Jul 9th 2016 | MILAN | From the print edition + + + +THE shockwaves from Brexit have been almost as severe on the Tiber as on the Thames. Markets fear that Britons’ vote to leave the European Union on June 23rd presages weaker growth in Europe and still-lower interest rates. That is not good for banks—and Italy’s, labouring under the EU’s heaviest bad-debt burden and tied to a frail economy, have been walloped (see chart). Shares in UniCredit, the biggest, have slid by one-third. Those of second-ranked Intesa Sanpaolo, though it is in far better shape, have shed 30%. + + + +Most troubled is Italy’s third-biggest lender (and the world’s oldest): Monte dei Paschi di Siena, founded in 1472. Its shares tumbled on July 4th and 5th after the leak of a request from the European Central Bank for it to reduce its bad-loan pile from last year’s €46.9 billion ($52 billion), or 35% of all its lending, to €32.6 billion by 2018. (That was already the plan, said the bank, but the shares sank all the same.) It trades at around one-tenth of book value. Analysts at Morgan Stanley estimate it needs €2 billion-6 billion of extra capital. + +Several European governments poured money into their banking systems in the wake of the financial crisis. Italy did not, partly in the misplaced hope that economic recovery would lighten its bad-debt load. The pile is now €360 billion, 18% of all banks’ loans, double what it was in 2011. After loss provisions (too low, say analysts) it is still €200 billion. The most “suffering” loans, or sofferenze, amount to €200 billion, or €83 billion after provisions. On July 29th EU supervisors are due to publish the results of their latest “stress tests” of 51 European lenders, which will not flatter Monte dei Paschi. It was one of nine Italian lenders to fail tests in 2014. Forced mergers, closures and capital raising ensued. + +Matteo Renzi, Italy’s prime minister, wants to help banks shed their bad debts and recapitalise, with government money if need be. But European rules restricting “state aid” for companies have been tightened recently, making the task much harder. Since the start of this year, any bank receiving state aid is supposed to be put into “resolution”—in effect, bankruptcy. Shareholders and junior creditors must then be “bailed in” (ie, lose money) to the tune of at least 8% of the bank’s liabilities. + +Mr Renzi wants to avoid that at all costs, because Italian banks’ creditors include millions of ordinary Italians. Households own around €200 billion of bank bonds eligible to be bailed in, which account for 5% of their financial assets. The stock is declining, because people are at last aware of the risks. A rescue of four tiny banks in November, in which bondholders were bailed in, caused widespread protests (one of which is pictured); one saver killed himself. A repeat may well seal Mr Renzi’s defeat in a referendum in October on constitutional reform, on which he has bet his premiership. + +The stakes are high for the European Commission, too. It does not want its new rules to be bent the first time they are tested, nor does it relish a blazing row with a founding member of the EU so soon after the Brexit vote. So the search is on for a way to allow Italy to put public money into banks while sparing bondholders. There is wriggle-room: the rules allow a “precautionary” injection of state money to preserve financial stability without putting banks into resolution. A bad showing in a stress test is a possible justification. + +That still counts as state aid, so should trigger a bail-in. One way around that, suggests Morgan Stanley, is to create a fund to compensate retail investors on the ground that the bonds were mis-sold in the first place. That may be not only expedient but also just: many investors were convinced that the bonds were as safe as legally guaranteed deposits. + +Reports have suggested that Mr Renzi is contemplating a recapitalisation fund of €40 billion. But officials familiar with his plans say a far smaller sum is likely, probably less than €10 billion. That would be ample for recapitalising Monte dei Paschi and perhaps some smaller banks, and so could be a helpful step towards repairing the system. But it would still leave a lot of work to do. + +Some banks will be able to raise capital on their own account if they need it. Analysts expect UniCredit, for example, to tap the markets and dispose of some businesses. The decision awaits Jean-Pierre Mustier, who becomes chief executive on July 12th. + +But clearing up bad debts will take time. For lenders, sales and write-downs mean a painful blow: potential buyers rate the sofferenze at below 20% of face value on average, less than half of the written-down figure on banks’ books. Italian bankers complain that pressure from European regulators to act quickly will make a bad problem worse, by encouraging fire sales. Collateral consists largely of property: flats and commercial premises may be easy enough to sell in Milan or Rome, but much harder in less liquid markets in struggling areas. And repossession can take years—something a recent bankruptcy reform is intended to change. + +One hope is that Atlante, a €4.25 billion fund set up in April with money from banks, insurers and other institutions to recapitalise small banks and securitise bad loans, can take more of the strain. But €2.5 billion has already been spent on shares in two ailing northern banks, leaving little in the kitty. Moves are afoot to boost Atlante, perhaps with a new bad-debt fund of €3 billion-5 billion. + +The answer to Italy’s banking problems seems sure to involve more capital—from whatever source—more asset sales and more write-downs, as well as consolidation of smaller lenders, which the government is encouraging. But even that may not be enough. It is hard for banks to thrive if the economy around them does not. + + + + + +Buttonwood + +Safe as office blocks + +British property funds suspend redemptions + +Jul 9th 2016 | From the print edition + + + +THE first concrete signs of post-Brexit financial stress in Britain emerged this week. The asset-management arm of Standard Life, an insurer, suspended redemptions from its £2.9 billion ($3.8 billion) British property fund. It was followed by a flurry of rivals: Aviva, Canada Life, Columbia Threadneedle, Henderson and M&G. Another fund, run by Aberdeen, said it would apply a 17% discount to redemptions. + +The decisions highlighted the mismatch between the open-ended nature of such funds—allowing retail investors to buy and sell on a daily basis—and the illiquid assets they hold: office blocks and shopping centres. But the announcements also reflected the shock to the property market caused by the Brexit vote. London has attracted lots of businesses both because of its perceived openness and because it provides an English-speaking base for doing business in the EU; the vote has caused a reassessment of its attractiveness as a corporate home. + +According to the Financial Times, German and Spanish buyers pulled out of £650m-worth of property deals in the week after the referendum. Russell Chaplin of Aberdeen says many deals had a “Brexit clause” allowing purchasers to walk away if Britain voted to leave. This has happened to Aberdeen’s property fund in two cases: one buyer abandoned a purchase altogether while another asked for a discount, which has not been accepted. + +Mutual property funds tend to have monthly valuations (conducted by outsiders) to determine the “fair value” of their assets. Given the uncertainties after the referendum, valuers thought it prudent to apply a discount and fund-management groups took their advice. Henderson reduced its fair-value estimate by 4%, M&G by 4.5%, and Standard Life by 5%. + +The funds keep some liquid assets on hand in order to meet the kind of redemptions they face in normal circumstances; as of May 31st, Standard Life had 13% of its assets in this form. Some of these liquid assets will be stakes in big property companies like British Land and Land Securities, so the big falls in their share prices (see chart) may in part be a contagion effect from funds meeting redemption requests. + +There may be other knock-on effects. In a report on financial stability published on July 5th, the Bank of England worried that forced sales of assets by property funds may exacerbate the market’s weakness; it has eased capital requirements for banks to encourage lending. + +Problems have been growing for a while. The central bank said that foreign capital inflows into British property fell by almost 50% in the first quarter, perhaps as investors waited for the Brexit vote to be resolved. The purchasing managers’ index for the construction industry fell in June to its lowest level since 2009. + +Mike Prew of Jefferies, an investment bank, has been predicting a commercial-property downturn since last year. Two areas stand out. Central London has been on a building spree, with 26m square feet of offices currently being added (or refurbished) in a market with around 200m square feet of space. Mr Prew thinks 100,000 jobs in London are at risk of moving to the EU—enough to free up 10m square feet. Office rents could fall by as much as 18% in central London, he warns. + +The second problem area is retail premises, to which the Standard Life fund was heavily exposed (its five biggest tenants were all retailers). High-street shops have been squeezed by the rise of the internet; BHS, a department-store chain, recently went under. If the economy does slow in the wake of the referendum, retailers’ troubles will intensify. + +Comparisons with the financial crisis of 2007-08 are inevitable; that too saw property-fund suspensions in its early stages. But they should not be overdone. For a start, open-ended property funds do not borrow and own only around 5% of British commercial property. Few investors are likely to have devoted a large part of their savings to this asset; they will have known that they might lose money. The systemic risk is limited. + +Furthermore, with interest rates near zero and ten-year bond yields below 1%, property funds still offer a decent income; even in London, prime rental yields are 4-4.5%. Vacancies are below the historical average, according to Jones Lang LaSalle, an estate agent. A big sell-off would surely attract some bargain-hunters. + +Still, fund suspensions are not a good sign. At the very least, they should make regulators question whether open-ended funds are suitable for property investing. There is nothing liquid about bricks. + +Economist.com/blogs/buttonwood + + + + + +MiFID + +Financial tonic + +Bankers hope an obscure law will preserve the City’s access to the EU + +Jul 9th 2016 | From the print edition + + + +THERE was a time when a mention of MiFID 2, a complex European regulation, elicited groans from financial types in the City of London. Since Britain voted to leave the European Union, however, it has become a source of hope. That is because a clause in the second iteration of the Markets in Financial Instruments Directive, to give it its full name, seems to provide financial firms outside the EU, as those in the City may soon be, with a means to provide services to customers inside it. + +The provision in question allows financial firms from outside the EU to offer trading, brokerage and underwriting services to European institutional (but not retail) clients, as long as the regulatory regime where they are based is deemed “equivalent” to that of the EU. In theory, there should be no doubt about the equivalence of Britain’s laws, points out Jonathan Herbst of Norton Rose Fulbright, a law firm, as long as Britain continues to implement European rules until its exit. This suggests that for banks and brokerages based in London it should be business as usual. + +Politics is likely to get in the way, however. The equivalence provision is as yet untested, since MiFID 2 does not come into force until early 2018. But the regulators’ interpretation of a similar clause in the European Market Infrastructure Regulation (EMIR), which governs the trading and clearing of derivatives, is sobering. + +The declaration of equivalence, both for EMIR and for MiFID 2, is at the discretion of the European Securities and Markets Authority (ESMA), based in Paris. It has so far proved to be largely a “political process”, says Simon Gleeson of Clifford Chance, another law firm. Declaring American regulations on clearing-houses equivalent under EMIR, for example, took over three years and involved a long debate between America and the EU over the extent to which America should adapt its rules to mirror Europe’s (resolved only after ESMA eventually yielded). + +As Mr Gleeson points out, the equivalence provisions of both EMIR and MiFID 2 were originally intended to encourage other countries to bring their rules more in line with European ones, in exchange for generous market access. A post-Brexit Britain would start with identical rules, but even a small divergence—a decision, say, to repeal Europe’s caps on bankers’ bonuses—could be construed as an unacceptable step in the wrong direction. In any case, argues Philippe Morel of Boston Consulting Group (BCG), a consultancy, it is unrealistic to expect that any decision on equivalence could be divorced from the wider, potentially acrimonious exit negotiations, in which it is bound to be used as a bargaining chip. + +Indeed, the huge uncertainty about the length and outcome of the negotiations over Britain’s departure could be enough to render MiFID 2 useless to the City. If bankers cannot be sure about how soon a decision on equivalence will be made, or whether it might be revisited at any moment, they cannot rely on MiFID 2 to keep their operations running smoothly. According to Mr Morel, co-author of a recent joint report on MiFID 2 by BCG and Markit, a financial-information company, the implementation of the new law has already proved more costly and time-consuming than anticipated, requiring a big overhaul of market participants’ data systems. Banks would not want to risk wasting all the money spent complying with MiFID by maintaining European trading desks in London alone. + +Instead, financial firms with big operations in London will probably begin setting up or scaling up European subsidiaries, to be able to continue trading with European clients no matter how the Brexit saga ends. Once trading has moved, it may not shift back. Some British bankers remain sanguine, arguing that retaining access to Britain’s deep capital markets is so important to European businesses that they would not allow it to fall victim to petty politics. Then again, some thought that the City was so important to the British economy that voters would not dare risk its future by plumping for Brexit. + + + + + +Banks in oil-exporting countries + +Lending at $47 a barrel + +Cheaper oil means tighter credit + +Jul 9th 2016 | From the print edition + +Two is for joy + +AT FIRST glance, Nigeria’s decision last month to float its currency and the announcement this week of a bank merger in the United Arab Emirates (UAE) have little in common. Nigeria is a country of almost 180m people with a GDP per person of less than $3,000 (at last year’s market exchange rates). The population of the UAE is 18 times smaller and 13 times better off. Both countries are, however, members of the Organisation of the Petroleum Exporting Countries (OPEC), a cartel, and both are learning to cope with cheaper crude. + +The merger of National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB), approved by their boards on July 3rd, will create a national champion with assets of over 640 billion dirhams ($175 billion). FGB’s strengths lie in consumer banking, credit cards and housing loans. NBAD describes itself as a “banker to the government”, with a strong investment-banking arm. The merged institution will help Abu Dhabi “project its financial power” beyond its borders, says Simon Kitchen of EFG-Hermes, an investment bank. + +It is also, true, however, that the UAE itself has become less financially roomy. Since the oil price began sliding, in 2014, oil revenue has declined, stemming dollar inflows. Because the dirham is pegged to the greenback, lower inflows, all other things being equal, translate directly into slower growth in the money supply. In fact, it has plateaued over the past two years (see chart). A similar slowdown has prevailed across the Gulf. No fewer than 46 commercial banks (one for every 208,000 people) are competing over the UAE’s stagnant pool of deposits. Some of the smaller ones now trade at less than their book value. James Burdett, NBAD’s chief financial officer, has said that further consolidation “makes a lot of economic sense.” + + + +Whatever the consequences of the peg, the UAE has the fiscal and currency reserves to defend it. It allowed its budget deficit to reach 3.7% of GDP in 2015, according to the Economist Intelligence Unit, our sister firm, but that red ink followed an even bigger surplus the year before. For less fortunate countries, cheaper oil poses tougher choices. One way to supply more money locally despite a dearth of dollars is to let the exchange rate drop. On June 20th Nigeria did just that, allowing the naira to depreciate by 30% in a single day. This float replaced an unworkable peg, imposed in March 2015, that had left the economy short of dollars and captive to an expensive black market for foreign exchange. In the week after the float was announced, bank shares rose by almost 10%. + +Whereas the UAE is chock-full of banks, Nigeria has remarkably few. Only 21 (one for every 8.5m people) soldier on, down from 89 in 2004. For this score of survivors, the naira’s depreciation posed some difficulties. According to Fitch Ratings, 45% of Nigerian banks’ loans are denominated in dollars (or other foreign currencies), whereas their capital is in naira. When the currency fell, it dragged down the value of their capital relative to their loans, bringing them closer to regulatory minimums. If the naira weakens much further, it may harm their creditworthiness. + +In other oil-exporting countries, a drop in the currency has caught banks in the opposite trap, raising the value of their liabilities relative to their assets. In both Azerbaijan and Kazakhstan, for example, deposits are more dollarised than loans, exposing banks to a troublesome currency mismatch. Every oil exporter is unhappy, each in its own way. + + + + + +China’s debt + +Coming clean + +Plans to rein in credit slowly take shape + +Jul 9th 2016 | SHANGHAI | From the print edition + + + +AS ANYONE who has conquered addiction knows, the first step is admitting that you have a problem. China, hooked on debt for much of the past decade, may be reaching that point. In recent weeks officials have talked at length about the country’s troubling reliance on credit to fuel growth. They have also sketched out a range of possible solutions. It is only a start—withdrawal symptoms in the form of defaults and slower growth are sure to hurt, and could yet prompt a relapse. But the new tone is encouraging nonetheless. + +The frankest admission came in a front-page article in the People’s Daily, mouthpiece of the Communist Party, in early May. An anonymous “authoritative person”, widely believed to be Liu He, an economic adviser to President Xi Jinping, warned that high leverage could spark a systemic financial crisis. China’s total debt load jumped from less than 150% of GDP in 2008 to more than 250% at the end of last year. Increases of that size have presaged economic trouble in other countries. + +Last month the government convened its first news conference on the topic, bringing together officials from the finance ministry, the central bank, the banking regulator and a top planning agency. The Chinese Academy of Social Sciences, a prominent official think-tank, has also opined on it. The research arm of the central bank has published a paper with a section on what can be done. And this week, a forum in Beijing gathered officials, bankers and academics to sift through the suggestions. + +All of them have homed in on corporate debt as the main worry. That is obvious enough from a quick comparison with other big economies: China sits in the middle of the pack for total debt but is at the high end for corporate liabilities (see chart). Yet it marks a change of tone from recent years, when officials focused on cleaning up the debt of local government. This presented a more immediate but smaller problem, and also a more manageable one. + +The most important outcome from all the discussions has been an outline, albeit rough, of how China hopes to tackle its burden. There will be no rush to deleverage. Sun Xuegong, a central planner, said China would start by slowing the rise in its debt-to-GDP ratio before guiding it lower, trying to avoid too much collateral damage to the economy in the process. + +Officials think they can cushion the blow from eventual deleveraging in three ways. First, they want to get more bang from new debt. That, in theory, means choking off credit to underperforming state-owned firms or restructuring them in the image of their sleeker private-sector peers. Loans would flow to better firms generating higher returns. + +Second, they want equity financing to help replace debt. That is tough, given the woeful state of the stockmarket after last year’s crash. But there are other ways. Regulators are working on a programme under which banks will swap some loans to indebted companies for equity stakes instead. Banks have pushed back, fearing that they will be saddled with bad investments. Officials insist that only viable companies will receive this treatment. + +Finally, the government will use fiscal policy to prop up growth, in effect transferring debt from corporate balance-sheets to its own. That makes sense: official public debt is low, at less than 50% of GDP, while state-owned companies are the biggest debtors. However, direct bail-outs would give state firms little reason to improve their operations. So the central bank’s researchers suggest other measures, such as tax cuts, which would improve the business environment for all. + +Scepticism about whether China will end its credit binge is warranted. Last December the government identified deleveraging as one of its main tasks for 2016. Yet credit issuance has outpaced economic growth by a wide margin, raising overall debt levels. And China’s approach to state firms is inconsistent. Officials recognise that getting them to operate more like private firms, constrained by budgets, is critical to controlling debt. But at the same time the Communist Party recently reiterated that they must obtain its approval before making any big decisions. China is sure to keep one promise, at least: there will be no speedy resolution to its debt problems. + + + + + +Taxes in California + +Stop dreamin’ + +California’s tax system needs reform. It is unlikely to get it + +Jul 9th 2016 | SACRAMENTO | From the print edition + + + +NOT long ago, California’s finances were a mess. The state’s tax revenues tanked during the recession of 2008-09. At one point in 2009 it ran out of money completely, prompting it start issuing IOUs and to force employees to take unpaid leave. Revenues have grown only slowly since. But in California, as in every state except Vermont, the law requires a balanced budget. As a result, from 2008 to 2012, politicians slashed spending. So it was testament to the state’s fiscal turnaround when on June 27th Jerry Brown, California’s fiscally hawkish governor, signed a budget without finding the need to veto any item of spending—the first time a governor has held fire on a budget since 1982. + +The economic recovery has, for now, filled California’s coffers. Lawmakers are relaxing constraints on welfare spending and have even found some new money for infrastructure. But the Treasury’s long-term health remains uncertain. For that, thank the state’s oddball tax system. + +Gag me with a boon + +Two things stand out about taxes in California. The first is their progressivity. The top rate of state income tax, levied on incomes greater than $1m, has been 13.3% since 2012, when voters approved a ballot measure raising it from an already steep 10.3%. (These rates come on top of the highest federal levy of 39.6%, though taxpayers can usually knock state taxes off their federally taxable income.) Today the income-tax rate is the highest in the country. As inequality has increased over the past two decades, the state’s fondness for soaking the rich has proved lucrative. Since 1995, while incomes have grown by about 160%, the income-tax take is up 300%. But this has also made the budget reliant on a small number of high earners. In 2014 the top 1% of earners paid 48% of all income tax, up from 36% in 1995. + + + +The second oddity is the set of strict constraints on local property taxes. Because these finance schools, and the state tops up local education budgets when necessary, property taxes affect the state’s bottom line. Proposition 13, a ballot measure passed in 1978, caps these levies at 1% of a property’s value. It also stops the tax bill on a given property from rising by more than inflation unless the property changes hands, no matter how much its value increases. This benefits homeowners but also firms who, on selling a property, can use shell companies to avoid a technical change of ownership. According to one estimate, in 2012-13 nearly 40% of commercial properties were assessed at less than 80% of market value. + +Because incomes fluctuate more than property prices, these two features make the tax take highly volatile. Moreover, California taxes capital gains as income, so receipts rise and fall in line with the stockmarket. In 2014 the state set up a “rainy day fund” to guard against volatility. This year the amount stashed away will reach $6.7 billion, or 5.6% of annual revenues. The goal is 10%, but even that may not be enough. In April Moody’s, a rating agency, ranked the 20 most-populous states by the solidity of their buffers against another recession. California came 19th; only Illinois looked less prepared. + +Betty Yee, the state’s wonkish financial controller, thinks the answer is comprehensive tax reform. On June 9th she released a report examining the options for change. One idea is to fix the state’s outdated sales tax. Currently, this applies only to goods, but Americans spend an ever-greater fraction of their income on services, in part because trade has kept goods cheap in recent decades. The fact that the federal government allows individuals to deduct either state income taxes or sales taxes from their taxable income, but not both, may have weakened the incentive for California to fix its sales tax. A high income tax and a low sales tax together result in a greater federal deduction than would middling rates for both. + +Modernising the sales tax would be sensible, as would taking a second look at property levies. But both are close to impossible politically. “Prop 13 is sacred,” says Scott Drenkard of the Tax Foundation, a think-tank. Many firms would lobby against an expansion of the sales tax to cover services. Fans of high income taxes, meanwhile, think that the problem of volatility is used as cover by those who are mainly interested in cutting, rather than smoothing, the overall tax take. It is better to scale back investment in bad times than never have it in the first place, argues Chris Hoene of the California Budget and Policy Centre. + +The immediate question likely to face voters this November is whether to extend the 2012 rise in income taxes on the rich, which expires in 2018, for another 12 years. With few other options, they should probably do so—and press politicians to save still more of the proceeds. + + + + + +Free exchange + +X marks the knot + +It is surprisingly hard to draw clear conclusions about voters’ intentions from electoral results + +Jul 9th 2016 | From the print edition + + + +THE voters have spoken, runs an old gag, but what on earth did they mean? In the wake of Britain’s vote to leave the European Union, bereft Remain campaigners have sought to explain away the result. Some argue that Britons would never have voted for Brexit if they had known what it involves. Others claim voters were not really expressing an opinion about the EU, but simply protesting about the state of the country. The outcome, the revanchists insist, was not an accurate reflection of voters’ desires, but an electoral malfunction. + +To most, that sounds like sour grapes. But there is a body of academic work that supports the idea that elections often misfire. For one thing, voters can be capricious. In a recent book, “Democracy for Realists”, Christopher Achen and Larry Bartels recount how people in New Jersey were significantly less likely to vote to re-elect President Woodrow Wilson in 1916 if they lived near the sites of recent shark attacks. By the same token, voters seem to punish politicians for floods and droughts, but instead of seeking candidates who plan to spend more time or money preparing for such calamities, they simply unseat the incumbent. They are also myopic, judging politicians’ economic management on the basis of only the very recent past. Their opinions can fluctuate wildly, depending on how questions are asked. Before the Gulf war of 1991, almost two-thirds of Americans said they were willing to “use military force”, but less than 30% wanted to “go to war”. + +Messrs Achen and Bartels also show that many people neither follow politics closely nor scrutinise policy carefully. Voters do not always understand the politics of different parties: in Germany, only half of them can place “Die Linke” (“the Left”) on the left-right scale. Many do not even know who represents them: in 1985 only 59% of American voters could say whether the governor of their state was a Democrat or a Republican. The authors present compelling evidence that voters tend to pick a candidate first, then bring their policy views into line with their choice. That is true, they argue, of both educated and uneducated voters. + +And then there is the question of how well voting systems distil voters’ intentions. There are mathematical difficulties in aggregating their desires. Most of the time, individuals’ preferences are at least vaguely consistent: if you prefer apples to oranges, say, and oranges to bananas, then you probably also prefer apples to bananas. But this is not true of groups. Even if each individual has consistent preferences, they can vary among voters in such a way that, in two-way races, candidate A would beat candidate B, candidate B would beat candidate C, and yet candidate C would beat candidate A. What, then, is the “will of the people”? + +Another problem is that adding extra options may change a group’s choice. Al Gore might have won a straight vote against George W. Bush in America’s knife-edge presidential election in 2000. But the candidacy of Ralph Nader, a left-wing challenger, may have split the left-wing vote, allowing Mr Bush to win. + +Devising electoral systems to get around such problems is far from straightforward. Take three fairly simple-seeming principles. First, if voters prefer A to B in a straight run-off, that preference should not change when you introduce C to the list. Second, if voters unanimously prefer pizza to pasta, then pizza must always outrank pasta. Finally, assume voters can at most rank the available options: they can say that they prefer lower taxes to higher taxes, but not how much they care. Yet in 1951 Kenneth Arrow, an economist, proved that it is impossible to devise a voting system that satisfies all these assumptions. + +For example, French presidential elections aim to minimise vote-splitting by whittling the field down to two candidates, who then face each other in a run-off. Yet in the first round, vote-splitting remains a problem. This can lead to tactical voting. A communist, say, who supports a radical candidate might nonetheless vote for the mainstream Socialist Party to ensure that a left-winger of some description makes it into the run-off. Building on Arrow’s work, Allan Gibbard and Mark Satterthwaite proved in the 1970s that every common electoral system, even those in which voters can rank their preferences, is distorted by tactical voting. + +In principle, referendums are simpler. British voters were given a straight choice between leaving the EU and remaining; there was no complicated menu of options. However, it was not clear what a vote to leave meant. One option is the “Norwegian model”, under which Britain retains access to the single market but must continue to allow unfettered immigration from the EU. Yet many Brits voted out because they wanted to reduce immigration. In effect, “half-in” and “out” votes were lumped together. The result may well have been different had they been separated. + +Don’t ask, don’t tell + +There is a long intellectual tradition which argues that voters should never be presented with such questions. Indeed, representative democracy is predicated on the idea that many have neither the time nor the inclination to wrestle with the details of policymaking. James Madison, one of America’s Founding Fathers, and Edmund Burke, his philosophising contemporary, argued for a “trustee” model, whereby voters elect politicians to make difficult decisions for them. In the 20th century Joseph Schumpeter argued, more bluntly, that policy should be left to those with the time and skill to get it right. The role of voters is to throw the rascals out if they sense things are going wrong. + +What, then, would Schumpeter have said about the EU referendum? On the one hand, he would probably have argued that it should never have been held. On the other, he might well have interpreted the outcome as an angry public, sensing that something had gone wrong, giving the elites a good kicking—just what voting is for. + +Visit our Free exchange economics blog + + + + + +Science and technology + + + + +Self-driving cars: Motoring with the Sims + +Mitochondrial donation: Three’s company + +Biomimetic engineering: Flight of fancy + + + + + +Self-driving cars + +Motoring with the Sims + +Testing autonomous vehicles virtually will make them safer on real roads + +Jul 9th 2016 | From the print edition + + + +AMERICA’S National Highway Traffic Safety Administration (NHTSA) is investigating the fatal crash in May of a Tesla Model S electric car. Normally such an accident, tragic though it is for the friends and family of the victim, would not warrant a high-level inquiry of this sort. In the case in question, though, the car was operating on Autopilot. That is the name Tesla, an electric-vehicle-maker based in California, has chosen for its “autonomous-driving mode”, in which the vehicle itself, via sensors and computers, lifts from the person behind the wheel much of the burden of controlling the car. According to Tesla, neither the Model S’s driver nor the car’s own sensors noticed a large articulated lorry crossing the road ahead. The car therefore failed to brake, and it ended up careering under the lorry’s trailer. That ripped off its roof, killing the driver. + +In the accident, which happened in Florida, the lorry, which was painted white, was set against a brightly lit sky, Tesla noted. One possibility is that the vehicle’s cameras, working in combination with its forward-facing radar, wrongly concluded that the lorry was an overhead sign with space beneath it. Some reports have suggested the driver might have been watching a video at the time. But whatever the NHTSA determines to be the cause, the accident makes plain that self-driving cars still have a long way to go before they are ready for routine use. + +Tesla acknowledges this by describing Autopilot as an “assist” feature designed to relieve some of the workload of driving. When engaged, the system advises drivers: “Always keep your hands on the wheel. Be prepared to take over at any time.” Autopilot periodically checks pressure on the steering wheel to ensure that it is being held, and will slow the car if no pressure is detected. Yet plenty of videos have been posted on social media of drivers not touching the steering wheel and relying totally on their vehicle’s autonomous features. One of these was filmed by a driver from the back seat. + +The virtues of driving virtually + +For Tesla and other firms developing autonomous vehicles (from information-technology companies such as Google and Uber to established carmakers), the systems now available are more akin to intelligent cruise control than robot chauffeurs. But the features they provide, such as lane-keeping, automatic braking, maintaining a safe distance from the vehicle in front and overtaking, are necessary steps towards fully self-driving cars that, backers say, will operate more safely than those driven by people. Most accidents are, after all, caused by human error. + +To get to that happy state of affairs, though, much practical development work must take place. Doing this on the open road provides the most realistic data, but as the accident in Florida shows, this can be a risky business. A new facility, at the University of Warwick, in Britain, offers an alternative approach. It is a driving simulator specifically designed to test “intelligent” vehicles. It can thus interact with the sensors of an autonomous car and put that car through its paces without its needing to go on the road. + +The car to be tested sits in the middle of the simulator, which projects a 360° high-definition image of the vehicle’s virtual surroundings, constructed from digital maps of 48km (30 miles) of roads in and around the nearby city of Coventry, together with adjacent buildings and scenery. The simulator comes complete with virtual traffic, cyclists, pedestrians and even dogs scampering into the road—all of which its operators can control. It also features surround-sound and actuators that move the vehicle as it would when accelerating, braking or cornering. Even the thump of a virtual pothole can be created. + +Some car sensors will interact directly with the projected image. Camera-based systems on many vehicles typically use a form of artificial intelligence, called machine vision, to analyse the shapes of objects. But this can go wrong, says Paul Jennings, head of experimental engineering at Warwick, such as when cameras succumb to a condition known as “washout” caused by the glare of bright sunrises and sunsets. Unlike the real world, hundreds of sunrises and sunsets can be created in the simulator every day. This will speed up the development of antiglare systems. Other visible hazards that might be hard for self-driving cars to manage—streets crowded with pedestrians, cars jumping red lights, joggers suddenly running into the road—can also be created endlessly in a simulator without endangering anyone. + +Cameras are not, though, the only sensors fitted to autonomous vehicles. They also have devices that can detect how far away objects are. These may use ultrasound, radar or lidar (a system like radar but which substitutes laser light for radio waves). The researchers at Warwick can bypass these sensors and feed in simulated signals from the computer model. But they are also working on ways to test the sensors directly. One possibility is to generate radar or ultrasonic signals and send them to the test vehicle as if they had been reflected from cars and other objects in the projected scene. + +Besides testing a car’s hardware and software, Dr Jennings’s simulator will also test its “wetware”—ie, the humans who are being transported—for he plans to invite members of the public to become drivers and passengers. His idea is to use gaze-monitoring and cameras inside the vehicles to find out how they respond to certain situations. In particular, he and his colleagues hope to see how quickly they realise that something might be going wrong and understand that they should therefore take back control of the car. This is important, for there is ample evidence that some people put too much trust in machines. For example, drivers have been known to follow instructions from satellite-navigation devices slavishly, even when the result is that they end up hundreds of kilometres from their intended destinations. + +Hacked to death? + +Autonomous vehicles also rely on navigation signals from satellites, though, and on other wireless transmissions as well. In the future, such connectivity will increase. Autonomous vehicles will probably communicate both with each other and with bits of transport infrastructure, such as traffic lights. The integrity of the signals involved will be paramount. So for safety’s sake, Dr Jennings’s machine can simulate what happens when contact is degraded or shut off—for example, when a vehicle enters a tunnel or a city canyon of tall buildings. A giant Faraday cage, formed from a mesh of materials that block electrical signals, surrounds the simulator. This both insulates it from outside interference and enables the signals that are required inside it to be created and controlled accurately, and terminated at will. + +On top of this testing of accidental interference with a car’s wireless traffic, the team will also try to hack deliberately into vehicles—something that it would be illegal as well as irresponsible to attempt on public roads. Such tests, nevertheless, need to be done. Carsten Maple, a cyber-security expert at Warwick, reckons criminals are only about five years away from being able to disable a car’s ignition remotely, holding it to ransom until the owner has made a payment. Indeed, in 2015 Fiat Chrysler recalled 1.4m vehicles in America after security researchers showed it was possible to take control of a Jeep Cherokee via its internet-connected entertainment system. + +Despite the potential problems, though, Dr Jennings and his team are convinced that genuinely driverless vehicles have a big future. At first this future could be in controlled and specially designated areas, such as city centres. One vehicle that will be tested in the simulator has been designed with just such a purpose in mind. It is an electrically powered passenger-carrying pod produced by RDM, a firm in Coventry. The pods are already being tested in pedestrianised areas of Milton Keynes, a modernist British city. RDM says they are also intended for use in places such as airports, shopping centres, university campuses and theme parks. + +On the open road, however, it may take longer before steering wheels become obsolete. Even after extensive testing in simulators, the performance of autonomous systems will still need to be verified in the real world. And no self-driving system will ever be completely foolproof. As the Florida crash showed, accidents will still happen—although, mercifully, there may be fewer of them. + + + + + +Mitochondrial donation + +Three’s company + +Mice with genes from three parents live longer + +Jul 9th 2016 | From the print edition + +Elixir of life + +GENETICALLY speaking, everyone has two parents. But that could soon change. Several countries, led by Britain—whose legislators approved the idea last year—are working on a procedure called mitochondrial donation, which would result in a child with DNA from three people: its mother, its father and a female donor sometimes dubbed a mitomum. + +The mitomum supplies the child’s mitochondria. These are tiny structures (one is pictured below), present in most cells, that liberate usable energy from food and oxygen. People with defective mitochondria suffer debilitating illness and often die young because the tissues of their bodies are starved of the energy they need to work. Mitochondrial diseases are hereditary, and at the moment incurable. Mitochondrial donation is designed to prevent them by replacing faulty mitochondria with healthy ones. + +But mitochondria are, or used to be, creatures in their own right. They are the descendants of ancient bacteria that once lived free, but then entered into a symbiotic union with other cells. As such they have their own tiny genomes, separate from the main genome in the host cell’s nucleus. A baby born through mitochondrial donation would thus inherit maternal nuclear DNA, paternal nuclear DNA and a helping of mitochondrial DNA from the mitomum. + +The effects of such mixing seem benign—and certainly better than inheriting misfiring mitochondria. But, to the surprise of almost everybody, a paper in Nature by José Antonio Enríquez of the Carlos III Centre for Cardiovascular Research, in Madrid, suggests they may be more than merely benign. The very act of transplanting mitochondria, regardless of any pre-existing disease, might bring benefits. + +Dr Enríquez and his colleagues worked on that scientific stalwart, the mouse. Many genetic strains of lab mice are available, and the team started with two whose mitochondria had been shown by DNA analysis to have small but significant differences—about the same, Dr Enríquez reckons, as the ones between the mitochondria of modern Africans and those of Asians and Europeans, people whose ancestors left Africa about 60,000 years ago. They then copied the procedure for human mitochondrial transplants by removing fertilised nuclei from eggs of one strain, leaving behind that strain’s mitochondria, and transplanting them into enucleated eggs of the second strain, whose mitochondria remained in situ. A group of the first strain, left unmodified, was employed as a control. The researchers raised the mice and kept an eye on how they developed. + +While the animals were young, few differences were apparent between modified and unmodified individuals. But as murine middle age approached, at around the animals’ first birthdays, differences began to manifest themselves. Modified mice gained less weight than controls, despite having the same diet. Their blood-insulin levels fluctuated less after fasting, suggesting they were more resistant to diabetes. Their muscles deteriorated less rapidly with age. And their telomeres—protective caps on the ends of their chromosomes whose shortening is implicated in ageing—stayed lengthier for longer. + +Not all of the changes were beneficial. Young, unmodified mice had lower levels of free radicals—highly reactive (and therefore damaging) chemicals produced by mitochondria—than did their modified brethren, though even that difference reversed itself after the animals were 30 weeks old. But the combined result of the various changes was that the modified mice lived longer. Their median age at death was about a fifth higher than that of their unmodified cousins. + +Given the fundamental metabolic role played by mitochondria, it makes sense that replacing one set with another, more distantly related set causes profound changes. The surprise is that those changes seem largely positive. Most biologists would have predicted the opposite, assuming that nuclear and mitochondrial DNA would co-evolve to interact optimally, so that mixing versions which have not co-evolved would be harmful. + +Though unsure what to make of his discovery, Dr Enríquez suggests that a concept called hormesis might offer an explanation. This is the observation that a small amount of adversity can sometimes do an animal good, by activating cellular repair mechanisms that go on to clear up other damage which would otherwise have gone untreated. The biochemical cost of coping with mismatched mitochondria might, therefore, be tempering the animals’ metabolisms in ways that improve their overall health. + +It is an intriguing idea. And regulators, in Britain and elsewhere, will examine Dr Enríquez’s results with interest. But it would be foolish to assume that something similar would happen in people. After all, human beings live much longer than mice do. And Doug Turnbull of the University of Newcastle, who is one of the pioneers of mitochondrial donation in Britain, points out that both strains of mice used in the study are highly inbred—much more so than humans. A better lesson to draw, until many more experiments have been done, is that a mismatch between parents and mitomum can indeed have profound physiological consequences. For the time being, Dr Turnbull thus argues, the safest approach to human mitochondrial donation is to make sure that the mitomum is as closely related to the biological parents as possible. + + + + + +Biomimetic engineering + +Flight of fancy + +A robotic stingray, powered by real muscles and guided by light + +Jul 9th 2016 | From the print edition + + + +LOOKING to the natural world for engineering inspiration is an idea at least as old as Leonardo da Vinci. Copying nature directly, though, has often proved hard. For example, birds flap their wings to achieve both lift and propulsion, but flying machines that imitate this action have tended not to do well. Human engineering has found it easier to create aircraft by giving them fixed, rigid wings and propelling them with motors. + +Air is not the only medium through which animals move by flapping, however. Many creatures flap wings, or wing-like structures, to “fly” through water. That is something human engineers can aspire to imitate because the buoyancy of water provides free lift and its density makes propulsion easier. And, as they write in this week’s Science, a group led by Kit Parker of Harvard University have done just that. They have built a robotic stingray (pictured above) that imitates the motion of its biological counterpart. Moreover, it does so not with the electric circuits and servomotors of conventional robots, but with muscle cells engineered to mimic the elegant undulations of a living stingray. + +The ray itself is a so-called soft robot, a type of ’bot that has gained prominence of late. Soft robots, which are made of materials such as latex and silicone, are able to squeeze through tight openings, handle fragile objects and interact with humans far more safely than can their rigid metal and plastic counterparts. Yet most soft robots are propelled by pneumatic pressure or cables that are, in turn, driven by bulky, rigid motors. Having real muscles instead of these ersatz ones would make much more sense for a soft robot, since muscles, too, are soft, and are powered by glucose, not motors. + +Dr Parker and his team chose rat muscles for their rays. They grew rat-muscle cells in culture and then “printed” them onto sheets of elastomer that were to act as the surfaces of a robo-ray’s wings. Muscle cells work by contracting, which is why muscles often operate in pairs (like the biceps and triceps of the arm), the elements of which pull in opposite directions. To simplify things, though, the team used only one layer of muscle, to pull in one direction. The opposite pull was supplied by the relaxation of a skeleton of gold that had been put under tension by the muscle cells’ initial compression. The result, when cut into an appropriate shape, was a plausible facsimile of a ray. + +To co-ordinate the muscle cells’ contraction in a way that would propel the ray forwards, Dr Parker printed them in serpentine patterns. When one cell was activated, it released calcium ions which acted (as happens in nature) as a signal to the next cell in the sequence to contract. Thus, like a cascade of dominoes, waves of muscular undulation passed from one end of the ray to the other. + +Perhaps the cleverest component of the bionic ray, though, was its control mechanism. The muscle cells Dr Parker chose were genetically engineered so that light activated their contraction. Flashing a beam at the front of the ray’s fins caused an undulation to start propagating. Each new flash triggered a new undulation, so making the ray move forward in a straight line meant flashing at each fin simultaneously. Increasing the rate of flashing on one side of the robot but not the other caused that side to flap faster, turning the machine away from the hyperactive fin. This let the team steer the device. Thus controlled, the 16mm-long ray was able to travel at 90mm a minute, and to complete a 250mm slalom course at that speed without touching any of the obstacles. Moreover, it was able to do so on six consecutive days, retaining 80% of its original speed on the final day of the trial. + +What use might be made of a more sophisticated version of such a robot remains to be seen. Dr Parker’s design requires the fluid the ’bot swims through to contain the glucose that power its muscles, reducing the ’bot’s deployability. But a future version might be fitted with a glucose reservoir and a cardiovascular system to circulate that glucose. This would let it go anywhere which had enough oxygen in the water for the muscle cells to respire—and would make it resemble a real animal even more closely than it does already. + + + + + +Books and arts + + + + +Innovation in China: Out of the Master’s shadow + +Political biography: A work in progress + +Child development: The brain game + +20th-century history: Vantage point + +A.E. Housman: A Worcestershire lad + +Painters’ paintings: Beyond influence + + + + + +Innovation in China + +Out of the Master’s shadow + +China, long a land of copycats, is making gains as an innovator + +Jul 9th 2016 | From the print edition + + + +Paper Tigers, Hidden Dragons: Firms and the Political Economy of China’s Technological Development. By Douglas Fuller. OUP; 304 pages; $95 and £55. + +China’s Next Strategic Advantage: From Imitation to Innovation. By George Yip and Bruce McKern. MIT Press; 290 pages; $29.95 and £19.95. + +“THE Master said, ‘I transmit rather than innovate. I trust in and love the ancient ways’.” Those words from Confucius seem to offer a cultural explanation for why China is an innovation laggard. Many Chinese companies seem to be copycats, unable or unwilling to come up with world-beating ideas, products and services of their own. The Chinese legal system also looks rigged against foreign inventors. A cultural deference to authority and an educational system that emphasises rote-learning complete the stereotype. + +It is true that markets in Chinese cities offer knock-off Gucci handbags, Peppa Pig toys and Apple gizmos. Jack Ma, boss of Alibaba, an e-commerce giant accused of tolerating counterfeits on its websites, sparked an outcry in June by claiming: “Fake products today are of better quality and better price than the real names.” Beijing’s patent office recently ordered Apple to stop selling some versions of its iPhone in Beijing, which allegedly copy designs belonging to an obscure Chinese firm. + +Yet there are also signs of an imaginative China emerging. In fields from gene editing to big-data analytics to 5G mobile telephony, Chinese experts are now among the world’s best. Sunway TaihuLight (pictured), a supercomputer made using only local computer chips, is five times as fast as the best American rival. Fleet-footed and frugal Chinese firms are coming up with business-model innovations too. WeChat, a social-media and payments platform with 700m monthly active users, is more useful and fun than Facebook, Twitter and WhatsApp put together. + +Most Chinese companies are still plodders, just as many firms in America’s rustbelt or deep South are hardly innovation icons. But it is increasingly clear that a vanguard of world-class firms is emerging in the Middle Kingdom, and two new books explain why and how the best of China Inc is learning to innovate. + +Douglas Fuller is an academic at Zhejiang University, in a part of China’s eastern coast that has for centuries produced the country’s greatest entrepreneurs (including Mr Ma). In a new book, Mr Fuller is scathing in his indictment of state capitalism. By showering state-owned enterprises and “state-favoured” private firms with soft money and protecting them from market discipline and bankruptcy, the state removes any incentive for them to upgrade their technological capacity. + +So how does he explain the rise of outstanding Chinese firms? Mr Fuller believes that “ethnic Chinese, foreign-invested firms…are the hidden dragons driving China’s technological development.” He argues that the best ones are only partly Chinese, with hybrid structures that allow access to capital and talent from outside the mainland. Local startups often lack the privileged access to financing enjoyed by established Chinese firms, and so are forced to raise money from foreign venture capitalists. Because international investors and regulators demand financial discipline and good governance, these firms have no choice but to compete at the level of top global companies. Such firms also boast talent from Hong Kong or Taiwan, who blend knowledge of Chinese culture with global sophistication. + +Producing a handful of stars is one thing, but could the Chinese market really become the world’s innovation hotbed? That bold thesis is put forward by George Yip and Bruce McKern, academics affiliated with the China Europe International Business School in Shanghai, in their new book. They show how technological disruptions, business-model innovations and the world’s most eager customers are coming together in this market to produce agile and inventive firms. + +Though their arguments are stretched thin at times, the authors are persuasive when arguing that the Chinese market accelerates innovation. Consumers are quick to adopt new trends and are digital sophisticates. Unlike those in established markets, they are quite forgiving of mistakes, which lets firms experiment, fail and learn quickly. The domestic market, with both a super-rich elite and a big bottom of the pyramid, is a useful bellwether of global trends. And the huge diversity of the continental-scale country forces firms to adapt nimbly. Messrs Yip and McKern call it “the world’s biggest Petri dish for breeding world-class competitors”. + +Fine, but what about the thorny problem of intellectual property (IP)? The authors insist the government is getting serious about protecting it, pointing to special IP courts in big cities with technically trained judges and staff. Apple is appealing against the iPhone decision by Beijing’s patent office, and continues to sell its phones in China. Surprisingly, Shanghai’s government has just ordered Han City, a multi-storey mall overflowing with counterfeits on the city’s main shopping promenade, to be shut down. China’s leadership also vows to “strive to build an IP power, an innovative country, and a well-off society”. If it does so, surely even the Master would approve. + + + + + +Political biography + +A work in progress + +Jul 9th 2016 | From the print edition + +The patrician turned tribune of the people + +Bobby Kennedy: The Making of a Liberal Icon. By Larry Tye. Random House; 580 pages; $32. + +ROBERT KENNEDY remains an enigma nearly 50 years after he was gunned down in a Los Angeles hotel, in the midst of a promising presidential campaign. He was fearsome yet gentle, an anti-communist stalwart who became the standard-bearer for American liberals, and a moralistic, devout Catholic who covered up his brother’s affairs (and, some suspect, his own) and embraced dirty political fights. + +Larry Tye, a former Boston Globe journalist, is the latest to try to untangle these delicate threads. His thesis is that Bobby Kennedy learned as he went along, far more than most politicians. Driven by passion, Kennedy became a “pragmatic idealist” who, midway through his only term as senator from New York, had become “twice the senator and reformer” that his brother John had been. + +Mr Tye opens with Robert’s most startling alliance—with Senator Joseph McCarthy, whose anti-communist witch-hunts rocked America during the 1950s. Joe Kennedy, the family patriarch, had befriended and given amply to McCarthy, clearing the way for Bobby to take a job that jump-started his career. An aide on McCarthy’s investigations subcommittee, Kennedy focused on American allies shipping goods to communist China during the Korean war. He left after seven months but remained fond of McCarthy, even showing up secretly at his memorial service. + +The experience was, Mr Tye writes, a “baseline”, highlighting how much Kennedy would change over his short life. His cold-warrior posturing, in support of a man who routinely violated civil liberties, would soften as he saw more of the world and its hardships. Gradually, this privileged son who lived in an enormous mansion learned to empathise with those on the fringes of society. + +Indeed, it is Kennedy’s work on civil rights and poverty that reverberates most powerfully through history. As attorney-general during his brother’s presidency, he ordered troops to prepare for a stand-off in Alabama with the arch-segregationist governor over admitting African-Americans to the state university. As a senator, he travelled to Mississippi to search out the poverty that the state’s leaders ignored. He also became an early ally to Cesar Chavez and the farmworkers Chavez fought for. “All [Kennedy] said was, ‘What do you want? And how can I help?’ That’s why we loved him,” a Chavez deputy recalled. + +Mr Tye’s account is nuanced and thorough, and he manages the rare feat of interviewing Kennedy’s widow Ethel, now 88. Yet it is still hard for the reader to get truly inside the mind of this complex Kennedy, somehow both a “Machiavellian contriver and man of conscience”. + +A few stylistic quirks also distract. Mr Tye repeats that Bobby was “growing up fast”—a tired way to describe a grown man. He has an odd habit of relegating key points to footnotes. These include the Kennedy brothers’ likely plans to get rid of J. Edgar Hoover as director of the FBI had John been re-elected in 1964, and the “antipathy” between Ethel and Jackie Kennedy, whom Bobby grew close to after John’s death. (Mr Tye poses the question of how close, but does not answer it.) + +And so Robert Kennedy remains a mystery, cut down at 42, shortly after he won the California presidential primary. Yet his vision echoes through the decades. “Only those who dare to fail greatly can ever achieve greatly,” he said in 1966. If only modern-day leaders were so bold. + + + + + +Child development + +The brain game + +Jul 9th 2016 | From the print edition + + + +Helping Children Succeed: What Works and Why. By Paul Tough. Houghton Mifflin Harcourt; 144 pages; $18.99. Random House; £8.99. + +AFTER the collapse of the Soviet Union, the number of infants in Russian orphanages swelled. They had food, and they were clean and safe. But the staff were impersonal and cold, until researchers coached them in new ways: smiling at the babies, cooing, talking and other behaviours natural to parents. The results were striking. Infants did better on developmental tests and grew physically stronger, too. + +For Paul Tough, a journalist, this offers two lessons about why some children thrive and others struggle. The first is that the emotional contexts in which children grow up are crucial, especially in their early years—“a remarkable time of both opportunity and potential peril”. Infants who are neglected or under-stimulated develop in different ways from those reared in loving homes. Hormones triggered by stress stunt brain development, making it hard to control behaviour and concentrate. The effects last: such children do worse in exams and earn less at work. + +The second lesson, though, is that it is possible to mitigate the effects of adversity. In “Helping Children Succeed”, Mr Tough describes Attachment and Biobehavioural Catch-up (ABC), a programme in which coaches visit foster homes in poor parts of New York City. By helping foster parents become more attentive, ABC has helped children in care to reduce stress levels and improve their behaviour. + +It is most cost-effective to act early to prevent infants turning into troublesome teenagers, but Mr Tough shows that policy can also help later on in childhood. He cites Turnaround for Children, a programme run in schools in New York, New Jersey and Washington, DC, by Pamela Cantor, a child psychiatrist. Turnaround trains teachers to make their classrooms more supportive and their classwork more engaging. Teachers are told how to defuse aggressive pupils, and are encouraged to set tricky team projects rather than drone on at the whiteboard. + +Mr Tough’s book is one of many in recent years to argue that education policy in rich countries has emphasised academic skills while neglecting emotional and psychological development. His previous books, “Whatever It Takes”, about the Harlem Children’s Zone (a pioneering educational charity in New York), and “How Children Succeed”, pursue similar themes. Those books are better. “Helping Children Succeed” reads more like a succession of entries in a notebook than a new story worthy of a whole book. + +Nevertheless, his message bears repeating. Too often, education policy zips from one fad to another, neglecting the deeper reasons why adversity leads to poor outcomes. Evidence-based early childhood projects are among the smartest ways to avert enduring poverty. Spending public money on infants can save taxpayers a lot of money later (on, say, job training and prison places). But such programmes must be rooted in scientific evidence and led by empathetic professionals who know what they are doing. + +Too often they do not. Around the world, countries are embracing early-childhood projects, opening snazzy centres and dispatching home visitors. But too many projects are of poor quality. Mr Tough shows that it need not be this way. In doing so he points towards an entirely new meaning for the nanny state. + + + + + +20th-century history + +Vantage point + +Jul 9th 2016 | From the print edition + + + +The House by the Lake: One House, Five Families, and a Hundred Years of German History. By Thomas Harding. Picador; 410 pages; $28. William Heinemann; £20. + +IN 2007 Thomas Harding, an English journalist, began probing his German-Jewish roots after hearing an amazing story at a family funeral. The result was “Hanns and Rudolf”, a bestselling account of how his great-uncle, Hanns Alexander, tracked down and eventually captured the kommandant of Auschwitz, Rudolf Höss. + +Mr Harding was only beginning to mine his family’s history, it transpired. In “The House by the Lake”, a book acclaimed in Britain last year and now available in America, his gaze broadens to the century-long saga of five families’ fortunes and misfortunes. If “Hanns & Rudolf” was a sonata, “The House by the Lake” is a symphony, telling the story of modern Germany with one recurring theme: history as seen from the Alexander family’s lake house outside Berlin. + +Alfred Alexander, Mr Harding’s great-grandfather, built the house at Gross Glienicke, 15km (nine miles) west of Berlin, in 1927. A prominent doctor who counted Einstein among his patients, Dr Alexander sought a calm refuge for himself, his wife Henny and their four children. That idyll came to an abrupt end in 1936, when the Alexanders fled Nazi Germany to England. + +Thus “Aryanised”, their cottage would, by an extraordinary twist of fate, offer a ringside seat to the many convulsions of German history. This house not only endured seizure by the Gestapo and had the Berlin Wall built at the bottom of its garden, but was on the front-line of every other major event of Germany’s 20th century: the 1936 Olympics, Soviet conquest and mass rape, the Berlin airlift, the socialist republic, spies, sports doping, and finally, the Wall’s fall in 1989. + +“The House by the Lake” skips between its varied occupants and these events to present an admirably clear and concise history of modern Germany. It’s an impressive feat of archival and investigative research. Fascinating revelations abound, such as the fact that the anthem of the Berlin airlift, “Berlin bleibt doch Berlin” (“Berlin is still Berlin”), was written in 1948 by Will Meisel, the composer who took over the Alexanders’ house in 1937 and vainly tried to reclaim it after the second world war. + +Yet for all its detailed digging, the emotional side of the family’s loss remains submerged. Mr Harding is more comfortable with facts; with classic English reticence, he buries his family’s responses in footnotes and summaries. A greater willingness to explore the pain of this historic theft would have made this powerful book even more so. + + + + + +A.E. Housman + +A Worcestershire lad + +Jul 9th 2016 | From the print edition + + + +Housman Country: Into the Heart of England. By Peter Parker. Little, Brown. 446 pages; £25. + +IN FEBRUARY 1896, a slim volume of 63 poems was published: 500 copies at half a crown each. Their author, A.E. Housman, had had to pay £30 towards publication. (“Vanity,” he confessed, “not avarice, is my ruling passion.”) Sales were sluggish despite a handful of favourable reviews, and the first printing didn’t sell out until two years later. The volume remained in print, however, and slowly but steadily sales picked up. The poems, set in an idealised English countryside and imbued with a yearning melancholy, struck a chord not just in England but in America. By 1918 “A Shropshire Lad” was selling 16,000 copies a year. + +Alfred Edward Housman was not a Shropshire lad but a Worcestershire one. His mother died as he turned 12, an event which left the seven Housman children in the care of their genial but madcap father, and which would gradually lead Housman to reject Christianity. He left the local grammar school garlanded with prizes, and went to Oxford with an open scholarship to study classics. He is perhaps the only person ever to have got a first in his second-year exams, and then entirely failed his finals. + +“So Alfred has a heart after all,” a member of his family remarked after reading “A Shropshire Lad”. He certainly had, and it had been broken by a fellow undergraduate, Moses Jackson. As Jackson was heterosexual, the love was unrequited—possibly never even expressed—but it was the great passion of Housman’s life, and it left him almost incapable of intimacy. He could, said his Times obituary, be “so unapproachable as to diffuse a frost”. E.M. Forster was not the only person to find his attempts at friendship brutally rebuffed, and when Housman died in 1936 he wore an expression of “proud challenge”. + +So much for the man. But Peter Parker’s new book is much more than a biography, and having lured us into Housman’s life with a magpie’s eye for detail, he then sets out on a tour of Housman Country—not a geographical area but a landscape of the mind in which “literature, landscape, music and emotion” all contribute. He casts his net wide to encompass, among much else, the feelings of an increasingly urbanised population about the English countryside; the development of the Youth Hostels Association and the Ramblers’ Association; the publication of the Shell County Guides; the attitudes of other writers, including George Orwell, Rupert Brooke, T.S. Eliot, W.H. Auden and Ted Hughes towards Housman; and the part Housman played in the English musical renaissance. + +But it was ordinary people (chiefly men) that Housman longed to reach through his poetry, and thousands of soldiers in both world wars left home with copies of “A Shropshire Lad” in their breast pockets, where Housman hoped they might stop bullets. The poems remained precious to some for years after the war was over. + +Today, Housman’s influence continues to be felt, not simply among contemporary writers—Chimamanda Ngozi Adichie, Alice Munro and Tom Stoppard among them—but in popular culture, from “Inspector Morse” to “The Simpsons” and “The Archers”. Among rock singers, Mr Parker considers Morrissey the musician “who most embodies” Housman’s spirit. + +After 120 years, “A Shropshire Lad” has never been out of print. “Some men are better than their books,” Housman believed, “but my books are better than their man.” What this wry, shy genius created in one slim volume was not simply a collection of moving poetry but a “gazetteer of the English heart”. + + + + + +Painters’ paintings + +Beyond influence + +A new show examines the myriad reasons artists collect each other’s work + +Jul 9th 2016 | From the print edition + +It made an impression on Matisse + +THE young Henri Matisse fell hard for Paul Cézanne’s “Three Bathers” (pictured) when he saw it in 1899 at the gallery of Ambroise Vollard in Paris. He couldn’t get the painting out of his mind; several agonising weeks later, he and his wife agreed to pawn her emerald ring and buy it. Matisse would not part with the painting for another 37 years; from it he drew, he said, “my faith and my perseverance”. + +It is easy to see why. The three fleshy nudes are at once solid and kinetic. Streaks of sunlight bathe the awkward yet magnetic little group. This small and potent canvas, now owned by the city of Paris, is at the centre of an unusual summer show at London’s National Gallery called “Painters’ Paintings”. + +Artists have always closely observed the work of fellow artists. Still, it is rare for museums to consider the “extra level of identity” a painting owned by another artist acquires, says Anne Robbins, the show’s curator. Prompted by a gift from the late Lucien Freud of a portrait he loved by Corot, visitors are invited to go beyond the usual single-artist show to a richer, more historical approach. + +The show flows backwards over 500 years, from Freud to Matisse to Edgar Degas, then to the Victorians such as Lord Leighton, and English court and portrait painters, notably Joshua Reynolds and Anthony Van Dyck. It is immediately apparent that some painters acquired paintings out of an intimate urge, while others were more interested in assembling great collections. Degas did both. Of the eight painters considered, the moderns stand out: the passion of Degas and Matisse for the works they acquired is especially palpable. + +Degas, like nearly every painter in Paris, started out by copying paintings in the royal collection. “The Louvre is the book where we learn to read,” Cézanne once said. But unlike his fellows, Degas was born to wealth. He supported his Impressionist friends by buying their paintings; later he was able to acquire favoured old masters such as Ingres and Delacroix. The happy result is a gathering of masterpieces that reveals the private personality of the man: generous, reverential, obsessive. The world owes a great deal, for example, to his dogged search for the pieces of Manet’s “The Execution of Maximilian”, dismembered after Manet’s death, which Degas hunted down and reassembled. + +In Van Dyck’s reverence for Titian, or Reynolds’s appreciation for the Renaissance masters, one begins to grasp that an artist’s collection is “the most secret kind of self-portrait”, in Ms Robbins’s words. Tracing the influence of these painter’s paintings on their own style, however, is more difficult; the show makes the case better for some than for others. Lord Leighton’s vast collection in Holland Park included a magnificent set of Corot landscapes entitled “The Four Times of Day”, which the painter so admired that he adopted Corot’s injunction to use a certain pigment to achieve his luminous skies. + +The gallery devoted to Matisse makes the connection best. The intense red of Degas’s “La Coiffure” finds echoes in Matisse’s expanses of rich colour; the thick limbs of Cézanne’s bathers find their counterpart in his monumental sculpture “Back III”. In other galleries, the influence of one painter on another is less obvious, the comparisons made between the works less rich. + +Yet tracing influence is only one way of regarding these works. “Painters’ Paintings” also reveals an equally fascinating habit common to many artists: keeping special artworks close to hand. Treasured pieces function as prompts or inspirations; as models for composition and technique; they contribute to the development of an aesthetic theory and serve as yardsticks against which to measure oneself. An entire floor of Degas’s Paris house was stuffed with easels displaying old masters, which favoured visitors were allowed to view. Matisse and Freud, especially, regarded the pieces they amassed around them as possessed of a talismanic power. “Lucien always thought that art came out of art, so it was necessary that he had these paintings in his life,” says David Dawson, his former studio assistant, in an accompanying film. + +Freud’s favourite, “The Italian Woman” by Corot, hung in his drawing room and was visible through a double-door from his bed. It may be that he saw in it a physical approach to paint, a kind of “abrupt, rough-hewn brushwork” similar to his own, Ms Robbins suggests. To Freud’s assistant, the connection went far deeper still. “Everything he wanted in painting was in that work—everything that it meant to be human.” By studying it, and the many exhilarating works in this intimate show, we too may glimpse a little of what a great painter sees. + + + + + +Obituary + + + + +Obituary: Elie Wiesel: Unanswerable questions + + + + + +Obituary: Elie Wiesel + +Unanswerable questions + +Elie Wiesel, preserver of the memory of the Holocaust, died on July 2nd, aged 87 + +Jul 9th 2016 | From the print edition + + + +ON REFLECTION, the habit had begun with Moishe the Beadle. It was Moishe who led Elie Wiesel, much too young, to study Kabbalah. Most people in the little shtetl of Sighet, in Transylvania, knew it was dangerous even to go near those mysteries. But Moishe insisted on probing, seeking, enquiring for deeper and deeper truths. Questions, he said, possessed power. The more a man asked, the closer he got to God. + +And why indeed had the townsfolk not asked more questions when, in 1942, Moishe was suddenly deported? Why had they not listened to his agonised cries of warning when he returned, weeping, knocking on doors? Why had they insisted, even when the town was divided into two ghettos by the Nazis, that they could live in this new world and treat it like a temporary vacation? Why, in 1944, had they never heard the word “Auschwitz”? + +As he was deported too, questions poured into Elie’s 15-year-old head. Why were his friends and neighbours put into sealed cattle cars, to travel for two days with almost no air or water? Why were they delivered to a place fogged with the stench of human flesh, where pits of fire devoured the bodies of babies and children? Why were they stripped of everything, shaved, tattooed with numbers and made to run everywhere? Why, within a day, was he torn from his mother and youngest sister, never to see them again? How, in the 20th century, could such things happen, and the world stay silent? + +The questions accumulated and became more disturbing. Why did fellow-inmates, as well as Germans, beat new arrivals and call them sons of bitches? Why did the prisoners watch the routine hangings for minor thefts without emotion, staring indifferently at the swaying, swollen faces? Why did he find himself thinking of nothing but his ration of soup and bread? What led him to claw his way through a pile of dying men to save just himself? Most dreadful of all, what led him to ignore his dying father’s request for water, when his father was the only and dearest thing he had left in the world? + +When, after a year, he was freed from the camps, he knew he had survived to tell the tale. He must sear the memory of the Holocaust on human minds for ever. In a world that preferred to blot it out, his motto had become Zachor! Remember! But for a full decade he asked: How? Even as a student of literature at the Sorbonne, even as a working journalist, how could he find the words? What phrases could do justice to inexpressible evil? What language could he write in, when language itself had been profaned by obscene meanings for “selection”, “concentration”, “transport”, “chimney” and “fire”? + +Perhaps silence was a better response. Several famous rabbis had excelled at it. After all, what authority did he have to speak for the dead, to recount their mutilated dreams? None. But how else to remember them? For 800 pages in Yiddish, itself a relic that had to be treasured and preserved, he poured out his memories. Much shortened, they became “Night”, published in Engish in 1960 and overlooked at first. He persevered. What other reason had he to live, when six million had died? What else could be done to honour those ghosts? In 1964 he returned to Sighet to find the town prospering but the Jews forgotten, the closed synagogues filled with dust. He revisited the labour camp at Buna to find it had vanished, reclaimed by trees and birds. Who could prevent the disappearance of these things? + +With a book every year—57 in all, each permeated by “Night”—with lectures, articles, even cantatas, he rammed the subject of the Holocaust home. His sad lined face, the shaggy hair, the brooding eyes, became ubiquitous where Jewish leaders or luminaries gathered. By his 80th birthday the Holocaust was established on modern-history curriculums, his books were on reading lists, he had won the Nobel peace prize, and millions of visitors every year streamed to the Holocaust Memorial Museum in Washington, DC, which he had helped to found. Widening his scope beyond his beloved Israel, he set up his own foundation to pursue human rights wherever they were threatened, in Cambodia, Bosnia, South Africa, Chile, Rwanda. For just as he still had nightmares of his parents and the dark, just as he still feared random attackers and journeys by train, who was to say that the Holocaust might not happen again? + +Nor did the questions ever stop. His Talmud-studying childhood had been devoted to God, but where had God been in the camps? Why had He allowed Tzipora, the little golden-haired sister, to die for nothing? Why had He caused old men to fall down from dysentery on forced marches, when they might have died peacefully in their beds? Why had God created man, if only to abandon him? What exactly did God need man for? + +Against the melancholy that never really lifted—for how could it ever do so?—he clung to the words “and yet”. The sun set, and yet it rose again. Delirium struck, and yet it passed. He railed at God, and yet still strapped on his tefillin and recited his prayers as fervently as he had done on the day of his bar mitzvah. For ritual, too, was part of memory. And besides, how could he ever get closer to the mystery of God, unless he battered Him with his doubts? + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +The Economist poll of forecasters, July averages + +Markets + + + + + +Interactive indicators + +Jul 9th 2016 | From the print edition + + + + + +Output, prices and jobs + +Jul 9th 2016 | From the print edition + + + + + +Trade, exchange rates, budget balances and interest rates + +Jul 9th 2016 | From the print edition + + + + + +The Economist commodity-price index + +Jul 9th 2016 | From the print edition + + + + + +The Economist poll of forecasters, July averages + +Jul 9th 2016 | From the print edition + + + + + +Markets + +Jul 9th 2016 | From the print edition + + + + + +Table of Contents + +The Economist + +The world this week + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + +Italian banks: The Italian job + + + + + +China’s middle class: 225m reasons for China’s leaders to worry + + + + + +Hillary Clinton’s e-mails: Notes on a scandal + + + + + +Immigration and politics: Aussie rules + + + + + +War in Iraq: The dangerous chill of Chilcot + + + + + +Letters + +On female genital mutilation, law, Brexit: Letters to the editor + + + + + +Briefing + +America’s forests: Ravaged woodlands + + + + + +United States + +Warfare: The queen and her drones + + + + + +Stem-cell clinics: A dish called hope + + + + + +Competitive eating: Glorious gluttony + + + + + +Education: O-levels + + + + + +Religious-liberty laws: Left, right + + + + + +Lexington: Ride ’em, cowboy! + + + + + +The Americas + +Violence in Rio: A sporting chance of safety + + + + + +Education protest in Mexico: A battle to feed young minds + + + + + +Argentina’s economy: The cost of truth + + + + + +Bello: No Brussels here + + + + + +Asia + +Mainstream politics breaks down: The churn down under + + + + + +Change of command in the Philippines: Talk Duterte to me + + + + + +Cambodian politics: Sex, power and audiotape + + + + + +Indian politics: Modi-fication + + + + + +Hindi movies: Yes, he Khan + + + + + +Terrorism in Asia: Jihad’s new frontier + + + + + +China + +Pollution: Beijing v belching chimneys + + + + + +Bad planning: A bigwig purged + + + + + +Anti-smoking legislation: Butts resist kicks + + + + + +Middle East and Africa + +Kurdistan: Dream on hold + + + + + +Iraq and Syria: Islamic stateless? + + + + + +Zimbabwe’s begging bowl: Bailing out bandits + + + + + +Divorce in Nigeria: Rings fall apart + + + + + +Europe + +France on edge: Hot time, summer in the cité + + + + + +German inheritance law: Free will + + + + + +Scandinavia and Russia: Just visiting + + + + + +The Balkans and the EU: Balking at enlargement + + + + + +Labour law: Going posted + + + + + +Charlemagne: Looking to Mutti + + + + + +Britain + +The Conservative leadership: The battle for Downing Street + + + + + +Sterling: How low can it go? + + + + + +The Brexit procedure: Article of destiny + + + + + +The Chilcot report: Iraq’s grim lessons + + + + + +Bagehot: ¡Hasta siempre, comandante! + + + + + +International + +Immigration systems: What’s the point? + + + + + +Marriage and citizenship: Get hitched or hike + + + + + +Special report: Chinese society + +Chinese society: The new class war + + + + + +Chinese nationalism: East, west, home’s best + + + + + +Family, identity and morality: A nation of individuals + + + + + +Wealth: Keeping up with the Wangs + + + + + +Public opinion: Crowd control + + + + + +Civil society: Daring to think, daring to act + + + + + +Emigration: The long march abroad + + + + + +Looking ahead: The writing on the wall + + + + + +Business + +Consumer goods: Invasion of the bottle snatchers + + + + + +Boardroom brawls, Chinese style: Vanke panky + + + + + +Israel’s tech industry: Talent search + + + + + +Kingfisher Airlines: Flying blind + + + + + +After the Brexit vote (I): Rules and Britannia + + + + + +After the Brexit vote (II): Picking losers + + + + + +Schumpeter: The two faces of USA Inc + + + + + +Finance and economics + +Italian banks: Crisis and opportunity + + + + + +Buttonwood: Safe as office blocks + + + + + +MiFID: Financial tonic + + + + + +Banks in oil-exporting countries: Lending at $47 a barrel + + + + + +China’s debt: Coming clean + + + + + +Taxes in California: Stop dreamin’ + + + + + +Free exchange: X marks the knot + + + + + +Science and technology + +Self-driving cars: Motoring with the Sims + + + + + +Mitochondrial donation: Three’s company + + + + + +Biomimetic engineering: Flight of fancy + + + + + +Books and arts + +Innovation in China: Out of the Master’s shadow + + + + + +Political biography: A work in progress + + + + + +Child development: The brain game + + + + + +20th-century history: Vantage point + + + + + +A.E. Housman: A Worcestershire lad + + + + + +Painters’ paintings: Beyond influence + + + + + +Obituary + +Obituary: Elie Wiesel: Unanswerable questions + + + + + +Economic and financial indicators + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +The Economist poll of forecasters, July averages + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.07.16.TXT b/homeworks/B20769/homework1/data2/2016.07.16.TXT new file mode 100644 index 0000000..accdfcb --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.07.16.TXT @@ -0,0 +1,5357 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +The World If + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Jul 16th 2016 | From the print edition + + + +Theresa May became Britain’s prime minister, after her last remaining opponent withdrew from the Conservative leadership race. Mrs May’s elevation to Number 10 brought a quick resolution to the power vacuum left by David Cameron’s resignation after the vote on Brexit. One of her first acts was to make Boris Johnson, a prominent leader of the campaign for Britain to leave the EU, foreign secretary. George Osborne, who until a month ago was arguably Britain’s most powerful politician, was unceremoniously dumped as chancellor of the exchequer. His replacement is Philip Hammond. See article. + +Britain’s Labour Party, by contrast, was still hampered with its leader, Jeremy Corbyn. He refuses to resign despite losing the support of most of the party in Parliament, citing his backing among party members. Two opponents running against him in a party election say they can provide the leadership that Mr Corbyn can’t. That does not appear to be difficult. See article. + +The Polish parliament’s lower house passed legislation that would resolve a controversy over seating justices on the constitutional tribunal but still limit its power to block laws. Poland’s ruling right-wing Law and Justice party is at odds with the EU and with a liberal protest movement that defends judicial independence. + +Ireland announced that GDP grew by 26% last year, because of changes in how it calculates the size of its economy. Assets belonging to multinational companies that are based in Ireland for tax purposes are now counted. The whopping revision heightened Irish citizens’ sense that, as more offshore firms flock to the country, growth statistics have become meaningless. See article. + +Emmanuel Macron, France’s economy minister, held the first rally of a political movement, En Marche!, he has set up. A liberal voice in the governing Socialist Party, Mr Macron wants to deregulate the economy. Advisers are prodding him to run in elections for president next year against the unpopular incumbent, François Hollande. See article. + +Two commuter trains collided in southern Italy, killing at least 23 people. + +The great wail of China + +An international court in The Hague delivered its verdict on a case filed by the Philippines challenging China’s territorial claims in the South China Sea. The judges ruled that China’s claims to resources within a “nine-dash line” encompassing most of the sea had no legal basis. It also said China’s island-building on reefs there had violated the Philippines’ sovereign rights. China reacted furiously to the judgment. See article. + +The Liberal Democratic Party of Shinzo Abe, the prime minister of Japan, scored a sweeping victory in elections to the upper house of the Diet. Together with Komeito, his ally in the ruling coalition, and like-minded parties and independents, Mr Abe now has the two-thirds majority to push for changes to the pacifist constitution in a referendum. See article. + +Street violence was reignited in Indian-ruled Kashmir after security forces killed a prominent militant leader, Burhan Wani. In days of protest by pro-separatist youth, more than 36 people have been killed, nearly all by police gunfire. The insurgency today is being waged less by infiltrators from Pakistan and more by local militants. See article. + +The Liberal-National coalition led by Malcolm Turnbull, the prime minister of Australia, scored a narrow victory in an election. With the final votes still being counted, the coalition was expected to secure a majority in the lower chamber. Mr Turnbull may need the support of small parties and independents, who are likely to hold the balance in the upper house. See article. + +Desperate measures + + + +As the situation in Venezuela grew more chaotic, President Nicolás Maduro told the army to take over five ports in order to ensure adequate supplies of food and medicine. He said this was necessary because of the “economic war” being mounted against him by rivals with the backing of the United States. Venezuela’s Catholic bishops warned that the growing role of the military was a threat to civil peace. + +A well-known environmental campaigner in Honduras, Lesbia Yaneth Urquia, was murdered. There was widespread international outrage after her body was found abandoned on a rubbish dump. She was the second opponent of a giant dam project to be killed in four months. + +Pulling back from the brink + +A ceasefire halted four days of fighting in South Sudan between soldiers loyal to the president, Salva Kiir, and bodyguards of the vice-president, Riek Machar, a former rebel. Efforts were made to reinstate a peace agreement between the factions. The fighting, which started after a shoot-out at a checkpoint, claimed the lives of 270 people and threatened a return to civil war. See article. + +In Zimbabwe,Evan Mawarire, a pastor who helped inspire a one-day general strike, was arrested and charged with attempting to overthrow the state. The charges were dropped and he was released after a large crowd gathered for his appearance in court. + +Amnesty International reported that hundreds of people have disappeared or been tortured at the hands of Egypt’s security services over the past year. + +Russian jets bombed a refugee camp in Syria, killing 12. + +America said it would send another 560 troops to Iraq to help the security forces and Kurdish fighters in their attempt to retake Mosul from Islamic State. + +A week for weeping + +In a show of national unity amid a bad week for race relations in America, Barack Obama and George W. Bush spoke at a memorial for five policemen shot dead by a black nationalist in Dallas. They were slain overseeing a street protest against the killings of two black men by police, in Louisiana and Minnesota. Mr Obama praised the police for doing a difficult job, but urged them not to dismiss the black protesters as “troublemakers or paranoid”. See article. + + + +After weeks of wavering, Bernie Sanders at last endorsed Hillary Clinton as the Democratic candidate for president. Mr Sanders put up a surprisingly strong challenge to Mrs Clinton in the primaries. She has made some concessions, notably by agreeing to offer free tuition at public colleges for poorer students. See blog. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21702236-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Jul 16th 2016 | From the print edition + +After two weeks of turmoil following Britain’s referendum decision to leave the European Union, global markets rallied, buoyed in part by a favourable jobs report from America. Employers added 287,000 jobs to the payroll last month, the biggest gain this year. The S&P 500 rose to beat the record it set a year ago. The FTSE 250, a share index comprising mostly British companies, also advanced and was close to its pre-Brexit levels. Investors still sought out havens, however. For the first time the German government sold ten-year bonds (Europe’s benchmark issue) offering a negative yield. + +Talks continued in Europe over a possible rescue of Italy’s troubled banks, which have endured a further loss of investor confidence in the wake of Brexit. The head of the euro-zone group of finance ministers reiterated the official view that any rescue must observe EU rules that compel creditors to take losses before any taxpayers’ money is used. See blog. + +Not going to make it easy + +The French finance minister gave an indication of the trickiness of the discussions ahead on Britain’s exit from the EU. Michel Sapin lambasted a recent pledge by George Osborne, Britain’s erstwhile chancellor of the exchequer, to reduce corporation tax as “not a good way to start negotiations” over the UK retaining its passport for financial services in the single market. France and Germany see Britain’s desire to reduce business taxes as an attempt to create a low-tax jurisdiction not subject to EU regulations. + +Meanwhile, it emerged that in 2012 Mr Osborne had interceded in the US Justice Department’s investigation into HSBC over money laundered through its American branches by Mexican drug lords. The department was considering bringing charges on top of the fines it imposed on the bank, Britain’s biggest, but Mr Osborne argued that this would destabilise a “systemically important financial institution” and lead to “contagion”. + +A former high-frequency trader who was found guilty last November of “spoofing”, or placing a large number of small orders electronically to create the illusion of demand and drive prices higher before cancelling them, was sentenced to three years in prison. Michael Coscia’s conviction is the first for spoofing under the Dodd-Frank financial reforms. + +Having his say on pay + +Jamie Dimon, the chief executive of JPMorgan Chase, waded into the debate on low pay by promising to lift the wages of 18,000 of the bank’s lowest-paid staff. JPMorgan Chase pays a minimum of $10.15 an hour, but this will rise to between $12 and $16.50, costing the bank an estimated $100m. Announcing the step, Mr Dimon decried that fact that “wages for many Americans have gone nowhere” and said the increase in pay would help retain talented people. + +IKEA extended a safety recall to China, following a backlash from state newspapers and social media there. The company recently recalled 29m chests of drawers in America when the products were linked to the deaths of six toddlers who were crushed by the furniture toppling over. But China’s official news agency declared that IKEA was “arrogant” for not withdrawing the range from its Chinese stores. + +The steep drop in the value of the pound against the dollar was a factor behind the acquisition of the Odeon cinema chain in Britain by AMC, an American peer owned by Dalian Wanda of China. The deal is worth £921m ($1.2 billion). The seller is Guy Hands, whose private-equity firm bought Odeon in 2004. + + + +The latest craze in video games literally hit the streets. “Pokémon Go” is an alternate-reality game for smartphones. Guided by GPS, players traverse their cities seeking to “capture” Pokémon characters that pop up on the screen. Tales abounded of players finding characters in odd locations. One man even captured a character while his wife was in labour (he stopped playing during the birth). The game is part-owned by Nintendo; its share price surged. See article. + +In one of the biggest-ever deals involving a sports brand WME-IMG, a talent agency, agreed to buy Ultimate Fighting Championship, which promotes mixed martial-arts tournaments and whose events are becoming as popular as boxing. The acquisition is worth $4 billion; UFC was sold in 2001 for just $2m. WME-IMG’s other assets include the Miss Universe organisation, which it bought last year from a certain Donald Trump. + +Cheers! + +Anathema to some, America’s biggest brewers agreed voluntarily to place nutrition labels on bottles and cans of beer that will disclose how many calories and carbohydrates they contain. The move, to be completed by 2020, is intended to help drinkers shed their beer bellies, often gained by chugging a six-pack. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21702235-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Jul 16th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21702237-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Election 2016: The dividing of America + +Britain’s new prime minister: May time + +The South China Sea: Come back from the brink, Beijing + +Deutsche Bank: A floundering titan + +Marine management: Net positive + + + + + +Articles Sections Next + +Election 2016 + +The dividing of America + +Donald Trump’s nomination in Cleveland will put a thriving country at risk of a great, self-inflicted wound + +Jul 16th 2016 | From the print edition + + + +FROM “Morning in America” to “Yes, we can”, presidential elections have long seemed like contests in optimism: the candidate with the most upbeat message usually wins. In 2016 that seems to have been turned on its head: America is shrouded in a most unAmerican pessimism. The gloom touches race relations, which—after the shooting of white police officers by a black sniper in Dallas, and Black Lives Matter protests against police violence, followed by arrests, in several cities—seem to get ever worse. It also hangs over the economy. Politicians of the left and right argue that American capitalism fails ordinary people because it has been rigged by a cabal of self-serving elitists. The mood is one of anger and frustration. + +America has problems, but this picture is a caricature of a country that, on most measures, is more prosperous, more peaceful and less racist than ever before. The real threat is from the man who has done most to stoke national rage, and who will, in Cleveland, accept the Republican Party’s nomination to run for president. Win or lose in November, Donald Trump has the power to reshape America so that it becomes more like the dysfunctional and declining place he claims it to be. + +This nation is going to hell + +The dissonance between gloomy rhetoric and recent performance is greatest on the economy. America’s recovery is now the fourth-longest on record, the stockmarket is at an all-time high, unemployment is below 5% and real median wages are at last starting to rise. There are genuine problems, particularly high inequality and the plight of low-skilled workers left behind by globalisation. But these have festered for years. They cannot explain the sudden fury in American politics. + +On race relations there has, in fact, been huge progress. As recently as 1995, only half of Americans told pollsters that they approved of mixed-race marriages. Now the figure is nearly 90%. More than one in ten of all marriages are between people who belong to different ethnic groups. The movement of non-whites to the suburbs has thrown white, black, Hispanic and Asian-Americans together, and they get along just fine. Yet despite all this, many Americans are increasingly pessimistic about race. Since 2008, when Barack Obama was elected president, the share of Americans who say relations between blacks and whites are good has fallen from 68% to 47%. The election of a black president, which seemed the ultimate proof of racial progress, was followed by a rising belief that race relations are actually getting worse. + +What explains the divergence between America’s healthy vital signs and the perception, put with characteristic pithiness by Mr Trump, that the country is “going down fast”? Future historians will note that from about 2011 white and non-white babies were born in roughly equal numbers, with the ageing white population on course to become a minority around 2045. This was always going to be a jarring change for a country in which whites of European descent made up 80-90% of the population for about 200 years: from the presidency of George Washington to that of Ronald Reagan. + +Demographic insecurity is reinforced by divisive partisan forces. The two parties have concluded that there is little overlap between the groups likely to vote for them, and that success therefore lies in making those on their own side as furious as possible, so that they turn out in higher numbers than the opposition. Add a candidate, Mr Trump, whose narcissistic bullying has prodded every sore point and amplified every angry sentiment, and you have a country that, despite its strengths, is at risk of a severe self-inflicted wound. + +Reshaping politics + +The damage would be greatest were he to win the presidency. His threats to tear up trade agreements and force American firms to bring jobs back home might prove empty. He might not be able to build his wall on the border with Mexico or deport the 11m foreigners currently in the United States who have no legal right to be there. But even if he failed to keep these campaign promises, he has, by making them, already damaged America’s reputation in the world. And breaking them would make his supporters angrier still. + +The most worrying aspect of a Trump presidency, though, is that a person with his poor self-control and flawed temperament would have to make snap decisions on national security—with the world’s most powerful army, navy and air force at his command and nuclear-launch codes at his disposal. + +Betting markets put the chance of a Trump victory at around three in ten—similar to the odds they gave for Britain voting to leave the European Union. Less obvious, but more likely, is the damage Mr Trump will do even if he loses. He has already broken the bounds of permissible political discourse with his remarks about Mexicans, Muslims, women, dictators and his political rivals. It may be impossible to put them back in place once he is gone. And history suggests that candidates who seize control of a party on a prospectus at odds with that party’s traditional values tend eventually to reshape it (see article). Barry Goldwater achieved this feat for the Republicans: though he lost 44 states in 1964, just a few elections later the party was running on his platform. George McGovern, who fared even worse than Goldwater, losing 49 states in 1972, remoulded the Democratic Party in a similar fashion. + +One lesson of Mr Trump’s success to date is that the Republicans’ old combination of shrink-the-state flintiness and social conservatism is less popular with primary voters than Trumpism, a blend of populism and nativism delivered with a sure, 21st-century touch for reality television and social media. His nomination could prove a dead end for the Republican Party. Or it could point towards the party’s future. + +When contemplating a protest vote in favour of tearing up the system, which is what Mr Trump’s candidacy has come to represent, some voters may ask themselves what they have to lose. (That, after all, is the logic that drove many Britons to vote for Brexit on June 23rd.) But America in 2016 is peaceful, prosperous and, despite recent news, more racially harmonious than at any point in its history. So the answer is: an awful lot. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21702188-donald-trumps-nomination-cleveland-will-put-thriving-country-risk-great/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Britain’s new prime minister + +May time + +A no-nonsense conservative has taken Britain’s helm. She should make the case for a minimalist Brexit + +Jul 16th 2016 | From the print edition + + + +THEY campaigned to Leave, and they were as good as their word. Three weeks on from their referendum triumph, the politicians who led the charge for Britain to quit the European Union have fallen by the wayside in the race to replace David Cameron as prime minister. This week the last of the prominent Leavers, Andrea Leadsom, withdrew her candidacy after a few days’ media scrutiny revealed her to be fantastically ill-prepared. The job of steering Britain towards the EU’s exit doors has thus fallen to the only candidate left in the race: Theresa May, who campaigned to Remain. + +Mrs May’s path to power was easier than that of most prime ministers, but her time in office will be the hardest stint in decades (see article). Extricating Britain from the EU will be the diciest diplomatic undertaking in half a century. The wrangling at home will be no easier: whatever divorce settlement Britain ends up with is likely to be deeply unsatisfactory even to those who voted to Leave. Popular anger will not be soothed by the recession into which the country is probably heading. It will take a gifted politician to lead Britain through this turbulent period. + +Last woman standing + +Is Mrs May up to it? The gormlessness of her rivals flatters her. But she has real qualities: a Merkelian calm, well suited to counter the chaos of the moment, and a track record of competence that increases the likelihood of an orderly withdrawal from the EU. Her first speech as prime minister—in which she promised to fight the “burning injustice” faced by the poor—suggests she has correctly read the mood of those who voted against the establishment and for Brexit, and is preparing to seize the centre ground vacated by the Labour opposition. + +Her effortless victory presents a tactical problem. Without a proper leadership contest or general election, Mrs May lacks the seal of approval of her party’s members or the public. She has ruled out a snap election—rightly, since there is only so much political drama the country can take (in any case Labour, engulfed in civil war, is in no shape to fight one). Yet her lack of a mandate will be used against her, especially by Brexiteers. When Mrs May eventually returns from Brussels with a deal that falls short of the Brexit fantasy that voters were mis-sold, expect those in the Leave camp to cry treachery. To head off such accusations she has already given plum cabinet jobs to some unworthy Brexiteers, notably Boris Johnson as foreign secretary. In negotiations she may be unwilling to give ground to the EU even when it is in Britain’s interest. + +The European divorce proceedings will dominate her government. The first decision is when to invoke Article 50 of the Lisbon treaty, the legal mechanism by which Brexit begins. Fortunately, Mrs May seems to be in no hurry. Britain needs to settle its own position before firing the starting gun on negotiations, which will take months to do properly. Delay will also give EU politicians time for reflection, raising the chances of sensible compromise. + +The single biggest call of her premiership will be what variety of Brexit to aim for. At one end of the spectrum is a “soft Brexit”: full membership of the single market, or something close to it, in return for retaining the principle of free movement of people. At the other is a “hard Brexit”: a clean break, sacrificing membership of the single market for full control over how many and which EU nationals can move to Britain. This newspaper favours minimal restrictions on migration in return for maximum participation in the single market; even those less enthusiastic than we are about immigration should shudder at the economic damage from serious barriers to a market that buys nearly half of Britain’s exports. + +Mrs May’s thinking on this trade-off is unknown, but there are ominous signs. As home secretary she cut immigration at the expense of the economy—limiting visas for fee-paying university students, for instance. She has been unnervingly reluctant to guarantee the status of the 3m EU citizens already in Britain. And during the refugee crisis last summer she claimed, outrageously, that under Labour the asylum system had been “just another way of getting here to work”. + +Her domestic economic plans, though only sketched, include some progressive ideas. She has vowed to tackle vested interests and ramp up competition. Her promise of a splurge on infrastructure is sensible. So is a vow to make shareholders’ votes on bosses’ pay binding. But there are hints of a preference for meddling over markets, for example in her suggestion that the government should be readier to stop foreign takeovers of British firms. As Britain gives up its prized link with Europe, it will need all the foreign capital it can get. The “proper industrial strategy” she has called for is too often a synonym for empty or bad ideas. + +Hard-working, little-known + +The Home Office never made a liberal of any minister. But it instils a reverence for order, which could make Mrs May think twice before slashing ties with the EU. Membership gives Britain access to shared security resources, from Europe-wide arrest warrants to pooled information on airline passengers and criminal records. During the campaign Mrs May pointed out that British police will soon be able to check EU nationals’ DNA records in 15 minutes, down from 143 days. Although Britain pulled out of some EU justice initiatives two years ago, it hung on to others such as these because, in Mrs May’s words, they were “not about grandiose state-building and integration but...practical co-operation and information-sharing”. + +That rationale applies to much of what matters in Britain’s relationship with Europe. The single market is not a romantic ideal but a way of letting companies trade across borders. Free movement allows British firms and universities to recruit workers and students more flexibly, and lets Britons work and study abroad. These are the practical arguments for negotiating a minimalist Brexit—and their urgency will grow as Britain’s economic predicament worsens. Mrs May seems to be no liberal, but we hope she will champion the conservative case for staying close to Europe. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21702187-no-nonsense-conservative-has-taken-britains-helm-she-should-make-case-minimalist/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The South China Sea + +Come back from the brink, Beijing + +Why China should accept a damning international ruling + +Jul 16th 2016 | From the print edition + + + + + +THE aggression that China has shown in the past few years in its vast territorial grab in the South China Sea has terrified its neighbours and set it on a collision course with America, long the guarantor of peace in East Asia. This week an international tribunal thoroughly demolished China’s vaguely defined claims to most of the South China Sea. How Beijing reacts to this verdict is of the utmost geopolitical importance. If, in its fury, China flouts the ruling and continues its creeping annexation, it will be elevating brute force over international law as the arbiter of disputes among states. China’s bullying of its neighbours greatly raises the risks of a local clash escalating into war between the century’s rising superpower and America, the current one. The stakes could hardly be higher. + +Blown out of the water + +The ruling by the Permanent Court of Arbitration in The Hague, in response to a case brought by the Philippines, is firm, clear and everything China did not want it to be (see article). The judges said that the UN Convention on the Law of the Sea (UNCLOS) should determine how the waters of the South China Sea are divided among countries, not China’s ill-explained “nine-dash line” which implies the sea is Chinese. None of the Spratly Islands in the south of the sea, claimed (and occupied) by several countries including China, can be defined as islands that can sustain human life, they ruled. This means no country can assert an Exclusive Economic Zone (EEZ) extending up to 200 nautical miles around them. + +The court had no power to decide who owns which bits of land in the South China Sea. But the judges said that by building on rocks visible only at low tide, and thus not entitled under UNCLOS to any sovereign waters, China had encroached illegally into the Philippines’ EEZ. The court also said China had violated UNCLOS by blocking Philippine fishing boats and oil-exploration vessels and that Chinese ships had acted dangerously and unlawfully in doing so. Moreover, China’s island-building had caused “severe harm” to the habitats of endangered species, and Chinese officials had turned a blind eye to Chinese poaching of them. + + + +In graphics: A guide to the South China Sea + +For China, this is a humiliation. Its leaders have called the proceedings illegal. Its huge recent live-fire exercises in the South China Sea imply that it may be planning a tough response. This could involve imposing an “Air Defence Identification Zone” of the kind it has already declared over the East China Sea. Or China might start building on the Scarborough Shoal, which it wrested from the Philippines in 2012 after a stand-off between the two countries’ patrol boats. + +That would be hugely provocative. Although America is deeply reluctant to risk a conflict, President Barack Obama is thought in March to have warned his Chinese counterpart, Xi Jinping, that any move on Scarborough Shoal would be seen as threatening American interests (the Philippines is a treaty ally). For China to call its bluff in a sea that carries $5.3 trillion in annual trade would be reckless and irresponsible. + +There is a better way. China could climb down and, in effect, quietly recognise the court’s ruling. That would mean ceasing its island-building, letting other countries fish where UNCLOS allows and putting a stop to poaching by its own fishermen. It would have good reason: its prestige and prosperity depend on a rules-based order. It would be in China’s interests to secure peace in its region by sitting down with the Philippines, Vietnam and other South-East Asian neighbours and trying to resolve differences. Right now those countries, and America, should avoid action that will needlessly enrage China, and instead give it a chance to walk back from the edge. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21702194-why-china-should-accept-damning-international-ruling-come-back-brink-beijing/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Deutsche Bank + +A floundering titan + +Germany’s banking champion has neither a proper business model nor a mission + +Jul 16th 2016 | From the print edition + + + +THERE are banks that are smaller than Deutsche Bank, and there are larger ones. There are riskier ones, and safer ones. But it is hard to think of any other big financial institution so bereft of a purpose. + +Since its acquisition of Bankers Trust in 1999, Deutsche has sold itself as a global investment bank. Yet American rivals leave it trailing, even in its own backyard: the Goldman Sachs of Europe, it turns out, is Goldman Sachs. Deutsche’s revenues have dived since the crisis; last year it reported its first annual loss since 2008. Its shares are worth barely an eighth of what they were in 2007. Employees are demoralised: less than half are proud to work there. + +Some of the blows Deutsche has sustained are not of its own making. It has thousands of investment bankers in London, for example, but the city’s future as Europe’s financial capital has been thrown into doubt by Brexit. Negative interest rates hurt margins across the industry. A few problems, such as litigation costs for past misdeeds, will fade with time. Its newish chief executive, John Cryan, wins plaudits for a hard-nosed strategy to cut costs, sell assets and overhaul dusty IT systems (see article). But the task of turning Deutsche around is made nearly impossible by two problems—its inadequate level of capital and the fundamental question of what the bank is for. + +Capital, first. In the go-go years before the financial crisis, banks could fund rapid expansion with vanishingly thin capital cushions. Today, nothing matters more for a bank than the amount of equity it has. Deutsche has consistently been behind the curve, first waiting too long to raise capital, then doing so in insufficient amounts. Its leverage ratio, a gauge of how much equity it has to soak up losses, was 3.5% at the end of 2015, lower than that of global peers. Concerns about capital mean no dividends for shareholders, and the threat of dilution if the bank attempts another fund-raising exercise. + +Cryan de coeur + +Mr Cryan is loth to tap investors for more money. It is doubtful that they would stump up one euro more in any case, given that Deutsche seems unable to generate decent profits. Before the crisis its mantra, like that of other big banks, was expansion. Now lenders are focusing on core strengths, usually on their home turf. American investment banks can rely on the world’s largest capital markets to sustain them: banks in America charge twice as much as those in Europe for their work on initial public offerings. European investment banks have fall-back options. Barclays claims 16m retail customers in Britain; UBS and Credit Suisse boast big wealth-management arms. + +Deutsche lacks a jewel in the crown. It does not have a strong retail presence in Germany: indeed, it plans to reduce its presence on the Hauptstrasse further by selling Postbank, a large bank it took control of in 2010. It is too big to be simply the house bank for Germany’s corporate elite. Its positioning as a global leader in selling and trading bonds made much more sense in an era when banks could make big bets with their own money, and when there were greater efficiencies from being global. The returns now on offer are paltry. + +There is no obvious way out. Deutsche trades at about a quarter of the notional value of its net assets. If it were a non-financial firm it would be broken up. But big banks cannot be dismantled without risking chaos. No regulator wants to see a charge of theirs buy Deutsche. So on it must plod, more zombie than champion, an emblem of an enfeebled industry. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21702195-germanys-banking-champion-has-neither-proper-business-model-nor-mission-floundering-titan/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Marine management + +Net positive + +How to stop overfishing on the high seas + +Jul 16th 2016 | From the print edition + + + +FISH are slippery characters, with little regard for international agreements or borders. The speediest, such as crescent-tailed bluefin tuna, can slice through the ocean at 70 kilometres per hour. Their routes take them beyond areas that come under the jurisdiction of individual coastal states, and into the high seas. These wildernesses were once a haven for migratory species. No longer. + +Under international law the high seas, which span 64% of the surface of the ocean, are defined as “the common heritage of mankind”. This definition might have provided enough protection if the high seas were still beyond mankind’s reach. But the arrival of better trawlers and whizzier mapping capabilities over the past six decades has ushered in a fishing free-for-all. Hauls from the high seas are worth $16 billion annually. Deprived of a chance to replenish themselves, stocks everywhere pay the price: almost 90% are fished either to sustainable limits or beyond. And high-seas fishing greatly disturbs the sea bed: the nets of bottom trawlers can shift boulders weighing as much as 25 tonnes. + +Introducing private property rights is the classic answer to this “tragedy of the commons”. That is the principle behind the exclusive rights given to coastal states to maintain territorial waters. A clutch of regional organisations have been set up to try to manage fish stocks in the high seas. But as a result of overlapping remits, vested interests and patchy data, the plunder continues apace (see article). Since 2010 the proportion of tuna and tuna-like species being overexploited has grown from 28% to 36%. + +A fresh approach is needed. Slashing fishing subsidies is the most urgent step. In total these come to $30 billion a year, 70% of which are doled out by richer countries. By reducing fuel costs, subsidies bring the high seas within reach for a few lucky trawlers, largely from the developed world. Just ten countries, including America, France and Spain, received the bulk of the bounty from high-seas catches between 2000 and 2010, even though Africa has more fishermen than Europe and the Americas combined. That is unfair and short-sighted. + +The next step is to close off more areas to fishing. As of 2014 less than 1% of the high seas enjoyed a degree of legal protection. A review of 144 studies published since 1994 suggests that to preserve and restore ecosystems, 30% of the oceans should be designated as “marine protected areas” (MPAs). Individual countries can play their part, by creating reserves within territorial waters: last year Britain created the world’s largest MPA, an area bigger than California off the Pitcairn Islands in the South Pacific. But to get anywhere near that 30% share, mechanisms must be found to close off bits of the high seas, too. The UN’s members have rightly agreed to work out how to do so. + +Scaling up + +Progress towards even these limited goals, let alone more ambitious ones such as a total ban on high-seas fishing, will not be easy. The fishing industry is adept at protecting its interests. Questions of governance and enforcement dog every effort to police the high seas. Demand for fish is rising: humans are each consuming 20kg on average a year, more than ever before. + +So in parallel with efforts to protect wild stocks, another push is needed: to encourage the development of aquaculture, the controlled farming of fish. In 2014, for the first time, more fish were farmed for human consumption than were caught in the wild; farmed-fish output now outstrips global beef production. Unfortunately, feedstocks are often poor and storage facilities inadequate. By boosting basic research and infrastructure for aquaculture, governments could hasten a welcome trend. Eventually, efficient fish-farming will be the best guardian of stocks on the high seas. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21702196-how-stop-overfishing-high-seas-net-positive/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On Zimbabwe, the Chilcot report, urban sprawl, companies, Africa, Brexit: Letters to the editor + + + + + +Articles Sections Next + +On Zimbabwe, the Chilcot report, urban sprawl, companies, Africa, Brexit + +Letters to the editor + +Jul 16th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Zimbabwe and the IMF + +The Economist provided only a partial picture of the IMF’s engagement with Zimbabwe (“Bailing out bandits”, July 9th). In fact, financial support from the IMF for Zimbabwe is far from a done deal. The authorities have announced that they intend to request IMF financing after arrears to all international financial institutions are cleared. Once the arrears are cleared, the IMF’s executive board would need to approve the normalisation of relations with Zimbabwe. Any negotiation would start only at that point. + +The approval of a potential programme would, in turn, be contingent on two factors. First, designing sound economic policies to ensure that structural imbalances are meaningfully addressed. Second, obtaining financing assurances regarding Zimbabwe’s ability to service its debt in a timely manner going forward. A sound economic programme would require the upfront adoption of important fiscal measures and the continued implementation of structural reforms to restore confidence in the dollarised system, as well as an increase in the private sector’s contribution to growth. And the financing assurances would involve contributions from all multilateral and bilateral creditors in support of Zimbabwe’s economic programme after the arrears clearance. + +In short, irrespective of the calendar for the clearance of arrears, the economy needs immediate reforms to address the vulnerabilities that have come to the fore since May. As your article pointed out, Zimbabwe has taken steps in the past few months that move the country further in putting in place some of the needed reforms. Expeditious implementation is critical to reverse Zimbabwe’s economic decline, exploit the economy’s potential and protect its most vulnerable people. + +GERRY RICE + +Director of communications + +International Monetary Fund + +Washington, DC + + + + + +Iraq and the law + +Although the Chilcot report (“Iraq’s grim lessons”, July 9th) declined to express an opinion on whether the invasion of Iraq was legal, plenty of other people did, and in advance. The Foreign Office legal team, for example, whose head later said that it was the first and only time in his 30 years of service that his advice had not been taken. In his 2010 book “The Rule of Law”, Lord Bingham said that Iraq was “a serious violation of international law”. At the time of the war, neither he, nor any other British judge specialising in international law, was asked to give a view. + +Instead, Tony Blair decided to “rely” on the advice of one man, Lord Goldsmith, the attorney-general. Although Lord Goldsmith was a lawyer, he was also a government minister and as his evidence to Chilcot confirmed, he yo-yoed around in order to find the answer that Mr Blair wanted as cover for a decision that had already been taken. It was a sorry process. + +The world needs from time to time clear reminders that certain types of behaviour should not be allowed. I very much hope that somewhere, at some point in time, a competent court of law will make the judgment that Sir John Chilcot declined to make. + +ROBERT SATCHWELL + +Haarby, Denmark + + + + + +Hotline bling + +* The Economist is right to encourage leaders in the developing world to plan for urban growth, rather then trying to retrofit infrastructure once such growth has already happened (“The right kind of sprawl”, July 2nd). But politics is the arsenic in the jam. + + + +Cities across the global south are highly unequal. Rich elites increasingly opt out of existing mediocre public services and retreat behind gated estates with private water and electricity generation. And many leaders in urbanising countries have political bases in rural areas. Both these dynamics make it difficult to generate the political will for the necessary investments in urban planning. + + + +Where there has been relative success, such as in some Brazilian cities, three factors have been essential: social movements in informal communities; local government with effective authority for both planning and revenue generation; and mayors from a political party with strong ties to grassroots movements and activist professionals, especially architects, planners, lawyers, and engineers. + + + +BENJAMIN BRADLOW + +São Paulo + + + + + +Company sclerosis + +Schumpeter’s column on the imperial chief financial officer (June 18th) reminded me of the observations made by Alfred Sloan in “My Years with General Motors”. Sloan noted the evolving power structure of firms as they went from startups to institutions. The reign of the bean counters was one of the latter stages, chasing profits by grinding away at costs and the vitality of the organisation itself. In his cycle, that was soon to be succeeded by the reign of the lawyers, who hobbled what was left through more and more complex rules and operational restrictions. That, I believe, is a rather provocative parallel to the affairs of recent years. + +JOHN MCNEILL + +San Francisco + + + + + +Under African skies + +* You repeat twice in your June 18th issue the claim that “artificial” borders drawn by Western powers caused problems in the third world (“The scramble for .africa” and “Tales of spring and winter”). Neither aspect of that claim withstands scrutiny. Pre-colonial people lived with shifting borders due to constant plunder and subjugation of rival people. Fixing those borders saved many from further subjugation. Meanwhile, fixed borders created the first real incentives for the emergence of civic identities. Countries whose borders were sensitively drawn around ethnic groups—Swaziland, Ethiopia, Cambodia, or South Sudan—have fared no better, and often much worse, than those with “artificial” borders. + + + +BRUCE GILLEY + +Professor of political science + +Portland State University + +Oregon + + + +* “The Scramble for .africa” explains that ICANN blundered by failing to halt the African selection process. The blunder is more systemic: a loophole in new domain application contracts allows losers to subject winners to the full Vogon poetry of ICANN’s bylaws, with predicable results. + + + +ICANN has fielded over 70 reconsideration requests in the past two years, 16 of which have gone to full arbitration. The process has no clear end point. Like .africa, our community application for .eco—supported by UNEP, WWF, Greenpeace and many others—was on hold for over two years as a result. + + + +The unfortunate impression is that the internet community, which is mostly industry groups, puts its own interests first. This is bad because ICANN depends on participation to make good decisions. ICANN needs support for much needed reforms as part of securing independence before the next American election. As the treatment of .africa and .eco shows, the risk to the internet lies not in the text of these reforms, but in the community around them. + + + +JACOB MALTHOUSE + +Co-founder & Director + +Big Room + +Vancouver, Canada + + + + + +A future outside the EU + +The Norwegian option for Britain once it leaves the European Union would indeed do the least damage to the British economy (“Adrift”, July 2nd). Norwegian businesses, which I represent, have lived well with the European Economic Area for 20 years. It secures full access to the single market. But, remember, we have to take on board all relevant EU legislation in order to keep a level playing field. If we don’t, the EU can respond by suspending the relevant chapter of the agreement. Since market access is so important, we have never used this right. + +We even had to establish a separate surveillance authority and court that can issue binding decisions if our government does not implement EU legislation correctly. Free movement of people is a core element of the agreement and we have to contribute substantial amounts to the EU’s poorer countries. If you are ready to take up the obligations and give up your voting rights you are welcome to the EEA. If not, it is not for you. + +KRISTIN SKOGEN LUND + +Director-general + +Confederation of Norwegian Enterprise + +Oslo + +The Brexit vote was more a democratic rebellion against meritocrats than a “backlash against globalisation” (Free exchange, July 2nd). In the 1950s Michael Young coined the word “meritocracy” to describe a new ruling elite, nastier than an aristocracy or plutocracy. He predicted that an elite picked by “merit” would feel entitled to exploit, drive up income differentials and fix rules to give their kids a head start. “The Rise of the Meritocracy”, published in 1958, described a divided 21st-century Britain, run by an elite hardened to outsiders, with the party of the left becoming more technocratic than working class. + +Young foresaw a populist right-wing rebellion which would baffle the new ruling class. Sound familiar? The smart set has had its come-uppance, yet, in a new snobbery, scorns dissenters as daft, racist, unpatriotic or all three. + +JON HUGGETT + +London + +In the wake of the vote to leave the EU, the move towards isolationist Euroscepticism in the Tories and turmoil within Labour, Bagehot calls for a new political party in Britain of the cosmopolitan centre (July 2nd). Happily such a party already exists and it is simultaneously new and old. The Whig Party was re-established in 2014 and fielded four candidates in the 2015 election on a platform of optimistic, internationalist liberalism. + +ALASDAIR HENDERSON + +London + +Bagehot dubbed pro-globalisation, pro-EU parts of Britain “Londonia”. Surely “Remainia” is more apt? + +STEPHEN GRAHAM + +Cambridge, Cambridgeshire + + + +“Article 50 ways to leave your lover” was music to my ears (July 2nd). Possibly portending that Brexit might be a lengthy divorce, that song was included on Paul Simon’s classic album “Still Crazy After All These Years”. + +FABIAN DECHENT + +Mainz, Germany + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21702155-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +The Republican Party: Past and future Trumps + + + + + +Articles Sections Next + +The Republican Party + +Past and future Trumps + +Insurgent candidates who win the nomination tend to transform their party, even if they never become president + +Jul 16th 2016 | From the print edition + + + +IN EVERY continent he seems familiar. Italians see another Silvio Berlusconi, South Africans a Jacob Zuma and Thais a Thaksin Shinawatra. Latin America practically invented the type: to Argentines he is Juan Perón’s echo. Those who find Donald Trump scary sometimes compare him to jackbooted fascists in 1930s Europe. The search for the right precursor to Mr Trump is born of an understandable urge to work out what happens next. + +Here is a prediction: Mr Trump, who will stand onstage at the Republican Convention in Cleveland and accept the party’s nomination as its presidential candidate, will have a more lasting effect on the Republican Party than its elected members currently realise, even if he goes on to lose the election in November. + +For the moment, most Republicans either resist this notion or are relaxed about it. “I don’t think the Trump nomination is going to redefine in any real way what America’s right-of-centre party stands for,” Mitch McConnell, the Senate majority leader, told National Public Radio after the primaries were over. “You know what, I think something different and something new is probably good for our party,” Reince Priebus, head of the Republican National Committee, told CNN, hopefully. Paul Ryan, who has criticised Mr Trump during the campaign and since, wrote in his hometown newspaper: “On the issues that make up our agenda, we have more common ground than disagreement.” + +For those watching the convention, which begins on July 18th, what is happening may not appear unusual. The party has rallied, as it usually does, behind the nominee. Before the first caucus met in Iowa, Gallup reported that Mr Trump was already familiar to 91% of Americans. Familiarity has bred content among most right-leaning voters (see chart 1). Yet what is happening in the Republican Party right now is far from normal. + + + +The party is nominating someone who is not a Republican in any recognisable form. Instead, Mr Trump combines traditions that Republicans and Democrats have at times flirted with, only to reject them when in government. One of these is populism, which in America usually means making promises to improve the livelihoods of blue-collar workers by protecting them from foreign competition, whether that comes in the form of immigration or trade. + +Pat Buchanan, who made bids for the Republican presidential nomination in 1992 and 1996, declared during his first attempt: “If I were president I would have the Corps of Engineers build a double-barrier fence that would keep out 95% of the illegal traffic. I think it can be done.” Four years later Mr Buchanan, who studied at Georgetown and Columbia, said that the peasants were coming with pitchforks, and that he was their champion. Ross Perot, who ran for the presidency as an independent in 1992, made a different part of the Trump pitch—the successful businessman who would stop the “giant sucking sound” of American jobs being hoovered up by Mexico, the billionaire promising to make competition go away. + +A lone voice + +A second thread that has been gathered up by Mr Trump is isolationism. His talk of “America First” is borrowed, consciously or not, from Charles Lindbergh, whose America First Committee argued in the 1940s against participation in the second world war. Mr Trump is not consistent on this point: at times he regrets American involvement in foreign wars, at others he wants to seize foreign oilfields. The idea that America should station troops abroad, but that the countries concerned would have to pay for it, is the synthesis of his opposing instincts over dealing with the rest of the world. + +The third thread is nativism. For Mr Trump, not all citizens are equally American. Hence his claims that Gonzalo Curiel, a federal judge born in Indiana, was biased against him because of the judge’s Hispanic background. Mr Trump’s plan to deport the 11m undocumented migrants from America is a nativist fantasy. It recalls the enthusiasm for deportation of Art Smith, another fringe politician from the 1930s. Smith, who really was a fascist, advocated the removal of radicals from the country. America’s appetite for fascism proper was tested in 1933, after a protester was killed at a rally. Smith proposed a march on Washington later that year which, he boasted, would number 1.5m people. Only 44 showed up. + +Populism, isolationism and nativism are distinct from racism. But they can often be found on the same shelf. Towards the end of the 19th century, as Chinese labourers were brought to California to work on the railways, Denis Kearney, a labour-movement leader, made a career out of attacking the “Chinaman”, laying the groundwork for the Chinese Exclusion Act of 1882, the first of several laws to interrupt migration from Asia. Kearney did not just object to Chinese workers undercutting American wages. He found their food, habits and living arrangements revolting. “Whipped curs, abject in docility, mean, contemptible and obedient in all things…they seem to have no sex. Boys work, girls work; it is all alike to them.” + +Mr Trump’s assertions that Mexico is not just destroying American workers’ livelihoods (because of NAFTA), but sending drug-dealers and rapists across the border too, is Kearney for the 21st century. When accused of racism, Mr Trump responds that he loves Hispanics and insists they love him back. His supporters hear what they want to hear. + +From light to night + +Like any successful populist, though, Mr Trump is also of his time. In 1984 voters were persuaded that it was morning in America; in 2016 many seem prepared to believe that night is falling. Two-thirds say that the country is on the wrong track. Ever since Ronald Reagan’s first victory, it has been a cliché that the most optimistic candidate usually wins. Mr Trump has turned this upside down, declaring during the primaries: “This country is a hellhole.” Bad news seems to confirm his thesis and gives his candidacy energy. The shootings in Dallas are the latest example, but the same could be said of the attacks in Orlando and San Bernardino. + +Mr Trump’s most popular proposal, more loved even than the Great Wall of Texas, is to ban Muslims from entering the country. Exit polls from the Republican primaries recorded that voters were more worried about terrorism than immigration. That, combined with anxieties about the changing racial make-up of America, explains why around two-thirds of primary voters supported the Muslim ban. + +Though much of it may be old, there is nothing old-fashioned about how Mr Trump delivers his message. His skill on broadcast media recalls Charles Coughlin, a Catholic priest whose radio show reached around 30m listeners at its peak in the 1930s. Coughlin founded the Union Party in 1936 and supported Huey Long, a populist of the left who wanted a corporatist state to save workers from the cruelty of capitalism. But it is impossible to disentangle Mr Trump from the world of reality television, where he honed his narrow-eyed stare and finger-jabbing persona. Or from social media, which Mr Trump uses sometimes to broadcast his views and sometimes to insinuate them. + +He has an ability to say things that are not true but which seem, to his supporters, to be right anyway. Shared with like-minded people on social networks, this has been a boon for what Richard Hofstadter called “the paranoid style in American politics”, an apparently sincere belief in implausible conspiracies. Mr Trump’s insinuation, after the shooting in Orlando, that the president might secretly sympathise with Islamic State was a model of the paranoid style. + +The most novel thing about Mr Trump, though, when compared with the fringe figures who preceded him, is that he is the nominee of one of America’s two main parties. This puts him in a different category and will give him a greater opportunity to shape the country. This is obviously the case if he wins in November. But it will probably happen even if he loses, currently the more likely result. + +A handful of insurgent candidates have seized the nomination, lost the election and transformed their parties anyway. From the late 19th century William Jennings Bryan failed three times as a Democratic candidate while campaigning for a federal income tax, popular election of senators, votes for women and other causes that had become laws by the time of his death. Two more recent examples of nominees who have done the same are worth looking at more closely. + +The first is George McGovern, the Democratic nominee in 1972, beaten by Richard Nixon in 49 states. One reason for this rout was that McGovern’s Democratic Party seemed to hold different values to those of most voters. In his history of the era, Rick Perlstein recounts how television cameras at the 1972 convention lingered on two men in the hall who were wearing purple shirts with “gay power” written on them, and kissing. The same convention was the first to be addressed by an openly gay man, Jim Foster. McGovern proposed a “Demogrant”, a basic income for all, guaranteed by government. Many Democrats looked at lonely Massachusetts in the blue column the day after the election and concluded that they could never win the presidency with a candidate like McGovern. + +Viewed today, the 1972 Democratic campaign looks premature rather than wrong. That is the view of John Judis and Ruy Teixeira, authors of “The Emerging Democratic Majority”, published in 2002. One chapter of their book is called “George McGovern’s revenge”. McGovern appealed strongly to non-whites: according to Gallup he won 87% of them in 1972, a higher proportion than Barack Obama managed in 2012. + +The rapidly increasing racial diversity of the electorate between then and now has turned this from a losing strategy into a winning one. McGovern did better with working women than men and better with professionals than with blue-collar workers. This, too, made him a loser in 1972 but provided the template for Democratic victories in 2008 and 2012. Polls suggest that Hillary Clinton may be the first Democratic presidential candidate for at least 60 years to win a majority of white voters with college degrees (see chart 2). + + + +Before McGovern, Barry Goldwater also got thrashed and transformed his party in the process. Goldwater lost 44 states on a platform of huge tax cuts, pouring weedkiller on the federal government, opposition to civil rights and confronting communism abroad. “Extremism in the defence of liberty is no vice,” he told the 1964 convention in Daly City, California. + +Voters disagreed, and not even a powerful televised speech made in support of Goldwater by Ronald Reagan, then a TV presenter, could persuade them otherwise. The future for Goldwater’s ideas did not look bright. “The election has finished the Goldwater school of political reaction,” wrote Richard Rovere in the New Yorker, reflecting the consensus of what would now be called the mainstream media but then was simply known as the press. It could hardly have been more wrong. + +As with McGovern’s defeat, Republicans initially reacted by picking candidates with more traditional views of government. Goldwater’s success in the Deep South, thanks to his opposition to civil rights, the popularity of George Wallace, the segregationist governor of Alabama, and rising public alarm about law and order and cultural change, bore fruit in the 1968 election, when Richard Nixon grabbed millions of voters from the Democrats to build a “New Majority” of big-city Irish, Italian and Polish Catholics, and white Protestants from the South, Midwest and rural America, beginning a nationwide realignment of politics that is still playing out today. + +Goldwater runs deep + +The radical conservative side of Goldwater’s platform had captured his party’s heart by 1980. Reagan won the nomination and then the general election on a platform of tax cuts, shrinking government and confronting communism abroad. Up until last year, it was accurate to say that Goldwater still provided the intellectual framework for the Republican Party: George W. Bush is disliked by so many Republicans because his big-government conservatism strayed too far from it. With Mr Trump as the nominee, the Goldwater takeover, which has lasted 35 years, is under threat. + +What might a Trumpist Republican Party look like? In “five, ten years from now,” he told Bloomberg, “you’re going to have a workers’ party. A party of people that haven’t had a real wage increase in 18 years, that are angry.” Speaking at a recycling plant in Pennsylvania in June, he said that American workers had been betrayed by politicians and financiers, who “took away from the people their means of making a living and supporting their families”. + +This is a complete reversal of Republican orthodoxy of the past 30 years, which has mixed openness to trade and an impulse to cut entitlement spending with conservative stances on social issues. Anyone who thinks that the party will revert to that orthodoxy if Mr Trump loses wasn’t paying enough attention during the primaries, which suggested that registered Republicans are, on the whole, less interested in government-shrinking and values-voting than their elected representatives are. + +Those who lean Republican, according to polling by the Pew Research Centre, are more likely to say that free-trade deals are bad for America than those who lean Democratic (see chart 3). The same polling shows that Republican voters are just as reluctant to cut Social Security benefits as Democratic ones. This helps to explain why Republican primary voters liked the sound of what Mr Trump is selling more than they liked the tax-cuts-and-Old-Testament tunes of the party’s late-Goldwater period. And elected Republicans are acutely sensitive to the preferences of their primary voters, who have a veto on whether they will end up running for office. + + + +As well as a reversal of party orthodoxy, Mr Trump’s campaign has also ditched the party’s electoral strategy. From Mitt Romney’s defeat in 2012 until Mr Trump won in South Carolina, it seemed obvious that to win the presidency the Republican Party needed a candidate with some appeal to Hispanic voters: hence the excitement about Jeb Bush, whose wife is Mexican, and then Marco Rubio, whose parents were born in Cuba. Instead, the party has picked a candidate of whom 87% of Hispanics disapprove. + +This would appear to be a recipe for Republicans to lose a lot of presidential elections, and it might indeed prove to be so. Even with low levels of immigration by past standards, demographers expect America to have a non-white majority by the middle of the century. Getting caught out by a demographic wave of this size would, eventually, lead to the Republican Party being dragged to the ocean floor and held underwater until it blacked out. + +Yet the electorate is not the same as the population, because not all voters are equally likely to turn out. Even in 2012, an election that saw minorities turn out in record numbers, voters were as white as America was 20 years before. Three demographers—Mr Teixeira and Rob Griffin of the Centre for American Progress, and Bill Frey of Brookings—have run a simulation to see what would happen if the Republican Party managed to boost white turnout by 5% across the board, while all other voter groups remained constant. This would be hard to achieve, but not impossible: turnout among whites in 2012 was 64%, which leaves some headroom. The result of the voting model is a Republican advantage in the electoral college up until 2024, after which point the strategy no longer works. + + + +A Trumpist Republican Party might not win many presidential elections. But it could be competitive enough to resist demands for reform and would probably have enough bodies to block legislation in Congress. With less outright hostility to Hispanics and a softer tone towards women, it might even attract some of those currently on the left who are hostile to trade and globalisation, or who worry about threats from immigration and automation, to create an updated populism. + +The coalitions that have underpinned both main parties now look fragile. On some cultural issues, notably guns, white Democrats without a college education are more closely aligned with the Republicans than with the party they currently vote for. Mr Trump’s coronation in Cleveland will be the burial of an old dynasty. It may also be the foundation of a new one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21702193-insurgent-candidates-who-win-nomination-tend-transform-their-party-even-if-they-never/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Race in America: Progress and its discontents + +Policing and race: Quantifying Black Lives Matter + +Fishing: All about the bass + +Lexington: Homeopathy politics + + + + + +Articles Sections Next + +Race in America + +Progress and its discontents + +After a dreadful week, despair over race and policing is understandable. But America also has cause for hope + +Jul 16th 2016 | From the print edition + + + +FOR a few generations, Americans seldom saw death up close. It was banished to hospitals or mimicked, harmlessly, on cinema and TV screens. But on July 5th death was beamed onto laptops and iPads from the forecourt of a convenience store in Baton Rouge, where Alton Sterling was fatally shot by a police officer as another pinned him down; and on July 6th it was broadcast from the passenger seat of a car in Falcon Heights, Minnesota, the police weapon that killed another black man, Philando Castile, still sticking through the window as the footage began. + +The next day, if they had the stomach for it, Americans could watch Micah Johnson, a black army veteran intent on slaughtering white policemen, stalk and slay an officer in downtown Dallas, a stone’s throw from the site of John F. Kennedy’s assassination. Mr Johnson managed to murder five before a robot-delivered bomb ended his rampage and his life. These terrible images were more traumatic even than most deaths. The killing of policemen, and killings inflicted by them, bloodshed moreover tinged by racism, avowed or alleged: these seemed, for many, to presage the unravelling of society. + +Or, as Barack Obama put it at a memorial service on July 12th, close to the bullet-scarred crime scene—five seats left empty for the fallen officers—it felt as if “the deepest faultlines of our democracy have suddenly been exposed, perhaps even widened”. Almost as he spoke, authorities in Baton Rouge disclosed another alleged plot to kill police. Meanwhile rallies against police violence, like the one at which Mr Johnson struck, continued. Hundreds of protesters have been arrested. + +Yet the way Americans experience these terrors is itself an example of their complexity. The enmity and barbarity look like a path to the abyss—but the smartphone clips that help to relay them are a form of progress as well as a medium of horror. Something similar goes for the fraught nexus of race and policing that lies behind the turmoil. On these overarching issues too, the picture is more nuanced than it currently seems. From the streets of Dallas to national race relations, anger and disappointment are bound up with quieter improvements. + +The lens of grief + +Bedecked with flowers, Stars-and-Stripes balloons and handwritten tributes such as “Back the Blue” and “All Lives Matter”, the two squad cars parked outside police headquarters in Dallas have become colourful, tearjerking shrines. The city’s response has “been overwhelming,” says one officer, taking a break from hugging well-wishing locals, a recently received teddy bear protruding from his shirt. But another confesses he is “miserable”, as might be expected after an atrocity that could have been even worse had Mr Johnson deployed the bombmaking kit found in his house. The mood is tense and jittery: when an unknown man mounted a parapet opposite the HQ on July 10th, officers drew their weapons and hurried bystanders inside (the man was taking a selfie). + +But both since the calamity and before it, Dallas has offered reasons for optimism. “Sometimes you have to have a light shined on you to see what reality is,” says Mike Rawlings, the white mayor. “And sometimes it’s positive.” At a City Hall vigil on July 11th, thousands of candles were held aloft in the warm Texan night as bagpipes played, a civic unity mirrored and led by the stoic conciliations of Mr Rawlings and the impressive police chief, David Brown. “I love Dallas,” Mr Brown, who is black, told journalists this week, exhorting protesters to help fix the troubles that exercised them: “We’re hiring.” + +Dallas, it is true, remains starkly segregated, black and white neighbourhoods split by the interstate that bisects the city (though Mr Rawlings thinks the “real chasm” is economic, “between the haves and the have-nots” rather than the races). An African-American surgeon who cared for wounded officers attested to residual tensions between black residents and the police: “I will care for you,” he said with painful honesty; “that doesn’t mean I do not fear you.” Nevertheless, Mr Brown’s emphasis on community policing and transparency has been accompanied by a drop in police shootings and in complaints about the use of force. Before they shielded the protesters from the gunman, Dallas officers posed for photos alongside them. + +Even before the massacre, the community was reciprocating. Richie Butler, pastor of St Paul United Methodist Church, one of the oldest black churches in Dallas, began arranging police-community get-togethers after the death of Michael Brown, a young black man, in Ferguson, Missouri in 2014. (That event also galvanised the Black Lives Matter movement, which Mr Johnson cited as an influence and which, despite its leaders’ professed non-violence, now faces renewed and intense criticism.) To help build rapport, Mr Butler organised a basketball game involving officers and churchmen, a humanising idea that he wants to extend to other cities. + +Such under-the-radar efforts are not confined to Dallas. Consider an initiative sponsored by the Department of Justice which, like the recommendations made last year by a White House task-force on policing, aims to improve community relations. In six pilot cities, the programme promotes reconciliation between officers and local people, many of them black. Its moderators serve as impartial brokers between the two—remarkably, for a government-sponsored scheme—in sessions that resemble those in post-apartheid South Africa. After all, says Amy Crawford, the initiative’s director, even if policies change on neuralgic issues such as traffic stops, “You can’t force trust.” + +Given that most police chiefs are only one PR disaster away from losing their jobs, many have been admirably willing to embrace these reforms. Not surprisingly, though, they make less of an impression than viral footage of homicide, such as the images of Mr Castile slumped in his car that were live-streamed by his girlfriend, Diamond Reynolds. “I’m right here,” Ms Reynolds’s four-year-old daughter, also a witness, heartwrenchingly tells her distraught mother. “Would this have happened if...the driver and the passengers were white?”, asked Mark Dayton, Minnesota’s governor. “I don’t think it would have.” (A lawyer for the officer who shot Mr Castile denied race was a factor, citing instead the gun the victim was carrying.) + +The impact of these clips is often exacerbated by what follows, which, judicially speaking, is often little or nothing. On-duty police officers kill roughly 1,000 times a year in America—the imprecision is because official statistics are shoddy, making it hard to know how far black men are disproportionately affected, as they seem to be in lesser interactions such as searches (see article). According to Philip Stinson of Bowling Green State University, who keeps a tally, since the beginning of 2005 only 73 officers have been charged with murder or manslaughter. A third have been convicted, while a further third of cases are still pending. + +That gruesome evidence from smartphones, or dash- or bodycams, often proves less damning than it first appears; prosecutors, judges or juries decide that, while a decision to shoot might have been tragically mistaken, it wasn’t criminal. The result, says Jim Bueermann, a retired police chief who leads the Police Foundation, a think-tank, is that the public first “sees something that looks awful”, then the apparent impunity becomes, for the aggrieved, “another example of injustice”. + +Moreover, watching these remote but shockingly intimate scenes—viewing that, for many, seems at once voyeuristic and a civic duty—conveys the impression that they are ever more common. In fact, says Peter Moskos of John Jay College of Criminal Justice, the police fired their weapons much more frequently in the 1990s, and even more in the 1970s. The rise is not in the number of incidents but in the breadth and speed of their circulation. Even without court convictions, that exposure can spur changes in police practices and open windows into black experiences for white audiences. Like the general state of policing in America, the videos incite rage, but they also contain reasons for hope. + +A symptom, not a solution + +Some think this uproar is not just distressing but destructive. Heather Mac Donald of the Manhattan Institute, a think-tank, believes it has led to a retreat from discretionary policing tactics, street stops and the like, that are liable to be denounced as racist. This reticence, she argues, explains the recent bump in the murder rate in some cities. (It has risen in Dallas, though overall crime there has fallen to historical lows, as it has in the country at large.) The victims of this so-called “Ferguson effect”, she points out, are often the black residents of high-crime urban neighbourhoods. She blames Black Lives Matter, among others, and denies that the criminal-justice system is racially biased. One policeman in Dallas concurs. “Attacking us,” he says, “doesn’t stop black folks being killed.” He fingers the media, too, for inflaming anti-cop sentiment: “Our blood for their dollar”. + +Baton Rouge remembrance + +The “Ferguson effect” is controversial and disputed. But many officers and observers agree that, in a more general sense, the reach of the police is more limited than society would like. Dallas’s Chief Brown this week objected that the common response to the problems of drug addiction, mental illness, failing schools and family breakdown is, “Let’s give it to the cops.” Mr Obama echoed that complaint: “We ask the police to do too much,” he said, “and we ask too little of ourselves.” + +Bias among police officers, the president also argued, is not specific to them but evidence of wider prejudices. The police, in other words, are not the origin of society’s pathologies; they are a symptom of America’s problems as much as they are a solution. As Trotsky once said of the army, they are “a copy of society, and suffer from all its diseases”. + +On the face of it, this wider picture looks grim, too. According to a recent survey by the Pew Research Centre, 84% of black Americans think they are treated less fairly by police than whites are; only 50% of whites agree. There are similar gaps in perceptions of the fairness of courts, banks and workplaces. And in the durability, even existence, of the basic wrong: among blacks, 43% believe the country will never make the changes required for racial equality; only 11% of whites concur. Among whites, 38% think that goal has already been accomplished; only 8% of blacks are so sanguine. Blacks are twice as likely to think that racial issues are neglected. According to Gallup, the share of Americans who worry “a great deal” about race relations has doubled in two years. + +Behind this gulf in perceptions there are stubborn and severe disparities in material circumstances. Black youngsters are less likely to finish high school, make it to college or graduate if they do. Black adults earn less than their white counterparts, even when they have broadly comparable qualifications and do similar jobs. Blacks are more than twice as likely to be poor or unemployed; at the last count, the net worth of white households was 13 times higher. Black life expectancy is four years lower than white Americans’. + +And yet, once again, disappointment and progress are enmeshed; indeed, as with the new awareness of police abuses, the disappointment may partly be the consequence of the progress. Among the signs of the latter are the soaring public approval and incidence of interracial marriage. Then there is Mr Obama’s presidency itself. Historic leap that it was, it seems also to have contributed to the disenchantment, in two ways. The advent of a black presidency alarmed bigots, some of whom have denounced and attempted to delegitimise it: as Pastor Butler put it, “What was in some folks, came out.” + +Meanwhile, many younger people, in particular, evince frustration that racial tensions have proved so intractable. To have expected them to evaporate was naive. But, in a way, the sense of betrayal is an inverted form of optimism. + +Towards the sound of fire + +These neglected signs of racial progress lie behind Mr Obama’s assertion at the memorial service that “we are not so divided as we seem”. America, he said a few days earlier, was not as polarised as in the 1960s, an era now often enlisted in comparisons, in particular for the violence that engulfed the Democratic convention in 1968. Donald Trump, on the other hand, observed that the recent strife “might be just the beginning for this summer”; and, if there are reasons for confidence about the political sequel, there are also some to be fearful. Race and party allegiance now overlap tightly and toxically, with almost all blacks voting Democratic, and many Republicans sceptical of race-based grievances. In a classic case of people hearing only what they want to, Mr Obama’s opponents ignore his praise for policemen and pick up only his criticisms, even, sometimes, accusing him of complicity in Dallas. + +And there is one aspect of these events for which, at the federal level, the prospects look straightforwardly glum: guns, as peculiarly an American problem as is its slavery-shaped racial history. Considered in that context, the Dallas killer’s peers are not black militants but other savage wielders of assault rifles, such as the butchers of Orlando and Sandy Hook. The role of guns in Dallas was not limited to the shooting itself. Others at the demonstration were openly carrying weapons, which served only to distract the police. As Chief Brown said, when a person with a rifle slung over his shoulder starts running, as some innocent protesters did, it is confusing. + +Guns make police work not just difficult but terrifying, and therefore dangerous for everyone. The long-term trend in cop-killing is downwards, as is that for murder as a whole, but 39 were fatally shot on duty last year, according to the Officer Down Memorial Page; several have been attacked since the tragedy in Dallas, in Georgia, Michigan and elsewhere. Most officers never fire their weapons in earnest in their entire careers, but those that do often shoot out of fear, justified in general in a gun-saturated society, if not always by the circumstances. These killings of and by policemen are symbiotically linked, together contributing to a throb of avoidable deaths in which, unlike the other themes of this traumatic week, it is hard to find anything hopeful. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702215-after-dreadful-week-despair-over-race-and-policing-understandable-america-also/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Policing and race + +Quantifying Black Lives Matter + +Are black Americans more likely to be shot or roughed up by police? + +Jul 16th 2016 | From the print edition + + + +AS A teenager, Roland Fryer had “unpleasant” run-ins with police. Officers pointed guns at him six or seven times. Even now, the youngest African-American to get tenure at Harvard wonders why police shout loudly at him as soon as he forgets to indicate when driving. But when the economist began researching racial differences in the use of force by police officers, he did not want his own experience to prejudice his findings. To understand how cops work he joined them on the beat in New Jersey and Texas. + +Then he collected a lot of data. In a paper published on July 11th, Mr Fryer crunched police-generated data on almost 5m cases from 2003 to 2013 as part of New York city’s Stop, Question and Frisk programme. He then analysed how non-lethal uses of force—such as pushing, kicking and baton-wielding—varied by race. Based on the raw data, blacks and Hispanics were more than 50% more likely to encounter police force than whites. + +This in itself was not proof of racial discrimination, notes Mr Fryer. The gap might be a result of what happened during the encounters; blacks might have been more likely to resist. And yet, after any such differences were accounted for, the results still suggested bias. Blacks were 17.3% more likely to incur use of force after controlling for the characteristics of the civilian (such as age) and the encounter (such as if they ran away, complained or hit an officer). Analysis of a national survey of citizens’ contact with police found even greater disparities in police use of non-lethal force. Mr Fryer adds that blacks who were reported by cops as being perfectly compliant with police instructions during their interactions were still 21.1% more likely than whites to have some force used against them. This points to racial prejudice. + +What shocked Mr Fryer was when he looked in detail at reports of police shootings. He got two separate research teams to read, code and analyse over 1,300 shootings between 2000 and 2015 in ten police departments, including Houston and Los Angeles. To his surprise, he found that blacks were no more likely to be shot before attacking an officer than non-blacks. This was apparent both in the raw data, and once the characteristics of the suspect and the context of the encounter were accounted for. + +Mr Fryer dug deeper into the data. He combed through 6,000 incident reports from Houston, including all the shootings, incidents involving Tasers and a sample in which lethal force could have justifiably been used but was not. What he found was even more startling: black suspects appear less likely to be shot than non-black ones, fatally or otherwise. + +These findings need caveats. Houston is one city; there are no equally detailed data for the rest of the country (though findings in the other districts seem to support the conclusions). The city voluntarily submitted its reports; it may have been confident of its lack of bias. Critics of Mr Fryer’s work have pointed out that his paper does not address any bias in an officer’s decision to stop a black person in the first place—a common criticism of stop and frisk. Mr Fryer acknowledges that blacks are more likely to be stopped, but adds that his findings are consistent with other types of encounter between police and civilians. + +In explaining why racial bias is present in all cases except shootings Mr Fryer suggests that it may reflect how officers are rarely punished for relatively minor acts of discrimination. When he shadowed cops on patrol, Mr Fryer was told repeatedly that “firing a weapon is a life-changing event”—and not only for the victim. Although activists argue that too many officers get off lightly when they harm civilians, cops find it hard to escape any scrutiny after discharging their weapon. More transparency and accountability are therefore needed, even when police encounter members of the public. + +For racial discrimination by police is socially corrosive. Mr Fryer suggests that if blacks take their experience with police as evidence of wider bias, it can lead to a belief that the whole world is also against them. They may invest less in education if they think employers are biased too. It is more than 50 years since Martin Luther King spoke of blacks being “staggered by the winds of police brutality”. Those winds are still blowing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702219-are-black-americans-more-likely-be-shot-or-roughed-up-police-quantifying-black-lives/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Fishing + +All about the bass + +Montana’s rivers are warmer than they should be, which is bad news for trout + +Jul 16th 2016 | LIVINGSTON, MONTANA | From the print edition + +Hotter than July + +STANDING on the banks of the Yellowstone river in southern Montana on the last afternoon in June, Dan Vermillion gazes at the clear, sun-dappled waters, checks the river temperature on his smartphone, and pronounces the conditions “great fishing”. Alas, this does not cheer Mr Vermillion, who grew up fishing these waters for trout and now works as a high-end outfitter, guiding the wealthy and powerful to the world’s best fly-fishing spots, from Montana to Alaska and even Mongolia. For these fine fishing conditions—with the water running clear after months of turbid flows from spring snowmelt, and the temperature at 65°F (18.3°C)—have arrived too early, by some weeks. The water should be ten degrees cooler, frowns Mr Vermillion, and data retrieved by his smartphone from a nearby measuring station shows flows at less than half their historical median level. + +All rivers vary from year to year. What worries federal wildlife officials, state biologists and a growing number of devoted anglers across the mountain West, is that, for the past 15 years, some of America’s finest fishing rivers keep breaking records for early snowmelts, too-warm water and low flows. Mr Vermillion is also chairman of the Montana Fish and Wildlife Commission, a government body. To his dismay he has just approved some of the earliest fishing closures ever recorded, closing legendary trout waters on such rivers as the Gallatin, Beaverhead and Jefferson every afternoon with effect from July 1st, after water temperatures hit 73°F (22.8°C) on three consecutive days. Afternoon closures are a compromise, aimed at giving trout a respite in the warmest hours of the day. Trout are cold-water fish, which struggle to digest food above such temperatures, and start to die once water nears 80°F (26.7°C). Warmer water carries less oxygen, too, so that trout caught and released may never recover once back in the river. + + + +Such worries used to be rare. In the six years from 1995 to 2000 water temperatures on the Jefferson river, in south-western Montana, exceeded 23°C on only 23 days, and in some years never went that high. In 2015 alone, the water crossed that danger-mark on 21 days and exceeded 26°C in early July, leading to significant fish deaths. After studying data going back decades, the long-term trends are “exceptionally clear”, says Mr Vermillion. Other signs of stress may be seen. The coldest, highest rivers of south-western Montana are home to the Yellowstone cut-throat trout, named after an orange under-jaw marking like a slash. Smaller than non-native rainbow and brown trout, which were introduced to Montana in the 19th century, the cut-throat is especially sensitive to warming water. Rainbow and brown trout are pushing up into cut-throat fisheries, even into the protected rivers of Yellowstone National Park, where anglers must watch for grizzly bears and snorting, shaggy-headed bison, but increasingly catch hybrid trout, rather than pure-bred cut-throats. Worse, smallmouth bass, a warm-water species, are each year creeping farther and farther up Montana’s rivers. Bass have even been caught near Mr Vermillion’s office in the handsome town of Livingston. + +Something, in short, is going on. Where consensus breaks down is when locals, scientists, politicians and even fishing clients debate whether what is going on has links to man-made climate change. All too often discussions follow partisan lines, says Mr Vermillion. He is a Democrat in a conservative state: his office wall has a photograph of him fishing with President Barack Obama in Montana (“Dan! You got me hooked,” reads the presidential inscription). His wife’s family, who are conservative farmers, acknowledge that the weather is changing. “Where it gets tricky for them is to admit that it is man-made.” Montana’s three-man congressional delegation splits on party lines: Representative Ryan Zinke and Senator Steve Daines, who are Republicans, call the science of climate change far from proven, and both have opposed carbon-emissions curbs that might hurt their state’s coal and oil industries. Senator Jon Tester and the governor, Steve Bullock, both conservative Democrats, call climate change a threat and back the development of renewable energy in Montana (a windy place), while urging caution over federal policies that would impose rapid change on the coal sector. + +Spending by tourists is increasingly valuable, with the state Office of Tourism claiming that 53,000 jobs are supported by visitors. Mining employs fewer than 7,000 people in a state of 1m inhabitants. But coal and oil jobs pay better than tourism work, and energy companies pay a lot of taxes. Still, fish are changing the public discussion about climate change and whether it might be hurting Montana, says Mr Vermillion, who as a wildlife commissioner meets frequently with hunters, ranchers and other groups. Telling people where smallmouth bass have been found is his most effective piece of evidence for convincing audiences that the weather is changing, he notes, trumping dry statistics about rising temperatures, shrinking snow packs and more frequent wildfires. “What bass say about our rivers is spooky.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702220-montanas-rivers-are-warmer-they-should-be-which-bad-news-trout-all-about/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Homeopathy politics + +Bad ideas in small doses only give voters a taste for something stronger + +Jul 16th 2016 | From the print edition + + + +FOR anyone with a bias towards scientific rigour, pharmacies in continental Europe are liable to send blood pressure soaring. Many are gleaming white, high-priced temples to hypochondria, peddling cures for maladies not found in other lands (the French are obsessed with “heavy leg syndrome”, for instance). Worse, Euro-pharmacists often offer, unasked, remedies based on homeopathy: the bogus theory that some compounds, even toxins like arsenic, if so diluted that only a “memory” of their presence remains in a pill or potion, have magical curative powers. A European doctor offered Lexington a convincingly cynical explanation: because many clients are not very ill and “homeopathic” sugar pills are cheap to make, quack cures offer low risks and high profits. + +Alas, a similar quackery increasingly infects politics across the Western world, and the side-effects are grave. Political leaders from America to Austria have a problem. To simplify, lots of people want something impossible: a return to some hazily-remembered golden era before globalisation, offering jobs for life, upward mobility and shared traditional values. + +Too often, the response of mainstream leaders amounts to political homeopathy. They offer a small dose of a harmful idea, whether that is foreigner-bashing, protectionism or ugly partisanship, in the vain hope of soothing voters until their fevers pass. That is a mistake. What voters hear is leaders agreeing that economies should be shielded from global competition, that immigrants disproportionately steal jobs and property, or that political opponents are bent on wrecking the country. But then, to the disgust of supporters and grassroots activists, the realities of global commerce mean that those same leaders are only able to deliver half-remedies: eg, long-term targets for reducing immigration and vague pledges to put native workers first. Then such elites are surprised to find themselves barged aside by populist insurgents like Donald Trump peddling toxic ideas—build a border wall, start a trade war, ban Muslims—at full strength. + +Republicans hold their national convention in Cleveland from July 18th-21st, at which they are due to make Mr Trump their presidential nominee. In a neat bit of timing the Republican majority leader of the Senate, Mitch McConnell of Kentucky, recently published a book of memoirs, “The Long Game”, explaining his philosophy of conservatism. An owlish, taciturn, supremely disciplined strategist—at one point his book describes a year and a half spent outwitting a Senate rival, ending with an assassin’s quiet boast: “Larry never saw it coming”—Mr McConnell is in many ways the anti-Trump. + +That does not make Mr McConnell a centrist. Unlike Mr Trump, a would-be strongman who talks with relish of the president’s executive powers, the Senate leader returns time and again to what he considers his distinctively Republican distrust of government—reinforced by a brief stint at the Department of Justice, recalled as “people shuffling paper, doing the bare minimum, spending their days in an endless cycle of bureaucracy”. Mr McConnell praises the wisdom of the Founding Fathers in creating a Senate whose rules—requiring a super-majority to pass most laws—serve to temper the “worst impulses” of both politicians and the voters who put them there. + +Mr McConnell, a senator since 1985, differs from Mr Trump in other ways. The Senate leader favours free-trade pacts and commends George W. Bush for keeping America safe after the September 2001 terrorist attacks. He praises Mr Bush’s belief that immigration is to be celebrated, not seen as a “problem to be solved”. He calls Mr Trump’s Muslim ban “a very bad idea”. + +Chilly in public, the majority leader reveals a gentle side in his book, notably in a tribute to his mother. She nursed him through childhood polio, which enforced two years of painful bed rest. After his mother suffers a stroke in old age, the senator climbs onto her hospital bed and recalls how she lay beside him as a toddler, making towns out of toys on his blankets, transforming his small bed into a “nearly limitless world”. When she dies the next day, his sadness makes for hard reading. He describes his father’s belief in racial equality and “joy” at the passage of the Civil Rights Act—views which, he notes, were “extraordinary” for a man raised in the deep South. Mr McConnell scolds Barry Goldwater, the Republican presidential candidate in 1964, for opposing the civil-rights bill, a decision that “hurt our party for decades”. + +Unsafe at any strength + +Yet Mr McConnell has endorsed Mr Trump, a man willing to use racial, ethnic and religious resentment to win votes. Like other Republican grandees, he complains about conservative outside groups and talk-radio hosts who in 2013 forced a “futile” government shutdown. But this is the same Mr McConnell who accuses President Barack Obama of a “far-left” agenda to “Europeanise” America, and boasts that when Mr Obama pushed ideas “bad for the country”, such as his health-care reform law, Mr McConnell’s goal was to deny him a single Republican vote, to make it “obvious” which party was to blame. Small wonder that activists think they hear him declaring the Democrats a party unfit for bipartisan co-operation. + +In an interview, Mr McConnell dismisses the suggestion that legislation like the Civil Rights Act passed only because in the 1960s the two parties were still broad and overlapping coalitions, and home to many centrists. When he was a child in the South, he says, “You couldn’t tell a Republican from a Democrat.” But now the two parties are “properly labelled” and “people pretty much know what they are voting for.” It is an elegant argument: modern hyper-partisanship as a source of democratic accountability. It is also unconvincing. Mr McConnell can distance himself from Mr Trump all he likes. But by peddling the poison of hyper-partisanship, even in controlled doses, he enabled his rise. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702209-bad-ideas-small-doses-only-give-voters-taste-something-stronger-homeopathy/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Tierra del Fuego: The tax haven at the end of the world + +Bello: Let’s sue the conquistadors + + + + + +Articles Sections Next + +Tierra del Fuego + +The tax haven at the end of the world + +A giant economic experiment at Argentina’s southern tip is starting to flag + +Jul 16th 2016 | USHUAIA | From the print edition + + + +EARLY on a Tuesday morning, a team of mainly female workers is assembling mobile phones. Hair covered and hands gloved, they connect chipsets and insert batteries. This could almost be China, the homeland of Huawei, the company which designed these devices. But the plant is 16,000km (10,000 miles) away from Huawei’s base, and a long way from almost everywhere else: in the archipelago of Tierra del Fuego, a place where the buzz of productive energy, impressive as it is, has begun to die down. + +The assembly line’s location in a land of glaciers and tundra reflects a giant exercise in mixing geostrategy with industrial policy. Argentina’s half of the main island became a special economic zone in 1972 when the then ruling junta decided to populate it, hoping to keep Chile’s military ambitions at bay. To lure people to this wild corner of the Earth, it exempted firms and residents from most taxes. + +As a bid to turn a remote place into a hive of manufacturing, the industrialisation of Tierra del Fuego recalls the towns planted by Soviet planners in Siberia. But a closer parallel is with Manaus, the steamy, inaccessible city on the Amazon where Brazil’s generals, in a similar use-it-or-lose-it spirit, created a free economic area in 1967. Both South American zones have become bases for consumer electronics; Manaus also makes almost all Brazil’s motorcycles. In both cases, tax breaks go with protectionism; a minimum of parts and accessories must be made domestically. + +However boldly planners set out to defy geography, the effort usually peters out in the end. But with Tierra del Fuego, it is not for lack of trying. The place did draw people; its population rose 11-fold between 1970 and 2015 to about 150,000. That marks a rise of about a fifth since 2009, when Cristina Fernández de Kirchner, Argentina’s former president, blocked foreign electronic goods by raising sales and import taxes. Since then international brands have had to use local makers like Grupo Newsan, the owner of that phone-making line, to reach Argentine users. Newsan’s six plants in Tierra del Fuego also put together TV sets, computers and air-conditioning units. Phone kits come in up to 40 pieces. Once assembled, they are officially Argentine and escape import tax. Between 2009 and 2015 output in the province’s electronics plants tripled and employment surged. Newsan is the main private employer: in 2015 it was responsible for 5,000 jobs. + + + +But this year demand for its wares has cooled as Mauricio Macri, Argentina’s president since December, brings a dose of realism to a land where his predecessor gave a sham sense of economic security. Consumption has fallen, as high interest rates are used to curb inflation of around 42% a year. The country’s dip into recession is felt in Ushuaia. In late 2015 Newsan was turning out 500,000 phones a month; in the first six months of 2016 it was half that rate, and 400 jobs were shed. + +Ushuaia’s dowdy state does not help the mood. Drab buildings are in ugly contrast to the snow-capped peaks. In the provincial governor’s office, corridors are grubby and the ceiling needs repair. Gloomy islanders see many threats. Managers fear Mr Macri will open the electronics market to imports. A government vow to avoid “indiscriminate” liberalisation did not reassure them. In 2023 the province’s status as a special economic zone will expire, and it may not be renewed. + +Without it, Tierra del Fuego’s electronics firms would struggle much harder. In order to find staff, they already pay around three times the Buenos Aires wage. Isolation costs a lot. Because Tierra del Fuego lacks a good port, about 90% of foreign inputs are shipped to Buenos Aires before being loaded up for a four-day road trip south. Once products are assembled, they trundle back. This makes them crazily expensive. It can be cheaper to fly to New York and buy a phone than to get the same device in Buenos Aires. + +The island’s public sector, too, is hard to sustain. Some 98% of the provincial budget goes on employment costs. Under a “law of 25 winters”, state workers can retire after 25 years on very generous terms; some stop work at 42 on a pension of up to 210,000 pesos ($14,000) a month. The head of the local teachers’ union, Horacio Catena, calls these advantages fair return for “the cold, the wind, the storms, the isolation”. But they seem unsustainable. When Rosana Bertone, the province’s governor, took office in December, pensioners had not been paid for three months. + +On January 8th she raised the retirement age to 60 and put a levy of up to 4.5% on public-sector wages and pensions to plug the gap. Irate citizens blocked the road to the mainland for ten days and erected a camp outside government house, keeping Ms Bertone from her office. Striking teachers sent 35,000 pupils out of class for up to two months. On May 31st police burned the camp and dispersed the protesters. They remain defiant, but so is Ms Bertone. “This is not a fantasy island,” she says. + +With a fiscal deficit of 5.8% of GDP in 2015, the national government can ill afford a status quo which means the treasury forgos 23.5 billion pesos a year (0.5% of GDP) in tax receipts. And the place lost strategic importance after Argentina made peace with Chile in 1984. + +So far the government has revealed no plans for the archipelago. That frustrates local firms; they want the authorities to find new ways to make them competitive, for example by expanding the port. + +Some also want the province to imitate Manaus and move beyond consumer devices, perhaps into automotive electronics. But more hope may lie in bolder change. Ms Bertone would like to tilt the economy towards tourism, timber and hydrocarbons, which abound in the sea. Ushuaia could thrive as a base for Antarctic tours. “Our geographical position is privileged,” insists the governor, who calls herself a “natural optimist”. It will take clear thinking as well as an upbeat spirit to sustain that mood. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21702216-giant-economic-experiment-argentinas-southern-tip-starting-flag-tax-haven/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +Let’s sue the conquistadors + +A hedge fund’s campaign risks bringing free-trade deals into disrepute + +Jul 16th 2016 | From the print edition + + + +SCATTERED across rural Peru are theruins of thousands of casas hacienda (estate houses), reduced to broken porticos and crumbled walls. These decayed structures recall one of the most radical land reforms ever undertaken in a noncommunist country. In the 1970s a leftist military government expropriated 15,286 rural properties and 9m hectares (22m acres) of land. It was a heavy-handed response to gross inequality in landholding and near-servile labour relations that stemmed from the Spanish conquest. + +The bureaucrats turned the estates into top-down co-operatives, which soon failed. Food imports soared for two decades. But the reform had an unintended consequence. In the 1980s the co-ops divided up their land among around 300,000 beneficiaries. That laid the foundations of a market-based agricultural revolution in Peru, featuring medium- and small-scale farmers who export fruit, vegetables, spices and grains. + +The reform was also unfair. The landowners received compensation totalling 15 billion soles (then around $350m), of which 73% was in bonds, redeemable over 20 to 30 years and paying annual interest of 4-6%. According to one calculation, that amounted to only a tenth of the market price. When Peru’s economy collapsed in the 1980s, the government eventually stopped servicing the bonds. Although there were individual hard-luck stories, most of the landowners built new and successful urban lives. As for Peru, after a quarter of a century of macroeconomic stability and rapid growth, it has become a Latin American success story with an investment-grade credit rating since 2008. + +Now, some 40 years later, these forgotten agrarian-reform bonds are the subject of an international dispute. Gramercy, a Connecticut hedge fund, filed an arbitration claim last month against Peru’s government under the investment clause of the country’s free-trade agreement (FTA) with the United States of 2009. Gramercy claims to have bought some 10,000 of the bonds in 2006-08, and is demanding $1.6 billion for them. It has waged an aggressive lobbying and publicity campaign claiming that Peru is in “selective default”, though financial markets have shrugged at this. + +So far, so like the case in which “vulture funds” extracted $5 billion from Argentina’s new government earlier this year. Except that these are bearer (ie, unregistered) bonds issued under Peruvian law as compensation, not as an investment instrument. The dispute turns in part on how to update their value, given that Peru went through hyperinflation and two currency reforms after they were issued. In 2001 the Constitutional Tribunal ruled that the unpaid bondholders should receive “market value”. In 2013 it specified that this should be calculated by reference to the dollar. A government decree then set out a procedure for registration and a complex mathematical formula for payment of the bonds. Gramercy claims the 2013 judgment was rigged and says the formula offers only 0.5% of what it thinks it is owed. + +The government counters that Gramercy made a speculative purchase at heavily discounted prices because of the legal uncertainty surrounding repayment, something it says the fund’s own due diligence recognised. Gramercy refuses to disclose how much it paid for the bonds; the government says its claim would give it a return of up to 4,000%. + +Gramercy’s purpose may be simply to make a nuisance, in the hope that Peru’s new government, which takes over on July 28th and has a large quota of bankers and businessmen, makes a better offer. Certainly the official repayment formula, which has yet to be applied, looks like a ruse to avoid revaluing the bonds and should be reviewed. + +Bigger issues are at stake in this dispute. The Peruvian bondholders have indeed had rough justice. But as Enrique Mayer, a Peruvian anthropologist, wrote of the agrarian reform: “The irony is that landlords, as they complained about the lack of due legal process in expropriation, were the ones whose parents and grandparents had so patently disregarded laws or arbitrarily manipulated them.” A rigorous attempt to apply the rule of law to history would start with the conquistadors. + +Hyperinflation confiscated the incomes, pensions and assets of many Peruvians. Why should only holders of agrarian bonds be fully compensated? This is a political question, for Peruvians to decide. But no reasonable person could construe Gramercy’s speculative punt on archaic local IOUs as a foreign investment of the kind that the FTA is designed to protect. By invoking the FTA Gramercy is doing its bit to discredit free trade and globalisation. Its case should be thrown out. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21702218-hedge-funds-campaign-risks-bringing-free-trade-deals-disrepute-lets-sue-conquistadors/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Japanese politics: Diet control + +Japan’s Emperor Akihito: The long goodbye + +Australia’s election: Squeaking back in + +Kashmir violence: After the funeral + +Cambodia: Murder most murky + +Taiwanese identity: Hello Kitty, goodbye panda + + + + + +Articles Sections Next + +Japanese politics + +Diet control + +Shinzo Abe may have the two-thirds majority he needs to change the constitution. But fixing the economy is more urgent + +Jul 16th 2016 | TOKYO | From the print edition + + + +AS THE results of the election for the Diet’s upper house rolled in on July 10th, Japan’s prime minister, Shinzo Abe, beamed. And why not? This was his third sweeping election victory since he and his Liberal Democratic Party (LDP) returned to power in late 2012. It was won despite a sputtering economy and mounting doubts about how Mr Abe might fix it. And it moves him a big step closer to achieving a lifelong political ambition: unshackling Japan from the constitution imposed by America on a defeated country after the second world war. + +With its junior partner, Komeito, the LDP won 70 out of the 121 seats up for grabs (half the upper house), admittedly on a low turnout. It nevertheless gives the ruling coalition firm control over the upper house. And, with support from like-minded parties and independents, Mr Abe can now claim a two-thirds majority in both upper and lower houses. That, in theory, gives him the long-coveted supermajorities to present constitutional changes to voters for approval by referendum. + +First, though, Mr Abe must turn to boosting the economy. For all the trumpeted “Abenomics” of the past three years, including monetary and fiscal stimulus, output is forecast to grow at just 0.9% this year. Business confidence is flat, wages are stagnant and, though jobs are easy enough to find, consumption is sluggish. Not for the first time, Abenomics needs a reboot. + +In the circumstances, it is remarkable that the opposition Democratic Party (DP) landed so few punches. It lost 15 seats. Post-Brexit turmoil in Europe may have spurred voters to cling to the stability that the LDP represents. The DP’s tactical agreement to co-ordinate fielding candidates with three disparate opposition parties unsettled many voters. Gambling all on its opposition to constitutional change, the DP had few economic proposals. + +Having postponed a planned rise in the consumption tax, Mr Abe has instructed the finance ministry to draw up a “supplementary” budget to be passed in a special session of the Diet, expected in mid-September. The fresh stimulus may amount to as much as ¥10 trillion ($99 billion), or 2% of GDP—to be added to the current budget deficit and national debt of about 6% and 250% of GDP respectively. Mr Abe remains wedded to the old LDP recipe of construction projects and high-speed trains. Some of the money will be raised through investment bonds which, like nearly all the finance ministry’s debt issuance these days, will be bought by the central bank, in a tight fiscal-monetary tango. There is also talk of direct cash transfers to boost consumption among targeted groups, notably the young, the working poor, women and pensioners—a variant on “helicopter money” that seems destined to be called “drone money”. + + + +A cabinet reshuffle is likely in August, and any Buggins’-turn appointments will be presented as bringing in new reformist blood. It is possible that the finance minister, Taro Aso, will want to go. But Mr Abe knows he has to do more than change faces and push yet more stimulus. One measure hinted at for the autumn Diet session is to reform the labour market. The prime minister, his advisers say, has come to believe that the economy’s problems are structural and to do with a shrinking population and rigid work practices. Japan has a two-tier labour market of cosseted permanent staff and less-protected employees on non-regular contracts—many of them young. + +That said, the political will for labour reform, or indeed much structural change of any sort, has eluded Mr Abe to date. And the Diet session has other urgent business, including passing legislation to join the Trans-Pacific Partnership, a free-trade deal that has yet to be passed by America’s Congress and is opposed by both presidential candidates (though Hillary Clinton’s precise views are hard to pin down). + +The prime minister sees economic strength and his nationalist agenda to restore Japanese power and prestige as one combined objective. But for all the opposition’s efforts, Mr Abe ducked the debate on constitutional change during the campaign—for good reason. A pre-election survey by NHK, the public broadcaster, found only 11% of respondents thought the constitution of greater concern to them than bread-and-butter issues. + +With victory in the bag, he has now called for a debate on changing the constitution, saying it is his “duty” as president of his party. Setsu Kobayashi, a constitutional scholar at Keio University in Tokyo, says that on security and constitutional matters, Mr Abe has form in pushing ahead with unpopular measures, such as a controversial law that now allows Japan to take part in collective defence with allies. + +An LDP draft for a revised constitution calls for, among other things, rewriting Article 9, which renounces war, to recast the country’s “self-defence forces” as regular armed forces. Getting that draft passed will require the “art of politics”, Mr Abe said this week. China may yet prove his best ally: it reacted furiously to an international ruling on July 12th dismissing its territorial claims in the South China Sea (see page 47), while its navy and air force have increased their probing of the waters and air space around Japan. At present, though, the hurdles to constitutional change remain high. Natsuo Yamaguchi, Komeito’s leader, for one, has warned against tampering with the constitution’s pacifist clause. + +Close advisers suggest that Mr Abe will not push for early change. Brexit, they say, has come as a stark reminder to him of how, without laying the groundwork, a referendum can divide a country and produce an unexpected and “wrong” outcome. Besides, no consensus exists on what the changes should be. While some would-be amenders (including in the DP) care about Article 9, others are more concerned with enshrining human rights or simply revamping the procedures for amending the constitution. Still others talk of a new amendment giving the prime minister and self-defence forces emergency powers after a natural disaster. + +So no immediate drive for constitutional reform, perhaps. All the more reason, then, to judge Mr Abe by his promise to transform the economy. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21701960-upper-house-election-japan-goes-emphatically-favour-shinzo-abe-diet-control/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Japan’s Emperor Akihito + +The long goodbye + +A remarkable figurehead wants to step down + +Jul 16th 2016 | TOKYO | From the print edition + +Goodbye Akihito, but not quite yet + +EVEN for such an unusual institution as Japan’s imperial system, Emperor Akihito is an anomaly. Descended from the sun goddess, Amaterasu, and son of the man-god in whose name Japan waged total war, Akihito was educated by humble Quakers. If there is something of which he can be said to be truly proud, it is his scientific passion for fish—“Some Morphological Characters Considered to be Important in Gobiid Phylogeny” being a particular highlight. Yet for all his innate modesty, he lives on 115 manicured hectares bang in the centre of crowded Tokyo. Life in the capital, in a very real sense, revolves around him. + +As for his duties as emperor, Akihito is an anomaly, too. At home, he has knelt to comfort victims of natural disasters. Across Asia, his frequent travels and sensitive speeches have helped make amends for Japan’s militarist past—even as the country's politics has lurched rightwards. + +The prime minister, Shinzo Abe, is among the revisionists who imagine a beautiful past. He and other ministers like to worship at the Yasukuni shrine that glorifies militarism; Akihito pointedly refuses to visit. The Economist once asked a rightist, whose publications glorify the emperor system and whitewash Japan’s wartime aggression, how he felt about having a liberal emperor who disagreed with nearly all his views. No matter, he replied: Akihito was merely the current, imperfect vessel; one day, he would pass. + +And so, this week, came news that the 82-year-old would like to retire. The reign of his father, Hirohito, coincided with Japan’s transformation from militarist empire to modern economic powerhouse. Akihito’s own reign since 1989 oversaw a period of gentle economic decline and diminished capacities. Kneeling to meet his subjects at eye level seemed to acknowledge that path. Now pneumonia, prostate cancer and heart surgery have weakened him. Having to scale back official duties has caused him “stress and frustration”, says NHK, the public broadcaster, in the timorous language reserved for the imperial family. + +A law must first be passed to allow Akihito to step down—nothing like this has happened in modern times. As for his son and successor, Prince Naruhito (speciality: 18th-century navigation on English waterways), he may struggle in the role. The royals are virtual prisoners of the Imperial Household Agency, the gnomic bureaucracy that runs the world’s oldest hereditary monarchy. It has treated Naruhito’s wife, Masako, a former diplomat, as an imperial birthing machine, and she has grappled with depression. Whether Naruhito would rather navigate the upper Thames than the forces that swirl around the monarchy remains unclear. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21702210-remarkable-figurehead-wants-step-down-long-goodbye/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Australia’s election + +Squeaking back in + +A tight victory hurts Malcolm Turnbull’s political authority + +Jul 16th 2016 | SYDNEY | From the print edition + + + +IT WAS hardly the mandate Malcolm Turnbull had hoped for when he called an early general election, asking for a stable majority. On July 10th, eight days after the vote, Australia’s prime minister was at last able to claim victory for his conservative Liberal-National coalition. + +But he appeared to have secured only the narrowest of majorities—76 seats in the 150-seat House of Representatives, down from 90 seats previously; late counting may snare one more. But he may still have to rely on independents and small parties (two minnows, Bob Katter and Cathy McGowan, say they will back the prime minister), who are also likely to hold the balance in the Senate, the upper house. + +The tight result could shrink Mr Turnbull’s authority in the Liberal Party, the coalition’s senior partner. A centrist, he persuaded the Liberals’ rightists that he could rescue the party from its dire electoral prospects under his divisive predecessor, Tony Abbott, whom he unseated last September. That now looks unconvincing, and he can expect tensions at the governing parties’ first post-election meeting on July 18th. + +A big question hangs over Mr Turnbull’s ability to manage the economy. He talks of the need to diversify growth “fuelled up” by a mining boom linked to China. With annual GDP growth at 3.1% and an unemployment rate below 6%, Australia has so far managed this transition well. + +But his core campaign promise, to cut Australia’s company tax rate from 30% to 25% over the next decade, now seems doomed in the Senate. Moreover, the risk of political gridlock has focused the attention of markets on the budget deficit of A$37 billion ($26 billion), 2.2% of GDP, in the current fiscal year. A balanced budget is not projected before 2020-21. + +After the election Standard & Poor’s, a ratings agency, issued a negative outlook on Australia’s AAA credit rating: it believes the close result means “fiscal consolidation may be further postponed”. Saul Eslake, an economist, reckons a ratings downgrade would hit business and consumer confidence. + +So Mr Turnbull’s likely inability to push through business tax cuts, which would reduce government revenue by around A$50 billion, could turn out to be his “saviour”, sharply improving the long-term budget outlook. For now, says Paul Bloxham, an economist at HSBC, markets have been largely untroubled by Australia’s result. + +Mr Turnbull will be wary of too much belt-tightening: Bill Shorten, the Labor opposition leader, won votes by promising to champion Australia’s public health-insurance system. How Mr Turnbull handles this fiscal dilemma could determine the fortunes of Australia’s sixth prime minister in a decade. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21702031-tight-victory-hurts-malcolm-turnbulls-political-authority-squeaking-back/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Kashmir violence + +After the funeral + +The death of a militant sparks fury but little change + +Jul 16th 2016 | From the print edition + +Under the cosh in Kashmir + +AS NEWS spread that security forces had killed Burhan Wani and two other guerrillas, admirers from across the Kashmir Valley headed to his village. Over 20,000 gathered for Mr Wani’s funeral on July 9th. The crowd was too dense to hold prayers; armed militants in its midst fired their guns in salute with no fear of arrest. Over the next days angry protests spread throughout the valley. At least 36 people were killed and 2,000 wounded, nearly all by police gunfire. At least 117 civilians, injured by blasts of buckshot, were likely to lose their eyesight, doctors said. + + + +This was the worst outbreak of violence in Kashmir for six years, and yet it was dismally predictable. For months police, local leaders and residents had warned of imminent trouble in India’s northernmost state. True, the level of violence has dropped sharply from its peak in 2001 (see chart). The conflict has for decades squeezed the unhappy valley’s 7m inhabitants, nearly all Kashmiri-speaking Muslims, between the rival ambitions of India and Pakistan. Lately Pakistan has sharply curbed the export of guns and militants to a territory it long claimed as its rightful property, while India’s estimated 600,000 troops have underpinned a semblance of normality, allowing a return of tourism and the holding of regular elections. + +The problem, say Kashmiri activists, is that relative calm has bred complacency in New Delhi, the Indian capital, while frustrations among Kashmiris, and especially young people, have grown. Some troubles, such as a lack of good jobs, are shared with other Indians. But in Kashmir these are compounded by a long, cyclical history of political manipulation and repression, where local politicians willing to “play India’s game” are discredited in Kashmiri eyes. Most of India’s mainstream press blithely disregards Kashmiri opinion, preferring to view the region simply as a playground for Pakistani-sponsored terrorism. + +The current state government of Jammu & Kashmir, a polity that ties the Muslim-majority valley to adjacent regions of starkly different complexion, is an ungainly coalition between a traditional Kashmiri party and the Hindu-nationalist Bharatiya Janata Party (BJP) of the prime minister, Narendra Modi. The BJP has little understanding of and no patience for the Kashmiris’ disgruntlement. Its local partner, despite efforts to spread patronage and to exploit fears of Islamic radicalism, faces charges of acting as a stooge for New Delhi. + +In recent years the number of armed militants has plummeted, while their romantic appeal has risen. Police reckon that fewer than 200 fighters now roam Kashmir’s mountains and forests. The difference is that many, perhaps most, of the renegades are no longer jihad-minded infiltrators from Pakistan, but local boys, often from the south of the valley far from the frontier. Worryingly, these militants now tend to be of higher social class, and adept at using social media. + + + +Mr Wani exemplified this trend. Born in 1994 to a middle-class family, he went underground in 2010, during a previous round of violence, reportedly after his brother had been beaten and humiliated by policemen. Although local activists as well as at least one security official say there is little evidence that Mr Wani was directly involved in attacks on police, images of him in guerrilla clothes and armed with a rifle, against a backdrop of forests and mountains, spread via mobile-phone messages and Facebook. In a video posted in June he pledged that fighters would allow safe passage to Hindu pilgrims engaged in an annual trek to a mountain temple, and would accept the return of Hindu refugees from previous rounds of violence, but would resist attempts to establish colonies of Hindu returnees in Kashmir. + +While Mr Wani’s example is not thought to have inspired more than a few dozen new recruits to armed insurgency, it held strong symbolic appeal. His death, in a safe-house besieged by an overpowering Indian force, followed a familiar pattern. Every few weeks guerrillas ambush Indian patrols, and every few weeks a suspected infiltrator or militant is killed in return. Since they are more often, now, local men, their funerals have swollen in size, and these in turn have fomented street clashes. + +Many, even Mr Wani’s family, thought his death was inevitable, and would prove a catalyst for further violence. The surprise is that the anger seems to have caught out the Indian authorities. “The Indian government has got used to a firefighting approach,” says Basharat Peer, a Kashmiri writer who has chronicled repeated bouts of violence. “They don’t even see that by making no attempt at a political process to address Kashmiris’ real demands, they simply perpetuate the cycle.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21702222-death-militant-sparks-fury-little-change-after-funeral/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cambodia + +Murder most murky + +An assassination casts a lurid light on politics and society ahead of an election + +Jul 16th 2016 | PHNOM PENH | From the print edition + + + +THE murder on July 10th of Kem Ley, an independent-minded commentator who castigated the ruling party and the opposition alike, has jangled nerves ahead of local elections next year and a general election the year after. Thousands of Cambodians have poured in from all corners of the country to Phnom Penh, the capital, to pay their respects to a man famed nationally for his radio programmes and his measured, impartial commentaries. + +Mr Ley criticised politicians in general, but he singled out Hun Sen’s ruling Cambodian People’s Party (CPP) for particular contempt. The assassination, apparently carried out by gunmen as the 45-year-old victim was sipping a morning coffee at a petrol station, came only three days after Global Witness, a campaigning group that specialises in exposing links between governments and the exploitation of natural resources such as Cambodia’s timber, claimed that the prime minister’s family had acquired assets worth at least $200m, in one of the poorest countries in Asia. Shortly before his death Mr Ley had spoken at length about the Global Witness report. As the government cracks down on dissent, corruption has become a big issue in the run-up to the elections. + +Mr Hun Sen’s relatives have vilified the report. Hun Mana, his eldest daughter and the clan’s biggest magnate, with interests in television, radio and newspapers, said Global Witness was trying to tarnish her father’s reputation. A Nazi-style cartoon depicting America, Britain and Russia as threats to peace in Cambodia began circulating on social media, with local English-language newspapers and Global Witness portrayed as villains. + +Mr Hun Sen and his party are facing their toughest test. Attitudes have changed a lot since the civil war ended. A younger, more educated generation has grown up. Two-thirds of Cambodia’s 16m people are under 30. In the most recent general election, in 2013, many voted for the opposition Cambodia National Rescue Party. Since then many of its politicians have been beaten up, jailed and sued. Its leader, Sam Rainsy, has fled into exile. His deputy, Kem Sokha, has been holed up for seven weeks in the party’s headquarters fearing arrest after being summoned by the courts over a sex scandal that his supporters say has been cooked up by the ruling party. + +Mr Ley’s family and admirers are sceptical about the police’s initial claims that a man arrested soon after the murder had borne a grudge against Mr Ley because of his alleged failure to pay a debt of $3,000. Media friendly to the ruling CPP claim that the opposition was keenest to have Mr Ley out of the way, a suggestion his friends say is preposterous. Mr Ley’s widow is thinking of moving to Australia. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21702221-assassination-casts-lurid-light-politics-and-society-ahead-election-murder-most-murky/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Taiwanese identity + +Hello Kitty, goodbye panda + +Taiwan’s obsession with Japanese kawaii culture + +Jul 16th 2016 | TAIPEI | From the print edition + +Catnip for Taiwanese babies + +THIS spring the world’s first Hello Kitty-themed train began service in Taiwan. It proved so popular that almost all the head-rest covers on the seats were snaffled by passengers on the first day. Last week EVA Air, Taiwan’s second-largest airline, announced that it would increase the number of Hello Kitty flights to Paris. Ten of its destinations have a service that features pillows and slippers branded with the white cat. Taipei airport has a Hello Kitty check-in area, gift shop and even a breast-feeding room. + +Taipei has Hello Kitty shabu-shabu (hot pot) restaurants offering tofu in the form of the cat’s face and squid-balls shaped like her bow, all washed down with a Hello Kitty fizzy drink. Night-market stalls offer a variety of Hello Kitty apparel, including boxer shorts. + +The craze is about more than infantile consumerism: Hello Kitty has become an unlikely token of Taiwanese identity. She is part of a wider embrace of Japan’s kawaii, or “cuteness”, culture. And this is a way for the Taiwanese to define themselves as different from China, which lays claim to their island, by cleaving to Japan, their former coloniser. + +The message is clear from the livery of the Hello Kitty train: each of the eight carriages is decorated with Hello Kitty in different parts of the world: Taiwan and then each of the seven continents. The Taiwanese Hello Kitty drinks bubble tea beneath Taipei 101, the capital’s landmark skyscraper; she is separated from the Chinese version (who visits pandas and the Great Wall) by a kimono-wearing Japanese feline. In Hello Kitty world Taiwan has its own car; China is lumped in with other Asians in a separate one. + +The obsession is thought to have been started by McDonald’s, a fast-food chain, which gave out Hello Kitty toys with its meals in August 1999. Its supply of half a million toys ran out in just four hours. Later that year Chunghwa Telecom sold out of 50,000 telephone cards within five minutes of making them available. + +Love of kawaii reaches politics, too. In elections this year, the independence-minded Democratic Progressive Party, which defeated the pro-unification Kuomintang (KMT), released a Japanese-style animated campaign video of Tsai Ing-wen, its successful presidential candidate, as a flying cat-woman “lighting up all Taiwan”. The video was not in Mandarin, the island’s official language, but in Taiwanese, once scorned by the KMT. + +Some Taiwanese idealise Japanese rule. Lee Teng-hui, a former president, even said that during the second world war Japan—not China—was Taiwan’s “motherland”. Now Hello Kitty allows the Taiwanese to be Taiwanese by outdoing the Japanese at being Japanese. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21702223-taiwans-obsession-japanese-kawaii-culture-hello-kitty-goodbye-panda/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +The South China Sea: Courting trouble + + + + + +Articles Sections Next + +The South China Sea + +Courting trouble + +An international tribunal delivers a blow to China’s claims in the South China Sea + +Jul 16th 2016 | BEIJING, MANILA AND TAIPEI | From the print edition + + + +BY EJECTING its neighbours’ forces, building up its navy and constructing artificial islands, China has for years sought to assert vast and ambiguous territorial claims in the South China Sea. These alarm its neighbours and have led to military confrontations. They also challenge America’s influence in Asia. Now the Permanent Court of Arbitration, an international tribunal in The Hague, has declared China’s “historic claims” in the South China Sea invalid. It was an unexpectedly wide-ranging and clear-cut ruling, and it has enraged China. The judgment could change the politics of the South China Sea and, in the long run, force China to choose what sort of country it wants to be—one that supports rules-based global regimes, or one that challenges them in pursuit of great-power status. + +The case was brought by the Philippines in 2013, after China grabbed control of a reef, called Scarborough Shoal, about 220 miles (350km) north-west of Manila. The case had wider significance, though, because of the South China Sea itself. About a third of world trade passes through its sea lanes, including most of China’s oil imports. It contains large reserves of oil and gas. But it matters above all because it is a place of multiple overlapping maritime claims and a growing military presence (Chinese troops are pictured above on one of the sea’s islands). America had two aircraft carriers in the sea lately; on the eve of the court’s ruling, China’s navy was staging a live-fire exercise there. Above all it is a region where two world-views collide. These are an American idea of rules-based international order and a Chinese one based on what it regards as “historic rights” that trump any global law. + +China claims it has such rights in the South China Sea, and that they long predate the current international system. Chinese seafarers, the government says, discovered and named islands in the region centuries ago. It says the country also has ancestral fishing rights. In early July, by happy coincidence, a state television company began a mini-series about the experience of Chinese fishermen in the 1940s, reinforcing China’s view. These rights are said to exist within a “nine-dash line” (still usually called that, though Chinese maps began showing ten dashes in 2013 to bring Taiwan more clearly into the fold). It is a tongue-shaped claim that slurps more than 1,500km down from the southern coast of China and laps up almost all the South China Sea (see map). + + + +The court comprehensively rejected China’s view of things, ruling that only claims consistent with the UN Convention on the Law of the Sea (UNCLOS) were valid. Under UNCLOS, which came into force in 1982 and which China ratified in 1996, maritime rights derive from land, not history. Countries may claim an Exclusive Economic Zone (EEZ) up to 200 nautical miles (370km) off their coasts, or around islands. Based on this, the tribunal ruled that the nine-dash line had no standing. The judges wrote that there was “no legal basis” for China to claim historic rights within it. UNCLOS, they said, took precedence. + +Until now, China has not specified the exact meaning of the nine-dash line. It is not clear, for example, whether the country claims everything within the line as its sovereign possession or merely the islands and their surrounding waters. Even if the claim were confined to the islands, the ruling undermined that. The tribunal said that none of the Spratly Islands (where China’s island-building has been concentrated) count as islands in international law. Therefore, none qualifies for an EEZ. + +Adding insult to injury, the court ruled that China had been building on rocks that were visible only at low tide, and hence not eligible to claim territorial waters. It said this had violated the sovereign rights of the Philippines, which has an EEZ covering them. So, too, had China’s blocking of Philippine fishing and oil-exploration activities. The court ruled that Chinese vessels had unlawfully created a “serious risk of collision” with Philippine ships in the area, and that China had violated its obligations under UNCLOS to look after fragile ecosystems. Chinese fishermen, the judges said, had harvested endangered species, such as sea turtles and coral, while the authorities turned a blind eye. + +China refused to take any part in the court’s proceedings and said it would not “accept, recognise or execute” the verdict. As a member of UNCLOS it is supposed to obey the court, but there is no enforcement mechanism. The condemnation of China’s actions is so thorough, however, that it risks provoking China into a response that threatens regional security as much as its recent building of what one American admiral has called a “great wall of sand”. Other countries, and America, are nervously waiting to see whether China’s furious rhetoric will be matched by threatening behaviour by its armed forces. + +In 2014 the Indian government of Narendra Modi quietly accepted the court’s ruling against it in a case brought by Bangladesh over a dispute in the Bay of Bengal. But President Xi Jinping, who has supervised China’s recent efforts to reinforce its claims in the South China Sea, would find it very hard to do the same. He is preparing to carry out a sweeping reshuffle of the Communist leadership next year; foes would be quick to accuse him of selling out the country were he to appear weak. + +Taiwan’s denunciation of the ruling as “completely unacceptable” will give succour to Mr Xi. The positions both of China and Taiwan are based on claims made by Chiang Kai-shek when he ruled China, before he fled to Taiwan in 1949. That Taiwan maintains the same stance under Tsai Ing-wen, who took over as the island’s president in May, is even more of a boost. Ms Tsai’s party normally abhors anything suggesting that China and Taiwan have the same territorial interests. Yet the day after the court ruling, Ms Tsai appeared on a Taiwanese frigate before it set sail to defend what she called “Taiwan’s national interests” in the South China Sea, where Taiwan controls the largest of the Spratlys. + + + +In China, raging rhetoric quickly reached stratospheric levels. Global Times, a particularly hawkish newspaper, called the ruling “even more shameless than the worst prediction”. The government warned its neighbours that it would “take all necessary measures” to protect its interests. The social-networking accounts of Communist Party newspapers brimmed with bellicosity. “Let’s cut the crap,” said a user called Yunfu, “and show them our sovereignty rights through war.” Rumours that China was preparing for a fight ran so rife that the normally taciturn ministry of defence stepped in to deny them. + +It is thought unlikely that China would quit UNCLOS: that would reinforce the impression that China is a law unto itself and do grave damage to its global image. (America has not ratified UNCLOS, but observes it in practice.) More likely is that it will set up an Air Defence Identification Zone (ADIZ) in the South China Sea, like the one it declared over the East China Sea in 2013 after a spat with Japan over islands there. The day after the ruling, Liu Zhenmin, a deputy foreign minister, talked about China’s right to do so. Aircraft flying through China’s existing ADIZ have to report their location to the authorities or face unspecified “emergency defensive measures”. America’s military aircraft ignore this, and would do the same if a southern one were imposed. That could add to the already serious risk that the two countries’ fighter jets might end up in a confrontation. + +A no-less-worrying possibility is that China might start building on Scarborough Shoal, where the court case began. Radar, aircraft and missiles based there would be a close-up threat to the Philippines and military bases that are used by American forces. In March President Barack Obama reportedly warned Mr Xi that reclamation on the shoal would threaten America’s interests and could cause military escalation. + +Still, in the short term, there are reasons China might be cautious. It is hosting an annual meeting of G20 leaders in September. It is spending lavishly on preparations. The last thing it wants is for countries to boycott the event or spoil it with recriminations over its response to the verdict. + +No one in the region seems to want to make life harder for China at the moment. The Philippines, for example, is going out of its way not to crow. “If it’s favourable to us,” said the new president, Rodrigo Duterte, just before the ruling, “let’s talk.” + + + +In graphics: A guide to the South China Sea + +Vietnam and Malaysia, which might conceivably launch copycat cases in the court, both put out measured statements supporting peaceful resolution of the disputes. The Association of South-East Asian Nations (ASEAN), a ten-country grouping which includes four of the states in dispute with China, had little to say. Several of its members wanted ASEAN to take a firm stance against China’s claims—and an unusually strong statement released by ASEAN in June looked like the beginning of that. But it was retracted, mysteriously, within hours, making the organisation look weak and ineffective, as usual. + +There may be a glimmer of hope from China itself. By one reading, it may be in the process of clarifying that the nine-dash line is less sweeping than it looks. A government statement in response to the ruling mentions both historic rights and the nine-dash line repeatedly—but always separately, without linking them. Andrew Chubb of the University of Western Australia says this might mean that China is preparing quietly to say that the line does not indicate that China has historic rights to everything inside it, but rather, that it denotes an area within which China claims sovereignty over islands. + +As the verdict showed, that would still mean that many of China’s claims are inconsistent with UNCLOS. But it might result in China becoming less eager to patrol the nine-dash line right up to the edge. That may not seem much. However, in the aftermath of the ruling, the biggest question facing the countries of the South China Sea is whether Asia’s oceans will be governed by the rules of UNCLOS or whether those rules will be bent to accommodate China’s rising power. Even a small sign that the rules will not be bent as far as some hawks in China would like could be important. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21702069-region-and-america-will-now-anxiously-await-chinas-response-un-appointed-tribunal/print + + + + + +Articles Sections Next + + + + + +Middle East and Africa + + + + +Land ownership: Title to come + +Mozambique: Fishy finances + +Zambia: Cry press freedom + +Israel’s prime minister: The law looms larger + +Egyptian bureaucracy: A movable beast + + + + + +Articles Sections Next + +Land ownership + +Title to come + +Property rights are still wretchedly insecure in Africa + +Jul 16th 2016 | NAIROBI | From the print edition + + + +COSMAS MURUNGA was always proud to show off his mud-walled home, set in a clearing on the wooded slopes of Mount Elgon; to explain how his people coexisted with, and cared for, the forest and its wildlife on the border with Uganda. But that home is no more, burnt to the ground by around 50 Kenya Forest Service (KFS) rangers and police, along with 200 other dwellings, on June 20th and 21st. “We lost everything,” he says. + +Evictions are almost routine for the Ogiek, a group of around 80,000 indigenous hunter-gatherers who have suffered repeated expulsions since being moved by the British colonial government in the 1930s. Yet this one still came as a surprise: the community is in the middle of negotiating a settlement with the local government that should see formal recognition of its right to live, graze livestock and forage on land it has inhabited for centuries. + +In all rich countries, property rights are secure. Formal, legal title makes it easier to buy, sell and develop land. Buyers can be confident that the seller really has the right to sell what he is selling. Owners can use their property as collateral, perhaps borrowing money to buy fertiliser and better seeds. Legally recognising land ownership has boosted farmers’ income and productivity in Latin America and Asia. + +But not yet in Africa. More than two-thirds of Africa’s land is still under customary tenure, with rights to land rooted in communities and typically neither written down nor legally recognised. In 31 of Africa’s 54 countries, less than 5% of rural land is privately owned. So giving peasants title to their land seems like an obvious first step towards easing African rural poverty. + +However, it has proven extremely hard. Rwanda, for example, rolled out a programme over three years, whereby local surveyors worked with land owners and their neighbours to demarcate and register 10.3m parcels of land. By the time the scheme was completed in 2013, 81% of plots had been issued with titles, at relatively low cost; investment and women’s access to land have both improved. But even a relatively well-organised place like Rwanda has had problems keeping records up to date when land is sold or inherited. + +This land is your land? Prove it + +In Kenya a large-scale titling programme was carried out in colonial times and carried over to independence. The first president, Jomo Kenyatta, and his cronies bought the huge estates of white settlers who left. But the system is costly and ill-run. Most Kenyans cannot afford to update titles, and the government has not maintained the registry. Recognising land rights, whether customary or titled, needs to be done as cheaply and simply as possible, says Ruth Meinzen-Dick of the International Food Policy Research Institute (IFPRI). “The more you increase the cost, the more likely it is that urban elites and men with more education will be able to register the land in their names, rather than poor people, the less educated and women.” + +Being able to prove you own your land may be a necessary condition for using it as collateral, but a title deed does not guarantee that anyone will lend you money. As Abhijit Banerjee and Esther Duflo, two economists, observe in their book “Poor Economics” (2011), banks need a lot more information to judge borrowers’ creditworthiness and be sure of repayment. And the administrative costs of offering very small loans to very small farmers, even those with collateral, are often prohibitive. + +Africa’s rickety infrastructure does not help. Where there are no roads or warehouses to help get crops to market, many of the benefits of formal tenure will go unrealised. And legal property rights offer less protection in countries where big men can flout the law with impunity—a particular problem in Africa. + +Customary rights have the advantage that they already exist, people understand them and they offer at least some security. “Law and policy should recognise what is working on the ground. So if it is customary rights, so be it,” says Esther Mwangi of the Centre for International Forestry Research. A USAID survey conducted in Ethiopia, Guinea, Liberia and Zambia found that less than a third of people had experienced land disputes. About the same number thought confiscation of, or encroachment on, their land was likely. That suggests that their property is far less secure than it would be in any rich country, but not as insecure as one might expect, given that less than 10% of households have any documents proving their land ownership in the latter three countries. + +In recent years land grabs have sometimes made a mockery of customary ownership. In Ethiopia, all land is still officially state-owned. The government has successfully registered customary rights in some regions: about 30% of Ethiopian households now have such documents. But it has also leased to foreign investors large tracts of land in Oromia that have traditionally been used by smallholder farmers for growing crops, grazing livestock and collecting firewood—and brutally suppressed the protests that erupted as a result. + +In Ghana chiefs have used their right to administer communal land to sell large tracts without their community’s permission. Property rights are even less respected in Zimbabwe. Over the past decade and a half, Robert Mugabe’s government has seized most of the country’s commercial farms with little or no compensation. Traditional chiefs have also sold communal land to private firms, leaving many peasants destitute. In South Africa the ruling African National Congress (ANC) has generally been trying to weaken individual land rights by declaring more land “communal”. This puts it under the control of chiefs and shores up the ANC’s rural support, since people afraid of being evicted tend to vote for whomever they are told to. + +In several places custom dictates that only men can inherit land. In Uganda stories abound of widows being turfed off their marital land by in-laws. One woman was thrown out of her home a week after her husband died in an accident; she had refused to marry any of his five brothers, and her children were taken away to a sister-in-law. Individual land ownership is often ineffectual for forests and rangelands, which lose their value when parcelled up. There is evidence that recognising the communal rights of indigenous forest communities can mean their lands are conserved better. + +Around Mount Elgon successive governments have argued that, when evicting the Ogiek, they were protecting the forest and the rugged moorland above it to make way for a national park and forest reserve. Yet where the woodland is under the control of the KFS, whole areas have been razed to rent out to maize farmers. The Ogiek, by contrast, graze their cows in glades and above the tree line, relying on the forest to provide honey and medicine. + +Land rights are still a combustible issue in Kenya. The constitution of 2010, which recognises customary tenure, was passed after the post-election violence of 2007-08, sparked in part by politicians inciting Kalenjins in the Rift Valley to attack Kikuyu “squatters” who had migrated there for work. The constitution may help the Ogiek fight their corner. But until the men in power respect the law, the law can do little to protect property rights. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702175-property-rights-are-still-wretchedly-insecure-africa-title-come/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Mozambique + +Fishy finances + +A donor darling stumbles towards bankruptcy + +Jul 16th 2016 | MAPUTO | From the print edition + +“WHO cares about the tuna fish?” asked a fund manager a year or so ago, explaining his decision to buy bonds issued by a Mozambican government-backed company that planned to use the money to buy a brand new fleet of fishing boats. Instead this investor, and many others, looked simply at the government guarantee that underpinned the deal: even if not a single tuna were caught, the loans would still be repaid, since the government would step in. + +That assurance was as full of holes as an industrial-sized tuna net. Although the government has indeed stepped in to honour the debt, its own finances are horribly stretched, not least because it has borrowed far more than it had previously admitted. Faced with a shoal of troubles, it now appears to be on the brink of default. + + + +For a start, its decades-long civil war, which raged from 1977 to 1992, has returned. Vehicles are being burned and people killed daily in parts of central Mozambique where Renamo, a former rebel movement that became an opposition party, has gone back to guerrilla warfare. Highways, including those linking neighbouring countries such as Malawi to the sea, are no longer safe to travel without a military escort. Government forces are returning Renamo’s violence with interest. + +Drought compounds the misery: in the southern half of the country some 1.5m people are hungry after rains failed for the second year in a row. And weak oil and gas prices have slowed the development of reserves in the north that many had hoped would provide huge dollops of cash to pay off the country’s debts. Instead, investors are running scared. Government bonds are trading at about 70% of face value. This week Moody’s, a ratings agency, downgraded the country, saying it was very near to defaulting. + +At the heart of Mozambique’s debt crisis is a series of three foreign-currency loans that, between them, add up to about 15% of GDP. The first was for $850m that was meant to have been spent on a fishing fleet. Yet it seems to have bought ludicrously expensive boats, and a chunk went on high-speed patrol craft. The fishing boats that did arrive generally spend their days tied up on the docks, though occasionally one is seen puttering about inside the harbour. Earlier this year Empresa Moçambicana de Atum (EMATUM), the state-owned tuna-fishing company, said it could not repay its debt. A rescue plan was cobbled together under which investors swapped their EMATUM bonds for ones issued by the government. + +That ought to have settled the matter. But just as the swap was going through it was revealed that Mozambique had secretly borrowed another $1.4 billion, or about 10% of its GDP, making it the most indebted country in sub-Saharan Africa (see chart). The revelation shocked the IMF and western donors into freezing disbursements to the government, whose budget relies on international aid. It also led to red faces at Credit Suisse and VTB, the two banks that helped arrange the various bond sales. Some of the investors who bought the bonds complain that the banks should have given them more information. + + + +Yet it seems to have induced almost no shame in the government. The IMF and western donors are pressing for an independent audit of the secret loans. Yet Filipe Nyusi, Mozambique’s president, is dragging his feet, prompting speculation that a cover-up is under way. + +Mozambique is not alone in its fiscal fishiness. Economic crisis is stalking Angola, which is also suffering from the slumping price of oil, its main export. Its bonds tumbled earlier this month after Jose Eduardo dos Santos, its president since 1979, said the country was collecting barely enough revenue to service its debt. It, too, had been in bail-out talks with the IMF, but called them off after seeing the fund’s conditions on fighting corruption. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702178-donor-darling-stumbles-towards-bankruptcy-fishy-finances/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Zambia + +Cry press freedom + +A lively government critic feels the heat + +Jul 16th 2016 | LUSAKA | From the print edition + +Without fear or favour + +IT IS mid-afternoon in Lusaka, the capital of Zambia, and a newsroom has formed on a pavement. Journalists tap away at laptops in the shade of a tree; phone conversations are held on mobiles against the sound of traffic. Cables lead out of cars. An ice-cream salesman does brisk business out of a cool box mounted on a bicycle. + +The newspaper is the Post, a punchy tabloid that is Zambia’s biggest independent media organisation. Opposite the makeshift office on the street are the real ones—but the journalists cannot enter. The paper, a staunch critic of President Edgar Lungu’s government, was shut down on June 22nd by the Zambian tax authorities; its reporters were pushed out with tear gas. A week later, its editor, Fred M’Membe, was arrested and beaten. Coming barely a month before elections, it is a sign of how dissenting voices are being quietened. + +Press freedom is under assault in much of Africa. Jihadists threaten and sometimes murder journalists in northern Nigeria and Mali. Eritrea’s despotic regime bans independent journalism entirely. Elsewhere, hacks are most likely to be harassed around voting time, when politicians particularly resent criticism. According to Reporters Without Borders, an NGO, press freedom declined in Uganda, the Republic of Congo and Djibouti over the past year—all of which had elections. In Burundi, it has all but disappeared. Zambia seems to be the latest country to fall victim. + +The government says that the closing of the Post is about taxes, not politics. The authorities demanded $6m in unpaid taxes and when it was not paid, seized the paper’s assets, including its offices and printing presses. A week later, on June 28th, Mr M’Membe claimed to have a court order declaring the seizures illegal and reopened the offices—only to be arrested for trespass and using false documents. + +Nobody disputes that some taxes have gone unpaid. The dispute is over the scale. The government says the Post has been underpaying taxes for a decade and that the taxman is acting independently. Mr M’Membe says his business is far more up-to-date than most organisations in Zambia. He points out that government-owned competitor newspapers have had their tax debts written off, and accuses Mr Lungu of ordering the crackdown personally. + +Proving who is right is impossible. But Zambia’s only source of independent news is now struggling. And that has an outsize effect. Though few people actually buy newspapers, the Post’s stories—full of lurid details about vote-rigging and corruption—are repeated on radio stations across the country. Now they will have to rely more on the official media, which are nakedly pro-government and all but ignore the opposition. In a recent bulletin on public radio, eight out of the ten headlines began with the words “President Lungu”. + +For now, the Post carries on, printed on cheap paper at a secret site. It has plenty to write about. On July 11th the government banned campaigning after a man was killed at an opposition rally. “We are still doing what we know best,” says Mr M’Membe, flat cap on his head, apparently thriving despite having only just been released from jail. “For us, the most important thing is to keep coming out every day.” That, sadly, is a lot to ask. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702179-lively-government-critic-feels-heat-cry-press-freedom/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Israel’s prime minister + +The law looms larger + +Binyamin Netanyahu’s legal tribulations are worsening + +Jul 16th 2016 | JERUSALEM | From the print edition + + + +A LACONIC announcement by Israel’s attorney-general, Avichai Mendelblit, confirmed weeks of rumours: his office and the police, he said, have indeed been looking into allegations against Binyamin Netanyahu, the prime minister. Mr Mendelblit provided no further detail and stressed that no criminal proceedings had begun. The prime minister’s spokesman later reminded reporters that Mr Netanyahu had previously been the subject of allegations “that turned out to be baseless” and that “there will be nothing here either—because there is nothing.” + +It is true that Mr Netanyahu has never been indicted, but in two separate cases, in 1997 and 2000, police investigators opined that there was enough evidence to charge him with fraud and breach of confidence. Each time, however, they were overruled by the then attorney-general, who criticised Mr Netanyahu’s conduct but said it fell short of criminal. The latest inquiry may, however, be more menacing because law-enforcement chiefs are considering a whole raft of allegations regarding the prime minister and his close circle. Among other things, the attorney-general is looking into the sources of funding for some of Mr Netanyahu’s trips abroad more than a decade ago when he was finance minister, and into payments Mr Netanyahu received from Arnaud Mimran, a Frenchman subsequently convicted of tax fraud. + +In both cases the prime minister says that all payments to him were above board. Another decision awaiting Mr Mendelblit is whether to act on the police’s recommendations to indict his wife, Sara Netanyahu, over misuse of public funds for the upkeep of their private weekend home. In recent days two members of Mr Netanyahu’s inner circle—a former political adviser and a former chief of staff—have also been revealed to be under investigation for alleged dodgy dealings. + +This accumulation of corruption allegations will not make Mr Netanyahu step down. Although he has been in power for more than ten years in all, he has made it clear he has no plans to resign in the foreseeable future and has already been confirmed as the ruling Likud party’s candidate for the premiership in the next general election. Not that he wants it to take place soon: the current parliament could serve for another three years and Mr Netanyahu has only recently broadened his coalition. That said, there is no lack of disgruntled ex-ministers from Likud and other parties who would be glad to see him go; but they have so far proved incapable of rallying around a viable challenger. Meanwhile, the main opposition group, Zionist Union, is being torn apart by infighting. + +But a criminal indictment could force Mr Netanyahu out of office. In recent times Israel’s legal system has shown itself fearless in the face of power. Ehud Olmert, Mr Netanyahu’s predecessor as prime minister, was forced to resign in 2009 over bribery allegations and is now serving a 19-month sentence in prison, while possibly facing further convictions. + +The independence of the current law-enforcement chiefs has yet to be thoroughly tested. Mr Mendelblit is Mr Netanyahu’s former cabinet secretary and the police commissioner, Ronny Alsheikh, has reason to hope that one day he will become head of Israel's security service, Shin Bet, a post in the prime minister’s gift. Indeed, both men owe their promotions to Mr Netanyahu. They may soon have to decide his political fate. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702180-binyamin-netanyahus-legal-tribulations-are-worsening-law-looms-larger/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Egyptian bureaucracy + +A movable beast + +Egypt’s bureaucrats can act fast when they want to + +Jul 16th 2016 | THE MOGAMMA, CAIRO | From the print edition + + + +IT IS hardly surprising that Adel is having trouble obtaining an official certificate of movement, which documents a person’s travels and is often required for visas. Waiting outside the Mogamma, an enormous administrative building in downtown Cairo, he explains that he submitted his paperwork a week ago, came back as instructed and—after pushing through a mob of other applicants—was told to reapply. Amid all the jostling he may not have noticed that the government’s travel records were scattered beneath his feet. + +For over 60 years Egyptians have gone to the Mogamma (roughly, “the complex”) seeking official documents, such as passports and driver’s licences. They wait in disorderly queues, often for hours, only to be frustrated by indifferent civil servants. Egyptians’ relationship with the building is captured in one of the country’s most popular films, called “Terrorism and Kebab”, in which a man becomes fed up with the bureaucracy, and inadvertently takes the Mogamma hostage. + +So it does not come as a surprise that few Egyptians have mourned the government’s decision to shut down the complex and move its 30,000 employees to more remote offices, supposedly to improve the flow of downtown traffic. News reports had this happening last month, but the building is still occupied. Inside there is even more confusion than normal. A security guard says he is moving next month. An official down the hall says it will take six or seven months. But he doubts it will happen at all. The government has promised to close the Mogamma before. + +Few expect the change of address, if it does occur, to improve Egypt’s bureaucracy. Government jobs are often handed out based on connections, not skill. There are few incentives to perform well. It is impossible to get anything done without a certain amount of baksheesh (bribery) and wasta (connections). An MP called Amr al-Ashkar tendered his resignation on account of his own frustrations. “I have not been able to solve a single problem,” said Mr Ashkar, who accused the bureaucracy of turning the lives of the poor “into a hell”. + +Gamal Abdel Nasser, Egypt’s president from 1956 to 1970, expanded the public sector to create a middle class “that relied on the state for its livelihood and on which the state, in turn, depended for political support”, writes Amr Adly of the Carnegie Middle East Centre, a think-tank. This symbiotic relationship has hindered reform. Egypt’s leaders have long purchased stability by increasing government wages and adding to the public payroll, so that it now contains some 7m employees. (By comparison Britain, with 80% of Egypt’s population, has under 500,000.) + +Faced with a strained budget, Abdel-Fattah al-Sisi, the president, has tried to rein in the bureaucracy at least a tiny bit. A law he decreed last year, in the absence of parliament and as he was to host a conference of international donors, aimed to limit some forms of compensation and tie bonuses and promotions to performance. Workers might even be sacked if they performed poorly. Mr Sisi said that the state only needed 1m workers—but still promised that all 7m would keep their current jobs and wages. + +Even these mild reforms enraged public workers, who claimed Mr Sisi was ramming through drastic cuts. Several protests were held. In January a new parliament approved most of the president’s decrees, but rejected his civil-service reforms. (It may soon vote on a modified version of the law.) Concerns linger and Egypt’s bureaucrats have proven that, when properly motivated, they can take action. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702181-egypts-bureaucrats-can-act-fast-when-they-want-movable-beast/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Macron and France’s presidential election: L’internationaliste + +Ireland’s economic statistics: Not the full shilling + +The EU-Canada trade deal: Fear of the maple menace + +Spain, Gibraltar and Brexit: Rock out + +Charlemagne: Single-market blues + + + + + +Articles Sections Next + +Macron and France’s presidential election + +L’internationaliste + +The young economy minister wants to change French politics. If he runs, he may + +Jul 16th 2016 | PARIS | From the print edition + + + +WHEN he passed the lingerie shop, the minister hesitated. It was not on the schedule. But the store manager insisted, and Emmanuel Macron, France’s young economy minister, found himself greeting astonished shoppers as they leafed through piles of lace-trimmed bras. By the time he made it out, a crowd had gathered, some eager for selfies, others for a chance to unload their discontent. He lingered and listened. “It’s rare to see a minister stop to talk to people like us,” said one woman. A young man agreed: “He’s a fighter. He knows what he wants and he wants to make a difference.” + +Mr Macron is the face of France’s youngest political movement, En Marche! (“On the Move!”), which he launched earlier this year as a platform for a possible bid for the presidency in 2017. Although a member of President François Hollande’s Socialist government since 2014, Mr Macron insists that his new movement is “neither on the right nor the left”. Rather, it is a response to a new fault line that is emerging in Western liberal democracies confronted with the rise of populist nationalism. “The new political split is between those who are afraid of globalisation,” he told The Economist, “and those who see globalisation as an opportunity, or at least a framework for policy that tries to offer progress for all.” + +His diagnosis is based on France, but applies to other European countries, from Britain to Poland. The old divide between left and right is being eroded by the rise of the National Front (FN), once an extremist fringe party, which seems better able to offer hope to those disillusioned by the political elite and buffeted by globalisation. Under Marine Le Pen, the anti-immigration, Eurosceptic FN has become the most popular party among working-class voters, supported by 43% of them, next to just 20% for the Socialists. She now tops most polls for the first (though not the second) round of next year’s presidential election. + +The geography of voting reflects this new divide. Thriving, cosmopolitan cities such as Lyon, Grenoble and Bordeaux, with their smart pedestrian centres, tech hubs and gourmet food, vote for either the left (Lyon) or the centre-right (Bordeaux)—but not for the FN. By contrast, in battered second-tier towns full of betting shops and half-empty cafés, the FN is on the rise. Less than 9% of voters in Grenoble, a centre of high-end scientific research, voted for the FN at municipal elections in 2014. In the same elections Hénin-Beaumont, a town in the former mining basin of northern France, elected its first FN mayor. + +Mr Macron calculates that this creates a new political space for progressives who believe in an open and mobile society, including, he says, “those who haven’t benefited from globalisation but are ready for change”. He judges that peeling such voters away from both left and right is a way to confront the conservative forces that push for closed, Eurosceptic, inward-looking solutions. “The biggest challenges facing this country and Europe—geopolitical threats and terrorism, the digital economy, the environment—are not those that have structured the left and the right.” + +To this end, Mr Macron has enrolled 16,000 volunteers to knock on doors and gather ideas over the summer, and signed up 50,000 members. His hope is to carry out a different sort of politics, based on direct contact with voters through social media and emerging local networks, in order to respond to political disillusionment. At his first political rally this week in Paris, before a packed audience of about 3,000 supporters, Mr Macron hinted that he might lead the movement into elections next year—but stopped short of declaring his candidacy. + +Think positive + +In the long run, Mr Macron may be right about the coming shift. Yet his effort raises tough questions. One is whether combining left and right to confront nationalism runs the risk of lending such forces legitimacy. He brushes aside such concerns, pointing out that the FN is already France’s top party in recent voting. His argument is that politicians cannot just fight fear (of immigration or globalisation) with fear (of an FN victory): they need to make a positive case for progress, and equal opportunity, in an open society. + +Another question recalls the difficulties experienced by tech start-ups, which Mr Macron champions in the face of protected industries. As so often happens in French business, the incumbent parties may crush Mr Macron before he can disrupt politics. Manuel Valls, the reformist prime minister, who has his own presidential ambitions, is infuriated by Mr Macron’s circumvention of the party system. “This has got to stop,” he huffed earlier this week. It is difficult to see the insubordinate Mr Macron remaining much longer in government. + +Outside, however, he will be on his own, and he has never run for elected office. Both right and left plan their own presidential primaries in coming months. It takes a leap of faith to see the space for a serious candidate outside either structure—and, to the frustration of some of his impatient backers, it is unclear whether Mr Macron would run were Mr Hollande, his former boss, to seek re-election. + +A final question is whether Mr Macron has what it takes. His inexperience can betray him: in April it led to an embarrassingly gushing photo splash with his wife, his former high-school French teacher and 20 years his senior, in a celebrity magazine. A graduate of the high-flying Ecole Nationale d’Administration, Mr Macron is also a former banker, and thus is distrusted within the Socialist Party. He is loathed by unionists for, among other things, his critique of the 35-hour working week. Polls say Socialist voters would prefer Mr Valls or Mr Hollande as their nominee. + +Yet if one polls all French voters, Mr Macron is the favourite. And his cross-party support reaches into unlikely corners. At a recent event for start-ups in the banlieues, Paris’s high-rise suburbs, participants were unbothered by his establishment ties. “We like his message that it’s OK to want to succeed,” said Daniel Hierso, a young black businessman. “In France we never try new things, it’s always the same faces,” said Yacine Kara, an entrepreneur of Algerian origins. “His political inexperience is positive. He’s taking a risk, like us.” Nobody denies that it is a long shot, and could flop badly. But as a response to Europe’s populist convulsions, it is one of the most intriguing attempts around. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21702230-young-economy-minister-wants-change-french-politics-if-he-runs-he-may-linternationaliste/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Ireland’s economic statistics + +Not the full shilling + +Why GDP growth of 26% a year is mad + +Jul 16th 2016 | From the print edition + +THE year 2015 was a busy one in Ireland, what with protests against water charges, a referendum legalising same-sex marriage and speculation over a coming general election. No wonder the Irish failed to notice their country’s record-breaking economic growth. On July 12th, in front of gobsmacked journalists, Ireland’s Central Statistics Office (CSO) revised up GDP growth for 2015 from 7.8% to 26.3%. In modern economic history, only poor countries experiencing natural-resource booms or the end of wars have grown faster. + +Few economists take the revised figure seriously. “It’s complete bullshit,” says Colm McCarthy, an economist at University College Dublin. “It’s Alice in Wonderland economics.” But while the 26.3% figure may distort economic reality, it has real political consequences. + + + +The CSO calculations are not flawed, Mr McCarthy says. The change stems from a Europe-wide shift in the way investment is treated in GDP statistics. When a company executes a “tax inversion”, registering in Ireland to benefit from its low 12.5% corporate tax rate, it and its intellectual property are now added to the country’s capital stock, and the returns are included in GDP. Ireland’s capital stock grew by one-third in 2015, as American firms rushed to pull off tax inversions in anticipation of a likely crackdown. Ireland’s booming air-leasing sector also inflates the figures: planes owned by local firms are included even though most never visit the country. + +Spectacular growth sounds good. It will make it easy for Ireland to satisfy the euro zone’s demand that countries keep their budget deficits below 3% of GDP. But this may allow politicians to return to bad habits. The finance minister promises not to indulge in tax cuts or spending increases, but his minority government may ditch that pledge to win friends in parliament. Ireland will be the country hit hardest by Brexit. It should be building up fiscal firepower, not spending it. + +A second risk is that the Irish will lose all trust in economic figures. Voters are already alienated because most growth is concentrated in Dublin and does not reach the countryside. Fairy-tale GDP statistics will worsen their scepticism. One can hardly expect voters to embrace sound economics when the statisticians seem to be living in virtual reality. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21702232-why-gdp-growth-26-year-mad-not-full-shilling/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The EU-Canada trade deal + +Fear of the maple menace + +One of Brussels’ biggest trade deals looks uncertain after Brexit + +Jul 16th 2016 | From the print edition + + + +OF ALL the countries with which the European Union might conclude a trade agreement, Canada ought to be the least controversial. The land of maple syrup and baffling politeness has had a patchwork of sectoral trade and investment deals with Europe since the late 1970s. It currently boasts a liberal government led by an affable young prime minister who is keen on protecting the environment and taking in Syrian refugees. As Chrystia Freeland, the Canadian trade minister, put it in Brussels earlier this month: “If the EU cannot do a deal with Canada, I think it is legitimate to say: Who the heck can it do a deal with?” + +The question is apt. On July 5th the European Commission announced that the Comprehensive Economic and Trade Agreement (CETA), a long-awaited deal between the EU and Canada, would not be signed by the European Council and European Parliament alone, but would need to be ratified by at least 36 parliaments, both national and provincial. This appeared to contradict previous statements by Jean-Claude Juncker, the commission’s president. It could add four or five years before the agreement takes effect. And it implies that an intercontinental deal which has been a decade in the making could in principle be scrapped by the local parliament of the Belgian province of Flanders. + +Britain’s vote to leave the EU appears to have sapped the European Commission’s energy for a fight with its fractious member states. Several countries oppose aspects of the deal. Bulgaria and Romania are irked that their citizens would still need to apply for a visa to visit Canada, while other Europeans can go moose-hunting in Ontario without one. Activists in Germany and the Netherlands complain about a clause which lets investors sue national governments. In April the Dutch parliament passed a motion against letting the deal apply provisionally, and activists have threatened a referendum to overturn it if it is ratified. In the same month the Walloon parliament in Belgium voted against the agreement. + +Ms Freeland and Cecilia Malmstrom, the EU’s trade commissioner, stress the benefits of the deal, which would remove tariffs and other barriers to trade and is more ambitious in terms of services and investment than any previous deal. It would make both sides somewhat richer, but few national politicians in Europe have spent much time trying to enthuse voters. Partly this reflects the fact that Canada has more at stake: last year the EU was Canada’s second-largest trading partner, accounting for 9.5% of its trade, while Canada represented just 1.8% of the EU’s. The EU trades much more with other countries (see chart). Canadian free-marketeers also hoped that the deal would force their government to dismantle convoluted internal trade barriers between provinces and territories. (For instance, there are different provincial standards for maple syrup, organic foods and the size of milk containers; firms must often register in every province where they do business.) + +But it also hints that the EU is growing more protectionist. Anti-trade activists fear that this deal sets a precedent for a more controversial one currently being struck with America, known as TTIP, and complain that the deal has been shrouded in secrecy. “Brussels has received a message: people do not feel like they have enough control over their own fates,” says Pieter Cleppe of Open Europe, a think-tank. + +Several of the EU’s trade deals have been ratified by national parliaments. But the Commission’s move to defer to them first, rather than argue for EU institutions to fast-track the deal, is unprecedented, and risks making the EU look weak. “This was a golden opportunity for the Commission to show that despite Brexit they would continue to deal with the business of governing,” says John Manley of the Business Council of Canada, which represents the country’s largest companies. “They let the opportunity slip by,” he laments. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21702231-one-brussels-biggest-trade-deals-looks-uncertain-after-brexit-fear-maple-menace/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Spain, Gibraltar and Brexit + +Rock out + +A territory is dragged from Europe against its will. Spain looms + +Jul 16th 2016 | GIBRALTAR | From the print edition + +The European vision + +RED post boxes and phone booths line the streets. Musket-bearing re-enactors march past helmeted policemen. The pubs serve pie and chips even in 25-degree heat. It seems like a Brexiteer’s paradise. Yet while 17m Britons were voting to leave the European Union on June 23rd, Gibraltar—a tiny British Overseas Territory dangling from the southern coast of Spain—voted by 19,322 to 823 to stay. Their votes “did not even move the needle”, Gibraltar’s chief minister, Fabian Picardo, told a crestfallen public the following day. The peninsula now faces an uncertain future outside the EU, which has helped underwrite decades of prosperity and kept the all-important border open. Spain has periodically pressed its claim to Gibraltar (and laid siege to it twice) since ceding it to Britain in 1713. + + + +For now, the EU flag still flutters alongside the Union Jack above the government building. Inside, Mr Picardo is confident that his government can deliver the 8.25% annual growth promised in its pre-election manifesto in November, which had supposedly priced in the risk of Brexit. But many worry that Spain could close the border again, as it did between 1969 and 1985. Within hours of the result, the Spanish foreign minister, José García-Margallo, crowed: “The Spanish flag is now much closer to the Rock.” + +Gibraltar’s booming economy (growth came in at 10.6% last year) relies on the thousands of Spanish workers who cross the border every day. Christian Hernandez, president of the chamber of commerce, says the peninsula’s thriving financial-services sector is at risk, too: “The whole way we’ve marketed the jurisdiction is as a gateway into Europe.” + +Some industries will prove immune. Roughly 90% of Gibraltar’s insurance and online-betting business consists of transactions with Britain, Mr Picardo reckons. Low tax rates will help keep firms in place. “We don’t see Gibraltar plc collapsing,” says John Westwood, managing director of Blacktower, a financial-services company based in the territory. And Mr Picardo gives short shrift to Mr Garcia-Margallo’s threats over sovereignty: “Another day, another stupid remark.” The British Foreign Office insists it will not even discuss the issue. + +Moreover, self-interest is likely to mute Spanish sabre-rattling. Gibraltar provides 25% of the economy of the neighbouring Spanish area of Campo de Gibraltar; the region of Andalusia as a whole suffers 32% unemployment. “Our economy is completely dependent on Gibraltar,” says Juan Franco, mayor of the border town of La Línea de la Concepción. Thirty-year-old Tamara Gómez commutes daily from La Línea to her waitressing job, and has never been able to find a job in Spain: “The only money I’ve ever earned is in Gibraltar.” + +Some even think the future will be brighter. A Shell-operated liquid natural gas terminal will come online by mid-2017. A new secure data facility is housed deep within the Rock. The government hopes to forge tighter links with Morocco and Africa beyond. Tarik El-Yabani, one of the few local Leave activists, thinks that Gibraltar could position itself as “the Hong Kong of Europe”. + +Nevertheless, many are hoping that Gibraltar will somehow avoid Brexit. Mr Picardo is conferring with his counterparts in Scotland about how to remain within the EU, and has called for a second referendum to be held once the details of Britain’s prospective relationship with Brussels are hashed out. Whatever the result, Gibraltar’s politicians and people have displayed remarkable unity, both in their stance during the referendum and in their efforts to cope with the consequences. In this, red phone booths or no, Gibraltar looks very little like Britain. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21702147-territory-dragged-europe-against-its-will-spain-looms-rock-out/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Single-market blues + +The European project that Britain helped build is grinding to a halt + +Jul 16th 2016 | From the print edition + + + +“NO EUROPE à la carte.” “The four freedoms are indivisible.” “There can be no cherry-picking.” It takes a lot to get the European Union’s leaders to agree, but Britain’s vote to leave has managed it. The merest hint from Brexiteers that they might seek the full benefits of the EU’s single market while curbing immigration was enough to galvanise the rest of the club to action. Angela Merkel, Germany’s chancellor, emphasised the point again this week: Britain could expect no “free access” to the single market if it shut its borders to EU workers. + +Ah, the single market. The €14-trillion ($15.6 trillion) jewel in the EU’s crown, the pinnacle of European integration. Unlike the single currency it covers all EU members and is largely considered a success, generating a 2.1% increase in GDP in its first 15 years. it has quickly acquired a totemic role in debates on both sides of the English channel. Almost half of Britain’s exports by value go to the rest of the EU; any curbs on that trade could seriously injure an economy already tumbling towards recession. On the EU side, governments trying to hold their fracturing club together are hardly minded to offer privileged market access to a country that has chosen to leave. + +More than a traditional free-trade area, the single market eases intra-EU commerce by reducing non-tariff barriers, facilitating capital flows and trade in services, and granting full mobility to European workers, a right 7m have chosen to exploit. (Hence the “four freedoms”: movement of goods, services, people and capital.) The idea is to allow Europe’s businesses to operate as freely across borders as within them. + +If only. Although goods are easily traded and EU citizens have the right to live and work where they please, elsewhere the single market remains a work in progress. Energy, finance and transport markets are far from integrated. The service sector, 70% of the EU economy, is particularly hampered: in 2012 it accounted for only one-fifth of intra-EU trade. Professions are often hard for outsiders to penetrate, thanks to licensing rules, training requirements and other barriers to entry. Ask architects or notaries trying to set up shop outside their home country, or anyone trying to break into Germany’s heavily regulated (and low-growth) services sector. Some countries have over 400 regulated professions. A special diploma is needed to become a corset-maker in Austria. + +The European Commission, which polices the single market, has tried to prise open some of the more protected areas of Europe’s economy. A services directive in 2006 cut red tape and made it easier for firms to establish operations abroad, but its scope was limited and implementation patchy. A “single-market strategy”, launched almost unnoticed last October, sought to do better at applying existing rules. But this is hardly visionary stuff. + +Among the first to argue that this was hypocritical was John Major, a former British prime minister. In a speech in 2014 warning of the risk of Brexit, he suggested that the incomplete EU market in services was reason not to be dogmatic on labour mobility. If Germany could, in effect, limit foreign businesses from operating inside its borders, why should Britain not cap EU migrants? That argument seemed reasonable in Britain, where high EU immigration rates had become divisive, but found scant support on the continent. Some governments even grumbled at the terminology: EU workers are not “migrants”, they fumed, but citizens with legitimate free-movement rights. They had a point: plenty of services can only be delivered in person (think waiters or tattoo artists). Herein lies the “indivisibility” of the four freedoms. + +But the energy devoted to defending the single market is apparently not available for deepening it. Jean-Claude Juncker, the commission’s current boss, took office almost two years ago vowing to accelerate integration in energy, digital services and Europe’s fragmented capital markets. But progress has been slow (and Jonathan Hill, the British commissioner in charge of the capital-markets union project, resigned after the Brexit vote). Consumer-friendly measures, such as preventing “geoblocking” (altering website access for users in different countries), will grab headlines but are unlikely to do much for growth. + +The market that Jacques built + +That is a shame. Or, as one senior EU official puts it, “it is borderline criminal”. The commission reckons that merely implementing current law on services trade could boost EU output by 1.8%. A proper digital market could add 3%. Other estimates are higher. Across the EU growth is slow, investment low and, in most countries, fiscal space limited. Deepening the single market looks like a good way to boost long-term output. And yet progress has ground almost to a halt. Why? + +First, the low-hanging fruit has been plucked. It is much easier to liberalise trade in goods than in jealously protected services markets, as the EU has learned during its painful attempts to negotiate “next-generation” trade deals with Canada and America. Second, the euro crisis forced governments to focus on macroeconomic stability rather than the fiddly business of market regulation. Third, the commission is not the mighty beast that, under the guidance of a French Socialist, Jacques Delors, assembled the rudiments of the single market in the 1980s. Today power in the EU rests firmly with governments, and few seem minded to take on vested interests at home when the benefits of freer trade will be so diffuse. One Brussels-based lobbyist notes ruefully that in 2008 industrial firms tried to stop the commission from regulating so much. Now they are desperate for it to be more aggressive. + +Calls to deepen the single market will not go away, but they are starting to acquire a sepia tinge. Momentum has stalled and looks unlikely to pick up, not least because the departure of Britain will deprive the single market of its biggest champion. For some, who never trusted the EU’s great project of liberalisation, that is no great loss. Others may come to regret it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21702233-european-project-britain-helped-build-grinding-halt-single-market-blues/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Britain’s political landscape: The irresistible rise of Theresa May + +The Labour Party: Twist or split + +The civil service: Building the Brexit team + +Defence: The nuclear option + +The economic impact of Brexit: Straws in the wind + +The immigration paradox: Explaining the Brexit vote + +Bagehot: Travels in Theresa May country + + + + + +Articles Sections Next + +Britain’s political landscape + +The irresistible rise of Theresa May + +The new Conservative prime minister faces huge challenges on Brexit and the economy. What will help her most is the turmoil in the opposition + +Jul 16th 2016 | From the print edition + + + +SO IT was a coronation after all. On July 13th Theresa May, the home secretary, became Conservative Party leader and prime minister after her only remaining rival, Andrea Leadsom, the energy minister, pulled out of the race. Mrs Leadsom’s ostensible reason was that she had the backing of only 84 Tory MPs, against Mrs May’s 199. But what counted more was that, under pressure, she had shown her unfitness for the job, embroidering her financial career and hinting that, as a mother, she was better qualified than the childless Mrs May. + +A new Tory prime minister is but one feature of the redrawn political landscape after Britain’s vote to leave the European Union. The opposition Labour Party has sunk into ever-deeper chaos under Jeremy Corbyn, who now faces a leadership challenge (see article). The populist UK Independence Party has a vacuum at the top following the resignation of its leader, Nigel Farage, on the completion of his career’s ambition. And although the Scottish Nationalists, the third-biggest party in Westminster, are united under Nicola Sturgeon, they are uncertain how and when to pursue independence post-Brexit. + +Mrs May backed the Remain side in the referendum, unlike most Tory voters. Yet they welcomed her victory, if only because she has shown more political nous than her pro-Brexit opponents. Indeed, it is remarkable that the Brexiteers, having won a famous victory, have now largely fled the battlefield, leaving Remainers to sort out the mess. Mrs May was only ever lukewarm about the EU, and has promised that “Brexit means Brexit”. Still, she can expect cries of treachery if the process stalls. + +As home secretary for six years, she built a reputation as a moderniser, picking fights with the police. She was quicker than most Tories to see which way the wind was blowing on issues such as gay marriage; in 2002 she warned that many voters saw the Conservatives as the “nasty party”. She is a child of England’s home counties, without the privileged background of the outgoing prime minister, David Cameron, and many of his circle. + +Her first task was to form a cabinet. Philip Hammond, previously the foreign secretary, is to be the new chancellor. More surprisingly she gave the Foreign Office to Boris Johnson, a Brexiteer not noted for his diplomacy. (In May he won a magazine competition to write a poem about Turkey’s repressive president—“a young fellow from Ankara / Who was a terrific wankerer”, as he put it.) Liam Fox, a fellow Leaver who resigned from the cabinet in disgrace less than five years ago, will be trade secretary. David Davis, a veteran Eurosceptic, will take charge of a new Brexit department. Amber Rudd, the energy secretary, will become home secretary. + +The next question will be whether Mrs May wants or needs a stronger democratic mandate. In 2007, when Gordon Brown assumed the premiership without any Labour challenger, she accused him of running scared by not holding an election to test his credentials. Yet she now insists that no election is needed before the current parliamentary term ends in 2020. The Fixed-term Parliaments Act of 2011 makes it harder than it used to be for prime ministers opportunistically to call early elections. But Labour’s disarray may yet tempt her to try, perhaps next year or in 2018. + +Her biggest test of all will be Brexit. She has experience of Brussels, notably in skilfully negotiating Britain’s opt-out from most EU justice and home-affairs policies in 2014, while ensuring that it opted back in to 35 measures, including Europol (which assists members’ police forces), the European arrest warrant and the passenger-names directive. But she has not even met most EU leaders. No doubt they will give her a cautiously warm welcome (she has some affinities with Germany’s chancellor, Angela Merkel, including an upbringing as a pastor’s daughter). But they will also say it is for her to explain how she wants to proceed—and how fast. + + + +The characteristics of incoming British prime ministers + +Mrs May insists that there will be no attempt to remain inside the EU and there can be no second referendum. But she has also said she will not trigger Article 50, the legal route to Brexit, until she has fixed her own negotiating position. And, although as home secretary she was fiercely anti-immigration, she has been careful to insist only that free movement of people in the EU cannot continue as it currently operates. She knows the value of full membership of Europe’s single market, and she understands the trade-off that may be necessary between preserving this and setting limits on free movement. + +It is within this framework that the hard bargaining with Britain’s partners will eventually take place. Many colleagues are floating ideas loosely called Norway-plus (or Norway-minus), which involve trying to keep as much as possible of Britain’s membership of the single market while being permitted to impose some controls or an emergency brake on free movement. + +It will help that the recession that is now on the cards will have the side-effect of curbing immigration. But in other respects the economy will be the second big headache for Mrs May. She has sensibly junked her predecessor’s target of balancing the budget by 2020. She plans more investment in infrastructure, though she is against a third runway at Heathrow airport. She has evinced a surprising hostility to foreign takeovers of British companies; and she has moved to grab Labour’s territory in proposing that workers and consumers should sit on company boards, and that executive pay be limited. Mrs May’s declared goals of building an economy that works for everyone, not just for the privileged few, and of doing more to help the poor and disadvantaged who have suffered most in the past decade, are admirable. But she may yet need to curb her more interventionist instincts. + +Her best asset, however, will be the chaos of the opposition. The Tories precipitated the Brexit vote for internal reasons and in doing so split their members and decapitated their leadership. It is extraordinary that they now appear the more united of the two main parties. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702150-new-conservative-prime-minister-faces-huge-challenges-brexit-and-economy-what-will/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Labour Party + +Twist or split + +Jeremy Corbyn’s insistence on staying as leader risks destroying his party + +Jul 16th 2016 | From the print edition + + + +THE timing could not have been worse. After weeks of indecision Angela Eagle, a veteran Labour MP, at last announced a challenge to Jeremy Corbyn as party leader on July 11th. But just as she was making her pitch to a room full of journalists, the reporters began to leave. Elsewhere, the Conservatives’ own leadership battle had come to an abrupt end, and Theresa May was about to be crowned the winner. Ms Eagle’s gauntlet was buried by headlines about the new prime minister. + +Things did not get better. A bid to keep Mr Corbyn out of the leadership contest, on the basis that he could not secure the backing of 51 Labour MPs or MEPs, failed when the party’s National Executive Committee (NEC) ruled by 18 votes to 14 that Mr Corbyn must be on the ballot as the incumbent. Then Owen Smith, another Labour MP who, unlike Ms Eagle, had opposed the Iraq war, announced his own leadership bid, threatening a divide among anti-Corbyn MPs. All this lends some justice to a remark by John McDonnell, the shadow chancellor, that the anti-Corbyn plotters were “fucking useless”. + +Ever since Mr Corbyn became leader last September there has been tension between Labour MPs, most of whom consider him unelectably left-wing, and party members, many of whom adore him. It was bad enough when he won the leadership crushingly last September after scraping around for last-minute nominations from MPs, some of whom backed him just to make the contest more lively. It is now much worse: 172 of Labour’s 230 MPs have declared no confidence in Mr Corbyn, making his position in the parliamentary party untenable. Next week’s Trident vote is likely to expose just how far removed he is from his own MPs (see article). + +The Brexit referendum crystallised their frustration. The party was formally committed to Remain, but many moderate MPs felt that Mr Corbyn was half-hearted at best, and that this caused many Labour voters, especially in northern and eastern England, to back Leave. With Mr Corbyn’s poll ratings dismal and a serious risk of the party compounding its loss of Scotland in 2015 by losing northern England, most Labour MPs desperately want a new leader. + +Yet they may not get one. There is talk of a legal challenge to the NEC decision, but it is unlikely to succeed, as the rules are at best ambiguous about whether the incumbent needs signatures, like a challenger. The nasty treatment of anti-Corbyn MPs, including a brick being thrown through the window of Ms Eagle’s constituency office and efforts to intimidate moderates by members of the far-left Momentum group, could lead some party members to change their minds about Mr Corbyn. The NEC’s decision to exclude from the leadership vote new members who have joined the party only since January, and to require newly registered supporters to pay £25 ($33), not £3 as last year, may also reduce his support. Yet he remains the favourite to defeat any challengers. + +What then? A large number of moderate MPs might set up a new opposition group and pick a new leader. But after such a split, they would risk losing Labour’s apparatus, assets and name. The rebels are not eager to join the Liberal Democrats; they recall the rebels who left Michael Foot’s Labour Party in 1981 to form the Social Democrats, a party that later disappeared. So they may just hope that Mr Corbyn is sufficiently wounded by winning with a smaller margin than last time that they can prepare a successful challenge next year. Either way, the only winner for now is Mrs May. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702224-jeremy-corbyns-insistence-staying-leader-risks-destroying-his-party-twist-or-split/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The civil service + +Building the Brexit team + +A bureaucratic marathon lies ahead. Does Britain have enough pen-pushers? + +Jul 16th 2016 | From the print edition + + + +FEW challenges the British civil service has faced would boggle the bureaucrat’s mind as much as Brexit. While unscrewing the legal nuts and bolts that fasten the country to the European Union, officials will have to survey British industries to discover what protection motorcycle manufacturers and salmon fisheries might require from foreign competition and what access they need to European markets. Then they must negotiate more than 50 trade deals, to replace the ones Britain will forfeit by leaving the EU. Some wonder whether the “Rolls-Royce” of government—which has shrunk by one-fifth since 2010—has the horsepower for the job. + +The scale of the task will depend on what sort of Brexit the new prime minister, Theresa May, negotiates. Under the maximal form of withdrawal, civil servants would painstakingly have to copy, or scrap, 12,295 EU regulations. They have already started to map out every British law that derives from the EU. + +Mrs May has promised a new ministry for Brexit to co-ordinate all this, the first task-specific Whitehall department created outside of wartime. A new department of up to 1,000 staff may reassure the public that something is being done but, as the Institute for Government, a think-tank, points out, it will bog down mandarins at a time when there is more important work to be done than sorting out new e-mail addresses. Nick Wright of University College London believes that funding boosts for existing departments, particularly the stripped-down Foreign Office, would make more sense. + +Whatever the new ministry looks like, the most pressing issue is expertise. Much of the Brexit bureaucracy can be handled by Britain’s 393,000 existing civil servants. But some outside help will be required, particularly when it comes to trade. When Britain joined the European Economic Community in 1973 it handed over control of trade-deal negotiation, as all member states must. As such, only about 20 civil servants in London now have experience of these complex tugs-of-war, according to an initial government review. The EU, meanwhile, has a crack team of around 600. It will be “very difficult” for Britain to catch up, says Pascal Lamy, a former head of the World Trade Organisation (WTO). The Department for Business, Innovation and Skills recently advertised for 300 negotiators and trade specialists. + + + +Daily chart: Britain votes to leave the European Union + +The private sector stands ready to help. But besides the expense, bringing in an army of management consultants would raise questions of confidentiality, says Emily Jones of Oxford University’s Blavatnik School of Government. Any consultancy’s other clients would love a keyhole into the Brexit negotiations; in the finance industry alone, £12 billion ($16 billion) of business rests on the outcome, according to PricewaterhouseCoopers. Doubts of allegiance also surround foreign nationals. New Zealand, the first rich country to sign a trade deal with China, has offered to loan its experts. But the top team should be British, says Sir Simon Fraser, a former diplomat. + +The wiliest strategy might be to poach trade negotiators from the European Commission itself. Some 32 Britons work within its Directorate General for Trade. Recruiting them may be easier for the fact that Brexit is likely to stall Britons’ progress up the Commission’s career ladder. Yet Eurocrats enjoy reduced-tax salaries and have put down roots in Brussels. Still, says Miriam Gonazález Durántez, a lawyer and former EU trade negotiator, it is their doors that Britain should be knocking on. Next it could approach Britons working in the WTO. If Britain is to leave the negotiating chamber with its pockets unpicked, their ilk is sorely needed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702229-bureaucratic-marathon-lies-ahead-does-britain-have-enough-pen-pushers-building-brexit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Defence + +The nuclear option + +Parliament prepares to deliberate on whether to ban the bomb + +Jul 16th 2016 | From the print edition + +No substitute + +NINE countries are believed to have nuclear weapons. On July 18th Britain will decide whether it wants to remain in that club, when its MPs debate whether to renew the country’s Trident nuclear deterrent. Theresa May, the new prime minister, has said it would be “sheer madness” to give it up, and the vote is expected to pass easily. Perhaps 150 of Labour’s 230 MPs will vote in favour of the plan, rebelling against their leader, Jeremy Corbyn. + +The House of Commons approved in principle the retention of a nuclear deterrent in 2007. A review in 2013 reaffirmed that “like-for-like” replacement of the four submarines that carry the missiles represented the best and most cost-effective way to do it. Parliament will now decide whether to approve the spending of £31 billion ($41 billion) over 20 years to replace the four Vanguard-class subs, which will wear out within a decade. + +Trident’s detractors argue that a lot has changed since the programme was approved in 2007. For one thing money is tighter. Around one-quarter of defence spending on new equipment procurement will be on submarine and deterrent systems by 2021-22. There has also been a surge in support for independence in Scotland, where the submarines are based. It is unlikely that the government would choose to site the capability north of the border if the renewal process began again now, says William Walker of St Andrew’s University. The Scottish government opposes the plan; almost all of the 59 Scottish MPs at Westminster are expected to vote against it (though polls suggest that public opinion in Scotland is more mixed). If Scotland were to become independent—now more likely because of Brexit—Britain could well have to relocate its subs, at further expense. + +Critics also say Trident relies too much on a single naval platform (America has air, land and sea options), and that improved ballistic-missile defences and the future use of underwater drones and cyber warfare could threaten the subs’ security. Yet land-based ballistic missiles are vulnerable to attack, and arming aircraft with nuclear-tipped cruise missiles permanently aloft carries a significant danger of nuclear accident and is much more expensive. The cut-price option of building three submarines rather than four would be a false economy, undermining the principle of “continuous at-sea deterrence”. + +The vote comes at a time when few in Britain are minded to dial down the country’s defence capabilities. Mrs May has cited Russia’s renewed belligerence as one justification for updating Trident. And Brexit has left the country, and its allies, shaken. Britain’s partners would be sensitive to signs of more isolationism, says Malcolm Chalmers of RUSI, a think-tank. Britain has the largest defence budget in Europe; maintaining nuclear capabilities shows that it is still committed to NATO. “Our allies would not understand if we chose this moment to give up our nuclear weapons,” Mr Chalmers says. + +The vote is also linked to Britain’s image of itself. Last year a strategic review boosted defence spending, as part of an effort to restore Britain’s standing as a military power after years of cuts. Trident is part of that. Though it is expensive and imperfect, most MPs, and their constituents, believe it still helps to make Britain safe, and is a force for stability—something of which it has had precious little in recent weeks. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702226-parliament-prepares-deliberate-whether-ban-bomb-nuclear-option/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The economic impact of Brexit + +Straws in the wind + +Forget the financial markets. Evidence is mounting that the real economy is suffering from Brexit + +Jul 16th 2016 | From the print edition + + + +BEFORE the referendum, economists were in near-unanimous agreement that a vote to Leave would hit the economy. And as predicted, the past three weeks have been torrid. The pound has fallen by one-tenth against the dollar; the FTSE 250, an index of domestically focused firms, is down. Alongside the now-familiar turmoil in financial markets, there is growing evidence that the real economy is slowing. + +It is not easy to assess the economic impact of Brexit, because official data are published with a long lag. The first official estimate of GDP growth in the third quarter will not come out until late October. + +But there is a smorgasbord of other indicators of economic activity—in particular, data “scraped” from the internet—which occur at a higher frequency than official data are published. None of the observations is robust on its own. But together, they hint at how the British economy is doing after Brexit. + +It is not all doom. Consumer spending seems to be holding up. OpenTable, a restaurant-booking website, showed a drop in reservations during the referendum, as people made time to vote or watch the coverage. After the next weekend, however, reservations were back to normal. + +Shoppers have not been too affected, either. Sales at John Lewis, a department store, which has published weekly figures to July 9th, are up on previous years. The number of people entering shops, a decent proxy for retail spending, has not much changed since the referendum, according to data from Footfall, a consultancy. Supermarkets are not aggressively discounting, finds mySupermarket, a price-comparison site. Tesco, Britain’s biggest, had 23.7% of products on promotion on July 8th, down from 24.8% just before the referendum. + +All this chimes with what economists predicted—that consumer spending would hold up. Over half of voters plumped for Brexit, after all, so they should be happy shoppers. An economic slowdown does not immediately pinch people’s pockets. Instead, the assumption was that investment would be whacked. Companies would put off big decisions on capital spending or recruitment, given the uncertainty about the future of the economy. + +It looks a fair prediction. Firms already seem more reluctant to take on new staff. Data from Adzuna, a job-search website with over 1m listings, suggest that in the week to July 8th there were one-quarter fewer new jobs than in the first week of June. Part-time roles appear to have been particularly hit. Scotland, which was already near recession because of low oil prices, is suffering most. + +While some Britons struggle to find new jobs, others may be losing theirs. A Bank of England paper from 2011 analysed Google as a window into the labour market. Searches for “jobseekers” (as in jobseekers’ allowance, an unemployment benefit) have historically been correlated with the unemployment rate. In the first fortnight in July, Britons searched for that word about 50% more frequently than in May. This suggests that unemployment is now 5.3%, not the official rate of 5% (last recorded for the three months to April). + +Businesses are cutting investment, too. On Funding Circle, a peer-to-peer loans website for small firms, the volume of lending is about 10% lower so far in July than it was in the same month last year. The number of planning applications—for permission to expand premises, say—is another decent proxy for investment spending. Though there is a lag in registrations, a tally of applications in London boroughs in the week after Brexit currently stands at one-third below their level a year before. + +The tail-off in planning may be linked to a slowdown in the housing market. Data scraped from Zoopla, a property website, suggest that of about 6,000 London properties listed from June 24th to July 11th, roughly 1,000 have had their price cut since the referendum. A survey by the Royal Institution of Chartered Surveyors published on July 14th, which accounts for the post-referendum period, shows a sharp fall in inquiries from homebuyers. + + + +INTERACTIVE: Integration within the European Union + +What of the export boom resulting from the weak pound, as Brexiteers predict? There is some evidence that flight bookings into Britain have risen. And the headline on NetEase, a Chinese web portal, is bullish: “Pound falls to 31-year low. Time to bargain-hunt for British homes?”. But although it is difficult to assess the overall impact on exports, there is little to suggest a bonanza is on the way. British export competitiveness has not improved as much as the fall in sterling implies, because one-quarter of the value of British exports contains imports—which are getting pricier. Analysis by The Economist of data provided by PriceStats, a consultancy that scrapes prices from online retailers, suggests annualised inflation since the vote has been above the Bank of England’s 2% target. In any case, research shows little evidence that currency depreciations lead to increased market share in exports, particularly for a country like Britain which competes mainly on “non-price” factors such as quality and customer service. + +Now the slowdown is taking shape, the authorities must respond. Theresa May, the new prime minister, has made encouraging noises about a fiscal stimulus, though with the budget deficit already at about 4% of GDP she does not have much room to manoeuvre. On July 14th the Bank of England surprised markets by holding interest rates at 0.5%; most analysts had expected a cut. A future reduction cannot be far away: as the economy slows, it will soon need all the help it can get. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702225-forget-financial-markets-evidence-mounting-real-economy-suffering/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The immigration paradox + +Explaining the Brexit vote + +Areas with lots of migrants voted mainly to Remain. Or did they? + +Jul 16th 2016 | From the print edition + + + +Daily chart: Britain votes to leave the European Union + +Although immigration featured heavily in the Brexit campaign, areas with the most migrants—notably London—were among those most likely to vote Remain (see chart 1). Mint-tea-sipping metropolitans may find it absurd that people in areas with comparatively few foreigners should be so keen to curb migration. But consider the change in numbers, rather than the total headcount, and the opposite pattern emerges (chart 2). Where foreign-born populations increased by more than 200% between 2001 and 2014, a Leave vote followed in 94% of cases. The proportion of migrants may be relatively low in Leave strongholds such as Boston, Lincolnshire, but it has soared in a short period of time. High numbers of migrants don’t bother Britons; high rates of change do. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702228-areas-lots-migrants-voted-mainly-remain-or-did-they-explaining-brexit-vote/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Travels in Theresa May country + +To understand Britain’s new prime minister, visit her constituency + +Jul 16th 2016 | From the print edition + + + +FROM 10 Downing Street, travel west. First you pass posh inner districts like Notting Hill, where David Cameron and his fashionable set plotted a liberal future for the Conservative Party early in the past decade. Then you cross working-class suburbs of the capital like Brentford and Hounslow, where trading estates intertwine with Victorian terraces. Afterwards comes Heathrow airport, a series of reservoirs, the grandeur of Windsor Castle and Eton College, and then Slough, a town so architecturally dismal that in 1937 Sir John Betjeman penned a poem beckoning “friendly bombs” to rain down on it. And then, where the concrete meets the fields, you hit Maidenhead. + +This is home turf for Bagehot, who grew up in similar borderlands south of London and, when he was small and pesky, was packed off to grandparents in Littlewick Green, a village immediately west of Maidenhead. It is also Theresa May country. Since 1997 Britain’s new prime minister has been MP for the constituency encompassing the town and its surroundings. She spent her childhood across the Chiltern Hills in Wheatley, where her father was a vicar. Her seat is suburban in the truest sense: Maidenhead has always been an in-between sort of place; it exists to connect other places. It started with a toll bridge on the River Thames. Then, in the 1830s, came the Great Western Railway, which turned it into a London commuter dormitory. Now it thrives thanks to its proximity to the M4 motorway and Heathrow. + +“In-between” describes Maidenhead in other ways, too. The Tudorbethan houses, the rowers on the Thames and the cricket greens make it feel like deepest England. But Maidenhead is neither nostalgic nor monocultural. It is too diverse and too close to London for that. Polish pilots who flew from the White Waltham airfield settled here after the war. In the 1950s a Sicilian newspaper advertised jobs here, attracting a large Italian contingent. Today the proliferation of global companies like Adobe, BlackBerry and Maersk draws residents from around the world. + +Aesthetically, the seat is similarly interstitial. It is where the worst of London’s sprawl—post-war concrete and thundering roads scarring parts of the town centre—mingles with the English countryside at its parklike best. Murder mysteries are filmed in the surrounding villages. Amal Clooney, a hotshot human-rights lawyer, and her actor husband George live in a 17th-century manor house in Sonning, where Mrs May has her constituency home. + +What about money? Maidenhead is Britain’s answer to Connecticut: “You were considered subversive if you only mowed your lawn once a week,” recalls John O’Farrell, a Labour comedian who ran against Mrs May in 2001. It contains the Fat Duck, the three-Michelin-starred restaurant epitomising Britain’s gastronomic boom. But this prosperous town also contains poor people. Its service economy has plenty of lovely jobs (software designers, bankers and insurance brokers) and plenty of lousy ones (cleaners, dish-washers and carers), but not much in the middle. House prices—one estate agent advertises a two-bedroom flat for £575,000 ($760,000)—are forcing those in the latter category into tiny dwellings and even onto the streets. Recently a group of homeless people, “Born SL6” (the local postcode), camped on the trim lawn of the town hall. A food bank feeds 200 families. + +In this constituency of contrasts, one thing is uniform: everyone likes Mrs May. “She’s approachable.” “Every Friday, you see her in the town.” “She looks after us.” The new prime minister has nurtured her seat with military discipline. Even at the peak of the leadership contest she was there: opening an Alzheimer’s charity shop, visiting a DIY store and attending a church service commemorating victims of the Somme. The archives of the Maidenhead Advertiser document her involvement in every local campaign for the past 19 years. “Even her political opponents respect her,” said Martin Trepte, the editor. + +At times she seems like a liberal, at others an authoritarian. She admires Margaret Thatcher but postures as an economic interventionist. She was never part of the Notting Hill set, preferring to spend her time working the “rubber chicken circuit”: speaking to silver-haired Conservatives in village halls and mid-range restaurants in small-town Britain. Thus she has acquired a reputation in Westminster for being dull and suburban. Mr Cameron claims his favourite bands include The Killers and Radiohead, for example; Mrs May goes for Abba and Frankie Valli. She holidays not on tycoons’ yachts but on hiking trips to the Alps, like Angela Merkel, another cautiously dutiful centre-right European leader to whom the comparisons draw themselves. + +Go west, young Eurocrat + +Mrs May’s constituency epitomises her desire for order. Maidenhead is not a backwater. It is buffeted by globalisation and change as much as anywhere. But it attracts people who want suburban calm and certainty over city buzz; who eschew the risky and unknown. Folk who, as Betjeman put it, “talk of sports and makes of cars / In various bogus-Tudor bars / And daren’t look up and see the stars”. May’s unromantically pragmatic instincts reflect this. She is not anti-globalisation (she was against Brexit). But she does want to take the edges off it, get it under control and make it neat and manageable. + +European negotiators should take note. Eventually they will be locked in negotiations with the self-described “bloody difficult woman” who now inhabits 10 Downing Street. She is inscrutable, private and hard to read. But those with whom she spars could do worse than head to May country for a sense of her instincts. To an in-between land of garden centres, railway season-tickets, motorway service stations, faux-mullion windows, chain restaurants and supermarket loyalty cards. Of leather-on-willow, gin-and-jag and keep-calm-and-carry-on. To a land where Britain’s bucolic past and cosmopolitan future pass each other in the street—and avoid eye contact. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702217-understand-britains-new-prime-minister-visit-her-constituency-travels-theresa-may-country/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Buying drugs online: Shedding light on the dark web + + + + + +Articles Sections Next + +Buying drugs online + +Shedding light on the dark web + +The drug trade is moving from the street to online cryptomarkets. Forced to compete on price and quality, sellers are upping their game + +Jul 16th 2016 | From the print edition + + + +LEAVING vacuum-sealed bags, digital scales and stashes of marijuana lying around was a mistake. So was getting T-shirts and hoodies emblazoned with “Cali Connect”, under which name drugs were dealt online. Selling pot to an undercover officer was a further slip-up. All this is part of the prosecution evidence in an ongoing case against David Burchard in California. But the crucial piece of evidence, according to the police who arrested him in March, was that he had trademarked Cali Connect to protect his brand. + +Mr Burchard is awaiting trial; the charges against him may be demolished in court. But even if the police officers’ story does not hold up, in its outline it is typical of recent developments in the drug trade. Though online markets still account for a small share of illicit drug sales, they are growing fast—and changing drug-dealing as they grow. Sellers are competing on price and quality, and seeking to build reputable brands. Turnover has risen from an estimated $15m-17m in 2012 to $150m-180m in 2015. And the share of American drug-takers who have got high with the help of a website jumped from 8% in 2014 to 15% this year, according to the Global Drug Survey, an online study. + +Online drug markets are part of the “dark web”: sites only accessible through browsers such as Tor, which route communications via several computers and layers of encryption, making them almost impossible for law enforcement to track. Buyers and sellers make contact using e-mail providers such as Sigaint, a secure dark-web service, and encryption software such as Pretty Good Privacy (PGP). They settle up in bitcoin, a digital currency that can be exchanged for the old-fashioned sort and that offers near-anonymity during a deal. + +Almost all sales are via “cryptomarkets”: dark websites that act as shop-fronts. These provide an escrow service, holding payments until customers agree to the bitcoin being released. Feedback systems like those on legitimate sites such as Amazon and eBay allow buyers to rate their purchases and to leave comments, helping other customers to choose a trustworthy supplier. The administrators take a 5-10% cut of each sale and set broad policy (for example, whether to allow the sale of guns). They pay moderators in bitcoin to run customer forums and handle complaints. + +Once a deal is struck and payment is waiting in escrow, drugs are packed in a vacuum-sealed bag using latex gloves to avoid leaving fingerprints or traces of DNA, and dipped in bleach as a further precaution against leaving forensic traces. A label is printed (customs officials are suspicious of handwritten addresses on international packages). Smart sellers use several post offices, all far from their homes—and, preferably, not overlooked by CCTV cameras. Some offer to send empty packages to new customers, so they can check for signs of inspection. Smart buyers use the address of an inattentive or absent neighbour with an accessible postbox, and never sign for receipt. Judging by the reviews, around 90% of shipments get through. + +Despite the elaborate precautions, until now cryptomarkets have tended not to last long. The first, Silk Road, survived almost three years until the FBI tracked down its administrator, Ross Ulbricht, aka “Dread Pirate Roberts”. He is serving a life sentence for money-laundering, computer-hacking and conspiracy to sell narcotics. Its successor, Silk Road 2, lasted just a year before law-enforcement caught up with it. Buyers and sellers migrated to the next-biggest sites, Evolution and Agora. The former vanished in March 2015 with $12m-worth of customers’ bitcoin in an “exit scam”. Then Agora disappeared, claiming that it had to fix security flaws. The biggest still standing is Alphabay, though the recently opened fourth version of Silk Road could knock it off the top spot. + +Quality assurance + +The secretive nature of dark-web markets makes them difficult to study. But last year a researcher using the pseudonym Gwern Branwen cast some light on them. Roughly once a week between December 2013 and July 2015, programmes he had written crawled 90-odd cryptomarkets, archiving a snapshot of each page. + +The Economist has extracted data from the resulting 1.5 terabytes of information for around 360,000 sales between December 2013 and July 2015 on Agora, Evolution and Silk Road 2. In total the deals were worth around $50m. For each transaction we know what was sold, the price in bitcoin, the date of completion, shipping details, the customer’s rating and the vendor’s pseudonym. + +There are, inevitably, flaws in the data. Mr Branwen’s scrapes probably missed some deals. We excluded any sale that was more than a week old when the scrape took place. If a price was absurdly high we ignored the page; such “holding prices” are used by dealers to indicate a lack of supply. Vendors may fake sales (though probably not often, since cryptomarkets take a cut) or reviews (though dissatisfied real customers would soon catch outright fraudsters). The volatile exchange rate between bitcoin and dollars means our conversions of prices are not completely accurate. + +MDMA (ecstasy) sold the most by value (see graphic). Marijuana was the most popular product, with around 38,000 sales. Legal drugs such as oxycodone and diazepam (Valium) were also popular. A third of sales did not belong in any of our categories: these included drug kit such as bongs, and drugs described in ways that buyers presumably understood, but we did not (Barney’s Farm; Pink Panther; Gorilla Glue). + +Some of the products cater to niche interests. You can consume “with a good conscious [sic]”, promises one vendor for his “ethically sourced” THC chocolate, which costs 13% more than the ordinary, immoral stuff. “Conflict-free” cocaine is also available for the humanitarian (or delusional) drug-taker. And “social” coke—a less pure version sold at a discount of 5-25%—is aimed at buyers who want to look lavish on a budget. + +The first striking finding is that drugs bought on the dark web are comparatively pricey (see chart 1). Even though buyers can browse for a bargain, in most countries a gram of heroin costs roughly twice as much online as on the street. The markup for cocaine is around 40%. + + + +Australia bucks this trend. Narcotics prices there are usually three or four times higher than the rich-world average. Australia is so remote that sending drugs there is much more expensive, plus their customs officials are better at securing their border, notes David Décary-Hétu, a cyber-security expert at Montreal University. But the competition from an international market drives online prices below those on the street. Using the postal system makes arbitrage possible, says Nicolas Christin of Carnegie Mellon University. An enterprising dealer could, for instance, pick up a gram of heroin from the Netherlands for $75. If it makes it through customs into Australia, the price jumps to $288. + +One reason for the higher price of dark-web drugs in most of the world, says Mr Christin, is that vendors must build in some of the cost of parcels being intercepted (some promise to split the loss with the seller; others say they will abide by a moderator’s decision). And using the postal system makes it hard to introduce economies of scale. To avoid suspicion, vendors do not buy vacuum-seal bags in bulk. A package can take an hour to prepare. The common precaution of using a distant post office is costly: on an online forum, one dealer complains that dispatching a single package a day would mean losing money on petrol alone. Postage and packing raises prices as much as 28% (see chart 2). + + + +The main reason for the online price premium, though, appears to be that dark-web drugs are of higher quality. If you order from someone with thousands of reviews you are unlikely to get a poison in place of a psychedelic, explains a regular buyer of LSD. An online dealer who flogs dross gets bad reviews and loses clients. + +A study by Energy Control, a Spanish think-tank that asked volunteers to send samples of dark-web drugs for testing, confirms the existence of this quality premium. It found an average purity level for cocaine, the drug for which it gathered the most data, of 71.6%, compared with 48% for cocaine bought on Spanish streets. Over half of the dark-web samples contained nothing but cocaine, compared with just 14% of those bought offline. Taking purity into account, it is probably cheaper to score online than via your local dealer, says Judith Aldridge of Manchester University. + +The price gap differs from drug to drug. Some of the variation can be explained by where the cryptomarket sits in the supply chain. With the right know-how and access to chemicals it is possible to produce synthetic drugs such as LSD and ecstasy anywhere. Cannabis can be grown indoors, if bathed in high-powered electric light. But heroin and cocaine still have to be sourced from Afghanistan or Latin America. So their sellers, even online, are likely to be middlemen, with the associated risks, rather than producers. + +For most drugs, though, cryptomarkets allow dealers to avoid the dangers they face on the street. They no longer run such risks as being shot by a rival or stabbed by a junkie. Customers are less likely to be arrested, or sold dodgy products. But there are also new dangers. + +Ms Aldridge points to “doxxing”—the release of personal details online—as one. An aggrieved (or opportunistic) vendor who thinks a customer’s review was unfair may publish the delivery address or threaten blackmail. On a forum, one user complains that he received a letter postmarked Hawaii saying that someone “has my info and he’s going to give it to the cops” unless five bitcoin ($1,217 at the time) are sent to an untraceable account. And cryptomarkets themselves have suffered distributed denial-of-service attacks, in which a website is brought down by a flood of bogus page requests. These may be orchestrated by rivals who want to grab market share, says James Martin, a cryptomarket expert at Macquarie University in Australia, just as offline gangs engage in turf wars. + +Medicine man + +As the drug trade moves to cryptomarkets, ancillary services are springing up. Outfits such as Mr420 claim to offer vendors public-relations services—and fake reviews. Online forums allow dark-web users to warn each other about rip-off vendors, and addicts to seek advice on how to manage their habits. Dealers, too, share information: leaked customs and post-office manuals are mined for tips on how to lower the odds that a shipment is stopped. + +DNMAvengers, a website that launched last November, funded by donations, uses trained chemists to analyse samples of dark-web drugs sent in by users. It publishes the results on its website. Fernando Caudevilla, a physician based in Madrid who is better known as DoctorX, dishes out free drug-related advice on dark-web forums. Drug-users do not come into hospitals, he says, so health workers need to go and find them. He has responded to about a thousand queries in the past few years, from “Can I take MDMA if I have diabetes?” (Yes, if you follow the guidelines and closely monitor blood tests) to “Can I use marijuana while I am breastfeeding?” (No; it gets into breast milk). + +Other developments are making the job of law-enforcement harder. Tails, an operating system popular among dark-web fans, blocks almost all non-anonymous communication to or from a computer. Mr Christin and Kyle Soska, another cyber-security expert, found that the share of vendors using PGP encryption jumped from about 25% in July 2013 to over 90% in January 2015. “Bitcoin-tumblers” make the digital currency harder to trace. A customer’s bitcoin are poured into a virtual black box and mixed with other bitcoin. Afterwards the same amount is returned, but made up of bits of other people’s stashes, making transactions even harder to track. + +OpenBazaar, a trading site launched in April, works on a peer-to-peer basis, rather than through a central website. Users download a program that links their computers to all others on which it is installed, thus creating a network through which deals can take place. This model could make dark-web markets less susceptible to exit scams, since the escrow system requires either the buyer’s or seller’s approval to release the bitcoin, and nearly impossible to take down. + +Around three-fifths of dark-web vendors are groups of people rather than individuals, judging by the share of profiles that refer to themselves as “we”. And a small number are responsible for most of the sales. The study by Mr Christin and Mr Soska found that just 2% of sellers made more than $100,000 between July 2013 and January 2015. + +Another study, by Mr Décary-Hétu and Ms Aldridge, suggests that roughly a quarter of deals on dark-web markets appear to be for wholesale purposes. Purchases of cannabis costing over $1,000 (roughly three ounces) make up 24% of marijuana sales by value. Ecstasy orders worth the same amount make up 47%. Other sellers are probably users who have bought a bit more than they need and have no one to sell to. They find buyers online, drop their surplus in the post and leave it at that. + +We crunched numbers for around 2,000 vendors, splitting them into quintiles and analysing their characteristics. Those who did well look a lot like the best sellers on legitimate marketplaces such as Amazon and eBay. The sellers with the highest revenues tend to offer a wider range of products and to ship globally. They seek to distinguish their brands by developing a reputation for quality, reliability and speed. They get the best reviews. + +Since little other information about the seller is available, a good track record matters even more in illicit markets than in ordinary ones. Most of the ratings in our dataset are close to five, but there is still a gap between the best and the rest. The big fish were awarded scores of 4.9 on average, compared with 4.7 for the minnows. + +Breaking into such a market can be tough. So newcomers use promotions such as free samples to win their first reviews. Low prices help, says one vendor: once you have a following you can raise them. Some use stunts: one outfit somehow convinced a customer to get its logo tattooed on his back. The photo, circulated on forums, helped attract new buyers. + +Once established, vendors work hard to keep clients happy. “Customer service is usually excellent,” notes a regular weed-buyer, who finds that dealers online are “very polite and friendly”. Good feedback may be rewarded: some sellers respond to positive reviews by putting a little extra in the next parcel. Diversifying is another way to increase revenue. Vendors split into two distinct groups: those who peddle drugs and those who do not (see chart 3). Within those categories, bigger vendors typically stock at least two products; smaller vendors often sell just one. And when drug dealers decide to branch out, what they add depends somewhat on what they already peddle. Those who sell speed, for instance, are more likely also to stock MDMA, another synthetic drug. Those who sell cocaine are likely to diversify into heroin; and those who sell marijuana not to diversify at all. + + + +Just as on the “surface” web, going global can be profitable. About half the dealers in the upper bracket of sales ship worldwide, compared with a third at the bottom end. But this is riskier: customs officers are more likely to inspect suspicious packages than postal workers are. Australian officials seem to be the nosiest: of the 126 dealers in our dataset who name regions where they will not ship, 112 exclude Australia. + +Compared with legal online markets, trust in cryptomarkets lies more with sellers than with the platform on which they operate. Exit scams and police takedowns mean no site becomes dominant, and customers are resigned to none lasting long. Buyers tend to have accounts on multiple markets and to jump ship as soon as things go wrong. Grams, a dark-web search engine modelled on Google, allows punters to hunt for bargains across different markets, further eroding sites’ ability to gain market share. Its logo even mimics the internet giant’s colour palette, and Grams Trends lets users see what other people have been searching for (mostly marijuana). Dedicated forums and dark-web news sites keep track of which websites are active, and recommend specific dealers. + +Legitimate businessmen + +Thus far the powerful “cartels” that have long dominated the drugs trade seem to have taken little interest in the dark web. One reason is that they have established supply chains that they are not keen to disrupt. Their special skills—smuggling, intimidation and violence—are useless online. And their comparative advantage is in shifting drugs in tonnes, not kilograms. + +According to Mr Martin, the drug trade may be experiencing the equivalent of the online retail boom of the 1990s, when department stores downplayed the threat posed by insurgent e-tailers. Those department stores have since built websites of their own—or gone out of business. Old-style drug lords might want to think about investing in cryptomarkets, or risk being disrupted out of existence. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21702176-drug-trade-moving-street-online-cryptomarkets-forced-compete/print + + + + + +Articles Sections Next + + + + + +The World If + + + + +If Donald Trump was president: The world v the Donald + +If the North Korean regime collapsed: Night and day + +If states traded territory: A country market + +If financial systems were hacked: Joker in the pack + +If China embarked on mass privatisation: The greatest sale on Earth + +If economists reformed themselves: A less dismal science + +If the ocean was transparent: The see-through sea + +If computers wrote laws: Decisions handed down by data + +If we all had personal drones: Prone to disaster + +What if Germany had not reunified?: A German question + + + + + +Articles Sections Next + +If Donald Trump was president + +The world v the Donald + +How a made-for-TV foreign policy triggered real-world crises + +Jul 16th 2016 | Washington, DC, April 2017 | From the print edition + + + +HIS presidency is only 100 days old, yet already some are wondering if Donald Trump will ever again match the approval ratings he enjoyed one week after inauguration day. His “Made in America” summit, held in a blizzard-lashed White House on January 27th, delighted the public, according to opinion polls, even as it reminded the president’s critics of an event more suited to Vladimir Putin’s Russia. Mr Trump dressed down two dozen corporate chieftains on live television as “dishonest and greedy” and demanded that they promise, on the spot, to close or scrap named manufacturing plants in China within his first term and bring production back to America. The newspapers the next day carried images of Tim Cook, the head of Apple, and Dennis Muilenburg, the boss of Boeing, shivering in the North Portico as they waited, coatless, to be picked up by their drivers after declining to make such a promise, prompting their summary expulsion from the building. + +Supporters also cheered Mr Trump’s appointment in his first week of Joe Arpaio, the hardline sheriff of Mariposa County, Arizona, to chair a presidential task force on building a fortified border with Mexico within three years, named “Make America Safe Again”. There was a more muted response to a third announcement: that the new president’s first overseas visit would be to Moscow, for a meeting with Mr Putin to explore common ground in the fight against Islamist terrorism. + +True, Mr Trump promised he would strike “only the toughest deals, the smartest deals, or I walk from the table”. But his quick offer to meet the Russian president reminded many Americans, uncomfortably, of the murky espionage scandal that played so large a role in the defeat of Hillary Clinton. In October top-secret files had appeared on the internet, allegedly extracted by hackers from Mrs Clinton’s private e-mail server when she was secretary of state, identifying individuals as American intelligence assets in Russia and Ukraine; one, an Israeli-Russian businessman, was soon afterwards found dead at a Geneva hotel. Mrs Clinton continues to deny any knowledge of the leaked documents. Her husband, ex-President Bill Clinton, sparked fresh headlines with an intemperate interview in March in which he charged that “Kremlin dirty tricks” helped to swing the 2016 election. + +One hundred days into the Trump era, that Moscow trip remains on hold. Like much else it has been delayed by diplomatic, military and commercial moves by China, Mexico and Russia that a dissident Republican, Senator Lindsay Graham of South Carolina, has called a “pre-emptive strike by the rest of the world” against Mr Trump’s “America First” agenda. + +No date has been set for Mr Trump’s emergency trip to Beijing, announced by him on Twitter several weeks ago but now deemed “just a suggestion” by the White House spokesman, Sean Hannity. There has been no suggestion of a summit with the leader who has most gleefully cast himself as the anti-Trump, President Enrique Peña Nieto of Mexico. + +Relations with Russia trouble the Washington national-security establishment the most. The president faces growing questions about the mysterious disappearance of a helicopter carrying Estonian troops over the Baltic Sea on March 1st, amid claims that the aircraft may have been shot down by a Russian warship. Mr Trump is being pressed over reports that he told the Estonian president in a telephone call that his small Baltic republic, a member of NATO, needs to “get smart and shut up”, because America’s national interest lies in co-operating with Russia in Syria, not with defending European allies. Declining to address those reports, Mr Trump used a rambling White House press conference to complain about the media, about official leaks and about disloyalty at the Pentagon, where, he said, “there are a lot of generals who need firing, believe me.” + +On the economic front moves by Chinese authorities against American companies have panicked investors. The first firm to be hit was Boeing, days after a speech by Mr Trump calling it “just disgusting” that the aerospace giant is planning to open a new facility in China. Chinese state media gave prominent coverage to a speech by an aviation regulator warning that planned sales of hundreds of aircraft to Chinese airlines might need to be reviewed if “certain entities are not the reliable long-term suppliers that they claim to be.” + +“One hundred days in, that Moscow trip remains on hold" + +Soon afterwards the China headquarters of Apple, a computer firm, and Pfizer, a drugs company, were raided by antitrust investigators from the State Administration for Industry and Commerce; both firms say they are in full compliance with competition laws. In early March the Ministry of Environmental Protection announced that the most popular models sold by General Motors and Ford in China will face new tests of their exhaust emissions. Brushing aside assurances from American car executives that their emissions comply with all Chinese laws, the ministry added that Chinese consumers might care to wait for tests to be completed before choosing an American vehicle. More poetically, a recent editorial in the state-run Global Times talked of China being willing to take “resolute actions” against “an arrogant foreign leader who prattles like a monk about honesty while hiding a stolen goose in his sleeve”. + +In Mexico Mr Peña announced in February that, to his “great anger”, he had received evidence that American drug-enforcement agents had been operating illegally inside Mexican territory, abusing the terms of the Mérida Initiative, a security co-operation agreement signed by President George W. Bush. Mr Peña suspended the initiative, ordering American liaison officers to leave Mexico immediately. + + + +In mid-March he made a further announcement: Mexico would no longer deport unaccompanied children from Central America back to their violence-wracked home countries. Though Mr Peña called this a purely humanitarian gesture, Mexico had endured political pain, regionally, for helping the United States to stem flows of migrants from Central America. By the end of March, 500 unaccompanied child migrants had turned up at the Mexico-Texas border, claiming asylum. The Department of Homeland Security is said to be bracing itself for tens of thousands more by the summer. + +The irony is that Mr Trump has stopped some way short of the programme that he promised in his campaign. He has not slapped punitive tariffs on Chinese-made goods. He has not banned Muslims from entry, because he cannot by law (though he has stopped refugee arrivals from several Middle Eastern countries). His plans for a “beautiful” border wall have been parked with Mr Arpaio’s committee. Mr Trump has revoked Mr Obama’s executive actions shielding millions of undocumented migrants from deportation, though the legal status of those already granted work permits is now before the courts. Work on a much larger task—planning the mass deportation of all foreigners without legal status—has barely started. + +Scrutinise the new government’s “America First” approach to the world, and much of it amounts to made-for-TV displays of firmness. Alas, when America’s president blusters and swaggers, it can produce real-world consequences. It has taken just 100 days for multiple crises to teach Mr Trump that lesson. Americans can only contemplate the next three years and nine months, and hope that their president has not learned it too late. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21701933/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +If the North Korean regime collapsed + +Night and day + +America and China have done too little planning for a Korean crisis + +Jul 16th 2016 | SEOUL | From the print edition + + + +AS ERIC CLAPTON played the first bars of “Cocaine”, the country’s transformation seemed complete. The former “May 1st” stadium in Pyongyang, renamed “December 1st” to commemorate Korean reunification in 2018, was packed. Before the fifth-anniversary concert, the organisers had shown that their old mastery of mass pageantry had not been lost. After a stunning callisthenic display, children from the Ban Ki-moon High School arranged themselves to form portraits. Mr Ban himself, first president of a unified Korea, was followed by President Hillary Clinton, whose staunch support had eased reunification. Then came Kim Jong Chul, “special adviser” to the interim governments of the northern provinces, grandson of North Korea’s founding leader, Kim Il Sung, and elder brother of its last leader, Kim Jong Un. + +After Kim Jong Un died in mysterious circumstances, apparently poisoned by a radioactive prawn consumed when visiting a factory making frozen tempura for the Japanese market, his two brothers came to prominence. Believing the dynasty remained essential to any hope of stability, the country’s neighbours had turned to them. China backed the oldest, Jong Un’s half-brother, Kim Jong Nam, whom it knew well from his days of dissolution in the casinos and massage parlours of Macau. After all, North Koreans were in blissful ignorance of his disgrace in 2001, when he was caught by Japanese immigration officials trying to sneak into the country on a forged passport from the Dominican Republic, to visit Tokyo Disneyland. + +He was soon outmanoeuvred, however, by Kim Jong Chul, who hitched his wagon to the incoming South Korean forces and their American allies. As a reward, he was given his cushy “advisory” sinecure. It was on his advice, indeed, that Mr Clapton was invited. An approach to the musician to perform in Pyongyang in 2007 had been rebuffed, and this was the first time Jong Chul had seen his idol since two memorable gigs at the Royal Albert Hall in London in 2015. + +In retrospect, it was perhaps not surprising that China had backed off so quickly. For decades its North Korea policy had been based on the need for a “buffer” between it and the South, ally to America and home to some 25,000 American troops. But as the regime in the North crumbled after Jong Un’s death, several truths dawned on China’s leaders: that a reunified Korea would never, out of its own self-interest, be hostile towards it; that with North Korea’s nuclear sites scattered and the number of warheads unknown, it had to co-operate with America to eliminate them; and that to back one faction of the fractured regime would lead to instability on its borders, risking a flood of refugees. It helped that Mrs Clinton honoured her pledges not to station American soldiers anywhere in the former North Korea. + +Five years on, North Koreans were better-fed and freer than they had ever thought possible. The new government (in effect the old one, of the South) had stepped carefully, but gradually statues of Kim Il Sung were disappearing. Portraits of his son, Kim Jong Il, forever associated with the famine of the 1990s, had been quick to go. A massive building boom had introduced South Korean efficiency to the country’s 1930s infrastructure. Former soldiers used to building dirt tracks by hand now used modern machinery to carve expressways linking the South to China. + +The changes were even visible from space. Satellite photos used to show North Korea at night as an area of darkness next to the bright glow of the South. Steadily, the pinpricks of light were spreading. It was like a dream. + +Indeed it would be. Many analysts believe that the collapse of the Kim dynasty in North Korea is, if not imminent, then quite possible, and that the most likely upshot would be Korean reunification under the South’s leadership. That should be good news. North Korea is ruled by the most repressive and closed regime on Earth. Hardly anyone, however, believes its end will be smooth or peaceful. Think not German unification, says Andrei Lankov, a Russian expert on the North who teaches in Seoul, the capital of the South, but “Syria with nukes”. And how would the outside world know if the regime was imploding? “Fighting on the streets.” + + + +The cold light of today + +Much work has been done in South Korea, America, China and Russia on scenarios for North Korea’s implosion. Most envisage some or all facets of a complex disaster: humanitarian emergency; civil war; international conflict; nuclear proliferation; economic hardship; social tensions between northerners and southerners. But preparations for these contingencies are difficult. Not only are the circumstances of collapse unforeseeable, but the co-ordination between America, China and South Korea is politically impossible, beyond talking-shops where scholars engage in speculation. Even now, angry though it seems to be with the recalcitrant Kim Jong Un, China is unwilling to discuss the possible end of its longtime ally. + +China’s displeasure with Mr Kim is one reason some analysts think collapse may have become more likely. When he took over on the death of his father in 2011, Mr Kim, then in his late 20s, and without any administrative experience, seemed to some the face of a ruling clique. Yet he has ruled ruthlessly, purging potential rivals, including even his uncle, Jang Song Taek, who had been seen as the power behind his throne, and the country’s main interlocutor with China. He was executed in 2013. Mr Kim seems solidly in control. In May this year he convened the ruling party’s first congress since 1980, rewarding himself with a new job as its chairman, and showing the world evidence of his people’s adulation in a mass parade. But he has many potential enemies: generals fearing they may be next to be purged; members of the elite fearing they will be impoverished by Chinese sanctions; a lone hungry madman with a gun. + +His is, in a phrase of Chun Yung-woo, a former South Korean delegate to talks with North Korea, a “theocratic” regime. Unlike other ruling communist parties, the Korean Workers’ Party probably does rely on a dynasty for its legitimacy and durability. With its linchpin gone, it might swiftly fall apart. Uncertain who is in charge and remembering the shortages of the past, those with guns might start seizing food and looting. Fighting would break out, and people start fleeing—probably not for the well-mined and fortified “demilitarised zone” on the 38th parallel that forms the border with the South, but to the more porous one with China in the North. Those guarding the gulag housing tens of thousands of “political” prisoners—ie, people suspected of even the mildest dissent—might turn their guns on the inmates; they are said to have orders not to leave any evidence or witnesses of the regime’s crimes. + +The South, backed by America, would feel compelled to intervene. It has a detailed plan for a military occupation. South Korean forces would dominate, keeping hated American faces well in the background—except for those highly trained special forces who would be airlifted to known nuclear sites to secure them. At some sites in the far north, they might find the Chinese had got there first. There has, after all, been no co-ordination. But some sites are unknown, as are the actual number of nuclear devices and the amount of fissile material, let alone the identity of the most important nuclear scientists. An intensive propaganda drive to convince them they will be well treated in a unified country may not work. Some may find terrorists willing to protect and reward them. + +Even if the headline number for the active front-line personnel in North Korea’s armed forces—some 700,000—includes many who are in fact deployed in construction work, some soldiers would fear punishment or at least a loss of privileges. They would “almost certainly” oppose outside intervention, concluded a study in 2013 by Bruce Bennett of the RAND Corporation, a think-tank, “in some combination of regular combat, insurgency and criminal behaviour”. However secure its nuclear weapons, North Korea has plenty of conventional artillery and the ability, as it likes to remind the world at times, to turn Seoul into a “sea of fire”. Its special forces might infiltrate the South. + +In the unfolding chaos, China, South Korea and America, their troops perhaps eyeball-to-eyeball in remote nuclear sites, would need to scramble through negotiations on issues unsettled for more than six decades. China would have to decide whether to install a puppet regime, to maintain its buffer. At least it has party-to-party ties with the Workers’ Party, and army-to-army links; and it has a number of defectors it might have been grooming for such an eventuality. But imposing order might be beyond it without unacceptable military risks. It seems to have a particular fear of mass migration. Some South Korean experts think this is misplaced: food is now more available on private markets, so migrants may not be driven by hunger; and most North Koreans live far from the border. But as early as 1994, on Kim Il Sung’s death, China was examining where it might put refugee camps. After regime collapse, disorder could engulf North Korea. China might conclude that reunification is not, after all, the worst outcome. + +So the issue would become: what assurances would China need? Would all American troops have to leave the peninsula, or would a pledge to avoid the North suffice? Would South Korea’s security treaty with America have to be abrogated? And, if that was the condition for reunification, might South Korea accept it? + +Two into one won’t go + +How the emotions of such a tumultuous time would play out is anyone’s guess. Many in the South fear reunification. The kinship that linked the peninsula (where as late as 2000, 7.7m South Koreans were estimated to have family in the North) has weakened as divided family-members have died. And the two countries have drifted apart, linguistically and even physically: a study of North Korean refugees in the South suggested that boys were on average 10cm (4 inches) shorter than southerners the same age, and girls 7cm. The experience of integrating defectors from the North in the South has not been encouraging. Even comparatively well-off, highly educated defectors struggle to find white-collar jobs. They have left not just one country for another, but the past century. + +The kinship that linked the peninsula has weakened + +South Koreans are put off by the cost of reunifying Germany (see the final story in this supplement), and North Korea is far poorer than the old East Germany. In the initial chaos, the North’s currency would be deemed worthless; people would use Chinese yuan or scarce American dollars, or barter. America and South Korea would find themselves having to guarantee the value of the North’s won, before quickly replacing it with the South’s—at a generous exchange rate. That in itself would be a costly subsidy to the 25m people in the North. But many would still be dependent on state handouts. Taxes in the South, and the national debt, would climb quickly. Those in the South clinging to hopes that they might one day reclaim their ancestral homes in the North would also be disappointed. To avoid legal wrangles or vigilante evictions, ownership rights would have to be given to current residents. + +All this perhaps explains why the South’s current president, Park Geun-hye, realising the reunification may be a fact not a choice, emphasises the “bonanza” of North Korean resources, cheap labour and unfulfilled potential. Even if they are sceptical, many in the South would see reunification as a moral necessity, ending the ugliest legacy of the cold war and of a form of politics that turned the 20th century into a nightmare for much of the world. + +Nor has the dream of Korean unity faded altogether. In that concert, the final encore would see Slowhand tackle “Arirang”, a folk-song indispensable to karaoke-singers in both North and South. The crowd would sing along, waving cigarette lighters and hugging. There would be not a dry eye in the house. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21701932/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +If states traded territory + +A country market + +A way to solve some of the world’s trickiest problems + +Jul 16th 2016 | From the print edition + + + +IT MIGHT not rank with the Battle of the Somme, but 2016 also marks the 100th anniversary of the Treaty of the Danish West Indies, which transferred sovereignty over the Caribbean islands of St John, St Thomas and St Croix from Denmark to America, for $25m (worth $550m today). The deal removed trade barriers between the Virgin Islands and their region’s economic superpower, and prevented them from falling into German hands during the first world war. Now, it stands as the last time a country has directly sold control over territory to another. + +Such transactions were once common. (America’s Louisiana Purchase from France in 1803 and Alaska Purchase from Russia in 1867 were big examples), and remain perfectly legal under international law. But in the post-colonial age, borders move when a state breaks up, or countries settle a dispute or, occasionally, by use of force, not because two governments simply agree to trade a chunk of land. + +What if that changed? With a little imagination, it is possible to see a large and varied market for such trades. + +Climate change could stimulate demand. Countries whose very existence is threatened by it, such as Nauru, have a powerful incentive to acquire higher-elevation islands from nearby states, like the Solomon Islands. + +Small, rich, densely populated countries would be natural buyers from land-rich, poorer states. No Arab government could sell Israel land and hope to stay in power. But this year Egypt did cede control over a pair of disputed Red Sea islands to Saudi Arabia shortly after receiving financial support from the kingdom, though a court has since quashed the decision. + +Land sales could resolve territorial disputes. Instead of struggling to stop mighty China from taking over contested islands in the South China Sea, might the Philippines and Vietnam cash them in? Nigeria is still seething over a verdict in 2002 by the International Court of Justice handing the Bakassi peninsula to Cameroon; it would have been far more efficient to buy out Cameroon’s claim. Russia could formalise its annexation of Crimea by helping to pay off some of Ukraine’s debts, possibly raising the money for this by agreeing to hand eastern Karelia, which it conquered in the second world war, back to Finland (in the early 1990s Boris Yeltsin reportedly offered the territory for $15 billion). Japan might take a similar interest in the Kuril Islands and oil-producing southern Sakhalin, which it lost to Stalin. + +Lastly, there’s access to the sea. Landlocked Bolivia could pay Chile in gas to acquire a Pacific port, an old yearning. Botswana’s trade would boom if it bought a corridor to the sea from Namibia. + +There is a dark side, though. Today, lenders are left with little recourse when sovereign debtors go bust. If governments were willing to buy land, however, issuers would have a highly marketable asset that their creditors might demand they pawn off. Serial defaulters like Argentina might borrow themselves out of existence. + +Even more alarming would be militarily motivated purchases. North Korea and Iran could render the billions spent on Western missile defences moot by acquiring islands in the Mediterranean or Caribbean. Would America or its allies really pay whatever it took to keep these out of unwelcome hands, enabling the likes of Venezuela or Algeria to arrange a bidding war? It might be cheaper to invade. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21701931/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +If financial systems were hacked + +Joker in the pack + +Recent attacks give a glimpse of the sort of cyber-assault that could bring the world economy to a halt. Better defences are needed + +Jul 16th 2016 | From the print edition + + + +THIS May Anonymous, a network of activists, briefly hacked into Greece’s central bank and warned in a YouTube message that: “Olympus will fall…This marks the start of a 30-day campaign against central-bank sites across the world.” The warning struck a raw nerve. + +The financial system is little more than a set of promises between people and institutions. If these are no longer believed the whole house of cards will collapse and people will take their money and run. That happened in 2008 because of bad credit decisions; but the same could unfold via a sophisticated cyber-attack. Processes designed to make banking safer have created new vulnerabilities: large amounts of money flow through certain key bits of infrastructure. If such systemic institutions were compromised, a panic similar to those in 2008 could quickly spread. + +Cyber-attacks are rapidly growing, and financial services are a favoured target of thieves and people intent on causing chaos. The rise in attacks on individual banks, mostly to steal money or information or to shut down the system for the hell of it (often using so-called denial-of-service attacks), is worrying enough. But two recent attacks signal a move from simple “Bonnie and Clyde” crimes to a new “Ocean’s Eleven” sophistication. + +In 2013 a raid by the Carbanak gang, named after the malware it used, was discovered when its “mules” were seen picking up cash that was apparently being randomly dispensed by ATMs in Kiev (a ruse known as ATM jackpotting, whereby criminals hack into a bank’s PCs and then send direct commands to the ATMs). The extent of the assault only gradually became clear: the final bill could be high. The largest sums were stolen by hacking into bank systems and manipulating account balances. For example, an account with $1,000 would be credited with an extra $9,000, then $9,000 would swiftly be transferred to an offshore account; the account holder would still have $1,000, so was unlikely to notice or panic. This messing with the numbers showed a new ability and ambition among cyber-criminals. + +The second attack unfolded over a few days in February, when hackers stole $81m from the Central Bank of Bangladesh’s account at the Federal Reserve in New York, in a shockingly ambitious heist. More worrying than its scale was the fact that the raiders hijacked bank personnel’s access to SWIFT, a highly secure (or so it was thought) messaging system that connects 11,000 financial institutions and sends around 25m messages a day, helping to settle billions of dollars-worth of transactions. They then sent 35 false payment orders from Bangladesh Bank, via SWIFT, to the central bank’s account at the Fed. + +Experts think it likely that several more such efforts remain to be discovered. A similar, smaller, one has come to light in which hackers tried to take $1m from a bank in Vietnam, in December. Banks are now looking at limiting the number of people who can access SWIFT, and SWIFT itself has raised the possibility of suspending banks with weak security controls. + +These heists give a glimpse of what could lie ahead. Armageddon for banks could take the form of an attack prepared over several months and then carried out over a day or two of mayhem. In this scenario, the motive would be to cause maximum instability, something that worries regulators more than simple theft. + +Rather than hacking into an individual bank, the assailants might aim straight at the heart of global finance by choosing as their target parts of its essential “financial-market infrastructure” (FMI), such as clearing houses or payments systems. FMIs are like the plumbing in a city: they facilitate the smooth flow of money. Because plenty can go wrong between the promise of a payment (eg, writing a cheque or making a digital purchase) and its actual settlement (the money arriving into the bank account of the seller), clearing houses sit in the middle of transactions to process them and insulate both sides against credit risk. + +If a major FMI is breached, it can turn from a source of market stability into a source of contagion. Target2, Europe’s interbank settlement system, which handles large transactions, had total flows of €470 trillion ($520 trillion), through 88m payments, in 2015. In America the Automated Clearing House saw more than 24 billion transactions with a total value of over $41.6 trillion flow through its system in 2015, for everything from consumer payments to payrolls. An attack on such systems could quickly have systemic consequences if it leads to wayward flows of money. Central banks would soon become involved: without a speedy intervention, banks could become insolvent. + + + +Faking and entering + +So how might such an attack unfold? Step one, several months before mayhem is unleashed, is to get into the system. Financial institutions have endless virtual doors that could be used to trespass, but one of the easiest to force is still the front door. By getting someone who works at an FMI or a partner company to click on a corrupt link through a “phishing” attack (an attempt to get hold of sensitive information by masquerading as someone trustworthy), or stealing their credentials when they use public Wi-Fi, hackers can impersonate them and install malware to watch over employees’ shoulders and see how the institution’s system functions. This happened in the Carbanak case: hackers installed a “RAT” (remote-access tool) to make videos of employees’ computers. + +Step two is to study the system and set up booby traps. Once in, the gang quietly observes the quirks and defences of the system in order to plan the perfect attack from within; hackers have been known to sit like this for years. Provided they are not detected, they pick their places to plant spyware or malware that can be activated at the click of a button. + +Step three is the launch. One day, preferably when there is already distracting market turmoil, they unleash a series of attacks on, say, multiple clearing houses. + +The attackers might start with small changes, tweaking numbers in transactions as they are processed (Bank A gets credited $1,000, for example, but on the other side of the transaction Bank B is debited $0, or $900 or $100,000). As lots of erroneous payments travel the globe, and as it becomes clear that these are not just “glitches”, eventually the entire system would be deemed unreliable. Unsure how much money they have, banks could not settle their books when markets close. Settlement is a legally defined, binding moment. Regulators and central banks would become agitated if they could not see how solvent the nation’s banks were at the end of the financial day. + +Banks could not settle their books when markets close + +At the latest, therefore, the affected banks should become aware of the attack at the end of the trading day when their books don’t add up. And FMIs themselves should notice it too as part of their normal monitoring. The more sophisticated banks would probably spot it sooner, because they are increasingly moving to real-time monitoring. But even when institutions do realise what is going on, it could take longer before the scale and sophistication of the offensive becomes clear to all involved, because banks remain reluctant to speak up when they are breached. + +The effects could spread quickly. If a bank can no longer trust the numbers on its balance-sheet, it will be reluctant to pay out other commitments such as payrolls and loans. Without a reliable payments system, shops and businesses would not be able to operate normally, supply chains would struggle and normal trading would stutter. Within days if not hours, even unaffected account-holders would probably want to fetch their money from banks as news spread that “the system” had been compromised and people started to wonder whether their bank might be next. + +The main concern at this stage would be of banks going bust. Normally if a bank has a run on its deposits, central banks will provide emergency liquidity. But if this happens to many banks concurrently, and nobody understands why, would central banks be able to save the situation? + +When computer systems go down, the typical response is to switch to the backup systems. Unfortunately these would have been corrupted as well, as they are a copy of the manipulated numbers. This would leave banks and FMIs with no other option but to shut everything down and eventually call a bank holiday. + +At the same time as figuring out what had happened, a priority would be to get the system up and running again. This requires public confidence that the attacks have been stopped, or at least confined. Unlike a natural catastrophe or a physical war, it is often unclear when a cyber-attack has started. The extent of damage can take a long time to become clear and finding the perpetrator can be tricky. Worse, as opposed to the hit-and-run bank robbers of old, today’s sophisticated hackers can linger in a system for ages: even now it is unclear whether the Carbanak attack has ended (Kaspersky Lab, a cyber-security firm, says with “complete confidence” that the gang is still active). + +Broadly, there are three types of cyber-attacker: nation-states, criminals and hacktivists. The limited number of actors thought to have the capabilities to pull off something like this are tied to nation-states; and if the perpetrator did turn out to be a rogue state, NATO might even get involved. For now, thankfully, nation states have no interest in taking down the global financial system. But that is no cause for complacency. + +Bouncing back from disaster + +Financial institutions are beefing up their cyber-capabilities, for example by hiring “white hats” (good hackers) to expose vulnerabilities, improve “threat intelligence” and develop plans for prevention and response. FMIs take cyber-security very seriously. Their sector-wide target is to get the system back up within two hours of a shutdown, though many acknowledge this is more of an aspiration than a reality. The CPMI, a branch of the Bank of International Settlements, and IOSCO, the international body of securities regulators, have taken the lead in co-ordinating efforts to increase cyber-resilience in systemic FMIs, as well as in designing response-and-recovery plans in case an attack is successful. They plan to issue new guidance soon. + +The industry is at last starting to accept that not all attacks can be prevented. Response-and-recovery plans should now become a greater priority, says Coen Voormeulen from the Dutch central bank, co-chair of the CPMI-IOSCO group that has drafted the guidance, not least because “if you reduce the impact, attacks will stop being worth the trouble.” Today the two-hour recovery target would be a challenge for certain extreme but plausible attacks. Much to the frustration of organisations such as SWIFT, banks have been slow to share information about hacks, which means that other banks are not warned as fast as they could be to expect one. + +Unfortunately, cyber-attacks seem to be developing faster than defences against them. “We’re not keeping up, we’re losing,” says one insurer, who thinks most people remain blind to the real-world damage such assaults could do. So long as something as simple as clicking on an advert could ultimately give an attacker the keys to the kingdom, the financial system remains vulnerable. Just as a country with a threat of flooding would build dykes, and one with violent neighbours should guard its border, every country and institution at risk would be wise to double down on their cyber-defences as well as their plans for when—not if—they are breached. And since cyber-threats constantly change, so should the defence plans. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21701928/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +If China embarked on mass privatisation + +The greatest sale on Earth + +How China sells its state-owned enterprises matters as much as whether it does + +Jul 16th 2016 | SHANGHAI | From the print edition + + + +“CHINA must privatise,” insists Chen Zhiwu of Yale University, who serves on the board of PetroChina, the publicly traded arm of the China National Petroleum Corporation, one of the country’s biggest state firms. He cautions that, as long as state-owned enterprises (SOEs) are dominant in an industry, the rule of law suffers as state assets are used to provide benefits to company bosses and political elites. Within the Communist Party hierarchy some state firms’ chairmen have outranked the heads of the regulatory agencies charged with supervising them. The State-owned Assets Supervision and Administration Commission (SASAC), the body responsible for managing big state firms, even engages in an obscene game of round robin whereby it occasionally rotates the bosses of SOEs within an industry—airlines, energy and banks are recent examples—even though these firms are supposed to be commercial rivals. This makes a mockery of competition, as does the fact that China’s state firms are rarely targeted by antitrust authorities. + +Forty years after the death of Mao Zedong, who crushed the private sector, China today still has some 150,000 SOEs. Many of its best-known companies, from China Mobile to CITIC, are “red chip” firms. Nearly a fifth of the Fortune Global 500 list of the world’s biggest companies are from greater China, and most of these goliaths are in the state sector. + + + +Few Communist Party officials are keen to sell off what they see as crown jewels. Many would resist reforms that would loosen their grip on the economy. However, given the recent financial panics and policy bungling that have set the world on edge about China’s economic health, it is becoming possible to imagine a scenario in which the Chinese leadership feels compelled to embrace privatisation. Several forces could help to bring this about. + +For one thing, it costs a fortune to keep China’s lumbering SOEs supplied with subsidies and cheap capital. By one reckoning, the government spent over $300 billion, in nominal terms, between 1985 and 2005 subsidising the biggest state firms. These firms are also debt bombs waiting to explode (see chart 1). The IMF calculates that the average debt-to-equity ratio at SOEs rose from 1.3 in 2005 to about 1.6 in 2014, whereas the level at private firms in 2014 was below 0.8. Returns on assets at SOEs lag far behind those at private firms, and are dropping (see chart 2). A stalling economy or another financial shock could well force the country’s leaders to reconsider their ambivalence about privatisation. + + + +If that happened, how should they go about it? For a start, China should avoid some mistakes. The temptation to move swiftly, as a way of overcoming resistance to reform, carries big risks. In Russia the fire sale of state assets after the collapse of the Soviet Union led to a massive transfer of official wealth to well-connected oligarchs, particularly in the raw-materials industries. Given China’s cosy nexus of party and state, there is a great danger that a drive to sell off state assets quickly would merely transfer them to China’s version of oligarchs, the “princelings”, as the influential descendants of early Communist leaders are known. Scott Kennedy of America’s Centre for Strategic and International Studies, a think-tank, insists that “the outcome would be one that Schumpeter would not be proud of…with princelings and others with guanxi [political connections] creating enclaves they would dominate.” + +There are also lessons from Communist China’s own previous dalliances with the private sector. China’s economic reforms began after 1978 in the countryside, where most people lived in desperate poverty at the time. Officials decided to allow rural entrepreneurs to start businesses; land was decollectivised and contracted out to farmers; and market prices began to erode the fixed-price system. Many ailing “township and village enterprises” (including Wanxiang, now the world’s biggest independent manufacturer of car parts) were allowed to be run as private firms. This rural “privatisation” drive did at least as much to reduce poverty and to spur economic growth and employment as did China’s subsequent opening to global trade and foreign investment. Alas, in the 1990s the party rolled back almost all of those rural reforms and related financial liberalisation, and opted instead for stronger control over the economy. + + + +Before long, hard times again forced Communist leaders to look to the private sector for salvation. In the late 1990s a wave of privatisation and restructuring saw thousands of smallish state firms disappear and tens of millions of workers lose their jobs. This may seem like an embrace of market discipline, but Yasheng Huang of Massachusetts Institute of Technology argues that it was flawed in two ways. + +First, it was stealthy. Asset sales often took place without proper legal and institutional frameworks. As a result, property rights were insecure and assets subject to subsequent state seizure as well as appropriation by insiders. Second, leaders remained wary of market forces, using peripheral privatisations as part of a strategy to retain political control. China’s leadership revealed that the objective of reform was to “grasp the large, release the small”: the chief aim was not to increase the efficiency of the state sector or to boost consumer welfare through competition. Rather, it was to create bigger, more dominant national champions that would remain tightly controlled by the party. + +The proof is in the pudding. SASAC saw its asset base (of the biggest state firms) increase from 7.1 trillion yuan in 2003 to 21 trillion yuan in 2009. Count all 150,000-odd SOEs today and that figure rises to over 100 trillion yuan in state assets. + +So, to be serious, the effort should be bold, transparent and long-term. For example, a thoughtful plan to wind down holdings in several big industries currently dominated by the state—energy, telecoms and transport, say—in stages over the next decade could give enough time for markets to absorb the inevitable wave of sell-offs, acquisitions and bankruptcies. Successful experience with privatisation in these industries around the world belies the Communist Party’s claim that they are too strategic to be left in private hands. + +The effort has to be bold, transparent and long-term + +Insiders will still try to game the system, but this can be made more difficult (as it was in the more sophisticated parts of post-communist eastern Europe) by holding competitive auctions that are open to all, including foreign investors. The government itself has proposed reforms to its foreign-investment laws that would, at long last, put foreign investors and domestic rivals on an equal legal footing. Another measure that would spread the wealth beyond the princelings would be the allocation of shares from any privatisations to government pension schemes. This would ensure a broad ownership of assets and may help win over a sceptical public worried about dodgy dealings. + +To ensure that competition flourished, privatisation would need to go hand in hand with an equally ambitious agenda of legal and institutional reform. In a paper for the Paulson Institute, a think-tank, Curtis Milhaupt of Columbia University and Zheng Wentong of the University of Florida argue that China must “transform the role of the state from an active market participant to the designer and arbiter of neutral, transparent rules for market activity.” They are rightly sceptical of the government’s timid plans for “mixed ownership reforms”, which involve selling off bits and pieces of a few SOEs to private investors without yielding management control. + +Beware of mega-zombies + +They are even more scathing in their critique of the government’s plans to consolidate the 100 or so biggest SOEs, many of which are lumbering zombies, into just 40 or so mega-zombies: “These massive consolidations will accentuate the role of the state in key sectors and will generate even more rent-seeking activities… [and] additional deadweight loss that would be generated by the creation of monopolies.” + +Few know China’s rocky history of market reforms as well as Fred Hu does. He runs Primavera, a prominent investment fund in Hong Kong (which was involved in the bold but, in the end, unsuccessful bid by China’s Anbang Insurance Group for America’s Starwood Hotels & Resorts Worldwide). Previously, he held big China-focused jobs at the IMF and Goldman Sachs. From painful experience, he declares that half-measures like “independent” boards do not work. + +He wants President Xi Jinping to embrace a privatisation plan that “sells off all SOEs to the world” over his remaining seven years in office. Sequence the sales carefully, pull in strategic investors and put some shares into the state pension fund, and this veteran China dealmaker thinks this can be done entirely on domestic capital markets. If it really happens, and is accompanied by reform of the rule of law, it would prove transformative to China’s economy. As Mr Hu puts it, “it would be the greatest sale on Earth.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21701925/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +If economists reformed themselves + +A less dismal science + +Reforming economists’ tools, temperament and training could help to mitigate, if not to prevent, the next crisis + +Jul 16th 2016 | From the print edition + + + +BASHING economists is scarcely out of fashion. They are accused of being blinkered by mathematical models, of overestimating their predictive powers and churning out narrow-minded graduates. Some folk see them, rather than bankers, as the real villains behind the global financial crisis, asking, as Queen Elizabeth is said to have done at the London School of Economics, why no one had seen the credit crunch coming. + +John Maynard Keynes once said that “if economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.” How could they achieve that? Through a strong dose of what they (and this newspaper) often prescribe for others: structural reforms. + +To start with, that means tackling what Paul Romer, an economist at the Stern School of Business in New York, calls the profession’s “mathiness”. The mountain of algebra in economic research is supposedly meant for clarification and rigour, but is too often deployed for obfuscation. Used responsibly, maths lends useful structure to economists’ thinking, and weeds out sloppiness. But there needs to be a purge of maths-for-maths’-sake. + +Related to mathiness is model-mania. Economists are good at reducing a complicated world to a few assumptions, then adding bells and whistles to make their models more realistic. But problems arise when they mistake the map for the territory. In 2008, on the eve of the financial crisis, Olivier Blanchard, then chief economist of the IMF, published a paper celebrating the convergence of thought within macroeconomics. Unfortunately, some key assumptions behind that consensus turned out to be wrong. It is now clear that different models of asset bubbles and banking crises would have better prepared policymakers for the Armageddon that ensued. + +So economists should treat consensus with suspicion, and remain open to the idea that there might be more than one explanation of what they can see. Financial stability could represent policy success, for example, or it could mean that regulators are becoming complacent and hidden pressures are building. In future, big data and new “machine-learning” techniques could help test the relative power of competing theories. With a better sense of what is influencing behaviour in the economy, economists might become less blinkered by their own theory, and better able to foresee the next crisis. Meanwhile, they would be wise to repeat (daily) the words: “My model is a model, not the model.” + +New technology points to another desirable reform: the need for better numbers to work with. The main gauge used to measure the size and progress of the economy, GDP, was designed for a different era, and looks increasingly flawed for a modern world of services, apps and bots. Economists have work to do to improve these basic tools of their trade. + +Their tendency to look down on other social sciences is ripe for change, too (one study showed that articles in the American Economic Review cite the top 25 political-science journals one-fifth as often as articles in the American Political Science Review cite the top 25 economics journals). Some of their most influential research—in behavioural economics, for example, which fuses psychology and economics—has come about when they are willing to mix with others. Economists should get out more and mingle with historians and sociologists. + +All this needs to start with the way economists are trained—a final area for reform. Today, graduate economists undergo “maths camp” before being bombarded with lectures. Too little focus is on getting real-world experience: visiting job centres, meeting entrepreneurs, spending time at a central bank or the national statistical agencies. Such work experience would increase the chances of theory being tied to practice. Exams would test critical reflection (for example, awareness of where the results a student is “proving” might not hold true) as much as algebraic prowess. + +Hedgehogs v foxes + +Economists face two competing criticisms. Either they are lambasted for their arrogance or accused of being unwilling to draw firm conclusions (in exasperation at the hedging of his economic adviser, President Harry Truman requested a one-handed economist). Dani Rodrik of Harvard University, drawing on an idea from Isaiah Berlin, splits economists into two camps: hedgehogs and foxes. Hedgehogs take a single idea and apply it to every problem they come across. Foxes have no grand vision but lots of seemingly contradictory views, as they tailor their conclusions to the situation. More foxlike behaviour will not by itself prevent the next crisis; politicians anyway will still be making the decisions. But it could help policymakers be better prepared. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21701926/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +If the ocean was transparent + +The see-through sea + +The ability to peer unhindered into the deep would reveal a host of wonders—and have huge practical consequences + +Jul 16th 2016 | From the print edition + + + +THE surface of Mars is better mapped than that of the Earth. Every dry, dusty square metre of it has been peered at by cameras and illuminated by altimeters. The lion’s share of the Earth’s surface has never been shown any such attention. This is not because Mars is more interesting. It is because it suffers from an insufficiency of ocean. In most respects, this is to its detriment; seas are fascinating things that make planets far more habitable. They also allow paddling, whalesong and other delights. But they do rather cover things up. + +Water absorbs light. Despite this, seeing through a few metres of it is not too hard, sediment permitting. And some wavelengths can penetrate a lot more. A ray that is just the right shade of blue will still be half as bright after passing through 100 metres as it was when it started. If you were to sink into the ocean looking up, that shade of blue would be the last thing you would see. But even it would eventually fade to black. Almost the whole ocean floor is dark to those that inhabit it, and invisible to all. + +What if it were not—if light could pass through the ocean as easily as it does through the atmosphere? What if, when you looked down from a trans-Atlantic flight, the contents of the ocean, and its floor, were as clearly visible as if seen through air: what would you see? + +The most persistent feature would be a thin green mist extending a few tens of metres down from the surface. It would be too sparse to be seen over much of the planet; but in some patches, and close to some shores, it would be a visible layer of light and life. This is the world’s stock of phytoplankton, tiny photosynthetic algae and bacteria. Its total mass is far less than that of the plants that provide photosynthesis on land, but every year it takes 50 billion tonnes of carbon out of the atmosphere, turning it into organic matter for the ocean’s inhabitants to eat. Scant though the planktonic biomass is, it does roughly as much biogeochemical work as all the continents’ forests, savannahs and farms. + +Water, water, everywhere + +From the smallest of the surface features to the largest, you would also see more than 111,000 ships hanging as if suspended in empty space, according to estimates of the size of the world’s merchant fleet from IHS. They are the workplaces, and sometimes homes, of at least 1.5m seafarers, and more than 500 liners provide temporary accommodation to hundreds of thousands of passengers, too. This disassembled city of steel carries some 90% of all international trade by weight. Its wandering buildings can carry, between them, over 1 billion tonnes of cargo: a mass equivalent to one cubic kilometre of water, a little less than a billionth of the total volume of the ocean. + +That brings home the most striking feature of the see-through ocean: its emptiness. People tend to focus on the bits of the ocean that are full of life (such as reefs) or of trade (such as shipping lanes). But these are only a tiny fraction of everything there is. And in much of that everything, there is close to nothing. Spread those ships out evenly and each one of them would have 3,000 square kilometres of ocean to herself—the size of the state of Rhode Island. + +Ships are not the only man-made artefacts that float across the seas. There is an alarming amount of rubbish—in some places it outweighs the phytoplankton. As ecologically delinquent as this is, in terms of its bulk the problem would still be easy to overlook in a transparent sea. The “great Pacific garbage patch” consists of millions of tonnes of rubbish floating in the slowly circulating North Pacific Gyre. But the size of the gyre is such that the rubbish adds up to just five kilograms per square kilometre. + +Indeed, rather than filling the ocean, humankind has been working hard at emptying it. Tuna stocks are thought to be half of what they were before modern commercial fisheries. Estimates of Atlantic whale populations based on DNA suggest they used to be between six and 20 times greater than they are today. + +The opacity of the ocean makes a straightforward numerical census of what remains impossible. But Simon Jennings of CEFAS, a research centre in Lowestoft, in England, and Kate Collingridge have made a brave stab at estimating how many fish there are in the sea by applying ecological modelling. Their result is strikingly small: 5 billion tonnes of fish weighing between a gram and a tonne. If piled together, those fish would not even fill Loch Ness, which though an impressive body of water is nugatory compared with the whole ocean. Even if Dr Jennings is off by a factor of ten, the volume of fish would still be less than that of Lake Geneva. Broadly, the world boasts less than a minnow for every Olympic swimming pool of its seawater. + +Yet life in the ocean can still mount sublime spectacles. Nicholas Makris of MIT and his colleagues have observed fish in the Gulf of Maine using a sonar system that comes as close as almost any technology to making this article’s premise real, and rendering the ocean transparent. Employing longer wavelengths of sound than most sonars, and taking advantage of lightning-fast processing power, it is possible to create time-lapse movies of sea life over tens of thousands of square kilometres. + +Dr Makris’s team have been able to quantify the processes by which herring can gather themselves into shoals many kilometres long and comprised of hundreds of millions of fish, watching their depth and behaviour change with the time of day. In the Gulf of Maine they were able to distinguish the calls and songs of various species of whale attracted by the herring shoals, to track them as they communicated with each other and to distinguish their different herring-snaffling strategies. + +And a thousand thousand slimy things + +Other acoustic research has revealed a fundamental feature of ocean life invisible from the surface—a layer of small fish and other creatures that spend their days at depths of a few hundred metres before rising to the surface at night. In the early days of sonar this was regularly confused with the sea floor, because of the way the fish’s bladders resonated with the sonar’s sound waves. The daily rise and fall of this “deep scattering layer” would, in a transparent ocean, be revealed as one of the largest mass movements of the animal kingdom. + +Acoustic techniques produce pictures of the ocean’s floor, as well as its contents. For most of the 20th century, though, the relevant measurements were sparse. Thus the pioneering maps put together by Marie Tharp and Bruce Heezen of Columbia University in the 1950s and 1960s—which first identified the structure of the mid-Atlantic ridge, and of the faulted “fracture zones” perpendicular to it—often relied on depth data from just a few ships making single crossings of the ocean to get a sense of vast swathes of the terrain below. The maps were works of extrapolation, interpolation and inspiration, not mere measurement. + +Nevertheless, they had a huge impact. They let geologists visualise the processes at work in the nascent theory of plate tectonics; those mid-ocean ridges and fracture-zone faults turned out to be the boundaries of the “plates” into which plate tectonics cut the surface of the Earth. They were mind-expandingly right in their synoptic vision, if frequently inexact and sometimes mistaken in their specifics. + +The side-scanning and “multibeam” sonar introduced for civilian use in the 1980s allowed a ship to map not just a thin strip of sea floor directly beneath it but a rich swathe to either side, and to provide detail on its texture, not just its depth. At first this acuity was used mostly for sites scientists wanted to focus on, or artefacts of particular interest. UNESCO estimates that there are 3m wrecks on the sea and ocean floors: 30 for every ship that now sails the surface. Sophisticated sonar has found some of the spectacular ones, such as Bismarck, and others whose cargoes are of commercial interest for salvage. It has also helped in the laying of ever more cable ever more precisely across the abyss; according to TeleGeography, there are now a million kilometres of submarine cable. Every second they can carry 31 terabits across the Pacific, 55 across the Atlantic. + +Because GPS satellites allow ships to know exactly where they are, and thus exactly which bit of the sea floor they sit above, new sonar technology has also revolutionised mapping. The 2014 edition of the General Bathymetric Chart of the Oceans (GEBCO), an enterprise begun by Albert I of Monaco in 1903, includes sonar depth data from thousands of voyages, covering more than 60m square kilometres of the ocean floor. But even that represents only 18% of the ocean floor. The rest is mapped indirectly, by satellites. + +Altimetry has discovered at least 10,000 seamounts + +Whereas light is absorbed by water, some forms of electromagnetic radiation bounce right off it. Satellites can thus use radio waves to get a very accurate picture of the height of the ocean’s surface. This varies from place to place, reflecting the unevenness in the solid Earth’s gravitational field that comes from the planet not being a perfect sphere. The sea level is, for example, slightly higher above a seamount—an ocean-floor protuberance that does not make it to the surface—because the water feels the gravitational attraction of its mass. This difference is only a couple of centimetres; but satellites can measure it. + +Altimetry has discovered at least 10,000 such seamounts. Statistics suggest that hundreds of thousands of smaller ones remain to be found. Added together that’s an ecologically interesting habitat about the size of Europe that was previously almost completely uncharted. + +Since the 1990s radar-altimetry has allowed oceanographers to fill in the 80% or so of the ocean floor that sonar bathymetry does not cover. The latest GEBCO map still required some interpolation. But in both resolution and consistency such hybrid maps are far better than what went before. In some ways looking at these maps comes as close as one can get to seeing right through the ocean. + +The charmèd water burnt alway + +There is a subtle distortion, though. Maps of the ocean floor are typically rendered in a “shaded relief” style (and computers now add a spectrum of “false colour”, with red for high and blue for low). For this to make sense to the untutored eye, the relief in question has to be exaggerated, typically by a factor of ten or 20. + +So people have become used to seeing the ocean-floor world as interestingly craggy. It really isn’t. In maps the drops that separate continental shelves from the abyssal plains far below them fall away like the edge of a flat Earth; in fact they have typical gradients of about 7%. Were it not for the water, few features in the ocean would present an off-road car with much difficulty. + +Marie Tharp drew her maps in this way in part to emphasise the new features she, Heezen and their colleagues had discovered. But it was also because the obvious alternative was no longer legal. Earlier 20th-century maps of the ocean floor had, like maps of the land, used contours. In the 1950s the precise depths necessary for making contour maps were classified by the American government. The deep seas were becoming a cold-war battlefield. + +Tharp invents augmented reality + +Being unseen had given submarines a tactical advantage since they entered widespread use in the first world war. In 1960 the obscurity of the depths took on a strategic importance, too. The nuclear-powered George Washington, launched that year, carried 16 Polaris missiles with nuclear warheads. That her location when submerged could not be known meant there was no way for all of America’s nuclear weapons to be destroyed in a pre-emptive attack. The appeal of this “assured second strike” capability saw missile submarines adopted by Russia, Britain, France, China, Israel and India. These days about a dozen nuclear-missile-carrying submarines (known as SSBNs) patrol the ocean at any given time. If water were perfectly transparent you would see them, plump tubes of menace hanging in the void. And if you could see them, you could target them. + +There is a certain irony, then, that the technologies which have done most to make the ocean transparent have come from the armed forces. The American navy developed multibeam sonar to understand the submarine battlefield. The gravitational-field mapping that lies behind satellite altimetry was needed so that submarines and their missiles would better know where they were and what they would hit. The cold war produced the experts as well as the technology: Dr Makris listened for submarines at the Office for Naval Research before he listened for herring off Maine. If you were interested in ocean remote sensing, he says, you more or less had to: “They had all the great toys.” + +The end of the cold war saw a big drop in undersea sensing as a military priority, but its strategic importance is hardly diminished. Britain, for example, is deciding whether to renew its SSBN fleet. It matters whether the submarines will, in the 2050s, be as impossible to trace as they are today. + + + +Under the keel nine fathom deep + +What new technological approaches might be able to make the ocean transparent to submarine-hunters? Two are widely discussed: drones and big data. Uncrewed surface vessels and submersibles might be able to field far more instruments more cheaply than navies have in the past. And new data-processing capabilities might be able to make sense of signals that would previously have been swamped by noise. + +Thousands of remote-sensing platforms are already scattered around the ocean. The Argo array currently consists of 3,918 floats which submerge themselves to about 2,000 metres and then return to the surface, measuring temperature and salinity as they rise and fall and sending their data back by satellite. By gauging the amount of heat stored in the ocean they are crucial to studies of climate change. These floats go where the currents take them, but that is not mandatory. The wings of “seagliders”, which also rise and fall by changing their buoyancy, allow them to traverse large distances as they sink. They can operate autonomously for months at a time and traverse whole ocean basins. + +There do not yet appear to be any seagliders designed for detecting or tracking submarines—but in April DARPA, the Pentagon’s developer of futuristic technology, commissioned Sea Hunter, a small non-submersible trimaran that needs no crew, but carries sensors. It is intended to prove that once an enemy submarine is located it can be trailed indefinitely. + +Sea Hunter is designed to track conventional diesel-electric submarines, not SSBNs. The American navy got a shock in 2006 when a previously unnoticed Chinese diesel-electric boat surfaced less than 10km from one of its aircraft-carriers, Kitty Hawk, in the Philippine Sea. If it wants to keep its carriers safe it needs to be able to keep better tabs on such craft. But what can be used for one sort of submarine today might be adapted to track another tomorrow. It is likely that drones above, on or below the surface will come to play a much bigger role in anti-submarine warfare; the underwater ones, though, will still have to deal with the sea’s opacity. A swarm of airborne drones can co-ordinate itself by radio, but things are harder underwater. + +New data-processing approaches could also make submarines easier to see. America’s Ohio-class submarines displace 18,750 tonnes when submerged. Moving such a big object, even slowly, will leave a wake of sorts on the surface. Computers are getting better and better at picking small signals out of noisy data. And being metal, submarines have an effect on the Earth’s magnetic field, another potential giveaway. Flying drones equipped with new sorts of magnetometer could make submarine-hunting easier. + +The ocean will surely become more see-through + +Turning these possibilities into operational systems could make vital parts of the ocean—for example, some of the seas off Asia—transparent. Scaling them up to cover whole ocean basins, though, would be a huge endeavour. Remember the first insight of the transparent ocean: very big, very empty. That array of 3,918 Argo floats works out as one per 340,000 cubic kilometres of water. And SSBNs are sneaky. + +If the SSBNs can still find somewhere to lurk, for now, the ocean will surely become more see-through, especially at the edges. Dr Makris would like to make sonar systems like that which he and his colleagues have pioneered available for fisheries management. As Dr Jennings points out, the seas are already transparent for a lot of fishing fleets, thanks to short-range fish-finding sonar and spotter planes. Letting managers see what is going on might be a boon for conservation in some fisheries. + +Charting of the deep seas will continue, too. The task is daunting: Larry Mayer of the University of New Hampshire says multibeam-sonar mapping of all the remaining deep ocean would take 200 years of a research ship’s time. But bit by bit it will be done. In June a GEBCO forum in Monaco discussed the way forward. + +Being able to see is only the start; then you have to learn to look, to distinguish, to understand. What ecological patterns could be discerned from those as yet unmapped seamounts? What secrets lie in the ecosystems of the deep sea? What archaeological surprises may lurk in those millions of wrecks—or in the abandoned homes of those who, in the last ice age, lived in plains that today are sea floors? Where is the heat the Argo floats are tracing ending up—and how likely is it to come back out? What sorts of clever management could restore some of the riches that have been fished away? + +There is a fear that making things visible will strip them of their mystery. Maybe so. But it need not strip away curiosity or wonder. As mappers of both Mars and the ocean bear witness, there is no void, abyssal or interplanetary, that those feelings cannot fill, if given a chance. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21701927/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +If computers wrote laws + +Decisions handed down by data + +Might future law-school graduates look to machines rather than the judges, rules and standards that have underpinned the legal system? + +Jul 16th 2016 | New Haven, Connecticut, circa 2030 | From the print edition + + + +SONIA picked up her hoverboard, put it under her arm and trudged up three flights of stairs illuminated by stained glass to a vast room with old portraits of judges and shelves of dusty books. New students wondered why all this paper existed. All treaties, regulations and court decisions had long since been digitised. The answer for the continued accumulation of paper, students learned, was that the American Bar Association required it. It was by itself a lesson in law, Sonia concluded. Regulation never kept up with reality. + +The move to electronic forms of information was briefly believed to be a momentous change in the law. In retrospect it was little more significant than going from a pencil to a pen: different means, same end. The struggle for every student now was to understand how technology was turning the foundations of law upside down. Specific rules and broad standards, the two approaches through which law was applied for thousands of years, were becoming obsolete, along with the judges who weighed in with the last word. + +Change was everywhere. On Sonia’s scoot to school, streets had been empty so traffic lights were off. Who needed them? Preset rules shifting red to green had been replaced by “micro-directives”, really a standard, tied to safety and efficiency. As traffic picked up, lights came on, programmed to optimise the flow. Needs could change in an instant, such as when a car hit a fellow hoverboarder. The micro-directive controlling the lights ensured her ambulance received all green lights to the hospital. That, of course, caused problems for others. A woman in labour was held up by the sudden red lights and gave birth in the back of a cab. Sonia understood why all the most ambitious third-year students were hoping to get jobs at government agencies vetting the micro-directives that computers put into practice. They determined who got the green lights. + +Even hospital treatment was changing. Micro-directives had replaced the broad standard controlling medical care: that a doctor aspire to act in a patient’s best interest. Her injured friend was scanned and prodded; then, as she was wheeled into the operating room, screens listed procedures to be done, and one that should be delayed concerned her mangled hand. The computers noted that courts had levied heavy penalties on hospitals when the treatment of a hand resulted in the loss of dexterity, since that had an impact on lifetime earnings. Treatment, the screens said, should await the arrival of a specialist. + +It all seemed “reasonable”—that essential legal word—and even smart. But not fun. Over-strict rules could be challenged, standards could be vague but allowed for responsibility and initiative. Not so micro-directives. Among the portraits on the library wall where Sonia studied was one of Potter Stewart, a Supreme Court justice famous for his definition of pornography: he knew it when he saw it. Now, focus groups evaluated a handful of films and television shows in terms of their impression of what might be offensive. The results and the material were then evaluated by computers which rated every production released, or not released, to the public. + +When, Sonia wondered, did the system begin to take this effective, but nonetheless oppressive, shape? She had inadvertently spoken out loud, prompting the screen she carried to display the first draft of an academic paper, written in 2015, by two professors, one at the University of Chicago, the other at the University of Toronto*. They envisaged machines able to assemble data and produce predictive outcomes, and then distribute these everywhere, instantly, turning rules and standards upside down and replacing them with micro-directives that were more responsive to circumstances, and rational. + +One of the paper’s co-authors had gone so far as to join a startup combining law and machine learning to provide answers about complex areas of tax, such as how to determine if a person is an employee or independent contractor, or whether an expenditure should be treated as current or depreciated—murky stuff that even tax authorities preferred coming from machines. That was novel in 2016. Each year since then it had expanded. + +Students aspiring to work in investment management now routinely used machines to assess whether a shareholder in a firm that was sold through a leveraged buy-out would be retrospectively liable for a “fraudulent transfer” if the company subsequently collapsed, a risk that defied being addressed because it was so hard to measure. The entire world of negligence had been transformed. Live in a remote location and it was fine to install a swimming pool. A child moves nearby and a computer sends out a notification that the pool has become an “attractive nuisance” and a fence should be built immediately. The physical topography may not have changed, but the legal one had. + +Criminal law once revolved around externally observed facts. Then DNA evidence entered the picture. Now, cases often hinged on data about pulse rates, intoxication and location, drawn from the wristbands that replaced watches. It was much fairer—but creepy, because the facts came from perpetual monitoring. + +A formula for justice + +The most important introductory course faced by Sonia and her classmates had long ceased to be about contracts or procedure; it was algorithms and the law. One student melded data on work attendance, high-school grades, standardised tests and documented preferences in music into a program for use by states to determine an individual age of consent for sex and alcohol. She was voted by Sonia’s class the most likely to have a portrait added to the library wall—the first of many replacing old judges, who had somehow gained fame for making decisions that now seemed hopelessly devoid of data. + +* “The death of rules and standards”, by Anthony J. Casey of the University of Chicago Law School and Anthony Niblett of the University of Toronto + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21701934/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +If we all had personal drones + +Prone to disaster + +The elation of flying is the stuff of dreams. But what if personal drones could make our dreams come true? The Economist's resident cartoonist KAL lets his imagination fly. + +Jul 16th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21701936/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +What if Germany had not reunified? + +A German question + +Joining East and West together within NATO and the European Union was the worst option, except for all the others + +Jul 16th 2016 | BERLIN | From the print edition + + + +WHEN the Berlin Wall fell in November 1989 it quickly became clear that the cold war was over. The reunification of Germany, however, was not a foregone conclusion. The West German government’s priority was freedom for the East Germans, with no timetable for reunification, says Horst Teltschik, who was then advising the chancellor, Helmut Kohl. “Internally, we thought at the end of ’89 that it would take five to ten years.” Even the East Germans at first could not conceive of reunification; they proposed vague “confederative structures”. + +Moreover, the leaders of three of the four Allied Powers of the second world war, which still had a say in German affairs, initially opposed reunification: Britain’s Margaret Thatcher, France’s François Mitterrand and the Soviet Union’s Mikhail Gorbachev. They feared resurgent German power (as Thatcher is said to have put it, “We’ve beaten the Germans twice. Now they’re back!”). Only America’s George Bush senior was in favour of German unity from the start. + +So history could easily have gone another way, and kept two Germanys. Europe would have evolved very differently. Looking back from 2016, two of today’s crises might have been avoided. + +Crises? What crises? + +First, there might have been no euro crisis. Reunification put a strain on the economies of the other 11 members of what was then the European Community. Even before political unity in October 1990, East Germany’s money was exchanged into West Germany’s D-mark at an economically fantastical rate of 1:1 for prices, wages, rents and small savings. Germany then ran budget and trade deficits to finance reconstruction in the east. And western Germany’s trade unions, afraid that the east’s low wages would hollow out their collective-bargaining powers, colonised the east, winning huge pay rises for easterners. + +All this prompted Germany’s Bundesbank to raise interest rates to “keep the D-mark credible”, recalls Otmar Issing, who was on its board at the time. Because the Bundesbank, through its weight, influenced interest rates in all of western Europe, Italy, France and other economies were burdened with higher rates than they should have had. Indirectly, the trend even forced Britain to drop out of the European exchange-rate mechanism in 1992. + +Without reunification, moreover, Europe would have moved much more slowly, if at all, towards the euro. The idea of a common currency predated the fall of the Berlin Wall. But an accelerated march towards it was the precondition that Mitterrand, who viewed the D-mark as the symbol of German power, demanded from Mr Kohl in return for blessing reunification. Without that time pressure weaker EU economies could have continued devaluing against the D-mark when needed. They would have had time to adjust before eventually adopting the euro. + +Second, relations with Russia might be less fraught. A smaller European Union with a smaller Germany could have continued its own “deepening” instead of prematurely “widening” towards the east, says Mr Teltschik. Russian troops would not have had to leave East Germany in a hurry. NATO could still have expanded eastward later, and Russians would still have been traumatised by their bloc’s disintegration. But they could not today blame their trauma on Western expansion beginning with Germany reunited as part of NATO. + +That narrative, however, leaves out what would have taken place in East Germany had it remained a separate country. Its economy was on the verge of collapse in 1990, recalls Lothar de Maizière, who was East Germany’s last leader in 1990 (and its only democratically elected one ever). In the winter of 1989-90, several thousand East Germans were migrating west every day. Their chant was: “If the D-mark comes, we stay/or else to her we move away”. Without reunification, says Mr de Maizière, East Germany would have been emptied of all but the old and frail. + +East Germany was thus different from, say, Poland or (from 1993) the Czech Republic. Poles and Czechs spoke their own language and did not have West German citizenship. They had no choice but to stay, reform and rebuild. Under the West German constitution, however, East Germans had an automatic right to West German citizenship. “It was a race between capital going east and people going west, and the people were faster,” says Karl-Heinz Paqué, an economics professor in Magdeburg. + +A depopulated East Germany could have become a failed state, destabilising all of central Europe. Such a “wild east” could either have run into conflict with Russia in a pre-run of today’s Ukraine crisis, or chosen “resubmission” to Russia, thinks Ulrich Speck of the Transatlantic Academy, a think-tank in Washington, DC. Neither sounds appealing. To stabilise central Europe, West Germany’s allies, even Britain and France, would before long have begged it to rescue the failed eastern state. This would eventually have led back to reunification. But “that path would have been more chaotic and more dangerous,” says Mr Teltschik. + +As it happened, the great powers came to that conclusion by themselves in 1990. The breakthrough occurred on June 3rd, during a meeting between Mr Bush and Mr Gorbachev. Until then Mr Gorbachev had demanded that a reunited Germany be neutral—in effect, a “Finlandisation”. Mr Bush casually opined that the matter was really for Germans to decide. Mr Gorbachev did not contradict him. And so history turned. + +Not without costs. Mr de Maizière recently asked a Czech friend how the experiences of Czechs and eastern Germans differ today. Czechs, his friend replied, compare their lives now with their lives in the past, and are happy; eastern Germans compare their lives with those of western Germans, and are unhappy. Czechs are proud that they changed themselves; eastern Germans know they were changed by westerners. Many are alienated and follow populist parties. This is the price for a stabler Europe than any alternative scenario could have offered. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21701935/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +The future of television: Cutting the cord + +Video games: I mug you, Pickachu! + +Diagnostics: Red alert + +Fads in corporate architecture: Putting on the glitz + +Indian conglomerates: Sell me if you can + +Defence firms: Rocketing around the world + +Corporate philanthropy in China: The emperor’s gift + +Schumpeter: Be nice to nerds + + + + + +Articles Sections Next + +The future of television + +Cutting the cord + +Television is at last having its digital-revolution moment + +Jul 16th 2016 | From the print edition + + + +THE future of television was meant to have arrived by around now, in a bloodbath worthy of the most gore-flecked scenes from “Game of Thrones”. The high cost of cable TV in America, combined with dire customer service and the rise of appealing on-demand streaming services as inexpensive substitutes, would drive millions to “cut the cord” with their cable providers. Customers would receive their TV over the internet, and pay far less for it. Many obscure channels with small audiences, meanwhile, would perish suddenly. + +So, at least, many in the industry thought. Instead, the death of old television has been a slow bleed. American households have started to hack away at the cable cord, but the attrition rate is only about 1% a year. Television viewership is in decline, especially among younger viewers coveted by advertisers. Yet media firms are still raking it in, because ad rates have gone up, and the price of cable TV continues to rise every year. The use of Netflix and other streaming services has exploded—half of American households now subscribe to at least one—but usually as add-ons, not substitutes. Overall, Americans are paying more than ever for TV. + +This cannot last for much longer. The fat, pricey cable bundle of 200 channels is fast becoming antiquated as slimmer streaming options emerge. Now two tech giants, Amazon and YouTube (owned by Google), as well as Hulu, a video-streaming service that is jointly owned by Disney, Fox and NBC Universal, are negotiating to offer live television over the internet by the end of the year or early next year. They would offer America’s major broadcast networks and many popular sports and entertainment channels, at a price that would cut the typical monthly bill almost in half, to $40 or $50. + +That threatens to upend what was, and still is, the best business model in media history. The media conglomerates delivered a package of something for everyone—at first, at a reasonable price. The audience kept on growing along with the number of channels, which was good for advertisers, for studios that produced shows, and for sports leagues that sold broadcast rights. Cable operators and networks enjoyed gross margins of 30-60% and merrily pushed new gear, such as digital video recorders, and still more channels towards their loyal customers. + + + +They are becoming less loyal. The pace of cord-cutting has not been as fast as many expected, but it has begun to quicken. The number of people leaving cable each year outnumbers those joining, and has done so since 2013. For a while the losses were modest, at just over half a million households in total in 2013 and 2014, out of 101m subscribers. Last year, however, traditional pay TV suddenly lost 1.1m subscribers. Lots switched to an early internet “skinny bundle” from Sling TV, a new product from Dish Network, a satellite-TV provider. Investors panicked. When Bob Iger, chief executive of Disney, acknowledged last August that people were severing the cord even with ESPN, a sports network and the firm’s most profitable media property, a media rout ensued. Since then, shares in Disney and Fox have fallen by almost 20%. + +Those that do chop the cord almost never come back, joining the ranks of millennials who avoid signing up for cable in the first place, dubbed “cord-nevers” by media executives. They are lost to the world of subscription video-on-demand: Netflix, Amazon Prime video, Hulu, HBO Now and the like, services that cost around $10 to $15 a month each. + +To stanch this flow, cable operators can offer “triple-play” packages that combine broadband, television and telephone service, which gives them a pricing advantage. They can also rely on older Americans. Older viewers watch more television than any other group, they watch more of it than they used to, and more are tuning in; and they are not going anywhere. Internet services may also blunder as they go into TV-streaming. An internet service from HBO, owned by Time Warner, a media conglomerate, recently suffered a blackout just as a much-anticipated episode of its “Game of Thrones” was about to begin, enraging customers. Early adopters will sign up; others will wait and see. + +But over time the changes threaten to cripple several actors that now live off the big bundle: large media companies with weak programming, like Viacom (the firm may sell a large stake in its film studio to Dalian Wanda Group, a Chinese entertainment conglomerate, to raise cash); small independent channels that have benefited from being part of the “long tail”; and satellite operators, who have little to sell but TV. The winners and survivors will be media companies who provide the most “must-see” TV and the fewest unwanted channels. Coveted content will still be king, as seen in the recent sale of a niche martial-arts league for $4 billion. Cable firms can still earn their keep selling broadband internet and, perhaps, streaming services. + +The clearest winners will be consumers. In 2008, cable subscribers had 129 channels to choose from, and they watched an average of 17 channels in a given week. Five years later, they had 189 channels, and were still watching only 17.5, or just under a tenth of the available offering. Their bills, unlike disposable incomes, have doubled in this century. + +The fact that more TV viewers have not switched channel to a better model is mainly the result of two factors. The first is that customers are still addicted to live TV, especially sport, and fat, pricey bundles reliably give that to them. Media firms have bid up sports rights to fantastic sums. Disney’s ESPN, and TNT, owned by Time Warner, are paying a combined $24 billion for the rights to broadcast NBA basketball games for the next nine years, almost triple the amount they were paying under their former deal. The second factor is that customers have lacked reliable, cheaper options until now. That is changing with the arrival of services like Sling TV, which now has 700,000 subscribers, reckons Michael Nathanson of MoffettNathanson, a research firm. Another new “skinny” bundle, from Sony PlayStation Vue, recently passed 100,000 subscribers. + +Many more may end up going to Hulu. Its old-media parents appear to have accepted the risks of disrupting the existing model in order to keep a stake in the future through younger viewers; channel negotiations are expected to go smoothly. And Hulu’s product at least continues the highly profitable concept of the bundle. One owner, NBC Universal, is owned by Comcast, a cable firm that could lose much from cord-cutting, but it has no say in the operations of Hulu, and would probably have little choice but to participate under competition terms set by the media regulator. Time Warner is also considering joining in. + +Hulu is now testing channel combinations at various prices, including around $40 to $50 a month, close to similar packages from Sling TV and Sony PlayStation Vue. That would mean a slim margin, but its chief executive, Mike Hopkins, says getting people to cut the cord is all about price. It can profit from extra services, such as options to stream on multiple devices, to record and store shows in the cloud, and to subscribe to premium channels. + +Amazon and YouTube are sure to generate yet more buzz, although their plans are still under wraps. Traditional players know full well that the dominant pay-TV operators of the future could well be the internet giants. New competitors will not have things all their own way. Apple failed to launch its own live TV service last year, perhaps because it could not agree with local broadcast affiliate stations on how much they should be paid for retransmitting their feeds. But the cable networks are keenly aware of what happened to the music business after Apple’s iTunes and other streaming services disaggregated the album. They will do what they can to prevent TV from being Spotified. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702177-television-last-having-its-digital-revolution-moment-cutting-cord/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Video games + +I mug you, Pickachu! + +A hit video game shows how the real and virtual worlds are merging + +Jul 16th 2016 | From the print edition + +Profits over here + +ON JULY 10th police in O’Fallon, a Missouri town of about 80,000 people, made a statement about the modus operandi of an armed gang that had been using “Pokémon Go”, a video game, to prey on the locals. “You can add a beacon to a Pokéstop to lure more players,” the lawmen explained. “Apparently they [the muggers] were using the app to locate people standing around in the middle of a parking lot or whatever other location they were in.” + +If that sounds like gibberish, it might be best to consult your nearest millennial. “Pokémon Go”, an app for smartphones published by Nintendo, a Japanese video-gaming firm, has proved a smash hit since its release on July 6th in America, Australia and New Zealand. It is the latest instalment of the Pokémon franchise, which began as a video game in 1996, before branching out into collectible cards, toys, books, TV shows and comics, and grossing ¥4.8 trillion ($46 billion) in the process. Players take part in a sort of lighthearted digital dogfighting, in which the protagonists are not canines but cute magical animals discovered and trained by players. + +“Pokémon Go” applies that formula to the real world. Smartphones direct players to various locations, either to find Pokémon or useful virtual items (at the aforementioned Pokéstops), or to deploy their charges in battle. An optional “augmented-reality” feature uses the phone’s camera to show a picture of the real world with a Pokémon digitally superimposed (pictured). + +There have been unforeseen side-effects, some macabre. As well as the muggings in Missouri, a player in Wyoming found a dead body in a river while looking for Pokémon. A civilian (ie, not a player) discovered that the old church in which he lives had been tagged by Niantic, the firm that developed the game, as a “gym”—a meeting-point for players wanting to do battle, dozens of whom had duly begun arriving outside his house. Most gyms seem to be in public places, suggesting the man’s home was tagged by mistake, though there is, at present, no way to have the tagging undone. + +Much like Pokémon, pundits are now engaged in a virtual battle over what the game’s success means. Is it just a fad? Possibly. Will it help augmented reality go mainstream? Probably. How much money will Nintendo make with “Pokémon Go”? Although the app itself is free, players buy virtual items to strengthen their Pokémon. That “freemium” model has earned riches for other firms. And Niantic wants retailers and other firms to sponsor locations in its virtual world. In any case, Nintendo’s owners should be happy: the firm’s shares are up by over 50% since the game’s release, adding $11 billion to its valuation. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21702087-nintendo-shares-rocket-after-its-successful-foray-smartphone-gaming-pok-mon-go-shows/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Diagnostics + +Red alert + +Theranos’s fortunes worsen again + +Jul 16th 2016 | From the print edition + + + +“FIRST they think you’re crazy, then they fight you, and then all of the sudden you change the world,” said Elizabeth Holmes as troubles mounted for her blood-testing startup, Theranos, last year. Things look ever less likely to go beyond the fighting stage. + +On July 7th a government regulator, the Centres for Medicare and Medicaid Services, said Ms Holmes would be barred from owning or running a laboratory for two years. It will also revoke her company’s licence to operate one of two laboratories where it conducts tests. As The Economist went to press the firm was due to reply to a letter from Congress, which asked how, exactly, Theranos is going to handle the tens of thousands of patients who were given incorrect test results. Even so, Ms Holmes looks set to remain in position even as the situation deteriorates around a firm that once commanded a multi-billion-dollar valuation. + +These may be some of the last twists in a story which will be turned into a Hollywood film by the director of “The Big Short”. Theranos’s troubles began last year when the Wall Street Journal questioned whether the firm’s core technology—the ability to perform multiple tests on a tiny droplet of blood—actually worked. More problems piled up after news of flaws in its lab testing. The Securities and Exchange Commission said it would investigate whether Theranos’s investors, who funded the company to the tune of $690m, were misled. In May it emerged that in 2014-15, results from its proprietary blood-testing device had been thrown out entirely (see table). + +These made up only a tiny proportion of the millions of tests that Theranos ran, but there are concerns that patients may nonetheless have been harmed by receiving the wrong test results. Theranos’s own industry is turning upon its erstwhile star. The chief executive of HealthTell, another blood-diagnostics startup, says it is now clear that Theranos did not spend enough time developing the necessary clinical evidence before launching its new blood-testing product. + +Theranos’s chief business partner, Walgreens, an American drug retail chain, ended its three-year partnership with Theranos in June. It will now close Theranos’s lab-testing services inside 40 of its shops. Theranos has also been hit with lawsuits from patients claiming fraud and false advertising, with Walgreens as a co-defendant. Walgreens confirmed to The Economist earlier this year that it had not validated or verified Theranos’s tests (contradicting earlier assurances by the firm). + +If Theranos is to limp along with Ms Holmes at the helm, one option the firm will be considering is to close down its laboratories (to comply with her ban) and focus the business on developing new blood tests. This was what she had been trying to do before the ill-fated move into the reference laboratory market, one that offers many commonly used tests to customers at one location. + +The move into the reference market made it seem as if the firm was not committed to developing finger-stick tests. When customers arrived for testing they were often required to give blood from a vein, albeit blood taken in unusually small samples with tiny needles. That heightened concerns about the company. But behind the scenes it was moving towards its aim of using ever smaller volumes of blood in more consumer tests. + +Whether the company has any technology worth saving from its mess is now the most intriguing question. The firm still claims to have a family of new clinical diagnostic methods that can reduce the amount of blood needed for testing and that can perform a wide range of tests in centralised and decentralised settings. A Hollywood ending would involve some sort of redemption for Ms Holmes. The real world is not always as kind. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702208-theranoss-fortunes-worsen-again-red-alert/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Fads in corporate architecture + +Putting on the glitz + +Everyone wants buildings as trendy as those of tech firms + +Jul 16th 2016 | From the print edition + + + +PICTURE a set of Lego that covers 50,000 square metres (540,000 square feet), costs over one billion Danish kroner ($150m), and has a mini-golf course on its roof. In reality the new global headquarters of the Lego Group will be of real bricks and concrete, but its boss, Jorgen Vig Knudstorp, describes it with childlike glee. It will rise up in Billund, in rural Denmark, he says, as “a great facility, not opulent, very playful, for children too.” “People house” will be a totem of the firm’s success. + +Mr Knudstorp is allowed to brag. The toymaker’s annual return on invested capital has topped 100% for each of the past eight years. Pre-tax profits leapt by 28% last year and sales are buoyant. His “stick-to-the-brick” strategy has done handsomely, after an earlier crisis. Warner Brothers makes and owns brand-boosting Lego movies and others run Lego-themed parks, leaving him to sell toys. After years of recruitment, he says the 4,000 staff in Denmark have outgrown their offices. + +Getting a glitzy new building with an indoor prairie, open space and bright yellow staircases is a fine way to celebrate. The design is packed full of fads common to others’ new headquarters: staff who get “hot desks” to share, not their own workspaces ; a big atrium and lots of glass to suggest a transparent firm culture and not much hierarchy; space for exercise plus lots of green features, notably low energy use. + +That will sound familiar to others. Last month Siemens’s boss, Joe Kaeser, unveiled a pricey new corporate HQ in Munich, and has described it as a place where encounters occur. Airbus, too, just cut the ribbon on its “Wings Campus”, a new group head office in Toulouse. A big canteen, fitness centre and “collaborative office space” are supposed to get staff talking. Tom Enders, its boss, claimed it all shows his firm is “open-minded, innovative and future-oriented”. Meanwhile Adidas, which makes running shoes, is splashing over €500m ($550m) on a head office in tiny Herzogenaurach in Germany. It insists the design will ensure workers’ “spontaneous interaction”. + +Big, old firms try to package themselves as nimble and open because they have to compete ever harder for talent, including against tech firms. Mr Knudstorp frets that in ageing Europe, labour markets will grow ever tighter for skilled designers, software engineers and others. Offering them a career in a windowless cubicle won’t do. Luka Mucic, chief financial officer of SAP, Europe’s largest software firm, notes a change of attitude among recent graduates, saying recruits care less than previous generations did about status and title. They want to know about a firm’s “vision”, and whether it has “an environment where they have a sense of choice”, he says. + +Whether non-tech firms can really win in a battle of the buildings is another thing. Apple is spending an estimated $5 billion on its new flying saucer-shaped campus in Cupertino, California; nearby Google will erect such futuristic headquarters that one website calls it a “spiderweb canopy utopia”. Amazon, not to be outdone, is putting up tree-filled “spheres” in downtown Seattle so staff can hold meetings in forests. For European firms in out-of-the-way company towns such as Billund or Herzogenaurach, it might be hard to compete, however appealing the minigolf course. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702205-everyone-wants-buildings-trendy-those-tech-firms-putting-glitz/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Indian conglomerates + +Sell me if you can + +India’s indebted tycoons are under pressure to flog their prized assets + +Jul 16th 2016 | MUMBAI | From the print edition + +A STAKE in a Formula One team, four planes and a slew of posh hotels including the Grosvenor House Hotel in London: the troubles of Sahara, an Indian conglomerate whose founder has been in and out of prison, has resulted in a neat pile of trophy assets for the discerning buyer. The often unmanageable debt levels at India’s largest firms now mean plenty of less glamorous assets are up for grabs, too, from cement and steel plants to airports and toll roads. Once adept at giving their bankers the runaround, tycoons are now less able to fend off pressure to pay down debt with sales of prize assets. + +Given how indebted India’s largest firms are—ten prominent ones taken together have interest payments bigger than their annual profits, according to Credit Suisse, a bank—there should soon be a long list of items on the block. A few big groups have already raised fresh funds by selling off parts of their businesses. Analysts at State Bank of India reckon that deals worth 2 trillion rupees ($29.8 billion) have been signed or are on the way, enough to make a dent in the total debt of the companies involved, which amounts to around 10 trillion rupees. + +So far, more deals have been rumoured than actually completed (the Qatar Investment Authority is poised to snap up the London hotel). Many of the investment bankers who had hoped for fat mandates worry that the founder-shareholders who dominate India’s business scene (and its debt) are keener to talk about break-ups than actually preside over them. Others prefer to flog overseas trophies, for example a stake in Sabiha Gökçen airport in Turkey, sold by GMR, an infrastructure group, to a Malaysian rival. + +But a sea-change is on its way. Formerly, company founders had the clout to keep their empires intact. They could put in a call to their pals in government to keep down any pesky banker demanding repayment. India had no proper bankruptcy regime, so promoters, as company founders are known, could effectively blackmail banks with an implicit threat: keep funding me or face years of litigation as the business implodes. + +Banking reforms championed by Raghuram Rajan, the departing central-bank governor, have made such tactics harder. The government passed a new bankruptcy law in May. It will mean that banks should from next year onwards be able to foreclose on insolvent firms. A new mood in the offices of regulators and government officials is also emboldening bankers to recoup dud loans rather than, as in the past, extend new ones. Better still, under Narendra Modi, India’s prime minister, tycoons appear to have lost their direct access to ministers’ offices. + +Even with the coming changes, India is far from using an efficient, American-style procedure in which over-indebted firms are swallowed by their lenders and then disposed of, either whole or in parts, to new owners. One reason is that buyers are scarce. A web of regulation makes it hard in India to run the private-equity firms that could smooth the process. And promoters are hesitant to swoop for each other’s assets, bound as they are by long histories of their families doing business together (and, often, by marriage, too). + +Much of corporate India’s unsustainable debt is also in cyclical industries such as steel or mining. Shareholders often hang on for far too long hoping that rising commodity prices might resurrect an ailing firm’s fortunes. Meanwhile, tycoons are good at making money from the businesses they own even when no profits are forthcoming. One ruse is getting firms to overpay for rent on a head-office building ultimately owned by family members. + +Nor will asset sales be a panacea. If a profitable part of a conglomerate’s business is sold to raise cash, its profits won’t be available to service what remains of the debt, so leaving both bankers and businessmen only a bit better off. But it is surprising even to see the deals happening—and that a regulatory change is already having such a visible effect. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702206-indias-indebted-tycoons-are-under-pressure-flog-their-prized-assets-sell-me-if-you-can/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Defence firms + +Rocketing around the world + +Weapons-makers reckon missiles will be their next big hit + +Jul 16th 2016 | FARNBOROUGH | From the print edition + + + +THE F-35 stealth fighter is designed to be unnoticeable—at least by enemy radar. Nonetheless, it was the showstopper at this week’s Farnborough air show in Britain, impressing crowds in the showground’s terraces with its smooth manoeuvres and party tricks such as flying backwards. Such was the buzz around the new jet that CEOs attending the show to hammer out big deals broke off meetings to watch. But at Farnborough’s trade show, which opened on July 11th, all the talk was of the missiles the F-35 can fire, as well as the new missile-defence systems that could eventually shoot it down. + +Missiles excite, for unlike other weapons, demand for them is growing strongly. Global defence spending grew by just 1% last year—after five years of severe budget cuts in many countries—but the global market for missiles and missile-defence systems is racing ahead at around 5% a year. The capabilities of such weapons are increasing, and with that their price and profitability. Missiles are no longer just flying bombs; they now often contain more computer than explosive to help find their target autonomously. + +Sales are rising along with the military threats they help address, says Wes Kremer, who runs Raytheon’s integrated missile-defence business. NATO has been upgrading its European ground-missile defences to prepare for Russian aerial attacks since Vladimir Putin annexed the Crimea in 2014; last week an initial version was declared operational. In Asia several countries are spending on systems to defend against China and North Korea. And in the Middle East, the use of targeted air-to-ground missiles has dramatically risen to try and reduce casualties in conflicts against IS and in Yemen. + + + +For defence firms, missile systems are among the most profitable products they can offer (see chart). One reason is that the current generation of weaponry has not faced the same scale of development problems as new plane projects such as the F-35, or Airbus’s A400M military transporter, both of which are billions of dollars over budget. + +Executives are putting missiles at the forefront of their efforts to expand abroad and to reduce their reliance on home governments. This week the West’s big three missile-makers (Raytheon, Lockheed Martin and MBDA) showed off their kit to visiting military delegations, festooned with colourful aiguillettes and decorations, from across the world. Small countries can afford the million-dollar-plus price tags for missile systems compared with $80m for a new F-35. The most go-ahead so far has been MBDA, a European joint venture, which last year won more missile orders outside Europe than within its home continent. Others are now catching up on foreign sales. Raytheon hopes soon to sign a $5.6 billion deal with Poland to upgrade its Patriot missile-defence shield, while Lockheed and MBDA plan to ink a deal with Germany for their air-defence systems. + +Investors reckon this will surely all translate into fatter profits for the defence industry. The share prices of Lockheed and Raytheon have both risen by a third over the past year. But there also are reasons to be cautious. “We’re unlikely to see returns as good in the sector over the next few years as we have since 9/11 from which point American military spending surged,” says Michael Goldberg, a defence consultant at Bain & Company. + +Another reason to be cautious is that defence ministries have become better at procurement and at fostering competition. That means missile divisions at Western firms are facing more competition from Chinese, Israeli and Russian firms in some export markets, where the latter are upping their game. However good the missile, not every target will be hit. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702207-weapons-makers-reckon-missiles-will-be-their-next-big-hit-rocketing-around-world/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Corporate philanthropy in China + +The emperor’s gift + +Chinese bosses are giving more to charity + +Jul 16th 2016 | HANGZHOU | From the print edition + + + +WHEN Warren Buffett and Bill Gates held a banquet for Chinese billionaires in 2010, they hoped to win them over to philanthropy. They got the cold shoulder. Many wealthy industrialists stayed away, and none of those who attended signed their “Giving Pledge”. This meanness was not due to penury: China boasts more dollar billionaires today than does America. Asked why he and his compatriots rebuffed the evangelisers, Jack Ma, boss of Alibaba, an e-commerce giant, insists it is not because they were stingy. At a conference on private-sector philanthropy hosted by his firm this month in Hangzhou, he explained that China’s charitable sector was then still in its infancy. + +The outlook has since improved. Charitable giving in China still lags that in America, but it is rising (see chart). Oscar Tang, a Chinese-American billionaire and philanthropist, tells of another banquet for fat cats in Beijing, this one hosted earlier this month by Ban Ki-moon, secretary-general of the United Nations, and the C100, a group of prominent Chinese-Americans. Unlike at the frosty meeting in 2010 with the “two white men” telling them to give away money, he recounts, the mainland bosses were enthusiastic about his exhortations to share the wealth. + + + +One reason for this shift in attitude is a generational change. Scholars at Harvard University have looked at patterns of giving among China’s top donors. In the past, the most generous were property tycoons who gave to educational outfits, especially elite universities in their home provinces along the wealthy coast. It was a careful approach, suited to a political system where making pots of money had only recently become normal. But it meant poor schools and indigent interior provinces lost out. + +As the economy modernises, a crop of youngish technology billionaires, keen to “democratise” philanthropy, has emerged. On the eve of Alibaba’s initial public flotation in New York two years ago, Mr Ma and Joseph Tsai, the firm’s co-founder, donated options worth about 2% of their firm’s equity to a new charitable trust (Alibaba’s market capitalisation today is around $200 billion). Pony Ma (pictured), founder of Tencent, a Chinese gaming and social-media giant, said in April that he will donate shares worth over $2 billion to his firm’s charitable foundation. + +Many entrepreneurs are following their lead. The younger generation is much more likely than older ones to give money to more politically sensitive areas such as the environment and public health, as the two Mas are doing with their respective foundations. They are also applying whizzy digital tools, from the mobile internet to cloud computing, in order to help charities to modernise their operations. + +Such beneficence is helping to address some of the flaws in the non-profit sector. There is a lack of proper management and not enough transparency. Governance is weak. Various prominent charities have been ensnared in corruption scandals in recent years. Numerous research institutes and academic training programmes have sprung up of late to address the problem. + +The last, and most surprising, push towards philanthropy comes from the government. Chinese rulers have long viewed private philanthropy with suspicion, worrying that the public might recognise in it the manifold failings of the state. Many would-be donors also resisted giving money, or did so furtively, for fear of attracting unwanted official attention. But the government has pushed through a sensible philanthropy law, due to come into force later this year, that makes it easier to donate. It also clarifies regulations governing local charities and pushes for transparency. If the implementation is as good as the framework, China’s corporate giving will surely surge. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702204-chinese-bosses-are-giving-more-charity-emperors-gift/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Be nice to nerds + +Forget the cool kids. Geeks are now shaping new products and services + +Jul 16th 2016 | From the print edition + + + +FIVE years ago Zach Sims, a sprightly, striving 21-year-old, launched Codeacademy, a startup, to offer online courses about how to write software. He remembers pitching his idea to prospective investors only to hear a “chorus of no”. At the time, the naysayers thought coding was a weird, fringe activity for computer-science geeks. They were wrong. Since 2011, more than 25m people have signed up for Codeacademy. Meanwhile, in-person crash courses that teach computer programming, called coding boot-camps, have spread worldwide, as more people aspire to tech jobs or running their own startup. This year tuition fees at these boot-camps will reach around $200m in America alone. + +“Be nice to nerds. Chances are you may end up working for them,” wrote Charles Sykes, author of the book “50 Rules Kids Won’t Learn in School”, first published in 2007. Today there are more reasons than ever to treat nerds with respect: never mind the fact that every company is clamouring to hire them, geeks are starting to shape markets for new products and services. + +Stephen O’Grady of RedMonk, a consultancy, calls developers the “new kingmakers”: they are driving decisions about the technology that their companies use to an extent that has never before been possible. From personal computers to social-media companies like Twitter and Facebook, many gadgets and platforms started out with curious tech enthusiasts experimenting in their garage or dorm room, only to turn into mainstream hits. Slack, a two-year-old messaging firm that aims to displace e-mail, started as a tool for software developers to communicate with one another before it spread to other functions and companies. + +But nerds’ influence now goes well beyond technology. They hold greater cultural sway. “Silicon Valley”, a show on HBO which will soon start filming its fourth season, presents the “brogrammer” startup culture in all its grit and glory, and suggests that mass audiences are transfixed by what really happens behind closed (garage) doors. Techies in San Francisco don not only hoodies but also T-shirts with “G∑∑K” emblazoned on the front. Those too risk-averse to become university dropouts like Microsoft’s Bill Gates and Mark Zuckerberg of Facebook rush in rising numbers to Silicon Valley as soon as they graduate, forsaking careers on Wall Street to code their way into the 1%. + +Nerds carry more clout in part because their ranks have swelled. IDC, a research firm, estimates there are now around 20m professional and hobbyist software developers worldwide; that is probably low. Geeky, addictive video games are drawing more into the fold. Each month at least 70m people play “League of Legends”, a complex multiplayer online game; that is more than play baseball, softball or tennis worldwide. + +As a result, companies had better pay attention to the rise of a “nerd economy” that stretches well beyond their direct technology needs. Venture capitalists were first to pick up on this. Chris Dixon of Andreessen Horowitz, a Silicon Valley venture-capital firm, says he is constantly watching “what the smartest people are doing on the weekends”, because it hints at what the mainstream will be up to in ten years’ time. With this rationale, Andreessen Horowitz has invested in various gadgets and products that early adopters have embraced, including a nutrient-rich drinkable meal for engineers too busy to take a break from coding, called Soylent. Another investment is in a company called Nootrobox, which makes chewable coffee for people too lazy or antisocial to order a liquid shot from a barista. The “mouth of the cultural river” has shifted from New York and Los Angeles to San Francisco, says Mr Dixon. + +Not only nerd food has won venture capitalists’ attention, but also their fashion choices. Warby Parker, a glasses firm, and Stance, a startup that makes bright, geeky socks, have attracted $200m in venture capital. Both cater to techies as well as the fashion-aware (the line between hipster and nerd can be fuzzy). The “sharing economy”, exemplified by Lyft and Airbnb, also was originally a nerd thing: they prefer renting to buying stuff. + +Incumbent businesses, too, have started to take their cue from all this nerdiness. Brands like Mountain Dew and Doritos have sponsored video-game competitions and “rodeos” where competitors race drones around stadiums. By intrepidly going where the nerds go, brands hope to get some credibility. “Hackathons”, where companies invite prospective and current employees to stay up all night, eat pizza and code, are de rigueur as a means to recruit engineers. Even very traditional companies like MasterCard and Disney have started to hold them. + +Sometimes, however, it can all be a bit embarrassing. GE, an industrial giant, has run a television ad campaign about how it hires software developers that feels as awkward to watch as an engineer trying to do stand-up comedy for the first time. Haagen-Dazs, an ice cream-maker, has put up billboards in San Francisco that proudly declare “We’re a 56-year-old startup” and present the written recipe for vanilla ice cream as if it were code. + +It’s all geek to me + +As the success of Pokémon Go, an augmented-reality game, shows (see article), there can be big profits in the avant-garde areas where nerds like to experiment. Unfortunately, trying to observe and appeal to nerds is not a sure-fire strategy. Not every product or pastime embraced by software engineers will become a hit. “Brogrammers” may embrace Soylent and Nootrobox. But your correspondent, who has tried both to her stomach’s displeasure, is sceptical on whether they will ever be a match for solid food and hot coffee. + +And if they try too hard to speak geek, large companies will come off as inauthentic and alienating, exactly what they were trying not to be. Nerds may be a powerful commercial force, but many of them harbour disdain for big brands and overt marketing. Firms will have to try hard to send a cool, coded message. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702183-forget-cool-kids-geeks-are-now-shaping-new-products-and-services-be-nice-nerds/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Turkey’s economy: Sugar highs + +Buttonwood: Slow suffocation + +Deutsche Bank: In a rut + +Prosecuting financial firms: Hongkong and Shanghaied + +Temporary work: How the 2% lives + +Payouts for whistleblowers: Whistle while you work + +Free exchange: Econometrics + + + + + +Articles Sections Next + +Turkey’s economy + +Sugar highs + +Turkey’s economy needs boring reforms. Instead, it is getting quick fixes + +Jul 16th 2016 | Istanbul | From the print edition + + + +LAST year Soner Tufan, straining to keep up with demand for guided tours around Istanbul, decided to move to spacious new offices. “Those were the days,” sighs Ali Emrah, his business partner. Despite running one of the top-rated tour-guide companies in Istanbul, they have seen daily inquiries about tours fall from 20 or 30 to three or four following a series of terrorist attacks in Turkey, the most recent on Istanbul’s main airport. Their expansion now feels like an error. Many tour guides, they say, are looking for new jobs. + +Turkey’s tourism slump is already visible in deserted sights and empty hotels, but not yet in its economic statistics. Banks have restructured loans to the industry; non-performing loan ratios will begin to rise only next year, says Ozlem Derici of DenizBank. The impact on Turkey’s current account—last year revenues from tourism paid for half of Turkey’s trade deficit in goods—will become clearer as the summer wears on. Nihan Ziya-Erdem of Garanti Bank says the slowdown could shave as much as one percentage point off this year’s growth rate. + +That is bad news for Recep Tayyip Erdogan, Turkey’s president. As it is, growth has slowed from rates of 7-8% a year when he was prime minister (see chart). The relatively healthy clip of 4.5% in the first quarter, year on year, was largely the result of a 30% boost to the minimum wage on January 1st, which lifted consumer spending. The IMF expects growth to decline further, to 3.5% in 2018. + + + +Turkey’s current-account deficit, however, is already large and persistent. Cheap oil and reduced demand for imports of other goods because of the weakness of the Turkish lira helped keep it to 4.5% of GDP in 2015. But Nafez Zouk of Oxford Economics, a consultancy, expects that the tourism slump will lead to a current-account deficit of 5% this year and 5.4% in 2017. + +This is worrying, as it leaves Turkey dependent on flighty foreign lenders and investors to cover its import bill. Turkey’s foreign debts have risen rapidly, from 38% of GDP in 2008 to 55% of GDP at the end of 2015. And more than 90% of them are denominated in foreign currency, not in lira. Further depreciation of the lira risks a mismatch between what companies owe and what they can afford. And if the foreigners take fright, funding could dry up. + +Yet the economy does not seem to be on the brink of crisis. Most firms borrowing in foreign currency are taking out long-term loans, Mr Zouk notes, and many, such as energy and property firms, price their products in dollars, providing something of a hedge against further depreciation. Besides, expected interest-rate rises in the rich world, which might have drawn capital out of emerging markets, have been deferred again in the wake of Brexit and a broader slowdown in the world economy. + +There is much that could be done to boost growth, however, including scrapping rules on firing that discourage hiring, improving the quality of education and bringing the huge informal economy onto the books. Investment shrank in the first quarter. Reviving it requires greater political and economic stability, says Zumrut Imamoglu of TUSIAD, Turkey’s main business lobby. Raising the pitifully low savings rate would reduce Turkey’s reliance on flighty foreigners. Without such reforms, growth will inevitably falter at some point, she argues. + +Yet Mr Erdogan’s speeches suggest a preoccupation with quick fixes instead of worthy but arduous reforms. He has publicly criticised the (theoretically independent) central bank for keeping interest rates too high, accusing a mysterious “interest-rate lobby” of choking off investment. To the befuddlement of economists, he has even suggested that lower interest rates would dampen inflation, the exact opposite of the conventional view. + +Unfortunately, Mr Erdogan’s fulminations seem to be influencing the central bank. Annual inflation ticked up to 7.6% in June, well above the official target of 5%. Nevertheless, the bank has been easing monetary policy over the past few months, under the guise of simplifying an (admittedly complex) interest-rate regime. Cevdet Akcay of Yapi Kredi, another Turkish bank, found that inflation has become less responsive to monetary policy. That will make it much harder to bring it back down without raising rates sharply and thus injuring the economy. + +Instead of improving the investment climate more broadly, Mr Erdogan is scattering subsidies and tax breaks. On June 28th the government announced an investment-promotion package, including an exemption from property tax for investments, cuts to stamp duty on contracts and subsidies for research and development. For now, the budget remains in primary surplus (ie, before interest payments), but that is largely thanks to one-off revenues, including an auction of broadcasting spectrum. A bill to improve tax collection, meanwhile, is idling in parliament. + +Mehmet Simsek, the deputy prime minister, admits that the electoral cycle has got in the way of reform over the past few years. But he argues that beneath the rhetoric, the government will keep pushing more substantive measures. He says that the becalmed tax reform should eventually become law, as will a new policy automatically enrolling people in pensions, which should boost private savings. “If we are successful in implementing reforms, then Turkey should return to high growth,” he says. Left unsaid is the corollary: without reform, Turkey will merely scrape by. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702185-turkeys-economy-needs-boring-reforms-instead-it-getting-quick-fixes-sugar/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Slow suffocation + +The financial system isn’t designed to cope with low or negative rates + +Jul 16th 2016 | From the print edition + + + +EVERY time commentators say that bond yields cannot go any lower, the markets take delight in proving them wrong. After Britain’s shock decision to leave the European Union, yields dropped again: the income on ten-year Treasury bonds reached a record low, and German and Japanese yields headed further into negative territory (see chart). The prospect that monetary policy would remain accommodating also helped shares on Wall Street reach new highs. + +Interest rates are the oil in the financial system’s engine, helping capital to flow from one area to another. There is a reason that rates have been positive for the past three centuries, despite world wars and the Depression. The system isn’t designed for a world of ultra-low, let alone negative, rates. + +The traditional business of banking is to take money from depositors (a bank’s liabilities) and lend it, at higher rates and over longer periods, to borrowers (its assets). So an important driver of profits is the shape of the “yield curve”—the chart of interest rates for different durations. The smaller the gap between short- and long-term rates (the flatter the yield curve, in the jargon), the harder it is for banks to make money. The problems become even greater as bond yields near zero. Banks face resistance from depositors if they try to charge them for the privilege of having money in an account. Even as the return on banks’ assets declines, it is hard for them to reduce the cost of their liabilities. + +When a central bank imposes negative interest rates on the reserves commercial banks keep with it, as those in Europe and Japan have done, it is thus very hard for the banks to pass this cost to depositors. Negative rates act as a tax on bank profits. + +According to Jason Napier, an analyst at UBS, there is another factor at work. Many commercial banks own portfolios of government bonds, in part because regulators require them to keep a stock of liquid assets on hand. The interest payments on those bonds used to be a handy source of income. But as older, higher-yielding bonds mature, they are being replaced with much lower-yielding assets. + +Mr Napier estimates that this factor alone will cut European bank profits by 20% over several years. Offsetting this effect will be hard. Either costs will have to be cut by 10% or banks will have to charge their borrowers an extra 0.3% a year. But pulling off the latter trick would not be economically helpful; central bankers are trying to reduce, not increase, the cost of corporate borrowing. + +Banks are not the only institutions to be affected. Insurance companies used to follow the Warren Buffett model for making money: collect the premiums upfront, invest them wisely, and use the returns to create a cushion against bad news on the underwriting front. These days, thanks to regulations, insurers have very little exposure to risky assets like equities. They buy bonds to match their assets with their liabilities. But insurance companies in Germany and Switzerland are stuck with savings products they sold in happier times, which guaranteed returns well above current yields. A similar problem hit Japanese insurers in the 1990s and 2000s. + +Insurance companies that have asset-management arms have some protection from this pressure. The savings products they sell are not guaranteed, instead offering returns linked to the financial markets. But the impact of low returns is slowly squeezing asset managers too: clients tend to notice the impact of fees much more than they did when returns were in double digits. New business is gravitating towards low-cost exchange-traded funds and index-trackers. A similar problem afflicts private banks, whose wealthy clients are starting to wake up to the impact of fees. + +In a way, each sector’s problem is a manifestation of the same phenomenon. Short-term interest rates and government-bond yields are the risk-free rates that form the basis of all financial returns. The expected return on equities comprises the risk-free rate plus a premium to allow for the volatility of the stockmarket and the risk of capital loss. A good chunk of the income of financial-services companies is the “cut” they take out of these returns. Now there is simply less return to share around. + +The irony is that low rates were initially devised as a policy to save the financial sector, and through the mechanism of higher lending, the rest of the economy. Many voters protested about the bailing out of the very institutions that caused the crisis. Those protesters can take only cold comfort that the same policies are now slowly suffocating the industry. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702186-financial-system-isnt-designed-cope-low-or-negative-rates-slow/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Deutsche Bank + +In a rut + +Brexit is merely one more worry for Germany’s leading lender + +Jul 16th 2016 | From the print edition + + + +THE biggest bank in Europe’s most robust economy may seem an unlikely victim of Brexit. Yet in the fortnight after Britons voted to quit the European Union Deutsche Bank’s share price tumbled by 27%—putting Germany’s biggest lender in the unexalted company of British and Italian banks. On July 7th it slid to €11.36 ($12.58), a record low. + +The price has since clambered back towards €13. But Deutsche still trades at only a quarter of the supposed net value of its assets—far behind its peers (see chart). Its shares fetch half of what they did a year ago and an eighth of what they did in 2007. It lost a staggering €6.8 billion in 2015. The newish chief executive, John Cryan, is carrying out an overdue spring-clean: he has told investors to expect no profit or dividend this year (and scrapped last year’s too). Brexit makes the job a little harder. + + + +Mr Cryan is overhauling Deutsche’s rickety computer systems, closing offices and shedding 9,000 jobs. But his most pressing task is to thicken Deutsche’s capital cushion. The bank is not in mortal danger, but in these post-buccaneering days regulators insist that lenders have ample means to withstand big losses. European “stress tests” this month may not flatter Deutsche, partly because they take no account of its capital-boosting plans. + +Deutsche’s ratio of equity to risk-weighted assets, an important gauge of resilience, is 10.7%. Had the latest regulations been in place in 2009, estimates Autonomous, a research firm, Deutsche’s ratio would have been a threadbare 2.4%, and just 5.5% even in mid-2012. Despite this improvement, Deutsche still lags its peers. Mr Cryan wants to lift its score to 12.5% by 2018. + +The sale of a stake in Hua Xia, a Chinese bank, due to be completed soon, should close around 0.5 points of that 1.8-point gap. The disposal of Postbank, a German mass-market retail bank of which Deutsche took control in 2010, is slated to bring in most of the rest. (Deutsche also has another, posher retail operation under its own name.) But Mr Cryan has soft-pedalled on the sale. Postbank relies chiefly on deposit-taking and mortgage lending, and the euro zone’s ultra-low interest rates have made it less attractive to would-be buyers. Hurrying to sell makes little sense. + +The Brexit vote portends weaker growth in Europe and thus even lower rates, making Postbank even less alluring. Still-lower rates also make it harder for Deutsche to fatten capital by making and retaining profits. Its net interest income (the difference between what it pays depositors and charges borrowers) dropped by 7%, year on year, in the first quarter. + +Slower growth in Europe is also little use to Deutsche’s investment bank, which suffered with the rest of the industry in the market turmoil at the start of the year. The second quarter may have been better—and Brexcitement boosted trading volumes. But the second half may be weaker again. And in recent years Deutsche has been hampered by its focus on fixed income—selling, trading and underwriting bonds—in which it is among the world’s leaders. According to Huw van Steenis of Morgan Stanley, industry revenues from bonds, currencies and commodities fell by 9% a year in 2012-15, while equities businesses grew by 6% annually. Among big banks, none relies on fixed income more than Deutsche does. + +The bank has legal worries too. The biggest of these is an allegation by America’s Department of Justice that Deutsche misrepresented the value of residential mortgage-backed securities before the crisis of 2008. Other leading banks have already settled similar claims. American and British authorities are also examining whether slack controls at Deutsche let money-launderers spirit cash out of Russia. Deutsche has set aside €5.4 billion to cover legal bills. Another looming headache is a proposal by international regulators that would sharply increase capital requirements for mortgages and other loans. + +Mr Cryan said this month that he didn’t see his bank as a takeover target. He’s right about that: regulators think banks are big enough. He also said that Deutsche would reach its capital target without needing to tap up investors. He may be right about that, too—but it’s much less certain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702189-brexit-merely-one-more-worry-germanys-leading-lender-rut/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Prosecuting financial firms + +Hongkong and Shanghaied + +An investigation into an investigation of HSBC + +Jul 16th 2016 | New York | From the print edition + +It could have been much worse + +THERE are two conflicting views of American regulators’ response to the financial crisis, and to misdeeds at big banks more broadly. The first holds that Uncle Sam has gone easy on Wall Street, sparing individuals from prosecution, for the most part, and punishing institutions with nothing more serious than fines. The other contends that banks have been the victims of a capricious and unjustified shakedown, driven entirely by politics, with little opportunity for redress. A new congressional report examining one bank’s travails provides grist for both arguments. The process that led to a swingeing fine for HSBC in 2012 does indeed look arbitrary, but the government was also less severe than it might have been. + +In 2012 HSBC agreed to pay American authorities $1.9 billion, admitting that it had violated sanctions against Cuba, Iran, Libya, Myanmar and Sudan, and had failed to impose tight enough safeguards to avoid handling drug money in Mexico. Some observers complained that the government should have brought criminal charges against the bank instead, even if that led to the loss of its American licence and, as a result, its potential collapse. Soon after, Eric Holder, the attorney-general at the time, who had participated in the negotiations with HSBC, told the Senate that the dire economic consequences had an “inhibiting influence” on plans to prosecute big financial firms. Later, he said had been “misconstrued”, and that decision to prosecute rested simply on whether wrongdoing could be proved. + +The Republicans of the Financial Services Committee of the House of Representatives, convinced that Mr Holder had admitted that big banks were above the law, decided to investigate. Their 245-page report, published this week, concludes that big banks were indeed seen as “too big to jail”. It points to the fact that some officials in the Justice Department had recommended a criminal prosecution for HSBC, but were overruled. + +Yet the report also makes clear that HSBC could never have fought the government’s charges. The Office of the Comptroller of the Currency, a financial regulator, could not provide any assurance that a successful prosecution of HSBC would not lead both to the closure of its American unit and to the revocation of its right to process transactions in dollars—a fatal outcome the bank could not risk. There was definitely political intervention: Britain’s chancellor interceded on HSBC’s behalf both with his American counterpart and with the head of the Federal Reserve, although whether this had any effect is unclear. Just how regulators arrived at $1.9 billion, or at any of the $219 billion of fines they have heaped on financial firms since the crisis, remains opaque. The report, in short, leaves everyone cross with the government—just as they were before. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702192-investigation-investigation-hsbc-hongkong-and-shanghaied/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Temporary work + +How the 2% lives + +Temping is on the increase, affecting temps and staff workers alike + +Jul 16th 2016 | From the print edition + + + +AT THE BMW factory in Spartanburg, South Carolina, brand new sport-utility vehicles roll off the assembly line with the regularity of a German express train. Work rotas at the vast facility, alas, are not always so reliable. Between 2007 and 2009, amid the turmoil of the financial crisis and ensuing recession, BMW hired, then laid off and then re-hired some 700 temporary workers through a firm called Management, Analysis and Utilisation (MAU). Josef Kerscher, the luxury carmaker’s American boss, likened the conditions that prompted the wild fluctuations in Spartanburg’s temporary workforce to a “rollercoaster”. Such volatility is not uncommon for America’s temps, however, whose numbers are growing even as their lot in life diminishes. + +Demand for temps has never been higher (see top chart). The industry now provides work for some 2.9m people, over 2% of the total workforce. The American Staffing Association, an industry group, reckons that it generated over $120 billion in revenue in 2015. Since the economic recovery began in 2009, temporary employment has been responsible for nearly one in ten net new jobs. + +But as temping has grown, the quality of the jobs it provides has deteriorated. In the 1950s and 1960s temping was seen as a way for educated people with time on their hands—college students, school teachers on holiday and middle-class housewives—to earn a little extra cash. One early study found that about half of female temps during the 1960s had some college education, nearly twice the national rate. The typists, stenographers and other clerical workers supplied by temping agencies earned wages only slightly below those of permanent workers. Perhaps most important, temp agencies were not seen as second-rate employers. “There is nothing demeaning about working for such an organisation,” Barron’s wrote in 1962; “Many workers prefer to do so.” + +According to the Census Bureau, temps today are disproportionately young, single and black or Hispanic. More than half are men. If the temps of the 1960s were relatively educated, today’s are more likely than permanent workers to be high-school dropouts. Just 8% of them have an advanced degree compared with 12% of permanent workers. Perhaps unsurprisingly, given all that, temps earn 20-25% less than their permanent counterparts. Even after controlling for demographic characteristics such as age and education, Lawrence Katz, an economist at Harvard University, reckons temps face a 15% earnings penalty. In 1970 8% of temporary workers lived below the poverty line; in 2014 it was 15%. + +Such conditions have stigmatised temporary employment—so much so that workers seek out temping jobs only as a last resort. In 2005, the last year temporary workers were thoroughly surveyed by the Census Bureau, eight in ten said they would prefer a permanent job. More than half said they were working as a temp not for the added “flexibility”, a claim frequently made by industry boosters, but because it was the only work they could find. A survey by the Federal Reserve in 2013 found that a big share of temps consider themselves overqualified for their jobs. Less than a third see their job as a “stepping stone to a career”. + +Although temps account for just 2% of America’s workforce, there is wide variation at the local level. In Queens County, New York (home to the borough of the same name), fewer than one in 200 workers is employed by temp agencies. In Greenville County, South Carolina, just a few miles from BMW’s factory, it is nearly one in ten. Big, concentrated and enduring pockets of temporary workers suggest that temping agencies are being used not just to smooth out fluctuations in demand, but also to lower labour costs. + +The proliferation of ill-paid temp work affects temporary and permanent workers alike. Many of the costs that employers of temps avoid, including prevailing wages and health-care costs, are now borne in part by taxpayers in the form of increased spending on Medicaid, food stamps and other welfare schemes. More than 26% of temps participate in at least one of these social safety-net programmes, compared with 14% of permanent workers. + +The growth of the temping industry affects labour markets in other ways. On the positive side, by offering positions to workers who might otherwise be unemployed, temping reduces the unemployment rate. Temps also insulate permanent employees from downturns in the business cycle, thereby improving job stability. + +Yet according to a paper published in 2013 by David Pedulla of Stanford University, permanent employees who work alongside temps worry more about job security. They also take less pride in their firm and have worse relationships with managers and co-workers. A study published in 1999 by Mr Katz and Alan Krueger of Princeton University found that states with a higher share of temporary employment in the late 1980s experienced lower wage growth in the 1990s. These results have held up: in states where less than 2% of the workforce was employed by temping firms in 2000, wages of permanent workers grew an average of 3% a year between 2000 and 2015; in states with a higher proportion of temp workers, wages grew at an annual rate of 2.6% (see bottom chart). Such findings lend support to the view of David Autor of MIT that the use of temping agencies, while beneficial to individual workers and firms, “may exert a negative externality on the aggregate labour market—that is, it is a ‘public bad’.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702190-temping-increase-affecting-temps-and-staff-workers-alike-how-2/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Payouts for whistleblowers + +Whistle while you work + +Ontario offers finance workers millions to blow the whistle on fraud + +Jul 16th 2016 | Ottawa | From the print edition + + + +CANADA has long had a reputation as a security fraudster’s playground, where misdeeds go undetected and unpunished and investors must take extra care. David Dodge, then governor of the central bank, provoked outrage in 2004 when he said foreigners perceive Canada as a “Wild West” in terms of the degree to which financial rules and regulations are enforced. At the time Mr Dodge was advocating a single national securities regulator, which despite the efforts of successive federal governments has yet to be created. But stung by the criticism, Canada’s 13 separate securities commissions—one for each province and territory—have at least been trying much harder to get to grips with securities fraud. + +The regulators, often working in concert with the police, the government or the courts, have experimented with all kinds of fraud-fighting schemes. They have set up multi-agency enforcement teams, brought in no-contest settlements akin to those used by America’s regulators and allowed institutional investors to finance lawsuits on behalf of aggrieved investors in exchange for a cut of the proceeds. The results to date have been underwhelming. Between 2012 and 2015, 1,205 individuals and companies were prosecuted for securities offences in Canada, but fewer than 40 went to jail, according to FAIR, a lobby group for investor rights. “From a swindler’s point of view, these are great odds,” says Neil Gross, FAIR’s boss. + +This week the Ontario Securities Commission, Canada’s biggest, decided to up the ante, by setting up an office to encourage whistleblowing, with the power to offer financial rewards of as much as C$5m ($3.8m). “It will be a game-changer,” says Kelly Gorman, who heads the new office. She expects insiders will help uncover difficult-to-detect frauds and offer the kind of meaty evidence that investigators would normally spend years accumulating. It should also prompt financial firms to improve compliance systems to catch misconduct before it becomes fodder for a tip. The payouts for whistleblowers, modelled on those offered by America’s Securities and Exchange Commission, will be an especially powerful tool, she says. + +The creation of a new office to encourage whistleblowing has broad support, but the decision to offer financial rewards has been much more controversial. Some see the hand-outs as too timid: the commission, confusingly, has decided not to make payments in cases in which it plans to pursue a criminal conviction. There is an administrative logic to that: the commission does not handle criminal cases itself, but hands them to Ontario’s prosecutors. Nonetheless, says Mr Gross, the distinction “could have a chilling effect on whistleblowers, who will be reluctant to come forward in the most serious cases.” + +Others think the promise of payouts will create an “avaricious mentality among employees and agents”. Similar programmes run by Britain’s Financial Conduct Authority and Australia’s Securities and Investments Commission do not offer money. Nor does the new whistleblower office in neighbouring Quebec, which opened its doors in June. + +Quebec looked at the American, British and Australian systems and concluded there was not enough evidence to show that money generated more or better tips. Ms Gorman defended Ontario’s choice, saying that while the prime motivation of most whistleblowers is to stop wrongdoing, the offer of a reward might tip the balance for those who fear blowing the whistle will be a career-ending move. + +It will take time to see whether Ontario has struck the right balance with its financial inducements. Yet just by opening its doors the new office helps send a message to investors that regulators are on the case. Mr Dodge, the former central-bank governor, says the situation has changed since he made his comments in 2004, with many new rules and regulations now in place. “The West is not so wild as it was,” he says. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702191-ontario-offers-finance-workers-millions-blow-whistle-fraud-whistle-while/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Econometrics + +It is not easy to compare the size of economies—even across the Channel + +Jul 16th 2016 | From the print edition + + + + + +FRANCE is renowned, fairly or not, for its long holidays and short working weeks, subsidised farmers and unionised workers, high culture and higher taxes. Less than two-thirds (64%) of its working-age population was employed last year, according to the OECD, compared with almost three-quarters (73%) in Britain. But is France’s well-lunched workforce of 26.4m now producing more than Britain’s harried 31.1m employees? + +Many people seem to think so. France’s GDP in 2015 was about €2.18 trillion. Britain’s was a little over £1.86 trillion. On July 6th the pound fell below €1.17 on the currency markets, rattled by Britain’s vote to leave the European Union (EU). Since 1.86 multiplied by the exchange rate of July 6th is less than 2.18, many commentators jumped to the conclusion that Britain’s economy had slipped overnight from fifth-biggest in the world to sixth. It was one more humiliation among many. + +Comparing the size of national economies can be a frustrating exercise. The measuring tape is not always consistent from place to place or period to period. This week Ireland’s statisticians added over 19% to last year’s GDP after folding multinationals’ aircraft and intellectual property into its economy. Both China and India, two of the biggest economies in the world, have recently revised their methods for calculating GDP, bringing them closer to international standards agreed on in 2008. India’s controversial overhaul recalculated everything from manufacturing output (drawing on a new database of corporate e-filings) to the value of dung. (This latter revision added over $180m to India’s GDP, assuming an “evacuation rate” of 0.3kg a day for goats and rather more for sheep.) + +China, for its part, last week added R&D spending to its measure of economic size (just as advanced countries already do). It also took the opportunity to revise its figures all the way back to 1952 (see chart). The new numbers suggest that China’s GDP was over 68 trillion yuan last year, compared with only 478 billion yuan in 1952 (at 2015 prices). The difference between those two numbers, however sketchy they may be, represents the greatest economic story of the modern age. But the statisticians keep fiddling with the earlier chapters. + +When laypeople reflect on the size of their national economy, they may think of a vast inventory of productive assets: humming factories, gleaming skyscrapers, fertile lands, cosy homes and teeming workers, full of brains and brawn. Similarly, when they look at a chart of GDP, like China’s above, it may remind them of a pile of money accumulating steadily over time, like an unusually successful stock portfolio. + +Viewed this way, it may seem natural to recalculate the value of an economy in the light of sudden currency fluctuations, like the yuan’s decline since August or the pound’s since June 23rd. Why not mark these economies to market? It seems unobjectionable to reprice Britain’s GDP at the lower July 6th exchange rate, just as a Frenchman in London might recalculate the diminished euro value of his sterling bank account or his Battersea flat. + +But such an exercise betrays a misunderstanding of GDP. This deceptively familiar gauge of economic size does not represent a stock of assets but a flow of goods and services. It is more akin to the wages and interest someone earns during a year than to the money in an account at the end of the year. It cannot therefore be valued at a point in time, like a bank balance, dwelling or stock portfolio. It must instead be evaluated over a span of time. + +Most often, this span is a year (which obviates the need for seasonal adjustment) or a quarter. Other periods are possible, both longer and shorter. From 1952 to 2015 China’s GDP amounted to over 809 trillion yuan (at 2015 prices), according to our calculations, based on the government’s revised figures. Incredibly, of all the goods and services ever produced by the People’s Republic of China, over half were produced from 2008 onwards. + +Shorter timespans are also possible: Canada publishes a monthly GDP estimate. In theory, one could even calculate the output of Britain and France in the few weeks since the EU referendum. But weekly GDP figures do not exist and would be hideously volatile if they did. + + + +Explore our interactive guide to Europe's troubled economies + +Because GDP represents a flow of goodies over time, it makes sense to value it at the exchange rates that prevailed during that time. It seems odd, in contrast, to reprice what happened last year at an exchange rate that arose only last week. Many of the items that constitute GDP are perishable, disappearing shortly after their creation. Hot meals and long journeys, a stirring night at the theatre, a warm radiator on a winter’s morning—Britain produced many such necessities and conveniences over the course of 2015. But these items left nothing behind that could be marked to market in July 2016. + +This is not to deny that the pound was overvalued. Its strength was rooted not in the international appeal of British goods but in the widespread appeal of British assets—including gilded homes and gilt-edged securities. Foreign purchases of these assets added little directly to British output (because GDP includes only newly built homes and factories, not financial securities or pre-existing properties or companies sold to new owners). But these buyers did bid up the currency in which GDP was priced. + +Liberty, fraternity, purchasing-power parity + +The size of Britain’s GDP, when converted into euros, thus reflected an uneasy amalgam of demand for its goods and services and a somewhat separate demand for the pounds required to buy British assets. The combination made Britain an expensive place to visit: all told, its prices were about 16% higher than France’s last year, according to the World Bank and the IMF. As it happens, if similar items were priced similarly in both countries (bringing their purchasing power into parity with each other), France’s GDP would have been almost the same size as its neighbour’s in 2015, even before Britain’s recent setbacks and indignities. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702184-it-not-easy-compare-size-economieseven-across-channel-econometrics/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +When science goes wrong (I): Computer says: oops + +When science goes wrong (II): Shell shock + +Oncology: Fast thinking + +Electric aircraft: Extra thrust + +Fishing: Unbalancing the scales + + + + + +Articles Sections Next + +When science goes wrong (I) + +Computer says: oops + +Two studies, one on neuroscience and one on palaeoclimatology, cast doubt on established results. First, neuroscience and the reliability of brain scanning + +Jul 16th 2016 | From the print edition + + + +NOBODY knows how the brain works. But researchers are trying to find out. One of the most eye-catching weapons in their arsenal is functional magnetic-resonance imaging (fMRI). In this, MRI scanners normally employed for diagnosis are used to study volunteers for the purposes of research. By watching people’s brains as they carry out certain tasks, neuroscientists hope to get some idea of which bits of the brain specialise in doing what. + +The results look impressive. Thousands of papers have been published, from workmanlike investigations of the role of certain brain regions in, say, recalling directions or reading the emotions of others, to spectacular treatises extolling the use of fMRI to detect lies, to work out what people are dreaming about or even to deduce whether someone truly believes in God. + +But the technology has its critics. Many worry that dramatic conclusions are being drawn from small samples (the faff involved in fMRI makes large studies hard). Others fret about over-interpreting the tiny changes the technique picks up. A deliberately provocative paper published in 2009, for example, found apparent activity in the brain of a dead salmon. Now, researchers in Sweden have added to the doubts. As they reported in the Proceedings of the National Academies of Science, a team led by Anders Eklund at Linkoping University has found that the computer programs used by fMRI researchers to interpret what is going on in their volunteers’ brains appear to be seriously flawed. + +fMRI works by monitoring blood flow in the brain. The idea behind this is that thinking, like any other bodily function, is hard work. The neurons doing the thinking require oxygen and glucose, which are supplied by the blood. The powerful magnetic fields generated by an MRI machine are capable of distinguishing between the oxygenated and deoxygenated states of haemoglobin, the molecule which gives red blood cells their colour and which is responsible for shepherding oxygen around the body. Monitoring haemoglobin therefore monitors how much oxygen brain cells are using, which in turn is a proxy for how hard they are working. + +I want to look inside your head + +In an fMRI study, an image of a brain is divided into a large number of tiny “voxels”—3D, volumetric versions of the familiar pixels that make up a digital image. Computer algorithms then hunt for changes in both individual voxels and clumps of them. It was in that aggregation process that Dr Eklund and his colleagues found the problems. + +To perform their test, they downloaded data from old fMRI studies—specifically, information from 499 resting volunteers who were being scanned while not thinking about anything in particular (these scans were intended for use as controls in the original papers). The researchers divided their trove arbitrarily into “controls” and “test subjects”, and ran the data through three different software packages commonly used to analyse fMRI images. Then they redivided them, in a different arbitrary way, and analysed those results in turn. They repeated this process until they had performed nearly 3m analyses in total. + +Since all the “participants” in these newly conducted trials were, in fact, controls in the original trials, there ought to have been no discernible signal. All would presumably have been thinking about something, but since they were idling rather than performing a specific task there should have been no discernible distinction between those categorised as controls and those used as subjects. In many cases, though, that is not what the analysis suggested. The software spat out false positives—claiming a signal where there was none—up to 70% of the time. + +False positives can never be eliminated entirely. But the scientific standard used in this sort of work is to have only one chance in 20 that a result could have arisen by chance. The problem, says Dr Eklund, lies with erroneous statistical assumptions built into the algorithms. And in the midst of their inspection, his team turned up another flaw: a bug in one of the three software packages that was also generating false positives all on its own. + +The three packages investigated by the team are used by almost all fMRI researchers. Dr Eklund and his colleagues write that their results cast doubt on something like 40,000 published studies. After crunching the numbers, “we think that around 3,000 studies could simply be wrong,” says Dr Eklund. But without revisiting each and every study, it is impossible to know which those 3,000 are. + +Dr Eklund’s results blow a hole in a lot of psychological and neuroscientific work. They also raise the question of whether similar skeletons lurk in other closets. Fields from genomics to astronomy rely on computers to sift huge amounts of data before presenting summaries to their human masters. Few researchers are competent to check the assumptions on which such software is built, or to scour code for bugs—which, as programmers know, are virtually guaranteed to be present in any complicated piece of software. + +There is another problem, says Dr Eklund: “it is very hard to get funding to check this kind of thing.” Those who control the purse strings are more interested in headline-grabbing discoveries, as are the big-name journals in which researchers must publish if they wish to advance their careers. That can leave the pedestrian—but vital—job of checking others’ work undone. This may be changing. Many areas of science, including psychology, are in the midst of a “replication crisis”, in which solid-seeming results turn out to be shaky when the experiments are repeated. Dr Eklund’s findings suggest more of this checking is needed, and urgently. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21702166-two-studies-one-neuroscience-and-one-palaeoclimatology-cast-doubt/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +When science goes wrong (II) + +Shell shock + +Tiny fossils used to date rocks may not be the accurate clocks once believed + +Jul 16th 2016 | From the print edition + +Opaque results or translucent answers? + +UNDERSTANDING past climates is crucial to understanding future ones, and few things have been more important to that historical insight than fossil foraminifera. Forams, as they are known, are single-celled marine creatures which grow shells made of calcium carbonate. When their owners die, these shells often sink to the seabed, where they accumulate in sedimentary ooze that often gets transformed into rock. + +For climate researchers, forams are doubly valuable. First, regardless of their age, the ratio within them of two stable isotopes of oxygen (16O and 18O) indicates what the average temperature was when they were alive. That is because different temperatures cause water molecules containing different oxygen isotopes to evaporate from the sea at different rates; what gets left behind is what shells are formed from. Second, for those forams less than about 40,000 years old, the ratio of an unstable, and therefore radioactive, isotope of carbon (14C) to that of stable 12C indicates when they were alive. That means the rock they are in can be dated. + +How accurately such rocks have been dated, though, has just been called into question by Jody Wycech and Clay Kelly, of the University of Wisconsin-Madison. A paper they have published in Geology suggests many foram-derived dates may be too old. + +14C is formed in the atmosphere by the action of cosmic rays on nitrogen atoms, and often subsequently reacts with oxygen to form carbon dioxide. This CO2 may be taken in by plants as part of photosynthesis, or by shell-forming creatures to make calcium carbonate for their armour plating. When an organism dies, radioactive decay gradually diminishes the concentration of 14C in its remains. The isotope has a half-life of 5,730 years, and that steady decay rate means it can be used as a clock. This clock, however, can reach back only so far. After around 40 millennia (ie, seven half-lives) only 1/128th of the original amount is left. That puts a practical limit on such radiocarbon dating. + +Moreover, for the technique to be accurate the remains in question need to have been chemically undisturbed. In particular, post-mortem contamination by other sources of carbon can sprinkle grit into the radioactive clockwork. Ms Wycech and Dr Kelly wondered whether foram shells provide quite such a precise timepiece as palaeoclimatology researchers assume. In particular, though the shells of living forams are translucent, those fossilised in rocks are often chalkily opaque. This means their chemical composition has changed in the process of fossilisation. + +The two researchers therefore looked at samples of sea-floor sediment taken from a site on Blake Ridge in the north-western Atlantic Ocean. They knew from the work of others that some foram shells in this sediment have remained translucent while others have become opaque, permitting the two sorts from the same sedimentary layer to be compared and contrasted. + +The contrasts, they found, are huge. Radiocarbon dating suggests the opaque shells are a lot older than the translucent ones. In one sample, collected from a depth of 71-73cm below the sea floor, the translucent shells clocked in as being between 14,030 and 17,140 years old, while the opaque shells seemed to be aged between 26,120 and 32,580 years. Another sample, taken from almost twice that depth beneath the sea floor, had translucent shells that were apparently between 21,730 and 21,800 years old. Opaque shells at that depth were dated to between 27,860 and 33,980 years ago. + +Clearly, there is something wrong here. Ms Wycech and Dr Kelly suspect that the compaction which transforms ooze into sedimentary rock forces carbon-containing compounds like bicarbonates into the shells, both making them more opaque and diluting their 14C—and thus causing them to appear older than they really are. The randomness of such a process would also explain why the range of possible ages is wider for the opaque shells than for the translucent ones. + +Whatever the cause, though, this finding will worry climate scientists. If studies in other locations support Ms Wycech’s and Dr Kelly’s conclusions, then foram-based estimates of when the climate has changed over recent millennia will have to be reconsidered. Forams are not the only clocks used to date such transitions—tree rings, ice cores and so on also play a part—but they are important. Moreover, as the results cited above suggest, it is not simply a matter of applying a proportional correction to the existing estimates. In those cases, the translucent shells had similar apparent ages while the opaque ones did not. On the other hand, this work does suggest a way to get around the problem in future, namely by concentrating analysis on translucent shells alone. + +Ms Wycech’s and Dr Kelly’s work also raises the question of how reliable the oxygen-isotope-ratio data are. With luck, in their case, there will be no problem, for the ratio in foram shells reflects that of the oxygen atoms in the water of the ocean at the time those shells were formed. Any leakage from the surrounding ooze would thus be likely to have had the same ratio. It would, though, be worth checking. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21702167-tiny-fossils-used-date-rocks-may-not-be-accurate-clocks-once-believed-shell/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Oncology + +Fast thinking + +How to starve a cancer without starving the patient + +Jul 16th 2016 | From the print edition + + + +A GENERAL besieging a city will often cut off its food supply and wait, rather than risking a direct assault. Many doctors dream of taking a similar approach to cancer. Tumours, being rapidly growing tissues, need more food than healthy cells do. Cutting this off thus sounds like a good way to kill the out-of-control cells. But, while logical in theory, this approach has proved challenging in practice—not least because starvation harms patients, too. + +In particular, it damages cells called tumour-infiltrating lymphocytes (TILs) that, as their name suggests, are one of the immune system’s main anti-cancer weapons. Valter Longo of the University of Southern California, in Los Angeles, however, thinks he may have a way around this problem. As he and his colleagues write in a paper in this week’s Cancer Cell, they are trying to craft a diet that weakens tumours while simultaneously sneaking vital nutrients to healthy tissues, TILs included. + +Dr Longo first used starvation as a weapon against cancer in 2012. In experiments on mice, he employed it in parallel with doxorubicin, a common anticancer drug. The combination resulted in the animals’ tumours shrinking by an average of four-fifths, as opposed to a half if they were dosed with the drug alone. No one, though, was willing to follow this experiment up by starving people in the same way. The consensus was that this would be too risky. That led Dr Longo to think about how he might mimic the benefits of starvation while minimising its problems. The result is a diet rich in vitamin D, zinc and fatty acids essential to TILs’ performance, while being low in the proteins and simple sugars that tumours make ready use of. + +To test this diet’s efficacy, Dr Longo and his colleagues injected 30 mice with breast-cancer cells. For the first two days after the injections they fed these mice standard rodent chow, composed of 25% protein, 17% fat and 58% simple sugars and complex vegetable carbohydrates. This contained 3.75 kilocalories of energy per gram. They then put ten of the animals onto a transition diet of 1.88 kilocalories per gram for a day before switching them to the near-starvation diet. Besides its special ingredients this consisted of 0.5% protein, 0.5% fat and 99% complex carbohydrates that would be of little value to cancer cells. + +The mice remained on their meagre commons for three days before being returned to standard rodent chow for ten days and then put through the cycle again. Another nine mice, chosen from the original 30 as controls, were starved for 60 hours (the maximum feasible without endangering lives) every ten days but otherwise kept on normal chow. And the remaining ten (one of the originals had died) were fed the chow continuously. + +When the team terminated the experiment, they found that both the rodents which had been starved and those which had been fed the special diet developed tumours which were only two-fifths of the size of those found in the mice on the ordinary diet. Encouraged by these results, Dr Longo ran the experiment again, but with the addition of doxorubicin. The results were impressive. In combination with the special diet, doxorubicin drove tumours down to a quarter of the size of those found in control mice—close to the reduction he had reported in 2012. + +To work out what was happening at the cellular level, the team collected samples of breast-cancer tissue from the mice in the re-run experiment and scanned these for TILs. They found that, while such cells were indeed present in the tumours of mice fed ordinary chow, there were 70% more of them in the tumours of mice given doxorubicin alone, 80% more in those of mice that were on the special diet alone and 240% more in mice that had been given both therapies. + +A follow-up experiment revealed at least part of what was going on. An enzyme called haeme oxygenase-1, which helps regulate immune responses, turned out to be protecting tumours from the attention of TILs in mice on the normal diet. Dr Longo’s diet seems to suppress this enzyme’s production in a tumour—and that encourages TILs to accumulate. Add in the drug, and the tumour faces a two-pronged assault. Further work by the team suggests this approach also works on melanoma, a particularly aggressive form of skin cancer. A siege mentality can pay off. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21702169-how-starve-cancer-without-starving-patient-fast-thinking/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Electric aircraft + +Extra thrust + +Another stage on the journey to battery-powered planes + +Jul 16th 2016 | From the print edition + + + +THIS aeroplane may not look special, but it is. Its airframe is that of a 330L, an aerobatic craft built by Extra Flugzeugbau of Dinslaken, Germany. It is propelled, though, by an electric motor built by another German company, Siemens. + +Electric aircraft are, as it were, in the air—with projects like the Solar Impulse, a sun-powered plane about to complete a round-the-world flight, and Antares, a motorised glider. But the 330LE, as it is dubbed, is the first to have an airframe already certified for sale and also the first (other than motorised gliders) to use an electric engine its makers plan to have certified as well. The 330LE’s initial public outing, on July 4th, was thus a step forward for the field. + +The motor itself weighs a mere 50kg. That compares with 201kg for the 9,550cc, six-cylinder device a 330L normally sports. Batteries are not included, however, and that makes a bit of a difference—for the batteries required weigh 150kg each, and two are needed. One sits conveniently in the liberated space in the engine compartment, but the second has to be strapped to the co-pilot’s seat. For this and other reasons, the plane’s pilot (and Extra Flugzeugbau’s founder), Walter Extra, did not attempt any of the fancy aerobatics for which the 330L is renowned on his ten-minute proving flight. + +The limited duration of Mr Extra’s flight was determined by a need not to drain the batteries—which, combined, have only about 20 minutes’ worth of juice in them. But that does not bother Siemens. Battery technology is improving rapidly and Frank Anton, head of the firm’s eAircraft programme, believes it will quickly become powerful enough to sustain Siemens’s ambition to build, by 2030 and in collaboration with Airbus, a pan-European company, a hybrid-electric regional aircraft with 60-100 seats. + +Depending on how the power used to charge the batteries is generated, such a craft could help reduce carbon-dioxide emissions. A more certain environmental benefit, though, would accrue to those living near airports—for one particularly desirable feature of electric motors is that they are almost silent. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21702170-another-stage-journey-battery-powered-planes-extra-thrust/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Fishing + +Unbalancing the scales + +Poor management of fisheries is not a local problem. It extends to the entire ocean + +Jul 16th 2016 | From the print edition + + + +THE high seas are a lawless place. That is no metaphor. Beyond the jurisdiction of governments, beyond even the United Nations Convention on the Law of the Sea (UNCLOS), which was agreed in 1982 and came into force in 1994, they have been subjected to few laws over the centuries besides the prohibition of piracy and slave-trading, and the regulation of submarine cables and pipelines. + +In 2001, though, they became a little less lawless. That was the year the United Nations’ Fish Stocks Agreement (UNFSA) came into effect. The UNFSA tried to impose some order on high-seas fishing, an activity not previously considered to matter enough for people to care about it. + +Fishing beyond those parts of the ocean within 200 nautical miles of land, codified by UNCLOS as exclusive economic zones (EEZs), began about six decades ago. It ramped up in the late 1970s when Australian and New Zealand vessels started casting their nets specially for deepwater species. Other countries have now joined and overtaken them (see chart). + + + +Though the fuel needed to get to the high seas is pricey, taxpayers often pick up part of the tab in the form of government subsidies. Such subsidies, combined with overexploitation of fisheries closer to land, have made the high seas attractive to fishermen. The consequence, according to the UN’s Food and Agriculture Organisation, is that they, too, are being pillaged. Already, two-thirds of their stocks are being fished beyond sustainable limits and, as they once provided a haven for fish everywhere, yields in EEZs are suffering, too. + +The UNFSA attempts to regulate high-seas fishing through clubs called Regional Fisheries Management Organisations (RFMOs). The 17 RFMOs set rules supposed to be binding on member countries (unlike about 50 other fisheries bodies which mainly provide advice). Some are confined to EEZs. But those that do extend their remit to the high seas attempt to protect two groups of fish. The first are straddling stocks, species such as cod, halibut and pollock whose habitats, and therefore populations, stretch beyond EEZs into the high seas. The second are migratory animals such as tuna and swordfish, which travel long distances between feeding and breeding grounds. + +RFMOs’ decisions about how much fishing to allow are supposed to be guided by ecological reality. The overall health of an area’s stocks, for example, is often assessed by working out how many of a species there would be in that area if there were no fishing at all (a quantity known as its unfished biomass), and then estimating how far short of this level stocks currently fall. In an active fishery, they obviously will fall short of it, but the optimal shortfall is shown by a second number, the maximum sustainable yield. This is the peak crop that can be taken from a fishery, year after year after year. + +The old plans and the sea + +Translating these numbers into fishing practice can be hard. For example, two species with the same unfished biomass may, because of their ways of life, be under different levels of strain from net-casters. Fishing optimally for one might threaten the other. But data on by-catch—species netted that are not a boat’s main quarry—which would illuminate such differences, are difficult to come by, for countries are often loth to share them. + +Moreover, even if data are true, actions based on them may be questionable. In 2014, for example, an RFMO called the Inter-American Tropical Tuna Commission reduced the bluefin-tuna catch in its jurisdiction from 5,500 tonnes a year to 3,300 tonnes. That sounds like common sense, but the cut recommended by the commission’s scientific advisers was to 2,750 tonnes, so the species is still at risk. + +Tuna seem particularly vulnerable to this sort of thing. Since 2010, the fraction of tuna stocks regarded as over-exploited has risen from 28% to 36%. Sometimes, indeed, matters descend into farce. In 2015 the International Commission for the Conservation of Atlantic Tunas, another RFMO, agreed to a 23% reduction in the quota for the Atlantic bigeye tuna after warnings from its scientists. But this will help little, for the species is now so rare that catches had fallen below the newly approved level when the change was promulgated. + +There are some signs of progress. In May another RFMO, the Indian Ocean Tuna Commission, adopted tighter rules to help ailing skipjack-tuna stocks. This, according to Mireille Thom, a marine-policy specialist at the World Wide Fund for Nature, a global conservation charity, was the first time a body responsible for tuna has acted to prevent a stock from collapsing, rather than reacting to its collapse. + +Skipjacks and their kin are migratory species. The state of straddling stocks can be even harder to determine. No one has reliable information on how they fare in the western central Pacific, the eastern and western central Atlantic and the Indian oceans. Some RFMOs attempt to act responsibly amid the murk anyway. The Southeast Atlantic Fisheries Organisation has imposed catch limits on certain species, such as orange roughy, armourhead and cardinal fish, although how much these are exploited is unknown. And many RFMOs say they want to care for marine ecosystems, even if their translation of that intention into action is patchy. + +Possibly, they could learn lessons from one other organisation that has high-seas jurisdiction, the Commission for the Conservation of Antarctic Marine Living Resources. This was established by international convention in 1982 and has 25 members. It was set up to prevent a repeat, in the late 20th century, of the unfettered ravaging of Antarctic wildlife (especially whales and seals) that characterised the 19th and early-20th centuries. + +Under the commission’s aegis, reported catches of krill, Antarctic toothfish and other species of the Southern Ocean have fallen to a third of their levels in the 1980s and 1990s. That has been achieved by the long-term closure of certain areas to fishing efforts directed at particular prey, such as toothfish. This ensures that wildlife have enough food. The Ross Sea alone is home to almost 30,000 pairs of emperor penguins and 21,000 minke whales. + +Even the Antarctic commission, however, struggles at times. For example, China and Russia oppose efforts to create the world’s largest marine reserve in the Ross Sea. Like an RFMO, the commission is only as strong as its most reticent members. Better data-gathering and greater sharing of the information discovered should at least make such reticence harder to justify. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21702168-poor-management-fisheries-not-local-problem-it-extends-entire/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +America’s conservatives: Seeking a way forward + +J.M.W. Turner: Industrious genius + +South Sudan: From hope to horror + +The death penalty in Pakistan: Flowers from the muck + +Peeping Toms: Too much information + +Johnson: War of words + +Johnson: Correction: A Worcestershire lad + + + + + +Articles Sections Next + +America’s conservatives + +Seeking a way forward + +Republicans used to produce big ideas. They have not yet regained that habit + +Jul 16th 2016 | From the print edition + + + +The Fractured Republic: Renewing America’s Social Contract in the Age of Individualism. By Yuval Levin. Basic; 272 pages; $27.50 and £18.99. + +PARTY conventions are built around set-piece speeches given from the main stage at a time when middle America, that mythical place, is settling down after dinner to watch the news. Delegates usually hear from the party’s previous nominee, from a rising star, from the candidate’s spouse and then, on Thursday night, from the candidate. In theory, what that candidate says will bear some relation to the ideas discussed, papers published and data marshalled by the wonks who populate the fringe meetings that take place at the convention, unseen by TV cameras, where health-care costs and optimal tax rates may be debated. This year’s Republican convention will be different. The party is running an experiment to see what happens when the nominee’s ideas on almost everything contradict those of the party’s professional intellectuals, those people who write newspaper columns or work in think-tanks clustered between Dupont Circle and K Street in Washington, DC. + +Yuval Levin, a White House staffer under George W. Bush, editor of National Affairs and fellow of the Ethics and Public Policy Centre, is a prominent member of a tribe within this tribe—the self-styled “reformicons” who delight in borrowing ideas from different political traditions and giving them a conservative spin. Mr Levin’s first steal is in the subtitle of his new book, “The Fractured Republic: Renewing America’s Social Contract in the Age of Individualism”. The notion of the social contract was popularised by Rousseau, whose prose inspired generations of left-wing European revolutionaries just as conservatives were about to be guillotined. + +“Life in America”, Mr Levin begins, “is always getting better and worse at the same time.” Both political parties are in the grip of overpowering nostalgia for the mid-20th-century moment. For Republicans, this was a time of stable marriages, respect for authority and economic dynamism. For Democrats, it was a time when a man could leave high school at 16 and walk into a well-paid job, with pension and health-care benefits, which would allow him to support a family and retire comfortably. With it came a high degree of consensus on what was right for the country, partly because everyone was watching the same nightly news broadcasts. + +Yet, as Mr Levin writes, though there was much to like about this land of ice-cream sundaes, sports coats and cars with tail fins, the nostalgic picture of post-war America is conveniently partial. It forgets that much of the rest of the world was in ruins after the end of the second world war, clearing the field of competition in the economic sphere, or that the spectre of nuclear annihilation was ever-present. + +It looked rather different to women with little chance of a career beyond the typists’ pool, or to African-Americans forced to the back of the bus. Even those who benefited from this arrangement between the races and the sexes frequently found the conformity of mid-century America stifling. + +Feminism, the civil-rights movement and economic progress in other countries swung a wrecking-ball at the edifice. To regret its collapse, as both parties sometimes do, is also to wish those improvements had never happened, which is absurd. Mr Levin argues that the nostalgia he sees everywhere in politics reflects a longing for childhood on the part of the baby-boomer generation, a cohort whose size handed it a cultural clout not enjoyed by any other. “Our political, cultural and economic conversations today overflow with the language of decay and corrosion, as if our body politic is itself an ageing boomer looking back upon his glory days.” + +If ditching nostalgia is the first step in building a new kind of conservatism, what comes next? Mr Levin, borrowing from Edmund Burke, puts his faith in what he calls the “mediating institutions” that sit between families and the state: churches, unions, charities. Only these, he thinks, can reconcile a fragmented culture with self-government. The tendency to centralise decision making in a country as divided as America makes little sense to Mr Levin, and he sees it as one of the causes of the long decline in public trust in institutions, Congress chief among them. + +Mr Levin has done conservatism a service by reining in nostalgia. His writing is precise, well-observed and witty in a sober sort of way. But he offers little on what the consequences of more decentralisation would be, or where its limits are. The form of government that Mr Levin advocates sounds very different if you are a black American in, say, Ferguson, Missouri, who is accustomed to seeing the federal government as a protector against rapacious local officials. What kind of conservatism could bring those voters on board? That is a question that will probably not be raised at the convention in Cleveland on July 18th. + +Another quibble is that the author sees gay marriage as something foisted on religious America by secular America, downplaying the changes in attitudes that he observes so keenly elsewhere in the book. There is no mention of climate-change, guns, or race and policing. These may be preoccupations of the left, but a broad kind of conservatism ought to have something to say about them. Nor is there mention of Donald Trump. In Mr Levin’s telling, all the threats to conservative values come from the left. Yet if the Republican nominee gets his way, Mr Levin and his fellow reformicons may eventually be forced to conclude that their ideas stand a better chance in the hands of centre-left politicians. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702157-republicans-used-produce-big-ideas-they-have-not-yet-regained-habit-seeking-way/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +J.M.W. Turner + +Industrious genius + +A highly readable life of England’s finest painter + +Jul 16th 2016 | From the print edition + +Mysterious visionary + +The Extraordinary Life and Momentous Times of J.M.W. Turner. By Franny Moyle. Viking; 508 pages; £25. To be published in America by Penguin in October. + +NEITHER old admirers nor recent converts can seem to get enough of J.M.W. Turner. Franny Moyle’s biography, the latest of many in recent decades, is a fat, satisfying popular history of the man who was arguably Britain’s greatest painter. The book-jacket goes further, declaring Turner to be the world’s most famous landscape painter. Turner himself would have disagreed. His hero was Claude Lorrain, a 17th-century French landscape painter. Ms Moyle says he wept on seeing a painting by Claude on a subject that he had also tackled: “I shall never be able to paint anything like that picture,” he said. + +Turner eventually outshone his hero by taking advantage of his momentous times. He quickly absorbed the importance of the Industrial Revolution, and was inspired by it. In his last 20 years, says Ms Moyle, he allowed himself to be himself, experimenting with colour and drawing inspiration from landscape. Magnificent works such “Rain, Steam and Speed” and “The Fighting Temeraire” being towed to the breaker’s yard by a steam tug (both hanging in the National Gallery) were the work of an adventurous and energetic painter. William Makepeace Thackeray thought the “Temeraire” was “as grand a painting as ever figured on the walls of any academy”. + +Ms Moyle has not written academic art history; she is entertaining on Turner’s life and good on his times. Of humble beginnings, he was a prodigy who first showed his work, aged 15, at the annual exhibition of the Royal Academy (RA). He was canny, too, making sure of his place as an academician at the RA, both to enhance his social position (he needed aristocratic endorsement to succeed), and to provide an acceptable floor price for his work. + +That price rose steadily. He was able to open an account at the Bank of England at the age of 19, and his fortune only grew. His clients were aristocrats and wealthy industrialists. In his middle years, he was in such demand that he could open a gallery in Queen Anne Street to sell his work. Before his death in 1851, an American collector offered the unheard of sum of £5,000 for the “Temeraire”, but the old man did not need the money, and kept the painting for himself. In search of new subjects, he became a tough and dedicated traveller, going by foot and donkey down German rivers, and across the French Alps, and to Venice, which he painted in gold, white and blue to reflect “a melancholic delicacy”. + +When not playing politics at the RA, Turner was deeply private, especially about his romantic life. Victorian critics thought him “squalid, seedy and eccentric”, in Ms Moyle’s words. He relished the company of women, and his notebooks contained erotic sketches as well as landscapes. Initially, he lived with Sarah Danby, the widow of a composer. They had one child. A second child may well have been born to Hannah, a relation of Sarah’s who was his housekeeper. He later found himself with Sophia Booth, his landlady in Margate, which he had regularly visited during his adolescence. When his health began to fail, he and Sophia moved into an insalubrious street in Chelsea, where neighbours thought he was a sea captain. + +Turner died there. His friends tried to keep his second home with Sophia secret in the belief that the publicity would destroy his reputation. It survived long enough, however, for the grand funeral that the barber’s son from Maiden Lane in Covent Garden had always hoped for to take place in St Paul’s Cathedral. He had richly deserved it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702159-highly-readable-life-englands-finest-painter-industrious-genius/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +South Sudan + +From hope to horror + +Jul 16th 2016 | From the print edition + + + +South Sudan: The Untold Story from Independence to Civil War. By Hilde Johnson. I.B. Tauris; 304 pages; $35 and £20. + +HILDE JOHNSON is a Norwegian former minister for international development who became head of the UN mission in South Sudan when it gained independence in 2011. Two years after leaving the capital, Juba, she has written an account of the challenges she faced and tries to explain how the world’s newest country spiralled from hope to civil war. “South Sudan” is packed with riveting detail, but mostly shows how badly international actors, including Ms Johnson herself, have misjudged their roles in South Sudan. + +The first time this reviewer met the author, she was living in a hotel in the centre of Juba. The special representative of the UN secretary-general had resisted living within the confines of a UN base. Ms Johnson said that she wanted to live among the South Sudanese. Her ambition was admirable, but misjudged; most South Sudanese live in mud-walled huts, as opposed to a several-storey hotel with room service and a working lift. + +A large part of Ms Johnson’s mission was to work with the country’s many different actors. As she documents in detail, she routinely met senior government and military figures, advising, entreating, cajoling. Ms Johnson saw her role as head of the UN mission as personal. “They never lie to me. They know that I know them too well,” she said of the generals leading the Sudan People’s Liberation Army (SPLA), the rebel movement that became the fledgling nation’s regular army. But lie they did. Over and over again. In retelling the history, the author seems as blind to this as she is dogged in her biases, making frequent mentions of “freedom fighters”, “comrades” and “cadres”. + +Her book also reaffirms a narrative that has long been favoured by the country’s gatekeepers—a tight network of Western academics and their humanitarian and defence advisers, as well as their affiliated figures within South Sudan. It is a narrative that resists naming names in connection with atrocities and corruption, and downplays or even suppresses the role of ethnicity in the mayhem of the past three years. + +It also fails to grasp the way that South Sudanese leaders perceive the UN and its biggest supporters—America, Norway and Britain. Earlier this month, as violence escalated, a state-affiliated group, the Red Army Foundation, posted on Facebook a call for the public to “resist” plans by the UN to “invade South Sudan” and “overthrow the government”, suggesting that the Western presence is seen as far less idealistic than its leaders might believe. + +Ms Johnson closes her book with a plea for still more international engagement to “save South Sudan” so that “the next generation of South Sudanese leaders” can “finally build the country their people dreamt of. Only then can South Sudan rise as a nation.” Her plea is admirable, but again misplaced. The real question is how the “nation”, as perceived by the SPLA and its Dinka leadership, deals with other ethnicities. Heavy fighting broke out in Juba on July 7th. Tens of thousands have been displaced. Two Chinese peacekeepers are among the more than 300 said to have been killed in five days of fighting. Civilians who sought protection inside UN bases have also died. The corpses are decomposing, and there is no way to transport them to a morgue. So they will be buried there, inside the perimeter fencing where the UN had sought to protect them. And so the bloodshed continues. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702158-hope-horror/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The death penalty in Pakistan + +Flowers from the muck + +A well-observed account of Pakistan’s death penalty and how it works + +Jul 16th 2016 | From the print edition + +Shackled to the system + +Trials: On Death Row in Pakistan. By Isabel Buchanan. Jonathan Cape; 264 pages; £16.99. + +PAKISTAN’S death row is one of the grimmest places on earth. The sordid conditions of its condemned—stowed away for decades, eight men to a 120-square-foot cell, sustained on filthy gruel and constantly recontaminating one another with disease—are the least of its horrors. When this book begins in 2013, an estimated 8,000 people were awaiting execution. A former minister estimates that two-thirds were innocent. “Trials” is about a foreign lawyer’s plunge into this swirling injustice. The surprise is the flowering of virtue that she finds at its centre. + +Isabel Buchanan was somehow drawn to this mess. Just months after finishing her law degree in Scotland, she decided to learn Urdu, move to Lahore and bury herself beneath a mountain of files in a stifling room. She says modestly little about her reasons, save for a self-effacing remark about her love for Pakistani sweets. + +The first pattern to emerge is the way Pakistan’s penal system is wielded against British-raised expatriates who return to their homeland. Jealous neighbours easily suborn the police into arresting them. Ms Buchanan took up the victims’ cases to provide them with legal aid. Her guide is another crusading misfit, Sarah Belal, whom she introduces with great charm (“one of Pakistan’s least successful lawyers…unemployed, depressed” and yet glamorous). Along the way, she cobbles together a handbook to a mad system. + +Together, the two lawyers plough into a field of perversity. The police routinely begin their investigations by torturing suspects into unreliable confessions. This is so well known that Pakistan’s courts have ruled statements made in police custody to be inadmissible as evidence, unless corroborated. So the torture goes on, in co-ordination with police who plant evidence to validate the forced confessions. In one case the same man is sentenced to death twice: once by hanging, once by firing squad. But the most perverse judgments arise from an unholy hybrid of antiquated British rules and Islamic law: the law against blasphemy. An Islamist reinterpretation of sharia demands the ultimate punishment, while colonial-era criminal procedures short-circuit traditional Islamic opportunities for apologies and mercy. + +More than 1,200 people have been sentenced to death for blasphemy, but none has been executed. Ms Buchanan attributes that oddity to “a quiet, subtle act of objection” on the part of Pakistan’s higher courts, which do what they can to lessen the law’s damage. Instead, convicted blasphemers are murdered routinely outside the court system, as are those who might protect them. Yet many continue to brave the murderers’ threats. + +Other bravery shows itself through tenderness, as when an innocent prisoner devotes himself to comforting panicked men on their way to the gallows. Ms Buchanan dedicates her book to him. She manages to keep aloft several such stories at once, with a fine eye for machinery behind the scenes: like the black typewriters that judder under candlelight during a summertime blackout. + +In an elegant final chapter, Ms Buchanan makes the point that Pakistan is hardly alone in subjecting Pakistanis to inhumane treatment. Ms Belal’s ragtag team turns to arguing for the repatriation of Pakistani civilians dragged by American special forces across the border into Afghanistan and stored like meat in a locker at an American prison near Bagram. Its inmates have been denoted by serial numbers, and years of their lives have been stolen, on a mere guess that they may be terrorists. + +Eventually the courts in Pakistan agree to recognise the prisoners near Bagram as people, and Ms Buchanan gives them their due. “It was Pakistan’s legal system that championed fundamental rights where two great Western democracies [Britain and America] had denied them.” In a triumph against appearances, some Pakistanis refuse to submit to pressure to dispense with the niceties of justice. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702162-well-observed-account-pakistans-death-penalty-and-how-it-works-flowers-muck/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Peeping Toms + +Too much information + +Jul 16th 2016 | From the print edition + + + +The Voyeur’s Motel. By Gay Talese. Grove Press; 233 pages; $25 and £14.99. + +IS VOYEURISM madness, or just exaggerated curiosity? Gay Talese, a veteran American journalist renowned for investigations into the private lives of his subjects, is more qualified than most to answer. His latest book is a study of voyeurism stripped to its bare fundamentals. + +Based on a long-standing correspondence with Gerald Foos, the self-declared “World’s Greatest Voyeur”, Mr Talese tells the story of his subject’s life as owner of Manor House Motel in Colorado for nearly 30 years. Mr Foos fitted his property with an “observation platform” in the attic, complete with fake ventilator grates, enabling him to spy on his guests (often accompanied by his wife) undetected for around three decades. His interest was both sexual and “scientific”: Mr Foos would take meticulous notes as he observed the sex lives of couples in the rooms beneath him, from the suburban mother stealing lusty trysts with a doctor in his lunch hour, to the married couple and the young stud employed in their vacuum- cleaner company, to the Miss America candidate from Oakland who spent two weeks in the motel and never had sex with her husband. Mr Foos would often then masturbate, or have sex with his wife. + +“The Voyeur’s Motel” is a strange composite. It has, in effect, two authors with distinct agendas. Mr Talese is interested in voyeurism and its moral implications. Mr Foos, who first confided in Mr Talese in 1980 and over three decades later gave the writer permission to go public with his story, believes himself to be a “pioneering sex researcher”. He explicitly places his journal and statistical records in the tradition of William Masters and Virginia Johnson, themselves pioneering sexologists. Mr Foos considers himself to have performed three decades of public service, and now seeks recognition. + +Shortly before publication, the Washington Post found that Mr Foos had not owned the motel for the whole period he claimed to have had access to it. Mr Talese seemed to disavow the book, then to disavow his disavowal (probably under pressure from his publishers). If the primary value of “The Voyeur’s Motel” lies in its veracity, or, as Mr Foos might like, as a sexual history of post-war America, this flip-flopping might render it worthless. In fact, it adds a layer of intrigue. The problem for the reader, though, is that this is an exercise in exhibitionism as much as a study of voyeurism. Even if Mr Foos’s tale is broadly reliable, it is unsettling that he has been given a platform. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702160-too-much-information/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +War of words + +Women are judged by the way they speak + +Jul 16th 2016 | From the print edition + + + +FEMALE politicians are easily labelled: from the battle-axe to the national mum. Everything they do contributes to the media’s desire to pop them into ready-made boxes, whether it’s their hairstyle, clothes or shoes. But the way they speak, the main task of politicians everywhere, is the most important source of their influence and the biggest potential pitfall. How women leaders talk to voters and each other is soon to get more scrutiny than ever, with Britain’s new prime minister, Theresa May, joining Angela Merkel as two of the most powerful leaders in Europe, and perhaps soon to be ranked with President Hillary Clinton at international summits. The pitfalls for women’s political language come at every level, from tone of voice to word-choice to the topics of conversation to conversational styles. + +Authority, for example, is linked to male voices. A study in 2012 showed that a bland political slogan, digitally altered to make it deeper, was more appealing to voters, no matter whether the voices—or the voters—were male or female. This hardly needed experimental proof, however. Margaret Thatcher took elocution lessons in the 1970s as she prepared to become the Conservative Party’s leader and ultimately prime minister. A surprisingly girlish voice from the 1960s became a commanding and much-admired tone during her premiership. + +It is not only tone, but variation in tone, that matters. Pitch with a wide band of variation signals emotion. Men who vary their tone are rarely punished for doing so. Mark Liberman, a linguist at the University of Pennsylvania, compared seven Republican presidential candidates’ speeches and found one contender, Rand Paul, to have the most varied pitch. Yet he is not called “emotional”. But for women, variation in tone matters. Mrs Merkel, whose country has come to distrust charismatic leadership and highly personalised debate, rarely varies the pitch of her deep voice, and is known, for her calm, as Mutti, or mum—in this case at least, a mostly admiring label. + +Mrs Clinton, an experienced and articulate politician, has a calm and capable delivery in small settings. But she is less comfortable on the stump, especially in the current hot-and-bothered American political climate, where a politician is expected to signal that they are mad as hell and not going to take it any more. When Mrs Clinton attempts this, with her voice high and loud at its peaks, she is called “shrill” and “hectoring”, while her laugh is a “cackle”—words rarely aimed at men. + +Another tightrope women must walk is topic. Interviewers rarely ask men about being a man in politics, or their role as husbands and fathers. Women leaders face this regularly, and it can be a trap. Andrea Leadsom, who hoped to defeat Mrs May and become prime minister, was undone partly by a newspaper interview in which she spoke at length about the importance of having children to her candidacy. This was taken as a swipe at the childless Mrs May, and the hapless Mrs Leadsom was soon out of the race. + +Women must also beware of pushing back too hard on the sexist culture they face, or risk being labelled as humourless feminists. Type the name of Julia Gillard, Australia’s prime minister from 2010 to 2013, into Google and the search engine will quickly suggest “Julia Gillard misogyny speech”, a fiery denunciation of old-boy sexism she gave in 2012. The speech thrilled admirers, irritated opponents and made her name around the world. But the true feminist triumph will be when women leaders are remembered more for being leaders than for being women. + +Finally, there is the issue of how women interact with others. The more “male” a woman behaves in a leadership setting, the more authority she gains—but stacks of research have shown that this comes with a loss of likeability among both women and men. It is hard to be both tough and likeable, but it can be done: Deborah Cameron and Sylvia Shaw, two British academics, analysed the 2015 general-election debates, and found that Nicola Sturgeon, the Scottish Nationalists’ leader, interrupted most among the seven participants. Interrupting is a quintessentially male tactic—the kind of thing women are punished for—but her performance won rave reviews. Ms Cameron notes that Ms Sturgeon moves comfortably between cut-and-thrust debate, statesmanlike speech and warmth. Most politicians are lucky to be good at just one of these, but women must be especially agile to avoid falling into a stereotyped box. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702161-women-are-judged-way-they-speak-war-words/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Correction: A Worcestershire lad + +Jul 16th 2016 | From the print edition + +We wrote (“A Worcestershire lad”, July 9th) that A.E. Housman had gone to “the local grammar school”, but it had long been private. Sorry. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702163-correction-worcestershire-lad/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Michael Cimino: The price of perfection + + + + + +Articles Sections Next + +Obituary: Michael Cimino + +The price of perfection + +Michael Cimino, a film-maker who tasted both triumph and disaster, died on July 2nd, aged 77 + +Jul 16th 2016 | From the print edition + + + +WHAT people did not understand about him, Michael Cimino said—briefly emerging in 2005 from his seclusion in Los Angeles—was that he was not a film-maker. He had read one book on film-editing, but never got to the end of it. His training consisted of going to the movies every week with his grandmother, and getting the feel of a Movieola camera when he went to New York to make commercials. The fact that he ended up directing seven films was a mystery and a wonder to him. + +And to others. With only his second film, “The Deer Hunter”, a story of three steelworkers before, during and after their service in Vietnam, he became a star; in 1979, it won five Oscars. America’s most humiliating war had not been touched before; the film proved emotionally devastating. But his third, “Heaven’s Gate” (1980), a vast narrative of struggle between cattle barons and immigrants in late-19th-century Wyoming, was the biggest flop in Hollywood history. Its 1.3m feet of film were edited to five and a half ravishing, snail-paced hours. It cost $44m, 300% over budget, and almost sank United Artists. He withdrew the film after a week, with no regrets, though it had cost his reputation; he had wanted to make the best Western ever and, in his view, he had. + +He spoke as an artist. A precocious one, who at the age of five could draw perfect portraits. A student of art, who had studied painting and architecture at Yale. His chief influences, he proudly said, were Degas, Kandinsky and Frank Lloyd Wright. His predilections showed in the way he placed extras in his shots, as though painting them in; the way he favoured interiors with shafts of light playing through smoke, as Caravaggio might have done; his love of big choreographed dance scenes, in which swirling human beings built a structure of beauty; his habit of driving thousands of miles to find just the right range of mountains, or line of trees, to frame his shots; his readiness to wait, for hours if necessary, for the right cloud to appear. + +In pursuit of perfection he did everything himself, including the screenplays and, he claimed, the photography. He wanted to inspire such total belief that the screen would be demolished and the audience transported. He insisted on location shooting because he believed, as firmly as native Americans did, in a spirit of place that could change the texture of a film (a theme he developed in “Sunchaser” (1996), his last work). And he would go on, obsessively on, until he was satisfied. + +UA should have known this when in 1978 they allowed him to make “Heaven’s Gate”. He was already a slow worker in his commercial days, taking an infinity to provide a minute of stunning visuals for Kodak or Pepsi-Cola. When Clint Eastwood gave him his first big break to direct “Thunderbolt and Lightfoot”, a buddy movie, in 1973, his finnickyness was forever bumping against Clint’s impatience. He even spoke slowly, as if with effort, from behind near-perpetual sunglasses and a glossy-smooth tan, and walked slowly, in stacked Western boots that gave his small body an air of Napoleonic command. On set once, needing some wind, he raised his hand; and the wind, from nowhere, blew. + +The burning fiery furnace + +“The Deer Hunter” also went over-schedule and over-budget. The search for authenticity led Mr Cimino to use eight locations for Clairton, the fictional town at the film’s heart; to put his actors on the furnace floor of a real steelworks, and make a wedding last for a real hour; to strip leaves from trees, paint them orange and reattach them, in order to make summer autumn; to shoot the Vietnam scenes in Thailand, deliberately on the River Kwai; to make his actors really slap each other, jump out of helicopters and fall into waters full of live rats, for as many as 50 takes. He drew the best out of his devoted cast, and it cost $15m. + +This came to seem a pittance. “Heaven’s Gate”, “the real West, not the fake West”, required an even higher pitch of perfection, including the restoration of a buggy at workshops in three states; the building of an irrigation system under a wide area of prairie to make it lushly green for the climactic battle scene; the training of the cast in rifle-shooting, horse-riding, roller-skating and Slavic accents, and the demolition of a street in order to rebuild it a mere six feet wider. UA tried to rein him in. He refused to speak to them or let their people on set and, once the film was in the can, edited it behind barred windows and locked doors. + +After the debacle, with critics cold and studios no longer wanting him, his quest for perfection turned inward. His mouth was too small, his cheeks too plump; LA cosmetic surgeons turned him into an unrecognisable waif. His career seemed over, but he was writing novels, which the French liked, and noting that his new cut of “Heaven’s Gate”, released on DVD in 2013, was murmured by some to be a masterpiece. He said he was never happier. After all, he had never aimed to be a film-maker. + +A mountain of unproduced scripts remained in his house. They included adaptations of “Crime and Punishment” and Malraux’s “La Condition Humaine”. His favourite, worked on for decades, was Ayn Rand’s “The Fountainhead”: the story of an architect ready to destroy all he had built rather than betray his perfect vision. Truly he had been there, and done that. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21702145-michael-cimino-film-maker-who-tasted-both-triumph-and-disaster-died-july-2nd-aged-77/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Food prices + +Markets + + + + + +Articles Sections Next + +Output, prices and jobs + +Jul 16th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21702200-output-prices-and-jobs/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Jul 16th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21702201-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Jul 16th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21702197-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Food prices + +Jul 16th 2016 | From the print edition + + + +The Economist’s food-price index has jumped by 8% over the past three months, propelled in large part by the rising price of soyabeans (soya-related products make up 27% of the index). Heavy flooding in Argentina, the world’s largest soyabean-meal exporter, has reduced supplies. Growing demand in China, where the meal is used as animal feed, has also driven up prices. Promising growing conditions in America have helped temper the rally recently. The price of sugar has also been on an upward trajectory, rising by 33% since April. Wet weather in Brazil has reduced the amount of recoverable sugar per tonne of cane. Reports of record yields of wheat in America have pushed its price down. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21702199-food-prices/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Jul 16th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21702198-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Fri, 15 Jul 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Election 2016: The dividing of America + + + + + +Britain’s new prime minister: May time + + + + + +The South China Sea: Come back from the brink, Beijing + + + + + +Deutsche Bank: A floundering titan + + + + + +Marine management: Net positive + + + + + +Letters + + + +On Zimbabwe, the Chilcot report, urban sprawl, companies, Africa, Brexit: Letters to the editor + + + + + +Briefing + + + +The Republican Party: Past and future Trumps + + + + + +United States + + + +Race in America: Progress and its discontents + + + + + +Policing and race: Quantifying Black Lives Matter + + + + + +Fishing: All about the bass + + + + + +Lexington: Homeopathy politics + + + + + +The Americas + + + +Tierra del Fuego: The tax haven at the end of the world + + + + + +Bello: Let’s sue the conquistadors + + + + + +Asia + + + +Japanese politics: Diet control + + + + + +Japan’s Emperor Akihito: The long goodbye + + + + + +Australia’s election: Squeaking back in + + + + + +Kashmir violence: After the funeral + + + + + +Cambodia: Murder most murky + + + + + +Taiwanese identity: Hello Kitty, goodbye panda + + + + + +China + + + +The South China Sea: Courting trouble + + + + + +Middle East and Africa + + + +Land ownership: Title to come + + + + + +Mozambique: Fishy finances + + + + + +Zambia: Cry press freedom + + + + + +Israel’s prime minister: The law looms larger + + + + + +Egyptian bureaucracy: A movable beast + + + + + +Europe + + + +Macron and France’s presidential election: L’internationaliste + + + + + +Ireland’s economic statistics: Not the full shilling + + + + + +The EU-Canada trade deal: Fear of the maple menace + + + + + +Spain, Gibraltar and Brexit: Rock out + + + + + +Charlemagne: Single-market blues + + + + + +Britain + + + +Britain’s political landscape: The irresistible rise of Theresa May + + + + + +The Labour Party: Twist or split + + + + + +The civil service: Building the Brexit team + + + + + +Defence: The nuclear option + + + + + +The economic impact of Brexit: Straws in the wind + + + + + +The immigration paradox: Explaining the Brexit vote + + + + + +Bagehot: Travels in Theresa May country + + + + + +International + + + +Buying drugs online: Shedding light on the dark web + + + + + +The World If + + + +If Donald Trump was president: The world v the Donald + + + + + +If the North Korean regime collapsed: Night and day + + + + + +If states traded territory: A country market + + + + + +If financial systems were hacked: Joker in the pack + + + + + +If China embarked on mass privatisation: The greatest sale on Earth + + + + + +If economists reformed themselves: A less dismal science + + + + + +If the ocean was transparent: The see-through sea + + + + + +If computers wrote laws: Decisions handed down by data + + + + + +If we all had personal drones: Prone to disaster + + + + + +What if Germany had not reunified?: A German question + + + + + +Business + + + +The future of television: Cutting the cord + + + + + +Video games: I mug you, Pickachu! + + + + + +Diagnostics: Red alert + + + + + +Fads in corporate architecture: Putting on the glitz + + + + + +Indian conglomerates: Sell me if you can + + + + + +Defence firms: Rocketing around the world + + + + + +Corporate philanthropy in China: The emperor’s gift + + + + + +Schumpeter: Be nice to nerds + + + + + +Finance and economics + + + +Turkey’s economy: Sugar highs + + + + + +Buttonwood: Slow suffocation + + + + + +Deutsche Bank: In a rut + + + + + +Prosecuting financial firms: Hongkong and Shanghaied + + + + + +Temporary work: How the 2% lives + + + + + +Payouts for whistleblowers: Whistle while you work + + + + + +Free exchange: Econometrics + + + + + +Science and technology + + + +When science goes wrong (I): Computer says: oops + + + + + +When science goes wrong (II): Shell shock + + + + + +Oncology: Fast thinking + + + + + +Electric aircraft: Extra thrust + + + + + +Fishing: Unbalancing the scales + + + + + +Books and arts + + + +America’s conservatives: Seeking a way forward + + + + + +J.M.W. Turner: Industrious genius + + + + + +South Sudan: From hope to horror + + + + + +The death penalty in Pakistan: Flowers from the muck + + + + + +Peeping Toms: Too much information + + + + + +Johnson: War of words + + + + + +Johnson: Correction: A Worcestershire lad + + + + + +Obituary + + + +Obituary: Michael Cimino: The price of perfection + + + + + +Economic and financial indicators + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Food prices + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.07.23.TXT b/homeworks/B20769/homework1/data2/2016.07.23.TXT new file mode 100644 index 0000000..977831a --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.07.23.TXT @@ -0,0 +1,5428 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Economics brief + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Jul 23rd 2016 | From the print edition + + + +A faction of Turkey’s armed forces attempted a coup, but was defeated by other military units, police and crowds of civilians. President Recep Tayyip Erdogan launched a crackdown, arresting or purging thousands of military officers, judges, academics, journalists and others. The government accused Fethullah Gulen, a Muslim cleric based in America, of plotting the coup (which he denied), and sought his extradition. The EU and America warned Mr Erdogan not to crush democracy. See article . + +A Tunisian resident of France drove a lorry through crowds of pedestrians celebrating Bastille Day in Nice, killing 84. Islamic State claimed responsibility, but police found no evidence he had pledged allegiance to the group, though he had watched violent jihadist videos. The French government said it would extend the country’s state of emergency. See article. + +In Germany, a 17-year-old Afghan refugee was shot dead by police after he attacked passengers on a train with an axe, injuring five people. + +Pavel Sheremet, a muckraking journalist, was killed by a car bomb in Kiev. Working for Ukrainska Pravda, he had written exposés of government corruption in Belarus, Ukraine and Russia over several decades. Petro Poroshenko, Ukraine’s president, called for an EU inquiry into his death. + +The effort by MPs in Britain’s Labour Party to topple Jeremy Corbyn as leader intensified. To avoid splitting the anti-Corbyn vote one challenger, Angela Eagle, withdrew in favour of another, Owen Smith. However, Mr Smith soon came under pressure over his previous job working for drug companies. For a party on a mission to gain credibility, the choice between a candidate who shilled for “Big Pharma”, or a leader with rock-bottom parliamentary support, may be a bitter pill to swallow. + +In her first week as Britain’s prime minister, Theresa May cruised through a crucial parliamentary vote on the renewal of Trident, the country’s nuclear deterrent. Trips to Berlin and Paris followed, as Mrs May met Germany’s Angela Merkel and France’s François Hollande. Convincing European heads of state of her desire to achieve a mutually beneficial Brexit may prove difficult. She ruled out holding any talks this year. See article. + +Throwing his hat in the ring + + + +The Republicans held their convention, nominating Donald Trump for president. There was some mild excitement when Republicans still opposed to Mr Trump’s candidacy tried to register their protest on the convention floor. They were drowned out by rock music. Ted Cruz, a rival in the primaries, was booed off the stage when he refused to endorse him. See article. + +Mr Trump, meanwhile, said that if he were president, America would come to the aid of the Baltic states if they were invaded by Russia, only if they “fulfil their obligations to us”. Mr Trump has signalled before a lack of commitment to the NATO alliance. + +The issue of policing featured heavily at the convention following the latest shooting of police by a black gunman. Three officers were killed in Baton Rouge, Louisiana, by a former marine who lured them into an ambush close to police headquarters. See article. + +A death in the family + +Pakistan arrested the brother of a social-media star, after he confessed to killing her for the family’s “honour”, because “girls are born to stay at home.” Qandeel Baloch rose to fame by posting cheeky, politically controversial videos on Facebook. Hailed by some as a feminist, she was reviled by conservative clerics. Her brother strangled her at home. See article. + +America’s Justice Department began proceedings to seize assets involved in “an international conspiracy to launder funds” from 1MDB, Malaysia’s state investment fund. Investigators in America, Switzerland and elsewhere have been piecing together a money trail in a suspected multi-billion-dollar scam involving senior politicians. See article. + +A prominent liberal-leaning journal in China, Yanhuang Chunqiu, stopped publication after the dismissal of its senior editorial staff by the state-affiliated academy that supervised it. With support from many retired officials, the journal had often published articles at odds with the Communist Party’s line, especially on historical issues. President Xi Jinping has launched a campaign to tighten party control over the media. + +Reinforcing peace + +The African Union proposed deploying additional troops to South Sudan after recent clashes left hundreds of people dead. The proposed peacekeeping force will join the UN’s 12,000-strong mission already on the ground to maintain a tenuous peace deal signed last year. + +Meanwhile, the AU was forced to extend the term of chairman Nkosazana Dlamini-Zuma by six months, after a summit in Rwanda of African leaders failed to settle on her successor. None of the three contenders was able to attain the two-thirds majority required. + +Israel’s Knesset passed a law that will allow it to impeach any member accused of racial incitement or supporting violence against the Jewish state. Critics said the controversial law was aimed at Arab lawmakers and would harm democracy. + +Three members of the French special forces died in Libya when their helicopter was shot down by an Islamist militia. The militia claimed that French jets bombed its positions in response, raising the prospect of an escalation in fighting. + +A quick dash to the shops + + + +More than 100,000 Venezuelans, suffering from shortages of food and other basic goods, crossed the border into Colombia to buy them. This was the second time Venezuela had opened its border recently to allow its citizens to go shopping. Venezuela’s government shut the border last year because, it said, paramilitaries and criminals were crossing it to enter the country. + +Mexico enacted laws that establish a long-awaited national “anti-corruption system”, which creates independent authorities to monitor, investigate and punish corruption. Announcing the measures, Mexico’s president, Enrique Peña Nieto, apologised for his role in a scandal in 2014, in which his wife acquired a $7m house from a government contractor, but said he did not break the law. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21702519-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Jul 23rd 2016 | From the print edition + +The IMF warned that Britain’s decision in a referendum to leave the European Union had thrown a “spanner in the works”, causing widespread economic and financial uncertainty that is still unfolding. It slightly reduced its expectations for global growth this year and next, but slashed its forecast for Britain to 1.3% for 2017, from the 2.2% it had projected in April. The fund said the effects of Brexit would be felt mostly in Europe (it cut its estimate of German GDP growth next year to 1.2%) and that there would be a “relatively muted impact elsewhere”. + +China’s economy grew by 6.7% in the second quarter, the same as in the previous three months and a healthier pace than many had expected given the country’s stockmarket crash and depreciation of the yuan. Investment in infrastructure has surged and personal consumption has been strong. + +Strong ARM tactics + +SoftBank, a multinational telecoms company based in Japan, agreed to buy ARM, a British designer of smartphone chips, for £24 billion ($32 billion). ARM’s technology is licensed by Apple, Samsung and others and used in virtually all phones sold around the world. The firm is expanding rapidly into the “internet of things”. Masayoshi Son, SoftBank’s boss, announced the deal in London, where the government trumpeted it as proof that Britain was open for business following Brexit. It is the biggest-ever takeover of a European tech company. See article. + +Trying to draw a line under two years of upheaval, PIMCO, one the world’s largest bond funds, appointed Emmanuel “Manny” Roman as its chief executive. Mr Roman currently heads Man Group and is credited with turning round the hedge-fund group. PIMCO hopes he will do the same when he moves to its headquarters in Newport Beach, California. Bill Gross, its founder, known in the industry as “the bond king”, left on acrimonious terms in 2014. Assets parked in its Total Return Fund have fallen from almost $300 billion in April 2013 to $86 billion today. + +The FBI charged HSBC’s global head of foreign-exchange cash trading with fraud in a currency-trading deal. The man was arrested at JFK airport in New York shortly before he was to take a flight to London. Several big banks paid fines last year in an unrelated investigation into the rigging of currency rates. + +Disaster movie + + + +Netflix’s share price fell sharply after it reported that subscriber growth had slowed appreciably in the second quarter. A net 1.7m customers joined the video-streaming service, half the number in the same quarter last year. In America Netflix has raised its fees, which has put off subscribers; nearly all its new ones were outside the United States. Its reliance on growth from its international base looks set to continue; early next year Netflix will stream episodes of the new Star Trek series within a day of their broadcast on CBS. + +Lockheed Martin’s F-35 fighter jet, the West’s most-expensive weapons programme, helped boost its revenue in the second quarter to $13 billion and profit to $1 billion. The company is still haggling with the Pentagon over its next jet contract, but sales have taken off in Britain, Israel and Turkey. + +Monsanto rejected a second takeover bid, of $64 billion, from Bayer. It said it was open to “continued and constructive conversations”. + +A civil lawsuit lodged in New York by three states alleged that Volkswagen’s chief executive, Matthias Müller, had been aware in 2006 that some of its cars did not meet emissions-testing standards. The suit does not say that Mr Müller authorised or even knew about the software that was installed in cars to evade the tests, but it is the first time he has been named directly in relation to the scandal. He worked at Audi, VW’s luxury brand, at the time, and has denied any involvement in the wrongdoing. + +Paul Romer was appointed chief economist at the World Bank, replacing Kaushik Basu, who has held the job since 2012. Mr Romer, who currently teaches at New York University, is known for his work in endogenous growth theory and for developing the notion of “charter cities”, encouraging poor countries to create urban centres that can experiment with economic and political reforms. Unusually for an academic, he is also an entrepreneur, having created (and sold) Aplia, a homework website. See article. + +Smooth operator + +Unilever offered a reported $1 billion to buy Dollar Shave Club, a startup that has undercut its rivals in the market for razors by selling its products exclusively online, appealing to hirsute hipsters with a humorous viral-marketing campaign. Private-equity firms were also interested in buying Dollar Shave Club, but Unilever’s bid beat them by a whisker. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21702517-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Jul 23rd 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21702518-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + +Leaders + + + + + +The failed coup in Turkey: Erdogan’s revenge + +Britain’s “industrial strategy”: Open for business? + +The politics of Thailand: The generals who hide behind the throne + +Methane leaks: Tunnel vision + +Big economic ideas: Breakthroughs and brickbats + + + + + +Articles Sections Next + +The failed coup in Turkey + +Erdogan’s revenge + +Turkey’s president is destroying the democracy that Turks risked their lives to defend + +Jul 23rd 2016 | From the print edition + + + +MUCH is unknown about the attempted military coup in Turkey on the night of July 15th. Why was it botched so badly? How far up the ranks did the conspiracy reach? Were the putschists old-style secularists, as their initial communiqué suggested; or were they followers of an exiled Islamist cleric, Fethullah Gulen, as the government claims? + +But two things are clear. First, the people of Turkey showed great bravery in coming out onto the streets to confront the soldiers; hundreds died (see article here and here). Opposition parties, no matter how much they may despise President Recep Tayyip Erdogan, united to denounce the assault on democracy. Better the flawed, Islamist-tinged strongman than the return of the generals for the fifth time since the 1960s. + +The second, more alarming conclusion is that Mr Erdogan is fast destroying the very democracy that the people defended with their lives. He has declared a state of emergency that will last at least three months. About 6,000 soldiers have been arrested; thousands more policemen, prosecutors and judges have been sacked or suspended. So have academics, teachers and civil servants, though there is little sign they had anything to do with the coup. Secularists, Kurds and other minorities feel intimidated by Mr Erdogan’s loyalists on the streets. + +The purge is so deep and so wide—affecting at least 60,000 people—that some compare it to America’s disastrous de-Baathification of Iraq. It goes far beyond the need to preserve the security of the state. Mr Erdogan conflates dissent with treachery; he is staging his own coup against Turkish pluralism. Unrestrained, he will lead his country to more conflict and chaos. And that, in turn, poses a serious danger to Turkey’s neighbours, to Europe and to the West. + +One more earthquake + +The failed putsch may well become the third shock to Europe’s post-1989 order. Russia’s annexation of Crimea and invasion of eastern Ukraine in 2014 destroyed the idea that Europe’s borders were fixed and that the cold war was over. The Brexit referendum last month shattered the notion of ineluctable integration in the European Union. Now the coup attempt in Turkey, and the reaction to it, raise troubling questions about the reversibility of democracy within the Western world—which Turkey, though on its fringe, once seemed destined to join. + +The turmoil is unsettling NATO, the military alliance that underpins Europe’s democracies. Without evidence, Mr Erdogan’s ministers blame America for the coup; they have demanded that it extradite Mr Gulen, who lives in Pennsylvania, or risk Turkey turning its back on the West. Electricity to the military base at Incirlik, a hub of American-led air operations against Islamic State (IS), was cut off for a time. Were Turkey an applicant today, it would struggle to qualify for NATO; yet the alliance has no means to expel a member that goes bad. + +With the second-largest armed forces in NATO, Turkey has been the forward bastion of the West, first against Soviet totalitarianism and then against the chaos of the Middle East. In the early years of government under Mr Erdogan’s Justice and Development (AK) party, the country became the model of a prospering, stable Muslim democracy. It sought peace with the Kurdish minority, and the economy grew healthily thanks to sensible reforms. The EU opened membership negotiations with Turkey in 2005. + +But since major protests in 2013 against plans to build over Gezi Park in Istanbul, and then a corruption scandal, Mr Erdogan has become ever more autocratic. His regime has jailed journalists, eviscerated the army and cowed the judiciary, all in the name of rooting out the “parallel state” Mr Erdogan claims the Gulenists have built. As a cheerleader for the overthrow of Syria’s president, Bashar al-Assad, he turned a blind eye to the passage of jihadists through Turkey. Mr Erdogan wants a new constitution to allow himself to become an executive president, though he hardly lacks power. He has abandoned all caution to achieve it, not least by letting peace talks with the Kurds break down. Turkey now faces a double insurgency: by the Kurds and the jihadists. + +Autocrats R Us + +Handled more wisely, the failure of the coup might have been the dying kick of Turkey’s militarists. Mr Erdogan could have become the magnanimous unifier of a divided nation, unmuzzling the press, restarting peace talks with Kurds and building lasting, independent institutions. Instead he is falling into paranoid intolerance: more like the Arab despots he claims to despise than the democratic statesman he might have become. + + + +Eroding Erdogan's power: Our guide to Turkey's general elections + +Granted, the AK party has won every election since 2002. But Mr Erdogan’s view of democracy is distinctly majoritarian: though only about half of Turks vote for him, he thinks he can do what he wants. It will be principally for Turks themselves to check their president, by peacefully resisting his power grabs and backing his opponents at the ballot box. + +Turkey’s Western friends must urge Mr Erdogan to exercise restraint and respect the law. But what if he will not listen? Turkey is a vital ally in the war against IS. It controls the south-eastern approaches to Europe, and therefore the flow of everything from natural gas to Syrian refugees. Europe cannot change geography, but it can make itself less vulnerable, starting with a proper system to control the EU’s external frontiers and handle asylum-seekers. And although Mr Erdogan holds many cards, he is not immune from pressure. Just before the coup he patched up relations with Israel and Russia. + +Mr Erdogan’s greatest success—the economy—has become his weak point. Many tourists are now too frightened to visit, so the current-account deficit will only gape wider. To stay afloat the country needs foreign investment and loans, so it must reassure foreigners that it is stable. With Mr Erdogan acting like a vengeful sultan, that will be hard. + +The repercussions of the putsch will be felt for a long time. The coup-makers killed many fellow Turks, discredited the army, weakened its ability to protect the frontier and fight terrorists, rattled NATO and removed the restraints on an autocratic president. A terrible toll for a night of power-lust. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21702465-turkeys-president-destroying-democracy-turks-risked-their-lives-defend-erdogans/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Britain’s “industrial strategy” + +Open for business? + +The takeover of a British microchip-maker belies a cooling climate for foreign investors + +Jul 23rd 2016 | From the print edition + + + +THE “Silicon Fen” of tech firms on the outskirts of Cambridge is less glamorous than the California cluster after which it is nicknamed, but it has nonetheless produced some stars. The brightest of them is ARM Holdings, whose microchips power cars, drones and most of the world’s smartphones. This week’s announcement that ARM would be bought by SoftBank, a Japanese tech giant, was hailed by Britain’s new government as evidence that the country is still “open for business” following last month’s decision to leave the European Union. + +ARM’s sudden appeal to its Japanese suitor may owe something to the post-referendum slide of the pound, but the deal is welcome nonetheless. Foreign companies play a pivotal role in Britain’s unusually open economy, carrying out half of all research-and-development spending as well as raising productivity and wages in the firms they snap up (see article). Yet, despite the good news about ARM, two clouds hang over Britain’s ability to attract foreign direct investment. The new government appears to have a more interventionist approach to the economy, one that may put the brakes on similar deals in the future. And Brexit may eventually mean that there are fewer British firms worth bidding for in the first place. + +After Brexit, techxit? + +In her pitch to be prime minister, Theresa May sounded decidedly sceptical of foreign takeovers, citing past bids by food and pharmaceuticals companies that she might have blocked. In office, she has set up a ministry of “industrial strategy”, a banned phrase during the Thatcher years (see article), and floated the idea of expanding the list of sectors in which foreign takeover bids can be subjected to a “public-interest test”. (At present this is possible only for defence, financial services and media companies.) Mrs May seems keen to decide on a case-by-case basis whether a deal is in Britain’s national interest. That degree of meddling is not good. Foreign suitors will be less inclined to pursue British firms if they have to win over the prime minister, too. + +The bigger worry is that the government’s main aim—withdrawal from the EU—will dry up the supply of firms in outward-facing industries such as technology. Britain’s hitherto borderless approach to capital and labour has helped to make it a European tech centre. By one count London has birthed three times as many startups as Paris in the past decade. + +Brexit threatens this position. The loss of “passporting” rights, enabling firms based in Britain to provide financial services across the EU, would hamper fintech firms. Stricter migration rules would deprive startups of valuable foreign geeks (university dropouts such as a young Steve Jobs or Bill Gates wouldn’t make it through the points-based migration criteria that the government is proposing). And British universities, the route through which many techies first end up in Britain, are preparing to take fewer students from continental Europe. + +The best “industrial strategy” would be to leave well alone. Though the country is committed to Brexit in some form, it should go for a variety that preserves the broadest-possible access to European markets and puts the lightest-possible controls on migration. In all but the most sensitive industries it should let foreign companies make whatever offers they like for British firms. At the moment the government is edging in the opposite direction: tightening the tap for labour, backing out of Europe’s single market and developing a taste for tinkering with takeover deals. Britons may one day look back and think that worrying about foreign firms wanting to buy their successful companies was a nice problem to have. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21702468-takeover-british-microchip-maker-belies-cooling-climate-foreign-investors-open/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The politics of Thailand + +The generals who hide behind the throne + +Thailand is ill-prepared for the death of its king + +Jul 23rd 2016 | From the print edition + + + +TO THE tourists who still flock to its beaches and golden temples, Thailand seems calm. But this is an illusion. Thai politics are as ugly as the country is beautiful—and could soon get uglier. The country’s beloved king, Bhumibol Adulyadej, whose 70th year on the throne was celebrated on June 9th, is 88 years old and gravely ill. The country is scared of what might happen when he dies (see article). + +Were Thailand a normal democracy with a constitutional monarchy, the death of a king would cause national sorrow but not political instability. Alas, it is not. Two years ago the army seized power in a bloodless coup. An “interim” constitution grants the prime minister and junta leader, Prayuth Chan-ocha, almost unlimited power. Because the regime is illegitimate, it hides behind Thailand’s most revered institution. + +Its propagandists do all they can to fizz up adulation of the monarchy; for example, by building colossal statues of seven Thai kings. And the regime has applied Thailand’s strict lèse-majesté laws with ferocity, arresting people for the slightest perceived insult to the dignity of the king, his family or even his pet dog. Those deemed to have defamed his majesty face up to 30 years in prison. This creates an atmosphere in which critics of the government, too, can be bludgeoned into silence. + +Whereas Mr Prayuth rambles self-righteously on his weekly television show, opposition parties are gagged and parliament stuffed with the junta’s allies. The regime has hauled critics to army bases for “attitude adjustment”. It has charged Thailand’s former prime minister, Yingluck Shinawatra, with neglect-in-office, and may hand her ten years in jail. The army’s latest ploy is a new constitution, which would allow fresh elections but keep the next government subservient to a nominated senate and a handful of junta-stacked committees. It hopes to win public approval for this plan in a referendum on August 7th. Just to make sure, it has trained bureaucrats to “explain” the charter to voters, but it forbids civilians from campaigning against it, on pain of a ten-year prison sentence. + +The generals insist that their actions have been for the good of Thailand. Their coup in 2014 ended months of pro- and anti-government street protests, which had turned violent. Locking out Ms Yingluck, they hint, keeps a dodgy family out of power. Ms Yingluck backed an amnesty bill that could have allowed her brother, Thaksin, another former prime minister, to return from exile in Dubai. The army had deposed him in 2006, arguing that his administration was corrupt. + +Indeed it was, but probably no more so than most Thai governments. The army’s excuses for seizing power are wearing thin. Thailand has seen a dozen successful coups since the 1930s and a new constitution on average every four years. The army typically installs conservative governments that favour the urban elite. That has entrenched inequality and infuriated the rural poor. Mr Thaksin won two elections by wooing poor voters with free public health care and subsidies for farmers. He may have left the scene, but his supporters are still there. + +The army has long defended its coups by claiming to have the king’s support. After taking power, coup-leaders have always trekked to the palace to receive royal assent. But if King Bhumibol is succeeded by the crown prince, who is unpopular, the claim of royal approval will count for less. Elites fret that the succession will disrupt long lines of patronage which for generations have shovelled wealth and influence their way. They fear that anti-government activists will seize the chance to push for big changes in how the country is run. + +Little time, much to do + +With luck, the succession will pass peacefully. But securing long-term stability will require reforms that the army may not like. Royals should speak out against the lèse-majesté law (which King Bhumibol has already once condemned, in 2005). The generals must allow Thais the freedom to debate the new constitution. A better one would be more like the 1997 charter, so far Thailand’s best. If and when the soldiers return to barracks, they will need pruning: their idle ranks include more generals and admirals than America’s armed forces, which serve a superpower nearly five times as populous. + +Politicians must rethink, too. Thailand’s middle classes may find Thaksinite populism abhorrent, but they have failed to provide poorer Thais with an alternative. The Democrat Party, the establishment’s main political outfit, has been squealing about the generals’ stifling rule. But for years it has put off the groundwork needed to win an election, betting instead that friends in the army or judiciary will help it. Any lasting solution will require decentralising power to the provinces. + +Untangling this mess will take years, but it is not impossible. If the junta blocks reform, allies such as America should impose financial sanctions and travel bans on its leaders and their cronies. Thailand needs a civilian government that is accountable to voters and the law, not to the men with guns. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21702467-thailand-ill-prepared-death-its-king-generals-who-hide-behind-throne/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Methane leaks + +Tunnel vision + +Even natural gas needs to clean up its act + +Jul 23rd 2016 | From the print edition + + + +CARBON DIOXIDE is the main greenhouse gas emitted by human activities. But it is not the only gas capable of causing great harm to people and the planet. That point was driven home by the emissions scandal that engulfed Volkswagen last year. Since the 1990s policymakers in Europe had backed diesel as a way to reduce carbon emissions, turning a blind eye to other ways in which the fuel might damage human health. The VW affair drew back the veil on this trade-off. The company’s diesel engines did indeed deliver lower carbon emissions and better fuel economy, but at the cost of belching out noxious pollutants capable of shortening many lives. + +A similar case of tunnel vision also exists in the energy industry. To its evangelists, natural gas helps satisfy demand for fossil fuels but causes less harm to the planet than coal and oil. Like diesel carmakers, natural-gas producers make reduction of carbon-dioxide emissions a big selling-point, but downplay the effects of other gases they emit. For the car industry, the problem is nitrogen oxides. For natural gas, it is methane, the fuel’s main component. + +Burning natural gas converts methane into carbon dioxide, but in lower quantities than in alternative fuels. It emits almost half as much carbon dioxide as coal, and almost a third less than petrol. The problem is that lots of methane escapes into the atmosphere without being burnt. And methane has its own effect on the climate. Although it stays in the atmosphere for far less time than carbon dioxide, which hangs around for centuries, it is about 25 times more potent as a cause of global warming (see article). + +Methane emissions come from several sources—not least the digestive systems of livestock such as cows. But the latest figures show that the biggest chunk of annual methane emissions in America, around a third, can be traced to the natural-gas industry. An estimated 2.5% of the natural gas flowing through America’s ageing energy infrastructure leaks out of wells, pipelines and storage tanks. Often it seeps discreetly into the air. Sometimes it leaves a more noticeable footprint—a 2015 blowout at the Aliso Canyon storage facility in Los Angeles produced the worst leak in American history. + +Recognition of the problem is growing. This year America’s Environmental Protection Agency (EPA) admitted that it had underestimated the extent of oil- and gas-related leakages, revising them up by almost a third and ramping up regulation. Recent use of infra-red cameras and airborne monitoring devices has shown where the worst problems lie in the natural-gas supply chain. Last month Mexico joined America and Canada in their commitment to cut methane emissions from oil and gas operations by 40-45% by 2025, compared with 2012. + +The industry has been slower to acknowledge the problem. American oil companies are reluctant to provide the public with emission-reduction targets. They chafe against new EPA regulations, such as those requiring them to monitor leaks at compressor stations twice as often as in the past. Controlling methane leaks should not be that expensive; the less gas that escapes, the more the industry has to sell, after all. But the head of the Railroad Commission of Texas, which regulates oil in the state, calls them part of Barack Obama’s “war against fossil fuels” and too costly for small producers to comply with. + +If even American oilmen are so dismissive of the problem, it is hard to be hopeful for other places, like Russia, which have even creakier natural-gas networks. Few countries monitor methane emissions with the precision that they do carbon dioxide. Many developing countries have not reported energy-related methane emissions for at least a decade, so it is impossible to know whether conditions are getting better or worse. Without good data, it is hard to set targets for reduction. + +Methane bane + +Natural-gas advocates have decent reason to hope the fuel will be a bridge to a post-carbon future. Thanks to the shale-gas revolution, natural gas last year rivalled coal as the main source of electricity in America. That brings immediate climate benefits. But the problem of methane leaks should not be downplayed. They do not just sully the climate. They sully the good name of natural gas. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21702470-even-natural-gas-needs-clean-up-its-act-tunnel-vision/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Big economic ideas + +Breakthroughs and brickbats + +What economists can learn from the discipline’s seminal papers + +Jul 23rd 2016 | From the print edition + + + +IT IS easy enough to criticise economists: too superior, too blinkered, too often wrong. Paul Samuelson, one of the discipline’s great figures, once lampooned stockmarkets for predicting nine out of the last five recessions. Economists, in contrast, barely ever see downturns coming. They failed to predict the 2007-08 financial crisis. + +Yet this is not the best test of success. Much as doctors understand diseases but cannot predict when you will fall ill, economists’ fundamental mission is not to forecast recessions but to explain how the world works. Over the next six weeks we will be running a series of briefs on important economic theories that did just that—from the Nash equilibrium, a cornerstone of game theory, to the Mundell-Fleming trilemma, which lays bare the trade-offs countries face in their management of capital flows, exchange rates and monetary policy; from the financial-instability hypothesis of Hyman Minsky to the insights of Samuelson and Wolfgang Stolper on trade and wages; from John Maynard Keynes’s thinking on the fiscal multiplier to George Akerlof’s work on information asymmetry, the topic of this week’s article (see article). These breakthroughs are adverts not just for the value of economics, but also for three other things: theory, maths and outsiders. + +More than ever, economics today is an empirical discipline. Thanks to the power of big data, economists can track consumer behaviour in real time or know almost precisely how much a good teacher is worth to the lifetime income of children. But theory remains vital. Many policy failures might have been avoided if theoretical insights had been properly applied. The trilemma was outlined in the 1960s, and the fiscal multiplier dates back to the 1930s; both illuminate the current struggles of the euro zone and the sometimes self-defeating pursuit of austerity. The Nash equilibrium describes an outcome in which everyone is doing as well as they can given the strategies of others; it explains how countries compete with each other to cut tax rates in order to lure global capital. + +Nor is the body of economic theory complete. Big gaps remain in the understanding of financial markets, for example, and on how best to regulate tech platforms like Facebook. The shortfalls are particularly glaring when it comes to modern macroeconomics. From “secular stagnation” to climate change, the discipline needs big thinkers as well as big data. + +It also needs mathematics. Paul Romer, who is heading to the World Bank as its chief economist, has railed against “mathiness”, the habit of using algebra to disguise ideological positions. Economic papers are far too formulaic; models should be a means, not an end. But the symbols do matter. The job of economists is to impose mathematical rigour on intuitions about markets, economies and people. Maths was needed to formalise most of the ideas in our briefs. + +Thinking far and wide + +In economics, as in other fields, a fresh eye can also make a big difference. John Nash was only 21 when he set out the concept that became known as the Nash equilibrium; Mr Akerlof had not long completed his PhD when he wrote “The Market for Lemons”, the paper that made his name. New ideas often meet resistance. Mr Akerlof’s paper was rejected by several journals, one on the ground that if it was correct, “economics would be different”. Recognition came slowly for many of our theories: Minsky stayed in relative obscurity until his death, gaining superstar status only once the financial crisis hit. + +Economists still tend to look down on outsiders. Behavioural economics has broken down one silo by incorporating insights from psychology. More need to disappear: like anthropologists, economists should think more about how individuals’ decision-making relates to social mores; like physicists, they should study instability instead of assuming that economies naturally self-correct. This could make the maths trickier still. But not as hard as getting the profession to eschew its natural insularity. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21702469-what-economists-can-learn-disciplines-seminal-papers-breakthroughs-and-brickbats/print + + + + + +Previous Articles Sections Next + + + +Letters + + + + + +On Kurdistan, immigration, executive pay, the passive voice, China: Letters to the editor + + + + + +Articles Sections Next + +On Kurdistan, immigration, executive pay, the passive voice, China + +Letters to the editor + +Jul 23rd 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + +Politics in Kurdistan + + + +It is true that the president of the Kurdistan region, Masoud Barzani, is in office beyond the mandate originally agreed to by all parties, but this is primarily because of a constitutional disagreement (“Dream on hold”, July 9th). Mr Barzani heads the Kurdistan Democratic Party and it wants popular elections to determine who should be president. + +There is some background to this. In June 2005 Mr Barzani was elected president by the Kurdish parliament for the first time. A faction within the Patriotic Union of Kurdistan, which later formed a new party, Goran, demanded that the president should be directly elected by the people, which is what happened in 2009. Mr Barzani received 70% of the vote in a direct election. Four years later, his mandate was extended for another two years by a majority vote in Kurdistan’s parliament. + +Subsequently, political deadlock has developed, but your readers were not told why. The Kurdistan region had drafted and agreed on, but not issued or ratified, its constitution. Therefore its draft constitution is not in force. The draft envisaged a presidential, French-style system, under which the position of president would constitutionally be limited to two terms. + +But in 2013, the very same faction that had previously demanded popular elections to elect the president came up with a new demand: the president should be elected by the parliament. Goran blocked the ratification of the constitution and has prevented the draft, previously the subject of an all-party agreement, from being sent to the public for ratification. + +As such, Mr Barzani has remained president until the constitutional deadlock can be resolved. Given that the Kurdistan region is at war with Islamic State, providing the boots on the ground for the coalition effort, it is the view of many if not most in Kurdistan that the president, as commander-in-chief of the Peshmerga, is providing much needed stability. + +SAFEEN DIZAYEE + +Spokesperson of the Kurdistan Regional Government + +Erbil + + + + + +Points make prizes + + + +The Economist argues that an immigration points system is wrong for Britain (“What’s the point?”, July 9th). Our current immigration system turns away deserving applicants while waving in anyone from the EU. A points system would treat all applicants fairly. In 2015, a big chunk of our net migration came from the EU, even though the EU has only 7% of the world’s population. This imbalance arises because we reject vast numbers of deserving immigrants. If you’re an Australian, merely having a British spouse won’t get you in, and if you’re an Indian, a PhD and a job offer won’t help you. Even those who qualify for settlement are rejected on technicalities, since the application system is almost impossible to pass through without expensive legal help. + +The question is not whether immigration is good or bad; it is whether we can improve our immigration policy. We cannot do so if we subscribe to the EU’s principle of freedom of movement. + +NICOLAS GROFFMAN + +Head of International + +Harrison Clark Rickerbys + +Cheltenham, Gloucestershire + +Bagehot stated that in Britain, political upheavals “are as uncommon…as tornadoes” (June 25th). He may be surprised to learn that Britain experiences more tornadoes per square mile than anywhere else in the world. + +DAVID HASSON + +Edinburgh + + + + + +Wage restraints + +Regarding executive pay (“Neither rigged nor fair”, June 25th) what harm would come from limiting the pay of chief executives to, say, 40 times that of the average worker? Do we honestly think there would be a tragic exodus of managerial talent? Such limits would help restore workers’ faith in the economic system, which, as Joseph Stiglitz argued in “The Price of Inequality”, would increase productivity. A ratio linked to workers’ pay would also help bosses understand, and even increase, the pay of the rank and file. + +PETER COLBY + +San Francisco + + + +Executive salary is a classic agency problem for which there is a simple regulatory fix. Mandatory shareholding for chief executives would force their personal interests to align with the companies they head. Require them to buy shares amounting to several times their total remuneration for the year and hold them for ten years. Those CEOs who really add value will have nothing to worry about. The others will lose their shirts. + +SABESH SHIVASABESAN + +Pretoria, South Africa + +* Compensation consultants often add to the increase in salaries and bonuses because they have an incentive to satisfy management’s wishes. A board’s compensation committee is often forced to work with a shortlist of management-approved consultants. Term limits for consultants would help ease those structural anomalies. + +PAUL WHITE + +Toronto + +We are barraged by the left about the unconscionable salaries of chief executives. The average pay of top athletes, pop stars and actors is higher, yet none of them contributes to the jobs, salaries, investment and returns to average investors the same way that a CEO does. + +SCOTT PROCTOR + +Livonia, New York + + + + + +Passive attack + + + +Johnson (July 2nd) is right that the passive voice is widely used in science. It gives the false impression of objectivity. “The addition of X caused the mixture to ignite” sounds so much better than “When I added X to the mixture it blew up.” As an undergraduate I was marked down for writing in the first person. But a Nobel laureate speaking to the chemistry society told us, “It’s so important to write up experimental data in the first person, because it is you that has carried it out. Using the passive voice implies a level of objectivity that is simply untrue; someone else doing the same experiment may well produce a quite different result and it is important for the reader to be aware of this.” + +DAVID SCOTT + +Loughborough, Leicestershire + +Active or passive? It depends on where you wish to place emphasis, on the actor (subject) or the one acted upon (object). An active verb can convey a powerful message. The most perfect sentence ever written is “Jesus wept.” One subject and one active verb conveying intense emotion. Now the case for the passive side. Isaiah’s mighty prophecy: “For unto us a child is born, unto us a son is given, and the government shall be upon his shoulder.” And what editor would dare touch this: “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their creator with certain unalienable rights.” + +The defence rests. Or the case has been made by the defence. + +JIM RHODES + +Norfolk, Virginia + + + + + +Magic Middle Kingdom + + + +“Lord of the Jungle” (June 18th) dwelt on the negatives for Shanghai Disneyland. Instead, we should take the long view and dare to dream that now that the Cheesecake Factory and Disneyland have landed in China, can democracy be far behind? + +W.L. CHANG + +Hong Kong + +* Letter appears online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21702427-letters-editor/print + + + + + +Articles Sections Next + + + +Briefing + + + + + +Turmoil in Turkey: After the coup, the counter-coup + +Turkey and the world: Running out of friends + + + + + +Articles Sections Next + +Turmoil in Turkey + +After the coup, the counter-coup + +The failed putsch was the bloodiest Turkey has seen; the backlash is as worrying + +Jul 23rd 2016 | ANKARA, GAZIANTEP AND ISTANBUL | From the print edition + + + +THE brutality of the soldiers’ power-grab still horrifies many Turks. Each day brings fresh footage and stories of what took place during the long, bloody night between July 15th and 16th: one mobile-phone video shows a group of bystanders near the presidential palace in Ankara overwhelmed by the blast of an air strike; another captures a man diving to the ground between the tracks of a tank to avoid being crushed, rising to his feet, then falling again to save himself from another one; a third records soldiers shooting down unarmed protesters. + +Stories are told of how the rebels kidnapped their commanders. The chief of general staff, General Hulusi Akar, was told by his aides to sign a declaration of martial law. When he refused, they tightened a belt around his neck, but he would not yield. He survived the ordeal. + +This was hardly the first time that Turkish soldiers had tried to seize power. Forged in military revolt, modern Turkey has seen the generals topple four governments since the 1960s, sometimes ruling directly, sometimes indirectly (see chart). Even when civilians have been in charge, the army has lurked in the background as the self-appointed guardian of secularism against Islamists and other radicals. The latest putsch was the bloodiest yet: more than 230 people died, among them 145 civilians who had taken to the streets to confront the rebellious soldiers. + +The government’s backlash has been harsh, too. “This uprising is a gift from God to us because this will be a reason to cleanse our army,” declared Recep Tayyip Erdogan, Turkey’s Islamist-tinted president, a few hours after he triumphantly returned to Istanbul to reclaim the country. + + + +He proved as good as his word. On July 20th the government declared a state of emergency for at least three months. Roughly 6,000 servicemen have been arrested, among them about 100 generals and admirals. Nearly 8,000 policemen have been sacked; almost 3,000 judges and prosecutors have been suspended or detained. University academics, teachers and civil servants—including some 250 from the prime minister’s office—have been pushed out. + +Altogether more than 60,000 people have been purged for suspected links to Fethullah Gulen, a Muslim cleric exiled in America. His movement emphasises education; but his devotees are accused of infiltrating the government and fomenting the coup. Mr Gulen was for years an ally of Mr Erdogan, never more so than when Gulenist prosecutors were busy purging the military “deep state” on charges of fomenting a putsch. But when they started digging into corruption in Mr Erdogan’s entourage, the Gulenists were treated as a “parallel state” to be extirpated. The defeat of the latest coup seems to have opened the way for Mr Erdogan’s counter-coup. + +Mehmet Simsek, the deputy prime minister, declares reassuringly: “Some of these measures might seem like a wholesale purge, but they are aimed at minimising the aftershocks after the earthquake.” Turkey’s Western allies are pleading for restraint (see article). + +The identity of the plotters, and their motives, remain murky. They had impressive resources at their disposal: F-16 fighter-jets, aerial refuelling tankers, helicopter gunships and transporters, and tanks. Units took over parts of Istanbul and Ankara, but commandos missed capturing Mr Erdogan at an Aegean resort by less than an hour. The rebels bombed the police and intelligence-service headquarters in Ankara, but did not knock them out. + +Face time with Erdogan + +Crucially, an air strike on the Turksat satellite broadcast station in Ankara failed to put it out of service. This meant that, even though the coup-makers took over the state broadcaster, private television networks continued to operate freely. The turning-point came when Mr Erdogan, hitherto a critic of internet activism, called a television station with his phone’s video app to urge followers to take to the streets. + +As crowds surrounded pockets of rebel soldiers, the coup began to collapse. One Turkish ex-officer said it was madness to stage a coup at ten in the evening when the streets were still crowded. “Coups have to be carried out when everyone is asleep, so they wake up and it’s all over.” + +So badly was the coup botched, and so well has it played into Mr Erdogan’s hands, that many of his opponents now think it was choreographed by the government all along. A more likely explanation is that it was a desperate, almost suicidal attempt to preclude an expected wave of arrests and demotions in the army this summer. Officials in Ankara acknowledge they had a list of officers suspected of plotting the coup but failed to nip it in the bud. “The network had been mapped as part of an investigation that, to be frank, did not consider an actual coup very likely,” says one. + + + +Eroding Erdogan's power: Our guide to Turkey's general elections + +Turks’ sacrifice in defence of their institutions—not just supporters of the ruling Justice and Development (AK) party but also of the opposition—offered Mr Erdogan a perfect opportunity to heal a country beset by growing terrorist violence and political divisions over his autocratic manner. The entire parliamentary opposition and what was left of the free media, which Mr Erdogan despises, denounced the plotters. “There was some level of dialogue, a level of solidarity we have not seen in years, something that could have been built on,” says Nigar Goksel of the International Crisis Group, a think-tank. Instead Mr Erdogan has squandered the opportunity, preferring to expunge his enemies, real or imagined, and extend his power. + +Every night, crowds of distinctly Islamic flavour gather in town squares to hold vigils and deter any other would-be putschists. In the southern city of Gaziantep, where during the coup the governor blockaded the local army base with lorries and other vehicles, loudspeakers broadcast music reflecting the lurches of Turkey’s modern history: the drumbeat of Ottoman-era Janissaries, the national anthem of the ardently secular Kemalists and Islamic mantras set to techno beats. “Yallah. Bismillah. Allahu akbar,” intones the crowd. Many give the four-finger salute first used by Islamists in Egypt after the army overthrew their elected president. + +Crowds hold up effigies of Mr Gulen. One banner in Taksim Square in Istanbul called him “Satan’s dog”, proclaiming: “We will hang you and your dogs with your own leashes.” Mr Erdogan says he may indeed reinstate the death penalty. He has resurrected a project to build a mosque in Istanbul’s Taksim Square and convert a nearby park into a replica of an Ottoman barracks—a plan that sparked mass protests, violently suppressed, in 2013. + +The longer Mr Erdogan whips up his alliance of Islamists and nationalists the greater the danger of ethnic and sectarian violence—including against secularists, liberals, Alevis and Kurds. In the south-eastern city of Diyarbakir, a Kurdish stronghold, activists are bracing for a round-up. “I’m waiting for the knock on the door,” says one Kurdish journalist after AK activists blacklisted her on social media. + + + +Another concern is that Turkey’s security forces are being dangerously hollowed out by the purges at a time when they are confronted by the twin menaces of Kurdish and jihadist attacks. “We would not have such losses to the officer corps if we had fought a conventional war for eight years,” says Haldun Solmazturk, a former brigadier-general. + +As with previous challenges to his rule, the coup attempt has left Mr Erdogan stronger, or at least more autocratic. For years, he suspected an unholy alliance of foreign and domestic foes of conspiring to topple him. Now that he has survived a real coup, Mr Erdogan may give free rein to his authoritarian instincts and seek new executive powers. + +How far will he go? Some are not sticking around to find out. The day after the coup attempt, a newly wed couple swept incongruously into a restaurant near Taksim Square, alarmed and elated in equal measure. They had decided to go ahead with their wedding despite the previous night’s gunfire, explosions and roar of fighter jets. But they were fed up: in a few days they would be leaving for Germany. They were not expecting to come back. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21702511-failed-putsch-was-bloodiest-turkey-has-seen-backlash-worrying-after-coup/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Turkey and the world + +Running out of friends + +Recep Tayyip Erdogan drifts away from America, NATO and the EU + +Jul 23rd 2016 | BRUSSELS, CAIRO AND ISTANBUL | From the print edition + +Lost in interpretation + +OVER the decades Turkey’s relations with America, its principal military ally, have withstood coups, skirmishes with Greece (a fellow NATO ally) and the invasion of Cyprus in 1974. Of late, however, the friendship has grown testier, particularly over the civil war in Syria and the American-led campaign against Islamic State (IS). With the failed coup, ties are close to openly hostile. + +One Turkish minister, Suleyman Soylu, claimed (with no evidence) that America was behind the putsch. Pro-government media teemed with conspiracy theories. In Yeni Safak, a daily newspaper, Aydin Unal, an MP from President Recep Tayyip Erdogan’s Justice and Development (AK) party, even suggested that American army officers disguised as Turkish ones had taken part in the fighting. For a time the government cut off electricity to Incirlik air base, from which America conducts air raids against IS. Some of the planes that took part in the failed coup were said to have been stationed there; the Turkish commander of the base was arrested. + +A more contentious issue is the presence in America of Fethullah Gulen, the head of an Islamist movement that was once allied with Mr Erdogan but has become his nemesis. Turkey wants Mr Gulen extradited (he denies involvement in the coup, and denounces it). If America insists on evidence to satisfy its courts—beyond a four-volume dossier provided by Turkey—“even questioning our friendship may be brought to the agenda here,” warned Binali Yildirim, the prime minister. + +The reaction from America has been just as blunt: it is Turkey that is endangering ties with America and the West. “Public insinuations or claims about any role by the United States in the failed coup attempt are utterly false and harmful to our bilateral relations,” said John Kerry, America’s secretary of state. In other remarks, he warned Mr Erdogan against using the coup as an excuse to clamp down on his opponents. A wide-ranging purge, he said, “would be a great challenge to his relationship to Europe, to NATO and to all of us.” + +Were Turkey applying for NATO membership today, it would have little chance of success. Under the terms of NATO’s “membership action plan”, applicants are required “to have stable democratic systems, pursue the peaceful settlement of territorial and ethnic disputes, have good relations with their neighbours, show commitment to the rule of law and human rights, establish democratic and civilian control of their armed forces, and have a market economy.” As things stand, Turkey only ticks the last box. The Washington treaty, which established NATO in 1949, allows for a member to leave after giving 12 months’ notice, but there is no provision for expelling one. + +America’s defence secretary, Ash Carter, makes no secret of his distaste for Mr Erdogan. He was infuriated by Turkey’s refusal to allow American aircraft to strike IS from Incirlik until this time last year. If the base again becomes a bargaining chip, calls from Congress to abandon it for another one elsewhere will grow louder. + +In recent months tensions have run high over America’s de facto alliance with the Syrian Kurdish militia known as the People’s Protection Units (YPG). It is regarded by America as the most effective ground force against IS in Syria; but it is seen by Turkey as closely related, if not identical, to the Kurdistan Workers’ Party (PKK), which has resumed its decades-long insurgency for autonomy inside Turkey. + + + +Several American pundits ask whether Turkey is still a reliable ally. Among their reasons for doubting it are Mr Erdogan’s disregard for democratic liberties, his self-harming Syria policy and his penchant for stirring up the AK party’s religious base with crude anti-American rhetoric. + +Turkey’s relations with the EU, by far its largest trading partner, have been no less fraught. In March, in exchange for Turkish efforts to reduce the flow of refugees and other migrants to Greece, the EU made several promises. It agreed to revive Turkey’s stalled accession bid, accelerate the abolition of short-term visas for Turkish tourists and businessmen, and fund Turkish efforts to support refugees. The deal was heavily criticised, in part because it relied on the EU designating Turkey a “safe country” for refugees. Now its first two elements, at least, may be in jeopardy. + +Mr Erdogan would be wise not to create more enemies than he already has. For this reason, some EU officials believe he will honour the migrant deal. Moreover, Mr Erdogan no longer enjoys the leverage he did last autumn, when thousands of refugees were crossing from Turkey to Greece every day. The western Balkan route that most migrants followed on their way to Europe’s heart is now closed, and word has spread quickly. Even with the full co-operation of the Turkish gendarmerie and coastguard, migrants would have little reason to try their luck in Greece, for they could not easily go farther. + +Under the terms of the deal most arrivals in Greece were supposed to be returned to Turkey to have their asylum claims processed. But asylum adjudicators in Greece often refuse to send migrants back. The unfolding chaos in Turkey presents them with a fresh argument not to deport anyone. The groaning camps on Greek islands hold around 9,000 asylum-seekers, and are swelling daily. + +Moreover, Turkey may be less willing to accept returns if it does not win visa-free access to the EU’s Schengen passport-free zone. European officials had hoped for a breakthrough in the autumn, but European governments (and the European Parliament) that must sign off on the visa deal will be less minded to overlook Mr Erdogan’s excesses. + +The accession process, which has never been easy, is also on the rocks. At a summit this week EU foreign ministers declared firmly that Mr Erdogan’s threatened reintroduction of the death penalty would kill Turkey’s candidacy. Germany, the most important advocate of the migrant pact, was particularly tough. A spokesman for Angela Merkel, the chancellor, condemned the “revolting scenes of caprice and revenge” against Turkish soldiers; Mr Erdogan’s subsequent purges of judges raised “profound and worrisome questions”. + +The challenge for Europe is to find a way to argue that Mr Erdogan remains a credible partner in managing migration without tempering its criticism of his growing authoritarianism. Some worry that the next wave of asylum-seekers to Europe will be Turkish citizens. + +The upheaval in Turkey matters to the Arab world, where Mr Erdogan has played an influential role. Mainstream Syrian rebel groups, squeezed around Aleppo, fear abandonment by Turkey. Newspapers in Egypt—a country run by Abdel-Fattah al-Sisi, a general who seized power in a coup and has been bitterly at odds with Mr Erdogan over his support for the Muslim Brotherhood—ran hopeful headlines announcing that the Turkish president had been overthrown. With no hint of irony, they now denounce his crackdown. + +Can allies persuade Mr Erdogan to change course? Intriguingly, just before the coup attempt he acted to end two diplomatic rows. In June he struck a deal with Israel to normalise relations, which had broken down in 2010 after Israeli forces killed nine Turkish citizens trying to breach a naval blockade of Gaza. Mr Erdogan also apologised to Russia for shooting down a Russian fighter jet in November when it briefly entered Turkish airspace (hence the nervousness of Syrian rebels). But neither Israel nor Russia can substitute for Turkey’s military ties with America, or its economic ones with Europe. Whether Mr Erdogan realises that is another matter. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21702509-recep-tayyip-erdogan-drifts-away-america-nato-and-eu-running-out-friends/print + + + + + +Previous Articles Sections Next + + + +United States + + + + + +The Republican convention: Donning the mantle + +On the trail: Cleveland special + +Paul Ryan’s agenda: Better than what? + +Roger Ailes: Kingmaker no more + +Policing after Baton Rouge: Ambushed and anguished + +Michael Elliott: The Fab One + +Immigration economics: Wages of Mariel + +Lexington: At his majesty’s pleasure + + + + + +Articles Sections Next + +The Republican convention + +Donning the mantle + +Amid chaos and rancour, Donald Trump was confirmed as the Republican nominee + +Jul 23rd 2016 | CLEVELAND | From the print edition + + + +IN THE run-up to the Republican National Convention, held in Cleveland between July 18th and 21st, Donald Trump lamented that its predecessor, in 2012, was “the single most boring convention I’ve ever seen”. As the party’s prospective nominee, he planned to prevent a repeat of that tedium, mainly by injecting “some show-biz” into the proceedings. On the evidence of the convention’s first three days, Mr Trump triumphed. The convention was one of America’s strangest and most compelling political set-pieces in decades. This was notwithstanding the C-grade celebrities, including a star of the reality television show “Duck Dynasty”, a golfer and a martial-arts impresario, whom Mr Trump wheeled out to praise him. + +Proceedings at the Quicken Loans Arena plunged between perplexing inanity (to which the celebrities did contribute), shambles, and sometimes rowdy conflict among the almost 2,500 Republican delegates gathered to nominate Mr Trump. Little went according to plan. Entertainment aside, Mr Trump needed three things from the convention. He needed to impose a measure of unity on his divided party. He needed to project a sense that he is qualified to be president—which almost 60% of Americans doubt. And he needed to appear more likeable—especially to the third of Republican voters who dislike him. On these criteria, the convention looks to have been a crashing failure. + +The degree to which Mr Trump’s populist takeover of the Republican Party has rent it is hard to exaggerate. The party’s past two nominees, John McCain and Mitt Romney, refused to come to Cleveland. So did the past two Republican presidents, the Georges Bush, and their son and brother, Jeb Bush, a humiliated former opponent of Mr Trump’s who says he is mulling voting for the Libertarian Party. John Kasich, another vanquished rival, also gave the convention a miss—though, as the governor of Ohio, he was responsible for arranging its ample security. A dozen notable congressmen also stayed away, especially those, such as Senator Mark Kirk of Illinois and Mr McCain, in Arizona, who face daunting re-election battles which Mr Trump’s name on the ballot will probably make harder. + +No wonder Mr Trump needed reality television stars to speak for him. Among elected Republicans, Chris Christie and Scott Walker, the governors of New Jersey and Wisconsin, were the only heavyweight speakers prepared to give him a fulsome endorsement. The Speaker of the House of Representatives, Paul Ryan, who was chairing the convention, gave a speech, notionally in support of Mr Trump, in which he referred to him only twice—and both times in the same breath as his running-mate, Governor Mike Pence of Indiana, whose caustic conservatism Mr Ryan approves of more. That was one more mention than Senator Ted Cruz, a distant runner-up in the primaries and talented orator, afforded Mr Trump. + +Bigger, not better + +In a theatrical performance—delivered in a prime-time viewing slot on Day Three—Mr Cruz first congratulated the tycoon on his victory, then delivered a virtuoso argument for freedom and the constitution, conservative orthodoxies in which Mr Trump has little interest. “We deserve leaders who stand for principle,” said Mr Cruz, to, initially, thunderous acclaim from a crowd grateful, at last, for a revivifying dose of conservative dogma. “Please, don’t stay home in November,” Mr Cruz continued: “Stand, and speak, and vote your conscience, vote for candidates up and down the ticket who you trust to defend our freedom and to be faithful to the constitution.” But then it dawned on the crowd that Mr Cruz had not named Mr Trump because he did not mean him. He had just punked the convention. As many Trump supporters began to boo, members of the Trump campaign rushed around the delegates, allegedly trying to whip up more dissent. To deflect attention from the wrecking-job afoot onstage, Mr Trump entered the arena and stood waving generally, with a waxen half-smile, like a senile dictator. By the time Mr Cruz finished, there was pandemonium; his wife Heidi, assailed by livid Trump supporters jeering “Goldman Sachs!” (the capitalist outfit for which she works), had to be escorted outside by bodyguards. + +Many delegates were also unhappy with their party’s choice. The opening day of the convention saw a last-ditch effort by some anti-Trump holdouts to express their dissent by forcing a disapproving vote on Mr Trump’s rules for the convention; they were drowned out by a burst of aggressive whipping and loud rock music. The 721 delegates who voted against Mr Trump’s nomination the next day, during the official tallying of his support, nonetheless made up the Republicans’ biggest dissenting vote since 1976, when Gerald Ford sealed his defeat of Ronald Reagan on the floor of the convention. Even many of Mr Trump’s loyal delegates seemed a bit half-hearted in their support; asked whether his champion was a Republican or a conservative, a delegate from North Carolina responded: “No, not yet.” + +Even so, as the disapproving response to Mr Cruz suggested, most delegates were prepared to back Mr Trump, whatever their misgivings about his disapproval of free trade and thuggish style, in order to wrest power from the Democrats; 90% of Republican voters say the same. Yet anyone looking to this convention for evidence that Mr Trump has the wherewithal to perform that feat must be disappointed. It was muddle-headed and disorganised, reflecting a campaign effort that appears amateurish, underfunded and insufficient. + +The programme was a mess; the convention’s expected breakout star, Senator Joni Ernst of Iowa, ended Day One speaking to a near-empty arena. Then a more embarrassing scandal erupted. It emerged that a moving tribute to Mr Trump by his Slovenian-born wife, Melania, contained passages lifted from Michelle Obama’s address to the 2008 Democratic Convention. + +Paul Manafort, Mr Trump’s campaign chief, denied this was plagiarism; Mr Christie said it was no big deal. By the time the Trump campaign admitted that Mrs Trump’s wife had plagiarised the wife of the man he declares unfit to be president, the kerfuffle had dominated TV coverage of the convention for a day. It made those around Mr Trump, a self-declared straight-shooter and problem-solver, appear phoney and incompetent. It made a mockery of his own ambition to show a softer side to his unloved character. + + + +Timeline: United States presidential nominating conventions + +As The Economist went to press, Mr Trump had a chance to turn things around in his closing speech. It is the most important part of any convention and, given his charisma and his campaign’s reliance on it, that may be especially true for Mr Trump. Even so, the most enduring moment of this convention may prove to be from Day Two. It was supposed to be dedicated to the economy; “Make America work again” was its theme. Yet, in the absence of almost any talk onstage of jobs, business or Mr Trump’s economic plans, such as they are, the crowd began chanting a more appropriate slogan: “Lock her up! Lock her up!” + +Hatred of Hillary Clinton, whom Mr Trump says is undeserving of her liberty, never mind the presidency, was the leitmotif in Cleveland. The word “Hillary” was spoken disdainfully onstage that day more often than “Trump” or “America”, and four times more often than “economy”. Almost all Mr Trump’s headline speakers joined the attack on his Democratic rival. The grieving mother of one of the four Americans killed by militants in Benghazi in 2012 blamed Mrs Clinton for their deaths—an allegation rubbished by nine official investigations so far. Scott Baio, a television actor in 1980s sitcoms, defended a tweet in which he labelled Mrs Clinton a “cunt”. Ben Carson, another former opponent of Mr Trump’s, suggested a possible link between the former First Lady and Satanism. The Republicans, their convention has confirmed, are irredeemably divided behind an unloved candidate whose platform and organisation appear unfit for the coming campaign. Rallying in detestation of his opponent is their only hope. + +They are fortunate she presents such a juicy target. Mrs Clinton is almost as disliked as Mr Trump, which is why, despite his poor ratings, he remains within touching distance of her. An historically hateful campaign looks inevitable. The question, which the first post-convention polls may begin to answer, is which of the two will that hurt most? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702513-amid-chaos-and-rancour-donald-trump-was-confirmed-republican-nominee-donning/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +On the trail + +Cleveland special + +Jul 23rd 2016 | From the print edition + + + +The joker + +“I’ll let you know how I feel about it after it happens.” + +Donald Trump fails to squash rumours that even if he wins the election, he may yet walk away from the presidency. New York Times + +Another brick... + +“We build 95-storey buildings with bathrooms, that’s tough construction…Walls don’t have bathrooms.” + +Trump resumes his favourite project. Sopan Deb, Twitter + +Trump Airlines? + +“She was asked…Little bit difficult because of, you know, it’s a long ways away.” + +Sarah Palin did not make the trip from Alaska to Ohio. Washington Examiner + +Freudian slip + +“You can’t always get what you want.” + +Mr Trump’s unfortunate choice of music, by the Rolling Stones, before officially introducing Mike Pence as his vice-presidential pick + +Deep throat + +“What is the T doing to that P?” + +John Dingell, a Democratic congressman, is bemused by the suggestive Trump-Pence campaign logo (above) + +Tourist attraction + +“Home of 10,000 lakes, home of Spam and home of the late, great Prince.” + +The Minnesota delegation casts its vote + +Humblebrag + +“I think I am, actually humble. I think I’m much more humble than you would understand.” + +Mr Trump’s first joint interview with Mr Pence was focused mostly on himself. CBS News + +“It was a Trump tour de force. Also, Mike Pence was there.” Washington Post + +Sad emoji + +“I’m worried that I will be the last Republican president.” + +Former President George W. Bush, reportedly speaking to a reunion of former staff in April. Politico + +A good lickin’ + +“I will utilise my 55 years of law enforcement. I don’t have a gun, but I have a tongue.” + +Sheriff Joe Arpaio of Arizona objects to the anti-Trump delegates. Time + +Keep Calm + +“It’s exciting. I think you can feel we’re resigned to this.” + +A visitor to the convention is overcome by emotion + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702523-cleveland-special/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Paul Ryan’s agenda + +Better than what? + +The Speaker’s policies are the best a divided party has to offer + +Jul 23rd 2016 | CLEVELAND | From the print edition + + + +FOR all the Republican Party’s problems, it does not want for policy. Donald Trump has several clear-if-crazy promises: build a wall on the Mexican border, suspend Muslim immigration and renegotiate trade deals. To coincide with the convention, the party, as usual, released an official policy platform. And since early June Paul Ryan, the Speaker of the House of Representatives, has been penning six papers laying out what he calls “A Better Way”. The problem for the Republicans is that these multiple plans frequently contradict one another. + +It is no secret that Mr Ryan does not support Mr Trump’s trade- and immigrant-bashing populism. These areas have been left out of Mr Ryan’s agenda, to limit discord. But lapses in the Speaker’s restraint threaten the truce. At an event on July 18th he described Mr Trump as “not my kind of conservative”. In his speech the next day the Speaker barely mentioned Mr Trump, and said that his presidency would only provide a “chance” of a better way. + +Mr Ryan also seems to have gone quiet on fiscal policy. For most of Barack Obama’s presidency, congressional Republicans have warned of the dangers of government debt. The Speaker still refers to a supposed “debt crisis”, but his economic policy papers barely mention it. Two things probably account for this shift. The first is that the deficit has fallen from 10% of GDP in 2009 to 2.5% in 2015. The second is Mr Trump’s fiscal abandon. + +For a Republican to call for both balanced budgets and big tax cuts is not novel. But Mr Trump has taken that inconsistency to new heights. His tax plan would, even after its growth-boosting effects, cost $10 trillion (about three times the total tax take in 2015) over a decade, according to the Tax Foundation, a think-tank. Yet he also claims, impossibly, that this largesse would not cause the national debt to rise. + +On July 20th two of Mr Trump’s advisers said he would soon update his tax plan and bring it closer to Mr Ryan’s, which is modest by comparison. (The Speaker would, for instance, cut the top rate of income tax from 39.6% to 33%, compared with 25% under Mr Trump’s current plan.) Aligning the two plans will require more than merely adjusting rates, however. So far, Mr Trump has ignored two key pillars of tax reform which the Speaker supports. The first is to pay for lower rates, in part, by broadening the tax base; Mr Trump’s plan, if anything, makes the tax base narrower. The second is to redefine the corporation tax so as to encourage investment. + + + +It is not yet known how pricey Mr Trump’s new plan will be. For now, Mr Ryan has banished his fiscal hawkery to his health-care plan, in which he promises to curb rising spending on Medicare (government health insurance for the elderly). Yet Mr Trump has promised faithfully to protect Medicare. + +Is there anything the two men agree on? The need for deregulation may be one. Republicans lament the Affordable Care Act’s new rules for the health-care industry, the Environmental Protection Agency’s clean-energy regulations, and the Department of Labour’s penchant for rule-making. Perhaps most vocally, they object to the endless new financial regulations resulting from the Dodd-Frank Act of 2010. + +It is surprising, then, that the party’s official platform supports reinstating the Glass-Steagall Act of 1933, which forcibly separated commercial and investment banking. This would be a dramatic regulatory incursion by any measure. The platform is also noteworthy for its astringent language on gay marriage, transgender rights and pornography. + +In short, Republican policymaking is divided between a populist presidential candidate, a sober but unconvincing Speaker, and a base which cares most about stern social conservatism and immigration. Mr Ryan’s ideas are the best on offer. They may prevail if the party wins in November. But it is far from certain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702522-speakers-policies-are-best-divided-party-has-offer-better-what/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Roger Ailes + +Kingmaker no more + +A media master disappears + +Jul 23rd 2016 | NEW YORK | From the print edition + +Thriving on conspiracy + +“I WANT to elect the next president,” Roger Ailes once told staffers at Fox News. It was no idle ambition. Mr Ailes, the pre-eminent master of the dark arts of politics and television in America, had been helping Republicans get elected president since Richard Nixon. This week, with the Republican Party nominating another candidate he helped to create, the kingmaker himself is being dethroned. Rupert Murdoch and his sons Lachlan and James, who control 21st Century Fox, appear ready to oust the 76-year-old chief of Fox News after a career spanning more than 50 years. + +It is a sudden and ignominious downfall, the sort Mr Ailes would have put on the air nonstop if the subject had been one of his enemies. His network’s motto was, and is, “fair and balanced”, a shot at the perceived liberal bias of his competitors. Mr Ailes’s brand of angry, conspiracy-driven political news and opinion set Fox News apart, from the coverage of real scandals, including the impeachment of Bill Clinton, to imagined or overcooked ones, like Hillary Clinton’s failings over Benghazi. + +Viewers ate it up. Mr Ailes, the son of a factory worker, instinctively knew how to appeal to white, working-class voters disaffected, as he was himself, with liberal elites and political correctness. In six years he built Fox News from a joke when it began, in 1996, into the number-one powerhouse in cable, eventually collecting profits of more than $1 billion a year. Along the way he helped redefine American right-wing politics, and created its media stars in Bill O’Reilly, Sean Hannity and, more recently, Megyn Kelly. + +He also helped mould Mr Trump into a nasty populist. In 2011 Mr Trump was one of the loudest cheerleaders for Fox News’s questioning of Barack Obama’s birthplace. Though this seemed insane outside the Fox News bubble of hype, it presaged a historic presidential run. + +Few felt they could challenge Mr Ailes. It was only in the last year that weaknesses began to emerge. Mr Trump boycotted the network over his perception of mistreatment by Ms Kelly; eventually they made up. Then on July 6th Gretchen Carlson, a former presenter on the channel, filed a lawsuit alleging sexual harassment. Other women emerged, including in reporting by Gabriel Sherman, a journalist who wrote an unflattering biography of Mr Ailes. On July 19th Mr Sherman reported that Ms Kelly too had spoken of being harassed by Mr Ailes a decade ago. + +The theme of the allegations, which Mr Ailes denies, was that women would get ahead if they did what he asked. For years he seemed to hold such power. Mr Sherman wrote that Mr Obama greeted the media titan at the White House with the line, “I see the most powerful man in the world is here.” No longer. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702525-media-master-disappears-kingmaker-no-more/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Policing after Baton Rouge + +Ambushed and anguished + +The thin blue line is on edge after a new spate of shootings + +Jul 23rd 2016 | NEW YORK | From the print edition + +One move towards reconciliation, at least + +WHEN police officers hear on their radios that a 10-13 or an 11-99 is in progress, they drop what they are doing and go. A 10-13 means an officer needs assistance. An 11-99 means an officer is under attack, and all nearby units must respond. + +Such an event happened in Baton Rouge, Louisiana on July 17th, when three officers were killed in an ambush. According to the city’s police chief, they were “targeted and assassinated” with military precision. Given the timing, the killer, Gavin Long, a black ex-serviceman, may have been enraged by the killings of unarmed black men by police in Baton Rouge and Minnesota—as was the black man who, on July 7th, shot dead five officers in Dallas. + +In the wake of these shootings, several police departments have changed tactics. In Boston and New York City officers have been ordered to work only in pairs. In New Orleans officers must respond in two patrol cars, instead of the usual one. One former cop speculates that, in future, officers responding to a call may park a block away and avoid using the front entrance, to avoid being ambushed. + +After riots in 2014 in Ferguson, Missouri, where an unarmed black man had been shot by a white police officer, many departments tried to get closer to their communities. Police walked the streets rather than using patrol cars, getting to know shop-owners and residents nearly as well as the criminals. But trust between the police and citizens, particularly blacks, has badly broken down. Anti-cop rhetoric is pervasive. Camera phones mean more scrutiny. And there are more than 300m guns around. + +Navigating through a crowd in a state with open-carry gun laws is a nightmare. Forty-five states now have them. In Dallas, during the protest at which the five officers were killed, as many as 30 people were carrying rifles. Although the number of police murdered in the line of duty is much lower than in the 1970s, when the average was 127 a year, this year has seen a jump. According to the National Law Enforcement Officers Memorial Fund, 32 officers have been shot dead so far this year. Over the same period last year, 18 were. + +In response to Black Lives Matter, some serving and retired officers have created Blue Lives Matter, a pro-police movement. According to the New York Post, Blue-Lives-Matter badges sold out at this week’s Republican convention. In May Louisiana became the first state to pass a Blue Lives Matter bill, which treats attacks on the police as hate crimes. Similar bills are afoot in other states, including Wisconsin and Florida. + +Some departments are becoming better at dealing with explosive situations. Even smaller outfits, like Florida’s Palm Beach Gardens force, with just 100 officers, are spending money to improve the way police go about their jobs. A 10,000-square-foot tactical training centre, opening in the autumn, will teach officers to use words, not force, to defuse dangerous moments. In a classic example of the method, in November a man brandishing a knife in Camden, New Jersey was arrested without incident. Police followed him at a distance, encouraging him to drop the knife. + +Camden was once one of America’s most dangerous cities. Crime there has reached record lows—homicides fell by 52% between 2012 and 2015—largely because of community policing. Handcuffs and firearms are now considered tools of last resort. As Camden’s police chief remarked not long ago, “Nothing builds trust like human contact.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702521-thin-blue-line-edge-after-new-spate-shootings-ambushed-and-anguished/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Michael Elliott + +The Fab One + +One of Liverpool’s finest exports to America died on July 14th, aged 65 + +Jul 23rd 2016 | From the print edition + +Big Idea brewing + +AROUND the time that Michael Elliott, then a Britain correspondent at this newspaper, was steeped in an analysis of London’s revival—published in January 1986—Prince Charles came for lunch at The Economist. Where, the prince asked the journalists, were Britain’s entrepreneurial industries of the kind America nurtured at MIT? “There,” said Mike, with a sweep of his arm towards the panorama of London behind him. “In Covent Garden, Sir, in music, in arts, in advertising. That’s our MIT.” + +The sweeping view was something Mike produced with gusto, not just at The Economist, but at Newsweek and Time too, for he had senior roles at all three. Here he was the founding author of both the Bagehot column on British politics and the Lexington one on America (named after the first skirmish in America’s war of independence, where the British drew first blood before being harried back to Boston). + +In America Mike found his spiritual home. No one cared about a Scouse accent and, in contrast to Britain, blatant ambition was admired. The big ideas poured forth. + +“No offence intended, but what is the point of the Senate?” began a typical Lexington column. A special report in 1991 probed why, despite the collapse of communism, “America now is not self-confident, not sure of its greatness. It feels the pressure of the outside world on its violate shores, and it fears a debilitating fragmentation within them.” The words still ring true 25 years on. + +Presciently, too, Mike grasped in 1992 the political gifts of a young governor from Arkansas. And he had an eye for the sort of detail that could elude others. Setting off to take the pulse of the heartland after the Republican convention that year, he wrote: “Between Tulsa, Oklahoma and Rapid City, South Dakota, The Economist’s correspondent was unable to find a copy of Playboy openly displayed for sale.” + +Having explained America to the world, he went on to explain the world to America. As editor of Newsweek and Time’s international editions, he splendidly interpreted everything from the geopolitics of football to the consequences of Asia’s rise. In all this, three things helped him. First, his family, who kept his feet on the ground. Second, a quick mind: he wrote with speed and panache, after strolling round leisurely with a big cigar beforehand. And, third, a winning personality: gregarious, fun, big-hearted. That made him a natural networker, as well as a generous mentor to young journalists. + +For the past five years he was president and CEO of ONE, an anti-poverty advocacy organisation co-founded by the rock star Bono. It was a perfect place for his hobnobbing and high ideas. And it gave him a new mission: after explaining the world, it was time to change it. + +Time, sadly, was not on Mike’s side. Two days before his death from cancer, ONE held a dinner in his honour. In homage to his Liverpudlian roots, Beatles references abounded. Bono adapted “When I’m 64” to “Now I’m 65”. But never mind the Fab Four: here was a Fab One, who with an expansive gesture and a few phrases could sum up not just London, but the world. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702520-one-liverpools-finest-exports-america-died-july-14th-aged-65-fab-one/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Immigration economics + +Wages of Mariel + +The effect of the boatlift is re-evaluated + +Jul 23rd 2016 | From the print edition + + + +IT CAN be hard to work out the net impact of immigration on wages, especially in cities with bustling economies. The only way to try to tease out causality from coincidence is by hunting for a “natural experiment”: a historical event that is something like the randomised controlled tests scientists would conduct in a lab. For immigration, one such useful event is the Mariel boatlift of 1980. + +For all its woes now, Cuba was an even tougher place 36 years ago for dissidents and economic strivers. Fidel Castro’s government persecuted citizens for their political beliefs, and barred most Cubans from emigrating. But in April 1980 Mr Castro decided that tensions in his country had grown too severe, and opened an escape valve. He declared that any Cubans who wanted to leave were free to go, provided that they left by the port of Mariel. Some 125,000 Cubans took up his offer that year, most of them heading for Miami. + +As the newcomers arrived, Miami’s workforce grew by 55,000, or 8%, almost at once. The marielitos were mostly low-skilled: around 60% lacked high-school degrees, and just 10% were college graduates. In theory, a supply shock of this magnitude might have been expected to depress the wages of workers already in Miami, particularly the poorly-educated, at least in the short run. But the empirical evidence has been mixed. In 1990 David Card, an economist now at the University of California, Berkeley, looked at the bottom quartile of workers in Miami and concluded that the Mariel boatlift had had “virtually no effect” on the wages of low-skilled non-Cubans. He also found no evidence of increased unemployment. His paper was highly influential. + + + +Twenty-six years later, Mariel is in the policy spotlight once again. A forthcoming paper by George Borjas, an economist at Harvard, revisits the boatlift and contradicts Mr Card’s conclusion. By using a slightly different definition of low-skilled worker—high-school dropouts—he found that their wages fell precipitously after the influx of labour in 1980, both in absolute terms (see chart) and relative to other workers in Miami. A similar decline could be observed after 1995, after a second wave of immigration from Cuba. + +It remains hard to generalise from either set of results. Mr Card’s study suggested that reality may not agree with researchers’ intuitions; Mr Borjas’s paper shows that empirical results may depend on exactly where researchers look. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702526-effect-boatlift-re-evaluated-wages-mariel/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +At his majesty’s pleasure + +Mike Pence is no saviour for a divided Republican Party + +Jul 23rd 2016 | From the print edition + + + +CONSERVATIVE principles “work every time you put them into practice”, Governor Mike Pence of Indiana told the Republican National Convention in Cleveland in his first big speech as Donald Trump’s vice-presidential running-mate. Mr Pence cited as proof his home state’s balanced budget, lowered taxes and sharply trimmed public workforce. A strait-laced, silver-haired former altar boy, he waved hello to his mother and to his wife of 31 years, and promised that Mr Trump would bring “no-nonsense leadership” to Washington. The crowd was so relieved that spontaneous chants of “We like Mike” broke out. + +Mr Pence was introduced by his former colleague from Congress, the Speaker of the House of Representatives, Paul Ryan. Back in 2012 Mr Ryan reassured anxious conservatives as Mitt Romney’s vice-presidential sidekick. Mr Ryan called Mr Pence a “Reagan conservative through and through”, who could be trusted as a pro-growth, anti-abortion defence hawk from “the heart of the conservative movement and the heart of America”. + +Others go further. Cleveland buzzed with talk of Mr Pence as vice-president-cum-CEO, who might wield sweeping delegated powers over foreign and domestic policy. Conservatives have been encouraged in thinking by such Machiavellian figures as Paul Manafort, the Trump campaign chairman, who told the Huffington Post, a website, in May that the putative president wanted an “experienced” vice-president to do bits of the job that do not appeal to him, leaving Mr Trump a “chairman of the board”. + +Mr Ryan played up the idea of the general election as a team effort, telling the convention that the best end for a year of “surprises” would be America voting for a “conservative governing majority”. The Republican majority leader in the Senate, Mitch McConnell of Kentucky, asked delegates to imagine a President Trump signing bills placed on his desk by a Republican Congress, and naming stern conservatives to the Supreme Court. + +For their part, several delegates in the hall cooed over Mr Trump’s snappily dressed, perfectly coiffed children, as they declared their love for and pride in their father. In an unusually feudal touch, the convention in Cleveland heard speeches from several Trump employees, including the manager of his Virginia wine estates. This vision of a leader surrounded by handsome children and loyal counsellors had its fans. A woman delegate from New York, eyes wide in delight, predicted that a President Trump would surround himself with the “very, very, best people”, including the “best generals”, to keep the country safe. + +Enough of these delusions. Start with a gulf of ideology. Such figures as Mr Pence and Mr Ryan, with their record of backing free-trade pacts and their wonkish talk of balanced budgets, limited government and a global, outward-facing America, are describing ways to make their country more competitive. Boil Mr Trump’s platform down to its essence, and he is offering to shield his angry, unhappy supporters from global competition, whether by beating it back with protectionism, trade wars and a fortified border, or by an “America First” foreign policy that would hand in America’s badge as a global policeman. As if to prove the point, on the day of Mr Pence’s speech Mr Trump told the New York Times that, should Russia menace such NATO allies as the Baltic republics, he would weigh whether they had “fulfilled their obligations to us” before acting. + +Listen to some in Cleveland, and “chairman of the board” hardly describes the role they have in mind for Mr Trump. With their word-pictures of Reaganesque bills being sent for the Trump signature, and their fawning praise for the Trump clan, some are describing a sort of elected monarchy, complete with princelings, in which important decisions are guided or taken by a Prime Minister Pence from the ruling Republican Party. + +No such institution exists in America’s constitution, born of a revolution against a king. The most influential vice-presidents wield power only at the pleasure of the president. By the end of the second term of George W. Bush, even Dick Cheney was a much reduced figure. Moreover, much of a president’s political power derives from the unrivalled personal clout that comes with election by more than 60m voters: a mandate that explains why presidents enjoy honeymoon periods when they are first elected. The mandate of Congress is sometimes fresher, after mid-term elections, but it is never as weighty. + +In as much as mandates are built on promises to do things, Mr Trump pledges to enact policies that repudiate much of what men such as Mr Pence and Mr Ryan stand for. Republican unity, such as it is, is currently built on what the party is against. Almost every speech in Cleveland attacked Hillary Clinton, the presumptive Democratic nominee, whose name was enough to prompt repeated chants from delegates of “Lock her up”. But for feuding wings of the Republican Party, having a common enemy is not the same as seeking the same governing mandate. + +Trump Rex + +Mr Pence may not even broaden Mr Trump’s base much. He shores up the Christian conservative vote, but by taking positions liable to put off other groups vital to Republicans in national elections, such as college-educated whites or married suburban women. As governor of Indiana he signed, then tweaked, a law that appeared to allow religious business owners to refuse service to gay couples, as well as a far-reaching bill (since held up by lawsuits) banning doctors from performing abortions on such grounds as a diagnosis of Down’s syndrome. + +In febrile times, it is hard to begrudge Republicans cheering a stolid midwesterner for whom “no-nonsense” is a compliment. But nonsense is what has propelled Mr Trump this far. He needs a running-mate who will not overshadow him, and who will give Reagan-loving conservatives an excuse to embrace him, not control him. Hence Mr Pence. + + + + + +Donning the mantle + +Proceedings plunged between perplexing inanity, shambles, and sometimes rowdy conflict + + + +US party convention timeline + +Any drama that ensues at this year's Republican affair will still pale in comparison with the rows and splits of yesteryear + + + +Melania Trump’s excruciating blunder + +Two passages of her speech had been lifted from Michelle Obama's address to the Democratic convention in 2008 + + + +How Paul Ryan hopes to preserve his dignity + +Mr Ryan is a decent man who must chair the Republican convention that will nominate an indecent candidate for president + + + +The killings in Baton Rouge + +Law-and-order is pushed to the centre stage of the conventions + + + + + +More US election coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702524-mike-pence-no-saviour-divided-republican-party-his-majestys-pleasure/print + + + + + +Previous Articles Sections Next + + + +The Americas + + + + + +Canada’s internal trade: The great provincial obstacle course + +Cuba’s economy: Caribbean contagion + +El Salvador: Reconsidering the price of peace + +Bello: Lessons from a liberal swashbuckler + + + + + +Articles Sections Next + +Canada’s internal trade + +The great provincial obstacle course + +The country is far from being a single market. That may be about to change + +Jul 23rd 2016 | OTTAWA | From the print edition + + + +LAST year Don Dean, a logistics expert, set out to solve a mystery: why were oil and mining firms in Alberta buying heavy equipment from Asia, landing it in United States ports and bringing it in by motorway rather than using suppliers in Ontario? The answer, he discovered, is bureaucracy. Lorries carrying heavy loads in Canada need permits from each provincial government, municipality and utility company along the route. Ontario can take 27 weeks to issue one, says Mr Dean, who works for Prolog Canada, a consultancy. The journey on American roads requires just one licence. + +Canada’s constitution of 1867 mandates the free flow of commerce across the country. But leaders of the ten provinces and three territories have spent 149 years inventing creative ways to favour local firms or issuing regulations that unintentionally snarl trade through sheer complexity. Some are mere nuisances: lambs’ heads are thrown out by federally licensed slaughterhouses but given back to the farmer for sale in some provinces (they are a delicacy in some cultures). Other impediments loom larger. Canada lacks a single securities regulator; production of milk must be matched to local consumption; the sale of alcohol is reserved for provincial monopolies. Twelve regional regulators license engineers. Canada’s internal market for goods and services is less integrated than that of the EU, concluded Alicia Hinarejos, of the University of Cambridge, in a study in 2012. + +No one knows how much this costs in lower productivity from lost economies of scale. In a recent report, “Tear Down These Walls”, the Senate’s banking committee guessed that the economy loses C$130 billion ($99 billion) a year from internal barriers, which is among the higher estimates. A more reliable answer will come later this year when EY, an accounting and consulting firm, completes work on an index of barriers and their costs that was commissioned by the federal government in 2014. + + + +Internal obstacles are one reason that provinces trade more with foreign countries than with each other; another is the American market next door (see chart). Earlier attempts to dismantle barriers have been half-hearted. An Agreement on Internal Trade reached in 1994 eliminated specific obstacles but did not sweep most away. Provinces often ignored it. Quebec protected its dairy farmers by insisting that margarine could not be the same colour as butter; Alberta, which makes butter-coloured spread from canola, protested for years (before winning its case). Fines of up to C$5m, introduced in 2009, improved compliance. The agreement has been extended to cover some aspects of labour mobility, but large gaps remain. + +Unlike the EU, Canada has left the demolition of internal trade barriers to politicians rather than the courts. Canada’s Supreme Court, reluctant to interfere in provincial affairs, has ruled narrowly in trade cases on whether a province was acting within its constitutional powers rather than on broader issues of internal free trade. That has spared Canada EU-style complaints about rules on banana curvature imposed from afar by bureaucrats. But it has also allowed the national market to remain a patchwork. The federal government, which has jurisdiction over inter-provincial commerce, has sermonised on freer trade but not enforced it. + +Two recent events have changed the mood. The first is the conclusion in February of negotiations on a free-trade agreement between Canada and the EU (CETA). Under the proposed deal, Canada would offer European firms broader access (for example, in public procurement) than provinces give to each other’s companies. This showed that Canada’s internal obstacles are “a bit ridiculous”, said Tom Marshall, a former premier of Newfoundland and Labrador. After Britain’s vote to leave the EU, CETA is likely to fall apart, but its shaming effect lingers. + +A bigger spur to reform is a decision by a court in New Brunswick in April to dismiss charges against a man who bought cheap beer and spirits in neighbouring Quebec to guzzle at home. The judge took a more expansive view of his powers than earlier precedent-setters have done. “The fathers of confederation wanted to implement free trade as between the provinces of the newly formed Canada,” he wrote. New Brunswick’s liquor laws thus violate the constitution. The province has appealed; the case may reach the Supreme Court. + +Before that happens the provinces may take action. On July 8th their trade ministers decided to revise the internal-trade agreement. The “positive list” of deregulated sectors will be replaced by a “negative list”, a limited number of sectors exempt from free trade. A new mechanism will be created to harmonise provincial regulations. Provinces are to offer each other the same access Canada does to countries with which it has trade deals. Brad Duguid, Ontario’s minister responsible for trade, calls the agreement “unprecedented”. As The Economist went to press, provincial premiers were expected to ratify it. + +Yet resistance to the Canadian single market remains strong. Alberta lobbied to reserve for local firms a big share of contracts to rebuild Fort McMurray, the centre of its oil industry, which was burnt down by wildfires this year. Deregulation of trade in liquor, dairy products, poultry and eggs has been left until later. Provincial protectionism is not dead yet. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21702495-country-far-being-single-market-may-be-about-change-great-provincial/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Cuba’s economy + +Caribbean contagion + +Venezuela’s pneumonia infects the communist island + +Jul 23rd 2016 | HAVANA | From the print edition + +Haircuts all round in Havana + +QUEUES at petrol stations. Sweltering offices. Unlit streets. Conditions in Cuba’s capital remind its residents of the “special period” in the 1990s caused by the collapse of the Soviet Union. Today, the benefactor in trouble is Venezuela. + +For the past 15 years Venezuela has been shipping oil to Cuba, which in turn sends thousands of doctors and other professionals to Venezuela. The swap is lucrative for the communist-controlled island, which pays doctors a paltry few hundred dollars a month. It gets more oil than it needs, and sells the surplus. That makes Cuba perhaps the only importer that prefers high oil prices. Venezuelan support is thought to be worth 12-20% of Cuba’s GDP. + +Recently, the arrangement has wobbled. Low prices have slashed Cuba’s profit from the resale of oil. Venezuela, whose oil-dependent economy is shrinking, is sending less of the stuff. Figures from PDVSA, Venezuela’s state oil company, suggest that it shipped 40% less crude oil to Cuba in the first quarter of 2016 than it did during the same period last year. Austerity, though less savage than in the 1990s, is back. Cuba’s cautious economic liberalisation may suffer. + +On July 8th Marino Murillo, the economy minister, warned the legislature that Cuba would lower its energy consumption by 28% in the second half of this year and cut all imports by 15%. The government has ordered state institutions to reduce their energy consumption dramatically. Television producers have been told to film outdoors to save the expense of studio lighting. Foreign businesses, some of which have not been paid by their government customers since last November, are being asked to wait still longer, though the government is negotiating to restructure sovereign debt on which it had defaulted. + +It has cut off the supply of diesel to drivers of state-owned taxis and told them to look for other work for the next few months. “It’s entirely illogical,” says Hector, a driver. Tourism has surged since the United States loosened travel restrictions in 2014, which will partially offset the loss of Venezuelan aid. The cost of fuel is minuscule compared with the fares Hector’s American passengers pay. + +A week after Mr Murillo, the government’s leading economic reformer, issued his warning to the legislature he was relieved of his ministerial duties, though he remains in the Politburo. His replacement as economy minister, Ricardo Cabrisas, is seen as a competent veteran. + +The crisis seems to have slowed reforms of Cuba’s socialist economy, which were never rapid. Raúl Castro, who took over as president from his brother, Fidel, in 2008, has since allowed entrepreneurs to start small businesses, cut the state workforce by 11% and opened a free-trade zone for foreign firms at the port of Mariel. But Cuba still operates a price-distorting dual-currency system. Small businesses cannot buy from wholesalers or import products directly. Many foreign investments in such areas as sugar and tourism, which would bring in billions of dollars, are stuck in the planning stages. Venezuela’s lurgy should sharpen Cuba’s eagerness for the remedy of reform. It seems to be dulling it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21702494-venezuelas-pneumonia-infects-communist-island-caribbean-contagion/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +El Salvador + +Reconsidering the price of peace + +The striking down of an amnesty law rattles the establishment + +Jul 23rd 2016 | SAN SALVADOR | From the print edition + + + +WARPLANES flew over the capital. Ex-guerrillas waving red protest banners thronged the streets. On July 13th El Salvador’s supreme court struck down an amnesty law that had helped secure peace after 12 years of civil war. The law enacted in 1993 is unconstitutional, the court said, because it prevents victims of atrocities from seeking justice. But many Salvadoreans fear that justice will come at the expense of political stability. + +Amnesty for crimes committed by both sides in the war, in which more than 75,000 people died, is almost the only point of agreement between the main political forces, the right-wing ARENA party and the left-wing FMLN. A “general amnesty” was the only way to move the conflict from the battlefield to the ballot box, says Mauricio Ernesto Vargas, a retired general who represented the military in the peace talks. Today’s elected leaders, heirs to the left-wing guerrillas who waged war against the state, are equally nervous. The court’s decision threatens “the fragile coexistence in our society”, said the president, Salvador Sánchez Cerén, a former guerrilla commander. He later backtracked. + +Human-rights advocates insist that peace never depended on impunity for the worst crimes. The agreements signed in Mexico in 1992 provided for a UN-appointed “truth commission” to investigate “grave acts of violence”, an idea copied by other countries trying to overcome decades of conflict, including South Africa. A National Reconciliation Law enacted that year granted amnesty for most war crimes but said that perpetrators of atrocities should be prosecuted. That law is unaffected by the court’s decision. + +Its target is the more sweeping amnesty law passed a year later, after the truth commission issued a report accusing leaders from both sides of participating in massacres, assassinations, torture and other atrocities. That law violates both the constitution and human-rights treaties by declaring an “unrestricted, absolute and unconditional” amnesty, the court said. The government must investigate and punish “the material and intellectual authors of human-rights crimes”, which may include El Salvador’s most prominent politicians. It must also make reparations to victims. Though politicians are alarmed, the ruling “puts El Salvador on the path to reconciliation”, contends David Morales, the country’s human-rights ombudsman. He hopes that justice will heal the “open wounds” of victims’ families and help end a culture of impunity, one reason for the country’s horrific murder rate. + +That thesis will be tested only if El Salvador’s prosecutors now pursue suspected war criminals. The decision falls to Douglas Meléndez, the attorney-general, who has shown an independent streak, for example by charging corrupt mayors in both parties. So far, he has not made it clear that he intends to prosecute war criminals. + +The supreme court’s ruling is a sign that El Salvador’s judiciary is eager to assert its independence of both political parties. If Mr Meléndez takes up its invitation to prosecute civil-war-era crimes, that separation of powers will become more pronounced. El Salvador’s decision will be watched by other countries trying to settle longstanding conflicts, including Colombia, which is poised to end a 52-year war with the FARC, a left-wing guerrilla group. A belated pursuit of justice would force Salvadoreans to relive the horrors of the 1980s and remind them of the bloody origins of the main political parties. Some will ask whether amnesty and impunity were too high a price to pay for peace. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21702516-striking-down-amnesty-law-rattles-establishment-reconsidering-price-peace/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +Lessons from a liberal swashbuckler + +Francisco de Miranda and the betrayal of liberty in Venezuela + +Jul 23rd 2016 | From the print edition + + + +EVEN by the standards of an extraordinary age, it was a remarkable life. Francisco de Miranda, who was born in Venezuela in 1750 and died in a Spanish prison 200 years ago this month, was a soldier, statesman, student of military affairs and philosophy, womaniser and bon vivant. Above all, he was a peerless networker and self-appointed leader in the cause of independence for South America from Spanish rule. The populist rulers of present-day Venezuela claim Miranda as a forebear, but his hurly-burly life is a rebuke to their illiberalism. + +He met everyone who was anyone in the Atlantic world in the age of revolution: Washington, Jefferson and Hamilton; Tom Paine and Lafayette; Pitt and Wellington; Napoleon and Catherine the Great of Russia; Joseph Haydn and Edward Gibbon; Jeremy Bentham and Lady Hester Stanhope. He counted several of them as friends and protectors. A man of the Enlightenment, he could converse in five languages as well as read Latin and Greek. His library of 6,000 books in the house in Fitzrovia, London, that was the closest he came to a home was one of the largest of the age. He was, as Karen Racine, a recent biographer, puts it, “an international celebrity, a must-have guest at any liberal host’s dinner party”. + +As an officer in the Spanish army he fought in Morocco and in Florida against the British during the American war of independence. Slighted and mistrusted, he turned against Spain. The rest of his life became a quest for the liberation of South America, in which his main resources were charm, intelligent conversation and an unshakable self-importance. A tireless traveller and acute observer, he roamed across the United States and western Europe, and on to Greece, Turkey and Russia. Catherine, infatuated by the handsome South American, made him a count; the claims of excitable biographers that they were lovers lack evidence. + +In 1792 Miranda turned up in revolutionary France. He was appointed a marshal in the army. He acquitted himself well in battles against the Austrian-Prussian coalition (his name is inscribed on the Arc de Triomphe in Paris) before falling victim to intrigue. Twice imprisoned during the Terror, he escaped the guillotine thanks to his popularity and sangfroid. + +Fittingly for a man whom Napoleon judged a “saner” Don Quixote, at the age of 55 Miranda set sail with just three ships and some 180 freshly recruited New Yorkers to liberate his homeland from Spain. The expedition failed. Back in London, he was persuaded by the young Simón Bolívar to try again. After Venezuela declared independence in 1811, Miranda was put in charge of the patriot forces. But he was old and, after 40 years abroad, ignorant of local realities; he was forced to negotiate peace. In one of history’s great betrayals, Bolívar, who had played a big role in the defeat, handed his fallen hero over to the Spaniards. It would be the younger man who became the great liberator of northern South America. + +Most revolutions disdain the past. Not so those in Latin America (which often claim to have fought a second imperialism, that of the United States). That is especially true of Hugo Chávez’s “Bolivarian revolution”, which used oil wealth (now dried up) to build an elected autocracy and a state-controlled economy (now in ruins). Perhaps because the United States never dominated Venezuela as it did Cuba, or because he came to power via a failed military coup and then an election, not a popular uprising, Chávez constantly sought to link himself to his country’s independence leaders. At the national pantheon in Caracas on July 14th, Nicolás Maduro, Chávez’s chosen successor, marked the bicentenary of Miranda’s death by declaring him (rightly) to be “a universal Venezuelan” and (mysteriously of a soldier) “admiral-in-chief of the nation”. If Miranda were alive today, “he would be a chavista,” opined a leader of the ruling party. + +Like hell. True, Miranda was an anti-imperialist and he believed in continental solidarity against Spain. But he was a lifelong admirer of the United States and (especially) Britain. His political philosophy was moderate liberalism. Personal experience gave him a particular horror of Jacobin extremism. In a pamphlet published in France criticising the Terror, Miranda “recommended that the various branches of government be kept separate, each charged with oversight of the others”, as Ms Racine writes. For Venezuela, a country whose president this month granted the army sweeping power over food production and distribution, who ignores the opposition-controlled parliament and whose courts bow to the executive, that remains sound advice. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21702528-francisco-de-miranda-and-betrayal-liberty-venezuela-lessons-liberal/print + + + + + +Previous Articles Sections Next + + + +Asia + + + + + +Politics in Thailand: Twilight of the king + +Crimes against women: Can the licence to kill be revoked? + +Dissent in Laos: Radio silence + +South Korea’s DIYers: Bangsta style + + + + + +Articles Sections Next + +Politics in Thailand + +Twilight of the king + +After the ailing monarch goes, what next? + +Jul 23rd 2016 | From the print edition + + + +TO THE casual observer the country is calm and orderly. And reverential: adorning a sweet-seller’s stall in a buzzing market in Bangkok, Thailand’s capital, are a dozen laminated pictures of the 88-year-old King Bhumibol Adulyadej who, on the throne since 1946, is the world’s longest-reigning monarch, indeed the only king most Thais have ever known. During his reign Thailand has become one of the richest big countries in South-East Asia, a manufacturing hub and a magnet for tourists. Bhumibol’s picture is everywhere, including in millions of homes. As for the ailing king himself, who lies in a hospital just opposite the sweet-seller’s stall—he has not been seen for months. The palace rarely breaks its silence. But in June and again this month doctors said they had drained fluid from his brain. + +Whether it comes in weeks or years, the king’s passing will be more than a milestone. His death may set loose centrifugal forces that a coup in 2014 sought to contain, but seems destined in the long run only to aggravate. Below the surface, Thailand is deeply fractured. And so the army-enforced calm accompanying the king’s twilight is fragile. Not least of the problems is that his successor, the crown prince, Maha Vajiralongkorn, is deeply unpopular. After Bhumibol’s death the country, a crucial ally of America’s in South-East Asia, risks descending further into civil strife and economic dislocation, as an elite around the palace resists popular calls for a greater say in politics and a more equitable sharing of wealth. At that point, all bets about Thailand’s stability and prosperity may be off. + +When the junta ousted the elected government of Yingluck Shinawatra two years ago, it was the second army-backed coup in a decade, and the most recent of several during the king’s reign. This time the army appears to be digging in. The junta, under the self-declared prime minister, Prayuth Chan-ocha, has forbidden politics and censored the press. Even criticism of an illiberal draft constitution that the generals hope to ram through in a popular referendum on August 7th is banned. Critics of the junta, including journalists, activists and a few politicians, have been hauled in for “attitude adjustment” sessions. + +Notably, the junta has made draconian use of Thailand’s law on lèse-majesté, which provides for long prison terms for anyone deemed to have spoken ill of the king, queen or heir-apparent. Facing growing anti-establishment sentiment in the provinces among people who feel that an urban alliance has conspired to disenfranchise them, the authorities have presided over a big rise in the law’s use over the past decade, with imprisonments rising sharply after the 2014 coup (see chart). + + + +More than 50 people spent some time in jail in June for lèse-majesté; they included Thais accused of defaming the royals in a student play, scribbling on toilet walls and speaking unguardedly in a taxi. Military courts have handed out staggering sentences: last year two Thais convicted of posting anti-monarchy messages on Facebook received jail terms of 28 and 30 years. Any Thai may report an instance of lèse-majesté, and the authorities invariably act, scared that going soft on suspects might itself be a crime. Hardliners argue that even criticising the law or the long sentences is an offence. (Though the king himself did so in 2005, complaining that: “If you say that the king cannot be criticised, it suggests that the king is not human.”) + +A big part of the generals’ project is to eradicate any lingering influence of Thaksin Shinawatra, a populist politician (and elder brother of Ms Yingluck) now in self-imposed exile, but who has been the biggest factor in politics for most of the past decade and a half. Though the traditional elites abhor him, his parties have won every election they have been allowed to contest since 2001. His movement is loosely associated with the “red-shirt” activists who have sometimes congregated in support of the Shinawatras (and who are themselves opposed by “yellow-clad” royalist protesters, mostly drawn from the middle and upper classes). + + + +A police officer turned tycoon, Mr Thaksin took advantage of a liberal constitution adopted in 1997 in the wake of the Asian financial crisis. He transformed a system of retail, local vote-buying into a machine that spread patronage more broadly. Helping him were billions of dollars earned from his telecoms and media businesses, built on government concessions. His parties draw support especially from Thailand’s neglected north and north-east. + +There was much to object to about Mr Thaksin’s time as prime minister between 2001 and his ouster by the generals in 2006. Berlusconi-like, he blurred the line between politics, media and business. And the bloody vigilante justice he dealt to alleged drug-runners and to government opponents in the Muslim and often strife-torn south of the country was appalling. But the generals’ squabble with him is part of a broader tension, which has pitted a Bangkok-centred establishment against poorer Thais, many in the countryside. + +For all Mr Thaksin’s flaws, he recognised the plight of the less well-off and shaped a politics that appealed to them. His first government introduced free health care and increased subsidies to rice farmers. That, in 2005, helped him become the first elected Thai prime minister to complete a term in office. Yet the business and political establishment around the royal court pushed back. Bangkok bigwigs, hardly clean themselves, complained about corruption and cronyism. They accused Mr Thaksin of pouring cash into crowd-pleasing schemes to tighten his grip on power. They warned that rural giveaways would bust the budget. But, above all, they worried that he appeared to be setting up a network of patronage and economic power to rival their own. Their royal-sanctioned network was—and remains—huge, and ill-understood. Yet it is the chief obstacle to the modernisation that Thailand needs for long-term stability. + +The importance of royal patronage to Bangkok’s elites helps explain why reverence for the king is so obsessively enforced. Yet neither that reverence, nor its enforcement, were self-evident necessities to the reformers who, in 1932, replaced a long line of absolutist kings with a constitutional monarchy. Nor were they deemed so in 1946, when the current king ascended the throne as a young, American-born son of a commoner. Soon, however, struggles between civilian and military factions had halted progress towards democracy. Palace advisers and military-led governments sought to shape the Bhumibol reign, and the behaviour of the man himself. + +The royal role + +Seeking legitimacy—and, as wars raged in Indo-China, a bulwark against communists—generals who had come out on top by the late 1950s sought to turn the monarchy into a nationalist symbol. With army help (and American financial backing), the palace clawed back esteem and wealth. + +Elevating the king’s prestige has made it easier for Thailand’s armed forces to paint the politicians they have routinely ousted as petty and ignoble. And it has allowed the palace to become a political actor in its own right. Its power has fluctuated. It remains opaque and the subject of debate. One analysis describes Thailand’s monarchy not as a person, nor even really an institution, but as a network centred on royal advisers in the privy council (appointed by the king) and encompassing royalists whom they can promote through the army, bureaucracy and judiciary. Though interests differ and sometimes conflict, many benefit from the whiff of authority which proximity to the palace endows. + +In times of crisis, the palace has occasionally acted as a final arbiter—as in May 1992, when the king was seen to call an end to bloody battles between pro-democracy demonstrators and an army-led government, whose prime minister then stepped down. More often the palace is seen to endorse military takeovers. No coup is considered successful until its leaders are granted some sort of royal audience. + +Less obvious but equally important, a near-divine figurehead is convenient for blessing the sometimes dodgy business activities of palace elites and the army. It is desirable, too, for the elites to have a monarch who is a source of patronage and power in his own right. The monarchy bestows honours, for instance, in return for donations to royal charities and good causes. Such things are valuable: indeed, the courts imprison people deemed to have feigned royal links for personal gain. + +And though the economy has liberalised considerably since the Asian financial crisis, government concessions, public works and special policy deals still produce vast fortunes for palace-linked businesses. Serhat Ünaldi, the German author of a recent book about the monarchy, notes that some royally connected businesses outperform peers simply because consumers consider them more prestigious. + +Follow the money + +When the king was healthier, cameras would film him trekking around poor parts of the country, inspecting royally sponsored development projects and meeting subjects. For decades he presided over every public university’s graduation ceremony. But over this foundation grew a thick layer of myth. Courtiers reinstated archaic traditions, such as a requirement that commoners prostrate themselves before royals. Royal pageants with spiritual overtones became more frequent. A royal philosophy was devised, of the “sufficiency economy”. Its vision of development based on harmonious rural life and a deferential hierarchy is fantasy. No matter: the generals who ousted Mr Thaksin in 2006 accused him of flouting the notion of the sufficiency economy—ie, the king’s will. + +In the zero-sum calculations of the court, Mr Thaksin’s own network threatened to supplant that of the monarchy. And the stakes were huge. The palace controls billions through its stewardship of the Crown Property Bureau (CPB), a firm that manages the royal family’s properties and investments. Its holdings include chunks of Siam Commercial Bank, one of Thailand’s largest banks; Siam Cement, its biggest industrial conglomerate; and the Kempinski hotel group. It owns swathes of land, including several square miles of Bangkok. Its finances are outside the government budget, and opaque. A study in 2015 guessed that it was worth about $44 billion. That may be an underestimate. + +The CPB’s board is appointed by the palace (though by tradition the finance minister holds a seat). It is not required to pay tax, and in principle its income is the king’s to spend. The CPB’s cash pays a big chunk of the monarchy’s household expenses; it is also used for provincial developments that have done much to burnish the palace’s prestige. Some of its business in Bangkok looks charitable, too. All but a sliver of its property there is leased cheaply—and sometimes to palace cronies. + +The risk that the succession will disrupt or divert patronage is one reason for jitters in Bangkok. The CPB’s holdings amount to an “insane” amount of money, says a local businessman. “People kill for much less.” + +Vajiralongkorn: uncrowned and unloved + +The 63-year-old crown prince, Vajiralongkorn (pictured), is spoilt and demanding, and—to put it mildly—widely loathed. Three times divorced, he spends a lot of time abroad, often in Germany. In 2007 leaked video footage showed him and his then-consort, who was wearing nothing but a G-string and heels, holding a lavish royal party. The only guest appeared to be Foo Foo, his poodle, which before dying in 2015 enjoyed the rank of air chief marshal. One of the prince’s more generous critics calls him “a loose cannon”. + +What once especially troubled the elites was a rumoured friendship between the crown prince and Mr Thaksin, who upon his election in 2001 is said to have given Vajiralongkorn a luxury car. The establishment worried that, when crowned, the prince, unpopular at court and among the middle classes, might align himself with Mr Thaksin’s populist movement. That could grant Thaksinites access to the crown’s wealth, and end up locking the old elites out of power. This may have been a key factor behind the army coups against Mr Thaksin and his sister. + +For years it was rumoured that palace insiders might interfere with the succession in order to elevate Vajiralongkorn’s more admired sister, Princess Sirindhorn, to the throne (Thailand has never had a reigning queen). But this gossip has recently died down. The junta has shown clear support for Vajiralongkorn, whose reputation it is buffing with a lavish publicity campaign. It has also involved the prince in jolly public events such as two huge charity bike rides. It may have come to some kind of accommodation with him, or simply decided that interfering with the succession will only cause more trouble. + +Born unequal still + +Some observers now suggest that the succession will prove less disruptive than many had feared. There is even talk that King Bhumibol might abdicate before he dies, in order to help smooth the transition. Certainly, vague worries in Bangkok that “red-shirts” could use the occasion for anti-establishment protests are likely to prove overblown. Might Bangkok’s elites, less worried that a royal transition would threaten their privileges, countenance the shifts needed to heal the country’s rifts, starting with a huge economic divide? + +They certainly ought to. More and more Thais are aware of their country’s stark inequalities. Yes, rapid growth has lifted tens of millions from poverty and the curse of subsistence farming. Many from outlying regions have found work in the booming capital or have moved abroad. Yet inequality remains high compared with similarly developed countries. One analysis finds that a tenth of Thailand’s landowners own nearly two-thirds of its titled land. A fifth of rural Thais remain unbanked. + +National governments have long overlooked such disparities, committing the bulk of resources to the capital region, even though incomes there are five to seven times higher than in Thailand’s poorer parts. A three-year study reported by the World Bank in 2012 found that three-quarters of all public expenditure was lavished on Bangkok and adjacent provinces, even though the capital region had only 17% of the population of 67m (see map). Spending per head on education was four to five times higher in Bangkok than elsewhere, and on health, 12 times higher. But instead of devising policies to deal with such inequalities, the junta has been cracking down particularly hard on opposition in the rural north and north-east, the largest and poorest regions. One opponent recalls being taken away blindfolded and detained for seven days. + + + +An obstacle to sounder policy is Thailand’s extreme centralisation. Neighbouring Indonesia, after the fall of Suharto, its last dictator, undertook radical decentralisation, which has helped entrench democracy. Yet even during periods of democratic rule, Thailand’s provincial governors have been appointed by the central government rather than elected locally. That means regions lack champions—and the stakes in national politics are raised. Under the army, which sees itself as the guardian of a unitary state, regional autonomy seems unimaginable. Historically, civilian and military governments alike have played down, not celebrated, Thailand’s provincial dialects and patchwork of ethnicities. + +It is all storing up trouble for later. Some Thais seem persuaded that eradicating the last lingering influence of Mr Thaksin and his family will help heal social and economic divisions. The establishment intimates that the so-called “good people”—soldiers and selfless bureaucrats—are the only ones who can be trusted to lead the country. Yet such thinking is holding back the development of democratic institutions that might have kept Mr Thaksin in check. The generals have not banished the dissatisfaction caused by the instability and low growth that followed Mr Thaksin’s defenestration. “The junta’s attention is nowhere near where a normal government’s ought to be,” says an analyst familiar with the north-east. + +Continuity bordering on stasis looks likely to be the watchword. Portraits of King Bhumibol will not disappear any time soon. Indeed, one Thai observer thinks his veneration will extend long beyond his death and mourning period. Yet the eventual dissipation of Bhumibol’s charisma, and his moral and sacred authority, mean that the palace’s authority seems bound to dwindle. A new generation of royal advisers could come to realise that the monarchy’s survival would be best secured through a more defined kind of constitutionalism. The palace might attempt to speak out more plainly against the most egregious abuses of the lèse-majesté law (rumours have swirled that a large number of pardons may be granted soon). + +Unsteady as you go + +A palace less tolerant of authoritarianism would be an improvement. But it is only the most optimistic scenario. A grimmer one sees the army using the royal transition as an excuse to impose even greater limits on political activity and free speech—becoming ever more at odds with civilians whose taste for bowing and scraping before the monarchy can only fade. Observers who once thought that the generals’ only priority was to act as an escort to the succession now detect nostalgia for the days when military government was the norm; it looks keen to pull Thailand’s strings for years to come. That would probably mean many more policies designed to smother, rather than solve, Thailand’s problems—such as the suspension of local elections, which are seen to foment discord. All this would doubtless drag out the country’s economic slump. + + + +In graphics: Explaining Thailand’s volatile politics + +Things would get only more volatile should the next king choose to pull enthusiastically on all the levers that have passed to the palace under Bhumibol—elevating henchmen and pursuing vendettas, for instance. It is not clear how far eminences who have thrived under Bhumibol’s reign would tolerate a sovereign they consider actively damaging to their interests: were he, for example, to appear overly chummy with factions linked to Mr Thaksin (or, worse, appear to favour his return). + +Yet efforts to restrain him would risk angering “red-shirt” activists who in recent years have rallied to defend Mr Thaksin and his sister, and more broadly their own democratic rights. They might perceive another effort by the establishment to stifle change they feel is overdue. All is quiet now. But the elements of post-Bhumibol turmoil in Thailand are all there, should events conspire to arrange them so. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21702497-after-ailing-monarch-goes-what-next-twilight-king/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Crimes against women + +Can the licence to kill be revoked? + +“Honour killings” can be stopped only by scrapping religiously inspired laws + +Jul 23rd 2016 | ISLAMABAD | From the print edition + + + +FEW Pakistanis have broken taboos as gleefully as Qandeel Baloch, a social-media star who used the internet to titillate and scandalise her fellow citizens. The 26-year-old (pictured with her iPhone), whose real name was Fauzia Azeem, twerked on camera, posted suggestive selfies and mocked the mullahs who police the social boundaries of a Muslim-majority nation that has become more religiously conservative over the years. It was too much for many, including her brother, who strangled Ms Baloch after drugging her to sleep. Waseem Azeem proudly admitted his crime: “She was bringing disrepute to our family’s honour.” He has been arrested on suspicion of murder. Ms Baloch’s funeral (pictured) was held on July 17th. + +So-called “honour killings” are rarely so sensational. But nor are they rare. The Human Rights Commission of Pakistan tallied 1,096 female victims of them last year. Many go unreported to the police. Cases in the past three months include a 19-year-old girl burned to cinders for refusing a marriage proposal; a 16-year-old girl who met a similar fate for helping a friend elope; and an 18-year-old killed by her mother for marrying a man from a different ethnic group against her family’s will. + +Such atrocities are widely accepted. At a recent screening of “A Girl in the River”, an acclaimed documentary about honour killing, male students at a leading university applauded an interview with a man who was unrepentant about trying to kill his daughter for entering a “love marriage”. + +The problem is rooted in tribal and cultural traditions at odds with young women in a growing middle class who increasingly wish to choose their own husbands. Often such killings will be agreed beforehand at a gathering of local men. + +She mocked the mullahs. She died + +Pakistan’s mullahs are united in declaring that Islam condemns such murders. But this clerical consensus frays when it comes to the sharia-inspired laws of qisas (retribution) and diyat (blood money) that enable men to get away with it. Introduced in 1990, the laws allow the heirs of murder victims to decide whether killers should suffer qisas or be pardoned, sometimes having paid diyat. Since most honour killings are premeditated conspiracies involving entire families, charges are often dropped even before the case goes to court. + +Mr Azeem, however, may not dodge punishment. His distraught father vowed not to forgive the killer of a daughter who was financially supporting the family. And the local police have taken the unusual step of bringing the case themselves. But rights activists say that is no guarantee against a court later agreeing to a forgiveness deal. Families come under immense pressure to pardon honour-killers. + +Pakistan’s clerical establishment is loth to endorse change. A bill in 2004 to reform the law was “severely mutilated”, says the Aurat Foundation, a human-rights group. Reforms proposed in 2015 that would make honour-killers serve at least seven years in jail, even if pardoned, have gone nowhere. + +But there is now an encouraging sign: a private member’s bill to make such crimes “non-compoundable”, meaning that families would no longer be able to forgive each other, is expected to be presented to parliament for debate within weeks. It had long languished in limbo, even after Nawaz Sharif, the prime minister, vowed in January to crack down on honour killings after “A Girl in the River” was nominated for an Oscar, which it then won. Now the government appears to be backing it. + +But Mr Sharif has been beset by corruption allegations, by disputes with the army and by open-heart surgery. While the leading clerical party, the Jamiat Ulema-e-Islami (JUI), has only 13 seats, Mr Sharif values its support at a shaky time and may be wary of pushing through a new law. + +The bill’s sponsors think the JUI may be persuaded that honour killings are an abuse of sharia concepts that were intended to resolve tribal wars, not to provide cover to murderers. But the mullahs may still balk if they believe reform is part of a “Western agenda” epitomised for many by the outrageous Ms Baloch. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21702510-honour-killings-can-be-stopped-only-scrapping-religiously-inspired-laws-can-licence-kill/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Dissent in Laos + +Radio silence + +As Barack Obama prepares for his first visit to Laos, its civil society struggles + +Jul 23rd 2016 | VIENTIANE | From the print edition + +Sombath is missing + +A HIGHLIGHT of Ounkeo Souksavanh’s years as a radio host in Vientiane, the capital of Laos, came in late 2011 when he hosted an episode of Wao Kao (“News Talk”) on land disputes in the south of the country. Near the end of the programme, Mr Ounkeo says, a listener called in and criticised the son of a Politburo member for allegedly grabbing land from farmers for a property-development project. In mid-2012 the Lao government appeared to show sympathy with such complaints: it said it would suspend the granting of permits to take over farmland for rubber plantations, a big cause of farmers’ gripes. + +But there was no on-air celebration. The government had shut down the radio programme, one of the country’s only public outlets for grievance. In December 2012 Sombath Somphone, a campaigner for farmers’ rights who had publicly challenged the granting of rural land-use concessions to businesses, was stopped at a police post and put into the back of a pickup truck. He has not been heard from since. His supporters put up notices about his disappearance, like the one pictured on the next page. Officials told them to stop. Mr Ounkeo felt that he was in danger, too. He eventually left for America. He now works there for Radio Free Asia, a station funded by America’s Congress. + +Foreign ministers from the ten-country Association of Southeast Asian Nations (ASEAN) are due to meet in Vientiane on July 24th for talks on regional issues. One delegate is Aung San Suu Kyi from Myanmar, which has recently taken a big step away from the authoritarianism that once gripped it. Mr Ounkeo describes Miss Suu Kyi as an “icon of democracy”. He says she is an inspiration to young people and intellectuals in Laos. + +But Mr Ounkeo and observers in Vientiane say there is little chance that Myanmar’s opening will be replicated soon in Laos, which resembles Myanmar in its darkest days. It has no free press and dissent is rare and dangerous. NGOs must be approved by the government, which is led by the communist Lao People’s Revolutionary Party (LPRP), the only one allowed by law. They are often strangled by red tape. + +There has been a notable chill since Mr Sombath’s disappearance. Most local civil-society organisations have government links and stick to non-controversial initiatives in areas such as health and education (Mr Sombath’s Participatory Development Training Centre is a rare exception). In May three people who wrote anti-government posts on Facebook were shown on state television in prison garb, confessing their crimes. Their fate is unclear, yet the message is obvious. “It’s an unreconstructed Stalinist dictatorship,” says Phil Robertson of Human Rights Watch, an NGO. + +When Western diplomats raise the case of Mr Sombath’s disappearance, Lao officials say that they, too, do not know where he is. They insist that the government is constitutionally bound to protect the civil rights of its citizens. In December officials even took part in a conference hosted by the United Nations Development Programme to discuss human rights (delicately) with foreign experts and civil-society members. But the government also says it prizes the stability that Laos has enjoyed since 1975, when the LPRP seized power with backing from North Vietnam. This hints at what it really thinks: that civil liberties must be kept in check. + +Western countries, however, are not likely to put the kind of pressure on Laos that they once did on Myanmar. They are eager to court friendship with ASEAN (of which Laos is chairman this year), partly as a counterbalance to Chinese power in the region. In September Barack Obama is due to become the first sitting US president to visit Laos, where he will attend an ASEAN summit. That will put the impoverished country of 7m people under a spotlight, but human rights are expected to be a side issue at best. America needs the support of China-leaning Laos in its efforts to forge a regional consensus on how to deal with China’s assertiveness in the South China Sea. Laos is littered with unexploded American bombs that were dropped during the Vietnam war. Mr Obama will try to win hearts and minds by announcing more funding to help clear them up. + +Regional civil-society leaders normally convene what they call a “People’s Forum” alongside ASEAN summits. There will be no such gathering in Vientiane. Mr Robertson says Lao civil-society leaders have told counterparts elsewhere that their government will not allow certain topics to be discussed in Laos. These include gay rights, the building of controversial dams on the Mekong River and the case of Mr Sombath. So the People’s Forum will instead be held in Timor-Leste, 2,400 miles (3,900km) away. Even there, Laotians expect their government will keep a close watch. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21702514-barack-obama-prepares-his-first-visit-laos-its-civil-society-struggles-radio-silence/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +South Korea’s DIYers + +Bangsta style + +Television shows on interior design are bringing down the house + +Jul 23rd 2016 | SEOUL | From the print edition + + + +A WIFE and daughter arrive home to find their living room transformed. Behind a partition, Daddy is sitting in a soundproof cubicle, strumming his guitar. He offers his stunned wife a drink at his new bar, and gleefully shows off his table-football skills. He is the star of a recent episode of “Macho House”, a new television show that creates dream spaces for South Korean men. + +The programme is more of a gag show than one on thoughtful redesign. But it taps into a growing desire among South Koreans to rearrange their private living spaces. At first sight that is surprising for a nation that spends more hours at office desks than any other among rich countries. Yet in a recent poll by Macromill Embrain, a local market researcher, over half said they had spent more time at home in the past year due to “growing social anxieties”. Amid an economic slump, city-dwelling South Koreans are seeking solace in their cramped flats. They want time there to be “very special, almost festive”, says Soh Yoon-young, an architect and author. + +Jipbang—“house broadcasts” that often weave tips on design makeovers with advice for unhappy occupants—promote a new approach to domestic wellbeing. “Let Me Beautify Your Home”, which started airing in the spring, is a spin-off of “Let Me In”, a controversial series that offered radical plastic surgery as a cure for misery. The new show tailors interior designs to a family’s problems: an uncommunicative teen, or a retired father who lacks authority. It suggests, for example, new partitions to create privacy—or to force all family members to pass through a shared living space in order to get to their bedrooms. In “Old House, New House”, two teams of experts compete to revamp a celebrity’s house, recreated in a studio. In “My Room’s Dignity”, DIY geeks offer tips on how to spruce up dingy studios. + +Clutter is a big theme. Designers pride themselves on ideas for storing things, such as under sofas. They regularly suggest ways of creating what for some is their first experience of a room dedicated just to accommodating a Western-style bed. In urban apartments, rooms are commonly multifunctional: a bedroom might, once a sleeping mattress is rolled up, turn into a tea-room by day. + +Oddly, given the state of the economy, sales at Hanssem, a home-furnishings store, rose by nearly a third last year compared with 2014. DIY shoppers collect tips from internet forums and online “housewarmings” on social-media sites such as Instagram. These involve the sharing of snaps of renovated flats: in South Korea people “bangstagram”, after the word for “room”. + +Ms Soh says some are mimicking the modern designs of South Korea’s vibrant cafés. These are popular places to socialise in a country where few people feel confident enough to invite others into their homes. As more homeowners gain pride in their slick interiors, they may feel readier to spend less time sipping latte and more hanging out with friends in their own alluring lounges. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21702515-television-shows-interior-design-are-bringing-down-house-bangsta-style/print + + + + + +Previous Articles Sections Next + + + +China + + + + + +Hong Kong police: The force is with who? + +The South China Sea: My nationalism, and don’t you forget it + + + + + +Articles Sections Next + +Hong Kong police + +The force is with who? + +Falling public trust in the territory’s police bodes ill + +Jul 23rd 2016 | HONG KONG | From the print edition + + + +HONG KONG had long been renowned for the peacefulness of its protests and the tact with which police normally handled them. So it was a shock to the territory when, in 2014, police at first responded aggressively to pro-democracy unrest that began with large-scale demonstrations and continued with weeks of sit-ins on roads. The protesters’ means of defence against the pepper spray and tear gas gave its name to the movement: the Umbrella Revolution. It ended peacefully, but the damage had been done. Growing public mistrust of a vital institution was added to longstanding anxiety about China’s political influence in the territory. This does not augur well for Hong Kong’s stability. + +For a long period under British colonial rule, Hong Kong’s police were widely reviled for their corruption; during violent anti-British unrest in the 1960s leftist radicals were rounded up even for peaceful protest. But the force’s image began to change in the 1970s: a new anti-graft body, the Independent Commission Against Corruption (ICAC), purged its ranks. Public trust in the police helped ensure a smooth transfer from British to Chinese rule in 1997. Hong Kong’s police did little more than change their cap badges (some of its British officers stayed in place, a curious sight on the streets of a Chinese territory); the law remained essentially the same. Even after anti-government demonstrations in 2003, far larger than the ones in 2014, the police continued to be held in high esteem. + +Rule of law is what made Hong Kong such a great centre of international business, and what continues to distinguish it from the Chinese mainland. Hong Kong is still one of the safest cities in the world. In 2015 its crime rate fell to a 43-year low, with fewer offences per person even than famously law-abiding Tokyo. But there is a growing perception that the 33,000-strong force is becoming politicised. It still largely operates by rules bequeathed by the British. Yet officers work for a government that ultimately answers to the Chinese Communist Party in Beijing, even though it has been granted a “high degree of autonomy” by the central authorities. On the mainland, the most important role of the police is political: to keep the party in power. + +The thin red line + +China’s critics in Hong Kong point to what they see as examples of a similar imperative swaying the territory’s police. In 2002 several followers of Falun Gong, a Chinese spiritual movement which the Communist Party regards as a serious threat to its rule, were convicted for obstruction after meditating outside the central government’s liaison office in Hong Kong. The ruling was later overturned; a judge deemed that no obstruction had been caused. When Li Keqiang, now China’s prime minister and then one rank below, visited Hong Kong in 2011 police shielded him from seeing protesters. The tactic was repeated this year when Zhang Dejiang, a member of the Politburo’s Standing Committee and head of China’s rubber-stamp parliament, went to the territory. + +Public satisfaction with the force slowly fell after 2007, according to a poll by the University of Hong Kong. After the protests in 2014 it plummeted to less than 21%, down from nearly 75% when Chinese rule resumed. It has since recovered slightly. The fall was partly the result of police violence against protesters during the Umbrella movement (police also reportedly stood by as thugs attacked demonstrators). Nathan Law Kwun-chung, who was a student leader of the movement and now heads a new political party, Demosisto, describes front-line police as “like monsters beating us, you could see nothing in their eyes.” (Their use of pepper spray and tear gas on protesters was very rare.) On July 21st Mr Law was convicted of inciting demonstrators to gather, and two fellow protesters were found guilty of unlawful assembly—the first criminal convictions of student leaders of the unrest in 2014. + +Among the units patrolling the demonstrations was one normally assigned to fighting Triad gangsters; police from this group were allegedly among seven officers who were filmed beating a demonstrator, Ken Tsang (pictured, escorted by officers), with his hands tied behind his back. It did not help the force’s image that it took the police a year to lay charges against the officers allegedly responsible (their trial has been adjourned until October). + +Qualms about the force’s quality extend beyond their handling of demonstrators. Some people accuse the police of failing to attach due importance to the disappearance of five Hong Kong booksellers who many believe were seized by mainland agents because they dealt in salacious works about Chinese politicians. One was apparently snatched from Hong Kong itself and another from Thailand; the others were visiting the mainland. (All but the one who disappeared from Thailand have since returned; he is thought to remain in the custody of mainland police.) The investigation of the disappearances was handed to the missing persons unit, and was not taken up by the far stronger anti-Triad one, which deals with most cross-border crime and liaises often with mainland agents. + +The neutrality of the ICAC has also been questioned this month following the reassignment of its chief investigator after only a year in office (she subsequently resigned). Though officially she was replaced for not being up to the job, some commentators suggest that her real shortcoming was refusing to mute an ongoing investigation into a HK$50m ($6.5m) payment to Hong Kong’s chief executive, Leung Chun-ying. His office has denied Mr Leung was involved in any wrongdoing. + +Suspicions abound in Hong Kong that the party’s tentacles are spreading. One of the booksellers, Lam Wing-kee, says he has been followed by strangers since his return to Hong Kong. Some pro-Umbrella publications have reported cyber-attacks or harassment. On July 14th Hong Kong’s government ruled that candidates for September’s elections to the territory’s legislature must sign a declaration acknowledging that Hong Kong is an “inalienable part” of China, a response to a small but growing call for independence for Hong Kong. Several groups say they will not sign. + +The malaise is helping to nurture a generation of protesters who are more prepared to confront the police—and cops, in turn, who expect to be targets of crowd violence. In February police used batons and pepper spray and fired two warning shots into the air in Mongkok district during a crackdown on unlicensed street hawkers that snowballed into a riot—China blamed it on “separatists”. The erosion of public trust increases the risk of such turmoil. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21702512-falling-public-trust-territorys-police-bodes-ill-force-who/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The South China Sea + +My nationalism, and don’t you forget it + +Xi Jinping tries to contain public fury over the South China Sea + +Jul 23rd 2016 | BEIJING | From the print edition + +Playing chicken with the party + +CHINA is smarting. A tribunal in The Hague ruled on July 12th that its claims to most of the South China Sea had no basis in international law. In the days since, China’s government has shown no sign of wanting to dig itself out of a diplomatic hole—or any sign that it thinks it is in one. + +Officials had two opportunities to be emollient and passed them both up. The first came when discussing bilateral talks with the Philippines, which had brought the case. Before the verdict the Philippines’ new president, Rodrigo Duterte, had said “let’s talk.” But according to his foreign minister, Perfecto Yasay, China demanded the talks take place without reference to the tribunal’s ruling. When Mr Yasay said no, the Chinese side muttered that “we might be headed for a confrontation.” China also continued to block Philippine fishermen from their traditional grounds. + +The other chance to step back came during a visit to Beijing by the chief of America’s navy, Admiral John Richardson. His opposite number, Wu Shengli, did not miss the opportunity to miss an opportunity. “We will never stop our construction on the Nansha [Spratly] islands half way, no matter what country or person applies pressure,” he said, referring to China’s controversial building of harbours and runways on disputed outcrops in the South China Sea. At least they were talking. + +Bellicosity from the brass is the order of the day. According to Reuters, another Chinese admiral, Sun Jianguo, told a forum in Beijing that “freedom of navigation” by American warships in the South China Sea, designed to ensure sea lanes stay open, could “play out in a disastrous way”. A vice-chairman of the Central Military Commission, the Communist Party body that controls the armed forces, talked about beefing up combat preparedness during an inspection tour in the southern province of Guangdong. And so on. + +More worrying than words were the actions. The maritime authority of Hainan, an island province off Guangdong, said it was closing an area in the South China Sea for three days while naval exercises took place. Xinhua, an official news agency, said China had recently dispatched a combat air patrol, consisting of H-6K bombers and fighters, over the South China Sea. China has been talking about setting up an Air Defence Identification Zone in the area, requiring incoming aircraft to identify themselves to its authorities. The air patrols could help China implement one. John Kerry, America’s secretary of state, has called the idea of such a zone “provocative and destabilising”. + + + +Two things are clear. One is that stubborn nationalism is a strong feature of China’s foreign policy. The other is that Xi Jinping—China’s president, Communist Party leader and commander-in-chief—is determined to control it, just he is to dominate all aspects of China’s politics. State media have dismissed the tribunal as an American puppet, but Mr Xi does not want anti-US fervour to disrupt his diplomacy. China’s navy is still taking part in biennial naval drills called RIMPAC, hosted by America and joined by more than 20 other countries, that are under way off Hawaii. It appears to relish the prestige. + +After the verdict, China’s social media started to call on people to boycott bananas from the Philippines and American brands such as iPhones and KFC, a fast-food chain. But the last thing Mr Xi wants are public demonstrations. (In the past century, patriotic protests have had a habit of turning against the government in China.) So this week, Xinhua and People’s Daily, a party newspaper, started criticising the “irrational patriotism” of social media. A picture (left) that circulated on social media of a protest outside a KFC outlet was deleted by censors. If there is one thing more important than Chinese nationalism, it seems, it is party control. + + + +In graphics: A guide to the South China Sea + +That was borne out on July 17th when the Chinese National Academy of Arts forced the closure of one of China’s most important and few remaining liberal magazines, Yanhuang Chunqiu. The decision to close it was remarkable because Mr Xi’s late father, Xi Zhongxun, was one of its most important fans. The closure was inconceivable without the younger Mr Xi’s say-so. The magazine won its spurs by challenging the party’s account of events ranging from the Communist takeover of China in 1949 to the Cultural Revolution of the 1960s and 1970s. But nothing may now challenge the official version—as the government’s angry defence of its “historical” claims in the South China Sea shows. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21702527-xi-jinping-tries-contain-public-fury-over-south-china-sea-my-nationalism-and-dont-you/print + + + + + +Previous Articles Sections Next + + + +Middle East and Africa + + + + + +Israel and the Arab world: The enemy of my enemies + +Syrian refugees in Jordan: From haven to hell + +Lebanese cronyism: Hire power + +City slickers on the farm: Africa’s real land grab + +Smoking: Plains packaging + +Nigeria’s currency: If you love it... + + + + + +Articles Sections Next + +Israel and the Arab world + +The enemy of my enemies + +As Arab states warm to Israel, the Palestinians feel neglected + +Jul 23rd 2016 | CAIRO AND JERUSALEM | From the print edition + + + +EGYPT’S ambassador to Israel was in Tel Aviv for less than a month before he was called back to Cairo in November 2012. His government, then led by Muhammad Morsi of the Muslim Brotherhood, was incensed over Israel’s bombing of the Gaza Strip, which is controlled by Hamas, a Brotherhood affiliate. Mr Morsi also summoned Israel’s ambassador in Cairo, where a year earlier protesters had stormed the Israeli embassy. + +What a difference a few years make. In February Egypt’s current president, Abdel-Fattah al-Sisi, who toppled Mr Morsi in a coup, sent a new ambassador to Israel, the first since 2012. Mr Sisi has closed Egypt’s border with Gaza, to great Palestinian dismay, and vilified Hamas. To complete the turnabout, there are now rumours that Binyamin Netanyahu, Israel’s prime minister, will soon visit Mr Sisi in Egypt. + +Israel’s warmer relations with Egypt are a sign of a broader rapprochement with the Arab world. Mr Netanyahu may be stretching things when he says that Arab leaders now see the Jewish state as an ally, but their priorities, such as countering Iran and combating Islamic terrorism, are increasingly aligned. The shift has left the Palestinians, whose fate once topped the Arab agenda, feeling abandoned. + +A different sense of betrayal has helped to bring the Israelis and Arabs closer. Barack Obama’s eagerness to pull America back from the Middle East, and his dealings with Iran, resulting in a nuclear accord signed last year, alarmed Israel and the Arab states in equal measure. Both sides fear Iran will cheat on the deal and use the economic benefits to support proxies fomenting chaos in Iraq, Syria and Yemen. So, quietly, Israel and the Gulf states have begun to co-operate over security. “We have the same understanding of the region,” said Tzipi Livni, a former Israeli foreign minister, in January. + +Après Morsi, le déluge + +According to the Israeli officials, co-operation with Egypt and Jordan, with which Israel has signed peace treaties, is even better. In April the Israeli army’s deputy chief of staff spoke of an “unprecedented” level of intelligence-sharing between the countries. Israeli drones have been allowed to fire on insurgents in Sinai, where fighters loyal to Islamic State (IS) have tormented the Egyptian army. Since taking office in 2014, not only has Mr Sisi closed Egypt’s border with Gaza, he has flooded the smuggling tunnels beneath it in order to stop the flow of weapons. “The Egyptians now are more anti-Hamas than even we are,” says a senior Israeli officer. “They’re actually pressing too hard now on Gaza.” + +Yet Egypt, hoping to re-establish its influence in the region, is trying to revive moribund peace talks between the Israelis and Palestinians. To that end Mr Sisi sent his foreign minister to Israel on July 10th, the first such visit in nearly a decade. Mr Netanyahu has hailed the effort, if only to head off a French-led peace initiative that he fears will attempt to force an agreement on Israel. A senior Israeli diplomat says there is little actual hope for a renewal of serious talks. + +The Palestinian Authority (PA), which rules the West Bank under Israel’s eye, has also welcomed Egypt’s efforts. Hamas, which is left out of Egypt’s plans, has stayed mostly silent for fear of aggravating Mr Sisi. But some Palestinians worry that Arab states are letting Israel upend the Arab Peace Initiative, which calls for it to withdraw from the West Bank and Gaza and agree to a “just settlement” for Palestinian refugees in return for recognition of Israel. “Israel wants normalisation and political ties with the Arab states, and to achieve this without solving the Israeli-Palestinian conflict,” says Elias Zananiri of the Palestine Liberation Organisation, the movement once led by Yasser Arafat. + +This has contributed to a more general sense of unease among the Palestinians. Officials in other parts of the Arab world talk more about Iran’s meddling, the wars in Syria, Iraq and Yemen, and their own domestic economic and political troubles. Such issues seem more pressing to their people. And besides, many Arabs are resigned to the stalemate in the peace process. Mr Netanyahu appears intransigent; Palestinian leaders are seen as divided, ineffective and corrupt. + +Mahmoud Abbas, the Palestinian president, still makes the rounds in Arab capitals—and foreign leaders still profess their support. But the Palestinians are aware of their diminished status. In a recent poll 78% of them said their cause was no longer the top Arab priority, and 59% accused Arab states of allying themselves with Israel against Iran. The amount of aid flowing from Arab countries to the PA has fallen by well over half in recent years. Funds from the West have also declined. + +The public in some Arab countries may have softened its animus towards the Jewish state. An Israeli polling organisation has reported that only 18% of Saudis see it as their country’s main threat. But the Palestinian issue can still excite passion. In Egypt, for example, a member of parliament was hit with a shoe and expelled by his colleagues after meeting the Israeli ambassador in February. The Israeli flag is still burned at protests in the region. + +What really stirs Arab emotions are scenes of Israelis killing Palestinians. Violence over the past year has left dozens of Israelis and more than 200 Palestinians dead. Most Palestinians, according to polls, back a return to an armed intifada (uprising). With the Arab world focused elsewhere, America in the throes of a presidential race and progress towards a two-state solution halted, they may see no other way to capture the world’s attention. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702476-arab-states-warm-israel-palestinians-feel-neglected-enemy-my/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Syrian refugees in Jordan + +From haven to hell + +Thousands of Syrians are trapped on the border with Jordan + +Jul 23rd 2016 | MAFRAQ | From the print edition + + + +THE hospitality of the Jordanian government reached its limits on June 21st, when a terrorist attack on the last entry point from Syria into Jordan killed seven Jordanian soldiers. The authorities slammed the border shut, and King Abdullah said that Jordan would respond “with an iron fist against anyone who tries to tamper with its security and borders”. + +The closure has turned a desperate situation into a humanitarian black hole. According to the UN, more than 70,000 people are now stranded in a harsh no-man’s land-between Jordan and Syria, known as the berm (see map). No one knows the exact numbers in the settlements, nor indeed what life is like there, since the attack has stopped aid flowing in and information flowing out. + +Before aid agencies were shut out reports and video footage suggested a hostile refuge. Mice and disease roam amid the sprawl of dusty tents. In May an NGO reported that women were using nappies to avoid defecating in the open, and that mothers were covering their newborn babies’ faces to protect them from rat bites. + +In the blistering heat and without shade, water or greenery, the inhabitants depend on help from outside. But since June 21st the Jordanian government has blocked anything other than water from passing through. That means that for a month no food or medical services from the Jordanian side have reached the people stuck there. At first even the water did not get through to the berm, as people within refused it in the absence of food. + +Aid workers are racing to negotiate better access. By July 20th the UN’s World Food Programme had a provisional agreement to send food in, but had been unable to get final Jordanian approval. Even this would buy it time only to explore other options, none of which looks good. Trucking in help through Syria would mean travelling through territory held by the hostage-beheaders of Islamic State. Dropping it from the sky would require permission from the Syrian, Russian, American and Jordanian governments, as well as being hugely expensive. + +The people there will need to move. Before the attack Jordan’s government had offered to fly them to wherever will take them, but so far no country has offered to. It closed other crossing points from Syria to reduce the influx of refugees, not expecting the fighting to push so many towards this passage of last resort. The aid on offer, and the hope of entry into Jordan, drew yet more in. Meanwhile the lawless vacuum has been a magnet for militias. + +There are no easy exits. A return to Syria is too unsafe for most, though a very few may be going back. But last month’s attack made entry into Jordan much harder. The country’s authorities want to preserve its status as a haven in a region on fire and reassure citizens already disgruntled by the refugee influx. + +The Jordanian government has an economic motive, too, for sealing off the settlements; it has long exploited its geography to squeeze goodies from worried foreigners. On July 20th, for example, details of preferential access for Jordan’s exports to the EU were announced, in exchange for expanding Syrians’ right to work in Jordan. + +The situation at the berm reminds foreign governments and agencies that Jordan has already taken in 660,000 registered refugees, putting huge pressure on its infrastructure and services. Even before the attack, Azraq camp, which had been receiving people from the berm, was nearly full. In Mafraq, where half the residents are Syrian refugees, rubbish piles up too fast for collectors to keep up. And donors have fallen short of their promises. With half of the year gone, only a third of the aid promised to Jordan at February’s conference in London has come through. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702471-thousands-syrians-are-trapped-border-jordan-haven-hell/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lebanese cronyism + +Hire power + +Political connections create jobs in Lebanon, but only for some + +Jul 23rd 2016 | BEIRUT | From the print edition + + + +WHEN a visitor starts emphasising the historical links between their families, Carlos Edde, a Lebanese politician, knows where the conversation is headed. Twenty minutes in, the visitor’s tone of voice shifts: “I’ve come to see you because I need a favour.” In Lebanon politicians find employment for their constituents in exchange for votes. Three quarters of university students surveyed by the Lebanese Centre for Policy Studies thought political connections were important to find jobs; 20% said that they had used them. + +These days Mr Edde says that he never does more than forward a CV to one of his business contacts, without any pressure to hire. Anecdotal evidence suggests other politicians push harder (and win more votes—Mr Edde’s party has no MPs). Quantifying the damage caused by such string-pulling is tough. + +A new working paper by Ishac Diwan at Paris Sciences et Lettres, a university, and Jamal Haidar of Harvard University, has a go. Using administrative data on every registered company in Lebanon between 2005 and 2010, they painstakingly map links between the people registered as the owners or officers of companies and lists of politicians. In this way they hope to identify the firms that make political hires. They identify 497 companies, covering about 16% of the formal labour force. + +They find politically connected firms in industries such as banking, media, energy, health and water, which tend to have a cosy relationship with the state. Similar methods applied to Tunisia and Egypt find the political tentacles reach much wider. The authors suggest that the difference is because Lebanon’s state is weakened by divisions that date back to its civil war. Its politicians are not powerful enough to make big decisions that would create economic spoils—such as erecting trade barriers to protect local firms—so it has fewer favours to offer firms in exchange for hiring the dimwitted cousin of a donor. + +The economists find strong hints that political connections drive hiring. In 2009, an election year, politically connected firms hired 14,500 extra people, compared with 8,000 in normal years. Meanwhile unconnected firms hired just 4,000 compared with their average of 6,000 a year. Those with political connections create a third more jobs each year than unconnected firms in the same sector. + +Politically connected firms pay higher wages on average yet produce less per person. In other words, the authors think that these companies are over-hiring to please their political contacts. Yasser Akkaoui, the editor-in-chief of Executive, a Lebanese business magazine, agrees, but explains that the companies would not hire so many unnecessary staff that they go out of business. Politicians, for their part, have an interest in the companies’ survival. They also have the power to keep them not merely alive but thriving. Rami Rajah, who works for a textbook company, says that “people who deal with the government grow, while people who don’t are just scrambling for the scraps.” + +All this hurts consumers, unconnected firms and economic efficiency. But there may be a silver lining. Carving up the spoils may distract politicians from carving up each other. And in a state as fragile as Lebanon, that is important. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702473-political-connections-create-jobs-lebanon-only-some-hire-power/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +City slickers on the farm + +Africa’s real land grab + +Never mind foreign interlopers. African urbanites are scooping up more land + +Jul 23rd 2016 | MOROGORO | From the print edition + +My other car is a Porsche + +AFTER half an hour poking around Martin Shem’s farm, Paul Kavishe is impressed, even a little jealous. “He has done well,” says Mr Kavishe. “He’s a real farmer!” This is strange praise, not because Mr Shem’s dairy, maize and mango-growing operation on the outskirts of Morogoro is not admirable, but because both men have had university careers. For middle-class Tanzanians, though, a successful farmer trumps a successful academic. + +“Every Tanzanian is a farmer,” explains Ali Aboud, another professor who has moved into agriculture. He cultivates about 20 hectares of rice paddy; in the past three years a businessman from Dar es Salaam and another city-dweller have bought big farms near his fields. These men are part of a quiet, hard-to-track but momentous change in Africa, which has profound consequences for the continent’s most important industry. + +Surveys show that most farms in sub-Saharan Africa are smaller than two hectares. But that is the wrong way of measuring agriculture, says Thomas Jayne of Michigan State University. Look at land rather than farms, he says, and it is clear that a fairly small number of farmers now own a large portion. The fastest growth is among the middle class. In Ghana, 38% of agrarian land is occupied by farms of between five and 100 hectares; in Zambia, 52% is. In both of those countries, and also in Kenya and Malawi, medium-sized farms collectively take up more land than larger ones, whether those are owned by rich Africans or the foreign investors who are often accused of “grabbing” land. + +Mr Jayne and other researchers find that in Kenya, Malawi and Zambia (though not in Ghana) most medium-sized farms were not built by successful smallholders but bought by urbanites. In Tanzania, where about one-third of the population is urban, city-dwellers are thought to own 33% of the farmland, up from just 12% a decade ago. Typically, the new farmers are middle-aged public-sector workers. The popular obsession with foreign land grabs is wrong-headed, says Isaac Minde of Sokoine University of Agriculture in Morogoro. If there is a land grab in Africa, it is being done by African urbanites. + +City-dwellers are going into farming partly because legal reforms have made buying land easier and ownership a little more secure. Another reason is that urban growth is making crops and meat more valuable. Still another is the weakness of African manufacturing, which means city-dwellers lack good places to invest their cash. Most important of all, public-sector jobs seldom pay enough to sustain an upper-middle-class lifestyle. Mr Kavishe, who grows maize and keeps several thousand laying hens, is surprised to be asked whether he earns more than he did as a university administrator. Of course the chickens are more lucrative. + +Urban farmers often bring new ideas and technology to the places where they settle. Raphael Laizer, a government official who moved into farming, remembers paying smallholders to plant maize on his fields, insisting on precise distances between seeds. Soon the smallholders were planting their own fields the same way. Mr Aboud, the rice farmer, introduced his neighbours to mechanised seed drills (“for the first two years everyone just looked on”) and to a high-yielding hybrid seed known as SARO 5. Urban farmers’ tractors are hired by smallholders to process maize or plough the fields. + +The new arrivals tend to be highly literate, legally savvy and assertive. That cuts their neighbours both ways. When it comes to procuring public goods, their bullishness is a boon. Some of Morogoro’s urban farmers are harrying local authorities to invest in irrigation schemes, which would boost overall productivity. Mr Kavishe even tried to persuade the Finnish government to chip in. + +But the high-powered interlopers can be unpopular, especially in crowded rural districts. In addition to his farm near Morogoro, Mr Shem owns a large cattle ranch upon which smaller farmers have encroached, leading to court cases and what he calls “psychological warfare”. Much of Africa is moving away from communal land ownership towards the individual kind, but only gradually, leaving a lot of room for confusion and fights. + +Tanzania’s urban farmers also have one foot in the old Africa and another foot in the new one. They are mostly the children of farmers and found it easy to return to the family line. Yet these men are not quite following their parents. They have bought little if any land in their ancestral villages, and do not expect to return there (“you go back when you are buried,” says Mr Aboud). Instead they farm close to the cities where they made their careers. Several predict that their children will have no interest in farming. They are a transitional generation. In a strange way, the rush to acquire farmland shows that Africa is becoming properly urban. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702472-never-mind-foreign-interlopers-african-urbanites-are-scooping-up-more/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Smoking + +Plains packaging + +Young Africans are lighting up at an alarming rate + +Jul 23rd 2016 | From the print edition + + + +IN 2002 British American Tobacco (BAT), a big cigarette manufacturer, shuttled a temporary cinema around six Nigerian cities in what it called the “Rothmans Experience It Cinema Tour”. The company screened “Ocean’s Eleven”, “The Matrix” and other blockbusters for crowds of Nigerians, excited by the foreign concepts of high quality sound and a wide screen. To those who came to watch Brad Pitt gobble hamburgers and Keanu Reaves swallow red pills, BAT gave free packs of Rothmans cigarettes. + +The tobacco industry’s desperation to recruit African smokers has only intensified since. In most countries the percentage of the population that smokes cigarettes has shrunk since 2000. Most of the exceptions are in Africa. + +According to data collected by the World Health Organisation (WHO), smoking rates have increased in only 27 countries over the past 15 years; 17 are in Africa. Congo-Brazzaville has witnessed the most staggering spike: 22% of its people admitted to smoking regularly in 2015, up from 6% in 2000 (see chart). Nearly half of Congolese men now light up. The share of smokers in Cameroon more than doubled in the same period as well, from 7% to 22%. + + + +Africa’s low rates of smoking in the recent past were largely because of poverty and limited advertising, says Hana Ross, a researcher at the University of Cape Town. But companies have caught on: in Zimbabwe recent advertisements cheerfully boasted: “Not British. Not American. Zimbabwe’s Finest Cigarettes”. + +Happily between 1999 and 2010, the share of sub-Saharan Africans living in extreme poverty fell from 58% to 48%. Over the same period, the continent’s total population rose from 767m to over 1 billion. The UN projects that Africa will account for more than half of the world’s population growth over the next 35 years. These predictions tantalise tobacco companies as smoking rates decline in places such as China, Russia and America. + +“Tobacco companies are very good at finding market opportunities where there are not only potential smokers, but also weak regulations. Africa is in that sweet spot,” says Michael Eriksen, of Georgia State University. Granted, some African countries have recently tightened tobacco-control laws. In May Uganda banned smoking in public places—a move Ghana made in 2012. Mr Eriksen says such policies discourage smoking but they can also be difficult to enforce. Additionally, excise taxes in Africa are too low. Nigeria taxes cigarettes at only 20% of the retail price, far less than the WHO benchmark of 75%. + +Particularly worrying is a rise in the number of young people smoking. Although African men smoke less than those in other developing regions, that is not the case with boys (some 9% of African boys smoke compared with 8% in the Middle East and 6% in the Western Pacific). At this rate Africa will face a greater public health crisis than anywhere else in the world. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702475-young-africans-are-lighting-up-alarming-rate-plains-packaging/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nigeria’s currency + +If you love it... + +A new “floating” exchange rate was fixed. But that may be changing + +Jul 23rd 2016 | LAGOS | From the print edition + + + +SOMETIMES the worst is not bad enough. Or such is the case for Nigeria’s currency, which nosedived by 30% when the central bank first removed its peg to the dollar on June 20th. The naira is now this year’s poorest-performing currency in Africa. Internationally, only the currencies of Venezuela and tiny Suriname have fared worse. Yet were it truly free, it would be weaker still. + +In fact, the naira’s free float seems to have lasted exactly a day. Since its sharp drop on the first day of its devaluation, the currency has more or less flatlined at about 282 per dollar (see chart). This is rather odd given the pent-up demand for dollars after the central bank governor, Godwin Emefiele, restricted the supply in a bid to defend the currency at its old peg of 199 to the dollar. Many analysts expected it to plummet as low as 350 when businesses hoovered up a backlog exceeding $4 billion. + + + +Bankers say this stability came about after the central bank sold dollars and traders were bullied by it to keep to an unofficial peg. “If you want to sell or buy higher than the managed peg, life will be made difficult,” says the former CEO of a bank. + +So why did the central bank ignore its own policy on allowing a float? The most plausible explanation is that Mr Emefiele has been kowtowing to President Muhammadu Buhari, who fears a weak currency. But these sorts of flip-flops hardly reassure foreign investors, whose dollars Nigeria desperately needs to fill a gaping trade deficit. Nor do they encourage Nigerian exporters to repatriate foreign exchange, since they still expect a further fall in the value of the local currency. + +Starved of an inflow of fresh dollars, the new interbank market on which the naira trades has been painfully thin: little more than $50m in foreign exchange changes hands there daily, according to Renaissance Capital, an investment bank. (By contrast foreign exchange flows in South Africa are worth billions of dollars a day.) It reckons that about 90% of Nigeria’s flow comes from the central bank, which should be stepping away from the market. Its reserves have fallen to $26.3 billion: barely enough for six months’ imports. + +Yet there is reason for hope. By happy coincidence, the naira began to slide again in mid-July after the governor took an ear-bashing from foreign investors over his manipulation of the exchange rate (which he denies). By the time The Economist went to press it had reached 295 to the dollar, its lowest ever official rate. This is still about 20% stronger than on the black market—which is surely a more accurate representation of the naira’s worth. + + + +In charts: Explore Nigeria’s economy and politics + +The central bank’s policy of defending the naira has been disastrous, creating shortages of products such as milk and fuel and bringing factories to a standstill for want of imported inputs. The economy contracted by 0.4% in the first quarter of this year thanks to cheap oil and monetary mismanagement. The IMF expects GDP to shrink 1.8% this year. + +Worse still, inflation hit 16.5% in June—the highest rate in almost 11 years. With a weaker currency, it might surpass 20% by Christmas, calculates Chris Becker of Investec, a South African bank. Whatever happens, Nigerians will hurt more yet. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702474-new-floating-exchange-rate-was-fixed-may-be-changing-if-you-love-it/print + + + + + +Previous Articles Sections Next + + + +Europe + + + + + +Another attack in France: Madness and terror + +Russia’s Olympian drug habit: Tamper proof + +Italy’s upstart party: The Five Star question + +Charlemagne: Parliament plot + + + + + +Articles Sections Next + +Another attack in France + +Madness and terror + +When a truck is a weapon of mass murder + +Jul 23rd 2016 | NICE | From the print edition + + + +THE spots where the bodies fell are now marked by makeshift memorials along the palm-fringed beachfront. Some are ringed by pebbles. Most feature candles, stems of white flowers and teddy bears. Ten children were among the 84 killed on July 14th, when a 31-year-old Tunisian citizen ploughed a 19-tonne truck into Bastille Day crowds. A football lies among the mementos left where a 13-year-old French boy, Mehdi, was killed. His aunt died a step away. “I just hope this won’t be turned against us,” says a grieving family member, whose origins are in Morocco. “We grew up in France; we come from here too.” + +This was the third mass terrorist attack in 18 months, and the bloodiest on French soil since the Paris attacks last November. The proudest emblems of French life have been targeted: freedom of expression (Charlie Hebdo) and religion (a Jewish supermarket), as well as the security forces, in January 2015; sport, music and pavement cafés, in November 2015. Now, terror has struck seaside festivities for the country’s national day at one of its most famous resorts, favoured by Hemingway and Fitzgerald, and painted by Matisse and Dufy. + +Mohamed Lahouaiej Bouhlel, a delivery-driver born in Tunisia but living in Nice, drove his rented lorry for 1.7 kilometres (1.1 miles) over a promenade closed off for the city’s annual fireworks display, where some 30,000 spectators had gathered. He rammed the vehicle into the crowds, driving on and off the walkway used daily by joggers and cyclists, crushing bodies as he went. The carnage stopped only after he was shot dead by the police. A third of the dead were Muslims. + +President François Hollande immediately called the attack “terrorist” in nature. Mr Lahouaiej Bouhlel’s rampage, though, is a reminder of how the definition of Islamist terror has evolved. He showed a “certain interest” in radical Islamist movements, said François Molins, the Paris public prosecutor, and videos of decapitation were found on his computer. Islamic State (IS) claimed he was one of its “soldiers”. But Mr Lahouaiej Bouhlel also ate pork, did not go to the mosque, and had an “unbridled sex life”, said Mr Molins. No direct evidence of his allegiance to IS has yet been found. + +Those who study radicalisation in France say that this profile is not uncommon. Deep religiosity rarely plays a part in the swing towards political jihad. Nor does IS need to issue direct orders. It “inspires this terrorist spirit”, said Jean-Yves Le Drian, the defence minister. In 2014 Abou Mohammed Al-Adnani, an IS spokesman, urged jihadists not to worry if they could not blow themselves up or shoot a gun: smash the skull of a “French or American infidel” with a stone, stab him with a knife, or “run him over with a car”. + +It is not unusual for radicalisation to take place quickly, particularly among the violent or unstable. A loner, unknown to intelligence services, Mr Lahouaiej Bouhlel was given a suspended prison sentence earlier this year for violence. He grew a “religious” beard just eight days before the attack, said Mr Molins. “This is not an anomaly,” says Hugo Micheron, a researcher on French jihadists: “There are different routes into jihadism today, and I’ve seen several cases of radicalisation taking place within a couple of weeks.” + +Nice may be best known as a swish tourist destination. But behind the old town’s Belle-Epoque façade, the high-rise neighbourhoods that spread up the ravines beyond the city have become one of the most intractable centres of Islamist radicalism outside the Paris region. At least 55 residents of Nice and other towns in the department of Alpes-Maritimes, which covers the Côte d’Azur, have left for jihad in Syria or Iraq, including 11 members of one family. In part this is the work of a vigorous local French recruiter, known as Omar Omsen, or Omar Diaby. He was thought to have been killed in Syria last year, but seems to have faked his own death. + +Côte de jihad + +A local early-warning unit set up by Alpes-Maritimes in 2014 to counter radicalisation has so far received 600 alerts. Fully 37 individuals from the department have been expelled from France, and 15 others prevented from leaving the country. Five underground prayer houses suspected of preaching violent Islamism have been closed down. Moderate Muslim leaders fear that the latest attack will deepen distrust. A striking 36% of Nice voters backed the far-right National Front at the most recent elections. “The Muslim community is doubly attacked,” says Boubekeur Bekri, rector of the Al-Forqane mosque, which lies near the brutalist tower blocks of Ariane, a banlieue of Nice: “By Daesh [IS]—and by those who are playing Daesh’s game by dividing Muslims.” + +The Nice attacks are sorely testing France’s ability to withstand a permanent terrorist threat. Manuel Valls, the prime minister, has told the French to “live with terrorism”. Mr Hollande announced fresh air strikes on Syria. Parliament has voted to extend the state of emergency, conceived last November as a temporary response, for a further six months. Yet such measures may be more about managing public anxiety than fighting terrorism. Hours before the Nice attack, Mr Hollande had announced that he would not renew the state of emergency. Of nearly 3,600 house raids carried out under its provisions, only five have led to a terrorism-linked judicial investigation. + + + +In charts: Terror in western Europe + +Last year, the French reacted to terror mostly with defiance and unity. In November parliamentarians of all political colours spontaneously sang the national anthem after Mr Hollande’s speech announcing a “war on jihadist terrorism”. Today, however, there is increasing French anger at the failure of their government to keep people safe. After a minute’s silence this week, Mr Valls was booed by crowds in Nice. Only 33% told a poll they have confidence in the government’s counter-terrorism strategy. + +Opposition politicians on the centre-right have turned on the government too. “If all measures had been taken, this drama would not have happened,” claimed Alain Juppé, a former prime minister and presidential hopeful for the 2017 election. Arguably there could be more robust blockades around crowded public events, Israeli-style. But France is already on maximum alert, and has stretched its armed forces by putting 10,000 soldiers on patrol on the streets. The cruel reality is that if terrorists can turn lorries into weapons, it is impossible to keep everyone safe. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21702480-when-truck-weapon-mass-murder-madness-and-terror/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Russia’s Olympian drug habit + +Tamper proof + +An investigation gives Moscow a gold medal for cheating + +Jul 23rd 2016 | MOSCOW | From the print edition + +Taking the piss + +WHEN Grigory Rodchenkov, the erstwhile director of Russia’s anti-doping lab, confessed that he had helped run a state-directed doping programme during the 2014 Sochi Winter Olympics, his story sounded fanciful. He said he had served athletes steroid-spiked cocktails mixed with cognac and vermouth, while Russia’s secret police, the Federal Security Service (FSB), had cracked the supposedly foolproof urine-sample bottles used in international competition. The sports ministry, Mr Rodchenkov claimed, fed lab officials lists of athletes to be protected; their drug-laced samples were swapped for clean ones through a hole in the wall of the Sochi testing facility. + +The World Anti-Doping Agency (WADA) dispatched a team to investigate. This week, the results came back positive: Mr Rodchenkov’s story was true. The report, the latest in a string of WADA investigations of Russian sport, details a co-ordinated government-run doping effort. Since 2011 the Moscow anti-doping laboratory, in concert with the sports ministry, had used a technique called “the disappearing positive” to cover up for dirty athletes; the FSB helped cook up a more sophisticated sample-swapping plan for the Sochi games. The cheating touched at least 30 sports, tainting Russia’s triumphant haul of 33 medals in Sochi and calling into question the results of the 2013 track and field World Championships and the 2013 World University Games, both held in Russia. Richard McLaren, a Canadian lawyer who led the inquiry, says his initial scepticism of Mr Rodchenkov’s claims proved unwarranted: “Now I know it did happen.” + +The evidence leaves no doubt. Investigators found signs of tampering on preserved samples from Russian athletes in Sochi. One man accredited as a “sewer engineer” at the Sochi games turned out to be a Russian intelligence officer, Evgeny Blokhin, who helped Mr Rodchenkov swap out the samples. In e-mails, Russian sports officials referred to Mr Rodchenkov’s cocktail by the nickname “the Duchess”. The report refutes Russian claims that doping was the fault of a few bad apples. Senior Russian sports officials, including a deputy minister and an anti-doping adviser, played key roles in managing the cover-up, dictating which athletes should be protected. + +The International Olympic Committee (IOC) called the Russian programme a “shocking and unprecedented attack on the integrity of sport”. Russia’s track and field federation has already been banned from the Olympic Games in Rio de Janeiro, due to start on August 5th. As The Economist went to press, the IOC was meeting to decide whether to bar the rest of the Russian team too. The committee said it would balance the need to punish Russia against the right to compete of individual athletes who might not have used drugs. + +Hoping to salvage his country’s chances, Vladimir Putin promised to suspend the officials named in the report. Yet rather than apologising, he called the allegations part of an American-led conspiracy to “make sport an instrument for geopolitical pressure”. And he promised to stand by his embattled minister of sport, Vitaly Mutko, a longtime ally stretching back to their days together in St Petersburg’s city hall. The Olympic movement, he warned, “could find itself on the brink of division”. If so, it is hard to imagine who will side with a country that drugged its athletes and lied about it. Unlike bottles of tainted urine, this scandal cannot be made to disappear. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21702484-investigation-gives-moscow-gold-medal-cheating-tamper-proof/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Italy’s upstart party + +The Five Star question + +The new party has a clear path to victory, but fuzzy notions of what to do if it wins + +Jul 23rd 2016 | TURIN | From the print edition + + + +ROSARIO SCAVO remembers when 80% of the inhabitants of Borgo Vittoria worked directly or indirectly for the Fiat car company. “It was a city within the city,” he says of the firm, to which he gave 33 years of his life. In those days, it went without saying that this working-class district of Turin, where the gleaming Alps are obscured by dismal apartment blocks, voted for the left. Once it was the Socialists or Communists, more recently the Democratic Party (PD) of Prime Minister Matteo Renzi. + +Much of Fiat’s production has since left Italy for cheaper locations. Today, Borgo Vittoria is a lifeless place. A jeweller’s shop bears the melancholy sign “I Buy Gold”. (Not much though, says an assistant: “Those who wanted to sell have already sold.”) As for Mr Scavo, the energetic 62-year-old has already been a pensioner for five years. He gives €300 a month to his university-educated daughter, who has been unable to find any job better than part-time health and social work. + +Such grim economic prospects are one reason why, at local elections last month, the Torinese ended 23 years of centre-left government and chucked out their PD mayor, Piero Fassino. Mr Fassino had carried on his predecessors’ project of developing Turin as a tourism destination, but little of that money reached the city’s fringes. In the run-off election, most voters in Borgo Vittoria backed Mr Fassino’s rival, Chiara Appendino (pictured), of the upstart Five Star Movement (M5S). With M5S riding high in the polls (see chart), the PD is growing worried that what happened in Turin could happen in the rest of Italy, too. + + + +Ms Appendino is a 32-year-old graduate of Milan’s Bocconi University, the business school of the northern Italian bourgeoisie. That makes her an odd champion for working-class frustration. But M5S, which was launched in 2009 as an internet-based political insurgency by Beppe Grillo, a comedian, has much to offer such voters. It demands a referendum on membership of the euro, which it blames for Italy’s economic ills. It promises a minimum income for all citizens, whether they work or not. Its candidates hammer relentlessly on the theme of onestà (honesty), a powerful rallying cry in Italy’s dirty political culture. And it has tried to engage disaffected voters by soliciting their ideas. Ms Appendino ran on a platform of 16 planks developed in concert with open-access citizens’ groups. + +But M5S’s biggest advantage is its ability to appeal to the right as well as the left. Ms Appendino beat Mr Fassino in Turin’s run-off by winning over the voters who had backed right-wing parties in the opening round. In the European Parliament, M5S’s deputies sit with those of the UK Independence Party and Germany’s anti-immigrant Alternativ für Deutschland. M5S’s Eurosceptic tendencies and Mr Grillo’s hostility to immigration appeal to many on the right. + +This makes the party highly effective in two-round elections. Thanks to an electoral law passed on Mr Renzi’s watch, Italy now has a two-round system not just at local, but at national level. The prime minister is focused on winning a referendum this autumn to alter the constitution so that the next government has a free hand for its entire term. If he loses, he says he will resign, pitching Italy into a government crisis. But for his party an even greater danger is that he could win the referendum—and then lose to M5S in the next election. + +Heads we win, tails we win the run-off + +M5S is woefully unprepared to govern. Its left- and right-wing impulses are in tension, but, says Marco Ricolfi, a social scientist at the University of Turin, the left-wing side predominates. Last year Mr Grillo tried to get his MPs to vote against decriminalising illegal immigration; he was thwarted by a grassroots mutiny. In Turin, the party is aligned with the sometimes violent resistance by environmentalists to a high-speed rail link through the Alps to France. Ms Appendino’s governing programme vows to promote veganism. The right-wing voters who back it as a protest may not like such policies if it wins. + +Worse, the movement’s efforts to solicit citizen input, however laudable, have left its platform a hotchpotch of ingenuousness, cynicism and ambiguity. Its foreign policies are suffused with anti-Americanism. One of its leading members wants to involve leftist Latin American governments in Middle East peace talks. Another returned from Russia to declare that Vladimir Putin should be considered an ally and sanctions should be dropped, since they hurt Italy’s food and furniture exports. On economics, M5S’s main policy is to demand a referendum on the euro. This may be unconstitutional; in any case, M5S will not say whether it wants out or in. + +Coherent or not, these policies are popular. An average of recent polls puts the movement less than a percentage point behind the PD. In a run-off between the two, polls find, M5S would win. Italy may well end up granting its government more power, only to elect a party that has no idea how to use it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21702486-new-party-has-clear-path-victory-fuzzy-notions-what-do-if-it-wins-five/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Parliament plot + +Giving more voice to national legislatures will not enhance the EU’s legitimacy + +Jul 23rd 2016 | From the print edition + + + +IN FOOTBALL two yellow cards are enough to get a player sent off. But in the European Union three may pass with nary a word. Under the EU’s “yellow card” system, if one-third of the union’s national parliaments think that a proposed law tampers with matters better handled nationally, they can force the European Commission to reconsider it. Before this year parliaments had issued two yellow cards, once against a law limiting workers’ right to strike and once against establishing an EU-wide prosecutor’s office. The commission rejected the card both times (though it withdrew the strike law for other reasons). + +This week the commission made it a hat-trick. In March, ten central and eastern European countries (plus Denmark) yellow-carded a directive that would force firms that post employees to work in other EU countries to match local pay and conditions, rather than simply paying the minimum wage. The easterners said this undermined their ability to set wages themselves, and would kill jobs. But on July 20th Marianne Thyssen, the employment commissioner, said the directive would remain unchanged. The easterners, already annoyed off with the commission over its plans to redistribute refugees around the EU, are now fuming. + +So are some who want a greater EU role for national parliaments. For in the aftermath of Brexit the EU is undergoing one of its periodic fits of soul-searching. Whatever popular legitimacy is, the EU plainly lacks it. The European Parliament has utterly failed to capture the imagination of European voters. Turnout for its elections has steadily decreased even as it has accrued powers. And it is far too cosy with the commission it supposedly holds to account. National parliaments are reckoned to have a greater feel for the weft and warp of citizens’ political preferences. Perhaps one remedy for Euro-blues is to hand them more influence. + +David Cameron thought so. In the renegotiation of Britain’s EU status that preceded his doomed referendum, the former prime minister won agreement for a “red card” procedure under which groups of parliaments could block legislative proposals. Research suggested the procedure would rarely, if ever, be used, and some analysts mused that vetoes were a rather blunt way of involving parliaments (under EU rules governments may already stop laws in their tracks). We will never know; Mr Cameron’s deal died with his premiership when Britain elected to leave the EU. + +Does the raspberry the commission has blown at the latest yellow card suggest that the whole enterprise is pointless? Perhaps. But Ms Thyssen had no easy option. Several western European states, notably France, were hopping mad at the easterners for posting lower-paid workers to their countries, even though such employees represent just 0.7% of the EU labour force. These days such thinking holds sway in a commission fretful about the rise of anti-globalisation populists, like Marine Le Pen in France. “We have to act according to the general interest of Europe,” says Pierre Moscovici, the (French) economics commissioner. “If you have total freedom for posted workers, you’re dead.” + +In any case, the national parliaments have just won their biggest battle yet. Earlier this month the commission’s president, Jean-Claude Juncker, bowed to trade-wary governments and agreed to send a mooted EU-Canada deal to national parliaments for approval, even though lawyers had said ratification could be limited to the European Parliament. That could delay or even scupper the agreement. And it sets a precedent which could be bad news for TTIP, an EU-America deal that leftist MPs in countries like Germany and Austria have built careers opposing. A future Britain-EU agreement might face the same fate. + +It is easy to romanticise national parliaments. But they also suffer from the distrust of political elites that is spreading across the democratic world. The Eurobarometer survey consistently finds that European citizens trust the EU more than their own parliaments (by 40% to 31%, in 2015). This helps explain Europe’s mania for referendums, which pose a greater threat to parliaments than anything the EU may do. One irony of the Brexit vote is that it was held to safeguard British parliamentary sovereignty, but the majority of MPs would have voted to remain in the EU. + +No doubt legislatures could do a better job of examining their governments’ EU positions. Many national MPs need a crash course in the procedures of the EU, and could start by paying more attention to what their party colleagues do in the European Parliament. The British House of Lords, perhaps surprisingly, is sometimes held up as a model of EU expertise and scrutiny. Nordic parliaments do a good job of telling their ministers what deals they are allowed to make in Brussels, though this does not seem to have made their voters any less Eurosceptical. + +Make parliaments great again + +The real test comes when the EU interferes in matters that parliaments care about—euro-zone bail-outs, for example, which are funded from the national treasuries which parliaments oversee. Each Bundestag vote on Greece is monitored closely across the EU; never before have so many non-Germans known so much about the views of deputies from Mecklenburg-Vorpommern. In 2011 all Europe held its breath as 150 Slovak MPs debated whether to support a euro-zone fund. As leaders negotiating late-night deals in Brussels well know, parliaments can insert themselves effectively into European debates when they care to. + +The question is what this actually accomplishes for the EU. When the Bundestag demands tough bail-out terms for Greece, Germans may feel empowered—but Greeks feel trapped. Prescriptive agreements imposed on bailed-out countries do more to damage the EU’s legitimacy than any yellow cards can remedy. It is unclear why a Europe of feuding parliaments will be more popular or harmonious than the current one. Expect to hear more about the role of parliaments as the EU desperately seeks new sources of legitimacy. Do not expect it to help much. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21702485-giving-more-voice-national-legislatures-will-not-enhance-eus-legitimacy-parliament-plot/print + + + + + +Previous Articles Sections Next + + + +Britain + + + + + +The government’s “industrial strategy”: A change of gear + +Foreign takeovers: Fear and favour + +London buses: Parting the red sea + +Universities and Brexit: A first-class mess + +Pushy parents: How to make children do homework + +Labour and the north: Tyne and Weary + +Bagehot: In the map room with Theresa May + + + + + +Articles Sections Next + +The government’s “industrial strategy” + +A change of gear + +The new prime minister signals a more hands-on approach to business + +Jul 23rd 2016 | From the print edition + + + +IF MAKING the gaffe-prone Boris Johnson foreign secretary was Theresa May’s most eyebrow-raising cabinet appointment, probably her most visible policy pronouncement since taking office on July 13th has been to signal the return of an “industrial strategy”. + +Merely to mention the phrase in Conservative Party circles has amounted to heresy since the days when Margaret Thatcher was prime minister. She made it a test of ideological purity to reject the muddled state-interventionism of her predecessors, both Labour and Tory; there was to be no return to the disastrous meddling in, or nationalisation of, companies like British Leyland under the Iron Lady. Yet Mrs May has broken the taboo. She made a “proper industrial strategy” part of her pitch to be party leader in a speech in Birmingham on July 11th. And now in Downing Street she has created a new ministry with the phrase at the top of the bill: the Department for Business, Energy and Industrial Strategy, headed by Greg Clarke. + +Although the details are yet to be fleshed out, Mrs May gave some indication of what it might entail in her Birmingham speech: raising productivity, a commitment to infrastructure projects (such as the north-south HS2 railway), more house-building and a regional policy that will “help not one or even two of our great regional cities but every single one of them”—perhaps a dig at the previous government’s championing of Manchester, Birmingham’s great rival. + +Such a strategy will also involve helping particular sectors of the economy, an approach which, its proponents insist, is quite different from the now-unfashionable 1970s policy of “picking winners”. This suggests a degree of continuity with David Cameron’s coalition government of 2010-15 when Sir Vince Cable, the Liberal Democrat business secretary, spoke enthusiastically of industrial strategies and singled out 11 industries with which the government would build long-term “partnerships”, including carmaking and aerospace. Both of these businesses, for instance, benefited from public investment in a network of “Catapult” research and development centres. + +People like Michael Hawes, the head of the Society of Motor Manufacturers and Traders, therefore welcome Mrs May’s more overt commitment to an industrial strategy. Free-market types, however, are more worried. Mark Littlewood, head of the Institute of Economic Affairs, a think-tank, argues that although the new policy remains “murky”, adopting even a limited industrial strategy could tempt the government into going further by propping up loss-making industries such as steel—especially once Britain leaves the EU and is no longer bound by European rules against state aid. He hopes that the new strategy might be more rhetorical than meaningful. + +A first test of this came quickly. On July 18th it was announced that the Cambridge-based tech company ARM Holdings was to be sold to Japan’s SoftBank for £24 billion ($32 billion). If the deal goes through it will be the largest-ever Asian investment in Britain. Mrs May had vowed to defend “important” sectors of the British economy against foreign takeovers in her Birmingham speech. Yet the government enthusiastically welcomed the sale of the home-grown chipmaker. + +In a nod to the new approach, it was stressed that the prime minister had spoken personally to the head of SoftBank, who assured her that ARM’s headquarters would stay in Cambridge and the number of jobs there would double over the next five years. Future takeovers would be assessed on a “case-by-case” basis, the government said. In practice this may mean increasing the number of sectors in which a public-interest test is applied—currently limited to defence, financial services and the media—to include other industries. This compromise was designed to appease both free-marketeers (who nonetheless saw it as meddlesome) and interventionists (who still complained that Mrs May had let ARM slip out of British hands). + +The temptation to tinker + +The ARM deal notwithstanding, the government is likely to spend more time trying to keep investment in Britain than fending it off. Business is still nervous about Brexit. Britain’s booming auto and aerospace industries, for example, are very exposed to the EU, which bought 57% of Britain’s car exports last year. To avoid a draining away of investment to other countries, the government may be in a mood to grant concessions elsewhere. Mr Hawes says his industry will lobby for lower energy prices and business rates as Brexit looms. It is believed that, in order to ensure that a big investment programme went ahead, Mr Cameron’s government had already talked to one carmaker after the referendum about how it could help the company to mitigate the effects of paying EU tariffs if Britain had to leave the single market. + +The new business secretary, Mr Clarke, has a reputation as a pragmatist rather than a radical. The “industrial strategy” so far seems mild enough. Yet with the popular mood souring towards globalisation, and the government keen to occupy the political centre-ground abandoned by Labour, many Tories will be on the lookout for signs of mission creep on industrial strategy. Well-intentioned interventions could quickly become counter-productive. And as the economy deteriorates, the calls for intervention will grow louder. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702531-new-prime-minister-signals-more-hands-approach-business-change-gear/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Foreign takeovers + +Fear and favour + +The evidence is that foreign managers improve the British firms they acquire + +Jul 23rd 2016 | From the print edition + + + +FOREIGN acquisitions have a bad reputation in Britain. Before Kraft, an American food-processing firm, swallowed Cadbury, a British confectioner, in 2010 it pledged not to outsource work abroad. Just days after the deal was done, it reneged. Small wonder, then, that the probable takeover of ARM Holdings, a Cambridge-based tech company, by SoftBank, a Japanese one, has people worried. + +Britain welcomes monied foreigners with open arms. Its stock of inward foreign direct investment is bigger than that of anywhere but America and Hong Kong. In the past decade overseas investors have splurged £500 billion ($835 billion) to acquire nearly 2,000 British firms, almost three times the amount spent by British investors on acquisitions within Britain. + +Foreign buy-outs increase demand for British assets and thus raise the pound’s value, making exporters less competitive. And foreign owners are popularly suspected of having a “home bias”, making decisions which benefit their country rather than Britain. ARM’s founder, Hermann Hauser, lamented to the BBC that “what comes next for technology will not be decided in Britain any more, but in Japan.” + +But the case against foreign investors does not stand up. A dear pound hardly helps exporters, but weak productivity is a bigger problem (in the manufacturing sector it is lower now than in 2011). And foreign owners seem to improve the situation. Economists reckon that about half the productivity gap between Britain and America is down to bad management. A paper by Nick Bloom of Stanford University and others shows that the David Brents can learn from the Jack Welches: when they take over British firms, American multinationals bring better technology and practices, lifting productivity by up to 10%. + +These benefits are easiest to grasp in heavy industry, where measuring output is straightforward. A study by Simon Collinson, now of Birmingham University, looked at British Steel Strip Products, which formed an alliance with Japan’s Nippon Steel in the early 1990s. Japanese management practices had a clear impact: within a few years the percentage of steel rejected because it was too rusty declined from 2-3% to less than 0.5%. + +As well as cutting down on tea-breaks and making factory lines sleeker, foreign-owned firms, which make up 1% of Britain’s businesses, appear to spend more on R&D than comparable British firms. That boosts productivity and thus wages: a study by the OECD found that in Britain wages in foreign-owned companies were about 5% higher than they would have been were the firm under British ownership. Altogether, foreign-owned businesses account for half of British R&D spending. + +Overseas owners also shake up supply chains, says Mr Collinson. One paper found that a ten-percentage-point increase in foreign presence in a British industry raised the total factor productivity (which captures the efficiency with which capital and labour are used) of that industry’s domestic producers by about 0.5%. + +No one celebrates when higher productivity arises from laying off workers, and foreign takeovers are, indeed, associated with job losses. But this is a feature of acquisitions in general, not of foreign ones in particular. Restricting buy-outs in order to protect jobs would ultimately depress living standards by keeping workers in inefficient companies. It is not always easy being at the mercy of global markets, but on balance Britain benefits from being open to foreign buyers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702418-evidence-foreign-managers-improve-british-firms-they-acquire-fear-and-favour/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +London buses + +Parting the red sea + +The new mayor plans to pedestrianise Europe’s busiest shopping street + +Jul 23rd 2016 | From the print edition + +Transport of delight + +IN 1963 the author of “Traffic in Towns”, a book commissioned by the Ministry of Transport, cursed Oxford Street as a “travesty of conditions as they ought to be in a great capital city”. Things have only deteriorated since then. Shoppers breathe in the highest levels of nitrogen dioxide in Britain as they navigate a road that is among the capital’s most dangerous. Those who cram into Oxford Street’s crowded buses quickly realise it would have been faster to walk. + +They may soon have to. Sadiq Khan, London’s new mayor, has promised to pedestrianise Oxford Street by 2020 (it is already off-limits to private cars most of the time). The capital’s transport authority has previously warned that making big changes to the street is “neither deliverable nor desirable”. Built on a Roman road, it is one of London’s few east-west arteries. At peak times 250 buses an hour trundle along it, five times the number on Fifth Avenue in New York. + +Powerful, posh residents’ groups such as the Marylebone Association will lobby against diverting buses down quieter streets. Mr Khan may not mind: the people of Marylebone High Street already preferred his Conservative rival by two votes to one in the last election. But Westminster City Council, which is more beholden to local residents, will have to approve any changes. + +A cull of bus routes is overdue, reckons Alexander Jan of Arup, an engineering firm. Twenty-one different routes go down Oxford Street, some following the paths of horse-drawn predecessors. The crush developed in the early 1900s, when private companies competed for fares. Things will get busier in 2018 when Crossrail, a new east-west trainline, adds as many as 150,000 daily visitors to the half-a-million Oxford Street already gets. + +A “hopper” fare will soon allow passengers to switch buses without charge, as they can on the Underground. If they resent having to hop around Oxford Street, its fresher air might cheer them up. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702462-new-mayor-plans-pedestrianise-europes-busiest-shopping-street-parting-red-sea/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Universities and Brexit + +A first-class mess + +Academics fear a drying up of students, and money + +Jul 23rd 2016 | From the print edition + + + +MOST economists were against the idea of Britain leaving the European Union. But perhaps few felt so strongly about it as the economics lecturer at Cambridge University who, following the referendum on June 23rd, turned up to a faculty meeting unclothed with “Brexit leaves Britain naked” daubed across her torso. Although the form of protest was unusual, the feeling it expressed was not: in a poll conducted prior to the vote by Times Higher Education, a trade paper, nine in ten university staff said they would vote to Remain. At University College London (UCL), where one in ten students comes from the EU, the mood after the result was one of “deep shock, grief and then concern,” says Michael Arthur, the university’s president. + +British universities are home to students from all corners: Europeans make up 6% of the total; another 14% come from the rest of the world. As a result of EU rules, the former are treated like home students, meaning that in England their fees are capped at £9,000 ($11,900) a year and they have access to state-provided loans. By contrast, there are no limits on fees for students from the rest of the world. A geography degree at Oxford, as taken by Theresa May, costs non-EU students £22,430 a year. + +Jo Johnson, the universities minister, has confirmed that students from the EU starting their courses in September will continue to have access to government loans and capped fees. If, as expected, that remains true in 2017-18, there may even be a surge in the number of EU applicants as potential students rush to take advantage of the support while they still can, says Emran Mian, director of the Social Market Foundation, a think-tank. + +But life will soon get trickier for universities. The big issue is whether EU students will continue to have access to loans, says Mr Mian. It may be politically difficult to justify offering them such support. It is an expensive policy: it is estimated that nearly three-quarters of students will never repay their loans in full, since outstanding debt is forgotten after 30 years. Withdrawing the loans from EU students, however, would risk a big drop in their number. Mr Arthur worries that it could cause a 50-75% fall in the number of EU students at UCL. + +Others point out that under such a scenario universities probably would be free to charge higher fees to EU students, as they currently do for non-Europeans. That may help, says Richard Shaw, head of education at Grant Thornton, an accounting firm, but it seems unlikely that any increase in fees would be sufficient to make up for the fall in student numbers. Those numbers could drop further if foreign students are put off by the referendum result, which some have interpreted as a sign of hostility towards migrants in general. + + + +Daily chart: Britain votes to leave the European Union + +Brexit comes at an awkward time for universities. Many have borrowed money to fund expansion, following the government’s decision in 2013 to lift the cap on the number of students that English universities were able to accept. Some might now find their new lecture halls less full than they had hoped. Raising funds will get harder, too: on June 29th Moody’s, a ratings agency, lowered the outlook of six of the seven universities it monitors; post-Brexit the EU’s European Investment Bank may also stop dealing with British institutions. + +Support for academic research is another area of concern. EU funding follows research quality, meaning that Britain receives a hefty share of the kitty (63% more than it contributed, in 2007-13). It may be that Britain is able to negotiate continued access to European funding, perhaps in return for offering financial support to European students, speculates Mr Arthur. But it is unlikely to be able to continue to sway it in the direction of excellence rather than need. There are already reports that British academics have been asked to take their names off applications for funding, owing to uncertainty over whether they will remain eligible, and that some foreign academics are reluctant to take jobs in Britain. + +Most countries do all they can to lure students from around the world, including seeking to attract the best lecturers. That is sensible: some students stick around, boosting the economy; others return home with fond memories of the country where they spent their early adulthood. All of them pay for the privilege. Immigration restrictions on non-EU students have already done considerable harm to higher education. It is likely that British universities will suffer once again. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702505-academics-fear-drying-up-students-and-money-first-class-mess/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Pushy parents + +How to make children do homework + +Sending texts to parents improves pupils’ grades as much as summer school + +Jul 23rd 2016 | From the print edition + +The dog ate my Google doc + +HOW can schools get parents interested in their children’s education? It is an important question: there is rare consensus among teachers, scholars and policymakers that children do better when their parents are involved in their school life. But getting parents on board is hard. It is particularly tricky, say teachers, to get parents who got little out of their own time in school to push their children to knuckle down. + +Studies published on July 15th by the Education Endowment Foundation (EEF), a charity, suggest something counter-intuitive: the best way to get parents involved may also be the cheapest. The EEF examined three programmes. One taught parents of five- and six-year-olds who were struggling to read techniques to help their children. Another paid parents of older primary-school children £30 ($40) per session to attend classes on improving their children’s literacy and numeracy. Both programmes had difficulty in attracting parents (although more turned up when there was money in it). Neither had much impact on pupils’ results, at least in the short term. + +A third programme, developed by researchers at Harvard and Bristol Universities, was more promising. The parents of nearly 16,000 pupils at 36 secondary schools in England were sent regular text messages to remind them of forthcoming tests, to report whether homework was submitted on time and to outline what their children were learning. Parents could opt out if the texts became bothersome. Few did. The result was an uptick in performance in maths and (more weakly) English, as well as lower absenteeism. + +The benefits were of a similar size to those achieved by sending children to summer school, says Sir Kevan Collins, chief executive of the EEF, yet the scheme costs just £6 per pupil to run for three years (by contrast, ten weeks of the first trial came to £804 per pupil). It could easily be rolled out across the country, Sir Kevan reckons, as most schools already have the necessary technology, which they use to notify parents if their child is ill, say, or if school is off because of snow. + +That is good news, says Raj Chande, one of the researchers, since secondary schools find it particularly tricky to engage parents. Most pupils travel to and from school by themselves, meaning parents lose the opportunity to swap stories at the school gates. The number of teachers a pupil deals with jumps from one at primary school to sometimes more than ten. And parents’ evenings are often a hurried “whizz-bang tour”, notes Mr Chande. The texts gave parents a chance to get involved in their children’s education. They took it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702504-sending-texts-parents-improves-pupils-grades-much-summer-school-how-make-children-do/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Labour and the north + +Tyne and Weary + +Consumed by metropolitan bickering, Labour loses touch with its heartlands + +Jul 23rd 2016 | NEWCASTLE AND SUNDERLAND | From the print edition + +Out of puff + +JEREMY CORBYN’S opponents in Parliament have at last agreed on a candidate to challenge him for the leadership of the Labour Party. On July 19th Angela Eagle, a little-known MP of the soft left, stepped aside, leaving Owen Smith, an even-littler-known MP of the soft left, to compete for the job in a vote in September. The news came as a YouGov poll found that Mr Corbyn’s popularity among Labour members had grown since last year, even as it remains low among voters at large. It is Labour’s half-a-million members—many of whom have signed up within the past year specifically in order to vote for the far-left Mr Corbyn—who choose the leader, not the party’s MPs, three-quarters of whom passed a no-confidence motion against him last month. So Mr Corbyn is likely to win. But battles going on far from Westminster could prove more significant. + +The leadership fight was triggered by Brexit. Newcastle, the biggest city in England’s North East, and Sunderland, its smaller, less cosmopolitan neighbour, were the first cities to declare results in the referendum of June 23rd. Newcastle voted to Remain by a whisker; Sunderland voted to Leave by a crushing 23%. In the end, 58% of the North East voted for Brexit, the second-highest share of any region. Many Labour MPs blame Mr Corbyn for not campaigning harder for Remain in the Labour-dominated north. + +Much of the Leave sentiment was driven by the anti-immigration UK Independence Party (UKIP). Even though the north-east has the lowest proportion of foreign-born residents in England (just 1.6%), UKIP’s rhetoric struck a chord with the economically marginalised. The party won 4m votes in the general election last year, coming second to Labour in many north-east constituencies. But it has had trouble broadening its appeal. UKIP councillors in local government are often unimpressive. As for the Conservatives, in spite of a pledge by Theresa May, the new prime minister, to reach out to the working class, the memory of Thatcherism is still too vivid and bitter to allow the Tories to make great inroads. Nor do the Liberal Democrats, woolly pro-Europe liberals, excite many people on Tyneside. + +Which leaves Labour. Though not quite a one-party state, the North East is solidly Labour country. Yet it is divided. In thriving, trendy Newcastle, some constituencies are held by soft-left Labour MPs with harder-left constituency parties, now influenced by Momentum, a pro-Corbyn movement. The two are often at each other’s throats, sometimes publicly. The Labour MP for Newcastle Central, Chi Onwurah, supported the no-confidence vote against Mr Corbyn, accusing him of “ineptitude and arrogance”. “You really should speak a little nicer about your boss,” one Momentum activist tweeted her. “The people of Newcastle are my boss,” she tweeted back. + +If Mr Corbyn sees off Mr Smith’s challenge, the Labour Party may split, with moderates walking out to form a party of their own. But such a separation would merely be a parting of two wings of the party that are, in different ways, incorrigibly metropolitan. The Corbynites and moderates alike are mostly socially liberal, university-educated urbanites, who are pro-gay marriage and pro-immigration. Neither faction is well aligned with Labour voters in cities like Sunderland and dozens of other towns across the north, who are more likely to work in low-paid jobs, more likely to be socially conservative and less likely to be interested in Talmudic debates about the nature of socialism. Martin Farr of Newcastle University says they make up the vast majority of Labour voters. + +That means there is a gap in the market for a party offering classic Labour redistributive economic policies, but with tougher rules on immigration, says Gidon Cohen of Durham University. The people who support Labour’s economic stance are often those most concerned about migrants, he says. Until Labour’s warring factions budge on that front, many people will continue to vote UKIP. Labour is unlikely to lose the North East, says Mr Farr, but many voters feel they have been taken for granted for too long. “Even ten years ago, it was unthinkable that Labour would lose Scotland,” he points out. But it did. + +The other danger is that, whoever wins the leadership fight, Labour remains distracted by infighting while places like Sunderland struggle. Unemployment there is the highest in Britain. And despite north-easterners’ enthusiasm for Brexit, it will do their economy little good: 60% of their exports go to the EU, a higher proportion than that of any other region. It also benefits from EU funds—soon to dry up—that have built much local infrastructure. Other Brexit-induced concerns loom. Scotland has indicated it might cut corporate taxes if it becomes independent, which could lure businesses north across the border. + +Meanwhile, rank-and-file pragmatists are tired of the ongoing Labour ding-dong. “You’ve got to be able to get into power,” says Paul Freeman, a lifelong Labour member from South Shields, between Newcastle and Sunderland. “We don’t necessarily need the red flag flying over the town hall. What we do want is a chance in life and a financial future, and the ability to get jobs for ourselves and our kids.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702503-consumed-metropolitan-bickering-labour-loses-touch-its-heartlands-tyne-and-weary/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +In the map room with Theresa May + +The outlines of Britain’s post-Brexit place in the world begin to emerge + +Jul 23rd 2016 | From the print edition + + + +IF EVER you find yourself at a dinner party with British establishment types, ask them about the Foreign and Commonwealth Office (FCO). Jokes about gin-swilling, oikophobe globetrotters in linen suits will spill forth. The more chauvinistic may tut about that diplomat’s disease: “going native”, or sympathising more with foreigners than with folk back home. To sound clever, someone will decree that every prime minister since Thatcher has been his or her “own foreign secretary” (as if Churchill and Eden were remembered today for their education policies) and that the FCO these days is just a venue for formalities. + +This image riles diplomats, and rightly. The essence of the grandest department on Whitehall is not that it deals with the world outside Britain. Practically every government body does that: the business department frets about foreign takeovers, the Ministry of Defence is hardwired into NATO, 10 Downing Street co-ordinates big summits. The point of the FCO is to go beyond the transactional focus of these branches, of fleeting political moods and fads, of narrow, immediate readings of the national interest. Its embassies are a nervous system conveying information, cultivating influence and generally providing a strategy for the country’s global role that transcends the next photo opportunity or crisis. Its goal is an influential Britain in an orderly world. Or, as Ernest Bevin, the post-war foreign secretary, put it: the preservation of every Briton’s ability to “take a ticket at Victoria Station and go anywhere I damn well please!” + +It is in this context that the sudden and brutal humiliation of the FCO following Britain’s vote for Brexit should be understood. The swingeing budget cuts and departmental turf wars of recent years have been tough enough. But none of this compares with the indignities visited upon it in recent weeks. + +Most colourful among them is Theresa May’s appointment of Boris Johnson as foreign secretary. The former mayor of London, who campaigned for Brexit, is affable and intelligent. But he is also unscrupulous and unserious. In Brussels he is loathed for his myth-making about the EU and for comparing the union to the Third Reich. German news readers struggled to stifle laughter when they read out the news of his promotion on July 14th. In Washington the reaction was no better: five days later the new foreign secretary grinned his way sheepishly through a press conference as American journalists read from his litany of undiplomatic remarks. In 2007 he compared Hillary Clinton to a sadistic mental health nurse, for example; the following year he described Africans as “piccaninnies” with “watermelon smiles”. + +What possessed Mrs May? It seems the prime minister wants to pack Mr Johnson off to parts foreign, welcoming him back in London only to help her, a Remainer before the referendum, to sell an eventual Brexit deal with the EU to Eurosceptics. That is dismal. It treats the FCO, a giant national asset, as a tool of domestic political management and thus suggests a drastic downgrade of Britain’s ambitions on the world stage. + +So too does the prime minister’s creation of two new departments: one for Brexit and one for international trade. The former, in particular, will be composed from chunks of the FCO, including some of its brightest staff. Both are led by uncompromising Eurosceptics, David Davis and Liam Fox, who seem determined to nab further turf from the (in their eyes) all-too internationalist diplomats. Thus the FCO will now have to share facilities—like Chevening, the foreign secretary’s country retreat—and battle for influence with two rival outfits programmed to see other countries less as partners than as negotiating opponents. + +A hint of what is to come came on July 20th, when Mrs May travelled to Berlin to meet Angela Merkel. The prime minister received military honours and exchanged warm words with her German counterpart. Yet insiders detected a shift. For all the talk of co-operation on Turkey and the refugee crisis, in the German capital Britain is now seen less as a solution than a problem. As one local diplomat put it to Bagehot: “Here Britain now means Brexit.” For the foreseeable future, then, the country’s scope to play the expansive, agenda-setting role for which the FCO is designed is limited. Brexit talks will drain energy from other fields. The fragmentation of Britain’s diplomatic arsenal will Balkanise policymaking. Doors will close which once were open. Mark Leonard, the director of the European Council on Foreign Relations, reckons the country could end up as “a bit player in support of policies developed in Berlin, DC and other places.” + +The new Westphalianism + +Too gloomy, say some, pointing to Britain’s ongoing NATO membership, UN Security Council seat, Commonwealth links and economic and military heft. These things matter, of course. But quitting the EU denies Britain opportunities to make the most of them (consider its leadership, alongside France and Germany, in the Iran nuclear talks). The country’s temperamental and institutional tilt in a more zero-sum, nation-state-centric, sovereignty-first direction makes its existing strengths less valuable: a less open and collaborative ally to its friends. Mr Leonard calls this “strategic shrinkage on steroids”. He sees Britain taking a more craven stance towards economic powers like China and Russia, whose cash might help it plug the economic gap left by Brexit. + +Not everything about this is preordained. Perhaps Mrs May can play off her three sort-of foreign secretaries against each other. Abroad she has opportunities to shore up some of Britain’s influence, says Brendan Simms, a historian of the country’s place in Europe: by striving to remain a useful ally to Germany, by amplifying Britain’s voice on defence and security matters (it is still a major player in NATO’s defences in the Baltics, for example) and by throwing herself into debates about the future integration of continental Europe. Britain’s stature in the world is shrinking. By how much is up to its leaders. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702502-outlines-britains-post-brexit-place-world-begin-emerge-map-room/print + + + + + +Previous Articles Sections Next + + + +International + + + + + +Stress: What makes us stronger + +Workplace stress: Fuss and bother + + + + + +Articles Sections Next + +Stress + +What makes us stronger + +New research shows that even severe stress can have an upside + +Jul 23rd 2016 | From the print edition + + + +FOR centuries physicists have used the word stress to describe force applied to materials. It was not until the 1930s that Hans Selye, a Hungarian-born endocrinologist, began using it of live beings. Selye injected rats with cow hormones, exposed them to extreme temperatures and partially severed their spinal cords to prove that all these sorts of maltreatment affected the rodents in the same ways: they lost muscle tone, developed stomach ulcers and suffered immune-system failure. He used the word for both the abuse of the rats and the health effects. Later on, it started to be used for psychological suffering as well. + +Today, the Oxford English Dictionary defines stress as “a state of mental or emotional strain or tension resulting from adverse or demanding circumstances”. The causes vary enormously: one person may be stressed by exams but happily swim with Great White sharks. Another may have to take sedatives before flying, but adore speaking to a crowd. This makes stress hard to measure. Proxies, such as the Negative Experience Index produced by Gallup, a pollster, suggest the world is growing more pessimistic, which may indicate increasing stress levels. Other surveys confirm what is perhaps obvious: stress is universal. + +The American Psychological Association (APA) suggests that, at least in America, the most common causes are to do with money, work and family. Women report being more stressed than men and are twice as likely to be diagnosed with anxiety disorders. Studies on rats indicate that sex hormones such as oestrogen and progesterone may play a part; so may the double burden of family and work. Men may also be more likely to conceal their distress. Black and Hispanic Americans, as well as poor people and parents, also report higher levels of stress. In 2015 half of Americans starting university reported being stressed most or all of the time. + +Young people have long reported more stress than old people, says Mary McNaughton-Cassill of the University of Texas at San Antonio. But she believes today’s youth are more overwhelmed than ever before. Globalisation means rapid change in the workplace, and firms increasingly expect employees to be constantly connected. The mass media flood us with bad news while creating unattainable aspirations, she adds: “you have to look like a movie star, stay informed about politics, take care of the kids and hold down a job.” Social media, which may lower stress when used to strengthen connections with friends, have been associated with higher stress when they deliver news of friends’ travails, such as divorces and accidents. + +Many studies have shown that stress has similar effects on humans as on Selye’s rats. It has been linked to high blood pressure, headaches, stomach upset and insomnia. According to the APA, chronic stress can “ravage” the immune system and increase unhealthy behaviours, such as drinking and smoking, that raise the risks of diabetes and cardiovascular diseases. A recent study by Bruce McEwen, a neuroscientist at Rockefeller University, showed that exposing rats to stress for just three weeks changed their brain architecture. Forcing his rats to swim, among other unpleasant tasks, shrank the dendrites in their amygdalae, the parts of the brain that control emotional responses, decision-making and memory. Though reversible, such changes in humans increase the risk of anxiety disorders and depression. + +Snapping point + +Late in his career Selye came to distinguish between “eustress”, or the good stress caused by positive experiences, such as falling in love, and distress, the bad sort. Other scientists extended the original physics metaphor: just as many materials can withstand stress until a certain point, it was thought that humans could cope with stress if it did not become too severe. Indeed, the idea took hold that moderate stress might be a good thing. In 1979 Peter Nixon, a consultant at Charing Cross Hospital in London, described a “human function curve”: a moderate amount of stress, such as a deadline or race, was now understood as not just harmless, but beneficial. But above a certain threshold humans, like metal bars, would break. + +Now a new body of research is challenging that notion. Some scientists posit that what matters is not just the level of stress, or even its type, but how it is thought about. The same stress, perceived differently, can trigger different physical responses, with differing consequences in turn for both performance and health. + +Recognising that stress can be beneficial seems to help in two main ways. People who have a more positive view of stress are more likely to behave in a constructive way: a study by Alia Crum of Stanford University’s Mind and Body Lab and others found that students who believed stress enhances performance were more likely to ask for detailed feedback after an uncomfortable public-speaking exercise. And seeing stressors as challenges rather than threats invites physiological responses that improve thinking and cause less physical wear and tear. + +Humans can respond to stress in several different ways. The best-known is the “fight or flight” response, which evolved as a response to sudden danger. The heart rate increases; the veins constrict to limit the bleeding that might follow a brawl and send more blood to the muscles; and the brain focuses on the big picture, with details blurred. + +In less extreme situations, the body and brain should react somewhat differently. When people perceive they are being challenged rather than threatened, the heart still beats faster and adrenalin still surges, but the brain is sharper and the body releases a different mix of stress hormones, which aid in recovery and learning. The blood vessels remain more open and the immune system reacts differently, too. Sometimes, though, the wrong response is triggered, and people sitting exams, giving a speech or pitching a business plan react as if to a sudden threat, with negative consequences for both their performance and their long-term health. + +Ms Crum believes that attitudes and beliefs shape the physical response to stress. In 2013 she subjected student volunteers to fake job interviews. Beforehand, they were shown one of two videos. The first extolled the way stress can improve performance and forge social connections; the second emphasised its dangers. In the fake interviews, the participants were subjected to biting criticism. When Ms Crum took saliva samples at the end of the study, she found that those who watched the upbeat video had released more DHEA, a hormone associated with brain growth. + +In an earlier study Ms Crum and Shawn Achor, the author of “The Happiness Advantage”, visited UBS, an investment bank, at the height of the financial crisis in 2008. They split around 400 bankers into three groups. The first watched a video that reinforced notions of stress as toxic, the second watched one highlighting that stress could enhance performance and the third watched no clip at all. A week later the second group reported greater focus, higher engagement and fewer health problems than before; the other two groups reported no changes. + +Other scientists have shown that recognising the benefits of stress can cause measurable improvements in performance. In one experiment Jeremy Jamieson, a psychology professor at the University of Rochester, gathered college students preparing for the Graduate Record Examination (GRE), an entrance test for postgraduate courses. He collected saliva from each of the students to measure their baseline stress response and divided them into two groups. One group was told that stress during practice exams was natural and can boost performance; the other got no such pep talk. The students who received the mindset intervention went on to score higher on a GRE practice test than those who did not. When Mr Jamieson collected their saliva after the exam, it suggested his intervention had not soothed their nerves: they were at least as stressed as those in the control group. A few months later the students reported their scores on the real GRE exam: those who had been taught to see stress as positive still scored better. + +“Google images of stress and you’ll see a guy with his head on fire. We’ve internalised that idea,” says Mr Achor. He instead compares stress to going to the gym. You only get stronger if you push yourself beyond what feels easy, but afterwards you need to recover. The analogy suggests that stress at work may be performance-enhancing, but should be followed by rest, whether that means not checking e-mails on weekends, taking more holiday or going for a stroll in the middle of the day. + +The well-tempered mind + +Kelly McGonigal, a psychologist at Stanford University and the author of “The Upside of Stress”, helps people rethink stress by telling them that it is what we feel when something we care about is at stake. She asks them to make two lists: of things that stress them; and of things that matter to them. “People realise that if they eliminated all stress their lives would not have much meaning,” she says. “We need to give up the fantasy that you can have everything you want without stress.” + +By changing how their bodies process stress and how they behave, such reframing may help people live healthier lives. In 2012 a group of scientists in America looked back at the 1998 National Health Interview Survey, which included questions about how much stress the 30,000 participants had experienced in the previous year, and whether they believed stress harmed their health. Next, they pored over mortality records to find out which respondents had died. They found that those who both reported high stress and believed it was harming their health had a 43% higher risk of premature death. Those who reported high stress but did not believe it was hurting them were less likely to die early than those who reported little stress. + +The study shows correlation, not causation. But since much stress is unavoidable, working out how to harness it may be wiser than fruitless attempts to banish it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21702463-new-research-shows-even-severe-stress-can-have-upside-what-makes-us-stronger/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Workplace stress + +Fuss and bother + +How firms are easing the strain + +Jul 23rd 2016 | From the print edition + +No feathers flying + +THE cost of stress is staggering. In Britain, 43% of all working days lost due to ill-health are because of stress-related conditions. Across Europe the share is even higher. One recent paper in America estimated that work-related stress—which excludes that experienced by the unemployed, students and those working in the home—accounted for between $125 billion and $190 billion in health-care costs annually. + +Governments and firms are starting to pay attention. Last year Japan—which has a word (karoshi) to describe death from overwork—flirted with the idea of forcing employees to take more of the vacation to which they are entitled. France recently passed a law giving workers the “right to disconnect”, which obliges firms with more than 50 staff to draw up rules for handling out-of-hours work e-mails. Google has nap pods in its headquarters; employees can also attend meditation and mindfulness classes. The New York offices of Knewton, an education-technology company, boast ping-pong tables and a large terrace for “knerds” in need of a break. + +Travellers at Los Angeles International Airport are greeted by dogs from the airport’s Pets Unstressing Passengers (PUP) programme. On Fridays at Yale Medical School, angsty students can visit Finn the Therapy Dog, whose ancestry includes terrier and poodle. The University of Minnesota has a similar scheme with a range of animals, including Woodstock, a lushly feathered chicken (pictured). Petting animals is known to lower blood pressure and cholesterol. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21702464-how-firms-are-easing-strain-fuss-and-bother/print + + + + + +Previous Articles Sections Next + + + +Business + + + + + +Methane leaks: A dirty little secret + +The industrial internet of things: The great convergence + +SoftBank and ARM: Everything under the Son + +Niche media: Fight club + +Corporate earnings: Of populism and profits + +Consumer products: His and hers + +Schumpeter: Silicon Valley 1.0 + + + + + +Articles Sections Next + +Methane leaks + +A dirty little secret + +Natural gas’s reputation as a cleaner fuel than coal and oil risks being sullied by methane emissions + +Jul 23rd 2016 | From the print edition + + + +METHANE is invisible to the naked eye and does not make for good television. So when about 100,000 tonnes billowed out of a natural-gas system in Aliso Canyon, Los Angeles, over 112 days last winter (pictured in infra-red above), it drew relatively little media attention—even though it forced the evacuation of thousands of homes and the plume was big enough to be detectable from space. Compare that with coverage of the Deepwater Horizon oil spill in 2010, which was the top item of news for weeks in America, much of it focused on the environmental impact on the Gulf coast. + + + +Unsurprisingly, many oil and gas companies would prefer methane leaks to remain out of the public eye, even though their industry now surpasses cow burps as a source of emissions (see chart). Methane is the predominant constituent of natural gas, a fuel that energy companies are embracing over oil and coal as a “bridge” to a post-carbon future and which has been given a new lease on life by America’s shale revolution. When burned, it emits about half as much carbon dioxide as coal and far less sulphur, soot and other pollutants. But greenhouse gases insulate the Earth in different ways. Carbon dioxide stays in the atmosphere for more than 500 years; methane just for 12. But the latter is about 25 times more potent. + +The American Petroleum Institute (API), a lobby group, says America is in “good shape” thanks to natural gas. As it has over time rivalled coal as the main source of power generation, it has helped lower emissions of the main source of global warming. The institute cites data showing that the amount of methane that leaks out of natural-gas wells and pipelines criss-crossing America has fallen over the past quarter of a century. “Let’s not get unreasonably concerned about [methane], because the industry has been addressing it,” says the API’s Erik Milito. + +Yet even environmentalists who acknowledge a preference for natural gas over coal believe methane leaks could be its fatal flaw. The Environmental Defence Fund (EDF), an American NGO that works with industry to reduce methane emissions, has in recent years deployed infra-red cameras along energy firms’ pipelines and beside thousands of oil and gas wells, as well as airborne monitoring kit to gather data. The results suggest methane leaks are significantly higher than had been previously understood. + +EDF has found that a disproportionate amount of fugitive emissions from the oil and gas infrastructure comes from a few “super-emitting” sites. In rare cases, like Aliso Canyon, they can take months to plug. More often the culprits may be well-side storage tanks with faulty valves, which may be fixable just with a wrench, but while left unattended billow methane into the air. + +Recently, the Environmental Protection Agency (EPA), an American regulator, has introduced its first regulations specifically aimed at capping methane emissions, acknowledging it has underestimated the problem. It has lifted its estimate of the amount of methane that leaked out of the natural-gas and oil supply chain in America in 2013 by about 30%—a massive revision. Steve Hamburg, EDF’s chief scientist, says that still leaves out the “fat-tail” super-emissions. He reckons about 2-2.5% of the gas flowing through the American supply chain leaks out, in total. + +Get much higher, and that would endanger the argument that natural gas is over all time periods cleaner than coal. And if natural gas emerges as a rival to petrol as a transport fuel, as European companies such as Royal Dutch Shell strongly hope, such levels would erode the net climate benefit altogether, Mr Hamburg says. “Switching from coal to gas is always advantageous to the climate over the long term, but the short-term benefits depend on minimising methane emissions,” he says. He has experience of methane’s effect at his cabin in the White Mountains of New Hampshire, where global warming means that trees now grow in places he would never have thought possible. + +Oil and gas producers acknowledge it is in their interest to curb leaks; it gives them more natural gas to sell. They say they are stepping up monitoring efforts, and have increased the use of “green completions” at shale wells to capture methane emitted at the end of the fracking process, rather than flaring it at the well head. Big European companies appear to take the reputational risk seriously. “The industry realises it needs to get its act together,” says one executive. BP, for instance, has designed a gas project in Oman that should be leak-free. Italy’s ENI has set publicly available targets for cutting methane emissions. + +Some state-owned oil giants, such as Saudi Aramco and Mexico’s Pemex, have joined global efforts to reduce methane emissions. But many reckon firms in Russia, Angola and Nigeria would show up as big emitters if reliable data were collected. A report last year by the Rhodium Group, a research firm, said large producers such as Iraq, Angola and Libya had never reported methane-emissions numbers to the UN. Without good global data, it will be impossible to get the problem in hand. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702493-natural-gass-reputation-cleaner-fuel-coal-and-oil-risks-being-sullied-methane/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The industrial internet of things + +The great convergence + +China aims to lead the world in connecting the factory + +Jul 23rd 2016 | SHANGHAI | From the print edition + + + +THE “internet of things” (IoT) is much hyped. For a decade, a world in which household appliances, packaged goods, clothes, medical devices and much more besides would be connected to the internet via smart chips and capable of sensing and sharing information has been just around the corner. Progress remains slow in the consumer market, despite a few hit products, such as the Fitbit, an activity tracker that connects to smartphones. An industrial form of the IoT, however, may come to fruition much faster. + +As the world’s biggest manufacturing power, China is well placed to lead this transition. Which is why this week GE, the world’s biggest industrial company, opened what it calls a “digital foundry” in Shanghai. The centre will help Chinese companies develop and commercialise products for the industrial internet of things, which involves factory machines and industrial goods communicating with each other and their surroundings. It will probably be a much bigger market than the one for consumers. China has millions of factories with billions of machines and it also makes most of the world’s electronics, including many of the sensors and other electronic devices that would form the backbone of such a network. Moreover, the government is keen to upgrade the country’s manufacturing base. + +There are already more things connected to each other in China than in any country, with the numbers set to skyrocket further (see chart). IDC, a research firm, forecasts that the overall market for IoT kit of various forms in China will rise from $193 billion last year to $361 billion in 2020. Accenture, a consultancy, reckons embracing IoT in manufacturing could add up to $736 billion to China’s GDP by 2030. + + + +GE’s new centre (it will soon open a similar one in Paris to tap into the European market) is part of its efforts to get firms to use Predix, its proprietary software for the industrial IoT. The American company had already signed up China Eastern Airlines and China Telecom, two big state-owned enterprises, and this week Huawei, a Chinese telecoms-equipment giant, also came on board as a partner. GE is not alone in seeing China as a potential hotbed of the industrial IOT. Siemens, a German rival, held an event in Beijing earlier this month to trumpet its own technology. HP, Honeywell and Cisco, all big American technology firms, are also rushing in. + +Sany side up + +Chinese firms, however, have their own plans. China Mobile, the largest mobile-phone firm, has established its version of a digital foundry: a “cellular IoT open lab”. Li Yue, the company’s chief executive, dreams that he could earn 100 billion yuan ($15 billion) from the IoT with as many as five billion devices connected by 2020. + +Chinese firms also have local knowledge. Sany, which makes construction equipment, started connecting machines on its factory floor in 2008. It then put sensors on its diggers and cranes to monitor them in real-time to improve operating efficiency. The company has invested in data analytics and artificial intelligence. He Dongdong, who leads those efforts, brags that unlike foreign multinationals his firm knows how to make affordable kit that works in “Chinese conditions”. By that he means places where workers are low-skilled, conditions are dirty and operators often push equipment to its limits. + +That points to another sort of local advantage. Foreign firms might have fancier kit, but locals know how to make things cheap and cheerful. Huawei’s push into the IoT got a boost in June when a new protocol it helped to develop, known as “narrow band IoT”, was approved as a global standard. The new protocol works with devices that require inexpensive sensors that use little energy. + +Still, there are three potential snags to China’s IoT ambitions. Firms, squeezed by both a weak local and global economy, may not be able to afford to connect their machines to the cloud. Sany’s Mr He, however, reckons the downturn will be good for stronger firms as their low-end competitors will be forced out. + +Secondly, Chinese factories are less technologically advanced than those in America or Europe, so moving to advanced computer-controlled production and automation could be daunting for some. + +Finally there are standards. Despite the new narrow band IoT protocol, there is a lack of overall global standardisation, such as the common GSM protocol that allowed Europe to leapfrog others in mobile telephony. Jagdish Rebello of IHS, a consultancy, argues that a push from Chinese regulators, combined with the country’s massive home market, could lead to domestic standards dominating the global market. Firms elsewhere, and in a variety of different industries from cars to robotics and cloud computing, will have other ideas. Consumers, meanwhile, will continue to wait for the refrigerator that can contact the supermarket to restock itself. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702487-china-aims-lead-world-connecting-factory-great-convergence/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +SoftBank and ARM + +Everything under the Son + +Masayoshi Son sets the tone for SoftBank after the exit of his successor + +Jul 23rd 2016 | From the print edition + + + +AS A student, the 58-year-old founder of SoftBank, a Japanese telecoms firm, resolved to dream up one computer-related business idea a day. When Masayoshi Son saw, at that time, a picture of a new Intel chip in a science magazine, he cut it out and kept it with him for years. So it fits that his biggest acquisition should be in semiconductors. On July 18th he said SoftBank would buy ARM Holdings, a British company that designs processing chips, for £24 billion ($32 billion). + +After Nikesh Arora, a former Google executive whom Mr Son named as his successor only a year ago, abruptly left SoftBank in June, investors had anticipated a shift in strategy. Mr Arora invested over $3 billion in a smattering of global startups. Mr Son had seemed to refocus on paying down his firm’s massive net debt, which reached over $80 billion at the end of March, a ratio of four times gross operating profits. Sprint, its struggling American telecoms subsidiary, which it bought for $39 billion in 2013, accounts for about $30 billion of that debt. SoftBank agreed to sell some assets, including a stake in Alibaba, a Chinese e-commerce giant. + +But investors who know Mr Son’s audacious ways had been totting up the sums to hazard a guess on his next big deal, says an analyst in Tokyo. Mr Son has topped up ¥2.3 trillion ($21.7 billion) of cash with a bridge loan of ¥1 trillion to buy ARM. + +Set up in 1990 in Cambridge, ARM is obscure yet fantastically important: the chips in over 95% of all smartphones sold last year are based on its designs, which it licenses to hardware makers including Apple and Samsung of South Korea, earning a royalty for each chip its customers sell. Last year they sold 15 billion ARM-based chips, an increase of 25% from 2014, and more than double the 6 billion sold in 2010. + +ARM is now trying to get into designing chips for giant servers, as Intel does. Its model means that, as more of its designs are sold—and as a single chip contains ever more of its processors—royalties should grow. But slowing smartphone sales means it needs to move into other areas, such as cars and machinery. In 2013 it bought Sensinode, a software provider for the “internet of things”, which adds sensors and web connections to everyday objects from toasters to tractors. In South Korea, ARM-based sensors in fish tanks signal nutrient levels to farmers by text message. + +The British firm’s high market share and steady cashflow appeals to SoftBank, as tightening regulation in Japan could squeeze profits from its smartphone customers. The big question is how long-term a view it will take with ARM. If it is tempted to jack up its royalties—currently just 1-2% of the chip’s selling price—that might upset chipmaker clients. For now, though, Mr Son says he wants to support ARM in “aggressive” investments in technology and engineers; he will start by doubling its headcount in Britain within five years. That suggests he will support it to become a big player in the internet of things. Mr Son is showing his seriousness on this, argues Oliver Matthew of CLSA, a stockbroker. One of Mr Son’s more restrained forecasts about the future of technology is that by 2040, everyone will own 1,000 devices each connected to the internet. + +Big, visionary bets are his stock-in-trade. But the premium he is paying for ARM—over 40 times its forecast earnings for 2017—has once again alarmed investors. So far, SoftBank’s domestic acquisitions have worked well but the record overseas is patchy. Its shares plunged by a tenth on July 19th. Sprint’s shares plummeted too: many worry that ARM will distract Mr Son from reviving it. And “how will they fund ARM’s future development if Sprint fails?” asks one longtime SoftBank watcher. + +Mr Son says he can invest in ARM because he is confident he can turn Sprint around. He has taken on more vertiginous levels of debt in the past when he bought Vodafone’s Japanese subsidiary in 2006, and paid off the debt early. Mana Nakazora of BNP Paribas doubts SoftBank will make any more big buys for two or three years, and expects it to focus now on improving its balance-sheet. That was the theory after his last huge investment, in Sprint, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702488-masayoshi-son-sets-tone-softbank-after-exit-his-successor-everything-under/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Niche media + +Fight club + +What the value of a martial-arts promoter says about the media + +Jul 23rd 2016 | From the print edition + +Their tweets are punchy too + +BLOODIED bone visibly juts out of his ring finger but Josh Emmett keeps on fighting. At the Ultimate Fighting Championship (UFC), broken bones need not stop the spectacle. Violence sells. And in the case of the UFC, a mixed martial-arts league, it sells for $4 billion—the largest sale of a single sports organisation in history. + +For Lorenzo and Frank Fertitta, who bought UFC for just $2m in 2001, this month’s deal is a thumping victory. Back then, mixed martial arts (a free-for-all of boxing, ju-jitsu, wrestling and other disciplines) was banned in New York state and branded “human cockfighting” by Senator John McCain. Now, the UFC dominates the field. It claims to be in 1.1 billion homes in 156 countries and to be the world’s largest pay-per-view event provider. It has a $100m annual contract with the Fox cable-TV network in America and boasts a growing digital-streaming platform. + +The new owners are a group led by WME-IMG, an American talent agency. Their executives are thought to be bullish on the future of UFC’s $10 a month digital-streaming platform, Fight Pass, and future opportunities in Asia. The two may go together. Digital streaming will be central to winning new fans and earning fees from new viewers in China and many other new markets, says Dan Singer of McKinsey, a consulting firm. + +Still, $4 billion for a bit of fisticuffs might seem rich. This year Comcast bought a whole film studio for $3.8 billion. But the deal signals three trends in sport and media. Live sports are commanding ever-higher premiums for broadcast rights, as networks fear losing viewers’ attention to the internet and smartphones. Second, UFC’s rise as a social-media phenomenon shows that it pays to be savvier in this area than other media firms. UFC even gave bonuses to fighters making creative use of Twitter and now has 46m followers across social-media platforms. Lastly, owners and marketers of content are also becoming distributors of it, creating more opportunities to turn athletes into mainstream celebrities. + +The only real headache for WME-IMG is that fighters are demanding more. Kajan Johnson, a lower-level UFC fighter, claims his pay has left him “struggling to eat”. Six former combatants are seeking class-action status for a lawsuit that alleges the UFC has restricted competition for fighters by buying up rival leagues. Athletes and owners alike want more bums on seats. But a (fist-free) tussle over who benefits most from them may ensue. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702489-what-value-martial-arts-promoter-says-about-media-fight-club/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Corporate earnings + +Of populism and profits + +Investors may be too sanguine + +Jul 23rd 2016 | NEW YORK | From the print edition + + + +IF YOU look at the headlines, geopolitical risk is at record highs, with populism and strife in Europe, a coup attempt in Turkey, a tense election in America, the threat of terrorism, and tensions in the South China Sea. Peer at a stock-price screen, however, and everything seems fine. This month the S&P 500 index of big American firms roared to a new high. Benjamin Graham, a famous investor, described America’s stockmarket as a manic depressive. But now it appears to be one of the planet’s last, incorrigible optimists. + +Investors are convinced that the outlook for corporate profits has improved. For the past four quarters, earnings-per-share for the S&P 500 have been falling by about 12% compared with the prior year (see chart). That has reflected the strong dollar, which crimps the value of foreign income, together with a slump at energy and commodity firms. Coca-Cola’s global sales have risen in local-currency terms but declined in dollars; ExxonMobil’s profits have fallen by four-fifths compared with two years ago. + +Yet now markets believe these problems are going away. The dollar and the oil price have stabilised and the domestic economy seems to be in a Goldilocks situation for profits—not too hot, not too cold. It is growing just strongly enough to keep demand for products moving along. But wages, or labour costs, so far this year have been rising at an annual rate of only 2-3%. So America Inc can be slothful but highly profitable. In addition, firms are using high earnings to pay for share buy-backs, which have been running at $165 billion a quarter, and which help to prop up share prices. + +A majority of analysts still expect profits to dip for the second quarter but then to rise, and strongly by the end of this year. Just how sensible is this expectation? One objection is that a tightening labour market may mean that wage pressures rise at last. Just a 5% rise in wages would, all else being equal, lower profits by about 15%. Yet this is not what the Federal Reserve expects, nor the bond market, which is pricing in a long period of low inflation and interest rates. + +A still bigger risk, but one that is harder to quantify, is the longer-term effect of a fraught political climate upon corporate profits. Firms have earnings and cashflow at unusually elevated levels relative to GDP, while the share of output going to workers is depressed. Both sides of the presidential campaign have hit out at big firms, which many people feel are benefiting from an economy tilted in their favour. + +How might such sentiment translate into lower profits? Hillary Clinton has promised to put pressure on drugs pricing (14% of all profits in America are earned by health-care firms). Her party has also promised a tougher approach on competition policy, which could hurt technology firms with large market shares. Donald Trump might pursue a protectionist agenda that would be painful for big firms that operate abroad or that rely on imported inputs (about two-fifths of S&P 500 sales are made abroad). Both parties could seek to crack down on generous tax breaks for offshore profits. + +Yet investors are shrugging off such concerns, perhaps reckoning campaign promises will be quietly forgotten. For example, analysts expect pharmaceutical firms’ earnings-per-share almost to double by 2018. It may be wishful thinking. The banking sector was the first industry in America to be hit hard by a populist backlash, and it is unlikely to be the last. Its earnings were hammered—banks’ return on equity has halved over the past decade. It is no coincidence that the chief executive now doing most to head off popular discontent hails from banking. Last week Jamie Dimon of JPMorgan Chase announced that 18,000 of its rank-and-file staff would see their pay rise from $10 an hour to $12-17. He may not be the last to make such gestures. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702492-investors-may-be-too-sanguine-populism-and-profits/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Consumer products + +His and hers + +Companies hungry for profits are playing the gender card + +Jul 23rd 2016 | From the print edition + + + +“GENTLEMEN, it’s time for us to be done with women’s cleaning products,” suggests the website for Hero Clean, a line of American products aimed at men that Elizabeth Sweet, a professor at the University of California, Davis, came upon while shopping in California. “No more pastel bottles with puppies, babies and dewy meadows.” + +Only a tiny group of products merit distinction by gender. “Anything meant for your genitals,” says another gender expert, Lisa Wade of Occidental College. Yet needlessly gendered items are proliferating. Q-TIPS now offers “men’s ultimate” cotton swabs for men whose earwax would overwhelm ladylike swabs. A firm in California called Daisy Rock hawks hot pink sparkle-coated “girl guitars” to women. Banana Boat, a sunscreen brand, sells black bottles of sun lotion to men who can’t touch its less masculine orange packaging. + +There has been a huge shift towards gendered marketing since the 1950s when even beauty products were often gender-neutral, says Ms Sweet. One theory is that because men and women are increasingly doing the same things, such as attending the same universities, doing the same jobs and household duties, marketers see a chance to appeal to an older instinct, for differentiation. + +Some firms are even trying to charge women more for the same products. A 2015 study in New York city found that women’s products cost more two-fifths of the time. But many of the new gendered products are for men. Powerful Yogurt, a food company, has begun producing high-protein yogurt in black tubs. Mammoth Supply, a New Zealand-based producer of bottled iced-coffee, urges men to embrace their new domesticised reality. “Don’t just clear the leaves: eliminate them. Don’t just do the chores: annihilate them.” Bulldog Skincare peddles moisturisers “built for men”. + +Other firms are treading more carefully. Following complaints about gender-based signs last year, Target, an American retailer, removed mentions of it from the kids’ bedding and toy sections. Some firms, such as Johnson & Johnson, a health-care firm, via its Clean & Clear brand, are even embracing transgender themes in their marketing. + +Many consumers are resisting the gender card. Reviews on the Amazon page of Bic for Her pens, which are like any other pen except pink and purple, are sarcastic. One reviewer told how his wife, attempting to use his man-keyboard, faints until he revives her with smelling salts. Men may be from Mars and women from Venus, but both seem to agree that when it comes to pens, everyone can share. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702491-companies-hungry-profits-are-playing-gender-card-his-and-hers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Silicon Valley 1.0 + +Cleveland can teach valuable lessons about the rise and fall of economic clusters + +Jul 23rd 2016 | From the print edition + + + +WHEN the Republican Party decided to hold its national convention in Cleveland back in July 2014 no one dreamed that Donald Trump would be the party’s presidential nominee. Yet the city and the man are oddly suited. It is hard to think of a city that better illustrates Mr Trump’s campaign theme of making America great again. For Cleveland is a city that has clearly fallen from greatness. It is also hard to name a city that better illustrates the fears of Mr Trump’s critics. It is clear that the politics of anger and resentment have done nothing but hasten its decline. + +Cleveland was the Silicon Valley of the second industrial revolution. John D. Rockefeller founded Standard Oil Company there in 1870. Steel barons built mills along the Cuyahoga River and Lake Erie, drawn both by the supply of iron ore and by excellent transport links to the east coast. Immigrants came in their thousands. Charles Brush pioneered electric lighting there; Sidney Short and fellow inventors came out with electric street cars. By 1900 Cleveland was so successful, leading in patent registration and venture capital, that it opened a stock exchange. + +The city was also home to one of America’s greatest political machines, put together by a local boy, Mark Hanna, an iron-and-steel magnate turned political Svengali, and his front-man, William McKinley, from nearby in Ohio. McKinley won the presidency in 1896 on a platform of nationalism, protectionism and (qualified) isolationism, and his party held the presidency for all but eight years until 1932. (Karl Rove, George W. Bush’s own Svengali, modelled himself on Hanna, and wrote a biography of McKinley, though Mr Bush’s unpopularity and Mr Trump’s rise suggest that he was less successful than his role model.) + +The relics of Cleveland’s greatness can still be seen everywhere. The city boasts one of America’s greatest orchestras. The Lake View Cemetery contains the bones of Rockefeller and those of America’s 20th president, James Garfield. The suburbs are dotted with the palaces of former industrial barons. But they only serve to remind you of how far the place has fallen. Cleveland embodies all the classic signs of rust-belt decline. The centre often looks barren. Crime and begging are a problem. The population has fallen from 900,000 in the 1950s to less than 400,000 today. + +Economists from Alfred Marshall on have dwelt on the self-reinforcing characteristics of successful clusters. They can protect their pre-eminence by producing distinctive cultures (Marshall said that there was something “in the air” in Sheffield that was conducive to steelmaking) and by attracting talent and money. And they can entrench themselves by investing in robust institutions like universities. The most prominent example of a successful cluster today is Silicon Valley. But there are plenty of others: the City of London in England or the car industry in Stuttgart. + +Cleveland is a reminder that decline can be as self-sustaining as success. There are three reasons why clusters fail. One is that they over-specialise in products that are later improved elsewhere. Sheffield stuck to steelmaking even as others learned to make it better and cheaper. A second is that they complacently fail to upgrade their productivity. Detroit succumbed to Japanese carmakers in the 1970s and 1980s because it thought more about providing its cars with ornate fins (and its workers with gold-plated benefits) than it did about their performance. The third is that they suffer from an external shock from which they fail to recover, as could be the case with the City of London in the wake of Brexit. + +Naomi Lamoreaux, an economic historian at Yale University, says Cleveland falls into the third category. It led in a wide variety of industries into the 1920s, including cars, chemicals, paints and varnishes, machine tools and electrical machinery as well as iron and steel. It spent money on R&D. But then came a series of external shocks. The Depression destroyed the local financial institutions that had supported Cleveland’s start-ups. Regulations adopted in its wake gave New York’s banks such a competitive advantage that local capital markets withered. The federal government’s wartime policy of dispersing manufacturing industry eroded the city’s industrial base. + +Fanning the flames of hate + +Cleveland’s decline became self-reinforcing. Firms downsized, closed or relocated. The inner city fell prey to crime and dysfunction. The white middle-class moved to suburbia. Politicians responded not with pragmatic ideas for reform but by whipping up anger and resentment, which only hastened white- and business-flight. Dennis Kucinich, the mayor in 1977-79, who much later ran for president, refused to privatise the electric utility and, in 1978, took the city into bankruptcy. A once-proud city was mocked as “the mistake on the lake”. To cap it all, Cleveland paid the price for its earlier successes: by 1969 the Cuyahoga River was so polluted that it caught fire, an event that is still celebrated in one of its local brews, Burning River Pale Ale. + +The city’s story is also a warning that rebuilding clusters is fiendishly hard. It has had some success by focusing on education and medicine, though not as much as its fellow rust-belt city, Pittsburgh. The Cleveland Clinic is one of America’s great medical institutions. The city’s record with various mega-projects is mixed. In the early 1990s it spent over $300m on a sports complex for its baseball team, the Indians, and its basketball team, the Cavaliers. But downtown can still feel like a ghost town at night. More recently the city fathers have built lofts and bicycle paths to attract millennials. But then so has every other city in the country. + +Perhaps the most important lesson from Cleveland is that the likelihood that you’re going to remain a top cluster for ever is small. Even if you diversify your risks and invest in your future, as Cleveland clearly did, some unforeseen event might knock you for six. And reversing decline is harder than capitalising on success. Success is a delicate flower that can easily be killed. Failure is a weed that it is almost impossible to exterminate. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21702387-city-offers-warning-reversing-decline-harder-capitalising-success-lessons/print + + + + + +Previous Articles Sections Next + + + +Finance and economics + + + + + +African banks: Subprime savannah + +Buttonwood: Vanishing workers + +The Big Mac index: Patty-purchasing parity + +Postal Savings Bank of China: A red-letter IPO + +The 1MDB affair: Thick and fast + +Free exchange: Putsch and pull + + + + + +Articles Sections Next + +African banks + +Subprime savannah + +Trouble is stalking many of Africa’s banks + +Jul 23rd 2016 | LAGOS and NAIROBI | From the print edition + + + +AFRICA’S financial firms can claim many innovations, from M-Pesa, a pioneering Kenyan mobile-money service, to the life insurance for people with HIV offered by All Life, a South African firm. To these can be added the first social-media bank run. Chase Bank Kenya, the country’s 11th-largest (unrelated to America’s JPMorgan Chase), was taken over by regulators in April after word of its impending collapse spread on Twitter and WhatsApp, spurring panicked withdrawals. + +The run highlighted the risks facing banks in a region that is seen by many investors as one of the industry’s final frontiers. Whereas banks in many rich countries have produced disappointing profits since the financial crisis of 2008, African ones had until recently been reporting stellar growth and juicy returns. Those in Ghana were expanding their loan books at a breathtaking pace of more than 30% a year. Banks in Mozambique, Zambia and Malawi were not too far behind. And most were making good money, too. + +Moody’s, a rating agency, reckons that average return on equity (a standard measure of profitability) ranged from 20-25% in many African countries, making their banks well over twice as profitable as American ones and four or five times more profitable than Europe’s limping lenders. Yet in many parts of sub-Saharan Africa these mouthwatering profits are turning into losses as a result of falling commodity prices, slowing economies and, in some cases, weak regulation. + +Nigeria, Africa’s biggest economy, seems on the brink of its second banking crisis in less than a decade. On July 4th the central bank dismissed the management of Skye Bank, the country’s eighth-biggest lender by assets, amid concerns that it had failed to keep thick enough buffers of capital to absorb losses on its bad debts. Its share price has plunged by about a quarter since the move. The shares of other Nigerian banks are also sinking. + + + +The central bank insists that “there is… no need for panic withdrawals from any bank.” Yet Skye’s managerial maelstrom harks back ominously to 2009, when the global financial crisis caused several of Nigeria’s bigger banks to collapse. Back then the central bank replaced the bosses of eight institutions. A state-backed agency known as Amcon was established to swallow up bad loans; the sickliest outfits were either nationalised or sold to other banks. + +Today’s sticky issue is oil. During the financial crisis the price of oil slumped only briefly before recovering strongly. Nigerian banks subsequently lent billions to local businessmen to help them buy oil and gas wells. These loans, about 25% of the country’s total, seemed quite safe until the oil price began dropping in mid-2014; it is now less than half what it was then. Militancy in the oil-pumping Niger Delta has only made matters worse. + +Afren, an exploration company, went bust last year. Oando, a leading local oil producer, admits “significant doubt” about its ability to repay loans. “The interest is racking up,” says Kola Karim of Shoreline Energy, another local producer, which had to turn off its taps after bandits bombed a pipeline in February. And even firms that are not in the oil business may struggle to service their debts thanks to the economy’s broader malaise: the IMF reckons it will shrink by 1.8% this year. + +First Bank, Nigeria’s second-largest by assets, says that 18% of its loans are non-performing. It may be suffering more than most, since more than 40% of its loans went to oil and gas producers. The central bank says that bad debts in the banking system as a whole have doubled in the past six months, to 10%. Emmanuel Assiak of Africa Capital Alliance, a private-equity firm, thinks the figure is really in the low teens. “A lot of people are saying this is not 2009. Well it’s worse,” says Ronak Gadhia of Exotix, an investment bank. “Back then, they didn’t have the exposure to oil.” + +Banks are also under pressure elsewhere in the region, often for similar reasons. In Ghana non-performing loans have jumped to more than 16% of the total after slumping commodity prices and a plunging currency forced the central bank to ramp up interest rates. It raised them by five percentage points, to 26%, a level at which almost all borrowers will struggle. Zimbabwean banks hold lots of government bonds that will probably never be repaid. They have only staved off runs by limiting withdrawals. + +In Kenya, however, banks face a different set of stresses. Weak regulation, exacerbated by the proliferation of small banks, is taking a toll. Three banks have been placed into receivership in less than a year by Patrick Njoroge, the respected governor of the Central Bank of Kenya, as a series of ruinous insider-lending scams have come to light. Mr Njoroge alleges that the managing director of one bank siphoned off 38 billion Kenya shillings ($335m) via 20 shell companies over 13 years . The full scale of the heist was discovered a few days after his funeral. At Chase Bank, the victim of the social-media run, directors had signed off on some 8 billion shillings in loans to themselves. + +Mr Njoroge seems determined to clean up Kenya’s banking system. But elsewhere in Africa regulators still seem willing to turn a blind eye to problems. Forcing banks to admit to rising bad debts could lead to painful collapses and to strained public finances if governments have to step in with bail-outs. But ignoring them might be even worse in the long run. As it is, businesses in Africa struggle to obtain enough capital to grow: despite rapid loan growth, most African countries still have low banking penetration. Allowing zombie banks to limp on, too weakened by bad loans to make any new ones, would only worsen Africa’s desperate shortage of credit. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702479-trouble-stalking-many-africas-banks-subprime-savannah/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Vanishing workers + +Can the debt-fuelled model of growth cope with ageing populations? + +Jul 23rd 2016 | From the print edition + + + +THE world is about to experience something not seen since the Black Death in the 14th century—lots of countries with shrinking populations. Already, there are around 25 countries with falling headcounts; by the last quarter of this century, projections by the United Nations suggests there may be more than 100. + +Such a shift seems certain to have a big economic impact, but there is plenty of debate about what that impact might be. After the Black Death a shortage of labour eventually led to a sustained rise in real wages. If that trend were repeated, it would come as a big shift after a prolonged period of sluggish wage growth, something that has fuelled political discontent across the rich world. + +A new report on the demographic outlook by Berenberg, a German bank, focuses on one important measure: the dependency ratio. This compares the number of children and the elderly with people of working age (those aged 15-64). The higher the dependency ratio, the greater the burden on the workforce. In the world’s biggest economies, America apart, the workforce is set to shrink significantly (see chart). + + + +In many developed countries, the dependency ratio rose after the second world war (thanks to the baby boom), fell in the late 1960s and 1970s as the boomers entered the workforce, and has recently started rising again. That history makes it possible to analyse how economies performed during periods of both falling and rising ratios. Berenberg based its analysis on ten rich countries: America, Australia, Britain, France, Germany, Italy, Japan, Spain, Sweden and Switzerland. + +The housing market seems an obvious place to start. You would expect a growing workforce to push house prices higher, as wage-earners seek more space for their families. Sure enough, the authors find that, since 1960, the median increase in real house prices when the dependency ratio was decreasing (ie, when there were relatively more workers) was 2.7% a year. However, when the dependency ratio was increasing (ie, relatively fewer workers), real house prices fell by 0.2% a year. + +Similarly, as you might expect, real GDP per person tends to grow faster (2.6%) in years when the dependency ratio is falling than in years when it is rising (1.9%). Having more workers makes it easier for the economy to grow. Inflation also tends to be higher (4.1%) in years when the dependency ratio is falling and lower (2.7%) when the ratio is increasing. + +That points to a problem. In recent decades, the developed world has seen a big surge in total debt-to-GDP ratios in both the private and public sectors. People tend to take on debt for two reasons: to maintain their consumption or to buy an asset (for individuals, often a home). This requires a belief on the part of the debtor (and the lender) that, at a minimum, their future incomes and asset prices will not both fall by a lot, so the money can be paid back. + +In a world of sluggish growth, low inflation and stagnant house prices, debts become much harder to pay off. Indeed, that has pretty much been the picture since the financial crisis in 2008: debt has been shuffled around a bit (from the private sector to the government) but total debt-to-GDP ratios have not fallen. + +The show has been kept on the road by big reductions in interest rates, which have enabled most borrowers to keep servicing their debts. And demography suggests that the era of low interest rates is set to continue. Berenberg finds that, since 1960, real interest rates have tended to rise when the dependency ratio is decreasing and fall when the ratio is rising (as it is now forecast to do). + +Low rates are in part a deliberate policy by central banks to stimulate the economy by encouraging people and companies to borrow. But as workers age, they are less likely to want to take on debt. And if an ageing workforce means slower growth, companies won’t want to borrow to invest. So the policy may not work. Indeed, the Berenberg study found that since 1960, private-sector debt rose almost three times as fast, relative to GDP, in years when the dependency ratio was decreasing than when it was increasing. + +The big question is whether economic growth and rising debt levels go hand-in-hand, or whether the former can continue without the latter. If it can’t, the future could be very challenging indeed. To generate growth in our ageing world may require a big improvement in productivity, or a sharp jump in labour-force participation among older workers. To date, the signs on productivity are not encouraging and elderly employment ratios have a lot further to go. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702477-can-debt-fuelled-model-growth-cope-ageing-populations-vanishing/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Big Mac index + +Patty-purchasing parity + +The size of the world economy—measured in burgers + +Jul 23rd 2016 | HONG KONG | From the print edition + + + +IN THE mall below a McDonald’s restaurant in Hong Kong, excitable children pose for photos next to a statue of the chain’s clownish mascot, Ronald, who lounges on a bench, one yellow glove raised in welcome. He fronts a display of other promotional decor, including a soft drink the size of a man and a box of fries that looms even larger. A video chronicles the chain’s 41 years in Hong Kong, which have been full of menu twists and tweaks: sausage McMuffins, shake-shake fries, chicken McNuggets, salads. At the restaurant upstairs, touchscreen menus now allow choosy customers to build their own burger, adding exotica like grilled champignon, herb aioli and sliced jalapeños or even (heresy!) subtracting the bun. + +Innovation and differentiation—the creation of things new and singular—are a boon to economic progress and the bane of economic measurement. It would be much easier to compare economies across borders and time if goods remained much the same, wherever and whenever they were made. Fortunately, amid all the creativity and complexity, the Big Mac remains something of a constant. It varies rather little from country to country or year to year. Its consistency is part of its appeal to customers. It is also why it appeals to us—as a handy benchmark for judging the strength of currencies and even the size of economies. + +To calculate our Big Mac index, we collect the price of the burger (with bun, of course) in 59 countries accounting for 94% of the planet’s output. (In India, we substitute the Maharaja Mac, which is made with chicken rather than beef.) It turns out that some of these burgers are much cheaper than others in dollar terms. In America, a Big Mac costs $5.04 on average. In Hong Kong, by comparison, the same burger costs the equivalent of $2.50 or so. There are many potential reasons why Hong Kong’s Big Macs are cheaper than America’s. But one is that Hong Kong’s currency is undervalued. + +The Big Mac index thus provides a simple gut-check for judging the competitiveness of currencies. It compares each country’s exchange rate with a hypothetical alternative: the rate that would equalise the price of a Big Mac around the world. In Hong Kong, where the Big Mac costs 19.20 Hong Kong dollars, that hypothetical exchange rate would be 3.81 Hong Kong dollars to the greenback. The real, market exchange rate is much weaker: it takes 7.75 Hong Kong dollars to buy one of the American sort. According to the Big Mac index, then, the Hong Kong dollar is heavily undervalued—by more than half. + +Hong Kong is not alone. Judging by the price of burgers, most currencies are undervalued against the dollar. The euro looks 17% too cheap. The yen is undervalued by about 30%. Big Macs also look strikingly cheap in many emerging economies, including South Africa (58%) and Malaysia (61%). In fact, only three currencies look overvalued by this measure: Sweden (overvalued by 4%), Norway (9%) and Switzerland (31%). + +If most currencies are “too” cheap against the dollar, it follows that the dollar itself must be too expensive. The Big Mac index suggests it has climbed a whopping 56% above fair value on a trade-weighted basis. Does this mean we should expect a dollar crash? No. There are fundamental economic reasons why exchange rates tend to look cheap in developing countries—in particular, poor productivity in both tradable sectors (eg, manufacturing) and non-tradable ones (eg, services). As productivity in manufacturing improves in emerging markets, factory wages will rise, putting upward pressure on wages and prices elsewhere in the economy, even in fast-food chains. That will make their burgers dearer, narrowing the gap with America. + + + +Track global exchange rates over time with The Economist's Big Mac currency index + +In a more sophisticated version of the Big Mac index, we have taken these fundamentals into account. The adjusted index looks at whether a currency is cheap or expensive compared with what you would expect given the country’s level of development. By this measure, the dollar is still overvalued, but by a much smaller margin: roughly 11% on a trade-weighted basis. + +The Big Mac index also provides a fun gauge of the size of national economies, a matter of great debate and controversy. If a country spent its entire annual income on Big Macs, how many burgers could it buy? America’s GDP is forecast to be over $18.5 trillion this year, according to the IMF. That translates into almost 3.7 trillion burgers at a little over five bucks apiece. America thus accounts for a big share of the world total, which will amount to over 19.2 trillion in 2016, by our calculations, based on IMF forecasts (see chart). + +Can any other economy rival the home of the hamburger? China’s GDP will be a little over 73 trillion yuan this year, says the IMF, or less than $11.4 trillion. But in China, a Big Mac costs only 18.6 yuan. So its GDP is equivalent to over 3.9 trillion burgers, over 5% more than the American total. Indeed, by this measure, China overtook America back in 2013. At market exchange rates, America’s economy is still far bigger than China’s. But at patty-purchasing parity, their positions have been flipped. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702482-size-world-economymeasured-burgers-patty-purchasing-parity/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Postal Savings Bank of China + +A red-letter IPO + +A creaky, bloated bank will be this year’s star share listing + +Jul 23rd 2016 | SHANGHAI | From the print edition + +Not exactly Silicon Valley + +FEW companies are able to go public with a valuation of more than $50 billion less than a decade after their founding. This rarefied group, which mainly consists of tech darlings, is about to admit a surprising new member: a large, lumbering Chinese bank. Postal Savings Bank of China, established in 2007, is on course for an initial public offering (IPO) this year that is expected to be the world’s biggest for nearly two years. Its pitch to prospective investors is also unusual. Far from boasting about how well it is run, it instead emphasises the advantages of scale—which it has so far squandered—to imply that it has vast untapped potential. + +Describing Postal Savings Bank as a startup is something of a misnomer. When it launched nine years ago, it was a spin-off from the Chinese postal service, which had doubled as a quasi-bank for 20 years. As a way of bringing finance to rural areas, the government set up windows at post offices for locals to deposit their savings, a model that lots of other countries had previously followed. + +In many small villages in China, the postal bank is still the only trustworthy savings institution around. It also provides a remittance network for tens of millions of migrant labourers, letting them send their incomes from far-flung factories back to their families. As of the end of March, Postal Savings Bank had 40,057 outlets nationwide, covering 98.9% of counties, more than any other bank in China. It also had 505m retail customers, more than one in every three citizens. + +But it does not do much beyond offering a safe place for customers to put their money. It used to place almost all its assets with the central bank, and so earned a measly profit. The government’s decision to incorporate it as a stand-alone entity in 2007 was the first big step towards improving its performance, opening the door for it to lend more. It still has a long way to go. Last year its return on assets was just 0.51%, less than half the national average for commercial banks of 1.1%. Corporate governance has also been weak. Tao Liming, head of Postal Savings Bank at its launch, was arrested in 2012 for corruption. He died in custody last month. + +Some big investors think it can turn itself round. Last year the bank sold a 17% stake to a consortium that includes UBS, a Swiss bank, and Canada’s biggest pension fund. Its listing, which is likely to take place in September, could bring in as much as $10 billion, boosting its depleted capital cushion. It clearly has room to grow. Its loan-to-deposit ratio of 39% is some 30 percentage points lower than its peers’. Low-yielding government bonds still eat up a big share of its assets. It has also yet to take real advantage of its vast client base to sell other financial products, such as insurance. + +Yet making the transition to full-fledged commercial bank will be hard. Under-performance tends to be baked into the DNA of postal banks, if privatisations in other countries are anything to judge by. The bank has a responsibility to serve isolated rural communities; it cannot simply cut branches, says Dong Ximiao of the Chongyang Institute for Financial Studies at Renmin University. + +Moreover, at the same time as Postal Savings Bank stays yoked to a bricks-and-mortar model, technological change is sweeping through the financial system. Mobile banking is increasingly popular. Payment apps owned by Tencent and Alibaba, two internet giants, already have at least 500m users between them. Most are in cities for now, not in the rural heartland of Postal Savings Bank, but it is only a matter of time before the technology spreads farther. + +Optimists think the tech groups will work with the bank, not against it. Tencent and Ant Financial, Alibaba’s payments affiliate, were among the group of investors in Postal Savings Bank last year. Its physical presence could help them build deeper relationships with customers. But a more cynical view is that the tech giants were fulfilling their own political duty, currying favour with the government by supporting a state-owned bank whose business model, though important to China’s rural past, will be less relevant to its urban future. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702483-creaky-bloated-bank-will-be-years-star-share-listing-red-letter-ipo/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The 1MDB affair + +Thick and fast + +America applies to seize assets linked to a Malaysian state investment firm + +Jul 23rd 2016 | SINGAPORE | From the print edition + + + +HAVING smouldered for more than a year, international investigations into 1MDB—a Malaysian state investment firm at the heart of a sprawling financial scandal—are now burning fiercely. On July 20th America’s Justice Department began proceedings to seize more than $1 billion of assets, which it alleged had been purchased with funds siphoned out of the firm. It is the largest single action the department has ever launched. + +The goodies concerned include luxury properties, artworks by Van Gogh and Monet, and a jet, according to court filings. Authorities say 1MDB’s money was also spent on gambling and used to make the “Wolf of Wall Street”, a film about a high-living swindler starring Leonardo DiCaprio. It was made by a production company co-founded by Riza Aziz, the stepson of Malaysia’s prime minister, Najib Razak. (A spokesman for the firm, Red Granite Pictures, said neither it nor Mr Riza had done anything wrong.) + +Mr Riza is among several people the Justice Department claims are “relevant” to its case. So is Low Taek Jho, a Malaysian tycoon who helped to set up 1MDB, and two former officials at an Abu Dhabi state firm with which 1MDB did business. Also listed in the complaint (but not named) are four employees of 1MDB and a high-ranking Malaysian government official who is described as a relative of Mr Riza and for the moment known only as “Malaysian Official 1”. + +1MDB was launched in 2009, the year Mr Najib became prime minister. It was supposed to bring investment to Malaysia by forging partnerships with foreign firms. But by 2014 it was struggling to service debts of more than $11 billion. Questions about it multiplied last year when it was discovered that around $700m had entered Mr Najib’s bank accounts shortly before a close election in 2013. (Mr Najib says the money was not related to 1MDB, but was a perfectly legal, personal donation from a Saudi royal, much of which has been returned. Malaysia’s attorney-general agrees.) + +The Justice Department says the assets it is seeking to recover are associated with “an international conspiracy to launder funds misappropriated” from 1MDB. Its filing alleges that between 2009 and 2015 more than $3.5 billion belonging to the firm may have been pinched by “high-level officials of 1MDB and their associates”. The complaint provides extensive detail on the deals in question, which it divides into three “phases”, beginning in 2009, 2012 and 2013. + +The proceedings now starting in America relate only to the seizure of assets, and do not amount to criminal charges against the individuals alleged to be involved. In the meantime several cases are advancing elsewhere. In May the Swiss financial regulator fined BSI, a private bank which handled some of 1MDB’s money, and launched proceedings against two of its former employees. + +On July 21st authorities in Singapore said that they had seized or frozen assets worth S$240m ($175m), half of it belonging to Mr Low or his family, as part of an ongoing probe into transactions linked to 1MDB. The local financial regulator also announced that it would be taking action against three big banks—DBS, UBS and Standard Chartered—for “lapses and weaknesses” in their efforts to prevent money-laundering. With investigations underway in half a dozen countries, expect to hear much more. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702481-america-applies-seize-assets-linked-malaysian-state-investment-firm-thick/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Putsch and pull + +Plots to topple leaders are becoming less common. That’s a good thing for many reasons + +Jul 23rd 2016 | From the print edition + + + +THE attempt last week to overthrow Recep Tayyip Erdogan, Turkey’s president, was at once surprising and familiar. Few had thought that the armed forces, however disgruntled, would dare to remove an elected leader who enjoys widespread support. But it was only a short while ago that Turkey suffered a coup every ten years or so, on average. The same can be said for coups around the world. They are almost always unexpected: by their nature, they aim to catch the government unawares. Yet they occur often enough. The past three years have seen successful coups in Egypt and Thailand, along with several botched attempts in other countries. + +This regularity has yielded a body of research about the causes and consequences of coups, with much of it focused on their economic dimensions. There are no iron laws. Each coup is unique, laced through with political and social complexities. Still, there are certain patterns. + +Start with the basic numbers. Jonathan Powell and Clayton Thyne of the University of Kentucky have built a data set of all coup attempts between 1950 and 2010. By their count, there were 457. Over that time, plotters had almost exactly even odds. Of all the bids to topple leaders, 227, or 49.7%, were successful; 230, or 50.3%, failed. But the figures have changed in recent years. Plotters appear to have honed their craft, scoring a nearly 70% success rate after 2003. + +One possibility is that, as in any industry, best practice has spread. (There are suggestions that “Coup d’État: A Practical Handbook”, a study published by Edward Luttwak, has helped would-be putschists.) The basic steps—detain key leaders, take over major media outlets, control traffic arteries—are well known. In this respect, the bungling of the Turkish coup was almost as surprising as the fact that it was attempted in the first place. Yet Turkey also showed that technology is challenging established formulas. Mr Erdogan harnessed social media to rally crowds of supporters and used video-streaming to conduct a live interview with a TV station. + +Coups have also become less common over the years. Their heyday was the mid-1960s, when nearly 15 took place every year. In the 2000s that fell to less than five a year. The Turkish coup was the first attempted this year. There are many possible explanations for the decline in coups, but one is economic: the world has become richer. Looking at a sample of 121 countries, John Londregan and Keith Poole, then of Carnegie Mellon University, concluded in 1990 that coups were 21 times more likely to occur in the poorest than in the wealthiest. Using another group of countries, Paul Collier and Anke Hoeffler of Oxford University found in 2007 that the risk of coups fell by about 27% as the level of income per person doubled. + +By the same token, growth rates matter. Raising it by one percentage point reduces the probability of coups by 4.4%. The corollary is, of course, that slower growth raises the risk. There is no automatic threshold. Just look at North Korea or Zimbabwe, where the economies have been disastrous for years without soldiers defenestrating their leaders. But it is axiomatic that so long as an economy is thriving, coups are far less likely. In the case of Turkey most attention has been placed, rightly, on the army’s discomfort with Mr Erdogan’s tightening grip and his embrace of Islam in a once fiercely secular state. Yet it is also noteworthy that growth over the past decade has disappointed and that reformists have been sidelined in recent months. + +Coup de graphs + +What happens to growth after a putsch? One opinion occasionally voiced is that coups might be helpful, allowing no-nonsense leaders to dispense with endless politicking and push through smart policies. That view was heard in Egypt in 2013, and again in Thailand in 2014. But this is unlikely, according to Erik Meyersson of the Stockholm Institute of Transitional Economics, who has looked at hundreds of failed and successful coups. Failed coups have little discernible impact on a country’s growth; after short-term volatility, it quickly returns to its previous trend. Successful coups, however, do have a real impact—but only in previously democratic countries. In such places, coups lower the growth of income per person by as much as 1.3% a year over a decade (see chart). As a result, incomes eventually end up more than a tenth lower in post-coup democracies. In countries with autocratic rulers, in contrast, coups make little difference in the long run. + +Coups are also associated with a range of other economic pathologies, particularly in democracies. There is a reduction in social spending, perhaps because the elite that toppled the previous leaders now seek to enrich themselves and their cronies. Financial stability also tends to deteriorate as governments rack up greater debts. Impaired legitimacy makes it harder to collect taxes, and the confidence of foreign investors seeps away. + +Mr Meyersson’s explanation of why democracies fare so much worse is simple: coups are much more of a wrenching change for them. In authoritarian countries, with no mechanism for transferring power, coups are part of the natural order of things. In democracies—even imperfect ones such as Thailand or nascent ones such as Egypt—coups represent a fundamental rupture, altering the course of their development. + +From this standpoint, the failure of Turkey’s coup bodes well for the economy. Whatever illusion of stability the generals might have offered, the economic costs would have been severe (to say nothing of the anger that would have welled up in society). Yet Turkey may be one case where the effects of a failed coup are much the same as those of a successful one. This is not shaping up to be a victory for Turkish democracy. Rather than reinforcing Turkey’s democratic institutions, Mr Erdogan is purging his enemies, real and perceived, and entrenching his own rule. Putsches can come in many forms. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702478-plots-topple-leaders-are-becoming-less-common-thats-good-thing-many/print + + + + + +Previous Articles Sections Next + + + +Economics brief + + + + + +Information asymmetry: Secrets and agents + + + + + +Articles Sections Next + +Information asymmetry + +Secrets and agents + +George Akerlof’s 1970 paper, “The Market for Lemons”, is a foundation stone of information economics. The first in our series on seminal economic ideas + +Jul 23rd 2016 | From the print edition + + + +IN 2007 the state of Washington introduced a new rule aimed at making the labour market fairer: firms were banned from checking job applicants’ credit scores. Campaigners celebrated the new law as a step towards equality—an applicant with a low credit score is much more likely to be poor, black or young. Since then, ten other states have followed suit. But when Robert Clifford and Daniel Shoag, two economists, recently studied the bans, they found that the laws left blacks and the young with fewer jobs, not more. + +Before 1970, economists would not have found much in their discipline to help them mull this puzzle. Indeed, they did not think very hard about the role of information at all. In the labour market, for example, the textbooks mostly assumed that employers know the productivity of their workers—or potential workers—and, thanks to competition, pay them for exactly the value of what they produce. + +You might think that research upending that conclusion would immediately be celebrated as an important breakthrough. Yet when, in the late 1960s, George Akerlof wrote “The Market for Lemons”, which did just that, and later won its author a Nobel prize, the paper was rejected by three leading journals. At the time, Mr Akerlof was an assistant professor at the University of California, Berkeley; he had only completed his PhD, at MIT, in 1966. Perhaps as a result, the American Economic Review thought his paper’s insights trivial. TheReview of Economic Studies agreed. The Journal of Political Economy had almost the opposite concern: it could not stomach the paper’s implications. Mr Akerlof, now an emeritus professor at Berkeley and married to Janet Yellen, the chairman of the Federal Reserve, recalls the editor’s complaint: “If this is correct, economics would be different.” + +In a way, the editors were all right. Mr Akerlof’s idea, eventually published in the Quarterly Journal of Economics in 1970, was at once simple and revolutionary. Suppose buyers in the used-car market value good cars—“peaches”—at $1,000, and sellers at slightly less. A malfunctioning used car—a “lemon”—is worth only $500 to buyers (and, again, slightly less to sellers). If buyers can tell lemons and peaches apart, trade in both will flourish. In reality, buyers might struggle to tell the difference: scratches can be touched up, engine problems left undisclosed, even odometers tampered with. + +To account for the risk that a car is a lemon, buyers cut their offers. They might be willing to pay, say, $750 for a car they perceive as having an even chance of being a lemon or a peach. But dealers who know for sure they have a peach will reject such an offer. As a result, the buyers face “adverse selection”: the only sellers who will be prepared to accept $750 will be those who know they are offloading a lemon. + +Smart buyers can foresee this problem. Knowing they will only ever be sold a lemon, they offer only $500. Sellers of lemons end up with the same price as they would have done were there no ambiguity. But peaches stay in the garage. This is a tragedy: there are buyers who would happily pay the asking-price for a peach, if only they could be sure of the car’s quality. This “information asymmetry” between buyers and sellers kills the market. + +Is it really true that you can win a Nobel prize just for observing that some people in markets know more than others? That was the question one journalist asked of Michael Spence, who, along with Mr Akerlof and Joseph Stiglitz, was a joint recipient of the 2001 Nobel award for their work on information asymmetry. His incredulity was understandable. The lemons paper was not even an accurate description of the used-car market: clearly not every used car sold is a dud. And insurers had long recognised that their customers might be the best judges of what risks they faced, and that those keenest to buy insurance were probably the riskiest bets. + +Yet the idea was new to mainstream economists, who quickly realised that it made many of their models redundant. Further breakthroughs soon followed, as researchers examined how the asymmetry problem could be solved. Mr Spence’s flagship contribution was a 1973 paper called “Job Market Signalling” that looked at the labour market. Employers may struggle to tell which job candidates are best. Mr Spence showed that top workers might signal their talents to firms by collecting gongs, like college degrees. Crucially, this only works if the signal is credible: if low-productivity workers found it easy to get a degree, then they could masquerade as clever types. + +This idea turns conventional wisdom on its head. Education is usually thought to benefit society by making workers more productive. If it is merely a signal of talent, the returns to investment in education flow to the students, who earn a higher wage at the expense of the less able, and perhaps to universities, but not to society at large. One disciple of the idea, Bryan Caplan of George Mason University, is currently penning a book entitled “The Case Against Education”. (Mr Spence himself regrets that others took his theory as a literal description of the world.) + +Signalling helps explain what happened when Washington and those other states stopped firms from obtaining job-applicants’ credit scores. Credit history is a credible signal: it is hard to fake, and, presumably, those with good credit scores are more likely to make good employees than those who default on their debts. Messrs Clifford and Shoag found that when firms could no longer access credit scores, they put more weight on other signals, like education and experience. Because these are rarer among disadvantaged groups, it became harder, not easier, for them to convince employers of their worth. + +Signalling explains all kinds of behaviour. Firms pay dividends to their shareholders, who must pay income tax on the payouts. Surely it would be better if they retained their earnings, boosting their share prices, and thus delivering their shareholders lightly taxed capital gains? Signalling solves the mystery: paying a dividend is a sign of strength, showing that a firm feels no need to hoard cash. By the same token, why might a restaurant deliberately locate in an area with high rents? It signals to potential customers that it believes its good food will bring it success. + +Signalling is not the only way to overcome the lemonsproblem. In a 1976 paper Mr Stiglitz and Michael Rothschild, another economist, showed how insurers might “screen” their customers. The essence of screening is to offer deals which would only ever attract one type of punter. + +Suppose a car insurer faces two different types of customer, high-risk and low-risk. They cannot tell these groups apart; only the customer knows whether he is a safe driver. Messrs Rothschild and Stiglitz showed that, in a competitive market, insurers cannot profitably offer the same deal to both groups. If they did, the premiums of safe drivers would subsidise payouts to reckless ones. A rival could offer a deal with slightly lower premiums, and slightly less coverage, which would peel away only safe drivers because risky ones prefer to stay fully insured. The firm, left only with bad risks, would make a loss. (Some worried a related problem would afflict Obamacare, which forbids American health insurers from discriminating against customers who are already unwell: if the resulting high premiums were to deter healthy, young customers from signing up, firms might have to raise premiums further, driving more healthy customers away in a so-called “death spiral”.) + + + +The car insurer must offer two deals, making sure that each attracts only the customers it is designed for. The trick is to offer one pricey full-insurance deal, and an alternative cheap option with a sizeable deductible. Risky drivers will balk at the deductible, knowing that there is a good chance they will end up paying it when they claim. They will fork out for expensive coverage instead. Safe drivers will tolerate the high deductible and pay a lower price for what coverage they do get. + +This is not a particularly happy resolution of the problem. Good drivers are stuck with high deductibles—just as in Spence’s model of education, highly productive workers must fork out for an education in order to prove their worth. Yet screening is in play almost every time a firm offers its customers a menu of options. + +Airlines, for instance, want to milk rich customers with higher prices, without driving away poorer ones. If they knew the depth of each customer’s pockets in advance, they could offer only first-class tickets to the wealthy, and better-value tickets to everyone else. But because they must offer everyone the same options, they must nudge those who can afford it towards the pricier ticket. That means deliberately making the standard cabin uncomfortable, to ensure that the only people who slum it are those with slimmer wallets. + +Hazard undercuts Eden + +Adverse selection has a cousin. Insurers have long known that people who buy insurance are more likely to take risks. Someone with home insurance will check their smoke alarms less often; health insurance encourages unhealthy eating and drinking. Economists first cottoned on to this phenomenon of “moral hazard” when Kenneth Arrow wrote about it in 1963. + +Moral hazard occurs when incentives go haywire. The old economics, noted Mr Stiglitz in his Nobel-prize lecture, paid considerable lip-service to incentives, but had remarkably little to say about them. In a completely transparent world, you need not worry about incentivising someone, because you can use a contract to specify their behaviour precisely. It is when information is asymmetric and you cannot observe what they are doing (is your tradesman using cheap parts? Is your employee slacking?) that you must worry about ensuring that interests are aligned. + +Such scenarios pose what are known as “principal-agent” problems. How can a principal (like a manager) get an agent (like an employee) to behave how he wants, when he cannot monitor them all the time? The simplest way to make sure that an employee works hard is to give him some or all of the profit. Hairdressers, for instance, will often rent a spot in a salon and keep their takings for themselves. + +But hard work does not always guarantee success: a star analyst at a consulting firm, for example, might do stellar work pitching for a project that nonetheless goes to a rival. So, another option is to pay “efficiency wages”. Mr Stiglitz and Carl Shapiro, another economist, showed that firms might pay premium wages to make employees value their jobs more highly. This, in turn, would make them less likely to shirk their responsibilities, because they would lose more if they were caught and got fired. That insight helps to explain a fundamental puzzle in economics: when workers are unemployed but want jobs, why don’t wages fall until someone is willing to hire them? An answer is that above-market wages act as a carrot, the resulting unemployment, a stick. + +And this reveals an even deeper point. Before Mr Akerlof and the other pioneers of information economics came along, the discipline assumed that in competitive markets, prices reflect marginal costs: charge above cost, and a competitor will undercut you. But in a world of information asymmetry, “good behaviour is driven by earning a surplus over what one could get elsewhere,” according to Mr Stiglitz. The wage must be higher than what a worker can get in another job, for them to want to avoid the sack; and firms must find it painful to lose customers when their product is shoddy, if they are to invest in quality. In markets with imperfect information, price cannot equal marginal cost. + +The concept of information asymmetry, then, truly changed the discipline. Nearly 50 years after the lemons paperwas rejected three times, its insights remain of crucial relevance to economists, and to economic policy. Just ask any young, black Washingtonian with a good credit score who wants to find a job. + +LATER IN THIS SERIES: + +• Minsky's financial cycle + +• The Stolper-Samuelson theorem + +• The Keynesian multiplier + +• The Nash equilibrium + +• The Mundell-Fleming trilemma + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economics-brief/21702428-george-akerlofs-1970-paper-market-lemons-foundation-stone-information/print + + + + + +Articles Sections Next + + + +Science and technology + + + + + +The 21st International AIDS Conference: Rallying the troops + +Data storage: Atoms and the voids + +Medical technology: All sewn up + + + + + +Articles Sections Next + +The 21st International AIDS Conference + +Rallying the troops + +AIDS workers face setbacks, both epidemiological and financial. But they are about to be handed new weapons to carry on the fight + +Jul 23rd 2016 | Durban | From the print edition + + + +VETERANS of the war on AIDS wear the medal stamped “Durban” with pride. It was in that city, in 2000, that the most effective of the International AIDS Conferences was held. The field’s bigwigs agreed that everything possible should be done to make the antiretroviral (ARV) drugs that had been invented a few years earlier available to all who needed them, and began to create the institutions that would distribute them. + +In retrospect, it sounds an obvious thing to do. But in those days ARVs were costly, and ways of getting them to people in poor countries nearly non-existent. The ramp-up therefore took time, and deaths from AIDS continued to rise. According to UNAIDS, the United Nations agency charged with combating the disease, they peaked at 2m a year in 2005. Since then, though, they have almost halved, to around 1.1m a year. That is fewer than the 1.5m who die from viral hepatitis, a fact that would have astonished the delegates to Durban in 2000. + + + +No good deed, however, goes unpunished. In the poorest countries, which are often those with the biggest problem, ARV programmes still depend on foreign subsidies. But as the perception of crisis has passed, political attention has wandered. A report published on July 15th by the Kaiser Family Foundation, an American charity, in conjunction with UNAIDS, showed that in 2015, for only the second time since 2002, international aid for AIDS was down (see chart). That made for a gloomy backdrop to the AIDS conference’s return to Durban. But it also gave urgency to its two main themes—prevention and cure. + +We interrupt this transmission... + + + +AIDS is costly to fight because ARVs only suppress HIV’s reproduction; they do not eradicate it from someone’s body. Those infected are therefore on the drugs for life. This means preventing transmission is crucial not only for humanitarian reasons, but also for financial ones. As the number of infected people rises, so does the bill for treating them. Moreover, unlike death rates, rates of new infection seem, after several years of falling, to have levelled off. A recent study published in the Lancet said they have not fallen for the past five years (see chart). Another, from UNAIDS and based on different data, suggested recent drops were caused solely by falling rates of transmission between mothers and their children, rather than the adult-to-adult sort. + +One change since 2000 is that prevention has become a scientific endeavour. Then, the best advice was sexual fidelity and condoms. It is still good advice, but other options are now available. Circumcision is one example. Research suggests that parting with his foreskin reduces a man’s risk of getting infected by up to 60%, because the foreskin is rich in the sorts of cells in which HIV reproduces. Prophylactic circumcision has become an established medical procedure in many African countries. But levelling the playing field between the sexes requires techniques that women can use, too. Linda-Gail Bekker, the incoming president of the International AIDS Society, which organises the AIDS conferences, thinks two such technologies are imminent. One is available to both sexes, while the other is in the hands of women alone. + +The universal sort is called oral pre-exposure prophylaxis (PrEP). Oral PrEP, which involves taking an antiviral drug combination called Truvada in anticipation of risky intercourse, was in the air at the last AIDS conference, held in 2014. Now, although it has so far been licensed in only about half a dozen countries, it is taking off. UNAIDS estimates 60,000 people around the world are on oral PrEP. Gilead Sciences, Truvada’s makers, reckon that between 2012, when America approved oral PrEP, and the end of 2015, 80,000 people in America alone had used it at some point. + +UNAIDS sees an opportunity here—perhaps one as big as that offered by ARVs in 2000. Michel Sidibé, the agency’s boss, reckons that if oral PrEP is focused on those facing the highest risk, such as prostitutes, the rate of new infections would start falling again. UNAIDS, which loves targets, suggests aiming to have 3m people on oral PrEP by 2020. That sounds ambitious. But if the UNAIDS figure for current users is correct, a little more than doubling the number every year would get there. + +The second technique involves silicone rings laced with a drug called dapivirine. These rings, developed under the aegis of the International Partnership for Microbicides (IPM), another charity, sit at the top of the vagina, slowly releasing a pharmacological payload designed to stop the reproduction of any viruses that do find homes in the vaginal wall. At the moment, they last a month, but a three-month version is under development. + +Two trials which reported earlier this year—one in South Africa and Uganda, and the other in those places plus Malawi and Zimbabwe—suggest the rings work. Follow-up data released at the conference confirm this. A ring’s efficacy is, unsurprisingly, related to how much a woman actually uses it. But for the most diligent it reduced the risk of becoming infected by 75%, compared with control volunteers who did not use such a ring at all. More studies have just been launched, and if all goes well the IPM hopes governments will start approving the rings by 2018. + +The best form of prevention, though, would be a vaccine. Here the news is less good. Researchers have been hunting for a vaccine almost since HIV was first discovered, in 1983. The closest they have come was a trial in Thailand in 2009. That vaccine had an efficacy of 31%, which was too low to license it for general use. + +Undeterred, Dr Bekker has run a small trial to prove the safety of a new version of the Thai vaccine, adapted to combat the strain of HIV most common in South Africa and also given a better adjuvant—a booster chemical that promotes a vaccine’s efficacy. The results came out in May and signalled the all-clear for a larger trial, with 5,400 participants, that will begin in November. If the tweaked vaccine has an efficacy of 50% or more, then it is likely to become the first actually approved for use. + +Don’t mention the “C” word + +The search for a full-on cure for AIDS is as long-standing as the search for a vaccine and has proved, so far, equally futile. Indeed, the “C” word is now going out of fashion. Many researchers prefer to talk of “remission”, as cancer doctors do. By that they mean some treatment, possibly needing to be repeated every few months, that lets patients stop taking ARVs. + +The problem faced by all attempts at either a cure or remission is that HIV hides away in certain inactive body cells by integrating its genes into the host cell’s chromosomes. Until such a cell starts translating those genes into new viruses, the infection remains invisible both to ARVs and to the immune system. For decades, researchers have been trying to flush HIV out of its hiding places by activating these cells and then eliminating them—a strategy called “shock and kill”. But shock and kill has, so far, yielded no treatment. So other approaches are coming to the fore. + +One is to abandon the idea of waiting for the virus to come out and instead go in and get it. That is the method adopted by Monique Nijhuis of the University Medical Centre Utrecht, in the Netherlands. She uses CRISPR-Cas9, a potent new gene-editing technique, to hunt down and eliminate DNA sequences found in HIV but not the human genome, thus wrecking the viral genes inside their host chromosomes. + +Dr Nijhuis’s technique works well in cell cultures, though it has yet to be tested in animals, let alone people. But another approach is starting, tentatively, to be so tested. This encourages the immune system to attack infected cells (including those where HIV is latent) more aggressively. + +AIDS and cancer are different sorts of diseases, but they share an important feature. Both are able to outwit the immune system. This suggests to some that the way to deal with them is to give the immune system a bit of help. In the case of AIDS one approach is to try bolstering it, by injection, with extra antibodies known to have at least some effect on HIV. Individually, these do little good. But Anthony Fauci, head of America’s National Institute of Allergy and Infectious Diseases, and one of AIDS research’s oldest hands, suggested that they might be used, as ARVs are, in combinations of three or four that attack different parts of the virus. + +Another way the immune system might be boosted—and one that is already employed to treat cancer—is to use drugs called checkpoint inhibitors. To stop immune responses getting out of hand, and harming the person they are supposed to protect, evolution has created various molecular “checkpoints” that slow things down. A checkpoint inhibitor neutralises one of these, speeding things up again. + +Testing such drugs on those infected with HIV is not as simple as it sounds. Disinhibiting the immune system is risky. It could end up damaging healthy cells. People whose HIV is controlled by ARVs are not in immediate danger, so it would be unethical to put them at such risk. But this does not stop doctors using inhibitors to treat cancer patients who also happen to be HIV-infected, since the primary purpose is clinical, not experimental. And, as Olivier Lambotte of the Hôpital Bicêtre, just outside Paris, told the meeting, that is precisely what is happening, in three small trials which began this year. + +Sadly, even if one or more of these approaches does work, it will be a long time before it makes a dent in the epidemic. Hence the worry about the slackening of funding in the face of growing numbers of infected—let alone aspirations to offer ARVs to at least 90% of those so diagnosed and to roll out oral PrEP. But, huff and puff as people may, there is unlikely to be much more money in the immediate future. Things will therefore have to change. + +David Wilson, who directs the World Bank’s AIDS programme, has several ideas to cope with belt-tightening. One is better targeting of existing cash, for example by identifying HIV hotspots within countries. That, in turn, means collecting better data. Such an approach would reap huge rewards, he argues, reducing budgets by 20-40%. And he thinks the worst-hit countries should do more to help themselves, and could raise more money if they put their minds to it—though they cannot yet be expected to do everything. + +These are good ideas, and should be pushed. But Dr Wilson also reckons that there needs to be a move away from the feeling that AIDS is exceptional, and thus requires an exceptional response. In the past, it certainly did. But, he says, HIV is now familiar enough that its treatment can be integrated ever more closely into routine health care, to the benefit of both. + +That may be premature, for AIDS does remain exceptional. Its association in the public mind with prostitutes, drug users and gay men (in many places where AIDS is rampant, homosexual acts are illegal) means treating it as just another disease is still a long way off. At the same time, and despite the lack of money and the plateauing of infection rates, the progress that has been made since 2000 against something unknown to medical science 36 years ago is impressive. With the new tools now available, and with but a little more willpower, AIDS can surely be beaten. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21702436-aids-workers-face-setbacks-both-epidemiological-and-financial-they-are-about/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Data storage + +Atoms and the voids + +Individual atoms offer ultra-dense information storage + +Jul 23rd 2016 | From the print edition + +There is indeed plenty of room at the bottom + +WHAT if “we can arrange the atoms the way we want; the very atoms, all the way down”? So asked the physicist Richard Feynman in an influential 1959 lecture called “There’s Plenty of Room at the Bottom”. This manipulation would mean that information, like text, could be written using atoms themselves. Feynman predicted that the entire “Encyclopædia Britannica” could be written on the head of a pin. + +Three decades later, a group of scientists at IBM managed exactly that. They were able to write the firm’s name using 35 xenon atoms resting on a sheet of nickel—the first demonstration of precise atomic placement. Individual atoms, though, tend to jiggle around. They jiggle less at lower temperatures, so to keep the atoms in place, the researchers cooled them to -269ºC, just 4ºC above absolute zero, the coldest temperature physically possible. This was so costly that writing more than three letters did not make sense. + +Now a team of researchers led by Sander Otte at Delft University of Technology, in the Netherlands, have done better, potentially paving the way for large-scale storage at the atomic level. Instead of three letters, they managed to store an entire paragraph of text (about 1 kilobyte of data). And the memory they used proved stable, in later experiments, at temperatures of -196ºC. That may not sound particularly balmy, but it can be achieved with liquid-nitrogen cooling, which is much cheaper than the liquid helium used by IBM. + +The team stored their information not by writing letters with atoms, as IBM did, but in a binary code. They covered a sheet of copper with chlorine atoms, a process in which the chlorine atoms naturally form a lattice above the copper. But the team used only enough chlorine to cover five-sixths of the copper surface. The lattice therefore contained plenty of “vacancies”—spaces in which chlorine atoms could be present, but were not. Thanks to the bonds between the atoms, the lattice proved to be much more stable than the lone atoms used by IBM. + +The team used pairs of one atom and one vacancy each to encode bits of information. They were able to write and rewrite the memory by sliding the atom within each pair back and forth. To do this, they used the probe of a scanning tunnelling microscope (STM), the same device IBM had used in their experiment 26 years earlier. Eight bits were arranged together to form one byte, which is enough to encode a single letter in the standard computer scheme used to represent text. + +The pockmarked lattice was stable enough that the team was able to build 1,016 atomic bytes in an area that measured just 96 nanometres by 126 (an HIV virus, for comparison, is about 120nm across). That works out to an information density of 78 trillion bits per square centimetre, which is hundreds of times better than the current state of the art for computer hard drives. + +The high density achieved by this kind of atomic storage could—some day—expand the memory capacity of phones, computers and data centres. But two further problems must be solved. It would help if the atoms could be made stable at room temperature. And, for now at least, the process is achingly slow. Dr Otte reports read and write speeds of 1-2 minutes per 64 bits. He reckons he could boost those speeds drastically, to about a million bits per second. But that is still thousands of times slower than modern hard drives. + +Still, it is an impressive illustration of the advancing state of the art. And what did Dr Otte choose to inscribe on his atomic tablet? Naturally, two paragraphs of Feynman’s speech. Apparently, we can arrange the atoms the way we want. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21702343-individual-atoms-offer-ultra-dense-information-storage-atoms-and-voids/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Medical technology + +All sewn up + +Turning surgical sutures into sensors + +Jul 23rd 2016 | From the print edition + + + +WEARABLE and implantable medical gadgets are a promising technology. By continuously collecting information from patients they make it easier to diagnose and treat whatever the problem may be. But most of the sensors in such devices have to lie flat against the body. That limits what they can do. + +Now a team of researchers are trying to use one of humanity’s oldest technologies to do better. As they report in Microsystems & Nanoengineering, Sameer Sonkusale at Tufts University, in Massachusetts, and his colleagues, propose to turn threads, of the sort spun to make clothes, into sensors. + +Thread has many advantages. It is cheap, flexible and mostly tolerated by human bodies. Most pertinently, doctors have plenty of experience, via the practice of suturing, of sewing it into bodily tissues. Doing that with smart thread would allow a more detailed overview of what is happening than any skin-mounted sensor could. + +Turning yarn into sensors requires clever chemistry. Electrodes for recording mechanical or chemical activity can be created by covering the threads with conductive ink. Sensors designed to measure physical strain—useful in monitoring wound healing—can be made by coating stretchy fibres with carbon nanotubes and silicone. The electrical resistance of those fibres changes as they are placed under strain. By running a small electric current through the thread, Dr Sonkusale and his team can, therefore, measure the forces surrounding it. A related technique can be used to make sensors sensitive to acidity. + +Another useful property of some fibres is wicking, in which liquids travel along the fibre via a bit of physics called capillary action. The researchers found that specially treated cotton made a good wick for the interstitial fluid that surrounds most tissues. A smart suture could siphon tiny amounts of that fluid to sensors elsewhere, allowing doctors to keep a continuous and unintrusive eye on their patient’s biochemistry. + +So far Dr Sonkusale and his team have tested their technology only in rodents. But it seems to work as expected. One possibility for human trials might be in diabetic patients, who must keep a close eye on any wounds they suffer, as they often resist healing. That can lead to amputations. A few choice stitches could save a limb. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21702438-turning-surgical-sutures-sensors-all-sewn-up/print + + + + + +Previous Articles Sections Next + + + +Books and arts + + + + + +Chinese politics: The people's pope + +South-East Asian history: Striving for unity + +South Africa: Time of death + +Australian fiction: The way of the world + +American photography: Exposed + + + + + +Articles Sections Next + +Chinese politics + +The people's pope + +Two books explore the meaning of Xi Jinping + +Jul 23rd 2016 | From the print edition + + + +CEO, China: The Rise of Xi Jinping. By Kerry Brown. I.B. Tauris; 262 pages; $28 and £20. + +Chinese Politics in the Era of Xi Jinping. By Willy Wo-Lap Lam. Routledge; 323 pages; $52.95 and £34.99. + +THERE are few political questions to which the answer will have greater bearing on the lives of such a large number of people in the coming years as this: what sort of leader is Xi Jinping? Since Mr Xi emerged in 2010 as heir-apparent to the general-secretaryship of the Chinese Communist Party, and took on the job two years later, the question has exercised the minds of analysts even more than is normal when someone new takes over in China. As recently as the mid-2000s, Mr Xi was still little-known. His glamorous folk-singing wife was far more famous. The somewhat liberal leanings (by the party’s highly illiberal standards) of Mr Xi’s late father, a party grandee, provided one of the few available clues. It has proved highly misleading. Mr Xi has presided over the toughest crackdown on dissent in years. + +One way of understanding China’s leader is suggested by the title of a new book: “CEO, China”. Yet as the author, Kerry Brown, a veteran British China-watcher, makes clear, Mr Xi is far more than merely the chief executive of a colossal economy. He compares Mr Xi’s role to that of the pope: “The general secretary, armed with doctrinal infallibility, like the pope, is a rule-giver, spiritual nurturer and voice of doctrinal purity and correctness,” he writes. Pope Francis, he notes, is battling to instil a renewed sense of mission into a Catholic church “that has lost touch with its spiritual roots, tarnished its legitimacy and become consumed by material power”. This, he says, is “eerily similar” to Mr Xi’s struggle to revamp his party. + +It is somewhat easier, however, to understand how the pope wants to reform the church than it is to make out how Mr Xi intends to change the party, and his country. He says that market forces should play a decisive role, but does that mean he wants to topple state-owned enterprises from the commanding heights of the economy? His wish to purge the party of the egregious corruption that has permeated it at every level seems evident: his campaign against graft has been the most sustained and wide-ranging of any waged by a Chinese leader since the party seized power in 1949. But does he want to introduce checks and balances that would make it harder for corruption to take root? He stresses the importance of rule of law, but does he mean that courts should operate independently from the party, even in cases that involve challenges to the party’s rule? Many observers have lost hope that the answers to any of these questions might be affirmative. + +Willy Wo-Lap Lam, another experienced China-watcher based in Hong Kong, appears to have little doubt. His richly detailed book, “Chinese Politics in the Era of Xi Jinping”, describes Mr Xi as more “a disciple of Mao” than of Deng Xiaoping, the leader who began opening China to the outside world in the late 1970s. Mr Lam says Mr Xi has no interest in political or ideological liberalisation, having “learned the lessons” of the vicissitudes experienced by party liberals such as his father, who was imprisoned by Mao. Mr Xi has “totally ruled out” any option other than orthodox socialism, he writes. + +But so great is the secrecy surrounding the highest echelons of power in China that it is impossible to know for sure. Mr Lam’s book came out in 2015 and covers less than two years of Mr Xi’s rule. Notably it does not extend as far as a meeting of the party’s Central Committee in October 2014, which emphasised the importance of the rule of law and the state constitution—an unusual focus of interest at such a gathering, and an intriguing one given the Chinese leader’s seeming disdain for both. + +Mr Xi may in the end turn out to be more of a reformer than his frequent hardline rhetoric, his hammering of civil society and his tiptoeing round all-powerful state firms may suggest. A dwindling band of optimists pin their hopes on a crucial party congress late next year, at which Mr Xi will preside over sweeping leadership changes and set out the party’s goals for the remaining five years of his rule (assuming he accepts the norm of a ten-year limit on the general-secretaryship). Having placed more of his allies in key positions, Mr Xi may begin to do what he has said he wants to do: let market forces hold sway and put “power in a cage” of impartial law. + +In his crisp and provocative account, Mr Brown suggests that analysts may be wrong to set much store by Mr Xi’s individual will. “The party is the power in China,” he writes. Mr Xi is “only powerful through it, operating within the limits it sets. On this basis, he is no Mao.” The party believes in the creation of a “strong, rich, stable” and respected country, says Mr Brown. The emotional power of this goal is what confers power upon Mr Xi (who describes it as the “Chinese dream”); unlike Mao, he cannot enforce discipline through terror or repression, the author argues. Mr Xi, he says, is a “servant” of the party’s ambition to restore China to the greatness it once enjoyed. It could “easily go badly” for him if sufficient numbers of his colleagues were to decide that he is taking the country in the wrong direction. + +If Mr Brown is right, this may explain why Mr Xi, for all his seeming strength, appears to vacillate. Making China a respected global power will require the development of a more attractive political system. But Mr Xi is transfixed by a fear of unrest, and so clamps down ruthlessly on dissent. He acknowledges that making China rich and strong will require tough economic reforms. But these may trigger strikes and protests as state firms are closed or slimmed down, so he errs repeatedly on the side of caution. Failure to reform may eventually cause even greater instability, many analysts believe. But if Mr Xi agrees with them, he appears to think that on his watch, at least, repression will ensure that the party is obeyed. Given that the main mission entrusted to him by the party is an impossible one—keeping a one-party dictatorship in place for ever—he has few good options. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702429-two-books-explore-meaning-xi-jinping-peoples-pope/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +South-East Asian history + +Striving for unity + +A thoughtful history of Vietnam + +Jul 23rd 2016 | From the print edition + +Spiritual nature + +Vietnam: A New History. By Christopher Goscha. Basic Books; 524 pages; $35. Allen Lane; £30. + +WHAT do people think of when they see the word Vietnam? In America the name conjures images of a brutal, grinding military loss which, until President George W. Bush’s ill-fated decision to invade Iraq in 2003, made American leaders rightly hesitant to engage in wars of choice for ideological reasons. For young Europeans Vietnam has become an essential stop on the circuit of backpacking around Asia, offering pleasant weather, cheap accommodation, great food and just enough exoticism to give bragging rights at university and just enough tourist infrastructure to make travelling reasonably comfortable. Investors appreciate its cheap labour, long coastline, numerous ports and pro-business policies—all assets that will grow increasingly important as Chinese labour costs rise. + +But Vietnam, today, is not the front-runner in any of those categories: China still draws more investment, Thailand more tourists and the ongoing Iraq fiasco more opprobrium. Ask the average Westerner to name a great Vietnamese artist, musician or writer—or a politician not named Ho Chi Minh—and you would probably get a blank stare in response. French politicians and writers in the 19th and 20th centuries saw Vietnam as a land first to subjugate and then to administer. Contemporary Western historians all too often see it simply as a victim of colonialism: a country to be pitied and ennobled, and with which greater powers had their way, rather than as a polity that has done what any other polity does: make the best of suboptimal situations. + +Christopher Goscha’s thorough and thoughtful new history of Vietnam counters these simple portrayals with large and welcome doses of complexity. The area known today as Vietnam, he convincingly argues, was not just a blank mass awaiting modernity and the French (not necessarily in that order). Numerous political entities battled for influence, particularly in the fertile region along the Red river, which runs from Kunming (today in the southern Chinese province of Yunnan) into the Gulf of Tonkin, which sits between northern Vietnam and Hainan. + +The Han Dynasty subsumed northern Vietnam into Imperial China in around 110BC. Chinese administrators waxed lyrical about the Red river area’s benefits as a trading post. Over the millennium of Chinese rule, what Mr Goscha calls a “Sino-Viet or Sinitic elite” emerged; not until the 20th century did quoc ngu, as Vietnam’s contemporary Latinate alphabet is known, displace the Chinese and indigenous character-based language as the standard written script. The Chinese influence on Vietnam still persists, notably in the Mahayana Buddhism which today is practised by many ethnic Vietnamese, and in Vietnam’s distinctly Confucian political and education systems. But Ngo Quyen routed the Chinese in 939AD, renaming the territory Dai Viet, or “Greater Viet”. + +Dai Viet rulers then embarked on a grandiose imperial expansion; indeed, one of the signal achievements of Mr Goscha’s work is the attention he pays to pre-European South-East Asian imperialism. The French were just one of many groups to conquer and colonise the territory known today as Vietnam. They may not even have been the most successful. The Dai Viet used military might and Confucianist statecraft and administration to push the Viet empire southward, in order to “respectfully bring the Mandate of Heaven, and do the work of striking and killing those cruel people”. They then did what kings around the world had done: they invented a mythical past to justify their conquests. Viet generals known as the Nguyen pressed even farther southward, bringing their state with them. In the early 19th century Viet emperors declared themselves rulers over a unified (if fractious) state that included parts of modern-day Vietnam, Laos and Cambodia. + +Thus when the French established their first colonial base of Cochin-China in 1862, they did not build a state so much as layer a French veneer onto an already functioning one. The Nguyens’ extensive land-registry records made it easy to collect property taxes; the French also drew revenue from state monopolies on alcohol, gambling, opium and rice production. Much as the British did in their South Asian possessions, the French adroitly exploited local grievances, propped up pliable rulers and developed an ethnic-Vietnamese colonial elite—all, of course, with the threat of violence in the background. The French conquest of Indochina was driven less by a civilising mission than by mercantile interests, particularly rubber, rice and coffee, all made into profitable exports by “cheap, mainly ethnic Viet sweat”. + +After the first world war, anti-French pressure grew until Ho Chi Minh, whom Mr Goscha depicts less as a communist ideologue than as a crafty statesman, declared independence on September 2nd 1945. Decades of war followed. Today Vietnam, like China, has a booming economy, and remains communist in name only. The ruling party, as Mr Goscha notes in his shrewd final chapter, has subtly shifted its raison d’être “from defending ‘class struggle’ and ‘proletarian internationalism’ to promoting economic prosperity and inclusive nationalism for all social groups”. Ho would understand. He might even approve. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702433-thoughtful-history-vietnam-striving-unity/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +South Africa + +Time of death + +The killing of Amy Biehl and its afterlife + +Jul 23rd 2016 | From the print edition + +We Are Not Such Things. By Justine van der Leun. Spiegel & Grau; 544 pages; $28. Fourth Estate; £14.99. + +IN AUGUST 1993, a little less than a year before the end of apartheid, South Africa was on edge. Political violence was claiming close to 100 lives a week, even as negotiators were guiding the country into post-apartheid democracy. Most of these killings took place in the townships, densely packed areas to which black people were confined by the laws of the time. + +Yet occasionally violence spilled over, igniting fears among the country’s white population, which still controlled the police and army, that ending racial rule would lead not to the “rainbow nation” promised by Nelson Mandela but to outright racial war. Few killings ignited such fears as that of Amy Biehl, a young American student who was a Fulbright scholar and an anti-apartheid activist. Biehl died after she unwittingly drove into a protest in a township on the outskirts of Cape Town. A large crowd of angry young men chanting “One settler, one bullet”, surrounded her car and pelted it with stones. When she ran from the vehicle her attackers chased her through the streets, cornered her and killed her. + +Because of Biehl’s skin colour, nationality and idealism, her death attracted the world’s attention in a way that the daily toll of black deaths had not, and came to represent the senselessness of political violence in South Africa. Yet her killing came to stand for much more, too. Four men were convicted of her murder after a contentious trial in which they alleged they had been tortured into confessing. In 1997, after the men had applied for amnesty to the Truth and Reconciliation Commission, Biehl’s parents supported their claim, becoming in turn powerful symbols of South Africa’s attempts to put its violent past behind it. Embracing those who had killed their daughter, Biehl’s parents employed two of those convicted through a foundation established in her memory. + +Yet much of this narrative is challenged in a deeply researched and thought-provoking book, “We Are Not Such Things”, by Justine van der Leun, an American writer who spent years tracking down most of those involved. Her somewhat wordy writing—part whodunnit and part travelogue—weaves together the accounts of policemen, prosecutors and those convicted with some penetrating insights. + +Guided by, among others, a former liberation fighter who found Buddhism in prison, the author tugs at the threads of the official account. She finds that one of South Africa’s most celebrated examples of reconciliation has not put to rest the country’s painful past for either victims or perpetrators of violence. Among those she meets are the other two men who were convicted, discovering that they were afterwards embittered that they too were not hired by the Amy Biehl Foundation, an institution that they feel they helped create through killing the American student. + +Her most puzzling discovery relates to Easy Nofemela, who was found guilty of the murder and subsequently granted amnesty and hired by the foundation. Yet the author finds evidence suggesting he was not even at the scene of the crime. This is an engaging take on a murder that might have derailed democracy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702432-killing-amy-biehl-and-its-afterlife-time-death/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Australian fiction + +The way of the world + +A prize-winning Australian novel + +Jul 23rd 2016 | From the print edition + + + +The Natural Way of Things. By Charlotte Wood. Europa; 208 pages; $17. Allen & Unwin; £12.99. + +AT THE start of this unsettling novel by Charlotte Wood, who was born in New South Wales in 1965, two Australian women awake drugged and imprisoned, wearing “bizarre olden-day costume”. Soon the full horror of Ms Wood’s contemporary fable becomes clear. Yolanda and Verla, along with eight others, have been made to disappear, victims of a conspiracy to silence women who inconvenience powerful men. + +A haunting parable of contemporary misogyny, “The Natural Way of Things”, which earlier this year won the Stella prize for fiction by Australian women, is “The Handmaid’s Tale” for our age of sensational media and reality television. Like Margaret Atwood’s dark vision of religious dictatorship, it is a preview of what could happen to women who rock the boat, resisting predation or asserting their own sexual freedom. + +This is a tale of captivity, with all its tedium and desperation. Yet the remote desert prison, surrounded by dark bush and a vast bowl of sky, provides a kind of solace. Trapped alongside the minions of the faceless corporation that has spirited them away, the women and their captors struggle to survive. The “natural way of things” refers not just to male domination but to deeper, more sustaining bonds between humans and nature. + +Like the surreal prison itself, Ms Wood’s writing is direct and spare, yet capable of bursting with unexpected beauty. Kookaburras “dazzled the darkness with their horrible noise”; Verla is “mesmerised by pairs of seed pods nestled at the base of a grass tree: hot orange, bevelled, testicular”. A rabbit trap is “a drooping bouquet of rusted steel”. Yolanda, scarred by gang rape, becomes a hunter, driven ever deeper into her animal self; Verla, whose “crime” was sleeping with a cabinet minister, realises that even her education and privilege will not protect her. Their groping towards mutual understanding is the novel’s heart: “Yolanda and Verla hold themselves apart, for survival. This is their bond.” + +The most chilling aspect of Ms Wood’s premise is its plausibility. Nowadays, women who denounce sexism are routinely attacked on social media; the novel’s more savage forms of punishment logically extend the ways in which they can be bullied and silenced. The very absence of the corporate captors makes the horror worse. No one will come; no one cares. The sly and devastating ending makes the point: Ladies, you have been warned. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702430-prize-winning-australian-novel-way-world/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +American photography + +Exposed + +A new show at the Met traces the short, hard life of a visual master + +Jul 23rd 2016 | NEW YORK | From the print edition + +Shuttered up... + +WHEN Diane Arbus (she pronounced it Deeyan) died in 1971, she joined a pantheon of distraught, creative women, including Sylvia Plath, Marilyn Monroe, Judy Garland, Janis Joplin, Frida Kahlo and Kay Sage, who all died prematurely. Like Mark Rothko a year before, she slit her wrists and overdosed on pills. Arbus’s suicide increased public awareness of her work, but it masked her delight at trying to capture quite what it means to be human. + +Arbus started in 1946 as a stylist, working in close partnership with her husband Allan, photographing fashion advertisements for Russek’s, her father’s Fifth Avenue department store. Later the Arbuses branched out into editorial photography for fashion magazines. Their work, mostly done in their studio with large-format cameras, was competent, but lacked both the clarity and the compositional fireworks of a Richard Avedon or an Irving Penn. + +Burned out after a decade of styling ideas for Christmas presents and reversible bunny-fur jackets, Arbus left to do her own thing, quipping later that she preferred to photograph people in their own clothes. She grew up in a family of rich fashion merchants, but had no use for fashion herself. One biographer insists that she preferred not to use make-up or deodorant. What she always wore was a camera: her shield, licence and admission ticket into strangers’ homes and lives. + +A new show at the Metropolitan Museum of Art’s Breuer gallery has been hung to allow the visitor to focus carefully on each photograph. Jeff Rosenheim, the freewheeling curator, presents the works without any thematic or chronological consistency, which means one has to focus on each print and develop one’s own narrative, seeking out what in every picture appealed to Arbus. + +A useful approach is to note how the photographer’s technique, approach and subject matter developed. The earlier pictures were taken with hand-held cameras with 35mm film and available light. The camera was held at eye level, and promoted direct eye-to-eye contact. + +In late 1956 and over the next two years, Arbus took classes with Lisette Model, known for her close-up, biting street caricatures. She pushed Arbus towards a more crisp, close-in and confrontational approach. By 1962, eschewing her earlier grainy style and looking for more definition, Arbus began using a Rolleiflex twin-lens reflex camera with a larger square film format. It was held at waist-level, looking up to her subjects. Her images, sometimes made using a tripod and flash, became sharper and more tightly composed. + +Early on, Arbus staked out places with a lot of people. Her initial pictures were simple, passing encounters. Often her subject would be confused about why she wanted to photograph them. Their querulous, hostile or annoyed faces recur in her work from the late 1950s. Arbus had a taste for whimsy—a night view of a drive-in screen showing a projected image of a bright sun shining through the clouds, or quirky film props, such as rocks on wheels, stored in a back lot at Disneyland. + +...vamping for the camera + +Arbus was 38 before she saw herself as a professional. She moved from depicting random incidents with strangers to seeking out visually interesting human tribes—twins and triplets, midgets, circus performers, nudists, the blind, transvestites, freaks and the mentally ill—by entering their worlds. Jack Dracula, a legendary tattoo man (pictured), was a favourite subject. She used her considerable intelligence, charm and an intense interest in others to get the poses she wanted. Her pictures, taken in bedrooms and backstage dressing rooms, are evidence of her ability to gain trust and acceptance from those whom society might find repellent, and who in turn distrusted society themselves. + +While risqué at the time, her choice of subjects was not without precedent. Nearly a century before, Edgar Degas had painted inhabitants of his own demimonde: prostitutes, ballet dancers, jockeys, chanteuses. As with the early Impressionists Arbus’s work was met initially with disapproval; at her first show spit had to be wiped every day off the pictures. In this age of ever-present selfies, the novelty of street photography has faded, as has the shock value of tattoos, piercings, cross-dressing and gender reassignment. Viewers today are more open to Arbus’s images—and far less likely to spit. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702431-new-show-met-traces-short-hard-life-visual-master-exposed/print + + + + + +Previous Articles Sections Next + + + +Obituary + + + + + +Obituary: Johnny Barnes and Datta Phuge: Clothed with happiness + + + + + +Articles Sections Next + +Obituary: Johnny Barnes and Datta Phuge + +Clothed with happiness + +Johnny Barnes, Bermuda’s “greeter”, and Datta Phuge, “the Gold Man of Pune”, died on July 9th and 14th respectively, aged 93 and 48 + +Jul 23rd 2016 | From the print edition + + + +IN THE city of Pune in Maharashstra, in 2012, Datta Phuge conceived a desire to display something no one else had. Something, that is, made of pure gold. As founder-floater of the Vakratunda Chit Fund, a slightly slippery credit society, he had any amount of gold in his possession or on his body: rings, bracelets, coins, mobile phone. He was in the habit of wearing 7kg of it a day, here and there. He had given a heap to his wife Seema, who began to find it a little boring to wear. But since gold was his passion and his chief way of showing how happy and fortunate he was, he wanted to flaunt it still more. + +After chatting it over with his friends at Ranka Jewellers, he ordered a shirt made almost wholly of gold. It comprised 100,000 spangles and 14,000 gold flowers fixed to white velvet cloth, so that it could be folded away like any other shirt. Accessories were provided, also of 22-carat gold: necklaces, cuffs and a belt. Altogether, the outfit weighed 9.5kg. It took 15 craftsmen from West Bengal, working 16-hour days, more than two weeks to create it. And it cost 1.27 crore rupees, or $250,000. + +Almost 13,000km away, across two oceans in Bermuda, Johnny Barnes in 1986 also decided to put on a prodigal display. He would stand at the Crow Lane roundabout in Hamilton, where most of the rush-hour traffic came past, and tell each passing motorist how sweet life was and how much he loved them. His days had long overflowed with happiness, in his garden and in his jobs as a railway electrician and a bus-driver, where he had taken up the habit of waving and smiling to anyone who passed as he ate his lunchtime sandwiches. He had lavished joy on his wife Belvina, “covering her with honey”, as he put it. But there was plenty left over. + +For 30 years he went to the roundabout every weekday morning. He would rise at around 3am, walk two miles to his post, stay for six hours shouting “I love you!”, smiling and blowing kisses, and then walk home again. He was there in the heat, his wide-brimmed straw hat keeping off the sun, and there in the rain with his umbrella. Only storms deterred him and eventually, the creakings of old age. Over the years, he transmitted his radiant happiness to drivers hundreds of thousands of times. + +Both Mr Barnes and Mr Phuge were taken for madmen at the start; but they justified themselves partly by the ambient culture. In India, Mr Phuge explained, everyone loved gold, and in Maharashtra they loved it even more. Politicians went laden with it and, as a man of political ambition himself, he hoped the shirt might get him noticed nationally. That was why he wore it not just to functions or events, but also when going casually around the town, causing a small sensation. For Mr Barnes, his extravagant love of Hamilton’s commuters came partly from Bermudans’ habit of saying “Good morning” anyway, partly from his genuine joy in the life God had blessed him with, and partly from the switching his mother had given him when he failed, as a child, to greet an old lady. Every day ever since, he had tried to spread happiness to as many people as possible. + +Fame came rapidly. Mr Barnes was hailed as an icon of Bermuda, and in 1998 a statue of him was put up near the roundabout. Tourists from Africa and America came to be photographed with him and to buy his dollar postcards; he once waved to the Queen of England. Mr Phuge was on all the Marathi TV channels modelling his shirt, but also had BBC reporters and Canadians lining up at his front door; they were, his wife said, “even more sought-after than royals”. Both men were credited with powers to make gold, or happiness, increase. Mr Barnes, a Seventh-Day Adventist, often prayed with his visitors beside the road, and his rare absences were taken as bad omens. Mr Phuge (who always wore with his shirt a giant “Om” in crystals on a thick chain of gold) was believed to have the Midas touch, and was asked to bless houses. Both men hugely enjoyed the attention. + +There were naysayers, of course. Those who were not so lucky, or in a bad mood, resented these continuous demonstrations of good fortune. Gentle Mr Barnes was condemned as a traffic hazard, and once had a bucket of water thrown over him. Mr Phuge was more justifiably attacked as a shady money-lender, parading in his gold while local farmers starved—and indeed while he, too, was deep in debt. When he strolled out in his shirt his heavily armed “boys” went too, to protect him. + +Drawing the moral + +On the night of July 14th, on his way to a party—but not, apparently, in the shirt—he was stoned to death by “friends” to whom he owed money. Nothing could have been further from the peaceful death of Johnny Barnes, in ripe old age and in the firm conviction he was heading home. The moral of the tale seems almost too easy to draw: the selfish flaunter of happiness, weighed down by gold, came to an awful end, while the selfless one, wearing his prodigious love so lightly, was praised and lamented. + +Both men, though, left behind a deficit of magic. After Mr Phuge died, no one could find the wonderful gold shirt. It was not in the house, nor at Ranka Jewellers; rumour had it that a creditor from Mumbai had taken it away. As for Mr Barnes, people searched up and down, far and wide, for the true secret of his happiness; for that, too, had disappeared with him. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21702424-johnny-barnes-bermudas-greeter-and-datta-phuge-gold-man-pune-died-july-9th-and/print + + + + + +Articles Sections Next + + + +Economic and financial indicators + + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +GDP forecasts for 2016 + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Jul 21st 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21702506/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Jul 23rd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21702499-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Jul 23rd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21702496-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Jul 23rd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21702498-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +GDP forecasts for 2016 + +Jul 23rd 2016 | From the print edition + + + +The IMF has cut its forecast for world economic growth in 2016 for the fourth time in a row; it now expects GDP to increase by a mere 3.1%. The Brexit vote in Britain explains some of the drop, although it may have only a muted impact on non-European economies. Growth in the euro area has been revised upwards, thanks to unexpectedly strong first-quarter GDP growth, but it would have been even higher were it not for Brexit. China’s GDP may also expand at a faster pace, albeit still within its target of 6.5-7%. A forecast of slower growth in Japan is partly due to the yen’s recent appreciation. Nigeria’s economy is now expected to contract as a result of lower oil receipts and power-supply problems. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21702500-gdp-forecasts-2016/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Jul 23rd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21702501-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +TE20160723 + +The world this week + + + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + + + +The failed coup in Turkey: Erdogan’s revenge + + + + + +Britain’s “industrial strategy”: Open for business? + + + + + +The politics of Thailand: The generals who hide behind the throne + + + + + +Methane leaks: Tunnel vision + + + + + +Big economic ideas: Breakthroughs and brickbats + + + + + +Letters + + + + + +On Kurdistan, immigration, executive pay, the passive voice, China: Letters to the editor + + + + + +Briefing + + + + + +Turmoil in Turkey: After the coup, the counter-coup + + + + + +Turkey and the world: Running out of friends + + + + + +United States + + + + + +The Republican convention: Donning the mantle + + + + + +On the trail: Cleveland special + + + + + +Paul Ryan’s agenda: Better than what? + + + + + +Roger Ailes: Kingmaker no more + + + + + +Policing after Baton Rouge: Ambushed and anguished + + + + + +Michael Elliott: The Fab One + + + + + +Immigration economics: Wages of Mariel + + + + + +Lexington: At his majesty’s pleasure + + + + + +The Americas + + + + + +Canada’s internal trade: The great provincial obstacle course + + + + + +Cuba’s economy: Caribbean contagion + + + + + +El Salvador: Reconsidering the price of peace + + + + + +Bello: Lessons from a liberal swashbuckler + + + + + +Asia + + + + + +Politics in Thailand: Twilight of the king + + + + + +Crimes against women: Can the licence to kill be revoked? + + + + + +Dissent in Laos: Radio silence + + + + + +South Korea’s DIYers: Bangsta style + + + + + +China + + + + + +Hong Kong police: The force is with who? + + + + + +The South China Sea: My nationalism, and don’t you forget it + + + + + +Middle East and Africa + + + + + +Israel and the Arab world: The enemy of my enemies + + + + + +Syrian refugees in Jordan: From haven to hell + + + + + +Lebanese cronyism: Hire power + + + + + +City slickers on the farm: Africa’s real land grab + + + + + +Smoking: Plains packaging + + + + + +Nigeria’s currency: If you love it... + + + + + +Europe + + + + + +Another attack in France: Madness and terror + + + + + +Russia’s Olympian drug habit: Tamper proof + + + + + +Italy’s upstart party: The Five Star question + + + + + +Charlemagne: Parliament plot + + + + + +Britain + + + + + +The government’s “industrial strategy”: A change of gear + + + + + +Foreign takeovers: Fear and favour + + + + + +London buses: Parting the red sea + + + + + +Universities and Brexit: A first-class mess + + + + + +Pushy parents: How to make children do homework + + + + + +Labour and the north: Tyne and Weary + + + + + +Bagehot: In the map room with Theresa May + + + + + +International + + + + + +Stress: What makes us stronger + + + + + +Workplace stress: Fuss and bother + + + + + +Business + + + + + +Methane leaks: A dirty little secret + + + + + +The industrial internet of things: The great convergence + + + + + +SoftBank and ARM: Everything under the Son + + + + + +Niche media: Fight club + + + + + +Corporate earnings: Of populism and profits + + + + + +Consumer products: His and hers + + + + + +Schumpeter: Silicon Valley 1.0 + + + + + +Finance and economics + + + + + +African banks: Subprime savannah + + + + + +Buttonwood: Vanishing workers + + + + + +The Big Mac index: Patty-purchasing parity + + + + + +Postal Savings Bank of China: A red-letter IPO + + + + + +The 1MDB affair: Thick and fast + + + + + +Free exchange: Putsch and pull + + + + + +Economics brief + + + + + +Information asymmetry: Secrets and agents + + + + + +Science and technology + + + + + +The 21st International AIDS Conference: Rallying the troops + + + + + +Data storage: Atoms and the voids + + + + + +Medical technology: All sewn up + + + + + +Books and arts + + + + + +Chinese politics: The people's pope + + + + + +South-East Asian history: Striving for unity + + + + + +South Africa: Time of death + + + + + +Australian fiction: The way of the world + + + + + +American photography: Exposed + + + + + +Obituary + + + + + +Obituary: Johnny Barnes and Datta Phuge: Clothed with happiness + + + + + +Economic and financial indicators + + + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +GDP forecasts for 2016 + + + + + +Markets + + + + + +Table of Contents + +TE20160723 + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +The failed coup in Turkey: Erdogan’s revenge + + + + + +Britain’s “industrial strategy”: Open for business? + + + + + +The politics of Thailand: The generals who hide behind the throne + + + + + +Methane leaks: Tunnel vision + + + + + +Big economic ideas: Breakthroughs and brickbats + + + + + +Letters + + + +On Kurdistan, immigration, executive pay, the passive voice, China: Letters to the editor + + + + + +Briefing + + + +Turmoil in Turkey: After the coup, the counter-coup + + + + + +Turkey and the world: Running out of friends + + + + + +United States + + + +The Republican convention: Donning the mantle + + + + + +On the trail: Cleveland special + + + + + +Paul Ryan’s agenda: Better than what? + + + + + +Roger Ailes: Kingmaker no more + + + + + +Policing after Baton Rouge: Ambushed and anguished + + + + + +Michael Elliott: The Fab One + + + + + +Immigration economics: Wages of Mariel + + + + + +Lexington: At his majesty’s pleasure + + + + + +The Americas + + + +Canada’s internal trade: The great provincial obstacle course + + + + + +Cuba’s economy: Caribbean contagion + + + + + +El Salvador: Reconsidering the price of peace + + + + + +Bello: Lessons from a liberal swashbuckler + + + + + +Asia + + + +Politics in Thailand: Twilight of the king + + + + + +Crimes against women: Can the licence to kill be revoked? + + + + + +Dissent in Laos: Radio silence + + + + + +South Korea’s DIYers: Bangsta style + + + + + +China + + + +Hong Kong police: The force is with who? + + + + + +The South China Sea: My nationalism, and don’t you forget it + + + + + +Middle East and Africa + + + +Israel and the Arab world: The enemy of my enemies + + + + + +Syrian refugees in Jordan: From haven to hell + + + + + +Lebanese cronyism: Hire power + + + + + +City slickers on the farm: Africa’s real land grab + + + + + +Smoking: Plains packaging + + + + + +Nigeria’s currency: If you love it... + + + + + +Europe + + + +Another attack in France: Madness and terror + + + + + +Russia’s Olympian drug habit: Tamper proof + + + + + +Italy’s upstart party: The Five Star question + + + + + +Charlemagne: Parliament plot + + + + + +Britain + + + +The government’s “industrial strategy”: A change of gear + + + + + +Foreign takeovers: Fear and favour + + + + + +London buses: Parting the red sea + + + + + +Universities and Brexit: A first-class mess + + + + + +Pushy parents: How to make children do homework + + + + + +Labour and the north: Tyne and Weary + + + + + +Bagehot: In the map room with Theresa May + + + + + +International + + + +Stress: What makes us stronger + + + + + +Workplace stress: Fuss and bother + + + + + +Business + + + +Methane leaks: A dirty little secret + + + + + +The industrial internet of things: The great convergence + + + + + +SoftBank and ARM: Everything under the Son + + + + + +Niche media: Fight club + + + + + +Corporate earnings: Of populism and profits + + + + + +Consumer products: His and hers + + + + + +Schumpeter: Silicon Valley 1.0 + + + + + +Finance and economics + + + +African banks: Subprime savannah + + + + + +Buttonwood: Vanishing workers + + + + + +The Big Mac index: Patty-purchasing parity + + + + + +Postal Savings Bank of China: A red-letter IPO + + + + + +The 1MDB affair: Thick and fast + + + + + +Free exchange: Putsch and pull + + + + + +Economics brief + + + +Information asymmetry: Secrets and agents + + + + + +Science and technology + + + +The 21st International AIDS Conference: Rallying the troops + + + + + +Data storage: Atoms and the voids + + + + + +Medical technology: All sewn up + + + + + +Books and arts + + + +Chinese politics: The people's pope + + + + + +South-East Asian history: Striving for unity + + + + + +South Africa: Time of death + + + + + +Australian fiction: The way of the world + + + + + +American photography: Exposed + + + + + +Obituary + + + +Obituary: Johnny Barnes and Datta Phuge: Clothed with happiness + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +GDP forecasts for 2016 + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.07.30.TXT b/homeworks/B20769/homework1/data2/2016.07.30.TXT new file mode 100644 index 0000000..d360547 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.07.30.TXT @@ -0,0 +1,4823 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Economics brief + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics + +Business + +KAL's cartoon + + + + + +Articles Sections Next + +Politics + +Jul 30th 2016 | From the print edition + + + +America’s Democrats gathered in Philadelphia to nominate Hillary Clinton as their candidate for president of the United States. Some supporters of her opponent for the nomination, Bernie Sanders, refused to give up the fight and chanted the Trump cry, “Lock her up!” But Mr Sanders gave an impassioned speech supporting Mrs Clinton. She also revealed Tim Kaine, a senator from Virginia, as her vice-presidential running mate. See article. + +Thousands of leaked e-mails showing that the Democratic Party leadership favoured Hillary Clinton over Bernie Sanders exposed rifts within the party. Debbie Wasserman Schultz, the head of the Democratic National Committee (DNC)—which should have remained impartial during the primaries—resigned. The DNC blamed Russian hackers for the stolen e-mails, which were released via WikiLeaks. See article. + +Prosecutors dropped the remaining charges against three Baltimore police officers relating to the death of Freddie Gray, bringing an end to the case without a conviction. Gray died in April 2015, a week after he sustained a spinal injury while in the back of a police van. His death had prompted widespread protests against police brutality towards black men. Three of the six officers charged in the case had already been acquitted. + + + +Brazilian police arrested a dozen people who were planning terrorist attacks during the Olympic games, which are due to start in Rio de Janeiro on August 5th. They had been inspired by Islamic State (IS). Brazil’s justice minister, Alexandre Moraes, said they were “absolutely amateur” and “unprepared”. + +Hundreds of Venezuelans have marched to demand that the country’s electoral commission rule on whether a referendum to recall the president, Nicolás Maduro, can proceed. The protesters think that the commission has delayed its decision on whether to approve nearly 2m signatures demanding the vote to protect the unpopular regime. If Venezuelans vote to remove Mr Maduro after January 10th it would not trigger a fresh election. Instead, the vice-president, Aristóbulo Istúriz, would become president. + +Les misérables + + + +In a week of violence, two men inspired by IS slit the throat of Father Jacques Hamel, an 85-year-old priest, during a church service in Saint-Etienne-du-Rouvray, a suburb of Rouen in northern France. The assailants—one of whom had been jailed twice for trying to join IS in Syria—were shot dead by police. In Bavaria, a German-Iranian teenager shot and killed nine people in a Munich shopping centre, and a failed Syrian asylum-seeker blew himself up, injuring 15, after being refused entry to a music festival being held in the town of Ansbach. See article. + +Russia’s Olympic athletes will not all be banned from competing in Rio de Janeiro, the International Olympic Committee announced. Instead, decisions over bans will be left to individual sports’ federations. The World Anti-Doping Agency, which exposed Russia’s massive, state-sponsored doping programme and recommended a blanket ban, said it was disappointed. See article. + +Michel Barnier, a former foreign minister of France and vice-president of the European Commission, has been appointed to lead the EU’s Brexit negotiations with Britain. Mr Barnier is seen as a tough adversary for Britain. He is best known for introducing banker bonus caps and other regulations disliked in Britain when he was the EU’s single-market commissioner. + +Theresa May, Britain’s new prime minister, continued her Brexit charm offensive this week. She met the leaders of Northern Ireland’s devolved government to reassure them that a “hard” border would not be reimposed between Britain and Ireland. She also met for talks in London Enda Kenny, Ireland’s prime minister, and Italy’s premier, Matteo Renzi, in Rome. See article. + +Digging up old history + +Palestinian officials announced a plan to sue Britain over the Balfour Declaration of 1917 that laid out a vision for a Jewish homeland in Palestine. + +A big truck bomb in the Kurdish-controlled Syrian city of Qamishli killed 44 people. IS claimed responsibility for the blast, which detonated near a security headquarters. + +Salva Kiir, the president of South Sudan, has replaced his vice-president, Riek Machar, the leader of the main opposition, threatening a fragile peace deal between the two. Mr Machar had fled the capital a few days earlier after an outbreak of fighting between his forces and those who are still loyal to the government. + +The Shabaab, a jihadist group in Somalia, used two suicide-bombers driving car bombs to attack a United Nations base near the airport in Mogadishu, the capital. Thirteen people were killed in the attacks. Unlike previous attacks by the group, gunmen did not accompany the suicide-bombers. + +A new retirement home + +A military court in China jailed a retired general, Guo Boxiong, for life for accepting bribes in return for promotions. He is the most senior military official to be convicted of corruption since the Communists came to power in 1949. + +Two Hong Kong journalists were imprisoned in China for articles they had published in their home territory. Hong Kongers are supposed to have press freedoms not enjoyed in the mainland. But these two journalists, who were arrested in 2014, were charged for mailing copies of their magazines into China. + + + +Four officials were suspended from their posts for allegedly mismanaging floods in China’s northern province of Hebei that have killed at least 130 people and affected 9m others. Torrential rain has caused the country’s worst flooding in several years. See article. + +Nineteen residents of a care home for the disabled near Tokyo were stabbed to death and another 25 wounded, in Japan’s worst mass killing in the post-war era. Satoshi Uematsu, a 26-year-old former employee with a history of urging that the disabled be euthanised, turned himself in to the police. See article. + +At least 70 have died and many more made homeless in Nepal after monsoon rains triggered widespread flooding and landslides. Rescue and relief efforts have been launched in 14 of Nepal’s 75 districts. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21702817-politics/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business + +Jul 30th 2016 | From the print edition + + + +After a months-long bidding process, Yahoo, a struggling internet company, announced that it is to sell its core business to Verizon. Last year the wireless carrier also paid $4.4 billion for AOL, another former internet darling. Merging AOL and Yahoo will give Verizon more eyeballs to sell to digital advertisers. The deal will surely bring the curtain down on Marissa Mayer’s tenure at Yahoo, which is widely regarded as a failure. Between 2012, when Ms Mayer took over, and 2015, Yahoo’s gross earnings have fallen by 44%. The firm has also written off much of the value of Tumblr, a social-networking site that it bought for $1.1 billion in cash in 2013. See article. + +Sales of Apple’s iPhone continued to fall. The world’s largest listed company said it sold some 40m smartphones between April and June, around 15% fewer than during the same period last year. It also forecast sales would drop again in the coming quarter. The phones are responsible for around half of Apple’s sales. Its quarterly profit fell to $7.8 billion, down by 27% on the year before. Sales in China, which produces cheap competitors to the iPhone, were particularly hard-hit. + +Ryanair became the latest European airline to warn of troubles ahead. The continent’s largest low-cost carrier followed easyJet, Air France-KLM and Lufthansa in suggesting that business may be hit this year. European airlines have had to deal with a litany of woes, including air-traffic-control strikes in France, terrorist atrocities in Belgium, France and Egypt, and an attempted coup in Turkey. Consumer confidence may also be damaged by Brexit and the subsequent fall of the pound. The good news for flyers is that European carriers may now have to lower fares to fill their planes. + +A top-up + +AB InBev, the world’s biggest brewer, raised its offer for SABMiller, a rival based in Britain. The two firms struck a deal in November but the pound’s fall after the Brexit referendum prompted AB InBev to revise its offer from £44 (now $58) to £45 a share. The merged company will have nearly a third of the world’s beer market. + +It was a bad week for Goldman Sachs. The firm was sued for $510m by a big shareholder of EON Capital, a Malaysian bank that Goldman once advised. Primus Pacific Partners accused Goldman of a conflict of interests because it concealed its links with 1MDB, Malaysia’s sovereign-wealth fund, which was launched by Najib Razak, the prime minister. Goldman also advised on the takeover of EON by Hong Leong Bank, which had ties to Mr Razak. Primus says Goldman undervalued EON as a result, an allegation it denies. Goldman also faced criticism from British MPs for its role as an informal adviser to Sir Philip Green, then owner of British Home Stores. BHS went bust after Sir Philip sold the department-store chain for £1. MPs said he had failed to resolve a £571m pension-fund hole. No illegality was alleged. Sir Philip denies wrongdoing. + +BP’s half-yearly profit fell by 44% to $720m, compared with the same period last year. It blamed the low oil price. Brent neared $44 a barrel this week; it was over $50 in May. BP reckons the current glut of oil could last for 18 months. The firm said it hoped it had now drawn a line under the Deepwater Horizon disaster of 2010, which has cost it some $62 billion. Shell also announced poor quarterly results, down 72% on the year before. + +This bird has flown + +There was little sign of Twitter escaping the doldrums. The firm announced that both revenue and the number of people using the social network had grown slowly in the second quarter of this year. The loss-making site also suggested revenue for the current quarter might be as low as $590m, well below market expectations. + +Ericsson, a Swedish telecoms firm, ousted Hans Vestberg, its chief executive, following a disappointing financial performance over the past year. The firm has also faced probes into alleged corruption. See article. + +Deutsche Bank said profits had dropped by 98% to €20m ($22m) in the second quarter, compared with the same period last year. It suggested that cost-cutting, which has already led to 9,000 job losses, may now have to go even deeper. Deutsche is also trying to come to a settlement with American regulators over its alleged mis-selling of mortgage-backed securities. It has set aside €5.4 billion to deal with litigation. + +America’s Federal Reserve decided against raising interest rates, as good news about the country’s economy, such as better employment data, was offset by subdued inflation expectations and global worries. But the Fed kept open the possibility of a rate rise later this year, saying the near-term risks had diminished. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21702798-business/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Jul 30th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21702809-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Globalisation and politics: The new political divide + +Abenomics: Overhyped, underappreciated + +Russian dirty tricks: Doping and hacking + +The parable of Yahoo: From dotcom hero to zero + +Air pollution: Cleaning up the data + + + + + +Articles Sections Next + +Globalisation and politics + +The new political divide + +Farewell, left versus right. The contest that matters now is open against closed + +Jul 30th 2016 | From the print edition + + + +AS POLITICAL theatre, America’s party conventions have no parallel. Activists from right and left converge to choose their nominees and celebrate conservatism (Republicans) and progressivism (Democrats). But this year was different, and not just because Hillary Clinton became the first woman to be nominated for president by a major party. The conventions highlighted a new political faultline: not between left and right, but between open and closed (see article). Donald Trump, the Republican nominee, summed up one side of this divide with his usual pithiness. “Americanism, not globalism, will be our credo,” he declared. His anti-trade tirades were echoed by the Bernie Sanders wing of the Democratic Party. + +America is not alone. Across Europe, the politicians with momentum are those who argue that the world is a nasty, threatening place, and that wise nations should build walls to keep it out. Such arguments have helped elect an ultranationalist government in Hungary and a Polish one that offers a Trumpian mix of xenophobia and disregard for constitutional norms. Populist, authoritarian European parties of the right or left now enjoy nearly twice as much support as they did in 2000, and are in government or in a ruling coalition in nine countries. So far, Britain’s decision to leave the European Union has been the anti-globalists’ biggest prize: the vote in June to abandon the world’s most successful free-trade club was won by cynically pandering to voters’ insular instincts, splitting mainstream parties down the middle. + +News that strengthens the anti-globalisers’ appeal comes almost daily. On July 26th two men claiming allegiance to Islamic State slit the throat of an 85-year-old Catholic priest in a church near Rouen. It was the latest in a string of terrorist atrocities in France and Germany. The danger is that a rising sense of insecurity will lead to more electoral victories for closed-world types. This is the gravest risk to the free world since communism. Nothing matters more than countering it. + +Higher walls, lower living standards + +Start by remembering what is at stake. The multilateral system of institutions, rules and alliances, led by America, has underpinned global prosperity for seven decades. It enabled the rebuilding of post-war Europe, saw off the closed world of Soviet communism and, by connecting China to the global economy, brought about the greatest poverty reduction in history. + +A world of wall-builders would be poorer and more dangerous. If Europe splits into squabbling pieces and America retreats into an isolationist crouch, less benign powers will fill the vacuum. Mr Trump’s revelation that he might not defend America’s Baltic allies if they are menaced by Russia was unfathomably irresponsible (see article). America has sworn to treat an attack on any member of the NATO alliance as an attack on all. If Mr Trump can blithely dishonour a treaty, why would any ally trust America again? Without even being elected, he has emboldened the world’s troublemakers. Small wonder Vladimir Putin backs him. Even so, for Mr Trump to urge Russia to keep hacking Democrats’ e-mails is outrageous. + +The wall-builders have already done great damage. Britain seems to be heading for a recession, thanks to the prospect of Brexit. The European Union is tottering: if France were to elect the nationalist Marine Le Pen as president next year and then follow Britain out of the door, the EU could collapse. Mr Trump has sucked confidence out of global institutions as his casinos suck cash out of punters’ pockets. With a prospective president of the world’s largest economy threatening to block new trade deals, scrap existing ones and stomp out of the World Trade Organisation if he doesn’t get his way, no firm that trades abroad can approach 2017 with equanimity. + +In defence of openness + +Countering the wall-builders will require stronger rhetoric, bolder policies and smarter tactics. First, the rhetoric. Defenders of the open world order need to make their case more forthrightly. They must remind voters why NATO matters for America, why the EU matters for Europe, how free trade and openness to foreigners enrich societies, and why fighting terrorism effectively demands co-operation. Too many friends of globalisation are retreating, mumbling about “responsible nationalism”. Only a handful of politicians—Justin Trudeau in Canada, Emmanuel Macron in France—are brave enough to stand up for openness. Those who believe in it must fight for it. + +They must also acknowledge, however, where globalisation needs work. Trade creates many losers, and rapid immigration can disrupt communities. But the best way to address these problems is not to throw up barriers. It is to devise bold policies that preserve the benefits of openness while alleviating its side-effects. Let goods and investment flow freely, but strengthen the social safety-net to offer support and new opportunities for those whose jobs are destroyed. To manage immigration flows better, invest in public infrastructure, ensure that immigrants work and allow for rules that limit surges of people (just as global trade rules allow countries to limit surges in imports). But don’t equate managing globalisation with abandoning it. + +As for tactics, the question for pro-open types, who are found on both sides of the traditional left-right party divide, is how to win. The best approach will differ by country. In the Netherlands and Sweden, centrist parties have banded together to keep out nationalists. A similar alliance defeated the National Front’s Jean-Marie Le Pen in the run-off for France’s presidency in 2002, and may be needed again to beat his daughter in 2017. Britain may yet need a new party of the centre. + +In America, where most is at stake, the answer must come from within the existing party structure. Republicans who are serious about resisting the anti-globalists should hold their noses and support Mrs Clinton. And Mrs Clinton herself, now that she has won the nomination, must champion openness clearly, rather than equivocating. Her choice of Tim Kaine, a Spanish-speaking globalist, as her running-mate is a good sign. But the polls are worryingly close. The future of the liberal world order depends on whether she succeeds. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21702750-farewell-left-versus-right-contest-matters-now-open-against-closed-new/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Abenomics + +Overhyped, underappreciated + +What Japan’s economic experiment can teach the rest of the world + +Jul 30th 2016 | From the print edition + + + +IN THE 1980s Japan was a closely studied example of economic dynamism. In the decades since, it has commanded attention largely for its economic stagnation. After years of falling prices and fitful growth, Japan’s nominal GDP was roughly the same in 2015 as it was 20 years earlier. America’s grew by 134% in the same time period; even Italy’s went up by two-thirds. Now Japan is in the spotlight for a different reason: its attempts at economic resuscitation. + +To reflate Japan and reform it, Shinzo Abe, prime minister since December 2012, proposed the three “arrows” of what has become known as Abenomics: monetary stimulus, fiscal “flexibility” and structural reform. The first arrow would mobilise Japan’s productive powers and the third would expand them, allowing the second arrow to hit an ambitious fiscal target. The prevailing view is that none has hit home. Headline inflation was negative in the year to May. Japan’s public debt looks as bad as ever. In areas such as labour-market reform, nowhere near enough has been done. + +Compared with its own grand promises, Abenomics has indeed been a disappointment. But compared with what preceded it, it deserves a sympathetic hearing (see article). And as a guide to what other countries, particularly in Europe, should do to cope with a greying population, stagnant demand and stubborn debts, Japan again repays close attention. + +This arrow points up + +Take monetary policy. The lesson many are quick to draw from Abenomics is that the weapons deployed by the Bank of Japan (BoJ)—and, by extension, other central banks—since the financial crisis do not work. The BoJ has more than doubled the size of its balance-sheet since April 2013 and imposed a sub-zero interest rate in February; still more easing may be on the way (the BoJ was meeting as The Economist went to press). Yet its 2% inflation target remains a distant dream. + +The naysayers have it wrong. Unlike other countries, Japan includes energy prices in its core inflation figure. Excluding them, core consumer prices have risen, albeit modestly, for 32 months in a row. Before Abenomics, Japan’s prices had fallen with few interruptions for over ten years; they are now about 5% higher than they would have been had that trend continued. Japan has increased inflation while it has fallen in Australia, Britain, France, Germany, Italy and Spain. + +If central banks have more sway than some pundits allow, Abenomics also shows the limits of their power. The BoJ has buoyed financial assets, but it has failed to drum up a similar eagerness on the part of consumers or companies to buy real assets or consumer goods. Household deposits are high. And despite bumper corporate profits, firms doubt such plenty will persist. They have been happy to raise prices but less eager to lift investment or base pay (which are harder to reverse). Japan’s non-financial firms now hold more than ¥1 quadrillion ($9.5 trillion) of financial assets, including cash. + +Herein lies another lesson of Abenomics: monetary policy is less powerful when corporate governance is lax and competition muted. Mr Abe has handed shareholders greater power. In 2012 only 40% of leading companies had any independent directors; now nearly all of them do. But if Japan’s equity culture were more assertive still, shareholders might demand more of the corporate cash hoard back—to spend or invest elsewhere. And if barriers to entry were lower, rival firms might expand into newly profitable industries and compete away these riches. They might also pay more. In theory, reflating an economy should be relatively popular, because wage rises should precede price increases. In reality, the price rises came first and pay has lagged behind. That is why the IMF has pushed for Japan to adopt an incomes policy that spurs firms to raise wages. + +Someone must spend + +If companies are determined to spend far less than they earn, some other part of the economy will be forced to do the opposite. In Japan that role has fallen to the government, which has run budget deficits for over 20 years. Mr Abe set out intending to rein in the public finances. But after a rise in a consumption tax in 2014 tipped Japan into recession, he has backed away from raising the tax again. This week he signalled a large new fiscal-stimulus package worth ¥28 trillion, or 6% of GDP (although it was unclear how much of that money will be new). + +Abenomics has not only demonstrated how self-defeating fiscal austerity can be, particularly when it comes in the form of a tax on all consumers. It has also shown that, in Japanese conditions, sustained fiscal expansion is affordable. Without any private borrowers to crowd out, even a government as indebted as Japan’s will find it cheap to borrow. Japan’s net interest payments, as a share of GDP, are still the lowest in the G7. Politicians in Europe make fiscal rectitude a priority. Abenomics shows that public thrift and private austerity do not mix. + +Many people argue that Mr Abe’s monetary and fiscal stimulus has served only as an analgesic, masking the need for radical structural reform. To be sure, greater boldness is needed—to encourage more foreign workers into the country, for example, and to enable firms to hire and fire more easily. But a revival in demand has encouraged supply-side improvement, not simply substituted for it. Stronger demand for labour has drawn more people into the workforce, despite the decline in Japan’s working-age population. The increased presence of women in the labour force has prompted the government to create 200,000 extra places in nurseries, and to make life harder for employers who discriminate against pregnant employees. In recognising that reflation and reform go hand in hand, Abenomics is an unusually coherent economic strategy. + +Abenomics has fallen short of its targets and its overblown rhetoric. That makes it easy to dismiss as a failure. In fact, it has shown that central banks and governments do have the capacity to stir a torpid economy. And in some senses, the hype was needed. Japan’s stagnation had become a self-fulfilling prophecy; Abenomics could succeed only if enough people believed it would. This is a final lesson that Japan’s economic experiment can impart to the rest of the world. Aim high. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21702751-what-japans-economic-experiment-can-teach-rest-world-overhyped-underappreciated/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Russian dirty tricks + +Doping and hacking + +Russia is waging a silent war on the international order + +Jul 30th 2016 | From the print edition + + + +IT HAS been a good few days for Russia’s dirty-tricks squad. On July 24th the International Olympic Committee (IOC) announced it would not ban the Russian team as a whole from next month’s games in Rio de Janeiro, even though an investigation concluded that the country’s government had been running an extensive doping programme for athletes. Two days earlier WikiLeaks, a whistleblowing website, had published embarrassing e-mails from officials of the Democratic National Committee, which is meant to be neutral between Democrats, disparaging Bernie Sanders. Security experts determined the e-mails had been stolen by Russian government hackers. + +Compared with the other misdeeds of Vladimir Putin’s regime, these ones may seem tame. Russia is, after all, a country that stripped the markings from its soldiers’ uniforms in order to invade Ukraine while lying about it, and assassinated a defector in London by putting polonium in his tea. But cheating at sport and hacking e-mails to sway an American election are serious offences too. More important, they reflect a broader pattern of behaviour. In arena after arena, Russia is not only violating the rules; it is trying to break the international order, to splinter any body or group that might hold it to account. + +Sex, drugs and Russia’s role + +The Russian government routinely humiliates domestic opponents using kompromat (embarrassing surveillance material, often sex tapes) gathered by its spooks. But using the technique in a Western election is something new. The Russians clearly wanted to help Donald Trump (see article), whose isolationist tendencies delight Mr Putin (and whose top campaign official and foreign-policy adviser have ties to Russia). Besides professing his admiration for Mr Putin, Mr Trump has suggested that America should not defend its allies unless they have, in his judgment, fulfilled their commitments (see article). This is music to the ears of Mr Putin, who knows that without its guarantee of mutual defence, NATO is dead. + + + +A timeline of Vladimir Putin’s unshakeable popularity + +Russia’s efforts to sow discord in NATO mirror its attempts to divide the European Union. In eastern Europe, Russia funds anti-EU political parties and uses its Russian-language television channels to support them. A Russian bank has provided loans to France’s anti-immigrant National Front; Russian groups supported French conservatives’ campaign against legalising gay marriage. In Germany, Russian propagandists cooked up a media frenzy over a bogus sexual assault to foment discord over Muslim immigration. In 2015 Russia even hosted a “separatists’ convention” in Moscow, attended by secessionists from Northern Ireland and Catalonia (and Hawaii). The goal is to render the West too divided to respond to Russian aggression, as it did by imposing sanctions over Ukraine. + +America and the EU struggle to cope with these tactics. But one might have hoped that the IOC, of all international bodies, would respond firmly to Russian rule-breaking. Sport is nothing without rules; permitting cheating risks destroying the whole enterprise. Yet even in the face of a state-run doping programme affecting hundreds of athletes, the IOC would not ban the Russians entirely, but instead kicked the issue down to the governing bodies of individual sports. Russia trumpeted this as proof that the doping was a matter of a few bad apples and the investigation an American-led witch-hunt. + +Western governments and voters may not be able to stop Russia from hacking politicians’ servers, spreading disinformation or assigning intelligence officers to unscrew the lids on urine samples. But they can stop Russia from pitting them against each other. Mr Putin is exploiting Western democracies’ divisions for his own ends. They should not let him. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21702755-russia-waging-silent-war-international-order-doping-and-hacking/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The parable of Yahoo + +From dotcom hero to zero + +Yahoo is no longer an independent company. Its failure had many fathers + +Jul 30th 2016 | From the print edition + + + +IT WAS one of Silicon Valley’s most riveting success stories. Now it stands as a warning to others. Yahoo began in 1994 as a lark in Stanford’s dormitories, when two students, David Filo and Jerry Yang, assembled their favourite links on a page called “Jerry and David’s Guide to the World Wide Web”. The site, which they renamed Yahoo, quickly became the “portal” through which millions first encountered the internet. At its peak in 2000, Yahoo had a market value of $128 billion. In the dotcom version of Monopoly, Yahoo got the prime slot. + +This week its history as an independent firm came to an end. On July 25th Verizon, a telecoms giant, announced that it would pay around $4.8 billion to acquire Yahoo’s core business (see article). The sale will come as a blessed relief to shareholders. Yahoo churned through four chief executives in the three years before the hiring of Marissa Mayer in 2012. Her efforts to turn the company round may have failed, but the seeds of this week’s sale were sown long before she arrived. Three problems explain the firm’s demise. + +The first was a chronic lack of focus. Right from the start Yahoo was ambivalent about whether it should be a media or a technology company. As a result, whenever the internet zigged, Yahoo zagged. It could not decide whether search was a “commodity” business to be outsourced or an area worthy of heavy investment; its prevarication allowed Google to rise. It took too long to respond to the emergence of social media and the coming of the mobile internet. Ms Mayer, and the company’s toothless board, did nothing to resolve Yahoo’s split corporate personality. + +Instead of focusing, Yahoo sprawled. By 2001 it had 400 different products and services. Its cumbersome structure proved no match for specialised rivals such as Google in search and eBay in e-commerce. Yahoo was notoriously dysfunctional: at one point it had four different classified-advertising businesses, each using different technology. This contains a warning for others. Silicon Valley is known for its world-changing ambitions, but managers can be distracted by doing too many things at once. Alphabet, Google’s parent company, which continues to push into new areas, should take note. + +A second problem at Yahoo concerned dealmaking. Some of its purchases paid off: by the end, its stake in another web giant—Alibaba, a Chinese e-commerce firm—was worth far more than its own internet properties. Others flopped: Ms Mayer, for example, bought Tumblr, a social-networking platform, for $1.1 billion in 2013, even though it was about to run out of money. But a company’s success depends as much on the deals it does not do as on the ones it does. Yahoo’s history is littered with transactions that should not have been passed up. It did not buy Google for $1m when it had the chance. It agreed to buy Facebook for $1 billion, but the deal fell through when Yahoo tried to negotiate down the price. It eschewed the chance to buy YouTube (subsequently bought by Google), and its purchase of eBay fell through because of clashing egos. + +The long shadow of Steve Jobs + +Most galling of all, Mr Yang, the chief executive at the time, had the chance to sell Yahoo to Microsoft for around $45 billion in early 2008. His pride and his desire to head his company led him to reject the offer. This is the third lesson from Yahoo’s demise: founders can often be too attached to their progeny to make the right strategic decisions. Silicon Valley still believes in the idea of founders as visionary turnaround artists. Last year Jack Dorsey was brought back to run Twitter, a social-media firm (while continuing to run Square, a payments company that he also founded). Shareholders of both firms should consider Yahoo’s example carefully. For every Steve Jobs, who successfully resurrected Apple, there is a Mr Yang. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21702752-yahoo-no-longer-independent-company-its-failure-had-many-fathers-dotcom-hero-zero/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Air pollution + +Cleaning up the data + +The dangers of dirty air need to be made much more transparent to city-dwellers + +Jul 30th 2016 | From the print edition + + + +WHAT if all Londoners, no matter how young or frail, smoked for at least six years? In effect, they already do. The city’s air pollution exacts an equivalent toll on each resident, cutting short the lives of nearly 10,000 people each year and damaging the lungs, hearts and brains of children. + +Yet few Londoners realise that things are this bad. Citizens of other big cities in the rich world are equally complacent (those in the developing world are unlikely to be in any doubt about the scale of their pollution problem). Official air-quality indices do exist. They alert people when to stay at home, particularly those with asthma and other medical troubles. But these indices focus on the immediate risks to health, which for most people are serious only when the air is almost unbreathable. No equivalent source of information exists to warn residents about the dangers that accumulate from much lower amounts of pollution. It is all too easy for people to take the short-term index, which says “low pollution” most of the time, as a proxy for their lifelong risks. + +Easy, and wrong. Analysis of one year’s worth of pollution data from 15 big cities in the rich world by The Economist shows how far from the truth such assumptions can be (see article). Daytime levels of nitrogen dioxide in London exceeded the World Health Organisation (WHO) limit for hazardous one-year exposure for 79% of the time, and were on average 41% above the guideline. About half the time both nitrogen dioxide and fine particulates were above the limit. In daytime Paris, at least one of these pollutants exceeded the WHO’s limit for 82% of the time. Pollution is less of a problem in American cities, partly because most cars run on petrol and emit less nitrogen dioxide than diesel vehicles, which are preferred in Europe. + +A dependable long-term air-quality index, similar in design to existing short-term gauges, is needed in the world’s big cities. That would educate policymakers and voters about the nature of the problem. It would help doctors dispense routine advice to pregnant women, children and other more vulnerable people on how to reduce exposure to pollution. And it would enable the development of apps and products that can deliver practical advice to everyone. + +Our analysis gives a flavour of what such advice might contain. In Paris, for example, 8am is a much better time than 9am for the morning commute, with levels of nitrogen dioxide lower by 26% on average, and fine particulates by 10%. In Amsterdam, Brussels, London and Paris, there is 10-22% less nitrogen dioxide floating around on Sundays than Saturdays, suggesting that might be the better day to schedule children’s weekend outdoor activities. + +Organising daily and weekly routines in this way can materially affect the amount of pollution inhaled. A study in Barcelona found that, although travel accounts for just 6% of people’s time, that is when they breathe in 24% of their intake of nitrogen dioxide. + +Breezy does it + +Reducing air pollution may take lots of money, time and compromises. But telling people just how bad pollution is for them and how to avoid it is easy, uncontroversial and cheap. Not everyone will heed the advice (for proof, look no further than the sunburnt arms and faces on an English summer day). But even if a minority do, thousands of people in every big city will live longer, healthier lives. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21702753-dangers-dirty-air-need-be-made-much-more-transparent-city-dwellers-cleaning-up/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On Republicans, Pokémon, blood-testing, Brazil, John Cleese, Italian banks: Letters to the editor + + + + + +Articles Sections Next + +On Republicans, Pokémon, blood-testing, Brazil, John Cleese, Italian banks + +Letters to the editor + +Jul 30th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Former Republicans + +Donald Trump’s insurgent takeover of the Republican Party (“The dividing of America”, July 16th) has an ironic counterpart in 1940, when the party nominated Wendell Willkie to run against Franklin Roosevelt. Like Mr Trump, Willkie was a former Democrat, never held political office and was perceived as an alternative to entrenched politicians in both parties. But there the comparison ends. He positively favoured civil rights, trade and internationalism. By defeating the Republican isolationists, he gave crucial cover to Roosevelt to build American support for Britain in its lone defence against Nazi Germany. + +Willkie lost the election, but afterwards he became an unofficial ambassador for FDR. He also championed equal rights at home and opposed the prospect of post-war colonialism. When he died suddenly in 1944, a journalist recorded that Willkie had come “on the American scene like a meteor and like a meteor he burned himself out”. He was a “challenging figure possessed of an integrity, honesty and courage far beyond the average measure.” + +It does not seem a trivial question to ask, but where are the Willkies of today? + +WARD CAMPBELL + +Sacramento, California + +I would be persuaded by your thesis that Donald Trump will leave a lasting mark on the Republican Party but for one distinction between him and the examples you put forth: Barry Goldwater and George McGovern were men of profound and verifiable conviction. Mr Trump is a man of mirage. I predict that the mirage will fade. + +FRED LAKNER + +San Diego + +If people want to know why Mr Trump says crazy things they should turn to this Wikipedia article on narcissistic personality disorder: it “is a long-term pattern of abnormal behaviour characterised by exaggerated feelings of self-importance, an excessive need for admiration and a lack of understanding of others’ feelings. People affected often spend a lot of time thinking about achieving power, success or their appearance. They often take advantage of the people around them.” + +TIMOTHY COTTON + +New York + + + + + +Pokémon no! + +Once upon a time, adults who chased fairies at the bottom of the garden were locked up. Now, through “Pokémon GO” and the wonders of smartphone technology, they are encouraged to play with other fairy-chasers (“I mug you, Pikachu!”, July 16th). I’m still trying to work out if this represents progress or regress. + +NICK WILLS-JOHNSON + +Perth, Australia + + + + + +Testing blood + +You wrote about the problems at Theranos, a blood-testing startup that gave incorrect results to patients (“Red alert”, July 16th). The underlying reason for Theranos’s ascent was the lack of general awareness of the advances in the in-vitro diagnostics field over the past 50 years and the critical and widespread contribution it makes to health care. The biggest irony is that “the ability to perform multiple tests in a tiny droplet of blood” has long been a reality in medical diagnosis and is actually carried out millions of times a day in laboratories everywhere. The challenge does not lie in the instruments used, but in the lack of reliable methods to transfer the sample to those instruments. + +Diagnostic tests were already performed routinely using a drop of blood from a pinprick long before Theranos existed. However, the blood obtained that way differs from, and is far more variable than, that drawn from the vein. This fact is widely known in the industry. For example, last year the Centres for Medicare and Medicaid prohibited the unrestricted use of fingerstick glucose-testing on critically ill patients, after several fatal incidents that were linked to spurious pinprick tests. + +The silver lining around Theranos’s lamentable cloud might be a wider awareness of this important practice. + +SAMUEL REICHBERG + +Laboratory Assessment and Biotech Systems + +New York + + + + + +A pair of comedians + +If Theresa May wanted a comedian as foreign secretary (“May time”, July 16th), John Cleese would have been a better pick than Boris Johnson. He openly supported Brexit and has ministerial experience (at the ministry of silly walks). And although both are classical scholars, Boris is fact light, whereas Mr Cleese is intellectually rigid, pointing out that Romani ite domum is the correct Latin spelling for “Romans go home” in “Life of Brian”. With those attributes he is much better equipped to negotiate the complexities of Brexit. + +MICHEL VAN ROOZENDAAL + +Helsinki + +Brazil's future + +The problems in Brazil cannot be denied (“A sporting chance of safety”, July 9th). The Petrobras scandal makes Watergate look like child’s play. But another way of looking at it is that, after a long history of corruption throughout colonisation and dictatorship, the crooks are at last getting rounded up, ousted from office and sent to jail. In fact, Brazil is a success story for the global anti-corruption movement, the Olympic spirit and the rule of law. + +In the midst of a vote-buying scandal, a recession, the rare back-to-back hosting of the world’s biggest sporting events, and a much-resented increase in fares on public transport, Brazilians took to the streets to protest against corruption and mismanagement. Its Congress responded by enacting a dramatic series of anti-corruption laws. In 2011, public-procurement reforms and a new freedom of information law. In 2013 a statute addressing corporate complicity in public corruption and another giving federal prosecutors important new enforcement tools. These laws made possible the investigations and convictions of today. + +So let’s turn the conventional narrative on its head. Short-term, Brazil is in a political and economic crisis. But long-term, Brazil is becoming less corrupt; democracy and the rule of law are becoming stronger, not weaker. In this regard, its prospects may actually be improving. + +ANDY SPALDING + +Associate professor + +University of Richmond School of Law + +Richmond, Virginia + + + +The self-preservation society + +You wrote about the parlous state of the Italian banking system and the lessons that go unheeded in the banking industry. Your headline, “The Italian job” (July 9th) was an amusing parallel with that wonderful film and only served to underline the scale of the problem, on whose rear end the stash of gold seized by Charlie Croker and his mob would represent but a pimple. Perhaps you could have taken the parallel one step further by using another line from the film, which sums things up neatly: “Camp Freddie, everybody in the world is bent.” + +ARCHIE BERENS + +Abu Dhabi + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21702734-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Globalisation and politics: Drawbridges up + + + + + +Articles Sections Next + +Globalisation and politics + +Drawbridges up + +The new divide in rich countries is not between left and right but between open and closed + +Jul 30th 2016 | CLEVELAND, LINZ, PARIS, ROME, TOKYO AND WARSAW | From the print edition + + + +IS POLAND’S government right-wing or left-wing? Its leaders revere the Catholic church, vow to protect Poles from terrorism by not accepting any Muslim refugees and fulminate against “gender ideology” (by which they mean the notion that men can become women or marry other men). + +Yet the ruling Law and Justice party also rails against banks and foreign-owned businesses, and wants to cut the retirement age despite a rapidly ageing population. It offers budget-busting handouts to parents who have more than one child. These will partly be paid for with a tax on big supermarkets, which it insists will somehow not raise the price of groceries. + +“The old left-right divide in this country has gone,” laments Rafal Trzaskowski, a liberal politician. Law and Justice plucks popular policies from all over the political spectrum and stirs them into a nationalist stew. Unlike any previous post-communist regime, it eyes most outsiders with suspicion (though it enthusiastically supports the right of Poles to work in Britain). + +From Warsaw to Washington, the political divide that matters is less and less between left and right, and more and more between open and closed. Debates between tax-cutting conservatives and free-spending social democrats have not gone away. But issues that cross traditional party lines have grown more potent. Welcome immigrants or keep them out? Open up to foreign trade or protect domestic industries? Embrace cultural change, or resist it? + +In 2005 Stephan Shakespeare, the British head of YouGov, a pollster, observed: + +We are either “drawbridge up” or “drawbridge down”. Are you someone who feels your life is being encroached upon by criminals, gypsies, spongers, asylum-seekers, Brussels bureaucrats? Do you think the bad things will all go away if we lock the doors? Or do you think it’s a big beautiful world out there, full of good people, if only we could all open our arms and embrace each other? + +He was proven spectacularly right in June, when Britain held a referendum on whether to leave the European Union. The leaders of the main political parties wanted to stay in, as did the elite of banking, business and academia. Yet the Brexiteers won, revealing just how many voters were drawbridge-uppers. They wanted to “take back control” of borders and institutions from Brussels, and to stem the flow of immigrants and refugees. Right-wing Brexiteers who saw the EU as a socialist superstate joined forces with left-wingers who saw it as a tool of global capitalism. + +A similar fault line has opened elsewhere. In Poland and Hungary the drawbridge-uppers are firmly in charge; in France Marine Le Pen, who thinks that the opposite of “globalist” is “patriot”, will probably make it to the run-off in next year’s presidential election. In cuddly, caring Sweden the nationalist Sweden Democrats topped polls earlier this year, spurring mainstream parties to get tougher on asylum-seekers. Even in Germany some fear immigration may break the generous safety net. “You can only build a welfare state in your own country,” says Sahra Wagenknecht, a leader of the Left, a left-wing party. + +In Italy, after the Brexit vote, the leader of the populist Northern League party tweeted: “Now it’s our turn.” Japan has no big anti-immigrant party, perhaps because there are so few immigrants. But recent years have seen the rise of a nationalist lobby called Nippon Kaigi, which seeks to rewrite Japan’s pacifist constitution and make education more patriotic. Half the Japanese cabinet are members. + +There’s no we in US + +In America the traditional party of free trade and a strong global role for the armed forces has just nominated as its standard-bearer a man who talks of scrapping trade deals and dishonouring alliances. “Americanism, not globalism, will be our credo,” says Donald Trump. On trade, he is close to his supposed polar opposite, Bernie Sanders, the cranky leftist who narrowly lost the Democratic nomination to Hillary Clinton. And Mrs Clinton, though the most drawbridge-down major-party candidate left standing, has moved towards the Trump/Sanders position on trade by disavowing deals she once supported. + +Timbro, a Swedish free-market think-tank, has compiled an index of what it calls “authoritarian populism”, which tracks the strength of drawbridge-up parties in Europe. On average a fifth of voters in European countries back a populist party of the right or left, it finds. Such parties are represented in the governments of nine countries. The populist vote has nearly doubled since 2000 (see chart 1). In southern Europe austerity and the euro crisis have revived left-wing populism, exemplified by Syriza in Greece and Podemos in Spain. In Northern Europe the refugee crisis of 2015 has boosted the populists of the right. + + + +Drawbridge-up populists vary from place to place, but most share a few key traits. Besides their suspicion of trade and immigration, nearly all rail against their country’s elite, whom they invariably describe as self-serving. British people “have had enough of experts”, said Michael Gove, a leader of the Brexit campaign. Mr Trump last week said that the elite back Mrs Clinton because “they know she will keep our rigged system in place….She is their puppet, and they pull the strings.” + +Distrust of elites sometimes veers into conspiracy theory. Poland’s defence minister suggests that Lech Kaczynski, a Polish president who died in a plane crash in 2010, was assassinated. Mr Trump talks of “the plain facts that have been edited out of your nightly news and morning newspaper”. Panos Kammenos, a member of Greece’s ruling coalition, wonders if Greeks are being sprayed with mind-altering chemicals from aeroplanes. + +Nearly all drawbridge-up parties argue that their country is in crisis, and explain it with a simple, frightening story involving outsiders. In Poland, for example, Law and Justice accuses decadent Western liberals of seeking to undermine traditional Polish values. (A recent magazine cover spoke of “Poland against the Gay Empire”.) It also plays up the threat of Islamist terrorists, who have killed no one in Poland since the days of the Ottoman Empire—but will start again, unless the government is vigilant. + +Poland’s previous government, led by a party called Civic Platform, agreed last year to take a few Middle Eastern refugees—7,000 in total—to show solidarity with fellow members of the EU. Law and Justice accused them of recklessly endangering the lives of Poles. Voters kicked them out of office. + +The recent string of terrorist attacks in France, Belgium and Germany has boosted support for drawbridge-raising throughout Europe. On Bastille Day a jihadist in a truck killed 84 people in Nice; on July 26th two men linked to Islamic State slit the throat of an 85-year-old Catholic priest celebrating mass near Rouen. These assaults on symbols of French culture—the anniversary of the revolution and the dominant, if declining, religion—prompted President François Hollande to declare war on Islamic State. He vowed that: “No one can divide us.” Ms Le Pen retorted on Twitter: “Alas, @fhollande is wrong. Islamic fundamentalists don’t want to ‘divide’ us, they want to kill us.” + +Europe’s drawbridge-uppers would have enjoyed the Republican convention in Cleveland last week, where team Trump wrote a new script for the party of Lincoln. Speaking by video link, Kent Terry and Kelly Terry-Willis described the murder of their brother Brian, a border-patrol agent, in a shootout in Arizona. Later, three parents told the audience how their children had been murdered by illegal immigrants. There is no evidence that illegal immigrants commit more crimes than other people. But Mr Trump said that to Barack Obama, each victim was “one more child to sacrifice on the altar of open borders”. + +The great disruption + +Mr Trump’s charisma aside, the success of drawbridge-up parties in so many countries is driven by several underlying forces. The two main ones are economic dislocation and demographic change. + +Economics first. Some 65-70% of households in rich countries saw their real incomes from wages and capital decline or stagnate between 2005 and 2014, compared with less than 2% in 1993-2005, says the McKinsey Global Institute, a think-tank. If the effects of lower taxes and government transfers are included, the picture is less grim: only 20-25% of households saw their disposable income fall or stay flat. In America nearly all households saw their disposable income rise, even if their headline wages stagnated. Such figures also fail to take full account of improvements in technology that make life easier and more entertaining. + +Nonetheless, it is clear that many mid- and less-skilled workers in rich countries feel hard-pressed. Among voters who backed Brexit, the share who think life is worse now than 30 years ago was 16 percentage points greater that the share who think it is better; Remainers disagreed by a margin of 46 points. A whopping 69% of Americans think their country is on the wrong track, according to RealClearPolitics; only 23% think it is on the right one. + +Many blame globalisation for their economic plight. Some are right. Although trade has made most countries and people better off, its rewards have been unevenly spread. For many blue-collar workers in rich countries, the benefits of cheaper, better goods have been outweighed by job losses in uncompetitive industries. For some formerly thriving industrial towns, the impact has been devastating (see page article). + +Economic insecurity makes other fears loom larger. Where good jobs are plentiful, few people blame immigrants or trade for their absence. Hence the divide between college-educated folk, who feel confident about their ability to cope with change, and the less-schooled, who do not. + +Consider Austria, where a presidential election on October 2nd will pit Norbert Hofer of the anti-immigrant, Eurosceptic and protectionist Freedom Party against a global-minded Green candidate, Alexander van der Bellen. In Linz, an industrial city on the Danube, the central Kaplanhof district is full of startups and technology firms that have moved into former factories and warehouses. Here, globalisation means customers and opportunities; pro-openness messages go down a treat. In a nearby café, Mr van der Bellen told cheering regulars: “Don’t forget that in Austria, every second job is directly or indirectly linked to trade with the rest of the world.” + +A couple of miles south is a different Linz: the Franckviertel. Vast chimneys from chemical plants loom over rusting railway sidings. Streets are lined with cheap clothes shops and empty video-rental outlets. Here, globalisation has meant decline. Like Kaplanhof, it has an above-average proportion of foreigners (32% of the population), but these tend to be the poorer, less well qualified sort: Afghans and north Africans attracted by low rents. This has bred resentment: “It’s the Moroccans. They rape, they sell drugs. Have you seen the train station?” complains Peter, a “Linzer born-and-bred” waiting for the trolley bus into town. In these parts Mr Hofer is likely to win. + +This divide is new in Austria. For decades it was dominated by a centre-left and a centre-right party. But both have struggled to reconcile the cosmopolitan and nativist parts of their electoral coalitions. In the first round of this year’s presidential election, they won just 22.4% of the vote between them and had to drop out. + +The second force pulling drawbridges up is demographic change. Rich countries today are the least fertile societies ever to have existed. In 33 of the 35 OECD nations, too few babies are born to maintain a stable population. As the native-born age, and their numbers shrink, immigrants from poorer places move in to pick strawberries, write software and empty bedpans. Large-scale immigration has brought cultural change that some natives welcome—ethnic food, vibrant city centres—but which others find unsettling. They are especially likely to object if the character of their community changes very rapidly. + +This does not make them racist. As Jonathan Haidt points out in the American Interest, a quarterly review, patriots “think their country and its culture are unique and worth preserving”. Some think their country is superior to all others, but most love it for the same reason that people love their spouse: “because she or he is yours”. He argues that immigration tends not to provoke social discord if it is modest in scale, or if immigrants assimilate quickly. + +When immigrants seem eager to embrace the language, values and customs of their new land, it affirms nationalists’ sense of pride that their nation is good, valuable and attractive to foreigners. But whenever a country has historically high levels of immigration from countries with very different moralities, and without a strong and successful assimilationist programme, it is virtually certain that there will be an authoritarian counter-reaction. + +Several European countries have struggled to assimilate newcomers, and this is reflected in popular attitudes. Asked whether having an increasing number of people of different races in their country made it a better place to live, only 10% of Greeks and 18% of Italians agreed (see chart 2). Even in the most cosmopolitan European countries, Sweden and Britain, only 36% and 33% agreed. In America, by contrast, a hefty 58% thought diversity improved their country. Only 7% thought it made it worse. + + + +Most immigrants to America find jobs, and nearly all speak English by the second generation. For all Mr Trump’s doomsaying, the recent history of race relations is one of success. But that cannot be taken for granted. In one respect, America is entering uncharted waters. Last year white Christians became a minority for the first time in three centuries. By 2050 whites will no longer be a majority. The group that has found these changes hardest—whites without a college education—forms the core of Mr Trump’s support. + +White Americans, like dominant groups everywhere, dislike constantly being told that they are privileged. For laid-off steelworkers, it doesn’t feel that way. They do not like being accused of racism if they object to affirmative action or of “microaggressions” if they say “America is a land of opportunity”. Another Pew poll found that 67% of American whites agreed that “too many people are easily offended these days over language”. Among Trump supporters it was 83%. + +How to fight back + +What can drawbridge-downers do? The most important thing is to devise policies that spread the benefits of globalisation more widely. In the meantime, and depending on how their national political system works, they are trying various tactics. In Sweden, France and the Netherlands, the mainstream parties have formed tactical alliances to keep the nationalists out of power. So far, they have succeeded, but at the cost of enraging nationalists, who see the establishment as a conspiracy to keep the little guy down. + +Instead of, or in addition to this, mainstream politicians sometimes borrow the nationalists’ clothes. In Britain the Conservatives have taken a far tougher line on immigration than many of their cosmopolitan leaders would have preferred. Theresa May, the new prime minister, was the architect of this policy. In America Mrs Clinton’s flip-flop on free trade is a tactical concession to her party’s protectionist wing: among the free-trade deals she now decries is one that she helped negotiate. + +Virtually no politicians have forthrightly argued that free trade and well-regulated immigration make most people better off. Emmanuel Macron, France’s economy minister, says it is time to try. Drawbridge-downers in France’s main parties have more in common with each other than with the National Front, he says, so he has launched a new movement. + + + +An obvious objection is that if parties align themselves into explicitly globalist and nationalist camps, this might lend the nationalists legitimacy and accelerate their ascent. Piffle, says Mr Macron. “Look at the reality,” he says: in France the National Front was already the top party in voting at the most recent (regional) elections. It’s not a risk; it has already happened. + +Although the drawbridge-uppers have all the momentum, time is not on their side. Young voters, who tend to be better educated than their elders, have more open attitudes. A poll in Britain found that 73% of voters aged 18-24 wanted to remain in the EU; only 40% of those over 65 did. Millennials nearly everywhere are more open than their parents on everything from trade and immigration to personal and moral behaviour. Bobby Duffy of Ipsos MORI, a pollster, predicts that their attitudes will live on as they grow older. + +As young people flock to cities to find jobs, they are growing up used to heterogeneity. If the Brexit vote were held in ten years’ time the Remainers would easily win. And a candidate like Mr Trump would struggle in, say, 2024. + +But in the meantime, the drawbridge-raisers can do great harm. The consensus that trade makes the world richer; the tolerance that lets millions move in search of opportunities; the ideal that people of different hues and faiths can get along—all are under threat. A world of national fortresses will be poorer and gloomier. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21702748-new-divide-rich-countries-not-between-left-and-right-between-open-and/print + + + + + +Articles Sections Next + + + + + +United States + + + + +The Democratic convention: Bridging the torrent + +On the trail: Philly special + +Putin, Trump and the DNC: Signal and noise + +The PGA championship: Who’ll win? + +Southern living: From crop to pop + +Political parties: Defining realignment + +Lexington: Able Kaine + + + + + +Articles Sections Next + +The Democratic convention + +Bridging the torrent + +Democrats successfully unite behind Hillary Clinton, an unloved nominee + +Jul 30th 2016 | From the print edition + + + +IN THE end, Bernie Sanders came through. The senator from Vermont had threatened to take his fight for a “political revolution” to the floor of the Democratic National Convention, which was held in Philadelphia between July 25th and 28th. But when his aggrieved supporters had the temerity to take that threat seriously, by booing the convention’s early stages, Mr Sanders tried to calm them, and just about succeeded. Reprising the healing role Hillary Clinton played on behalf of Barack Obama in 2008 when she was the loser, it was he who declared her the Democratic presidential nominee. Mrs Clinton is the first woman to fill that role for either of America’s main parties. + +Mr Obama, who is currently enjoying his highest approval ratings in years, was another star turn. Before a stadium hushed in adoration, he talked up his former secretary of state, rebuked the divisiveness of her Republican rival, Donald Trump, and sought to breathe self-confidence back into a country too short of it. “Anyone who threatens our values, whether fascists or communists or jihadists or home-grown demagogues, will always fail in the end,” he said. It was perhaps his last great speech as president—though arguably his family’s second-best in Philly. + +Earlier, Michelle Obama had elegantly placed Mrs Clinton’s nomination in the sweep of America’s march to equality. “I wake up every morning in a house that was built by slaves,” she said. “And I watch my daughters, two beautiful, intelligent black young women playing with their dogs on the White House lawn. And because of Hillary Clinton, my daughters and all our sons and daughters now take for granted that a woman can be president of the United States.” Mrs Clinton, in her own speech (due on July 28th, after The Economist had gone to press), could hardly have hoped to do better. + +The contrast with the much smaller Republican convention, which was held in Cleveland the previous week, and boycotted by most Republican heavyweights, was striking. In Mr Sanders, the Obamas, Bill Clinton, Joe Biden and Senator Elizabeth Warren, among others, the Democrats paraded speakers whose popularity, in the blue half of America, was a rebuke to the cynicism about politics upon which Mr Trump has fed. A notable independent, Michael Bloomberg, the billionaire former mayor of New York, also made an appearance to offer a more direct rebuke. He urged Americans to elect Mrs Clinton on the basis that she, unlike her rival, is “sane”. + +The entertainment was better in Philly, too. Where Mr Trump, by way of showbiz glitz, had produced a couple of reality-television stars, the Democrats paraded a stream of A-listers. To recommend unity, Paul Simon sang “Bridge over Troubled Water”. Not everyone was mollified. Among the 4,763 state delegates attending the convention, a few dozen Sanders supporters kept up a determined protest. Several complained, before banks of television cameras, that their “voices were not being heard”. Outside the arena, meanwhile, Philadelphia saw bigger protests, by thousands of Sanders voters, anarchists and pro-dope campaigners carrying a giant inflatable spliff. Yet the lasting impression, which opinion polls support, was of the Democrats uniting against a common enemy; 90% of Mr Sanders’s supporters in the primaries say they will vote for Mrs Clinton. + +The convention illustrated another big Democratic advantage. In Cleveland, the delegates were lily-white. In Philadelphia they were the multi-hued representatives of an electorate that is growing rapidly less white, and where minorities vote blue. In 2000, non-whites accounted for 23% of the electorate; this year they will represent over 31%. No wonder the convention was largely dedicated to issues, such as gun control, criminal justice and immigration reform, that concern non-whites especially. This is the demographic wave that Mr Obama rode to electoral victories; the board, and a tremendous natural advantage, now passes to Mrs Clinton. Yet the question, which lurked beneath the jollity and the protest in Philadelphia, is whether the former secretary of state can surf. + +It is amazing how badly she is doing. The latest opinion polls suggest she is at best level-pegging with Mr Trump, having forfeited a seven-point lead in the past month. According to calculations by Nate Silver, a respected number-cruncher, Mrs Clinton currently has only a 53% chance of winning in November. In other words, given Mr Trump’s stated plans, her performance is threatening a catastrophe for America and the world. + +You get me too, folks! + +The tightness of the race is largely due to Mr Trump’s success in rallying working-class whites with his dystopian vision, racially loaded language and promise to reverse globalisation. His conference speech, in which he described America as a “divided crime scene” which he alone could fix, went down a storm with them. According to a poll for CNN, his lead over Mrs Clinton with non-college-educated whites has since doubled, to almost 40 percentage points. The consensus view has long been that there are too few of these voters to give Mr Trump victory. It is estimated that he would need to bag around 70% of them, which seems unlikely. Yet that assumes Mrs Clinton does almost as well as Mr Obama in turning out non-white and younger voters, and she may not. + +Her trouble with working-class whites is fuelled by deep forces, including wage stagnation and rage against the elite, that might poleaxe any establishment politician. Yet Mrs Clinton’s struggle is exacerbated by her wretched trust ratings, for which she is clearly to blame. Her irregular e-mail arrangements as secretary of state, and, what was worse, her spiky mishandling of the furore this caused, has trashed her standing with millions of voters. Only 30% consider her honest; by comparison, 43% say the same of Mr Trump, though his speeches are packed with untruths. + +This has encouraged a notion that the nominees are as bad as each other—“Hillary and Trump are Coke and Pepsi, both bad for you,” spat out a retired teacher from Minnesota at an anti-Clinton rally in Philadelphia. Disenchanted by their choice, a quarter of voters say they are still undecided. Among younger voters, an important part of Mr Obama’s winning coalition, a quarter say they mean to vote for a candidate other than Mr Trump or Mrs Clinton. + + + +Timeline: United States presidential nominating conventions + +Beyond reconciliation, the Democratic convention was largely designed to relaunch Mrs Clinton’s image—most obviously in her husband’s address. It was, for the most part, a schmaltzy, meandering recollection of the couple’s early years together. “In the spring of 1971, I met a girl,” he began, then recounted details of the courtship that ensued: the fine public swimming-pool close to her parents’ house in Illinois, his two failed marriage proposals. + +It would have been more moving, perhaps, if all this wasn’t familiar from a couple of biographies. The strength of the bond he described would certainly have been more convincing had he mentioned the infidelities with which he tested it; “She’ll never quit on you. She never quit on me,” was as close as he came. But the Democratic crowd was gripped. And when Mr Clinton set his own portrait of an indefatigably public-spirited Mrs Clinton against the devious caricature her opponents describe—“One is real, the other is made up”—he won her her first serious ovation of the convention. + +It was well done, though unlikely to sway many partisans. Republicans have spent three decades hating the Clintons. In a rousing speech Mr Biden, the vice-president, delivered a more promising defence. “Everyone knows she’s smart, everyone knows she’s tough, but I know what she’s passionate about,” he roared. In other words: you may not like her, you may not believe her, but at least trust that, in a lifetime of public service, Mrs Clinton has been motivated mainly to do good. + +It is a low bar but, 100 days from the election, perhaps the biggest reset Mrs Clinton can hope for. A popular slogan in Philadelphia was “Love trumps hate”. But, well as the convention went, there was no great love in the air for her there. + + + +Barack Obama passes the baton to Hillary Clinton + +The sitting president’s role was predictable, but the long arc of the day bent nicely + + + +Bill Clinton hails Hillary the change-maker + +On the evening of her official nomination, Bill Clinton makes an eloquent case for his wife + + + +The Sandernistas’ last hurrah in Philadelphia + +Yet disunity is not the Democrats’ biggest problem + + + +Hillary Clinton chooses Tim Kaine + +It should be balm to centrists’ souls to hear Senate colleagues from both parties agree that Mr Kaine is a thoroughly decent and reasonable man + + + +Courts strike down unfair voting laws + +Three courts thwart Republican efforts to dampen support for Democrats at the polls + + + + + +More US election coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702799-democrats-successfully-unite-behind-hillary-clinton-unloved-nominee-bridging/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +On the trail + +Philly special + +Jul 30th 2016 | From the print edition + + + +Scoop + +“We’re gonna cut you off right now. We’re gonna cover right now Boyz II Men, Philadelphia’s own, is here and they’re performing onstage.” + +CNN cuts from demonstrators outside the convention to watch an ageing pop band + +No speaky + +“I’m hoping I’m not going to have to start kind of brushing up back on my Dora the Explorer to understand some of the speeches given this week.” + +A CNN political consultant is upset that Senator Tim Kaine, Hillary Clinton’s running-mate, speaks Spanish + +Accentuate the positive + +“But boring is the fastest-growing demographic in this country.” + +Senator Tim Kaine defends himself. NBC + +Meme of the moment + +“I don’t know who created Pokémon Go, but I’m trying to figure out how we get them to Pokémon Go to the polls!” + +Mrs Clinton keeps up with popular culture + +History repeating + +“Today is the anniversary of Dylan going electric at the 1965 Newport Folk Fest, basically the last time the Left felt this betrayed.” + +Olivier Knox. Twitter + +Vegas, baby + +“With a spirit as wild and free as our mustangs.” + +Nevada casts its vote + +Stages of grief + +“OK. Fine. Hillary, I guess.” + +A bumper-sticker for resigned BernieSanders fans, circulating on the internet + +RIP + +“Before the dawn comes the deepest dark of night.” + +A huddle of #NeverTrump Republicans in Washington, DC hold a wake for their party + +Ladylike + +“She’s got a fresh mouth. Other than that, she’s got nothing going.” + +Donald Trump really doesn’t like Elizabeth Warren + +With friends like these... + +“It’s probably China. Or it could have been somebody sitting in his bed…Russia, if you’re listening, I hope you’re able to find the 30,000 e-mails that are missing. I think you will probably be rewarded mightily by our press.” + +Mr Trump, answering questions about the hacking of DNC e-mails, brings up Hillary’s deleted ones and appeals to Vladimir Putin to help retrieve them + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702814-philly-special/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Putin, Trump and the DNC + +Signal and noise + +A hack fuels suspicion of plots against Bernie Sanders—and against America + +Jul 30th 2016 | PHILADELPHIA | From the print edition + +Dreaming of Donald + +NEVER interfere in other countries’ internal affairs, Vladimir Putin has insisted—except by invading them, bankrolling their nastiest politicians and, perhaps, conspiring to embarrass America’s Democratic Party and its presidential candidate. + +The Kremlin’s precise role and purpose in the scandal over the Democratic National Committee’s (DNC’s) e-mails, and whom it will harm most, remain to be seen. The known facts of the story are that, on July 22nd, WikiLeaks published over 19,000 e-mails hacked from the DNC’s accounts. (Five days later it followed up with a clutch of purloined voicemails.) Some confirmed the conviction of supporters of Bernie Sanders that party apparatchiks favoured Hillary Clinton in its primaries. In one of the grubbiest messages, an official seemed to float the idea of insinuating that the senator was an atheist. Disgruntled Sandernistas were already intending to disrupt the convention in Philadelphia; Debbie Wasserman Schultz, a Floridian congresswoman, duly resigned as the committee’s chairman on July 24th. + +Russian involvement had already been identified by CrowdStrike, a cyber-security firm, which the DNC enlisted in May. In a judgment supported by digital clues and shared by other cyber-sleuths—including, it seems, American spooks—it found that the hack began last summer, and was perpetrated by two groups thought to be associated with Russian intelligence agencies. They are known to aficionados as “Fancy Bear” and “Cozy Bear”; the latter was also implicated in cyber-raids on the State Department, the White House and the Joint Chiefs of Staff. Andrei Soldatov, an expert on the Russian security services, offers another hypothesis: that one of the intruders is a private outfit, the second its state-affiliated client. The claim to responsibility of a pseudonymous hacker, who said he was Romanian but couldn’t speak the language, looks like an unconvincing decoy. + +WikiLeaks—whose founder, Julian Assange, used to present a TV show on a Russian propaganda channel—denied the Russian connection; the Kremlin scoffed at it. Nevertheless, Mr Putin’s aversion to Mrs Clinton, and thus a possible motive to undermine her, is well-documented. In 2011 he blamed her for protests against Russia’s rigged parliamentary election: she “set the tone” and “gave them a signal”, railed Mr Putin, for whom unrest in the post-Soviet world is generally a sign of American machinations. In Moscow she is widely seen as a warmonger and sanctions hawk. + +Donald Trump seems much more palatable. He prefers bilateral dealmaking to alliances and isolationism to global activism. He downplays Russian human-rights abuses and America’s role in addressing them; most encouragingly for Mr Putin, he disparages NATO, suggesting that its mutual-defence commitment might be optional. All that leads some to discern a Russian bid to boost his candidacy; the conspiratorially minded even suspect a link between his campaign and the Kremlin. They point to his business dabblings in Russia, sycophantic comments about Mr Putin and his confidants’ pasts. Paul Manafort, his campaign chairman, once advised Viktor Yanukovych, a former Ukrainian president who fled to Russia. A foreign-policy adviser, Carter Page, has ties to Gazprom. + +Mr Trump scoffed, too—then, astonishingly, seemed to call for the Russians to dig up Mrs Clinton’s private e-mails as well. He also entertained the prospect of recognising Russia’s annexation of Crimea. Still, the overlap in personnel could be explained by correlation rather than conspiracy: working for Mr Putin’s stooges, and for Mr Trump, require similar lacks of scruple. Maria Lipman, editor of Counterpoint, a journal of George Washington University, thinks the Kremlin knows its influence in American politics is small. If Russia is responsible, the aim might be to portray American democracy as tawdry and flawed, rather than, more ambitiously, to swing the contest for Mr Trump. + +An FBI probe might clarify whether this hack fits alongside other Kremlin-directed exposés of inconvenient politicians, more typically involving tapped conversations or fuzzy footage of extramarital sex. Whatever the intention, meanwhile, Mr Trump seems more likely to be damaged by the episode than Mrs Clinton—if, that is, he is still embarrassable at all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702813-hack-fuels-suspicion-plots-against-bernie-sandersand-against-america-signal-and-noise/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The PGA championship + +Who’ll win? + +Crunching the probabilities + +Jul 30th 2016 | From the print edition + + + + + +INTERACTIVE: Spectacular golfing collapses + +ALL eyes will be on Henrik Stenson at the PGA Championship, the last of the year’s four major men’s golf tournaments, which began on July 28th in Springfield, New Jersey. At the British Open two weeks before he led a men’s field by the biggest margin since 1955. But EAGLE (Economist Advantage in Golf Likelihood Estimator), our new golf prediction system, is unimpressed. Based on data from 450,000 holes played in past tournaments, it thinks Mr Stenson has only a 5.0% chance of winning. Instead—though he is under the weather at the moment—it favours the victor of last year’s PGA, Jason Day (above), giving him a 10.5% chance of defending his title. You can follow EAGLE’s projected win probabilities, updated every 15 minutes during the event, at economist.com/eagle. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702803-crunching-probabilities-wholl-win/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Southern living + +From crop to pop + +What the rise of a vertically integrated lolly-maker says about urban trends + +Jul 30th 2016 | ATLANTA AND WINSTON, GEORGIA | From the print edition + +Competition royally licked + +WHEN Steven Carse began hawking ice lollies on a corner in Atlanta, one of his best customers was a lawyer representing Unilever. Mr Carse’s brand name was King of Pops, but his marketing used the word Popsicle—a trademark indirectly acquired by the conglomerate from a Californian who, as a child, accidentally invented the delicacy on a wintry night in 1905. The lawyer would serve him “cease and desist” notices, Mr Carse recalls. But she always bought some pops, too. + +That was in 2010, when he was 25. He had abandoned a brief stint in Idaho as a journalist and returned to Georgia, where he grew up, to be a data analyst for an insurance firm. Losing that job in a post-crash cull, he reverted to selling candyfloss at baseball games, as he had in college: good practice, he says, for making eye contact and ten-second sales. Hoping to buy a pop-freezing machine, he became embroiled with a Cypriot businessman in West Palm Beach, who undertook to import one from Brazil (he didn’t). He made his pops by night in a shared Atlanta kitchen, lugging a cart to his corner to sell them by day. + +Soon his brother, Nick, ditched his career as a prosecutor and joined him. Six years on, Mr Carse reckons he may hit annual sales of 2m lollies. King of Pops is still a family concern: his dad deals with wholesale distribution—they deliver for other outfits as well—while his mum oversees collections. But it now has around 100 street vendors in eight cities, supplies hundreds of retailers and runs a catering arm. + +Much of this success came from hard work. But evolutions in taste, and in Atlanta itself, have contributed. The supremacy of King of Pops is also a parable of trends in consumerism and in urban living. + +Mr Carse traces his enthusiasm for pops to the trips he made to Latin America to visit his other brother, an anthropologist. He ate lots of paletas, Popsicle-esque treats that make use of otherwise superfluous produce. Those origins suggest one advantage pops offer startups: low overheads and, potentially, high margins. Twitter helped Mr Carse to realise those, letting him inform his customers where his cart was and which flavours he was peddling. + +Meanwhile, as in other places, growing numbers of Atlantans have been attracted by his reliance on local ingredients. At first he bought at farmers’ markets, but two years ago King of Pops invested in its own farm—King of Crops—30 miles west of the city. Touring it, Mr Carse points out peppers used in pineapple habanero, cucumbers soon to be mixed with lime and lemongrass with coconut. These exotic combinations are part of another relevant shift: the rise of posh street food, driven by enlightened licensing authorities, a cohort of shoestring entrepreneurs and diners looking for low-cost sophistication. + +Coincidentally, in Atlanta as elsewhere, more people are getting around by foot or bicycle; in a related change, more young professionals are choosing to live in town, often with their pop-happy offspring. The King of Pops’ HQ and kitchen has a window counter on the BeltLine, a converted railway trail that is the axis of Atlanta’s redevelopment. A mile up, it has opened a bar in a revamped mall. On Tuesdays hundreds of people gather on the BeltLine for a King of Pops-sponsored yoga class. It has become the flagship brand of a newly pedestrianised lifestyle. + +How far can Mr Carse’s pops go, before their hip and eco-credentials melt? Once he couldn’t afford a store; now King of Pops has bricks-and-mortar outlets in Atlanta, Charleston, Charlotte and Richmond. From the farm to the carts, it is an integrated crop-to-pop producer: a bold, unusual model that might prove impractical on a bigger scale. And between King of Crops, Poptails (cocktails, frozen and otherwise) and King of Pups (icy dog treats), it may be reaching its alliterative limit. + +For now, Mr Carse hopes that—within the South, with its long pop season—it can continue to take in roughly a city a year. In any case, King of Pops is already an institution, a status that might take decades to acquire in other cities but in Atlanta, novelty-seeking and hungry for hometown champions, can be won at speed. Two recent events sealed it. Dad’s Garage, a local theatre, put on a musical in which the King of Pops does battle with a corporate villainess, the Ice Queen of Cones. Then in May the city’s mega-brand, Coca-Cola, enlisted the firm to make a celebratory float for its 130th anniversary. On the wrapper a Coke bottle sports a King of Pops crown. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702812-what-rise-vertically-integrated-lolly-maker-says-about-urban-trends-crop/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Political parties + +Defining realignment + +The anger and fickleness of voters are forcing change. But in which direction? + +Jul 30th 2016 | From the print edition + +BIG structural changes to political parties happen only once in a generation. Academics reckon that in 219 years America has seen just six different party systems, each attracting a distinct coalition of voters. Donald Trump’s idea of turning the Republican Party, long the ally of big business, into a “workers’ party” may yet force a seventh. To track the trend, The Economist has melted down the American electorate into their policy choices and priorities alone, freeing them from party labels to see what kind of winning policy platforms might emerge in future. + +First-past-the-post voting like America’s tends inevitably to yield two-party systems, which usually require awkward coalitions. What determines which interest groups coalesce? In 1929 Harold Hotelling, an economist, wrote that a rational voter would choose a candidate whose views showed most “proximity” to his own. In turn, a political party serious about winning should take the positions most likely to convince the voter in the electorate’s ideological middle. Since both parties needed to attract most votes from a broad electorate, this “median-voter theorem” would push them both towards the centre. Hotelling observed that American candidates tended to “pussyfoot” for just that reason, giving ambiguous answers to policy questions for “fear of losing votes”. + +Hotelling’s logic remains airtight today. If a hypothetical party system is to remain stable, it will have to give both sides roughly equal opportunities to cobble together 50.1% of the electorate. To identify the most viable potential coalitions, we used an online poll of over 7,000 registered voters conducted by YouGov from May to July, which asked respondents both to express their preferences on 12 different issues (see table) and say how much they cared. By multiplying each position by its importance and adding them up for every voter, we could tell not just which present party they might support, but also which way they would lean in more than 300,000 hypothetical alternative systems. + + + +Leftward shifts + +Starting with the candidates’ actual platforms in the 2016 race, this approach shows that, free of party loyalties, 52% of registered voters are closer to Hillary Clinton’s basket of policies than to Mr Trump’s. That suggests a win for the Democrats in November. And, surprisingly, Mrs Clinton has room to shift further leftward. Around 9% of voters hold views currently closer to Mr Trump’s, primarily because of their support for building a border wall with Mexico, but would wind up on Mrs Clinton’s side if she embraced a $15 federal minimum wage and fully-taxpayer-funded college tuition. In that case, the Democrats’ share of the vote would increase to 54%. + +However, Mrs Clinton should not stray too far in this direction. The positions of her left-wing rival, Bernie Sanders—raising taxes without cutting spending, reluctance to wage war on terrorism—are anathema to much of the electorate. Forced to choose between Mr Trump’s positions and Mr Sanders’s, 57% would vote for Mr Trump. + +Nonetheless, the poll still indicates that Hotelling’s coveted median voter sits to the left of the midpoint between the presidential candidates. Mr Trump’s opposition to American military intervention in Syria does cost him votes, particularly against a hawkish Democrat like Mrs Clinton. But on almost every other topic save immigration, he would have to slide left to cut into his rival’s lead. Given Mrs Clinton’s positions, he could conceivably win 70% of the non-college-educated vote if he backed a liberal wish-list diametrically opposed to his current platform, including legal abortion and gun control. (If anyone could pull off such a flip-flop, it would be him.) + +Although candidates are usually rewarded for taking the centre ground, there is no simple rule of thumb for winning over the median voter. Views on many topics tend to be correlated: for example, 65% of people who want gay marriage banned also want more restrictions on abortion. This forces politicians to adopt these paired opinions as a package, even if one is far more popular than the other. So parties continually attract and repel votes as they shift their platforms. The more eclectic the average voter’s mix of positions, the more unstable the party system becomes. + +On pure policy grounds, American voters hold far more heterogeneous views than their perfectly-polarised representatives in Congress. Just 12% have down-the-line liberal or conservative positions on economic and social questions. And immigration, which has split both parties, is an unusually potent issue. Not only do 53% of respondents expressing an opinion support building a wall on the Mexican border; 94% of those said doing so was “important” or “very important”. + +As Hotelling would predict, the most conceptually consistent (and therefore ideologically extreme) platforms are not politically viable. A mercantilist party that favoured moral and fiscal conservatism and intervention abroad would collect less than 30% of the vote against Mrs Clinton or Mr Trump. And a pure libertarian opposing all restrictions on guns, abortion, immigration or free trade would pick up a mere 26% of the vote against Mrs Clinton and 34% versus Mr Trump. + +The YouGov survey suggests, however, that a winning coalition could be built around an anti-globalisation message. The candidate would have to take centrist positions on abortion, gay marriage and gun control, and alienate business by backing popular but costly government benefits like national health insurance. When combined with supporting a border wall, opposing the North American Free Trade Agreement and ignoring climate change, this basket would secure 51.2% of the vote against a more socially liberal platform backing NAFTA and immigration: close enough to maintain a stable two-party system across election cycles. + + + +Hotelling’s theory of proximity accurately predicts how people will actually vote. The YouGov figures show that a robust 84% of respondents already support the party closer to their beliefs. The remaining 16%, our model suggests, often cling to a party for reasons other than policy, such as party identity. In 2004 Thomas Frank, a journalist, argued that America’s white working class acts against its own economic interests by backing the Republicans on cultural grounds; and our analysis proves that an additional 2.5% of the white non-college-educated vote would go over to the Democrats if policy choices alone mattered. However, this effect is more than offset by a similar number of people who support the Democrats despite holding Republican-friendly views. These are disproportionately less-educated non-whites, many of whom associate Republicans with hostility to immigrants. As Marco Rubio, a Republican senator, put it in 2012 regarding Hispanics: “It’s really hard to get people to listen to you…if they think you want to deport their grandmother.” + +Two caveats are necessary. Our analysis shows that far more Americans hold moderate views than extreme ones. But this may be because they are uncertain where they stand, and are waiting to be persuaded. For example, 45% are unsure whether NAFTA has helped or harmed economic growth. A study based, like ours, on Hotelling’s policy-preference-maximising automatons, captures this confusion. + +Perhaps most important, our analysis ignores the quality of the candidates themselves. Just 26% of the YouGov respondents said that agreeing with a candidate’s positions was the most important factor guiding their vote. Personality, or lack of it, accounts for the rest. Great campaigners can and do sway voters who may disagree with some of their views, while lacklustre ones can disenchant even their natural supporters. And then there are the downright ornery voters—as many as 10-15% of respondents in our survey—who refuse to be pigeonholed at all. As Robert Kennedy observed in 1964, “One-fifth of the people are against everything all the time.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702805-anger-and-fickleness-voters-are-forcing-change-which-direction-defining/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Able Kaine + +Hillary Clinton’s choice of running-mate suggests she hopes to heal the partisan divide + +Jul 30th 2016 | From the print edition + + + +TIM KAINE, the senator from Virginia chosen by Hillary Clinton as her running-mate, is endearingly bad at hiding how excited he is by his new gig. The morning of July 27th found the rumpled ex-missionary and harmonica aficionado in Philadelphia, preparing for a televised address that evening to the Democratic National Convention. To limber up, Mr Kaine dropped in on the Virginia state delegation as they breakfasted at their hotel. He described the telephone call in which he was invited to join the Democratic presidential ticket. Hillary Clinton called “at 7.32pm”, he told them, before pausing, abashed by the precision of the memory. “Now, who’s counting?” he blushed. “I mean just 7.32-ish.” Mr Kaine is good at folksy self-effacement. + +Vice-presidential picks are chosen less to sway many votes in their own right than to complement the top of the ticket. That makes them revealing—their strengths are a guide to the qualities that presidential candidates fear they lack. Mr Kaine is affable. He is detectably a normal human being, despite decades in politics. He first ran for the city council in Richmond, Virginia’s mostly black capital, then as mayor, before serving as Virginia’s governor and senator. He sent his children to Richmond public schools. In this he followed a family tradition—his wife, Anne, was also sent to Richmond schools by her father, a Republican governor of Virginia with an unusually progressive record on civil rights. There are Republican senators who like Mr Kaine, and who have admitted to this in public since his elevation. + +In a rancorous election season, Mr Kaine sends an important signal about how Mrs Clinton thinks she may win. Political campaigns can be boiled down to two tasks, one nobler than the other. The first involves maximising turnout on voting day, too often by pandering and stoking the passions of core supporters. The second task is persuasion. At its finest, this involves crafting arguments that lure voters to cross party lines. + +In choosing Mr Kaine, Hillary Clinton is placing at least a partial bet on persuasion. Mr Trump has gone the other way. His Republican National Convention in Cleveland was a four-day gamble on turnout, with angry, dystopian speeches aimed at mostly white voters who believe their country has been stolen from them. In his statewide races Mr Kaine has done well with black voters and with the state’s growing Hispanic population. His early work as a civil-rights lawyer, fighting racist landlords, helped, as does his fluent Spanish, picked up as a Catholic missionary in Honduras in a year out from Harvard Law School. But some of his most impressive vote tallies were run up in suburban counties with names like Loudoun and Fairfax—places filled with college-educated whites in leafy cul-de-sacs, where folk like taxes low and yearn to feel safe from terrorism, but are repelled by angry culture wars and anti-government slogans. + +Mr Kaine is not exactly a centrist. Doctrinaire conservatives cannot forgive his support for legal abortion (though personally opposed to the practice, he says that such decisions fall in the sphere of personal morality). Virginia Republicans have attacked his stance against the death penalty, though he fought back by explaining that his beliefs flowed from his Catholic faith—and as governor he oversaw 11 executions, saying that he bowed to the law. His is a social-justice strain of Catholicism, with a whiff of Latin America and of Pope Francis to it. He was an outspoken advocate for immigrants, an early supporter of gay rights, and pushed for gun controls after a shooting at Virginia Tech University in 2007 when a gunman killed 32 people. + +Yet unlike some politicians who hold similar views, he knows how to present progressive goals in a patriotic light. In his first campaign event as Mrs Clinton’s running-mate in Miami on July 23rd, he said immigration was a vote of confidence in America, asking naturalised citizens to raise their hands and telling them: “Thank you for choosing us.” Addressing those Virginia delegates in Philadelphia, he praised Mrs Clinton for her plans to tackle economic inequality, the great cause that animates the Democratic Party’s loud populist wing. But rather than denouncing the economy as “rigged”, in the manner of Senator Bernie Sanders, Mr Kaine said his boss has “the right ideas about how to grow the economy and make sure that we grow it for everybody and not just a few”. That focus on growth as a motor of social justice puts him in the Bill Clinton tradition of Democratic politics. + +The Truman Show, revisited + +In foreign policy Mr Kaine is an admirer of Harry Truman, the Democratic president whose doctrine established America as a cold-war defender of democracy against Soviet dictatorship. He angers the left by backing free trade, though he has had to join Mrs Clinton in saying the next big trade pact, the Trans-Pacific Partnership, is too flawed to support. In his convention speech he attacked the Republican nominee from the right on national security, noting that his son, Nat, is a marine who this month deployed to Europe “to defend the very NATO allies that Donald Trump now says he would abandon”. + +The new running-mate talked of growing up in Kansas City, and the small ironworking business that his father ran. He noted that his father-in-law remains a Republican in his 90s, but feels abandoned by a party that could nominate Mr Trump. Directly addressing any Republicans in despair at what has become of their “party of Lincoln”, Mr Kaine told them: “We’ve got a home for you right here in the Democratic Party.” + +This is only part of the Kaine mission: expect to see him deployed to drive up Democratic turnout, too. He is a master of delivering partisan blows with an aw-shucks smile. But Mr Trump’s gruesome demagoguery has left millions of Republicans bereft. Genial Mr Kaine represents a pitch by Mrs Clinton for some of those votes. If he bridges the partisan divide, even a little, some good may come out of the Trump era. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21702804-hillary-clintons-choice-running-mate-suggests-she-hopes-heal-partisan-divide-able/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Brazil’s Olympics: Not yet medal contenders + +Bello: Cash in bin liners, please + + + + + +Articles Sections Next + +Brazil’s Olympics + +Not yet medal contenders + +The Olympic city has been in decline since the 1960s. The games will not change its direction + +Jul 30th 2016 | RIO DE JANEIRO | From the print edition + + + +WHEN Rio de Janeiro won the right almost seven years ago to host the Olympic games in 2016, the cidade maravilhosa (wonderful city) seemed to deserve its nickname. Violence, as much part of Rio’s image as its beaches, had been falling for more than a decade (see chart). Rio’s economy, and that of the surrounding state (also called Rio de Janeiro), was booming, thanks to the world’s demand for the oil that lies off its shores. The games would show off a prosperous, self-confident city, its organisers claimed. As important, if Rio could show that it can plan as well as it parties, it would bury the idea that “Brazil is not a serious country,” as a Brazilian diplomat put it in the 1960s. “Those who give us this chance will not regret it,” promised Luis Inácio Lula da Silva, the president who brought the games to Brazil. + + + +With days to go before the opening ceremony on August 5th, Rio’s self-confidence is looking shaky. On July 24th the Australian team stormed out of the Olympic village in the district of Barra da Tijuca, complaining of clogged toilets and loose wires. But those are trivial glitches compared with the other problems plaguing the host city. Guanabara Bay, where Olympic sailors are to compete, remains in parts an open sewer. An outbreak last year of the mosquito-borne Zika virus, which causes birth defects, has scared away some sportsmen. Male golfers, in particular, are shunning Rio as if Ipanema beach were a giant sand trap. Policemen, whose salaries were delayed by a bankrupt state government, have greeted visitors at the international airport with signs that read (in English) “welcome to hell”. A new metro line and bus corridor, the games’ main legacy to cariocas, as the city’s residents are called, are behind schedule. + +These local difficulties are compounded by national crises. Brazil is suffering from a severe recession. Its president, Dilma Rousseff, is being impeached on charges that she manipulated government accounts; an interim government, led by Michel Temer, is in charge. Rio is one of the centres of national dysfunction. Petrobras, the state-controlled oil firm at the centre of a multibillion dollar scandal that fuelled demands for Ms Rousseff’s impeachment, has its headquarters there. The city’s policemen are no exception to the violent Brazilian norm: they killed 40 people in May alone. Its reputation as an urban Dorian Gray—gorgeous to behold but infected by corruption—is not entirely undeserved. + +Rio may yet confound doubters. It hosts a huge Carnival every year without plunging into chaos. The sporting arenas are ready. Rio’s cost overruns for building them and for other Olympic spending are smaller than average for host cities, and most of the money was from private sources. The federal government has given the state 2.9 billion reais ($890m) in emergency aid in part to pay policemen’s salaries. It has sent 27,000 soldiers and national guards to fight crime and prevent terrorism (on July 21st police said they had foiled a plot by home-grown jihadists). The bus links are late but working; organisers promise that the metro will be running by July 30th. After quick repairs to their quarters, the displaced Australians returned. + +They and the 500,000 sports fans expected to attend the games will leave the city once they are over. Rio’s 6.5m inhabitants will remain. Whether the Olympics dazzle or disappoint, cariocas will find that they have done little to arrest the city’s long decline. + +Beauty is not enough + +Whether they live on Rio’s glitzy seafront, in one of the city’s 1,000-odd favelas (shantytowns) or in dowdy dormitory districts, the mood is grim. A law student who came three years ago, intending to stay after her studies, now wants to leave: she is fed up with cuts to the budget of her state university and strikes that have forced it to cancel classes. A group of businessmen tried to improve the state’s governance in 2008 by paying for a renowned consultant to offer management advice to the administration. A few years later the bureaucrats slipped back into clientelistic habits. Carioca friends of José Padilha, a film director who lives in Los Angeles, have been telling him to stay there. According to a poll conducted last September, 56% of cariocas want to leave the city, up from 27% in 2011. + +No tourist will fail to notice the jarring juxtapositions of wealth and poverty, a consequence of Rio’s exuberant topography as well as its poor governance. Residents of lush Gávea can expect to live past 80, 13 years longer than their neighbours in Rocinha, a large favela next door. Crime rates vary wildly. Last year 133 people died violently in Santa Cruz, a deceptively tranquil district at Rio’s western tip, where broccoli and books are sold side by side in a shabby central market. In the three beachfront bairros of Zona Sul (the southern zone), whose joint population is roughly equal to Santa Cruz’s, just 11 did. A priority in middle-class Copacabana, where a quarter of residents are 65 or older, is fixing uneven pavements, says Fernando Gabeira, a writer who was an unsuccessful candidate for mayor in 2008. In Complexo do Alemão, a large northern favela with a young population, it is better schools and jobs. Everyone worries about crime. + +The vast majority of cariocas live neither along beachfront avenues nor the alleyways of ramshackle favelas. Zona Sul is home to 11% of the city’s inhabitants. Favelas account for 3.7% of the city’s area and house 22% of its people. Most live in charmless low-rise apartment blocks that arch across Rio’s north and west. And then there is Barra da Tijuca, a fast-growing mini-Miami of car dealerships, marshland and identikit condominiums with names like “Sunflower” and “Villaggio Felicitá”. + +Gently down the sewer + +Tourism and other services provide most jobs: a quarter of young people work in bars and restaurants. Many have long commutes. Emanuel, a jovial 60-year-old with a missing front tooth, grumbles that it takes him an hour-and-a-half to commute to Leblon, where he sells biscuits and iced tea along the beachfront, from Jacarepaguá, 24km (14 miles) to the west. Some 2m workers stream into Rio daily from its underdeveloped periphery. + +The roots of Rio’s discontent go back at least to 1960, when Brazil’s federal government moved to Brasília, the purpose-built capital. Rio had lost industrial leadership to São Paulo, which had more space and more immigrants, 40 years before. The loss of its capital-city status was a blow from which it has yet to recover. The idea of moving the seat of government to spur development away from the coastline is an old one, set forth in an early constitution enacted in 1891. Few Brazilians took it seriously until Juscelino Kubitschek, elected president in 1956, pushed through a law to make it happen. Even after civil servants began moving to the modernist capital, cariocas thought important ministries would stay put. Who, they wondered, would swap the cidade maravilhosa for a barren savannah in the middle of nowhere? Rio thrived briefly as a city-state, called Guanabara, but was soon merged into the poorer surrounding state of Rio de Janeiro. + +By the 1980s nearly all federal agencies had disappeared. The financial sector followed. Brazil’s central bank stopped using the city as the main centre for trading government securities. Bankers were frightened away by a spate of kidnappings for ransom in the 1980s. Rio’s stock exchange, founded 180 years earlier, was taken over piecemeal by São Paulo’s exchanges in the 2000s. Brazil’s state development bank still has its headquarters in Rio and a few asset managers moved in. But the city’s importance for Brazil’s economy has progressively diminished. + +Apart from the annual bacchanal of Carnival, Rio has found no vocation to replace banking and bureaucracy. The discovery of huge underwater oil deposits in 2007 seemed to offer the city (and the state) an alternative source of jobs and growth. But the industry has been devastated by a combination of low oil prices and the Petrobras scandal. The oil boom reversed the relative decline of Rio’s economy, but perhaps only briefly. The city is home to a clutch of creative enterprises and universities: Rede Globo, Brazil’s biggest media group, and research units of Microsoft and GE. But these are no more than a kernel for a more dynamic economy. + +Culture has not replaced commerce. Bossa nova was conceived on Rio’s beaches in the 1950s, but since then the city has become stifling, says Caetano Veloso, one of Brazil’s most famous musicians, who lives in the city. Tropicalismo, a blend of Brazilian and pop music that Mr Veloso helped pioneer, was born in São Paulo. “Rio was too blasé,” he says. Blessed with the natural riches of oil and scenery, it has not striven to create its own wealth. Cariocas do not plant, they “just pluck”, observes Ruy Castro, a chronicler of the city. + +Olympic hopefuls + +Politics have done little to stir them from complacency. Rio’s status as the national capital stunted its institutions. Presidents appointed the mayor; the senate could overturn his decisions. Mayors offered jobs to senators’ sons, encouraging habits of patronage that Rio has yet to break. The merger between Rio de Janeiro and Guanabara, imposed by military dictators, brought the state’s clientelistic culture to the city. The state especially has been profligate, while spending too little on the services and infrastructure needed to spur investment and improve welfare. + +In June the acting governor of Rio state, Francisco Dornelles, declared that its finances constituted a “public calamity”, a formality that allowed the federal government to send aid during the Olympics. The immediate cause was a drop in taxes and royalties from oil, but years of fiscal mismanagement had paved the way. + +Cariocas hoped that the games might be a catalyst for better public services and more jobs. The city’s government has partly met those expectations. The mayor, Eduardo Paes, nearly trebled spending on health and education. He hired 43,000 teachers and 21,000 health workers, 80% of whom work in the city’s impoverished north and west. Now 4.4m people have access to family doctors, up from 329,000 when Mr Paes took office in 2009. The proportion of cariocas served by mass transit rose from 18% to 63% during his tenure. City hall should be making these improvements anyway, the mayor admits, but the Olympics provided a “pretext” to push them through quickly. Games-related works boosted the local economy while Brazil was in recession. Cariocas’ incomes rose even as they fell in Brazil as a whole, according to a study by the Fundação Getulio Vargas, a university. + + + +Daily chart: Crime and the Olympics + +The state government meanwhile tried to curb violent crime. Starting in 2008 it sent heavily armed troops into 38 favelas to evict drug gangs, then set up “pacification police units” (UPPs) to keep the peace. It worked. Violent crime in Rio halved between 2009 and 2012. + +But police commanders created too many UPPs too quickly, overstretching the force. In training they continued to emphasise the skills required to hold territory, neglecting those needed to forge strong relations with the community. “A year of this and you could turn a Benedictine monk into a warrior,” laments Íbis Pereira, a former police commander now at Viva Rio, an NGO. In Complexo do Alemão, shootouts between gangsters and trigger-happy police have become frequent, says Luisa Cabral, a social worker in the neighbourhood. After its decline, the number of violent deaths has crept back up across the city this year. Ms Cabral now thinks the UPPs should leave the favelas, letting the drug traffickers return. After Mr Paes accused the state of doing a “horrible” job on security in an interview on CNN, 20,000 Americans returned their Olympic tickets. + +A successful games could lift Rio’s downbeat mood. That will not be enough to make the city an economic dynamo. The spectacular scenery makes people want to come, but it will take more enlightened crime-fighting, better fiscal management and improved public services to make them want to stay. Until its leaders provide that, Rio will not become a great city, merely a great setting for one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21702811-olympic-city-has-been-decline-1960s-games-will-not-change-its/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +Cash in bin liners, please + +The Argentine way of corruption, and of fighting it + +Jul 30th 2016 | From the print edition + + + +IN THE early hours of June 14th a suspicious neighbour spotted a man armed with an automatic rifle throwing bulging black bin liners over a convent wall in General Rodríguez, a suburb on the western fringes of Buenos Aires. The man then leapt over the convent’s big wooden gateway. Fearing for the safety of the three elderly nuns who lived there, the neighbour called the police. Two patrol cars turned up. The officers say they refused the man’s attempt to bribe them. + +The bin liners contained 90 kilos (200 pounds) of banknotes: $9m, plus €153,000 ($168,000) and smaller amounts in other currencies. The man was José López, who for 12 years was secretary of public works in the governments of Cristina Fernández de Kirchner and her late husband and predecessor, Néstor Kirchner. The antics of Mr López, who has been charged with illicit enrichment, have provided a defining retrospective image of the Kirchner era in Argentina. + +As president Ms Fernández adopted a regal manner, never admitting mistakes and browbeating anyone, from businessmen to media owners and judges, who got in her way. After the narrow victory in November’s presidential election of Mauricio Macri, a centre-right opponent of her political heir, Daniel Scioli, there was talk that she would remain the dominant power in Argentina. Yet out of office, Ms Fernández has quickly been exposed as a paper tigress. Much of her Peronist movement has deserted her. And now she faces a real threat of jail. + +Three judges are investigating her or her associates. One case involves her government’s sale of dollar futures last year to prop up the peso before the election, which cost the central bank $4 billion when Mr Macri’s inevitable devaluation followed. More personally damaging are two judicial probes into two hotel companies she and her family own in Santa Cruz, a province in Patagonia. Scores of rooms were block-booked (but few occupied) for months on end by Aerolíneas Argentinas, an airline which she renationalised, and by companies controlled by Lázaro Báez, a former bank clerk, and by another close business associate of the Kirchners. Mr Báez, who is in jail on suspicion of money-laundering, received the lion’s share of public-works contracts from Néstor Kirchner when he was governor of Santa Cruz and, later, many federal contracts. + +One judge has blocked Ms Fernández’s bank accounts and credit cards; the other has found that Florencia Kirchner, her 26-year-old daughter, had $4.7m in several safe-deposit boxes and $1m in a bank account. She says this is her inheritance from her father. The Kirchner family’s declared wealth increased 17-fold during their dozen years in power to 119m pesos ($8m). They say that came from hotels and the revaluation of land, which they bought cheaply from local authorities. + +Ms Fernández’s response to being investigated has been to embrace victimhood, blaming “judicial persecution”. Take on powerful interests, such as farmers and multinational companies, and “it’s clear that one of the risks is prison,” she told foreign reporters, whom she summoned to her retreat in El Calafate in Santa Cruz on July 23rd. + +Whatever happens to the former president, several things stand out from these investigations. The first is how ham-fisted the alleged corruption seems. Mr López’s preference for crisp notes was shared by others; in 2013 two sidekicks of Mr Báez told an interviewer they had sent €55m in cash to accounts in tax havens (they later withdrew this claim). Another is the brazen sense of impunity. Much of the suspected wrongdoing was known about for years, thanks to investigative journalists. Judges did nothing about it. + +“In Argentina while you are in power you are untouchable,” says Roberto Saba, a law professor at the University of Palermo in Buenos Aires. “The day you leave” official watchdogs and judges will investigate. That knowledge may have been behind the Kirchners’ quest for permanent power, by alternating in office (a scheme thwarted by Néstor’s death in 2010), by using the state to build a large clientelistic political base and by subordinating economic management to popularity. + +Although the scale may have been greater under the Kirchners, padding public-works contracts has been going on for decades in Argentina. As in Brazil and Mexico, it has been a means to finance politics while, in some cases, getting rich. The Argentine clean-up is not comparable to that in Brazil, where judges are pursuing those who are now in power. Will that change? Mr Macri has praised the judiciary for “starting to work in an independent way” and said he hopes this will continue. That will require deeper changes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21702810-argentine-way-corruption-and-fighting-it-cash-bin-liners-please/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Defending South Korea: Of missiles and melons + +Politics in Indonesia: Look who’s back + +Murder in Japan: Still safe + +Terror in Afghanistan: Unwelcome guests + +Young aborigines: Australia’s Abu Ghraib + +Politics in Taiwan: A series of unfortunate events + + + + + +Articles Sections Next + +Defending South Korea + +Of missiles and melons + +South Koreans fear their country’s new missile-defence system + +Jul 30th 2016 | SEONGJU | From the print edition + + + +NEAR the Seongju county office, Lee Soo-in mans a makeshift stand for citizens wanting to renounce their affiliation to the ruling Saenuri party. Over 800 have signed up in a week. Mr Lee, born in this rural town of 14,000, is stunned: conservatives in North Gyeongsang, a south-eastern province, are normally staunch supporters of Park Geun-hye, South Korea’s president. But “now we feel betrayed,” says Mr Lee. + +At issue is the planned installation, on a hilltop a few kilometres away, of an American-funded missile-defence battery called THAAD (Terminal High-Altitude Air Defence). Fearful of upsetting China, South Korea had long dithered over whether to add the sophisticated system—which could shoot down incoming North Korean ballistic missiles above the atmosphere—to its crop of Patriot batteries, which destroy missiles at lower altitudes. But after a suite of North Korean bomb and missile tests it is no longer delaying. Chinese opposition to the news, on July 8th, that a THAAD battery would be set up in South Korea within 18 months has been predictably shrill. It says that the system’s powerful radar might be used to snoop on China. + +Yet it is the intensity of protests at home that has wrong-footed Ms Park’s administration. Misinformation about the battery has proliferated, in part because of the secrecy surrounding it. Residents in Seongju and nearby appear to fear irradiation from THAAD’s electromagnetic waves more than the (real) threat of nukes from North Korea—which has lately promised, with signature bombast, to turn Seongju into “a sea of fire” and “a pile of ash”. + +The town is festooned with protest banners: “Opposed to THAAD with our lives” and “We must not pass the waves on to our young”. Residents turn out nightly for a two-hour vigil at the county office, holding candles (supplied by a local Buddhist temple) and sporting anti-THAAD pins (from the church). Rumour has it that no one wants to marry a Seongju bride. Farmers in the area grow melons, which they fear might somehow be contaminated. + + + +South Korea has tried to quell panic by measuring what waves are emitted from its existing anti-missile systems, as well as from a THAAD battery at an American base in Guam. The military is trying to gain locals’ trust. On July 15th, two days after announcing that Seongju would host the battery, the prime minister and minister of defence visited to explain their decision (the mayor, Kim Hang-gon, says he first heard about it on television). Protesters pelted them with eggs and water bottles. Local officials, including Mr Kim, shaved their heads in protest and wrote petitions in their own blood. + +Such zeal is common in South Korea’s young, raucous democracy. In the past decade civic groups have banded together with farmers and villagers to resist nuclear-power plants, naval bases and American military installations. These went ahead, but not without delays, ugly evictions and compensation. Katharine Moon of the Brookings Institution, a think-tank in Washington, DC, says state heavy-handedness has repeatedly irked local communities, particularly when it suggests the bilateral military alliance takes precedence over their livelihoods and self-governance. + +Nationally, support for THAAD hovers above 50%. And America enjoys far higher approval ratings today in South Korea—84%, according to the Pew Research Centre, another think-tank—than it did a decade ago. Though small leftist outfits that resent its 28,000 troops and champion engagement with North Korea have rallied against THAAD in the capital, Seoul, they have managed to mobilise only a few hundred people. For now Seongju’s conservative protesters scoff at joining forces. + + + +In graphics: What North and South Korea would gain if they were reunified + +That suggests that there is still a chance for Ms Park to cool tempers in a region that is so important to her party. Yet her early rebuke to protesters for being “divisive” was taken as “an indirect declaration of war” on Seongju’s people by one South Korean daily. A group of elderly local women—anti-THAAD badges tacked to their flowery pink pyjamas—recently pulled an enormous portrait of Ms Park from the wall of their community centre, which stands not far from where some of her ancestors are buried. In the election in 2012, 86% in Seongju voted for her; since July 15th her approval rating in North Gyeongsang has tumbled from 50% to 41%. + +Ms Park’s presidency has been overshadowed by botched responses to a deadly ferry accident and a national health scare over an outbreak of Middle East Respiratory Syndrome. Her party is still reeling from the loss of its majority in legislative elections in April—the first time for a ruling party in 16 years. Two minor opposition parties are drafting a resolution demanding that THAAD require parliamentary ratification. In a survey of South Koreans by Realmeter, a pollster, only a third agreed that deployment should not require MPs’ approval. + +Such churn may delay deployment. South Korea and America plan to have the battery set up by late 2017—which, neatly, is when South Koreans go to the polls to elect their next (single-term) president. Choi Jong-kun of Yonsei University, in Seoul, thinks that presidential hopefuls will build election platforms on the promise of postponement. Perhaps by then some of the fervour will have cooled. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21702800-south-koreans-fear-their-countrys-new-missile-defence-system-missiles-and-melons/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Politics in Indonesia + +Look who’s back + +A sweeping cabinet reshuffle installs an unloved former general + +Jul 30th 2016 | JAKARTA | From the print edition + +Surprise! + +JOKO WIDODO, Indonesia’s president, universally known as Jokowi, reshuffled his cabinet on July 27th for the second time since taking office in late 2014. Although observers had expected only minor fiddling, he made big changes. + +Most contentious is the appointment of Wiranto (who like many Indonesians uses only one name) as chief security minister. Mr Wiranto (pictured) served as defence minister and head of the armed forces under Suharto, Indonesia’s late strongman, and afterwards during the independence referendum in East Timor (now Timor-Leste) in 1999. Between 1,000 and 2,000 civilians are thought to have lost their lives before and after the vote. Many more were forced to flee their homes. In 2003 a UN-backed court in Timor-Leste indicted Mr Wiranto for crimes against humanity. He has never appeared before it to answer the charges. + +Human-rights groups reacted with dismay. They were already decrying Indonesia’s plans to execute by firing squad 14 people, most of them foreigners convicted of drug offences. Keith Loveard, a political-risk consultant in Jakarta, thinks that Mr Wiranto’s appointment may be a “wily” balancing act aimed at setting meddlesome former generals in the cabinet against one another. If so it could eventually allow Jokowi more room to manoeuvre. + +Another notable change is the return of Sri Mulyani Indrawati to the post of finance minister. Ms Mulyani, who has been a director at the World Bank since resigning from the government of Indonesia’s previous president, was praised for her management of the economy in 2005-10. She returns at a time when slumping commodity prices are weighing down Indonesia’s growth. Her first priority will be a tax-amnesty scheme intended to lift dwindling revenues and prevent the budget deficit from breaching a legal limit of 3% of GDP. + + + +Indonesia in graphics: Tiger, tiger, almost bright + +Though the currency and stockmarket rallied on news of her return, Ms Mulyani will have to work alongside ministers who spoke against her during investigations into a controversial bank bail-out during the financial crisis of 2008-09. These include the vice president, Jusuf Kalla. + +After a shaky start to his presidency, Jokowi—Indonesia’s first leader from outside the political or military elite—is looking more confident. In part this reflects a rapprochement with Golkar, the second-largest party in parliament. It backed a rival candidate for the presidency but has since changed its chairman and pledged to support Jokowi, strengthening him in the legislature. He rewarded the party with its first cabinet post, which went to Airlangga Hartarto, who takes the industry ministry, a portfolio his father held before him under Suharto. + +No one can accuse Jokowi of dithering after so sweeping a reshuffle. Yet Indonesia’s international standing, already shaken by its policy of executing drug traffickers, will surely be tarnished by the return of Mr Wiranto to one of the most powerful positions in government. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21702801-sweeping-cabinet-reshuffle-installs-unloved-former-general-look-whos-back/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Murder in Japan + +Still safe + +A massacre at a care home risks provoking an overreaction + +Jul 30th 2016 | TOKYO | From the print edition + + + +IN A world tormented by violence, Japan is remarkably safe. Muggings are rare and the murder rate low. Last year police recorded just a single gun death in a country of 126m people. + +The weapon of choice when someone runs amok is a knife. And so it was on July 26th when a young man broke into a care home for the disabled and carried out Japan’s worst mass murder in decades. The killer methodically stabbed over 40 people lying in their beds, killing 19. Most of the wounds were to his victims’ necks. + +Police have named the only suspect as Satoshi Uematsu, a 26-year-old former care worker at the home, who is now under arrest. Mr Uematsu had repeatedly threatened to kill disabled people. In February he wrote a letter explaining his goal of a world in which people unable to live unattended lives would be euthanised. It was hand-delivered to the residence of Japan’s Lower House speaker. + +The pathology of mass killers is consistent, whatever their nationality. Almost all are young and male, fuelled by aggression and testosterone. In many cases the tripwire for murderous sprees can be an event that unravels their lives—losing a job, for example. Only Mr Uematsu knows what was going through his mind when he drove to the care home in the dead of night, armed with a bag of knives. He had reportedly been fired—hardly surprising, given his attitude to the disabled—and may have nursed a grudge. A brief enforced spell in hospital earlier this year ended when he was released into the care of his family. + +His attack will almost certainly trigger more scrutiny of Japan’s post-bubble generation, the children who have come of age in leaner times. In June 2008 Tomohiro Kato murdered seven people by driving a truck into a crowd of shoppers in Tokyo and jumping out to slash pedestrians with a dagger. Mr Kato traced his failures in life in part to his vertiginous descent, aged 25, into the insecure world of temporary employment. But he added: “The crime I committed is all my responsibility.” + +Such horrific events have triggered tighter controls (daggers of 6cm or longer have been banned since Mr Kato’s killing spree), and handwringing that Japan is becoming as dangerous as everywhere else. The statistics say otherwise. Crime last year hit a post-war low. Japan still incarcerates fewer of its citizens than almost any other rich country. + +The main danger is overreaction. In 2001 a former school janitor murdered eight primary-school children in Osaka with a kitchen knife. Mamoru Takuma’s rampage is the reason why security guards stand outside some schools in Japan to this day—a sad reminder to millions of children that the world can be a scary place. + +Japan’s biggest newspaper, the Yomiuri Shimbun, said this week that care homes for the mentally ill might consider following suit. Security is weak and many facilities lack strong doors or gates. But whatever follows, it is hard to protect everyone from the actions of an unstable citizen who is determined to do harm. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21702806-massacre-care-home-risks-provoking-overreaction-still-safe/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Terror in Afghanistan + +Unwelcome guests + +Islamic State claims an appalling attack + +Jul 30th 2016 | KABUL | From the print edition + +More common than ever + +EVEN for a country as inured to war as Afghanistan, the strike on a crowd of peaceful protesters in Kabul on July 23rd was shocking. Bombs killed 81 people, perhaps the deadliest such attack in the capital since the civil war two decades ago. Islamic State (IS) claimed responsibility, saying it had sent two suicide-bombers to “a Shiite gathering” (the protesters were mainly Hazaras, a Shia minority). It hinted it would attack again should Afghan Shias keep travelling to Syria to fight on the side of its president, Bashar al-Assad. + +The Afghan government said it thought IS was indeed guilty. The group published photos of two men they said were the bombers, and details of the attack bear IS’s hallmarks. But as with massacres in Europe, it seems likely that the culprits were inspired by IS’s propaganda rather than following direct orders. Though the exact number of self-styled IS fighters in Afghanistan is disputed, their ranks remain small and are not obviously growing. The group is opposed by the Taliban (which looks askance at its Arab origins). A cluster of fighters in Nangarhar, an eastern province, looks fairly well contained. + +All this is no comfort to Afghanistan’s battered citizens. Civilian casualties have risen every year since the UN started counting in 2009 (during which time nearly 23,000 have been killed). On July 26th the government said it had cleared IS fighters from parts of Nangarhar. But it said something similar four months ago, and that did not prevent the bloodshed in the capital. + +The Hazaras commonly face discrimination; they had gathered to protest against the planned rerouting of a power line around the Hazara-dominated province of Bamiyan. Security forces were present, but focused mostly on keeping protesters away from the city centre; they blocked roads with shipping containers. + +Such marches are an increasingly popular way for young Afghans to exercise political rights; many now shun older politicians, whom they associate with tanks and guns. And for all its violence Afghanistan has managed to avoid the kind of sectarian bloodletting that afflicts neighbours such as Iraq. Afghans of all ethnicities are loudly decrying the attacks. That is some small solace, at least. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21702802-islamic-state-claims-appalling-attack-unwelcome-guests/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Young aborigines + +Australia’s Abu Ghraib + +Abuses at a juvenile prison prompt a national inquiry + +Jul 30th 2016 | SYDNEY | From the print edition + +Looks familiar + +WHEN he announced plans on July 25th to strengthen Australia’s anti-terrorism laws, Malcolm Turnbull, the prime minister, declared that his administration’s “primary duty” was to keep citizens safe. Within hours Australians were watching videos of government employees doing harm. Inmates of a youth detention centre at Darwin, in the Northern Territory, most of them indigenous children, were shown being thrown on floors, manacled, stunned with tear gas and subjected to other cruel treatment by prison guards. Dylan Voller, then aged 17, was left alone in a cell for two hours after guards had tied his arms, feet and head to a metal chair and put a hood over his face. + +The prison videos were shown on “Four Corners”, an Australian Broadcasting Corporation (ABC) programme. Mr Turnbull said he was “shocked and appalled” and announced a royal commission inquiry to “expose the culture that allowed it to occur and allowed it to remain unrevealed for so long”. + +In fact, lawyers and indigenous leaders have long called for government action to cut Australia’s high rate of aboriginal youth imprisonment. Mick Gooda, an aboriginal official at the Australian Human Rights Commission, calls it “one of the most challenging human-rights issues facing our country”. The Northern Territory, a federal dependency, has one of the worst records. Indigenous people are almost a third of the territory’s population, compared with 3% for Australia as a whole. But they account for 96% of youngsters aged between 10 and 17 in detention. Amnesty International reported last year that the number of indigenous young people in detention in the territory nearly doubled over the four years to 2014. + +Nationwide, Amnesty says young indigenous Australians are 26 times more likely to be in detention on an average night than their non-indigenous counterparts. It says governments have failed to respond to a “national crisis”. The exposure of the territory’s prison footage, recorded over the past six years, seems to bear this out. Lawyers and journalists had unsuccessfully sought the footage under freedom-of-information laws; whistle-blowers apparently enabled the ABC finally to reveal it. Yet Adam Giles, the territory’s chief minister, claimed he had not seen it before. He blamed a “culture of cover-up”. He could have added blame-shifting. Nigel Scullion, Mr Turnbull’s minister for indigenous affairs, “assumed” the territory government was handling the problem: “It did not pique my interest.” + + + +Daily chart: Australia struggles to bring equality to its indigenous population + +The high detention rates echo broader problems: indigenous Australians are poorer, unhealthier and do worse in school than their compatriots. Eight years ago, the federal and state governments set targets for “closing the gap” with the rest of the country. The scheme’s latest report says two crucial areas, jobs and life expectancy, are “not on track”. Some lawyers blame governments for spinning “law and order” as a quick fix although locking up young people often sets them back even more. + +Mr Voller was first detained when he was 11 years old. Now 18, he is in an adult prison and is due for release this year. Gillian Triggs, head of the human rights commission, says it is “not too extreme” to compare his treatment to that of prisoners in Abu Ghraib prison during the Iraq war. + +Some want the inquiry to cover youth detention centres around Australia. Mr Turnbull will keep it “focused” on those in the Northern Territory; he wants it to report early next year. It will need to be more productive than another inquiry carried out 25 years ago, into high death-in-custody rates among indigenous people. Since then, says Mr Gooda, “our people are more likely than ever to be incarcerated.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21702807-abuses-juvenile-prison-prompt-national-inquiry-australias-abu-ghraib/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Politics in Taiwan + +A series of unfortunate events + +The new president faces troubles at home and abroad + +Jul 30th 2016 | TAIPEI | From the print edition + + + +TAIWAN’S first female president has had a testing start. Within weeks of Tsai Ing-wen’s inauguration in May, China announced that it had cut off important channels of communication with her government, because she refuses to accept the idea of “one China”, with Taiwan as part of it. Ms Tsai has inherited a struggling economy, hampered by sluggish global demand, and has had to contend with a series of mini-crises, too: a flood crippled the capital’s main airport; flight attendants at the largest airline, China Airlines, went on strike to demand better working hours and benefits (stoppages are rare in Taiwan); the navy accidentally fired an anti-ship missile, killing a fisherman. + +At the annual congress of her Democratic Progressive Party (DPP) in mid-July, Ms Tsai displayed photographs of these events. “I would like everyone here to take a good look at these pictures, and this nation,” she said. “This is Taiwan under a DPP government.” Her words were meant to goad officials into action, not (presumably) to describe how she saw the coming four years of her term. But there is little doubt that her leadership risks being beset by problems at home and abroad that may eclipse those experienced by her predecessor, Ma Ying-jeou, of the Nationalist Party, or Kuomintang (KMT). + + + +Start with the economy. Having contracted for three consecutive quarters, it looks unlikely to grow by much more than 1% in 2016. Ms Tsai’s rocky relationship with China endangers cross-strait economic activity, a vital underpinning of growth during Mr Ma’s presidency. (Tourists from the mainland have become sparser since her victory.) It will not help that this year Taiwan’s working-age population has begun to shrink. + +Continued economic malaise could aggravate social tensions that led to big protests in 2014, ostensibly against free trade with China but fuelled just as much by widening inequality, stagnant wages and inflated house prices. Demonstrators gathered outside the DPP’s meeting this month, decrying a decision to cut seven national holidays; they accused the party, which likes to present itself as a supporter of workers’ rights, of siding with bosses. + +Abroad, Ms Tsai has found herself unexpectedly embroiled in a legal wrangle not just with China, but with the world at large. On July 12th an international tribunal in The Hague, in a ruling on a case lodged by the Philippines against China’s claims in the South China Sea, concluded that an island controlled by Taiwan and commonly known as Itu Aba was merely a rock. This meant Taiwan could not claim an “Exclusive Economic Zone” of up to 200 nautical miles around it. Ms Tsai said the tribunal had “seriously infringed” Taiwan’s territorial claims and that the ruling, which was based on the UN Convention on the Law of the Sea, did not bind Taiwan, which is not a UN member. + +Ms Tsai’s hands may have been tied by Mr Ma’s efforts, just before his term ended, to whip up public support for Taiwan’s bizarre claim to Itu Aba, which is 1,400km (870 miles) away. He paid a rare visit there and separately invited foreign media to go. Lin Chong-pin, a former deputy minister of defence, says that with all the troubles Ms Tsai faces, she cannot afford to arouse yet more controversy by retreating from Taiwan’s claims—a legacy of the days when the KMT ruled the mainland as well as Taiwan. + +While all this plays out, strife between Ms Tsai’s party and the KMT is intensifying. On July 25th the DPP-dominated legislature voted to establish a government commission empowered to retrieve assets stolen by political parties since 1945—a move clearly aimed at the KMT, which the ruling party accuses of having (long ago) pinched properties and other state-owned goodies that Japanese colonials gave back to Taiwan at the end of the second world war. But Ms Tsai must also handle rifts within her own party. At its recent congress some delegates said the DPP should drop its call for an independent Taiwan (which would please China), while others called for Taiwan’s official name, the Republic of China, to be abolished (which would infuriate it). + +Ms Tsai’s travails are mostly not of her making. But supporters fret that her government, despite enjoying a large majority, looks shy of unpopular reforms. Conservative picks in the cabinet have disappointed young adherents without much placating the opposition. “I am worried that we will try to please everybody and end up offending everyone,” says Parris Chang, a former senior DPP official. As the glow from a big election win fades, the president’s troubles may only increase. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21702808-new-president-faces-troubles-home-and-abroad-series-unfortunate-events/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Flood control: Disgorging + +Jiang Zemin: Jiang of Jiang Hall + +Online media: Stop the virtual presses + + + + + +Articles Sections Next + +Flood control + +Disgorging + +At the world’s largest dam, the operation is successful but the patient is dying + +Jul 30th 2016 | BEIJING | From the print edition + + + +OUTSIDE China, the monster Three Gorges dam across the Yangzi river is one of the most reviled engineering projects ever built. It is blamed for fouling the environment and causing great suffering among the 1.2m people who were relocated to make way for its reservoir. Inside China, officials insist that the dam is an “unsung hero” (in the recent words of the Yangzi’s chief of flood control). But controversy over the project occasionally flares. Amid the country’s worst flooding in years, it is doing so again. + +The Communist Party took enormous pride in the completion of the Three Gorges dam a decade ago; officials said it would play a vital role in taming a river which, when it flooded, often claimed hundreds or thousands of lives. Recently, however, censors have permitted a few ripples of complaint to disturb the glassy surface of state-run media. Online critics have asked whether the dam has failed to protect cities from flooding or whether it has caused earthquakes—and have not had their posts deleted. Granting permission to complain may seem surprising. But officials have reason to feel confident. The much-denounced dam seems to be passing its first big test as a flood barrier. + +This season has been one of the wettest in China’s recent history, with 150 towns and cities suffering record amounts of rain. The Yangzi basin has been particularly hard hit. In the week to July 6th Wuhan, a giant city downstream from the dam, received 560mm (22 inches) of rain, its biggest ever downpour (residents are pictured on a temporary bridge). + +China’s most recent experience of weather like this was in 1998, which was also the last time El Niño, a shift in the weather patterns of the western Pacific, had a big impact on the world’s weather. That summer the Yangzi burst its banks, causing more than 1,300 deaths. So far this year fewer than 200 people have died in the river’s basin. + +One big difference is that in 1998 the Three Gorges dam was still under construction (it went into full operation in 2012). By July 24th it had held back about 7.5 billion cubic metres (260 billion cubic feet) of potential floodwater, which would have compounded disasters caused by torrential rain in the middle and lower reaches: some of the heaviest rains have occurred downstream from the dam. It is too soon to declare victory over the floods. The rainy season is only halfway through and more downpours are expected in August. But so far, as a method of flood control, the dam has done more or less what it was supposed to. + + + +That doesn’t necessarily justify the project. One of the most important criticisms of it, by the late Huang Wanli, a hydrologist at Tsinghua University in Beijing, is that so much silt will eventually build up behind the dam that it will have to be taken down, leaving the Yangzi basin worse off than if the barrier had never been built. The region in which the dam stands is also one of the world’s most seismically active. Geologists worry that the weight of water in the sinuous reservoir, 600km (370 miles) from end to end, and the rise and fall of it, is causing more frequent tremors along the fault lines. Even small earthquakes can cause perilous landslides. + +Considered purely as a means of flood control, the dam is a mixed blessing. The silt-free water that gushes through it fails to replenish embankments downstream, thus weakening them as flood barriers (several have collapsed this year). Below the dam, the water now runs faster; it has scraped away and lowered the Yangzi’s bed by as much as 11 metres, according to Fan Xiao, a geologist working for Probe International, a Canadian NGO. As a result, nearby wetlands drain into the river, damaging their ability to act as sponges during a flood. + +In 2000 another academic at Tsinghua, Zhang Guangduo (who had done the environmental feasibility studies for the dam), told the man in charge of building the barrier that “perhaps you know that the flood-control capacity of the Three Gorges Project is smaller than declared by us,” according to leaked documents. Peter Bosshard of International Rivers, an environmental NGO, asks whether it was wise to spend so many billions on one project, rather than strengthen flood-protection measures all along the Yangzi. + +That point has been borne out by the many failures of local flood-control measures that have also occurred this year. In July parts of Wuhan’s metro system filled with water. This seems to be the result of bad management or corruption. According to People’s Daily, a party newspaper, only 4 billion yuan ($600m) of the 13 billion yuan allocated to improving drainage in the metro was actually spent. Local media say that one of the people responsible for drainage projects in the city is under arrest for taking huge bribes. + +Such problems have been exacerbated by urban expansion. Wuhan used to have more than 100 lakes, but it has lost two-thirds of them to construction sites since 1949. The city’s wetlands have been gobbled up, too. Those that remain are too small to store flood waters. It is a relief that far fewer people have died in floods along the Yangzi this year compared with 1998. But it is no indication of the basin’s broader environmental health. + +The Three Gorges dam has a historical parallel. In 1928 a tropical hurricane caused Lake Okeechobee, in central Florida, to flood, drowning 2,500 people in the southern half of the state. Determined that such a thing would never happen again, America’s Army Corps of Engineers over the next few decades drained much of the Everglades, which then covered much of the southern part of the state. No human disaster has recurred but the Everglades is a shadow of its former self and conservationists are battling to save it from destruction. The Yangzi is in danger not only from floods but from its flood controls. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21702774-worlds-largest-dam-operation-successful-patient-dying-disgorging/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Jiang Zemin + +Jiang of Jiang Hall + +It began as mockery of a former leader. Now it has a strange life of its own + +Jul 30th 2016 | BEIJING | From the print edition + +He has some great qualities has Toady + +ONE of the least understood players in Chinese politics is the former president, Jiang Zemin. On August 17th he will celebrate his 90th birthday, yet he is still thought to exert influence. Rumours swirl in Beijing about strife between him and the current president, Xi Jinping. The life sentence imposed this week on a former general who was once close to Mr Jiang, Guo Boxiong, will fuel such speculation: Mr Guo is the highest ranking military officer to be jailed for corruption since the Communists seized power in 1949. + +But there are some in China who are rooting for Mr Jiang, who led China from 1989 to 2002. They call themselves “toad-worshippers”. Mr Jiang (pictured, in the Dead Sea) has earned the nickname Toad thanks to his broad mouth, oversize glasses and generous waistline. At first it was meant as an insult. Now it is commonly used with affection. + +When he was president, Mr Jiang was widely regarded as a bit of a buffoon, given to occasional boorishness (eg, combing his hair in front of Spain’s king). More recently, however, he has acquired a cult status online. Fans share videos of him on social networks. In one he angrily accuses Hong Kong reporters in English of being “too simple, sometimes naive”—a phrase that entered common internet parlance in China. In another, Mr Jiang is seen breaking into song and reciting parts of the Gettysburg address (again, in heavily accented English). + +Some admire Mr Jiang’s willingness to extemporise, in contrast with Mr Xi’s scripted public persona. Mr Xi would not deign to express such poisonous American ideas as those of Abraham Lincoln that Mr Jiang enjoyed quoting. Last year students in Beijing conducted an online survey of toad-lovers. Among the 508 people polled, fondness for Mr Jiang was balanced by disapproval of Mr Xi. + +Censors have tried to purge toad-worship from the internet. But Mr Jiang’s fans are a dedicated lot. Some have taken to buying mobile-phone cases, flash drives or T-shirts adorned with the former president’s thick-rimmed glasses. One user on Zhihu, a question-and-answer forum, said she owed her job to toad-knowledge. When she was being interviewed for the post, she wrote, the questioner used one of Mr Jiang’s catchphrases and she responded with another. “That moment he realised we were on the same path.” Unfortunately for political fun-lovers, Mr Xi is on a different one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21702777-it-began-mockery-former-leader-now-it-has-strange-life-its-own-jiang-jiang-hall/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Online media + +Stop the virtual presses + +Officials try to fill a crack in the edifice of censorship + +Jul 30th 2016 | BEIJING | From the print edition + + + +WHEN reading about themselves or their country’s affairs of state, China’s leaders do not like to be surprised or contradicted. They have little to worry about in conventional media, over which—for the most part—the Communist Party exerts tight control. But matters are different online, where journalists sometimes have had better luck in dodging the party’s censors. They may not for long. + +On July 24th the Beijing municipal branch of the Cyberspace Administration of China ordered some of China’s biggest internet companies, including Sina, Sohu and Netease (which are listed on NASDAQ), to stop publishing independent reports on politically sensitive topics. Official media said some news portals would be fined. Such restrictions have been in place at least since 2005. But internet companies have often ignored them (albeit cautiously), hoping to attract more readers among the country’s 700m netizens. + +One violation that is believed to have angered the leadership was a typo this month in the headline of a story published by Tencent News. Instead of “Xi Jinping delivered an important speech”, it said that the president had “flipped out” when doing so—a difference of only one Chinese character. With such stories even headlines are supposed to be copied from official media. Tencent’s failure to do so properly was an egregious error in the party’s eyes: the report was not only about Mr Xi, but the party’s own birthday. + +Censors may also be worried that online media might contradict official reports on recent floods. They have clamped down hard on users of social media who have done so. In the northern city of Xingtai, three people have been punished for spreading “rumours” online about flash floods there that caused at least 34 deaths. One of those sanctioned was a 35-year-old man who was jailed for five days for claiming the flood was caused by an intentional discharge of water from reservoirs. + +Mr Xi is wary of any hint of journalistic daring. In February he visited the country’s three biggest party-controlled news organisations, and reminded them that their job was to serve the party. This month a prominent liberal journal, Yanhuang Chunqiu, closed after a purge of its top editors. On July 22nd a court in Beijing rejected an attempt by the former editors to challenge their removal. Among China’s journalists, despondency is spreading. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21702778-officials-try-fill-crack-edifice-censorship-stop-virtual-presses/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Zimbabwe’s president: Comrade Bob besieged + +South Africa’s local elections: Young rivals + +Nigeria’s struggling states: Running out of road + +The Arab League: A new low + +The Saudi bombardment of Yemen: Worse than the Russians + +Water in the West Bank: Nor yet a drop to drink + + + + + +Articles Sections Next + +Zimbabwe’s president + +Comrade Bob besieged + +A fresh round of challenges to Robert Mugabe’s deadly grip on power + +Jul 30th 2016 | HARARE | From the print edition + + + +WHEN the presidential motorcade tears through the posh Borrowdale suburb where Robert Mugabe resides in Harare, all traffic still pulls onto the verge in reluctant deference to the despot. At 92 he is plainly bent on staying in power for as long as he lives. But nowadays the vendors hawking newspapers at the roadside, with Zimbabwean flags draped around their shoulders like superhero capes, are selling a different story. “Writing on the wall for Mugabe,” blares one independent newspaper’s headline. In the past few weeks a string of setbacks for the old man has increased the chances that his luck may finally be running out, even before he dies. + +The most striking development is the sudden rise of a protest movement led by a previously unknown clergyman, Evan Mawarire, whose hashtag #ThisFlag has caught the nation’s imagination. His campaign, bolstered by the clever use of social media, has drawn support from churches and the middle class which had hitherto tended to steer clear of street politics. When Mr Mawarire, whose trademark is the Zimbabwean flag wrapped around himself, was arrested earlier this month, a large crowd, including many lawyers, converged on the court-house where he was being held, until he was freed amid triumphant cheers the next day. (More recently Mr Mawarire has found it wiser to stay in neighbouring South Africa.) + +But this is not the only recent setback for Mr Mugabe. As the economy again threatens to collapse, feuding within his own ZANU-PF party has intensified. Thousands of civil servants, including teachers and health-care workers, are being paid late or not at all. Worse still for Mr Mugabe, self-proclaimed veterans of the liberation war whom he has long cosseted (and paid to intimidate his opponents) have turned against him. Even the army and police have become increasingly sour as their monthly salaries have been paid late. + +An old man in no hurry + +On July 6th a general strike organised by #ThisFlag was heeded by an unusually large number of people. Many Zimbabweans, especially the legions who eke out a living by petty trading, have been infuriated by a ban on the import of basic household goods. This provoked demonstrations and the torching of a warehouse at the Beitbridge border with South Africa. Minibus drivers frustrated by the mushrooming of roadblocks where police demand bribes have also protested violently. Rarely have so many problems hit the president at the same time, says Eldred Masunungure of the Mass Public Opinion Institute in Harare. “For the regime, it should give them sleepless nights.” + +Mr Mugabe was probably most shaken by the hostility of the “veterans”, (many of whom are too young to have seen action in the civil war of the 1970s). On July 21st an association of them deplored his “bankrupt leadership”. “We note with concern, shock and dismay the systematic entrenchment of dictatorial tendencies, personified by the president and his cohorts, which have slowly devoured the values of the liberation struggle,” they declared. + +“It gives people confidence that Mugabe has been ditched by his erstwhile friends,” says Wilson Nharingo of the Zimbabwe Liberators’ Platform, a rival veterans’ group that has long derided those who have recently turned on Mr Mugabe as thugs for propping him up in the first place. “They have been benefiting from the system,” says Mr Nharingo. “But now they’ve been kicked off the gravy train, they’re seeing the light.” + +ZANU-PF heavies have begun a witch-hunt to identify and root out those responsible for the veterans’ angry declaration. Saviour Kasukuwere, the local-government minister and a leading backer of the president’s avaricious wife, Grace, to succeed the old man, has warned disgruntled war veterans that their farms (many of which they seized from whites) would be confiscated. “There could be blood on the floor,” says Pedzisai Ruhanya, a pundit. “Mugabe is very vindictive. He will not let go.” Newspaper ads summoned all war veterans to ZANU-PF headquarters on July 27th to prove their loyalty to Mr Mugabe. + +Amid these ructions the calculations of Emmerson Mnangagwa, the vice-president, who is likeliest, at least in the short run, to take over if Mr Mugabe falls or dies, have been unclear. He has previously had the tacit support of the war veterans, the army chiefs and the security service. But as the jockeying gets more feverish, new factions in every corner of the ruling establishment may emerge. + +Mrs Mugabe, perhaps wary of the wind blowing in so many directions, has been away a lot in Singapore. The ZANU-PF Women’s League, which she heads, and the party’s Youth League, are both deemed doggedly loyal to the president—and presumably to herself. After the anti-government protests earlier this month thousands of youths were bussed into Harare from the countryside to march in support of Mr Mugabe and the ruling party, with loose promises that they would be given plots of land in Harare and in Bulawayo, the country’s second city. + +Some opposition figures have called for a transitional authority to take over as Mr Mugabe’s authority dips. Joice Mujuru, who was vice-president until she was ejected from ZANU-PF in 2014, is hoping to lead the fray against whoever takes over her old party. But Mr Mugabe has not yet ceased to astonish his would-be successors with his resilience and cunning. “We are reaching a tipping point,” says Mr Masunungure. “But don’t underestimate the capacity of ZANU-PF to recreate itself.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702760-fresh-round-challenges-robert-mugabes-deadly-grip-power-comrade-bob/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +South Africa’s local elections + +Young rivals + +Can an energised opposition, with two fresh leaders, poach ANC voters? + +Jul 30th 2016 | JOHANNESBURG | From the print edition + +Will Maimane (left) or Malema hurt the ANC more? + +FORGET ducking and dodging corruption charges. Jacob Zuma’s new signature move is the “dab”. At rallies ahead of local government elections on August 3rd, South Africa’s 74-year-old president drops his forehead to the crook of one arm and bops—a dance move borrowed from American hip-hop culture. These elections will be a crucial test of support for the African National Congress (ANC) under the unpopular Mr Zuma. + +He is facing two much younger rivals seeking to knock the ruling party off its post-liberation perch. The ANC, in an attempt to update its image among young voters, has adopted “dabbing” for its campaign events, along with pop star endorsements and branded leather jackets. For South Africa’s two biggest opposition parties, this election offers their best shot yet of denting the ANC’s dominance. + +Mr Zuma’s rivals hail from different political planets. Mmusi Maimane, just 36 years old, leads the Democratic Alliance (DA), a liberal-leaning party that drew 22% of the vote in the 2014 general elections. For Mr Maimane, the first black leader of what many still regard as a white-dominated party, this is a make or break election. The DA, with a record of clean governance, is desperate to win a big city outside its Western Cape base. Nelson Mandela Bay metro, which includes the city of Port Elizabeth, is the party’s likeliest target; taking Johannesburg or Tshwane (Pretoria) would be a triumph. Although Mr Maimane, who until recently doubled as a preacher, is known for giving impassioned speeches—notably, an address in parliament damning Mr Zuma as a “broken man”—he has faced an uphill battle in trying to sway a mostly black electorate. + +On the political left is the bombastic Julius Malema, 35, “commander-in-chief” of his radical Economic Freedom Fighters. The EFF was formed after Mr Malema, a former youth league leader in the ANC, fell out with Mr Zuma and was booted out of the party. Now only three years old, the EFF has shaken up South African politics with revolutionary rhetoric and attention-grabbing moves such as wearing workers’ costumes to parliament—overalls, maids’ uniforms—topped with Che Guevara-style red berets (these have become a must-have accessory for youth on the march). The party’s new smartphone app includes EFF-themed playlists and push notifications for Mr Malema’s latest missives. + +Mr Malema, who once said he would “kill for Zuma”, now accuses the president of being a dictator. He courts angry young voters who chafe at the scarcity of jobs and flagrancy of corruption under the ANC. He is also a skilled demagogue, making inflammatory remarks that often have a racial overtone. Some have compared him to Idi Amin, which is rather unfair as Mr Malema is not a mass murderer. + +The big question is whether disgruntled ANC supporters will stay loyal, stay home or cast a ballot for an alternative. Weekly polls commissioned from Ipsos by eNCA, a private broadcaster, have the DA leading the ANC in all three battleground metro areas. The DA’s own polling is less optimistic. The EFF, which aims to triple its support from the 6% received in the 2014 general elections (10-12% is thought a more likely number), has focused on Mr Malema’s home province of Limpopo, as well as KwaZulu-Natal, where the ANC has been racked by violent internal disputes. + +Sensing danger, Mr Zuma has gone on the attack, dancing his way past his legal problems and using crude insults to distract his audiences. During a recent campaign event he called the DA a “poisonous snake” and accused the party of being anti-black. He said that Mr Malema and the EFF party leaders were “small boys who have no respect”. “Voting ANC is like opening [the] gates to heaven,” Mr Zuma warned a cheering crowd at a rally in the Eastern Cape. “If you do not vote ANC, it’s like choosing to be with [the] devil.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702761-can-energised-opposition-two-fresh-leaders-poach-anc-voters-young/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nigeria’s struggling states + +Running out of road + +The end of state-sponsored marriages is just the funny bit + +Jul 30th 2016 | LAGOS | From the print edition + + + +WEDDINGS do not come cheap, as Kano’s state government has found out. Over the past four years its Islamic morality police, the Hisbah, has arranged, and helped pay for, marriages for more than 4,000 lonely ladies. Yet even the most pious can put a price on love. As Nigeria’s economy heads into recession, the state now says that it cannot afford to pay bride prices or to fill marital homes with furniture and cooking kit. Ten thousand disappointed daters have been left to find love and marriage the normal way. + +They can hardly be so aggrieved as Nigeria’s 36 state governors. Most of them have little in the way of either local industry or foreign investment, meaning that they are incapable of providing for themselves. They borrowed heavily when oil prices were high, and also rely on monthly allocations from the federal government to keep afloat. But two years of low oil revenues have eaten nastily into those disbursements (see chart), leaving them unable to service their debts or pay their inflated workforces. + +Out of the window have gone more pricey programmes, such as pilgrimages sponsored by Niger. This state (not to be confused with the country) generated monthly revenues of 500m naira ($2.5m) in 2015, while running up a wage bill over four times that. “Other equally people-oriented demands” must now take precedence over journeys to Jerusalem and Mecca, Governor Abubakar Bello said recently. Politicians in Bayelsa, a southern state that has a reputation for oil and alarming kidnap rates, waved goodbye to a five-star hotel which has been over a decade in the making. Good riddance, many said. The 18-storey monstrosity cost the governor 6 billion naira before he shelved it. + + + +More important investments in roads and schools have long since dried up, according to BudgIT, a fiscal analysis group in Lagos. Civil servants no longer hope to get their salaries on time, and in some places their already meagre pay has been slashed by half. Osun state, which previously splurged on six stadiums, is now surviving without a cabinet. Governors best known for fast cars and love nests are suddenly professing restraint. In Niger state, Mr Bello has said he will cut spending on housing for officials by at least 80%; an easy promise to make, given that his books are not made public. + +This points to a general problem within federal Nigeria. With a couple of exceptions, its local and state governments do not publish budgets, so they can spend at will. It is no surprise therefore that they failed to cut spiralling costs as oil prices fell. Or that the governors squandered the 660 billion naira federal bail-out package intended to pay salaries last year. In just one mysterious transaction, Imo decided that 2 billion naira might be put to best use on the government accommodation account. + +Having frittered away this lifeline, they are now asking for a new one. Last month Nigeria’s finance minister agreed to lend the states 90 billion naira, provided they start publishing audited accounts. That is a start. Meanwhile, the governors will take hope from a resurgence in their gross June and July allocations (thanks to higher federal tax collections). But in Kano, the Hisbah is looking for a quicker solution: private sponsors for mass weddings. “Stopping it altogether [is] unthinkable,” its director-general said. Recession be damned. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702783-end-state-sponsored-marriages-just-funny-bit-running-out-road/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Arab League + +A new low + +Even by its own dismal standards, the League’s latest summit was a flop + +Jul 30th 2016 | From the print edition + +Room at the top + +WHAT if they held a summit and no one came? That, almost, is what has just happened in Nouakchott, the capital of Mauritania—which most Arabs probably did not know was part of the Arab League at all. On July 25th only seven of its 22 heads of state bothered to attend their summit and one of them, Ould Abdul Aziz of Mauritania, was there anyway. Another, Abd Rabbo Mansour Hadi of Yemen, was booted out of his capital by rebels in 2015, and doesn’t have much else to do. A third, Omar al-Bashir of Sudan, is wanted by the International Criminal Court for genocide, meaning that his travel options are severely limited. Not that Nouakchott is a very flash destination. For want of a suitable venue, the meeting was held in a tent. + +King Salman of Saudi Arabia said he was ill—which is probably true since he is 80 and infirm. But he did not think it worth sending his son, Muhammad bin Salman, the 30-year old deputy crown prince, who actually runs the country these days. Another no-show was King Mohammed VI of Morocco. He was meant to have been hosting the summit himself. But in February he renounced the honour. His foreign ministry put out a statement saying that “given the absence of important concrete initiatives which could be submitted to Arab Heads of State, this summit will only be an occasion to take ordinary resolutions and deliver speeches which pretend to give a false impression of unity and solidarity between Arab States.” + +That, of course, is the rub. The implosion of so many states, the region-wide strife between Sunni and Shia Arabs, and the economic crises caused by the weak oil price have all combined to produce unprecedented levels of division and bitterness among the League’s members. Far easier just to stay at home. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702780-even-its-own-dismal-standards-leagues-latest-summit-was-flop-new-low/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Saudi bombardment of Yemen + +Worse than the Russians + +The West is abetting vast loss of life + +Jul 30th 2016 | From the print edition + + + +NINETY years ago Britain’s planes bombed unruly tribes in the Arabian peninsula to firm up the rule of Abdel Aziz ibn Saud, the founder of the Saudi state. Times have changed but little since then. Together with America and France, Britain is now supplying, arming and servicing hundreds of Saudi planes engaged in the aerial bombardment of Yemen. + +Though it has attracted little public attention or parliamentary oversight, the scale of the campaign currently surpasses Russia’s in Syria, analysts monitoring both conflicts note. With their governments’ approval, Western arms companies provide the intelligence, logistical support and air-to-air refuelling to fly far more daily sorties than Russia can muster . + +There are differences. Russian pilots fly combat missions in Syria; Western pilots do not fly combat missions on behalf of the Saudi-led coalition in Yemen. Nor are their governments formal members of the battling coalition. Their presence, including in Riyadh’s operations room, and their precision-guided weaponry, should ensure that the rules of war that protect civilians are upheld, insist Western officials. But several field studies question this. Air strikes were responsible for more than half the thousands of civilian deaths in the 16-month campaign, Amnesty International reported in May. It found evidence that British cluster bombs had been used. Together with other watchdogs, including the UN Human Rights Council, Human Rights Watch and Oxfam, it has documented the use of Western weaponry to hit scores of Yemeni markets, medical centres, warehouses, factories and mosques. One analyst alleges that the use of its weapons amounts to Western complicity in war crimes. + +The war in Yemen has certainly been lucrative. Since the bombardment began in March 2015, Saudi Arabia has spent £2.8 billion ($3.8 billion) on British arms, making it Britain’s largest arms market, according to government figures analysed by Campaign Against Arms Trade, a watchdog. America supplies even more. + +Western support might have helped reduce Saudi Arabia’s ire at the nuclear deal America and other world powers signed easing sanctions on Iran. But it has also fuelled another conflict in the Middle East. Together with the ground war and the Saudi-led blockade, it has devastated infrastructure in what was already the Arab world’s poorest country, displaced over 2m people and brought a quarter of Yemen’s population of 26m to the brink of famine. Aid agencies warn that another refugee exodus across the Red Sea and on to the Mediterranean could be in the offing. + +Negotiations aimed at ending the war resumed on July 16th in Kuwait. But both sides have scoffed at Kuwait’s threats to expel their delegations if they fail to conclude a deal within two weeks. Yemen’s president-in-exile, Abd Rabbo Mansour Hadi, who hopes to install his own government, has dismissed the UN envoy’s proposals for a power-sharing administration. He has shored up his own team with hardliners. A civil war in the 1960s, note observers gloomily, lasted eight years. + +A fragmenting country further complicates the task for the peacemakers. Southerners in the port city of Aden are seeking to resurrect a separate state. Further east, Gulf states, led by the United Arab Emirates, have struck at al-Qaeda’s build-up in Hadramawt, fearful of a spillover into their own states, which have large Yemeni populations. Recent bombings in the Saudi cities of Medina, Jeddah and Qatif underscore the reach that the jihadists already have. This is a war whose consequences will be felt for many years. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702782-west-abetting-vast-loss-life-worse-russians/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Water in the West Bank + +Nor yet a drop to drink + +Palestinians go thirsty, despite sitting on an underground ocean + +Jul 30th 2016 | SALFIT | From the print edition + +The hard way + +IYAD QASSEM is trying to run a coffee shop without water. He reuses the stuff in his sink, which quickly fills with muck, and in the shishas that Palestinians puff on his patio. It would be a difficult task, if he had many customers: but it seems people who haven’t showered in a week lose interest in sipping tea in 35°C heat. “The café is empty because everyone is worried about the situation. It’s getting impossible to run a business,” he says. + +Tens of thousands of Palestinians in Salfit and the surrounding villages are suffering through a months-long drought. Summer shortages are nothing new on the parched hills outside Nablus, in the northern West Bank. But this season is particularly bad. Taps slowed to a trickle before the Ramadan holiday, and few expect relief before the winter rains. + +Israelis once obsessed over the level of their largest natural reservoir, the Sea of Galilee. As The Economist went to press, it was just 11cm above its “red line”, the point at which Israel stops pumping water to avoid ecological damage. Yet this no longer causes public concern, for most of Israel’s water is artificially produced. About a third comes from desalination plants that are among the world’s most advanced. Farmers rely on reclaimed water for irrigation. Israel recycles 86% of its wastewater, the highest level anywhere; Spain, the next best, reuses around 20%. + +None of these high-tech solutions helps the Palestinians, though, because they are not connected to Israel’s water grid. They rely on the so-called “mountain aquifer”, which lies beneath land Israel occupied in 1967. The 1995 Oslo Accords stipulated that 80% of the water from the aquifer would go to Israel, with the rest allocated to the Palestinians. The agreement, meant to be a five-year interim measure, will soon celebrate its 21st birthday. During that time the Palestinian population in the West Bank has nearly doubled, to almost 3m. The allocation has not kept pace. + +The settler population has doubled too, and they face their own shortages. In Ariel, a city of 19,000 adjacent to Salfit, residents experienced several brief outages this month. Smaller settlements in the area, which are not hooked up to the national grid, have dealt with longer droughts. Palestinians have suffered far more, however. On average they get 73 litres per day, less than the 100-litre minimum recommended by the World Health Organisation. + +Walid Habib spends 300 shekels ($75) each week to fill the tanks on top of his house in Salfit—a huge sum in the West Bank, where the average monthly wage is about $500. The water, drawn from wells drilled by the Palestinian Authority, is trucked in each morning on the winding mountain road. Supplies are limited, and residents do not always get their weekly deliveries. “We have a sea underneath us in Salfit, but we can’t even take a shower,” he says. “It’s pathetic.” + +Down the hill at a taxi company, workers have no water to brew tea. A more urgent problem is the office bathroom—dry toilets do not flush. “We’ve probably spent more on Dettol this summer than on gasoline,” jokes a dispatcher. + +The situation is even worse in Gaza, which relies almost entirely on a fast-shrinking coastal aquifer; what remains is polluted from years of untreated sewage and agricultural run-off. The stuff that comes out of Gazan taps is already brackish and salty. UN experts think that aquifer will be irreversibly damaged by 2020. + +Israel’s water authority sells the Palestinians 64m cubic metres of water each year. It says they cause their own shortages, because up to a third of the West Bank’s water supply leaks out of rusting Palestinian pipes. A joint water committee is supposed to resolve these issues, but it has not met for five years. Predictably, each side accuses the other of causing the deadlock. Palestinians also find their own government neglectful: the administrative capital Ramallah is well-supplied as the hinterlands go thirsty. Blame is never in short supply, even if water is. “When you don’t have water, it destroys everything,” says Mr Habib, sipping on a cup of the stuff—bottled, of course. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21702716-palestinians-go-thirsty-despite-sitting-over-underground-ocean-nor-yet-drop/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +France’s response to terrorism: Loss of faith + +How Germans handle terror: Pure reason + +A shock for NATO: Defend me maybe + +Catholic youth in Poland: Cross purposes + +Charlemagne: Correspondence club + + + + + +Articles Sections Next + +France’s response to terrorism + +Loss of faith + +The French are growing impatient with lofty calls to persevere against terror + +Jul 30th 2016 | PARIS | From the print edition + + + +NO TARGET is too soft for killers inspired by Islamic State. On July 26th in Saint-Etienne-du-Rouvray, a small town in Normandy, two knife-wielding terrorists entered a church. They took hostage the 85-year-old priest celebrating mass and the tiny congregation, two nuns and two parishioners. They slit Father Jacques Hamel’s throat as he knelt before the altar. Police shot and killed the terrorists; one other hostage was critically injured. The jihadists’ “barbaric attack on a church”, as the prime minister, Manuel Valls, put it, recast France’s conflict with terror as a primitive war of religion. + +The murder added to the nation’s sense of siege. Less than two weeks had elapsed since the horror of Nice, when a man of Tunisian origin killed 84 people by driving a lorry through a crowd celebrating Bastille Day. The mood of defiant solidarity forged after last year’s Charlie Hebdo and Bataclan attacks in Paris is eroding. + +Within a few hours of the latest attack, the president, François Hollande, appeared at the scene, flanked by his stolid interior minister, Bernard Cazeneuve, to express his dismay at the “desecration of democracy” and to promise to use all means necessary to defeat those who have declared war on France and its values. While warning that the threat of new atrocities remains high, he called for national unity and almost prayed (though he is an atheist) that the terrorists not succeed in their aim of fomenting division. + +For many French, these once-reassuring words are growing wearisome. Single attacks, however terrible, can unite a shocked nation, but France has suffered at least 14 terrorist assaults in the past two years, in which at least 240 people have been killed and over 600 injured. Moreover, the attacks have been widespread: eight of the 12 mainland regions of France have been hit. Intelligence services say many more plots have been foiled. + +Protégez-nous + +Ten months before a presidential election, a mood of anger and frustration over the state’s failure to keep people safe is growing. Adel Kermiche, one of the Normandy knifemen, was twice arrested last year while trying to travel to Syria and had been detained for ten months. Prosecutors argued that he posed a sufficient threat to remain in jail, but in March a judge ordered that the 19-year-old be put under house arrest and wear an electronic tag for surveillance. The tag was switched off for a few hours every morning—during which time Mr Kermiche committed murder. + +The public finds such decisions incomprehensible. Crowds in Nice booed Mr Valls at a memorial service last week. Mr Cazeneuve is also under pressure. Police responsible for video surveillance in Nice claimed his office tried to meddle in their report on the July 14th attack, by allegedly demanding that they confirm the videos showed enough well-armed national police to guard the crowds. Mr Cazeneuve denies making any such demands, and says he will sue those who made the accusations. But he has not yet explained a request last week from SDAT, an anti-terrorism agency under his interior ministry, for the Nice authorities to destroy the video footage. Supposedly this was to prevent leaks, lest extremists used the film for propaganda. Many suspect a cover-up. + +All of this is casting doubt on Mr Hollande’s future. Three days before the murder of Father Hamel, Ifop, a pollster, found that 65% of respondents lacked confidence in his handling of terrorism. He had promised to end France’s state of emergency, imposed after the Bataclan attacks, over criticism that its provisions are undemocratic. Instead, after the outrage in Nice, he extended it: polls show most voters crave a stronger crackdown. + +Nicolas Sarkozy, a former president and the leader of the centre-right Republican party, jumped on the law-and-order bandwagon. “We must be merciless…the legal quibbling, precautions and pretexts for insufficient action are not acceptable,” he said. He demanded that the government enact a list of security measures, including either holding all Islamist suspects in detention or electronically tagging them to prevent potential attacks. + +The leader of the xenophobic National Front, Marine Le Pen, blamed the attack on France’s entire political establishment: “All those who have governed us for 30 years.” Mr Hollande, whose polling numbers are abysmal, is said to be so pessimistic that he may announce he will not stand in next year’s election. If the attacks continue, Ms Le Pen seems sure to reach the second round. Voters are growing insistent that someone stop the bloodshed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21702746-french-are-growing-impatient-lofty-calls-persevere-against-terror-loss-faith/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +How Germans handle terror + +Pure reason + +In the face of a rash of attacks, Germans are staying remarkably calm + +Jul 30th 2016 | BERLIN | From the print edition + +Germans, not panicking + +ASK some Germans how people should react to terrorism and most would probably agree with the historian Herfried Münkler that the best attitude is heroische Gelassenheit: heroic calmness. Let other countries declare wars on terrorism and near-permanent states of emergency, they say; Germany’s dark history has taught it not to over-react. Sceptics used to reply that talk was cheap coming from Germany, which had been spared major incidents of the sort that have struck America, France, Turkey and other countries. That changed in the space of one week this month, when Germany suffered four very different attacks. + +First, on July 18th, an Afghan refugee stabbed and axed four passengers on a train and another on a platform. Four days later a German teenager of Iranian descent went on a rampage in a shopping centre in Munich (pictured), injuring more than 30 people and killing nine before shooting himself. Two days after that, a Syrian refugee hacked a pregnant woman to death with a machete—“relationship troubles”, the police said. Elsewhere that night another Syrian refugee tried to enter a concert with a backpack of explosives. When he was barred, he blew himself up, injuring 15 others. + +Germans grew more jittery with each round of breaking news. There was a brief panic during the initial hours of the Munich rampage, as rumours spread on social media that three killers were on the loose rather than just one. Munich’s 2,300 police were inundated with 4,300 emergency calls, almost all of them false. + +But Munich quickly recovered its poise. Under the hashtag #OffeneTuer (“#OpenDoor”), residents offered to accommodate anyone stranded for the night by the lock-down. Munich’s police spokesperson, Marcus da Gloria Martins, laboured tirelessly to sort fact from fiction. Mr da Gloria Martins, who wrote a thesis on crisis communication, ultimately became the country’s hero of the week. On a television talk show, he appealed to the audience and media: “Give us the chance to report facts. Don’t speculate, don’t copy from each other.” It was the biggest applause line of the night. + +Most politicians heeded his advice, distinguishing carefully between the issues at play in different killings. The week’s worst disaster, in Munich, had nothing to do with Islamism. The 18-year-old gunman, David Ali Sonboly, had been bullied and suffered from depression, and had prepared his rampage for a year. He had read “Why Kids Kill” by Peter Langman, an American expert on school shootings. In 2015 he visited Winnenden, a town in Germany where a school mass shooting took place in 2009. He executed his attack on the fifth anniversary of the massacre by Anders Breivik on the Norwegian island of Utoya. + +Mr Sonboly’s case opened many debates. He had played “Counter-Strike”, a violent computer game also favoured by other shooters. Should such games be banned? The consensus seemed to be no; that would curtail liberty and be unfair on the majority of players who never become violent. Should Germany deploy its army in domestic emergencies such as this? Some, including Bavaria’s interior minister, Joachim Herrmann, said yes. Others pointed to Germany’s Nazi-era history and remained wary. + + + +In charts: Terror in western Europe + +Mr Sonboly had used a contraband Glock 17, the type of gun also preferred by the killers at Utoya and Winnenden. Should Germany’s gun laws be tightened? No, the consensus suggested; Germany already has some of the strictest laws in the world. Mr Sonboly had bought his gun illegally from Slovakia through the “dark net”, an encrypted portion of the internet. The weapon had been disabled for use as a stage prop; Mr Sonboly or someone else later restored it to shoot live rounds. + +Public discussion of the other three attackers was equally mature. All were refugees from war-torn countries and probably traumatised. Two of them—the axeman on the train and the backpack bomber at the concert—acted in the name of Islamic State (IS). The former, an unaccompanied minor from Afghanistan, was only 17 years old. The latter, a Syrian nicknamed Rambo at his refugee centre, had been denied asylum and was to be deported to Bulgaria. He had already been in psychiatric treatment and twice tried to commit suicide. + +Some worried that IS might have smuggled in terrorists amid the refugees who have arrived in Germany in recent years—about 1m last year alone. Germany is investigating 59 such cases, said Thomas de Maizière, the interior minister. (There are 708 other investigations into possible Islamist terrorist plots, involving more than 1,000 suspects.) But he cautioned that the vast majority of refugees are peaceful victims, rather than perpetrators, of terror. Most Germans agreed that refugees, especially the young and traumatised, should receive better counselling and supervision. + +Only a few tried to make hay of the tragedies. During the Munich rampage, André Poggenburg, a leader of the anti-immigrant Alternative for Germany party, tried to blame the open-door refugee policy of chancellor Angela Merkel—even before anyone knew who was shooting. “Our sympathy for the wounded and the bereaved, our disgust for the Merkelites and leftwing idiots who bear responsibility!” he tweeted. He earned immediate condemnation on social and broadcast media, followed by ridicule once it emerged that the shooter was German. Then the country went on being heroically calm. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21702718-face-rash-attacks-germans-are-staying-remarkably-calm-pure-reason/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A shock for NATO + +Defend me maybe + +Donald Trump casually undermines the world’s most important alliance + +Jul 30th 2016 | From the print edition + + + +IT WAS a single remark in an interview with the New York Times, but it rattled the strongest military alliance the world has ever seen. On July 20th Donald Trump declared that should the Baltic states be attacked by Russia when he is president, he would come to their aid only if he felt they had met their “obligations”. That would contravene Article 5, the bedrock of NATO’s founding treaty, which holds that an attack on one member is an attack on all. NATO’s secretary-general, Jens Stoltenberg, soon pushed back: although he did not wish to interfere in an American election, he said, “solidarity among allies is a key value for NATO.” + +Russia’s threat to the Baltic states is not notional. Under Vladimir Putin, Russia is fast modernising its armed forces, building a hard-hitting, flexible military that can be deployed at short notice into what it calls its “near abroad”. Russian war games regularly simulate attacks on Estonia, Latvia, Lithuania and Poland. The 2009 Zapad exercises included rehearsing the use of tactical nuclear weapons. + +Russia does not want to reconquer the Baltics. But it might want to use the hybrid-warfare tactics it employed in Ukraine (such as disinformation, political subversion, cyber-attacks and the use of special forces without insignia) to demonstrate that the West is reluctant to defend its most vulnerable allies. If, for example, Russia sent forces into a Russian-speaking area of Estonia, NATO would be faced with an existential dilemma: to fight back and risk nuclear war, or to capitulate and destroy its own credibility. + +Recognising the danger, NATO has tripled the size of its rapid-response force to 40,000, established a spearhead force that can be deployed within hours and, at its Warsaw summit earlier this month, agreed to put multinational battalions into the four front-line states. The Obama administration is quadrupling spending on America’s military presence in eastern Europe next year. But the deterrent value of all this depends on the world believing that America cares about Europe, and that NATO can make decisions fast. It is faith in these that Mr Trump has undermined. + +The three Baltic states are model allies. Latvia and Lithuania are on course to reach the alliance’s target of spending 2% of GDP on defence. Estonia has always hit the 2% mark. Yet Newt Gingrich, tipped as a possible secretary of state in a Trump administration, dismisses it as a “suburb of St Petersburg”. As Toomas Hendrik Ilves, Estonia’s president, pointed out, no Americans have died for Estonia, but Estonians have already died for America: its forces fought enthusiastically in Afghanistan and Iraq—and suffered the highest casualties, per head, of any alliance member. + +Mr Trump is right that many European countries spend too little on defence. But to suggest ignoring treaty obligations is reckless. The whole point of a deterrent is that if it is credible, you don’t have to use it. If Mr Trump wins, America’s allies everywhere may feel they are on their own. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21702771-donald-trump-casually-undermines-worlds-most-important-alliance-defend-me-maybe/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Catholic youth in Poland + +Cross purposes + +As the global church trends liberal, the Polish church is not following + +Jul 30th 2016 | KRAKOW | From the print edition + +Tough crowd + +THE window over the main door of the Bishop’s Palace in Krakow is known as the Pope’s Window. It was from here that John Paul II, born Karol Wojtyla, used to address his followers when visiting the city where he had served as archbishop during the communist regime. This week, a different pontiff is occupying the window. Pope Francis is in Poland for the church’s World Youth Day festival (actually a week, between July 25th and 31st), which is expected to draw over 1m visitors. Although the more conservative pope died in 2005, it is not clear whose is the greater presence. Asked by Polish television on Monday night about security at the event, a government official said there was a “pact with Holy Father John Paul II” to protect it. + +Although Krakow is full of flags and outdoor stages, the Polish church itself is not so lighthearted. Catholicism is Poland’s dominant religion, and the church’s political ally, the nationalist Law and Justice party (PiS), has been running the country since November. Whereas Francis has suggested that perhaps gay people are not all wicked, PiS’s leaders insist that sexual deviation of all kinds is a threat to the nation. The pope’s visit is highlighting many Poles’ desire for priests who will listen, rather than judge. Yet it also shows the gap between a reformist pontiff and a Catholic country that has taken an illiberal turn. + +Cultural politics in Poland do not fit a neat model of young liberals versus old conservatives. Over two-thirds of young Poles describe themselves as believers, though they go to church less than their parents do. True, the number of young atheists has doubled in a decade, and most young people think premarital sex is fine. But only one in five supports abortion on demand. Prejudice towards gay people lingers, too. In Krakow, one Youth Day volunteer calls homosexuality an “illness”. + +The young are more hostile to refugees than their parents: over 80% of Poles aged 18-34 oppose taking them in, compared with 52% of those over 65. They are also more in favour of border controls within the EU. Many of the teenage pilgrims in Krakow say they fear a wave of “Islamisation” or “secularisation” from western Europe. (Oddly, they sometimes conflate the two.) The Pope is “great on faith but not on politics”, says a young street sweeper from Nowa Huta, an industrial area of Krakow. + +Indeed, PiS came first among 18- to 29-year-olds in the elections last October. Beata Szydlo, the prime minister, has refused to take in refugees, citing security concerns. “Political correctness, abandoning the Christmas tree so as not to irritate Muslims—this has emboldened terrorists, too,” she said in a recent interview with wSieci, a conservative weekly. + +Poland’s clerics have been at best lukewarm towards refugees. When Francis called on parishes to take them in last year, one Polish bishop likened them to “crusaders”, adding that “multi-culti has failed.” Whereas the Pope preaches openness, Polish clerics warn against “gender ideology” (a catch-all term for tolerance of sexual minorities) and in-vitro fertilisation. PiS has decided to suspend state funding for IVF. + +Meanwhile, Pope Francis has become an icon for liberal Poles, Catholic or not. Slawomir Sierakowski, head of Krytyka Polityczna, a club of intellectuals, calls him the “leader of the left”. Many hope he can change the church. Polish Catholicism speaks a language of “homophobia veiled in a layer of mercy”, says Aleksandra, a young member of “Faith and Rainbow”, a group of Polish LGBT Christians. At the group’s hang-out on the sidelines of World Youth Day, a rainbow flag and a Polish flag fly side by side. + +Poland’s religious landscape remains dominated by John Paul II, whom many still call “our pope”. Still, the unpretentious Francis, who planned to travel through Krakow by tram, is a breath of fresh air. On July 27th he urged a crowd to “take in people fleeing wars and hunger”, and called for “a climate of respect between all circles in society”. Even if Francis cannot soften Poles’ attitude to refugees, he may be able to help them talk to each other. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21702770-global-church-trends-liberal-polish-church-not-following-cross-purposes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Correspondence club + +Advice for the British and German leaders on navigating the Brexit mess + +Jul 30th 2016 | From the print edition + + + +DEAR THERESA, + +At your first cabinet meeting you said that your government would not be “defined by Brexit”. Good luck with that. Britain’s tortured relationship with the European Union has felled most recent Conservative prime ministers, and none faced a task remotely as daunting as the one that confronts you. Disentangling Britain from the EU will be like extracting one glue-slathered octopus from a basket of 27 other ones. It could go horribly wrong. + +To avoid that, Charlemagne offers some unsolicited advice. You begin with a reservoir of relief (not goodwill, mind) among your fellow European leaders. Disaster would now be looming had an outlandish Brexiteer such as Boris Johnson muscled his way into Downing Street. You earned respect in Brussels during your six years as home secretary. But that also means that while your EU counterparts may ignore the boosterish bluster emitted by some of your more excitable cabinet colleagues (such as Liam Fox, the new trade secretary), they will expect better from you. + +So choose your battles carefully. Do not, for example, dither endlessly on Article 50, the legal device which sets a two-year timetable for quitting the EU. The EU is sick of crises and wants as smooth an exit path for Britain as possible. You will need friends if you are somehow to maintain British banks’ access to the EU market while limiting the right of European workers to move to Britain. Your government is not supposed to conduct trade talks with third parties before Britain has left the EU, but your partners may wink at Mr Fox’s globetrotting if you have earned their trust. + +Do your homework on other countries’ domestic politics, for they will complicate your talks. One year from now, for example, your French interlocutor might be not François Hollande but the more obstreperous Nicolas Sarkozy (or even the ghastly Marine Le Pen). Italy might have tumbled into political and financial chaos. So listen to your diplomats. Tour the capitals. If you can bear it, address the European Parliament; MEPs must approve whatever post-Brexit deal you strike, and they adore the attention. And a tip for EU summits: do not say one thing to your fellow leaders inside the room and then the opposite in public. As Mr Cameron can attest, they really, really hate that. + +You must expect a fair bit of scrutiny yourself. Some in the EU fear you have staffed your court with jokers and knaves (many were incredulous at your decision to appoint Mr Johnson foreign secretary). Prove them wrong. Ignore advisers gleefully predicting another euro crisis that Britain can exploit; placing bets on imminent disaster is not the way to win friends. And immediately fire anyone who speaks of using Britain’s “security surplus” as a bargaining chip. Britain backs EU and NATO military missions on their merits, not because they may help win sweet trade deals. + +Some decisions must be made quickly, including whether temporarily to opt in to Europol, the EU police agency that Britain has done so much to support. You should, if only to figure out how to maintain access to its databases after Brexit. Foreign policy should prove a little easier. Britain’s diplomatic expertise, military might and aid budget are valued in Europe, and few in Britain see much point in cutting all foreign-policy ties. (Ignore those who do.) Finally, keep your eyes on the prize. The next two years will involve hard talks, late nights and tough calls. If they go badly, what follows could be far worse. + +LIEBE ANGELA, + +Three British prime ministers have come and gone during your time in the chancellery. Your renowned reserves of patience will be needed to manage the fourth. Mrs May’s rapid ascent to power masks deep dysfunction in her government and party. Howls of betrayal will begin as soon as the Brexit talks do. The ministers she has sacked are brooding on the backbenches, some waiting to exploit her slim majority. The weakness of the opposition Labour Party—which rivals your coalition partner, the Social Democrats, for uselessness—further liberates Tory mischief-makers. + +Your trickiest customers could be the “soft Brexiteers”, who will seek complex trade-offs between market access and migration rights that could set awkward precedents for other EU members. (The headbangers would be perfectly happy with the sort of clean break that would make life easier for everybody else.) Do not read too much into Mrs May’s eyebrow-raising appointments: she has party rifts to heal. It may be woeful to see Mr Johnson, a man of no known principles, occupy a great ministry of state. But look on the bright side: he is ideally placed to display the ideological flexibility the Brexit negotiations will demand. + +How should you approach the talks? The idea, popular among your advisers, of letting Britain stew in its own juice is not absurd. Spiralling bond yields did more than any political pressure to rid you of Silvio Berlusconi during the euro crisis, after all. And the signs are that the economic pain from Brexit will fall squarely on Britain. A nasty recession, you might think, would encourage Mrs May to seek as broad a trade deal with the EU as possible, even if that means special treatment for its migrants. + +Do not take this line of thinking too far. Plenty of people in Britain, to put it bluntly, are prepared to make their country poorer to regain control over borders and law-making. Just look at the referendum result. German exporters have already leant on you to keep tariffs in whatever post-Brexit settlement emerges as low as possible. But they are not your only concern. + +For once again, it has fallen to you to hold Europe together after the body blow of Brexit. From terrorism to refugees to Italian banks, there is much to disturb your sleep. An early lesson in what not to do was provided by your foreign minister, who invited his counterparts from the five other founding EU countries (France, Italy and Benelux) for a brainstorm in Berlin just after the referendum. Other governments were furious. Happily, you quickly distanced yourself from this anachronistic nonsense. + +But the foreign ministers were right about one thing: this is no time for “mere reflection” inside the EU. No one thinks you and the French are about to get over your differences on how to run the euro. But the EU could do with an eye-catching initiative or two. What about leaning on France to scrap the European Parliament’s much-hated second seat in Strasbourg? Perhaps Paris could be placated with the European Banking Authority, which will have to leave its London home. + +Dramatic gestures are not your style, of course, particularly before your presumed re-election bid next autumn. But after you have won your fourth, and presumably final, term, you can afford to loosen up a bit. Britain’s departure will roil the EU, and there is nothing you can do to stop it. But a bit of fresh thinking for the rest of the club would not go amiss. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21702773-advice-british-and-german-leaders-navigating-brexit-mess-correspondence-club/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +The impact of free trade: Collateral damage + +Northern Ireland after Brexit: Frontier spirit + +Women in politics: The struggle continues + +Commuter hell: Going south + +Brexit and public services: Somebody call a doctor + +Drug-testing at music festivals: Cocaine or concrete? + +Bagehot: Rage against the dying of the light + + + + + +Articles Sections Next + +The impact of free trade + +Collateral damage + +Britain is unusually open to trade but unusually bad at mitigating its impact + +Jul 30th 2016 | BLACKBURN | From the print edition + + + +“LANCASHIRE invented the world,” Iain Trickett’s grandfather told him. The old man was half right. During the industrial revolution the county in north-west England pioneered machinery that churned out manufactured goods by the ton; other countries copied it. Traces of that past glory linger on. In a factory in Blackburn highly skilled workers produce top-of-the-range jackets and jeans for companies including Community Clothing, of which Mr Trickett is general manager. Boxes destined for London’s fanciest shops are stacked up by the door. + +There are other local success stories, including an old maker of wallpaper-printing equipment down the road in Accrington whose machines now print electrical devices (see article). But they are the exception. Manufacturing employment in the Blackburn area has dropped by one-third in the past decade. The town centre seems to have more pawnbrokers and betting shops than restaurants or bars. “There’s nothing for young people around here,” says Maureen, a local resident, over a lunchtime game of bingo in a giant gambling complex near the train station. + +The travails of Blackburn and places like it have led many to ask whether globalisation does more harm than good. Britain is hardly alone in this. Yet the debate in Britain is overwhelmingly focused on the effects of immigration, particularly from the EU. Usually overlooked—unlike in other rich countries, notably America—is the effect of trade. As Britain embarks on a round of trade negotiations ahead of Brexit, the issue is likely to become central. + +Economists agree that foreign trade has afforded big benefits to Britain overall. Trade with the EU since joining it in 1973, for instance, has increased Britain’s GDP by 8-10%, according to Nick Crafts of Warwick University. More recently, as countries like Vietnam and China have become manufacturing giants, consumers have enjoyed cheap imported goods. Philip Hammond, the chancellor, was in Beijing this week to suss out a post-Brexit trade deal. + +However, mounting evidence suggests that the gains from free trade are not shared equally. A body of research on the American economy shows that import competition from poor countries can depress the incomes of the low skilled, at least in the short run, says John Van Reenen of the London School of Economics (LSE). One paper concluded that competition from Chinese imports explains 44% of the decline in employment in manufacturing in America between 1990 and 2007. + +Britain’s economy is about twice as exposed to foreign trade as America’s. After averaging around 1% of GDP for half a century, Britain’s trade deficit in goods soared from the year 2000 and is now about 7% of GDP. China’s accession to the World Trade Organisation in 2001 played an important part in this. Britain’s growing appetite for imported goods coincided with a collapse in manufacturing employment. + +Formal studies back up the circumstantial evidence. João Paulo Pessoa of the LSE looked at the period 2000-07 and found that British workers in industries that suffered from high levels of import exposure to Chinese products earned less and spent more time out of employment than those in other industries. As people fare badly in the labour market, social problems arise: another study found that a one standard-deviation increase in import competition worsened rates of mental illness by 1.2 percentage points. + +Open argument + +Unfortunately, the pain tends to be concentrated geographically. An index compiled by Italo Colantone and Piero Stanig of Bocconi University shows that almost no part of the country is more vulnerable to competition from Chinese imports than Blackburn (see map). Northampton, with its shoe industry, is similarly exposed; cheap steel imports have left places such as Port Talbot vulnerable. In the past decade the number of over-25s unemployed for more than one year has increased much faster in areas where manufacturing makes up more than 20% of the local economy than in areas where it makes up less. It has coincided with a rise in regional inequality: during the same period the ratio between output per person in Britain’s three richest sub-regions and the three poorest increased by a quarter. + + + +On the ground, the result is clear to see: swathes of the country feel left out of Britain’s generally healthy economic growth. Areas highly affected by Chinese import competition (which is probably a decent proxy for import competition from anywhere) were particularly prone to vote for Brexit, according to Messrs Colantone and Stanig’s calculations. Houses with fluttering St George’s flags pepper the landscape around Blackburn. + +It does not have to be this way. The large overall gains from free trade mean it should be possible to compensate its losers. That means upgrading the skills of the workforce in places like Blackburn—as is the norm in Germany, which has a sophisticated system of apprenticeships. America’s “trade adjustment assistance” programme funds training and support for workers displaced by foreign competition. The EU’s “globalisation adjustment fund” does something similar. Britain can (for now at least) apply for its funds. + +But it hasn’t. Officially the government has “concerns about whether it is an appropriate use of money”; a member state drawing on the fund is also supposed to stump up some of its own cash. But the government’s preferred programme, its so-called “rapid response service”, is feeble. It is supposed to provide training and support when there are mass redundancies. But it is a murky operation: there are almost no data on what it does. According to a House of Commons report, it “does not appear to be being monitored.” In 2008 its budget was a pitiful £6m ($8m). Nor does its response seem very rapid: your correspondent sent an e-mail requesting assistance for a fictitious Blackburn firm a week ago and has received no follow-up. + +Data from the OECD, a club mostly of rich countries, suggest that even after accounting for Britain’s low unemployment rate, for years it has been a stingy spender on “active” labour-market policies (ie, those that seek to improve the skills of the unemployed, not just let them languish). One paper estimated that British spending on active policies, adjusted for GDP, was about one-fifth that of Germany. Only about 15% of those on unemployment benefit receive any sort of training. Those displaced by free trade thus get little help towards becoming the model employees of tomorrow. Firms in Blackburn looking for good workers often turn to eastern Europeans, Mr Trickett sighs. + +Britain has benefited enormously from its embrace of free trade. But its failure to share the proceeds means that in too many places, such as Blackburn, the effect has been underwhelming. Until this is corrected, don’t expect arguments about globalisation to go away any time soon, Brexit or no Brexit. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702791-britain-unusually-open-trade-unusually-bad-mitigating-its-impact-collateral-damage/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Northern Ireland after Brexit + +Frontier spirit + +Uncertainty about the border cheers unionists and dismays republicans + +Jul 30th 2016 | BELFAST | From the print edition + + + +“WE BELIEVE in the union,” declared Theresa May in her first speech on the steps of Downing Street on July 13th: “the precious, precious bond between England, Scotland, Wales and Northern Ireland.” The new prime minister, an Englishwoman, has since visited all three neighbouring countries; on July 25th she landed in Belfast for the last, and perhaps trickiest, of these trips. + +Mrs May and her counterparts in Belfast and Dublin must soon decide what to do about the border between Northern Ireland and the Republic. In recent years it has become almost invisible, the ugly watchtowers, heavy army presence and long traffic queues of the past now no more than an unpleasant memory. But after Brexit the border will become a frontier of the European Union. That has raised the prospect of tighter controls on people and goods travelling between north and south—and even between Northern Ireland and mainland Britain. + +During the referendum campaign Mrs May, who backed Remain, said it was “inconceivable” that Brexit would not lead to changes to Irish border arrangements. But in Belfast this week she had warmer words, reassuring locals—a majority of whom opposed Brexit—that “nobody wants to return to the borders of the past”. Nor, it seems, will there be passport checks for those travelling to mainland Britain. The following day the Irish prime minister, Enda Kenny, claimed that he and Mrs May had agreed after talks in London that there should not be a “hard border” between Ireland and the north. + +Yet the border may have to be harder than it is now. If Britain eventually opts out of the EU’s free-movement rules and single market, Northern Ireland could become a back door into Britain for undocumented migrants and untaxed goods, unless new checks are imposed. Some of the harder-line Brexiteers in Mrs May’s Conservative Party are already reportedly agitating to pull out of the EU’s customs union, a move which would give Britain greater leeway in negotiating post-Brexit trade deals but which could force the imposition of customs checks on goods travelling between Northern Ireland and the south. + +In the zero-sum game of Northern Irish politics, talk of a harder border has dismayed nationalists while boosting unionists. Many of the latter had been apprehensive about what Brexit might mean for the treasured union with Britain. But Mrs May has given them a few reasons to be cheerful. She politely but firmly opposed the idea of a second referendum on Scottish independence, something which Northern Irish unionists fear could cause further fraying of the United Kingdom. + +And she appointed as her new Northern Ireland secretary James Brokenshire, most of whose ministerial career has been in security and counter-terrorism—a background which suits the traditional unionist emphasis on a firm approach. His undersecretary is Kris Hopkins, a former soldier who once said he felt “absolute revulsion and anger” when Martin McGuinness, now Northern Ireland’s deputy first minister and leader of Sinn Fein, the former political wing of the Irish Republican Army, walked into a conference event. + +By contrast, things look gloomy for nationalists, and particularly for Sinn Fein. The party had come to hope for ever-closer links with Europe, together with a gradual weakening of the bond between Northern Ireland and Britain. But with Brexit, at a stroke the entire course of politics has gone off in a different direction. Nationalists overwhelmingly voted to Remain but now with dismay find that Northern Ireland’s ties to the EU are being undone. + +Sinn Fein’s electoral march had already faltered in recent years, as the concessions it used to extract from London became rarer. Its leverage via IRA violence has gone. And its links with Britain’s Labour Party are worth less with Labour on the rocks (see article). With Brexit tilting the balance of power further towards the unionists, nationalists need a new gameplan. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702793-uncertainty-about-border-cheers-unionists-and-dismays-republicans-frontier-spirit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Women in politics + +The struggle continues + +Women lead in Westminster, Holyrood and Stormont, but equality is still far off + +Jul 30th 2016 | From the print edition + + + +THERESA MAY’S appointment as Britain’s second female prime minister has led to predictable comparisons with Margaret Thatcher. Yet around Britain, female leaders have become the norm. In Scotland, the heads of the three biggest parties are women. So is Northern Ireland’s first minister. Wales is the only country of the UK where a man is in charge—and he faces a female leader of the opposition. It is a “historic moment”, says Meryl Kenny of the University of Edinburgh. + +Yet despite these gains, women are still under-represented. Last year 191 women were elected to the House of Commons, making up only 29% of MPs. Northern Ireland’s share is about the same; Scotland and Wales do a little better, with 35% and 42% respectively. Britain ranks only 48th in the world for the proportion of women in its parliament (Rwanda leads the way). + +The rate of change increased after Labour adopted women-only shortlists in the mid-1990s (see chart). And the lack of female Conservative MPs (only 21%) belies how the party has been evolving. In 1992, when it was riding high, it had only 20 women in the House of Commons. However, partly because of the efforts of Women2Win, a pressure group co-founded in 2005 by Mrs May, 49 female Tories were elected in 2010 and 68 in 2015. Gillian Keegan, a Tory candidate, says the aim is to double this number again. + + + +But there are fears that things will get harder for women. For a start, as a recent report on diversity in Parliament by Sarah Childs of Bristol University contends, the lack of working-class representation in Westminster “has become a more high-profile political concern over the last decade”. Parties want to reconnect with working-class men; this could come at the expense of promoting women. + +This could be particularly true of the Labour Party, where Jeremy Corbyn’s class-based politics have trumped Tony Blair’s identity politics. This is one reason for the ruptures in Labour. Women MPs feel that they have been “disproportionately affected” by heightened levels of personal abuse within the party, as 44 of them wrote in a letter to Mr Corbyn on July 21st. Owen Smith, who is challenging Mr Corbyn for the leadership, has promised that women would make up half his shadow cabinet. + +Some express concern that the problem is broader than this. Demos, a think-tank, has documented how social media have become a conduit for abuse against women in public life. Labour MPs have helped to found a “Reclaim the Internet” campaign. They fear that online “trolling” is forcing women to reconsider whether it is safe even to enter politics, let alone aspire to the cabinet. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702796-women-lead-westminster-holyrood-and-stormont-equality-still-far-struggle/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Commuter hell + +Going south + +Passengers fume at useless train firms. They should blame the government too + +Jul 30th 2016 | From the print edition + +Letting off steam + +FOR months Jamie Rickers has regularly crammed like a sardine into his Southern Rail train from Sanderstead to London Victoria; for months delays have made him late for work; and for months he has questioned the value of paying £2,724 ($3,590) a year for a “shit” service. “The only way it would change,” he says, “is if everyone on this train turned around and said: ‘I’m not paying any more’.” Alas Mr Rickers, who checks his watch as the train crawls along, lacks the time to start a revolution. + +Thus far public anger has mainly scorched Southern itself. Govia Thameslink Railway (GTR), the company which controls Southern, has certainly made a mess of things. Just as guards went on strike in April over the introduction of driver-only trains, it cut back on employee benefits such as free travel for family members. Staff sickness rates promptly doubled and drivers stopped volunteering to work overtime on Sundays. + +Cue meltdown. In July Southern withdrew 15% of its services until further notice. Protests broke out in Brighton. Police had to drag an irate passenger away from a “meet the manager” session in London. Those who did make it onto trains could while away the journey playing “Southern Rail Tycoon”, a facetious online game that rewards players for each service they cancel. + +Behind the spoof lies a sense that the company is profiting from passengers’ misery. GTR has indeed failed to fulfil the terms of its £8.9 billion contract, which runs from 2014 to 2021. But it is hardly profiteering. In June its expected profit margin over the seven years was cut in half, to 1.5%. + +Nor is it the only party at fault. Signalling failures and other snafus by Network Rail, which maintains most of Britain’s track, explained half the delays in June. “All roads [in this dispute] lead back to the Department for Transport [DfT],” says Stephen Joseph of the Campaign for Better Transport, a pressure group. The DfT is right to push for driver-only trains, given that underemployed guards help to make Britain’s railways much less efficient than many in Europe. But it was unwise to force the issue when huge infrastructure projects were under way. And its contract with GTR is too soft, allowing the company to rely on drivers working overtime and, worst of all, specifying only featherweight financial penalties for cancelling services. Amid the chaos the firm has had to cough up just £2m, or 0.02% of its contract fee. + +Caroline Lucas, the Green MP for Brighton Pavilion, wants to nationalise the franchise; polls suggest most passengers do too. But upgrading the track and training more drivers—the main obstacles to a less awful service—will take just as long whoever runs the trains. More broadly, privatisation has been no disaster: since the process began in 1994, annual passenger journeys have increased by 130%, to 1.7 billion. Train operating companies were subsidised only until 2010; last year they paid £802m to the Treasury. + +When the Southern franchise comes up for renewal in 2021, the government should stiffen fines and require more drivers. For now, it must hope that the track upgrades finish soon and ease congestion, before a passengers’ revolution begins. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702795-passengers-fume-useless-train-firms-they-should-blame-government-too-going-south/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit and public services + +Somebody call a doctor + +Immigration is said to stretch services. But reducing it may strain them more + +Jul 30th 2016 | From the print edition + + + +MANY of the 52% of Britons who voted to leave the European Union did so because they wanted to reduce immigration. Since the June referendum, however, the implications of such a policy have started to dawn. As well as keeping British businesses ticking over, European migrants fill jobs in the country’s public services: one in ten doctors and one in 25 nurses is EU-born, for instance. Thousands more work in low-skilled public-sector jobs, from bus drivers to street sweepers and school caterers. “We are reliant on foreign labour to deliver public services more cheaply,” says Jonathan Clifton of IPPR, a think-tank. What will happen if that stream of labour dries up? + +There are 3m EU-born migrants in Britain. The government has indicated that they will be allowed to stay, as long as Britons abroad get the same treatment. The question is how the country will treat new arrivals. Last year net immigration from around the world topped 330,000, of whom more than half came from outside the EU. Non-Europeans’ entry is determined by a points system based on criteria such as education and salary, whereas Europeans are free to enter Britain at will. If Britain opts out of the EU’s free-movement rules, EU citizens might be subjected to the points system, or something like it. + +The minimum requirement for non-EU work visas is a salary of £20,800 ($26,900)—due to rise to £30,000 next year—and a graduate-level job. Last year only 19% of EU migrants employed in Britain were in graduate-level jobs earning more than £20,000. Indeed, only one-quarter of all jobs in Britain meet the conditions for the most common non-EU work visa. In some migrant-heavy industries, almost no workers would qualify: in “agriculture, forestry and fishing” only 4% would; in “distribution, hotels and restaurants” 6% would. Few of those toiling in unskilled public-sector jobs—waste disposal or cleaning, say—would meet the criteria. “That would have a significant impact on public services across the board,” says Bob Price, leader of Oxford City Council. + +Many worry that the National Health Service (NHS), whose junior doctors are in revolt over a new contract that they consider miserly, might find it harder to attract staff. Britain is already 24th out of 27 in the EU for the number of doctors per person. Many of its home-grown medics are leaving in search of better deals in Australia and Canada. Carlos Vargas-Silva of the Migration Observatory at Oxford University thinks that, if necessary, the government may relax criteria for visas in the NHS. Most doctors would anyway satisfy the current non-EU visa conditions, and nurses are on a “shortage occupation list” which means the usual requirements do not apply. “It is hard to see any scenarios where there would be limitations on medical professionals,” says Mr Vargas-Silva. + +Less politically sensitive services might struggle. One in 20 people employed in adult social care—which includes old folks’ homes and social work, for instance—is EU-born, a total of about 75,000 people. The sector is already acutely understaffed: last year there were 70,000 unfilled vacancies. Even before the Brexit vote, a report by Independent Age and the International Longevity Centre, two NGOs, estimated that, by 2020, this figure could rise to 200,000, or 14% of the workforce required. + +Support for Brexit was strongest among pensioners, around 60% of whom voted to Leave. Those who did so in order to limit migration may find, too late, that they were the ones who needed it most. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702650-immigration-said-stretch-services-reducing-it-may-strain-them-more-somebody-call/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Drug-testing at music festivals + +Cocaine or concrete? + +Revellers get the chance to see if their illegal drugs are what they claim to be + +Jul 30th 2016 | From the print edition + +Good clean fun + +BACKSTAGE at many of Britain’s summer music festivals, suspicious pills and powders seized from tents are analysed by lab technicians. Usually it is to advise on-site doctors and police on what symptoms to look out for in people who become unwell. But this year, for the first time, festival-goers have been given the chance to get their illegal drugs tested before they take them. + +At the Secret Garden Party, a Cambridgeshire bash on July 21st-24th, a non-profit organisation called The Loop manned a tent where partygoers could drop off their drugs anonymously, before returning later for the results. As police turned a blind eye, technicians analysed nearly 250 drug samples, mostly of ecstasy, cocaine and ketamine. + +Or at least, that was what they claimed to be: in reality the bags of “MDMA crystal” being sold for £50 ($66) per gram turned out to be brown sugar; some suspiciously hard, grey pills were made of concrete; and several samples of “cocaine” and “ketamine” were in fact ground-up anti-malaria tablets. Even the real drugs varied dangerously in potency: the strongest ecstasy pills were five times as potent as the weakest. + +Festival drug-dealers are a particularly dodgy bunch, says Fiona Measham, a professor of criminology at Durham University and co-director of The Loop. Ripping people off in their home town carries the risk that “if they bump into them again they’d get battered. At a festival they can disappear into the crowd.” + +But does the testing encourage more drug use? It is too early to say, but there is some evidence that it does the opposite. After getting their results back, only half of those at the Secret Garden Party said they would take the drugs; one-quarter said they would throw them away. Of the remainder, some said they would track down the dealer to remonstrate. “Customer satisfaction” may become a higher priority, says Ms Measham. + +The Loop will next take its tent to Kendal Calling, a festival in the Lake District which begins on July 28th. Five other festivals have made inquiries. Those held on private land, as the Secret Garden Party is, may be more open to the idea than festivals in public places. Last year a plan to bring drug testing to Parklife, a shindig in a park in Manchester, was vetoed by the city council. + +The programme also represents a test of the new government. In 2013, as home secretary, Theresa May dismissed a proposal to pre-test drugs at a nightclub in Manchester, arguing that “if somebody has purchased something that the state has deemed illegal, it’s not then for the state to go and test it for you.” Yet so far the Home Office has made no criticism of The Loop’s project. That is perhaps the most encouraging result of the weekend. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702624-concrete-posing-ecstasy-brown-sugar-mdma-crystals-illegal-drugs-often-are-not-what-they/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Rage against the dying of the light + +Owen Smith bears Labour’s last hope of salvation. It is slim + +Jul 30th 2016 | From the print edition + + + +THERE is a Welsh style of political speech that owes more to the pulpit than the podium. It was born in the nonconformist Valleys, where mysticism, mining and Methodism mingled and produced a distinctively emotional and poetic religious culture. At its heart is hwyl, a hard-to-translate Welsh term implying the stirringly sentimental, bardic and gutsy. On the preacher’s lips it means cerdd dafod (rhythm, or “tongue craft”) and cynghanedd (harmony). It has marked the speech of three of Britain’s most acclaimed modern political orators, all sons of provincial Wales: David Lloyd George, Nye Bevan and Neil Kinnock. Of the latter’s first speech as Labour Party leader one reporter admiringly wrote that he “hwyled and hwyled and hwyled.” + +Perhaps it was the choir-like backdrop of supporters waving placards, or the misty red-and-purple lighting illuminating the organ pipes and columns, or the inscribing around the rim of the vaulted ceiling: “And I heard a great voice out of heaven saying behold the tabernacle of God is with men…”. But as Bagehot watched Owen Smith at the Emmanuel Centre, a church in Westminster, he detected hints of that preacherly register. + +The MP challenging Jeremy Corbyn for the Labour leadership grew up in Barry and calls Bevan his political hero. Mr Smith is a good speaker: he lilts, alliterates, leans on his vowels and is visual (describing the prolix Mr Corbyn’s “flapping lips”). He uses repetition, decrying “the weak, weak, weak way in which we contested that [Brexit] referendum” in a fashion redolent of Mr Kinnock during his battle with hard-left entryists in the 1980s (“A Labour council, a Labour council…”). + +Optimists on Labour’s centrist wing see in Mr Smith further similarities to Mr Kinnock, who took over from the unelectably left-wing Michael Foot, fought both Trots and Margaret Thatcher and bequeathed to Tony Blair, his successor-but-one, something that could be moulded into a party of government. In Mr Corbyn, they see a worse version of Foot and in Theresa May a kind of Thatcher. The latest ICM poll puts Labour 16 points behind her and shows that one in three voters who backed Labour last year prefer Mrs May as prime minister. This helps to explain why most of Mr Corbyn’s MPs have turned against him, forced the current contest and backed Mr Smith. + +The former shadow-welfare secretary is about as conciliatory as Labourites come. He is one of the peacenik social democrats who considered Mr Blair too Atlanticist and market-liberal, who reckon Labour can win elections in a consumerist, post-Thatcher country on a platform of more redistribution and state interference, but who also recognise the importance of credibility and presentation. Both Mr Kinnock and Ed Miliband, Mr Corbyn’s predecessor, hail from this segment of the party. Neither won power but both kept Labour vaguely competitive. + +With his crisp shirts and trendy glasses, Mr Smith looks more like a prime minister than either. But he is also farther to the left: on July 27th he unveiled a programme of punitive tax rises, spending hikes and clamps on Britain’s liberal labour market. At his London rally he pledged a War Powers Act that would limit the government’s ability to intervene militarily without Parliament’s blessing. If anyone can build a bridge between those Labour members who still care about winning elections and those Corbynites who are having doubts about their gormless Svengali it is Mr Smith. + +And still he struggles. For all his orotund pandering, in London he spoke to a half-empty hall. From the back your columnist looked out on a canyon of empty pews. Moreover, those applauders in the front few rows cheered most enthusiastically when he attacked Mr Corbyn. In other words: these were sensible social democratic types who already opposed Labour’s current leader. Despite his leftward elasticity, Mr Smith does not seem to be winning over the waverers. Polling concluded on July 18th found that members would back Mr Corbyn over his challenger by 56% to 34%. On Facebook the former has 774,000 followers, 767,000 more his rival. Corbynites tar their opponent as an evil capitalist who has committed the sins of working in pharmaceuticals and once saying something positive about Mr Blair. + +The valley of the shadow of death + +Bagehot wishes Mr Smith success in Labour’s leadership contest. But it concludes on September 24th and the Welshman is losing. Mr Smith’s best hope now is to make the race about Brexit, one of the few subjects that drives a wedge between Mr Corbyn, a Eurosceptic, and his often younger, internationalist supporters. The Labour leader’s droopy performance during the referendum campaign, in which he backed Remain only half-heartedly, contributed to the dismal result and exposes him for the conservative he is: a left-wing Little Englander, an abrasively nostalgic memorabilia junkie, the left’s answer to the Duke of Edinburgh. If Mr Smith, who has backed a second referendum, is to beat his opponent, he has to draw the lefties’ attention to this. + +Many moderates supporting him reckon he will flunk the vote. Thousands of idealists joined the party last summer and too few recognise the mess Mr Corbyn has made of the job. “I used to think splitting the party was a terrible idea. I don’t any longer” says one Labour strategist. If the singsong MP for Pontypridd loses, moderate MPs are preparing to declare independence and form their own parliamentary group. In order to replace Mr Corbyn’s rump party as the official opposition, such a splinter needs to carry the majority of Labour MPs. So perhaps the real value of Mr Smith’s campaign will be to lose and thus persuade his fellow soft-leftists that the party is indeed lost; that even with an impeccable lefty alternative, Mr Corbyn’s fans will not abandon their man. In other words: it may be that Mr Smith’s bid serves primarily to let MPs quit with honour, having not given up without a fight. They will not have gone gentle into that good night. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21702792-owen-smith-bears-labours-last-hope-salvation-it-slim-rage-against-dying-light/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Pope Francis: Hearts, minds and souls + + + + + +Articles Sections Next + +Pope Francis + +Hearts, minds and souls + +Despite his popularity, the pontiff’s efforts to reshape his church face stiff resistance + +Jul 30th 2016 | VATICAN CITY | From the print edition + + + +CARDINAL ROBERT SARAH (pronounced Sar-AH, with the accent on the last syllable) has never been afraid to speak out. Such was his defiance of his native Guinea’s dictator, Ahmed Sékou Touré, that he was at the top of a list of candidates for assassination found when the strongman died in 1984. Since coming to Rome in 2001 he has emerged as standard-bearer-in-chief of the traditionalists: Roman Catholics who prize doctrinal certainty over adapting to changing times. Many in the church’s higher reaches would like to reverse some of the innovations that followed the Second Vatican Council, which closed in 1965 (indeed, they often claim its intentions were misinterpreted). + +As the head of the department overseeing the church’s charitable activities, Cardinal Sarah brought Caritas, its main development agency, under tighter Vatican control and in 2011 jettisoned its liberal-minded director, Lesley-Anne Knight. At a recent synod, or meeting of bishops, called by the pope to discuss issues that split liberals and traditionalists relating to the family and sexual orientation, he vigorously opposed change. On July 5th he went further, openly defying Pope Francis. The issue was one of immense symbolic importance for Catholics. At a conference in London Cardinal Sarah, who now heads the Vatican’s liturgy department, asked priests to resume celebrating mass facing east, with their backs to the congregation, as they had done before the Second Vatican Council. + +Seldom do Catholic leaders clash so publicly. The Cardinal Archbishop of Westminster, Vincent Nichols, wrote to the priests of his diocese reminding them that an instruction “approved by the highest authority in the church” told them to face the congregation whenever possible. The pope saw Cardinal Sarah on July 9th, after which the Holy See said the cardinal’s words, which went against that settled position and the pope’s known wishes, had been wrongly interpreted. + +It was the latest sign that conservative resentment of Francis is developing into open resistance. Traditionalists hanker for the papacy of his predecessor, Benedict XVI, who retired to a life of prayer three years ago. On May 20th, in another seemingly subversive pronouncement, Archbishop Georg Gänswein, who doubles as Benedict’s secretary and the head of Francis’s household, said the papacy was in fact dual, with an active member (Francis) and a contemplative one (Benedict). + +This week hordes of young Catholics are converging on Krakow in Poland to celebrate their church’s World Youth Day. It is the kind of event at which the genial, informal Francis excels (the picture shows him greeting the faithful in St Peter’s Square in Rome). It is also one that allows him to shore up his position with popular acclaim. A global opinion poll published in March found that his admirers outnumbered his detractors by more than four to one. Last year in America, 86% of Catholics said they had a favourable impression of him. Even more approved of the direction in which he was taking the church. + +So far, Francis’s popularity has shielded him from the traditionalists. But that popularity may be diminishing. Attendance at papal events in Rome last year was less than half that in the year of his election. This may have other causes, notably fear of terrorism. But it could also reflect growing doubts, not just among conservative Catholics, but among liberal ones. + +Suffering little children + +When Francis became pope, liberalisers’ hopes were high that he would make change in four areas: by instigating a financial clean-up of the Vatican, long criticised for lacking transparency and aiding tax evasion; by tackling the long-running scandal over clerical child-abuse; by breaking the grip of traditionalists—notably, with regard to the position of women in the church; and by decentralising the church’s administration. How has he fared? + +The pontiff’s most unambiguous success has been in handling the Vatican Bank. The clean-up began under Benedict. But Francis has pursued it with vigour. In May it was revealed that two members of its supervisory board had resigned. Not long ago that would have been widely reported; instead it passed almost unnoticed. The journalists who cover the Holy See, like the diplomats accredited to it, mostly accepted the official explanation that the two had quit in a disagreement over management policy. It was a measure of how successfully the pope, who has also created a new financial super-department, headed by an Australian cardinal, George Pell, has defused the ticking bomb of the Vatican’s offshore financial status. + +When it comes to child abuse by priests, however, the pope’s actions have been far more disappointing. “I don’t understand Francis,” says Kieran Tapsell. “He’s done some fantastic things. But he has this blind spot.” Mr Tapsell, a retired Australian lawyer and ex-seminarist, is the author of “Potiphar’s Wife”, a study of the scandal’s legal background and, in particular, the relevance of the “pontifical secret”. This requires bishops not to disclose information on serious offences allegedly committed by priests. It was only in 2010 that Benedict ruled that bishops could report suspected child abuse to the civil authorities—but only where required to do so by local laws. Since victims of child abuse commonly wait until adulthood before telling anyone, most revelations concern crimes committed many years ago. And very few countries require reports of such historical cases to be passed to the police. + +In June the pope announced new rules that provide for the removal of bishops who cover up evidence of serious crimes by priests, including sex abuse. But Mr Tapsell dismisses it as “pure PR: Francis is saying that if bishops don’t [report to the civil authorities], they will be punished. But canon law says that if the pontifical secret applies they are obliged to cover up—and can be punished for not covering up.” + +Regarding the position of women in the church, the early signs were more promising. Last year Francis shut down a hostile investigation, launched under Benedict, of American nuns suspected of promoting radical feminism. In May, he announced an inquiry of his own—into the possibility of ordaining women as deacons (a lower rank than that of priest which, unlike the priesthood, is open to married men). + +However, the last such exercise, which reported in 2002, led nowhere. Some campaigners now pin their hopes on women being chosen to fill senior positions in a new Vatican department for the laity, the family and the church’s anti-abortion activities. But Francis has not so far used the room for manoeuvre he could enjoy. For example, though under canon law only the ordained (and therefore only men) can be cardinals, that is a relatively recent innovation (a layman last became a cardinal in 1858). If the pope wanted to, he could change the rules and propose some heads of the women’s orders as cardinals. + +Man of the people + +Lucetta Scaraffia, a columnist for the Vatican daily, L’Osservatore Romano, was among a handful of women invited to take part in last year’s synod. She is a “bit disappointed” by Francis’s failure to act, she says. But, noting that his motivations are always deeply spiritual, she believes he is trying to develop a new theology on which to base an enhanced role for women. She points to an announcement last month that, in line with the pope’s “express wish”, the annual celebration of St Mary Magdalene is to become a proper feast day. That puts the most prominent female disciple of Jesus on a level with his apostles. Indeed, the Vatican’s statement went further, adopting St Thomas Aquinas’s description of the woman who announced the resurrection to Jesus’s followers as “the apostle of the apostles”. + +The sex-abuse scandal and the role of women in the church both featured in the talks that led to Francis’s election. But the most insistent demands from those of his fellow cardinals who serve among congregations as pastoral archbishops were for measures to involve them in decision-making; and for a shake-up of the Vatican bureaucracy, known as the Roman Curia, and new curbs on its powers. + +Here, too, there have been some encouraging signs for those who hoped for change. Francis has weakened the Curia’s grip partly by the simple expedient of ignoring it at critical junctures. According to insiders, he broke with protocol by not consulting the Secretariat of State, which acts as both foreign and interior ministry, before a historic (and, say critics, ill-advised) meeting in February with the Russian Orthodox Patriarch, Kirill. For his first press interview he bypassed the house paper, L’Osservatore Romano, and went to the Jesuit periodical Civiltà Cattolica (he is a Jesuit himself). And when he released his latest encyclical, or letter on doctrine, Amoris Laetitia (The Joy of Love), the job of presenting it went not to the Vatican’s official theological supremo, Gerhard Müller, but to a pastoral cardinal, the Archbishop of Vienna, Christoph Schönborn. + +The pope has not, however, managed to make the Curia more international (indeed, he has appointed Italians to several key posts). He has not imposed a term of office on its officials. Nor has he established a counterweight to it, though he clearly intended to. Soon after his election Francis created a Council of Cardinal Advisers. At first, only one member was drawn from the Curia. Its brief was no less than to advise the pope on “the government of the universal church” and to draw up plans for reforming its central administration. + +Almost three years on the council, which now includes three curial members, is still meeting. It has contributed to a reorganisation of the central bureaucracy (the latest reform will put all the Vatican’s media operations into a single department) and its members plan to submit to Francis a comprehensive proposal for a new constitution for the Curia. But as it deliberates, some wonder whether Francis may be cooling on the “sound decentralisation” he advocated in his first encyclical, Evangelii Gaudium (The Joy of the Gospel). + +The difficulty is that this goal clashes with another dear to the pontiff’s heart: that of doctrinal liberalisation. The debates at the synod in 2014 and last year revealed a hierarchy more divided than he had perhaps imagined, and more conservative than he would have liked. More than half of all Catholics now live in developing countries and prefer, particularly in Africa, a muscular, no-nonsense Christianity. Among other affirmations of traditionalist attitudes, the synod watered down proposals for a more inclusive approach to gay people, and balked at endorsing communion for remarried Catholics. + +By grace and good works + +The synod has only consultative powers, so, at least in principle, Francis can simply ignore it. To some extent, he has done. Amoris Laetitia was his response to the synodal deliberations, and it takes a notably liberal line on divorced and remarried Catholics: “It is possible that in an objective situation of sin,” he wrote, “a person can be living in God’s grace…while receiving the church’s help to this end.” In a footnote that outraged traditionalists, he added that “this can include the help of the sacraments.” He might not have been able to go further without splitting the church. + +Robert Mickens, editor of “Global Pulse”, a Catholic online publication, worries that the spirit of tolerance and inclusiveness the pope has fostered could be reversed by his successor unless Francis puts new structures in place. But he suspects that the pope “is trying to buy time to change attitudes. He has always said that if we just change structures without making conversions, we won’t get anywhere.” + +Francis may not be in a position to play a long game. He will be 80 later this year. It may be possible only in his pontificate’s final stages to answer the central question: as one long-time observer puts it, “Is he clever and guileful? Or is he blocked?” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21702749-despite-his-popularity-pontiffs-efforts-reshape-his-church-face-stiff/print + + + + + +Articles Sections Next + + + + + +Business + + + + +Verizon buys Yahoo: Does it ad up? + +Rare diseases: Fixing fate + +Corporate governance: Change, or else + +Telecoms: Hans free + +Electric cars in China: Charging ahead + +Companies’ green strategies: In the thicket of it + +Schumpeter: Not-so-clever contracts + + + + + +Articles Sections Next + +Verizon buys Yahoo + +Does it ad up? + +The telecoms giant has made a bold, risky bet on the future of advertising + +Jul 30th 2016 | SAN FRANCISCO | From the print edition + + + +“POETIC” is how Marissa Mayer, the boss of Yahoo (pictured), described the sale. Others, remembering better times at Yahoo, see little that is artful about the decline and fall of the 22-year-old internet company. On July 25th, Verizon, a telecoms giant that is also America’s biggest mobile operator, announced it would buy Yahoo’s main internet business for $4.8 billion (a price that does not include the firm’s properties in Asia or its portfolio of patents). The sum is paltry compared with Microsoft’s offer of $45 billion in 2008, which Yahoo’s management turned down, arguing that the firm was worth far more. + +Four years ago, when Ms Mayer, an early Google executive and an engineer, arrived to try to reverse the fortunes of Yahoo, the firm’s Silicon Valley headquarters brimmed with optimism. For more than two decades, Yahoo had been torn between its identity as a media company that made content and a technology company that provided tools for people to use online. It seemed that Ms Mayer could be the leader to settle on a single identity and direction (see timeline). + + + +Instead, she spent on everything and hoped something would work. Early on came the purchase in 2013 of Tumblr, a social network and blogging platform, for $1.1 billion, even though, according to an insider, it was about to run out of cash. Yahoo has since written down most of the purchase price. To beat out Google she inked a pricey, five-year deal with Mozilla, owner of Firefox, a browser; Yahoo became Firefox’s default search engine at an annual cost of more than $375m. As for Yahoo’s own core business, revenues are falling by a tenth each year as consumers and advertisers migrate from desktop computers and the internet firm’s products. Its gross profits fell by 44% between 2012 and 2015 and its costs, including those of an overstaffed headquarters, rose sharply. + +Verizon’s shareholders must hope that the firm absorbs the lessons of Yahoo’s decline alongside its assets. But investors who know it well are near unanimous that this week’s deal may not fare all that much better than some of its target’s past ones, says Jonathan Chaplin of New Street Research in New York. Certainly, Verizon makes no claim to be able to restore Yahoo to its former glory. Rather, it reckons Yahoo could help buttress its main business of selling mobile-phone subscriptions. This has slowed now that most people have smartphones, which are falling in price. + +“Yahoo brings viewers; viewers bring advertising; advertising brings top-line growth,” is how Fran Shammo, Verizon’s chief financial officer, sums up the firm’s thinking. Last year it spent $4.4 billion on AOL, another former dotcom darling. With both Yahoo and AOL it will achieve much-needed scale: in America it will command the second-most visited set of web properties. Only Google beats it now (see chart). + + + +Scale makes sense because buyers of digital ads want to spend money where they can find large audiences. Every last percentage point of growth in global online advertising last year (outside China) went to Google and Facebook, notes Brian Wieser of Pivotal Research, which tracks digital ads, among other things. The two giants together control over half of the US mobile-advertising market, compared with Yahoo’s 2.4% and Twitter’s 3.4%. + +Google and Facebook have invested heavily in technology that allows them to sell digital ads in an efficient, automated fashion. Verizon is hoping to take them on. Advertising is going through (yet another) digital transformation, meaning that marketers are not only spending more money online but also using technologies to buy ad space more efficiently, targeting their message to the specific people they are interested in. AOL has a smoothly functioning new platform for this, but Yahoo underinvested. Verizon reckons it will be able to use AOL’s technology to sell a lot of Yahoo’s inventory of ads to marketers. + +All the same, Verizon will be taking on rivals whose main business is advertising, and in which they each have more than a decade of experience. It will need to move nimbly, not something telecoms firms are known for. Another reason why Verizon may struggle to challenge Facebook’s and Google’s duopoly has to do with new plans from the telecoms regulator. Internet-service providers and mobile carriers like Verizon know more about their customers than do Google and Facebook. They know their billing addresses, their precise location at any moment and all their online habits, says Harold Feld of Public Knowledge, an advocacy group. + +So Verizon is now betting it will be able to muster data about all of its 113m retail subscribers and bombard them with targeted ads as they browse apps or websites owned by Yahoo and AOL. Advertisers are much taken with the possibility. For example, McDonald’s, a fast-food chain, could choose not to advertise to people who have visited a store recently and instead go after those who prefer Burger King. This kind of “geo-targeting”, as it is known, has long held promise but eluded advertisers. + +But the Federal Communications Commission has proposed rules that could challenge this vision. The regulator may soon require that mobile-phone subscribers opt in to any sort of advertising by outside parties instead of automatically allowing it. Many, of course, would opt out. Investors in telecoms firms have paid insufficient attention to the discussions in Washington, DC, thinking them too wonky to worry about, says Craig Moffett of MoffettNathanson, a research firm. + +Watching people’s physical whereabouts may already be a step too far for consumers, and could spark an immediate backlash over privacy. Verizon has recently had a run-in with privacy advocates over its use of “zombie cookies”, which allowed it to track its customers’ online browsing even when they opted out; it then shared the data with other firms. The company had to pay a small fine earlier this year. + +Verizon’s deal does have one thing on its side: low expectations. Any success it has with its purchase of Yahoo is all upside, says Mr Chaplin. By contrast, during her reign, Ms Mayer was dogged by unreasonably high expectations, along with near-constant scrutiny. Verizon has the freedom to say next to nothing about how its advertising business does in the near term. Such relative invisibility may allow it to press on with the radical surgery, such as slashing headcount, that Yahoo has needed for years but never received. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702779-telecoms-giant-has-made-bold-risky-bet-future-advertising-does-it-ad-up/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Rare diseases + +Fixing fate + +New medical cures may mean changes in drugmakers’ business models + +Jul 30th 2016 | MILAN | From the print edition + + + +WHEN families leave the genetic institute at the San Raffaele Hospital in Milan, they are still anxious. Later, many will come to see the day their children received gene therapy as a blessed new start. Youngsters who had been sentenced to short lives, full of suffering caused by faulty DNA, get better and thrive. Cures for rare genetic diseases, both for children and adults, were once no more than a dream, but now they are set to become commercial reality. + +Gene therapies take sections of correct DNA and insert them into cells, often using viruses. Once inside the cell, the new DNA produces the protein that was formerly missing and the fault is fixed. Last week America’s Food and Drug Administration (FDA) handed out “breakthrough” designations—intended to hasten the approval of important new treatments—to two gene therapies. One, made by Pfizer, a giant drugmaker, and Spark Therapeutics, a biotech company, is for haemophilia B, a rare bleeding disorder. The other, made by a specialist gene-therapies firm, AveXis, is for a severe neuromuscular disease. Money is pouring into the area: this week a gene-therapy biotech firm, Audentes, raised $75m in an initial public offering. + +Although only a handful of gene therapies have been approved around the world, the number in development has doubled since 2012, according to analysts at Datamonitor Healthcare. Spark Therapeutic’s SPK-RPE65, which restores vision by treating an inherited retinal condition, is most likely to be the first to receive full approval in America. + +But most genetic diseases are extremely rare. Take Strimvelis, a therapy that GSK, a British drug company, has approval to market in Europe. The treatment, developed at the San Raffaele, cures ADA-SCID, an immune disease that is often fatal in the first year of life. Annually, just 15 patients are diagnosed with it across Europe. Developing financially viable therapies for such tiny markets will be extremely difficult. + +So far GSK has not said how it will price Strimvelis, but the industry is watching the decision keenly. Martin Andrews, the firm’s head of rare diseases, says there is little point in bringing a medicine to market that nobody can afford, so the price has to be set as low as possible. But his firm also has to make a return on its investment, he points out. The lessons from Glybera, the first gene therapy to be sold in Europe, still loom large. It cures a genetic condition that causes a dangerously high amount of fat to build up in the blood system. Priced at $1m, the product has only been bought once since 2012 and stands out as a commercial disaster. + +Some suggest the costs of expensive therapies like this might be spread over many years. Another idea is to pool the risk of having to pay for them among health insurers. Andrew Chadwick-Jones, a partner at Oliver Wyman, a consulting firm, says the pharmaceutical industry would like to move to an “outcome-based system” for many drugs, in which firms can show that high prices still reduce overall health-care costs. Health providers may find that cures are cheaper in the long run than existing treatments for chronic and life-shortening conditions, so they may be willing to pay prices that allow the drug firms to make a profit. + +Mr Andrews predicts that eventually, larger numbers of patients will generate far more creative thinking by pharmaceutical companies. GSK is looking at automation as a way of reducing the cost of gene-therapy treatments. Keith Thompson, boss of the Cell and Gene Therapy Catapult, an accelerator funded by the British government, says there is a “global race” to see who can do this better and faster. His group is building a manufacturing centre that aims to help supply gene therapies to the drugs industry. Industrialising the process will take years. But a new chapter in medicine, and perhaps in the pharmaceutical business model, has begun. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702785-new-medical-cures-may-mean-changes-drugmakers-business-models-fixing-fate/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Corporate governance + +Change, or else + +As anger over big business mounts, a handful of bosses push for reform + +Jul 30th 2016 | NEW YORK | From the print edition + + + +BASHING big business used to be the preserve of politicians on the left. But so unpopular are America’s corporate titans—ranking below even newspapers (see chart)—that attacks on them were as much a feature of this month’s Republican convention as they were of the just-concluding Democratic bash. Unsettled by this hostility and harbouring some concerns of its own, about things like the accuracy of reported results and the structure of public companies and markets, the business community is responding. + +Hence the release, on July 21st, of a report labelled “Commonsense principles of corporate governance”, containing 77 suggestions compiled by 13 of America’s most prominent chief executives during a year of secret meetings. The group was convened by Jamie Dimon of JPMorgan Chase and Warren Buffett of Berkshire Hathaway, and included the likes of GE and GM, as well as Vanguard and T.Rowe Price, two fund managers with reputations for being forthright. + +Their recommendations, like the report’s title, may lack the catchiness of populist policies. But they represent a sober take on some big issues—how big companies should be led, how they should communicate with their shareholders, and how large investment firms should fulfil their own responsibilities. + +The most controversial recommendation seemed innocuous: for corporate accounts to follow generally accepted accounting principles (GAAP). Startups often recoil at this, because they believe that GAAP reporting, which counts their high, initial fixed costs, penalises them. So too, with far less merit, do clever chief financial officers who have learned to make adjustments and tweaks that often highlight successes and disguise failures. For similar reasons, the report discouraged companies from providing earnings “guidance”, since making predictions about future numbers created pressure to fiddle the actual results. + +Much of the report is devoted to the role of directors, in theory the apex of a company but in reality often an assembly of dim bulbs with bright names that serve as an appendage of the CEO. The report counsels that directors should be “shareholder oriented”, with diverse backgrounds and skills, undistracted by excessive other commitments. Opportunities should exist for critical issues to be discussed without the chief executive. The board should be able to speak with senior employees and outside consultants. Pay for board members and senior executives must be linked to the company’s success through share grants or the equivalent. + +Corporate shareholders were also taken to task. They should, the report said, take direct responsibility for voting on proxy motions, rather than delegating their ballots away to advisory firms; weigh in on issues tied to long-term value creation; and have access to company management and its board. They should, in sum, be active in their ownership even if, as in the case of index funds, they take a passive approach to what they own. + +None of the bigwigs’ suggestions are particularly exceptional. They may not soften the hearts of those who are fundamentally opposed to business. But any attempt to meet concerns that companies are feckless and undeserving of trust is worthwhile. More such initiatives might mean that four years hence, rather than facing a storm of criticism, there might even be a convention willing to give a cheer. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21702553-faced-mounting-criticism-big-business-bosses-offer-some-sensible-governance-reforms/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Telecoms + +Hans free + +Ericsson’s boss, Hans Vestberg, departs and his firm’s troubles continue + +Jul 30th 2016 | PARIS | From the print edition + +Would an outsider do better? + +“THE pace of technological change will only increase,” Hans Vestberg told a group of visitors to Ericsson’s headquarters in Stockholm a few months ago, adding that his company had to learn from “innovators”. Though Ericsson is a colossus, with two-fifths of the world’s mobile-phone traffic passing through its networks, he talked of needing a new business model to take on rising digital rivals—providers of software and database services, such as Google and Microsoft. His observations were shrewd, but someone else will have to find ways of putting them into practice. Mr Vestberg lost his job on July 25th. + +He ran the firm for six years but repeated efforts to cut costs failed. Ericsson’s revenues from selling and installing telecoms networks, its core business, face long-term decline. More bad news came this week when Standard & Poor’s, a rating agency, said it was worried about the firm’s earnings prospects. Its two main competitors, Nokia (which has completed a merger with Alcatel, of France) and Huawei Technologies, of China, are far more efficient. + +More important, Mr Vestberg, who has spent his whole career at Ericsson, failed to produce a radical plan beyond building networks. Shareholders bemoaned low investment in new areas. Since the price of infrastructure, its core business, is going down, Ericsson should invest more in software and services, or management systems for networks, says Rolv-Erik Spilling, a veteran of Nordic telecoms now involved in startups. + +Ericsson claims that close to half its sales come from services (though much comes from installing networks). It spends plenty on R&D. But its innovations have brought too few benefits. The firm’s shares have flatlined for most of a decade. Bengt Nordstrom, an analyst at Northstream, a telecoms consulting firm, blames cautious leadership by what he calls “general practitioner” bosses. Ericsson should now pick a leader more inspired by technical or digital matters, and thus better placed to meet competition from Google and other new rivals. The challenge for Mr Vestberg’s successor is not only to cut costs, but to find a new purpose. If Ericsson cannot, worries Mr Nordstrom, the company’s continued existence could soon come into question. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702775-ericssons-boss-hans-vestberg-departs-and-his-firms-troubles-continue-hans-free/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Electric cars in China + +Charging ahead + +China’s dirty race for clean vehicles + +Jul 30th 2016 | SHANGHAI | From the print edition + + + +AFTER a decade of halting progress, electric cars are zooming ahead in China. Last year the number of registrations of new electric vehicles overtook that in America, making the Middle Kingdom the world’s biggest market (see chart). The category includes electric-only cars as well as plug-in hybrids that can also run on petrol. Analysts expect the market to grow by nearly 50% a year for the rest of this decade. + +Unfortunately, the growth is mostly due to state largesse. The government doles out generous subsidies to local makers of electric vehicles (EVs), to parts suppliers and to those who buy the final products. Favoured Chinese firms also benefit from friendly procurement contracts, such as one that the government of Shenzhen, a southern city, handed out this week to BYD, a big EV manufacturer based there, for hundreds of electric buses. It could be worth 1.5 billion yuan ($227m). + +Last year alone China shovelled over 90 billion yuan in subsidies into the industry, which it calls “strategic”. This has led to queues of EVs on the streets, mostly of poor design and quality. China has yet to produce an EV manufacturer that can compete at the level of America’s Tesla Motors. + +Nor does China hold back from directly hobbling foreign firms. In June, it denied battery certifications to South Korea’s LG and Samsung, while granting them to inferior local suppliers. Protectionism, says a car-industry analyst who prefers to comment anonymously. Desperate to stay in the market, Samsung said this month it will spend 3 billion yuan on a stake in BYD. + +At least the government is encouraging other Chinese firms, including the country’s tech giants, to innovate in the field. Tencent, a gaming and social media firm, is developing internet-connected EVs with Taiwan’s Foxconn. Alibaba, an e-commerce firm, is providing data and cloud-computing services to Kandi Technologies, a local EV-maker that is popularising the sharing of the vehicles. + +One smaller upstart is NextEV, which is backed by Sequoia Capital, a Californian venture fund. It is in the midst of raising $1 billion and plans to launch a Chinese-backed sports car this year to challenge Tesla. NextEV’s chairman, William Li, has a clear view on state help. “Subsidies can’t make drivers love EVs.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702786-chinas-dirty-race-clean-vehicles-charging-ahead/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Companies’ green strategies + +In the thicket of it + +However faddish and fuzzy, the idea of sustainability is here to stay + +Jul 30th 2016 | From the print edition + + + +WITH all due fanfare, on September 10th last year Dow Jones, a financial-news provider, declared Volkswagen to be the world’s most sustainable carmaker in its flagship sustainability index. Just weeks later it removed the firm. The news that 11m of VW’s diesel vehicles had been fitted with software to cheat emissions tests somewhat dented its credentials—and that of corporate sustainability itself. + +After a couple of decades of worthy initiatives, acting to implement sustainable practices in a meaningful way is still far harder than gushing about it. “Sustainability is just being slightly less awful,” admits Chris Davis, who keeps the Body Shop, a cosmetics firm, on the right side of greenery. The hardest part is still getting businesspeople to understand that sustainability is not just a cost or a constraint, says Philippe Joubert, formerly an executive at Alstom, a French engineering firm, and now a sustainability adviser. + +No accepted steps exist for going green, so sustainable approaches often end up bogged down in endless questionnaires and targets. And a lack of standard practices gives some firms leeway to cut corners. One dodge to give the appearance rather than achieve the reality of reducing pollution, for example, is to pick a particularly fume-laden year as a baseline, according to Peter Williams, an expert on sustainability data at IBM, a computing firm. Firms can ignore difficult areas, such as their heavy use of chemicals, entirely. + +Many firms pursue a goal of carbon neutrality: they cut their output as much as possible and then pay to reduce emissions via special schemes. One example is Bain, a consulting firm, which boasts of offsetting the air miles it racks up through carefully monitored wind-power schemes in India and forestry programmes in Brazil. But the green projects into which many polluting firms pour money often lack robust certification or oversight, leaving their environmental credentials much flimsier than the glossy annual reports which describe them. + +“Total chaos” surrounds environmental reporting by companies in America, according to Jean Rogers of the Sustainability Accounting Standards Board, a specialist body (one of many). There is no recognised standard for calculating total carbon impact, admits the Carbon Trust, another group. Taking into account the impact of a manufacturing process is one thing, but working out how a telecoms device pollutes over its life or the energy wasted from draughty office buildings is another. Tallying a firm’s overall environmental impact is extremely hard. + +There is no getting away from the subject, however. Last year the UN’s Sustainable Development Goals were adopted. Many investors increasingly fret over environmental risks, and are demanding policies that lessen them. Consumers care more, too, as a rash of examples attests. Demand from businesspeople for courses on sustainability is rising. + +They may learn that many of the most effective green initiatives are often measures that any well-run company should embrace. Over a decade to 2015, Walmart, the world’s biggest retailer, saved as much as $1 billion annually by doubling the efficiency of its American vehicle fleet by changing its routes. Veolia, a French conglomerate with businesses ranging from energy to waste, has found a way to extract valuable rare metals, such as palladium, from street sweepings. And Nike’s Flyknit technology, which allows sports shoes to be woven, not sewn together from pieces, cuts waste by four-fifths and earned revenues of about $1 billion in 2014. These are the sort of un-faddish ideas that could give corporate greenery a better reputation. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702784-however-faddish-and-fuzzy-idea-sustainability-here-stay-thicket-it/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Not-so-clever contracts + +For the time being at least, human judgment is still a better bet than cold-hearted code + +Jul 30th 2016 | From the print edition + + + +BUSINESS could be such a breeze—if it weren’t for those pesky humans. Imagine contracts that enforce themselves and are not subject to interpretation by, for instance, rent-seeking lawyers. Or envisage autonomous corporations, made up of bundles of automatic agreements, which could send their investors dividends whenever profits reach a certain, specified level and not just when the board of directors has had a good lunch. + +Such “smart contracts” are all the rage among futurist backers of the blockchain, the technology that underpins bitcoin, a digital currency. In simple terms, these are pieces of software that represent a business arrangement and execute themselves automatically under pre-determined circumstances. As well as making businesses more efficient, some see them as a way to bypass human decision-making altogether. Faster than you can say “techno-Utopia”, however, the idea has collided with reality. + +Automating contractual relationships is an old dream. The term “smart contracts” was coined in 1994 by Nick Szabo, an American computer scientist and legal scholar. But the concept remained obscure for lack of the right technology. Then, in 2008, along came bitcoin and the blockchain, a special kind of peer-to-peer database that provides a secure, public and trusted record of transactions. It enables new data to be added and prevents historical data from being tampered with. But the potential of the blockchain goes much further than ensuring the same bitcoin are never spent twice. It also allows users to “bake in” information, including the precise instructions needed for smart contracts. + +Bitcoin’s blockchain proved to be less than ideal for executing business rules. Enter Vitalik Buterin, a 22-year-old Russian-Canadian programming prodigy, and his crew of libertarian coders. Last year they launched Ethereum, a new type of blockchain meant as a platform for smart contracts. The aim was as much political as it was technological. Ethereum would allow developers to program not only smart contracts, but entire “Decentralised Autonomous Organisations” (DAOs)—entities that, like bitcoin, do not need centralised management and operate beyond the direct control of self-interested institutions such as governments. + +The Ethereum coders immediately pressed ahead with just such an application and created, in April, a sort of venture-capital fund without venture capitalists, called the DAO. Everyone could join it by transferring digital coins (called “ether”, Ethereum’s equivalent of bitcoin) to a smart contract which represents the fund, which gave them the right to participate in votes on investment proposals. It attracted ether at one point worth more than $200m. But then somebody hacked the DAO through flaws in its code, and took about $50m. The stolen funds could only be fully withdrawn after four weeks. So to recover the money in time Ethereum’s community last week agreed to change the rules, allowing the original owners to withdraw their contributions. + +The DAO debacle could reflect teething problems. On average, software comes with between 15 and 50 defects per 1,000 lines of code. That number is estimated to be at least twice as high for Ethereum’s contracts because the system is immature. This means that, as one blogger put it, the contracts are “candy for hackers”. + +But the affair also points to more serious problems with the very concept of smart contracts. A blockchain is meant to be immutable. Once contracts are set in cryptographic stone, the whole idea is that they cannot be changed, even though updates are usually how software matures. The Ethereum community resorted to changing its blockchain in this instance because the DAO was considered too big to fail: it had attracted 14% of all the ether in circulation. But that creates more problems: if code is law, so are bugs in the code—and correcting them may itself mean a breach of contract. Some are now speculating whether the DAO hacker will sue to recover his loot. + +There are other reasons why smart contracts may never become as pervasive as their fans hope. Imagine a contract that gets data from elsewhere and then takes action—an agricultural-insurance policy, say, that retrieves weather data and pays out automatically if there has been no rainfall. Simple as that sounds in theory, the nature of the blockchain again gets in the way. It is controlled collectively by many of its users, so they all have to keep identical copies of the contract and there is as yet no way around this. So which duplicate of the contract should try to fetch the data? To avoid such confusion, trusted parties, known as oracles, could supply the data to a blockchain, but that would undermine the goal of agreements free of human caprice. + +Fans of smart contracts should curb their enthusiasm. Rather than creating “a new breed of human organisation”, as the now dissolved DAO promised, the best uses of the technology are for now more mundane: escrow, automatic transfer of funds and the like. Sophisticated smart contracts will emerge within old-style organisations long before they replace them—on private blockchains maintained by groups of companies, such as banks. The furthest along in using smart contracts, Symbiont, a startup, for instance, has built a trading platform for “smart securities” such as syndicated loans and catastrophe-insurance swaps. + +Flawed humans v buggy code + +If smart contracts can be made to work, how automated should business ultimately become? So far, IT has mainly replaced paper processes. Smart contracts mean a different order of automation: economic transactions are put on auto-pilot. True believers want them to do away entirely with intermediaries, from banks to governments. But they should be careful what they wish for. If smart contracts spread widely, you would take away much of the flexibility that smooths the economy’s functioning. Real-world institutions can adjust when things go wrong. For many years to come, and perhaps for ever, human institutions, flawed though they are, will be a smarter bet than relentless, bug-ridden code. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21702758-time-being-least-human-judgment-still-better-bet-cold-hearted/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Japan’s economy: Three-piece dream suit + +Buttonwood: Putting it all on red + +The Federal Reserve: Staying its hand + +Road taxes in Europe: Not easy being green + +Private share sales: Trading places + +Free exchange: A hire power + + + + + +Articles Sections Next + +Japan’s economy + +Three-piece dream suit + +Abenomics may have failed to live up to the hype but it has not failed. And the hype was necessary to its success + +Jul 30th 2016 | TOKYO | From the print edition + + + +JAPAN is not, by nature, a boastful country. Its opportunities for bombast have shrunk along with its population. And its economic pride has suffered many years of deflation, a form of macroeconomic self-deprecation, in which firms and workers continuously discount what they do. In some fields, however, Japan still allows itself some swagger. It is, for example, happy to describe itself as a “robotics superpower”. In a speech early this year Shinzo Abe, the prime minister, praised a “dream robot suit” made by Cyberdyne as a prime example of the country’s technological advances. The robotic exoskeleton can add strength and stamina to healthy limbs and restore movement to enfeebled ones. As a symbol of Japanese ingenuity in overcoming debility, the suit’s appeal to Mr Abe is easy to understand. + +Since returning to office in 2012 Mr Abe has strapped Japan into an economic exoskeleton of his own. Dubbed “Abenomics”, his three-piece dream suit includes monetary easing, fiscal pragmatism and structural reform. He claimed it would repel deflation, repair the public finances and revive productivity. Over time, he later boasted, the combination of stronger growth and higher prices would lift Japan’s nominal GDP (which includes the effects of inflation) to ¥600 trillion ($5.7 trillion). Economic resurgence was also meant to bolster Japan’s national security and global standing. + +His bold vision has not been fulfilled. Inflation remains well below target. The economy is too weak to sustain a further increase in a controversial consumption tax. This week Mr Abe promised another fiscal jolt, of ¥28 trillion, although the true dimensions of fresh spending may be smaller. It may be combined with more quantitative easing from the Bank of Japan (BoJ), which was meeting as The Economist went to press. Structural reforms have advanced haltingly. In the run-up to an election for the upper house of the Diet, on July 10th, in which Mr Abe scored a sweeping victory, his party dropped mention of the need for monetary easing. + +Many observers, particularly foreign ones, say Abenomics is dead. As they see it, Mr Abe used his monetary and fiscal powers not to boost productivity, but to buy popularity, allowing him to advance his nationalist aim of revising Japan’s American-written pacifist constitution, a legacy of military defeat over 70 years ago. In the autumn of 2015, Mr Abe pushed through laws allowing the army, known as the Self-Defence Force, to come to the aid of the country’s allies if under attack, a freedom the constitution formerly denied it. + +Impugning Mr Abe’s motives is too cynical. His commitment to economic revival was no doubt sincere, even if he also saw it as a precondition for national greatness. Disdain for Abenomics is also forgetful, failing to recall the grimness of late 2012, when deflation seemed inescapable, the yen was export-sappingly strong and the Nikkei 225 stockmarket index, now above 16,000, languished below 10,000 (it peaked at nearly 39,000 in 1989). + +Compared with past efforts to revive Japan, Abenomics has achieved a great deal. It has defeated core deflation (excluding energy prices); lifted companies’ profits and dividends; expanded employment, especially among women and the old; and sprinkled Japan with a light dusting of gentle reforms that may hold the promise of more radical future ones. In early 2013, for instance, few believed that Japan would sign the Trans-Pacific Partnership, an ambitious free-trade agreement among 12 countries: it did (though the TPP’s fate now rests on American politics). Against the will of the country’s powerful business lobby Mr Abe introduced a corporate-governance code and guidelines to oblige shareholders to be more active. + +Potent potion + +Abenomics may have fallen short of the hype that accompanied it. But to break Japan’s deflationary mindset, some bombast was required. When Mr Abe and his Liberal Democratic Party (LDP) returned to power in December 2012, he had already signalled his intention to ease monetary policy and thereby to weaken the yen. In April 2013 his pick as governor of the BoJ, Haruhiko Kuroda, broke decisively with the central bank’s defeatist past. He set an inflation target of 2%, backed up by asset purchases of impressive scale and scope. + +Financial markets at first responded strongly to these signals. The currency fell and the stockmarket leapt. It did not take long for tourists to flock to cheaper Japan, taking advantage too of newly loosened visa rules. Last year around 20m came, mostly high-spending Chinese visitors. + +Companies felt emboldened to charge a little extra for their wares. By September 2015, two-thirds of the items in Japan’s inflation index were increasing in price. It was around then that Kagome, the country’s biggest condiment firm, raised the price of its ketchup for the first time in 25 years. After falling for two decades, Japan’s consumer prices (excluding energy and fresh food) have risen gently for 32 months in a row (see chart 1). Under Abenomics Japan’s nominal GDP has grown at its fastest for 18 years. + + + +Compared with its deflationary past, Japan’s mild inflation is a remarkable achievement. Compared with the central bank’s promise, it is a failure. The BoJ now says it will not reach its 2% inflation target (which includes energy prices) until the 2017-18 fiscal year, or around three years late. The BoJ anticipated that its easing would spur borrowing and spending, including capital expenditure. Business expansion would add to employment. Strong hiring would drive up wages, in turn pushing up prices. Reality has not matched up to the textbook. The economy’s two most significant limbs—consumption and investment—have proved less bionic than hoped. + +Rather than inflation rising to the BoJ’s target, many economists now fear it will fall. The bank already owns over a third of government bonds and is projected to own around 55% by December 2018, according to Marcel Thieliant of Capital Economics. Having created vast sums of money to buy assets, this year it imposed a negative interest rate on some of the money that banks deposited with it. This decision has backfired, many believe, damaging consumer confidence, bank profitability and money-market turnover. And, they point out, the yen is extremely unlikely to fall by 30% again. Indeed, in the wake of European bank scares and Brexit, it has strengthened, hurting share prices. + +Other trends will, however, work in the central bank’s favour. The number of workers has increased by more than 1.5m under Abenomics, despite a decline of 3.5m in the working-age population (see chart 2). Many people have taken on part-time work for modest wages, dragging down average pay, but increasing collective spending power. Total wage income (earnings multiplied by the number of employees) in March-May was over 2% higher than a year earlier, in nominal terms. + + + +Japan’s workers tend to base their wage claims on today’s cost of living rather than on the central bank’s promises of future inflation. Now that energy prices have stopped falling and core prices are creeping up, unions should in theory strengthen wage demands. Future inflation may thus turn on the outcome of a race between the falling expectations of financial markets and the rising expectations of workers. + +The BoJ can still influence this race. There are plenty of assets left to buy. Pension funds and life-insurance companies may be reluctant to sell their government bonds, but at some price they will do so. And the bank may get more bang for its buck by buying larger quantities of riskier assets, including corporate bonds and equities, via exchange-traded funds. + +But the bank’s hasty imposition of a negative interest rate on some bank reserves was not a success. Market participants initially struggled to transact at negative rates and banks have been reluctant to pass them on to depositors, despite the harm to their margins. The policy is beginning to bed down, however. Banks are competing fiercely for mortgage borrowers, which should eventually increase housing demand and put more money in the pockets of borrowers. And even if banks stop short of inflicting negative rates on retail savers, they may impose them on corporate deposits. + +If Mr Kuroda’s monetary-regime shift was not as decisive as hoped, fiscal policy has proved unexpectedly powerful—albeit unhappily so. An increase in the consumption tax in April 2014 caused large and lasting damage to household spending and housing investment. The BoJ’s monetary easing could not offset it, as many economists had hoped it would. A second tax rise has been twice postponed. + +Instead Mr Abe has opted for more fiscal stimulus. Can the country afford it? Its public debt is 250% of GDP. But the government also holds voluminous financial assets, reducing its net debt to about 130% of GDP. Thanks to rock-bottom interest rates, its net interest payments, as a percentage of GDP, are the lowest in the G7. + +How is this possible? When governments borrow too much, they crowd out private borrowing. The result is high interest rates or inflation. Japan has neither. In Japan, public borrowing is not crowding out private investment. On the contrary, Japan’s government borrows so much only because the private sector refuses to borrow or spend enough, preferring to hoard financial assets instead. If the government were to cut back, Japan would suffer from a disastrous shortage of demand. + +Until private spending picks up, fiscal stimulus will be both necessary and cheap: the government will find willing takers for any additional debt. And the central bank could always purchase and hold the government’s additional bonds, replacing debt (which must be repaid) with money (which need not be). That combination could be unusually powerful, resembling a “helicopter drop” of newly printed money. Mr Kuroda recently ruled the option out, but might again change his mind. + +Not-so-golden hoarders + +Further stimulus would not be necessary if corporate Japan did its bit. Its caution is a source of barely concealed frustration at the Kantei, Mr Abe’s office. His government is among the most pro-business in the world, yet firms have not responded with large increases in either wages or investment. + +Companies could not hoard money if investors demanded it back. Mr Abe has tried to make owners more assertive, introducing codes on corporate governance and for Japanese institutional investors. In 2012 only two-fifths of leading companies had independent directors; now nearly all of them do. These moves have made a difference. Firms’ return on equity rose from 5.8% in 2012 to 8.2% in 2014, according to Kathy Matsui of Goldman Sachs. The government may go further, perhaps imposing a tax on retained earnings. + +Mr Abe’s irritation with Japan Inc is reciprocated by the country’s firms. His government promised rapid and sweeping reforms of the economy and society, covering the labour market, immigration, education, electricity, agriculture, the role of women, medicine and welfare spending. Japanese bosses welcome all or most of this. But Mr Abe’s team raised expectations to the highest pitch in private meetings with foreign investors. In one encounter with hedge-fund chiefs, Yasuhisa Shiozaki, the labour minister, is said to have promised stringent standards of corporate governance and bank lending—so stringent that even household names like Japan Airlines, the national flag carrier, would be shut down. + +These expectations have not been met. Progress has been incremental, at best, prizing breadth over depth. Mr Abe has chosen not to follow the model of a former prime minister, Junichiro Koizumi, who chose one cause—post-office reform—and pursued it doggedly. Instead, his method has been to make partial progress on multiple fronts, says a government official. + +Voters seem to share his instincts, handing Mr Abe repeated election victories. Thanks to high employment and a cohesive society, Japan feels little sense of urgency. The growing ranks of the underprivileged—single mothers, young irregular workers, the elderly and children living in poverty—are not yet large or vocal enough to demand change. Japanese seem to prefer kaizen, or continuous improvement, to kaikaku, a pejorative word for reform. + +One casualty of his caution is labour reform. Two years ago officials planned to allow large companies to fire staff provided they offered sufficient severance pay. For Japan it would have been an abrupt departure from the traditional norm of lifetime employment. The media said it would “chop off the heads of people”. In the run-up to an election in December 2014, Mr Abe stopped discussion of the bill. + +The reform’s supporters now doubt it will ever come. However, senior officials signal in private that Mr Abe plans to press ahead, starting with two bills early next year. Firing with severance pay would be the first, followed by a delayed bill allowing well-paid, white-collar workers to be paid by performance rather than the number of hours they clock up. + +In tackling the lowly status of women in the workplace, Mr Abe has shown more mettle. “Womenomics” was not a natural policy for Mr Abe, who surrounds himself with ultraconservatives, points out Yuriko Koike, an LDP lawmaker who is now the favourite to become the governor of Tokyo. Traditional housewives are the backbone of LDP election campaigns, preparing coffee and rice balls. No one wants to upset them, she says. + +Like a highly qualified female graduate obliged to bring the tea, Mr Abe’s womenomics policy has suffered numerous humiliations. As soon as he spoke of allowing women to “shine”, the frequency of public sexist comments by LDP politicians shot up. A scheme offering ¥300,000 to small companies that promoted women to supervisory roles attracted no takers. + +Lower down the ranks, women face a financial disincentive to rise. Married people earning less than ¥1.3m a year are eligible for health care and a pension through their spouse. Those earning less than ¥1m are exempt from income taxes and social-security taxes. In some workplaces, new hires can tick a box indicating they do not wish to earn more than these sums. They can then limit their hours accordingly. There is little sign that the LDP has gathered the will to change the rules. + +To help working parents, the government has created 200,000 extra places in nurseries and set a target of 500,000 by the end of next year. Reports of “maternity harassment” (in which employers bully, demote or fire pregnant employees) have increased dramatically, because people are newly aware of its illegality. + +Foreigners needed + +Allowing unskilled foreign workers to settle permanently remains taboo for Japanese politicians, who fear the public’s xenophobia. But the public may be more open-minded than they think. In January, Mr Abe lauded the country’s unlikely victory over South Africa in the 2015 rugby world cup. Japan’s heroes included players called Broadhurst, Hesketh and Wing. + +Foreigners are filling other jobs too. Thanks to the strength of labour demand, there were almost 908,000 foreign workers last year, up by over 15% from the year before. Japan needs hardworking housekeepers and homebuilders. It also needs high-flying tech leaders, says Takeshi Niinami, who sits on the council for economic and fiscal policy. In this year’s growth strategy, the government proposes to give skilled foreigners permanent residency, with a waiting period of as little as three years, compared with five before 2012. + +Mr Abe once also promised to make Japan a far easier place to do business. He aimed at moving it to third (among rich countries) in the World Bank’s rankings on this score. Instead it has slipped from 21st in 2015 to 24th. Even Cyberdyne was once a victim of bureaucratic inertia. The company’s bionic leg brace was not certified as a medical device until February this year, about eight years after regulators were first approached. Back then, the same certificate covered both medical devices and drugs. The firm was thus obliged to describe the side-effects of drinking its exoskeleton (to appease regulators, it said what would happen if you licked it). But the Abe government has tried to streamline regulations and improve co-ordination among ministries, the company says. Cyberdyne is now struggling to keep up with demand for its products. + +The force of demand will also govern Japan’s immediate future. A healthy appetite for labour has already increased the number of foreign workers by a third since Mr Abe came to power, even though he could go much further in reforming rules on immigration. The same economic force has created jobs for an extra 1.2m women, despite the limitations of the womenomics campaign. And if demand is strong enough, market forces will begin to improve conditions for irregular workers. + +It used to be said that Abenomics had reflated Japan but not reformed it. Now, thanks to the yen’s recent strength, even the reflation is in doubt. But as long as monetary and fiscal policy work in tandem, demand should be resilient. Mr Abe’s bold macroeconomic efforts may then achieve some of what his structural reforms have so far fallen short of achieving. Abenomics has underperformed its targets but outperformed the past. And its next, surely more humble, three years could then improve on its first boastful ones. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702756-abenomics-may-have-failed-live-up-hype-it-has-not-failed-and/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Putting it all on red + +The rules encourage public-sector pension plans to take more risk + +Jul 30th 2016 | From the print edition + + + +IMAGINE two kinds of investment funds, both of which have the same aim: to provide pensions for their employees. You might think that they would invest in a similar way. But when it comes to American pension funds, you would be wrong. It turns out that public funds have a rather different, and more aggressive, approach to risk from private ones (and indeed from their counterparts in other countries). + +As a recent paper* by Aleksandar Andonov, Rob Bauer and Martijn Cremers shows, that different approach is driven by a regulatory incentive—the rules that determine how pension funds calculate how much they must put aside to meet the cost of paying retirement benefits. Usually, the bulk of a pension fund’s liabilities occur well into the future, as workers retire. So that future cost has to be discounted at some rate to work out how much needs to be put aside today. + +Private-sector pension funds in America and elsewhere (and Canadian public funds) regard a pension promise as a kind of debt. So they use corporate-bond yields to discount future liabilities. As bond yields have fallen, so the cost of paying pensions has risen sharply. At the end of 2007, American corporate pension funds had a small surplus; by the end of last year, they had a $404 billion deficit. + +American public pension funds are allowed (under rules from the Government Accounting Standards Board) to discount their liabilities by the expected return on their assets. The higher the expected return, the higher the discount rate. That means, in turn, that liabilities are lower and the amount of money which the employer has to put aside today is smaller. + +Investing in riskier assets is thus an attractive option for a public-sector employer, which can tap only two sources of funding. It can ask its workers to contribute more, but since they are well-unionised that can lead to friction (after all, higher pension contributions amount to a pay cut). Or the employer can take the money from the public purse—either by cutting other services or by raising taxes. Neither option is politically popular. + +Unsurprisingly, therefore, the academics found that American public pension funds choose a riskier approach. Theory suggests that as pension funds mature (ie, more of their members are retired), they should allocate their portfolios more conservatively, because the promised benefits need to be met sooner and funds cannot risk a sudden decline in the value of their assets. That is the case with private-sector pension funds, but public funds take more risk as they mature—putting more money into equities, alternative assets (like private equity) and junk bonds. + +Public pension plans have also increased their allocation to risky asset classes as interest rates and bond yields have declined. Again, this does not make sense in theory. The expected return on both risk-free and risky assets should decline in tandem. But a fall in ten-year Treasury-bond yields of five percentage points has been associated with a 15-point increase in public funds’ allocation to risky assets. + +The academics also look at the trustees, the people who make the investment decisions. They find a relationship between the riskiness of a fund’s assets and the proportion of political trustees (such as state treasurers) and worker trustees elected by scheme members. Neither group will want to see contributions rise in the short term. So it makes sense that both groups bank on achieving higher investment returns, leaving any scheme shortfall to be cleared up later. + +Some people might argue that this is all for the good. Pension schemes have long-term liabilities and thus should take more risks. If public funds take more risk and earn higher returns, that is saving both their employees and taxpayers money. Alas, the academics find that, even if you allow for their asset-allocation decisions, public pension funds underperform their benchmarks by more than half a percentage point a year. This underperformance is greatest in the alternative-asset categories such as private equity. Even if their asset allocation might have beaten a bond-only portfolio, the overall strategy isn’t working. For example CalPERS, the Californian state pension fund, has underperformed its targeted 7.5% return over the past 3, 5, 10 and 20 years. + +The paper demonstrates convincingly that American accounting regulations have created perverse incentives for public pension funds. And that can mean only one thing. The rules need to change. + +Economist.com/blogs/buttonwood + +* “Pension fund asset allocation and liability discount rates”, March 2016 + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21702623-rules-encourage-public-sector-pension-plans-take-more-risk-putting-it-all/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Federal Reserve + +Staying its hand + +A strengthening economy creates a dilemma for the central bank + +Jul 30th 2016 | WASHINGTON, DC | From the print edition + + + +BY MOST measures, America’s economy is flourishing. Unemployment is only 4.9%. From April to June payrolls swelled by a healthy 147,000 per month, on average. Consumer confidence is strong and sales of new homes are higher than at any time since 2008. Financial markets have mostly shaken off their early-year worries about Chinese growth and their summer blues over Brexit. Second-quarter growth, due to be revealed after The Economist went to press, was expected to rebound after an underwhelming start to 2016 (mirroring last year). Yet on July 27th, the Federal Reserve opted to hold interest rates in the target range of 0.25%-0.5% for the fifth consecutive meeting. What explains the central bank’s hesitation? + +One answer is that inflation, according to the measure the Fed targets, is just 0.9%, well below the central bank’s 2% goal. But Janet Yellen, the head of the Fed, has long argued that price rises will pick up as the effect of cheap oil and a strong dollar dissipates. Core inflation, which excludes food and energy prices (and usually prefigures the headline measure), is 1.6%. And competition for workers is pushing up wages. The median annual pay rise is 3.6%, according to the Atlanta Fed—almost the same as it was in July 2006. That suggests slack in the economy is disappearing (see chart). + +A more subtle problem also lies behind the Fed’s inertia: it is hard to tell how loose monetary policy really is. That depends on the “natural” interest rate, the level which would, in theory, cause inflation to neither rise nor fall. If rates are much lower than this, then the Fed is providing foot-to-the-floor stimulus. But if they are only slightly below it, the Fed is merely giving the economy a gentle push. + +The latter looks more likely. A recent estimate by the San Francisco Fed put the natural rate in real terms (subtracting inflation) at 0.4%. If the Fed were hitting its 2% inflation target, the natural nominal rate would be 2.4%. With inflation at 0.9%, today’s rates look only modestly stimulatory. + +Several factors are holding down the natural rate. One is weak productivity growth. In the previous economic expansion, in the 2000s, productivity growth averaged 2.5% a year. Since the financial crisis, it has averaged just 0.9%. Another cause is an ageing population, which, by reducing the capacity of the economy to produce, deters investment. Economic pessimists say these forces and others are causing a “secular stagnation”. + +The Fed’s rate-setters are becoming more open to this possibility, says David Mericle of Goldman Sachs, a bank, having previously preferred to describe the drags on growth merely as “headwinds”. Since December, their median estimate of where rates will settle in the long run has fallen from 3.5% to 3%. James Bullard, the president of the St Louis Fed, recently abandoned a hawkish position to argue that the economy is now in a low-rate “regime” which is likely to persist. Markets, too, expect low rates to continue (a ten-year Treasury bond yields just 1.5%). + +The Fed did say, in its post-meeting statement, that short-term risks have “diminished”. The strength of the consumer means there is a chance of a rate rise this year; markets put it at about 40%. But had the Fed a clearer view of the long-term picture, rates would probably be higher by now. When visibility improves, some abrupt steering may be necessary. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702764-strengthening-economy-creates-dilemma-central-bank-staying-its-hand/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Road taxes in Europe + +Not easy being green + +Why fuel taxes are the best way to encourage sales of greener cars + +Jul 30th 2016 | From the print edition + + + +THE world’s policymakers agreed at the Paris climate-change talks last December to try to limit greenhouse-gas emissions so global temperatures rise by no more than 2°C from pre-industrial levels. To succeed, they need, among other things, to encourage people to buy cleaner cars and lorries. Around 23% of carbon-dioxide emissions come from transport, of which three-quarters stem from road vehicles, according to the International Energy Agency. + +Governments have tried to get drivers to go for greener vehicles. Some have raised the cost of driving by taxing petrol and diesel. Others have taxed the ownership of dirty cars by raising their annual registration fees, or dangled rebates on purchases of greener ones. + +Which is the most efficient approach? A new paper by Anna Alberini and Markus Bareit compares policy changes in Switzerland’s 26 cantons to changes in new car sales in each area between 2005 and 2011 as a natural experiment. The least efficient policy was the annual rebate for owning a green car. The authors found this was much less effective than raising the annual registration fees on dirty cars, which had the bonus of raising revenues. + +But even that was inefficient. Every tonne of carbon saved by the purchase of greener cars cost the consumer SFr810 ($815), over seven times the government’s estimate of the economic cost of higher emissions. Higher fuel taxes were more effective: the authors found a 16% increase in petrol duty had the same effect as a 50% increase in registration fees. + +Ms Alberini says that drivers seem to see road taxes as less important than fuel efficiency, in part because refilling their cars frequently reminds them of the cost. Second, as the annual registration fee is levied regardless of distance driven, there is no incentive to drive less once it has been paid. The study mirrors other findings. In a paper published last year, Reyer Gerlagh of Tilburg University and several co-authors found higher annual road taxes on gas-guzzlers have no, or even an adverse, effect on emissions. + +Higher fuel taxes are, alas, unpopular. Many European countries have preferred to subsidise the purchase of cleaner cars than tax dirty ones. Good politics is rarely good news for the environment. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702762-why-fuel-taxes-are-best-way-encourage-sales-greener-cars-not-easy-being/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Private share sales + +Trading places + +Psst! Wanna buy some unicorn shares? + +Jul 30th 2016 | New York | From the print edition + + + +FOR tech startups, paying employees with shares makes sense. Young companies can reduce their bills and so preserve their capital; workers receive a payout which, although deferred and uncertain, is potentially far more valuable than their salary. But there is a hitch: tech firms are taking much longer to list. Their average age at initial public offering (IPO) has risen from four years during the dotcom bubble in 1999-2000 in America to 11 today. That leaves many workers pining for a payday. Inevitably, another bunch of tech startups is trying to develop a solution. + +In the past, the only means of selling unlisted shares was via an informal broker, who could take months to find a buyer and charge a fee worth 30-40% of the transaction. More recently, demand for Facebook’s pre-IPO shares gave rise to a first wave of secondary markets; SharesPost and SecondMarket were the two largest players. + +But the number of American unicorns—private firms valued at more than $1 billion—has since jumped, from 28 in 2013 to 96 today. New secondary-market players, such as EquityZen and Equidate, have emerged, closing deals within weeks and charging about 5% to each side. They are catching on: EquityZen has handled stakes in 40 companies this year, more than double 2014’s figure. + +Unicorns have mixed feelings about the platforms. Many accept that their employees cannot always wait for an IPO to finance a wedding, the purchase of a house, or private education. At least half of America’s 25 biggest unicorns have given permission for secondary trades. Some even approach the marketplaces to help staff sell. However, since outsiders sometimes interpret share sales by employees as a sign of trouble, many firms reserve the right to buy back employees’ shares before they are offered elsewhere. + +Regulators are paying attention to this growing market. Last year, the Securities and Exchange Commission closed Sand Hill Exchange for selling retail investors complicated derivatives linked to private shares. Now the private-company stockmarkets accept only “accredited” (ie, wealthy) investors. The big question is whether the talk of a unicorn bubble proves correct. Equidate is making some of its data available to the public, and giving investors real-time updates on share values. Tech employees might face a reality check when turning shares into cash. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702763-psst-wanna-buy-some-unicorn-shares-trading-places/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +A hire power + +Workers benefit when firms must compete aggressively for them + +Jul 30th 2016 | From the print edition + + + +JOSEPH SCHUMPETER gave the name “creative destruction” to the process by which new and innovative firms displace stodgy ones, thereby driving long-run economic growth. The Schumpeterian sort of economic reinvention is out of fashion at the moment. Unhappy workers are casting their lot with populist politicians, who are in turn looking to rein in the disruption caused by everyone from tech unicorns in Silicon Valley to sellers of cut-price steel in China. Economists understandably worry that this backlash will lead to sweeping new regulations, taxes and protections for firms and workers. But red tape and tax are not the only things that can gum up the economy’s operation. Evidence increasingly suggests that some of what looks like sclerosis across rich countries is in fact rooted in the unequal distribution of gains from growth. + +When old industries are swept aside by new ones, economists reckon that the resulting gains ought to be large enough to make everyone better off, including the displaced workers. Living standards should rise as new, better and cheaper goods and services become available. Just as importantly, as people change the kinds of goods and services they purchase, new industries should expand to hoover up jobless workers. In a well-functioning economy, firms ought to provide plenty of labour demand: new job openings to coax workers out of unemployment or away from jobs in declining cities and sectors. + +This process is far from automatic, however. It can depend on the geographic distribution of income growth, for instance, as recent research reveals. A paper by Terry Gregory and Ulrich Zierahn, of the Centre for European Economic Research in Mannheim, and Anna Salomons, of Utrecht University, examines the effect of technological change across 238 European regions between 1999 and 2010, focusing on the propensity of new technologies to push workers out of jobs doing routine sorts of work and into jobs that cannot be done as easily by computers and robots. They estimate that the direct displacement of workers by technology reduced employment across Europe by nearly 10m jobs during the period studied (see chart). Yet technological change also created new opportunities. Automation of some jobs reduced costs, squashing prices and leading to increased product demand. That, in turn, led to the creation of nearly 9m jobs in newly efficient firms in Europe. Those gains, the authors reckon, ought to have spilled across local labour markets as the extra wages and profits were spent at restaurants and shops. + +This “multiplier” effect is potentially the most potent of all. But its contribution depends on where the profits generated by the new technology are earned. The authors calculate potential new employment growth from this multiplier would be close to an extra 12m jobs (or about half of total European job growth over the period) on the assumption that all profits were retained within Europe. Yet if they assume that all profits flow abroad, growth in labour demand is far more modest: net job creation shrinks to less than 2m. Only when profits are recycled locally does automation lead to lots of opportunities for displaced workers. + +Analysis of the American economy suggests the distribution of economic power matters as well. In a new paper Mike Konczal and Marshall Steinbaum of the Roosevelt Institute, a left-leaning think-tank, examine the worrying decline of business dynamism in America. Since 2000, the share of employment in the oldest and largest firms has grown at the expense of employment in younger and smaller establishments. The startup rate of “transformational” firms—the young, fast-growing companies that represent new kinds of businesses—has declined. The trend seems to be linked to a change in the habits of American workers, especially the young adults for whom early-career job changes are an important contributor to long-run success. They have become less likely to switch jobs and move to new cities. + +It is possible that regulations keep Americans from jumping to new jobs or places, thereby jamming the process of economic reinvention. Some research has indicated that the growth of occupational licensing, which makes it harder to enter many service-sector industries, constrains labour mobility. Other work points to high housing costs—a consequence of overly strict land-use rules—as a force repelling workers from productive places. But Messrs Konczal and Steinbaum reckon these explanations cannot fully account for America’s doldrums. + +If red tape were the main constraint on the economy, then workers who do successfully move from one job to another are likely to be moving to one that pays them a lot more. And places with lower levels of economic turnover ought to enjoy higher wage growth, as firms struggle to attract scarce workers. But job changes seem not to provide much of a wage fillip, the authors find, suggesting that people are staying put because other firms are uninterested in hiring new workers and feel little pressure to offer high wages. Similarly, places in America where dynamism is very low tend to suffer unusually weak growth in pay. + +Too comfortable for comfort + +Messrs Konczal and Steinbaum argue that firms do not need to compete for workers because, increasingly, they do not need to compete at all. America’s corporate world has grown top-heavy, thanks to the dominance of large firms and a wave of mergers. Reduced competition keeps profits high; in recent years, profit as a proportion of GDP has lingered near the highest level in half a century. In a more competitive market, upstart firms would hire labour and pressure big firms to use their cash for job-creating investments. If wages grew faster than profits, that might further raise labour demand, as workers spend their gains in the local service economy. Red tape no doubt prevents some firms from making growth-boosting investments. But bigger gains might come from creating an economy in which firms found themselves needing to compete to attract workers. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21702754-workers-benefit-when-firms-must-compete-aggressively-them-hire-power/print + + + + + +Previous Articles Sections Next + + + + + +Economics brief + + + + +Financial stability: Minsky’s moment + + + + + +Articles Sections Next + +Financial stability + +Minsky’s moment + +The second article in our series on seminal economic ideas looks at Hyman Minsky’s hypothesis that booms sow the seeds of busts + +Jul 30th 2016 | From the print edition + + + +FROM the start of his academic career in the 1950s until 1996, when he died, Hyman Minsky laboured in relative obscurity. His research about financial crises and their causes attracted a few devoted admirers but little mainstream attention: this newspaper cited him only once while he was alive, and it was but a brief mention. So it remained until 2007, when the subprime-mortgage crisis erupted in America. Suddenly, it seemed that everyone was turning to his writings as they tried to make sense of the mayhem. Brokers wrote notes to clients about the “Minsky moment” engulfing financial markets. Central bankers referred to his theories in their speeches. And he became a posthumous media star, with just about every major outlet giving column space and airtime to his ideas. The Economist has mentioned him in at least 30 articles since 2007. + +If Minsky remained far from the limelight throughout his life, it is at least in part because his approach shunned academic conventions. He started his university education in mathematics but made little use of calculations when he shifted to economics, despite the discipline’s growing emphasis on quantitative methods. Instead, he pieced his views together in his essays, lectures and books, including one about John Maynard Keynes, the economist who most influenced his thinking. He also gained hands-on experience, serving on the board of Mark Twain Bank in St Louis, Missouri, where he taught. + +Having grown up during the Depression, Minsky was minded to dwell on disaster. Over the years he came back to the same fundamental problem again and again. He wanted to understand why financial crises occurred. It was an unpopular focus. The dominant belief in the latter half of the 20th century was that markets were efficient. The prospect of a full-blown calamity in developed economies sounded far-fetched. There might be the occasional stockmarket bust or currency crash, but modern economies had, it seemed, vanquished their worst demons. + +Against those certitudes, Minsky, an owlish man with a shock of grey hair, developed his “financial-instability hypothesis”. It is an examination of how long stretches of prosperity sow the seeds of the next crisis, an important lens for understanding the tumult of the past decade. But the history of the hypothesis itself is just as important. Its trajectory from the margins of academia to a subject of mainstream debate shows how the study of economics is adapting to a much-changed reality since the global financial crisis. + +Minsky started with an explanation of investment. It is, in essence, an exchange of money today for money tomorrow. A firm pays now for the construction of a factory; profits from running the facility will, all going well, translate into money for it in coming years. Put crudely, money today can come from one of two sources: the firm’s own cash or that of others (for example, if the firm borrows from a bank). The balance between the two is the key question for the financial system. + +Minsky distinguished between three kinds of financing. The first, which he called “hedge financing”, is the safest: firms rely on their future cashflow to repay all their borrowings. For this to work, they need to have very limited borrowings and healthy profits. The second, speculative financing, is a bit riskier: firms rely on their cashflow to repay the interest on their borrowings but must roll over their debt to repay the principal. This should be manageable as long as the economy functions smoothly, but a downturn could cause distress. The third, Ponzi financing, is the most dangerous. Cashflow covers neither principal nor interest; firms are betting only that the underlying asset will appreciate by enough to cover their liabilities. If that fails to happen, they will be left exposed. + +Economies dominated by hedge financing—that is, those with strong cashflows and low debt levels—are the most stable. When speculative and, especially, Ponzi financing come to the fore, financial systems are more vulnerable. If asset values start to fall, either because of monetary tightening or some external shock, the most overstretched firms will be forced to sell their positions. This further undermines asset values, causing pain for even more firms. They could avoid this trouble by restricting themselves to hedge financing. But over time, particularly when the economy is in fine fettle, the temptation to take on debt is irresistible. When growth looks assured, why not borrow more? Banks add to the dynamic, lowering their credit standards the longer booms last. If defaults are minimal, why not lend more? Minsky’s conclusion was unsettling. Economic stability breeds instability. Periods of prosperity give way to financial fragility. + +With overleveraged banks and no-money-down mortgages still fresh in the mind after the global financial crisis, Minsky’s insight might sound obvious. Of course, debt and finance matter. But for decades the study of economics paid little heed to the former and relegated the latter to a sub-discipline, not an essential element in broader theories. Minsky was a maverick. He challenged both the Keynesian backbone of macroeconomics and a prevailing belief in efficient markets. + +It is perhaps odd to describe his ideas as a critique of Keynesian doctrine when Minsky himself idolised Keynes. But he believed that the doctrine had strayed too far from Keynes’s own ideas. Economists had created models to put Keynes’s words to work in explaining the economy. None is better known than the IS-LM model, largely developed by John Hicks and Alvin Hansen, which shows the relationship between investment and money. It remains a potent tool for teaching and for policy analysis. But Messrs Hicks and Hansen largely left the financial sector out of the picture, even though Keynes was keenly aware of the importance of markets. To Minsky, this was an “unfair and naive representation of Keynes’s subtle and sophisticated views”. Minsky’s financial-instability hypothesis helped fill in the holes. + +His challenge to the prophets of efficient markets was even more acute. Eugene Fama and Robert Lucas, among others, persuaded most of academia and policymaking circles that markets tended towards equilibrium as people digested all available information. The structure of the financial system was treated as almost irrelevant. In recent years, behavioural economists have attacked one plank of efficient-market theory: people, far from being rational actors who maximise their gains, are often clueless about what they want and make the wrong decisions. But years earlier Minsky had attacked another: deep-seated forces in financial systems propel them towards trouble, he argued, with stability only ever a fleeting illusion. + +Outside-in + +Yet as an outsider in the sometimes cloistered world of economics, Minsky’s influence was, until recently, limited. Investors were faster than professors to latch onto his views. More than anyone else it was Paul McCulley of PIMCO, a fund-management group, who popularised his ideas. He coined the term “Minsky moment” to describe a situation when debt levels reach breaking-point and asset prices across the board start plunging. Mr McCulley initially used the term in explaining the Russian financial crisis of 1998. Since the global turmoil of 2008, it has become ubiquitous. For investment analysts and fund managers, a “Minsky moment” is now virtually synonymous with a financial crisis. + + + +Minsky’s writing about debt and the dangers in financial innovation had the great virtue of according with experience. But this virtue also points to what some might see as a shortcoming. In trying to paint a more nuanced picture of the economy, he relinquished some of the potency of elegant models. That was fine as far as he was concerned; he argued that generalisable theories were bunkum. He wanted to explain specific situations, not economics in general. He saw the financial-instability hypothesis as relevant to the case of advanced capitalist economies with deep, sophisticated markets. It was not meant to be relevant in all scenarios. These days, for example, it is fashionable to ask whether China is on the brink of a Minsky moment after its alarming debt growth of the past decade. Yet a country in transition from socialism to a market economy and with an immature financial system is not what Minsky had in mind. + +Shunning the power of equations and models had its costs. It contributed to Minsky’s isolation from mainstream theories. Economists did not entirely ignore debt, even if they studied it only sparingly. Some, such as Nobuhiro Kiyotaki and Ben Bernanke, who would later become chairman of the Federal Reserve, looked at how credit could amplify business cycles. Minsky’s work might have complemented theirs, but they did not refer to it. It was as if it barely existed. + +Since Minsky’s death, others have started to correct the oversight, grafting his theories onto general models. The Levy Economics Institute of Bard College in New York, where he finished his career (it still holds an annual conference in his honour), has published work that incorporates his ideas in calculations. One Levy paper, published in 2000, developed a Minsky-inspired model linking investment and cashflow. A 2005 paper for the Bank for International Settlements, a forum for central banks, drew on Minsky in building a model of how people assess their assets after making losses. In 2010 Paul Krugman, a Nobel prize-winning economist who is best known these days as a New York Times columnist, co-authored a paper that included the concept of a “Minsky moment” to model the impact of deleveraging on the economy. Some researchers are also starting to test just how accurate Minsky’s insights really were: a 2014 discussion paper for the Bank of Finland looked at debt-to-cashflow ratios, finding them to be a useful indicator of systemic risk. + +Debtor’s prism + +Still, it would be a stretch to expect the financial-instability hypothesis to become a new foundation for economic theory. Minsky’s legacy has more to do with focusing on the right things than correctly structuring quantifiable models. It is enough to observe that debt and financial instability, his main preoccupations, have become some of the principal topics of inquiry for economists today. A new version of the “Handbook of Macroeconomics”, an influential survey that was first published in 1999, is in the works. This time, it will make linkages between finance and economic activity a major component, with at least two articles citing Minsky. As Mr Krugman has quipped: “We are all Minskyites now.” + +Central bankers seem to agree. In a speech in 2009, before she became head of the Federal Reserve, Janet Yellen said Minsky’s work had “become required reading”. In a 2013 speech, made while he was governor of the Bank of England, Mervyn King agreed with Minsky’s view that stability in credit markets leads to exuberance and eventually to instability. Mark Carney, Lord King’s successor, has referred to Minsky moments on at least two occasions. + +Will the moment last? Minsky’s own theory suggests it will eventually peter out. Economic growth is still shaky and the scars of the global financial crisis visible. In the Minskyan trajectory, this is when firms and banks are at their most cautious, wary of repeating past mistakes and determined to fortify their balance-sheets. But in time, memories of the 2008 turmoil will dim. Firms will again race to expand, banks to fund them and regulators to loosen constraints. The warnings of Minsky will fade away. The further we move on from the last crisis, the less we want to hear from those who see another one coming. + +LATER IN THIS SERIES: + +• The Stolper-Samuelson theorem + +• The Keynesian multiplier + +• The Nash equilibrium + +• The Mundell-Fleming trilemma + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economics-brief/21702740-second-article-our-series-seminal-economic-ideas-looks-hyman-minskys/print + + + + + +Articles Sections Next + + + + + +Science and technology + + + + +Printed electronics: On a roll + +Air pollution: Breathtaking + +The ancient atmosphere: Time capsules + + + + + +Articles Sections Next + +Printed electronics + +On a roll + +Printing with conventional rotary presses will create cheaper electronics + +Jul 30th 2016 | Accrington | From the print edition + + + +MAKING things with 3D printers is an idea that is being adopted by manufacturers to produce goods ranging from false teeth to jet engines. Conventional printing, though, has not remained idle. Machines that have their origins in the high-speed rotary presses that apply words and images to large reels of paper, like the ones which turn out the physical versions of this newspaper, have started making other things as well. + +The extent of this transformation can be seen at a factory in Accrington, a town in one of Britain’s former industrial heartlands, Lancashire. Here, Emerson & Renwick, founded in 1918, has expanded beyond its formative business of making wallpaper-printing equipment. The latest piece of kit to which the finishing touches are being added is part of the firm’s Genesis range. It is about the size of a shipping container and is designed to coat and print electrical devices. Like a conventional printer it does so on long rolls of material, called webs. Then, just as printed pages are cut by guillotines from such webs for binding into newspapers, magazines or books, these printed items are cut out and used in products ranging from solar cells to display screens to batteries. One customer wants to print some of the main components of a new generation of smartphones. + +Roll-to-roll printing of this sort is quick and efficient. Some of the fastest web-offset presses, in which an inked image is transferred to another roller and thence to the surface being printed, can churn out more than 20 newspapers a second. Flexographic presses, which use a flexible relief image on a cylinder to print things such as packaging, can belt along at 500 metres a minute. These methods have already been adapted to print basic electronic circuits, by replacing conventional graphic inks with conductive inks that can carry an electric current. Scientists and engineers, however, have loftier ambitions than these. They are developing ways to print not just circuits but also sophisticated electronic devices, such as thin-film transistors, using the mass-production capabilities of roll-to-roll processes. + +Transistorised, at half the price + +The machine in Accrington is one such offering. It puts sequential coatings onto webs of material such as plastic film, flexible glass and metal foil. Some coatings conduct. Some insulate. Some are semiconductors. Some emit light. Emerson & Renwick produces special carts, each the size of a large oven, which are wheeled into the printing system to configure it for different applications. Some carts contain equipment that accelerates ions from a plasma onto a source material, in order to spatter molecules from that source onto the web. That allows printing at the atomic scale. Others perform a similar trick using a beam of electrons. Others still employ chemically reactive gases to etch features such as holes and channels less than 50 nanometres (billionths of a metre) across into the coatings, for electrical connections. To avoid contamination, all of these processes take place in a vacuum. + +As exotic as the Genesis machine may seem, though, many of its underlying technologies are, according to Colin Hargreaves, Emerson & Renwick’s boss, similar to those found in a conventional graphics press. In particular, careful management of the web through its winding, tension and control is essential. A break in the web, as any newspaperman knows, brings production to a time-consuming and expensive halt. When printing electronics with such exacting processes in a vacuum, a web-break is potentially catastrophic as it could damage a whole reel. + +Printing electronics requires special formulations of ink. Often, these are made with silver, which is a better conductor even than copper. But silver is expensive. An alternative, being worked on by Tawfique Hasan and his research group at Cambridge University, is to include flakes of graphene in such inks. Graphene is a form of carbon made from sheets a single atom thick. The result, Dr Hasan claims, can be manufactured and printed for a fraction of the cost of silver ink and is conductive enough for many applications, such as disposable biosensors used to test samples from patients, and packaging that can track and authenticate a product. Graphene ink could also be used to make electrodes for printed batteries. + +Dr Hasan and his colleagues have demonstrated flexographic printing of conductive graphene ink at more than 100 metres a minute. They are working in collaboration with Novalia, a firm in Cambridge that has produced several printed touch-sensitive products, including a musical keyboard and interactive posters. They have also established a company called Inkling Cambridge to commercialise the formulation and develop other electronic inks, coatings and paints. + +One idea they are exploring is “smart” wallpaper. In addition to graphene ink, this would use either organic light-emitting diodes (OLEDs) or quantum dots—crystals of semiconducting material just a few atoms across. Both of these emit light when excited by electricity, so wall coverings printed with such materials could be used to illuminate rooms. + +Elsewhere, Taiwan’s Industrial Technology Research Institute plans to open a roll-to-roll line in 2017, to make OLED lighting panels for display screens, decorative lighting, signage and exterior car lights. These will be printed on rolls of plastic film or ultra-thin flexible glass. The institute says its system will incorporate seven separate processes, including coating, baking and etching, into a single roll-to-roll machine. At the moment, each process requires a different apparatus, and the products have to be made one at a time, or in batches. + +Another use for printed electronics of this sort is solar energy. Several groups are working on making thin-film solar panels in this way. Such panels, being cheap and lightweight, could readily be attached to walls and roofs, and even built into roofing tiles. In this context, a family of crystalline materials called perovskites is attracting particular interest for roll-to-roll printing. Whereas the best conventionally made silicon-based solar panels convert the energy in sunlight into electricity with an efficiency of just over 20%, researchers at the Lawrence Berkeley National Laboratory, in California, think they can push that to 31% using perovskites. And being small, crystalline grains, perovskites make ideal ingredients of ink. + +Inkjet printing is also getting a roll-to-roll makeover, according to David Bird of the Centre for Process Innovation (CPI), a British government-backed organisation that helps companies commercialise new technologies. Inkjet printers are not particularly fast, but they are parsimonious, for they spray ink only where it is needed. Moreover, they are flexible and easily customised. To alter what is being printed requires only a software reload, rather than the changing of a printing plate. And lack of speed is relative. The CPI’s inkjet machine can, for example, print copper circuits onto rolls of plastic at a rate of 17 metres a minute. These circuits are used for things like sensors and radio antennae. Electronics can be made with 3D printers, too. These produce objects by depositing successive layers of material. Like inkjet printers, 3D printers are flexible, but they build things one at a time or in small batches and are mostly used to print larger objects. + +As Dr Bird points out, printing of any sort at speed demands good quality control. Single-sheet or batch production permits an error to be spotted before it is repeated, but high-speed roll-to-roll systems can churn out a lot of waste if there is any delay in identifying problems. Cameras can be used to detect errors in printed text or graphics, but they are not much cop at spotting faults in microscopic layers of transparent material whizzing past on a web—not least because there may be nothing to see. To help resolve this for the CPI’s machines, researchers at the University of Huddersfield, across the Pennines from Accrington, in Yorkshire, have come up with a method that builds up a three-dimensional model of the web’s surface using reflected light, and can raise the alarm if it detects any depressions that might indicate an uncoated spot. + +A new meaning of “computer printer”? + +How far printed electronics will go remains to be seen. At present such products tend to be used as components rather than complete systems. The technology is a long way from being able to roll-print powerful computer chips, which contain several billion transistors squeezed onto a tiny piece of silicon. These processors are currently made in batches in costly semiconductor fabrication plants. + +Using roll-to-roll systems to print lots of transistors in the form of a processor is nevertheless an attractive proposition. In many applications these processors need not be very powerful. But they won’t be wimps. Ma Zhenqiang of the University of Wisconsin-Madison and his colleagues recently fabricated a flexible transistor that operates at 110 gigahertz—making it fast enough to use in almost any electronic application. To make this transistor Dr Ma used an electron beam to etch shapes just ten nanometres wide in a mould that was then employed to form the transistor’s circuitry in an ultra-thin flexible silicon membrane. As the mould can be reused, Dr Ma reckons his method could easily be scaled up for roll-to-roll processing. Printed media may be going out of style, then, but it looks as if their electronic replacements will still require the presses to roll. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21702741-printing-conventional-rotary-presses-will-create-cheaper-electronics/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Air pollution + +Breathtaking + +Air-quality indices make pollution seem less bad than it is + +Jul 30th 2016 | From the print edition + + + +SMOKING a whole packet of cigarettes in a day once or twice a year would certainly make someone feel ill, but probably would not kill him. Smoking even one cigarette every day for decades, though, might do so. That is the difference between acute and chronic exposure, and it is a difference most people understand. What they may not understand is that the same thing applies to air pollution. + +On a day-to-day basis, the forecasts most cities offer turn red only when pollution levels rise to a point where they will cause immediate discomfort. That makes sense, for it lets people such as asthmatics take appropriate action. But it might also lead the unwary to assume, if most days in the place he inhabits are green, that the air he is breathing is basically safe. This may well not be the case. In London, for example, a study published last year by researchers at King’s College suggested air pollution shortens the city’s inhabitants’ lives by nine to 16 months. + +To investigate the matter, The Economist crunched a year’s worth of data collected from May 2015 onwards in 15 big cities. They were gathered by Plume Labs, a firm based in Paris, which uses them to produce a commercial air-quality app. The three pollutants of most concern in rich countries are nitrogen dioxide (NO2, a brownish gas emitted by car exhausts, and particularly by diesels), ozone (a triatomic form of oxygen that irritates lungs) and soot-particles smaller than 2.5 microns across (which makes them tiny enough to get deep into the lungs). These pollutants can cause a variety of medical difficulties, including asthma, heart disease, lung cancer and stunted lung growth in children. + +As the chart shows, levels of NO2 in London and Paris are routinely higher than World Health Organisation (WHO) guidelines about what constitutes a long-term hazard, known as the annual average limit—and that goes, too, for particulate matter. In London, during daytime, the concentration of NO2 exceeded the WHO’s limit by 41%, on average, over the 12 months examined. In Paris, where the national index said air quality was “good” or “very good” four days out of five, our analysis found that at least one of the three main pollutants exceeded the WHO’s limit at some point almost every day. + + + +A further problem is that setting day-to-day limits is a local matter. So, not only do they rarely take long-term risk into account, they also vary from place to place. In Britain’s index a concentration of NO2 up to five times the WHO’s annual average limit counts as “low”. America is more conservative. It draws the line at two-and-a-half times the WHO limit. Worse, in some cases there is no pretence of objectivity. The website of Belgium’s BelATMO index, for example, warns that this is “a qualitative representation” of air quality that “has little scientific meaning”. + +Cities also vary in the way they present pollution data. Most do so on a scale of ten or 100, which is then segmented into four to six bands labelled low, moderate and so on. Some places draw the line between “low” and “moderate” at the level at which pollution starts to cause immediate health effects, reserving the red band for smog that severely affects most people. Others divide the scale into equal chunks, each representing the same additional daily risk of dying or being admitted to hospital because of pollution. + + + +INTERACTIVE: From CO2 to GHG, which countries have the highest emissions? + +Official indices also fail to capture patterns of variation within a day. These can be important—and people might be able to modify their behaviour if they understood them. Our analysis suggests, for example, that Parisians who head out for work at 9am and return at 6pm could reduce their average daily commuting intake of NO2 by 16% by travelling both ways an hour earlier. Going two hours earlier would cut the intake by 28%. + +Weekly cycles also exist. Parents in Brussels and Paris might be wise to schedule their children’s indoor activities, such as swimming lessons, on Saturdays and outdoor stuff like football practice on Sundays. That is because, during daytime hours, the concentration of NO2 in those cities was, on average, about 20% lower on Sundays. In Amsterdam it was 16% lower. In all three places, fine-particle pollution also fell on Sundays, as did ozone in the summer months. + +The best pollution advice of all to people in these cities, though, is: move to America. In New York, levels of NO2 were 20% below the WHO limit, and that is pretty typical of places in the United States, where diesels are less common than in Europe. As the inscription under the Statue of Liberty has it, “Give me your...huddled masses, yearning to breathe free.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21702743-air-quality-indices-make-pollution-seem-less-bad-it-breathtaking/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The ancient atmosphere + +Time capsules + +A new way to chart the rise of oxygen + +Jul 30th 2016 | From the print edition + + + +OXYGEN makes up a fifth of the atmosphere (20.9%, to be precise), but that has not always been so. For the first 2 billion years of Earth’s existence, before photosynthetic organisms became common, there was no chemically uncombined oxygen in the air at all. Even after that, the gas remained scarce for hundreds of millions of years. By 575m years ago, however—which was when animals whose dimensions are measured in centimetres rather than microns appear—there must have been enough oxygen around to support their respiration. The usual guess is that the gas’s levels began to rise about 700m years ago. But a guess it is. + +Now, Nigel Blamey of Brock University, in Ontario, Canada, has brought some evidence to bear on the question. His study, just published in Geology, is the first to measure directly the composition of samples of air from this ancient time. They were trapped in rock salt from the Officer Basin in south-western Australia, laid down by the evaporation of seawater between 830m and 800m years ago. + +Previous estimates of oxygen’s past abundance have been made indirectly. In particular, the gas’s appearance in the atmosphere is dated to 2.5 billion years ago because that is when fossil stromatolites (small, rocky knolls built by photosynthesising bacteria; modern versions are pictured above), and also rocks called banded-iron formations, become common. Banded-iron formations, as their name suggests, are full of rust. Rust is formed by the reaction of iron with oxygen. + +Dr Blamey thought he could do better than such indirect evidence. He chose rock salt (“halite”, to give its geological name) because its crystals often trap tiny pockets of the brine it is precipitating from, and this brine contains dissolved air. Such inclusions have been used to study the calcium, magnesium and potassium present in ancient seawater. Dr Blamey suspected they might also be employed to glimpse past atmospheres. The risk was that the composition of the trapped gas might change over the millennia. So he did a series of experiments to make sure that it does not. + +First, he studied nitrogen, oxygen and argon concentrations in the cavities of modern halite, choosing crystals that had formed between two and seven years ago in New Mexico and Australia. The gas in these matched today’s atmosphere, so the actual process of trapping does not seem to affect its composition. Then Christophe Lecuyer, a colleague at the University of Lyon, in France, collected 6m-year-old halite from a mine in Sicily and 100m-year-old halite from a mine in Cretaceous rocks in China. The air in the Sicilian samples more or less matched modern air—which agrees with other evidence that the atmosphere has not changed a great deal in the past 6m years. The Chinese samples, by contrast, suggest oxygen made up 25.8% of the Cretaceous atmosphere. Again, this agrees with the palaeontological consensus, which is that the air the dinosaurs breathed contained more oxygen than does today’s. + +Now convinced the method worked, Dr Blamey and his colleagues applied it to the Australian samples. These indicate that the air around when they were laid down was 10.9% oxygen. While this is only half modern values, it is five times more than predicted—suggesting the rise of oxygen to levels similar to today’s began a good deal earlier than had been believed. + +This has implications for theories about the evolution of animals. The need to respire means abundant oxygen is a necessary precondition for large animals to come into existence. Many palaeontologists, however, have gone further, and seen it as a sufficient one. They think of unicellular creatures straining, as it were, on an evolutionary leash, waiting for there to be enough of the gas to support the big bodies multicellularity can create. Yet, though a few multicellular animals do predate 575m years ago, all those discovered so far are microscopic. It therefore looks as if sufficient oxygen was available to support big bodies for hundreds of million of years before evolution took advantage of it. + +Why oxygen levels rose when they did is a separate question, and one Dr Blamey’s result does not address directly. But his method’s precision means that if other halite deposits of appropriate age can be found and tested, it might be possible to build a detailed graph of the gas’s rise—and that, in turn, may lead to explanations that currently elude the field’s practitioners. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21702742-new-way-chart-rise-oxygen-time-capsules/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +American foreign policy: Playing it long + +The Olympic games: Fanfare + +American fiction: Mean girls + +Jazz in the 21st century: Playing outside the box + +Johnson: Liberal blues + + + + + +Articles Sections Next + +American foreign policy + +Playing it long + + + +A new book argues that Barack Obama’s grand strategy has made America stronger both at home and abroad. Not everyone will agree + +Jul 30th 2016 | From the print edition + + + +The Long Game: How Obama Defied Washington and Redefined America’s Role in the World. By Derek Chollet. PublicAffairs; 247 pages; $26.99 and £17.99. + +WHEN Barack Obama comes to write his memoirs they will no doubt be an elegantly persuasive account of the ideas that guided his presidency. Until then “The Long Game”, Derek Chollet’s apologia for what he sees as Mr Obama’s distinctive approach to grand strategy, is likely to be the closest that anyone will come to understanding the thinking behind a foreign policy that has many critics. + +Having served in senior positions in the State Department, the National Security Council and the Pentagon, Mr Chollet has been close to the action throughout the Obama years. His contention is that the foreign-policy establishment in Washington (of which he admits to having been a “card-carrying member for over two decades”) has underestimated the extent of Mr Obama’s achievement. Policymakers at home lambast Mr Obama for having overlearned the lessons of Iraq, for his extreme caution and aversion to the use of America’s hard power in support of global order and for an unwillingness to shoulder the burdens of leadership, which has dismayed allies and emboldened foes. + +Meanwhile, detractors on the left have been horrified by his cold-blooded use of drones to kill America’s enemies, his commitment to a costly nuclear modernisation programme and his bombing of more countries than George W. Bush. So which is he, asks Mr Chollet: a woolly-headed liberal idealist or an unsentimental realist? + +The answer, of course, is neither. Mr Chollet argues that Mr Obama is misunderstood because he likes to play what the author calls the “long game”. The book portrays the president as trying to be Warren Buffett in a foreign-policy debate dominated by day traders. He has an unwavering view of what is in America’s long-term interests and refuses to be forced by impatient demands for action to intervene in ways that may be temporarily satisfying but have little prospect of success at acceptable cost. + +To this end, Mr Chollet argues that Mr Obama has formulated what amounts to a long-game checklist, a series of principles that should be applied to managing American power and making strategic choices. The first of these is balance: balance between interests and values, between priorities at home and abroad, between declared goals in different parts of the world, and between how much America should take on and how much should be borne by allies. And balance in the use of the whole toolbox—military power, diplomacy, economic leverage, development. Mr Chollet contrasts this with the lack of balance Mr Obama inherited from Mr Bush: a tanking economy, over 150,000 troops deployed in two wars and sagging American prestige. + +The other key principles of the Obama checklist are: sustainability (avoid commitments that cost too much to stick with); restraint (ask not what America can do but what it should do); precision (wield a scalpel rather than a hammer); patience (give policies the time and effort to work); fallibility (be realistic about the chances of failure and modest about what you can achieve); scepticism (interrogate the issues and beware those peddling easy answers to difficult questions); exceptionalism (the recognition that because of its enormous power and attachment to universal values America has a unique responsibility to provide leadership in the world that cannot be ducked). + +For Mr Chollet this mix of cautious pragmatism and cool realism finds an echo in the approach of two Republican predecessors, Dwight Eisenhower and the first George Bush, whose reputations have grown considerably since their departure from office. Mr Chollet reckons that this president’s foreign policy will look pretty good too once hindsight kicks in. + +Maybe. But eminently sensible though the checklist appears to be, rather than setting the appropriate conditions for action, it can also be used as a way to do too little, too late. By and large, Mr Obama managed to get right his policies towards China (the “rebalancing” towards Asia was timely and has been quite effective) and Russia (the “reset” of the first term delivered some benefits; when Vladimir Putin annexed Crimea and opted for confrontation with the West, Mr Obama responded accordingly). But in Afghanistan, Iraq and, most of all, in Syria, the Obama doctrine—let us call it that—has had terrible consequences. + +In Afghanistan, Mr Obama’s long-debated troop surge was fatally undermined when he announced that American forces would start to come home within 18 months. He repeated the error in May 2014, saying that the residual American force in Afghanistan would be fully withdrawn by the end of 2016. He has had to reverse that foolish promise. But by setting timetables for forced reductions unconnected to conditions on the ground, Mr Obama has given encouragement to the Taliban and left Afghan forces cruelly exposed. + +Mr Obama’s decision to pull all American forces out of Iraq at the end of 2011 was even more disastrous. He used the excuse of the difficulty of negotiating a new status-of-forces agreement with the Iraqis to do what he wanted to do anyway. Had a few thousand American troops been left in Iraq, Mr Obama and his team would have known much more about the Maliki government’s subversion of the US-trained and US-equipped Iraqi security forces and would have had some leverage to prevent it. A direct result of Mr Obama’s insouciance was the emergence of Islamic State in 2014 as an organisation able to take and hold Iraqi cities. + +In Syria the catalogue of errors is far too long to enumerate. But Mr Obama’s extreme reluctance to do anything to help the moderate rebels (while there still were some) and his failure to punish the regime for crossing his previously declared red line on the use of chemical weapons were turning points that contributed to the scale of the catastrophe. Mr Chollet is reluctant to blame Mr Obama, but he was among those arguing for the president to take a different course of action. + +The one unambiguous policy success that Mr Obama’s long game can claim is the nuclear deal with Iran. Patient diplomacy and the building of international support for a crippling sanctions regime, combined with the credible threat of military action if all else failed, resulted in an agreement that has effectively dealt with worries about Iran getting a bomb for the next decade or so. If the deal holds, it will be the defining achievement of the Obama doctrine. But not every problem can be approached in the same painstaking, deliberative way. + +The president is far from being the feckless wuss portrayed by his critics. But nor is he the master of grand strategy that Mr Chollet makes him out to be. His contempt for the interventionist excesses of his predecessor, his suspicion of arguments to “do more”, his arrogant disdain for military advice and his ingrained pessimism about the utility of hard power have had the effect of reducing America’s capacity to do good in a bad world. If Hillary Clinton succeeds him, she is likely to provide a modest but welcome corrective. If Donald Trump is the next president, Mr Obama and his long game, whatever its defects, will be sorely missed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702733-new-book-argues-barack-obamas-grand-strategy-has-made-america-stronger-both-home/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Olympic games + +Fanfare + +A sobering history of how the Olympic games evolved + +Jul 30th 2016 | From the print edition + +First of the big spenders + +The Games: A Global History of the Olympics. By David Goldblatt. W.W. Norton; 516 pages; $29.95. Macmillan; £20. + +IN 1892, Baron de Coubertin, a French educator and historian, called for the restoration of the Olympic games, hoping that they would promote peace and also help achieve his decidedly conservative political aims. De Coubertin considered the games a way to promote ideals of manliness. He argued that women’s sport was “the most unaesthetic sight human eyes could contemplate” and that the games should be reserved for men. + +The Olympics have always been intertwined with politics, as David Goldblatt shows in an elegant and ambitious new study. The International Olympic Committee (IOC) has never wavered from its underlying conservatism. Taiwan preserved its place in the Olympics far longer than it did in the United Nations. Ludicrously, the IOC maintained the “hypocritical and ultimately forlorn” pretence of amateurism until 1988—even as Soviet athletes were amateurs in name only. And from 1928 until 1968, there were no women’s races of more than 200 metres because it made them look too tired. It took until 1984 for women to make up one-fifth of competing athletes. + +If the Olympics have been a force for wider good, this has often been in spite of the IOC rather than because of it. In Mexico City in 1968, Tommie Smith and John Carlos, two African-American athletes who had just won medals in the 200 metres, gave the Black Power salute. Avery Brundage, the American president of the IOC, ordered the delegation to expel the athletes. They did. South Africa had been excluded from the Olympics in 1964 because of its apartheid policy, but in 1968 the IOC at first gave the nation the all-clear, before protests forced it to back down. + +At every turn, the Olympics has allowed itself to be manipulated by governments, including appalling regimes. Ahead of the 1936 games in Berlin, the chairman of the American Olympic Committee concluded that there was no case for a boycott as there was no discrimination in German sport. Nazi Germany, which had initially been reluctant to play host, soon realised the huge potential benefits: it is estimated that more was spent on the Berlin games than all the previous Olympics combined. Adolf Hitler and the Nazi entourage attended every day. More recently, the IOC has allowed governments to hide their problems from view during the games—after Atlanta submitted its bid for the 1996 games, homeless people were even locked up—and to trample over the rights of their citizens. Construction before the Beijing games in 2008 forced more than 1m people out of their homes. + +In crude financial terms, hosting is a disaster: the 2004 games in Athens cost the Greek government about $16 billion (about 5% of the government’s total debt) and the swimming complex remains unused. Mr Goldblatt reckons that, of the 17 Olympic tournaments held between the second world war and 2012, only the one in Los Angeles, in 1984, actually made a profit. Moreover, the idea that the games makes a host nation more athletic has no foundation. In Britain, fewer people do sport now than did before the Olympics in 2012. Little wonder, then, that a “Nolympics” movement has built up, made of protesters against hosting the games. + +Another dark side of the sport can be seen in the way athletes, often at the behest of their national Olympic committees, have used performance-enhancing drugs. This kind of cheating began in the 1930s, if not earlier, though the IOC did not introduce drug testing until 1968. As the recent Russian doping scandal highlights, drug use remains all too prevalent. So far, this has not undermined the popularity of the games. In 1912 de Coubertin created a poetry contest and chose as the winner a poem he had written himself, which included the words, “O sport you are justice!” His view of the Olympics was never accurate; now the games seem more imperilled than ever. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702736-sobering-history-how-olympic-games-evolved-fanfare/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +American fiction + +Mean girls + +A great summer read + +Jul 30th 2016 | From the print edition + + + +The Girls. By Emma Cline. Random House; 355 pages; $27. Chatto & Windus; £12.99. + +IN AN essay called “The White Album” Joan Didion once wrote: “Many people…believe that the Sixties ended abruptly on August 9, 1969.” Indeed for some, the night of the Manson murders, which were orchestrated by Charles Manson, a charismatic cult leader, and then violently acted out by his “family” of followers, marked the brutal end to a decade of peace and freedom. But to others, the murders were instead a symbol for 1960s America, emblematic of the Vietnam war, growing social unrest and the psychosis of the times. + +Since then, people’s fascination with the Manson crimes has far from diminished. For Emma Cline, a young American writer born long after the killings, the legacy of the Manson murders hangs heavy in the air of her debut, “The Girls”. A compelling novel, it traces one teenage girl’s summer spent in a Californian cult (not unlike that of the Manson clan), exploring how the ties of sisterhood can inextricably unite—and divide—adolescent girls for ever. + +Bought as part of a three-book deal reportedly worth $2m, “The Girls” has been hailed as one of the year’s most anticipated fiction releases. But be warned: Ms Cline’s retelling is far from a straightforward fictionalisation of the murders. The nuanced and deeply drawn character study of teenage ennui and anger charts how Evie Boyd, the 14-year-old protagonist, becomes dangerously entangled in the sisterhood of this cultish group. Ms Cline delves into the vulnerability and anxiety of a teenage girl, showing how Evie finds herself edging closer and closer to unthinkable violence all in an attempt to keep her newfound bond with “the girls” of the family. + +In luminous prose, the novel maps Evie’s obsessive psyche, demonstrating her hunger to be accepted by the other girls, especially the family’s ringleader, Suzanne. With its beguiling tale of adolescent angst, played out against a retelling of one of the most infamous murders in American history, “The Girls” is a compelling and startling new work of fiction. Ms Cline brilliantly shows how far adolescent loneliness can push a girl in her desire to be loved. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702738-great-summer-read-mean-girls/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Jazz in the 21st century + +Playing outside the box + +The new sound of summer + +Jul 30th 2016 | LOS ANGELES, MONTREAL and NEW YORK | From the print edition + +Hell of a wardrobe + +“JAZZ isn’t dead,’’ Frank Zappa once said, “it just smells funny.” If he were around today, Zappa might point to the music of a London-based trio, The Comet Is Coming, with its curious scent. At the Montreal International Jazz Festival earlier this month, the fiery saxophone of Shabaka Hutchings, Dan Leavers’s pulsating synthesiser and Maxwell Hallett’s arresting percussion dazzled an audience with its mash-up of jazz and cosmic sounds. Halfway through the show, some entranced listeners rose from their seats and danced to a tune perfect for a rave. The trio calls its music “apocalyptic space funk”. More important, Mr Leavers adds, is the group’s goal: like a comet it “travels through distant galaxies exploring musical concepts”. + +Jazz is evolving with the help of a new breed of musicians who are creating an innovative sound that challenges convention and defies categorisation. After originating from the streets and clubs of New Orleans in the late 1800s, the art form produced subgenres such as Dixieland, Afro-Cuban jazz, swing and bebop. Along the way, some purists scolded experimenters for straying from well-established categories. But rebels have always emerged to create new strains of improvised music. + +Today’s nonconformists and mavericks, though well grounded in jazz’s history and repertoire, also incorporate elements of hip-hop, rock or classical music into their works. YouTube and streaming services such as Spotify can often wield more influence than radio in shaping a musician’s exposure to music. Original and unique voices now abound. Vijay Iyer, a pianist and composer who was DownBeat magazine’s top jazz artist of 2012, 2015 and 2016, shines in acoustic jazz settings but also excels at electronic music and collaborates with string quartets, film-makers and poets. Makaya McCraven, an experimental Chicago-based drummer, makes some recordings by stitching together pieces of past live performances. Snarky Puppy, a quirky Grammy award-winning instrumental ensemble, incorporates funk and electronica into the jazz in its music. + +While New York and New Orleans remain established centres for jazz, new voices can emerge from just about anywhere. Maurin Auxéméry, a programmer for the Montreal festival, says that London has emerged as a hotbed for edgy jazz artists such as The Comet Is Coming. ADHD, a band from Iceland, found fans in faraway places by weaving rock influences into its compositions featuring saxophone, organ and guitar. Tokyo Chutei Iki from Japan created a buzz beyond Asia with its restless ten-person (or sometimes more) baritone saxophone-only group. Some occasionally wander into the audience while playing. + +Other jazz musicians such as Michael League, the bandleader of Snarky Puppy, and Robert Glasper, a pianist, believe that the current movement is giving jazz a shot in the arm. “If you don’t want jazz to change, you are putting a pillow over its face, and it’s going to die,” says Mr Glasper, whose acclaimed recording, “Black Radio” became a marker for its genre-defying blend of jazz, rhythm-and-blues and rock. Mr Glasper was destined to fuse musical influences. Besides listening to acoustic jazz as a youngster, he grew up in America’s Bible belt, playing gospel music at Baptist churches in Houston, Texas. He also performed with Roy Hargrove, a Grammy award-winning trumpeter known for his boundary-crossing ways, and has recorded with Kendrick Lamar, a popular rapper. Herbie Hancock, who influenced Mr Glasper, was so impressed with his approach to music that he hired him to produce his next recording. + +Meanwhile, some music experts wonder if jazz can survive: it represents only about 1.2% of recorded and streamed albums sold (compared with the 26.8% for rock and 22.6% for hip-hop and rhythm and blues combined), according to the 2016 Nielsen Music US Mid-Year Report. Yet audience exposure for jazz artists may be a better measure of its staying power. A case in point: Kamasi Washington, a burly, soft-spoken Los Angeles-based saxophonist (pictured on previous page) who sports dashikis and robes onstage, was unknown globally until his three-CD debut recording, “The Epic”, became a bestseller and critics’ favourite in 2015. This year Mr Washington, as well as a British trio, GoGo Penguin, performed before tens of thousands of people at the Coachella Valley Music and Arts Festival, which is usually reserved for rock, hip-hop and pop stars. + +Beyond the mega-festivals, many more listeners are flocking to listen to jazz groups onstage. Snarky Puppy, which once performed in small venues, can now fill a 3,000-seat auditorium. Randall Kline, founder of SFJAZZ in San Francisco, which showcases a variety of jazz styles, says that traditional and cutting-edge shows regularly fill its concert venues and the organisation’s concert subscriptions have quadrupled in the past four years. The new jazz may smell a bit peculiar, but audiences find its aroma pleasing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702735-new-sound-summer-playing-outside-box/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +Liberal blues + +The many meanings of liberalism + +Jul 30th 2016 | From the print edition + + + +AMERICAN politics reached one of its quadrennial high points this month, as the two major parties met to nominate their candidates for president. Amid the hoo-hah, one word was curiously in abeyance. “Liberalism” is disappearing in America—and elsewhere. + +Once “liberalism” was the proud banner of the Democrats—and the bogeyman of Republicans. Pat Buchanan, an insurgent Republican conservative, declared a “cultural war” against “liberals and radicals” in a rousing convention speech in 1992. Frank Luntz, a Republican consultant, advised Republicans to use words like “liberal”, “sick”, “corrupt” and “traitors” together, to tarnish the Democrats. + +Older liberals still embrace the term: Paul Krugman, an economist, blogs for the New York Times under the banner “The Conscience of a Liberal”, and Thomas Frank has written a book called “Listen, Liberal” chiding Democrats for losing sight of the working class. But the young American left increasingly prefers a different label. When Hillary Clinton introduced Tim Kaine, her choice for vice-president, in an e-mail, she knew the word eager activists wanted to hear: “Tim is a lifelong fighter for progressive causes.” “Progressive” is supplanting “liberal”, with Republicans perhaps now the last remaining users of the older word, as in their oft-repeated complaint about the “liberal media” or “liberal values”. + +“Liberal” has meant many different things over the course of its career. The first political liberals under that name were Spaniards who, in 1814, opposed the king’s suspension of the constitution, and the word spread from Spain to France. But it put down especially deep roots in England, associated in philosophy with John Stuart Mill and in politics with the Liberal Party. James Wilson, The Economist’s founder, was a Liberal member of Parliament in the 19th century. This liberalism, the sort that this newspaper champions, emphasises individual freedom, free markets and a limited state. + +But over time the word has headed elsewhere. In French- and Spanish-speaking countries, “liberal”, now often prefixed by “neo-”, is a fighting word used with exactly the opposite meaning to that which it has in America: to describe a heartless small-government economic philosophy, and a global order in which the World Bank and International Monetary Fund boss poor countries around, forcing them to adopt market-based economic policies. In America, liberalism’s association with big, not small, government began with Franklin Roosevelt’s New Deal. + +In some places, the word “liberal” seems to have no meaning at all. Japan’s ruling Liberal Democratic Party is a mildly conservative and nationalist one. Russia’s party of the same name is a nakedly fascist one. Britain’s ailing Liberal Democrats and Canada’s governing Liberal Party are among the few parties to have both the “liberal” name and liberal DNA. + +“Liberal”, of course, shares an etymology with “liberty” and “liberation”. But many use the latter words, while not at all being liberal: Donald Trump, scowling in Cleveland, said that he plans “to liberate our citizens from…crime and terrorism and lawlessness.” This is classic law-and-order conservatism from a man no one would confuse with any sense of the word “liberal”. + +With so much confusion over the “liberal” label, alternatives have arisen. Many liberal parties’ names are plain confusing: the Danish governing party is called “Venstre”, or “Left”, though it is in fact on the liberal centre-right. In other countries, like France, the liberal party has often taken another surprising name: “Radical”, an echo of the time when limiting government really was radical. + +Since the 1960s, talk in Western countries of how to divide the economic pie has yielded in part to “post-industrial” concerns like the environment and women’s rights. Parties that focus on these now typically call themselves “green”, not “liberal”. Those who prioritise privacy and the right to be left alone by the state have hived off “libertarian” from the old shared root of “liberal” and “liberty”. To add a further twist, left-libertarians sometimes call themselves, tongue in cheek, “liberaltarians”. + +If it is not easy to define “liberal”, it is easy to spot its rivals, authoritarianism and fundamentalism of all kinds. Whatever the confusion over the meanings of “liberal”, one of its elements has always been optimism. Even if the word itself fades, the faith behind it will not. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21702737-many-meanings-liberalism-liberal-blues/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Geoffrey Hill: The discomfort of words + + + + + +Articles Sections Next + +Obituary: Geoffrey Hill + +The discomfort of words + +Geoffrey Hill, an English poet, died on June 30th, aged 84 + +Jul 30th 2016 | From the print edition + + + +IT WAS, he said, like falling in love. When Geoffrey Hill was ten years old he was given a Victorian anthology of English poetry, an award to mark his punctilious attendance at the Sunday school of his local church. It was filled with the kind of high-flown, sentimental stuff he would later scorn. But for the child of a village policeman who had left school at 13, the poetry of past lives suddenly seemed a revelation—and led to his eventual vocation. + +As with all vocations, or indeed love affairs, it was often difficult. Few seemed to understand him in the beginning. At Oxford University, his first year was miserable and he had few friends. He was often wracked with “savage melancholia” and what he later realised was obsessive-compulsive disorder. The history of the place, with its portraits of evil-looking old men, initially oppressed him. While other undergraduates cavorted through their time there he stood aloof, worrying at his poems. They did not come easily: he would work on a line for weeks, like a sculptor chipping away, bit by bit, at marble. + +Statesmen have known visions. And, not alone, + +Artistic men prod dead men from their stone: + +Some of us have heard the dead speak: + +The dead are my obsession this week + +While other British writers such as Philip Larkin and Donald Davie tore into the 1950s with short, plain-speaking poems inspired by the staccato of jazz and modern life, he turned instead to the past: to the England of his grandmother, a working-class woman who spent her life making nails; to Robert Southwell and Edmund Campion, 16th-century Roman Catholic martyrs he longed to have known; and to Anglo-Saxon kingdoms buried deep beneath the soil of his beloved native Worcestershire. + +Nature appeared too, but was rarely comforting: “An owl plunges to its tryst / With a field-mouse in the sharp night. / My fire squeals and lies still.” Religion played its part as well: for a modern poet, he was unashamed to show his fear of the fate of his soul. Death—whether in the form of the Holocaust or earlier, English, massacres—continued to obsess him. + +This made him different as well as difficult. Some loved him for it: the first publisher of his poems, in a short pamphlet when he was 20, would wake up in the night to read his work again, marvelling at its strange beauty. Several critics spent decades championing and defending his poems and his criticism; to many, he was Britain’s greatest living poet. Others dismissed him as obscure, high-flaunting and, latterly, plain incomprehensible. Spending a life in seemingly dusty academia—teaching at Leeds, Cambridge, Boston and then back at Oxford, to be Professor of Poetry from 2010 to 2015—he could appear like a figure from another age, with his white beard and broad-brimmed hats. His heroes included John Milton and Alexander Pope and, as he aged, he appeared to resemble aspects of them more and more, with his biting invective and fondness for arcane words and complicated phrases. + +Rancorous, narcissistic old sod—what + +makes him go on? We thought, hoped rather, + +he might be dead. Too bad. So how + +much more does he have of injury time? + +Even friends could feel wary of him, his dark eyes sometimes glowering with a toad-like stare before he broke into laughter. His sonorous voice, shaped by a childhood illness which made him deaf in one ear, could sound as if he was admonishing his listeners. At one reading in London he bellowed “SOD OFF!”; at another, he condemned the “anarchical plutocracy” he lived in, scorning the depravity of modern society and its politics. He saw the louche, camp comic Frankie Howerd as an influence. But when he taught at Leeds he was given the nickname “Chuckles” for his apparently unrelieved gloom. + +As he got older, writing came more easily. Once he would have counted himself lucky to write seven poems in a year. In his 70s he could write seven or more a week. His first books had come out only after at least five or six years of agonised revisions; now he published one every two years. When his poems were gathered into one volume in 2013 it ran to just under 1,000 pages. + +Refusal to reveal + +Part of the reason for the change was his health: after a heart attack in the 1980s, time appeared ever more precious to him. He would work away on an exercise bike while reading murder mysteries and wrote laboriously in longhand journals. A second marriage in 1987 to Alice Goodman, a librettist turned Anglican priest 26 years younger, was a happier reason. She introduced him to livelier modern poets, such as Frank O’Hara; he trusted her judgment more than anyone else’s. Medication for his depression, first lithium and then serotonin, seemed to inspire him further—though, when pressed, he professed it was something of a mystery as to why he could suddenly write so much. + +Perhaps it was better to keep it that way. Although his later poems seemed more autobiographical, he resisted any idea of a poet revealing himself in his work. Rather, poems should be like love, expressive of something greater and yet mysterious: “Crying to the end, ‘I have not finished’.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21702700-geoffrey-hill-english-poet-died-june-30th-aged-84-discomfort-words/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Merchandise trade + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Jul 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21702744/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Economic data + +Jul 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21702768-economic-data-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Jul 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21702765-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Jul 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21702767-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Merchandise trade + +Jul 30th 2016 | From the print edition + + + +The volume of world merchandise trade grew by an insipid 2.7% in 2015, the fourth year in a row that it had been below 3%. China’s slowdown and recession in places like Brazil weighed on trade. Between 1990 and 2008, trade grew twice as fast as world GDP on average; last year they were roughly similar. Statistics on trade value are gloomier still. In 2015 the value of merchandise trade in current dollar terms plummeted by 13% to $16 trillion, due largely to the strong dollar and plunging commodity prices. Although merchandise trade values seemed to stabilise in the first quarter of 2016 as dollar appreciation slowed and oil prices started to recover, the outlook is still subdued. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21702766-merchandise-trade/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Jul 30th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21702759-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +TE20160731 + +The world this week + + + +Politics + + + + + +Business + + + + + +KAL's cartoon + + + + + +Leaders + + + +Globalisation and politics: The new political divide + + + + + +Abenomics: Overhyped, underappreciated + + + + + +Russian dirty tricks: Doping and hacking + + + + + +The parable of Yahoo: From dotcom hero to zero + + + + + +Air pollution: Cleaning up the data + + + + + +Letters + + + +On Republicans, Pokémon, blood-testing, Brazil, John Cleese, Italian banks: Letters to the editor + + + + + +Briefing + + + +Globalisation and politics: Drawbridges up + + + + + +United States + + + +The Democratic convention: Bridging the torrent + + + + + +On the trail: Philly special + + + + + +Putin, Trump and the DNC: Signal and noise + + + + + +The PGA championship: Who’ll win? + + + + + +Southern living: From crop to pop + + + + + +Political parties: Defining realignment + + + + + +Lexington: Able Kaine + + + + + +The Americas + + + +Brazil’s Olympics: Not yet medal contenders + + + + + +Bello: Cash in bin liners, please + + + + + +Asia + + + +Defending South Korea: Of missiles and melons + + + + + +Politics in Indonesia: Look who’s back + + + + + +Murder in Japan: Still safe + + + + + +Terror in Afghanistan: Unwelcome guests + + + + + +Young aborigines: Australia’s Abu Ghraib + + + + + +Politics in Taiwan: A series of unfortunate events + + + + + +China + + + +Flood control: Disgorging + + + + + +Jiang Zemin: Jiang of Jiang Hall + + + + + +Online media: Stop the virtual presses + + + + + +Middle East and Africa + + + +Zimbabwe’s president: Comrade Bob besieged + + + + + +South Africa’s local elections: Young rivals + + + + + +Nigeria’s struggling states: Running out of road + + + + + +The Arab League: A new low + + + + + +The Saudi bombardment of Yemen: Worse than the Russians + + + + + +Water in the West Bank: Nor yet a drop to drink + + + + + +Europe + + + +France’s response to terrorism: Loss of faith + + + + + +How Germans handle terror: Pure reason + + + + + +A shock for NATO: Defend me maybe + + + + + +Catholic youth in Poland: Cross purposes + + + + + +Charlemagne: Correspondence club + + + + + +Britain + + + +The impact of free trade: Collateral damage + + + + + +Northern Ireland after Brexit: Frontier spirit + + + + + +Women in politics: The struggle continues + + + + + +Commuter hell: Going south + + + + + +Brexit and public services: Somebody call a doctor + + + + + +Drug-testing at music festivals: Cocaine or concrete? + + + + + +Bagehot: Rage against the dying of the light + + + + + +International + + + +Pope Francis: Hearts, minds and souls + + + + + +Business + + + +Verizon buys Yahoo: Does it ad up? + + + + + +Rare diseases: Fixing fate + + + + + +Corporate governance: Change, or else + + + + + +Telecoms: Hans free + + + + + +Electric cars in China: Charging ahead + + + + + +Companies’ green strategies: In the thicket of it + + + + + +Schumpeter: Not-so-clever contracts + + + + + +Finance and economics + + + +Japan’s economy: Three-piece dream suit + + + + + +Buttonwood: Putting it all on red + + + + + +The Federal Reserve: Staying its hand + + + + + +Road taxes in Europe: Not easy being green + + + + + +Private share sales: Trading places + + + + + +Free exchange: A hire power + + + + + +Economics brief + + + +Financial stability: Minsky’s moment + + + + + +Science and technology + + + +Printed electronics: On a roll + + + + + +Air pollution: Breathtaking + + + + + +The ancient atmosphere: Time capsules + + + + + +Books and arts + + + +American foreign policy: Playing it long + + + + + +The Olympic games: Fanfare + + + + + +American fiction: Mean girls + + + + + +Jazz in the 21st century: Playing outside the box + + + + + +Johnson: Liberal blues + + + + + +Obituary + + + +Obituary: Geoffrey Hill: The discomfort of words + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Merchandise trade + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.08.06.TXT b/homeworks/B20769/homework1/data2/2016.08.06.TXT new file mode 100644 index 0000000..1953b44 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.08.06.TXT @@ -0,0 +1,5282 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Economics brief + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Aug 6th 2016 | From the print edition + + + +Continuing his crackdown, Turkey’s president, Recep Tayyip Erdogan, issued a decree allowing the government to issue direct orders to the commanders of the army, air force and navy, bypassing the chief of the general staff. Mr Erdogan also sparred with Italy’s prime minister, Matteo Renzi, over his son, Bilal Erdogan, who is under investigation for money laundering in Bologna. Mr Erdogan was not allowed to speak via videolink at a rally of his supporters in Cologne. Turkey summoned Germany’s chargé d’affaires in Ankara to explain why. See article. + +Thousands of people attended the funeral of a French priest whose throat was slit by two jihadists. Muslims attended Catholic mass in a gesture of solidarity. Meanwhile, Nicolas Sarkozy, who is running for president again, called for a French-style Guantánamo to deal with suspected terrorists. + +The British government unexpectedly put plans to build a new nuclear reactor at Hinkley Point on hold. EDF, the French company financing most of the project, had just narrowly voted to give it the go-ahead. China is also providing some of the funding. It was reported that Britain’s prime minister, Theresa May, delayed the project because of security concerns over China’s role. See here and here. + +London is to deploy more armed police in response to the recent spate of terrorist attacks across Europe. Highly visible patrols armed with handguns as well as semi-automatic rifles and tasers will be stationed around the capital’s landmarks. + +Shameless + +Donald Trump came under pressure from Republicans to tone down his act and run a professional campaign. Mr Trump has been conducting a feud with the parents of a slain American Muslim soldier. Oddly, he likened his own “sacrifice” as a casino-builder to the soldier’s. A Republican congressman became the first to declare that he will vote for Hillary Clinton in the presidential election. See article. + +An appeals court struck down a law in North Carolina that had made voting harder, including a requirement that voters show photo identification. The judges found that the law was designed specifically to reduce the turnout of blacks. + +Freed at last + +India’s upper house passed the biggest reform to taxes since the country’s independence from Britain in 1947. The goods-and-services-tax bill aims to replace India’s innumerable sales-tax rates with a single levy. Businesses have been calling for the change for years. + +Anandiben Patel resigned as chief minister of the Indian state of Gujarat, where dalits, formerly untouchables, have been protesting after violent attacks on their community. + + + +Yuriko Koike was elected as the governor of Tokyo, thefirst woman to hold the position. Ms Koike emphasised her sex in her campaign, promising to change the country’s male-dominated politics. Just 9% of the members of Japan’s lower house are women. See article. + +North Korea fired a missile that travelled 1,000km (620 miles) over land and sea before falling into Japanese waters. Tensions are high in the region ahead of America’s annual joint military drills with South Korea, which always rankle the North. + +Hong Kong’s electoral commission blocked Edward Leung, a pro-independence candidate, from standing in September’s elections to the legislative council, even though he had signed a form declaring that the territory is an “inalienable” part of China. An arm of the Chinese government called America the “dark shadow” behind Hong Kong’s pro-independence movement. + +The head of Malaysia’s anti-corruption agency resigned abruptly. He had been investigating the prime minister, Najib Razak, and a related scandal surrounding the state-investment fund, 1MDB. He had been heavily criticised by Mr Najib’s supporters but denies standing aside because of political pressure. + +Strike force + +Intense fighting took place around the ancient Syrian city of Aleppo, as rebels in its eastern part attempted to break out of the siege imposed upon them by the regime of Bashar al-Assad, backed up by Russian warplanes. A huge tunnel bomb, set off by the rebels, hit a government position in the west of the city. A rebel-held town was hit with chlorine gas, near where a Russian helicopter had earlier been shot down. See article. + +America bombed positions held by Islamic State in Sirte, in Libya, a move intended to show support for the newly formed unity government. + +In Tunisia, the parliament decided by 118 votes to three to remove the country’s prime minister. The new appointee, Youssef Chahed, is said to have family connections to the president, the Arab world’s oldest leader at 89, though he denies this. See article. + + + +South Africa voted in municipal elections, seen as a crucial test of the popularity of President Jacob Zuma and his African National Congress. Early results suggested big gains for the opposition. See article. + +Heading to court + +A judge ruled that a case against Brazil’s former president, Luiz Inácio Lula da Silva, along with six other people should proceed. Prosecutors allege that they conspired to pay a former executive of Petrobras not to co-operate with an investigation into a bribery scandal centred on the state-controlled oil company. Lula says he is the victim of a political witch hunt. See article. + +Venezuela’s election commission confirmed that the opposition had gathered enough signatures to move to the next stage of holding a referendum to recall the president, Nicolás Maduro. The opposition must now collect signatures from about 4m voters. Meanwhile, the army has been put in charge of food distribution. See article. + +Nicaragua’s president, Daniel Ortega, named his wife, Rosario Murillo, as his running- mate in a presidential election, to be held in November. Ms Murillo appears more often in public than her husband, a former leader of the Marxist Sandinista guerrilla movement, which is now his political party. + +Police used tear gas against protesters along the route of the Olympic flame in Rio de Janeiro, where the summer games were ready to open on August 5th. The protesters are angry about the high cost of the event. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21703426-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Aug 6th 2016 | From the print edition + +The Bank of England cut its benchmark interest rate for the first time since 2009, from 0.5% to 0.25%. The central bank had been charting a course to raise rates. But Britain’s vote in June to leave the EU has brought economic uncertainties to the fore; one survey of business activity recorded its sharpest drop in 20 years. + +Markets were unimpressed with a new stimulus package in Japan unveiled by Shinzo Abe, the prime minister. He announced ¥28 trillion ($275 billion) in measures to boost the anaemic economy, though only a quarter of that is new government spending, mostly on welfare and infrastructure. The details are to be fleshed out later, but doubts remain whether long-term investments, such as in a maglev train line from Tokyo to Osaka, will be enough to speed a recovery. + +European banks had a rocky week on the stockmarket. The results of the latest round of “stress tests” to determine the ability of lenders to survive a financial crisis weighed on investor sentiment. On average, the banks were deemed to be more robust than two years ago, when the previous round was conducted. But fewer banks from fewer countries participated; Cyprus, Greece and Portugal were excluded. + +Monte dei Paschi di Siena did worst in the stress tests. The board of the troubled Italian bank approved a rescue plan that requires it to move €27 billion ($30 billion) of bad loans at a huge discount into a special fund that will then sell them off. The bank will also raise €5 billion in new capital. The plan is designed to avoid the use of public money and comply with tough new European rules on bailing out banks. Shares in other Italian banks slid. Investors fear that the lower value ascribed to Monte dei Paschi’s bad loans sets a precedent for the holdings of other banks. + +Uber reached a deal to sell its operations in China to Didi Chuxing, its arch-rival there, an acknowledgment that its expensive campaign to conquer the ride-sharing market in China is over. Uber is taking a 17.7% stake in Didi as a consolation prize. Passengers and drivers may be the biggest losers. Uber and Didi spent billions of dollars on discounting rides in their competition for market share, but Uber’s discounts reportedly dwindled this week and fares soared. + +Almost a year after admitting that it had cheated on emissions tests, Volkswagen faced new woes when South Korea in effect banned most of its cars, including its Audi and Bentley ranges, from sale in the country. Meanwhile, the state pension fund in the German state of Bavaria said it would join the ballooning number of lawsuits against the company. + +In an all-share deal that has raised questions about possible conflicts of interest, Tesla Motors agreed to buy SolarCity, a solar-power company, for $2.6 billion. Elon Musk is the chief executive of Tesla and the chairman of SolarCity, holding around a fifth of the shares in both companies. The ebullient Mr Musk described those who have concerns about the merger as “silly buggers”. + +Qatar Airways revealed that last month it raised its stake in International Airlines Group, the parent company of British Airways, from almost 16% to 20%. The Qataris took advantage of IAG’s cheaper share price, which plunged after the referendum in Britain on leaving the European Union, and a weaker pound. + +Horizontal ambition + +Kevin Roberts decided to resign as chairman of Saatchi & Saatchi, a British advertising agency, after he was roundly criticised for saying that female executives in the industry lack “vertical ambition”. Mr Roberts left the firm speedily in the ensuing media storm, following at least one of his favourite leadership maxims; “Fail fast, fix fast, learn fast.” + +GlaxoSmithKline, a British drug company, said it was joining Verily Life Sciences, which is owned by Alphabet, Google’s holding company, to create a new venture in bioelectronic medicine. The pair are developing miniature devices that can be implanted into a body to modify irregular nerve impulses related to several diseases, such as arthritis, asthma and diabetes. + +Time Warner took a 10% stake in Hulu, a video-streaming company. Next year Hulu is introducing a live-streaming service, which will include Time Warner’s CNN programming, that will distinguish it from rivals such as Netflix. + +Fly me to the Moon + + + +America’s Federal Aviation Administration approved the first request by a private firm for a mission to the moon. Moon Express hopes to launch a small spacecraft with no crew in 2017. Under the Outer Space Treaty of 1967, private firms must request such permission from national regulators. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21703427-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Aug 6th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21703425-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + +Leaders + + + + + +Technology in China: China’s tech trailblazers + +After the Arab spring: The ruining of Egypt + +Energy policy: Hinkley Pointless + +Vietnam’s economy: The other Asian tiger + +International adoption: Babies without borders + + + + + +Articles Sections Next + +Technology in China + +China’s tech trailblazers + +The Western caricature of Chinese internet firms needs a reboot + +Aug 6th 2016 | From the print edition + + + +GOOGLE left. Facebook is blocked. Amazon is struggling to make headway. And if further proof were needed that China’s tech market is a world apart, this week seemed to provide conclusive evidence. Uber, a ride-hailing service that is the world’s most valuable startup, decided to sell its local unit to Didi Chuxing, a Chinese rival (see article). Its China dream, like those of so many before, is dead. + +For many, the lessons of this latest capitulation are clear. China is a sort of technological Galapagos island, a distinct and isolated environment in which local firms flourish. Chinese firms are protected from external competition by government regulation and the Great Firewall. And that protection means that they need not innovate but can thrive by copying business models developed in the West. In short, China is closed, its firms are cosseted and their talent is for mimicry. + +At first sight, Uber’s retreat appears to fit this damning profile. The startup has ceded China to Didi: it will concentrate on its home market and elsewhere. Uber’s surrender was caused partly by regulations, issued at the end of July by the Chinese authorities, that in effect outlawed subsidies—Uber spent $1 billion a year in incentives to Chinese drivers and riders. Now Didi, whose forerunner firms were founded in 2012, three years after Uber introduced ride-hailing, can make hay. But look more closely and a more positive picture emerges—not just of Didi, but of China’s technology firms as a whole. + +Getting the message + +The usual story about the isolated nature of the Chinese market is that foreign firms are either blocked altogether or hobbled by regulators. The government has indeed restricted competition in some areas—which is why China has subpar clones of Western firms, such as Baidu in search or Renren, an ailing knock-off of Facebook. But China is not as impenetrable as its critics suggest. WhatsApp, the world’s most popular messaging app, which is owned by Facebook, is freely available in China; yet it is dwarfed by WeChat, China’s leading app (which has also fought off Alibaba, a formidable local internet giant). China is the largest market for Apple’s iPhone. And Uber made a valiant effort to establish itself in China, the world’s largest ride-hailing market: a 17.7% stake in Didi is not a bad consolation prize. Nor are Chinese tech giants walling themselves off from the rest of the world. They have invested in American startups, including Snapchat and Lyft, and bought mobile-gaming firms like Supercell of Finland and Playtika of Israel. + +Being present in the Chinese market is all very well, comes the retort, but not if you are stopped from winning. That gives too little credit to China’s tech leaders. Ride-hailing, like many online businesses, is a cut-throat, winner-takes-all market: Didi itself is the product of a 2015 merger of two local firms. Uber was outcompeted. Globally, Uber arranged its billionth ride at the end of 2015, after five years in business; Didi arranged 1.4 billion rides in 2015 alone, just in China. Uber struggled to raise its market share in China above 10%. Didi understood the local culture, integrated better with social-media platforms and got taxi drivers onside by incorporating them into its app from the beginning. In outlawing subsidies, the regulators called time on a fight the American firm had already lost. + +Similarly, whatever the settings of the Great Firewall, there is nothing outside China that offers WeChat’s combination of features. It has over 700m monthly users, and combines messaging, voice calls, browsing, gaming and payments (see article). It can be used for everything from paying parking tickets to booking a hospital appointment, ordering food or paying for a cup of coffee. WeChat is not so much an app as an entire mobile operating system, and accounts for more than one-third of all time spent online by Chinese mobile users; HSBC, a bank, values the app at over $80 billion. To Chinese users, Western apps look hopelessly backward. + +WeChat is the best riposte to the condescending, widely held belief that Chinese internet firms are merely imitators of Western ones, and cannot innovate themselves. But it is not the only example. Alibaba kick-started Chinese e-commerce with the clever trick of holding payments in escrow, helping buyers and sellers establish trust. It now offers services that exploit its vast customer database, including credit-scoring, digital marketing, and vetting visa applicants and users of dating sites. Didi’s ride-hailing app includes novel features such as on-demand bus services and the option to request a test-drive of a new car. Sina Weibo, the Chinese equivalent of Twitter, has a built-in payments system and supports premium content, both features that Twitter lacks. With revenue from payments, virtual goods and gaming, Chinese internet firms are also much less dependent on online ads than Western rivals. + +As a result, the flow of ideas between China and the West is now two-way. Facebook’s efforts to incorporate payments and commerce into its Messenger app are inspired by WeChat, as is Snapchat’s expansion from a messaging app into a media portal, and the sudden enthusiasm of Google, Facebook and Microsoft for bots (smart software that chats with customers). Western consumers are having their experience of the mobile internet shaped by a Chinese success story. Companies that want a glimpse of the future of mobile commerce should look not just to Silicon Valley but also to the other side of the Pacific. + +Digital dragons + +Policymakers should study China, too. No other place will reveal more about the advantages and drawbacks of winner-takes-all digital markets. As WeChat shows, a single dominant app, particularly with a payments system included, is amazingly convenient for users. But monopolies can also spell danger. Now that Didi has a 90% market share and no serious rivals to speak of, riders can expect to pay more and drivers to be paid less. How to strike the balance between convenience and dominance is the great question for regulators in the digital age. One lesson is already clear: compared with Renren and Baidu, Didi and WeChat were strengthened by fierce rivalries. If China’s tech trailblazers aim to become truly global champions, then competition is their friend. Watch closely, world. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21703371-western-caricature-chinese-internet-firms-needs-reboot-chinas-tech-trailblazers/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +After the Arab spring + +The ruining of Egypt + +Repression and the incompetence of Abdel-Fattah al-Sisi are stoking the next uprising + +Aug 6th 2016 | From the print edition + + + +IN EGYPT they are the shabab al-ahawe, “coffee-shop guys”; in Algeria they are the hittistes, “those who lean with their backs to the wall”; in Morocco they go by the French term, diplômés chômeurs, “graduate-jobless”. Across the Arab world the ranks of the young and embittered are swelling. + +In most countries a youth bulge leads to an economic boom. But Arab autocrats regard young people as a threat—and with reason. Better educated than their parents, wired to the world and sceptical of political and religious authority, the young were at the forefront of the uprisings of 2011. They toppled rulers in Tunisia, Egypt, Libya and Yemen, and alarmed the kings and presidents of many other states. + +Now, with the exception of Tunisia, those countries have either slid into civil war or seen their revolutions rolled back. The lot of young Arabs is worsening: it has become harder to find a job and easier to end up in a cell. Their options are typically poverty, emigration or, for a minority, jihad. + +This is creating the conditions for the next explosion. Nowhere is the poisonous mix of demographic stress, political repression and economic incompetence more worrying than in Egypt under its strongman, Abdel-Fattah al-Sisi. + +Battle of the youth bulge + +As our briefing on young Arabs sets out (see Briefing), the Middle East is where people are most pessimistic and most fearful that the next generation will fare worse than the current one. Arab populations are growing exceptionally fast. Although the proportion who are aged 15-24 peaked at 20% of the total of 357m in 2010, the absolute number of young Arabs will keep growing, from 46m in 2010 to 58m in 2025. + +As the largest Arab state, Egypt is central to the region’s future. If it succeeds, the Middle East will start to look less benighted; if it fails, today’s mayhem will turn even uglier. A general who seized power in a coup in 2013, Mr Sisi has proved more repressive than Hosni Mubarak, who was toppled in the Arab spring; and he is as incompetent as Muhammad Morsi, the elected Islamist president, whom Mr Sisi deposed. + +The regime is bust, sustained only by generous injections of cash from Gulf states (and, to a lesser degree, by military aid from America). Even with billions of petrodollars, Egypt’s budget and current-account deficits are gaping, at nearly 12% and 7% of GDP respectively. For all of Mr Sisi’s nationalist posturing, he has gone beret in hand to the IMF for a $12 billion bail-out (see article). + +Youth unemployment now stands at over 40%. The government is already bloated with do-nothing civil servants; and in Egypt’s sclerotic, statist economy, the private sector is incapable of absorbing the legions of new workers who join the labour market each year. Astonishingly, in Egypt’s broken system university graduates are more likely to be jobless than the country’s near-illiterate. + +Egypt’s economic woes stem partly from factors beyond the government’s control. Low oil prices affect all Arab economies, including net energy importers that depend on remittances. Wars and terrorism have kept tourists away from the Middle East. Past errors weigh heavily, too, including the legacy of Arab socialism and the army’s vast business interests. + +But Mr Sisi is making things worse. He insists on defending the Egyptian pound, to avoid stoking inflation and bread riots. He thinks he can control the cost of food, much of which is imported, by propping up the currency. But capital controls have failed to prevent the emergence of a black market for dollars (the Egyptian pound trades at about two-thirds of its official value), and has also created shortages of imported spare parts and machinery. This is stoking inflation anyway (14% and rising). It is also hurting industry and scaring away investors. + +Sitting astride the Suez Canal, one of the great trade arteries of the world, Egypt should be well placed to benefit from global commerce. Yet it lies in the bottom half of the World Bank’s ease-of-doing-business index. Rather than slashing red tape to set loose his people’s talents, Mr Sisi pours taxpayers’ cash into grandiose projects. He has expanded the Suez Canal, yet its revenues have fallen. Plans for a new Dubai-like city in the desert lie buried in the sand. A proposed bridge to connect Egypt to Saudi Arabia sparked protests after Mr Sisi promised to hand back two Saudi islands long controlled by Egypt. + +Even Mr Sisi’s Arab bankrollers appear to be losing patience. Advisers from the United Arab Emirates have gone home, frustrated by an ossified bureaucracy and a knucklehead leadership that thinks Egypt needs no advice from upstart Gulfies—mere “semi-states” that have “money like rice”, as Mr Sisi and his aides are heard to say in a leaked audio tape. + +Better the general you know? + +Such is Egypt’s strategic importance that the world has little choice but to deal with Mr Sisi. But the West should treat him with a mixture of pragmatism, persuasion and pressure. It should stop selling Egypt expensive weapons it neither needs nor can afford, be they American F-16 jets or French Mistral helicopter-carriers. Any economic help should come with strict conditions: the currency should ultimately be allowed to float; the civil service has to be slimmed; costly and corruption-riddled subsidy schemes should be phased out. The poorest should in time be compensated through direct payments. + +All this should be done gradually. Egypt is too fragile, and the Middle East too volatile, for shock therapy. The Egyptian bureaucracy would anyway struggle to enact radical change. Yet giving a clear direction for reform would help to restore confidence in Egypt’s economy. Gulf Arabs should insist on such changes—and withhold some rice if Mr Sisi resists. + +For the time being talk of another uprising, or even of another coup to get rid of Mr Sisi, has abated. Caught by surprise in 2011, the secret police are even more diligent in sniffing out and scotching dissent. But the demographic, economic and social pressures within Egypt are rising relentlessly. Mr Sisi cannot provide lasting stability. Egypt’s political system needs to be reopened. A good place to start would be for Mr Sisi to announce that he will not stand again for election in 2018. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21703374-repression-and-incompetence-abdel-fattah-al-sisi-are-stoking-next-uprising-ruining/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Energy policy + +Hinkley Pointless + +Britain should cancel its nuclear white elephant and spend the billions on making renewables work + +Aug 6th 2016 | From the print edition + + + +THE “golden decade” of co-operation between Britain and China, launched last year as Xi Jinping banqueted at Buckingham Palace, seems to have lasted all of nine months. The centrepiece of the new partnership was a deal in which China would invest £6 billion ($8 billion) in a new French-built nuclear power station at Hinkley Point in south-west England, before building one of its own in the south-east (see page 21). Yet on July 28th, as the Hinkley project was due to receive final approval, Britain’s new government announced ominously that it was under review. + +Putting the brakes on Hinkley has tarnished the golden era with China, whose state-owned news agency complained about Britain’s “suspicious approach” (see article). It risks annoying France, which can complicate Britain’s exit from the EU. And Britain badly needs new sources of energy. + +Even so, scrapping the deal would be the right decision. Regardless of security worries about China, which are probably overblown, the Hinkley plan looks extraordinarily bad value for money. What’s more, as renewable sources of energy become more attractive, the days of big, “baseload” projects like Hinkley are numbered. Britain should pull out of the deal, and other countries should learn from its misadventure. + +The fallout + +EDF, the firm building Hinkley, has yet to finish two similar reactors in France and Finland that, based on a design plagued by problems, are overdue and over-budget. The British government has nonetheless promised to pay about £92.50 per megawatt hour for Hinkley’s output, compared with wholesale prices of around £40 today. By 2025, when Hinkley is due to open, that may look even pricier; by the time the guarantee runs out, 35 years on, it could look otherworldly. Other technologies are galloping ahead, upsetting all kinds of pricing assumptions. In the past six years Britain’s government has reduced the projected cost of producing electricity from onshore wind in 2025 by one-third, and of solar power by nearly two-thirds (see chart). Because nobody knows how the next few decades will unfold, now is not the time to lock in a price + +One of the few certainties is that Hinkley is not the sort of power station that any rich country will want for much longer. Nuclear energy has a future, but big, always-on projects like Hinkley, which would aim to satisfy 7% of Britain’s energy needs, do not fit the bill. As renewables generate a growing share of countries’ power, the demand will be for sources of energy that can cover intermittent shortfalls (for instance, when the wind stops blowing or the sun goes in). + +To keep the lights on in the short run it would make more sense to use gas-powered plants. These can be built quickly, run cheaply and turned on or off as required. Meanwhile, the sums earmarked for Hinkley could be put to use in better ways. Improved electricity storage is one answer to the intermittency problem. Battery technology is fast improving (see article); Tesla Motors opened its “Gigafactory” in America last week; and other firms are experimenting with drawing power from unusual stores, such as traffic-light batteries. Interconnectors can link energy-hungry countries like Britain with northern European ones, where there is a wind-energy surplus, or Iceland, which crackles with geothermal energy. The grid operator could pay firms to curb power usage at peak times. + +All of these options would be cheaper than Hinkley, which would take ten years to get going and represent a huge, ongoing cost to bill payers, if it ever worked at all. Such a strategy would also buy time to see what new technologies emerge. The chances are, these would come from China anyway. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21703367-britain-should-cancel-its-nuclear-white-elephant-and-spend-billions-making-renewables/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Vietnam’s economy + +The other Asian tiger + +Vietnam’s success merits a closer look + +Aug 6th 2016 | From the print edition + + + +WHICH Asian country has roared ahead over the past quarter-century, with millions of its people escaping poverty? And which Asian economy, still mainly rural, will be the continent’s next dynamo? Most would probably respond “China” to the first question and “India” to the second. But these answers would overlook a country that, in any other part of the world, would stand out for its past success and future promise. + +Vietnam, with a population of more than 90m, has notched up the world’s second-fastest growth rate per person since 1990, behind only China. If it can maintain a 7% pace over the next decade, it will follow the same trajectory as erstwhile Asian tigers such as South Korea and Taiwan. Quite an achievement for a country that in the 1980s was emerging from decades of war and was as poor as Ethiopia (see article). + +Unlike either China or India, Vietnam lacks the advantages of being a continent-sized economy, so the lessons of its rise are more applicable to other developing countries, especially those nearby. It is also a useful counter to techno-pessimism. The spread of automation in factories has fuelled concerns that poor countries will no longer be able to get a lift from labour-intensive manufacturing. Vietnam shows that tried-and-tested models of development can still work. + +Most obviously, openness to the global economy pays off. Vietnam is lucky to be sitting on China’s doorstep as companies hunt for low-cost alternatives. But others in South-East Asia, equally well positioned, have done less. Vietnam dramatically simplified its trade rules in the 1990s. Trade now accounts for roughly 150% of GDP, more than any other country at its income level. The government barred officials from forcing foreigners to buy inputs domestically. Contrast that with local-content rules in Indonesia. Foreign firms have flocked to Vietnam and make about two-thirds of Vietnamese exports. + +Allied to openness is flexibility. The government has encouraged competition among its 63 provinces. Ho Chi Minh City has forged ahead with industrial parks, Danang has gone high-tech and the north is scooping up manufacturers as they exit China. The result is a diversified economy able to withstand shocks, including a property bust in 2011. + +At the same time Vietnam, like China, has been clear-minded about the direction it must take. Perhaps most important has been a focus on education. Vietnamese 15-year-olds do as well in maths and sciences as their German peers. Vietnam spends more on schools than most countries at a similar level of development, and focuses on the basics: boosting enrolment and training teachers. The investment is pivotal to making the most of trade opportunities. Factories may be more automated, but the machines still need operators. Workers must be literate, numerate and able to handle complex instructions. Vietnam is producing the right skills. Thailand, Indonesia and Malaysia lag behind, despite being wealthier. + +Mekong, you follow + +Now a middle-income country, Vietnam faces a steep ascent to the high-income ranks. The Trans-Pacific Partnership, a 12-nation trade pact meant to be a boost, may well be blocked by America’s inward turn. State-owned enterprises (SOEs) are bloated. Competing provinces, long a benefit, are a liability when they duplicate infrastructure. Vietnam has struggled to build a domestic supply chain. Moving up in value will be hard when China’s grip on high-end output is tightening. The repressive, one-party system of government is brittle. + +But Vietnam’s past quarter-century means that it has a decent chance of prevailing. It is at last starting on SOE reform. It is negotiating trade deals in Asia and with Europe. And it is drafting plans to increase its domestic share of manufacturing without scaring off foreigners. Vietnam is a model for countries trying to get a foot on the development ladder. With luck, it will also become a model for those trying to climb up it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21703368-vietnams-success-merits-closer-look-other-asian-tiger/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +International adoption + +Babies without borders + +Hundreds of thousands of children languish in orphanages. Adopting them should be made easier + +Aug 6th 2016 | From the print edition + + + +OF THE 2 billion children in the world, about 15m are parentless. Millions more have been abandoned. Most of these unlucky kids are cared for by other relatives. Others live temporarily with foster parents. But hundreds of thousands languish in state institutions of varying degrees of grimness. The youngest and healthiest will probably find local adoptive parents. For older or disabled children, however, willing adopters from abroad are often the best and only option. Yet the total number of overseas adoptions is dwindling (see article). + +There is a reason for this. For decades cross-border adoptions were often a racket. In Romania after the fall of the dictator Nicolae Ceausescu in 1989, thousands of orphans were adopted illegally. In post-civil-war Guatemala middlemen paid poor women a pittance to get pregnant repeatedly—or simply stole babies and sold them. When one country tightened the rules, the trade in babies moved somewhere laxer. + +That trend has stopped. As countries have implemented the Hague Adoption Convention, passed in the wake of the Romanian exodus, they have stamped out the worst cases. Last year 12,500 children were adopted by overseas parents, about a third of the total just over a decade ago. The crackdown was necessary: babies are not goods to be trafficked. But many governments have gone too far. It is now too hard for willing, suitable parents to adopt needy children—and this hurts both the would-be adopters and, more importantly, the children. + +Cambodia and Guatemala have stopped foreign adoptions completely; Russia has banned those by Americans. In many other countries the paperwork can take years. This is cruel. The early months and years of life are the most crucial. Depriving a child of parental love—inevitable in even the least dire orphanage—can cause lifelong scarring. The priority for any system should be to perform the necessary checks as quickly as possible and to place every child with foster or adoptive parents. + +The Hague convention is a good starting-point. It says: first try to place an abandoned child with a relative; if that fails, try for a local adoption; and if a local family cannot be found, look overseas. Critics of international adoption point out that children who grow up in a different culture sometimes feel alienated and unhappy. This is true, but for many the alternative—growing up in an institution—is far worse. + +When overseas adoption is a last resort, the children who end up with foreign families are the ones whom no one else wants: the older ones, the severely handicapped, members of unpopular ethnic minorities. In Guatemala only 10% of the children awaiting adoption are babies or toddlers without special needs. Few Guatemalans will consider taking the other 90%. Plenty of evangelical Christians in America would be happy to. It makes no sense to stop them. + +No one cares for you a smidge + +Creating a fast, safe adoption system should not be costly. Indeed, it should be cheaper than keeping children in institutions. All it takes is political will, as can be seen from the success of schemes in Peru and Colombia. Public databases that match children with good, willing parents work well locally in some rich countries. (Pennsylvania’s is praised, for example.) There is no reason why such systems should not be made international. Children need parents now, not next year. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21703369-hundreds-thousands-children-languish-orphanages-adopting-them-should-be-made/print + + + + + +Previous Articles Sections Next + + + +Letters + + + + + +On Thailand, Stuttgart, Saudi Arabia and Yemen, human rights, China, the sea: Letters to the editor + + + + + +Articles Sections Next + +On Thailand, Stuttgart, Saudi Arabia and Yemen, human rights, China, the sea + +Letters to the editor + +Aug 6th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Politics in Thailand + +The articles entitled “The generals who hide behind the throne”, and its more elaborated version, “Twilight of the king” published on July 23rd contain a raft of one-sided observations which warrant clarification. + +First, the claim that "the country is scared of what might happen" during the royal succession is totally unfounded. The Palace Law on Succession and the relevant sections of the Constitution clearly stipulate rules and procedures on this matter. His Royal Highness Crown Prince Maha Vajiralongkom has been proclaimed Heir to the Throne since 1972. To speculate how the issue would unfold is not only futile but also highly inappropriate. + +Second, by arguing that the Lese-majeste Law "has created an atmosphere in which critics of the government can be bludgeoned into silence", the article unfairly blurs a line separating the monarchy and politics. The government has never applied the law for political purposes. The aim of the law, which has always been an integral part of Thai criminal laws since ancient times, is to protect the rights and reputations of the King, Queen, Heir-apparent and the Regent because noblesse oblige prevents Their Majesties from seeking legal redress against the subjects for defamatory remarks. The law is, therefore, justified for the institution in a similar way libel law is for commoners. It should be noted that similar protection is also provided for kings and queens, heirs-apparent of other states, as well as official representatives thereof as stated in articles 133-134 of Thailand’s Criminal Code. It is undeniable that the Thai monarchy is a pillar of stability in Thailand. The Thai sense of identity is closely linked to the institution, which dates back more than 700 years. The institution, to this day, continues to play a unifying role and symbolises the unity of the Thai communities. Enacting appropriate legislation to protect the highly revered institution is a common practice in Thailand as in other nations. The government never "hides behind the throne" for any political gains, but simply carries out its duty as required by the existing laws. On the other hand, certain individuals have recently intensified their illegal activities so as to heighten political tensions and social divisiveness. + +Third, the assertion that "coup leaders have always trekked to the palace to receive royal assent" can mislead your readers that the palace is somehow not above politics. In fact, Royal Commands appointing Prime Ministers is an act of mere formality for a constitutional monarch to fulfill his traditional role as a guarantor of the country’s stability and thereby reassuring the people that their peaceful livelihood can continue undisrupted. Bestowing these commands, which His Majesty invariably did throughout his reign, cannot be interpreted as approval or disapproval of any political actors. + +Lastly, the articles’ criticism of the Sufficiency Economy Philosophy (SEP) is also unjustified. SEP has been widely recognised by the international community as an alternative model of sustainable and integrated development. A great number of Thais prefer to live their lives according to SEP, and become better off because of it. In fact, a Bloomberg’s ’misery index’ this year puts Thailand as the world’s happiest country. Thus, the articles’ claim that SEP is a “fantasy” only reveals the authors’ lack of understanding of Thais and the western-centric lens through which they see Thai society. + +In short, these two articles which seem to be based more on imagination than on evidence, and are of menacing nature to a much beloved institution of Thailand, have gravely tarnished the reputation and reliability we once believed to be hallmarks of your newspaper. Less obsession with the conspiracy theory of the so-called ’network monarchy’ should allow one to appreciate more clearly what has actually transpired in Thailand. I, therefore, hope that you will convey these points to your readers so that they will have a more balanced and accurate view of the Monarchy and the political situations in Thailand. + +SEK WANNAMETHEE + +Director-General of the Department of Information and + +Spokesperson of the Ministry of Foreign Affairs of Thailand + +Bangkok + + + + + +Stuttgart stutters + +In his column on the rise and fall of economic clusters, Schumpeter pointed to Stuttgart as a successful cluster that attracts talent and money and produces a distinctive culture (July 23rd). Yes, Stuttgart has been at the centre of Germany’s car industry for a long time. But it is now being challenged by Tesla, Uber and Google. The key to Stuttgart’s success, the motor vehicle, is being advanced elsewhere and its business model of selling cars to individual customers is about to be rocked to the core. + +JOSEF ERNST + +Stuttgart + + + + + +Saudi Arabia and Yemen + +Curiously, your article on Saudi Arabia’s military involvement in Yemen made no mention that the coalition is operating with the unanimous support of UN Security Council resolution 2216 to thwart an Iranian-supported rebellion against an internationally recognised and legitimate government (“Worse than the Russians”, July 30th). The president of Yemen requested “support...including military intervention to protect Yemen and its people from the continuing aggression by the Houthis”. + +Saudi Arabia deeply regrets any civilian deaths during the conflict, but it absolutely denies allegations of deliberately targeting non-combatants. The campaign is in full compliance with international humanitarian law; we have created a committee to investigate any claims that the law has been breached. + +You also did not mention the conduct of the Houthis, who are backed by Iran and have committed numerous war crimes. Along with forces of the ousted president they have attacked Saudi Arabia directly, killing Saudi citizens. Houthi fighters have prevented aid groups from delivering urgent medical and food supplies to Taiz, one of Yemen’s largest cities. Aid agencies have warned of a humanitarian disaster. Moreover, Saudi Arabia is the largest donor of humanitarian aid to Yemen. Indeed, Médecins Sans Frontières has acknowledged “the efforts done by the coalition in order to facilitate the work of its teams on the ground”. + +Terrorist organisations have been allowed to flourish, a clear threat to Saudi Arabia, the Middle East and the wider international community. We are acting in self-defence. The notion that we would seek to prolong this conflict, giving time for terrorists to solidify their grip in Yemen, is absurd. + +Britain and Saudi Arabia have been allies for almost a century. The commitment by the new prime minister, Theresa May, to fight violent extremism and terrorism was welcome. It is only with the support of our friends that Saudi Arabia can continue to restore stability to places like Yemen and to confront the scourge of terror. + +MOHAMMED BIN NAWAF AL SAUD + +Ambassador of Saudi Arabia + +London + + + + + +Human rights + +* The death of Qandeel Baloch, a social-media star in Pakistan, at the hands of her brother in the name of family honour was another unfortunate example of backward practices towards women still happening in the 21st century (“Can the licence to kill be revoked?”, July 23rd). As you pointed out in your story, “such atrocities are widely accepted”. Perhaps nothing better else explains honour killings (and female genital mutilation, for that matter), than describing them as a clash of civilisations. As a former diplomat to the Middle East and South Asia, I have witnessed first-hand instances where Western values come crashing into the logic of cultural relativism and historical justification. But no belief system, of any kind, is an acceptable excuse for these heinous practices towards women (or gay people for that matter). The developed world must stand firm, defend human rights and continue unapologetically to denounce practices like honour killings whenever and wherever they take place. + +ARMAND CUCCINIELLO III + +New York + + + + + +Sovereign claims + +The dispute over territory in the South China Sea, you say, constitutes a contest between “an American idea of rules-based international order and a Chinese one based on what it regards as ‘historic rights’ that trump any global law” (“Courting trouble”, July 16th). You note that America has not ratified the UN Convention on the Law of the Sea, but do not explain why. In 1982 the Reagan administration reasoned that the convention cannot take priority over domestic legislation that declares American sovereignty over the extended continental shelf. This is not entirely different from China’s claims of historic rights. + +The Reagan administration was also uncomfortable with the compulsory dispute-resolution mechanism proposed by the convention, which is a similar argument to the one China put forward when it rebuffed the recent court ruling that rejected its claims in the South China Sea. + +Therefore, the dispute is less a clash of “two world-views”, as you suggest, but simply China taking cues from America in attempting to demonstrate its own exceptionalism. + +KARTHIK SIVARAM + +Stanford, California + + + + + +Shimmering shiny sea + + + +“See-through sea” pondered what would happen if oceans were transparent (July 16th). But there are deeper consequences. If we had translucent seas, the “Odyssey”, “Moby Dick”, “Twenty Thousand Leagues Under the Sea”, “Jaws”, “Finding Nemo”, “The Hunt for Red October”, or “Pirates of the Caribbean” might have never been written or produced. In each case the storyline would sink with the protagonist having a sufficiently strong telescope to scan the abyss. + +On the flip side, all the treasures from sunk ships would have been found, MH370 conspiracy theories would never surface, and underwater laser-shows would dazzle octopuses and lobsters alike. + +DOMINIK PUDO + +Quebec City, Canada + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21703346-letters-editor/print + + + + + +Articles Sections Next + + + +Briefing + + + + + +Arab youth: Look forward in anger + + + + + +Articles Sections Next + +Arab youth + +Look forward in anger + +By treating the young as a threat, Arab rulers are stoking the next revolt + +Aug 6th 2016 | BEIRUT, CAIRO AND RIYADH | From the print edition + + + +WITH his gelled hair, taste for coffee and keen interest in women, Muhammad Fawzy could be a university student anywhere. At the age of 21, and studying engineering at Cairo University, he should be looking to a bright future; after all, the world is crying out for technically minded graduates. But Mr Fawzy feels the outlook is bleak. He worries that no job he finds after graduation will pay enough to cover his costs, let alone allow him to support his widowed mother. Without a good salary, Mr Fawzy cannot buy a flat; without his own home he cannot marry; and without marriage, he cannot have sex. + +“I cannot have a girlfriend for religious reasons, and because I wouldn’t like that for my sister,” explains Mr Fawzy. “I was in relationships [with women] previously but it never got physical. I never held their hands or kissed them.” He often talks to women, but on Facebook: it affords privacy and safe distance. As with much else, his predicament about women is more complex than just the pull of tradition. + +His views of Islam are just as tangled. He regards himself as more devout than his parents, but does not pray regularly; he prefers the company of friends to listening to preachers, yet craves a purer version of Islam. Egyptian tradition, he thinks, is tainted by a culture of bribe-paying, nepotism and other behaviour banned by religion. “We need to enforce morals that the West has taken from us.” The spread of atheism, he thinks, is a menace. + +Mr Fawzy is hardly unique. Arab countries are full of young people frustrated by a lack of jobs; questioning traditional authority; bittersweet about the West, its liberties and its power; and plugged-in enough to know that their lot is worse than that of many of their peers around the world. “Young people just want to live and not make trouble, but they are unable to break into the political, social, economic systems of their countries,” says Rami Khouri of the American University of Beirut. “They have to create parallel universes for themselves because they can’t do anything normal in normal settings.” + +Many factors led to the Arab uprisings of 2011, which overthrew old rulers in Tunisia, Egypt, Libya and Yemen, and rattled many other regimes. But there is little doubt that the Arab world’s large youth bulge, and its rulers’ failure to harness it for economic development, was central. + +Now that the uprisings have either been beaten down or degenerated into murderous civil war (except in Tunisia), the lot of young Arabs is even worse: they face more political repression and worse job prospects. Economic growth in the region has lagged behind other middle-income countries (see chart 1). The fall in the oil price is now hurting some countries even more, turmoil has spooked investors and terrorism has wrecked tourism. The self-defeating policies of governments clinging to power, such as in Egypt (see article), cause yet more harm. + + + +Elsewhere, a large youthful population would be regarded as an economic blessing. But in the Arab world the young are treated, for the most part, as a curse, to be suppressed. These days life for young Arabs is often a miserable choice between a struggle against poverty at home, emigration or, in extreme cases, jihad. Indeed, in places such as Syria, the best-paid jobs involve picking up a gun. + +Young people in the Arab world, as elsewhere, come in endless varieties. But taken as a whole, several trends stand out. First is a demographic explosion. The Arab world is growing fast. The region’s population doubled in the three decades after 1980, to 357m in 2010. It is expected to add another 110m people by 2025—an average annual growth rate of 1.8%, compared with 1% globally. The demographic stress is compounded by rapid urbanisation. In 2010 the proportion of Arabs who are aged 15-24 peaked at 20% of the total population. But the absolute number of young will keep growing, from 46m in 2010 to 58m in 2025. + +A second striking aspect is the scale of youth unemployment (see chart 2). In 2010, on the eve of the Arab uprisings, total and youth unemployment rates in the Arab world were already the highest of any region, at 10% and 27% respectively. Since then these figures have risen further, to nearly 12% and 30%. + + + +Amazingly, in some Arab countries, the more time you spend in school, the less chance you have of finding a job. In Egypt 34% of university graduates were unemployed in 2014, compared with 2% of those with less than a primary education (see chart 3 ). The inequality between the sexes also stands out: 68% of women aged 15-24 were jobless in Egypt compared with 33% of men. + + + +A third trend is the high level of migration, especially to oil-rich Gulf states. Syria, the Palestinian territories and Egypt were among the 20 countries worldwide with the highest number of people living abroad in 2015, in part because of a surging volume of refugees. + +Little wonder, then, that young Arabs are unhappier than their elders and than their peers in countries at similar stages of development, according to Ishac Diwan of Harvard University. A survey by the Pew Research Centre, a think-tank in Washington, DC, likewise found that countries in the Middle East were an exception to its finding that people in poorer countries are generally more optimistic about their future than those in rich countries. Only 35% of those polled in the Middle East thought their children would be better off financially than them, compared with 51% in Africa and 58% in Asia. + +Degrees of uncertainty + +Young Arabs are most worried about their standard of living. All too often taxi drivers reveal that they possess engineering degrees; sometimes driving is a second job taken to make ends meet after a day at work elsewhere. Arab governments have long tried to absorb new workers by expanding the civil service; better to have the young do nothing on the public payroll than to go out on the streets and cause trouble. In the heyday of Arab nationalism under Gamal Abdel Nasser, who overthrew Egypt’s monarchy in 1952, every graduate was guaranteed a government job. + +But neither he nor his successors knew how to make good use of the talents of a soaring number of graduates (their ranks more than tripled between 1970 and 1980). Over time they were made to wait ever longer, sometimes for up to a decade, for a job. With the balance-of-payments crisis of the 1990s, the public sector was slimmed down and new government jobs all but disappeared. + +Cheap oil is forcing Gulf monarchs, who have hitherto bought their people’s acquiescence with cushy jobs and handouts, to trim the public payroll. And since Gulf monarchies cannot find enough jobs for their own people, the safety valve of emigration to work in the Gulf has closed to other Arabs. The largest Gulf state, Saudi Arabia, needs to create about 226,000 new jobs every year, according to Jadwa Investments, a Saudi research firm. But in 2015 employment rose only by 49,000. + +Gulf states have set quotas for the employment of nationals, but many companies complain that local graduates lack the skills and work ethic required. “I know of firms that pay Saudis to satisfy the law, but tell them to stay at home,” says one businessman. Under its 30-year-old deputy crown prince, Muhammad bin Salman, Saudi Arabia is planning an ambitious transformation, led by the private sector, to diversify away from oil. But it will be a tall order to train Saudi Arabia’s pampered young men to work for a living. + +In several parts of the region, Arabs retain a strong sense of entitlement, says Nader Kabbani of Silatech, a Qatari body that connects young Arabs to jobs. Many would rather continue to live with their family than take a job they deem beneath their dignity. At the same time, young people’s aspirations are growing. They have higher rates of literacy than in the past and more access to information about the wider world. They are voracious users of mobile phones, the internet and social media. They get more of their news online, which is harder for governments to censor than TV and newspapers, according to the Arab Youth Survey, a poll conducted in 2016 of 3,500 young people in 16 countries by Asda’a Burson-Marsteller, a PR firm. + +All this has started to chip away at a culture of obedience to family, religious leaders and governments. The tendency is perhaps most apparent in tension over the status of women who, for all their traditional subordination and the trend towards covering their heads in public, now make up the majority of university graduates in the Arab world. + +For some, marriage is an escape from family strictures. But others choose not to get hitched. The Population Reference Bureau, a research body in Washington, DC, notes the growing number of Arab women who are not married by the time they are 39 years old. Khloud Faloudah, a 35-year-old unmarried Saudi woman who works in Riyadh in the IT department of Al Jomaih, which bottles Pepsi, says that a generation ago her ambition would have been to have a family, but “my main aim has been to get a management role at work.” + +All too often, though, the cause of late marriage is not ambition but poverty. Men are expected to buy a home and furnish it before they can get hitched. The groom is required to provide a dowry. In Gaza City the ruling Palestinian Islamist movement, Hamas, decks the seaside with bunting to hold mass weddings for followers unable to afford their own ceremonies. Ismail Haniyeh, the enclave’s acting prime minister, sponsors a dating agency. + +Independence for women, let alone sex outside marriage, is still strongly frowned upon. In Saudi Arabia women are not allowed to travel abroad without express permission from a male guardian (there is a mobile-phone app for the purpose). But even in countries, such as Egypt, where the law is supposedly more egalitarian social mores remain strict. + +Riham, a 23-year-old freelance graphic designer from Tanta, a town north of Cairo, recounts how she moved to Egypt’s capital to study fine arts and escape male relatives who banned her from wearing skirts, staying out late and travelling alone. “Even there I was not allowed to return to the dorms after 9pm, while my male friends were allowed back at 11pm,” she says. + +Islam is losing its stabilising role, too. Overall the Arab world is far more pious than countries at a similar stage of development, according to the World Values Survey, a research project based in Vienna. But young Arabs are exposed to a proliferation of Islamic beliefs on satellite-TV channels and the internet. Religious leaders once exercised a degree of authority over their flocks. But now young Arabs often cite Islamic texts when challenging their elders. + +Some young Arabs are less devout than their parents; but others have become more so. Abdulaziz al-Ghanam, a Saudi studying in America, says that back home few people he knows still go to mosque for the five daily prayers even though all shops and restaurants are forced by law to shut during them. In Egypt, though, Ayman Nabil, a 29-year-old accountant, declares: “I am more conservative than my father because he is conservative based on traditions he inherited; but I am conservative based on things I read about.” + +That said, young Arabs have become more sceptical about religion in public life. Enthusiasm for religious parties has plummeted since the Arab spring. The Muslim Brotherhood, which took power in Egypt after the ousting of Hosni Mubarak, was deemed dismal. (The backlash against the Brotherhood was exploited by the army to depose it in 2013.) Half of those responding to the Arab Youth Survey saw the Shia-Sunni divide as a source of conflict. + +Mr Diwan notes that, on the whole, young Arabs are markedly more patriarchal and less tolerant towards people of different cultures or religion than young people in other middle-income countries. Worryingly, better education does not breed greater openness, as it usually does elsewhere. Mr Diwan thinks it is because schooling is used by governments and religious authorities as a form of indoctrination. Rather than teach critical thinking, textbooks perpetuate ideas of obedience (the region’s repressive governments like it that way) and, often, misunderstanding or even hatred of other faiths and sects. Textbooks in Saudi Arabia list Christmas among banned holidays. + +A particular worry, held by young people themselves, is the prospect that disenchanted young Arabs will be pushed into the arms of jihadists. Much of the media coverage of Islamic State (IS) focuses on the radical ideology and extreme brutality of the group. But the Arab Youth Survey found that young people thought the lack of jobs and opportunities was the main reason why people joined up. IS offers salaries, an arranged marriage (sometimes to a slave-woman) and the opportunity to run amok and feel self-righteous about it. + +It is difficult to gauge what, precisely, drives young people to violence. Most young Arabs shun IS. “Joining IS is the same as turning atheist or converting to Christianity,” says Mr Nabil in Cairo. Recruits to IS come from both middle-class and poor backgrounds, educated and uneducated. But the vast majority of those who join are young men. + +The Arab Youth Survey found that 78% of young people said they would never support the group. Yet 13% of them said they might, if it were less violent—a number that rose to 19% in the Gulf countries, which adhere to a more austere form of Islam. That is a minority, but not a small one. It suggests that IS and whichever terrorist group comes next can draw on a large pool of potential recruits and sympathisers. + +Young and dangerous + +Arab governments may pay lip service to the concerns of young people—the United Arab Emirates this year appointed a 22-year-old woman as minister of youth (along with new ministers for tolerance and happiness) but most rulers view young people as a danger. + +Gerontocrats and autocrats still hold power, and are giving little say to the next generation. The near-absent president in Algeria, Abdelaziz Bouteflika, is 79; the one in Sudan, Omar Bashir, is 72. In Egypt young people of all hues—Islamist, liberal and professional—are being locked up by the president, Abdel-Fattah al-Sisi (61), with a zeal far outstripping that of the fallen Hosni Mubarak. Political parties attract few young members since they have little power. Parliament in Syria is a figleaf for dictatorship; Lebanese parties are sectarian; those of the Gulf are consultative only. In Egypt the Muslim Brotherhood, another party led by old men, has been banned. + +Indeed, the wars and turmoil since the Arab spring have suppressed the hunger for democracy. In Tunisia, the supposed success story of the revolts, the hankering for stability overtook a want for democracy in mid-2012, according to Pew. Some 53% of respondents to the Arab Youth Survey said they put stability first. + +Young, gifted, held back + +Yet this does not mean the young are apathetic. Even if they are not all eager to vote, they want their rulers to be less corrupt and brutal. Many would like to see women enjoy more rights, too. Nearly all want institutions such as the police to work for them, rather than against them. In Lebanon Beirut Madinati (“Beirut is my City”)—a new movement that promised to tackle uncollected rubbish, intermittent electricity and corruption—won 40% of the vote at local elections in May. Young people are increasingly keen to volunteer and join civil organisations, says Barbara Ibrahim of the American University of Cairo. + +The Arab uprisings of 2011 showed a thirst for change among the young, says Mr Khouri. “They want to be involved and are looking for outlets that are satisfying,” he says. “But they have given up on public political life. For now they are compliantly rebellious: finding private spheres in which to live.” + +How long will they remain sullenly subdued? A world where finding a job is ever harder, where getting by depends as much as ever on wasta (connections) and where the political system typically excludes them, is bound to stoke resentment. For Mr Nabil, the misery is caused by tyranny in its many forms: “All of society’s problems stem from it: having people only serve one thing, be it the father, the family, the manager at work or the president. Tyranny is the root of society’s problems.” + +For the time being, there are small protests, from Baghdad to Rabat, but little evidence of an incipient second wave of revolt, if only because people are tired and the secret police remain terrifyingly effective. But two things seem certain. The evidence from around the world is that lots of jobless young men are a recipe for instability. And Arab rulers, in fearing the young and failing to help them, are creating the conditions for the next explosion. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21703362-treating-young-threat-arab-rulers-are-stoking-next-revolt-look-forward-anger/print + + + + + +Articles Sections Next + + + +United States + + + + + +The presidential race: Trump in the dumps + +Partisan politics: In plain words + +Voting restrictions: Back in the booth + +Convention bounces: Up, then down + +Wilderness living: The last big frontier + +The NYPD: Goodbye to Bratton + +Lexington: Gridlock Central + + + + + +Articles Sections Next + +The presidential race + +Trump in the dumps + +The divisiveness of his campaign, and his own loutishness, are giving Donald Trump a ton of trouble + +Aug 6th 2016 | MECHANICSBURG, PENNSYLVANIA | From the print edition + + + +SO CLOSE to the stage that Donald Trump could almost have touched it, a notice on the school wall in Mechanicsburg, Pennsylvania, carried this message: “Welcome to Cumberland Valley where sportsmanship is an expectation. So please …let the spectators be positive.” No chance of that. Even before the Republican nominee appeared, late on August 1st, on a pit-stop between Ohio and New York, the 3,000-odd people packing the gymnasium were spewing hate. + +“What should we do with Hillary Clinton?” hollered a local politician, as if this crowd, of young people wearing “Trump that bitch” T-shirts and older ones who apparently did not mind the slogan, needed warming up. “Kill her!” someone shouted. “Lock her up!” the chant began. + +This is Mr Trump’s achievement. The billionaire demagogue has not merely responded to the grievances of working-class whites—such as the folk in Mechanicsburg, mourning their lost steel mills and the pay rises and other benefits that once accrued to being hardworking and white in America. He has also sought to stoke their anger. Vengeance against “rapist” Mexicans, Muslim fifth-columnists, job-killing outsourcers and his “criminal” Democratic opponent, Mr Trump tells his supporters, is the solution to their gripes. Anyone who says otherwise, he added in his bleak convention speech last month, is conning them. “No longer can we rely on those elites in media and politics, who will say anything to keep a rigged system in place.” + +And yet, appearing onstage in Mechanicsburg, to the accompaniment of mock-heroic synthesiser chords, as if he were a game-show host, Mr Trump looked tired and unenthused. He did not thump the air and trumpet polling data as he likes to; how could he? After a disastrous fortnight for the Republican nominee, in which the chaos and thuggery he has brought to American politics appear to have united much of non-Trumpian America in disgust, the polls look bad for him. + +In Pennsylvania, which he probably must win to gain the White House, he is trailing Mrs Clinton by an average of five points, as he is nationally. “I guess the polls have it sort of even,” is how he put this. He also claimed the polls understate his appeal: “It’s a little embarrassing, people don’t want to say they want to vote for me, but then they get into the booth and they say, ‘Is anyone looking? Boom, I’m taking Trump’!” But there is little evidence for these shy Trumpkins—or that Mr Trump believed his shtick. The speech that followed was even more rambling than usual, and peppered with personal gripes; the boasts were fewer, and his haranguing of the media (“some of the most dishonest people”) went on for longer. + +At times, Mr Trump sounded deranged. Some of the negotiators he says he will commission to improve America’s trade terms “are horrible, horrible human beings”, he said. “Some of them don’t sleep at night, some of them turn and toss and sweat, they’re turning and tossing and sweating and it’s disgusting, and these are the people we want to negotiate for us, right?” Whose experience, actually, was he describing? With three months to the election, it is early days, and the contest looks close; yet Mr Trump’s campaign is a mess. In Mechanicsburg it was tempting to think he really had seen the writing on the wall. + +His troubles are in part the flipside of his vote-getting strategy. As an exercise in riling angry whites, his convention speech was masterful; Mr Trump’s lead over Mrs Clinton with high-school-educated whites swelled to almost 40 points in one poll. He could win this group more crushingly than any presidential candidate since Ronald Reagan in 1984. The problem is that, back then, no-college whites represented 62% of the electorate; now they represent around 34%. And Mr Trump’s raving depiction of America as a “divided crime scene” does not ring true to most other Americans. + +By expanding his angry fan base, Mr Trump enjoyed a small post-convention boost, as newly-crowned nominees usually do. This gave him a small lead over Mrs Clinton in some polls. Yet, among the weeds, his ratings among non-whites and college-educated whites plunged. A poll by Gallup suggests that, for the first time ever recorded, the Republican convention repelled more voters than it attracted. Mr Trump now trails Mrs Clinton with college-educated whites, a group that has voted Republican since polling began, by a five-point margin. If Mr Trump cannot close that gap, he will probably lose. + +You might think this would have given a pragmatic tycoon, pursuing success with the focused greed of a truffle-hog, a moment’s pause. Yet the incontinence Mr Trump has displayed since the convention has been astounding. In particular, consider the fight he has picked with a pair of Pakistani-Americans, Khizr and Ghazala Khan, whose 27-year-old son, Humayun, was killed fighting for America in Iraq. + +Speaking at the Democratic convention in Philadelphia on July 28th, with his wife standing demurely beside him, Mr Khan noted that, had the ban Mr Trump swears to impose on foreign Muslims been in place at the time, his son might never have moved to America as a child. “Donald Trump, you’re asking Americans to trust you with their future. Let me ask you: Have you even read the United States constitution?” said Mr Khan. “Have you ever been to Arlington cemetery? Go look at the graves of brave patriots who died defending the United States. You will see all faiths, genders and ethnicities. You have sacrificed nothing and no one.” + +A “sane, competent” person (a standard Michael Bloomberg, in another memorable moment in Philadelphia, suggested his fellow-New Yorker does not meet) might have responded by praising the Khans and changing the subject. Mr Trump bit back, suggesting Mrs Khan had not delivered the speech because of her religion (“Maybe she wasn’t allowed to have anything to say”). He also protested that, as a hardworking builder, he too had “sacrificed”. Unfortunately for Mr Trump, Mrs Khan, in subsequent television interviews and a piece in the Washington Post, turned out to be almost as articulate as her husband; she had chosen not to speak, she said, because, as she had stood beneath a giant portrait of her dead child, her pain was too great. + +The row dominated America’s airwaves for almost a week, setting Mr Trump against veterans’ groups, the families of other dead servicemen and a parade of wretched-looking Republican leaders. The efforts of Mr Trump’s campaign team to quash it were hapless. Its spokeswoman claimed Mr Khan had died because of stringent rules of engagement introduced under Mr Obama; he was killed, in 2004, serving George Bush. + +Meanwhile, out of puerile spite, Mr Trump launched an assault on his disapproving party leadership, by refusing to endorse Senator John McCain, his predecessor in 2008, and Paul Ryan, the Speaker of the House of Representatives, in their forthcoming primary fights. He also implied, in an interview, that he would take revenge on his main rivals in the primaries, Ted Cruz and John Kasich, by backing their opponents. No wonder, despite an improvement in Mr Trump’s fund-raising performance (in July he and his party raised $82m), there were reports of confusion in his campaign team. Its chief, Paul Manafort, was also linked to allegations that Mr Trump has an unhealthily high regard for Vladimir Putin; Mr Manafort previously worked for the pro-Putin former government of Ukraine. (In Mechanicsburg Mr Trump repeated his suggestion that Russia should keep annexed Crimea: “You want to have World War III to get it back?”) + + + +INTERACTIVE: navigate your way through the policy landscape to a majority + +Rarely in recent times have America’s fact-based media, on the left and right, its politicians, its armed forces and citizens’ groups seemed so united, in a face-off between decency and rancour, as they do now. The baying of some of Mr Trump’s supporters reinforces the impression: at a rally in Nevada the mother of an air-force officer was jeered after asking his running-mate, Mike Pence, to speak up for the Khans. So, too, for the small but growing majority of Americans who like his record, did an intervention by Barack Obama on August 2nd. Calling Mr Trump “unfit to serve” as president, he urged Republicans to disown him. “There has to come a point”, he said, “at which you say somebody who makes those kinds of statements doesn’t have the judgment, the temperament, the understanding, to occupy the most powerful position in the world.” + +The same day, Richard Hanna, a Republican congressman from New York, said he would vote for Mrs Clinton. “I think Trump is a national embarrassment,” he said. Hours later, a billionaire Republican donor, Meg Whitman, said she would vote for and donate heavily to Mrs Clinton and urge her network to do likewise. On August 3rd even mild Mr Pence broke ranks, declaring that he would support Mr Ryan. + +There is little to suggest the trickle will become a flood. The partisan division is too deep and the contest still too tight. Mr Trump looks able to rally his embittered, defiant supporters for a huge turnout; none of those in Mechanicsburg, it was depressing to note, admitted to giving a stuff about Mr Trump’s remarks to the Khans. To defeat him, Mrs Clinton would have to rally her supporters similarly. And it is unclear, not least given the low esteem in which many hold her, whether she will be able to do that. But this is a bad moment for Mr Trump, so a good one for America. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21703395-divisiveness-his-campaign-and-his-own-loutishness-are-giving-donald-trump-ton/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Partisan politics + +In plain words + +Republican or Democrat? Just listen + +Aug 6th 2016 | From the print edition + + + +IN CASE anyone was in much doubt, a new working paper by Matthew Gentzkow of Stanford University, Jesse Shapiro of Brown University and Matt Taddy of Microsoft Research claims to show that partisanship among America’s lawmakers is higher today than at any point since Reconstruction after the civil war. The researchers came to this conclusion after analysing more than 135 years of speeches in the Congressional Record, including 529,980 unique phrases spoken 297m times. In 1990, the probability of correctly guessing a lawmaker’s party from a one-minute speech was 55%, only slightly better than flipping a coin. In the mid-1990s, however, Democratic and Republican language began to diverge, as politicians on the left adopted phrases like “undocumented workers” and “tax breaks for the wealthy” while those on the right spoke of “illegal aliens” and “tax reform”. By 2008, the probability of correctly identifying a Democrat or Republican had jumped to 83%. + +What caused this linguistic split? Possibly, say the authors, the Republican takeover of Congress in 1994 led by Newt Gingrich (whose pollster and spin-doctor, Frank Luntz, coined the phrases “death tax” and “climate change”). They also cite the use of polls and focus groups to craft messages that appeal to specific groups of voters; the rise of partisan cable-news stations; and the evolution of the 24-hour news cycle. Language gets most partisan over taxes, immigration and crime. + +In the 2016 election cycle, the speech divide between America’s parties seems to have widened. Donald Trump, who became a TV star with the phrase “You’re fired!”, has developed a swarm of catchphrases to rally his supporters and tear down his opponents. And the habit is infectious. At the convention in Cleveland, “Lock her up!” and “Build that wall!” were popular all through the arena, and the phrase “radical Islam” was uttered from the lectern 41 times. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21703400-republican-or-democrat-just-listen-plain-words/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Voting restrictions + +Back in the booth + +A wave of rulings may help the Democrats in November + +Aug 6th 2016 | NEW YORK | From the print edition + +How many pieces of ID? + +AWAY from the razzmatazz of the party conventions, federal judges have been making decisions that could have a greater impact on the election. Seven rulings have softened or nullified Republican efforts in several states to tighten voting rules—allegedly to deter fraud, though they also depress turnout among minorities and the poor, who tend to vote Democratic. + +In Michigan, where Hillary Clinton has a small lead over Donald Trump, a federal judge ruled on July 21st against a Republican-sponsored law meddling with the layout of the election ballot. For 125 years, Michigan voters have had the option of filling in a single bubble to select every candidate from a given party. Banning this practice, the court ruled, has a disproportionate effect on black voters, who tend to use the straight-party option to vote for the entire Democratic slate. Since it takes much longer to fill in a dozen bubbles, the law will increase “voter wait times…greatly in African-American communities”, potentially deterring them from trying. + +As for North Carolina, a state that has voted Republican all but twice since 1968, the 4th Circuit Court of Appeals issued a decision on July 29th that may give an edge to the Democratic nominee. Many provisions of the state’s voting law of 2013, the court ruled, unconstitutionally “target African-Americans with almost surgical precision” to keep them away from the polls. + +For decades, changes to voting practices in a large swathe of North Carolina—and in other states with a particularly chequered history of racial discrimination—could not be implemented without the approval of the Department of Justice, as required by the Voting Rights Act. But the Supreme Court found part of this law unconstitutional in Shelby County v Holder, a ruling three years ago in which Chief Justice John Roberts declared America’s racism largely past. As soon as Shelby County came down, Republicans in North Carolina rushed to pass a new voting law, with one party leader later saying: “If it hurts a bunch of lazy blacks that want the government to give them everything, so be it.” + +The 4th Circuit court found that lawmakers had requested and surveyed black voting data before crafting rules to limit their franchise. They knew that eliminating same-day voter registration and pre-registration for high-school students, as the new bill did, would have an outsize impact on blacks. They knew that shortening early voting by seven days would cut out one Sunday on which black churches bused “souls to the polls”. They understood that banning same-day registration and out-of-precinct voting would disproportionately hamper black voters because they move more often than whites. But they passed the law all the same, in three days, in an apparent “attempt to avoid in-depth scrutiny”. No legislative body in America, the court concluded, “has ever done so much, so fast, to restrict access to the franchise”. + +Texas and Wisconsin may have come close. In the Lone Star State, voters must show one of seven forms of photo-ID before entering the voting booth. A gun licence works, but neither a driving licence from another state nor a university ID will do. The more than 600,000 registered voters lacking proper documents may still vote, but their ballots will be destroyed unless they show up at a government office within six days with one of the prescribed forms of identification. The story in Wisconsin is similar. Scott Walker, Wisconsin’s Republican governor, called his state’s law a “common-sense reform” that would protect “the integrity of elections”. Senator Troy Fraser, the author of the Texas law, argued that without it “we can never have confidence in our system of voting”. + +These claims have now been found wanting. In a 9-6 ruling on July 20th, the 5th Circuit Court of Appeals found that Texas’s photo-ID requirement had a discriminatory effect on racial minorities. Hispanics are about twice as likely as whites to be without acceptable ID on election day; blacks, three times as likely. After the ruling Texas relented, announcing that most documents bearing a voter’s name and address would be sufficient. + +On July 29th a federal district court also loosened Wisconsin’s absentee-voting restrictions, shortened a 28-day residency requirement and added expired (but valid) student IDs to the list of acceptable forms of photo-ID. Another judge has ruled that those who are unable to obtain photo-ID in Wisconsin may instead vote by signing an affidavit. A similar ruling on August 1st found that North Dakota had suppressed the franchise of Native Americans by requiring photo-ID while eliminating other options, such as swearing an oath. The state will revert to its previous, less restrictive, policy for the November election. + +Some of these rulings will go to appeal, but with the Supreme Court down to eight justices, four of whom back expanded voting rights, circuit-court rulings striking down those rights are unlikely to stick. It takes five votes to reverse an appeals-court decision; and so if the election comes down to a few thousand votes in a handful of states, the absence of Antonin Scalia may be the key to stopping Mr Trump. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21703386-wave-rulings-may-help-democrats-november-back-booth/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Convention bounces + +Up, then down + +Aug 6th 2016 | From the print edition + + + +After their conventions, most candidates briefly bounce. But transience does not mean insignificance. The two years that Democrats slid noticeably in the polls after their convention, 1968 and 1972, augured humiliating defeats. + +On The Economist’s own analysis of presidential polling from 1952, Democrats usually nab a 3.2% gain in vote share within a week of the convention, while Republicans settle for a 2.3% upswing. The biggest bounce came in 1992 for Bill Clinton, whose boost of 13% was helped by Ross Perot’s withdrawal from the race. + +One week after Philadelphia, on a poll of polls, Hillary Clinton saw a steady 2.3% upswing. Donald Trump earned a slightly worse 2.1%. Ms Clinton’s advantage may yet surge; Mr Trump’s has already gone. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21703384-up-then-down/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Wilderness living + +The last big frontier + +A movement of staunch conservatives and doomsday-watchers to the inland north-west is quietly gaining steam + +Aug 6th 2016 | BONNERS FERRY, COEUR D’ALENE AND SANDPOINT, IDAHO | From the print edition + +Feds, liberals and Californians Keep Out + +ASKED by an out-of-stater where the nearest shooting range is, Patrick Leavitt, an affable gunsmith at Riverman Gun Works in Coeur d’Alene, says: “This is Idaho—you can shoot pretty much anywhere away from buildings.” That is one reason why the sparsely populated state is attracting a growing number of “political refugees” keen to slip free from bureaucrats in America’s liberal states, says James Wesley, Rawles (yes, with a comma), an author of bestselling survivalist novels. In a widely read manifesto posted in 2011 on his survivalblog.com, Mr Rawles, a former army intelligence officer, urged libertarian-leaning Christians and Jews to move to Idaho, Montana, Wyoming and a strip of eastern Oregon and Washington states, a haven he called the “American Redoubt”. + +Thousands of families have answered the call, moving to what Mr Rawles calls America’s last big frontier and most easily defendable terrain. Were hordes of thirsty, hungry, panicked Americans to stream out of cities after, say, the collapse of the national grid, few looters would reach the mostly mountainous, forested and, in winter, bitterly cold Redoubt. Big cities are too far away. But the movement is driven by more than doomsday “redoubters”, eager to homestead on land with lots of water, fish, and big game nearby. The idea is also to bring in enough strongly conservative voters to keep out the regulatory creep smothering liberty in places like California, a state many redoubters disdainfully refer to as “the C-word”. + +Estimates of the numbers moving into the Redoubt are sketchy, partly because many seek a low profile. Mr Rawles himself will not reveal which state he chose, not wanting to be overrun when “everything hits the fan”. But Chris Walsh of Revolutionary Realty says growing demand has turned into such a “massive upwelling” that he now sells about 140 properties a year in the north-western part of the Redoubt, its heart. To manage, Mr Walsh, a pilot, keeps several vehicles at landing strips to which he flies clients from his base near Coeur d’Alene. + +Many seek properties served not with municipal water but with a well or stream, ideally both, just in case. More than nine out of every ten Revolutionary Realty clients either buy a home off the grid or plan to sever the connection and instead use firewood, propane and solar panels, often storing the photovoltaic power in big forklift batteries bought second-hand. They also plan to educate their children at home. The remoter land preferred by lots of “off-the-gridders” is often cheap. Revolutionary Realty sells sizeable plots for as little as $30,000. After that, settlers can mostly build as they please. + +Lance Etche, a Floridian, recently moved his family into the Redoubt after the writings of Mr Rawles stirred in him “the old mountain-man independence spirit—take care of yourself and don’t complain.” He chose a plot near Canada outside Bonners Ferry, Idaho, cleared an area with a view, put down gravel, “and they dropped the thing [a so-called “skid house”, transported by lorry] right on top of it”, he says—no permit required. + +Some newcomers are Democrats keen to get back to nature, grow organic food or, in Oregon and Washington, benefit from permissive marijuana laws. Not all conservatives dislike this as much as Bonny Dolly, a Bonners Ferry woman in her 60s who says: “We don’t want liberals, that’s for sure,” and carries a .45-calibre handgun “because they don’t make a .46”. But lefties who move in and hope to finance tighter regulations with higher taxes often get the cold shoulder. Mr Walsh weeds out lefties from the start, politely declining to show them property, noting that they wouldn’t fit in anyway. This discrimination is legal, he says, because political factions, unlike race or sexual orientation, are not legally protected classes. + +A red dawn + +Todd Savage, who runs Survival Retreat Consulting in Sandpoint, Idaho, works with the more usual sort of client: political migrants who rail against “morally corrupt” nanny government elsewhere. He does a brisk business helping them set up their food-producing fortress-homesteads. Staff train clients in defensive landscaping, how to repel an assault on their property with firearms, and the erection of structures “hardened” to withstand forced entry and chemical, biological, radiological or explosive attack. + +Very few redoubters, however, wish to secede from the United States. The Confederacy’s attempt fared badly, notes Mr Rawles. He did, however, exclude the politically conservative but mostly flat Dakotas from the Redoubt because mechanised units could manoeuvre easily there. The same went for swathes of Utah, a state also left out because it has little water. + +Purists have criticised him for including eastern Oregon and Washington in the Redoubt, since their larger liberal populations near the west coast dominate state politics. But he believes that the designation will quicken efforts in the eastern reaches to form new, freedom-minded states within a generation. As Mr Walsh puts it, easterners’ taxes get them “nothing back except for a bunch more rules” from socialist bureaucrats. + +As for doomsday itself, redoubters differ. Mr Rawles considers the most likely cause to be a geomagnetic solar storm like the Carrington Event in 1859, when a coronal mass ejection from the sun generated sparks in telegraph lines, setting some buildings on fire. Had the nearly 3,000 transformers that underpin America’s grid existed then, a quarter of them would have burned up, according to Storm Analysis Consultants in Duluth, Minnesota. Some redoubters have signed up to receive a National Oceanic and Atmospheric Administration alert of any approaching solar storm like the big one that blew across Earth’s path on July 23rd 2012, missing the planet by days. + +Alternatively, a nuclear explosion 450km above the central United States would produce enough high-energy free electrons in the atmosphere below to fry the grid and unshielded electronics in all states except Alaska and Hawaii. Conceivably, and unpredictably, North Korea or Iran might dare to launch such a missile. + +A more likely catastrophe, Mr Rawles believes, would be a pandemic virulent enough to cause the breakdown of the national sewerage system as well as the grid. Mr Savage, for his part, worries most about a “slow slide into socialism” akin to “death by a thousand cuts, right, you just keep whittling away at liberty” by, for example, restricting gun sales. Some of his firm’s clients fear that bankers may deliberately collapse the financial system in order to introduce a single global currency. + +The dominant view is simply that institutions and infrastructure are more fragile than most believe, says Dave Westbrook, an American Redoubt consultant homesteading north-west of Sandpoint. Videos sold by his firm, Country Lifestyle Solutions, show redoubters how to assess the viability of off-grid properties, plant orchards and tend crops. But paranoia is out there, says Ben Ortize, the pastor of Grace Sandpoint Church. Terrorism, and the widespread belief that President Barack Obama’s progressive agenda is naive, have fuelled strong support for Donald Trump in the Redoubt, which has a disproportionately large population of former policemen, firemen and soldiers. To calm them down, he tells his flock that the Bible advises them to trust in the Lord, rather than in shotguns and Tasers. + +The area’s bad rap is sometimes undeserved. “Hate in America: A Town on Fire”, a recent Discovery Channel broadcast about Kalispell, Montana, attempted to conflate gun-lovers who recoil at big government with the few white supremacists shown at the start. In fact, there is much less racism in the inland north-west than in the South, says Alex Barron, founder of the libertarian Charles Carroll Society blog and self-proclaimed “Bard of the American Redoubt”. Some are quick to label ideological opponents as white supremacists, he says. Liberal bloggers have called him one; but Mr Barron is black. + +The Redoubt does give refuge to more than its fair share of outlaws, whether ageing draft-dodgers or crooks on the lam. So says Mike “Animal” Zook, a bounty hunter in Spirit Lake, Idaho with a gunslinger image enhanced by his sidearm’s faux-scrimshaw handle. Pointing east from the Riverman Gun Works car park, he notes that a man can trek that way for nearly 150 miles and see nothing but majestic forest and game. Turn south, and the wilderness extends more than double that. + +Wanted men can and do disappear here, Mr Zook says. Some pan for gold, hunt, trap game and quietly slip into a town once a year or so for supplies. Nationwide, perhaps only one in 1,000 indicted felons skip bail and run for it, he says, but the percentage is higher in the Redoubt and especially in Lincoln County, in nearby north-western Montana. That provides enough work, he says, for more than 2,000 fugitive-recovery agents—as bounty hunters are also known—who, like himself, operate at least part-time, typically as private contractors for bondsmen in the Redoubt. All in all, the frontier spirit of America’s Old West is still alive and well. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21703411-movement-staunch-conservatives-and-doomsday-watchers-inland-north-west/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The NYPD + +Goodbye to Bratton + +America’s top policeman leaves at a sobering moment + +Aug 6th 2016 | NEW YORK | From the print edition + +What would Peel do? + +AFTER two stints heading the New York Police Department (NYPD), as well as running the departments in Los Angeles and Boston, Bill Bratton is leaving public service for a job in the private sector. His legacy is a mixed one. His adopted city is decidedly safer; but the force is not much better liked, particularly by minorities. “I don’t know why he ever came back,” says one former cop, who thinks that second tour of duty in New York tarnished the glow of the first. + +Mr Bratton transformed the NYPD in the mid-1990s, targeting low-level offences to deter larger ones, and introducing a data-driven real-time “CompStat” crime-fighting system which has been copied across the country. On his first watch, homicides fell by 50% and serious crimes, like rape, by more than a third. He had similar success in Los Angeles, where he cleaned up a scandal-plagued department and repaired relations between the police and the black community, all while lowering crime. His former deputies led police departments in Chicago and Miami. David Cameron wanted him to head London’s Metropolitan Police, until Theresa May disagreed. + +When he became head of the NYPD for a second time in 2014, therefore, much good groundwork had been done—by himself. Just seven months into his new job, however, he faced protests over the death of Eric Garner, an unarmed black man who had died at the hands of police. Some months later, after no indictments in the Garner case, two officers were shot dead. At that, the rank-and-file revolted against Bill de Blasio, New York’s mayor, who was seen as lax on security generally, and Mr Bratton found himself caught between the police and City Hall. It was not a comfortable position. + +As chief, he was not afraid to make changes in the department. He moved officers away from their desks and on to the beat in local neighbourhoods. He overhauled training for recruits to reduce the use of force and was gradually bringing in the use of body cameras to record confrontations. And serious crime went on falling. + +Yet by other measures, he failed. Mr Bratton had intended especially to rebuild “mutual respect and trust” between police and New Yorkers, especially in communities that had been subject to heavy stop-and-frisk techniques. He kept in mind the remark of his hero Robert Peel, who founded Britain’s first force in 1829: “Police…should maintain a relationship with the public that gives reality to the historic tradition that the police are the public and the public are the police.” + +Instead he leaves behind a demoralised force, with many in blue glad to see the back of him. He is quitting at a low point in policing, when forces across the country feel besieged and protests against them are a daily occurrence. To many, it looks as though Mr Bratton could not wait to leave; and to hand over to his successor, Jimmy O’Neill, currently the highest-ranking uniformed officer, the burden of a job that has suddenly got much harder for everyone. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21703410-americas-top-policeman-leaves-sobering-moment-goodbye-bratton/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Gridlock Central + +The best-case scenario for American politics next year is not very cheering + +Aug 6th 2016 | From the print edition + + + +AMERICANS dismayed by the 2016 elections should brace themselves: next year political divisions will probably deepen. With a hot-headed, thin-skinned President Donald Trump in charge of the nuclear codes, the worst-case scenario would resemble “Dr Strangelove”. But weighing the lessons of the Republican and Democratic national conventions in Cleveland and Philadelphia, even the best-case scenario—in which Hillary Clinton becomes president, acknowledges that she will need bipartisan support and woos congressional leaders over White House dinners and late-night whiskies—will echo “All Quiet on the Western Front”. + +The causes of political trench-warfare range from giant, multi-year trends to petty calculations by individual members of Congress. Start with large forces. At the 2016 conventions the parties did not so much disagree on how to solve America’s problems, as speak to two different countries. The Republican convention was a four-day lament for stolen national greatness. Delegates heard about an America under domestic assault from terrorists and immigrants, and left at the mercy of foreign foes by corrupt elites. Democrats celebrated modern America’s diversity and tolerance. Like members of a self-help group, Democratic delegates were urged to praise their country for acknowledging lingering social, racial and economic ills, as a first step to seeking a cure. + +Should Mr Trump pull off a win in November, a perilous number of voters and officials will see him not just as the wrong man for the job, but as wholly unfit for public service. In Philadelphia a veteran of the Obama administration admitted to fearing the arrival of Middle Eastern-style politics, in which opposing parties view each other as illegitimate threats to national survival. Rather than wait four years for another election, this former member of Team Obama suspects many Americans would feel a patriotic duty to thwart what in their eyes would be the world-threatening policies of President Trump. Should Mrs Clinton win, a dangerous number of voters seem certain to think she should be in prison, agreeing with delegates in Cleveland chanting “Lock her up!” or (as Lexington heard more than once: “Hang the bitch!”). + +Then come narrow electoral calculations. The sort of political realignment needed to elect Mr Trump president should leave Republicans with a hefty majority in the House of Representatives. But the map of Senate seats in play suggests that the chamber is likely to remain finely balanced whoever wins the presidency, with neither party enjoying a 60-seat super-majority. A well-placed Republican predicts that, whichever party controls the Senate after November, its leaders will change the rules so that a simple majority will be enough to end filibusters and force a vote on confirming Supreme Court justices—an assault on the powers of the minority party which will poison relations. Republican bigwigs insist that Mr Trump can be kept in check by Congress, and will allow them to pursue conservative goals, such as corporate tax reform or slashing back environmental and financial regulations. Democrats will see little incentive to help. + +The forces needed to elect Mrs Clinton president would probably leave the Senate narrowly controlled by Democrats but the House still in Republican hands, albeit with a reduced majority. Alas for Mrs Clinton, the most vulnerable members in both parties are moderates from swing districts and states. That will leave Republican hardliners with so much power in the House that, as Nathan Gonzales of the Rothenberg & Gonzales Political Report and CQ Roll Call suggests, it is far from guaranteed that Paul Ryan will be re-elected Speaker next year. In the Senate, the defeat of moderate Republicans will make it harder to pass such ambitious measures as immigration reform. + + + +INTERACTIVE: navigate your way through the policy landscape to a majority + +In the corridors of the Philadelphia convention, some happy Democratic members of Congress imagined a Republican Party reeling after a thumping Trump defeat, notably at the hands of non-white and Hispanic voters, making them desperate to pass a law resolving the status of some 11m migrants in the country without legal papers. A Hispanic congressman imagines contrite Republicans rushing to prove to the country that they are not racists, “to get away from the Trumpster”. But those gleeful Democrats are indulging in dodgy political analysis and worse psychology. An immigration bill could conceivably pass the Senate, but House Republicans face different incentives. Their party’s fate in presidential contests matters less to them than a primary challenger in their own district, charging them with backing “amnesty for illegals”. As a matter of human nature, it is also implausible that chastened Republicans will bow their heads before Democrats charging them with racism, and vow to mend their ways. Instead, should Mr Trump lose, here is a prediction: lots of Republicans will accuse the media, in their cynical pursuit of TV ratings, of bamboozling their primary voters into choosing Mr Trump, a non-conservative whose defeat need teach the party nothing. + +Obstructionism as a sacred duty + +What might Hillary Clinton get done? In her convention speech she talked of a big, bipartisan infrastructure bill, creating millions of jobs and fixing battered roads and bridges. A Democrat suggests that his party should let Republicans call it the “Ryan Infrastructure Plan”, if that helps. But that presupposes Republicans would want to give Mrs Clinton a win of any sort, even a shared one. There are members on right and left who support changes to criminal-justice laws that lock non-violent offenders up for decades; Mrs Clinton has, in her day, sounded open to examining the sustainability of safety-net schemes such as Social Security. But the window for bipartisanship will be narrow. The Senate map in 2018 overwhelmingly favours the Republicans, offering reasons to dig in for two years. Defeating Mr Trump—a would-be American Caesar, come to save the republic—is a worthy fight. It may be hard for Mrs Clinton to accomplish much else. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21703385-best-case-scenario-american-politics-next-year-not-very-cheering-gridlock/print + + + + + +Previous Articles Sections Next + + + +The Americas + + + + + +Venezuela: Army rations + +The Petrobras scandal: Defendant-in-chief + +Cannabis in Colombia: Weeds of peace + + + + + +Articles Sections Next + +Venezuela + +Army rations + +Nicolás Maduro turns to the armed forces for salvation + +Aug 6th 2016 | CARACAS | From the print edition + + + +“THERE is only one chief! One commander! One authority!” These thunderous assertions came from Nicolás Maduro, Venezuela’s president, during a recent television appearance. Oddly, he was not talking about himself. He was extolling the defence minister, Vladimir Padrino López (pictured with Mr Maduro), who nodded appreciatively. The general, long a behind-the-scenes operator, has become much more visible and powerful. + +In July Mr Maduro put him in charge of the government’s latest effort to alleviate food shortages, which have destroyed the populist regime’s prestige and threaten its survival. Things are now so bad that McDonald’s has stopped selling Big Macs because it cannot get the buns (a privation for the few Venezuelans who can afford them). The “Great Mission of Sovereign Supply” takes the bulk of food distribution away from an array of state and privately owned wholesalers and entrusts it to the army. General Padrino López, whose first family name means “godfather”, would be answerable to no one, Mr Maduro proclaimed. “All ministries and government institutions [involved in distributing food] are subordinated” to him. Mr Maduro told the army to take over the ports, too. + +One big question is whether General Padrino López is now also in charge of Mr Maduro, or soon will be. The president has “transferred power”, believes Cliver Alcalá, a retired major-general who counts himself an admirer of General Padrino López. Writing on Latin America Goes Global, a website, analysts Javier Corrales and Franz von Bergen contend that Venezuela may have undergone “a new type of coup” in which “the president is not displaced, but effectively handcuffed.” + +The regime was already a quasi-military one. Its founder, Hugo Chávez, was an army colonel who once attempted to stage a coup (he failed, but later won power in an election). His government was a civil-military union, in which the army acted as a spearhead of his “Bolivarian revolution”. The hapless Mr Maduro, chosen by Chávez to be his heir before he died in 2013, is a civilian and can look awkward at military gatherings. But he has kept the government’s martial tone. A third of his ministers are soldiers. Following a failed coup attempt in 2002, Chávez asserted full control over the army; after he died it resumed its historical role as an arbiter of power. + +That became apparent after Venezuela’s parliamentary election on December 6th, when the opposition won control of the national assembly for the first time in 17 years. After the vote General Padrino López went on television to congratulate citizens for taking part in a peaceful democratic process. Some analysts interpreted this as a warning to Mr Maduro not to reject the opposition’s victory. More recently, General Padrino López has spoken of a “failure of governance”. There is no reason to doubt his loyalty to Chávez’s revolution; to defend it, he might betray the president. + +The army’s future role may now be intertwined with the opposition’s attempt to unseat Mr Maduro by holding a recall referendum. On August 1st the election commission confirmed that the opposition had collected enough signatures to move to the second stage of the recall process: the collection of signatures representing at least a fifth of the electorate—about 4m. If Mr Maduro’s foes achieve that, by law a referendum on whether to oust him must be held. Since less than a quarter of Venezuelans approve of his job performance, he would probably lose. + +Recall to duty? + +Timing is everything. If Mr Maduro is ejected before January 10th there will be a new presidential election; if after, the vice-president, currently Aristóbulo Istúriz, will take over. In that case, General Padrino López might increase his influence over government still further. + + + +In graphics: A political and economic guide to Venezuela + +By then, though, the army’s already diminished prestige may have suffered from its failure to alleviate food shortages. The government blames them on black marketeers, whom the army is to evict from the distribution network. This is delusional. + +The shortages are caused by price controls, which make it illegal to sell essential goods for more than a fraction of what they cost to make. Domestic production of everything from bread to toilet paper has predictably plunged. Thanks to low oil prices and its own incompetence, the government does not have enough money to subsidise imports to make up the shortfall. The black market is a consequence, not the cause, of shortages. Reaffirming his rejection of economic reality, Mr Maduro appointed a new commerce minister who last year praised the Soviet Union as a “highly self-sustaining country”. + +Soldiers are unlikely to help much. Military checkpoints on the border with Colombia already skim off cash from smuggling networks. On August 1st a court in New York charged Néstor Reverol, an ex-commander of the national guard and Venezuela’s former drug tsar, with cocaine trafficking. The day after the indictment Mr Maduro named him interior minister. + +There is little evidence that the Grand Supply Mission, inaugurated on July 11th, is making much difference. Venezuelans still spend hours queuing at supermarkets with empty shelves. Millions are desperate for bread. Perhaps the generals will manage to put the buns back on Big Macs. More likely, they will demonstrate that supply and demand, unlike soldiers on parade, do not follow orders. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21703416-nicol-s-maduro-turns-armed-forces-salvation-army-rations/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Petrobras scandal + +Defendant-in-chief + +The remarkable downfall of the most important Brazilian + +Aug 6th 2016 | SÃO PAULO | From the print edition + + + +“I DOUBT that anyone in this country is more law-abiding than me,” says Brazil’s former president, Luiz Inácio Lula da Silva. On July 29th a federal judge in the capital, Brasília, demurred in startling fashion. He accepted charges of obstruction of justice against Lula and six other people. Prosecutors say they tried to pay a former executive of Petrobras not to co-operate with the investigation into a vast bribery scandal centred on the state-controlled oil company. The judge thinks the evidence is strong enough to warrant a trial. + +His decision hastens the downfall of this century’s most important Brazilian. Lula’s election in 2002 showed that a member of the working class could gain power democratically in a country marked by great inequality. As president from 2003 to 2010, he won adulation at home and renown abroad for reducing poverty and presiding over brisk economic growth. Lula’s global stature helped bring this month’s Olympic games to Rio de Janeiro. + +But he has been caught up in a scandal that has implicated dozens of prominent politicians and businessmen. It has discredited the left-wing Workers’ Party (PT), which he founded and led. The popular fury aroused by the scandal provided the political passion that led to the impeachment of Lula’s successor as president, his protégée Dilma Rousseff. The senate is to try her later this month on charges that she manipulated government accounts. She has had to step aside until the trial is completed, leaving the government in the hands of her vice-president, Michel Temer. + +Brazilians have become so accustomed to revelations of wrongdoing that they treated news of Lula’s forthcoming trial almost as a non-event. Valor Econômico, the biggest business daily, did not mention it in its next edition. But it will further weaken the PT ahead of important local elections to be held in October. If Lula is convicted, and his conviction is upheld in a higher court by 2018, he will not be able to run in the next presidential election. Despite the scandal and his age (70), he remains the PT’s most effective vote-getter by far. + +More charges may follow the indictment, which is based on testimony given by a disgruntled former PT senator, Delcídio do Amaral, in return for leniency. Prosecutors allege that Lula is “one of the principal beneficiaries of the crimes” at Petrobras. Lula, his family and an NGO he heads received “undue advantages” worth 30m reais ($9m) from construction firms, investigators say. Those firms also made payments to the PT and its allies in return for padded contracts with Petrobras. Lula’s alleged personal gains seem to have taken the form of refurbishments to property; investigators have not found bank accounts stuffed with cash. In March police briefly detained him for questioning. + +He and the other alleged conspirators (Mr do Amaral aside) deny wrongdoing. Lula claims that he, along with Ms Rousseff and the PT, is a victim of a political witch hunt. On July 27th he launched a website to defend “democracy, justice, development and social inclusion”—and his image. The next day, anticipating a trial, he petitioned the UN Human Rights Committee to intervene, accusing Sérgio Moro, the crusading federal judge in charge of the main Petrobras investigation, of “a lack of impartiality” and “abuse of power”. Awkwardly for Lula, a different judge called for a trial first. Whatever the courts conclude, Lula is unlikely to reclaim his position at the pinnacle of Brazilian politics. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21703295-remarkable-downfall-most-important-brazilian-defendant-chief/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cannabis in Colombia + +Weeds of peace + +A drug-growing country experiments with medical marijuana + +Aug 6th 2016 | BOGOTÁ | From the print edition + + + +COLOMBIANS called it the bonanza marimbera (marijuana bonanza). In the 1970s and 1980s smokers in the United States were especially partial to Santa Marta Gold, a variety of cannabis grown on the slopes of Colombia’s Sierra Nevada. It has “a sweet, intense aroma” and “powerful psychedelic effects”, says WeedWiki, a website. But government fumigators, plus competition from American-grown weed, ended the Santa Marta Goldrush. Farmers switched to coca, the raw material of cocaine. + +Now Colombia hopes to cash in on a new cannabis-based bonanza, set off by legalisation in parts of the United States and elsewhere. The government recently licensed three companies to process extracts, resins and oils for treating such ailments as cancer, epilepsy and multiple sclerosis. Its ambition is to build medical marijuana into a business as big as cut flowers, which bring in more than $1 billion in export revenue. Colombia could be “the winner of this emerging global market”, said Alejandro Gaviria, the health minister. + +The three companies with permits to process cannabis—one Canadian and two Colombian—must wait until the government licenses the growing of the weed itself, probably next year. Also awaiting the go-ahead are Colombian growers, whose activities are unauthorised but tolerated. + +They hope to move up the value chain. A co-operative of 53 farmers in Cuaca province, where half of Colombia’s marijuana is grown, is seeking licences to cultivate it, produce cannabis-based remedies and research the weed’s medicinal properties. This shows that the cannabis industry “can change a problem into an opportunity”, said Mr Gaviria. + +It could also help solve the coca problem. The area under production jumped by 39% last year. One reason is that farmers are profiting all they can before a peace accord is signed by FARC guerrillas and the government, after 52 years of war. That would oblige the FARC to fight the drug trade, from which they have long profited. Cannabis would be less lucrative, but it might provide pain relief. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21703415-drug-growing-country-experiments-medical-marijuana-weeds-peace/print + + + + + +Previous Articles Sections Next + + + +Asia + + + + + +Myanmar’s economy: Miles to go + +Sri Lanka’s missing people: Refusing to give up hope + +India’s economy: One nation, one tax + +Canine couture in Taiwan: Furry fashionable + +Japan and the last commute: Peak death + +Japan and the last commute: Award + + + + + +Articles Sections Next + +Myanmar’s economy + +Miles to go + +The new government unveils promising but vague economic plans, as the armed forces loom in the background + +Aug 6th 2016 | YANGON | From the print edition + + + +IN AN open-plan office in a nondescript building in central Yangon, women sort through piles of brown folders. Three men try, with little success, to fix a photocopier; others organise piles of kyat, Myanmar’s currency, by denomination. Myanma Economic Holdings Limited (MEHL), a conglomerate run by the armed forces, has many workers who do very little. Being owned by men with guns has long meant being shielded from competition. + +That began to change in 2011 when Thein Sein, then the country’s president, ended the military conglomerates’ tax exemptions and their import monopolies on many goods. He welcomed foreign competitors to some of their businesses. But the army, which ruled from 1962 until March of this year, when the democratically elected National League for Democracy of Aung San Suu Kyi took office, retains vast business interests. And it controls three powerful ministries, as well as a quarter of the seats in parliament, meaning it can scupper Miss Suu Kyi’s planned economic reforms, should it choose to. + +That Myanmar’s economy needs reform is beyond dispute. Though foreign investment is soaring and GDP is expected to grow by at least 8% this year and next, both are from a tiny base. Before the army seized power, Myanmar had been one of the world’s leading rice exporters and one of Asia’s wealthiest countries; today it is among the poorest. Last year GDP per person was just $1,204—less than a fifth the level of neighbouring Thailand—and tax revenue, as a share of GDP, was the lowest in the region. Most of the population is poor and rural: scant access to credit, energy, seeds and fertiliser keeps agricultural productivity low. Bad roads, inefficient ports and sporadic electricity impede industrial growth: the advantage afforded by a cheap, young workforce is frittered away if they sit idle during power cuts. Transporting goods to market costs a fortune. + +On July 29th in Naypyidaw, the capital, Miss Suu Kyi presented her long-awaited plan to tackle these problems. Though it pointed in the right direction—towards greater liberalisation and away from the planned economy—it was worryingly light on detail. What were described as “economic policies” were more like aspirations: more efficient public spending and taxation; better technical and vocational education; more transparent budgeting; less red tape and so on. There were vague promises about agriculture and infrastructure. Farmers will somehow get greater access to credit and more secure land tenure. Electricity generation, roads and ports will be prioritised. + +The goals are laudable. But are they achievable? And when will the government get started? According to Sean Turnell, an Australian economist advising the new administration, so little economic information was handed over by its predecessor that its first four months have been spent tracking down basic facts about revenue, budgeting, the financial position of state-owned enterprises and so on. + +After many years in exile fighting for democracy, Miss Suu Kyi has entered office with much goodwill, at home and abroad. But she is also burdened with high expectations, which are likely to go unfulfilled. Almost everything needs fixing, and she has shown a worrying tendency to centralise and micromanage. She still chairs her political party, while holding three positions in the new government. To build functioning financial institutions, she must learn to delegate, analysts say. + +The rift over the loot + +There are also worries about how the army will react once the government is ready to act. Outright resistance is unlikely: the democratic transition began in part because the army realised it was hopelessly ill-equipped to oversee a market economy. And at least some of its enterprises make money legitimately, and will make more as the country prospers. MEHL, for example, makes Myanmar Beer, the most popular brand, and Red Ruby, one of the most popular cigarettes. + + + +Myanmar in graphics: An unfinished peace + +However, the army and its cronies have also grown rich from gem and jade mines—and vast tracts of land that many contend were illegally seized. The new government says it will neither extend mining licences nor offer new ones until the laws governing the sector are tightened (it appears keener on environmental and safety rules than its predecessors). It has begun to investigate what it estimates are hundreds of thousands of land grabs, totalling millions of acres. This limited remit—the government could have plumped, instead, for a full-blown investigation into land-ownership nationally—is seen by some as a signal to the army that it will be allowed to keep past gains, but should understand that from now on, things will change. + +Whether that will be enough for it remains to be seen. For Miss Suu Kyi has pledged a “just balancing” between states and regions, with the aim of “national reconciliation”. This is an old demand of ethnic insurgents against the central government: Myanmar’s civil wars have been motivated not only by politics, but by control of resources. Dividing the spoils more equitably will be essential if the fighting is to end. But Miss Suu Kyi may find that the army is none too happy about a civilian government dictating terms over conflicts in which it has spilt blood for decades. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21703405-new-government-unveils-promising-vague-economic-plans-armed-forces-loom/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Sri Lanka’s missing people + +Refusing to give up hope + +A new government tries to give certainty to grieving relatives + +Aug 6th 2016 | COLOMBO | From the print edition + +The Sundararaj family: happier days + +SEVEN years ago, at a busy crossroads in Colombo, Sri Lanka’s largest city, armed men in an unmarked white van abducted Stephen Sundararaj. He was going home, his three children snuggled up against him, after idling for weeks in a police cell. Mr Sundararaj, then a 39-year-old project manager at a local human-rights group, had been detained under the Prevention of Terrorism Act, a draconian law permitting arrests without warrant for “unlawful activities”. He challenged the move in court and would have pursued the case, had he not been hauled away mere hours after his release. He was never charged with a crime. He has never been found. + +Such horrifying tales are common in Sri Lanka, where 26 years of ethnic conflict ended with the defeat of the Tamil Tigers in 2009. In the past century the country has also experienced two Marxist insurgencies in the south, and several anti-Tamil pogroms. In May Mangala Samaraweera, the foreign minister, admitted that it had one of the world’s largest caseloads of missing people. The armed forces, the Tamil Tigers and other insurgents are all to blame. + +Figures vary hugely, depending on the source. The UN puts Sri Lanka second only to Iraq, with 5,731 outstanding cases. But Dhana Hughes of Durham University, who has studied the two southern insurgencies, estimates that thousands vanished during the second one alone, in the late 1980s. Under the authoritarian Mahinda Rajapaksa, president from 2005 to 2015, who defeated the Tamil Tigers, snatches like that of Mr Sundararaj were so common that they were dubbed “white-vanning”. Not only terrorism suspects but political opponents were targets. Some, like Mr Sundararaj, were taken for no apparent reason. Thousands more went missing from war zones. + +In 2013, after heavy international pressure, Mr Rajapaksa set up a body to investigate missing-persons cases. The Paranagama Commission received more than 19,800 representations, including 5,600 from relatives of missing military personnel. Weeping families flocked to public hearings clutching photographs and heart-rending petitions. But the commission’s final report, last year, exonerated the government of war crimes—which had not even been part of its remit. + +But Mr Rajapaksa’s defeat at a snap election in January 2015 by a coalition supported by Tamil and Muslim voters created space for more genuine efforts. The new government ratified the UN convention on enforced disappearances and allowed its working group to visit, even throwing open a former secret detention facility and escorting its members to mass graves. The group concluded that “a chronic pattern of impunity still exists in cases of enforced disappearance”. It urged the government to determine the fate of the disappeared; to punish those responsible; and to guarantee truth and reparation. + +The government vows that it is trying. A law to create an “office on missing persons” will be taken up for debate in parliament this month. Another, to issue “certificates of absence” to families of the missing, will be presented to the legislature around the same time. These will help relatives overcome legal, administrative and financial obstacles (the transfer of property or bank accounts, for instance) that would, under normal circumstances, require death certificates. + +She does not want any certificate, says Vathana, Mr Sundararaj’s wife. And she can identify two of his abductees, she says: she had often seen them sitting outside his police cell. What she wants is to get him back: she insists that he is still alive. + +According to the International Committee of the Red Cross, which offers support to victims after as well as during wars, such refusal to lose faith is not unusual. The lack of information about missing relatives wears families out, it said in a survey of them it published last month. Fewer than two-fifths of those it interviewed believed their loved ones were dead; the rest were split roughly equally between believing they were still alive and being unsure. All vacillated between hope and fear; mired in pain, they told and retold their stories to anybody who would listen. “No abduction, please,” says Vathana, wiping away tears. “Not for Sinhala, Tamil or Muslim.” In the meantime, she waits for news. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21703404-new-government-tries-give-certainty-grieving-relatives-refusing-give-up-hope/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +India’s economy + +One nation, one tax + +A tax overhaul will have welcome, if unpredictable, consequences + +Aug 6th 2016 | MUMBAI | From the print edition + +Time to lighten the load + +GIVEN how few voters enjoy paying them, politicians rarely trumpet the advent of new taxes. But the passage of a new goods-and-services tax (GST) in India’s upper house on August 3rd is a deserved exception. Well over a decade in the making, the new value-added tax promises to subsume India’s miasma of local and national levies into a single payment, thus unifying the country’s 29 states and 1.3 billion people into a common market for the first time. The government of Narendra Modi, never averse to over-hyping what turn out to be modest policy tweaks, has enacted its most important reform to date. + +Few countries are fiddlier than India when it comes to paying taxes; the World Bank ranks it 157th out of 189 for simplicity. Both the central government and powerful state legislatures impose a dizzying array of charges. Because the rates differ between states, making stuff in one and selling it in another is often harder within India than it is in trade blocs such as NAFTA or the European Union. Queues of lorries idle at India’s state boundaries much in the same way they do at international borders. + +That should change with the GST, essentially an agreement among all states to charge the same (still to be decided) indirect tax rates. Businesses are thrilled at the idea of being able to distribute their products from a single warehouse, say, rather than replicating supply chains in each state. Thick, exception-riddled tax codes—car sales are liable to six different levies at various rates, depending on the length of the vehicle, engine size and ground clearance, for example—are to be replaced with a single GST rate to be applied to all goods and services. + +Better yet, the GST will be due on the basis of value added. That avoids businesses being thwacked by taxes on the entire value of the products they buy and sell rather than just the value they create—a situation that often made it cheaper to import stuff rather than make it locally. Just as importantly, by requiring businesses to document the prices at which they buy inputs and sell products (unless they wish to pay higher taxes), it will force vast swathes of the economy into the reach of the taxman. + +Economists and technocrats have long backed the GST, which they think could boost economic output by 1-2 percentage points a year. Their calls were insufficient to overcome India’s petty politics: GST proposals stalled under governments of left and right since it was first mooted in 2000. Mr Modi, as chief minister of Gujarat state until 2014, helped thwart the previous government’s GST plans and has faced retaliatory obstructionism since. A committee of various states’ finance ministers helped convince regional parties in the upper house, which Mr Modi’s government does not control, to clear the blockage. + +Because the tax overhaul requires a new amendment to the constitution, and therefore the backing of at least 15 state legislatures, it will take several months to enact. Few expect it to be derailed, but a deadline of April 2017 seems unlikely to be met. Though efforts to water down the bill (for example by exempting petrol) appear to have been overcome, its precise workings remain undecided. Even the GST rate is unknown; a government study mooted 17-18% but some states (which will receive the cash raised) would like it to be higher. + +Such nitty-gritty will be fought over in the “GST council”, a novel body which will represent both state and federal executive branches but looks likely to be dominated by ministers sitting in New Delhi. Arvind Subramanian, the government’s chief economic adviser, calls the whole construct “a voluntary pooling of sovereignty in the name of co-operative federalism”, borrowing freely from the lexicon once used by the builders of the EU’s common market a generation ago. Such projects do occasionally run into bouts of difficulty. + +Indeed, the new council and the tax it will administer go against a recent trend for decentralising power from New Delhi to the various state capitals. Powerful chief ministers sitting in the provinces will be more dependent on revenue collected federally and less on purse-strings they control themselves. Money will shift from (richer) states that make things towards (poorer) ones that consume them, too. The advent of a single tax to rule them all may come to shape Indian politics as much as it does the economy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21703370-tax-overhaul-will-have-welcome-if-unpredictable-consequences-one-nation-one-tax/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Canine couture in Taiwan + +Furry fashionable + +What pampered pooches reveal about national security + +Aug 6th 2016 | TAIPEI | From the print edition + +Did someone say “catwalk”? + +LONDON or Paris? Milan or New York? Fashionistas differ on which city is the most stylish. For four-legged trendsetters, however, there is a clear winner: Taipei. Dogs strut their stuff on its pavements tricked out in tutus, hoodies, boots, overalls and trousers. A biker’s best friend can be kitted out with a matching motorbike helmet. Pampered pooches have been spotted in LA Dodgers kits (adapted, naturally, to accommodate four legs). In the city’s night markets shops have sprung up with doggie sales staff modelling the wares (your correspondent tried to dig up data on entry-level pay, but found no bones). + +A troubling trend is driving the popularity of canine couture: Taiwan’s rock-bottom birth rate. At just 1.1 births per woman, it is far below the replacement rate of 2.1, at which the population would stabilise. Many Taiwanese fear that the growing amount of money and attention lavished on pets stems from the decreasing willingness of young Taiwanese to start a family. Caring for a dog seems to have become a substitute for having children. Dog strollers seem at least as numerous on Taipei’s crowded streets as buggies holding babies. + +The baby bust is giving the government paws for thought. The previous president, Ma Ying-jeou, called it a “serious national-security threat”. He tried to encourage child-bearing with cash handouts, more breast-feeding facilities and the like. After all, if Taiwanese youth decides that dogs are less trouble than sprogs—and just as much fun to dress up—then who will defend the democratic island, which Beijing has long claimed as its own? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21703403-what-pampered-pooches-reveal-about-national-security-furry-fashionable/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Japan and the last commute + +Peak death + +As a baby-boom generation ages, businesses struggle to make money out of a rare growth sector + +Aug 6th 2016 | TOKYO | From the print edition + +A fine and private place + +IN HIS office behind Tokyo’s Aoyama cemetery, Yukihiro Masuda says that these days prospective clients are so much readier to talk about the end of life that he encourages them to try out his coffins. He gestures at one: a handsome model, lined with white satin, and decorated on the outside with superb red kimono cloth. Inside, with the lid closed, it is as acoustically dead as a recording studio, quite soporific and, for this overweight Westerner, at least, rather snug at the shoulders and hips. + +Talking about death is still taboo for some Japanese—and in parts of the country the burakumin, an often ostracised group who are descendants of medieval outcasts, still fill a large share of jobs in the funeral business. But for many others the taboo is broken. A 2008 film, “Departures”, movingly depicted the beauty and dignity of nokan, the (Buddhist-derived) ritual cleansing ceremony for the recently deceased, carried out at home before laying the body in a coffin for cremation. The film’s success led to a wave of job applications to perform nokan. Not long after, the Weekly Asahi, a magazine, began promoting the idea of shukatsu, planning for the end of life, in the hope of interesting readers and attracting advertisers. And then the devastating tsunami of 2011 made many Japanese wonder openly: if I die, who will take care of my funeral, sort out my affairs and carry out my wishes? + +Underlying these cultural shifts is the tyranny of demography. Although Japanese are living longer, healthier lives, the huge baby-boom generation born after the second world war is starting to die just as younger Japanese are having fewer children. The population of 127m has already peaked and is set to fall below 100m by 2050. This year around 1m Japanese will be born, and around 1.3m will die. By 2040 annual deaths may approach 1.7m. + +Call it peak death. It is already changing families. Traditionally, offspring would handle their deceased parents’ affairs, with neighbours helping with funeral ceremonies at home. But many more Japanese, particularly in depopulated rural areas and coastal towns, are now dying alone, with few to help them into the next world. + +The funeral industry and other companies not hitherto associated with end-of-life issues sense an opportunity—a rare growth sector. A huge funeral fair in Tokyo in December, with nokan competitions using volunteers posing as corpses, gave a sense of the scale of the ¥2 trillion ($20 billion) industry. There are niches: stationery companies sell books for “ending notes”—instructions for post-death practicalities, but also for innermost feelings that Japanese tend to keep to themselves and that atomised families make difficult to express in life. End-of-life businesses also offer alternatives to costly temple gravestones, such as scattering loved ones’ ashes in Tokyo Bay (just don’t tell the honeymooners to whom the boat is also offered). + +Tech companies are also jumping in. Two years ago Yahoo Japan, an internet giant, launched Yahoo Ending, a service that charges ¥180 a month until you die, then sends an e-mail alerting friends and family once you’ve reached the other side, smoothly closes your internet accounts and sets up an online memorial page. It also offers to arrange funerals, complete with a Buddhist priest. + +Amazon Japan offers a monk-for-hire service: with one click you can order a priest to chant sutras (much to the ire of traditional temples, for which funerals and caring for ashes are nice earners). Aeon, a retail and financial-services conglomerate, has branched out from arranging funerals for employees past and present, and opened its first outlet for the general public in the shopping centre next to its Tokyo headquarters. Fumitaka Hirohara, the head of Aeon Life, its funeral business, claims it was the first place to offer free coffin trials, in 2011 (much to the initial surprise of passing shoppers). + +Yet most of the businesses that moved into shukatsu have not found the bonanza they were hoping for. Few old people signed up to Yahoo Ending’s services for the simple reason that they are not heavy users of internet services. Younger Japanese balked at a lifetime’s monthly fees. Yahoo Japan closed the service in April. And then the funeral business turns out to be not so different from others in Japan: eking out thin margins in a competitive world. Though the number of funerals is rising, the average cost, once over ¥2m, is falling—deflation and competition are as fierce as in other sectors. In the boom years up to the early 1990s funeral firms charged what they wanted and few complained. + +Companies often paid for lavish funerals for their executives and dispatched employees as mourners to the funerals of important customers, even if they did not know them. Now companies are strapped for cash, and employer-employee loyalty has eroded. Besides, more and more Japanese just want a simple ceremony for close family and friends. + +Mr Masuda says that traditional funeral companies try to make their money from costly add-ons, such as fancy cars or a DVD of the funeral. But customers want less and less of it. “Companies don’t listen to what customers want,” he says; “they just offer the same old packages.” + +Instead, Mr Masuda says, firms need to keep prices low (a funeral package can now cost less than ¥500,000) and to differentiate their products. His company, WillLife, offers an eco-friendly send-off. The coffins are made of robust cardboard from the packaging industry (which the parent company is in). Even though they need as much paraffin—70 litres—for cremation as the usual wooden versions, the company plants trees in Mongolia as a carbon offset. + +Still, Mr Masuda laments that plywood coffins from China can cost just a third as much as his cardboard ones. The “China price”, a fixture of life in Japan as elsewhere, applies in death, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21703392-baby-boom-generation-ages-businesses-struggle-make-money-out-rare-growth-sector-peak/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Award + +Aug 6th 2016 | From the print edition + +Our correspondent in Sri Lanka, Namini Wijedasa, has been named Investigative Journalist of the Year by the Editors’ Guild of Sri Lanka and the Sri Lanka Press Institute + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21703388-award/print + + + + + +Previous Articles Sections Next + + + +China + + + + + +The Cultural Revolution: Unlikely hero + +Tibetan culture: And the policemen danced + + + + + +Articles Sections Next + +The Cultural Revolution + +Unlikely hero + +A local leader jailed for extremism during the Cultural Revolution has many devoted followers + +Aug 6th 2016 | LANKAO | From the print edition + + + +WHEN Zhang Qinli’s ashes were carried to his native village in a white pickup truck in May 2004, mourners lined the streets. They wept and clapped and set off firecrackers as the vehicle started its journey from the county seat of Lankao. “He died a wronged man,” shouted some. It was a hero’s send-off; so many knelt before the truck, sobbing, that it took about five hours to make its way from the dusty town to the hamlet, tucked in a grove of poplars 30km (20 miles) away. + +It is rare indeed for someone who once served as the Communist Party chief of a county, as Zhang did, to be so adored by its residents that his death would provoke such spontaneous displays of sorrow. But Zhang’s funeral went unremarked in the official media. That is because popular affection for him revealed an uncomfortable fact: though Mao’s Cultural Revolution caused the suffering and death of millions, to some in China the era—a time of idealism and little corruption—was not all bad. A few, even, would like another one. + +In 1978, two years after Mao’s death, Deng Xiaoping muscled diehard Maoists out of the leadership and took over himself. To secure his power, he set out to purge the party of supporters of the “Gang of Four” radicals led by Mao’s wife, Jiang Qing, who had been arrested shortly after the chairman’s death and blamed for the Cultural Revolution’s excesses. Zhang, who had held leadership posts in Lankao and in the nearby city of Kaifeng, was an early target. He was arrested in October 1978 and jailed for 13 years for “counter-revolutionary” crimes, including the “brutal persecution of revolutionary cadres” and “trampling on the socialist legal system”. + +At the time, as China began to open up and Deng launched economic reforms, no one stood up in support of imprisoned Maoists. But the deep factional divisions that had plunged the country into chaos during the Cultural Revolution had not healed. Those who had backed the wrong side kept their heads down. Not all had been supporters of Red Guard brutality—some were simply idealists who found it hard to shake off the leftist ideology they had believed was unassailable. + +By the time Zhang was released from prison in 1990 on medical parole, China was growing richer but more unequal. Maoist traditionalists were beginning to criticise Deng’s reforms openly. In the lower reaches of the Yellow River among the wheat- and maize-growing villages of Lankao (officially designated as an “impoverished county”), Zhang was remembered for his hard work and honesty: how different, many there thought, from modern-day officials. + +But the party never formally forgave Zhang; though he was cleared of counter-revolution on appeal, he remained guilty of “instigating and plotting” others to engage in “beating, smashing and looting”. He was never readmitted to the party’s ranks. So the shouts of mourners on the streets of Lankao as his ashes passed by government buildings were cries of protest: “Learn from the old [party] secretary”; “Down with corruption and sleaze.” + +For China’s current leader, Xi Jinping, Zhang is a headache. Not only is he a deceased arch-criminal who happens to be popular, but he is also one whom the party cannot easily airbrush from its history. That is because Zhang’s story intertwines with that of one of the party’s most beloved heroes: the model party secretary, Jiao Yulu. Jiao was Zhang’s predecessor as Lankao’s party chief. He died two years before the Cultural Revolution, so was not tainted by it. Mr Xi loves Jiao; in 1990, when still a little-known local leader himself, he wrote a poem about him. “Snow at sunset, frost at dawn/Cannot change the will of a hero” go two of its lines. He has urged the nation to study him. + +Party and anti-party + +Lankao thus has two heroes. One, Jiao, is honoured in a museum dedicated to his memory. Mr Xi visited it in 2014. The other, the “anti-party” (as the court described him) Zhang, enjoys an unofficial following, as is evident at his native village where admirers have erected more than 80 stone tablets inscribed with tributes to him (pictured above). Without Zhang, say his fans, Jiao might never have enjoyed such posthumous fame. It was Zhang who revealed details of Jiao’s Stakhanovite attributes to Chinese journalists; their story, published in February 1966, launched the cult of Jiao. Zhang’s fans say it was merely a cruel twist of fate that made one a saint in the party’s eyes, and the other a criminal. The two, they insist, were very similar. Even some liberals in China accept that Zhang and his associates may have been wronged. + +The party has tried to play down the 50th anniversary this year of the launch of the Cultural Revolution, which began a few weeks after the article about Jiao appeared. That bloody period of Mao’s rule was a “disaster”, the party says. It does not want its wounds reopened. Reformists in China have long argued that the party should be more open about what happened, in order that lessons be learned from the near civil war it led to. + +But there are also some from the other end of the political spectrum who say that Deng overreacted, rounding up numerous people like Zhang whose only crime, they argue, was belonging to the wrong faction. The Cultural Revolution was a good idea, they say: China needed one to prevent the kind of slide towards capitalism that the country is now (as they see it) suffering. In May Maoist websites in China published photographs of a meeting of Mao-lovers in Xi’an, the capital of Shaanxi province. “Long Live the Great Proletarian Cultural Revolution” proclaimed a red banner along one side of the room, where more than 50 people sat in rows before a large portrait of Mao. + +Rebuilding reputations + +Mao-worshippers in Henan province, to which Lankao belongs, say that the purges of leftist radicals that began in the late 1970s were far more wide-ranging in Henan than elsewhere in China. In March a group of retirees, including former officials, wrote to the Supreme Court to demand the rehabilitation of more than 1m people whom they said were detained at the time. Some 4,000 were given prison sentences after closed-door trials, they said. The letter specifically called upon the court to reopen the case of Zhang, “a hero of socialist construction”. + +In Lankao Zhang’s followers say they have heard nothing in response to such petitions, of which several have been sent (and published on Maoist websites) in recent years. Last year, however, Henan’s state-run television station broadcast a documentary about Zhang. It described the charges against him as “groundless”—a strong hint that the party was having second thoughts. + +Zhang’s fans are keeping up the pressure. On the anniversary of his death this year, hundreds flocked to his village to mourn. Several new tablets commemorating him have been put up there in the past few months (bus drivers in Lankao waive the fare for pilgrims, locals say). The large walled compound containing the monuments is strewn with the detritus of firecrackers, set off to protect the dead from evil spirits. The Cultural Revolution’s ghosts still wander. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21703365-local-leader-jailed-extremism-during-cultural-revolution-has-many-devoted/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Tibetan culture + +And the policemen danced + +In Tibetan areas the government mixes control with tolerance + +Aug 6th 2016 | YUSHU | From the print edition + +Horses dance, too + +TROUPES of Tibetan dancers twirled long pieces of silk. Men in red-tasselled hats brandished swords. Horses in fine saddles stormed around the stadium. Last week the Gesar cultural festival opened in Yushu in the western province of Qinghai. Locals gathered for the three-day celebration of equine prowess, yak-racing and Tibetan song and dance. It is just one of many such festivals held on the Tibetan plateau in the summer months. + +It would be easy to paint recent changes to such festivities as an indication of repression of Tibetan culture. The opening ceremony of the Gesar event, once free to all, is now ticketed, and many seats are reserved for government officials. Police lined the perimeter fence; during one performance 13 uniformed men in protective vests, masks and helmets walked across the field. In a rare sign of dissent, only a few of the crowd outside the officials’ section stood for the Chinese national anthem. + +But the story is more subtle: on this part of the plateau, outside Tibet proper, China’s government maintains stability by an artful balance of repression and tolerance. It allows freedom in some spheres to prevent simmering anxieties about the future of Tibetan culture and Buddhism from boiling over. + +That contrasts with the official Tibetan autonomous region, home to less than half of China’s 6.3m Tibetans, where several anti-Chinese riots erupted in 2008. There, a system of street-level surveillance known as the “grid” operates, in which community members gather information for officials. Groups of five to ten households sign contracts agreeing not to make trouble. In Lhasa people may be imprisoned for carrying or displaying images of the Dalai Lama; elsewhere on the plateau most are merely reprimanded. + +The exact level of control in Qinghai is unclear. Some locals complained that July’s event was smaller than previous ones because the government is “afraid” of large gatherings of Tibetans. Last year a Tibetan monk died after setting himself on fire in Yushu just weeks before the festival: since 2011 more than 140 Tibetans have protested against Chinese rule in the same desperate way. Yet Yushu’s festivals may simply be losing out to events elsewhere: visitors to the Tibetan autonomous region, which has several similar celebrations, increased fivefold from 2007 to 2015. + +China’s government argues that such festivals demonstrate the protection and development of Tibetan culture. They are certainly not mere propaganda aimed at outsiders: many townsfolk came to the Gesar festival and the mood was relaxed. On the second day security was looser and Tibetans pitched coloured tents and picnicked on the Batang grasslands south of the city. In the evening the police allowed a bonfire—open flames in a place where people set themselves alight in anger—and the crowd joined the traditional Tibetan dance around it. Even the policemen danced. + +In Tibetan parts of neighbouringSichuan province, where nearly a third of those who have burnt themselves are from, the picture is again less happy. At the same time as the horse festival in Yushu, buildings were being destroyed in Sichuan province at Larung Gar, one of the world’s centres of Tibetan Buddhist learning, according to campaign groups outside China, and thousands of monks and nuns were evicted. Chinese officials claim that work is being done to upgrade living conditions. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21703366-tibetan-areas-government-mixes-control-tolerance-and-policemen-danced/print + + + + + +Previous Articles Sections Next + + + +Middle East and Africa + + + + + +Egypt’s economy: State of denial + +The war in Syria: Kerry talks while Aleppo burns + +The roasting of the Middle East: Infertile Crescent + +South Africa: The Zuma effect + +Gabon: Trying to get past oil + + + + + +Articles Sections Next + +Egypt’s economy + +State of denial + +Egypt has squandered billions of dollars in aid. With more on the way, is it at last ready to reform? + +Aug 6th 2016 | CAIRO | From the print edition + + + +AFTER Abdel-Fattah al-Sisi, Egypt’s president, welcomed hundreds of foreign dignitaries to the seaside resort of Sharm el-Sheikh last year, he made them a simple pitch. The upheaval that followed the Arab spring in Egypt was over, said Mr Sisi, who had ousted his Islamist predecessor, and the country was ready for their investment. He promised stability and economic reforms. His guests, in turn, rewarded Egypt with cash, loans and new business. It was “a moment of opportunity”, said Christine Lagarde, the head of the IMF. + +That opportunity has been squandered. A team from the IMF is now back in Egypt negotiating a new package of loans thought to be worth $12 billion over three years. Mr Sisi desperately needs the cash. His government faces large budget and current-account deficits (almost 12% and 7% of GDP, respectively), as Egypt’s foreign reserves run perilously low. An overvalued currency, double-digit inflation and a jobless rate of 12% complete the dismal picture. Potential investors are staying away. + +Egypt’s government inspires little confidence. The new IMF package would be contingent on reforms that politicians have talked about for years, but failed to implement. Take a value-added tax, which would raise much-needed revenue. A proposal is now before parliament, but it has caused uproar owing to concerns over inflation, which has just hit 14%. Similar misgivings caused Mr Sisi to back away from a promise to end fuel subsidies, after trimming them in 2014. Parliament is holding up reform of Egypt’s bloated civil service, despite Mr Sisi’s pledge that nobody would be fired. + +In the face of such inertia, the World Bank has withheld a separate package of support. The African Development Bank may do the same. Even the Gulf states, which strongly support Mr Sisi and have given Egypt billions of dollars in aid, seem to be losing faith. The United Arab Emirates is believed to have pulled its advisers out of the country in dismay. The latest instalments of aid have been slow to arrive. + +Hoarding is haram + +The government’s fecklessness extends to Egypt’s most pressing problem: its overvalued currency. While the official exchange rate is 8.83 Egyptian pounds to the dollar, the black market rate is over a third higher. The demand for dollars has outpaced supply owing to steep drops in tourism and foreign investment, key sources of hard currency. So the government has tried to keep dollars in Egypt by, for example, limiting bank withdrawals. Al-Azhar, the country’s Muslim authority, has declared it a sin to hoard foreign currency. But these efforts have merely scared off potential investors and hobbled Egyptian importers. + +There is concern that a weaker pound would lead to even higher prices, as Egypt imports many staples, such as wheat. But the government ought to worry more about its broken subsidy schemes. Egypt is the world’s largest market for wheat, which is bought by the state and used to make heavily subsidised bread. The state buys some wheat at home at an outrageous mark up to encourage local farmers. This scheme drains public coffers and is horribly corrupt. Farmers mix foreign wheat with their own and sell it at jacked-up prices. Bureaucrats exaggerate the amount of wheat in government silos and pocket some of the subsidies. A smart-card system that is meant to track bread purchases has been hacked, allowing some bakers to load up on subsidised flour. + +Mr Sisi warns that “harsh economic measures” are coming. Tarek Amer, the governor of the central bank, admits that defending the pound was a “grave error”. The government seems likely to pass a number of reforms and even devalue the currency. But economic policy is seldom implemented properly. The government, for example, has backed off a plan to start paying Egyptian farmers the market rate (plus a small subsidy) for their wheat. Rather, Mr Sisi has trumpeted various mega-projects, such as expanding the Suez Canal, to pump up national pride—and his ego. But, they have done little to boost the economy. Revenue from the canal has actually fallen since the expansion was completed last August. + +A related project will create a special economic zone, supposedly with fewer regulations and lower taxes than the rest of Egypt, along the canal. The head of the zone, Ahmed Darwish, has insisted that “we are completely independent of the government decision-making process.” Still, few companies have signed up to join the zone—perhaps because Mr Darwish’s claim has already been undermined by the government’s decision to raise the corporate-income-tax rate, even in special economic zones, from 10% to 22.5%. Compare that with Dubai’s Jebel Ali port, where companies will pay no tax at all for 50 years. + + + +At least policymakers are thinking of ways around Egypt’s overbearing regulatory system. Mr Sisi uses the army for many of his projects, increasing its already large role in the economy. Ordinary firms, though, are strangled by red tape. Nothing moves without a bribe. Egypt comes a woeful 131st in the World Bank’s ease-of-doing-business ranking. An investor must get permits from 78 different official bodies to start a new project, according to the government. Its promise of a “one-stop shop” to replace them all, made 18 months ago, has so far come to naught. + +The bureaucracy is so predatory that many stay small to hide from it. An estimated 18m businesses are not monitored (or taxed) by the government. The informal economy is thought to be about two-thirds the size of the formal one. + +But informal enterprises find it hard to borrow money, and therefore hard to grow. This year the government mandated that 20% of bank loans go to small- and medium-sized firms, but it is not clear how informal ones will be treated (or whether there are enough promising small enterprises to absorb that much cash anyway). Banks may struggle to finance this plan and still keep lending to the government. + +Egypt is also failing to equip its young people with useful skills. More than 40% of them are unemployed. A university education is in effect free, but the quality is poor and universities make little effort to teach skills that local employers actually need. Egypt produces many doctors—but more of them end up in Saudi Arabia than in Egypt. Other graduates count on the public sector to provide work, but job openings are increasingly scarce. + +Jobless graduates have held dozens of protests in recent years. Adel Abdel Ghafar of the Brookings Doha Center, a think-tank, notes the “direct correlation between youth unemployment and the socioeconomic and political stability of a state”. As Egypt’s youth population continues to grow, some call the country a powder keg. + +But Egypt also has a history of muddling through. Hosni Mubarak, a previous strongman, also received help from the IMF and embraced its suggested reforms, leading to impressive growth in the 1990s and 2000s, even as the masses continued to struggle. Mr Sisi is hoping for more broad-based development. So far, however, there are few signs that he will do what it takes to achieve it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21703393-egypt-has-squandered-billions-dollars-aid-more-way-it/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The war in Syria + +Kerry talks while Aleppo burns + +A putative agreement between America and Russia offers little hope + +Aug 6th 2016 | From the print edition + + + +THE black smoke rising over eastern Aleppo is a mark of the desperation of its 300,000 besieged inhabitants. By setting old tyres on fire, they hope to conceal targets from Syrian government and Russian aircraft that are pounding them relentlessly. Food, water and medical supplies are running out; the few remaining hospitals are routinely attacked. Meanwhile, the Assad regime has opened “humanitarian corridors”. The aim is not to allow the passage of essential supplies, as the UN demands. Rather, it is to prepare the ground for a final assault on Syria’s biggest city by encouraging an exodus of its people. + +It is against this appalling backdrop that America’s secretary of state, John Kerry, is trying to put together a deal with Russia that will supposedly boost the air campaign against Islamic State (IS) and the other big local terrorist outfit, Jabhat al-Nusra (JAN). Details of the proposed deal leaked out in mid-July, when Mr Kerry said he hoped to get an agreement tied down by early August. It involves the setting up in next-door Jordan of a “joint implementation group” (JIG) that will share intelligence and co-ordinate American and Russian air strikes against IS and against JAN in “designated areas”. + +It aims also to curb the regime’s military air operations, particularly the bombing of civilians and attacks on the less extreme rebel groups that America supports. As a prelude to the establishment of the JIG, there would be a renewed commitment by all sides to revive the “cessation of hostilities” pact that was announced in February, but which has since frayed to irrelevance, and to resume the passage of UN-sponsored humanitarian aid to the most hard-pressed areas. + +Mr Kerry’s capacity for pulling rabbits from hats should not be underestimated. But it is hard to see how he can enter into such an agreement with Russia while the ferocious assault on the rebel-held areas of Aleppo continues. Given that Bashar al-Assad’s regime believes that controlling Aleppo is key to its survival, it is equally hard to imagine either it or its Russian and Iranian allies pulling back now. + +Michael O’Hanlon of the Brookings Institution, a think-tank, worries about sharing intelligence with the Russians. He sees it, like the stalled Geneva peace process, as a form of displacement activity in which the Obama administration “pretends to have a policy, but is really just buying time and running down the clock”. Andrew Tabler of the Washington Institute, another think-tank, fears that in its present form the deal might do more harm than good. He points out that it does nothing to limit the regime’s use of artillery, by far its most devastating weapon. + +It is not clear where the Americans would and would not work with the Russians against JAN. As one of the largest rebel militias, JAN intermingles with less extreme groups. Two weeks after the details of the plan emerged, JAN announced that it was ending its affiliation with al-Qaeda and renaming itself Jabhat Fateh al-Sham, in order to “protect the Syrian revolution”. + +The rebranding does not alter the group’s Salafi-jihadist ideology and indeed al-Qaeda’s leader, Ayman al-Zawahiri, appears to have given it his blessing. However, it does remove a major obstacle to the unification of Syria’s armed opposition (still excluding IS). As The Economist went to press, Jabhat Fateh al-Sham was fighting alongside other rebel groups in a bid to break the siege of Aleppo. America is unlikely to want to help the Russians do anything to hamper that. + +Anthony Cordesman of the Centre for Strategic and International Studies in Washington DC praises Mr Kerry for effort. But he says the agreement is flawed because “we have no leverage and we are negotiating with someone who is not a friend.” Mr Tabler says Russia knows what it wants—a national unity government led by Mr Assad—but America does not. “The White House,” he says, “is retreating faster than the other side can advance.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21703406-putative-agreement-between-america-and-russia-offers-little-hope-kerry-talks/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The roasting of the Middle East + +Infertile Crescent + +More than war, climate change is making the region hard to live in + +Aug 6th 2016 | BASRA | From the print edition + +It’s too darn hot + +“UNTIL the 1970s Basra’s climate was like southern Europe’s,” recalls Shukri al-Hassan, an ecology professor in the Iraqi port city. Basra, he remembers, had so many canals that Iraqis dubbed it the Venice of the Middle East. Its Shatt al-Arab river watered copious marshlands, and in the 1970s irrigated some 10m palm trees, whose dates were considered the world’s finest. But war, salty water seeping in from the sea because of dams, and oil exploration which has pushed farmers off their land, have taken their toll. Most of the wetlands and orchards are now desert. Iraq now averages a sand or dust-storm once every three days. Last month Basra’s temperature reached 53.9ºC (129°F), a record beaten, fractionally, only by Kuwait and California’s Death Valley—and the latter figure is disputed. + +Unlike other parts of the world where climate change has led to milder winters, in the Middle East it has intensified summer extremes, studies show. Daytime highs, notes an academic study published in the Netherlands in April, could rise by 7ºC by the end of the century. Anotherstudy (by the UN) predicted that the number of sandstorms in Iraq would increase from 120 to 300 a year. The UN’s Environmental Programme also estimates that the harsh climate claims 230,000 lives annually in west Asia (the Arabian Peninsula and the Fertile Crescent), making it a bigger killer than war. Things are so bad that even Jabhat al-Nusra, a terrorist group, is preaching the virtues of solar panels. + +The region also has fewer coping mechanisms than before. Population increase has reduced the water supply, leaving two-thirds of the countries in the Arabian Peninsula and Fertile Crescent without what the UN considers enough. Sana’a, the capital of Yemen, is set to run out of water in 2019 or perhaps earlier. Some people have air-conditioners, but power cuts—of up to 16 hours a day in southern Iraq—make them nearly useless. Baghdadis blister their fingers on door-knobs. + +And they are the lucky ones. The Middle East is home to 39% of the world’s refugees, more than any other region. Hundreds of thousands live in tent cities. “If the wind blows from the north, it brings the gas from Qurna field,” says a librarian in a village north of Basra. “If it blows from the south, it’s heavy with gas from Majnoon.” + +Much of the problem is man-made. Over-irrigation has dried up lakes and turned seas into dustbowls. The Dead Sea is shrinking by a metre a year. Oil has made much of the Gulf fantastically wealthy. But like a modern Midas touch, its atmospheric by-product threatens to choke it. Rising water levels could sink between 5% and 11% of Bahrain by the end of the century, according to projections. War and urbanisation have combined to chase rural people from the land. Desertification and sandstorms lift radioactive war detritus into the air. War stops people from taking counter-measures, such as planting trees. + +Richer states can create artificial environments to make life less sweaty. In Kuwait, which recorded highs above Basra’s this week, malls turn the air-conditioning so low that wags joke they offer one of the coolest summers on Earth. Land reclamation may outpace land loss from rising sea-levels. And each summer millions of Gulf citizens migrate north. But for most Arabs, such things lie far out of reach. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21703269-more-war-climate-change-making-region-hard-live-infertile/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +South Africa + +The Zuma effect + +The big cities vote for change + +Aug 6th 2016 | JOHANNESBURG | From the print edition + +Zuma bruised + +BLUSTERY winter weather settled over South Africa on August 3rd as voters handed the ruling African National Congress a sharply diminished share of the vote in local-government elections, the most competitive polls since the end of apartheid. As The Economist went to press, incomplete results showed that the ANC had slid from 63% in the 2011 local polls (it won 62% in the 2014 national election) to around 52%. The main opposition Democratic Alliance (DA) appeared on track to boost its support to above 30%, up from 24% in 2011 and 22% in 2014. For Mmusi Maimane, 36, who only last year became the first black leader of what is still viewed as a white party, these results are a vote of confidence. + +The populist Economic Freedom Fighters (EFF), under the young firebrand Julius Malema, looked likely to match the 6.5% of the vote they received in 2014, the first election the party contested. This will be a big disappointment for Mr Malema, who had hoped to triple the EFF’s tally by appealing to disgruntled young ANC supporters with promises of nationalising mines and seizing white-owned land. + +South African elections are impressively clean affairs by any standards. Nasty weather was the biggest problem of the day, according to the Independent Electoral Commission. Results from the country’s big battleground cities were still being tabulated, but the DA looked certain to win the Nelson Mandela Bay municipality, which includes Port Elizabeth. Tight races in Johannesburg and Tshwane (the metro area that includes Pretoria, the capital) point to the DA’s success in pushing back the ANC. Coalitions are likely to follow. The DA benefited from high turnout in the cities, where it campaigned hardest. This combined with slipping support for the ANC in townships and rural districts to boost the DA’s share of the vote. + +All of this is good news for South African democracy. Jacob Zuma, the unpopular president, has been dogged by corruption allegations and scandals for nearly his entire time in office. According to a recent Ipsos survey, 57% of South Africans believe the ANC has “lost its moral compass”. As the ANC counts its losses, Mr Zuma is likely to face mounting pressure to step down ahead of his party’s leadership conference next year. A particularly worrying trend is a rise in intra-ANC violence. This was especially the case in rural KwaZulu-Natal province, Mr Zuma’s heartland, where factional disputes raged over lucrative positions on candidate lists, and at least a dozen ANC members were killed. In June violent protests broke out in Tshwane after the ANC announced its mayoral candidate. + +Apart from a broad dislike of Mr Zuma’s leadership, for many voters the government’s shoddy provision of basic services was the decisive issue of this election. Protests over the lack of water and electricity have spiked in recent years. In a part of Limpopo province, where angry residents burned down two dozen schools in a recent dispute over municipal demarcation lines, many voters refused to cast a ballot, instead playing football in protest. The DA argues that where it governs, it governs well. It has demonstrated this in Cape Town. Now it may get the chance to take its claim to the heart of the country. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21703417-big-cities-vote-change-zuma-effect/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Gabon + +Trying to get past oil + +One African country’s struggle to diversify + +Aug 6th 2016 | LIBREVILLE | From the print edition + +Digging for diversity + +GABON, in west-central Africa, is among Africa’s least densely populated countries. Fly south from the capital, Libreville, in a helicopter and you will mostly see rainforest, stretching endlessly into the distance, interrupted only by rivers cutting through to the Atlantic Ocean. Yet suddenly, near a town called Mouila, the dense forest gives way to orderly rows of palms, separated by roads of red earth. A processing factory sits in the middle, its metal roof sticking out from the expanse of green. + +This is Africa’s newest palm-oil plantation. Built by Olam, a vast Singapore-based agricultural trading house, it should eventually cover 50,000 hectares (120,000 acres) and employ some 15,000 workers. It is the main evidence of President Ali Bongo Ondimba’s plan to reduce Gabon’s dependence on the other sort of oil—which in 2014 made up four-fifths of the country’s export revenues. Mr Bongo (pictured), who faces an election at the end of this month, seems determined to make his country diversify. Yet it is harder than he lets on. Gabon shows how oil can twist the fate of a nation—and how difficult moving away from the black stuff is. + +With just 1.8m people, Gabon is a minnow. But it is spacious—twice the size of England—and resource rich. Gross national income per head was around $9,000 in 2015, among the highest in Africa. Gabon has long punched above its weight in Francophone west Africa, largely thanks to Mr Bongo’s father Omar, who served as president from 1967 until his death in 2009. The elder Bongo had a gift for politics as outsized as his personality (among other foibles, he liked to show off his pet tiger to guests). He became close friends with François Mitterrand, France’s president in the 1980s, as well as mentor to a generation of politicians in neighbouring Congo-Brazzaville and Equatorial Guinea. + +This ensured stability, and made Gabon a perennial obsession of the French press. What it didn’t do, however, was create prosperity. When Bongo died, he left his country with a political system built mostly on sharing oil spoils among a fat class of fonctionnaires. Around a quarter of the population still live on less than $3 a day. The Bongos themselves live in spectacular fashion: the family is said to own 39 properties in France alone. Their assets are still under investigation by the French authorities. In four decades under the elder Bongo, little was built in Gabon bar a lot of grandiose offices and an extraordinarily expensive railway, running from Libreville to the Bongos’ hometown of Franceville. + +It is this mess that his son—one of 52 officially recognised children—inherited in 2009 and now promises to fix. Speaking to The Economist from the presidential palace in Mouila (one of many), he is careful to defend his father. “I found the country at peace,” he says of what he inherited. But he admits he has his work cut out. “Basically we’re a country based on the sales of raw materials,” he says. Now, he believes, Gabon needs manufacturing and agriculture. + +The Olam investment is the biggest evidence of this effort. The company is not only planting trees, it is also building a new port to ship out the palm oil. It is involved in opening a special economic zone on the outskirts of Libreville, which the president hopes to turn into a manufacturing cluster. Olam was persuaded to come to Gabon by the combination of fertile soil, political stability and a flexible government, says Gagan Gupta, the local boss. + +Yet Gabon remains a difficult place to do business for anyone who is not extracting oil (of either variety). At a Malaysian-owned factory in the special economic zone, huge piles of sawn wood are being turned into doors and tables. The idea, which originated with the president, is to use more Gabonese wood in the country. The export of logs has been banned, though that of sawn planks continues. But business is struggling. “We can’t make a profit,” laments Cheah You Wok, the factory’s manager. His boss says that he hopes that the government will introduce tariffs on imported furniture. + +The risk now is that growth goes into reverse as lower oil prices—and the need to pay salaries before an election—put a brake on infrastructure building. Only 20% of the government’s infrastructure plan has been implemented, says Sylvie Dossou, the World Bank representative in the country. Funding has been cut for almost everything. Almost the only projects that continue are related to the African Cup of Nations football tournament, which Gabon is hosting next year. Some 162 billion CFA Franc ($270m) of bills to government suppliers are in arrears. Yet Mr Bongo still proudly talks of giving civil servants a 30% pay rise. + +After the election binge, expect a hangover. By the end of the year Gabon is likely to need a bail-out, probably from the IMF. This will surely come with uncomfortable conditions. Another oil-rich state, Angola, asked for a bail-out in April, but changed its mind last month, probably because it would have required its national oil company, Sonangol, to be opened up to scrutiny. If Mr Bongo stays in power, which seems likely, he faces a turbulent 2017. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21703289-one-african-countrys-struggle-diversify-trying-get-past-oil/print + + + + + +Previous Articles Sections Next + + + +Europe + + + + + +Media freedom in Turkey: Sultanic verses + +Turks in Germany: Old faultlines + +Land transfers: Peak diplomacy + +Anti-Mafia: Dead dogs and dirty tricks + +Britain and Europe: The start of the break-up + +Charlemagne: Au revoir, l’Europe + +Charlemagne: Award + + + + + +Articles Sections Next + +Media freedom in Turkey + +Sultanic verses + +The Turkish government’s crackdown extends to journalists and poets + +Aug 6th 2016 | ISTANBUL | From the print edition + + + +THE past three weeks have seen a reversal of fortunes for Dogan Holding, Turkey’s largest media conglomerate. Last September, when a mob of supporters of the ruling Justice and Development (AK) party stormed the offices of Hurriyet, the group’s biggest newspaper, it was to protest at what they saw as hostile coverage of President Recep Tayyip Erdogan. But when a similar crowd returned on July 16th, in the dying hours of an attempted coup against Mr Erdogan’s government, it was with a wholly different purpose: to evict rebel troops that had taken over Dogan’s flagship news channel, CNN Turk. + +Along with all of Turkey’s mainstream media, CNN Turk had sided against the coup plotters. Shortly before being yanked off the air by the putschists, the channel broadcast Mr Erdogan’s plea, made using a FaceTime call, for Turks to fight back. At the cost of some 270 lives, they did. Today, the Dogan group, once reviled as a bastion of the political opposition by AK hardliners, is basking in the government’s favour. Its share price has climbed by 40%, while its journalists are lauded as heroes. “I think the media response to the coup was a lesson for Erdogan,” says Nevsin Mengu, one of CNN Turk’s most popular anchors, “because it showed him the need for a free press.” + +Yet there is little to suggest that Turkey’s leader has taken that lesson to heart. The purge he ordered after the coup, which has cost 60,000 civil servants their jobs and 10,000 soldiers their freedom, has now to spread to journalists. Last week, the government closed 131 media outlets linked to the Gulen community, or cemaat, a secretive Islamist movement. Arrest warrants were issued for 89 journalists on suspicion of links to the Gulenists. At least 17 have already been charged with membership of a terror group. + +According to Turkish officials, it was Gulen followers in the armed forces who masterminded the coup. The chief of the general staff, who was held hostage by the plotters, has testified that one of his captors offered to put him on the phone to the cemaat’s Pennsylvania-based leader, Fethullah Gulen. Other evidence suggests that the conspiracy involved a wider alliance of factions. Official and popular outrage, however, whipped up by new footage of the coup-plotters’ violence against civilians, has focused on the cemaat. In one poll 64% of Turks hold the group responsible. Both Mr Erdogan and the leader of the main opposition party have called on America to extradite Mr Gulen. (Mr Gulen himself has denied any involvement.) + +International watchdogs have condemned the crackdown on the press, but the outcry among Turks, including journalists, has been muted. Partly this is because little sympathy is left for the cemaat in Turkey. Secularists resent the group’s followers in the police and judiciary for staging mass trials from 2008 to 2013 that sent hundreds of army officers to prison on trumped-up coup charges (with the blessing of Mr Erdogan, who was then allied to the Gulenists). Kurds blame them for locking up thousands of activists. Journalists dislike the cemaat’s media outlets for applauding the trials and smearing those who exposed the group’s wrongdoings. “This was not the free press, it was a propaganda machine,” says Ms Mengu, referring to the group’s biggest newspaper, Zaman, whose employees have been detained en masse since the coup (although she does not think editorial bias justifies the arrests). + +Poets are dangerous, too + +Now, however, the government is starting to target people with only tenuous links to the cemaat. Thousands of academics have been suspended. An octogenarian poet and a prominent human-rights activist were detained for days, seemingly guilty of little more than penning a column in a Gulen newspaper (the poet was released because of poor health). Other critics, including the group’s opponents, are also being rounded up. “I was in the streets protesting against those people,” says Bulent Mumay, a journalist (pictured above), referring to the Gulenists. “And now the government accuses me of being one of them. That is bullshit.” Mr Mumay was detained on July 26th and released three days later. + +Mr Erdogan has not been entirely consistent in his purge. On July 29th he announced that he would withdraw all lawsuits, said to number around 2,000, against people accused of insulting him. (Mr Erdogan did not, however, withdraw charges against a German comedian who offended him by joking that he had sex with a goat, among other things.) + +But in many ways the actions of the Turkish government, newly equipped with emergency powers, are predictable. Despite lingering questions about the key suspects and their motives, most media outlets have lapped up the government’s version. Journalists at mainstream TV channels admit that they have to steer clear of provocative subjects, such as claims that the alleged coup plotters were tortured, which the government denies. + +Big news organisations find it particularly tricky to be critical of the government, says Erol Onderoglu of Reporters Without Borders, a Paris-based lobby. Dissent, whether in the press or in public life, was already difficult in Mr Erdogan’s Turkey. The crackdown, accompanied by a surge of jingoism, has made it even harder. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21703375-turkish-governments-crackdown-extends-journalists-and-poets-sultanic-verses/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Turks in Germany + +Old faultlines + +As tensions rise in Turkey, they spill over into Germany + +Aug 6th 2016 | BERLIN | From the print edition + + + +THE arm of Turkey’s president, Recep Tayyip Erdogan, “must not reach into Germany”, says Cem Ozdemir, one of 11 members of Germany’s parliament with Turkish roots. Yet Turkish politics have erupted onto the streets of Germany. On July 31st almost 40,000 people gathered at a pro-Erdogan rally in Cologne organised by an international lobby for Mr Erdogan’s Justice and Development party. The demonstration hinted at the scale of support for Mr Erdogan—and the difficulty German politicians will face when speaking out against him. + +About 3m people of Turkish descent live in Germany. Half of them retain Turkish citizenship, making Germany in effect Turkey’s fourth-largest electoral district. Of the roughly 570,000 German Turks who voted in 2015, 60% chose Mr Erdogan’s party, giving him a higher share in Germany than at home. Some 2,000 of the country’s 3,000 mosques are Turkish, and 900 of those are financed by DITIB, an arm of the Turkish government, which sends the imams from Turkey. Other political groups are present too, including the movement founded by the exiled Islamist cleric Fethullah Gulen, whom Mr Erdogan blames for the attempted coup in Turkey on July 15th. (Mr Gulen denies this.) + +Relations between the two countries have been deteriorating for months. Since the German parliament voted in June to call the Turkish massacre of Armenians a century ago a “genocide”, Mr Erdogan has given Germany’s ambassador in Ankara the cold shoulder. He has harassed members of the Bundestag with Turkish roots such as Mr Ozdemir. And he has barred all German parliamentarians from visiting their troops stationed in Turkey (as part of a NATO force fighting Islamic State). This may lead to Germany withdrawing. + +But since the coup attempt three weeks ago things have got much worse. Mr Erdogan’s German supporters have become more vocal. Several Gulen supporters have had death threats. The Turkish government is demanding the extradition of many of them. Winfried Kretschmann, premier of Baden-Württemberg in the south-west, says the Turkish government has asked his state to close schools considered to have ties to the Gulen movement, requests that he thinks outrageous. + +This could not come at a trickier time for Angela Merkel, Germany’s chancellor. In March she negotiated a deal whereby Turkey promised to stop refugees from crossing the Aegean Sea in return for money, visa-free travel for Turks in the European Union and new talks about the (very remote) possibility of Turkey joining the EU. But progress has slowed as Turkey still does not meet all of the conditions for visa-free travel. Turkish politicians are threatening to scupper the whole deal. + +Many German politicians now doubt the loyalty of their country’s largest minority. “Citizens have to pledge allegiance to the state in which they live,” demands Volker Kauder, the majority whip in the Bundestag. But many Turks blame German politics. For decades after Turkey started sending “guest workers” to man German factories, politicians maintained the fiction that these Turks would one day go home, doing nothing to integrate them. Their divided loyalties today are the blowback of that bad policy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21703296-tensions-rise-turkey-they-spill-over-germany-old-faultlines/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Land transfers + +Peak diplomacy + +A towering birthday gift from Norway to Finland is an excuse for bad puns + +Aug 6th 2016 | From the print edition + +The tipping point + +ERNA SOLBERG, Norway’s prime minister, piqued the interest of the press worldwide last week. The momentous event happened when she suggested that her government might cede some territory as a birthday gift to Finland, which next year marks a century since it declared independence from Russia. + +The land in question is some 15,000 square metres of Halditsohkka, a minor peak of the Halti mountain. Though Halti is not particularly high—it is more than 500 metres shorter than Norway’s 200th-highest peak—its lower spur would instantly become the highest point in Finland. When the border was agreed by treaty in 1751, a straight line was cut along the side of the range, depriving the Finns of the crest. The transfer would be a high point in Nordic relations. + +The idea started as a suggestion from a retired Norwegian government surveyor, who called the border “illogical”. Many Finns thought he had a point. A Facebook group was set up and things snowballed from there, reaching the zenith of Norway’s government. Asked about it by the country’s public broadcaster, Ms Solberg said her government would “look into the matter”. In practical terms it would make no difference. Though Norway is not in the European Union, both countries are members of the Schengen area, which guarantees free movement across borders. The adjustment would be so minor as to be invisible on most maps. + +Both sides could benefit. Norway has already had mountains of favourable press coverage. It has also generated goodwill among its neighbours: and, as any accountant would agree, there is an economic value to goodwill. Meanwhile, flat Finland acquires a new entry in its record books. Eurocrats in Brussels may also be delighted. Having just lost Britain, any expansion of EU territory, no matter how tiny, will be welcome. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21703378-towering-birthday-gift-norway-finland-excuse-bad-puns-peak-diplomacy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Anti-Mafia + +Dead dogs and dirty tricks + +Some of those battling the mob are less than squeaky clean themselves + +Aug 6th 2016 | ROME | From the print edition + + + +FOR decades the police have tirelessly attempted to crush organised crime in southern Italy. In 1963 Italy’s parliament acquired a dedicated, all-party anti-Mafia commission. But the fight against Italy’s four big Mafia groups also has a vast unofficial component: of businesspeople publicly refusing to pay for protection, investigative journalists and, above all, civil-society movements. The management of the mobsters’ seized wealth is a huge enterprise: in the 12 months to August 2015, €678m ($793m) was taken from them. + +Over the past year, however, a string of scandals has blurred the line between the Mafia and their opponents. Indeed, the parliamentary anti-Mafia commission’s latest investigation, which began taking evidence in December, is aimed at the anti-Mafia itself, especially the unofficial parts of it, such as civil-society groups. Rosy Bindi, the commission’s president, says she aims to cut through the anti-Mafia’s “opaqueness and ambiguities”. + +In the most blatant instances, standing up to the mobsters became its own route to personal enrichment. A woman who was a symbol of the fight against the Calabrian ‘Ndrangheta was found guilty of pocketing funds she received for a women’s support group. Sometimes, individuals celebrated for their anti-Mafia stance were found to have adopted the criminals’ methods, such as the case of a leading Sicilian businessman convicted last year of extorting a €100,000 bribe. In other cases, running an anti-Mafia group was a source of power in a society infused with a culture of favours. + +The latest scandal concerns the campaigning head of a TV station in Sicily, Pino Maniaci. When in 2014 Mr Maniaci’s pet dogs were found hanging dead near his workplace Matteo Renzi, the prime minister, called him to express admiration for his courage. But in April it emerged that Mr Maniaci is under investigation, suspected of extortion. Prosecutors allege he obtained cash and favours by threatening to use his media clout against local mayors. Among the alleged beneficiaries was his married lover. The dogs, say the investigators, were killed not by Cosa Nostra (the Sicilian Mafia) but by her husband. + +Mr Maniaci, who has not been indicted, denies wrongdoing. He claims the allegations are in retaliation for his station’s role in exposing potentially the most serious case, involving a judge, Silvana Saguto. Last year Ms Saguto, who presided over the court in Palermo which rules on the administration of property confiscated from Cosa Nostra, was suspended after being placed under investigation on suspicion of corruption. (Ms Saguto denies the accusation and has yet to be indicted.) + +In May Antonino Di Matteo, a deputy chief prosecutor of Palermo, stressed that the cases which had come to light were isolated ones. He expressed concern that the entire anti-Mafia movement was being sullied. But ignoring the shortcomings of the anti-Mafia will only make battling the gangsters and their friends even harder. The godfathers are no doubt delighted by the recent scandals—and the attention they deflect from their own dirty business. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21703389-some-those-battling-mob-are-less-squeaky-clean-themselves-dead-dogs-and-dirty-tricks/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Britain and Europe + +The start of the break-up + +What do other countries make of Brexit? + +Aug 6th 2016 | From the print edition + + + +MUCH of the European Union is still smarting from Britain’s vote to leave the club on June 23rd, according to data released on August 4th by Ipsos Mori, a pollster. In the nine member states surveyed, 55% think an exit vote was a bad choice for Britain, while 58% think it was also bad for the EU as a whole. Outside the Union feelings are slightly more sanguine. Only 35% of those polled in seven countries with big economies think Britain made a mistake. + +Of all the countries surveyed, Russia is by far the happiest. Only 10% believe it was the wrong decision for Britain. By contrast, the Swedes are the most overwrought: 68% think it will be bad for Europe. These two extreme reactions may well be connected. Swedes fear Brexit could lead to the dissolution of the EU. This would leave them even more exposed to the whims of the Kremlin, which routinely makes aggressive gestures in their direction, such as sending submarines into Swedish waters. By contrast Russia is delighted by the prospect of a weaker Europe. + +Another reason the Swedes may be anguished is trade. Britain is their fourth-biggest trading partner. As with the other countries surveyed, that factor seems to sway respondents’ feelings about Brexit. Broadly speaking, the more a country exports to Britain, the more upset are its citizens by the split (see chart). + +In almost every country surveyed the better educated are more likely to think Brexit was unwise. On average 42% of people who did not finish secondary school thought it was the wrong choice, compared with 58% of those who had been to university. Moving up the income ladder also tends to lower the likelihood of backing Brexit. + + + +INTERACTIVE: Integration within the European Union + +Slightly more Europeans want the EU to be tough with Britain (28%) than those who want a softer approach (26%). France is harshest: 39% of its people want Britain to be clobbered. Britons, unsurprisingly, are the most eager for generous terms. + +Britons diverge from continental thinking in another regard. They are more likely than those in any other EU state to believe their departure will spur others to leave. Fully 64% of them also reckon that Brexit will leave the EU economy weaker, the joint-highest estimate among all the countries asked. Breaking up a relationship is never easy, but when one side thinks it is God’s gift to political unions it becomes tougher still. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21703390-what-do-other-countries-make-brexit-start-break-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Au revoir, l’Europe + +What if France voted to leave the European Union? + +Aug 6th 2016 | From the print edition + + + +BARELY a year into his second presidency, Nicolas Sarkozy looked out from the steps of the Élysée and admitted defeat. The referendum had been lost. The European Union flag still fluttering behind him, the president said that he regretted that France, a founding member of the EU, would now have to leave it. Pollsters were flabbergasted. Mr Sarkozy put on a brave face. “Eternal France”, he said, trying to sound like de Gaulle, had endured far worse in its long and glorious history. Its best days lay ahead. And non, the president had no intention of resigning. + +His optimism was unusual. Mr Sarkozy had won another spell in the Élysée by trafficking in fear (borrowing several ideas from Donald Trump’s almost-successful campaign for the White House). In the primary for France’s centre-right Republicans, held in November 2016, Mr Sarkozy had focused relentlessly on the country’s année de cauchemars (“year of nightmares”), blaming weak leaders and bumbling Eurocrats for failing to prevent a bloody series of terrorist attacks. In this febrile atmosphere Mr Sarkozy’s rival, the genteel Alain Juppé, didn’t stand a chance. + +The same arguments carried Mr Sarkozy through the first round of the following year’s presidential election. But in the run-off pressure from a surging Marine Le Pen, who campaigned openly for France to follow Britain out of the EU, forced him to beat the nationalist drum even harder. A plot to bomb the railway station in Lille, organised over the Belgian border in Namur, was foiled just in time, but added to the sense that the EU’s commitment to open borders was endangering French lives. Eventually Mr Sarkozy pledged a referendum on France’s EU membership within a year of taking office. (Inevitably, the plebiscite was dubbed “Frexit”.) It won him the presidency. + +Ms Le Pen’s National Front made the running during the referendum campaign, tapping old French neuroses about cheap eastern European workers and newer ones about Muslims. Mr Sarkozy argued vigorously for France to stay in the EU. But voters found it hard to swallow his bromides about European co-operation after years of hearing him rail against it. The opposition Socialists were in disarray. A gloomy (and, said some, racially charged) piece in Le Figaro by Michel Houellebecq, an eccentric author, accusing Europe of “auto-crucifixion”, seemed to capture the mood of malaise. In the end it was not even close: the French voted to leave by 55%-45%. + +The loss liberated Mr Sarkozy to indulge the grittier side of his politics. He revived his old idea of shutting the border with Italy, across which refugees from Libya’s civil war were streaming. The revelation that a refugee who entered Belgium in the wave of 2015 had had a bit-part in the Lille plot allowed the president to accuse Angela Merkel, Germany’s chancellor, of having endangered European security by opening her country’s borders. Mrs Merkel was not amused; not least because the ringleader of the foiled attack was not a refugee or even an immigrant, but a French-Algerian child of the Paris banlieue. + +The euro had played little part in the referendum campaign. Indeed, the hastily drafted referendum text did not mention the single currency at all. So the finest legal minds in Brussels were put to work to find a way to keep France inside the euro even after it left the EU. That didn’t keep markets from swooning. France was, after all, the second-largest economy in the euro zone. The French elite believed more passionately in the EU than they did in God. Without Paris to propel it along, what hope was there for the European project? Bond yields in Greece, Portugal and Italy soared. Mario Draghi, the head of the European Central Bank, sought vainly to calm investors’ nerves. + +After a summit of the 26 other members in Sofia, Mrs Merkel declared gamely that the EU would survive, because “we are always stronger together than apart”. Her domestic popularity, which had been waning after her fourth election victory, rose as quickly as the Bunds into which frightened investors had poured their money. But Mrs Merkel acknowledged that a “momentous” change to the EU treaty was needed. (Merkologists confirmed that this was the chancellor’s first known use of the word.) + +Moins d’Europe + +It didn’t take long for the gears to spin in Brussels. Jean-Claude Juncker, the hapless president of the European Commission, jumped before he was pushed; his appeal to French voters not to kill “our beautiful Europe” was ridiculed. A leaked paper from Wolfgang Schäuble’s finance ministry in Germany became the template for a radically stripped-down commission, proposing the removal of its competition and fiscal-scrutiny powers. At an emergency summit Mr Juncker’s rapidly shrinking job was handed to Donald Tusk, who chaired the summits of EU leaders. + +But events were moving quickly. The unbowed Ms Le Pen and Nigel Farage, a British Eurosceptic, toured Europe stirring up nationalists at vast “Patriotic spring” rallies. Pressure for referendums was growing in the Netherlands and Denmark. In Spain and Portugal and most of eastern Europe there was little appetite for destruction but scarce will to stem the bleeding. Left-wing parties began to lose faith in the EU; one oddball outfit in Romania even campaigned for “socialism in one country”. From free movement to fishing quotas, governments began openly defying EU law, eating away at the commission’s authority. + +Perhaps most worrying was the decay in the EU’s influence abroad. With the prospect of membership now all but dead, Serbia’s voters turned to the pro-Russia Radicals. Bosnia began to fray. Ukraine, despite the best efforts of a despairing Mr Tusk, drifted further from the EU into corruption and misrule. Putting a brave face on things, Mr Sarkozy visited Britain to sign a naval co-operation deal. But his trip was cut short when he was called home to deal with an emergency. An explosion had taken place near Nantes, and it did not appear to be an accident. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21703373-what-if-france-voted-leave-european-union-au-revoir-leurope/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Award + +Aug 6th 2016 | From the print edition + +Annabelle Chapman, the Warsaw correspondent for The Economist, has won the inaugural Timothy Garton Ash prize for European writing. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21703383-award/print + + + + + +Previous Articles Sections Next + + + +Britain + + + + + +Nuclear power: When the facts change... + +Chinese investment: Not so gung-ho + +The Bank of England: Treating the hangover + +The UK Independence Party: Kippers flounder + +Archaeology: The last crusade + +Bagehot: The sage of Birmingham + + + + + +Articles Sections Next + +Nuclear power + +When the facts change... + +Hinkley Point would tie Britain into an energy system that is already out of date + +Aug 6th 2016 | From the print edition + + + +LESS than three years ago the British government struck a deal with EDF, a French state-owned utility, to subsidise the first new nuclear power station built in Britain since 1995: Hinkley Point C on the Somerset coast. The agreement was hailed by David Cameron, the then-prime minister, as “brilliant news”. But a lot has changed since then—and not just the incumbent at 10 Downing Street. + +On July 28th, hours after EDF’s board narrowly endorsed a decision to go ahead with the £18 billion ($24 billion) Hinkley Point investment, the new government of Theresa May unexpectedly slammed the brakes on, launching a review of the project that it says it will finish by the autumn. It is understood to want to probe a deal with China General Nuclear Power, a Chinese state behemoth, which had offered to stump up one-third of the price tag in exchange for permission to build a nuclear-power station of its own at Bradwell, in Essex. The delay is the clearest sign that Mrs May is rethinking the open-door industrial policies of her predecessor (see article). + +Yet analysts say there is more to the delay than mere Sinophobia. Hinkley is “big and based on last-century technology, which is not what the UK’s power system needs for the future,” says Michael Grubb of University College London. A review of the assumptions prevailing when the government struck the deal reveals how flimsy the economic rationale was. In 2012 Britain’s energy boffins predicted that for the foreseeable future the price of non-nuclear fuels, such as natural gas, would be more than double where they are today. As a result, they estimated that wholesale electricity prices—the basis for determining the level of subsidy to EDF—would remain above £70 per megawatt hour. They are currently below £40. Last month the National Audit Office, a spending watchdog, said that forecasting error alone had almost quintupled the implied value of the subsidy, from £6 billion to almost £30 billion over 35 years. + +At the time, the civil servants reckoned that by 2025, when Hinkley Point is due to open, the cost of producing electricity from a nuclear-power station would be lower than from a gas-fired one—and much lower than from wind farms and solar-power plants. They have since reversed those views (see chart). Since Hinkley became a serious proposal less than a decade ago, the cost of nuclear power has increased, that of renewables has fallen and the price of battery storage—which could one day disrupt the entire power system—has plummeted. What is more, EDF’s nuclear technology has failed to get off the ground in the two projects in Finland and France that have sought to use it. “When so much has changed, it would have been inappropriate not to pause,” says Professor Grubb. + + + +Hinkley’s supporters counter that it would help to plug a looming gap in the country’s energy supply. Over the next 15 years, Britain plans to shut down its coal-fired power stations and decommission all but one of its ageing nuclear plants, losing 23 gigawatts (GW) of power-generating capacity. Hinkley Point C, with a capacity of 3.2GW, is intended to ensure there is enough clean energy to offset that, by kickstarting a broader revival of nuclear power in the country. It would also strengthen energy security, reducing reliance on Russian gas. And its power would be clean: without it, supporters say, Britain would fail to meet its obligation under the 2008 Climate Change Act to reduce greenhouse gases to 80% below their 1990 level by 2050. + +But these arguments fail to account for how quickly the energy landscape is changing. First, as their costs continue to drop, renewables are becoming a bigger part of the energy mix. They currently account for about one-quarter of Britain’s power output. But renewables are intermittent, generating little power on days that are calm or overcast. So they must be complemented by alternative sources of energy, which add to the total cost. Big power stations such as Hinkley Point cannot fill that role: nuclear power is hard to flex up and down. Combined-cycle gas turbines (CCGTs) are cheaper and more nimble. As a backup to renewables, they can enable Britain to “muddle along” at least for another 20 years, says Deepa Venkateswaran of Bernstein Research, a firm of analysts. That would buy time to assess the progress of other clean technologies, such as battery storage and carbon capture. + +Smaller businesses are also jostling to step into the breach, offering standby power when shortages occur. One such firm, UK Power Reserve, uses small gas-fired generators that can be switched on and off quickly. It calls itself a “scalpel” compared with a CCGT “sledgehammer”. Another, Upside Energy, proposes selling to the grid surplus power stored in battery systems that back up everything from office computers to traffic lights. Others enable companies to shift their power consumption to times of lower demand, cutting their bills. Such options may not provide the bedrock of power or thousands of jobs that EDF promises at Hinkley Point, and may require more innovative policymaking. But in terms of value for money, they could beat it hands down. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21703396-hinkley-point-would-tie-britain-energy-system-already-out-date-when-facts/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Chinese investment + +Not so gung-ho + +Relations may cool, but the flow of yuan into Britain is unlikely to dry up + +Aug 6th 2016 | From the print edition + + + +AFTER spending a century trying to prise open the Chinese market in Victorian times, European countries are now seeing the flow reversed, as a tide of Chinese money (if not yet gunboats) goes west. Some are cautious about allowing Chinese investment in sensitive areas of the economy. But last year, to the surprise of many, Britain’s government launched a new initiative of economic co-operation with China that the two sides said would bring forth a “golden era” in bilateral relations. + +Britain became one of the first Western countries to sign up for the new, China-led Asian Infrastructure Investment Bank, to America’s annoyance. George Osborne, then chancellor of the exchequer, visited Beijing, to make clear that cash-strapped Britain was open for infrastructure investment. He launched the £12 billion ($16 billion) procurement process for HS2, a railway between London and the north of England, in the Chinese city of Chengdu. + +Then came a double shock. First the vote on June 23rd to leave the European Union. Then on July 28th the surprise decision by the new prime minister, Theresa May, to delay approval of a nuclear power plant at Hinkley Point in Somerset, due to be part-funded by Chinese investment. If the review cancels the project, the golden era could be over before it has begun, says Kerry Brown of King’s College London. + +Since 2000 China has poured more direct investment into Britain than it has into any other EU country (see map). The Chinese are keen to prove themselves as solid partners in Western infrastructure projects, and hope, after Hinkley, to design and build an entire nuclear plant in Essex. But critics felt the sudden British embrace of China was too gung-ho. The same sceptics had, for security reasons, already warned about a decision to allow Huawei, a Chinese firm, to supply equipment for Britain’s telecoms infrastructure. Many feared getting too close to China tied Britain’s hands diplomatically. + +Mrs May’s delay on Hinkley has clearly annoyed China’s leaders. In an editorial Xinhua, the official news agency, denied that China would put any “back doors” into the project, saying that ditching it would “stain” Britain’s credibility as an open economy and “might deter possible investors from China” in the future. + +Xinhua also pointed indirectly to a sensitive issue about the British delay: Brexiteers had promoted a vision of Britain outside the EU with closer ties to emerging markets like China. The new government has begun to explore what type of trade deal it could strike with the Chinese, but that process could be more difficult if the nuclear project is blocked. “For a kingdom striving to pull itself out of the Brexit aftermath, openness is the key way out,” warned Xinhua. The delay threatens the “Northern Powerhouse” plan to boost the economies of northern English cities, for which Chinese investment was considered crucial. Lord (Jim) O’Neill, a key proponent of the Powerhouse, is said to be considering whether to resign as commercial secretary to the Treasury. + +A potential bust-up with China comes at a bad time for British business. For many years, British firms trailed German, French and American exporters in the Chinese market. Now, though, with tens of millions of middle-class Chinese looking for better health care, insurance and financial services—areas in which Britain excels—“This should be Britain’s time,” says David Martin of the China-Britain Business Council, a lobby group. London this year became the largest clearing centre for the yuan outside greater China. + +“It is going to need some skilful diplomacy to maintain this relationship,” admits Mr Martin. But he still thinks the pessimism is overblown. Chinese leaders last year launched an initiative called “Made in China 2025”, to deal with its declining competitive advantage in manufacturing by helping companies make better-quality products. The scheme is a chance for British firms to supply high-tech equipment, design and consulting. + +British bankers, oilmen and consultants are also working with Chinese companies in third countries on multi-billion dollar projects as part of China’s “One Belt, One Road” initiative. The scheme aims to revive the ancient silk roads, connecting China with its neighbours and beyond, through investment. Much of this will be unaffected by Brexit or Hinkley. “The things the UK was good at on June 22nd [the day before the referendum], it was still good at on June 24th,” says Mr Martin. + +Though some state-owned Chinese companies may think twice, private firms are likely to continue looking for growth in the West. China will triple its overseas assets from $6.4 trillion to almost $20 trillion by 2020, says the Rhodium Group, a consultancy. “China is eager to expand its presence in OECD countries such as Britain,” says Rhodium’s Thilo Hanemann. Attitudes across Europe are changing, he admits: in Germany, for example, some politicians opposed the purchase of Kuka, a robotics firm, by Midea, a big Chinese appliance manufacturer. But for every sensitive deal that draws opposition, he says, there may be ten that go through. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21703401-relations-may-cool-flow-yuan-britain-unlikely-dry-up-not-so-gung-ho/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Bank of England + +Treating the hangover + +The first interest-rate move in seven years is a Brexit-induced cut + +Aug 6th 2016 | From the print edition + + + +THE Bank of England had not changed base rates in seven years, but when it finally moved, it did so with a bang. In response to the low growth it expects in the wake of Brexit, it cut rates by a quarter point, to 0.25%, expanded its quantitative easing scheme and introduced a new funding scheme for banks. The move came on August 4th—three prime ministers, two disappointing European football championships and one referendum since the last wiggle in the rate. + +The cut, when it finally came, was fully expected by markets and indeed looked overdue. In the days immediately after the Brexit vote, Mark Carney, the governor of the bank, hinted that the MPC would be ready to respond aggressively to the presumed economic blowback. Yet at its July meeting the MPC held fast while awaiting more data. The news since has been almost uniformly bad. Manufacturing, service-sector and construction activity all shrank sharply in July, the latter two at the fastest pace since 2009. Measures of economic confidence have also taken a tumble, and surveys of business reveal a broad pessimism across firms as orders from abroad dry up. The British economy seems destined to suffer through at least a mild recession. + +In responding to the danger, the bank opted to do more than cut rates. It will also restart quantitative easing (printing money to buy bonds). The MPC pledged to buy £60 billion ($80 billion) in government bonds and up to £10 billion in corporate bonds over the next 18 months. That is on top of the £375 billion of assets already purchased. Both measures are meant to keep credit taps open and provide a lifeline to firms; analysts expect bank lending to companies to contract in coming months. The new funding scheme is designed to help banks and building societies which might otherwise struggle to cut their lending rates in line with base rates. + + + +Yet having warned before the referendum that monetary policy could only do so much to limit the damage from Brexit, Mr Carney will be hoping for co-operation from the government. Interest rates are already very low: a small business can borrow for 3.5% a year, for instance, down from 7% when the financial crisis hit. A bold new programme of public investment spending might do more to shore up both business confidence and demand than central-bank bond-buying. Unfortunately, Philip Hammond, the chancellor, seems to be in no rush: the government’s spending plans are not expected to change until October. A recession might be under way before fiscal stimulus begins working its way through the economy. + +Were this a typical recession, Britain’s best hope might be a rise in exports to the continent. The interest-rate cut should keep the downward pressure on sterling, and the European recovery continues to plod along. Yet European firms will be reluctant to spend more money in Britain until the future of its relationship with the EU is clearer. For now, Britons must sleep in the bed Leave voters have made—and hope the Remain campaign’s economic warnings prove excessively pessimistic. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21703434-first-interest-rate-move-seven-years-brexit-induced-cut-treating-hangover/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The UK Independence Party + +Kippers flounder + +A farcical leadership contest prompts questions about the party’s future + +Aug 6th 2016 | From the print edition + +Woolfe: huffed, puffed and blew it + +THE past couple of months have hardly been an advertisement for the competence of British politicians. Yet few blunders have been as avoidable as that made by Steven Woolfe, an MEP for the UK Independence Party (UKIP), who on July 31st submitted his application for the party leadership 17 minutes late. He blamed a malfunctioning website for failing to accept his papers (others pointed out that he might have had more luck had he not waited until 25 minutes before the midday deadline to apply). Mr Woolfe had spoken of the need to “professionalise” the party. + +On August 3rd UKIP’s governing body ruled that he would not be allowed to stand in the contest. Mr Woolfe had been the front-runner; his exclusion leaves a field of six, and many possible paths for the insurgent party. + +After the Brexit vote, which it was instrumental in helping to win, UKIP should be on a roll. Instead, it has reverted to its favourite pastime of infighting. One faction, which includes the outgoing leader, Nigel Farage, argues that the party should focus on winning seats in northern England and Wales by appealing to disaffected, working-class Labour voters. Mr Woolfe, a mixed-race former barrister who grew up in a tough part of Manchester, had seemed perfect for the job, combining a hard line on immigration with talk of improving social mobility. His supporters may now shift to Diane James, the party’s deputy chair, who has stronger support in the south. + +Another camp wants to make the party more emollient in the hope of appealing to moderate voters. It includes Douglas Carswell, the party’s sole MP, who criticised the “angry nativism” of some Brexiteers during the referendum. This group seems to have united behind Lisa Duffy, a local councillor from Cambridgeshire. Yet for all the talk of contrasting visions for the party, the split is really about personal differences, says Matthew Goodwin, a UKIP expert at Kent University. Indeed, Ms Duffy, the supposed moderate candidate, recently said that she supported a “total ban” on Muslim state schools. + +What now? First, Mr Farage and his supporters will seek to change how UKIP works. In a recent article for Breitbart, a right-wing news website, Mr Farage described the party’s high command as “total amateurs who come to London once a month with sandwiches in their rucksacks, to attend [party] meetings that normally last seven hours”. He and others have been considering adopting a decentralised model in which party members have more say—similar to that of Italy’s populist Five Star Movement—for the past year or so, says Mr Goodwin. It is likely they will try to push ahead with such plans now. + +If that fails, a split could be on the cards. One former aide to Mr Farage, writing on Facebook the night before Mr Woolfe’s exclusion, vowed to “declare full-scale war on UKIP” if Mr Woolfe was blocked from running. Arron Banks, a prominent donor, tweeted that Mr Woolfe’s exclusion would be “the final straw”. Some have suggested that a new party could be created from the remains of the Leave.EU campaign, which Mr Banks founded and to which he gave £6m ($8m) during the referendum. + +Despite its achievements, which include winning 12.6% of the vote in last year’s general election, UKIP has never had much institutional ballast. During the 2010 election campaign its then-leader, Lord Pearson, admitted when quizzed on the party’s manifesto: “I haven’t remembered it all in detail.” If the popular Mr Farage were to leave UKIP, many of its members might follow suit. Yet he and his supporters will surely be loth to abandon a brand they have spent years building. The squabbling has only just begun. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21703361-farcical-leadership-contest-prompts-questions-about-partys-future-kippers-flounder/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Archaeology + +The last crusade + +Lighter planning laws and a slowdown in building could mean that fewer treasures are discovered + +Aug 6th 2016 | From the print edition + +Where there’s muck there’s bronze + +AMONG the glories that archaeologists have unearthed at Must Farm, or “Britain’s Pompeii”, as some in the profession giddily dub it, is the first set of stacked bowls from the Bronze Age. The charred earthenware, excavated from the Cambridgeshire fenland, looks unremarkable, but the manner of its storage reveals new things about the past. Archaeologists have inferred that, even 3,000 years before Ikea, Britons could afford to own more pots than they really needed. Indeed, Must Farm shows that these Britons had more of almost everything—textiles, weapons, jewellery imported from the Mediterranean—than previous finds had indicated. + +As digs like this reveal, Britain knows less about its own history than textbooks suggest. Even those written 30 years ago on prehistory and the Roman era are “completely out of date”, says Mike Heyworth of the Council for British Archaeology, an educational charity. Such gaps in understanding mean there is no shortage of archaeology enthusiasts: each year 200,000 of them volunteer to crawl around in the mud on their hands and knees, looking for treasure. But the foundations of the commercial archaeology industry, which employs most of Britain’s 5,500 professional archaeologists, look shakier. + +Much of Britain’s archaeological work is mandated by planning laws. In 1989 a developer nearly tore through the buried remains of Shakespeare’s Rose Theatre on the south bank of the Thames. New planning guidelines subsequently required developers to commission archaeological work on their sites before they started construction. Suddenly, the earth came alive. Between 1990 and 2010 there were 86,000 archaeological investigations, sustaining a boom in the number of private firms. The construction of a new housing estate in Colchester exposed the only Roman chariot-racing stadium in Britain. In Surrey the Historic Environment Record, an official directory, grew from 4,000 to more than 22,000 sites of interest. + +But lately the balance has tilted away from the preservation of the past towards speedier building, says Iain Gilbey of Pinsent Masons, a law firm. The Housing and Planning Act, passed in May, implies a shift in responsibility for archaeological surveying on some brownfield sites to local authorities, which may lack the resources to do it. Archaeologists fear that the forthcoming Neighbourhood Planning and Infrastructure Bill, designed to streamline the cumbersome planning process, will further reduce the amount of archaeological work required before building can start. + +At the same time, local authorities are losing the expertise to interpret planning guidance. Council-employed archaeologists typically check developers’ archaeological surveys and determine whether more work needs to be done on site. But big cuts to councils’ budgets have seen many shed these staff, whose work is required under national planning guidelines but not by law. Their number declined by 10%, to 459, between 2007 and 2015. + +James Howell, a Conservative MP and co-author of an unpublished government review into the situation, acknowledges that there is a problem, but adds that “there is more archaeologists could be doing to help themselves”. One strategy is cost-saving mergers between local authorities: at the moment some, such as Lancashire County Council, simply go without archaeologists, which critics fear could mean planning officers rubber-stamping developments that a trained archaeologist would not. This hits demand for fieldwork. Though Must Farm, the Cambridgeshire site, was chanced upon by an archaeologist who simply spotted some timbers poking out of the earth, 79% of investigations stem from the planning system, including one that discovered, nearby, eight elegant Bronze Age longboats. + +Some of the profession’s gloom is unwarranted. In 2008 Geoffrey Dicks, an economist at RBS, argued that archaeologists were a bellwether for the wider economy, since when construction slows, they lose work. Britain’s already-tiny band of commercial archaeologists did indeed shrink by 28% in 2008-12. The post-Brexit slowdown threatens more pain. But today the sector is not so tied to private building. Historic England, a public agency, estimates that 40 big infrastructure projects planned by the government, including the HS2 railway, will require an increase in the number of archaeologists of at least 25% in the next six years. It is setting up a plethora of apprenticeships. At least while this work goes on, the investments in Britain’s future will carry it back to its past. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21703437-lighter-planning-laws-and-slowdown-building-could-mean-fewer-treasures-are/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +The sage of Birmingham + +Theresa May’s pugnacious chief-of-staff prescribes a new direction for the Conservative Party + +Aug 6th 2016 | From the print edition + + + +ON JULY 7th 1906 Joseph Chamberlain led an 80-car rally to celebrate his 70th birthday. Thousands of Brummies lined its 17-mile route. “Our Joe” had fought for Birmingham’s workers as mayor and, on the national stage, had advocated tariffs protecting its industries. The city was a palimpsest of his achievements: its schools for the poor, its magnificent parks, its grand civic buildings, its whirring workshops and clanking factories full of confident, well-fed workers. + +Still, eyebrows twitched when, in a speech almost precisely 110 years later, Theresa May cited him as an example. She was campaigning for the Tory leadership and, though he had ditched the Liberal Party over its tolerance for Irish autonomy, Chamberlain had never been a Tory. That the woman who today runs Britain praised him had everything to do with her closest adviser: Nick Timothy. He is one of the most interesting figures in her government. The son of a steelworker and a school secretary, he venerates Chamberlain’s interventionism and wrote a biography of the man. He even wears a long Victorian beard. + +Those close to Mrs May differ on how much Mr Timothy influences her, but only between “quite a lot” and “enormously”. Like her he is a cricket fanatic (he lives a big six away from the Oval ground). He shares the post of Downing Street chief-of-staff with Fiona Hill. For most of their boss’s spell as home secretary this duo was her praetorian guard: bossing around civil servants, telling David Cameron’s aides to mind their own business and generally exhibiting an unflinchingly protective loyalty to her. Admirers credit this with Mrs May’s unusually long (six-year) stint in the job. Critics fret that the control freakery will now constipate Whitehall: “You couldn’t blow your nose without Nick or Fi knowing,” recalls one former colleague. + +It is not an exaggeration to discern a direct line between Mr Timothy’s upbringing and Mrs May’s vision. He provides a pragmatic prime minister with an idealistic edge. His credo is captured in an article he wrote in March (one of a series for ConservativeHome, a Tory-aligned website) about “modernisation”. Here a bit of history helps. Back in the early 2000s, when the Conservatives were in the doldrums and the reactionary old farts were doing battle against modernisers, Mr Timothy was with the modernisers. But with David Cameron’s rise to the leadership in 2005, the debate shifted to what modernisation should mean. There was “Easterhouse modernisation”, a focus on the poorest, named after a Glasgow housing estate. There was “Soho modernisation”, an urban social liberalism named after a trendy part of London. But Mr Timothy reckoned a third leg of the stool was missing: “Erdington modernisation”, a concentration on the struggling, patriotic working-class named after the industrial suburb of Birmingham where he grew up. + +His writings expatiate on the idea. At home: more intervention in the economy, a clamp on immigration, less greenery, tough measures against crime, more religious schools and selective education rewarding poor, bright kids. Abroad: closer links with the Commonwealth—akin to Chamberlain’s proposed imperial economic union—and looser ties to Europe, which features in Mr Timothy’s output only as a source of bad public policies, corrupt leadership and justifications for Brexit. It also means a cooling of Britain’s links to both America, to which he reckons Tony Blair was too close, and China, to which he believes Mr Cameron was too craven. Overall it means a government keener to confront foreigners, vested interests and especially the sort of polenta-munching elites who share each other’s globalising enthusiasms, holiday villas and platforms at Davos. + +Mrs May’s premiership is not a month old. But already it bears Mr Timothy’s stamp. Britain has lost a department dedicated to climate change and gained one devoted to “industrial policy”. She has sidelined the “Northern Powerhouse” programme to integrate the big northern cities and committed to reining in foreign takeovers. A Chinese bid to finance Hinkley Point, a nuclear power station, has been put on hold. The new prime minister’s speech to the Tory conference in October (in Birmingham, as it happens) should be a Chamberlainite symphony. Renewal, a think-tank founded in 2013 to promote working-class Toryism, is emerging as the new regime’s brains trust. + +Mr Timothy’s analysis of his party—that it can appear not to “give a toss about ordinary people”—is accurate. The Cameroons’ brand of modernisation owed too much to noblesse oblige, to a vision of society that treated the welfare state as the institutional equivalent of giving one’s gardener a Christmas bonus. Mrs May’s authoritative mien and middle-class roots, combined with Mr Timothy’s instinct for working-class priorities, makes her party newly formidable, propelling it into landslide territory (an early election is surely not off the cards). Moreover, she and he have a point. Britain is too unequal. The past years have been brutal to the sorts of left-behind places that have been denied the boom enjoyed by the big cities. + +A new business model + +Still, the new Chamberlainites have questions to answer. Britain has found confidence and relative prosperity as a linchpin of globalisation. It is good at the sort of service industries that demand flexible labour markets, urban clusters, worldly universities and fast-moving capital: think not just the City of London but successful provincial centres like Swindon, Milton Keynes and Manchester. Where manufacturing survives, it is often thanks to the country’s openness to foreign investors. All this has bypassed some towns. But for decades Britain has sought to make the most of its strengths while helping those who have lost out to adapt or move. Mrs May and Mr Timothy seem to reckon those strengths—and globalisation itself—are much more malleable than their predecessors have realised. The burden of evidence is on them. + +Economist.com/blogs/bagehot + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21703391-theresa-mays-pugnacious-chief-staff-prescribes-new-direction-conservative-party/print + + + + + +Previous Articles Sections Next + + + +International + + + + + +International adoption: Home alone + + + + + +Articles Sections Next + +International adoption + +Home alone + +Fewer families are adopting children from overseas + +Aug 6th 2016 | From the print edition + + + +A DECADE ago Guatemala’s hotels were full of light-skinned foreigners with dark-skinned babies. The country was sending nearly as many children to America for adoption as was China, despite a hundredfold difference in population. Between 1996 and 2008 more than 30,000 Guatemalan children were adopted abroad—in 2007 nearly one out of every 100 babies. Hotels in Guatemala City, the capital, had entire floors for child care and notaries’ offices. “Some countries export bananas,” says Fernando Linares Beltranena, who worked as an adoption lawyer. “We exported babies.” + +Guatemala’s adoption business took off in the 1970s, when a civil war displaced hundreds of thousands, including many children. A 1977 law allowing notaries to facilitate adoptions helped shape an industry where anything went. After the war ended in 1996 the number of overseas adoptions rocketed. Americans and Europeans swooped in to adopt supposed orphans, unaware that many had been stolen from their families. + +By the 2000s the country’s adoption “supply chain” had thousands of workers. “Snatchers” kidnapped or bought children; caretakers fed kids in “fattening houses” crammed with cribs; notaries and lawyers took chunky fees for the paperwork; and poor women were paid to get pregnant repeatedly. Most of the children being adopted by foreigners each year were “manufactured for the specific purpose of adoption”, says Rudy Zepeda of Guatemala’s National Council of Adoptions. Reports of baby-theft were ignored. “People looked to the state for help but the state was complicit,” says Laura Briggs, a historian at the University of Massachusetts. In 1997 there were fewer than 1,000 adoptions to America; a decade later there were five times as many. + +Eventually, in 2008, in response to hunger strikes by mothers of stolen babies and pressure from the UN and receiving countries, Guatemala stopped foreign adoptions. Many other “sending” countries have seen the same pattern: a big rise in adoptions; claims, first ignored and then acknowledged, of rampant child-trafficking; a shutdown; and then—in the best cases—slow reform. As one country after another has tightened up its rules (see chart), the number of overseas adoptions has fallen, from 45,000 in 2004 to 12,500 in 2015. + + + +One consequence is that couples in the rich world find it harder to adopt a baby from a poor country. Another is a debate about the place of cross-border adoption in broader attempts to help children in poor countries. Advocates see it as the only way to save “hard-to-place” children—older, with severe health problems or in sibling groups—from life in an institution. Critics note that some children adopted into a different culture later feel unhappy about having been uprooted. Some also dismiss overseas adoption as a distraction from other ways of reducing poverty. + +It was the rushed, often illegal overseas adoption of thousands of children from Romanian orphanages after the fall of the dictator, Nicolae Ceausescu, in 1989 that first led activists to call for global adoption standards. The result was the Hague convention of 1993, which said that governments should verify children’s origins and oversee all adoptions, taking them out of private lawyers’ hands. It also established the “subsidiarity principle” that first relatives and then local adoptive parents should be sought before looking abroad. + +No place left + +As one country after another became more stringent, adopters and agencies moved on to others with still-lax rules. In the 1980s 56% of all international adoptions had been from just three countries—Colombia, India and South Korea. By 1998 the top three were China, Russia and Vietnam. Some governments blacklisted countries that were slow to follow the new rules. By 2002 Canada, France, Italy and Spain had all stopped accepting adoptions from Guatemala, though America continued until it ratified the convention in 2008. American adoption agencies then turned to Africa, in particular Ethiopia and the Democratic Republic of Congo—which are now tightening up in turn. + +Few development types have noticed. They pay little attention to international adoption, arguing that most vulnerable children in poor countries need not a new family but support in their current one. They point to how Guatemala, for example, devotes less than 3.4% of its GDP to public spending that directly helps children and adolescents, the lowest rate in Central America. “Adoption is a symptom of a society that can’t care for its children,” adds Ms Briggs. + +Seeking answers + +Among other critics of overseas adoption are some adult adoptees who have begun to speak publicly about how hard they found it growing up knowing little about the culture and circumstances into which they were born. Jean Sebastien Zune, who is active in the European organisation La Voix des Adoptés, the Voice of Adoptees, was adopted from Guatemala by Belgian parents in 1985. He returned in 2013 to look for his birth parents. He tracked down the man and woman whose names appeared on his birth certificate but neither was related to him. + +In fact, as Mr Zune discovered with the help of government investigators, he was probably born in a Mexican border town and given to a criminal network in Guatemala. He plans to file cases against traffickers in Guatemala and the Belgian adoption agency he accuses of having been complicit in the fraud. “Adoption is not just paperwork and an aeroplane ticket,” he says. “When a child grows up, you need to be able to tell him where he came from.” + +Though some countries, notably China, have built domestic adoption programmes as envisaged by the Hague convention, in many others locals have not taken up the slack. Globally, there are hundreds of thousands of children in state institutions because they have no family to care for them. They should be candidates for adoption—but many have health problems, and most are over five years old and have been harmed by neglect. “The profile is completely different from what most families can handle,” says David Smolin of Samford University in Alabama. + +Things are even tougher when the children in need of adoption come from a different ethnic group from the people who want to adopt. In Guatemala many of the children seeking new families are indigenous. In South Korea and many African countries domestic adoption efforts are also hampered by a cultural prejudice against bringing unrelated children into the household. “There’s a lot of stigma. People worry that kids with different blood will be badly behaved, uncivilised, even dirty,” says Aixa de López, an evangelical pastor who adopted two girls, aged six and nine, with her husband and runs a support group for adoptive families. + +David McCormick, a social worker at Casa Bernabé, an orphanage near Guatemala City, says the home was unprepared for the rising number of older children needing institutional care because of the new rules. Previously, half of the 15-20 children adopted from the orphanage each year—by foreigners—were over ten years old. “Now we have an average of three adoptions a year, and they’re all babies,” he says. Of 339 children awaiting adoption in Guatemala, only 34 are babies and toddlers without special needs. But few of the 85 Guatemalan families waiting to adopt will consider older children. + +Children around the world “are languishing in institutions because the Hague has been wrongly interpreted and badly implemented,” says Peter Hayes of the University of Sunderland. Excessive oversight means it can take years before a child is declared available for adoption. “Kids dread their birthdays,” says Mr McCormick. “They know as they get older, the chance they’ll be adopted diminishes.” + +Among those who want to help are evangelical Americans. Congregations have latched onto an estimate by UNICEF that there are 140m orphans in the world, declaring an “orphan crisis”. (This figure includes children who have lost just one parent.) In 2009 the Southern Baptist Convention, a network of about 50,000 churches and missions, directed all members to consider adoption. The next year adoptions brokered by Bethany Christian Services, America’s largest adoption agency, rose by 26%. + +The fervour has abated somewhat after several scandals, such as when a Baptist congregation tried to sneak 33 children, most of whom had parents, out of Haiti in 2010. But Christians make up a large share of people seeking to adopt abroad, says Jedd Medefind of the Christian Alliance for Orphans. “It takes a very deep motivation to cause a family that could have a biological child to choose instead to welcome a child from another country with special needs,” he says. “It stems from the central Christian narrative, that God pursued us and welcomed us into his family when we were separated and alone.” + +Shawn and Kathy Mokert, an evangelical couple from Missouri, have spent three years trying to adopt a seven-year-old girl with special needs from El Salvador, where hundreds of cases of baby theft during a civil war in the 1980s gave way to a slow and frustrating adoption system. “Sometimes the government’s decisions seem so arbitrary, we ask ourselves, are they waiting for us to offer money?” says Mr Mokert. Rosario de Barillas, the director of El Salvador’s National Adoption Office, blames a lack of social workers and judges. Lawyers criticise an overly rigid interpretation of the subsidiarity principle. Last year the country processed just four international adoptions and 59 domestic ones. + +Baby steps + +Such sluggishness infuriates overseas parents. But many sending countries say critics underestimate the difficulties of building a robust adoption system—and ask why, if people in rich countries really care about poor children in poor places, they do not fund domestic programmes to keep families together instead. + +Some American charities have tried, reinventing themselves as welfare organisations focused on poor countries. Bethany has started foster-care programmes in five countries and is arranging more domestic adoptions. Similar efforts have, however, run into trouble. When Tom DiFilipo became director of the Joint Council on International Children’s Services in 2007, an umbrella organisation of about 140 agencies, he tried to redirect funding toward family-preservation efforts. He was dubbed the “Devil in Adoption” by adoption advocates and quit last year. + +For sensible adoption advocates, the solution is simple: poor countries should fix their adoption systems so that, once domestic possibilities have been exhausted, foreigners can step in. “The Hague isn’t an expensive convention to uphold,” says Susan Jacobs, America’s ambassador for children’s issues. “Countries just need to take the initiative.” + +And a few countries are leading the way. As El Salvador thrashes out its new adoption law, it looks for guidance to Colombia, which sends around 500 children abroad each year, nearly all older than seven or with special needs. Indeed, nowadays most of the 12,500 or so kids adopted globally by foreigners each year have special needs or are over five years old. El Salvador is poorer than Colombia, and its bureaucracy is less capable. But if it succeeds in its efforts to improve its adoption system, many more of the neediest children may find homes. + +“We do our best,” says Leticia Abarca of St Vincent de Paul Children’s Home, where the seven-year-old matched with the Mokerts has spent her life. “But there’s an emptiness only a family can fill.” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21703364-fewer-families-are-adopting-children-overseas-home-alone/print + + + + + +Articles Sections Next + + + +Business + + + + + +Ride-hailing in China: Uber gives app + +China’s mobile internet: WeChat’s world + +Tobacco regulation: No logo + +Bosses’ salaries in Japan: Pay check + +The chocolate industry: Cocoa nuts + +Schumpeter: Look before you leap + + + + + +Articles Sections Next + +Ride-hailing in China + +Uber gives app + +China’s Didi Chuxing and America’s Uber declare a truce in their ride-hailing war + +Aug 6th 2016 | SAN FRANCISCO and SHANGHAI | From the print edition + + + +WHAT will success look like in the extremely competitive Chinese ride-hailing market? “There are two versions,” Travis Kalanick, the chief executive and co-founder of Uber, recently told The Economist. “There is the gold medal, and there is the silver medal.” + +Over the past several years Uber, an American ride-hailing firm, has lost a fortune competing in China with Didi Chuxing, an inventive local rival, and its forerunners. Mr Kalanick seems to have decided that accepting a slice of gold with a side-dish of crow is better than continuing a bloody battle in hopes of getting silver or bronze. The brash Silicon Valley giant has done what seemed unthinkable just a few weeks ago: surrendered. + +On August 1st Uber agreed to hand over its Chinese operations to Didi, in return for a 17.7% stake in the combined company’s equity. Uber, though, will get only 5.9% of the voting rights in the new entity. Investors in Uber China, including Baidu, a big Chinese internet firm, will get a 2.3% stake. Mr Kalanick will serve on Didi’s board, and Cheng Wei, Didi’s boss, will join Uber’s board. The deal is a boon for both companies, but especially so for Uber. + +For years Uber has lagged behind Didi, which has an estimated four-fifths of the Chinese ride-hailing market (see chart). Critics of Uber’s record in China say the American firm was both late to the market and sometimes flat-footed as it tried to adapt. For too long it used Google maps, which do not work well in China, before switching to a local service. Another problem, not of its own making, was that it offered a credit-card-based payment system even though such cards are not widely used on the mainland. Many people prefer to transact using WeChat, a hugely popular messaging app (see article). But WeChat (whose owner, Tencent, is an investor in Didi), sometimes blocked Uber from the superapp, wounding its business. + + + +In contrast, Didi proved a nimbler innovator than Uber and other rivals expected. It used its early presence in the market to establish its operating platform on a large scale, says Jeffrey Towson of Peking University. It started with taxi-hailing, not chauffeur-driven cars, which helped it win over grumpy taxi drivers and local politicians. In time, it added bus-hailing, car-pooling that came to resemble social networking and other inventive offerings. And it was able to integrate its service early on with WeChat. + +The two firms’ race was an extremely costly one: in two years, Uber lost $2 billion in China; Didi is believed to have lost far more. An investor close to both companies claims that Uber China lost $250m just in the past month, which he believes gave it no choice but to succumb. The money mainly went on subsidies to lure both drivers and passengers. + +Investors on both sides approve of the arrangement. But it was Uber’s investors who had been growing particularly queasy about the bloodbath in China. A long fight in China could have drained its resources and forced it to raise more money, diluting their stake. Uber, for its part, can console itself that the deal this week smooths the way for its expected initial public offering, which losses in China had reportedly held up. The stake in Didi should rise in value, and Uber can take a share of Chinese growth without having to spend another tuppence there. By striking the deal, Uber will have outdone Facebook, Google and Amazon in China, says Bill Gurley of Benchmark Capital, an investor in Uber who sits on its board. + +The deal raises three big questions. One is what the alliance means for the global ride-hailing market. When it was at war with Mr Kalanick, Didi had invested in Uber’s rivals, including Lyft in America, Ola in India and Grab in South-East Asia, in an attempt to weaken its enemy. The three smaller firms also formed an alliance to share technology and tips so as to better fight Uber. Now it is the alliance between Uber and Didi that seems strongest. The Chinese firm even agreed this week to invest $1 billion in the American startup. There are whispers that Didi and Uber are quickly moving forward with plans to carve up the world between them. + +As a result, Lyft, Ola and Grab may not be able to count on Didi’s cheque-book being open far into the future (although rumours surfaced this week that Didi is in fact involved in a new $600m round of financing for Grab and will continue with it). And the small fry now find themselves with a conflicted investor, who can try to influence their direction but has a strong, strategic relationship with their chief rival, Uber. Lyft and the others may try to find new backers to buy Didi’s stakes in them, but in the meantime it brings uncertainty to these firms. Speculation that predated this week’s news, that Lyft could be sold, has grown stronger still. + +Fare trade + +A second question is about the effect of the deal on ride-hailing customers. Consumers have been complaining noisily this week on Weibo, the Chinese version of Twitter, that fares have already shot up. An Uber driver in Shanghai says that pre-deal, he earned a subsidy at rush hour worth 1.8 times the fare. This will not last. And if a popular backlash grows from both consumers and drivers, it will focus attention on the Chinese government and its plans for the country’s ride-hailing market. Just before the news of the agreement between Uber and Didi, seven ministries jointly announced a new law that legalises online ride-hailing services for the first time—and, in effect, bans all subsidies. + +Some have claimed that the new law is a factor in why Uber China sold out. Because the underdog in ride-hailing markets typically needs subsidies more than the dominant firm, the new regime would have harmed it most had it stayed the course in China. But people familiar with the deal confirm that negotiations have in fact been under way for weeks, and say the new law was rather the final straw for the American firm. + +A last question is how the Chinese authorities will treat the deal. The Ministry of Commerce on August 2nd tartly rejected Didi’s claim that the deal was not subject to anti-trust scrutiny. Given public disgruntlement, it is likely to give the deal a noisy vetting. But the government has also allowed lots of big mergers and quasi-monopolies in various sectors of the internet already. It has a penchant for national champions, and Didi, after digesting its chief foe in China, will certainly be one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21703409-chinas-didi-chuxing-and-americas-uber-declare-truce-their-ride-hailing-war-uber-gives-app/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +China’s mobile internet + +WeChat’s world + +China’s WeChat shows the way to social media’s future + +Aug 6th 2016 | SHANGHAI | From the print edition + +Time for a shot of WeChat + +YU HUI, a boisterous four-year-old living in Shanghai, is what marketing people call a digital native. Over a year ago, she started communicating with her parents using WeChat, a Chinese mobile-messaging service. She is too young to carry around a mobile phone. Instead she uses a Mon Mon, an internet-connected device that links through the cloud to the WeChat app. The cuddly critter’s rotund belly disguises a microphone, which Yu Hui uses to send rambling updates and songs to her parents; it lights up when she gets an incoming message back. + +Like most professionals on the mainland, her mother uses WeChat rather than e-mail to conduct much of her business. The app offers everything from free video calls and instant group chats to news updates and easy sharing of large multimedia files. It has a business-oriented chat service akin to America’s Slack. Yu Hui’s mother also uses her smartphone camera to scan the WeChat QR (quick response) codes of people she meets far more often these days than she exchanges business cards. Yu Hui’s father uses the app to shop online, to pay for goods at physical stores, settle utility bills and split dinner tabs with friends, just with a few taps. He can easily book and pay for taxis, dumpling deliveries, theatre tickets, hospital appointments and foreign holidays, all without ever leaving the WeChat universe. + +As one American venture capitalist puts it, WeChat is there “at every point of your daily contact with the world, from morning until night”. It is this status as a hub for all internet activity, and as a platform through which users find their way to other services, that inspires Silicon Valley firms, including Facebook, to monitor WeChat closely. They are right to cast an envious eye. People who divide their time between China and the West complain that leaving WeChat behind is akin to stepping back in time. + +Among all its services, it is perhaps its promise of a cashless economy, a recurring dream of the internet age, that impresses onlookers the most. Thanks to WeChat, Chinese consumers can navigate their day without once spending banknotes or pulling out plastic. It is the best example yet of how China is shaping the future of the mobile internet for consumers everywhere. + +That is only fitting, for China makes and puts to good use more smartphones than any other country. More Chinese reach the internet via their mobiles than do so in America, Brazil and Indonesia combined. Many leapt from the pre-web era straight to the mobile internet, skipping the personal computer altogether. About half of all sales over the internet in China take place via mobile phones, against roughly a third of total sales in America. In other words, the conditions were all there for WeChat to take wing: new technologies, business models built around mobile phones, and above all, customers eager to experiment. + +The service, which is known on the mainland as Weixin, began five years ago as an innovation from Tencent, a Chinese online-gaming and social-media firm. By now over 700m people use it, and it is one of the world’s most popular messaging apps (see chart). More than a third of all the time spent by mainlanders on the mobile internet is spent on WeChat. A typical user returns to it ten times a day or more. + + + +WeChat has worked hard to make sure that its product is enjoyable to use. Shaking the phone has proven a popular way to make new friends who are also users. Waving it at a television allows the app to recognise the current programme and viewers to interact. A successful stunt during last year’s celebration of Chinese New Year’s Eve saw CCTV, the official state broadcaster, offer millions of dollars in cash rewards to WeChat users who shook their phones on cue. Punters did so 11 billion times during the show, with 810m shakes a minute recorded at one point. + +Most importantly, over half of WeChat users have been persuaded to link their bank cards to the app. That is a notable achievement given that China’s is a distrustful society and the internet is a free-for-all of cybercrime, malware and scams. Yet using its trusted brand, and putting to work robust identity and password authentication, Tencent was able to win over the public. In contrast, Western products such as Snapchat and WhatsApp have yet to persuade consumers to entrust them with their financial details. Japan’s Line (which recently floated shares on the New York and Tokyo stock exchanges) and South Korea’s KakaoTalk (in which Tencent is a big investor) have done better, but they cannot match the Chinese platform. + +One app to rule them all + +How did Tencent take WeChat so far ahead of its rivals? The answer lies partly in the peculiarities of the local market. Unlike most Westerners, many Chinese possessed multiple mobile devices, and they quickly took to an app that offered them an easy way to integrate them all into a single digital identity. In America messaging apps had a potent competitor in the form of basic mobile-phone plans, which bundled in SMS messaging. But text messages were costly in China, so consumers eagerly adopted the free messaging app. And e-mail never took off on the mainland the way it has around the world, mainly because the internet came late; that left an opening for messaging apps. + +But the bigger explanation for WeChat’s rise is Tencent’s ability to innovate. Many Chinese grew up using QQ, a PC-based messaging platform offered by Tencent that still has over 800m registered users. QQ was a copy of ICQ, a pioneering Israeli messaging service. But then the Chinese imitator learned to think for itself. Spotting the coming rise of the mobile internet, Tencent challenged several internal teams to design and develop a smartphone-only messaging app. The QQ insiders came up with something along the lines of their existing product for the PC, but another team of outsiders (from a just-acquired firm) came up with Weixin. When Tencent launched the new app, it made it easy for QQ’s users to transfer their contacts over to the new app. + +Another stroke of brilliance came two years ago when the service launched a “red packet” campaign in which WeChat users were able to send digital money to friends and family to celebrate Chinese New Year rather than sending cash in a red envelope, as is customary. It was clever of the firm to turn dutiful gift-giving into an exciting game, notes Connie Chan of Andreessen Horowitz, a VC firm. It also encouraged users to bind together into groups to send money, often in randomised amounts (if you send 3,000 yuan to 30 friends, they may not get 100 yuan each; WeChat decides how much). That in turn led to explosive growth in group chats. This year, over 400m users (both as individuals and in groups) sent 32 billion packets of digital cash during the celebration. + +The enthusiasm with which WeChat users have adopted the platform makes them valuable to Tencent in ways that rivals can only dream of. After years of patient investment, its parent now earns a large and rising profit from WeChat. While other free messaging apps struggle to bring in much money, Duncan Clark of BDA, a technology consultancy in Beijing, estimates that WeChat earned about $1.8 billion in revenues last year. By the reckoning of HSBC, a bank, according to current valuations for tech firms, WeChat could be worth over $80 billion already. + +Over half of its revenues come from online games, where Tencent, the biggest gaming firm, is extremely strong. E-commerce is another driver of the business model. The firm earns fees when consumers shop at one of the more than 10m merchants (including some celebrities) that have official accounts on the app. Once users attach their bank cards to WeChat’s wallet, they typically go on shopping sprees involving far more transactions per month than, for instance, Americans make on plastic. Three years ago, very few people bought things using WeChat but now roughly a third of its users are making regular e-commerce purchases directly though the app. A virtuous circle is operating: as more merchants and brands set up official accounts, it becomes a buzzier and more appealing bazaar. + +Users’ dependence on the portal means a treasure-trove of insights into their preferences and peccadilloes. That, in turn, makes WeChat much more valuable to advertisers keen to target consumers as precisely as possible. There are few firms better placed to take advantage of the rise of social mobile advertising than WeChat, reckons Goldman Sachs, an investment bank. When BMW, a German carmaker, launched the first-ever ad to appear on the WeChat Moments page (which is akin to a Facebook feed) of selected users, there followed nothing like pique at the commercial intrusion, but rather an uproar from people demanding to know why they had not received the ad. Even though Tencent has deliberately trodden carefully in introducing targeted ads on users’ Moments pages, its official corporate accounts enjoy billions of impressions each day. + +For Western firms, the most telling lesson from WeChat’s success is that consumers and advertisers will handsomely reward companies that solve the myriad problems that bedevil the mobile internet. The smartphone is a marvellous invention, but it can be frustrating. In much of the world, there are too many annoying notifications and updates and the proliferation of apps is baffling. WeChat provides an answer to these problems. + +Better-known rivals in the West regard WeChat’s rise with more than a tinge of jealousy. One executive, David Marcus, who runs Facebook Messenger, a popular messaging app run by the social network, is willing to talk about it openly. He calls WeChat, simply, “inspiring”. His plan, to transform Messenger into a platform where people can communicate with businesses and buy things, sounds familiar. + +Even enthusiasts acknowledge that the mobile ecosystem is different in the West and that WeChat’s reach and primacy in the eyes of consumers will not be easily replicated. It took off in China well before the app ecosystem had taken hold, as it has now in America and Europe. Western consumers are accustomed to using many different apps to access the internet, not just one. It would require a lot of nudging to encourage use of a single, central hub. + +Nor is there much chance that Facebook could make a significant dent in WeChat’s dominance in China. The Silicon Valley darling enjoys incumbency and the network effect in many of its markets. That has sabotaged WeChat’s own efforts to expand abroad (despite splashy ad campaigns featuring Lionel Messi, a footballer). But the same rule applies if Facebook enters China, which could happen this year or next. “We have the huge advantage of incumbency and local knowledge,” says an executive at Tencent. “Weixin is quite simply more of a super-app than Facebook.” + +Indeed, WeChat has already proved itself in the teeth of competition. Many Chinese champions have succeeded only because the government has hobbled domestic rivals and blocked foreign entrants. Here, too, Tencent breaks the mould. It has withstood numerous attempts by Alibaba, a formidable local rival, to knock it and its creations off their perch. And it is Facebook’s WhatsApp that is WeChat’s most obvious rival. Unlike Facebook itself, and Twitter, both of which are blocked on the mainland, WhatsApp is free to operate. WeChat has flourished for simple, commercial reasons: it solves problems for its users, and it delights them with new and unexpected offerings. That will change the mobile internet for everyone—those outside China included, as Western firms do their all to emulate its success. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21703428-chinas-wechat-shows-way-social-medias-future-wechats-world/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Tobacco regulation + +No logo + +Big Tobacco’s controversial, ailing crusade against plain packaging + +Aug 6th 2016 | NEW YORK | From the print edition + +Ashes to ashes + +THREE years ago, the government of Togo, which has a gross domestic product of $4 billion, received a letter from Philip Morris International, a tobacco giant which last year earned revenues of $74 billion. The country had been mulling bringing in plain packaging for cigarette boxes. It would risk “violating the Togolese constitution”, the firm’s subsidiary explained, “providing tobacco manufacturers the right to significant compensation.” It then outlined how plain packaging would violate binding global and regional agreements. Togo was in no position to anger its international partners, it suggested. + +For health advocates, such tactics are the last refuge of firms they have long denounced. But tobacco companies will do what they can to protect their packaging. They detest warnings with repulsive images of decaying body parts. In 2010 Philip Morris sued Uruguay, claiming that big warnings on boxes violated a trade deal. Then two years later Australia became the first country to go further, banishing iconic trademarks from tobacco packs. Its law mandates that brand names—such as Marlboro, Winfield or Dunhill—appear in grey type against a background of Pantone 448C, a putrid green deemed the world’s ugliest colour by a market-research firm. + +So tobacco firms sued—in Australian courts, before a UN tribunal and by supporting countries that challenged the rule before the World Trade Organisation (WTO) on the ground that banning trademarks represents an expropriation of intellectual property (IP). Less formally, they and allies have lobbied against warnings and plain packaging in places ranging from Namibia to New Zealand. It has all been surprisingly effective. Until very recently, Australia has been the only country to ban tobacco trademarks from cigarette packs. + +Such avenues may be closing. Although the WTO’s decision is still pending, firms lost their other suits against Australia. Last month arbitrators at the World Bank threw out the lawsuit against Uruguay. In May the European Court of Justice upheld a rule on big warnings and Britain’s High Court confirmed one for plain packaging. It seems likely that more governments will in future prioritise public health over IP. Canada, France and Ireland are already moving towards plain packs. + +If so, ugly packaging could become the most damaging rule tobacco firms have faced in years. To date many laws have hurt firms in some ways but also, strangely, helped them in others. Bans on advertising lower their costs. Small competitors, unable to advertise, struggle to grow. High excise taxes can be another boon: when taxes are fixed and large, a big increase in the underlying price of a pack amounts to a relatively small rise in the pack’s total price. High prices have sustained tobacco firms, even as smoking rates decline. “They probably have the best pricing power of any industry,” says James Bushnell of Exane BNP Paribas, a broker. + +But plain packaging clamps down on one of their last bits of advertising. The design of the box is where they must convey not only the name of the brand but abstract qualities, such as masculinity or the idea that a product is “premium”, and worth an extra outlay. If such traits are stripped from packs, consumers may choose cheaper brands. That is particularly worrisome in emerging markets, says Mr Bushnell, where standard packs would threaten the aspirational appeal of smoking. Other “sin” industries are worried. The International Trademark Association frets that governments might strip trademarks from junk food and liquor. + +It may become pointless for cigarette firms to start legal proceedings. The Trans-Pacific Partnership (TPP), a pending free-trade agreement among 12 countries, shields governments from lawsuits over tobacco rules. It may unravel, but future pacts could have similar terms. Only America, where the right to free speech makes standard packs highly unlikely, may remain an anomaly (though it is a signatory to the TPP). In the past investors often viewed a new wave of rules on tobacco as a chance to buy tobacco stocks inexpensively, before they resumed their steady rise. This time may be different. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21703424-big-tobaccos-controversial-ailing-crusade-against-plain-packaging-no-logo/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bosses’ salaries in Japan + +Pay check + +Japanese bosses still find it hard to ask for more + +Aug 6th 2016 | TOKYO | From the print edition + + + +TO PROMOTE team spirit among their loyal, lifelong employees, Japanese bosses live in modest houses and take the metro to work. They also keep the pay gap between themselves and workers tiny by international standards (see chart). To them the news that SoftBank, a telecoms and internet firm, paid its former, Indian-born president, Nikesh Arora, ¥31.5 billion ($300m) in two years defies comprehension. Bosses at the biggest firms receive ¥100m ($1m) a year on average. + +Corporate-governance experts are used to grappling with excessive executive pay. In Japan, they are pondering how big a problem rock-bottom compensation may be. The earnings of bosses at listed firms weigh in at roughly a tenth of what American executives get. Foreign bosses in Tokyo, such as Mr Arora, or Carlos Ghosn of Nissan, a car firm, come near the top of global league tables, but very highly-rewarded local executives are extremely rare. + +Low compensation doubtless contributes to a cautious culture in which many firms prefer to sit on vast piles of cash—non-financial firms now hold more than ¥1 quadrillion ($9.5 trillion) of financial assets, including cash—rather than invest in risky new projects. Japanese firms whose bosses receive fatter paychecks outperform peers, according to a recent study from Goldman Sachs, an investment bank. + +Not only is there too little financial incentive to make bold bets, but there are social penalties if things don’t work out. If a risky new tack fails, that could mean losing face, being forced to cut the workforce or forfeiting the privilege of staying on well past retirement as a paid adviser. + +Japanese companies have recently started making better returns, partly because of a new corporate-governance code introduced by Shinzo Abe, the prime minister, in June 2015. The government took care to include in its new code a recommendation that firms lift the variable bit in pay packages that is linked to long-term results. Such incentive-based pay makes up just 14% of packages in Japan, compared with 33% in Germany and 69% in America, according to Towers Watson, a human-resources consultancy. Accordingly, two Japanese giants—Shiseido, a cosmetics firm, and Obayashi, a builder—began for the first time to offer their executives stock-option plans tied to corporate performance. + +But the unintended effects of an ill-conceived regulation from 2010 may yet hold back much-needed change on pay. Back then, securities regulators required listed companies to disclose, for the first time, all bosses earning above ¥100m. The idea was to increase transparency for investors (before, companies disclosed only the sum of the total executive-pay pot, for shareholder approval). There were hardly any that met the threshold—in 2014 only executives at 9% of listed firms had to be outed. + +Even so, it was considered embarrassing to be named. Naohiko Abe of Pay Governance, which advises corporate compensation committees, says he was inundated with calls early on checking what others firms’ bosses were being paid. In the West, such transparency has tended to have the effect of raising the compensation of comparatively underpaid bosses. In Japan, some quickly took a pay cut so as not to appear on the list, says Mr Abe. In particular, says Nicholas Benes of the Board Director Training Institute of Japan, which promotes better governance, the ¥100m-disclosure rule inadvertently sets a limit on lifting the incentive portion of pay cheques (salaries are mostly cash-based). + +Still, there has been progress. The number of bosses earning $1m, or enough to require disclosure, has risen from fewer than 300 to just over 500 since 2009. Some people want to go further. Takeshi Niinami, the boss of Suntory, a drinks giant, and a prominent adviser to the government, thinks that firms should eschew thresholds and simply disclose the compensation of all their best-paid people. Openly paying bosses oodles of cash and stock options might work best in topsy-turvy Japan. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21703430-japanese-bosses-still-find-it-hard-ask-more-pay-check/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The chocolate industry + +Cocoa nuts + +Where Starbucks once blazed a trail, chocolatiers are following + +Aug 6th 2016 | From the print edition + + + + + +THEY have “brew bars”, single-origin beans and hessian sacks from exotic lands. Sound familiar? Posh chocolate shops are springing up in the hip neighbourhoods where coffee culture long ago took root. All the talk is of aromas and sustainability—the usual stuff of craft products that makes it seem stingy not to fork out £7.50 ($10) for something that disappears in a few mouthfuls. + +“Coffee has paved the way for chocolate,” says Lani Kingston, the boss in London of Mast Brothers, a well-known Brooklyn-based chocolate-maker that came to Britain last year. For a while it even had to fend off intrigue over whether it had melted another maker’s squares into its own bars, such is the growing fascination with artisanal chocolate. + +More established chocolatiers are trying to do for the stuff what Starbucks once did for coffee—investing a commoditised product with a dash of high-street chic. Last year Ferrero Rocher, an Italian brand, bought Thorntons, a UK chocolate retailer with almost 250 stores. Lindt and Sprüngli, owner of Switzerland’s best-known brand, aims to become the world’s biggest retailer of premium chocolate in four years. It expects to add 65 stores this year, after 50 new ones in 2015. + + + +Posh chocolate is where the money is. Euromonitor, a retail consultancy, says that worldwide consumption of all chocolate has been stagnant during the past five years, mostly because rich-world consumers are eating healthier snacks. But sales of dark chocolate grew by 5.1% and 3.3% last year in America and western Europe, respectively. + +The upmarket trend extends back to the grower. Doug Hawkins of Hardman Agribusiness, an advisory firm, says that most cocoa is produced by smallholders who have not increased supply in recent years as much as other commodity producers, helping push up prices. Posh chocolatiers such as Britain’s Hotel Chocolat, with higher margins, can absorb that better than big brands such as Mars. + +Rising raw-material costs and stagnant demand bode less well for big manufacturers. That may be one reason Mondelez International, owner of Cadbury, has bid for Hershey, another American firm. They are eying potential chocoholics in China and India. But again, it is quality chocolate that will most appeal to elites with purchasing power. As Euromonitor notes, it would take an Indian on average a month’s wages to buy the chocolate a Brit scoffs in a year. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21703429-where-starbucks-once-blazed-trail-chocolatiers-are-following-cocoa-nuts/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Look before you leap + +The notion of leapfrogging poor infrastructure in Africa needs to come back down to earth + +Aug 6th 2016 | From the print edition + + + +CAN entrepreneurs make up for a lack of roads? In Rwanda, where most of the population live in cut-off villages, the government wants to skip straight to drones. Encouraged by Paul Kagame, the president and a darling of the development industry (if not of human-rights activists), some of Silicon Valley’s most prominent venture-capital firms, including Sequoia Capital and the investment arm of Google’s parent company, Alphabet, have bet that tiny, unmanned aircraft carrying medical supplies can simply hop over the rolling green hills and the mud tracks that barely connect people now. + +It is the latest example of what businesspeople working across Africa call “leapfrogging”. Usually married to an almost evangelical belief in the power of startups, this is the notion that, having failed to adopt now-outdated technology, Africa can simply jump straight over it and go right to the latest thing. Just as drones can make up for poor roads, the theory goes, mobile phones can overcome a lack of well-functioning banks, portable solar panels can stand in for missing power stations and free learning apps can substitute for patchy education. + +There is a compelling precedent. Fifteen years ago, only a tiny fraction of Africans had access to phones of any kind. Getting a landline installed meant waiting years. Then mobile telephony exploded. In some African countries, such as Uganda, the number of mobile phones came to surpass the total number of landlines in less time than the old state monopoly would take to install a single connection in your house (typically two years or more). When a telecoms mast goes up, other new businesses follow. Young men start selling airtime; farmers find new markets. + +Now the hope is that drones could take over from mobile phones as the way to transform Africa. The project under way in Rwanda is courtesy of a startup based in Silicon Valley called Zipline. Its idea is to use small, fixed-wing drones to drop off packets of blood with parachutes from Rwanda’s five blood banks to hospitals and health-care centres, under a contract with the government. A lot of women die in childbirth because they cannot get blood quickly enough. + +But the hype about machines saving African lives ought to elicit caution. No one can say how many people will benefit from Zipline, which has yet to begin operating, or whether there will be sufficient profits to continue over the long term. Another project is the world’s very first “drone port”, designed for Rwanda by Foster + Partners, a fancy British firm of architects that wants every small town in Africa to have its own drone port by 2030. Yet its Rwandan project won’t be completed for another four years. A separate initiative, in Malawi, to transport blood samples for HIV tests, received money from UNICEF, a branch of the UN, and testing is under way. The project is pricey—at $7,000 a drone. Paying drivers on motorbikes would be cheaper. + +Such caveats hardly dampen the mood at business conferences in Africa, where you find hundreds of investors gushing about their plans to help the poor with new technology and make big profits while doing it. “Within the next few years you’ll really see leapfrogging taking off,” says Ashish Thakkar, a British-born, Ugandan businessman whose Mara Group, a business-services firm, is setting up tech businesses across the continent. Perhaps, but tech booms based on leapfrogging have been wrongly anticipated in the past. Americans who turn up in Nairobi and Dar es Salaam with millions of dollars hoping to buy startups that have risen as part of the so-called “Silicon Savannah”, an east African cluster, for example, frequently leave empty-handed because there isn’t all that much to buy. + +African tech types often think they can quickly copy rich-country products and sell them to the urban middle class. But then they discover that there is no getting around complex tax laws, a dearth of engineers and fragmented markets. The Western investors who back them have even less grasp of just how dysfunctional basic infrastructure can be, notes Ory Okolloh, a Kenyan investor and a political activist. All the evidence suggests that technology firms are no better at leapfrogging such hurdles than, say, a carmaker. The only part of the continent with a mature tech scene is South Africa: a country which also has good roads, reliable power and plenty of well-educated graduates. + +Mr Kagame himself has admitted that leapfrogging has limits. Drones can transport blood, but they can’t transport doctors, who need roads. Solar panels will help people light their homes without burning kerosene, but they will not replace the functioning grid that manufacturers need. Nor will clever technology firms do away with the need for well-drafted regulation and the rule of law. + +Mind the gaps + +A few tech firms are pulling off impressive feats. M-Kopa, a Kenyan company backed by the Gates Foundation, has sold some 375,000 solar panels on credit, using mobile money to collect payments and to monitor the creditworthiness of borrowers. But it has had to build an entire network of old-fashioned marketers going from door to door. Jumia, a Nigerian e-commerce firm, built separate logistics systems in seven different countries. In other words, to make the most of digital opportunities these firms had to construct their own basic physical infrastructure. + +Wander the streets of any big African city and it soon becomes clear that a lack of enterprise is hardly the problem. In Nairobi’s biggest slum, Kibera, the narrow dirt streets bustle with businesses charging phones from generators; running tiny cinemas showing Premier League football on satellite TVs; and selling solar panels. What you won’t find are clean toilets, potable water or anyone earning much over a few dollars a day. The main leapfrogging that takes place is over the open sewers. That is not something you can fix with a mobile-phone app. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21703399-notion-leapfrogging-poor-infrastructure-africa-needs-come-back-down-earth-look/print + + + + + +Previous Articles Sections Next + + + +Finance and economics + + + + + +Asia’s next tiger: Good afternoon, Vietnam + +Buttonwood: The second big shift + +European banks: Still stressed out + +Property taxes: Home bias + +Japan’s economy: Levitation speed + +Free exchange: The desperation of independents + + + + + +Articles Sections Next + +Asia’s next tiger + +Good afternoon, Vietnam + +Having attained middle-income status, Vietnam aims higher + +Aug 6th 2016 | HO CHI MINH CITY | From the print edition + + + +WHEN Jonathan Moreno’s company was looking for a location for a new factory in 2009 to make its medical devices, it ruled out much of the world. Europe and the Americas were too expensive, India was too complex and intellectual-property rights in China too patchy. In the end, Vietnam was the one candidate left standing. It still seemed risky as the country was just emerging as a destination for foreign investors. Seven years on, Mr Moreno surveys the scene—employees assemble delicate diagnostic probes in a room that resembles a laboratory—and has no doubt about where his company, Diversatek, will expand next. “To the back, there and there,” he says, pointing to either side. + +It is far from alone. Foreign direct investment in Vietnam hit a record in 2015 and has surged again this year. Deals reached $11.3 billion in the first half of 2016, up by 105% from the same period last year, despite a sluggish global economy. Big free-trade agreements explain some of the appeal. But something deeper is happening. Like South Korea, Taiwan and China before it, Vietnam is piecing together the right mix of ingredients for rapid, sustained growth. + +Vietnam already has a strong, often underappreciated, record. Since 1990 its growth has averaged nearly 6% a year per person, second only to China. That has lifted it from among the world’s poorest countries to middle-income status. If Vietnam can deliver 7% growth for another decade, its trajectory would be similar to those of China and the Asian tigers (see chart). But that is no sure thing. Should growth fall back to 4%, it would end up in the same underwhelming orbit as Thailand and Brazil. + + + +Perhaps the biggest factor in Vietnam’s favour is geography. Its border with China, a military flashpoint in the past, is now a competitive advantage. No other country is closer to the manufacturing heartland of southern China, with connections by land and sea. As Chinese wages rise, that makes Vietnam the obvious substitute for firms moving to lower-cost production hubs, especially if they want to maintain links back to China’s well-stocked supply chains. + +A relatively young population adds to Vietnam’s appeal. Whereas China’s median age is 36, Vietnam’s is 30.7. Soon enough, it will start ageing more rapidly but its urban workforce has much scope to grow. Seven in ten Vietnamese live in the countryside, about the same as in India—and compared with only 44% in China. The reservoir of rural workers should help dampen wage pressures, giving Vietnam time to build labour-intensive industries, a necessity for a nation of nearly 100m people. + +Many other countries also boast young workforces. But few have had as effective policies as Vietnam. Since the early 1990s the government has been very open to international trade and investment. This has given foreign companies the confidence to build factories. Foreign investors are responsible for a quarter of annual capital spending. Trade accounts for roughly 150% of national output, more than any other country at its level of per-person GDP. + +Investors have also taken heart from the stability of Vietnam’s long-term planning. Like China, it has used five-year plans as rough blueprints for development. But also like China, its governance allows scope for innovation: its 63 provinces compete with each other to attract investors. A model of developing industrial parks with foreign money and managers began in Ho Chi Minh City in 1991 and has since been replicated elsewhere. + +And Vietnam’s workforce is not just young but skilled. Public spending on education is about 6.3% of GDP, two percentage points more than the average for low- and middle-income countries. Although some governments spend even more, Vietnam’s expenditures have been well focused, aiming to boost enrolment levels and ensure minimum standards. In global rankings, 15-year-olds in Vietnam beat those in America and Britain in maths and science. That pays dividends in its factories. At Saitex, a high-end denim manufacturer, workers must handle complex machinery—from lasers to nanobubble washers—all to produce the worn jeans so popular in the West. + +On top of this solid foundation, Vietnam is reaping benefits from trade deals. It is set to be the biggest beneficiary of the Trans-Pacific Partnership (TPP), a 12-country deal that includes America and Japan. With American politics turning hostile to trade, there is a risk that the TPP will fail. But even if that happens, Vietnam will do well. The TPP has already helped to advertise its capabilities. And there are other major agreements: a free-trade pact with the EU is in the works, and one with South Korea went into force in December. + +Yet Vietnam also faces a series of challenges, any of which could impede its rise. Speculative excesses in the past helped fuel a property bubble. It burst in 2011, saddling banks with bad debts. Vietnam created a “bad bank” to house the failed loans and has started cleaning up its banks. However, it has been slow to inject new capital into its banks and hesitant about modernising their operations. + +In one crucial area it compares poorly with China: getting the most out of the private sector. Private Chinese companies generate about 1.7 yuan of revenue per yuan of assets, more than double the 0.7 ratio for state-owned enterprises (SOEs). In Vietnam private-sector productivity has slumped over the past decade to the 0.7 level, the same as SOEs, says the World Bank. One reason is that large groups in Vietnam sprawl across 6.4 separate industries on average; those in China operate in just 2.3, according to the OECD. + +Furthermore, although Vietnam has benefited from foreign investment, only 36% of its firms are integrated into export industries, compared with nearly 60% in Malaysia and Thailand, according to the Asian Development Bank (ADB). In some cases Vietnam has gone too high-end. Much has been made of Samsung’s plans to invest $3 billion in mobile-phone production in Vietnam, but domestic suppliers provide it with little except plastic wrapping. Vu Thanh Tu Anh, director of the Fulbright Economics Teaching Program in Ho Chi Minh City, says the government needs to help build up supply chains—for example, training companies in textile production to support the apparel sector. + +There are grounds for cautious optimism. The Ministry of Planning and Investment teamed up with the World Bank to lay out a strategy for change earlier this year. Their joint report, “Vietnam 2035”, details how the country can make SOEs more commercial and reinvigorate the private sector. Weakened public finances—the fiscal deficit is set to be more than 6% of GDP for the fifth straight year in 2016—are putting pressure on the government. To bolster its revenues, it sold shares in more than 200 SOEs last year, the biggest annual tally ever. These were mostly small deals but in July it took a bolder step, scrapping a foreign-ownership limit (previously 49%) on Vinamilk, the country’s main dairy company. Investors are hopeful this will serve as a template for more such reforms. + +After years of solid growth, Vietnam has nearly reached a milestone. Now it is classified as a middle-income country, it is about to lose access to preferential financing from development banks. In 2017 the World Bank will start to phase out concessional lending. For Vietnam it is a moment to reflect on how far it has come and also on the trickier path ahead. It has a chance to be Asia’s next great success story. It will take courage to get there. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21703376-having-attained-middle-income-status-vietnam-aims-higher-good-afternoon-vietnam/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +The second big shift + +The relationship between equity and bond values has changed again + +Aug 6th 2016 | From the print edition + + + +INVESTORS who need income have traditionally opted for savings accounts and bonds. That was believed to be the safe approach. In the conventional view, equities were what you bought when you wanted long-term capital gains. + +That view was always short-sighted; over 20-year periods around half of the total return from American shares comes from reinvesting dividends. But ignoring the income-generating appeal of equities looks particularly odd now. The dividend yield on shares in America, Britain and Japan is higher than the yield on ten-year government bonds; in the case of the latter two, the difference is more than two percentage points (see chart). The gap is nothing like as big in America, although many would argue that share buy-backs materially boost the effective yield. + +For investors who started their careers in the 1980s and 1990s, this relationship looks very weird. For them, the norm was for bonds to offer a yield many percentage points higher than that from equities. As a result, when, in 2003, the dividend yield on British shares rose above the government-bond yield for a few days, many investors saw it as an historic buying opportunity. London’s FTSE 100 index duly rallied sharply. A closer look at the chart suggests something significant has changed. Equities have frequently yielded more than bonds in both Britain and Japan since 2008, without signalling that shares were a steal. + +Financial history shows that the valuation basis for equities and bonds has already undergone one historic change. Up until the late 1950s, it was quite common for equities to yield more than government bonds. That is because equities were perceived to be more risky. Companies pay dividends only after they have satisfied the demands of other creditors, in particular bondholders. The Depression had shown that equities could collapse in price and that many companies could go bust. So, the institutional investors of the 1930s and 1940s thought it prudent to place the bulk of their assets in bonds. + +But from the mid-1950s onwards, these big investors started to change their minds. Memories of the Depression faded. Equities might be individually risky but a diversified portfolio looked much more secure. Over time, the dividend income from shares would rise while the income from bonds was fixed. And as inflation soared in the 1960s and 1970s, that made holding bonds look like a very bad idea. The “cult of the equity” had arrived. + +In other words, this first valuation shift between bonds and equities was down to a change in economic fundamentals and in the attitudes of institutional investors. Both factors are probably at play in this latest switch, too. + +Since 2008 the developed world has struggled to generate either inflation or consistently rapid growth. That combination is better for bonds than it is for equities. In a sense equities have defied the odds, rallying strongly since the spring of 2009 despite sluggish economic growth. The reason is that profits (in America in particular) have been high as a proportion of GDP, because wages have been held down. But it seems unlikely that profits can stay elevated indefinitely. And although a diversified portfolio of equities protects investors against the risk of individual company failure, they can still suffer significant losses from a market sell-off. Japan’s Nikkei 225 is less than half its 1989 peak. Dividend income can be slashed in a crisis; it fell by 28% in America in 2008, for example. + +Investor attitudes have also changed. Regulations mean that insurance companies and pension funds have reduced their exposure to equities and pushed up their bond holdings. They are no longer automatic buyers of equities when the market falls. The cult of the equity has lost some important followers. + +Central banks have also become huge players in the government-bond markets, pushing yields to negative levels in many cases. That has led some commentators to argue that, rather than equities being cheap, bonds are ridiculously expensive. + +This view may turn out to be right. But investors have been betting that Japanese bonds are overvalued for more than 20 years in a trade now known as the “widowmaker”. In the post-2008 world, bond yields seem likely to stay low. That should make investors cautious about using bond yields as a buy signal for equities. The income from equities looks very appealing and (in the absence of a recession) should provide support for share prices. But do not count on share prices rising sufficiently to push the dividend yield below bond yields again. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21703380-relationship-between-equity-and-bond-values-has-changed-again-second-big/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +European banks + +Still stressed out + +Stress-test results do little to dampen worries about Italy’s lenders + +Aug 6th 2016 | From the print edition + + + +ANY big announcement about banks made after the markets close for the weekend is bound to bring back dark memories of the 2007-08 financial crisis. Although the results of the latest European bank stress tests, released on July 29th, contained much that was reassuring, they did not dispel investors’ doubts about the industry’s earnings prospects. And in the case of Italy, the tests seemed to exacerbate bigger worries. When the markets opened again on August 1st, they were marked by falls in banks’ share prices; the Euro Stoxx banks index dropped by 3% and almost 5% on successive days. + +In aggregate the results suggested that European banks were in a healthier position than when the last exercise was conducted, in autumn 2014. This time the banks began with an average “fully-loaded” capital ratio of 12.6% and ended with one of 9.2% in the tests’ most adverse scenario; that compares with a fall from 11.1% to 7.6% last time. No country’s banking sector ended the tests with an average capital ratio below the 5.2% of Ireland; in 2014, the ratio for several countries was negative, implying systemic insolvency. These figures are flattered, however, by the absence of banks from the still-struggling economies of Greece, Portugal or Cyprus. + +But the real focus was on the weakness of specific banks, notably in Italy. The worst of the bunch was Monte dei Paschi, Italy’s third-largest lender. Its capital ratio was the only one to turn negative in the test, at -2.4%, meaning that it would be bankrupt if the tests’ worst-case scenario came true. The bank anticipated this awful result by unveiling a plan of its own a few hours earlier to shore up its finances. The scheme involves increasing provisions on impaired loans from 29% to 40%; moving €27.7 billion ($30.9 billion) of the most troubled non-performing loans, discounted to 33% of book value, off its balance-sheet into a special-purpose vehicle; and securitising and selling these loans to investors. + +The losses that Monte dei Paschi incurs as a result of this transaction will be offset by raising €5 billion of new equity, though this is conditional on the successful completion of the bad-loan spinoff. Although investors initially welcomed the plan, with the share price rallying early on August 1st, the bank’s shares fell by a precipitous 16% on the following day as concerns grew that the deal may fall through and that regulators may impose losses on creditors if the capital-raising is unsuccessful. + +Health assessment + +UniCredit was the second-worst test performer among Italian banks, with a capital ratio of 7.1%. Its second-quarter results reinforced worries about its thin capital cushion, which has dipped from 10.5% to 10.3% since March. Analysts at Morgan Stanley, an investment bank, expect that it will need to raise €6 billion in capital. The bank has already announced the sale of its card-processing business; in the wake of a 17.8% share-price plunge in just three days after the tests, more action to spruce up its balance-sheet is surely needed. + +The fall in Italian bank shares extended even to those that performed well in the stress tests, such as Banco Popolare. One fear is that the bad-loan plan laid out by Monte dei Paschi sets a new benchmark for the whole sector. Many Italian lenders still have provisions on impaired loans of below 20%, and value their non-performing loans at much more than 33 cents on the euro. If the Monte dei Paschi deal does indeed set the standard for the rest, Italian banks could need up to €18 billion more in capital, according to Autonomous, a research firm. + +The stress test also highlighted other poor performers outside Italy. Allied Irish Bank had a capital ratio of just 4.3% in the adverse scenario, a result that may delay the Irish government’s plans to float 25% of the bank in 2017. Further disappointments included Raiffeisen of Austria, the third-worst performer in the test with a 6.1% capital ratio, and two German behemoths, Commerzbank and Deutsche Bank. Yet despite share-price declines—exacerbated in Commerzbank’s case by the release of a set of poor second-quarter results on August 2nd—the test results are unlikely to force an urgent response. + +Indeed, most investors are more worried by chronic ailments than the sort of shocks simulated by the stress tests. Hani Redha of PineBridge Investments, an asset-management firm, says markets are more concerned with bank profitability than solvency. The stress tests were based on the effects of a spike in long-term yields, when continued low interest rates seem more likely to weigh on a sector that depends for its earnings on the gap between short- and long-term interest rates. Banks are tied closely to the economic health of the countries they operate in. As long as low growth persists in Europe, no one should expect its banks to perform all that well. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21703263-stress-test-results-do-little-dampen-worries-about-italys-lenders-still/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Property taxes + +Home bias + +A taxing problem for foreign buyers + +Aug 6th 2016 | VANCOUVER | From the print edition + + + +EVEN in hot markets like Vancouver, property sales normally slow in the summer. But for Sonia Prasad and other estate agents, the last days of July were a blur of hurried sales and paperwork as buyers and sellers rushed to complete transactions before an August 2nd deadline. + +On July 25th the provincial government of British Columbia decreed that, after that date, foreign buyers must pay a new 15% tax on any residential purchase. The tax is aimed at stopping these buyers from pushing up prices in Canada’s most expensive residential-property market. + +Ms Prasad’s last-minute buyers included a couple from China who were purchasing a C$400,000 ($305,000) condominium in the suburb of New Westminster for their son, a student starting college in September. The extra $60,000 they would have had to pay might have killed the deal, Ms Prasad says. Indeed, the tax seems likely to have prompted some foreign buyers to walk away from deals agreed, but not completed, before the deadline. + +Governments at all levels, from municipal to federal, have been under pressure over the past two years to curtail foreign ownership in Vancouver. Michael de Jong, the finance minister of British Columbia, says foreign nationals invested more than C$1 billion in the province’s properties in the five weeks between June 10th and July 14th. More than C$860 million of that was spent in metropolitan Vancouver. + + + +Compare global housing data over time with our interactive house-price tool + +Back in 2011 the median price of a detached home in Vancouver was C$933,000; now it is C$1.56m. Household median incomes in the city have been rising only gently, from C$69,000 in 2011 to C$76,000 by 2014. Sherry Cooper, chief economist at Dominion Lending in Toronto, says Vancouver’s inflated prices are higher than anywhere else in the country. “When everyone is screaming about affordability, the government has to look like it’s doing something,” she says. + +Other jurisdictions have also implemented policies and surcharges to reduce foreign ownership in their residential markets. In December Australia’s Foreign Investment Review Board started to charge application fees for foreign buyers. Hong Kong, the most expensive real-estate market in the world, has added a 15% surcharge on home purchases from non-permanent residents. Britain has raised the stamp duty on homes worth more than £1.5m, the kind of properties bought by rich foreigners. + +To some, however, British Columbia’s move was poorly thought out. Under the Canada China Foreign Investment Promotion and Protection Agreement which took force in October 2014, foreign investors must be treated as favourably as locals, says Barry Appleton, a trade lawyer. The new tax, which targets all foreigners and not just Chinese buyers, will also violate the terms of the North American Free Trade Agreement, he alleges. This policy could end up being settled in the courts. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21703381-taxing-problem-foreign-buyers-home-bias/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Japan’s economy + +Levitation speed + +Japan gets less stimulus than expected + +Aug 6th 2016 | From the print edition + + + +JAPAN’S fastest trains run above the tracks, not along them, suspended in the air by magnetic forces. One of these miraculous trains will eventually connect Tokyo and Osaka, cutting over 70 minutes off the journey time. In its ability to speed things up, this “maglev” technology is matched by the magic of macroeconomics. This week the government approved a fiscal-stimulus plan to revive Japan’s economy that will, among other things, cut eight years off the completion time for the Tokyo-Osaka line. + +The government’s low-interest loan to high-speed rail was one of many goodies in a plan advertised at over ¥28 trillion (almost $280 billion). Only a fraction of that figure represents new government spending. And only a fraction of that fraction will be spent this fiscal year (which ends in March 2017). Nonetheless, ¥4.6 trillion will be included in the government’s “supplementary” budget this year, a non-negligible sum equal to about 0.9% of GDP. This easing is also a striking contrast with the fiscal tightening that was previously planned. A much-feared increase in the consumption tax was postponed on June 1st. + +In theory, the more a government does to revive demand, the less its central bank has to do. In practice, the government seems to be urging the Bank of Japan (BoJ) to match its stimulus efforts. On July 29th the BoJ demurred, easing monetary policy by less than expected. It increased its purchases of equities (via exchange-traded funds) but left its bond-buying and interest rates unchanged. + +As if to throw a bone to the government, the BoJ did note that its monetary easing and the government’s efforts to revive the economy will generate “synergy effects”. It may explore these interactions further in a “comprehensive assessment” of policies it is undertaking for its next meeting in September. + +Some commentators, including Adair Turner of the Institute for New Economic Thinking, argue that the synergy between monetary and fiscal stimulus can be pushed further. The government could finance its deficit with newly created money, not bonds. This was one of a variety of unconventional proposals the IMF analysed in its latest report on Japan’s economy, also released this week. (Others included a policy of “irresponsible” fiscal and monetary stimulus in pursuit of inflation well above 2%, as advocated by Paul Krugman, a Nobel-prize winning economist, and a policy of capping the yen until prices reach a desired level, an idea propounded by Lars Svensson of the Stockholm School of Economics.) + +All of these approaches could lift inflation and growth. Mr Turner’s proposal could even lower public debt. The IMF worries, however, that these benefits will be negated if markets demand an inflation-risk premium or if they believe the state will subordinate monetary policy to its fiscal needs, replacing deflationary dangers with fears of excessive inflation (see article). Like its maglev trains, Japan’s economy must build up velocity before it can levitate. To speed it up, some unconventional policies may be necessary. But there is always the worry that such policies might send Japan’s economy off the rails altogether. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21703379-japan-gets-less-stimulus-expected-levitation-speed/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +The desperation of independents + +Stubbornly low interest rates may mean the end of central-bank autonomy + +Aug 6th 2016 | From the print edition + + + + + +LIKE many articles of faith, central-bank independence requires some suspension of disbelief. In most countries the central bank is a branch of government, which appoints its top officials and sets its goals. Yet in the decades after the 1980s, when governments began giving the institutions operational independence, that faith seemed to move mountains. The shift coincided with the “great moderation” era of low inflation and gentle business cycles. Indeed, central bankers came to be seen as near-omnipotent. The 2007-08 crisis reminded the public that the monetary titans are mortal. Yet for all the criticism they have faced since then, central bankers have less to fear from frustrated politicians and angry voters than from the cold logic of low interest rates. + +What is so special, exactly, about an independent central bank? Support for their autonomy emerged as a result of the counter-revolution against Keynesianism of the 1970s, and is built on two related ideas. The first is that independence is necessary to preserve monetary restraint. Robert Lucas, a Nobel-prize winning economist, argued that when elected leaders exercise influence over interest rates, they cannot resist the temptation to loosen monetary policy in election years, accepting higher inflation as the price of lower unemployment. As people learn to anticipate this behaviour, so their expectations of inflation change. Price rises accelerate even as unemployment holds steady or rises. To rein in inflation, monetary policy had to be depoliticised and given to central bankers who stood alone. + +Independence was also intended to impose discipline on fiscal policy. In 1981 Thomas Sargent (another Nobel laureate) and Neil Wallace pointed out that central banks and governments are locked in a battle for dominance. If a central bank is beholden to the government then spendthrift politicians might become emboldened and rack up enormous debts, knowing that should markets lose faith, a dutiful central bank will step in and print money to cover the fiscal shortfall. If, on the other hand, a central bank can credibly assert independence and commit itself to a monetary-policy target, governments might be persuaded that money-printing is not available as a backstop, and that public debt must be kept under control. In the 1970s governments ran roughshod over their central banks, contributing to the high inflation of the period. During the great moderation, in contrast, assertive central bankers hectored their governments about the need for fiscal restraint: Alan Greenspan, then chairman of the Federal Reserve, famously persuaded Bill Clinton to drop his plans for public spending and instead slash deficits. By successfully imposing discipline on governments, central bankers hoped to avoid being captured by them. + +This model of the economy has been turned on its head by the steady downward march of interest rates that began in the 1980s as a result of financial globalisation, lower inflation and expectations of slower growth. In the years since the financial crisis rates have plumbed new and extraordinary depths. This striking trend, which once looked like a macroeconomic triumph, now threatens to marginalise central banks. It has steadily eliminated the room central banks have to cut their benchmark interest rates in order to provide an economic boost in a slump. They look anything but all-powerful: unable to generate strong growth or to return rates to normal levels after years of recovery. + +Give me liberty or give me debt + +A further erosion of central banks’ authority may be unavoidable. Many of their remaining tools reduce their ability to impose discipline on government budgets. If not eventually reversed, quantitative easing, or the purchase of government bonds with newly created money, represents the monetary financing of some government debt—precisely the outcome independence was meant to rule out. Negative interest rates relax budget constraints by reducing the cost of financing government debt. New policy tools (like the authority to buy a wider range of assets or a change in mandates) would in most cases require government permission. And as asset purchases lead to larger central-bank balance-sheets, so do the potential losses to those banks from higher interest rates (and corresponding declines in the prices of the bonds they hold). Such losses would not impair monetary policy, but would open the central banks to intense scrutiny and perhaps invite populist power grabs. + +Although economists remain broadly in favour of central-bank independence, the amount of new research affirming the importance of stimulatory fiscal policy is growing. The continued economic doldrums are also creating a political opening for more aggressive fiscal action. On August 2nd the Japanese government announced new stimulus measures worth ¥4.6 trillion ($45 billion) this year. Both American presidential contenders have plans that will raise government deficits, and the British government has abandoned its target of balancing the budget by 2020. Low interest rates have emboldened politicians who might otherwise have ignored the calls of frustrated voters for fear of the bond-market vigilantes. + +The loss of central-bank autonomy would create risks—serious ones in places with a history of fiscal incontinence. Governments are not the deftest of economic stewards. They are often slow to respond to slumping demand. Tax cuts and spending increases can play havoc with people’s incentives, undermining the efficiency of the economy. Yet history also suggests that central-bank submission need not lead to disaster. The period from the 1940s to the 1970s, when governments took primary responsibility for keeping economies out of slumps, was more volatile and inflationary but it was hardly Armageddon. Demand-starved recoveries with central-bank interest rates stuck perpetually at or below zero are corrosive in their own way. The independent central bank is an impressive technocratic institution. It may also prove to be a relatively short-lived one. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21703372-stubbornly-low-interest-rates-may-mean-end-central-bank-autonomy/print + + + + + +Previous Articles Sections Next + + + +Economics brief + + + + + +Tariffs and wages: An inconvenient iota of truth + + + + + +Articles Sections Next + +Tariffs and wages + +An inconvenient iota of truth + +The third in our series looks at the Stolper-Samuelson theorem + +Aug 6th 2016 | From the print edition + + + +IN AUGUST 1960 Wolfgang Stolper, an American economist working for Nigeria’s development ministry, embarked on a tour of the country’s poor northern region, a land of “dirt and dignity”, long ruled by conservative emirs and “second-rate British civil servants who didn’t like business”. + +In this bleak commercial landscape one strange flower bloomed: Kaduna Textile Mills, built by a Lancashire firm a few years before, employed 1,400 people paid as little as £4.80 ($6.36) a day in today’s prices. And yet it required a 90% tariff to compete. + +Skilled labour was scarce: the mill had found only six northerners worth training as foremen (three failed, two were “so-so”, one was “superb”). Some employees walked ten miles to work, others carried the hopes of mendicant relatives on their backs. Many quit, adding to the cost of finding and training replacements. Those who stayed were often too tired, inexperienced or ill-educated to maintain the machines properly. “African labour is the worst paid and most expensive in the world,” Stolper complained. + +He concluded that Nigeria was not yet ready for large-scale industry. “Any industry which required high duties impoverished the country and wasn’t worth having,” he believed. This was not a popular view among his fellow planners. But Stolper’s ideas carried unusual weight. He was a successful schmoozer, able to drink like a fish. He liked “getting his hands dirty” in empirical work. And his trump card, which won him the respect of friends and the ear of superiors, was the “Stolper-Samuelson theorem” that bore his name. + +The theorem was set out 20 years earlier in a seminal paper, co-authored by Paul Samuelson, one of the most celebrated thinkers in the discipline. It shed new light on an old subject: the relationship between tariffs and wages. Its fame and influence were pervasive and persistent, preceding Stolper to Nigeria and outlasting his death, in 2002, at the age of 89. Even today, the theorem is shaping debates on trade agreements like the Trans-Pacific Partnership (TPP) between America and 11 other Pacific-rim countries. + +The paper was “remarkable”, according to Alan Deardorff of the University of Michigan, partly because it proved something seemingly obvious to non-economists: free trade with low-wage nations could hurt workers in a high-wage country. This commonsensical complaint had traditionally cut little ice with economists. They pointed out that poorly paid labour is not necessarily cheap, because low wages often reflect poor productivity—as Kaduna Textile Mills showed. The Stolper-Samuelson theorem, however, found “an iota of possible truth” (as Samuelson put it later) in the hoary argument that workers in rich countries needed protection from “pauper labour” paid a pittance elsewhere. + +To understand why the theorem made a splash, it helps to understand the pool of received wisdom it disturbed. Economists had always known that tariffs helped the industries sheltered by them. But they were equally adamant that free trade benefited countries as a whole. David Ricardo showed in 1817 that a country could benefit from trade even if it did everything better than its neighbours. A country that is better at everything will still be “most better”, so to speak, at something. It should concentrate on that, Ricardo showed, importing what its neighbours do “least worse”. + +If bad grammar is not enough to make the point, an old analogy might. Suppose that the best lawyer in town is also the best typist. He takes only ten minutes to type a document that his secretary finishes in 20. In that sense, typing costs him less. But in the time he spent typing he could have been lawyering. And he could have done vastly more legal work than his secretary could do, even in twice the time. In that sense typing costs him far more. It thus pays the fast-typing lawyer to specialise in legal work and “import” typing. + +In Ricardo’s model, the same industry can require more labour in one country than in another. Such differences in labour requirements are one motivation for trade. Another is differences in labour supplies. In some nations, such as America, labour is scarce relative to the amount of land, capital or education the country has accumulated. In others the reverse is true. Countries differ in their mix of labour, land, capital, skill and other “factors of production”. In the 1920s and 1930s Eli Heckscher and his student, Bertil Ohlin, pioneered a model of trade driven by these differences. + +In their model, trade allowed countries like America to economise on labour, by concentrating on capital-intensive activities that made little use of it. Industries that required large amounts of elbow grease could be left to foreigners. In this way, trade alleviated labour scarcity. + +That was good for the country, but was it good for workers? Scarcity is a source of value. If trade eased workers’ rarity value, it would also erode their bargaining power. It was quite possible that free trade might reduce workers’ share of the national income. But since trade would also enlarge that income, it should still leave workers better off, most economists felt. Moreover, even if foreign competition depressed “nominal” wages, it would also reduce the price of importable goods. Depending on their consumption patterns, workers’ purchasing power might then increase, even if their wages fell. + +Working hypothesis + +There were other grounds for optimism. Labour, unlike oil, arable land, blast furnaces and many other productive resources, is required in every industry. Thus no matter how a country’s industrial mix evolves, labour will always be in demand. Over time, labour is also versatile and adaptable. If trade allows one industry to expand and obliges another to contract, new workers will simply migrate towards the sunlit industrial uplands and turn their backs on the sunset sectors. “In the long run the working class as a whole has nothing to fear from international trade,” concluded Gottfried Haberler, an Austrian economist, in 1936. + +Stolper was not so sure. He felt that Ohlin’s model disagreed with Haberler even if Ohlin himself was less clear-cut. Stolper shared his doubts with Samuelson, his young Harvard colleague. “Work it out, Wolfie,” Samuelson urged. + +The pair worked it out first with a simple example: a small economy blessed with abundant capital (or land), but scarce labour, making watches and wheat. Subsequent economists have clarified the intuition underlying their model. In one telling, watchmaking (which is labour-intensive) benefits from a 10% tariff. When the tariff is repealed, watch prices fall by a similar amount. The industry, which can no longer break even, begins to lay off workers and vacate land. When the dust settles, what happens to wages and land rents? A layman might assume that both fall by 10%, returning the watchmakers to profit. A clever layman might guess instead that rents will fall by less than wages, because the shrinkage of watchmaking releases more labour than land. + +Both would be wrong, because both ignore what is going on in the rest of the economy. In particular, wheat prices have not fallen. Thus if wages and rents both decrease, wheat growers will become unusually profitable and expand. Since they require more land than labour, their expansion puts more upward pressure on rents than on wages. At the same time, the watch industry’s contraction puts more downward pressure on wages than on rents. In the push and pull between the two industries, wages fall disproportionately—by more than 10%—while rents, paradoxically, rise a little. + +This combination of slightly pricier land and much cheaper labour restores the modus vivendi between the two industries, halting the watchmakers’ contraction and the wheat-farmers’ expansion. Because the farmers need more land than labour, slightly higher rents deter them as forcefully as much lower wages attract them. The combination also restores the profits of the watchmakers, because the much cheaper labour helps them more than the slightly pricier land hurts them. + + + +The upshot is that wages have fallen by more than watch prices, and rents have actually risen. It follows that workers are unambiguously worse off. Their versatility will not save them. Nor does it matter what mix of watches and wheat they buy. + +Stolper, Samuelson and their successors subsequently extended the theorem to more complicated cases, albeit with some loss of crispness. One popular variation is to split labour into two—skilled and unskilled. That kind of distinction helps shed light on what Stolper later witnessed in Nigeria, where educated workers were vanishingly rare. With a 90% tariff, Kaduna Textile Mills could afford to train local foremen and hire technicians. Without it, Nigeria would probably have imported textiles from Lancashire instead. Free trade would thus have hurt the “scarce” factor. + +In rich countries, skilled workers are abundant by international standards and unskilled workers are scarce. As globalisation has advanced, college-educated workers have enjoyed faster wage gains than their less educated countrymen, many of whom have suffered stagnant real earnings. On the face of it, this wage pattern is consistent with the Stolper-Samuelson theorem. Globalisation has hurt the scarce “factor” (unskilled labour) and helped the abundant one. + +But look closer and puzzles remain. The theorem is unable to explain why skilled workers have prospered even in developing countries, where they are not abundant. Its assumption that every country makes everything—both watches and wheat—may also overstate trade’s dangers. In reality, countries will import some things they no longer produce and others they never made. Imports cannot hurt a local industry that never existed (nor keep hurting an industry that is already dead). + +Some of the theorem’s other premises are also questionable. Its assumption that workers will move from one industry to another can blind it to the true source of their hardship. Chinese imports have not squeezed American manufacturing workers into less labour-intensive industries; they have squeezed them out of the labour force altogether, according to David Autor of the Massachusetts Institute of Technology and his co-authors. The “China shock”, they point out, was concentrated in a few hard-hit manufacturing localities from which workers struggled to escape. Thanks to globalisation, goods now move easily across borders. But workers move uneasily even within them. + +Grain men + +Acclaim for the Stolper-Samuelson theorem was not instant or universal. The original paper was rejected by the American Economic Review, whose editors described it as “a very narrow study in formal theory”. Even Samuelson’s own textbook handled the proposition gingerly. After acknowledging that free trade could leave American workers worse off, he added a health warning: “Although admitting this as a slight theoretical possibility, most economists are still inclined to think that its grain of truth is outweighed by other, more realistic considerations,” he wrote. + +What did Stolper think? A veteran of economic practice as well as principles, he was not a slave to formalism or blind to “realistic considerations”. Indeed, in Nigeria, Stolper discovered that he could “suspend theory” more easily than some of his politically minded colleagues (perhaps because theory was revealed to them, but written by him). + +He was nonetheless sure that his paper was worth the fuss. He said he would give his left eye to produce another one like it. By the paper’s 50th anniversary, he had indeed lost the use of that eye, he pointed out wistfully. The other side of the bargain was, however, left unfulfilled: he never did write another paper as good. Not many people have. + +LATER IN THIS SERIES: + +• The Keynesian multiplier + +• The Nash equilibrium + +• The Mundell-Fleming trilemma + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economics-brief/21703350-third-our-series-looks-stolper-samuelson-theorem-inconvenient-iota/print + + + + + +Articles Sections Next + + + +Science and technology + + + + + +Anti-submarine warfare: Seek, but shall ye find? + +Lithium-air batteries: Their time has come + +Artificial neurons: You’ve got a nerve + +The right to die: What is unbearable? + + + + + +Articles Sections Next + +Anti-submarine warfare + +Seek, but shall ye find? + +A proliferation of quieter submarines is pushing navies to concoct better ways to track them + +Aug 6th 2016 | From the print edition + + + +DURING war games played off the coast of Florida last year, a nuclear-powered French attack submarine, Saphir, eluded America’s sub-hunting aircraft and vessels with enough stealth to sink (fictitiously) a newly overhauled American aircraft-carrier, Theodore Roosevelt, and most of her escort. An account of the drill on a French defence-ministry website was promptly deleted, but too late for it to go unnoticed. + +Nor was this French victory a fluke. In 2006, in what was very far from being a war game, a Chinese diesel-electric submarine surfaced near Okinawa within torpedo range of another American carrier, Kitty Hawk, without having been detected by that carrier’s escort of more than a dozen vessels and anti-submarine aircraft. And, from the point of view of carrier-deploying navies, things are threatening to get worse. Saphir, launched in 1981, hardly represents the state of the art in underwater undetectability; in the decade since the Okinawa incident diesel-electrics have become even quieter. For an inkling of the silence of the new generation of such subs when they are running on battery power alone, without their engines turning, Jerry Hendrix, a former anti-submarine operations officer on the Theodore Roosevelt, asks: “How loud is your flashlight?” + +Moreover, submarines are spreading. Since the cold war ended, the number of countries deploying them has risen from a dozen or so to about 40. Many of the newcomers are not part of the Western system of alliances. Some are actively hostile to it. And more may join them. A secondhand diesel-electric boat—not state of the art, admittedly, but effective nevertheless—can be had for as little as $350m. + +Worse, for those trying to defend ships from submarine attack, Western powers have routinely cut anti-submarine spending since the end of the cold war. American carriers retired the S-3 Viking submarine-hunting warplane in 2009, leaving shorter-range helicopters to compensate. Since the Soviet Union’s demise the average surface escort of an American carrier has shrunk from six vessels to four. + +Modern submarines are not merely quieter than their predecessors, they are also better armed. Many carry anti-ship guided missiles as well as torpedoes. One such, the CM-708 UNB, was shown off by China in April. It packs a 155kg warhead and, after popping out of the water, flies at near the speed of sound for about 290km. An export version is available but, if you prefer, Russia’s submarine-launched Kalibr-PL missile offers a bigger warhead and a terminal sprint at Mach three. In December a submerged Russian submarine hit Islamic State targets in Syria with four similar missiles. + +Potential adversaries operate or have ordered more submarines than Western powers could feasibly find and track with their existing defences. Even Iran has more than a dozen well-armed “midget” subs that hide in the shallows of the Persian Gulf, as well as three big Russian-made Kilo class diesel-electrics. Israel’s navy trains as if this trio carry the Kalibr-PL’s export variant, according to an Israeli expert. Countries which plan to arm submarines with that missile include China, India and Vietnam. The upshot is that many warships are in jeopardy and may only learn just how great that jeopardy is, says Alain Coldefy, a former vice-chief of France’s defence staff, once a missile is closing fast. + +Automating the hunt for Red October + +Perhaps belatedly, but certainly determinedly, a new approach to the submarine threat is now being developed. It is based on a simple principle: since submarines are hard to detect, when you do find one you should never let go. + +Shadowing threatening submersibles is nothing new. Trailing something is a much easier sensory task than discovering it in the first place, when you have an entire ocean to search. But at the moment this job is done by destroyers and (for those that have them) nuclear submarines. These cost billions of dollars to build and tens of millions a year more to run. Instead, the idea is to use smallish unmanned ships—marine drones, in effect—to do the job. These will be packed with enough sensors and artificial intelligence to follow adversaries’ submarines automatically. + +Half a dozen Western naval powers are conducting the R&D needed to build these, according to Eric Wertheim, author of the US Naval Institute’s reference doorstop “Combat Fleets of the World”. America is furthest along. In June its Office of Naval Research and its Defence Advanced Research Projects Agency, DARPA, began tests in the Pacific of the Sea Hunter, an unmanned (and, for now, unarmed) 40-metre trimaran, pictured. It is designed to follow an enemy submarine from the surface relentlessly for months, even in high seas. While the crew of the boat being tailed will probably be able to hear their pursuer’s diesel engine, that is not really a problem. Short of a torpedo launch, which would be an act of war, “there’s nothing you can do about it”, says Nevin Carr, a retired rear admiral in the American navy who now works at Leidos, the firm which designed Sea Hunter. + + + +Sea Hunters will cost just $20m each, according to Leidos. America will be able to let lots of them loose, says Scott Littlefield, head of the Sea Hunter programme at DARPA—or, rather, the “anti-submarine-warfare continuous trail unmanned vessel” (ACTUV) programme, as the agency prefers to call it. Mr Littlefield thinks of these robots as pawns to be put in harm’s way without risking loss of life or great treasure. Likening them to the chessboard’s lowliest piece, however, is slightly misleading. They will eventually need enough artificial intelligence not to be outfoxed by the manoeuvrings of the world’s best submarine commanders. + +Designing the software to do this has been hard, Mr Littlefield says. DARPA therefore asked video gamers for help. In 2011 the agency released “ACTUV Tactics Simulator”, a modified version of a game called “Dangerous Waters”, in which players chose the sensors for a Sea Hunter-like craft that they piloted to follow an enemy submarine. Having played, they repaid DARPA by uploading relevant data from their game sessions. These were analysed by the agency’s naval-warfare experts and tactics judged useful then programmed into the Sea Hunter’s software or passed on to contractors to improve the design of the ship. Even so, more advances are needed before the system can match an enemy submarine’s crew, according to Mr Carr. + +But naval drones will still be useful before then. With greater manoeuvrability, endurance and speed than manned diesel-electric submarines, they will find employment in many sorts of mission besides tracking the boats of potential enemies. This autumn, for example, Norway begins sea trials of ODIN, an 11-metre-long surface drone. ODIN will first sweep for underwater mines, since these are static and cannot take evasive action. Eventually, though, upgrades should give its software the wit to follow manned submarines. + +Some navies hope to make the drones themselves submerge. America’s putative SHARK class (an acronym contrived from “submarine, hold at risk”) is the furthest advanced in this area, says Andrew Krepinevich, a former adviser to three American defence secretaries—but China and Japan are not far behind. Underwater drones are harder to detect, and thus counter, than surface drones are because sound radiates from them through the water as a sphere, rather than the hemisphere occupied by the waterborne sonic emissions of a drone at the surface. Filling a larger volume at any given distance from its source, the sound of a submarine drone therefore dissipates faster than that from a surface drone. + +Some needle, some haystack + +All this technological change is ushering in a new era for anti-submarine warfare, according to Gunnar Wieslander, a former commander of Sweden’s submarine flotilla who now runs Saab Kockums, an exporter of diesel-electric manned submarines. Saab Kockums’s new 62-metre A26 model will sport a tube from which an underwater drone could slip out to attack surface drones. This, Mr Wieslander says, is the first time that such a feature has been fitted to a production submarine. Mr Krepinevich, however, counsels caution regarding underwater drones. They are fine for attacking other drones, but without huge advances in battery technology (see article), no such machine could keep up for long with a big submarine that charges its batteries from a diesel engine and can travel at up to 20 knots—much less with a faster nuclear-powered one. + +What, though, of the crucial task of detecting the submarines to be trailed in the first place? The phrase “surfaced within torpedo range” may bring to mind an image of a boat popping up a few hundred metres from its target—as, perhaps, in a film about the second world war. In the Okinawa incident, though, the distance was probably about five nautical miles (the details remain classified). Sound, whether of engines turning or sonar pulses returning, obeys the inverse-square law. Its strength changes in inverse proportion to the square of the distance it has travelled. That means it falls off fast. Ideally, therefore, detectors need to be close to their targets. + +One way to do this, at least for home waters, is to have a dense grid of fixed detectors. One of the more advanced of these is Singapore’s. It consists of underwaterbuoys called acoustic nodes that are tethered to the sea bed two or three kilometres apart. These nodes can talk to each other. They communicate by broadcasting precisely calibrated vibrations through the water. At the moment they are sending test messages, but eventually they will be equipped with their own submarine-detecting sensors. + +More sophisticated systems than this are in the works—including anti-drone countermeasures. According to Torstein Olsmo Sæbo, a scientist at FFI, Norway’s defence-research establishment, drone-towed acoustic arrays can now mimic the signature of a big submarine, luring a drone off in the wrong direction. (Just because Norway’s nascent flotilla of underwater drones could be programmed to do this, he adds, does not mean that it has been.) DARPA, meanwhile, is planning sea-floor pods which pop open to release drones that swim closer to an enemy submarine, or, after rising to the surface, fly off to deliver or collect more intelligence. + +The arms race between surface vessels and submarines has been going on for almost exactly a century—since Germany’s demonstration to its enemies in the first world war of the threat from its U-boats. By the end of the second world war, the Allies had become so good at finding U-boats that German crews taking to the sea had a life expectancy of about a week. As the examples of the Kitty Hawk and the Theodore Roosevelt show, the balance at the moment has tipped back in favour of the submariner. The great question is how long it will stay that way. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21703360-proliferation-quieter-submarines-pushing-navies-concoct-better-ways/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Lithium-air batteries + +Their time has come + +A new type of electrical cell may displace the lithium-ion design + +Aug 6th 2016 | From the print edition + +A cage for battery ions + +BATTERIES are notoriously hard to improve. Nowhere was this more apparent than at the opening last week, on July 29th, of Tesla’s Gigafactory, a massive battery plant in Nevada. According to its boss Elon Musk, Tesla built the factory because wringing more efficiency out of batteries is far more difficult than optimising the process by which they are made. + +It is an ironic coincidence, therefore, that last week also saw the publication, in Nature Energy, of a paper outlining a way of making a battery whose prototype stores twice as much juice as the lithium-ion cells the Gigafactory will turn out, and which could eventually do better than that. The new battery, brainchild of Ju Li of the Massachusetts Institute of Technology, is some way from commercialisation, but its design is such that commercialising it should not be hard. + +The fundamental idea behind Dr Li’s device is not new. It is a version of what is known as a lithium-air battery, something that has been a desideratum of energy-storage research since the 1970s. In theory, such batteries could hold more than four times the energy per kilogram of lithium-ion batteries. Building them, though, has proved taxing. As their name suggests, they draw in air. The part they need is the oxygen, but other atmospheric components—water vapour and carbon dioxide in particular—often damage them. + +Even versions that run on pure oxygen, however, have been plagued with problems. Using and recharging existing lithium-air batteries wastes a huge amount of energy because the process involves changing the oxygen from a gaseous state into what is, in essence, a solid, and then back again. Such phase changes require a lot of energy and may thus waste more than 30% of the input electricity. Moreover, the changes in volume that accompany the shift from gas to solid to gas put a strain on the battery’s electrodes. This means they rapidly degenerate to the point where the battery can no longer be recharged. + +The crucial difference between Dr Li’s design and previous attempts is that no actual air is involved. Instead, the cell is hermetically sealed and uses oxygen stored inside the battery itself, in a chemical called lithium superoxide (LiO2). Because this compound is unstable, it is easily induced to surrender some of its oxygen. + +To stop the superoxide disintegrating spontaneously, Dr Li embed it in the voids of a matrix made of cobalt oxide (yellow, in the artist’s imagining below left, in which white spheres represent lithium ions, red ones oxygen ions and blue streaks the crackle of electricity). This gives the superoxide’s structure stability. + +When the new battery is discharging power, lithium ions from a liquid electrolyte that bathes the matrix enter the solid and react with the oxygen in the superoxide to form either lithium peroxide (Li2O2) or lithium oxide (Li2O), both of which are also solids. Those chemical reactions drive electrons around an external circuit, where they might be put to use running anything from a mobile phone to a vehicle’s electric motor. Push electrons the other way around the circuit, though, by connecting the battery to a power supply, and the chemical reactions will go into reverse, charging the thing up again. + +That the oxygen remains in a solid state throughout these processes is crucial to the new battery’s success. Instead of 30%, it loses just 8% of the energy put into it. Similarly, its life is prolonged. In trials which discharged and recharged the battery 130 times, it lost less than 2% of its capacity. + +Past claims of practical lithium-air batteries have been met with scepticism, but in this case other workers in the field who are not involved in the study seem persuaded that Dr Li may be onto something. “Really impressive,” says Venkat Viswanathan of Carnegie Mellon University, in Pittsburgh. “A very interesting, exciting piece of work,” agrees Laurence Hardwick of Liverpool University, in Britain. + +Dr Li hopes, within a year, to turn the prototype into something that might be manufactured. This is an ambitious goal but Dr Hardwick agrees that, from an engineering perspective, the challenges are similar to conventional lithium-ion batteries, so rapid development is possible. And it is also an attractive goal. For Tesla and its rivals, these batteries could fuel a virtuous cycle of lighter cars with longer ranges. Dr Li sees this potential, too. His team have filed a patent and have begun talking with manufacturers. The question now is: who will license the technology first? + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21703358-new-type-electrical-cell-may-displace-lithium-ion-design-their-time-has/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Artificial neurons + +You’ve got a nerve + +Narrowing the gap between biological brains and electronic ones + +Aug 6th 2016 | From the print edition + + + +SINCE nobody really knows how brains work, those researching them must often resort to analogies. A common one is that a brain is a sort of squishy, imprecise, biological version of a digital computer. But analogies work both ways, and computer scientists have a long history of trying to improve their creations by taking ideas from biology. The trendy and rapidly developing branch of artificial intelligence known as “deep learning”, for instance, takes much of its inspiration from the way biological brains are put together. + +The general idea of building computers to resemble brains is called neuromorphic computing, a term coined by Carver Mead, a pioneering computer scientist, in the late 1980s. There are many attractions. Brains may be slow and error-prone, but they are also robust, adaptable and frugal. They excel at processing the sort of noisy, uncertain data that are common in the real world but which tend to give conventional electronic computers, with their prescriptive arithmetical approach, indigestion. The latest development in this area came on August 3rd, when a group of researchers led by Evangelos Eleftheriou at IBM’s research laboratory in Zurich announced, in a paper published in Nature Nanotechnology, that they had built a working, artificial version of a neuron. + +Neurons are the spindly, highly interconnected cells that do most of the heavy lifting in real brains. The idea of making artificial versions of them is not new. Dr Mead himself has experimented with using specially tuned transistors, the tiny electronic switches that form the basis of computers, to mimic some of their behaviour. These days, though, the sorts of artificial neurons that do everything from serving advertisements on web pages to recognising faces in Facebook posts are mostly simulated in software, with the underlying code running on ordinary silicon. That works, but as any computer scientist will tell you, creating an ersatz version of something in software is inevitably less precise and more computationally costly than simply making use of the thing itself. + +Hearing the noise, seeing the signal + +Neurons are pattern-recognition devices. An individual neuron can be connected to dozens or hundreds of others, and can pass electrical signals to and fro. If it receives a sufficient number of strong enough signals from its brethren over a short enough span of time, it will “fire”, sending a jolt of electricity to other neurons connected to it, possibly causing them to fire as well. If the incoming signals are too weak, or too infrequent, it will remain quiescent. + +Dr Eleftheriou’s invention consists of a tiny blob of germanium antimony telluride sandwiched between two electrodes. Germanium antimony telluride is what is known as a phase-change material. This means that its physical structure alters as electricity passes through it. It starts off as a disordered blob that lacks any regular atomic structure, and which conducts electricity poorly. If a low-voltage electrical jolt is applied, though, a small portion of the stuff will heat up and rearrange itself into an ordered crystal with much higher conductivity. Apply enough such jolts and most of the blob will become conductive, at which point current can pass through it and the neuron fires, just like the real thing. A high-voltage current can then be applied to melt the crystals back down and reset the neuron. + +This arrangement mimics real neurons in another way, too. Neurons are unpredictable. Fluctuations within the cell mean a given input will not always produce the same output. To an electronic engineer, that is anathema. But, says Tomas Tuma, the paper’s lead author, nature makes clever use of this randomness to let groups of neurons accomplish things that they could not if they were perfectly predictable. They can, for instance, jiggle a system out of a mathematical trap called a local minimum where a digital computer’s algorithms might get stuck. Software neurons must have their randomness injected artificially. But since the precise atomic details of the crystallisation process in IBM’s ersatz neurons differ from cycle to cycle, their behaviour is necessarily slightly unpredictable. + +The team have put their electronic neurons through their paces. A single artificial neuron, hooked up to the appropriate inputs, was able, reliably, to identify patterns in noisy, jittery test data. Dr Tuma is confident that, with modern chip-making techniques, his neurons can be made far smaller than the equivalent amount of conventional circuitry—and that they should consume much less power. + +The next step, says Dr Eleftheriou, is to experiment with linking such neurons into networks. Small versions of these networks could be attached to sensors and tuned to detect anything from, say, unusual temperatures in factory machinery, to worrying electrical rhythms in a patient’s heart, to specific types of trade in financial markets. Bigger versions could be baked onto standard computer chips, offering a fast, frugal co-processor designed to excel at pattern-recognition tasks—like speech- or face-recognition—now performed by slower, less efficient software running on standard circuitry. Do that and the conceptual gap between artificial brains and real ones will shrink a little further. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21703301-narrowing-gap-between-biological-brains-and-electronic-ones-youu2019ve-got/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The right to die + +What is unbearable? + +Some data about an emotional issue + +Aug 6th 2016 | From the print edition + +“A FATE worse than death” is a journalistic cliché, used this week alone to describe a visit to the dentist (in a British newspaper) and the plot arc of a character in J.K. Rowling’s new “Harry Potter” play (in an American magazine). But for the terminally ill, such fates do exist: death really can seem preferable to a lifetime of pain and suffering. A growing movement, including this newspaper, thus seeks to legalise—with stringent safeguards—doctor-assisted suicide around the world. + +Yet doctors are taught to keep patients alive regardless of the circumstances, says Emily Rubin of the University of Pennsylvania. A paper by her and her colleagues, just published in JAMA Internal Medicine, attempts to give statistical rigour to scientific hunches about end-of-life care. Over an eight-month period, beginning in July 2015, her team surveyed 180 patients who had been admitted to a hospital in Philadelphia suffering from serious illnesses, including lung and heart disease. All participants were over 60, and were asked by medical staff to hypothesise whether they would prefer to die than be in progressively worse vegetative states. + +As the chart shows, half or more said that they would consider being incontinent, being unable to get out of bed or relying on a breathing machine to stay alive as fates worse than death. Being so debilitated that they were reliant on food delivered via a tube, were constantly confused or required round-the-clock care were judged similarly by a third or more of respondents. + + + +Although it draws on a small sample, Dr Rubin’s study adds data to the discussion. Too much of the debate around the “right to die” focuses on individual opinion, often that of campaigners (on both sides) who are in rude health imagining how they would feel were they faced with severe illness. And when the views of those who are actually afflicted by ill-health are considered, the cases cited are often the hard ones that proverbially make bad law. Asking people approaching, or threatened with death, how they feel about it, and the moment at which they would like it to come, is a welcome development. Both sides of the doctor-assisted-dying debate should pay attention to it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21703359-some-data-about-emotional-issue-what-unbearable/print + + + + + +Previous Articles Sections Next + + + +Books and arts + + + + + +Fiction: Life and afterlife + +Elite black America: A world apart + +Geopolitics: East, West home is best + +European arts: Two men of one mind + +Paths well travelled: Trails and error + +Classical music: He’s the piano man + + + + + +Articles Sections Next + +Fiction + +Life and afterlife + +The surprising late literary flowering of John Maxwell Coetzee + +Aug 6th 2016 | From the print edition + + + +The Schooldays of Jesus. By J.M. Coetzee. Harvill Secker; 260 pages; £17.99. To be published in America by Viking in February 2017; $27. + +JUDGING the Man Booker prize, the world’s best-known annual award for fiction in English, involves reading a novel a day—every day—for more than six months. The initial distillation of this compulsive word-brew is the longlist, 13 books which are known collectively as the Man Booker dozen and are the first indication of what the judging panel is thinking. A crowd of famous authors failed to make the cut this year, from Edna O’Brien to Don DeLillo. Instead, the longlist, announced on July 27th, included three tiny independent publishers and four first novels (all virtually unknown). One was written in a VW camper van, a sign perhaps that the judges were looking for authors and editors who live outside the mainstream. + +So it came as something of a surprise that the list also included an old, if not elderly, hand, J.M. Coetzee. A Nobel laureate who has twice won the Man Booker (in 1983 for “The Life & Times of Michael K” and again in 1999 for “Disgrace”) and been longlisted three times more, Mr Coetzee is almost two decades older than any of his colleagues on the list. At an age when most people have retired to an armchair, he finds himself not so much making a late dash as accelerating on to a whole new literary motorway. + +In 2009, when he was about to be 70, Mr Coetzee wrote two letters to Paul Auster, a New York novelist, outlining his ideas about “late style”. He saw the artist’s life as having two, perhaps three stages. “In the first you find, or pose for yourself, a great question. In the second you labour away at answering it. And then, if you live long enough, you come to a third stage, when the aforesaid great question begins to bore you, and you need to look elsewhere.” By then, as an Irish literary critic, Fintan O’Toole, pointed out, Mr Coetzee had turned his back on his “great question”, man’s capacity for cruelty and the future of his native South Africa, the setting for his two Man Booker winners. He had also just finished “Summertime”, an autobiographical novel that appeared to free him to make a fresh literary start. + +The result, “The Childhood of Jesus”, Mr O’Toole wrote in the New York Review of Books, was “not so much a late work as a posthumous publication…a writer’s afterlife, Coetzee after Coetzee.” The main character, Simón, explains to Davíd, the small boy he has taken under his wing: “After death there is always another life…We human beings are fortunate in that respect.” The novel ends with the family on the run. + +Readers, including Joyce Carol Oates who has a lifetime of difficult reading behind her, were gripped by the vestigial Bible tale and captivated by the spare writing style, even as they were bemused at the lack of conventional narrative landmarks and the fact that this so-called allegory turned out to be nothing of the kind. Mr Coetzee’s new book aims to take the story on. “The Schooldays of Jesus” is not out until later this month, so the Man Booker judges are among the few who have read it. What was it that so impressed them? + +Davíd and his parents have taken refuge in another town. In need of employment, they are taken in on a farm and work as common labourers. The boy is naturally clever—and wilful—with ideas of his own. “He believes he has powers,” his father tells a friend. “As you can imagine, it is not easy to teach him.” The owners of the farm, three sisters, offer to pay for his education. Having failed to thrive in an ordinary school, the boy is sent to the Academy of Dance, which is devoted to “the training of the soul through music”. + +Loose biblical associations are threaded throughout: a census is about to be held, the family meets many sinners, listens to parables and discusses sin, guilt, redemption and how miscreants should be treated. But the central issue of this novel and its predecessor is one that philosophers have pondered for centuries: what makes us human, and is there more to life than existence on this planet? People have feet of clay, but even the most earthbound can be transported by music, passion, poetry and the possibility of a next life—if only they find the key. Freed from literary convention, Mr Coetzee writes not to provide answers, but to ask great questions. + +Will he become the first writer to win the Man Booker prize three times? Perhaps not this year. But that may not trouble him. Mr Coetzee is a writer; writing is what he does best. He is still having fun doing it and, at 76, he may not ask for more. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21703348-surprising-late-literary-flowering-john-maxwell-coetzee-life-and-afterlife/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Elite black America + +A world apart + +Growing up in upper-class African-America + +Aug 6th 2016 | From the print edition + +Dressing up + +Negroland: A Memoir. By Margo Jefferson. Vintage; 248 pages; $16. Granta; £12.99. + +“IN NEGROLAND”, writes Margo Jefferson, “we thought of ourselves as the Third Race, poised between the masses of Negroes and all classes of Caucasians.” This penetrating memoir, out last September in America and only recently in Britain, is at its heart an unpacking of that sentence and its implications. + +Start with her self-conscious choice of the word “Negro”. To modern ears it sounds archaic, not to mention offensive. But as Ms Jefferson explains, no other word captures the sweep and complexity of America’s tortured race relations; it is “a word for runaway slave posters and civil-rights proclamations…a tonal-language word whose meaning shifts as setting and context shift.” + +“Negroland” is Ms Jefferson’s term for “a small region of Negro America whose residents were sheltered by a certain amount of privilege and plenty.” This region is not geographically bounded; it exists in most major American cities. Ms Jefferson is its product—having grown up in Bronzeville and Park Manor, wealthy black neighbourhoods on Chicago’s South Side, in the 1950s. + +She is not its first chronicler. In 1841 Joseph Willson, a dentist, wrote “Sketches of the Higher Classes of Coloured Society in Philadelphia”, an orotund, Victorian disquisition that urged his coevals to be cultured and educated, but above all to “show themselves very humble”. Nearly two decades later Cyprian Clamorgan’s showier “The Coloured Aristocracy of St Louis” introduced readers to his mansion-owning neighbours who sent their children to school in Europe. In 1903 W.E.B. DuBois, a sociologist who founded one of America’s pre-eminent civil-rights organisations (the National Association for the Advancement of Coloured People), called the African-American intellectual elite “the Talented Tenth”, and placed upon them his hopes for racial advancement. + +But unlike individual rich black people, and also unlike rich white castes such as Boston Brahmins and the southern agrarian elite, the black upper class as a group—with its rituals and lineages, like southern society, and its Brahmin-like social clubs—remains hazy to many. As recently as 1999, when Lawrence Otis Graham, a lawyer and author, published his breezy “Our Kind of People”, the New York Times asked in a headline, “Is there a black upper class?” + +In his magisterial novel, “Invisible Man”, Ralph Ellison posits that mainstream America has trouble seeing black people as differentiated, fully rounded individuals. As Ms Jefferson observes, there are boxes into which white Americans can place outrageously wealthy black athletes and entertainers, and other boxes for poor black people, but when confronted by successful, diligent black lawyers, dentists and entrepreneurs—that is, when confronted by black people who have navigated the ordinary world as well or better than themselves—their imagination fails. “We are not what They want to see in their books and movies,” she writes. “Our We is too much like Theirs. Which threatens them, bores them, or both.” + +This book encapsulates the tension between wanting and fearing to be seen. Ms Jefferson was taught to excel, but never to show off; to compete with anyone, regardless of race, and be comfortable anywhere, but to be aware that prejudice could rear its ugly head at any moment. She was spared the brutality of southern segregation; she learned to navigate a much subtler set of tacit rules and assumptions. The Black Power movement in the 1960s called into question the worth of seeking to succeed on white society’s terms; by the 1970s “white society scurries to include us in its ranks…we work at corporations (usually as directors of human resources)”. Ms Jefferson, it must be said, is a master of the arched-eyebrow, sardonic quip. + +Suffusing this book are equal parts admiration at what it takes to navigate the world as a member of the Third Race, and a deep sadness at having to do so. Ms Jefferson reproduces a letter that her mother wrote to a friend in 1944, when she was a young wife of an army officer: “Tell Hertha I wish her all the happiness I have, ’cause that’s as much as anyone could wish. Sometimes I almost forget I’m a Negro. That’s something, huh?” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21703354-growing-up-upper-class-african-america-world-apart/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Geopolitics + +East, West home is best + +How China’s growing importance shifting the world + +Aug 6th 2016 | From the print edition + +Easternisation: War and Peace in the Asian Century. By Gideon Rachman. Bodley Head; 280 pages; £20. + +JULY brought the clearest sign yet of how China’s growing power is changing the world order. The Permanent Court of Arbitration in The Hague, a tribunal set up by Western powers in 1899 and designated by the UN as an arbiter of disputes under its Law of the Sea Convention, rejected China’s claims to any historic right to control the South China Sea. The case had been brought by the Philippines, with unofficial backing from America. But China simply ignored it. + +The Philippines, and its Western sympathisers, won the argument but will probably lose the battle. Conventional power politics trumps international law. That is scarcely a new insight, alas, but what is new is to see a non-Western nation displaying this truth so brazenly. That is what Gideon Rachman, chief foreign affairs commentator for the Financial Times (and before that a senior writer at The Economist for 15 years) means by “Easternisation”, which is both the title of his book and what he says is the defining trend of our age. + +The word is rather clunky and a tad misleading, as becomes clear when Mr Rachman tries a bit too hard to apply it to almost every foreign policy theme he can find. Has Russia really been “Easternising” simply by turning against the West, annexing Crimea and seeking to restore its domination of the former Soviet states around its borders? It certainly hasn’t found an especially warm embrace in China. + +Does the West’s impotence in the Middle East and north Africa really contribute to “Easternisation” in any way other than the fact that the Gulf states sell a lot of oil to China? The continued disaster in Syria, Iraq and Libya is huge and hugely disturbing, but this is scarcely the first time in the post-imperial era that external intervention has been found wanting; it offers no particular advantage to the East, beyond evidence of Western discomfort. + +What this book is really about, and is very good at describing, is the growing impact of China on its neighbours, on the world and on the liberal, mostly rules-based order that the West set up, principally after 1945. As historians have been saying ever since China’s rise caught their notice in the 1990s, this ought to be called “normalisation”, since until 1800 the world’s biggest economies were its most populous countries, China and India. + +Such normalisation was nicely summarised in “The Post-American World”, by Fareed Zakaria, an Indian-born American journalist, in 2008. This is the point that Mr Rachman is underlining and updating here. The crucial “-isation” question, though, is neither about normality nor West-versus-East, but rather about whether a more even global distribution of power will bring stability or not. + +Mr Rachman hopes it will, though he fears that it won’t. Ranged on one side is a seemingly immutable Chinese aspiration to at least be treated just like America as a great power and, if circumstances permit, even to take over leadership. That aspiration is what lies behind the country’s claim, first put forward formally by Chiang Kai-shek’s Nationalist government in the 1940s, to the South China Sea: a great power needs to control the seas around its coasts, the logic goes, and China used to do so 2,000 years ago under its Han Dynasty, so it must be entitled to do so now. + +Ranged on the other side is what a senior American official, quoted by Mr Rachman, terms his country’s “addiction to primacy”. Western countries have not truly dominated the world since the collapse of Europe’s empires in the 1940s and 1950s, but they have certainly led it, with America at the forefront. America has both championed international law and institutions and demanded the right to be exempt from them when it chooses. Coping with a more equal world, accommodating new powers, ought to be possible in principle. But practice could be different. + +Mr Rachman’s book may produce a wry smile in Singapore. Until recently, one of Asia’s most provocative current-affairs writers, a retired diplomat called Kishore Mahbubani, was producing book after book lambasting Western journalists like Mr Rachman for their pro-Western bias and failure to acknowledge Asia’s success. One of Mr Mahbubani’s recent books, however, was called “The Great Convergence”, arguing that West and East were now blending together. He and Mr Rachman seem to have passed each other in mid-air. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21703352-how-chinas-growing-importance-shifting-world-east-west-home-best/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +European arts + +Two men of one mind + +How Mariano Fortuny and William Morris shaped 19th-century culture + +Aug 6th 2016 | From the print edition + +Pleats please + +Peacock & Vine: On William Morris and Mariano Fortuny. By A.S. Byatt. Knopf; 183 pages; $26.95. Chatto & Windus; £14.99. + +ANTONIA BYATT’S slim and elegant new book, “Peacock & Vine”, is about two textile designers: Mariano Fortuny (1871-1949: think tiny silk pleats) and William Morris (1834-96: think willow branches). Ms Byatt admits to reading an “unmanageable heap of large books” for it, but her pleasure in just looking is everywhere: in every leaf and tendril, pomegranate and bird, in their colours, balance and geometry. + +The whole idea for the book emerged from a strange piece of optics. Fortuny lived and worked in Venice, and while visiting his palazzo there (now a museum), Ms Byatt found her inner eye distracted by Morris’s Gloucestershire house, Kelmscott, “with the meandering Thames and grass fields”. Back home in Morris country, the author could not escape the “aquamarine light, water flowing in canals, the dark of the Palazzo Pesaro Orfei”. She took the hint, and began to consider each man in the light of the other. + +Like so many of the characters in “The Children’s Book”, a novel she published in 2009, both Morris and Fortuny were artist-craftsmen. Between them they covered design, painting, photography, lighting, embroidery, dyeing, printing and much else besides (Morris was also a poet, a translator of Icelandic sagas, and a Utopian socialist). There is room enough here for Ms Byatt’s “large books”, for her reflections on cultural influences, on art versus nature and on northern and southern sensibilities. But there is also room for her novelist’s sense of Fortuny and Morris as men, especially in relation to women. + +Ms Byatt uses the French expression bien dans sa peau about Fortuny’s wife in his portraits of her, meaning comfortable. He too was happy in his skin. Born into a family of artists, he was rooted in his aesthetic tradition, at ease with people, and “moved by women”. Morris, by contrast, had no artistic background, was “ill at ease with the human”, and tormented in marriage. What excited him were “natural places, growths and creatures”. Suddenly Morris’s flowered cushions and curtains begin to seem more interesting, less comfortable. By contrast, those tightly pleated Fortuny dresses seem more sexy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21703356-how-mariano-fortuny-and-william-morris-shaped-19th-century-culture-two-men-one-mind/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Paths well travelled + +Trails and error + +The many joys of walking + +Aug 6th 2016 | From the print edition + +On Trails: An Exploration. By Robert Moor. Simon & Schuster; 340 pages; $25. Aurum Press; £16.99. + +HONED by time and the collective wisdom of walkers past, trails guide people through inhospitable territory towards food and shelter, and set wanderers right if they lose their bearings. Since the 19th century, they have also been a form of popular entertainment. Urban dwellers tramp them as a virtuous form of exercise and to get restorative doses of fresh air and the great outdoors. + +The New World that Europeans discovered in the late 15th and 16th centuries was of course new only to them. It was already inhabited by native tribes, many of whom assiduously managed the land and were consummate trailmakers, carving out their walkways with moccasin-clad feet and dog sleds. And it was along some of these native trails, now known as the Trail of Tears, that some 16,000 Cherokees were forcibly driven after the Indian Removal Act of 1830, when the newcomers decided they could make better use of the Cherokee land than its inhabitants. Some 4,000 of the exiles died en route. + +Robert Moor, an American environmental journalist, has crammed a wealth of such tales into his new book, “On Trails”. In Newfoundland he walks the oldest known paths on Earth, made by Ediacarans—soft-bodied, sack-like creatures which crept across the seabed some 565m years ago. Other seemingly unintelligent creatures, including ants, caterpillars and slime mould can, by trial and error, create surprisingly efficient routes. + +When Japanese researchers mimicked the main population centres surrounding Tokyo using a series of oat clusters, the way slime mould moved from cluster to cluster replicated Tokyo’s railway system. Ant trails, which are powered by pheromones and are extraordinarily efficient, are used as models to improve fibre-optic networks and shipping routes. Other scientists found that the branching tunnels of Messor sancta ants closely resemble the elegantly reductive street structures found in unplanned cities. (Although, as the author wryly notes, because of ants’ comparative selflessness, even the densest of ant crowds won’t grind to a halt in the manner of impatiently barging humans.) + +Larger animals use trails too, of course. Elephants, who in the wild walk up to 50 miles (80km) a day, create and then faithfully follow paths—even in captivity, where there is no need and little space. Some will lead to sites necessary for a herd’s survival, including grazing sites, watering holes or salt licks. + +Mr Moor’s narrative is grounded by his passion for the story of the Appalachian Trail. From the moment it was dreamed up in 1900 by a forestry student called Benton MacKaye, during a hike in the Green Mountains in Vermont, to its planned expansion through Canada, across to Europe and into Morocco, the author returns again and again to the tale of this meandering, flawed and yet alluring path. In doing so, he leads the reader on page by page. A wanderer’s dream, even from an armchair. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21703351-many-joys-walking-trails-and-error/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Classical music + +He’s the piano man + +Why Stephen Hough is more and more in demand + +Aug 6th 2016 | From the print edition + +Playtime + +ACCLAIMED for countless recordings and laden with awards, including a $500,000 MacArthur “genius” grant, 54-year-old Stephen Hough is the undisputed top dog among British concert pianists. He is even more sought-after in America, where he has been touring for much of this year. In Britain this month he is due to play Liszt, Schubert and Franck at the Edinburgh festival and Rachmaninov’s “Rhapsody on a Theme of Paganini” in his 25th appearance at the BBC Proms in London. + +There are reserves of power in Mr Hough’s touch, and an ingrained refinement; his self-composed encores usually dissipate with sly comedy the high seriousness of his art. Elegantly at ease with himself, he is a performer with whom audiences also feel easy. + +Mr Hough was born and brought up near Liverpool. The £5 ($6.70) second-hand piano his parents bought him was all he needed to start honing the talent which led him, via the Royal Northern College of Music, to win the Naumberg international piano competition in New York when he was 21. That win signalled the start of a relationship with America which has grown steadily closer ever since. + +Most great pianists have a personal style, but Mr Hough’s playing, though magisterial, is not easily characterised. With Vladimir Horowitz or Sviatoslav Richter, Martha Argerich or Mitsuko Uchida, you soon know who you are listening to. And although the fastidiously eccentric Shura Cherkassky, an American pianist with a virtuoso technique, named Mr Hough as his natural successor, the Englishman’s style is far more complex. What sets him apart is the exceptional breadth of his repertoire, as well as the technical finesse and idiomatic authority he brings to every piece he plays. None of the heavily promoted younger pianists playing today can match this combination; among the older ones, Evgeny Kissin—now a 44-year-old eminence grise—is the only one who does. + +Mr Hough programmes his repertoire by creative juxtaposition. For a recital at Alice Tully Hall in 2014, he began with Schoenberg’s vestigial “Six Little Pieces”, then moved on via progressively longer works by Richard Strauss, Wagner, Bruckner and Brahms, to climax with Liszt’s gigantic B minor sonata. This programme, he explained, was a way of asking how much could be said in how little time. + +Meanwhile, by performing and recording the forgotten concertos of Johann Nepomuk Hummel (overshadowed in life by Mozart and Beethoven) and of Franz Xaver Scharwenka (overshadowed by Tchaikovsky), he has induced other pianists to take them up. He has also devotedly championed the elusive miniatures of Federico Mompou, which he describes as “the music of evaporation”. + +The other way in which he has expanded his repertoire is by composition. In his pieces for solo piano and chamber ensemble, this means an ongoing wrestle with the question overarching all contemporary classical music: how to deal with the division between tonal and atonal? Mr Hough’s flip description of his own music is “tonal with a twist”, but there is nothing flip about his analysis of the revolution ushered in by Schoenberg. + +Traditional tonality works by creating and resolving tensions—“placing markers along the way, paths to return home”, Mr Hough says. “Conversely the 12-note system ensures that all roads are equal, that no note is more important than any other…a nomadic, circular path where home is the journey itself.” This system became the basis for a cramping orthodoxy which still has adherents. Mr Hough’s Piano Sonata III (Trinitas) is an ingenious experiment designed to undermine that system by taking it to its logical conclusion. “I want music to move me,” he says, “and I don’t think it can do that without at least a link to tonality. It’s the tug between atonal and tonal which makes music poignant.” + +Mr Hough is also a prize-winning poet and paints in a boldly Abstract Expressionist style. He has just finished writing his first novel, about a priest who has lost his faith and is being blackmailed, an exercise that allowed him to explore his own life, though he says the book is in no way autobiographical. + +That is an important disclaimer, because Mr Hough is a gay Roman Catholic. He has long felt drawn to the priesthood; the two masses he has composed and his book on devotional readings, “The Bible as Prayer”, are commentaries on his belief. At the Wigmore Hall in October, Jacques Imbrailo, a baritone, will sing the premiere of “Dappled Things”, Mr Hough’s new song-cycle on poems by Oscar Wilde and Gerard Manley Hopkins. These poets were linked, he believes, by sexual orientation and a common aesthetic. Beneath its urbane surface all Mr Hough’s music is, in one way or another, a crusade. + +Stephen Hough is playing at the Edinburgh festival on August 18th; at the Royal Albert Hall in London on August 23rd; at the Helsingborg piano festival in Sweden on September 5th; in Birmingham, Alabama, on September 16th and 17th and at the Wigmore Hall in London on October 28th + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21703355-why-stephen-hough-more-and-more-demand-hes-piano-man/print + + + + + +Previous Articles Sections Next + + + +Obituary + + + + + +Obituary: Luc Hoffmann: For birds and for wilderness + + + + + +Articles Sections Next + +Obituary: Luc Hoffmann + +For birds and for wilderness + +Luc Hoffmann, ornithologist and conservationist, died on July 21st, aged 93 + +Aug 6th 2016 | From the print edition + + + +WHEN it came to birds, Luc Hoffmann was no elitist. Every species was precious to him. At boarding school in the Swiss Alps he watched migrating passerines—barn swallows, wrynecks, pied flycatchers—flocking through the passes between the peaks. His first scientific article, written at school, was on migrating shorebirds; his first long expedition, at 16 with his friend Dieter, was to Brittany in search of gannets, a bird rarely spotted in France. His doctoral thesis at the University of Basel was on the colour variations in the down of the chicks of the common tern. As an old man, standing tall and straight, he liked to watch the valiant efforts of brightly coloured bee-eaters to fly, and catch their food, in the mistral. And his binoculars often searched for his favourite, the collared pratincole, so small and neat in its brown and white, which also hunted in the air. + +The birds he was most closely associated with, however, were the greater flamingos of the Camargue in south-eastern France. He first saw them when he was still a student, chasing the big grey chicks through stones and tamarisk in an effort to ring them. Everything about them fascinated him, from the wondrous pink-and-scarlet of their adult plumage to their strange tongues, spined and hooked to filter food from water like a baleen whale, to their surging flights in flocks of thousands from one lagoon to the next. In 1948 he bought an old farm at Tour du Valat, without water or power, with a mind to live there for ever and set up a centre for study. + +He did both. His centre eventually welcomed up to 100 researchers; the flamingos, which had declined sharply in the 1960s, were monitored and re-established within a decade. And his ambitions embraced the wetlands themselves. His “emotional predilection” for such places in boyhood—a typical Balser understatement—had become, in the water-lit land of the Camargue, a coup de foudre of both mind and senses. The world’s swampy, estuarine places were then mostly ignored by naturalists. But to him they were like plants, with their roots reaching down to hydrate the whole planet. If they were drained, the birds and all nature died in consequence. He was passionately determined to save them. + +A pot of gold + +In this he was not alone. Others too, like Peter Scott and Julian Huxley, were thinking that way. What distinguished him was an enormous pot of money. His grandfather had founded Hoffmann-La Roche, and he himself was a majority shareholder in what became a giant pharmaceutical company with annual sales, in this century, in the billions of dollars. This wealth was never flaunted. He drove a Fiat Panda, andstayed in hostels. At Tour du Valat his four children were brought up as little camarguais with the children of the estate workers, and told that their grandfather had a “chemist’s shop” in Basel. Only the glass of Montrachet offered to a visitor, or the glimpse of a Braque in the drawing room (Braque, a friend, had also fallen for the Camargue), hinted that Mr Hoffmann could have led a different, self-centred life. + +Wherever and whenever he thought good, he gave money. It was done either overtly, as grants or loans with his name attached, or covertly, through donations from organisations whose finances he controlled. When the World Wildlife Fund was set up in 1961, Scott invited him to be president, but he declined; he became its second vice-president, and made quietly sure his money bankrolled the WWF to success. His dollars, as well as his drive, also saved the wetlands at Coto Doñana in Andalucia, home to imperial eagles; the Banc d’Arguin in Mauritania, the stopover point for millions of migrating waders; the Faia Brava in Portugal, haunt of griffon vultures; and many others. In 1971, at Ramsar in Iran, he oversaw the signing of the first global treaty protecting wetlands. + +His charm, tact and optimism proved important, for in setting up protected areas he was often dealing with difficult people: officials of Franco’s Spain, Soviet Russia and Mao’s China, and industrialists and developers of every stripe. He was dealing, too, with many struggling, suspicious locals who earned their living from the wetlands. His technique was to bring them alongside, showing that they could benefit from conservation—even the Camargue rice-farmers, who each spring found flamingos foraging among their newly planted crops. In Faia Brava the dwindling band of hill-farmers were encouraged to open their houses to hikers. In Banc d’Arguin tribal fishermen were given exclusive access to the waters of the reserve. His motto, reversing the theme of conservation to that point, was “with man, not against him”. + +Few understood, though, how far he meant that philosophy to go. The concept of reserved areas deeply dissatisfied him, for he wanted the whole globe to be a place where man lived in harmony with nature, and no special protections were needed any more. He was no militant, seeing the cause of conservation as going far beyond partisan politics or the shock tactics of Greenpeace; but in old age he shared much of their frustration. Small successes had been notched up here and there; not much more. Like the bee-eaters battling the wind, he was grateful to have caught a few flies on the wing; but his real ambition had been to change the wind itself. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21703339-luc-hoffmann-ornithologist-and-conservationist-died-july-21st-aged-93-birds-and/print + + + + + +Articles Sections Next + + + +Economic and financial indicators + + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +The Economist poll of forecasters, August averages + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Aug 6th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21703347/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Economic data + +Aug 6th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21703397-economic-data-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Aug 6th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21703394-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Aug 6th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21703398-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist poll of forecasters, August averages + +Aug 6th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21703407-economist-poll-forecasters-august-averages/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Aug 6th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21703408-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +TE20160806 + +The world this week + + + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + + + +Technology in China: China’s tech trailblazers + + + + + +After the Arab spring: The ruining of Egypt + + + + + +Energy policy: Hinkley Pointless + + + + + +Vietnam’s economy: The other Asian tiger + + + + + +International adoption: Babies without borders + + + + + +Letters + + + + + +On Thailand, Stuttgart, Saudi Arabia and Yemen, human rights, China, the sea: Letters to the editor + + + + + +Briefing + + + + + +Arab youth: Look forward in anger + + + + + +United States + + + + + +The presidential race: Trump in the dumps + + + + + +Partisan politics: In plain words + + + + + +Voting restrictions: Back in the booth + + + + + +Convention bounces: Up, then down + + + + + +Wilderness living: The last big frontier + + + + + +The NYPD: Goodbye to Bratton + + + + + +Lexington: Gridlock Central + + + + + +The Americas + + + + + +Venezuela: Army rations + + + + + +The Petrobras scandal: Defendant-in-chief + + + + + +Cannabis in Colombia: Weeds of peace + + + + + +Asia + + + + + +Myanmar’s economy: Miles to go + + + + + +Sri Lanka’s missing people: Refusing to give up hope + + + + + +India’s economy: One nation, one tax + + + + + +Canine couture in Taiwan: Furry fashionable + + + + + +Japan and the last commute: Peak death + + + + + +Japan and the last commute: Award + + + + + +China + + + + + +The Cultural Revolution: Unlikely hero + + + + + +Tibetan culture: And the policemen danced + + + + + +Middle East and Africa + + + + + +Egypt’s economy: State of denial + + + + + +The war in Syria: Kerry talks while Aleppo burns + + + + + +The roasting of the Middle East: Infertile Crescent + + + + + +South Africa: The Zuma effect + + + + + +Gabon: Trying to get past oil + + + + + +Europe + + + + + +Media freedom in Turkey: Sultanic verses + + + + + +Turks in Germany: Old faultlines + + + + + +Land transfers: Peak diplomacy + + + + + +Anti-Mafia: Dead dogs and dirty tricks + + + + + +Britain and Europe: The start of the break-up + + + + + +Charlemagne: Au revoir, l’Europe + + + + + +Charlemagne: Award + + + + + +Britain + + + + + +Nuclear power: When the facts change... + + + + + +Chinese investment: Not so gung-ho + + + + + +The Bank of England: Treating the hangover + + + + + +The UK Independence Party: Kippers flounder + + + + + +Archaeology: The last crusade + + + + + +Bagehot: The sage of Birmingham + + + + + +International + + + + + +International adoption: Home alone + + + + + +Business + + + + + +Ride-hailing in China: Uber gives app + + + + + +China’s mobile internet: WeChat’s world + + + + + +Tobacco regulation: No logo + + + + + +Bosses’ salaries in Japan: Pay check + + + + + +The chocolate industry: Cocoa nuts + + + + + +Schumpeter: Look before you leap + + + + + +Finance and economics + + + + + +Asia’s next tiger: Good afternoon, Vietnam + + + + + +Buttonwood: The second big shift + + + + + +European banks: Still stressed out + + + + + +Property taxes: Home bias + + + + + +Japan’s economy: Levitation speed + + + + + +Free exchange: The desperation of independents + + + + + +Economics brief + + + + + +Tariffs and wages: An inconvenient iota of truth + + + + + +Science and technology + + + + + +Anti-submarine warfare: Seek, but shall ye find? + + + + + +Lithium-air batteries: Their time has come + + + + + +Artificial neurons: You’ve got a nerve + + + + + +The right to die: What is unbearable? + + + + + +Books and arts + + + + + +Fiction: Life and afterlife + + + + + +Elite black America: A world apart + + + + + +Geopolitics: East, West home is best + + + + + +European arts: Two men of one mind + + + + + +Paths well travelled: Trails and error + + + + + +Classical music: He’s the piano man + + + + + +Obituary + + + + + +Obituary: Luc Hoffmann: For birds and for wilderness + + + + + +Economic and financial indicators + + + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +The Economist poll of forecasters, August averages + + + + + +Markets + + + + + +Table of Contents + +TE20160806 + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Technology in China: China’s tech trailblazers + + + + + +After the Arab spring: The ruining of Egypt + + + + + +Energy policy: Hinkley Pointless + + + + + +Vietnam’s economy: The other Asian tiger + + + + + +International adoption: Babies without borders + + + + + +Letters + + + +On Thailand, Stuttgart, Saudi Arabia and Yemen, human rights, China, the sea: Letters to the editor + + + + + +Briefing + + + +Arab youth: Look forward in anger + + + + + +United States + + + +The presidential race: Trump in the dumps + + + + + +Partisan politics: In plain words + + + + + +Voting restrictions: Back in the booth + + + + + +Convention bounces: Up, then down + + + + + +Wilderness living: The last big frontier + + + + + +The NYPD: Goodbye to Bratton + + + + + +Lexington: Gridlock Central + + + + + +The Americas + + + +Venezuela: Army rations + + + + + +The Petrobras scandal: Defendant-in-chief + + + + + +Cannabis in Colombia: Weeds of peace + + + + + +Asia + + + +Myanmar’s economy: Miles to go + + + + + +Sri Lanka’s missing people: Refusing to give up hope + + + + + +India’s economy: One nation, one tax + + + + + +Canine couture in Taiwan: Furry fashionable + + + + + +Japan and the last commute: Peak death + + + + + +Japan and the last commute: Award + + + + + +China + + + +The Cultural Revolution: Unlikely hero + + + + + +Tibetan culture: And the policemen danced + + + + + +Middle East and Africa + + + +Egypt’s economy: State of denial + + + + + +The war in Syria: Kerry talks while Aleppo burns + + + + + +The roasting of the Middle East: Infertile Crescent + + + + + +South Africa: The Zuma effect + + + + + +Gabon: Trying to get past oil + + + + + +Europe + + + +Media freedom in Turkey: Sultanic verses + + + + + +Turks in Germany: Old faultlines + + + + + +Land transfers: Peak diplomacy + + + + + +Anti-Mafia: Dead dogs and dirty tricks + + + + + +Britain and Europe: The start of the break-up + + + + + +Charlemagne: Au revoir, l’Europe + + + + + +Charlemagne: Award + + + + + +Britain + + + +Nuclear power: When the facts change... + + + + + +Chinese investment: Not so gung-ho + + + + + +The Bank of England: Treating the hangover + + + + + +The UK Independence Party: Kippers flounder + + + + + +Archaeology: The last crusade + + + + + +Bagehot: The sage of Birmingham + + + + + +International + + + +International adoption: Home alone + + + + + +Business + + + +Ride-hailing in China: Uber gives app + + + + + +China’s mobile internet: WeChat’s world + + + + + +Tobacco regulation: No logo + + + + + +Bosses’ salaries in Japan: Pay check + + + + + +The chocolate industry: Cocoa nuts + + + + + +Schumpeter: Look before you leap + + + + + +Finance and economics + + + +Asia’s next tiger: Good afternoon, Vietnam + + + + + +Buttonwood: The second big shift + + + + + +European banks: Still stressed out + + + + + +Property taxes: Home bias + + + + + +Japan’s economy: Levitation speed + + + + + +Free exchange: The desperation of independents + + + + + +Economics brief + + + +Tariffs and wages: An inconvenient iota of truth + + + + + +Science and technology + + + +Anti-submarine warfare: Seek, but shall ye find? + + + + + +Lithium-air batteries: Their time has come + + + + + +Artificial neurons: You’ve got a nerve + + + + + +The right to die: What is unbearable? + + + + + +Books and arts + + + +Fiction: Life and afterlife + + + + + +Elite black America: A world apart + + + + + +Geopolitics: East, West home is best + + + + + +European arts: Two men of one mind + + + + + +Paths well travelled: Trails and error + + + + + +Classical music: He’s the piano man + + + + + +Obituary + + + +Obituary: Luc Hoffmann: For birds and for wilderness + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +The Economist poll of forecasters, August averages + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.08.13.TXT b/homeworks/B20769/homework1/data2/2016.08.13.TXT new file mode 100644 index 0000000..21d89c4 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.08.13.TXT @@ -0,0 +1,5214 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Economics brief + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Aug 13th 2016 | From the print edition + + + +Voters in Thailand backed a draft constitution put forward by the armed forces in a referendum. The ruling junta threw out the old constitution when it took power in 2014, after months of political insecurity. Critics say the new document will entrench military control. Supporters hope it will restore stability. Thailand’s biggest political parties opposed the new constitution but have said they will accept the result of the referendum. See article. + +A suicide-bomb and shooting attack killed more than 70 people at a hospital in Quetta in south-west Pakistan. The attack targeted the emergency department, where the body of a prominent lawyer shot dead earlier that day had been brought. A faction of the Pakistani Taliban claimed responsibility for both atrocities. + +Japan’s foreign minister twice summoned the Chinese ambassador to protest against the sailing of dozens of Chinese ships close to the Senkaku islands in the East China Sea. The Chinese call the islands the Diaoyu and claim them as their own. The stand-off comes after an international court rejected China’s historic claims to most of the South China Sea. + +Emperor Akihito of Japan suggested that he wants to step down. The 82-year-old is barred from making political statements, so did not state explicitly a plan to abdicate. But he said he has “started to reflect” on his time as emperor and contemplate his position in the years to come. + +India’s prime minister, Narendra Modi, denounced vigilantes belonging to so-called cow-defence squads. His comments came after a series of violent attacks on Muslims and low-caste Hindus for transporting cattle, disposing of cow carcasses and eating beef. Cows are revered by high-caste Hindus. + +Closer, but no cigar + +Donald Trump gave a much-anticipated speech that set out his ideas on the economy, and brought him closer to accepting the agenda of Republicans in Congress on taxes and regulation. Sharp differences remain over trade deals, which the presidential candidate has vowed to renegotiate. + +The Justice Department produced its report into the Baltimore police department, a year after the death of a black man in police custody sparked the city’s worse riots in decades. The report found that “zero tolerance” policing had eroded relations with Baltimore’s black residents; only 4% of people stopped and searched by police were charged or given a citation. + +A city in ruins + +The fighting intensified in Aleppo. Rebels in the east of what was once Syria’s largest city managed to break out following their encirclement by government forces, but have since come under heavy bombardment by government and Russian planes. UNICEF warned that water has been cut off from most of the city for several days. Russia has promised a daily three-hour ceasefire for aid deliveries. See article. + +Shahram Amiri, an Iranian scientist who defected and gave America information about the country’s illicit nuclear-weapons programme, was hanged for treason, the Iranian government said. He returned to Iran after threats were made against his family. + +The Egyptian government announced that it had killed the leader of the Sinai branch of Islamic State. + +The head of Zambia’s electoral commission said that “unprecedented” violence had marred presidential and parliamentary elections. See article. + + + +Anti-government demonstrations across Ethiopia provoked an angry response from the authorities. Human-rights groups described how police had fired at protesters in several cities, killing dozens. + +The strongmen + +Presidents Recep Tayyip Erdogan of Turkey and Vladimir Putin of Russia vowed to repair diplomatic ties that have come under strain since Turkey’s shooting down of a Russian military jet near Syria. They met in St Petersburg amid growing tensions between Turkey and the West. Meanwhile in Moscow, Mr Putin allowed a rare protest to take place: a big demonstration against new anti-terrorism laws. See article. + +Russia’s Federal Security Service said that it had thwarted an insurrection in Crimea, heightening tensions with Ukraine. Petro Poroshenko, the president of Ukraine, denied the allegations and accused Russia of accelerating military threats. See article. + +Norway could block Britain’s bid to join the European Free Trade Association after it leaves the European Union, according to Norway’s European affairs minister, as it fears the addition of such a large economy would not be in its interest. Other countries in the association, however, are keen for Britain to join. + +Spain and Italy were spared fines for missing deficit-reduction targets. EU governments agreed to give the countries extra time to reduce their budget deficits. The decision, was met with scepticism in several member states, particularly in Germany, where many feel that being lenient to Spain and Italy undermines the credibility of the euro zone. + +Toying with the opposition + +Venezuela’s election commission set the end of October as the probable time when the opposition can move to the next stage of a referendum to recall the president, Nicolás Maduro. Signatures from 20% of the electorate are required to hold the recall. The decision to wait may make it impossible to hold the referendum itself before January 10th. If a referendum passes before that date, a new presidential election will be held. If it succeeds after that, Mr Maduro would be replaced by the vice-president. + +Brazil’s senate voted to put the president, Dilma Rousseff, on trial on charges that she tampered with fiscal accounts. She stepped aside in May, after the lower house of congress forwarded the charges to the senate, leaving the vice-president, Michel Temer, in charge of government. + + + +The Olympic games opened in Rio de Janeiro. Brazilians, unhappy about the country’s severe recession and deep political crisis, were cheered by a show that celebrated Brazil’s cultural variety. The games themselves suffered glitches: queues were long, athletes complained of raucous fans and a chemical imbalance turned the water in the pools used for diving and water polo bright green. But earlier fears of chaos abated. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21704830-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Aug 13th 2016 | From the print edition + +The Bank of England hit a problem on the second day of its expanded quantitative-easing programme when it fell £50m short in its attempt to buy £1.17 billion ($1.5 billion) in bonds with maturities of 15 years or longer. It was the first daily shortfall since the central bank started QE in 2009. Amid signs that Britain’s post-Brexit economy is weakening the bank has pledged to buy £60 billion in government bonds and up to £10 billion in corporate bonds over the next 18 months (it has also cut interest rates). Pension funds hold most of the bonds dated 15 years or longer, which have better returns than shorter-dated ones. See article. + + + +Meanwhile, 85% of the nearly 6,000 British pension funds covered by the Pension Protection Fund are in deficit. The total deficit was £408 billion ($530 billion) at the end of July, an astonishing rise of £113 billion since May. + +Four years after it settled with America’s federal authorities and British regulators in the LIBOR scandal, Barclays agreed to pay $100m to 44 American states to bring an end to their investigation of the bank regarding the rigging of the benchmark interbank lending rate. Barclays, which neither admitted nor denied any wrongdoing in this week’s resolution, is the first large bank to settle with the states. See article. + +Walmart said it would buy Jet.com for $3.3 billion, marking a big shift in the giant retailer’s internet strategy as it ramps up its competition with Amazon. Walmart launched an online site 15 years ago, but last year this contributed just 3% to its total sales. Jet’s business has soared over the past two years by offering incentives to shoppers on its website to buy in bulk. Jet’s founder, Marc Lore, will hope to replicate that success at Walmart when he becomes the combined company’s head of e-commerce. See article. + +Inseparable bedfellows + +Continuing its acquisitive streak, Steinhoff, a furniture retailer that is based in South Africa but which also owns several furniture chains in Europe, made its first foray into America by offering to buy Mattress Firm for $4 billion. Steinhoff recently struck a deal to buy Poundland in Britain for £610m ($790m). Earlier this year Mattress Firm took over Sleepy’s, a rival. The combined company has 3,500 stores across America. + +A problem at its technology centre in Atlanta caused Delta Air Lines to ground all its planes worldwide for several hours, leading to cancellations and delays in the 5,000 flights it operates each day. Other airlines have had technology issues that have affected operations recently, but Delta’s was the worst. The industry’s rapid consolidation is partly to blame for patching together airlines’ creaking IT systems. See article. + +Britain’s Serious Fraud Office confirmed that it is investigating some of the contracts for civilian aircraft awarded to Airbus in emerging markets. The probe is centred on the company’s use of third-party agents to smooth negotiations with a number of airlines that are closely associated with their national governments. + +America’s labour productivity rate, which measures hourly output per worker, fell by 0.5% in the second quarter, extending the longest decline in productivity since the late 1970s. This suggests there will be a further squeeze on companies’ profit margins. Hourly pay rose by 1.5% in the quarter after declining by 0.8% in the first. + +Australia’s treasurer, Scott Morrison, blocked a consortium led by China’s State Grid Corporation from taking a controlling stake in Ausgrid, Australia’s biggest electricity network, pending its response to concerns that a sale would jeopardise national security. In Britain the government’s delay in giving the go ahead for a new nuclear-power station at Hinkley Point, reportedly over unease about China’s involvement in the project, drew a rebuke from the Chinese ambassador, who warned that relations between the two countries were at a “crucial historical juncture”. + +Claiming it was standing up for its principles, Facebook made changes to its desktop website that enable advertisements to sneak past adblocking software by disguising them as original content. It is the most significant attempt yet by an internet firm to deal with the challenge posed by adblockers; a quarter of internet users in America have one installed on their computer. Facebook gets 84% of its ad revenue from mobile devices, which are less responsive to adblockers. + +A crunchy deal + +Tyrrells, a British maker of potato crisps with posh flavours such as Ludlow sausage and mustard, was sold to Amplify Snack Brands in Texas for £300m ($390m). Tyrrells is currently owned by a private-equity firm in Bahrain, but it was created in 2002 by a farmer in Herefordshire as a way to use his oddly shaped discarded potatoes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21704851-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Aug 13th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21704852-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + +Leaders + + + + + +Ageing: Cheating death + +War against crime in the Philippines: A harvest of lead + +Trump’s plan for the economy: Scrimping on sense + +South Africa: Time to govern + +Preventing child-abuse: First, save the children + + + + + +Articles Sections Next + +Ageing + +Cheating death + +Science is getting to grips with ways to slow ageing. Rejoice, as long as the side-effects can be managed + +Aug 13th 2016 | From the print edition + + + +IMAGINE a world in which getting fitted with a new heart, liver or set of kidneys, all grown from your own body cells, was as commonplace as knee and hip replacements are now. Or one in which you celebrated your 94th birthday by running a marathon with your school friends. Imagine, in other words, a world in which ageing had been abolished. + +That world is not yet on offer. But a semblance of it might be one day. Senescence, the general dwindling of prowess experienced by all as time takes its toll, is coming under scrutiny from doctors and biologists (see article). Suspending it is not yet on the cards. But slowing it probably is. Average lifespans have risen a lot over the past century, but that was thanks to better food, housing, public health and some medicines. The new increase would be brought about by specific anti-senescence drugs, some of which may already exist. + +This, optimists claim, will extend life for many people to today’s ceiling of 120 or so. But it may be just the beginning. In the next phase not just average lifespans but maximum lifespans will rise. If a body part wears out, it will be repaired or replaced altogether. DNA will be optimised for long life. Add in anti-ageing drugs, and centenarians will become two a penny. + +Man and superman + +To this end, many hopeful repairmen are now setting up shop. Some of them want to upgrade worn-out tissues using stem cells (precursors to other sorts of cell). Such bio-renovation is the basis of an unproven, almost vampiric, treatment in vogue in some circles: transfusion into the old of the blood of the young (see article). The business of growing organs from scratch is also proceeding. At the moment, these “organoids” are small, imperfect and used mainly for drug testing. But that will surely change. Longevity is known to run in families, which suggests that particular varieties of genes prolong life. Some are investigating this, with the thought that modern gene-editing techniques might one day be used to make crucial, life-extending tweaks to the DNA of those who need them. + +From an individual’s viewpoint, this all sounds very desirable. For society as a whole, though, it will have profound effects. Most of them will be good, but not all. + +One concern is that long life will exacerbate existing social and economic problems. The most immediate challenge will be access to anti-senescence treatment. If longer life is expensive, who gets it first? Already, income is one of the best predictors of lifespan. Widening the gap with treatments inaccessible to the poor might deepen divisions that are already straining democracies. + +Will older workers be discriminated against, as now, or will numbers give them the whip hand over the young? Will bosses cling on, stymying the careers of their underlings, or will they grow bored, quit and do something else entirely? And would all those old people cease to consider themselves elderly, retaining youthfully vigorous mental attitudes as well as physical ones—or instead make society more conservative (because old people tend to be)? + +A reason for hoping that the elderly would turn out less hidebound is that life itself would be more a series of new beginnings than one single story. Mid-life crises might be not so much about recapturing lost youth as wondering how to make the most of the next half-century. + +Retirement would become a more distant option for most, since pension pots would have to be enormous to support their extended lifespans. To this end, the portfolio career would become the rule and education would have to change accordingly. People might go back to school in their 50s to learn how to do something completely different. The physical labourer would surely need a rest. The accountant might become a doctor. The lawyer, a charity worker. Perhaps some will take long breaks between careers and party wildly, in the knowledge that medicine can offer them running repairs. + +Boredom, and the need for variety, would alter family life, too. How many will tie the knot in their 20s in the expectation of being with the same person 80 years later? The one-partner life, already on the decline, could become rare, replaced by a series of relationships, each as long as what many today would consider a decent marital stretch. As for reproduction, men’s testes would presumably work indefinitely and, though women’s ovaries are believed to be loaded with a finite number of eggs, technology would surely be able to create new ones. Those who wished to could thus continue to procreate for decades. That, and serial marriage, will make it difficult to keep track of who is related to whom. Families will start to look more like labyrinthine networks. In the world where marriages do not last, women everywhere will be freer to divorce and aged patriarchs will finally lose their hold. + +Such speculation is fun, and mostly optimistic. The promise of a longer life, well lived, would round a person out. But this vision of the future depends on one thing—that a long existence is also a healthy one. Humanity must avoid the trap fallen into by Tithonus, a mythical Trojan who was granted eternal life by the gods, but forgot to ask also for eternal youth. Eventually, he withered into a cicada. + +Forward to Methuselah + +The trap of Tithonus is sprung because bodies have evolved to be throwaway vessels for the carriage of genes from one generation to the next. Biologists have a phrase for it: the disposable soma. It explains not only general senescence, but also why dementia, cancer, cardiovascular problems, arthritis and many other things are guarded against in youth, but crammed into old age once reproduction is done with. These, too, must be treated if a long and healthy life is to become routine. Moreover, even a healthy brain may age badly. An organ evolved to accommodate 70 or 80 years of memories may be unable to cope when asked to store 150 years’ worth. + +Yet biological understanding is advancing apace. Greater longevity is within reach—even if actual immortality may not be as close (or as interesting) as some fantasists would like to believe. Be sure to draw up a very long bucket list. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21704791-science-getting-grips-ways-slow-ageing-rejoice-long-side-effects-can-be/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +War against crime in the Philippines + +A harvest of lead + +Rodrigo Duterte is living up to his promise to fight crime by shooting first and asking questions later + +Aug 13th 2016 | From the print edition + + + +THE Philippines’ kill-list of suspected drug-pushers shot by the police or unknown gunmen gets longer by the day. By one count more than 600 people have died since Rodrigo Duterte was elected president on May 9th; another puts the total at nearly 1,000. Inaugurated on June 30th, Mr Duterte has taken to naming senior officials publicly as suspected narcos: generals, policemen and judges have been told to resign and submit to investigation. Or else? The kill list speaks for itself. + +Mr Duterte is unabashed at international criticism, boasting that he does not care about human rights or due process. He was elected on a promise to eradicate crime, even by killing 100,000 gangsters and dumping their bodies in Manila Bay. More worrying still is that the bloodletting is popular with Filipinos, many of whose lives are blighted by poverty and crime. + +That satisfaction will not last. Wholesale extrajudicial killing is no solution to the Philippines’ many problems. Instead, it will lead only to more misery. + +From Davao with bullets + +Mr Duterte has been schooled in the violent politics of Mindanao, the southern and most lawless large island of the archipelago. A region historically influenced by Islam and progressively settled by Christians, Mindanao still has the feel of a restless frontier. It has been plagued by both communist and Muslim insurgencies, now more or less quiescent apart from splinter groups affiliated to al-Qaeda and Islamic State. Assassinations and death squads have been endemic. Davao City, of which Mr Duterte was mayor for 22 years, has been a byword for violent crime. + +Mr Duterte claims to have cleaned up Davao by being the baddest man in town. But his tenure is hardly the success he claims it to be: crime rates are high and the city is still the country’s murder capital. Now he is bringing the methods of Davao to Manila (see article). That so many should find this appealing speaks volumes about how far Filipino institutions have rotted, under both the dictatorship of the late Ferdinand Marcos and successive democratically elected presidents. + + + +A guide to the Philippines, in charts + +Mr Duterte would have the world believe that the Philippines’ corrupt and ineffective police have suddenly become omniscient—able to tell innocence from guilt and decide who may live and who should die. When he menacingly read out the names of more than 150 officials deemed connected to the drug trade, at least two of those whom he fingered were already dead. It would be comical were the consequences not so horrifying. One recent picture shows a distraught woman cradling her husband lying dead next to a sign, pusher ako (“I am a drug pusher”)—a tropical version of Michelangelo’s “Pietà”. + +Right now Mr Duterte seems beyond restraint. When the chief justice demanded proper arrest warrants, Mr Duterte threatened to impose martial law. And when the American ambassador expressed misgivings, Mr Duterte labelled him bakla, a pansy. But Filipinos and their foreign friends must keep exerting pressure on him. + +The lesson of the drug wars in Latin America, and of previous dirty wars, is that extrajudicial violence resolves nothing and makes everything worse. Innocent people will be killed; and denunciations will also be used to settle scores and exploited by gangs to wipe out rivals. Filipinos’ desire for instant retribution will, surely, turn to horror, hatred and revenge. The rule of law will erode. Investors, who have made the Philippines one of globalisation’s winners in recent years, will flee. The only winners will be the still-lurking insurgents. Mr Duterte’s ill-conceived war on drugs will make the Philippines poorer and more violent. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21704793-rodrigo-duterte-living-up-his-promise-fight-crime-shooting-first-and-asking-questions/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trump’s plan for the economy + +Scrimping on sense + +The Republican nominee’s ideas on the economy are thoughtless and dangerous + +Aug 13th 2016 | From the print edition + + + +FOR Donald Trump, details are not a strong suit. His policies typically fit in a tweet: build a wall, reduce Muslim immigration, make NATO allies pay for protection. That makes them easy to list but hard to fathom. His speech on August 8th, on economic policy, was an opportunity to explain at greater length how he hopes to achieve the economic boom that he promises American workers. Alas, the extra detail did not bring greater clarity. Even when sticking to a script, Mr Trump seems incapable of producing ideas of depth and rigour. His plan is more wild brainstorm than policy memo. + +Mr Trump paints a picture of the economy that is irreconcilable with the facts. He says jobs are scarce, poverty is rising and incomes are stagnant. But in reality America’s economy is the strongest in the rich world. Unemployment is only 4.9%. The poverty rate, though high, has been falling since 2012. And median earnings have risen by 5% in real terms in the past two years. It is normal for opposition politicians to exaggerate economic problems, and the image of an economic wasteland is based on the genuine problems of areas that relied on low-value manufacturing, where workforce-participation has fallen (see article). But Mr Trump goes much further, claiming that America’s unemployment statistics are “a hoax”. + +The treatments he proposes are no better than his diagnosis. To boost growth, he promises to free the economy from “onerous” government regulations and to cut taxes. That sounds fair enough, until you get to the details. Mr Trump would scrap the wrong regulations. America has as many barmy rules as the next country—such as those, often at state level, which mean that more than a quarter of workers must hold occupational licences. Yet, for reasons best known to him, Mr Trump chooses to focus on federal energy and car regulations designed to ameliorate climate change. + +On tax, he has watered down the ruinously expensive plan he put forward during the primaries. He now promises to cut the top rate of income tax from 39.6% to 33% (instead of 25%). He would still cut corporate tax by more than half. There is, though, no plan for how to pay for this largesse, other than to borrow (how much is unknown, because he has revealed just the contours of his proposal). Even if America could afford this profligacy, spare cash would be much better spent fixing the country’s wretched infrastructure than on tax cuts for the rich. As it happens, Mr Trump has promised that, too. But he thereby only exacerbates his difficulty in coming up with the astronomical sums needed to pay for his ideas. + + + +The worst part of the Trump economic plan is its defining element: trade policy. His protectionism would wreck the economy, reduce wages and achieve little in return. + +If America shredded trade deals and imposed tariffs on Chinese and Mexican imports, jobs would not simply reappear as Mr Trump claims. Manufacturing’s share of employment has fallen mostly because of technology, not trade. Indeed, it is almost exactly where you would predict it to be just by extrapolating the 1946-80 trend. Were Mr Trump miraculously to turn back productivity gains, he would add to the problems by causing average wages to fall. And those few jobs that did return would cater only to domestic demand: high-cost American workers would not be able to sell to the world as they did. + +Bad! + + + +INTERACTIVE: navigate your way through the policy landscape to a majority + +Protection would threaten high-value manufacturing jobs. It would disrupt the global supply chains which see routine work done overseas and trickier bits done in America. That is all the more troubling because export-supported jobs pay a wage premium of roughly 18%. Retaliatory tariffs on American exports would reduce overseas sales. Worse still, tariffs would eviscerate the purchasing power of American wages, as imported goods, from clothes to dishwashers, would become more expensive. The poorest Americans, who spend the highest share of their incomes on goods, would suffer most. + +Mr Trump denies that he opposes all trade, and promises “great” deals to replace those he scraps. Yet he has not explained what such deals might look like. Instead, he asks Americans to share his belief in his own negotiating talent, and to believe him when he says, contrary to all reason, that reviving manufacturing “won’t even be that hard”. Meanwhile, his proposals threaten the jobs and living standards of millions of Americans. Rarely has a candidate for president been less deserving of such a leap of faith. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21704792-republican-nominees-ideas-economy-are-thoughtless-and-dangerous-scrimping-sense/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +South Africa + +Time to govern + +There is now a genuine alternative to the ANC + +Aug 13th 2016 | From the print edition + + + +EVER since Nelson Mandela led South Africa into the democratic era in 1994, the country has been ruled by the African National Congress (ANC), the main movement that opposed apartheid. In every election since, it has secured about 60-70% of the vote. But in local ballots this month the party’s share fell to 54%. The mighty ANC now looks mortal. This is a humiliation for its leader, Jacob Zuma, whose tenure in office has been marked by corruption and misrule. His legacy may be the loss of the ANC’s majority in the election of 2019. + +By contrast, the outcome is a triumph for Mmusi Maimane, the impressive young leader of the Democratic Alliance (DA). But before Mr Maimane can become South Africa’s giant-slayer he must resolve the dilemma of power: should his party seek to govern some of South Africa’s leading cities by forming an alliance with the radical, dangerous Economic Freedom Fighters (EFF) or should it keep clean and stand aloof? + +We think that, for the right sort of deal, he should dare. The prizes on offer are glittering. In Johannesburg, the commercial capital, the ANC got only 44% of the vote, losing its majority even though the municipality encompasses the vast vote bank of Soweto and other black townships. In Tshwane, which contains the federal capital, Pretoria, it fared even worse: with just 41% of the vote there, it was overtaken by the DA. The DA also won massively in Nelson Mandela Bay, which includes South Africa’s sixth-biggest city, Port Elizabeth. + + + +The DA has governed Cape Town for ten years, but had until now failed to break out of the Western Cape. Mr Maimane, just 36, is the first black leader of a liberal party hitherto led by whites. His increased haul of votes is a testament to the solid work he has done in holding Mr Zuma to account. But in Johannesburg and Tshwane, his party will not be able to govern unless it forms a coalition with the EFF and its red-bereted leader, Julius Malema. + +It would not be an easy alliance. Mr Malema favours the rhetoric of class and racial conflict, and espouses economic policies that would be applauded by Robert Mugabe in Zimbabwe, but few others. Where Mr Maimane is quietly spoken and reassuringly pro-business, Mr Malema, 35, is a rabble-rouser. Yet fate, and electoral arithmetic, may now cast these two young men together. + +City of electoral gold + +The downside of a coalition is obvious: there is a clear risk that it will lead to chaotic rule, a speedy divorce and a tarnishing of the DA’s hard-won reputation for competence. But the upside is also considerable. It was only through another coalition, with a group of tiny parties, that the DA got its first break in Cape Town, and started to establish the record of effective governance that has enabled it steadily to increase its vote at election after election across the country. + +A deal with the EFF, provided that it held together for a respectable amount of time, would powerfully reinforce that trend. And it could also act as an antidote to the unfair but toxic charge, levelled by the ANC’s backers, that Mr Maimane is nothing but a black face on a white party. In fact, the DA’s candidate for mayor of Johannesburg is Herman Mashaba, probably South Africa’s most successful self-made black businessman. A deal with the EFF could bring the DA vital credibility in black townships where Mr Maimane has not yet made much of an impact. + +Any coalitions should be local, not national, to act as insulation against Mr Malema’s future antics. They must respect the fact that the DA won far more votes than the EFF, so the top jobs—mayors, finance directors, economic-development chiefs—ought to stick with the main opposition party. But the EFF should be allowed to handle important bread-and-butter issues like transport and housing. It, too, would have a chance to demonstrate competence, or perhaps its unfitness to govern. + +Both parties face big opportunities and potentially fatal dangers by joining forces, but they should take the risk. The biggest winners would be South Africans, who deserve to be given a choice of credible parties to rule them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21704790-there-now-genuine-alternative-anc-time-govern/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Preventing child-abuse + +First, save the children + +Punitive laws intended to protect children from sexual assault too often make them less safe + +Aug 13th 2016 | From the print edition + + + +THE sexual abuse of children wrecks lives. Survivors can suffer severe harm to their mental and physical health. That is one reason why no crime provokes greater revulsion. Another is that a shamed society has only recently begun to acknowledge how common abuse really is. And yet, precisely because abuse has been covered up for so long, no crime is more widely misunderstood. The result is that the need to punish abusers is sometimes being pursued at the expense of prevention. That means children are not being protected as they should be. + +The duty of care + +Typical of the confusion about child-abuse is that those who commit it are widely thought all to be paedophiles—that is, adults whose main sexual attraction is to pre-pubescent children. In fact paedophiles are a minority (see article). Some abusers’ victims are sexually mature, though below the age of consent. Others abuse because younger children are defenceless or because of a sense of entitlement or social inadequacy. Such distinctions matter, because spotting and stopping crimes means knowing who commits them, and why. + +For instance, understanding the behaviour of true paedophiles is essential, because they include some of the most serious and prolific offenders. Evidence suggests that paedophilia is usually a fixed sexual orientation. Hence the threat of prison and social rejection, although they make everyone else feel better, are only part of the way to deter offenders. Children would be better protected if paedophiles could also use counselling and supervision to learn to control themselves; some paedophiles can be helped by drugs that dampen sexual desire. But the fear of vilification means that hardly any seek help voluntarily—and without it they are more likely to offend. + +As awareness of child-abuse has grown, the punishment of past crimes has sometimes taken precedence over the prevention of future ones. Many countries have set up public inquiries. But the understandable desire to end cover-ups has favoured the idea that a bigger inquiry signals a more sincere attempt to get at the truth and learn lessons. Britain’s, which last week lost its third head since it was set up in 2014, receives 100 new allegations weekly but has yet to hear any evidence. Survivors—and those at risk of abuse—would be better served by investigations that are smaller, faster and more focused. + +Many places have toughened sentencing and parole conditions. In many American states convicted child-molesters’ names are put on a public register for life, and their addresses, workplaces and licence-plate numbers published online. Leave aside whether anyone should be beyond redemption: isolation and joblessness make reoffending more likely. Sex-offender registers also foster a false sense of security, because they include only those few whose crimes have been detected. + +Tough but flawed laws were inspired by rare, horrific child-abductions—rather than the abuse that commonly takes place within families. Similarly, the spread of new mandatory-reporting laws was inspired by child-abuse within institutions, such as the Catholic church, schools and care homes, and Britain’s publicly funded broadcaster, the BBC. Already in force in America, Australia and Canada, and being considered in Britain, mandatory reporting criminalises anyone who fails to report suspicions of child-abuse to the police. At first sight this seems a useful weapon against cover-ups, but it is flawed, too. + +Broad mandatory reporting can deter children from talking to a trusted adult, such as a teacher, because they know that their words will be passed to the police and they may be taken from their families. If long-past cases are included, adults who were abused as children will not be able to seek counselling without triggering a criminal investigation they may not want. They may choose instead to keep their suffering to themselves. Such laws can also overwhelm police and social services who could otherwise focus on the children most at risk. In just one year the Australian state of Queensland received reports relating to 7% of all children. Only a tiny share had substance. + +Legislation can cut abuse, but it needs to be narrower. In the cover-ups, many who suspected abuse kept silent for fear of harming their institutions or themselves. New laws should focus on wrongdoing in such bodies, requiring people within them to report reasonable suspicions about a colleague; these should be coupled with protection for whistle-blowers. + +More needs to be understood about the abuse of children and how to stop it. Governments should sponsor research. And when they draft laws they should remember that what matters most is protecting children. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21704794-punitive-laws-intended-protect-children-sexual-assault-too-often-make-them-less/print + + + + + +Previous Articles Sections Next + + + +Letters + + + + + +On Britain, globalisation, Hinkley Point, laws, landmines, Donald Trump, Brexit: Letters to the editor + + + + + +Articles Sections Next + +On Britain, globalisation, Hinkley Point, laws, landmines, Donald Trump, Brexit + +Letters to the editor + +Aug 13th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Britain’s place in the world + +To say that Britain’s stature in the world must inevitably shrink post-Brexit (Bagehot, July 23rd) is not simply too gloomy, it is also a dangerous fatalism that underestimates our ability to show bold leadership in the world. Now more than ever, Britain must wield its positive influence to the full. With multiple crises threatening the international system, the new government should forge a vision of Britain’s role as a beacon of human rights, democratic principles and international co-operation, and a foreign policy that is not just about buying and selling to others. + +We have the tools to do so. Our commitment to spending 2% of GDP on defence makes us one of NATO’s power brokers; our leadership at the UN and groupings like the International Syria Support Group has the potential to drive through ambitious collective responses to catastrophes; and we lead by example in our investment in global public goods, such as international development. + +Boris Johnson, the foreign secretary, has stated that we need more Britain in the world, not less. A government united around that vision is required more than ever and would soon dispel your counsel of despair. + +LORD WOOD OF ANFIELD + +Chair + +United Nations Association, UK + +London + + + + + +Adjusting to reality + +Reading that The Economist agrees with “managing globalisation” (“The new political divide”, July 30th) is music to the ears of those of us throughout the Americas who have struggled to tame the Washington consensus. Be they structural-reform programmes in the 1980s, with conditions enforced by multilateral financial institutions and the Treasuries of rich countries, or free-trade agreements such as CAFTA, a radical free-market ideology was shoved at us as the only way. + +Paradoxically, these same forces promoted a whole array of tax exemptions, subsidies and extra protections for multinational investments. Whoever dared to suggest a middle ground was branded a communist or ignorant. + +In that survival-of-the-fittest world (which included special concessions for the already fit), millions were left behind. The advent of leftist populism in Venezuela and other Latin American countries as a reaction to that ideology only forestalled the anti-globalisation forces that are now apparent in Western countries. + +OTTÓN SOLÍS + +San José, Costa Rica + + + +You used the metaphor of a drawbridge to illustrate your argument that the new political alignment is no longer between right and left but between open and closed societies (“Drawbridges up”, July 30th). But the whole purpose of having a drawbridge is that one can raise or lower it as necessary depending upon the situation at hand. A proper castle requires a sensible fellow at the controls. + +R.D.G. STOUT + +New York Mills, Minnesota + + + + + +Why Hinkley matters + +You urged the British government to cancel the Hinkley Point nuclear-power project and instead spend the money on renewable energy (“Hinkley Pointless”, August 6th). There are a few things to bear in mind that were not mentioned in your leader. We take the construction risk. The consumer pays nothing before Hinkley starts producing electricity. The fact that prices decades from now are unknown is precisely why investors and consumers benefit from a set price today. It protects consumers from volatility. It makes investment possible. You also claimed that combined-cycle gas turbines are cheaper to run (“When the facts change…”, August 6th). That is only true based on today’s low gas and carbon prices and with the running costs of existing plants. The correct comparison is with future options. Under the government’s central forecast for gas and rising carbon prices, the cost of a gas-plant commissioning in 2025 is close to the Hinkley strike price. + +Moreover, the government’s pledge to pay £92.50 ($120) per megawatt hour for Hinkley’s output is lower than the average £123 per MWh in renewables’ support schemes. You compared specific technologies without considering the whole-system cost. In fact, a low-carbon mix with nuclear is significantly more affordable than one without. Other technologies play a role but cannot replace the need for large-scale low-carbon generation. + +Hinkley will create thousands of jobs as part of a real industrial strategy. Suggesting that Britain could “muddle along” is an unwise response to the issues of energy security and climate change. Hinkley Point is a wise response. + +PAUL SPENCE + +Director of strategy and corporate affairs + +EDF Energy + +London + + + + + +If computers wrote laws + +“Micro-directives” have been around since laws existed and computers will not change that (“Decisions handed down by data”, July 16th). When lawmakers realise they can no longer control the beast, they sprinkle it with terms like “reasonable, fair, adequate” and other vague guidelines. Imagine a traffic-light regulation that says: “On green the driver may cross the road, unless, under the given circumstances, a reasonable person would consider this to be risky, inadequate or reckless.” We now need a lawyer as a co-driver. + +The problem with too many rules is that human life with all its interactions is too unpredictable to be programmed. The trick is to draw a hard line between frequent events and rare, unforeseeable events. The former need to be programmed in truly binary code. The latter must be left to the discretion of officials and the courts. + +KARL-ERBO KAGENECK + +Munich + + + + + +Global demining + +* The Economist highlights the continuing challenge that unexploded ordnance (UXO) and landmines pose around the world and the difficulty of clearing these hazards safely (“How unexploded ordnance is cleared”, July 25th). Since 1992, America has been the world’s leader in funding the removal of landmines and UXO. Working with partner NGOs around the world, we have contributed over $2.6 billion to conventional weapons destruction and succeeded in helping sixteen countries declare themselves “mine-impact free,” most recently Mozambique in September 2015. + + + +In June, John Kerry, America’s secretary of state, and Børge Brende, Norway’s foreign minister, launched a new US-Norwegian Demining Initiative aimed at broadening international partnerships to clear landmines and unexploded ordnance in post-conflict countries. America and Norway plan to convene a high-level demining conference this autumn on the margins of the UN General Assembly in order to secure demining commitments from other governments and private sector partners for key countries. This is an important multinational effort that can assist these countries in returning refugees and internally displaced persons, as well as undertake reconstruction and economic efforts to sustain development. + + + +MAJOR GENERAL MICHAEL ROTHSTEIN + +Deputy Assistant Secretary + +Bureau of Political-Military Affairs + +United States Department of State + +Washington, DC + + + + + +Can Trump reach 270? + +If Donald Trump were to obtain most votes in the election, we might be saved by the electoral college (“Donning the mantle”, July 23rd). Under normal circumstances, the 538 electors in the electoral college vote in line with the popular vote in each state. In some states, this is a legal requirement. But there is no federal law to say they must vote that way, and in almost half the states there is no legal requirement for them to do so. These include big states such as New York, Pennsylvania, Illinois and Texas. + +The Founding Fathers did not trust the popular will when it came to electing the American president. It might turn out that they have got it right in 2016. + +ANDREW STOLER + +Adelaide, Australia + + + + + +Sell off the Remainers + +You asked, what if countries could trade land to resolve territorial disputes (“A country market”, July 16th)? In addition to the examples you gave, Northern Ireland could be sold by the United Kingdom to Ireland. Scotland could be sold to the European Union or the highest bidder. This would help cover some Brexit costs. + +ALEX PETRACHKOV + +Geneva + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21704781-letters-editor/print + + + + + +Articles Sections Next + + + +Briefing + + + + + +Longevity: Adding ages + + + + + +Articles Sections Next + +Longevity + +Adding ages + +The fight to cheat death is hotting up + +Aug 13th 2016 | From the print edition + + + +MICHAEL RAE eats 1,900 calories a day, 600 fewer than recommended. Breakfast is a large salad, yogurt and a “precisely engineered” muffin. In a mere 100 calories this miracle of modern gastronomy delivers 10% of Mr Rae’s essential nutrients. Lunch is a legume-based stew and another muffin. Dinner varies. Today he is looking forward to Portobello mushroom with aubergine and sage. There will be a small glass of red wine. He has been constraining his diet this way for 15 years. + +In some animals calorie restriction (CR) of this kind seems to lessen the risk of cancer and heart disease, to slow the degeneration of nerves and to lengthen life. Mr Rae, who works at an anti-ageing foundation in California, thinks that if what holds for rodents holds for humans CR could offer him an extra seven to 15 years of healthy life. No clinical trials have yet proved this to be the case. But Mr Rae says CR dieters have the blood pressure of ten-year-olds and arteries that are clean as a whistle. + +The “profound sense of well-being” Mr Rae reports might seem reward enough for his privations. But his diet, and the life extension he thinks it might bring, are also a means to an end. Mr Rae, who is 45, thinks radical medical advances that might not merely slow but stop, or reverse, ageing will be available in the not-too-distant future. If CR gets him far enough to benefit from these marvels then a few decades of deprivation might translate into additional centuries of life. He might even reach what Dave Gobel, boss of the Methuselah Foundation, an ageing-research charity, calls “longevity escape velocity”, the point where life expectancy increases by more than a year every year. This, he thinks, is the way to immortality, or a reasonable approximation thereof. + +That all remains wildly speculative. But CR is more than just an as-yet-unproven road to longer human life. Its effects in animals, along with evidence from genetics and pharmacology, suggest that ageing may not be simply an accumulation of defects but a phenomenon in its own right. In a state of nature this phenomenon would be under the control of genes and the environment. But in a scientific world it might in principle be manipulated, either through changes to the environment (which is what CR amounts to) or by getting in among those genes, and the metabolic pathways that they are responsible for, with drugs. + +A treatment based on such manipulation might improve the prospects of longer and healthier life in ways that drugs aimed at specific diseases cannot match. Eileen Crimmins, a researcher at the University of Southern California in Los Angeles, points to calculations which show that the complete elimination of cardiovascular disease would add only 5.5 years to overall life expectancy in America, and removing deaths from cancer would add just 3.2 years. This is because diseases compete to kill people as they age; if one does not get you the next will. According to Dr Crimmins, increasing life expectancies much beyond 95 would require an approach that held the whole pack at bay, not just one particular predator. + +Something which slowed ageing down across the board might fit the bill. And if it delays the onset of a range of diseases it might also go some way to reducing the disability that comes with age. An ongoing long-term study at Newcastle University has been looking at the health and ageing of nearly 1,000 subjects now aged 85. At this point they have an average of four to five health problems. None of them is free from disease. Most researchers in the field scoff at talk of escape velocities and immortality. But they take seriously the prospect of healthier 85 year olds and lifespans lengthened by a decade or so, and that is boon enough. + +Indications of immortality + +Before discovering whether anti-ageing drugs might be able to deliver such things, though, researchers need to solve a daunting regulatory conundrum. At the moment the agencies that allow drugs to be sold do not consider ageing per se to be an “indication” that merits therapy. It is, after all, something that happens to everyone, which makes it hard to think of as a disease in search of a cure, or even a condition in need of treatment. Unless ageing is treated as an indication, anti-ageing drugs can’t get regulatory approval. And there’s little incentive to work on drugs you can’t sell. + +If regulators were to change their stance, though, the interest would be immense. A condition that affects everyone is as big a potential market as can be imagined. And there are hints that the stance may indeed be changing. Two existing drugs approved for other purposes—metformin, widely used and well tolerated as a treatment for diabetes, and rapamycin, which reduces the risk of organ transplants being rejected—look to some researchers as though they might have broad anti-ageing effects not unlike those claimed for CR. In 2014 a study of 90,000 elderly patients with type 2 diabetes found that those receiving metformin had higher survival rates than matched non-diabetic controls. Other work has shown its use is associated with a decreased risk of cancer. + +Scientists at the Institute for Ageing Research at the Albert Einstein College of Medicine, in New York, want to mount a trial of metformin in elderly subjects to see whether it delays various maladies (and also death). If that turns out to be the case, it will go a long way to showing that there is a generalised ageing process that can be modulated with drugs. Nir Barzilai, one of the researchers involved, says an important reason to do the trial is to have an indication against which next-generation ageing drugs can be assessed by regulators. + +This sort of interest seems to be triggering a change of tone at America’s Food and Drug Administration over whether it might approve an anti-ageing drug. The regulator is thinking about when a broad, and so far unprecedented, claim of anti-ageing might be considered to be supported by the evidence; it is “looking forward to seeing this area of science evolve”. In the dry language of a government agency these are encouraging words. + +If an unregulated diet can do the trick, why does the world need drugs? Three reasons. One is that taking a few pills a day will be easier for most than subsisting on low-calorie muffins and salad. A second is that companies can make money making pills and will compete to create them. A third is that pills may work better than diets. Dr Barzilai, who is in the pill camp, points out that CR works less well in primates than other mammals, and that people with low body-mass indices, a natural condition for those restricting their calories, are in general more likely to die. Those who do well on CR, he says, are likely to be a subset benefiting from the right genetic make-up. His hope is that a range of targeted therapies might allow everyone to get the benefits. + +If they do, it will be by inducing changes in metabolism. It has been known for 20 years that altering the gene daf-2 in roundworms slows their ageing and doubles their lifespans; another gene, daf-16, is now known to be required for this to work. Equivalent genes in humans are in charge of the cell-surface receptors for insulin and insulin-like growth factor 1, hormones with key metabolic roles. The human equivalent of daf-2 seems to be turned on by CR. Very long-lived people have been found to share particular variants of the human version of daf-16. + +Another effect of CR is that it deactivates mTOR, a protein that helps pass signals from growth hormones to the parts of the cell involved in protein synthesis. It plays a role in regulating the cell’s metabolism, division and growth, and prevents the breakdown of damaged cells. When food is abundant mTOR stimulates cell division and growth. + +Throwing the switch + +These lines of research suggest that in the animals where CR works well it switches cells from a regime where they concentrate on growing to one where they concentrate on their own repair. In that second mode damage to cells accumulates more slowly, which means they age less. Drugs that seem to have an effect on ageing achieve some of the same shift. Metformin acts on a number of hormone receptors which are also affected by CR (see chart); rapamycin works on a pathway that gets its name from a protein that is the “target of rapamycin”: mTOR. Reducing the function of mTOR extends life in yeast, worms and flies. In 2009, work in a number of laboratories showed that rapamycin can extend the lifespan of middle-aged mice by 14%. + + + +Alexander Zhavoronkov, the boss of Insilico Medicine, a longevity firm, says he is testing rapamycin on himself (self experimentation does not seem uncommon in the field). But he warns it is necessary to have a significant knowledge of biomedicine to do so safely. The drug has serious side effects; rodents treated with it suffer from insulin resistance and it suppresses the immune system. That’s good when preventing the rejection of organ transplants—the drug’s current medical use—but not so good in otherwise healthy people. One idea is that low doses might preserve the drug’s benefits while limiting its side-effects. + +There are other drugs, though, that target the same pathway with fewer downsides. One of these, resveratrol, caused a great deal of excitement among longevity researchers a few years ago because it kept mice on rich diets youthful. A lot of the initial interest has waned since it was discovered to be less helpful in mice that are not overweight, but it is still being investigated as an Alzheimer’s treatment. + +David Sinclair of the Harvard Medical School, who was part of the initial enthusiasm, describes it as a “dirty” drug, in that it has a number of targets within the cell. Among them are a set of proteins known as sirtuins which appear to be activated by resveratrol. Dr Sinclair created a company, Sirtris Pharmaceuticals, to investigate the potential of drugs aimed at these targets. GSK, a British pharma company which bought Sirtris in 2008, continues this work, though to date it has not yielded as much as was once hoped. + +Sirtuins may act as metabolic sensors, and a number are found exclusively in the mitochondria, the structures in cells that look after respiration and which are central to the evolving concept of cellular ageing. Thomas von Zglinicki of Newcastle University says ageing cells are characterised by mitochondrial damage and have difficulty recycling damaged or broken cell machinery. They produce pro-inflammatory factors called cytokines which move neighbouring cells to senescence; chronic progressive inflammation of this sort drives various age-related diseases. + +João Passos, also at Newcastle University, says cells from which mitochondria are removed start to look more like young cells and stop secreting cytokines. Other work has shown that killing off mitochondria can mimic some of the effects of drugs that activate mitochondrial renewal—such as rapamycin. Faster turnover of mitochondria seems to improve their functioning. + +Data against death + +Such discoveries in cell and molecular biology have perked up commercial interest in longevity. So too has data from the hundreds of thousands of human genome sequences. Dr Zhavoronkov’s Insilico Medicine, based in Stuttgart, Germany, is using machine learning on vast piles of published genomic data to work out the differences between the tissues of young and old people and to look at how patterns of gene expression evolve as people age. It then looks in drug databases for molecules that might block the effects of the genes it thinks matter. + +The force to be reckoned with in this field, though, is Craig Venter, a pioneer in gene sequencing. In 2013 he founded Human Longevity Inc (HLI), based in San Diego. Like Insilico, HLI wants to sift through genomic data; but it does so on a vastly larger scale, generating the genomic data itself and matching them with details of physiology and appearance. Dr Venter hopes this will allow the company to unpick the genetics of longevity and predict how long people will live. Research at HLI has already found that some genetic variations are absent in older people, a finding that implies they might be tied to shorter lifespans. Companies such as Celgene and AstraZeneca that work in drug discovery have made deals to collaborate with HLI. Dr Venter says HLI may eventually move into the drug business itself. + + + +For those who cannot wait for drugs, HLI has a high-end “wellness” service called the Health Nucleus. At prices starting from $25,000 it will give a customer a constellation of cutting-edge tests, including a full sequence of both his genome and a battery of tests for the signs of cancer, Alzheimer’s and heart disease. Lots of tests means lots of possibilities for “false-positive” results; but the affluent clients of Health Nucleus may worry less about follow-ups that reveal false alarms than other people do. + +In 2013 Google (now Alphabet) started a venture called the California Life Company, or Calico, to take a “moonshot” approach to anti-ageing; the company has said it will invest up to $750m in the venture. Calico is a drug-development company much more willing to talk about its world-leading scientists, such as Cynthia Kenyon, a worm biologist, and the track record of its boss, Arthur Levinson, who used to run Genentech, a biotech giant, than about what it is actually doing. But it has announced a series of collaborations, the most significant of which is a ten-year R&D deal with AbbVie, a pharma company based in Chicago, focused on cancers and degenerative nerve conditions. + +Degeneration leads to thoughts of regeneration. Even the most enthusiastic adherents of slowing down ageing by means of diet or pharmacology have to admit that it will not keep people going forever. At best it might allow them to age as slowly as the slowest-ageing people do naturally. And that makes it unlikely, even at its most effective, to increase lifespans beyond 120, because that seems to be more or less the natural upper limit to a human lifespan. Improvements in medicine and welfare mean that there are many more people in their 90s and 100s round the world today than there used to be. The number of people in their 130s, though, remains stubbornly at zero. + +To do something about this means not just slowing ageing but stopping or reversing it, either by causing bits of the body to rejuvenate themselves or by removing and replacing them. This is where stem cells come in. They play an important role in the repair and regeneration of tissue; they can be induced to differentiate into a range of specialised cells, and thus to replace cells that are worn out or used up. Regenerative therapies seek to supplement this repair using stems cells from elsewhere. They might be taken from frozen samples of placentas; they might be created from existing body cells. + +Many stem-cell therapies are moving rapidly towards clinical trials under the rubric of “regenerative medicine”. Both Calico and HLI are active in the field. Research has shown that nerve cells grown from human embryonic stem cells and transplanted into rats with the equivalent of Parkinson’s disease proliferate and start to release dopamine, which is what such rats and people lack. Roger Barker of the University of Cambridge recently treated a man with Parkinson’s this way. ReNeuron, based in Bridgend in Wales, is in trials designed to discover the efficacy of stem cells as a treatment for disabilities brough on by stroke. Despite the risks of unregulated therapies, hundreds of clinics around the world are already rushing to offer “treatments” for the diseases of age. This is unsurprising. It is historically an area rich in hope, hype and quackery, and it will take some time for well-founded research to clean the stables—if, indeed, it can. + + + +Another regenerative possibility flows from studies which find signs of rejuvenation in elderly animals exposed to the blood of younger animals. Infusions of young people’s blood plasma are being tried out on some Alzheimer’s patients in California. A startup called Ambrosia, based in Monterey, recently began “trials” of such a therapy with healthy participants who pay $8,000 to take part; critics say they are so lacking in controls that they are unlikely to generate any useful information. If particular genes are beneficial then gene therapy, or gene editing, could prove to be fertile ground; work to this end has begun in mice. And some won’t wait. Elizabeth Parrish, the boss of a biotech company called BioViva, claims she has already given herself an anti-ageing gene therapy. + +Beyond this horizon + +The extent to which any of this technology will help will depend on how old those it is used on are when it comes into its own. The scope for radically changing the lifespan of a 65-year-old is much smaller than that of a 20-year-old, let alone an embryo. But the amount that is lost by getting things wrong goes up in exactly the same way. + +The idea that radical biotechnology can lead to longer lifespans than that of Jeanne Calment, a French woman whose recorded lifespan of 122 years has never been bettered, seems at best a plausible speculation. To say—as Aubrey de Grey, a noted cheerleader for immortality, has done—that the first person to live to 1,000 has probably already been born seems utterly outlandish. But thinking through Calment’s life might give you pause. When she was born, in 1875, the germ theory of disease was still a novelty and no one had ever uttered the word “gene”. When she died in 1997 the human genome was almost sequenced. All of modern medicine and psychiatry, barring general-purpose anaesthesia, was developed during her lifetime. If a little girl born today were to live as long—and why should she not?—she would see the world of 2138. The capabilities of medicine at that point will surely still be limited. But no one can guess what those limits will be. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21704788-fight-cheat-death-hotting-up-adding-ages/print + + + + + +Articles Sections Next + + + +United States + + + + + +Hillary Clinton: Inevitable once more + +Purchasing power: More bang for your buck + +Merit scholarships: TOPSy-turvy + +Dietary inequality: Bitter fruits + +America’s foreign bases: Go home, Yankee + +Lexington: Dollars in the wind + + + + + +Articles Sections Next + +Hillary Clinton + +Inevitable once more + +The Democratic nominee is starting to look unbeatable. Thank Donald Trump + +Aug 13th 2016 | KISSIMMEE, FLORIDA | From the print edition + + + +“HERE she is!” shouted Bill Nelson, turning from the podium, with a sweep of his senatorial arm, to an empty walkway, where Hillary Clinton was supposed to be. The small crowd, gathered in an exhibition hall in Kissimmee, central Florida, on August 8th gamely cheered the empty stage, but with a hint of surprise and, when it remained empty, confusion. “I’m with her!” banners weakly fluttered—but where was she? By the time the Democratic nominee, wearing a bright orange trouser suit (which instantly recalled the “Hillary for Prison” badges for sale outside her Republican rival’s rallies), emerged and hotfooted it to the podium, the Floridian crowd was audibly running out of puff. + +A visiting Martian might be surprised to learn, on the basis of Mrs Clinton’s rallies, that she is a strong favourite for the presidency. As The Economist went to press, she led Donald Trump by eight percentage points in an average of recent polls, by a similar margin in several important swing states, including Virginia and Pennsylvania, and her lead was growing. Groups that have not voted Democratic in decades, such as college-educated whites, are flocking to her. So are some Republicans, including a good few of the 50 Republican security gurus who denounced Mr Trump on August 8th. All are repelled by him, which is no wonder. In a speech in North Carolina on August 9th Mr Trump appeared to ponder Mrs Clinton’s assassination: “If she gets to pick her judges, nothing you can do folks,” he goaded the crowd, “although the Second Amendment people—maybe there is, I don’t know.” Yet it is still striking how little Mrs Clinton, America’s probable next president, is loved. + +The “enthusiasm” of her supporters is another measure on which she leads: 51% of Democrats says they are enthusiastic about the election, compared with 41% of Republicans. Yet the word does not seem to describe the feelings of all that many Clinton supporters: they are “respectful of” and “convinced by” her, but not gushing. In interviews with a score at Kissimmee, all said they admired her (though some had reservations) and were confident she would beat Mr Trump, whom they loathed. But most struggled to name a quality they especially liked in her. Some seemed surprised by the question. + +“Her husband was one of the best presidents we’ve had,” offered Max, a dental assistant. “I just think she’s the best choice,” said Greg, a retired mechanic. Others worried about Mrs Clinton’s reputation for shadiness, exacerbated by the undying scandal over her furtive e-mail arrangements as secretary of state: “I was very disappointed by her,” said Hallie, a retired civil servant. The strongest endorsements were for what Mrs Clinton represents, as a woman and, especially, as the anti-Trump candidate. “I was raised a Republican,” said Amanda, a student. “But I’m gay, I’m young, I’m a woman, how can I not vote for her?” “She isn’t a good candidate,” said Neil, a retired obstetrician, wearing a T-shirt stamped with a swastika bearing Mr Trump’s name. “But I can live with her.” + +Dig into Mrs Clinton’s stellar polling figures, and there is worse than ambivalence. Almost 60% of voters say they are “dissatisfied” with both candidates; 56% of college-educated whites are “anxious” about the prospect of her as president; almost 70% of voters do not find her trustworthy. Perhaps this does not matter; voters like Mr Trump even less. Yet her unpopularity is at the least liable to make the next three months more nerve-racking, given the disaster a Trump victory would represent for America, than they might otherwise be. It is also a poor basis for a presidency. + +How poor, may depend on quite what is behind Mrs Clinton’s struggle. She blames it on her awkwardness as a campaigner: “Through all these years of public service, the ‘service’ part has always come easier to me than the ‘public’ part,” she said in her convention speech last month. That was a bit disingenuous: had she been less slippery in her e-mail arrangements, she would be less mistrusted. Yet her clumsy political skills clearly do not help. + +She is an amazingly poor orator, considering her long record and her easy charm in private, with a default shouting mode that would grate less if she would at least shout in the right places. “It’s so exciting to have this chance to talk to all of YOOOO!”she thundered in Kissimmee. Having little flair for the big narrative, she can be similarly poor at convincing voters she understands and will act on their worries. Her response to almost any problem is to spout policy, which is admirably pragmatic, but, as in the economic plan of action she delivered in Kissimmee, can sound aloof. There is no quick fix to the stagnant wages, wrought by technological and other change, she referred to, and most voters know it. By describing the problem thoughtfully, including the brighter future that technology may well bring, she might nonetheless have provided reassurance. Instead, she harped back to the different world of her father’s working life, half a century ago, then rattled off policies—infrastructure investment, vocational training and the like—that would not begin to go far enough to achieve the transformation she implausibly promises. + + + +INTERACTIVE: navigate your way through the policy landscape to a majority + +But there is a counter-case, rooted in the unusual difficulty of what she is attempting. Sure, Barack Obama and Bill Clinton were better campaigners than she is. Yet their big advantage was being young, novel and in a position to argue for an end to unpopular Republican rule. Mrs Clinton, an establishment veteran at a time of anti-establishment sentiment, has a much tougher sell to make. She is arguing for a rare third term for her party, which must be neither a continuation of Mr Obama’s terms, given Americans’ widespread disgruntlement, nor a repudiation of them, given his popularity in her party. Not even her silver-tongued predecessors would have shone at that. In time, her candidacy may be judged less harshly. + +The next three months should advertise some of her strengths. Her campaign is well-resourced—she has so far spent $52m on television advertising, while Mr Trump has spent nothing—well-organised and, in the primaries, roused ambivalent voters effectively. Her party, unlike her opponent’s, is united, for which she can also take credit, thanks to her careful negotiations with Bernie Sanders, her aggrieved Democratic rival. Above all, in Mr Trump, her candidacy has been granted the unifying principle it previously lacked. + +It is a low bar; but being demonstrably sane, competent and able to refrain from publicly envisaging her opponent’s murder is now at the heart of Mrs Clinton’s sales pitch. Almost all her best lines and biggest applause in Kissimmee referred to her rival; this election, she said, is “a choice between two different views of who we are as Americans”. Indeed it is, and the polls suggest that the inclusiveness and moderation that inform her vision, whatever her character flaws, her fudgy policies and the anti-politics mood, are shining through. In this election, those qualities alone are worth cheering. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21704799-democratic-nominee-starting-look-unbeatable-thank-donald-trump-inevitable-once/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Purchasing power + +More bang for your buck + +Aug 13th 2016 | From the print edition + + + +“It’s all about the Benjamins,” rapped Puff Daddy, using slang for the $100 bill. But the real value of a “Benjamin” depends on where you live. The Tax Foundation, a think-tank, looked at federal data to determine the cost of buying goods in each state relative to the national average. A $100 bill goes furthest in Mississippi, where it is worth $115.34, giving the state 36% more purchasing power than Washington, DC, where $100 is worth only $84.67. In states with high nominal incomes, prices are usually higher—with exceptions. North Dakota, for instance, has high (fracking-fuelled) income without high prices; Hawaii has low income and high prices. But better weather. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21704800-more-bang-your-buck/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Merit scholarships + +TOPSy-turvy + +How a programme meant to help poor blacks has roared out of control + +Aug 13th 2016 | NEW ORLEANS | From the print edition + + + +TWENTY-EIGHT years ago, in a forgotten corner of New Orleans, a rich oilman, Patrick Taylor, promised a class of 13-14-year-olds that he would pay their college tuition fees as long as they could keep a B average through high school. The idea caught on, and soon expanded to cover poor pupils across Louisiana. + +Eventually the private funding was replaced with taxpayer dollars. Then, in the late 1990s, the means-testing was dropped too. Everyone could now get the scholarships, called Taylor Opportunity Programme for Scholars, or TOPS; and so a behemoth was born. Similar programmes, such as HOPE in Georgia, have sprung up in more than a dozen states, mostly in the South, to try to stanch the “brain drain” these states have historically suffered. Everywhere they have proved enormously popular—and expensive. In Louisiana, the cost has doubled in a decade; and TOPS has become the very definition of a middle-class entitlement. + +Like many other states, Louisiana has coped with lean budgets in recent years in part by scaling back its funding of universities. Colleges have been allowed to make up the difference by raising tuition fees—thus increasing the cost of the TOPS programme. This summer, for the first time, the state legislature failed to come up with enough money to finance TOPS fully. In the coming academic year, scholarship recipients will have to contribute about $2,000 of their own money for college. This has sparked fury among pupils and parents. + +Louisiana’s decision to cut back its direct support of universities while pouring more and more money into merit scholarships amounted to a huge, if mostly unremarked, shift in policy. In essence, the state decided to subsidise individuals rather than institutions. In 2007, for instance, the state sent about $7 to universities for every dollar that went to the scholarships. Last year, it sent about $1.49 to the campuses for each dollar that went into TOPS. + +There is some logic to this. TOPS has allowed thousands of deserving children in Louisiana to earn a college degree and emerge with little or no debt. And although data are few, it is likely that the scholarships have kept more of them in the Pelican State after graduation. + +But there are downsides, too. As designed, TOPS rewards mediocrity. To quality, pupils need only a 2.5 grade-point average—gentlemen’s Cs, in other words—and an average mark of 20 in the national standardised test, or ACT. (Most states have more rigorous standards.) Meanwhile, white high-school graduates in Louisiana are almost three times as likely to qualify as their black counterparts, mainly because whites fare slightly better on standardised tests. Yet it was originally blacks—who are still far more likely than whites to be poor and attend rotten schools—who were meant to benefit most from TOPS. + +If Louisiana really hopes to keep its academic superstars, it should offer a more generous incentive to truly excellent pupils, as many states now do. Currently, the best students get a small stipend in addition to help with tuition fees, but it is hardly a game-changer. It could also raise the bar for scholarships, requiring at least a 3.0 grade-point average—as most states do. The money saved could then be injected into need-based aid. Up to now, that has been mostly an afterthought: in the most recent year, less than a dollar went into need-based aid for every $10 put into TOPS. + +Walter Kimbrough, the president of Dillard University, a historically black private college in New Orleans, is pressing hard for such reforms—and for a return of the means-test. The programme, he insists, must be focused on those who really need it: as Mr Taylor intended back in 1988. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21704798-how-programme-meant-help-poor-blacks-has-roared-out-control-topsy-turvy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Dietary inequality + +Bitter fruits + +As incomes become more unequal, so too may the rate of healthy eating + +Aug 13th 2016 | From the print edition + +All you can eat, and shouldn’t + +IN HIS book “In Defence of Food: An Eater’s Manifesto”, Michael Pollan urged people to “Eat food. Not too much. Mostly plants.” Although a paltry 2.7% of Americans have a “healthy lifestyle”, according to the Mayo Clinic, their diets are improving. A recent study by researchers at the Tufts University Friedman School of Nutrition Science and Policy, tracking changes in eating habits between 1999 and 2012, suggests that Americans are nibbling more whole fruits, nuts and seeds, and gulping fewer sugary drinks, than they were in the fairly recent past. But the study also revealed that the gap between the diets of rich and poor seems to be widening. + +That rich Americans eat more healthily than poor ones is not a new revelation. Low-income places are less likely to have full-service grocery stores or farmers’ markets, let alone organic stuff. Poor people often have no cars, so they have to shop at the sort of convenience stores that offer crisps and doughnuts rather than fresh produce. And fruit and vegetables are heavy to lug home. In Newark, New Jersey, Renée Fuller, an elderly woman who walks with a stick, has to go to the next town, West Orange, to shop. “You want a banana, you have to travel. There’s not many supermarkets. There’s nothing convenient…You have bodegas and corner stores that sell cold cuts and sandwiches, but not many vegetables…I get my food stamps once a month. I can’t stock up on fruits for the whole month.” Low-income urban areas that are at least a mile from the nearest supermarket, and rural areas that are at least ten miles from any grocery store, are considered “food deserts”. In 2009 the Department of Agriculture calculated that 11.5m people, or 4.1% of America’s population, live in such deserts. + + + +If fresh food becomes more available, though, it will not necessarily get eaten. In Morrisania, a deprived neighbourhood in New York’s unhealthiest county (and, until recently, a food desert), the launch of a supermarket did not markedly change eating habits. Kelly Brownell, the dean of the Sanford School of Public Policy at Duke University, says that makes sense: “Supermarkets offer more choice of healthy foods, but also ice creams and salty snacks.” In a survey conducted in 2012, over half of Americans claimed ignorance: working out their income tax, they said, was easier than knowing how to eat healthily. + +Employees at City Seed, a food-based charity based in New Haven, Connecticut, agree that availability is only part of the puzzle. By hosting farmers’ markets that accept Supplemental Nutrition Assistance Programme benefits, formerly known as food stamps, the group’s founders wanted to improve access to fresh foods where it “was easy enough to find pizza, but next to impossible to locate a fresh tomato”. Nicole Berube, the executive director of City Seed, not only hopes to bring healthy food closer, but also to build on the skills of people who know how to choose it and cook it—skills that exist even in deprived places. + +Rising income inequality may also help to explain why American diets are becoming less equal. Adam Drewnowski, a professor of epidemiology at the University of Washington’s School of Public Health, estimates that the difference between eating healthily and poorly in America is $1.50 a day. For a family of five, that is over $2,700 a year. Dariush Mozaffarian, a doctor and one of the authors of the eating-habits study, thinks time constraints are even more important. “Low-income individuals might have to work two jobs to support their families, or make long commutes. Such commitments might get in the way of cooking healthy meals.” + +Dr Mozaffarian believes it is crucial to change cultural attitudes towards nutrition. The tobacco industry offers a useful example. As smoking has become less socially acceptable, smoking rates have declined. If people could come to view inhaling cheesecake or Big Macs in the same way, Americans’ waistlines would shrink along with their health-care bills. + +Over one-third of American adults are not just overweight, but obese. Past research suggests obesity and the preventable chronic diseases that go with it cost the country between $147 billion and $210 billion a year. Dr Mozaffarian believes the economic toll is even higher, and yet nutrition is not tracked in most electronic health records. “This should be a top national priority,” he says; “up there with terrorism.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21704801-incomes-become-more-unequal-so-too-may-rate-healthy-eating-bitter-fruits/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +America’s foreign bases + +Go home, Yankee + +The presence of American troops on foreign soil is growing more controversial + +Aug 13th 2016 | From the print edition + + + +AT THE end of July the United States army announced plans to hand back 15 square miles (40 square km) of land on Okinawa to the Japanese government. This will be the biggest land return in the island, home to almost 30,000 American troops, since the United States’ formal occupation ended in 1972. The decision follows the rape and murder of a local woman and big anti-American protests in June. + +Opposition to American bases has increased recently in Turkey, too. In the wake of July’s failed military coup, many Turks have accused American soldiers on the Incirlik air base of being among the plotters. Three days after the coup Yusuf Kaplan, a pro-government journalist, tweeted: “USA, You know you are the biggest terrorist! We Know All the Coups are your work! We are not stupid! #procoupUSAgohome.” + +America has more overseas military bases than any other nation: nearly 800 spread through more than 70 countries. Of the roughly 150,000 troops stationed abroad, 49,000 are in Japan, 28,000 in South Korea and 38,000 in Germany; the total cost to the American government, with war zones excluded, is up to $100 billion a year. For much of the 20th century, overseas military facilities were justified as a bulwark against the Soviet threat; as that faded, other reasons to stay soon emerged. Since the 1990s, wars in the Middle East have meant that countries such as Bahrain and Turkey have gained strategic importance. (American strikes on Islamic State (IS) are launched from the Incirlik base.) More recently, China’s growing naval power has prompted America to reinforce its presence in the Pacific. + +Home support for foreign bases peaked a year after the September 11th attacks, when 48% of Americans thought projecting military might was the best way to reduce the terrorist threat. Today, although about the same number still believe that, 47% think it creates hatred and leads to more terrorism. (The divide falls along partisan lines, with 70% of Republicans supporting military force, and 65% of Democrats opposing.) When it comes to overseas bases themselves, though, Americans, for the most part, are “completely unaware” of them, says David Vine, associate professor of anthropology at the American University and author of “Base Nation: How US Military Bases Abroad Harm America and the World”. If they consider them at all, he says, “most people would think the US military is good so US bases, wherever they are, must be a good thing”. During the presidential primaries Donald Trump, the Republican nominee, questioned the need for, and the expense of, so many overseas bases. No other candidate did. + +False assumptions about the costs of funding America’s overseas military presence could, in part, explain the public’s ambivalence. According to Mr Vine, even “so-called experts within the military” believe the bases do not cost America much because foreign governments foot a large part of the bill. In reality, he explains (and according to an estimate by the RAND Corporation in 2013), keeping members of the armed forces overseas, rather than within the United States, costs between $10,000 and $40,000 extra for every man and woman involved. + +Within the armed forces, an overseas posting is still seen by many as a perk of the job and one of the main reasons to sign up in the first place. “For maybe 75% of the people I talk to, travelling is the biggest thing that gets them,” says Staff Sergeant Marco Lopez, a recruiter based in Los Angeles. Another recruiter, Staff Sergeant Andrew Murray, based in Tennessee, explains that a lot of new recruits “are looking to get out of small-town Tennessee; when I tell them about my experience in Europe, they just light up.” Europe, particularly Germany, seems to be one of the most popular destinations for army recruits. The sergeants found Germans particularly friendly and welcoming; Europe’s rich history attracts some, while Sergeant Murray enjoyed being able to visit “a different city every weekend, partying and sightseeing”. + + + +Before going overseas, American troops are given a detailed briefing on what to expect and how to behave. Sergeant Murray says he was warned that Germans are not good at queuing, and that it was a good idea “to tone down the patriotism”; Sergeant Lopez, when stationed in Seoul, was told to avoid areas known for prostitution. Not all those enlisted take the briefings on board, as the recent events in Okinawa have made clear. Uncle Sam’s pay-cheques feed the economies of areas with army bases, but mostly through the soldiers’ patronage of night clubs and bars—which can lead to trouble. + +In the past 15-20 years the Pentagon has taken steps to improve relations between its overseas outposts and local communities. Most of these have involved trying to rein in wayward soldiers. In 2006 an anti-prostitution charge was added to the United States Military Code of Justice (to the outrage of some American troops stationed in Germany, where prostitution is legal). The Department of Defence also reported an increase in the number of sexual-assault cases taken to courts martial, from 42% in 2009 to 68% in 2012. But Japan remains an outlier: within navy and marine-corps units stationed there, only 24% of those charged with sexual offences were court-martialled in 2012, the latest date for which data are available. + +The United States has 85 military facilities scattered across Japan—a legacy of American occupation after the second world war. Three-quarters of the territory occupied is on the string of islands making up Okinawa, along with more than half of the 49,000 military personnel. Okinawans resent the heavy burden they have shouldered, as well as the American presence itself—particularly the brothels. These were deliberately set up for United States troops and remained legal on the island until 1972, 14 years after they were banned in the rest of the country. The protests in June over the most recent rape victim were the latest in a long line of anti-American demonstrations. The largest came in 1995, when 85,000 Okinawans took to the streets following the gang-rape of a 12-year-old girl by three American soldiers. + +In the past, the presence of American troops has also sparked more general protests. During the cold war West Germany played host to more American military facilities than any other country, up to 900 by some definitions, incorporating schools and hospitals as well as sports complexes and shopping centres. Local communities protested against the noise and disruption from constant military manoeuvres. Opposition reached its peak at the end of the 1980s, fuelled further by growing anti-nuclear sentiment. Leftist groups, the Red Army Faction and the Revolutionary Cells also launched violent attacks against American army headquarters and kidnapped military personnel, objecting to the mere physical presence of America in their country. + +Miss you, miss you not + +Almost 30 years later, the withdrawal of American troops from Germany is well under way: in 2010 the army announced it was handing over 23 sites to the German government. “We don’t miss them, but we weren’t wanting them to leave either,” says Hans Schnabel, a business-development manager in charge of converting old army bases in the Bavarian city of Schweinfurt, where up to 12,000 soldiers and their families were stationed before it closed in September 2014. After the cold war resentment in Germany towards the bases, and American forces in general, became more subdued; recent protests, such as one in June outside the Ramstein base against alleged support for drone operations, are fewer and quieter. At Schweinfurt, says Mr Schnabel, local people even think of the base with nostalgia: they are building an “American house” to remember those stationed there, and the streets around the new housing development (once the barracks) will be given names such as California Strasse and Ohio Strasse. + +In contrast, America’s military presence in Turkey, as in Okinawa, is still a focus of thriving anti-Americanism today. The relationship began well enough: in 1946, when the USS Missouri sailed into Istanbul, the show of American might was warmly welcomed. It foreshadowed Turkey’s accession to NATO six years later and the stationing of American troops across the country. American enclaves in Ankara, and sailors’ weekend jollies in Izmir and Istanbul, contributed to a change in public opinion. By the end of the 1960s “Go home Yankee” signs greeted disembarking American sailors and soldiers. In the 1970s, as in Germany, leftist revolutionary groups resorted to increasingly extreme tactics in their attempts to “liberate” Turkey from American imperialism: the Turkish Revolutionary Army abducted four American airmen in March 1971 and three NATO engineers the next year. + +Since then, America’s military presence in Turkey—though far less substantial than in Japan—has been seen by many as an unwanted encroachment on Turkey’s independence. In 2003 Turks protested against the war in Iraq and proposals for America to station military personnel at the Mersin naval base. When the USS Stout docked in Bodrum in 2011, members of the Turkish Communist Party stood on the shore chanting anti-American slogans. Three years later, in two separate events, members of the Turkish Youth Union targeted American sailors and NATO soldiers in Istanbul, putting white sacks over their heads and throwing red paint over them. A similar incident occurred at Incirlik air base in April this year. Even a visit by President Barack Obama, during his trip to Turkey in 2009, drew crowds of angry protesters shouting “Yankee go home” and “Get out of our country.” + +Happier days in Okinawa + +The latest attacks against America’s military presence in Turkey, however, mark a shift. Since the Syrian war broke out, the United States has increasingly used the Incirlik base to support the Kurdish People’s Protection Units (YPG), implying that it might also support an autonomous Kurdish state carved out of Turkey. America and its armed forces have long featured in conspiracy theories, too, particularly those involving Fethullah Gulen, an Islamic cleric living in self-imposed exile in the United States. The recent attempted coup against President Recep Tayyip Erdogan is proof to many Turks of a Gulenist-American alliance, and of the subversive influence of American armed forces in the country. The closure of Incirlik air base for a short time immediately after the coup added fuel to the conspiracy theories. Mr Erdogan himself seems to be using America as a scapegoat, intentionally ramping up hostility towards the personnel stationed there. + +The strategic importance of Incirlik for America’s campaign against IS means that keeping American combat boots on Turkish soil is more in America’s interests than Turkey’s. But given that anti-Americanism in Turkey is one of the few sentiments uniting an increasingly undemocratic and destabilised country, American troops will have to tread carefully: they are likely to become bigger, not smaller, targets as internal tensions mount. + +In many other countries both sides, despite sporadic differences, have an equal interest in Americans staying. After the protests in 1995 in Okinawa, America and Japan agreed to close Futenma, the marine air base in the overcrowded city of Ginowan, and to build a new facility in Henoko, a fishing village. The plan failed to appease locals—who re-elected anti-base politicians such as Takeshi Onaga, Okinawa’s governor, in June’s local elections—but Shinzo Abe, Japan’s prime minister, is pressing ahead with it anyway. + +He has particular reason to try to smooth tensions between the two sides. North Korea’s flaunting of its nuclear weapons and China’s aggression in the South China Sea mean his plans for strengthening Japan’s military defences must go ahead, and the United States’ armed forces are an essential part of this. Some 47% of Americans would agree with Mr Abe: they are in favour of extending America’s military presence in Asia to counter Chinese power. But 43% are opposed. America, despite what its enemies sometimes suppose, is never really thrilled to be the world’s policeman—especially if the world proves ungrateful. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21704817-presence-american-troops-foreign-soil-growing-more-controversial-go-home/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Dollars in the wind + +Galloping off in all directions with taxpayers’ money + +Aug 13th 2016 | From the print edition + + + +THERE is more than one way to achieve dreadful public policies. Committees of bureaucrats have crafted real stinkers over the years. Other duff laws are the work of deep-pocketed special interests. But to create the worst government programmes—schemes that combine brow-furrowing folly with gasp-inducing expense—few methods are as sure as inviting Congress to spend the money of future taxpayers, in order to pander to public sentiment today. + +For a case in point, consider the Wild Horse and Burro Programme of the Bureau of Land Management (BLM). The BLM, a federal agency which manages more than 245m acres of public land, is a whipping-boy for the environmental left and the anti-government right alike. But when it comes to the mismanagement of wild horses, the real villain is Congress. The BLM runs 177 “herd-management areas” across ten states. The animals are in truth feral, not wild—a few can be traced back to horses brought to the Americas by the Spanish, but most are descended from ranch stock or unwanted animals set loose during the 20th century. + +Lexington recently visited a herd in the McCullough Peaks of Wyoming—100,000 acres of desert badlands softened by pale, scented sagebrush, and cut through by canyons of pink-striped rock. To keep the herd’s population constant, a BLM officer, Tricia Hatle, injects between 50 and 60 wild mares each year with darts containing PZP, a contraceptive. This involves stalking the herds with a fearsome-looking gas-powered dart gun, capable of hitting a horse from 40 yards. Ms Hatle, an efficient sort, finished her darting in 18 days this year, down from several months a few years ago. The cost is $150 per horse, per year. + +That sounds reasonable—except that the McCullough Peaks herd comprises just 152 animals, out of 67,000 wild horses that roam public rangelands. The McCullough Peaks animals are also among the most accessible in the country, feeding and drinking near dirt roads open to the public. (Indeed, as Ms Hatle demonstrates her dart-gun, a retired baby-boomer in a low-slung sports car growls into view, asking where the horses are; the tourist is politely directed back to a tarmac road before he has to be towed out of a mud-pool.) Other herds roam across treeless tracts of states such as Nevada and would see agents from miles away. They would run long before they could be darted. + +Feral horses were once herded cruelly with airplanes or poisoned to stop them competing for food. But in 1959 a law promoted by a campaigner, Velma Bronn Johnston, also known as “Wild Horse Annie”, ended those practices. It was followed by the Wild and Free-Roaming Horses and Burros Act of 1971, which ordered the animals protected as “living symbols of the historic and pioneer spirit of the West”. Yet at the same time Congress told the BLM to keep public rangelands open for cattle-grazing and other uses, leaving limited room for feral horses. + +Bowing to public opinion, Congress has also shut down horse slaughterhouses in America. In 2015 a bipartisan group of members further tried to ban the export of horses for meat (steak de cheval is a delicacy in France). More cheerfully, as many as 8,000 wild horses used to be adopted out of BLM herds each year. But there is an oversupply of domestic horses—in part because of the closed slaughterhouses, and partly because rural folk are turning to all-terrain vehicles. Today the BLM struggles to find adoptive homes for 2,500 animals. Meanwhile, the National Academy of Sciences (NAS) estimates that the nationwide wild-horse population grows by 15-20% a year. + +In addition to the 67,000 horses roaming free, the BLM has moved 46,000 animals to corrals and to what the bureau’s director, Neil Kornze, calls “gorgeous green pastures in the Midwest”. Horses live longer on those rented pastures. Over the next 40 years, Mr Kornze calculates that those verdant retirement homes are “a billion-dollar commitment on behalf of the American public, in addition to the billion-dollar cost of horses on the range”. The bureau’s entire annual budget is $1.2 billion, of which over $80m is now spent managing wild horses—double the amount spent seven years ago. + +The BLM is pinning its hopes on research into new contraceptives, as well as into spaying and neutering. The bureau also wants Congress to make it easier to transfer wild horses to public agencies, such as the US Border Patrol. But the challenge may be larger than any technical fix. Historically, horses were seen as livestock, explains Mr Kornze. They are now “trending more into the pet category”. + +Hipsters against culling + +Last year a group of mostly western senators and members of Congress asked the BLM to outline different scenarios for bringing wild-horse numbers under control. Bluntly, none looks sustainable. In one, more than 160,000 animals would be added to BLM off-range corrals and pastures, for a 40-year cost of $4.6 billion. Another involves adding 15,000 horses to corrals and injecting up to 27,000 fertile mares a year with PZP. + +Senator John Barrasso of Wyoming, a Republican, says the BLM is between a “rock and a hard place”. The senator, a surgeon by background, sees no solution which does not involve some culling of wild horses. But public sentiment makes that unthinkable for most members of Congress, notably those representing urban and suburban areas. Several animal-rights groups even oppose transfers to pastures, arguing that the BLM should instead pay ranchers to move their cattle, freeing up vast new areas of the West for horses. Meanwhile, the wild-horse population is on course to double every four years (the NAS found little evidence that wolves or mountain lions keep herds in check). It is a revealing mess. Ask Congress to manage a few hundred thousand photogenic mustangs, and they try to spend their way to popularity. Small wonder welfare for humans is beyond reform. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21704733-galloping-all-directions-taxpayers-money-dollars-wind/print + + + + + +Previous Articles Sections Next + + + +The Americas + + + + + +Argentina’s economy: It’s cold outside + +Rio’s Olympics: More with less + +Canada’s Senate and Supreme Court: Look to the rainbow + + + + + +Articles Sections Next + +Argentina’s economy + +It’s cold outside + +A battle over utility bills is Mauricio Macri’s first big crisis + +Aug 13th 2016 | BUENOS AIRES | From the print edition + + + +THE most populous parts of Argentina are stifling in summer and bone-chilling in winter. The Kirchner family, which ruled for a dozen years until 2015, kept the cost of comfort low. An earlier government had fixed the price of electricity and natural gas in 2002 to help the economy out of a slump; the Kirchners barely raised it. As a result, Argentines pay a fraction of what their neighbours do for energy (see chart). + + + +But they have paid in other ways. Energy subsidies jumped from 1.5% of government spending in 2005 to 12.3% in 2014. Partly because of such largesse, the budget deficit was a worrying 5.4% of GDP last year. Because energy is cheap, consumers use it with abandon; utilities lack cash for investment. Summer blackouts can last for hours. Mauricio Macri, who succeeded Cristina Fernández de Kirchner as president in December, said the energy crisis was the most complex of the “many bombs” she had left for him. Defusing it is proving to be perilous. + +Soon after Mr Macri took office the energy minister, Juan José Aranguren, said he would chop the $16 billion subsidy bill in half. Gas tariffs would quadruple for most consumers; those for electricity would increase sixfold. The higher bills landed in consumers’ post boxes in June, during Argentina’s coldest autumn in 60 years. A backlash followed. Pot-banging protests, called ruidazos, took place across the country on August 4th. A few days later thousands of pot-bangers marched to the Casa Rosada, the presidential palace. Two courts have blocked the tariff rises. The final decision now rests with the supreme court. + +The government cannot afford to lose. The price increases are a vital part of Mr Macri’s plan to restore confidence in an economy undermined by years of reckless spending, self-defeating price and regulatory controls, and economic nationalism. He began his presidency by allowing the peso to devalue, removing taxes on food exports and striking a deal with holders of debt on which Argentina had defaulted. + +Unsurprisingly, the remedy has been painful. The peso’s drop pushed the inflation rate to more than 30% even before utility bills went up. Growth, private employment and manufacturing have fallen since Mr Macri came to office. The IMF expects the economy to shrink by 1.5% this year. Argentina’s deal with bondholders has yet to trigger the surge in foreign investment that the president promised would follow. + +The government’s clumsy handling of the price rises made the backlash worse. Alfonso Prat-Gay, the finance minister, airily dismissed them as “the cost of two pizzas”. Mr Macri upbraided energy gluttons. “If you’re in a T-shirt and bare feet around the house, you’re using too much,” he lectured. On Twitter, indignant Argentines posted videos of themselves listening to his speech dressed for Arctic conditions. + +The government has tried to placate voters without abandoning its policies. “We got it wrong,” admitted the interior minister, Rogelio Frigerio. A chastened president installed a solar-powered hot-water tank on the roof of the Quinta de Olivos, his official residence. “I am on a campaign to save energy,” he joked during a visit to Casa Rosada by the Mexican president, Enrique Peña Nieto. “If you’re cold, now you know why.” On June 7th the government said it would cap the rise in gas prices and increase the amount of electricity sold at concessionary rates to small consumers in some provinces. + +Mr Macri has reservoirs of political strength and popular goodwill to draw on. Though Argentines are angry, most still blame the Kirchners for their hardship. Allegations of corruption have enfeebled Ms Fernández as a political force. A new generation of politicians is competing to become the next presidential candidate of her Peronist party, weakening its ability to provide opposition to the government. + +But Mr Macri’s honeymoon is coming to an end (see chart). With legislative elections due in October 2017, “the government needs to show some economic results in the first quarter of next year,” argues Juan Cruz Díaz of Cefeidas Group, an advisory firm. The IMF thinks the economy will rebound in 2017; it forecasts growth of 2.8%. + + + +The row over tariffs could slow the recovery. The courts’ injunction against the price increase has shaken foreign investors’ confidence in the legal system. No one is sure whether the supreme court will reverse it. Two of its five judges were recently appointed (by Mr Macri), which makes the decision hard to predict, says Mr Díaz. Until it acts, firms will continue to face the threat of output-disrupting power cuts. + +Mr Macri has little choice but to hope that the supreme court rules in his favour, persist with price rises and pay the political cost. “To find tariffs both attractive enough for investment and acceptable to society—without impacting inflation—is impossible in the short term,” says Carlos Marcelo Belloni of IAE Business School in Buenos Aires. Like chilly consumers, Mr Macri is waiting for balmier weather. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21704824-battle-over-utility-bills-mauricio-macris-first-big-crisis-its-cold-outside/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Rio’s Olympics + +More with less + +Aug 13th 2016 | From the print edition + + + +The ceremony that opened the Olympic games at Rio de Janeiro’s Maracanã stadium on August 5th cost a fraction of what London spent four years ago. But ingenuity and style made up for it. The film directors who staged the show conjured up a rainforest, a favela and an animated city in a celebration of Brazil’s hybrid culture. Brazilians are depressed about an economic slump, the impeachment of their president and a huge corruption scandal. Despite glitches at the games, the Olympics are cheering Brazilians up. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21704826-more-less/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Canada’s Senate and Supreme Court + +Look to the rainbow + +Justin Trudeau is shaking up two constitutional bodies + +Aug 13th 2016 | OTTAWA | From the print edition + + + +A BOOK about Canada’s Senate published in 1984 was called “Survival of the Fattest”. The chamber’s record of cronyism, indolence and scandal since then has not improved its reputation. “Patronage Heaven” should simply be abolished, many Canadians think. No one says that about the Supreme Court, a far more respected body. But both would benefit from a shake-up. Or so believes Canada’s newish prime minister, Justin Trudeau. + +He wants to bring the two institutions closer to ordinary people, and to reduce (a bit) the prime minister’s almost limitless power to decide who may serve on them. His reforms are meant to fulfil his campaign promise to make government more representative and accountable. But they carry risks for his Liberal government. + +Loosely modelled on Britain’s House of Lords, the Senate can amend bills passed by the House of Commons, prompting negotiations between the two chambers. If these fail, the bill dies. In practice, the Senate rarely acts as a check on government. In June it voted to expand the range of patients who would benefit from the government’s bill to allow doctor-assisted death. When the Commons refused to endorse the change, the Senate characteristically backed down. + +Senate appointments became a way for prime ministers to reward loyalists with “taskless thanks”. A recent expenses-claims scandal compounded the chamber’s reputation for fecklessness. The Supreme Court blocked a plan by Stephen Harper, Mr Trudeau’s predecessor, to make it an elected body. He then refused to appoint any senators during his final two-and-a-half years in office. + +Under Mr Trudeau’s “non-partisan merit-based process”, would-be senators nominate themselves. Anyone who meets basic criteria (citizens aged 30-75 who own property in the province they would represent) is eligible. An independent committee will present a shortlist of candidates to Mr Trudeau; it will favour women, indigenous Canadians and other minorities, especially if they are bilingual. Among those who applied for the 20 vacant seats this month were community activists and a hot-dog vendor from Ottawa. + +In a test run of the new system this year, Mr Trudeau chose seven senators from a slate of candidates put forward by civic groups. Canadians applauded the new intake, which included a former Paralympic athlete, an editorial writer and an indigenous leader. + +The government has tweaked its anti-insider approach for the Supreme Court. Gone are the days of governments choosing justices “through a secretive backroom process”, Mr Trudeau promised in an op-ed article. Again, he will choose from a shortlist drawn up by a committee of worthies. Legislators can question but not vote on the appointee; only bilingual lawyers and judges need apply. Diversity matters on the court, too. Mr Trudeau might appoint a woman to fill the seat opened by the retirement of Justice Thomas Cromwell, giving the court a female majority. He could pick the first indigenous justice. + +But there are snags. Mr Trudeau’s keenness on ethnic variety clashes with the priority traditionally given to diversity based on region. By law, three of the Supreme Court’s nine justices must be from Quebec. By custom, the others are drawn from around the rest of the country: three from Ontario, two from western Canada and one from the four Atlantic provinces. It will be hard to fill Mr Cromwell’s Atlantic seat with someone who ticks Mr Trudeau’s diversity boxes. The province of Newfoundland and Labrador, which has never sent a judge to the court, is especially worried. Mr Trudeau is treating Atlantic Canada “like a backwater”, complained one MP. + +In the Senate, where regional diversity is assured, the risk is that a less partisan chamber will be a more assertive one. Under Mr Trudeau’s plan, the Senate will have a non-party majority for the first time. The new senators may take their independence seriously. If so, he may rue the day he reformed Patronage Heaven. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21704825-justin-trudeau-shaking-up-two-constitutional-bodies-look-rainbow/print + + + + + +Previous Articles Sections Next + + + +Asia + + + + + +Philippine politics: From plan to execution + +Thai politics: How not to solve a crisis + +Kashmir: Reviving the cause + +Gay rights in Indonesia: Under pressure + +Women’s education in Afghanistan: Liberation through segregation + + + + + +Articles Sections Next + +Philippine politics + +From plan to execution + +The new president keeps his most brutal campaign promise + +Aug 13th 2016 | MANILA | From the print edition + + + +A YOUNG man from a poor district of Manila volunteered with a local anti-crime group and was working towards his second degree. The student—call him Joshua—lived with his sister and her husband. After she had a child their small house was cramped, so he was staying with a friend. One night in July, the police raided the friend’s house. They claim that Joshua, his friend and another man were armed and started a gunfight. + +Witnesses—three young women also staying at the house, whom police escorted out—say that Joshua and the other guest were sleeping, and the tenant (who allegedly belonged to a gang of petty thieves) had surrendered. He was pleading with the police to leave Joshua and the other friend alone; they had done nothing wrong. The witnesses also claim the police trained their guns on any neighbours trying to see what was happening and then kicked Joshua awake. He immediately surrendered. Shots rang out. All three young men were killed. + +When a local NGO asked for CCTV footage that would have shown the raid, they were told the cameras had malfunctioned. The chairman of the barangay, or neighbourhood, said he knew nothing about the raid and was on holiday that night. + +Such is life in the Philippines under President Rodrigo Duterte. During his 22 years as mayor of the southern city of Davao, human-rights groups linked him with vigilante squads who killed suspected criminals there. He treated the accusations with pride. As a presidential candidate, he vowed to stamp out crime within six months of taking office, even if it meant he had to slaughter 100,000 suspected criminals. On the day he took office, he told police officers that if they killed 1,000 people while doing their duty, he would protect them. Many assumed his tough talk was campaign bluster. They were wrong. + +Extrajudicial killings—of environmental activists, journalists, ordinary citizens who challenge politically powerful clans and others—have long been a fact of life in the Philippines. Under Mr Duterte, people suspected of involvement in the drug trade have now come under fire. Between May 10th, the day after Mr Duterte won the presidency, and August 5th, ABS-CBN, a Philippine broadcaster, estimates that 943 drug suspects have been killed, most of them by the police, some by “unknown assailants”. Many were suspected of being drug dealers, but users have also been targeted: according to the Inquirer, a newspaper keeping a “kill list” of the casualties in the drug war (with about 600 names), one woman was found dead with a sign around her neck saying that she was “a drug addict, pickpocket and pest to society”. + + + +Because suspects never face trial, the evidence against them remains largely unknown. According to one human-rights worker, police present barangay officials with a list of drug suspects. The officials then send the suspects a notice identifying them as such and ordering them to turn themselves in at the barangay office. There they receive a warning: reform or else you will be arrested or killed. Once they promise to change they are given waivers—sometimes in English, which few poor Filipinos can read—and are released. + +Activists say at least 125,000 people have voluntarily surrendered so far (others put the number much higher). But Mr Duterte estimates that 3m-4m Filipinos are drug addicts. According to Nicanor Silanga, a policeman in Payatas, a poor, sprawling barangay in Quezon City, the police “expect all of them to surrender”. + +America, the UN and the Catholic church have expressed concern over the extrajudicial killings, but Mr Duterte’s standing among ordinary Filipinos remains high. A human-rights worker calls him “our most popular president since Cory Aquino” (the worker requested anonymity, citing increased security concerns since Mr Duterte took office). + +Theresa Padaluga, an investigator in Commonwealth, the biggest barangay in Manila, says that around 20 drug suspects have been killed there since Mr Duterte took over. She proudly notes that her jails now house no drug users—only drinkers and those accused of domestic violence. Geraldine, a mother holding her toddler’s hand outside the Commonwealth barangay office, says that Mr Duterte’s policies work because they target “pests”. Even if they get another chance, “they’ll just go back to using drugs,” she says. Amelia, who runs a stall on a quiet Commonwealth street, says: “We like Duterte. Since he took over it’s become quieter here because people are afraid.” + +Cruel of law + + + +A guide to the Philippines, in charts + +Recently Mr Duterte has escalated his crusade from the street to the halls of power. He has met some pushback. On August 7th he publicly named and accused more than 150 judges, politicians and senior military and police officials of involvement in drugs, giving them 24 hours to surrender. “Due process has nothing to do with my mouth,” said Mr Duterte. Few would disagree. Still, his list included the names of dead, retired and fired officials, and prompted an outcry from the country’s chief justice and other politicians. In response Mr Duterte threatened to declare martial law. In any event, he won office largely because he was not an ordinary politician; opprobrium from trapos (slang for “traditional politicians” and a play on the Tagalog word for “old rags”) only enhances his standing. + +The longer the killings continue, the more damage is done to the rule of law. Last month Alfred Ceasico, a drug user, was shot dead in his own home by a hitman who ran into the house as his sister, Sheryl, was leaving. Three days before his death, police had detained him and demanded more money than his family could afford; when they could not pay, she says, they beat him with a wooden plank. She does not know who shot him, but wants to tell her brother’s story. “Not all drug users are bad people,” she says. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21704829-new-president-keeps-his-most-brutal-campaign-promise-plan-execution/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Thai politics + +How not to solve a crisis + +A plebiscite further consolidates the army’s power + +Aug 13th 2016 | BANGKOK | From the print edition + +Oh no + +HAVING launched more than a dozen coups in the past 80 years, Thailand’s generals have not been friends of democracy. So it has been jarring to watch the country’s ruling junta praise Thais for approving an army-backed constitution in a heavily-controlled “referendum”, which took place on August 7th. Prayuth Chan-ocha, an irascible former army chief who became prime minister after a military takeover in 2014, insists the new charter will end a decade of political instability and allow for fresh elections next year. In fact it will not heal Thailand’s deep divisions but make them worse. + +The constitution, Thailand’s twentieth, will keep soldiers in charge for years to come. New election rules will produce weak coalition governments that can be bossed around by bodies stacked with the junta’s friends. The generals will handpick a 250-member senate, tasked with ensuring governments do not deviate from a 20-year programme of “reforms”. They will need to convince only a quarter of legislators in the lower house to back their choice of prime minister, who need not be an MP. Barriers to amending the constitution are prohibitive. + +The result stunned civil rights groups and other campaigners for democracy, who had believed the plan would face fierce opposition. More than 61% of votes were in favour. Voters in the rural north-eastern province of Isaan (where opposition to army rule is fiercest) turned the charter down, but only just. The one convincing rejection came from Muslim-majority provinces in the south, where separatists wage a long-running guerrilla war. + +The vote is a reminder that many middle-class Thais can stomach military rule if it serves their interests. Plenty of urbanites share the junta’s desire to stamp out the lingering influence of Thaksin Shinawatra, a populist former prime minister who now lives in exile. The urban elites say he governed corruptly. Wildly popular among the rural poor, Mr Thaksin’s parties have won every election since 2001 but will be disadvantaged more than any other by the new election rules. As for the generals’ opponents, they had been warned that a “No” vote might result in the army imposing a charter they would like even less. A turnout of 59% suggests that some Thais saw no good choice at all. + +Many voters appeared to have only limited knowledge of the new constitution’s implications, having been intentionally kept in the dark by the farcical way in which the referendum was conducted. The junta banned opponents from criticising the text, on pain of a ten-year prison sentence, and arrested students who attempted to point out its deficiencies. + +Yet the generals seem oblivious to the emptiness of their victory and to the anger the show-vote has stoked among the critics it had to gag. Shortly after the result was announced Mr Prayuth’s government issued a pompous statement praising its own generosity for having offered Thais any say at all. It called the vote a “pinnacle” reached through many years of “great toil”. + +Both Thailand’s big political parties had recommended rejecting the constitution, but they accepted the referendum result. An election will supposedly take place in November next year if the generals do not find an excuse to postpone it. It will certainly be cancelled in the event of the death of Thailand’s venerated king, who is old and gravely ill. + +By providing investors with the impression of progress, the referendum may give a brief boost to Thailand’s sluggish economy. But weak governments beholden to powerful vested interests are hardly the ideal way to raise the country from its slough. The IMF reckons that Thailand’s potential growth has slowed from 5% in the mid-2000s to 3% over the past five years. Domestic demand is weak and exports will fall for a third year in 2016. The workforce is growing old and expensive, and talk of moving to a zesty “knowledge economy” looks absurd as censorship and online surveillance are tightened. + +The churning of Thailand’s grim cycle of elections, protests and coups will subside for a while. Under the new system the generals will be able to manipulate politics without the hassle of mobilising tanks. But it will do nothing to tackle the root causes of the country’s tensions—a history of antiquated and over-centralised governance which allows bigwigs in Bangkok to hog influence and resources. The referendum makes the coup permanent. But it is only papering over the cracks. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21704827-plebiscite-further-consolidates-armys-power-how-not-solve-crisis/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Kashmir + +Reviving the cause + +Turmoil in Kashmir has reopened an old wound and hardened anti-India sentiment in Pakistan + +Aug 13th 2016 | MUZAFFARABAD | From the print edition + + + +IT HAS been a dispiriting decade for those who dream of Pakistan taking full control of Kashmir, the Himalayan former kingdom that India claims for itself. Pakistan-based activists have long feared Islamabad’s heart is no longer in their cause. Some feel the big political parties are more interested in accepting the status quo of a divided Kashmir and focusing on trade. The Pakistani army, battling domestic extremists, is unwilling to reprise the 1990s, when it helped arm and train jihadists in Indian Kashmir (though it has refused Indian demands to crush them entirely). + +But violence in Jammu and Kashmir, India’s only Muslim-majority state, is now fanning separatists’ hopes for a revival of their cause. It was triggered by the killing last month by Indian security forces of Burhan Wani, a popular commander of Hizbul Mujahideen, an insurgent group Delhi appears determined to shut down. People in the Kashmir valley, on the Indian-controlled side, defied curfews to turn out for his funeral. Through skilful use of social media the 22-year-old Mr Wani had become especially popular with a younger generation resentful of Indian rule. + +Pakistani pundits have dwelt on India’s efforts to reinstate order and the deaths of more than 50 civilians since Mr Wani was killed on July 8th. Islamist organisations such as Jamaat-ud-Dawa (which the UN lists as a terrorist front group) descended on Islamabad, Pakistan’s capital, to stage a protest against India. + +The dispute over Kashmir began at the partition of British India in 1947, when the last maharajah of Kashmir dithered over which country to join. He chose India but only after Pakistan, which viewed a contiguous Muslim-majority area as a natural part of its territory, had sent tribal insurgents who grabbed half the land. Both countries still lay claim to the half of Kashmir they do not control. + +According to Parvez Ahmed, a Pakistan-based leader of the All Parties Hurriyat Conference, a coalition of Kashmiri separatist groups, the recent unrest has transformed the debate within Pakistan. “No one is talking about trade or holding candles at the border any more,” he says—a mocking reference to vigils held by Pakistan’s peace lobby at Wagah, the only crossing point along the 2,900km (1,800 mile) border with India (see picture). + + + +Before regional elections held on July 21st in Pakistan-administered Kashmir, candidates rushed to burnish their credentials as supporters of the separatist cause. At a victory rally the following day in the state capital, Muzaffarabad, Nawaz Sharif, Pakistan’s prime minister, said that the country was “awaiting the day when Kashmir will become Pakistan”. Such rhetoric has further aggravated relations with India. These had already been damaged by an attack carried out in January on an Indian airbase at Pathankot, near the border, by jihadists India believes were directed by handlers in Pakistan. + +India on August 9th summoned Pakistan’s high commissioner in New Delhi to protest at what it called continued infiltration of militants across the “Line of Control”, the demarcation in Kashmir that neither side recognises as a border. The move came days after India’s home minister, Rajnath Singh, at a regional conference in Islamabad, called for isolation of countries deemed to be supporters of “terrorism”. + + + +Our interactive map demonstrates how the territorial claims of India, Pakistan and China would change the shape of South Asia + +Most mainstream Pakistani politicians privately accept that their country’s longstanding demand for a plebiscite that would allow Kashmiris on either side to decide their future, as called for in a UN resolution in 1948, will never be met. Support for cross-border violence fell considerably in the early 2000s when it became clear that the cost to Pakistan’s reputation was too high. Some fear that Indian Kashmiris might not even opt to join Pakistan if given the chance, so badly has Pakistan’s economy fallen behind India’s. They may be right: in Indian Kashmir the talk is usually of azadi—freedom—not of joining Pakistan. + +Realists know that the only policy with a chance of success is something like a proposal in 2004 by Pervez Musharraf, a former military dictator. This involved no exchange of territory but freedom for Kashmiris to move between the two sides, demilitarisation and greater self-government for the region. But such a compromise would require warm relations with India. Mr Sharif would like nothing better. In December he hosted Narendra Modi, India’s prime minister, on the first visit by an Indian premier in 12 years. If Mr Modi is to return, as he plans to in November for another regional summit, the issue of Kashmir will need to simmer down again. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21704828-turmoil-kashmir-has-reopened-old-wound-and-hardened-anti-india-sentiment-pakistan-reviving/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Gay rights in Indonesia + +Under pressure + +Religious conservatives push back against gay-rights activists + +Aug 13th 2016 | JAKARTA | From the print edition + + + +FOR a Muslim-majority country, Indonesia has often been regarded as relatively tolerant on gay issues, as long as gay people were discreet. Homosexuality has never been criminalised and sexual minorities have mostly been left alone. But in recent years, as LGBT groups have become more vocal in pursuit of equal rights, religious conservatives have reacted angrily and started to push back. A report this week by Human Rights Watch (HRW), a pressure group based in New York, says LGBT rights have come under “unprecedented” attack this year. + +In January the minister for higher education sought to ban LGBT student groups from university campuses. They were, he said, at odds with the “values and morals” of Indonesia. Conservatives are petitioning the constitutional court to make gay sex a crime punishable by five years in prison. The past couple of years have also been bad. In 2015 the country’s top clerical council passed a fatwa condemning homosexuality. Yuli Rustinawati, chairman of Arus Pelangi, a civil-society group which campaigns on LGBT issues, worries that matters will only get worse. “We are close to criminalisation,” she says. + +The absurdity of some aspects of the government’s anti-gay campaign—in which ministers have, among other things, told popular social-messaging apps to remove emojis depicting same-sex couples because they might spark unrest—belies the threat it poses to millions of people in Indonesia. A series of homophobic statements by prominent politicians, religious leaders and the mass media have provided “social sanction” for Islamist hardliners to persecute LGBT people, according to the HRW report. Some activists have gone into hiding after receiving death threats. + +Groups such as the Islamic Defenders Front, a hardline religious organisation, have frequently disrupted LGBT parades and other assemblies with impunity. But what has been just as shocking this year is how ministers and officials have stirred things up. In February the defence minister claimed that LGBT groups were waging a “proxy war” that posed more of a risk to national security than a nuclear attack. Indonesia’s television and radio regulator has issued rules against content that might depict homosexual relationships as anything other than “deviant”. And politicians have applauded quacks from the psychiatrists’ association talking of homosexuality as a sickness that can be cured. + +Politics, as much as religious conviction, plays its part. Many politicians sense they may win more votes by presenting themselves as pious Muslims than by defending sexual minorities from persecution. Local leaders have used the far-reaching powers devolved to them since the overthrow in 1998 of Suharto, Indonesia’s former strongman, to pass by-laws that discriminate against LGBT people and other minorities. The most extreme case is Aceh, the only province to enforce Islamic sharia, under which homosexual acts are punishable by 100 lashes. LGBT groups worry about more anti-gay measures ahead of local elections next year. And they fret that the national government does not seem to provide any protection. + +For Ms Rustinawati this is especially troubling. LGBT activists campaigned vigorously for Joko Widodo, known to all as Jokowi, during the closely contested presidential election of 2014. They saw him as the man to uphold Indonesia’s traditional tolerance. Now he is president, they feel he has let them down by failing to support them. Ms Rustinawati says LGBT groups are not seeking special treatment: “We want the same rights as other people.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21704855-religious-conservatives-push-back-against-gay-rights-activists-under-pressure/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Women’s education in Afghanistan + +Liberation through segregation + +A university just for women opens in the Afghan capital + +Aug 13th 2016 | KABUL | From the print edition + +I want to be a doctor + +WHEN Aziz Amir was a young man, his mother died from an infection which should have been easy to treat. “She didn’t go to a hospital because she didn’t want to show herself to a male doctor,” says Mr Amir, a trained cardiologist who now owns a private hospital in Kabul. Determined to give more Afghan women medical training, in May he inaugurated the Moraa Educational Complex, a private university for women only, together with a school and nursery for their children. Housed in a cluster of lime-coloured buildings, the university offers courses including medicine, nursing and midwifery. + +Afghanistan has many private universities. Moraa is the first just for women. Will it be a boost to women’s education, or perpetuate segregation of the sexes? Many Afghan girls do not even make it through school, leaving to get married (15% of all girls wed by the age of 15) or because their parents are unwilling to let them mingle with boys after puberty. Under the fundamentalist rule of the Taliban, girls’ enrolment in primary school fell from 32% to just 6.4% between 1996 and 1999 . Only 24% of women are literate, according to UNESCO, compared with 52% of men (see chart). + + + +The government claims big improvements: it counts 8m Afghan children enrolled in school, 2.5m of them girls, and says the number of female university students has risen by 50% since 2008. Foreign donors are said to have built thousands of schools and trained some 200,000 teachers. But these figures are suspect and drop-out rates for girls are still high. An American government watchdog has documented non-existent schools and “ghost” pupils. Although the Taliban have become more amenable to educating girls, opposition to the notion is still strong: according to the UN, last year at least 96 schools were attacked. + +The failure to turn out female graduates has a woeful impact on women’s health, since it means too few female medical and nursing staff. Again, the figures have improved, but not enough. Around 4,000 midwives have been trained since 2003. But the maternal mortality rate is still 327 per 100,000 births—far better than in 2002, when it stood at 1,600 per 100,000, but very high by international standards. + +In funding the new university’s set-up costs, Mr Amir has taken a risk. Afghanistan’s stagnant economy makes it hard to be sure of a return. At present it has only 240 students, mostly from middle-class families; he has ambitions for a campus holding 12,000. But foreign donors are wary of funding institutions that are segregated by sex—a mistake, says Mr Amir, since if fathers cannot send daughters to a place of learning they trust, many will not let them go at all. + +Malina Heimat, who is 22 and will help train midwives, says her family made her resign from a job that involved working with men at a government hospital, but is allowing her to teach at Moraa. Marwa, a medical student, says it is easier to talk about biology when there are no men present. She isn’t worried that the campus could become a target. “We won’t let those people who don’t want us to get an education stop us.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21704854-university-just-women-opens-afghan-capital-liberation-through-segregation/print + + + + + +Previous Articles Sections Next + + + +China + + + + + +The judicial system: Suppress and support + +Youthful nationalists: The East is pink + + + + + +Articles Sections Next + +The judicial system + +Suppress and support + +The Communist Party cracks down on political activists, even as it eases up on some less sensitive legal cases + +Aug 13th 2016 | BEIJING | From the print edition + + + +A HUMAN-RIGHTS lawyer and three activists have been found guilty of “subverting state power” in a series of trials in the northern city of Tianjin. With resonances of the show trials of China’s Cultural Revolution in the 1960s, they are the latest part of a crackdown on Western ideas and social and political activism that began in earnest after Xi Jinping became Communist Party chief in 2012. + +The past year has been particularly intense for lawyers and activists, starting last July when 250 of them were detained by police. The four convicted between August 2nd and 5th were accused of being part of a foreign-backed, anti-party conspiracy and confessed their “crimes” in video footage. + +Yet the crackdown on rights lawyers and political activists is not the whole story. It comes as incremental judicial reforms are taking place for less sensitive cases at a local level which mean that some citizens are making modest progress seeking redress through the courts. These two contradictory dynamics—old-style, top-down political pressure alongside some bottom-up legal empowerment—are part of the party’s carrot-and-stick approach to maintaining stability. While no one expects significant change at the top, the big question is how much impact the local level reforms can have. + +The four men who stood trial last week included Zhou Shifeng, former director of a Beijing law firm famous for defending activists such as Ai Weiwei, an artist, and intellectuals such as Ilham Tohti, an economist who spoke up for the Uighur ethnic group. Mr Zhou was jailed for seven years. + +His family members, and those of the other defendants, were not allowed to attend the trials. Police blocked foreign journalists from entering the courthouse and official media reports discredited the men ahead of their sentencing. International observers condemned the proceedings in Tianjin as a travesty of justice. On August 1st, Wang Yu, another prominent human-rights lawyer, was said to have been released from jail. In a televised confession she proclaimed that “foreign forces” were to blame for inciting her law firm to undermine the Chinese government. “I won’t be used by them anymore,” she said. Over a dozen lawyers and activists are still being held, according to Amnesty International. They could be tried at any time. + +Stay out of politics + +On less sensitive cases, however, popular anger has pushed the judicial system to try to be more accountable. China’s most senior legal figure, Zhou Qiang, appointed president of the Supreme People’s Court in 2013, is widely believed to want to use judicial reform to stop people taking their anger onto the streets—an increasingly widespread phenomenon. In the past, Chinese courts would arbitrarily reject sensitive cases. Many still do. But new rules brought in last year now oblige them to hear all cases that fulfil basic standards, even if they then throw them out. In the first month after the regulations came into effect, there was a 30% jump in the number of cases accepted. + +In China’s first same-sex marriage case, a gay couple went to court in April in the southern city of Changsha to sue the local civil affairs bureau for the right to marry. The judge dismissed the couple’s case within minutes and they lost their final appeal two months later, but legal reformers saw the case as progress because it was at least heard in a courtroom. + +In the past year, the number of cases accepted by courts relating to the rights of socially marginalised groups has surged, even though few have won. They include a lesbian student suing the education ministry for textbooks calling homosexuality a disorder; the country’s first transgender employment discrimination case; and dozens of food-safety and environmental-protection suits that challenged large companies. In a landmark victory in April, a court in the south-western province of Guizhou ruled that a local education bureau must pay a school teacher compensation after he lost his job for testing HIV-positive. China has no specific laws against employment discrimination and the case was reportedly the first of its kind. + +Stanley Lubman, an American legal scholar, says the ability to sue government agencies is important and the increased pursuit of such cases reflects a greater legal consciousness among citizens. Two other things are contributing to the changes. One is progressive legislation, such as recent new laws to protect the environment and punish domestic violence; these have widened the space for litigation. A pilot reform launched last year even encouraged state prosecutors to pursue public-interest suits. + +The other is social media. Sun Wenlin, a 27-year-old IT worker who is half of the gay couple in Changsha, is optimistic in spite of losing his case. “Homosexuality is taboo and we thought no one would care. But our case generated a lot of discussion on the internet. We had sympathetic coverage even in state-owned media,” he says. Mr Sun now gives workshops around the country to teach others how to file similar lawsuits, hoping to change the belief among cynical Chinese that the law is just a tool of oppression. “China is clearly changing, but slowly,” he says. + +Yet the courts are still under the thumb of the Communist Party. Officials approve the hearing of many cases and sometimes determine the verdict and sentence, too. There is no way for plaintiffs to know whether a case will cause them trouble or not. Jerome Cohen of New York University says the focus of Mr Xi’s presidency is on expanding central control. The party defines sovereignty and national security broadly in order to keep control over sensitive issues, says Susan Finder, an expert on China’s legal system. + +Long way to go + +It will take a lot more effort to educate the broader public on their legal rights and to train enough legal officials. Judges, especially those in lower courts, are poorly paid and have little formal legal training. Many have been jailed for taking bribes. This generates deep resentment, and is the reason why thousands of petitioners journey to Beijing each year to complain to the central government rather than bother using the local courts. + +Now many judges are leaving the profession, citing low pay and high pressure. The caseload of all levels of courts went up significantly following the recent reforms, while changes to judicial procedure in 2014 had already declared that judges should bear “lifetime responsibility for case quality”. A former judge in Beijing, now earning much more as a commercial lawyer, says that reforms have made things better for lawyers, who have more confidence in the system, but worse for judges, who find their ability to benefit from their position more limited. + +Experts say reforms are trying hard to reduce corruption at local levels, not least to limit the damage it does to the party’s reputation nationally. But the possibility of any kind of institutional, independent checks and balances is still a long way off. On July 22nd a Beijing court gave no reason for rejecting a lawsuit filed by Yanhuang Chunqiu, an outspoken liberal journal, over the demotion of the journal’s chief editor and the firing of its publisher. It is a measure of how ossified the overall system remains that some of the small changes in local cases are greeted with such optimism. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21704849-communist-party-cracks-down-political-activists-even-it-eases-up-some-less-sensitive/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Youthful nationalists + +The East is pink + +As online mobs get rowdier, they also get a label + +Aug 13th 2016 | SHANGHAI | From the print edition + +La vie en rouge + +TRY AS the Communist Party might to sanitise the internet, its people keep coming up with new ways to discuss politics. They have developed colourful slang to express sarcasm, dodge censors and attack their opponents. Their latest invention sounds cute: “little pink”, or xiao fenhong. Its meaning, at least as initially intended, is not so sweet. It is a disparaging term for young nationalists who use the internet as a battleground for patriotism, often focusing on pop culture to whip up support. + +The term first started to emerge a few years ago in a popular online chat group called Jinjiang Forum, whose website has a pink background. Its users called it “little pink” out of affection. It was not primarily a political forum, but from time to time political topics surfaced. A small group of contributors came to be known for their nationalism. Outsiders called them “little pink” as an insult, and the phrase soon caught on as a label for nationalistic youth. + +To those who detect worrying parallels between Xi Jinping, China’s leader, and Mao Zedong, the little pink are sinister. They are seen as modern-day Red Guards, the students who exploded in rage and violence at the start of the Cultural Revolution 50 years ago. Many think this is an exaggeration; but they still see the little pink as an ugly trend, a Chinese manifestation of the coarsening of online discourse. + +A two-week tussle catapulted the clan to mainstream attention in July. Young people lashed out at a Chinese film director for casting a Taiwanese actor in the lead role of “No Other Love”, a film due to be released next year. They accused Leon Dai, the actor concerned, of supporting Taiwanese independence because he appeared to back protests against a free-trade deal with China two years ago. The director ended up cutting Mr Dai out of the film, despite having already completed shooting. After this victory, media outlets and scholars began analysing the phenomenon. + +Little-pink outbursts have been getting more frequent. In January, when Tsai Ing-wen, a Taiwanese politician who leans toward independence, was elected president, Chinese netizens flooded her Facebook page with negative comments and pictures. In June they called for a boycott of Lancôme, a French cosmetic company, for hiring Denise Ho, a Hong Kong singer suspected of supporting independence for the former British territory. Lancôme dropped her. Next, they swarmed Lady Gaga’s Instagram page after the American pop star met the Dalai Lama, the spiritual leader of Tibet, condemned as a separatist by the Chinese government. + +This week netizens have turned their rage on Mack Horton, an Australian swimmer who won gold at the Olympics in Rio de Janeiro, because he called Sun Yang, his Chinese rival, a “drug cheat”. Criticism of Mr Horton was much more widespread than that of either Ms Ho or Ms Gaga, crossing quickly into mainstream media. But the bombardment of his social-media accounts with angry comments bore the hallmarks of little-pink attacks. + +The pink gang’s attitude is different from the broader nationalism in Chinese society. The vast majority of Chinese people would oppose Taiwanese or Hong Kong independence. But only a minority fly into a cyber-rage at the slightest provocation. Many people frown on little-pink actions as extreme, but they have won influential backers. Seizing on the more conventional association of the colour pink, the Communist Youth League praised the online mobs as female nationalists. It declared on its official microblog that they are “our daughters, our sisters, girls we had crushes on”. Many young women started declaring themselves “little pink” as a badge of honour. “We couple strength with gentleness, and love our country wisely,” one self-declared member wrote on the Youth League microblog. + +There is a streak of humour in the movement. Members are not calling for violence. Often they just post silly pictures. Playing on the idea that Taiwanese look down on mainland Chinese for being poor and unable to afford good food, they flood Taiwanese websites with photos of mainland delicacies. But plenty of people still worry that beneath the giggles lies a more disturbing undercurrent—that, at some point, the little pink might blaze into a harsher shade of red. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21704853-online-mobs-get-rowdier-they-also-get-label-east-pink/print + + + + + +Previous Articles Sections Next + + + +Middle East and Africa + + + + + +New rivalries on a contested continent: Asia’s scramble for Africa + +Ethiopia’s football follies: Full time? + +Zambia’s elections: A test case for democracy + +Iraq’s Yazidis: Freedom on hold + +Libya and the West: Piling in + + + + + +Articles Sections Next + +New rivalries on a contested continent + +Asia’s scramble for Africa + +India, China and Japan are battling for influence + +Aug 13th 2016 | NAIROBI | From the print edition + + + +IF THERE is a modern gateway from the east to Africa, it is arguably Addis Ababa’s airport. Passengers passing through its dusty terminals on their way to some far-flung capital will be surprised to find that getting an Ethiopian meal is remarkably difficult. Asian dumplings, however, are available at two different cafés. Signs marking the gates are in English, Amharic and Chinese, as are announcements. + +Dozing gently on the beige loungers are untold numbers of young Chinese workers waiting for flights. They are part of a growing army of labourers, businessmen and engineers who can be seen directing the construction of roads, railways and ports across much of east Africa. + +Concerns about China’s involvement in Africa are often overplayed. Accusations that it is buying up vast tracts of farmland, factories and mines, for instance, are blown out of proportion. Even so, its growing influence on the continent has nettled India and Japan, who are both boosting their engagement in response. + +As with previous rounds of rivalry in Africa, such as during the cold war, at least some of this activity relates to access to bases and ports to control the sea. China’s involvement in Africa now includes a growing military presence. Thousands of Chinese soldiers have donned the UN’s blue helmets in Mali and South Sudan, where several have been killed trying to keep an imaginary peace. Chinese warships regularly visit African ports. + +China maintains a naval squadron that escorts mostly Chinese-flagged vessels through the Gulf of Aden. But some diplomats fret that China has been using these patrols to give its navy practice in operating far from home, including in offensive actions. “You wouldn’t normally use submarines for counter-piracy patrols,” says one. + +Patrolling for pirates has also given China an excuse to set up its first overseas base in Djibouti, next door to an existing American one. Yet the more alarmist worries about China—that it is planning to build naval bases in a “string of pearls” stretching from China to the Red Sea and as far as Namibia’s Walvis Bay on the Atlantic coast—have not materialised. The Walvis Bay rumour seems to be a red herring. China has used its ships and soldiers to protect its own citizens in Africa and the Middle East: in 2011 it evacuated 35,000 of them from Libya and last year one of its ships rescued 600 from Yemen. But its main naval focus remains the South China Sea. + +Wary does it + +Still, India is deeply suspicious of China’s presence in the Indian Ocean. A wide network of some 32 Indian radar stations and listening posts is being developed in the Seychelles, Madagascar and Mauritius, among other countries. This will enable India to monitor shipping across expanses of the ocean. It is also improving its ability to project power in waters it considers its own, and is arming friendly countries such as Mauritius. Among other things, India is building a naval and air base on Assumption Island, north of Madagascar and within easy reach of many of east Africa’s newly discovered offshore gasfields. “It’s the Indian Ocean, stupid,” quips one seasoned commentator in mimicry of Indian diplomats on its power projection. “They say it’s ‘our near abroad’.” + +Japan has also been flexing its naval muscle but in a more limited manner. This month it pledged $120m in aid to boost counter-terrorism efforts in Africa. It has been a stalwart contributor to the multinational naval force policing the seas off Somalia’s coast. Sino-Japanese rivalry is fiercest in diplomacy and trade. Two prizes are on offer: access to natural resources and markets, and the continent’s 54 votes at the UN. Much of the effort to win the former was pioneered by Japan in the 1990s, when it helped build ports and railways. Akihiko Tanaka of the University of Tokyo, a former president of the Japan International Co-operation Agency, says that for years Japan’s aid to Africa was “qualitatively different” from that of other rich nations in part because it focused on infrastructure rather than the direct alleviation of poverty. “We were criticised a lot,” he says. “Now there is an almost unanimous view that you need to invest in infrastructure.” + +Japan’s latest spending spree on infrastructure will speed economic growth on the continent; but there is a degree of one-upmanship and duplication. Japan recently handed over the keys to a new cargo terminal at Kenya’s main port in Mombasa. Meanwhile, a short hop down the coast at Bagamoyo, Tanzania is building east Africa’s biggest port—with Chinese cash. + +On the diplomatic front both Japan and India are trying to make common cause with African states that want to reform the UN Security Council. They argue that Africa deserves permanent seats on it, as do they. China favours a permanent seat for an African country, and it doesn’t mind India having one. But in return it expects endorsement of its stand against Japan getting a seat. + +Both Japan and China back up such diplomatic efforts with aid and, at least in China’s case, this seems to have helped win it friends. Countries that vote with China in the UN (for instance over Taiwan) usually get more cash from it, according to AidData, a project based at the College of William and Mary in Virginia. + +China also makes African friends by selling arms. In the five years to 2015 it nearly doubled its share of weapons supplied to sub-Saharan Africa, from little more than a tenth of the total to almost a quarter, according to the Stockholm International Peace Research Institute, a think-tank. It has sold tanks and jets to Tanzania, armoured vehicles to Burundi and Cameroon, and missile launchers to Morocco, to name but a few. It also wins friends among the continent’s war criminals through its policy of “non-interference” in the internal affairs of other countries, for instance by opposing the International Criminal Court (ICC). + +Japan, which until 2014 was prohibited by its constitution from selling weapons, and supports the ICC, has had a harder time. It has concentrated on dispensing aid and using soft power, such as awarding scholarships for study in Japan and free classes in akido and karate at its embassy in Nairobi. But even in this sphere it is outclassed by China, which has established some 46 Confucius Institutes in Africa to teach Chinese language and culture. China also flies thousands of Africa’s ruling-party officials, civil servants and trade unionists to attend political-training schools in China. This has worked so well in South Africa that the ruling African National Congress last year published a foreign-policy discussion document suggesting that China’s Communist Party “should be a guiding lodestar of our own struggle.” + +Yet apart from South Africa, which has slavishly aligned itself with China (for instance by voting with it against a UN resolution to protect the right of people to hold peaceful protests), most African countries are good at playing off rivals against each other, says Alex Vines of Chatham House, a London think-tank. Many have diversified their diplomatic links by opening new embassies, including ones that cross previous divisions between rival powers in Africa. Countries including Burundi, Mauritania and Togo, that used to fall firmly within France’s sphere of influence have opened embassies in Britain. “This is a really great time for clever African countries to get really good deals,” says Mr Vines. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21704804-india-china-and-japan-are-battling-influence-asias-scramble-africa/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Ethiopia’s football follies + +Full time? + +The country is overdoing its stadium-building + +Aug 13th 2016 | ADDIS ABABA | From the print edition + + + +BROKEN windows, fraying nets, chairs with missing legs; the Yidnekachew Tessema Stadium in Addis Ababa has seen better days. Rehabilitated by Emperor Haile Selassie after his return from exile in 1941, it was once a proud monument to Ethiopia’s restored independence following five years of Italian occupation. In 1962 it hosted the African Cup of Nations (Afcon); the national football team, known as the “Walias”, won. But the Walias, like their stadium, have struggled since. In 2012 they ended a 31-year stretch in the wilderness by qualifying for Afcon. In 2013 they duly crashed out in the first round. + +Enough is enough, says the government. Ethiopians are proud of their sporting heritage: the country’s long-distance runners are among the best in the world. “We were the founders of African football,” says Juneydi Basha, head of the Ethiopian Football Federation. Addis Ababa hosts the African Union; the government wants it to host Afcon again. + +In every big town, new football stands are going up. The federal government, which is paying, says eight “world-class” stadiums—each with a capacity of at least 30,000—are being built. Six smaller ones are also under way in the capital. The flagship is a 60,000-seater (as big as Arsenal’s Emirates stadium in London) in the centre of Addis Ababa, being built by the Chinese State Construction and Engineering Corporation at a projected cost of at least $110m. + +Ordinary Ethiopians scent folly. The ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF), has a solid reputation for managing the country’s infrastructure, but the stadium programme has people talking. The claim that it is simply responding to popular demand seems doubtful. “It makes no sense,” says Leoul Tadesse, a local sports journalist. “Building stadiums won’t solve our problems.” Football enthusiasts cramming into bars underneath the old stadium to watch European football matches point out that state-of-the-art infrastructure is no substitute for skills. Just look at England, which has a rich, fabled league but a poor national team. + +Is the EPRDF, which has governed Ethiopia since winning power in 1991 after a decade of armed struggle, scoring an own goal? The country’s revered former prime minister of 17 years, Meles Zenawi, would probably not have let the programme kick off. The stern veteran of the EPRDF’s bush war, who died in 2012, is said to have remarked once that Ethiopia needs fertilisers, not stadiums. With the country only just starting to recover from drought—and this week wracked by widespread anti-government protests, in some of which security forces are accused of having fired into crowds—those words now seem prescient. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21704742-country-overdoing-its-stadium-building-full-time/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Zambia’s elections + +A test case for democracy + +Fingers crossed that a tight poll will again be freely and fairly decided + +Aug 13th 2016 | LUSAKA | From the print edition + +State power + +RE-ELECTION campaigns are not fun for the incumbent. They are worse when the economy is in free fall. And worse still when fought under new constitutional rules yet to be tested. So imagine facing an election with all that, just 18 months after becoming president. That was the awkward fate of Edgar Lungu, Zambia’s president. On August 11th, as The Economist went to press, Zambians were voting on whether to give Mr Lungu, who took office in a by-election last year after the death of his predecessor, another full term. + +The vote, which followed one of the ugliest campaigns in Zambian history, looked to be one of the closest in its history, too. The results, due over the weekend, will go some way towards answering a big question: is Africa getting used to the idea that a well co-ordinated opposition can overcome the power of incumbency? + +Historically Zambia is one of Africa’s most stable countries. In 1991 it became only the second country on the continent (months after Benin) to experience the peaceful, democratic removal of an incumbent at the ballot box, when Kenneth Kaunda, who had run the country for 27 years after independence, stepped down after losing the country’s first multiparty poll. Government has since changed hands several times, most recently in 2011, when Mr Lungu’s party, the Patriotic Front (PF), was elected with Michael Sata, Mr Lungu’s predecessor, as its president. Mr Lungu, also from the PF, won a by-election to replace Mr Sata after his death last year by just 1.7% of the vote. + +This election seems likely to be just as tight. The opposition is again fairly unified around the same candidate, Hakainde Hichilema, a businessman who has fought five presidential election campaigns including this one. This time he is promising to fix the economy and end corruption. He says that if he wins he will cut the number of ministers by 48, apparently saving $750,000 for each just in the cost of government cars. + +In normal circumstances Mr Hichilema would win. The Zambian economy, which depends on copper for over two-thirds of its export revenues, is struggling. In the past two years the currency, the kwacha, has lost around 40% of its value against the dollar. That has raised the price of food for Zambians. It also forces hard decisions on the government. A bail-out from the IMF is expected, though Mr Lungu refused one earlier in the year, because of his unwillingness to cut fuel subsidies. + +Mr Lungu has fought dirty. The Post, the only independent newspaper in the country, was closed in June, allegedly over non-payment of taxes. Mr Hichilema’s rallies have been held up on legal technicalities and his helicopter flights restricted. Dipak Patel, his campaign manager, says the counting of ballots will be rigged, too. As the results trickle in, it will become clear whether such tactics will have been enough to keep Mr Lungu his job. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21704821-fingers-crossed-tight-poll-will-again-be-freely-and-fairly-decided-test/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Iraq’s Yazidis + +Freedom on hold + +Safe from Islamic State, Yazidis now face a struggle with the Kurds + +Aug 13th 2016 | MOUNT SINJAR | From the print edition + + + +FROM afar, Mount Sinjar rises out of Iraq’s caked-earth flats like a giant upturned tureen. Up close, its crevices offer glimpses of lush tobacco plantations, and the homes of Yazidis lurking within. So formidable are its rugged defences that it has defeated the many foes who for centuries have sought to stamp out the ancient peacock-worshipping sect. Even the most recent and cruel, Islamic State (IS), which massacred and enslaved Yazidi communities on the plains with abandon, gave up the effort once it reached its foothills. + +The mountain’s plateau today is coated with tents, sheltering the fortunate thousands who fled for its passes before the jihadists swept through in August 2014 and hunted the others down. Reluctant to entrust their fate to outsiders, they have set up their own administrative council in a caravan, as well as an armed force, the Sinjar Resistance Units, numbering 1,000 men. The multi-faith settlements Saddam Hussein fashioned on the plains below in the 1970s seem a historical relic. Today, says the council chief, Khidr Salih, Iraq’s half million Yazidis need their own enclave and homeland; the region has now fallen to the Kurds. + +In Mr Salih’s telling, the Yazidis’ new Kurdish overlords are little better than Arab ones. If the latter perpetrated genocide, the former, he says, let it happen by fleeing without a word in the night as IS approached. “We want international forces,” reads the graffiti on a roadside, indicating the local distrust. + +Those are unlikely to come any time soon. Kurdish forces control Fishkhabour, the gateway to Sinjar on the banks of the Tigris River 60 miles (100km) to the north, and access depends on permits. This correspondent was granted permission, but other foreign aid workers and journalists complain they are turned back. + +None of Iraq’s warring communities has done more to rescue Yazidis than the Kurds. Whereas other Muslims shunned them as devil-worshippers (the revered Yazidi peacock, Melek Taus, represents a fallen angel associated with Satan), Kurdish fighters opened a corridor to Sinjar after IS took control of the plains. Kurdish leaders, who pride themselves on their religious tolerance, readily accommodated legions of the displaced in vast camps. Though Sunni, they created a department of Yazidi affairs in the religious ministry of the autonomous Kurdistan Regional Government. Their prime minister, Nechirvan Barzani, ordered the renovation of the Yazidis’ second holiest shrine. The Kurds launched a commission to investigate and highlight crimes of genocide, and uncover mass graves—31 at the latest count. + + + +But as is often the way of the Middle East, in their quest to mark out their identity, liberation movements are prone to suppressing similar stirrings in others. Kurdish officials have submerged the predominantly Kurdish-speaking Yazidis into a broader Kurdish collective. Though the Kurds, with American help from the air, almost entirely recaptured Sinjar from IS by the end of 2015, Mr Barzani’s government is seeking to postpone a mass return “until after Mosul falls,” says his spokesman. “Realistically, the Yazidis are not going home for a long time,” says an official at Mamilyan camp, which hosts 13,000 displaced people deep in Kurdistan’s hills, 170 miles (270km) east of Sinjar. + +Fearful that another resettlement programme looms, Sinjar’s Yazidi leaders liken a programme of “Kurdification” to Saddam Hussein’s Arabisation in the 1970s. “We’re neither Kurds nor Arabs,” insists Mr Salih, Sinjar’s fledgling council leader. His efforts to encourage a mass return are dogged by a lack of services. Mr Barzani, the ruler of Iraqi Kurdistan, has yet to reconnect Sinjar and its surrounding settlement to the main electricity grid or water mains, and has shunted responsibility for financing schooling and reconstruction onto Baghdad. And having failed to protect the Yazidis in 2014, his officials say they do not want to make the same mistake twice. “It’s not safe enough for a mass return,” explains his security chief at Sinouni, who in calmer times was a veterinarian. + +Security can also seem wanting in Kurdistan’s camps for the Yazidis. At Mamilyan, camp managers offer joint baking classes in an attempt to break down barriers between Yazidis and displaced Sunni Muslims from Mosul, whose tribes many Yazidis blame for perpetrating the genocide. “We make sure everyone washes their hands at the start,” says an aid worker, hoping to combat Muslim taboos on eating with devil-worshippers. But the tents are said to conceal weapons. And when a Sunni imam uttered the traditional call to prayer seeking protection from Satan, Yazidis took offence, and violence quickly followed. Armed Kurdish Muslims from outside the camp rushed to help Muslims within. “The [Sunnis] don’t recognise what we’ve been through. They still think we’re infidels,” says a young camp resident. “We’re desperate to go back to Sinjar.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21704767-safe-islamic-state-members-sect-now-face-struggle-their/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Libya and the West + +Piling in + +Divisions within divisions in Libya complicate the West’s intervention + +Aug 13th 2016 | CAIRO | From the print edition + +One for the caliphate + +WHAT has been the worst mistake of Barack Obama’s presidency? Failing to plan for the day after intervening in Libya, says the president himself. Five years ago rebels backed by Western air strikes ousted Muammar Qaddafi, Libya’s dictator. But the West lost interest as the country stumbled on the path to democracy, then fell into civil war in 2014. Now Libya is divided, most notably between east and west, each with its own government, and home to three different branches of the Islamic State (IS) jihadist group. + +Amid the chaos, thousands of migrants have used Libya as an embarkation point for the trip across the Mediterranean Sea to Europe. It is feared that terrorists are taking advantage of the lawlessness to plan attacks abroad. + +So the West has stepped back in. America, Britain, France and Italy all have troops on the ground in Libya, and are increasingly being drawn into the fight against IS. With Western support, the UN is backing a government of national accord (GNA) based in Tripoli, the capital, and led by Fayez Seraj. But Libya’s many divisions are proving hard to mend.The GNA was meant to unify the country’s fighting forces, but it draws support mainly from militias in the west. The body has not been approved by a parliament in the east that is under the sway of a Libyan general, Khalifa Haftar. Backed by Egypt and the UAE, General Haftar commands forces aligned with the eastern government and looks increasingly like a dictator. + +On August 1st America dipped its foot further into the morass by launching air strikes against IS fighters holed up in the coastal town of Sirte. The battle for the town is indicative of the complications facing the West. American air strikes have aided a force of militiamen mostly from Misrata, in the north-west, who are aligned with the GNA. But their loyalty is precarious. Fighters complain of being abandoned by the government, which was slow to call for American help and, according to diplomats, still has not asked for the easing of an international arms embargo. “If nothing changes, Seraj’s time will come,” a Misratan fighter told Reuters. + +After two months of fighting, there are only a few hundred jihadists left in Sirte; this week the government captured a large convention hall complex in the city centre from IS. What follows its defeat may exacerbate divisions in the country. The Misratans say they will leave Sirte after the battle, but that is doubtful. Battlefield successes have emboldened Misratan leaders, who have hardened their stance against General Haftar playing any role in Libya’s future. Defeating him, not IS, should be the priority, say some Misratans. + +Mr Haftar’s forces are in Benghazi, east of Sirte, fighting jihadists and the general’s more moderate opponents. Western special forces—the French, in particular—are also thought to be active in the east. On July 20th three French soldiers were killed in a helicopter crash near Benghazi. An Islamist-aligned group called the Benghazi Defence Brigades (BDB) claimed credit for downing the helicopter. So tangled is the web of alliances in Libya that the BDB is backed by Misratan militias, which benefit from American air strikes. + +The revelation that French soldiers are in Benghazi set off protests in western Libya, while America’s air strikes sparked criticism from Islamists in Tripoli. But much of the public’s anger is aimed at the GNA, which has struggled to establish its authority, even in the capital. It has mostly failed to restart public services or stabilise the collapsing economy. Often painted as a Western puppet, it is reluctant to ask for help. Some analysts fear that IS will further undermine the government by launching attacks in Tripoli. A victory in Sirte would at least give it a morale boost. + +The West has papered over Libya’s divisions, first with the creation of the GNA and more recently with deals over oil production. Yet the country is almost broke. Libya’s output dropped to 300,000 barrels a day in July, from 1.6m at the start of 2011. Ibrahim Jathran, whose Petroleum Facilities Guard controls oil ports at Ras Lanuf, Sidra and Zueitina, says he wants to reopen facilities, some of which have been heavily damaged. But his loyalty to the GNA is fickle—he has sabotaged production before—and his efforts alone cannot guarantee the flow of oil. Mr Haftar’s forces and militias from Zintan have the ability to cut off pipelines further south. The national oil company is hoping to bring production up to 900,000 barrels a day by the end of the year. That is optimistic; yet another conflict, between Mr Jathran’s men and Mr Haftar’s seems more likely. + +Many think federalism or decentralisation, whereby the oil money is split between regions, is the answer in Libya. Getting there is the hard part. The West, at least, seems more likely to stick around this time. America’s next president, to be chosen in November, looks likely to be Hillary Clinton, who argued for intervening in Libya in 2011 as secretary of state. Like Mr Obama, she too may hope to make up for the chaos that has followed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21704822-divisions-within-divisions-libya-complicate-wests-intervention-piling/print + + + + + +Previous Articles Sections Next + + + +Europe + + + + + +Migration within the EU: Europe’s scapegoat + +The time in Spain: Out of sync with the sun... + +Tensions in Crimea: The cruellest month + +Renewable energy: It’s not easy being green + +Charlemagne: Small but not too beautiful + + + + + +Articles Sections Next + +Migration within the EU + +Europe’s scapegoat + +The EU’s cherished free-movement rights are less secure than they seem + +Aug 13th 2016 | TARGU LAPUS | From the print edition + + + +THERE is not a lot to do on the outskirts of Targu Lapus, a small town in northern Romania. But Catalin Konolos, a construction worker, is rarely home, so he is making the most of a mid-afternoon game of cards before he returns to Luton, a town north of London, for another spell on the building sites. Mr Konolos and his brother, Viorel, sitting beside him, typically toil for four months at a time in Britain before taking a break at home. They work for other Romanians, and have little interest in integrating. Neither speaks English. + +The brothers embody the European Union’s free-movement rights. They, and millions like them, are filling labour needs abroad and improving their wages by many multiples. Much of that income finds its way to Romania, in the form of remittances to family members or via consumption (often of the conspicuous kind, as the flash cars in nearby villages testify). + +The system is almost unique. What began in 1957 as a work-permit regime among the EU’s six founding members now allows Europeans to work, study and retire anywhere across the 28-member club (plus a handful of other countries) without a permit or visa. It is meant to complement the EU’s other freedoms: of goods, services and capital. Surveys consistently find that citizens prize free movement above anything else that EU membership brings. Governments also back it fiercely: David Cameron, Britain’s former prime minister, dismally failed to secure an exemption for Britain from freedom of movement earlier this year. + +Yet mobility is a freedom few in Europe have chosen to exercise compared with workers in other labour markets. Americans are three times as likely to move states in search of work than Europeans are to cross borders, according to the World Bank. Language hurdles can be difficult to surmount; qualifications earned in one country may not be recognised in another. When viewed through the prism of international migration, however, the recent mobility has been extraordinary. Since the early 1990s nearly 5.5% of eastern Europe’s population has emigrated. In 2014 fully 20% of EU citizens living elsewhere in the club were Romanians (see chart). + + + +In many ways the system has worked. The EU reckons that the extension of free-movement rights to eastern Europe after two enlargements in 2004 and 2007 boosted overall GDP by €40 billion ($45 billion). In crises free movement can act as a macroeconomic stabiliser, particularly in the euro zone, where currencies cannot adjust. In recent years southern workers have flocked to the wealthier north. + +But tensions exist, seen most visibly in Britain, where arguments over EU migration fuelled much of the debate over the recent vote to leave the club. In most countries European immigrants are net contributors to the public purse. But German and Dutch politicians have fretted about “welfare tourism”. France has backed controversial new EU rules that would force companies sending employees abroad (“posted workers”) to match local wages, irking eastern European governments worried about their citizens’ jobs. + +It is the home countries of emigrants, however, that have been most hurt so far. A recent IMF report found that post-communist emigration from eastern European countries has stunted their growth, strained public finances and accentuated demographic problems. Romania is among the hardest hit. Young people are disproportionately likely to leave, raising the average age and hitting the already-low fertility rate. Romania’s population has declined from 22m in 2000 to below 20m today. Remittances helped plug the current-account deficit, but they may also deter Romanians from entering the labour market. + +“I am asked daily why I am still here,” says Corina Stanciu, a junior doctor in Bucharest. Young Romanian doctors can earn ten times more in western Europe than at home, she says. Ms Stanciu, who had planned to stay put until she encountered the dire conditions in Romanian hospitals, is preparing to move to Britain. Under one model of the effects of migration, by 2030 GDP per capita in some eastern European countries could fall by 4%. “Europe has destroyed us,” says an official in the deserted Romanian village of Certeze. + +Yet the threats to freedom of movement are more likely to come from the countries that benefit from it. The row over posted workers shows how mobility rights can run up against the EU’s impulse to “protect” citizens in rich countries from globalisation’s ravages. Economic and technological changes are making working lives more precarious; in time, more governments may choose to pin the blame on free movement. One former senior EU official involved in previous rounds of accession talks says that an “emergency brake” rule allowing governments to halt labour inflows is inevitable. Mr Cameron’s bid may simply have been premature. + +The experience of Ireland shows that emigration can be a boon, if workers gain skills and contacts abroad, and need not hamper success within the EU. The likes of Romania have much to do: improve institutions; raise the poor labour-force participation rate by cutting employment taxes; and reform social security. + +Even if they could muster the political will to pull this off, countries such as Romania, with a legacy of corruption and misrule, will struggle to match the lure of higher wages in the West. Ioan, a London-based plumber “recharging the batteries” in his home village of Racsa, says he would permanently move back to Romania if he could. He has few friends in Britain, and fears it is vulnerable to terrorism. But his homeland, he says, will never offer him the opportunities he enjoys abroad. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21704813-eus-cherished-free-movement-rights-are-less-secure-they-seem-europes-scapegoat/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The time in Spain + +Out of sync with the sun... + +...and knackered by it + +Aug 13th 2016 | MADRID | From the print edition + + + +IN THE summer, Spaniards enjoy their long evenings, having a drink at a pavement terraza before dining at 10pm or later. Yet the evenings are far longer than they should be: by local clocks, the sun sets an hour and 20 minutes later in Madrid than in New York City, though both are on the same latitude. That is because Spain (except the Canary Islands) is in the wrong time zone. Madrid is on a similar line of longitude to Swansea in Wales. Its clocks are set to Central European Time, the same as Warsaw or Tirana, some 24 degrees or 2,000kms (1,200 miles) to the east. + +Spanish time is a historical anomaly. When Franco drew close to Hitler in the second world war, he changed his country’s clocks to mimic those of Berlin. Nobody ever changed them back. The result is that Spaniards live out of sync with the sun. A “breakfast” meeting tends to be at 9am. At this time of year those hoping for a stroll in the cool of evening at 8pm face an oven-like wall of heat. + +A second anomaly compounds the problem—the long lunch break. This dates from when cities were small enough to permit an afternoon siesta at home and when, in post-civil war penury, many Spaniards did two separate jobs. The result is a wearyingly long day, with much hanging around. In private firms, workers tend to toil from 9am to 7pm with a lunch break of an hour or two at 2pm. To cater to after-work shoppers, department stores and supermarkets stay open till 10pm. Prime-time television runs until 11.30pm. In June the televised election debate among the party leaders finished well past midnight. + +The upshot is that Spaniards sleep far less than the European average (41 minutes fewer, according to Angel Largo of Arhoe, a group campaigning for more rational hours). This also makes them less productive at work. “When we’re lunching, our European partners are working, and when we go back to work, they’re preparing to go home,” sighs Mr Largo. + +His campaign wants Spain to adopt GMT (like its Iberian neighbour, Portugal) as a means to change habits, with a shorter lunch-break and more conventional working hours. It has made progress. The ruling Peoples’ Party, the opposition Socialists and liberal Cuidadanos all support switching to GMT. “It’s a relevant issue” for productivity, says Luis de Guindos, the economy minister. But it could only be approved by consensus, he adds. + +The force of habit is strong. A law to cut civil servants’ lunch break to one hour to allow them to go home earlier has been widely ignored. Many Spaniards are happy with their long, convivial evenings. Mr Largo is convinced that rationality will win out. But it will take more concerted political backing to persuade Spaniards to trade their traditional lifestyle for a decent night’s sleep. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21704816-and-knackered-it-out-sync-sun/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Tensions in Crimea + +The cruellest month + +A worrying spat between Russia and Ukraine + +Aug 13th 2016 | From the print edition + +A familiar sight + +IN RUSSIA, history tends to take cruel turns in August. There was the failed coup of 1991 (August 19th); the Moscow apartment bombings of 1999 (August 31st); and the start of the war in Georgia in 2008 (August 1st). On August 10th, the alarm bells rang again, when Russia’s Federal Security Service (FSB) announced that it had foiled a Ukrainian plot to launch a terror attack in Crimea. Vladimir Putin, Russia’s president, decried the Ukrainian authorities, declaring that Russia “would not let such things pass” and that further meetings in the Normandy peace format—involving Russia, Ukraine, Germany and France—were “senseless”. Ukraine’s president, Petro Poroshenko, denied the claims, calling them “a pretext for more military threats against Ukraine.” + +The heightened tensions in Crimea, the most ominous since Russia annexed the peninsula in early 2014, come amid mounting casualties in eastern Ukraine. The FSB said that two separate incidents took place: first, a raid on the terror cell that left one FSB officer dead and a Ukrainian intelligence officer in custody. Second, Russia accused Ukrainian forces of firing across the border into Crimea, allegedly killing one Russian soldier. Reports of Russian troop movements near the Crimean border earlier this week had led Ukraine to put its forces on high alert. On August 6th, Igor Plotnitsky, the head of the self-declared Luhansk People’s Republic, was the target of an assassination attempt that he blamed on Ukrainian forces (though internal power struggles are as likely to be the cause). + +The timing of the spat is notable in light of upcoming elections in both America and Russia. American officials say that Barack Obama, America’s outgoing president, has made it clear that he wants progress on Ukraine before the end of his term. Victoria Nuland, the American State Department official responsible for Ukraine, has been in talks with Vladislav Surkov, a close confidant of Mr Putin. By rejecting the Normandy Four format, Mr Putin may be hoping to pressure Mr Obama into making the grand Yalta-style bargain he has long desired. + +A re-run of the Ukrainian drama may also play well domestically ahead of Russia’s parliamentary elections on September 18th. As the country’s economic crisis grinds on, the looming vote has the Kremlin anxious. Dmitry Medvedev, Russia’s prime minister, drew widespread criticism in May when he told a griping Crimean pensioner that “There’s no money, but hang in there—all the best to you!” While the war in Ukraine has largely disappeared from state media in recent months, its return to the headlines could provide a welcome distraction. Ukrainians have good reason to fear; more than 9,500 people have already been killed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21704818-worrying-spat-between-russia-and-ukraine-cruellest-month/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Renewable energy + +It’s not easy being green + +Even with new reforms, doubts remain about Germany’s energy transition + +Aug 13th 2016 | BERLIN | From the print edition + + + +BRANDENBURG used to be called the sandbox of the Holy Roman Empire for its poor soil and marginal geography. Today a more appropriate moniker might be “the wind farm of the European Union” for all the spinning turbines that tower over the flat landscape. In Bavaria’s Holledau region endless rows of hop bines still undulate through the hills as they have for centuries; but today they share the south-facing slopes with solar panels. Germany’s Energiewende (“energy transition” or “revolution”) has transformed its countryside. + +The main tool in this transition is a policy of subsidising renewable power. Germany guarantees investors in green energy that their electricity is fed into the grid before that from conventional sources, and at high prices fixed for 20 years. Thanks to this support, the share of renewable energy in German electricity generation has gone from 3.6% in 1990 to 30% last year. But although green energy is subsidised in most of the EU and America, Germany’s efforts are unusually generous. Consumers pay the price of the subsidies—more than €20 billion ($22 billion) each year—through their electricity bills. Germans pay more for power than all other Europeans except Danes (German industry is exempt from some of the burden). + +As a result, Germany’s renewables law has long been in need of reform. In July, after much wrangling, the German parliament finally changed it. The government will still determine the volume of renewable-energy capacity it wants added each year, to try and slow climate change. Its target is for 40-45% of electricity to be generated from renewables by 2025, 55-60% by 2035 and at least 80% by 2050. But from next year the fixed sum paid in feed-in tariffs to everyone supplying renewable power will be replaced with auctions in which investors place sealed bids to build new wind or solar farms. Those who offer to do it for the lowest price will win, and only they will be paid for the power they supply. (Small installations, of solar panels on roofs and the like, will stay in the old system.) + +This reform is an important step toward a market economy, says Patrick Graichen of Agora Energiewende, a think-tank. But problems remain. Local politicians, especially in Bavaria, take a NIMBYish attitude to the power lines that need to be built to bring electricity from the windy north to the industrial south. Those lines must now go underground, making them more expensive. Moreover, the new reform does not address the more fundamental flaws in the Energiewende. The first is that even as the share of renewable energy in electricity generation rises, overall production is so far not getting cleaner, as measured by emissions. One reason is the snap decision after the disaster at Fukushima in 2011 by Angela Merkel, the chancellor, to phase out nuclear power (which emits no greenhouse gases) by 2022. + +While renewables can easily compensate for this missing nuclear capacity on windy and sunny days, other energy sources are needed for the rest. Environmentally, gas-fired power plants would be the next best option, but they are more expensive to run than coal-fired plants. And so Germany continues to rely on dirty lignite and only slightly less dirty hard coal. This gives the Energiewende a “credibility problem”, says Claudia Kemfert at the German Institute for Economic Research. + +Alongside this, the Energiewende has so far focused almost entirely on electricity generation. But electricity accounts for only about 21% of energy consumed in Germany, with the rest used to drive cars and trucks and to heat homes. Renewable sources play a negligible role in these sectors. Electric vehicles remain more of a marketing dream than reality. Too few Germans drive them to make the air cleaner, though this may change in the wake of the Volkswagen diesel emissions scandal last year. + +The policy of the Energiewende, says Clemens Fuest of the Ifo Institute, a think-tank in Munich, had three goals: to keep energy supply reliable; to make it affordable; and to clean it up to save the environment, with a target of cutting emissions by 95% between 1990 and 2050. “All three goals will be missed,” he thinks, making Germany’s energy transition “an international example for bad policy”. That may be a bit harsh. Germany’s policy has helped bring down the cost of solar panels and wind technology. But in order to get the revolution Germany really wants, far more drastic reforms will be needed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21704819-even-new-reforms-doubts-remain-about-germanys-energy-transition-its-not-easy-being-green/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Small but not too beautiful + +Europe’s micro-countries may be places where people are up to no good, but so are bigger ones + +Aug 13th 2016 | From the print edition + + + +THE top of the Spanish Steps in Rome is as good a place as any to appreciate the strangeness of Europe, for it is perhaps the only place from which to survey three sovereign entities. Most of the view is, of course, in Italy. But in the distance is the dome of St Peter’s in the Vatican, a separate city-state. And, just below, a large red-and-white flag billowing above Rome’s glitziest shopping area signals the presence of the Sovereign Military Hospitaller Order of Saint John of Jerusalem, of Rhodes and of Malta. + +Once the Crusaders’ medical corps, the order governed a series of Mediterranean islands before being kicked off Malta by Napoleon. It may no longer own any territory, bar a couple of buildings in Rome and another on Malta. But the order still maintains diplomatic relations with more than 100 states and permanent observer status at the UN. + +Europe is littered with such idiosyncrasies, leftovers from Europe’s consolidation into nation-states. There are seven states with a population of under 500,000. Add Britain’s crown dependencies and Denmark’s autonomous countries; throw in Gibraltar and Britain’s sovereign bases on Cyprus and the micro-territory count reaches 15. Lacking economies of scale, the micro-territories have survived by exploiting their one truly worthwhile asset: their sovereignty, the right to do as they please. Like mosquitoes, they sucked cash from neighbouring states by offering their inhabitants the opportunity to do things they could not do at home. Monaco opened its first casino in 1856. + +More recently, many turned into tax havens. Some—Monaco, Liechtenstein and San Marino—had the advantage of being relatively easy to reach from major cities. By moving into the business of offshore finance, Europe’s micro-territories acquired an importance out of all proportion to their size. By last year, assets under management in Andorra were 17 times the GDP of the tiny Pyrenean principality. This made them prosperous. Liechtenstein, the Isle of Man, Monaco, San Marino and Jersey are among the world’s 20 richest places, measured by GDP per person. + +But since 2001, those same activities have put them under unprecedented levels of international pressure. The micro-territories’ potential usefulness to terrorist paymasters first steered them into the firing line after 9/11. The global financial crisis did the rest. Governments hungry for revenue to shrink their deficits have become less tolerant of individuals and corporations that minimise their taxes. That is even truer of electorates. Among the forces behind the spread of populism in Europe is a sense of outrage over offshore tax avoidance and evasion. + +But the pressure, largely from the OECD club of mostly rich-world countries and Moneyval, a watchdog body set up by the Council of Europe to fight money laundering, has succeeded in bringing about significant change. Most of the micro-territories that are either sovereign states or depend on one have been cajoled into passing legislation and creating institutions that clamp down on offshore jiggery-pokery. It has cost them. Money has fled to Singapore and Dubai and to other countries in Europe, including Latvia, Georgia and Moldova. + +Some had already been looking around for alternative sources of income. Most have made efforts to boost tourism. Malta, Alderney and the Isle of Man (which markets itself under the witty, if questionable, rhyming slogan of “Where you can”) have tempted e-gaming firms to their shores. Jersey and others have strived to attract technology and telecoms businesses. But this does not mean that Europe’s micro-states have given up on offshore finance. + +Acquiring the instruments with which to combat suspicious activity is one thing. Using them is another. The focus of the next stage in Moneyval’s activities will be on implementation: making sure that when cases of suspicious activity come to light they are acted on effectively. The Vatican is a case in point. For years, Italians with good contacts in the papal administration were able to use its bank, the Institute for the Works of Religion, to dodge tax, launder cash and illegally export currency. Over recent years the Holy See, which volunteered to be inspected by Moneyval, has put in place an extensive framework designed to ensure that such things never happen again. Since 2011, its financial watchdog body has referred 34 cases of suspicious activity to Vatican prosecutors. Yet not a single indictment has so far resulted. + +Holy cash + +Making sure that potentially troublesome little states keep to the straight and narrow is unquestionably necessary. But some of the smaller jurisdictions are right to point out that, while they have gone a long way towards cleaning up their acts, many of the bigger countries continue to do as they like. Some of the most worrying tax havens in Europe include Luxembourg, Ireland and the Netherlands. None is subject to Moneyval’s scrutiny. All are members of the EU, and thus in a position to lobby Brussels to water down measures intended to limit fiscal hanky-panky. + +Britain, too, is in many respects a tax haven. The regulation of British firms that set up companies is almost non-existent, and certainly lighter than in its crown dependencies. In May Roberto Saviano, the author of a bestselling work on the Mafia of Naples, provocatively described Britain as “the most corrupt place on Earth”. Few Italian prosecutors would go as far, even privately. But they agree with Mr Saviano that all too many British companies are being used to recycle the proceeds of Italian organised crime, including arms smuggling. In much the same way, some of the ill-gotten lucre withdrawn from the micro-states’ banks has gone, not to remote Pacific islands or self-proclaimed republics, but to American states that offer iron-clad corporate anonymity. It is time the big fish of global finance diverted their gaze from the gadding of the minnows to take a look at their own reflections in the aquarium. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21704823-europes-micro-countries-may-be-places-where-people-are-up-no-good-so-are-bigger-ones-small/print + + + + + +Previous Articles Sections Next + + + +Britain + + + + + +The Labour Party: The metamorphosis + +Schools: Grammatical error + +Football geography: A country of two halves + +The “term funding scheme”: When cuts are not enough + +Fatter people: Counting calories + +Thinner pets: Subwoofers + +Bagehot: This sceptic isle + + + + + +Articles Sections Next + +The Labour Party + +The metamorphosis + +How Jeremy Corbyn took control of Labour + +Aug 13th 2016 | BRISTOL | From the print edition + + + +ON A sunny afternoon in the garden of the Bristol Flyer pub, a gang of Jeremy Corbyn fans are gathered around a table discussing the Labour Party leader’s rally in the city the day before. “Three thousand people? Was that it?” asks one. “Yeah, you think Corbyn and you think 500,000!” replies a man in a Ramones T-shirt. Still, on to the next battle. Leaflets are circulated, which cheer on Labour’s leader and attack Tories and Blairites. Yet these Corbynistas are not Labour supporters. They are members of a rival outfit: the tiny Socialist Party. + +Since he won Labour’s leadership contest last September, Mr Corbyn and his once tiny band of allies on the party’s hard left have taken control of Labour. Partly this is the product of an effort by gnarled agitators from outside it to flood the party with activists and challenge the moderates in its institutions. But it is also thanks to a mostly unorchestrated surge of previously disillusioned new members, many of them young, into the party. + +A new leadership contest, triggered after a vote of no confidence in Mr Corbyn by moderate MPs in June, illustrates the transformation. Mr Corbyn deserves to flop. In the past 11 months Labour has lost seats in local elections, failed to hold the government to account, become infected with anti-Semitism, tumbled in the polls and, thanks to its lacklustre campaign to Remain, contributed to Britain’s vote for Brexit. Following the referendum, most of Mr Corbyn’s shadow cabinet resigned. Despite all this, he is heading for a solid win in the leadership contest over Owen Smith, the moderates’ actually-quite-left-wing candidate, on September 24th. This week a court ruled that the 130,000 Labour members who have signed up since January should be allowed to vote in the contest, making Mr Corbyn’s victory all but certain. + +How did the formidable centrist party of Tony Blair end up in the hands of Mr Corbyn, an admirer of Hugo Chávez? Entryism has played a part. Mr Corbyn’s victory brought back veterans of Labour’s battles in the 1980s, when Militant, a Marxist group, tried to take over the party. One trouper of the hard left, Jon Lansman, now runs Momentum, a powerful Corbynite movement. Its local groups have come to dominate many local Labour branches and chivvy MPs to support Mr Corbyn. On August 10th Tom Watson, Labour’s deputy leader, alleged that the party was being infiltrated by Trotskyists from groups like the Socialist Party (whose website boasts of its members addressing Momentum events). Some in Momentum want to reinstate “mandatory reselection”, enabling local members to boot out sitting Labour MPs. + +Momentum’s efforts are intertwined with those of far-left parties such as the Socialist Workers Party (SWP). John Ferrett, who leads Labour’s group on Portsmouth Council, describes how things have changed: “[Party] meetings used to be friendly and focused on local politics and local campaigning. Now they are dominated by Momentum activists. Most moderate members no longer turn up and those that do get harangued if they criticise Corbyn.” Most astonishing “is seeing the Socialist Worker [the SWP’s paper] being sold outside and inside the meeting.” + + + +The takeover is mirrored at the national level. The National Policy Forum, a policymaking body created by Mr Blair, has been sidelined in favour of the National Executive Committee (NEC), which has tilted left; at elections on August 8th all six of the seats reserved for constituency representatives went to Corbynistas, who now fill 16 of its 33 places. A document circulated by Mr Lansman in December (titled “Taking control of the party”) proposed giving the NEC a veto on candidate selections. If he is re-elected, Mr Corbyn is expected to purge the party’s headquarters, dumping Iain McNicol, its moderate general secretary. + +Yet Labour’s transformation owes as much to circumstance as conspiracy. The conditions for Mr Corbyn’s victory were ripe: years of austerity concentrated on the young, an outgoing leader (Ed Miliband) whose compromises with electability had failed to save Labour from electoral disappointment and, crucially, new rules enabling non-members to vote in the leadership contest for £3 ($4). Idealistic lefties poured in, tripling the party’s electorate and propelling Mr Corbyn, initially a no-hoper, to a crushing victory. + +Some of the new joiners are former members who quit during the Blair years. Others are young folk with no experience of party politics. But only a minority, albeit a well organised one, are entryists. Most are simply attracted to the man’s unvarnished style and uncompromising politics. That is evident on his Facebook page (which has more “likes” than that of Labour itself) and at his rallies. In Bristol speakers excoriated Thangam Debbonaire, a local Labour MP who had criticised Mr Corbyn, to cries of “Deselect!” from the crowd. + +This points to a hard truth for Labour moderates: the party’s metamorphosis is as much a bottom-up swell of enthusiasm as a takeover at the top. Without “the movement”, the top-down changes would be unthinkable. The mass of new members protects Mr Corbyn and forces those who want to make their way in the party to bow to him: of three Labour mayoral candidates selected on August 9th and 10th, one (Steve Rotheram, the unexpected winner in Liverpool) is a Corbyn ally and another (Andy Burnham in Manchester) is a moderate who has pandered to Corbynistas. As long as he has this large, growing base Mr Corbyn can face down his MPs and continue remaking the party for as long as it pleases him. + +This is excellent news for the Tories, who are contemplating calling an early election to cash in their poll lead (14 points, according to the latest YouGov survey). And it leaves Labour’s moderates—who remain a large minority of the membership and dominate the parliamentary party—with a grim dilemma. Some are toying with declaring independence from Mr Corbyn and sitting as a separate parliamentary group. But Labour is a tribal party and most MPs are inclined to dig in. They are in for a long wait. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21704838-how-jeremy-corbyn-took-control-labour-metamorphosis/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Schools + +Grammatical error + +Lifting a ban on new selective schools would damage social mobility + +Aug 13th 2016 | From the print edition + +Theresa Brasier (later May), grammar girl + +NEARLY half of Theresa May’s cabinet went to comprehensive (ie, non-selective) state schools; Justine Greening, the new education secretary, is one of them. Outside 10 Downing Street on July 13th, Mrs May pointed out that those in state schools had less of a chance of making it to the top than their privately educated peers. That, she said, must change: “We will do everything we can to help anybody, whatever your background, to go as far as your talents will take you.” + +Her first step in that direction may prove controversial. On August 7th the Sunday Telegraph reported that the government would seek to lift a ban on new grammar schools, which are allowed to select pupils at age 11 on the basis of ability. It would be a big change. At their height, in the early 1960s, grammar schools educated around one-quarter of pupils. Then, in the mid-1960s, the Labour government sped up their conversion into comprehensives. Anthony Crosland, the education secretary, declared he would “destroy every fucking grammar school in England”. Some local authorities held out. But there remain just 163 grammars in England, educating 5% of pupils. (Scotland and Wales have none; Northern Ireland has lots.) + +Many Tories are delighted by the proposal. Grammars are seen as a ladder by which clever, poor children can climb up the social hierarchy. The Conservatives need to be for the underdog, pushing a meritocratic vision of social mobility, argues Dominic Raab, a Conservative MP, who supports more grammars. Supporters hark back to a supposed golden age of meritocracy in which grammar school boys were to be found at the head of business, the civil service and politics. In 1964-97, all five prime ministers were grammar school alumni. So is Mrs May. + +Pupils at grammars do get better results than they would at comprehensives. A study by researchers at Bristol University in 2006 found that the boost to a pupil attending a grammar school was worth four grades at GCSE, the exams taken at 16. But this comes at a cost. Those who fail to get into grammar school do one grade worse than they would if the grammars did not exist. The likely explanation is that grammar schools attract the best teachers, says Rebecca Allen of Education Datalab, a research group. There is no overall improvement in results as the benefit to the brightest is cancelled out by the drag on the rest. + +Rewarding merit in this way might be defensible if it improved social mobility. But grammars impede it. By age 11, poor children lag nearly ten months behind their peers in educational progress, according to the Education Policy Institute, a think-tank, meaning they are less likely to pass grammar schools’ entrance tests. Grammar schools therefore fill up with middle-class pupils. Just 3% of children at grammar schools receive free school meals (a measure of poverty), compared with 13% in other local state schools. + +The gaming of the system by well-off parents can be seen in the impact on the market for private education. The opening of a new grammar school is associated with a decline in demand for the best local private secondary schools and an increase in demand for private primaries, says Ms Allen. Many parents also pay for tutoring to help their children pass the grammar’s entrance exam, in the hope of moving the financial burden of secondary education onto the state. This gives richer children an edge. Even looking only at those pupils who get good grades aged 11, 40% of those on free school meals get into a grammar school, compared with 67% of the rest. + +The impact on social mobility is lasting. In 2014 a Bristol University study comparing those taught in a comprehensive system with those taught in a grammar school system found that grammars increased income inequality by one-fifth. + +Supporters argue that grammar schools’ posh intake is because of their location in leafy neighbourhoods and their relative scarcity, which increases competition for places. Mrs May should put new ones in areas of social deprivation, says Don Porter of Conservative Voice, a pressure group that backs grammars. That might help. Yet parents seem willing to let their children travel to attend good schools. One-quarter of grammar pupils commute from another local authority. + +If the government goes ahead with its plans for more grammars it will face strong opposition in Parliament. But polls suggest that voters like the idea. The government may allow some other form of selection, perhaps encouraging “chains” of state schools to concentrate the brightest of their pupils in one school that specialises in teaching gifted children. Regardless of Mrs May’s fine intentions, reintroducing selection would do little to improve the diversity of future cabinets. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21704837-lifting-ban-new-selective-schools-would-damage-social-mobility-grammatical-error/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Football geography + +A country of two halves + +England’s beautiful game has gone south + +Aug 13th 2016 | From the print edition + + + +IN 1888 the world’s first football league was launched in England. Half the 12 teams competing in the inaugural season came from the north and half from the midlands; none was from south of Birmingham. Long after, the sport remained “a game of industrial England”, as Roy Hattersley, a deputy leader of the Labour Party, wrote in 1990. + +As a new season of the Premier League kicks off on August 13th, that is no longer the case. The four clubs based in Manchester and Liverpool are still forces to be reckoned with: it is rare that one of them is not champion or runner-up. Yet outside those two cities, northern clubs are in decline (see chart). Last season the most successful of the bunch, Sunderland, finished 17th. + + + +Poor management is one reason. Leeds United, who won the league in 1992, were relegated in 2004 after spiralling into debt. Newcastle United, relegated last season, had failed to invest. Sunderland have struggled to find continuity while going through six permanent managers since 2011. + +Attracting elite players to the north is another problem. “Sunderland is pretty bleak. So is Newcastle,” wrote Roy Keane, a former Sunderland manager, in his autobiography. “They wanted compensation for the cold and dark nights,” the poor dears. Foreign owners have snapped up clubs all over the country as trophy assets, but the richest and most dedicated have tended to go for clubs that they can visit easily from London, says Jonathan Wilson, a football historian. And these days few local businessmen are able to bankroll their home teams to victory, as Jack Walker, a steel magnate, did with Blackburn Rovers in 1995. + +Unlucky Black Cats + +Regional economic decline has sapped northern clubs’ revenues. In 2014-15 Sunderland had the sixth-highest attendance in the league but only the 15th-highest revenue, according to the Swiss Ramble, a football finance website. By contrast, clubs in posher parts of the country rake in money from tickets and corporate hospitality. Chelsea, who had a lower average attendance than Sunderland, earned over six times as much from each match day. This season Sunderland have cut their season-ticket prices. + +Northern fans have some reasons to be optimistic. All three teams promoted to the Premier League this season are from the north. And a new TV deal that comes into effect this season is so lucrative that the proportion of clubs’ revenue that comes from matchdays will decrease significantly, helping teams in England’s poorer regions to catch up. Nonetheless the pitch looks uneven, a metaphor for England’s growing southern skew. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21704844-englands-beautiful-game-has-gone-south-country-two-halves/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The “term funding scheme” + +When cuts are not enough + +Explaining the Bank of England’s newest wheeze + +Aug 13th 2016 | From the print edition + + + +AS THE post-referendum economy wobbles, the Bank of England is acting to prop it up. On August 4th, when it cut the base rate of interest to 0.25%—the lowest in its 322-year history—it also announced a new round of quantitative easing (QE), or printing money to buy bonds. The new round had a shaky start. On August 9th the bank bought fewer gilts than it had hoped, a reflection of illiquidity in long-term-debt markets and thin summer trading. Even when completed, the effect will be marginal: the £60 billion ($78 billion) in new QE is small compared with the £375 billion the bank had already amassed. + +A second problem concerns the impact of an ultra-low base rate. Such enthusiastic slashing can create more problems than it solves. Banks make money by charging borrowers more than they pay savers. As the base rate nears zero, the margin between rates on saving and lending is squeezed. This is because banks are loth to offer savers a negative interest rate; disgruntled savers might pull their money out and hoard it under the mattress. As banks’ profits suffer, so they are less likely to lend. Cutting interest rates, perversely, can thus lead to a contraction in the supply of credit. + +Here, however, a new wheeze, the “term funding scheme” (TFS), may be able to help. Banks will be able to borrow up to £100 billion of newly created funds, at a rate near the ultra-cheap base rate. Each can borrow up to 5% of their existing loan books, as well as extra funds equal to the increase in net lending in the coming months. Since banks typically pay around 1% for funding from retail deposits or in wholesale markets, this is a boon, says Samuel Tombs of Pantheon Macroeconomics, a consultancy. The TFS will help to preserve banks’ profitability, meaning that the cut in the base rate should be passed on to households and firms. + +In some ways, the new wheeze resembles the “funding for lending scheme” (FLS), designed to channel cheap credit to firms, which was launched in 2012. The economic recovery got going soon after its introduction. However, Mr Tombs doubts the new scheme will have such a big effect. The punishment for not lending is hardly severe, as it was under the FLS. + +Although in some respects the TFS is underwhelming, in another it is radical. Simon Wren-Lewis of Oxford University argues that the scheme bears a resemblance to “helicopter money”. Under this proposal, the central bank prints money to dole out to the public, with the aim of boosting growth and inflation. A few tweaks to the TLS and the helicopter comparison might seem apt. The bank could in theory make the interest rate on borrowing under the TLS negative, thus paying banks to borrow from it and subsidising lending to ordinary Britons, Mr Wren-Lewis says. + +Measures to pep up the economy are certainly needed. Data released on August 10th showed business confidence sinking. But there may be an easier way to put money into the hands of ordinary Britons, points out Tony Yates of Birmingham University. The government can issue long-term bonds at negative real rates; it should take advantage of low rates to fund public spending. The bank is thinking creatively; now the government needs to step up. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21704845-explaining-bank-englands-newest-wheeze-when-cuts-are-not-enough/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Fatter people + +Counting calories + +A new study suggests people have been fibbing about how much they eat + +Aug 13th 2016 | From the print edition + + + +THE English are fat and getting fatter. The scales of the average adult clocked 77.5kg (171lb) in 2014, an increase since 1993 of 5.1kg—about the weight of a border terrier. Over the period the share of adults classed as obese rose from 14.9% to 25.6%, about twice the rate in France and Sweden. + +And yet policy analysts have been trying to digest a podgy paradox. Data suggest people are heavier—but also eating less. According to the Living Costs and Food Survey (LCFS), a long-running study that tracks shopping, average daily calorie purchases fell from 2,534 in 1974 to 2,192 in 2013. Another official survey based on reported food consumption found a similar pattern. + +People gain weight when they consume more calories than they burn off. Therefore the two official data sources suggest that England’s weight gains result from people exercising too little, not eating too much. Researchers using these data tend to agree. A forthcoming paper by the Institute for Fiscal Studies, a think-tank, argues that the rise in obesity in England reflects how jobs and housework have become less strenuous. They suggest sloth is more important than gluttony. + +But a report published on August 8th rejects this idea. Hugo Harper and Michael Hallsworth of the Behavioural Insights Team, a research group spun out of government, compared official data with those from other sources. A private survey and, more damningly, measures of actual calorie consumption, suggest that the participants in the LCFS are dramatically under-reporting their intakes. The authors estimate that England consumes 30-50% more calories than is declared. + +Such under-reporting would mean that sloth is not the main cause of England’s weight gain. For this to be the case the country would have to have seen a big drop in activity, according to Mr Harper and Mr Hallsworth. They estimate that it would need to have been akin to every adult jogging for 56 minutes less per day than in the 1970s. This is hard to believe. + +There are two reasons why people may have been fibbing about their calories. The first is that such data are hard to track, especially given that snacking and eating out have become more common. The second reason is wishful thinking. People who say they want to lose weight are more likely to underestimate how much they eat. And since fat people are more likely to say they want to lose weight, the rise of obesity has led to a growing tendency to under-report. + +Simon Stevens, head of the National Health Service, says obesity is “the new smoking”. It costs the NHS billions of pounds per year and cuts life expectancy by up to ten years (about the same as a lifelong cigarette habit). The report’s findings therefore have important implications. + +The government is looking at new ways of measuring calorie consumption. And the report may encourage policies targeting gluttony rather than sloth: for example, an expansion of the sugar tax that was announced in March. Nearly one-third of English children are overweight or obese. There is no time for flabby thinking. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21704847-new-study-suggests-people-have-been-fibbing-about-how-much-they-eat-counting-calories/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Thinner pets + +Subwoofers + +The curious incident of the dog and the waistline + +Aug 13th 2016 | From the print edition + + + +WHILE their owners bulge, British dogs appear to be shrinking. Each year the Kennel Club, a dog-lovers’ association, registers the details of about 250,000 hounds; the club believes it has records for about one-third of the dogs in Britain. An analysis by The Economist using data supplied by the club suggests that the weight of the average British pup has fallen by about 12% in the past decade (see chart). As smaller breeds grow in popularity, the average size of a dog, as measured by the circumference of its neck, has also fallen. + + + +Squeezed living standards may be the culprit. Lower wages have encouraged people to guzzle cheap, unhealthy food, causing them to pile on the pounds. But the same drop in incomes has had the opposite effect on pets: it is much cheaper to feed a dinky dog than a big beast. A pug needs about one-quarter the daily calories of a German shepherd. Vets’ bills tend to be more affordable, too. + +Likewise, city living has encouraged people to opt for littler dogs. As house prices have risen by half since 2001, the rate of overcrowding (as measured by the number of people per bedroom) in private rented households has increased by one-third. Smaller houses, with cramped rooms and gardens, need smaller pets. + +Miniature breeds are therefore booming. In the past decade the number of pugs registered each year has jumped by nearly 300%, while beefier bull terriers have fallen by over 50%. The number of standard-sized dachshunds, otherwise known as “sausage dogs”, registered with the Kennel Club has fallen by 2.5%, while the number of cocktail-sized miniature dachshunds has risen by one-quarter. Registrations of giant and miniature schnauzers have similarly diverged. As British pets slim down, it is surely time for owners to follow their dogs’ lead. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21704755-curious-incident-dog-and-waistline-subwoofers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +This sceptic isle + +Britain is unusually irreligious, and becoming more so. That calls for a national debate + +Aug 13th 2016 | From the print edition + + + +THE final parish meeting of the Holy Trinity Church, in the centre of Bath, took place on a rainy day in February 2011. Anglo-Catholic congregations had worshipped here, under the hammer-beam roof and monuments to heroes of Napoleonic wars, for nigh on two centuries. Now a £40,000 ($52,000) bill for electrical repairs had succeeded where a German bomb had failed: the church was to close and it was time to wind up its affairs. Formalities concluded, parishioners filed in for a final mass. “Forgive us as we confess our negative feelings and fears for the future,” ran a closing message on the website. Today the building is listed for sale on the Church of England website, offers invited. + +Last year the church reported a “sharp upturn” in such disposals. That hints at a milestone that Britain reached in January, when figures for weekly church attendance fell below 1m for the first time, as well as one passed in 2009, when the proportion of Britons saying they had no religion (49% in the latest data, for 2015) overtook that saying they were Christian (43% in 2015) in NatCen’s British Social Attitudes survey. Other figures also point to this spiritual sorpasso: since 2004 church baptisms are down by 12%, church marriages are down by 19% and church funerals by 29%. A 65-country study by WIN/Gallup last year found a lower proportion of people are religious in Britain than in all but six other countries. + +Each generation is about as observant as it has always been: a fairly consistent 80% of the pre-war cohort has generally described itself as religious; about 40% of Britons born after 1980 tend to do so. And there are exceptions, of course. Some inner-city churches, particularly in areas of high immigration, are dynamic and thriving; clergymen hope that these successes can be spun off (or “planted”) to other parts of the country. Meanwhile other religions, like Islam, are growing—albeit not nearly fast enough to slow the growth of non-religious Britain. + +The country is littered with evidence of the change. Everywhere deconsecrated churches are reopening as bars and restaurants. Five hundred churches were turned into luxury homes over five years in London alone. Shrinking congregations and growing repair bills are typically the fatal combination: about a quarter of Sunday services are attended by fewer than 16 parishioners. The Church of England is doing its best to manage this trend. Christmas-only parishes, catering to the once-a-year crowd, are one avenue. A new app enables cashless millennials to chip in to a virtual collection plate. + +But if it does not reverse the decline, society at large—all of it—has big questions to ponder. Christianity has been woven into British life over the course of two millennia. In the span of history the current contraction of the observant population is precipitous. In all sorts of ways it leaves a big gap. + +There is the physical one. Myriad restrictions govern the sale of landmarks and artworks. Yet the parish church, that icon of Britain’s national character, is becoming a memory. Sometimes such buildings remain public, as cafés, preschools and the like. But often they do not. In 2013 a London church-turned-house, complete with a golden swimming pool in the crypt, sold for £50m. Is it reasonable to let these spaces close to the great unwashed for good? The nation’s cathedrals pose similar quandaries. To maintain their leaky roofs, draughty windows and artistic treasures typically costs more than £1m annually (York Minster, which gets rubbed down with olive oil to protect against acid rain, faces bills of £20,000 a day). Recently the government has doled out discretionary payments to cover repairs, most recently a £20m extension to a fund commemorating the first world war. But is it appropriate for these cornerstones of the nation’s heritage to rely on ministerial whim? Or, for that matter, for taxpayers to subsidise organised religion? + +Aisle be back + +Then there is the non-liturgical dimension. Churches are spaces for reflection and meditation. In an age when pubs, too, are struggling to stay open, they are a bastion against social atomisation. Before it closed, Holy Trinity in Bath used to host dance classes, band rehearsals, counselling groups and lectures. Should civil society be providing new sources of guidance and support? In 2008 a group of philosophers founded the School of Life, a sort of secular answer to organised religion (tickets to an upcoming class on “Mastering the Art of Kindness” sell for £10). Are more such initiatives needed? Churches also complement the welfare state. The number of emergency food packages distributed in Britain by the Trussell Trust, a Christian charity, rose from 26,000 in 2008-09 to 1.1m in 2015-16. Such food banks are found in 14% of British churches. Should the country consider measures to substitute this role? Or should it underwrite it? + +Finally there is religion’s political vocation. The monarch is the head of the Church of England. Bishops sit in the House of Lords to provide “an independent voice and spiritual insight”. Church figures enjoy media pulpits for their views on ethical matters. Should these conventions be upheld for the sake of tradition and continuity? Or should church voices be complemented, even supplanted, by other philosophical and moral authorities? + +These questions are mutually inextricable. They bear not just on government but on civil society, public services, cultural institutions, philanthropists and the ordinary citizen. So it is time, surely, that they benefited from concerted debate. Britain is hardly alone in this. It is a subject with which most Western countries will soon need to grapple. The Pew Research Centre (whose research goes beyond pews) projects that Australia, France and the Netherlands will lose their Christian majorities by 2050. Even in America, the non-religious part of the population rose from 16% to 23% between 2007 and 2014. Britain is just farther down the road to a post-religious society than most. It must lead the way. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21704836-britain-unusually-irreligious-and-becoming-more-so-calls-national-debate/print + + + + + +Previous Articles Sections Next + + + +International + + + + + +Paedophilia: Shedding light on the dark field + + + + + +Articles Sections Next + +Paedophilia + +Shedding light on the dark field + +Understanding sexual attraction to children is essential if they are to be kept safe + +Aug 13th 2016 | From the print edition + + + +IN AN office in Epsom in southern England, the phone rings. Calls come in from men who have been arrested on suspicion of possessing indecent images of children; those who are fathers will probably have been barred from seeing their children unsupervised until their trials. Or the caller may be a mother whose adolescent son has been charged with molesting a child; if he has siblings social workers may insist that the family is broken up. Some calls are from men desperate to talk to someone about their own sexual desire for children, and terrified that without help they may act on them. + +This is Stop it Now UK, an advice service run by the Lucy Faithfull Foundation, a charity. Callers need not identify themselves (though if they do, and a crime has been committed or a child may be at risk, the staff tell the police). Of 700-800 calls answered each month (another 1,500 go unanswered for lack of resources), most are from men who have recently been arrested—police have often told them about the service in the hope that it can keep them from committing suicide. “We talk about self-care and keeping busy,” says Jenny Michell. “It’s about getting an acknowledgment at the other end of the line that they are still human,” her colleague Sue Herbert, a social worker, chimes in. + +The idea of a confidential helpline for some of the world’s most reviled people came from Fran Henry, an American campaigner. In the 1960s, when she was aged 12-16, she was sexually abused by her father. “The abuse I suffered was egregious and affected every aspect of my life,” she says. But when as an adult, after counselling, she confronted her father, she realised that what she really wanted was not to see him in jail, but to make it less likely that other children suffered as she had. + +Ms Henry started to visit sex offenders in prisons, asking a single question: what, if anything, could have stopped you? Many said that they had struggled with themselves before offending and believed that they might never have started if they had received counselling. And they thought they could have been caught sooner, if anyone had picked up the warning signs and intervened. From those conversations was born the first helpline, which started in Vermont in 1992 and now runs nationally. The British version followed a decade later. Survivor groups criticised the idea as “offender-friendly”, Ms Henry says; funders, too, were hard to convince. “Some would say: ‘I can’t take this to my board; it’s too yucky.’ Many people refuse to educate themselves on this issue.” But she persisted. “I took the attitude that what we are doing now is not protecting children.” + +Back then, child-abuse was mostly covered up or ignored. Now it is known to be extremely common. Crime surveys suggest that nearly a fifth of girls and nearly a tenth of boys worldwide suffer a contact sexual offence before turning 18. The few studies that focused on younger age groups suggest that many were first assaulted before puberty. A recent British survey found that 3% of women, and 1% of men, had suffered rape or attempted rape by an adult (that is, excluding encounters by two under-age children) before turning 16. Few victims tell anyone; and hardly any assaults lead to convictions. Tough sentencing and parole conditions, first introduced in America and copied widely, have been shown by many studies not to have cut recidivism or victimisation rates. + +Suffering innocents + +Another obstacle to keeping children safe is that misconceptions about the causes of child-abuse abound. Perhaps the most serious is the idea that the perpetrators are all paedophiles. In fact, paedophiles are probably a minority. The term is clinical, not legal or criminological: paedophiles are adults who are only or mainly aroused by prepubescent children. But a third of sexual assaults against children are thought to be committed by other children, who will not be diagnosed as paedophiles because their sexual interests may well mature as they do. (They may still face criminal sanctions.) In another big chunk, the victims are past puberty. Their abusers may be hebephiles (adults attracted to children in early puberty), or simply unconcerned that a physically mature child is too young, legally or morally, to consent. + +Sometimes erotic interests are hard to untangle from other motives. Some child-abusers are socially inadequate and fear adults will reject their sexual advances. Many describe feeling like a child themselves when they abuse, says Heather Wood, a psychotherapist at the Portman Clinic in London, which treats patients with paraphilias (abnormal sexual interests). Or they may be in the grip of what psychotherapists call “manic defence”: an escape from inadequacy and loneliness into exhilarated states such as sexual arousal. The child is reduced to a bit-player in the abuser’s psycho-drama. + +Identifying likely perpetrators and working out what drives them would mean they could be offered tailored support—which is where helplines such as Stop it Now come in. “They live among us, so it’s better that we know them and treat them,” says Ms Michell of Stop it Now UK. And though paedophiles are a minority of those who commit sexual offences against children, understanding them is particularly important, because they are among the most predatory and prolific abusers. + +The stigma of paedophilic desires means that just how common they are is not known. Michael Seto, an expert on paraphilias and sexual offenders at the University of Toronto, says that probably 1% of all men are predominantly or only attracted to prepubescent children, a share that may double if children in early puberty are included. Female paedophiles are probably more rare, since almost everyone diagnosed with any type of paraphilia is male. Women also seem to commit only a tiny fraction of sexual offences against children, whether the motive is paedophilic or something else. Only around 5-7% of those accused or convicted of such crimes are female; victimisation surveys suggest they are responsible for perhaps a tenth of all offences, or slightly more. + +Some experts think that paedophilia usually has an early biological cause, perhaps genetic or in the womb. Others emphasise the role of life events. The two may intertwine, says Professor Seto, as with schizophrenia, say, or depression. “Just because there are biological factors doesn’t rule out the role of experience.” + +One theory is that men who are attracted to children have the evolutionarily driven sexual preference for youthful traits, such as unlined skin—without, for some reason, the usual liking for the curves that indicate fertility. That could help explain why fewer women are paedophiles: women typically find men around their own age most attractive, whatever age that is. + +Another theory starts from the observation that most people find children beautiful, but in a way that elicits protective rather than sexual feelings. James Cantor of the University of Toronto has scanned paedophiles’ brains and found abnormalities in the connective white matter, which might indicate “cross-wiring” that causes the wrong response to be triggered by the sight of a child. He and others have also shown that paedophiles are more likely than other men, or than those who have sexually offended against adults, to be short, left-handed or of low IQ. All these traits are seen somewhat more often in people with neurological disturbances. + + + +Those who see paedophilia as learned behaviour point to two other observations. The first is that a third to a half of known paedophiles were themselves abused as children, a much higher share than among other men. Maltreated children learn that adults are frightening, says Donald Findlater of the Lucy Faithfull Foundation. Then, as their sexual interests develop during puberty, they may focus on children, whom they find less threatening. The second observation is that same-sex preference is far more common among paedophiles than among men who prefer adult partners: more than half are thought to prefer boys. That suggests a degree of identification with the object of desire. + +To the extent that paedophilia is an orientation, like being straight or gay, attempts to change it are probably pointless. For “exclusive” paedophiles—those whom adults leave cold—the best that can be hoped is probably that they accept they will never have a satisfying sexual relationship. But those who also feel some attraction towards adults may be helped by cognitive behavioural therapy that teaches them to focus on their admissible desires. There is little evidence supporting behavioural and psychological therapies. But most studies have been small and poorly designed—and on convicted child-molesters, who are likely to be more impulsive and anti-social, and less intelligent, than those who have not been caught. They differ even more from paedophiles whom morality and self-control have enabled so far to avoid offending. Randomised controlled trials are urgently needed, says Professor Seto. + +Both exclusive and non-exclusive paedophiles need to be disabused of mistaken beliefs about children. In 2006-07 Sarah Goode of the University of Winchester, in southern England, administered questionnaires to 56 anonymous self-described paedophiles she recruited on online forums. Many held wrong and dangerous beliefs about children, saying, for example, that child pornography was harmless if the child had “consented” and that they preferred the children to look as if they were enjoying themselves. In fantasies, they imagined children seeking and initiating sexual contact with adults. + +Such false thinking may flow from the “sexual over-perception bias”: a cognitive flaw which makes men (but not women) prone to seeing sexual interest where there is none. That is bad enough when it means thinking a friendly female colleague is making advances; when it means reading a child’s playfulness and warmth as seductive, it is very dangerous. + +In the 1970s the North American Man-Boy Love Association and, in Britain, the Paedophile Information Exchange (now disbanded) peddled the notion that sex between an adult and child can be loving and consensual, even educational. They gained remarkable support from feminist and civil-rights groups for their aim of abolishing age-of-consent laws, which they argued restricted children’s freedom. Though they failed, until recently anyone seeking information online about paedophilic urges would struggle to find other sympathetic voices. That is starting to change. + +For such moments as this + +Virtuous Paedophiles (VirPed), a website set up in 2011 for paedophiles determined not to act on their desires, offers “advice and camaraderie: the only place that you are not insulted and degraded,” says Todd Nickerson, one of the few members to go by his real name. It also offers hope that paedophiles can live an offence-free and “somewhat happy” life. “There is a message from society that you are doomed to offend,” he says, which serves children poorly, since “despair can become a self-fulfilling prophecy.” + +Some forum members remind Mr Nickerson of himself 30 years ago: going through puberty and realising, to his horror, that the age of the girls he found attractive seemed stuck at pre-teenage. He and other experienced members challenge the beliefs that enable abuse (“paedophiles are very good at deluding themselves that a kid is coming on to them”) and share tips: always act as if a child’s parent is in the room; avoid situations such as children’s birthday parties; never fantasise about a child you know. Mr Nickerson says he has never touched a child sexually, “and never will”; he has never been accused of molestation. Going public has attracted vilification—but also, to his gratitude, “kind and sweet” messages from survivors of abuse, thanking him for the work he is doing. + +Some wonder whether exclusive paedophiles might be helped to maintain their self-control by “abuse-free” erotica, such as child sex dolls, or cartoon or computer-rendered films or images. Such “virtual child pornography” is illegal in Britain, Canada and many other countries (though some is allowed in America, where a decade ago the Supreme Court overturned a blanket ban, citing constitutional protections for free speech). Research is urgently needed to establish whether it would function as an outlet for dangerous urges or instead as an incitement to abuse, says Professor Seto. “Clearly there’s an ‘ick’ factor. But we’ve got to ask ourselves: what are the options here? We are asking of paedophilic men that they remain entirely celibate.” + +In some countries convicted paedophiles may be offered drugs: either SSRIs, antidepressants that dampen obsessive rumination and also lower libido; or anti-androgens, which block the action of male sex hormones. Anti-androgens can have serious side-effects, including heart disease. And their tangible effects, which include erectile difficulties and a feminised body shape, make double-blind controlled trials impossible. Many men refuse to take them, and others start but soon stop. But for offenders committed to going straight, they seem to cut recidivism. + +Some paedophiles beg for drugs and experience the loss of their sex drive as a blessed relief, says Don Grubin, a forensic psychologist who is overseeing a British drug-treatment programme. But drug therapy will only suit about one in 20 offenders, he thinks: those with very high sex drives and obsessive thoughts focused exclusively on children. + +In 1972, and again in 1984, Wayne Bowers, a Michigander who runs CURE-SORT, a small charity that seeks to cut child-abuse, was convicted for molesting young boys. Before his second jail term he joined a programme for sex offenders at the Johns Hopkins sexual disorders clinic in Baltimore. The anti-androgens they prescribed helped, he says: “I still knew the attraction, but didn’t feel aroused.” That allowed him to benefit from group-therapy sessions, where he learned to think about his actions from the child’s point of view and to stop justifying his behaviour. + +Many countries offer libido-lowering drugs to convicted sex-offenders who volunteer for them. Some parts of America, Australia and Europe go further by making such treatment mandatory, perhaps as a condition of parole. That may seem an obvious solution—but it is worse than ineffective. Since child-molesters are often driven less by sexual impulses than by a need for intimacy or control—or by sadism—a man forced to take drugs that affect his body and self-image may respond with rage and become more dangerous. + + + +Germany is one of the few countries that tries to treat all paedophiles, even those not in trouble with the law. Its criminologists refer to crimes unknown to the authorities as the Dunkelfeld (dark field); for many types of crime this is much larger than the obverse Hellfeld (light field). This is particularly true of child-abuse. + +Prevention Project Dunkelfeld, which runs at 11 clinics nationwide, gives confidential treatment to people troubled by sexual desires for children below or in the early stages of puberty. A national television-advertising campaign urges them to get in touch. “No one is guilty because of their sexual inclination,” it says. “But everyone is responsible for their behaviour.” Half the men it has accepted for treatment for paedophilia or hebephilia had never been accused of abusing a child, and said they had never done so. + +Strict German laws about doctorpatient confidentiality mean that those who contact Project Dunkelfeld can be sure they will not be reported to the police. That means therapists may be remaining silent about ongoing abuse, or evidence that someone with access to children has a history of offending. Critics—a few in Germany and more abroad—find that too much to stomach. But supporters say that therapists would surely never have received such evidence were it not for that confidentiality, and that untreated paedophiles are more likely to offend. + +That such arguments are not merely hypothetical can be seen from the experience of Johns Hopkins, where Mr Bowers was treated in the 1980s. During the following decade state laws were passed requiring police to be told of child-abuse disclosed during treatment. The rate of self-referrals to its sex-offenders’ programme fell from about seven a year to zero, and patients also stopped disclosing previously unknown offences. A paper published in 1991 concluded that no children were being protected as a result of the law, and that therapy was probably made less effective. + +Many countries now require any suspicion of child-abuse to be reported, under pain of criminal sanctions. Laura Hoyano, a lawyer at Oxford University who specialises in child-abuse and exploitation cases, has studied such laws—and concluded that they, too, have done little or nothing to protect children from abuse. Investigations into scandals in churches, schools and children’s homes have found that many people had suspicions, but said nothing—even in places with mandatory-reporting laws. The failure to speak out stemmed from a desire to protect institutions’ reputations, or fear of retribution. Strong protection for whistle-blowers, says Ms Hoyano, is at least as important as a duty to report. + +Mandatory-reporting laws have had perverse consequences, too. Police and social services have been swamped. A report in 2013 in Queensland, Australia, which requires reporting of “reasonable suspicion” that a child is, or is at risk of, being harmed, found that in the previous year reports were made about 71,928 children—7% of all those in the state. More than three-quarters related to suspicions so vague or minor that they did not meet the threshold for notification. Only 6,974 reports were substantiated. The report concluded that innocent families had been harmed by the unavoidably intrusive investigations. + +Mandatory-reporting laws may also make victims less likely to seek help. Children are often kept silent by their assailants saying that if they tell anyone, the authorities will find out and put them in care. Britain has no mandatory-reporting laws, but professional guidelines mean teachers cannot promise a child confidentiality. “For me that is one reason that some children don’t tell,” says Mr Findlater of Stop it Now UK. + +Typically, says Mark Rosenberg of the Task Force for Global Health, an American charity, someone else knows about or at least suspects the abuse, but keeps quiet. They may shy away from bringing disgrace on the family—or struggle to reconcile the image of the demonic child-abuser with someone they know and even love. “People won’t reach out if they think that only monsters molest kids,” says Jenny Coleman of Stop it Now USA. + +There go I + +According to Mr Nickerson, people opposed to any attempt to understand or treat paedophilia often say: What if your child was a victim? “I understand this, but let’s reverse it,” he says. “What if your son or daughter came to you one day and said, ‘I have to tell you something—I think I may be a paedophile.’ Would you advocate some of the policies you now advocate if it was your child who was dealing with this unfortunate sexuality?” Children, too, would be better protected by greater understanding and by help for those who might otherwise harm them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21704795-understanding-sexual-attraction-children-essential-if-they-are-be-kept/print + + + + + +Articles Sections Next + + + +Business + + + + + +The other side of Warren Buffett: Don’t Buff it up + +Airlines and technology: All systems stop + +PSA Group: Peugeot rallies + +Walmart buys Jet.com: Boxed-in unicorn + +The Berlusconis’ shrinking empire: Things fall apart + +Live-streaming: Amateur’s hour + +The tourism industry: Nothing to see here + +Schumpeter: Revenge of the nerds + + + + + +Articles Sections Next + +The other side of Warren Buffett + +Don’t Buff it up + +An investing hero is not a model for how to reform America’s economy + +Aug 13th 2016 | From the print edition + + + +WARREN BUFFETT has long dabbled in politics. In the mid-1970s he developed a taste for exclusive Washington dinner parties. In the 1980s he spent a weekend being Ronald Reagan’s golf partner. He helped Arnold Schwarzenegger become the governor of California in 2003 and in 2008 John McCain and Barack Obama both hinted that they would like Mr Buffett to become their Treasury secretary. + +This year America’s most famous investor has spoken out loudly on political affairs—aged a liberating 85 and with a left-leaning credo. The latest of his annual letters to investors, which usually confine themselves to folksy jokes and dissections of insurers’ reserve ratios, has a passionate repudiation of the bleak national mood. “For 240 years it’s been a terrible mistake to bet against America,” it declares. On August 1st Mr Buffett was on stage with Hillary Clinton in Omaha and laid into Donald Trump’s character and business record. + +If the intensity of Mr Buffett’s interventions has risen over time, so has the seriousness with which they are taken. This partly reflects his financial clout. Berkshire Hathaway, his investment vehicle, is worth $363 billion and is the world’s sixth-most-valuable firm. He is at least 20 times richer than Mr Trump. It also reflects Mr Buffett’s popularity: 40,000 people attended Berkshire’s annual meeting in April, compared to 5,000 two decades ago. Since the death of Steve Jobs, the boss of Apple, Mr Buffett has become the lone hero of big business in America. He stands for the promise of a nostalgic, fairer kind of capitalism. + +But Mr Buffett is not as saintly as he makes out. He has to act in his own interests, and he does so legally, but if all companies followed his example America would be worse off. An example is his oft-expressed sympathy for workers. In 2013 Berkshire partnered with 3G, a Brazilian buy-out firm renowned for swinging the axe at acquired firms. Since 3G engineered the merger of Kraft and Heinz (Berkshire owns 27% of the combined firm) last year, staff numbers have dropped by a tenth. + +Last year a hedge-funder, Daniel Loeb, attacked what he called a disconnect between Mr Buffett’s words and his actions. “He thinks we should all pay more taxes but he loves avoiding them,” he said. Mr Loeb was right: Berkshire’s tax payments have shrunk relative to its profits. Last year the actual cash it paid to the taxman was equivalent to 13% of its pre-tax profits—this is probably the fairest measure of its burden—making it one of the lightest taxpayers among big firms (see chart). + + + +Mr Buffett is a vocal critic of Wall Street, but during the crisis of 2008 he stepped in to support Goldman Sachs. Berkshire was a core shareholder in Moody’s, a credit-rating agency at the heart of the subprime debacle. And the group has a big financial-services business of its own, mostly active in insurance, with $250 billion of assets, as well as 10% of Wells Fargo, America’s largest bank (by market value). This portfolio has escaped being classified as systemically important by national regulators. + +Mr Buffett often expresses strong views on how firms are run; he joined 12 other prominent bosses last month to demand better governance. One recommendation was that corporate accounts should follow generally accepted accounting principles (GAAP). But Berkshire encourages investors to use its own performance methodology, based on the concept of “intrinsic value”. Mr Buffett’s first wife was on Berkshire’s board until her death in 2004, and his son may become its next chairman. + +Such inconsistencies are inevitable in a long and vigorous business life. But there is another problem with Mr Buffett: his fondness for oligopolies. After being disappointed by returns from textiles in the 1960s and 1970s, and then by shoe manufacturing and airlines, he concluded his firm should invest in “franchises” that are protected from competition, not in mere “businesses”. In the 1980s and 1990s he bet on dominant global brands such as Gillette and Coca-Cola (as well as Omaha’s biggest furniture store, with two-thirds of the market). Today Berkshire spans micro-monopolies such as a caravan firm and a prison-guard uniform maker, and large businesses with oligopolistic positions such as utilities, railways and consumer goods. + +As more money has followed his example, America’s economy has become Buffettised. Among investors there is a powerful orthodoxy that you must own stable, focused businesses with high returns and market shares and low investment needs. Managers have obliged. Of America’s top 900 industries, two-thirds have become more concentrated since the mid-1990s. Last year S&P 500 firms reinvested only 45% of the cashflow they generated. Protecting margins and cutting costs is the priority. Economic growth suffers as a result. + +Like Jobs, Mr Buffett seems to be able to create a reality-distortion field around him to deflect criticism. In bookshops, for every copy of Mr Trump’s auto-hagiography, “The Art of the Deal”, or Kim Kardashian’s book of auto-pornography, “Selfish”, there are scores of tributes to a ukulele-playing Nebraskan who reads accounts for fun. And for his investors his career has of course been a triumph, with Berkshire achieving a compound annual return of 21% since 1965, double that of the S&P 500. Parts of Mr Buffett’s approach might benefit society if widely adopted—for example owning shares for long periods. He has been dogged in sniffing out wrong conduct, for example at Valeant, a drugs firm that has run into trouble. His plan to pass on most of his wealth to the Gates Foundation, a charity, is exemplary. + +But he is far from a model for how capitalism should be transformed. He is a careful, largely ethical accumulator of capital invested in traditional businesses, preferably with oligopolistic qualities, whereas what America needs right now is more risk-taking, lower prices, higher investment and much more competition. You won’t find much at all about these ideas in Mr Buffett’s shareholder letters. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21704841-investing-hero-not-model-how-reform-americas-economy-dont-buff-it-up/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Airlines and technology + +All systems stop + +Why big firms like Delta find it so hard to eliminate glitches from their IT systems + +Aug 13th 2016 | From the print edition + +Waiting for an upgrade + +EARLY in the morning of August 8th, streams of bleary-eyed passengers arrived at London’s Heathrow airport, hoping for a smooth ride across the Atlantic with Delta Air Lines, America’s second-largest carrier. But most did not realise they were the first victims of the most disruptive IT glitch that has hit an airline in recent years until they got to check-in desks unable to access their details. The snafus—caused by a computer outage 4,000 miles away in Delta’s Atlanta HQ—prompted the airline to cancel more than 2,000 flights, delay several hundred thousand passengers’ journeys, and in some places go back to printing boarding passes on dot-matrix machines fit to be museum pieces. + +The chaos highlights how vulnerable big firms are to their IT systems crashing. Delta initially blamed its electricity supplier for the outage. But the airline’s chief operating officer, Gil West, later admitted that a malfunctioning power-control system at its data centre was really to blame. The 22-year-old piece of kit started a small fire, knocking out its primary and backup systems. Either way, unable to access customer records or to compile passenger lists ahead of aircraft take-offs to meet security requirements, the entire airline ground to a halt for around five hours. + +Such accidents can happen, even to an company such as Delta whose systems were thought by aviation analysts to be better than those of its rivals. Only last month Southwest was forced to cancel 2,300 flights because of a faulty router that brought its systems down for 12 hours. Last September American Airlines suspended flights for several hours from Dallas/Fort Worth, its largest hub, after a similar glitch. And since the merger of United and Continental in 2010, their tacked-together IT systems have failed regularly. + +What is more surprising is that it took Delta so long to get its computers running again. It has lately spent hundreds of millions of dollars on IT upgrades. But airlines’ systems are hugely complex beasts. If data is not properly backed up, for instance, it can take days to reload and make sure hundreds of connected subsystems work. “Technology is like painting a bridge. Work is never done,” Delta’s chief information officer, Rahul Samant, said in June. + +One reason for the complexity is that airlines were early adopters of computerised systems. They built their first electronic reservation systems in the early 1950s; Delta’s current system once belonged to a defunct airline that went bust in 1982. But as airlines merged and more new functions were added—from crew scheduling to passenger check-in and bag tracing—they have come to resemble technological hairballs in which one small problem quickly spirals into bigger ones that even experts struggle to disentangle. + +Airlines are not the only firms plagued by such problems. Banks, too, were among the first companies to invest in IT. And they too grapple with systems cobbled together over decades. When RBS, a British bank, tried to upgrade its systems in 2012, a malfunction left many thousands of customers without access to their accounts. + +Yet bosses in both industries say they are reluctant to replace their systems. For an airline, it would cost billions of dollars and take five years to do. Worse still, no single IT firm has the skills to provide all the software needed for a complete replacement. With the average tenure of airline CEOs so short, the risks of such a project going wrong outweigh the benefits. It is hard for any firm to entirely eliminate IT glitches; for many it simply isn’t worth it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21704842-why-big-firms-delta-find-it-so-hard-eliminate-glitches-their-it-systems-all-systems/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +PSA Group + +Peugeot rallies + +A remarkable recovery at a French carmaker may be difficult to sustain + +Aug 13th 2016 | PARIS | From the print edition + + + +CARLOS TAVARES, appointed to run PSA Group two years ago after a bail-out by China’s Dongfeng Motor and the French government, once claimed that he would rather have pursued a career as a racing driver than as a businessman. Motorsport is a pastime he still pursues, and his racing mentality has seemingly rubbed off on the car company he now steers. PSA Group, the parent firm of Peugeot and Citroën, which was loss-making and on the brink of bankruptcy two years ago, has made a surprisingly rapid recovery. + +Cost cutting and streamlining manufacturing have boosted profits, revenues and margins. After averaging around 1% for more than a decade, profit margins before interest and taxes reached 5% in 2015 and 6.8% in the first half of 2016. In the ruthlessly competitive mass market, those are outstanding numbers. PSA’s recent five-year plan, “Push to pass” (named after an engine-boost button that aids overtaking), envisages margins of 6% by 2021, and revenue growth that will outstrip years of slow expansion. This now appears unambitious. + +Mr Tavares regards too much time spent in head office away from the factory floor as “poison”, and his approach has worked well. His hands-on improvements to operations have been impressive. Yet there are limits to what more can be done by slashing costs and improving efficiency. + +Most analysts see the firm as too Eurocentric and too small. Its reliance on its home continent, where it sells two-thirds of its cars, was once judged a crippling weakness. It is true that Europe has been buoyant of late, and PSA has been insulated from the problems besetting rivals that rely on Brazil, Russia and other turbulent emerging markets. But car-buying in Europe may have reached another peak. Sales in China, a big source of profits, are slowing down, so PSA hopes to expand in Asia, Africa and the Middle East. + +But even if the company can expand in the right markets, it will not do much to address its other problem, which is a lack of overall scale. The prevailing wisdom is that bigger is better, and PSA is much smaller than its competitors, turning out just 3m vehicles annually. + +Little is certain about the future of the car industry except that the cost of preparing for it will be exceptionally high. An emissions scandal at VW is likely to mean tougher emissions standards; these will require much higher spending to develop compliant engines or electric and hybrid drivetrains. Autonomous-driving technology will cost even more. + +Firms like Toyota, VW and General Motors make around 10m cars a year across which to spread these costs. They can apply real pressure to suppliers. Renault-Nissan recently took a stake in Japan’s Mitsubishi, pushing it closer to the crucial 10m mark. Fiat Chrysler hankers after a merger with anyone willing (and is often touted as a partner for PSA). + +And if a firm has premium marques, as do BMW and Mercedes, it can more easily pass on costs to eager buyers or absorb them with its fatter profits. PSA’s premium brand, DS, carved out from Citroën last year, is still too small to bring this effect. The French company’s lower spending on R&D than its larger rivals also means it will struggle to pack its cars with whizzy features or develop new models in every segment like a truly global carmaker. Mr Tavares concedes that making 10m cars is useful for spreading the industry’s high costs but is less certain that suppliers can be leant upon indefinitely without going bust themselves. He says that he prefers the agility of a smaller carmaker in a “chaotic world”. He has done a good job of steering through the chaos up to now, but he may find that ultimately size is as important as staying fast and nimble. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21704835-remarkable-recovery-french-carmaker-may-be-difficult-sustain-peugeot-rallies/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Walmart buys Jet.com + +Boxed-in unicorn + +Walmart’s acquisition of Jet.com heats up its battle with Amazon + +Aug 13th 2016 | From the print edition + + + +SPENDING $3.3 billion on an unprofitable business might seem an undisciplined splurge. By buying Jet.com, a shopping website, Walmart, the world’s biggest retailer, has joined the ranks of investors betting on so-called “unicorns”, or private startups valued at over $1 billion. The acquisition is the most expensive deal ever for an American e-commerce startup, and a sign of just how worried Walmart executives are by the rise of Amazon. It’s also an admission that despite heavy internal investment, the Bentonville giant’s own site, Walmart.com, is nowhere near enough. + +Walmart still accounts for a tenth of American retail sales, but that has declined from 11.6% in 2009, according to Cowen Group, a financial-services firm. Amazon’s share is about half of Walmart’s, but it is growing fast. Moreover, last year, of every $10 that American shoppers dispensed on goods, $1 was spent online. Even the Walmart faithful are beginning to use Amazon. Last year just over a tenth of Walmart’s customers shopped on Amazon too. + +Online, where the future battle lies, the news for Walmart is scarcely better. Last year its global e-commerce sales increased by 12% to $13.7 billion, compared with a 20% jump to $107 billion of sales at Amazon. At the start of the year Walmart’s e-commerce sales growth slowed to 7%. For its chief executive, Doug McMillon, this may have been a trigger to make a quick acquisition. Amazon’s fast and efficient shipping through Amazon Prime has also proven hard to match, as has its range of products (Amazon is said to offer well over 200m different items, while Walmart.com serves up around 11m). + +Buying Jet.com is unlikely to change the dynamic between the two giants. In technology circles, some view the shopping website as an ugly foal masquerading as a unicorn. It is believed to lose around 30 cents for every dollar of sales it makes (it does not release the figures), because of its alluringly low prices. The more it sells to its customers, the more it loses. Its investors will be glad of the generously priced exit offered by Walmart. + + + +One attraction is Jet.com’s real-time pricing algorithm, which tempts customers with lower prices if they add more items to their basket. The algorithm also identifies which of Jet.com’s vendors is closest to the consumer, helping to minimise shipping costs and allowing them to offer discounts. Walmart plans to integrate the software with its own. Buying this platform makes more sense than trying to develop it internally, says Charles O’Shea of Moody’s, a rating agency. + +Walmart is also buying talent. Jet.com chief executive Marc Lore has e-commerce pedigree. He co-founded Quidsi, the parent company of Diapers.com and Soap.com, among others, which Amazon itself snapped up for $545m six years ago. Mr Lore will now run both Jet.com and Walmart.com. Walmart also desperately hopes that Jet.com will help it attract millennials, a demographic it wants to do better with. Jet.com boasts a base of millennial shoppers which Walmart claims is growing by around 400,000 per month. + +Yet buying online-only Jet.com does not solve another problem that Walmart has, which is how to fuse its e-commerce business with its big-box stores. Nine out of ten Americans live within ten miles of one of its ubiquitous boxes, meaning the firm’s online shoppers can collect their purchases nearby. Walmart says that shoppers who spend both online and in physical stores end up buying more than those who keep to bricks and mortar. But the firm faces two hard truths. First, building an e-commerce business is horribly expensive. Second, as more people shift to shopping online, they may shun Walmart’s vast, neon-lit boxes. This may make the titan of efficiency less profitable and force it to close more stores. It is not unlike the scenario that, not so long ago, Walmart inflicted on small chains of local shops. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21704840-walmarts-acquisition-jetcom-heats-up-its-battle-amazon-boxed-unicorn/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Berlusconis’ shrinking empire + +Things fall apart + +Diminished politically, the Berlusconi dynasty is also losing corporate heft + +Aug 13th 2016 | MILAN | From the print edition + + + +NOT much goes Silvio Berlusconi’s way these days. The billionaire ex-crooner and ex-prime minister has spent two years trying to sell AC Milan, a football club he bought in 1986. But its players have struggled, finishing seventh in Italy’s league last season, and business has slumped. A shadow of its old self, the club last year lost €89m ($99m). Its slide has matched the dwindling fortunes of its owner. + +Finally on August 5th the Cavaliere, as Mr Berlusconi is still known, said Chinese investors Sino-Europe Sports Investment Management Changxing would pay €740m for the club, and take on €220m of its debt. The sale marks a generational turn, as power in Mr Berlusconi’s corporate empire starts to shift towards his children. His eldest daughter, Marina Berlusconi, chair of the family holding company, Fininvest, appears delighted to be rid of AC Milan. The younger Berlusconis will probably prove to be more modest business actors than their father. + +A process of succession is under way. A heart attack in June nearly killed Mr Berlusconi, who turns 80 next month. “He is struggling very much to get his affairs in order,” says François Godard of Enders Analysis, noting that the family has been scrambling to raise cash and pay down debt. In February 2015 Fininvest sold a 7.8% stake in its big television company, Mediaset, for €377m. Fininvest, which just about broke even last year after prolonged losses, vowed in June to “consolidate” leadership in its core business. Streamlining its interests would make sense. It holds 30% of Mediolanum, a financial-services firm, plus 50% of Mondadori, Italy’s largest publishing house. But what really counts is the family’s 34.7% stake in Mediaset, the leading terrestrial broadcaster. + +It’s getting harder to score + +That is run by Pier Silvio Berlusconi, the ex-premier’s bodybuilder son, nicknamed “Dudi”. It has various free-to-air channels but has suffered from weak advertising because of Italy’s economic slump. It seems to be struggling from the loss of a “Berlusconi premium”. A study three years ago by the Centre for Economic Policy Research, a think-tank in London, estimated that Mediaset had previously gained an extra €1 billion in revenues over the years as advertisers tried to please the politically strong owner. That is long gone. + +A Mediaset offshoot now thrives in Spain, but the Italian business appears slow in responding to consumers’ changing internet habits or competing against Sky Italia, part of BSkyB, in winning pay-TV subscribers. Mediaset has been steadily losing value—its market capitalisation is just €3.3 billion, just over €2 billion less than a year ago. The biggest drag is its pay-TV unit, Mediaset Premium, which attracts low-paying subscribers, and has vastly overpaid for TV rights for football matches for the next two seasons. Never profitable, the unit has already lost over €100m in the first half of this year. + +When Mr Berlusconi rode high, some sort of rescue would have been expected. In fact, in April Vivendi, a French media firm led by Vincent Bolloré, a pal of the Cavaliere, agreed in effect to save the division, in exchange for cross-shareholdings of 3.5% between Mediaset and Vivendi. This was touted as a “Latin strategy” to build a Mediterranean pay-TV powerhouse. It made little sense, unless Mr Bolloré dreamed of one day acquiring Mediaset itself, and the terrestrial TV business in which it remains a market leader. In late July the accord fell apart, with Vivendi saying it had noticed that Mediaset’s pay-TV business would take a long time to break even. Fininvest hit back with various accusations against Vivendi and promised to sue. The new generation of Berlusconis has plenty of tidying up to do. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21704843-diminished-politically-berlusconi-dynasty-also-losing-corporate-heft-things-fall-apart/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Live-streaming + +Amateur’s hour + +Aug 13th 2016 | From the print edition + +And the world laughed with her + +A MAN broadcasts via Facebook Live the moment a sniper gunned down five policemen in Dallas. With her dying boyfriend next to her, a woman in a car recounts with stunning composure how just seconds before he was shot by a police officer after a traffic stop in Saint Paul, Minnesota. Citizens live-stream the aftermath of an attempted coup in Turkey. A woman cannot contain her excitement about a mask of Chewbacca, a Star Wars character, she has just bought, earning her 160m views on Facebook (pictured). + +Scarcely a week now passes without the world being treated to the real-time footage of another, sometimes harrowing event, which goes viral. But whether or not live-streaming will be a big money-earner is less obvious than its rising appeal. It was a decade ago that websites such as Justin.TV and Ustream made it possible for anyone with a PC, an internet connection and a webcam to become a broadcaster. Live-streaming’s current, far more user-friendly mobile incarnation emerged early last year, by when wireless data connections were fast enough. And when Twitter (via its Periscope app) and Facebook started offering live-streaming services, the practice went mainstream. + +Yet the fact that providers don’t release much meaningful data suggests its scale may not be so impressive. In March Periscope announced that it had hosted 200m broadcasts since its launch in March 2015 and that 110 years of video were being watched live each day. But it won’t say how many live-streams are created every day or the size of the audience. There are differing views on how big it will become. One take is that it will advance the “videofication” of the internet, in the words of Mark Mahaney of RBC, a bank. More and more online content and advertising, he predicts, will come in the form of moving pictures. Others reckon live-streaming will remain a niche service for people who like to be seen and heard. It is unlikely to become something most people will use every day, such as instant messaging, says James McQuivey of Forrester, a research firm. + +Another open question is how live-streaming apps, and the individuals or small outfits that regularly host streams, can eventually turn a profit. In China, where live-streaming has taken off rapidly, apps such as YY, by far the market leader with 80m viewing hours in April, allow viewers to reward their hosts with virtual gifts, including flowers or sports cars in the form of emoticon-like symbols that move across the screen. These can be traded for real money. Other services let users buy digital tokens to tip performers. + +But such tipping is unlikely to become big in the West. Consumers there are used to getting online content free, and advertising is what pays the bills for most internet firms. But advertisers could shy away from some of the content from live-streaming. They may not want their ads to appear, for instance, in or next to a stream of violent demonstrators. “Live is always scary for advertisers,” says Peter Stabler of Wells Fargo, another bank. + +Live-streaming services will have to think hard about what they can show. At some point, the video from Minnesota became “temporarily inaccessible” before re-appearing. According to Facebook, this was down to a technical glitch, but it triggered a heated debate about the firm’s responsibilities as a host of citizen journalism. In China, regulators have laid down the law: eating bananas in a “seductive” fashion, for instance, is now banned. + +Facebook has agreed to pay more than a hundred media companies, including the New York Times and BuzzFeed, and assorted celebrities, to create advertiser-friendly live-streams. Payouts agreed to date are estimated to exceed $50m, but publishers say they have yet to figure out what gets people to watch live—other than political speeches, sports and porn. Over time, after a period of experimentation, live-streaming should find its place in the media landscape. But as things stand, it is unlikely to occupy more than a niche. Its main impact may be in politics. Campaign events are now regularly live-streamed. Perhaps one day politicians will be expected to wear a body camera at all times so voters can follow their every step. If you don’t like Trump on Twitter, wait for TrumpTube. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21704850-amateurs-hour/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The tourism industry + +Nothing to see here + +Aug 13th 2016 | From the print edition + + + +OTHERWISE law-abiding citizens confiscating drivers’ keys, kettles that reek of crabmeat, and twenty-somethings unable to afford apartments; these phenomena seem unconnected. Yet locals see a common culprit: tourists. Troublesome tourists are nothing new. “Though there are some disagreeable things in Venice, there is nothing so disagreeable as the visitors,” quipped Henry James. But the volume of tourists in popular destinations is new, as well as the fact that many places are restricting or even banning them. + +From October visitors will be turned away from Koh Tachai island, a snorkelling paradise in Thailand, to save the coral from death by a thousand plastic fins. Sun umbrellas will go from three nearby islands, as they curb tourism too. At the height of summer some 10,000 holidaymakers per day trundle off cruise ships into the alleyways of Santorini, a Greek island. The authorities now have a cap of 8,000 a day. + +In the Seychelles, the government has banned large hotel developments indefinitely. Both Barcelona and Amsterdam have banned construction of new complexes in the city centre to appease locals. That answers a common complaint of residents, which is that the fruits of tourism mostly go to large firms such as hotel groups, not to small entrepreneurs. + +Blocking new Hiltons does little to stop the growth of Airbnb, a room-sharing service, another reason why some destinations have such an influx of visitors just now. Airbnb is making city living unaffordable for residents as well as crowded, many complain. Authorities in Berlin, Barcelona and Iceland have responded with new limits on it. But that is unlikely to satisfy all locals. “Tourist you are the terrorist” can be found spray-painted across a stone wall in Palma de Mallorca. In New Zealand people are confiscating car keys from tourists who (allegedly) drive badly. + + + +This summer in Barcelona, around eight out of ten people on Las Ramblas, a famous street, will be tourists. Many residents say their homes are being “Disneyfied”. The operators of Disneyland might view that as harsh: drunk and naked tourists, a boom in illegal flat rentals, and too many knick-knack shops are bigger problems in Barcelona than in the American firm’s theme parks. The city’s new mayor, Ada Colau, was elected on a manifesto of clamping down on tourists. + +The Chinese come in for particular criticism. One in ten international tourists now comes from China. Seychellois hoteliers are fed up with one of their habits, which is to boil fresh crabs inside the hot water kettles in their rooms. The head of New Zealand’s tourism body admitted last year that the growth in the number of Chinese visitors is higher than it would like. + +Mark Tanzer, head of the Association of British Travel Agents, has warned that without controls, tourists could kill tourism. But local officials will need to tread carefully when putting them in place. Tourism now accounts for nearly a tenth of global GDP, and is a reliable source of growth for many places that would otherwise struggle. In Barcelona it provides 120,000 jobs, and in the Seychelles tourism was almost two-thirds of GDP last year. + +Many problems may in fact be caused as much by inadequate planning by local governments as by a surfeit of day-trippers. They can be slow to build infrastructure that could ease the burden, for instance free public toilets for those tourists who are on a tight budget. Not all are good at crafting rules that protect local ambience without discouraging tourists altogether. They’ll need to get better at it. Vast crowds of visitors may be a new challenge, but it’s one that is here to stay. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21704856-nothing-see-here/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Revenge of the nerds + +Silicon Valley’s geeks are trying to turn themselves into jocks + +Aug 13th 2016 | From the print edition + + + +AS THE new year dawned Mark Zuckerberg informed the world that his resolution for 2016 was to run 365 miles over the coming year—and challenged his legions of Facebook followers to do likewise. Mr Zuckerberg has hit his target, and is now hard at work on his next challenge, competing in a triathlon. This summer he fell off his bike and broke his arm but forges on as best he can. + +Gone are the days when geeks wore shapeless T-shirts to prove that they didn’t care about physical appearances. Now they wear tight tops designed to show off their arms and torsos. Tim Cook, Apple’s CEO, gets on the treadmill by five in the morning. Jack Dorsey, Twitter’s boss, is a fan of squats, push-ups and jogging. Brian Chesky, a co-founder of Airbnb, was once a competitive bodybuilder. Jeff Bezos and Elon Musk both reportedly have “pecs to die for”. + +Why limit yourself to such plebeian gyrations as running, bicycling and weightlifting when you have several billion dollars to burn? Larry Ellison, Oracle’s chairman, races his own yachts and plays tennis to a reasonable standard (he picks up tips from watching the Indian Wells tournament, which he owns). Sergey Brin, Google’s co-founder, pushes his body to the limits in a variety of sports: skydiving, rollerblading, roller hockey, “ultimate Frisbee” and high-flying trapeze. Mr Brin can be found in some surprising poses, walking around his office on his hands, and in some unexpected places, such as trapeze classes at local circuses. + +Vigorous exercise regimes often go hand-in-hand with exotic diets. Mr Zuckerberg once set himself the challenge of eating meat only if he killed it himself, for a year—which, given that he lives in San Francisco and works 60 hours a week, means he was a de facto vegetarian. Mr Dorsey follows a Paleo diet (no gluten, dairy, sugar or alcohol). Nor is the obsession with health confined to a few fanatics at the top. Tech companies expect employees to make full use of amenities such as rock-climbing walls. Even strapped-for-cash startups make sure they have table-tennis tables. The streets of San Francisco are lined, along with the homeless, with gyms offering something called SoulCycle, as well as CrossFit training and Zumba dancing, and restaurants purveying gluten-free this and macrobiotic that. + +Predictably, the nerds are trying to “reinvent” fitness much as they are trying to reboot everything else. They talk about how physical fitness is just another code to be hacked, and festoon their bodies with fitness bands and other measuring devices. They surround themselves with ever more exotic gadgets such as self-balancing unicycles (which are like hover boards but have one wheel rather than two) and aqua-cycles. Alex Debelov, the CEO of Virool, a video advertising platform, has an oxygen-filtering mask to optimise his workouts. + +Equally predictably, the nerds are also trying to reinvent the business of fitness. A former boss of Twitter, Dick Costolo, is building a software platform designed to help people work out together and motivate each other to stay fit. Zepp Labs helps golfers and tennis and baseball players to improve their games by collecting data on their swings using 3-D motion sensors. Strava, a mobile app, allows cyclists and joggers to compete with each other even if they live thousands of miles apart. + +There are two reasons why the tech titans are obsessed with healthy living. One is that the American elite in general has rediscovered the Victorian adage “mens sana in corpore sano”. Being fit sharpens your mind and boosts your energy (though American productivity growth was significantly higher in the days of three-martini lunches and steak dinners). And California has always been at the centre of America’s fitness culture: witness the surfers of San Diego and the bodybuilders of Venice Beach. Drop America’s most ambitious people into the most body-obsessed of its 50 states and a plague of fitness crazes will inevitably follow. + +There is also a more intriguing explanation: the revenge of the nerds. American high schools have always been divided between “jocks” and “nerds”. The nerds excel at academic work. But the jocks excel in all the things that teenagers care about—getting on the football team, winning running races and attracting women. In the early stages of the tech revolution the nerds got their revenge by earning more money than the jocks ever dreamed of. Now they are going further and proving they can beat the jocks at their own game. The athletes can never catch up with the nerds when it comes to algebra or earning power (and indeed many of them run to fat as they get older), but the nerds can become alpha males physically as well as intellectually, particularly when they can afford to hire personal trainers and dieticians. + +All they need is a lobotomy and some tights + +Yet however hard they exercise they cannot extirpate the memories of their high-school years. Chris Anderson, the CEO of 3D Robotics, a drone company, and former editor-in-chief of Wired, argues that would-be alpha nerds are condemned not just to overcompensation but to escalation in their overcompensation. Wind boarding leads to kite surfing which leads to fly boarding. Rollerblading leads to hover boarding which leads to electric unicycling. Unicycling leads to wire walking which leads to trapeze artistry which leads to skydiving. Skydiving leads to flying planes which leads to flying fighter jets which leads to flying spaceships. + +The Silicon Valley fitness craze clearly has a long way to go. But the anxieties that drive it are eternal. Tech billionaires may hone their bodies with high-powered exercise machines and scientifically formulated diets. They may blast themselves into outer space. They may even discover the secret of perpetual youth. But as they float around in outer space, their bodies finely toned, their life-force rejuvenated by the blood of 20-year-olds, their bank accounts swollen from three commas to four, they will still be, in their deepest selves, the puny nerd who cowered, sweating and miserable, before some muscle-bound jock. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21704834-silicon-valleys-geeks-are-trying-turn-themselves-jocks-revenge-nerds/print + + + + + +Previous Articles Sections Next + + + +Finance and economics + + + + + +Europe’s disappearing cash: Emptying the tills + +Buttonwood: Back in fashion + +Pensions: No love, actuary + +The leisure economy: Surfing to success + +Recruitment and inequality: Pandora’s box + +Financial crime: The final bill + +Free exchange: The problematic proposal + + + + + +Articles Sections Next + +Europe’s disappearing cash + +Emptying the tills + +Some Europeans are more attached to notes and coins than others + +Aug 13th 2016 | STOCKHOLM | From the print edition + + + +ONLY tourists pay in cash, says the young barista in Espresso House, a Swedish coffee chain, on Vasagatan in Stockholm. “They don’t understand we don’t use that anymore,” she rolls her eyes, gesturing to the card machine. The contactless “taps” that locals use are much faster, and she frequently runs out of change when foreigners bring large-denomination notes, fresh from the ATM. + +Swedes rarely handle cash; the volume of card payments has increased tenfold since 2000 and only one in five payments—5-7% if measured by value—are made in cash today. In much of northern Europe the situation is similar, with “no cash” signs increasingly popping up in shop windows. But travel south or east and a different picture arises; in Italy 83% of payments are still in cash. Whereas Norwegians made 456 electronic transactions per person last year, Italians made only 67 and Romanians 17, according to the Boston Consulting Group. Most surprising is Germany’s reluctance to dispense with “real money”. Over three-quarters of German payments are still made in cash and “cash only” signs are not that uncommon. + +As countries become richer, they tend to move away from cash on grounds of security, convenience and cost. Consumers may think that cash is free but for banks and retailers it is not; it needs to be counted, bundled, transported, cleaned, replaced, checked for forgery, stored and guarded. Around 0.5-1% of GDP a year is spent on managing cash. Moreover, in a new book, “The Curse of Cash”, the economist Kenneth Rogoff argues that cash in the rich world aids tax evasion and other illegal activities, and that monetary policy would be more effective in a cashless world. Yet some Europeans are far more reluctant to abandon paper and copper than others. + +In the Benelux and Scandinavian countries, banks were early promoters of electronic payments and made it easier (and cheaper) for customers to use cards. In thinly populated Sweden and Norway, maintaining a large branch and ATM network is costly; Swedbank, Sweden’s largest retail bank, has only eight branches that handle cash. Banks also helped to develop mobile-payment technologies, such as MobilePay in Denmark, an app now used on nine out of ten Danish smartphones. + + + +Yet in Germany and much of the south and east, banks have been less proactive. German banks have been much slower to promote electronic and card payments. In Italy relatively few people have bank cards and those who do use them infrequently (25 transactions per debit card per year, compared with 114 in France). This is partly because Italian merchants dislike cards, as banks have tended to charge high fees. To iron out differences between countries, in December 2015 the European Commission capped interchange fees at 0.2% per debit-card transaction and 0.3% for credit cards. + +Scandinavian authorities have helped facilitate card use. In Sweden the installation in cash registers of “blackboxes” that directly send sales data to the tax agency to fight VAT evasion, has helped make cash less attractive. In Denmark paying benefits onto debit cards aided the transition. + +Dimitri Roes, the owner of ‘t Vlaams Broodhuys, a Dutch chain of bakeries, says the decision to become cashless was motivated by security and hygiene. “Bakeries are soft targets for robberies. For a few hundred euros you get a knife in you.” Customers also didn’t like staff touching their croissants after handling coins. Some clients angrily threw their coins across the counter when bakers stopped accepting them, but over 90% didn’t care. + +Culture plays a role, too. Digitally sophisticated Scandinavians may be comfortable buying groceries on their smartphones but a deep-rooted aversion to being tracked—a scar left by the Stasi—lies behind German distrust. A recent survey by PWC revealed that two in five Germans don’t use mobile payments because of concerns about data security (and nearly nine in ten worry about it). When the German finance ministry recently proposed capping cash payments at €5,000, as in some other countries, Bild, a daily newspaper, organised a reader protest. + +Italians were equally enraged when a cap on cash payments over €1,000 was introduced in 2011. Matteo Renzi, the prime minister, last year loosened it to €3,000. Mr Rogoff thinks weak governance in countries such as Italy and Greece is largely to blame for high rates of tax evasion and other crime, and consequent hefty holdings of cash. Practices such as paying part of salaries in cash-stuffed envelopes are deeply rooted. + +Despite such slower progress, Andreas Pratz of AT Kearney, a consultancy, thinks that once a country reaches 100 point-of-sale card transactions per person per year, people realise they can survive without cash. As the share of transactions made in cash falls, their overall costs increase. Panteia, a research firm, estimates that in the Netherlands the average cost per cash payment grew from €0.22 to €0.25 between 2009 and 2014 and the cost per pin payment dropped from €0.21 to €0.19. + +Of course there are downsides to moving away from cash. Installing card machines can be costly. The poor, many of whom lack bank accounts, would need to be included. Concerns about losing anonymity are legitimate. And cash has always been the obvious contingency in case systems break down. + +But the advantages of cashless commerce grow ever more apparent. Back in Stockholm, at the Radisson Waterfront hotel, two American seniors bicker over who will fetch “local money” so they can get a taxi. If only they knew that cabbies here prefer cards and only 7% of Taxi Stockholm’s payments are made in cash. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21704807-some-europeans-are-more-attached-notes-and-coins-others-emptying-tills/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Back in fashion + +Emerging markets are popular with investors again + +Aug 13th 2016 | From the print edition + + + +EMERGING markets are back. The stockmarkets of developing countries have flipped in and out of fashion over the past 20 years as investors have switched from naive enthusiasm about their long-term growth prospects to heightened concern about their riskiness. This year they are once again in style, having generated a return of more than 13%. + +That is an abrupt change of mood from 2010-14, when the markets were about as popular as a drug tester at a Russian athletics event (see chart). During those years, investors seemed to focus entirely on the negatives. The growth rates of many emerging economies, even China, seemed to falter. Commodity producers were hit by a decline in raw-materials prices. Political worries resurfaced about previously popular investment destinations, such as Brazil and Turkey. + +Eventually, however, markets tend to fall far enough that they reflect all the bad news. Robeco, a Dutch fund-management group, reckons that emerging markets trade at a 30% discount to rich-world equities, in terms of their prospective price-earnings ratio (the next year’s profits, relative to the share price). + +And there may be good news on the economic fundamentals. In its April forecast, the IMF predicted a modest uplift in emerging-market GDP growth this year to 4.1% (from 4% in 2015) and a more vigorous rebound in 2017 to 4.6%. In particular, two troubled economies—Brazil and Russia—are expected to stop shrinking next year. After a long period of decline, emerging-market exports are showing signs of stabilising; in volume terms, they rose by 3% in May, compared with the same month a year earlier. + +Although the oil price has been weak in recent weeks, raw-materials prices in general seem to have stabilised this year, an important factor since many developing countries are commodity producers. + +As a result, investors are starting to recover their enthusiasm. The monthly survey of fund managers by Bank of America Merrill Lynch shows that most had a lower-than-normal exposure to emerging markets from 2013 onwards. Since May, they have shifted to a higher-than-normal weighting, although their optimism is nowhere near the levels seen before the financial crisis of 2008. + +Emerging markets are also benefiting from the search for a decent return. With cash rates at close to zero or below in many economies, and trillions of dollars worth of government bonds trading on a negative yield, investors are willing to take some risk. As a result, emerging-market currencies and government bonds have also rallied this year. + +Historically, the most dangerous time for emerging markets is when investors’ enthusiasm for the sector is highest and when it trades at a premium, in valuation terms, to the developed world. Neither caveat applies at the moment. + +Still, investors should beware the naive belief that, because emerging markets are growing faster than advanced economies, they must be a better bet. A study by Elroy Dimson, Paul Marsh and Mike Staunton of the London Business School found that, from 1900 to 2013, there was actually a negative correlation between economic growth per person over five-year periods and inflation-adjusted equity returns. + +One reason for the anomaly is that a country’s stockmarket is not a facsimile of the domestic economy; many companies are not quoted. Another reason is that minority investors may not get the full benefit of corporate growth. John-Paul Smith of Ecstrat, a consultancy, has been bearish on emerging markets for some time and still argues that there is “very little prospect of a shift in the underlying governance regimes of the major emerging equity markets in a direction that would benefit minority investors”. + +Perhaps the biggest threat to the emerging-market rally would be a Donald Trump presidency. There are direct threats—his plans to leave the North American Free Trade Agreement or his hints about quitting the World Trade Organisation—that would hit economic growth in developing countries. Then there are his foreign-policy pronouncements, including a willingness to disengage from overseas defence alliances. Citigroup, a global bank, thinks that South Korea and Taiwan would be harmed by such a shift, with Russia probably the only beneficiary. + +The erratic nature of Mr Trump’s pronouncements might also lead to a dose of risk aversion among global investors. And emerging markets tend to lose out when investors grow cautious. There is still time for this rally to get derailed. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21704809-emerging-markets-are-popular-investors-again-back-fashion/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Pensions + +No love, actuary + +A report on American pension funds is controversially shelved + +Aug 13th 2016 | From the print edition + + + +WHEN it comes to funding the pensions of their workers, American states and local governments have not been doing a good job. Back in 2000, the average pension plan was fully funded, according to the Centre for Retirement Research (CRR); at the end of 2015, the official funding ratio was just 72%. + +So a report from a pension-finance task force into the way economic principles apply to public pension funds ought to make compulsory reading. But the paper, commissioned by the American Academy of Actuaries (AAA) and the Society of Actuaries (SoA), is not going to see the light of day. That is very disappointing, since the report (a draft of which has been seen by The Economist) highlights how the approach to valuing American public pensions is highly questionable. + +The big costs for pension plans lie in the future, as members retire and benefits are paid. Those costs must be discounted at some rate to the present day so those who run schemes know how much money to put aside. The higher the discount rate, the less money has to be put aside now; American public plans tend to use a discount rate of around 7.5%, based on the investment return they expect to achieve. + +The draft paper points out that this approach is flawed. Indeed, accounting rules don’t allow corporate pension plans to use it. Economic principles suggest that the cost of a benefit does not depend on the assets expected to finance it. A promise to pay a stream of pension payments in the future resembles a commitment to make interest payments on a bond. A bond yield is thus the most appropriate discount rate. But given how low bond yields are, pension deficits would look larger (and required contributions would be much higher) if such a discount rate were used. A discount rate of 4%, for example, would mean the average public pension plan would have a funding ratio of only 45%, not 72%, according to the CRR. + +A more generous accounting approach allows public pension plans to avoid asking taxpayers to stump up more money in the short term. But future taxpayers will bear the burden. As the paper points out, the concept of intergenerational equity requires each generation of taxpayers to pay the full cost of the benefits it receives. + +The ideas in the paper have been circulating among European actuaries for 20 years. But the conclusions are controversial in America; an AAA spokesman said the study “did not meet the editorial and policy standards of our review process”. Pressed for details, the AAA referred to the paper’s “tone and clarity” and cited the wording of a footnote on pension costs. + +It was perfectly within the rights of the actuarial bodies not to publish but they went further. In a memo, Tom Wildsmith and Craig Reynolds, respectively presidents of the AAA and SoA, said that, as the paper was produced by a group set up by them, “we do not think it would be appropriate for members of the task force, as individuals, to take the existing paper and simply publish it somewhere else.” + +The decision angered those who have been working on the paper since 2014, who see the move as censorship. “This is a paper that they didn’t write, they didn’t fund and don’t want to publish,” says Ed Bartholomew, a former banker and one of the authors who worked on a voluntary basis. Jeremy Gold, another of the authors, says the affair illustrates the insularity of the actuarial profession. + +In its defence, the AAA says it has in the past published similar views to those expressed in the report. And the SoA plans to hold a webinar on September 27th, in which the authors can discuss the issue. Still, the two bodies should just allow the report to be published. American public-sector pension deficits are more than $1 trillion, even on the most generous assumptions. This is an issue in which debate should not be stifled. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21704796-report-american-pension-funds-controversially-shelved-no-love-actuary/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The leisure economy + +Surfing to success + +Quality waves create a surge in economic activity + +Aug 13th 2016 | From the print edition + +Breaking good + +BRONZED travellers gaze out over their cocktails as surfers carve up the left-hand breaks on offer in Máncora, Peru. Decades ago Máncora was little more than a somnolent fishing village surrounded by desert. Today it’s a staple of the surfer circuit with a recent swell of luxury retreats. Máncora’s transformation, everyone agrees, owes much to its wave patterns. + +Just how much waves are worth has long interested surfers. Valuing waves can help fight developments like sea walls that threaten to mess up the waves. Surfonomics, pioneered by Chad Nelsen of the Surfrider Foundation, normally estimates waves’ worth by surveying how much surfers splash out on food, drink and lodgings at a particular beach. But global and national valuations of waves have proven more elusive. + +A new paper by a pair of salt-sprayed economists, Thomas McGregor and Samuel Wills of Oxford University, takes a different approach. They study data on wave quality, crowdsourced from picky surfers, and satellite images of night-time light intensity, a handy proxy for economic activity. Areas around beaches with high-quality waves have over time grown brighter and brighter in these satellite images. Beaches with low-quality waves, on the other hand, remain lost in the dark. + +Quality waves bring surfers who need somewhere to sink a cold beer and snooze. Nearby towns also get a boost as surfers roll in for supplies or, for the less talented, medical care. The better the waves are, the greater the surge in economic activity—but only up to a point. The biggest, purest breakers are suitable only for pros (or novices with scant regard for personal safety). + +Waves, it turns out, are no drop in the ocean. High-quality waves, the authors estimate, generate economic activity worth $50 billion per year globally. That’s around $20m annually for each place with good surf. And when surfers discover a great new spot, economic growth in the area can rise by up to three percentage points for the next five years. Good waves also help turn the tide of rural poverty by encouraging the poor to stream into towns to join the surfing economy. + +Developing countries gain the most from serious surf. And with 26,000km of coastline in Africa and 62,800km in Asia, the opportunities are boundless. But good waves alone don’t guarantee an economic boom. According to Messrs McGregor and Wills, to catch the economic benefits, countries need stable politics and a decent business environment. Before squeezing into a wetsuit, policymakers may first need to go on a regulatory diet. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21704592-quality-waves-create-surge-economic-activity-effects-surfers-local/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Recruitment and inequality + +Pandora’s box + +Allowing ex-cons to hide their criminal histories increases racial inequality + +Aug 13th 2016 | From the print edition + + + +WITH budgets under strain, governments across the developed world want to reduce their jail populations. For the first time in decades, America and Europe are now releasing more prisoners than they are locking up. One way to ensure those ex-cons do not wind up back behind bars is to help them find work. But a body of new research suggests one increasingly popular way to promote this has worrying unintended consequences. + +Forcing job applicants to declare they have a criminal record—whether or not it is relevant to the post—allows employers to filter out ex-convicts, it is argued, and prevents them finding the sort of work that would help them stay out of prison. So activists across the world have called for “ban-the-box” laws, which prohibit employers from inquiring about criminal histories prior to job interviews or offers. + +Some 24 states and many municipalities in America have now introduced laws along those lines. They are also gaining favour in Europe. The British government has banned the question for civil-service jobs; the policy was the core of the previous prime minister’s plans to boost racial equality. As black people are more likely than whites to end up with criminal records—five times more likely in America—banning the box should help reduce bias, advocates say. But research suggests otherwise. Instead, such policies encourage racial stereotyping by employers that hinders minority groups from finding work. + +A paper by Jennifer Doleac of the University of Virginia and Benjamin Hansen of the University of Oregon, published on August 1st, looked at the impact of introducing ban-the-box policies on labour-market data from America’s population census. It found that withholding criminal-record data from employers encouraged them to treat certain minority groups as if they were more likely to have criminal pasts. In areas where ban-the-box laws have taken effect, the study found, the probability of being employed has fallen by 5.1% for young, low-skilled African-American men, and by 2.9% for young, low-skilled Hispanic men. Such effects are stronger in areas with lower levels of racism historically, such as those with smaller black populations in the Northeast, Midwest and West. + +Other research backs up this conclusion. Amanda Agan of Princeton University and Sonja Starr of the University of Michigan sent 15,000 fictitious job applications to employers in New York and New Jersey. Before ban-the-box was introduced in these states, white applicants received around 7% more callbacks than similar black applicants. But when the policy took effect the gap increased to 45%. + +Research by other economists suggests the more information the better when it comes to giving minorities a leg up. A recent paper by Abigail Wozniak of the University of Notre Dame found that employers who were allowed to use drug testing in recruitment were up to 30% more likely to employ black people, and, when they did, pay them more. Another study, by economists at MIT, published in March, found that banning employers from checking the credit records of potential employees reduced black employment by up to a sixth. In short, banning the box alone is a “cheap fix that doesn’t work” as far as promoting racial equality is concerned, Ms Doleac concludes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-economics/21704757-americas-ban-box-laws-are-harming-those-they-are-meant-help-allowing-job/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Financial crime + +The final bill + +The legal storm surrounding banks is largely over + +Aug 13th 2016 | NEW YORK | From the print edition + + + +THE last few drips are spilling from the tap. On August 8th Barclays agreed to pay 44 American states $100m in recompense for its traders manipulating the London Interbank Offered Rate (LIBOR). That followed a Federal Reserve announcement of a $36m payment by Goldman Sachs for the improper receipt of confidential information. Soon JPMorgan Chase is expected to say it will pay $200m to settle allegations it bribed high-ranking Chinese officials by offering internships to their children. + +While these penalties are hardly trivial, they are small compared with what went before. Federal criminal prosecutions of financial firms in America were almost non-existent before the 2008 crisis. They then took off, accompanied by civil litigation, often co-ordinated with state attorneys general, and followed by private lawsuits. + +It is not quite over. Negotiations continue over allegations of foreign-exchange manipulation by a dozen large banks. Barclays will not be the last to settle over LIBOR. But cases tied to three large categories—mortgages, tax evasion and the dodging of sanctions—have largely run their course. Barring a surprise, an era of costly litigation may soon come to an end. + +All told, there have been 188 settlements since 2009, costing $219 billion, according to KBW, an investment bank. Another 278 announced actions are pending a resolution. Eleven firms have paid fines in excess of 10% of their market capitalisation (see chart), with Bank of America having spent the most in absolute terms ($77 billion) and in relation to its net worth (50%). + +These costs have caused banks to change how they act. Some of this is merely form. Candid e-mails have become unacceptable risks. The investigation into JPMorgan’s hiring of interns stemmed from explicit records—favour-granters will now act quietly. + +Global banks once considered much of their value to come from operating everywhere, and particularly in difficult environments. Now, in countries where bribery and shady customers abound, and the cost of compliance to meet these circumstances exceeds the potential for legitimate profits, banks are pursuing “an alternative form of crime reduction—they are pulling out”, says Jennifer Arlen, a professor at New York University. + +Questions have also been raised about how settlement money has been used. No cohesive accounting exists. Many states treated their take as a windfall gain. A congressional hearing in May cited several deals arranged by the Department of Justice that allowed banks to reduce their overall payments in exchange for channelling money to housing advocacy groups supported by the Obama administration, rather than directly to victims. + +The most controversial legacy is the lack of individual accountability. In response to pervasive criticism, the Justice Department formulated a new approach, announced in September by deputy attorney general Sally Yates in a speech at New York University. “Our mission here,” she said, “is not to recover the largest amount of money from the greatest number of corporations; our job is to seek accountability from those who break our laws.” + +Since then, little has happened to illustrate the new approach. It could be too soon; cases can take years to build. The real test may have to come in the next crisis. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21704815-legal-storm-surrounding-banks-largely-over-final-bill/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +The problematic proposal + +Shifts in global-trade patterns are fuelling a new anti-trade fervour + +Aug 13th 2016 | From the print edition + + + +THESE are difficult times for America’s free-traders. Donald Trump has put anger at “globalism” at the heart of his campaign. Even Democrats have turned against the Trans-Pacific Partnership (TPP)—an ambitious new agreement between 12 Pacific-rim countries, and one of Barack Obama’s signature second-term achievements. Hillary Clinton, once a backer, has withdrawn her support, while left-wing activists rail against the deal at every opportunity. The changing structure of global trade is partly to blame for the souring of public opinion. Unfortunately, that evolution will make any new effort to liberalise trade devilishly hard. + +Trade between America and China has grown explosively since 2000, over which time manufacturing employment in America has fallen from just over 17m workers to around 12m, while wages for less-skilled workers have stagnated. In a recent paper David Autor, David Dorn and Gordon Hanson examined the performance of cities where industry was most exposed to Chinese competition. They found depressed wages and labour-force participation and elevated unemployment persisted for a decade or more after rapid growth in trade with China began. Resentment at this experience, and at the perception that too little has been done by American leaders to mitigate these harms, certainly motivates some trade warriors. The wonder, arguably, is that politicians have taken so long to exploit these trends. + +However, polling actually shows that Americans favour freer trade—more so, in fact, than they did a few years ago, when Mr Obama prioritised the TPP negotiations. But the recognition of the value of trade agreements does not extend to acceptance of TPP. Recent surveys find that the majority of Americans are against it. If worker angst and Sinophobia were determining what people think, then you might expect more anger about overall trade but less hostility to TPP, which excludes China. Instead, the public—and even Republicans, now America’s most trade-hostile party—see more opportunity than cost to expanded trade, while at the same time distrusting TPP. + +This odd divergence in opinion may be linked to a globalisation of supply chains. Production of traded goods has become “unbundled”, says Richard Baldwin of the Graduate Institute in Geneva. Firms once tended to design new gadgets and order the supplies needed to build them in a single factory or city. In the past few decades, more efficient global shipping and improvements in communications allowed firms to spread production across far-flung locations: to design a phone in America, source parts from several Asian economies, and assemble it in China. The share of parts and components in trade rose from 22% to 29% between 1980 and 2000. In 2005 trade in “intermediate inputs” accounted for an estimated 56% of trade in goods and 73% in services across rich countries. This dispersion of production chains contributed to a dramatic acceleration in global trade growth. It also changed the way many workers view trade. Where once it meant the choice between Japanese and American gadgetry, it now means iPhones, but built with cheap foreign labour. + +As production has spread around the world, countries have specialised in different segments of the supply chain. While those, such as China, with lots of low-cost labour, focused on manufacturing and assembly, more advanced economies followed a different path. Cities like New York and San Francisco enjoyed an initial advantage in the most lucrative bits of the modern supply chain: research and development, engineering and finance. As a result, growth in supply-chain trade has been a boon for the powerful and profitable firms with headquarters in those cities, and for the highly skilled, well-compensated workers they employ. To the extent that further trade integration is seen as likely to reinforce these trends, TPP helps motivate opposition among red-state Republicans who are contemptuous and suspicious of big, blue-state metropolitan areas, and also among left-leaning Americans worried about inequality. + +Worse still, from a strictly political perspective, is the focus within new trade agreements on stripping away non-tariff barriers. After decades of multinational diplomacy, tariff rates on most goods traded by most members of the WTO are too low to mention. Yet all sorts of obstacles to free exchange remain. Tradable services—in finance, or information industries—are subject to thickets of domestic regulation, for example conditions that must be satisfied before a firm can invest across borders. Simplifying and harmonising such rules should reduce trade costs. But when voters get a peek at such negotiations, they see their government offering to alter domestic standards—to sacrifice autonomy and sell out domestic interests, even—just to help the big firms make a few more bucks. Multinational companies do indeed exercise plenty of influence over what such pacts will entail. Yet even if they did not, the nature of the bargaining would make such dealmaking politically vulnerable. + +What’s in it for me + +America’s lot in this new world is, on the whole, a happy one. Many countries envy its fortunate position as a hub for innovative cities. Most studies of the potential effects of TPP conclude that the deal would raise American output by a small but meaningful amount: just under a percentage point of GDP, perhaps, over the next 15 years. But the obstacles confronting new trade deals are formidable. More generous redistribution, perhaps through an expanded programme of trade-adjustment assistance, could help neutralise some opposition. But discomfort with TPP is mostly rooted in a mistrust of the elite. Voters who are sceptical of the value of TPP will be unlikely to change their stripes without some demonstration that pacts of its kind benefit the many rather than just the few. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21704789-shifts-global-trade-patterns-are-fuelling-new-anti-trade-fervour/print + + + + + +Previous Articles Sections Next + + + +Economics brief + + + + + +Fiscal multipliers: Where does the buck stop? + + + + + +Articles Sections Next + +Fiscal multipliers + +Where does the buck stop? + +Fiscal stimulus, an idea championed by John Maynard Keynes, has gone in and out of fashion + +Aug 13th 2016 | From the print edition + + + +AT THE height of the euro crisis, with government-bond yields soaring in several southern European countries and defaults looming, the European Central Bank and the healthier members of the currency club fended off disaster by offering bail-outs. But these came with conditions, most notably strict fiscal discipline, intended to put government finances back on a sustainable footing. Some economists argued that painful budget cuts were an unfortunate necessity. Others said that the cuts might well prove counterproductive, by lowering growth and therefore government revenues, leaving the affected countries even poorer and more indebted. + +In 2013 economists at the IMF rendered their verdict on these austerity programmes: they had done far more economic damage than had been initially predicted, including by the fund itself. What had the IMF got wrong when it made its earlier, more sanguine forecasts? It had dramatically underestimated the fiscal multiplier. + +The multiplier is a simple, powerful and hotly debated idea. It is a critical element of Keynesian macroeconomics. Over the past 80 years the significance it has been accorded has fluctuated wildly. It was once seen as a matter of fundamental importance, then as a discredited notion. It is now back in vogue again. + +The idea of the multiplier emerged from the intense argument over how to respond to the Depression. In the 1920s Britain had sunk into an economic slump. The first world war had left prices higher and the pound weaker. The government was nonetheless determined to restore the pound to its pre-war value. In doing so, it kept monetary policy too tight, initiating a spell of prolonged deflation and economic weakness. The economists of the day debated what might be done to improve conditions for suffering workers. Among the suggestions was a programme of public investment which, some thought, would put unemployed Britons to work. + +The British government would countenance no such thing. It espoused the conventional wisdom of the day—what is often called the “Treasury view”. It believed that public spending, financed through borrowing, would not boost overall economic activity, because the supply of savings in the economy available for borrowing is fixed. If the government commandeered capital to build new roads, for instance, it would simply be depriving private firms of the same amount of money. Higher spending and employment in one part of the economy would come at the expense of lower spending and employment in another. + +As the world slipped into depression, however, and Britain’s economic crisis deepened, the voices questioning this view grew louder. In 1931 Baron Kahn, a British economist, published a paper espousing an alternative theory: that public spending would yield both the primary boost from the direct spending, but also “beneficial repercussions”. If road-building, for instance, took workers off the dole and led them to increase their own spending, he argued, then there might be a sustained rise in total employment as a result. + +Kahn’s paper was in line with the thinking of John Maynard Keynes, the leading British economist of the day, who was working on what would become his masterpiece, “The General Theory of Employment, Interest and Money”. In it, Keynes gave a much more complete account of how the multiplier might work, and how it might enable a government to drag a slumping economy back to health. + +Keynes was a singular character, and one of the great thinkers of the 20th century. He looked every inch a patrician figure, with his tweed suits and walrus moustache. Yet he was also a free spirit by the standards of the day, associating with the artists and writers of the Bloomsbury Group, whose members included Virginia Woolf and E.M. Forster. Keynes advised the government during the first world war and participated in the Versailles peace conference, which ended up extracting punitive reparations from Germany. The experience was dispiriting for Keynes, who wrote a number of scathing essays in the 1920s, pointing out the risks of the agreement and of the post-war economic system more generally. + +Frustrated by his inability to change the minds of those in power, and by a deepening global recession, Keynes set out to write a magnum opus criticising the economic consensus and laying out an alternative. He positioned the “General Theory” as a revolutionary text—and so it proved. + +The book is filled with economic insights. Yet its most important contribution is the reasoning behind the proposition that when an economy is operating below full employment, demand rather than supply determines the level of investment and national income. Keynes supposed there was a “multiplier effect” from changes in investment spending. A bit of additional money spent by the government, for instance, would add directly to a nation’s output (and income). In the first instance, this money would go to contractors, suppliers, civil servants or welfare recipients. They would in turn spend some of the extra income. The beneficiaries of that spending would also splash out a bit, adding still more to economic activity, and so on. Should the government cut back, the ill effects would multiply in the same way. + +Keynes thought this insight was especially important because of what he called “liquidity preference”. He reckoned that people like to have some liquid assets on hand if possible, in case of emergency. In times of financial worry, demand for cash or similarly liquid assets rises; investors begin to worry more about the return of capital rather than the return on capital. Keynes posited that this might lead to a “general glut”: a world in which everyone tries to hold more money, depressing spending, which in turn depresses production and income, leaving people still worse off. + +In this world, lowering interest rates to stimulate growth does not help very much. Nor are rates very sensitive to increases in government borrowing, given the glut of saving. Government spending to boost the economy could therefore generate a big rise in employment for only a negligible increase in interest rates. Classical economists thought public-works spending would “crowd out” private investment; Keynes saw that during periods of weak demand it might “crowd in” private spending, through the multiplier effect. + +Keynes’s reasoning was affirmed by the economic impact of increased government expenditure during the second world war. Massive military spending in Britain and America contributed to soaring economic growth. This, combined with the determination to prevent a recurrence of the Depression, prompted policymakers to adopt Keynesian economics, and the multiplier, as the centrepiece of the post-war economic order. + +Other economists picked up where Keynes left off. Alvin Hansen and Paul Samuelson constructed equations to predict how a rise or fall in spending in one part of the economy would propagate across the whole of it. Governments took it for granted that managing economic demand was their responsibility. By the 1960s Keynes’s intellectual victory seemed complete. In a story in Time magazine, published in 1965, Milton Friedman declared (in a quote often attributed to Richard Nixon), “We are all Keynesians now.” + +But the Keynesian consensus fractured in the 1970s. Its dominance was eroded by the ideas of Friedman himself, who linked variations in the business cycle to growth (or decline) in the money supply. Fancy Keynesian multipliers were not needed to keep an economy on track, he reckoned. Instead, governments simply needed to pursue a policy of stable money growth. + +An even greater challenge came from the emergence of the “rational expectations” school of economics, led by Robert Lucas. Rational-expectations economists supposed that fiscal policy would be undermined by forward-looking taxpayers. They should understand that government borrowing would eventually need to be repaid, and that stimulus today would necessitate higher taxes tomorrow. They should therefore save income earned as a result of stimulus in order to have it on hand for when the bill came due. The multiplier on government spending might in fact be close to zero, as each extra dollar is almost entirely offset by increased private saving. + +Rubbing salt in + +The economists behind many of these criticisms clustered in colleges in the Midwest of America, most notably the University of Chicago. Because of their proximity to America’s Great Lakes, their approach to macroeconomics came to be known as the “freshwater” school. They argued that macroeconomic models had to begin with equations that described how rational individuals made decisions. The economic experience of the 1970s seemed to bear out their criticisms of Keynes: governments sought to boost slow-growing economies with fiscal and monetary stimulus, only to find that inflation and interest rates rose even as unemployment remained high. + +Freshwater economists declared victory. In an article published in 1979 and entitled “After Keynesian Economics”, Robert Lucas and Tom Sargent, both eventual Nobel-prize winners, wrote that the flaws in Keynesian economic models were “fatal”. Keynesian macroeconomic models were “of no value in guiding policy”. + + + +These attacks, in turn, prompted the emergence of “New Keynesian” economists, who borrowed elements of the freshwater approach while retaining the belief that recessions were market failures that could be fixed through government intervention. Because most of them were based at universities on America’s coasts, they were dubbed “saltwater” economists. The most prominent included Stanley Fischer, now the vice-chairman of the Federal Reserve; Larry Summers, a former treasury secretary; and Greg Mankiw, head of George W. Bush’s Council of Economic Advisers. In their models fiscal policy was all but neutered. Instead, they argued that central banks could and should do the heavy lifting of economic management: exercising a deft control that ought to cancel out the effects of government spending—and squash the multiplier. + +Yet in Japan since the 1990s, and in most of the rich world since the recession that followed the global financial crisis, cutting interest rates to zero has proved inadequate to revive flagging economies. Many governments turned instead to fiscal stimulus to get their economies going. In America the administration of Barack Obama succeeded in securing a stimulus package worth over $800 billion. + +As a new debate over multipliers flared, freshwater types stood their ground. John Cochrane of the University of Chicago said of Keynesian ideas in 2009: “It’s not part of what anybody has taught graduate students since the 1960s. They are fairy tales that have been proved false. It is very comforting in times of stress to go back to the fairy tales we heard as children, but it doesn’t make them less false.” + +The practical experience of the recession gave economists plenty to study, however. Scores of papers have been published since 2008 attempting to estimate fiscal multipliers. Most suggest that, with interest rates close to zero, fiscal stimulus carries a multiplier of at least one. The IMF, for instance, concluded that the (harmful) multiplier for fiscal contractions was often 1.5 or more. + +Even as many policymakers remain committed to fiscal consolidation, plenty of economists now argue that insufficient fiscal stimulus has been among the biggest failures of the post-crisis era. Mr Summers and Antonio Fatas suggest, for example, that austerity has substantially reduced growth, leading to levels of public debt that are higher than they would have been had enthusiastic stimulus been used to revive growth. Decades after its conception, Keynes’s multiplier remains as relevant, and as controversial, as ever. + +LATER IN THIS SERIES: + +• The Nash equilibrium + +• The Mundell-Fleming trilemma + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economics-brief/21704784-fiscal-stimulus-idea-championed-john-maynard-keynes-has-gone-and-out/print + + + + + +Articles Sections Next + + + +Science and technology + + + + + +Hybrid cars: At last, the 48 show + +Anthropology: No hard feelings + +Graphene-based electronics: Bugs in the system + + + + + +Articles Sections Next + +Hybrid cars + +At last, the 48 show + +Upping the volts will make hybrid cars much cheaper + +Aug 13th 2016 | From the print edition + + + +VOLTAGE is to electricity what pressure is to water: the more you have of it the more oomph you get. That is why electrical power lines work at high voltage. In the 1950s carmakers needed extra oomph of this sort to start the powerful high-compression engines then being introduced, so they increased the voltage of their vehicles’ electrical systems from six to 12. Now voltages are going up again—to 48. + +One reason is that cars are packed with more and more components, demanding more and more electrical power. A modern vehicle may have as many as 150 electric motors. But there is a second reason for the increase, too. Extra voltage lets engineers design cars in novel ways that boost engine output and efficiency. This can be used to make hybrids on the cheap (some people call them “mild hybrids”). These employ a combination of electric motors and combustion engines to cut both fuel consumption and polluting emissions. + +The first production car to use 48 volts is the SQ7, a new luxury sports-utility vehicle made by Audi, a German firm that is part of the Volkswagen Group. It is not a hybrid, but it employs an electrically driven 48-volt turbine to force extra air into the engine when a spurt of power is needed. This provides a faster response than a turbocharger, which is operated by the vehicle’s exhaust gases. The car also has a 48-volt active suspension. Again, this improves response time, permitting faster action from the electric motors that control how the vehicle rolls on corners. + +The hybrid possibilities of high voltage are shown by an experimental Ford Focus being put through its paces by the Advanced Diesel-Electric Powertrain (ADEPT) consortium, in Britain. ADEPT, which includes Ford itself, Ricardo, an engineering consultancy, the University of Nottingham and others, uses 48 volts to power components ranging from the water pump to an electric turbine. One of the test vehicle’s most important features, though, is its water-cooled starter. Many cars use stop-start technology, which saves fuel by switching the engine off when the vehicle is stationary. To reignite as soon as the driver is ready to move off again requires a powerful, fast-acting starter. Twelve-volt starters can struggle, particularly when attached to heavier diesel engines. + +Hybrid vigour + +Improving stop-start performance is, however, only part of the picture. During braking the starter can act as a generator to recover a vehicle’s kinetic energy—a crucial feature of hybrid technology. Here, 48-volt circuitry’s energy-handling oomph helps again. In this case it comes from a lead-carbon battery, which can charge and discharge faster than the lead-acid variety used for standard 12-volt systems. Both the Focus and the SQ7 use 12-volt systems as well, and so require two batteries (the Audi’s 48 volts come from a lithium-ion battery). Secondary 12-volt systems are likely to remain for less demanding devices, such as lighting and stereos, until production volumes increase sufficiently for more parts of a car to migrate to 48 volts. + +The Focus, though, has one more important trick. It can draw on some of the 48-volt battery’s power for “torque-assist”, in which the starter acts as a supplementary motor, helping the car accelerate. This not only gives a better ride, it also makes the car less polluting by reducing emissions, including nitrogen oxides. + +These gases, known collectively as NOX, are created by the heat-driven reaction together of air’s two principal components, nitrogen and oxygen, during combustion. NOX emissions both cause and aggravate respiratory diseases. Paradoxically, they can be the product of what is normally a good thing, a lean-burning, efficient engine. In demanding driving conditions, such as periods of acceleration, lean-burning engines can burn a bit too lean. That means less fuel than is ideally required is supplied to their combustion chambers. Since one of fuel’s side-effects is to cool the engine, this can cause the engine to heat up and thus encourage NOX formation. By helping turn the engine during acceleration, torque-assist stops this over-lean running, thus reducing emissions of NOX. + +There are yet more things a higher voltage can provide, says Nick Pascoe, the boss of Controlled Power Technologies, an ADEPT member that makes the Focus’s starter. One is coasting. Once a car is cruising at a constant speed, torque-assist alone might be enough to keep it there. Moreover, it allows smaller engines to be used. A turbocharged 1.5-litre engine today can already produce power equivalent to that of an older 2-litre unit. With 48 volts the same power would, according to Mr Pascoe, be available with just a 1-litre engine. On top of this, instead of using an automatic gearbox stuffed with all the gubbins for nine speeds, as some now are, a car could have fewer gears and use torque-assist to fill the gaps. Smaller engines and gearboxes save weight, and would therefore reduce fuel consumption and associated emissions. + +Exactly how well ADEPT’s Focus performs will be announced soon, but it is expected to cut fuel consumption by 10-12% compared with even the most frugal cars in its class. In volume production the 48-volt systems it runs on would be significantly smaller and cheaper than those needed to build full hybrids, which use large and costly battery packs. When it comes to better fuel economy and lower emissions, some in the car industry reckon mild hybrids could yield 70% of the benefits of a full hybrid (even as those cars switch to 48 volts) at 30% of the cost. + +Most carmakers and their suppliers are now working on 48-volt systems. Delphi, a Michigan-based group that is one of the world’s largest suppliers of automotive parts, thinks mild hybrids could cut CO2 emissions by 15-20%. Delphi expects that, by 2025, one in every ten cars sold around the world will be a 48-volt mild hybrid. Upping the volts, then, will make motoring much greener. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21704778-upping-volts-will-make-hybrid-cars-much-cheaper-last-48-show/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Anthropology + +No hard feelings + +Reconciliation after competition is more a masculine than a feminine trait + +Aug 13th 2016 | From the print edition + +What’s a grand-slam championship between friends? + +MEN have a long history of fighting with one another for dominance, but why such duels did not leave tribal unity in tatters and warriors less capable of working together to fend off attacks from predators and hostile clans remains a mystery. One common theory is that men more readily make up after fierce physical conflicts than do women. And an experiment run recently at Harvard University, by Joyce Benenson and Richard Wrangham, and published in Current Biology, suggests this may be true. + +Tribal contests like Yanamamo clubbing duels, in which men take turns bashing each other on the head until one surrenders or is knocked out, were not regarded as suitable for the Harvard campus. The researchers speculated, however, that less lethal competitive sports could stand in for such pursuits, given that they are standardised, aggressive and intense confrontations which take place in front of an audience. + +To this end, they collected 92 videos of male championship tournaments in tennis, table tennis, badminton and boxing, and 88 videos of female tournaments in these sports. Altogether, athletes from 44 countries were involved. Participants in the sports in question are expected by convention to make (peaceful) physical contact after the competition—by shaking hands after the racket sports or by embracing after boxing. Dr Benenson and Dr Wrangham timed these contacts, which they predicted would last longer in men than in women, and also recorded any spontaneous follow-ups, such as embraces after racket sports, arm-touching and pats on the back, which they predicted would be more common in men than in women. + +On both counts they were right. Men made post-match physical contact for longer in all of the sports. In tennis, the male median contact time was 1.4 seconds while the female median was 0.8 seconds. In badminton it was 1.1 seconds for men and 0.8 seconds for women. In table tennis it was 0.6 seconds for men and 0.3 seconds for women. Boxing—the sport closest to real fighting—showed the greatest difference. Males made contact for 6.3 seconds after a bout. Females did so for 2.8 seconds. + +Men also engaged in more touching after the handshake or post-boxing embrace. In tennis 42.5% of the matches between men concluded with the winner touching the loser’s arm or body in addition to the handshake, while only 12.5% of women’s matches ended this way. Ping pong showed similar results, with 33% of the male matches involving additional physical contact between the competitors while female matches showed none. (The high net in badminton and the many individuals interacting with fighters after boxing bouts made it impossible to monitor post-handshake contact in those sports.) + +These results do not prove the hypothesis Dr Benenson and Dr Wrangham are testing, but they do support it. And such male bonding may go back a long way into the evolutionary past: similar differences between the sexes in post-conflict reconciliation have been seen in chimpanzees. Whether that means women are leaving the field of battle with more of a grudge than that borne by menfolk is a question for another experiment. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21704779-reconciliation-after-competition-more-masculine-feminine-trait-no-hard/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Graphene-based electronics + +Bugs in the system + +Bacteria may be the key to turning graphene into a semiconductor + +Aug 13th 2016 | From the print edition + + + +SINCE its discovery in 2004 graphene, a form of carbon made of sheets a single atom thick, has been an invention in search of an application. In particular, it has fired engineers’ imaginations with the possibility of making thin, flexible, semi-transparent electronics. But it has always promised more than it has delivered because, although it is an excellent conductor of electricity, its other electronic properties are lacklustre. First, instead of being easily channelled, electric current moves across a graphene sheet randomly and in all directions. Second, graphene does not have a bandgap—a property needed to create the distinct “on” and “off” electronic states that transistors rely on to work, and which is induced in a material by disrupting the way its electrons are distributed. + +One way to open up a bandgap is to introduce atoms of other elements into a substance. For graphene, however, this reduces the conductivity that is one of its attractive features. Another approach is to modify the atomic sheets’ shapes by, for example, wrinkling them—but existing methods of doing this do not control where the wrinkles form or how they are oriented. + +That is about to change, and in a quite surprising way: by employing bacteria as templates. A team of researchers led by Vikas Berry of the University of Illinois, in Chicago, has found out how to produce wrinkles controllably in graphene, using a bacterium called Bacillus subtilis. + +Bacillus subtilis cells are normally short, plump cylinders with smooth surfaces. If they get dehydrated, though, they shrink. That makes them wrinkle up, much like a grape shrivelling into a raisin. These wrinkles, Dr Berry and his team report in ACS Nano, can be patterned on to graphene. + +The researchers started by placing a droplet of nutrient solution containing Bacillus subtilis onto a chip made of silica that had electrodes at either end. Running a current between the electrodes caused the bacteria themselves to become charged (positive at one end of the cylinder and negative at the other), and thus to line up parallel with the flow of current. + +Next, they placed a sheet of graphene on top of the aligned bacteria and cooked the lot in a vacuum chamber heated to 250°C. This caused the bacteria to dehydrate and shrink, dragging the graphene sheet with them so that it took on the wrinkle patterns of the cells underneath it. + +Crucially, bacteria do not wrinkle at random. Bacillus subtilis cells form wrinkles about 33 nanometres (billionths of a metre) apart—so that was the separation of the ridges imposed on the graphene. Unfortunately, this is too far apart to create a significant bandgap. The ridges do not disrupt graphene’s electronic structure enough. To do that, they would have to be less than five nanometres apart. But Dr Berry thinks such distances might be achieved by using another species of bacterium, one with stronger cell walls—or, perhaps, different sorts of cells altogether. + +Even the 33-nanometre wrinkles, though, give graphene some interesting properties. Instead of zipping randomly across it, electrons traversing a sheet of wrinkly graphene are channelled between the ridges. This suggests that, if the bandgap problem can be resolved, then placing bacteria in preset arrays to create complex channel patterns would be the equivalent of etching a silicon chip. Components like the logic gates which form the basis of computing could thus be created. + +Before that happens, though, two other problems need to be resolved. One is removing the bacteria and releasing the wrinkled graphene. That will mean finding the right chemical to do the loosening. The other is reproducibility. Individual bacteria differ slightly, not least because they are often of different ages, so any product that used unsorted cells as templates would be unreliable. This might be dealt with by cell-sorting techniques, or even by synthesising artificial scaffolds that behave similarly to cells. These, though, are details. The important thing is that Dr Berry has managed to push graphene towards semiconductivity in a novel and intriguing manner. The search for an application for the stuff has taken a step forward. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21704743-bacteria-may-be-key-turning-graphene-semiconductor-bugs/print + + + + + +Previous Articles Sections Next + + + +Books and arts + + + + + +American memoirs: Promises, promises + +America in the 1970s: That’s rich + +New fiction: Irish charm + +World music: Humanity’s heartbeat + +Johnson: Would that it were so simple + + + + + +Articles Sections Next + +American memoirs + +Promises, promises + +Why Donald Trump speaks to so many Americans + +Aug 13th 2016 | From the print edition + + + +Hillbilly Elegy: A Memoir of a Family and Culture in Crisis. By J.D. Vance. Harper; 264 pages; $27.99. + +THE favoured candidate of the white working class in the presidential campaign is a man who travels on his own private aircraft and gives interviews from his penthouse in a building emblazoned with his name in gold letters. When he started out in property it was with a “small loan of $1m” from his father. Among white voters without college degrees, Donald Trump holds a commanding lead over his Democratic opponent, Hillary Clinton. (“I love the poorly educated,” he crowed after one of his many primary victories.) + +How did Mr Trump pull this off? The same way unscrupulous people often succeed: he saw an opportunity and exploited it. White working-class voters felt abandoned by both parties. As unions grew less powerful, Democrats became the party of educated coastal voters and minorities. This divide was cemented by eight years of Barack Obama; white working-class voters attracted by Bill Clinton’s folksy charm were repelled by a black president with a foreign-sounding name and a chilly, cerebral manner. + +Republicans, meanwhile, consistently argued for free trade and deregulation, policies that, whatever their general merits, left some working-class voters still worse off. Meanwhile, coal is in decline and automation has made secure low-skilled manufacturing jobs increasingly rare. Life at the low end of the income scale has grown more tenuous: the inflation-adjusted income of households headed by a non-college graduate fell by 19% between 1999 and 2014. Also during that period, death rates for middle-aged whites without college education crept up, even as they plunged for middle-aged blacks and Hispanics. The cause was not disease, but suicide and the effects of substance abuse. + +Mr Trump has courted these voters as assiduously as he has insulted everyone else. He promises to bring manufacturing jobs back while keeping immigrants out. To minorities, many women and gay Americans, his slogan—“Make America great again”—sounds like a promise to bring back a social order that oppressed them. To white working-class voters, it sounds like the opposite. America’s political system and the white working class have lost faith in each other. J.D. Vance’s memoir, “Hillbilly Elegy”, offers a starkly honest look at what that shattering of faith feels like for a family who lived through it. Not all white working-class voters are rural Appalachians, as Mr Vance’s family is, but the problems he describes are widespread. You will not read a more important book about America this year. + +Mr Vance’s family comes from Jackson, a small town in Kentucky’s coal country. In a culture that prizes toughness and honour, his family was “hillbilly royalty”: his grandmother came from “a family that would rather shoot at you than argue with you”. One day when his grandfather came home drunk, his grandmother, having threatened to kill him if he ever did that again, doused him with petrol and dropped a lit match on his chest. He survived with only minor burns after their 11-year-old daughter put out the flames. Mr Vance’s great uncle once heard another young man make a crude comment about his sister, the author’s grandmother; the man said he wanted to “eat her panties”. Mr Vance’s great uncle forced the young man to do just that—at knifepoint. + +For his family, as in many others like his—ethnically Scots-Irish, rural—“poverty is the family tradition”. In the southern slave economy they were day-labourers and sharecroppers. Eventually many became miners or millworkers. In the 1940s his grandparents, like millions of other poor white Appalachians, left to find better jobs (this overlapped with another mass migration—of African-Americans, out of the rural South to cities in the north, West, Midwest and north-east). The Vances ended up in Middletown, a steel town in south-western Ohio so full of people like them that it was known as “Middletucky”. His grandfather worked in the Armco steel plant, and raised a family on his salary. + +But then things started to go south. Mr Vance’s mother abused alcohol and prescription pills, and had a steady stream of unsuitable male partners; Mr Vance barely knew his father until he was almost in his teens. The relationship lessons he learned from his mother included: “Never speak at a reasonable volume when screaming will do…it’s okay to slap and punch, so long as the man doesn’t hit first; always express your feelings in a way that’s insulting and hurtful to your partner.” Steady jobs for workers without college degrees grew scarce. In the 20th century Appalachians mined the coal and made the steel that built America; in the 21st, however, the divide deepened between Appalachia and the flourishing coasts, and few people in Middletown knew quite how to bridge it. + +Mr Vance figured it out. He joined the Marines, and then graduated from Ohio State and Yale Law School. Today he works at an investment firm in San Francisco and is happily married. What did he have that others didn’t? His grandparents made sure he studied hard; along with his older sister, they gave him some semblance of stability. + +But he also had grit. He refuses the easy consolation of excuses. Addiction may function as a disease, but believing that it is one makes it that much easier to take the next drink or pop the next pill; the user can cede responsibility for his own actions. Government may have let Appalachians down, Mr Vance argues, but government does not make them skip work, smack their kids or turn every disagreement into a blood feud. Mr Vance is a conservative in the oldest and best sense, and his prescription is a bracing tonic for the poison being sold to his people by the pandering huckster seeking the presidency: “We hillbillies must wake the hell up,” he urges. “It starts when we stop blaming Obama or Bush or faceless companies and ask ourselves what we can do to make things better.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21704774-why-donald-trump-speaks-so-many-americans-promises-promises/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +America in the 1970s + +That’s rich + +What the kidnapping of Patty Hearst tells you about 1970s America + +Aug 13th 2016 | From the print edition + +First round + +American Heiress: The Wild Saga of the Kidnapping, Crimes and Trial of Patty Hearst. By Jeffrey Toobin. Doubleday; 371 pages; $28.95. + +ON FEBRUARY 4th 1974, just a couple of weeks before her 20th birthday, Patricia Campbell Hearst was kidnapped from her flat in Berkeley by the so-called Symbionese Liberation Army (SLA). On April 15th she took part in robbing a San Francisco bank deliberately chosen so that its camera would show her face. A month later she fired her machine-gun at a sporting-goods shop in Los Angeles to help an SLA comrade escape pursuit. + +But was Patty Hearst, daughter of one of America’s great media families, really an unwilling urban guerrilla intent only on staying alive? Or had she fallen prey to “Stockholm syndrome”, named after hostages in a Swedish bank siege in 1973 who sympathised with their captors—and become a genuine revolutionary? + +The question is hardly new. Nor is the contrast that Jeffrey Toobin draws, in his new book, “American Heiress”, between the “hopeful” 1960s of flower power and peaceful protest and the “sour” 1970s of Watergate, Nixon, the oil embargo and the continuing Vietnam quagmire. + +Ms Hearst’s trial lawyers sought to present her as a brainwashed innocent, but Mr Toobin does not accept that argument. For him it made sense for Ms Hearst to go along with that particular defence: “Patricia was always a rational actor—with the SLA and now with her lawyers. Even in chaotic surroundings, she knew where her best interests lay.” Hence the importance of her taped statement to a local radio station two months after the kidnapping: “I have been given the choice of (one) being released in a safe area, or (two) joining the forces of the Symbionese Liberation Army, and fighting for my freedom and the freedom of all oppressed people. I have chosen to stay and fight.” + +In retrospect it was a futile fight. Mr Toobin neatly skewers the antics of the SLA, with their noms de guerre (Patty Hearst became “Tania”) and pretentious communiqués signed off with: “Death to the Fascist insect that preys upon the life of the people.” The SLA, a handful of misfits, were led by an escaped convict called Donald DeFreeze, who was also known as Cinque M’tume or Cin. They espoused black power, but Cin was the SLA’s only African- American. However, Mr Toobin acknowledges the influences of other groups that prevailed at the time, such as the Weathermen and the Black Panthers. In 1974 activists set off some 2,044 bombings, claiming 24 lives. + +Ms Hearst, whose prison sentence was commuted by Jimmy Carter and who was later given a presidential pardon by Bill Clinton, chose not to co-operate with Mr Toobin. Was that wise? Mr Toobin has amassed a mountain of detail on Tania and the SLA, including files that he purchased from one of Tania’s SLA comrades. He has put them to good use here, and says he intends to donate them to Harvard Law School, his alma mater. + +As a former lawyer (and now legal analyst for CNN), the author is careful to note that the evidence for and against Patty Hearst’s behaviour is “contradictory”. However, on the tactics of Ms Hearst’s self-promoting lead advocate, F. Lee Bailey, known to the wider world as part of the O.J. Simpson defence team, Mr Toobin pulls no punches: his performance was “rocky”. As Mr Toobin notes, Mr Bailey has since been disbarred in Florida and is now “doing business as a ‘legal consultant’ in a single room above a beauty salon in a resort town in Maine”. + +The Patty Hearst story has been written by many authors, including Ms Hearst herself. But Mr Toobin makes a compelling narrator, and his coverage of the Hearst trial is quite brilliant. He also makes a wounding point: the well-born and well-connected Patty Hearst went to prison, but her sentence was commuted and then she was pardoned. Yet America’s prisons “teem with convicts who were also led astray and who committed lesser crimes than Patricia. These unfortunate souls have no chance at even a single act of clemency, much less an unprecedented two.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21704773-what-kidnapping-patty-hearst-tells-you-about-1970s-america-thats-rich/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +New fiction + +Irish charm + +A debut novel that points to a great future + +Aug 13th 2016 | From the print edition + +The Glorious Heresies. By Lisa McInerney. Tim Duggan Books; 389 pages; $27. John Murray; £8.99. + +LISA McINERNEY’S first novel takes off like a house on fire and doesn’t stop until it has singed the reader’s heart. Love, crime and cockeyed redemption meet on a hardscrabble housing estate in County Cork, Ireland, in a rare blend of heartbreak and humour. “Glorious Heresies”, which is just being published in America, has already won two big British prizes, establishing Ms McInerney, a former blogger from Galway, as a writer to watch. + +The lives in this interlocking jigsaw don’t just touch, but are bashed together through proximity, poverty and violence. Ryan Cusack is a bright boy who is regularly beaten by his alcoholic father; Maureen Phelan is the slightly lunatic mother of the local crime kingpin. When Maureen unintentionally kills an intruder with her “Holy Stone”, a gaudy gold ornament featuring the Virgin and a chubby Jesus, a vivid collection of lost souls begins to collide. + +Maureen’s gangster son, Jimmy, cleans up the mess, but soon regrets rekindling the relationship with his mother. Maureen is cracked and contradictory, an oracular, foul-mouthed figure, the embodiment of Ireland at its most destructive. Her windowsills are lined with religious keepsakes. Yet she sets off on a hilarious quest to hold the Catholic church to account for the lives it has blighted, committing acts of arson in an inspired—and deranged—effort to redeem both the land and herself. + +Ms McInerney draws memorable characters, skewering them in a phrase. Tony, Ryan’s dad, is “taxidermy reanimated”; Jimmy, with long experience at the “conveyor belt of deviants”, reckons that Tony’s malevolent neighbour Tara “failed quality control”. Maureen’s first encounter with a sad prostitute reads like a stand-up routine. Yet if this sounds like a romp, it is not. These harsh lives are real; the reader can’t help but recognise the losers of the Celtic miracle as both damaged and fully aware of their plight: “savagely articulate”, in one reviewer’s words. + +The legacy of drink and dogma cascades through the generations. Yet Ms McInerney takes the story deeper, skilfully setting a funeral pyre “for that Ireland”: the Ireland of children wrenched from their mothers and ruled by the “Holy Trinity: the priests, the nuns and the neighbours”. By the end, it acts on the reader much like Maureen and a match. “Nothing as cleansing as a fire,” she says—to scour the rot and make resurrection possible. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21704777-debut-novel-points-great-future-irish-charm/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +World music + +Humanity’s heartbeat + +Field recordings, long a source of musical history, are under threat everywhere + +Aug 13th 2016 | From the print edition + +Old Havana + +“WHOEVER wishes to collect from the mouth of the people should hurry; folk songs are disappearing one after another.” Thus wrote Ludolf Parisius, a German song collector, nearly two centuries ago. Others have since said the same, for just as spoken languages can die, so too can musical ones. + +A century ago song-collection was an important part of the study of musical languages. There were archives of “field recordings” in Berlin, London and Washington, DC, which could express deep social truth: they were the heartbeat of humanity. They served other purposes, too. Like many of their contemporaries, Zoltan Kodaly and Bela Bartok, two Hungarians who visited Magyar villages in the early 1900s, used the folk music they hoovered up to enrich their own compositions. + +Meanwhile, the nascent record companies were also getting in on the act. But the British Gramophone Company and its German and American rivals had little interest in musicology. The songs and dances they recorded in Central and South-East Asia were for sale back to the people of those regions, who would, it was hoped, buy the expensive equipment needed to play them. It is a sweet historical irony that their shellac discs are now musicological treasures: some antique Balinese pieces are known solely because in the early 1930s a Canadian composer bought some of those records in a shop in Bali. The warehouse manager, angry that his wares were not selling, smashed the rest in a rage. + +It was only in 1933, when John Lomax, an American folklorist, began making his marathon collection of recordings from the American South for the Library of Congress, that the significance of field recordings became generally realised. Among other luminaries, Lomax recorded Huddie “Leadbelly” Ledbetter, a well-known blues guitarist who was doing time in a Louisiana prison. Lomax’s son, Alan, carried on his work, with surveys of the folk music of Spain and Italy, including children’s songs in dirt-poor Extremadura and falsetto extravaganzas by dockers in Genoa. These now offer unique glimpses of the past, since most of that gritty, heartfelt music has been civilised out of existence. + +By the mid-1900s the world was being scoured by musicologists seeking to document and preserve, with ethnographic labels giving them altruistic support: Folkways in America, Topic in Britain and Ocora, set up by the French government initially to record the music of the French West African colonies as they moved towards independence. It was a measure of the prestige attached to field-recordings that, in 1977, one of the Nonesuch label’s recordings of traditional Balinese gamelan music was sent into outer space as part of the Voyager Golden Record. + +The world music boom of the 1990s was galvanised by a bestselling Cuban album, “Buena Vista Social Club”. Who could not be fired by the spectacle of some very old men and women (and their label) striking gold with forgotten music of irresistible charm? Record companies rushed to join the bonanza, but it lasted only a few years. The growth of digital media and the decline in the market for specialist CDs (and record shops’ increasing reluctance to stock them) turned boom into bust. + +This slump hit the ethnographic companies hard. Some closed down, and others abandoned CDs in favour of digital distribution. The long-awaited release of Dust-to-Digital’s box of Moroccan field recordings, made in the 1950s by Paul Bowles, author of “The Sheltering Sky”, highlights another marketing ploy: with Bowles’s notes handsomely presented in a leather-bound book, the box is an art-object in itself. But Topic now survives on its backlist, and is no longer able to finance new field recordings; Ocora still bravely continues to produce them, though its director Serge Noël-Ranaivo admits the label’s future is “not assured”. + +Smithsonian Folkways is in fine fettle, in large part because of its unparalleled resources. The not-for-profit label of the American museum follows the policy of Moses Asch, whose company, Folkways, it acquired in 1987: every release should be kept available to the public, whether profitable or not. Smithsonian’s distribution is increasingly digital and it is expanding its collection by acquiring others, including 127 unreleased albums of traditional music that were made by UNESCO in over 70 countries. It still releases new field recordings, but its splendid ten-CD survey of the music of Central Asia was only possible thanks to a subsidy from the Aga Khan Trust for Culture. A projected African series will not happen without similar help. + +Professor Theodore Levin, producer of that Central Asian series, is a rare optimist. “Ethnographic recordings have never been easier to make and disseminate,” he says. “Anyone with a Zoom recorder and a laptop can make digital field recordings and put them online.” He also points to the proliferation of cross-cultural fusions now being recorded. + +But there are more reasons to be pessimistic. YouTube recordings are no substitute for the scrupulously curated products of Smithsonian and Ocora, and although some inspired fusions are being created in Central Asia, most come and go without a trace. Traditional music typically evolves slowly, and in a stable environment. If its ecosystem is destroyed, it can wither and die. New musical forms, rap included, continue emerging. But, as sound archives now recognise, local music is fading away. Parisius, the German collector of early song, was spot-on. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21704775-field-recordings-long-source-musical-history-are-under-threat-everywhere-humanitys/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +Would that it were so simple + +The strange tale of the subjunctive in English + +Aug 13th 2016 | From the print edition + + + +IN A recent supplement to The Economist, called “The World If”, we considered several hypothetical futures under such headlines as: “If Donald Trump was president” or “If the ocean was transparent”. Several readers wrote in dismay: surely we meant: “If Donald Trump were president” and “If the ocean were transparent”. Does no one know the English subjunctive anymore? + +In fact, the decision to use “If the ocean was…” was made consciously, after some debate. It looks less stilted in a headline. It feels a bit less distant from reality. And because of the design of the pages, the words “…the ocean was transparent” stood alone. They would have looked bizarre as “...the ocean were transparent”. + +Normally we would not let design considerations govern grammatical ones. But is there a case to be made for “if he was...”? Yes. There is a reason grammar books must hound people to use “if he were…” Most English-speakers use “if he was” at least some of the time in sentences that call for the subjunctive, and some of them use it exclusively. + +How could this arise? Subjunctive “were” is an odd bird. Since Joseph Priestley in 1761, grammarians have fretted that it was on its way to disappearing from English. There are 37,704 verbs in the Oxford English Dictionary; only one has a special subjunctive form—“to be”. Even then, “to be” has a special subjunctive for only two of the six grammatical persons: first-person singular and third-person singular. In the other 37,703 verbs the subjunctive (“if we had”) looks just like the ordinary indicative (“we had”). + +As it always does, incidentally, for all those other verbs. “If you ate that, you’d get sick” is the subjunctive; the “if” clause is about an unreal, hypothetical situation. But “if you ate that, I’m mightily impressed” is indicative (the “if” clause indicates something that is quite possibly true). Both forms of “ate” look like the plain past tense, though. It’s an odd theory of grammar to say that English has a full, robust and mandatory subjunctive, and yet that in almost every instance, it looks just like the plain past tense. + +Major bits of grammar—like the existence of a subjunctive—are usually a lot more visible than this. The subjunctive has a distinct form for all verbs in many languages. In Spanish, for example, sabe (he knows) becomes sepa. It’s required to describe doubts, as in “I don’t think he knows…” Portuguese even has a future subjunctive (for “when he comes tomorrow…”), and German has one for reported speech (“She said that she is…”) + +The English “were” is the runt of the subjunctive litter, used on just one verb, just some of the time, and not by everyone. And some experts reckon this is not a subjunctive at all. “The Cambridge Grammar of the English Language”, by Geoffrey Pullum and Rodney Huddleston, calls counterfactual “were” the “irrealis”, rather than the subjunctive, and says that it is an unstable remnant of an earlier system. + +They reserve “subjunctive” to describe a fuller and healthier bit of English: things like “so be it”, “come what may”, and “he insists that students be punctual”. Other grammarians call this the English present subjunctive, and say that “if he were” is the past subjunctive. Messrs Pullum and Huddleston reply that the present subjunctive is so different from the “if he were” cases that the term “subjunctive” makes little sense covering both—hence their proposal of irrealis for the “if he were” cases. Outsiders to academic linguistics are often shocked that there is debate on basic facts like what the subjunctive is. But language is much more complex than short-and-sharp grammars portray. (The “Cambridge Grammar” is not one of those, at 1,842 pages.) + +The fact is that “if he were” is still in good health in edited English: it is not archaic like the King James Bible’s “If he be poor” (yet another subjunctive). But “if he were” is slightly formal, a bit tricky and not universally observed. Our choice of “If Donald Trump was…” comports with the many grammar books that consider “if he was” simply less formal. Defoe, Swift and Addison were using “was” in such sentences three centuries ago. + +Many people think that grammar always gives a single answer to any question. But it doesn’t. In the recent Coen brothers film “Hail, Caesar!”, a stuffy older English film director struggles endlessly to get a backwoods-bred young American actor to master a single line, which both includes and sums up the subjunctive: “Would that it were so simple…” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21704776-strange-tale-subjunctive-english-would-it-were-so-simple/print + + + + + +Previous Articles Sections Next + + + +Obituary + + + + + +Obituary: Qusai Abtini: From child to man + + + + + +Articles Sections Next + +Obituary: Qusai Abtini + +From child to man + +Qusai Abtini, sit-com star of Aleppo, was killed on July 8th, aged 14 + +Aug 13th 2016 | From the print edition + + + +WHEN you saw Qusai Abtini on his TV sit-com, “Umm Abdou the Aleppan”, he appeared as the typical father-figure of a struggling Syrian household. Dressed in greasy blue overalls, he would trudge home from his workshop and throw a bag of shopping at his wife, Umm Abdou, ordering her to cook supper. More mellow afterwards, he would lounge in his white cap and dishdasha on the sofa, picking his teeth and patting his stomach while his wife served up his glass of coffee. As she carried on (for Umm Abdou, played by his 11-year-old schoolfriend Rasha, was wilful, beautiful, full of half-crazed ideas, and never stopped talking), he would keep a lordly silence, occasionally stroking an imaginary beard. Then, after an affectionate put-down, he would waddle off. Everything was exactly observed; and only the occasional too-broad bucktooth grin, or an unprofessional glance to camera, would betray the fact that patriarch Abu Abdou was a child. + +He was one of around 100,000 children, roughly one-third of the population, in the eastern part of Aleppo, which for months and years has been fought over by the forces of Bashar al-Assad and the Syrian rebels. Thousands have died. With the arrival of the Russians on the government side, fighting has intensified to break the rebel hold on the east of the city. Qusai was one of those for whom school had become intermittent and street football too dangerous, with days spent inside instead, watching TV when the power was on, or reading by candlelight when it went off. A lot of time was spent queuing for bread, and too much time dreading the barrel bombs that would bounce down across the blue sky. In June his house was hit by rockets, and his father badly wounded. + +This war zone was the background of his sit-com, made by opposition activists and aired on the rebel channel Halab Today TV. Qusai and the other children had been recruited from the Abdulrahman Ghaafiqi school, where he had started acting in the seventh grade. All the filming took place in Aleppo’s Old Town, through ancient archways and narrow streets with cast-iron grilles. But the child-actors also scurried past piles of rubble and burned-out cars, sometimes ending at half-bombed buildings that seemed ready to fall about their ears. Abu Abdou’s “home” seemed cosy enough, with rich carpets draped on an ornate sofa and, in one episode, even fresh apples and carrots for him to gorge on. But a closer look showed wires dangling, paint peeling, the potted palms thick with dust and bullet holes in the walls. The sound of shelling, and sometimes of close explosions that made everyone jump, rumbled behind their chatter. + +Qusai’s job, and Rasha’s, was to entertain Aleppans despite it all. Umm Abdou was forever complaining about the lack of power, lack of water (which meant she had to do all the washing by hand in a plastic bowl), lack of a signal for her large mobile phone, the state of the city, the Assad regime and the way no one seemed to be filming the bloodshed properly, “so that other countries can’t see what’s happening to us”. Abu Abdou was lazier and more stoical. Umm Abdou wanted to start a women’s rebel army; he deterred her by pretending to see a mouse under the sofa, reminding “you woman”, as he loftily called her, how easily terrified she was. When he briefly joined the rebels himself, he was ambushed by Assad’s men and limped home with a bandaged head—all his wife’s fault, for gossiping about his sortie to the neighbours. + +The face of defiance + +Qusai already had half a foot in that world. He joined his first street protests when he was eight, sitting shouting on the shoulders of his elder brother Assad. In later demonstrations he strode fearless at the front, the fresh, cheeky face of Aleppo’s defiance. Assad joined the Free Syrian Army; Qusai signed up to a first-aider course at Jerusalem hospital. His acting career included video tours lamenting the state of ruined Aleppo, and school plays in which he played a rebel soldier in full fighting gear, drawing cheers from the parents for his speeches. In one theatre show he was “killed” by a sniper outside a bar and draped by his “mother” with a Syrian flag, the proper rites for a martyr. + +By this year he was getting too old to play a child playing a man. The second series of the sit-com, made in June, starred a boy called Subhi in the part of Abu Abdou instead. Qusai was getting tall, and his schoolteacher noticed that his ambitions were growing with him, to be a serious actor and a star in his own right. Offstage, he went around in camouflage trousers and a hoodie that helped to disguise how young he was. Looking in the mirror, brushing his thick hair and practising a slighter, poutier smile, he was beginning to see the face of a celebrated fighter or a juvenile lead. + +It was not to be, because as the battle worsened and Aleppo fell under seige his father decided to get him out. Subhi, his replacement, had already fled to Turkey with his family. By July, only one “humanitarian route” remained open out of the city. They took it, but a shell or a missile hit the car. His father survived; he did not. + +He was mourned as the “little hero” who had made Aleppo laugh. His hopes had been for much bigger things, when he was really a man. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21704758-qusai-abtini-sit-com-star-aleppo-was-killed-july-8th-aged-14-child-man/print + + + + + +Articles Sections Next + + + +Economic and financial indicators + + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Holiday blues + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Aug 13th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21704785/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Aug 13th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21704810-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Aug 13th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21704812-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Aug 13th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21704806-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Holiday blues + +Aug 13th 2016 | From the print edition + + + + + +August is not the holiday season for everyone: last year 38% of Europeans felt they couldn’t pay for a week away, according to Eurostat. In Greece the share of people who believed they couldn’t afford a holiday rose by four percentage points between 2008 and 2015, during which time real wages fell by 14% and unemployment climbed by 17 points. In Sweden household disposable income per person grew by 9% over the same period, and the proportion of people who felt they couldn’t stump up for a summer jaunt decreased. Income and employment rates cannot fully explain sentiment, though: housing costs, changes to welfare payments and the prevalence of temporary work also play a part. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21704811-holiday-blues/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Aug 13th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21704808-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +TE20160813 + +The world this week + + + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + + + +Ageing: Cheating death + + + + + +War against crime in the Philippines: A harvest of lead + + + + + +Trump’s plan for the economy: Scrimping on sense + + + + + +South Africa: Time to govern + + + + + +Preventing child-abuse: First, save the children + + + + + +Letters + + + + + +On Britain, globalisation, Hinkley Point, laws, landmines, Donald Trump, Brexit: Letters to the editor + + + + + +Briefing + + + + + +Longevity: Adding ages + + + + + +United States + + + + + +Hillary Clinton: Inevitable once more + + + + + +Purchasing power: More bang for your buck + + + + + +Merit scholarships: TOPSy-turvy + + + + + +Dietary inequality: Bitter fruits + + + + + +America’s foreign bases: Go home, Yankee + + + + + +Lexington: Dollars in the wind + + + + + +The Americas + + + + + +Argentina’s economy: It’s cold outside + + + + + +Rio’s Olympics: More with less + + + + + +Canada’s Senate and Supreme Court: Look to the rainbow + + + + + +Asia + + + + + +Philippine politics: From plan to execution + + + + + +Thai politics: How not to solve a crisis + + + + + +Kashmir: Reviving the cause + + + + + +Gay rights in Indonesia: Under pressure + + + + + +Women’s education in Afghanistan: Liberation through segregation + + + + + +China + + + + + +The judicial system: Suppress and support + + + + + +Youthful nationalists: The East is pink + + + + + +Middle East and Africa + + + + + +New rivalries on a contested continent: Asia’s scramble for Africa + + + + + +Ethiopia’s football follies: Full time? + + + + + +Zambia’s elections: A test case for democracy + + + + + +Iraq’s Yazidis: Freedom on hold + + + + + +Libya and the West: Piling in + + + + + +Europe + + + + + +Migration within the EU: Europe’s scapegoat + + + + + +The time in Spain: Out of sync with the sun... + + + + + +Tensions in Crimea: The cruellest month + + + + + +Renewable energy: It’s not easy being green + + + + + +Charlemagne: Small but not too beautiful + + + + + +Britain + + + + + +The Labour Party: The metamorphosis + + + + + +Schools: Grammatical error + + + + + +Football geography: A country of two halves + + + + + +The “term funding scheme”: When cuts are not enough + + + + + +Fatter people: Counting calories + + + + + +Thinner pets: Subwoofers + + + + + +Bagehot: This sceptic isle + + + + + +International + + + + + +Paedophilia: Shedding light on the dark field + + + + + +Business + + + + + +The other side of Warren Buffett: Don’t Buff it up + + + + + +Airlines and technology: All systems stop + + + + + +PSA Group: Peugeot rallies + + + + + +Walmart buys Jet.com: Boxed-in unicorn + + + + + +The Berlusconis’ shrinking empire: Things fall apart + + + + + +Live-streaming: Amateur’s hour + + + + + +The tourism industry: Nothing to see here + + + + + +Schumpeter: Revenge of the nerds + + + + + +Finance and economics + + + + + +Europe’s disappearing cash: Emptying the tills + + + + + +Buttonwood: Back in fashion + + + + + +Pensions: No love, actuary + + + + + +The leisure economy: Surfing to success + + + + + +Recruitment and inequality: Pandora’s box + + + + + +Financial crime: The final bill + + + + + +Free exchange: The problematic proposal + + + + + +Economics brief + + + + + +Fiscal multipliers: Where does the buck stop? + + + + + +Science and technology + + + + + +Hybrid cars: At last, the 48 show + + + + + +Anthropology: No hard feelings + + + + + +Graphene-based electronics: Bugs in the system + + + + + +Books and arts + + + + + +American memoirs: Promises, promises + + + + + +America in the 1970s: That’s rich + + + + + +New fiction: Irish charm + + + + + +World music: Humanity’s heartbeat + + + + + +Johnson: Would that it were so simple + + + + + +Obituary + + + + + +Obituary: Qusai Abtini: From child to man + + + + + +Economic and financial indicators + + + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Holiday blues + + + + + +Markets + + + + + +Table of Contents + +TE20160813 + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Ageing: Cheating death + + + + + +War against crime in the Philippines: A harvest of lead + + + + + +Trump’s plan for the economy: Scrimping on sense + + + + + +South Africa: Time to govern + + + + + +Preventing child-abuse: First, save the children + + + + + +Letters + + + +On Britain, globalisation, Hinkley Point, laws, landmines, Donald Trump, Brexit: Letters to the editor + + + + + +Briefing + + + +Longevity: Adding ages + + + + + +United States + + + +Hillary Clinton: Inevitable once more + + + + + +Purchasing power: More bang for your buck + + + + + +Merit scholarships: TOPSy-turvy + + + + + +Dietary inequality: Bitter fruits + + + + + +America’s foreign bases: Go home, Yankee + + + + + +Lexington: Dollars in the wind + + + + + +The Americas + + + +Argentina’s economy: It’s cold outside + + + + + +Rio’s Olympics: More with less + + + + + +Canada’s Senate and Supreme Court: Look to the rainbow + + + + + +Asia + + + +Philippine politics: From plan to execution + + + + + +Thai politics: How not to solve a crisis + + + + + +Kashmir: Reviving the cause + + + + + +Gay rights in Indonesia: Under pressure + + + + + +Women’s education in Afghanistan: Liberation through segregation + + + + + +China + + + +The judicial system: Suppress and support + + + + + +Youthful nationalists: The East is pink + + + + + +Middle East and Africa + + + +New rivalries on a contested continent: Asia’s scramble for Africa + + + + + +Ethiopia’s football follies: Full time? + + + + + +Zambia’s elections: A test case for democracy + + + + + +Iraq’s Yazidis: Freedom on hold + + + + + +Libya and the West: Piling in + + + + + +Europe + + + +Migration within the EU: Europe’s scapegoat + + + + + +The time in Spain: Out of sync with the sun... + + + + + +Tensions in Crimea: The cruellest month + + + + + +Renewable energy: It’s not easy being green + + + + + +Charlemagne: Small but not too beautiful + + + + + +Britain + + + +The Labour Party: The metamorphosis + + + + + +Schools: Grammatical error + + + + + +Football geography: A country of two halves + + + + + +The “term funding scheme”: When cuts are not enough + + + + + +Fatter people: Counting calories + + + + + +Thinner pets: Subwoofers + + + + + +Bagehot: This sceptic isle + + + + + +International + + + +Paedophilia: Shedding light on the dark field + + + + + +Business + + + +The other side of Warren Buffett: Don’t Buff it up + + + + + +Airlines and technology: All systems stop + + + + + +PSA Group: Peugeot rallies + + + + + +Walmart buys Jet.com: Boxed-in unicorn + + + + + +The Berlusconis’ shrinking empire: Things fall apart + + + + + +Live-streaming: Amateur’s hour + + + + + +The tourism industry: Nothing to see here + + + + + +Schumpeter: Revenge of the nerds + + + + + +Finance and economics + + + +Europe’s disappearing cash: Emptying the tills + + + + + +Buttonwood: Back in fashion + + + + + +Pensions: No love, actuary + + + + + +The leisure economy: Surfing to success + + + + + +Recruitment and inequality: Pandora’s box + + + + + +Financial crime: The final bill + + + + + +Free exchange: The problematic proposal + + + + + +Economics brief + + + +Fiscal multipliers: Where does the buck stop? + + + + + +Science and technology + + + +Hybrid cars: At last, the 48 show + + + + + +Anthropology: No hard feelings + + + + + +Graphene-based electronics: Bugs in the system + + + + + +Books and arts + + + +American memoirs: Promises, promises + + + + + +America in the 1970s: That’s rich + + + + + +New fiction: Irish charm + + + + + +World music: Humanity’s heartbeat + + + + + +Johnson: Would that it were so simple + + + + + +Obituary + + + +Obituary: Qusai Abtini: From child to man + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Holiday blues + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.08.20.TXT b/homeworks/B20769/homework1/data2/2016.08.20.TXT new file mode 100644 index 0000000..62420fc --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.08.20.TXT @@ -0,0 +1,5364 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Economics brief + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Aug 20th 2016 | From the print edition + + + +Aung San Suu Kyi, Myanmar’s foreign minister and de facto leader, visited China to discuss border disputes, refugees and a suspended Chinese dam-building project, among other things. China hopes to regain some of the influence it enjoyed when Myanmar was under military rule, but Miss Suu Kyi, an icon of democracy, is wary. + +Militants killed two soldiers and a policeman in an ambush in the Indian part of Kashmir. Last month the army killed a popular militant who fought against Indian rule, sparking ongoing protests that have claimed more than 60 lives. A curfew has been imposed in what is the worst surge of violence in Kashmir since 2010. + +Australia said it would close a controversial detention centre for would-be immigrants that it operates in Papua New Guinea. The government insists none of the 854 inmates will be brought to Australia, but it has not revealed where they will be sent instead. See article. + +The number two at the North Korean embassy in London defected to South Korea and was placed under government protection. He is the most senior diplomatic defector since 1997. + +A court in Hong Kong sentenced three prominent student leaders for their activities during Hong Kong’s pro-democracy “Umbrella movement” in 2014. One of them, Alex Chow, was given a three-week prison sentence suspended for a year. Two others, Nathan Law and Joshua Wong, were ordered to do community service. + +Worthless money + +Police in Zimbabwe broke up demonstrations in the capital, Harare, against plans by the central bank to introduce new local banknotes. The country has used mainly American dollars since 2009 after a bout of hyperinflation destroyed the value of its own currency. + +Edgar Lungu, the president of Zambia, narrowly won re-election in a vote that the opposition said was rigged. Mr Lungu won 50.35% of the vote, just enough to avoid a second-round election. + +Russian bombers conducted air strikes against targets in Syria from an airbase in Iran in a move that stepped up Russia’s support for the regime of Bashar al-Assad. Meanwhile, Amnesty International reported that 18,000 people have died in Syria’s prisons at the hands of the regime since the start of the conflict in 2011. + +Forces aligned with the internationally recognised government in Libya recaptured most of Sirte from Islamic State fighters, narrowing the part of the city still held by jihadists. Their assault has been aided by American air strikes. + +This season’s colours + + + +Burkinis are “not compatible with French values,” according to Manuel Valls, the prime minister of France. Mr Valls threw his support behind mayors of three cities, including Cannes, who have banned the full-body swimsuits worn by Muslim women on beaches. In Germany, Angela Merkel’s Christian Democratic party wants to ban burqas in public places. The measures follow a wave of terrorist attacks in Germany and France. + +In a big government shake-up, Russia’s president, Vladimir Putin, dismissed his chief of staff, Sergei Ivanov. Mr Ivanov started the job in 2012 and has been one of Mr Putin’s closest allies. He will be replaced by his little-known deputy, Anton Vaino. Mr Putin, who also reshuffled Russia’s regional governors recently, is preparing the political ground for parliamentary elections in September. + +Turkey’s president, Recep Tayyip Erdogan, extended his crackdown to Turkish business leaders. Riot police raided the offices of 51 businesses and detained dozens of executives. The government also issued a decree allowing for the conditional release of 38,000 prisoners, which is seemingly designed to make room for the thousands arrested since the failed military coup in July. See here and here. + +Anjem Choudary, Britain’s most prominent Islamic fundamentalist preacher, was found guilty of calling on Muslims to support Islamic State. Counter-terrorism officials have spent two decades trying to secure a conviction against Mr Choudary for radicalising young men and women. See article. + +Tear down those walls + +Colombia and Venezuela began a gradual reopening of their border, which Venezuela had closed a year ago to curb smuggling. Tens of thousands of Venezuelans crossed into Colombia to buy basic goods, which they cannot obtain at home. Price and currency controls imposed by Venezuela’s government have led to acute shortages of food and medicine. + +Brazilian authorities pulled two American Olympic swimmers off an aeroplane in Rio de Janeiro on their way to the United States. They were among four swimmers who say they were robbed at gunpoint by people disguised as police officers in Rio. Police have cast doubt on their account of the robbery. + +The son of Joaquín “El Chapo” Guzmán, the boss of Mexico’s Sinaloa drug gang, was kidnapped by members of a rival gang, Jalisco New Generation. El Chapo, who escaped twice from Mexican prisons, was rearrested in January. He is appealing against the government’s decision to extradite him to the United States. + +A campaign under water + +Amid a drubbing in the opinion polls, Donald Trump again revamped his campaign team, employing Stephen Bannon, who runs Breitbart News, a conservative website, as “chief executive”. Paul Manafort, who stays as campaign chairman, has come under scrutiny for his work as a political consultant in Ukraine and ties to a pro-Russia party in the country. + + + +Milwaukee, Wisconsin, was rocked by rioting sparked by the fatal shooting by a black policeman of an armed black man who ran after being pulled over for questioning. + +Guccifer 2.0 has struck again. The hacker behind the release of embarrassing e-mails from the Democratic National Committee posted the personal phone numbers and addresses of current and former Democratic congressmen online. The Russian government has denied that its security services are behind Guccifer 2.0. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21705390-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Aug 20th 2016 | From the print edition + +The Bank of England had little problem buying up government bonds from investors in the second round of its expanded quantitative-easing programme. In the previous round of purchases it had fallen short of obtaining its daily target for the first time since launching the policy in 2009, as investors were unwilling to part with longer-dated gilts. + +Taking a back seat, for now + +An activist hedge fund bought a 2% stake in Morgan Stanley. America’s big banks have provided comparatively poor returns for investors since the financial crisis. ValueAct, best known for the management changes it wrought at Microsoft, is betting that Morgan Stanley, whose share price is down by a fifth in the past year, is undervalued. It has praised the bank’s strategy, but could yet push for board seats. See article. + +The biggest trial to date of an auditing firm entered its second week in Miami. The American arm of PricewaterhouseCoopers is being sued for $5.5 billion by the trustee overseeing the bankruptcy of Taylor, Bean & Whitaker, a former mortgage lender. The charge is that it failed to spot a fraudulent scheme that executives had concocted with staff at Colonial Bank, which had employed PwC as its auditor. PwC insists it complied with accounting standards. + +Two big suppliers of industrial gases, Linde and Praxair, confirmed they were in merger talks. If a deal is sealed the combined company will overtake Air Liquide, which has itself recently merged with a rival, to become the biggest in the industry. + +Saudi Arabia suggested it would like to restart talks at the end of next month with Russia and other non-OPEC oil producers about freezing output levels in order to lift oil prices. A similar deal fell apart in April because Iran, an OPEC member, does not want to curtail production. Meanwhile, Rosneft, Russia’s state-controlled oil company, reported a hefty drop in profit for the first half of the year because of weaker oil prices. + + + +BHP Billiton reported an annual net loss of $6.4 billion for the year ending June 30th. This was blamed on charges related to depressed energy markets and to a dam failure at one of its mines in Brazil, which killed 19 people and precipitated a compensation claim from the Brazilian government. Without the charges the Anglo-Australian mining giant made an underlying profit of $1.2 billion. In 2011 it was reporting profits of more than $20 billion. + +Gawker, a muckraking online publication that was forced into bankruptcy after it incurred crippling legal costs, was sold to Univision, a Spanish-language network. Gawker was sued by Hulk Hogan for publishing a sex tape in which he featured. The jury in the case, which was backed by Peter Thiel, an entrepreneur who has his own issues with Gawker, awarded the celebrity wrestler $140m in damages. Gawker is Univision’s second grab of a media site aimed at millennials, after taking a 40% stake in the Onion. + +Good for what Ailes you + +Rupert Murdoch restructured the role of chief executive at Fox News, choosing two veterans at the networkto replace Roger Ailes, who has been forced out amid claims of sexual harassment. Jack Abernethy and Bill Shine will lead the network as co-presidents, reporting directly to Mr Murdoch as executive chairman of 21st Century Fox. + +Saddled with burgeoning expenses from Obamacare, Aetna became the biggest health-insurance company so far to reduce sharply its participation in the state online exchanges where people buy cover. The large number of younger and healthy members that would balance the risk for insurers has not materialised, leaving Aetna and others with a big pool of older and sicker customers. It wants to merge with Humana, a rival, to cut overheads, but the government is challenging the deal on antitrust grounds. + +Uber started legal proceedings against London’s transport authority over new rules that, among other things, require private taxi firms to make sure their drivers can speak English and pass a written test. The ride-hailing app thinks its drivers should speak English, but that making them sit a written test is going too far. + +Quantum leap + +China launched the world’s first satellite using quantum-entanglement technology, which in principle should ensure that communications cannot be hacked. Still in an experimental phase, quantum technology uses entangled particles of light to transmit messages (at a slower rate than radio signals) over long distances and detects the calling card of anyone trying to tamper with them. China is at the forefront of such research; it hopes to establish a quantum-communications link between Beijing and Shanghai soon. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21705387-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Aug 20th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21705388-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + +Leaders + + + + + +Housing in America: Nightmare on Main Street + +Political reform stalls: Africa’s fragile democracies + +Data analytics: The power of learning + +Welfare reform: A patchy record at 20 + +Chinese politics: Beach rules + + + + + +Articles Sections Next + +Housing in America + +Nightmare on Main Street + +America’s housing system was at the centre of the last crisis. It has still not been properly reformed + +Aug 20th 2016 | From the print edition + + + +WHAT are the most dysfunctional parts of the global financial system? China’s banking industry, you might say, with its great wall of bad debts and state-sponsored cronyism. Or the euro zone’s taped-together single currency, which stretches across 19 different countries, each with its own debts and frail financial firms. Both are worrying. But if sheer size is your yardstick, nothing beats America’s housing market. + +It is the world’s largest asset class, worth $26 trillion, more than America’s stockmarket. The slab of mortgage debt lurking beneath it is the planet’s biggest concentration of financial risk. When house prices started tumbling in the summer of 2006, a chain reaction led to a global crisis in 2008-09. A decade on, the presumption is that the mortgage-debt monster has been tamed. In fact, vast, nationalised, unprofitable and undercapitalised, it remains a menace to the world’s biggest economy. + +Unreal estate + +The reason the danger passes almost unnoticed is that, at first sight, the housing market has been improving. Prices in America have crept back up towards their all-time high. As a result, the proportion of households with mortgage debts greater than the value of their property has dropped from a quarter to under a tenth. In addition, while Europe has dithered, America has cleaned up its banks. They have $1.2 trillion of core capital, more than double the amount in 2007, which acts as a buffer against losses. The banks have cut risk and costs and raised fees in order to grind out decent profits. Bosses and regulators point to chastened lenders and boast that the problem of banks “too big to fail” has been solved. Taxpayers, they say, are safe. + +Only in their dreams. That trillion-dollar capital buffer exists to protect banks, but much risk lies elsewhere. That is because, since the 1980s, mortgage lending in America has been mainly the job of the bond market, not the banks as in many other countries. Loans are bundled into bonds, guaranteed and sold around the world. Investors on Wall Street, in Beijing and elsewhere own $7 trillion-worth. + +When those investors panicked in 2008, the government stepped in and took over the bits of the mortgage-guarantee apparatus it did not already control. It was a temporary solution, but political gridlock has made it permanent. Now 65-80% of new mortgages are stamped with a guarantee from Uncle Sam that protects investors from the risk that homeowners default. In the heartland of free enterprise the mortgage system is worthy of Gosplan. + +The guarantees mean there is unlikely to be a repeat of the global panic that took place in 2008-09, when investors feared that housing bonds were about to default. Only a madman in the White House would think that America gained from reneging on its promises. And parts of the system are indeed safer. The baroque derivatives that caused huge damage, such as mortgage-based CDOs, have shrivelled away. At least 10,000 pages of new rules exist to police reckless conduct. + +The dangers of a nationalised system are more insidious (see article). The size, design and availability of mortgages is now decided by official fiat. Partly because the state charges too little for the guarantees it offers, taxpayers are subsidising housing borrowers to the tune of up to $150 billion a year, or 1% of GDP. Since the government mortgage machine need not make a profit or have safety buffers, well-run private firms cannot compete, so many banks have withdrawn from making mortgages. If there is another crisis the taxpayer will still have to foot the bill, which could be 2-4% of GDP, not far off the cost of the 2008-09 bank bail-out. + +Faced with this gigantic muddle, many politicians and regulators just shrug. The system is mad, but the thicket of rules and vigilant regulators will prevent crazy lending from taking place, they argue. Households have deleveraged, leaving them able to service their debts more efficiently. + + + +US property: Interactive county map & guide + +That seems wildly optimistic. Because housing is seen as one of the few ways in which less-well-off Americans can accumulate wealth, there is an inbuilt political pressure to loosen lending standards. As a result, housing crises are a recurring feature of American life. Before the subprime debacle in 2008-10, there was the savings-and-loans fiasco in the 1980s. Since the crisis the share of households that own their property has fallen from 69% to 63%. Rather than welcoming this as a sensible shift towards renting, Donald Trump and others have portrayed it as a disgrace. Because global investors are hungry for safe assets, any bonds with an American guarantee are snapped up, adding to the incentive to borrow. + +Rather than allow the cycle of remorse and repetition to repeat, better to complete the job of reform and make sure that the mortgage system cannot be used as a political tool to stimulate the economy. The simplest approach would be to give it the same medicine as the regulators administered to the banks. The nationalised mortgage firms that guarantee the bonds—and are thus in hock if the market collapses—should be forced to raise their capital buffers and increase their fees until they make an adequate profit. + +The public would have to foot the bill, of around $400 billion, making explicit the contingent liability for future losses that it already bears. The cost of mortgages, at a record low today, would also rise. But that would eliminate the ongoing hidden subsidy and create a level playing field so that private firms were able to do more mortgage lending. If that bill was too big to swallow, a second-best would be to impose the new rules on new mortgages, leaving the stock of subsidised existing loans to run down over the coming decades. + +This House is for doing nothing + +It is a massive job, made harder by the fact that so many groups have a stake in a rotten mortgage machine. Homeowners like cheap debt. Litigious hedge funds have their own agenda. The government uses an accounting quirk to book profits from the mortgage system, but does not recognise the potential cost to taxpayers. It is no surprise that Congress has shirked its duty. But until America’s mortgage monster is brought to heel, the task of making finance safer will remain only half-done. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21705317-americas-housing-system-was-centre-last-crisis-it-has-still-not-been-properly/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Political reform stalls + +Africa’s fragile democracies + +Since the end of the cold war, multi-party democracy has flourished. In many countries it is now at risk + +Aug 20th 2016 | From the print edition + + + +SOME call it Africa’s second liberation. After freedom from European colonisers came freedom from African despots. Since the end of the cold war multi-party democracy has spread far and wide across the continent, often with impressive and moving intensity. Remember 1994, when South Africans queued for hours to bury apartheid and elect Nelson Mandela as president in their country’s first all-race vote. + +Many of Africa’s worst Big Men were swept away. Mengistu Haile Mariam fled Ethiopia in 1991; Mobutu Sese Seko of Zaire (now the Democratic Republic of Congo) decamped in 1997; a year later Sani Abacha of Nigeria died in office (or, as rumour has it, in the arms of prostitutes). In parts of Africa autocrats are still in power and wars still rage. But most leaders now seek at least a veneer of respectability; elections have become more frequent and more regular; economies have opened up. + +And yet, as our reporting makes clear (see article), African democracy has stalled—or even gone into reverse. Too often, it is an illiberal sort of pseudo-democracy in which the incumbent demonises the opposition, exploits the power of the state to stack the electoral contest in his favour and removes constraints on his power. That bodes ill for a continent where institutions are still fragile, corruption rife and economies weakened by the fall of commodity prices (one of the fastest-growing regions of the world has become one of the slowest). For Africa to fulfil its promise, the young, dynamic continent must rediscover its zeal for democracy. + +Lost in democratic transition + +The latest worrying example is Zambia. It was one of the first African countries to undergo a democratic transition, when Kenneth Kaunda stepped down after losing an election in 1991. This week Edgar Lungu was re-elected president with a paper-thin majority in a campaign marred by the harassment of the opposition, the closure of the country’s leading independent newspaper, accusations of vote-rigging and street protests. + +Especially in central Africa, incumbent leaders are changing or sidestepping constitutional term limits to extend their time in office, often provoking unrest. Kenya, where political tension is rising, faces worries about violence in next year’s general election. Freedom House, an American think-tank, reckons that in 1973 only about 30% of sub-Saharan countries were “free” or “partly free”. In its latest report the share stands at 59%. That is a big improvement, obviously, but it is down from 71% in 2008. Countries that are “not free” still outnumber those that are. A big chunk in the middle is made up of flawed and fragile states that are only “partly free”. + +The people of Africa deserve better. For democracy to work, winners must not be greedy, losers must accept defeat and both need trusted institutions to act as arbiters and stabilisers. Yet, in many places, some or all of these elements are missing. + +The best way for democracy to flourish would be to expand and strengthen Africa’s emerging middle class. Increasingly connected to the world, Africans know better than anyone the shortcomings of their leaders. Take South Africa. Despite its model constitution, vibrant press and diverse economy, it has been tarnished under its president, Jacob Zuma. He has hollowed out institutions, among them bodies tasked with fighting corruption. And yet South Africa also demonstrates the power of voters. In municipal elections this month, the mighty African National Congress lost control of major cities. For the first time, a plausible alternative party of power is emerging in the liberal, business-friendly Democratic Alliance. + +Free societies and free economies reinforce each other. African countries need to diversify away from dependence on exporting commodities, which in turn means liberalising markets and bolstering independent institutions. The rest of the world can help by expanding access to rich-world markets for African goods, particularly in agriculture. + +To the victor the spoils + +As well as promoting a middle class, diversification mitigates the curse of winner-take-all politics. When a country’s wealth is concentrated in natural resources, controlling the state gives a leader access to the cash needed to maintain power. The problem is aggravated by the complex, multi-ethnic form of many African states, whose borders may have been created by colonial whim. Voting patterns often follow tribe or clan rather than class or ideology, so tend to lock in the advantage of one or other group. Losing an election can mean being cut out of the spoils permanently. Dealing with variegated polities requires doses of decentralisation (as in Kenya), federalism (as in Nigeria) and requirements for parties or leaders to demonstrate a degree of cross-country or cross-ethnic support. + +Where democracies are fragile, the two-term rule for heads of government is invaluable, as it forces change. Mandela set the example by stepping down after just one term. The two-term rule should be enshrined as a norm by Africa’s regional bodies, just as the African Union forbids coups. + +Can the outside world do more than provide African countries with markets? China has become Africa’s biggest trading partner, supplying aid and investment with few or no strings attached in terms of the rule of law and human rights. But even China, especially now that its own economy has slowed, is not in the business of propping up bankrupt African autocrats. + +This means that Western influence, though diminished, remains considerable—for historical reasons, and because many African countries still look to the West for aid, investment and sympathy in international lending bodies. With the end of the commodity boom, growing numbers of countries face a balance-of-payments crisis. Any fresh loans should be conditional on strengthening independent institutions. + +But the West has flagged in its efforts to promote democracy, especially in places, such as around the Horn of Africa and the Sahel, where the priority is to defeat jihadists. That is short-sighted. Decades of counter-terrorism teaches that the best bulwarks against extremism are states that are prosperous and just. And that is most likely to come about when rulers serve at the will of their people. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21705319-end-cold-war-multi-party-democracy-has-flourished-many-countries-it-now/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Data analytics + +The power of learning + +Clever computers could transform government + +Aug 20th 2016 | From the print edition + + + +IN “Minority Report”, a policeman, played by Tom Cruise, gleans tip-offs from three psychics and nabs future criminals before they break the law. In the real world, prediction is more difficult. But it may no longer be science fiction, thanks to the growing prognosticatory power of computers. That prospect scares some, but it could be a force for good—if it is done right. + +Machine learning, a branch of artificial intelligence, can generate remarkably accurate predictions. It works by crunching vast quantities of data in search of patterns. Take, for example, restaurant hygiene. The system learns which combinations of sometimes obscure factors are most suggestive of a problem. Once trained, it can assess the risk that a restaurant is dirty. The Boston mayor’s office is testing just such an approach, using data from Yelp reviews. This has led to a 25% rise in the number of spot inspections that uncover violations. + +Governments are taking notice. A London borough is developing an algorithm to predict who might become homeless. In India Microsoft is helping schools predict which students are at risk of dropping out. Machine-learning predictions can mean government services arrive earlier and are better targeted (see article). Researchers behind an algorithm designed to help judges make bail decisions claim it can predict recidivism so effectively that the same number of people could be bailed as are at present by judges, but with 20% less crime. To get a similar reduction in crime across America, they say, would require an extra 20,000 police officers at a cost of $2.6 billion. + +But computer-generated predictions are sometimes controversial. ProPublica, an investigative-journalism outfit, claims that a risk assessment in Broward County, Florida, wrongly labelled black people as future criminals nearly twice as often as it wrongly labelled whites. Citizens complain that decisions which affect them are taken on impenetrable grounds. + +These problems are real, but they should not spell the end for machine learning as a policy tool. Instead, the priority should be to establish some ground rules and to win public confidence. The first step is to focus machine learning on applications where people stand to gain—extra help at school, say, rather than extra time in jail. + +More can be done to assuage concerns about transparency. Algorithms can be modified to reveal which components of their inputs had the most influence on their decisions, for example. But full transparency has risks. If restaurants know that five-star reviews will guarantee fewer inspections, they may make them up. Even so, regulators should insist that government users know the factors behind predictions, and that these are explained to affected citizens upon request. Above all, algorithms should help people make decisions, not make decisions for them—as can be the case with credit-scoring. + +Colour-blind computing + +The trickiest issues lie in criminal justice, but here too machine learning could still do much good. The threat of racial bias can be minimised by paying close attention to the distribution of false-positive results while the system is being trained. With or without programs to help them, judges have to make plenty of predictions, for instance about whether a person will commit a crime or flee before trial. They can display lifelong bias (they are, after all, only human). The right machine could make their decisions fairer. + +In the end Mr Cruise’s psychics were banished to an isolated island. Machine learning deserves no such fate. But to avoid rejection, it needs to be used in the right situations with the right caveats; and it must remain a tool in human hands. Do that, and the benefits promise to be vast. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21705318-clever-computers-could-transform-government-power-learning/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Welfare reform + +A patchy record at 20 + +Bill Clinton’s welfare reform of 1996 got more people into work, but failed to reduce deep poverty + +Aug 20th 2016 | From the print edition + + + +WHAT duty does a rich society have to its poorest members? The answer in America’s welfare reform of 1996, the 20th anniversary of which falls on August 22nd, was that it has an obligation to help the poorest into work. The new law changed the lives of millions of Americans. Its effects were also felt beyond America’s borders, as European countries copied “workfare” and middle-income countries like Mexico and Brazil attached strings to cash payments for the poorest. + +One aim of the reform was, in President Bill Clinton’s words, “to end welfare as we know it.” Judged by that standard, it succeeded. Welfare rolls fell by half and then fell by half again. That is both because the reform prompted welfare recipients to seek work, and because cash payments are eventually cut off to those who are not working (see article). + +This success came at a price. Mr Clinton’s original proposal coupled the work requirement with a guarantee that the government would act as employer of last resort, as it had during the Depression. But that idea was dropped before the reform became law, partly because of cost and partly on ideological grounds, after control of the House of Representatives passed to Republicans in 1994. Scrapping cash welfare, but not replacing it with a job or training guarantee, created strong incentives for the unskilled to find work—but at the cost of worsening poverty for those who could not get jobs. One study suggests that about 1.5m families now subsist for periods on almost no income at all. Roughly 3m children live in such families, about the same as the population of Iowa or Utah. + +In retrospect, part of the problem lies with the way the federal government funded the reform. The annual cash payment provided to states—in the form of a “block grant”—was a fixed nominal sum. Twenty years of inflation have eroded its real value. Worse, this grant does not vary according to the overall health of the economy. + +Blockheads + +Yet states also deserve blame. With few restrictions on how the money can be spent, the grant was designed to encourage experimentation. However, given the freedom to innovate, too many states have spent their funds on schemes only vaguely related to poverty reduction. Several states spend less than 10% of their grant on cash assistance for the poor. Challenged to reduce the number of people receiving welfare, many states merely shifted people onto disability insurance instead, declared victory and sent the bill to Congress. For those who believe that allowing states to decide for themselves what works best will usually lead to better policies, this has been depressing to watch. + +How might the reform be reformed? Most vitally, by concentrating attention and resources on those 1.5m families at the very bottom. Since this is the hardest group to reach, the federal government should use its money to encourage states to find new ways to help them. A useful model is “Race to the Top”, an education initiative from the Obama administration which rewards states that achieve improvements with extra money, in the hope that others will copy their success. There are plenty of policies worth experimenting with: expanding tax credits for those without children, extra government help with finding a job and even public make-work schemes. But this must be experimentation with the right purpose—helping the poorest into work rather than simply cutting welfare rolls. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21705331-bill-clintons-welfare-reform-1996-got-more-people-work-failed-reduce-deep/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Chinese politics + +Beach rules + +Rumours in China have become everyone’s problem + +Aug 20th 2016 | From the print edition + + + +FEW beach resorts would boast of promoting “core socialist values”. The seaside town of Beidaihe, the nearest sandy getaway to the Chinese capital, Beijing, is not so bashful. Local media laud its barrage of propaganda designed to boost values such as harmony and friendship. + +The fanfare is because Beidaihe is home to a walled, heavily guarded compound where China’s rulers usually take a working holiday in early August (see article). Yet it is likely that this year, amid the orange-roofed villas, harmony and friendship were in short supply. Communist Party rules require that a cohort of leaders retires at the party congress in the autumn of 2017. There is speculation that the looming changes to China’s leadership are causing a struggle that reaches right to the top. + +Such reports are everyone’s business. Not just because China may be about to witness big changes, but mainly because nobody knows if the rumours are true—since nobody knows what goes on inside China’s senior echelons. China is the world’s second-biggest economy. It aspires to global leadership. It preaches stability. Yet its government is utterly opaque. + +Sea change or see no change? You choose + +Opacity makes it hard to understand the thinking behind policy. Show-trials this month of independent lawyers do not augur well. Their defence of human rights was condemned by the courts as “subverting state power”. A recent surge in the number of Chinese coastguard and fishing vessels near islands claimed by Japan in the East China Sea is a sign that the president, Xi Jinping, likes to pander to nationalists. Might he be tempted to biff a pipsqueak neighbour in the South China Sea or succumb to Japan-baiting, always a crowd-pleaser? (See article.) And the economy has been looking frailer. Perhaps Mr Xi’s politicking will distract him from healing it. + +Without enough context, actions can be interpreted in radically different ways. Since coming to power almost four years ago, Mr Xi has waged a campaign against corruption. On one reading, this is to clean up the system before he undertakes political reform. On another, it is at its heart an old-fashioned purge of his enemies. Similarly, Mr Xi has centralised power, taking jobs and responsibilities that his predecessor delegated to others. Some observers think this shows he is strong; others conclude that he has been forced to act because he feels weak. + +Such contradictions are the backdrop to rumours about the forthcoming leadership changes. The only certainty is that the churn will be enormous. By late next year, five of the seven members of the Politburo’s Standing Committee will have reached retirement age. One-third of its 18 other members are due to go with them. In the coming months, as the combination of promotion and retirement cascades through official China, leadership posts will be shaken up at every level of the party. Hundreds of thousands of jobs will be affected, down to the level of rural townships and state-owned enterprises. + +Mr Xi is the only person all but certain to keep his current titles. He has six more years to serve (indeed some gossip foresees a power-grab that will enable him to stay on even longer). Meanwhile, many of his retiring colleagues owe their position to his predecessors; getting his people into the senior posts they vacate will involve a bitter fight with rival factions. Some analysts speculate about the future of the prime minister, Li Keqiang—who is neither close to Mr Xi, nor seen as having done a good job. + +China is not the only country whose government is so secret; in Russia, too, the machinations inside the Kremlin remain deeply mysterious (see article). But the sheer importance of China in the global economy makes its opacity more dangerous. The fact that gossip about Mr Xi’s bickering in Beidaihe matters so much is a symptom of the world’s fragility. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21705328-rumours-china-have-become-everyones-problem-beach-rules/print + + + + + +Previous Articles Sections Next + + + + +Letters + + + + + +On Egypt, Brazil, sustainability, methane, Canada, politics: Letters to the editor + + + + + +Articles Sections Next + +On Egypt, Brazil, sustainability, methane, Canada, politics + +Letters to the editor + +Aug 20th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Egypt responds + +Your articles on Egypt eschewed any objective analysis, focusing instead on spewing insults at Egypt’s president (“The ruining of Egypt”, “State of denial”, August 6th). It is deplorable that such a professional publication resorted to using subjective and politically motivated terms to characterise the economic policies of a country. Although criticism is welcome in the spirit of a constructive and informed manner, The Economist did not undertake the effort of providing a thorough analysis of Egypt’s economic policy and overlooked the accomplishments achieved across many economic sectors. + +Your claim that President Sisi came to power through a “coup” completely disregarded the will of the Egyptian people, who demonstrated in the millions for the ouster of the Muslim Brotherhood’s Muhammad Morsi and also voted in the millions for the election of President Sisi in a landslide victory. You accused him of “incompetence” in handling Egypt’s economic policies. President Sisi does not micromanage Egypt’s institutions and does not create economic policy in a vacuum; he is surrounded by institutions and consultants, an independent central bank and a cabinet of professionals who are in charge of decision-making in this area. The government is accountable to parliament and to Egypt’s people, who have the final say as to what they consider sound policy and what constitutes “incompetence”. + +You claimed that Egypt’s economy is sustained only through cash injections from the Gulf and military aid from the United States. It seems The Economist failed to notice the decline of US aid to Egypt in recent years. Mindful of the difficulties lying ahead, and the structural challenges that Egypt is wrestling with, any credible analysis would recall that the country has passed through an acute crisis since January 2011, which is still inflicting a high financial cost. + +Creating a new economic model takes time. The economic package recently achieved with the IMF, and so sarcastically undermined by The Economist, is itself an indication that Egypt’s economy is moving on the right track and can be considered as a clean bill of health for Egypt’s economic outlook. + +AHMED ABU ZEID + +Spokesman + +Ministry of Foreign Affairs + +Cairo + +The case for the defence + +There are some important points to be made about the crisis facing the Brazilian criminal justice system (“Defendant-in-chief”, August 6th). Many in Brazil, including Lula, its former president, are critical of federal prosecutors who leak their confidential but half-baked speculations to the media and of federal judges who unlawfully issue bench warrants and illegally disclose telephone intercepts in order to embarrass defendants. They also order indefinite pre-trial detention (ie, the refusal of bail) of “Car Wash” suspects to make them confess unreliably in order to get out of prison. It is against international norms when an oversuspicious investigating judge automatically becomes the trial judge, sitting without assessors or a jury. The testimony from Delcídio do Amaral, a former senator whom you referred to, was part of a plea-bargain agreement with the Federal Prosecutor’s Office, allowing him to leave prison after his confession had incriminated others. + +Lula is the leading candidate in every 2018 presidential poll, and the latest accusation against him demonstrates that this is a persecution and not a prosecution. Its objective seems to be to remove him from running for president. Lula has welcomed the investigation into corruption and has co-operated fully with it. It will be effective only if it is conducted fairly. + +CRISTIANO ZANIN MARTINS + +Lawyer for Luiz Inácio Lulada Silva + +São Paulo + + + + + +Sustaining sustainability + +When I told The Economist that “sustainability is about being a little less awful” an onslaught of e-mails challenged my statement, so I feel obliged to explain why I believe it to be true (“In the thicket of it”, July 30th). The Earth has lost half its wildlife in the past 40 years, society is increasingly unequal, and the last time there was this much carbon in the atmosphere humans didn’t exist. The apparently continuous and accelerating decline in the planet’s health is happening despite business and investors appearing to take social and environmental responsibility more seriously. To me, this is indicative of today’s approach to sustainability which is, as I said, just about being slightly less awful. + +Business must acknowledge this failure, regroup and seek a path towards true, science-based sustainability. Only then can we talk about sustainability being good and not just being less bad. + +CHRISTOPHER DAVIS + +International director of corporate responsibility + +Body Shop International + +Littlehampton, West Sussex + + + + + +* You rightly points out that there remains a substantial amount of work to do to make sustainability the new business norm. Disruptive innovations and standard business concerns to control risk and cost are breaking new ground and transforming business models. They are challenging the status quo of established industries—from fossil fuels to fashion. Given growing environmental and security threats, the private sector needs to accelerate inclusive growth and drive sustainability at far greater speed and scale. The Sustainable Development Goals (SDGs) are a framework for business to do just that. + + + +A major challenge is the trust deficit in society with regard to business, especially large multinationals and financial institutions. Recent political developments in Europe and America are widely seen as rebukes to economic elites and dramatic evidence of the dire lack of trust. The SDGs, therefore, have a second purpose: to serve as a roadmap for business to create the social license it needs to operate and thrive. + + + +By pursuing the SDGs through sustainable and inclusive new business models, the private sector can rebuild bridges. The result could be that sustainability loses its “faddish” reputation entirely, and instead, becomes an enduring business must-have. + + + +MARK MALLOCH-BROWN + +Chair + +Business & Sustainable Development Commission + +London + + + + + +The effects of methane + +When you stated that methane is “25 times as potent” a cause of global warming as carbon dioxide, you perpetuated the myth that there is a single conversion factor that translates the climate effect of methane into what would be caused by an “equivalent” amount of carbon dioxide (“Tunnel vision”, July 23rd). The number you quoted is based on a measure called “global warming potential”. This measure exaggerates the importance of methane because it fails to properly reflect the importance of the short (12 year) lifetime of methane in the atmosphere compared with carbon dioxide, which continues to transform the climate for centuries. + +A simple financial analogy is useful. If you opened a bank account for storing your methane emissions, it would be as if the account paid a negative interest rate of -8.3% annually (a concept which may become all too familiar in the real world of banking before long). The balance in the account represents the warming effect of the methane emitted. + +If you deposited $1,000-worth of methane today, in 50 years your account would be worth only $16. A big pulse of methane released today would have virtually no effect on the temperature around the time we hope global warming will be peaking. If you were to deposit a steady $100 of methane a year your account would be valued at $1,205 in a few decades but would then stop growing. The only way to increase the amount of warming from methane is to increase the annual emissions rate. Not so with carbon dioxide, which acts more like a bank account with a zero interest rate (rather like a real bank account these days). A fixed emission-rate of carbon dioxide accumulates in the atmosphere, leading to warming that grows without bounds over time. + +In fact, if warming causes the land ecosystems to start releasing rather than storing carbon, it would be as if your bank account had a positive interest rate. Not a bad thing for a real bank account, but bad news for climate if it is carbon dioxide you are banking. + +RAYMOND PIERREHUMBERT + +Professor of physics + +University of Oxford + + + + + +Border hopping + +* Canada’s internal trade restrictions may hamper growth (“The great provincial obstacle course”, July 23rd). But the exercise of sovereignty within its provincial borders yields unexpected delights. As a boy, I looked forward to regular journeys across the border to Quebec to buy a monthly supply of butter-coloured margarine, which was banned in our province. + + + +We stopped for Quebec sugar pie and my parents explained the very real and very odd impact of political policy on our lives, perhaps sparking my lifelong interest in microeconomics. + + + +GREG MOORE + +Sydney + + + + + +Critical rationalism + +Abenomics is an apt analogy for much of today’s politics and why voters worldwide are so dissatisfied (“Overhyped, underappreciated”, July 30th). Perhaps Karl Popper expressed it best: “Those who promise us paradise on earth never produced anything but a hell.” + +ROB HINDHAUGH + +London + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21705291-letters-editor/print + + + + + +Articles Sections Next + + + + +Briefing + + + + + +Housing in America: Comradely capitalism + + + + + +Articles Sections Next + +Housing in America + +Comradely capitalism + +How America accidentally nationalised its mortgage market + +Aug 20th 2016 | From the print edition + + + +THE most dramatic moment of the global financial crisis of the late 2000s was the collapse of Lehman Brothers on September 15th 2008. The point at which the drama became inevitable, though—the crossroads on the way to Thebes—came two years earlier, in the summer of 2006. That August house prices in America, which had been rising almost without interruption for as long as anyone could remember, began to fall—a fall that went on for 31 months (see chart 1). In early 2007 mortgage defaults spiked and a mounting panic gripped Wall Street. The money markets dried up as banks became too scared to lend to each other. The lenders with the largest losses and smallest capital buffers began to topple. Thebes fell to the plague. + + + +Ten years on, and America’s banks have been remade to withstand such disasters. When Jamie Dimon, the boss of JPMorgan Chase, talks of its “fortress” balance-sheet, he has a point. The banking industry’s core capital is now $1.2 trillion, more than double its pre-crisis level. In order to grind out enough profits to satisfy their shareholders, banks have slashed costs and increased prices; their return on equity has edged back towards 10%. America’s lenders are still widely despised, but they are now in reasonable shape: highly capitalised, fairly profitable, in private hands and subject to market discipline. + +The trouble is that, in America, the banks are only part of the picture. There is a huge, parallel structure that exists outside the banks and which creates almost as much credit as they do: the mortgage system. In stark contrast to the banks it is very badly capitalised (see chart 2). It is also barely profitable, largely nationalised and subject to administrative control. + + + +That matters. At $26 trillion America’s housing stock is the largest asset class in the world, worth a little more than the country’s stockmarket. America’s mortgage-finance system, with $11 trillion of debt, is probably the biggest concentration of financial risk to be found anywhere. It is still closely linked to the global financial system, with $1 trillion of mortgage debt owned abroad. It has not gone unreformed in the ten years since it set off the most severe recession of modern times. But it remains fundamentally flawed. + +The strange path the mortgage machine has taken has implications for ordinary people, as well as for financiers. The supply of mortgages in America has an air of distinctly socialist command-and-control about it. Some 65-80% of all new home loans are repackaged by organs of the state. The structure of these loans, their volume and the risks they entail are controlled not by markets but by administrative fiat. + +No one is keen to make transparent the subsidies and dangers involved, the risks of which are in effect borne by taxpayers. But an analysis by The Economist suggests that the subsidy for housing debt is running at about $150 billion a year, or roughly 1% of GDP. A crisis as bad as last time would cost taxpayers 2-4% of GDP, not far off the bail-out of the banks in 2008-12. + +America’s housing system has always been unusual. In most countries banks minimise their risk by offering short-term or floating-rate mortgages. American borrowers get a better deal: cheap 30-year fixed-rate mortgages that can be repaid early free. These generous terms are made possible by the support of a housing-finance machine that funnels cheap credit to homeowners and, in doing so, takes on the risk, thereby shielding both the borrowers and the investors. + +For decades lightly regulated thrifts did most of this lending. But in the 1980s they blew up due to a mixture of risky lending, inadequate capital and bad bets on interest rates. Between 1986 and 1996, over 1,000 thrifts were bailed out at a cost to taxpayers of about 3% of one year’s GDP. + +The vacuum left by the thrifts was filled by the new technology of securitisation, which seemed, for a while, to make the risk vanish altogether. There are several steps. Mortgages are originated, or agreed, with millions of homeowners. The loans thus underwritten are then spruced up to look more attractive or realise some profits; for example sometimes insurance may be taken out against defaults, or the rights to “service” loans (collect interest payments) sold off. Next the loans are guaranteed and securitised. The bundles of bonds thus produced are then flogged to investors. After all this, derivatives contracts are created whose value is linked to these bonds. + +The machine blew up in 2006-10 for a host of reasons, the most important of which was wild and sometimes fraudulent underwriting. There was a run on mortgage bonds and on the firms that issued or owned them. There have since been three big changes. + +The trouble with Gosplan + +First, banks have partially withdrawn from the mortgage game after facing swathes of new rules and $110 billion of fines for misconduct. They still own mortgage-backed bonds and they still make home loans to wealthy folk, which they keep on their balance-sheets. But with the exception of Wells Fargo they are less keen on writing riskier loans in their branches and feeding them to securitisers. New, independent firms like Quicken Loans and Freedom Mortgage have filled the gap. They originate roughly half of all new mortgages. + +The second big change is that the government’s improvised rescue of the system in 2008-12 has left it with a much bigger role (see chart 3). It is the majority shareholder in Freddie Mac and Fannie Mae, mortgage companies that were previously privately run (though with an implicit guarantee). They are now in “conservatorship”, a type of notionally temporary nationalisation that shows few signs of ending. Other private securitisers have withdrawn or gone bust. This means that the securitisation of loans, most of which used to be in the private sector, is now almost entirely state-run. Along with Fannie and Freddie, the other main players are the Veterans Affairs department (VA), the Federal Housing Administration (FHA) and Ginnie Mae, which helps the FHA and VA package loans into bonds and sell them. + + + +In all, these five bodies own or have guaranteed $6.4 trillion of loans: a book of exposure three times larger than Mr Dimon’s balance-sheet. The FHA, an agency tasked with promoting home ownership, has tripled its guarantee book since the crisis. The mortgage bonds into which these entities bundle their loans are perceived by investors to be almost as safe as Treasuries; though they charge a fee for this protection, it is far lower than that which private companies that do not benefit from the backing of the state would have to charge if they were taking on the same risks. Thus they face no competition. + +The last big change is the withering of the derivatives superstructure. The baroque instruments of the 2003-07 bubble, such as CDOs, CLOs and swaps on the ABX Index, have been stripped back after huge losses: trading activity has fallen by 90%. The mortgage machine is safer as a result. But even shorn of this amplifying mechanism, the machine is still connected to the broader world of global finance. American banks own 23% of all government mortgage bonds. + +American officials who served during the crisis tell war stories about trying to persuade their counterparts in China and elsewhere not to dump all their mortgage bonds. As a result of their efforts foreign central banks, private banks and financial firms still hold 15% of all mortgage bonds; Barclays’ mortgage-bond holdings are worth 22% of the bank’s core capital. The rest are mainly owned by domestic investment funds and the Federal Reserve which, due to its asset-purchasing scheme, holds $1.8 trillion of government mortgage bonds, or 27% of the total. + +This new credit machine has plenty of flaws. Almost everyone in the business worries that regulation of the new mortgage originators which funnel loans to the government-guarantee firms is too loose, for example; supervisors are looking at tightening up. But the biggest issue is the danger that sits with the state-run securitisers that magically transform risky mortgages into risk-free bonds. With a dearth of reliable market signals and a diminished profit motive, the risk appetite of the mortgage system is now entirely controlled by administrative fiat. There are at least 10,000 relevant pages of federal laws, regulatory orders and rule books. + +These are meant to prevent another blow-up by screening out undesirable loans before securitisation. They stipulate the profile of the borrower (a debt-servicing-to-income ratio of more than 43% is a poor lookout) and, indeed, the dimensions of the house (if prefabricated, it must be at least 12 feet, or 3.6 metres, across). They define the documentation required. They specify the design of mortgages: balloon payments (whereby repayment of the principal is pushed back to the end of the loan period) are a no-no, as are some fee structures. They impose rules on counterparties: mortgage insurers, for example, must have over $400m of assets at hand. Although there are no government quotas for the volume of new loans there are soft targets. + +Like water through cracks, risk still finds a way in. Federal law is silent on loan-to-value limits for borrowers, so this is one area where risky lending is booming, with a fifth of all loans granted since 2012 having LTV ratios of 95%, meaning homeowners are underwater if house prices fall by more than 5%. Most of these sit with the FHA. One big bank admits that it is selling at face value high-risk loans to the government that it expects will make a 10-15% loss due to homeowners defaulting. + +My indecision is final + +And all such rules are vulnerable to political pressure. Home-ownership rates have dropped to about 63% from a peak of 69% (see chart 4); many housing experts talk of an affordability crisis among the young and minorities. With Congress gridlocked and likely to remain so after the election, the mortgage machine is a largely off-balance-sheet way to funnel money to ordinary Americans, most of whom still want to own homes. Just as underwriting standards in the private sector gradually loosened over time before 2007, there are gentle signs of loosening evident today, too—rules on down-payments, for example, have been relaxed. Not yet frightening; but it never is, to begin with. + + + +All the new rules are silent on the mortgage system’s purpose. One potential justification is simply to facilitate a liquid mortgage-bond market. By acting as a common guarantor, the state can ensure that mortgage bonds are homogenous and easy to trade ($220 billion-worth change hands every day). Another is to subsidise home loans for a broader political or social purpose. In the absence of a grand design or clear political direction, the mortgage machine has assumed both roles. + +One response to the new mortgage system is to leave it be. After all, the previous approach, in which private securitisers played a bigger role, was a disaster. Household debt is relatively restrained at the moment; measured by debt-service-to-income ratios it is 10% below the long-term average. Based on the post-war experience, housing-debt crises come only every 25 years or so; it is not yet time to worry about another one. + +Leaving aside its fundamental irresponsibility, a course of inaction carries hard-to-quantify costs in the form of subsidies for borrowers. The securitisation industry believes there are reasons for not holding it to the same standard as the banks. But imagine that it were: that it had to carry the same level of capital as banks do and to make an adequate (10%) post-tax profit on that capital. The higher costs entailed give a sense of the scale of the current distortion. On this basis The Economist calculates the subsidy on mortgages to be running at $150 billion a year, 1% of GDP. (This estimate includes the impact of the Fed’s bond-buying on interest rates and the cost of tax breaks on mortgage-interest payments.) + +And the status quo also means that, in the event of another crash, taxpayers would be landed with a big bill. How big? Consider a spectrum of scenarios. At one end, the cumulative mortgage-system losses are 10%, the same as the actual losses in 2006-14 according to estimates by Mark Zandi of Moody’s Analytics. At the other, cumulative losses on all mortgages are assumed to be 4.4%—the level the Fed used in its stress tests of the banks in May 2016. Adjusting for the pockets of capital in the system, and the profits made by some parts of it, both of which can help absorb losses, this means that the total loss for taxpayers if another crisis strikes would be $300 billion-600 billion, or 2-4% of GDP. Most of this would fall on Fannie, Freddie and the FHA, which would need to draw money from the government to pay out on the insurance claims made by investors. + +Such a bill would hardly bankrupt America. But it would enrage it again. It is similar in size to the $700 billion TARP bail-out that Congress reluctantly passed in 2008. Lawmakers might be unwilling to pay for a repeat performance, especially with some of the benefit going abroad—and the mere possibility of their not stumping up would set the world’s financial markets a-jitter. If Congress signed off, a populist president might still be able to scupper the deal; the credit line through which Fannie and Freddie would be paid is governed by a contract between the Treasury and their regulator that comes under the executive. The catastrophic impact that a mortgage-bond default would have on the markets would almost certainly serve to ensure that the politicians did, indeed, act. But the capacity of American politics to disregard what used to seem almost certain is on the up these days. + +How to waste a crisis + +There is an alternative approach: force the mortgage machine to follow the same path the banks have. It would have to recapitalise and raise its fees enough to offer an acceptable profit on that capital. The subsidy would fall. Administrative controls could be eased. The risk of loss could be passed into private hands, either by privatising the mortgage-securitisation firms or by allowing them to shrink, with private banks and insurers now able to compete on a level playing field. Using the same approach as the Fed’s bank-stress tests, the system would need about $400 billion of capital. The cost of American mortgages would rise by about one percentage point. + + + +There are various proposals for reducing the government’s role in the system; the White House floated several in 2013, and there is a range of reform bills floating around Congress, the best of which is known as Corker-Warner. But no one is in a hurry to pass reforms that would result in higher mortgage rates at a time when the middle class is struggling. A lot of policy discussions obfuscate the basic issues, assuming either that mortgages are now much safer than they were in the past or that the mortgage-guarantee firms can be safer than the banks even though not subject to the same stringent capital rules. + +The government has pragmatic reasons to procrastinate. The coupons it gets on money loaned to Fannie and Freddie count as income but their debt doesn’t end up on its books; that provides a nice fillip for the accounts. The status quo also lets it avoid confronting a noisy group of hedge funds taking legal action over the treatment of Fannie’s and Freddie’s shareholders in the bail-out. If the government were to recapitalise or restructure the mortgage firms, it would probably need to reach a settlement with the hedge funds or defeat them. + + + +US property: Interactive county map & guide + +To be fair, some parts of the mortgage system are trying to find ways to push risks on to the private sector. Fannie and Freddie have written new “risk sharing” deals that take a slice of the risk on about $850 billion of bonds, and package it into securities that are sold to investors or swap contracts with reinsurance firms. But even if these measures did not look a little too like some of the opaque instruments that blew up in 2007-08 to be entirely comforting, they would be no substitute for proper reform. + +So the trigger for the most recent crisis remains the part of the global financial system that has been least reformed. Mortgages are still the place where many of America’s deepest problems meet—an addiction to debt, the use of hidden subsidies to mitigate inequality, and political gridlock. In the land of the free, where home ownership is a national dream, borrowing to buy a house is a government business for which taxpayers are on the hook. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21705316-how-america-accidentally-nationalised-its-mortgage-market-comradely-capitalism/print + + + + + +Articles Sections Next + + + + +United States + + + + + +Poverty in America: No money no love + +The campaigns: Fantastic people + +Entrepreneurial transit: George Washington’s bus + +Music and violence: Something in his whiskey + +Nashville: Hot sauce + +Putrid Pennsylvania: Kaned + +Flood and fire: From LA to CA + +Lexington: Normalising narcissism + + + + + +Articles Sections Next + +Poverty in America + +No money no love + +A row over Bill Clinton’s landmark welfare reform highlights how much deprivation survived it + +Aug 20th 2016 | BALTIMORE AND WASHINGTON, DC | From the print edition + + + +DANIELLE HUGHES wanted to graduate from high school. But after gangsters shot up her family home in New York, her mother ordered her to grab her baby son and flee. Now living with relatives in Baltimore, the 21-year-old single mother has no qualifications, no stable job and, having unsuccessfully sought government aid while interning as a receptionist, no prospect of a steady income. “I feel like I have lived through so much already,” she says. She has applied for a job as a cashier, but, in a city where the unemployment rate among blacks is twice that among whites, is not optimistic. “Sometimes you feel like giving up.” + +A dismal feature of this year’s election season is how little either of the main candidates has raised the endemic poverty that underlies such tough stories. Almost 15% of Americans are poor, including one in five children, and almost one in three households headed by a woman. That represents a level of deprivation, which rises and falls with the economy but has never dipped into single figures, higher than that of almost any other developed country. + +Donald Trump’s views on poverty alleviation are hazy; he is against teenage mothers getting welfare, “unless they jump through some pretty small hoops”. Hillary Clinton’s reticence on the issue is more telling, given her zeal for social policy. It reflects the complexity of the problem, the partisanship surrounding it and the degree to which both are exacerbated by a festering row over the merits of America’s last major welfare reform, which was signed into law by her husband 20 years ago on August 22nd 1996. + + + +The reform made a huge change to how America treats poverty, which liberals still decry. In search of hard-edged credentials, Bill Clinton had promised to make a life on dole less commodious for the nearly 14m single mothers and their children then surviving on handouts. “Make welfare a second chance, not a way of life,” was his slogan. Yet the bill concocted by Republicans in Congress was tougher than he wanted. It replaced an open-ended promise of federal support for needy women and children with a stricter regime, which capped the largesse, henceforth known as Temporary Assistance for Needy Families (TANF), at $16.5 billion a year, and put the states in charge of it. It also made TANF payments conditional on the recipient trying to find work; and it decreed that no one could receive them for more than five years in total. + +Daniel Patrick Moynihan, a Democratic senator, predicted the reform would lead to half a million children in New York “sleeping on grates”. Instead, it led to a huge drop in TANF claimants—their number fell by 66% in the first post-reform decade—which appeared, in the early years of the new regime, during which poverty fell, to come with no social cost and considerable gains. At a time of thrumming growth, most former claimants found jobs. This enabled them to enjoy both the dignity of work and a simultaneous increase in subsidies for low-paid work, including tax credits, which last year were worth around $70 billion. For those unable to work, there was increasingly little cash available. Adjusted for inflation, spending on TANF has declined by a third—to $11.1 billion in 2015 and, because some states divert it to other needs, such as child-care services, less than half of that was actually handed out. A big expansion in non-cash benefits, such as food stamps and housing vouchers, was meant to cover the shortfall. + +The reform still looks broadly positive. Fewer Americans are dependent on TANF than ever; yet, even in the pits of the 2007-09 recession, the poverty rate did not surpass a recent high of 15.1%, recorded in 1993. But the fact that it has not increased the share of people in poverty is not much to shout about. And in the tougher economic conditions of the past decade, shortcomings have been evident in the welfare system at every level. + + + +One concerns the quality of the jobs former claimants find themselves in. It was envisaged that, energised by honest toil, they would steadily climb the income scale. Yet the failures of the reform to provide the guaranteed public-sector jobs Mr Clinton had originally promised, and of the states to provide much useful training, have made that hard. A shift to low-grade services jobs across the labour market has done worse damage; the result is millions are stuck round about the poverty line. And for the minority who do prosper, high marginal tax rates, occasioned by the too-sudden withdrawal of tax credits and other in-work benefits, are a disincentive to progress. A single parent with children, climbing from the federal poverty threshold of $11,770 a year, could pay an effective tax rate of 60%. Factor in child care and other costs and she may see no gains from doing more or better-paid work at all. + +A more worrying contention is that dwindling payments have fuelled the creation of a new cash-poor underclass. Estimates by two scholars of poverty, Kathryn Edin and Luke Shaefer, suggested that, as a direct consequence of the two-decades-old reform, in 2011 there were 1.5m households, with 3m children, surviving on cash incomes of no more than $2 per person, per day—the World Bank’s global definition of poverty. A book published last September in which they advanced this thesis (“$2.00 a day: Living on Almost Nothing in America”) has been influential, especially on the left. While campaigning for the Democratic primaries in April, Mrs Clinton felt compelled to soften her erstwhile support for her husband’s reform, suggesting it was time “to take a hard look” at its legacy. + +Other wonks—on the right but also including former members of the Clinton administration—take issue with the claims made by Ms Edin and Mr Shaefer. A forthcoming paper by Scott Winship of the Manhattan Institute, a think-tank, argues that, after factoring in non-cash benefits and underreported income, a sunnier picture emerges. The only groups he finds to be worse off than they were in 1996, including childless households, were unaffected by the reform. Meanwhile, he argues that “children, in particular those in single-mother families—are significantly less likely to be poor today than they were before.” As for Ms Edin’s and Mr Shaefer’s most emotive claim, he says, “no one in America lives on $2 a day.” + + + +Household income inequality: ladders to climb + +Mr Winship is right that consumption is a better measure of poverty than income, and that there is scant evidence the reform increased the ranks of the poor. Yet cash is important; without the means to pay a phone bill or a haircut, no one, however well-nourished and sheltered, is liable to kick on. It is hard not to conclude that, even allowing for underreporting, the reform has denied too many poor Americans such means; between 1993 and 2013 the percentage of households on food stamps who had no cash income more than doubled. + +Instead of quibbling over the past, it would be better to ponder what America should do to cut poverty—and here there is more agreement, or at least potential for compromise. Concerned Republicans such as Paul Ryan, the Speaker of the House, argue for work-requirements to be extended to food stamps and other benefits. The record suggests that is a good idea; especially if, as Democrats want, in-work benefits such as tax credits are also boosted. But the safety-net for the least capable needs strengthening. That should include giving them more cash, by increasing TANF or limiting the ability of states to plunder it. + +If Mrs Clinton, the favourite to win in November, could strike such a compromise, she would emulate the best of her husband’s reform. If not, the debate over its merits may continue, for another decade or so, without easing the wretchedness of millions of American lives. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21705386-row-over-bill-clintons-landmark-welfare-reform-highlights-how-much-deprivation-survived/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Fantastic people + +Donald Trump shakes up his team again + +Aug 20th 2016 | WASHINGTON, DC | From the print edition + +Paul Manafort, Trump whisperer + +IN A bid to signal readiness to govern, Hillary Clinton, the Democratic presidential nominee, named the heads of her White House transition team on August 16th. The team—which will vet potential senior members of a Clinton administration and begin policy planning, in a standard practice for major party nominees—will be chaired by Ken Salazar, a centrist former senator from Colorado and ex-interior secretary, distrusted on the left for his pro-trade and pro-business instincts. + +A day later, signalling his readiness to wage a bare-knuckle, brutally populist slugging-match to keep Mrs Clinton from power, Donald Trump, the Republican nominee, announced a shake-up of his own team, appointing as his campaign chief executive Stephen Bannon, the chairman of Breitbart News, a hard-right, conspiracy-tinged website. Aides to Mr Trump told the New York Times that the businessman is also being advised on his upcoming debates with Mrs Clinton by Roger Ailes, a vastly experienced media strategist who cut his teeth teaching Richard Nixon how to appear more likeable on television. Mr Ailes resigned as chairman of Fox News in July amid allegations of sexual harassment by female former employees. + + + +INTERACTIVE: navigate your way through the policy landscape to a majority + +This tale of two campaigns came as opinion polls showed Mr Trump continuing to shed support among college-educated whites, married women and other voter blocs that have reliably skewed Republican in successive presidential elections. In interviews, Mr Trump has seethed at media reports that his campaign staff and prominent Republicans yearn for him to “pivot” to a more presidential approach, involving scripted attacks on Mrs Clinton read from a teleprompter. A leading advocate of such a pivot, Paul Manafort, remains Mr Trump’s campaign chairman, but his clout appears diminished by the recruitment of Mr Bannon and a new campaign manager, Kellyanne Conway, a Republican pollster who has worked for Mike Pence, Mr Trump’s running-mate, and Newt Gingrich, the former Speaker of the House of Representatives. It does not help Mr Manafort that he has spent days fending off reports about his time as a highly paid consultant to a Ukrainian political party with close ties to Russia. + +Mr Trump still draws large, frenzied crowds to rallies, and appears unwilling to abandon the style—involving appeals to America-first nationalism, doomy talk of crimes committed by immigrants, vengeful attacks on a “lying” press and claims that the November election may be “rigged”—that reliably fires up such gatherings. After all, that approach won him the presidential primary contest. He maintains hefty leads among his most loyal voter blocs, notably older whites without a college degree. But paths to general-election victory involve winning an increasingly daunting number of such voters, in such battlegrounds as Florida, Pennsylvania and the post-industrial Midwest, where his polls are going the wrong way. + +Mr Trump calls Mr Bannon and other hires “fantastic people who know how to win”. Republican leaders in Congress—routinely denounced as establishment shills and enemies of the working man by Breitbart News—may have different descriptions for the new Trump team. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21705383-donald-trump-shakes-up-his-team-again-fantastic-people/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Entrepreneurial transit + +George Washington’s bus + +The flourishing, efficient, semi-legal trade in ferrying New Yorkers around + +Aug 20th 2016 | NEW YORK | From the print edition + + + +IN PARTS of New York city, if you know what to look for, you will find a vast and quasi-legal transport network operating in plain sight. It is made up of “dollar vans”, private 15-passenger vehicles that serve neighbourhoods lacking robust public transport. With an estimated 125,000 daily riders, they constitute a network larger than the bus systems in some big cities, including Dallas and Phoenix. + +Van drivers, like all entrepreneurs, have recognised a market and met demand. Some shuttle between Chinese communities not connected directly by public transport: for example, Flushing in Queens, Manhattan’s Chinatown and Sunset Park in Brooklyn. Others serve Caribbean communities in Brooklyn and south-eastern Queens. The Utica and Flatbush Avenue corridors patrolled by the vans in Brooklyn are the borough’s busiest and third-busiest bus routes, respectively. These vans offer what New York City buses fail to provide: speed and reliability. They are also cheaper, at $2 per trip. + +Eric Goldwyn, an urban planner, compared a week’s worth of ridership data from the B41 bus route along Flatbush Avenue with average travel times of dollar vans making the same trip. Buses took an hour with a standard deviation of 15 minutes, meaning that 68% of all rides lasted between 45 minutes and 75 minutes. That’s a big window. Vans took just 43 minutes with a standard deviation of five minutes. + +New York City’s dollar vans trace their origins to 1980, when a massive public-transport strike sent customers looking for alternatives. Private vans surfaced to meet demand. The strike eventually ended, but the vans kept going. In 1993 the city took regulatory control over the industry and became responsible for licensing, inspections and insurance. In exchange for a licence to operate, drivers had to accept onerous legal requirements which few have complied with since. + +Technically dollar vans can accept only pre-arranged calls and must maintain a passenger list. The idea was to protect yellow taxis’ street-hail privilege and, according to Mr Goldwyn, elbow the vans out of business. But vans are flexible and spontaneous by their very nature; the street-hail prohibition goes ignored. In Brooklyn drivers cruise up and down Utica and Flatbush Avenues, tapping their horn to attract fares. Passengers wave and jump in, and the vans keep on rolling. Without street hails there would be no business. + +Dollar vans—even the 480 licensed ones—have been operating more or less illegally for decades. An estimated 500 more operate unlicensed. Lax enforcement means that the “pirates”, as they are called, have little incentive to go above board. “Why drive a name brand when you can drive a regular vehicle and make more money?” asks Winston Williams, whose struggle to pay insurance in the face of rogue competition forced him to shrink his fleet by 21 drivers. Several bills before the City Council attempt to close the gap between law and practice by allowing street hails and ramping up enforcement. + +Dollar vans—nimble and reactive as they are—might teach the Metropolitan Transportation Authority (MTA) something about the needs and preferences of passengers. The vans are fast because they make fewer stops than buses, which tend to load and unload every two blocks. City buses are slowed down further by the lack of all-door boarding and well-enforced bus lanes. “There’s a serious degree of policy inattention to operating the bus system in an effective way,” says Jon Orcutt of TransitCentre, a research group. Investment is much lower than in the subway, which carries 5.7m riders daily and commands $14.2 billion from the MTA’s five-year capital plan. Buses, which carry 2.1m riders daily, get just $2 billion. As long as the city neglects its buses, dollar vans will be there to mind the gap. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21705275-flourishing-efficient-semi-legal-trade-ferrying-new-yorkers-around-george/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Music and violence + +Something in his whiskey + +In country songs, at least, women are fighting back against domestic abuse + +Aug 20th 2016 | NASHVILLE | From the print edition + + + +ON A recent night at the “Grand Ole Opry”, a live radio show that is a country-music institution, the songs’ themes were familiar and unabrasive: homesick wayfarers, smoochy asseverations of love and the virtues of the simple life, God and corn whiskey. Until the guitars began twanging for “Church Bells”, sung by Carrie Underwood (pictured), the genre’s reigning queen. The ballad tells of a backwoods beauty who marries up, but to a violent man. After a beating she finds herself “covered in make-up…sitting in the back pew /Praying with the baptist.” + +As Robert Oermann, an expert on country music, says, unlike the sanitisations of pop, “country songs reflect the culture from which they spring.” Parts of the South, country’s heartland, suffer badly from domestic violence. For example, proportionally more women are killed by men in South Carolina than in any other state. That blight has always featured in country lyrics—but traditionally from the perspective of male perpetrators, who are only sometimes punished or even regretful. In the 1920s tune “T for Texas”, Jimmie Rodgers sang of shooting “poor Thelma/ Just to see her jump and fall.” As late as 1994, in “Delia’s Gone”, Johnny Cash’s narrator “found [Delia] in her parlour…tied her to her chair,” and killed her. + +For a long time, notes John Shelton Reed, a distinguished sociologist, country-music wives put up with their lot (as in “Stand by Your Man”); when they began fighting back, it was generally against the other woman rather than the creep, as when Loretta Lynn’s lyrics invited a love rival to “Fist City”. But gradually the reality of abuse crept in. The subject of a song by Reba McEntire from 1987 must “pretend that she fell down the stairs again”. + +Eventually, these victims laid claim to country’s tradition of righteous vengeance. In the same year as “Delia’s Gone”, Martina McBride’s “Independence Day” depicted a mistreated mother incinerating her home—and husband—on July 4th. Later, in the Dixie Chicks’ “Goodbye Earl”, two friends see off the tormentor of one of them with a plate of poisoned black-eyed peas. In Miranda Lambert’s “Gunpowder and Lead”, a woman waits for her assailant with a shotgun and a six-pack: “He slapped my face and he shook me like a rag doll /Don’t that sound like a real man.” + +Jenny’s liberation in “Church Bells”—she “slipped something in his Tennessee whiskey”—represents the apotheosis of this reversal. Pathbreaking as it was, “Independence Day” mixed its message with patriotism, a core country value, and, initially, some radio stations wouldn’t play it. “Goodbye Earl” is sardonic and, in its hymn to friendship, upbeat. “Church Bells” is triumphant—“How he died is still a mystery/ But he hit a woman for the very last time”—yet unflinching. And this time, no one is complaining or censoring it: on the contrary, it is wall-to-wall on country radio. As Beverly Keel of Middle Tennessee State University says, Ms Underwood is a crossover mega-star, who reaches “beyond the borders of country music to homes and cars across America”. (In another of her hits, “Blown Away”, a daughter lets her no-good father be swept away by a tornado.) + +This self-assertion does indeed mirror a broader shift in the way society, and women themselves, respond to domestic violence, most obviously in new laws, facilities and tools like the restraining order taken out against the Dixie Chicks’ Earl. The trajectory of the overall problem is hard to gauge, since more reporting may signify lower tolerance of offences rather than a higher incidence; but while it remains an epidemic, affecting around 10m people annually, its most severe manifestation—femicide—has fallen in the past 20 years. Fresh portrayals in country music and other art forms may have nudged as well as recorded evolving attitudes. Judy Benitez of the National Network to End Domestic Violence, for which Ms McBride was formerly a spokesman, says that “hearing someone on the radio singing about your experience, when you feel like no one else has gone through this or can understand, can be life-changing.” + +But country music captures some darker truths, too. The propensity of its heroines to kill in self-defence is atypical—but their disinclination to use shelters remains sadly realistic. For all the improvements, a study in Georgia found that, in the five years before their deaths, just 15% of those who died by domestic violence had contact with support agencies. Such crimes are overwhelmingly perpetrated with guns, despite state and federal laws meant to keep out them out of abusers’ hands: at the last count there had been 394 such fatalities in America this year. Guns, of course, are another staple of country music. Indeed, on the night Ms Underwood sang “Church Bells” at the Grand Ole Opry, one of the show’s sponsors was a firearms superstore. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21705385-country-songs-least-women-are-fighting-back-against-domestic-abuse-something-his/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nashville + +Hot sauce + +The new mayor of Music City’s formula for growth + +Aug 20th 2016 | NASHVILLE | From the print edition + +Megan Barry, standing by + +DURING last year’s mayoral race in Nashville, Megan Barry was accused of being an atheist; she duly went to church for a laying-on of hands. But if Music City remains traditional enough for politicians’ faith to be a sticking-point, it is sufficiently liberal to have installed Ms Barry, who as a councillor conducted its first same-sex wedding, as its first female mayor. Her experiences suggest a possible strategy for Democrats elsewhere, as well as the frictions they may experience. + +One has been with the Republican supermajorities in the Tennessee capitol, around the corner from her office—part of a widening stand-off between left-leaning southern mayors and conservative legislatures. In 2011 Nashville was involved in an early tussle over protections for gay and transgender people; this year a state bathroom bill like the one that ignited controversy in North Carolina failed, but a measure letting counsellors turn away patients on the grounds of “sincerely held principles” was passed. That cost Nashville at least three convention bookings, Mayor Barry laments, gently noting that the state relies on the city’s success, too. There have been disagreements over guns in parks (which the city was forced to allow last year), a putative rise in the minimum wage (nixed) and a plan to reserve 40% of work on big public projects for locals (ditto). + +Overall, though, visitors and migrants are undeterred. By Ms Barry’s count, 81 people move to Nashville every day. The foreign-born population has risen from 2% in 2000 to 13%, a contingent that includes America’s biggest Kurdish community. “What a gift!” she says hearteningly of the 120 languages spoken by pupils. The city has escaped the Islamophobia that has erupted in other parts of Tennessee; the failure, in 2009, of a bid to make English Nashville’s sole official language seems to have squashed nativist sentiment. + +Still, unsurprisingly, the boom has created its own tensions, such as rising housing costs and, say some, an exacerbation of racially tinged inequality. Critics on both left and right question the city’s generous business incentives, not least a $1m bung for a fifth series of the country-music drama “Nashville”, despite its transfer from ABC to the cable network CMT. Ingrid McIntyre of Open Table Nashville, an interfaith advocacy group, worries that the “whole workforce is being pushed out”. Homelessness is conspicuous; the poverty rate is a stubbornly high 20%. “I liked the old Nashville,” Ms McIntyre says. Justin Owen of the Beacon Centre of Tennessee, a free-market think-tank, reckons the city’s subsidies are “creating a lot of the problems it claims it needs to solve”. Everyone moans about the traffic. + +Ms Barry defiantly cites a swelling budget (up $121m without new taxes), rattling off housing and job schemes the extra cash is paying for. As for those incentives: “If anybody ever says to you, ‘Should we have a TV show and name it after your city?’, say ‘Yes’.” She thinks this “special sauce”—social liberalism and business-friendliness, yielding an electoral coalition of honchos and hipsters—can work for other urban Democrats. Perhaps, though not many enjoy the same helpful mix of tourist attractions, creative industries and universities. At least while the good times roll, though, it seems to go down well in Nashville. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21705377-new-mayor-music-citys-formula-growth-hot-sauce/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Putrid Pennsylvania + +Kaned + +How the state’s top prosecutor came to be convicted of criminal conspiracy + +Aug 20th 2016 | NEW YORK | From the print edition + + + +JOSHUA MORROW testified that he had been taken to a parking garage and searched for a recording device. His wallet, phone and keys were taken away. Mr Morrow, a political consultant, was patted down by the security detail of Kathleen Kane, the attorney-general of Pennsylvania, before they met for lunch. Over the meal, they hatched a plot to deny illegally leaking secret documents from a grand-jury proceeding. Mr Morrow’s tale was one of many such details revealed during Ms Kane’s trial. Her tenure in office, which started with such promise, ended in a conviction on nine charges, including perjury and conspiracy, on August 15th. She resigned a day later. + +Ms Kane was elected in a landslide in 2012. Not only was she the first woman to become the state’s attorney-general; she was the first Democrat to win since the job became an elected position in 1980. She had a good start. During her first year she earned praise for calling Pennsylvania’s ban, then in force, on same-sex marriage “wholly unconstitutional” and refusing to defend the state in a federal lawsuit against it. She also took a stand in favour of gun control, preventing Pennsylvanians who had been denied state permits from buying guns in other states. Pundits speculated she would soon run for higher office. + +During her election campaign, she vowed to review the handling of the Jerry Sandusky case. Mr Sandusky was a popular football coach at Pennsylvania State University, who had been accused of raping and molesting ten children. She suggested that the then attorney-general had slowed the investigation in the run-up to an election, so as not to upset fans of the Penn State football team. Mr Morrow testified under immunity that Ms Kane believed Frank Fina, a former star prosecutor who had headed the Sandusky case, had planted a negative story about her in a local newspaper. According to the complaint and testimony, Ms Kane began leaking secret documents from the grand-jury investigation to the press. She then concocted lies to cover up this abuse of power, blaming a senior deputy. + +She leaves behind 750 demoralised staffers in the attorney-general’s office. Cases have reportedly unravelled. Some lawyers have left, many who remain have been questioned, and some have filed suit. Earlier this month her office paid out $150, 000 to settle a former employee’s lawsuit. Ms Kane will be sentenced in October. She has already lost her law licence and faces up to 28 years in prison. + +Pennsylvanians are accustomed to politicians and officials leaving office in disgrace. While she was riding high, Ms Kane’s office investigated state employees, including two judges, and found they had exchanged thousands of pornographic, racist, homophobic and misogynistic e-mails on state computers. Some of the e-mails were released to the press, who of course dubbed the scandal “Porngate”. + +The Centre for Public Integrity, an NGO which grades state governments, gives Pennsylvania an F for its entrenched culture of malfeasance. It is ranked 45th in the country for integrity. Three former House Speakers and a former Senate president have all been convicted of corruption. State lawmakers have been involved in various public corruption cases going back at least four decades. In 1995 another attorney-general pleaded guilty to fraud involving campaign contributions. According to a poll by Franklin and Marshall College, Pennsylvanians are more concerned about corruption than the economy. + +Ms Kane’s case is a bit different. It was not about corruption in the typical way, says Terry Madonna of the Centre for Politics and Public Affairs at Franklin and Marshall College. It was not about illicit campaign contributions or bribery. “It was personal. It’s a story about retaliation, retribution and revenge.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21705380-how-states-top-prosecutor-came-be-convicted-criminal-conspiracy-kaned/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Flood and fire + +From LA to CA + +Aug 20th 2016 | From the print edition + + + + + +Thirteen people have been killed and 30,000 forced to leave their homes by severe floods around Baton Rouge in Louisiana. For the second time this year the state’s governor, John Bel Edwards, declared a state of emergency, which allows governors to tap state funds and some federal assistance. In March floods forced thousands from their homes and killed four people. The coast guard and an impromptu flotilla dubbed the Cajun Navy has come to the aid of many of the stranded. The state government is calling for more volunteers to help remove mud from homes as the waters recede. Returning residents have been warned to beware of snakes and ants also sheltering from the floods.In California 80,000 people have been ordered to leave San Bernardino County, to the east of Los Angeles, where a fire is advancing. The blaze, which began in the canyons around San Bernardino and spread quickly in high winds, has already burned up 30,000 acres, destroyed homes and made Interstate 15 impassable. It is just one of three fires wreathing parts of the Golden State in smoke. One in the northern part of the state, at Clayton, east of Oakland, is thought to be the work of an arsonist. The other is halfway between Los Angeles and San Francisco, near San Luis Obispo. California’s governor, Jerry Brown, has declared three countywide states of emergency. The risks from fires in America are increasing: the Forest Service says that the fire season is on average 78 days longer now than it was in 1970. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21705384-la-ca/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Normalising narcissism + +Even before Donald Trump, appeals to selfishness and grandiosity were poisoning the right + +Aug 20th 2016 | From the print edition + + + +THE website of the American Psychiatric Association warns members not to opine on the mental health of Donald Trump, Hillary Clinton or other challengers for the White House. The notice, first reported by the Washington Post, reminds psychiatrists that it is unethical to psychoanalyse public figures whom they have never met, though this election’s “unique atmosphere” may make them want to try. The temptation is clear. Crack open the “Diagnostic and Statistical Manual of Mental Disorders”, a widely used handbook, and the checklist for Narcissistic Personality Disorder could be notes for a Trump profile. Symptoms include abnormal attention-seeking, self-centredness, a sense of entitlement, exaggerated self-appraisal (ie, fibbing about achievements) and warped relations with others. The outside world is mostly of interest as a mirror, reflecting back on the narcissistic self. Mr Trump assured a recent interviewer: “I am much more humble than you would understand.” + +If Republicans hope to reclaim their party, they need to grasp how their leaders—including people who disagree with Mr Trump on many questions of policy—contributed to a wounded, resentfully navel-gazing psychological mood on the right that enabled the tycoon’s rise. Put another way, Republicans need to understand that the bad cousin of rugged individualism—conservative America’s founding value—is narcissism. + +True, self-regard is not unknown on the left. Think of President Bill Clinton’s private life, or those Democratic voters and public-sector workers who approach government budgets with a powerful sense of entitlement. But too often in recent years the right has taken such cherished principles as self-reliance and a stern moral code, often involving a sense of communion with a divine saviour, and let them sour into something darker. + +Consider three totems of Republican politics: God, guns and grit. Start with God. The alignment of born-again Christianity with politics is old news. It seems quaint now that George H.W. Bush, a man of quiet faith, fretted when his son, George W., named Jesus as his favourite philosopher in a Republican primary debate—the older Bush hoped “the Jesus answer” would not hurt his boy “very much”. By the 2016 election cycle, at least two candidates for the Republican nomination flatly declared that God wanted them to run. Announcing his candidacy, Scott Walker, the governor of Wisconsin, e-mailed backers to say that after much prayer, he was certain that “this is God’s plan for me”. + +When Lexington interviewed Ben Carson, a retired brain surgeon, on a campaign bus trundling through North Carolina, the softly spoken doctor explained his bargain with God: he would heed the call if his Creator opened the doors to a presidential run. Now, he said, those doors “appear to be flying open. So I am going to keep walking.” Such talk thrilled Christian conservatives, who flooded Dr Carson with donations. Lexington wondered why this was not blasphemy. Michael Cromartie, an expert on politics and religion at the Ethics & Public Policy Centre, a think-tank in Washington, notes that branches of American Christianity, such as parts of the evangelical pietist and Pentecostal traditions, often claim that God speaks directly to believers and (typically) tells them what they want to hear. Both Dr Carson and Mr Walker flopped in the primaries, Mr Cromartie says, raising the question: “What do they now think that God was saying?” + +Next, guns. Over the years the gun lobby has shifted from dry talk of a constitutional right to tote hunting rifles or visit gun ranges, to arguments that packing heat is the only sure defence when killers target loved ones, and the state is too incompetent or uncaring to help. Amid public alarm about terrorism, Senator Marco Rubio of Florida let it be known that he had bought a new gun last Christmas Eve, saying that if Islamic State visited his community or his family, his gun was “the last line of defence” and adding that “millions of Americans feel that way”. Senator Ted Cruz of Texas called guns “the ultimate check against government tyranny”, as if his supporters might battle the 101st Airborne should the feds suspend the constitution. This is an appeal to narcissism as well as to paranoia—a message that you, the heroic individual, will experience a very rare event (a coup d’état or terrorists crashing through your front door) and will be ready to fight back. This forces supporters of gun-control to tell gun-owners that they are deluded about being heroes, a hard message to sell. + +Last, grit. The Republican nominee from 2012, Mitt Romney, is a bigger and better man than Mr Trump will ever be. He has admirably refused to endorse his successor. But the Republican National Convention that nominated Mr Romney four years ago resembled a self-centred gathering of business-owners and entrepreneurs, congratulating themselves on their own success. Repeatedly, speakers boasted of their hard work, and railed against a clumsily worded comment by President Barack Obama that business owners “didn’t build” their companies, because they also relied on public investments in roads, schools or the internet. Republican delegates offered chants of “We built it”. Mr Romney told supporters to stand and say: “I am an American! I make my destiny. And we deserve better!” It all sounded peevish and self-regarding at the time, and offered little to the majority of non-business-owning voters who just want a decent job. + +The American dream takes a team + +The risks of individualism have been debated since America’s earliest days. Alexis de Tocqueville worried about frontiersmen withdrawing from society and believing that they “owe nothing to any man”. Despots love to stoke selfishness among their subjects, he went on, because it usefully divides the masses. Happily, he believed, American democracy offered a solution, as so many citizens served in local government and civic bodies, which offer their members valuable lessons about interdependence. De Tocqueville would have loathed this election. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21705378-even-donald-trump-appeals-selfishness-and-grandiosity-were-poisoning/print + + + + + +Previous Articles Sections Next + + + + +The Americas + + + + + +Brazil’s economy: The only way is up + +Gay rights (1): Open city + +Gay rights (2): Belize blazes a trail + + + + + +Articles Sections Next + +Brazil’s economy + +The only way is up + +The recession rages on. But there are incipient signs of recovery + +Aug 20th 2016 | SÃO PAULO | From the print edition + + + +FOR many Brazilians, the high point of the Olympic games in Rio de Janeiro came in the rain-drenched Engenhão stadium on August 15th. That was when Thiago Braz (pictured) won an unexpected gold medal, and set an Olympic record, in pole vaulting. Brazil’s beaten-down economy is nowhere near performing a feat that would remind anyone of Mr Braz’s jump. But it may be starting to pick itself back up. + +The signs are still tentative. Manufacturers are investing again: imports of capital goods were 18% higher in dollar terms in June than in the same month last year, the first year-on-year rise since September 2014. Industrial production increased in June for the fourth consecutive month after two years of nearly uninterrupted decline. Firms’ stocks of unsold goods are starting to shrink, and the number of lorries on motorways has stopped falling. + +Firms are not yet ready to hire more people, says Arthur Carvalho of Morgan Stanley, a bank, but firings have slowed. That is making consumers less glum; one consumer-confidence index rose for the third straight month in July. After repeatedly reducing its growth forecasts, the IMF recently revised upward its projection for GDP next year. It now expects a modest expansion of 0.5% in 2017; in April the Fund was predicting no growth. Some private-sector economists expect the growth rate to be as high as 2% next year. + +Much of the encouragement is coming from Brasília, the capital, which seems to be moving towards a resolution of the country’s prolonged political crisis. On August 25th the senate is due to begin the impeachment trial of Dilma Rousseff, Brazil’s unpopular president, on charges that she tampered with government accounts. Although she denies this, few observers doubt that she will be removed from office, probably in September. The vice-president, Michel Temer, who has been acting president since May, would then serve out the remaining 28 months of her term. + + + +Waxing and waning: Brazil's economic woes, in charts + +He has lifted spirits just by not being Ms Rousseff. The stockmarket has boomed since he took charge (see chart). More pro-business than the left-wing president and wilier in dealing with congress, Mr Temer promises confidence-boosting reforms. A bill to open up deep-sea oilfields to more private investment is making its way through congress. Another would oblige the environmental regulator to decide on licences for projects within ten months; this can now take years, investors grumble. On August 25th the government will present a list of state-owned firms it wants to privatise. The real’s sharp decline since 2011 makes Brazil’s exports more competitive, another spur to optimism. + +None of this means that the economy is yet in good shape. Household incomes are still falling and the unemployment rate is expected to rise by another percentage point, to around 12%, before it starts to dip sometime next year. Lenders and borrowers are still behaving cautiously. A privatisation of the Goiás state energy utility, planned for August 19th, was cancelled because it failed to attract bids from nervous investors. GDP data to be released this month are likely to show that the economy continued to contract sharply in the second quarter of this year. + + + +To keep confidence alive, Mr Temer must reduce the budget deficit, now an alarming 10% of GDP. Otherwise, high interest rates will continue to depress growth or inflation will surge. Mr Temer wants to amend the constitution to freeze government spending in real terms and to reform overgenerous pensions. So far, though, he has ramped up spending. He cajoled congress to relax Ms Rousseff’s target for this year’s primary deficit (before interest payments) from 1% of GDP to 2.5%. He accepted big public-sector pay rises and gave federal debt relief to Brazil’s bankrupt states. + +Mr Temer’s aides say generosity now will buy political support for fiscal reforms once Ms Rousseff is removed from office. The markets believe this: the cost of insuring against default on government bonds has dropped (see chart). But the cheers will fade unless Mr Temer clears the high bar he has set for himself and the country. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21705333-recession-rages-there-are-incipient-signs-recovery-only-way-up/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Gay rights (1) + +Open city + +The capital is progressive. The rest of the country is catching up slowly + +Aug 20th 2016 | MEXICO CITY | From the print edition + +Happily same-sex in the city + +OMAR GARCÍA CERVANTES, an aspiring novelist, was brought up in the state of Veracruz but moved to Mexico City 16 years ago. As a gay man, he is happier there than anywhere else. Mexico City has grown only more welcoming since he moved there. In November last year the mayor, Miguel Ángel Mancera, signed a declaration proclaiming its gay-friendliness. Gay marriage has been legal in the city since 2010; under a law passed in 2014, people can change their legal sex simply by applying to alter their birth records. Hate crimes against gays are almost unheard of, says Alejandro Brito of Letra S, a gay-rights activist group. + +Outside the city, the climate is more forbidding. Fans of the national football team are wont to shout “puto” (“faggot”) at opposing goalkeepers. The Catholic church, the spiritual home of 80% of Mexicans, continues to denounce gay marriage as a threat to families. Its influence is especially strong in states north-west of the capital. A demonstration last year against gay marriage in Guadalajara, the second-largest city, attracted more than 50,000 people, says the organiser, an alliance of church groups and educational institutions. + +Attitudes harden even a few miles outside Mexico City. Lorena Wolffer, an artist, noticed disapproving stares when she visited a hospital with her female partner recently. “We just turned to each other and said, ‘Of course, we’re in the state of Mexico,’” not the city, she recalls. + +But there is progress. Last year the supreme court ruled that state laws preventing homosexuals from marrying violate constitutional protections against discrimination. Three of Mexico’s 32 states (Michoacán, Colima and Morelos) have recently passed laws permitting gay marriage, joining Mexico City, Campeche, Coahuila and Nayarit in a liberal group of seven. Four more allow gay marriage but have not passed laws sanctioning it. + +In the 21 states that still forbid it, couples can now defy local laws by going to court; under the supreme court’s ruling, judges are obliged to give them permission to marry. In May this year Mexico’s president, Enrique Peña Nieto, proposed changing the constitution to make gay marriage legal throughout the country, though there is little prospect of that happening before the next presidential election in 2018. + +The spread of gay rights has been accompanied by more reports of violence against homosexuals. The number of homophobic murders has jumped to 71 a year on average over the past decade from 50 a year during the previous ten years, according to Letra S. In June, in the northern town of Monclova, a lorry driver shot Jessica González Tovar and ran her over in the presence of her female partner. + +But reports of more homophobic violence may be misleading. Letra S draws its data from newspaper reports, since the police do not report such crimes separately. The higher numbers may show that the press is reporting them more accurately, Letra S acknowledges. “There seems to be more homophobia,” says Nicolás Loza Otero of FLACSO, a university in Mexico City, “but I think there’s less.” + +That hopeful assessment is probably right. Even the conservative areas north-west of Mexico City are changing. Fresnillo, a town in Zacatecas, elected Mexico’s first openly gay mayor, Benjamín Medrano, in 2013. Rubí Suárez Araujo became Mexico’s first transgender municipal councillor in Guanajuato in March this year. Sexual diversity is increasingly visible in Guadalajara, says María Martha Collignon of ITESO, a university there. A gay marriage takes place nearly every week. + +Just under half of Mexicans support gay marriage, according to a poll conducted in 2013 and 2014 by the Pew Research Centre, a think-tank. But among those aged 18 to 34, 63% are in favour. Older Mexicans are becoming less censorious. “Parents aren’t saying they’re pleased at the news that their children are lesbian,” says Paulina Martínez of Metal Muses, a lesbian pressure group. “But they accept it more.” It will take years before Mexico becomes as tolerant as its capital, but gay people in the heartlands have grounds for hope. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21705345-capital-progressive-rest-country-catching-up-slowly-open-city/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Gay rights (2) + +Belize blazes a trail + +A small Caribbean country sets an enlightened precedent + +Aug 20th 2016 | From the print edition + + + +TINY Belize is having a moment of global fame. Simone Biles, the United States’ spring-loaded gold-medal gymnast, is also a citizen of the Caribbean state. Human-rights advocates, meanwhile, are more excited about the decision by its high court to decriminalise homosexuality. Section 53 of the criminal code, which threatens people who engage in “carnal intercourse against the order of nature” with up to ten years in prison, is unconstitutional, ruled the chief justice, Kenneth Benjamin, on August 10th. The decision may set a precedent for a conservative region. + +It was a long time coming. Caleb Orozco, a leader of the United Belize Advocacy Movement, a gay-rights group, waited three years for a hearing after challenging the law in 2010. His campaign provoked attacks and insults. Churches fought it, both in the courtroom as “interested parties” and through the media. Lance Lewis, president of Belize’s National Evangelical Association, called the court’s ruling “an abomination”. + +But it has given hope to campaigners in the ten other English-speaking Caribbean countries that still have Victorian-era anti-sodomy laws on their books. Among them is Maurice Tomlinson, a gay Jamaican lawyer who has fled to Canada because of hostility at home. He has challenged Jamaica’s “buggery laws” in the high court. He faces fierce opposition from the attorney-general and from nine church-based groups. + +Among Anglophone Caribbean countries, Jamaica is most hostile to gay rights. The prime minister, Andrew Holness, proposes a referendum to reaffirm anti-gay laws, which would probably pass. But opinion is growing more tolerant. The Gleaner, Jamaica’s most influential newspaper, argued in an editorial after the Belize judgment that “the state has no place snooping around the bedrooms of consenting adults.” + +In Guyana, where a president in 2001 vetoed legislation to ban discrimination against gay people, the current leader, David Granger, is setting a different tone. In January he said that he would “respect the rights of any adult to indulge in any practice which is not harmful to others”. Now it falls to Guyana’s parliament, and those of its neighbours, to write that principle into their countries’ laws. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21705344-small-caribbean-country-sets-enlightened-precedent-belize-blazes-trail/print + + + + + +Previous Articles Sections Next + + + + +Asia + + + + + +Immigration to Japan: A narrow passage + +Japanese citizenship: Inspectors knock + +Protecting India’s cows: Cowboys and Indians + +The Ismailis of Tajikistan: A hopeful Aga saga + +Australia and New Zealand: Transported + +Banyan: Full steam + + + + + +Articles Sections Next + +Immigration to Japan + +A narrow passage + +Begrudgingly, Japan is beginning to accept that it needs more immigrants + +Aug 20th 2016 | SHIN-OKUBO | From the print edition + + + +IN THE Shin-Okubo neighbourhood of Tokyo, smells of Korean food and snatches of the language waft in the air. A supermarket selling kimchi sits next to an Indian-run kebab shop—the latter complete with leaflets promoting Islam, the religion of the Calcutta-born owner. A local estate agent advertises staff that speak Chinese, Vietnamese and Thai alongside the floor plans for tiny Tokyo apartments. + +Shin-Okubo is a rarity in Japan. The country has remained relatively closed to foreigners, who make up only 2% of the population of 127m, compared with an average of 12% in the OECD, a club of mostly rich countries. Yet Japan is especially short of workers. Fully 83% of firms have trouble hiring, according to Manpower, a recruiting firm, the highest of any country it surveys. And the squeeze is likely to become much worse. The population is projected to drop to 87m by 2060, and the working-age population (15-64) from 78m to 44m, because of ageing. The Keidanren, the Japan Business Federation, and prominent business leaders such as Takeshi Niinami, the head of Suntory, a drinks company, have long called for more immigration. + + + +Shinzo Abe, Japan’s prime minister, says he would prefer to raise the relatively low proportion of Japanese women who work, and to keep all Japanese working later in life, before admitting droves of foreigners. But his government has nonetheless taken a few small steps to boost immigration. It has quietly eased Japan’s near-ban on visas for low-skilled workers, with agreements to allow foreign maids to work in special economic zones. It is now talking about relaxing requirements for Filipino carers. The authorities have also made student and trainee visas easier to obtain, and turned a blind eye to those who exploit them to recruit staff for jobs that involve very little study or training at kombinis (the ubiquitous corner stores, often staffed by Chinese) or in forestry, fishing, farming and food-processing. It may extend trainee visas from three years to five. Mr Abe has also boasted that he will reduce the time non-permanent residents need to live in Japan before becoming eligible for permanent residence to the “shortest in the world”—probably to less than three years (far from the shortest) from the current five. + +All this is starting to make a difference. Last year the number of foreign permanent residents reached a record 2.23m, a 72% increase on two decades ago—and the number of people on non-permanent visas is also rising. But the goal seems to be a surreptitious increase in the number of temporary workers and a more accommodating system for skilled workers, not the settlement of foreigners on a grand scale. Only tiny numbers of foreigners become Japanese citizens (see article) and even fewer are granted asylum: only 27 in 2015, a mere 0.4% of applicants. + +A few voices advocate opening the door more widely. Hidenori Sakanaka, a former immigration chief who now heads the Japan Immigration Policy Institute, a think-tank, reckons Japan needs 10m migrants in the next 50 years. At the very least the country needs a clear policy on bringing in menial foreign workers, rather than ignoring the abuse of student and trainee visas, says Shigeru Ishiba, a prominent lawmaker in the Liberal Democratic Party who is expected to challenge Mr Abe for the party’s leadership in 2018. The government needs to lay out the specifics of how many people it wants to attract and in what time-frame, he says. + +Public opinion seems to be gradually shifting. The authors of a recent poll by WinGallup were surprised that more Japanese favoured immigration than were against it—22% to 15%—although a whopping 63% said they were not sure. A warm embrace for lots of foreigners is unlikely. Japan’s nationalists do not have the power of Europe’s broad-based anti-immigrant movements. But the country prides itself on its homogeneity, and although the media no longer reflexively blame foreigners for all social ills, discrimination is still rife. Many landlords will not accept foreign tenants, ostensibly, says Li Hong Kun, a Chinese estate agent in Shin-Okubo, because they do not adhere to rules such as being quiet after 10pm and sorting the rubbish properly (a complex task). Others suggest terrorist attacks in Europe as a reason to keep Japan for the Japanese. Brazilians of Japanese origin, who were encouraged to migrate to Japan in the 1980s, have never really been accepted despite their Japanese ethnicity, notes Tatsuya Mizuno, the author of a book on the community. + +Even Mr Sakanaka and Mr Ishiba think all migrants must learn the language and local customs, such as showing respect for the imperial family. But the economic case for a bigger influx is undeniable. For those, like Mr Abe, who speak of national revival, there are few alternatives. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21705376-begrudgingly-japan-beginning-accept-it-needs-more-immigrants-narrow-passage/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Japanese citizenship + +Inspectors knock + +Getting a passport is not easy + +Aug 20th 2016 | TOKYO | From the print edition + + + +TO BECOME a Japanese citizen, a foreigner must display “good conduct”, among other things. The rules do not specify what that means, and make no mention of living wafu (Japanese-style). But for one candidate, at least, it involved officials looking in his fridge and inspecting his children’s toys to see if he was Japanese enough (he was). + +Bureaucratic discretion is the main reason why it is hard to get Japanese nationality. The ministry of justice, which handles the process, says officials may visit applicants’ homes and talk to their neighbours. It does not help that wannabe Watanabes must renounce any other passport: Japan does not allow dual nationality. And applicants must have lived in Japan for a minimum of ten years. Other requirements—speaking Japanese, holding sufficient assets—are similar to those in many countries, but still daunting. + +Small wonder that so few people naturalise. Last year the government received just 12,442 applications, which take 18 months or so to process; it granted citizenship to 9,469 people, compared with almost 730,000 in America. But that at least suggests most applicants are successful. Koreans and Chinese make up the vast bulk of them. New citizens are no longer obliged to adopt a Japanese-sounding name. And there is no fee to apply, in contrast with a charge of $595 in America and £1,236 ($1,613) in Britain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21705375-getting-passport-not-easy-inspectors-knock/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Protecting India’s cows + +Cowboys and Indians + +An udderworldly debate + +Aug 20th 2016 | Mumbai | From the print edition + +Milking it + +CLOSE your eyes and you could be in a farmyard: a docile heifer slurps a grassy lunch off your hand, mooing appreciatively. Now open your eyes to the relentless bustle of a huge city: the cow is tied to a lamp-post, cars swerve to avoid it and its keeper demands a few rupees for providing it with the snack. Across Mumbai, an estimated 4,000 such cow-handlers, most of them women, offer passing Hindus a convenient way to please the gods. In a country where three-quarters of citizens hold cows to be sacred, they form part of an unusual bovine economy mixing business, politics and religion. + +India is home to some 200m cows and more than 100m water buffaloes. The distinction is crucial. India now rivals Brazil and Australia as the world’s biggest exporter of beef, earning around $4 billion a year. But the “beef” is nearly all buffalo; most of India’s 29 states now ban or restrict the slaughter of cows. With such strictures multiplying under the government of Narendra Modi, a Hindu nationalist, entrepreneurs have sought new ways to profit. + +One promising line of business has been to become a gau rakshak, or cow protector. Some of these run charitably funded retirement homes for ageing cows, including rural, ranch-style facilities advertised on television. Other rakshaks have proven more concerned with punishing anyone suspected of harming cows or trading in their meat. Such vigilantes have gained notoriety in recent years as attacks on meat-eating Muslims or on lower-caste Hindus working in the leather trade have led to several deaths. A mob assaulted a group of Dalits (the castes formerly known as untouchables) last month in Mr Modi’s home state of Gujarat, thinking they had killed a cow. In fact they were skinning a carcass they had bought legitimately; Dalits traditionally dispose of dead cows. + +More commonly, India’s less scrupulous cowboys simply demand protection money from people who handle cattle. An investigation by the Indian Express, a newspaper, found that cattle breeders in the northern state of Punjab were forced to pay some 200 rupees ($3) a cow to ensure that trucks transporting livestock could proceed unmolested. Under pressure from the rakshaks, the state government had also made it harder to get permits to transport cattle. + +Earlier this month Mr Modi broke a long silence on the issue. Risking the ire of his Hindu-nationalist base, the prime minister blasted “fake” gau rakshaks for giving a good cause a bad name. If they really cared about cows, he said, they should stop attacking other people and instead stop cows that munch on rubbish from ingesting plastic, a leading cause of death. + +In any case, vigilantism and the beef trade generate minuscule incomes compared with India’s $60 billion dairy industry. The country’s cows and buffaloes produce a fifth of all the world’s milk. As Indian incomes rise and consumers opt for costlier packaged brands, sales of dairy products are rising by 15% a year. But although a milk cow can generate anywhere from 400 to 1,100 rupees a day, this still leaves the question of what to do with male animals, as well as old and unproductive females. + + + +Counting chickens: where the world's livestock lives + +Not all can be taken in by organised shelters. This makes the urban cow-petting business a useful retirement strategy. A good patch (outside a temple, say) can generate around 500 rupees a day from passers-by. Feed costs just 20 rupees a day, says Raju Gaaywala, a third-generation cow attendant whose surname, not coincidentally, translates as cow-handler. + +He inherited his patch in Mulund, a northern suburb of Mumbai, when his father passed away in 1998. His latest cow, Lakshmi, cost him 4,000 rupees around three years ago and generates around 40 times that every year, enough to send his three children to English-language schools and, he hopes, to set them up in a different form of entrepreneurship. + +The handlers fear their days may be limited. A nationwide cleanliness drive has targeted urban cow-handlers, who are in theory liable for fines of 10,000 rupees. In practice the resurgent Hindu sentiment under Mr Modi should help leave the cattle on the streets. It may kick up other opportunities, too. Shankar Lal, an ideological ally of the prime minister’s, in an interview with the Indian Express extolled the many health merits of cow dung. Spreading a bit on the back of a smartphone, as he does every week, apparently protects against harmful radiation. Usefully for Indian farmers, only local cows can be used, not Western breeds such as Holsteins or Jerseys, he warns: “Their dung and milk are nothing but poison.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21705374-udderworldly-debate-cowboys-and-indians/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Ismailis of Tajikistan + +A hopeful Aga saga + +In the poorest bit of the former Soviet Union they look to a leader of yore + +Aug 20th 2016 | From the print edition + +Khorog at rush hour + +THE region of Badakhshan, which covers most of the eastern half of Tajikistan but hosts barely 3% of its population, is probably the poorest bit of the former Soviet Union’s poorest country. Scraping a living at the rugged western end of the Pamir mountains, its people feel remote from the government in Dushanbe. Their biggest town, Khorog, where anti-government violence has broken out twice in the past four years, is slap on the border with turbulent Afghanistan to the south. Warlords and drug-traffickers, often one and the same, frequently hold sway on both sides of the frontier. The inhabitants, most of whom follow the Ismaili version of Shia Islam, were generally on the losing side of the vicious civil war that ravaged Tajikistan from 1992 to 1997. + +Their biggest benefactor by far is the Ismailis’ hereditary leader, Prince Karim Aga Khan. A Swiss-born British citizen, he is resident mainly in France; one of his horses recently won the Epsom Derby, one of the grandest British races of the year; he also skied for Iran in the 1964 Winter Olympics. + +His most ambitious educational project in Badakhshan is a branch of the nascent University of Central Asia, created under the auspices of the Aga Khan Development Network (AKDN), which is said to employ 80,000 people in the 30-odd countries where the Ismailis’ 15m-strong diaspora resides. Along with campuses in Kazakhstan and Kyrgyzstan, its remotest academic outpost is in Khorog. The AKDN does an array of other good works in eastern Tajikistan. + +The authorities in Dushanbe have sometimes viewed the munificent 79-year-old Aga Khan with suspicion, as he is so much more popular than they are in the fastnesses of the Pamir. But he goes out of his way to stay on polite terms with them and to keep out of formal politics, paying for charitable works in the capital and elsewhere, and investing in telecoms, energy and tourism. The Serena Hotel, part of a worldwide chain his family owns, is the best hotel in Dushanbe. The Ismaili faith puts much emphasis on pluralism, education and social justice—things that Tajikistan still badly lacks. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21705372-poorest-bit-former-soviet-union-they-look-leader-yore-hopeful-aga-saga/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Australia and New Zealand + +Transported + +New Zealanders are the unexpected victims of tighter rules for immigrants + +Aug 20th 2016 | SYDNEY | From the print edition + + + +“NO TWO nations could be closer,” insists Malcolm Turnbull, Australia’s prime minister, of his country’s ties with New Zealand. Gary Howes is not so sure. Like many young New Zealanders, he moved to Australia with his family when he was a child. “Australia is my home,” he says. But after a brush with the law Mr Howes, now 25 years old, was locked in an immigration detention centre and then deported to New Zealand, a country he says he barely knows. + +Immigration detention centres in Australia now hold almost 200 Kiwis, more than any other nationality (Australia also keeps some would-be immigrants in camps in Papua New Guinea and Nauru). About 650,000 New Zealanders live in Australia, ten times the number of Australians in New Zealand. They are entitled to “special category” visas, which allow them to live and work in Australia without restriction. But they are not citizens, and so are subject to the tighter rules on the conduct of immigrants introduced by Tony Abbott, Mr Turnbull’s predecessor. In particular, any foreigners who are jailed for a year or more lose their visas automatically. + +Because their visas are otherwise so accommodating, many Kiwis do not bother taking Australian citizenship even after many years’ residence. So the new policy has scooped up relatively more New Zealanders than other nationalities. Mr Howes served a two-year prison term for theft. He returned for a shorter stint after breaking parole. While in prison, he received an official letter saying his visa had been cancelled and he would be expelled. + +Peter Dutton, Australia’s immigration minister, will not say how many New Zealanders Australia has deported since the law changed. Oz Kiwi, an advocacy group, thinks it is about 600. Joanne Cox of Oz Kiwi accuses Australia of applying the law retrospectively, even to some who had done prison time before the change: “They were juvenile offenders, now grandparents. Hardly the dregs of society.” + +Amid such outcry, Mr Turnbull six months ago announced a plan to drop visas for some New Zealanders and allow them permanent residence. Eligible Kiwis must have lived in Australia for five years and earn at least A$53,900 (about $41,000) a year. Mr Turnbull called it a “streamlined pathway to Australian citizenship”. But that does nothing to stop the deportations of less well-paid New Zealanders. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21705371-new-zealanders-are-unexpected-victims-tighter-rules-immigrants-transported/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Full steam + +If long-standing tensions ease in the South China Sea, China will ensure they rise elsewhere + +Aug 20th 2016 | From the print edition + + + +WITH all respect to the endearing Fu Yuanhui, the Olympic swimmer whose goofy post-race interviews have made her a global star, the Chinese are creatures of the land, not the water. On the beaches of Sanya on the southern island of Hainan, China’s new Hawaii, crowds of holidaymakers in tropical shirts dabble awkwardly at the water’s edge; few actually plunge into the sea. In the Sanya market a fishmonger explains a national aversion to deep water more bluntly: the Chinese, she says, simply don’t have sea legs. Refusing to go afloat herself, she buys her fish from the boat people living in the harbour, an ethnic subgroup whose generations have come into the world afloat and gone out the same way. Tanka, as these people are called in southern China, have historically faced discrimination. Even the name, “egg people”, has the force of an insult in Chinese (they call themselves “on-the-water people”). + +So it is striking how large water now looms in China’s diplomatic calculations and in the region’s geopolitics, nowhere more so than in the South China Sea that Sanya looks out on. It is there that the gunboat diplomacy which China has employed in recent years to back expansive maritime claims has stirred nervousness among South-East Asian neighbours—and created fears of a collision with America. + +Sanya is part of the story. An expanding deepwater naval base there is intended to project China’s power far into the South China Sea and to support a new archipelago of artificial islands that China has built on reefs and atolls a long way from Chinese shores. Three of these bases in the Spratly islands have military-length runways, and recent satellite pictures show the construction of concrete bunkers, presumably for fighter jets. Back in Sanya, a base for nuclear submarines cuts into the mountainside. Even Hainan’s lowly fishermen play a part. Formed into waterborne “people’s militias”, their vessels have grabbed fishing grounds far from home by chasing off their counterparts from neighbouring countries, such as the Philippines and Vietnam. + +Last month an international tribunal in The Hague issued a ruling in a case brought by the Philippines that challenged, among other things, China’s “indisputable historical claim” in the South China Sea. In a damning rebuke, the tribunal dismissed China’s assertion of sovereignty over a vast area within a “nine-dash” line that encompasses nearly all of the sea. + +China reacted with fury. The nine-dash line has long been a matter of national pride. A recent letter to The Economist from the foreign ministry asserts that there are “ample historical documents and literature” to show that China was “the first country to discover, name, develop and exercise continuous and effective jurisdiction over the South China Sea islands”. Bunkum. As Bill Hayton points out in his book, “The South China Sea”, the first Chinese official ever to set foot on one of the Spratlys was a Nationalist naval officer in 1946, the year after Japan’s defeat and loss of control of the sea; he did so from an American ship crewed by Chinese sailors trained in Miami. As for the story of the nine-dash line, it begins a only decade earlier with a Chinese government naming commission. China was not the first to name the islands; the commission borrowed and translated wholesale from British charts and pilots. + +Yet no Chinese official could ever admit this. The nine-dash line has for decades graced maps of China in every schoolroom in the land—part of what one academic has described as a cartography of humiliation: a narrative about what China lost in the past to imperialist depredations and what it rightly owns today. + + + +In graphics: A guide to the South China Sea + +So what happens next? To some, laying bare China’s claims will only raise the stakes. When a Singaporean author and former diplomat, Kishore Mahbubani, predicted earlier this month that tensions would not lead to military conflict between China and America, the auditorium broke into applause—as much for the boldness of his assertion as in the hope that he may be right. Some predict that China will take advantage of what is left of Barack Obama’s presidency to start building on the disputed Scarborough Shoal, from which Chinese ships dislodged the Philippine navy in 2012. America has suggested that such a move would constitute a red line. But, fairly or not, Mr Obama does not have the reputation of an energetic enforcer of red lines. + +China will not necessarily act provocatively. Challenging America, backed as it is by much of South-East Asia, carries risks. Besides, despite its legal setback, China’s military position in the South China Sea is stronger than ever—even without a base on Scarborough Shoal. The trip to Hong Kong last week of a former president of the Philippines, Fidel Ramos, to meet senior Chinese officials and try to improve roiled relations, had the air of a vassal’s visit. The imperial power could now be magnanimous, allowing Philippine fishermen to fish where they always have. + +There are other seas full of fish + +A pause, perhaps, but far from the end of the matter. Indeed, even if tensions ease in the South China Sea, they are rising again in the East China Sea, around the Senkaku islands which Japan controls but which China claims (and calls the Diaoyu). In recent weeks, fleets of Chinese fishing boats have crowded into the waters around the uninhabited islands, backed by Chinese fisheries-protection vessels, part of the coastguard. The incursions are the most intense since China began challenging Japan for control of the islands four years ago. Japan has protested at both the onslaught and a military radar found on a nearby Chinese oil rig. + +China’s latest actions may be to please a nationalistic audience back home. They may be to warn a new, right-wing cabinet in Japan against visiting Tokyo’s militaristic Yasukuni shrine around the anniversary of the end of the second world war. (No member has.) Or they may simply be to show who calls the tune in East Asia these days—now it’s Japan’s turn to dance. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21705373-if-long-standing-tensions-ease-south-china-sea-china-will-ensure-they-rise-elsewhere-full/print + + + + + +Previous Articles Sections Next + + + + +China + + + + + +Politics: Xi’s day at the beach + +History: The return of the Xia + + + + + +Articles Sections Next + +Politics + +Xi’s day at the beach + +The leadership’s annual retreat will not have been relaxing + +Aug 20th 2016 | BEIDAIHE | From the print edition + + + +RESPLENDENT in a pleated chef’s hat, Yang Zhibin supervises the kitchens of Kiessling’s restaurant in the resort town of Beidaihe, where he has worked since 1971 and where, every August, China’s political elite gathers for highly secretive meetings. Now head chef, Mr Yang helps ensure that little changes at the resort’s grandest restaurant. “There are over 20 dishes on the menu that we’ve been cooking for 100 years,” he says. “We wanted to keep the traditional style.” A diner who gives his name as just Houzi (meaning “monkey”) says: “I first came to Kiessling’s 30 years ago. Only the prices have changed.” + +The town of Beidaihe, a beach resort 175 miles (280km) east of Beijing, feels stuck in a time warp. Hotels even have embroidered sheets. Yet as the annual political gathering ended on August 16th, Beidaihe’s staid, timeless feel was proving misleading. The country’s politics has entered a period of unusual uncertainty and tension. In the coming months President Xi Jinping will supervise sweeping changes to the party’s leadership at every level, culminating late next year in the unveiling of a new Politburo (which he will continue to lead). This five-yearly process will be overshadowed by bitter struggle between the president and rivals close to his predecessors, as well as growing concerns about the health of the country’s economy. The leaders in their seaside villas will not have been in the mood to party. + +It was Mao Zedong who began the tradition of holding informal meetings at Beidaihe. The idea was to provide a forum at which current and former leaders could meet away from Beijing’s sweltering summer and daily grind. In the 1980s and 1990s the discussions were a useful way for Deng Xiaoping, who was then pulling strings behind the scenes, to convey his views to those who were nominally in charge. But Mr Xi tries to keep interfering party elders at bay (his predecessor-but-one, Jiang Zemin, turned 90 on August 17th, though still retains influence). Unlike his immediate predecessor, Hu Jintao, Mr Xi appears to have far less time for the old boys. + +Power plays + +In theory it should be relatively easy for Mr Xi to place henchmen in positions of power during the reshuffles. The president is far more of a strongman than Mr Hu was. He has dismantled Deng’s system of “collective” leadership, taking to himself more formal positions of authority than his predecessors did. As were Mr Hu and Mr Jiang, Mr Xi is the party’s general secretary, state president and chief of the armed forces, but he is also much more. He has expanded a system of “small leading groups” under his own chairmanship, giving them sway over areas of policy that used to be the preserve of the government and the party’s highest bodies. + +Mr Xi has also been engaged in a fierce campaign against corruption, which has spread fear throughout the bureaucracy; his rivals have been among its most prominent victims (the most recent, Ling Jihua, who once served as Mr Hu’s aide, was sentenced to life imprisonment in July). In all, 177 people with deputy-ministerial rank or above have been investigated as part of the crackdown since Mr Xi took over in 2012. He has had over 50 generals arrested for graft and promoted his own men in their place, says Cheng Li of the Brookings Institution, a think-tank in Washington, DC. + +Even so, Mr Xi’s authority remains hemmed in. True, his position at the highest level looks secure. But among the next layer of the elite, he has surprisingly few backers. Victor Shih of the University of California, San Diego, has tracked the various job-related and personal connections between the 205 full members of the party’s Central Committee, which embodies the broader elite. The body rubber-stamps Mr Xi’s decisions (there have been no recent rumours of open dissent within it). But the president needs enthusiastic support, as well as just a show of hands, to get his policies—such as badly needed economic reforms—implemented. According to Mr Shih, the president’s faction accounts for just 6% of the group. That does not help. + +Admittedly, this number should not be taken too literally: it is difficult to assign affiliations to many of the committee’s members. Doubtless, too, many members who are not in Mr Xi’s network support the president out of ambition or fear. Still, Mr Xi can rely on remarkably few loyal supporters in the Central Committee because he did not choose its members. They were selected at the same time he was chosen as party leader in 2012, a process overseen by the dominant figures of that period, Mr Hu and the long-retired Mr Jiang. + +Next year the party will appoint a new Central Committee at its regular five-yearly congress, which will probably take place in October. This time not only will Mr Xi be in charge of the process, he will also have more places than usual to fill. Normally 40-60 full members retire every five years when they reach the committee’s retirement age of 65 (the age for the Politburo is 68). Assuming the retirement ages do not change, 85 committee members will leave in 2017. Seven more have been purged for corruption, bringing to 92 the total number of places Mr Xi will have available to fill. At Beidaihe this summer, the elite is thought to have had its first look at the new line-up. + +Some of the jobs will be filled by the principle of Buggins’s turn. But if Mr Xi were able to pick, say, half the new members, that would sharply increase the level of his support in the committee—though even then he could not count on a majority of loyal backers. It would extend his power but not make it absolute. That would frustrate him. His predecessor, Mr Hu, likewise inherited a Central Committee stacked with members installed by the outgoing leadership, but he was a relatively weak leader who showed limited appetite for difficult economic reforms. At least rhetorically, Mr Xi has appeared more ambitious (there are even rumours that he wants to stay on after 2022, when he would normally be expected to step down). + +These personnel battles will be fought behind closed doors over the next year or so. Mr Yang, the chef, will be kept busy. Members of the elite used to come to his restaurant to eat. Now, he says, he more often gets summoned to cook for them in their beach houses. Presumably while they plot to eat each other’s lunch. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21705382-leaderships-annual-retreat-will-not-have-been-relaxing-xis-day-beach/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +History + +The return of the Xia + +Geological evidence has boosted a founding myth, and spurred controversy + +Aug 20th 2016 | BEIJING | From the print edition + +If only the shell could be found + +CHINA’S leaders are immensely proud of their country’s ancient origins. President Xi Jinping peppers his speeches with references to China’s “5,000 years of history”. The problem is that archaeological evidence of a political entity in China going back that far is scant. + +There is some, including engravings on animal bones, that shows the second dynasty, the Shang, really did control an area in the Yellow river basin about 3,500 years ago. But no such confirmation exists for the legendary first ruling house, the Xia. Even inside China, some historians have long suspected that the country’s founding story—in which Emperor Yu tames flooding on the Yellow river (with the help of a magic black-shelled turtle, pictured), earns for himself the “mandate of heaven” and establishes the first dynasty—was either a Noah’s-Ark flood-myth or perhaps propaganda invented later to justify centralised state power. This month, however, state-controlled media have been crowing over newly published evidence in Science, an American journal, that at least the flooding was real. This, they say, has made it more credible that the Xia was, too. Not everyone is so convinced. + +Catastrophic floods leave their mark on soil and rocks. Qinglong Wu of Peking University and others have examined the geology of the upper reaches of the Yellow river. In the journal, they conclude that a vast flood did take place in the right area and not long after the right time for the supposed founding of the Xia. Although their evidence does not prove the existence of an Emperor Yu or of the dynasty he founded, it does provide a historical context in which someone might have gained power with the help of flood-taming exploits. + +According to Mr Wu, a vast landslide, probably caused by an earthquake, blocked the course of the Yellow river as it flowed through the Jishi gorge on the edge of the Tibetan plateau. For six to nine months as much as 16 cubic kilometres (3.8 cubic miles) of water built up behind the accidental dam, which, when it finally burst, produced one of the biggest floods ever. At its peak, the authors calculate, the flow was 500 times the normal discharge at Jishi Gorge. Mr Wu reckons the ancient flood could easily have been felt 2,000km downstream in the area of the Yellow river said by Chinese historians to have been the realm of the Xia. + +At about this time, either coincidentally or (more probably) because of the flood, the river changed its course, carving out its vast loop across the north China plain. The significance is that, while the river was finding its new course, it would have flooded repeatedly. This is consistent with old folk tales about Emperor Yu taming the river not through one dramatic action, but by decades of dredging. + +The ancient flood can be dated because the earthquake that set the catastrophic events in motion also destroyed a settlement in the Jishi gorge. Radiocarbon dating of inhabitants’ bones puts the earthquake at about 1920BC—not 5,000 years ago but close-ish. Xinhua, a state news agency, lauded the study as “important support” for the Xia’s existence. Xu Hong of the Chinese Academy of Social Sciences challenged this, saying the scholars’ findings had not proved their conclusions. The first dynasty has gone from myth to controversy. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21705381-geological-evidence-has-boosted-founding-myth-and-spurred-controversy-return-xia/print + + + + + +Previous Articles Sections Next + + + + +Middle East and Africa + + + + + +African democracy: The march of democracy slows + +Israel and Gaza: Alms for the enemy + +Christians in the Arab world (1): Crimes and no punishment + +Christians in the Arab world (2): Under the gun + + + + + +Articles Sections Next + +African democracy + +The march of democracy slows + +Threats to democratic rule in Africa are growing, but time and demography are against the autocrats + +Aug 20th 2016 | LUSAKA | From the print edition + + + +MUSIC blasts from speakers mounted on the back of a truck in a rubbish dump in a corner of Lusaka, Zambia’s capital. Young men with bandannas over their faces form a security cordon. Children climb on top of a dumpster to get a better view. A woman swigs from a bottle of local rum as she dances provocatively on the makeshift stage. A man in a suit steps up and the music stops. “Zambia!” he shouts. “Zambia!” roars back the crowd. + +This is not a music festival. It is a political rally. Yet for all the jovial colour of the occasion, democracy in Zambia is not well. The rally was held on a stinking rubbish dump because the government refused to let Hakainde Hichilema, the main opposition candidate for the presidency, use any other public space in the area. Mr Hichilema was repeatedly refused permission to fly his helicopter to campaign elsewhere. The country’s leading independent newspaper, the Post, was shut down, ostensibly over a tax bill, after it reported on what it said were plans to rig the election. Several rallies turned violent, leaving at least one person dead. + +After the election, held on August 11th, the counting of the votes lasted four days instead of the usual two. On the third day, Mr Hichilema’s party withdrew from the verification process, complaining that the electoral commission was colluding with the party of the incumbent, Edgar Lungu, to boost his vote. In the end Mr Lungu was narrowly re-elected, despite a collapsing economy and an inflation rate of 20%. + +Zambia’s marred election is a particular disappointment. In 1991 it was the second country on the continent to expel an incumbent ruler at the ballot box, following Benin by a few months. It again booted out the ruling party in 2011, establishing a healthy pattern of alternation that now seems threatened. + +Zambia is an unnerving example of how democracy, which had seemed finally to be about to bloom on the world’s poorest continent, is still struggling to take root in many parts of it. Looked at through a wide lens of history, Africa’s standard of governance is almost unimaginably better than it was at the end of the cold war. Then a dart thrown at the map would almost certainly have landed on a one-party state, military junta or outright dictatorship. + +Economic liberty was much scarcer then, too: various forms of socialism abounded, from Tanzania to Ghana, Ethiopia to Angola. Freedom House, an American think-tank, reckons that in 1988, just before the cold war ended, only 16 countries in sub-Saharan Africa could be classified as “free” or “partly free”. Since then, the organisation reckons that 29 of the 48 countries in the region can be considered “free” or “partly free”. + +Yet zoom in the historical lens to view the past few years and it seems that the picture is mixed. Some places are seeing progress. In South Africa, the African National Congress, which has ruled since the end of apartheid, lost its majority in several major cities in local elections this month. Despite efforts by its president, Jacob Zuma, to hollow out institutions such as the prosecutors’ office, national broadcaster and anti-corruption agency, a critical press, independent judiciary and vocal opposition are keeping the government on its toes. In Nigeria, Africa’s most populous country, a corrupt and incompetent ruling party was voted out for the first time since the end of military rule in 1999. + + + +Yet elsewhere democracy appears to be withering. The most recent tally of free countries has fallen from a peak of 34 a decade ago (see chart). A number of countries which, like Zambia, had been becoming more open and free, have seemed to slide backwards. + +It won’t be built in a day + +The most recent threats to democracy in Africa vary, even if some are familiar. They include the short-term interests of Western countries; a demand for minerals and oil; and the rising influence of new powers such as China. Underlying these are the bigger enduring problems of poverty and weak institutions. + +Modern Africa’s first taste of democracy came in the form of fledgling parliaments bestowed by departing colonial powers. As Britain and France dismantled their empires, they left behind crude carbon copies of their own forms of government (though Portugal, a dictatorship until 1975, left its colonies in Mozambique and Angola mired in civil war). Indeed, Sir Abubakar Tafawa Balewa, Nigeria’s first prime minister, closed his speech at Nigeria’s independence ceremony with the words, “God Save Our Queen”. + +Yet in the early days of independence most African leaders swiftly imposed their own stamp on the fragile states they had inherited, reshaping institutions they often condemned as colonial impositions. New ideas such as “African socialism” swept the region, along with the notion of a specifically African form of democracy. Leaders such as Julius Nyerere of Tanzania and Kwame Nkrumah of Ghana led the way in arguing that new states needed to put national unity ahead of multi-party democracy, often imposing one-party systems of government that swiftly turned into bullying autocracies. In many cases—witness Ghana and Nigeria—unity was supposedly saved by military coups that were easily mounted because armies were the only strong institutions inherited from empire. + +Some military juntas did hand power back to civilians, but in many cases they led to dictatorship in whatever guise. An extreme example of this was Mobutu Sese Seko of Congo (or Zaire, as he renamed it), who, after taking power in a coup, became the archetype of an African dictator. Before the news was broadcast to the nation every morning on television, his face would emerge out of the clouds, framed by the sun. Mobutu declared that absolute rule was authentically African. “Can anyone tell me that he has ever known a village that has two chiefs?” he would ask anyone who questioned his authority. + +Yet as superpower competition fell away after the collapse of the Soviet Union in 1991, so too did the no-strings-attached military and economic aid that had sustained many African dictators for so long. The failure of socialism and one-party states was laid bare both in Europe and Africa. In some parts of the continent—most notably Democratic Republic of Congo (DRC), which was renamed again in 1997—the result was the collapse of the state and the onset of civil war. But in many places the result was the spread of new, more open types of government. Ivory Coast had a multi-party poll in 1990; Benin and Zambia followed in 1991; then Kenya in 1992 and Tanzania in 1995. Ghana and Nigeria reverted to civilian rule with multi-party elections in 1996 and 1999 respectively. Since 1991 incumbents have been ejected peacefully at the ballot box at least 36 times. Among Arabs the figure is zero. + +Such progress has continued in places such as Nigeria and Ghana, with the latter preparing for elections in December that are sure to be fiercely contested. In 2011 in Liberia, Ellen Johnson Sirleaf, the continent’s first elected female president, won re-election in a vote the Atlanta-based Carter Center called the “best run and most credible election in the country’s history”. + +Yet in other places democracy seems to have eroded, thanks largely to presidents changing or flouting constitutions to cling on to power. In Uganda, Congo-Brazzaville and Burundi, Presidents Museveni, Denis Sassou Nguesso and Pierre Nkurunziza have all won flawed elections in the past year after dropping term-limits that required them to step down. In all three, opposition has been violently crushed. + +Time for two-terming + +Rwanda’s president, Paul Kagame, will run for a third term in 2017 after changing his country’s constitution last year. In DRC President Joseph Kabila seems set simply to ignore the constitution he helped enshrine in 2006. His final term comes to an end in December, but he has refused to hold elections, citing logistical problems. + +Optimists point out that three decades ago almost no African countries had term limits; since then, some 33 of 48 new constitutions enacted in Africa have included them. Most Africans say they like the idea. Afrobarometer, a polling firm, found that about three-quarters of people in 34 African countries said that presidential mandates should be restricted to two terms. + +In parts of east Africa the problem is less the domination of politics by one man and more the fact that politics is often contested along tribal lines or dominated by powerful incumbents who blur the division between party and state. In Ethiopia, for instance, an authoritarian government dominated by the Tigrayan ethnic group has whittled down the opposition, imprisoning many of its people; in last year’s election the ruling party won all the seats in parliament. In Tanzania, where a new president, John Magufuli, took office last year, his Chama cha Mapinduzi (Party of Revolution), the longest-ruling in Africa, was never likely to lose. When the people on the island of Zanzibar dared to vote for a different party, the result there was promptly annulled. + +In Kenya President Uhuru Kenyatta and his allies seem determined at all costs to win next year’s elections again. If the result is close, or people believe it to have been rigged, there is a risk that the violence that led to some 1,300 deaths in 2008 will recur. + +In southern Africa the picture is mixed. Democracy looks entrenched in South Africa, it functions fairly well in Namibia and Botswana, and more or less in Malawi. But in Zimbabwe and Mozambique voting has failed to push out two of the most spectacularly corrupt regimes, and Swaziland is ruled by an absolute monarch. + +So why has democracy across sub-Saharan Africa’s heterogeneous 48 countries recently stumbled? In some places it was never strongly rooted in the first place. Mr Kagame, for example, has always been an autocrat at heart, even though he rode to power with an initial vote of confidence. Under Mr Kabila, despite his messy election in 2006, DRC was never going to become a proper democracy. + +And even where states embrace the outward forms of democracy, holding regular elections, few enjoy the checks and balances provided by strong institutions and independent courts and civil services. This shortcoming is compounded by the fact that in many African countries the strongest institution is the army. + +Yes General, er, Prime Minister + +Nicholas Cheeseman, an academic at Oxford University, reckons that of 91 presidents and prime ministers to have held office on the continent in civilian regimes since 1989, 45% once either served in the armed forces or were guerrillas before becoming politicians. This includes all four presidents in the Great Lakes region around eastern Congo, as well as Nigeria’s Mr Buhari. Coups are far less common these days; the African Union, often an ineffectual organisation, has recently taken a firm stand against them. Yet the prevalence of so many former fighting men in civilian office highlights the influence that armies still wield in politics. + +This may well be reinforced by a shift in the priorities of Western governments, from promoting democracy to fighting jihad. Uganda’s contribution of 6,000 soldiers to suppress al-Shabab, a jihadist group in Somalia, means that Western governments are less inclined to criticise Mr Museveni. The same applies to Ethiopia’s government, which also acts against al-Shabab. It has been accused by Human Rights Watch of killing more than 400 peaceful protesters since last November, yet Western criticism is muted at best. + +African autocrats have also benefited from China’s rise as an economic and political power. The authoritarian regime of José Eduardo Dos Santos in Angola, for instance, has turned to it for cash when it has disliked the conditions such as making its budget transparent which are imposed by organisations like the IMF. + +Yet neither Chinese money nor Western apathy alone explains why things are getting worse in countries such as Zambia, Tanzania and Congo. Part of the explanation lies in the narrow nature of most African economies. Many of them rely on the export of one or at best a handful of commodities. In the likes of Angola, which depends hugely on its oil, or Zambia, which relies on its copper, the easiest path to riches is not by coming up with a new product or service, but by going into politics or befriending someone who has done so; the government is funded by royalties from oil or by mining companies rather than by taxes on people who may start demanding better governance and services. + +In turn, money is redistributed downwards in exchange for votes. At political rallies across the region people are paid in cash for turning up. On polling day they are bused in and given food and T-shirts. + +Sir Paul Collier, an economist at Oxford University, thinks the defining feature of politics in much of the continent is that the winner takes all—and uses state power to try to keep it. Institutions such as the civil service, electoral commissions and the courts often lack independence. That creates a vicious dynamic, says Sir Paul. Instead of governing well, politicians are keener to steal money so as to bribe and rig their way back to power. Ideological differences and arguments over policy barely register in election campaigns. In many cases politicians fall back on appeals to tribal, religious or regional loyalties. + +In Kenya, where five leading ethnic groups make up more than three-fifths of the population, tribal leaders generally campaign on variations of the promise that it is their group’s “turn to eat”. Politicians from two ethnic groups—the Kikuyu and the Kalenjin, a clutch of ten or so smaller tribes linked by language—have had the biggest say in running the country for most of its 52 years since independence. Politicians from another big tribe, the Luo, have tended to lead the opposition. Most Kenyan elections since the return of multi-party democracy have been marred by varying degrees of violence. + +Across the African board, the winner-takes-all aspect is common almost everywhere, including South Africa, which has the most advanced economy and strongest institutions. Yet Mr Zuma, its president, was roundly criticised a few years ago for saying, “You have more rights because you’re a majority; you have less rights because you’re a minority. That’s how democracy works.” This tendency explains why elections in large parts of Africa so often result in riots and why relatively democratic countries, such as Ghana or Kenya, seem to suffer more from corruption than some more autocratic ones, such as Ethiopia or Rwanda. + +Just the beginning + +Yet constitutional changes to devolve power can go some way to improving things. Kenya’s newish constitution has given marginal groups more of a say over their own affairs. Democracy can plainly be improved by stronger institutions and less politicised civil services, as well as by a vibrant civil society and free media. + +One big hope lies in the continuing rise of an educated, wealthier middle class. As Africa in general gets richer and the younger generation turns against the bribery and corruption of the old order, the demand for decent governance will get louder. According to a study by Sir Paul, democracies become less inclined to violence and patronage-based politics as incomes rise. Once GDP per head rises above roughly $2,700, greater democracy generally begins to make countries more stable. Some 12 sub-Saharan countries have reached this level. Except for the corrupt petro-states of Equatorial Guinea and Gabon, they are the ones where democracy is performing best. + +Urbanisation should also play a role in promoting openly contested politics. In Uganda and Tanzania national politics may still be dominated by parties long accustomed to rule, but the main cities of Kampala and Dar es Salaam are run by mayors from opposition parties. In South Africa the two cities that host Parliament and the seat of government are now run by parties opposed to Mr Zuma’s ANC. + +If it is true that urban voters, who on the whole are better educated and richer than their rural counterparts, tend to be more willing to kick out incumbents, then demography is on democracy’s side. By 2050 more than half of Africans will live in cities, up from just a third today. + +Technology may also lend a hand. In Nigeria young voters with smartphones snapped pictures of the tally at remote counting stations and posted the pictures on social media, stymying attempts by the ruling party to rig the vote. As smartphones proliferate and more people have access to the internet, crooked governments will be less able to ignore the voters’ wishes. And as Africa becomes more urban and its middle class grows, so too will the demand—egged on by social media—for democracy. Whereas previous waves of democratisation in Africa came from abroad, expect Africans themselves to generate the next democratic tsunami. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21705355-threats-democratic-rule-africa-are-growing-time-and-demography-are/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Israel and Gaza + +Alms for the enemy + +Allowing humanitarian aid risks having it diverted to Hamas + +Aug 20th 2016 | JERUSALEM | From the print edition + + + +THE indictments this month in an Israeli court of two Palestinians employed by international aid agencies have become a valuable weapon in the Israeli government’s public-relations war against Hamas, the militant Islamist movement that has ruled Gaza since 2007. In the first, a local director for World Vision, one of the world’s largest Christian aid organisations, stands accused of diverting millions of dollars to the armed wing of Hamas; the money, Israel alleges, was used to buy weapons, build fortifications and pay fighters. In the second, an engineer working for the UN Development Programme (UNDP) was charged with building facilities for Hamas. + +Israeli intelligence officials claim that these cases are only the first in a series that will show how Hamas has co-opted international aid organisations to bankroll its military activities. Hamas denies the claims, and World Vision and UNDP maintain that their activities in Gaza have been closely audited. The evidence, collected by Israel’s Shin Bet internal security agency, will now have to stand up in a civilian court. But the indictments were enough for Israel’s foreign ministry to launch a major media offensive and for the prime minister, Benjamin Netanyahu, to claim in a video posted on Facebook that “Israel cares more about Palestinians than their own leaders do,” since “Hamas stole critical support for Palestinian children so that they could kill our children.” + +Setting aside Mr Netanyahu’s hyperbole, the revelations underscore not only the continuing efforts of Hamas to build up military capability but also the difficulty faced by aid agencies in getting help to those in desperate need of it in Gaza. All humanitarian organisations working in war-zones face pressure to juggle the often conflicting demands of helping people without being seen to favour one side or another (while also meeting strict rules on good governance and corruption when they may be forced to treat with armed groups to get their aid through). + +Yet even by these standards Gaza is an especially difficult environment for humanitarian groups. Although Israel is not physically present in the strip (it dismantled its settlements and withdrew its forces in the summer of 2005), it controls nearly all access, bar the Rafah crossing, which is intermittently opened by the Egyptian government. Yet Israel forbids international organisations from interacting with Hamas, which it (like several other governments) defines as a terrorist organisation. “Even the best-organised operations have no choice but to operate in a grey zone in Gaza,” says Michael Sfard, an Israeli human-rights lawyer who advises humanitarian organisations working in the Palestinian territories. “Israel considers every civil servant who is paid by Hamas a terror operative, so even a medical-relief organisation that supplies incubators to a hospital in Gaza can be potentially accused of aiding terror.” + +Both Israel and Egypt justify the restrictions imposed on travel and imports to Gaza by citing Hamas’s violent activities. Although Israel has kept Gaza under tight control since the Hamas takeover in 2007, the latest prosecutions highlight the difficulty of continuing to do so without prompting a humanitarian disaster. And even Israel’s own stance towards Hamas has informally softened with time. Israel co-ordinates the strip’s civilian affairs through officials appointed and paid by the Palestinian Authority based in the West Bank. Meanwhile Hamas has its own parallel civil service, with which Israel will not officially deal. Yet only last month Israel allowed the Qatari government to transfer $31m to make up for a shortfall in Gaza’s finances and pay Hamas officials. + +Israeli security officials say that allowing day-workers to enter Israel and building a seaport for Gaza would not only improve Palestinian welfare, but also reduce the chances of yet another outbreak of violence. Mr Netanyahu has said in recent closed briefings that he would consider such ideas. Yet given his intense public campaign against Hamas, such pragmatism would be a hard sell at home. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21705357-allowing-humanitarian-aid-risks-having-it-diverted-hamas-alms-enemy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Christians in the Arab world (1) + +Crimes and no punishment + +Violence is only one of the problems faced by Christians in Egypt + +Aug 20th 2016 | MINYA | From the print edition + + + +IT BEGAN with an argument over money, says a resident of Karam village in Minya. A shop-owner called Ashraf, a Coptic Christian, could not pay his Muslim suppliers. So they started a rumour that Ashraf was having an affair with a Muslim woman. In May a group of enraged Muslim men burned down his house along with several other homes owned by Christians. Ashraf’s elderly mother was stripped naked and dragged around the village. + +Tensions are rising between Egypt’s two largest religious communities. The head of the Coptic church, Pope Tawadros (pictured above), says attacks against Christians, who make up between 5% and 15% of the population, occur about once a month. The Egyptian Initiative for Personal Rights (EIPR), a pressure group, counted 77 incidents of sectarian violence and tension in Minya, where there is a large Christian minority, since 2011. At least ten incidents this year have resulted in discord, death and destruction. + +The EIPR’s count excludes a spate of violence three years ago, when protesting supporters of Muhammad Morsi, an Islamist president who was ousted in 2013, were violently dispersed by the government. In response, they burned dozens of churches. Since then Abdel-Fattah al-Sisi, a former general who deposed Mr Morsi, has tried to ease religious tensions. In 2015 he became the first president to attend (albeit briefly) Christmas mass at Cairo cathedral. “We’re all Egyptians, first and foremost,” he said. He attended again in 2016, vowing to restore churches and homes that had been burned down. + +Pope Tawadros has staunchly supported Mr Sisi, whom he once referred to as a “saviour” and “hero”. But Christians are growing disenchanted with Mr Sisi’s lack of progress. “We were expecting it to be much better,” says Magdi Kemal Habib of Minya, who nevertheless backs the president. The church’s leader in Minya is more critical. “He just gives good feelings, but these feelings need to be translated into actions,” says Bishop Makarios. Christians still face discrimination in the job market and are under-represented in government. The authorities often treat them like second-class citizens. It is, for example, exceedingly hard to get the state to recognise conversions to Christianity from Islam. + +When disputes with Muslims arise Christians say they are urged not to go to court. Instead officials rely on informal “reconciliation councils”. These invariably favour Muslims, who often face fines but no other punishment for crimes such as arson. Christians, on the other hand, tend to get harsh justice even for minor (or inane) offences: a teacher in Minya who filmed his students mocking the jihadists of Islamic State was convicted in court of blasphemy and sentenced to three years in prison. Four teenage students received sentences of up to five years in prison. Appeals are in the works, but a reconciliation council has expelled the teacher and his family from their village. + +Sectarian violence often accompanies Muslim claims that Christians are trying to build new churches. The government has made church-building extremely hard by withholding permits; there are 2,869 churches in Egypt compared with 108,395 mosques. A new bill proposes to guarantee that building permits for churches will be processed within four months. Bishop Makarios does not expect it to pass; nor, if it does, to solve the problem. “Even if there is a law allowing Christians to build churches, there will be a security official who will stop them,” he says. + +Some think the Coptic church has struck a Faustian pact with Mr Sisi. Despite the Bible’s direction to “defend the oppressed”, Pope Tawadros excuses the president’s human-rights abuses, while condemning the Arab uprisings of 2011 and echoing the government’s conspiracy theories. In return, Mr Sisi says all the right things. Last year he chastised Islamic scholars for not respecting other religions. “God did not create the world for the umma [Muslim community] to be alone,” he said. But Christians often feel that is exactly what Muslims in Egypt want. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21705365-violence-only-one-problems-faced-christians-egypt-crimes-and-no/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Christians in the Arab world (2) + +Under the gun + +An archbishop laments his flock’s flight + +Aug 20th 2016 | ERBIL | From the print edition + +Tending a scattered flock + +“THE Lord is my shepherd,” says the psalmist, but Nicodemus Daoud Sharaf is finding it devilishly hard to tend his flock. As archbishop of Mosul’s Syriac Orthodox church, he has been chased out of one of Christianity’s oldest dioceses. Most of his congregation fled when the city was conquered by the jihadists of Islamic State (IS); now he ministers to what is left of it in Erbil, the capital of Iraq’s Kurdish region. + +Archbishop Nicodemus says he was the last senior churchman to leave Mosul in July 2014. Since then, he says, 32 churches in Mosul and in the surrounding plain of Nineveh have been burnt or put to other uses. His cathedral is now a mosque dedicated to jihad. “For the first time in the history of Christianity, there are no Christians praying in Mosul,” he adds, weeping. “Even under the Mongol hordes and Hulagu Khan [in the 13th century] it wasn’t so bad.” + +As the archbishop sees it, the IS takeover is the culmination of a lengthy campaign by assorted Muslims to squeeze Christianity out of the Middle East. During the first world war Sunni Turks and Kurds purged Anatolia of Greek, Armenian and Syriac Christians, partly in response to the earlier expulsions of Muslims from the Crimea and south-eastern Europe by Orthodox Christians. Since then, he says, Sunni Arabs have done most of the tormenting. When Iraq became independent in 1932, Christians made up 12% of its people. By the time Saddam Hussein was ousted in 2003, they had fallen to 6%. Since America’s invasion, two-thirds of Iraq’s remaining 1.5m Christians have left. + +Though Sunni jihadists have been in the vanguard of efforts to kill or expel Christians, Iraq’s Shia-led establishment has hardly been friendly: the government adorns its flag with the Islamic salute, Allahu akbar (“God is greatest”), implicitly demoting non-Muslims. “Christian Syriacs were here first,” says the archbishop. “But our guests took us over” + +Many of Iraq’s city centres, he adds, were once predominantly Christian—including Erbil, his Kurdish-run haven. The Kurds, he admits, have given sanctuary what is left of his flock. In Ankawa, a district of Erbil that has become the Christians’ Iraqi heartland, a statue of the Virgin Mary stands tall. On Sunday evenings Ankawa’s churches are full, mostly with people displaced by IS. A Catholic university opened last year. The Kurdish government’s religious-affairs ministry has departments for Christians, Yazidis and Jews. Its flag has no Muslim symbol. + +Archbishop Nicodemus can do little more than vent his grievances on local television. Saddam’s rule was bad, he says. So is that of Syria’s leader, Bashar al-Assad. But the jihadists who have taken their place are worse. Iraq’s minorities were once the glue that straddled Iraq’s sectarian and ethnic lines and held the country together. No longer. In his father’s day, Christians would celebrate Easter by parading through Mosul’s streets, thumping their drums. It was the same in Damascus. Now the dwindling remnants stay indoors. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21705366-archbishop-laments-his-flocks-flight-under-gun/print + + + + + +Previous Articles Sections Next + + + + +Europe + + + + + +Putin’s personnel moves: Dancing in the dark + +Germany’s new security measures: Integration panic + +Match-fixing in Italy: You betcha + +Turkish anger at the West: Duplicity coup + +The hunt for Gulenists: Extradition quest + + + + + +Articles Sections Next + +Putin’s personnel moves + +Dancing in the dark + +Desk shuffles in the Kremlin signal something, but no one knows what + +Aug 20th 2016 | MOSCOW | From the print edition + + + +THE Kremlin’s political nature resembles its physical structure: a walled fortress whose interior is invisible to those on the outside. On August 12th, when President Vladimir Putin sacked Sergei Ivanov, his powerful chief of staff, the Kremlin released only a cryptic video in which Mr Putin thanked Mr Ivanov for his 17 years of service. The move’s real meaning was left to speculation. This aura of mystery is not happenstance, but a guiding principle. “We have a system that believes it can do anything without any explanation,” says Gleb Pavlovsky, a former Kremlin advisor. “We have only a black box.” + +Mr Ivanov, like Mr Putin an ex-KGB man from St Petersburg, was seen as one of Russia’s most influential figures, perhaps second only to the president himself. The decision to replace him with the 44-year-old Anton Vaino fits a broader pattern of Mr Putin’s old comrades being pushed out in favour of younger loyalists. “Those who don’t fit Putin’s vision of the new aims are leaving,” says Aleksei Chesnakov, a former presidential administration official. However, he adds, “no one except the president knows what those new aims are.” + +The switch comes at a sensitive time. Parliamentary elections loom in mid-September and the Russian economy remains weak. Tensions with Ukraine have escalated over Russian allegations of an attempted terrorist attack in Crimea. Russia is also expanding its presence in the Middle East, launching bombing runs into Syria from Iranian bases this week. + +So, Kremlinologists wonder, does the shake-up signal that Mr Putin wants early presidential elections next year, as a means to renew his mandate and launch needed economic reforms? Or does he instead plan to step down as president in 2018? Is Dmitry Medvedev, Mr Putin’s successor in 2008, destined to return once more? Or is Mr Putin seeking a new heir? “The bottom line is we don’t know much,” says Mark Galeotti, a veteran Russia expert. + +Certain trends can be divined. Last year the Russian Railways boss, Vladimir Yakunin, a close friend of Mr Putin known for his lavish lifestyle, was dismissed. Earlier this year, Mr Putin created a national guard force, pushing out longtime allies heading the drug enforcement agency and federal migration service. New faces have taken over the powerful economic-crimes department of the Federal Security Service (FSB). In July Andrei Belyaninov, chief of the lucrative customs service, stepped down after FSB agents raided his home and found stacks of cash. As budgets tighten, such blatant corruption has become too costly to tolerate, some analysts argue. + +As for Mr Ivanov, the death by drowning of his son in 2014 may have left him exhausted. He retains his seat on the powerful Security Council, suggesting that any falling-out with Mr Putin may be overblown. Yet he had reportedly been excluded from the inner circle for some time. Some analysts think Mr Putin is losing interest in the independent counsel of old friends who can speak to him as equals. + +In any case, clearing out ageing comrades helps refresh (and intimidate) the country’s elite. Without public politics, Mr Putin’s system lacks effective means for generating new cadres. Where the Soviet Union had a Communist Party that trained and promoted new leaders, today’s Russia relies on informal nepotistic ties. + + + +A timeline of Vladimir Putin’s unshakeable popularity + +As Mr Putin’s long rule continues, he has become increasingly concerned with the personnel problem. When he returned to the presidency in 2012, he created new recruitment channels, says Nikolai Petrov, a political analyst. Primary elections earlier this year by the ruling United Russia party served as “an incubator of new faces”, says Andrei Kolesnikov of the Moscow Carnegie Centre, a think-tank. The president even put his weight behind a national academy for gifted children in Sochi. + +Buddy guards + +Yet when it comes to new appointments, Mr Putin is still turning to people he knows personally. This year he appointed former bodyguards as governors in three regions. Another former bodyguard, Victor Zolotov, heads the national guard. The new generation of “Putin’s people” tend to owe their careers entirely to the president. They should be “loyal, effective and non-ideological”, says Evgeny Minchenko, a political consultant. + +The president’s new right-hand man, though not a bodyguard, has also spent his career by Mr Putin’s side. Working in the administration’s protocol department, Mr Vaino kept Mr Putin’s schedule, accompanied him on travel and carried his umbrella. Oleg Matveychev, a former presidential administration official, says Mr Vaino developed a reputation as “rigorous, upright and well-dressed”. + +The grandson of an Estonian Communist Party leader, Mr Vaino started out as a diplomat, serving in Tokyo. (Japanese observers wonder if Mr Vaino’s promotion augurs a deal over the disputed Kuril Islands.) As a bureaucrat unlikely to challenge Mr Putin, he may turn the administration into a less influential, more technocratic operation. But Mr Vaino is also auditioning for future roles. Mr Putin’s former chiefs-of-staff have included Sergei Naryshkin (now speaker of the Duma), Sergei Sobyanin (mayor of Moscow), and Mr Medvedev (prime minister, for now). + +Mr Vaino’s promotion may portend wider changes. Ministers may be swapped out after parliamentary elections. More old cronies, such as the Rosneft head, Igor Sechin, may find themselves under fire. Yet where these shifts will take the country remains a mystery. That is part of the point. As Kirill Rogov, a political analyst, explains: “They believe that secrecy is power.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21705361-desk-shuffles-kremlin-signal-something-no-one-knows-what-dancing-dark/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Germany’s new security measures + +Integration panic + +An incoherent batch of proposals to soothe anxiety about terrorism + +Aug 20th 2016 | BERLIN | From the print edition + +Clash of civilisations? + +EVEN by their own exacting standards, Germans are experiencing a lot of Angst this summer. They are still jittery after aseries of terrorist attacks in July, including two by Muslim refugees. They are also newly nervous about the 3m German citizens and residents of Turkish descent, many of whom have staged demonstrations since last month’s coup attempt in Turkey in support of its president, Recep Tayyip Erdogan. Most Germans are wary of Mr Erdogan, who has been cracking down on opponents real and imagined at home and has requested the extradition of several suspects from Germany (see article). Between the attacks and the demonstrations, many Germans feel civilisations are clashing on their own streets. + +In response to the anxiety, politicians have come out with a burst of proposals claiming to get tough on terrorists, tough on security, tough on integrating refugees—in short, tough on the whole confused range of identity-politics issues that are making Germans nervous. On August 18th the eight interior ministers of German federal states who belong to the Christian Democratic Union, the centre-right party of Chancellor Angela Merkel, met in Berlin to issue a declaration summing up the proposals. Some of these, such as adding more police, are uncontroversial. Others that are politically explosive include restricting dual citizenship and banning the public wearing of burqas (veils covering both body and face). + +Germany has already tightened asylum rules in the past year—making it easier, for example, to deport refugees who commit crimes. On August 11th Thomas de Maizière, the federal interior minister, offered his own ideas to get even tougher. These range from increasing video surveillance to easing confidentiality requirements between doctors and patients, so that psychiatrists, say, can tell on people they deem dangerous (though doctors are already obliged to report such cases). + +A few worry that the new measures represent panic, not sound policy. Even Mr de Maizière, a Christian Democrat himself, rejects some of his party colleagues’ more extreme ideas. He sees the burqa as a symbol of failed integration and the subordination of women, he says, but “you can’t prohibit everything you reject”. + +Centre-left politicians, meanwhile, worry that the debate is veering off course. It was a government of Social Democrats and Greens that in 2000 liberalised citizenship laws, mainly so that the children of Turkish guest-workers no longer had to choose between their native and inherited nationalities. The premise was that they could then integrate better into society. (At the latest count, in 2011, 4.3m Germans had another citizenship, 530,000 of them Turkish.) If Germany now forces its Turkish citizens to choose one loyalty, says Sigmar Gabriel, the Social Democrats’ boss, that “would only help Mr Erdogan. He’s happy when we split people again, into Turks and Germans”. + +Nonetheless, the debate will stay hot for the coming year, ahead of the federal election in the autumn of 2017. The campaign has, in effect, started already: two of Germany’s 16 regions, Mecklenburg-West Pomerania and Berlin, will elect new assemblies next month. In both contests a populist anti-immigrant party, the Alternative for Germany (AfD), is likely to enter state parliaments. In north-eastern Mecklenburg—the only state legislature where the NPD, a party considered to be neo-Nazi, is currently represented—the AfD is even polling at 19%, not far behind the Social Democrats and Christian Democrats, who govern the state jointly. But the AfD puts most pressure on the Christian Democrats, who view security as part of their brand. This is why the interior ministers of Mecklenburg and Berlin, Lorenz Caffier and Frank Henkel, are the driving force behind the “Berlin declaration”. + +Fears that migrants may commit terror are justified. The domestic intelligence service knows of 340 cases in which Islamic extremists have entered refugee centres in search of recruits. But banning burqas and dual citizenship will not assist security or integration. It would be disastrous, warns Wolfgang Kubicki of the Free Democrats, a liberal party, if politicians eager to translate Angst into votes jeopardised “all that makes us different from Turkey under Erdogan and Russia under Putin”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21705364-incoherent-batch-proposals-soothe-anxiety-about-terrorism-integration-panic/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Match-fixing in Italy + +You betcha + +Italians are not the only ones throwing matches + +Aug 20th 2016 | ROME | From the print edition + + + +WHEN the Italian football season opens on August 20th, fans who have been staving off their soccer cravings by following news of summer transfers will at last get a chance to watch some real competition. Or will they? Recent investigations have shown that an alarming number of matches are not contests at all, but choreographed performances, the results known to some of the participants before any whistle is blown. + +The latest scandal, which led to ten arrests (including at least three players) in May, concerns two second-division games in the 2013-14 season, a 1-0 victory by Modena over Avellino and a 3-0 win by Avellino over Reggina. Also in May, two other judicial offensives reached turning points. In the northern town of Cremona a judge sent more than 90 people to trial, including a former player for Italy. The charges, arising from an investigation code-named Last Bet, relate to an alleged conspiracy to fix results in both senior divisions, Serie A and Serie B, as well as a junior one. Meanwhile, in the southern city of Bari, five people convicted of rigging major Serie B games in the 2007-8 and 2008-9 seasons were given suspended sentences. + +June brought yet more evidence of football-related skulduggery: prosecutors in the southern city of Catanzaro sought the indictment of 63 people accused of involvement with criminal networks that rigged matches in the lower divisions. More than 30 teams were affected. + +It is hard to say whether all this activity shows Italy’s football to be unusually corrupt, or that its prosecutors are exceptionally diligent in pursuing match-fixing. The Last Bet case extends far beyond Italy. In 2013 evidence gathered by the prosecutor overseeing the case led to the arrest in Singapore of a businessman, Tan Seet Eng (more commonly known as “Dan Tan”), believed to have been the kingpin of a global match-rigging network that made millions of dollars out of games in Italy, Hungary and Finland. Mr Tan was held for two years under a law allowing for indefinite detention without trial in the interest of public safety. He was released last November, only to be re-arrested a month later on accusations of intimidating witnesses. + +Corruption in sport is almost as old as sport itself, but the immense growth of betting in recent decades, especially on football, has multiplied the incentives for bribery. According to Sportradar, a Swiss-based multinational that analyses sports data, bets worth €750 billion ($845 billion) are placed each year, and more than half relate to football. Sportradar’s fraud detection unit thinks about 1% of matches have been rigged. Recent high-profile cases have involved a top Zimbabwean official, a German referee and players in several Asian countries. Nor is football the only target. Evidence of corruption has emerged in cricket, baseball, tennis, snooker and, most recently, e-gaming, which now attracts betting just as traditional sports do. In April prosecutors in South Korea charged two of the world’s leading StarCraft players, Lee Seung Hyun (alias “Life”) and Jung Woo Young (“Bbyong”), with accepting $62,000 to throw matches. + +What makes some of the current cases in Italy particularly serious is evidence of the involvement of mobsters. Gambling of all kinds has long been a way to launder ill-gotten cash. By fixing contests on which they bet, gangsters can ensure they make even more. In the scandal that triggered May’s arrests in Italy, the alleged beneficiary is a clan of the Camorra, the mafia of Naples. Match-fixing is no game. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21705256-italians-are-not-only-ones-throwing-matches-you-betcha/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Turkish anger at the West + +Duplicity coup + +Turks are convinced that Europe and America had something to do with the attempted putsch + +Aug 20th 2016 | ISTANBUL | From the print edition + +All part of the conspiracy + +THE aftermath of the attempted coup in Turkey on July 15th has been fertile ground for conspiracy theories. Pro-government newspapers have alleged that CIA agents directed the coup from an island in the Sea of Marmara; that a retired American general wired billions of dollars to rogue Turkish soldiers; and that the United States directed Turkish forces to kill Turkey’s President, Recep Tayyip Erdogan. An Islamist daily called Germany an enemy state, and pictured its chancellor, Angela Merkel, in a Nazi uniform. + +The surge in anti-Western sentiment is widely shared. One poll found that 84% of Turks believe that the coup-plotters received help from abroad; more than 70% suspect America of having a hand. Mr Erdogan and his ministers have accused the West of double standards, and warn of a serious deterioration in ties unless the United States extradites Fethullah Gulen, the Pennsylvania-based Islamist cleric whom they blame for orchestrating the coup. A senior American official complains that using Mr Gulen as the only yardstick for bilateral ties puts the relationship at risk. Mr Erdogan does not seem to care. + +In part, Western governments have themselves to blame. With the exception of America and Germany, many were slow to condemn the coup attempt, fuelling suspicions that they were waiting to see how it would play out. In response to the purge of government institutions that followed, Austria’s chancellor urged the European Union to suspend membership talks with Turkey. Germany’s top court banned Mr Erdogan from addressing a rally in Cologne by video link. To date, no EU head of state has travelled to Turkey to express solidarity with the victims. A visit to Ankara by America’s vice-president, Joe Biden, due on August 24th, is seen as too little, too late. “The United States should have shown stronger political support earlier,” says Unal Cevikoz, a former Turkish ambassador to Britain. + +Turkish politicians, including those opposed to the ruling Justice and Development (AK) party, accuse the West of being more critical of the government’s response to the coup than of the carnage that accompanied the putsch. Some Western diplomats acknowledge a failure to come to grips with the scale of the violence, which left some 270 dead, and with widespread support for the purges. “There is no understanding in Europe that things would have been much worse if the coup had succeeded,” says one. “For the Turks, this was a test of loyalty, and Europe failed it.” + +Yet Europe is right to fear that the crackdown on suspected Gulen sympathisers has spun out of control. Over 80,000 people have been arrested, sacked or suspended, including soldiers, judges, teachers, policemen, businessmen and even football officials. Nearly 100 journalists have been detained and more than a hundred media outlets shut down; ordinary criminals have been set free to make room for political cases. Many of those purged appear to have only tenuous links to the Gulenists. But concerns about repression fall on deaf ears, writes Sinan Ulgen, a former Turkish diplomat. The West, he says, “has eroded its ability to gain influence in Turkey at a time when this leverage is possibly more important than ever”. + +Popular resentment against the West and the Gulenists has accomplished what Mr Erdogan had failed to in recent years: rally a large majority of Turks to his side. Since late June, the president’s approval rating has jumped from 47% to a record 68%. A mass gathering addressed by Mr Erdogan earlier this month attracted over a million people, as well as the leaders of two of the three biggest opposition parties. The main pro-Kurdish party was left out. + +In Mr Erdogan’s view, only one outside power has adequately backed his government: Russia. Before meeting Vladimir Putin in St Petersburg on August 9th, the Turkish leader praised him for wasting no time in offering his support. Unlike Western officials, Mr Erdogan pointedly remarked, “Putin did not criticise me on the number of people from the military or civil service who had been dismissed”. + +Such plaudits, along with Mr Erdogan’s show of contrition for Turkey’s downing of a Russian jet last November, are music to Mr Putin’s ears. Yet much as the Russian leader might want to exploit the rift between Turkey and the West, his dalliance with Mr Erdogan has its limits. Mr Putin might offer Turkey some support against the Gulenists in Central Asia, where the movement runs a network of schools, says Soner Cagaptay of the Washington Institute, a think-tank. But the two countries will remain divided over the crucial issue of Syria, where they are still backing opposite sides in the country’s civil war. + +For now, says a Western diplomat, NATO need not fear that Turkey will stray far from the alliance. But, he continues, Mr Putin will continue to pit Turkey against America and the EU: “He can play that game better than anyone else.” For a decade, Turkey’s once pro-European government has been drifting away from the West. After the ambivalent American and European responses to the coup, that drift is accelerating. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21705286-turks-are-convinced-europe-and-america-had-something-do-attempted/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The hunt for Gulenists + +Extradition quest + +Turkey’s global dragnet for anyone it links to the coup + +Aug 20th 2016 | ISTANBUL | From the print edition + + + +TURKEY has good news for inmates of its crowded prisons. A decree on August 17th made some 38,000 of them, excluding those convicted of serious crimes such as murder or rape, eligible for parole after serving half their sentences. The aim is to make room for the civil servants, soldiers, journalists and others detained in connection with Turkey’s failed coup—35,000 at the last count. + +Having sworn to crush the Gulen movement, an Islamic sect it blames for the coup, Turkey’s government is now taking its purge abroad. The foreign ministry has recalled over 200 diplomats as part of the investigation. Of those, 32 are believed to be on the run. Eight soldiers who flew their helicopter to Greece have claimed asylum there; Turkey has asked for their extradition. It has issued an arrest warrant for Hakan Sukur, a retired football star living in America. + +Turkey is also doing what it can to lean on foreign governments to dismantle a chain of Gulenist charities and private schools that spans 160 countries. Some have complied. Somalia recently closed two schools and a hospital. Azerbaijan fired 50 Turkish university teachers linked to the group and launched an investigation into a local Gulenist network. Others are less likely to follow. In many parts of the world the schools offer a decent education, often in English, to the children of local elites. Indonesia and Kenya say they will play no part in a crackdown that conflates pro-coup Turkish bureaucrats with teachers and charity workers. Under Turkish pressure, Albania screened dozens of its own Gulen schools last year for any signs of wrongdoing. It found none. + +Turkey’s main target is the movement’s septuagenarian leader, Fethullah Gulen, who has been ensconced in a farmhouse in Pennsylvania since 1999. Turkey’s president, Recep Tayyip Erdogan, who once praised Mr Gulen, now calls him the coup’s mastermind, and wants him extradited. Other than the testimony of the army’s chief of the general staff, who says that one of the plotters offered to put him on the phone with the preacher, Turkey has not produced compelling evidence against Mr Gulen. “What documents do you need when 265 people have been killed, bombed from jets and run over by tanks?” the prime minister, Binali Yildirim, recently asked. It may take more than that to convince the American courts. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21705362-turkeys-global-dragnet-anyone-it-links-coup-extradition-quest/print + + + + + +Previous Articles Sections Next + + + + +Britain + + + + + +Counter-terrorism: Driving away the shadows + +The Brexit trigger: To pull or not to pull + +Ticket touts: A muggle’s game + +Tax avoidance: You feeling lucky? + +Lorry drivers: Keep off truckin’ + +Bagehot: Paddy Ashdown’s grand design + + + + + +Articles Sections Next + +Counter-terrorism + +Driving away the shadows + +Early intervention to prevent terrorism is tough to get right. Britain does not do a bad job + +Aug 20th 2016 | From the print edition + + + +ANJEM CHOUDARY had long, and skilfully, avoided the British criminal-justice system. Yet on August 16th the press was allowed to report, following the conclusion of a separate trial, that the charismatic radical cleric had been convicted in July of inviting others to support Islamic State (IS). Mr Choudary’s former acolytes include Michael Adebolajo and Michael Adebowale, who murdered a British soldier in 2013; Siddhartha Dhar, a suspected IS executioner; and Omar Sharif, a suicide bomber who attacked Tel Aviv in 2003. In the words of a Home Office official, “He preyed on vulnerable individuals to fight his own wars for him.” He now faces up to a decade behind bars. + +Like other countries, Britain is keen to ensure that preachers like Mr Choudary are unable to spread hate (see article). But it puts as much, if not more effort into dissuading vulnerable people from following the extremists’ proclamations. Much of this work comes under the Prevent strategy. Prevent is one of four strands of counter-terror efforts, alongside Pursue (to stop attacks), Protect (to reduce vulnerability) and Prepare (to minimise the impact of attacks). It includes Channel, a programme in which those identified as being at risk of radicalisation are offered a tailored package of education, counselling and support. + +In the strategy’s early years, after the London bombings of July 2005, Prevent funded projects like sports teams and youth clubs in the hope they would improve integration. But some money found its way to extremist organisations. Partly as a result, in 2011 the Tory-Lib Dem coalition refocused the programme on terrorism. Last year the new Tory government passed a law placing a sweeping duty on public-sector bodies to stop people from being drawn into violent extremism. + +That has led to a vast expansion of the government’s counter-terror work. In 2012-13, 95,921 public employees were trained in how to spot future terrorists; last year 243,662 were. In the past five years 10% of Britain’s 5.4m public-sector workers have been through the training. Other parts of the programme have grown, too. In 2015 social-media snoopers removed 55,000 pieces of propaganda, 22% more than in 2014. The government’s counter-propaganda was viewed 15m times, compared with 3m times in 2014. A typical example features interviews with the parents of British IS fighters, interspersed with scenes of Syrian devastation. + +Measuring success is hard, but there are some positive indicators. By the end of 2015, 760 people had travelled from Britain to the conflict in Syria and Iraq, the same number as from more-populous Germany and many fewer than the 1,700 who had travelled from France by May 2015. The government says that it stopped more than 150 attempted journeys to such places last year. Frank Foley of King’s College London notes that Britain has been subject to fewer co-ordinated attacks than France, despite the uncompromising tactics employed by the French police, which include shutting premises suspected of hosting non-violent extremists and wider use of surveillance. Security types put Britain’s record down to its intelligence expertise. Yet it has also seen relatively few “lone wolf” incidents, which can be minimised only by early intervention, says William Baldet, a Prevent co-ordinator in the Midlands. + +Ramping up Prevent has upset some. Following news this month of the apparent death of Kadiza Sultana, a 16-year-old east Londoner who had joined IS in Syria in February, Rushanara Ali, the girl’s local MP, said she had “huge concerns” about the programme. The training of public-sector workers is the main worry. More people will now be primed to see signs of radicalisation, says Miqdaad Versi of the Muslim Council of Britain, an umbrella group, meaning that “the natural consequence of the policy is discrimination.” + +One teacher says he attended a session that consisted of a 20-minute slideshow so basic it left people confused as to why they were there. The schools inspectorate has warned that some colleges view Prevent as little more than a “tick-box exercise”. + +Reasonable disagreements mix with myths. Many believe that a referral to Channel earns a criminal record (it doesn’t); newspapers run stories about public officials referring people over absurd misunderstandings (often exaggerated). Prevent officers argue that such fears bear no relation to how the programme works. There has been a jump in the number of referrals to Channel and 80% are turned away. Yet the panels that adjudicate cases handle reports sensitively, checking they are not malicious or misguided, and those referred won’t know unless their case is taken up, says Mr Baldet. + +The work is similar to programmes that deal with sexual abuse or gang membership, says Sean Arbuthnot, a former police officer who had local responsibility for Prevent. Officers can educate people who make inappropriate referrals, he says. And “I would rather have 99 rubbish referrals than have one child who ends up in Syria.” + +Those who are taken on can leave the programme at any time. Some are helped to find a job or to reconnect with their family; others are gradually talked out of their beliefs. And although Channel focuses on Islamist radicals, in 2012-13 one in five of those referred was not a Muslim (most concerned far-right extremism). + +Still, some Muslim parents now advise their children not to discuss politics or religion in public in case it is taken the wrong way. Teachers are similarly nervous, says Kenny Frederick, a former head teacher in Tower Hamlets in London. That is a shame, she says, as it stifles debate, which is the best way to change minds. Worse relations between the state and Muslim communities could undermine all of these efforts. + +In many ways it is odd that the most moderate of Britain’s counter-terror efforts provokes the most opposition. Prevent’s supporters wish the Home Office would trumpet its achievements. Yet it is not that easy. Much of the programme involves vulnerable people; other parts would be less effective if state support were broadcast. As a result, Prevent is shrouded in secrecy. Perhaps the biggest secret, though, is that it is not as nasty as it seems. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21705307-early-intervention-prevent-terrorism-tough-get-right-britain-does-not-do-bad/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Brexit trigger + +To pull or not to pull + +The case for delaying the start of the Brexit process + +Aug 20th 2016 | From the print edition + +May with a mountain to climb + +THERESA MAY knew from the moment she became prime minister last month that Brexit would be her biggest test. Nobody has ever before tried to disentangle a large and sophisticated economy like Britain’s from as intricate and regulated a body as the European Union, after it has been a member for 43 years. Before the June referendum, David Cameron’s government noted that Brexit would be the start, not the end, of a process and warned that it could last up to a decade. + +The administrative challenge alone is vast. Mrs May has passed much of it to pro-Brexit ministers known, inevitably, as the three Brexiteers: David Davis, Liam Fox and Boris Johnson. Just setting up a new Department for Exiting the EU under Mr Davis is taking time. The department is now 150-strong, but it will have to expand to more like 400 (including officials in Brussels). Mr Fox’s Department for International Trade needs 1,000 staff, including hundreds of trade negotiators. Relations between the two, and with Mr Johnson’s Foreign Office, can be strained. Already Mr Fox and Mr Johnson have clashed over who runs economic diplomacy. Mr Fox and Mr Davis are hardly best friends. + +Given all this, it is not surprising that there should be speculation about when to trigger the Brexit process under Article 50 of the Lisbon Treaty. Brexiteers have always disliked Article 50: it sets a two-year deadline that can be extended only unanimously, and its voting rules exclude the exiting country. Moreover, it is meant to cover mainly administrative issues such as sorting out pensions, relocating EU agencies based in Britain and safeguarding multi-year projects (the Treasury has promised recipients of EU money that it will guarantee their funds, including paying farm subsidies until 2020). + +But Article 50 also promises to take account of future relations with the EU. That means, above all, trade arrangements. Yet experienced negotiators say trade deals take far more than two years to negotiate: the Canada-EU agreement has taken seven and has still not been ratified. Brexit will require many such deals, including one with the EU and others with some 58 third countries such as South Korea that have free-trade deals with the EU. Mr Fox has talked grandly of “scoping out” free-trade agreements that Britain might make with America and Australia. But these cannot be pursued seriously until there is more clarity over Britain’s trade relations with the EU. + +Some Brexiteers say the simplest course would be to revert to the rules of the World Trade Organisation (WTO), of which Britain is a member. But this would imply tariffs on some goods, and would not cover most services, including financial services. Nor is falling back on the WTO as easy as it sounds. Britain’s membership is linked to the EU: to rejoin independently, it must agree on a new tariff schedule, which would be hard in areas with shared import quotas, like agriculture. The WTO’s director-general, Roberto Azevedo, likens this to accession—and it needs unanimous approval, including from countries that are not always friends of Britain. + +Could the Brexit process be delayed to allow several years of trade talks? Mrs May has said only that she will not trigger Article 50 this year. But letting the start date drift far into next year or even into 2018 could be testing. Tory Brexiteers (and voters) know that Mrs May was a Remainer, so they will pounce on any hints of backsliding. It may be tempting to wait for elections in other EU countries, notably the French presidential election next spring. But putting off Article 50 further might mean its two-year expiry clashes with the European elections and a new EU budget round, both due in 2019. And delays could irritate Britain’s EU partners, who might refuse to negotiate seriously until the government shows that it really means to leave. + +One alternative proposed by some in London is to seek prior political agreement to extend the Article 50 process beyond two years. But since the treaty requires unanimous approval at the end of the two years, it may not be possible to secure a guarantee that binds future EU leaders. + +Another possibility is an interim arrangement to take effect during the hiatus after Article 50 expires, but before the final shape of future trade deals is clear. This would probably be an off-the-shelf model, such as temporary membership of the European Economic Area that includes Norway. This would preserve full access to the EU’s single market. But it would have two drawbacks. One is that, in trade, the temporary often becomes near-permanent. The other is that, against Brexiteers’ fervent wishes, it would imply continuing to accept free migration from the EU, make payments into the EU budget and abide by all single-market rules. + +Life is clearly possible outside the EU. But the process of getting there is full of pitfalls and problems. It is no wonder that Mrs May, contemplating the future from her walking holiday in Switzerland, has said little more than that “Brexit means Brexit”. And it is no wonder that she has dumped the responsibility for delivering it into the laps of the three Brexiteers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21705347-case-delaying-start-brexit-process-pull-or-not-pull/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Ticket touts + +A muggle’s game + +The curse of market forces makes ticket reselling tough to manage + +Aug 20th 2016 | From the print edition + + + +TICKETS to “Harry Potter and the Cursed Child”, the latest, on-stage instalment in the magically lucrative series, have proved harder to grasp than the golden snitch. After 250,000 tickets released on August 4th sold out within hours, fans’ disappointment turned to outrage as stubs with a face value of £15-70 ($20-90) started popping up on resale websites for more than £8,000. + +In line with the howls of outrage, the play’s producers called the secondary ticket market an “industry-wide plague” and asserted their contractual right to refuse entry to people turning up with a resold ticket. This was the most they could do. Unauthorised reselling (known to its foes as scalping) was criminalised in Britain in the case of football in 1994, and in the London Olympics of 2012, but is legal for plays and concerts. + +Flint-hearted economists might note that a secondary market suggests that the seats were underpriced. Cheaper tickets meant to boost equal access lure in touts, for whom low prices mean bigger premiums. And more scalpers means more disappointed fans in the queue. + +Rather than allowing touts to profit, the play’s producers could take a cue from “Hamilton”, a wildly successful Broadway musical, and raise prices for the premium seats until demand falls in line with supply (even at up to $849 per ticket, some argue that “Hamilton” is too cheap). But the Potter producers seem to be more worried about impecunious wizarding fans losing out than about the prospect of touts swiping surplus. + +Stamping out the secondary market entirely means preventing people selling their tickets to those who value them more. This inefficiency is wince-inducing for economists, and difficult to enforce. In May a report on the online secondary ticket market commissioned by the government pointed out that banning the secondary market would simply shift activity underground. + +Restricting the secondary market is possible, but only with great effort. The government’s review reported that the Glastonbury model, where festival-goers must show proof of identity alongside their ticket, works, but only because the organisers have such tight control over everything about the process, from ticketing to the venue. + +Checking at performances of “Harry Potter and the Cursed Child” seems less rigorous. The producers have identified only around 60 bookings yielding tickets that made their way on to the secondary market since the play opened in June, an average of around one a day. In any case, resale websites guarantee that rejected tickets will be reimbursed. Awkwardly for producers, ticket markets are more like unruly bludgers than pliable quaffles. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21705288-curse-market-forces-makes-ticket-reselling-tough-manage-muggleu2019s-game/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Tax avoidance + +You feeling lucky? + +Proposed measures against dodgy tax structures would be a big step forward + +Aug 20th 2016 | From the print edition + + + +IT IS not correct to say, as many do, that tax evasion is illegal but tax avoidance is legal. The lawyers and accountants who manage avoidance schemes—which often exploit loopholes to gain a tax advantage that legislators never intended—work in a legal grey area. Until courts offer an opinion, the people managing and using the most exotic tax structures cannot know if they are operating on the right side of the law. All this trickery has a heavy cost to the state. In 2013-14 tax avoidance cost the British government £2.7 billion ($4.3 billion), according to official estimates. As part of a wider crackdown, the government is now going after those who make all this possible: the “pinstriped mafia” of tax advisers. + +Currently, advisers and their associates need not worry excessively about whether the tax-avoidance schemes that they sell to clients are legal or not. If such a scheme is found to be on the wrong side of the law, it is usually not the advisers but the clients who take the heat, even if they thought they were doing the right thing. Popstars and sports icons are among those who have been publicly skewered for taking part in such schemes. + +This arrangement may soon change. On August 17th HMRC, the tax-collecting agency, launched a two-month consultation on new plans to punish “those who design, market or facilitate the use of tax-avoidance arrangements”. It proposes that someone who does so could be fined a sum equal to 100% of the tax they had helped a client to avoid. + +It would not be the first time a government had gone after those who help people to dodge tax. Tax advisers in Australia can be fined up to A$550,000 (£323,000). Britain has already introduced fines for those who help with offshore tax evasion or non-compliance. But in going after tax advisers so aggressively, the new scheme would go further than the rules seen in any other country, says Francesca Lagerberg of Grant Thornton, an accounting firm. It has been warmly received by tax campaigners. “It is rare that I unambiguously welcome a government press release,” says Richard Murphy, one of them. + +If introduced, the proposed new rules would significantly change tax advisers’ appetite for risk. What is currently a one-way bet with multi-million-pound pay-offs would have the potential to be a costly mistake. But the sweeping nature of the proposed rules—there is so far little guidance about what would count as “bad” behaviour, for instance—could have unintended consequences. Jolyon Maugham QC of Devereux Chambers points out that perfectly honest tax advisers may worry about giving any advice at all, lest they inadvertently fall foul of the new regulations. He expects the rules to be “materially revised” before becoming law. + +Still, unscrupulous firms are expected to suffer most. Tax advisers are required to hold professional indemnity insurance, to cover the cost of compensating clients for damage resulting from negligent services. Mr Murphy reckons that premiums will rocket for those suspected or found to be engaging in tax avoidance. The consultation suggests that before long, Britain will look like a very bad place to try your luck with the taxman. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21705349-proposed-measures-against-dodgy-tax-structures-would-be-big-step-forward-you-feeling-lucky/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lorry drivers + +Keep off truckin’ + +The haulage industry epitomises problems seen across the labour market + +Aug 20th 2016 | GLOUCESTER AND GRIMSBY | From the print edition + +Going downhill + +GRIMSBY, home to Britain’s best fish and chips, has one of the highest unemployment rates in the country. Yet in the very same town an industry is crying out for workers. Grimsby’s port welcomes everything from Russian wood-pallets to French cars. But as adverts around the town attest, road-haulage firms, which transport these goods around the country, complain about a shortage of labour. The trucking puzzle hints at three problems facing the wider labour market: discouraged workers, unambitious employers and a government that does too little to get people into jobs. + +Lobby groups estimate that the road-haulage industry is short of 45,000 drivers (the government agrees). Only 17,000 new truck-drivers’ licences are issued each year, half of what is needed. The result of this lack of personnel is that haulage firms must turn down work. Products turn up late. With three times as much freight transported by road as by rail and water combined, this is bad news for consumers. + +One reason for the labour shortage is that people do not fancy the work. Driving the lorries is not tricky; after having a go, your correspondent can attest that the wagons are surprisingly nimble. But on the road, finding decent food or a shower can be tough. Parked lorries are easy targets for thieves. Unions complain about the “spy in the cab”, a camera in some vehicles which monitors the driver to enforce limits on driving hours. Some bosses use the camera to bully drivers into doing more work. And the hours are long. Of the roughly 1,000 types of jobs classified by the Office for National Statistics, none involves a longer working week than the road-freight industry. More than 60 hours is common. Enter the cab of a lorry and the first thing you spot is a fold-down bunk where drivers often spend the night. + +Theory suggests that hauliers could simply raise wages to a high enough level to persuade workers to put up with these downsides, thus eliminating the labour shortage. Yet pay has remained stubbornly low. The average hourly wage in road-freight transport is £10.44 ($13.74), below the overall median of £11.80. And in spite of the growing labour shortage in recent years, in nominal terms pay has grown at the same pace as the average since 2008. In real terms it has fallen. + +Bosses say that raising wages by much would be impossible. The country’s 70,000-odd haulage companies compete closely on cost. Foreign firms are another source of competition, though for now they are minor players (in 2013 just 3.3% of heavy-goods-vehicle miles in Britain were driven by foreign-registered vehicles). And as supermarkets have started to compete more fiercely on price there has been “enormous pressure” on hauliers to cut costs further, according to one witness in a recent parliamentary report. + +Circle the wagons + +Hauliers would be able to afford better wages if they were more productive. But in recent years, like many other British industries, they have skimped on investment. In the transportation and storage sector, private capital spending is 4% lower than in 2008. Firms may think that marginal improvements are hardly worth the expense when driverless lorries are on the way (see article). In March the government announced that trials would start soon. So fleets are getting older: in 2006-15 the proportion of vehicles on the road aged ten or more years rose from 23% to 29%. + +With bad conditions and poor pay, it may not be a surprise that unemployed folk in places like Grimsby shun a life on the road. Young Britons are particularly lorry-shy. Just 1% of heavy-goods drivers are under 25, compared with 12% of the total employed population. Small wonder that haulage companies have been plugging gaps with workers from eastern Europe. In the offices of Downton Group, a firm based near Gloucester that delivers everything from magazines to tea, signs are in English and Polish. + +For the Britons who do want to try their luck, haulage is not easy to break into. It costs about £3,000 to train as a new “C+E” driver, the highest licence classification—a big ask for someone with no job. Some firms, like Downton, pay for their employees’ training. Leonie John became a driver last year thanks to its apprenticeship programme. A former hairdresser, she always wanted to drive heavy-goods vehicles, a rare thing in an industry where women make up just 1% of drivers. + +Generally, however, haulage companies are reluctant to fund such courses, since it is all too easy for a rival to poach employees trained up at their expense. There is only one haulage apprenticeship within 40 miles of Grimsby, offering a measly annual wage of £7,000. + +The haulage industry may thus be suffering from “market failure”. In such a situation, economists recommend that the government steps in. However, it is not easy to get help from the state with the costs of training. Lorry-driving is considered a low-level skill, which makes it tricky to qualify for “advanced learner loans”, a government scheme to help with the costs of vocational courses. + +Changes may be afoot. The newish government has talked up its “industrial strategy” and has recently offered to improve funding for lorry-driving apprenticeships. It has been vague about details (such as the budget). In any case, without also increasing retention in the industry, the parliamentary report concluded, such efforts may amount merely to “top[ping] up a leaking bucket”. In the next decade one-fifth of Britain’s lorry drivers are expected to retire. The puzzle seen in places like Grimsby is unlikely to be solved soon. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21705350-haulage-industry-epitomises-problems-seen-across-labour-market-keep-truckin/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Paddy Ashdown’s grand design + +A new movement preaching post-partisan centrism is welcome. But it faces an uphill struggle + +Aug 20th 2016 | From the print edition + + + +ONE evening about five years ago, a group of political types gathered for a London dinner party. They included a former secretary of state on the modernising wing of the Labour Party, a senior Liberal Democrat in the then-coalition government and a prominent voice on the Conservative left. All three were—and are—household names in Westminster, and fairly well known beyond it. Wine and conversation flowed. The talk ranged from public services and the economy to foreign policy and party politics. By the time they were on coffee, the three agreed that they had a great deal more in common than with some or most of their own parties. How silly, they concluded, that the political system kept them apart. + +Such is the compact at the heart of Britain’s majoritarian system. First-past-the-post gives you broad, stable political families for the price of a distortive electoral system that, by rewarding such sprawling parties, blurs some political differences and accentuates others. It tends towards one big party of the left and one of the right. Many a time those with the political predilections of the dinner-party guests—liberal centrists, in other words—have struggled to work across that divide. + +In the 1980s the right wing of the Labour Party split off and briefly soared but was killed by the electoral system and ended up merging with the Liberals. In the 1990s Paddy (now Lord) Ashdown, then the leader of the ensuing Lib Dem party, flirted with Tony Blair’s Labour, but tribalism on both sides got in the way. After the inconclusive 2010 election Lord Ashdown scrambled in vain to midwife a “progressive coalition” encompassing both parties, plus various small centre-left and regional outfits. + +Some reckon the referendum on Brexit offers fresh opportunities for such a force. Why? The result exposed the fragmentation of the old two-party electorate. It incensed many Remainers and thus provides a rallying point for liberals. The Labour Party has trooped off to the hard left, Theresa May’s government is popular but at the mercy of hardline Brexiteers, and the Liberal Democrats remain marginal and unloved. So various new groupings are trying to circumvent the parties and provide rallying points for centrists of all tribal allegiances and none. For example Hugo Dixon, a leading Remainer, and others have set up Common Ground, to campaign for an open, internationalist Britain. + +The most prominent initiative is More United, an online campaign sporting a heart-shaped union-flag logo. Founded by Lord Ashdown and other like-minded public figures (including Martha Lane Fox, an internet entrepreneur), it takes its name from a phrase in the maiden parliamentary speech given by Jo Cox, the Labour MP whose murder in the mephitic final days of the referendum campaign brought thousands out on the streets in protest at the darkly divisive atmosphere. More United starts from those instincts: it wants a calmer, more collaborative politics. But it also wants to go further and build a centrist movement that transcends party boundaries and appeals, Lord Ashdown says, to those “who want to influence politics but, for whatever reason, don’t necessarily want to do so through a political party.” + +“Phase One” (Lord Ashdown was once in the Royal Marines) was a toe-dipping exercise. A month after the referendum a website was created and expressions of support invited. At the time of writing these numbered 24,707, far more than More United had expected. So in the coming weeks it will progress to Phase Two: the creation of a constitution and perhaps a list of policies. At the next election the group hopes to channel donations towards candidates who conform to its principles (think: in favour of a close relationship with the continent, party-funding reform and a social market economy). Beyond that, it might provide scholarships to promising young politicians, nurture parliamentary links between like-minded MPs, deploy activists to favoured local campaigns or even, some reckon, catalyse a new political party. + +The vital centre + +In an age of Brexit, Britain needs voices for internationalism. Its referendum illustrated dual deficits, of strong champions of globalisation and of effective mechanisms to share its fruits. So a market-liberal credo combining openness with political reform and hard-headed dollops of economic progressivism is just the cocktail the country needs. A new force pushing for such things is thus welcome. + +Still, More United faces an uphill struggle. The Brexit vote was momentous, but the old fealties live on. Some in the Labour and Conservative camps see the initiative as a Lib Dem front. Will candidates from those parties accept its support? Then there is the national picture. Nearly half of voters opposed Brexit, but they are concentrated in about a quarter of constituencies, in Scotland, London, other big cities and herbivorous university towns. Moreover, most post-party, internet-based politicians—Donald Trump in America, Beppe Grillo in Italy, Jeremy Corbyn and the Brexiteers in Britain—tend to be anti-establishment. Lord Ashdown is proposing a bottom-up movement that, while reformist, will risk seeming defensive of Britain’s status quo. + +To be fair, Emmanuel Macron, France’s centrist economy minister, has created one promising precedent in En Marche! (On the Move!), a cross-partisan, pro-openness movement. Brexit will give his British counterparts an insurgent edge. And long-term demographic trends, like the steep rise in university attendance, work in their favour. But the best opportunity for More United depends on an established party: Labour. On September 24th it will probably announce the re-election of Mr Corbyn, its far-left leader. That could tempt some on its moderate wing to split off. More United could offer them the infrastructure, funding and manpower they need to abandon the party but remain electorally competitive. Like the country at large, its prospects are—despite everything—in the hands of the two-party system. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21705346-new-movement-preaching-post-partisan-centrism-welcome-it-faces-uphill-struggle-paddy/print + + + + + +Previous Articles Sections Next + + + + +International + + + + + +Islamic education in Europe: Faith of our fathers + +Online Islamic education: World-wide mullahs + + + + + +Articles Sections Next + +Islamic education in Europe + +Faith of our fathers + +Fearing extremism and lack of integration, European governments want more of the continent’s imams to be home-grown + +Aug 20th 2016 | HAMBURG AND NOTTINGHAM | From the print edition + + + +FOR a snapshot of how Europeans, Muslim and non-Muslim, learn about Islam, visit the Centrum mosque near Hamburg railway station. A converted public bath, it is one of about 60 prayer spaces serving 200,000 Muslims in the city. This community’s roots are in a Turkish Islamist movement, Milli Gorus (National Vision) which flourished among German Turks before propelling a pious government to power in Turkey, in 1996, for one turbulent year. On weekdays it bustles with people seeking solace, or reading matter in German, Arabic or Turkish. On Saturdays children take Koranic lessons. + +Hundreds of non-Muslim adult Germans also file through this battered building: they are teachers taking courses in Islam. Ozlem Nas, a spokeswoman for the Schura, Hamburg’s biggest mosque federation, explains: “They don’t know what to do when, say, a Syrian pupil and a Chechen call each other bad Muslims.” + +For another picture of Islamic instruction, explore the redbrick streets of Nottingham in England’s East Midlands. The Karimia Institute, a religious and cultural centre, is a hive of piety and learning. Nearly 1,500 children flock to after-school Koranic classes. These madrassas are respected, but there are some bad, brutal ones elsewhere in England and the government has vowed to reform this hitherto unregulated sector. As well as three mosques, the institute has a kindergarten and a private primary school (pictured above) where, in the words of Karimia’s founder, Musharraf Hussain, children imbibe a “British Islamic” culture. The uniform is traditional (girls wear a body-covering jilbab) but the stress is on good interfaith relations and obeying British law. British royal events are celebrated keenly, but human links with Pakistan remain, thanks to satellite television and online learning (see article). + +European governments fret over these fast-evolving combinations of local and imported influences. With so many Islamic teachers and clerics whose roots and ethos are far from western Europe, they fear for social cohesion; at worst they see fertile soil for terrorism, although the internet probably inspires more extremists than any mosque or school. They dream of a home-grown Islam that is less reliant on immigrants’ countries of origin and sits well with democracy, led by teachers and administrators trained in national universities. In the background is wariness of Saudi Arabia, which sends few migrants or imams to Europe but finances mosques and literature reflecting its puritanical Salafi school of Islam. This is sometimes—though not always—a path to extremism. + +One problem with “Europeanising” Islam is that home-grown need not mean emollient. Those Nottingham madrassas follow the relatively liberal Barelvi form of Islam, but that makes it harder to find British-schooled staff. The 50 teachers are mostly foreign-born. If they followed the stricter Deobandi school, they could hire graduates from more than 20 “seminaries” of that persuasion in Britain which boys can enter at 12 and stay in for a decade. But these copies of an Asian prototype, forged under the Raj, hardly foster integration. + +As European countries tackle Islamic education, each confronts its own history and long-settled deals regarding the state’s relationships with Christianity and Judaism. Belgium, for example, was created as a Catholic kingdom; it subsidises both worship and teaching. Islam now benefits from that; more than half its imams are paid by the state. In state schools in Brussels, most children study the religion of their heritage; half select Islam. (Next school year, a civics course for all will partly replace these lessons, but some confessional teaching will stay.) A Muslim body advising the government is now led by a well-connected Moroccan; Morocco is almost co-managing Belgian Islam. + +Bringing it home + +Religious education in the Netherlands is shaped by an old compromise between Protestants and Catholics, entitling small groups to found confessional schools. This has facilitated the creation of more than 40 Muslim primary schools. Demand is surging, says Haci Karacaer, a Milli Gorus veteran who runs one. But he struggles to find Muslim staff who are qualified to teach in Dutch, although several Dutch universities excel in Islamic studies. Nor do many imams preach in Dutch. Government pressure to use the national language has been counter-productive, he laments. This suggests a worrying disconnect between government, academia, clerics and Dutch-speaking youngsters. + +At the other extreme is France, where the regime of laïcité (secularism) instituted in 1905 bars religion from state education. But last month the prime minister, Manuel Valls, proposed some changes after the grisly murder of a Catholic priest. France, he wrote, must become a centre of excellence in Islamic theology, and strategies must be found to replace foreign financing of mosques with national sources. + +Under laïcité, state universities cannot have theology faculties, though they can offer related courses, say on Arab culture or religious sociology. Universities in Paris and Aix-en-Provence do that, as Mr Valls approvingly noted, and in Strasbourg (exempt from laïcité because it was not French in 1905) theology is allowed. With the will to give Islam a prestigious place in French higher education, there is certainly a way. + +But that will not solve the problems faced by poor Muslim communities across Europe who can hardly pay imams anything, let alone a graduate salary. Their mosques seek practical solutions; whether that is foreign financing, or unsophisticated clerics from their homelands who will accept modest remuneration. + +At least 70% of the 2,000-plus imams in France are foreign nationals. About two-thirds get no regular wage. Of the rest, 150 are paid by Turkey’s government, 120 by Algeria’s and 30 by Morocco’s. France is co-operating more with these countries. Trainee imams from France now go to Morocco to attend a new Islamic seminary. A recent deal means that those in Algeria destined for France will study in both countries. + +Germany’s main source of imams is Turkey; it hosts 1,000 who are paid by the Turkish government, serving a third of its mosques. They enter on five-year visas under a deal with Ditib, the external arm of Turkey’s religious-affairs directorate. But some Germans, including Turkish-descended ones, favour severing ties with Ditib, calling it a tool of Recep Tayyip Erdogan, Turkey’s president. Since last month’s failed putsch, Ditib has echoed him in blaming Fethullah Gulen, a preacher based in America. A network of Gulen-related schools, cultural centres and newspapers say they feel under threat from Ditib. + + + +Islam in Europe: perception and reality + +Post-war German politicians never foresaw having to accommodate Islam within this framework. They viewed religion classes in schools, provided by Protestant and Catholic churches, as a bulwark against totalitarianism. Now German states, responsible for education under the federal system, are trying to fit Islam into the system. Their approaches vary. Schools in Berlin do not routinely teach religion, but a group close to Milli Gorus won a legal battle to offer Islamic education where parents want it. In 2012 Hamburg struck an accord with most Islamic bodies in the city, including Ditib, giving them a role in comparative-religion studies. + +In several other states Ditib has in recent weeks been shunned. Three have gone slow on collaboration with the agency. This reaction risks creating a vacuum, says Jonathan Laurence, an American scholar of European Islam; instead the authorities should push Ditib’s German operation to loosen ties with Ankara. + +Ditib’s departure would leave a gap. It discreetly backs another German project: fostering Islamic theology in higher education. Since 2010 the government has urged universities to help train future imams, teachers and chaplains. Places like Tübingen and Münster, famous for Christian scholarship, now offer Muslim studies. + +Will Germany reap the desired harvest of home-grown scholars? Mohamed Taha Sabri, a Tunisian-born imam in Berlin, says Muslim communities may shun people who have studied Islam in liberal places under non-Muslims. Dietrich Reetz of Berlin’s Free University retorts that they will easily find work, say in mosque administration. However few will be imams, because most are women. + +The vision of great European universities, some founded as Christian seminaries, helping to distil and domesticate Islam has appeal. But they move slowly, and needs on the ground evolve fast. Intensive vocational courses for anyone in charge of children, and strict monitoring of foreign teachers and preachers, might be the best focus. Governments cannot micromanage faith but they can regulate it better. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21705335-fearing-extremism-and-lack-integration-european-governments-want-more-continents/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Online Islamic education + +World-wide mullahs + +The rise of the digital madrassa + +Aug 20th 2016 | RAWALPINDI | From the print edition + +Window on the world within + +WORK never stops at Jamia Sirat-ul-Mustaqeem, a madrassa in a rundown part of Rawalpindi in the Pakistani Punjab. After its 20 pupils are in bed, the teachers use Skype to connect to homes in Britain, France, Norway and Sweden, where teenagers attempt to read the unfamiliar Arabic script of the Koran. Many European parents find these online sessions more convenient than after-school classes at the local mosque. + +The owner, Maulana Malik Muheisen Shafiq, decided to go round-the-clock four years ago to spread the message of Islam—and subsidise the education of the madrassa’spoorer boys. He charges £35 ($46) for three half-hour sessions a week, or £50 for five sessions. “People in Europe spend a huge amount of money seeking knowledge,” he says. + +Online Koranic academies range from one-man affairs to institutions more like call-centres, with IT managers and teachers working shifts. Competition is getting tougher, Mr Shafiq says: he now offers free trial sessions to lure new customers. + +Parents have no way to check teachers’ backgrounds: one former fighter from Lashkar-e-Taiba, which the UN regards as a terrorist front group, teaches from Lahore. But proprietors say parents would quickly realise if teachers strayed beyond reading and reciting the Koran. “We don’t discuss anything related to politics, violence and jihad,” says Mr Shafiq. + +Four miles away, in a smarter area, the Zakariyya mosque takes a more traditional approach to spreading the word. It is the Rawalpindi headquarters of the Tablighi Jamaat (TJ) missionary movement, which sends preachers round the world to attract Muslims to the Deobandi movement. This seeks to return to the perceived purity of seventh-century Islam and is in some respects similar to the Wahhabism of Saudi Arabia. + +Although nearly all Pakistan’s militant groups are within the Deobandi fold, experts disagree on whether the TJ is a security threat. On August 11th the army banned Tariq Jameel, one of its best-known preachers, from speaking at its institutions. And yet some militant groups regard TJ’s peaceful proselytising and preaching of poverty as a cop-out. + +Gulam Rasool, a missionary, has just returned from Indonesia. Britain is one of his favourite destinations, he says: “They’re accepting the true version of Islam in large numbers.” His globe-trotting life of prayer and preaching leaves little time for his family. He is yet to meet his youngest child. When he does see his family it is usually over Skype. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21705334-rise-digital-madrassa-world-wide-mullahs/print + + + + + +Previous Articles Sections Next + + + + +Business + + + + + +The future of television: Streaming on screens near you + +Workplace woes: The bane of brilliance + +Terror and tourism in France: Not all shows must go on + +Measuring companies: The watchers + +Industrial gases: Something’s in the air + +Self-driving lorries: A long haul + +Schumpeter: Family values + + + + + +Articles Sections Next + +The future of television + +Streaming on screens near you + +Can Netflix stay atop the new, broadband-based television ecosystem it helped create? + +Aug 20th 2016 | From the print edition + + + +COMING soon on your Netflix service: a Portuguese-language sci-fi thriller shot in Brazil; the second series of “Narcos”, about a Colombian drug cartel; a British series about the life of Queen Elizabeth called “The Crown”; and new episodes of “Black Mirror”, a dystopian vision of the future that originated on Britain’s Channel 4 but was snapped up by the streaming service for tens of millions of dollars. In the next year there will be new television series in Italian, German, Spanish and Japanese, and the second series of a French political drama, “Marseille”, starring Gérard Depardieu. Some of these shows will be excellent, and some will not (the first series of “Marseille” was panned by critics). But that is not the point. + +Netflix was once a humble DVD-by-mail business based in Los Gatos, California. It is now becoming a global television network. The subscription service expanded early this year from a mere 60 countries into a total of over 190. It has 83m subscribers, including 47m in America, who pay between $8 and $12 a month for it. Appetite for its many-flavoured fare is strong. A Netflix household streams an average of nearly two hours of the service per day. + +The 19-year-old firm’s many innovations have changed how consumers watch TV. It delivers programming on a global basis, on demand and without ad breaks. That has vastly accelerated viewers’ shift away from the existing pay-TV and broadcast system that has been built along national borders, time schedules, release windows and sponsorships. Netflix’s interface employs an algorithmically-driven platform that knows what viewers watch, learns what they like and pushes new shows and episodes to them continuously. This has helped to usher in an era of online binge-watching. + +Streaming of Netflix shows—a technology that did not exist a decade ago—now accounts for 35% of peak internet traffic in American homes, according to Sandvine, a consultancy. This shift is reshaping both supply and demand for TV. The firm’s budget for making and licensing content—$6 billion this year—is now triple that of HBO, the original champion of quality subscription drama. This splurge is having a meaningful impact on the economics of TV production, and creating a windfall for studios, producers, writers and actors. + + + +Yet many in the industry wonder how long Netflix’s winning streak can continue. The way in which the firm has changed TV is leading others quickly to copy it. It still has first-mover advantage. But keen and extremely well-funded rivals such as Amazon, YouTube and Hulu are catching up. A new, broadband-based TV ecosystem is forming around a number of firms. The question now is whether Netflix will keep its position on top of it. + +There are reasons to worry. Netflix’s challenges are growing. After several years of rapid expansion, competition is looming larger, including from Amazon. It is having trouble finding a viable path into China, the world’s largest TV market, where it does not yet have a presence. The firm’s growth in subscribers has slowed of late, prompting concerns about whether it has taken on too ambitious a global mission, too quickly. + +Yet Netflix has a history of adapting well. Sixteen years ago it could have been acquired by Blockbuster, a DVD-rental service that has since gone bankrupt, for around $50m (there were reportedly talks about a deal but the older firm passed on the chance to buy the upstart). Its later transformation into a global producer of content came not in one well-judged leap but in a series of incremental steps. First it changed its focus to streaming. Then it learned to analyse customers’ viewing habits in real time and started pushing recommendations and keeping customers on the platform for longer. In 2010 it ventured beyond America’s borders. It entered Latin America in 2011. Britain and northern Europe came next, in 2012. + +Finally, in 2013, Netflix became a studio in its own right, producing content for international consumption. This was momentous. A company that Hollywood had viewed merely as a distributor of its products had turned itself into a vertically-integrated manufacturer, armed with reams of data about what people liked to watch. There will be plenty of industry-changing milestones ahead, too, according to its co-founder and chief executive, Reed Hastings, who recently declared that “one day we hope to get so good at suggestions that we’re able to show you exactly the right film or TV show for your mood when you turn on Netflix”. + + + +It took years for the television industry to fully appreciate the threat it faced from streaming. Netflix now has a market capitalisation of $40 billion (making it almost as valuable as 21st Century Fox). Its rivals have woken up, and other recent entrants with international reach are now splashing out, too. Amazon and YouTube have recently spent heavily on paid streaming services. Hulu, backed by Disney, Fox, Comcast and Time Warner, is Hollywood’s rival to Netflix in America. HBO and Showtime both offer direct streaming services. + +In foreign markets, too, traditional pay-TV companies have started their own low-cost streaming options, including Rupert Murdoch’s Sky Now in the UK and Vivendi’s CanalPlay in France, which got its start before Netflix entered the French market. Studios are now more aware that when they sell shows to Netflix, they are empowering a competitor. Netflix’s early acquisitions of the rights to stream Hollywood films and entire runs of TV shows—like AMC’s “Breaking Bad”—came at relatively low cost, helping it expand its subscriber base more efficiently. Now the firm must pay more, and it must fight harder against rival services for subscribers. + +The biggest threat to Netflix is probably Amazon, which unlike the smaller firm does not rely on its video service for its profits. Rather, Amazon includes video with its Prime service and uses TV as a way to lure in more e-commerce customers. Its early strategy seemed oddly cautious. It offered less content than Netflix, and its shows were often more quirky than popular. But it is becoming more aggressive; last year it paid $250m to sign Jeremy Clarkson and the team who made the BBC’s series, “Top Gear”, and it outbid Netflix for the streaming rights to “Mr Robot”, a hit on the USA Network. Amazon recently said it would double spending on content in the second half of this year. For now, Amazon video is available only in America, Britain, Germany, Austria and Japan, but it is expected soon to expand to France, Italy and Spain. Futuresource Consulting, a research firm, reckons the service could have close to 40m users by the end of the year. + +Netflix may have a bigger international footprint than Amazon, but it must overcome myriad obstacles to growth in the markets in which it operates or would like to. In emerging markets, broadband access is limited and relatively expensive. Payment systems tend to be antiquated and consumers will inevitably be less willing or able to pay for TV. In some developed countries, after a wave of early adoption, the pace of growth tends to slow, especially in markets where pay TV is cheap (unlike in America and Britain). Even in America, subscriber growth slowed considerably in the second quarter of this year, after a record first quarter. Netflix blamed a higher rate of churn of subscribers that it argues will be temporary, connected to the expiration of older, cheaper price plans. In a few big markets the firm faces resistance from governments. China’s authorities earlier this year put a halt to a streaming service started by Disney with Alibaba, a Chinese internet giant; they are unlikely to be friendlier to Netflix. The European Commission is considering various onerous regulations, including a European content quota, and a requirement to contribute to subsidy pots for national production. + +The big, background question for Netflix is whether it can continue to make and acquire content that appeals to a sufficient number of its subscribers. That is an expensive proposition, and one that requires achieving great scale to earn big and recurring profits for the firm. Netflix will have negative cashflow this year of more than $1 billion, and it will increase its borrowings late this year or early next. The firm says it will be slightly in the black this year, and it expects profits to be significant next year. The variation between cashflow and profit is due to the fact that it spreads its heavy spending on content production over time. Yet there is no let-up in the vast quantities it plans to spend on programming. If the model works, Netflix’s appeal as a platform will grow, allowing it to afford more content that in turn will attract more subscribers, forming a virtuous cycle. But the circle could turn if a competitor lures away Netflix subscribers with superior content. + +Who’s afraid of peak TV? + +For now, what Netflix’s peers see is the sheer scale of its outlays on programming. Its model raises questions about the ability of smaller players to compete. John Landgraf, who runs FX, a network owned by Fox that makes some of the best shows on TV, worries that Netflix wants to achieve a level of dominance in television production similar to that enjoyed by Facebook in social networking or by Google in search. + +In his view, Netflix’s spending spree is leading the industry towards “Peak TV”—the production of far more television than people have time to watch—and an industry consolidation in which Netflix could be dictating the terms. Similarly, pay-TV operators and cinemas around the world worry that Netflix will bankrupt them, offering a low-cost, commercial-free service with thousands of hours of content. + +Such fears are overblown. Netflix will have plenty of competition in making the TV of the future. It is not in the same business as FX and other niche channels. It does not want to make only “prestige TV”, but programming for all segments of its audience. Some of the shows may be terrible, but if they are watched by a sizeable slice of its subscribers, they still have value to the firm. This is another reason why it is old-fashioned broadcast networks that have the most to fear: they used to have the market for broad, popular fare to themselves. As for pay-TV and cinema owners, it is the internet (and the accompanying piracy) that has disrupted them, not Netflix in particular. + +Netflix should have a large hand in shaping the future of television. Programming used to be awful. Creative choices were entirely driven by ratings and advertising, resulting in lowest-common-denominator shows that were popular but formulaic. The days of watching series that were available on a certain channel at a certain hour—and only rarely crossed a national border—are long gone. Netflix and the other streaming services have intensified competition in quality TV production, using a model similar to that of the likes of HBO, which in the 1990s began competing solely on the basis of quality to win subscribers. They have brought what some call a “platinum age” of television, and the ability to see much of it on demand in a lot more places. + +Some years hence, Mr Hastings envisages a future in which the main networks are Netflix, Amazon, YouTube, HBO, assorted sports networks and only a very few existing channels that are able to thrive on the internet, including the BBC (which has its online iPlayer and a captive subscriber base thanks to Britain’s licence fee). Live sports will be delivered online in ultra-high definition. Scripted television could become still more cinematic and expensive. HBO’s “Game of Thrones” costs around $10m an hour to make. Baz Luhrmann’s “The Get Down”, six episodes of which were released on Netflix on August 12th, cost roughly the same (see article). “What does $20m-an-hour television look like?” Mr Hastings muses. Whether it is Netflix or one of its rivals that casts caution to the wind and splurges the cash will hardly occupy viewers’ minds as they lower the blinds and prepare to binge. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21705353-can-netflix-stay-atop-new-broadband-based-television-ecosystem-it-helped-create-streaming/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Workplace woes + +The bane of brilliance + +Some high-performing employees suffer for their success + +Aug 20th 2016 | From the print edition + + + +WHO wouldn’t want to be a star employee? The salary is nice, as is the chance to climb to the top and tell others what to do. The downside is that your co-workers may hate you. The notion that jealous managers bully high-performing underlings, whom they see as a threat to the social order, has been well researched. But management theorists now say it is not only small-minded bosses that star workers need to overcome; it is also their colleagues. + +A study by Theresa Glomb of the University of Minnesota and Eugene Kim of the Georgia Institute of Technology suggests that workers have a tendency towards what Leon Festinger, a social psychologist, defined as “upward social comparisons”. They overestimate their ability and judge their standing in the office against those with more talent. Falling short leaves average Joes envious and spiteful. Tall poppies, says Ms Glomb, are chopped down in a variety of ways, including ostracism at social events and humiliation before the boss. + +All this rarely happens in industries such as the technology business, where outperformance is, by and large, admired by all. It is typically found in stagnant environments, says Sue Filmer of Mercer, a human resources (HR) consultancy: the more dynamic the business, the less the scope for peers to sit and stew. An HR manager at a property firm, employing around 400 staff, says that when he implemented a talent-management programme, those excluded immediately came to tell him why the chosen ones were undeserving. In small organisations, too, there can be little chance of a sideways move to escape the rut. Ivor Adair, an employment lawyer at Slater + Gordon, a law practice, says such cases are widespread. In one recent instance he dealt with, a jealous worker at a professional-services firm was cited for leaning over a desk and screaming, hairdryer-style, into a talented colleague’s face. + +High performers have their lives made difficult in other ways, too. A study by Gráinne Fitzsimons of Duke University showed that the most talented employees tend to have extra work dumped on them—not only the high-powered tasks they might relish, but also mundane chores, such as organising meetings. + +In some cases, the stars have themselves to blame. It can be in the nature of successful people to display a level of ambition and self-absorption that can get up colleagues’ noses. And because high-flyers tend to have better cognitive skills, they could simply be more adept at spotting slights that stupider employees would overlook. If you find e-mails terse or colleagues offhand, in other words, it means you’re a high performer. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21705354-some-high-performing-employees-suffer-their-success-bane-brilliance/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Terror and tourism in France + +Not all shows must go on + +The accumulating costs of terrorism for French businesses + +Aug 20th 2016 | PARIS | From the print edition + +Wish you weren’t here + +IN NOVEMBER Youssou N’Dour, from Senegal, and others will perform at the Bataclan concert hall in Paris. A year after gunmen killed 90 people there, the idea is to let audiences feel safe again. The best way to defy terrorists, and keep businesses going, is to resume normal routines. + +That’s a fine ambition. Yet tourism, entertainment and other business in France are struggling. Heavily armed soldiers continue to patrol Paris’s streets, metro stations and riverside beaches, snapped by wide-eyed tourists as a new sort of postcard from the city. A national state of emergency, in place until January, plus pat-downs and bag searches at the entrance to any mall or cinema, are constant reminders of ongoing threats. A blues musician laments that concerts in his city are far less well-attended than before. + +Fears are spreading that businesses face more than a temporary dip in custom. A hotelier grumbles that bookings fall each time a ruling politician declares that France is “at war”. Late in July AccorHotels, a big group, reported “a very pronounced drop” in demand this year, as its revenues in Paris fell by 12%. Across France they slid by more than 2%. + +Though France hosted the Euro 2016 football championship without incident, passenger growth has stalled at Paris’s main airport, Charles de Gaulle. A 3.9% slump in June suggests deepening gloom, even as traffic surges across Europe as a whole. On July 29th Eurostar said cross-Channel passenger numbers fell too, with revenues down by a tenth in the second quarter compared to last year. That matches the general downturn for foreign-tourist arrivals. Late July brought 19% fewer flight reservations by Americans than in the same period last year. Trips by Brexit-pinched Brits fell even more. Nor are once-buoyant new markets helping: France’s embassy in Beijing says it had 15% fewer visa applications than last year. + +In rich countries terror attacks are typically shrugged off by most businesses before long, as visitors resume postponed trips; financial markets routinely brush aside a single assault, even big ones. Roughly a year after attacks in Madrid (in 2004) and London (2005) hotel occupancy rates in each city were back at old levels. + +But France has suffered a steady drumbeat of recurring attacks, which poses a worse threat to the world’s second-most-valuable tourist industry, accounting for 2m jobs. After 14 assaults in two years, and more in nearby Belgium, gloom is deepening. In some cases official behaviour has gone from Gallic defiance to skittish anxiety. Nice scrapped a big European road-cycling event, due next month. Lille’s mayor has called off a huge flea market, in September, which last year drew 2.5m visitors. The boss of a union of hotel workers talks of a “catastrophic” downturn. + +Officials say that tourist revenue losses last year were around €2 billion in total. This year will be worse. Nor is terror the only problem. Spring strikes and floods were unhelpful. Cash-strapped Russian sun-seekers are retreating from beauty spots, including French ones. Lower oil revenues affect high spenders from the Gulf. Some firms that cater to tourists have themselves as well as terrorism to blame. Disneyland Paris says revenues and visitors fell by about a tenth from April to June compared to a year ago. It cites terror, but people are also fed up with its dowdy, badly-repaired theme park. + +Paris’s tourist office bravely claimed this year that it saw “growing tourist resilience in the face of terrorist attacks”. But if the downturn lasts into a third year, or longer, it will have to learn from others’ prolonged slumps. Thirty years of troubles clobbered private-sector job creation and tourism in Northern Ireland. Decades of violence in Corsica put off investors in tourism. Academics who studied the economy and tourism in Spain’s Basque region, to the 1990s, found terrorism cut incomes by a tenth. In all three, tourism picked up again once stability returned. + +Until then, it makes sense for local authorities to boost the sums they spend on private security firms, and to get them co-operating more closely with police. They can perhaps divert more anxious visitors to cruise liners or resorts where security measures can be more easily organised than on beaches or in flea markets. French officials have vowed to spend more promoting the country’s attractions, though a boom in foreign visitors to Spain this year suggests other destinations could make headway faster. The resumption of shows at the Bataclan will also be a symbol of resilience—as long as the crowds turn up. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21705368-accumulating-costs-terrorism-french-businesses-not-all-shows-must-go/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Measuring companies + +The watchers + +Alternative-data firms are shedding new light on corporate performance + +Aug 20th 2016 | From the print edition + + + +FINANCIAL statements are both infrequent and backwards-looking, so getting a sense for how a business is performing in the present can be nearly impossible. But a cottage industry of a few dozen firms, mostly in America, is gleaning “alternative” data from novel sources, ranging from satellite images to obscure corners of social media. + +The growth of small, low-cost satellites and machine learning means companies can quickly and cheaply parse millions of satellite images a day. A common trick is to analyse photos of car parks outside big-box retailers such as Walmart to get a sense of daily revenues. A Chicago-based data firm, RS Metrics, sells estimates on the productivity of factories by tracking the number of lorries parked outside. Bad weather can make such analysis difficult in some places, but satellite-image analysis of, say, Elon Musk’s new “gigafactory” making batteries for Tesla’s electric cars in Nevada is more straightforward under the desert’s clear skies. + +A bit of ingenuity along with some elementary geometry goes a long way. Data analysts estimate the size of oil stocks by looking at the lengths of shadows cast by oil tanks in satellite pictures (the height of the roofs of most crude-oil tanks varies depending on how full the tank is). Several firms, such as Orbital Insight, in Palo Alto, also study farmland to estimate crop yields before official statistics are reported by America’s Department of Agriculture, and often do it better (see chart). Investors are particularly keen for firms to study pictures that yield rare data on, say, steel production in China or Russia, where official data can be patchy. + +Dataminr, a startup in New York, mines social media for happenings on which to alert its clients, which include hedge-fund traders and big newsrooms. Twitter has taken a 5% stake in the firm. Early this year a local reporter tweeted that the FBI was raiding the offices of United Development Funding, a sponsor of real-estate investment trusts in Grapevine, Texas. It took other investors around ten minutes to hear the news and to push its shares down by 50%, by which time Dataminr’s clients had been able to short them. + +Some social-media firms are themselves branching out into alternative data. Foursquare, which is known to consumers for its mobile app that provides restaurant recommendations based on its users’ locations and histories, now sells data. Foursquare can accurately guess if someone is a patron of a particular shop based on how long he has stopped moving (five minutes or more is the trigger). + +Alternative-data firms also offer insights into private companies, such as technology “unicorns” (firms that have yet to come to the stockmarket but are valued at $1 billion-plus). Second Measure, based in San Francisco, claims it can show how many subscribers Netflix had this month, or how Uber, a ride-sharing service, is doing relative to Lyft, a rival. The information comes from data that Second Measure collects on credit-card transactions. For venture capitalists, alternative-data firms may be the only objective source of sales data. + +There have been plenty of acknowledged triumphs. In a blog post earlier this year, the boss of Foursquare, Jeff Glueck, used his company’s foot-traffic data to predict, correctly, that same-store sales at Chipotle, a restaurant chain affected by an outbreak of E. coli, would fall by 30%. Shares in Chipotle fell by 6% when the company reported earnings. + +One impediment to broad adoption of alternative data is a cultural divide between west-coast techies and buttoned-up east-coast financiers, notes the boss of one data provider. He was dismayed to find, on a visit to one richly-resourced fund, that it was guilty of what techies consider the ultimate sin: using Windows computers. Such data is also expensive, and the payoff can take time. But the value of the information to hedge funds and other investors is growing fast. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21705369-alternative-data-firms-are-shedding-new-light-corporate-performance-watchers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Industrial gases + +Something’s in the air + +Two giants of the industry may merge + +Aug 20th 2016 | From the print edition + + + +ASIDE from oxygen-quaffing mountaineers and scuba divers, few consumers give a thought to the normally stable world of making industrial gases. Yet the sector, essential for much other manufacturing, is now gripped by discussion of mega-mergers as big firms on either side of the Atlantic jostle for advantage. + +This week brought renewed talk of a long-expected tie-up. Analysts have speculated for a while about a possible family reunion between Linde, a German firm with a market value of $30 billion, and Praxair, an American rival of similar value that is more profitable. Praxair originally sprang from its European parent over a century ago. The talks are at an early stage. A union would produce the leader in industrial gases, with a market share of about 40%. + +It would suit the companies, less so consumers. Praxair does well selling gases for industrial use, chiefly in America. The food industry needs carbon dioxide, in fizzy drinks or to get caffeine from coffee, for example. Linde, in contrast, has expertise in the long-term growth area of gases for medical use. Supplying oxygen to hospitals is expected to be profitable as ageing societies see more elderly patients under long-term care. + +Merging Praxair and Linde, probably by swapping shares, would reduce competition, which is worrying considering that four companies already control three-quarters of the global market, and in some countries more. The firms, by announcing their talks, presumably believe they have answers to antitrust concerns, and might offer to sell some regional businesses. + +Consumers might prefer the talks to fail. The proposed merger is hardly the product of a sparkling imagination. Hamza Khan of ING, a bank, says that in a low-margin environment, the two firms are simply seeking efficiency by getting bigger. Innovation is limited, so competitors dream mostly of winning clout, buying rivals and especially getting more access to contracts as a dedicated supplier to a big customer, such as a steel plant. + +Around a third of sales of industrial gas are of this sort, producing stable businesses living off contracts with guaranteed minimum fees and long terms. Even so, the industry does not look in fine fettle. Firms were overconfident, building too much production capacity. Returns on invested capital for the four big companies (the other two are France’s Air Liquide and America’s Air Products) have slumped since 2011. + +Linde undoubtedly needs the biggest shake. It has issued two profit warnings in the past two years, a sign the underlying business is in a fix. Internal squabbles haven’t helped. An embittered finance chief, Georg Denoke, seemed to reckon he should be boss rather than Wolfgang Buchele, the current CEO, who looks unsure of how to take charge. Adding to the mess, a former CEO, Wolfgang Reitzle, became Linde’s chairman in May. Ambitious, combative and publicly critical of the firm’s recent showing, the former boss sounds like a tricky colleague. But he also has a recent record of pushing big mergers, and may be the one behind the talks with Praxair. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21705370-two-giants-industry-may-merge-somethings-air/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Self-driving lorries + +A long haul + +A revolution in the trucking industry is a distance down the road + +Aug 20th 2016 | From the print edition + + + +“DUEL”, one of Steven Spielberg’s early films, features a lorry apparently controlled by demonic forces rather than a driver. The sensors, cameras and software already steering the wheels of some of the world’s lorries, in place of drivers, are regarded as a similarly malign power by truckers fearing replacement by technology. But they have little reason to worry about the arrival of self-driving lorries, and the benefits of safer roads and cheaper shipping should be felt more widely than any pain from job losses for years to come. + +It has so far been carmakers and tech firms that have hogged the headlines in the race to develop autonomous vehicles. Ford announced on August 16th that it intends to have a car devoid of pedals and steering wheel on the road by 2021. But several firms have been working on driverless lorries. Rio Tinto, a commodities giant, has put them to work at one of its iron-ore mines in Australia, and Volvo will soon begin testing a self-driving truck at a mine in Sweden. Mercedes-Benz, Iveco and most other lorrymakers have plans for autonomous vehicles, and a big beast of tech is also set to make a move on the kings of the road. As The Economist went to press, Uber, a ride-hailing firm, was expected to announce it had acquired Otto, an American startup that is developing self-driving kit to retrofit to any lorry. + +Lorries have kept pace with cars in the race to commercialise self-driving vehicles for two reasons. As Lior Ron, a co-founder of Otto, points out, lorries offer businesses a clear return on investment through cost savings from greater efficiency. Self-driving cars, robotaxis aside, on the other hand, will be a discretionary purchase by consumers, aimed at making journeys more pleasurable. + +But hauliers interested in autonomous systems will need to factor in that the existing technology does still require a driver (as, often, do regulations). Most autonomous systems are being designed for motorways, for manoeuvres such as accelerating and braking. A human will drive the lorry on smaller roads leading to and from main road arteries and would need to take the wheel in an emergency. There will still be benefits. Self-driving lorries may attract new drivers to a hard job. Vehicles could be driven for longer hours, and with optimised software should consume less fuel than they do under the sole guidance of leaden-footed truckers. Safety could also improve. + +It is also easier to devise autonomous systems for lorries than for cars that have to negotiate all types of road. Driving on motorways is much easier to automate than city travel, as everyone is going in the same direction at high but regular speeds. There’s no need to worry about pedestrians, and blind spots that come with a city’s sharp corners. + +The main roadblock is likely to be that trucking in rich countries is an old-fashioned business, dominated by small firms. Persuading these hauliers to adopt and pay for new technology will be tough. Otto reckons its kit, which still needs a human in the cab, should be available by around 2020 at a cost of $30,000. As Stephan Keese of Roland Berger, a consulting firm, points out, the big cost savings will come only when higher levels of automation allow hauliers to get rid of drivers completely. That is still a long way off. Most observers reckon the technology for fully autonomous cars or lorries will not be ready before 2030, and will then take years to become commonplace. Unlike the truck in “Duel”, driverless lorries are unlikely to run the conventional business models of hauliers off the road for some time. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21705367-revolution-trucking-industry-distance-down-road-long-haul/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Family values + +Donald Trump is running his campaign like a family business + +Aug 20th 2016 | From the print edition + + + +FAMILY businesses are different from other sorts—they are held together by strands of DNA as well as the logic of profit. They are rich in scarce resources, such as loyalty and flexibility, but also suffer from extreme challenges, such as family feuds and wayward patriarchs. At their best they are unbeatable. At their worst they are disasters. + +Donald Trump’s presidential campaign is as good an illustration of this point as any. He presents himself as a businessman who can offer America commonsense solutions backed up by professional management—“I’m going to get great people that know what they’re doing, not a bunch of political hacks,” he says. But in fact he is a very particular sort of manager: a second-generation family businessman who inherited a property company from his father, Fred, and relies on his three adult children, Donald, Ivanka and Eric, and his son-in-law, Jared Kushner, to run it. + +The debate about the business skills of Mr Trump frequently misses this simple point. Critics lambast his chaotic methods: the Trump Organisation lists 515 businesses and has at various times branched out from property into TV, airlines, beauty pageants and gambling. They forget that family firms are often held together by nothing more than a name and a buccaneering spirit. Some argue that he would be richer if he had invested his inheritance in the stockmarket. But Mr Trump has lived the life of Riley while putting his name on towers in Manhattan, holiday resorts in Palm Beach and golf clubs in Scotland. + +For all his braggadocio Mr Trump has avoided some of the most common failings of family businesses such as family rows and botched successions: witness the repeated feuds between the Koch brothers or the battle to see who will succeed Sumner Redstone. The Family Firm Institute says that only 30% of family firms last into the second generation and only 12% into the third. Mr Trump has not only kept his business intact through two divorces and numerous spats. He has also successfully groomed his children (and son-in-law) to take over. + +Mr Trump is applying the same family-business formula to his presidential campaign, making all the key decisions himself, but also relying on his three adult children plus Mr Kushner to act as campaign aides, surrogates and all-purpose fixers. Eric and Donald junior have been particular assets with the hunting crowd (who might have been suspicious of Manhattan socialites) thanks to their love of slaughtering African wildlife. Republican Party bigwigs have to go through the children if they want access to Trump senior. + +Mr Trump’s family-business style served him brilliantly when he was running for his party’s nomination. Family outfits are good at spotting profit centres that corporate giants ignore. Sam Walton, Walmart’s founder, recognised that Americans wanted “every day low prices” more than they wanted local stores. Mr Trump recognised that working-class conservatives were fed up with a political party that offered steak for the rich in the form of tax cuts but cheap labour and a bit of patriotic sizzle for the masses. + +The same style is turning into a disaster now. Successful family businesses know when to consolidate their gains by adopting professional management methods. Mr Trump still thinks he is running in the primaries. Ivanka was potentially a huge asset to the campaign, her skills honed by years of appearances on her father’s television show, “The Apprentice”. But she has expended much of her energy cleaning up after his misogynistic comments rather than extending his brand. + +Mr Trump’s campaign now has all the classic signs of a failed family business—riven by faction fights, haunted by reminders of past business dealings with dodgy financiers and property developers, and humiliated by a properly run rival. On August 17th Mr Trump shook up his team for the third time—appointing Stephen Bannon, a conservative journalist, to a new role as campaign chief executive, and Kellyanne Conway, a veteran Republican pollster, as campaign manager. But he still has not mastered the basic arts of running a campaign, such as buying political advertising and establishing field offices. + +Brace yourselves for the next show + +Before celebrating Mr Trump’s likely defeat in November it is worth remembering that family businesses can surprise everybody by turning themselves around. Rupert Murdoch’s News Corporation increased in value after the restructuring that was triggered by a phone-hacking scandal. Mr Trump’s children, who are reportedly the only people capable of reining him in, may yet be able to save his campaign from humiliation. And even if he loses he may be able to parlay political defeat into business success in the form of a conservative television channel fuelled by the rage that he has exploited and starring Ivanka and Co. + +And before dismissing the Trumps’ dynastic campaign as a weird aberration it is worth remembering that America is no stranger to political families. The Donald may be the first candidate to run his campaign like a family business but the Adamses, Kennedys, Rockefellers, Bushes and, of course, the Clintons have all regarded politics as a family business. Hillary Clinton is as professional as Mr Trump is slapdash. Yet there are some similarities. Mrs Clinton relies heavily on family members—not just on her husband, Bill, but also on her daughter, Chelsea. (The similarities between Chelsea and Ivanka are uncanny: they are, among other things, both in their mid-30s, and both married to men whose fathers have done time in prison). Mrs Clinton is also prey to conflicts of interest, particularly over the Clinton Foundation, which would be much more fiercely debated now if it weren’t for Mr Trump’s follies. Even if he loses the election America will not be rid of the problems that are created when families, businesses and politics collide. + + + + + +Donald Trump shakes up his team again + +He has appointed the chairman of a hard-right, conspiracy-tinged website as campaign chief executive + + + +Why felons in Virginia lost their right to vote, again + +A back-and-forth argument about voting in a key battleground state + + + +Donald Trump’s media advantage falters + +As his polling numbers drop, Mr Trump is doubling down on his media-bashing + + + +Why Clinton’s plan to scrap Citizens United won’t work + +The candidate is enjoying the spoils of what she calls a “disaster for democracy" but pledges to tear it down in office + + + +Hillary Clinton opens up a sizeable lead + +The gap between the candidates in the latest YouGov poll is the biggest since February + + + + + +More US election coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21705294-donald-trump-running-his-campaign-family-business-family-values/print + + + + + +Previous Articles Sections Next + + + + +Finance and economics + + + + + +Machine learning: Of prediction and policy + +Buttonwood: To have and to hold + +Morgan Stanley: Poacher to prey + +Italian distressed debt: Bargain hunt + +China’s budget deficit: Augmented reality + +Free exchange: Medalling prosperity + + + + + +Articles Sections Next + +Machine learning + +Of prediction and policy + +Governments have much to gain from applying algorithms to public policy, but controversies loom + +Aug 20th 2016 | From the print edition + + + +FOR frazzled teachers struggling to decide what to watch on an evening off, help is at hand. An online streaming service’s software predicts what they might enjoy, based on the past choices of similar people. When those same teachers try to work out which children are most at risk of dropping out of school, they get no such aid. But, as Sendhil Mullainathan of Harvard University notes, these types of problem are alike. They require predictions based, implicitly or explicitly, on lots of data. Many areas of policy, he suggests, could do with a dose of machine learning. + +Machine-learning systems excel at prediction. A common approach is to train a system by showing it a vast quantity of data on, say, students and their achievements. The software chews through the examples and learns which characteristics are most helpful in predicting whether a student will drop out. Once trained, it can study a different group and accurately pick those at risk. By helping to allocate scarce public funds more accurately, machine learning could save governments significant sums. According to Stephen Goldsmith, a professor at Harvard and a former mayor of Indianapolis, it could also transform almost every sector of public policy. + +In hospitals, for instance, doctors try to predict heart attacks so they can act before it is too late. Manual systems correctly predict around 30%. A machine-learning algorithm created by Sriram Somanchi of Carnegie Mellon University and colleagues, and tested on historic data, predicted 80%—four hours in advance of the event, in theory giving time to intervene. + +Policing may be helped, too. Last year a policeman in Texas, who had responded to two suicide calls that day, was dispatched to a children’s pool party and ended up pulling out his gun. Ideally, the station would have sent a less stressed officer. Many police chiefs already have a simple system to flag “at risk” officers. No one can be sure that machine learning would have prevented the Texas scare. But a system developed by Rayid Ghani at the University of Chicago and others increases the correctness of at-risk predictions by 12% and reduces the incorrect labelling of officers as being at risk by a third. It is now being used by the Charlotte-Mecklenburg police department in North Carolina. + +Chicago’s Department of Public Health is another early adopter. It used to identify children with dangerous levels of lead in their bodies through blood tests and then cleanse their homes of lead paint. Now it tries to spot vulnerable youngsters before they are poisoned. And in India, Microsoft and the state government of Andhra Pradesh are helping farmers choose the best time to sow their seeds. This month, eyeing new government contracts, Microsoft held its first machine-learning and data-science conference in Bangalore. + +But the case for code is not always clear-cut. Many American judges are given “risk assessments”, generated by software, which predict the likelihood of a person committing another crime. These are used in bail, parole and (most controversially) sentencing decisions. But this year ProPublica, an investigative-journalism group, concluded that in Broward County, Florida, an algorithm wrongly labelled black people as future criminals nearly twice as often as whites. (Northpointe, the algorithm provider, disputes the finding.) + +To limit potential bias, Mr Ghani says, avoid prejudice in the training data and set machines the right goals. Machines are trained to find patterns that predict future criminality from past data. They can therefore be told to find patterns that both predict criminality and avoid disproportionate false categorisation of blacks (and others) as future offenders. When a new defendant is tested against these patterns, the risk of racial skewing should be lower. + +Bail decisions, in which judges estimate the risk of a prisoner fleeing or offending before trial, seem particularly ripe for help. Jens Ludwig of the University of Chicago and his colleagues claim that their algorithm, tested on a sample of past cases, would have yielded around 20% less crime (see chart), while leaving the number of releases unchanged. A similar reduction nationwide, they suggest, would require an extra 20,000 police officers at a cost of $2.6 billion. The White House is taking notice. Better bail decisions are a big priority of its Data-Driven Justice Initiative, which 67 states, cities and counties signed in June. + + + +Still, people want to know how decisions that affect them are made. The European Union is considering giving citizens affected by algorithmic decisions the right to an explanation. “Transparency, transparency, transparency” is needed, says Jay Stanley of the American Civil Liberties Union. But private companies may be loth to divulge their special sauce. For Boston’s chief information officer, Jascha Franklin-Hodge, that is a motivation to develop machine learning in-house. Analytical skills, however, are scarce. + +Other obstacles may also slow adoption. Getting enough data for a project can be hard. Combining supposedly confidential data sets can heighten the risk of accidentally identifying individuals. Some applications may be thought unethical. Mr Mullainathan and his colleagues show that machine learning can help predict the risk of death. That could, say, help focus hip replacements on those likely to live longest. Some may think that a step too far. + +Prediction is anyway probabilistic, not perfect. Officials still have to act. Getting rid of lead paint may be easy; even with clever algorithms, stopping traumatised policemen from drawing their guns is not. For governments that embrace machine learning, the future will depend on how well they marry its predictive power with old-fashioned human wisdom. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21705329-governments-have-much-gain-applying-algorithms-public-policy/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +To have and to hold + +The endowment effect among stockmarket investors + +Aug 20th 2016 | From the print edition + + + +ADAM SMITH remarked that no dog ever made a free and fair exchange of one bone for another. Many pooch-owners will agree, having spent frustrating minutes trying to wrestle a stick or a ball off their pets. + +But humans are supposed to be rational. They should not value things they own more highly just because they already possess them. Experiments in the classroom have shown, however, that people may be subject to this trait, dubbed the “endowment effect”. In a classic study, students were randomly given a mug. Those who received the mugs were asked what price they would sell them for; the mean was $5.78. Those who did not were asked what they would buy them for; the average was $2.21. + +In a similar test, students were asked to state their preference between a mug and a chocolate bar; 56% favoured the former and 44% the latter. Two other groups of students were then randomly assigned the mug or the chocolate and then asked whether they were willing to swap; in each case, around nine in ten of the students were unwilling to do so. You might say they were “possessed”. + +That is the kind of result that gets behavioural economists excited, since it suggests people are not the rational calculating machines (Homo economicus) that standard models assume them to be. Traditional economists, by contrast, are sniffy about such experiments, arguing that they bear little relation to the kind of decisions made in the real world. + +But a new paper* claims to spot the endowment effect at work among a supposedly hard-headed group of individuals: stockmarket investors. It looks at the flotations—initial public offerings, or IPOs—of companies on the Indian market. + +When Indian IPOs are oversubscribed, issuers often use a lottery to assign shares to eager investors. Winning investors are allocated shares at the flotation price; losing investors can buy only after the issue starts trading. + +In theory, both groups should be equally keen to own the shares. After all, they applied on the same basis. But the authors found that 62.4% of winners were still holding the shares after a month, while just 1% of losers had bought them. Now, these groups will have paid different prices, since the losers have to buy in the secondary market; the average IPO increases in price by 52% on the first day of trading. On the surface, it makes perfect sense that the losers would not want to pay what they perceive to be an inflated price. + +However, if this were the driving force, you would expect to find more losers buying IPOs when the initial gain was small or when prices fell. But the authors found no relationship between the endowment effect and early price movements. + +Furthermore, in cash terms, IPO investors’ trading gains are limited. In order to apply for shares, investors have to put an average of around $1,750 into an escrow account, but are allotted shares worth only around one-eighth of that. That means the average first-day trading gain is just $62. Would this really drive such a big difference in behaviour? + +Another puzzle is that, after its initial gain, the average IPO falls in price as time goes on; after 12 months, it is 54% below the issue price. So it would make sense for the lottery winners to offload their holdings after the first day’s trading and for the losers to try to buy the stock on the cheap later. But that doesn’t happen: after a year 45.8% of the winners are still hanging on to their stock, whereas only 1.7% of the losers have piled in. + +Perhaps inertia is the driving factor? Investors simply might not get around to trading. But the authors reject that explanation; the endowment effect is still present when they study investors who make more than 20 other stockmarket trades in the month of the IPO. + +Another possibility is that those winners who hold onto their shares are naive investors; more experienced traders are more rational. So the authors looked at investors who had taken part in more than 30 IPOs, and found there was still a substantial endowment effect; winners were four times more likely than losers to hold shares at the end of the first month. + +It looks, therefore, as if the act of winning the IPO lottery makes investors more willing to hold on to their shares, regardless of their profit or loss. So next time your dog refuses to give up his ball—the very ball he expects you to throw for him to fetch—show him some sympathy. He is only imitating his human owner. + +* “Endowment Effects in the Field: Evidence from India’s IPO Lotteries”, by Santosh Anagol, Vimal Balasubramaniam and Tarun Ramodorai. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21705330-endowment-effect-among-stockmarket-investors-have-and-hold/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Morgan Stanley + +Poacher to prey + +An activist investor nibbles at a Wall Street giant + +Aug 20th 2016 | NEW YORK | From the print edition + + + +SINCE the 1930s Morgan Stanley has been dispensing advice to America’s most prominent companies. Now sound counsel may be needed at home. The Wall Street firm must ponder how to respond to a $1 billion investment by a hedge fund with a history of stirring up changes on boards and in executive suites. + +The purchase, by ValueAct, a San Francisco fund, ought not to be a surprise. Judged on the measures often used as a first screen to identify takeover targets, Morgan Stanley has long looked vulnerable. A letter from ValueAct to its own investors early this month noted that the investment bank was trading at only 70% of book value, implying that a break-up could be lucrative. Since news of its investment emerged on August 15th, that has risen to 80%, providing an immediate return without undermining the thesis (see chart). + +Predictably, Morgan Stanley said it welcomed its new shareholder (as it would any investor). There may be at least some truth in this. ValueAct’s letter extolled Morgan Stanley’s virtues and its strategy. The fund has not demanded board seats or changes, as it has elsewhere. + +This flattery may partly reflect Morgan Stanley’s position on Wall Street. It is about as inside the club as any firm could be. When ValueAct tries to shake up a board, Morgan Stanley will surely be on one side or the other. The fine words may also be sincere. In 2013 the bank acquired Citigroup’s vast brokerage operations for a song and has since integrated them into its own operations. In so doing it has slowly shifted away from businesses where risks and capital requirements were particularly high, notably fixed income. James Gorman, its chief executive, is broadly thought to have done a good job. + +For all that, results remain barely adequate. Mr Gorman has set a target for return on equity of 9-11% in 2016, up from last year’s 8% but hardly stellar. It is much less than JPMorgan Chase and Wells Fargo, two universal banks, expect. + +Ordinarily, that might prompt a possible bid. But no rival is faring brilliantly, and any takeover would be tricky. The logical domestic acquirer, Wells Fargo, could face antitrust objections: a merger would combine two of America’s three largest brokers. And the Federal Reserve is unlikely to allow a bank already considered too big to fail to become bigger still. + +Mitsubishi UFJ of Japan already owns more than 20% of Morgan Stanley and could in theory buy the rest, but big cross-border bank deals have all but vanished. National regulators, considered the guarantors of institutions on their patch, are sceptical everywhere. America’s would surely be reluctant to approve a deal. + +Any other buyer would need to be big: Morgan Stanley’s market valuation is $58 billion, and a takeover would require a premium. ValueAct says it has bought 2% of the firm. That is enough to draw attention, but no more. Regulatory restrictions would anyway limit the inclusion of leverage in any deal. + +Still, a deal is not wholly unthinkable. Several private-equity firms are sitting on huge piles of cash and they like to think they can create new structures. That might even temper their habitual affection for debt. Morgan Stanley’s brokerage and advisory businesses surely could thrive as a privately owned business. Underwriting can be done with little capital. The trading business is shrinking. ValueAct says in its letter that public shareholders do not understand or properly value the firm. Perhaps others would. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21705342-activist-investor-nibbles-wall-street-giant-poacher-prey/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Italian distressed debt + +Bargain hunt + +Structural obstacles make Italian banks’ bad loans hard to sell + +Aug 20th 2016 | From the print edition + + + +AFTER years of economic stagnation and questionable lending, bad loans at Italian banks have piled up. The gross value of non-performing loans (NPLs) is around €360 billion ($406 billion), or almost one-fifth of Italian GDP. Hasty repairs and rescues have been arranged for troubled lenders—notably Monte dei Paschi di Siena, the third-biggest, in July. But what can be done about the loan mountain? + +The IMF has suggested building a robust market in NPLs, thus placing the burden of bad loans with distressed-debt specialists, freeing Italian banks to provide more credit to the real economy. But although the market for bad debts has started to pick up in Italy, with volumes increasing steadily to reach €22 billion so far this year, structural obstacles mean such markets may be less successful than in other European countries. + +Distressed-debt investors tend to buy loans in bulk, and hence prefer loans with easily recoverable, tangible collateral. The NPLs of stricken British, Irish and Spanish banks in recent years were largely mortgages: being backed by property, they could be valued from current real-estate prices. British and Irish courts are also pretty efficient at dealing with claims on collateral. Many Italian NPLs, by contrast, are uncollateralised loans to small businesses or consumers. Even when collateral has been pledged, Italian courts are much slower than those elsewhere to recover it. + +Most significant, Spain and Ireland set up “bad banks” a few years ago that used pots of public money to buy NPLs from banks’ balance-sheets and then sold them gradually, creating enough transaction volume for a vibrant market to form. Newly tightened European rules, however, prevent Italy from doing likewise. + + + +Of course, Italian NPLs can still be attractive investments if the prices are low enough. But the gap between banks’ and investors’ valuations is troublesome. Banks have not tended to mark down their loans to any lower than around 40% of their original book value, whereas investors may be willing to pay only 20%. This makes Italian banks even less keen to sell, as it would force them to take a large hit to their already thin capital buffers when selling the duff loans. + +Prevented from setting up a bad bank, the Italian government has pinned its hopes on securitisation of NPLs. It has set up a guarantee scheme called GACS for senior tranches of NPL-backed securities. Josh Anderson of PIMCO, an asset manager, reckons that carefully structured transactions could allow NPLs to be transferred from banks’ balance-sheets at something close to current book value. + +However, it is too early to be confident. The GACS scheme has not yet been tested and comes with many strings attached. NPL cashflows may be “too lumpy and unpredictable” to appeal to institutional investors, says David Edmonds of Deloitte, an accounting firm. There are few precedents for securitising NPLs, in Italy or abroad, that provide a useful guide. + +Given investors’ reluctance to stump up new capital, transactions that allow banks to thicken their capital cushions through asset sales may provide an alternative. Investors in distressed debt often have private-equity arms too, and have offered to buy businesses from banks to compensate for the capital hit from bad-loan sales. One firm, Apollo Global Management, recently bought the insurance division of Banca Carige, a regional Italian lender. Loan-servicing units, which pursue individual debtors, are especially appealing targets. + +Novel approaches hold promise for both banks and troubled business borrowers. KKR, a large private-equity firm, launched a platform called Pillarstone last autumn that combines NPL resolution with corporate restructuring. Like a buy-out firm, Pillarstone seeks to take control of overindebted, troubled firms and turn them round with new capital from KKR. The novelty is that it also manages the bank loans of those firms, with the aim of achieving repayment and giving banks part of any extra profits, too. + +HIG Bayside Capital, a distressed-debt specialist, recently announced a €260m fund that goes a step further: it both plans to restructure companies burdened by loans and allows banks to sell those loans at current book value in exchange for a stake in the fund. This should improve banks’ capital ratios while diversifying their sources of income. More such creative ideas will surely be needed to sort out Italy’s bad debts. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21705341-structural-obstacles-make-italian-banks-bad-loans-hard-sell-bargain-hunt/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +China’s budget deficit + +Augmented reality + +The fiscal hole is much bigger than meets the eye—but under control + +Aug 20th 2016 | SHANGHAI | From the print edition + +Keeping the budget on track + +IF A country’s fiscal deficit hit 10% of GDP five years running, you might reasonably conclude that its public finances were parlous. So it is understandable that China has bristled at suggestions that it is veering into such territory. Officially, China is a paragon of fiscal rectitude: its annual deficits have averaged just 1.8% in the past half-decade. But the IMF, Goldman Sachs and others have come up with “augmented” estimates of nearer to a tenth of GDP, more than five times the official number. + +At face value, these estimates imply that China is suffering from a budget gap—not to mention a credibility gap—of Greek proportions. Are things really that bad? Almost certainly not. The augmented figures form a clearer picture of China’s fiscal health. But they also differ from conventional measures in important ways, and so are potentially misleading. + +The IMF devised the alternative concept a few years ago, to track the vast amount of spending that occurs off China’s public balance-sheet. Because the central government places tight limits on local-government debts, provinces and cities have long used arm’s length companies, known as local-government financing vehicles (LGFVs), to borrow from banks and issue bonds. That these are really just stand-ins for public borrowing is an open secret. The augmented deficit is a way of making this explicit. Consider the projections for 2016: the government is on course for an official deficit of roughly 3% of GDP. But adding in LGFV borrowing, the IMF forecasts that it will rise to 8.4%. + +The augmented estimates also catch other forms of quasi-fiscal spending. Over the past year the authorities have made liberal use of China Development Bank, a “policy bank” specifically charged with supporting government initiatives. Land sales are also an important source of funding. Totting up all the different items, the IMF says China’s augmented deficit will rise to a jaw-dropping 10.1% of GDP in 2016 (see chart). The government is thus giving the economy a fiscal push more than triple the size of its official target. + + + +Although that stimulus may be welcome now, an obvious question is whether public debt is far greater than advertised. Repeated fiscal blow-outs—declared or not—will eventually appear on the balance-sheet. Sure enough, the Chinese government tacitly confirmed the augmented estimates, at least in part, when it added off-balance-sheet debts to its official tally a couple of years ago. Its debt jumped to 38.5% of GDP in 2014 from 15.9% in 2013. + +But the augmented deficit is not as frightening as it looks—and certainly not as worrisome as China’s vast corporate debts. First, it does not represent new hidden debt: it is an attempt to assign responsibility, putting the government on the hook for implicit liabilities. Second, spending funded by land sales does not add to debt. Sales must be handled prudently—once an asset is sold, it’s gone—but they are like a development bonus, topping up the coffers so long as urbanisation continues. + +Finally, China’s deficit is different from those of developed economies. Outlays on social programmes, though rising, are still low. Much of the deficit stems instead from investment in roads, railways and so forth. “These are not just general spending,” says Helen Qiao, an economist with Bank of America Merrill Lynch. “They generate assets for the government.” So long as the assets are decent, net debt will remain under control, allowing China slowly to rein in its deficits. Indeed, the IMF expects the augmented deficit to average 9% until 2021. + +This, however, raises a different concern: that the deficit should in fact be more like those elsewhere. At around a tenth of GDP, social spending is half of what it is in rich countries. And with China’s population about to age rapidly, the gaps in pension, welfare and health-care systems will soon get much wider without more public money. A strong state backstop would also give people confidence to spend more, supporting the economy’s rebalancing towards consumption. So while China can afford to tame its deficit gradually, it must be quicker to shift its spending habits. More should go on hospitals and pensions, less on power stations. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21705343-fiscal-hole-much-bigger-meets-eyebut-under-control-augmented/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Medalling prosperity + +If the Olympics teach anything about growth, it is that there are no shortcuts + +Aug 20th 2016 | From the print edition + + + + + +THERE is nothing (one imagines) quite like standing atop an Olympic podium, a disc of bullion around your neck, while your national anthem plays for all to hear. It is an experience Britons have enjoyed with surprising frequency in recent days. As The Economist went to press, Team GB’s gold-medal haul in Rio trailed only America’s. Governments are keen to crack the code of Olympic success, both to buoy national spirits and bask in athletes’ reflected glory. Performances like Britain’s encourage those who see a role for state planners. Since a string of woeful tallies in the 1990s the main organisation promoting British athletics, UK Sport, has been more active in picking potential winners and showering them with resources. Why, some wonder, should their government not perform the same trick for, say, manufacturing? Some caution is in order. + +For a start, in chasing Olympic success it helps to be rich already. To be sure, a large population is an advantage: nations with more people are likelier to contain individuals of exceptional ability. But numbers matter little if a country cannot tap its human endowment. In 2012 India, the world’s second-most populous country, captured just six medals, none of them gold. New Zealand, with just 4m people, won 13. An analysis in 2008 suggested that although India’s population is large, its pool of potential Olympians is far smaller. In areas stricken by poverty, disease and malnutrition, many struggle to be healthy at all, let alone become champion athletes. + +Rich countries tend to have healthier populations and more resources to devote to sport. In 2000, when China’s GDP per person (adjusted for purchasing power) was less than $4,000, it won just 58 medals. By 2012 GDP per person had quadrupled, and the count rose to 88. Indeed, in a paper published in 2004 Andrew Bernard of Dartmouth University and Meghan Busse of Northwestern University concluded that, because population and GDP per person have similar effects on medal count, total GDP is a good predictor of how much hardware a country can expect to win. Our chart supports this intuitive result. + +This is of little use to either rich countries or poor ones seeking Olympic success (which is anyway among the least important reasons for reducing poverty and improving health). But while some countries dramatically underperform these fundamentals, others punch above their weight. Some suspiciously so: Russia’s impressive medal hauls in past games look different since the discovery of a state-sponsored doping regime. Across other rich countries, attention has increasingly focused on the nuts and bolts of Olympic industrial policy. + +Throwing money at the problem seems to work. In Britain funding for athletes—paid for largely by the national lottery—rose almost fivefold between 2000 and 2012, from just over £50m ($76m) to over £250m; the medal count rose in tandem. Hosting the games yields a temporary dividend, though at great expense: Britain’s medal count rose by nearly 40% from 2008 to 2012, when the games were staged in London at a cost of about £9 billion. + +Aiming money more precisely seems to make more sense. Athlete-development programmes are essential, to identify prospective winners and provide them with coaching, equipment and living expenses. Countries can also make strategic choices about which sports to specialise in. They may choose events in which they have a strong tradition, which other countries neglect, or in which there are several sub-disciplines and so plenty of medals on offer (eg, cycling). Britain’s medal success is due in part to ruthless decisions to cut funding to sports and athletes with little chance of victory, and to divert the largesse to those with better prospects. Cyclists’ strong performance in 2012 was rewarded with more cash; failure at volleyball meant the budgetary axe. A similarly unsentimental programme once brought Australia success, but the tally has fallen since the Sydney games in 2000 and the retirement of a brilliant sporting generation. A revised version has not yielded the hoped-for returns in Rio. + +Therein, it would seem, lies the answer. For a rich country unhappy with its lot in matters of global competition, all that’s needed is for government to identify and support the athletes—or industries—likeliest to win. The only way to lose is not to play. + +Fool’s gold + +Governments tempted to deploy Olympic strategies elsewhere should think twice, however. The Olympics are not like most aspects of economic life. There are only three spots on the podium. Home athletes and fans may sigh when a foreigner throws a javelin farther or performs better on the pommel-horse. Coming fourth in global production of steel is not something to fret about—unless the government is wasting money on unproductive plants to achieve that result. That suggests governments should focus more on investment in public goods that buoy performance across a range of industries rather than risking waste by climbing league tables that do not matter. + +Perhaps just as important, the desire to best other countries can lead to blinkered decision-making, even in financing Olympic sports. The short-run advantage from finely targeted funding, like Britain’s, may be offset in the long run by the erosion of the fan base and infrastructure of neglected sports. Neither is it obvious, enjoyable as it is to watch your compatriots win, that money spent chasing gold medals would not do more good elsewhere: building public pitches and pools in disadvantaged neighbourhoods, for instance, or supporting early-childhood education. + +A government which competes with other countries to build the best public goods—the best universities or railways—does not lose if it fails to come top of the league tables in published research or passenger miles. To believe that success in the Olympics provides evidence of the value of industrial policy, you need to believe that governments are wise to spend on Olympic prowess in the first place. Yet bread matters more than circuses. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21705313-if-olympics-teach-anything-about-growth-it-there-are-no/print + + + + + +Previous Articles Sections Next + + + + +Economics brief + + + + + +Game theory: Prison breakthrough + + + + + +Articles Sections Next + +Game theory + +Prison breakthrough + +The fifth of our series on seminal economic ideas looks at the Nash equilibrium + +Aug 20th 2016 | From the print edition + + + +JOHN NASH arrived at Princeton University in 1948 to start his PhD with a one-sentence recommendation: “He is a mathematical genius”. He did not disappoint. Aged 19 and with just one undergraduate economics course to his name, in his first 14 months as a graduate he produced the work that would end up, in 1994, winning him a Nobel prize in economics for his contribution to game theory. + +On November 16th 1949, Nash sent a note barely longer than a page to the Proceedings of the National Academy of Sciences, in which he laid out the concept that has since become known as the “Nash equilibrium”. This concept describes a stable outcome that results from people or institutions making rational choices based on what they think others will do. In a Nash equilibrium, no one is able to improve their own situation by changing strategy: each person is doing as well as they possibly can, even if that does not mean the optimal outcome for society. With a flourish of elegant mathematics, Nash showed that every “game” with a finite number of players, each with a finite number of options to choose from, would have at least one such equilibrium. + +His insights expanded the scope of economics. In perfectly competitive markets, where there are no barriers to entry and everyone’s products are identical, no individual buyer or seller can influence the market: none need pay close attention to what the others are up to. But most markets are not like this: the decisions of rivals and customers matter. From auctions to labour markets, the Nash equilibrium gave the dismal science a way to make real-world predictions based on information about each person’s incentives. + +One example in particular has come to symbolise the equilibrium: the prisoner’s dilemma. Nash used algebra and numbers to set out this situation in an expanded paper published in 1951, but the version familiar to economics students is altogether more gripping. (Nash’s thesis adviser, Albert Tucker, came up with it for a talk he gave to a group of psychologists.) + +It involves two mobsters sweating in separate prison cells, each contemplating the same deal offered by the district attorney. If they both confess to a bloody murder, they each face ten years in jail. If one stays quiet while the other snitches, then the snitch will get a reward, while the other will face a lifetime in jail. And if both hold their tongue, then they each face a minor charge, and only a year in the clink (see diagram). + + + +There is only one Nash-equilibrium solution to the prisoner’s dilemma: both confess. Each is a best response to the other’s strategy; since the other might have spilled the beans, snitching avoids a lifetime in jail. The tragedy is that if only they could work out some way of co-ordinating, they could both make themselves better off. + +The example illustrates that crowds can be foolish as well as wise; what is best for the individual can be disastrous for the group. This tragic outcome is all too common in the real world. Left freely to plunder the sea, individuals will fish more than is best for the group, depleting fish stocks. Employees competing to impress their boss by staying longest in the office will encourage workforce exhaustion. Banks have an incentive to lend more rather than sit things out when house prices shoot up. + +Crowd trouble + +The Nash equilibrium helped economists to understand how self-improving individuals could lead to self-harming crowds. Better still, it helped them to tackle the problem: they just had to make sure that every individual faced the best incentives possible. If things still went wrong—parents failing to vaccinate their children against measles, say—then it must be because people were not acting in their own self-interest. In such cases, the public-policy challenge would be one of information. + +Nash’s idea had antecedents. In 1838 August Cournot, a French economist, theorised that in a market with only two competing companies, each would see the disadvantages of pursuing market share by boosting output, in the form of lower prices and thinner profit margins. Unwittingly, Cournot had stumbled across an example of a Nash equilibrium. It made sense for each firm to set production levels based on the strategy of its competitor; consumers, however, would end up with less stuff and higher prices than if full-blooded competition had prevailed. + +Another pioneer was John von Neumann, a Hungarian mathematician. In 1928, the year Nash was born, von Neumann outlined a first formal theory of games, showing that in two-person, zero-sum games, there would always be an equilibrium. When Nash shared his finding with von Neumann, by then an intellectual demigod, the latter dismissed the result as “trivial”, seeing it as little more than an extension of his own, earlier proof. + +In fact, von Neumann’s focus on two-person, zero-sum games left only a very narrow set of applications for his theory. Most of these settings were military in nature. One such was the idea of mutually assured destruction, in which equilibrium is reached by arming adversaries with nuclear weapons (some have suggested that the film character of Dr Strangelove was based on von Neumann). None of this was particularly useful for thinking about situations—including most types of market—in which one party’s victory does not automatically imply the other’s defeat. + +Even so, the economics profession initially shared von Neumann’s assessment, and largely overlooked Nash’s discovery. He threw himself into other mathematical pursuits, but his huge promise was undermined when in 1959 he started suffering from delusions and paranoia. His wife had him hospitalised; upon his release, he became a familiar figure around the Princeton campus, talking to himself and scribbling on blackboards. As he struggled with ill health, however, his equilibrium became more and more central to the discipline. The share of economics papers citing the Nash equilibrium has risen sevenfold since 1980, and the concept has been used to solve a host of real-world policy problems. + +One famous example was the American hospital system, which in the 1940s was in a bad Nash equilibrium. Each individual hospital wanted to snag the brightest medical students. With such students particularly scarce because of the war, hospitals were forced into a race whereby they sent out offers to promising candidates earlier and earlier. What was best for the individual hospital was terrible for the collective: hospitals had to hire before students had passed all of their exams. Students hated it, too, as they had no chance to consider competing offers. + +Despite letters and resolutions from all manner of medical associations, as well as the students themselves, the problem was only properly solved after decades of tweaks, and ultimately a 1990s design by Elliott Peranson and Alvin Roth (who later won a Nobel economics prize of his own). Today, students submit their preferences and are assigned to hospitals based on an algorithm that ensures no student can change their stated preferences and be sent to a more desirable hospital that would also be happy to take them, and no hospital can go outside the system and nab a better employee. The system harnesses the Nash equilibrium to be self-reinforcing: everyone is doing the best they can based on what everyone else is doing. + +Other policy applications include the British government’s auction of 3G mobile-telecoms operating licences in 2000. It called in game theorists to help design the auction using some of the insights of the Nash equilibrium, and ended up raising a cool £22.5 billion ($35.4 billion)—though some of the bidders’ shareholders were less pleased with the outcome. Nash’s insights also help to explain why adding a road to a transport network can make journey times longer on average. Self-interested drivers opting for the quickest route do not take into account their effect of lengthening others’ journey times, and so can gum up a new shortcut. A study published in 2008 found seven road links in London and 12 in New York where closure could boost traffic flows. + +Game on + +The Nash equilibrium would not have attained its current status without some refinements on the original idea. First, in plenty of situations, there is more than one possible Nash equilibrium. Drivers choose which side of the road to drive on as a best response to the behaviour of other drivers—with very different outcomes, depending on where they live; they stick to the left-hand side of the road in Britain, but to the right in America. Much to the disappointment of algebra-toting economists, understanding strategy requires knowledge of social norms and habits. Nash’s theorem alone was not enough. + + + +A second refinement involved accounting properly for non-credible threats. If a teenager threatens to run away from home if his mother separates him from his mobile phone, then there is a Nash equilibrium where she gives him the phone to retain peace of mind. But Reinhard Selten, a German economist who shared the 1994 Nobel prize with Nash and John Harsanyi, argued that this is not a plausible outcome. The mother should know that her child’s threat is empty—no matter how tragic the loss of a phone would be, a night out on the streets would be worse. She should just confiscate the phone, forcing her son to focus on his homework. + +Mr Selten’s work let economists whittle down the number of possible Nash equilibria. Harsanyi addressed the fact that in many real-life games, people are unsure of what their opponent wants. Economists would struggle to analyse the best strategies for two lovebirds trying to pick a mutually acceptable location for a date with no idea of what the other prefers. By embedding each person’s beliefs into the game (for example that they correctly think the other likes pizza just as much as sushi), Harsanyi made the problem solvable.A different problem continued to lurk. The predictive power of the Nash equilibrium relies on rational behaviour. Yet humans often fall short of this ideal. In experiments replicating the set-up of the prisoner’s dilemma, only around half of people chose to confess. For the economists who had been busy embedding rationality (and Nash) into their models, this was problematic. What is the use of setting up good incentives, if people do not follow their own best interests? + +All was not lost. The experiments also showed that experience made players wiser; by the tenth round only around 10% of players were refusing to confess. That taught economists to be more cautious about applying Nash’s equilibrium. With complicated games, or ones where they do not have a chance to learn from mistakes, his insights may not work as well. + +The Nash equilibrium nonetheless boasts a central role in modern microeconomics. Nash died in a car crash in 2015; by then his mental health had recovered, he had resumed teaching at Princeton and he had received that joint Nobel—in recognition that the interactions of the group contributed more than any individual. + +LAST IN THIS SERIES: + +• The Mundell-Fleming trilemma + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economics-brief/21705308-fifth-our-series-seminal-economic-ideas-looks-nash-equilibrium-prison/print + + + + + +Articles Sections Next + + + + +Science and technology + + + + + +Aviation and robots: Flight fantastic + +Weed control: Now try this + +Reversing deafness: Gone today, hair tomorrow + +Crime prevention: Cutpurse capers + + + + + +Articles Sections Next + +Aviation and robots + +Flight fantastic + +Instead of rewiring planes to fly themselves, why not give them android pilots? + +Aug 20th 2016 | From the print edition + + + +THE idea of a drone—an aircraft designed from scratch to be pilotless—is now familiar. But what if you want to make pilotless a plane you already possess? Air forces, particularly America’s, sometimes do this with obsolete craft that they wish to fly for target practice. By using servomotors to work the joystick and the control surfaces, and adding new instruments and communications so the whole thing can be flown remotely, a good enough lash-up can be achieved to keep the target airborne until it meets its fiery fate. The desire for pilotlessness, though, now goes way beyond the ability to take pot shots at redundant F-16s. America’s air force wants, as far as possible, to robotise cargo, refuelling and reconnaissance missions, leaving the manned stuff mostly to its top-gun fighter pilots. This could be done eventually with new, purpose-built aircraft. But things would happen much faster if existing machines could instantly and efficiently be retrofitted to make their pilots redundant. + +Shim Hyunchul and his colleagues at KAIST (formerly the Korea Advanced Institute of Science and Technology) think they can manage just that. They plan to do so by, quite literally, putting a robot in the pilot’s seat. As the photograph shows, this robot—called PIBOT (short for pilot robot)—has a human body plan, with a head, torso, arms and legs. The head is packed with cameras, which are thus in the same place as a human being’s eyes, and the arms and legs can operate an aircraft’s controls, just as a human being would. + +Call me George + +To design PIBOT, Dr Shim and his colleagues broke the task of piloting down into three areas—recognition, decision and action. They then developed the machine intelligence and sensory software needed for a robot to carry all three out well enough to fly a plane. + +The recognition part was fairly easy. Trainee pilots have to learn to ignore irrelevant stimuli and concentrate on the instruments, which is trivial for a robot. And most recognition tasks during flight involve reading simple text displays and markings, tasks for which modern optical-recognition software is more than adequate. For looking out of the cockpit, meanwhile, PIBOT has edge-detection software that recognises features like the horizon and runway markings. + +Decision-making is similarly simple to program in. Here, PIBOT works like a standard autopilot, following the rules set down in the handbook of whichever aviation authority has to approve it. Programming in the actions consequent on these decisions, though, was trickier. Every such action—for example, flicking a particular switch or moving the joystick a prescribed amount—has to be expressed as a combination of arm- or leg-joint movements that have to be calculated precisely and then added to the robot’s memory. + +The first PIBOT, a scaled-down version based on a commercially available ’bot called BioLoid Premium, was demonstrated in 2014. Though just 40cm tall, this had the same articulation as a full-sized device. When strapped into a cockpit simulator with miniature controls, it was able to go through a complete flight sequence, from turning on the engine and releasing the brakes to taxiing, taking off, flying a predetermined route and landing safely at the destination. Crucially, it was then able to do the same in a real, albeit miniature aircraft—though it needed some human assistance with the tricky procedure of landing. + +Now, Dr Shim has unveiled PIBOT2, a full-sized version of his invention. This flies a simulator as well as its predecessor did, though it has yet to be let loose in a real cockpit. If it can outperform that predecessor in the landing department, then it will fulfil the United States Air Force’s requirement for a “drop-in robotic system” that can be installed quickly without modifying an aircraft—and will do so at a unit cost of $100,000, which is $900,000 less than the cost of converting an F-16 for a trip to the great shooting gallery in the sky. + +From an air force’s point of view there is a lot to like. PIBOT’s autonomy removes the risks of jamming or loss of a communication link that goes with remote control. The robot is immune to g-forces, fatigue and fear, requires neither oxygen nor sleep, needs only a software download—rather than millions of dollars of flight training—to work out how to pilot an aircraft, and can constantly be upgraded with new skills in the same way. + +Moreover, Dr Shim sees the military use of PIBOT as just the beginning. It could also provide an economical replacement for a human co-pilot on commercial flights. It could revolutionise ground transport, too—providing, as an alternative to purpose-built driverless cars, the possibility of a robo-chauffeur. Dr Shim says he is already working on a PIBOT able to drive a car, a task which is, he says, “easier in some parts and more difficult in others” than piloting a plane. If successful, this approach could turn millions of existing vehicles into driverless ones quickly and easily. And the owner could still put the robot in the back seat (or even the boot) whenever he wanted to experience the old-fashioned thrill of taking the wheel himself. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21705295-instead-rewiring-planes-fly-themselves-why-not-give-them-android/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Weed control + +Now try this + +Milkweed is toxic and hard to get rid of. The answer? Train rabbits to like it + +Aug 20th 2016 | From the print edition + + + +IF HUMAN beings could have conversations with animals, many a conservationist would bring up the subject of invasive plants. “Try this one,” they would plead with their fauna. “It’s new, it may take some getting used to, but it’s nutritious. And it really, really needs a natural enemy around here.” + +Such a meeting of minds has taken place, after a fashion, in Hungary. The animals in question are rabbits. A group of biologists led by Vilmos Altbäcker of Kaposvar University have persuaded these lagomorphs to add common milkweed to their diet. + +Milkweeds are native to North America, and famous there as host of the caterpillars of the monarch butterfly. Elsewhere, though, they can be pests, for they are poisonous to many grazing animals, notably cattle, sheep and horses. But not to rabbits, at least not the common milkweed, Asclepias syriaca, that has been overwhelming Kiskunsag National Park in Hungary. When confined to cages, and offered little other food, rabbits will eat it and thrive. + +That is a far cry from persuading wild rabbits of milkweed’s virtues. But Dr Altbäcker thought this could be done, based on an earlier discovery of his—that the rabbits of Kiskunsag have dietary traditions. In one corner of the park, for instance, their favourite winter food is juniper. In another part, by contrast, they shun that plant. Experiments he conducted with transplanted junipers proved the difference was not in the food. Rather, it was a matter of the local rabbits’ culinary preferences. + +Persuading animals to acquire a taste for a previously shunned plant is not unprecedented. Some farmers train their livestock to eat certain weeds as well as grass, and calves will even pick up the habit from the example of their elders. Dr Altbäcker’s goal, though, was to perform this feat with a species in the wild, where such cultural transmission is much harder to engineer—particularly because rabbit kittens leave the nest as soon as they are weaned, and thereafter fend for themselves, giving them little chance to learn by example. + +But observing their mothers is not the only way that kittens might learn what to eat. The chemistry of the milk they are drinking might give them clues, as might the edible faecal pellets all rabbits produce as a way of digesting their fibrous vegetable food twice. And Dr Altbäcker did indeed establish that both milk and pellets from rabbits which had consumed milkweed would cause the next generation to prefer that plant to regular laboratory food. + +This still left one obstacle to milkweed’s introduction into rabbit cuisine. Young rabbits are born in winter and early spring, whereas milkweed plants do not pop up until May. On the face of things, milkweed molecules thus have no way to get into rabbits’ milk and edible faeces in the wild. But Dr Altbäcker backed a hunch that such molecules might hang around in a mother’s body long enough (perhaps stored in her fat) to carry a message from the previous season. He therefore tested the preferences of kittens born to mothers taken off milkweed three months beforehand (long enough to mimic the time between the end of the milkweed’s growing season and the beginning of the rabbits’ breeding season) and found that although these youngsters were not quite as happy to consume milkweed as those in the earlier experiment, they liked it better than control litters did. + +The next step would thus seem to be to introduce milkweed-primed rabbits into Kiskunsag and see what happens. Unfortunately, says Dr Altbäcker, Kiskunsag’s management is not minded to accept an addition to the park’s rabbit population. It may even have a point. In Hungary, rabbits are themselves an invasive species, brought from Iberia in Roman times. Why take the chance of introducing a souped-up version? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21705297-milkweed-toxic-and-hard-get-rid-answer-train-rabbits-it-now/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Reversing deafness + +Gone today, hair tomorrow + +Sea anemones may hold an answer to the problem of hearing loss + +Aug 20th 2016 | From the print edition + + + +PEOPLE’S ability to hear depends on bundles of tiny hairs found inside their ears. When these bundles vibrate in response to sound, cells at their base send signals to the brain, which then translates them into the rich symphony that fills the world. In normal circumstances, this symphony leaves the hairs unharmed. But exceptionally loud noises—close cracks of thunder, the emissions of rock-concert loudspeakers and so on—can disorganise the bundles, traumatising and sometimes killing the cells they are connected to. Doctors have long believed such damage to be irreversible, but an experiment led by Glen Watson of the University of Louisiana, Lafayette, and published in the Journal of Experimental Biology, suggests an ointment containing proteins harvested from sea anemones may do the trick. + +Some anemones, such as Nematostella vectensis, pictured above, have a primitive sense of hearing: tiny hair bundles scattered along their tentacles sense when animals that they can sting are nearby. Wounds from battles with struggling prey often disorganise these bundles but, unlike the hair bundles found in the ears of mammals, anemone bundles mend themselves in the space of four hours. + +During previous work, Dr Watson noticed that a mixture of 37 proteins from Nematostella, including several known to help either repair or destroy misfolded proteins, were used by the anemones to reorganise their dishevelled bundles. He therefore wondered whether these could repair other animals’ hair bundles, too. To find out, he isolated the anemone protein mixture and applied it to damaged sensory hair bundles from blind cavefish. He knew from another study on these fish that their hair bundles usually took nine days to recover after being damaged. Applying the anemone proteins reduced the recovery period to a little over an hour. This led him to try the same thing with mammals. + +He and his colleagues removed the organs of Corti, home of the hair bundles, from the ears of mouse pups, and cultured them on microscope-slide cover slips. Once the team were sure the cultures were stable, they exposed them for 15 minutes to one of two solutions. The first contained healthy levels of calcium. The second was calcium-free, a fact they knew would cause the bundles to lose their structure. They then incubated the slips in another sort of solution—in this case either enriched in anemone repair proteins, or not. After an hour of this, they stained the samples and studied them under a microscope. + +To quantify matters, they examined transects 50 microns long from each sample. Such transects would traverse six bundles in a healthy animal. They assigned a score of 1.0 to bundles that were clearly healthy and well organised, a score of 0.5 to those that were disorganised but present, and a score of zero to sites where hairs should have been but weren’t. Scored this way, transects from healthy controls averaged 5.9 while those from untreated traumatised tissue averaged 2.2. Traumatised tissue that had been treated subsequently with the anemone-repair-protein solution, though, had an average score of 5.1. It had indeed been repaired. + +While repairing hair bundles in samples of mouse-pup ear tissue is not the same thing as repairing those inside the ears of people suffering from hearing loss, Dr Watson’s findings suggest that a treatment of this sort may be possible in the not too distant future. If he is right, those who regret that front seat at Madison Square Garden in their misspent youths may have a chance to redeem themselves. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21705298-sea-anemones-may-hold-answer-problem-hearing-loss-gone-today-hair/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Crime prevention + +Cutpurse capers + +Artful dodger, your time may be up + +Aug 20th 2016 | From the print edition + +Big Brother really is watching you + +SMART-CARD public-transport ticketing systems let people hop between buses, subways, trams, surface rail and river boats—even when these are operated by different companies—without having to buy new tickets. This undoubted good, though, has ramifications. One is that anyone with access can, by following individual passengers (or, at least, their cards), study precisely where people are going. + +Companies use this knowledge to optimise services—again, an undoubted good. But many other things, some disturbing to freedom lovers, might also be done with smart-card data. One, outlined in San Francisco this week at the Knowledge Discovery and Data Mining conference, seems completely unsinister on the face of it. This is to use such data to catch pickpockets. + +The idea is the brainchild of Xiong Hui of Rutgers University, in New Jersey, and Du Bowen and Hou Zhenshan of Beihang University, in Beijing. Together, they studied the movements of passengers on Beijing’s buses, trains and subways. As might be expected, most moved swiftly from A to B—taking the least time or smallest number of transfers to do so, and made similar journeys day after day. A small proportion, though, undertook trips that made little sense, or suddenly varied in their pattern. + +Many of these anomalies have innocent explanations: a forgotten briefcase, perhaps, or a journey in an unfamiliar part of town. But sometimes the cause is more nefarious—a pickpocket plying his trade on the network, possibly employing a stolen travelcard to do so. + +Thankfully, pickpockets are rare. But that makes detecting them all the more challenging. Dr Xiong used a two-step system. First, a computer program called a classifier looked at the peregrinations of 6m travelcards in and around Beijing between April and June 2014 and separated the outliers from the mundane travellers. A second classifier, primed with information about pickpocketing hotspots gleaned from police reports and social-media posts, then tried to spot the pickpockets among these outliers. + +In this, it succeeded. It identified 93% of known pickpockets (ie, those caught by the police during the period in question). However, a second goal is to cast suspicion on as few innocents as possible. Here, its performance was equivocal. Only one out of every 14 suspicious individuals was a known pickpocket. On the other hand, that number presumably included some unknown pickpockets, too. + +Even with a false-positive rate this high, though, Dr Xiong thinks he has developed a powerful tool. Monitoring a suspicious few using closed-circuit cameras is less daunting than following millions of riders. He says the technology will soon be piloted in Beijing and rolled out subsequently in other Chinese cities. + +Not all experts are convinced. Shashi Verma, chief technology officer at Transport for London, and thus the man ultimately responsible for the smooth operation of that city’s Oyster card system, says his records show millions of ordinary people making all sorts of “weird, wonderful, complicated” journeys. Picking the criminal needles from the haystack of innocents is not as easy as it sounds. Dr Xiong is, however, confident in his team’s approach—so confident that they propose to investigate the movement patterns of other “asocial groups” such as “alcoholics, drug-users, homeless people and drug-dealers” on public-transport networks. Such mission creep is precisely what gives freedom lovers the willies. Picking up pickpockets is one thing. Using artificial intelligence to pursue those at the margins of society is quite another. Technology does not know the difference. But people need to. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21705296-artful-dodger-your-time-may-be-up-cutpurse-capers/print + + + + + +Previous Articles Sections Next + + + + +Books and arts + + + + + +Microbes and humans: With a little help from my friends + +Russian history: Prison without a roof + +Annals of brain science: No more memories + +A history of skyscrapers: The up and up + +Europe’s single currency: On course to fail + +“The Get Down”: All beat, no heart + + + + + +Articles Sections Next + +Microbes and humans + +With a little help from my friends + +The microbiome gets a worthy biography + +Aug 20th 2016 | From the print edition + + + +I Contain Multitudes: The Microbes Within Us and a Grander View of Life.By Ed Yong.Ecco; 368 pages; $27.99. Bodley Head; £20. Buy from Amazon.co.uk (ISBN=unknown) + +ED YONG is a fan of David Attenborough. So much so that to celebrate the naturalist’s 90th birthday on May 8th this year, Mr Yong, a science journalist, re-visited 79 episodes of Sir David’s “Life” documentary series and ranked them from best to worst or, as he put it, “from least great to greatest”. + +Now, in his first book, “I Contain Multitudes”, Mr Yong has turned an enthusiastic naturalist’s eye on the bacteria, viruses and other minuscule organisms that cohabit the bodies of humans and other animals; creatures which, if those bodies magically disappeared, would be “detectable as a ghostly microbial shimmer, outlining a now-vanished animal core”. + +Humans and microbes have been on a war footing since the mid-19th century, when Louis Pasteur’s experiments provided support for the germ theory of disease. The improvements in sanitation that followed have saved millions of lives. But the focus on preventing disease also sidelined the study of beneficial microbes, a problem exacerbated by the fact that these indigenous microbiota, exquisitely sensitive to the conditions inside the body, were almost impossible to grow in the lab. + +It would be over a century before new genetic tools would allow scientists to dispense with trying to culture these recalcitrant microbes. By sequencing the tiny amounts of DNA from these critters present in environmental samples, they could begin studying them without the need for a robust culture in a Petri dish. The number of new species of bacterium known to science exploded in the 1990s, and the field of metagenomics—the study of entire microbial communities—was born. + +Mr Yong explores the vital role these symbionts are now known to play in animals, affecting their development, immune systems, nutrition and even, in some cases, their sex. In the same way that a flower in the wrong place is a weed, Mr Yong notes that microbes are not necessarily either our friends or our foes. Context is king, and in the right place, bacteria are indispensable. A remarkable example in humans comes from milk, which is packed with sugars called oligosaccharides. Newborns cannot digest them. They exist to feed one subspecies of bacterium, Bifidobacterium longum infantis, which digests the sugars in order to produce molecules that feed an infant’s gut cells and regulate its nascent immune system. + +Then there is the male-hating microbe Wolbachia pipientis, which Mr Yong endearingly names his “favourite bacterium”. It can be passed on only via eggs, so it has evolved many ways of keeping the egg-producing female share of a population high—by harming males. Wolbachia can kill the male larvae of some host species, for example, or allow the females of another to reproduce without males. Yet this seeming villain of a microbe also confers a range of different benefits to its various hosts, protecting them from other pathogens or providing vital nutrients missing from their diets. + +Mitochondria, the power-generating structures in plant and animal cells, perhaps best illustrate the dual nature of the relationship between microbes and their hosts. Thought to be the result of an ancient symbiosis, mitochondria structurally and genetically still resemble the bacteria they once were. Despite over a billion years of evolution, however, mitochondria that leak into the blood following an injury trigger a misplaced immune response that can be fatal. + +Gut bacteria have now been linked to a long list of ailments including obesity, alcoholism, irritable-bowel syndrome and rheumatoid arthritis. For a lesser writer, the temptation to oversimplify the science or to sex up unwarranted conclusions might have proved irresistible. Mr Yong expertly avoids these pitfalls. The ecosystem of the gut is complex, he says, and the earliest studies in a comparatively new field are frequently wrong. He also examines probiotics, and finds little evidence that the sort included in some yogurts and drinks today prevent illness or provide health benefits. + +No matter. Mr Yong has no need for such hype in his book. “I Contain Multitudes” bowls along wonderfully without it. His hero, Sir David, would surely approve. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21705302-microbiome-gets-worthy-biography-little-help-my-friends/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Russian history + +Prison without a roof + +Aug 20th 2016 | From the print edition + +The tsars’ idea of rehabilitation + +The House of the Dead: Siberian Exile Under the Tsars.By Daniel Beer.Allen Lane; 487 pages; £30. To be published in America by Knopf in January. Buy from Amazon.co.uk (ISBN=unknown) + +“HERE was a world all its own, unlike anything else,” wrote Fyodor Dostoevsky. Like hundreds of thousands of Russians before him, and many more after, Dostoevsky had been in Siberian exile, banished in 1850 to the “vast prison without a roof” that stretched out beyond the Ural mountains for thousands of miles to the Pacific Ocean. The experience marked him for ever. Siberia, he wrote later, is a “house of the living dead”. + +It was no metaphor. In 19th-century Russia, to be sentenced to penal labour in the prisons, factories and mines of Siberia was a “pronouncement of absolute annihilation”, writes Daniel Beer in his masterly new history of the tsarist exile system, “The House of the Dead”. For lesser criminals, being cast into one of Siberia’s lonely village settlements was its own kind of death sentence. On a post of plastered bricks in a forest marking the boundary between Siberia and European Russia, exiles trudging by would carve inscriptions. “Farewell life!” read one. Some, like Dostoevsky, might eventually return to European Russia. Most did not. + +Successive tsars sought to purge the Russian state of unwanted elements. Later, as Enlightenment ideas of penal reform gained prominence, rehabilitation jostled with retribution for primacy. But the penal bureaucracy could not cope. The number of exiles exploded over the course of the 19th century, as an ever greater number of activities were criminalised. A century of rebellions, from the Decembrist uprising in 1825 to the revolution of 1905, ensured that a steady supply of political dissidents were carted across the Urals by a progressively more paranoid state. The ideals of enlightened despotism—always somewhat illusory—were swept away. Exiles re-emerged—if they ever did—sickly, brutalised and often violently criminal. + +In the Russian imagination, the land beyond the Urals was not just a site of damnation, but a terra nullius for cultivation and annexation to the needs of the imperial state. Siberia, Mr Beer writes, was both “Russia’s heart of darkness and a world of opportunity and prosperity”. Exile was from the outset a colonial as much as a penal project. Women—idealised as “frontier domesticators”—were coerced into following their husbands into exile to establish a stable population of penal colonists. Mines, factories, and later grand infrastructure projects such as the trans-Siberian railway were to be manned by productive, hardy labourers, harvesting Siberia’s natural riches while rehabilitating themselves. + +But in this, too, the system failed utterly. Unlike Britain’s comparable system of penal colonisation in Australia, the tsars never brought prosperity to Siberia. Fugitives and vagabonds ravaged the countryside, visiting terror on the free peasantry, Siberia’s real colonists. A continental prison became Russia’s “Wild East”. + +In the end, the open-air prison of the tsarist autocracy collapsed under the weight of its own contradictions. The exiled and indigenous populations were engaged in low-level civil war, with resentful Siberian townsfolk up in arms protesting the presence of exiles thrust on them by the state. A land intended as political quarantine became a crucible of revolution. And modernisation—above all the arrival of the railway—ultimately turned the whole concept of banishment into an absurd anachronism. With revolution in 1917, the system simply imploded. + +But it never really disappeared. The tsars’ successors, the Soviets, proclaimed lofty ideals but in governing such a vast land they, too, became consumed by the tyrannic paranoia that plagued their forebears. Out of the ashes of the old system rose a new one, the gulag, even more fearsome than what it replaced. Mr Beer’s book makes a compelling case for placing Siberia right at the centre of 19th-century Russian—and, indeed, European—history. But for students of Soviet and even post-Soviet Russia it holds lessons, too. Many of the country’s modern pathologies can be traced back to this grand tsarist experiment—to its tensions, its traumas and its abject failures. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21705305-prison-without-roof/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Annals of brain science + +No more memories + +Aug 20th 2016 | From the print edition + + + +Patient H.M.: A Story of Memory, Madness, and Family Secrets.By Luke Dittrich.Random House; 440 pages; $28. Chatto & Windus; £18.99. Buy from Amazon.co.uk (ISBN=unknown) + +PATIENT H.M. is probably the most famous human case-study in the history of science. In 1953 he was suffering from severe epilepsy, so he underwent a drastic surgical procedure. The medial temporal lobes, including structures called the hippocampi, were mostly removed on both sides of his brain. The procedure failed to cure him, but it did have unintended consequences. H.M. developed anterograde amnesia: from the age of 27 he never formed a new long-term memory. The moment a thought ceased to be suspended in his consciousness, it was gone. “Every day is alone in itself. Whatever enjoyment I’ve had, and whatever sorrow I’ve had.” + +His great loss was an immeasurable gain for science. Studies on H.M. teased apart different types of memory and showed that the hippocampi were required for some of them, demonstrating that there is indeed functional specialisation in specific brain regions. But Mr Dittrich also shows something of the man behind the acronym: Henry Molaison. He dispels the myth that Molaison existed in a sort of nirvana, serenely content in the present. He suffered, and he was manipulated by scientists. In life, his identity was jealously guarded; in death, the dissection of his brain was streamed live on the internet. + +Much has been written about H.M., but here Mr Dittrich is uniquely qualified: his grandfather, William Scoville, was the neurosurgeon who operated on him. This book is not simply about H.M., but rather uses him as a springboard to explore the history of neuroscience, from the first records of brain surgery in Egyptian writings to 20th-century psychosurgery and beyond. The story of psychosurgery—operating on the brain to treat mental illnesses—is a dark one, and his grandfather played a key role in it. “None would perform as many lobotomies as [Walter] Freeman,” Mr Dittrich writes of another leading doctor of the time, “who was as prolific as he was passionate. My grandfather, however, would come in a close second.” + +Mr Dittrich has honed the narrative to a fine edge by the time his grandfather is standing over H.M.’s brain, scalpel in hand, unable to find the epileptogenic focus, the brain region responsible for the seizures. Most surgeons would simply have sewn him up again. A risk-taker might have removed the temporal lobe from one side of the brain, theoretically giving a 50% chance of removing the focus without removing too much brain tissue. But Scoville did something unexpected—something unjustifiable—in removing both temporal lobes. The personal side of Mr Dittrich’s book wonders why his grandfather did it, and what kind of a man he was. H.M.’s fate is not the book’s only shocking tale. The family secret referred to in the book’s subtitle is foreshadowed early on, but its revelation is no less powerful when it comes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21705306-no-more-memories/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A history of skyscrapers + +The up and up + +Using economics to explain why buildings get big + +Aug 20th 2016 | From the print edition + +No “skyscraper curse” in sight + +Building the Skyline: The Birth and Growth of Manhattan’s Skyscrapers.By Jason Barr.Oxford University Press; 437 pages; $49.95. Buy from Amazon.co.uk (ISBN=unknown) + +THE world is in the middle of an unprecedented skyscraper boom. Last year more than 100 buildings over 200 metres tall were built. What forces drive such ambition? A new book by Jason Barr, an economist at Rutgers University-Newark, focuses on Manhattan, and shows why these behemoths develop, in a conversational style that almost makes you forget that you are reading a book about economic history. + +Why is Manhattan synonymous with skyscrapers? In the late 19th century the island was booming: demand to be in particular areas was so high that the only option was to build up. But geography also played a role. The famous grid pattern of the city’s streets, imposed early in that century, meant that the average plot of land in the city was fairly small. Manhattan is itself a thin piece of land, making it hard for economic activity to spread out, Mr Barr notes. + +New York’s first skyscraper, the 11-storey Tower Building, went up in the 1880s. Situated on Broadway, it was a technological breakthrough. The architect, Bradford Lee Gilbert, realised that supporting a super-tall building using conventional techniques would require walls so thick that there would be little floorspace left. So he created an iron frame for the building (after which the only function of the walls was to keep the rain out). On a gusty morning in 1888, New Yorkers anxiously watched Gilbert as he climbed right to the top. + +Along the way, Mr Barr punctures some skyscraper myths. For instance, there are relatively few towers between Downtown and Midtown. Urban folklore has it that New York’s geology is the reason: the bedrock in that part of town, the assumption goes, cannot support tall buildings. + +A better explanation is New York’s economic history. Mr Barr argues that the area between Downtown and Midtown historically had low land values. In the 18th century the rich lived in Downtown areas close to the port and the seat of government. The poor lived just outside. The wealthy reacted to the gradual introduction of public transport in the 1820s and 1830s by moving far out, eventually as far as Midtown, a less-developed area which could be built to their tastes. The in-between zones thus left behind were undesirable, and few people thought it profitable to build skyscrapers there. The spatial economics of the 19th century continues to shape Manhattan’s skyline today. + +Mr Barr tackles another popular myth, often referred to as the “skyscraper curse”. Some economists reckon that a boom in skyscraper construction artificially forces up the price of land; developers want to build an even taller building than their rivals, so they furiously compete for plots. This can push an economy into bubble territory, the thinking goes. Indeed, the 1920s was a period of frantic floor-adding, often with little economic rationale. It culminated in the opening of the Empire State Building in 1931—just as the Great Depression bit. However, Mr Barr’s careful statistical analysis indicates that over the long sweep of history, skyscraper construction is rational: bursts of activity tend to follow an increase in land values, but not the other way round. + +Economists will appreciate Mr Barr’s careful use of wonky concepts; architects and historians will enjoy his keen eye for detail. But whatever your persuasion, after reading this book you will never look up at a skyscraper the same way again. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21705303-using-economics-explain-why-buildings-get-big-up-and-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Europe’s single currency + +On course to fail + +Aug 20th 2016 | From the print edition + + + +The Euro: How a Common Currency Threatens the Future of Europe.By Joseph Stiglitz.Norton; 416 pages; $28.95. Allen Lane; £20. Buy from Amazon.co.uk (ISBN=unknown) + +THOSE in search of an antidote to the anxieties that arise from Britain’s vote to leave the European Union should avoid the latest book from Joseph Stiglitz. Its subject is the euro, which has hitherto been the main font of fears for Europe and (his analysis suggests) will soon be once again. It is a meaty subject, suited to a big-name economist. Mr Stiglitz has won a Nobel prize, served as a feather-ruffling chief economist for the World Bank and written several books with a fair claim to prescience, notably, “Globalisation and Its Discontents”, published in 2002. + +The main argument of his new book is that, on its current course, the euro is certain to fail—and indeed, that it was fatally flawed from birth. It entails a fixed exchange rate and a single interest rate for its members, which means countries must forgo the option to devalue in times of economic weakness. To make up for that loss, the euro’s architects should have created institutions, such as jointly issued bonds, mutual backing of bank deposits and a common fund for unemployment insurance, so the costs of righting each economy are shared. Instead the burden falls on individual countries through austerity policies, such as tax rises and wage cuts. The results have been ugliest in Greece, where national income has shrunk by a quarter since 2007 and where the unemployment rate is 24%. There is still time to put in place better policies, thinks Mr Stiglitz. But an amicable divorce would be preferable to the current situation, which puts the considerable achievement of European integration at risk. + +A good chunk of the book is taken up with a critique of policymakers’ efforts to address the euro crisis. Mr Stiglitz rightly takes issue with the blame-the-victim analysis of the euro’s failings that is commonly heard in Germany. The persistent trade surpluses of Germany and the vast deficits of boomtime Spain, Portugal and Greece are two sides of the same coin. Indeed, in a world short of aggregate demand, German thrift is the bigger failing, argues Mr Stiglitz. He favours the remedy, first proposed by John Maynard Keynes, of forcing creditor countries to adjust by taxing their trade surpluses. But in redressing the balance, Mr Stiglitz gives too little weight to the mistakes of crisis countries. The book has other shortcomings. The strident tone and frequent self-references will put off many readers. If sentences that contained the word “I” or “my” were expunged, the book would be rather slimmer. In places it reads as if the miseries of the euro zone stem from sinister corporate forces and not misplaced idealism. Similar arguments crop up in several chapters, a further irritation and a symptom of careless structure. + +Mr Stiglitz is not the first economist to make dark predictions about the euro, though it is clear that he favours its success. A fuller reckoning of the blame for the mess the euro zone is in would not undermine Mr Stiglitz’s main arguments; it would strengthen them. It is only right at the end of the book that he presents the euro story as mostly tragedy: “It was created with the best of intentions by visionary leaders whose visions were clouded by an imperfect understanding of what a monetary union entailed.” It is a shame that such a dispassionate tone does not permeate the earlier chapters. Mr Stiglitz is at his best when coolly analytical and at his most trying when settling scores. Yet on the essentials, he is surely right. Without a radical overhaul of its workings, the euro seems all but certain to fail. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21705304-course-fail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +“The Get Down” + +All beat, no heart + +An extravagantly empty tribute to 1970s New York and the birth of hip-hop + +Aug 20th 2016 | From the print edition + +One day we’ll be nostalgic about this + +BAZ LUHRMANN, the director of “The Great Gatsby” and “Moulin Rouge”, is known for stylistic rambunctiousness, not artistic reserve. So Netflix executives should not have been too surprised when the Australian auteur reportedly overshot the budget of his first television series, “The Get Down”, by $30m. At a cost of $120m, the show is among the most expensive ever made in an industry engaged in an apparently limitless game of creative one-upmanship. + +Set in the Bronx in the late 1970s, “The Get Down” does not brush over the borough’s history of poverty, crime and urban neglect. On a tour as a presidential candidate in 1980, Ronald Reagan compared it to London during the Blitz, and archive footage woven into the show affords a glimpse of this bleak milieu. The first six episodes, available on Netflix, take place in the scorching summer of 1977. (The remaining episodes will be released next year.) In the stifling heat, chaos feels close. Fires rip through abandoned tenements. One character asks, “Yo, is it just me today, or is it like the Bronx is getting closer to the sun?” + +Rather than dwell on blight, though, “The Get Down” celebrates the tenacity and vim of the area’s black and Latino youth. It chronicles the generation who revolutionised music by breaking from disco to invent hip-hop. For the protagonists, DJing, graffiti, breakdancing and rapping offer an escape from drug-pushing and gang war. “Had to find my rope/To pull me up/Because I needed some kind of hope/To fill me up,” raps the narrator in the prologue. Mr Luhrmann’s stamp is felt in the show’s glossy, hyper-real shots saturated with colour, and his freewheeling camera-work has found a perfect subject in the disco dance-floor. + +There was a time when film directors would not touch television shows. Writers and producers were deemed to wield too much power. The picture is different in today’s much-praised age of television, where producers court big names with the promise of increased creative control. Mr Luhrmann, who initially saw “The Get Down” as a film, was persuaded to oversee the series from start to finish by Ted Sarandos, Netflix’s chief content officer, according to Variety, an entertainment-industry magazine. + +Mr Luhrmann spared no expense or detail in realising his vision. A pioneering rapper, Grandmaster Flash (also a character), and Nelson George, a journalist covering African-American culture in the 1970s, were consultants, and the cast were taught on set to breakdance and mix on turntables as they did in the 1970s. Nas, a hip-hop artist and producer, scored original music; he has sold more than 25m records and probably did not come cheap. + +It is not clear that the investment has paid off. The creative direction is muddled: Mr Luhrmann directed only the first episode, but worked closely on them all, resulting in an uneven quality. Stuffed with characters, subplots and flashy song-and-dance numbers, the show resembles a musical. That works fine for the big screen. But television gives time for characters to grow and plots to unspool, keeping viewers coming back. As a director, Mr Luhrmann is more interested in melodrama and spectacle than drawing the audience in. “The Get Down”, like a disco ball, glitters on the outside, but is hollow at its heart. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21705301-extravagantly-empty-tribute-1970s-new-york-and-birth-hip-hop-all-beat-no/print + + + + + +Previous Articles Sections Next + + + + +Obituary + + + + + +Ernst Neizvestny: The unknown warrior + + + + + +Articles Sections Next + +Ernst Neizvestny + +The unknown warrior + +Ernst Neizvestny, sculptor, artist, philosopher and defier of the Soviet regime, died on August 9th, aged 91 + +Aug 20th 2016 | From the print edition + + + +THE two men were about the same size, sturdy and short. Both had fought in the Great Patriotic War, worked in foundries; they could knock each other out. One was broad-faced, gap-toothed and almost bald; the other was swarthy, with bushy black brows and hair. The bald man, Nikita Khrushchev, leader of the Soviet Union, was shouting “Filth! Dog shit! Disgrace!” at the paintings on display, that day in 1962, on the walls of the Manege Gallery beside the Kremlin. The swarthy one, Ernst Neizvestny, had his answer ready: “You may be premier and chairman, but not here in front of my works. I am the premier here.” + +He was manhandled and expelled from the Artists’ Union, but he was not arrested, and government psychiatrists pronounced him sane. Khrushchev even half-joked that there was an angel and a devil in him, and as long as the angel had the upper hand, they could get along. Mr Neizvestny liked that remark, for that was exactly what his paintings, and especially his sculptures, were about: struggle, contradiction, multiplicity, flesh against spirit, all within one unity, the human body. His works turned humans into robots, centaurs, giants or machines, with hard and soft, metallic and organic flowing into and transforming each other. Khrushchev bitterly condemned his public “disfiguring” of Soviet people, but that was not what he was doing; he was showing how Protean and enduring a human being was. + +Even as a child, he had imagined infinity as bigger and bigger versions of himself stretching into space—or smaller and smaller versions, until he had whole worlds on the tip of his finger. As a sculptor he could recreate that cosmos, a god exerting his will on clay or on fiery rivers of bronze. In the Soviet Union of the 1950s and 1960s it was all much harder, with his studio squeezed into the back of a shop and bronze unavailable to headstrong sculptors like himself. He foraged and fought. In the foundry, he stole what scraps of metal he could. + +Commissions came, for war memorials and friezes at Pioneer camps. But because he rejected the sterile socialist realism approved by the state—seeing himself instead as the successor of Kandinsky, Malevich and the brief avant-garde of the early decades of the century—official work often vanished again. As a monumental sculptor he longed to be exposed, potentially defying the state on a grand scale. Instead his boldest dreams remained maquettes, unless they could be sold abroad. In 1975, weary of it all, he applied to go into exile, settling in New York and lecturing about art, in Russian, on America’s west coast. + +He easily mixed philosophy with art; in Russian culture, he explained, they were inseparable. Art contained all of life, and the greatest artists not only fixed on beauty; they took risks, outraged good taste, shocked people with the messy process of existence. The figures he admired unflinchingly portrayed man’s necessary struggle to become himself: Dostoevsky, with his mastery of a polyphony of contesting, God-questioning voices, and Dante, with his writhing bodies caught in good and evil, fire and whirlwinds. + +In a way, he felt he had been fighting all his life. He came from Sverdlovsk in the Urals, at the frontier of Europe and Asia, from a family whose Jewishness had been mocked years before with the name Neizvestny, “unknown”—though his father was an eminent and prosperous surgeon and the house full of intellectuals, out to change the world. He determined early not to be unknown, but loud, rough and unmannerly in proclaiming the truth about art: that to have any value it had to be an act of faith, a spiritual thing. + +It all came down to his favourite poem, Pushkin’s “The Prophet”, in which an exhausted pilgrim was suddenly attacked by an angel, “the finest sculptor I know”: + +And he cleft my chest with a sword + +and withdrew my fluttering heart + +and a coal aglow with fire + +pushed into my open breast. + + + +This had happened to him in the war. He was just 19, commanding a unit in Austria, when a bullet entered his chest and exploded in his back. It made a hole so big that he was left for dead. But he survived, and so did the burning coal. The result was a continual flow of sculptures in which bodies, assaulted and mutilated from both inside and out, were nonetheless finding the energy to change into something new. + +Angel and devil + +His most abiding dream was of a huge open sculpture, 150 metres high, of seven spirals rotating round the form of a human heart that appeared to grow like a tree, and within which people could wander through galleries of art. It was to be a synthesis of all human nature and creation, called “Tree of Life”. Smaller versions were installed in Paris and New York; no one would fund the swarming, pulsing cosmos he really hoped for. He found some comfort in a warmer welcome in Russia after 1989, and commissions for several brooding monuments to Stalin’s victims. + +He had the last word, too, in his showdown with Khrushchev. In 1974, after the leader’s death, the family asked him to design the tomb. He produced two jagged towers, one of white blocks, one of black, angel and devil in their continual confrontation, contending on either side of Khrushchev’s pugnacious, unseeing face. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21705283-ernst-neizvestny-sculptor-artist-philosopher-and-defier-soviet-regime-died-august/print + + + + + +Articles Sections Next + + + + +Economic and financial indicators + + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Corporate profits + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Aug 20th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21705332/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Aug 20th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21705309-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Markets + +Aug 20th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21705310-markets-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Aug 20th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21705312-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Corporate profits + +Aug 20th 2016 | From the print edition + + + +Another mediocre earnings season: second-quarter earnings per share for S&P 500 firms are expected to be 2.5% lower than a year earlier, the fourth fall in a row. The strong dollar has depressed overseas demand and multinationals’ earnings, while subdued oil prices have hurt energy groups (earnings are down by 85%). Companies selling discretionary consumer goods have seen earnings rise thanks to lower oil prices and car sales, though they are levelling off. Low interest rates have helped capital-intensive utilities, while some tech companies have benefited from the shift towards cloud computing. Aggregate earnings growth for S&P 500 firms is expected to turn positive by the end of the year. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21705311-corporate-profits/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Aug 20th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21705314-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Thu, 18 Aug 2016] + +The world this week + + + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + + + +Housing in America: Nightmare on Main Street + + + + + +Political reform stalls: Africa’s fragile democracies + + + + + +Data analytics: The power of learning + + + + + +Welfare reform: A patchy record at 20 + + + + + +Chinese politics: Beach rules + + + + + +Letters + + + + + +On Egypt, Brazil, sustainability, methane, Canada, politics: Letters to the editor + + + + + +Briefing + + + + + +Housing in America: Comradely capitalism + + + + + +United States + + + + + +Poverty in America: No money no love + + + + + +The campaigns: Fantastic people + + + + + +Entrepreneurial transit: George Washington’s bus + + + + + +Music and violence: Something in his whiskey + + + + + +Nashville: Hot sauce + + + + + +Putrid Pennsylvania: Kaned + + + + + +Flood and fire: From LA to CA + + + + + +Lexington: Normalising narcissism + + + + + +The Americas + + + + + +Brazil’s economy: The only way is up + + + + + +Gay rights (1): Open city + + + + + +Gay rights (2): Belize blazes a trail + + + + + +Asia + + + + + +Immigration to Japan: A narrow passage + + + + + +Japanese citizenship: Inspectors knock + + + + + +Protecting India’s cows: Cowboys and Indians + + + + + +The Ismailis of Tajikistan: A hopeful Aga saga + + + + + +Australia and New Zealand: Transported + + + + + +Banyan: Full steam + + + + + +China + + + + + +Politics: Xi’s day at the beach + + + + + +History: The return of the Xia + + + + + +Middle East and Africa + + + + + +African democracy: The march of democracy slows + + + + + +Israel and Gaza: Alms for the enemy + + + + + +Christians in the Arab world (1): Crimes and no punishment + + + + + +Christians in the Arab world (2): Under the gun + + + + + +Europe + + + + + +Putin’s personnel moves: Dancing in the dark + + + + + +Germany’s new security measures: Integration panic + + + + + +Match-fixing in Italy: You betcha + + + + + +Turkish anger at the West: Duplicity coup + + + + + +The hunt for Gulenists: Extradition quest + + + + + +Britain + + + + + +Counter-terrorism: Driving away the shadows + + + + + +The Brexit trigger: To pull or not to pull + + + + + +Ticket touts: A muggle’s game + + + + + +Tax avoidance: You feeling lucky? + + + + + +Lorry drivers: Keep off truckin’ + + + + + +Bagehot: Paddy Ashdown’s grand design + + + + + +International + + + + + +Islamic education in Europe: Faith of our fathers + + + + + +Online Islamic education: World-wide mullahs + + + + + +Business + + + + + +The future of television: Streaming on screens near you + + + + + +Workplace woes: The bane of brilliance + + + + + +Terror and tourism in France: Not all shows must go on + + + + + +Measuring companies: The watchers + + + + + +Industrial gases: Something’s in the air + + + + + +Self-driving lorries: A long haul + + + + + +Schumpeter: Family values + + + + + +Finance and economics + + + + + +Machine learning: Of prediction and policy + + + + + +Buttonwood: To have and to hold + + + + + +Morgan Stanley: Poacher to prey + + + + + +Italian distressed debt: Bargain hunt + + + + + +China’s budget deficit: Augmented reality + + + + + +Free exchange: Medalling prosperity + + + + + +Economics brief + + + + + +Game theory: Prison breakthrough + + + + + +Science and technology + + + + + +Aviation and robots: Flight fantastic + + + + + +Weed control: Now try this + + + + + +Reversing deafness: Gone today, hair tomorrow + + + + + +Crime prevention: Cutpurse capers + + + + + +Books and arts + + + + + +Microbes and humans: With a little help from my friends + + + + + +Russian history: Prison without a roof + + + + + +Annals of brain science: No more memories + + + + + +A history of skyscrapers: The up and up + + + + + +Europe’s single currency: On course to fail + + + + + +“The Get Down”: All beat, no heart + + + + + +Obituary + + + + + +Ernst Neizvestny: The unknown warrior + + + + + +Economic and financial indicators + + + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Corporate profits + + + + + +Markets + + + + + +Table of Contents + +The Economist [Thu, 18 Aug 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Housing in America: Nightmare on Main Street + + + + + +Political reform stalls: Africa’s fragile democracies + + + + + +Data analytics: The power of learning + + + + + +Welfare reform: A patchy record at 20 + + + + + +Chinese politics: Beach rules + + + + + +Letters + + + +On Egypt, Brazil, sustainability, methane, Canada, politics: Letters to the editor + + + + + +Briefing + + + +Housing in America: Comradely capitalism + + + + + +United States + + + +Poverty in America: No money no love + + + + + +The campaigns: Fantastic people + + + + + +Entrepreneurial transit: George Washington’s bus + + + + + +Music and violence: Something in his whiskey + + + + + +Nashville: Hot sauce + + + + + +Putrid Pennsylvania: Kaned + + + + + +Flood and fire: From LA to CA + + + + + +Lexington: Normalising narcissism + + + + + +The Americas + + + +Brazil’s economy: The only way is up + + + + + +Gay rights (1): Open city + + + + + +Gay rights (2): Belize blazes a trail + + + + + +Asia + + + +Immigration to Japan: A narrow passage + + + + + +Japanese citizenship: Inspectors knock + + + + + +Protecting India’s cows: Cowboys and Indians + + + + + +The Ismailis of Tajikistan: A hopeful Aga saga + + + + + +Australia and New Zealand: Transported + + + + + +Banyan: Full steam + + + + + +China + + + +Politics: Xi’s day at the beach + + + + + +History: The return of the Xia + + + + + +Middle East and Africa + + + +African democracy: The march of democracy slows + + + + + +Israel and Gaza: Alms for the enemy + + + + + +Christians in the Arab world (1): Crimes and no punishment + + + + + +Christians in the Arab world (2): Under the gun + + + + + +Europe + + + +Putin’s personnel moves: Dancing in the dark + + + + + +Germany’s new security measures: Integration panic + + + + + +Match-fixing in Italy: You betcha + + + + + +Turkish anger at the West: Duplicity coup + + + + + +The hunt for Gulenists: Extradition quest + + + + + +Britain + + + +Counter-terrorism: Driving away the shadows + + + + + +The Brexit trigger: To pull or not to pull + + + + + +Ticket touts: A muggle’s game + + + + + +Tax avoidance: You feeling lucky? + + + + + +Lorry drivers: Keep off truckin’ + + + + + +Bagehot: Paddy Ashdown’s grand design + + + + + +International + + + +Islamic education in Europe: Faith of our fathers + + + + + +Online Islamic education: World-wide mullahs + + + + + +Business + + + +The future of television: Streaming on screens near you + + + + + +Workplace woes: The bane of brilliance + + + + + +Terror and tourism in France: Not all shows must go on + + + + + +Measuring companies: The watchers + + + + + +Industrial gases: Something’s in the air + + + + + +Self-driving lorries: A long haul + + + + + +Schumpeter: Family values + + + + + +Finance and economics + + + +Machine learning: Of prediction and policy + + + + + +Buttonwood: To have and to hold + + + + + +Morgan Stanley: Poacher to prey + + + + + +Italian distressed debt: Bargain hunt + + + + + +China’s budget deficit: Augmented reality + + + + + +Free exchange: Medalling prosperity + + + + + +Economics brief + + + +Game theory: Prison breakthrough + + + + + +Science and technology + + + +Aviation and robots: Flight fantastic + + + + + +Weed control: Now try this + + + + + +Reversing deafness: Gone today, hair tomorrow + + + + + +Crime prevention: Cutpurse capers + + + + + +Books and arts + + + +Microbes and humans: With a little help from my friends + + + + + +Russian history: Prison without a roof + + + + + +Annals of brain science: No more memories + + + + + +A history of skyscrapers: The up and up + + + + + +Europe’s single currency: On course to fail + + + + + +“The Get Down”: All beat, no heart + + + + + +Obituary + + + +Ernst Neizvestny: The unknown warrior + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Corporate profits + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.08.27.TXT b/homeworks/B20769/homework1/data2/2016.08.27.TXT new file mode 100644 index 0000000..0ff895e --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.08.27.TXT @@ -0,0 +1,5148 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Technology Quarterly + +Business + +Finance and economics + +Economics brief + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Aug 27th 2016 | From the print edition + + + +Negotiators for Colombia and the FARC, a left-wing guerrilla group, announced that they had reached a final agreement to end their 52-year-long war. Some 220,000 people died and 7m were displaced in Latin America’s longest-running military conflict. Combatants who committed crimes are to face a special tribunal. Those who confess will have their movement restricted and perform community service but will not go to jail. Colombians are to vote on the agreement on October 2nd. See here and here. + +Venezuela’s president, Nicolás Maduro, warned that some government workers who signed a petition to initiate a referendum to recall him from office will themselves be sacked. The order applies to managers in five ministries, including those responsible for food, labour and finance. + +Tens of thousands of people protested against Chile’s pension system, which they say pays inadequate benefits. Chile’s system of private pension accounts is seen as a model by many. But workers who did not contribute consistently receive lower payouts than they expected—and are outraged. See article. + +The cauldron + +The war in Syria became yet more complex when Turkey sent troops across the border to push Islamic State forces out of Jarabulus, a strategic town. This came less than a week after American jets intercepted Syrian ones that were bombing Kurdish forces supported by American troops. Shortly before Turkey intervened a suicide-bomber killed more than 50 people at a Kurdish wedding in Turkey near the border with Syria. Most of the victims were children. Meanwhile, Iran stopped allowing Russia to use one of its airfields to bomb rebel positions in Syria. See here and here. + +South Africa’s currency and bonds tumbled on news that the finance minister, Pravin Gordhan, had been asked to report to police for questioning about an investigation within the revenue authority. Mr Gordhan is tackling corruption in state-owned enterprises and government procurement. The markets think the allegations against him are baseless and politically motivated. + +An Islamist rebel admitted to destroying religious artefacts in Timbuktu, Mali, at the International Criminal Court in The Hague. He pleaded guilty to the charges, the first time any defendant has done so at the ICC. It was also the first time the court tried a case of cultural vandalism. + +The day the ground shook + + + +An earthquake of magnitude 6.2 struck central Italy, killing hundreds of people. Buildings were reduced to rubble in villages and towns across the regions of Lazio, Umbria and Le Marche. Amatrice was particularly badly hit. “Half the town is gone,” said the mayor. See article. + +Nicolas Sarkozy, France’s former president, announced his candidacy for the 2017 presidential election. The centre-right politician will first have to win his party’s primary in November, where his main challenger is Alain Juppé, a former prime minister. See article. + +The European Commission ordered France to hand over the details of its study on Renault’s car emissions. Some MEPs accuse France of covering up the details in order to protect its domestic car industry. The French state has a 20% stake in Renault. + +Sadiq Khan, London’s popular mayor, threw his support behind Owen Smith, who is challenging Jeremy Corbyn for the leadership of Britain’s Labour Party. Although Mr Khan nominated Mr Corbyn in last year’s leadership contest (so the party could have “a proper debate”), he did not vote for him and they have crossed swords many times since. Mr Khan does not think Labour can win an election with Mr Corbyn in charge. See article. + +Talking peace + +Representatives of the Philippine government and communist rebels met in Oslo in the hope of negotiating an end to a 47-year-old insurgency. The rebels want their captured comrades released, but the government fears the negotiators do not have the authority to end the conflict. See article. + +A representative of Shanghai’s government attended a forum in Taiwan. He is the most senior Chinese official to visit the island since Tsai Ing-wen became president in May. China had downgraded links with Taiwan in a protest against her party’s pro- independence stance. + +A UN human-rights envoy, Philip Alston, was granted a rare visit to China. At the end of his trip, he spoke of a “shrinking space” for the country’s civil society and said he had been asked to notify the government before any meetings with private individuals. But he said China should be “genuinely congratulated” for its fight against poverty. + +Foreign ministers from China, Japan and South Korea showed unusual solidarity during a trilateral meeting in Tokyo overshadowed by territorial and security-related disputes between China and both of its interlocutors. The three condemned a missile test by a North Korean submarine which had just taken place. + +Zika dangers + +An American health official warned Louisiana to monitor its mosquito population when the water in areas hit by recent flooding starts to recede, in case the mosquito-borne Zika virus has spread to the state. In the latest government guidance, pregnant women were advised not to travel to Miami Beach, where transmissions of the virus have been detected. + +A federal judge blocked the Obama administration’s edict that transgender school pupils should be allowed to use whichever toilet or locker room they feel comfortable in. The judge ruled that states had not been given time to implement the rule. + + + +The Olympic games finished in Rio de Janeiro. America again dominated the medals table. Because it won the second-most golds, Britain came next, placing above China in the ranking. The hosts, Brazil, did not capitalise on their home advantage, finishing 13th overall and taking 19 medals in total, just two more than in 2012. That result is even more disappointing considering 465 Brazilian athletes took part in the Rio games compared with 248 in London in 2012. See article. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21705873-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Aug 27th 2016 | From the print edition + +The Indian government named a successor to Raghuram Rajan as governor of the Reserve Bank of India, nine weeks after his surprise decision to step down. Mr Rajan’s replacement is Urjit Patel, a deputy governor at the central bank who is credited with shaping an inflation-targeting framework that has helped tame prices. See article. + +John Cryan, the CEO of Deutsche Bank, lashed out at the European Central Bank’s policy of negative interest rates, saying it countered the aim of making the banking system safer. The ECB charges banks 0.4% to park their deposits with it. Mr Cryan thinks that policy, coupled with regulations that compel banks to hold more liquid assets, has weakened banks, not strengthened them. + +A court in Zurich handed Rudolf Elmer, a whistle-blower, a 14-month suspended prison sentence for threatening his former employer, Julius Bär, a private bank. However, he was acquitted of the more serious charge of violating Swiss banking-secrecy laws. The ruling sets an important precedent, since it indicates that Switzerland’s famously strict confidentiality laws do not protect foreign trusts and companies that hold Swiss accounts. + +The Hong Kong stock exchange introduced a circuit breaker that halts trading in volatile conditions. Hong Kong’s system targets specific shares, unlike the circuit breakers that created havoc on the Shanghai and Shenzhen stockmarkets in January by shutting down the whole market. + +Importing trouble + +Orders for British exports are at a two-year high, according to the Confederation of British Industry, as the sharp fall in sterling “is starting to filter through to overseas demand”. But the CBI warned that a weak pound is pushing up costs for manufacturers. Meanwhile, other data indicated that net withdrawals from UK-based investment funds were £4.7 billion ($6.2 billion) in July. That was a three-year high and up from £3 billion in June, when Britain voted in a referendum to leave the EU. + +The euro-zone economy picked up slightly in August, judging by a closely watched index of private-sector activity. It had been expected to fall after the Brexit vote. + +America’s budget deficit will rise this year for the first time since 2009. The Congressional Budget Office estimates the deficit will total $590 billion for the fiscal year ending September 30th, a third higher than in 2015. The main reason is that revenues are much lower than had been anticipated, especially from corporate taxes. However, the outlook foresees deficits getting smaller over the next decade, partly because the government will pay lower interest on its mountain of debt. + +The American government officially nominated Jim Yong Kim to serve a second term as president of the World Bank. Although Mr Kim has the support of America, his restructuring of the bank has ruffled the feathers of much of its staff. Their association recently talked of a “crisis of leadership” at the organisation and called for a new leader. + +Broadcast news + +The saga that pitted the Redstone family against Viacom’s bosses reached a conclusion. Sumner Redstone, the 93-year-old mogul who controls most of the shares in the media conglomerate, and his daughter, Shari, claimed victory when the board dismissed the embattled chief executive, Philippe Dauman, and named five new members selected by Ms Redstone. All lawsuits between Viacom and Mr Redstone will now end. Mr Dauman leaves with a $72m severance package. See article. + +Pfizer agreed to pay $14 billion for Medivation, a biotech company based in San Francisco that makes a bestselling treatment for prostate cancer. Its work in immunotherapies sits nicely with Pfizer’s research into drugs that fight cancer using the body’s immune system. Pfizer is still considering splitting itself in two, with one part producing profitable drugs and the other selling medicines that have lost their patent protection. + +Tesla Motors unveiled new versions of its electric Model S sedan and Model X sports-utility vehicle with more powerful batteries that extend the cars’ driving range. The new Model S can travel over 500km (315 miles) without a recharge. The company claims the car can accelerate faster than any “mass-produced” vehicle made so far, reaching 60mph in 2.5 seconds. + + + +A multinational team of astronomers working at the European Southern Observatory in Chile discovered an Earth-sized planet in orbit around a star four light-years away. Proxima Centauri b is a bit bigger than Earth and orbits within its parent’s habitable zone. That will make it the focus of scientific efforts to search for life elsewhere. See article. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21705874-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Aug 27th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21705875-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Space exploration: Brave new worlds + +Colombia and the FARC: Ending a half-century of war + +Monetary policy: When 2% is not enough + +Turkey and the West: Don’t lose the plot + +The desire for children: Wanted + + + + + +Articles Sections Next + +Space exploration + +Brave new worlds + +New discoveries, intelligent devices and irrepressible dreamers are once again making space exciting + +Aug 27th 2016 | From the print edition + + + +IT MAY turn out to be a bare and barren rock. The fact that liquid water could be flowing across the surface of the planet just discovered orbiting Proxima Centauri, the nearest star to the sun, does not mean that any actually is—nor for that matter that it has an atmosphere. The fact that water and air, if present, could make this new world habitable does not mean that it is, in fact, a home to alien life. + +But it might be. + +What is exciting about this new world is not what is known—which, so far, is almost nothing (see article). It is what is unknown and the possibilities it may contain. It is the chance that there is life beneath that turbulent red sun, and that humans might be able to recognise it from 40 trillion kilometres away. In the immense distances of space that is close enough to mean that, some day, perhaps, someone might send probes to visit it and in so doing glimpse a totally different form of life. In the thrill of such possibilities sits all that is most promising about the exploration of space. + +All our yesterdays + +Next year will mark the 60th anniversary of the first satellite, Sputnik. The intervening decades have brought wonders. Men have looked back on the beauty of the Earth from the bright-lit Moon—and returned safely home. The satellites of America’s Global Positioning System (GPS) have created a world in which no one need ever be lost again—changing the human experience of place rather as the wristwatch changed the experience of time. Robots have trundled across the plains of Mars and swooped through the rings of Saturn. The Hubble space telescope has revealed that wherever you look, if you look hard enough you will find galaxies scattered like grains of sand across the deep. + +Even so, space has of late become a bit dull. No man has ventured beyond low Earth orbit in more than four decades (no woman has done so ever). Astronauts and cosmonauts commute to an International Space Station that has little purpose beyond providing a destination for their capsules, whose design would have been familiar in the 1960s. All the solar system’s planets have been visited by probes. The hard graft of teasing out their secrets now offers less immediate spectacle. + +The use of space is integral to all sorts of things, including the workings of armies, air forces and navies, but its role in GPS—or, for that matter, Google Maps—barely merits a mention. Some companies make money from putting satellites into orbit, and not just the kind that do things for governments. But there is an undeniable bathos to the fact that the biggest business in a realm once synonymous with human transcendence is providing viewers on Earth with umpty-seven channels of satellite TV. + +Now that is changing. The technological progress that has put supercomputers into the pockets of half the world has made it possible do a lot more in orbit with much smaller spacecraft. A generation of entrepreneurs forged in Silicon Valley—and backed by some of its venture capitalists—are launching highly capable new devices ranging in size from shoe boxes to fridges and flying them in constellations of dozens or hundreds. Such machines are vastly more capable, kilo for kilo, than their predecessors and cheaper, to boot. They are making space interesting again. + +The first new businesses are based on something easily returned from space to Earth: data. Although companies such as DigitalGlobe, in Denver, have been selling satellite images for decades, most of their customers have been spooks and soldiers. Today’s entrepreneurs at companies like Planet, BlackSky and Spire are hoping to sell not just snapshots of places that brass hats want to peer at. They are offering comprehensive and constantly updated global data sets. Ever better machine-learning programs can mine these for information on crops, shipping, traffic, wildlife or the environment that will be used by everyone from eco-warriors to hedge funds. Add the potential of small, smart satellites in their hundreds or even thousands to connect the billions of people too poor and remote to have yet been reached by the phone revolution, or the trillions of devices in the “internet of things”, and this new space age will bring more than ever to the world below. + +And that is just the start. Elon Musk, the founder of both Tesla, a car company, and SpaceX, a rocket company, wants to found a colony on Mars and will soon be building spacecraft that can go there. Jeff Bezos, of Amazon, is following a steady and somewhat secretive path that may one day see the skies filled with automated factories and asteroid mines. Yuri Milner, an investor who got into Facebook early, is spending $100m on the most serious attempt yet to detect civilisations around other stars. He is also funding a programme aimed at studying planets like the one around Proxima Centauri with probes travelling at a fifth the speed of light—spacecraft so tiny as to make today’s shoe-box satellites look like battleships. + +New life, and new civilisations + +Even if they fail, these attempts to reinvigorate space will be instructive and thrilling. Just as on Earth, states will always have a role as, among other things, protectors of their national satellite infrastructure and as the enforcers of the laws they have put in place to govern the commercial exploitation of space. But in the years ahead, as the cost of hardware plummets and as systems on Earth learn to make better use of data, the growing number of star-struck entrepreneurs promise to relieve governments of the burden of space-age dreams with a torrent of innovation. + +There is no objective need for people to colonise space or for them to look at planets in other solar systems in order to answer questions about life’s place in the universe. People can survive without such journeys or knowledge. Some, though, see the possibilities, stand in awe, and start making plans. They may not succeed. The planets may turn out to be barren rocks. Infinite space, in the end, might be just a nutshell’s worth of emptiness. + +But, then again, it might not. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21705825-new-discoveries-intelligent-devices-and-irrepressible-dreamers-are-once-again-making-space/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Colombia and the FARC + +Ending a half-century of war + +After 220,000 deaths, voters should endorse the new Colombian peace accord + +Aug 27th 2016 | From the print edition + + + +A DECADE or so has passed since a ferocious war between the state and the FARC, an army of leftist narco-guerrillas, dominated life in Colombia. An offensive launched by government forces in 2002 pushed the FARC into remote mountain and jungle areas. A unilateral ceasefire declared by the FARC last year virtually ended hostilities. Nowadays the war’s terror no longer troubles city-dwelling Colombians. + +Nevertheless, the final peace accord announced on August 24th, after four years of talks in Havana, is historic. It ends a war that began 52 years ago and has killed perhaps 220,000 people and displaced 7m more. Under the agreement, the FARC is to turn itself into a normal political party. After its fighters finally remove their uniforms, vestigial insurgencies will continue in South America. A drug-running rump of the Shining Path fights feebly on in Peru and the ELN remains more than a nuisance in Colombia. But the FARC’s recognition of Colombia’s constitutional order represents the death of a strain of Stalinist violence that has plagued Latin America for decades. When Colombia’s citizens vote on the settlement on October 2nd it deserves their endorsement. + +The deal arrived at by Colombia’s president, Juan Manuel Santos, and the FARC’s leader, Rodrigo Londoño-Echeverry, known as “Timochenko”, provides for the disarmament of the FARC’s remaining 6,800 troops and 8,500 militia and their concentration in 23 “normalisation zones”. That process is to be overseen by the UN. The guerrillas will eradicate coca fields and clear landmines, which have killed 11,000 people since 1990. The government is to spend billions of dollars on development in areas that the FARC once controlled. + +It is not a perfect agreement. The most contentious part is the provisions for bringing to justice those who committed horrific crimes against non-combatant Colombians. The FARC, the Colombian army and right-wing paramilitary groups all murdered civilians. The FARC’s crimes extended to extortion, kidnapping and pressing children into military service. Perpetrators of such crimes belong in prison. Under the peace accord, though, they will serve no jail time if they confess. Instead, guerrillas and soldiers will appear before a special tribunal; if convicted their liberty will be “restricted” and they will perform community service for up to eight years. + +A somewhat just peace + +Many Colombians understandably find such leniency hard to stomach. Their outrage has been seized upon by Álvaro Uribe, Mr Santos’s predecessor. The unremitting offensive against the FARC during his time in office made peace possible (and led to some of the atrocities committed by pro-government forces). Now a senator, Mr Uribe denounces the peace agreement as a surrender to “Castro-chavismo” (which it is not) and is leading a campaign against it. Opinion polls suggest that the vote in the plebiscite will be close (see article). + +Mr Uribe’s fight is wrongheaded. Though flawed, the “transitional justice” that the peace accord will bring about will be more rigorous than that achieved in other countries, such as South Africa and El Salvador, which have ended bitter conflicts. The peacemakers asked the pope and the UN secretary-general to help pick the committee that will appoint judges to the tribunal. That will bolster its credibility. + +A vote to reject the agreement would be a tragedy. The FARC cannot return to its former deadly potency, but even as late as 2013 some 2,000 armed clashes took place. Rural regions that bore the brunt of the war are desperate for peace. Colombians have a chance to end one of the world’s longest-running conflicts. They should seize it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21705827-after-220000-deaths-voters-should-endorse-new-colombian-peace-accord-ending-half-century/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Monetary policy + +When 2% is not enough + +The rich world’s central banks need a new target + +Aug 27th 2016 | From the print edition + + + +LIKE other areas of public policy, central banking is prone to fads and fashions. From limits on money-supply growth to pegging exchange rates, orthodoxies wax and wane. Yet the practice of inflation-targeting has proved remarkably long-lived. For almost three decades, central bankers have agreed that their best route to stabilising an economy is to aim for a specific target for inflation, usually 2% in advanced economies and a little higher in emerging ones. + +This orthodoxy is still intact in many emerging economies where inflation is yet to be tamed (see article). But in the rich world the consensus is beginning to fracture. As central bankers gather this weekend for their annual shindig in Jackson Hole, Wyoming, John Williams, head of the San Francisco Fed, has caused a stir by suggesting it is time for a rethink on what central banks should aim for. He is right. + +The reason is that the rich world’s central banks are working in a different context from the 1990s, when today’s inflation-targeting doctrine was formed. Then, it seemed that inflation would spend as much time above target as below it. And the “natural real rate of interest”—the inflation-adjusted price that balances the supply of, and demand for, savings in a full-strength economy—was as high as 3.5%. But inflation has been below the central bankers’ target for years. And the underlying real natural rate of interest has fallen to 1% or lower, probably because population ageing has boosted saving even as lower expectations of growth have cut investment (see article). + +This matters because low inflation and a low natural interest rate limit the effectiveness of central bankers’ traditional policy lever: setting short-term interest rates. Since nominal interest rates are the sum of real rates and inflation, the rich-world central banks cannot, under today’s regime, expect their policy rates to rise much higher than 3% (the 2% inflation target plus a 1% real rate). That leaves very little room to cut when the next recession strikes. In the three most recent recessions the Fed slashed rates by 675 basis points (hundredths of a percentage point), 550 basis points, and 512 basis points. + +Fear of future impotence is the main cause of today’s misgivings over a low inflation target. But there are other drawbacks with the current regime. First, a target for annual inflation gives the central bank no leeway to make up for periods during which inflation has been too high or too low. If central bankers could credibly promise that they would allow a burst of catch-up inflation, they might be more successful at boosting too-low inflation today. Second, when supply shocks such as a sudden rise or fall in the oil price send inflation and economic growth in opposing directions, central bankers face a tricky choice of which to respond to. + +How might these problems be fixed? One possibility is simply to raise the inflation target to, say, 4%. Credibly enacted, that ought to alleviate the risk of impotence. If investors and consumers believe inflation will reach 4%, nominal interest rates should eventually rise to 5% or so even if real rates stay low. But rich-world central banks have undershot their targets for so long they may struggle to persuade the public to expect higher inflation. And a higher target would still leave central banks with a dilemma when economic growth and inflation diverge. Neither would it make up for big misses. + +Who ate all the pi? + +A more radical option is to move away from targeting inflation altogether. Many economists (and this newspaper) see advantages in targeting the level of nominal GDP, the total amount of spending in the economy before adjusting for inflation. A nominal-GDP target would allow for temporary variations in inflation. Downturns would be tempered by an expectation of protracted stimulus later on to make up lost ground. In better times, a rise in real GDP would provide the lion’s share of the required nominal-GDP growth and inflation could drift lower. + +Changing targets is not something policymakers should do lightly; their credibility depends on stability. And, like every regime, a nominal-GDP target has its drawbacks, not least that few non-economists have ever heard of the concept. It will not be easy to build a consensus for it. But it is right to start doing so. A 2% inflation target is ill-suited to the rich world today. Doubling it would be an improvement, but targeting nominal GDP would be better still. Time for a new era. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21705826-rich-worlds-central-banks-need-new-target-when-2-not-enough/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Turkey and the West + +Don’t lose the plot + +How to manage relations with NATO’s most awkward member + +Aug 27th 2016 | From the print edition + + + +IT IS hard to dissuade people from believing conspiracy theories, especially when there really has been a conspiracy. The attempted coup in Turkey on July 15th involved thousands of members of the armed forces. Encouraged by their government, many Turks seem to believe that the West—in particular America—had a hand in it. Relations have soured and Turkey has taken to demanding that Western countries demonstrate they are on its side. Turkey is a NATO ally and, notwithstanding a spate of recent terrorist attacks, a bastion of relative stability in a region racked by war. Western countries want to keep it that way. This week America’s vice-president, Joe Biden, visited Ankara as a gesture of goodwill. Beyond his offer of soothing words (see article), what more should the West do? + +Tone it down + +Turkey’s attempted coup shocked an already tense society. At least 240 people were killed, and the country narrowly averted a disastrous military takeover. The plot was led in part by followers of the Gulen movement, a secretive Muslim sect that runs a global network of schools, charities and businesses and has infiltrated the Turkish state. It is only natural that Turks should be determined to identify and punish the conspirators. + +Yet rather than focus on those directly involved, President Recep Tayyip Erdogan has launched a vast crackdown on anyone with Gulenist ties, as well as on other opponents of his governing Justice and Development (AK) party. Over 80,000 people, including judges, businesspeople, journalists and academics, have been purged. Mr Erdogan speaks darkly of a “higher mind” directing both the coup and the other threats Turkey faces, including an insurgency by the Kurdistan Workers’ Party (PKK) and bombings carried out by Islamic State (IS). The purges have enormous support, even among secular Turks who oppose Mr Erdogan’s Islamist policies. + +Mindful of Mr Erdogan’s authoritarian bent, Western leaders tempered condemnation of the mutiny with warnings against the ensuing crackdown even as Turks were celebrating the survival of civilian rule and voicing fear of the Gulenists. Stung by the criticism, Turkey’s pro-government media have claimed, preposterously, that America must have been behind the coup. Polls suggest that most Turks believe them. + +Such paranoia is dangerous, and not only because it could accelerate Turkey’s drift into autocracy. Mr Erdogan has made overtures to Vladimir Putin and hinted at a realignment towards Russia and Iran. He is demanding that America extradite Fethullah Gulen, the inspiration behind the movement, who has been in self-imposed exile in Pennsylvania since 1999 and whom he accuses of masterminding the plot against him. Turkey’s justice minister, Bekir Bozdag, says extradition is a political test: is America for Turkey or against it? + +Turkey likewise wants European governments to help track down Gulenists among their Turkish populations. Turkey also wants progress on granting its citizens visa-free travel to the European Union’s Schengen zone, part of the deal the two sides struck in March to control the flow of Syrian refugees. But that requires Turkey to reform its laws on terrorism, tricky amid a security crackdown. Meanwhile, clashes have broken out in Europe between backers of Mr Gulen and of Mr Erdogan. Anti-Muslim populists have exploited the tensions. Austria’s chancellor has demanded that Turkey’s accession talks to the EU be halted; Turkey has recalled its ambassador to Vienna. + +It is a mess, but two thoughts should guide the West. One is that, just as it wants Turkey to observe the law, so it must follow due process itself. Extradition is a matter for the judiciary, not for politicians or intelligence agencies. If Turkey can provide solid evidence against Mr Gulen that was not collected under duress, he should be extradited; if not, then he should remain in Pennsylvania. Similarly, Europe should honour its promises. If Turkey brings its terrorism laws into line with EU standards and meets the other conditions in the migrant deal, its people should be granted visa-free travel. Until it does, however, the EU should wait. + +Second, the West should cleave to its principles, urging Mr Erdogan to seek pluralism and strong institutions rather than an all-powerful presidency. Instead of attempting to bolster his position with ethnic Turks by stirring up antipathy towards the Kurds, Mr Erdogan should return to the search for peace. + +Turkey allied to Iran and Russia, rather than NATO, would be weaker. Even as Mr Biden was visiting Ankara, Turkish forces were entering Syria under NATO air cover to attack the jihadists of IS (see article). Russia could not provide the same support. The truth is, Turkey needs the West and the West needs Turkey, no matter how infuriating its leader. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21705828-how-manage-relations-natos-most-awkward-member-dont-lose-plot/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The desire for children + +Wanted + +Unwanted pregnancies are bad. But so is the unfulfilled desire for children—and that problem is growing + +Aug 27th 2016 | From the print edition + + + +FAMILY planning has been a huge success. The global fertility rate has crashed, from 5.1 babies per woman in 1964 to 2.5 today. The average Bangladeshi woman can now expect to have about the same number of children as the average Frenchwoman. Only in sub-Saharan Africa are big families still in vogue, and even there they are shrinking. This is welcome. It suggests that women have gained more control over their bodies and that parents no longer reproduce frantically for fear that some of their children will die. Cutting the birth rate also leaves countries with fewer dependants per worker, at least for a time, making them better off. + +But this triumph conceals a growing problem. For more and more couples, the greatest source of anguish is that they have fewer children than they want, or none at all. With Globescan, a consultancy, The Economist polled 19 countries, asking people how many children they would like and how many they expect to have. In every rich country we surveyed, couples expect to be less fertile than they would like, and many in developing countries suffer the same sorrow (see article). On average, Greeks think the ideal family contains 2.6 children but believe they will end up with 1.7. + +Medical infertility is part of the problem, not just in rich countries, where couples put off having children until it is rather late, but also in poor countries, where health care is worse. By one global estimate, at least 48m couples have been trying for a child for the past five years but have not succeeded, up from 42m in 1990. But the main reason for the shortfall, according to our poll, is money. From Brooklyn to Beijing, the cost of housing and education is so high that many young people say they cannot afford as many children as they want. + +Malthusians will rejoice. The population is growing fast enough already, they will argue. Besides, can’t infertile couples just adopt children? In fact, population growth today largely reflects longer lives and will eventually go into reverse. It is not clear that there are too many people; and it is callous to ask couples who might want children to forgo that joy simply because some of their neighbours would prefer a less populous planet. And adoption, though admirable, is neither the sole responsibility of the childless nor a perfect substitute for procreation. + +The pain of having no or fewer children than you desire is often extreme. It can cause depression and in poor countries can be a social catastrophe. Couples impoverish themselves pursuing ineffective treatments; women who are thought to be barren are divorced, ostracised or worse. Last month a childless Kenyan tailor was charged with attempted murder, having allegedly attacked his wife with a machete. + +More frugal innovation, please + +In wealthy countries, where maternity wards are quiet partly because the young are so economically insecure, governments can help by doing things they should be doing anyway: liberalising labour markets that shut the young out of jobs, relaxing planning rules to make housing cheaper and promoting child-friendly policies in the workplace. Across the world, education is important, both to warn women about how fertility declines with age and, especially in Africa, about preventable infections such as chlamydia and gonorrhoea. + +Most important, however, is medical innovation. In vitro fertilisation (IVF) has become better over the years but is still horribly expensive. Some couples remortgage their homes in the hope of conceiving. Research into more frugal technology is staggeringly rare, given the demand for it. Would lower, cheaper doses of IVF drugs work as well for some people? No one knows. Will a shoe-box-sized IVF laboratory developed in America work reliably? Trials are only now under way. + +More money for research would help, as it generally does. But perhaps not as much as more attention. Governments and aid agencies have turned family planning into a wholly one-sided campaign, dedicated to minimising teenage pregnancies and unwanted births; it has come to mean family restriction. Instead, family planning ought to mean helping people to have as many, or as few, children as they want. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21705829-unwanted-pregnancies-are-bad-so-unfulfilled-desire-childrenand-problem/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On Taiwan, obesity, Labour, China, Alaska, Ultimate Frisbee, economics, jazz: Letters to the Editor + + + + + +Articles Sections Next + +On Taiwan, obesity, Labour, China, Alaska, Ultimate Frisbee, economics, jazz + +Letters to the Editor + +Aug 27th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Taiwan’s claim to Taiping + +The latest ruling on Taiping Island (commonly known as Itu Aba) in the South China Sea by the Permanent Court of Arbitration in The Hague does not infringe Taiwan’s territorial claims, as you state (“A series of unfortunate events”, July 30th). The ruling downgrades the legal status of Taiping from an island to merely a rock without exclusive economic zones or a continental shelf. Taiwan is not a party to the UN Convention on the Law of the Sea but has administered Taiping since 1946. Yet Taiwan was not invited to join the arbitration nor consulted during the process. This is a violation of the due process of law. Taiping’s ample fresh water, agricultural produce and around 200 residents clearly meet the requirements of an island under the UN convention. + +Moreover, Taiwan’s claim on Taiping is far from “bizarre”. It dates back to the 18th century and the Qing dynasty. Taiping lies 1,600km from Taiwan, about an eighth of the distance between the British mainland and the Falklands, for which the Royal Navy fought rightly, not “bizarrely”, against Argentina in 1982. + +When I was president I felt obliged to let the PCA and the whole world know that Taiping is an island, not a rock. I landed there myself and invited foreign media to see it for themselves earlier this year. There is nothing wrong with a national leader stepping on his or her country’s own territory. Both my predecessor and I visited Taiping, and so should my successor in the future. + +MA YING-JEOU + +Former president of the Republic of China (Taiwan) + +Taipei + + + +Something to chew on + +“Counting calories” (August 13th) takes it for granted that obesity costs the National Health Service “billions of pounds each year”. According to a widely cited study from 2008 by Pieter van Baal, a Dutch economist, it is the long-living healthy (non-smoking, non-obese) who ultimately generate the highest lifetime medical costs. Because obese people die younger on average, they require fewer years of medical care and are less likely to fall victim to the expensive morbidities associated with old age. Obesity prevention is important to improving public health and should not be seen purely as a way of saving money. + +TAMAY BESIROGLU + +London + +Contrary to what you say, the zero-tolerance attitude towards smoking does not offer a lesson on obesity (“Bitter fruits”, August 13th). Hostility to smoking is rarely directed towards smokers, but to their habit. The obese are maligned personally for being fat. A survey for University College London found that obese people who reported discrimination or abuse were more likely to continue gaining weight than those who were not. Ridiculing the obese just drives them out of the gym and into their comfort zone. + +BRENDAN MCGRATH + +Dublin + + + +Labour's abysm + +* Bagehot’s comparison between Neil Kinnock and Ed Miliband (July 30th) was a little glib: in fact the two leaders could not have been more different. Mr Kinnock showed immense political courage in making the Labour party electable again after 1983 and, as Tony Blair has acknowledged, made the latter’s premiership ultimately possible. By contrast, Mr Miliband’s inability to make hard choices or develop a coherent narrative for Labour during his tenure took the party backwards from its second-worst ever defeat in 2010 and led, almost unthinkably, to near wipeout in Scotland. By extending the leadership franchise to any registered supporter prepared to pay £3, he sowed the seeds for the current chaos. Mr Kinnock rescued Labour from one abyss; Mr Miliband took it to the edge of another. + + + +DAVID HORNSBY + +Herne Bay, Kent + + + +Tech firms in China + +It is true that some technology platforms in China have features that are absent from Western ones (“China’s tech trailblazers”, August 6th). However, this doesn’t mean that these companies are as sophisticated. Baidu is the king of search in China—and nowhere else. Google is more successful in the European Union, with a 90% share in search there, than in America. + +Furthermore, many social- networking sites are actually country-specific, and it is little surprise that Chinese ones are more popular in China. The reason, as you noted, is that local companies often understand the market better and can tailor their offerings before foreigners come in. The problem is that these local adaptations may be of little use elsewhere. WeChat’s payment system came about because of a scarcity of payments infrastructure in China. Alibaba was created because buyers had little recourse if sellers sent them faulty goods. These are not problems in the West. It is not that Western apps are more advanced than Chinese ones, or vice versa. They simply address different needs. + +Against the backdrop of Western tech companies’ woes in China, Apple’s success there looks even more phenomenal, but it could be because iPhones are considered more of a fashion item than a piece of technology. + +NICOLAI POGREBNYAKOV + +Associate professor + +Copenhagen Business School + + + +No place for softies + +In case the new survivalists have forgotten, it is Alaska that proudly calls itself, “the Last Frontier”. The reason “redoubters” live in the Lower 48 is that they don’t have the guts to try to survive up here (“The last big frontier”, August 6th). + +JON HOREN + +Fairbanks, Alaska + +Stamina a requirement + + + +Ultimate Frisbee is a real thing, not an oddity requiring quotes around it as if it were a strange metaphor of a sport (Schumpeter, August 13th). It is recognised by the International Olympic Committee. The World Flying Disc Federation manages global tournaments and enforces the World Anti-Doping Agency’s regime. Some in the sport cautiously avoid the trademarked Frisbee name and are pushing for the sport to be called Ultimate. Indeed, the disc officially used is not that of Frisbee’s trademark owner, Wham-O, but is typically a Discraft manufactured disc. It may be time to update your style guide to include this magnificent sport. It is definitely time to surrender the quotes. It truly is Ultimate. + +ANDREW WORK + +Editor-in-chief + +Harbour Times + +Hong Kong + + + +The human factor + +Hyman Minsky recognised that economics cannot be summarised in terms of a complex physical system largely explained in terms of partial differential equations and he abandoned mathematics (“Minsky’s moment”, July 30th). Economics is a complex adaptive system in which the interacting agents are themselves modified, making analysis more intractable than its practitioners admit. A new philosophical and mathematical approach is needed that supplants the modelling that is currently used. Unfortunately human psychology will be one of the agents in the mix. No wonder predictions are unreliable. + +MICHAEL SHERRATT + +Tring, Hertfordshire + + + +Jazz from hell + +As an aficionado of most forms of music over 60 years, I still surprise myself in my struggle to appreciate jazz. Amused by Frank Zappa’s quote at the beginning of your piece (“Playing outside the box”, July 30th), I listened to several tracks by the band The Comet is Coming. The music was interesting and reminiscent of early tracks by Pink Floyd, including “Interstellar Overdrive”, which Pink Floyd played and Zappa jammed on at the Festival d’Amougies in 1969. So does that mean I have always enjoyed jazz but did not know it? + +PETER BRADSHAW + +Anchorage, Alaska + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21705663-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Demography and desire: The empty crib + +In vitro fertilisation: An arm and a leg for a fertilised egg + + + + + +Articles Sections Next + +Demography and desire + +The empty crib + +Our poll of 19 countries reveals a neglected global scourge: the number of would-be parents who have fewer children than they want—or none at all + +Aug 27th 2016 | ATHENS, LAGOS AND MUMBAI | From the print edition + + + +ALTHOUGH he recently lost his job, T. R. Sesadri is a contented middle-aged man. He rides a Royal Enfield motorbike and plays badminton every day. Two years ago he acquired a small flat on the outskirts of Mumbai, which he plans to rent out. Most satisfying of all, Mr Sesadri and his wife have two children, a boy and a girl—“the perfect combination”, he says. + +An only child does not learn to compromise, argues Mr Sesadri. A lone boy never has to wait for his sibling to leave the bathroom and never has to concede over which television programme to watch. But three children are too many in modern India. “If someone has a third child, people will think, what the hell is he doing?” he says. Some will scornfully ask: “Did you have two daughters first?” No—two is just right. + +Urban India played a starring role in “The Population Bomb”, Paul Ehrlich’s bestseller of 1968. “The streets seemed alive with people,” Mr Ehrlich wrote, of a sweltering taxi ride through Delhi that convinced him the world was heading for a Malthusian catastrophe. “People, people, people, people.” Yet India’s birth rate has contracted astonishingly quickly, and with it Indians’ notions of the ideal family. On average, city-dwelling Indians now believe that 1.9 children is perfect (see chart 1). + + + +Globescan, a consultancy, has polled 19 countries on behalf of The Economist. We began by asking people to specify their ideal family size. We asked how many children they had and how many more they expected to have. We then asked people to explain why they had (or were on track to have) fewer or more children than their ideal, and how their success or failure to hit the mark had affected them. These are universal human questions. But people answer them in startlingly different ways. + +More like pandas than rabbits + +Our poll shows that the ideal family in Asia’s three largest countries (China, India and Indonesia) is now smaller than the ideal family in Britain or America. We also find that access to birth control is seldom much of an issue. Few young people will have more children than they want because reliable contraception was not available to them. The poll also signals a global shift. Judging by the collective desires of parents and would-be parents, more suffering is caused by having too few babies than too many. + +Of the 19 countries we polled, eight are overshooting—that is, the ideal family size is smaller than the number of children people expect to have. Nigerians have gone furthest awry: on average, they think the ideal family contains 5.4 children but are on course to have 7.7. Eleven countries are undershooting. A few barely miss the target, but others fall well short. Russians regard 2.3 children as ideal; Spaniards favour 2.4; Greeks think 2.6 best. In all three, people reckon that they will end up with 1.7 children on average. Because the replacement fertility rate is about 2.1, the difference between the ideal and expected number of children in these countries is the difference between healthy natural population growth and natural decline. + +Greeks are painfully aware of the gap between desire and reality. Dafni Vitali, a curator in Athens with a young son, says she feels guilty about the prospect of raising a child without a sibling but might end up doing so. Greece’s long economic crisis has shaken her confidence in the future. Perhaps life will be just as difficult in 15 or 20 years’ time, she says; perhaps it will even be worse. A man who gives his name as Nikos, who once wanted four children but has only one, says the ailing economy has greatly raised the cost of raising a large family. Although he was educated in a state school, he now regards private education as essential. The state schools have deteriorated too much. + +Having the “wrong” number of children has psychological consequences, though not always bad ones. In America 39% of people who reckon they will exceed their ideal number of children report that they are more satisfied with life as a result, whereas just 8% feel sorry for themselves (see chart 2). Indians and Pakistanis are even more cheerful about overshooting their ideal family size, as many do. (Admittedly, Indians and Pakistanis who have fewer than the ideal number of children are also pleased, suggesting they are just rather sanguine.) + + + +In all but one of the Western countries we polled, though, undershooting is more often felt to be bad than good. In America 15% of those who have fewer than the ideal number of children think that their life is better as a result, whereas 21% say it is worse. Having no children at all is especially painful. A 34-year-old American woman, Angela Bergmann, who has been trying to get pregnant for a decade, moved to a bad neighbourhood to scrape together the money to pay for treatment. An ectopic pregnancy left her severely depressed. “It’s hugely draining on you as a couple,” says Emily Ansell, a 30-year-old university worker in Sheffield who has twice miscarried. Many couples suffer in silence: infertility still carries a stigma. + +More than anything else, people blame financial pressures and the cost of housing for having fewer children than they think desirable. Greece is not the only country where economic turmoil has put people off having children. The fertility rate in America, Australia and most of Europe has dropped since 2009. In many countries the financial crisis has been especially hard on young people, delaying the independence that many think necessary for starting a family. José Luis Marin of porCausa, a journalism and research outfit in Madrid, points out that the average Spanish man now leaves home and sets up his own household at the age of 30. + +Oddly, people who live in buoyant countries like China and Mexico are even more likely to cite financial pressure as the reason for their small families. In China 80% of our respondents say that two children is ideal—an admirably cussed consensus, when one considers the fierceness with which the state enforced a one-child policy until last year. Many will not manage two, says Feng Wang, a demographer at the University of California. China’s fertility rate has fallen to 1.6, which Mr Feng ascribes mostly to urbanisation, rising university attendance and the opportunity cost of having babies in a country that is quickly becoming richer. China’s economy has been like a rocket: it can be unwise to let go even for a year. + +People who have more children than they think ideal usually say that their partners wanted more, that they reckoned they could afford it or simply that they love babies. Only 13% explain that they did not use birth control or that it was unavailable. And this seems to be a shrinking problem. Whereas 21% of people aged 55 or over blame their larger-than-ideal families on a lack of reliable contraception, only 6% of people under 35 do so. + +In India roughly half of married women use birth control, and in much of Africa the rate is far lower. But many people who do not use contraceptives see no need for them. In some countries, such as Nepal and the Philippines, many husbands and wives live apart because one partner is working abroad. In others women of childbearing age are often trying to get pregnant, are actually pregnant or recently gave birth. The Guttmacher Institute in New York estimates that, although 85% of married women in Nigeria are not using birth control, the proportion who have an “unmet need” for it is just 16%. + +“In our place they believe in many children,” explains Esther Okafur, a mother of nine who lives in Ajah, a slummy suburb of Lagos. In Nigeria’s rural districts, where children start working young, a large family means a more productive farm—“like you have a tractor on it”, says a driver from Mrs Okafur’s neighbourhood. As well as having a culture of large families, Nigeria is patriarchal and pious. Men say that babies are God’s will; women report that they have little say in the matter, at any rate. + +But Nigerians are no more immune to the family-shrinking pressures of urbanisation and economic change than Europeans or Asians have been. Mrs Okafur followed her husband to Lagos two months ago to look for work. In the city her large brood is a burden. She says she would like to send her children to school but cannot afford it. Other urbanites increasingly desire smaller families, which helps explain why the ideal family size in Nigeria is two children smaller than people’s expectations. Especially in the mostly Christian south, wealthy Nigerians are marrying later, says Olayinka Akanle, a sociologist at the University of Ibadan. Bank advertisements targeting monied folk paint a picture of two-child domestic bliss. + +Reliable contraception is important, and will become even more so in countries like Nigeria where couples increasingly seek smaller families. But the assumption that family planning should be all about birth control is a 1960s relic. In a growing number of countries, the problem of getting hold of contraception is giving way to the problem of getting pregnant. As Mr Feng puts it, unmet need is being replaced by unmet demand. + +As our poll shows, people in wealthy countries consistently want bigger families than they get. Couples start having children late and find it increasingly difficult. A 30-year-old woman has a roughly 20% chance of getting pregnant each month, falling to about 5% by the age of 40. The resulting baby shortfall is painful for couples and alarming for governments, which worry about the long-term solvency of old-age-pension systems. + + + +In poorer countries infertility is more often caused by infections—some of them sexually transmitted, others picked up following childbirth. It is often a social emergency, especially for wives—“You can be sent out of the house and buried in a different graveyard,” says Joe Leigh Simpson, head of the International Federation of Fertility Societies (IFFS). Gradually, though, poor-world infertility is changing from a kind of random crisis visited upon some people to a broad difficulty affecting many. + +That change can be seen in the Mumbai suburb of Thane, in the Cocoon fertility clinic run by Anagha Karkhanis. Some of the patients Dr Karkhanis sees would be unfamiliar to European or American fertility specialists. Couples who have been married little more than a year visit to ask about IVF (almost invariably, they assume the problem lies with the wife rather than the husband) with a mother-in-law or another close relative in tow. Some of the women are as young as 24. Couples frequently ask whether she can help them to have a boy. Sex selection is illegal in India but common, and is usually done by aborting female fetuses. + +But Dr Karkhanis also sees the kind of people who fill waiting rooms in Western fertility clinics—couples who got going on family life rather late, having devoted years to their careers, and are now finding it hard to conceive. Some are handicapped by diseases of affluence: they drink too much alcohol, smoke, or are obese. She tries to dissuade women over the age of 50 from IVF treatment, although other clinics do not. The IFFS estimates that India now has 1,000 fertility clinics—more than any other country. Good clinics are appearing in African cities too, according to Mr Simpson. + +The people who fretted about an exploding population half a century ago made two mistakes. They failed to imagine that agriculture could become far more productive. They also failed to predict that birth rates would fall so sharply. That is to their discredit, but it is understandable. Almost nobody could have believed that a country like India would end up suffering a shortage of children. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21705678-our-poll-19-countries-reveals-neglected-global-scourge-number-would-be-parents-who/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +In vitro fertilisation + +An arm and a leg for a fertilised egg + +Doctors have spent decades trying to make IVF more effective. Now they are trying to make it cheaper + +Aug 27th 2016 | From the print edition + + + +LOUISE BROWN was conceived in a Petri dish placed under a dome-shaped glass jar that looks a bit like an old-fashioned cake dish. She was the first baby created by in vitro fertilisation (IVF). Today’s IVF babies are made in fancy laboratories where computers monitor the temperature, sterility and a finely tuned mix of medical-grade gases. Sophisticated techniques, such as testing embryos for genetic diseases, promise hopeful parents a greater chance of a healthy baby. + +But the price tag is hefty, ranging from $2,000-3,000 per cycle in India to $12,000-15,000 in America. In England the National Institute for Health and Care Excellence, a government body, says the state should offer infertile couples three cycles of IVF. But tight budgets mean that over half of IVF patients pay out of pocket. In America, where insurers rarely pay for IVF, only a quarter of couples who need it to conceive actually get it, by one estimate. Globally, the figure is less than a tenth. + +Can IVF be made cheaper? Experts see two ways to try. The first is to cut the use of drugs, tests or procedures that for many couples are clearly unnecessary. The second is to work out how the cost and effectiveness of simpler methods compare with those of the standard package. For a health problem that affects one in six to seven couples, solid studies on this trade-off are shockingly rare. + +A clue about the scale of wasteful over-prescribing comes from new data on the use of intra-cytoplasmic sperm injection (ICSI), a procedure to insert sperm into the egg in cases of male infertility. In 2010 this was used in nearly 70% of IVF cycles globally, though faulty sperm affects only 40% of infertile couples. Other bells and whistles include various tests to find out what causes infertility, such as sperm analysis using expensive machines (inspection under a simple microscope is often enough). Such extras are overused partly because many doctors and patients mistakenly believe that they make a big difference. + +Some cost-cutting techniques could make IVF less effective. However, in some cases the trade-off may be worth it, says David Adamson of the International Committee Monitoring Assisted Reproductive Technologies. Lower doses of pricey IVF drugs, for example, reduce the chance of conceiving a baby on each try. But the time it takes to bring home a baby is, on average, similar and the total cost lower under such a regimen, some studies suggest (you simply try the cheaper intervention more often). It also results in fewer complications from the IVF drugs and fewer multiple births. This “mild IVF” approach is increasingly popular in some countries, including Japan, France and the Netherlands. + +Two IVF technologies developed in recent years do without the expensive laboratory where embryos are grown before they are placed in the uterus. INVOcell, which was licensed in America last year, is a plastic chamber the size of a champagne cork. The gametes (eggs and sperm) are placed inside and fertilisation occurs when the device is placed in the vagina for three to five days. Some clinics offer IVF with the device at half the price of conventional IVF. One small study showed that pregnancy rates are similar. + +Another breakthrough is a shoe-box-sized IVF laboratory. The gametes are placed in a cheap glass tube connected to another tube, in which the carbon dioxide needed for fertilisation is produced using baking soda. So far 51 babies have been born this way in trials in Belgium, with success rates similar to those for conventional IVF. More trials are under way in England, Portugal and Ghana. In Europe this method can cut IVF costs by three-quarters, says Willem Ombelet of the Genk Institute for Fertility Technology in Belgium. + +However, many couples desperate for a child will continue to remortgage their houses to pay for conventional IVF until there is enough evidence that these new offerings will give them the same chance of a baby for less money. Even if results from larger trials show that is the case, dispelling the notion that low cost means low quality will be a challenge, says Mr Adamson. + +In poor countries only an approach that combines all of these cheaper methods can put IVF within reach of most infertile couples—and government health budgets. Testing low-cost IVF packages in such places is tough, however. One challenge is to persuade health ministries of the need. Infertility is hardly ever on their radar screen. The World Health Organisation had no guidelines on the matter until last year. Western IVF charities struggle to set up low-cost laboratories. A common problem is that the only local expert recruited for such efforts jumps ship to establish a private practice offering conventional IVF to the rich. Some groups are turning to training nurses instead. + +Politicians speak with reverence of motherhood (not to mention apple pie), yet infertility research struggles to attract funds. One reason, ironically, is that IVF has grown so much more effective since Louise Brown was born. This has led to complacency, says Geeta Nargund, a campaigner for cheaper IVF. + +The recent shift of focus from chasing success at any price to curbing costs is as welcome as it is overdue. If momentum is lost, however, most of the world’s 48m couples longing for a child have only hope on their side. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21705676-doctors-have-spent-decades-trying-make-ivf-more-effective-now-they-are-trying-make-it/print + + + + + +Previous Articles Sections Next + + + + + +United States + + + + +Immigration economics: Wage war + +Alaskan agriculture: Growing farmers + +An American mystery: Down in the valley, up on the ridge + +Lexington: Clinton Republicans + + + + + +Articles Sections Next + +Immigration economics + +Wage war + +Who are the main economic losers from low-skilled immigration? + +Aug 27th 2016 | From the print edition + + + +ILLEGAL immigration from Mexico is not quite a century old. A law of 1917 was the first to regulate the southern border. Stricter controls gradually followed all through the 20th century, often during the low points of a recurring cycle of sentiment towards immigrants. Economic booms have lured workers across the Rio Grande, encouraged by American firms. Downturns have led to demonisation of “wetbacks”. The 1930s and 1950s both saw indiscriminate mass-deportations; in 1976 President Gerald Ford wondered how best to “get rid of those six to eight million aliens who are interfering with our economic prosperity”. + +The latest bout of Trumpian immigrant-bashing fits the mould in one respect: it comes on the heels of an economic downturn. But it is also strange, because the undocumented population levelled off after 2007. In 2015 there were just 188,000 apprehensions of Mexicans at the border, down from 1.6m in 2000 (see chart). This is partly because the recession reduced the magnetism of America’s labour market. But it also reflects a much more secure border—the number of border agents quintupled between 1992 and 2010—and changing demography in Mexico, where the birth rate has been falling since the early 1970s. + + + +Nonetheless, undocumented immigrants still constitute 5% of America’s labour force. Distinguishing their impact from that of other immigrants is hard, because they are tricky to identify. Instead, researchers typically just rely on nationality. There is almost no way for low-skilled Mexicans who lack American relatives to migrate north legally. As a result, Mexicans make up about half of all illegal immigrants, but only a fifth of all legal ones. + +Mexicans tend to be less educated than other immigrants. In 2014 nearly 60% had less than a high-school education, compared with less than 20% of immigrants from other countries, according to the Pew Research Centre, a think-tank. Undocumented migrants are more likely than legal ones to work in unskilled occupations like services and construction. + +There is a vigorous—and sometimes ill-tempered—debate among academics about the impact of low-skilled migration, both legal and illegal, on wages. Most recently this has centred on a dispute between two economists, David Card at the University of California, Berkeley, and George Borjas, at Harvard University, over the effect of an unexpected surge in Cuban migrants to Miami in 1980 (the so-called “Mariel boatlift”). In 1990 Mr Card found this influx had no effect on the wages of low-skilled workers in Miami; Mr Borjas has now revisited the analysis, and claims that wages of high-school dropouts in fact fell substantially. + +This dispute, however, is only part of a much broader debate. Most other research finds that immigrant flows harm at least some workers, as economic theory usually predicts they should when immigration changes the balance of skills in an economy. The debate is over precisely who suffers, and how much. + +The findings depend on two factors. The first is how to define unskilled workers. Mr Card and others like to include both high-school graduates and dropouts. In 2014, there were 64m such workers aged between 25 and 64 in America. Mr Borjas prefers to treat high-school dropouts separately in his research, so that the lowest-skilled migrants compete with fewer existing workers: 20m, at last count. + + + +The second factor is whether, among those with similar education, migrants and native workers are substitutes or complements for each other. In 2011 a study by Gianmarco Ottaviano and Giovanni Peri, two economists, found that immigrants seem to compete mostly with other immigrants, even when controlling for age and education. One possible explanation is that unskilled natives respond to an increase in migration by specialising in work that makes better use of their command of English. Messrs Ottaviano and Peri concluded that between 1990 and 2006 immigration had a small positive effect on the wages of unskilled American-born workers, but reduced the wages of previous generations of migrants by 6.7%. + +Mr Card says the “worst-case scenario” is that immigration has cut the wages of high-school dropouts by about 5% over 20 years, which, compared with the effect of technology and other trends, is not much. Mr Borjas says larger effects are possible. But everyone agrees that the more workers and new immigrants can substitute for each other, the more likely it is that immigration will change relative wages. + +If the workers most comparable to illegal Mexican immigrants are legal ones, they will be most likely to have seen their wages depressed by illegal migration. Any such effect would probably have been compounded by the fact that firms who hire undocumented workers off-the-books need not pay them the minimum wage or adhere to other regulations. One survey of low-wage workers in Chicago, Los Angeles and New York in 2008 found that 37% of undocumented workers had been paid less than the minimum wage, compared with 21% of legal migrant workers. + +Illegal migrants also may find it hard to move jobs, especially in states that require employers to check their papers. Their immobility could reduce their bargaining power. It certainly seems to stunt their wage growth. In 2009 Pew found that among those who had been in the country for less than ten years, legal migrants earned 18% more than illegal ones; among those with more than a decade under their belts, the gap was fully 42%. It is possible, though, that the wages of both these groups had still been dragged down relative to those of native workers. + +The flipside of low wages for illegal immigrants, though, is greater economic benefits for those who are not competing with them for work. A rare study of the effect of illegal immigrants specifically found that in Georgia, a one-percentage-point increase in undocumented workers in firms boosted wages by about 0.1%. One explanation is that such firms benefit from a richer mix of skills within their workforce. Another explanation is that they are sharing the spoils of the savings that stem from hiring workers on the black market. + +Were a President Trump to deport all illegal immigrants, the economy would suffer greatly. Just ask Arizona, where a crackdown on illegal immigrants in 2007 shrank the economy by 2%, according to a private analysis by Moody’s, a ratings agency, for the Wall Street Journal. The incomes of most workers would fall. Yet strangely enough, those best placed to benefit from a mass deportation would be those who had crossed the border legally. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21705699-who-are-main-economic-losers-low-skilled-immigration-wage-war/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Alaskan agriculture + +Growing farmers + +Tunnel vision in the chilliest state + +Aug 27th 2016 | HOMER, ALASKA | From the print edition + +The tropics, when under plastic + +ALASKA’S state fair, which runs until September 5th, began as a celebration among residents of the Matanuska Colony, a New Deal scheme under which 200 down-and-out midwestern farm families were moved to Alaska to see whether agriculture could gain a foothold in the coldest state. The state fair lives on, but little more than a decade after the start of the colony most of the participants had abandoned their frigid farms. The project was widely seen as a flop. + +In this state, glaciers cover 300 times more acres than farms. Only 5% of the food consumed is grown locally, compared with 81% nationwide. The growing season is short and summer temperatures chilly. Tomato plants wither. Fruit trees, in most parts of the state, are just a dream. + +Enter the high tunnel: a greenhouse consisting of a curved metal frame with plastic sheeting stretched across it. There is even a federal programme to pay for it. The scheme, which seeks to extend growing seasons and improve soil health, is open to farmers across the country. But it is Homer, a town of about 5,000 souls 200 miles south of Anchorage, that has become the high-tunnel capital of America, officials say. Residents have put up more than 120 federally funded greenhouses—far more per person than anywhere else. + +Kyra Wagner heads the local Soil and Water Conservation District, a small-scale partner of the federal Department of Agriculture, which finances the effort. Ms Wagner has been a champion of the high-tunnel programme since it began in 2010. The structures, she explains, do not merely extend the growing season, they are “climate extenders”. “Pretty much, you’ve gone to southern California,” she says. + +Only a few millimetres of plastic separate crops in the high tunnels from the great outdoors. But this is enough for Alaskan growers to produce tomatoes as well as sweetcorn, aubergines (eggplant), peaches, nectarines and kiwi fruit, and to boost production of crops by a quarter or more. + +These results have brought new people to farming, sometimes accidentally. “We always liked gardening, then everything kept growing,” says Donna Rae Faulkner, owner with her husband, Don McNamara, of Oceanside Farms. Mrs Faulkner used to be a high-school biology teacher; her husband is a carpenter-turned-farmer. The couple have eight tunnels measuring 32 feet by 70 feet a few miles from Homer’s main street and grow corn, tomatoes, grapes, strawberries and leeks, among other things. They went commercial six years ago when they put up their first high tunnel. Now they harvest about 500lb (227kg) of vegetables each week. + +In a place where no one blinks if you call yourself a fishermen, drill-rig roustabout, tugboat captain or gold miner, an increasing number of Alaskans are thinking of themselves as people who grow food. Since the start of the programme, the number of farms registered with the state has nearly doubled. Local restaurants have begun shaping their menus around what neighbouring farms can grow. Homer’s hospital subsidises the cost of produce boxes from nearby farms for its employees and encourages patients to buy from them. + +High tunnels have sprouted on the tundra of western Alaska to Fort Yukon, a small village north of the Arctic Circle where winter temperatures dip to -40°F. And although the high-tunnel programme has not yet shifted the barometer of food independence significantly, dinner plates across Alaska are beginning to look different. Eight decades ago, the federal Matanuska Colony tried to turn farmers into Alaskans. Today, the high tunnels are turning Alaskans into farmers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21705605-tunnel-vision-chilliest-state-growing-farmers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +An American mystery + +Down in the valley, up on the ridge + +An Appalachian people offers a timely parable of the nuanced history of race in America + +Aug 27th 2016 | VARDY, TENNESSEE AND BIG STONE GAP, VIRGINIA | From the print edition + + + +HEAD into Sneedville from the Clinch river, turn left at the courthouse and crawl up Newman’s Ridge. Do not be distracted by the driveways meandering into the woods, the views across the Appalachians or the shadows of the birds of prey; heed the warnings locals may have issued about the steepness and the switchbacks. If the pass seems challenging, consider how inaccessible it must have been in the moonshining days before motor cars. + +Halfway down, as Snake Hollow appears on your left, you reach a narrow gorge, between the ridge and Powell Mountain and hard on Tennessee’s north-eastern border. In parts sheer and wooded, it opens into an unexpected valley, where secluded pastures and fields of wild flowers hug Blackwater Creek—in which the water is not black but clear, running, like the valley, down into Virginia. This is the ancestral home of an obscure American people, the Melungeons. Some lived over the state line on Stone Mountain, in other craggy parts of western Virginia and North Carolina and in eastern Kentucky. But the ridge and this valley were their heartland. + +The story of the Melungeons is at once a footnote to the history of race in America and a timely parable of it. They bear witness to the horrors and legacy of segregation, but also to the overlooked complexity of the early colonial era. They suggest a once-and-future alternative to the country’s brutally rigid model of race relations, one that, for all the improvements, persists in the often siloed lives of black and white Americans today. Half-real and half-mythical, for generations the Melungeons were avatars for their neighbours’ neuroses; latterly they have morphed into receptacles for their ideals, becoming, in effect, ambassadors for integration where once they were targets of prejudice. + +The two big questions about them encapsulate their ambiguous status—on the boundaries of races and territories, and between suffering and hope, imagination and fact. Where did the Melungeons come from? And do they still exist? + +Last of the Phoenicians + +At a recent gathering of the Melungeon Heritage Association (MHA), in Vardy, a hamlet in the valley, and over in Big Stone Gap, Virginia, family trees and photographs of swarthy ancestors were compared. But the underlying preoccupation was the Melungeons’ origins—a subject comprised more of legend than of evidence. They are said to be the progeny of Phoenicians who fled the Roman sacking of Carthage, or of pre-Columbian Turkish explorers (making them America’s first Muslims). They descend from wayward conquistadors, from a doomed colony established on Roanoke Island by Sir Walter Raleigh, or from Moorish galley slaves abandoned there by Sir Francis Drake. They were sired by shipwrecked pirates or by Madoc, a 12th-century Welsh explorer. They are a lost tribe of Israel. + +Native Americans often feature as consorts in these narratives, such as the fable in which Satan briefly cohabits with a Cherokee woman in the mountains of Tennessee. Etymology is as vexed as genealogy. The name Melungeon derives from mélange, an appellation bestowed by early French settlers on the Clinch river. Alternatively, Italian pioneers in Virginia used their word for aubergine to disparage the Melungeons’ skin colour. It comes from melas, Greek for dark or black, from the Turkish expression melun can, meaning “cursed soul”, or from melungo, a West African term for shipmate. Or from an old English word for trickery found in Spenser’s “The Faerie Queene”. + +One of the most widespread beliefs is that they are offspring of Portuguese mariners who arrived in early colonial times; or, as some 19th-century Melungeons would have put it, on the rare occasions when they spoke for themselves, they were “Portyghee”. A newspaper report of 1848 said the community was established by “a society of Portuguese Adventurers”, and now lived in “a delightful Utopia” of primitive disinhibition. (The Melungeon story has mostly been told in the calumnies and hearsay of outsiders.) A sub-theory sees them as exiled conversos, Iberian Jews who hid their faith to escape the Inquisition before fleeing to the New World. + +For much of American history, of course, Mediterranean lineage was a valuable asset to anyone with an olive complexion, often, in this case, combined with aquiline features and sometimes blue eyes: it meant the people in question were not black. In a trial of the late 1840s, for example, a group of Melungeons were accused of illegal voting, a right withdrawn from free blacks in Tennessee in 1834. Their lawyer maintained they were Portuguese, reportedly introducing as evidence their feet, which—supposedly unlike negroes’—“were as delicate and nice as a lady’s”. He is said to have invited the prosecutor to remove his own shoes for a comparison. The prosecutor declined; the defendants were acquitted. In a case in 1872 involving marriage and inheritance rights, a lawyer convinced Tennessee’s Supreme Court that the Melungeons were “pure-blooded Carthagenians, as much so as was Hannibal and the Moor of Venice”. Such judgments and affidavits were invaluable precedents, like imprimaturs for forged works of art. + +Robert Davis, a Mediterranean-hued attendee at the MHA meeting, recalls his mother receiving an anonymous note, in the 1920s, informing her that blacks weren’t welcome at her church. Race was fodder for private vendettas as well as official discrimination. Before the civil war, “free people of colour”, as many Melungeons were described in the census of 1830, were threatened by re-enslavement and repatriation (several later got themselves reclassified as white). In the Jim Crow era such designations determined which schools their children attended. After the passage of Virginia’s “one drop” law in 1924, whereby anyone with a trace of blackness was classified accordingly, Walter Plecker, the monstrous registrar of the Bureau of Vital Statistics, singled the Melungeons out for persecution. To American eugenicists like him, such liminal groups were degeneration incarnate. + +Among the Portyghee + +No wonder that, today, the children of segregation-era Melungeons report a familial anxiety about going dark in the sun. But, in a narrow respect, Plecker may have been right—at least according to one purported solution to the origin mystery. In 2012 a DNA study disclosed that those Melungeons who took part descended largely from African men and white European women. That corresponds with research by Tim Hashaw, a Texan author who has traced the line to a cargo of Africans delivered to Jamestown in 1619—a year before the arrival of the Mayflower. Coincidentally or otherwise, the itinerary of those souls echoes some Melungeon myths: they were captured by Portuguese raiders in Angola, then poached by English pirates. + +Daughter of Appalachia + +Some were indentured servants, not lifelong vassals: chattel slavery had yet to be codified. At liberty, some such early arrivals married white serving-women. + +As Mr Hashaw says, accounts of this period in which blacks appear only as slaves are “not the real story”: there were free black people in the colonies from the beginning. This episode also dispels another simplification, in which mixed-race relationships were publicly tolerated only recently. In truth, attitudes were more open in the mid-17th century than they were for most of the 20th. And, while feelings are hard to discern across centuries, unlike the innumerable master-slave rapes that followed, these intermarriages seem to have been voluntary. + +Before long, alas, sentiments and laws sharpened, until interracial couples risked fearsome punishments. Still, the Melungeons offer an insight into a lost but documented history in which America’s race relations were less hierarchal than they shortly became. + + + +Today, among former denizens of the ridge and valley, several explanations are given for their ancestors’ decision to settle there. A wagon wheel fell off en route to the Mulberry Gap; a child on a wagon trail died, and the grief-stricken parents refused to budge. But the most plausible is that noxious treatment forced them out of Virginia and the Carolinas and, around the end of the 18th century, into what became Hancock County, Tennessee. As their legal predicament deteriorated there, too, this remote nook, on the edge of the state’s jurisdiction, was a good place to lie low. Now, as then, it is as isolated as it is beautiful, featuring lonely farmsteads, some weather-beaten barns and a few clapboard churches. + +Isolated, beautiful—and poor. Hancock County remains one of Tennessee’s poorest and among the nation’s. Some of its residents resorted to the usual shifts of penury, moonshining and the like. Those exigencies, combined with a reputation for bushwhacking during the civil war—and, above all, the enduring queasiness about miscegenation—turned the Melungeons, in their neighbours’ imaginings, into renegades and bogeymen. As a sensationalist report of 1891 put it, they were “a synonym for all that is doubtful and mysterious”. + +Naturally, nobody wanted to be one. Wayne Winkler, an author of Melungeon descent, says his grandparents’ generation wouldn’t utter the word, which, to them, connoted shiftlessness and dishonesty as much as racial instability. Clarke Collins, who grew up in Vardy in the 1930s, says he never encountered the term until 1948. Returning from college and asking his mother about it, he was told never to say it again. + +Then, beginning in the late 1960s, in the wake of the civil-rights movement, its valency changed. First, Hancock County staged “Walk Towards the Sunset”, an outdoor drama about the Melungeons that ran for six seasons. In the 1990s, as the internet ignited a genealogy craze, a new consciousness blossomed. Activists sought to reclaim the Melungeons’ identity from vilification; an influential book cast them as victims of “an untold story of ethnic cleansing”. Amid the enthusiasm Abraham Lincoln and Elvis Presley were outed as crypto-Melungeons. + +Events since exemplify the web’s power both to bring people together and to drive them apart. Disagreement over the Melungeons’ provenance turned rancorous after the DNA study of 2012. Stalwarts of the MHA, an ecumenical outfit with the motto “One People, All Colours”, had always been aware of the family tree’s black branches. But, perhaps inevitably after centuries of denial, a few avowed Melungeons were less sanguine about the findings. Some were keen to corroborate a Native American component; some coveted Jewish or Muslim connections, while others repudiated them. People wanted to vindicate family lore, or simply to be proved right. The Portuguese and Turkish hypotheses were noisily championed. A fledgling community was riven by in-fighting. + +In fact, a surprising number of the rival theories are, if not plausible, at least not impossible. Those DNA tests have proved no more unifying than has the internet: other samples have yielded Native American, Middle Eastern, North African and South Asian strands. Part of the trouble is that by the time the Americas were colonised, the European gene pool had already been augmented by invasions, expeditions and enslavements. Stir in the improvisational nature of marriages on the colonial frontier, plus the patchiness and misrepresentations of old records, and refuting all but the wildest fantasies becomes tricky. + +Ketchable, not fetchable + +A key sticking point concerns who should be tested: where the Melungeons have ended up is almost as contentious as where they came from. The ridge, the valley and their environs, runs one answer: “We that descend from [their former residents] are Melungeons,” says Mr Davis. Others consider surnames more important. Today’s Melungeons, they think, bear the ones that recur in the valley’s cemeteries, in which lizards dart among the Collins, Mullins, Gibson and Goins gravestones, beside a road dissolving into dirt on its way into Virginia. + +Then again, a hard-core “ridge only” faction repudiates the valley-dwellers. Still others reasonably note that, especially during the exodus of Appalachians after the first world war, many Melungeons moved away. Racism, and the chance to “pass” for white elsewhere, gave them an added impetus. A Presbyterian missionary school provided some with the means to escape, education’s bittersweet one-two of opportunity and deracination. + +Gallingly, there is little by way of culture to distinguish them—except, perhaps, their mini-pantheon of folk heroes. One is Vardemon Collins, variously recorded as Cherokee and Portyghee, who married “Spanish Peggy” and moved to the valley. He allegedly set himself up by selling into slavery a pal who, as planned, promptly escaped. Later came Mahala (“Big Haley”) Collins Mullins, moonshiner and mother of 20, whose house burned down when Confederates came to kill her sons. She grew so fat that, when a deputy tried to arrest her, she couldn’t be pried from her cabin: “She’s ketchable,” he reported, “but she ain’t fetchable.” The cabin has since been moved from the ridge to the valley; DruAnna Overbay, of the Vardy Community Historical Society, indicates its arched windows, with their hint of Moorish style, as a distinctive Melungeon touch. + +In general, though, the ways of the people known as Melungeons were similar to their Appalachian compatriots’. They practised the same crafts and the same Christian faith, relying on the same ingenuity and hardiness. Their experiences overlap, too, with other mixed-race groups in the south-east, such as the Red Bones of Louisiana or the Brass Ankles of South Carolina. “There is no distinct ethnic identity or cultural heritage,” concludes Melissa Schrift of East Tennessee State University. Physical markers—cranial bumps, sixth fingers—are more rumour than reality. + +Eternal peace among the hills + +Given this cultural elision, the inconclusive DNA and physical dispersal, firm membership criteria are elusive. Hence a final, telling twist in the Melungeon saga. As Mr Winkler says, in the days when they formed a semi-coherent group, no one claimed or accepted the label for themselves. But that cohort, and the injustice they faced, are mostly gone. That sort of loss often sets off a belated urge to know more about the passing generation. In this case, the void also represents an opening. Because, now, a claim to Melungeon extraction is difficult to deny. + +And, despite the online ructions, in recent years some Americans have laid such claims. Whereas formerly “Melungeon” was a slur to be renounced, it has become an allegiance to be embraced. Once the Melungeons were a barometer of discrimination, their situation shifting with the law’s caprices, the forebearance of strangers and their own canniness, chutzpah and skin tone. Now they are emblematic of a 21st-century urge to belong. “Some people think a mystery is something that has to be destroyed,” says Paul Johnson, the MHA’s registrar. “Other people think it’s something that has to be preserved.” + +The fabric of America + +Those who feel this way share some characteristics. Most (though not all) are fair-skinned. Several report suspicious silences about their families’ pasts, plus a childhood sense of not quite fitting in. Sometimes there are foreign names among their forebears. And, very often, they had never heard of the Melungeons until middle age. + +Nan Tuckett, for instance, was raised amid whispers of Cherokee blood; a strand of her family had dark skin and hair and roots in Virginia. As an adult she both converted to Judaism and discovered an affinity with the Melungeons. “They’re such an open loving people,” she explains at the MHA event. “I want to be able to go into any group of people and feel like I belong”. Kathy Lyday, a board member of the MHA, believes she has Indian blood on both sides of her family; on her mother’s there were dusky folk with Hispanic names such as Alfonso and Carlos. She came to the Melungeons through her academic work (she teaches American literature); initially she wanted to establish a link, but now is simply intrigued. “We’re all mixed race to some degree, if you grow up in this part of the world”, Ms Lyday reasons. + +It is easy to be sceptical of such a discretionary association. As Ms Schrift says, it bestows on those who choose it an ethnic loyalty at once exotic and, these days, stigma-free. It dissociates them from white America’s past sins, replacing that guilty legacy with the afterglow of trials overcome, plus a mantle of victimhood that may properly belong to others. In one interpretation, such feel-good ethnic tourism threatens, as Ms Schrift puts it, to render the term Melungeon “so elastic that it really has no meaning at all.” To join the Melungeons, she says, is to acquire “a skeleton key to identity”. + +On the other hand, there may be a deeper honesty, and a kind of idealism, in this voluntary embrace of a mixed-ethnic background—a make-up common to millions of Americans, but which many remain reluctant to acknowledge. And there is something optimistic and timely about the vision of race that the Melungeons imply. These days, on university campuses and beyond, the old, humanistic faith that everyone is the same at heart has been ousted by an essentialist idea of black- and whiteness, which sees the experiences of each as distinct, even mutually incomprehensible. The grievances that underpin this attitude are often legitimate, but the result is that race in America can sometimes seem like a prison. The notion of racial categories as fluid and optional, even invented, is a refreshing counterpoint to this ossifying sense of unbridgeable difference. + +Scott Withrow, the MHA’s hospitable president, says he, too, never heard of the Melungeons as a child, discovering them only as an adult. He has traced an 18th-century North Carolinian ancestor named Collins, one of the core Melungeon surnames, who may have been related to the Collinses of Hancock County, though incomplete records mean Mr Withrow can’t be sure. He hasn’t done a DNA test—though what, really, would it prove? His tolerant organisation does not require a pedigree: “We don’t get into who’s more Melungeon than others.” The Melungeons, he says, inarguably, “are part of the fabric of Appalachia. The fabric of America.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21705639-story-appalachian-people-offers-timely-parable-nuanced-history-race/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Clinton Republicans + +Donald Trump is driving professional women away from the Republican Party + +Aug 27th 2016 | From the print edition + + + +HILLARY CLINTON’S campaign has a new TV ad suggesting that Donald Trump’s ego is too large and his head too hot to entrust him with nuclear codes. The ad—which ends with the whistle of a falling bomb, roaring jet engines and a doomy sounding narrator intoning: “Because all it takes is one wrong move”—is built around clips of Mr Trump himself, boasting that he knows more about Islamic State than “the generals” and inviting opponents to “go fuck themselves” (with the expletive bleeped out). By way of serene contrast, the ad shows Mrs Clinton reading briefing books in what looks like a night-time White House. + +This invites comparisons with “Daisy”, an attack ad from 1964 implying that a vote for Barry Goldwater, that year’s hardline Republican nominee, was a vote for nuclear war. “Daisy” (so called after its opening images of a child picking the flowers) quoted the sitting president, Lyndon Johnson, paraphrasing W.H. Auden’s line: “We must love one another, or die,” as atomic blasts filled the screen. In this less poetic age, Mrs Clinton’s spot offers a recording of Mr Trump vowing to “bomb the shit” out of foes. + +Mr Trump’s snarling, chin-jutting approach to national security is one reason why he is currently losing a voting bloc—white college graduates—won by every Republican presidential candidate since 1952. Celinda Lake, a Democratic pollster, reports that many graduates are “extremely concerned” about someone of Mr Trump’s temperament and inexperience becoming commander-in-chief. Among an important sub-group, college-educated women, Ms Lake finds extra angst about Mr Trump’s record as a bullying misogynist, and about what his rise might “legitimise in the workplace”. White women college-graduates (who overlap with suburban women, a much-wooed pool of swing voters) had a brief, narrow flirtation with Barack Obama in 2008; but some recent surveys have Mrs Clinton crushing Mr Trump among them by staggering margins of 57% to 38%, or more. + +William Frey, a demographer at the Brookings Institution, a think-tank, has calculated that—if those trends hold—this would translate into a 4m net gain at the general election for Mrs Clinton. According to Mr Frey’s number-crunching, such a score among white women with college degrees would be enough to offset even a (highly improbable) 99% turnout rate among Mr Trump’s most ardent supporters, white working-class men. + +The Clinton campaign has noticed. Its strategists crafted the new ad with such groups as “national-security moms” and suburban independents in mind. A companion advertisement, entitled “Role Models”, shows wide-eyed children catching news clips of Mr Trump calling Mexicans rapists, mocking a disabled reporter or suggesting that a woman journalist’s judgment is addled by menstruation. The founder of Republican Women for Hillary, a group for women fleeing Mr Trump, was given a speaking slot at the Democratic National Convention. + +Despite all this, most white college-educated men still favour Mr Trump, though his lead with them is smaller than the Republican norm. To understand the shift among well-educated women, Lexington headed this week to Chesterfield County, Virginia, a leafy, mostly conservative suburb of Richmond. There he met seven members of the Women’s Business Council of the Chesterfield Chamber of Commerce, most of whom call themselves lifelong Republicans. Only one is sure to vote for Mr Trump, and that will be a vote “for the party”. Some are considering the Libertarian candidate, Gary Johnson. Three are steeling themselves to vote Clinton (maybe “with a big glass of wine”). Erica Giovanni Baez, a divorce lawyer, has “huge concerns” about the Democratic nominee’s probity, citing alleged access-peddling at the Clinton Foundation, a charity founded by ex-president Bill, while Mrs Clinton was Secretary of State. But she worries more about Trump-induced global chaos. For her, “the prime issue is safety”. + +Polls show a big gender gap when Americans are asked if they want an outsider-president, with men much likelier to take a “screw the experts” line. For Chesterfield’s professional women, qualifications are a form of battle-armour as they navigate the world of work. Woman must be “ten times more qualified” than men to land a promotion, argues Anne Moss Rogers, co-owner of a marketing firm. She thinks the country would never tolerate a woman candidate for president as inexperienced as Mr Trump. + +All the little Trumps + +In suburbs like Chesterfield County, not a few Trump-loathing women share homes with men who like the tycoon. That makes it important to avoid stigmatising Trump voters as bigots, says Candace Graham, a retired teacher volunteering at the Chesterfield County Democratic Committee. She thinks it clever when the Clinton campaign uses Mr Trump’s own words against him. + +Lots of educated whites will doubtless return to the Republican Party if Mr Trump loses—or will do as long as defeat in November empowers the sort of leader they like, such as Paul Ryan, Speaker of the House of Representatives. But there are reasons to think that educated women, in particular, may shift camp more durably, prompting talk of “Clinton Republicans” starting to offset the left’s loss of blue-collar “Reagan Democrats” in the 1980s. + +For one thing, all graduates are, on average, more likely to see big social and economic changes as an opportunity, not a threat, making them less receptive to Trump-style nativism. Women in general—especially unmarried women and the young—lean Democratic, and college-educated women are an increasingly young group. Back in the late 1960s, just one in 12 adult women had a college degree. Today one-third do, and indeed women now outnumber men on college campuses. Meanwhile the 2012 election marked the first time that whites with a high-school education or less were not a plurality of eligible voters. If Mr Trump had set out to alienate the future America, he could hardly be doing better. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21705698-donald-trump-driving-professional-women-away-republican-party-clinton/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Colombia’s peace accord: Unlearning war + +Chile’s pensions: The perils of not saving + + + + + +Articles Sections Next + +Colombia’s peace accord + +Unlearning war + +A chance to become a normal country + +Aug 27th 2016 | TORIBÍO | From the print edition + + + +GNARLED beams and splinters of wood are all that remain of many houses in Toribío, a town high in the Andes that saw some of the worst of the violence in Colombia’s war against the FARC, a left-wing guerrilla army. On one dwelling’s surviving wall graffiti in bold yellow letters reads: “I hate your war.” Over its 52 years, perhaps 220,000 Colombians died and 7m were displaced. + +Now Latin America’s longest-running military conflict is over. On August 24th negotiators representing Colombia’s government and the FARC announced that they had reached a final agreement after four years of talks in Havana. Although violence subsided in recent years, especially after the FARC declared a unilateral ceasefire in 2015, the war’s formal end will allow Colombia at last to become a normal country, and to focus its attention on improving the lives of its 48m citizens. “Today marks the beginning of the end of the suffering, the pain and the tragedy of war,” said Colombia’s president, Juan Manuel Santos. + +Now he will ask congress to convoke a plebiscite on October 2nd to seek voters’ approval. Meanwhile, the FARC will hold their tenth, and presumably last, congress as an armed group before transforming themselves into a non-violent political party. Mr Santos, and the FARC’s top commander, Rodrigo Londoño-Echeverry (known as “Timochenko”), will sign the agreement, probably towards the end of September. Even before the plebiscite, the FARC’s 6,500 troops and 8,500 militia will gather in 23 designated zones and begin handing their weapons to UN observers. + +Some of the six points covered by the pact gave negotiators little trouble. They agreed years ago on programmes to foster development in rural regions, where poverty is rife and infrastructure is inadequate. The accord widens opportunities for small political movements, such as the FARC, to participate in elections. The FARC has committed itself to dismantling drug-trafficking operations, which channelled billions of dollars to the insurgents over the past 30 years, and to discouraging the cultivation of coca, the raw material for cocaine. + +Far trickier was the question of how to bring to justice FARC fighters and pro-government forces who had committed crimes during the war. Under the agreement, the FARC is to help make reparations to victims of its crimes, which included kidnapping, mortar attacks on towns and villages and mass expulsions. It establishes a system of “transitional justice”, under which FARC fighters who confess will be sentenced to up to eight years of “restricted” movement and community service, but not to jail. The same penalties apply to Colombian soldiers and civilians who admit to having committed atrocities. + +These stay-out-of-jail provisions are the most contentious parts of the peace agreement and may yet cause it to founder. Many Colombians are enraged that the FARC do not face harsher punishment. Their cause is being championed by Álvaro Uribe, a former president whose government waged all-out war against the FARC from 2002 to 2010. He is leading a campaign against the accord. He wants it to require jail time for insurgents who committed war crimes and to bar them from holding public office. A “No” vote in the plebiscite would be a “political mandate to renegotiate the deal”, says Carlos Holmes Trujillo, a leader of Mr Uribe’s Centro Democrático party. + +He is mistaken. The FARC were weakened but not defeated by Mr Uribe’s offensive. They would not have signed an agreement that would have put their leaders behind bars. If the accord is defeated in the plebiscite, the FARC will return to their jungle and mountain camps, says César Gaviria, another former president, who is campaigning for “Yes”. “It’s hard to imagine that the FARC are going to go off to have picnics.” Opinion polls suggest the vote will be close. The most recent shows a dead heat between “Yes” and “No”, and a third of voters planning to abstain. + +Not conflicted about peace + +For residents of Toribío and towns nearby, there is little disagreement about how to vote. “It’s the people in Bogotá who say No because they don’t know what this war has been like,” says Javier Escobar, a businessman and farmer in Corinto, another town in Cauca province. They have never seen a tatuco, a homemade rocket often used by the guerrillas, he says. War did sometimes erupt in the capital, as in 2003, when a car bomb at a fashionable club killed 36 people. But in Toribío violence was an everyday event. Firefights between government forces and guerrillas could break out at any time. In July 2011 the FARC detonated a bus bomb that killed three people, wounded more than 100 and destroyed the police station and dozens of houses. The station was rebuilt, but the houses were not. “For the longest time you couldn’t sell a single brick in this town,” says Alcibiades Escué, the mayor. + +Already, Toribío is enjoying the blessings of peace. The government stopped bombing rebel camps after the FARC declared its ceasefire. Homeowners have started razing ruins in order to rebuild, helped by government subsidies. Children who were told to run home after school now gather in Toribío’s shady square to do homework and share ice creams. + +A “No” vote is not the only threat to peace. Colombia’s smaller guerrilla group, the ELN, says it wants to settle its conflict with the government but has shown no signs of being serious about it. It continues to kidnap civilians and bomb oil pipelines. Farmers in Cauca say the ELN is already taking over areas that the FARC are preparing to abandon, along with the marijuana and coca crops that grow there. Criminal gangs that grew out of right-wing paramilitary groups are another menace. + +Another fear is that the government will renege on its promises to invest in infrastructure, health and education. A congressional committee estimates that the government will have to spend $31 billion on these and other peace-related projects, including reintegrating FARC fighters into society. The drop in the price of oil has slashed government revenues. Mr Santos plans to raise taxes, but not until after the plebiscite is safely over. The day when grumbles about tax drown out the screams of war will be a good one for Colombia. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21705851-chance-become-normal-country-unlearning-war/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Chile’s pensions + +The perils of not saving + +A pioneering system, now in need of reform + +Aug 27th 2016 | SANTIAGO | From the print edition + +I’d like someone else to pay my pension + +PALLBEARERS bearing coffins scrawled with the legend “No+AFP” joined tens of thousands of Chileans in Santiago on August 21st to protest against the country’s privatised pension system. Organisers—a mix of unions, pensioners’ associations and consumer-advocacy groups—say that a million demonstrated nationwide (perhaps an exaggeration). Pensions are too small, the marchers complain. After “years of abuse…the people have finally woken up,” says Ernesto Medina Aguayo of Aquí La Gente, a pressure group. + +The scheme they revile, launched by the dictatorship of Augusto Pinochet 35 years ago, was a model for other developing countries such as Peru and Colombia. Rather than saddle the government with an unaffordable pay-as-you-go system, in which today’s taxpayers support today’s pensioners even as the population ages, Chile created one in which workers save for their own retirement by paying 10% of their earnings into individual accounts. These are managed by private administrators (AFPs). + +In some ways, the system worked. Contributions to the AFPs flowed into capital markets, which boosted growth. Annual GDP growth from 1981 to 2001 was 0.5 percentage points higher than it would have been without the investment, according to one study. This helped lift millions of people out of poverty. + +Alas, benefits have not measured up to people’s unrealistic expectations. The scheme’s founders told workers that if they contributed continuously throughout their careers they would receive a generous 70% of their final salaries upon retirement. And indeed, men who chipped in for 30 years or more earned an average pension of 77% of their final salary. But most workers contributed far less. Women took time off to raise children (and retire earlier than men). Many Chileans spent time in informal jobs or unemployed. On average, they contribute for only 40% of their prime working years. + +For most people the 10% contribution rate, just half the average in the OECD, a club of mainly rich countries, is too low. As a result, the typical benefit, including a supplement paid to poor people, is 45% of a pensioner’s final salary, well below the OECD average of 61%. Women are worst off. They take home pensions worth 31% of their final salaries, compared with 60% for men. In 2008 the government decided to reward mothers for each child they raised by topping up their pensions, but that does not fully compensate for the shortfall. + +Chileans with other grievances have latched onto the pensioners’ cause. Some decry the system’s dictatorial origins. Sceptics of capitalism grumble that the scheme has enriched dodgy fund managers. Two former owners of AFP Cuprum are being investigated on charges that they made irregular campaign contributions to dozens of right-wing politicians. The system has generated high returns for pensioners, averaging 8.6% a year between 1981 and 2013. But the AFPs’ high fees have bitten a huge chunk out of those returns, reducing them to 3-5.4%. + +The complaints thus have some merit. The AFPs and the government failed to stress enough that the normal contribution level, interrupted by spells of non-employment, would not purchase pensions that meet the 70% target; just 0.2% of workers top up their contributions. Competition among the AFPs was desultory, allowing them to keep commissions high. Several reduced them after a reform in 2010, in which the AFP offering the lowest commission is awarded all the new contributors. + +Some marchers want Chile’s president, Michelle Bachelet, to replace the private pension scheme with a state-funded pay-as-you-go system offering defined benefits. Many experts favour a less drastic reform. Several countries that adopted the Chilean model have moved to a mixed system, in which the state supplements but does not replace private funds, notes Nicholas Barr of the London School of Economics. + +Chile is already moving in this direction. A tax-funded scheme introduced in 2008 for Chileans with relatively low incomes, 60% of the population, will pay out more than half the country’s pension bill by 2030, says David Bravo, who led a government commission on pensions last year. On August 9th Ms Bachelet proposed further reforms, including a 5% contribution to be levied on employers, which will go toward topping up the lowest pensions. A new state-owned AFP will provide more competition to private ones. Hidden charges will be eliminated. Rather than bury Pinochet’s pension scheme, Ms Bachelet may give it a second lease of life. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21705850-pioneering-system-now-need-reform-perils-not-saving/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Kashmir: Vale of tears + +Communists in the Philippines: Rebels in their dotage + +Karachi: Slammer dunk + +Leafy Singapore…: Move over, Merlion + +…and sooty South Korea: Bad air days + +Learning English in Japan: Talk like a gaijin + + + + + +Articles Sections Next + +Kashmir + +Vale of tears + +The fierce repression of protests is only stoking Kashmiris’ resentment + +Aug 27th 2016 | SRINAGAR | From the print edition + + + +OWAIS GULAB has not left home for seven weeks. The college where he studies computing is closed, as are all but a few local shops. His phone, like others across the Kashmir Valley that use a pre-paid SIM card, cannot make calls. The hostel his family runs stands empty. It overlooks Dal Lake, whose hundreds of pleasure craft, normally packed with summer tourists, sit idle. + +It is not just curfews, strikes and clashes between police and protesters that make Mr Gulab feel trapped. He fears leaving the valley, he says, because in other parts of India police routinely harass young Kashmiris. Musing over tea on the 46th afternoon of his confinement, what perturbs Mr Gulab is that he too now thinks in terms of “us” and “them”. “Someone my age with a 21st-century outlook should not be saying ‘those Indians’ and ‘their army’, but then you look at the headlines,” he says, pointing to a local newspaper that lists those killed in the latest round of violence. + +There are now 68 names on that list. The number of injured approaches 10,000, some 460 of them wounded in the eyes by pellets from the shotguns the police use to quell riots. Most are young men, shot during the repeated confrontations with security forces that have broken out since the funeral, on July 9th, of Burhan Wani, an Islamist guerrilla from the south of the valley who had become a hero for young Kashmiris resentful of India’s seven-decade-long rule. + +In the months before Indian troops killed Mr Wani, Kashmiris had warned of rising anger. The predominantly Muslim, Kashmiri-speaking people of the valley have long felt reluctant citizens of a huge, predominantly Hindu country that has repeatedly broken promises of special treatment. Neighbouring Pakistan, which claims natural title to Kashmir, has exploited this discomfort. Its dispatch of armed jihadists in the 1990s and 2000s, ostensibly to aid their co-religionists, prompted a massive and brutal, albeit successful, Indian counter-insurgency. That fighting left some 40,000 dead, by Indian estimates. It transformed the valley into an armed camp; perhaps half a million Indian troops still dwell among its 6m-7m residents. + + + +The unrest, which briefly erupted again in 2008 and 2010, undermined the tourism-dependent economy of what had been one of India’s richest states, with massive floods in 2014 adding to the misery. Indian general elections that year brought the Hindu-nationalist Bharatiya Janata Party into power, leaving Kashmiris further estranged. Local elections that followed in Jammu and Kashmir, a state that joins the valley to adjacent regions with very different ethnic and religious make-up, then made things worse: the new state government was a slim, ungainly coalition between the BJP and the valley-based People’s Democratic Party. In the valley itself, many had heeded the calls of separatist leaders to boycott the polls. + +In Delhi none of this seemed to matter. When trouble erupted in July the knee-jerk response was to blame Pakistan and to clamp down hard on the protests. India’s finance minister, Arun Jaitley, described stone-throwing as “a new form of attack by Pakistan on India’s unity and integrity”. The state’s chief minister, Mehbooba Mufti, herself a Kashmiri, insisted that a mere 5% of Kashmir’s people backed the protests. In an address on India’s independence day, August 15th, the prime minister, Narendra Modi, avoided mention of Kashmir and instead lashed out at Pakistan, accusing it of human-rights violations in its own restive region of Balochistan. + +Mountain prayer + +In recent days, however, alarm has grown in Delhi. With senior army officers, India’s supreme court and opposition leaders all suggesting that security measures alone cannot solve the problem, Mr Modi broke his silence on August 22nd, expressing “deep concern and pain” at the loss of life. In a meeting with Kashmiri politicians he stressed the need for all parties to work together towards a “lasting solution to the problem within the framework of the constitution”. Mr Modi also sent his home minister, Rajnath Singh, to Srinagar for talks with local leaders. + +Calming tempers, let alone finding a more lasting settlement, will not be easy. True, casualty rates have fallen in recent weeks and security forces have loosened strictures on movement and communications. Yet even as India’s government sends in politicians for talks, it has also sent in more troops. Some of them have taken over schools as barracks, despite a vow by the state’s education minister to reopen them for classes. + +And while Mr Modi’s call for dialogue may be sincere, there remain the crucial questions of whom to talk to, and about what. Over the years, complains a human-rights worker in Srinagar, Indian governments have undermined the credibility of every local politician who has tried to work with them. The latest unrest has made things worse: the valley’s mainstream parties are torn between appeasing burning rage in the streets and upholding law and order, as Delhi sees it. As for parties that demand Kashmir’s separation from India, who far better represent the current mood, Mr Modi’s government has so far refused to engage with them: their leaders are under house arrest. + +What is more, Kashmir’s decades of turmoil have left its society bitterly divided. A painstaking opinion poll published in 2010 by Chatham House, a British think-tank, revealed very low support in the valley for armed militancy, for joining Pakistan or for remaining a part of India. Instead, between 75% and 95% of respondents favoured Kashmiri independence. Gratifying such urges seems impossible, given the bounds of India’s constitution, the crushing rivalry between India and Pakistan and the disarray of Kashmir’s own politics. “The situation won’t get better,” concludes a weary plainclothes police officer in Srinagar. “The government doesn’t know what it is doing, and the separatists don’t know what they are doing.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21705823-fierce-repression-protests-only-stoking-kashmiris-resentment-vale-tears/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Communists in the Philippines + +Rebels in their dotage + +A 30-year-old peace process resumes + +Aug 27th 2016 | MANILA | From the print edition + +A long way from the Netherlands + +WHEN negotiators sat down together in Oslo this week in an effort to end the Philippines’ 47-year-old communist insurgency, they expressed the hope that a peace deal could be wrapped up within a year. That is optimistic: the two sides have been talking on-and-off for 30 years, without success. Their jerky progress towards the negotiating table in recent weeks is an ominous portent. + +The Philippines’ new president, Rodrigo Duterte, had promised to resume talks during his election campaign, and declared a unilateral ceasefire within a month of his inauguration in late June. But the communists failed to reciprocate immediately. Instead, communist guerrillas ambushed some government militiamen in the southern Philippines, killing one and wounding four. Mr Duterte promptly called off the truce, just before the communists declared their own ceasefire, which was subsequently rescinded. It was only after the government released some insurgents, and the communists reciprocated, that the two sides reinstated the ceasefires, allowing the talks to go ahead. + +The man the government regards as the leader of the communists is Jose Maria Sison. Mr Sison founded the Communist Party of the Philippines (CPP) in 1968, and later an armed wing called the New People’s Army (NPA), with the aim of overthrowing Ferdinand Marcos, the president of the day. The insurgency blazed when Mr Marcos imposed martial law on his way to becoming a kleptocratic dictator. The NPA boasted of its thousands of armed guerrillas. The Philippines looked as if it might become the next South-East Asian domino to fall to communism—until Mr Sison was captured and imprisoned. + +When Mr Marcos was overthrown in 1986, the new government freed Mr Sison. But he spurned the government’s peace overtures and sought refuge in the Netherlands, where he still lives. He is now 77 years old, and the most prominent communist at the talks. + +Mr Sison’s revolution has become a hopeless cause, thanks both to the restoration of democracy and infighting within the communists’ ranks. But the NPA remains a deadly nuisance, especially in rural areas on the southern island of Mindanao. It extorts money from businesses, typically setting fire to equipment belonging to construction companies or blowing up base stations belonging to mobile-phone networks that refuse to pay its revolutionary “taxes”. But its guerrillas failed to mount a single big operation last year, and their number had dwindled to fewer than 4,000 by the end of the year, according to the army. They tend to avoid combat, so outbreaks of fighting are rare and brief. + +Previous efforts at making peace have been thwarted by the insurgents’ insistence on the release of detainees they regard as political prisoners but the government considers common criminals. Among the 20 prisoners the government freed to allow the latest talks to proceed were a married couple, 65-year-old Benito Tiamzon, the suspected chairman of the CPP, and 63-year-old Wilma Tiamzon, the suspected secretary-general. Both were released on bail despite facing multiple charges of murder, attempted murder and kidnapping. They immediately went to Oslo to join the communist negotiating team. + +The communists will press for the release and pardon of more such figures. But the government will be sceptical that the ageing negotiators, long separated from their fighters by exile or prison bars, still have the authority to order a permanent end to nearly half a century of conflict. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21705824-30-year-old-peace-process-resumes-rebels-their-dotage/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Karachi + +Slammer dunk + +The new mayor is a jailbird. His city is a battleground + +Aug 27th 2016 | KARACHI | From the print edition + + + +FOR decades the fleshy features of Altaf Hussain have glowered over Karachi. The leader of the mighty Muttahida Qaumi Movement (MQM) may have fled to London 25 years ago, but his image remains plastered on the streets of the city he controls. But it is becoming harder to find the posters and party flags that once fluttered from every streetlight. Mr Hussain has gradually been losing sway over Pakistan’s largest city to the Rangers, a notionally civilian security force under the control of the army. + +In 2013 the government ordered the Rangers to rid Karachi of Islamist militants and criminal gangs. Last year they turned their attention to the MQM, a party successive governments have accused of deep involvement in Karachi’s criminal economy. Although it is ostensibly a relatively liberal and staunchly anti-Islamist political outfit, the authorities claim it runs a shadow organisation of extortionists and kidnappers. As evidence of the party’s unsavoury side, the Rangers point to weapons they discovered when they raided its “Nine Zero” headquarters last year. + +The MQM, in turn, accuses the Rangers of kidnapping and killing dozens of blameless political activists. Last month saw the arrest of Waseem Akhtar, a leading MQM politician accused of numerous crimes, including instigating riots in 2007 which killed more than 40 people. This week the city council, which the MQM controls, elected Mr Akhtar as Karachi’s new mayor. He may serve his entire term from a cell. + +Mr Hussain himself has been questioned in connection with British investigations into money-laundering and the killing in London in 2010 of Imran Farooq, a disgruntled MQM leader. The Pakistani authorities are incensed by Mr Hussain’s speeches, which are delivered by telephone from Edgware, a dowdy London suburb, and played on loudspeakers to crowds of MQM supporters. Last year he called for Pakistan’s arch-enemy, India, to come to the aid of downtrodden Karachi-ites. That led the courts to ban media coverage of Mr Hussain’s outbursts. + +This week Mr Hussain was at it again, with a speech in which he railed against television stations that had denied him coverage. One person was killed and several were injured when angry supporters ransacked the offices of two media companies. In response, the Rangers arrested senior MQM officials and shut Nine Zero. The police lodged a treason case against Mr Hussain, who had described Pakistan as a “cancer” in his speech. The interior minister complained to the British government about the conduct of Mr Hussain, who became a British citizen after fleeing an earlier crackdown on the MQM. + +Mr Hussain issued a fulsome apology and said he had been under “immense mental stress”. It was not enough to avoid an unprecedented rebuke from Farooq Sattar, the MQM’s leader in Pakistan. All future decisions will be taken by the party’s leadership in Pakistan, he said, not from London. Mr Hussain appears to be acquiescing to this demotion: he has issued a statement promising to hand over “complete power”. + +Sceptics say Mr Hussain will never willingly relinquish his grip. He stepped aside once before, in 1992, only to re-assert himself a few months later. But a comeback will be harder this time. The battering the Rangers have given the party’s heavies has greatly diminished his clout. His regular demands for citywide strikes used to turn Karachi into a ghost town. Shops now stay open, for the most part. + +Yet the MQM’s local leadership will not want to cut all ties to Mr Hussain. He is the most charismatic figure in a party increasingly challenged by rivals, including the splinter Pakistan Sarzameen Party, which was set up by a former MQM mayor in March with, many believe, the support of the security services. + +The MQM draws its support from the mohajir community—Urdu-speaking Muslims who fled India in 1947 and their descendants. They have remained a dependable vote block despite the many hair-raising claims made about the party, in part because they fear they will lose out to the city’s other ethnic groups, not least the fast-growing Pushtun community. For many mohajirs, the Rangers’ crackdown has only made Mr Hussain more popular. “Altaf is like the head of a family who has been fighting for us for 30 years,” says Mujahid Rasool, a 50-year-old shopkeeper. “Even when the eldest son starts taking more responsibilities, it doesn’t mean he is the family’s guardian.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21705835-new-mayor-jailbird-his-city-battleground-slammer-dunk/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Leafy Singapore… + +Move over, Merlion + +The return of long-absent otters is a sign of the city’s greening + +Aug 27th 2016 | From the print edition + +Otterly entrancing + +WHEN Australia’s prime minister came to visit Singapore last year, his local counterpart took him to visit not the Merlion, a statue of a mythical creature adopted decades ago as a national mascot, but the Bishan Ten—a photogenic family of otters that have become something of a national obsession. In early August Singaporeans chose the Bishan Ten as the official emblem of their country’s 51st year. A state media firm has produced a documentary on the family, narrated by Sir David Attenborough. And the city-state has just hosted the 13th International Otter Congress. + +Otters had disappeared from Singapore by the 1970s, as rubbish, farm waste and sewage clogged its few short rivers. But in 1977 Lee Kuan Yew, Singapore’s independence leader, ordained a clean-up, as part of his vision to turn Singapore into a “garden city”. “The river went from black to clear in less than a decade,” says Sivasothi, also known as Otterman, a lecturer at the National University of Singapore. + +As the rivers grew cleaner, fish populations returned. By 1998, the first otter families began to return to Singapore. Most stuck to the island’s less developed north coast, along the border with Malaysia. It was not until 2014, when the Bishan Ten colonised a park near the city centre, that the otters really began to loom in the public consciousness. + +Groups sprang up on social media to trade sightings and suggest good otter-spotting locations. Singaporeans gasped collectively on the day the otters were separated from one of their pups, Toby, and sighed with relief when they were reunited, with Mr Sivasothi’s help. They tutted and chuckled when the otters were accused of scoffing $60,000 of designer carp. + +The return of otters to the city is proof of the success of Singapore’s efforts to green itself. Although it is the world’s second-most densely populated country (after Monaco), the government has set aside approximately 8% of its 719 square kilometres (277 square miles) for parks and other green space. It has promised that 85% of Singaporeans will live within 400 metres of a park by 2030. An area of rooftops equivalent to roughly 100 football pitches has been planted, with more on the way. The city-state is becoming what Mr Lee, who died last year, always thought it otter be. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21705834-return-long-absent-otters-sign-citys-greening-move-over-merlion/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +…and sooty South Korea + +Bad air days + +Policymakers are beginning to address an asphyxiating problem + +Aug 27th 2016 | SEOUL | From the print edition + + + +AFTER the sun sets, Seoulites can glance at the illuminated N Seoul Tower atop one of the peaks surrounding the city to check the quality of the air they are inhaling. The tower has a palette of four colours: if blue or green, go for that jog. But if it glows yellow or red, beware not only of high levels of coarse soot, but also unhealthy concentrations of fine dust that can cause grave damage to the lungs. + +South Korea began publishing nationwide readings on PM2.5, as the dust is known, only last year. It stood at 27 micrograms per cubic metre on average—half the level in nearby China, but over two-and-a-half times higher than the World Health Organisation’s recommended limit, and well above the levels in other rich Asian countries. Seoul is far sootier than Tokyo (see chart). And these readings may be optimistic: an adviser says the government regularly discards high readings as “anomalies”. South Korea ranks 173rd out of 180 countries in an index of air quality from Yale University (China came in next-to-last). Its problems with pollution are likely to grow: the OECD, a group mostly of rich countries, projects that on the current trajectory the number of premature deaths each year due to dirty air will triple by 2060 to 1,100 for every million inhabitants. + +Most South Koreans shrug all this off as an inevitable consequence of being so near to China, says Ha Seung-soo of the Green Party, set up in 2012. The government estimates that 30-50% of PM2.5 drifts into the country from China, and possibly more during the dry, windless winters, when a blanket of smog tends to settle over Seoul. But activists complain that the government has used Chinese pollution as an excuse to tolerate the home-grown sort. It is building 20 new coal-fired power plants, at a time when most rich countries are cutting back on coal. A fine of 26m won ($24,000) levied on five plants that exceeded emission limits in 2013 was “ridiculously low”, says Greenpeace, a pressure group. + +There are signs that South Koreans are becoming less tolerant of this approach. “Dust Out”, an online forum set up in May, already has over 13,000 members. In a survey conducted in June by Realmeter, a local pollster, three-quarters of respondents said they were unhappy with current fine-dust policies. + +The government’s response has been muddled. In 2014 it decided to regulate barbecue joints and bathhouses that use charcoal as worrying sources of pollution; this year it gave warning that fumes from home-grilled mackerel, a popular local dish, were harmful to health. But it is reluctant to raise taxes on diesel, the source of almost a third of Seoul’s PM2.5. From next year, at least, Seoul will ban certain old diesel vehicles from its roads unless they are fitted with filters. Drivers who scrap such cars will also be given subsidies for new ones. And there are subsidies for new filters for the barbecue joints too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21705852-policymakers-are-beginning-address-asphyxiating-problem-bad-air-days/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Learning English in Japan + +Talk like a gaijin + +The government hopes to boost the economy with English lessons + +Aug 27th 2016 | TOKYO | From the print edition + +Got it? + +ITS buses and trains arrive on the dot. Its engineers are famously precise. But when it comes to English, Japan is uncharacteristically sloppy. Signs are often misspelled. Taxi drivers point at phrasebooks to communicate with foreigners. Shops that take an English name to be trendy often get it horribly wrong: witness “Poopdick”, a second-hand cosmetics outlet. + +English-speakers are much less common in Japan than in most rich, globalised countries. In 2015 Japan’s average score in the TOEFL, a popular test of proficiency for non-native speakers, was 71 out of 120, lower than in all East Asian countries except Laos and Cambodia. Companies seeking English-speakers tend to look for people who studied or grew up abroad, on the assumption that locally schooled candidates will not cut the mustard. + +The government wants to change this. Earlier this month it announced plans to overhaul the teaching of English. Children may soon start learning the language two years earlier, when they are eight instead of ten. Lessons will emphasise communication over reading, writing and grammar. + +All this, it is hoped, will help Japan play a bigger role in a world where English is the lingua franca. “We need English to understand other cultures and explain ourselves to them,” says Hideyuki Takashima of Tokyo University of Foreign Studies. And, particularly important to the government of Shinzo Abe, English is needed to boost the economy. Japanese companies, which are increasingly expanding abroad as the local population shrinks and ages, need English to prosper outside, and to attract talented workers to Japan. + +Some businesses have taken matters into their own hands. Sony has long insisted that workers be able to explain the workings of its products in English. Six years ago Hiroshi Mikitani, the Harvard-educated boss of Rakuten, an e-commerce giant with operations in 30 countries, decreed that English should become the firm’s main language; it no longer conducts any meetings in Japanese. Rakuten provides tuition in English for all its staff. Honda, a carmaker, said last year that by 2020 it too will make the linguistic shift. + +Tweaks to the education system alone will not be enough; cultural barriers abound. Many Japanese don’t see the need to use English because they rarely travel abroad and work in jobs that don’t require it. American films and music are not as widespread as in Europe, Africa or the Middle East. Traditionalists, eager to maintain the purity of Japanese culture, would be happy for things to stay that way. + +Kensaku Yoshida, a professor at Sophia University in Tokyo, reckons the biggest obstacle is a lack of confidence. Many Japanese are so embarrassed by the inevitable mistakes that a non-native speaker makes that they prefer not to try at all. Many also struggle with English sounds: their language does not differentiate between “l” and “r”, for instance. The many English words used in Japanese are often so changed as to be unrecognisable to a native speaker: aidoru (idol), Makudonarudo (McDonalds), bareboru (volleyball). “We need to accept that we don’t have to talk like native speakers,” says Mr Yoshida. “We just have to communicate.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21705853-government-hopes-boost-economy-english-lessons-talk-gaijin/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Sexual abuse of children: A horror confronted + +Banyan: A spot of localist bother + + + + + +Articles Sections Next + +Sexual abuse of children + +A horror confronted + +China has millions of sexually abused children. It is beginning to acknowledge their suffering + +Aug 27th 2016 | BEIJING | From the print edition + + + +HUANG YANLAI was 74 when he first raped 11-year-old Xiao Yu. He threatened her with a bamboo-harvesting knife while she was out gathering snails in the fields for her grandmother in Nan village, Guangxi province, in China’s south-west. Over the following two years, Xiao Yu (a nickname meaning Light Rain) was raped more than 50 times, her hands tied and a cloth stuffed in her mouth. She was a left-behind child, entrusted to relatives while her parents worked in distant cities. Her father returned home once a year. Told that his daughter was in trouble, he asked her what was wrong but she was too frightened to tell him. So he beat her up. + +Her abusers bribed her to keep quiet, giving her about 10 yuan (about $1.50) each time they raped her, threatening that “if this gets out, it will be you who loses face, not us.” They were right. When Xiao Yu finally confided to her grandmother and went to the police, the villagers called her a prostitute and drove her out of town. + +Xiao Yu’s story came to national attention after it was reported by state media. At the end of May it formed part of a study released by the Girls’ Protection Foundation, a charity in Beijing founded to increase awareness of child sexual abuse, a crime officials preferred not to discuss openly until recently. The study said there had been 968 cases of sexual abuse of children reported in the media between 2013 and 2015, involving 1,790 victims. Wang Dawei of the People’s Public Security University said that, for every case that was reported, at least seven were not. That would imply China had 12,000 victims of child sexual abuse during that period. “I have never seen this many child sexual-assault cases, ever,” ran one online reaction. “Why is it such things were hardly heard of five years ago,” asked another, “and now seem all over the media?” + +China is no exception + +The answer is that social attitudes are changing; it is no longer taboo to discuss the problem. In 2015 Fang Xiangming of China Agricultural University, in a report for the World Health Organisation (WHO), estimated, using local studies, that 9.5% of Chinese girls and 8% of boys had suffered some form of sexual abuse by adults, ranging from unwanted contact to rape. For boys the rate is as high as the global norm, for girls it is slightly less so. Because of the country’s size, however, the absolute numbers are staggering. Perhaps 25m people under 18 are victims of abuse. + +Chinese pride themselves on the protectiveness of their families. That children suffer even an average level of abuse is a surprise to many. But, as everywhere, children hide their experience. In 2014 Lijia Zhang, a journalist, wrote a first-hand account in the New York Times of sexual abuse at her school in the city of Nanjing in the 1970s. She said it never occurred to her and other victims to report the teacher. “We didn’t even know the term sexual abuse.” Even in Hong Kong, where sex is more openly discussed, a study of university students found that 60% of male victims and 68% of female ones surveyed since 2002 had not told anyone about their abuse. These rates of non-disclosure are considerably higher than in the West. Mr Fang, the author of the study for the WHO, says that if Chinese girls were more open, then the true rate of female sexual abuse might turn out to be as high as elsewhere, just as it is for boys. + +In any country, child sexual abuse is hard to measure. China has never conducted a nationwide survey, though it is talking about holding one in the next couple of years. There are many provincial or citywide studies. But as in other countries, researchers use different measures and standards. And there are no studies of abuse over time, so it is hard to detect trends. Even so, there are reasons to believe that children are at growing risk. + +First, China has huge numbers of “left-behind” children, like Xiao Yu. According to the All-China Women’s Federation, an official body, and UNICEF, the UN agency for children, 61m people below the age of 17 have been left in rural areas while one or both parents migrate for work. Over 30m boys and girls, some as young as four, live in state boarding schools in villages, far from parents and often away from grandparents or guardians. (A growing number of rural children whose parents are still at home have to board, because of the closure of many small schools in the countryside as village populations shrink.) Another 36m children have migrated with their families to cities, but their parents are often too busy to look after them properly. + +Time for new thinking + +About 10m left-behind children see their parents only once a year and otherwise rely on the occasional phone call. “Every time my mother called, she would tell me to study hard and listen to my teachers,” said one victim of sexual assault by a mathematics teacher at a school in You county, in the central province of Hunan. “I could not bring myself to tell her over the phone what was happening.” + +How much abuse is inflicted on left-behind children is not known. Researchers complain that schools with large numbers of them often refuse to allow sexual-abuse surveys. But given their vulnerability, left-behind children are likely to be victims of such abuse more frequently—possibly much more so—than average. + +Another risk factor is a mixture of ignorance, shame and legal uncertainty that makes it very difficult for children to defend themselves. Fei Yunxia works for the Girls’ Protection Foundation, the NGO that released the recent study of abuse cases. She travels to schools, giving sex-education classes. “No one tells these students about their bodies or how to protect themselves from harm,” she told Xinhua, a government news agency. Sex education in China is rare and never touches on abuse. The NGO says that 40% of 4,700 secondary-school pupils polled in 2015, when asked what was meant by their “private parts”, said they did not know. When cases are reported to the authorities, little is done, either because of legal loopholes, or because officials refuse to recognise the problem, or because they cover up for colleagues. + +It does not help that China’s statute of limitations is only two years. Wang Yi of Renmin University says this is too short for cases involving child sexual abuse: victims often remain silent for years. There is no national register of sex offenders, though Cixi, a city in Zhejiang province, aroused controversy in June when it said it would publish “personal information” about major sex criminals after their release to let the public monitor them (some commentators worried about an invasion of privacy). + +The lack of well-developed sex-crime laws means victims are often failed by the justice system. In Liaoning province eight school girls aged between 12 and 17 were kidnapped, stripped, beaten, and forced to watch and wait their turn while men who had paid $270 per visit raped them repeatedly in hotel rooms. The men were charged with having “sex with under-aged prostitutes”, a charge that shamed the victims into silence. The law that allowed child-rape victims to be classified as prostitutes was scrapped in 2015. But a women’s legal-counselling centre in Beijing, which had led a campaign against it, was itself closed earlier this year as part of a crackdown on civil society launched by China’s president, Xi Jinping. No wonder that, as a lawyer in the You county case put it, “silence is the preferred solution.” + +A shift in moral assumptions about sex presents another challenge. China is in the middle of a sexual revolution. Sex before marriage is more common. The age of first sexual experience is dropping. Most researchers into child abuse think there may be a link between such changes and sexual violence against children, if only because the revolution in mores seems to go hand in hand with changes to the traditional child-rearing system that, through intense surveillance, may limit abuse. + +Ye Haiyan, challenging abuse + +When a country confronts the problem of child abuse it typically goes through three stages, argues David Finkelhor of the University of New Hampshire. First the public and media become alert to the problem. This is happening. With the help of social media, and thanks to a greater willingness to speak out on social matters, campaigners have begun to organise. Ye Haiyan (pictured), known online as “Hooligan Sparrow”, helped arouse public awareness with her protests in 2013 against the rape of six girls aged between 11 and 14 by their school principal. In the next stage the government becomes concerned and starts to tighten laws. Then the police, social workers and public prosecutors begin to deal with problems on the ground. China is moving into this third stage. + +Make them safer + +Since early this decade, prosecutors and police have been spelling out how cases of abuse should be handled, from the collection of evidence to support for victims and procedures for separating a child from his or her parents. At the end of 2015 China adopted its first domestic-violence law. It says that preventing this is the “joint responsibility of the state, society and every family”. All this, says Ron Pouwels, UNICEF’s head of child protection in China, means that “China gets it and is determined to do something about it.” + +But much more work is needed. For example, there are very few social workers. The government has set a target of 250,000 properly qualified ones by the end of 2020. But only 30,000 take up such jobs each year. Crucially, Mr Xi needs to reverse his campaign against civil society and his efforts to stifle media debate. Further improving public awareness of the problem will need the help of NGOs and a freer press (free, for example, to point out that abusers are often people in authority—Ms Ye, the activist, was harassed by officials for trying to do so). Over the past 30 years, China has enhanced the life prospects of millions of children by providing them with better education and health care. Now it is time to protect them from sexual violence, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21705848-china-has-millions-sexually-abused-children-it-beginning-acknowledge-their-suffering/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +A spot of localist bother + +How Hong Kong sees itself has changed profoundly, in just a couple of years + +Aug 27th 2016 | From the print edition + + + +OFFICIALS in Hong Kong say they want to cover up the royal insignia on the cast-iron letterboxes from the territory’s colonial era. A small thing, you might think, and let’s not get mawkish about British rule. But it would be a telling move. Anson Chan, the city’s most respected figure, calls the boxes “part of our collective memory”. And many young people to whom Banyan has spoken since recently moving to Hong Kong echo what Mrs Chan calls an “insidious chipping away at our values and our lifestyle” by China’s rulers and those who do their bidding. The issue is a central one in elections for the Legislative Council (Legco) that will be held on September 4th. + +Its prominence was guaranteed after the electoral commission insisted that all candidates “confirm” that Hong Kong is an “inalienable” part of China. Some refused, or the commission did not believe their declaration. They are part of a growing “localist” movement seeking to preserve Hong Kong’s autonomy and a culture distinct from China’s. On August 5th over 2,000 people gathered in support of the disqualified candidates. It was, in effect, Hong Kong’s first ever pro-independence rally. + +A profound change of mood has overtaken the territory in the past couple of years. The guarantees made when an open society passed to a Communist dictatorship in 1997 are no longer so widely believed. Hong Kong’s mini-constitution, the Basic Law, held that the city’s way of life was to remain unchanged until at least 2047. The champion of “one country, two systems”, Deng Xiaoping, who died just months before the handover, had said there was no reason why it should not hold for a century. As head of the civil service before and (for nearly four years) after the handover, Mrs Chan was an embodiment of the guarantees. + +But under “C.Y.” Leung Chun-ying, a property man with strong ties to the mainland who has led Hong Kong since 2012, it is no longer clear what is being done in the territory’s best interests. True, Mr Leung has taken steps to see that elderly people are better provided for; they have long been shamefully neglected, as those who can often be seen eking a bent-backed living collecting scrap cardboard can attest. But Mr Leung’s mission is essentially a political one: to help China keep Hong Kong’s sense of the territory’s distinctiveness in check. From the moment when he made his inaugural speech in Mandarin rather than Cantonese, the local language, the direction of travel under a man assumed to be a closet member of the Communist Party has been clear. + +This has created increasingly stark choices for Hong Kong, as was evident during the “Occupy” or “Umbrella” movement two years ago. It grew in response to China’s legislature handing down long-awaited rules for the election in 2017 of Hong Kong’s next leader. Universal suffrage had been promised in the Basic Law. But China insisted on being able to vet the candidates through an “election committee” dominated by the party’s sympathisers in Hong Kong, who could be counted on to exclude popular democrats (such as Mrs Chan). A semi-democratic Legco rejected the package. Student-led protests erupted, blocking streets in busy commercial areas for over two months. + +Mr Leung faced down the protesters. Since then a hard line has crept into Hong Kong’s affairs, undermining the old guarantees. Last year the University of Hong Kong’s recommendation of a legal scholar, Johannes Chan, as its deputy vice-chancellor was vetoed by a governing council packed with outside members appointed by Mr Leung. It looked like punishment for Mr Chan’s support for pro-democracy movements. Since then, academics say a chill of self-censorship has descended on campuses. + +Perceptions of other much-admired institutions are also changing for the worse. One such body is the Independent Commission Against Corruption. It is accountable only to the chief executive, which is why the sudden transfer and resignation in July of a highly regarded official running an investigation into Mr Leung’s business dealings has led to turmoil and dismay within the commission. Across the civil service, morale is ebbing. + +Dogmatism is creeping in, too. The education department recently issued a ban on independence even being discussed in schools. The most notorious incident occurred late last year with the disappearance of five men involved with a Hong Kong bookshop specialising in salacious material about China’s leaders. One of the men seems to have been bundled out of Hong Kong by Chinese state-security goons. Even Britain, which under David Cameron was fixated on commercial gain in China and downplayed anxieties in Hong Kong, was moved to protest. It took a while longer for Mr Leung to go through the motions. + +Mainland officials harrumph that in Hong Kong there has been way too little “decolonisation” and too much “desinification”. A hard line and “patriotic” education are their remedy for a spoiled and ungrateful populace. But can’t they see? That is why people are talking about independence in the first place. + +For some young people, 2047, when all bets are off, seems not such a long way away. “Prepare for the worst, hope for the best,” says Joshua Wong Chi-fung, a 19-year-old who was one of the Occupy leaders and wants self-determination. Two years ago he was seen as radical. Now a small but growing share of the young sees peaceful disobedience as quaint. + +A brief history of lamp-posts and revolutions + +So, yes, the letterboxes are small stuff. But small things these days can blow up. Take the riot that was sparked when officials tried to close down unlicensed hawkers selling snacks during the Chinese new-year holiday in February. The “fishball revolution” was condemned by China as the work of splittists and black hands. Meanwhile on Lugard Road on the Peak, a famous sightseeing route named after a British governor, they have not yet started dismantling the wonderful old lamp-posts. But someone has written on every one: C.Y. (Leung), step down. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21705857-how-hong-kong-sees-itself-has-changed-profoundly-just-couple-years-spot-localist/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +The war in Syria: Smoke and chaos + +The Brotherhood returns: The ballot and the Book + +Religion in Zimbabwe: Tithing troubles + +The Central African Republic: Nostalgia for a nightmare + +Mining in the Democratic Republic of Congo: The richest, riskiest tin mine on Earth + + + + + +Articles Sections Next + +The war in Syria + +Smoke and chaos + +The battlefield in Syria grows more complicated + +Aug 27th 2016 | CAIRO AND ISTANBUL | From the print edition + + + +AS IF the war in Syria did not have enough combatants, yet another country has entered the fray. On August 24th Turkey sent tanks, warplanes and special forces soldiers over the border, driving Islamic State (IS) out of Jarabulus, an important supply node for the jihadists. + +Turkey’s mission has the backing of America, which is leading an anti-IS coalition. But it is already raising concerns inside Syria, where a five-year-old civil war has killed perhaps 500,000 people. Lately the fighting has become more chaotic. Alliances are shifting and peace, already a dim prospect, now seems even further off. + +The situation in Hasakah, in the north-east, is indicative of the changing landscape. Until recently, the Syrian army of Bashar al-Assad, the country’s blood-soaked president, had mostly steered clear of Kurdish militias—and, at times, seemed to work with them—in order to confront Sunni Arab rebels. The Kurds, for their part, have focused their fire on IS and tried to consolidate their self-declared semi-autonomous region, called Rojava, in the north. But in Hasakah the government and the Kurds recently came to blows. + +That fighting appears tied to warmer relations between Russia and Iran (which have long backed Mr Assad) and Turkey (which has not). Tension between Russia and Turkey reached a peak in November 2015 when Turkish F-16s shot down a Russian jet that had violated Turkish airspace. But a recent detente between the two, coupled with Turkish concerns over Kurdish power and IS terrorism (a suicide-bombing killed 54 people at a wedding in Turkey), have changed the dynamic. Binali Yildirim, Turkey’s prime minister, now says that Mr Assad might play a “transitional” role in Syria (rather than being forced out as soon as possible). + +In turn, the Syrian government has expressed unease with Kurdish aspirations to carve out land. The Syrian army echoes Turkish statements linking the main Kurdish party in Syria, known as the Democratic Union Party (PYD), with the Kurdistan Workers’ Party (PKK), which has waged a long guerrilla war against Turkey. Little is now made of the Syrian government’s role in fostering the PKK. But the Syrian foreign ministry has also condemned Turkey’s operation as a breach of its sovereignty. Russia said it was “deeply concerned”. + +America has tried to stick to the narrow mission of defeating IS. But it risks being drawn into the wider conflict. Air strikes by Syrian planes around Hasakah on August 18th came close to American soldiers supporting Kurds in their fight against IS. America sent in its own jets, which arrived as the Syrian bombers were leaving. Now it is patrolling the skies over the city, where a ceasefire is in place. “The Syrian regime would be well advised not to do things that place [anti-IS coalition forces] at risk,” said Jeff Davis, a Pentagon spokesman. + +America’s support for the Kurds in Syria has strained its relationship with Turkey. Unfounded Turkish suspicions that America was involved in a coup attempt have increased the distrust. “Turkey has determined that America is not in a position to guarantee its interests [in Syria],” says Emile Hokayem of the International Institute for Strategic Studies, a think-tank. New evidence came earlier this month, when the town of Manbij, an important hub for IS, was liberated. America had assured Turkey that Arab fighters would lead the way into the city, but the PYD forces were in the vanguard. Now the Kurds refuse to leave. + +A bridge too far + +The jihadists retreated north and west, towards Jarabulus and al-Bab. Now the Kurds have set their sights on al-Bab, which would allow them to link up the eastern and western portions of Rojava (see map). But some had also hoped to capture Jarabulus, where the Turks now appear intent on installing thousands of non-Kurdish Syrian rebels. Many Kurds think the Turkish mission is really aimed at blocking them from gaining a contiguous piece of territory along the Syrian frontier. + + + +There is a risk that the Turkish offensive will meet Kurdish resistance, pitting an American ally against an American proxy, with American fighter jets providing air cover. Turkey’s minister of foreign affairs, Mevlut Cavusoglu, has warned the Kurds to return east of the Euphrates river. “America gave its word they would do so,” he said. “Otherwise we as Turkey will do what is needed.” At a press conference in Ankara America’s vice-president, Joe Biden, warned that the PYD risked losing American support if it did not move back. + +They aren’t going quietly. “Turkey has much to lose in the Syrian swamp,” said Saleh Moslem, a co-leader of the PYD, on Twitter. The Kurdish-led Syrian Democratic Forces says it is “prepared to defend the country against any plans for a direct or indirect occupation”. + +Turkey’s machinations have also led to fears in Aleppo, where earlier this month rebels broke a government siege. Some of them now worry that Turkey, in deference to Mr Assad’s foreign backers, will cut its support. “We need these supply routes [to Turkey] to stay open. Otherwise things will get even worse for civilians in the city,” says a local activist. Fierce fighting has left much of eastern Aleppo cut off from food, water and medicine. Efforts to reach a ceasefire deal have come to nought. Stephen O’Brien, the top aid official at the UN, has called the crisis the “apex of horror”. + +Such suffering, and a new UN report that documents Mr Assad’s continued use of chemical weapons (as well as a mustard gas attack by IS) after he had promised to export and destroy them, have some hoping America will intervene more forcefully to protect civilians and punish the regime. But that might benefit rebel outfits such as Jabhat Fatah al-Sham, which only recently shed its affiliation with al-Qaeda (and changed its name from Nusra Front) in order to appear more moderate. “America risks becoming the air force of jihadist groups,” says Thanassis Cambanis of the Century Foundation, a think-tank. + +Russia, meanwhile, is establishing a more durable presence in the region, by making its air base in Latakia permanent and working closely with Iran. The Middle East has become “the platform for Russia’s ambitions as a 21st-century great power”, says Dmitri Trenin, the director of the Carnegie Moscow Centre, a think-tank. But it risks getting bogged down in Syria’s intractable and expanding war. Permanence, in that case, may not be desirable. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21705658-battlefield-syria-grows-more-complicated-smoke-and-chaos/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Brotherhood returns + +The ballot and the Book + +On both sides of the Jordan river Islamists are tiptoeing back to elections + +Aug 27th 2016 | AMMAN AND RAMALLAH | From the print edition + +“WHOOPS!” seems to be all aghast officials can say. On either side of the River Jordan, the Hashemite kingdom and the Palestinian Authority have called elections expecting easy wins. Instead, to their surprise, the local arms of the Muslim Brotherhood, an Islamist group, have ended their boycotts of the ballot and are now the front-runners. The king’s men in Jordan anticipate that the Islamic Action Front (IAF), the brothers’ political arm in Jordan, will emerge from the general elections on September 20th as the largest single party. In adjacent Palestine, ministers speculate that Hamas, the Brotherhood’s Palestinian offshoot, might sweep all eight of the West Bank’s cities in municipal elections set for October 8th. + +This would mark a turn for democratic Islamism, which had seemed on the verge of oblivion in the Arab world after the Brotherhood’s Muhammad Morsi was overthrown as president of Egypt in 2013. Hounded into hiding and despairing of electoral politics, Sunni Islamists across the region abandoned the ballot box for bullets and boats to Europe. King Abdullah of Jordan declared the Brotherhood “a Masonic cult” and banned it (although he eschewed the mass arrests that have taken place in Egypt). Now, both the Palestinian president, Mahmoud Abbas, and King Abdullah will have to engage with the Islamists again. “We’re not Cairo,” proffers a Jordanian official. + +After preaching revolution and gaining little from it, many Islamists crave the legitimacy that elections offer. They are unlikely to regain the close relationship with power they enjoyed under King Abdullah’s father, Hussein, when he ruled both sides of the Jordan. But in both Jordan and the West Bank mayhem and infighting in the ranks of the ruling parties have bolstered the brothers’ chances. + +By contrast, the IAF’s headquarters is a hive of strategists and statisticians calculating campaigns and polls. It is fielding candidates in 15 of Jordan’s 23 electoral districts. Its nearest rivals struggle to muster a handful. “Only the Brotherhood has the social support, the political platform and the cross-country organisation to get out the vote,” says Curtis Ryan, an American political scientist. + +Pragmatism is also helping their cause. In both Jordan and the West Bank the authorities sought to stack the ballot against the Islamists by reserving a disproportionate number of seats for groups such as Christians, Circassians and women. But the Islamists have outwitted them by reaching out to minorities. Five Christians are on the IAF’s list and Hamas, for the most part, has sidestepped the usual bombast about “resistance” and cast itself as a technocratic alternative to Mr Abbas’s corrupt and sclerotic faction, Fatah. They have also wooed Christian candidates. “The Brotherhood is going to taste the sweetness of being not just Islamist leaders but national leaders,” says Leith Shubeilat, a veteran Islamist and scourge of the Jordanian royal family. + +The king and IAF + +The elections may be a barometer of popular sentiment, but they will have little real impact. In Jordan gerrymandering ensures that East Bank Bedouin get the lion’s share of seats. At best, says an IAF candidate, the Islamists will gain 25% of the seats. Moreover, King Abdullah prefers to rule through his security agencies and has clawed back most of the power parliament and the government once had. When legislators prove troublesome, he dissolves parliament and rules by decree. + +In the West Bank Mr Abbas also rules by decree, having suspended parliament a decade ago and overrun his own mandate by seven years. Municipal elections have been a rare exception to this democratic deficit. Electoral billboards plaster the roadsides and, despite Hamas’s participation, Mr Abbas insists the vote will go ahead. But his police have jailed dozens of Islamist campaigners and he may yet look to Israel’s army, which occupies the West Bank, to annul the ballot for him. After Hamas won legislative elections in 2006 Israel jailed most of its parliamentarians to give Fatah a majority. Foreign donors, too, may influence the outcome, should they again withhold funding for municipalities run by Hamas. “They believe elections should only be a means to Fatah’s victory,” says Salah al-Bardawil, a Hamas official. + +Yet there may be some benefits to getting the Islamists into parliament. A growing number of young Jordanians are idling towards violent opposition: in less than a year jihadists acting in the name of Islamic State have struck the security forces three times. And despite vast dollops of aid, Jordan’s economy is sliding into insolvency. Public debt has climbed from 82% of GDP in 2014 to 94% and the king will find it easier to sell painful cuts if backed by a government with broad representation. + +Indeed, much needs to be done to rebuild public trust in state institutions. Turnout at elections is often low and many take to the streets instead to voice their frustrations. “What’s the point of a parliament which is not a parliament?” is a common refrain in Jordan. Better to keep the Islamists pliant within. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21705838-both-sides-jordan-river-islamists-are-tiptoeing-back-elections/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Religion in Zimbabwe + +Tithing troubles + +Even the most popular preachers of prosperity are facing tougher times + +Aug 27th 2016 | HARARE | From the print edition + + + +THE booming voice of Apostle Rodney Chipoyera, the pastor of the Kingdom Prosperity Ministries, fills a decrepit cinema-turned-church in Harare, Zimbabwe’s capital. Yes, times are tough, he tells his congregants, who sit in broken chairs wearing their Sunday best. The country may be bust, but if you stop tithing—giving a full tenth of your income to his church—you will be cursed. “You tithe, He blesses,” proclaims Mr Chipoyera. “You keep the tithe, the curse is initiated.” The congregation responds in ardent agreement: “I refuse to rob God in tithes and offerings!” + +Strutting across the stage, Mr Chipoyera is at pains to defend his shiny car and fashionable clothes. Nobody wants their pastor to look poor, he declares with a laugh. “I represent God,” he says. “I dress well to show who I represent…I don’t want to be one of those pastors on a bicycle.” + +On Sunday mornings Harare booms with the sound of preaching. White-robed apostolic sects worship in fields and by the roadside; wealthier folk attend gleaming megachurches. Pastors starting from scratch find space in schools and even nightclubs. Traditional denominations have lost members to Pentecostal and apostolic groups, many of them promising prosperity to those who truly believe—and open their wallets to prove it. American dollars are preferred, but mobile money is acceptable too. + +Some of the more enterprising priests sell miracles. Blessed ballpoint pens help you pass exams. Miracle bricks will help you acquire your own home. Local newspapers carry regular reports of miracles. “Churches—the only business in Zimbabwe that’s growing,” scoffs a journalist. + +But even the prosperity churches have suffered setbacks recently. As the economy melts down, donations have dwindled. One church has been accused of seizing property and equipment from members who have failed to pay their tithes. The government, ever ravenous for cash, has started to tax some church proceeds. Bishop Rodger Jeffrey, who founded a church in a poor Harare suburb eight years ago, says he used to get about $2,000 a month from his congregation. Nowadays donations have halved. “We must encourage them to be entrepreneurs,” he says. To help things along, an upcoming church conference will include lessons on starting a business. “No one wants to be poor,” says Bishop Jeffrey. “Poverty is the devil.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21705839-even-most-popular-preachers-prosperity-are-facing-tougher-times-tithing/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Central African Republic + +Nostalgia for a nightmare + +He fed his opponents to crocodiles. Yet people miss Emperor Bokassa + +Aug 27th 2016 | BANGUI | From the print edition + +What’s on the menu later? + +HE CALLED himself the Emperor of Central Africa. Others dubbed him the Butcher of Bangui. Jean-Bédel Bokassa seized power in a coup on December 31st, 1965 and ruled what is now the Central African Republic (CAR) until he was ousted by French soldiers in 1979. + +In his early years in office he was corrupt, brutal and chummy with France. (President Valéry Giscard d’Estaing often came to slaughter elephants in one of his wildlife reserves.) With time, however, Bokassa’s behaviour grew even worse. He fed his enemies to lions and crocodiles. He ordered all schoolchildren to buy new uniforms made by his family firm, rounded up those who protested and massacred at least 100 of them—reportedly joining in the beatings himself. After the French lost patience and overthrew him, the dismembered remains of a maths teacher were found in his fridge. His successor accused him of cannibalism. He always denied it, though at a state banquet he once told a French diplomat: “You never noticed, but you ate human flesh.” + +Bokassa died in 1996. Strangely, he is now enjoying a surge of posthumous popularity in his homeland. Last month a group of admirers recovered and restored what is left of the bejewelled throne on which he crowned himself emperor, Napoleon-style, in 1977 (see picture). The gems and gold-plated eagle that once adorned it are gone. But the frame has been repainted bright yellow and was displayed beside one of the busiest roads in Bangui, the capital, for a few days until the authorities removed it. + +“We want this throne to be exhibited and looked after in a museum honouring Jean-Bédel Bokassa,” says Héritier Doneng, a leader of Patriotes Centrafricains, a group that aims to “defend the country’s cultural values” in part by praising the late emperor, whom it credits with building a university and schools. + +A tentative rehabilitation of Bokassa has, in fact, been under way for some time. Although he was twice sentenced to death, he served just seven years in prison and was freed in 1993. In 2010 the then-president, François Bozizé, formally rehabilitated him, awarding him the state’s grandest medal of honour. Bokassa had “given a great deal for humanity”, said Mr Bozizé who, like Bokassa, had grabbed power in a coup and later lost it the same way. + +Nostalgia for tyrants is not unusual—witness the cults of Stalin and Mao. In the CAR, a rosy view of the 1970s thrives partly because most people have no memory of that decade (the median age is 20). Also, the present is so nasty that many think the past must have been better. The country has been at war more or less constantly since 2004. Perhaps 20% of its people have fled their homes. + +A fragile peace allowed the inauguration this year of President Faustin-Archange Touadéra, who promises peace, unity and development. As his interior minister, he has appointed Jean-Serge Bokassa, the son of you know who. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21705837-he-fed-his-opponents-crocodiles-yet-people-miss-emperor-bokassa-nostalgia/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Mining in the Democratic Republic of Congo + +The richest, riskiest tin mine on Earth + +Can an ambitious mine make a difference in eastern Congo? + +Aug 27th 2016 | BISIE | From the print edition + +More than a river to cross + +DEEP in the jungle of North Kivu, a lawless province in the Democratic Republic of Congo, a new road is being cut through the canopy. As birds chirp, hand saws cut noisily through trees. Men with shovels dig out roots and flatten the ochre-red earth. A sturdy new log bridge crosses a stream. On it stands Boris Kamstra, a South African in a plaid shirt and bucket hat. “This is great road-building material,” he booms, gesturing at the stones. + +Mr Kamstra is the boss of Alphamin Resources, a Canadian-funded company that is trying to build perhaps the most improbable mine in Africa. The site, on a hill called Bisie, is about 60km (37 miles) from the nearest settlement of any size, a town called Walikale. Before Alphamin arrived there was no road connection: anyone hoping to reach it faced a full day’s hike. Getting to Goma, the nearest border crossing, would take another two days on a road lorries cannot use. In the immediate area are three armed rebel groups. The nearest government post is at Walikale—and consists of one rather squat office. + +Congo’s soil is bursting with buried treasure. Its long civil war, which ravaged the east for the best part of a decade, was financed largely by metals extracted from hills like Bisie (see article). Congo’s tin, tantalum and tungsten are used in electronics around the world. Although some of these minerals come from big industrial copper mines in Katanga, Congo’s south, and a gold mine in South Kivu, there is not yet a single modern mine in North Kivu. + +Tin, tin in the Congo + +Until now the province’s metal has been dug out almost entirely by hand. Yet Alphamin hopes to show that it can run a modern industrial mine in a part of the world that scares other modern miners away. + +Alphamin says that the investment is attractive—even at a time of low commodity prices—because the ore that it plans to extract is richer than that found anywhere else in the world. Behind the company’s camp on the hill are stacks of carefully ordered cylinders of rock drilled out to map the riches beneath the mountain. (Like almost everything else in the camp, the drill rig had to be lifted in by helicopter.) The ore they contain is 4.5% grade. That means that for every 100 tonnes of ore extracted, the firm will be able to sell 3.25 tonnes of tin (not all the tin can be extracted from the rock). Most other mines would be happy to produce 0.7 tonnes. + +Such a rich deposit ought to make Bisie a very cheap producer, but its advantages are offset by the other costs and risks of working in eastern Congo. These are hefty, even before the first load of tin has been extracted. The helicopter “makes confetti of $100 bills”, jokes Mr Kamstra. Exploratory drilling costs more still (roughly $250 for every metre, of which the company has drilled 40,000 to prove to investors that it has lots of tin in the ground). Building a new road 32km through the bush is not cheap: it involves 450 workers. The firm is also rehabilitating an existing road to Goma so that it can carry lorries. + +Once exploration is completed it will take some $135m to build the mine. Recouping that investment may not be easy in a place as insecure as North Kivu. Congolese authorities granted a permit for exploratory drilling in 2006. But the firm was not able to operate until 2012 because there was too much fighting nearby. Since then its base camp has been attacked by armed groups four times. In 2014 a police officer was killed and research work worth hundreds of thousands of dollars was wrecked. The camp now has 30 police officers living on site. UN peacekeeping helicopters sometimes keep a watchful eye on it, too. + +If the gamble pays off Alphamin’s investors will make juicy returns. But to do so they may have to convince locals that the project is in their interest. If not, they risk protests and sabotage. + +In 2007 some 18,000 people lived at Bisie, working the site with pickaxes and shovels. They produced some 14,000 tonnes of tin that year—or perhaps 5% of world production. To get it to market people carried concentrated ore on their heads through the jungle to an airstrip where small planes could land to carry it out. It was back-breaking work but lucrative for many Congolese. That era began to come to an end in 2011, thanks in part to an American law. + +Under the Dodd-Frank act, a law aimed mainly at tightening bank regulation, firms operating in the United States must be able to show where the minerals used in their products came from. The idea was to stop rebels in poor countries from selling gold and diamonds to fund wars. The law all but shut down artisanal mining in much of eastern Congo. + +Elsewhere in eastern Congo artisanal mines have gradually reopened thanks to a verification scheme under which the UN and the government check mines and allow certified ones to “tag and bag” minerals. The site at Bisie has, however, never been certified. And although Alphamin will provide some well-paid jobs to locals, as well as pay taxes to the central government, its mechanised operations will never employ anything like the thousands of people who once toiled there with pick and shovel. Alphamin has promised to fund local projects, such as a new school, that are intended to benefit 44 villages. + +The mine could help local people indirectly, too, by bankrolling a cash-strapped government. When production begins a truck carrying tin ore will rattle every day from Bisie towards Goma. Each one will pay both a toll for the road as well as royalties to the provincial government. For the first time, the government will have a financial incentive (and some revenue) to provide security in the area. Insecurity is not just the biggest threat to Alphamin’s investors; it is also the biggest cause of suffering to the locals. + +In much of Africa having natural resources has often proved to be a curse. Gems and minerals have funded rebel armies and kept conflicts burning. Governments that can raise big bucks from oil or mineral royalties, rather than by fostering broad-based growth and taxing people’s incomes, have had little incentive to govern well. The ruling class have devoted their energies to divvying up the easy money rather than actually governing. + +In eastern Congo the state has all but collapsed, leaving vast tracts of territory lawless. The locals have discovered that even bad government is better than no government at all. It will take more than a tin mine to change that, but you have to start somewhere. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21705860-can-ambitious-mine-make-difference-eastern-congo-richest-riskiest/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Turkey’s anger at the West: Al-Malarkey + +Sarkozy returns: The revenant + +Croatian stagnation: Pining for the partisans + +An earthquake in Italy: Beauty and tragedy + +War and peace in Ukraine: Fighting for position + + + + + +Articles Sections Next + +Turkey’s anger at the West + +Al-Malarkey + +President Erdogan’s threat to realign towards Russia is more bark than bite + +Aug 27th 2016 | ISTANBUL | From the print edition + + + +THE presidential palace in Ankara is a 1,150-room modern fortress of stone pillars and sheet glass, completed for President Recep Tayyip Erdogan in 2015 at an official cost of $615m. For Mr Erdogan’s supporters, it is an emblem of Turkey’s energy and will. For his opponents it represents the president’s autocratic instincts and lust for power. During the attempted coup of July 15th, mutinous fighter pilots dropped bombs near the complex. On August 24th, Joe Biden, America’s vice president, went there to apologise to Mr Erdogan for America’s failure to show more solidarity with Turkey in the coup’s aftermath. + +Mr Biden did his best to mend fences. He compared the failed coup attempt to the September 11th attacks in America, expressed regret for not coming earlier, and paid his respects to the coup victims. Yet Mr Erdogan seemed unimpressed. Sitting alongside Mr Biden, looking less like an old friend than an estranged relative, the Turkish leader complained that Fethullah Gulen, the American-based Muslim cleric who his government claims masterminded the plot, was still free. “Under Turkey’s extradition agreement with the United States, such people should at least be taken into custody,” he said. “But at this very moment this man continues to manage a terrorist organisation.” + +The American vice president’s visit was part of an effort to repair a relationship that has gone badly wrong. Turkish officials do not just feel insufficiently appreciated: many actually think that American intelligence had foreknowledge of the coup. For weeks, the pro-government press has charged that America’s army or the CIA directed the plot. Polls show that a large majority of Turks now believe that the United States had something to do with it. + + + +America’s failure to arrest Mr Gulen at his compound in Pennsylvania is a big reason why. Mr Gulen’s sect, known as the cemaat, administers a global network of schools, charities, and businesses, and has placed followers throughout the Turkish bureaucracy. It was allied with Mr Erdogan and his Justice and Development (AK) party until the two groups fell out in 2013. Western analysts are divided on whether the coup was a cemaat operation or whether other groups in the army also played a role, but Turks mostly blame the Gulenists. + +For weeks, American officials have explained to the Turkish government and public that the request for Mr Gulen’s extradition will be handled in the courts, like any other. “We apply the law without exception… That’s what’s called the separation of powers,” Mr Biden told a Turkish reporter who suggested America was sheltering Mr Gulen. Such explanations cut little ice. Most Turks “live in a conspiracy-theory view of the world. They do not believe in the separation of powers,” says James Jeffrey, a former American ambassador to Ankara. + +A second source of friction has been criticism of Turkey’s crackdown after the coup, both from America and Europe. Western governments and human-rights advocates were already wary of Mr Erdogan’s growing authoritarianism in recent years. As his government began rounding up thousands of suspected Gulenists and other opponents, the suspicion grew that he was using the failed putsch as an excuse to cement his hold on power. Two days after the coup, John Kerry, America’s secretary of state, and Federica Mogherini, the EU’s foreign minister, starting warning Turkey to respect human rights. + +This rubbed many Turks, who were in the midst of a national celebration after defending a civilian government against a military takeover, the wrong way. Some American diplomats now feel they got the tone wrong. “What would your reaction have been if the president of another country came to New York five weeks after (September 11th) and lectured us about the Patriot Act?” asked an American official in a briefing before Mr Biden’s visit. + +You never visit + +A final issue was the lack of post-coup solidarity visits by Western leaders to Ankara. Europeans, still smarting from Mr Erdogan’s tough negotiations over the refugee deal in March (and his efforts to have their citizens prosecuted for reciting insulting poems about him), were in no mood to pat him on the back. The numbers swept up in the purges have swelled to 80,000; a visit to Turkey might seem like an endorsement. + +The Europeans are right to worry. The purges have “little to do with respect for due process and basic rights”, says Sezgin Tanrikulu, an opposition parliamentarian and human rights-lawyer. A government decree passed after the coup permits holding suspects for up to 30 days without hearing charges. Access to lawyers is limited. The authorities are not looking to document suspects’ links to the coup, says Mr Tanrikulu, but to the Gulen movement. + +Turkey’s reaction to Western criticism has been to threaten to turn away from the West entirely. Vladimir Putin was one of the first foreign leaders to express support for Mr Erdogan during the coup attempt, and the first to be visited by Mr Erdogan afterwards. Turkey has long supported overthrowing Syrian President Bashar Assad, who is backed by Iran and Russia, but recently said he could stay temporarily (see article). Mr Erdogan’s way of “pushing America and the EU and signalling that he has options is rapprochement with Russia and Iran,” says Gonul Tol of the Middle East Institute. + +Yet strategically, Russia is no alternative to the Western alliance for Turkey. The two are historic enemies and rivals for influence in the Caucasus, the Middle East and the Black Sea. NATO is far more valuable. Indeed, as Mr Biden arrived in Ankara, Turkish forces were moving into Syria under American air cover for the first time, preparing to attack Islamic State. Turks are livid with the West for its response to the coup, and most suspect America of backing the cemaat. But they will not turn their backs on America or Europe just yet. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21705842-president-erdogans-threat-realign-towards-russia-more-bark-bite-al-malarkey/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Sarkozy returns + +The revenant + +Given up for politically dead, France’s former president is back in the race + +Aug 27th 2016 | PARIS | From the print edition + + + +WHEN Nicolas Sarkozy failed in his bid for re-election as president in 2012, the French thought they had seen the back of him. He vowed to retire from public life. But the promise never rang entirely true. Sure enough, this week the Sarko tornado began once again to tear its way through France: the Gaullist former president declared that he would seek his party’s nomination at a primary in November. For now, Mr Sarkozy trails his rivals for the post. But it is almost always a mistake to underestimate the pugnacious ex-president. + +Mr Sarkozy formally announced his decision in a new book, “Tout pour la France” (Everything for France), published on August 24th. The next day he was due to take to the stage in the south of France for his first campaign rally. Mr Sarkozy’s platform, as outlined in the book, is a hallmark mix of economic liberalism (lower taxes, longer working hours, later retirement) and right-wing identity politics (tighter citizenship and immigration rules, a tougher stance on Islam and integration). + +On the face of it, Mr Sarkozy’s chances of securing the nomination for “Les Républicains” (the Republicans), and getting his old job back, are not high. In polls among voters on the centre-right, he consistently trails Alain Juppé, a patrician former prime minister. A recent poll by TNS Sofres puts the gap at 30% to 37%, with François Fillon, another former prime minister, at just 8%. A broader sample of French voters also expects Mr Juppé to come top, by a big margin. Mr Sarkozy’s head-spinning mercurial style, and his tendency to prefer grandiose gestures over policy follow-through, have lost him support among centrists, who see Mr Juppé as a less divisive figure. + +Yet Mr Sarkozy is also a past master of the political comeback. After supporting a losing presidential candidate, Edouard Balladur, in 1995, and later securing a miserable 13% of votes for his party, which he led into European elections in 1999, Mr Sarkozy was widely written off. But he won the presidency eight years later. More recently, his prospects have been damaged by various judicial inquiries into affairs such as a breach of party-financing rules. Some of these cases are still outstanding. But so far none of the charges has managed to stick to him. + +Above all, Mr Sarkozy’s calculation is that, after 18 months of deadly terrorist attacks, voters on the right want a hard line on security and political Islam. France is currently tangled in a row over the “burkini”, a cross between a burqa and a swimsuit, which a dozen mayors of seaside towns have banned on their beaches this summer. Such bans, which have been challenged by civil-liberties groups in the courts, fall partly under a long French secular tradition of keeping conspicuous religiosity out of public places. But they also reflect wider tensions over Islamism and public order. + +A former interior minister who once set up a ministry of national identity, Mr Sarkozy has more of a record on such matters than does Mr Juppé. And, unlike Mr Juppé, he has no qualms about trampling over ground occupied by the ultra-nationalist Marine Le Pen. Mr Sarkozy wants, for example, a ban on headscarves in state universities (under France’s secular rules, they are already banned in state schools) and, even more controversially, the preventive detention of those listed as “dangerous” by intelligence services, whether or not they face charges. How was it possible, he asked, that one of the assassins who cut the throat of a Normandy priest in July had been released from prison with an electronic tag when he launched his barbaric attack? + +The French return next week for la rentrée, the start of the school year, with the country still under a state of emergency. Given such stress, political divergences are readily amplified. The primary campaign, and the election next spring, could turn out to be ugly as identity politics are thrust to the fore. Already, the heavy-handed enforcement of the burkini ban by policemen in Nice has divided opinion. Rivalry among Republicans is all the greater given the stakes. Polls currently suggest that the party’s nominee will go on to face a second-round run-off in 2017 against not a Socialist, as is traditionally the case, but Ms Le Pen. It would take an immense upset for her to win. More probably, the winner of the Republican primary will end up as the next president of France. La rentrée looks set to be tense and turbulent. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21705845-given-up-politically-dead-frances-former-president-back-race-revenant/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Croatian stagnation + +Pining for the partisans + +Where politics are stuck in the 1980s, if not the 1940s + +Aug 27th 2016 | ZAGREB | From the print edition + + + +KOKI the parrot is a shrewd old bird. He used to belong to Marshal Josip Tito, Yugoslavia’s longtime communist leader, who died in 1980. Koki lives on the Croatian island of Brioni, where Tito spent six months of the year, and where the villas are still reserved for Croatia’s leaders. If visitors are lucky, Koki will swear at them, or squawk “Tito! Tito! Tito!” If Koki had a bigger vocabulary, he would doubtless enjoy revealing Croatia’s darkest state secrets, which he has surely overheard. On August 16th Croatia lurched into a new election season, and it is a measure of the country’s frozen politics that some of the key campaign issues hinge on conversations Koki might have eavesdropped on decades ago. + +Take the murder of Stejpan Djurekovic, who was shot and hacked to death with a meat cleaver in Germany in 1983. Mr Djurekovic was an émigré active in Croatian nationalist circles. On August 3rd a German court sentenced Josip Perkovic and Zdravko Mustac, two former Yugoslav secret-service agents, to life imprisonment for organising his death. + +Croatia’s main parties, the Social Democrats and the Croatian Democratic Union (HDZ), disagree furiously about what this means. Zoran Milanovic, the head of the Social Democrats, who was prime minister from 2011 until this year, fought hard to prevent the extradition of the two men now convicted. So supporters of the HDZ say that the Social Democrats were protecting the men who killed a Croatian nationalist. The Social Democrats retort that the killers had close links to Franjo Tudjman, independent Croatia’s first prime minister in 1991 and the co-founder of the HDZ. + +The two parties are distinguished not so much by their current platforms as by their histories. The Social Democrats claim the anti-fascist credentials of Tito’s communist partisans, who battled Nazi occupiers in the second world war. In contrast, many in the HDZ admire the wartime Ustasha, a Nazi-quisling movement. The German verdict has added an extra layer to their historical quarrels. Another recent spat concerns HDZ ministers who attended the unveiling of a monument to a Croatian nationalist whose accomplishments included murdering the Yugoslav ambassador to Sweden in 1971. Some saw this as poor form. + +All this folklore distracts from more important issues. Croatian politics have been a mess for months. The previous election was in November, but the resulting HDZ-dominated coalition government collapsed in June over a corruption scandal involving the national oil company. The HDZ then jettisoned its leader, who had allowed the party’s Ustasha-admiring elements to the fore. The new leader, Andrej Plenkovic, is a moderate member of the European Parliament. He wants to wrench his party back to the centre, and says he deplores the populism that is sweeping Europe. As for historical issues, he says, Croatia needs “sober debate” about the crimes of both Ustashas and Communists. + +One reason to stick to the past may be the two parties’ dreary records in the present. The Social Democrats had a disastrous economic record during their years in power, from 2011 until January 2016: the economy shrank four years out of five. In the years before that, the HDZ gained a reputation for corruption, which its most recent term did nothing to dispel. The HDZ is trailing in the polls, and neither party will gain enough votes to govern alone after the September 11th election. Some analysts predict a grand coalition between the two major parties, though Mr Plenkovic says this is “not an option”. The obsession with history makes it perhaps less odd that, in a televised campaign debate, Mr Milanovic attempted to win over HDZ voters by proudly revealing that his grandfather had been an Ustasha. + +Such tactics appal many. Boris Miletic is the head of a regional party that runs Istria, the area where Koki lives (see map). Tourism is a mainstay of the economy; this season, Mr Miletic says, has been “fantastic, perhaps the best since the war” (referring to Croatia’s conflict with Serbian forces from 1991 to 1995). But then his mood darkens. Arguing about Ustashas and the past is “really embarrassing”, he says. “We need to talk about the future.” He lists reforms which the HDZ and Social Democrats have promised for years: decentralising power, rationalising territorial divisions, and so on. Unfortunately, in Croatia, the main political parties seem incapable of anything but parroting the same old lines. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21705844-where-politics-are-stuck-1980s-if-not-1940s-pining-partisans/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +An earthquake in Italy + +Beauty and tragedy + +Aug 27th 2016 | From the print edition + + + +Beauty and tragedy, the contrasting faces of Italy, came together in deadly fashion on August 24th when a 6.2 magnitude earthquake struck villages in the picturesque uplands north-east of Rome. At least 247 people died. In 2009 an earthquake devastated the city of L’Aquila, less than 30 miles (50km) away. The lethal impact of the disaster is likely to have been magnified, as it was around L’Aquila, by houses built decades, if not centuries, ago that do not meet modern anti-seismic standards. The earthquake presents Italy’s prime minister, Matteo Renzi, with a new headache as he strives to win a referendum, probably in November, on changing Italy’s constitution. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21705684-beauty-and-tragedy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +War and peace in Ukraine + +Fighting for position + +An escalation in violence may mean Russia wants to renegotiate the terms of a stalled peace process + +Aug 27th 2016 | KIEV | From the print edition + +Putin spends rubles, makes rubble + +AS COLUMNS of soldiers marched through the centre of Kiev to mark 25 years of Ukrainian independence this week, Larissa Nikitina could not help but think about the price of sovereignty. Some 9,500 Ukrainians have been killed in fighting in the country’s east since early 2014, and there are more casualties every week. “We fought for this holiday, we are fighting for it, and we will have to keep fighting for it,” she said. Tensions have flared around Crimea and eastern Ukraine in recent weeks, and many worry that another round of fighting is on the horizon. + +The Minsk peace process, which has sought since mid-2014 to broker an end to the conflict, has been at a standstill all summer, and violence has been escalating. International monitors have noticed Ukrainian government and Russian-backed separatist forces creeping closer along the line of contact; heavier-calibre weaponry and artillery have come back into use. Earlier this month, Russia claimed that Ukraine tried to stage a terrorist attack on Russian-occupied Crimea, a charge Kiev denied. While events remain murky, Vladimir Putin’s rhetoric was ominously clear: “We will not let these things pass.” Ukraine’s president, Petro Poroshenko, put his troops on high alert. + +Ukraine’s worries have been compounded by Russian sabre-rattling along its borders. Mr Putin led a meeting of his security council in Crimea last week, as the Black Sea Fleet staged war games. Large-scale exercises in the Southern Military District, encompassing Crimea and part of the border with Ukraine, are scheduled for September. Ukrainian observers have noted that Russian exercises provided cover for assaults on Ukraine in 2014 and Georgia in 2008. + +Nonetheless, an all-out invasion by Russia remains unlikely. The Pentagon says it has not seen evidence of “troop movements that are so large that we’re concerned about those on their own”. Occupying Ukrainian territory would be bloody and costly. “Russia could enter, but getting in does not mean getting out,” says Colonel General Ihor Smeshko, a former head of Ukraine’s Security Service (SBU). Partisan resistance would be fierce. And Ukraine’s army, while still lagging Russia’s, has improved from the hollowed-out force it was when Russia annexed Crimea in early 2014. Then, Ukraine could field just 6,000 combat-ready infantry. During the ensuing war, officials say, some 300,000 soldiers have seen time on the frontline. + +Instead, Russia hopes to use the threat of war to extract concessions at the negotiating table. “Tensions along the border create a discourse in the West and Ukraine,” says Alex Ryabchyn, a Ukrainian MP from the Donetsk region. “Putin wants the West to think about what would happen if war restarted.” The agreements require Ukraine to hold elections in the secessionist territories, but are ambiguous about the sequencing. Moscow accuses Kiev of balking. Ukraine and the West insist that a stable ceasefire and the withdrawal of Russian forces must come first. + +Pressing forward with the political elements of the Minsk protocol carries grave domestic risks for Ukraine’s leadership—a fact not lost on the Kremlin. When constitutional amendments foreseen under the Minsk deal were first raised in parliament last summer, nationalist protests outside the Rada turned violent, leaving four dead. Passing election laws and constitutional changes while soldiers are still dying in the Donbas would be “disastrous” for Ukraine’s political stability, says Ivanna Klympush-Tsintsadze, the country’s Vice Prime Minister for European and Euro-Atlantic Integration. While the West often pushes for more compromise, she adds, “there are serious red lines” where Ukraine cannot make further concessions. + +Ultimately, Russia may be seeking a favourable renegotiation of the whole peace deal. As diplomats bicker over a “road map” for implementation, Russian propositions amount to a “rephrasing” of the original Minsk agreements, says Sergei Rakhmanin, deputy editor of Zerkalo Nedeli, a Ukrainian weekly. Mr Putin has accused the Ukrainians of “turning to terror” and abandoning the Minsk plan, and suggested that further meetings in the Normandy negotiating format of Russia, Ukraine, France and Germany are senseless. When Angela Merkel and François Hollande meet Mr Putin on the sidelines of the G20 summit on September 4th, they may do so without Mr Poroshenko. + +For Russia, the time to regain advantage by changing facts on the ground appears ripe. More military drama would provide a welcome distraction from Russia’s economic struggles ahead of its mid-September parliamentary elections. Barack Obama wants to get closer to resolving the Ukraine crisis before his term ends. Ms Merkel and Mr Hollande are eyeing their own upcoming elections next year, and remain preoccupied with the fallout from the migrant crisis and Brexit. The current timetable for Minsk implementation will run out at the end of the year, as will European Union sanctions against Russia. + +The West will need to muster political will to extend both. Many expect pressure to escalate further before talks in Minsk on August 26th and at the G20 on September 4th-5th. Ukrainians believe the aim is to lure them into overreacting. “They’re trying to provoke us to go on the attack and give them a reason to abandon Minsk,” says Yuri Biryukov, a presidential advisor. With so many men and so much materiel along the front, even small provocations risk spiralling out of control. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21705843-escalation-violence-may-mean-russia-wants-renegotiate-terms-stalled-peace/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Scottish education: Not so bonny + +Brexit and immigration: Raising the drawbridge + +Olympic success: The brass behind the gold + +Football iconography: Put out more flags + +Television subtitles: Read my lips + +Political comedy: Laugh or cry? + +Bagehot: The 2016 vintage + + + + + +Articles Sections Next + +Scottish education + +Not so bonny + +Scotland’s schools were once among the best in the world. What went wrong? + +Aug 27th 2016 | EDINBURGH | From the print edition + + + +THE Royal High School, a state-run secondary in Edinburgh, is a good example of Scotland’s tradition of egalitarian education. It was founded in around 1128 to prepare children for a life in the church. In 1505 it was described as a “high school” in the first recorded use of the term. In the early 19th century it served as a model for America’s first public secondary school. + +Its results are still among the best in Scotland. But on a visit before the summer break, Pauline Walker, the school’s enthusiastic head, apologised to your correspondent for the mess. She was speaking in a cramped, makeshift office; many of her pupils were being taught in Portakabins, dotted in soldierly rows across the school’s car park. The inconvenience was a result of an inspection in April that found some of the school’s buildings to be unsafe. Only when pupils returned to school two weeks ago did things get back to normal. + +There are parallels with Scottish education as a whole. Once splendid, it is now slightly shabby. Even before the devolution of a wide range of political powers to Edinburgh in 1999, Scotland had an education system distinct from those of England, Wales and Northern Ireland. The national curriculum introduced by Margaret Thatcher in 1988 did not apply north of the border. Testing was less common. In the early 2000s Scottish children came near the top of the rankings in the OECD’s PISA tests for 15-year-olds. That reflected Scotland’s long-standing focus on education. Its teachers’ reluctance to embrace the “progressive” education styles that were fashionable in the 1960s-80s, instead focusing on the basics, also helped, says Lindsay Paterson of Edinburgh University. + +Since then, however, Scotland has dropped down the tables. Its PISA scores are now only a little above average. In 2007 the government pulled out of the TIMMS and PIRLS numeracy and literacy check-ups for younger children, in which Scotland was lagging behind England. There has been a small increase in the proportion of children achieving five good results in the exams taken at age 15 and 16, compared with big improvements in England, Wales and Northern Ireland, albeit from a low base (see chart). Fewer Scottish children stay in education post-16 than in any other country of the union. + + + +To critics, this is proof that Scotland missed out on reforms enacted elsewhere in Britain. They point to England, where the Labour governments of 1997-2010 focused on improving failing schools. They introduced more frequent testing and monitoring of pupils’ performance, as well as a focus on basic standards, setting time aside each day in primary schools to improve literacy and numeracy. + +In Scotland, a new curriculum was phased in from 2010 by the ruling Scottish National Party (its development began under the previous Labour government). It is an “idealistic, almost Utopian” approach to education, says Mr Paterson. According to the official rubric it hopes “to achieve a transformation in education in Scotland” and includes “the totality of experiences which are planned for children and young people through their education”. It seeks more pupil contribution in lessons and less prescription from teachers. + +The government, as well as many teachers, argues that in secondary schools with good leadership the new curriculum has allowed pupils flexibility in their final years at school (some, for instance, spend a few days a week on work experience or in an apprenticeship). But, says Carole Ford, a former head of School Leaders Scotland, a head teachers’ union, any benefits have come at the expense of a more rigorous education. Even some supporters of the new curriculum suspect that more time spent in class discussions, and less on basic skills, is to blame for falling standards. In primaries, standards of literacy and numeracy have fallen every year since national measurements were introduced in 2011. + +Ms Ford says that teachers are swamped by the number of “outcomes” that have to be met, despite the curriculum’s claims to free them to teach how they see best. Similarly, although the number of year-end exams has been cut, there is now a barrage of tests throughout the year. Teachers report that children are stressed and that the need for constant resits makes planning ahead futile. A survey by the Scottish Qualifications Authority, which runs exams, found that 89% of teachers believe the new approach to assessment is not working well. + +School leaders find it difficult to respond to such problems because of more bureaucracy and less money. Education spending in Scotland fell by 8% in 2010-2014, while in England school spending grew by 3%. Hiring and firing staff is difficult. And since there are caps on class sizes, head teachers are restricted in how they can deal with their lower budgets. + +The Scottish government has woken up to its underperforming schools. Nicola Sturgeon, the first minister, has asked to be judged on her success in closing the gap between rich and poor pupils, as well as in raising attainment across the board. She is considering reforms including giving more money directly to schools; national assessments in primaries; a streamlined curriculum and reduced local-authority control. A government adviser says ministers have noted the success of some charter schools in America and of London’s schools, which were boosted by more funding but also greater autonomy (see article). Yet the membership of a recently appointed panel of education advisers points in a less radical direction. + +Much depends on Ms Sturgeon’s willingness to take on the Scottish educational establishment. Doing so would require a role reversal. Historically, Scottish ministers have acted as cheerleaders for schools under their control, whereas English ones have acted as critics. Her party’s strong position in the Scottish Parliament offers an opportunity for change. If she is serious in her desire to improve Scotland’s schools, Ms Sturgeon must take it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21705866-scotlands-schools-were-once-among-best-world-what-went-wrong-not-so-bonny/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit and immigration + +Raising the drawbridge + +Hopes of a cost-free cut in European Union migration are illusory + +Aug 27th 2016 | From the print edition + + + +HOSTILITY to immigration was a key driver of Britons’ vote on June 23rd to leave the EU. Theresa May has duly said that freedom of movement from the EU cannot continue as before. Yet curbing migration will be both tricky and costly. + + + +It is numbers that cause the most trouble. In both 2010 and 2015 the Tories said they would cut annual net immigration to the tens of thousands. Yet the figure for 2015, published before the referendum, was 333,000, almost half of it from the EU. Such high EU immigration is relatively new, caused in large part by the accession of ten eastern European countries in 2004 and 2007 (see chart). Figures released on August 25th showed that net immigration in the year to March was still running near record levels. + +One issue is what to do about 3.5m existing EU migrants. British Future, a think-tank, finds that 84% of Britons want them to stay, yet the government remains wary of commitment. Mrs May has said she first needs a reciprocal promise for 1.2m Britons living abroad in the EU. There is also some dispute over whether to have a cut-off date, perhaps June 23rd. In reality there is little chance of any deportations, which would surely be illegal. EU migrants have a right to permanent residence after five years in Britain; given how long Brexit may take, that should cover most already there. + +Next is the question of what sort of controls to have for new arrivals. Most Brexiteers favour an “Australian” points system similar to that applied to non-EU migrants, which lets in only the skilled and educated. Yet Australia is no longer satisfied with the way its points system works. + +According to the Social Market Foundation, another think-tank, only 12% of EU migrants would qualify under the current rules for non-EU migrants. But slashing the number of unskilled could be costly. The food-processing, farming and hospitality industries rely on low-cost labour from eastern Europe. Cutting it off would create labour shortages that would force firms to adapt their business models: more automation, higher wages or just closing down. Employers may also demand a scheme to admit temporary low-skilled workers. + +The administrative burden of new restrictions would be heavy. Data on EU migrants range from scanty to non-existent. National-insurance numbers are unreliable, as more are issued than used. The government is unlikely to bring in travel visas, still less identity cards. So enforcement of any system of work permits would rely on employers, landlords and public services, meaning more red tape. The Home Office would have to increase its enforcement role. With its current staffing, it would take 140 years to process all existing EU migrants’ requests for permanent residence, says the Migration Observatory at Oxford University. + +Given also the potential backdoor via Ireland, which will keep free movement within the EU but has no border controls with Britain, a big risk is that tighter migration controls will simply mean more illegal migration. Illegal immigrants are less likely than legal ones to pay taxes, receive the minimum wage or secure normal employment or health-and-safety protections. + +The supposed economic gains from cutting EU migration are also doubtful. Brexiteers have argued that migrants push down wages, increase pressure on health and education services, take jobs from Britons and make it harder for young people to afford housing. Yet researchers at the Resolution Foundation, another think-tank, dismiss most of these claims. + +They argue that there may have been a small downward impact on wages in some industries, but it is dwarfed by the impact of recession. Far from stealing jobs, EU migrants take ones that natives spurn; Britain’s employment rate is at a record high. Since they tend to be young, employed and taxpaying, migrants are net contributors to the state. For that reason they should ease, not raise, pressure on public services and housing—though there is a case for a “migrant impact fund” to channel their taxes towards more local public spending. + +Post-Brexit curbs on migration will do economic damage. Other EU leaders have made clear that they also imply more limited British access to the EU’s single market, delivering a further hit to the economy. British Future’s report calls the current system broken and proposes a “national conversation” on immigration policy. Ensuring that politicians (and voters) understand that tougher controls will impose significant costs on the economy would be a good start. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21705870-hopes-cost-free-cut-european-union-migration-are-illusory-raising-drawbridge/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Olympic success + +The brass behind the gold + +More cash, ruthlessly funnelled to winners, explains a record medal-haul + +Aug 27th 2016 | From the print edition + +Next stop: Tokyo + +BRITONS worried about their country’s global standing after Brexit might take solace from the Olympics in Rio de Janeiro. Team GB arrived home on August 23rd with 27 gold medals, second only to America. Its total haul of 67 gongs was its best in a century, and an Olympic first: no other country has increased the number of medals it has won immediately after hosting the summer games, as London did in 2012. + +History suggested that Britain would not match its performance in London, when it finished third with as many golds as France, Germany and Japan combined. Hosts typically enjoy an “Olympic bounce”: most increase their returns in the run-up to a home games, peak on their own turf, and then fade (see chart). A likely explanation is that hosts increase spending on sport ahead of the event, not wanting to flop at their own party. British success has increased in line with total funding since 1996, when Team GB won just one gold medal in Atlanta on a shoestring budget. + + + +Beefed-up Olympic programmes allow countries to enter more competitors. And hosts are guaranteed spots in some disciplines, such as rowing and football. The British team that competed in Rio was one-third smaller than the one in London, making its achievement all the more surprising. + +Luck helped. Britain benefited from the inclusion for the first time in Rio not only of rugby sevens (in which it picked up a silver medal) but also of golf, where Justin Rose won in a field thinned by the absence of several of the world’s top players who stayed away for fear of the Zika virus. Some countries questioned Team GB’s rapid improvement in the velodrome. Britain won no events at the 2015 Track Cycling World Championships, but six out of ten in Rio. British Cycling, the sport’s governing body, says it focuses on Olympic victories: Britons won seven golds in London. + + + +But the main cause of Britain’s success is a ruthlessly efficient allocation of resources. The lion’s share of the £350m ($540m) pot of National Lottery money divided among British teams in the four years leading up to the Rio games went to those with a track record of success. Cyclists, rowers and sailors, who won 26 medals in 2012, received £88m to spend on better equipment, facilities and training. Britain’s struggling gymnasts received just £1.8m before the Beijing games, but beat their medal target in 2012 and so earned a budget of £14.6m for Rio, with which they produced their first Olympic champion. Weightlifters, fencers and archers, who won nothing in London, were given just £8.8m. This unforgiving approach earned Britain one gold medal for every 14 athletes competing in Rio, its best ratio since 1908. + +The remorseless focus on the elite has drawbacks. For one thing, Lottery revenues come disproportionately from low-income households, whereas the beneficiaries of Olympic funding are a posh bunch. A quarter of the British team in Rio were privately educated. Worse, the success of Britain’s star athletes is in contrast to the lardy state of the general population. The London Olympics was supposed to inspire greater participation in sport. But in England weekly sports participation has fallen by 0.4% since 2012. Time to stop watching sport and start playing it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21705872-more-cash-ruthlessly-funnelled-winners-explains-record-medal-haul-brass-behind/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Football iconography + +Put out more flags + +Why Palestinian banners are flown in a Scottish stadium + +Aug 27th 2016 | GLASGOW | From the print edition + + + +FANS of Hapoel Be’er Sheva, an Israeli football team that visited Scotland on August 17th to play Glasgow Celtic in a European Champions League qualifier, were greeted at the Parkhead stadium by a sea of Palestinian flags. Europe’s football authority, UEFA, took a dim view. It bans “messages that are of a political, ideological, religious, offensive or provocative nature” and has ruled the Palestinian flag “illicit” before. The return leg, in Israel on August 23rd, passed without incident. Celtic may still face a sanction. It would not be the first time: two years ago the club was fined €20,000 ($27,000) after its fans flew the Palestinian standard at a match against KR Reykjavik. + +Why do Glaswegian football fans take such an interest in Middle Eastern politics? Their club, founded in 1887 by poor Irish Catholic immigrants, rapidly became associated with political causes, from campaigns against economic discrimination suffered by Catholics in Scotland to the fight for Irish home rule. + +Most supporters are acutely aware of this history. “What Ireland went through, that’s what Palestinians are going though now,” says a woman in a Parkhead bar clutching precious tickets for a game against local (and Protestant) rivals Rangers. “They want their freedom back, that’s why Celtic fans go with Palestine.” + +This link has been fostered since 2006 by fans branding themselves the Green Brigade, who now number about 500. Feeling home games lacked passion (partly a result of campaigns to stamp out Catholic-Protestant sectarianism, a noxious feature of Celtic-Rangers matches), they mimicked Italian “Ultra” fans and adopted political causes. They have sent food to migrants in Calais and organised an anti-discrimination football tournament. The Irish tricolour and Basque ikurrina have both fluttered at Parkhead. + +The Green Brigade is now crowd-funding cash to pay Celtic’s expected UEFA fine and make a matching contribution to Palestinian charities. Remarkably, the kitty passed £140,000 ($185,000) in three days. And much as the club vainly pleaded for Palestinian flags to be left at home, it may have noted that the fallout has attracted worldwide attention, and no little support. “A club like no other”, declare giant drapes cladding the stadium. Quite. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21705869-why-palestinian-banners-are-flown-scottish-stadium-put-out-more-flags/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Television subtitles + +Read my lips + +As on-demand programming replaces broadcast, deaf viewers are left out + +Aug 27th 2016 | From the print edition + + + +CATCHING the latest episode of a television series no longer requires a reminder in the diary. British audiences, like those elsewhere, increasingly feed their TV habit using “on-demand” services like Sky, Netflix and Virgin TiVo. By one estimate, conventional broadcast television now accounts for less than half of the video consumed by 16- to 24-year-olds. It is through such an on-demand service that Kimberley Lucas’s boyfriend has lately been watching “The Wire”, a cops-and-robbers drama. But Ms Lucas, who is deaf, cannot join in. Whereas she could have watched the series with subtitles when it was originally broadcast, the helpful transcriptions have fallen away during the move online. + +The hard of hearing (as well as those who struggle with the Baltimore accents in “The Wire”) are well served by broadcast television in Britain. Ofcom, the regulator, has overseen a rise in subtitling to more than 80% of programming on most channels. But its rules do not apply to on-demand television, which by comparison is a “Wild West”, says Matt Simpson of Ericsson, a firm that provides subtitles. More than 150,000 hours of on-demand content are published each year without captions. Some platforms, such as the BBC’s iPlayer—which started to offer live online subtitling, a world first, just in time for the Rio Olympic games—do far better than others. Almost all of the BBC’s on-demand content carries subtitles. Just 15% of the services available through Sky were similarly accessible in 2015, according to Action on Hearing Loss, a charity. + +Sky has promised to bring that figure up. But years of complaints from Britain’s 900,000 deaf people have done little to budge on-demand providers. In 2013 the government promised to consider legislation if there had not been “progress” by July 2016. But the threat was withdrawn before the end of last year, by which point just 22 of Britain’s 90 on-demand providers were offering subtitles. Deaf Britons look enviously at America, where the government enforces equal service across broadcast and on-demand TV. + +Modern subtitles are simple to create, and curiously human. In a booth in west London, Jon Luke, one of 400 “re-speakers” with Ericsson, repeats every word of a BBC programme into a microphone, adding punctuation vocally. Producing subtitles in this way is easier than hiring stenographers, as was common a decade ago, and more accurate than relying on machines to turn words into text. + +But whereas subtitles made this way work well with television broadcasts, they do not fit with on-demand platforms. The format is based on Teletext, an all but obsolete technology. So engineers must copy the original into the 18 formats used by the various on-demand players, from Apple to Xbox. Neither programme-makers nor broadcasters want to foot that bill. + +Ofcom may step in if the stalemate persists. This month it hinted that it would gradually align its rules for broadcast and on-demand television. That would frustrate the industry. But it would allow viewers like Ms Lucas to catch up with everyone else at last. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21705868-demand-programming-replaces-broadcast-deaf-viewers-are-left-out-read-my-lips/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Political comedy + +Laugh or cry? + +The farcical state of the left is splitting sides at the Edinburgh Fringe + +Aug 27th 2016 | EDINBURGH | From the print edition + +More free seats than the shadow cabinet + +IT IS a case of bad comic timing. The Edinburgh Fringe Festival, which runs through August, is normally a chance for political stand-up comedians to throw carefully honed jokes to reliably liberal audiences. Yet the speed of events since the June 23rd EU referendum, which triggered a change of prime minister and a leadership contest in the Labour Party, has left comics rewriting shows as they go along. One compares the task to wrestling a lubricated dolphin in a bathtub. + +Trickiest is negotiating a new ideological cleavage in audiences. Labour’s hard-left leader, Jeremy Corbyn, is disliked by many Labour voters and most of his own MPs (this week the Labour mayor of London and the head of the party’s Scottish wing became the latest to withdraw their support). Yet he is wildly popular among young idealists. The lefty Fringe audience is therefore split as never before. Do comics dare to mock Mr Corbyn? + +Some have been ruthless. One self-described Corbynite gasped as Ahir Shah tore into the Labour leader with an unprintable joke about his fiddling while the left burned. Another stand-up, Andy Zaltzman, accused the Eurosceptic Mr Corbyn of campaigning for Remain “with all the ferocity of a cornered blancmange”. Matt Forde, an unfashionably forthright Blairite, did an impression of Labour’s leader sniffing constantly, “as if someone is cooking a delicious meal in the room next door”. + +Others have thrown their weight behind him. Robin Ince, Jeremy Hardy and Mark Steel have joined a fund-raising tour entitled “JC4PM”. And there were more jokes about his opponents. Mr Forde described Theresa May’s “occasional haunted look in her eye...like she’s just remembered she killed someone”. Alex Kealy said David Cameron listing his achievements in his post-Brexit resignation speech was like “if someone dies at your house party but you just bang on about how great the guacamole was”. + +Most stand-ups have played it safe by studiously avoiding the Corbyn question. Not that it matters when jokes about Labour’s hapless leader seem to write themselves. On August 23rd, a week after he had filmed himself humbly sitting on the floor of a “ram-packed” train carriage, the rail company in question released CCTV footage of Mr Corbyn walking past empty seats on the way to film his piece. + +Some stand-ups are changing tactics. Josie Long and Jonny Donahoe have responded to the accusations of preaching to the left-wing choir by starting a tour designed for conservative audiences. Defying talk of a “post-truth” politics, they are even bringing a retinue of live fact-checkers along with them. Comedy has become a serious business indeed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21705660-farcical-state-left-splitting-sides-edinburgh-fringe-laugh-or-cry/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +The 2016 vintage + +Forget the Olympics. Wine should guide Britain’s approach to Brexit + +Aug 27th 2016 | From the print edition + + + +“I LOOKED at my dad. We couldn’t believe it,” says Simon Roberts. Mr Roberts and his father, the founder of the Ridgeview vineyard, were at the Royal Opera House for the Decanter World Wine Awards in 2010. They had assumed they had been seated too far from the stage to have won. Champagne makers had always nabbed the “top sparkling wine” award before. It was stated that the winning wine was a blanc-de-blancs (a sparkling wine made only from white grapes). The Roberts family were baffled: that described none of the French wines on the shortlist. It was only when the announcer remarked that the wine was English that the penny dropped. Ridgeview had become the first ever non-French wine to win the prize. + +The result sent shocks through the wine world and vindicated the gamble taken by the Roberts family 16 years earlier, when they sold their computer business to buy a fledgling vineyard near the Sussex coast. Their rationale was simple: the mild days would nurture the sugar in the grapes, the cool nights would bring on the acid, the South Downs would shelter the vines and the result would be a sparkling wine that could take on Champagne. + +Today Ridgeview wines sell in Scandinavia, the Netherlands, America and even—whisper it—Bordeaux. They are served in Downing Street and Buckingham Palace. Ridgeview is building a new cellar to cope with a rise in production from 250,000 to 600,000 bottles a year. Obsessiveness perfumes the place: in the spring staff hurry out at 2am to light giant candles under the vines to keep the frost from the buds. This perfectionism has won medals: at the Texsom International Wine Awards in Dallas in March, Ridgeview took bronze, silver or gold for all five of its entries. + +These days Britain is preoccupied with gongs of a different sort. Politicians have tortured the country’s storming performance at the Olympic games for lessons about Brexit. Lefties think public money and teamwork are the key. The right prefers tales of elite rewards for elite performances. Both sides have a point. But both should also look to their country’s booze boomlet. It hints at a happy middle ground. + +In the decade to 2014 the acreage of vineyards in England and Wales rose from 1,879 to over 4,500. Wine exports are expected to increase from £3.2m ($4.9m) in 2015 to over £30m in 2020. Two French firms—Taittinger and Vranken Pommery Monopole—have recently invested in southern England. On August 19th the first full container of English fizz departed for America. “New York sommeliers always want something new to talk about,” observes Frazer Thompson of Chapel Down, a producer in Kent. He says the difference between English sparkling wine and Champagne is like that between Vivienne Westwood and Chanel: the former is a funky and fresh alternative to a traditional rival. + +Winemakers are uncertain about Brexit. The wine industry is vulnerable to regulation. For example, American winemakers must relabel their bottles for export because they list alcohol content to one decimal point more than the EU deems permissible, bizarrely. Winemakers like the Roberts family buy bottles, barrels and machinery from France. It is a borderless business. “We can have breakfast in Sussex and lunch in Épernay,” boasts Mr Roberts. Meanwhile they benefit from the EU’s single farm payments, the harmonisation of standards across the union, its tariff-free market and its trade deals with other countries. + +For such producers the priority is continuity. Winemakers would like a guarantee of the status quo. That means British substitutes for existing EU agricultural and rural funds; comprehensive free-trade agreements with the EU and other trading partners; and ongoing co-ordination of standards between Britain and the union. “There is a compelling case for reducing customs tariffs to zero,” reckons Simon Stannard of the Wine and Spirit Trade Association. The government, he says, might also establish a planning regime guaranteeing all vineyards agricultural status and secure the status of local brands. “The EU has hundreds of protected wine names and we will want those names to continue to be respected once the UK leaves the EU,” says Mr Stannard. + +A little hiccup + +It is easy to be blasé about all this. In the run-up to Britain’s EU referendum campaigners for Brexit talked endlessly about German carmakers and French wine producers. Their point was that the continentals would not seek a strict trading regime with Britain, which buys so many of Europe’s wares. Yet this overlooked that Britain also has plenty to sell, from cars and financial services to jet engines and bubbly. The notion that other EU governments would fall to their knees to maintain access to the British market was always a fantasy. Doubtless, Britain should use its consumption-heavy economy to its advantage while negotiating Brexit. But it should not forget that it is the supplicant. + +Millions of its jobs depend on exports. The Article 50 process (which is likely to be invoked in 2017) allows a member state just two years to negotiate exit terms. So Britain faces a real risk of leaving the union before it has been able to make new trading arrangements. All of which militates for ongoing British membership of the single market, perhaps as a member of the European Economic Area, like Norway, for the period between its departure from the EU and the establishment of its new status. + +Theresa May and her ministers must thus move fast to clarify certain basic details—about Britain’s future trading relationships, its regulatory parameters, its domestic policies—to give firms like Ridgeview the confidence they need to continue investing. The Chardonnay grapes on its vines today will hit the shelves as sparkling wine in 2019 or 2020. Before they ripen it is up to Mrs May to light the proverbial candles, to head off the chilling effects of Brexit. If the negotiations go well and Brexit succeeds, Bagehot will raise a glass of the 2016 vintage to them. If they go badly he may drain the bottle. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21705867-forget-olympics-wine-should-guide-britains-approach-brexit-2016-vintage/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +School reform: After freedom, what? + + + + + +Articles Sections Next + +School reform + +After freedom, what? + +Liberating schools to run their own affairs produces some great ones, but also plenty of dross. The priority now is to spread success + +Aug 27th 2016 | From the print edition + + + +AS THE new school year approaches, most pupils in Detroit and New Orleans are preparing to return to desks in charter schools. First permitted by Minnesota in 1991, charter schools are found in 43 states; in a few cities they have become mainstream. Their equivalents in England, academies, were set up later but have grown faster. Just 14 years after the first one opened in London, a quarter of all English state schools, and two-thirds of secondaries, are now academies (see chart). + + + +These schools remain the great hope of education reformers in both countries—and beyond. Though charters and academies differ in many ways, they were both conceived as an alternative to schools run directly by local government. They are publicly funded but operated by charities or, in some American states, by companies. This model of public-private partnership has inspired several other countries including India, Kenya, Liberia, South Africa and Uganda. + +International evidence suggests that schools do best when freed from government control. Competition from newly founded schools tends to raise others’ standards. But in both America and England, researchers have recently produced some troubling numbers. Although some charters and academies have achieved spectacular results, on average they appear to be little better than other schools when pupil characteristics are taken into account. + +As a result, reformers are thinking afresh about autonomous schools. They are seeking ways to ensure that they are held to account, that they are well-led and that the exceptional teaching found in the best becomes the norm. + +Class acts + +The American cities that embraced charters in the 1990s saw them as a way of injecting entrepreneurial zeal into moribund school districts. John King, the federal education secretary, co-founded a charter school in Boston in 1999. He recalls that they were set up to showcase new ways of running schools and teaching pupils in otherwise “one size fits all” districts. Since charters usually did their own hiring and firing, they were less beholden to—and ferociously resisted by—America’s mighty teaching unions. They were concentrated in poor parts of big cities, where results had long been dire. + +Before he was elected president, Barack Obama pledged to increase funding for charter schools. (There are still about 1m children on charter waiting lists nationwide, and 23 of the 43 states that allow charter schools limit their growth.) Race to the Top, a programme passed as part of the 2009 fiscal stimulus package, offered cash to areas that encouraged charters, introduced common standards and put in place measures to evaluate teachers. + +The main motivation for creating the first group of academies in England was to raise standards for poor children, recalls Conor Ryan, an adviser to Tony Blair, the prime minister of the day. Many attended awful schools run by local authorities. So, in 2002, the Labour government said that failing schools would become academies, with more control over recruitment, timetabling and finances. When Labour left office in 2010 there were 200 such schools in England. (Scotland, Wales and Northern Ireland have distinct education systems, and no academies.) + +Under the coalition government that followed, academies spread rapidly. Ordinary schools received cash to convert. The expansion continued after the general election in 2015. Earlier this year Nicky Morgan, then the education secretary, said that she wanted all schools, including primaries, to become academies. + +Yet political enthusiasm seems to be waning on both sides of the Atlantic. Hillary Clinton is less keen on charters than Mr Obama. In England teachers, and even many Conservative MPs, fiercely opposed Ms Morgan’s policies. Theresa May, the new prime minister, has yet to comment on her plans for education. + +The scepticism is partly a result of research suggesting that the impact of school autonomy is less impressive than advocates had hoped. A study in 2013 by the Centre for Research on Education Outcomes (CREDO) at Stanford University compared the results of pupils at charters with those of similar children at ordinary state schools. CREDO concluded that pupils at charters on average progressed by the equivalent of just eight additional days of learning per year (admittedly, many American charter schools get by on less money than other schools). + +In England, academies are found at the top and bottom of the league tables that rank school success. As Lucy Heller, the chief executive of Ark, a charity that runs a successful group of academies, notes: “Autonomy provides a licence to do well, but also the freedom to do badly.” A study published in July by the Education Policy Institute (EPI), a British think-tank, found that converting from being council-run to an academy had little effect on mid-ranking schools. But the EPI also found that conversion led to improvements among both the best and worst schools. + +Where charters and academies have done particularly well is in teaching poor children in cities. A follow-up study by CREDO in 2015 found that across 41 urban areas, children in charters were learning the equivalent of 40 more days of maths and 28 days of English every year than pupils in traditional schools. Black and Hispanic children performed especially well. And although charters have not thrived in every city (see map), where they have worked, as in Washington, DC and New York, pupils can make gains worth almost 100 days of extra learning in a year. + + + +Reformers are now trying to work out why such huge variation exists. One lesson that has been learned in both America and England is that autonomy needs to be coupled with a way of ensuring schools are still accountable for their performance. CREDO found that in states where charters expanded with little oversight, such as Arizona, there were many failures and results were worse than in ordinary schools. The biggest successes in England were in the early years of academies, when they were few and ministers could keep track of them, says Mr Ryan. + +Accountability requires clear standards, transparent ways of measuring whether schools are meeting those standards, and the ability to reward schools that succeed and sanction those that fail. One way to ensure it is with central-government oversight. Forty years ago a British prime minister would not have dreamed of keeping tabs on individual schools. Today the education department has a “delivery unit” monitoring around 100 performance indicators. America’s federal government has far less control over education, but it can influence schools through initiatives such as Race to the Top and Common Core, a nationally recognised set of school standards. + +Many charter schools and academies are also accountable to the school chains they are part of. Harris Federation, a high-performing group of 41 academies, is one example. Forty specialist “subject consultants” sit at the centre of its operation, writing lesson plans, setting the curriculum, reviewing data and, most important, observing and training teachers. The process for getting new schools up to speed is quite rigid, says Sir Daniel Moynihan, the Harris Federation’s chief executive. Only when standards have improved are head teachers given more freedom. + +The second lesson reformers have taken from the past 25 years of school autonomy is that leadership matters. The best charter organisations and academy groups are slick operations. A paper in 2014 by Nick Bloom of Stanford University and others found that schools using the sorts of practices common in excellent companies, such as clear targets, performance tracking and incentives for good employees, achieved better test scores. These practices were much more common in charter schools and academies than in either normal state or private schools. + +For David Laws, Britain’s schools minister from 2012 to 2015, the leadership and firm governance brought by academies mattered more than their freedoms. This partly explains why the best ones were able to take advantage of greater autonomy whereas middling ones did not, he suggests. Indeed, a report in 2014 by the Department for Education found that few academies had taken much advantage of their freedoms. Some 55% had made changes to the curriculum, but only 8% had changed the length of the school day. + +A successful charter organisation such as KIPP (Knowledge is Power Programme) opens a new school only when it spots a leader capable of running it. This has held back growth. England’s school chains are suffering from similar constraints. Some organisations, however, are trying to plug the gap. Future Leaders works with schools to spot, recruit and train potential head teachers. In March the government said that it would develop new voluntary qualifications to prepare those soon to be in charge of academy groups and their finances. + +The third lesson being drawn by reformers is about how to spread the types of education provided by the best charters and academies. Initially, the main approach was to expand their reach. In the early years of the coalition some groups “took on any school the government gave them”, says Jonathan Simons of Policy Exchange, a British think-tank. Soon enough, standards slipped. + +Many of the best English chains are wary of growing too fast. Taking on a failing school is expensive, says Sir Daniel. Turning it around will require a great deal of time and attention. He has therefore limited Harris to growing by between three and five schools a year. + +The best schools increasingly resemble laboratories, where reformers try to distil the essence of success. In 2011 Roland Fryer and Will Dobbie, both then at Harvard, summarised the five qualities of the best charter schools. These were: frequent feedback for teachers, tutoring, longer school terms and days, the frequent use of data to track pupils’ progress and a “relentless focus on academic achievement”. + +A follow-up paper published in 2014 found that these attributes could be developed in an average public-school system (in this case, Houston). What is required, though, is for more talented people to enter teaching and for them to be taught how to do their jobs well, rather than subjected to the abstract theorising common on many teacher-training courses. + +Many charter-school pioneers now argue that reforming education across an entire school system is as much about improving the quality of teaching as about tinkering with structures. “The first generation of charter schooling was about proving that poverty wasn’t destiny,” says Orin Gutlerner of Match, a group of Boston charters. “The second was about trying to scale up those schools. But the third is about human capital.” + +The most innovative schools are currently rethinking their focus on behaviour management and relentless test preparation. Partly, this reflects a private recognition among advocates that although charters have transformed education in some poor areas, they would think twice about sending their own children to them. They worry that although these schools can provide the discipline missing in their pupils’ lives, they can also stifle creativity. + +The shift in emphasis also reflects a growing concern that even graduates of the best charter schools could be doing better. Like others, they often drop out of university—and, even more worrying, do not seem to be thriving at work. + +Lessons for life + +In a new paper, Mr Dobbie and Mr Fryer found that although the best charter schools in Houston did better than equivalent state schools in tests and college admissions, attending one had no discernible impact on wages. They suggest that charters need to work just as hard to develop children’s soft skills and character as to boost their test scores. Doing that will require the freedom to innovate. But politicians are increasingly impatient. If the schools do not move quickly, autonomy could prove short-lived. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21705697-liberating-schools-run-their-own-affairs-produces-some-great-ones-also-plenty/print + + + + + +Articles Sections Next + + + + + +Technology Quarterly + + + + +Remaking the sky: A sudden light + +Satellites: The small and the many + +Earth observation: Anywhere and everywhere + +Launchers: Getting a lift + +The role of robots: Construction and destruction + +Human space flight: The orphans of Apollo + +Brain scan: Space chips + + + + + +Articles Sections Next + +Remaking the sky + +A sudden light + +New capabilities, new entrepreneurialism and rekindled dreams are making space exciting again, says Oliver Morton + +Aug 27th 2016 | From the print edition + + + +SHORTLY after sunset there had been juddering green stabs of lightning to the south, but by a quarter to one in the morning there is nothing in the warm, wet July air over Cape Canaveral but a thin patchwork of moonlit cloud. And then, precisely at the time it was meant to happen, there is a sudden light on the horizon, some 18km away. A light that rises. + +A 550-tonne machine taller than a 20-storey building is throwing itself into the sky. Its initially unhurried ascent burnishes the clouds bronze. As the rocket climbs above them, its pace quickening, the roar of its engines speaks to its power as the sharp line of its exhaust illustrates its precision. + +Two minutes and 21 seconds after launch, 61km above the Atlantic and still well in sight, the first-stage engines shut down. The two stages of the rocket—a Falcon 9, built by a company called SpaceX that is seeking to reinvent space travel—separate; the single engine of the second stage ignites, driving its cargo ever faster to the east where it is quickly lost to sight. When, nine minutes after departure, that engine is turned off, the rocket will be in orbit 240km above the Earth, travelling at 7.5km a second. Two days later its cargo of provisions and scientific experiments will be delivered to the International Space Station (ISS). + +Will ye no come back again? + +The spectacle, though, is not over. Shortly after separation, at an altitude of more than 100km and while still climbing, the rocket’s first stage slews around before bringing three of its engines back to life to change its course. It reaches the highest point of its trajectory and starts to fall back to Earth, engine-end first. A bit more than halfway there, the engines fire again to cushion the shock of its re-entry. + +When it is about 10km up, and still falling at well over the speed of sound, the engines fire for the last time. The rocket’s return has none of the stateliness of its departure; the bright light plummets to the horizon with swift purpose. As it reaches the ground, a flat, fiery flower spreads out from its base. Four landing legs the size of oaks smack into the concrete pad. A second later the double whipcrack of its sonic boom signals the end of the eight-minute journey. + +Next year it will be 60 years since people first witnessed the majesty of a satellite being launched into orbit: Sputnik 1, hurled into the night sky in Kazakhstan early on October 5th 1957. Such knocking on heaven’s door remains a thrilling experience, and probably always will. The heavens themselves, though, have over that time become significantly more pedestrian. + +Just 15 years separated the launch of the first satellite and the return of the last man from the moon, years in which anything seemed possible. But having won the space race, America saw no benefit in carrying on. Instead it developed a space shuttle meant to make getting to orbit cheap, reliable and routine. More than 100 shuttle flights between 1981 to 2011 went some way to realising the last of those goals, despite two terrible accidents. The first two were never met. Getting into space remained a risky and hideously expensive proposition, taken up only by governments and communications companies, each for their own reasons. + + + +Now SpaceX, founded in 2002 by Elon Musk, an entrepreneur who around the same time also set up Tesla, a car company, is trying to provide the cheap, reliable, routine route to orbit that the shuttle could not. It is the first company since the 1980s to enter the launch business with newly designed rockets, and has developed some completely new tricks. Though the July lift-off of its ISS-resupply mission was the sort of thing Cape Canaveral has seen hundreds of times, the successful return of a rocket’s first stage had been witnessed there only once before, late last year. + +Mr Musk intends to keep up the pace of innovation. Late this year or early next his company will launch a rocket with three reusable stages, the Falcon Heavy, capable of handling bigger payloads than any other launcher working today. SpaceX is also developing a rocket engine more powerful than any previously developed for a commercial programme. More striking still, before the end of 2017 it is due to start delivering human space travellers to the ISS—the first private company to do so, unless Boeing, which has a similar contract with NASA, pips it to the post. + +Impressive as its prospects are, SpaceX is only one contender. Blue Origin, a company backed by Jeff Bezos, the boss of Amazon, has a sub-orbital rocket, the New Shepard, that can come back from the edge of space to land under power in the same way the first stage of a Falcon 9 does. It may well take a capsule with people on board into space next year. A number of other new companies with unmanned rockets are entering the launch business, too. + +New rockets, though, are not the only exciting development. The expense of getting into space during the 1980s and 1990s led some manufacturers to start shrinking the satellites used for some sorts of mission, creating “smallsats”. Since then the amount a given size of satellite can do has been boosted by developments in computing and electronics. This has opened up both new ways of doing old jobs and completely novel opportunities. + +The 24 satellites of the American government’s Global Positioning System probably represent the world’s single most important space-based asset, vital to the American armed forces and tremendously useful to a couple of billion smartphone users. Building up the constellation to its current size took two decades. Now smallsat companies talk about launching constellations several times that size in just a year or two. Those satellites will be in low orbits, but not all small spacecraft will stay close to home. By the end of 2017 Moon Express, based in Florida, hopes to deliver a 10kg payload including a rover to the Moon, making it the first commercial company to land anywhere beyond Earth. Other companies are looking at smallsats as a way of prospecting asteroids for mining. + +No single technology ties together this splendid gaggle of ambitions. But there is a common technological approach that goes a long way to explaining it; that of Silicon Valley. Even if for now most of the money being spent in space remains with old government programmes and incumbent telecom providers, space travel is moving from the world of government procurement and aerospace engineering giants to the world of venture-capital-funded startups and business plans that rely on ever cheaper services provided to ever more customers. + +As they prove that they can make money, they will grow further, and fast. But in many cases money is not the only aim. Their founders are people who think that going into space can benefit the human race more broadly. Mr Musk wants to set up a permanent colony on Mars in a couple of decades. Mr Bezos hopes that millions of people will one day work in orbit. Neither of these aspirations seems likely to be realised. But the effort to get there may well re-establish space as a realm of possibility and inspiration. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21705587/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Satellites + +The small and the many + +Flocks of cheap little satellites could transform the space business + +Aug 27th 2016 | From the print edition + +An SSL satellite unfurls its wings + +ROCKETS are the thrilling, spectacular bit of space flight. But without something useful to carry they are basically just fireworks. To get a sense of the new entrepreneurial approach to unearthly enterprise, start instead with the radical changes in what it takes to make a spacecraft. + +In Palo Alto, California, there is a factory that has been making spacecraft since the year Sputnik was launched, and before anyone in Palo Alto had heard of Silicon Valley. SSL, previously known as Space Systems/Loral, has built more than 100 communications satellites, of which 81 are still in operation today. The dozen or so currently spread through this warren of clean rooms the height of cathedral naves represent more than a year of the company’s order book. + +They are all based on the same structure: a cylinder 1.2 metres across enclosed in a square box. The more the satellite has to do, the taller the box it is built on, the longer its solar panels and the larger and more complex the array of antennae and reflectors through which it sends data to its earthbound clients. Sky Muster II, nearing completion, is among the biggest. Designed to provide broadband communications across the less densely populated parts of Australia, it stands nine metres tall, with a complex array of reflectors tailored to serve the outback. + + + +The communications-satellite business is dominated by four operators, Eutelsat, Inmarsat, Intelsat and SES. They make most of their money from companies that want to send television signals to people’s homes, but also serve markets for data transfer and mobile communications. They demand ever more of the handful of aerospace companies like SSL that have the expertise to compete for their custom, says Paul Estey, head of engineering and operations at the factory. + +The industry is innovative but also very loss-averse. The smallest of the SSL communications satellites may sell for $100m or so, the biggest for perhaps three times that. Add on $100m for the launcher, and the satellite may not start showing a profit for a decade. Because of the need for a long lifetime in a hostile environment with no chance of any repair, a new technology that carries any significant risk will simply not be flown. + +An hour’s drive up Route 101 you will find a very different spacecraft factory. Planet, until recently known as Planet Labs, occupies a shabby-chic building in the South of Market area of San Francisco. A room the size of a largish Starbucks on the ground floor houses the desks and tools needed to build 30cm-long satellites each weighing about five kilos. If you know what to look for, you will recognise many of the components as coming from other sorts of device, most notably smartphones. Making one of these “Doves” (pictured), as Planet calls them, takes about a week. At the back of the room there are dozens packed up ready to be shipped off. This is the new face of space: small objects, large numbers. + +Doves are part of an extended family of very small satellites known as cubesats. In the late 1990s researchers at Stanford University and California Polytechnic State University in San Luis Obispo realised that a certain amount of standardisation would make very small satellites much easier to launch. They came up with a standard called the “1U” cubesat: a box 10cm by 10cm by 11.5cm with electronic and physical interfaces that would allow it to fit alongside others of its ilk in a dispenser that could fly as a “secondary payload” (launchers often have more capacity than they need for their main cargo). The standard caught on. By early 2013 some 100 cubesats had flown, and the tools required to design and build one were so well developed that a class of schoolchildren with an inspired teacher could take on the task. + +Planet’s founders, Chris Boshuizen, Will Marshall and Robbie Schingler, thought cubesats might be the basis of a business. While working at NASA’s Ames Research Centre in the early 2010s, they looked at what could be done with the largest telescope that would fit into a “3U” cubesat, three 1Us stuck end to end. Pointed towards Earth from a low orbit like that of the ISS, such a telescope could take pictures with a resolution of five metres or a bit better. That was nothing like as good as the images being sold by companies using bigger telescopes in much larger satellites. But 3U cubesats could be deployed by the dozen or the hundred. For some markets, such as agricultural monitoring, the sheer quantity of the information gathered by such flocks might make up for the low resolution. + +The first 28 Doves were sent up from where they were deployed to the ISS in 2014. The launch was celebrated at Planet’s headquarters with a pancake breakfast, as has been each of the 13 launches since. Planet currently operates 63 spacecraft. Their capabilities may be limited by their size, but the company claims that the sophistication of their technology is a match for any satellite anywhere. And they support a promising business model. Mr Marshall says Planet now has over 100 customers for the data that the Doves send back. It looks poised for significant growth. + +Planet’s success stems partly from the continuously falling cost and rising capability of consumer electronics—especially components for smartphones, which sell by the billion and where size and low power usage are crucial. But that would be of no use without a willingness to improve the satellites frequently—indeed, incessantly. By June this year the Doves had been through 14 upgrades. Today’s spacecraft have a different camera from their predecessors, new antennae, rebuilt electronics and a power system based on the lithium-ion battery packs used in Tesla cars, rather than the original AA battery format. The satellites now “see” in four colour bands rather than the original three. They have become much better at telling where they are and which way they are pointing. According to Mr Marshall, in terms of performance per kilo the Doves are now 100 times better than the state of the art five years ago. Such agile innovation is normal in Silicon Valley, but it is not something the satellite world has seen before. + +Fly, my pretties + +To do things this way requires an attitude to risk alien to the world of big, expensive satellites: Planet expects some of its innovations to fail. It knows that Doves launched from the ISS have only a short life anyway, re-entering the atmosphere after nine to 18 months aloft. This attitude speeds up progress and provides resilience for the company as a whole. A big communications satellite can carry the fate of a whole company with it. When Astra1A, the first dedicated direct-broadcast television satellite, was sitting on top of Europe’s first Ariane 4 rocket in 1988, Rupert Murdoch knew that if it blew up, his nascent Sky broadcasting business would blow up with it—quite possibly taking the rest of his media empire down in flames too. Planet has twice had the bad luck to see a flock of Doves fall to Earth from the fiery wreck of a failed launch, and lived to tell the tale. + +A company can welcome risk only if its investors take the same view. Planet’s do. This is another consequence of building a business on small, cheap satellites; the amount of capital needed is relatively modest. Planet has raised almost all its capital from Silicon Valley angel investors and venture funds. Just as technological improvement can be accelerated when your satellites weigh just a few kilograms and have parts lists in the 1,000s, so getting funding is a lot easier when their cost is a few hundred thousand dollars or less. The total invested in Planet to date, after three rounds, is $158m; at SSL that would buy a single satellite. + + + +In 2001-05, venture investments in space businesses worldwide totalled just $186m. In 2011-15 they had risen to $2.3 billion, according to a study by the Tauri group. Half of those investors were based in California, and most of this money has gone either into small satellites or into new launchers tailored to those satellites’ requirements. Venture capitalists feel increasingly at ease about the technology involved. + +The business aspirations of companies like Planet are familiar, too. As the Tauri report puts it, the new wave of space companies has been able to sell itself to VCs as a way to “follow the path terrestrial tech has profitably travelled: dropping system costs and massively increasing user bases for new products, especially new data products”. Fashion is another factor. Like Doves, Silicon Valley investors flock; the past few years of success for SpaceX, founded by one of their own, has made space a particularly appealing place for the flock to settle. This new source of capital looks like producing a great many satellites. In July Euroconsult, a consultancy, estimated that in the period from 2016 to 2025 some 3,600 commercial small satellites might be launched, including over 2,000 flown by VC-funded Earth-observing companies. + +Others, including some with deeper pockets, want to take the smallsat revolution further. Today’s big communications satellites are almost all to be found in an orbit 36,000km above the Earth. This is because, at that height, it takes them 24 hours to go round once—which means that, seen from the ground, they seem to sit stationary in the sky. In businesses that depend on a single antenna pointed in a single direction, that is a huge advantage. But it has costs. The amount of data you can handle with a given antenna and amplifier drops off according to the square of its distance from the surface. This means that closer to Earth you can do more with less. You can do it faster, too: going 36,000km up to “geostationary” orbit and back again delays a radio signal by a quarter of a second, a problem for some applications. + +All the same, communications satellites have mostly forgone the advantages of lower orbits, for two reasons. The lower the orbit, the more satellites you need to make sure one can always be seen from the ground. And satellites that move across the sky require receivers that can track them. This does not mean moving dishes; today’s receivers can track electronically. But such technology is demanding. + +The more the merrier + +OneWeb, a project being put together by, among others, Intelsat, the Virgin Group and Airbus Industries, is based on the idea that modern antennae can surmount this communication problem, and that the smallsat approach can sort out the coverage problem. It plans to use some 648 satellites in orbits just 1,200km up to offer seamless communications to any spot on Earth. Its business plan turns the need to cover everywhere to cover anywhere into a feature by focusing on developing countries; nowhere will be too remote for it to serve. The first satellites are to be launched next year. + +This is not something you can do with cubesats, or on a startup budget. OneWeb is a multi-billion-dollar proposal. Its prototypes are being made at an Airbus plant in Toulouse. In Florida OneWeb and Airbus Space and Defence are building a factory where they hope to produce up to four 150kg spacecraft every day, using highly automated systems; that is more by an order of magnitude than anything the satellite world has seen before. + +Not only is the project technologically very ambitious; it also faces a lot of competition. Google, where OneWeb’s innovators were working at one point, is looking at stratospheric balloons as an alternative way of providing connectivity in the developing world. Facebook is eyeing high-flying solar-powered drones. + +The incumbent communications-satellite industry is paying attention, too. At Google the OneWeb founders worked on a system called O3B, named for the “other three billion” people not yet getting data services. After they left, the system went forward without them. When it is finished, it will consist of 20 satellites orbiting at about 8,000km. This summer SES, one of the big four comsat operators, took complete control of the project, buying out Google and its other original partners. Meanwhile SpaceX, which until now has operated purely as a launch provider, is talking about a low-orbit communications system of its own, with perhaps 4,000 small satellites. That one project would use three times as many spacecraft as there are in the skies today. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21705588/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Earth observation + +Anywhere and everywhere + +Earth-observation satellites are changing the world—yet again + +Aug 27th 2016 | From the print edition + + + +IN TERMS of engineering ambition, operational complexity and capital requirements, big communications-satellite constellations outstrip the small-satellite revolution in Earth observation. In terms of world-changing potential, though, things may well be the other way round. + +Satellites are only a marginal part of the communications business; they matter in some niches, such as multichannel television, but they represent only a small fraction of the $2 trillion telecoms business. The marginal can still matter. The as-yet-unconnected “other three billion” that projects like O3B and OneWeb aim to serve are on the margins of the world economy, and systems that connect them up affordably would be a great boon. But it would be an expansion of the remarkable transformation in computing and communications already being wrought by smartphones connected in all sorts of other ways. What is now happening in Earth observation, on the other hand, is a whole new story. For the fourth time in 60 years, space is revolutionising the way people think about the planet. + +The first revolution might be called an anywhere revolution. From the early 1960s on, spy satellites were able to look wherever their handlers wanted them to, even deep into enemy territory. They allowed cold-war adversaries to assess each other’s nuclear and other capabilities and provided a way of monitoring arms-control agreements. That helped to keep the cold war cold. + +The second revolution was an everywhere revolution. The pictures of the Earth taken by the Apollo astronauts gave the planet’s inhabitants their first sight of their common home seen from afar. Contrasted with the dead husk of the moon and the infinite emptiness of space it seemed small, beautiful, intensely precious. Those pictures accelerated the advent of modern green politics. + +The third revolution was another anywhere revolution. This time, though, the novelty was to know your position anywhere that you happened to be. The GPS satellites launched by America’s Department of Defence allow billions of devices to pinpoint their precise positions. That smartphones, cars, goods containers and girl guides know exactly where they are is now central to everything from orienteering to Uber. + +The current, fourth revolution is both an anywhere and an everywhere revolution. It is the transformation of the Earth into a gigantic set of data that can be both interrogated and extrapolated. + + + +The number of Doves Planet is able to fly allows it to provide images of every point on the planet fairly frequently; its ambition, likely to be realised fairly soon, is to use “sun- synchronous” orbits (see graph) to image everywhere on Earth at the same time every day. Spire, another cubesat startup based in San Francisco, does not look at the Earth’s surface but listens to its radio signals. Every ship on the planet is required to have a transmitter that continuously broadcasts its location, and before long Spire expects to have data on every ship on the planet every hour. + +All-seeing + +BlackSky, a startup based in Seattle, is at the anywhere end of the market. Its satellites are larger than Doves, and their bigger optics give them better resolution (one metre or so, meaning that they can pick up cars, which matters for a lot of applications). They can also be made to take pictures of targets off their orbital track, rather than seeing only straight below them. With 60 of these satellites in a range of orbits, the company aims to be able to produce a picture of any point on the Earth’s surface between 55ºN and 55ºS within 90 minutes of being asked. Other new outfits offer different combinations of resolution and repeat visits. + +Cloud storage and processing play a big part in this new revolution. Planet has invested heavily in the pipeline that takes raw data from its 12 ground stations around the world and turns them into a usable product, but it buys storage and processing power as needed from cloud-computing companies. Without such services, startups could never cope with the terabytes of data that their satellites produce every day. + +New markets matter too. The Earth-observation companies that started up in America in the 1990s all had a single dominant and expert customer for their high-resolution images: the little-known National Geospatial-Intelligence Agency in Virginia. Serving its requirements made money for the companies involved but hardly encouraged diversity. The industry eventually coalesced into a single company, DigitalGlobe. It is thriving; this September it will launch another of the big, capable high-resolution satellites it puts into orbit every few years. But the government still accounts for well over half its sales. + +The new companies will also sell to the government, but few if any of them are relying on it. Instead, their hopes of rapid growth rest on customers who have not previously used satellite data but have questions they want answered. Both the satellite companies and the third parties that use their data have invested heavily in machine-learning technologies that can extract those answers from the huge amounts of data stored in the cloud by understanding what they see and recognising when things change. + +They can tell a shipping line—or, soon, an airline—exactly where all its vessels are. They can chart economic growth by recognising the spread of cities and the traffic within them, or the amount of light that they give off at night. They can provide a reinsurance company with daily updates on any changes relevant to its risk portfolio. They can inform futures traders about the state of crops across an entire continent, or individual farmers about the state of crops in a particular field. They can combine their data with other georeferenced data, such as Twitter feeds, to produce images of disasters, demonstrations, conflagrations and celebrations as they happen. + +If you think the best way to look for some truth about America is to count the cars on the New Jersey Turnpike, it is easily done. The same applies to any equally obscure metric in any other country. The potential of immense sets of data that cover the world in growing detail, are refreshed more or less in real time and can learn to pick up all sorts of objects and phenomena autonomously seems inexhaustible. + +In among all the novelty, old sorts of forecasts will be overhauled, too. As well as hearing radio signals from the Earth below, Spire’s satellites can listen to the transmissions from America’s 24 GPS satellites, and from similar systems being fielded by Europe, Russia and China. Given their different orbits, the Earth will sometimes come between the two satellites, and its radio signal will have to pass through some of the Earth’s atmosphere before the planet blocks it out completely. The way that the signal fades in the atmosphere can be used to calculate the temperature and pressure along the line connecting the two spacecraft, providing a valuable new source of raw data for weather forecasting. Spire has 12 satellites today and hopes to have 44 before the year is out. By the time it has 1,000, it could be producing 100,000 atmospheric cross-sections every day: terabytes of valuable data from thin air. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21705589/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Launchers + +Getting a lift + +Being cheap is not the be-all and end-all of a launcher + +Aug 27th 2016 | From the print edition + + + +FOR decades, lower launch costs seemed to be the sine qua non of progress in space travel. Enthusiasts saw reducing them by orders of magnitude as the key to being able to do much more in space. That is one reason why there is so much excitement around SpaceX, which has undercut the competition enough to take a significant share of the launch market. Its potentially reusable spacecraft seem to promise continuing reductions in launch costs in the future. + +The smallsat revolution shows that this stress on dollars per kilogram was too simplistic. If you can get much more capability out of each kilo, then the cost of doing things in space will drop even if the cost of launches does not. In the smallsat world innovation comes first and new launch services follow. The key factor is not necessarily a very low cost per kilo, but new standards and speed of service. + +This is the market that Peter Beck, CEO of an American-owned, New Zealand-based company called Rocket Lab, wants to serve. His company’s Electron rocket is due to make its first flight from New Zealand’s North Island later this year. Backed by Silicon Valley money, the Electron is designed to deliver a 150kg payload to a sun-synchronous orbit for just under $5m—the same price as that currently charged by Spaceflight, a Canadian company that brokers “ride-share” opportunities for smallsats to fly as secondary payloads on big launchers. + +Rocket Lab’s $33,000 per kilo sounds dear when a Falcon 9 can deliver a kilo to low orbit for a tenth of that price or less. But you have to buy in bulk, paying $62m or more for launching 20 tonnes on a whole Falcon 9. And you may have to wait for a couple of years because there is a queue. For little agile companies currently shopping around for shared rides to often suboptimal orbits, like that of the ISS, 30 3U cubesats in just the right orbit within months of signing a $5m contract sounds a lot more appealing. + +Building rockets with the low unit costs that smallsats require is challenging, even if the payloads are modest. Mr Beck’s response combines mass production, new manufacturing techniques and materials and new ideas. Rather than have different engine designs for both the first and the second stage, he has gone for just one type, nine of which are used for the first stage and one for the second. Not coincidentally, this is the same cost-saving approach as that taken by the Falcon 9: SpaceX has shown it is cheaper to build lots of engines to the same design than smaller numbers to a range of them. Rocket Lab also uses 3D printing to produce the engines, and makes its fuel tanks out of carbon composites, which being lighter give the engines less to lift. And it has some tricks all of its own, notably the use of battery-powered pumps to push fuel and oxidiser into the engines. + +Alpha, a smallsat launcher being developed by Firefly, a company set up by SpaceX veterans, uses similar materials, but has a different new idea for getting the fuel into the engines, and is also using a novel clustered-engine design called an aerospike on its first stage. Richard Branson’s Virgin Galactic is in the market too. The company’s original purpose was to give tourists joyrides in sub-orbital spacecraft, and that is still on the cards, but the company is also planning to launch smallsats using LauncherOne, a rocket that will be carried under the wing of a converted Boeing 747. Again, the engines are largely 3D printed and the tanks made of carbon composite. The first flight is expected next year. + +A crowded space + +In its early days SpaceX, too, was aiming for the small-launcher market; the Falcon 1, which first flew in 2007, was much the same size as the Electron. But it was ahead of its time. There was a need for it but not a viable market, the company’s COO, Gwynne Shotwell, has since said. Luckily for Mr Musk, a NASA contract for resupplying the ISS made possible the development of the Falcon 9. Once it was making big launchers and space capsules, SpaceX did not return to the smallsat market; instead it branched out into the market for launching multi-tonne communications satellites to geostationary orbit, which had been dominated by Arianespace, a European consortium. + +Mass-produced engines and other innovative approaches have made SpaceX very competitive on cost, but there are limits to how useful that is in this market. Russia, China, Japan and India, as well as Europe, all have their own launch industries, and will keep them for national-security reasons. That might not matter if SpaceX were able to increase the overall size of the market, but rockets typically cost less than the satellites they launch, and it is the total cost that sets demand. Making rockets $10m or $20m cheaper is neither here nor there. + +So SpaceX (which declined to comment on the record for this article) has little commercial incentive to slash its prices, and at present is has no obvious new markets. Modest smallsat constellations do not make sense for it; the manifest that Rocket Lab hopes to spread over 50 launches in a year would fit on a single Falcon 9. And the only really big smallsat constellation, the OneWeb communications system, has signed launch contracts with Arianespace and Virgin Galactic (both companies in which OneWeb’s owners have stakes). This may be why SpaceX is talking about building its own constellation of 4,000 communications satellites. A venture on that scale might get real benefits from very low-cost Falcon 9 launches. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21705591/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The role of robots + +Construction and destruction + +It’s not what you launch, it’s what you do with it + +Aug 27th 2016 | From the print edition + +Spiderfab spins a platform + +ON EARTH, valuable assets are serviced, upgraded and recycled; they are also protected and, now and then, attacked. None of this is yet happening in space. But all of it could. + +Some satellites break down; all of them, eventually, run out of fuel. Robotic service spacecraft that can identify a satellite, grab it and manipulate it could get around those problems. Orbital ATK, an aerospace company based in Virginia, has developed a spacecraft along these lines that works a bit like a mobility scooter; it provides somewhere with an engine for an elderly spacecraft to settle down in when it can no longer get around on its own. Orbital hopes to use such spacecraft to extend the lives of communications satellites that are out of fuel but still making money, and has signed a contract with Intelsat to this end. + +An alternative to assisted mobility is refuelling. The Naval Research Laboratory, NASA and DARPA—the Pentagon’s advanced-technology arm—are all working on various projects for spacecraft that could refuel satellites and even repair them in orbit, using a range of tools and complex robotic arms. + +A more radical approach is to use orbiting robots to make new spacecraft rather than service old ones. Tethers Unlimited, based in Washington state, is working on a “SpiderFab” that would combine robotic arms with a form of 3D printing to create structures much larger and more delicate than anything that can fit into the fairing of a launcher. Satellite-makers have become adept at folding up solar panels and antennae so as to fit a lot of spacecraft into those small spaces. But the complicated unfurlings, articulations and poppings-into-place required tend to increase both expense and risk, and make some approaches impossible. + +Structures built with technologies such as the SpiderFab could change the way the communications-satellite industry works. Platforms with big solar panels and engines would take care of the housekeeping for a whole range of communications packages that could be smaller and launched more frequently, thus keeping the technology much more up-to-date and reducing risk. + +All this might have an even bigger effect on science. Space is a great place for telescopes, but it is very difficult to get a big one up there. One reason why the James Webb Space Telescope that NASA and the European Space Agency are due to launch in 2018 has a budget of $8 billion is the need to fold a sunshield the size of a tennis court and a polished mirror 6.5 metres across into the 5.4-metre fairing of an Ariane 5. A combination of big structures and techniques that let a number of small mirrors spread over a large area do the work of a single much bigger mirror would allow remarkable new instruments to be built. Such instruments might be much better than those on the ground at observing, for example, the fascinating planets being discovered around other stars. + +Another use for robots in space is asteroid mining. Some asteroids have orbits similar enough to the Earth’s to allow a spacecraft in orbit to get to them with a relatively small amount of fuel—much less than what is needed to get it into orbit in the first place. Like many other staples of science fiction, mining these flying boulders and mountains is now on the Silicon Valley startup agenda. The commodity of greatest interest is not a precious metal (though some of those are to be found on asteroids) but something that in space is much more valuable: water. + + + +Human space travellers need water, as well as oxygen, which can be made from water. They, and their spacecraft, also need fuel: hydrogen made from water fits that bill. Once a certain amount of activity is taking place in orbit, especially if it involves a human presence, getting water from asteroids, in some of which it can be found either as ice or as hydrated minerals, could start to make more sense than hauling it up from Earth. + +This will take time, but Deep Space Industries and another asteroid-mining startup, Planetary Resources, recently found a patient investor. Luxembourg knows a bit about space; two of the big four satellite operators, Intelsat and SES, in which its government is a shareholder, are based there. It is also well able to afford a flutter, and tightly knit enough to give a far-out idea with a few enthusiastic supporters a hearing. This summer Luxembourg announced that both companies would benefit from the €200m it will be spending on asteroid-mining initiatives. + +What goes up must come down + +Fuel from beyond could keep some satellites in orbit indefinitely. Others, though, need to be got rid of. In the lowest orbits—those of the ISS and below—the problem has a natural solution: drag in the outer reaches of the atmosphere will bring anything down in a matter of decades (the ISS has to be regularly boosted). But in other orbits space debris—consisting of dead satellites and their fragments, as well as the leftovers of discarded launchers—builds up. Even in the most debris-ridden orbits, between 700km and 900km, the risk of hitting something is pretty low; the chance of a close call is perhaps 1% per satellite-year, according to Brian Weeden of the Secure World Foundation, an American NGO. But satellites have been lost to such collisions; more satellites mean more such collisions; and collisions create yet more junk. Left to itself, the problem can only get worse. “It’s like climate change,” says Mr Weeden. “By the time it becomes a really big problem it may be too late to do anything about it.” + +One answer is to make satellites more responsive and ensure that their operators are better informed. America’s armed forces use radar and telescopes to keep track of everything bigger than about 10cm across, and provide warnings when a bit of junk is going to come close to a functioning satellite. Analytic Graphics, a company that sells orbit-planning software, is moving towards offering a similar service that is better tailored to the needs of commercial-satellite operators. Like Earth-observation startups, but in reverse, it is using ever cheaper commercial technology to do what only governments did before. It is currently tracking about half as many objects as the US Air Force provides data on, but its capacities are fast increasing. It may soon offer its customers a better service. + +The other answer is to clean things up—yet another job for robots. In 2017 an ESA spacecraft built by Surrey Satellite Technology, a pioneering smallsat company now owned by Airbus, will test its ability to ensnare a nearby cubesat in a net, reel it in and attach a “dragsail” to consign it to death by re-entry. It will also look at a technology for harpooning bits of junk. In the same year Astroscale, a Singapore-based startup, plans to launch a satellite to get a better measure of space junk. (Ground-based radar can see little that is less than 10cm across; the size of a cubesat was chosen in part because anything smaller would risk being invisible from Earth.) In 2018 Astroscale plans to try out a satellite with an adhesive patch to which any piece of junk can stick. + +As it happens, very similar technologies might also be used for removing satellites that some people want in position and others do not. Anti-satellite (ASAT) weapons that target satellites have been developed by America, China and Russia, but if they were used it would be fairly obvious who the attacker was. A stealthy little satellite that could take them out from close by might work better; the victim might never know for sure if its satellite had been attacked or just broken down. + +Here, too, better local information would help. America recently sent a pair of small satellites up to geostationary orbit to keep a much closer eye on both its own satellites and those of other countries. A second pair was launched on August 19th. But there are limits to this approach. As Doug Loverro, America’s Deputy Assistant Secretary of Defence for Space Policy, puts it, space is an environment which, at the moment, favours attack over defence. + +Star wars writ small + +That said, Mr Loverro identifies three ways of ensuring a continued satellite capability, all of which America is pursuing. One is active defence: measures that would make an ASAT attack more difficult. The second is resilience. Commercial service providers and America’s allies have more assets in space than ever before. The use of those capabilities, both on a routine basis—relying on commercial satellite links rather than bespoke military ones for many operations, for example—and as required in an emergency would make it harder for an adversary to deal a crippling blow with an ASAT strike. There would be just too many targets. + +The third response is replenishment, which means having some back-up satellites safely on the ground, ready to be sent into space at very short notice. Another of DARPA’s space projects, XS-1, is challenging commercial teams to develop partially reusable launch systems that could get a couple of tonnes into orbit every day for ten days in a row. That could improve the economics of small satellites yet further, and allow the armed forces to feel much more certain of their ability to keep using space. + +But there is another side to that use. Some systems designed to hit satellites might also be able to take out an intercontinental ballistic missile (ICBM) during the part of its trajectory when it is above the atmosphere. In the 1980s America’s “Star Wars” programme came up with the idea of so-called brilliant pebbles—thousands of small satellites that could spot and intercept rising ICBMs. The viability of such a system was hotly debated until the first Clinton administration pulled back from all space-based missile defences, on the argument that they would prove destabilising. That rendered the question moot. + +The geopolitics of missile defence remain tricky. However, it is a sure bet that in a world where a smartphone has as much processing power as a Cray supercomputer had in the 1980s, and startups are launching satellites by the hundreds, a brilliant-pebble constellation is technologically a lot more plausible than it used to be, even though it might still prove politically unacceptable. Moreover, these capabilities, though at their most developed in America, are not unique to it. Warfare, both defensive and offensive, may yet prove to be an application where, as with communications, navigation and observation, space-based assets offer a regional or worldwide service that provides a distinct edge over surface-based alternatives. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21705586/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Human space flight + +The orphans of Apollo + +There is no compelling need for people in space, but they will keep going anyway + +Aug 27th 2016 | From the print edition + +Orphans comforted + +SPACE need not necessarily become a battlefield, but the possibility is not without precedent. Military strategists have long known the value of taking the high ground, and the remarkable kinetic energy that comes with orbital velocities is a gift to weapon designers. The space race was a way to pursue the cold war by other means; its rockets were the children of V2s and the cousins of ICBMs. And its heroes were warriors, representing their nations in a strange new form of single combat. + +The early astronauts had no real technical or operational purpose; their presence, like their combat, was symbolic. But the symbolism was central to the whole enterprise. Well before Sputnik, science fiction had established space travel as one of the fundamental metaphors for future transcendence, a rising above and beyond the limits of the human which would be meaningless if humans were not involved. Superpower competition made the same demand. If space was a race it had to have winners, and those winners had to be people, singular people whose achievements, made possible by the work of hundreds of thousands, would inspire not just their fellow citizens but the whole world looking up at them. + +And inspire they did. A generation of children watched the Apollo landings and wondered what was coming next. That wondering went on for the next 40 years—wistful, fitful, sometimes angry, hungry for more. The “orphans of Apollo”, to borrow the title of a documentary film, watched the flying and failing of shuttles; the growth of the comsat industry; the Star Wars programme; the ISS; the roverisation of Mars: and none of it satisfied them. It was not simply that they wanted more astronauts. Astronauts kept flying almost all the time, because the powers that put them in space felt that giving up would entail a loss of prestige. The orphans wanted those astronauts to take things further. Human space programmes stuck in low orbit with no higher purpose than self- perpetuation could not make good their loss. + +Now some of those who wondered “what next?” are answering their own question. Many involved in the new generation of space ventures are motivated by more than profit. They want to extend humankind’s grasp and its sense of what it is. Some of this can be satisfied through the technologies of the small, the many and the robotic. These can do more than make money and serve humanity; they can inspire a wonder of their own (see Brain scan below). But for some the promise of space cannot be fulfilled just by hardware and imagery. And the radical improvements in earthly technology that have made ever more capable spacecraft possible have also made some of the technologically attuned entrepreneurs interested in space travel rich enough to direct their efforts beyond the near-term dictates of commerce. + +Elon Musk is the foremost of these superpowered orphans. He has shown that he can drive the costs of space travel lower, possibly far lower, than a government bureaucracy can. For more than a decade he has talked about the need for a self-sufficient colony of people on Mars to ensure that the human race could survive an Earth-wrecking cataclysm. He has made it clear that his company, SpaceX, which recent investments have valued at $12 billion, will not become a publicly traded company before it is well on the way to getting that colony started. His purpose is not to maximise shareholder value but to make history. + +At the end of September Mr Musk will reveal his road map for Mars colonisation at the International Astronautical Congress in Guadalajara, Mexico. A key part of the scheme is likely to be a new engine, the Raptor, far more powerful than the Falcon 9’s Merlin. Reusable rockets powered by clusters of Raptors will lift both Mars-bound spacecraft and their fuel to orbit. That fuel, unusually, will be liquid methane, which yields more energy per kilogram than the kerosene that Merlins use—and can quite easily be made from ice and carbon dioxide, both of which are available on Mars. Thus methane-powered spacecraft could not only get to the planet; they could also get back. + +Billionaire boys’ club + +Mr Musk is only one of a number of billionaires with a yen for space. In the 1996 Peter Diamandis, who is now co-chairman of an asteroid-mining startup, Planetary Resources, set up the Ansari X prize, a $10m reward for anyone who could build a vehicle able to lift three people higher than 100km—and thus, technically, into space—twice in two weeks. It was won in 2004 by SpaceShipOne, an experimental aircraft built by Scaled Composites, an outfit that excels at such things, and financed by Paul Allen, who founded Microsoft with Bill Gates. Mr Allen is now funding Stratolaunch, again in partnership with Scaled Composites. It aims to build the world’s biggest aircraft as a platform from which to launch satellites and, conceivably, people into space. + +Richard Branson, a British businessman, founded Virgin Galactic to build a space-tourism business out of Scaled Composite’s X-prize-winning know-how. His SpaceShipTwo should let six paying customers fly into the blackness of space and experience zero gravity; about 700 people have paid deposits for tickets. Its development has been far slower than expected, and in 2014 an accident claimed one of its aircraft as well as the life of one of its pilots. But SpaceShipTwo should be back in the air soon. And Mr Branson can call on more than just his own wealth to cushion the blows of fate: Arbor Investments, an Abu Dhabi sovereign-wealth fund, has invested $380m in the venture. + +Mr Branson’s main rival in the space-tourism business is Jeff Bezos of Amazon. New Shepard, the small reusable rocket built by Mr Bezos’s private company, Blue Origin, is capable of taking a reasonably roomy space capsule to the same sort of height as SpaceShipTwo. But Mr Bezos’s ambitions go far further. Blue Origin is building a new engine much larger than that used by New Shepard, similar in size to SpaceX’s Raptor. He is talking of selling this rocket to others, but doubtless also has plans for using it himself. + +When Mr Bezos outlines his long-term vision for space, he conjures up dreams strongly influenced by ideas championed in the 1970s by Gerard K. O’Neill, a professor at Princeton. O’Neill imagined a future in which all the heavy industry on Earth would be transferred to orbit, there to be powered by unlimited and uninterrupted sunshine, some of which would be beamed down to Earth by huge solar-power satellites. Industry’s workers would live in vast space settlements; its raw materials would come from the Moon and the asteroids; its effluent would be swept away by the solar wind. Mr Bezos talks of a similar “great inversion” in which orbital space becomes a swarm of industrial satellites employing millions of people while the billions below restore Earth to a pristine patchwork of cities, parks and wilderness, receiving much of the hardware they need as industrial manna from heaven. + +Blue Origin could be the tortoise to SpaceX’s hare. Rather than racing off to Mars, Mr Bezos is building up a sub-orbital space-tourism business first, then, presumably, a high-capacity, low-cost reusable launcher. From there, maybe, the assembly of an orbiting destination (another of Apollo’s wealthy orphans, Robert Bigelow, made his money in Las Vegas hotels, and longs to expand into orbit). Later perhaps some installations on the Moon, or on asteroids, to provision the guests? If Mr Bezos is willing to devote a significant fraction of what he has earned from Amazon to such things over the coming decades, his slow and steady approach might achieve a lot. Among other things, satisfied space tourists—well off, by definition—may swell the ranks of future space investors. + +Such undertakings could outstrip, or absorb, national human space-flight programmes. China and Russia both aspire to putting people on the Moon. Europe’s space agency has similar plans, though it lacks a crewed spacecraft. America talks of Mars as its next destination, but seems in no hurry; and if Mr Musk’s big rockets head there, NASA may pivot back to the Moon. It is good for doing interesting science, and there are resources, too: bits of the Moon, like some asteroids, have ice. A largely scientific moonbase may become America’s default destination. + +Such a moonbase might turn out significantly cheaper than the ISS—which is, at a cost of some $100 billion, the most expensive object humans have ever built. Just as post-shuttle NASA now uses contracts with private launchers like SpaceX to resupply the ISS, and will soon rely on them to get crew members there and back too, it will surely take a similar attitude to a future moonbase, contracting with Blue Origin, SpaceX, Boeing or some other company for the delivery of supplies and other services. That should keep costs down. So should the provision of robot assistance and the adaptation of other new space technologies to human needs. Companies such as Moon Express that are planning private missions to the Moon are not driven solely by the Google Lunar X prize, which promises $20m to a mission that meets certain objectives. They see themselves making money providing infrastructure for lunar science and, eventually, settlement. + +Stretching the magic + +None of this is yet certain. Mr Musk’s record is impressive, but he is trying to change the world not once but twice, both re-energising Earth with the solar-panel, battery and car business built around Tesla and providing an alternative to it with SpaceX. The magic could be spread too thin. So, perhaps, could the cash; both Tesla and SpaceX have in the past come within hours of bankruptcy, just as both have repeatedly failed to meet ambitious timetables. Even if Mr Musk can make spacecraft that get to Mars much more cheaply than previously thought, it is hard to see how they can be paid for with just part of the $5.5 billion launch business. + +The powerful Raptor could be a risky beast, at least early on. Taking hundreds of people to Mars is a task of a different order from taking a handful to the ISS. And some aspects of Mars itself could scupper the plans. The planet’s surface is laced with poisonous perchlorates; its gravity may be too low for women to carry babies to term, or children to grow up healthy. Mr Bezos’s Earth-centric ideas may look more reasonable. But they require manufacturing industries that greatly benefit from being in space. And those industries have to consider people who need air, food and places to live as more desirable workers than tireless solar-powered robots specifically designed for vacuum and microgravity—unless people to want to do the work so much that they will pay for the privilege, or contrive to receive subsidies. + +As far as a human presence goes, perhaps the most that space can hope for is to become a new Antarctic, protected from military expansion by treaty, suited only to research and tourism. It would not be a new Earth, or a greatly inverted one. But it would be an addition to the human realm well worth having; Antarctica, after all, is a wonderful thing. And the efforts of the orphans to create a yet greater future will, as long as there is no terrible loss of life, provide insights into what visionary drive, technological acumen and capital can achieve. + +Humankind’s expansion into space may never meet with crowning glory on other planets or pass far beyond Earth’s orbit. But the years and decades to come will see something bolder and more inspirational than the staid circlings of those just past. And whatever the fate of the most ambitious ventures, the navigable, networked and knowable world that today’s satellites are creating, reinforcing and enriching will endure. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21705590/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brain scan + +Space chips + +Zac Manchester is making smallsats smaller still + +Aug 27th 2016 | From the print edition + + + +LIKE Elon Musk, Zac Manchester wants to get people into space. Unlike Mr Musk, he does not have a billion-dollar spaceship business to do it with. But he has imagination, the skills of a smart young engineer, the cubesat standard and crowdsourced funding. That is enough. + +Had it not been for a regulatory SNAFU, the Falcon 9 that took off from Cape Canaveral this July would have carried a 3U cubesat called Kicksat. On board would have been 100 circuit boards measuring 3.5cm on a side and weighing four grams, each holding sensors, a processor, solar cells, a radio and a pair of coiled 10cm whiskers. Once in orbit each of those circuit boards—he calls them “sprites”—would have headed off on its own, kicked out of the tiny mother ship by the uncoiling of its antennae, and the project’s backers on Kickstarter would have had their own personal Sputniks, transmitting at a frequency they could monitor. + +A 3mm smartphone camera would be an easy addition, says Dr Manchester, as would other sensors commonplace in phones and elsewhere. A modest investment would allow the whole package to be produced on a single silicon chip. At the margin they could be priced in pennies. + +A swarm of such mites could be used to study the Earth’s upper atmosphere or its magnetic field. With a bit more development they could be a remarkable supplement to asteroid-prospecting missions, thousands of them imaging their target from every angle and putting a network of simple sensors all over its surface. If they were attached to lightweight mirrors, lasers could fling them to targets across the solar system—perhaps, one day, beyond it. + +Mr Manchester would like eventually to travel to space himself the old-fashioned way. If out-of-the-box engineers are needed in orbit, he may well get his chance. But Kicksat will get up there a lot sooner. And its nanoscale possibilities may take some imaginations—and sponsors—a great deal further. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21705592/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Linux and AWS: Cloud chronicles + +Viacom: In the name of the father + +Cement manufacturers: Cracks in the surface + +Football: Winging it + +Direct selling in China: Rebirth of a sales firm + +Schumpeter: Mafia management + + + + + +Articles Sections Next + +Linux and AWS + +Cloud chronicles + +How open-source software and cloud computing have set up the IT industry for a once-in-a-generation battle + +Aug 27th 2016 | From the print edition + + + +AS BOSSES go, Linus Torvalds and Andy Jassy couldn’t be more different. Mr Torvalds works, often in his bathrobe, out of his home in Portland, Oregon. He leads an army of volunteer developers whose software can be had for nothing. The office of Mr Jassy, who usually sports business casual, is in a tower in Seattle. His employees operate dozens of huge data centres around the world and work to create new online services that his firm can charge for. + +Yet their organisations share an anniversary and an intertwined history. On August 25th 1991 Mr Torvalds asked other developers to comment on a computer operating system he had written, which became known as Linux. It has since become the world’s most-used piece of software of this type. On the same day in 2006 Mr Jassy’s team made available a beta version of “Elastic Compute Cloud” (EC2), the central offering of Amazon Web Services (AWS), the cloud-computing arm of Amazon, an e-commerce giant. Over the past 12 months the division racked up sales of $11 billion. + +These two organisations have been central to the rise of cloud computing, the provision of all kinds of number-crunching services over the internet. Global networks of huge data centres, of the sort run by AWS, have become one of the world’s most important infrastructures. Without open-source programs like Linux, however, cloud computing would have been stillborn. Old-style “proprietary” software was too expensive and hard to adapt. In writing his program, Mr Torvalds was just scratching his own itch: he simply needed what later became Linux for his own PC. Now about 1,500 developers contribute to each new version of Linux. As for AWS, rapid growth had left its parent company with “jumbled IT systems”, says Mr Jassy, and it needed to integrate them into a single platform, or set of reusable services, which later emerged as AWS. + +Being first to succeed on a large scale allowed both Linux and AWS to take advantage of network effects, which make popular products even more entrenched. Linux also took off because Microsoft’s rivals, in particular IBM and Oracle, wanted to rein in Windows and threw their weight behind the open-source alternative. AWS’s timing, just before smartphones emerged in 2007 and ushered in the app economy, was especially good. It became the go-to service for startups because it charged only for the capacity they used rather than a fixed fee. AWS is still a haven for young firms: nearly two-thirds of its more than 1m customers are startups, although it increasingly also serves big companies such as General Electric and Netflix. + +Both open-source software and cloud computing have been disastrous for the old giants of IT. New firms almost always opt for an open-source database in the cloud rather than a pricey proprietary version from Oracle, the biggest vendor of such software. The more firms use the cloud, the less they buy equipment from Dell, Hewlett-Packard and other hardware makers. Cloud-computing providers, for their part, have little time for traditional vendors of computing gear and instead buy from contract manufacturers in China. The incumbents have seen sales in their core business stagnate or drop in recent years. IBM’s revenues, for instance, have fallen for 17 consecutive quarters. + +But if their pasts share resemblances, the futures of Linux and AWS will diverge. Linux will probably just “happily plod along”, in the words of Mr Torvalds, as will open-source software in general. Meanwhile, AWS shows no sign of slowing its progress towards full dominance of cloud computing’s wide skies (see chart). It has ten times as much computing capacity as the next 14 cloud providers combined, according to Gartner, a consulting firm. AWS’s sales in the past quarter were about three times the size of its closest competitor, Microsoft’s Azure. This business is the reason why its parent company was able to report its third consecutive record quarterly profit in July, after years of patchy results. + + + +It is much more profitable than anyone expected, too, even after many rounds of price reductions designed to seize market share. One reason is that as well as offering basic storage and number-crunching, it sells hundreds of other computing services and features, from analytics and e-mail to search and workflow; the marginal cost for providing these add-on services is close to zero because the necessary software is already written. + +Others are struggling to keep up. Hewlett-Packard has thrown in the towel. IBM had to buy SoftLayer, a startup, in 2013; it has since become the core of Big Blue’s cloud but IBM is still lagging behind. Google is also struggling. Last year it hired Diane Greene, a renowned IT executive, to give its computing utility a boost. Only Microsoft’s Azure is currently able even to “touch” AWS, says Paul Miller of Forrester, a consultancy. + +Get off of my cloud + +The “cloud-computing wars”, as some call them, are not yet over. The prize is too great. Gartner estimates that about $205 billion, or 6% of the world’s IT budget of $3.4 trillion, will be spent on cloud computing in 2016—a number it expects to grow to $240 billion next year. The latest battleground is data. Cloud providers are hoovering up digital information left and right so they can mine it and use the insights to offer new services or improve existing ones. Earlier this year, for example, IBM bought Truven Health Analytics, which has data on 215m patients. + +Yet again, however, AWS has stolen a march on its rivals. Its latest database offerings, Aurora and Redshift, have been in especially high demand. Last year it began to offer a service called Snowball, a suitcase-sized box packed with 50 terabytes of digital memory, which firms can use to transfer mountains of data into AWS’s cloud. + +AWS may eventually discover some limits to its growth, as users seek to keep alternative providers in business. Many customers fret about getting “locked in” to it. Startups often use the service in ways that deliberately allow them to switch providers. In Europe some two-fifths of firms use more than one cloud, according to Forrester. This will help other players to catch up. + +But AWS’s momentum is immense. Even Salesforce.com, a big provider of online business applications that operates data centres of its own, recently announced that it will start using AWS, notes George Gilbert of Wikibon, a group of IT consultants. At some point, Mr Gilbert reckons, even IBM may have to take the same step. + +AWS could end up dominating the IT industry just as IBM’s System/360, a family of mainframe computers, did until the 1980s. If that happens, the antitrust authorities may eventually have to step in, as they did with IBM. Back in the early days, when Messrs Torvalds or Jassy tinkered with their creations, that outcome would have seemed inconceivable. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21705849-how-open-source-software-and-cloud-computing-have-set-up-it-industry/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Viacom + +In the name of the father + +After a protracted fight, Shari Redstone has taken charge of Viacom + +Aug 27th 2016 | New York | From the print edition + +Family reunions + +A FEW days ago Viacom’s film studio, Paramount Pictures, released “Ben Hur”, a film that cost $100m to make and which tanked so badly at the American box office (it took just $12m in its first weekend) that a prominent investor in the firm, Mario Gabelli, calls it “Ben Hurts”. And in the latest in a string of disappointments for the media giant’s cable channels, which used to lead their industry, Comedy Central was obliged to cancel a low-rated programme, “The Nightly Show with Larry Wilmore”. + +Yet in another way Viacom has had a good couple of weeks. On August 20th it jettisoned Philippe Dauman, its chief executive, whom many people at the firm and outside blame for leading the business into disarray during his decade in charge. His ousting also marks the end of a soap-opera-like legal battle for control of the company. It has been fought in the name of Sumner Redstone, the ailing 93-year-old mogul who controls Viacom through his family’s private company, National Amusements. People around Mr Redstone, who is neither seen nor heard from these days, have variously claimed either to know his innermost thoughts, or argued that he was not competent enough to have them and should surrender control. + +A settlement between Mr Dauman and the board of Viacom leaves Mr Redstone still nominally in charge. But most people believe that Shari Redstone, the mogul’s daughter, who for years was estranged from her father, is now calling the shots. + +The question now is how she intends to lift Viacom’s fortunes. Paramount used to have blockbuster years at the box office; and Viacom some of the most acclaimed shows on cable, including Jon Stewart’s “The Daily Show”. Much of the company’s best creative talent left while Mr Dauman was in charge, and few will want to come back unless there are drastic changes. That cannot happen immediately. Tom Dooley, the former chief operating officer and Mr Dauman’s right-hand man, is serving as interim CEO until at least the end of September. Investors tend to like him, but creative types hope that he is a caretaker. + +The most intriguing option would be to recombine Viacom with the Redstone family’s more vibrant media property, CBS Corporation, under the leadership of the CBS chief, Leslie Moonves, one of the TV industry’s best-known showmen. According to one former Viacom executive who knows Ms Redstone well, a recombination is her priority. CBS, with a strong broadcast network and a well-run premium cable channel in Showtime, would fit with Viacom’s basic cable offering, giving a combined firm more leverage with cable companies to keep Viacom’s networks in their packages of channels. + +A reunited firm, with the film studio, would have enough size and global clout to be credible in an industry where its competitors operate at massive scale. Viacom has a market value of $17 billion, while CBS, once its junior, has risen to $23 billion (see chart). Disney, by comparison, has a market capitalisation of $154 billion. It is clear that Mr Redstone’s decision in 2005 to split up the two firms, partly to allow two favourites (Mr Moonves and Tom Freston, then co-presidents of Viacom) to take jobs as chief executives, was a mistake. Re-merging the firms “makes a lot of sense”, says Mr Gabelli, whose firm, Gamco Investors, controls the biggest block of voting shares not held by a Redstone. “Les is the logical guy and she likes him.” + + + +Whoever takes the job has a difficult task. Under Mr Dauman, a corporate lawyer by training, the firm was sapped of its creative energy, former executives say. He discouraged risk-taking, especially in the digital space, preferring to protect his existing portfolio of assets. He sued YouTube in 2007, after clips of Viacom shows started appearing on the video site. When ratings at the firm’s channels plummeted, he increased the number of commercials to keep up revenues. Recently Mr Dauman also tried to sell half of Paramount to Dalian Wanda, a Chinese conglomerate, in order to pay down debt. The studio that made “The Godfather” films has languished at the bottom of the box office rankings for four years. A sale of Viacom itself is an option, whether to a much bigger media conglomerate or to a trophy hunter. But not while Mr Redstone is still alive, says Mr Gabelli. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21705863-after-protracted-fight-shari-redstone-has-taken-charge-viacom-name-father/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cement manufacturers + +Cracks in the surface + +Why grey firms will have to go green + +Aug 27th 2016 | From the print edition + + + +THE cement industry is one of the world’s most polluting: it accounts for 5% of man-made carbon-dioxide emissions each year. Making this most useful of glues requires vast quantities of energy and water. Calcium carbonate (generally in the form of limestone), silica, iron oxide and alumina are partially melted by heating them to 1450°C in a special kiln. The result, clinker, is mixed with gypsum and ground to make cement, a basic ingredient of concrete. Breaking down the limestone produces about half of the emissions; almost all the rest come from the burning of fossil fuels to heat the kiln. + +About 4.3 billion tonnes of cement were consumed in 2014—China alone needed more than half of that. It also produces 60% of the stuff, followed at a distance by India and America. The industry brings in about $250 billion a year. Cement firms have not attracted the ire of environmental campaigners in the way that oil firms have. But that could change if they shirk efforts to cut emissions in a manner consistent with keeping the world less than 2°C warmer than it was in pre-industrial times (as agreed at UN climate talks last year). For now, few cement companies are setting environmental targets that are tough enough. + +The main reason is a lack so far of strong enough financial imperatives, but that is changing. And as is the case for many industries, going green could save firms money. Around a third of cement’s production costs come from energy bills. Retrofitting old kilns to improve thermal efficiency can lower the industry’s energy needs by two-fifths, according to the Carbon Disclosure Project, a research body. Another way to go green is to reduce the amount of clinker in cement by using waste substitutes such as fly ash from coal plants or slag from steel blast furnaces, but these are becoming scarcer and more expensive. + +Capturing carbon and then sequestering it, often underground, is another method for cutting emissions. But the bother and expense of such schemes makes them a rarity. There are variations that can cut costs in rich countries. Rather than stuffing the CO² spewed out of cement and other plants underground, Blue Planet, a carbon-capture company based in California, creates building materials from it in the form of aggregates. These can be recycled into making new concrete, avoiding the need for more limestone. + +As almost all big cement firms also produce building materials such as concrete and asphalt, capturing emissions to create such products is worthwhile. It could also reduce open-pit mining for limestone, which is especially destructive. Blue Planet is providing materials for San Francisco’s new airport and has other projects across North America. Concrete is the “900-pound gorilla in the carbon footprint of any building” says its CEO, Brent Constanz. + +The group of cement bosses that environmentalists need to win round is small. Just six firms—LafargeHolcim, Anhui Conch, CNBM, Cemex, Heidelberg and Italcementi—dominate the global market. The last two are set to merge this year, leaving just five behemoths. The nature of the industry helps explain its propensity for consolidation. The great weight of cement and its ingredients makes the materials tough to transport, creating localised markets. Companies prefer to serve distant markets by buying firms that are already there. Deals have multiplied as firms from the rich world have splurged on those in developing countries, and, occasionally, vice versa. Slowing growth in China has created a huge, grey supply glut of cement in the country, which is likely to mean more dealmaking. + +Further consolidation, bringing economies of scale, ought to help the industry to clean up. China is to introduce a national carbon-trading scheme in 2017, and the EU’s own scheme will reduce its emissions cap by 2.2% every year after 2020. The industry is becoming more vulnerable to emissions-curbing legislation, says Phil Roseberg of Sanford C. Bernstein, a research firm. Some cement giants are at last taking action. LafargeHolcim already uses an internal carbon price of $32 per tonne; Heidelberg works with one of $23. In a changing regulatory and political environment, investors may start to see nasty cracks in the business model of any firm still stuck in the industry’s old, polluting ways. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21705861-why-grey-firms-will-have-go-green-cracks-surface/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Football + +Winging it + +China and the beautiful game + +Aug 27th 2016 | SHANGHAI | From the print edition + +The Chinese are on side + +WILL the Reds go red? Everbright, a Chinese state-backed financial conglomerate, is reportedly keen to buy Liverpool Football Club, one of the sport’s most celebrated names. If it were to happen, it would be the biggest in a series of recent investments made by mainland firms in European football (see chart). Some think such moves will redraw the sporting map. Arsène Wenger, manager of Arsenal, a London club, has said that China has the financial wherewithal to “move a whole league of Europe to China”. + + + +The tally of Chinese investment in foreign football clubs since January of last year now stands at $2 billion, according to Rhodium Group, a consulting firm. The sums keep growing. The biggest deal yet was the takeover of AC Milan for $820m by a mainland consortium, announced on July 5th. Chinese money has also cascaded towards individual footballers, who often join the world’s best paid. The latest jaw-dropping deal was Shanghai SIPG’s signing of Givanildo Vieira de Sousa, a Brazilian star known as Hulk, in June for $61m. + +China’s president, Xi Jinping, a lifelong football fan, approves. He wants to build a domestic sports industry worth $850 billion by 2025. His other goals are for China to host the World Cup by 2030 and win it soon after. The bureaucracy has swung into action, issuing 50-point policy plans and offering tax breaks and other inducements to firms investing in the game. + +Many have responded, with Chinese investors in football ranging from the business elite to the relatively unknown. Some businessmen may be mindful of the benefits of being seen to invest in the state’s declared priorities during Mr Xi’s feared anti-corruption campaign. The new owner of Wolverhampton Wanderers, Guo Guangchang, the boss of Fosun Group, for instance, was briefly detained by police last December before being released with no charges a few days later. Foreign football clubs also offer investors a state-sanctioned way to move money out of China, and a hedge against the falling yuan. + +Many of those buying clubs abroad are also spending big on football back home. The knowledge gleaned from inspecting the way in which European clubs develop talent should eventually boost skills on pitches in China, where playing standards have long been poor. The investment is not a case of blind adoration for European football, argues Simon Chadwick of Coventry University Business School, but is rather quite strategic. + +Insiders who know Liverpool FC are playing down the likelihood of an imminent deal, but the club’s owners may be swayed by events 50km away from Anfield, its home. Manchester City, of which 13% is owned by a consortium led by China Media Capital (CMC), a venture-capital firm with a strong presence in Chinese media, is well placed to lift its profile in a vast, untapped football market. Manchester City has recently agreed a deal to set up a satellite club in China. + +Analysts based in China tend to think that the string of purchases represents a bubble. The nation is likely to have less success in spending its way to the top in football than it has had in the Olympics, says Mark Dreyer of China Sports Insider, an industry blog. Corruption now is not as bad as in the old days of “black ball” scandals, when many matches were fixed. Still, the Hong Kong Jockey Club, which hosts betting on a range of sports, remains suspicious and does not allow bets on Chinese football matches. + +And the problem with state backing is that it could easily lead to the sort of industrial policies that have led to overinvestment and underperformance in several other Chinese industries. The chances of China becoming a global chip-making superpower, for example, are slim, even though it plans to spend over $100 billion buying semiconductor firms and technologies, said Bain & Company, a consultancy, in a recent study. A report drawing similar conclusions about China’s ambitions in football could soon be on its way. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21705862-china-and-beautiful-game-winging-it/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Direct selling in China + +Rebirth of a sales firm + +Lessons from Amway’s turnaround + +Aug 27th 2016 | SHANGHAI | From the print edition + + + +“I AMWAY you this song!” So declared Tan Weiwei, a Chinese pop artist, during a performance in Shanghai on August 14th. Hers was the closing act in a gala celebration thrown by America’s Amway, the world’s largest direct-sales company, for its top sales representatives in China. When she used that odd expression, which in China is a way to say “strongly recommend”, the crowd of 11,000 diehards gathered in the stadium and another 1.5m Amway staff, distributors and customers watching via webcast went wild. + +That Amway’s Mandarin name (“An Li”) has become a meme shows the strength of its comeback in China. It entered two decades ago, using its model of multi-level marketing (MLM), which rewards salesmen not only for selling products but also for sales made by people they recruit. After a run of pyramid scams—unrelated to Amway—led to a public backlash, in 1998 the Chinese government banned all direct sellers and its sales dwindled to nearly nothing. Now, however, the mainland is Amway’s biggest market. Its annual sales there, of products such as toothpaste and make-up, have exceeded $4 billion in recent years. How did it do it? + +The firm’s leadership emphasises the virtues of patience and investment. Amway had floated bits of its Asian operations outside China, but disliked investors’ short-term focus. It took the divisions private again, which it says shows its long-term approach. Its philosophy helped it through the bleak years on the mainland. + +Just as important was Amway’s ability to sell itself to officialdom. The firm’s senior managers got to know regulators and informed them about the differences between pyramid schemes and established direct sellers. It managed its after-sales process well: even after the government lifted the ban on direct selling ten years ago after China’s accession to the WTO, Amway sponsored a fellowship that sent rising stars of the Communist Party to Harvard’s Kennedy School of Government, with a handy stopover at Amway’s headquarters in Ada, Michigan. + +Amway also had to be willing to change its MLM methods. China’s law permitted direct selling but forbade most forms of multi-level marketing. Firms had to have a physical presence, the government decreed. Amway’s China division devised clever, legal means to reward networkers who recruit other salespeople. It had to revise its sales model five times. It also opened branded outlets, Amway’s first. + +So far it has been worth it. Amway is facing greater competition from local firms, but it is still raking in cash as the biggest direct seller in a market worth 112 billion yuan ($16.8 billion). Yet the firm’s choice of keynote speaker at its recent gala in Shanghai, Sir Tim Berners-Lee, inventor of the web, is a reminder of a different threat. China’s rapid embrace of e-commerce has already caught some Western giants, including Unilever and Nestlé, off-guard. Amway is menaced, too. + +“E-commerce is hurting us very much, as it is changing the mentality of how people shop,” says Audie Wong, president of Amway China. Its digital efforts are getting results; from nothing a few years ago, e-commerce now makes up 45% of sales in China. But strangely, the company is refusing to let consumers buy online directly and insists that web orders must be routed through specific representatives, which adds to its products’ cost. It seems tied to its army of glad-handers. If it cannot go truly digital, its China business might eventually become an example of how not to do things. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21705864-lessons-amways-turnaround-rebirth-sales-firm/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Mafia management + +The crime families of Naples are remarkably good at business + +Aug 27th 2016 | From the print edition + + + +AN EASY way to revive a flagging dinner party is to ask people to name their choice of the greatest crime show. Is it “The Wire”, with its intricate portrait of Baltimore’s underworld? Or “The Sopranos”? Or perhaps “Breaking Bad”? Now there is a new contender for the prize—“Gomorrah”, a drama about a collection of Italian gangs known as the Camorra that run a criminal empire from their base in Naples. + +“Gomorrah” has been Italy’s most talked-about television series since its release two years ago. It has been sold in 50 countries and the first episode premiered on America’s Sundance TV this week. The series is far darker than the other three. The gangsters aren’t lovable monsters like Tony Soprano, just monsters. It is more realistic. The author of the book behind the series, Roberto Saviano, has been in hiding since the Camorra issued a death warrant against him in 2006. Filming of the series in gritty Neapolitan neighbourhoods was interrupted by local violence. + +One of the most striking things about the Camorra is how good they are at business. They have taken over from the Sicilian Mafia as Italy’s foremost crime syndicate, partly owing to the Italian state’s move to clamp down on the Cosa Nostra from the mid-1990s. The Camorra’s strategy of focusing on drugs, particularly cocaine, has also paid off. The group runs much of Europe’s drug trade, including the continent’s largest open-air narcotics market in Secondigliano, in the north-east of Naples. + +The syndicate appears to be organised like a typical corporation, with descending levels of power. There is a top tier of senior managers who determine strategy and allocate resources; a second tier of middle managers who purchase and process the product; a third level of sales chiefs who co-ordinate distribution; and a fourth grade of street salesmen who deliver the product directly to customers. The group employs all the usual supply-chain-management methods. Its leaders source drugs from around the world (cocaine from Latin America, heroin from Afghanistan and hashish from north Africa) and make sure that alternatives are in place in case of disruption. + +They do some things outstandingly well. Operating outside Italy’s growth-killing labour rules, the Camorra can be fleet-footed. A loose alliance of about 115 gangs, with around 500 members each and numerous associates, they can swiftly assemble a workforce of whatever size is needed, or shift from one line of business to another in a flash. They are best-in-class when it comes to renewing talent and ideas. Whenever entrenched managers balk at moving into new markets, as the older Camorra bosses did when drugs came along in the 1980s, they are replaced by a younger generation. + +Paolo Di Lauro, the former head of one of the most powerful clans, and the model for Don Pietro in “Gomorrah”, is arguably one of the most innovative businesspeople Italy has produced in recent years (since 2005 he has been held in solitary confinement in a maximum-security prison). As well as co-ordinating the drug trade with Colombia, he designed the group’s successful franchise system, in which it treats distributors like franchisees who are responsible for their own turf rather than as mere employees. That gives them an incentive to recruit more people as well as to shift more product. + +The Camorra put their own unique spin on standard management techniques. They are experts in team-building. New recruits are initiated with quasi-religious ceremonies. Rising stars are given endearing nicknames such as Carlucciello ‘o mangiavatt (“little Charles the cat-eater”) or Urpacchiello (a riding crop made from dried donkey’s penis). They take care of the relatives of workers who die on the job. Gang members known in their role as the “submarine” deliver money and groceries to the bereaved families on Fridays. The group’s efforts at corporate social responsibility (CSR) pay off. Local people invariably take the gangsters’ side during police raids, forming human barricades, pelting law enforcers with rubbish and setting fire to their cars. + +True, this is CSR that comes soaked in blood rather than the usual syrup. Mr Saviano calculates that the gangs were responsible for 3,600 deaths between 1979 (when he was born) and 2006 (when he published his book). They are also responsible for a widening circle of economic devastation. The trade in drugs that swells their coffers also ruins lives. Naples, one of Italy’s most enjoyable cities, would be a bigger tourist attraction if it weren’t for its reputation for violent crime. + +They’re bigger than US Steel + +The Camorra themselves pay a high price, too. The street soldiers live miserable lives, typically ending up dead, injured or in prison before they reach middle age. Those at the top are constantly on their guard against being rubbed out by rivals or arrested by the police. Many of them live in permanent hiding, either in attics or underground complexes. Mr Di Lauro’s business produced turnover of €200m ($250m) a year, but he didn’t exactly live large: he was a recluse, protected by steel shutters and bolted gates, and also had to spend years on the run. + +Nonetheless, the syndicate thrives, in part because the rewards are so huge and in part because the alternatives are so sparse. Italy’s economy has been stagnant for well over a decade. The country ranks number 45 in the World Bank’s ease-of-doing-business table, with southern Italy being a particularly hostile place for legitimate enterprise. On August 22nd the heads of the euro zone’s three biggest economies—Angela Merkel of Germany, François Hollande of France and Matteo Renzi of Italy—met on an island off the coast of Naples to talk about relaunching the European project. To be successful, any such plan must make it easier to create legal businesses—and thus likelier that the management genius displayed by the likes of the Camorra is directed towards the creative side of creative destruction. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21705858-crime-families-naples-are-remarkably-good-business-mafia-management/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Central banking: The Jackson four + +India’s central bank: Reserve player + +American business investment: Econundrum + +Drought insurance in Africa: ARC’s covenant + +Rising LIBOR: SECular shift + +Hedge funds: Law of averages + +Free exchange: Believing is seeing + + + + + +Articles Sections Next + +Central banking + +The Jackson four + +Should the Fed adopt India’s inflation target? + +Aug 27th 2016 | HONG KONG | From the print edition + + + +IN THE latter part of this week, monetary policymakers and theorists from around the world were due to attend the Jackson Hole symposium, 6,800 feet up in the mountains of Wyoming. Many people—aggrieved savers and yield-hungry investors—probably wish they would never come back down. To their critics, central bankers seem strangely committed to two unpardonable follies: eroding the interest people earn on their savings and inflating the prices they pay at the shops. + +It was, therefore, brave of one central banker—John Williams of the Federal Reserve Bank of San Francisco—to argue on August 15th that the Fed might need to raise its 2% inflation target or replace it with an alternative if it is successfully to fight the next downturn. Some economists favour an inflation target of 4%. This is not as outlandish as it sounds. Indeed, the notion that new circumstances require a new target may appear quite run-of-the-mill to central bankers from the developing world who are taking part in the symposium. + +Much criticism of the West’s central bankers rests on the myth that they are wholly responsible for rock-bottom rates. In fact, they seek the highest rates the economy can bear, but no higher. When the economy is at full strength, they want a “neutral” (or natural) rate that keeps inflation steady, neither stimulating the economy nor slowing it. When the economy is overheating, they want a rate above neutral. And when the economy is weak, they want one below it. The neutral rate (r* in economists’ algebra) thus provides a vital reference point for their policy. As such, it exercises considerable influence over central bankers. But they, importantly, exercise precious little influence over it. + +According to economic theory, the neutral rate reconciles the eagerness to invest and the willingness to save when the economy is in full bloom. As such, it reflects the productivity of capital, the promise of technology and the prudence of households, none of which are variables chosen by monetary officials. The neutral rate cannot be observed directly. But Mr Williams and a Fed colleague reckon it has fallen persistently: r-star (as he calls it) is close to zero, or about two percentage points lower than it was in 2004. + +If r-star is lower than it was back then, the Fed’s policy rate must also be lower to be equally stimulative. That means today’s rate (of between 0.25% and 0.5%) is not as lax as it looks. Leo Krippner of the Federal Reserve Bank of New Zealand estimates that American monetary policy today is already as tight as it was in July 2005, when the federal funds rate stood at 3.25%, having been raised nine times. + +The question preoccupying most Fed-watchers is how much tighter policy will get in the next year or two. Mr Williams raises a different concern: how much looser can policy get during the next downturn. If the Fed sticks to its current inflation target of 2%, a policy rate of 0% would translate into a real cost of borrowing of minus 2% (because the money debtors repay will be worth less than the money they borrowed). That may not be low enough. + +Such a rate would be only about two percentage points lower than Mr Williams’s estimate of the neutral rate. Raising the inflation target to 4%, say, would allow real interest rates to drop about four percentage points below neutral if necessary. (This is not the only reform idea. Another is targeting the trajectory of nominal GDP, which reflects both economic growth and price inflation; that might result in higher inflation when growth was weak and low inflation when growth was strong.) + +But even if a 4% target is desirable, would it be feasible? The Fed has struggled to reach its current target quickly or consistently. What makes anyone think it could hit a higher one? One answer is that a higher target would free the central bank from a “timidity trap”, as Paul Krugman of the New York Times calls it. In such a trap the central bank sets its goals too low, and paradoxically falls short of them. A credible central bank might cut rates to zero and promise 2% inflation. If it is believed, inflation expectations will rise and the anticipated real cost of borrowing will fall to minus 2%. But if the economy actually needs a real rate of minus 4% to revive, spending will remain too weak, economic slack will persist and inflation will ebb, falling under target. Conversely, if the central bank promises 4% inflation, its pledges will be both believed and fulfilled. + +Shooting r-star + +Western policymakers dislike tinkering with their inflation targets. But in the wider universe of central banks, periodic revisions are no big deal. Indonesia sets its targets for a three-year period, as does the Philippines, Turkey and South Korea. This flexibility need not destroy a central bank’s sound-money credentials: South Korea’s inflation is even lower than America’s. + +Although a target centred on 4% sounds scandalous to rich-world central bankers, it is not unusual elsewhere. Indonesia pursues one. Brazil’s inflation target is 4.5%. India is lowering its target from 6% last year to about 4% for the future. The committee recommending that figure was chaired by Urjit Patel, who will be the Reserve Bank of India’s next governor (see article). + +One advantage many emerging economies enjoy over richer ones is a higher r-star, thanks to faster rates of underlying growth and inflation, as low local prices converge towards higher international prices. That gives their central banks more room to cut interest rates in the face of a downturn. Indeed, it is hard to think of any catch-up economy that has remained stuck at zero rates. + +If Mr Patel succeeds in his new job and the Fed embraces reform, America’s inflation target may one day resemble India’s. But India will still worry more about overshooting its target than undershooting it, and America will still probably harbour the opposite set of concerns. Their inflation targets may match, but their r-stars will not be aligned. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21705832-should-fed-adopt-indias-inflation-target-jackson-four/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +India’s central bank + +Reserve player + +Will the new governor be a clone of the old one? + +Aug 27th 2016 | MUMBAI | From the print edition + +Patel-tale signs of orthodoxy + +CENTRAL banks need the confidence of investors to function well, so questions about their leadership and independence are seldom welcome. On August 20th Narendra Modi, India’s prime minister, belatedly appointed a new head of the Reserve Bank of India (RBI), nine weeks after Raghuram Rajan, the incumbent, surprised everyone by announcing he was stepping down. The new man, Urjit Patel, was an understudy to Mr Rajan—prompting plenty to wonder why the original cast member was, in effect, forced out. + +Beyond the usual way stations for central bankers—Yale, Oxford, a period at the IMF—Mr Patel was once a management consultant and an executive at Reliance Industries, a group headed by Mukesh Ambani, India’s richest man. He has been a deputy governor of the RBI since 2013. + +India’s newish inflation-targeting framework, which has been successful in stemming rising prices (helped by outside factors such as falling oil prices), is as much his as Mr Rajan’s. So is the upcoming arrangement whereby interest rates will be set by a panel comprising government and RBI appointees, rather than the governor alone. Though he lacks the stature of Mr Rajan, a former IMF chief economist, his hawkish credentials will help fend off calls for lower rates from ministers and industrialists. + +His appointment should alleviate fears that Mr Rajan’s untimely exit—all recent RBI governors have served more than a single three-year term—was a ploy by Mr Modi to hobble the central bank’s independence. Insiders suspect that it was Mr Rajan’s sideline as a public intellectual, pontificating on matters far removed from economics, that undermined him in Mr Modi’s eyes. Mr Patel is unlikely to stray so far from his bailiwick. + +If monetary policy is expected to remain unchanged, the regulation of banks, the RBI’s other main remit, is a more open question. The state-owned lenders, some 70% of the industry, are struggling with dud loans they extended to industry and infrastructure firms five years ago. Mr Rajan had forced the banks to recognise the holes in their balance-sheets, indirectly taking on the tycoons who had benefited from the forbearance of bank bosses. + +Mr Patel’s views on bank regulation are not known. Some of the sensible stuff enacted in recent years, such as making it easier for newcomers to obtain banking licences, will surely stay in place. But whether Mr Patel keeps up the same pressure on the banks will be a big test in the early stages of his three-year mandate. Many hope the new governor will be a clone of the man he replaces—while wondering why Mr Modi didn’t just stick with the original. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21705836-will-new-governor-be-clone-old-one-reserve-player/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +American business investment + +Econundrum + +Americans are spending and hiring. So why aren’t firms investing? + +Aug 27th 2016 | WASHINGTON, DC | From the print edition + + + +THE American economy is in a befuddling state. Firms are on a six-year hiring spree that shows little sign of abating; payrolls swelled by an average of 190,000 a month between May and July. Competition for workers is pushing up wages. The median pay rise in the year to July was 3.4%, according to the Federal Reserve Bank of Atlanta. Americans are spending that cash; in the second quarter, consumption per person grew at an annual pace of 5.5%, equalling its fastest growth in a decade. Yet real GDP is expanding by only 1.2% a year. The culprit seems to be business investment, which has fallen for three consecutive quarters. It is now 1.3% lower than a year ago—the biggest annual decline since early 2010 when the country was staggering out of the financial crisis. If firms are hiring and consumers are spending, why is investment weak? + +Initially, the decoupling was caused by the prolonged fall in oil prices. Cheaper petrol benefited Americans by about $1,300 per household, boosting consumption. Simultaneously, it caused investment in the oil industry to fall by more than half in 2015, as shale oil and gas firms stopped drilling. Investment elsewhere carried on merrily, rising by 4.3%. But the malaise is no longer so contained. Even excluding oil, investment shrank slightly in the first half of 2016 (see chart). + +Some of this reflects contagion. When energy firms tighten their belts, their suppliers feel the squeeze. Yet other sectors with little exposure to oil have also pulled back. Financial firms, for instance, invested about 21% less in the first quarter of 2016 than a year earlier. Investment is even down in the consumer-staples industry. + +There are three potential explanations for this widespread reluctance to invest. The first is weak demand for the firms’ goods. This explains exporters’ restraint, given lacklustre global demand and a pricey dollar. But it makes less sense at home, with consumer spending strong, and firms happy to hire and to raise wages. + +The second is tighter credit. Since the Federal Reserve raised interest rates in December, the average rate banks charge firms to borrow is up by about half a percentage point. After five years of loosening standards, more banks have tightened than eased credit standards for business lending in 2016, according to a Fed survey. In February, financial-market turmoil caused credit spreads in bond markets, the best measure of credit conditions, to surge. + +Yet it is unlikely that slightly tighter credit has substantially crimped investment, because American firms are flush with cash. At the end of last year they had $1.7 trillion on hand, enough to pay for Hillary Clinton’s infrastructure plan six times over (though much of this cash is held overseas for tax reasons). Indeed, firms are accumulating cash at the fastest rate since July 2011, according to the Association for Finance Professionals, an industry group. + +That leaves the third explanation: that in spite of strong spending, slow trend growth is reducing opportunities for profitable long-term investments. On this view, the recent downturn in business investment was less of a cyclical blip than a sign of things to come. + +Economies get bigger when they add people or get more from their existing workforce. America is doing less of both. The Bureau of Labour Statistics projects that the labour force will grow by an average of 0.5% a year from 2014 to 2024, down from 1.2% annually from 1994 to 2004, because of ageing baby-boomers and low fertility. And productivity growth has stalled. From 2005 to 2015, output per hour worked grew by only 1.3% a year, down from growth of 3% a year between 1995 and 2005. In the year to the second quarter of 2016, productivity actually fell, by 0.4%. + +Optimists argue that this is part of a lengthy hangover from the recession, which should soon end. One contributor to productivity is the amount of capital—for example, machinery or computers—that each worker has at their disposal. The recession sent this ratio soaring as firms laid off workers and left machines sitting idle. Why would firms invest again before they had replenished their payrolls? But this explanation is becoming less convincing. The capital-to-worker ratio returned to its long-run trend in 2014 (the last year for which data are available). It is past time for productivity growth to have recovered; instead, it is sinking further. + +Pessimists think the productivity problem is chronic. Technological advances, they say, are ever-less revolutionary: Uber is less of an advance than the car itself, the smartphone has not changed office work the way the PC did. Nonsense, reply “techno-optimists”, who foresee huge advances in machine learning and robotics. + +For now, the data support the pessimists. The best measure of technological advance is total factor productivity, which measures output after controlling for both the number of workers and the amount of capital. In 2015 it grew by just 0.2%, compared with an average of 1.1% in the two decades prior to the financial crisis. + +The economy has gradually become more stale. The number of startups per 100,000 people halved from 160 in 1977 to 80 in 2013, according to data from the Kauffman Foundation, a think-tank. Disruption thrives in hubs like the Bay Area and New York, but workers have become less geographically mobile (perhaps due to high housing costs in many such areas). Notwithstanding pockets of disruption, the market share of the biggest firms is rising in most industries, suggesting a dearth of competition. A recent analysis by Goldman Sachs, a bank, found that the fraction of workers in innovative occupations, defined as those growing more than three percentage points faster than overall employment, is falling. + +Businesses anticipating slower long-term growth cannot be expected to invest much. And politicians cannot easily conjure up technological progress. But they can boost competition, simplify taxes and regulation, and invest in infrastructure and education, all of which would help to raise American productivity. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21705847-americans-are-spending-and-hiring-so-why-arent-firms-investing-econundrum/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Drought insurance in Africa + +ARC’s covenant + +A worthy insurance scheme goes awry + +Aug 27th 2016 | LILONGWE | From the print edition + +Where’s the liquidity? + +This year has brought prolonged dry spells to many parts of Malawi. In April President Peter Mutharika declared a state of emergency because of food shortages; yields of maize, the staple crop, are a third below their five-year average. Prudently, Malawi had bought drought insurance from the financial affiliate of African Risk Capacity (ARC), an African Union initiative to fund disaster relief. There is one problem: ARC has not paid out. + +Malawian officials had spent three years preparing to join the scheme. They found lots to like. Risks were pooled across the continent. Sophisticated software would model rainfall and its impact on households. If the rains failed, a payout would come quickly, before more typical emergency assistance kicked in. “It was beautifully crafted,” says one civil servant. Malawi signed up last year. + +Under the terms of the policy, a payment would be triggered if more than 1.39m people were affected by drought. A joint assessment by the government and international agencies reckons that 6.5m people will need aid by January. Yet ARC’s software, bizarrely, concluded that only 21,000 people were at risk. According to the model, there was hardly a drought at all. ARC is investigating the discrepancy. + +No model is perfect. ARC’s approach does not account for extreme heat, which increased evaporation and thus water needs. It estimates precipitation based mostly on satellite monitoring of clouds—only a rough guide to how much rain is actually falling from the sky. Adjusting for the timing of the rains, which came after the crucial flowering period, is also tricky. But similar models are a standard part of famine early-warning systems, and these flaws were probably not the real culprit. + +Part of the problem may be that the model is benchmarked using data only from the previous five years, which were themselves unusually barren: that raises the bar to a payout. And many farmers are still reeling from last year’s poor harvest. With little to fall back on, they are vulnerable to even a small drop in rainfall—a rollover effect that ARC’s model ignores. + +ARC will conclude its investigations in September: some kind of payment may ease embarrassment. In the meantime Malawi is counting the cost of the wonks’ bewilderment. The maximum payout was $30m: not much to financial markets, but enough to provide supplemental food for 3.7m people for a month. The country is yet to get back its $4.7m premium. + +For all that, the principle of disaster insurance is a sound one. The African continent has nine discrete rainy seasons, which rarely all fail in the same year. By sharing risk, countries could halve the funds they need to hold back for emergencies. In 2015, its first year, ARC paid $26m to drought-affected countries in the Sahel before humanitarian appeals had even started. A similar scheme in the Caribbean has doled out $38m since 2007 to islands struck by earthquakes and cyclones. + +ARC wants to expand its coverage from seven countries this year to 30 by 2020. It has plans to insure against epidemics and issue climate-catastrophe bonds. Malawi will need convincing. The finance minister has promised to seek answers before signing up again. In this parched part of the continent, enthusiasm is drying up. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21705856-worthy-insurance-scheme-goes-awry-arcs-covenant/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Rising LIBOR + +SECular shift + +New money-market regulations are pushing up a benchmark interest rate + +Aug 27th 2016 | From the print edition + + + +DURING the financial crisis of 2008, LIBOR was a gauge of fear. The London inter-bank offered rate—at which banks are willing to lend to one another—leapt. (Even then it may have been too reassuring: banks have since been fined billions, and traders jailed, for rigging it.) Lately it has been climbing again: on August 22nd three-month dollar LIBOR rose above 0.82%. That is no cause for panic, but it is a seven-year high and 0.2 percentage points more than in June. What’s going on? + +Increases in LIBOR, a benchmark used to set rates for trillions of dollars’ worth of loans, usually reflect either strains on banks or expected rises in central banks’ policy rates. Although the Federal Reserve has been toying with tightening, this time LIBOR’s ascent has another explanation, traceable to the turmoil of 2008. A change by the Securities and Exchange Commission (SEC) in the regulation of American money-market funds has made borrowing pricier, especially for foreign banks. + +Before the crisis investors in money-market funds—which lend for short periods to banks, other companies and the government—had become accustomed to treating their accounts like bank deposits, putting money in and taking it out at will. That changed the day after Lehman Brothers went bust, when the Reserve Primary Fund “broke the buck”, declaring that investors could no longer redeem shares for the customary $1 apiece. A run on funds ensued; to halt the chaos, the Treasury was forced to guarantee them. + +The SEC’s new rule, which takes effect on October 14th, obliges “prime” funds (buyers of banks’ and companies’ paper, as well as public debt) serving institutional investors to let their net asset values vary, rather than fix them at $1 a share. To prevent runs, they may also limit and charge for redemptions if less than 30% of their assets can be liquidated inside a week. + +This has made prime funds much less attractive, causing a “change in the landscape of the wholesale funds market”, says Steve Kang, an interest-rate strategist at Citigroup. Between October 2015 and July 2016 all prime funds’ assets declined by more than $550 billion, to $1.2 trillion, according to the SEC; “government” funds that invest in Treasuries and the like have swollen by a similar amount, to $1.6 trillion (see chart). Prime funds have also pushed their liquidity ratios well above the 30% threshold as the October deadline approaches; they are loth to lend for as long as three months. Steven Zeng of Deutsche Bank notes that in the past couple of months the average maturity of large funds’ assets has declined from more than 20 days to less than 13. + +For foreign banks, which account for more than $800 billion of prime funds’ $938 billion of bank securities, this is depleting an important source of dollars. (American banks rely more on deposits.) Borrowing has become pricier, which LIBOR echoes. They seem to be filling the gap: for example, cash-rich companies are thought to be lending via “separately managed accounts” rather than prime funds. Banks have other alternatives, but borrowing using exchange-rate swaps, explains Mr Kang, is more expensive; central-bank swap lines are dearer still, and because they are primarily regarded as emergency facilities, banks are reluctant to tap them. + +The pain will vary from bank to bank. American lenders with lots of LIBOR-linked mortgages may even gain. Some foreign banks may also recoup higher borrowing costs: their floating interest-rate commercial loans outweigh those at fixed rates. But many borrowers will pay a price. The aftershocks of 2008 rumble on. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21705854-new-money-market-regulations-are-pushing-up-benchmark-interest-rate-secular-shift/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Hedge funds + +Law of averages + +Star funds rarely outperform for long + +Aug 27th 2016 | NEW YORK | From the print edition + + + +WHEN Citadel, a Chicago-based hedge fund, was bleeding money during the global financial crisis, its boss, Ken Griffin, says CNBC, a broadcaster, parked a van outside its doors to chronicle its demise. Last year CNBC crowned Mr Griffin “King Ken”; in recent years he has done spectacularly well. + +Such abrupt twists of fortune appear dramatic. In fact, they are predictable. Novus, an analytics firm, has crunched numbers from Hedge Fund Research, a data provider, to suggest that hedge-fund performance shares a trait boringly familiar from other forms of investment: funds that do poorly then do better, and outperformers then underperform. In other words, past performance is not a guide to future returns (see chart). + +The study filters data for two periods: from June 1st 2008 to February 28th 2009, when equity and credit markets were crashing, and from March 1st 2009 until the end of 2015. The funds are anonymised but show plenty of Citadel-like cases. One fund that lost 91% during the crash returned an annualised 42% afterwards. Conversely, among the 93 funds that finished in the top decile during the crash, only three remained star performers. Perhaps they were dazzlingly smart back then. Perhaps they were just lucky. + +The study is not perfect. The database includes 928 firms that are still around; others may have closed their doors. But the dots also reveal that quite a few funds performed poorly during both periods, belying the claim that hedge funds optimise returns during good times and minimise damage when things turn nasty. That may explain why this year is expected to be the first since the crisis when investors pull more money out of hedge funds than they put into them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21705855-star-funds-rarely-outperform-long-law-averages/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Believing is seeing + +New technologies will make society richer by cultivating trust + +Aug 27th 2016 | From the print edition + + + +IT IS easy to forget that even the most trivial commercial transactions rely on small acts of trust. Laws encourage good behaviour, but states lack the resources to force everyone to be good all the time. Trust keeps society running. Just ordering a pizza requires faith that the dough will be well made, that the pizzeria will not abuse the customer’s credit-card information, and that the delivery man will not abscond with the cargo. More complex partnerships, of the sort that make long-run economic growth possible, require much higher degrees of trust. New technologies, from sharing-economy apps to the blockchain, offer routes around some of the trust deficits that stand in the way of growth. Yet whether such solutions to problems of mistrust build on or undermine social ties is no easy question to answer. + +Trust in society is not just a nicety. It makes possible, as one paper on the subject has it, “the commitment of resources to an activity where the outcome depends upon the co-operative behaviour of others”. Low-trust societies waste piles of time and money working out who can be counted on, defending vulnerable stores of wealth, and guarding against con men. Such places are infertile ground for long-run investment, the gains from which could be grabbed by rivals or stolen by government. Meanwhile trust is highest, and defences against chicanery lowest, within some of world’s wealthiest countries. Studies of the relationship between measures of trust and economic growth find a close link between the two. That does not necessarily mean one causes the other. But research also suggests that trust boosts trade, participation in financial markets and investment, suggesting that greater trust spurs the activities that make a place richer. + +Sadly, cultivating trust is hard. It is a sort of social capital which must be built through time and effort. Repeated positive interactions and demonstrations of trustworthiness create a foundation of mutual confidence. Within close communities, emotional cues like praise and shame effectively discourage antisocial activity. In environments rich in social capital, the return for co-operative behaviour is high; you can make more money playing by the rules and building a business, for instance, than by reneging on a contract at the first opportunity. In the same way, trustworthiness is rarely rewarded in low-trust societies; both high-trust and low-trust states of the world are sticky. + +Inventive humans are good at finding ways around trust bottlenecks. Reliance on families or tribes—groups whose members’ interests are more closely aligned, presumably, than those of the population as a whole—is a common strategy. Yet by their nature, such workarounds are limited in scope, and leave many members of society isolated. New technologies offer a more promising approach. A company’s ability to use the internet to monitor production in a factory half a world away means that firms need not establish deep relationships with foreign suppliers before opening a distant plant. Network connections between retailers and banks can help verify a customer’s ability to pay; the blockchain, a shared, public and trusted digital ledger of transactions, eliminates the need for a central counterparty altogether. + +These advances clear the way for new investments and purchases. Yet whether they are a long-run boon is harder to assess. In a world of big data, people might come to trust only what can be verified electronically. In a recent blog post, Branko Milanovic of The City University of New York lamented the “commodification” of labour made possible by market-making apps. Enabling strangers to quickly do business frees people of the need to be nice, he argues; their trust-building skills could atrophy. Similarly, Tyler Cowen of George Mason University recently mused that as people grow more accustomed to interacting with intelligent machines (like Apple’s Siri), which require no social niceties, they might find it harder to build relationships with humans. Technologies can perpetuate discrimination: algorithms used to make lending decisions or process human speech occasionally “learn” to become racist by analysing the data fed to them. + +Computer says yes + +Historically, however, technology has done more to open up society than to segregate it. New technologies make it easier to trust unfamiliar groups. Public ratings, for instance, can undercut discrimination. Taxi drivers who might normally speed past members of a different race may feel more comfortable picking up a diverse set of riders given good ratings on Uber. A survey conducted by BlaBlaCar, a popular ridesharing service, found that 88% of its members reported a high level of trust in fellow users—higher than that reported for colleagues or neighbours. In a study in America, Alberto Alesina, of Harvard University, and Eliana La Ferrara, of Bocconi University in Milan, found that places with higher levels of racial and income diversity have lower levels of trust. By arranging interactions across such boundaries, technology may widen the circle of trust. + +Apps often encourage good behaviour as well. Public ratings, like the ones that Uber presents for its drivers or that Yelp collects for businesses, mean that good customer service is increasingly important in capturing new business. Firms and customers that behave badly risk a permanent stain on their reputation. + +Reliance on a social panopticon to enforce good behaviour may not seem much like the sort of trust that underpins economic growth. It is one thing to use Airbnb to rent a spare room from someone of a different background, and quite another to build the deep social bonds needed to support long-run investments. For big commitments, people will not suddenly let down their guard, however impressive technology becomes. Yet trust is a habit. New technologies that encourage co-operation in some spheres of life contribute to social capital rather than weaken it. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21705831-new-technologies-will-make-society-richer-cultivating-trust-believing-seeing/print + + + + + +Previous Articles Sections Next + + + + + +Economics brief + + + + +The Mundell-Fleming trilemma: Two out of three ain’t bad + + + + + +Articles Sections Next + +The Mundell-Fleming trilemma + +Two out of three ain’t bad + +A fixed exchange rate, monetary autonomy and the free flow of capital are incompatible, according to the last in our series of big economic ideas + +Aug 27th 2016 | From the print edition + + + +HILLEL THE ELDER, a first-century religious leader, was asked to summarise the Torah while standing on one leg. “That which is hateful to you, do not do to your fellow. That is the whole Torah; the rest is commentary,” he replied. Michael Klein, of Tufts University, has written that the insights of international macroeconomics (the study of trade, the balance-of-payments, exchange rates and so on) might be similarly distilled: “Governments face the policy trilemma; the rest is commentary.” + +The policy trilemma, also known as the impossible or inconsistent trinity, says a country must choose between free capital mobility, exchange-rate management and monetary autonomy (the three corners of the triangle in the diagram). Only two of the three are possible. A country that wants to fix the value of its currency and have an interest-rate policy that is free from outside influence (side C of the triangle) cannot allow capital to flow freely across its borders. If the exchange rate is fixed but the country is open to cross-border capital flows, it cannot have an independent monetary policy (side A). And if a country chooses free capital mobility and wants monetary autonomy, it has to allow its currency to float (side B). + + + +To understand the trilemma, imagine a country that fixes its exchange rate against the US dollar and is also open to foreign capital. If its central bank sets interest rates above those set by the Federal Reserve, foreign capital in search of higher returns would flood in. These inflows would raise demand for the local currency; eventually the peg with the dollar would break. If interest rates are kept below those in America, capital would leave the country and the currency would fall. + +Where barriers to capital flow are undesirable or futile, the trilemma boils down to a choice: between a floating exchange rate and control of monetary policy; or a fixed exchange rate and monetary bondage. Rich countries have typically chosen the former, but the countries that have adopted the euro have embraced the latter. The sacrifice of monetary-policy autonomy that the single currency entailed was plain even before its launch in 1999. + +In the run up, aspiring members pegged their currencies to the Deutschmark. Since capital moves freely within Europe, the trilemma obliged would-be members to follow the monetary policy of Germany, the regional power. The head of the Dutch central bank, Wim Duisenberg (who subsequently became the first president of the European Central Bank), earned the nickname “Mr Fifteen Minutes” because of how quickly he copied the interest-rate changes made by the Bundesbank. + +This monetary serfdom is tolerable for the Netherlands because its commerce is closely tied to Germany and business conditions rise and fall in tandem in both countries. For economies less closely aligned to Germany’s business cycle, such as Spain and Greece, the cost of losing monetary independence has been much higher: interest rates that were too low during the boom, and no option to devalue their way out of trouble once crisis hit. + +As with many big economic ideas, the trilemma has a complicated heritage. For a generation of economics students, it was an important outgrowth of the so-called Mundell-Fleming model, which incorporated the impact of capital flows into a more general treatment of interest rates, exchange-rate policy, trade and stability. + +The model was named in recognition of research papers published in the early 1960s by Robert Mundell, a brilliant young Canadian trade theorist, and Marcus Fleming, a British economist at the IMF. Building on his earlier research, Mr Mundell showed in a paper in 1963 that monetary policy becomes ineffective where there is full capital mobility and a fixed exchange rate. Fleming’s paper had a similar result. + +If the world of economics remained unshaken, it was because capital flows were small at the time. Rich-world currencies were pegged to the dollar under a system of fixed exchange rates agreed at Bretton Woods, New Hampshire, in 1944. It was only after this arrangement broke down in the 1970s that the trilemma gained great policy relevance. + +Perhaps the first mention of the Mundell-Fleming model was in 1976 by Rudiger Dornbusch of the Massachusetts Institute of Technology. Dornbusch’s “overshooting” model sought to explain why the newish regime of floating exchange rates had proved so volatile. It was Dornbusch who helped popularise the Mundell-Fleming model through his bestselling textbooks (written with Stanley Fischer, now vice-chairman of the Federal Reserve) and his influence on doctoral students, such as Paul Krugman and Maurice Obstfeld. The use of the term “policy trilemma”, as applied to international macroeconomics, was coined in a paper published in 1997 by Mr Obstfeld, who is now chief economist of the IMF, and Alan Taylor, now of the University of California, Davis. + +But to fully understand the providence—and the significance—of the trilemma, you need to go back further. In “A Treatise on Money”, published in 1930, John Maynard Keynes pointed to an inevitable tension in a monetary order in which capital can move in search of the highest return: + +This then is the dilemma of an international monetary system—to preserve the advantages of the stability of local currencies of the various members of the system in terms of the international standard, and to preserve at the same time an adequate local autonomy for each member over its domestic rate of interest and its volume of foreign lending. + +This is the first distillation of the policy trilemma, even if the fact of capital mobility is taken as a given. Keynes was acutely aware of it when, in the early 1940s, he set down his thoughts on how global trade might be rebuilt after the war. Keynes believed a system of fixed exchange rates was beneficial for trade. The problem with the interwar gold standard, he argued, was that it was not self-regulating. If large trade imbalances built up, as they did in the late 1920s, deficit countries were forced to respond to the resulting outflow of gold. They did so by raising interest rates, to curb demand for imports, and by cutting wages to restore export competitiveness. This led only to unemployment, as wages did not fall obligingly when gold (and thus money) was in scarce supply. The system might adjust more readily if surplus countries stepped up their spending on imports. But they were not required to do so. + +Instead he proposed an alternative scheme, which became the basis of Britain’s negotiating position at Bretton Woods. An international clearing bank (ICB) would settle the balance of transactions that gave rise to trade surpluses or deficits. Each country in the scheme would have an overdraft facility at the ICB, proportionate to its trade. This would afford deficit countries a buffer against the painful adjustments required under the gold standard. There would be penalties for overly lax countries: overdrafts would incur interest on a rising scale, for instance. Keynes’s scheme would also penalise countries for hoarding by taxing big surpluses. Keynes could not secure support for such “creditor adjustment”. America opposed the idea for the same reason Germany resists it today: it was a country with a big surplus on its balance of trade. But his proposal for an international clearing bank with overdraft facilities did lay the ground for the IMF. + +Fleming and Mundell wrote their papers while working at the IMF in the context of the post-war monetary order that Keynes had helped shape. Fleming had been in contact with Keynes in the 1940s while he worked in the British civil service. For his part, Mr Mundell drew his inspiration from home. + +In the decades after the second world war, an environment of rapid capital mobility was hard for economists to imagine. Cross-border capital flows were limited in part by regulation but also by the caution of investors. Canada was an exception. Capital moved freely across its border with America in part because damming such flows was impractical but also because US investors saw little danger in parking money next door. A consequence was that Canada could not peg its currency to the dollar without losing control of its monetary policy. So the Canadian dollar was allowed to float from 1950 until 1962. + +A Canadian, such as Mr Mundell, was better placed to imagine the trade-offs other countries would face once capital began to move freely across borders and currencies were unfixed. When Mr Mundell won the Nobel prize in economics in 1999, Mr Krugman hailed it as a “Canadian Nobel”. There was more to this observation than mere drollery. It is striking how many academics working in this area have been Canadian. Apart from Mr Mundell, Ronald McKinnon, Harry Gordon Johnson and Jacob Viner have made big contributions. + + + +But some of the most influential recent work on the trilemma has been done by a Frenchwoman. In a series of papers, Hélène Rey, of the London Business School, has argued that a country that is open to capital flows and that allows its currency to float does not necessarily enjoy full monetary autonomy. + +Ms Rey’s analysis starts with the observation that the prices of risky assets, such as shares or high-yield bonds, tend to move in lockstep with the availability of bank credit and the weight of global capital flows. These co-movements, for Ms Rey, are a reflection of a “global financial cycle” driven by shifts in investors’ appetite for risk. That in turn is heavily influenced by changes in the monetary policy of the Federal Reserve, which owes its power to the scale of borrowing in dollars by businesses and householders worldwide. When the Fed lowers its interest rate, it makes it cheap to borrow in dollars. That drives up global asset prices and thus boosts the value of collateral against which loans can be secured. Global credit conditions are relaxed. + +Conversely, in a recent study Ms Rey finds that an unexpected decision by the Fed to raise its main interest rate soon leads to a rise in mortgage spreads not only in America, but also in Canada, Britain and New Zealand. In other words, the Fed’s monetary policy shapes credit conditions in rich countries that have both flexible exchange rates and central banks that set their own monetary policy. + +Rey of sunshine + +A crude reading of this result is that the policy trilemma is really a dilemma: a choice between staying open to cross-border capital or having control of local financial conditions. In fact, Ms Rey’s conclusion is more subtle: floating currencies do not adjust to capital flows in a way that leaves domestic monetary conditions unsullied, as the trilemma implies. So if a country is to retain its monetary-policy autonomy, it must employ additional “macroprudential” tools, such as selective capital controls or additional bank-capital requirements to curb excessive credit growth. + +What is clear from Ms Rey’s work is that the power of global capital flows means the autonomy of a country with a floating currency is far more limited than the trilemma implies. That said, a flexible exchange rate is not anything like as limiting as a fixed exchange rate. In a crisis, everything is suborned to maintaining a peg—until it breaks. A domestic interest-rate policy may be less powerful in the face of a global financial cycle that takes its cue from the Fed. But it is better than not having it at all, even if it is the economic-policy equivalent of standing on one leg. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economics-brief/21705672-fixed-exchange-rate-monetary-autonomy-and-free-flow-capital-are-incompatible/print + + + + + +Articles Sections Next + + + + + +Science and technology + + + + +Hunting for aliens: Proximate goals + +How to find exoplanets: Round and round the mulberry bush + +Oceanography: Deep waters + +Keeping ships clean: Foul play + +Medical batteries: Dark arts + + + + + +Articles Sections Next + +Hunting for aliens + +Proximate goals + +An Earth-sized planet has been discovered in a propitious orbit around a nearby star. A new phase in the search for life elsewhere is about to begin + +Aug 27th 2016 | From the print edition + + + +“WE’VE been wondering what planet we’re first going to look for life on. Now we know.” Rory Barnes, of the University of Washington, puts it nicely. Proxima Centauri, the star closest to the sun, has a planet. That planet weighs not much more than Earth and is therefore presumably rocky. And it orbits within its parent star’s habitable zone—meaning that, given an atmosphere, its surface temperature is likely to permit liquid water. + +A prize discovery, then, for astrobiologists such as Dr Barnes. The discoverers themselves are a transnational team of astronomers who have been using telescopes at the European Southern Observatory (ESO) in the Atacama desert, in Chile, for planet-hunting. Though they have not seen the new planet directly (they have inferred its existence from its effect on its parent star’s light—see box on next page), their paper in Nature describes what they have been able to deduce about it. + +Proxima Centauri b, as it is known, probably weighs between 1.3 and three times as much as Earth and orbits its parent star once every 11 days. This puts its distance from Proxima Centauri itself at 7m kilometres, which is less than a twentieth of the distance between Earth and the sun. It can remain temperate in such a close orbit only because Proxima is a red dwarf, and thus much cooler than the sun. It is not the only Earth-sized extrasolar planet known to orbit in a star’s habitable zone. There are about a dozen others. But it is the closest to Earth—so close, at four light-years, that it is merely outrageous, not utterly absurd, to believe a spaceship (admittedly a tiny one) might be sent to visit it. Before this happens, though, it will be subjected to intense scrutiny from Earth itself. + +Eyeball to eyeball + +That scrutiny will probably be led by ESO. The data which led to Proxima Centauri b’s discovery came from the observatory’s 3.6 metre telescope at La Silla, in Chile. But ESO is also building a much bigger device, the 39-metre European Extremely Large Telescope (E-ELT), at another site in Chile. Since the late 2000s Markus Kasper of ESO has led a team which is designing a specialised planet-spotting instrument, the Exoplanet Imaging Camera and Spectrograph (EPICS), to fit on this telescope. Dr Kasper’s camera has a price tag of €50m ($56m), and there have always been questions about whether it is worth the money. But EPICS stands a better chance of producing actual pictures of Proxima Centauri b, and being able to analyse its atmosphere, than any other instrument in the world (or off it). Its future can now scarcely be in doubt. + +The problem for astronomers trying to catch a glimpse of Proxima Centauri b is that, though close to the Earth by interstellar standards, it is closer to its parent star by more or less every other standard short of that of walking down the road to the chemist. Seen from Earth, star and planet are 35 thousandths of an arc second apart (an arc second is a 3,600th of a degree). Producing a picture that separates the two objects thus requires a telescope with a resolution good enough to distinguish between the left and right headlights of an oncoming car in Denver from the distance of Berlin. + +Things get worse. Dim as it is, Proxima Centauri (pictured above, as seen by the Hubble space telescope) is still more than 10m times brighter than its planet is expected to be. It is as though one of those headlights in Denver was actually the open door to a furnace, while the other was a tea light. This is what makes the E-ELT and EPICS crucial. EPICS contains a coronagraph—a tiny shield that blocks out a star’s light so that adjacent planets can be seen. Unfortunately, a coronagraph reduces a telescope’s resolution, meaning you need an even bigger one to see the target in the first place. To observe Proxima Centauri b using a coronagraph, and doing so in the infrared wavelengths that are likely to provide the best information about its atmosphere, you need a telescope at least 20 metres across; 30 metres would be better. + +Two other large telescopes besides E-ELT are being developed. But the Giant Magellan Telescope, also in Chile, has an effective diameter of only 24.5 metres, and its design makes using a coronagraph tricky. The Thirty Metre Telescope, meanwhile, was conceived as an instrument for Hawaii, which is in the northern hemisphere. Proxima Centauri is in the southern skies, and therefore not so easy to study from north of the equator. + +There may, just possibly, be another way to look at Proxima Centauri b—or, at least, at its atmosphere. The planet was discovered by the radial-velocity technique, but there is about a one-in-67 chance that it might also be detectable by the transit technique (again, see box). This would require it and its star to sit in the same plane as Earth so that, seen from Earth, it would cross the face of its parent and thus slightly dim it. Various southern-hemisphere telescopes are already looking for the 0.5% dimmings of Proxima Centauri’s brightness which would be observed if Proxima Centauri b were transiting. If it is, then it will be possible to study its spectrum by subtracting the star’s spectrum when the planet is hidden behind it from the spectrum measured during a transit. + +Rainbow bridges + +The exciting thing about the planet’s spectrum, however it is measured, is that it might reveal the water content and chemical composition of Proxima Centauri b’s atmosphere, if it has one. And that might, in turn, give a clue as to whether it harbours life. Life on Earth leaves a sign of its existence in the atmosphere, in the form of oxygen. This is produced by plants and it is such a reactive chemical that if their photosynthesis stopped it would disappear rapidly from the air. Free oxygen in Proxima Centauri b’s atmosphere would therefore get a lot of people excited—but possibly without justification, for there are ways (such as the dissociation of water by ultraviolet light) to put oxygen into atmospheres abiotically. A stronger indicator of life would be finding both oxygen and molecules associated with biology that cannot long persist in its presence, and must thus be produced continuously. + +On Earth nitrous oxide and methane fit this bill, though these molecules are present in quantities too low to be seen light-years away. But David Catling, a colleague of Dr Barnes at the University of Washington, points out that there are models of planetary atmospheres which allow methane made by living things to build up quite a lot on a planet like Proxima Centauri b. If spectra showed methane and oxygen together, the likelihood of life on Proxima Centauri b would rise dramatically. + +Another way to look for life on Proxima Centauri b would be to search for radio signals. Life in general does not generate radiation at radio frequencies. But intelligent life does—at least it does on Earth. And that Earth-bound life also puts a tiny bit of effort into looking for such emissions from elsewhere, an endeavour known as the search for extraterrestrial intelligence, or SETI. There have been SETI studies of Proxima Centauri in past decades, but they have not been particularly sensitive. If the inhabitants of Proxima Centauri b were beaming powerful transmissions at Earth all day and night they would have been heard; if they were merely using radio for their own ends, in the way that broadcasters and radar systems do on Earth, they would not. + +Now, though, a big new SETI project bankrolled by Yuri Milner, a Russian billionaire with a taste for things interstellar, is collaborating with the Parkes radio telescope in Australia and the Meerkat radio array in South Africa. According to Dan Werthimer of the University of California, Berkeley, who works on Mr Milner’s programme, Proxima Centauri will now be getting a lot more attention. + +That there is intelligent life in the nearest planetary system to Earth’s is surely the longest of shots. And despite its nice-sounding location in the “habitable zone”, the presence of any sort of life on Proxima Centauri b is far from a foregone conclusion. For one thing, there are doubts about how easy it is for planets around red dwarfs to develop and retain atmospheres. Though such stars are cool for most of their existences, in their early years they burn bright. A planet close enough to one to stay warm in later life might have seen its atmosphere burned off in the star’s brief blazing youth. Even if it avoids this problem, it will still be whipped by the star’s magnetic field and lashed by its flares. Though they are dim, red dwarfs are given to all sorts of eruptive activity and pump out X-rays at a prodigious rate. These are both things which might make an atmosphere hard to hold on to and life itself a bit tricky. + +Journey’s beginning + +Such doubts will not stop people looking, though. Indeed, the discovery of Proxima Centauri b may accelerate plans to construct space telescopes designed especially to observe exoplanets directly using what is known as a starshade, instead of a coronagraph, to block the light from parent stars. A starshade is a second spacecraft, flown in formation with the telescope, that eclipses the parent while leaving the planet visible. + +The most radical form of follow-up, though, is an idea for interstellar flight that Mr Milner is working on in parallel with his SETI project. Light beams exert pressure. A powerful laser focused on a low-mass spacecraft could in principle accelerate it to a significant fraction of the speed of light. This would be awesomely difficult in practice. It would require hundreds of thousands of lasers yoked together to make a single coherent beam of 100 gigawatts or so. That is about the maximum electrical-power consumption of France. It would also require a spacecraft weighing just a few grams that could sit at the beam’s pinnacle without getting fried; a way of coping with high-speed collisions with dust particles that the craft would inevitably encounter en route; and a method of getting data back to Earth once the probe reached its destination. But it might not be impossible. Over the next six years Mr Milner’s “Starshot” programme plans to spend tens of millions of dollars to test the idea. If encouraged by the results, he may try to build a test rig in which a laser zaps a tiny object to the highest speed ever achieved by a machine other than a particle accelerator. + +The thought, however outlandish, of actually visiting Proxima Centauri b underlines what is most notable about its discovery. It makes the study of exoplanets newly specific; not a matter of statistics, models and populations, but of a particular rock in a particular place, a rock to be scrutinised for signs of life by all the methods that can be brought to bear. Searches around other nearby stars, including Proxima Centauri’s more sunlike siblings, Alpha Centauri A and B, will add more such targets. But Proxima Centauri b will retain a special place: the nearest, and the first. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21705659-earth-sized-planet-has-been-discovered-propitious-orbit-around-nearby/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +How to find exoplanets + +Round and round the mulberry bush + +Two ways to detect what you cannot see + +Aug 27th 2016 | From the print edition + + + +A PLANET orbiting a star tugs it gently this way and that, so it oscillates between moving towards Earth and away from it. The velocities involved are tiny: for Proxima Centauri about two metres per second, a brisk walk. Nevertheless, the effect on the star’s spectrum can be measured from the ground. When a star is approaching Earth, its light is slightly bluer; when away, slightly redder. For this method, the plane of the planet’s orbit need not be aligned with Earth. + +The transit technique, by contrast, requires that it is, so that the planet passes between Earth and its parent star every orbit. When that happens, the parent star’s light will dim accordingly. Transiting was used with great success by Kepler, an American space telescope which detected well over 1,000 distant planets earlier this decade. Statistical analysis of that sample suggests many—possibly all—red dwarfs have rocky planets, and that they are likely to crop up quite frequently in a red dwarf’s habitable zone. Since red dwarfs are the commonest stars, the most likely place to find an Earthlike planet is in orbit around one. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21705681-two-ways-detect-what-you-cannot-see-round-and-round-mulberry-bush/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Oceanography + +Deep waters + +A Chinese voyage to the bottom of the sea may not achieve all that it could + +Aug 27th 2016 | Shanghai | From the print edition + +The good ship Zhang Jian over the New Britain trench + +TO MAN or not to man, that is the question. In the great days of exploration—of deserts and jungles, of the Arctic and Antarctic, even of the Moon, there was no alternative. Now, though, machines can do most of what human beings can accomplish, and frequently more. Yet humanity continues to put men and women in harm’s way when robots would do the job perfectly well. + +The latest example comes from China, where a scientific adventurer called Cui Weicheng hopes to reap glory for himself and his country by organising routine manned expeditions to the hadal zone—the deepest part of the ocean, defined as anything below 6,000 metres. Dr Cui is the founder and director of the Hadal Science and Technology Research Centre (HAST) at Shanghai Ocean University. He became a national hero four years ago when Jiaolong, a manned submersible whose construction he organised, successfully plunged 7,062 metres down into the Mariana trench in the western Pacific Ocean. That enrolled China into the small club of countries (other members: America, France, Japan and Russia) that have sent submersibles to explore the deep sea. + +Since then, Dr Cui has set his eyes on the hadal zone in general, and in particular on the bottom of the Mariana trench. This, at nearly 11,000 metres below sea level, is the deepest part of the Earth’s surface. He has set up a firm called Rainbowfish Ocean Technology, also based in Shanghai but at arm’s length from HAST, and is using this to build a mobile seafaring laboratory consisting of a research ship, Zhang Jian, named after Shanghai Ocean University’s founder, a politician and entrepreneur of the late-19th and early-20th centuries, and five diving vessels pressure-proofed to survive the deepest hadal conditions. + +Three of these vessels are landers that can be lowered to the deep seabed, where they will sit recording data until brought back to the surface. The fourth is a so-called hybrid vehicle, a mobile unmanned submarine that can operate either automatically or by following instructions transmitted to it through a tether. So far, then, so scientific. But the fifth vessel—which, unlike the others, has yet to be constructed—will be a manned submersible that can hold three people. This is less easy to square with HAST’s scientific credentials. + +Dr Cui’s stated aim is to turn HAST into a research institution similar to the Woods Hole Oceanographic Institution (WHOI) in Massachusetts, which combines scientific curiosity with hard-nosed technological nous. Indeed, he hopes to outdo it, for WHOI’s own (unmanned) hadal-exploration craft, Nereus, imploded at depth in 2014 after just 11 dives, and will not be replaced. The Rainbowfish project, which has a budget of $122m, is backed by a mixture of private and government money—the former from people hoping for some sort of return from specialised tourism and prospecting the deep seabed for minerals. Dr Cui says he hopes the project will provide facilities that scientists from around the world can use for basic research. + +Inner space meets outer space + +Zhang Jian set sail from Shanghai on her maiden mission in July and is now off the coast of Papua New Guinea, over the 9,000-metre-deep New Britain trench. If all goes well, she will return in September. Many in the field, though, have doubts about what the cruise will achieve. + +The loss of Nereus means HAST has, for the moment at least, cornered the market on hadal exploration. The current voyage thus seems an ideal opportunity to do some proper science as well as to test the submersibles. But at the First International Summit on Hadal Zone Exploration, held in Shanghai in June—a few weeks before Zhang Jian set sail—the cruise still had no scientific plan beyond putting the unmanned submersibles through their paces. Instead, delegates were struck by HAST’s emphasis on the unbuilt manned craft which, at $61m, will consume half the project’s budget. They also raised eyebrows at Dr Cui’s personal goal to use this vehicle to emulate the dive made by James Cameron, a Canadian film-maker, to the bottom of the Mariana trench in 2012. + +That ambition, scheduled for fulfilment in 2019, is reminiscent of the aims of certain American entrepreneurs who are backing private space-flight ventures in part because they wish to escape in person the surly bounds of Earth (see Technology Quarterly). It is a harmless aspiration, and one the government would no doubt like to see fulfilled for patriotic reasons. But it would be a pity if it got in the way of HAST’s wider mission to push the frontiers of human understanding to the very bottom of the ocean. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21705682-chinese-voyage-bottom-sea-may-not-achieve-all-it-could-deep/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Keeping ships clean + +Foul play + +To clear vessels of encrusting animals, first understand why they settle there + +Aug 27th 2016 | From the print edition + +Blistering barnacles! + +“FOR God’s sake and our country’s,” wrote an 18th-century captain in Britain’s navy to the Admiralty in Whitehall, “send copper bottomed ships to relieve the foul and crippled ones.” Copper sheathing, first deployed widely in the 1780s, kept fouling at bay by inhibiting the growth of barnacles, mussels, tube worms and shipworms (actually a type of clam). But even today, when copper has been replaced by modern antifouling paints and wooden hulls have given way to metal ones, ship-fouling is still a problem. + +Dealing with it costs billions of dollars a year and often involves toxic chemicals whose use is being progressively restricted. How the larvae of befouling creatures choose where to settle is thus of great interest. A paper just published in the Proceedings of the National Academy of Sciences by Nick Shikuma of San Diego State University and his colleagues sheds some light. + +Dr Shikuma studies tubeworms. These shell-forming annelids have become model organisms for students of ship-fouling. Their research has already shown that tubeworm larvae like to attach themselves to surfaces covered with lots of bacteria. But how larvae and bacteria interact is only now being elucidated. + +For tubeworms, the cue comes from Pseudoalteromonas luteoviolacea, a bacterium abundant on marine surfaces. Individual Pseudoalteromonas cells produce small spears, called phage-tails, to defend themselves against hostile bacteria. But phage-tails also induce metamorphosis in several types of larvae, including tubeworms’. Shortly after contact with a phage-tail, a larva slows down and settles. Within 30 minutes it loses its cilia, the tiny hairs it employs to swim. Soon thereafter, it begins to elongate and to secrete its characteristic calcium carbonate tube around itself. + +Dr Shikuma suspected, however, that more than mere mechanical contact with phage-tails was involved in this process. To test his theory, he exposed tubeworm larvae to a suspension of Pseudoalteromonas. As expected, they began to settle down. Then, before they had lost their cilia, he removed the bacteria. Instead of continuing to metamorphose, the larvae backpeddled on the process and began swimming again in search of a new home. Clearly, the initial contact had not triggered an irreversible change; the continued presence of the bacteria was necessary for metamorphosis to go all the way. + +Dr Shikuma then tinkered with Pseudoalteromonas’s genes to try to work out what was going on. First, he deleted the part of the bug’s DNA involved in phage-tail production. As he expected, larvae exposed to these mutant bacteria did not even begin to metamorphose. Further tinkering, though, revealed a second set of genetic triggers. Bacteria that had intact phage-tail genes, but had had a block of six other genes deleted, were able to induce larvae to settle down, but not to shed their cilia and complete their metamorphosis. What these genes do for Pseudoalteromonas is not known. But whatever it is they are producing, it clearly also acts as a “go” signal to larvae that all is well for them to complete their metamorphosis. + +The discovery of this second pathway opens up an additional biochemical line of attack in the war against fouling. Once the signal the six newly identified genes are producing has been decoded, ways to interfere with it might be devised. That may lead to an environmentally friendly method of stopping sessile marine organisms growing in the wrong places. Even if it does not, Dr Shikuma’s approach seems likely reveal other weak points in the metamorphic process that can be exploited—both saving shipowners money and also saving the oceans from toxic chemicals. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21705680-clear-vessels-encrusting-animals-first-understand-why-they-settle/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Medical batteries + +Dark arts + +A bodily pigment may have industrial uses + +Aug 27th 2016 | From the print edition + + + +SINCE their invention two centuries ago, batteries have been made from many things. The first were of copper and zinc. Today, lithium is preferred for a lot of applications. Lead, nickel, silver and a host of other materials have also been used. Until recently though, no one had tried melanin, the pigment that darkens skin and protects it against ultraviolet light. But, as he reported this week at a meeting of the American Chemical Society in Philadelphia, Christopher Bettinger of Carnegie Mellon University, in Pittsburgh, has now done just that. His purpose is to create a battery safe for use in the human body. + +Melanin is not, at first sight, an obvious battery ingredient. It is a complicated molecule composed of carbon, oxygen, nitrogen and hydrogen. To synthesise it on an industrial scale would surely require biotechnology rather than conventional chemistry. But it does have the ability to capture and release positively charged ions, known as cations. Batteries depend on the movement of ions, so this property is a good start. On top of that, being a normal ingredient of bodies, melanin is not toxic. This is in contrast to many conventional battery ingredients, including most of those listed above. If melanin were to leak out of an implanted medical device, it would simply be mopped up by enzymes. + +The battery Dr Bettinger has come up with has a melanin cathode, an anode of sodium titanium phosphate, which is also non-toxic, and an aqueous electrolyte that can be charged with any soluble cation desired. He has experimented with ions of sodium, potassium, rubidium, caesium, magnesium, aluminium and iron. Most of the resulting batteries had modest voltages (between 0.5 and 0.7 volts) but stored enough energy to power one-shot ingestible devices such as capsule endoscopes (pill-shaped machines which can look at parts of the alimentary canal that conventional endoscopy cannot reach) or drug-delivery systems designed to release their payloads at a particular place in the gut. + +Intriguingly, though the uses Dr Bettinger has in mind do not need a rechargeable battery, one of the experimental models his team produced—that containing magnesium—could be recharged. This goes against conventional wisdom, for previous attempts to make a rechargeable magnesium battery have failed. Given the abundance and cheapness of magnesium, that may be useful information for battery engineers seeking to outdo modern lithium-ion batteries. If so, then melanin or something like it might find itself in very heavy demand indeed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21705683-bodily-pigment-may-have-industrial-uses-dark-arts/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Karl Marx: False consciousness + +Congo’s uranium: Rich pickings + +Public transport in London: More than just getting from A to B + +New fiction: Out of Africa + +Hollywood and the Middle East: War games + +Johnson: Rue the rules + + + + + +Articles Sections Next + +Karl Marx + +False consciousness + +The value of Marx in the 21st century + +Aug 27th 2016 | From the print edition + + + +Karl Marx: Greatness and Illusion. By Gareth Stedman Jones. Allen Lane; 750 pages; £35. To be published in America by Belknap in October. + +COMMUNISM collapsed nearly 30 years ago, but the influence of Karl Marx lives on. Marxist approaches are found in some of the most interesting history and sociology being published today. Marx’s works, including “The Communist Manifesto”, written with Friedrich Engels in 1848, may have had more impact on the modern world than many suppose. Of the manifesto’s ten principal demands, perhaps four have been met in many rich countries, including “free education for all children in public schools” and a “progressive or graduated income tax”. + +There is no better guide to Marx than Gareth Stedman Jones of Queen Mary University of London. In a new book he offers rich descriptions of Marx’s life, much of which was spent in abject poverty. German-born “Karl”, as the author refers to him, would work three or four days straight without sleep and was constantly ill (his uncompromising diet, based on “highly seasoned dishes, smoked fish, caviar and pickled cucumber together with Moselle wine, beer and liqueurs”, can hardly have helped). He comes across as unpleasant: arrogant, racist and constantly borrowing money off Engels. + +For readers most interested in such details, Francis Wheen’s biography of Marx, published in 1999, may be a better choice. Mr Stedman Jones’s book is above all an intellectual biography, which focuses on the philosophical and political context in which Marx wrote. He completed a doctorate in philosophy in 1841 and was surrounded by heated discussions about the consequences of industrialisation and the place of religion in the modern world. He was an avid reader of The Economist, while publicly dismissing it as the “European organ of the aristocracy of finance”. + +In contrast to what is often supposed, Marx did not invent communism. Radicals, including Pierre-Joseph Proudhon (1809-65) and the Chartist movement in England, had long used language that modern-day readers would identify as “Marxist”—“to enjoy political equality, abolish property”; “reserve army of labour” and so forth. + +What, then, was his contribution? Much of his time was spent disagreeing with other radicals, attacking Proudhon in particular, whom he likened to one of the “bourgeois economists”. Far more significantly, he attempted to provide an overall theoretical description of how capitalism worked, especially in “Capital”, which was published in 1867. + +His characterisation of capitalism is elegant in its simplicity. Each day, he argued, workers produced a greater value of goods than was necessary to support themselves; capitalists appropriated what was left over. Workers could not get hold of that surplus because they did not own capital (machinery, buildings and so on). But as they produced more, they created more capital, thus reinforcing the domination by the capitalists. A “system ostensibly resting upon equal and fair exchange could consistently yield a surplus to one of the parties to the exchange.” + +Mr Stedman Jones is an historian with Marxist leanings. As such the reader might expect a ringing endorsement of the great man’s ideas. However, in many parts the author is highly critical. For instance, he points out that Marx displayed “condescension towards developments in political economy”, a big mistake given how rapidly the field was changing at the time. More damning, the “Grundrisse”, an unfinished manuscript which many neo-Marxists see as a treasure trove of theory, has “defects [in the] core arguments”. + +Mr Stedman Jones is even critical of parts of “Capital”. In one passage, Marx set out to answer a puzzle. Changing levels of supply and demand explain why the price of a commodity goes up or down, but does not explain why the equilibrium price of that commodity is what it is. For instance, why are strawberries pricier than apples? + +To solve the puzzle Marx relied on the “labour theory of value”. He helped prove that the price of a commodity was determined by how much labour time had gone into it—which showed how workers were exploited. However, he “arbitrarily ruled out the relative desirability or utility of commodities,” says Mr Stedman Jones, which would strike most people as the obvious explanation. The author encapsulates a feeling of many students of Marx: read the dense, theoretical chapters of “Capital” closely, and no matter how much you try, it is hard to escape the conclusion that there is plenty of nonsense in there. + +The real value of such a work, in Mr Stedman Jones’s eyes, lies in its documentation of the actual day-to-day life faced by the English working classes. Marx synthesised an “extraordinary wealth of statistics, official reports and pieces of press reportage” to show just how hard life was for many people living in the most industrially advanced country in the world. Still, even his empirical research had flaws, something Mr Stedman Jones skirts over. He did not pay enough attention, for example, to objective measures of living standards (such as real wages), which by the 1850s were clearly improving. + +The overriding impression from this book is that Marx’s reputation (at least in some quarters) as an unrivalled economist-philosopher is wide of the mark. Marx had planned to write “Capital” in multiple volumes. He finished the first. But when it came to writing the second, on realising that he would face insurmountable intellectual hurdles, he pleaded illness (though seemed quite able to do other sorts of research). “Karl” was in the thick of the intellectual developments of the 19th century. But the myth is more impressive than the reality. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21705665-value-marx-21st-century-false-consciousness/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Congo’s uranium + +Rich pickings + +An intriguing account of why America was so interested in Congo in the 1940s + +Aug 27th 2016 | From the print edition + + + +Spies in the Congo: America’s Atomic Mission in World War II. By Susan Williams. PublicAffairs; 369 pages; $28.99. Hurst; £25. + +“A HOTBED of spies”, remarked Bob Laxalt when he arrived in Léopoldville, capital of the Belgian Congo, in 1944. Why, wondered the fresh-faced young code officer for the American Consul-General, was his government so interested in this “dark corner of darkest Africa”? After all: “There’s no war here.” + +Laxalt was not alone in his ignorance. America’s interest in the Congo—and, specifically, in the resource-rich south-eastern province of Katanga—was one of the best-kept secrets of the second world war. Beneath its verdant soil lay a prize that the Americans believed held the key to victory. It was the race to control this prize that brought the spooks to Léopoldville. The Germans, they feared, might be after it, too. + +The prize, Susan Williams explains in “Spies in the Congo”, was uranium. Congo was by far the richest source of it in the world. As the architects of America’s nuclear programme (the “Manhattan Project”) knew, uranium was the atom bomb’s essential ingredient. But almost everybody else was kept entirely in the dark, including the spies sent to Africa to find out if the heavy metal was being smuggled out of the Congo into Nazi Germany. + +The men—and one woman—charged with protecting America’s monopoly of Congolese uranium worked for the Office of Strategic Services (OSS), an organisation set up by President Franklin Roosevelt as the wartime intelligence agency, and the precursor to what in peacetime became the Central Intelligence Agency (CIA). Ms Williams presents the reader with a large cast of characters, some of them quite eccentric. Wilbur Owings Hogue, a civil engineer and the OSS station chief in Léopoldville, was also a part-time author of popular fiction. Two of his colleagues were ornithologists. His assistant, Shirley Chidsey, was a friend of F. Scott Fitzgerald, who later inscribed one of his books for her. + +The work these individuals undertook was dangerous. Hogue survived repeated assassination attempts. After the war ended, four of them—Hogue included—died young, quite possibly owing to exposure to nuclear radiation. Their work ensured that the essential Congolese ore (as far as is known) never reached Nazi Germany; without it, the Germans could not build an atom bomb. Yet their efforts went unacknowledged. + +Ms Williams pieces together her history in forensic fashion. The result is a gripping, if occasionally dense, work that uncovers a world long cast in shadow. Yet it is no mere thriller. Much of what runs through “Spies in the Congo” will be wearily recognisable to the Congolese, and many Africans. America’s early nuclear supremacy was dependent on African uranium, just as Europe’s industrial pre-eminence had been sustained by African copper, iron and rubber. But Congo’s role in this has been forgotten, deliberately erased from the historical record by officials hailing the success of the Manhattan Project following the bombing of Hiroshima and Nagasaki. + +Shortly after the war ended the focus of America’s nuclear rivalry shifted. In 1949 the Soviet Union tested its own nuclear bomb, launching a new era for America, Congo and the rest of the African continent. Huge sums were pumped into Katanga to facilitate uranium export and to prop up Belgian defences. After Congo became independent in 1960 the CIA lingered there for decades to keep uranium and, later, other minerals out of Russian hands. Much of Congo’s tragic late-20th-century history is attributable to these machinations. Thus in her account of this wartime scramble for African raw materials, Ms Williams tells a little-known story, but one with a terribly familiar ring—and ultimately devastating consequences. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21705666-intriguing-account-why-america-was-so-interested-congo-1940s-rich-pickings/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Public transport in London + +More than just getting from A to B + +Crossrail and the history of London + +Aug 27th 2016 | From the print edition + +Early commuter + +The Tunnel Through Time: A New Route for an Old London Journey. By Gillian Tindall. Chatto & Windus; 306 pages; £20. + +CROSSRAIL, a new rail line running east-west through London and its suburbs, is described as the biggest construction project in Europe today. It is also one of Britain’s biggest-ever archaeological undertakings. Since construction started in 2009, archaeologists have made more than 10,000 discoveries. These include Roman horseshoes, a medieval reservoir under Oxford Street, ice skates made of bones, Venetian glass, chamber pots, pickled onions and human bones—lots and lots of bones. + +The bones come from plague victims spanning centuries. They come from executed murderers, highwaymen and petty thieves unlucky enough to be caught and strung up. They come from Christian martyrs of all stripes, those who in the bloody early half of the second millennium belonged to the wrong faith in the wrong place at the wrong time. They come from sanctified churchyards piled deep as the centuries passed, for London has a lot of history and a lot of people live in this great metropolis, but many more have died in it. + +The soil unearthed by Crossrail and the discoveries made by archaeologists provide rich material for Gillian Tindall, a historian who has written biographies of Bombay, London’s South Bank and the Left Bank of Paris. The line also gives her a framework around which to construct a story that moves through both space and time. In the eastern fields of Stepney, close to Whitechapel station, she finds aristocrats and landed gentry who desired open fields and country estates yet enjoyed proximity to the City. It is a very different East End from the district of poverty and workhouses that would follow. + +On the site of Liverpool Street, one station over, she recounts the story of the Priory of St Mary of Bethlehem, which was founded in 1247. It survived centuries of religious turmoil and eventually became an insane asylum, giving the English language the word “bedlam”, a contraction of its name. To the west, where Crossrail crosses rails with two tube lines and a future second line, she chronicles the evolution of St Giles, once a far-flung outpost of London, which sank into disrepute and found lasting fame as the setting for Hogarth’s Gin Lane. At each location Ms Tindall skilfully blends ancient histories, archaeological findings and contemporary context. + +As London expanded and metamorphosed from one century to the next, as institutions, churches and homes came up, thrived, decayed and were regenerated, what remained the same are the routes that wind between the wood, brick and concrete. When Crossrail opens fully in 2018, it will trace a similar path to the one taken most days by John Pocock, a young messenger boy in the early 19th century, as he walked from his home near Paddington to the City. By the second half of the century, Crossrail’s earliest ancestor, the Metropolitan underground line, had started ferrying commuters between the same two destinations. Crossrail is only, as the book’s subtitle puts it, a new route for old journeys. It is a rewarding trip. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21705668-crossrail-and-history-london-more-just-getting-b/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +New fiction + +Out of Africa + +A delicate story of a Kenyan-Asian family + +Aug 27th 2016 | From the print edition + +A story of old—and new + +Who Will Catch Us As We Fall. By Iman Verjee. Oneworld; 442 pages; $15.99 and £12.99. + +A FAR cry from the outsider-in-Africa literature made famous by Karen Blixen and Elspeth Huxley, “Who Will Catch Us As We Fall” is an unflinching novel about an Indian family in Nairobi. Set between 1995 and 2007, it is a portrait of Kenya’s capital, a place that may cling to its moniker—“the green city in the sun”—but thanks to its reputation for crime, is known more commonly as “Nairobbery”. Violence, prostitution, corruption, poverty, police brutality, political impunity and the often seemingly insurmountable divisions of tribe and race are laid bare in this book. + +An assured insight into the culture of the Indian-Kenyans who arrived during the colonial era, this is the second novel by Iman Verjee (pictured), who grew up in Kenya. An idealistic father, Raj Kohli longs for his son Jai to take up the mantle left by Pio Gama Pinto, a politician who was assassinated just over a year after independence. Jai yearns to be accepted in his homeland while his mother, Pooja, strives to protect her family from it. Leena, the Kohlis’ daughter, and Michael, their erstwhile housemaid’s son, struggle to know if their relationship can overcome their divisions. Their story runs alongside Jeffrey’s, once an idealistic policeman but corrupted through a sense of betrayal by his country, “a place where thieves are celebrated and good men die unremarkable deaths”. + +The book is striking but not perfect. Ms Verjee simplifies issues and some of her characters feel too much like vessels for the author’s voice. She has said that, growing up, she was “guilty of possessing certain old-fashioned stereotypes”. Maybe it is in an attempt to make amends that the book veers into idealism and cliché: “This country is beautiful and full of life…who will fight for it, if not us?” But the story’s message of hope, resilience and redemption is as important as it is timely. Just as the novel’s timeline moves unstoppably into the bloody elections of 2007, from which the country has not recovered, Kenya today is preparing itself for a new poll next year. If only Kenyan politicians and police had as much idealism as this book. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21705664-delicate-story-kenyan-asian-family-out-africa/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Hollywood and the Middle East + +War games + +How Hollywood learned to stop worrying and love the war zone + +Aug 27th 2016 | From the print edition + + + +ABOUT a decade ago, a series of earnest and mostly dull Hollywood films weighed the cost of America’s wars in the Middle East. Paul Haggis’s “In the Valley of Elah” came out in 2007 and “Stop-Loss”, directed by Kimberly Peirce, in 2008. These downbeat dramas were followed by a generation of action movies which fetishised the danger of being a soldier in Afghanistan and Iraq. Chief among them was Kathryn Bigelow’s “The Hurt Locker” (2008), Peter Berg’s “Lone Survivor” (2013) and “American Sniper” directed by Clint Eastwood a year later. More recently, Hollywood’s embrace of war in the Middle East has shifted again. + +Its latest dispatches from the front line, or just behind it, are raucous comedies. Their protagonists are American civilians who learn that there is adventure to be had and money to be made by flying to a war zone. In these films—which are mostly, loosely speaking, based on true stories—Baghdad and Kabul are lawless gold-rush towns where failures can reinvent themselves as hard-partying successes, and where the bullets whizzing past their ears are all part of the rowdy fun. + +First came “Whiskey Tango Foxtrot” (“WTF”—get it?) in which Tina Fey’s television journalist finds fame and romance as a war correspondent in Afghanistan. “In New York, you’re like a six, seven,” a colleague tells her. “Out here you’re a nine, borderline ten.” Next was Barry Levinson’s misbegotten “Rock the Kasbah”. Inspired by an Afghan singer, Setara Hussainzada, who upset conservative Muslims by dancing without her hijab on a televised talent contest, the film focused not on the singer, but on a washed-up rock’n’roll manager played by Bill Murray. The third, and by far the best, of these Middle-East-meets-the-Wild-West comedies is “War Dogs”, a trenchant and very funny satire co-written and directed by Todd Phillips, the maker of “The Hangover” and its sequels. + +Its anti-heroes are two Miami 20-somethings, David Packouz (Miles Teller) and Efraim Diveroli (Jonah Hill). In 2005 the easily-led David is tired of trudging from mansion to beachside mansion as a massage therapist, so he jumps at the chance to go into business with Efraim, an old schoolmate who is now a cocaine-snorting wheeler-dealer. Efraim introduces him to a public website (“eBay but for war”) on which the Pentagon puts out the tenders for its military-procurement contracts. + +A few corporations are invariably chosen to supply the tanks and missiles, he says, but smaller hustlers can pick up a million dollars here and there by selling guns and ammunition. David has his qualms, because he marched against the Iraq war with his girlfriend (a beautiful cipher, as women in Mr Phillips’s films always are). But Efraim persuades him that they might as well try to make their fortune as international arms dealers, given that the war is happening anyway. Now all the new partners have to do is drive a lorryload of Beretta pistols from Jordan to Baghdad. + +Much like “The Big Short” and “The Wolf of Wall Street” (which also co-starred Mr Hill), “War Dogs” is, on one level, a celebration of those devil-may-care opportunists who spot a little-known way to turn a big profit. With enough gall and entrepreneurial spirit, it suggests, anyone can end up driving a Porsche and living in a marble-floored luxury apartment. + +But the film also asks pointed questions about a system which lets companies profit handsomely from warfare, and which lets them falsify bank records in the process. “War Dogs” stresses that David and Efraim are a long way from being the charmingly roguish Robin Hoods they think they are. David is a liar and a stooge, whereas Efraim’s ugly-American boorishness is accentuated by Mr Hill’s wired intensity and seal-barking cackle. It’s a boldly obnoxious performance which may well earn him a third Oscar nomination. + +As enjoyable and laudable as “War Dogs” is, though, it does have one thing in common with all the other war films mentioned above—not just the rollicking comedies, but the liberal dramas and the gung-ho thrillers. Its emphasis is squarely on the Americans who visit the Middle East. The people who live there have to stay in the background. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21705669-how-hollywood-learned-stop-worrying-and-love-war-zone-war-games/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +Rue the rules + +Early years of English teaching should focus on reading and writing, not abstract grammar + +Aug 27th 2016 | From the print edition + + + +BRITISH children will soon go back to school. As they settle into their English lessons, they will be made to learn grammar, spelling and punctuation as if these were as fixed as the stars in the sky. + +Most pupils will be unaware that parents, teachers, policymakers, researchers and critics have been wrangling over what kind of grammar should be taught; when it should be taught; how students should be graded and, in particular, how they should be tested. After an overhaul several years ago, the “Key Stage 2” tests given to 11-year-olds have been particularly controversial. Critics say that the terminology is too advanced for 11-year-olds. They also say that the teachers are unprepared themselves, since grammar teaching went out of fashion for decades in the English-speaking world. And the terminology they are expected to know has changed since the days when those who were lucky enough to study grammar did so in the mid- and late 20th century. + +No one disputes that children need to be able to write. But do 11-year-olds need the skill of identifying—by name—a “relative clause” (eg, the house that I live in), “modal verb” (eg, can and must) and “determiner” (a term better known to linguists than schoolteachers, including a, the, each, every and some)? The tests aren’t finding out whether youngsters can use these things, but whether they can “tick one box to show which part of the sentence is a relative clause,” or “circle all the determiners in the sentence below.” + +Michael Rosen, a radio presenter, children’s author and himself a teacher at Goldsmith’s College, points out that in the question asking “Which of these sentences is a command?” all four are instructions to do something, but only one of them (“Before you go out, ask your mother for a shopping list”) has a grammatical imperative. The others say things like “I want you to clean out the playhouse this afternoon.” Students are to know that this is not a “command” on the test—even if it certainly is a command when their parents say it. + +Deliberate study never killed anyone. But does this help kids write? Surely a curriculum would be introduced only after research indicated that it did—except that there is no evidence of that. One large meta-study (which looks at a host of previous studies) concluded that, of the teaching strategies designed to get kids writing better, nearly all had a positive effect—except for this kind of grammar teaching, which had a slightly negative one. + +At “English Grammar Day”, an event at the British Library this summer, Bas Aarts, a syntactician at University College London, eloquently defended explicit grammar teaching. It prepares students for learning a foreign language, when metalinguistic thinking will be useful. It trains certain useful abstract concepts. And since language is one of the most intricate and astonishing capacities of the human mind itself, studying it is a rich exercise all on its own. Mr Aarts is sceptical of any pedagogical philosophy based on pure utility, rightly noting that arts, history and other subjects will quickly be out the window if schools narrowly test only what will make a more efficient worker-bee. + +He is right. But 11 is too young for this work. At that age, kids are just beginning to read for pleasure in earnest. Good reading is probably more essential to good writing than any other activity; students can produce effective English only by consuming great quantities of it first, finding their rhythm, and absorbing the grammar of the written page by reading, much as they learn the spoken language when they are younger by listening. Of course, many annoying elements of English, like the fact that it’s is not a possessive or that their, they’re and there are different, need to be explicitly taught. But that teaching will stick best with good, curious and frequent readers. + +Explicit and overly abstract grammar teaching before the age of 11 is a bit like throwing seeds, that one hopes will turn into healthy plants, onto thawing early-spring ground yet to be ploughed. At this young age, spelling and punctuation—which are necessary but straightforward memorisable drudgery—can be introduced. But to expect the teaching of the modal verb and the determiner to make good writers out of young students is not “raising standards”. It is making a category error: writing and explaining syntax are related but not identical. Young children should read, then they should write, write and read again. The formal terms can wait for a later age. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21705667-early-years-english-teaching-should-focus-reading-and-writing-not-abstract/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Donald Henderson: Man versus virus + + + + + +Articles Sections Next + +Donald Henderson + +Man versus virus + +Donald Ainslie (“D.A.”) Henderson, epidemiologist, died on August 19th, aged 87 + +Aug 27th 2016 | From the print edition + + + +THE director of the World Health Organisation knew the plan would fail. To rid the world of smallpox was impossible. Each year, 2m people still died of it. Total global vaccination was a chimera. Besides, no disease had ever been eradicated. But since he had been pushed into it by the Soviet Union and the United States, he would put an American at the head of it, so that when everything went down the tubes it would be America’s fault. The year was 1966; he asked for Donald Henderson. + +In terms of revenge, he picked wrong. D.A., as everyone called him, was not at all inclined to fail. Brawny, brimming with confidence and not a sufferer of fools, he was already fixed on smallpox. He dated his obsession to 1947, when in supposedly smallpox-clear New York a man visiting from Mexico died of the disease, 12 others caught it, and the city went wild with fear—that age-old fear of a disease that killed a third of its victims, had ravaged the native tribes of the Americas, and left the faces of survivors gouged with scars. + +After that, he had no interest in any old dull doctor’s life. He wanted to study the causes, spread and suppression of epidemics. Rather than serve in the army he joined the Epidemic Intelligence Service at the Communicable Disease Centre in Atlanta, for what he called “firefighter” training. As soon as a disease broke out anywhere in the world, he would dash to tackle it—becoming a proper “shoe-leather” epidemiologist, as opposed to a “shiny-pants” desk-bound sort. When he was hauled away from his anti-smallpox work in west Africa and sent to Geneva for the WHO in 1967, at 38, he wasn’t thrilled. But if they wanted the world rid of the virus in ten years, he would give it his best shot. + +Not by himself, of course. “Target Zero” came to involve almost everyone in the affected countries, from scientists in labs to government ministers to local health officers and elders who could neither read nor write. His modus operandi, “surveillance-containment”, required not mass vaccination but pinning down each case and vaccinating all contacts; it needed the co-operation even of villagers and schoolchildren, who learned to spot the tell-tale rash of Variola major, like buckshot embedded in the skin. His own staff was tiny; but some 200,000 locally recruited people also worked for him, in 50 countries. + +This crowd of helpers, which delighted him, meant that no Nobel prize could be given for wiping out smallpox. If it had been, he might have shared it with William Foege, who first devised surveillance-containment, and Benjamin Rubin, inventor of the bifurcated needle, an easy and ingenious instrument which used a mere 25% of the normal amount of vaccine. But he was the man who kept the whole show on the road, strong-arming governments to provide funds and to make their own vaccines of the necessary purity, potency and stability; conducting his own cold-war diplomacy with the notably helpful Russians; muscling past the tentacular regional bureaucracies of the WHO; sending out continual reports on progress; and answering within three days, before e-mail, every plea that came in from the field. + +Problems rose up constantly. In Ethiopia, rebels attacked the vaccinators. Afghanistan brought deep snow and no maps. In Bangladesh trucks could not cross the bamboo bridges; in India mourners had to be stopped from floating smallpox corpses down the Ganges. He experienced most of this himself, frequently decamping from cramped Geneva armed with “Scottish wine” (his favourite medicine) to urge on the troops. Out in the trenches he also faced the full horror of what he was fighting. At a hospital in Dhaka the stench of leaking pus, the pustule-covered hands stretched towards him, the flies clustering on dying eyes, convinced him anew that he had to win this war. + +Overall—and only he had the full picture—the effort ebbed and flowed. Good progress in a country might be suddenly reversed by war, as in Biafra, Ethiopia and Bangladesh, by flows of infected refugees or, in Somalia, by nomads wandering across a border. Heartening figures might turn out to be colossal under-reporting. By 1975, however, almost all of Asia and Africa was free of smallpox. The last naturally occurring case, a Somali cook, was recorded in 1977. There followed two anxious years of more surveillance, when Dr Henderson was not quite sure they had really done it. By December 1979 he knew they had. + +The lurking menace + +Yet this was not the end of his worries about smallpox. Some still survived in the world, in various laboratories, which might be weaponised and used against a population which, increasingly, would have no herd immunity. From his new positions, as professor of epidemiology at Johns Hopkins and an adviser to presidents, he called for the virus to be destroyed and, at the same time, for vaccine to be stockpiled again. In 2001 he masterminded a simulation, “Dark Winter”, in which a smallpox epidemic hit the Midwest and America’s health system failed. + +“Future generations”, wrote Thomas Jefferson to Edward Jenner, the inventor of the smallpox vaccine, “will know by history only that the loathsome smallpox has existed.” Two hundred years later Dr Henderson was almost able to have that confidence. But not quite. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21705644-donald-ainslie-da-henderson-epidemiologist-died-august-19th-aged-87-man-versus-virus/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Youth unemployment + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Aug 27th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21705691/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Economic data + +Aug 27th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21705696-economic-data-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Aug 27th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21705694-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Aug 27th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21705693-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Youth unemployment + +Aug 27th 2016 | From the print edition + + + + + +Youth unemployment is on the rise again, after years of decline. Worldwide, the unemployment rate for 15- to 24-year-olds will rise to 13.1% this year, according to the International Labour Organisation. Arab states will see the highest rates of unemployment on average. Regional aggregates mask variations. In South Africa, for example, more than half of young people are expected to be unemployed this year. Even those with jobs face problems. Globally 38% of working youths are living in extreme or moderate poverty, compared with 26% of those in work aged 25 and over. In the European Union more than a third of young people in 2015 were in temporary jobs because they could not find permanent work. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21705695-youth-unemployment/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Aug 27th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21705692-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Thu, 25 Aug 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Space exploration: Brave new worlds + + + + + +Colombia and the FARC: Ending a half-century of war + + + + + +Monetary policy: When 2% is not enough + + + + + +Turkey and the West: Don’t lose the plot + + + + + +The desire for children: Wanted + + + + + +Letters + + + +On Taiwan, obesity, Labour, China, Alaska, Ultimate Frisbee, economics, jazz: Letters to the Editor + + + + + +Briefing + + + +Demography and desire: The empty crib + + + + + +In vitro fertilisation: An arm and a leg for a fertilised egg + + + + + +United States + + + +Immigration economics: Wage war + + + + + +Alaskan agriculture: Growing farmers + + + + + +An American mystery: Down in the valley, up on the ridge + + + + + +Lexington: Clinton Republicans + + + + + +The Americas + + + +Colombia’s peace accord: Unlearning war + + + + + +Chile’s pensions: The perils of not saving + + + + + +Asia + + + +Kashmir: Vale of tears + + + + + +Communists in the Philippines: Rebels in their dotage + + + + + +Karachi: Slammer dunk + + + + + +Leafy Singapore…: Move over, Merlion + + + + + +…and sooty South Korea: Bad air days + + + + + +Learning English in Japan: Talk like a gaijin + + + + + +China + + + +Sexual abuse of children: A horror confronted + + + + + +Banyan: A spot of localist bother + + + + + +Middle East and Africa + + + +The war in Syria: Smoke and chaos + + + + + +The Brotherhood returns: The ballot and the Book + + + + + +Religion in Zimbabwe: Tithing troubles + + + + + +The Central African Republic: Nostalgia for a nightmare + + + + + +Mining in the Democratic Republic of Congo: The richest, riskiest tin mine on Earth + + + + + +Europe + + + +Turkey’s anger at the West: Al-Malarkey + + + + + +Sarkozy returns: The revenant + + + + + +Croatian stagnation: Pining for the partisans + + + + + +An earthquake in Italy: Beauty and tragedy + + + + + +War and peace in Ukraine: Fighting for position + + + + + +Britain + + + +Scottish education: Not so bonny + + + + + +Brexit and immigration: Raising the drawbridge + + + + + +Olympic success: The brass behind the gold + + + + + +Football iconography: Put out more flags + + + + + +Television subtitles: Read my lips + + + + + +Political comedy: Laugh or cry? + + + + + +Bagehot: The 2016 vintage + + + + + +International + + + +School reform: After freedom, what? + + + + + +Technology Quarterly + + + +Remaking the sky: A sudden light + + + + + +Satellites: The small and the many + + + + + +Earth observation: Anywhere and everywhere + + + + + +Launchers: Getting a lift + + + + + +The role of robots: Construction and destruction + + + + + +Human space flight: The orphans of Apollo + + + + + +Brain scan: Space chips + + + + + +Business + + + +Linux and AWS: Cloud chronicles + + + + + +Viacom: In the name of the father + + + + + +Cement manufacturers: Cracks in the surface + + + + + +Football: Winging it + + + + + +Direct selling in China: Rebirth of a sales firm + + + + + +Schumpeter: Mafia management + + + + + +Finance and economics + + + +Central banking: The Jackson four + + + + + +India’s central bank: Reserve player + + + + + +American business investment: Econundrum + + + + + +Drought insurance in Africa: ARC’s covenant + + + + + +Rising LIBOR: SECular shift + + + + + +Hedge funds: Law of averages + + + + + +Free exchange: Believing is seeing + + + + + +Economics brief + + + +The Mundell-Fleming trilemma: Two out of three ain’t bad + + + + + +Science and technology + + + +Hunting for aliens: Proximate goals + + + + + +How to find exoplanets: Round and round the mulberry bush + + + + + +Oceanography: Deep waters + + + + + +Keeping ships clean: Foul play + + + + + +Medical batteries: Dark arts + + + + + +Books and arts + + + +Karl Marx: False consciousness + + + + + +Congo’s uranium: Rich pickings + + + + + +Public transport in London: More than just getting from A to B + + + + + +New fiction: Out of Africa + + + + + +Hollywood and the Middle East: War games + + + + + +Johnson: Rue the rules + + + + + +Obituary + + + +Donald Henderson: Man versus virus + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Youth unemployment + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.09.03.TXT b/homeworks/B20769/homework1/data2/2016.09.03.TXT new file mode 100644 index 0000000..5efcd8a --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.09.03.TXT @@ -0,0 +1,3446 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Politics this week + +Sep 3rd 2016 | From the print edition + + + +Brazil’s senate decided to remove the country’s president, Dilma Rousseff, from office by 61 votes to 20, after finding that she had tampered with government accounts to conceal the size of the budget deficit. Ms Rousseff’s successor is Michel Temer, who has been serving as interim president since May. In his first address as president he promised to reduce the deficit and restore the health of the economy, which is in a deep recession. See here and here. + +A ceasefire between Colombian security forces and the FARC, a left-wing guerrilla group, came into effect, ending a 52-year-old war. The FARC will now begin the process of handing over its weapons within six months. Its political wing is to get a guaranteed ten seats in congress. + +Three people were charged with murdering a government minister in Bolivia. He had tried negotiating with miners who were blocking roads as part of a protest against working conditions. The accused killers are all officials in a local mining union. + + + +The first commercial airliner to fly from the United States to Cuba in 55 years took off from Fort Lauderdale in Florida and landed in Santa Clara, in the centre of Cuba. + +Into the vortex + +Islamic State claimed responsibility for a suicide-bombing at an army training camp in the Yemeni port of Aden that killed at least 71 people. Aden is the base of Yemen’s president, backed by Saudi Arabia, who fled Sana’a when Houthi rebels took control of the capital. IS and other Islamist groups have taken advantage of the chaos in Yemen to inflict their own brand of carnage. + +Al-Shabab, a jihadist group in Somalia, struck at the capital, Mogadishu, twice in one week. It detonated a car bomb targeted at hotels used by officials and which killed 22 people. It also claimed responsibility for an attack on a restaurant in which ten people were killed. + +Jean Ping, the leader of the opposition in Gabon, rejected the results of a presidential election that was reported to have delivered a narrow victory to Ali Bongo, whose family has ruled the country for almost 50 years. Protesters set fire to the parliament building. + +Macronomics + + + +Emmanuel Macron stepped down as France’s economy minister, fuelling speculation that he will run against his Socialist Party mentor, François Hollande, in next year’s presidential election. Mr Macron rose to prominence as the champion of labour-market reforms. Various presidential hopefuls argued with each other over a ban on burkinis, modest swimsuits worn by some Muslim women. The ban has been overturned by a French court. See article. + +The Transatlantic Trade and Investment Partnership being negotiated between the European Union and America suffered a double blow. The French minister for foreign trade called for an end to talks, saying there was no political support for a deal in France. Germany’s economy minister said negotiations over TTIP had “de facto failed” because Europe did not want to give in to “American demands”. + +The UN refugee agency estimated that 100 migrants a day arrived on Greek islands from Turkey in August, up from 60 in July. Meanwhile, the Italian coastguard rescued around 6,500 migrants on a single day. Those plucked from the Mediterranean this week join some 270,000 who have made the dangerous crossing this year so far; an estimated 3,165 have lost their lives. + +Theresa May, Britain’s prime minister, moved to quell dissent over Brexit at a cabinet meeting to brainstorm plans to leave the EU. She was clear that there would be no second referendum and that Britain would not attempt to stay in the EU “by the back door”. Mrs May also ruled out holding an early election. A vote now could give her Conservative Party a sizeable increased majority: opposition Labour MPs are still trying ineptly to get rid of their hapless leader, Jeremy Corbyn. + +Mysterious circumstances + +The government of Uzbekistan announced that its despotic president, Islam Karimov, had been hospitalised. Other reports suggested he had died. Observers braced for a messy succession in Central Asia’s most populous country. See article. + +Aung San Suu Kyi, Myanmar’s de facto leader, convened a summit of groups representing the country’s many ethnic minorities, in the hope of ending the insurgencies that have racked the country since independence. + +A suicide-bomber attacked the Chinese embassy in Kyrgyzstan, injuring three locals. Suspicion immediately fell on the restive Uighur minority in the neighbouring Chinese province of Xinjiang. + +China banned entertainment news that promotes “Western lifestyles” or dwells on celebrities’ personal lives. Rather, it must convey “positive energy” in line with the Communist Party’s ideology, says the government. + +The Communist Party chief of Xinjiang, Zhang Chunxian, was replaced by the boss of Tibet, Chen Quanguo. Under Mr Zhang, ethnic Uighurs had to carry special ID cards if they travelled, to help officials track troublemakers. See article. + +North Korea reportedly executed a senior official for dozing off in the presence of Kim Jong Un. Around 100 officials are thought to have been purged since the dictator came to power in 2011. + +The spectacle of the bizarre + + + +Donald Trump visited Mexico where he met the president, Enrique Peña Nieto, and spoke of his affection for Mexicans as “honest, hardworking people”. He then went to Arizona where he reiterated his hardline policy on immigration, promising to build an “impenetrable ” wall on the border that Mexico would pay for. Mr Trump said he did not discuss who would pay for the wall with Mr Peña Nieto; the president said they did and it wouldn’t be Mexico. See article. + +Paul LePage, the Republican governor of Maine, hinted he might resign. He has stoked controversy, most recently by leaving a tirade of abuse on a legislator’s voicemail and by calling him a “snot-nosed little runt” and challenging him to a duel. Mr LePage was angry because the lawmaker had called him a racist for blaming black drugdealers for a heroin epidemic sweeping his state. Mr LePage has said he will seek “spiritual guidance”. + + + + + +Business this week + +Sep 3rd 2016 | From the print edition + +The European Commission found that the tax advantages offered by Ireland to Apple broke EU rules on state aid and ordered it to recover €13 billion ($14.5 billion) in taxes from the company, by far the highest penalty the commission has imposed in its crackdown on corporate tax avoidance. But the decision was criticised for intervening in an arrangement struck with Irish authorities 25 years ago, and which the government still supports. Tim Cook, Apple’s chief executive, said the company had never sought any special favours from Ireland, and is being asked to pay taxes to a government that insists it is not owed any money. See here and here. + +Activist shareholders in Germany claimed a rare victory in toppling the chairman of Stada, a drug company. Active Ownership Capital, an investment firm, said Stada was being managed mostly by pharmacists and doctors with little global ambition. It ran a campaign to install a new slate of shareholder representatives on the supervisory board made up of executives who have worked in some of Germany’s biggest corporations. See article. + +In the crosshairs + +The argument over sharp rises in the price of medicines came to the fore again in America’s presidential campaign. Mylan, a drug company, has come under fire for the $608 wholesale price it charges for EpiPen, which is used to treat severe allergic shock. That is a huge increase since 2007, when Mylan bought the product. After Hillary Clinton intervened, Mylan said it would start selling a generic version of the treatment costing $300. It had already offered to help low-income patients with the cost. See article. + +In a clinical trial, an antibody-based drug for Alzheimer’s shrank disease-associated protein plaques in the brains of many patients. There were suggestions it might also have reduced rates of cognitive decline, but the trial was not designed to investigate this. + +Japan’s Government Pension Investment Fund, the biggest in the world, ran up another quarterly loss, this time of ¥5.2 trillion ($50 billion). In 2014 the fund changed its investment strategy and doubled the proportion of domestic and foreign shares in its portfolio. But the value of those shares has been battered by the strengthening yen, which surged after Britain voted to leave the EU. + + + +Adding to the country’s uncertain political prognosis, Brazil’s economy shrank by 3.8% in the second quarter compared with the same period last year, worse than expected and the ninth quarter of decline. At its latest meeting the central bank kept its key interest rate on hold at 14.25%. + +India’s GDP grew by 7.1% in the second quarter, down from the 7.9% notched up in the first three months of the year but still outpacing China. + +Nigeria fell into recession, as its economy shrank by 2.1% year on year from April to June, the second consecutive quarter of decline. Inflation is at an 11-year high of 17.1%. The country has been hit hard by the slump in oil prices, which used to account for 70% of state revenues and 90% of export earnings. See article. + + + +Feeling the heat + +Rounding out a busy week for government statisticians, Canada said its economy contracted by an annualised 1.6% in the second quarter, in part because of the effects from the wildfires that began near Fort McMurray in May. It was the costliest disaster for insurance companies in Canadian history. + +Hanjin Shipping, based in South Korea and one of the world’s biggest freight-container lines, filed for bankruptcy protection after a downturn in the industry left it with debts of 5.6 trillion won ($5 billion) at the end of 2015. Hanjin’s creditors, led by Korea Development Bank, had earlier refused to continue providing a financial lifeline that had kept the company afloat. Some ports in America, China and Spain were already refusing entry to its ships, worried they could not pay port fees. A court will now decide whether Hanjin should restructure or be split up and sold off. + +The merger of Anheuser-Busch InBev with SABMiller is expected to lead to 5,500 job losses, or 3% of the combined brewers’ present workforce, according to official filings. + +Not so sweet + +Mondelez, one of the two companies to emerge from the splitting of Kraft Foods in 2012, said it could not reach an agreement with the owners of Hershey over its $23 billion takeover offer and had therefore dropped its bid for the confectioner. + +Agrium and Potash confirmed they were talking about merging, the latest sign of consolidation in the agricultural-chemicals industry. A successful deal between the two Canadian fertiliser producers would help them grow into a global giant in the field. + + + + + +KAL's cartoon + +Sep 3rd 2016 | From the print edition + + + +More KAL's cartoons + + + + + +Leaders + + + + +Personal transportation: Uberworld + +Corporate taxation: Bruised Apple + +The British economy and Brexit: The right kind of budget + +Brazil’s new president: A chance for a fresh start + +Counter-terrorism: Scared? Make women disrobe + + + + + +Personal transportation + +Uberworld + +The world’s most valuable startup is leading the race to transform the future of transport + +Sep 3rd 2016 | From the print edition + + + +“LET’S Uber.” Few companies offer something so popular that their name becomes a verb. But that is one of the many achievements of Uber, a company founded in 2009 which is now the world’s most valuable startup, worth around $70 billion. Its app can summon a car in moments in more than 425 cities around the world, to the fury of taxi drivers everywhere. But Uber’s ambitions, and the expectations underpinning its valuation, extend much further: using self-driving vehicles, it wants to make ride-hailing so cheap and convenient that people forgo car ownership altogether. Not satisfied with shaking up the $100-billion-a-year taxi business, it has its eye on the far bigger market for personal transport, worth as much as $10 trillion a year globally. + +Uber is not alone in this ambition. Companies big and small have recognised the transformative potential of electric, self-driving cars, summoned on demand. Technology firms including Apple, Google and Tesla are investing heavily in autonomous vehicles; from Ford to Volvo, incumbent carmakers are racing to catch up. An epic struggle looms. It will transform daily life as profoundly as cars did in the 20th century: reinventing transport and reshaping cities, while also dramatically reducing road deaths and pollution. + +The wheels of change + +In the short term Uber is in pole position to lead the revolution because of its dominance of chauffeured ride-hailing, a part of the transport market that will see some of the fastest growth. Today ride-hailing accounts for less than 4% of all kilometres driven globally, but that will rise to more than 25% by 2030, according to Morgan Stanley, a bank. The ability to summon a car using a smartphone does not just make it easy for individuals to book a cheaper taxi. Ride-sharing services like UberPool, which put travellers heading in the same direction into one vehicle, blur the boundaries between private and public transport. Helsinki and other cities have been experimenting with on-demand bus services and apps that enable customers to plan and book journeys combining trains and buses with walking and private ride-sharing services. Get it right, and public-transport networks will be extended to cover the “last mile” that takes people right to their doorsteps. This will extend the market for ride-hailing well beyond the wealthy urbanites who are its main users today. + +But in the longer term autonomous vehicles will drive the reinvention of transport. The first examples have already hit the road. Google is testing autonomous cars on streets near its headquarters in Mountain View. A startup called nuTonomy recently launched a self-driving taxi service in Singapore. Tesla’s electric cars are packed full of driver-assistance technology. And within the next few weeks Uber itself will offer riders in Pittsburgh the chance to hail an autonomous car (though a human will be on hand to take back the wheel if needed). + +Self-driving cars will reinforce trends unleashed by ride-hailing, making it cheaper and more accessible. The disabled, the old and the young will find it easier to go where they want. Many more people will opt out of car ownership altogether. An OECD study that modelled the use of self-driving cars in Lisbon found that shared autonomous vehicles could reduce the number of cars needed by 80-90%. As car ownership declines, the enormous amount of space devoted to parking—as much as a quarter of the area of some American cities—will be available for parks and housing instead. + +It is not clear which companies will dominate this world or how profitable it will be. Uber will not win in its current form: a ride-hailing business which depends on human drivers cannot compete on roads full of self-driving cars. But this existential threat is spurring the firm’s innovation (see article). With its strong brand and large customer base, Uber aims to establish itself as the leading provider of transport services in a self-driving world. It is also branching out into new areas, such as food delivery and long-distance cargo haulage using autonomous trucks. There is logic in this ambition. Carmakers lack Uber’s experience as a service provider, or its deep knowledge of demand patterns and customer behaviour. + +But firms that pioneer new technological trends do not always manage to stay on top. Think of Nokia and BlackBerry in smartphones, Kodak in digital cameras or MySpace in social networking. Much will depend on which firm best handles the regulators. Technology companies have a history of trying new things first and asking for permission later. Uber’s success in ride-hailing owes much to this recipe, yet when it comes to autonomous vehicles, the combination of vague rules and imperfect technology can have deadly consequences. + +Even for the winners, it is not clear how great the rewards will be. As more firms pile into ride-sharing, and autonomous vehicles become part of the mix, the business may prove to be less lucrative than expected. By matching riders with drivers, Uber can offer transport services without owning a single vehicle, and keep the lion’s share of the profits. But if its service becomes an integral part of urban transport infrastructure, as it hopes, Uber could end up being regulated, more highly taxed, broken up or all of the above. In a self-driving world, Uber might also have to own and operate its own fleet, undermining its “asset-light” model. The would-be high-margin digital disrupter would then look more like a low-margin airline. + +The great road race + +For now Uber is the firm to beat in the race to transform the future of personal transport. Unlike Apple or Google, it is singularly focused on transport; unlike incumbent carmakers, it does not have a legacy car-manufacturing business to protect. Its recent rapprochement with Didi, its main rival in China, has removed a major distraction, allowing it to devote its $9 billion war chest to developing new technology. Its vision of the future is plausible and compelling. It could yet prove a Moses company, never reaching its promised land—it might end up like Hoover, lending its name to a new product category without actually dominating it. But whether Uber itself wins or loses, we are all on the road to Uberworld. + + + + + +Corporate taxation + +Bruised Apple + +The European Commission’s assault on the technology giant is wrong + +Sep 3rd 2016 | From the print edition + + + +FOR many, there is no question who is the hero and who the villain in this week’s tax confrontation between Brussels and Apple (see article). Gaming of cross-border tax rules has risen inexorably. Apple, with its abundance of intangible assets, which are easier to play around with, has been one of the cleverest at exploiting the gaps. A bill of €13 billion ($14.5 billion) plus interest, the amount that the European Commission says Ireland must recover from the firm for tax avoidance, would pay for all the country’s health-care budget this year and barely dent Apple’s $230 billion cash mountain. + +But in tilting at Apple the commission is creating uncertainty among businesses, undermining the sovereignty of Europe’s member states and breaking ranks with America, home to the tech giant, at a time when big economies are meant to be co-ordinating their anti-avoidance rules. Curbing tax gymnastics is a laudable aim. But the commission is setting about it in the most counterproductive way possible. + +It says Apple’s arrangements with Ireland, which resulted in low-single-digit tax rates, amounted to preferential treatment, thereby violating the EU’s state-aid rules. Making this case involved some creative thinking. The commission relied on an expansive interpretation of the “transfer-pricing” principle that governs the price at which a multinational’s units trade with each other. + +Having shifted the goalposts in this way, the commission then applied its new thinking to deals first struck 25 years ago. Back then, there was no reason for Apple to think it might one day fall foul of the state-aid rules. The firm shook hands with a sovereign government, which continues to defend the arrangement to this day. Even if the plan had been legally suspect at the time, it makes as much sense for subsequent penalties to fall on the country that offered it as on the company that took it. Either way, firms that invest in Europe will be entitled to wonder what other deals reached with governments can be unwound retroactively. Ireland itself is bridling at interference in affairs that are typically the province of EU member states. It is considering whether to appeal; Apple has said it will. + +Better together + +By using new arguments to fire broadsides at deals done long ago, the commission is not helping the fight against egregious tax-dodging. Ireland and other obliging European states, such as Luxembourg and the Netherlands, have already succumbed to pressure to close several of the loopholes of the past. Last year the OECD, a group of rich countries, led the way on a set of guidelines designed to crack down on avoidance. By going it alone the commission risks stoking conflict, not co-operation. American politicians quickly branded the judgment a naked tax raid; in a white paper released before the commission’s verdict, America’s Treasury hinted ominously at retaliation. + +Some see a bright side. Money paid by Apple and other American firms to European governments will not go into tax coffers back home; the realisation that European politicians might gain at their expense could, optimists say, at last spur American policymakers to reform their barmy tax code. American companies are driven to tax trickery by the combination of a high statutory tax rate (35%), a worldwide system of taxation, and provisions that allow firms to defer paying tax until profits are repatriated (resulting in more than $2 trillion of corporate cash being stashed abroad). Cutting the rate, taxing only profits made in America and ending deferral would encourage firms to bring money home—and greatly reduce the shenanigans that irk so many in Europe. Alas, it seems unlikely. The commission has lobbed a grenade; a tax war may result. + + + + + +The British economy and Brexit + +The right kind of budget + +A to-do list for Britain’s new chancellor, Philip Hammond + +Sep 3rd 2016 | From the print edition + + + +TWO months on from Britain’s vote to leave the European Union, the economy has not plunged. The stockmarket has recovered strongly; retail spending remains solid. Yet it would be foolish to sound the all-clear (see article). Evidence abounds that businesses are holding off on investment as they wait for clarity about Britain’s future relationship with the EU. The fall in the pound will soon put a squeeze on real take-home pay. And, on past form, a burst of export-led growth is unlikely to compensate. + +Slower growth seems inevitable and the economy could yet fall into recession. The Bank of England has done what it can to prevent this, cutting the base rate of interest to near zero and launching another round of “quantitative easing” (bond-buying), alongside an array of “macroprudential” tools to ensure that lower borrowing costs filter through to firms and individuals. But now the limits of monetary policy are approaching. It is time for fiscal policy to play a bigger role. + +That task will fall to Philip Hammond, the newish chancellor, in the autumn statement, a mini-budget which is usually presented to Parliament in November or December. Mr Hammond’s job is complicated by the different directions in which Brexit pulls Britain’s fiscal arithmetic. The vote represents a shock to supply, potentially lowering the rate of growth the economy can sustain, and to demand, as business investment is suspended. Fiscal stimulus cannot help much on the supply front, but it can—and should—fill in for the loss of demand. + +Mr Hammond’s best move would be to undo the most ill-judged bits of the fiscal strategy he inherited. He has already ditched the target set by his predecessor of reaching a budget surplus by 2020. That was easy: the target was a daft one and, even without Brexit, the government was unlikely to hit it. The next step should be to cancel fiscal tightening planned for 2017-18. Current policy calls for a reduction in the budget deficit, adjusted for the economic cycle, of 0.8% of GDP. That would be a tight squeeze on a strong economy; with Brexit looming, it looks wholly unwise. Further progress on deficit reduction should wait until the clouds from Brexit clear. + +How to spend it + +Instead there is a case for stimulus, focused on two areas: more public spending on infrastructure and a reversal of the planned cuts to in-work benefits for the low-paid. Investing in transport, housing and suchlike will boost Britain’s long-term growth potential as well as propping up spending in the short term. And it is sorely needed. By global rankings, the quality of British infrastructure has slipped in recent years—hardly a surprise when public-sector net investment is down by a quarter since 2010-11. Overcrowding on trains travelling into London has doubled since 2009. Twice as many cars break down after encounters with pot-holes as did a decade ago. Congestion, as measured by the number of on-time journeys, is 3% worse than in 2011. + +Mr Hammond might be tempted to take advantage of low borrowing costs to splurge on big, shiny projects. Several such schemes are on the horizon: airport expansion in south-east England; a high-speed railway between London and the north; a road tunnel, perhaps the world’s longest, under the Pennines (see article). These would all help to get the economy going eventually. But in some cases they are years away from getting started. The priority should be smaller projects that generate fewer headlines but can begin immediately. Mr Hammond has several options: he could increase rewards for local councils that allow more housebuilding, or raise spending on local buses and roads, which have endured big cuts since 2010. + +The second area of focus should be welfare, which under current plans is on the wrong side of the line between tough love and inequity. Tax and benefit changes planned for the next four years will squeeze the incomes of some of the poorest households by as much as 12%. Tempering those cuts would be good politics, given the acres of political centre-ground vacated by the leftward-rushing Labour Party. But it would also be sound economics: poor households spend a greater proportion than rich ones of any extra income they receive. Mr Hammond should end the cash-terms freeze on working-age benefits, which is supposed to last until 2020. He should also look at reversing the changes to tax credits (top-ups for low-paid folk). + +The British economy has some hard years ahead. More drastic action may be needed when the country eventually leaves the EU. But it is long past time that the government loosened its over-tight spending plans, softened its regressive welfare reform and started investing more in infrastructure. If the prospect of Brexit at last forces the chancellor’s hand, good. + + + + + +Brazil’s new president + +A chance for a fresh start + +How Michel Temer can make a success of his presidency + +Sep 3rd 2016 | From the print edition + + + +FUTURE generations of Brazilians will not look back on the last day of August as a proud moment in their history. The eviction from office of the hapless president, Dilma Rousseff, by a compromised congress on a flimsy pretext, though perfectly legal, was not the country’s finest democratic hour (see article). But, with luck, tomorrow’s Brazilians may also remember August 31st as the day the country began to deal seriously with the root causes of its economic and political dysfunction. + +That hope rests with Michel Temer, the former vice-president, who has been acting president since May and was formally sworn in after Ms Rousseff’s ousting. He is no saint. His Party of the Brazilian Democratic Movement is as tainted by the Petrobras scandal as is Ms Rousseff’s Workers’ Party (PT). The scheme to funnel billions of dollars from the state-controlled oil company to governing parties and politicians stoked the political fury that led to Ms Rousseff’s impeachment, though it did not provide the legal grounds for it. But Mr Temer represents an improvement over the fallen president in two ways. Brazil’s political and economic crises had rendered her impotent well before the senate deposed her; he is a more adept politician, with a firmer base of support in congress. And he understands Brazil’s problems better than she does. + +These are too numerous and deep-seated to be solved in the 28 months that he will serve in office. But although he lacks a popular mandate, he cannot be just a caretaker. GDP contracted by 3.8% year-on-year in the second quarter of 2016. By the end of the year, the economy will probably have shrunk by more than 7% since the start of 2015, its worst slump in decades. Mr Temer’s presidency will be judged by his success in restoring growth and laying the groundwork for future prosperity. + +Temer the trimmer + +Brazil’s main economic problem is that the state spends lavishly but unwisely, and taxes and regulates with a heavy hand. That keeps interest rates high and investors’ confidence low. The most urgent task is to correct the disastrous fiscal course set by successive governments since the return of democracy in 1985, which became still more reckless under Ms Rousseff. Mr Temer’s other big job is to embark on a redesign of the nutty electoral system. + +He sounds like a fiscal reformer. His priorities are to freeze public spending in real terms and to raise the retirement age, reducing the growth of a pensions bill that cripples the government. But his behaviour has been less resolute than his rhetoric. During his short time in charge, he has given public-sector workers a big pay rise and bailed out bankrupt states. To sustain the economic confidence that began to return after Mr Temer took over in May, he must change course. + +That means not only keeping his promises but going beyond them. He should break the ratchet that makes pensions and other benefits grow faster than the state’s capacity to pay them. Under Ms Rousseff and her PT predecessor, Luiz Inácio Lula da Silva, non-interest spending grew twice as fast as GDP. Mr Temer should find plenty of fat to cut. That includes some 80 billion reais ($25 billion) in tax breaks for industry. + +These are the sorts of decisions that past presidents, putting their careers before their countrymen, have ducked. The new president and his economic team, including the finance minister, Henrique Meirelles, must govern more like technocrats. Mr Temer is right to rule himself out as a candidate in the next presidential election, to be held in 2018; he must avoid any suspicion that he is interfering in the course of the Petrobras investigation. Mr Meirelles, who is thought to have presidential ambitions, must not be distracted by them. + +Mr Temer’s small stock of political capital limits what he can do. An overhaul of taxes and the antiquated labour code will have to wait for the next president. But popular anger at the political class gives him scope to reform the political system. Today’s congressmen belong to dozens of parties and compete for votes across entire states. This makes elections expensive, parties weak and politicians, with little connection to constituents, more corruptible. A vote threshold for parties to enter congress and penalties for politicians who switch parties would make the political class more accountable. It would be a gift to Mr Temer’s successor. If that happens, August 31st may turn out to be not such a bad day for democracy after all. + + + + + +Counter-terrorism + +Scared? Make women disrobe + +A French court was right to overturn the burkini ban, but that is not the only foolish response to terrorism + +Sep 3rd 2016 | From the print edition + + + +A TERRORIST drove a lorry into a crowd on Bastille Day, killing 86 people and injuring hundreds. This atrocity took place near a beach. So a number of French seaside towns decided to ban Islamic swimwear in public (see article). This is an idiotic policy, and a French court was right to overturn it. Yet Nicolas Sarkozy, a former French president who launched his campaign to regain the Elysée last week, wants to change the constitution and impose a nationwide ban on burkinis. Why? + +As a measure to prevent terrorism, such a ban would be useless. Muslim women who wear modest swimsuits do so because they like swimming but would prefer not to expose lots of flesh. They are not hiding weapons under their burkinis. More important, giving officials the power to order women to disrobe is an affront to human dignity. Does anyone seriously imagine that this power would not be abused? It is as if Mr Sarkozy wants to turn a drunken rugby chant into government policy. A burkini ban would also alienate moderate Muslims, whose co-operation is desperately needed if France is to gather intelligence and foil actual terrorist plots. The notion that the burkini is a form of “enslavement of women”, as Manuel Valls, France’s prime minister, put it, and so offensive that it is likely to cause disorder, is preposterous. + +Strip-searching, without the searching + +Alas, the burkini ban is not the only noxious response to jihadism that Western leaders are mulling. Mr Sarkozy wants all suspected Islamist militants either to be put into detention camps or made to wear electronic tags, regardless of whether they have committed a crime. He would also ban headscarves and Muslim prayer from public places. He claims to be defending laïcité (secularism). Liberté, apparently, can go hang. + +The prospect of a contest between Mr Sarkozy and Marine Le Pen to decide who can bait Muslims more in the run-up to next year’s French presidential election is distressing. Meanwhile, on the other side of the Atlantic, Donald Trump has called for a ban on immigration to America by foreigners from countries racked by terrorism, urged the murder of terrorists’ families and vowed to deploy forms of torture “tougher than waterboarding”. + +Politicians make such promises because they think voters want to hear them. Some clearly do, partly because they have an exaggerated idea of the danger that terrorism poses. A recent poll finds that 77% of Americans who follow the news believe that Islamic State (IS) is a serious threat to “the existence or survival of the US”. Mr Trump agrees. If America doesn’t get tough on terrorism soon, he has said, “we’re not going to have a country any more—there will be nothing left.” + +Nonsense. For America (and most other countries) terrorism is a real threat, but not an existential one (see article). In the seven months that included the San Bernardino and Orlando shootings, Americans were nearly 300 times more likely to die in a car crash than a terror attack. Even in the past year, a French citizen was three times more likely to be the victim of an ordinary murderer than of a terrorist. Groups such as IS aim to spread fear. Using hyperbolic language about their power helps them achieve this aim. Ill-judged “security theatre”, such as sending heavily armed soldiers to patrol French beaches, may make people feel more anxious than safe. + +IS will eventually be evicted from the territory it controls in Iraq and Syria. The end of the “caliphate” will reduce its power to inspire terrorists in the rest of the world, but not eliminate it. Western security services have proved (mostly) effective at preventing large, complex attacks. Stopping lone wolves is much harder: anyone can rent a lorry and crash it into a crowd. So the spooks will have to remain vigilant. + +But it is no disrespect to IS’s victims to suggest that counter-terrorism policy should be measured and judicious. The aim should be to stop the largest number of attacks with the minimum intrusion into people’s lives. That means spying on suspects, but not locking them up without charge or harassing the communities from which they come. Over-reacting, as Barack Obama put it, can undercut “the essence of who we are”. + + + + + +Letters + + + + +On China, Labour, assisted suicide, Yazidis, voting, long lunches, dogs, religion, Donald Trump: Letters to the editor + + + + + +On China, Labour, assisted suicide, Yazidis, voting, long lunches, dogs, religion, Donald Trump + +Letters to the editor + +Sep 3rd 2016 | From the print edition + +Letters are welcome via e-mail to [email protected] + + + +Low-grade China + +There is a big “if” in your conclusion that debt in China will remain under control, allowing the country to rein in its deficits (“Augmented reality”, August 20th). You are right that much of China’s deficit stems from investments in transport infrastructure. You are wrong, however, in assuming that those investments have resulted in “decent” assets that contribute positively to the economy. A new study in the Oxford Review of Economic Policy (autumn 2016) shows the exact opposite to be true. + +Over half of the investments in transport infrastructure in China are of such low quality that they destroy economic value instead of generating it—the costs of that spending are larger than the benefits they generate. Unless China shifts to fewer and higher-quality infrastructure investments the country is headed for an infrastructure-led national financial and economic crisis, which is likely to spread to the international economy. + +BENT FLYVBJERG + +Professor + +Said Business School + +University of Oxford + + + + + +Uniting the centre-left + +Bagehot (August 20th) is right that “tribalism on both sides” killed off Paddy Ashdown’s project to ally the Liberal Democrats with Labour centrists in the 1990s. Having been somewhat involved in those talks at the time, I can assure you that the real cause of the breakdown was Tony Blair’s refusal to support the proposals outlined by Roy Jenkins to bring in proportional representation for the House of Commons. + +Mr Ashdown’s new grand design will also fail unless the larger part of Labour comes around to supporting electoral reform. An elaborate policy programme from More United, a political group, will only confuse the issue. A progressive movement that stuck just to two cardinal commitments, re-entry to the European Union and fair votes for the Commons, would sweep the tribalists away. + +ANDREW DUFF + +Visiting fellow + +European Policy Centre + +Brussels + + + + + +Assisted suicide is wrong + +Regarding your article on the right to die, laws that make assisted suicide illegal are often perceived as an obstacle to personal autonomy (“What is unbearable?”, August 6th). For those of us doctors who have witnessed hundreds of deaths, those laws seem necessary for at least two reasons. They prevent unscrupulous doctors from convincing their most bothersome patients to ask for assisted suicide and they keep sick people from the devastating feeling that they should kill themselves to stop being a burden. + +For some strange reason none of the hundreds of terminally ill patients I have cared for has admitted to be living an unbearable life. Yet suicide is the first thing some perfectly healthy scriptwriters and novelists think about when the topic is an incurable disease. Easier inflicted on others than on themselves. + +JOSEPH MASDEU + +Chair in neurological sciences + +Institute of Academic Medicine + +Houston Methodist Hospital + + + + + +Displaced people + +* Whilst your article about Iraq’s Yazidis makes interesting reading and certainly highlights the wider political and religious difficulties between the various ethnic groups, there are far more immediate problems being faced by all the communities in this troubled region (“Freedom on hold”, August 13th). + + + +There are more than 3.3 million internally displaced people in Iraq alone—the populations of Birmingham, Leeds, Glasgow, Sheffield, and Bradford combined—all refugees in their own country. They have lost everything: forced to live in camps, abandoned buildings, or with distant relatives and friends, the vast majority of these poor souls are living hand to mouth. They need the world’s help, but it is very slow in coming. The regional authorities are overwhelmed by the scale of this disaster and the populations of cities that were already struggling before the invasion of ISIS have doubled or even trebled. The frail infrastructures simply cannot cope and are collapsing. + + + +AMAR International Charitable Foundation, an NGO, has built state-of-the-art medical centres in two camps in the Dohuk region. There are 35,000 potential patients here and our medical staff see hundreds every day. If you consider that AMAR is helping just 1% of the country’s displaced people you can see the scale of the problem. Whilst there are huge political and strategic problems in this blighted region, one must give thought to the millions of desperate people behind the headlines. + + + +BARONESS EMMA NICHOLSON + +House of Lords + +London + + + + + +Car-sharing politics + +* Your coverage of voter suppression in the America has instigated a social movement. Reading “The fire next time” and “Voting wrongs” (May 28th) inspired me to create CarpoolVote.com, a platform that links volunteer drivers with voters needing a ride to the polls. The response has been overwhelmingly positive. Our local partners consistently say the same thing: this meets a real need in the community. The American public agrees. Since launching in August, more than 100 campaign volunteers and drivers have joined the campaign. One driver convinced 28 of their friends to do the same. We’ve learnt that voter suppression affects not only people of colour. People with disabilities, youth, elderly people and women are also denied access to democracy in the process. It is a shame that there is a need for an organisation like ours, in the 21st century. But we’ll keep going until legislators step in, and there is a system that allows for every vote to be counted. + + + +SASJKIA OTTO + +Founder + +CarpoolVote.com + + + + + +Time on their hands + +Bertrand Russell’s essay “In Praise of Idleness” maintains that, “in countries which do not enjoy Mediterranean sunshine idleness is more difficult, and a great public propaganda will be required to inaugurate it”. Your characterisation of the Spanish “long lunch” as “an anomaly compounding the problem” of being in the wrong time zone is propaganda in the opposite direction (“Out of sync with the sun”, August 13th). + +The causal link between working hours and work efficiency is not at all obvious. In fact, the available evidence suggests the contrary: the longer hours you work, the less productive you become. We the peoples of the Mediterranean shall gather evidence in our great public propaganda, and we shall prevail. If only we could leave the lunch table. + +EKIN CAN GENC + +Antalya, Turkey + +Spanish time zones are anomalous? A few winters ago I took a day trip from Kirkenes in the north of Norway over the border to Nikel in Russia, a distance of 55km. When we crossed the border the time in Norway was 11am but in Russia it was 2pm, a time difference of three hours. We were late for lunch when we got to Nikel and early for dinner when we arrived back to Kirkenes. + +MICHAEL FERGUS + +Oslo + + + + + +The dogs of war + +“Furry fashionable” asked how Taiwan will defend itself if its young people continue buying dogs instead of having children (August 6th). Herman Melville might have the answer. In “The Encantadas”, Melville recounted the tale of the Dog King, a Creole adventurer who became supreme lord of Charles Island in the Galápagos. After taking possession of the island, he dismissed his human bodyguard and relied, for the control and defence of the island, on a “cavalry company of large grim dogs”. For a time their “terrific bayings prove[d] quite as serviceable as bayonets in keeping down the surgings of revolt”. However, Taiwan should be wary of following these defensive policies. The dog army was eventually thrown into the sea. + +MATTHEW HAMBLIN + +London + + + + + +Freedom of religion + +* Bagehot (August 13th) rightly calls for debate about Britain’s adjustment to a “post-religious society”. It is in fact more complicated than that: we will have a non-religious majority co-existing with a more diverse, and more seriously religious, minority. + +That pluralism requires three things: firstly a British form of secularism, where freedom of religion, belief and expression are fully protected, provided they do not erode the rights and freedoms of others and no religion or belief has special privileges to the detriment of others. The 26 bishops in the House of Lords must go and the state should move to stop funding religious schools and insist that existing ones cease to discriminate against children on the basis of their parents’ beliefs. That will only happen if the government is brave enough to resist the influence the Anglican and Catholic churches still use to defend their institutional power and position. + +Secondly, we all need to be better informed. In particular, children must receive good, balanced teaching on ethics, religion and belief, including humanism. So far the government has failed to listen to recommendations from the Religious Education Council and others on what needs to be done. + +And finally, we all need to make the effort to talk to each other and understand those who are different as fellow human beings, whether we agree with them or not. Dehumanising “the other” and pushing an us-and-them view of the world are exactly what Islamist and other religious hardliners, and the far right, want us to do. + +JEREMY RODELL + +Dialogue Officer + +British Humanist Association + +London + + + + + +The Trump effect + +Lexington suggests there will be a reckoning between Republicans and Democrats in Congress after the presidential election (August 6th). There will be a reckoning, all right, but it will be between Republicans and Republicans. Win or lose, the big-tent alliance between conservatives in the base and nativist voters that has been at the core of the party for the past 40 years is irreparably broken. No one in the party wants to go through this again. Either the conservative wing will reassert control and drive the nativists out or conservatives will abandon the party and seek other accommodation. Either way, the real moment of truth will come with the 2018 mid-terms. + +CHRIS TRUAX + +Editor + +HoldingOurNosesForHillary.com + +San Diego + + + +Donald Trump reminds me of some monstrous figure out of Lewis Carroll’s writings. An amalgam of the Red Queen (“Why, sometimes I’ve believed as many as six impossible things before breakfast!), Humpty Dumpty (“When I use a word it means just what I choose it to mean, neither more nor less!”), and the Bellman in “The Hunting of the Snark” (“What I tell you three times is true!”). + +IAN MCDONALD + +Georgetown, Guyana + +I very much enjoy reading your analysis of the election. However, please keep in mind that all politicians are weasels. Hillary Clinton and Donald Trump are politicians. Therefore, we voters will be forced to choose between the lesser of two weasels. + +STEWART DENENBERG + +Emeritus professor of computer science + +State University of New York, College at Plattsburgh + +* Peggy Noonan summed up nicely the situation behind the rise of populism in America and Europe in her recent essay, “How Global Elites Forsake Their Countrymen”. For Ms Noonan, “Those in power see people at the bottom as aliens whose bizarre emotions they must try to manage”. + + + +DON POWELL + +Ponte Vedra Beach, Florida + +* Letters appear online only + + + + + +Briefing + + + + +Uber: From zero to seventy (billion) + + + + + +Uber + +From zero to seventy (billion) + +The accelerated life and times of the world’s most valuable startup + +Sep 3rd 2016 | SAN FRANCISCO | From the print edition + + + +SEVERAL of America’s great industrialists built empires in Pittsburgh, including Andrew Carnegie, a steel magnate. Now the city is attracting the attention of a new, aspiring robber baron. Last year the ride-hailing firm Uber swooped down on a robotics research centre run by Carnegie Mellon University in search of autonomous-vehicle expertise. It has been testing self-driving cars on Pittsburgh’s roads for months, and will soon begin offering customers the chance to request rides in one. + +Since the launch of its first smartphone app, UberCab, in 2010, the startup has attracted $18 billion in equity and debt. Today it carries a valuation of close to $70 billion, making it by far the largest of the startup “unicorns” worth over $1 billion (see chart 1). No technology firm in history has raised more money from private investors before going public. Its deep-pocketed backers include Saudi Arabia’s sovereign-wealth fund, mutual funds, Silicon Valley venture capitalists and a crowd of other firms. They are stalking the next big win in the technology business at a time when returns from other assets are widely disappointing. + + + +Uber operates in more than 425 cities in 72 countries and has around 30m monthly users. In 2016 it will probably have around $4 billion in net revenues, more than double the previous year’s. Originally dedicated to connecting customers with limos and other ritzy rides, since 2012 it has offered a peer-to-peer service called UberX that lets drivers of all sorts of cars offer rides to passengers using its app. This service now accounts for the bulk of the firm’s revenues. The company also offers an UberPool service that allows several passengers travelling in the same direction to share a ride. It does not own its car fleet, but takes a cut of the fare in return for providing the platform that allows the drivers to work—typically 25%, with the rest going to the driver. + +A runaway American dream + +The company combines great name recognition with huge potential for growth. Like Facebook and Google before it, it has its own verb (“Let’s Uber there”). Speaking to The Economist, Travis Kalanick, the company’s co-founder and boss, says his goal is not simply to disrupt the taxi market but to make ride-sharing so cheap and convenient that using Uber becomes an alternative to owning a car. Meanwhile, he is pushing into new areas, such as delivering food and packages. Last month Uber acquired Otto, a newborn autonomous-lorry company, for around $600m and 20% of Uber’s future profits from trucking. + +If Uber can pull all this off, it could be one of the biggest companies in the world—one which plays a critical role in the lives of consumers and the fabric of cities. The potential for profit is enormous. Worldwide spending on internet advertising, the business that sustains internet giants like Google and Facebook, will be $175 billion this year—larger than the taxi market, which is estimated at roughly $100 billion. But the global market for personal mobility is worth as much as $10 trillion, according to Adam Jonas of Morgan Stanley, a bank. + +These prospects go some way to explaining a valuation higher than the market value of 87% of firms in the S&P 500 and more than a third higher than that of General Motors, which had a gargantuan $152 billion in sales last year. Unsurprisingly, a valuation of around 17 times the loss-making company’s 2016 revenues spurs a certain amount of scepticism. Such a figure can be justified only by lots of future growth, which will cost yet more money. But when Uber goes public, perhaps as soon as next year, in order to provide an exit for current investors, will its new shareholders be willing to tolerate continuing losses in the name of growth? + +There are other questions, too. Are the barriers to entry in Uber’s business high enough to defend it against rivals such as Lyft in America, Ola in India and Grab in South-East Asia, and from future competition from the likes of Alphabet’s Google? Will regulation hamstring its growth? And perhaps most crucially, how will it manage the transition to driverlessness? The firm’s long-term success lies in changing the way people and goods get moved around—exactly the area that autonomous vehicles will disrupt. The company feels a pressing need to navigate this technological change before the carmakers and rival technology companies provide competitive visions of the future of transport, and of who will profit from it. + +Two of today’s digital giants provide a useful guide to Uber’s position and plans. Its executives never have Amazon far from their minds as they plot their company’s future, says Bill Gurley, a venture capitalist at Benchmark Capital, who invested in Uber and sits on its board. Amazon has favoured relentless growth over the pursuit of profits for much of its history, keeping prices low to win loyalty and grab market share. Uber is trying a similar tack by subsidising drivers to keep fares down, by rapidly expanding into new cities and by launching new services, such as the delivery of food and other items. + +Investors like to see the company in terms of Facebook. When the social network accepted an investment from Microsoft that valued it at $15 billion in 2007, a time when it had not shown any real propensity to make money, this was decried as folly. When it filed to go public at a valuation of around $100 billion in 2012, accusations of madness came back, based on worries about the company’s ability to adapt to the mobile phone. Today Facebook has a market value of more than $360 billion. A fear of missing out on the internet’s next Facebook-sized hit is a big factor in the flood of capital into Uber’s coffers. + +Investors’ bullishness is bolstered by Uber’s position at the intersection of three linked disruptive trends. First is the emergence of asset-light business models. The cost of expanding is far lower for a startup that does not own its own cars or consider its drivers employees. Second is the shift to the sharing economy, which underlies the success of peer-to-peer services; a system that lets people do as much or as little as they like attracts workers. The third is that consumers, especially young consumers, are increasingly happy to pay for access to things, rather than own them outright. + +The average cost per mile of UberX is probably around $1.50 (€0.84/km). It already costs more than that to own a car in some places. In New York City, car ownership works out at around $3 a mile. All told, about 14% of people in the urban centres of America’s top 20 metropolitan statistical areas (MSAs) may find it cheaper to use UberX at current rates than to own a car, according to Rod Lache of Deutsche Bank. The more Uber can bring costs down, the more widely it will compete with car ownership. Mr Lache reckons that autonomous cars might bring the price per mile down to 89 cents or less—below the average cost per mile for car ownership across all 20 top American MSAs. + +From the fire roads to the interstate + +Cost is not the only reason someone would give up a car; convenience and time matter, too. Like Amazon, though, Uber understands that low prices hook customers and is trying to push them down more. In San Francisco the price of an UberX ride is half what it was two years ago. An UberPool costs around half of an UberX ride. + +Even without an interest in forming habits, though, Uber would have little choice about low prices—because it has competition. The switching costs for both passengers and drivers are relatively low, which means new entrants can buy market share by subsidising trips and earnings. The same exuberance that has driven up Uber’s valuation has also given its rivals the resources with which to attack it. + + + +Lyft, with 20% of the American market to Uber’s 80%, is spending an estimated $50m a month to increase its share, and in many places it has been succeeding (see chart 2). Uber has had to pay out to avoid losing passengers and drivers in key markets. New companies, hearing of gold in the ride-hailing hills, have rushed in; two startups, Juno and Via, have toeholds in New York. Being the biggest company in a market helps a lot, because customers want short waiting times and drivers want frequent fares. But fighting off competitors still costs money. After claiming earlier this year that its developed-market business had become profitable, Uber lost an estimated $100m in America in the second quarter. + +Competition at home and abroad will affect Uber’s profit margins in the medium term. Thibaud Simphal, the boss of Uber’s French operations, admits that ride-hailing could be “a high-volume, low-margin business. It’s transportation. It’s like retail.” For the time being, investors are willing to accept these low margins as Uber pursues growth above all else. But their patience may wear thin if the intense competition drags on. Amazon built up its business at a time when few competitors shared its vision of the size of the e-commerce opportunity. Uber does not operate in a world of low expectations. + +One wild card is whether Lyft remains an independent company. There have been reports it has been seeking a buyer. In 2014 Uber might have been that buyer, something that has not been previously reported; negotiations fell apart over price. Mr Kalanick insists he does not regret the outcome: “It’s a really powerful thing for a company to compete. It makes you fierce about serving your customer.” Having a rival also helps deflect regulators’ scrutiny. Yet many of Uber’s investors wish the two had gone forward with a deal, so that Uber would not have to keep battling for share. + +If the competition can be won with money and determination, Uber has to be well-positioned. It was not the first firm to recognise the potential of peer-to-peer ride-sharing: Sidecar, a now-defunct startup in San Francisco, got the ball rolling. Lyft came next. But Mr Kalanick used the momentum achieved by raising a lot of capital and expanding rapidly to great effect. Uber’s huge cash pile now acts as an “almost unassailable barrier” to new entrants, says Sunil Paul, the founder of Sidecar. And even with $9 billion, Mr Kalanick does not rule out the possibility of asking investors for more: “If the money is there, that means my competitors will raise it, and that means I need to as well.” + +However dominant Uber’s position may be, Mr Kalanick will not let up. “[He] always sees himself as an underdog,” says Thuan Pham, Uber’s chief technology officer. Uber is not Mr Kalanick’s first startup; that was Scour, a file-sharing firm which filed for bankruptcy in 2000 after being sued by media companies for $250 billion for copyright infringement. He sold his second startup to Akamai, an internet firm, for a modest $15m. Those experiences left him obsessed with details and intensely focused on improvement. He enforces a feedback system called T3B3 (top-three, bottom-three skills), requiring his deputies to give him brutally honest feedback. “He changes himself faster than we can change our algorithms,” says Mr Pham. In the T3B3 process he shared his observation that Mr Kalanick should thank people more; now, apparently, he does. + +Uber has also shown a capacity for change. It launched UberX when many employees at the company thought it should not risk disrupting its black-car service by offering a cheaper option. And this August, after years spent ploughing huge amounts of money into its business in China, it announced that it was merging its Chinese business with that of a local rival, Didi Chuxing, in return for a fifth of the new firm, worth around $7 billion today. + +Investors were thrilled. They had worried that Uber would continue to lose billions of dollars chasing its Chinese dream. Mr Kalanick is extremely secretive about Uber’s financial data, but in the first two quarters of 2016, with $2.1 billion in revenue, the company lost at least $1.3 billion, according to reports, and there are good reasons to think that a lot of that was lost in China. Now Uber can share in the growth of the Chinese market without spending another dime. + +Having sorted China out, Uber is able to concentrate on promising pickings in other developing markets where governments may not be quite as determined as China’s was to see a local firm win out. In India, South-East Asia and Latin America rates of car ownership are low. Just as consumers in emerging markets leapfrogged the desktop internet and went straight to mobile devices, they could choose to bypass buying a car and move around via ride-hailing instead. Mr Jonas of Morgan Stanley reckons that by 2030 around 25% of miles travelled in India will be on ride-hailing and ride-sharing services. Fares in these markets will be lower—in Mumbai a commuter’s hour-and-a-half Uber costs 500 rupees ($7.50)—but the size of the population means there will be a lot of transactions. + +At the moment Uber is the underdog in India, lagging Ola, its local rival. Its huge cash resources mean that it is still a competitor, though. In Mexico and Brazil, it is the leader. And as a global brand it will be best placed to serve the small but disproportionately lucrative global business clientele. To distinguish itself from its competitors, Uber is investing heavily in developing its own mapping capabilities by buying assets, including the mapping startup deCarta, and hoovering up talent from Google. (Uber dreams “big” but “not as broad” as Google, says Brian McClendon, a high-profile hire from Google who now runs Uber’s mapping team.) + +Developing its own maps enables Uber to offer more precise estimates for pickups and drop-offs to users and better routes for drivers—improvements which are particularly important for carpooling and for autonomous vehicles. These are capabilities that rivals in emerging markets would be very hard put to match. + +In addition to competitors, Uber also needs to contend with regulators and policymakers. Most of Uber’s bookings are generated in just 20 cities. Many dense, potentially lucrative urban areas in countries including Germany, Italy and Spain are out of reach for the time being because of regulatory problems. It is unclear how soon and how favourably these will be resolved, if at all. + +Steppin’ out over the line + +How Uber fares with regulators will depend to some extent on how it manages its relationship with the public. If it succeeds in its vision of becoming a major provider of transport services for both passengers and goods all over the planet, it will have a larger presence in the physical world than any technology company in history. The public will have an opinion about it. Today competition authorities see Uber in a positive light, because it brings more transport options to city-dwellers. But when it puts many taxi companies out of business and becomes an essential part of a city’s infrastructure, there will be calls to regulate it more strongly. Those calls will get louder if, or when, Uber starts to swap growth for profits. + +Uber’s relationship with its drivers could hit its image and its pockets. Drivers in California, Massachusetts and New York have sued the company, claiming that they are employees, not freelancers, and are thus entitled to benefits. A judge in California recently allowed one of these cases to proceed, bringing fresh uncertainty over Uber’s financial obligations. Some drivers say that once they cover expenses, they make less than the minimum wage. “I feel betrayed by Uber,” says Omer Abdelnur, who has driven for Uber for three years in San Francisco; he has watched his earnings decline by around 70%, according to his estimates. (Uber says fares have dropped, but wages have stayed level because the volume of trips is up.) + + + +According to one insider, the public-relations nightmare of drivers’ low wages and lack of benefits (compared with techies’ high salaries) has helped to keep Apple and Google out of ride-hailing so far. But this does not necessarily apply to all business models: later this year Waze, a mapping app owned by Alphabet, will reportedly launch a service designed to let San Francisco commuters share rides. And it certainly won’t apply when the cars become driverless. + +Mr Kalanick acknowledges that autonomy poses an “existential” risk to Uber. If other companies produce safe software solutions earlier, they could launch ride-hailing or ride-sharing services that undercut and possibly destroy his company. In an autonomous world, the competition may expand to include carmakers like GM, Ford and Tesla as well as tech companies like Google and Apple—which have mountains of cash to spend on fleets, if they want to. If the fleet model proves the way to go, Uber would have to give up its asset-light approach and join in. + +There are reasons to be optimistic about Uber’s prospects in navigating this technological change. Because transport is its whole business, it will work harder to ensure it is in the lead. Alphabet, Google’s parent company, has more wonky projects than there are letters. Just as the shift to mobile concentrated Facebook’s attention and required a great deal of discipline, the shift to autonomy has created an urgency and focus at Uber. At the same time, it should be able to incorporate autonomy piecemeal as it is phased in at different paces, and with different rules, in different jurisdictions. Such a transition will be hard for an all-autonomous approach. + +That said, Uber has a reputation for pushing into new markets before regulations are in place and working out rules later; there are “lots of places where there aren’t regulations at all, so you can just roll out”, says Mr Kalanick. That may not be such a good approach when it comes to autonomy. Governments that have not thought through laws to govern autonomous vehicles as quickly as they might are unlikely to take kindly to self-driving cars barrelling down roads in the interregnum. + +The shift to autonomous vehicles may improve riders’ lives, but it could also spark a backlash against new technologies that put chauffeurs and truck drivers out of work. “We have a lot of attention as it is. I don’t even know how we could get more,” says Mr Kalanick. But if there is a lesson to be taken from Mr Carnegie’s experience of empire-building in Pittsburgh, it is that the public rarely looks kindly on those who amass big fortunes if they do not contribute some of their winnings in return. Offering cheap rides is not going to be enough to count on the public’s good graces. + + + + + +United States + + + + +The Senate: Downballot blues + +Bounty hunting: Delivery men + +Zika in Florida: Boots on the ground + +Political science: Trump and the academy + +Johns Hopkins: Applied research + +Lexington: In Trump they trust + + + + + +The Senate + +Downballot blues + +Donald Trump has made a tricky set of Senate races harder for the Republicans + +Sep 3rd 2016 | COLUMBUS, OHIO | From the print edition + + + +ON ROB PORTMAN’S website, trump is a verb, as in “With this president, politics trumps good policy”, but never a name. Of his party’s presidential nominee—with whom Mr Portman, a lean and businesslike first-term senator for Ohio and former trade envoy for President George Bush, will share the ballot on November 8th—there is no mention. + +Like most Republican senators up for re-election in swing states, Mr Portman has endorsed Donald Trump, mainly because disowning him would have risked aggravating too many Trump voters. Mr Trump won 36% of the vote in Ohio’s Republican primary and his disgruntled supporters, congregated in Ohio’s south-eastern rustbelt, are not in a mood to forgive a snub. Yet in order not to offend the mainstream conservatives and swing voters who tend to matter more in Ohio, a rare authentically purple state, Mr Portman is keeping his party’s champion at arm’s length. + +He declined to speak at the Republican convention in July, though it was held, partly at Mr Portman’s urging, in Cleveland, Ohio. He has not appeared with and, if he can help it, does not talk about Mr Trump. His campaign team, one of the richest and most technologically adept assembled for any Senate race, has little to do with Mr Trump’s more modest Ohioan effort. Even when he, like Mr Trump, promises to “end Obama’s war on coal”, which goes down well in Ohio’s coal country, where the Republican nominee is popular, Mr Portman rarely mentions him. + +It is an awkward balancing act: Mr Portman’s opponent, Ted Strickland, a former governor of Ohio, has largely dedicated his campaign to accusing Mr Portman of hypocrisy. Recent electoral history also suggests Mr Portman should fail. As partisanship has become entrenched, America has seen a steep decline in split-ticket voting—over 80% of current senators represent the party their state plumped for in the 2012 presidential election—and Mr Trump is trailing in Ohio by four percentage points. Yet Mr Portman is up by seven, and his lead looks so solid that backers of both senatorial candidates’ campaigns have in recent days announced plans to scale back spending on a race that has already consumed over $50m. They appear to think the Republican incumbent has it in the bag. + +Duck and cover + +The bad news for Republicans is that Mr Portman’s strong showing is to some degree exceptional. With 24 Republican senators up for re-election, and only ten Democratic ones, the party was always assured a tough battle to retain control of the Senate in November. To regain the majority they lost in 2014, the Democrats need a net gain of five seats, or, because the vice-president has a casting vote in the Senate, four if they hang onto the White House. Because eight of the Republican re-election battles are in swing or mainly Democratic states, that looked perfectly doable even before the Republicans put an intemperate bigot, with a sketchy state-level campaign effort, at the top of their ticket. And, sure enough, as Mr Trump’s numbers have collapsed in recent weeks, amid many blunders, the Republicans’ grip on the Senate has started to look even shakier. + +The Democrats are currently on track to pick up seats in Wisconsin and in Illinois—despite its junior senator, Mark Kirk, having issued the most forceful rebuke to Mr Trump of any Republican campaigning for re-election. They look well-placed in Indiana, where Evan Bayh, a well-known former Democratic senator and governor, is campaigning to succeed the retiring Republican incumbent, Dan Coats. They also look likely to hold their own seats, except perhaps in Nevada, where their candidate, Catherine Cortez Masto, a former attorney-general, is in a tough fight to succeed a retiring Democrat, Harry Reid. This seems to leave the Democrats needing at least three additional gains. + +Probably, they will not get them in Arizona and Florida, whose incumbent senators, John McCain and Marco Rubio, easily survived what might have been troublesome primaries on August 30th. But the Democrats could win in New Hampshire, North Carolina and Pennsylvania, where moderate Republican incumbents are all seeing their prospects wilt with Mr Trump. + + + +North Carolina, where Mr Trump is narrowly trailing Hillary Clinton, looks hardest to call: Senator Richard Burr has a narrow lead there over his unheralded Democratic challenger, Deborah Ross. But New Hampshire and Pennsylvania, where the tycoon is eight-to-nine points behind, look bad for the Republicans. Their candidates and incumbent senators, Kelly Ayotte and Pat Toomey, have both seen narrow leads evaporate in recent weeks. This is though both have refused to endorse Mr Trump (even if Ms Ayotte, awkwardly, says she will vote for him). It is also despite the fact that Mr Toomey appears to be a stronger candidate, running a much better campaign, than his opponent, Kathleen McGinty, a former bureaucrat, who has never held elected office. + +The fact that he and Ms Ayotte are even competitive, given the scale of Mr Trump’s collapse in their states, is a tribute to their efforts. Yet the big disparities between their numbers and Mr Trump’s do not look tenable. According to one of Mr Toomey’s advisers, “If the gap’s at five points, we’re good; if it’s at ten, we can do it; if it’s 15, it gets hard”. More likely, it is thought, partly based on Mr Portman’s success in Ohio, a reversion to ticket-splitting could help embattled Republican candidates survive at best a five-point defeat for Mr Trump in their states. + +The better news for Republicans is that, due to Mrs Clinton’s unpopularity, Mr Trump is not losing by a bigger margin in many swing states. And while it is possible that, if he continues to struggle, poor turnout among Republican voters could end up dragging all the party’s candidates south, the relative strength of their candidates does make a return to ticket-splitting look likely. A tramp through the prosperous Columbus suburb of Upper Arlington, knocking on doors with some of Mr Portman’s campaigners, illustrated that. + +The householders they contacted, after having identified them as swing voters via the natty software they carried on their smartphones, said they would vote for Mr Portman come what may. Mostly women, who were typically dressed, for an afternoon at home, in smart blue blazers and silk scarves, they spoke approvingly of the junior senator as “sensible”, “flexible”, “fair”, “a good listener” and “not a bully”. None, it was therefore unsurprising to hear, liked Mr Trump. Half said they would not vote for him; the rest said that they probably would, but they were embarrassed to admit it. “Let’s just say I wouldn’t want to put his yard-sign in front of my house,” said Melanie Brown, the director of a historical society. + +With ten weeks of campaigning still to go, much could change. If Mr Trump bombs in North Carolina, so may Mr Burr. It will also be interesting to see whether Mr Rubio, having breezed through his primary, can maintain the hypothetical lead he had previously enjoyed in the polls; his Democratic opponent, Patrick Murphy, a 33-year-old congressman, does not look imposing. As things stand, in short, Mr Trump’s recent troubles have made a tough fight for the Republicans to retain the Senate a bit tougher. But they have not changed its complexion as much as might have been expected. Most prognosticators have long been predicting the Democrats will pick up between three and six Senate seats; they have not revised that view. + +That the Republicans are bearing up at least partly due to the strength of their candidates, and to the resilience of their supporters, offers some reassurance to a party in need of it. While geeing themselves up with that, Republicans can also reflect on another big fillip. At the next round of Senate elections, in 2018, the starting positions of the two parties will be neatly reversed; 25 Democratic senators will then be up for re-election and only eight Republicans. So if the Republicans do lose control of the Senate in November, they will probably get it back then. + + + + + +Bounty hunting + +Delivery men + +Bounty-hunters are arguing about whether they should be regulated + +Sep 3rd 2016 | COEUR D’ALENE, IDAHO | From the print edition + +Mrs 10% + +THE gigs are irregular but, thanks in part to mostly lax regulations, good money can still be made by bounty-hunting, says Rob “Daddy Rat” Hoyt, a trucker in Post Falls, Idaho with an “icing on the cake” sideline snatching fugitives. All but four states allow private citizens to bounty hunt. Nearly a third, Idaho included, don’t bother licensing armed “fugitive-recovery agents”, as they are also known. Bondsmen typically pay bounty-hunters expenses plus 10% to 20% of the value of a bond on someone who fails to appear in court. Some bonds run into six figures. + +It is not work for the faint of heart—plenty of fugitives try to fight off pursuers. So many bounty hunters lift weights and practise a martial art or wrestling, the better to snap on handcuffs and, on some fugitives, ankle cuffs, lest they try to kick out a backseat window on the drive to jail. Tools of the trade include ballistic vests, pepper spray, Tasers, handguns and, for some jobs, a shotgun loaded with a beanbag that “folds you up like a newspaper”, says Mike “Animal” Zook, an affable bounty-hunter in Spirit Lake, Idaho. Though built like a bear, he has been clubbed and, on four jobs, stabbed. The pain didn’t really kick in until the adrenalin wore off. It’s “definitely not easy money”, says Rex Taylor, a bounty-hunter in nearby Coeur d’Alene who also runs All Freedom Bail Bonds. + +Bounty-hunting affords plenty of free time, and the mostly hands-off approach (especially in conservative Idaho and neighbouring Montana and Wyoming) has opened the profession to many, Mr Taylor says. To help them get a start, the National Association of Fugitive Recovery Agents (NAFRA) in Delaware refers rookies to old hands seeking an apprentice. Like many such groups, NAFRA favours more regulation. No capture means no pay, so some overzealous agents end up on the news, says Chuck Jordan, NAFRA’s boss. Tired of managing the bad PR, he is pushing for federal rules on training and background checks to weed out current or hopeful bounty-hunters who, for example, “have perhaps murdered someone”. + +Bounty-hunters generally resist calls for more rules. Thanks in part to a Supreme Court decision of 1873, if a fugitive is known to be in a house “we have every right to break down that door” without a warrant, notes Michael O’Halloran of Wyoming Fugitive Investigations in Cheyenne. The police have little time for such work because of the long stakeouts that are occasionally needed. Proposed restrictions, Mr O’Halloran says, could keep bounty-hunters from getting the job done. The National Association of Bail Enforcement Agents, now part of NAFRA, has estimated that nearly 90% of bail-jumpers get nabbed. + +That success rate has a lot to do with technology for “skip tracing”, the term of art for locating a man on the lam. Knowing that a certain fugitive had a weakness for 7-Eleven’s Slurpees, Mr Zook got access to security video recorded by the firm and used face-recognition software to learn when and at which outlet he was most likely to swing by. He caught the man as he emerged from an Idaho 7-Eleven with the frosty drink in hand. Online services like Skip Smasher and Bond Tracker search numerous databases for clues to a person’s whereabouts, with the latter even reporting the place and time an ATM is used. + +Such resources are making bounty-hunting easier than during its frontier heyday in the Old West, but success still requires ingenuity. Bounty-hunters sometimes fool a fugitive’s child or partner to reveal his hideout, and generally prefer to seize them when they are asleep or otherwise unprepared. Kathy Wilson, a former prison guard who now captures fugitives for Big Sky Bail Bonds in Kalispell, Montana, prefers to nab them leaving a supermarket with arms full, or in casinos where firearms are banned. Trickery is common, too. Agents with Wyoming Fugitive Investigations sometimes pretend to deliver a TV won in a competition, or don a FedEx uniform and knock on the door holding an empty box. “Everybody wants a package,” Mr O’Halloran notes. + + + + + +Zika in Florida + +Boots on the ground + +Into combat with Florida’s mosquito-busters + +Sep 3rd 2016 | CLEARWATER AND TAMPA | From the print edition + + + +THE coalition that wages Florida’s eternal battle against mosquitoes is both fearsome and eclectic. Helicopters and fleets of trucks are used to nix larvae and kill insects on the wing; traps baited with dry ice help to monitor them. There are animate weapons, too. Flocks of sentinel chickens, on which some mosquitoes like to munch, are maintained at strategic locations. Then there are mosquitofish, bug-eyed relatives of the guppy that are deployed in barrels and fountains. + +Tropical yet wealthy, Florida is “king of the hill” in the mosquito-control world, says Ron Montgomery, Hillsborough County’s veteran mosquito-buster-in-chief. His team of zappers, and those across Tampa Bay in Pinellas County, are on a new front line of the struggle against Aedes aegypti, one of the species that carries the Zika virus. Local transmission—whereby patients contract the virus in America, rather than bringing it home with them—has mostly been confined to the artsy Wynwood district of Miami and the fleshpot of Miami Beach. But one of Florida’s 46 such cases (so far) was found in Pinellas, in a woman said to have worked in Hillsborough. “Our job is to kill mosquitoes,” Mr Montgomery says at his bunker-like HQ on the outskirts of Tampa. “And we take it very seriously.” + +Naturally, politicians are the face of this counter-insurgency. Mosquitoes and politics have long been entwined in Florida—some counties elect dedicated mosquito commissioners—but this year, Zika and the bugs that convey it have infected races across the ballot. Amid an epidemic of hyperactive credit-seeking and partisan blame, everyone criticises Congress for failing to pass emergency funding before its summer recess (the Centres for Disease Control’s director said this week that the available money had almost run out). Democrats assail Rick Scott, Florida’s Republican governor, for previous state budget cuts. Patrick Murphy, victor in their senatorial primary on August 30th, lambasts Marco Rubio, his confirmed Republican opponent in November. Some Tampa–area politicians are agitating for the release of genetically modified mosquitoes, currently slated for a trial in the Keys, which might cut the Zika-spreading population. + +As in an actual war, however, the political grandstanding is a sideshow. The real combatants are the mosquito-control operatives, whose tools include their own bodies. As Rob Krueger of the Pinellas squad recounts, one form of surveillance involves standing in a buzzy spot and seeing how many mosquitoes land on him in a minute. “You end up with a lot of mosquito bites,” he says as his boss, Jason Stuck, brings in the eggs from a reserve battalion of chickens. West Nile virus, eastern equine encephalitis: other diseases are carried by Florida’s numerous mosquito species, but Zika is the focus of anxiety because of its impact on tourism—partial travel advisories for the affected bits of Miami remain in force—plus the microcephaly it can cause in infants. + +And, unfortunately, Aedes aegypti is a hard target. True, it cannot fly very far, meaning that, once a suspect cluster is located, it can be isolated; from a mobility point of view, says Mr Krueger, “It’s the people who are the problem,” especially since Zika is often asymptomatic. But the mosquito lives in crowded places, laying hardy eggs in small bodies of water such as flower pots, bird-baths or the filters of swimming pools: “Pop that sucker open,” says Mr Krueger, “and there’s sometimes aegyptae in there.” Since it prefers people to birds, the chickens are no use; for Zika, “our sentinel system is basically the human being”. Those habits mean that spraying from the air, or from trucks, is not enough. + +This fight, he says as a helicopter returns from a mission over the marshes, requires “boots on the ground”; he and his colleagues must go “door-to-door” with hand-held squirters in a pesticidal version of urban warfare. “It’s like a game of cat and mouse out there,” he reckons. Summer is always busy, but Zika has made this one frantic. The Pinellas team recently took almost a month’s worth of calls in a day. The crew is working 14-hour shifts to keep up. + +On a call-out at a retirement community in Clearwater, Mr Krueger extracted and examined water from swamps and ponds that had troubled the manageress. He caught a reassuring water spider in the swamp, of a kind that eats mosquito larvae, but patiently explained that the real worry is smaller receptacles such as the crevices in bromeliad plants, which typically need only to be drained. He identified and dispatched aegyptae in six nooks amid the palm trees and Spanish moss. “Aren’t you afraid of getting bitten by a Zika bug?” asked the manageress, confiding that “There’s a lot of panic about Zika.” Every job has its risks, Mr Krueger reasons. His colleagues in the vegetation-management section sometimes wade into alligator-infested channels to clear obstructions that make the water hospitable to mosquitoes. + +This sort of appreciation is rare for Florida’s mosquito-busters. As Mr Stuck jokes, if air-conditioning were lost and the mosquitoes given their head, the millions of Americans who have moved to the state would stampede north again. With Zika, at least, Mr Krueger feels he is “assisting with something major that’s happening. That’s kinda cool,” he observes, preparing to test the water in another bird-bath. + + + + + +Political science + +Trump and the academy + +Political science refashions itself to deal with the Republican nominee + +Sep 3rd 2016 | From the print edition + + + +SOON after Donald Trump announced his candidacy, the usually bickering American pundits scoffed in unison. Armed with time-tested principles of political science, they were sure that no one so inexperienced and iconoclastic could build the consensus needed to win the Republican nomination. Their precious theories now sullied, scholars of American politics are hurriedly revising the old, and originating the new. A course on the political science of Trump will begin at the University of California, Irvine this month. + +As with all disciplines, some explanations have gained more traction in political science than others. One of them was the idea put forward in a weighty and amply-footnoted book, “The Party Decides”, that parties still exert a good deal of influence over who gets the nomination. In a forthcoming paper in the journal Political Science and Politics, the book’s authors set out to save their theory from its mauling by Republican primary voters. A candidate who eschews consensus and campaigns only for a narrow section of voters could win, they concede, by appealing to voters directly via social media and by “playing on the penchants of journalists”. The idea that this caused Mr Trump’s rise has both the merit and the drawback of being impossible to verify. But throughout the Republican primary, national media did indeed lavish attention on the braggadocious upstart (see chart 1). The 16 other contenders vying for the Republican nomination had to make do with scraps. + +The apparent failure of the book’s highly influential theory has created a new field of Trumpology. A mammoth survey of 87,000 Americans by Gallup, a pollster, shows that people who lived in areas less affected by globalisation—whether the loss of manufacturing jobs or influxes of immigrants—were the ones more likely to view Mr Trump favourably. The simple explanation that white Americans roiled by free trade and immigration are flocking to the outrightly protectionist and anti-immigration candidate does not suffice. + +Disaffection of another sort seemed to predict support for Mr Trump: his popularity rose in areas with the least healthy populations and lower social mobility. A salesman first and foremost, Mr Trump spun a story that “elites in both parties haven’t taken the white working class seriously”, says Jonathan Rothwell, an economist who wrote the study. Yet polls suggest more than 40% of the electorate backs Mr Trump: only a small slice of that can be explained by his support in deprived areas. + +Perhaps none of the many theories proposed were so jarring, or gained so wide a following, as the “authoritarianism” explanation. A study published in January argued that support for Mr Trump was fuelled by newly awakened “authoritarian” voters who thrilled to his continued haranguing of Muslims and Mexicans. After all, Mr Trump had “replaced the dog whistle”—coded language to appeal to prejudiced voters—“with a bull horn”, says Matt MacWilliams, author of the study. + +This argument did not suggest that Americans were pledging admiration for a new Mussolini en masse. “Authoritarianism” is instead measured by four questions on child-rearing—such as whether respect for elders matters more than independence. A general preference for obedience and authority, evinced by fancying good manners over curiosity, say, was especially prevalent among Trump supporters. + +To test some of these nascent theories, The Economist examined the data underlying them. We asked YouGov to include the same questions used to assess authoritarianism in their weekly tracking poll. In this survey, authoritarianism, measured using the same child-rearing questions, was not associated with support for Mr Trump among Republican primary voters—though it was for his closest challenger, Senator Ted Cruz. We also examined the raw data behind another widely read version of this thesis and found it had not taken religion into account. When we repeated the analysis including measures for religiosity, authoritarianism became a far weaker predictor of Trump support. + +However, one theory of Trump remains standing. Along with the questions on authoritarianism, we also requested YouGov to ask a battery of questions aimed at measuring racial resentment. Different from outright racism, this is measured by support for the idea that blacks are undeserving and clamorous for special assistance. Strongly disagreeing with the claim that “over the past few years blacks have gotten less than they deserve”, for example, reflects a high degree of racial resentment. + +Racial resentment was tightly linked to Mr Trump’s supporters. These results held true when we controlled for region, race and religion, among other factors: 59% of Trump supporters in the Republican primary scored in the top quartile on racial resentment, compared with 46% of Republicans who backed other candidates and with 29% of voters overall. Those who thought that more should be done to fight terrorism were also much more likely to support him. In the Gallup study, whites who lived in racially isolated areas had a higher opinion of Mr Trump as well. + +These findings cast doubt on the alarming notion that Mr Trump is propelled by a latent yearning for a strongman. Instead, they bolster the view that the candidate’s recent speeches painting a dystopian vision of black America racked by crime and unemployment were aimed not at black voters themselves, but rather at the kind of whites who tell pollsters that blacks are lazy and overindulged. + + + + + +Johns Hopkins + +Applied research + +A university tries to take on the social problems that surround it + +Sep 3rd 2016 | BALTIMORE | From the print edition + + + +BISHOP DOUGLAS MILES of Koinonia Baptist Church, in Baltimore, used to be embarrassed to be a Johns Hopkins alumnus. A girl once stopped talking to him when she found out where he studied. Other residents recall being told by their elders to run past Johns Hopkins in case they were kidnapped by the research hospital for experiments. The university did not help by reneging on promises in the 1950s and 1960s to build new housing for the city. Hundreds of mostly black residents (Baltimore is 63% black) were displaced when the university hospital expanded. The new development was reserved for university staff and students, and then fenced off so that locals could no longer walk on the streets where they once lived. The university became an island and, until fairly recently, its students were advised not to go into certain neighbourhoods. + +While Johns Hopkins has thrived, Baltimore has not. Between 2003 and 2014 the city received $2.8 billion in federal aid and another $2.2 billion in state assistance, yet a quarter of the population still lives in poverty. Nearly a third of high-school pupils fail to graduate on time. On August 10th the Department of Justice (DOJ) found that the city’s police department engaged in unconstitutional practices, including disproportionate rates of stops, frisks and arrests of black Baltimoreans, and used excessive force against minors and the mentally ill. One black man in his mid-50s was stopped 30 times in less than four years on suspicion of loitering. The DOJ found that people were publicly strip-searched during traffic stops and that police retaliated when civilians complained. + +Yet the relationship between the university and its host city has changed. Johns Hopkins is the biggest private employer in Baltimore. And Ron Daniels, the university’s president since 2009, has assumed the kind of responsibility for the rest of the city more often associated with a government than with a private institution. + +The university has promised to increase its use of local and minority-owned construction businesses, to favour hiring local residents, especially those from distressed communities, and to use local vendors. It has encouraged more than two dozen other Baltimore companies, including BGE, a large regional utility, which already relies on local suppliers, to do the same. Tim Regan, the head of Whiting-Turner a large construction firm which signed up, says that Mr Daniels has tremendous power as a convener. In April the companies he recruited pledged $69m over three years, kick-starting what Bishop Miles calls “the most significant economic and jobs initiative in the life of the city”. + +Johns Hopkins is helping to finish a long-delayed development on 88 acres (36 hectares) near the hospital; it is also overhauling the curriculum at nearby schools to emphasise science, maths and engineering. In May the university began working with the city’s health department to help provide glasses for school-age children. Extra screening is now done immediately, and children can pick their frames in a “vision van” parked outside their school. Johns Hopkins is not only a fund-raiser for the programme; it will also evaluate it, to make sure it is working as it should. + +The university’s Bloomberg School of Public Health works with the city’s police department. Daniel Webster, who heads its work on guns, has a project that crunches data to help study and reduce violent crime. He and Kevin Davis, the new police chief, who took over from Anthony Batts when Mr Batts, who was fired after the unrest in the city last year, are working together, getting officers to walk the beat and to focus on the worst offenders. The university is also helping to improve recruitment. + +All this will test the limits of what a university which excels at solving theoretical problems can do for a place marked by boarded-up houses and mistrust. Mr Daniels is undeterred. “So goes Baltimore, so goes Hopkins,” he likes to say. + + + + + +Lexington + +In Trump they trust + +Why the Republican nominee does not need to concern himself with policy details + +Sep 3rd 2016 | From the print edition + + + +SHERIFF JOE ARPAIO of Maricopa County, Arizona—a law-and-order populist who styles himself “America’s toughest sheriff”—sets much store by his gut. His gut tells him that his county, a sun-frazzled expanse of retirement villages and shopping centres around Phoenix, is safer when foreigners with no legal right to be in America are tracked down and locked up. That same instinct made the sheriff an early supporter of Donald Trump, lauding the New York businessman as he promised to build a border wall and deport an estimated 11m migrants in the country without the right papers. The ferocity of “Sheriff Joe”, a gruff, bearlike 84-year-old, could yet send him to jail: a federal judge recently recommended that he be prosecuted for defying court orders to cease patrols that target people by race. + +So it was striking, this week, to find Mr Arpaio rather relaxed after several days in which Mr Trump seemed to hint that his immigration policies might be about to soften—even to the point of giving interviews saying that he will focus deportation efforts on “bad guys” and other foreigners with criminal records, while pondering a more leisurely approach for those who have lived blameless working lives for many years. + +Lexington caught up with Mr Arpaio at the headquarters of the Arizona Republican Party in Phoenix, a day before Mr Trump came to the city to spell out details of his policies on immigration, after a swift detour south of the border to meet President Enrique Peña Nieto of Mexico. Asked how he would feel if, after sorting through 11m migrants, a President Trump allowed several million to remain, Mr Arpaio replied: “I would live with it, he’s my guy,” adding, “Everybody has the right to change a little.” In Mr Arpaio’s telling, he will follow Mr Trump “to the end” because, unlike the cast of career politicians who also sought the Republican presidential nomination, the property tycoon is not seeking the presidency “for his own advantage”. + +Motives matter a lot in Trump-world. A volunteer making telephone calls for Mr Trump at Republican headquarters in Phoenix, Diana Brest, says that Mr Trump can change any policy and have her vote. “I’ll forgive him, no matter what,” she says. She offered no such absolution to the Republican politicians who, during the presidential primary contest, called it unrealistic to say that 11m people can be thrown out. Politicians are “phoney people” who say things to look good, she asserts: they betray themselves with their “swifty eyes”. + +Though more people have moved from America to Mexico this decade than have gone in the opposite direction, it is instructive to ask Trump supporters why they think that Congress and successive presidents, of both parties, have not sealed America’s borders. They have no truck with talk of complex problems that defy quick fixes. Instead they see a conspiracy to leave the law unenforced, born of ill-faith and corruption. When a politician changes his line on immigration it is a betrayal. When Mr Trump does it, it is further proof that he’s not a politician, which is good. + +As it happens, Mr Trump’s big speech in Phoenix contained more to comfort his hardline base than to worry them. It followed a rather awkward performance in Mexico City, involving a press conference in which Mr Trump said that he had not discussed with Mr Peña Nieto his long-standing assertion that he will force Mexico to pay for his border wall. His Mexican host took to Twitter hours later to assert that he had begun their talks by making clear Mexico would not pay for a wall. Had Mr Peña Nieto said that to Mr Trump in front of the cameras, the day could have turned disastrous for the American. Those wondering what the trip was for received a part-answer a little later when Mr Trump contrasted himself with his Democratic rival, Hillary Clinton. She had been invited to Mexico but not gone, Mr Trump told his Arizona audience, taking the chance to feed conspiracy theories that she is deathly ill by commenting: “She doesn’t have the strength or the stamina to make America great again.” + +Mr Trump’s Phoenix rally began with testimony from a succession of speakers whose loved-ones were killed by illegal immigrants. “Countless Americans […] would be alive today if not for the open-border policies of this administration,” Mr Trump said, with special emphasis on the case of a 64-year-old woman “sexually assaulted and beaten to death with a hammer”. + +A tall, powerful, beautiful wall + +The Republican vowed to triple the number of deportation officers in the Immigration and Customs Enforcement agency, with orders to move fast to remove criminals who have evaded justice, joking that on that basis they might deport Mrs Clinton (“lock her up” roared the crowd in Phoenix with delight). On Day One of his presidency, he would begin expelling what he called 2m “criminal aliens”, naming gang members, visa over-stayers and those on welfare as special targets. He pledged to start work on an “impenetrable, physical, tall, powerful, beautiful” wall. + +Dig a bit, and there were small nods to realism: he talked of setting “priorities” when enforcing immigration (as the Obama administration does), but added that no one who entered the country illegally would be “immune” from deportation. In plain English, he is ditching his promise to swiftly deport 11m, and instead proposing to leave perhaps 9m or more in the shadows, unless they are arrested or come to police attention for any reason. + +His most chilling lines seemed to divide would-be immigrants along cultural and religious lines, saying America had to be honest that not every group can successfully assimilate. It has a sovereign right to choose “immigrants that we think are the likeliest to thrive and flourish,” he declared, which either means nothing or something rather frightening. It is also, at a practical level, impossible to implement. Mr Trump’s supporters do not care, leaving him free to say what he wants on immigration or anything else. His actual policies do not have much to do with it. + + + + + +The Americas + + + + +Brazil: Time for Temer + +The Latinobarómetro poll: Neither Trumpian nor Brexiteer + +Bello: The unspeakable and the inexplicable + + + + + +Brazil + +Time for Temer + +The new president takes over a country in crisis + +Sep 3rd 2016 | BRASÍLIA | From the print edition + + + +THE street vendors who set up around Brazil’s congress must have been disappointed. Police had expected thousands to gather for the closing stages of the impeachment trial of Dilma Rousseff, Brazil’s president. But when the senate voted by 61 to 20 to remove her from office on August 31st, the esplanade, bisected by a fence to prevent clashes between her foes and her supporters, was eerily empty. Her former vice-president, Michel Temer, who has been interim president since May, was sworn in hours later to serve out the remaining 28 months of her term. + +It was a muted end to a remarkable era. For the past 13 years Ms Rousseff’s left-wing Workers’ Party (PT) has dominated politics. The party broke barriers. Luiz Inácio Lula da Silva, Ms Rousseff’s predecessor and patron, became the first working-class president in 2003; she was the first woman to hold the job. The global commodity boom paid for programmes that helped 40m people lift themselves out of poverty. Many Brazilians remain grateful. + +But Ms Rousseff’s impassioned self-defence before the senate on August 29th moved few of them. The charge against her—that she tampered with government accounts to conceal the size of the budget deficit—was not an impeachable offence, she insisted. She compared her ordeal to the injustice and torture she had suffered as a left-wing guerrilla during Brazil’s military dictatorship of 1964-85. Conservative political and business elites were persecuting her again, this time to sabotage her pro-poor policies, she contended. + +In fact, her downfall was brought about by Brazil’s worst-ever recession, which is partly her doing, by the multibillion-dollar scandal centred on Petrobras, the state-controlled oil company, and by her own political ineptitude. The people hit hardest by her policies were those she sought most to protect. Nearly 12m Brazilians, about one worker in nine, are jobless, a third more than a year ago. The economy shrank 3.8% year-on-year in the second quarter of 2016, the government reported on August 31st. But with inflation close to 10%, the central bank had little choice but to keep its target interest rate unchanged at 14.25%. That, too, is largely Ms Rousseff’s fault. During her first term in 2011-14 she pressed the bank to ease monetary policy prematurely. + +Mr Temer now promises to revive the economy, largely by reversing her policies. His talk of privatisation, deregulation and fiscal discipline has cheered investors. “Our motto is to spend only what we collect,” he said in his first television address as president. His economic team, led by the finance minister, Henrique Meirelles, inspires confidence. The São Paulo stockmarket and the real, Brazil’s currency, have strengthened since Mr Temer took charge. The cost of insuring government bonds against default has fallen by a quarter. + +Among ordinary voters, though, the new president has little more support than the outgoing one. His approval rating is below 20%, according to recent polls. His Party of the Brazilian Democratic Movement (PMDB) is as embroiled in the Petrobras scandal as the PT, its ally for more than a decade. Half of Brazilians want a chance to choose a new president in a fresh election. This would heal wounds opened by the flawed impeachment process, says João Castro Neves of Eurasia Group, a consultancy, but it would also delay urgent economic reforms. Mr Temer has no intention of triggering an election by resigning. + +Now it’s Michel’s mess + +Instead, he will begin the Herculean task of cleaning up Brazil’s chaotic public finances. Ms Rousseff began her presidency with a primary surplus (before interest payments) of 3.1% of GDP and ended it with a deficit of 2.7%. That deterioration raised borrowing costs, which made the fiscal situation still worse. The overall deficit is an alarming 10% of GDP. + +If nothing is done, warns Vilma Pinto of FGV-IBRE, a think-tank, public debt will exceed 110% of GDP in 2022, double what it was when Ms Rousseff took office, and will keep on rising. That could lead to a default, or to a return of the hyperinflation that blighted the decade after 1985. That was tamed by Itamar Franco, the last vice-president who was thrust into the top job (by the impeachment on corruption charges of Fernando Collor). + +Mr Temer hopes to work similar wonders. He is counting on two measures to achieve that: a 20-year freeze on public spending in real terms and a reform of the pension system, which generously rewards retired workers at the expense of everyone else. Both require amending the constitution. The proposals stalled during the impeachment process. Now, the government promises, both will move ahead. + +Many analysts say they are not ambitious enough. The budget presented on August 31st did nothing to dispel those worries. It would reduce the primary deficit only modestly, to 2% of GDP. Under the proposed spending freeze, the government would not run a primary surplus before 2021, says Ms Pinto. Public debt would peak at 90% of GDP in the early 2020s. That would probably avert catastrophe, but it would still crimp Brazil’s capacity to respond to economic shocks, such as a sudden domestic slowdown or a flight by nervous foreign investors. + +Faster deficit reduction will be politically painful. Brazilians want more from public services, not less. A survey in July found that a third of Brazilians had dropped their private health insurance over the past year because of economic hardship; they now rely on public clinics. Some 14% of parents say they have withdrawn children from fee-charging schools. Plenty of wasteful spending remains that could be cut without hurting ordinary Brazilians, reckons Alberto Ramos of Goldman Sachs, an investment bank. Non-interest expenditure grew twice as fast as the economy under the PT. “It is hard to believe that all that was wise and efficient,” says Mr Ramos. + +Opposition from the PT will be ineffectual. Demoralised by recession and scandal, it is fielding half as many mayoral candidates in October’s local elections as it did four years ago. Its distinctive red star has disappeared from some candidates’ campaign literature. Lula, still its most popular leader, has been charged with obstructing the investigation of the Petrobras affair. He denies wrongdoing. Several other party leaders are serving prison sentences. + +As so often in Brazilian politics, the president’s friends may prove more troublesome. The spending freeze and the proposal to raise the retirement age need three-fifths majorities in both houses of congress to pass. Mr Temer’s PMDB wants them watered down, for example by ring-fencing parts of health and education spending (together a third of the federal budget). The odds of other structural reforms, to Brazil’s Mussolini-era labour laws or its Byzantine taxes, are slim. + +Mr Temer will thus have plenty to ponder on his long flight to the G20 meeting on September 4th-5th in China, his first official trip as president. In striving to be the next Itamar Franco he could suffer the fate of José Sarney, a vice-president who was unexpectedly promoted in 1985 after the end of military rule. Mr Sarney proposed a series of half-baked inflation-fighting plans that only made things worse. The resulting turmoil helped usher in a telegenic populist in 1989: Fernando Collor. + + + + + +The Latinobarómetro poll + +Neither Trumpian nor Brexiteer + +Latin America has different worries from the United States and Europe + +Sep 3rd 2016 | From the print edition + + + +THE year since The Economist last published the results of the wide-ranging Latinobarómetro survey of Latin American public opinion has been an eventful one. In three countries, voters rebuked populist left-wing governments: Argentines elected a centre-right president; Venezuelans and Bolivians used non-presidential votes to undermine the incumbents. Peru chose Pedro Pablo Kuczynski, a 77-year-old ex-banker, as president over the mildly populist Keiko Fujimori, daughter of a former strongman, Alberto Fujimori, who is in jail. The Dominican Republic re-elected its centre-right president, Danilo Medina. Only Guatemalans voted for a miracle cure. They elected as president a comedian with no political track record, Jimmy Morales, mainly because voters believed his claim to be “not corrupt”. + +Latin pragmatism looks like a welcome contrast to the rise in support for fringe candidates and causes in Europe and the United States. But this year’s Latinobarómetro poll suggest that Latin Americans are no more content with the status quo than are Brexit-voting Britons or Trump-drunk Americans. The proportion of Latin Americans who think the elites govern in their own interests is on average 73%, its highest level in 12 years. For the first time, the share of people who say their countries are going backwards is bigger than that of people who think they are progressing. + +Latin Americans do not fret about the same things as Europeans and Americans. Terrorism and immigration are not among their chief concerns. They are not in a protectionist mood: 77% favour greater integration between their countries and their neighbours. Inequality, the rise of which explains much discontent in Europe and the United States, has fallen in Latin America since the early 2000s. Latin anxieties are a cocktail of worries about the economy, crime and corruption (see chart). + +Economic optimism has been hurt by six successive years of deceleration after the end of the global commodities boom. Latin Americans’ satisfaction with the performance of their economies is at its lowest level since 2004. Unemployment is the main economic worry. But in Venezuela, which received an absurd commendation last year from the UN’s Food and Agriculture Organisation for reducing malnutrition, shortages outweigh joblessness: 68% of Venezuelans say the supply of food is the most pressing problem. + +Preoccupation with crime, which jumped in the late 2000s, remains high. In half the countries, including Mexico, Peru and El Salvador, it is the loudest complaint of 30% of respondents or more. Corruption comes first or second on people’s list of worries in four countries: Bolivia, Brazil, Chile and Peru. + +The measure is scandal-sensitive. In Brazil, where investigators revealed that governing parties took billions of dollars in bribes from Petrobras, the state-controlled oil company, graft is the top concern of 20% of the population. It comes just behind health, which became the biggest worry after the outbreak last year of the Zika virus, which causes birth defects. In every country two-fifths of people or more think corruption is increasing. + +Where disgust with the shenanigans of political leaders is strongest, support for democracy has dropped. It plunged by 22 percentage points to just 32% in Brazil from 2015 to 2016; in scandal-racked Chile it dropped 11 points, to 54%. In El Salvador, Guatemala and Nicaragua it is the lowest it has been in ten years. + +But that does not mean Latin Americans are ready to abandon democracy for something else. Overall, 54% say it is better than any other system, a proportion that has not changed much since 1995. Instead, they are channelling their discontent into activism. Outrage over corruption has inspired massive demonstrations in Brazil, Guatemala and Honduras. Thousands of Mexicans have protested against official impunity; now Chileans are demonstrating against inadequate pensions. + +Evidence of greater assertiveness can be teased out from Latinobarómetro’s data. Last year’s survey asked whether Latin Americans would be willing to protest for such goals as higher wages, better health care and democratic rights. On a ten-point scale, where ten is the highest level of enthusiasm, they ranked their willingness to demonstrate at six-to-seven, a slight increase from 2013. + +Changing attitudes towards violence are evidence of greater maturity and more assertiveness among ordinary citizens, argues Marta Lagos, Latinobarómetro’s director. Although Latin Americans say that violence from street crime is the most common sort, the most damaging to their country, they think, is domestic violence. The priority people give to domestic violence is new, Ms Lagos believes (although the question has not been directly posed before). It suggests that Latin Americans are beginning to challenge the culture of machismo, which is pervasive in some countries. Women in particular are less willing to suffer in silence. This represents a “huge cultural change”, says Ms Lagos. + +Latinobarómetro’s snapshot of opinion shows that the progress of recent decades has raised expectations, but that Latin Americans have little faith that today’s institutions can fulfil them. As Ms Lagos puts it, they are challenging established forms of leadership but have yet to invent new ones. Although Latin Americans have little appetite for the dictators of the past, new types of anti-democratic politics could emerge. Unless elected politicians offer answers to crime, low growth, inequality and corruption, less democratically minded leaders may provide them instead. + + + + + +Bello + +The unspeakable and the inexplicable + +Why did Enrique Peña Nieto invite Donald Trump to visit Mexico? + +Sep 3rd 2016 | From the print edition + + + +SOME leaders like their governments to be teams of rivals, or big tents or nests of brilliant specialists. Those are not the preferences of Enrique Peña Nieto, Mexico’s president since 2012. He rules through a tight coterie of loyal aides, many of whom worked with him in his previous job as governor of the state of Mexico (which surrounds Mexico City). Whatever their other qualities, they have often seemed impervious both to the imperatives of democratic politics and to the ways of the wider world. + +It must have looked like a brainwave to someone in Mr Peña’s inner circle to invite the candidates in the American presidential election to drop by. It would put Mr Peña on the world’s front pages as a statesman able to do business even with Donald Trump, the Republican candidate, who has made Mexico-bashing the leitmotif of his campaign. + +Almost any foreign-policy expert would have disabused him of the idea. “It’s a very misguided and highly risky initiative,” says one, Andrés Rozental, a former deputy foreign minister. Mexicans are accustomed to the issues of drugs, migration and trade protectionism surfacing during American election campaigns. But no modern candidate has been as offensive and aggressive as Mr Trump. And it is rare for a Mexican president to host candidates at this stage of an American campaign. Indeed, officials long insisted that the government could not rebut Mr Trump’s falsehoods about Mexico because that would be to intervene in their neighbour’s internal affairs. + +Languishing in the polls and needing to convince voters that he could act like a statesman, Mr Trump jumped at the invitation (Hillary Clinton, the Democratic candidate, no doubt has better things to do). Their hour-long meeting on August 31st at Los Pinos, the presidential palace, did indeed put Mr Peña in the headlines. For many Mexicans, the news was that their president failed to extract a public apology from Mr Trump for his denigration of the country’s migrants as “rapists” and “criminals”. + +In a prepared statement, Mr Peña duly gave a long-winded account of how Mexican emigration has fallen sharply, and of how 6m jobs in the United States depend on his country, and how the border should be seen as a “shared opportunity”. “Mr Trump,” he declared, “Mexicans deserve the respect of everyone.” + +Mr Trump, looking less ebullient than usual, responded that Mexicans are “amazing people”. Mr Peña can claim some credit for his visitor backing away from his previous threat to discourage American companies from building plants in Mexico. That is now a promise “to keep industry in our hemisphere”—a significant concession. But another of the “shared commitments” Mr Trump read out, without rebuttal, was “the right” to a border wall to keep out migrants. At least he had the tact on this occasion not to ask his host to pay for it, though that is still his policy. + +Any Mexican president might struggle to react to Mr Trump. Mr Peña has flip-flopped. He began by ignoring him, on those grounds of non-intervention. Facing domestic criticism, he then gave an interview in which he compared the American businessman’s “strident rhetoric” to that which brought Mussolini and Hitler to power. + +The invitation to Mr Trump thus smacked of an attempt by Mr Peña to distract attention from the countless domestic problems he faces. The economy continues to disappoint. The government is visibly divided as to how to handle a rebellion by extremist teachers against its flagship education reform. Violent crime is rising again. A fresh conflict-of-interest allegation has surfaced concerning the First Lady, this one involving a flat in Miami (which she denies owning). And Mr Peña has been accused of plagiarising part of his thesis for his law degree (a claim the university has confirmed). Even before the latest two scandals, his approval rating had fallen to 23%, the lowest recorded for a Mexican president this century. That is the harvest of his peculiar and provincial way of governing. + +Mr Peña may believe that he took a bold initiative by opening a dialogue with Mr Trump. His demand for respect is legitimate. But it should be delivered by citizen diplomacy within the United States, and conveyed after the election to the winner. By allowing his visitor to seem presidential, he has helped Mr Trump perform some rhetorical climbdowns that were electorally inevitable. Even if Mrs Clinton wins she will not thank Mr Peña for that. If he turns out to have helped Mr Trump get elected, many Mexicans will never forgive him or his party, and neither will much of the rest of the world. + + + + + +Asia + + + + +Uzbekistan’s president: An ailing despot + +Australia and the Pacific: Foam flecked + +Marriage in Japan: I don’t + +Surrogacy in India: The end of paid labour? + +Banyan: Agreeing to agree + + + + + +Uzbekistan’s president + +An ailing despot + +As their tyrant nears his end, the people of Uzbekistan hold their breath + +Sep 3rd 2016 | From the print edition + + + +WHETHER Islam Karimov, who has ruled Uzbekistan with astounding brutality for the past 27 years, is dead or alive, his era is almost certainly drawing to a close. Two questions now hover over his hapless people. Who will succeed him? And will they get a better deal? The one they have suffered under for so long could hardly be worse. Of the five post-Soviet regimes in Central Asia, Uzbekistan’s is widely regarded as the nastiest, its leader the most mercilessly paranoid. + +News of Mr Karimov’s death went viral among Central Asia watchers on Twitter on August 29th, when it was reported by Ferghana News, an independent Moscow-based agency that focuses on Central Asia, citing unidentified sources. Rumours of the 78-year-old president’s imminent demise have circulated for years in Tashkent, the capital, but this time they were more solid. In its first official announcement concerning the president’s health, the secretive regime revealed that Mr Karimov was in hospital with an undisclosed ailment. His daughter, Lola Karimova-Tillyaeva, then took to Instagram, admitting that her father had suffered a stroke. His condition, she said, was stable, his prognosis unknown. Celebrations for independence day on September 1st were cancelled. The government has not yet reacted to reports of the president’s death. + +If he is dead, what next? Mr Karimov has not publicly planned for a transition from his rule, which began in 1989 when the Kremlin appointed him as communist boss of Uzbekistan. After the Soviet Union collapsed in 1991, he became president of an independent state. Mr Karimov has clung to power by rigging elections—last year he was re-elected with supposedly 90% of the vote—and by ruthlessly crushing dissent. In 2005 his security forces gunned down demonstrators in the turbulent city of Andijan. The official tally of victims was 187; independent observers put the figure at between 300 and 1,000. + +Torture is “endemic in the criminal-justice system”, says Human Rights Watch, a New York-based monitor, which describes the country’s record under Mr Karimov as “atrocious”. Tales of prisoners being boiled alive surfaced in 2002. Political opposition and independent media are banned. Some 10,000 political prisoners languish in jails. Though most Uzbekistanis are secular-minded and practise an easy-going brand of Islam, extremism is festering thanks to the repression of any form of religious opposition. Hundreds of Uzbeks are thought to be fighting for Islamic State in Syria and Iraq. A citizen of Uzbekistan is among those suspected of attacking Istanbul airport in June. + +Uzbekistan’s clans have been jockeying over the succession for years, eager to preserve the economic spoils amassed during Mr Karimov’s long rule. Unless it has been secretly settled already, a power struggle is likely to intensify. Outside powers will also be manoeuvring. Russia, the former colonial master, will be eager to assert its interest in what the Kremlin sees as its backyard. China, with its more mercantile approach, will want to secure its gas imports. And the United States will continue to woo Uzbekistan as an ally in the war against terrorism, mindful of the country’s border with Afghanistan. + +The president’s eldest daughter, Gulnara Karimova, was once groomed to inherit the crown, but a few years ago she had a spectacular fall from grace, leaving the family tainted by scandal. In 2014 she was put under house arrest in Tashkent and may be nervously awaiting her fate in a post-Karimov era. The presidency may yet be kept in the family through the president’s younger daughter, Lola, a sworn enemy of Gulnara, but she and her businessman husband, Timur Tillyaev, are not thought to be part of the ruling circle. + +Spooks and stalwarts + +Two long-serving insiders probably have better chances: Shavkat Mirziyoyev, the prime minister, and Rustam Azimov, his deputy, though some say Mr Azimov has been arrested. Others say that Rustam Inoyatov, head of the National Security Service, the country’s most powerful and most fearsome institution, will be the final arbiter and that he may arrange for a dark horse to emerge. + +Whoever succeeds him, Mr Karimov will bequeath a troubled legacy. Though Uzbekistan is the most populous of the “stans”, with 31m people and plenty of minerals, and was once widely considered the most hopeful, it has become an economic basket-case, riddled with corruption and run along Soviet lines. A black market flourishes. Foreign investors are deterred by a history of assets grabbed. Vested interests in Tashkent rake in the cash from exports of gas, gold and cotton (reaped by a million forced labourers every year), while ordinary Uzbeks struggle to get by. Many depend on remittances from migrants to Russia, but these are dwindling as recession bites there, too. + +Whoever succeeds Mr Karimov has an unenviable choice. He (or conceivably she) could use the same brutal methods to stem the torrent of disaffection that may burst forth after his demise, or he could loosen up a little and risk being swept away in a deluge of popular anger. Many analysts are pessimistic. “The system that Karimov built can continue after him, self-replicating regardless of who sits at the top,” says Daniil Kislov, editor of Ferghana News. “There will not be a thaw.” + + + + + +Australia and the Pacific + +Foam flecked + +It is not so easy being the biggest fish in the sea + +Sep 3rd 2016 | CANBERRA AND WELLINGTON | From the print edition + + + +AUSTRALIA recently announced that it would develop a new white paper on foreign policy—its first since 2003—reflecting recognition of both a sense of drift in its traditional partnerships and an array of strategic challenges that did not exist 13 years ago. Nowhere is this more evident than in the South Pacific, an expansive, sparsely populated region that Australia has long considered its own backyard. “Our relationships in the South Pacific have drifted off course,” says Michael Wesley, a national-security expert at the Australian National University. “There’s no real sense of an Australian agenda of what we want to achieve.” + +The most obvious test in the Pacific is dealing with China. Since convening the first China-Pacific Island Countries Development Forum in 2006, China has disbursed nearly $1.8 billion in aid and investment to Pacific countries, building roads and hospitals and opening mines. More is planned as part of the “Maritime Silk Road” strategy. + +Debate rages in Australia about how worrying this is. China has no territorial claims in the South Pacific, unlike in the East and South China Seas. Chinese naval visits to the region are handled cautiously, and Chinese diplomats are wary of antagonising Australia and New Zealand. China’s activity in the area is seen by many as part of its global hunt for resources, alongside an innocuous desire to raise its diplomatic standing. + +But as China’s special envoy to the Pacific islands himself points out, if resources were the only objective, the better strategy would be to abandon the Pacific and focus exclusively on Australia. China clearly has broader objectives. On occasion its officials give vent to their Pacific counterparts about American assertiveness and Australasian complicity. On a visit to Fiji in 2012, Wu Bangguo, a senior functionary, saluted the principle of non-interference, encouraged Fiji to adopt a “Look North” policy and complained about the “bullying” of small countries by big ones. + +The audience would have been receptive. Frank Bainimarama, Fiji’s prime minister, who seized power in a coup in 2006 but has since been elected, is a thorn in Australia’s flank. He will not attend the upcoming Pacific Islands Forum, which includes Australia and New Zealand, and has established a rival regional organisation, the Pacific Islands Development Forum, which excludes them. He has also snubbed Australian efforts to broker talks on reconfiguring the regional architecture. Big, rich countries often have prickly relations with their smaller, poorer neighbours. Nowhere is that plainer than in the Solomon Islands, where Australia has endured accusations of neo-colonialism while running a military and police operation for the past 13 years. (Australia was actually the colonial administrator of both Papua New Guinea, or PNG, and Nauru.) + +Talk to a Pacific-island official and you will invariably hear two things in quick succession. First, a paean to the strength of his country’s relationship with Australia, the close personal friendship he has with this or the other Australian politician and the deep esteem in which his people hold the Australian people. Then comes the catalogue of grievances: we give Australians visas on arrival but they don’t do the same for us; Australian politicians just turn up in our country and expect to meet high-ranking government officials; when political disagreements surface, the Australian government, as one diplomat complains, “uses aid as a whip”. + +Australia’s refugee policy has only deepened such feelings. For most of the past 15 years Australia has sent asylum seekers who arrive “spontaneously”—by boat and without a visa—to detention centres it runs in PNG and Nauru. There hundreds have stayed, often for years, as Australia tries to entice third countries into accepting them or the migrants into giving up and going home. Fiji’s foreign minister calls that policy “inconsiderate, prescriptive, high-handed and arrogant”. + +PNG has accepted several dozen refugees; Australia may have hoped it and other Pacific countries would accept more, but that prospect has stirred ill will. A provincial governor in PNG complained on an Australian radio programme that accepting refugees in exchange for Australian cash is “basically forcing ourselves to grovel at the feet of Australian neo-colonialism”. In mid-August Australia announced that it would close the camp in PNG, but did not say when or where the refugees would go. + +The longer the saga drags on, the more leverage Australia loses in the region. PNG is growing characteristically unruly as elections approach, this time over allegations of corruption directed at Peter O’Neill, the country’s prime minister. Australia’s response has been unusually subdued, which many attribute to its desire to keep the government of PNG onside. For similar reasons Australia has found it difficult to confront Nauru’s government as it sacks senior judges and suspends opposition MPs. Australia’s lofty rhetoric about transparency and good governance looks hypocritical to the entire region, thanks to the secrecy and backroom dealings surrounding its refugee policy. + +This state of affairs would seem to leave the Pacific open to wooing by a rival suitor, skilled at persuasion and the rosy-fingered arts of soft power. Fortunately for Australia, its rival is China. Countries that initially welcomed Chinese loans for infrastructure projects, coming as they do without political conditions, have grown nervous at the scale of their debt. The sight of Chinese workers building roads while domestic economies wobble has stirred popular resentment, as have Chinese purchases of local assets and businesses. China’s efforts to whip up support among Pacific nations for its position on the South China Sea have failed: only Vanuatu, long in China’s camp, has rallied to its side, while Fiji and PNG have remained steadfastly neutral. Still, Australia is clearly rattled: a white paper on defence published earlier this year declares an intention to “work with Pacific Island countries” to “limit the influence of any actor from outside the region with interests inimical to our own”. + + + + + +Marriage in Japan + +I don’t + +Most Japanese want to be married, but are finding it hard + +Sep 3rd 2016 | TOKYO | From the print edition + +An ever-rarer sight + +SEIKO, a 35-year-old journalist in Tokyo, is what the Japanese refer to as “New Year Noodles”. The year ends on December 31st, and, by analogy, the period when a Japanese woman is deemed a desirable marriage prospect ends after 31. It could have been worse: the slang term used to be “Christmas cake” because a woman’s best-before date was considered to be 25. + +Soon a new expression may be needed: men and women in Japan are marrying later, or sometimes not at all. Since 1970 the average age of first marriage has risen by 4.2 and 5.2 years for men and women respectively, to 31.1 and 29.4. The proportion of Japanese who had never married by the age of 50 rose from 5% in 1970 to 16% in 2010 (see chart). + + + +Something similar is happening in other rich countries, but Japan leads the way in Asia. (The proportion of South Koreans who have never married by 50 is 4%, for example.) And whereas, in the West, the decline of marriage has been accompanied by a big rise in the number of unmarried couples living together, only around 1.6% of Japanese couples cohabit in this way. So in Japan fewer marriages means fewer babies—a calamity for a country with a shrinking and ageing population. Only 2% of Japanese children are born outside marriage, compared with over 40% in Britain and America. + +Some of the reasons for the flight from marriage in Japan are the same as in other rich countries. Women are better educated, pursue careers, can support themselves financially and don’t see the traditional family as the only way to lead a fulfilling life. Some of the details are different in Japan, however. Couples are expected to have children shortly after getting married, so women who want to delay childbearing have a strong incentive to delay marriage. Even so, a large majority of Japanese still want to get married eventually: 86% of men and 89% of women, according to a survey published in 2010 by the National Institute of Population and Social Security Research, a government agency. + +Economics is a big part of the problem. Women seek men with financial security. Men want to be able to provide it. This is hard, however, when more and more young ones are stuck in temporary or part-time jobs. “I don’t want my wife and children to miss out on experiences because we can’t afford them,” says Junki Igata, a 24-year-old trainee at an international hotel chain, who says he will put off marriage until his mid- or late thirties. Men in part-time jobs are less likely to be married than full-timers. + +The opposite holds for women: there are more unmarried women among full-time professionals than part-time ones. The problem for them is the persistence of a traditional view of marital responsibilities, which makes it especially hard for a Japanese woman to juggle a full-time career with children. Her husband will often want her to give up work. (Seiko’s boyfriend asked her to do so after only three months together; she refused.) Also, domestic chores are unevenly shared in Japanese marriages: men do only an hour and seven minutes of housework and child care a day, compared with around three hours in America and two-and-a-half hours in France. + +People are finding it harder to meet, too. The days of omiai, or arranged marriage, are more or less gone. University students spend their free time joining clubs to bolster their CVs as good jobs become scarcer. Workers toil for long hours. Some reckon men in particular have become shyer (or lazier) about approaching prospective mates. + +High expectations pose another barrier. Takako Okiie, a “concierge” at Partner Agent, a sleek matchmaking agency manned by perfectly made-up women, says clients are often all “me, me, me”. They want a dream partner (Ms Okiie says it takes 18 months to knock this out of them) or, at the very least, what Japan refers to as the “three averages”: average income, average looks, average education. + +The difficulty young Japanese have in pairing up is one reason why the fertility rate has plunged. The number of children a Japanese woman can expect to have in her lifetime is now 1.42, down from 2.13 in 1970. Little wonder the population is shrinking. + +Some fret about a rise in the number of isolated people and “parasite singles”: people who live with and depend on their parents well into adulthood. The state can provide economic support, but the sort of civic groups and community associations that help people feel integrated into society have weakened in Japan as elsewhere. The once-tight connection between workers and their company has loosened too with the decline of jobs for life. “I worry about what will happen when these people’s parents die,” says Masahiro Yamada, a sociologist at Chuo University who coined the term “parasite single”. + +Not many singletons have boyfriends or girlfriends, even if they are neither otaku (men who are obsessed with anime or computer games) nor hikikomori (those who lock themselves away in their rooms). Mr Yamada reckons that if people aren’t marrying and aren’t dating, they must be doing something to satisfy their need for intimacy. He is researching whether they are opting for sexual and romantic alternatives such as prostitutes, romantic video games, celebrity obsessions, pornography or pets. + +Shinzo Abe, the prime minister, is concerned. His government wants women to have more babies. It would also like marriage to remain the basis of family life. It has paid subsidies to towns that organise dating events, tried to create more nursery places and this week announced a bid to scrap a spousal tax break that discourages married women from earning more than 1.03m yen ($10,000) a year. + +Such tinkering may help at the margins. So too would shorter working hours and—more important—an acceptance by Japanese men that they can’t get married on the terms their fathers did. Governments are mostly powerless to direct such cultural change, however. Japanese men and women will either have to figure out ways to live together—or remain alone. + + + + + +Surrogacy in India + +The end of paid labour? + +The government wants to ban payments to surrogate mothers + +Sep 3rd 2016 | ANAND | From the print edition + +Wombs for rent + +KOKILA, a young but weatherbeaten mother, reclines in a swivel chair, laughing at a silly question. How hard is her work as a surrogate seven months pregnant with another woman’s child? “It’s relaxing,” Kokila says in a mix of Gujarati and Hindi, “Much easier than working the fields.” As a manual labourer, she is used to earning 100 rupees a day ($1.50). She stands to earn 450,000 rupees at the end of her months spent chatting with other expectant surrogates. + +Upstairs, in another part of the clinic, Bharti Dali and her husband speak of their joy at meeting their second daughter ten days ago, thanks to another surrogate staying at the clinic. They named her Saina, just like their first daughter, who died in a car accident at the age of 18. They regard the new Saina as a miracle. What both Saina’s parents and Kokila have done, however, would be illegal under a new draft law, unveiled on August 24th, which would ban paid surrogacy entirely. + +Commercial surrogacy came to India in 2002 and went transnational within a year, when a British couple “commissioned” a pregnancy. Fertility clinics around the country piled into the trade, arranging surrogacies for foreign and Indian clients alike. The industry was big—a common estimate put its turnover at $2 billion a year—but unregulated and chaotic. It contracted sharply last November, however, when the government moved suddenly to block foreign nationals from hiring surrogates. The proposed law would kill the business off almost entirely. + +The news is a blow to Anand, the centre of Indian surrogacy thanks to the Akanksha clinic, run by Nayana Patel. Counting healthy twins delivered on August 30th, Dr Patel has brought 1,122 babies into the world by surrogacy. Parents pay her roughly 1.8m rupees ($27,000) for a single baby, of which about 400,000 rupees typically go to the surrogate. Her new glass and steel clinic looks like a plush spaceship, plopped down amid green potato fields. It was built to attract foreign would-be parents, though now there are none: the last foreign babies were born in July. + +Left-wing and feminist activists in India have decried commercial surrogacy as exploitation for years. Carrying a child poses a risk to any mother’s health, and surrogates are often implanted with several of a client’s embryos at once, to maximise the chance of a viable pregnancy. Most deliver by caesarean section, and the vast majority are poor or illiterate women who may have only a weak grasp of their contractual rights. Commercial surrogacy is illegal in most countries. + +Dr Patel rejects the notion that she and her clients are exploiting anyone. The women paid to stay in her on-site dormitory seem pleased with and proud of their work. Kokila says she is lucky to have begun her surrogacy before any ban takes effect: her pay will go a long way towards bringing up her own two children. + +Sushma Swaraj, India’s foreign minister, complains about decadent celebrities who already have children yet seek more babies through surrogacy. The complaint is aimed at Aamir Khan and Shah Rukh Khan, film stars who have gently criticised the government for its illiberal tendencies. What “started as a necessity, has become a hobby of sorts,” Ms Swaraj claims. That, she argues, justifies a host of restrictions: only childless, heterosexual Indian couples, married for five years or more, the wife aged 23-50 and the husband 26-55, will be allowed to use the procedure if the government’s plan is adopted. Moreover, surrogacy must be “altruistic”, ie unpaid, with only a “close relative” of the mother eligible to be the surrogate. Dr Patel estimates that only 25 of her clinic’s 1,122 babies would have passed muster. Ms Dali, who is over 50, would be among those barred from turning to a surrogate under any circumstances. + + + + + +Banyan + +Agreeing to agree + +South-East Asian summitry is the apogee of form over substance. That may be no bad thing + +Sep 3rd 2016 | From the print edition + + + +FOR world leaders, the prospect of a day spent milling around a gleaming new conference centre in Hangzhou, China, at the G20 summit this week, with nothing to show for it but an anodyne communiqué, must be depressing enough. Worse is the knowledge that many of them will then head straight for the East Asia Summit, an annual jamboree hosted by the ten-member Association of South-East Asian Nations, or ASEAN, to be held this year in Vientiane, the capital of Laos. Whatever skills President Xi Jinping of China may display in concealing an absence of purpose at the G20 were surely learned from South-East Asia. When it comes to elevating form over substance, and confusing a proliferation of meetings and acronyms for a deepening of ties, ASEAN is the Zen master. + +Laos has what may be the world’s most closed political system after North Korea. The last ASEAN summit held there, in 2004, led to the construction of sleepy Vientiane’s first high-rise. As for the few visiting media, the communist official appointed as spokesman for the occasion responded to most questions by blinking. This time the presidents of America and Russia, the prime ministers of China, India and Japan and 5,000-odd other foreign officials and journalists are about to descend on a city that is no bigger than the obscure Thai provincial capital on the opposite bank of the Mekong river. + +At a meeting of ASEAN’s foreign ministers in Vientiane in July (the AMM, since you ask), fluttering welcome flags lined the streets leading to the convention centre—the cathedral of summitry, often bearing signs of hasty completion. The youngish new foreign minister displayed a suavity that was absent a dozen years ago. Yet no one had warned the chatty student volunteers about the boisterous foreign press. They were left speechless when South Korean journalists got into a shoving match with a North Korean minister’s bodyguards. + +In the new cathedrals, the “ASEAN way” prevails. Like many other dogmas, this one is tautologous. At its squidgy centre sits the hallowed principle of “consensus”. A consensus about what? You do not begin to grasp the way until you grasp that the first, overarching consensus is to have a consensus, usually in the form of a post-summit joint statement. The consensus can, as a Singaporean diplomat, Bilahari Kausikan, puts it, be goals that everyone knows are unattainable. Or it can be extraordinarily bland. + +If there is any excitement, it tends to come from outside the cathedral. At the East Asia Summit in Pattaya in Thailand seven years ago, protesters invaded the convention centre; the Chinese, Japanese and South Korean leaders had to be airlifted to safety and the summit cancelled. Banyan found the Thai finance minister on the beach, the trousers of his impeccable suit rolled up, helping foreign dignitaries into rubber dinghies. + +Some romantics put this agreement not to disagree down to a beguiling regional culture of pacifism, fine manners and face-saving. Sorry, lah! South-East Asia has had more than its share of modern horrors, including genocides (eg, Cambodia), civil wars (Vietnam and, still, Myanmar), race riots (Malaysia, Singapore), coups (Thailand) and pogroms (Indonesia, Myanmar again). Visceral ethnic, religious and linguistic antagonisms still lurk just beneath the surface in even the most peaceable-seeming of South-East Asian societies. + +And that is the point. A modicum of cohesion, order and civility became—Mr Kausikan again—central to a grouping in which none of those qualities could be taken for granted. Formal voting would only create winners and losers, risking rupture. So bloodless consensus-building it is. From this follows another hallowed principle, that of non-interference. That is how, for years, Myanmar’s oppressive generals were allowed to run their country into the ground with not a peep from fellow members of ASEAN. + +Prioritising form over substance has clear drawbacks, including a tendency towards pomposity—as when ASEAN declared itself a nuclear-free zone. But members remember ASEAN’s provenance. The five founders in 1967 (Indonesia, Malaysia, the Philippines, Singapore and Thailand) had their differences; Indonesia had just waged an undeclared war against Malaysia. But they came together to confront the threat of Soviet-backed communism emanating from Vietnam. + +The cold war is long over, and ASEAN has expanded to include communist or formerly communist countries—Vietnam, Cambodia and Laos. But, more than ever, cohesion is called for, thanks to a new great-power contest between China and America being played out in the South China Sea. At an AMM in Phnom Penh in 2012, China sought to apply pressure through Cambodia, a near-client state, to have even the tamest reference to growing Chinese assertiveness in the sea excluded. After fierce bickering behind the scenes, no joint communiqué was issued—a first. + +It was, says a senior ASEAN diplomat, a “near-death experience”. At best, it threatened to make a mockery of the hallowed “ASEAN centrality”; at worst, it might have blown the club apart. Since then, and despite redoubled lobbying by China following an international tribunal’s sweeping judgment against its maritime claims, even tiny Laos, beholden to China but resenting it, will strive to avoid a repeat. + +The bland leading the bland + +For now, it suits the great powers to court ASEAN, taking part in its forums and indulging its notions of centrality. Even China would hate to be blamed for the club’s demise. And so ASEAN summits continue to proliferate. + +That is no disaster. For all their imperfections, they are the only game in Asia, a region with a heap of problems and a dearth of structures. They provide a rare opportunity for global leaders to build trust in bilateral meetings on the sidelines. And, for ASEAN, a scintilla of influence is preferable to none at all. + + + + + +China + + + + +Xinjiang: The race card + +Social media: Posers for the party + + + + + +Xinjiang + +The race card + +The leader of a troubled western province has been replaced. He will not be missed by its ethnic Uighurs + +Sep 3rd 2016 | From the print edition + + + +WHEN he took over in 2010 as the Communist Party chief of the western province of Xinjiang, Zhang Chunxian was portrayed by state media as a young, media-savvy official with a mission: to crack down hard on its separatists but also to foster “brotherly affection” between ethnic groups in the poor, violence-torn region. On August 29th Mr Zhang was moved to a new, as yet undisclosed, job, having claimed some success in his fight against Islamist “extremism”. The region’s ethnic divide, however, remains bitter. + +Uighurs, a mostly Muslim ethnic-Turkic people who make up nearly half of Xinjiang’s residents, have particular reason to grumble. Mr Zhang was sent to Xinjiang partly, officials said at the time, to improve the lot of people living in poorer, Uighur-dominated, areas (he is pictured, arm raised, meeting some of them last year). A few months earlier an explosion of rioting between Uighurs and ethnic Han Chinese, who form more than 90% of China’s population, had left around 200 people dead in the provincial capital, Urumqi (see map). Officials believed that poverty and unemployment among Uighurs was fuelling unrest. Mr Zhang, however, did little to boost Uighurs’ morale (or, possibly, to impress leaders in Beijing—some analysts speculate that he may now be sidelined). Restrictions in some areas on displays of Muslim faith, such as observing Ramadan or wearing face veils, made many even angrier. + + + +So too did the security clampdown that Mr Zhang maintained after taking over from his hardline predecessor. In spite of it, the violence continued. A spate of attacks in 2014 included some of the bloodiest in years blamed on Uighur militants: 33 slain in March that year by knife-wielding assailants at a railway station in Kunming in the south-western province of Yunnan; 43 killed in April, including four attackers, at a street market in Urumqi; more than 100 shot by police or killed by attackers in July near Kashgar in southern Xinjiang. Since 2014, there appears to have been a considerable decline in large-scale violence. But it is possible that smaller-scale incidents go unreported. Despite his unusually relaxed manner with journalists, Mr Zhang did not make it easy for foreign ones to visit Xinjiang. Police kept them away from trouble-spots (in his previous role as Tibet’s party chief, Chen Quanguo, Mr Zhang’s successor, was even less keen on them). + +One tool that Mr Zhang used to keep tabs on Uighurs was the inaptly named bianmin, or “convenient for the people” card. This was, in effect, a new kind of internal passport, required for use by people from Xinjiang who were living away from their home district in other parts of the province. The card bore contact details of named officials in the bearer’s hometown. This enabled someone inspecting it to alert the authorities quickly, and ensure a rapid response, if a troublemaker was found. Uighurs often had to show the card at security checkpoints, when they boarded long-distance transport or when they checked in at hotels. Han Chinese rarely had to produce one. Uighurs called it the yeshil kart, or “green card”, because it made them feel like immigrants in their own country. + +In May, two years after introducing it, Xinjiang’s government abolished the card. Official media said one reason was that its use had given rise to bribery. Uighurs often had to pay large backhanders to get hold of one. But ordinary identity cards are still often used to monitor the movement of out-of-town Uighurs. As a result of tighter controls on internal migration, the number of Uighurs from the south of the province working in Urumqi, in the north, has fallen sharply in recent years. Street stalls in the city, at which many such migrants once worked, are now conspicuously rarer. + +For years after the rioting in 2009, the authorities made it nearly impossible for many Uighurs to obtain foreign passports. They feared that those who travelled abroad might be infected by international jihadism. In recent months, however, the authorities have made it easier for some Uighurs (usually better-off and better-connected ones) to get them. As with the repeal of the bianmin card, however, this does not mean that the authorities are ready to relax their grip on the region. On August 30th an attack on the Chinese embassy in Bishkek, the capital of Kyrgyzstan, which borders on Xinjiang, will have compounded their anxieties about global terror. Three Kyrgyz staff were injured when an unidentified suicide-bomber blew himself up outside the compound. + +More likely is that Xinjiang’s government is more confident in its other methods of control. These include the fencing in of Uighur neighbourhoods in Urumqi’s south, with checkpoints at the entrances. Police visit homes to identify any newcomers. A QR code is attached to the door of each apartment. An officer scanning this can view photos of authorised residents. Now that the bars of the cage are stronger, the government feels it can give the prisoners a little more room. + + + + + +Social media + +Posers for the party + +How an online forum catches censors unawares + +Sep 3rd 2016 | BEIJING | From the print edition + + + +IN CHINA, the battle to control information is largely waged online. The Communist Party blocks most foreign social media, routinely censors dissenting views and punishes those who repeatedly speak out. It employs around 2m people to police the internet and bombard users with positive messages about the regime. Yet criticism of the party still bubbles up. Even as the authorities try to tighten controls, netizens devise new ways of airing their views more freely. Zhihu, a question-and-answer site on which people mostly ponder mundane topics such as fitness or films, has emerged as a surprising springboard for political discussion. + +Internet users everywhere migrate between social-media platforms as preferences change. But in China a site’s popularity is determined as much by users’ pursuit of freedom as it is by their love of fashion. Weibo, a Twitter-like microblogging site, gained a colossal following after it was launched in 2009 (Twitter itself is blocked). Many users relished the opportunity to air sensitive views and link up with like-minded people. It has since been eclipsed by the rise of WeChat, a messaging app which the authorities find less threatening, and so censor less. + +Zhihu, meaning “Do you know?” in classical Chinese, started in 2011 as a copycat of Quora, an American site. It is now China’s most popular question-and-answer portal, with 100m monthly active users (compared with Weibo’s 261m and WeChat’s 800m). It has evaded some of the strictures suffered by other forums because it is neither a news site nor a means of exchanging salacious videos (a new preoccupation for regulators, who recently called for 24-hour monitoring of live-streaming sites). Zhihu targets young urban professionals, who in China tend to be more willing than others to comment on sensitive topics. In January Zhihu users expressed doubts about the reliability of a televised confession made by a bookseller from Hong Kong, Gui Minhai, who is being detained by Chinese police for selling gossipy books about the country’s leaders. + +Though Zhihu does not provide news coverage, questions raised on it sometimes generate news stories. In May former university classmates of a 29-year-old environmentalist, Lei Yang, posted an account on Zhihu of Mr Lei’s death in police custody, raising several queries that challenged the official explanation. “We demand to know more. We demand that our questions be answered,” they wrote. News of this spread rapidly on other social media, forcing state media to look into the story. Two officers were eventually arrested for “neglect of duty” in their handling of the case—an apparent concession by the authorities to the public’s outrage. + +Sometimes it is the answers on the site that create an online sensation. Early this year a 21-year-old man with terminal cancer responded to the question “What is humanity’s greatest evil?” with the answer “Baidu”, the name of China’s biggest search engine. He accused it of profiting from distorted information after his search on Baidu for a cure led him to fork out for expensive and dodgy medical treatment from an institution that had paid to raise its search ranking (he subsequently died). The regulator has since ordered Baidu to give less weight in its search results to the amount advertisers pay. + +For its part, Zhihu uses an algorithm that rewards answers from experts, ranking them higher than posts by amateurs. Experts often correct and comment on each other’s responses, too. This enhances the site’s credibility. When news emerged last year that new running tracks in several Chinese schools were made from toxic materials, a heavyweight academic posted extensive information on Zhihu about how such tracks could harm pupils. By providing authoritative insights into topical issues, Zhihu is helping to shape political debate, says Ma Tianjie, a blogger in Beijing. + +Zhihu is still vigilant. Like other Chinese portals, it warns users against “endangering national security” and “spreading rumours”. Sometimes it removes questions, such as one in December asking about the arrest of labour-rights activists in the southern province of Guangdong. More often, controversial answers are deleted, leaving anodyne responses to questions such as: “Is [the prime minister] Li Keqiang doing the right thing to avoid the ‘middle income’ trap?” A page on Zhihu run by the US embassy in Beijing (at the invitation of the site’s owners) was taken down in May. A WeChat account run by the Communist Youth League accused the page of waging a “public-opinion war” and trying to “destroy China”. + + + +Caution may not protect Zhihu forever. Another Chinese question-and-answer site, Fenda, on which celebrities answer questions for cash, has been offline since early August. What it described as a temporary closure to allow it to carry out an upgrade has lengthened into weeks, prompting speculation that the site has been closed for good. It may be an early target of a new government campaign, made public this week, against sites that promote “Western lifestyles” or hype celebrity gossip. Fenda won notoriety in May after Wang Sicong, the son of one of China’s richest men, responded to the question “What is your favourite sexual position?” His answer, that he would do whatever gave his partner pleasure, may not have been discreet enough. + + + + + +Middle East and Africa + + + + +Nigeria’s food crisis: Hunger games + +South Africa: Uncivil war + +Egypt’s economy: Of bread, bribes and fungus + +Guinea and the haj: The pilgrims’ tale + +The war on Syria’s doctors: The ultimate barbarity + + + + + +Nigeria’s food crisis + +Hunger games + +Famine looms in areas devastated by Boko Haram + +Sep 3rd 2016 | BAMA | From the print edition + + + +AT A tiny air force clinic in Bama, a wretched town in north-eastern Nigeria, a military doctor is trying to insert a drip into a starving child. He gives up on the two-year-old’s arms and labours with a needle just above his brow. But that vein has collapsed too, and blood seeps through the pinprick. Half-dressed and dirty, the baby is bundled off to a quieter room. “He’s going to die if I can’t get it in today,” the medic says, following him out. + +Scenes like this are common in Borno, the state worst-affected by Nigeria’s insurgency, Boko Haram, which is affiliated to Islamic State. In Maiduguri, its capital, camps for the internally displaced are teeming with bloated-bellied babies. Their shoulder-blades stick out like wings. When a bereaved mother collapses at a clinic run by Médecins Sans Frontières, a non-governmental organisation, staff barely blink: they see hundreds of underfed children every day. + +All told, the UN estimates that 240,000 children in Borno are suffering from severe acute malnutrition—the deadliest category of it. More than 130 will die each day without assistance. Across the wider north-east of Nigeria, a population equivalent to New Zealand’s is in need of food aid. In Abuja, the country’s sleepy capital, humanitarian co-ordinators compare the crisis to those of South Sudan and the Central African Republic. Unlike them, Nigeria cannot excuse itself as a failed state. It is Africa’s second-biggest economy. Things should never have got this bad. + + + +That they did is largely because of Boko Haram. The jihadists want to establish a caliphate in Nigeria: until early last year they occupied a territory the size of Belgium. But they are hopeless administrators, skilled only in violence. Rather than wooing neglected villagers, they pillaged food, stole cattle and poisoned water. Instead of using farmers to feed their fighters, they held them under lock and key. “They wouldn’t allow us to come and go,” says one woman, who fled to Bama’s 10,000-person camp. “Only if your husband was with Boko Haram did they give you food.” + +Mercifully, the insurgents have been pushed out of most big towns in the north-east over the past 18 months, though they still strike smaller villages, and camp out in the bush. Soldiers say that landmines litter farmers’ fields, making it dangerous to grow food. Borno is now entering its third season without a harvest. Where food is available, prices have soared. Vendors in Maiduguri’s Monday market, a favourite of the suicide-squads, say that the prices of some staple grains have trebled. Those who can find supplies at all are the lucky ones. + +Nigeria’s government mutters about sending displaced people home, but many reclaimed towns are still in lockdown. There is hardly a building standing or a soul on the street in Bama, once a city of 250,000 people: only roofless walls covered in Arabic scrawl, and fallen power lines. Its closed-off camp depends entirely on food aid, like many others in the state. But Borno’s roads are often raided, so aid is in short supply. Soldiers in Bama were sharing out their rations before international help arrived in May. + +The Islamist desolation + +In other areas, the army is accused of exacerbating the food crisis by closing markets (which could be bomb targets) and blocking the passage of supplies (which could be destined for Boko Haram). At one outpost in Maiduguri, farmers say that when their sorghum grew “too much like a bush” they were ordered to chop it down. Starving out guerrillas is one thing; but it will kill civilians too. More culpable is the Nigerian government, which underplayed the crisis as Boko Haram lost territory last year. International partners fume that it did not want Nigeria to be stereotyped as “another African conflict country”, and therefore denied that help was needed. + +Months ago, the UN ought to have declared a “Level 3” emergency—the highest level, reserved for the likes of Syria and Yemen—to raise funds and mobilise personnel. Instead it pandered to politicians’ vanity and told humanitarian agencies that “the government would not tolerate it.” Many NGOs have been slow and ineffectual, too. Of the roughly 20 international non-profit organisations that together hand out 90% of the world’s aid, only half are present in Nigeria’s north-east, according to Toby Lanzer, the UN’s humanitarian coordinator for the Sahel. Nigeria’s own relief agencies are more used to dealing with floods than food crises, and are also accused of stealing supplies. + +Faced with an emergency which it can no longer deny, the government has at last grown more ready to accept help. Donors are also beginning to pay more attention: by the end of this year, their allocations should be roughly double what they were in 2015. But the worst is not yet over. The numbers needing aid will grow as new towns open up: there are perhaps 750,000 hungry people in the north-east who currently cannot be reached at all. Some aid agencies think that most insecure parts of Borno are now in full-blown famine, which would suggest that 30% of people there are acutely malnourished. + +To help humanitarians, Nigeria’s army must secure major roads and push forward into smaller towns, instead of sitting on its haunches. The UN says that discussions about proclaiming a top-level crisis are “really happening”, although it will probably make the call internally, rather than in public. Either way, it must not dally: eight months into the year, its campaign is only a third funded. Then it will need more (and better) partners, and require the snail-paced government to speed up its response. “What we are seeing is just the tip of the iceberg,” says one aid worker in Abuja. “It’s going to be one Bama after another as Borno opens up.” + + + + + +South Africa + +Uncivil war + +A battle for control of the state spills into the open + +Sep 3rd 2016 | From the print edition + +Flash Gordhan, saviour of the public purse + +DEMANDING bribes from large state-owned companies can be a tricky business, even if the intended beneficiary is the ruling party. But at least the maths can be kept nice and simple. Take a deal to supply locomotives to South Africa’s state-owned passenger-rail agency. According to papers before a Johannesburg court, a politically well-connected businesswoman allegedly told the winning bidder that, since the contract was worth billions of rand, “she could not understand why 10% of the value of the bid could not be paid to the African National Congress (ANC)”. + +The allegation was made by Popo Molefe, chairman of the rail agency. More important, he is a former premier of a province and a stalwart member of the ANC, which has ruled South Africa since the end of apartheid in 1994 (and says it never received a penny of this money). Mr Molefe made the allegations after he was told by the minister of transport, Dipuo Peters, to “close off” a corruption probe that has discovered at least 14 billion rand ($951m) in dodgy spending. Mr Molefe also says he was told by the winning bidder that it had paid money to a go-between to give to the ANC for rigging the contract. + +Mr Molefe’s claims are striking not for the rottenness they reveal in a country where corruption has become endemic, but for the fact that they have been aired by a senior member of the ANC, which since its days as an underground movement has prized loyalty above all. Now comrade has turned on comrade, ministers speak out against each other and the bosses of state-owned companies openly defy their political masters. + +“The thing about the ANC is that it has pretty much practised a code of omertà,” says Tony Leon, a former leader of the opposition Democratic Alliance (DA). Yet these are unusual times for the ruling party. The old rules are being ignored in a desperate battle for the levers of power. + +Central to this is a struggle between Jacob Zuma, a president accused of 783 counts of corruption, fraud, money-laundering and tax evasion, and Pravin Gordhan, his respected finance minister (pictured), over control of the Treasury. The state’s highest crime-fighting body, known as the Hawks, has called in Mr Gordhan for questioning over charges that look trumped up. Rumours of Mr Gordhan’s possible arrest have sent the currency spiralling down. Growth has ground to a halt. + + + +Various bits of the state that are still loyal to Mr Zuma have waged virtual war on Mr Gordhan, whom Mr Zuma appointed in December under pressure from the markets and his more sensible advisers. (The currency had collapsed after Mr Zuma had removed a previous finance minister, apparently for blocking some of his more profligate schemes.) Eskom, the state-owned electricity producer, has simply `refused to give Mr Gordhan documents relating to questionable procurement deals struck with the president’s pals. South African Airways, the almost-broke national airline, has ignored his orders to restructure its board and kick out Dudu Myeni, its chairwoman, who is another of Mr Zuma’s close friends. + +The latest infighting comes after a dramatic shift in power to the opposition in local elections in August, when the ANC’s share of the vote slumped to 54% from the 60-70% it had previously won. The DA ousted the ANC from the mayoralties of three of South Africa’s biggest cities: Johannesburg, Tshwane, which contains the capital, Pretoria, and Nelson Mandela Bay, which includes Port Elizabeth. It also held on to Cape Town, which it has governed for a decade. + +This shift has big consequences for a party that relies partly on patronage for support. Hundreds, if not thousands, of ANC appointees will now lose their jobs. Some of the new mayors say that they have already uncovered dirty dealings. Many ANC parliamentarians must also be wondering whether their jobs are at risk, if the ANC suffers a similar slump in national elections in 2019. + +After suffering a defeat when he tried to install a pliant finance minister in December, Mr Zuma appeared to have been held in check, not least because one court then found that he had breached his oath of office for spending state money on his own home, and another ruled that prosecutors should not have dropped corruption charges against him. Yet, with his party divided after its setback, Mr Zuma seems intent on tightening his grip on the government. This is a time for more of the ANC’s stalwarts to line up and be counted. + + + + + +Egypt’s economy + +Of bread, bribes and fungus + +A stupid policy from an incompetent government + +Sep 3rd 2016 | CAIRO | From the print edition + + + +WHEN Egypt, the world’s biggest importer of wheat, signalled last year that it would begin enforcing a ban on shipments of the grain with even trace amounts of ergot, a common fungus, it roiled the markets. Egypt, like most countries, had allowed grain with up to 0.05% ergot—a harmless level. The new standard would be nearly impossible to achieve, said suppliers, who proceeded to boycott the state’s grain tenders and raise prices. Within months, Egypt had to backtrack. + +Yet on August 28th the government reimposed its zero-tolerance policy on ergot, no doubt hoping that doing the same thing again will produce a different result. This is after a UN study found that the fungus posed no risk to Egyptian crops. Instead, the government is relying on its own group of pseudo-scientists, who have disregarded decades of evidence to reach the opposite conclusion. All but one supplier boycotted a state tender on August 31st. + +There is perhaps no better example of the Egyptian government’s incompetence than its handling of wheat. The state buys millions of tonnes of the stuff each year from local and international suppliers. Subsidies aim to encourage Egyptian farmers to grow more of it. The government then sells loaves to the masses at sub-market prices. + +The system is ruinously costly and riddled with corruption. A parliamentary commission’s report on the problems runs to over 500 pages and was referred to the prosecutor general on August 29th. Among the findings, officials and domestic suppliers appear to have been falsifying local procurement statistics and pocketing government payments. Investigating MPs say that some 40% of this year’s supposedly bumper harvest may be missing, or may never have existed in the first place. Egypt must use scarce dollars to buy wheat from abroad because it does not produce enough at home. + +A study by America’s agriculture department estimates that Egypt’s “unorthodox” agricultural policies will cost the country over $860m in 2016, even as the government considers new austerity measures under a bail-out deal with the IMF. Some of this is simple protectionism. Egypt, for example, bans American poultry parts because they may not be halal. Yet Muslims in Kuwait, Jordan, Iraq and Saudi Arabia happily devour them. Ridiculous standards, unpredictable enforcement and frequent “inspections” by bribe-grabbing officials make life hell for suppliers. The costs are passed on to Egyptian consumers, who are already suffering high food prices. + +Despite official pressure to stop the probe into wheat-related corruption, arrests have been ordered, and assets frozen. The biggest head to roll has been that of Khaled Hanafi, the supply minister, who resigned on August 25th. Though not accused of directly profiting from the graft, he oversaw Egypt’s food-subsidy programme. Mr Hanafi points to supposed successes, such as instituting smart-cards for bread distribution and reducing costs. But the cards were hacked, and spending on bread subsidies rose on his watch. Somehow his ministry failed to buy rice after the last harvest, leading to nationwide shortages and higher prices. + +Oddly, the corruption probe may have encouraged the daft policy on ergot. The supply ministry, which oversees grain purchases, had pushed for reasonable standards. But the government does not want to be seen as doing any favours to traders, some of whom are accused of corruption. The new ban is being billed as an effort to protect Egyptians when, in fact, it will only add to their misery. + + + + + +Guinea and the haj + +The pilgrims’ tale + +Getting from west Africa to Mecca is not easy + +Sep 3rd 2016 | CONAKRY | From the print edition + + + +PILGRIMS jostle outside the Islamic Centre in Conakry. A stressed-looking official barks at them to queue in single file. Rain pours down the sides of a dilapidated portico. Hawkers hover, flogging plastic sandals and kola nuts. + +These men and women have travelled from all corners of Guinea to apply for a “pilgrimage package” that will take them to Mecca, Saudi Arabia, on the haj in September. All Muslims are supposed to perform the ritual at least once. Guinea has been allotted 7,200 places this year by the Saudi authorities. Some pilgrims have been saving all their lives for this opportunity. All are anxious that their papers are processed in time. + +Complicating matters is pent-up demand. Pilgrims from Guinea were banned from taking part in the haj for two years because of the Ebola virus, which killed more than 2,500 of their compatriots. Saudi Arabia lifted the ban only at the end of June, so officials have had little time to prepare. + +“Some of those applying are not able to read or write and when they come to the centre they can’t manage the paperwork,” says Oumar Diallo, a local journalist. Many find that their passports are no longer valid and must be replaced with new biometric ones. + +That has left the passport office in Conakry flooded by impatient applicants. They occupy every chair and every inch of floor space. The office cannot cope: people have been forced to spend up to a week in the waiting room. + +This is but one of the many sacrifices demanded of the faithful. In a country where the average income is $1.80 a day, it is not easy to raise $4,470 for the pilgrimage package (which includes flights, hotels, food, injections and visas). It is especially hard so soon after Ebola damaged so many people’s livelihoods. By one estimate, economic growth fell from 4.5% to 2.4% during the outbreak. + +Mariama Conté has been planning to go on the haj since she started her clothes business back in 1984. “I saved up enough money and was ready to leave the year that Ebola hit. That time was very bad. Often I was not selling anything, but I didn’t give up,” she says. “It is this year that God has called me to Mecca.” + +Guinea sits near the bottom of the UN Human Development Index, at 182nd out of 188. Corruption, poverty and disease are endemic, leaving religion the only source of hope for many. Battered yellow taxis with “God will provide” and “Allah is one” painted on their bumpers crawl through Conakry. When asked about the pre-haj chaos, the vice-minister of religious affairs, Karamo Diawara, said: “It has not been easy, but by the grace of God we are overcoming the difficulties.” It is a common refrain in Guinea. + + + + + +The war on Syria’s doctors + +The ultimate barbarity + +Dr Assad turns Syria’s hospitals into death traps as part of a “kneel or starve” policy + +Sep 3rd 2016 | From the print edition + + + +ON A wintry morning in February warplanes supporting Syria’s President Bashar al-Assad launched a series of missiles that slammed into a field hospital in northern Syria. Medics raced towards the thick cloud of grey dust that mushroomed above the building, before clambering over breeze blocks and fallen trees to pull the wounded from the rubble. + +About 40 minutes later, the jets—either Russian or Syrian, no one is sure—circled back and dropped another bomb on the medics as they worked. The air strikes killed 25 civilians, including eight medical workers, making it the single deadliest attack on medical personnel since the war in Syria began in 2011. Unsatisfied with the death toll, the jets tracked the ambulances carrying the wounded to another field hospital three miles north. They hit the hospital entrance with another missile and then, ten minutes later, dropped yet another bomb. “There’s no way on that day they didn’t know what they were doing,” says Ahmed Tarakji, president of the Syrian American Medical Society, which financed the second hospital hit that day. + +In the euphemistic lexicon of war, these attacks are known as “double-tap” or “triple-tap” strikes. This devastating tactic, used to hit schools, bakeries and marketplaces, has become a common feature of the Syrian government’s air campaign. + +It has also turned Syria’s hospitals into death traps. Barrel bombs, artillery and air strikes have struck more than 265 medical facilities since the start of the war. Last month, possibly the deadliest since the war began, bombs and missiles hit a hospital or field clinic every 17 hours. Experts reckon that no previous war has witnessed such widespread, systematic targeting of hospitals and medical workers. + +There is little doubt among human-rights groups and UN officials that many of these attacks are deliberate. There is also little doubt about who is responsible: those documenting attacks on medical facilities say Syria’s government and its Russian backers have launched more than 90% of the attacks. “It’s not that hospitals haven’t been bombed in Afghanistan, Yemen, Somalia and Sudan. It’s that the intent and strategy as a tool of war is on another level. The government of Assad has aimed its weapons at the delivery of health care,” says Susannah Sirkin of Physicians for Human Rights, a New York-based chronicler of the atrocities in Syria. + +Dr Death + +By laying siege to rebel-held areas and bombarding civilian buildings, the Syrian president has sought to make life unbearable for civilians trapped in rebel areas. It is a classic counter-insurgency technique, a chilling response to Mao Zedong’s maxim that a guerrilla should move among the population as a fish swims in the sea. Mr Assad’s “kneel or starve” policy—so-called after the graffiti scrawled on walls by government loyalists—is designed to deprive the rebels of the sea in which they swim. + +The strategy is working. In the besieged east of Aleppo, once the country’s largest city, residents say they live inside a “circle of hell”. Less than a quarter of its hospitals can operate at all. Fuel for the generators needed to power vital equipment is scarce. When air strikes hit blood banks and oxygen tanks, patients are simply left to die. Fewer than 35 doctors remain to treat a population of 300,000. The rest have fled or been killed, detained or tortured. In the nearby rebel-held town of Madaya, only two dentistry students and a veterinarian are left to treat a population of 40,000. + +“The attacks are designed to terrify civilians. During sieges, people don’t want to give blood. They’d rather save it for themselves. Many are too scared to go to hospitals because they know they’ll be hit,” says Dr Hatem, one of the few remaining paediatricians in eastern Aleppo. + +The rebels have clung on in Aleppo, despite the intensity of Russian and Syrian air raids. Elsewhere, however, Mr Assad’s strategy has proved too much. On August 26th rebels in the Damascus suburb of Daraya surrendered to the government after enduring a siege that lasted four years and saw residents forced to eat grass to stay alive. A week before the surrender, Mr Assad’s air force bombed the last remaining hospital with incendiary weapons. Mr Assad once trained as a doctor himself. + +The destruction of Syria’s once sophisticated health system has forced doctors and medical charities to come up with innovative ways to escape the daily bombardment. Western-funded aid agencies have built a handful of secret hospitals underground. Others have tunnelled into the side of a mountain to build wards inside caves. But the costs are prohibitive. + +The legacy of the war and the regime’s unrelenting attacks on health facilities and medical workers could have broader repercussions. The international community’s failure to stop the attacks has led to fears that the deliberate targeting of medical facilities will become the new norm in future wars. “The laws of war were drafted to protect civilians, to make war less hellish. These laws are being eroded in Syria,” says Widney Brown of Physicians for Human Rights. “When no one enforces these laws, when those who commit war crimes aren’t held to account, then what message does that send?” + +Efforts to hold the Syrian regime and its foreign backers to account have failed. Russia and China blocked the country’s referral to the International Criminal Court in 2014. Governments in the West have begun to look at launching their own investigations into war crimes in the hope of prosecuting individuals under universal jurisdiction, but the creation of an independent body that investigates every alleged hospital attack is a dream. + +“Without justice, it will be impossible to get rid of this feeling of revenge,” says Dr Rami Kalazi, the only neurosurgeon working in eastern Aleppo. “Without justice people will lose their trust in the international community completely. They will lose their trust in everything except for weapons.” + + + + + +Europe + + + + +France’s identity politics: Ill-suited + +The future of the EU: Now what? + +Germany’s refugee anniversary: Assimilation report + +German populism’s heartland: East is east + +Charlemagne: Magical misery tour + + + + + +France’s identity politics + +Ill-suited + +As its presidential race kicks off, France argues over burkinis + +Sep 3rd 2016 | PARIS | From the print edition + + + +THIS week France came back from the beach for la rentrée, the return to school and work after the August holiday. The summer had been far from restful. It began with two terrorist attacks in Nice and Normandy, followed by a weeks-long political fixation with the “burkini”, a cross between a burqa and a swimsuit, which dozens of mayors of seaside resorts tried to ban from their beaches. The resurgence of identity politics in France, at a time of heightened tension over Islam and security, now looks likely to frame next year’s presidential election. + +The row over the burkini will probably abate as the beaches empty. On August 26th France’s highest administrative court suspended a ban imposed in the Mediterranean resort of Villeneuve-Loubet after it was challenged by human-rights groups. The court ruled that the mayor had not proved any risk to public order, and that the ban constituted a “manifestly illegal” infringement of “fundamental liberties”. + +Had France not been under a state of emergency, the matter might not have flared up as it did. But the French are hyper-sensitive to signs of overt Muslim religiosity. Politicians, roused from their holiday hide-outs, seized on the burkini row—and not just on the right. Manuel Valls, the Socialist prime minister, called the burkini an “enslavement” of women, and claimed it was part of a political project to impose Islamist rules on France. He noted that Marianne, a female figure symbolising the French nation, is classically depicted bare-breasted. The implication seemed to be that women in burkinis are un-French, while true French women go topless. + +France has a long history of trying to keep religion out of public life. A law of 1905 entrenched the principle of laïcité, or strict secularism, after a struggle against authoritarian Catholicism. The country banned the headscarf and other “conspicuous” religious symbols from state schools in 2004, and the face-covering burqa from public places in 2010. Indeed, such laws enjoy broad cross-party support. Yet secular zeal at times overrides common sense, or sensitivity to France’s Muslim minority, estimated to form about 10% of the population. Unlike the burqa, which is banned from the beach, the burkini does not even cover the face. As Olivier Roy, a French scholar of Islam, points out, it also offers a certain modern liberty to Muslim women who otherwise might not swim. Hardline Islamists, he says, would not allow women to bathe in the first place. + +The burkini frenzy sets the tone for an election season of culture wars over French identity. Nicolas Sarkozy, a former president vying for the nomination of the conservative Republican party, says he wants to ban the burkini altogether. So does Marine Le Pen, leader of the far-right National Front, who claims that the “soul of France” is at stake. Yet amid this feverish identity politics, some voices are trying to appeal for calm. One is Alain Juppé, a centre-right former prime minister and presidential hopeful. He backed the local burkini bans, but says national legislation would be provocative. Another, on the left, is Emmanuel Macron, who resigned on August 30th as economy minister. + +Mr Macron’s departure had been widely expected. In April he launched a new political movement, En Marche! (“On the Move!”). Although he stopped short of declaring this week that he would run for president, that may be a matter of time. A former adviser to President François Hollande, Mr Macron is now an unambiguous rival to his Socialist former mentor, whose own chances of running for re-election dwindle by the day. The ex-minister is trying to build a platform of economic reform to resist populist nationalism. + +Post-socialist international + +On leaving his ministry, Mr Macron said that his government experience had taught him the limits of the current political system. He now hopes to redraw the partisan map, pulling in support from both left and right for a pro-European, centrist movement that embraces globally-minded progressive politics. This is a daunting challenge, not least because Mr Macron has never stood for election for any office before, is short of money and has little parliamentary support. + +It also seems to cut against the national mood. After 18 months of barbaric terrorist attacks, France is leaning towards tightening restrictions on liberty, not loosening them. Freed from the constraints of the economics portfolio, Mr Macron will now be able to speak out on matters such as terrorism and religion. With the country so on edge, France could do with a dose of measured reflection. + + + + + +The future of the EU + +Now what? + +Europe vows progress after Brexit, but is unsure which way to go + +Sep 3rd 2016 | BRUSSELS | From the print edition + + + +AUGUST usually finds Europe’s politicians bronzing on the beach or lacing up their walking boots. But for the past few weeks they have been huddling, scheming and debating how to give their floundering European Union a fresh lease of life. “Citizens will only accept the EU if it makes it possible for them to prosper,” said Angela Merkel, Germany’s chancellor, during a visit to Warsaw last week. + +If there is a fresh urgency to the EU’s latest bout of navel-gazing, blame Brexit. Britain’s vote to leave on June 23rd was a grievous blow to a club that has only ever known expansion. At a summit six days after the vote, the leaders of the 27 remaining countries vowed reform and arranged to meet again in Bratislava on September 16th. Much of the recent shuttle diplomacy has been aimed at finding common ground for that meeting. As ever, Mrs Merkel has taken the lead. On August 22nd she and her French and Italian counterparts laid on the symbolism by holding a mini-summit on Ventotene, an Italian island where Altiero Spinelli, an early Euro-federalist, had been imprisoned during the war. + +There is no shortage of ideas. This week five senior European analysts and officials issued a paper calling for a “continental partnership”, including new decision-making structures for the single market, which could include Britain as well as other countries on Europe’s periphery, such as Turkey or Ukraine. Diehards are dusting off plans for grands projets like a standing EU army or a Europe-wide intelligence agency. + +But in a curious echo of the British government’s struggle to move ahead with Brexit, Europe’s leaders have not progressed much beyond slogans. This summer’s terror attacks brought calls for intelligence agencies to share more information, and for boosting the powers of Europol, the EU’s police co-ordination body. But such suggestions are nothing new. At Ventotene the leaders urged more defence co-operation. But there is little will to create anything that could rival NATO. + +On refugees, agreement seems limited to a beefed-up EU border force that officials hope to conclude on later this year. Eastern European governments remain implacably opposed to the EU’s plans to distribute hundreds of thousands of asylum-seekers across Europe. Viktor Orban, Hungary’s combative prime minister, will stage a referendum against the relocation plan on October 2nd. The easterners also fear a fresh wave of job-killing “social” initiatives from the European Commission. + +Ideas for deepening integration in the euro zone, from common bank deposit-insurance schemes to a single finance minister, seem no closer to fruition. Leaders have spoken of a scheme to tackle youth unemployment, but most of the tools for that lie in the hands of national governments, which may lack the will to act (a mild labour reform in France triggered weeks of protests this summer). Coming elections in the Netherlands, France and Germany limit leaders’ room for compromise. + +The crises that have buffeted Europe in the past few years continue to bubble away. The EU’s talks with Greece over its third bail-out are not going well. The Minsk peace process in Ukraine is stuck. The Transatlantic Trade and Investment Partnership (TTIP), the EU’s mooted deal with America, has become a piñata for electioneering European politicians: this week ministers in Germany and France declared it dead. And while a deal with Turkey has cut refugee flows, smugglers are still getting through and Greek islands are dangerously overcrowded. Turkey has threatened to scupper the arrangement entirely if the EU does not grant visa-free access by October. + +Brexit does little to fix any of these problems. (In some cases, such as TTIP, it makes them harder.) And managing the departure of a major country presents the EU with an entirely new sort of challenge. The will to keep the club together is strong, and predictions of further exits to follow Britain’s are overblown. But the old adage that Europe is forged only in times of crisis is starting to look threadbare. + + + + + +Germany’s refugee anniversary + +Assimilation report + +A year after Angela Merkel welcomed migrants, two Syrians differ on whether integration can work + +Sep 3rd 2016 | BERLIN | From the print edition + +Give me some sugar, neighbour + +IF ALL of the roughly 567,000 Syrian refugees currently in Germany were like Firas Alshater (pictured), there would be no integration problem. Mr Alshater is living proof that alienation and trauma can be overcome with a good attitude. In Syria, he was tortured in Bashar al-Assad’s prisons for nine months. “You sit there, hear the torment of others, and you don’t know when it’s your turn,” he recalls. In 2013 he escaped to Germany. “I had heard that the Germans are closed,” he says. “No, they’re not!” Now 25, he rarely looks back. + +But Mr Alshater fled to Europe at a time when the flow of migrants was still manageable. That changed a year ago, during the night of September 4th-5th. Masses of refugees who had trudged through the Balkans were stranded in a train station in Budapest. Fearing a humanitarian disaster, Angela Merkel, the German chancellor, allowed the whole lot into Germany. What was meant as a one-off exception was interpreted in the Middle East and Europe as a new open-borders policy, attracting even more refugees. Germany’s initially euphoric “welcome culture” soon soured, especially after New Year’s Eve, when crowds of mainly Arab men, including refugees, robbed and sexually assaulted women during festivities in Cologne and other cities. Now, as Germans mark the first anniversary of their experiment, many worry that integrating refugees will prove harder than they ever imagined. + +Mr Alshater burst into the public eye shortly after the Cologne assaults, like an angel of cross-cultural mingling. Speaking fluent German by now, he put his Syrian theatre-studies degree to good use with a self-produced YouTube clip. “Who are these Germans?”, he promised to explain, sitting on a couch with a scraggly beard and body piercings. As with all his succeeding clips—called Zukar Stückchen, mixing the Arabic for “sugar” with the German for “cubes”—the video has negligible intellectual content but oozes comedy and goodwill. In one stunt, Mr Alshater stands blindfolded in a Berlin square until people spontaneously begin hugging him. + +The clips went viral, helping Mr Alshater to launch a promising career in German media. With a partner, he is producing more Zukar Stückchen and will air his first television film this month. All this makes integration look easy. Is he a role model? “I don’t even know what ‘integration’ is,” he shrugs. “I accept them, they accept me, and I don’t bother anybody.” + +Others are less sanguine, among them Germany’s best-known Syrian immigrant of an earlier generation, Bassam Tibi. The 72-year-old Mr Tibi was born into an aristocratic family in Damascus. He learned to recite the Koran as a child, and grew up imbibing the anti-Semitism that pervaded his environment. But in 1962 he came to Germany, studied with renowned German-Jewish philosophers such as Theodor Adorno and Max Horkheimer, and embraced the West’s tolerant and open society. As a professor of international relations at the University of Göttingen for four decades, he popularised the term “Euro-Islam”, arguing that Muslims can and should integrate by blending their traditional and adopted cultures into a secularised and modern faith. + +But of late Mr Tibi has turned pessimistic. Mrs Merkel’s welcome last year, he thinks, could even turn Germany into a “failed state”. Recently, he spoke with ten young Syrians. “Two of them spoke German, were doing well, and reminded me of myself back then,” he says. “The other eight were telling me that ‘Allah gave us Germany as a refuge, not the Germans’.” Most Syrians and other Muslims, he now thinks, will never integrate, instead retreating into misogynistic, anti-Semitic and anti-democratic worldviews and segregating themselves in radicalised enclaves. + +Many Germans share his worries. Anxiety has risen since July, when a Syrian refugee blew himself up outside a concert in Bavaria, injuring 15 people, and an Afghan refugee hacked several passengers on a train with an axe. Both claimed to be acting on behalf of Islamic State. The government knows of 340 cases in which Islamic extremists have infiltrated refugee camps in search of recruits. + +Hard information on the progress of integrating refugees is elusive. Crime statistics suggest that “refugees, on average, are as likely or unlikely to become delinquent as the local population”, according to the interior ministry. Indeed, relative to their numbers, Syrians are under-represented among criminal suspects. (Moroccans, Algerians and Tunisians are over-represented, but rarely qualify as refugees.) Other objective measures of integration—such as the speed with which the newcomers learn German, acquire vocational skills and find jobs—will take years to assess. As of July, the backlog of unprocessed asylum applications was still more than half a million cases. With so much unknown, anxiety only increases. + +Mr Alshater is always cheerful in his videos, but in person can appear tired and sad at times. He tries bravely to remain optimistic. Integration just takes a lot of time, he says. “When I came, just that fucking paperwork took a year,” he says, displaying an idiomatic command of German expletives. “But those now crammed in the camps with hundreds of other refugees— how are they supposed to integrate? Speaking to a wall? To an oak tree?” + +Mr Tibi, convinced that integration will fail, blames not only the refugees. The German government thinks the challenge of integration boils down to teaching refugees German and getting them jobs. But it is really about identity, he says, and this is where German society fails. During his own stints at American universities, he was always impressed by how quickly he felt a sense of belonging. In Germany, even after writing 30 books in German and marrying a German wife, people still make him feel foreign. “I suffer from an identity crisis, but I go to a psychoanalyst and lie on the couch,” Mr Tibi says. “These 16-year-olds go to Islamic State.” + + + + + +German populism’s heartland + +East is east + +In a German backwater, anti-immigrant feeling thrives + +Sep 3rd 2016 | SCHWERIN | From the print edition + + + +“WHEN the end of the world is nigh,” Otto von Bismarck allegedly said, “I will move to Mecklenburg, because everything happens 50 years later there.” Even locals agree that the north-eastern state of Mecklenburg-West Pomerania will always be a backwater. But backwaters can also be bellwethers. On September 4th, all Germany will be watching as Mecklenburg elects its state assembly, housed in a medieval castle on an island in one of Schwerin’s lakes. Not only is the state home to the electoral district of Chancellor Angela Merkel; it is the heartland of the Alternative for Germany (AfD), a populist right-wing party that is polling at 21%, a hair behind the largest mainstream parties. “We want to become the strongest party,” says Leif-Erik Holm, the AfD’s top candidate in Mecklenburg. + +Even if it does, the AfD will not soon run Mecklenburg, or any other state. For that it would need a coalition partner, and no mainstream party will go near it. But it will almost certainly enter the Bundestag in the federal election next autumn, turning German politics into a six-party system. That fragmentation complicates coalition-building, and will put Mrs Merkel’s Christian Democrats under pressure from the right. This uncertainty is one reason why Mrs Merkel this week refused to commit herself to running again next year. + +It is not clear why the AfD is so popular in Mecklenburg. Its hallmark is anti-immigrant rhetoric. But Mecklenburg has just 23,000 refugees, or 1.5% of the population. Foreigners make up 3%, and most are Poles or ethnic Germans from Russia. Muslims are a rare sight. Yet even before the refugee crisis, about one in three locals told pollsters that “because of the many Muslims, I sometimes feel like an alien in my own country”. + +Mecklenburg does have a longstanding core of far-right voters: it is the only state where the NPD, a party considered neo-Nazi, has seats in the assembly. But the AfD draws more support from former non-voters and The Left, a party descended from East Germany’s communists. In the West, that may seem illogical. But it matches the gut feelings of many locals. One of the AfD’s themes is Ostalgie, “nostalgia for East Germany”. It nurtures a sense of solidarity against all outsiders, including western Germans and cosmopolitan elites. Since reunification people in the region have felt they were “overrun by the West”, says Mr Holm. + +At campaign events Mr Holm evokes 1989, when Ossis marched in solidarity against the communist regime. Now the enemy is perceived political correctness imposed by Berlin. The tone is invariably pro-Russian and anti-American. Asked how they feel about Russia’s invasion of Crimea, supporters compare it with America’s war in Iraq. “If the Ami does it it’s okay, but if Russia does it, it’s wrong?” asks one. The reasoning is questionable. But the emotional appeal is making the AfD a force to be reckoned with. + + + + + +Charlemagne + +Magical misery tour + +Visits to Europe’s nastiest spots are becoming popular + +Sep 3rd 2016 | From the print edition + + + +WITH its high unemployment, pervasive crime and rows of empty shops, the Belgian town of Charleroi is a “musée du globalisation”, quips Nico Buissart, with something approaching pride. The former art student has run tours of his town, which was once voted the ugliest place in Europe, since 2009; he now conducts two or three a week. When Charlemagne took the tour, the hulking Mr Buissart led the group down concrete paths littered with scrap metal and defaced by graffiti, under the shadow of looming steelworks, through waist-high weeds and up an enormous slag heap to take in the view of old factories and piles of waste from industries that have mostly moved elsewhere. + +Eccentric souls have long enjoyed exploring miserable bits of the continent. Valencia boasts a guided tour of the numerous big-ticket construction projects, some of them abandoned, launched by its corrupt politicians. In eastern Europe, fans of Soviet architecture regularly trek to long-forgotten places to uncover hidden brutalist gems. An alternative German guide to Berlin suggests spurning the Tiergarten and the Brandenburg Gate in favour of the hideous Schwerbelastungskörper, a cylinder of concrete laid down by Albert Speer, Adolf Hitler’s architect, which is so gargantuan that it cannot be moved. + +Lately, such tours of urban dysfunction have become popular for new reasons. With terrorism and the alleged failures of globalisation and multiculturalism dominating many countries’ political discussions, more and more people are keen to see the benighted European places where these disasters are supposedly unfolding. Unemployment, segregation and terrorist attacks may not be the sort of thing that local politicians want their towns to be known for, but they create a brand that can serve as the basis of a small, perverse tourism industry. + +In Molenbeek, a poor part of Brussels where at least two of the terrorists involved in the Paris attacks last November lived (and where Salah Abdeslam, the surviving suspect, was captured), guided tours used to run around five times a year. Since the attacks there have been 50, says Anne Brumagne, who works for the association that sets up tours throughout the capital. In late September Daniel Pipes, an American critic of Islamism, will take a group to Berlin, Paris and Stockholm to look at what he terms the “new Europe”. A highlight of the trip, he says, will be so-called “no-go zones”: places which, because of their large Muslim populations or high crime rates, are believed by anxious outsiders to be inaccessible to non-Muslims or the police. + +In many ways such tours are a good thing. People who know Molenbeek only from news accounts assume it is “a hellhole”, complains Ms Brumagne. After visiting, they are surprised at how lively it is. In April a big modern-art gallery opened there (though its opening was delayed by the terrorist attacks in Brussels in March). Community centres, gardens and social projects have sprung up, aided by an enterprising first-term mayor. In general, no-go zone designations are ridiculed by those who know the areas in question. A pundit on America’s Fox News went so far as to claim that Birmingham, Britain’s second-biggest city, was one. (He later apologised. The murder rate in Birmingham, England is less than 1/20th that in Birmingham, Alabama.) Visits by non-Muslim tourists help demonstrate that the down-at-heel parts of Europe are not wastelands or outposts of Islamic State. + +Nonetheless, the strange appeal of such areas hints at the magnitude of the problem facing European politicians. Many of the Belgians on the Molenbeek tour are seeing a side of their country they have never experienced before. Neighbourhoods where the signs are in Arabic, Moroccan men lounge outside tea rooms and women shop in headscarves may not actually be forbidden to them, as the term no-go zones suggests. But the fact that they find such places exotic shows how segregated their society is. + +This failure to integrate is a big problem. After a year of terrorist attacks and an unprecedented influx of refugees from the Middle East, Europeans are worried about immigration as never before. According to Ipsos MORI, a pollster, Europeans are among the most likely people in the world to doubt that refugees can integrate, and they hold some of the most negative views of immigrants. Fully 65% of Italians, 60% of Belgians and 57% of French people think there are too many immigrants in their country. While over a third of Americans and Britons think that immigration has had an overall positive impact on their countries, a measly 11% of Belgians and French do. + +Segregation today, segregation for ever? + +Europe’s urban divides are in some ways more subtle than those in America. When Americans think of dysfunctional places they imagine cities like Detroit, where large areas are literally in ruins, says Mr Pipes. “It’s quite surprising that places like Molenbeek are pleasant-looking,” he admits. Yet this can make some issues harder to tackle. Molenbeek is linked to nearly every recent terrorist plot in France and Belgium; Salah Abdeslam lived just around the corner from its police station. The neighbourhood’s density, social life and complex informal economy may have made it harder to track him down. Jean Jambon, Belgium’s interior minister, wants to ramp up security forces in the district. That might help law enforcement, but it will not tackle the aspects of poverty that contribute to radicalisation: poor education, unemployment, lack of adequate housing—and social segregation. + +By bringing public attention to problem areas, urban-dysfunction tours may help nudge the political system to address such issues. Then again, politicians may simply learn to celebrate the mess. When Mr Buissart first started his tours, local politicians in Charleroi complained that he was too negative, he says. Now the city’s website advertises jogging events through its industrial landscape and bicycling tours along disused railway tracks. Misery has officially become a marketing opportunity. + + + + + +Britain + + + + +The economy since the Brexit referendum: Fact and fiction + +Infrastructure: Ropy roads, rail and runways + +Britain and France: Calais capers + +Measuring crime: Bobbies on the spreadsheet + +Polish businesses: Staying put + +Bagehot: The ungovernables + + + + + +The economy since the Brexit referendum + +Fact and fiction + +The dire prophecies of doom have not come true—yet. But the economy is slowing + +Sep 3rd 2016 | From the print edition + + + +AFTER Britain voted to leave the European Union on June 23rd, financial markets took fright. Sterling lost one-tenth of its value in two days of trading. The FTSE 250, an index of domestically focused firms, fell by 14%. Remainers predicted that Leave voters would soon suffer from an acute case of buyer’s remorse. Yet as the summer has worn on, the mood has changed. Companies have not fled Britain en masse. The pound has stabilised and the FTSE 250 is up on its pre-referendum level. Polls suggest that few Brexiteers regret their vote: indeed, many of them now argue that the pre-referendum doom-mongering was overblown, and some even detect the beginning of a “Brexit boom”. What is the reality? + +Some of the gloomier pre-referendum forecasts ignored the possibility that the authorities would respond to a Leave vote by propping up the economy. In the event, the Bank of England loosened monetary policy six weeks after the referendum, a widely anticipated move that nonetheless boosted confidence. The new government of Theresa May quickly made clear that it would tone down the fiscal austerity of its predecessor. + +Nor did wonks foresee that Brexit would take so long to get under way. During the referendum campaign David Cameron implied that Britain would begin the process of withdrawal from the EU immediately, in the case of a Leave vote. Instead he left the job to his successor. Mrs May has said negotiations will not begin until 2017; only on August 31st did she convene a cabinet meeting to discuss the broad shape of Brexit. Bookmakers reckon there is a 40% chance that Britain will not leave the EU before 2020. Those who are pleasantly surprised by Brexit’s consequences should bear in mind that it has not yet happened. + +Still, in the short term the economy seems to be faring better than some economists had predicted. Consumer spending appears to be healthy. In July retail sales rose by 4% compared with the year before. But the fact that they grew by the same amount in September 2008, the month that Lehman Brothers collapsed and thus precipitated the global financial crisis, should give pause for thought. Consumers do not immediately internalise bad economic news: the man on the street is not thinking about Article 50 of the EU treaty as he enters a shopping centre. And more than half of Britons clearly never saw Brexit as bad news in the first place. + +For a better gauge of the future of the economy, look at the behaviour of companies. Before the referendum, economists’ main worry was that firms would hold back on expensive, hard-to-reverse decisions while Britain’s future relationship with the EU was sorted out. The two big questions concern jobs and investment. + +Growth in business credit has markedly slowed. The Bank of England’s latest survey of business confidence indicates that planned investment is being reined in. In July the value of contracts in the infrastructure industry fell by 20% compared with June, based on a three-month rolling average, according to Barbour ABI, a consultancy. As businesses hold back on investment, productivity will slow and, with it, wages. + +Data from Adzuna, a job-search firm, show that in July wages and vacancies fell compared with June. (A higher rate of inflation linked to the weak pound is eating further into real earnings.) The number of advertised low-paid and contract roles has grown, as employers seek to plug gaps without committing to permanent hires. The Economist’s model analysing Google searches for “jobseekers”, which is correlated with official unemployment back to 2004, suggests that unemployment is now around 5.3%, higher than the official rate of 4.9% last recorded for April-June. + +What of exports, which Brexiteers forecast would soar following a fall in the pound? A survey of manufacturing firms on September 1st showed strong growth in sales to places like America and China. Yet hopes of an export boom should be tempered. A high proportion of exports’ content is made up of imports, which are now pricier. And British exports compete mainly on “non-price” factors, such as quality and customer service, making them insensitive to currency fluctuations. When sterling fell by a similar amount in 2008-09, net exports barely responded. + +Britain now hopes to avoid entering recession, as many, including the Treasury, forecast before the vote. It partly depends on what Philip Hammond, the chancellor, announces in his autumn statement, a mini-budget due later in the year. To support the economy he will have to loosen the current fiscal plans considerably. His predecessor, George Osborne, pencilled in a reduction in the cyclically adjusted budget deficit in 2017 of about 1% of GDP, a sharp contraction even by the standards of recent years. Mr Hammond could help by cancelling this austerity. He is likely to announce a round of spending on infrastructure (see article). + +Such policy decisions may yet fend off recession. But deploying a fiscal boost would not be costless, with Britain’s public-debt-to-GDP ratio already running at 84%. Nor is ever-looser monetary policy, given the damage it does to pension funds. And consider the counterfactual. Before the referendum many economists had predicted a boost to growth in the event of a vote for Remain, as a big source of uncertainty was removed. The Bank of England had forecast growth of 2.3% in 2017, but now expects just 0.8%. Following the vote to Leave, the government and the bank have been forced to use monetary and fiscal policy just to try to keep growth in positive territory. And Brexit itself, of course, is still to come. + + + + + +Infrastructure + +Ropy roads, rail and runways + +Britain needs to hurry up with transport projects—both large and small + +Sep 3rd 2016 | From the print edition + +Time to pour more money into black holes + +TO LOOK down from the air-traffic control tower at Heathrow airport—Europe’s busiest—is to see a hive of activity. Crammed between the two runways to the west is the gleaming Terminal 5. To the east is Terminal 2, newer still, alongside a labyrinth of older terminals that are being refurbished or rebuilt. Yet despite its ongoing makeover, Heathrow is groaning. Operating at 99% of capacity and in need of new runways and terminals, the congested London airport is testament to politicians’ decades-long dithering about where to build new infrastructure. With Britain now flirting with a Brexit-induced recession, it is a habit the new government needs to break. + +The problem does not lie with builders. Terminal 5 was built on budget and on time; the Elizabeth line in London, a £15 billion ($20 billion) underground railway due to open in 2018, is also on track. A lack of planning by successive governments is instead to blame. Since the 1960s, decisions about where to put a new runway near London have been delayed repeatedly. Procrastination has left Britain lagging behind Europe and Asia on high-speed rail. Apart from the Channel Tunnel link, no new main lines have been built in Britain since the 1890s. And pothole-pocked roads suggest the highways are no better. + +The government now has an opportunity to make up for lost time. Since the vote in June to leave the EU, political support for more infrastructure spending has grown. Last November the Treasury announced that investment in transport projects would double by 2020. The new chancellor, Philip Hammond, is likely to expand this much further later this year. This would help soften the economic blow from Brexit and boost long-term growth. + +There is no shortage of potential projects lying in the government’s in-tray. Work on the Thames Tideway Tunnel, a £4.2 billion super-sewer under London, will start by November. And construction of the £28 billion HS2 railway, initially between London and Birmingham, will start early next year if, as expected, it is approved by Parliament in the autumn, says David Higgins, its chairman. + +Yet their fiscal impact will be only modest in the near term. Phase one of HS2 will pump at most £2 billion into the economy each year, says Mr Higgins, and it would be difficult to accelerate construction even if the chancellor wanted him to. + +The same applies to Crossrail 2, another planned railway in London, and to competing proposals to build new runways at Heathrow and Gatwick. Work would probably not begin on the runways before 2020, even if they got the go-ahead tomorrow. Although an independent commission last year backed Heathrow’s proposed runway as the option that would most improve London’s connections to other cities, academic research suggests that building runway capacity boosts a city’s economy much more than increasing the number of places to which it has direct flights. + + + +Smaller projects could get going quicker. Over the next four years around £20 billion of roadworks and £50 billion of rail contracts are in the pipeline, says Michael Dall of Barbour ABI, a consultancy. Some could be accelerated. County surveyors have reams of shelved road-resurfacing plans that could be quickly dusted down. It would cost £11.8 billion to repair Britain’s roads to a good standard, according to a recent survey of local authorities. + +Little improvements often have strong business cases, because they allow existing infrastructure to be used more intensively. The government calculated that the cost-benefit ratio for expanding rail capacity on existing lines was almost 50% higher than for building HS2. For some improvements the benefits were eight times greater than the costs. Smaller projects can also help to revive “left behind” regions—a stated priority of the government—which are literally bypassed by the likes of HS2. + +And without the small transport projects, passengers find it harder to use the big ones. “You have to do both,” Mr Higgins admits, or “you’ll have massive car parks everywhere.” For example, although a £6.5 billion investment in Thameslink has helped to reduce train journey times from London to Luton airport to just 24 minutes, the last mile from station to terminal, by bus transfer, can take an hour because of congestion on local roads. Although the government should get on with its big projects, the tiddlers are just as important. + + + + + +Britain and France + +Calais capers + +Threats to move Britain’s border back from Calais to Dover are mostly empty + +Sep 3rd 2016 | From the print edition + +Down and out in Calais, not London + +THE deal under which Britain’s Channel border is policed in Calais, 22 miles south-east of English shores, has long been controversial in France. Indeed, ahead of the Brexit vote on June 23rd David Cameron echoed warnings by some French political leaders that, were Britons to choose to leave the European Union, France might withdraw from the Anglo-French Le Touquet treaty that allows such “juxtaposed” border controls in each other’s country. Worse, since Brexit won the day, the number of migrants camped in the Calais “Jungle” has surged to almost 10,000, many of whom try nightly to clamber into vehicles heading for the Channel Tunnel. + +So it should not have been a surprise this week when the president of the northern region around Calais, Xavier Bertrand, suggested dumping the Le Touquet deal. Nicolas Sarkozy and Alain Juppé, the two main rivals for the centre-right nomination for president in next spring’s election, chimed in with calls for the border to revert to Britain. It was enough for several British newspapers to blare headlines about the Jungle springing up in Dover. + +Behind the drama lie two causes. The first is simply French politics. Centre-right leaders are acutely sensitive to the threat from the National Front’s Marine Le Pen, who is likely to get into the second round of the presidential election next May. Her base is in the north, and as part of her anti-immigration and souverainiste message she has long called for Le Touquet to be scrapped. Since many locals believe it works better for Britain than France, and with broader irritation over Brexit, other right-wing politicians are anxious not to be seen to be outflanked by Ms Le Pen. + +The reality is that the bilateral deal suits France as well. It gets money, assistance with security and intelligence co-operation from Britain. If the Le Touquet treaty went, or if Britain were to set up a local asylum-processing centre (another idea of Mr Bertrand’s), the news that it had become easier to cross the Channel would quickly spread, triggering a potentially huge inrush of migrants that would expand, not shrink, the camps around Calais. + +Second, however, humanitarian concerns about the Jungle are growing. This week Amber Rudd, Britain’s home secretary, and Bernard Cazeneuve, the French interior minister, promised to step up security at the Tunnel, to crack down harder on organised crime and to work faster to remove failed asylum-seekers. Charlie Elphicke, the Tory MP for Dover, stresses the case for action against people-smugglers and for vigorous patrols in the Channel to send a clear message to would-be migrants that they are unlikely to make it to Britain. Some in the Jungle would anyway be happy to stay in France or go to Germany, but processing their claims is time-consuming. + +The biggest worry is that Europe’s migration and refugee crisis may be getting worse. There has been a fresh upsurge of migrants setting out in rickety boats from Libya. The EU’s deal with Turkey that has stemmed the flow into Greece looks shaky. The Dublin convention, which requires migrants to apply for asylum in the first EU country they reach, is in tatters. Some countries in eastern Europe still refuse to take any refugees at all. And France is trying to stop migrants crossing over from Italy, leading to fears of a new Jungle being set up on the Italian side of the border, near Ventimiglia. + +Set against all this, the problems of the Calais camps and the Le Touquet treaty seem less consequential. Yet French politics will keep the issue alive at least until next May. One irony in this is the identity of the Frenchman who negotiated the treaty back in 2003: Mr Sarkozy, then Jacques Chirac’s interior minister. It is hard to believe he would disavow his own legacy. Yet with the mercurial Mr Sarkozy, it seems, nothing is ever certain. + + + + + +Measuring crime + +Bobbies on the spreadsheet + +A new way to count crimes could reduce the amount of harm they cause + +Sep 3rd 2016 | LEICESTER | From the print edition + + + +WALK down Evington Road towards Leicester station and you pass chicken shops, betting parlours and, more likely than not, a group of men drinking lustily on the corner. Police used to visit the neighbourhood only once every couple of days. But now an officer is a permanent fixture. Even if trouble starts up elsewhere in the Stoneygate area, she will stick to her beat. This is one of the first changes brought about by an experiment in the way that police count crimes, which could radically transform the way they work. + +Six months ago Leicestershire Police began to put the Cambridge Crime Harm Index (CHI) into practice, one of at least five forces to do so. Previously all crimes had been counted equally in the annual tally, with murder and petrol-theft both being given a value of one, among more than 60,000 offences. Lawrence Sherman, a professor of criminology at Cambridge University who designed the CHI, believes that this form of statistical equality can mislead the public and encourage police to focus on the easier offences. A big increase in murders, say, could be cancelled out by a small drop in shoplifting. But multiply the number of times a crime occurs by the harm it causes its victim and the statistics tell a clearer story. + +How to measure harm? It is a controversial business. The CHI takes the official guidelines on the minimum recommended sentences for each crime as its proxy. Shoplift, and the basic sentence is two days in prison; nobody has been hurt very much. Commit a murder and the least time you can expect to spend behind bars is 5,475 days. The Office for National Statistics is about to publish its own crime-harm index for all 43 police forces in England and Wales, based on an average of the sentences actually handed out by judges over the past five years. Professor Sherman points out that this varies according to the criminal record of the culprit, which has no bearing on the victim. + +When viewed through the CHI, some places in Leicestershire that were previously considered relatively low in crime turn out to be worse than thought, and vice versa (see maps). Spinney Hills, in the centre of Leicester, ranked 13th out of 67 areas in terms of the volume of crime. But it comes fourth in terms of the harm caused. Within it, a small section of Evington Road, near the booze and bargain stores, raised a red flag in the new system: two rapes and a few cases of grievous bodily harm had occurred there over the previous three years. + +The officer who now patrols only in that postcode has been trained to micromanage tricky areas, as have 70 others on the Leicestershire force who now have harm-specific roles. She aims to get to know the few Evington residents at the sharp end of serious crime (80% of harm in Leicestershire is suffered by 5.6% of victims, and caused by 4.7% of offenders, police say) and connect them to other services, such as Turning Point, a drug-and-alcohol rehabilitation charity, and domestic-violence units. Her work is narrower, more proactive and far more joined up than before, says Phil Kay, Leicestershire’s assistant chief constable. + +Priorities are changing at the top, too. Looked at by volume, sexual offences constitute less than 2% of Leicestershire’s total. In terms of the harm caused, that number is 30%. Police already knew such crimes were important, says Mr Kay, but the statistics make a powerful case to do more. Seventy-seven more officers have been moved to work on sexual-violence cases. + +The indices will need fine-tuning. It makes more sense to record crime harm from the date it occurred, rather than when it was reported—otherwise the recent surge in reports of historical child sex-abuse, for example, could give the false impression of a big recent increase in crime. + +Some forces will lack Leicestershire’s chutzpah in using the data. And harm-indices may encourage police to devote less time to fixing broken windows and other minor complaints which, some criminologists believe, are the key to preventing more serious crimes. But with the state-funded College of Policing pushing hard for evidence-based practice and resources stretched by the loss of 14% of officers since 2010, there is momentum. Mr Kay is blunt: he joined the police to stop people being stabbed, not petrol being stolen. + + + + + +Polish businesses + +Staying put + +The prospect of Brexit is not putting off Britain’s Polish entrepreneurs + +Dec 3rd 2015 | From the print edition + + + +TALKING behind his grocery shop’s generously stocked sausage-counter, a gloomy Daniel Przybylowski says it is time to sell up. Yet those who voted for Brexit on June 23rd in the hope of reducing the number of European migrants may be disappointed to learn that Mr Przybylowski is not going home to Poland as a consequence of the referendum. Far from it: it is the business rates that have defeated him. He hopes to recoup all his investment, at least, and is determined to start another business—in Britain. + +Mr Przybylowski typifies the attitude of the 90,000 Polish entrepreneurs and self-employed who make up a growing share of Britain’s economy. Last year Poles overtook Indians as the largest foreign-born group in the country, at an estimated 831,000. Consequently they became a target for hostility towards migrants during, and after, the referendum campaign. In Hammersmith, a west London suburb down the road from Mr Przybylowski’s shop, a Polish cultural centre was daubed with racist graffiti after the vote. On August 27th a Polish man was beaten to death outside a takeaway in Harlow, Essex; police are treating the murder as a “potential hate crime”. In the feverish aftermath of the referendum there was talk among Poles as to how many might leave. But after two months of political inaction, the atmosphere has changed. Polish entrepreneurs are now weighing up new opportunities rather than dwelling on Brexit’s risks. + +That is fortunate for Britain, as last year Poles formed more business entities—14,475—than any other migrant group, ahead of the Irish, Chinese and Indians. According to the Centre for Entrepreneurs, a lobby group, by 2014 Poles had founded nearly 22,000 limited companies, the third-biggest number among EU citizens after Germans and Irish. This is remarkable given that most Poles arrived only after 2004, when Poland joined the EU. + +About 65,000 are self-employed. Many are the bricklayers and electricians who have become ubiquitous on British building sites. But Poles have successfully moved into other sectors, such as finance, IT and retail. Often they have thrived by catering to Poles in Britain who come to work rather than settle, and as a consequence have limited English. Piotr Kubalka, who runs an accountancy firm in Ealing, came to Britain in 2000 with £274 (then $415) in his pocket. Five years later he set up the company and now employs 35 people dealing with 3,000 clients, mostly Polish. + +Another firm that has made a success of serving the community is Mlecko, which claims to be the biggest Polish-run company in Europe outside Poland. Founded 20 years ago, the supermarket now has 11 branches, mainly around west London, the centre of the Polish community. It imports all its food and drink from Poland and has its own haulage company and warehouses, as well as its own bakery. It employs about 450 people. + +Mlecko is an example of the sophisticated supply chains that have built up between Poland and Britain. Nowadays a shopkeeper like Mr Przybylowski can buy all his stock in London rather than import it. This is one reason why Poles are reluctant to turn their backs on Britain: they have invested too much to leave. Wladyslaw Mlecko, the supermarket’s founder, is ignoring Brexit and pressing on with plans to open two new stores and a new bakery. The next event of the Congress of Polish Entrepreneurs in the UK is on how to scale up a business, not how to wind it down. + +And Poles are increasingly entrenched in other ways. London’s state schools have 30,000 Polish-speaking pupils. Each year 20,000 children are born to Polish mothers; a quarter have non-Polish fathers. + +Wiktor Moszczynski, a former councillor in Ealing, rolls his eyes at the prospect of a large-scale return of Poles to their homeland, although he admits that some who had planned to come to Britain will hesitate until the terms of Brexit become clearer. As Mr Kubalka puts it, having survived the Nazi and Soviet occupations, Poles can perfectly well survive a Brexit. + + + +Raising the drawbridge + +Hopes of a cost-free cut in European Union migration are illusory + + + +To pull or not to pull + + + +Frontier spirit + +Uncertainty about the border cheers unionists and dismays republicans + + + +Somebody call a doctor + +Immigration is said to stretch services. But reducing it may strain them more + + + +Britain’s unparalleled diversity is here to stay + + + + + +More Brexit coverage + + + + + +Bagehot + +The ungovernables + +Brexit achieved and Nigel Farage gone, little remains to unite the UK Independence Party + +Sep 3rd 2016 | From the print edition + + + +IF NIGEL FARAGE detected a little bafflement in the crowd at the Coliseum on the matter of his identity and relevance to American politics, he did not let on. Donald Trump had invited the outgoing leader of the right-populist UK Independence Party (UKIP) to stump for him in Jackson, Mississippi. “I’ll keep it short,” Mr Farage assured his host, not quite off-mic, as he bounded onto the stage. “I come to you from the United Kingdom with a message of hope,” he gushed as his audience cheered (whoever this guy was, he sure seemed upbeat). Then they went wild for: “We made June 23rd our independence day when we smashed the establishment!” Mr Farage, without whom Britain’s vote for Brexit probably would not have happened, could not have been happier. + +Back home, his party is in a bad way. Which is odd: UKIP has just altered the course of British history, has soared ahead in recent local government elections, is ideally placed to hassle Theresa May’s government to move harder and faster towards Brexit and stands on the brink of toppling the Labour Party, divided and incompetent, in its doughty northern English strongholds where working-class voters backed Brexit. Yet UKIP’s poll numbers are down: to 12%, their lowest since last year’s election, according to YouGov. Meanwhile the race to replace Mr Farage has been dismal. None of the party’s most impressive figures is a candidate and Diane James, the unremarkable front-runner, has refused to propose any new policies or attend hustings. + +All of which exposes the underside of Mr Farage’s six years as leader, his second spell in the role. A talented rabble-rouser who has achieved more in the past few years than most cabinet ministers, UKIP’s former chief does not do computers (his wife sends e-mails on his behalf), people management or details. Raheem Kassam, a former aide, has described the party’s headquarters as “a fucking playground” where “we’d have to lock certain doors because the people behind those doors were too embarrassing to be seen”. As Mr Farage conceded to Bagehot when, last year, the two were barricaded inside UKIP’s Rotherham office by anti-racism protesters, the party has struggled to develop clear positions on subjects other than Europe and immigration. + +Then there are the psychodramas. Mr Farage fell out spectacularly with his party’s only three other political talents fit for national prominence: Suzanne Evans (whose membership was suspended after she called him “divisive”), Patrick O’Flynn (a former political editor of the Daily Express) and Douglas Carswell (a libertarian who defected from the Tories in 2014 to become UKIP’s only MP). He also managed to alienate his party’s executives, who barred one of his preferred successors, Steven Woolfe, from standing because he submitted his application 17 minutes late. Mr Farage’s unhappy parting shot was to call them “among the lowest grade of people I have ever met” and “total amateurs”. Ms James, who has ended up as the candidate least hated by the Farageists, wants to call an extraordinary general meeting of the party to disband the executive committee if she wins. + +She seems a capable manager—more so than Lisa Duffy, her main rival and formerly the hands-on UKIP mayor of Ramsey, a small town in Cambridgeshire—but would still struggle to improve things. For the party’s problems are deeper than they look. Populist political forces succeed by saying what their audiences want to hear and, as David Art, a political scientist at Tufts University, argued in his book, “Inside the Radical Right”, are thus fundamentally inimical to professional structures and processes. + +This is more true of UKIP, whose sole unifying cause has been Brexit, than broader-based counterparts like France’s National Front, Austria’s Freedom Party and Mr Farage’s carrot-hued new buddy in America. Beyond leaving the EU, virtually nothing unites UKIP. The party is at once libertarian and authoritarian. It preaches individual freedom but contains admirers of Vladimir Putin. It wants to privatise the National Health Service, apart from when it does not. It has flirted with both a tax on luxury goods and deep tax cuts for the richest. It hems and haws on gay marriage, halal food and the burkini. It is vague about what sort of immigrants Britain should let in, and in what numbers. Even on the EU it is utterly divided: some (like Mr Carswell) want Britain outside the union to become a European Singapore, while others (like Aaron Banks, the forthright businessman who bankrolled the party’s pro-Brexit efforts) want something more like a return to the 1950s. + +All parties, and especially populist ones, contain a range of views. Yet they tend to congregate around certain stretches of the political spectrum. Founded in pursuit of Brexit alone, UKIP has no such common ground. On sprawling, defining themes like the vocation of the state, the meaning of nationhood, the interaction of public and private spheres, and the roles of pluralism, globalisation and citizenship in modern societies it has no continuity and is irredeemably at odds with itself. That inhibits it from establishing and sticking to the sort of long-term strategy it needs to become and remain more professional. + +Making plans for Nigel + +This points to a grim cycle. The last time Mr Farage resigned, UKIP tumbled. For 11 ignominious months Lord Pearson, a languidly aristocratic former Tory, trashed his party’s prospects: in a television interview shortly before the 2010 election he appeared not even to have read its 14-page manifesto. All of which may now repeat itself. “One quite plausible possibility is we end up with a re-run of the Lord Pearson experience: a year or two of messy and incoherent leadership under a figure not cut out for the big leagues, then Farage comes back,” suggests Robert Ford, a UKIP expert at Manchester University. The fact is that UKIP’s weaknesses point to Mr Farage’s weird genius. Besides the quest for Brexit, his unique schtick was all the party had. Now, again, it may be its only salvation. + + + + + +International + + + + +Terrorism: Learning to live with it + + + + + +Terrorism + +Learning to live with it + +People are surprisingly good at coping with repeated terrorist attacks. In America and Europe, they may have to be + +Sep 3rd 2016 | From the print edition + + + +IT HAS been an edgy summer in France. Since the horror of Bastille Day, when Mohamed Lahouaiej Bouhel killed 86 people in Nice, heavily armed soldiers have patrolled the beaches. In late July fanatical Muslims murdered a Catholic priest in Normandy. France remains in a state of emergency after gunmen affiliated to Islamic State (IS) killed 130 people in Paris last November. Next year’s presidential election threatens to be a competition over who can sound toughest on terrorism. + +Last week Nicolas Sarkozy, a former president, launched his campaign to get his old job back. As well as calling for a national ban on the “burkini”, a modest swimsuit favoured by Muslims, he has proposed the detention or electronic tagging of potentially thousands of people who are on a list of Islamist-inspired security threats. If he wins his party’s nomination, Mr Sarkozy could be the less nativist of two second-round candidates for the presidency. The other would be Marine Le Pen of the National Front. + +Germany, too, remains on high alert after two Islamist attacks and a shooting rampage by a mentally unstable teenager in July. It is boosting spending on its police and security forces. Eight state interior ministers from the ruling Christian Democrat party met on August 18th to back a raft of measures, including restricting dual citizenship for Germans of Turkish origin and banning the burqa. Some reports suggest that the government will soon advise citizens to stockpile food and water in case of a major terrorist attack. + +In America, meanwhile, mass shootings in San Bernardino and Orlando have forced terrorism into the presidential race. In August Pew, a pollster, reported that Americans wanted Hillary Clinton and Donald Trump to spend more time debating how they would protect America from terrorism than debating the economy. Another poll conducted earlier this year asked the 83% of its respondents who said they followed IS news closely whether the group was “a serious threat to the existence or survival of the US”. No less than 77% agreed with this extraordinary suggestion. + +The age of humdrum terror + +September 11th, 2001 has remained an outlier both for its carnage and for its wider impact. Since then, Western security and intelligence services have become good at disrupting complex plots. Civil airlines have become dauntingly tough targets, albeit at enormous cost in money and travellers’ convenience. Fears of a terrorist group getting hold of a nuclear weapon have not disappeared. But nor has it happened, despite many predictions to the contrary. + +And yet the number of deaths rises, both in America and Europe. Killers have ranged from the “lone wolf” attacker (attracted to the IS brand by its slick propaganda on the internet) to commando-style operations. Almost without exception, targets have been chosen for their vulnerability or cultural symbolism. Whereas some attacks have involved IS fighters who have returned home (something that security agencies have been warning about for several years) most have been the work of local sympathisers, often with social or mental-health problems, who have been nowhere near Syria. + +Even when the caliphate is defeated in Iraq and Syria, as it surely will be, the threat to the West seems likely to persist. And the kind of attacks IS encourages are fiendishly hard to prevent. Anyone can rent or steal a lorry and drive it at a crowd. Especially in America, it is all too easy to buy high-powered automatic weapons that can kill scores of people in moments. Neither great planning nor great intelligence is required to carry out such attacks. Even when the perpetrators are on the radar of the police and security services—and by no means all are—there is no guarantee they can be stopped, given the sheer number of potential jihadists. + +Thus it seems likely that much of Europe and America will have to get used to acts of Islamist-inspired terrorism becoming, if not routine, at least fairly regular occurrences. The challenge for open, liberal societies is how they should respond to that threat, particularly at a time when popular confidence in traditional political elites has sunk so low. Above all, the danger is of over-reaction. + + + +As a result of the Troubles in Northern Ireland and the actions of ETA, a Basque separatist group, terrorism was consistently deadlier in the 1970s and 1980s than it has been since (see chart). Even then, the chance of being murdered was small. During the 30 years of the Troubles, the annual risk for civilians of being killed in Ulster was about one in 25,000. During the four bloodiest years of the second intifada, the annual risk to an Israeli civilian was about one in 35,000. Even in 2001, the likelihood of an American in the United States being killed in a terrorist attack was less than one in 100,000; in the decade up to 2013 that fell to one in 56m. The chance of being the victim in 2013 of an ordinary homicide in the United States was one in 20,000. Traffic accidents are three times as lethal. + +Barack Obama was correct when he said earlier this year that the danger of drowning in a bathtub is greater than that of being killed by terrorists. Baths are a one-in-a-million risk. Even if the terrorism deaths in San Bernardino and Orlando were doubled to give an annual death toll, the risk would still be about one in 2.5m. Yet the president was lambasted for his otherworldly complacency. + +That hints at the peculiar effects of terrorism. Voters and most politicians treat it as something entirely distinct from other, far greater, risks. As a result, cost-benefit analysis becomes almost impossible. + +After the attack on the World Trade Centre in 2001, America threw massive resources at homeland security. On conservative estimates, by 2009 it was spending an extra $75 billion a year. In a report for the Cato Institute, a libertarian think-tank, John Mueller and Mark Stewart assess whether that spending is worthwhile. Judging it on the same basis as other government spending that aims to mitigate fatality risk, they say it would be justified only if it was thwarting nearly half of 1,667 serious attacks a year. You would have to believe that without the additional security measures in place, America would be suffering four significant attacks a day. + +The limits of statistics + +But woe betide any politician who suggests diverting money from homeland security to areas where it might save more lives. The first popular response to a major terrorist incident is shock and grief. The second is nearly always that those in power have not done enough. After the Nice attack, one opinion poll found that 67% had no confidence in the government’s ability to tackle terrorist threats. Despite the enduring state of emergency and President François Hollande’s repeated assertion that France is “at war” with IS, the impression that his government has done too little has stuck. + +For political leaders, the calculation appears to be that you can never be seen to be doing too much to defeat terrorism, even if a great deal of the apparent effort is ineffective displacement activity, described by experts such as Bruce Schneier as “security theatre”. Much airport security is like that. One team appointed by the Department of Homeland Security managed to get fake guns or bombs past baggage scanners on 67 out of 70 attempts. + +Terrorism is a form of psychological warfare against a society. It is supposed to have effects that are utterly disproportionate to the actual lethality of the attacks. Thanks in part to the extensive media coverage that terrorist attacks attract, thanks also to the reaction of politicians who glibly talk of threats being “existential”, and thanks too to the security services who, for their own purposes, inflate the capability of terrorists, the perception of risk is typically far higher than the reality. + +Compared with other traumatic events, such as natural disasters, terrorist attacks tend to distress people who were nowhere near an incident and who knew nobody caught up in it. That is partly because of the seemingly random nature of attacks. It also shows how disturbing is the idea of an “enemy within”. In the case of suicide attacks, the terrorists’ fanaticism adds a dimension of horror. + +In 2002, at the height of the second intifada, 92% of Israelis feared that they or a member of their family would become a victim of a terrorist attack. Nearly 10% of the population suffered symptoms associated with post-traumatic stress disorder (PTSD). A survey of 30 countries in 2011 found that Northern Ireland had the highest rate of PTSD. Fully 15% of the adult population were affected as a result of conflict-related experiences. + +That is the bad news. The good news is that, despite the psychological and physical wounds that sustained terrorist campaigns inflict, societies can become inured to them. Dov Waxman, an Israeli academic who studied the effects of the second intifada, found that people can become habituated to repeated terrorist attacks, and live “a semblance of normal life”. Research on the impact on the morale of Israelis during the peak period of terrorist attacks (2002-04) has found that their satisfaction with life barely changed. It also compared quite favourably to terrorism-free societies. + +As terrorism becomes routine, its capacity to shock diminishes. Gradually, the news media lose interest. One study of four attacks on Israelis in 2002 and 2004, all of which killed between eight and eleven people and injured 50-60, found that the main television channels began to devote less time to attacks and ratings for the news programmes dropped. Politicians also exhaust their capacity for hyperbole and settle for a tone of grim defiance. + +Two things, however, may have contributed to Israeli resilience that are less evident in some Western societies. The first was the already strong social solidarity among Israeli Jews. The second was the relatively high confidence that Israel’s security services and political leaders would eventually get on top of the situation. + +The building of the security wall between Israel and the West Bank after 2003 showed how far the government was willing to go. The construction of the highly effective wall was a fairly simple solution that impinged little on the lives of most Israelis (though a lot on Palestinians). Governments in Europe and America, faced with a threat that comes mostly from their own radicalised citizens, will struggle to find any acceptable equivalent. + +Arguably, they should not even try. The greatest damage that terrorists do is almost always through the over-reaction their acts provoke. Given that this is such an obvious trap, it should be possible to avoid running full-tilt into it. As Messrs Mueller and Stewart point out in another paper, by wildly exaggerating the extent of the threat that terrorists pose, political leaders and security specialists play the terrorists’ game by glamorising their squalid enterprise. + +Leaping into the trap + +Last year General Michael Flynn, Donald Trump’s adviser on national-security issues and a former head of the Defence Intelligence Agency, did just that. He described the terrorist enemy as “fuelled by a vision of worldwide domination achieved through violence and bloodshed” that was “committed to the destruction of freedom and the American way of life”. That may indeed be how IS thugs see themselves. But why should anyone sensible be so keen to validate their boasts? + +To his credit, Mr Obama has consistently warned about the consequences of using hyperbolic language to describe the terrorist threat. In a TV address last December, after the San Bernardino shootings, he explained that success against IS and other terrorists “won’t depend on tough talk or abandoning our values, or giving in to fear”. Instead, he said, America would prevail by being strong and clever, resilient and relentless. Mr Obama is right. Defeating terrorism depends above all on good intelligence, a degree of stoicism and a refusal to allow it to undermine the principles that open societies are built on. + + + + + +Business + + + + +Corporate taxation: The €13 billion bite + +Drugs in America: Seizure-inducing + +Xiaomi: Show me again + +Serge Pun & Associates: Honest partner + +Corporate activists in Germany: Stada and deliver + +Zalando: Fashion forward + +Schumpeter: Leaving for the city + +Schumpeter: Correction: Own goal + + + + + +Corporate taxation + +The €13 billion bite + +The European Commission’s huge penalty against Apple opens up a new front in the war on tax avoidance + +Sep 3rd 2016 | From the print edition + + + + + +MARGRETHE VESTAGER, the EU’s competition commissioner (pictured), likes to knit elephants in her spare time, because, she once said, “they bear no grudge, but they remember well”. It is hard to imagine executives at one of the big beasts of the tech world forgetting August 30th 2016 in a hurry: that is when Ms Vestager told the Irish government to recover up to €13 billion ($14.5 billion), plus interest, in unpaid taxes from Apple. The decision was expected, but the figure was higher than experts had predicted. + +The ruling is the most important—and controversial—moment so far in the war on corporate tax avoidance. Tax-justice campaigners hooted with delight. Apple was livid, and vowed to appeal. The Irish government may follow; its finance minister, Michael Noonan, would rather “defend the integrity of our tax system”, as he put it, than accept a windfall that would exceed Ireland’s annual health budget. Politicians in America, Apple’s home market, denounced the move as a “tax grab”. + +The commission concluded that Irish rulings in 1991 and 2007 artificially lowered the tax Apple was due to pay, and that although the firm did not break any law, this arrangement was in breach of EU state-aid rules preventing member states from offering preferential treatment to particular firms. The spat centres on two Irish-registered subsidiaries that hold the right to use Apple’s intellectual property to make and sell its products outside the Americas. The commission argues that a dubious profit-allocation deal allowed most of their profits to be moved to a “head office” that existed only on paper and was tax-resident in no country—allowing Apple to shrink its tax rate in Europe to well below 1%. + +The ruling is part of a broader assault on aggressive tax avoidance, led by Europe. This began several years ago, when post-crisis austerity produced calls for greater tax fairness. The commission is looking into questionable structures set up by several other (mostly American) firms, including Starbucks and McDonald’s—though these involve much smaller sums than Apple. The focus is on arrangements that allow the firms to minimise taxes paid in Europe on sales in the region, while simultaneously using deferral provisions in the American tax code to keep the profits offshore indefinitely—thereby also shielding them from a tax hit back home, where they would be taxed at a hefty 35% (minus any payments made in Europe) if repatriated. + +European countries have been closely involved in efforts to create international consensus on how to close loopholes in cross-border taxation. These are led by the OECD, and are known as the Base Erosion and Profit Shifting (BEPS) project. The 44 participating countries (now 85) agreed on a set of reforms last year, but implementation is patchy. Some see the commission’s ruling on Apple as a sign that it has little faith in BEPS. The judgment certainly complicates international tax diplomacy. + +America criticised the ruling, calling it “unfair”. It had warned that it might retaliate in some way if Brussels went ahead. It argues that the commission is trying to turn itself into a “supranational tax authority”, threatening the consensus achieved through BEPS on the crucial “arm’s-length principle” at the heart of transfer-pricing rules. These govern the prices that subsidiaries of a multinational in different countries charge each other for the products and services that flow between them. + +The Americans are fretting mainly because the ruling signals that Europe will lay claim to some of the more than $2 trillion of profits that American firms have amassed offshore, under the deferral provisions. Policymakers in Washington believe only the federal government has the right to tax this, as and when it is brought home. The Brussels decision may spur American politicians to set aside their differences on tax reform and agree on a package with a reduced tax rate for profits that firms repatriate; better that than to let Europe dip into the offshore pot, they think. + +Apple has come out fighting. It has denounced the ruling as unfairly retroactive, based on various “fundamental” misunderstandings of its operations and underpinned by iffy theories that have changed over time and that deviate from settled practice. It strikes “a devastating blow to the sovereignty of EU member states over their own tax matters and the principle of the certainty of law in Europe,” Tim Cook, its boss, harrumphed. The firm’s CFO, Luca Maestri, accused Ms Vestager’s team of “legal mumbo-jumbo” and poor maths: their calculation that Apple paid an Irish tax rate of under 1% for 2014 was arrived at using the “wrong denominator and the wrong numerator”, he claimed. Apple says it paid the equivalent of $400m in Irish tax that year at the statutory 12.5% rate. + +Apple also took issue with the assertion that the “head office” was stateless; the unit is, it says, taxable in America (in theory at least). It is also true that Apple pays substantial tax globally; last year it wrote cheques for more than $13 billion, which is comparable with the tax rate that many large American firms pay—though a sizeable chunk of what it owes is not paid straight away but is instead recorded as a deferred tax liability (see chart). + + + +Ireland has its own reasons to chafe. It worries that being forced to collect would undermine its successful economic model: hosting multinationals that see Ireland as an attractive European base. “To do anything else [but appeal] would be like eating the seed potatoes,” said Mr Noonan. + +In the commission’s view, Ireland is not the only country short-changed by Apple’s tax practices; others, in the EU and beyond, have lost out. They may now challenge its arrangements. Other firms have reason to worry, too. There is no reason to think Brussels’s probes will end with Apple and the handful of other companies already under public scrutiny. These cases will not be resolved quickly. Apple’s appeal could take a decade to grind through the courts. In the meantime, it will have to put the amount demanded in escrow. At 7% of its cash pile, that’s comfortably affordable. Not many companies could say that. + + + + + +Drugs in America + +Seizure-inducing + +A row over Mylan’s EpiPen allergy medicine raises fresh questions about how drugs are priced + +Sep 3rd 2016 | NEW YORK | From the print edition + +Sticker shock + +JULIANA KEEPING is rushing to work in Oklahoma with two children in tow. Her three-year-old son, Eli, has cystic fibrosis, a deadly lung disorder. He is too young for a drug called Orkambi from Vertex Pharmaceuticals, a biotech firm, but one day it may keep him alive. His mother’s question is why it costs over $250,000. A charity helped pay for its development, she says, with some donations from people who were “D-Y-I-N-G”—she spells out the word. That is because she doesn’t want her other child to understand. “She doesn’t know her brother’s disease is F-A-T-A-L.” + +Ms Keeping has started a petition against the price of Orkambi. She is not alone in her anger. Americans are furious about the cost of medicines. Over the past week their ire engulfed Mylan, a generic-drug firm, which had raised the price of its EpiPen, an injectable medicine that fends off deadly allergic reactions, to $608, from about $100 in 2007. On August 29th Mylan said it would start selling a generic version for half the price. The brawl is far from over. Both Hillary Clinton and Donald Trump are proposing measures that would mean tighter price controls on drugs. + +For pharma firms, this is a worrying prospect. To date the government has done little to lower or cap spending on medicines. Across Europe governments control prices in one way or another, but American drug firms can set whatever official price they like. Their single biggest customer is Medicare, which spent a massive $112 billion on medicines for the elderly in 2014. The way it operates rewards doctors for selling costly intravenous drugs. And it is illegal for Medicare to negotiate with drug companies. Only private health insurers do so on the government’s behalf, but they are sharply constrained—for example, they are required to pay for six broad categories of drugs. The idea is that competition among insurers (and accompanying pressure to pass on savings to consumers) will restrain costs, but it has not done so. As a result America spends 44% more on drugs per person than Canada, the next-highest. + +There have been plenty of rows over drug prices in the past, but matters are becoming more heated now. For one thing, insurers are obliging patients to pay a greater share of the cost for their treatment, so they notice higher prices. Ms Keeping has private insurance, but she still had to spend nearly $3,000 last year on her son’s care. + +Prices are also rising rapidly. The average launch price of a range of cancer drugs, adjusted for inflation and health benefits, grew by 10% each year between 1995 and 2013, according to a recent paper from the Journal of Economic Perspectives. Prices for older, patented drugs are climbing, too (see chart). Drugs firms used to say increases were due to inflation, says Steve Miller, the chief medical officer for Express Scripts, a firm that manages drug costs for employers. Since there is now little general inflation about, he says, “it’s price gouging.” The pharma industry’s rationale, which is that brilliant new drugs are worth it, is often faulty. Some new medicines are impressive, such as Gilead’s $84,000 cure for Hepatitis C, Sovaldi, but others are not. Sanofi introduced Zaltrap, a cancer drug, for $11,000 a month, despite the fact that it offers little more benefit than cheaper drugs. + + + +Price increases for generic drugs seem even more arbitrary. The most egregious case remains Turing, a small company that bought an old HIV drug with an expired patent and boosted its price by 5,556%. Many in the industry branded its boss, Martin Shkreli, an evil anomaly. But the case of Mylan shows that Turing was not quite the outlier it appeared to be. The larger firm’s chief executive, Heather Bresch, heads the generic-drugs lobby and is the daughter of an American senator. + +In the field of patented medicines, the industry points to the billions of dollars that are required to develop new treatments. But many question whether drug firms’ profit margins, which greatly exceed those of other industries, especially in the case of biotech companies, need to be as high as they are. “There’s limited evidence to show that spurring innovation requires that level of profit,” says Ronny Gal of Sanford C. Bernstein, a research firm. + +What does the doctor order? + +The Food and Drug Administration (FDA) has made progress in addressing some of these problems. Last year it approved an impressive number of both generic drugs and innovative medicines. Still, it could work faster, particularly when a generic has a monopoly. + +Private insurers and pharmacy-benefit managers, such as Express Scripts, are old hands at resisting high drug prices. They use co-pay schemes and other incentives to push patients towards cheaper medicines. They also refuse to pay for some new drugs when there is a reasonable alternative. This works quite well. The official or “list” prices for spending on drugs climbed by 12.2% last year, according to IMS Health, a research outfit, but net spending, which includes the rebates and discounts that employers and health insurers demand, rose by a more modest 8.5%. + +A popular idea is to let the government negotiate prices of the drugs for Medicare directly with pharma firms. The idea has support from both Democratic and Republican voters. But any legislation might not pass, and it would be complex to put into practice. Furthermore, Medicare would need to be able to refuse to pay for some medicines; neither Mrs Clinton nor Mr Trump have gone so far as to suggest that. The public might object, too. The only thing that Americans detest more than an expensive drug is a bureaucrat who says they can’t have it. + +Reform will of course be opposed strongly by the pharmaceutical industry, which has many friends in Washington, DC. The chief strategy employed by drug companies to rein in costs for patients has bordered on the devious. They offer coupons and other help to cover patients’ out-of-pocket costs for expensive drugs. But the prices for insurers remain high, which raises costs for everyone. Now that the threat of regulation looms, they may be willing to do better. + + + + + +Xiaomi + +Show me again + +A once high-flying startup needs to get back to basics + +Sep 3rd 2016 | SHANGHAI | From the print edition + + + +IF YOU can sell smartphones, you can sell anything. That seems to be the motto of Xiaomi, a Chinese firm best known for making feature-laden but affordable handsets. On August 31st, at a splashy event in Beijing, it unveiled a robotic vacuum cleaner—the latest in its “ecosystem” of devices, which also includes smartwatches, air purifiers, hoverboards, rice cookers and even an electric screwdriver (most are built by startups in which Xiaomi has a stake). + +The snazzy vacuum—it features a futuristic distance sensor that is able to scan its surroundings up to 1,800 times a second—is a symbol of the hubris that has led Xiaomi to chase its ecosystem dreams even as it has neglected its core business. Considered the world’s most valuable startup only a couple of years ago, when it attracted more than $1 billion in funding at a valuation of $46 billion, some now reckon it to be worth only a tenth of that. + +The firm vigorously rejects such estimates—and calls another figure deeply flawed. According to IDC, a market-research firm, sales of Xiaomi handsets on the Chinese mainland fell by nearly 40% in the second quarter of this year, compared with a year ago. Other research, Xiaomi points out, shows that sales have declined only a bit. The firm insists that demand remains strong, claiming it sold nearly 7m phones in June alone (it shifted more than 70m last year). + +Whoever is right, the days of heady growth are clearly over (see chart). The firm soared by offering legions of first-time buyers smartphones with high-end features for just 699 yuan ($105). Partly as a result, smartphone penetration in urban China has risen from 51% two years ago to 75% today, according to Kantar Worldpanel, another research firm. + +Xiaomi also prospered by staying “asset-light”. Its initial business model involved holding few phones in stock, selling online only and offering only a limited number of models. In addition, rather than splash out on costly advertising, it relied on word-of-mouth recommendations and short-lived online sales campaigns that deliberately kept supply scarce (“hunger marketing”, in the jargon). + +Yet the smartphone market in China has quickly matured. Consumers are now buying their second or third devices. They are ready to pay for more expensive devices—and are less susceptible to marketing gimmicks. These worked when most people in big cities had never bought a smartphone, but now many find them annoying, observes Duncan Clark of BDA, a consultancy. Xiaomi’s slow product-release cycles may also have led the firm to appear “stale and uninnovative”, adds Edward Tse of Gao Feng, another consultancy. Consumers now favour mid-priced phones from local rivals such as Huawei and BBK. + +Other problems are home-made. C.K. Lu of Gartner, another research firm, argues that Xiaomi has failed in its push into services, which was meant to offset the thin margins on handsets. Xiaomi claimed it would reach $1 billion in revenues from services last year, but achieved barely half that amount. The firm’s noisy forays abroad, to South-East Asia and elsewhere, have proved a costly distraction. But the biggest headaches have been supply-chain snags, which hurt product quality and are another reason why it missed its sales targets. These troubles have led Lei Jun, the firm’s founder, to take personal charge of smartphone development and supply-chain management. + +Executives insist that the firm remains on track. Shou Zi Chew, its chief financial officer, says the bet on services is paying off. He claims his company is already profitable and predicts that revenues from services will reach the billion-dollar mark by the end of this year. Hugo Barra, who runs Xiaomi’s international business, points to sales growth of more than 70% year on year in India. Xiaomi recently won a licence for internet banking and will launch an online-payment service soon. It also plans to open 50 of its own retail stores across China by year-end. Some Xiaomi investors are looking to dump their holdings, but many seem patient. One of the biggest says: “The company is in no danger of collapse…and Lei is focused on the right things.” If he is wrong, others warn, Xiaomi could become the “Blackberry of the East” or the “HTC of the mainland”, referring to two once-proud handset makers that are shadows of their former selves. + + + + + +Serge Pun & Associates + +Honest partner + +Myanmar’s best-known business house is joining up with multinationals + +Sep 3rd 2016 | YANGON | From the print edition + +The wind’s set fair + +THE maroon hot-air balloons which carry tourists over Bagan—an ancient city teeming with crumbling red-brick temples—are famous in Myanmar. The fleet belongs to one of the country’s best-known tycoons. Since the pariah nation began to open up in 2011, Serge Pun has gradually transformed an empire built on property into a conglomerate with interests in tourism, consumer goods and other industries. His firms have become favourite partners for foreign multinationals. + +Mr Pun is an atypical character in Myanmar’s business scene. He spent his teenage years in China, his family having left Myanmar after the army’s coup in 1962. During the Cultural Revolution Chinese authorities sent him to a re-education camp. He returned home in the early 1990s after starting his own property firm in Hong Kong. + +He owns two flagship companies, First Myanmar Investments (which became the first company to list on Myanmar’s new stock exchange in March) and Yoma Strategic Holdings, which is listed in Singapore. Both hold stakes in a number of housing developments, whose value Myanmar’s opening has greatly boosted. + +Most Burmese companies are banned from forming partnerships with Western entrepreneurs, because they remain subject to sanctions imposed by the American government, designed to punish the army’s cronies. But Mr Pun’s firms never appeared on the sanctions list. His businesses kept their noses clean during years of military rule. At the time this rigour cost them dear in terms of deals, he says. Now their reputation for honest governance appeals to multinationals. It has also helped them to hire Western-educated exiles from Myanmar, who are increasingly choosing to return. + +Recent tie-ups with foreigners include plans by First Myanmar to invest in a network of hospitals in partnership with Lippo group, an Indonesian conglomerate. A bank of Mr Pun’s plans to launch a mobile-payments system in partnership with Telenor, a Norwegian telecoms firm. Yoma has acquired, from Yum! Brands, the American owner of Pizza Hut, Taco Bell and KFC, the right to operate the fried-chicken chain in Myanmar. The company is also distributing tractors from New Holland Agriculture, an Italian-owned maker of agricultural equipment (whose parent is controlled by Exor, whose chairman sits on the board of The Economist’s own parent company), which should benefit from the mechanisation of Myanmar’s farms. + +The future is still unpredictable. Foreign interest in Myanmar slowed ahead of a general election last November, and remains subdued as outsiders wait to see how the new government (led by Aung San Suu Kyi, a longtime democracy activist) will run things. The property market recently softened, and is only now reviving. Meanwhile, the authorities forced all high-rise construction in Yangon, the biggest city, to halt for an inspection of permits granted under the old regime, adding to worries that the government’s plans to boost business and the economy are still vague. But Mr Pun’s well-connected businesses look sprightlier than most. + + + + + +Corporate activists in Germany + +Stada and deliver + +A putsch at a drugs firm is a sign of rising confidence among investors + +Sep 3rd 2016 | PARIS | From the print edition + +IT MADE an uncommonly inviting target for an activist. Stada, a German maker of generic drugs based near Frankfurt, had low revenues, high running costs and opaque accounting. It was valued lower than its peers and shunned by investors. And if its overpaid top managers were lacklustre, its supervisory board was fossilised: crammed with elderly doctors and pharmacists who did little to pep it up. + +Shareholders in Germany usually shy away from confronting such problems. But after a rancorous 14-hour annual general meeting on August 26th, they voted out Stada’s chairman, Martin Abend. He went the way of the once-dominant chief executive, Hartmut Retzlaff, who quit in June (owing to an illness). As the board is rejigged, managers have rediscovered some ambition. They have promised to lift revenue to €2.6 billion ($2.9 billion) by 2019, from €2.1 billion last year. + +It is a big victory for a young, German-led investment firm, Active Ownership Capital (AOC), which has adopted the sort of aggressive style usually associated with American, British or Nordic funds, such as Cevian Capital of Sweden. AOC, which has a 7% stake in Stada, fought for a year to shake up the board. The scrap broke out into the open in May. “We have seen a type of proxy contest, a big change in composition of a board, that has never happened before,” says Alexander Georgieff of Georgieff Capital, a boutique investment bank. + +Only 27 German companies were subjected to (public) activist campaigns between 2010 and today, according to Activist Insight, which tracks such activity, compared with 147 in Britain. The number is surely rising. Cevian, especially, has made waves. A 10% stake it bought in Demag Cranes in 2010 roughly doubled in value by the time it helped an American buyer to take over the firm in 2011. It holds 16% of ThyssenKrupp, a huge, ill-run German steel and engineering conglomerate, which it hopes to shake up (and perhaps to break up). Cevian also bought a hefty stake in Bilfinger, a construction firm, though it is finding it hard to inspire an overhaul. + +Increased activism comes partly because ownership of German firms has changed. When banks and insurers held most stocks, they tended to leave sleepy boards alone; managers could decide whether or not to seek growth. Now foreign entities, notably pension funds, own over half of the shares in every firm listed on the DAX stockmarket index. + +Activism itself is on the rise globally. A report in August by JPMorgan Chase, a bank, counted more activist campaigns everywhere in the year to July, with Europe, which is late to the party, seeing the most dramatic increase. It totted up 99 campaigns by agitators there, up from 61 the year before. Perhaps the best-known foreign activist in Germany is Elliot, an American hedge fund known for buying large minority shares in firms targeted by others for takeover. In 2014 it sold a 25% stake it had built in a Stuttgart-based drugs firm, Celesio, for some $2 billion to an American buyer, McKesson, which distributes drugs. Another fund, Southeastern Asset Management, now has one of the largest shares in Adidas, a sportswear firm, and could do something similar. All these examples, and that of AOC, should encourage other investors—both local and foreign—to treat the “proxy season” of annual general meetings next spring as a chance to make their voices heard. Good news for everyone but the underperformers. + + + + + +Zalando + +Fashion forward + +One of Europe’s most interesting technology companies sells shoes and threads + +Sep 3rd 2016 | BERLIN and Mönchengladbach | From the print edition + +A platform for all shoes + +PAST the rolling hills, grazing ponies and sleepy villages of North Rhine-Westphalia, in west Germany, a convoy of trucks converges on Mönchengladbach. Here a hangar the size of 13 football fields encloses the logistics centre of Zalando, Europe’s biggest online vendor of clothing and footwear. Inside, people pack boxes with shoes, jeans and handbags; and thousands of parcels progress at fairground speed up and down a 14km conveyor belt where they are weighed, labelled, scanned and sorted before tumbling down slides into trucks bound for 15 countries. Last year Zalando shipped 55m orders, over 100 per minute, from three such warehouses. + +The firm’s founders, David Schneider and Robert Gentz, started by selling flip-flops online from their Berlin flat in 2008. They found that Europe’s market for shoes and clothing was fragmented, inefficient and offline. Soon, they were backed by Germany’s Samwer brothers, whose habit of imitating American online businesses earned them a reputation as the copycat kings of Europe. They noted that whereas Zappos, a firm later bought by Amazon, an American online retailer, was selling shoes online in the United States, nobody was doing so in Europe. + +Backed by the Samwers’ firm, Rocket Internet, Zalando has grown into a giant. Spending on fashion in bricks-and-mortar outlets is stagnant in Europe, but online sales are increasing by around 15% a year in the countries where Zalando operates. Its sales—of €3 billion ($3.3 billion) in 2015—are rising by around 30% a year (even after taking into account returns of items to the firm). When a series of Dutch shoe stores went bankrupt last year, many pointed to “the Zalando effect”, echoing the impact that Amazon has had on bookshops. + +Selling fashion in lots of markets is not easy. Half of what Zalando sells (by value) comes back to it in the form of returns, because of problems with fit or style. It tolerates all manner of customer whims. They can order as much as they like and are allowed 100 days to send back items at no cost. In places where people aren’t used to buying fashion online, such as Italy and Poland, they can pay the postman in cash. In towns and cities, the company is experimenting with collecting returns directly from customers’ homes and offices. All this has yielded 18m shoppers a year (who buy at least one item). Workers may not be as well treated: two years ago conditions for employees in one of its warehouses came in for criticism, as they have at Amazon. Zalando claims to have improved them. + +Early on it was difficult to get meetings with fashion brands. Christoph Lange, the company’s chief product officer, had to lie and say that Zalando had a physical store just to get in the door. Makers of clothing thought internet selling was evil, he says. Representatives of Topshop, a British mid-market brand, walked out of the two firms’ first meeting. Now it gives Zalando exclusive rights to sell its ranges in Europe. Zalando has relationships with 1,500 brands that supply 150,000 articles. It sells mostly well-known labels. Another online fashion retailer, ASOS, sells only 850 brands of clothing and shoes and relies heavily on its own label. A lure for retailers and brands is that Zalando saves them from having to invest in e-commerce themselves. + +It also saves them from having to get to grips with an unfamiliar office culture. Zalando has a Silicon Valley-inspired work environment, holding “fuck-up nights” to celebrate failure and “hack weeks” to cook up new ideas. It encourages its employees to abandon hierarchy and structure for what it calls “radical agility”. It has a 1,350-strong, and rapidly growing, technology team. Among its other assets are its software, which it built itself, and its user-friendly apps (two-thirds of all traffic goes through mobile phones). Other, older German companies, such as Otto and Lidl, are trying to mimic Zalando’s startup feel, notes Thomas Slide of Mintel, a market-research firm. + +Big data, in style + +Zalando pays close attention to data. It gleans a wealth of numbers from the more-than-5m daily visits to its site, and some brands and retailers of the bricks-and-mortar sort give it access to their stock counts. Both sets of figures help improve the firm’s forecasting of fickle fashion trends, its use of targeted ads and the speed of its responses to shifts in weather patterns or fashion tastes. Through data-mining it can spot the trendsetters among its customers and stock up on what they buy. In future it wants to sell its insights to the rest of the industry. “We want to keep tabs on every fashion item in the world,” says Rubin Ritter, Zalando’s chief financial officer. + +Its success has not gone unnoticed, however. Investors in Zalando have done well recently—its shares have risen by 19% over the past three months, compared with 8% for the DAX, Germany’s main share index—but the main worry is that Zalando could be overrun by Amazon, which plans to expand in fashion, or by Alibaba, a Chinese e-commerce juggernaut that is expanding in Europe. Mr Ritter’s argument that Amazon and Zalando can comfortably co-exist rests chiefly on the fact that Amazon is pursuing the more price-conscious shopper, whereas Zalando is after a higher-value, more brand-conscious segment. The company believes that for such customers, shopping for clothes, shoes and accessories is an emotional activity; shopping on Amazon is just a transaction. “Amazon lists prices, we give advice,” sums up Mr Lange. + +Not everyone is convinced by that, but many agree that Zalando has a head start. Amazon can copy it, but it would be hard to outperform the German company to the point where people start switching enmasse, says Max Erich of ING, a bank. Eventually, though, Amazon will build a strong offering, and consumers will be called upon to decide: do they want a one-stop-shop for everything, from electric toothbrushes to Jimmy Choo shoes? Zalando’s hope is that there is still something special about shopping for fashion, even if it’s done while waiting for the bus. + + + + + +Schumpeter + +Leaving for the city + +Lots of prominent American companies are moving downtown + +Sep 3rd 2016 | From the print edition + + + +FIFTY years ago American companies started to move their headquarters away from city centres to the suburbs. Some critics blamed the exodus on “white flight”, as businesses followed their employees out of increasingly crime-ridden cities. The firms themselves ascribed it to corporate responsibility. They provided offices in safe neighbourhoods and near good schools—one academic, Louise Mozingo, of the University of California, Berkeley, calls it “pastoral capitalism”. Whatever the reason, it created a new type of HQ: not an office tower in the pumping heart of a metropolis but a leafy campus in the middle of nowhere. + +Now a growing number of companies are moving back again. The most prominent example is General Electric, which abandoned New York City for a 68-acre campus in Fairfield, Connecticut, in 1974, but is now swapping its bucolic site for a collection of warehouses on the Boston waterfront. There are legions more. Chicago’s downtown has attracted an impressive collection of HQs, from both the surrounding suburbs and from farther afield, including McDonald’s, Kraft Heinz, Motorola Solutions, Boeing, and Archer Daniels Midland, a food-commodities giant. Zappos, an online retailer, has moved from an office park outside Las Vegas into the city’s old downtown. Biogen moved from Cambridge, Massachusetts, to the Boston suburbs in 2011 only to return a year later. Many tech companies were born urban and couldn’t be any other way. Twitter and Salesforce are in downtown San Francisco, and Jeff Bezos is building a huge campus for Amazon in downtown Seattle. + +City boosters are delighted. “This is better than hosting the Olympics,” says Shirley Leung, a columnist with the Boston Globe, of GE’s move. Corporate executives sound like graduate students after their first reading of “The Rise of the Creative Class” by Richard Florida, an urbanophile intellectual. Jeff Immelt, GE’s chief executive, says that “we want to be at the centre of an ecosystem that shares our aspiration”, and notes that Boston attracts “a diverse, technologically fluent workforce”. Ann Klee, who is helping to oversee GE’s move to Boston, says that the new headquarters will do without a car park, in order to encourage workers to use public transport. It will dispense with security gates and wants the public to come in. Greg Brown, the CEO of Motorola Solutions, commends downtown Chicago for its “energy, vibrancy and diversity”. + +Is the new urbanism all it is cracked up to be? It is easy to find counter-trends, given America’s size and variety: many CEOs continue to see a future in the suburbs of the sunbelt. ExxonMobil is building a headquarters for 10,000 people in the outskirts of Houston. Toyota is moving its North American headquarters from Torrance, California, to suburban Dallas. There is also tax-and-benefits arbitrage going on: over the past decades, the suburbs have become complacent and downtowns have got hungrier. GE’s affection for its old home in Connecticut was no doubt weakened by the state’s decision in 2015 to raise business taxes by $750m. Boston provided an estimated $145m in incentives to secure the deal. + +Still, something is clearly changing in America’s older cities. They are much less crime-ridden than before, thanks to a combination of better policing and demographic change. The homicide rate fell by 16.8% from 2000 to 2010 in big cities. Now these urban centres are magnets for millennials fresh from university and with few responsibilities. Young professionals are reconquering former no-go areas and shifting the problem of urban blight into the suburbs. Hiring such people in Boston, GE reckons, will help it shift its focus from hardware to software and from selling things to offering services over the internet. + +Yet the new downtown headquarters are very different from the old ones, and not just because they are open-plan and trendy. They are far smaller. Often, firms are moving their senior managers to the city along with a few hundred digital workers. Moving back to Chicago’s centre has usually involved downsizing: Motorola Solutions’ HQ shrank from 2,900 to 1,100, and that of Archer Daniels Midland from 4,400 to 70. Many companies are deconstructing their headquarters and scattering different units and functions across the landscape, leaving most middle managers in the old buildings, or else moving them to cheaper places in the southern states. Aaron Renn of the Manhattan Institute, a think-tank, reckons that head offices are splitting into two types: old-fashioned “mass” headquarters in the sunbelt cities, and new-style “executive headquarters” of senior managers and wired workers in elite cities such as San Francisco, Chicago and Boston. + +That suggests there will be no return to the broad-based urban prosperity of America’s golden age. San Francisco could be the template of the future. Its centre is divided between affluent young people who frequent vegan cafés and homeless people who smoke crack and urinate in the streets. Long-standing San Franciscans resent the way that the urban professionals have driven up property prices. And those young workers may fall out of love with the city centre when they have children and start worrying about the quality of schools and the safety of streets. + +To the top of the pyramid + +The best book to read if you want to understand corporate America’s migration patterns is not Mr Florida’s but a more recent study, Bill Bishop’s “The Big Sort”. It argues that Americans are increasingly clustering in distinct areas on the basis of their jobs and social values. The headquarters revolution is yet another iteration of the sorting process that the book describes, as companies allocate elite jobs to the cities and routine jobs to the provinces. Corporate disaggregation is no doubt a sensible use of resources. But it will also add to the tensions that are tearing America apart as many bosses choose to work in very different worlds from the vast majority of Americans, including their own employees. + + + + + +Correction: Own goal + +Sep 3rd 2016 | From the print edition + +In our story on Chinese investment in football, of August 27th, we exaggerated the valuations of two clubs, Aston Villa and Granada, by a factor of ten. Sorry. + + + + + +Finance and economics + + + + +China’s data: Superstition ain’t the way + +Politics and statistics: Called to account + +Stockmarket returns in America: The long arm of the Fed + +Indian capital markets: Bank vigilantes + +Private-equity search funds: Seek and we shall fund + +Bad loans to shipping: That sinking feeling + +Australia’s economy: Good on you + +Free exchange: More spend, less thrift + + + + + +China’s data + +Superstition ain’t the way + +Why do people still pay rapt attention to China’s unsatisfactory growth statistics? Because the alternatives are often worse + +Sep 3rd 2016 | From the print edition + + + +CHINA’S official statisticians attract plenty of criticism from baffled outsiders. In recent months, however, they have also endured attacks from party colleagues. On August 26th China’s corruption watchdog, the Central Commission for Discipline Inspection, charged Wang Baoan, head of the National Bureau of Statistics (NBS) from April 2015 to January 2016, with a variety of sins, including moral decay and “superstitious activities”. Earlier this year, the commission also paid a visit to Liaoning province in China’s industrial north-east, where it urged local officials to stamp out widespread data fraud. + +These exhortations may be having some effect. The recent collapse in Liaoning’s economic indicators (fixed-asset investment fell by 58% in the first half of the year, compared with a year earlier) may partly reflect efforts to wring the “water” out of fraud-soaked figures, according to Liu Liu and Hong Liang of China International Capital Corp, an investment bank. + +Many flaws in China’s data are well documented. Provincial GDP figures do not add up to the national total. Quarterly and annual growth do not always mesh. Of the three ways to measure GDP (by counting output, expenditure and income), production figures are reported miraculously quickly, even as the counterpart numbers for spending and earnings appear agonisingly slowly. + +Recent numbers have raised fresh questions. Fixed-asset investment by private enterprises fell by 1.2% in July, compared with a year earlier. Meanwhile the equivalent figure for state-owned enterprises surged. Services have been strong, even as industry has struggled. Growth has not dipped below 6.7%, even as prices slipped into deflation in late 2015. + +These doubts and discrepancies have motivated an understandable search for alternatives. As far back as 2000, scholars turned to indicators like electricity consumption as a statistical refuge from what one called the “wind of falsification and embellishment” rustling the official data. But electricity is a less reliable guide as an economy evolves away from power-hungry industry towards low-wattage services. In a post-industrial economy like America, for example, GDP can grow even as electricity consumption shrinks (as it did in 2015). + +Ker-ching moment + +Liaoning itself inspired a somewhat broader alternative. When he was the province’s party chief, Li Keqiang, now China’s premier, said he relied on rail freight, electricity and bank lending to keep track of the local economy, preferring them to the GDP figures, which, he noted, were “man-made”. His comments inspired this newspaper in 2010 to combine all three indicators into a simple gauge of the national economy, the “Li Keqiang index”. + +The most sophisticated version of this index was created in mid-2013 by John Fernald, Israel Malkin and Mark Spiegel of the Federal Reserve Bank of San Francisco. They fitted their version of the index to the official GDP figures from late 2000 to late 2009, then examined whether the fit remained snug in subsequent quarters. Surprisingly, it did. An index born out of frustration with the official numbers seemed to enjoy a stable, consistent relationship with them—up to the end of 2012 at least. + + + +This snug relationship has since broken down, however, according to our update of their work. Whereas the NBS reported growth slowing gradually to 6.7% in recent quarters, the Li Keqiang index shows it dropping below 5% (see chart). This gap may reveal flaws in the official data. But it may equally reflect shortcomings in the index, which would not have picked up the boom in financial services that boosted China’s GDP over this period. + +In relying on just three alternative indicators, Mr Li was relatively parsimonious. Other critics have been less picky. Some have passed a dragnet through China’s databases, which are teeming with raw statistics on the physical output of individual products: tonnes of steel, metres of silk, litres of beer, even kilowatts of solar cells. + +In a recent blog post for the Financial Times, Chris Balding of Peking University’s HSBC Business School in Shenzhen collected data on 69 “major industrial products” listed by Wind, a data provider. A simple average of these products shows industrial growth (year on year) of about 0% in the second quarter, compared with the official figure of about 6%. Goldman Sachs has gone even further, combining 89 products. Their measure shows industrial output actually shrinking in mid-2015, followed by a modest recovery since. + +The appeal of these output data is that they are less “man-made” than the headline figures. It is more straightforward to count tonnes of cement, square metres of glass or kilowatt-hours of electricity than it is to calculate the value added by a business. But without some measure of monetary value, it is impossible to know how much weight to give one product compared with another. “Tractors”, for example, appear four times in various guises in Wind’s data list. That gives them an outsized 5.8% weight in Mr Balding’s simple average of 69 products. (Goldman Sachs instead weights its products by revenues.) + +Counting tonnage is also, in some ways, a step backwards. China was once obsessed with measuring the sheer quantity of industrial goods, so as to fulfil the requirements of ambitious central plans. Back then, it was foreign critics who pointed out the shortcomings of such measures, which cannot capture quality, variety and efficiency. Growth often stems from reducing inputs or introducing novelty, not expanding volumes. For example, the NBS recently added smartphones, industrial robots and new-energy vehicles to its list of major industrial projects. + +Other alternatives to official data are futuristic, rather than anachronistic. Some data-sceptics have turned to space, using satellite images of China’s city lights to estimate its GDP. Others, such as the boffins at the Big Data Lab of Baidu, China’s biggest online-search company, are relying on smartphones. Through the mobile devices in people’s pockets, they can track online searches for—and physical visits to—shops, cinemas, industrial parks and other places of consumption and employment. + +They say their work can successfully predict fluctuations in Apple’s Greater China revenues and expose possible data fraud. Some cinemas, for example, reported much higher box-office takings than you would expect given the number of people who searched Baidu’s maps for the cinemas’ location. + +These high-tech alternatives are still in their infancy and may never provide more than a timely cross-check of official statistics. Fortunately, technology can also improve those official numbers. The NBS, for example, now receives direct data reports from almost 1m firms through an online system, initiated about four years ago. It has also expanded its central survey teams, making it less reliant on local help. + +As a result of these and other reforms, the official figures may be improving. In a second paper Messrs Fernald and Spiegel, together with Eric Hsu of the University of California, Berkeley, pit GDP against ten of its rivals. They test its ability to explain fluctuations in exports to China, as reported by America, the European Union and Japan, a gauge of China’s economic fortunes that neatly sidesteps the country’s statistical system. They find that China’s GDP does a much better job after 2008 than it did before. Indeed, the official figure tallied better with their trade-based benchmark than any other single indicator, except rail freight. (Some combinations of indicators did, however, outperform GDP, especially a combination of rail, electricity, retail sales and a measure of the availability of raw-material supplies.) + +Investors may disdain China’s official data but they cannot disregard them. The figures can still move markets, which is why unscrupulous traders sometimes try to get hold of them in advance. Leaks used to be commonplace. But investigations and arrests over the past few years seem to have made the bureau more watertight. Mr Wang may now be in disgrace. But his alleged superstitions probably date back to his long career at the finance ministry, rather than his short stint at the statistics bureau. Beijing presumably thinks the bureau’s reputation can withstand the bad publicity, or it would not have charged him so publicly. The accusations may be a paradoxical sign of confidence in the NBS. Some indicators move contrarily. + + + + + +Politics and statistics + +Called to account + +The disturbing prosecution of Greece’s chief statistician + +Sep 3rd 2016 | From the print edition + +“FACTS are stubborn,” wrote Mark Twain, “but statistics are more pliable.” Because made-up GDP and borrowing figures can trick creditors into lending more cheaply, and fiddled inflation numbers can cover up economic woes, politicians are sometimes tempted to tweak data. It is the job of statisticians to keep numbers honest. + +Occasionally, at a high price. In 1937 Olimpiy Kvitkin, a Russian statistician in charge of a census of the Soviet Union, was arrested and shot. His error was to find that the country contained fewer people than Joseph Stalin had announced (the dictator’s brutal policies may have explained the shortfall). + +Less extreme, but nonetheless shocking, is the case of Andreas Georgiou, who has gone from Greece’s chief statistician to its chief scapegoat. Mr Georgiou’s crime? Estimating that the government’s budget deficit in 2009 was 15.4% of GDP. + +Never mind that the first estimate of this figure had been only a little lower, at 13.6% of GDP. Never mind repeated confirmation from the European Commission that Mr Georgiou’s numbers were accurate. Never mind, too, his 21 years of experience at the IMF. Detractors across the political spectrum accused him of inflating the figures. They then took him to court. + +At first they claimed that the alleged falsification led to the panic that ended in Greece’s bail-out in 2010. Awkwardly, Mr Georgiou started at ELSTAT, the Greek statistical agency, after the bail-out. So the accusation changed. Now he is said to have caused Greece €171 billion-worth ($190 billion) of damage. His supposedly false numbers justified the harsh conditions imposed by Greece’s creditors. + +Courts have rejected these charges three times. But on August 1st the Greek supreme court reopened the case. And in December Mr Georgiou faces a separate trial, in which he is accused of refusing to allow ELSTAT’s board to use a vote to decide on the level of the deficit. Statistics are not supposed to work by ballot. + +When it is politically difficult to stand up for harsh truths, external agencies can be statisticians’ only fallback. So far it has fallen to the commission, rather than the Greek government, to speak up for Mr Georgiou. In a similar episode in 2013 in Argentina, where the then-president, Cristina Fernández de Kirchner, had a penchant for prosecuting number-crunchers keen to report accurate inflation figures, the IMF threatened expulsion if statistics did not improve. + +Statisticians know better than anyone that fiddling figures is hard. When Jean-Bédel Bokassa, dictator of the Central African Republic in the 1970s, ordered a boost to population figures, the total duly went up—but the separate tallies for men and women did not. Lies, damned lies and statistics? There’s a difference, all right. Ask a statistician. + + + + + +Stockmarket returns in America + +The long arm of the Fed + +The central bank may exert a strange sway over stockmarket returns + +Sep 3rd 2016 | BERKELEY | From the print edition + + + +SPECULATORS have always sought ways to anticipate shifts in share prices. Once they scrutinised rail-carriage movements to get a jump on business trends. A recent paper* concludes that since 1994, a shrewd approach would have been to focus on the Federal Reserve. + +It is no surprise that meetings of the Federal Open Market Committee (FOMC), in which Fed governors and regional Fed presidents set interest-rate policy, can trigger rises and falls in the stockmarket. But the study analyses a remarkable correlation. Usually every fortnight between FOMC meetings, fresh information is discussed in a gathering of Fed governors. It finds that all the gains in the stockmarket have occurred, on average, in the weeks of the FOMC meetings and the ones that involve the governors alone. A dollar invested only during those weeks would have grown more than 12-fold over the period. A dollar invested during other weeks would have lost half its value (see chart). + +To check their results, the authors explored potential correlations such as company earnings and economic data. They found none that were as statistically significant. They speculate that there is a causal connection, selective disclosure, which they say is unfair. Those who attend the meetings have informal contact with the media, consultancies and financial firms, and eventually the content of those meetings makes its way to the stockmarket. Some of that is potentially valuable. The governors receive reports on the economy, banks and the financial markets, and often begin formulating what may be announced by the FOMC. + +In 2012 an alleged leak from within the Fed to a publication, Medley Global Advisors, prompted an investigation by the Justice Department and Congress, which has yet to be concluded. The paper cites several non-nefarious reasons for those informal contacts: to extract information from market participants; to explain the Fed’s decision-making process; and to air competing views within the central bank. (Often board members also make their views known through speeches and interviews.) + +There are questions about the significance of the correlation. Why did it not start before 1994? Why does it not also apply to the bond market, which should be at least as sensitive to Fed policy? Why does the stockmarket always rise during the weeks in question, when Fed deliberations may cause a stockmarket sell-off? Whatever the answers, it shows what intriguing patterns data-crunching reveals. It will also add to calls for more scrutiny of the Fed. + + + +* “Stock Returns over the FOMC Cycle”, by Anna Cieslak, Duke University; Adair Morse, University of California, Berkeley, and National Bureau of Economic Research (NBER); and Anette Vissing-Jorgensen, University of California, Berkeley, NBER and the Centre for Economic and Policy Research + + + + + +Indian capital markets + +Bank vigilantes + +Companies in India are being shunted away from banks and towards bonds + +Sep 3rd 2016 | MUMBAI | From the print edition + +AFTER years of frustrated attempts to bolster India’s corporate-bond markets, Indian policymakers are supplementing their efforts with a dose of bank-bashing to improve their chances of success. The plans will make life pleasingly hard for crony capitalists. But they could leave some Indian companies struggling for capital if implementation fails to go to plan. + +Big companies across the world typically mix borrowing money from banks (which are flexible and can disburse loans quickly) with that raised from investors through bond markets (which offer lower interest rates). In India the balance has been skewed towards banks. This is, in part, because 70% of the banking sector is state-owned; at times, it has seen financing of even dubious projects as a calling rather than a way to make money. Issuing bonds has in any case been a fiddly business. + +That system used to work, but a good chunk of the money loaned by banks in a mini-credit boom that started around 2011 now appears not to be coming back. Around 16% of total loans have been restructured or are distressed in some way, and some banks have been bailed out by the government. One cause of the bad lending is that ministers have forced bureaucrat-bankers to extend credits to their favoured industrialists, many of whom were heavily indebted to begin with. Astute businessmen knew how to borrow from one bank to repay a loan from another, sometimes several times over. + +All that misdirected lending would have been less likely if companies had bonds outstanding: even the laziest banker will hesitate to lend to a company if its bonds are trading at 60 cents on the dollar. Such price-signalling requires an active secondary market, which in India is hampered by cumbersome regulations. One measure to remedy that, announced on August 25th, is to allow banks to use top-rated corporate bonds as collateral when funding themselves via the central bank’s “repo” facility (right now, only government bonds will do). The ability of banks to use their holdings of corporate bonds in this way will make them far keener to purchase them, either as creditors or in their investment-banking roles as marketmakers, facilitating the buying and selling of bonds by institutional clients. + +Other, bank-bashing measures are likely to have even more bite. In effect, companies with more than a fixed amount of debt will have no choice but to tap bond markets for at least half their new borrowings. The total maximum debt ceiling will be low: just 100 billion rupees ($1.5 billion) by 2019. So cronies whose main skill was charming bankers over long lunches will have to face the cold scrutiny of markets instead. Rashesh Shah, boss of Edelweiss, a finance firm, says the “relationship-based” pricing of loans in recent years will be replaced by the market-based sort instead. + +This is a kick in the teeth for the old-style borrowers and, in the short run, for the bankers who backed them blindly. Investment banks that help companies issue bonds should prosper—provided buyers for bonds can be found. Some managers of institutional money are sceptical. “There are a million reasons why the bond market hasn’t thrived in India,” says one. “Removing one barrier is often just a way of uncovering another one you hadn’t even thought of.” Overcoming those unknown hurdles could be hard, particularly for companies with anything less than a high, double-A rating which currently find it virtually impossible to issue bonds. + +Throttling banks so they don’t binge and bust again is a laudable, if heavy-handed, response to the recent mess. But the curtailing of bank lending presupposes that a thriving bond market will emerge, even though efforts spanning a decade have yielded little. If banks cannot lend and institutional investors prove unwilling to fund a corporate-bond market, those companies will have nowhere else to go—in effect, capping the size of companies whose capital structure the authorities disapprove of. + + + + + +Private-equity search funds + +Seek and we shall fund + +Private equity for absolute beginners + +Sep 3rd 2016 | NEW YORK | From the print edition + +IN 2007 Lucas Braun and Ryan Robinson emerged from the Stanford Graduate School of Business with such a sense of “professional invincibility” that they decided not to return to their old jobs in a consultancy and a hedge fund, respectively. Instead the two Americans took a leap of faith—in themselves. + +They were 32 and had no experience of running businesses, but they persuaded a group of investors to finance them for 21 months as they searched for a business to acquire. They discovered OnRamp, a Texas-based private company, and assumed the roles of chief executive and chairman. Following spin-offs and acquisitions, the company now provides cloud computing for industries with sensitive data. Over the past seven years, they say, revenues have grown by 30-35% a year. + +The two executives are products of a niche of the private-equity industry known as search funds—such a small niche, in fact, that few in the business have heard of it. But Stanford, which helped pioneer the industry in the 1980s, tracks it, and says that it has grown sharply in the past two years. In 2015 more than 40 new funds were established, twice as many as in 2009. Over the same period the number of acquisitions made by these funds tripled, to more than 15 a year. + +The typical search-fund principals are MBA graduates from an elite American university, who raise $400,000 or so of “walking around money” from investors, who purchase a stake in the fund for about $40,000 a share. The fund searches for a high-growth, high-margin target, valued at $5m-20m. The fledgling businessmen then hold a second round of acquisition financing, as well as raising debt. Their tenure as bosses lasts until they sell out. + +Returns are surprisingly good. The average is 8.4 times the money invested and an internal rate of about 37%. They do much better than the average of the rest of the private-equity industry, analysts say. By the time of the exit the principals can hold a 30% equity stake, provided they have met their targets. That is not a bad deal for a no-money-down entrepreneur. + +Some firms are injecting scale into the business. Boston-based Pacific Lake Partners, for instance, is dedicated to investing in search funds, and gives firm guidance regarding the industries and regions it prefers. Timothy Bovard, an industry expert, founded an incubator called Search Fund Accelerator in 2015 that provides capital and mentoring to aspiring search-fund entrepreneurs, in exchange for equity. Increasingly, the business is cherry-picking best practices from other bits of private equity. But the funds never invest in a portfolio of firms. Instead, the years knocking on doors can lead to a visceral sense of commitment to the targeted business. + +For several decades, America and Canada were the sole home of search funds. But lately European MBA courses have included search-fund case studies that have whetted the appetite of some intrepid would-be entrepreneurs. There are plenty of reasons for caution, though. About a quarter of searches come to nothing, and about a third of the acquisitions end in failure. But that is still better odds than starting a business from scratch. + + + + + +Bad loans to shipping + +That sinking feeling + +Banks continue to count the cost of shipping’s troubles + +Sep 3rd 2016 | From the print edition + + + + + +TOO many ships, too little trade. On August 31st Hanjin Shipping, South Korea’s biggest container carrier and the seventh-largest in the world, filed for receivership, after five years of losses and another deficit in the first half of 2016. Hanjin was holed by shipping’s prolonged global slump, the product of vast overcapacity and slow trade growth. Its creditors, led by state-owned Korea Development Bank (KDB), have had enough. + +Shipping’s malaise is both broad and deep. An earnings index compiled by Clarksons, a research firm, covering the main types of vessel—bulk carriers, container ships, tankers and gas transporters—reached a 25-year low in mid-August. The average for the first half of 2016 was 30% down, year on year, and 80% below the peak of December 2007. Stephen Gordon of Clarksons adds that new orders at shipyards are the lowest in 30 years. + +As KDB’s loss of patience shows, the industry’s troubles hurt lenders as well as shippers. According to Petrofin, another research group, Asian banks have expanded their shipping loans in recent years. With China’s economy slowing and world trade in the doldrums, they may soon regret that. For their part, European banks have already been tossed this way and that since the financial crisis of 2007-08. Some, notably Landesbanken—public-sector, regional wholesale banks—in northern Germany, are still counting the cost. + +German banks, traditionally strong in shipping, were eager lenders before the crisis, happily putting up 70% of a vessel’s cost—and even the rest, before borrowers raised the equity. Then the storm broke: Petrofin calculates that between 2010 and 2015 leading German lenders slashed their shipping books from $154 billion to $91 billion. In 2012 Commerzbank, the country’s second-largest lender, decided to quit altogether. Its portfolio has since dwindled from €19 billion ($24 billion) to €8 billion. + +On August 31st Bremer Landesbank, from the city-state of Bremen, announced loan-loss provisions, mainly for shipping, of €449m—over one-fifth of its equity at the end of 2015—and reported a first-half loss of €384m. At €6.5 billion, its shipping portfolio is around 30% of its loan book. Bremer LB will not be allowed to sink. NORD/LB, its neighbour, which already owns 54.8%, is taking it over fully. The deal values the state government’s 41.2% stake at €262m—far below its worth when Bremen boosted its holding in 2012. + +NORD/LB itself is far from shipshape. It recently reported a first-half loss of €406m, thanks to further loss provisions on marine loans. It plans to cut its shipping book, €19 billion at the end of 2015, to €12 billion-14 billion. Last month it agreed to sell $1.5 billion of loans to KKR, a private-equity firm, and an unnamed sovereign-wealth fund. A third lender, HSH Nordbank, is seaworthy largely thanks to guarantees, covering €10 billion of loans, from the states of Hamburg and Schleswig-Holstein. The guarantees were cut to €7 billion in 2011, but increased in 2013 when that proved premature. In May the European Commission approved the reinstated aid, provided that the bank’s core operations were sold. This is due by 2018. + +Some are confident of steering through choppy waters. Besides KKR, Berenberg, a Hamburg bank, is talking to institutional investors about buying (well-performing) loans. Not everyone is seasick. + + + + + +Australia’s economy + +Good on you + +Australia has weathered the China slowdown and commodities slump well. What has it done right? + +Sep 3rd 2016 | SYDNEY | From the print edition + +Girder on you, too + +THE last time Australia was in recession, Mikhail Gorbachev led the Soviet Union and Donald Trump had filed for Chapter 11 only once. Barring unforeseen catastrophe, late next year Australia will pass the Netherlands’ modern record of 26 years of consecutive growth—despite the slowdown of its biggest trading partner, China. Unlike most of the rich world, it sailed through the global financial crisis, and unlike most commodity exporters, it has weathered the raw-materials price slump. Its GDP growth rate of 3.1% dwarfs that of America and the euro zone. + +Australia is often called “the lucky country”, and luck, particularly in geology and geography, has played a part in its success. But it has deftly played both sides of the China boom: the surging demand for raw-material imports while that lasted; more recently, the desire of the Chinese middle-class to eat well, travel and educate their children in English. Yet every silver lining has a cloud. Not only does Australia have one of the most expensive housing markets in the world, it remains overexposed to the fortunes of China. + +The story of Australia’s success starts with what its government did not do: spend beyond its means. Tight budgets in the late 1990s and early 2000s, combined with improving terms of trade, meant that when the financial crisis hit, the government was running budget surpluses (though the country as a whole has a long-running current-account deficit). It could thus afford stimulus packages in late 2008 and early 2009 worth more than A$56.6 billion ($42.8 billion). Only China provided greater stimulus as a share of GDP. + +Australia was then in the middle of the biggest mining boom in its history, stemming from increased demand in China. In the decade to 2012, the value of its mined exports tripled; mining investment rose from 2% of GDP to 8%. From January 2003 to February 2011 the price of iron ore, which these days comprises 17% of Australia’s exports by value, rose from $13.8 to $187.2 a tonne. Australian thermal coal, which accounts for 12% of its exports, rose from $26.7 to $141.9 (down from a peak in 2008 of $192.9). + +The Reserve Bank of Australia (RBA) estimates that, during that period, mining raised real disposable household income by 13% and wages by 6%, boosting domestic purchasing power. Saul Eslake, an independent economist, argues that “except for the Chinese people, no country derived more benefit from the growth and industrialisation of China” than Australia. The value of the Australian dollar also rose, which dented non-mining exports. But since demand from Asia kept prices high for Australia’s agricultural commodities (such as beef and wheat), and because it exports relatively few manufactured goods, the damage was contained. + +As China rebalanced and commodity prices tumbled, other exporters such as Russia, South Africa and Brazil fell into recession. In Australia, although business investment has fallen sharply, GDP growth remains near its 25-year average of 3% (and as a side benefit, the commodity-price fall quelled rising inflation). + +For that, thank two factors. First, the rise in mining investment during the fat years led to increased production. Commodity exports have continued to grow (albeit modestly and less profitably). Though prices of iron ore and coal are well below the past decade’s peaks, they remain above pre-boom levels. + +More important, Australia let the dollar depreciate, which made its exports more appealing. Today Australia benefits from a growing number of Chinese consumers, who buy Australian food products that are widely seen as safer than their home-grown equivalents. + +Middle-class Asian students have been flocking for English-language education to Australian universities, which are closer and cheaper than their American and British counterparts. Between June 2015 and June 2016 the number of international students enrolled in Australian colleges and universities rose by 11%, and the number of international visitors rose by 13.7%. Today education and tourism together account for 14% of Australia’s export value. Graduates are eligible to work for up to four years, and some stay longer, giving Australia a relatively young, well-educated, multicultural workforce. + +Those workers will need places to live, which has helped increase house construction. According to Paul Bloxham, the chief Australia and New Zealand economist at HSBC, Australian builders completed almost 200,000 new dwellings last year, and will probably do the same this year and next. Construction has absorbed some of the employment losses as mining investment has waned (building a mine requires more people than running one). + +Yet that has failed to stop an alarming rise in house prices, particularly on Australia’s east coast. In 2015 the median house price in Sydney was 12.2 times the median income, up from 9.8 in 2014. Melbourne’s multiple rose from 8.7 to 9.7 in that period. Some argue that house prices have peaked, and that as residential construction continues prices will moderate (except perhaps in central Sydney). But if prices collapse, that could not just harm Australia’s otherwise healthy banks, but also dampen domestic consumption for years. + +Some argue that government debt, which has hit a record 36.8% of GDP, up from a low of 9.7% in 2007, is another worry, because it provides less policy room to deal with the next crisis. It remains lower than in most developed countries. But given the risks of a housing bust or deeper slowdown in China, such worries reflect a healthy lack of complacency. After all, one day the luck will run out. + + + + + +Free exchange + +More spend, less thrift + +German budget surpluses are bad for the global economy + +Sep 3rd 2016 | From the print edition + + + +ON AUGUST 24th Germans received news to warm any Teutonic heart. Figures revealed a larger-than-expected budget surplus in the first half of 2016, and put Germany on track for its third year in a row in the black. To many such excess seems harmless enough—admirable even. Were Greece half as fiscally responsible as Germany, it might not be facing its eighth year of economic contraction in a decade. Yet German saving and Greek suffering are two sides of the same coin. Seemingly prudent budgeting in economies like Germany’s produce dangerous strains globally. The pressure may yet be the undoing of the euro area. + +German frugality and economic woes elsewhere are linked through global trade and capital flows. In recent years, as Germany’s budget balance flipped from red to black, its current-account surplus—which reflects net cross-border flows of goods, services and investment—has soared, to nearly 9% of German GDP this year. + +The connection between budgets and current accounts might not be immediately obvious. But in a series of papers published in 2011 IMF economists found evidence that cutting budget deficits is associated with reduced investment, greater saving and a shift in the current account from deficit toward surplus. Two IMF economists, John Bluedorn and Daniel Leigh, reckoned that a fiscal consolidation of one percentage point of GDP led to an improvement in the ratio of the current-account balance to GDP of 0.6 percentage points. On that reckoning, the German government’s thriftiness accounts for a small but meaningful share of its growing current-account surplus; perhaps as much as three percentage points of GDP over the past five years. + +That has helped to resurrect an old problem. Global imbalances were a scourge of the world economy before the financial crisis of 2007-08. Back then, China and oil-exporting economies accounted for the surplus side of the world’s trade ledger, which reached nearly 3% of the world’s GDP on the eve of the crisis. Other countries, notably America, ran correspondingly large current-account deficits, financed in part by flows of investment from surplus countries that flooded into the country’s overheating housing market. A similar dynamic played out in miniature within the euro area, as core economies like Germany ran current-account surpluses and peripheral countries like Spain ran deficits. + +The recession that followed the crisis temporarily reduced these imbalances. Spendthrift consumers in deficit countries suddenly found themselves squeezed by joblessness and the evaporation of easy credit: that led to a collapse in imports. But a sustained era of balanced growth failed to emerge. Instead, surpluses in China and Japan rebounded. In recent years Europe has followed, thanks to a big switch from borrowing to saving (see chart). The countries on the periphery donned their sackcloth out of necessity, tightening belts and buying less from abroad than they produced at home. Ageing Europeans in core economies, like Germany and the Netherlands, saved for different reasons, such as preparing for retirement. German government-budget surpluses have piled on top of this glut. + +That adds up to a big problem, given the state of the world. Within the euro area, the struggling Mediterranean economies need faster rates of GDP growth to bring down unemployment and stabilise government debt. Germany’s enormous surpluses mean that its households are buying less from other countries than they ought to. That hurts the growth prospects of the periphery, and raises the risk of a politically induced break-up. + +The global picture is just as worrying. Interest rates have plunged since the financial crisis, indicating that the world’s savings are chasing too few investment opportunities. In normal times, this would be manageable. Central banks could cut their policy rates, reducing borrowing costs for firms and households and encouraging them to tap the reservoir of savings. Yet many central banks have cut rates to near zero, only to find people are still borrowing too little. As cash pours into safe assets like government bonds, demand slackens and economies stagnate. + +In-the-black hole + +This malaise appears to be contagious. In weak economies, battered consumers buy fewer imports and unemployment depresses wages, which can help boost exports. That provides a cushion for the suffering economy, producing a current-account surplus that siphons off spending from healthier countries. But this in turn weakens those economies, adding pressure on their central banks to cut rates. In a paper published this year Ricardo Caballero of the Massachusetts Institute of Technology, Emmanuel Farhi of Harvard University and Pierre-Olivier Gourinchas of the University of California, Berkeley, found that in a world of integrated financial markets, a slump in some economies can eventually engulf all of them. Once a few economies become stuck in the zero-rate trap, their current-account surpluses exert a pull which threatens to drag in everyone else. America, the world’s importer of last resort, remains pinned to near-zero rates, and economically vulnerable, thanks to this dynamic. + +Theoretically, this black hole can be dodged. Surplus economies like Germany just need to borrow more. Bigger budget deficits would boost global demand and reduce current-account imbalances. But Germans favour frugal budgeting. Just as important, Germany’s government, which is seen as an unforgiving taskmaster across the euro-area periphery, would prefer not to be accused of practising something different from what it preaches. And even a change of heart in Germany, helpful though that would be to the euro-area economy, would not solve everything. Imbalances are a global problem which cannot be fixed by any one country. + +Visit our Free exchange economics blog + + + + + +Science and technology + + + + +Vaccines: Putting shots in the locker + +Chronic-fatigue syndrome: Blood simple? + +The Anthropocene: Dawn of a new epoch? + + + + + +Vaccines + +Putting shots in the locker + +How to anticipate epidemics + +Sep 3rd 2016 | From the print edition + + + +FOREWARNED, the proverb has it, is forearmed. But what happens when there is no warning? That was the case in December 2013, when an outbreak of Ebola haemorrhagic fever began in Guinea. It spread rapidly to Liberia and Sierra Leone and raged on for over a year. Around 29,000 people were infected. More than 11,000 of them died. + +The world responded to this crisis, shipping in doctors, nurses and medical equipment. But what it could not ship in, for none existed, was the thing that would most quickly have stopped the epidemic: a vaccine. Such a vaccine was created eventually, but by the time it was ready, the outbreak was all but over. Had it been available from the beginning, things could have been different. + +Next time, though, they might be, for on August 31st a new organisation came into being. CEPI, the Coalition for Epidemic Preparedness Innovations, was founded this week in London, at the headquarters of the Wellcome Trust, a medical charity. It is the joint brainchild of the Wellcome, the Bill and Melinda Gates Foundation, the World Economic Forum and the government of Norway, and its purpose is precisely to forearm the world against future outbreaks of disease, without foreknowledge of what those outbreaks will be. + +Paradoxically, part of the inspiration for CEPI’s creation was not the failure to deliver an Ebola vaccine in time for it to be useful, but how close that project came to success. Creating a new vaccine from scratch is a long-winded undertaking, but in the case of Ebola several candidate vaccines were already on the shelf thanks to earlier, but stalled, work by America’s army and that country’s National Institutes of Health. There were also three pharma companies, GlaxoSmithKline, Johnson & Johnson and Merck, willing, pro bono publico, to take these candidates and try to turn them into the real thing as quickly as possible. That they succeeded in doing so by the summer of 2015 was, by most standards, extraordinary—and means vaccines are available the next time Ebola rears its ugly head. If a spontaneous lash-up could achieve such an outcome, the thinking went, an organised approach should do even better. + +You can bank on it + +CEPI’s plan is to build up a bank of candidate vaccines for as many as possible of the viral diseases that lurk menacingly on the edges of human society, but in which there is insufficient commercial interest for pharmaceutical firms to do the development work. These include Lassa fever, Marburg fever, MERS, SARS, Nipah and Rift Valley fever, but not dengue or influenza. Those two are already well served by drug-company researchers—as is Zika virus, for which a vaccine may be ready for testing in the field next year. + +The aim, says Jeremy Farrar, the Wellcome Trust’s director, is not to guess exactly which illness will become epidemic next, as this is a difficult thing to do. Instead CEPI will work through the list in a systematic way. To start with, it will pay for work on up to three viruses. + +Scientifically, this means identifying several possible vaccines for each disease, putting these through animal trials, and then carrying out small safety trials on human beings. Those candidates deemed safe will be stored for a future outbreak. This approach maximises the saving of time while minimising cost. If a disease for which there are candidate vaccines does become threatening, larger and more expensive human-efficacy trials can be organised quickly in response. If not, no money is wasted doing so. + +Organising efficacy trials quickly, though, illuminates CEPI’s other job. This is to have the bureaucracy for such trials (planning how they might be carried out, and arranging ethical approval) sorted out in advance, along with the means to scale up the production of successful candidates. Indeed, CEPI may even invest in its own surge capacity for the manufacturing of vaccines, rather than forcing drug companies to divert resources from existing vaccine production (with potential consequences for public health). + +There are thorny issues here, not least the question of legal risks. Even with the preliminary research already done, speed will be of the essence when the world is faced with an epidemic. Human trials will have to be conducted more hastily than drug companies are used to doing. That might lead to mistakes and thus to law suits. Who should bear the brunt of consequent liabilities needs to be sorted out in advance. This might involve governments offering some sort of reinsurance cover or waiver from such liability. + +John-Arne Rottingen, CEPI’s interim boss, argues that paying to prepare for future epidemics is like buying a form of global health insurance. But, unlike other forms of health insurance, the premium need not be paid for ever. No doubt the list of targets will grow as time goes by. But it is not infinite. Should the world wish to address the top 20 threats over the course of the next decade Dr Farrar estimates the total cost would be $1 billion-2 billion. + +The next stage is to start raising that money. The organisation hopes to tap governments and charities, including those which helped found it. It will also involve, and thus pick the brains of, drug companies and the World Health Organisation. If things go well, CEPI will be up and running next year. Once that has happened, the threat from epidemic viruses will diminish year by year thereafter. + + + + + +Chronic-fatigue syndrome + +Blood simple? + +A new test may diagnose a mysterious illness, and also help to explain it + +Sep 3rd 2016 | From the print edition + +The answer lies in the soil + +CHRONIC-FATIGUE SYNDROME, or CFS, which afflicts over 1m people in America and 250,000 in Britain, is certainly chronic and surely fatiguing. But is it truly a syndrome, a set of symptoms reliably associated together and thought to have a single underlying cause—in other words, a definable disease? + +CFS’s symptoms—debilitating exhaustion often accompanied by pain, muscle weakness, sleep problems, “brain fog” and depression—overlap with those of other conditions. These include fibromyalgia (itself the subject of existential doubt), clinical depression, insomnia and other sleep disorders, anaemia and diabetes. These overlaps lead some to be sceptical about CFS’s syndromic nature. They also mean many people with CFS spend years on an expensive “diagnostic odyssey” to try to find out what is going on. + +Scepticism about CFS’s true nature is reinforced by the number of causes proposed for it. Viruses, bacteria, fungi and other types of parasite have all had the finger pointed at them. So have various chemicals and physical trauma. Evidence that CFS truly does deserve all three elements of its name has accumulated over the years but a definitive diagnostic test has remained elusive. Until, perhaps, now. For in this week’s Proceedings of the National Academy of Sciences Robert Naviaux of the University of California, San Diego, and his colleagues published evidence that the metabolisms of those diagnosed with CFS are all changing in the same way. Their data suggest it is this cellular response to CFS-triggering traumas, and not the way the response is set in motion, which should define the illness. They also show that this response produces a chemical signal that might be used for diagnosis. + +Dr Naviaux and his team collected and analysed blood samples from 45 people who had been diagnosed with CFS, and also from 39 controls who were free of any CFS-related symptom. They then trawled through those samples looking at the levels of 612 specific chemicals, known as metabolites, which are produced during the day-to-day operations of living cells. + +These metabolite profiles, they found, differed clearly and systematically between the patients and the controls. Some 20 metabolic pathways were affected, with most patients having about 40 specific abnormalities. The biggest differences were in levels of sphingolipids, which are involved in intercellular communication, though other molecules played a role as well. These differences should give clues as to what is happening at a cellular level during CFS. More immediately, a handful of the abnormalities—eight in men and 13 in women—were enough, collectively, to diagnose with greater than 90% accuracy who had the disease. + +That is a good start. If this discovery is to lead to a reliable test for CFS, though, Dr Naviaux’s experiment will have to be repeated to compare those diagnosed as having CFS with those who are not so diagnosed yet display some of its symptoms. The answer should soon become apparent, for he is already applying his method to people who have depression, autism, traumatic brain injury and post-traumatic-stress disorder. + +One crucial question that needs an answer if CFS is to be understood better is: what cellular changes are these metabolic abnormalities bringing about? Here, Dr Naviaux has already made an intriguing and slightly disturbing discovery. Similar metabolite profiles to those seen in CFS are characteristic of a state known as “dauer” that occurs in one of biology’s most-studied animals, a soil-dwelling threadworm called C. elegans (pictured). In dauer, which is reminiscent of hibernation in larger creatures, the worm puts its development on hold and enters a state of suspended animation in response to threats such as reduced food, water or oxygen levels. It can survive this way for months, though the lifespan of an active worm is mere weeks. + +It may be a coincidence, but six of the diagnostic metabolites whose levels are low in CFS are also low in dauer. If it is not a coincidence, though, that suggests a biochemical overlap between the two conditions. If this were true, it could be of great value both in understanding CFS’s underlying biology and (because C. elegans is so well examined and easy to study) in experimenting with potential treatments. + + + + + +The Anthropocene + +Dawn of a new epoch? + +People may have propelled Earth into a novel episode of geological time + +Sep 3rd 2016 | From the print edition + +The start of something new + +ONE way to think of science is as a series of painful demotions. In the 1500s Nicolaus Copernicus kicked Earth from its perch at the centre of the universe. Later, Charles Darwin showed that humans are just another species of animal. In the 20th century geologists found that all human history amounts to less than an eye-blink in the span of a planet that they discovered is 4.6 billion years old. + +Now, though, those geologists’ spiritual descendants may give humans an unexpected promotion—to the status of geological movers and shakers. On August 29th Colin Waters, the secretary of the Anthropocene Working Group (AWG), an ad hoc collection of geologists, addressed the International Geological Congress in Cape Town. He told his colleagues that there was a good case for ringing down the curtain on the Holocene—the present geological epoch, which has lasted for 12,000 years—and recognising that Earth has entered a new one, the Anthropocene. + +As its name suggests, the point of this new epoch would be to acknowledge that humans, far from being mere passengers on the planet’s surface, now fundamentally affect the way it works. That sounds hubristic. But it is not a new idea. It was first promulgated in 2000 by Eugene Stoermer, now deceased, and Paul Crutzen. + +Dr Crutzen is an atmospheric chemist, and the growth of carbon-dioxide concentrations in the atmosphere is perhaps the most familiar symptom of the Anthropocene. For instance, acidity in oceans caused by extra CO2 affects the make-up of creatures whose shells will form Earth’s future limestones. Nitrogen, too, is affected. The process by which this vital element cycles through the air, the soil and living organisms has been turbocharged by human use of artificial fertilisers. One consequence is the expansion of food production. In 1750 about 5% of the Earth’s surface was farmed. That figure is now around 50%, and the transformation from wilderness to agricultural land leaves lasting changes in the nature of the soil. On top of this, dams hold back billions of tonnes of silt. As a result, river deltas everywhere are shrinking. + +Markers of the Anthropocene will surely be visible in the fossil record. On present trends, numerous species will vanish from that record—exterminated by human activity. Meanwhile, “technofossils” will appear. A favourite for long-term preservation, for example, is the porcelain water closet. New types of mineral may come into existence as a result of things like the deposition of elemental aluminium in the soil (the stuff is unknown in nature) and the settling to the sea bed of zillions of plastic scraps now littering the ocean. Beds of fly ash from power stations may get consolidated into novel rocks. And who knows what refuse tips will look like when buried, compressed and metamorphosed? + +The AWG, then, believes that the Anthropocene is real. The next question is how to define it. The traditions of geology demand a clear and sudden change, visible in the rocks. There are several contenders, including the appearance of plastics in the 1950s and the exchange of species between the New and Old Worlds in the 1600s. But most of the AWG’s members plumped for the high point of nuclear-weapons testing, in 1964. Fallout from those tests scattered plutonium, an element vanishingly rare in nature, far and wide across the planet. Future geologists, depending on precisely how much time has passed and therefore how much radioactive decay has occurred, will be able to see a layer of plutonium, or of uranium, or (eventually) of lead in the rocks. At the congress, the AWG’s members voted for this “bomb spike” to be the marker. That makes the Anthropocene more than half a century old already. + +The next step will be to point to a single piece of the geological record (an ice core, perhaps, or samples from lake sediments) that can serve as the officially accepted reference point. Then the proposal must make its way through several strata of geological bureaucracy, any of which could scupper it. The last step will be a vote at a meeting of the International Union of Geological Sciences. If that passes, then geological time, whose passage is famously slow, will have ticked perceptibly on. + + + + + +Books and arts + + + + +The state of the world: Better and better + +European history: The best of times + +Indian politics: Raise him up + +History of philosophy: Seeing the light + +Fiction: You’re my baby + +New American television: As real as a dream + + + + + +The state of the world + +Better and better + +Human life has improved in many ways, both recently, according to a Swedish economic historian, and in the 19th century + +Sep 3rd 2016 | From the print edition + + + +Progress: Ten Reasons to Look Forward to the Future. By Johan Norberg. Oneworld; 246 pages; $24.99 and £16.99. + +HUMANS are a gloomy species. Some 71% of Britons think the world is getting worse; only 5% think it is improving. Asked whether global poverty had fallen by half, doubled or remained the same in the past 20 years, only 5% of Americans answered correctly that it had fallen by half. This is not simple ignorance, observes Johan Norberg, a Swedish economic historian and the author of a new book called “Progress”. By guessing randomly, a chimpanzee would pick the right answer (out of three choices) far more often. + +People are predisposed to think that things are worse than they are, and they overestimate the likelihood of calamity. This is because they rely not on data, but on how easy it is to recall an example. And bad things are more memorable. The media amplify this distortion. Famines, earthquakes and beheadings all make gripping headlines; “40m Planes Landed Safely Last Year” does not. + +Pessimism has political consequences. Voters who think things were better in the past are more likely to demand that governments turn back the clock. A whopping 81% of Donald Trump’s supporters think life has grown worse in the past 50 years. Among Britons who voted to leave the European Union, 61% believe that most children will be worse off than their parents. Those who voted against Brexit tend to believe the opposite. + +Mr Norberg unleashes a tornado of evidence that life is, in fact, getting better. He describes how his great-great-great-great grandfather survived the Swedish famines of 150 years ago. Sweden in those days was poorer than Sub-Saharan Africa is today. “Why are some people poor?” is the wrong question, argues Mr Norberg. Poverty is the starting point for all societies. What is astonishing is how fast it has receded. In 1820, 94% of humanity subsisted on less than $2 a day in modern money. That fell to 37% in 1990 and less than 10% in 2015. + +Not only have people grown much more prosperous; they also enjoy better health than even rich folk did in the past. This is due partly to galloping progress in medical science. When the swine flu pandemic threatened to become catastrophic in 2009, scientists sequenced the genome of the virus within a day and were producing a vaccine in less than six months. + +The spread of basic technology, allowing for clean water and indoor plumbing, may have helped even more. Louis XIV’s palace was the pinnacle of 18th-century grandeur. Nonetheless, without flush toilets, it stank. “The passageways, corridors and courtyards are filled with urine and faecal matter,” wrote a contemporary observer. Now 68% of the world’s population have modern sanitation—a luxury denied to the Sun King—up from 24% in 1980. + +People are growing smarter too. Americans scored, on average, 100 points on IQ tests just after the second world war. By 2002, using the same test, this had risen to 118, with the biggest improvements in answers to the most abstract problems. This “Flynn Effect”, as it is known, is observed in all countries that have modernised. The most likely reasons are better nutrition and the spread of education—brains that are well-fed and well-stimulated tend to work better—and environmental improvements such as the removal of lead from petrol. + +Mr Norberg agrees with Steven Pinker, a psychologist, that humankind is also experiencing a “moral Flynn Effect”. As people grow more adept at abstract thought, they find it easier to imagine themselves in other people’s shoes. And there is plenty of evidence that society has grown more tolerant. As recently as 1964, even the American Civil Liberties Union agreed that homosexuals should be barred from government jobs. In 1987 only 48% of Americans approved of interracial dating; in 2012 that figure was 86% (and 95% of 18- to 29-year-olds). The caste system in India has eroded as individualistic values have spread: the proportion of upper-caste weddings with segregated seating fell from 75% to 13% between 1990 and 2008. + +Despite the bloody headlines, the world is far safer than it used to be. The homicide rate in hunter-gatherer societies was about 500 times what it is in Europe today. Globally, wars are smaller and less frequent than they were a generation ago. The only type of violence that is growing more common is terrorism, and people wildly overestimate how much of it there is. The average European is ten times more likely to die by falling down stairs than to be killed by a terrorist. Evidence that the past was more brutal than the present can be gleaned not only from data but also from cultural clues. For example, children’s nursery rhymes are 11 times more violent than television programmes aired before 9pm in Britain, one study found. + +That life is improving for most people does not mean it is improving for everyone. Male blue-collar workers in rich countries have seen their earnings stagnate. Even if the statistics fail properly to capture the benefits they enjoy as consumers of new technology, the slippage in their status is real and painfully felt. + +Global warming is a worry, too, but Mr Norberg hopes that human ingenuity will tame it. He writes with enthusiasm about all kinds of green innovation. For example, thanks to more efficient farming technology, the world may have reached “peak farmland”. By the end of the century, an area twice the size of France will have been returned to nature, by one estimate. + +This book is a blast of good sense. The main reason why things tend to get better is that knowledge is cumulative and easily shared. As Mr Norberg puts it, “The most important resource is the human brain...which is pleasantly reproducible.” + + + + + +European history + +The best of times + +How the continent was transformed in the 19th century + +Sep 3rd 2016 | From the print edition + +Steaming ahead + +The Pursuit of Power: Europe 1815-1914. By Richard Evans. Viking; 928 pages; $40. Allen Lane; £35. + +TO APPRECIATE the social transformations that took place in Europe between the Battle of Waterloo in 1815 and the start of the first world war, consider what happened to its towns and cities. Economic growth and technological innovation allowed them to reach new and vertiginous heights. Lofty creations like the Eiffel Tower, completed in 1889, or the Royal Liver Building in Liverpool, which opened in 1911, symbolised a richer, more confident world following the Napoleonic wars. + +In “The Pursuit of Power”, an impressive and richly documented new book, Richard Evans of Cambridge University says that most contemporaries were convinced this was a time of “open-ended improvement”. Breakneck industrialisation turned rural economies into metropolitan ones. Superior medicines and public sanitation, along with state vaccination programmes, cut the impact of epidemics like smallpox and typhus. Wars were relatively small and short-lived (the death rate of men in battle was seven times less than in the previous century). And steam power and electrical engineering freed societies from the limitations of human strength. + +Motor transport and the expansion of roads, canals and railways shrank distances and modernised conceptions of time. In 1875 William Rathbone Greg, an English essayist, said that people were living “without leisure and without pause—a life of haste”. Such developments, alongside steamships and the telegraph, were also the technological foundations of Europe’s global domination. + +The century was not one of inexorable progress, however, or of collective triumph; there were winners and losers. The former milked the benefits of what Mr Evans calls “the first age of globalisation”. They profited from the dismantling of trade barriers, industrial growth and expansion of the state, which required unprecedented numbers of administrators. + +For many, though, this proved to be no more than new forms of old miseries. Serfdom on the land gave way to wage labour in the factories. Workers lived in poverty, and gross disparities existed between the poor and well-off in health, nutrition and infant mortality. Perhaps the biggest losers were the traditional landowning aristocracy, who were undermined by economic change, the abolition of serfdom, the advent of elected legislatures and the commercial feats of enterprising bankers and businessmen. + +A distinguished scholar of Germany, Mr Evans is just as sure-footed across the continent. His interests also extend beyond the usual subjects of war and revolutions. There are, for example, timely sections on efforts to master the natural world, and early fears about climate change. The book is particularly illuminating on how social trends after 1848—the spread of education, the standardisation of languages, railway development and the mass production of newspapers—led to the rise of political forces like nationalism and democracy. + +Much of this history is well known, but Mr Evans is a skilled synthesiser with a strong eye for narrative. He acknowledges the pioneering work of other historians like Eric Hobsbawm and Jürgen Osterhammel. But if Hobsbawm identified the development of capitalism and the expansion of empires as hallmarks of the century, and Mr Osterhammel documented the emergence of “globalisation” avant la lettre, Mr Evans argues that it was the universal pursuit of power that defined the age. + +Serfs wanted emancipation from landowners and women sought liberation from men. Industrialists required economic control and new political parties campaigned for office. All major European states imposed colonial mastery over Africa and Asia. But the book’s real success lies with its timeliness. Europe is rendered not as a geographical space—its eastern borders have always been hard to define—but as a collective entity with a shared history. European leaders invited ruin upon themselves when they forgot that in 1914. They should never do it again. + + + + + +Indian politics + +Raise him up + +Rehabilitating a great Indian leader + +Sep 3rd 2016 | From the print edition + +His time has come + +Half-Lion: How P.V. Narasimha Rao Transformed India. By Vinay Sitapati. Penguin India; 391 pages; 699 rupees. + +INDIA’S tenth prime minister, P.V. Narasimha Rao, inherited a country on the point of collapse. In the run-up to the election in 1991 separatists were on the rampage in Kashmir and Punjab, the treasury was running out of foreign reserves and 800 people were killed in clashes across the country. Then Rajiv Gandhi was blown up by a Tamil Tiger suicide-bomber as he campaigned in southern India. Rao, a reticent scholar with government experience but little popular support, was his improbable successor. Power-brokers in the Congress Party believed they were installing a puppet in the prime minister’s office. What they got instead, as Vinay Sitapati writes in “Half-Lion”, was the most consequential Indian leader since Jawaharlal Nehru. + +Socialist India was in an advanced state of decay when Rao entered office. Aided by his finance minister, Manmohan Singh, he devised a radical plan to devalue the rupee, liberalise trade policies and lower the barriers to foreign capital and competition. But resistance to change was formidable. Rao’s minority government was subjected to multiple no-confidence motions in parliament. Mr Sitapati, a doctoral student at Princeton University, has unearthed a remarkable document which reveals that the prime minister survived (and pushed through his reforms) in part by deploying India’s intelligence agencies to dig up dirt on recalcitrant MPs. + +As foreign minister in the 1980s, Rao, who spoke a dozen languages, including Arabic, French, Spanish and Farsi, disarmed world leaders by addressing them in their own tongue. As prime minister, he initiated the overhaul of India’s foreign policy, aggressively courting South-East Asia to counteract China’s growing clout in the region, and moving India away from the Soviet Union and closer to the West. He even convinced Yasser Arafat to fly to India and endorse his establishment of diplomatic ties with Israel. People who once dismissed Rao as a pushover began likening him to Kautilya, the Mauryan empire’s strategist who wrote a book on statecraft a millennium before Machiavelli. + +Rao’s failure to stop Hindu zealots from razing the medieval Babri mosque after a political rally in 1992 has long been a stain on his memory. Mr Sitapati mounts a heroic defence of his subject. The worst that can be said of Rao, he writes, is that he placed a naive faith in the personal assurances given to him by high-ranking Hindu-nationalist leaders. Rao, a devout Brahmin, was accused of secretly abetting the mosque’s destruction. Mr Sitapati persuasively demolishes this charge with a careful reconstruction of events. + +India was a different country by the time Rao left office. Even the communists had joined the consensus around free trade. Mr Sitapati does an excellent job of tracing India’s transformation back to Rao’s vision and leadership. Alas, he is less good at making sense of its undesirable side-effects. The rapid rise of Hindu nationalism, despite Rao’s aversion to it, is very much his legacy. So are the oligarchs and robber barons who have proliferated across the country. Rural India suffered disproportionately during Rao’s years in government. After being thrown out of power by an electorate that was overwhelmingly poor, Rao seemed appalled by his own creation. He attacked India’s widening inequality in one of his last public speeches, warning that “ ‘trickle-down economics’—the practice of cutting taxes for the rich, hoping it would benefit the poorer in society—does not work.” + +Rao had committed the sin of being insufficiently deferential to the Gandhi dynasty while in power. He spent his final years as a pariah. His name was scrubbed from the Congress Party’s lore, and credit for his achievements was given to Manmohan Singh and Rajiv Gandhi. But Mr Sitapati makes an unanswerable case for Rao as the father of India’s economic reforms. + +When Rao died in 2004, Sonia Gandhi, the head of the Gandhi family, refused to allow his body to be cremated in Delhi or displayed in the party’s headquarters. His funeral was a humiliating affair, thinly attended by the establishment and poorly guarded. Stray dogs reportedly tore at the remains of his partially cremated body. + +Mr Sitapati has resurrected his subject from the ignominy and obscurity to which he has long been condemned by his party’s petty proprietors. Rao deserves a place alongside Nehru as India’s most important prime minister. + + + + + +History of philosophy + +Seeing the light + +A well-documented account of the second golden age of Western philosophy + +Sep 3rd 2016 | From the print edition + +The Dream of Enlightenment. By Anthony Gottlieb. Liveright; 301 pages; $27.95. Allen Lane; £20. + +WESTERN philosophy has had two golden ages. The first was the remarkable explosion of thought in early Athens, sparked by Socrates and continued by Plato, Aristotle and their followers. Then came the great flowering in northern Europe in the 17th and 18th centuries, when a diverse group of thinkers questioned received opinion and put their faith in reason in what is now known as the Enlightenment. This story is too simple to be the whole truth; but it is a narrative that is useful for those coming to the history of Western philosophy for the first time, even if they revise or abandon it later on. + +In “The Dream of Enlightenment”, the second in a planned trilogy that began with “The Dream of Reason”, Anthony Gottlieb focuses on some of the great Enlightenment thinkers, including Descartes, Hobbes, Spinoza, Locke, Leibniz, Hume, Rousseau and Voltaire. He offers engaging summaries of their main ideas and choice details of their lives. They were freelance philosophers working independently of the universities, criticising mainstream views and liberating thought from its academic straitjacket and neo-Aristotelian dogmatism. + +They were dangerous thinkers all, one publication away from exile, imprisonment or worse for their radical views on religion, politics and morality. Spinoza was the subject of a cherem, the equivalent of excommunication from the Amsterdam Sephardic synagogue; Locke disguised his authorship of “Two Treatises of Government”, and spent a number of years in self-imposed exile; Hume chose to publish his “Dialogues Concerning Natural Religion” posthumously; and Rousseau fled to England when persecuted in mainland Europe. Metaphysics was far from the safe activity it is today, and was often condemned as blasphemy or heresy. + +In an essay called “What is Enlightenment?”, written in 1784, Immanuel Kant crystallised the essence of the movement in the motto Sapere aude (“Dare to know”). Humanity had used reason to emerge from its state of immaturity, he argued. For many, Kant is the supreme example of an Enlightenment philosopher; though less provocative in his moral and religious conclusions than others, he pushed reason as far as it would go. Mr Gottlieb has, surprisingly, chosen to end his book with Voltaire and Rousseau, leaving Kant for a later volume, a decision that some might question. + +That aside, “The Dream of Enlightenment” is an entertaining introduction to a range of daring thinkers of the long Enlightenment from Descartes to Rousseau. The author has a light touch, and his book is a joy to read. He manages to convey the excitement of ideas, and the humanity of thinkers, without swamping readers with complexity. His readings are at times controversial, as when he declares Locke’s political philosophy more Hobbesian than is generally thought, and in the prominent place he gives to Pierre Bayle, a 17th-century French Protestant, but it is for scholars to quibble over these interpretations. + +A great strength of the book is the inclusion of details such as the mention of Voltaire’s marginal comments on Rousseau’s passages on primitive man: “How do you know?” and “How you exaggerate everything!”; the revelation that Spinoza did not live from his earnings as a lens grinder, but rather from grants from admirers and pupils; Hume’s reply to a publisher’s request for further volumes of his “History”, that he was “too old, too fat, too lazy, and too rich” to comply; and, perhaps most pertinent, the succinct summary of Locke’s philosophy by Charles Sanders Peirce, who was known as the “father of pragmatism”: “Men must think for themselves.” + + + + + +Fiction + +You’re my baby + +Ian McEwan’s new Hamlet is hilarious and dark + +Sep 3rd 2016 | From the print edition + + + +Nutshell. By Ian McEwan. Nan A. Talese; 208 pages; $24.95. Jonathan Cape; £16.99. + +YOU know from the prologue to “Nutshell” that the book is a new take on “Hamlet”, even before you learn that the two main adult characters are called Trudy (for Gertrude) and Claude (for Claudius, Hamlet’s uncle). + +“Oh God, I could be bounded in a nutshell + +and count myself a king of infinite space— + +were it not that I have bad dreams.” + +Reworkings of Shakespeare—by Margaret Atwood and Howard Jacobson, Anne Tyler and Jeanette Winterson—have been pouring into bookshops this year. But none is as creepy or as brilliant as Ian McEwan’s latest. The Hamlet-narrator is the child whom Trudy is carrying and will give birth to within a fortnight, a baby now so wedged up against the walls of the uterus that, “I wear my mother like a tight-fitting cap.” + +Trudy fell in love with the child’s father when she was 18, and they embarked on a romantic tryst in a room without a view in the historic seaside town of Dubrovnik. An impoverished poetry publisher (“he’s saddened rather than embittered by his own failure in verse”), he brought her back to live in the marital home he had inherited, a Georgian town house in north London that is worth as much as £8m ($10.5m). By now, ten years on, the two are separated. Trudy is still in the house and is having an affair with the poet’s brother Claude (“the dull-brained yokel”), whose only talent is property development, a base occupation that helped make him rich once, even though he is down to his last £250,000. The baby, tied to his mother, ear pressed up against her body, is privy to all their plans: to kill the father, sell the house, give the child up for adoption and run off, rich and unencumbered. + +Mr McEwan is 68 and has written 16 novels, so this counts as a late work, but what a glorious late work it is. What is wrong in Hamlet’s “state of Denmark” extends here to all of Europe, but there is much to celebrate as well. The book’s finest exploration is of poetry. The author offers up everything he knows about its intensity, and why he loves it so. It is clear Mr McEwan has had enormous fun writing “Nutshell”; now it is the reader’s turn to be entertained too. Dark as it is, this novel is a thing of joy. + + + + + +New American television + +As real as a dream + +With “Atlanta”, Donald Glover brings an original voice to prestige television + +Sep 3rd 2016 | From the print edition + +ONE of the shortcomings of this platinum age of television is that it is still predominantly white. There are more good shows with minority characters in important roles, but most stories are still told from the white point of view. + +“Atlanta”, which starts on September 6th on FX in America, introduces an important new voice to “prestige TV”. Donald Glover, the creator and star, is familiar to audiences as a comic actor (appearing in “Community”, a television show, and in “The Martian”, a film), and as a hip-hop performer with the stage name Childish Gambino. The show he has made is funny, eccentric and thought-provoking. It is also groundbreaking television: not just because it explores the struggles of a black man in a black world, but because of how it does so. + +Mr Glover plays Earn, a charming young underachiever trying to make something of himself—and to pay his share of the rent at his child’s mother’s house. In the first episode, having returned home to Atlanta after dropping out of Princeton, he discovers his drug-dealing cousin Alfred is beginning to make a name for himself as a rapper, Paper Boi, and decides to talk his way into becoming his manager. + +What follows is a series of misadventures, the attempted rise of a rapper and his would-be entourage. Earn is a guy on the make. His father refuses to let him into his house, giving as his reason, “I can’t afford it.” Paper Boi, played by Brian Tyree Henry, accuses Earn of trying to get rich from him. By the end of the first episode, Paper Boi and Earn end up being arrested after a confrontation where a gun goes off. By the end of the second, the publicity of the arrest makes Paper Boi a local celebrity, with echoes of the late Tupac Shakur (another American rapper and record producer, who was himself arrested in a shooting in Atlanta). It is a development that the rapper regards as both appealing and disturbing. Meanwhile, in parallel, Earn spends a long day in jail, a sequence that manages to serve as both social commentary and absurd entertainment. + +The first two episodes (and seven of the season’s ten) are directed by Hiro Murai, who has collaborated frequently with Mr Glover on music videos. Mr Murai’s surrealist touch pairs well with Mr Glover’s writing sensibility. In a mind-bending scene in the first episode, a man in a suit and bow tie on a bus dispenses wisdom to Earn and urges him to eat a Nutella sandwich, then disappears, only to reappear outside the bus walking a dog into the trees—a existential play. + +At the same time “Atlanta” feels real and naturalistic, a credit to its writing and acting. Keith Stanfield steals multiple scenes as Paper Boi’s trippy sidekick, Darius, usually high on weed and deep in his own head. When Earn says to Paper Boi that he is not so homeless that he, say, uses a rat as a telephone, Darius muses aloud how much better the world would be if people could actually use rats as phones. It would be “messy”, he concedes, but “everyone would have an affordable phone.” + +Alexa Fogel, a casting director who worked on “The Wire”, David Simon’s acclaimed crime drama series, has assembled a cast of talented character actors who anchor the show in its eponymous city. In the second episode, one of the men being held with Earn in jail launches into a monologue, in amusingly indecipherable Atlanta patois, about how he went out for beers and ended up getting arrested. This is how “Atlanta” unfolds—characters speak to each other without the limiting crutch of helping the audience with context or exposition. We are left to absorb the story, piecing things together in this world as we follow along with Earn, bemused. + +“Atlanta” defies easy categorisation. It is a comedy interested in more than laughs. It is a hyperrealist study painted with surrealist strokes. It comes from an original point of view, and it is heading somewhere intriguing. + + + + + +Obituary + + + + +Obituary: Roly Bain: Let us play + + + + + +Obituary: Roly Bain + +Let us play + +The Reverend Roly Bain, clown-priest, died on August 11th, aged 62 + +Sep 3rd 2016 | From the print edition + + + +STANDING in the vestry among the brooms and flower jugs—any vestry in the quietly attenuating Church of England—Roly Bain would put on his priestly vestments. First, the dog collar, several sizes too big, which hung round his neck like a juggling ring. Then baggy red trousers, a coat of many colours, and a biretta. Black shoes, of course: size 18 or so, with bulbous toes on which small boys liked to stamp. Lastly a modest red nose, mascara on his eyes and black crosses on his cheeks. A quick prayer, and he was ready to process down the aisle—on a unicycle, or waving a feather duster, or both at once. His opening invocation was, “Let us play!” + +This was his routine for 25 years. He performed in parishes, conference halls, prisons, schools and hospitals all over Britain, Europe, America and Australia, clocking up thousands of miles and becoming, in the process, Britain’s only full-time clown-priest. Since 1990, when life as a vicar in south London got a bit dull and he went off for circus training, he had stopped celebrating formal Eucharists to celebrate play and craziness instead. At his services sermons were limericks, prayers went up in clouds of bubbles (when they burst, God had heard them), and at the Peace the congregation were encouraged to shout “Cooeee!” and flap their hands like seals. It was all very un-Anglican. + +At the heart of every show was his “slackrope of faith”, suspended between two crosses on a frame of tubular steel. In his hands, or rather under his giant clumsy feet, it became a theological aid. The trick to balancing, he would say, precariously trying to, was to think “up”; then you would stay up. The key to walking any distance was to keep your eyes on the cross. At one point, having clambered laboriously onto the rope, he would find himself facing the wrong way. “I wish I could turn round!” he would howl, and then: “They call it repentance in the trade.” His continual fallings off, entanglements and failures were gloriously redeemed by one last successful stroll, juggling three rings at the same time—almost: “Two out of three ain’t bad—like most people’s doctrine of the Holy Trinity.” + +Children loved it. Adults could be harder work, especially those who saw religion as a po-faced Sunday duty, not to be taken lightly. The self-important were the hardest to win over, but putting down the mighty from their seats and exalting the humble, in the words of the Magnificat, were what his show was all about. “Holy Roly” turned the established order upside down, just as lesser clergy did when they mocked their superiors at the medieval Feast of Fools. He’d had enough of top-heavy pomposity at theological college, when some of his fellow students seemed fixated on high preferment and glittering robes, and he, instead, had preached on Jesus as a clown. A clown was a truth-teller, living by different rules—as he did when, on ten occasions, he greeted a presiding bishop with a merry splat of custard pie. + +He also dared, like all clowns, to expose his vulnerability publicly and completely. This put him in a long tradition of holy fools, in Islam and Hinduism as well as Christianity, uncomfortable characters who were often thought mad: St Simeon Salos of Emress, who towed a dead dog behind him and threw nuts at priests during services, or Basil the Blessed who walked naked through Moscow. Didn’t St Paul say, in his first letter to the Corinthians, “We are fools for Christ’s sake”? Hadn’t St Francis danced through the woods playing a pretend viol, and jumped into a potter’s claypit to hide? Like all these, he opened himself up to ridicule, giving only innocence, love and joy in return. + +In Coco’s footsteps + +The clowning emerged before the priestliness. He was inspired by his father’s biography of Joseph Grimaldi, the greatest of clowns. There were gypsies and storytellers—and a lion-killer—further back in the family. By the age of eight he knew he wanted to be just like Coco, the sad-faced auguste, or simpleton, in Bertram Mills’s circus. God’s call interrupted all this, but then it struck him that the two vocations went rather well together. In 1982 he set up Holy Fools, to encourage others. When he clowned around, hiding his skill at pratfalls and slapstick behind wide-eyed alarm, his audience seemed to open up to God, releasing pent-up emotions and becoming like children in faith, hope and love. Faith and hope were especially needed when tricks went awry, as his did. + +It was not a glamorous life: a succession of small, cardiganed congregations, muddy sports fields, school gyms, tea and biscuits and struggling to get the steel frame out of the car. It didn’t pay, with a family to keep: he was part-funded by a group called Faith and Foolishness, which supports clown-priests, and was lucky to rent the vicarage of St Mary’s Olveston, near Bristol, where he in turn helped the vicar. He sometimes seemed engaged in a ridiculous enterprise. But then what could be more ridiculous than the cross, that appallingly public symbol of scorn and hopelessness and utter failure? + +In weary moments, he would remind himself of a cardinal rule of clowning: never die onstage. Always get back up, despite the plank in the face or the exploding chair; shake it all off. God, too, required him to stand up! And proclaim the resurrection. + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Precious-metal prices + +Markets + + + + + +Interactive indicators + +Economic data + +Sep 3rd 2016 | From the print edition + + + + + +Output, prices and jobs + +Sep 3rd 2016 | From the print edition + + + + + +Trade, exchange rates, budget balances and interest rates + +Sep 3rd 2016 | From the print edition + + + + + +The Economist commodity-price index + +Sep 3rd 2016 | From the print edition + + + + + +Precious-metal prices + +Sep 3rd 2016 | From the print edition + + + + + +Precious metals have shone this year: in part because Brexit-related uncertainty has increased demand for safe assets, and in part because rock-bottom interest rates reduce the opportunity cost of holding an investment that produces no income. The price of gold has risen by 24% over the past eight months. Silver has done better still: its price has jumped by 35% this year, and not simply because of its appeal as an investment. Silver also has industrial uses and has benefited from rising smartphone use, especially in India and China, and from solar-panel installations. Both platinum and palladium are used by carmakers in catalytic converters; they have been boosted by rising car sales in China and America. + + + + + +Markets + +Sep 3rd 2016 | From the print edition + + + + + +Table of Contents + +The Economist + +The world this week + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + +Personal transportation: Uberworld + + + + + +Corporate taxation: Bruised Apple + + + + + +The British economy and Brexit: The right kind of budget + + + + + +Brazil’s new president: A chance for a fresh start + + + + + +Counter-terrorism: Scared? Make women disrobe + + + + + +Letters + +On China, Labour, assisted suicide, Yazidis, voting, long lunches, dogs, religion, Donald Trump: Letters to the editor + + + + + +Briefing + +Uber: From zero to seventy (billion) + + + + + +United States + +The Senate: Downballot blues + + + + + +Bounty hunting: Delivery men + + + + + +Zika in Florida: Boots on the ground + + + + + +Political science: Trump and the academy + + + + + +Johns Hopkins: Applied research + + + + + +Lexington: In Trump they trust + + + + + +The Americas + +Brazil: Time for Temer + + + + + +The Latinobarómetro poll: Neither Trumpian nor Brexiteer + + + + + +Bello: The unspeakable and the inexplicable + + + + + +Asia + +Uzbekistan’s president: An ailing despot + + + + + +Australia and the Pacific: Foam flecked + + + + + +Marriage in Japan: I don’t + + + + + +Surrogacy in India: The end of paid labour? + + + + + +Banyan: Agreeing to agree + + + + + +China + +Xinjiang: The race card + + + + + +Social media: Posers for the party + + + + + +Middle East and Africa + +Nigeria’s food crisis: Hunger games + + + + + +South Africa: Uncivil war + + + + + +Egypt’s economy: Of bread, bribes and fungus + + + + + +Guinea and the haj: The pilgrims’ tale + + + + + +The war on Syria’s doctors: The ultimate barbarity + + + + + +Europe + +France’s identity politics: Ill-suited + + + + + +The future of the EU: Now what? + + + + + +Germany’s refugee anniversary: Assimilation report + + + + + +German populism’s heartland: East is east + + + + + +Charlemagne: Magical misery tour + + + + + +Britain + +The economy since the Brexit referendum: Fact and fiction + + + + + +Infrastructure: Ropy roads, rail and runways + + + + + +Britain and France: Calais capers + + + + + +Measuring crime: Bobbies on the spreadsheet + + + + + +Polish businesses: Staying put + + + + + +Bagehot: The ungovernables + + + + + +International + +Terrorism: Learning to live with it + + + + + +Business + +Corporate taxation: The €13 billion bite + + + + + +Drugs in America: Seizure-inducing + + + + + +Xiaomi: Show me again + + + + + +Serge Pun & Associates: Honest partner + + + + + +Corporate activists in Germany: Stada and deliver + + + + + +Zalando: Fashion forward + + + + + +Schumpeter: Leaving for the city + + + + + +Schumpeter: Correction: Own goal + + + + + +Finance and economics + +China’s data: Superstition ain’t the way + + + + + +Politics and statistics: Called to account + + + + + +Stockmarket returns in America: The long arm of the Fed + + + + + +Indian capital markets: Bank vigilantes + + + + + +Private-equity search funds: Seek and we shall fund + + + + + +Bad loans to shipping: That sinking feeling + + + + + +Australia’s economy: Good on you + + + + + +Free exchange: More spend, less thrift + + + + + +Science and technology + +Vaccines: Putting shots in the locker + + + + + +Chronic-fatigue syndrome: Blood simple? + + + + + +The Anthropocene: Dawn of a new epoch? + + + + + +Books and arts + +The state of the world: Better and better + + + + + +European history: The best of times + + + + + +Indian politics: Raise him up + + + + + +History of philosophy: Seeing the light + + + + + +Fiction: You’re my baby + + + + + +New American television: As real as a dream + + + + + +Obituary + +Obituary: Roly Bain: Let us play + + + + + +Economic and financial indicators + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Precious-metal prices + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.09.10.TXT b/homeworks/B20769/homework1/data2/2016.09.10.TXT new file mode 100644 index 0000000..8616fe0 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.09.10.TXT @@ -0,0 +1,4862 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Sep 10th 2016 | From the print edition + + + +Hong Kong held elections for its 70-member Legislative Council, known as Legco. Six of the successful candidates were “localists”, as those who support greater independence for the territory are often described. It is their first presence in Legco and is sure to anger China, which fears they will use their new positions to push for a referendum on Hong Kong’s relationship with the mainland. See here and here. + +Uzbekistan buried Islam Karimov, the blood-drenched despot who ruled the country since independence after the break-up of the Soviet Union in 1991. His death was announced after days of feverish speculation about his health. Vladimir Putin laid flowers on his grave. + +The Taliban launched a series of attacks in Kabul, the Afghan capital. The defence ministry and the offices of a charity were among the targets. At least 35 people were killed. + +Rodrigo Duterte, the president of the Philippines, responded to a bombing in his home town of Davao by deploying the army to help in his current crackdown on drug-dealing and other crimes. He also caused a diplomatic kerfuffle by calling Barack Obama a “son of a whore”. See article. + +More than hot air + +Building on pledges made two years ago, America and China said they were committed to implementing last year’s Paris accord on climate change. America and China account for 40% of the world’s carbon emissions. Mr Obama plans to bypass the Republican-controlled Senate, which is required to give its approval to any treaty, reasoning that the agreement constitutes an executive action. He may try to push the deal through before he leaves office in January. + +Hurricane Hermine battered north Florida. It was the first hurricane to hit the state since Wilma in 2005, and caused a lot less damage. + +Hillary Clinton and Donald Trump took part in a televised forum that focused on foreign policy. In a preview of what to expect from the presidential debates Mrs Clinton stumbled to answer searching questions on issues such as Iraq and her misuse of e-mails, whereas Mr Trump got away with some bizarre and some invented statements. + +Dumped because of Trump + +Mexico’s finance minister, Luis Videgaray, resigned after helping to organise the recent unpopular visit to the country by Donald Trump. The Republican presidential candidate is rather disliked in Mexico because of his disparaging remarks about migrants. The departure of Mr Videgaray was seen as a chance for Mexico’s president, Enrique Peña Nieto, to improve his dire poll ratings. See article. + + + +As opposition to Venezuela’s leftist regime mounted on the streets, the authorities charged a journalist, Braulio Jatar, with money-laundering. He had used social media to publicise an incident in which President Nicolás Maduro was jostled and humiliated by pot-banging women in a working-class district that was once his stronghold. See article. + +A wounded animal + +At least 40 people were killed in a series of bombings in Syria for which Islamic State (IS) claimed responsibility. Possibly synchronised explosions took place in Tartus, Homs and a suburb of Damascus (all areas held by the government), and in Hasakah, which is controlled by Kurdish forces. + +Turkey sent more tanks into northern Syria and is closer to sealing off IS’s access to its border. Turkey’s president, Recep Tayyip Erdogan, said that together with America, Turkey could soon expel IS from its Syrian capital, Raqqa. + +America urged Bahrain to release a prominent human-rights campaigner, Nabeel Rajab, who was detained earlier in the summer and is believed to be facing further charges for writing to the New York Times. + +Somalia’s beleaguered government began to implement a ban on flights to Mogadishu, the capital, from neighbouring Kenya that carry qat, a narcotic popular among Somalis. Illicit flights to other parts of the country will doubtless ensue. See article. + +The migrant crisis + +In Germany’s regional elections, a fifth of the voters in Angela Merkel’s home state, Mecklenburg-Vorpommern, plumped for the anti-immigrant Alternative for Germany (AfD) party, pushing Mrs Merkel’s centre-right Christian Democrats into third place. The Social Democrats came first. Mrs Merkel acknowledged that many Germans have lost trust in her liberal refugee policy. + +European foreign ministers met Turkey’s European Union-affairs minister, Omer Celik. The hot topic was the deal to slow the flow of migrants into the EU. Despite Turkey’s earlier threats to renege on the deal if Europe failed to lift visa restrictions on Turks, all concerned at the meeting gave assurances that it would be implemented. + +Hungary’s prime minister, Viktor Orban, and the leader of Poland’s nationalist Law and Justice party, Jaroslaw Kaczynski, joined forces to launch a “cultural counter-revolution” to put an end to Europe’s “crisis of conscience”. Mr Orban’s anti-immigrant government has formed close ties with Poland since Mr Kaczynski’s party took power there last October. + +Russia’s last remaining independent polling firm, the Levada Centre, was designated a “foreign agent” by the government, two weeks ahead of parliamentary elections. No reason was given for the decision, but Levada had recorded a drop in support for United Russia, Vladimir Putin’s ruling party. + +Theresa May, Britain’s prime minister, said she opposes an “Australian-style” points system to control immigration. The system was one of the main promises to “control our borders” made by the campaign to leave the EU, but Mrs May has repeatedly noted its shortcomings. She also indicated a strong desire to reintroduce “an element of selection” in education, possibly by reviving the grammar-school system. That would reverse a decades-old policy held by successive governments. See article. + + + +At the G20 summit Mrs May talked about trade deals with Australia and China. She downplayed her decision to review the Hinkley Point nuclear-power plant deal in which China has a stake and declared that the two countries were entering a “golden era” in relations. Chinese officials were not so positive. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21706566-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Sep 10th 2016 | From the print edition + +A federal investigation began into the explosion of a SpaceX rocket as it was undergoing tests on a launch pad at Cape Canaveral. Led by Elon Musk, SpaceX is a pioneer in private-sector space transport. But the accident has prompted questions about its safety record. A satellite leased by Facebook that was to provide internet services to poor countries was destroyed in the blast. Spacecom, which owned the satellite, said it would want SpaceX to conduct several safe flights before using its services again. See article. + +Piping hot + +Enbridge, which is based in Canada and shifts crude oil around North America, agreed to buy Spectra, a natural-gas company in Texas, for $28 billion, creating a giant in energy infrastructure. Enbridge is one of the biggest owners of oil tanks in Cushing, Oklahoma, a hub for West Texas oil. Spectra has assets in the Marcellus shale-gas basin. With the industry under pressure to consolidate because of the plunge in oil prices, more mergers are thought to be in the pipeline. + +Exor, an Italian investment company controlled by the Agnelli family, confirmed it was moving its legal headquarters to Amsterdam, from Turin. Exor, which is The Economist’s largest shareholder, says the move will simplify its operations. Its Fiat Chrysler and Ferrari businesses are legally based in the Netherlands. The company will remain listed on the Milan stock exchange. + +The first corporate bonds from the private sector to be sold with negative yields were issued in Europe. Henkel, a German company, and Sanofi, a French one, sold bonds with a yield of -0.05%, meaning that investors who buy them are prepared to end up with less money in return. The European Central Bank’s expansion of its asset-buying programme to include corporate debt has driven yields to new lows. + + + +Markit said that its monthly survey of activity in Britain’s services industry had posted a record gain in August. The financial-data firm now thinks the economy is unlikely to fall into recession, reversing its forecast following Britain’s vote in a referendum in June to leave the European Union. But it does think the economy will slow considerably. + +The ultimate insider + +The EU’s ombudsman raised concerns about the decision of José Manuel Barroso to join Goldman Sachs. Mr Barroso is a former president of the European Commission and oversaw reforms to the financial industry that were often resisted by the City of London. The ombudsman said Mr Barroso’s appointment to the investment bank had caused “public unease”, and asked for clarification on how officials who used to work with Mr Barroso, including those who will head the EU’s Brexit negotiations, should liaise with him. + +South Africa’s economy grew by an annualised 3.3% in the second quarter, the fastest pace since late 2014. In the first three months of the year GDP contracted by 1.2%, leading to fears of recession, but mining, the mainstay of the economy, has since rebounded. + +Bayer sweetened its takeover offer for Monsanto, to $65 billion, the latest move in a spell of consolidation in the agricultural seeds and chemicals business. Monsanto has softened its response to the approach from its German rival, describing the latest negotiations as “constructive”. + +After a decade of ownership by a private-equity firm, Formula One was sold to Liberty Media, an American company, in a deal that values the racing-car championship at $8 billion. Bernie Ecclestone stays on as F1’s chief executive. + +Hewlett Packard Enterprise decided to sell most of its remaining software assets to Micro Focus, a British tech company, for $8.8 billion. The assets include what is left of Autonomy, a former star of British tech. Its purchase, in 2011, in a deal that rapidly turned sour, precipitated the splitting of HP into two companies last year. + +Augmenting its business in 3 D-printing, General Electric said it was buying Arcam of Sweden and SLM Solutions of Germany, two of the leading companies in metal-based additive manufacturing. GE will use the firms’ technologies to enhance its business in printing aircraft parts. + +Ear today, gone tomorrow + +Apple unveiled the iPhone 7. Sales of the device have slowed recently, in part because consumers have awaited its latest iteration. The new phone is waterproof and, controversially, does away with the headphone socket, so those who still want to use their top-of-the-range noise cancellers will have to carry an adaptor. Meanwhile, Apple’s arch-rival, Samsung, issued a safety recall for its new Galaxy Note 7 smartphone because of a fault in the battery that can cause the device to catch fire. See article. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21706567-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Sep 10th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21706568-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Post-truth politics: Art of the lie + +Elections in Hong Kong: A not-so-local difficulty + +England’s National Health Service: Bitter pills + +Economic reform in the Gulf: Time to sheikh it up + +Interest-rate caps: Cut-price logic + + + + + +Articles Sections Next + +Post-truth politics + +Art of the lie + +Politicians have always lied. Does it matter if they leave the truth behind entirely? + +Sep 10th 2016 | From the print edition + + + +CONSIDER how far Donald Trump is estranged from fact. He inhabits a fantastical realm where Barack Obama’s birth certificate was faked, the president founded Islamic State (IS), the Clintons are killers and the father of a rival was with Lee Harvey Oswald before he shot John F. Kennedy. + +Mr Trump is the leading exponent of “post-truth” politics—a reliance on assertions that “feel true” but have no basis in fact. His brazenness is not punished, but taken as evidence of his willingness to stand up to elite power. And he is not alone. Members of Poland’s government assert that a previous president, who died in a plane crash, was assassinated by Russia. Turkish politicians claim the perpetrators of the recent bungled coup were acting on orders issued by the CIA. The successful campaign for Britain to leave the European Union warned of the hordes of immigrants that would result from Turkey’s imminent accession to the union. + +If, like this newspaper, you believe that politics should be based on evidence, this is worrying. Strong democracies can draw on inbuilt defences against post-truth. Authoritarian countries are more vulnerable. + +Lord of the lies + +That politicians sometimes peddle lies is not news: think of Ronald Reagan’s fib that his administration had not traded weapons with Iran in order to secure the release of hostages and to fund the efforts of rebels in Nicaragua. Dictators and democrats seeking to deflect blame for their own incompetence have always manipulated the truth; sore losers have always accused the other lot of lying. + +But post-truth politics is more than just an invention of whingeing elites who have been outflanked. The term picks out the heart of what is new: that truth is not falsified, or contested, but of secondary importance. Once, the purpose of political lying was to create a false view of the world. The lies of men like Mr Trump do not work like that. They are not intended to convince the elites, whom their target voters neither trust nor like, but to reinforce prejudices. + +Feelings, not facts, are what matter in this sort of campaigning. Their opponents’ disbelief validates the us-versus-them mindset that outsider candidates thrive on. And if your opponents focus on trying to show your facts are wrong, they have to fight on the ground you have chosen. The more Remain campaigners attacked the Leave campaign’s exaggerated claim that EU membership cost Britain £350m ($468m) a week, the longer they kept the magnitude of those costs in the spotlight. + +Post-truth politics has many parents. Some are noble. The questioning of institutions and received wisdom is a democratic virtue. A sceptical lack of deference towards leaders is the first step to reform. The collapse of communism was hastened because brave people were prepared to challenge the official propaganda. + +But corrosive forces are also at play. One is anger. Many voters feel let down and left behind, while the elites who are in charge have thrived. They are scornful of the self-serving technocrats who said that the euro would improve their lives and that Saddam Hussein had weapons of mass destruction. Popular trust in expert opinion and established institutions has tumbled across Western democracies. + +Post-truth has also been abetted by the evolution of the media (see Briefing). The fragmentation of news sources has created an atomised world in which lies, rumour and gossip spread with alarming speed. Lies that are widely shared online within a network, whose members trust each other more than they trust any mainstream-media source, can quickly take on the appearance of truth. Presented with evidence that contradicts a belief that is dearly held, people have a tendency to ditch the facts first. Well-intentioned journalistic practices bear blame too. The pursuit of “fairness” in reporting often creates phoney balance at the expense of truth. NASA scientist says Mars is probably uninhabited; Professor Snooks says it is teeming with aliens. It’s really a matter of opinion. + +When politics is like pro-wrestling, society pays the cost. Mr Trump’s insistence that Mr Obama founded IS precludes a serious debate over how to deal with violent extremists. Policy is complicated, yet post-truth politics damns complexity as the sleight of hand experts use to bamboozle everyone else. Hence Hillary Clinton’s proposals on paid parental leave go unexamined (see article) and the case for trade liberalisation is drowned out by “common sense” demands for protection. + +It is tempting to think that, when policies sold on dodgy prospectuses start to fail, lied-to supporters might see the error of their ways. The worst part of post-truth politics, though, is that this self-correction cannot be relied on. When lies make the political system dysfunctional, its poor results can feed the alienation and lack of trust in institutions that make the post-truth play possible in the first place. + +Pro-truthers stand and be counted + +To counter this, mainstream politicians need to find a language of rebuttal (being called “pro-truth” might be a start). Humility and the acknowledgment of past hubris would help. The truth has powerful forces on its side. Any politician who makes contradictory promises to different audiences will soon be exposed on Facebook or YouTube. If an official lies about attending a particular meeting or seeking a campaign donation, a trail of e-mails may catch him out. + +Democracies have institutions to help, too. Independent legal systems have mechanisms to establish truth (indeed, Melania Trump has turned to the law to seek redress for lies about her past). So, in their way, do the independent bodies created to inform policy—especially those that draw on science. + +If Mr Trump loses in November, post-truth will seem less menacing, though he has been too successful for it to go away. The deeper worry is for countries like Russia and Turkey, where autocrats use the techniques of post-truth to silence opponents. Cast adrift on an ocean of lies, the people there will have nothing to cling to. For them the novelty of post-truth may lead back to old-fashioned oppression. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21706525-politicians-have-always-lied-does-it-matter-if-they-leave-truth-behind-entirely-art/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Elections in Hong Kong + +A not-so-local difficulty + +China’s separatist troubles have just got bigger. It has only itself to blame + +Sep 10th 2016 | From the print edition + + + +AT LEAST for a few moments, China’s president, Xi Jinping, might have felt like king of the world on September 4th as, one by one, the leaders of the planet’s biggest economies walked into a cavernous room in the centre of which he stood motionless, waiting for each to approach him, shake his hand and then disappear, stage left. It was the first time that China had played host to a summit of the G20 (see article). The Communist Party’s propagandists milked the occasion for every drop of patriotic feel-goodery that it could produce. Mr Xi has promised a “great revival” of the Chinese nation; presiding over such a meeting of global grandees was a perfect opportunity to show the public that he was on target. + +How awkward, then, that as he was doing so voters in Hong Kong were sending Mr Xi a different—and, for the party, shocking—message. In elections for the territory’s Legislative Council, or Legco, six candidates who want Hong Kong to be more independent from China gained seats in the 70-member body (see article). Some lean towards Hong Kong’s outright separation. It is the first time since the party dismantled the Dalai Lama’s government in Tibet in 1959 that sympathisers of separatism have gained a foothold in a political institution in China. Mr Xi will see this as a threat to his nation-building. + +Mercifully, it is extremely unlikely that China will resort to the tactics it has used to crush separatism in Tibet and Xinjiang in the far west, namely sending in troops and conducting mass arrests. Since China took over Hong Kong from Britain in 1997, it has allowed the territory to maintain freedoms that are forbidden on the mainland. These include the right to vote for some legislators in competitive elections (the Communist Party’s backers dominate Legco with the help of seats reserved for groups that tend to support the establishment). China tolerates Hong Kong’s distinctive politics because it promised to do so, at least until 2047. It knows that to scrap that promise would be the death knell for Hong Kong as a global financial hub. + +But China’s good sense cannot be entirely counted on. Indeed, it is China’s own miscalculations that have fuelled support for politicians known as “localists”, who include outright separatists as well as people who want Hong Kong to enjoy more autonomy. The biggest mistake was a decision in 2014 not to allow the territory’s leader to be elected by the public, with anyone allowed to stand. China said it would fulfil its promise of “universal suffrage” in such polls, but retain a system for weeding out candidates it does not like. Public anger over this decision triggered the “Umbrella movement” later that year, involving weeks of demonstrations and sit-ins. Some of the localists just elected were leaders of that campaign. + +Since those protests, China has kept picking away at Hong Kong’s freedoms. Voters were spooked by the detention, a few months ago, of several Hong Kong residents who had been selling gossipy books about Beijing’s leaders. One of them appears to have been spirited from Hong Kong by the mainland’s agents. And it was doubtless at the behest of leaders in Beijing that Hong Kong required candidates for Legco to forswear independence. As a result, several of the more outspoken ones were barred from standing. + +Separate ways + +To prevent separatism from growing in Hong Kong, Mr Xi has only one option that might actually work. That is to give the territory full democracy, not a system that is rigged in favour of the Communists’ supporters. Mr Xi may well prefer to stifle democracy even more. That would increase anger and frustration, boost separatist demands and make China’s great revival as a “harmonious” nation ever more distant. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21706507-chinas-separatist-troubles-have-just-got-bigger-it-has-only-itself-blame-not-so-local/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +England’s National Health Service + +Bitter pills + +The NHS is in terrible shape. Keeping it alive requires medicine both the left and right will find hard to swallow + +Sep 10th 2016 | From the print edition + + + +NEARLY everyone born in England after 1948 was delivered into the care of the National Health Service, and most retain an almost filial loyalty to the organisation. The taxpayer-funded service, which provides health care free at the point of use, is so precious in the public imagination that politicians are less likely to talk of improving the NHS than “protecting” it. + +Yet this national treasure is looking frail (see article). Nine out of ten of the local trusts which run hospitals are spending beyond their budgets; overall the service faces a funding gap of £20 billion ($27 billion) by the end of the decade. Doctors have gone on strike over a new, less generous contract that the government is imposing on them. And everywhere hospitals are struggling to make ends meet. In recent weeks one trust has abruptly shut an emergency department to children because it was found to be unsafe; another said it was considering delaying all surgery on obese patients. + +The diagnosis is simple: rising demand for health care from an ageing population is outstripping supply. But the cure will be hard to stomach for both left and right. Increasing the NHS’s capacity will require a far more ruthless focus on efficiency. Even then, taxpayers will have to get used to forking out more. Managing demand will involve not just uncontroversial measures such as more emphasis on preventive medicine, but toxic ones such as introducing charges for services that have been free. Such is the price Britons must expect to pay for living a decade and a half longer than when the NHS was founded. + +Though the NHS is lean by international standards, it still bleeds money through inefficiency. There can be few organisations in England that still use fax machines as often as doctors’ surgeries do. Poor staff planning means that shortages are tackled by expensive overtime. And the English have a romantic attachment to small local hospitals, which are costlier and deliver worse results than big specialist ones. By scaling up, the NHS could offer better care for the same money. In some parts of the country family doctors are leaving their cottage practices to join chains of larger surgeries that share back-office functions such as call centres. Countries such as Germany and Denmark have found that by reducing the number of hospitals that offer particular surgical procedures, they can reduce the incidence of complications. + +You may feel some discomfort + +Yet even if all such wastefulness can be eliminated, the government’s plan to close the NHS’s entire funding gap through greater efficiency is heroically optimistic. Britain already spends less as a share of its GDP on health care than most other rich countries. It is now on course to shrink that share, from 7.3% to 6.6% by 2021. At a time of steeply rising demand that is unrealistic. Politicians must make plain to voters that if they want to keep the taxpayer-funded model and expect to carry on living into their 80s and beyond, they will have to pay for it. + +At the same time as making available more resources, the government needs to rein in demand for NHS services. Patients should, where possible, be diverted from expensive forms of care into cheaper ones. One reason that hospital beds are in such short supply is that budgets for social care have been slashed. It makes no sense to use hospitals as expensive substitutes for old people’s homes. Amalgamating health and social care, as some regions are already doing, would lead to a more sensible allocation of resources. If more doctors dealt with simple queries from their patients by phone or e-mail, they would have more time to devote to tricky ones. Subjecting more services to fees would temper frivolous demand. In-person doctor’s appointments, for instance, could incur a modest charge, as prescriptions and dental work already do. + +More fundamentally, the focus must shift away from treating illness and towards preventing it. The NHS was designed with acute conditions in mind; nowadays 70% of its spending is on long-term illnesses. It is cheaper, as well as better for patients, to reduce obesity, say, than to treat diabetes. Yet NHS providers are paid for the procedures they carry out, not for those that they render unnecessary. A better model would be to give health providers a budget based on the population they serve, and pay them according to their ability to meet targets of better public health. This would increase the incentives to use new technology that would give patients more responsibility for their own health. If private outfits can do this with a profit margin to spare, good for them. + +Higher taxes, new charges and more rationed services: these are bitter pills for politicians. But the English are ageing, and as long as their leaders promise simply to “protect” the NHS by doing nothing, the service faces only decline. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21706513-nhs-terrible-shape-keeping-it-alive-requires-medicine-both-left-and-right-will/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Economic reform in the Gulf + +Time to sheikh it up + +How to get the locals to work + +Sep 10th 2016 | From the print edition + + + +THE people of Saudi Arabia have for decades enjoyed the munificence of their royal family: no taxes; free education and health care; subsidised water, electricity and fuel; undemanding jobs in the civil service; scholarships to study abroad; and much more. This easy life has been sustained by gushers of petrodollars and an army of foreign workers. The only thing asked of subjects is public observance of Islamic strictures and acquiescence in the absolute power of the sprawling Al Saud dynasty. + +Similar arrangements hold in the other countries of the Gulf Co-operation Council (GCC), a six-member club of oil monarchies. But these compacts are breaking down. The price of oil has fallen sharply since 2014, and the number of young Gulf citizens entering the job market is growing fast. The maliks and emirs can no longer afford huge giveaways, or to pay ever more subjects to snooze in air-conditioned government offices. The monarchs know it. They say they are seeking to diversify their economies away from oil rents; they are also whittling away generous subsidies and plan a new value-added tax across the GCC. + +But reforms have to go further. If Gulf citizens are to keep enjoying rich-world standards of living, they will increasingly have to find productive work in the private sector. That means overhauling labour markets that keep too many of the region’s citizens idle. + +The pampering of Gulf citizens has made them expensive for firms to hire (see article). By contrast, the third-class legal status of many migrant workers makes them extra-cheap (see article) and puts them at the mercy of their employers. Given the choice between a hardworking foreigner and a costly local, private firms have long preferred the foreigner. + +In response Gulf governments have imposed ever more stringent quotas on foreign companies to employ locals, especially in desirable white-dishdasha jobs. In Bahrain 50% of workers in banks must be Bahrainis; but only 5% of those in construction need be. (It’s awfully hot on building sites.) Quotas reduce the incentive for Gulf citizens to do a job well: why bother, when your employer has little choice but to keep you on? Firms often regard hiring locals as a sort of tax. Some pay them to stay at home. + +The best policy would be to phase out quotas entirely, while also slimming the bureaucracy and making it clear that civil-service jobs are no longer a birthright. In Saudi Arabia two-thirds of citizens are employed by the state. Public-sector wages account for 12% of GDP in the Gulf and Algeria, compared with an average of 5% across emerging economies. + +The way migrant labourers are treated needs to change, too. Gulf states deserve credit for letting in far more immigrants than almost all Western countries, relative to their populations. (In many cases, foreigners outnumber locals.) Migrants gain from earning far higher wages than they could back in India or Pakistan. But the coercive parts of the kafala system of sponsoring foreign workers should be dismantled. Migrant workers should not need their employers’ permission to leave the country. After a while, they should be allowed to switch jobs. Contracts should be clear and enforced by local courts. Long-term foreign workers should be able to earn permanent residence; ultimately those who wish to should have the opportunity to become citizens. + +These reforms—less pampering for locals and more rights for migrants—would reshape the labour market. More locals would have to do real work. Migrants would be better treated, though inevitably fewer would be hired. Some new ideas are being tested. Bahrain is allowing firms to ignore quotas by paying a fee for each foreign worker they employ. As part of its ambitious economic agenda, Saudi Arabia is talking of issuing green cards to some migrants. + +A new social contract + +At a time of bloody turmoil across the Arab world, many royals fear undoing the social compact that has kept them in power. But cheap oil makes change unavoidable; doing nothing merely postpones the reckoning. Economic transformation should nudge Gulf states towards political reform. Perhaps, as their citizens are asked to do more to earn their living, they will demand that rulers do more to earn their consent. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21706531-how-get-locals-work-time-sheikh-it-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Interest-rate caps + +Cut-price logic + +A bad idea that is remarkably common + +Sep 10th 2016 | From the print edition + + + +THE Kenyan government has a problem. Its banks will not lend cheaply to the private sector. Tired of asking nicely, the government has taken matters into its own hands. This month it will put a cap on commercial banks’ interest rates: charging borrowers more than four percentage points above the central bank’s base rate, which now stands at 10.5%, will be illegal (see article). Shares of the largest Kenyan banks plummeted by 10% in response to news of the cap. + +This sort of crude meddling in the market may seem antiquated, but it is remarkably common. A review by the World Bank in 2014 found then that at least 76 countries impose a limit on interest rates. Half the countries in sub-Saharan Africa have such caps. Rich countries are also fond of them. In America, 35 states have ceilings on payday-loan rates. Lending at a rate of more than 17% in Arkansas, for example, is forbidden; any higher, and the borrower can claim back double the illegal interest paid. + +The financial crisis of 2007-08 seems to have made governments more willing to intervene in this way. From Japan to El Salvador, lawmakers have either tightened their existing caps or slapped on fresh ones. British financial regulators limited interest rates on payday loans in 2015. + +Policymakers usually mean well: by controlling the cost of credit, they may hope to improve access to finance. But rate caps often have precisely the opposite effect. The most expensive loans are pricey because they go to the riskiest borrowers: younger firms without collateral, poorer consumers without credit histories. If lenders cannot charge interest rates that reflect these risks, they may not lend at all. + +When microfinance loans in west Africa became subject to interest-rate limits, small loans to the poorest borrowers in the most remote areas were the first to be axed. In Nicaragua an interest ceiling introduced in 2001 reduced lending growth from 30% a year to just 2%, according to a local microfinance body. After Ecuador introduced rate caps in 2007, the average size of bank microloans jumped, indicating that smaller loans had become less viable. A cap on payday-loan interest rates in Oregon, which became binding in 2007, increased the share of people reporting difficulties in getting short-term credit by 17-21 percentage points: many resorted to paying bills late instead. With fewer options to choose from, some borrowers may instead turn to loan sharks. One study suggests that illegal lending was at the time more widespread in Germany and France than in Britain because of their penchant for price caps. + +Sometimes conventional lenders keep extending credit but recoup their costs in other ways. A study of car loans in America between 2011 and 2013 found that dealer-lenders jacked up the price of cars, and thus the amount of credit they were extending, in response to interest-rate limits. Borrowers ended up no better off. In Nicaragua and South Africa lenders introduced so many extra fees and commissions in response to interest-rate caps that loans became more expensive overall. An interest-rate ceiling introduced in 2005 in Poland prompted lenders there to add a convenience fee that handily fell outside the definition of administrative fees and charges, also capped at 5%. A review by the European Commission found that rate limits were unlikely to cut the level of over-indebtedness. + +If the cap doesn’t fit + +No one doubts that price-gouging happens. Some people should not be borrowing in the first place. But rate caps target a symptom of a malfunctioning credit market, not the underlying problem. Exorbitant interest rates usually stem from weak competition or from insufficient information about borrowers and lenders. Transparency about fees, more sources of funding and credit scoring all tackle market failures much more directly than price caps. In Kenya’s case, a fiscal splurge has pushed up interest rates on government debt so much that banks make healthy returns by lending to the government and have scant incentive to make the effort to lend to the private sector. Ham-fisted price manipulation might make for good headlines. But imposing rate caps is shoddy economics. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21706528-bad-idea-remarkably-common-cut-price-logic/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On housing, wild horses, Scotland, child sex abuse, longevity: Letters to the editor + + + + + +Articles Sections Next + +On housing, wild horses, Scotland, child sex abuse, longevity + +Letters to the editor + +Sep 10th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + +Expand homeownership + + + +You argued that America has in effect nationalised its housing market (“Comradely capitalism”, August 20th). But the government has been supporting home financing and incentives for the past 80 years, whether through the mortgage-interest deduction or programmes that ensure affordable mortgage capital. Washington’s inability to press forward with reform has caused uncertainty and restricted credit for homebuyers. People are confident that if they qualify for a mortgage a bank will lend them the money. The Federal Housing Association, Fannie Mae, Freddie Mac and other programmes provided this stability. They took on the credit risk of mortgages so long as Wall Street took on the interest-rate risk. This system must be protected. + +The FHA, Fannie Mae and Freddie Mac have worked hard to further their public mission of supplying mortgage capital during depressed markets while protecting their integrity. During the housing recovery they have repaired their balance-sheets and strengthened underwriting standards. Any proposal that increases the cost of mortgages and threatens the availability of mortgage capital is wrong. Fannie Mae and Freddie Mac already charge a fee that reflects the costs of paying losses and of holding capital (even though they are not allowed to increase their capital reserves). + +We do need private capital to come back to the mortgage market, especially in California where so many homes exceed the loan limits of Fannie, Freddie and the FHA. But private capital has struggled to make a significant return after the bust. The private securities markets are still unable to agree on how to fix many of the issues that caused the financial crisis. + +In America, we unapologetically promote homeownership as it continues to be the best way for low- and middle-class households to build wealth and move up the socioeconomic ladder. Any mortgage-finance reform needs to make that its priority so that more people have access to safe and affordable mortgages. + +PAT “ZIGGY” ZICARELLI + +President + +California Association of Realtors + +Los Angeles + +You left the most important recent development in America’s housing market until the end: credit-risk transfer. The risk-transfer mechanisms you dismiss as “a little too like the opaque instruments that blew up in 2007-8” are nothing like the collateralised-debt obligations and credit-default swaps that were issued before the financial crisis. In fact, they represent de facto private capital, the only way to build the appropriate capital buffer in the absence of a congressional resolution on their current status. + +Now covering $1 trillion in loans, this market is well on its way to the 20% of total capital that would be required to shed almost all taxpayer risk in most analyses of the market. You did not mention that the reason all this was done under administrative fiat was the inability of the political system to do its part. Given this, the administrative actors are to be commended for pointing the way towards a long-term solution, rather than criticised. + +EKNATH BELBASE + +Director + +MBS Strategy + +Andrew Davidson & Co + +New York + + + +* Going back a little further in history, government involvement in housing has been an issue since at least 1913. That was when the United States made mortgage interest deductible from income tax. The Office of Management and Budget estimates that this subsidy costs the Treasury over $100 billion a year. Later the government made real property taxes deductible from income tax. Furthermore, as part of their strong pro-debtor policy they have non-recourse mortgages. + +This is all part of what George Cabot Lodge called “the American disease”: an ideological schizophrenia, which proclaims one thing and practices another. + +JOE MARTIN + +Director + +Canadian Business and Financial History + +Rotman School of Management + +University of Toronto + +A bit skint in Scotland + +I was pleased to see your recent article about Scottish education (“Not so bonny”, August 27th). However, the most important recent story in Scotland is the release of the Government Expenditure and Revenue Scotland statistics for 2015-16. The figures, produced by the Scottish government, show that Scotland’s public finances last year gained £9 billion ($12 billion) from pooling and sharing across the United Kingdom, and that Scotland’s own deficit is almost £15 billion, or 9.5% of GDP. This information, inter alia but also on its own, effectively scotches any economic case for Scottish independence. + +Scottish Nationalist politicians castigated The Economist for its famous Skintland cover (April 14th 2012). I was therefore surprised that you passed up the opportunity to demonstrate that you, and most Scots, are right to continue to support Scotland’s place in the UK. + +ALASTAIR CAMERON + +Director + +Scotland In Union + +Glasgow + +Dealing with sex abuse + + + +* “First, save the children” (August 13th) criticised “tough but flawed laws” on child sex abuse. Lawmakers should look to evidence-based medicine for a guide. Far too often, especially where legal measures are directed at sexual offenders, legislatures ignore scientific evidence. This is especially so in American laws on “civil commitment” (where a person is detained on the likelihood of committing abuse in the future), residency restrictions, sentencing and the creation of registries for sexual offenders. None of these laws have demonstrated that they have a substantial effect on decreasing sexual crimes; indeed, some have been shown to have adverse effects. + +We need to consider the evolving scientific literature on sexual offenders and direct our efforts towards research on individuals who commit sexual offences and on the effects of such policies. + +RICHARD KRUEGER + +Medical director + +Sexual Behaviour Clinic + +New York State Psychiatric + +Institute + +New York + +Lasso this bad policy + + + +Not only has the ban on horse-processing in America cost taxpayers billions of dollars (Lexington, August 13th), it has also hurt the horses. The processing of livestock is well regulated under the Humane Methods of Slaughter Act, and has been found to be a decent form of euthanasia for horses by the American Veterinary Medical Association. However, because of the ban, horses which would have been processed in America are instead being shipped thousands of miles to facilities in Canada and Mexico. Those not sent to Mexico are starving on rangeland which cannot support the growing population. + +If animal-rights activists were truly interested in horse welfare they would lobby to strip language tacked on to spending bills that prohibits the processing of horses and the euthanasia of wild horses. Removing the language would allow the Bureau of Land Management to reduce the wild-horse population to a sustainable level, and provide horseowners with a viable economic means of conveying ownership of their animals rather than releasing them onto the range or shipping them abroad. + +ADRIAN SMITH + +Member of the US House of Representatives + +Gering, Nebraska + + + + + +Who wants to live for ever? + +With mankind becoming ever more narcissistic, verified by selfies and inane posts on Facebook, the pursuit of longevity is the ultimate expression of our conceit (“Cheating death”, August 13th). Brilliant scientific minds, backed by investors forecasting tasty returns, will be able to extend our lives steadily to doddery heights. Physically this will be possible, but what about our mental state? + + + +How agile will we be? How set in our ways and resistant to change? We may be alive, but will we be an infuriating brake on progress and innovation? In a world where a diminishing number of working-age people must shoulder an increasing welfare burden, is it really fair that we selfishly continue to think it’s only about us? + +Perhaps the clever scientific minds and the dollars that back them should focus on providing solutions to younger people whose ability to realise their true potential is curtailed for one medical reason or another. Our world would be much richer. As for the rest of us, we should live our lives to the full, and when our natural time comes bow out gracefully and quickly. We’ll be remembered more fondly that way. + +JOHN LOEBENSTEIN + +Pumpenbil, Australia + +“Cheating death”? Postponing it. Easing or prolonging death, maybe. But cheating death? I don’t think so. + +MONTY LEDFORD + +Aberdeen, Idaho + +* Letter appears online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21706474-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +The post-truth world: Yes, I’d lie to you + + + + + +Articles Sections Next + +The post-truth world + +Yes, I’d lie to you + +Dishonesty in politics is nothing new; but the manner in which some politicians now lie, and the havoc they may wreak by doing so, are worrying + +Sep 10th 2016 | From the print edition + + + +WHEN Donald Trump, the Republican presidential hopeful, claimed recently that President Barack Obama “is the founder” of Islamic State and Hillary Clinton, the Democratic candidate, the “co-founder”, even some of his supporters were perplexed. Surely he did not mean that literally? Perhaps, suggested Hugh Hewitt, a conservative radio host, he meant that the Obama administration’s rapid pull-out from Iraq “created the vacuum” that the terrorists then filled? + +“No, I meant he’s the founder of ISIS,” replied Mr Trump. “He was the most valuable player. I give him the most valuable player award. I give her, too, by the way, Hillary Clinton.” + +Mr Hewitt, who detests Mr Obama and has written a book denouncing Mrs Clinton’s “epic ambition”, was not convinced. “But he’s not sympathetic to them. He hates them. He’s trying to kill them,” he pushed back. + +Again, Mr Trump did not give an inch: “I don’t care. He was the founder. The way he got out of Iraq was, that, that was the founding of ISIS, OK?” + + + +For many observers, the exchange was yet more proof that the world has entered an era of “post-truth politics”. Mr Trump appears not to care whether his words bear any relation to reality, so long as they fire up voters. PolitiFact, a fact-checking website, has rated more of his statements “pants-on-fire” lies than of any other candidate—for instance his assertion that “inner city crime is reaching record levels”, which plays on unfounded fears that crime rates are rising (see chart 1). + +And he is not the only prominent practitioner of post-truth politics. Britons voted to leave the European Union in June on the basis of a campaign of blatant misinformation, including the “fact” that EU membership costs their country £350m ($470m) a week, which could be spent instead on the National Health Service, and that Turkey is likely to join the EU by 2020. + +Hang on, though. Don’t bruised elites always cry foul when they fail to persuade the masses of their truth? Don’t they always say the other side was peddling lies and persuaded ignoramuses to vote against their interest? Perhaps, some argue, British Remainers should accept the vote to leave the EU as an expression of justified grievance and an urge to take back control—not unlike the decision by many Americans to support Mr Trump. + +There may have been some fibbing involved but it is hardly as though politics has ever been synonymous with truthfulness. “Those princes who do great things,” Machiavelli informed his readers, “have considered keeping their word of little account, and have known how to beguile men’s minds by shrewdness and cunning.” British ministers and prime ministers have lied to the press and to Parliament, as Anthony Eden did during the Suez affair. Lyndon Johnson misinformed the American people about the Gulf of Tonkin incident, thus getting the country into Vietnam. In 1986 Ronald Reagan insisted that his administration did not trade weapons for hostages with Iran, before having to admit a few months later that: “My heart and my best intentions still tell me that’s true, but the facts and evidence tell me it is not.” + +Fact or fiction + +It is thus tempting to dismiss the idea of “post-truth” political discourse—the term was first used by David Roberts, then a blogger on an environmentalist website, Grist—as a modish myth invented by de-haut-en-bas liberals and sore losers ignorant of how dirty a business politics has always been. But that would be complacent. There is a strong case that, in America and elsewhere, there is a shift towards a politics in which feelings trump facts more freely and with less resistance than used to be the case. Helped by new technology, a deluge of facts and a public much less given to trust than once it was, some politicians are getting away with a new depth and pervasiveness of falsehood. If this continues, the power of truth as a tool for solving society’s problems could be lastingly reduced. + +Reagan’s words point to an important aspect of what has changed. Political lies used to imply that there was a truth—one that had to be prevented from coming out. Evidence, consistency and scholarship had political power. Today a growing number of politicians and pundits simply no longer care. They are content with what Stephen Colbert, an American comedian, calls “truthiness”: ideas which “feel right” or “should be true”. They deal in insinuation (“A lot of people are saying...” is one of Mr Trump’s favourite phrases) and question the provenance, rather than accuracy, of anything that goes against them (“They would say that, wouldn’t they?”). And when the distance between what feels true and what the facts say grows too great, it can always be bridged with a handy conspiracy theory. + +This way of thinking is not new. America saw a campaign against the allegedly subversive activities of the “Bavarian Illuminati” in the early 19th century, and Senator Joseph McCarthy’s witch-hunt against un-American activities in the 1950s. In 1964 a historian called Richard Hofstadter published “The Paranoid Style in American Politics”. When George W. Bush was president, the preposterous belief that the attacks of September 11th 2001 were an “inside job” spread far and wide among left-wingers, and became conventional wisdom in the Arab world. + +The lie of the lands + +Post-truth politics is advancing in many parts of the world. In Europe the best example is Poland’s ultranationalist ruling party, Law and Justice (PiS). Among other strange stories, it peddles lurid tales about Poland’s post-communist leaders plotting with the communist regime to rule the country together. In Turkey the protests at Gezi Park in 2013 and a recent attempted coup have given rise to all kinds of conspiracy theories, some touted by government officials: the first was financed by Lufthansa, a German airline (to stop Turkey from building a new airport which would divert flights from Germany), the second was orchestrated by the CIA. + +Then there is Russia, arguably the country (apart from North Korea) that has moved furthest past truth, both in its foreign policy and internal politics. The Ukraine crisis offers examples aplenty: state-controlled Russian media faked interviews with “witnesses” of alleged atrocities, such as a child being crucified by Ukrainian forces; Vladimir Putin, Russia’s president, did not hesitate to say on television that there were no Russian soldiers in Ukraine, despite abundant proof to the contrary. + +Such dezinformatsiya may seem like a mere reversion to Soviet form. But at least the Soviets’ lies were meant to be coherent, argues Peter Pomerantsev, a journalist whose memoir of Mr Putin’s Russia is titled “Nothing Is True and Everything Is Possible”. In a study in 2014 for the Institute of Modern Russia, a think-tank, he quotes a political consultant for the president saying that in Soviet times, “if they were lying they took care to prove what they were doing was ‘the truth’. Now no one even tries proving ‘the truth’. You can just say anything. Create realities.” + +In such creation it helps to keep in mind—as Mr Putin surely does—that humans do not naturally seek truth. In fact, as plenty of research shows, they tend to avoid it. People instinctively accept information to which they are exposed and must work actively to resist believing falsehoods; they tend to think that familiar information is true; and they cherry-pick data to support their existing views. At the root of all these biases seems to be what Daniel Kahneman, a Nobel-prizewinning psychologist and author of a bestselling book, “Thinking, Fast and Slow”, calls “cognitive ease”: humans have a tendency to steer clear of facts that would force their brains to work harder. + +In some cases confronting people with correcting facts even strengthens their beliefs, a phenomenon Brendan Nyhan and Jason Reifler, now of Dartmouth College and the University of Exeter, respectively, call the “backfire effect”. In a study in 2010 they randomly presented participants either with newspaper articles which supported widespread misconceptions about certain issues, such as the “fact” that America had found weapons of mass destruction in Iraq, or articles including a correction. Subjects in both groups were then asked how strongly they agreed with the misperception that Saddam Hussein had such weapons immediately before the war, but was able to hide or destroy them before American forces arrived. + +As might be expected, liberals who had seen the correction were more likely to disagree than liberals who had not seen the correction. But conservatives who had seen the correction were even more convinced that Iraq had weapons of mass destruction. Further studies are needed, Mr Nyhan and Mr Reifler say, to see whether conservatives are indeed more prone to the backfire effect. + +Given such biases, it is somewhat surprising that people can ever agree on facts, particularly in politics. But many societies have developed institutions which allow some level of consensus over what is true: schools, science, the legal system, the media. This truth-producing infrastructure, though, is never close to perfect: it can establish as truth things for which there is little or no evidence; it is constantly prey to abuse by those to whom it grants privileges; and, crucially, it is slow to build but may be quick to break. + +Trust your gut + +Post-truth politics is made possible by two threats to this public sphere: a loss of trust in institutions that support its infrastructure and deep changes in the way knowledge of the world reaches the public. Take trust first. Across the Western world it is at an all-time low, which helps explain why many prefer so-called “authentic” politicians, who “tell it how it is” (ie, say what people feel), to the wonkish type. Britons think that hairdressers and the “man in the street” are twice as trustworthy as business leaders, journalists and government ministers, according to a recent poll by Ipsos MORI. When Michael Gove, a leading Brexiteer, said before the referendum that “people in this country have had enough of experts” he may have had a point. + +This loss of trust has many roots. In some areas—dietary advice, for example—experts seem to contradict each other more than they used to; governments get things spectacularly wrong, as with their assurances about the wisdom of invading Iraq, trusting in the world financial system and setting up the euro. But it would be a mistake to see the erosion of trust simply as a response to the travails of the world. In some places trust in institutions has been systematically undermined. + +Mr Roberts first used the term “post-truth politics” in the context of American climate-change policy. In the 1990s many conservatives became alarmed by the likely economic cost of a serious effort to reduce carbon emissions. Some of the less scrupulous decided to cast doubt on the need for a climate policy by stressing to the point of distortion uncertainties in the underlying science. In a memo Frank Luntz, a Republican pollster, argued: “Should the public come to believe that the scientific issues are settled, their views about global warming will change accordingly. Therefore, you need to continue to make the lack of scientific certainty a primary issue in the debate.” Challenging—and denigrating—scientists in order to make the truth seem distant and unknowable worked pretty well. One poll found that 43% of Republicans believe climate change is not happening at all, compared to 10% of Democrats. + +Some conservative politicians, talk-show hosts and websites, have since included the scientific establishment in their list of institutions to bash, alongside the government itself, the courts of activist judges and the mainstream media. The populist wing of the conservative movement thus did much to create the conditions for the trust-only-your-prejudices world of Mr Trump’s campaign. Some are now having second thoughts. “We’ve basically eliminated any of the referees, the gatekeepers…There is nobody: you can’t go to anybody and say: ‘Look, here are the facts’” said Charlie Sykes, an influential conservative radio-show host, in a recent interview, adding that “When this is all over, we have to go back. There’s got to be a reckoning on all this.” + +Yet gatekeepers would be in much less trouble without the second big factor in post-truth politics: the internet and the services it has spawned. Nearly two-thirds of adults in America now get news on social media and a fifth do so often, according to a recent survey by the Pew Research Centre, a polling outfit; the numbers continue to grow fast. + +On Facebook, Reddit, Twitter or WhatsApp, anybody can be a publisher. Content no longer comes in fixed formats and in bundles, such as articles in a newspaper, that help establish provenance and set expectations; it can take any shape—a video, a chart, an animation. A single idea, or “meme”, can replicate shorn of all context, like DNA in a test tube. Data about the spread of a meme has become more important than whether it is based on facts. + +The mechanisms of these new media are only now beginning to be understood. One crucial process is “homophilous sorting”: like-minded people forming clusters. The rise of cable and satellite television channels in the 1980s and 1990s made it possible to serve news tailored to specific types of consumer; the internet makes it much easier. According to Yochai Benkler of Harvard University in his book “The Wealth of Networks”, individuals with shared interests are far more likely to find each other or converge around a source of information online than offline. Social media enable members of such groups to strengthen each other’s beliefs, by shutting out contradictory information, and to take collective action. + +Fringe beliefs reinforced in these ways can establish themselves and persist long after outsiders deem them debunked: see, for example, online communities devoted to the idea that the government is spraying “chemtrails” from high-flying aircraft or that evidence suggesting that vaccines cause autism is being suppressed. As Eric Oliver of the University of Chicago points out in a forthcoming book, “Enchanted America: The Struggle between Reason and Intuition in US Politics”, this is the sort of thinking that comes naturally to Mr Trump: he was once devoted to the “birther” fantasy that Mr Obama was not born an American. + + + +Following Mr Oliver’s ideas about the increasing role of “magical thinking” on the American populist right, The Economist asked YouGov to look at different elements of magical thinking, including belief in conspiracies and a fear of terrible things, like a Zika outbreak or a terrorist attack, happening soon. Even after controlling for party identification, religion and age, there was a marked correlation with support for Mr Trump (see chart 2): 55% of voters who scored positively on our conspiracism index favoured him, compared with 45% of their less superstitious peers. These measures were not statistically significant predictors of support for Mitt Romney, the far more conventional Republican presidential candidate in 2012. + +From fringe to forefront + +Self-reinforcing online communities are not just a fringe phenomenon. Even opponents of TTIP, a transatlantic free-trade agreement, admit that the debate over it in Austria and Germany has verged on the hysterical, giving rise to outlandish scare stories—for instance that Europe would be flooded with American chickens treated with chlorine. “Battling TTIP myths sometimes feels like taking on Russian propaganda,” says an EU trade official. + +The tendency of netizens to form self-contained groups is strengthened by what Eli Pariser, an internet activist, identified five years ago as the “filter bubble”. Back in 2011 he worried that Google’s search algorithms, which offer users personalised results according to what the system knows of their preferences and surfing behaviour, would keep people from coming across countervailing views. Facebook subsequently became a much better—or worse—example. Although Mark Zuckerberg, the firm’s founder, insists that his social network does not trap its users in their own world, its algorithms are designed to populate their news feeds with content similar to material they previously “liked”. So, for example, during the referendum campaign Leavers mostly saw pro-Brexit items; Remainers were served mainly pro-EU fare. + + + +But though Facebook and other social media can filter news according to whether it conforms with users’ expectations, they are a poor filter of what is true. Filippo Menczer and his team at Indiana University used data from Emergent, a now defunct website, to see whether there are differences in popularity between articles containing “misinformation” and those containing “reliable information”. They found that the distribution in which both types of articles were shared on Facebook are very similar (see chart 3). “In other words, there is no advantage in being correct,” says Mr Menczer. + +If Facebook does little to sort the wheat from the chaff, neither does the market. Online publications such as National Report, Huzlers and the World News Daily Report have found a profitable niche pumping out hoaxes, often based on long-circulating rumours or prejudices, in the hope that they will go viral and earn clicks. Newly discovered eyewitness accounts of Jesus’s miracles, a well-known ice-tea brand testing positive for urine, a “transgender woman” caught taking pictures of an underage girl in the bathroom of a department store—anything goes in this parallel news world. Many share such content without even thinking twice, let alone checking to determine if it is true. + +Weakened by shrinking audiences and advertising revenues, and trying to keep up online, mainstream media have become part of the problem. “Too often news organisations play a major role in propagating hoaxes, false claims, questionable rumours and dubious viral content, thereby polluting the digital information stream,” writes Craig Silverman, now the editor of BuzzFeed Canada, in a study for the Tow Centre for Digital Journalism at the Columbia Journalism School. It does not help that the tools to keep track of and even predict the links most clicked on are getting ever better. In fact, this helps explain why Mr Trump has been getting so much coverage, says Matt Hindman of George Washington University. + +Equally important, ecosystems of political online publications have emerged on Facebook—both on the left and the right. Pages such as Occupy Democrats and Make America Great can have millions of fans. They pander mostly to the converted, but in these echo chambers narratives can form before they make it into the wider political world. They have helped build support for both Bernie Sanders and Mr Trump, but it is the latter’s campaign, friendly media outlets and political surrogates that are masters at exploiting social media and its mechanisms. + +A case in point is the recent speculation about the health of Mrs Clinton. It started with videos purporting to show Mrs Clinton suffering from seizures, which garnered millions of views online. Breitbart News, an “alt-right” web publisher that gleefully supports Mr Trump—Stephen Bannon, the site’s boss, took over as the Trump campaign’s “chief executive officer” last month—picked up the story. “I’m not saying that, you know, she had a stroke or anything like that, but this is not the woman we’re used to seeing,” Mr Bannon said. Mr Trump mentioned Mrs Clinton’s health in a campaign speech. Rudy Giuliani, a former mayor of New York, urged people to look for videos on the internet that support the speculation. The Clinton campaign slammed what it calls “deranged conspiracy theories”, but doubts are spreading and the backfire effect is in full swing. + +Such tactics would make Dmitry Kiselyov proud. “The age of neutral journalism has passed,” the Kremlin’s propagandist-in-chief recently said in an interview. “It is impossible because what you select from the huge sea of information is already subjective.” The Russian government and its media, such as Rossiya Segodnya, an international news agency run by Mr Kiselyov, produce a steady stream of falsehoods, much like fake-news sites in the West. The Kremlin deploys armies of “trolls” to fight on its behalf in Western comment sections and Twitter feeds (see article). Its minions have set up thousands of social-media “bots” and other spamming weapons to drown out other content. + +“Information glut is the new censorship,” says Zeynep Tufekci of the University of North Carolina, adding that other governments are now employing similar tactics. China’s authorities, for instance, do not try to censor everything they do not like on social media, but often flood the networks with distracting information. Similarly, in post-coup Turkey the number of dubious posts and tweets has increased sharply. “Even I can no longer really tell what is happening in parts of Turkey,” says Ms Tufekci, who was born in the country. + +This plurality of voices is not in itself a bad thing. Vibrant social media are often a power for good, allowing information to spread that would otherwise be bottled up. In Brazil and Malaysia social media have been the conduit for truth about a corruption scandal involving Petrobras, the state oil company, and the looting of 1MDB, a state-owned investment fund. And there are ways to tell good information from bad. Fact-checking sites are multiplying, and not just in America: there are now nearly 100, according to the Reporters’ Lab at Duke University. Social media have started to police their platforms more heavily: Facebook recently changed the algorithm that decides what users see in their newsfeeds to filter out more clickbait. Technology will improve: Mr Menczer and his team at Indiana University are building tools that can, among other things, detect whether a bot is behind a Twitter account. + +The truth is out there + +The effectiveness of such tools, the use of such filters and the impact of such sites depends on people making the effort to seek them out and use them. And the nature of the problem—that the post-truth strategy works because it allows people to forgo critical thinking in favour of having their feelings reinforced by soundbite truthiness—suggests that such effort may not be forthcoming. The alternative is to take the power out of users’ hands and recreate the gatekeepers of old. “We need to increase the reputational consequences and change the incentives for making false statements,” says Mr Nyhan of Dartmouth College. “Right now, it pays to be outrageous, but not to be truthful.” + + + +But trying to do this would be a tall order for the cash-strapped remnants of old media. It is not always possible or appropriate for reporters to opine as to what is true or not, as opposed to reporting what is said by others. The courage to name and shame chronic liars—and stop giving them a stage—is hard to come by in a competitive marketplace the economic basis of which is crumbling. Gatekeeping power will always bring with it a temptation for abuse—and it will take a long time for people to come to believe that temptation can be resisted even if it is. + +But if old media will be hard put to get a new grip on the gates, the new ones that have emerged so far do not inspire much confidence as an alternative. Facebook (which now has more than 1.7 billion monthly users worldwide) and other social networks do not see themselves as media companies, which implies a degree of journalistic responsibility, but as tech firms powered by algorithms. And putting artificial intelligence in charge may be a recipe for disaster: when Facebook recently moved to automate its “trending” news section, it promoted a fake news story which claimed that Fox News had fired an anchor, Megyn Kelly, for being a “traitor”. + +And then there is Mr Trump, whose Twitter following of over 11m makes him a gatekeeper of a sort in his own right. His moment of truth may well come on election day; the odds are that he will lose. If he does so, however, he will probably claim that the election was rigged—thus undermining democracy yet further. And although his campaign denies it, reports have multiplied recently that he is thinking about creating a “mini-media conglomerate”, a cross of Fox and Breitbart News, to make money from the political base he has created. Whatever Mr Trump comes up with next, with or without him in the White House, post-truth politics will be with us for some time to come. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21706498-dishonesty-politics-nothing-new-manner-which-some-politicians-now-lie-and/print + + + + + +Articles Sections Next + + + + + +United States + + + + +The Affordable Care Act: Encumbered exchange + +The election campaign: On the trail + +National security and 2016: Sewers to submarines + +Georgetown and slavery: Atonement + +Lexington: Land made for you and me + + + + + +Articles Sections Next + +The Affordable Care Act + +Encumbered exchange + +Obamacare’s future is not yet secure + +Sep 10th 2016 | WASHINGTON DC AND NEW YORK | From the print edition + + + +“WE HAVE to pass the bill so that you can find out what is in it, away from the fog of controversy,” said Nancy Pelosi, then Speaker of the House, of the Affordable Care Act (ACA), Barack Obama’s health-care reform, in March 2010. More than six years later, that fog has yet to recede fully. Nearly half of Americans say they oppose the law, despite large majorities in favour of most of its contents when these are polled separately. Donald Trump calls the act an “incredible economic burden”, to be replaced, under his presidency, with “something much better”. And critics continue to insist that the ACA is heading towards an inevitable failure, a charge fuelled by recent headlines about soaring premiums and struggling insurers. Democrats, meanwhile, largely celebrate the law as a defining success of Mr Obama’s presidency. Who is right? + +Under Obamacare, the percentage of Americans without health insurance has fallen from 16% in 2010 to 9% in 2015. The law achieved this in three ways. First, it expanded Medicaid, government-provided insurance for the poor, to cover all those with incomes of less than 138% of the federal poverty line. Only 31 states have gone along with the expansion, because the Supreme Court ruled in 2012 that it was optional. Nonetheless, together Medicaid and the Children’s Health Insurance Programme now cover 23% of the population, up from 18% in 2013. + +Second, the law established government-run insurance marketplaces, or “exchanges”. These offer federally funded subsidies to help those with incomes beneath 400% of the poverty line—$97,200 for a family of four in 2016—to buy insurance. Seventeen states run their own exchanges; the federally run fallback option, healthcare.gov, does the job everywhere else. About 12m Americans now buy health coverage on an exchange, 10m of them with subsidies. + +The third mechanism was the most subtle. Insurance markets always redistribute from the lucky to unlucky: everybody’s premiums pay for care for those who fall victim to, say, cancer or a car crash. But a thicket of regulations in Obamacare has made this redistribution more dramatic. + +Before the law, insurers selling new policies to individuals could vary what they charged based on customers’ sex, medical history, occupation and most other factors that correlate with health spending. Obamacare drastically limited this practice. Premiums now vary only with age, smoking habits, family size and where customers live. Discrimination is limited: for example, the old can be charged at most three times as much as the young. Insurers must accept all applicants, regardless of their health. And policies must offer “essential” coverage, which includes some things, like mammograms, which many buyers will never need. + +That has made plans cheaper for the riskiest customers, at the cost of higher premiums for the healthy and young. Poorer folk, who receive subsidies, do not particularly notice. But those who are healthy and too well-off to receive subsidies are paying more for insurance. Since 2010 households with incomes over $50,000 have reported the greatest increase in spending on premiums, despite the fact that coverage expanded most among poorer people (see charts). + + + +The regulations do more than just redistribute, argues Jonathan Gruber, one of Obamacare’s architects. A ban on lifetime limits on coverage gives everyone peace of mind. And a worker with medical problems knows that if she loses her job, and with it her employer-provided plan, she can buy new coverage. + +Still, concentrated increases in premiums help to explain some of the antipathy towards Obamacare. Before the law, Brian Anderson, a 30-something orthodontist from Nashville, paid $80 a month for insurance that came with a $5,000 deductible. In 2014 his insurer cancelled the plan, as it did not now comply with the law. His new plan, from healthcare.gov, provides, in his view, essentially the same coverage—the deductible is in fact higher—but costs fully $201 per month. Mr Anderson says he is glad many more people now have insurance. But the estimated 2.6m others whose plans were cancelled that year may not all be as understanding. + +Yet on average, marketplace plans have proved surprisingly cheap. A recent analysis by Loren Adler and Paul Ginsburg of the Brookings Institution, a think-tank, found that premiums were initially 10-21% lower on the exchanges than in the pre-existing market. More competition on the exchanges may have brought premiums down a bit. But insurers also set their prices low because they failed to predict buyers’ poor health. + +Three things caught them out. First, it was thought that many small employers would withdraw their plans once their staff could get to the exchanges. But this has not happened much: Obamacare has killed off perhaps 2m employer plans, compared with a forecast of 6m. Second, more people than expected continue to buy plans directly from insurers. About 9m Americans are covered this way, almost as many as use the exchanges. Third, more people than expected chose to remain uninsured. Thanks to the ACA, doing so incurs a fine, though those who cannot afford coverage are exempt. + + + +The poorer people are, the bigger the subsidy they get, and the keener they are to enroll (see chart). Poorer folk tend to be in worse health. By contrast, those who stay on their old insurance or pay a fine probably do so because they are healthy. The result is that average claims have been bigger than expected. “We have seen higher-than-expected cost from membership with chronic conditions,” John Gallina, the chief financial officer for Anthem, one insurer, told investors in July. + +Those who designed the ACA knew that insurers would struggle to predict the health of those enrolled. For that reason, it promised at first to redistribute cash from profitable insurers to loss-making ones. If everyone did badly—ie, if the industry accidentally underpriced insurance en masse—the taxpayer would make up losses. Similarly, if profits were excessive, the government would take most of them. This was not a new idea: a similar “risk corridor” operates as part of Medicare, government-provided health insurance for over-65s. But congressional Republicans gutted this provision in 2015. + +As a result, insurers have suffered from mispricing their plans. In 2014 only 30% made a profit from the exchanges, according to McKinsey, a consultancy. Premiums have risen from their initial low base, but the early evidence suggests that even fewer insurers—perhaps one in four—profited from the exchanges in 2015. And losses seem to have grown. Profit margins are now about minus 10%, so prices are rising further. The average planned premium increase for 2017 is around 25%, according to Charles Gaba of acasignups.net, a number-crunching website. + +Spiralling down + +Critics have long claimed that Obamacare would face a “death spiral”, in which price rises would drive away the healthiest consumers, forcing prices higher still. On the exchanges this is unlikely, because the government will bear the extra cost for those it subsidises. Price rises are inconvenient, because buyers may need to switch plans to avoid paying more (possibly disrupting their care). And it is possible that a death-spiral could affect the pricier “gold” and “platinum” options. But government support should keep the exchange market for other plans standing. + +The same cannot be said of plans bought directly from insurers, without subsidies. These are also getting pricier. The only safeguard against healthy people abandoning those plans is the fact that they would be fined if they went without insurance. For a single adult, the fine is currently $695 or 2.5% of gross income, whichever is higher, up to a maximum. That may not be enough, given that even plans with big deductibles typically cost several thousand dollars a year. + +The biggest threat to the exchanges is insurers leaving them. In April UnitedHealth Group, America’s largest insurer, announced it was pulling out from most exchanges. It will sell in only three next year. In August Aetna, another large insurer, said it would withdraw from 11 of 15 states, citing losses of over $400m. This year one in 50 potential exchange customers lived in a county with just one carrier, according to McKinsey. Next year, thanks to insurer withdrawals, as many as one in six people will. Some entire states will be served by only one insurer; Pinal County, in Arizona, is set to have an empty exchange. + +Some insurers are faring better than others. Health-maintenance organisations, in which a general practitioner oversees patients’ care within a limited network of specialists and hospitals, are performing relatively well. One example is Kaiser Permanente, a not-for-profit outfit. Its insurance covers treatment at its own hospitals, tracks patients’ health and tries to keep them well. But this example does not offer a quick fix. Kaiser Permanente’s model requires owning hospitals and clinics, making it difficult to expand quickly. + +Molina, a Californian insurer, is in one sense another success story. The company, an experienced Medicaid contractor, entered the exchanges slowly. “We did not jump in with both feet,” says Mario Molina, its chief executive. It would have made a slim profit last year, thanks to its low administrative costs and pre-existing small networks of doctors. But rules requiring healthy plans to pay struggling ones meant Molina made a modest loss. + +Exchanges can survive with just one insurer. It is odd to worry about monopolies when the main problem is firms’ losses, especially as regulators can already limit price rises (indeed, the threat of overzealous price regulation may be helping to scare insurers away). If monopolists start to make juicy profits, there is nothing stopping others from entering, or re-entering, the market. Yet clearly it would be better to have more insurers involved. Obamacare came with a promise of a choice between different plans. In any case, every county needs at least one insurer. + +The more the merrier + +The law would work better with more people—especially healthy people—on the exchanges. The ideal way to achieve that would be to nudge Americans away from employer-provided health insurance. More than half of America’s under-65s get coverage through their job, although this arrangement serves no good purpose. + +The culprit is the long-standing tax exemption for employer-provided health-care benefits. This costs taxpayers about $250 billion a year, and incentivises employers to ramp up health coverage rather than raise wages. That, in turns, inflates costs. The ACA’s “Cadillac tax” on lavish plans will mitigate this eventually (it was recently delayed until 2020). It would be better to abolish the deduction completely. + +The same goes for the part of Obamacare requiring firms with over 50 staff to offer insurance to their employees. This burdens firms with administrative costs and creates an unwelcome incentive for them to stay small. It has cosmetic appeal to some, because it appears to make firms foot the bill for keeping their staff healthy. But most economists agree that wages eventually fall to offset such perks. + + + +Fewer employer-provided plans would mean more people on the exchanges. To the same end, the government could require all individually purchased plans to be bought and sold on the exchanges, as Washington, DC does. That would not improve the overall pool of risks, but it would stop insurers withdrawing from the exchanges and continuing to sell directly to wealthier—and probably healthier—customers. Finally, the fine for not buying insurance could be raised. + +Unfortunately, these ideas are not politically appealing. In fact, any change requiring bipartisan co-operation will be difficult. Most Republicans want the law to fail, so that they can relax regulations and replace income-linked subsidies with a tax credit linked to age. Democrats, meanwhile, talk most about starting a publicly run insurer to compete on the exchanges, an idea Republicans hate. + +The administration can tweak some rules. For instance, it is proposing to do more to prevent people from signing up only when they become ill. Insurers want the health department to improve a formula under which firms with disproportionately healthy members pay those with unusually sick ones. Marilyn Tavenner, who oversaw the launch of healthcare.gov for the administration but now heads the main insurance lobby group, says she is keen to see such changes happen before Mr Obama leaves office in January. + +The exchanges may look wobbly, but they are only one part of the reform. Even if the market shrinks and many more people opt to pay the fine, it will be hard for any politician to roll back the expansion of Medicaid. And other, less flashy parts of the law seem to be making dents in America’s biggest long-term health-policy challenge: rising costs. For instance, almost one in three dollars spent on Medicare now flows through one of several promising cost-reduction programmes. + +Cost-control must become the priority in the private market, too. Private health-insurance spending (including employer-provided plans) is forecast to grow by 5.6% a year over the next decade, fuelled by spending on drugs. Overall spending on health care will rise to an absurd 20.1% of GDP by 2025. If Obamacare’s redistribution mechanisms survive, these rising costs will be felt more broadly. It will be easy for critical politicians to blame the ACA for the underlying trend. America will be better off if they avoid such a misdiagnosis, and search hastily for a cure. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21706527-obamacares-future-not-yet-secure-encumbered-exchange/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The election campaign + +On the trail + +Sep 10th 2016 | From the print edition + + + +Minority outreach + +“I didn’t really know what I was getting into…Is this going to be nice? Is this going to be wild?” + +Donald Trump makes his first visit to a black church + +Wrong turn + +“A little scheduling error.” + +Jill Stein, the Green Party candidate, is late to a rally after she flies to the wrong Ohio city. Columbus Dispatch + +Pride goeth... + +“She is sitting at 269 electoral votes guaranteed right now. I would argue she is sitting at 347 but for argument’s sake we can suspend reality for a moment.” + +David Plouffe, Barack Obama’s 2008 campaign manager, on Mrs Clinton’s potential victory. Politico + +The new chicken in every pot + +“My culture is a very dominant culture...If you don’t do something about it, you’re going to have taco trucks on every corner.” + +The founder of Latinos for Trump is understandably confused. MSNBC + +The help + +“I was raised by a black nanny, there’s no prejudice on my side.” + +A member of Trumpettes USA. Politico + +Unemployment insurance + +“That’s not my job.” + +Fox’s Chris Wallace will not correct false statements when he moderates one of the presidential debates. Fox News + +Gritted teeth + +“I’m thrilled. No, really! I wanted to welcome you onto the plane.” + +Hillary Clinton at last invites the press aboard and takes some questions + +Ancient wisdom + +“I often quote a great saying that I learned from living in Arkansas for many years: If you find a turtle on a fence post, it didn’t get there by itself.” + +Mrs Clinton speculates that Russia is working for a Trump presidency + +Rhetorical question? + +“What the hell do you have to lose?” + +Mr Trump’s last gambit + +The value of nothing + +“Of course I disagreed with him, because I was running against him.” + +Chris Christie explains why he mocked Mr Trump’s wall during the primaries, only to endorse it now. CBS News + +Badge of the week + +“Trump Putin ‘16’” + +Spotted in Tampa at a Clinton rally + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21706533-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +National security and 2016 + +Sewers to submarines + +Dullness confronts fantasy when the candidates debate foreign policy + +Sep 10th 2016 | TAMPA | From the print edition + + + +HILLARY CLINTON used flag-waving speeches in Florida and North Carolina this week, and a military-themed television forum in New York, to accuse her Republican rival, Donald Trump, of talking down the armed forces and failing to cherish the military alliances that underpin America’s global standing. Mrs Clinton’s hawkish instincts are sincere: several times as Secretary of State from 2009-13, she was readier to use force as a tool of geopolitics than was her boss, Barack Obama. + +But politics also explains her focus on whether Mr Trump has the temperament to be commander-in-chief. Recent opinion poll averages have tightened, suggesting that Mrs Clinton has lost as much as half of the roughly eight-point lead that she opened up after the national conventions in July, and that a fifth of voters are undecided, essentially because they dislike both candidates. With millions of Republicans, notably those with college educations, expressing distaste for Mr Trump, the Democrats have much to gain from casting the property developer as a menace to America and the world. + +A speech in Tampa was billed by the Clinton campaign as making a case that their nominee knows how to keep America safe, while Mr Trump is unfit to be commander-in-chief. Alas her address was lacklustre and rambling, ranging from education policy to the importance of infrastructure (“what about our water systems, our sewer systems?”) before reaching foreign policy. The crowd did its bit, cheering lustily as she recalled urging the president to launch the raid that killed Osama bin Laden in 2011 (“You go girl!” shouted a woman). Mrs Clinton scolded Mr Trump for being “very loose in his talk” about when nuclear weapons should be used, and for saying that as president he would order the use of torture, which she said would imperil Americans worldwide. + +There is a faint element of awkwardness when Democrats play hawk. The air force reservist chosen to introduce Mrs Clinton in Tampa was a shy former boss of an aircraft maintenance squadron, rather than a bullet-chewing warrior-type. In the crowd, Thomas Abel, a retired geologist sporting a “Vietnam Veteran” baseball cap at the Clinton rally, loyally condemned Mr Trump as frighteningly unpredictable. But he also admitted that he does not usually wear a veteran’s hat or other signs of war service, and chose his headgear to make the point that not all ex-soldiers are Republicans. Another veteran at the Tampa rally, Laura Westley, a graduate of the West Point academy for army officers who took part in the 2003 invasion of Iraq, says that ex-soldiers, like all voters this year, are sharply divided by education and gender. “There’s a big divide between officers and enlisted,” she says, with rank-and-file troops stirred by Mr Trump’s talk of “fighting and winning”. Mrs Clinton’s use of an insecure e-mail system as Secretary of State enrages many fellow West Pointers, she admits, who insist that, had they done the same, “they’d have lost their security clearance.” + +Mr Trump held his own military-themed campaign events this week, blending vague promises to increase defence spending with fact-trampling claims about a dangerous world which fails to “respect” America. Quizzed on foreign policy at a forum in Virginia Beach, Mr Trump seemed to believe that North Korea will “soon” have an aircraft-carrier (which is news to Korea-watchers) but that he will “very simply” oblige China to rein in North Korea. Turning to the fight against IS, he suggested that finding common cause with Russia against Islamic extremism would be “nice” and work better than Mrs Clinton’s tough talk about President Vladimir Putin, adding: “Putin looks at her and he laughs.” + +Addressing supporters in North Carolina, Mr Trump abruptly backed away from repeated boasts that he has a “foolproof” plan to defeat IS, which he is keeping secret to remain “unpredictable” and avoid tipping off the enemy. Mr Trump now says that, within 30 days of becoming president, he would ask “top generals” to hand him a plan for “soundly and quickly defeating” the extremist network. His campaign unveiled endorsements from 88 retired generals and admirals, prompting Team Clinton to release a list of 95 former generals and admirals who back her, and to note that the Republican nominee in 2012, Mitt Romney, found 500 flag officers to endorse him. + +A televised forum in New York, hosted by NBC News and the Iraq and Afghanistan Veterans of America, a charity, pointed up the downsides of Mrs Clinton’s extensive record. A Republican member of the audience charged that she had “corrupted” national security by mishandling e-mails at the State Department, and a Democrat asked sceptically about her “hawkish” foreign policy. Mr Trump played a strongman who is above mere details, declaring that under Mr Obama “the generals have been reduced to rubble” and that America has “the dumbest foreign policy”. Asked about praise from Mr Putin, he said the Russian president: “has very strong control over his country,” while Mr Obama runs a “divided country”—as if democracy is rather a nuisance. He vowed to rebuild a “depleted” military while being “very, very cautious” about using it. At its core, Mr Trump’s pitch is simplistic, chin-jutting, isolationism with a strong dose of wishful thinking. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21706543-dullness-confronts-fantasy-when-candidates-debate-foreign-policy-sewers-submarines/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Georgetown and slavery + +Atonement + +How does a university confront and then atone for its ties to slavery? + +Sep 10th 2016 | From the print edition + +Your statutes are my heritage + +ISAAC HAWKINS, along with his children and grandchildren, were among the 272 slaves sold by Maryland’s Jesuits in 1838 to pay off Georgetown University’s debts. The Jesuit-run university relied on money generated from the plantations the order owned. The slaves, who included babies and old people, were sold for $115,000, about $3.3m today, to plantations in Louisiana, where they laboured in dreadful conditions on cotton and sugar plantations. + +Although Father Thomas Mulledy, who ran the college then, had the Vatican’s approval for the sale, the Holy See imposed conditions. It insisted that families remained together and that they continued to practise their faith. This promise was not kept. More than 170 years later, John DeGioia, Georgetown’s president, has apologised for the university’s role in slavery. In an attempt to make amends, he announced that descendants of the Jesuit-owned slaves would be considered part of the Georgetown community, and would have preference if they applied to the university. + +These ideas came from the university’s Working Group on Slavery, Memory and Reconciliation, which convened last year. It released a report last week recommending building a centre on slavery, establishing a living memorial and engaging with slaves’ descendants. This is always tricky; most black Americans digging into their family histories, unless they know the last slave-owner’s name, hit the “1870 brick wall”—earlier national censuses, taken before emancipation, did not list the surnames of slaves. But the Working Group, using the detailed bill of sale and the ship manifests, which are still in the college archives, identified most of the 272 slaves sold in 1838 by first and last name and by age. + +Meanwhile, a team of genealogists led by Richard Cellini, a tech entrepreneur and Georgetown alumnus who runs the Georgetown Memory Project—an independent nonprofit researching the Georgetown slaves—has traced more than 200 of the 272 and has identified some 2,500 living and dead descendants. Judy Riffel, one of the genealogists, notes that even today descendants bear the names of their slaves’ forefathers, such as Nace (a form of Ignatius, founder of the Jesuits). Many are still Catholic. About 900 of the 1,200 residents of Maringouin, a small town in Louisiana near one of the plantations, are descendants. Family lore often hinted that they originally came from “up North.” + +Last year Georgetown students also demanded that Mulledy Hall should be renamed. Mr DeGioia says that it will now be Isaac Hawkins Hall, after the first slave listed in the bill of sale. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21706542-how-does-university-confront-and-then-atone-its-ties-slavery-atonement/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Land made for you and me + +The controversies that go with creating new national monuments + +Sep 10th 2016 | From the print edition + + + +IN GENERAL, any law that presidents mostly use in their second terms has unusual power to cause rows. Take the American Antiquities Act of 1906, giving presidents the right to protect landmarks and landscapes by declaring them national monuments—in the process bypassing Congress, which must approve new national parks and formal “wilderness” reserves. Safely past his last election, Barack Obama has been using the act with a will in recent weeks, creating a new national monument in the woods of Maine and more than quadrupling the size of a marine monument north-west of Hawaii, itself declared by George W. Bush during his second term. In all, Mr Obama has created more than two dozen national monuments, protecting more square miles of land and sea than any predecessor. + +If these actions delight some, they alarm others—notably folk who run cattle, mine, log or otherwise exploit nature’s bounty in picturesque bits of America. One such place is the Owyhee basin of eastern Oregon, a remote landscape of wild rivers and vertiginous cliffs, and high desert edged with red and pink rocks. Before Mr Obama steps down, environmentalists, outdoor-leisure companies (including Keen, an Oregon-based shoe-maker) and some Democratic politicians want him to create an Owyhee Canyonlands National Monument covering as much as 2.5m acres. + +Lots of monument-backers say that their main concern is possible oil and mineral extraction on what are today federally owned rangelands overseen by the Bureau of Land Management (BLM), not grazing cattle. But ranchers are deeply wary. Bob Skinner, whose family reached the Owyhee basin in 1863, is so alarmed that, one morning earlier this summer, he took Lexington up in his own light aircraft on an endearingly transparent mission: to badmouth a landscape that, deep down, he clearly loves. That’s lava from an eruption 600 years ago, Mr Skinner shouts over the Cessna’s engine, pointing to an otherworldly expanse of crusted black rock. Terrible, razor-sharp lava, he scowls: “Will cripple a dog in ten minutes.” A deep canyon is “pretty”, he concedes. But as he putters 100 feet above flat, sagebrush-scented steppes that lie beyond it, he demands: “Once you’ve seen one mile of it, what’s more of it?” He is echoed by Larry Wilson, an elected commissioner for the surrounding region, Malheur County, also along for the ride. Temperatures can exceed 100 degrees down there, says Mr Wilson: “This isn’t the kind of stuff that draws tourists.” Should any hikers try their luck, Mr Wilson adds doomily, the county has a tiny search-and-rescue budget. As the steppes roll on below, the men point out dirt roads that they fear might be barred to motor vehicles in a national monument, or creek-crossings that might be closed, forcing ranchers on 60-mile detours. Perhaps most of all, ranchers fear that a monument will open the door to endless lawsuits by environmental groups. + +The West has long seen arguments over land. Mr Skinner’s grandfather, as a boy, was posted to watch for free-roaming sheep that could strip pastures bare, until a 1934 act regulated grazing. The 1970s and 1980s saw “sagebrush rebels” chafing against the federal government, which owns half of all land west of the Rockies. The Skinner Ranch lies a short drive (by Oregon standards) from the Malheur National Wildlife Refuge, a remote spot occupied by armed anti-government militants early this year to protest against the jailing of two local ranchers for setting fires that spread to government property, and to challenge the feds’ legal right to own land at all—an occupation which ended with a protester’s death in a stand-off with FBI agents. Some Republicans, including Congressman Rob Bishop and Senator Mike Lee of Utah and Senator Ted Cruz of Texas, want federal lands transferred wholesale to the states. There are eco-absolutists, too, who call ranchers crony capitalists, exploiting too-cheap BLM grazing permits: some would ban cattle outright from public lands. + +Still, on the ground, compromise does not sound impossible. Mr Skinner sympathises with his ranching neighbours jailed for arson; but he has no truck with anti-government radicals, and thinks that the BLM has every right to exist. Nor does he think local control a panacea. Though rural Oregon is conservative, political power resides where most people live, in such left-leaning cities as Portland. If Democrat-run Oregon took over land management from the feds, Mr Skinner thinks ranchers’ problems would be “multiplied tenfold”. He also suggests that, if federal officials called for a smaller reserve, perhaps covering 48,000 acres, many locals would be willing to talk. + +A young neighbour, Elias Eiguren, says militants hurt the ranchers’ peaceful, law-abiding cause. Most came from out of state, he sighs: “Those people look like us, but aren’t us.” The local congressman, Greg Walden, walks a fine line. He has joined fellow-Republicans in seeking to bar new national-monument designations, but has not endorsed sweeping transfers of federal land to the states. Mr Walden says the right way to protect precious places is with legislation passed by Congress, to ensure individual rights are protected from bullying, far-off majorities. Alas, a polarised Congress has passed hardly any public-lands bills in recent years. + +The rural-urban canyon + +Malheur County (population, 30,000) held a referendum in March, with 90% of votes cast opposing a national monument. Mr Wilson thinks his county’s wishes should weigh “very heavily”. Local voices must be “respected”, agrees Neil Kornze, director of the BLM. But public lands are owned by all Americans: 60m visit them to hike, camp or river-raft there each year. Decades ago, Mr Kornze notes, his bureau’s badge showed five working men: a surveyor, a miner, a cowboy, a logger and an oilman. Now, reflecting public priorities, it shows a pretty mountain and a river. Managing that change will require national, state and local leaders to find common ground: a seemingly monumental task. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21706532-controversies-go-creating-new-national-monuments-land-made-you-and-me/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +A Mexican minister falls: The cost of an unwanted guest + +Avocado wars: Rich, creamy and rare + +Venezuela’s hapless leader: Chávez without the charm + +Bello: The impeachment country + + + + + +Articles Sections Next + +A Mexican minister falls + +The cost of an unwanted guest + +Donald Trump’s visit has upended Mexican politics + +Sep 10th 2016 | MEXICO CITY | From the print edition + + + +TO SAY things have been going badly for Enrique Peña Nieto, Mexico’s president, would be an understatement. Recent embarrassments include allegations that a Miami-based company paid property taxes for his wife, revelations that he plagiarised part of his university thesis and an ill-judged rendezvous with Donald Trump. On September 7th Mr Peña tried to put the unpleasantness behind him by accepting the resignation of the finance minister, Luis Videgaray, his most important deputy, who had hopes of becoming president in 2018. + +Most observers assume Mr Videgaray took the fall for suggesting Mr Trump’s visit in the first place. The court paid by Mr Peña to the Republican ranter (pictured) appalled the vast majority of Mexicans. Even before all that, Mr Peña had the lowest approval ratings of any president this century. Mr Videgaray saw the visit as a way to reassure investors who fear a President Trump would abrogate the North American Free-Trade Agreement or block remittances from Mexican workers in the United States. He misjudged the political cost. + +But Mr Videgaray was under pressure for other reasons. He has allowed public-sector debt to rise by more than 10% of GDP since 2012; Standard & Poor’s, a rating agency, said in August that it might mark Mexico down. Mexicans, who see their salaries in dollar terms, are angry about a slide in the value of the peso. Mr Videgaray had an embarrassment of his own involving the acquisition of a house from a firm that sought contracts from the government (before he was finance minister, he notes). + +In parting with him, Mr Peña is cutting loose the architect of the reforms for which his presidency is likely to be remembered. They include the introduction of competition in electricity and in the oil sector, long seen as an inviolable bastion of Mexican sovereignty, and a reform of taxes. + +Mr Videgaray’s departure is unlikely to change the course of those reforms. His successor, José Antonio Meade, who has served two presidents as the minister in charge of finance, energy, foreign affairs and, most recently, social development, is more technocrat than politician. As The Economist went to press he was due to present the budget for next year that Mr Videgaray had prepared. It is expected to aim for a deficit lower than this year’s (probably 3% of GDP) and for a small primary surplus (ie, before interest payments). + + + +Mr Peña’s use of a scapegoat does not answer the most pressing questions he faces: how to avoid irrelevance in the final two years of his term and prepare his Institutional Revolutionary Party (PRI) for the next election. The government’s reforms are moving ahead, with varying success. Energy is making progress; an education reform has been slowed by radical teachers. But Mr Peña has had little to offer Mexicans who are increasingly angry about sleaze, rising violence and the overall feebleness of the rule of law. The country’s corruption rating, as measured by the researchers of Transparency International, is stubbornly and embarrassingly poor for a democracy whose economy is the 15th largest in the world (see chart). + +The administration “needs a reset”, says Luis Rubio of CIDAC, a think-tank. A credible fight against lawlessness would be one option. But few analysts expect that to happen. A new “anti-corruption system” established in the summer could help fight that scourge. But it cannot by itself change a political culture that perpetuates corruption, and it may take years to show results. Mr Peña seems short of ideas for curbing violence. + +Mr Rubio thinks the president could still redeem the next two years by enacting an electoral reform, which would take effect before the vote in 2018. One common proposal is the introduction of a runoff in the presidential election. Under the current system, heads of state are chosen with a single round of voting which means that a candidate can prevail with much less than half the vote (Mr Peña, for example, won with just 38%). Diminishing support for traditional parties such as the PRI, coupled with the emergence of smaller challengers, makes it more likely that the next president will win with a small share of the vote, with dire consequences for his or her legitimacy. The introduction of a second round would be a neat way of solving that problem. + +Even if Mr Peña does not attempt to change the rules, the political world’s attention is now likely to turn to the next presidential race. Mr Videgaray’s downfall removed one major contender from the race. The promotion of Mr Meade improves his presidential prospects. There is speculation that Manlio Fabio Beltrones, who resigned as head of the PRI after it suffered setbacks in state elections in June, may now make a comeback. The centre-right National Action Party is in the opening stages of a struggle among presidential aspirants. + +Moderate Mexicans fear Mr Peña’s failings will open the door to Andrés Manuel López Obrador, a left-wing populist who was runner-up in the last two presidential elections. (A two-round election would make that less likely, and that is one reason why some people support it.) With Mr Videgaray gone and Mr Peña lamed, the identity of the next president could be the only decision of consequence to be taken over the next two years. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21706547-donald-trumps-visit-has-upended-mexican-politics-cost-unwanted-guest/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Avocado wars + +Rich, creamy and rare + +How anti-globalists ruin guacamole + +Sep 10th 2016 | From the print edition + + + +IF THE avocado has an original terroir or habitat, Costa Rica can’t be far from it. About 500 years ago, when Spanish explorers penetrated the Mesoamerican forest, they found people eating a tasty, nutritious fruit with lime-green flesh which looked quite unlike any edible plant they had ever seen. In due course its cultivation proved a stellar success in places from Florida to Israel to New Zealand. It became a feature of Australian beach-parties and London dinners. + +Why then are people in Costa Rica moaning that they can’t get enough of this lovely food, or at least not at the right price or quality? “Steak is now cheaper than avocado!” fumes a tweet from a Tico, as the country’s people are called. + +Put it down to a clunky piece of protectionism. Last year the government slapped a ban on the import of Hass avocados—the most popular kind worldwide—from nine countries, including Mexico, which was the main supplier and raised the matter at the World Trade Organisation. That variety has a high oil content and a creamy texture, good for guacamole. Its rough dark skin is durable, and ideal for shipping. Avocados grown in Costa Rica tend to be of the smooth, green-skinned sort that go well in salads. + +The import ban was supposedly a precautionary step against sunblotch, an infection that can hop from one species to another. Costa Rica’s producers have hailed the measure as an overdue boost to their efforts to satisfy all local palates. But that will take a long time: Mexico’s pre-ban sales of Hass were about 12,000 tonnes a year and Costa Rica produces about 2,000 tonnes of all types. Moreover, Ticos now have a taste for the Hass variety, both raw and mashed. Restaurants in Costa Rica say about a fifth of the avocado they serve is wasted, because customers prefer Hass to anything local. + +You can still get Hass in Costa Rica if you are rich or desperate. Imports are allowed from Chile (at up to twice the price Mexican ones used to fetch), and also from Peru, though Ticos grumble about the taste. And like most trade curbs, this one helps smugglers. Border police have seized truckloads of the fruit crossing the frontier with Panama. Some get through. + +In recent days, perhaps as a way of assuaging local palates while still protecting growers, the government has started the process of authorising imports from the Dominican Republic, which can offer cheap, year-round production: mostly of the green-skinned sort, but also increasing amounts of the oil-rich kind. So a few more Costa Ricans will soon be able to have their Hass and eat it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21706554-how-anti-globalists-ruin-guacamole-rich-creamy-and-rare/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Venezuela’s hapless leader + +Chávez without the charm + +Nicolás Maduro’s bumbling brings a messy end to his presidency closer + +Sep 10th 2016 | CARACAS | From the print edition + + + +WHATEVER his awful defects, Hugo Chávez showed it when he was riding high as Venezuela’s firebrand leader. So too did Fidel Castro when he played a similar role in Cuba. A strongman in a crisis needs charisma. Nicolás Maduro, Venezuela’s current president, has none. + +Take, for example, the moment on September 2nd when his motorcade passed through the gritty municipality of Villa Rosa on the island of Margarita. This used to be a red district, whose residents mostly backed the ruling leftists in December’s elections. But that support is vanishing. Margarita, like the rest of the country, has seen months of food and power shortages and, in particular, a lack of running water. When locals heard the president was coming, they reacted with a show of cacerolazo—banging pots and pans. + +Hearing the commotion, Mr Maduro tried working his charm on the masses as his predecessor might have done. But the jeering grew. After some brusque exchanges, he set off on a sort of defiant jog through the crowd. But it looked more like running away. At one stage he seemed to lash out at a saucepan-wielding lady. + +This farce, recorded on mobile phones, soon went viral on social media, thanks to sharing by a prominent opposition journalist, Braulio Jatar. He has since been arrested and, supposedly coincidentally, charged with money-laundering. The incident capped a disastrous few days for the president. On September 1st the opposition held a march, dubbed the “taking of Caracas”. Despite government closures of roads and transport, as many as 1m protesters took to the streets. Their ostensible aim was to accelerate a “recall referendum” which could oust Mr Maduro: the pro-government electoral authorities are deliberately stalling. But, perhaps more significant, the march was a vivid demonstration that the Chavista movement is now outnumbered by the opposition. + +Mr Maduro seems unable to accept that. During the “taking of Caracas”, he held his own rally. Tens of thousands of his supporters were there; many had been bused in by government vehicles. He derided the rival event, insisting that only 35,000 people had showed up. Wielding a guitar at one point, he used even cruder language than usual. On daytime TV, he called the head of the national assembly, Henry Ramos Allup, a “motherfucker”. In a bid to exaggerate his support, a huge TV screen was mounted behind the podium. Officials tweeted images of a big red-shirted march. It emerged that these actually showed another rally, from 2012, when Chávez was alive. A national assembly staffer who tried flying a drone over the opposition march, to show its size, was jailed. + +A decree by the government-appointed supreme court to invalidate all future decisions by the national assembly has made a political solution elusive, at least while Mr Maduro hangs on. Will his cronies ditch him? Vladimir Villegas, an ex-ambassador who hosts talks between government and opposition, hinted at this. He told a Colombian newspaper, El Espectador, that those in power were struggling with the “new reality” that their term could be finite. Some might see Mr Maduro as dispensable, he said: a movement would not be sacrificed for “an already worn-out leadership.” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21706553-nicol-s-maduros-bumbling-brings-messy-end-his-presidency-closer-ch-vez-without-charm/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +The impeachment country + +Does the ousting of Dilma Rousseff weaken or strengthen Brazil’s democracy? + +Sep 10th 2016 | From the print edition + + + +AS WELL as its five football World Cup victories and the world’s largest rainforest, Brazil has just acquired another unique distinction. It is the only country to have impeached two presidents in just 24 years. In the first case, that of Fernando Collor, who resigned in 1992 on the brink of being condemned for corruption, impeachment commanded near-universal support, and could be read as a sign of democratic vigour. In the case of Dilma Rousseff, ousted by the Senate by 61 votes to 20 on August 31st, judgments are far more mixed. Even some who did not sympathise with Ms Rousseff think her ousting sullies democracy. They worry that Brazil has devalued impeachment, turning it into a means to dump an unpopular ruler—and, in this case, replace her with her unequally unpopular vice-president, Michel Temer. + +Some of the arguments Ms Rousseff deployed in two days of evidence before the Senate were mere propaganda. No, her impeachment was not a coup, of any description. It took place over nine months, in strict accordance with the constitution and supervised by the supreme court, a majority of whose members were nominated by Ms Rousseff or Luiz Inácio Lula da Silva, her predecessor and the founding leader of her left-wing Workers’ Party (PT). + +The offence Ms Rousseff was accused of—using credits from public banks to swell the budget without the permission of Congress—is a “crime of responsibility” under Brazil’s impeachment law of 1950. But there the difficulties start. Her defenders are right that this charge was a relatively minor, technical matter. The lawyers who filed the impeachment petition hit upon it because there is no evidence that Ms Rousseff was personally corrupt. That is not true of Eduardo Cunha, the former Speaker of the lower house of congress. He accepted the petition, she plausibly claims, as an act of vengeance because she refused to help him evade expulsion over corruption allegations. It is troubling, too, that many of those who voted to oust her are accused of misdeeds. And Mr Temer, a 75-year-old political insider, hardly embodies the regeneration his country’s rotten politics need. + +Yet that is not enough to turn the moral tables in Ms Rousseff’s favour: many of the “coup-plotters” had been for a decade allies (and several were ministers) of the president and her predecessor. Their corruption, if proved, is venal and personal. More sinister is that of the PT, which organised a vast kickback scheme centred on Petrobras as part of a “hegemonic project that involved growing control of parliament, of the judges and…of the media”, as Fernando Gabeira, a left-leaning former congressman, wrote in O Globo, a newspaper. Ms Rousseff chaired Petrobras’s board (in 2003-10) and then ruled the country while this scheme flourished. Her claim to know nothing of it, nor that her campaign guru in the election in 2014 was paid with bribe money, smacks of negligence. + +On its own, the Petrobras scandal didn’t doom her. When Mr Cunha launched the impeachment last December, most political analysts expected it to fail. The subsequent stampede against the president owed everything to her own incompetence and to public opinion, which was enraged, too, by her catastrophic mishandling of the economy. Above all, she failed to build alliances in Congress, which need not always involve back-scratching. The crisis of governability in Brasília intolerably prolonged the economic slump, undermining some of the social progress made under Lula. It would have been resolved less divisively by Ms Rousseff resigning or by a fresh election. But she refused to step down, and an early election is constitutionally difficult. + +So Brazil is where it is. And it offers some lessons. One is that Ms Rousseff has paid the ultimate price for her fiscal irresponsibility (which went far wider than those disputed credits). That ought to be a salutary warning to Latin America’s more spendthrift politicians. Second, Brazilians want to hold their governments to account. Mr Temer will lose all legitimacy if he yields to pressure from his friends to rein in the Petrobras investigation or helps Mr Cunha avoid justice. + +The third lesson is that in Brazil, with its strong parliamentary tradition, no president can govern against Congress. When Ms Rousseff brandishes her 54m votes in the presidential election of 2014 as a defence, she forgets that they were for Mr Temer too, and that the senators have an equally valid democratic mandate. Brazil has thus offered a tutorial in constitutional theory to the likes of Nicolás Maduro, Venezuela’s dictatorial president. The legacy of a divisive impeachment is not all bad. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21706552-does-ousting-dilma-rousseff-weaken-or-strengthen-brazils-democracy-impeachment/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Afghan refugees in Pakistan: Homecoming spleen + +Ending Myanmar’s insurgencies: A long road + +Japanese politics: Get the party started + +The wit and wisdom of Rodrigo Duterte: Shoot from the lip + +Australia and China: You can’t buy trust + + + + + +Articles Sections Next + +Afghan refugees in Pakistan + +Homecoming spleen + +One of the world’s largest refugee populations is being driven out of Pakistan + +Sep 10th 2016 | PESHAWAR | From the print edition + + + +FOR weeks the voluntary repatriation centre run by the United Nations on the outskirts of Peshawar has been besieged by trucks laden with Afghan refugees and their worldly possessions. Inside the compound hundreds of men, children and burqa-clad women wait bad-temperedly in the sun to complete the achingly slow formalities of leaving Pakistan, a country that has hosted legions of displaced Afghans since the Soviet Union invaded Afghanistan in 1979, but now wants to be rid of them. + +The process, which involves scanning the soon-to-be-ex-refugees’ irises and issuing them with temporary travel documents, concludes with the cutting up of their “Proof of Registration” cards. Pakistan says these documents, once among refugees’ most important possessions, will cease to be valid on December 31st, leaving any of the 1.5m-odd documented refugees who remain in the country then in legal limbo. As for the 1m-odd undocumented Afghans in Pakistan, the government says that from November 15th on, they will need visas to remain—something hardly any of them currently have. + +Although such deadlines have been extended or ignored in the past, there are signs that the government means business this time. It is enforcing long-ignored rules that bar refugees from living outside designated camps, running businesses and owning property. It has forced banks to close refugees’ accounts and mobile companies to disable their SIM cards. Landlords have been encouraged to serve notice on Afghan tenants. The police, charged with raiding shops and homes, have taken full advantage of the opportunities for extortion afforded by the crackdown. + +“In the past we could go everywhere and no one would ask us about showing a visa or passport,” says Noorullah Malik, an Afghan who lived happily in the city of Nowshera for more than 30 years. This week he was waiting forlornly in the line at the repatriation centre, where a policeman had tried to relieve him of one of his few movable assets, a cow. + + + +Many refugees seem to have decided to go home before the winter sets in. The number of registration-card holders leaving Pakistan has surged in the past three months from 1,250 in June to 67,057 in August. Officials are expecting a further surge following the end of the Eid festival in mid-September. The United Nations High Commissioner for Refugees (UNHCR) and the International Organisation for Migration (IOM) predict 620,000 registered and undocumented refugees will return to Afghanistan by the end of the year. That would be a huge increase on recent years (see chart). + +The UNHCR’s decision in June to double to $400 the repatriation grant paid to each returnee has helped to swell numbers. But it has also added to the strain on its budget. It and the IOM are appealing for a combined $73m just to get them through the year. + +Pakistan used to counter charges that it was harming Afghans through its support for militant groups like the Taliban by touting its decades of hospitality towards Afghan refugees. But many ordinary Pakistanis see the refugees as a source of crime, unemployment and militancy. A senior police officer in Peshawar complains that the Afghans have turned an erstwhile “city of flowers” into a place of teeming slums, which harbour the most intractable redoubts of the polio virus, a disease that has nearly been eradicated elsewhere. + +The massacre of more than 130 schoolboys in Peshawar in 2014 prompted the government to unveil a “national action plan” to repatriate all refugees, even though no Afghans have been proved to have participated in the attack. It does not help that relations between the two countries have deteriorated, as they have swapped accusations about which is most responsible for the Taliban’s resurgence in Afghanistan. + +The growing instability in Afghanistan, however, makes it a poor time for the refugees to return. Even with the UNHCR’s extra cash the new arrivals will not find the adjustment easy. The IOM says the flood of returnees has helped to drive up rents and food prices in Jalalabad, the first big Afghan city up the road from Peshawar. In 2015 the governor of Nangarhar, the province of which Jalalabad is the capital, said he did not want returnees from different provinces to settle on his patch. + +The Afghan government is still encouraging refugees to return with a public-awareness campaign featuring the slogan “Grass is green in my land”. It promises to hand out land to the new arrivals. The Afghan ambassador to Pakistan recently told a gathering of refugees in Islamabad, “You belong in Afghanistan!” But the government, which provides little in the way of services at the best of times, is already struggling to deal with 221,000 people who have had to quit their homes within Afghanistan to escape fighting with the Taliban. The bitter winter looms. Aid agencies fear a humanitarian crisis. + +Any problems the refugees may face on arrival in Afghanistan simply compound the hardship of having to leave their adoptive home in Pakistan. Many of them were born in exile to refugee parents, and have never set foot in the country to which they are “returning”. In Peshawar long-established Afghan businesses, from carpet shops to juice bars, are shutting down. Their owners are often forced to sell property, electricity generators and whatever other assets they have at giveaway prices. + +Fazle Amin, a carpet-dealer, is trying frantically to recover money from customers who bought on credit. He fears he will lose almost $2m when he leaves the country. “I don’t know what I will do in Afghanistan,” he says. “I have never been there and I will be a refugee in my own country.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21706538-one-worlds-largest-refugee-populations-being-driven-out-pakistan-homecoming-spleen/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Ending Myanmar’s insurgencies + +A long road + +Myanmar’s new government sets about making peace with its many ethnic minorities + +Sep 10th 2016 | MYITKYINA | From the print edition + +Talk is cheap + +IN NAYPYIDAW, Myanmar’s capital, September 3rd marked the end of four days of peace talks between the government and 17 of the insurgent groups that have bedevilled the country since independence in 1948. Delegates listened to a series of optimistic closing speeches. But on the same day in Myitkyina, the capital of Kachin State, people heard a different sound: fighter jets roaring overhead. “Maybe they’re on their way to bomb Laiza,” said a local, referring to the town where the Kachin Independence Army (KIA), one of the rebel groups, is headquartered. It would not be the first time. Just days before the peace talks began, Myanmar’s army attacked KIA positions with helicopter gunships and heavy artillery. As delegates poured into Naypyidaw from around the country, clashes continued in the states named for the Shan and Kachin minorities, showing that, for all the excitement surrounding the talks, the road ahead is long and obstacle-strewn. + +At the talks Aung San Suu Kyi, the country’s leader, declared that with perseverance and courage, “we will surely be able to build the democratic federal union of our dreams.” Min Aung Hlaing, the army chief, promised to work towards peace. Even leaders from some of Myanmar’s many ethnic minorities, who had grumbled their way to the conference, acknowledged that, for the first time, they had talked to the army and it had listened. Since their speeches were shown on television, so did Myanmar’s Burman majority. + +On the streets of Myitkyina, however, the event seemed less remarkable. “It’s all a political illusion,” said one young man at a Kachin school, who wears a T-shirt with the green and red Kachin flag. “Aung San Suu Kyi wants to show the world that she’s doing great things, but there’s nothing there.” Another student agreed: “She only cares for Bamar [Burman] people. In Yangon there’s lots of development, but look around Myitkyina: nothing has changed.” That is not entirely true. Just a few years ago, when Myanmar was under military rule, displaying a Kachin flag, much less publicly deriding the country’s president, would have meant arrest, or worse. + +Still, Myanmar’s myriad ethnic minorities, which comprise around 40% of the population and live mainly in resource-rich border areas, come by their cynicism honestly. In 1947 Aung San, who led the fight for independence from Britain, signed the Panglong Agreement with representatives from the country’s Shan, Chin and Kachin people. It stated: “Full autonomy in internal administration…is accepted in principle.” But Aung San was assassinated before he could take power, and ethnic conflict has plagued the country since, killing and displacing hundreds of thousands. + + + +Myanmar’s border regions remain drenched in an alphabet soup of guerrilla groups (see map). The army, which ruled Myanmar for more than 50 years before permitting partially civilian government earlier this year, struck deals with some of them, allowing them to administer small enclaves. But it was not prepared to accept federalism on a grander scale or to pay much attention to the grievances of ethnic minorities more broadly. + +The National League for Democracy, headed by Miss Suu Kyi, who is Aung San’s daughter, won a landslide election victory last year, and formed a government earlier this year. She has said that achieving peace is her highest priority. She grandly titled this week’s talks “the 21st Century Panglong Conference”. But she has also taken pains to dampen expectations, reminding everyone that the talks were just the first step on a long road. Miss Suu Kyi’s huge mandate and personal stature give her greater credibility as a negotiator than the juntas that preceded her. All but three of the country’s 20 insurgent groups attended the conference, which is an achievement in itself. (Representatives of the biggest ethnic militia, the United Wa State Army (UWSA), showed up but then stormed out, complaining about lapses in protocol.) + +The talks featured no negotiations or official discussions, just around 80 speeches in which the various parties laid out their positions. The insurgents said that their fight for self-determination is not a fight for secession; they want to run their own affairs within a federal union. The army insisted that the constitution, which it wrote and foisted upon the country in a sham referendum eight years ago, already involves a degree of federalism. That is a wild exaggeration. The constitution gives Myanmar’s 14 states, including seven dominated by a particular ethnic group, their own legislatures. It also allows for autonomous areas within states for smaller ethnic groups. But in all these localities most power remains with a chief executive appointed by the army. Nonetheless, to have the army accept the idea of federalism and the ethnic armies renounce separatism is progress, by Burmese standards. Another meeting is scheduled in around six months; in the meantime, the government, army and ethnic militias will negotiate a framework for more substantive talks. + +That will be hard. Creating a federal system will require the army and central government to devolve far more authority than they currently do—and, more importantly, to let go of the idea that the Burmans are the country’s natural rulers. It is not clear that Miss Suu Kyi is willing to do that; and even if she were, the army almost certainly would not be. The constitution shields it from civilian control and oversight. It has grown rich snatching land and resources in minority areas. Then there are groups such as the UWSA, which struck deals with the army and so have run small border areas entirely as they please for decades. Are they willing to enforce Burmese law and abandon illicit activities such as drug-smuggling? + +If these questions are, miraculously, resolved, another may arise: whether Myanmar’s minorities can get on with one another. The country’s many and muddled ethnicities are not perfectly divided by its seven ethnically defined states and six official autonomous areas. Groups such as the Wa, Palaung and Pa-O worry that the states in which their autonomous areas are located will simply supplant the central government as the source of bias and repression. They would prefer states of their own; other groups do not even have autonomous regions. A long road indeed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21706535-myanmars-new-government-sets-about-making-peace-its-many-ethnic-minorities-long-road/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Japanese politics + +Get the party started + +The main opposition party hopes a new leader will revive its fortunes + +Sep 10th 2016 | TOKYO | From the print edition + +A new face, but not much of a plan + +IN THE dark-suited male world of Japanese politics, the front-runner in the race to lead the main opposition party is a breath of fresh air. If the young and charismatic former TV host who goes by the single name of Renho emerges from the election on September 15th as the new chief of the Democratic Party (DP), many members believe it will improve the party’s fortunes. “We need a female leader for a new image,” says Katsuya Okada, the outgoing leader, who supports Renho (pictured). + +The party fared badly at elections in July for half of the seats in the upper house. It lost 11, leaving it with just 49 of the 242 seats in the chamber. This handed the ruling coalition the two-thirds majority in both houses needed to change Japan’s constitution, a pet project of Shinzo Abe, the prime minister. + +Yet a new face will not be enough to revive the DP. For one thing, opposition parties always struggle in Japan. Mr Abe’s Liberal Democratic Party (LDP) has only been out of power for a total of four years since 1955. Many Japanese and much of the civil service (not to mention the party itself) see it as synonymous with the state. + +Voters, meanwhile, have yet to forgive the DP for its disastrous stint in government in 2009-12. It raised taxes, feuded with bureaucrats and floundered in the wake of the Fukushima nuclear disaster. “People let the LDP off the hook for their mistakes because they know they are rascals; but they will never forgive the DP for letting them down,” says Koichi Nakano of Sophia University in Tokyo. + +Thanks to Mr Okada’s steady hand, the party is in a better state than when it lost power in 2012. It merged with the small Japan Innovation Party in March, and struck a deal with the Japanese Communist Party before the elections in July to refrain from fielding candidates in the same constituencies, to avoid splitting the opposition vote. + +Yet the pact is controversial within the DP, which has no clear ideology. Its members range from right-wing nationalists to diehard leftists. As a result, it lacks policy heft. “We have made the mistake of always opposing the government’s policies, but not proposing our own alternatives,” says Akihisa Nagashima, a DP lawmaker. “This leadership election is our chance to debate policies and let people know what we stand for—perhaps our last.” + +Mr Abe has tried to co-opt perennial opposition causes, such as lifting the wages of ordinary workers and helping women. Yet he has left ample room for the DP to differentiate itself. Many voters oppose the LDP’s policy of restarting Japan’s nuclear power stations, which were shut down after Fukushima, and Mr Abe’s goal of scrapping the constitution’s restrictions on Japan’s armed forces. + +Alas, policy is where Renho, a talented communicator, is weaker than her two competitors for leader. (She is also likely to come under attack from traditionalists for being half-Taiwanese). Seiji Maehara, a former leader, has weightier positions on security and foreign policy, but does not offer the change the DP craves. (“If he wins, I may as well have stayed,” says Mr Okada.) Yuichiro Tamaki has ideas on helping families, but is unknown outside the party. + +The absence of a strong opposition is unhealthy for any democracy, but Mr Abe’s growing authority makes it especially worrying. He has largely stamped out LDP factionalism, which used to act as a check on the leader, and made reforms that give the cabinet more control over the bureaucracy. It does not help that the media is prone to self-censorship. Even some in the LDP would welcome more robust competition. “I don’t necessarily want a powerful opposition, but a more credible one would improve debates in parliament and sharpen our policies,” says Kuniko Inoguchi, an LDP member of the upper house. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21706544-main-opposition-party-hopes-new-leader-will-revive-its-fortunes-get-party-started/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The wit and wisdom of Rodrigo Duterte + +Shoot from the lip + +Fuck diplomacy! + +Sep 10th 2016 | From the print edition + + + +THIS week Rodrigo Duterte, the tough-guy president of the Philippines, was asked how he would react if Barack Obama criticised the crackdown on drugs he has instigated, in which the police have killed 1,000 people and unknown assailants another 1,400. Mr Duterte said he would call Mr Obama a “son of a whore” and then expressed regret, through a spokesman, that Mr Obama somehow took the phrase as an insult. (Mr Obama called Mr Duterte “a colourful guy” and cancelled their planned meeting.) To be fair, Mr Duterte was speaking about Mr Obama in exactly the same way he does about everything else. Here are a few of his memorable pronouncements: + +On being stuck in a traffic jam during a papal visit to Manila: + +“Pope, son of a whore, go home. Don’t visit any more.” + +On Singapore’s execution of a Filipina maid: + +“Fuck you…You are a garrison pretending to be a country.” + +In response to a question about human-rights abuses: + +“Fuck you, UN, you can’t even solve the Middle East carnage…shut up all of you.” + +On the killing of a Filipino journalist: + +“Just because you’re a journalist, you are not exempted from assassination if you’re a son of a bitch.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21706539-fuck-diplomacy-shoot-lip/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Australia and China + +You can’t buy trust + +A politician’s blunder exposes inconsistencies in Australia’s attitudes + +Sep 10th 2016 | SYDNEY | From the print edition + +If you squint, you can just make out the national interest + +SELDOM have Australia’s complex relations with China been more starkly exposed than in the agonies of Sam Dastyari, a prominent opposition MP. Three months ago Mr Dastyari gave a press conference with Huang Xiangmo, the head of Yuhu Group, a subsidiary of a property company linked to China’s government. Contradicting both the government’s line and the policy of his own party (Labor), Mr Dastyari called on Australia to “respect” China’s ill-founded territorial claims in the South China Sea, according to reports in the Chinese press. + +Mr Dastyari, it recently emerged, has accepted donations from Yuhu and from the Top Education Institute, a local firm run by a Chinese-Australian with close ties to the governments of both countries. Mr Dastyari used the money to pay for travel and legal advice. Yuhu also gave Mr Dastyari two bottles of Penfolds Grange, Australia’s most expensive wine, worth around A$800 ($600) a bottle. From the G20 summit in China, Malcolm Turnbull, Australia’s prime minister, described Mr Dastyari’s behaviour as “cash for comment”. + +On September 7th Mr Dastyari resigned from a post within the Labor party, but not as an MP. Although he admits that accepting the money was “a big mistake”, he denies any link between the donations and his remarks on the South China Sea. The donations, he points out, had been declared as required and were perfectly legal. Australia’s politicians and political parties, it transpires, took A$5.5m in donations from Chinese-linked firms in the two years through June 2015, including A$500,000 from Yuhu. Many are now calling for donations from foreigners to be banned. + +China is Australia’s biggest trading partner, and one of its biggest sources of immigrants. Chinese demand for Australian resources, as well as ever-increasing numbers of Chinese tourists and students, have helped to underpin Australia’s 25 years of unbroken economic growth. But many Australians worry that the pursuit of Chinese business is undermining their country’s independence. + +Mr Turnbull seems to agree. In April his government vetoed a bid by Dakang, a Chinese company, for S. Kidman and Co, a vast outback empire of cattle ranches that owns 2.5% of Australia’s agricultural land. Last month it turned down a joint bid by State Grid, a Chinese government-owned company, and Cheung Kong, of Hong Kong, for a 50.4% stake in Ausgrid, an electricity-distribution network in New South Wales, Australia’s most populous state. + +Scott Morrison, the treasurer (the most senior finance minister), said both bids were “contrary to the national interest”, without explaining how. Yet British firms own 7% of Australia’s agricultural land, without apparently damaging the national interest. And State Grid already owns stakes in several electricity distributors in other parts of Australia. The rules have not changed since those investments were made but, judging by the uproar about Mr Dastyari, the mood has. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21706476-politicians-blunder-exposes-inconsistencies-australias-attitudes-you-cant-buy-trust/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Politics in Hong Kong: The city that scares China + +Giant pandas: Survival of the cutest + +Banyan: Abide with Mao + + + + + +Articles Sections Next + +Politics in Hong Kong + +The city that scares China + +A new front opens in China’s struggle against separatism + +Sep 10th 2016 | BEIJING AND HONG KONG | From the print edition + + + +CHINA’S leaders wince at the merest hint of support for the separation of any part of their country from the “motherland”. Gun-toting police officers and armies of secret ones ensure that few dare openly to express support for the notion in Tibet and Xinjiang, traditionally restive regions in the west of the country. China’s rapid military modernisation in recent years has been aimed in part at deterring Taiwan, which has never been ruled by the Communist Party, from making its de facto independence a formal one. + +Imagine, then, their horror at the outcome of elections held in Hong Kong on September 4th. Six of the 70 people who won seats in the territory’s Legislative Council, known as Legco, were people who want Hong Kong to be more independent from China. Though their numbers are small, the emergence of such “localists” could change the way the party views the former British colony. It is no longer merely troubling for its endless calls for democracy. Now it looms as a new front in China’s struggle against separatism. + +Thanks to a system that China (gladly) inherited from the British, the outcome of elections to Legco is skewed in favour of pro-establishment politicians. That is ensured by the reservation of 30 seats for “functional” constituencies, namely professions, industries and other groups whose members tend to support the government (another five seats also technically belong to such constituencies, but they allow almost every adult to vote, unlike the others, which have small electorates). It was no surprise, then, that the government’s backers were able to take 40 seats, a majority that will ensure most of its bills will be passed. In the previous Legco elections in 2012 they took 43. + +As the Communist Party in Beijing sees it, it is the composition of the opposing camp, not its slightly bigger size, that is a cause for much anxiety. Gone from Legco are several veterans who have been vocal critics of the party (which operates only covertly in Hong Kong). But localists have now gained seats for the first time. Not only do such people flirt with the idea of independence, but they are also more ready than old-guard democrats to engage in civil disobedience. Several were leaders of the “Umbrella movement” of 2014, which involved weeks of demonstrations and sit-ins on busy roads by student-led protesters demanding more democracy. + +The umbrellas’ shadow + +In the race for 35 seats in “geographical” constituencies (ie, those filled by proper elections), pro-democracy politicians took nearly 55% of the vote in a record turnout. But a big share of this—nearly 20% of the vote—was for localists belonging to parties formed in the wake of the failed Umbrella campaign. Such groups seem to like portmanteau or hybrid names. One of the more radical of them, Youngspiration, now has two legislators. Nathan Law of a party called Demosisto, who was a student leader during the Umbrella movement, has become the youngest ever to win a Legco seat. He calls himself a “23-year-old kid”. In August Mr Law (pictured in front of a group of supporters after winning his seat with 50,818 votes) was sentenced to 120 hours of community service for inciting people to enter a fenced-off area at the start of the Umbrella protests. + +Hong Kong’s government, doubtless with prodding from Beijing, tried to keep supporters of independence from running. It introduced a rule requiring candidates to sign a declaration that they agree Hong Kong is an “inalienable part” of China, threatening criminal prosecution for doing so falsely. Six of the more outspoken hopefuls were thus excluded (they want to challenge this in court). But some of those now elected have expressed support for independence. All have called for “self-determination”, meaning the right of Hong Kong people to decide for themselves what sort of relationship they have with China. Youngspiration wants a referendum on this within five years. Its members believe it is necessary to decide as soon as possible what will happen after 2047; Hong Kong’s constitution gives no guarantee that China’s “one country, two systems” deal will continue beyond that date. + +China’s refusal to make concessions to the Umbrella protesters has fuelled the growth of such groups, despite efforts by the government in Hong Kong to undermine support for them (recently, for example, by banning teachers from expressing support for independence in schools). It refused to budge on their demands that the chief executive, as Hong Kong’s leader is known, be freely elected. China insists that candidates for the post be screened by a committee packed with loyal Hong Kongers, who can be counted on to exclude Communist Party-baiting democrats. + + + +Support for more radical political views has also been fuelled by China’s detention a few months ago of five Hong Kong booksellers for selling gossipy works on China’s leaders. One of them disappeared from Hong Kong, apparently snatched by mainland agents. Some Hong Kongers also resent an influx of people from the mainland, blaming them for pushing up house prices, taking good jobs and stripping shelves bare on shopping trips. Localists have been at the forefront of protests against the “locusts”, as some call the hordes of mainland day-trippers. + +China’s initial reaction to the results in Hong Kong has been guarded (beyond trying, as usual, to scrub the internet clean of any comment on the territory’s democratic endeavours). Its media have barely mentioned them. But the leadership’s worries are clear. A government statement said that advocating independence for Hong Kong was “a threat to China’s sovereignty and security” and would damage the prosperity and stability of Hong Kong. It expressed support for any legal action taken by Hong Kong’s government to stop it. + +One option that China may consider is pushing Hong Kong to revive its long-shelved plans to introduce a new law against subversion. That, however, would risk a public backlash, such as occurred in 2003 when hundreds of thousands of people took to the streets in protest against the government’s previous attempt to do so. It may also think about backing Leung Chun-ying, the current chief executive, for another term when elections are held next March for the post (without public input). Mr Leung is implacably anti-localist, but is also hugely unpopular. Keeping him would also risk triggering more unrest on the streets. The least likely option is that China will grant Hong Kong the democracy many of its people want. Among its many fears is that others in China, not least in its restless west, may ask why they are not allowed it, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21706442-new-front-opens-chinas-struggle-against-separatism-city-scares-china/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Giant pandas + +Survival of the cutest + +Down in the bamboo forest, something stirred + +Sep 10th 2016 | BEIJING | From the print edition + + + +GOOD news about conservation is always welcome, and never more so than when it concerns that most charismatic of charismatic mega-fauna, the giant panda. On September 5th the International Union for the Conservation of Nature (IUCN), an environmental group that links governments and NGOs, downgraded the international symbol of cuteness from “endangered” (meaning with a high risk of extinction in the wild) to “vulnerable” (ie, to becoming endangered). “Everyone should celebrate,” said Lo Sze Ping, the boss of WWF-China, a group whose logo is the cuddly-looking creature. + +China has made huge efforts to promote panda-breeding over the past 30 years. But those efforts have nothing to do with the animal’s reclassification. They take place in captivity. The conservationists’ decision was based on the health of panda populations in the wild. The numbers there, according to government surveys, have increased from 1,114 in 1988 to 1,864 in the most recent panda census in 2013. This is five times as many as the number of captive pandas. + +Gratuitous eye-candy + +Their increase in the wild reflects improvements in the pandas’ habitat, the dense bamboo forests of China’s south-west (see map). After a period of chopping down everything in sight, the country now has 67 protected panda reserves, covering about half the animals’ range. Two-thirds of wild pandas live in them. The opportunity cost of such reservations is doubtless made lighter by the pandas’ earning power (foreign zoos pay $1m a year to rent a pair). But the government deserves credit for decades of conservation efforts. + +The result is that China now has two panda populations, both increasing: the wild one, merely threatened, and the more frequently-photographed captive one. Though fewer in number, the captive pandas are much more fertile. The wild population rose by 268 between 2003 and 2013, or 17%. The captive population more than doubled from 164 to 375. Pandas have a reputation for being hopeless at reproduction (females come into heat only a couple of days a year). But the old difficulty of getting them to breed in captivity owed at least as much to human ignorance. As knowledge of panda biology and behaviour has soared, so has the birth rate. + +Unfortunately, this is making no difference to the wild population. The point of the captive breeding programme is to repopulate the wild. Pandas born in captivity undergo a two-year training process from teachers dressed in urine-soaked panda costumes, who teach them how to gather food and to be wary of people. But after years of effort only five captive-born pandas have been released. Two of those died. Two more are due to be introduced into the wild this winter. + +After all this, China’s government might have been expected to crow about the IUCN’s decision. It refrained. The State Forestry Administration (which supervises the pandas’ habitat) even came near to criticising it. The bureau pointed out that the wild panda population is fragmented into 33 subgroups, 18 of which have just ten or fewer animals, making them (the bureau says) “highly endangered”. Moreover, these groups are isolated from one another. This limits their gene pool and makes them disease-prone. Furthermore, the bureau said, quoting the IUCN’s research, climate change could destroy a third of panda habitat in the next 80 years. + +Around the world a sad parade of animals is travelling towards extinction (sometimes because of demand for their body parts from users of traditional Chinese medicine). The IUCN recently put another iconic species, the eastern lowland gorilla, on its endangered list. So it is heart-warming to see the panda going in the other direction. But the international symbol of conservation needs to lumber much farther from the edge of annihilation. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21706518-down-bamboo-forest-something-stirred-survival-cutest/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Abide with Mao + +China still struggles to stuff the Great Helmsman underground + +Sep 10th 2016 | From the print edition + + + +A MERE 18 years after the death of Mao Zedong, it was possible for a notable Sinologist to give his book on Chinese reforms the title of “Burying Mao”. And who was to quibble? The point of all the market-led economic change that Deng Xiaoping had promoted seemed to be to put as much distance as possible between his China and the era of Mao’s rule, so full of violence, trauma and human suffering. And yet. With the 40th anniversary of Mao’s death this month, a Sinologist now would think twice before choosing a similar title. “Mao Unburied” is more like it. + +For China still struggles to stuff the monster underground. Mao himself said he wanted to be cremated, and liberal intellectuals occasionally petition for his incineration and the return of his ashes to his hometown of Shaoshan. But his corpse still lies at the heart of the Chinese polity, in a glass sarcophagus on Tiananmen Square, attended by streams of visitors. Though most images of Mao have been removed from public places, his picture still hangs on the Gate of Heavenly Peace. It is 14 months in jail for you if you throw a bottle of ink at it. Mao would have been appalled at China’s present materialism. Yet his portrait is also on every banknote. It is as if he is having the last laugh. + +Taxi-drivers hang icons of Mao on their rear-view mirrors. When recently asked why, one replied that it was because Mao was a “kick-arse leader” who had had the guts to go to war with the Americans (during the Korean conflict of 1950-53). For younger Chinese, Mao has retired to the position of avuncular founder of the country. And in Shaoshan, Banyan has been to a restaurant that serves Mao’s favourite dishes to hordes of tourists. It even has a shrine to the Great Helmsman. Plastic flowers are around his neck, incense and oranges at his feet—along with Mao’s multiplying banknotes. The revolutionary atheist has become another god in the Chinese folk pantheon. + +To be clear about his rule: he emerged as the Chinese Communist Party’s leader from ruthless party purges in the early 1940s. From China’s “liberation”, ie, communist victory against the Kuomintang Nationalists in 1949, violence was, as Frank Dikötter, a historian at the University of Hong Kong, puts it, not a by-product but the essence of Mao’s rule: a reign of broken promises, systematic violence and calculated terror. The genius of Mao’s violence was to implicate ever more people in it. Between 1950 and 1952 perhaps 2m “landlords” and “rich peasants”—wholly artificial definitions, imported from the Soviet Union, for a country without big landholders—were singled out and killed. A parallel campaign was waged against “counter-revolutionaries”. Mao and his accomplices laid down execution quotas for each province: up to four people per thousand. Perhaps 5m were killed between 1949 and 1957—a golden era, relatively speaking, before the horrors of Mao’s Great Leap Forward and subsequent famine (up to 30m dead) and the Cultural Revolution of the 1960s and 1970s (over 1m killed). How can a man with as much blood on his hands as Adolf Hitler or Joseph Stalin be deemed acceptable? + +The question is not confined to China. This month, concerts glorifying Mao were to be held by a China-linked group hiring public venues in Sydney and Melbourne. Until they were cancelled because of threats by protesters to disrupt them, city officials defended the concerts as expressions of free speech. They would surely not have done the same for events in honour of Hitler or Stalin. Elsewhere, a restaurant in London plays on the theme of the Cultural Revolution. A high-end Western but Chinese-themed department store long sold playful watches featuring Mao’s arm waving to the crowds. + +One answer is that a personal side to Mao shines through in his early years that inoculates against the memory of the monstrous later ones. The early Mao had a gift for empathy and friendship absent in Hitler or Stalin. He was, moreover, hugely well read, and though it is not hard to be a better poet than Hitler was a watercolourist, Mao was in fact one of the finest Chinese poets of his day. Last, as Kerry Brown of King’s College, London, points out, Mao’s rise to power was accompanied in the turbulent China of the first half of the 20th century by a moving personal trauma: not only the deaths of so many of his chief colleagues, but also members of his family. In 1930 his second wife was executed by the Nationalists for refusing to renounce Mao. His son, Mao Anying, was killed in 1950 by an American air strike during the Korean war. The trauma engenders sympathy among those who know the story. Some suggest that the suffering Mao experienced early in his life may have numbed his senses to the destruction he later unleashed. + +Mao-tied + +Yet the more forceful answer must be that, whereas Hitler’s and Stalin’s regimes have long crumbled, China’s Communists continue in power. And, says Mr Brown, the national story that Mao crafted, of bringing together a nation after a century of turmoil and humiliation at Japanese and other foreign hands, remains emotionally reassuring and satisfying for many Chinese—despite a great many holes. + +It means that China’s Communist rulers have to put up with Mao. His craze for permanent revolution and popular attacks on the party are anathema to President Xi Jinping. Confucius, whom Mao reviled, is much more Mr Xi’s fellow, with his precepts of order, hierarchy, loyalty and uprightness. But Mr Xi has a problem. As Mr Brown puts it, a party with its roots in terror, illegality and revolution has today to present itself as the bastion of stability and justice. Mr Xi knows that Mao remains the bedrock of his power. It is why the regime allows no chipping away—recently closing the only Chinese museum dedicated to the horrors of the Cultural Revolution, and shutting down a journal that questioned Maoism. Mao positively oozed power, thrilling even Henry Kissinger. Mr Xi knows his power is merely borrowed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21706511-china-still-struggles-stuff-great-helmsman-underground-abide-mao/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Labour laws in the Gulf: From oil to toil + +Migration in the Gulf: Open doors but different laws + +Extremism in Jordan: Muzzling mosques + +Driving in Johannesburg: Bad robots + +Somalia: Most-failed state + + + + + +Articles Sections Next + +Labour laws in the Gulf + +From oil to toil + +Forcing the private sector to hire locals is hard, and misguided + +Sep 10th 2016 | MANAMA | From the print edition + + + +AT City Centre mall, Bahrain’s largest, Bahrainis buy, while foreigners operate the tills. Michelle is from the Philippines, and lowers her voice to explain why there are so few Bahrainis working alongside her. “They are lazy,” she says. Whereas she needs to work hard to keep her job and the visa that goes with it, they can do whatever they want, which isn’t much. + +As part of a government plan to boost indigenous employment, employers in Bahrain are given targets for the proportion of locals they must hire. The targets vary: in grubby or boring sectors, requirements are lower—large building-maintenance firms can get away with a 5% “Bahrainisation” rate. Sectors with more prestige, like banking or finance, face higher targets, of 50% for larger companies. Small clothes shops face a quota of 30%. Michelle points to the store opposite, which employs some Bahraini staff on the shop floor. They don’t even want to stand up when the customers come in, she grouses—they know they are there purely to keep the government happy, and are not likely to be fired. + +Meanwhile, in a room whirring with cash-counting machines at the Bahraini central bank, all the staff are local citizens, robed in their long white national dress. Half of Bahraini nationals with jobs work for the government. This model, of locals stuffing the public sector and private firms hiring foreigners, is common across the six members of the Gulf Co-operation Council (GCC)—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). In Saudi Arabia, Bahrain’s big neighbour, two-thirds of nationals with jobs were on the public payroll in 2015, according to Jadwa Investment, a Saudi research firm. Whereas other emerging markets and developing countries devoted around 5% of GDP to public-sector wages, a report from the IMF found in 2015 that in the GCC (plus Algeria) they splashed out closer to 12%. + + + +But sliding oil prices since mid-2014 have slashed Gulf countries’ revenues by at least 10% of GDP, swelling deficits and making the old model even less sustainable than it was before. With an extra 3.8m young people expected to enter the labour market between now and 2021, the pressure to find more private-sector jobs for nationals will be huge. + +Some countries are less worried than others. In Qatar and the UAE, nationals are so thin on the ground that there are probably not enough of them to fill government positions, says William Scott-Jackson of Oxford Strategic Consulting. In Oman and Bahrain, the situation is less comfortable, though at least unemployment among Bahrainis remains fairly low. Most is at stake in Saudi Arabia, where the unemployment rate is already 11.6% and only 40% of adult citizens are in the labour force. For Saudi women, the participation rate is a dismal 18%. + +The tyranny of high expectations + +The trouble is that young Gulf Arabs have come to feel entitled to government jobs. Terms are generous and duties light, dulling the incentive for bright graduates to invest in skills needed by the private sector, such as engineering. Few Saudis would consider working in shops or restaurants, let alone on building sites. + +The other, deeper, problem is weak demand from the private sector for Gulf nationals. The lure of the public sector makes them expensive, and immigration laws tying foreigners to their employers make non-nationals extra-cheap (see article). Solving either problem would mean tinkering with a fragile social contract between oppressive regimes and populations who tolerate them as long as they put food on the table. + +Under pressure, some governments are trying harder to force private companies to hire locals. Oman has extended its list of jobs for which foreigners may not get visas. It now includes marketing, cleaning and camel-keeping. Saudi Arabia plans to expunge foreigners from human resources and telecoms (and appears to be expunging a fair few businesses in the process). In December the Saudi government will tweak its “traffic-light” system, which imposes harsh penalties on firms that employ fewer women, or Saudis in senior roles, than the government wants. + +Such quotas are textbook examples of bad economic policymaking. They have existed in the GCC for a few decades now. They corrupt the work ethic of those taken on purely to meet the quotas. One restaurant owner tells of a Bahraini employee who took a holiday whenever he wanted, then demanded extra compensation when he was fired. He will think twice before hiring another Bahraini, he says. Employers don’t like being told to hire people for reasons other than ability and willingness to do the job. So some of them cheat: for example, by adding phantom citizen-employees to their payroll. + +Some companies claim to see the quotas as no problem. Jamal Fakhro, managing partner for KPMG in Bahrain, boasts that 60% of his employees are Bahraini, and that in the banking sector the figure is 70%—above what the government requires. But these are exceptions. The quotas create an incentive to give nationals low-wage jobs (which some will not bother to do). Firms treat this as a cost of doing business, like a tax, says Steffen Hertog of the London School of Economics. + +Yet a survey by GulfTalent found that, in 2014, 95% of employers in Oman reported that the quota system was a real challenge, as did 84% in Saudi Arabia and 55% in Bahrain. Such heavy-handed regulation is also nightmarish to enforce. In Bahrain, even with between 15,000 and 19,000 inspections a year, it takes five years for the government to visit each employer. + +One way to make locals more attractive to employers would be to reduce the pay gap between them and foreigners. Wage subsidies for nationals have worked in the past, but money for them is scarce. The Saudi government recently announced huge increases in visa charges for foreign workers. Bahrain this year allowed employers to ignore the employment quotas if they pay the government a fee for each foreign worker they hire. + +The new charge, set at around 15% of the cost gap between locals and Bahrainis, is too low, says Ausamah bin Abdulla al-Absi, head of the Labour Market Regulatory Authority (LMRA), which introduced the scheme. He hopes to increase the charge gradually and nudge employers away from their model of importing vast quantities of low-skilled labour and making their profits in low-productivity sectors. Mr Absi’s vision, which is more likely to rebalance the GCC economies than blunt quotas, requires time. Some see the low oil price as a blessing in disguise, a means of forcing through change. But after decades of living on petro-welfare, change may come as a shock to many. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21706523-forcing-private-sector-hire-locals-hard-and-misguided-oil-toil/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Migration in the Gulf + +Open doors but different laws + +Because migrants in the Gulf have few rights, locals let more of them in + +Sep 10th 2016 | MANAMA | From the print edition + +High pay, few rights + +MUHAMMAD DEV arrived in Bahrain three months ago from India, leaving behind his wife and baby. He misses his family, and calls them daily. But driving a taxi along Bahrain’s humid highways, he earns more than double what he did back home. “That’s why I’m staying here and they are happy,” he says. + +News about migrant labourers in the Gulf states usually focuses on abuses. A recent case involves thousands of Pakistani and Indian construction workers who have been stranded in Saudi Arabia after a cash-strapped employer stopped paying them but refused to let them leave the country. Many are owed months of back pay. The Saudi government has promised to give them plane tickets home, and insists that this is a one-off. It is not. + +Under the kafala (sponsorship) system used in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (collectively, the Gulf Co-operation Council or GCC), migrant workers are tied to their employers. They may not switch jobs or, in some cases, leave the country without their employer’s permission. Many have their passports confiscated, though this is illegal. + +The power that the kafala system gives to employers squashes wages. A study by Suresh Naidu of Columbia University, Yaw Nyarko of New York University, Abu Dhabi, and Shing-Yi Wang of the Wharton School of Business found that in the UAE wages for foreigners were 27% lower than they would be if firms had to compete with each other for labour. + +Yet still migrants flock to the Gulf. According to the Gulf Labour Markets and Migration programme, a research body, roughly half of the 50m people in the GCC are non-citizens. In Qatar and the UAE, it is more than 85%. + +One reason for the long queues of Indians at the Qatari embassy is obvious: wages are much higher in the GCC than at home. Unpublished research by Michael Clemens, from the Centre for Global Development, compares migrants who moved to the UAE with those who had their contracts cancelled at the last minute because of the property-price crash in 2008. Those who moved earned 250-350% more. Many migrants send money home, which pays school fees and helps relatives start businesses. Having a household member working in the UAE made Indian households around 30 percentage points more likely to own a family business. + +Another paper, by Glen Weyl of Microsoft Research and Yale University, finds that by letting in so many migrants the GCC countries do more (per head) to reduce global income inequality than richer OECD countries, which send loads of aid but keep their borders relatively closed. Were the OECD countries to open their borders to the same extent as Kuwait, which has two migrants for every native, global inequality could be cut by a quarter. That is politically impossible in the West. So why is it possible in the Gulf? + +Mr Weyl argues that it is the kafala system itself that makes Gulf citizens tolerate ultra-high levels of immigration. Precisely because it grants migrants so few rights—they can never become citizens, nor share in the generous local welfare state—Gulf nationals do not feel threatened by them. On the contrary, they like having other people to mop their floors and sweat on their building sites. + +Some Gulf states are trying to curb the most coercive elements of the system. Bahrain and the UAE have scrapped exit visas and allowed migrants to switch jobs. The Saudis are trying to crack down on exploitative middle men. Human Rights Watch, a watchdog, urges construction firms to treat workers better than the law requires. But the basic deal that Gulf states offer to migrants—you can work, but you will never be one of us—remains unchanged. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21706524-because-migrants-gulf-have-few-rights-locals-let-more-them-open/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Extremism in Jordan + +Muzzling mosques + +Jordan’s novel approach to Islamist militancy + +Sep 10th 2016 | BAQA’A CAMP | From the print edition + + + +WHEN is a mosque not a mosque? In Jordan on a Friday, it turns out. To stop militant preachers ascending the minbar (pulpit), Jordan’s leaders have come up with a novel approach. Each week, ahead of the main day of prayer, they temporarily order the closure of unlicensed mosques—over a third of the 6,000-odd in the country. Other measures being phased in require preachers to recite only approved sermons sent to them by mobile phone, and insist that only registered and government-trained imams may preach. “The Friday sermon is potentially a dangerous media channel,” explains the kingdom’s religious-affairs minister, Wael Arabiyat. + +The government has reason to be fearful; support for jihadist groups is widespread once you get outside the plush parts of western Amman. In the covered market of Baqa’a, the largest and grimmest of Jordan’s ten Palestinian refugee camps, shoppers exchange news of Islamic State’s latest doings when getting their groceries. From Othman bin Affan mosque, a preacher condemns rulers for obstructing the religious obligation of jihad and the defence of the Sunni realm—whether against Israel or Syria’s Bashar al-Assad. “The jihad begins from here,” says one al-Qaeda supporter over mint tea in an elegant Amman café. “Half a million Jordanians are convinced of our cause.” Some 4,000 Jordanians, he says, have left for the Syrian front. Per head, says the Soufan Group, a New York-based consultancy, more people from Jordan have joined Islamic State’s fighters than from any other Arab state bar Tunisia. + +The loss of their Palestinian, Syrian or Iraqi homelands makes Jordan’s refugees ready converts. But if the routes to foreign jihad are closed off, warns an IS sympathiser in Baqa’a, they may honour the obligation in Jordan instead. In June, a Baqa’a refugee walked into the fortress-like local intelligence headquarters and shot five of its agents dead. “Most of us cheered,” says a resident, urging his neighbours to stage a wake for the assassin’s execution. “There’s a war within Islam,” says an official. “If we don’t fix the problem within Islam, it’s not America or Britain who will go first.” Jordan, he means, will be the first victim. + +In the past the authorities opted for negotiation. Two years ago they released two leading jihadists, Abu Muhammad al-Maqdisi and Abu Qatada al-Filastini, in an attempt to co-opt their followers into their own war on Islamic State. More recently, though, they have gone for round-ups. Hundreds of cells have been broken up. And so far this year 1,100 Jordanians have been hauled before military courts on terrorism charges. Amjad Qourshah, a university lecturer in sharia studies who once taught in Britain, is spending his third month in detention for a video he made two years ago questioning Jordan’s security alliance with America and Israel. From his mosque in southern Amman, where he preaches weekly to 3,000 followers, Sheikh Muhammad al-Wahhash has been summoned to the religious-affairs ministry for “a final warning”. He says he is under suspicion for denouncing government policy on Palestine. + +Some think better public services would help. Thanks to the priorities of private benefactors and Gulf donors, many villages with unpaved roads and ramshackle schools sport multiple mosques. Others wonder whether the security measures are the right tools. “People say you’re attacking Islam,” says Bassam al-Omoush, a former Jordanian minister who teaches at Jordan University’s Sharia College and insists on delivering his own, unapproved, sermons. “Shut down nightclubs, not mosques.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21706521-jordans-novel-approach-islamist-militancy-muzzling-mosques/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Driving in Johannesburg + +Bad robots + +A green light for thieves in South Africa’s biggest city. Literally + +Sep 10th 2016 | JOHANNESBURG | From the print edition + + + +IN 1927 an industrialist named Isidore Schlesinger installed Johannesburg’s first traffic light. It drew crowds of onlookers, but was short-lived: an errant motorist soon knocked it down. Today the city’s “robots” (as they are called in South African English) are still unreliable, especially when it rains. Traffic updates on talk radio include a rundown on which robots are out. Drivers must get used to dodging other cars at malfunctioning eight-lane intersections. + +The Johannesburg Roads Agency (JRA), which manages the robots, blames ageing infrastructure and technology that is easily damaged by summer thunderstorms. Frequent power cuts don’t help. “Pole-overs” (vehicles crashing into traffic lights) are a big headache, too. On average, Johannesburg drivers damage 81 robots a month. + +But the biggest problem is robot robbers. Like power lines and manhole covers, traffic lights attract thieves who sell the metal for scrap. Some will cut down the entire pole to get a bit of copper wire. In one theft, caught on video, a man hacks away at a robot’s cables with a pickaxe while two others stand guard, scrambling into the bushes whenever a car goes by. Damage to robots has cost the city 12.7m rand ($900,000) in the past three years, says the JRA. + +To deter thieves, some metal parts have been replaced with nylon and plastic. Cables are being made with thinner (and so less valuable) copper wire. The 70 most frequently vandalised traffic lights have been fitted with CCTV cameras and vibration detection, “so we can tell when someone’s trying to cut down a pole”, explains Darryl Thomas, head of the JRA’s department for mobility and freight. But technology can also attract thieves. A remote monitoring system, using SIM cards, proved a disaster. Within months, thieves had stripped them all and run up huge phone bills using them. Also stolen, in 2013, were 200 back-up batteries installed in robots to keep them on during power cuts. + +The city is taking drastic action. New legislation, which came into effect in June, makes infrastructure theft a major crime. In some cases jail sentences can be as long as for murder. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21706520-green-light-thieves-south-africas-biggest-city-literally-bad-robots/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Somalia + +Most-failed state + +Twenty-five years of chaos in the Horn of Africa + +Sep 10th 2016 | MOGADISHU | From the print edition + +Wish you were here? + +AT THE Coconut Beach Hotel, which opened last month, new guests are served coconut smoothies when they arrive. The rooms do indeed have a view of the ocean. What betrays where the hotel is, in Mogadishu, the war-torn capital of Somalia, are the two dozen guards in football shirts loafing around the doors clutching AK-47s. At the top of the stairs sits a machine-gun nest pointing at the gate. Aisha Abdulle Hassan, the proprietor, explains that she has invested $2m in the business. She is confident that it will soon be highly profitable. But she is taking no chances: “Our security is as tight as we could make it,” she says. “Only Allah knows if it is enough.” + +Hotels are booming in Mogadishu. This is not thanks to tourists—only the most daring or idiotic would take a holiday in Somalia. Rather, the demand comes from power-brokers, who meet in them to discuss how to create a new government. This year Somalia is meant to hold elections, as part of the UN-led reconstruction effort. But even as peacemakers blather inside air-conditioned conference rooms, battle continues to rage outside. Hotels have become a target for militants. On August 30th a car bomb blew up outside one in Mogadishu, killing at least 15 people. After a quarter-century of costly foreign intervention, Somalia is still Africa’s most-failed state. + +At no point since 1991, when the despot Siad Barre was overthrown by rebels, have Somalis had a government worthy of the name. Officials from Mogadishu cannot safely visit much of the country, let alone govern it (even excluding Somaliland, a region in the north that has been de facto independent since 1991). War, famine and terrorism have prompted legions of Somalis to flee. A sixth of them—2m out of a population of perhaps 12m—now live abroad. For those who remain, life expectancy is just 55 years, and barely a third can read. + +Since 2007 Somalia has been occupied by armies from neighbouring countries, who—beginning with the Ethiopians in 2006—invaded to eject an incipient Islamist government in Mogadishu. The result was the creation of a Western-backed Somali transitional government, and a new enemy, al-Shabab, a splinter group from the Islamists. Al-Shabab immediately resorted to guerrilla war. In an effort to keep the jihadists at bay, Western governments pay for AMISOM, a force of 22,000 foreign soldiers operating in Somalia under a joint UN and African Union mandate. + +Today, the Islamists control little in the way of towns. But Somalia remains deeply insecure. In Mogadishu, fearing kidnap or worse, foreigners generally confine themselves to the international airport—a sprawling compound protected by thick fortifications and Ugandan soldiers. Travel outside means taking a risk in a taxi or enlisting an armoured car. In other parts of the country, especially in the south, AMISOM troops live in fortified camps with thin supply lines, while al-Shabab wander into villages and operate as they please. + +That is not to say there are no successes. At Villa Somalia, the bullet-pocked Italian-built Art Deco presidential palace, Mohamed Sheikh Hassan Hamud, the police commissioner, says that things have got better. A few years ago, at least one police officer was dying every day, he says. Today, it is five to ten a month. But his officers still cannot do much beyond escorting VIPs and guarding government buildings. Asked what he does to protect businesses from attacks, Mr Hamud answers: “We cannot protect them. They must have their own security.” That strengthens al-Shabab, because most firms choose to pay off the militants rather than risk attack. + +Somalia has a federal system, which means in practice that outside the capital the central government controls almost nothing. It collects just $200m in taxes each year, UN officials reckon, mostly from the port in Mogadishu, and spends almost all of it on its MPs and the presidency. Elsewhere Somali statelets operate more or less independently—respecting Mogadishu in theory only. Some, such as Puntland in the north, are fairly well organised, with police and security forces. Others are little more than warlords’ fiefs. + +The Somali National Army (SNA) is meant to keep people safe and hold the country together. Most independent observers agree with one UN official, who jokes that it “doesn’t actually exist”, at least as a cohesive force. British instructors brought in to train SNA soldiers have ended up training AMISOM instead. SNA commanders cannot say who or where their troops are, let alone what they are doing. There are soldiers, but they often desert and mostly owe their loyalty to clan leaders, not to Mogadishu. + +This sets the context for the elections due this year. With no money and no army, the government can exert influence only with the consent of regional leaders. This is why elections involving people from all parts of the country and all Somalia’s major clans are vital. Somalia’s president, Hassan Sheik Mohamud, was selected in 2011 by MPs who in turn were selected by a group of around 135 clan elders. But though his term comes to an end on September 10th, negotiations about the structure of new elections, due by the end of the year, have dragged on endlessly. + +Even if elections pass off well, it is unclear that they will deliver much legitimacy. One problem is that the entire process is dominated by diaspora Somalis. Some 55% of MPs have foreign passports, and while Mr Mohamud himself has never lived abroad, almost all of his advisers are either British or American Somalis. They are not always popular. For the moment, elections are the only hope, as donors’ patience is wearing thin. + +In February the EU, AMISOM’s main funder, cut 20% from its budget for peacekeeping in Somalia. That followed a series of attacks on AMISOM troops which have led contributors to wonder whether it is worth it. Kenyan troops have all but stopped fighting this year. Uganda had planned to pull its troops out by the end of 2017, though President Yoweri Museveni is now considering keeping them in place. + +A full withdrawal is unlikely. Compared with a decade ago, Somalia’s problems are more contained. Piracy has all but stopped; al-Shabab are a guerrilla army, but not a conventional one. People are generally not starving. All that would be undone quickly if the foreign soldiers left. But the real prize—a Somalia with a functioning government and safe streets—seems as distant as ever. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21706522-twenty-five-years-chaos-horn-africa-most-failed-state/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Turkey’s Gulen purges: A conspiracy so immense + +Spain’s coalition talks: Ageing caretakers + +Ireland and Europe: Upsetting the Apple cart + +Homeopathy in Germany: Not a molecule of sense + +Donald Trump and the Russians: Brazen meddling + +Russian social media: Tweetaganda + +Charlemagne: Unshrinking the continent + + + + + +Articles Sections Next + +Turkey’s Gulen purges + +A conspiracy so immense + +Turkey’s post-coup crackdown has become a witch-hunt + +Sep 10th 2016 | ISTANBUL | From the print edition + + + +ISTAR GOZAYDIN, a professor at Gediz University in Izmir, felt the sting of Turkey’s purges earlier than most. She was fired days after July’s failed coup, not by the government but by her own university. She had tweeted articles opposing reinstating the death penalty and condemning mob violence. “Perhaps [school officials] thought they could escape intervention by suspending me,” she says. They could not. Two days later Gediz and 14 other universities were shut down over alleged links to the Gulen community, or cemaat, a shadowy Islamic movement that was in part responsible for the coup. + +Most foreign analysts think an alliance of officers from different backgrounds took part in the plot to topple Turkey’s president, Recep Tayyip Erdogan. But the government blames the cemaat exclusively, and most Turks agree. The purge that Mr Erdogan has launched against the group and its sympathisers has swept up over 100,000 people. Last week 50,000 civil servants were dismissed by decree. Soldiers, journalists, academics, airline pilots and businessmen have all been targeted. + +Increasingly the crackdown resembles a witch-hunt, far bigger than Senator Joe McCarthy’s purge of suspected communists in America in the 1950s. Its latest casualties include a pop singer arrested for publishing columns in a Gulenist newspaper and a dancer sacked by the national ballet for allegedly selling his home through a Gulenist bank (which he denies). The authorities have shut thousands of schools, businesses and foundations. According to one minister, the state has seized more than $4 billion-worth of Gulenist assets. + +Meanwhile the purge is spreading to Turkey’s conflict with its Kurdish minority, which over the past year has led to heavy fighting in the country’s south-east. The government now plans to suspend 14,000 teachers over alleged links to the outlawed Kurdistan Workers’ Party (PKK). Once a witch-hunt starts, it is hard to stop. + +A simple country preacher + +The rise of the cemaat has its roots in the long struggle between the official secularism established by Kemal Ataturk, Turkey’s founding father, and Islam. The imam who founded the movement, Fethullah Gulen, was born in 1941 in eastern Turkey. By the early 1970s poor students were flocking to his impassioned sermons, infused with Sufism and Turkish nationalism. His wealthier acolytes set up a network of foundations, charities, newspapers and schools which pumped a stream of graduates (almost all men) into Turkish business and government, testing the boundaries of Kemalism’s anti-Islamist dogma. + +In 1999, two years after the army ousted an Islamist prime minister, Mr Gulen wisely left for America. Soon thereafter, he was charged in absentia with subverting Turkey’s secular order. A videotape showed him urging followers to seize control of the state. “You must move within the arteries of the system, without anyone noticing your existence,” Mr Gulen said on the tape. “You must wait until you have all the state power.” + +The victory of Mr Erdogan’s Islamist Justice and Development (AK) party in the elections of 2002 cleared the way for Mr Gulen’s rehabilitation. In 2006 a Turkish court acquitted him. Mr Gulen, by now ensconced in a complex in rural Pennsylvania, became a spokesman for enlightened Islam, preaching interfaith dialogue and the value of science. Teachers and volunteers linked to the cemaat fanned out across the globe, blazing a path for Turkish contractors and diplomats. (Turkey had 12 embassies in Africa in 2009; today it boasts 39. Trade with the continent has tripled since 2003.) Under AK, Gulen sympathisers snapped up government jobs by the thousands, replacing the secular old guard and establishing what Turks now call a “parallel state”. + +They then began to hound their opponents. Starting in 2007, Gulenist prosecutors orchestrated show trials that put hundreds of army officers, thousands of Kurdish activists, several journalists and the chairman of a football club behind bars. Gulenist newspapers cheered the arrests. In a recent interview with a Turkish daily, Ilker Basbug, a former army chief arrested in 2012, said he had warned Mr Erdogan about the cemaat. “I told him, we are facing this threat today, you will face it tomorrow,” he said. Mr Erdogan turned on the movement only after its bureaucrats turned against him in 2012, by trying to arrest his intelligence chief. A year later, he accused Gulenists of choreographing a corruption scandal involving AK politicians. The coup may have been prompted by government plans to purge Gulenists from the army. + +In the months since, Mr Erdogan’s government has been rewriting history by pinning its mistakes on Gulenists in its midst. It now blames the show trials, the collapse of peace talks with the PKK in 2015, and the army’s long reluctance to intervene against Islamic State militants on the cemaat. With the government exercising emergency powers, there is virtually nothing to check Mr Erdogan’s crackdown. The new interior minister compares the Gulenists to a plague, and has vowed to fight them “until not a single member is left”. + +The paranoia is spilling across borders, too. In the Netherlands, schools linked to the movement have hired security guards after parents complained of threats against them and their children. In Bulgaria, the government deported an alleged Gulen financier to Turkey over the objections of its own courts. Turkey’s state-run news agency, Anadolu, is churning out country-by-country blacklists of entities and people it claims are linked to the cemaat. A Turkish prosecutor recently accused the Vatican of appointing Mr Gulen as a “secret cardinal” in the 1990s. + +Secular Turks have no love for the Gulenists, who targeted them in their own purges in the 2000s. They have supported the government’s crusade against the cemaat, most visibly at a national unity rally in August in Yenikapi, a square in Istanbul. But as people with no real links to the Gulenists are purged, other opponents of AK, and even some of the party’s supporters, are starting to fear they may be next. “This is not what we understood as [the spirit of] Yenikapi,” said Kemal Kilicdaroglu, the leader of the main opposition party, the CHP, on September 3rd. That misunderstanding may cost Turkey dearly. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21706536-turkeys-post-coup-crackdown-has-become-witch-hunt-conspiracy-so-immense/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Spain’s coalition talks + +Ageing caretakers + +With a government still out of reach, a third election looms + +Sep 10th 2016 | MADRID | From the print edition + +Somebody has to run this place + +BACK in June, after Spain’s second indecisive election in six months, many people expected Mariano Rajoy (pictured), the prime minister, to form a new government quickly. Although his conservative People’s Party (PP) did not win a majority, it remained the largest party, with 137 of the 350 seats in parliament, and was the only one to increase its share of the vote. But summer has come and gone and Spain’s political stalemate is no closer to ending. + +In two parliamentary votes, on August 30th and September 2nd, Mr Rajoy fell short of securing a mandate, with 170 votes in favour but 180 against. These votes started the clock for a third election, once seen as unthinkable. If no one can secure a majority by the end of October, parliament will be dissolved and Spaniards will face a Christmas election. + +For this, most commentators put the blame squarely on Pedro Sánchez, the leader of the opposition Socialists. His 85 deputies hold the balance of power. But he refuses to allow enough of them to abstain to give Mr Rajoy his mandate. He accuses Mr Rajoy and the PP of betraying Spaniards’ trust and of burdening the country with austerity and corruption. + +Mr Rajoy argues that in 2011-15 his government took the tough measures required to return Spain’s economy to growth. Year-on-year GDP growth was 3.1% in the second quarter; for the European Union as a whole it was just 1.8%. Last month Mr Rajoy struck an accord with Ciudadanos, a new liberal party, to crack down further on corruption, reform the judiciary and restore social spending. + +So what now? The PP has brushed off suggestions that Mr Rajoy might step down in favour of another of its leaders. The pressure will remain firmly on Mr Sánchez to bend. He hinted that he might seek to form a government himself, with Podemos, a new far-left party. But he failed to do that after the election in December, and the numbers now do not add up. + +The party leaders are still struggling to adapt to a new political world, in which a two-party system has given way to a fragmented parliament, while Catalan and some Basque nationalists are set on independence rather than deals in Madrid. The Socialists are split. Several of the party’s regional leaders support abstention; others favour continued opposition. Mr Sánchez’s calculation seems to be that the Socialists would gain in a third election at the expense of Podemos, which may have peaked. Several corruption trials involving former PP officials are due to start in the autumn, which may hurt Mr Rajoy. + +This is a risky course for the Socialists. Mr Rajoy rightly charges that Mr Sánchez’s blocking of a government “carries a steep bill which all Spaniards will have to pay”. Spain has already marginalised itself from the EU’s discussions about its post-Brexit future. Without a government, it will be unable to approve a budget for 2017 or meet promises to the EU to cut its fiscal deficit from 5.1% of GDP in 2015 to 3.1% in 2017. + +Some Socialists are muttering about forcing Mr Sánchez to shift his stance or go. They have the increasingly shrill support of El País, a newspaper that generally backs the party. The pressure will mount if the Socialists do poorly in regional elections in the Basque Country and Galicia on September 25th. That might induce them to let Mr Rajoy form a government before the late-October deadline. But the chance of a third election is rising steadily. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21706439-government-still-out-reach-third-election-looms-ageing-caretakers/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Ireland and Europe + +Upsetting the Apple cart + +Europe’s most Europhile country is on the warpath with Brussels over tax + +Sep 10th 2016 | From the print edition + + + +FEW of Europe’s economies have had a more miserable decade than Ireland. Since being hit hard by the financial crisis, it has endured nearly ten years of austerity. But on August 30th there was what, at first, looked like good news: the European Commission ordered Ireland to collect €13 billion ($14.7 billion), a sum almost equal to 6% of annual GDP, in unpaid taxes from Apple, an American tech giant. + +Yet instead of dreaming of ways to spend the money, most senior Irish politicians were apoplectic with rage when the ruling was debated in parliament on September 7th. “We will fight it at home and abroad and in the courts,” thundered Ireland’s finance minister. “This is not a commission finding that stands by a small country,” said the taoiseach (prime minister). “It cannot be allowed to stand.” + +Such anti-Brussels views have suddenly become surprisingly common across the Irish establishment. Fianna Fail and Labour unanimously supported the government, led by Fine Gael, in its decision to appeal. “They should write a letter to Europe and tell them to fuck off,” advised Michael O’Leary, the forthright boss of Ryanair, Ireland’s largest indigenous firm. + +Mainstream parties appear to be in line with the broader mood. A poll published by Amarach Research, a consultancy, on September 5th found just 24% of the Irish public opposed appealing against the commission’s ruling. Those who want to keep the money are mainly Eurosceptics, including Sinn Fein, a nationalist party. They do so more to bash the political mainstream than for any newfound love for the EU, says Brian Hayes, a Fine Gael MEP. + +The Irish see little point in dunning Apple for back taxes. The company did pay shockingly little on its profits—just 0.005% in 2014. Yet were Ireland to collect the €13 billion, the EU ruling allows other countries to claim a share if they think Apple’s activities took place on their turf. And the company might well pack up and leave. + +Many believe that the EU is using the ruling as a way to attack Ireland’s low corporate tax rate of 12.5%. This regime is important for Ireland’s economic model, says Dan O’Brien, the chief economist of the Institute of International and European Affairs, a Dublin think-tank. Alongside EU membership and friendly business laws, it is how Ireland attracted the foreign cash that transformed a country of poor farmers into a wealthy knowledge economy. Multinationals lured by the low rate provide a fifth of private-sector jobs. They also produce 14% of tax revenues, well above the OECD average of 8%. + +A shaky economy urges caution against moves that alienate foreign investors. On September 6th the governor of the central bank said that Ireland is “especially exposed” to “international shocks”. GDP grew by a record 26% in 2015, but that was inflated by multinationals moving in. The domestic economy is expanding at only around 3% a year. + +The appeal process will probably take years. Irish politicians are likely to pursue it through the courts to the bitter end. “There’s more at stake for them now than there was during the bail-out negotiations of 2010,” Mr O’Brien says. France and Germany failed to force Ireland to increase its 12.5% rate back then, but their leaders openly say that a common European rate is still their goal. And after Brexit, Ireland’s only big ally in the battle against tax harmonisation, Britain, will disappear from the table. + +The Irish have consistently been among the EU’s most Europhile members in polls. But a bitter court battle over Apple’s taxes will sour relations between Dublin and Brussels for years. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21706549-europes-most-europhile-country-warpath-brussels-over-tax-upsetting-apple-cart/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Homeopathy in Germany + +Not a molecule of sense + +A push to disabuse Germans of a homegrown form of quackery + +Sep 10th 2016 | BERLIN | From the print edition + +Not as bad as leeches + +IT MAY not be as ancient as acupuncture, but homeopathy is the closest thing Germany has to a native alternative-medicine tradition. Practitioners line the high street. Upper-class Germans swear by it. Unusually, Germany gives homeopathy a privileged legal status. Whereas other medicines must meet scientific criteria, homeopathic remedies need not, and health insurers are explicitly allowed to reimburse for their use. This bothers sceptics such as Norbert Schmacke, a professor of medicine and the author of a book explaining why homeopathy is nonsense. “If you believe that water has memory,” as homeopaths do, you “might as well also believe in unicorns”, he says. + +Such objections have been raised for much of the two centuries since Samuel Hahnemann, a Saxon doctor, invented homeopathy. He believed that “like cures like”—ie, that tiny doses of a toxin can heal the patient. And he did mean tiny: homeopaths dilute their chemicals into water or sugar to concentrations of 1 part to billions or even trillions. Usually not a single molecule remains in the preparation. Yet believers claim that this dilution makes the remedies stronger, provided that practitioners use the proper shaking technique. + +Homeopathy’s renaissance started in the 1970s, when it was rediscovered by West Germany’s glitterati, including Veronica Carstens, the wife of a former German president. A big lobby sprung up. As homeopathy spread internationally, so did the controversies. Australia’s medical-research council last year came out firmly against the technique; Britain and Switzerland are still debating. + +Nobody denies that some people are sincerely convinced they benefit from homeopathy. This is thanks to the placebo effect—the more one believes, the bigger the effect. But no respectable scientific study has ever shown anything beyond that. That is why a group of German professors and doctors, including Mr Schmacke, met in Freiburg earlier this year to issue a declaration. Homeopathy is “a stubbornly surviving belief system”, they argue, which “cannot explain itself” and relies on “self-deception” by patients and therapists. + +At a conference in Bremen in May, the homeopathy lobby struck back, publishing a meta-analysis of research that supposedly proves homeopathy works. It contains old studies already debunked, the sceptics pointed out. As that fight rages on, politicians are becoming bolder. In August Josef Hecken, the chairman of the committee that governs what public health insurance can cover, said he favours banning homeopathy from the list. None of this will sway the faithful. “I’m not worried because I know that it works,” says Cornelia Bajic, the homeopathy lobby’s leader. She trusts her experience as a practitioner, she says, as well as the hordes of people showing up for treatment. In other words, if people think it works, it must work. Some might term such reasoning “superstition”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21706550-push-disabuse-germans-homegrown-form-quackery-not-molecule-sense/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Donald Trump and the Russians + +Brazen meddling + +The Kremlin prefers a Trump victory, but its feelings are mixed + +Sep 10th 2016 | MOSCOW | From the print edition + +Beautiful, I’m telling you + +THE plan was, as Donald Trump might put it, “yuuuge”: a statue of Christopher Columbus taller than the Statue of Liberty, donated by the Russian government, to be built on the banks of New York’s Hudson river. “It’s got $40m-worth of bronze in it,” Mr Trump bragged of the design by Zurab Tsereteli, a Moscow-based monumental sculptor, in 1997. But the project never came to fruition. The statue found a home only this year, in Puerto Rico (see picture). + +Now Russia is hoping Mr Trump’s run at the American presidency will prove more successful, and the Kremlin appears to be trying to give him a boost. American officials believe Russia hacked the e-mails from the Democratic National Committee (DNC) that appeared in July on WikiLeaks. The Washington Post reports that American spooks are investigating “a broad covert Russian operation” to sow distrust in the elections. Michael Morell, a former deputy director of the CIA, suggested that Mr Trump had become an “unwitting agent of the Russian Federation”. + +That may be taking things a bit far. Moscow clearly prefers Mr Trump, largely because it hates Hillary Clinton’s interventionist foreign-policy views. But many Russian officials are worried by the disruptive potential of a Trump presidency. “If he ends up in the White House, does it mean he’ll actually begin to fulfil all his chaotic promises?” asks Valery Garbuzov, head of the Russian Academy of Science’s Institute for the USA and Canada. + +Vladimir Putin is clearly pleased with Mr Trump’s praise for him. (“He’s been a leader, far more than our president,” Mr Trump said this week.) And the Kremlin is thrilled by Mr Trump’s statements deriding NATO, applauding Brexit, and suggesting that America might not defend allies threatened by Russia. “His views on America’s role in the world completely align with the hopes that Russia has always had,” says Fyodor Lukyanov, a Russian foreign-policy expert. + +Stylistically, too, Mr Trump is Mr Putin’s type: a man ready to make a deal. Like Silvio Berlusconi, the former Italian leader and pal of Mr Putin, Mr Trump seems unlikely to put politically correct talk of Western values ahead of mutual interests. That he may harm the Western alliance in the process is a welcome bonus. “Trump will smash America as we know it, we’ve got nothing to lose,” writes Konstantin Rykov, a former Duma deputy. + +Mr Putin’s circle has also been encouraged by Mr Trump’s use of advisers sympathetic to Moscow. His former campaign chief, Paul Manafort, previously worked for Ukraine’s ex-president, Viktor Yanukovych, a Kremlin ally. Carter Page, a foreign-policy adviser to the Trump campaign, made a speech in Moscow this summer denouncing America’s “hypocritical focus on… democratisation”. Late last year another adviser, General Michael Flynn, a former head of the Defence Intelligence Agency, popped up in Moscow at an anniversary dinner for RT, the Kremlin-backed broadcaster. He spent part of the evening seated next to Mr Putin. + +Yet, as with many of Mr Trump’s proposals, it is unclear how committed he is to his pronouncements on Russia policy, if at all. There is no evidence that his campaign has received Russian money. Mr Trump’s business interests in Russia amount to little, though not for want of trying: his multiple attempts to crack the Moscow property market, beginning with a trip to the Soviet Union in 1987, all fell through. If anything, this suggests a lack of well-placed Kremlin connections rather than the opposite. His most successful venture involved bringing the Miss Universe pageant to Moscow in 2013. While Mr Trump hoped Mr Putin would attend—tweeting “Will he become my new best friend?”—the Russian president never made it. + +Foreign-policy professionals in Moscow understand the risks of Mr Trump’s unpredictability. “If Trump wins, it’s an equation where everything is unknown. There, x times y equals z,” says Konstantin Kosachev, head of the Russian senate’s foreign-affairs committee. While Mrs Clinton is seen as fiercely anti-Russian, she is a familiar figure, and even commands grudging respect. “As a rule, it is easier to deal with experienced professionals,” wrote Igor Ivanov, a former foreign minister, in a recent column in Rossiskaya Gazyeta, a government newspaper. + +Regardless of who takes the White House, Russia’s presence at the centre of American electoral politics is celebrated in Moscow. While Russian officials deny allegations of meddling, the accusations also reinforce the sense of Mr Putin’s power. The focus on Russia in the American campaign is “a true acknowledgment that Russia has returned to the international arena as a real factor in world politics”, says Mr Kosachev. That, perhaps even more than Mr Trump’s victory, is what the Kremlin truly craves. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21706541-kremlin-prefers-trump-victory-its-feelings-are-mixed-brazen-meddling/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Russian social media + +Tweetaganda + +Sep 10th 2016 | From the print edition + + + +RT, the pro-Kremlin TV network, spits out a tweet every two minutes, many of them shared hundreds of times. Are they shared because human beings find them witty and persuasive? Perhaps not. An analysis of over 33,000 tweets from three news outlets shows that RT gets its retweets from relatively few followers. A similar pattern holds for who “likes” its posts on Facebook. Of the 50 accounts that most often retweet RT, 16 have such a regular pattern that they are probably “bots”—ie, computer programs—or chronic insomniacs. Many of the rest are extremely fond of Donald Trump. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21706534-tweetaganda/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Unshrinking the continent + +Europeans see themselves as mouse-sized. They need to man up + +Sep 10th 2016 | From the print edition + + + +LIKE all good B-movies, “The Incredible Shrinking Man” is deeper than it seems. After his body’s growth is sent into reverse by a wayward encounter with a radioactive cloud (yes, this is 1957), Scott Carey, the film’s hero, finds his relationships destroyed and his self-esteem dripping away. Richard Matheson, the screenwriter, said it was a “metaphor for how man’s place in the world was diminishing”. Today he might say the same for the old continent. Beleaguered by crisis and shorn of confidence, Europe seems to be shrinking by the day. + +It might seem an odd time for such a claim. This week came news that the euro zone grew by 1.6% in the second quarter compared with a year earlier, and the European Union, lifted by a pre-referendum Britain, by 1.8%. This, as Eurocrats wasted no time pointing out, was a good clip faster than the United States. In most countries budget deficits are under control, and after years of austerity the euro zone is at last enjoying the mildest of fiscal expansions. Outside Italy its banks are in better shape. A pan-EU investment scheme launched, to much scepticism, by the European Commission last year is starting to show results. + +Yet draw the camera back and the picture looks gloomier. The American economy dug itself out of its hole long ago. But according to calculations by the Peterson Institute for International Economics, an American think-tank, output in 11 EU countries has yet to recover to 2007 levels. Large economies, like France and particularly Italy, are struggling. The IMF has downgraded its forecasts for the euro zone, warning of the risks posed by Brexit. Unemployment remains over 10%, twice the American rate. And there is precious little thinking about long-term challenges like ageing, infrastructure or education. + +Towards the end of the film, Carey, now reduced to a few inches, laments that creatures like domestic cats and spiders have become enemies that seem “immortal”. Today in Europe unexpected changes, from genetically modified food to Uber, are too often perceived first as threats. “Even the slightest headwind seems to be framed as the beginning of the next big crisis,” said Jeroen Dijsselbloem, head of the Eurogroup of finance ministers, this week. After battling crisis for so long, Europeans now see it everywhere. + +Take migration. The refugee deal the EU signed with Turkey in March has brought numbers under control. The agreement’s deeper promise was to resettle refugees to Europe in an orderly fashion. Yet the EU has lost interest in that pledge, and remains entirely focused on preventing another migrant surge. In Germany politicians are revisiting last year’s arguments over open borders rather than grappling with the challenges of integration. The upcoming presidential campaign in France looks set to be dominated by inward-looking concerns about identity, security and burkinis. In most of the depopulating countries of eastern Europe it is impossible even to begin a serious debate about migration, including the legal sort. And Europeans conflate migrants with their obsessive fear of terrorism, which, though a real threat, is less prevalent than it was in the 1970s. + +Or take trade. TTIP, a proposed trade-and-investment agreement with the United States, is on life support after taking a beating from politicians across Europe. A “next-generation” deal concentrating on regulations and standards rather than tariffs was always going to be a tough sell. But rather than seek to shape negotiations with their most important ally, many Europeans now prefer simply to write the thing off. Even a trade deal with Canada, concluded two years ago and now awaiting ratification in Europe’s parliaments, may fall foul of opposition in Germany and Austria. Bashing international trade—by one account responsible for one in seven jobs in the EU—has become a favoured sport for European populists of both left and right. + +Like Carey, what Europe desperately needs is growth. Yet Europeans train their sights on the sources of growth and shoot them down, one by one. Easing digital trade within the EU might provide a boost. Yet the highlight of the European Commission’s much-ballyhooed proposals to deepen the digital single market may be a tired plan to help publishers charge search engines for linking to their stories. Tackling labour- and product-market rigidities could lift euro-zone GDP by 6% over the next decade, according to the OECD, a club of mainly rich countries. But politicians are too scared; instead they blame stagnation on the budget limits imposed by Brussels. It is not hard to see why. This summer a mild labour reform in France triggered weeks of protests. + +Hormones needed + +Slow growth, small declines in unemployment and an absence of crisis have started to feel like grand achievements. The heavy lifting has been done by the European Central Bank, which has bought €1 trillion ($1.1 trillion) of sovereign debt during 18 months of quantitative easing. That monetary stimulus lets leaders postpone reform in sclerotic economies like Italy and Portugal. Spain, where youth unemployment has been over 40% since 2010, is held up as a success. From time to time a powerless European dignitary will proclaim such figures a disgrace. A think-tank will lament European inaction. And then everyone moves on. + +It is not that Europe’s crises are imaginary. From Russia to refugees to Brexit, they are real enough. Polls show that European voters worry more about immigration and terrorism than about economic insecurity, and their leaders must respond. But they should not allow fear to cloud their judgment. Europe is not as small and helpless as it seems to think it is. With 7% of the world’s population, the EU accounts for 22% of its economic output. It still wields considerable soft power. At the end of “The Incredible Shrinking Man”, Carey comforts himself with the thought that however much his body may diminish, he will at least retain his own little place within the universe. With luck, Europe can muster a little more ambition. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21706551-europeans-see-themselves-mouse-sized-they-need-man-up-unshrinking-continent/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Britain and the European Union: So what will Brexit really mean? + +The National Health Service: Accident and emergency + +Dockyards: Sea change + +Chinese schools: Babes among dragons + +Cricket’s crunch: Sticky wicket + +Hate crime: Bearing the brunt + + + + + +Articles Sections Next + +Britain and the European Union + +So what will Brexit really mean? + +Theresa May’s ministers are carefully avoiding specific answers. But she is systematically disowning many of the Brexiteers’ promises + +Sep 10th 2016 | From the print edition + + + +SOME 77 days have passed since Britain voted on June 23rd to leave the European Union. Yet this period has been strangely reminiscent of 77 years ago, after Neville Chamberlain declared war on Nazi Germany: a phoney war. Theresa May, the prime minister, has created a new Department for Exiting the EU and put three leading Brexiteers (pictured) in charge of the process. But little else has happened. Article 50 of the EU treaty, which would kick off negotiations, has not been invoked. And Mrs May’s mantra, “Brexit means Brexit”, has become a tired cliché. + +David Davis, secretary of state for the new department, had another go in Parliament on September 5th. Brexit, he explained helpfully, meant leaving the EU. He added that this implied taking back control of borders, laws and taxpayers’ money. He brimmed with cheer about the opportunities it would bring. Yet when asked specific questions—Would Britain quit the EU’s single market? What migration controls would it seek? Would it stay in Europol? When would negotiations start?—he gave only vague answers. + +That may be quite sensible, for a reason he also offered: that it is more important to get Brexit right than to do it quickly. His department is a work in progress. He has 180 officials and a further 120 in Brussels, but he needs more. As he spoke, he was flanked by his two Brexiteer colleagues, Boris Johnson as foreign secretary and Liam Fox at the Department for International Trade. The three men have been having the usual turf wars and squabbles over exactly what Brexit should entail. + +Tellingly, two hints at answers emerged this week in Asia, not Westminster. In China for the G20 summit, Mrs May disavowed several pledges made by Brexiteers before the referendum. She said she was against an Australian-style “points” system for EU migrants (though mainly because it might let in too many, not too few). She refused to back Leavers’ promises to transfer saved EU budget payments to the National Health Service or scrap VAT on fuel bills. The not-so-subtle message was that, though the three Brexiteers may be nominally in charge, the real decisions will be taken by her and by Philip Hammond, her chancellor, both of them Remainers. + +A tip from Tokyo + +These two may have welcomed a second Asian intervention: the unusual publication by Japan’s foreign ministry of a Brexit paper. Japanese companies, it said, were huge employers in Britain, which took almost half of Japan’s investment in the EU last year. Most of that came because Britain is a gateway to Europe. The paper advised Mrs May to try to retain full access to the single market, to avoid customs controls on exports, to preserve the “passport” that allows banks based in London to trade across Europe and to let employers freely hire EU nationals. + +These interventions worry Tory Brexiteers, who fret that having won a famous victory in June, they could lose the war. Their fear is that, given the choice, Mrs May and Mr Hammond will lean more to staying in the single market than to taking back full control of migration, money and laws. Mr Davis said this week that having access to the single market was not the same as being a member of it, and added that giving up border control to secure membership was an “improbable” outcome. But he was slapped down when Mrs May’s spokeswoman said the remark was only Mr Davis’s personal opinion. He also talked of retaining as much of the status quo as possible, not least in areas like security and foreign-policy co-operation. + +The case for staying in the single market is simple: economists say this will minimise the economic damage from Brexit. A “hard” Brexit that involves leaving the single market without comprehensive free-trade deals with the EU and third countries would mean a bigger drop in investment and output. Brexiteers claim that many countries want free-trade deals and the economy is proving more robust than Remainers forecast. Michael Gove, a leading Brexiteer and former justice secretary, scoffed that soi-disant experts predicting economic doom had “oeuf on their face”. + +Yet Mrs May is less complacent, acknowledging that it will not be “plain sailing” for the economy. Domestic business and financial lobbies are pressing to stay in the single market. As for trade deals, although she won warm words at the G20 summit from Australia’s prime minister, Malcolm Turnbull, she was told firmly by Barack Obama and others that bilateral deals with Britain would not be a priority. The climate for free-trade deals is not propitious these days, and Mr Fox’s department is bereft of experienced trade negotiators. + +Mrs May has ruled out an early election and a second referendum. She refuses to provide a “running commentary” on her Brexit plans. And she insists she can invoke Article 50 without a parliamentary vote. Yet she is being urged by some to delay, since it would set a two-year deadline for Brexit that can be extended only by unanimity among EU leaders. In a thoughtful paper for the think-tank Open Europe, Andrew Tyrie, chairman of the Treasury committee, says the government should first decide what sort of Brexit it wants, adding that its leverage is greater before it pulls the trigger. He suggests waiting until the French election in the spring or even the German one in September. + +Yet Mrs May might not be allowed to wait by her own party, let alone by fellow EU leaders eager to get Brexit out of the way before the European elections in mid-2019. The phoney war may soon turn hotter. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21706470-theresa-mays-ministers-are-carefully-avoiding-specific-answers-she-systematically/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The National Health Service + +Accident and emergency + +The NHS is in a mess. But reformers believe that new models of health care, many pioneered in other countries, can fix it + +Sep 10th 2016 | BIRMINGHAM, CASTLE CARY AND SALFORD | From the print edition + + + +SALLY EVANS is 75 years old. She lives on her own in a bungalow in Castle Cary, a market town in Somerset, where she loves to knit and tend her garden. Both hobbies are harder than they were; Mrs Evans has a bad back and, like two-thirds of British adults, she is overweight. She also has diabetes, high cholesterol, chronic heart failure, high blood pressure, hyperthyroidism, incontinence and gout. All of which are made worse by a waning memory. + +Like health-care systems around the world, the National Health Service (NHS) is struggling to provide good care at low cost for patients such as Mrs Evans (not her real name). Its business model has not kept up with the changing burden of disease. For as more people enter and live longer in their dotage, demand increases for two costly types of care. The first is looking after the dying. About 25% of all hospital inpatient spending during a person’s lifetime occurs in the final three months. The second is caring for those with more than one chronic condition. About 70% of NHS spending goes on long-term illnesses. More than half of over-70s have at least two and a quarter have at least three. In south Somerset 50% of health and social-care funding is spent on 4% of people. + + + +The same pattern is found across the NHS, and it is struggling to cope. The pressures on the service once felt only in winter are now present throughout the year (see chart 1). Performance against waiting-times targets for cancer treatment and emergency care has deteriorated. The British Medical Association, a doctors’ trade union, is threatening strikes in October, November and December as part of a year-long dispute over a new contract. Jim Mackey, chief executive of NHS Improvement, a health regulator, puts it bluntly: “The NHS is in a mess.” + +When it was established in 1948, the NHS was the first universal health-care system free at the point of use. It is the institution of which Britons are most proud. No other country’s health service would have had a slot in the opening ceremony of an Olympic games, as the NHS did in 2012 in London. And yet it is of middling quality. England has a few world-leading hospitals. It vaccinates more people against influenza and screens more women for cancers than most rich countries. But its performance on standard measures of quality—such as survival rates from cancers, strokes and heart attacks—compares badly. + +If one fallacy about the NHS is that it is the envy of the world, as its devotees claim, another is that it is a single organisation. In fact it is a series of interlocking systems. Public health, hospitals, general practitioners (or GPs, the family doctors who provide basic care outside hospitals) and mental-health services all have separate funding and incentives. Social care, which includes old-folks’ homes and the like, is run by local councils, not the NHS. + +Governments have relentlessly tinkered with this complex system. Since 1974 there has been a reorganisation of the English NHS about once every two years. (Scotland, Wales and Northern Ireland have their own autonomous services.) The most important was in 1990 when the Conservative government introduced an “internal market”. Before the change, regional health authorities had been responsible for almost every aspect of running hospitals. The reform divided the bureaucracy in two. Henceforth one part of the NHS would be responsible for buying services from hospitals and another would be in charge of running them. The subsequent Labour government encouraged more competition and made it easier for private hospitals to provide NHS treatment. It also unleashed a tsunami of targets. + +The Health and Social Care Act, passed by the Conservative-led coalition in 2012, was described by a former head of the NHS as a reform so big it could be seen from space. But it has changed little on Earth. Today 209 “Clinical Commissioning Groups” are simply the latest parts of the NHS to purchase services from providers of care, usually hospitals. Paul Corrigan, a former adviser to Tony Blair, says the NHS is still a system set up to fix acute problems, not to treat long-term conditions. He compares recent reformers to someone “trying to connect their iPhone to a landline”. + +One aim of the 2012 act was to prevent ministers from micromanaging the NHS. But the reality is closer to the ideal of Aneurin Bevan, the post-war Labour health secretary who wanted the echo of bedpans hitting the floor in Tredegar to reverberate in Whitehall. Most Monday mornings, Jeremy Hunt, the current health secretary, gathers officials to go through the indicators for each NHS trust, line by line. Afterwards hospital bosses are told to shape up. + +But pep talks can only go so far. To fix the NHS requires changes in three areas. First, funding. Second, hospitals’ efficiency. And critically, third, reducing demand for unnecessary treatments through better public health and joined-up care. + +Since 1948, spending on the NHS has grown by an average of 3.7% per year. From 2010-11 to 2020-21 growth is set to average 0.9%. On a per person basis the budget will hardly budge—a big departure from the 2000s, when it shot up by 70%. NHS finances are “in a much worse position than they have ever been”, says Chris Ham of the King’s Fund think-tank. + + + +“It is all about the money,” adds Jennifer Dixon of the Health Foundation, another think-tank. No other rich European country is going through as steep a deceleration in funding. Britain-wide spending on health as a share of GDP in 2014-15 was 7.3% (£134 billion or $180 billion), lower than in most of its peers. It is projected to fall to 6.6% by 2021. If demand grows as forecast by the NHS, and it makes no efficiency savings, the service faces a shortfall of about £20 billion by 2020-21 (see chart 2). + +It is already on the verge of crisis. Several hospital divisions face closure, according to Chris Hopson, head of NHS Providers, which lobbies government on behalf of the local trusts that run services. Nearly nine out of ten hospital trusts ended the last financial year in deficit. Their costs rose as their income fell, a result of the government reducing the amount it paid per treatment. When companies are in the red they eventually go bankrupt. When trusts are in the red they are typically bailed out and told to improve. Since most of them are in trouble, in July the NHS opted to “reset” trusts’ financial and performance targets. + +Rising patient frustration may force the government to increase funding. But historically the public has been keener to fetishise the NHS than pay for it. Polls suggest that only a minority of people would be prepared to pay more in general taxation to boost its funding. + +This has led some wonks to propose a dedicated “NHS tax”. Though the Treasury is almost genetically sceptical of hypothecated taxes, the idea is popular among health officials and, more surprisingly, Conservative MPs. Andrew Haldenby of Reform, a think-tank, suggests that there could be charges for services such as seeing a GP, as is the case in about two-thirds of members of the OECD rich-country club. Though this idea is controversial, the NHS has since 1952 charged for seeing a dentist and for prescriptions. “There is no Rubicon to cross,” says Stephen Dorrell, a Conservative former health secretary. + +Then there is a more radical option: ditch the taxpayer-funded model altogether and replace it with health insurance. Typically the French, Swiss or German model of universal social insurance is pitched, as opposed to the American model. This is not a new idea; William Beveridge, who proposed a national health service during the second world war, preferred it. Its supporters argue that in countries that mandate health insurance, more money is spent on health and outcomes are better, partly as a result of competition between providers. One recent paper calling for social insurance in Britain is entitled: “What are we afraid of?” + +“An administrative mess” is the answer. After the chaos of the 2012 reforms there is little appetite for a shift in funding models. Most officials, and not only in the health department, believe that the cost of moving to social insurance would outweigh its benefits. They argue that what you spend is what you get: Britain spends less on health and its outcomes are worse than those of its peers. “Social insurance is a red herring,” says one senior Conservative. + +Tightening the tourniquet + +So the NHS must do more with what it already spends. A sign of inefficiency is the 6,000 patients in English hospitals who are ready to go home but not yet discharged, up from 4,000 in 2013. They cost the service hundreds of millions of pounds per year and obstruct others from treatment. The bed-blockers themselves are harmed, too. Elderly patients lose up to 5% of muscle strength for every day they are laid up in hospital. Some delays are the result of council cuts: about 400,000 fewer old people receive social care than in 2010, meaning that hospitals are sometimes used as expensive alternatives to care homes. But most are due to how hospitals are run. + +A review published in February by Patrick Carter, a Labour peer, concluded that “most [hospitals] still don’t know what they buy, how much they buy, and what they pay for goods and services.” There is huge variation in costs and outcomes. For hip replacements, hospitals pay between £788 and £1,590 for similar prosthetics. Rates of deep-wound infection, an avoidable complication, vary from 0.5% to 4%. Reducing the average to 1% would improve the lives of 6,000 patients per year and save £300m. Some trusts always use the recommended “cemented” fixation method for replacements, others for only one in 50 operations. And implementation of good ideas takes too long—about 17 years for scientific discoveries to enter day-to-day practice, by some estimates. + +This is not helped by the way hospitals are paid. The NHS tariff system rewards repeat activity rather than innovation. Iain Hennessey, a paediatric surgeon at Alder Hey hospital in Liverpool, wanted to use Skype to show parents remotely how to remove their children’s dressings. Yet he was prevented from doing so because the tariff price for a “telemedicine consultation” was too low. Patients instead came into hospital for more expensive treatment. Sir David Dalton, head of Salford Royal hospital, says such practices reflect the NHS’s “institutionally low tolerance to risk”. + +This conservatism is also apparent in its approach to its workforce. The English NHS is the biggest employer in Europe. It employs 1.4m people, or 5% of England’s workers. Staff costs account for more than two-thirds of hospitals’ budgets. But England has more shortages of hospital staff than other rich countries. In 2013-14 the NHS spent £3.3 billion on agency staff to cover gaps. Overtime costs rose, too. A consultant in Lancashire last year earned £374,999 in overtime. His basic salary: about £89,000. This is because the pay and volume of NHS employees are still centrally planned many years in advance via a system one official calls “Soviet”. + +Some of these problems would be fixed by recognising that there are too many hospitals. Across the world hospital chains are scaling up. Simon Stevens, the NHS’s chief executive, cites health firms such as Apollo in India, Helios in Germany and several American outfits that have saved money through shared staffing, back-office functions and procurement. Specialised care is better at scale. “Surgery is about practice and volume,” explains Mr Hennessey of Alder Hey. When Denmark reduced by two-thirds the number of hospitals that perform colorectal cancer surgery, post-operative mortality rates after two years improved by 62%. In Germany, higher-volume cancer-treatment centres have fewer complications than others. Fewer people have died of strokes in London since it merged 32 specialist sites into eight. + +“England has great attachment to the general hospital but it is a broken model,” says Sir David of Salford Royal. In a recent review for the government, he suggests that the 154 trusts that run hospitals should be reduced to 40-60 larger ones. It could be made easier for high-performing trusts to take over bad ones, and for private providers to take over failing hospitals. + +Under the knife + +Yet making up the funding shortfall through efficiency savings alone would require a bigger gain in productivity than any in the history of the NHS. And the fundamental problem remains that demand for hospital services is outpacing what the NHS is supplying. Referrals to hospital have risen by 20% since 2009-10, about three times as much as NHS spending. + +Curbing demand will be critical to the NHS’s long-term viability. This is partly about public health. Mr Stevens has described obesity, for example, as “the new smoking”. About one-third of English children are overweight, compared with an average of one-fifth across the OECD. Nevertheless, funding for public health is falling and the new government has slimmed down plans to reduce child obesity. + +This will only increase pressure on the NHS. In response, it will need to rein in demand for expensive hospital treatment by changing how non-hospital care is organised. Since the NHS is largely free at the point of use, governments have managed demand via GPs, who act as gatekeepers to hospital and prescriptions. And yet most GP practices are “artisan shopkeepers in an age of Amazon”, according to one Whitehall official. They are ill-equipped to deal with rising demand. + +If hospitals have suffered from relentless overhauls, GPs have received malign neglect. Though the vast majority of contacts between patients and the NHS are carried out by GP practices, they receive only about one-tenth of the NHS budget. The deal between GPs and the NHS is one of the most complex public-sector contracts in the world. Their funding is based on the number of patients in their area (adjusted for demographics) and whether the GPs meet targets set by the government. A study published in May by the Lancet, a medical journal, concluded that this framework of targets had not led to any “significant changes in mortality”. Gwyn Harris, medical director of Modality partnership, a group of GPs, goes further. Under what he calls an “inverse pay law”, those GPs who spend more on services which might keep patients out of hospital, such as a home visit by a nurse, make smaller margins. The worst doctors have the best returns. + +On average, the framework made GPs some of the highest-paid family doctors in the world when it was introduced in 2004. But since then it has become less generous. GPs’ real-terms income has fallen by one-fifth. This, and poor planning, has led to a shortage of them. England needs 5,000 more in the next five years. The NHS is mulling a deal with Apollo, whereby the Indian health-care firm supplies enough doctors to fill the gap. + + + +Improving the GP system so that it can cope with rising demand will require it to move away from its artisan model, embrace technology and work more closely with hospitals and other parts of the health service. A few GP sites are already expanding. In Birmingham, 17 practices run by Modality cover 65,000 patients. Its GPs are salaried rather than partners, following a trend seen elsewhere in the world (most American doctors were self-employed a decade ago, whereas now less than a quarter are). Modality has a single call-centre for booking patients. Nurses and doctors often attend to patients by phone or video-link. This has reduced no-shows while allowing GPs to spend more time on complex cases. Sarb Basi, Modality’s managing director, thinks that in 20 years there will be just 50 GP providers in England. + +GP practices are also belatedly embracing technology. Only 2% of people use the internet to contact their doctor. But two practices in Essex, for example, are trialling Babylon, an app that uses machine learning to diagnose symptoms. Others are cleverly using data. When Paul Mears became chief executive of Yeovil hospital he used customer segmentation techniques learned in previous jobs at British Airways and Eurostar. This helped him to realise that unless south Somerset’s fragmented systems worked together to deal with the costliest 4% of patients, he would need three new wards to keep up with demand. + +To integrate them he launched Symphony, which cares for Mrs Evans. It is one of the NHS’s “Vanguard” projects, many of which are trying to integrate historically separate parts of the system. Symphony took inspiration from the Esther Project in Sweden, in which care for complex patients is organised around their timetables, not those of doctors. Symphony has introduced “care co-ordinators” and “health coaches” who spend hours with patients to work out bespoke care plans. This makes patients feel more in control and has reduced admissions. + +Nevertheless, the people who run Vanguard projects worry that they cannot transform care without overhauling how money flows through the health system. Budgets remain fragmented. Doctors face competing incentives. Like Mr Stevens, Mr Mears thinks that the future of the NHS lies in Accountable Care Organisations (ACOs). These are increasingly popular ways of organising health care in countries like America, Germany and Singapore. In each case a single provider is responsible for all health care in its area. It is paid for outcomes, not activity. It is given a budget, adjusted for the health of the population. And so long as it meets its targets, it keeps the margin. Mr Stevens wants half of the NHS to use a version of the model by 2020. + +The move from “volume to value”—that is, from paying providers for the procedures they carry out to paying them for the outcomes they achieve—has helped to stem the cost of Medicare, the American health system for pensioners. The expansion of ACOs as part of Obamacare led to reduced mortality rates and savings for providers of about 1-2%. But Dan Norton-Jones, a visiting fellow at Harvard, warns that the potential for savings is greater in systems like Medicare, where there is no cap on spending. + +And yet ACOs reflect a growing belief that if you want radically to improve health care you have to change how you pay for it. They will not solve all the problems of the NHS, some of which are inherent in its taxpayer-funded model. But perhaps its business model may yet catch up with how illness is changing. The NHS should forget being the envy of the world, and instead learn from it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21706563-nhs-mess-reformers-believe-new-models-health-care-many-pioneered/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Dockyards + +Sea change + +Green energy offers dowdy ports a new means of regeneration + +Sep 10th 2016 | From the print edition + + + +BUILT in 1885 to export 5m tonnes of coal a year from Yorkshire’s mines, the Alexandra dock in Hull once caused foreign visitors to marvel at its scale and modernity. After a long decline it closed at last in 1982. Along with it went much of Hull’s dockyard industry, and not a little of its pride. + +As recently as last year the half-derelict site was filled with rusty sheds, old caravans and broken wooden pallets. But all that has now been swept away by a £310m ($415m) wind-turbine factory. On September 1st workers began to cast its first enormous fibreglass blade. Measuring 75 metres (250 feet) in length—longer than the world’s largest jetliner—the blade will be floated out into the North Sea next year to form part of a new bank of turbines. + +Rundown dock towns around Britain are hoping green energy can restore their fortunes. They are due a break. Hull saw its fishing industry collapse when it lost access to fishing grounds off Iceland in the 1970s and shed most of its docking jobs in the 1980s after a container terminal opened nearby. Recent years have been no kinder. There has been a near-total halt in global orders for big ships this year, caused by overcapacity in the shipping business. Shipyards making North Sea rigs have been hit by falling oil prices. By the end of the year the number of jobs supported by Britain’s oil and gas industry will be a quarter lower than at its peak in 2014, predicts Oil & Gas UK, an industry body. + +And so ports and shipyards are now pinning their hopes for revival on the offshore wind business, in which jobs have grown by almost a third since 2012. “Where coal was once exported, we’ll be exporting green energy,” says Finbarr Dowling, project manager at the Alexandra dock. Funded by Siemens, a German engineering giant, and Associated British Ports, which owns the port, it is Hull’s biggest investment since Victorian times. + +The old docks are perfect for assembling offshore windmills, Mr Dowling explains. The blades are too big to travel by road, rail or plane, and therefore too expensive to travel from countries where they could be made more cheaply. Unlike much other heavy manufacturing, production of turbines is likely to remain in Britain. + +With plenty of wind farms planned in the North Sea, the new facilities will be busy for decades. The latest phase of the nearby Hornsea farm, which will eventually be the world’s largest, was given the green light last month. When complete it will stretch 160km (100 miles). + +Although subsidies for onshore wind have been slashed over the past year, political support for offshore wind remains strong, says Jan Matthiesen of the Carbon Trust, an advisory body. The government wants wind-generated electricity to double by 2030. With fierce local opposition to onshore wind farms, it is politically easier to hide them away at sea, though offshore turbines are more expensive to run. + +Other ports are also benefiting from the offshore boom. South-east of Hull, long-abandoned fishing quays in Grimsby are being spruced up by Dong Energy, a Danish firm which plans to invest £6 billion in British wind farms. In Belfast, Harland and Wolff, the shipyard that built the Titanic, now gets 75% of its revenues from making green-energy equipment. Samson and Goliath, the yard’s two giant cranes, now build wind and tidal turbines instead of ocean liners. In May they helped build the world’s largest wave-energy generator. Firms in Aberdeen, Dundee and Newcastle, hit hard by the slump in oil and gas work, are also switching over production. + +Ports hope the change will be a boon for their wider economies. Hull City Council estimates that each job at the blade factory will create another three in the city. Siemens’ facilities will eventually employ 1,000 people. That is a small fraction of the 17,000 who worked at Hull’s docks 50 years ago; clearly, green energy will not solve all British dockyards’ problems. But it will give them a welcome tailwind. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21706456-green-energy-offers-dowdy-ports-new-means-regeneration-sea-change/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Chinese schools + +Babes among dragons + +Ambitious parents give their children a start in Mandarin + +Sep 10th 2016 | From the print edition + +One day she’ll be your boss + +BREXITEERS promised that, free of Europe, Britain would be better equipped to trade with China. But they failed to reckon with the rather sorry state of Chinese-language education in Britain. Though a few years ago David Cameron called on pupils to drop French for Mandarin, few have taken up the former prime minister’s entreaties. Last year just 3,100 students were entered for GCSE exams in Mandarin, compared with 150,000 for French. + +Yet a few schools detect a growing market for bilingual learning. Kensington Wade, a private school in a posh part of London, will open next year and will eventually admit three- to 13-year-olds. The school will teach all lessons in English and Mandarin and incorporate both Chinese and Western pedagogy, for fees of about £15,000 ($20,000) per year. Some parents are getting their children started even earlier. Hatching Dragons, a Chinese-language nursery across the city in Barbican, aims to turn toddlers into “globally aware, globally capable” citizens, says Cenn John, its founder. + +The government is also putting a little more money where its mouth is. On September 7th it said it would spend £10m on getting 5,000 state-school pupils “on track” to Mandarin fluency by 2020. The Institute of Education at University College London, which is supporting the project, is aiming to train 100 qualified Chinese teachers during the same period. + +Both the London schools play on the aspirations and insecurities of today’s parents. Hatching Dragons’ tagline is “Helping your baby fly through life”. Its little charges are mainly from white, upper-middle-class families, with parents who work in industries like law and finance—types most likely to picture their children as part of a globalised world. Wade is targeting a similar bunch. Both schools echo the language of the government in imagining a future where its economy is driven by trade with China. + +Though they have only recently appeared in London, the schools are already beginning to plan where they might expand. Kensington Wade thinks there is potential to set up elsewhere in Europe. Hatching Dragons, intriguingly, has been approached by Chinese investors interested in bringing its brand to China. Founded to educate young Britons in Mandarin, it may next be teaching Chinese tots in English. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21706508-ambitious-parents-give-their-children-start-mandarin-babes-among-dragons/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cricket’s crunch + +Sticky wicket + +The struggle for the soul of a great English game + +Sep 10th 2016 | SOUTHAMPTON | From the print edition + +A corridor of uncertainty + +A FEW hundred spectators are huddling in a near-empty stadium on the third day of a four-day match between Hampshire and Yorkshire, as a squall of autumn rain swoops in faster than a leg-stump bouncer. Players and spectators rush for cover. Such have been the joys of English cricket since the first county game in 1709. + +Though England’s international team is doing well and draws big crowds, county cricket is struggling, and not just because of the weather. Four-day matches between counties are where international cricketers, who play in five-day games known as Tests, cut their teeth. The tactics and patience of “long-form” cricket are deep in the bones of English sports fans. + +But some counties get fewer spectators in a season than Premier League football clubs get for one game. The England and Wales Cricket Board (ECB) has had to bail out clubs with money from the television rights it receives for Test matches. One-day cricket has taken over, to the chagrin of traditionalists like Tony Megson, a 50-year-old spectator. It is just “wham, bam, hit it as hard as you can.” There is none of the old skill of building an innings, he laments. + +Now, though, the ECB may be planning to use short-form cricket to save the longer game. At a meeting on September 14th it is expected to propose a new competition, modelled on the Indian Premier League (IPL), to the heads of the 18 county clubs. + +India is now the global centre of cricket. For two months every spring, eight teams hire the world’s best players for the shortest form of one-day cricket, known as T20, where the aim is simply to hit as many runs as possible off 120 balls. With all the razzmatazz of American football, the games are finished in three hours. While county cricketers in England earn about £50,000 ($67,000) a year, the IPL’s top earners take home about £1m. Australia now has a similar league, called the Big Bash. + +Supporters say such a league in England would generate sums that could subsidise long-form county cricket and reignite interest in the game. “It could do to English cricket what the Premier League did for English football,” says Ed Smith, an author and former England cricketer. Youngsters love T20. Even older fans like Mr Megson see super-league teams as a good compromise: “If they save county cricket, then I am for them,” he says. + +English cricket has struggled partly because it is loved (and run) by people for whom maximising revenue is not always a priority. England had the first T20 league in 2003, but the ECB did not capitalise on it. The league, which includes all 18 county teams, has been rebranded as T20 Blast and is a moderate success. But it has limits on foreign players and is too unwieldy to command a big broadcasting deal, meaning it cannot afford global megastars. + +A new super-league would contain eight to ten clubs, so half the counties—probably the smaller ones—would be left out. The question for the ECB is how to get those counties to support a set-up from which they would be excluded. One idea is to pay them from the proceeds of the super-league. “You’re going to pay us to not play?” asks a senior official at one club, incredulously. Some clubs could shut down. + +It is all a long way from the village green, admits the official. “Ten years ago, who would have thought that cricket would be talked about as ‘content’ to be distributed on Netflix or Facebook?” + +Back at Southampton, Rod Willcock, a coach, watches as the rain clears and the players re-emerge. A new league will not kill Test cricket but save it, he says. Youngsters are coming to the game through T20. But teams are now playing one- and two-day matches again, as teenagers take up the longer game. The sporting marrow in a nation’s bones is not easily removed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21706529-struggle-soul-great-english-game-sticky-wicket/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Hate crime + +Bearing the brunt + +A rancid post-referendum rise + +Sep 10th 2016 | From the print edition + + + +TALKING of the fatal assault on Arkadiusz (known as Arek) Jozwik outside a takeaway in Harlow, Essex, on August 27th, Eric Hind flinches at the memory of being shown a photograph of his friend after his death. “Arek’s head was in bits,” he says. “It was really shocking.” + +Like thousands of other Poles in Harlow, Mr Hind is reeling from the attack by a gang of about 20 youths on Mr Jozwik. Two more Poles were beaten up outside a pub in the centre of town on September 4th after attending a vigil in his memory. Police are treating both as hate crimes. In an atmosphere of fear, Polish parents worry about what awaits their children as they return to school. + +The attacks in Harlow follow a surge in hate crimes around the EU referendum on June 23rd. The National Police Chiefs’ Council says there were 3,076 cases of harassment or violence on June 6th-30th, an increase of 915 on the same period last year. The latest figures, from August 5th-18th, show 2,778 incidents— down on the previous fortnight, but a 14% increase on the same period in 2015. + +The Institute of Race Relations (IRR) scours the media for racially motivated attacks; it found 139 during the month after the referendum, up from 21 in the same month last year. Harmit Athwal of the IRR says Brexit has “emboldened” people to express hostility towards immigrants. Last month a UN committee blamed politicians for stirring the sour mood. Phil Allen of Weightmans solicitors says immigration-related harassment in the workplace also spiked after events like the Iraq war in 2003, “but nothing quite as focused as this”. + +Poland has dispatched two ministers to Britain, to urge the government to protect Poles. A uniformed Polish police officer will be sent to Harlow for a week to assist local coppers. For now, Mr Hind is praying that Polish youths don’t retaliate, setting off a cycle of violence. But he has no plans to leave Britain: “Two incidents shouldn’t decide our future.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21706477-rancid-post-referendum-rise-bearing-brunt/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Race relations: Slavery’s legacies + + + + + +Articles Sections Next + +Race relations + +Slavery’s legacies + +American thinking about race is starting to influence Brazil, the country whose population was shaped more than any other’s by the Atlantic slave trade + +Sep 10th 2016 | SÃO PAULO | From the print edition + + + +ALEXANDRA LORAS has lived in eight countries and visited 50-odd more. In most, any racism she might have experienced because of her black skin was deflected by her status as a diplomat’s wife. Not in Brazil, where her white husband acted as French consul in São Paulo for four years. At consular events, Ms Loras would be handed coats by guests who mistook her for a maid. She was often taken for a nanny to her fair-haired son. “Brazil is the most racist country I know,” she says. + +Many Brazilians would bristle at this characterisation—and not just whites. Plenty of preto (black) and pardo (mixed-race) Brazilians, who together make up just over half of the country’s 208m people, proudly contrast its cordial race relations with America’s interracial strife. They see Brazil as a “racial democracy”, following the ideas of Gilberto Freyre, a Brazilian sociologist who argued in the 1930s that race did not divide Brazil as it did other post-slavery societies. Yet the gulf between white Brazilians and their black and mixed-race compatriots is huge. + + + +Brazil took more African slaves than any other country, and now has nearly three times as many people whose ancestors left Africa in the past few centuries as America does. Yet black faces seldom appear in Brazilian newspapers outside the sports section. Few firms have black bosses. The government has not a single black cabinet member; its predecessor, which called itself progressive, had one—for equality and rights. On average black and mixed-race Brazilians earn 58% as much as whites—a much bigger gap than in America (see chart). + +The gap in Brazil, as in America, used to be even wider. Much progress has come from anti-poverty schemes, which, though colour-blind in design, benefit darker-skinned Brazilians more, since they are poorer. More recently, Brazil has started to try explicit racial preferences (known in America as “affirmative action”). But American ideas cannot simply be transplanted to Brazil. Differences in how the two countries were colonised, and how the slave economy operated, led to distinct ideas of what it means to be “black”—and different attitudes to compensatory policies and whom they should target. + +Of the 12.5m Africans trafficked across the Atlantic between 1501 and 1866, only 300,000-400,000 disembarked in what is now the United States. They were quickly outnumbered by European settlers. Most whites arrived in families, so interracial relationships were rare. Though white masters fathered many slave children, miscegenation was frowned upon, and later criminalised in most American states. + +As black Americans entered the labour market after emancipation, they threatened white incomes, says Avidit Acharya of Stanford University. “One drop” of black blood came to be seen as polluting; laws were passed defining mixed-race children as black and cutting them out of inheritance (though the palest sometimes “passed” as white). Racial resentment, as measured by negative feelings towards blacks, is still greater in areas where slavery was more common. After abolition, violence and racist legislation, such as segregation laws and literacy tests for voters, kept black Americans down. + +But these also fostered solidarity among blacks, and mobilisation during the civil-rights era. The black middle class is now quite large. Ms Loras would not seem anomalous in any American city, as she did in São Paulo. + +Colour card + +In Brazil, unlike America, race has never been black and white. The Portuguese population—700,000 settlers had arrived at the start of the 19th century—was dwarfed by the number of slaves: a total of 4.9m arrived. Portuguese men were encouraged to consort with African women. Since most came without wives, such unions gained some legitimacy. Their offspring, referred to as mulatto, enjoyed a social status above that of pretos. They worked as overseers or artisans, but also doctors, accountants and lawyers. A mulatto, Machado de Assis, was regarded as Brazil’s greatest writer even during his lifetime in the 19th century. + +Mixing led to a hotch-potch of racial categories. In 1976 the Brazilian Institute of Geography and Statistics (IBGE) recorded 134 terms used by Brazilians to describe themselves, mostly by skin colour. Some were extremely specific, such as branca suja (literally “dirty white”) or morena castanha (nut-brown). The national census offers just a few broad categories—as in America, which offers five, though these days America’s also allows you to tick as many as you like and add a self-description. Tiger Woods, a golfer, calls himself “cablinasian” (a portmanteau of caucasian, black, American Indian and Asian). + +Both black and white Brazilians have long considered “whiteness” something that can be striven towards. In 1912 João Baptista de Lacerda, a medic and advocate of “whitening” Brazil by encouraging European immigration, predicted that by 2012 the country would be 80% white, 3% mixed and 17% Amerindian; there would be no blacks. As Luciana Alves, who has researched race at the University of São Paulo, explains, an individual could “whiten his soul” by working hard or getting rich. Tomás Santa Rosa, a successful mid-20th-century painter, consoled a dark-skinned peer griping about discrimination, saying that he too “used to be black”. + +Though only a few black and mixed-race Brazilians ever succeeded in “becoming white”, their existence, and the non-binary conception of race, allowed politicians to hold up Brazil as an exemplar of post-colonial harmony. It also made it harder to rally black Brazilians round a hyphenated identity of the sort that unites African-Americans. Brazil’s Unified Black Movement, founded in 1978 and inspired by militant American outfits such as the Black Panthers, failed to gain traction. Racism was left not only unchallenged but largely unarticulated. + +Now Brazil’s racial boundaries are shifting—and in the opposite direction to that predicted by Baptista de Lacerda. After falling from 20% to 5% between 1872 and 1990, the share of self-described pretos edged up in the past quarter-century, to 8%. The share of pardos jumped from 39% in 2000 to 43% in 2010. These increases are bigger than can be explained by births, deaths and immigration, suggesting that some Brazilians who used to see themselves as white or pardo are shifting to pardo or preto. This “chromatographic convergence”, as Marcelo Paixão of the University of Texas, in Austin, dubs it, owes a lot to policy choices. + +The first law signed by Luiz Inácio Lula da Silva, a white former metalworker who was Brazil’s president in 2003-10, required schools to teach about Brazil’s African slaves. He introduced a “Black Consciousness Day” on November 20th, on which day in 1695 the leader of a slave rebellion died. In 2004 an Afro-Brazil Museum opened in São Paulo. A few states and cities now have racial quotas when hiring, as do the diplomatic service and federal police. + +Brazil’s public universities—which are more prestigious than private ones—have also introduced admissions preferences based on race and class. In 1997 barely one in 50 young pretos or pardos were studying at university or had graduated. That share rose rapidly as the economy improved and incomes rose, and from the early 2000s a handful of public institutions began to reserve some places for non-white students. In 2012 the supreme court ruled the practice constitutional. Shortly afterwards Lula’s successor, Dilma Rousseff, brought in racial quotas at all 59 federal universities and 38 technical schools. The effects are already visible on campuses. A study published in August found that between 2010 and 2014 the share of students at federal universities who described themselves as pretos or pardos jumped from 41% to 48%. + +There were fears that those admitted under quotas would struggle, as some think they have in America. The test that American students take to enter university is a good predictor of academic success, and American colleges typically admit black and Hispanic students with much lower scores than whites or Asians. This sets them up to fail, argue Richard Sander and Stuart Taylor in their book, “Mismatch”. They think that under race-neutral policies more would graduate. Though narrowly approved by the Supreme Court, affirmative-action policies are unpopular in America. Two-thirds of Americans disapprove of the use of race as a factor in college admissions, according to Gallup. + + + +In Brazil, the picture is different. For the few able to afford private schools and intensive coaching, getting into public universities used to be relatively easy. Entrance exams were poorly designed and old-fashioned; though they have been updated, they are still a crude measure of ability. This is perhaps why hard-working, ambitious cotistas, as students admitted under quotas are known, are able to hold their own. The first universities to adopt quotas have found that cotistas had lower grades on entry but graduated with degrees similar to those of their classmates. + +From this year half the places in all Brazil’s public universities will be reserved for students who have attended state schools, which prosperous ones seldom do. Half these quota places are reserved for applicants whose family income per person is no more than 1.5 times the minimum wage; and black, mixed-race and indigenous Brazilians are granted quota places in proportion to their share of the local population. The policy has wide support: a poll in 2013, soon after the law was passed, found that two-thirds of Brazilians approved. + +Naturally, some people game the system. A study in 2012 by Andrew Francis of Emory University and Maria Tannuri-Pinto of the University of Brasília (UnB) found that some mixed-race but light-skinned applicants to UnB, which introduced quotas in 2004, thought of themselves as white but said they had black heritage to improve their chances of getting in. Once admitted, some reverted to white identity. But not all, as “curly clubs” springing up on previously straight-hair-obsessed campuses attest. + +Brazil has a long way to go before it has a black middle class to rival America’s. A study in 2009 by Sergei Soares found that if the incomes of black and white Brazilians continued to evolve at 2001-07 rates, they would converge by 2029. But a subsequent severe recession has almost certainly pushed this further into the future. Employers continue to favour lighter-skinned job applicants. Less than a quarter of the officials elected in the federal and state races in 2014 were preto or pardo. “Decolonising your mind is tough,” sighs Ms Loras, whose experiences in Brazil have turned her into a black activist. + +But there are hints that an American-style black consciousness is emerging in Brazil—and not only on campuses. In February Ms Loras counted 17 black models on the covers of glossy magazines. Two years earlier, she says, there were hardly any. She is publishing a children’s book about famous black inventors. In America such titles are common; in Brazil hers will be the first. According to Renato Araújo da Silva of the Afro-Brazil Museum: “We Brazilian blacks are finally learning to be black.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21706510-american-thinking-about-race-starting-influence-brazil-country-whose-population/print + + + + + +Articles Sections Next + + + + + +Business + + + + +A.P. Moller-Maersk: Profits overboard + +Auditors aren’t so bad: Box ticked + +Reliance Jio: Free speech + +Smartphones: Still ringing bells + +Fashion retailing: Passé + +The space business: Mission, interrupted + +German firms in America: Making eyes across the ocean + +German power companies: Breaking bad + +Schumpeter: Shhhh! + + + + + +Articles Sections Next + +A.P. Moller-Maersk + +Profits overboard + +The shipping business is in crisis. The industry leader is not exempt + +Sep 10th 2016 | COPENHAGEN | From the print edition + + + +THE collapse of Hanjin Shipping, a South Korean container line, on August 31st brought home the extent of the storm in shipping. The firm’s bankruptcy filing left 66 ships, carrying goods worth $14.5 billion, stranded at sea. Harbours around the world, including the Port of Tokyo, refused entry for fear of going unpaid. With their stock beyond reach, American and British retailers voiced concerns about the run-up to the Christmas shopping period. + +Hanjin is not alone. Of the biggest 12 shipping companies that have published results for the past quarter, 11 have announced huge losses. Several weaker outfits are teetering on the edge of bankruptcy. In Japan three firms, Mitsui OSK Lines, NYK Line and Kawasaki Kisen Kaisha, look vulnerable. Activist investors are now pressing for them to merge to avoid the same fate as the South Korean line. + +Even the strongest are suffering. France’s CMA CGM, the world’s third-largest carrier, announced a big first-half loss on September 2nd. Maersk Line, the industry leader, and the largest firm within A.P. Moller-Maersk, a family-controlled Danish conglomerate, will be in the red this year, having lost $107m in the six months to June. The industry could lose as much as $10 billion this year on revenues of $170 billion, reckons Drewry, a consultancy. + +Two powerful forces have rocked the industry. The first is the ebbing of world trade since the financial crisis. Two-thirds of global seaborne trade by value is carried in containers, but in 2015, for the first time since they were invented in the 1950s, (apart from the 2009 recession), global GDP grew faster than worldwide box traffic. Insipid economic growth and moribund trade liberalisation play their part; so too do shifts in manufacturing. Multinational firms are increasingly building factories in local markets; General Electric, for example, now makes engine parts where they are needed rather than shipping them from America. + +The second factor is a surge in the size of the global container fleet following a ship-ordering binge that began around 2011. Overcapacity has crushed freight rates. Sending a container from Shanghai to Europe now costs half what it did in 2014, according to figures from the Chinese city’s shipping exchange. + +Shipping has been through many crises but few as severe as this one. The industry may still resist doing what many recommend, which is to tackle overcapacity directly by scrapping vessels. But the depth and length of the downturn mean that firms will start doing things differently. + +Eyes are trained on changes at Maersk Group in particular, which has long set the course for the industry. The Danish line has probably lost only $11 per container moved this year, less than the $100 figure for companies like Hanjin, but that is still unacceptable to its bosses and to the family that owns it. They are considering splitting up the conglomerate, and are due to announce details this month. + + + +Maersk Group has invested in all sorts of assets since the 1960s: supermarkets, airlines and recently oil drilling, as well as shipping. The idea was to construct a hedge against falling freight rates and spikes in oil prices. When fuel is dear, squeezing container profits, drilling for oil and gas would keep it afloat, or so the thinking went. But since 2014 oil prices and freight rates have fallen together, throwing both the shipping and energy units into a sea of red ink (see chart). + +In June Maersk Group’s chairman, Michael Pram Rasmussen, fired Nils Smedegaard Andersen, its CEO, and replaced him with Soren Skou, the head of the container line. Mr Andersen, a former boss of Carlsberg, a Danish brewer, and the first CEO to be brought in from outside the company, was keen on retaining some diversification. Mr Skou, who has worked in shipping since he joined the group in 1983, is believed to be more sceptical. + +Breakers ahead + +The main part of his review of the group’s operations will seek to determine whether it should break itself into two: a separate, publicly listed shipping business, encompassing Maersk Line and the group’s port terminals and logistics arms, and another listed firm concentrating on its oil exploration and drilling businesses. That would reassure investors, worried that their money is being used to prop up failing divisions. It could widen its pool of potential investors as well as boost its value, says Neil Glynn of Credit Suisse, a bank. + +The outcome of the review is still far from certain, but it is thought likely that Maersk Group will end up more focused on its roots in shipping. Mr Skou, who remains CEO of Maersk Line as well as the overall group, has said he wants to see the group’s revenues grow, and its oil division will struggle to play its part in this. One short-term but serious problem for Maersk Oil, for example, is that production could halve by 2018 because its licence to operate Qatar’s largest offshore oil field is expiring in July next year. + +Maersk Line, in contrast, starts from the position of being the biggest shipping firm in the world. Yet it too has lots of work to do if it is to boost revenues and profits from shipping. A favoured cost-cutting strategy among shipping firms so far has been to form alliances. In January 2015 Maersk Line and Mediterranean Shipping Company (MSC) launched 2M, a partnership to share space on their vessels. This April four others got together, followed by six more in May. These three groups now account for nearly three-quarters of the global market. But alliances do not solve the problem of overcapacity and they have not stopped freight rates from falling. + +Another tack has been to build bigger ships. “When oil prices were high we built bigger ships and pioneered slow steaming to save bunker costs,” says Soren Toft, Mr Skou’s COO and right-hand man. Maersk Line built 20 huge “Triple-E” class vessels that could carry just under 20,000 containers each; its biggest rivals, MSC and CMA CGM, followed its lead. But with fuel prices much lower—in 2015 they accounted for less than 13% of Maersk Line’s costs—the savings are slim. After the last Triple-E ship entered service last year, it cut back on ordering new vessels. + +Maersk Group’s big new idea is to make its existing ships smarter. Mr Toft says Maersk Line will focus on using these ships better by embracing the “age of digitisation”. This is an area in which shipping lags well behind other sectors, such as aerospace. Whereas a modern jetliner creates several terabytes of data a day, it takes the average cargo ship 50 days to produce a single one. Most ships do not even have basic sensors to ensure their hatches are closed before leaving port. Until very recently the industry resisted using data properly, says Martin Stopford, president of Clarkson Research, part of a shipbroker. Now it cannot afford to ignore systems that offer the chance of reducing costs by up to 30% by better co-ordinating the interaction of ships and shore, he says. + +Maersk Line is retrofitting its ships to collect more data. Last year it installed sensors on its containers that track their location and contents. That makes it easier for port terminals to handle them, so ships can leave and start earning money again more quickly. Software also works out how to stack containers on ships more efficiently. + +Empty containers are another drain, costing shipping lines up to $20 billion a year, according to BCG, another consultancy. Maersk Line is not the only one using data to deal with this problem. Japan’s NYK saved over $100m by getting better at spotting and using empty containers. A new website called xChange, which started operating last November, allows shipping lines to swap spare containers among themselves to maximise efficiency. + +The Danish firm’s three-year-old analytics team has also worked on discovering the optimal speed and course for its ships. They are trying to cut its big repair bills, too. The hope is that predictive maintenance could achieve this quickly. Instead of waiting for ship engines to break down, sensors will report when they need care. + +What Maersk Line does in digitisation is likely to be followed by the rest of the industry in fairly short order. As an executive at one of Maersk Line’s rivals admits: “We just watch what Maersk does and copy it.” And although few shipping outfits have the resources to build ever bigger ships, even the smallest of them can learn to use data better. Data crunching alone will not save the industry from the current storm; that will require ships to be scrapped. But it may prepare it better for the next one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21706556-shipping-business-crisis-industry-leader-not-exempt-profits-overboard/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Auditors aren’t so bad + +Box ticked + +The rich world is not suffering an outbreak of accounting fraud + +Sep 10th 2016 | NEW YORK | From the print edition + + + +IF YOU peer into the world of accounting in any given month, it is easy to get the impression that an epidemic of skulduggery and incompetence has broken out. Consider the month of August. A whistleblower at Monsanto, an American seeds firm, received a reward from the Securities and Exchange Commission, after spotting that the firm was misreporting its earnings for Roundup, a weedkiller. T. Rowe Price, an asset manager, launched a lawsuit against Valeant, a drugs firm which it accuses of fraud and misleading accounting. + +The list goes on. PricewaterhouseCoopers, one of the Big Four accounting firms, settled a case involving Colonial BancGroup, a lender it audited which went bust after suffering fraud. The boss of Monte dei Paschi di Siena, an Italian bank, said that he was under investigation as part of a probe into false accounting. Shares in Orbital ATK, an American defence firm, tanked after it said it had made accounting mistakes, and an internet firm called ComScore replaced its top brass amid problems with its numbers. + +The obvious conclusion is that the accounting industry has failed to clean itself up since 2001-03, when Enron and WorldCom, among others, blew up in spectacular style because of book-cooking. Those two American firms were worth a combined $250 billion at their peak, and their collapse also brought down their auditing firm, Arthur Andersen. + +In fact the opposite is true: accounting scandals have become less of a problem. With over 10,000 listed firms in Europe, America and Canada, bad apples are inevitable. But the impact of recent blow-ups has been far lighter than at the turn of the century. WorldCom overstated its profits by a colossal $7 billion. Enron puffed up its shareholders’ equity by $1 billion. Parmalat, an Italian food firm that folded in 2003, had a $15 billion hole in its accounts. + +Today’s scandals are smaller. When companies admit to fraud or mistakes, their books are restated, making comparisons straightforward. Valeant’s restatement, announced in February, was a modest $58m, while Monsanto’s was $48m. Tesco, a British supermarket that confessed in 2014 to an accounting scandal, exaggerated its profits by about $350m. One important measure, which is the scale of the single largest restatement by an individual firm in America in any given year, has shown a marked decline in the size of the corrections, points out Don Whalen of Audit Analytics, a data provider and research firm (see chart). + + + +In the dark days of 2000-01, investors worried that no firm in America could be entirely trusted. If you look at the sum of losses across the economy due to accounting fraud now, the number is low. The figure in 2015 was $2.7 billion, or 0.3% of total corporate profits, suggesting there is no systemic problem. + +There are plausible reasons why auditing and book-keeping might have improved so much. Sarbanes-Oxley, a corporate-governance law passed in America in 2002, has bite: it requires chief executives and chief financial officers personally to certify accounts. The spread of a common international accounting rule book in Europe has raised standards. The grisly collapse of Arthur Andersen may have led the other big accounting firms to behave better. During the financial crisis, auditors, along with regulators, pushed big banks to write down the value of subprime securities to realistic prices, often to squeals of protest from bosses and politicians. + +There is still no room for complacency. It is quite possible that huge undiscovered frauds are taking place. The incentive structure of the accounting industry remains suspect: accounting firms are paid fees to audit their customers, but they often earn more by selling various advisory services to them. The rise of opaque private markets for trading the shares of private firms—including Silicon Valley “unicorns”—seems ripe for fraud. + +And in many big emerging economies, including China and India, the state of accounting rules and of the auditing business is still murky. In Japan an accounting scandal at Toshiba, a conglomerate, which led to a restatement worth $1.9 billion last year, dented faith in accounting and in the local affiliate of EY, another Big Four audit firm. Yet to argue that there is a crisis in the quality of financial information that investors get about Western firms is to be guilty of a misleading overstatement. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21706555-rich-world-not-suffering-outbreak-accounting-fraud-box-ticked/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Reliance Jio + +Free speech + +India’s mobile-phone operators get a daunting new rival + +Sep 10th 2016 | MUMBAI | From the print edition + +Ambani dials up the pressure + +IN THE end it was even worse than they had feared. For months now, India’s dozen mobile-phone operators have been pondering just how aggressively Mukesh Ambani, the boss of Reliance Industries and India’s richest man, would gatecrash their market with the launch of Jio, his new 4G telecoms operation. They certainly expected the thousands of billboards adorned by Shah Rukh Khan, a ubiquitous Bollywood star. Heavily discounted prices were predictable, too. But the news that, from September 5th, anyone paying as little as 149 rupees ($2.20) a month would be able to make free phone calls and browse the internet a bit was a genuine shock. The share prices of rival firms tumbled. + +Telecoms incumbents are right to worry. Reliance has been able to use billions in cash from its main oil and refining businesses to invest over $20 billion in the infrastructure required to deliver high-speed connectivity across India. And Mr Ambani understands the industry extremely well. He built a network from scratch in the early 2000s, although that firm eventually went to his younger brother, Anil, in 2005 after the pair fell out. + +For the elder brother’s bet to pay off, Indians will need to continue flocking online at speed through their mobiles. Smartphones are in the early stages of becoming ubiquitous. Most of India’s nearly 400m internet users go online through them. But many people on small incomes use expensive data services sparingly, if at all, downloading content only when they have access to free Wi-Fi. New Jio customers will get as much internet as they want free of charge until the end of the year, and cheap access thereafter. Reliance is also promising free (for a time) access to Bollywood films and music. + +The incumbents expected Jio’s data rates to be lower than what they charge now. Heavy data users will probably be able to roughly halve their bills. But the huge impact is on voice traffic, which makes up around 70% of operators’ revenue. What had been a gentle decline in phone bills as Indians moved to data (including to make calls over the internet) is now likely to be much steeper. India’s already low average revenue per user will probably fall by 10-15% over the next year, say analysts at Fitch, a ratings agency. + +As for Reliance, it is said to have factored in at least two years of losses. Mr Ambani says he wants Jio to dash to 100m users, beyond the 70m-80m that most analysts think the firm will need to turn a profit. Only 5% of phones used in India now can access 4G, so most of Jio’s customers will be people upgrading their handsets. Reaching 100m quickly will require roughly one in three new smartphones to be from Jio. + +If Mr Ambani can pull it off, it would leave little for the 12 other networks. A round of consolidation could result. That might not be good news for the government. A spectrum auction later this month had been expected to raise 5.6 trillion rupees—more than corporation tax brings in over an entire year. Prospective bidders may now ask whether spending that kind of cash is worth it. Many of them are indebted and making low returns. + +If other telecoms firms aren’t making good profits, how can Reliance do so? Rivals argue that Mr Ambani will probably put up data tariffs for all his new customers as soon as the freebie offer ends. But privately they concede he is doing what they once did. They invested stacks of cash in the latest technology, tolerated low prices and hoped that enormous volumes would get the figures to add up. The formula may work if Indians continue flocking to the internet. Whatever happens, India’s march online has been given a big shove. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21706548-indias-mobile-phone-operators-get-daunting-new-rival-free-speech/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Smartphones + +Still ringing bells + +Slowing growth and less innovation do not spell the end of an era + +Sep 10th 2016 | From the print edition + +And on the 7th day... + +APPLE’s events have often been compared to religious worship. Evangelical fans watch as the company’s darkly-clad boss—first Steve Jobs, now Tim Cook—presents shiny new iSomethings in front of a screen showing colourful slides reminiscent of stained glass. Yet Apple’s latest event, on September 7th, was a less rapturous affair. The iPhone 7, the firm’s new smartphone, will come with a better camera, a faster chip and a brighter display, but will otherwise not be much of an improvement. The main novelty is that it no longer has a conventional jack for headphones, which have to plug into the charging port or be wireless (conveniently, Apple also introduced new untethered “AirPods”, which will cost $160 a pair). + +This lack of sparkle will disappoint devotees, but the new iPhone neatly encapsulates the mood in the smartphone market. After almost ten heady years, dating from the release of the first iPhone in mid-2007, both growth and the pace of innovation have slowed markedly in recent months. Prices have fallen, too. Some people are starting to talk of an end to the smartphone era, much as when the reign of personal computers came to an end a few years ago. + +Worldwide sales of smartphones are now barely growing. The devices are now good enough for most users’ needs, and smartphone penetration rates in rich countries have reached 90%. But the absolute numbers are still mightily impressive. Some 1.46 billion units will be shipped this year, reckons IDC, and perhaps 1.76 billion in 2020. + + + +Such numbers make the smartphone by far the world’s most popular electronic device. It is true that sales of “wearables”, such as smartwatches and fitness bands, have taken off: they should reach $14 billion in 2016, according to CCS Insight, another research outfit. But that is dwarfed by smartphone sales of $347 billion. So-called “smart speakers”, such as Amazon’s Echo, which allows users to play music, turn on the lights and, of course, order stuff from the e-commerce giant by using voice commands, will be popular. But they seem unlikely to become a must-have. Virtual- and augmented-reality gear is not yet ready for the mainstream consumer; and it may never be as convenient as a device that users can slip into their pockets. + +If smartphones remain at the top of consumers’ want-lists, how will the market evolve? Hardware innovation will be more incremental, says Ben Wood of CCS Insight. New phones will have better screens, faster processors and new materials. But another area promises rapid progress: artificial intelligence. Mr Wood expects firms to invest a lot in order to improve their digital assistants, such as Apple’s Siri or Google Now, so that handsets can become truly smart, combining data from the devices to make it easy to, say, book a restaurant with just a few words. + +The need to invest will fuel consolidation, reckons Francisco Jeronimo of IDC. The likely candidates to rule the industry are Apple, China’s Huawei and South Korea’s Samsung. (The recall by Samsung of 2.5m phones after battery fires shouldn’t linger long in customers’ minds.) Most other brands will disappear or serve small niches. It would be unwise to predict, as some do, that the leading smartphone makers are on their way to becoming has-beens. Apple may even be planning something miraculous for next year’s iPhone anniversary. Keep the faith. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21706559-slowing-growth-and-less-innovation-do-not-spell-end-era-still-ringing-bells/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Fashion retailing + +Passé + +The fashion industry grapples with bad timing + +Sep 10th 2016 | From the print edition + + + +NEW YORK CITY has just begun its sacred rites of retail. For its fashion week, which started on September 7th, tents go up, guests emerge from black cars, models sulk down catwalks and the wealthy and celebrated clap in unison. The point of all this is for designers to declare what will be “in” next spring. But for much of fashion retail, it is increasingly clear that something is out of place. + +For a sense of the problem, consider what happens when the week-long schedule of shows ends. Designers start making the clothes that retailers have ordered, with delivery scheduled four to six months later. But consumers see collections online instantly. “Fast fashion” shops such as Zara, which is part of Spain’s Inditex, rapidly produce clothes “inspired” by what appeared on the runway. When the originals arrive in stores, they feel tired. + +This has produced clear winners and losers. The world’s two biggest clothes retailers are now Inditex and TJX, according to Euromonitor, a research firm. TJX buys excess inventory of brand-name clothes and resells them at low prices. Traditional department stores, meanwhile, are struggling, partly because outdated frocks and coats languish on racks and then have to be sold at a discount. + +The challenge is widely understood. Now the industry is finally starting to deal with it. In March the Council of Fashion Designers of America (CFDA) and the Boston Consulting Group suggested alternatives to the current, slow retail cycle, some of which have been championed by fashionistas. A small band of designers are testing new business models this week in New York, or plan to at fashion week in London later in the month. The idea is to show clothes and sell them at the same time. It may seem obvious, but the shift is not easy for designers, suppliers, fashion magazines and retailers that have worked for so long around the old calendar. Most designers are sticking to it, with minor adjustments. During February’s fashion week in New York, for example, Michael Kors and Tory Burch showed only a very few looks that were available immediately. + +Others are going further. On September 7th Tom Ford staged not a “spring” runway show, as is customary, but a party streamed live online, featuring clothes from his autumn 2016 collection that are available for sale now. Rebecca Minkoff, another designer, will present her collection on the street outside her Manhattan store, with guests invited to shop for the runway looks immediately. Because retailers have already decided which of its clothes to stock, the fashion show can promote specific items to boost their sales. It becomes a more closely co-ordinated activity, says Uri Minkoff, the company’s chief executive. + +British designers are adapting, too. Burberry’s show in September will for the first time present only clothes that are available immediately. The company has pulled its entire fashion-design process forward by about six months, with clothes conceived, samples produced and presentations to editors and retailers all concluded much earlier. The catwalk event will not be a business event for the garment trade but a marketing event for consumers. + +But old habits die hard. The CFDA is exploring whether retailers might stock more clothes when people like wearing them. But many stores and designers still expect them to buy fur coats in July. And some in the industry are sceptical. Pascal Morand, who oversees Paris’s fashion week, approves of selling clothes that consumers can wear now. But he also worries about designers listening too much to what people want. “Consumers favour incremental innovation,” he says, whereas the most exciting designs defy the norm and are often adopted by consumers only gradually. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21706561-fashion-industry-grapples-bad-timing-pass/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The space business + +Mission, interrupted + +An expensive rocket accident puts pressure on SpaceX + +Sep 10th 2016 | From the print edition + +A waste in space + +ROCKET scientists love their jargon, and it seems to be infectious. On September 1st, when a Falcon 9 rocket belonging to SpaceX, a private rocketry firm, blew up on the launchpad at Cape Canaveral, in Florida, the emergency services announced that the mission had undergone a “catastrophic abort”. It happened while the rocket was being fuelled for a pre-launch engine test. No one was hurt, although windows were rattled several miles away. A communications satellite costing $200m that was mounted on the rocket, in preparation for the planned launch on September 3rd, was destroyed in an instant. + +The blast is a setback for SpaceX, a firm founded by Elon Musk, an entrepreneur who also runs Tesla, an electric-car maker. With contracts to fly cargo and supplies to the International Space Station (ISS) for NASA, as well as a thick book of orders from private satellite firms, it is the flag-bearer for a growing, buccaneering “new space” industry. The explosion was SpaceX’s second big failure in 15 months: on June 28th 2015, an uncrewed Falcon 9 rocket exploded halfway to the ISS. + +The immediate consequence is financial. The wrecked satellite belonged to an Israeli firm named Spacecom, which is the object of a takeover deal by Xinwei Technology Group, a Chinese company. That deal had been contingent on the satellite making it successfully into orbit. Spacecom’s shares fell by 40% after the explosion. The satellite was insured, but Spacecom is nonetheless reported to be demanding compensation from SpaceX. The explosion also damaged the launch-pad, leaving it unusable, although SpaceX has access to two others. The firm pointed out that it still has contracts for around 70 launches. + +Its reputation could also be damaged. The list of mishaps is lengthening. SpaceX has flown 29 Falcon 9 missions to date. Besides the two total failures, the fourth flight, in 2012, suffered an engine failure in mid-launch. The rocket was able to carry on to its rendezvous with the ISS, but its secondary payload—another satellite, owned by a firm called Orbcomm—could not be successfully deployed. Potential customers, attracted by the firm’s super-low launch costs—it charges far less than its main competitors—may now start wondering about its reliability. + +History suggests that rockets do become more reliable over time: the European Ariane 5, for instance, suffered two complete failures and two partial ones in the early part of its life, but has now gone through 72 launches and 13 years without mishap. And SpaceX’s machines are blazing entirely new technological trails. The Falcon 9 is the first-ever reusable rocket. Its first stage is designed to fly back to land on an ocean-going barge, a fiendishly difficult process that the firm seems now to have mastered. Mr Musk hopes that will allow him to cut prices even further. + +But the accident may delay the firm’s ambitious future plans. The post-mortem will tie up engineers at a time when the company already has a great deal on its plate. SpaceX had been due to launch nine other Falcon rockets before the end of the year. All those launches have now been postponed. In the early months of next year the firm is due to attempt the first launch of the Falcon Heavy, a new machine derived from the Falcon 9 that will be, by some distance, the most powerful rocket in the world today. That date could well slip. In addition to its contract with NASA to supply the ISS, SpaceX is soon due to start flying astronauts. The first mission is scheduled for some time in 2017. + +In the aftermath of the explosion, NASA, one of SpaceX’s biggest customers, declared its support for the firm. SpaceX itself has said it intends to go back to flying rockets as soon as possible. Mr Musk is not in the rocket business only to make money. He has always been clear that the ultimate goal of SpaceX is to lower the cost of space flight to the point where it is financially feasible to establish a human colony on Mars, as an insurance policy against potentially catastrophic events on Earth. Exploding rockets hurt that aim, as well as profits, so the pressure for a successful launch next time will be intense. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21706560-expensive-rocket-accident-puts-pressure-spacex-mission-interrupted/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +German firms in America + +Making eyes across the ocean + +German firms are increasingly keen on buying American rivals + +Sep 10th 2016 | From the print edition + + + +NO GERMAN firm has paid a higher price for shopping abroad than Daimler-Benz with its disastrous $43 billion merger with America’s Chrysler. When they did their deal in 1998, the carmakers claimed it was a smart manoeuvre in the face of industry consolidation. In fact, after culture clashes and much wasted effort, it fell apart within a decade. Eighteen years on, the record will be broken if Bayer, a drugs and chemicals giant best known for its pharmaceutical products such as aspirin, succeeds in its bid for Monsanto, the world’s biggest seed producer. Whether the outcome would be any better is another question. + +Bayer first made an unsolicited bid for the American firm in May. A deal now looks close. Monsanto has spent the summer playing hard to get; this week it succeeded in getting Bayer to raise its offer again, to a whopping $65 billion (including debt). The German firm is responding to a wave of consolidation in the global chemicals and seeds industry. Earlier in the year ChemChina, a state-owned Chinese firm, agreed to pay $43 billion for Syngenta, a big Swiss firm that sells chemicals to farmers. Buying Monsanto would give Bayer control of the world’s biggest seller of seeds and crop sprays. + +A deal may come before Bayer’s boss, Werner Baumann, is due to meet shareholders later this month, or talks could drag on. But doubts exist over the prospects for the acquisition, even if a deal is agreed. The price offered by the German firm looks remarkably high. Monsanto’s revenues have been sliding because of generally low crop prices and questions over the efficacy of one of its best-known products, a weedkiller. Antitrust concerns also loom large: regulators would certainly be lobbied by farmers wary of rising input costs. Other chemical firms, such as BASF, another German company, are hoping for rich pickings on the assumption that regulators would eventually force a merged Bayer and Monsanto to sell off businesses worth billions of dollars. + +Bayer is likely to push on regardless. Unlike Daimler, it has a proven record of successful acquisitions in America, beginning some 150 years ago with an investment in a coal-tar dye factory in upstate New York. It bought two more firms in the 1970s. Recent deals have been grander. In 2014 it bought the consumer-care business of Merck, an American drugmaker, which makes sunblock and anti-allergy medicines, for $14.2 billion, and absorbed the unit well. + +Whatever happens, German managers are widening their horizons. In July, investors in Deutsche Börse approved a planned $27 billion deal to buy the London Stock Exchange. Years of German firms punching below their weight in America appear to be over. Revised official estimates published in June now count Germany as the third-largest foreign direct investor, holding 10.8% of the total stock of $2.9 trillion of foreign direct investment. It came seventh on the list just a couple of years ago. + +That leap partly reflects new efforts to identify the nationality of the groups that are the ultimate beneficial owners of American assets (German buyers based in Luxembourg, for example, are now counted as German). But most of the rise is due to cash-rich German firms striking deals. In 2014 Siemens, an engineering conglomerate, SAP, an IT firm, and Infineon, a semiconductor maker, among others, each made deals worth billions of dollars. The pace has not slowed. In November last year Merck, a German life-sciences giant (confusingly, nothing to do with Merck in America in the present day), wrapped up a $17 billion purchase of Sigma-Aldrich, a chemicals and biotechnology firm. + +The traffic is not all one way. In August America’s Praxair and Germany’s Linde said they hope to merge and create a firm worth $60 billion, a giant of the industrial-gas industry, in which Praxair would probably dominate. The consolidation of industries such as chemicals and industrial gases offers one straightforward explanation for some of this activity across the Atlantic. But German bosses’ renewed confidence is also a factor. What explains that? Perhaps painful memories of the fiasco of DaimlerChrysler are fading away at last. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21706564-german-firms-are-increasingly-keen-buying-american-rivals-making-eyes-across-ocean/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +German power companies + +Breaking bad + +Sep 10th 2016 | From the print edition + + + +GERMANY’S largest utilities, E.ON and RWE, used to be known in the stockmarket as “widows’ and orphans’ paper”, so dependable were their profits and dividends. Those days are long gone. Since 2011, when the government stepped up its support for wind and solar energy and decided to abandon nuclear power after Japan’s Fukushima disaster, the share prices of both firms have plunged by two-thirds. + +That is why both firms are splitting in two. Their aim is to free up their renewables businesses, allowing them to thrive relatively unencumbered by debts, while underpinning their earnings with boring but reliable returns from running electricity down pylons, poles and wires. Dirtier power-generating assets, exposed to the vagaries of climate politics and commodities prices, are being put into separate companies. In a culmination of this process, on September 12th E.ON plans to spin off Uniper, a new firm into which it has separated its coal- and gas-fired power stations. Later this year RWE will pull off a similar split, albeit in a different way. + +The manoeuvres highlight the huge jolt Germany’s Energiewende, or green-energy transition, has dealt to the business model of what were once two of Europe’s most highly regarded utilities. “If I had proposed this [split] ten years ago, I would have been the laughing stock of the stock exchange and people would have sent me to the mental home,” says Johannes Teyssen, E.ON’s chief executive. + +In its listing on the Frankfurt Stock Exchange, Uniper will issue 53% of its shares to E.ON shareholders, leaving E.ON with the rest. Uniper says it will offer investors a chance to bet on the changing nature of energy markets. Coal- and gas-fired power plants are being replaced by wind and solar as the main sources of electricity, but they will carry on playing a potentially lucrative backup role, goes the pitch. E.ON, in contrast, will seek a greener sort of investor. “Across Europe companies want to get rid of the “bad” fossil-fuel business. E.ON is the most radical,” says Roland Vetter of PraXis Partners, a utilities specialist. + +RWE has followed a different route to the same destination. Instead of keeping its renewables, grid and local businesses, it has moved them, as well as many of its staff, into a new company, Innogy, which it will partially float. A tenth of Innogy shares will be listed in Frankfurt by the end of the year. The dirtier power plants will remain with the rump RWE. + +Plenty have reservations about the coming listings. Some describe Uniper as a “bad utility”, much like the “bad banks” that were set up after the financial crisis of 2008-09 to hold dud loans. Others believe that E.ON is wildly optimistic about the value of the assets it has transferred to Uniper. The unit is held on E.ON’s books at a value of about €12 billion ($13.5 billion), but may be worth no more than €3 billion-5 billion when listed. “In the short term at least, the outlook for those plants is terrible,” says Emanuel Henkel of Commerzbank. To make matters worse, the company is not promising a fixed dividend beyond 2016. What’s more, it may turn out to be too small for index funds, which may force many investors to dump their new shares in short order. + +E.ON’s own shares may perform no better. Initially the parent company had hoped to offload its nuclear-power plants and the cost of decommissioning them onto Uniper, marking a clean break with conventional power generation. But the government prevented that, on the ground that E.ON was ducking out of its responsibilities. Instead it will be required to provide the biggest share of a €23.3 billion decommissioning fund to be set up by the government, which will also require contributions from RWE and two other nuclear-power providers. To finance its share, E.ON may have to raise equity of its own. It will also remain tied to Uniper’s fossil-fuel fortunes because of its 47% stake. + +RWE may have slightly better prospects with Innogy’s IPO, because the latter is much more clearly a clean-energy company, which is likely to attract new investors, and because it has learned from E.ON’s mistakes, says Mr Vetter. But the green-energy credentials of both the new E.ON and Innogy are open to question. In the past E.ON and RWE sought to slow Germany’s energy revolution rather than championing it. Mr Teyssen admits that the company once thought “windmills” were something “out of the Middle Ages”. + +In their favour, they both have vast numbers of customers who could be persuaded to embrace renewable energy. Mr Teyssen prefers to see his company not as a dinosaur fighting extinction, but as a bird—the descendant of a dinosaur—flying into a bright future. Provided, that is, it doesn’t crash into a power pylon. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21706565-breaking-bad/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Shhhh! + +Companies would benefit from helping introverts to thrive + +Sep 10th 2016 | From the print edition + + + +MOST companies worry about discriminating against their employees on the basis of race, gender or sexual preference. But they give little thought to their shabby treatment of introverts. Carl Jung spotted the distinction between introverts and extroverts in 1921. Psychometric tests such as the Myers-Briggs Type Indicator consistently show that introverts make up between a third and a half of the population. Susan Cain’s book on their plight, “Quiet: The Power of Introverts in a World that Can’t Stop Talking”, has sold more than 2m copies; the TED talk based on the book has been viewed just over 14m times. And yet, if anything, the corporate approach to introverts has been getting worse. + +The biggest culprit is the fashion for open-plan offices and so-called “group work”. Companies rightly think that the elixir of growth in a world where computers can do much of the grunt work is innovation. But they wrongly conclude that the best way to encourage creativity is to knock down office walls and to hold incessant meetings. This is ill-judged for a number of reasons. It rests on a trite analogy between intellectual and physical barriers between people. It ignores the fact that noise and interruptions make it harder to concentrate. And companies too often forget that whereas extroverts gain energy from other people, introverts need time on their own to recharge. + +The recent fashion for hyper-connectedness also reinforces an ancient prejudice against introverts when it comes to promotion. Many companies unconsciously identify leadership skills with extroversion—that is, a willingness to project the ego, press the flesh and prattle on in public. This suggests that Donald Trump is the beau idéal of a great manager. Yet in his book “Good to Great”, Jim Collins, a management guru, suggests that the chief executives who stay longest at the top of their industries tend to be quiet and self-effacing types. They are people who put their companies above their egos and frequently blend into the background. + +Many of the most successful founders and chief executives in the technology industry, such as Bill Gates of Microsoft, and Mark Zuckerberg of Facebook, are introverts who might have floundered in the extroverted culture of IBM, with its company songs and strong emphasis on team-bonding. In penalising other people like them, firms are passing over or sidelining potential leaders. At all levels of company hierarchies, that means failing to take full advantage of employees’ abilities. + +What can companies do to make life better for introverts? At the very least, managers should provide private office space and quiet areas where they can recharge. Firms need to recognise that introverts bring distinctive skills to their jobs. They may talk less in meetings, but they tend to put more thought into what they say. Leaders should look at their organisations through the introverts’ eyes. Does the company hold large meetings where the loudest voices prevail? That means that it is marginalising introverts. Does it select recruits mainly on the basis of how they acquit themselves in interviews? That could be blinding it to people who dislike performing in public. + +Some of the cleverest companies are beginning to look at these problems. Amazon has radically overhauled its meetings to make them more focused. Every meeting begins in silence. Those attending must read a six-page memo on the subject of the meeting before they open their mouths. This shifts the emphasis from people’s behaviour in the meeting to focused discussion of the memo’s contents. Google has downplayed the importance of interviews in recruiting and put more emphasis on candidates’ ability to carry out tasks like the ones that they will have to do at the firm, such as writing code or solving technical problems. + +Managers cannot be on top of the very latest research on personality types. Nonetheless, they should pay more attention to the way that groups of people interact when it comes to designing teams. One study that looked at operations lower down an organisation shows that extroverts are better at managing workers if the employees are just expected to carry out orders, but those who tend towards introversion are better if the workers are expected to think for themselves. + +Extrovert five times a day + +Introverts must also work harder at adapting to corporate life, since work is essentially social. They could communicate over the keyboard rather than in meetings, or by arranging smaller gatherings rather than rejecting them altogether. This is important for climbing the ladder. Karl Moore of McGill University in Montreal, who has asked over 200 CEOs about introversion on the radio show he hosts, says that introverts who make it to the top usually learn how to behave like extroverts for some of the time. Claude Mongeau, the former CEO of Canadian National Railway, for example, set himself the goal of acting like an extrovert five times a day. In any case, the majority of people are on a spectrum of introversion to extroversion. Mr Moore thinks that quieter people can make as much impact as full extroverts, if they give themselves time to recharge. He sets his students the task of “networking like an introvert” or “networking like an extrovert” to broaden their perspectives. + +In “Quiet”, Ms Cain concludes that business has long been dominated by an “extrovert ideal”, thanks to a succession of corporate fashions—whether the 1950s model of the “organisation man”, who thrived by asserting himself in meetings and inside teams, or today’s fad for constant communication. Fortunately, some trends do now push in the other direction. The field of technology, an industry where introverts are common, has made it easier for everyone to communicate at a distance. The aim of enlightened management is not to tilt an extrovert-oriented company rapidly towards the introverts. It is to create a new kind of firm, in which introverts, extroverts and all the in-betweeners are equally likely to flourish. Call it the ambivert organisation. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21706490-organisations-have-too-long-been-oriented-towards-extroverts-companies-should-help/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Investing in commodities: Of mice and markets + +Buttonwood: Acclimatising + +The G20 and the world economy: Agreeing to disagree + +Kenya’s interest-rate cap: Ceiling whacks + +Offshore finance: The holdout + +Long-term private-equity funds: The Omaha play + +Financial education: Quantum of scholars + +Free exchange: All in the family + + + + + +Articles Sections Next + +Investing in commodities + +Of mice and markets + +A surge in speculation is making commodity markets more volatile + +Sep 10th 2016 | From the print edition + + + +A GAME of cat and mouse appears to be taking place in the oil market. The felines are big producers who want prices to go higher, the rodents speculators betting that they will fall. Twice this year, in the first quarter and the third, hedge funds and others have taken out record short positions on futures of West Texas Intermediate (WTI), an American crude-oil benchmark, only to be mauled by (so far empty) talk among members of the OPEC oil cartel and Russia of a production freeze. The resulting scramble by funds to unwind their short positions has fanned a rally in spot oil prices (see left-hand chart). + +This reminds Ole Hansen, head of commodities research at Denmark’s Saxo Bank, of currency intervention by central banks. It often works best, he says, when speculators are positioned heavily in the opposite direction. He mischievously pictures Saudi Arabia’s deputy crown prince, Muhammad bin Salman, watching a screen on his desk each week when America’s Commodity Futures Trading Commission (CFTC) reports speculative positions, poised to pounce. + + + +Not long ago there were fewer mice to catch: in 2012-14 volumes in commodity futures and options markets as a whole were relatively muted, as China’s economy slowed and prices of materials from copper to coal tumbled. Now volumes have bounced back. The Chicago-based CME says the volume of energy futures and options traded on its exchanges has risen by 21%, year on year, in 2016. Those of metals are also up strongly. Barclays, a bank, says that inflows into commodity-based exchange-traded products (ETPs), index funds and other investments have surged too. Led by gold and oil, this year they are at their highest for seven years (see right-hand chart). + +The last time investment flowed heavily into commodities was at the tail end of the China-led supercycle, in 2009-12. But back then, says Erik Norland of the CME, the pattern was different. Commodity markets were dominated by investors making one-way bets that prices would rally. Moreover, producers saw no need to hedge their exposures because prices (and hence their profits) were rising. + +Lately, however, markets have become harder to read. In oil, for instance, the heightened volatility appears to have attracted hedge funds, which for the first time have been the most active investors in futures markets all year, according to CFTC data. Kevin Norrish, head of commodities research at Barclays, describes today’s investors as more tactical than strategic. They are not investing out of confidence in the asset class as a whole. One example is their enthusiasm for gold, considered a safe-haven asset amid concerns about Brexit and America’s presidential election. + +Saxo’s Mr Hansen reckons the low yields offered elsewhere in financial markets are also piquing interest in commodities. The cost of buying a tonne of copper and storing it for sale, for example, is less daunting when interest rates are negative. + +The low-yield world may also be driving brave, or foolhardy, retail investors into commodity ETPs. The biggest beneficiaries this year have been gold funds. In America almost $12 billion has poured into one exchange-traded fund, State Street Global Advisors’ SPDR Gold Shares; the total invested in all such oil funds is just $1 billion. Yet oil has also attracted some devil-may-care day traders prepared to risk everything for a quick buck. Mr Hansen points out that a particularly hair-raising ETP, the family of so-called 3X, or triple-leverage, notes linked to WTI prices, has surged in popularity this year, even though the fund is designed to multiply losses as well as gains. Investors in that are probably chasing volatility, rather than thinking about the boring details of supply and demand. + +Such bets may be adding to the choppiness of markets. During the commodities boom, speculators were often wrongly blamed for pushing food and energy prices to stratospheric heights, when the true cause was China’s thirst for scarce raw materials. Since then, the new mines, oil wells and fields of grain carpeting the planet to meet that demand have started to produce goods just when the appetite for them has dulled, pushing down prices. But speculators are jumping on anything that may suggest large changes in supply, which may cause exaggerated price swings. For instance, they have placed big wagers on rising coffee prices this year, because of weather-related crop damage in Vietnam, Indonesia and Brazil. Prices of robusta and arabica coffee are near 18-month highs. + +Some believe inflows into commodities have already peaked. The pattern in recent years has been to divest in the autumn. But with the presidential election looming and uncertainty about American interest rates high, further volatility may be in store. Moreover, Saudi and Russian officials are again talking about stabilising oil markets as they prepare for a meeting later this month, which could make waves. The choppier markets are, the more speculative money they may attract. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21706512-surge-speculation-making-commodity-markets-more-volatile-mice-and/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Acclimatising + +Getting more sophisticated about green investing + +Sep 10th 2016 | From the print edition + + + +IT’S not easy being green, especially if you’re a fund manager. A decade or so ago, when mainstream politicians such as Britain’s David Cameron were petting huskies and embracing environmental issues, the stocks of renewable-energy producers were in vogue. But as in the dotcom boom a few years earlier, share prices ran way ahead of the potential for profits. An exchange-traded fund in global clean-energy stocks, set up by iShares in 2008, has lost investors 79% since its launch. Over the longer term, an analysis by Gbenga Ibikunle and Tom Steffen in the Journal of Business Ethics found that European green mutual funds had significantly underperformed their conventional rivals between 1991 and 2014. + +The rise in shale-oil and -gas production, and the accompanying decline in energy prices, have spelled double trouble for green investors. On the one hand, they have reduced the incentive for governments to favour renewable-energy producers—and thus dented the prospects of some green stocks. On the other hand, they have also hit the share prices of conventional oil and gas companies, which environmental funds tend to avoid. + +That decline has given succour to a campaign joined by a number of investors—mostly from the public and charitable sectors—to boycott the shares of fossil-fuel producers. Such investors cannot be accused, at least in the short term, of breaking the “fiduciary duty” that fund managers owe to their clients to generate the best possible return. + +In a new paper, BlackRock, a big fund-management group, argues that there are more sophisticated approaches to greenery than boycotting oil and coal companies, or piling into wind-turbine manufacturers. For example, investors could own a portfolio as close as possible to a given index, but choose the greenest companies within each sector. BlackRock reckons that it is possible to create a portfolio which tracks the MSCI World Index with an annual error of just 0.3% a year, yet comprises companies with carbon emissions 70% lower than the index as a whole. + +Another option is to look at the figures companies report for their own carbon emissions. BlackRock found that over the period from March 2012 to April 2016, the firms that had reduced their carbon emissions most beat the MSCI World Index by 4%; those that had shown the smallest improvement underperformed the index by nearly 5% (see chart). + +Although the world has struggled to reduce its carbon emissions, it would be a mistake for investors to believe that green policies cannot cause upheaval in individual industries. BlackRock points to the revolution in lighting. The phasing-out of incandescent light bulbs, induced by regulation, has spurred investment in light-emitting diode (LED) bulbs; the price of LEDs has fallen by 90% since 2010. Improvements in battery technology may yet transform the power industry, BlackRock thinks, by making it easier and cheaper to store energy from renewable sources such as wind and solar power. + +There are other climate-related risks that investors need to consider. In America the frequency of extreme weather events that cause at least $1 billion-worth of damage has risen sharply since 2000; that has implications for insurers. Extreme weather can cause short-term shocks to economic activity; rising temperatures can dent productivity growth. + +Nevertheless, even as the impact of environmental change is felt, short-term factors can still cause problems for investors keen on greenery. China and America may have ratified the Paris climate-change agreement on the eve of the G20 summit this week but there is plenty of resistance to green policies that are perceived to be expensive. Barack Obama has succeeded in boosting the use of renewable energy in America but has had to use executive action to bypass Republican opposition in Congress. + +As mainstream politicians fend off attacks from the populist right and left, the task of cutting emissions may get even harder. In Britain, for example, Mr Cameron has been and gone, and Theresa May, his successor, has abolished the Department for Energy and Climate Change. Even if Hillary Clinton defeats Donald Trump, a climate-change denier, in America’s presidential race, she seems likely to face a sceptical Congress. The undemocratic government of China may find it easier to meet its targets. + +Although they may be confident about their long-term analysis, therefore, environmental investors will need internal fortitude. Owning a green portfolio means enduring stormy moments. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21706517-getting-more-sophisticated-about-green-investing-acclimatising/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The G20 and the world economy + +Agreeing to disagree + +The global economy has many ailments and few easy remedies + +Sep 10th 2016 | HANGZHOU | From the print edition + +Great show, shame about the substance + +AT ITS first leaders’ summit, the Group of 20’s raison d’être was clear. Held shortly after the collapse of Lehman Brothers in late 2008, the forum of big economies reassured a worried world simply by putting on a show of unity. But as the worst ravages of the financial crisis have faded, the G20 has struggled to find the same sense of purpose. This year’s summit in Hangzhou, in eastern China, which ended on September 5th, pulled leaders’ attention in many different directions. + +It was preceded by another display of co-operation: America and China ratified the Paris climate-change agreement. Then work began on a long list of problems, including simmering trade disputes, overstretched central banks, corporate tax avoidance and a populist backlash in several countries against globalisation. The final communiqué ran to more 7,000 words, not counting several lengthy appendices. + +This sprawl frustrated some participants, who wanted a sharper focus on growth. The IMF noted that 2016 will be the fifth straight year of global growth below 3.7%, its average for nearly two decades before the crisis. The G20 economies are likely to miss a target they set themselves in 2014, of lifting their combined output by 2% over the IMF’s then forecast for 2018. + +Judging the G20’s success by growth outcomes is unfair, though, when most of its big members are holding back. America is contemplating a second interest-rate rise. Germany remains sceptical of stimulus. China is at present more intent on defusing financial risks than on ginning up GDP. + +And there is a more positive reading of the G20’s spread: that it is evolving to tackle, if not quite solve, the range of problems that bedevil the global economy. Although the G20 seems unwieldy, it also has an advantage: flexibility. Lacking a permanent bureaucracy, it can switch emphasis annually, depending on which country is in the chair. + +China put “innovation” at the heart of its G20 agenda. Vague as that sounds, it was sensible. First, debating whether to rely more on fiscal or on monetary policy to promote growth only gets you so far. In the longer term, progress depends on improved productivity—getting more out of existing resources. Second, at least some of the anger directed at globalisation stems from anxiety about new technologies, such as artificial intelligence, that threaten established patterns of employment. There is no simple answer: the G20 promised to share technology with poor countries and to develop training for workers. But getting the world’s leading economies to think collectively about the downside of innovation was better than nothing. + +On specific disputes, alas, little progress was made in Hangzhou. Both America and Europe pushed China to do more to curb its industrial overcapacity, especially in steel. China countered that weak global demand was as much the problem as oversupply. The proposed solution—to establish a forum to monitor global excess steel capacity—was a classic example of agreeing to disagree. + +Yet the summit was also a timely reminder of why there is no substitute for such gatherings. Days before it began the European Commission ruled that Apple had underpaid taxes in Ireland, by up to €13 billion ($14.7 billion). That has raised the prospect of a transatlantic tax war, with America hinting at retaliation. Such a conflict would undermine one of the G20’s main achievements: it was a request from the group in 2012 that led the OECD, a club of rich countries, to draft guidelines that make it harder for companies to shift profits to their favoured tax regimes. The Apple case will roll on, but in the meantime the G20 committed itself to more co-ordination on taxes. Within two years, most countries will automatically share information about taxes levied on non-residents, narrowing the scope for evasion. + +To those visiting for the summit, China sought to present an image of strength. The government shut down factories, near and far, to ensure the air was clean. It blanketed Hangzhou with security. And it put on a grand evening gala, featuring a dazzling light show and ballerinas dancing on water. The substance of the meetings was much duller. But the summits will, indeed must, go on. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21706514-global-economy-has-many-ailments-and-few-easy-remedies-agreeing-disagree/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Kenya’s interest-rate cap + +Ceiling whacks + +Curbing lending rates makes good politics but bad economics + +Sep 10th 2016 | NAIROBI | From the print edition + + + +WHEN interest rates are uncomfortably high, what can be done? To Western central bankers struggling with overflowing liquidity, that would be a pleasant question to have to answer. In Kenya, where the central bank’s headline rate is 10.5%, it is a nagging political problem. On September 14th a law capping the interest rates that commercial banks can charge at four points above the central-bank rate is due to come into force. Under the same law, banks will have to pay depositors at least 70% of the central-bank rate. Bankers and the IMF are horrified. What effect will the cap have? + +MPs had already tried twice before to cap rates. On both occasions the law they put forward foundered on a presidential veto. The current president, Uhuru Kenyatta, signed the law despite the objections of the central bank and most of the banking industry. Kenya is holding a presidential election next year, and access to finance has become a hot political issue. According to Aly Khan Satchu, a well-connected Kenyan financier, Mr Kenyatta felt too weak to resist. Pundits rejoiced. “Cheaper loans at last,” declared the Standard; “Why low bank rates are good for your family,” ran the headline in the Daily Nation. + +For most businesses, the more likely effect is a drying-up of credit. This is because the real cause of Kenya’s high interest rates is not greedy banks but its government, which is splurging money ahead of next year’s vote. On June 9th Henry Rotich, the finance minister, announced that the budget deficit for 2016-17 would reach 9.3% of GDP, far higher than anticipated. Yields on government debt have typically hovered around 14% over the past year. Under the new law, banks are being asked to lend to private businesses for the same rate they can get for lending to the government. + +How bad the impact on the economy will be depends largely on how businesses react, says Anzetse Were, a Kenyan economist. Most probably, she reckons, businesses will find other sources of credit than banks. Microfinanciers will not be affected; nor will the savings co-operatives which provide credit to large parts of the economy. These lenders may well expand their business as banks shrink theirs. One “silver lining” could be to tip more Kenyan businesses, which rely heavily on debt, to raise equity instead, says Ms Were. + +Bank shares fell sharply on the Nairobi stock exchange after the law was passed. Habil Olaka, the chief executive of the Kenyan Bankers Association, says that although the law does not require it, banks have agreed to apply the new terms to their existing portfolio, meaning that their margins will fall at once. Mr Olaka says banks will try to make up for losses by expanding the use of technology such as mobile-phone apps to cut their costs. But most will probably have to close branches, sack staff and lend less. + +A study by the World Bank in 2014 found that half the countries in sub-Saharan Africa have interest-rate ceilings of one sort or another, including the biggest economies, Nigeria and South Africa. African economies with caps generally have a lower ratio of credit to GDP than those without. In Kenya GDP growth has been driven by credit growth, according to Exotix, an investment bank. That might now slow. + +One consequence of interest-rate caps is that credit flows to safer borrowers rather than to needy but risky businesses. In Kenya the immediate beneficiaries may well include those who passed the law. Compared with their constituents, Kenyan MPs are among the best paid in the world. But winning office is not cheap and, in the course of campaigning, many build up hefty debts. Cheaper loans mean cheaper campaigns. Which way’s the bank? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21706515-curbing-lending-rates-makes-good-politics-bad-economics-ceiling-whacks/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Offshore finance + +The holdout + +The Bahamas cocks a snook at the war on tax-dodgers + +Sep 10th 2016 | From the print edition + +Why hurry? + +GROWING peer pressure on countries to exchange information about clients of their financial firms has left tax evaders with few places to hide. Panama was one, but the “Panama Papers” revelations this year have forced it into line: its government is poised to embrace the Common Reporting Standard (CRS), administered by the OECD, a club of mainly rich countries, which is becoming the global benchmark for sharing data. “Automatic”—that is, regular and systematic—exchange is meant to begin in 2017. But some recalcitrants remain. Chief among them is the Bahamas, an archipelago east of Florida and a tax haven of long standing. + +Most of the 100-plus countries in the CRS have signed a “multilateral convention” designed to speed up the data-swapping. Although the Bahamas is in the CRS, it is one of a few that have elected instead to strike deals one country at a time—and then only with those with which it already has special data-exchange agreements known as TIEAs. The Bahamas has only 26 of these (not counting TIEAs with other tax havens, which are meaningless). That leaves a lot of gaps. It has only two with Latin American countries, which provide the bulk of its offshore business. It says others are in the works. + +The Bahamas justifies this go-slow approach by citing concerns over the security of data passed to other tax authorities, and argues it is better suited to countries (like itself) with systems based mainly on indirect taxes. This looks like an excuse to drag its feet. The OECD has a team policing CRS members’ data-security safeguards, which even the Bahamians admit mitigates some of the worries. Mark Morris, an independent tax expert, says the Bahamas has a “disingenuous ‘compliant non-compliance’ strategy”: join the CRS, but choose the clunkier bilateral method and use fabricated confidentiality concerns to share data with as few countries as possible. + +The Bahamas Financial Services Board (BFSB), which promotes the islands’ financial centre, has stressed at international industry events that it will move very cautiously on information exchange. Some interpret this as a veiled invitation to park undeclared money there. Others say the Bahamas’ talk of its strategy being key to its finance industry’s “survivability” shows it believes it can carry on only by accepting undeclared funds. Tax-dodgers may also be attracted by the fact that the Bahamas is one of the few places where tax evasion does not count as a “predicate” (underlying) offence for money-laundering charges. + +All this worries the OECD’s tax-transparency crusaders. Pascal Saint-Amans, the club’s head of tax policy, was concerned enough to fly to Nassau last year to address the cabinet. “I told them if they play games they will lose. Their reputation will be hit,” he says. The lack of a response has left him “extremely disappointed”. + +On September 6th, just after receiving questions from The Economist, the government issued a press release saying that “progress [is] being made” with CRS compliance, that this is a “priority”, and that the Bahamas is “clean”. In response to the questions, it said it sees no competitive advantage from not signing the multilateral convention and is “cognizant of the damage” it could suffer if it advertised itself as being a safe place for the tax-shy. It said it is willing to exchange data “with any appropriate partner that approaches us”. The BFSB said it “has NOT been promoting the Bahamas as a place for undeclared funds”. + +The Bahamas is not quite alone. As many as a dozen other CRS countries have declined to sign the convention or equivalent multilateral agreements. But most either have lots of TIEAs with the countries where their clients live (Hong Kong, for instance) or are minnows that even Mr Saint-Amans won’t lose sleep over (like Dominica). The United Arab Emirates is a worry, he says. But the Bahamas displays a unique combination of defiance and a sophisticated offshore trust and banking sector, giving clients plenty of choice. Its banks have assets of $223 billion, 26 times its GDP. + +Mr Saint-Amans says he now plans to write the government a stern letter. Some might conclude from this that he suspects another visit would be a waste of time. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21706516-bahamas-cocks-snook-war-tax-dodgers-holdout/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Long-term private-equity funds + +The Omaha play + +Buy-out firms are seeking out longer-term investments + +Sep 10th 2016 | From the print edition + + + +WARREN BUFFETT’S Berkshire Hathaway is celebrated for identifying undervalued companies, buying them, holding on to them for years and reaping handsome rewards for its shareholders. Private-equity firms, by contrast, habitually deal in shorter timespans. Funds with a typical life of ten years aim to turn round troubled companies and sell them profitably within just three to five years. Recently, though, the private-equity industry has taken a page from Mr Buffett’s playbook. + +Several buy-out firms have been setting up funds that intend to lock up investor funds for 20 years and to hold individual companies for at least ten. Their target net annual return of 10-12% is well below the 20% usually aimed for by ten-year funds, but they promise less volatility and lower fees—1% or so, rather than the customary 2%. Among the largest private-equity firms, Blackstone, the Carlyle Group and CVC have all set up dedicated long-term funds. The largest, Blackstone’s, has raised nearly $5 billion. Specialised upstarts such as Altas Partners of Toronto, which raised $1 billion for its first fund in the spring, are also getting in on the act. + +Private-equity houses are establishing these funds mainly because their clients have an appetite for them. With interest rates at rock-bottom, investors are keen to find assets that can offer decent returns. Sovereign-wealth funds, which can invest for indefinite periods, are happy to accept long-term funds’ illiquidity. Endowments, too, are locking up money for longer. + +Creating long-term funds is not simple. Ludovic Phalippou, from Said Business School at Oxford University, says that getting fee and incentive structures right can be “very tricky”. Fees, typically fixed for the life of a fund, may look reasonable at first but prove wrong later. Low fees may lure investors but give private-equity firms insufficient incentives to manage the investments diligently; high fees could allow firms to siphon off most of investors’ returns. In quick turnarounds, new managers are usually brought in with the promise of juicy bonuses linked to the sale; how, Mr Phalippou asks, could that be done with a 20-year horizon? + +Some have concerns about conflicts of interest. One worried investor fears that large private-equity firms might earmark promising companies for their short-term funds—which remain their core business—leaving only mediocre ones for the new long-term funds. + +Small, long-term specialists like Altas Partners should avoid that pitfall. Andrew Sheiner, Altas’s founder, says he intends to hold on to investments for up to 15 years, but to retain the flexibility to “own each business for as long as it makes sense”, so some may be sold sooner. Altas says it has attracted a lot of interest not only from investors but also from the owners and bosses of target companies, many of whom are tired, in Mr Sheiner’s estimation, of being handed from one private-equity owner to another, and instead seek a more stable, longer-term partner. + +Despite their recent surge, longer-dated private-equity funds are likely to remain a niche. Last year investors committed $384 billion to the whole industry; the amount going into long-term funds is a small fraction of that. Only 5% of funds set up in 2016 have an intended lifespan longer than 12 years, according to Preqin, a data provider. The large, sophisticated investors who would be the best fit for such long-term funds can often build internal private-equity teams more cheaply. For others keen to invest in a portfolio of companies for the long term, there is another option. If even Henry Kravis, co-founder of KKR, a buy-out behemoth, has called Mr Buffett’s method “the perfect private equity model”, might it not make sense to invest directly in Berkshire Hathaway? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21706506-buy-out-firms-are-seeking-out-longer-term-investments-omaha-play/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Financial education + +Quantum of scholars + +The promise of a faster and cheaper path to Wall Street + +Sep 10th 2016 | NEW YORK | From the print edition + + + +MATHEMATICAL wizards known as quants are prized by trading firms in Chicago, hedge funds in Greenwich, Connecticut, and big banks in New York, London and Hong Kong. They wear T-shirts, not suits, and can bring in fatter pay-packets than bankers for less gruelling hours. But becoming a quant is hard: a PhD in maths or physics usually helps. + +More and more universities are trying to provide students with a short cut to Wall Street, via master’s degrees in quantitative finance. Familiarity with advanced calculus, probability and programming are minimum requirements. Since Carnegie Mellon University launched the first computational-finance programme in 1994, more than 40 universities worldwide, including Columbia, MIT and Oxford, have followed. + +These courses, usually 12 or 18 months long, are faster and cheaper than either doctoral programmes or typical MBAs. They are popular, too: last year the median master-of-finance programme (a broader category that includes quantitative finance) received 5.2 applications for each place, against 4.5 for MBAs, reports the Graduate Management Admission Council, a global group of management colleges. In the early 2000s many students were already working in general finance or technology. Today, over half of would-be quants at American universities are new graduates. Between 70% and 80% are foreign, mainly from China, India and France. + +Demand for mathematical skills is on the rise. In trading people are needed to design strategy and write codes, rather than execute individual deals. Fintech startups are keen on data-mining and machine-learning skills. Courses have adapted to shifts in Wall Street’s requirements. Since the financial crisis, banks have become more worried about quantifying risk and less keen on designing exotic products; Carnegie Mellon has cancelled advanced derivatives courses and started ones on risk management. + +Graduates from the best programmes can expect well-paid jobs: the average starting salary for alumni of the University of California, Berkeley, was $154,668 last year. Freshly minted quants must still compete against PhDs, who are better trained to research and build models. Graduates are up against computer-science types and recruits from the tech industry. But any quantitative analysis would conclude that demand for these students is healthy, and growing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21706505-promise-faster-and-cheaper-path-wall-street-quantum-scholars/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +All in the family + +America does little to help people’s work-life balance. Enter Heather Boushey + +Sep 10th 2016 | From the print edition + + + +AMID the furore of America’s bizarre presidential election, it is easy to forget that history may be made. If elected, Hillary Clinton will be the first female president. Her achievement would be one manifestation of arguably the most important social change of the past century. At the start of the 1950s only about one-third of American women worked, compared with almost 90% of men. Today 57% of women are in work, while the share of men is just under 70%. This shift has added trillions to economic output, and allowed women who might otherwise have been stuck at home to start companies, invent new products, advance the course of science or simply to earn a living of their own. It also transformed life within the home. Yet American policymakers have responded painfully slowly to this new reality. + +America is an extraordinary outlier in the quality of its safety net for families. It does not require firms to provide any paid family leave (when, for example, a child is born). The average in the OECD, a club of mostly rich countries, is 54 weeks. As a share of GDP, total spending on family benefits in America, at 1.6%, is well below the OECD mean. And a third of that takes the form of tax breaks—not much use to poorer families, which pay little income tax in the first place. + +Mrs Clinton, it seems, means to fix this. She has named Heather Boushey as chief economist in her transition team (putting her in line for a top job in a Clinton administration). Ms Boushey, currently at the Washington Centre for Equitable Growth, a left-leaning think-tank, has made inequities in the labour market the focus of her research. + +Despite decades of advances, the gender gap remains wide. Women are still under-represented in senior positions and among entrepreneurs. That helps to explain why the median female wage is 80% of that of men, lower than the OECD average. Worryingly, progress may be slowing. The proportion of women in the American workforce—which remains lower than in much of western Europe—has declined in recent years. The share of professional degrees earned by women soared from almost nothing to above 40% in the early 2000s, but has since fallen. + +In “Finding Time: The Economics of Work-Life Conflict”, a book published earlier this year, Ms Boushey argues that America’s labour-market troubles are largely the result of its failure to grapple with changes in family structures. Women once stayed at home, cooking meals, ironing clothes and looking after children while their husbands went out to work. This division was not universal—in poorer families, especially, women have long been employed outside the home. But it was the norm. + +As women joined the paid labour force in increasing numbers, more household responsibilities were shoehorned into the hours outside work. (Although men do more in the home than they used to, women still carry out the bulk of domestic duties.) Some can afford nannies and cleaners to help out. But many families, and especially women, have too much to do and too little time in which to do it. That may in turn push them to give up formal work. Family-friendly policies almost certainly boost labour supply. The OECD reckons, for example, that increases in paid leave up to a total of two years raise women’s participation in the labour force. + +Ms Boushey therefore wants America’s government to step into parts of workplaces and homes that it has hitherto chosen to avoid. In her book, she recommends reinforcing America’s safety net to make it more like those in Europe: to grant workers more paid time to care for new babies or ailing relatives; to allow greater flexibility in working time; and to provide greater support for the education of pre-school children. Those all sound like a boon for hard-pressed households. But is the government really needed to supply them? + +With her co-authors, Ms Boushey argues that better family-leave policies should not only improve the lives of struggling families but also boost workers’ productivity and reduce firms’ costs. In research with Sarah Jane Glynn, of the Centre for American Progress, another left-leaning think-tank, Ms Boushey found that the cost to employers of replacing workers who leave (for any reason, from a new job to parenthood) could amount to between 15% and 20% of annual pay, even in occupations paying less than $30,000 per year. Doing good for workers should, therefore, be good for businesses and for the economy. Other research suggests that more flexible work rules reduce absenteeism and increase productivity. + +But if enlightened family policies enable firms to raise their workers’ productivity and cut costs, they ought to be leaping to provide them themselves. At the very least, the cost of hiring replacements ought to give hard-pressed employees—those who are pregnant, say, or who have to care for elderly parents—room to bargain for better treatment. On the face of things, new government rules and regulations are unnecessary. + +Inside out + +Some companies have indeed spotted that it pays to be kind to their staff: when Google increased paid maternity leave from 12 to 18 weeks in 2007, the rate at which new mothers left fell by half. But big, profitable companies such as Google are better placed than most to notice the opportunity and act upon it. In firms employing a handful of people rather than many thousands, it can be debilitating if someone takes six months off. Here a nudge from the state may help. Broad social insurance could help smaller companies to share the financial load: they would pay into a fund, from which they could draw when employees go on parental leave, say. There are no easy answers here. But Mrs Clinton’s team have at least started to ask the right questions. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21706504-america-does-little-help-peoples-work-life-balance-enter-heather-boushey-all/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Building materials: Top of the tree + +The story of yeast: Domesticated tipple + +Military technology: Top Gun’s topper + + + + + +Articles Sections Next + +Building materials + +Top of the tree + +The case for wooden skyscrapers is not barking + +Sep 10th 2016 | From the print edition + + + +THE five-storey pagoda of the Temple of the Flourishing Law in the Nara prefecture of Japan is one of the world’s oldest wooden buildings. It has withstood wind, rain, fire and earthquakes for 1,400 years. Analysis of the rings in the central pillar supporting the 32-metre structure suggests the wood that it is made from was felled in 594, and construction is thought to have taken place soon after. + +In an age of steel and concrete, the pagoda is a reminder of wood’s long history as a construction material. New techniques mean that wood can now be used for much taller buildings. A handful are already going up in cities around the world. The 14-storey Treet block of flats in Bergen, Norway, is currently the tallest. But Brock Commons, an 18-storey wooden dormitory at the University of British Columbia in Canada, is due to be completed in 2017. That is when construction is expected to begin on the 21-storey Haut building in Amsterdam. Arup, a firm of engineering consultants working on the project, says it will be built using sustainable European pine. Some architects have even started designing wooden skyscrapers, like the proposed Tratoppen (“the treetop” illustrated above), a 40-floor residential tower on the drawing-board in Stockholm. + +Timber! + +Wood has many attractions as a construction material, apart from its aesthetic qualities. A wooden building is about a quarter of the weight of an equivalent reinforced-concrete structure, which means foundations can be smaller. Timber is a sustainable material and a natural “sink” for CO2, as trees lock in carbon from the atmosphere. Tall steel-and-concrete buildings tend to have a large carbon footprint, in part because of the amount of material required to support them. Using wood could reduce their carbon footprint by 60-75%, according to some studies. + +There are two main concerns about using wood to build high. The first is whether wood is strong enough. In recent years there have been big advances in “engineered” wood, such as cross-laminated timber (CLT) made from layers of timber sections glued together with their grains at right angles to one another. In much the same way that aligning carbon-fibre composites creates stronger racing cars, aircraft and golf clubs, CLT imparts greater rigidity and strength to wooden structures. + +A recent experiment by Skidmore, Owings & Merrill, a firm of architects, and Oregon State University, shows how strong engineered wood can be. The researchers used CLT in a hybrid form known as concrete-jointed timber. This featured an 11-metre wide CLT floor section with a thin layer of reinforced concrete spread across the surface. Thicker sections of concrete were added where the floor was supported by pillars. It was put into a giant test rig where a powerful hydraulic press pushed with increasing force onto the surface. The researchers wanted to see how the structure moved under load, but kept pressing in order to find its limits. The floor finally began to crack when the load reached a massive 82,000 pounds (37,200kg), around eight times what it was designed to support. + +The concrete covering the floor was mainly for sound insulation, but it helps to deal with the second worry: fire. The concrete adds a layer of fire protection between floors. In general, a large mass of wood, such as a CLT floor, is difficult to burn without a sustained heat source—for the same reason that it is hard to light a camp fire when all you have is logs. Once the outside of the timber chars it can prevent the wood inside from igniting. The big urban fires of the past, such as the Great Fire of London, which occurred 350 years ago this month, were mostly fuelled by smaller sections of timber acting as kindling. Prospective tenants would doubtless need lots of reassurance. But with other fire-resistant layers and modern sprinkler systems, tall wooden buildings can exceed existing fire standards, reckons Benton Johnson, a project leader with Skidmore, Owings & Merrill. + +He says the test showed that not only can wood be made strong enough for tall buildings but that “it makes sense to use it”. Although a cubic metre of concrete is cheaper than an equivalent volume of timber, wooden buildings can be built faster. Mr Johnson thinks the appeal of wood, both visually and as a sustainable material, will make it commercially attractive to property developers. + +London’s tree house + +What about woodworm and rot? “If you don’t look after it, steel and concrete will fail just as quickly as timber,” says Michael Ramage, head of the Centre for Natural Material Innovation at the University of Cambridge in Britain. Dr Ramage and his colleagues are also testing wooden materials for tall buildings, including for an 80-storey, 300-metre wooden skyscraper (see illustration) presented as a conceptual study to the City of London. Designed with PLP Architecture and Smith and Wallwork, an engineering company, it would, if built, become the second-highest building in London after the Shard. + +For a busy city such as London, there are yet more advantages to building higher with timber, adds Dr Ramage. For a start, the construction site would be a lot quieter without the heavy plant required to pound deep foundations, pump concrete and install steel supports. There would also be less construction traffic. Dr Ramage calculates that for every lorry delivering timber for a wooden building, five lorries would be needed to deliver concrete and steel. All these things may mean that once the total construction costs are calculated, a wooden building can work out cheaper. + +Anders Berensson, the Swedish architect who designed Tratoppen, believes engineered wood will become the cheapest way to construct tall buildings in the future. Another benefit of the material, he says, is the ability to carve the wood readily. In his current design the number of each floor is cut into the building’s exterior. + +One big obstacle to this wooden renaissance is regulation. Building codes vary around the world. In America cities can restrict wooden buildings to five or six storeys (about the height of a fire engine’s ladder). Exemptions can be made, however, and proponents of wood are hoping that as taller timber buildings emerge, city planners will adjust the rules. If they do, an old-fashioned branch of architecture might enjoy a revival. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21706492-case-wooden-skyscrapers-not-barking-top-tree/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The story of yeast + +Domesticated tipple + +In a piece of genetic archaeology, researchers discover the origins of a good pint + +Sep 10th 2016 | From the print edition + + + +CATTLE ranchers know that if they want to increase their yields it is best to breed their largest cows with their biggest bulls. The same idea works when trying to improve other livestock, crops and pets. Although less well known, microorganisms can also be bred selectively. Given that yeasts have a long history of being used to ferment food and drink, archaeologists have argued for years that early craftsmen may have selectively bred yeast strains without even realising it. + +Now there is evidence to support this idea. Steven Maere of the University of Ghent and Kevin Verstrepen of the University of Leuven, both in Belgium, and their colleagues have been studying the genomes of culinary yeast species. As they report in Cell this week, the researchers have found evidence that people started domesticating yeast strains, particularly those used in beer, some 500 years ago. + +Today’s bakers, vintners and brewers have intimate knowledge of yeasts and choose strains that improve their products and grant specific flavours. But until the work of Louis Pasteur in the mid-19th century nobody knew that microorganisms existed. However, a process called “backslopping”, whereby part of an old successful mix of fermented dough, wine or beer is seeded into a new mix, might have allowed early yeast users to confine species that had favourable characteristics in man-made environments for years on end, effectively domesticating them. Drs Maere and Verstrepen suspected that regular backslopping would have resulted in yeasts developing traits that led them to thrive in environments managed by humans, but to struggle in the wild. To explore that idea, they set up an experiment. + +Working with a team of experts from White Labs, a company in San Diego that develops and sells yeasts, the researchers analysed the genomes of 157 strains of Saccharomyces cerevisiae, a yeast species that is commonly used today. Most were beer strains but the team included a number of wine, spirit, sake and bread yeasts for comparison. They knew from past studies that it was common for organisms exposed to artificial selection to carry evidence of such tinkering in the form of duplicate chromosomes and genes. And, sure enough, they found these characteristics in abundance and noticed that all the strains seemed to stem from wild ancestors that lived 500 years ago. + +Further support came from traits carried by their genes. All yeasts engage in asexual reproduction most of the time. But wild species are capable of mating when genetic diversity in a population declines. Such a trait can prevent populations from becoming homogenous and thus vulnerable to a single disease or predator, but it serves no purpose in populations living in stable, protected man-made environments and ought thus to fade away. This is precisely what the researchers found. More than 40% of the beer yeasts were found to be incapable of reproducing sexually, and the others showed dramatically reduced sexual fertility. + +Although domestication led sexual reproduction to decay, traits useful for life in a brewery became more common. The researchers found that genes involved in the fermentation of maltose, the main sugar found in beer, were duplicated several times, allowing beer yeasts to complete the fermentation process more rapidly than their feral ancestors. Similarly, wild yeasts typically carry genes associated with a range of unpleasant flavours; and these genes were rare in the culinary ones. Intriguingly, all these signs of domestication were far stronger in the 102 brewing strains that the researchers studied than those in the wine strains. + +The evidence suggests that yeast domestication began in the 1500s and was more pronounced in brewing than it was in winemaking. Drs Maere and Verstrepen suggest that this may be down to different practices. Brewing yeasts were likely to breed continuously in a man-made environment, since they are recycled after each fermentation batch and beer is produced all year. In contrast, wine yeasts are only grown for a short period every year, and spend much of their lives in and around vineyards where they are subject to intermingling with wild strains, so are subjected to natural selective pressures. + +The work was more than an academic exercise. The researchers went on to select a strain of beer yeast that shows very efficient fermentation, but also produces an unwanted spicy flavour, and crossed it with a less efficient but better-smelling sake strain. By selecting progeny without the gene variants for the off-flavour, they obtained a new beer yeast that combines swift fermentation with a lovely, fruity aroma. And this could be just the beginning. The scientists expect a range of novel yeast hybrids to follow from their research. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21706494-piece-genetic-archaeology-researchers-discover-origins-good/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Military technology + +Top Gun’s topper + +Is the world’s most expensive fighter-jet helmet really that good? + +Sep 10th 2016 | From the print edition + + + +“IN THIS style, $400,000.” That price tag for a hat sounds like something out of a tea party attended by Alice. It is actually, though, the expected cost of the world’s most high-tech helmet—one to be worn by pilots of the Lockheed Martin Lightning II, also known as the F-35, which has been developed by America and its allies to replace most of their existing strike aircraft. In the context of a plane costing between $148m and $337m, depending on exactly which model you order, the price of the helmet is, perhaps, trivial. But for that amount you might expect to get something pilots are universally happy with. And they are not. + +The helmet is a wonder. Fighter pilots have long been used to a “heads-up” display—an image of cockpit data and targeting information displayed on the windscreen in front of them. The F-35 helmet goes much further. Not only does it display that detail, and much else besides, on the helmet’s visor but it also takes video images from six external cameras mounted around the aircraft and shows that as well. This allows the pilot to “look through” the aircraft at any angle. Want to see what is happening below? Then look down and instead of your lap you see the ground. The projected view also doubles up as a night-vision system, without the pilot having to put on a special set of goggles. + +The visor display can also include information from satellites, friendly aircraft and military units on the ground. The pilot’s eyes are tracked by the helmet to rapidly reposition images and symbols as they look around. If a missile is launched it can be steered towards the target with only the pilot’s gaze. In other warplanes pilots would have to expend “significantly more brainpower” assimilating data from multiple cockpit display screens, some of them not in their line of sight, says Billie Flynn, a test pilot for Lockheed Martin. + +Mission impossible + +The helmet, known as the Gen III Helmet Mounted Display System (HMDS), has been developed by a joint venture between Rockwell Collins, an American company, and Elbit Systems, an Israeli one, working with Lockheed Martin. Joe DellaVedova, the Pentagon’s spokesman for the F-35, says the combination of aircraft and HMDS means the new warplane can safely handle combat roles that no other can. Such boosterism is backed by numbers: America and its allies plan to order more than 3,100 F-35s. + +But some think that the helmet’s “political engineering” is as much a marvel as its electronics, says Dan Grazier of the Project on Government Oversight, a watchdog in Washington, DC. The aircraft’s research was spread around more than 300 congressional districts whose legislators were keen to support contractors’ proposals for fancy and expensive new features, he maintains. The helmet is now so complex, he reckons, that it has become the F-35’s weak link. Intricate kit breaks—and when it does, a pilot cannot simply borrow another’s helmet to fly. This is because each HMDS is calibrated to an individual flyer: for example, the alignment of their pupils for eye-tracking, which is a two-day laboratory job that only Rockwell Collins is authorised to conduct. + +In 2011 the Pentagon paid Britain’s BAE Systems to develop a backup helmet, lest the HMDS design prove flawed. Two years later the Pentagon decided to stick with the Rockwell Collins effort. Since then, some problems have been mostly solved. The helmet now adjusts the display to compensate for different vibrations. A green glow on the display, once distracting, has been dialled down. Pilots say that a previously frustrating delay in image projection has also largely gone. + +But criticism persists. A report written by a US Air Force F-35 pilot following mock dogfights last year said that the helmet was so large it restricted the ability of pilots to turn their head to see enemy aircraft. Tilting back to look up turns the helmet’s avionics cable “into a spring, further increasing neck tension”. Some flight manoeuvres momentarily resulted in the helmet being pinned against the canopy, obstructing the display and inhibiting weapon-firing. One airman says few of his colleagues like the F-35 helmet. + +At 2.4kg, there is also concern about the helmet causing a whiplash injury if a pilot is forced to eject. Test ejections with dummies by the Pentagon’s Operational Test and Evaluation unit found this could cause possible fatal neck injuries for some pilots. Designers are working to lower those risks. To reduce loading on the neck, Rockwell Collins will lighten the helmet by a quarter of a kilo, says Karl Shepherd, the firm’s marketing boss. Mr Flynn, Lockheed’s test pilot, says that more than 300 pilots have been trained to use the HMDS and that all “have become believers” in the helmet. + +A lesson lies in all this, some say. Developing exquisite technologies is not always the best means to an end. Had the F-35’s cockpit not been positioned lower than those of other fighter jets to reduce its radar signature, pilots would be able to see more with their own eyes. There are old-school ways around that: one F-35 pilot says he sometimes banks the aircraft over when he wants to see what is going on below. In future years, an entirely different solution may emerge. Given the pace of drone technology, the aircraft that replaces the F-35 may not have a pilot at all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21706448-worlds-most-expensive-fighter-jet-helmet-really-good-top-gunu2019s/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +China: Water, water, everywhere + +The right in America: Hand on heart + +Biography: Shades of Byzantium + +The Venice film festival: Showtime + +Johnson: Talking in tongues + + + + + +Articles Sections Next + +China + +Water, water, everywhere + +How China’s rivers shaped its history + +Sep 10th 2016 | From the print edition + + + +The Water Kingdom: A Secret History of China. By Philip Ball. Bodley Head; 316 pages; £25. To be published in America by University of Chicago Press in March 2017. + +THE Chinese mental compass is oriented not north-south as with the rest of the world, but west-east—a consequence of tectonic forces that threw up mountains in inner Asia from which rivers seek a course down through China to the sea. “Twisting around ten thousand times but always going eastward,” said Confucius: it seemed a law of nature. Philip Ball argues in his new book, “The Water Kingdom”, that the two greatest waterways, the Yellow river that flows across the north China plain and the Yangzi that charges through the heart of the country, are both “symbols of the nation” and, for millennia, have been the “keys to its fate”. + +Nowhere is this clearer than with the Yellow river, China’s “mother river”. Rising on the Tibetan plateau, it cuts a giant loop through the loess badlands of China’s north-west—the famous “yellow earth” formed of fine dust blown from the Gobi desert. By the time the river has turned abruptly eastward onto the vast and populous north China plain, a litre of river water carries up to 300 grams of alluvial silt. + +For thousands of years the silt has both nourished and destroyed on an unparalleled scale. As the sediment settles, it raises the river bed and makes the river more prone to flooding with the summer rains. The response was always to build higher ramparts of mud, rocks and matting of woven reeds until the river ran on its own conveyor belt, sometimes 15 metres above the surrounding countryside. When rains inevitably breached the dykes, the consequences could be catastrophic: up to 2.5m people are thought to have drowned or died from disease and starvation in the flood of 1887. After such disasters, it was impossible to force the river back into its old watercourse. Like an out-of-control fire hose, the Yellow river has thrashed across the north China plain, its sea mouth shifting by hundreds of miles. “China’s Sorrow” indeed. + +The vast ecosystem is shaped by human agency, yet nature remains god. The Yangzi, the more immense torrent, divides the wheat-growing north from the rice cultivation of the south. It has long been China’s commercial artery, running deep into the country through spectacular gorges, as well, in earlier dynasties, as its line of defence. With floods no less brutal than the Yellow river’s, the Yangzi has no equal for beauty and cruelty, as can be seen from the flooding of Changzhou in 2015 (pictured). + +Nearly all cultures have flood myths and legends. China’s are unusual in that at the heart of them are the engineering challenges of flood control. The first attempts to tame the Yellow river are ancient; the huge Three Gorges dam, which a decade ago turned a fast-flowing stretch into a reservoir the size of Lake Superior, is just the latest scheme. + +Mr Ball argues that “whatever one might think of China’s mega-engineering schemes, doing nothing is not an alternative.” Indeed, his book, a rewarding read, is at its most fascinating when describing how in China the laws of nature seem to have embedded in them a moral precept. Success or failure in flood control and irrigation can furnish or remove the Mandate of Heaven. The Yellow river catastrophe of 1887 was seen as evidence that the Qing, the last dynasty, was losing its mandate. When Chiang Kai-shek caused the deaths of hundreds of thousands of Chinese by ordering a breach of the same river’s dykes in an effort to avoid defeat by the Japanese in 1938, it was grist to the Chinese Communists’ claims that the Nationalists were unfit to rule. + +If heaven’s mandate comes from controlling the waters, might the demands of hydrology, including the need for considerable resources and legions of workers for flood control and irrigation, have created the highly centralised, authoritarian states of Chinese dynastic rule, the Communists’ one included? The idea of an “Oriental despotism” based on a “hydraulic civilisation” was advanced in the 1950s by Karl Wittfogel, a Marxist historian. His ideas have fallen out of fashion, not least because they often overplay emperors’ reach and downplay historical local actors in trade, commerce—and even hydrology. + +And yet: China’s biggest current water projects, including piping water from the Yangzi under the Yellow river to slake Beijing, are on an imperial scale that without authoritarianism would be hard to envisage. At the very least, water management has created, as Mr Ball puts it, “a political language, and it is one that speaks of legitimacy to rule”. Look how it soaks into political gesture, for instance, with the prime minister, Li Keqiang, wading into the flood waters in his office clothes. Such symbolic offerings will have to count for more as popular concerns grow about sediment building up behind the Three Gorges dam, increasing water extraction and desertification in the Yellow river basin. There is so much toxicity in northern Chinese cities that half the water there is undrinkable. + +Like Confucius’s rivers, “The Water Kingdom” twists around in spirals and meanders. That is its charm, as it takes in painting, poetry and ancient history. Sometimes the reader wishes the author had walked the rivers’ banks as much as the library stacks, and on occasion the narrative is shunted off course, as in overenthusiastic claims for China’s maritime prowess. The shock-and-awe voyages of Admiral Zheng He in the early 15th century that reached Hormuz and eastern Africa were remarkable. But they were never repeated, while his vessels were little more than lumbering rafts. Meanwhile, for much of history, the overseas trade with China was carried not in Chinese craft but on foreign (Arab, Indian and later Western) bottoms. But these are quibbles. Mr Ball puts water back beautifully at the heart of China’s story. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21706484-how-chinas-rivers-shaped-its-history-water-water-everywhere/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The right in America + +Hand on heart + +An American sociologist examines a political conundrum + +Sep 10th 2016 | From the print edition + +Strangers in Their Own Land: Anger and Mourning on the American Right. By Arlie Russell Hochschild. The New Press; 351 pages; $27.95. + +THE past is a foreign country. But so too is the present, says Arlie Hochschild, an American sociologist, of much of her own country. Ms Hochschild is a devoted liberal from Berkeley, California, and her latest book, “Strangers in Their Own Land”, is an astute study of America’s “culture war” drawn from the perspective of the white conservatives who feel they are losing it. But it is also a Bildungsroman: one woman’s journey across the political divide, to an empathy with those on the other side. + +Based on five years among Tea Party activists in Louisiana—a typical, if perhaps extreme, Southern “red state”—“Strangers in Their Own Land” will elicit comparisons with “What’s the Matter with Kansas?” by Thomas Frank, a bestseller in 2004. Like Mr Frank, Ms Hochschild is concerned chiefly with what she calls the “great paradox” of ordinary, hard-working Americans seemingly voting against their own economic interests by supporting small-state Republican politicians. And like Mr Frank, she is certain such voters would be better off under the Democrats. Much of the book is concerned with the many environmental disasters suffered by Louisiana as a result of under-regulated oil and gas companies plundering its natural wealth with the connivance of local Republican leaders. Where she and Mr Frank disagree is over his central premise that such voters are being duped by an unholy alliance of Fox News, unscrupulous corporations and self-aggrandising Washington elites. + +Ms Hochschild has been praised for focusing on her subjects’ emotional lives. Her new book is no exception. It is people’s emotional response, she argues, that is the raw stuff of politics. What, then, do her subjects feel? They see themselves as betrayed by “line-cutters”—black people, immigrants, women and gays—who jump in ahead of them in the queue for the American dream. Southerners feel patronised and humiliated by northerners who tell them whom to feel sorry for, then dismiss them as bigots when they do not. They feel they are victims of stagnant wages and affirmative action but without the language of victimhood: struggling Southerners are not “poor-me’s”. They believe that they are honourable people in a world where traditional sources of honour—faith, independence and endurance—seem to go unrecognised: until Donald Trump began offering hope and emotional affirmation. + +It is a convincing thesis, but not a new one. That conservative white middle-class and working-class Americans feel a sense of betrayal and loss is familiar territory. Ms Hochschild has little new to say about right-wing media or evangelical Christianity. What she does say about prosperity preachers and Fox News shock jocks duping their subjects by directing their anger away from real sources of local grievance like oil spills and gas leaks might confirm the argument she seeks to overturn. The book’s appendix shows how misled Tea Party activists are on many of their most cherished gripes, such as the size of federal government. According to the Bureau of Labour Statistics, at the end of 2014 only 17% of the 143m American workers were federal, state-government or military employees. The Tea Party activists she spoke to believe the figure is around 40%. + +Ms Hochschild offers an entry pass to an alternative worldview, and with it a route map towards empathy. In her book people like Janice Areno, a Bible-bashing Pentecostalist who says the poor should work or starve, become human. The anger and hurt of the author’s interviewees is intelligible to all. In today’s political climate, this may be invaluable. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21706483-american-sociologist-examines-political-conundrum-hand-heart/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Biography + +Shades of Byzantium + +A lively life of a great British historian + +Sep 10th 2016 | From the print edition + +Birdman + +Outlandish Knight: The Byzantine Life of Steven Runciman. By Minoo Dinshaw. Allen Lane; 767 pages; £30. + +BY THE time he died, in 2000 at the age of 97, Sir Steven Runciman knew that he was a “‘relict of a past age’”, the “embodiment of a…nearly mythical era.” Minoo Dinshaw’s brilliantly entertaining biography of the great historian of Byzantium restores him to public view and provides a vivid picture of many aspects of 20th-century Europe that now seem almost as remote as the crusades and religious schisms he described in his books. + +Runciman was not aristocratic by birth—his grandfather, a shipping magnate, had established the family fortune—but he was immensely grand and well connected. His parents were the first married couple to sit together in the House of Commons. And his father, who was part of Lord Asquith’s cabinet before the first world war, survived the declining fortunes of the Liberal party to lead the doomed mission to Czechoslovakia in 1938. He could claim in 1991 to have known every 20th-century prime minister except Sir Henry Campbell-Bannerman, who died when he was a toddler, and Bonar Law, “‘whom nobody knew’”. Introduced by his governess to French, Latin and Greek by the age of seven, he won scholarships to Eton—in an era of clever men like George Orwell, Cyril Connolly and Anthony Powell—and to Cambridge, where he lived in the “scornfully beautiful Great Court” of Trinity College. Through his friend Dadie Rylands (they were named the Tea Party Cats “for their velvety urbanity”) he met Lytton Strachey, John Maynard Keynes and other members of the Bloomsbury group. + +Despite frequent trips to London to socialise with the “bright young people” (and be photographed with his budgerigar by Cecil Beaton), Runciman won the first-class degree and prize fellowship that were to launch his academic career. Of the Cambridge spies recruited in the 1930s, Guy Burgess was a pupil and friend and Anthony Blunt a “supercilious” colleague. Employing political and diplomatic connections to the full, he travelled in style to Romania, Bulgaria and Asia. He established his reputation with histories of the emperor Romanus Lecapenus, the first Bulgarian empire and Byzantium. When he inherited wealth from his grandfather in 1938, he gave up his university fellowship. + +Unfit for military service, Runciman spent the war in the Balkans and the Middle East: in Sofia as press attaché to the British Legation, Jerusalem, Cairo and Istanbul. There he narrowly escaped a bomb blast, spent three years as professor of Byzantine history and art, and became an honorary Dervish. Between 1945 and 1947 he led the British Council in Athens. Osbert Lancaster, a witty cartoonist, and Patrick Leigh Fermor, who would become a glamorous writer, were there. Greece was lurching towards civil war and Runciman gained an abiding love for the country, pleasure from upstaging the British ambassador and the position of Astrologer Royal. + +On his return to Britain, Runciman split his time between London and the Hebrides, and wrote the books that were to make his name: the ground-breaking three-volume “History of the Crusades”; and a succession of works on Byzantine history that drew on a wide variety of sources, Muslim and Greek, most notably “The Sicilian Vespers” and “The Fall of Constantinople”. Francis Birrell, a Bloomsbury acquaintance, had greeted Runciman’s first book with the acknowledgment that fewer than “half a dozen people were really competent” to review it (and that he was not one of them). There were no such reservations about later volumes, which were lively, authoritative and well received. + +Runciman was not to everyone’s taste. He loved to tease, possessed a “queenly persona”, snubbed people who failed to interest him and “had a tongue like a viper if he wanted to use it”. He was a gossip who adored royalty; he entertained the Queen Mother to lunch at the Athenaeum Club every year; four queens are said to have attended his 80th-birthday party. + +Despite being able to compose an alphabet of lovers with every letter except Q (“I shall die Qless”), he was to claim that he had “never been in love”. He retained a wide circle of loyal friends and was a popular laird of the Isle of Eigg, not least because he would invite his musical friends to stay and perform at the village hall. (Yehudi Menuhin was “memorably described” by the ferryman as “a handy man for a ceilidh”). He gave his name and time to numerous public bodies and causes, at home and abroad. A final apotheosis, three months before he died, for his service as Grand Orator to the Patriarch of Constantinople, was a descent by helicopter on the Holy Mountain of Athos. + +Mr Dinshaw’s choice of subject for his first book is an inspired one. He interweaves the strands of a long and variegated life with sympathy, elegance and awareness of the wider picture. In recognition of Runciman’s fascination with the supernatural, chapters are headed with quotations from Arthur Waite’s “The Key to the Tarot”. He refers frequently to novelists such as Evelyn Waugh and Olivia Manning, authors of trilogies about the war. And his turn of phrase is as arresting as Runciman’s own—one family friend is “unceremonious, crapulous”. Mr Dinshaw has done Runciman proud. To whom will he turn his attention next? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21706486-lively-life-great-british-historian-shades-byzantium/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Venice film festival + +Showtime + +Unveiling the new films that will win Academy Awards + +Sep 10th 2016 | VENICE | From the print edition + + + +“SPOTLIGHT”, which won the best-picture award at the Oscars this year, was first shown at the Venice film festival last September. “Birdman”, the best-picture winner in 2015, was unveiled at Venice the year before. And in 2014, “Gravity” did not win the best-picture Oscar, but it collected seven other Academy Awards, as well as a mountain of trophies from around the world. No prizes for guessing where it was first shown to the public. + +Purists may say that no festival should be judged on the number of prizes its films go on to pick up elsewhere. But in publicity terms, it is invaluable to be known—as Venice is now—for being the launching pad for the winners of the Academy Awards, the Baftas and the Golden Globes. + +This year’s opening film was “La La Land”, a delightful musical comedy from Damien Chazelle, the writer-director of “Whiplash”. Set in modern Los Angeles, but revolving around a jazz pianist (Ryan Gosling) and an aspiring actress (Emma Stone—pictured together) who adore the music and movies of Hollywood’s golden age, it succeeds in being both innovative and nostalgic, frothy and melancholy, romantic and realistic. For all its bright colours, retro styling and toe-tapping tunes, the film asks, as “Whiplash” did, whether pursuing artistic greatness means abandoning everything else in your life, especially in the economically squeezed 21st century. The audience in Venice was so enchanted that by the time the end credits rolled, the Oscars had become a two-horse race between “La La Land” and all the rest. + +Whether or not “Arrival” is in contention for the best-picture award, Denis Villeneuve’s weighty and eerie science-fiction mind-bender is one of two films at the festival that could snag a best-actress trophy for Amy Adams, who has already been nominated for five Oscars and five Baftas. Ms Adams stars as a linguistics professor who is recruited by the American government when a monolithic alien spacecraft lands in a meadow in Montana—or, to be precise, floats a few metres above it. Her mission is to board the flying saucer, decode its occupants’ language and work out whether they are friend or foe. As in “Gravity”, the heroine of “Arrival” is a single mother getting over the death of her daughter, but in contrast with “Gravity”, the tragic back story doesn’t feel as if it has been grafted on. It is crucial to the plot. + +Ms Adams’s other starring role at the festival was in “Nocturnal Animals”, Tom Ford’s proudly melodramatic and dizzyingly ambitious follow-up to “A Single Man”. Proving definitively that the fashion designer is as skilled at writing and directing films as he is at designing sunglasses, “Nocturnal Animals” cuts between three narratives. In one, Ms Adams plays a rich, glamorous but miserable Los Angeles gallerist who is sent a proof copy of a novel written by her ex-husband. In the second strand, which visualises the story in the novel, a mild-mannered man (Jake Gyllenhaal) is terrorised by hoodlums in West Texas. And in the third, the gallerist remembers her bohemian youth in New York. Fact and fiction are woven together. Mr Ford, being Mr Ford, makes it all look absolutely fabulous. + +Mel Gibson’s “Hacksaw Ridge” is nowhere near as sophisticated as the other films shown. Nonetheless, his admiring biopic of Desmond Doss (Andrew Garfield), a pacifist who won the Medal of Honour for his bravery as a medic in the second world war, is likely to carry away many prizes. For all the gore, the film is ultimately a straightforward, uplifting ode to patriotic duty and individual principles. Besides Hollywood loves a tale of redemption, and “Hacksaw Ridge” marks Mr Gibson’s return to favour after years in the wilderness of scandal. What could be more Oscar-friendly than that? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21706485-unveiling-new-films-will-win-academy-awards-showtime/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +Talking in tongues + +Should religious language keep up with the times or stick closely to the original? + +Sep 10th 2016 | From the print edition + + + +A RECENT Johnson column looked at the English past subjunctive. The present subjunctive gets much less attention. This appears after verbs like “insist” and “request”, and can be spotted when a first- or third-person singular verb, which normally has an “s” on the end (he brings), loses that “s”: for example, “We ask that each student bring a lunch.” + +This subjunctive is becoming rarer. The above would be more idiomatic as “We ask each student to bring a lunch.” Most of the subjunctives that people actually know and use, in fact, are frozen phrases—many of them religious. “Peace be with you.” “The Lord be with you.” “God save the Queen.” “God bless America.” “God shed His grace on thee.” “Until death do us part.” (In the plain indicative, these would be “Peace is with you,” “God saves the Queen” and so on.) These forms cannot be repurposed in modern English: you can’t say to your neighbour “a good barbecue be with you,” or “your daughter win the race tomorrow.” + +Something about religious worship seems to call for special, often archaic language. Islam and Judaism both give exclusive status to one language, classical Arabic and Hebrew, regardless of the spoken languages of the worshippers. Arabs read, pray and hear sermons in a seventh-century language that is nearly as different from their spoken Arabic as Latin is from Italian. Young Jews around the world join the adult community by reciting a Torah passage in Hebrew. + +Christianity has also had its own policies. Early Christians accepted a Greek translation of the Hebrew Bible as the first part of God’s word, and a collection of Greek writings as the New Testament. But the Greek accounts of Jesus were already translations: he and his followers spoke Aramaic. After Christianity won official status in the Roman empire in the fourth century, it jumped languages again: St Jerome’s Latin Bible was official for Western Christianity. In 1546 the Council of Trent said of this translation of a translation that “no one is to dare, or presume to reject it under any pretext whatever.” + +All this has theological consequences, as Nicholas Ostler explains in a masterly recent book, “Passwords to Paradise”. St Jerome made basic errors, some due to the fact that most vowels are omitted in Hebrew texts: Johann Reuchlin (1455-1522), the first Christian Hebraist in northern Europe, found around 200 errors in St Jerome’s translation. + +Even defensible translation choices are meaningful. Mr Ostler skips over some well-known examples to tell the story of the fourth-century Goths, for example. Their leader, Wulfila, chose a translation for “Lord”, frauja, that meant something like the head of a household. Other tribes chose a word more suitable for a military chieftain—as would the Goths, one might think, but it seems Wulfila wanted to wean his people off marauding. + +Should churches regularly update their translations, keeping the religion fresh and relevant, or preserve tradition and authenticity? The debate is as old as the faiths themselves. A fourth-century commentator, arguing for translating Greek into Latin for Western Christians, said that “our heart is ignorant, if it speaks in a language it doesn’t know.” But Reuchlin, who corrected St Jerome, naturally thought he had got nearer to the spirit of the scriptures, and so to their author himself: “God wished his secrets to be known to mortal man through Hebrew.” + +The practical answer is that young people and new converts should study in their own vernaculars. As they progress in the faith they can get closer to the original through study. But the underlying theological question is hard to dodge. Would a loving supreme being want the truth of religion to be plain even to unlettered people, in the simplest possible vernacular? Or should original language (like Quranic Arabic) and archaic language (thou and all those subjunctives in English) remind worshippers that religion is not just any old set of beliefs and practices, just as there are special rules for the Sabbath or a house of worship? + +The question divided believers during the Reformation. Today, as science challenges many religious beliefs, some defenders of religion seek refuge in the argument that faith has a special status where the arguments of science do not apply. A language of sacred mystery could be seen as a sign of that special status—or as an admission that letting the faithful interrogate the doctrine in plain language can be a dangerous thing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21706482-should-religious-language-keep-up-times-or-stick-closely-original-talking/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Juan Gabriel: Mexico’s mirror + + + + + +Articles Sections Next + +Obituary: Juan Gabriel + +Mexico’s mirror + +Juan Gabriel (born Alberto Aguilera Valadez), songwriter and performer, died on August 28th, aged 66 + +Sep 10th 2016 | From the print edition + + + +MANY of the songs, and there were at least 1,500 of them, were syrupy and sentimental. Some were more sobbed than sung. Juan Gabriel was not David Bowie. But in the Spanish-speaking world he was even bigger, and his death touched off similar mass mourning. Mexico’s greatest modern pop singer touched the hearts of tens of millions, including millions living north of the Rio Grande. His meaning was deeper and more subversive than some of his songs might suggest. + +Part of his appeal lay in his own history. Alberto Aguilera knew all about the solitude and loss of love of which Juan Gabriel, his stage persona, sang. The youngest of ten children, his parents were farm workers in the western state of Michoacán. When he was four, his father was confined in a mental hospital. His mother moved the family to Ciudad Juárez, on the border with the United States. Unable to cope, she placed Alberto in an orphanage. The separation traumatised him. As he grew rich, in his quiet way of pointing out the injustices in Mexican society, he bought her the house in Juárez she had once cleaned for a living; when she died, she became the “Amor Eterno”of one of his biggest hits. He gave money, too, to children’s homes. + +He began to write songs at 13, while selling burritos on the streets of Juárez. He sang in the town’s bars, then all over the country. In Mexico City he was jailed for 18 months, mistakenly he said, over a stolen guitar. He never stopped playing, and as soon as he got out he became his new self, Juan Gabriel: determined, but still broke. Not for nothing was his first hit, in 1971, called “No tengo dinero”(“I have no money, nor anything to give, the only thing I have is love, to love with”). This catchy pop number announced his lifelong knack of addressing the cares of ordinary Mexicans. + +For almost half a century he provided Mexico with a soundtrack as the country changed. His songs were played at weddings, funerals and quinceañeras, the coming-out parties of 15-year-old girls. Someone worked out that, at any given minute, on a radio somewhere in Latin America one of his songs would be playing. He sold more than 100m albums worldwide and gave 15,000 performances, revelling tirelessly in the glitter of the stage. Many concerts lasted hours, and featured audience singalongs and massed mariachi bands. (The last, two days before he died, was for 17,000 people in Los Angeles.) Endlessly versatile, he dabbled in rock and wrote, as well as tear-jerking ballads, traditional folk rancheras and slow, romantic boleros. He thus became an inheritor of the golden age of Mexican popular music from the 1930s to the 1960s, when the rancheras of José Alfredo Jiménez and Agustín Lara rang out across Latin America and in Spain. + +The ranchera tradition was all about Mexican machismo. It sang of domineering men, treacherous women and the manly solace of tequila. One of Juan Gabriel’s achievements was to soften and feminise the ranchera. In “Se me olvidó otra vez” (“I’d forgotten once again”), the jilted lover waits in sad futility “in the same town and with the same people, so that when you come back you won’t find anything out of place”. But reunion is impossible: “I’d forgotten once again that it was only me who loved you.” This unusual sensitivity led him to write countless songs for, and frequently perform with, female singers. + +The softening of the ranchera was also signalled by his visible homosexuality, with his tight white trousers, sequinned shirts, makeup and mannered gestures. As deeply reserved offstage as he was flamboyant on it, he would never admit to it. When asked by an interviewer whether he was gay, he replied: “What can be seen isn’t asked about, my son”—a very Mexican way of saying yes, he was. + +Perhaps because of his unsettled youth, he was a man of the system. He appeared often on Televisa, Mexico’s quasi-official broadcaster, and publicly supported the long-ruling Institutional Revolutionary Party. But his loyalties were more personal than political, and he demanded respect. He fell out with Televisa when they claimed exclusive rights to air his shows. He knew he was bigger than they were. + +A man without heirs + +He left five sons, at least two of them adopted, none certainly his; they loved him as a father and, for him, that was enough. His musical legacy was similarly uncertain. Young Latin Americans are as likely to listen to salsa, rock or Colombian cumbia; for them, Juan Gabriel’s music was what their mothers hummed along to as they did the housework. In one way he harked back to a more innocent Mexico, without violence and drug cartels. But in another he heralded a more tolerant country, where homosexuality is becoming grudgingly accepted. He also represented a North American fusion; though an ardent cultural nationalist (his last tour was called “MeXXIco es todo”), in recent years he lived across the border in Santa Monica. + +“The Mexican macho—the male—is a hermetic being, closed up in himself,” wrote Octavio Paz, the country’s great 20th-century poet. He ascribed to his fellow countrymen “a painful, defensive unwillingness to share our intimate feelings”, and went on: “The Mexican succumbs very easily to sentimental effusions, and therefore he shuns them.” Juan Gabriel helped Mexicans sing them out. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21706186-juan-gabriel-born-alberto-aguilera-valadez-songwriter-and-performer-died-august-28th/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +The Economist poll of forecasters, September averages + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Sep 10th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21706501/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Sep 10th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21706499-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Sep 10th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21706500-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Sep 10th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21706502-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist poll of forecasters, September averages + +Sep 10th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21706503-economist-poll-forecasters-september-averages/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Sep 10th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21706496-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Post-truth politics: Art of the lie + + + + + +Elections in Hong Kong: A not-so-local difficulty + + + + + +England’s National Health Service: Bitter pills + + + + + +Economic reform in the Gulf: Time to sheikh it up + + + + + +Interest-rate caps: Cut-price logic + + + + + +Letters + + + +On housing, wild horses, Scotland, child sex abuse, longevity: Letters to the editor + + + + + +Briefing + + + +The post-truth world: Yes, I’d lie to you + + + + + +United States + + + +The Affordable Care Act: Encumbered exchange + + + + + +The election campaign: On the trail + + + + + +National security and 2016: Sewers to submarines + + + + + +Georgetown and slavery: Atonement + + + + + +Lexington: Land made for you and me + + + + + +The Americas + + + +A Mexican minister falls: The cost of an unwanted guest + + + + + +Avocado wars: Rich, creamy and rare + + + + + +Venezuela’s hapless leader: Chávez without the charm + + + + + +Bello: The impeachment country + + + + + +Asia + + + +Afghan refugees in Pakistan: Homecoming spleen + + + + + +Ending Myanmar’s insurgencies: A long road + + + + + +Japanese politics: Get the party started + + + + + +The wit and wisdom of Rodrigo Duterte: Shoot from the lip + + + + + +Australia and China: You can’t buy trust + + + + + +China + + + +Politics in Hong Kong: The city that scares China + + + + + +Giant pandas: Survival of the cutest + + + + + +Banyan: Abide with Mao + + + + + +Middle East and Africa + + + +Labour laws in the Gulf: From oil to toil + + + + + +Migration in the Gulf: Open doors but different laws + + + + + +Extremism in Jordan: Muzzling mosques + + + + + +Driving in Johannesburg: Bad robots + + + + + +Somalia: Most-failed state + + + + + +Europe + + + +Turkey’s Gulen purges: A conspiracy so immense + + + + + +Spain’s coalition talks: Ageing caretakers + + + + + +Ireland and Europe: Upsetting the Apple cart + + + + + +Homeopathy in Germany: Not a molecule of sense + + + + + +Donald Trump and the Russians: Brazen meddling + + + + + +Russian social media: Tweetaganda + + + + + +Charlemagne: Unshrinking the continent + + + + + +Britain + + + +Britain and the European Union: So what will Brexit really mean? + + + + + +The National Health Service: Accident and emergency + + + + + +Dockyards: Sea change + + + + + +Chinese schools: Babes among dragons + + + + + +Cricket’s crunch: Sticky wicket + + + + + +Hate crime: Bearing the brunt + + + + + +International + + + +Race relations: Slavery’s legacies + + + + + +Business + + + +A.P. Moller-Maersk: Profits overboard + + + + + +Auditors aren’t so bad: Box ticked + + + + + +Reliance Jio: Free speech + + + + + +Smartphones: Still ringing bells + + + + + +Fashion retailing: Passé + + + + + +The space business: Mission, interrupted + + + + + +German firms in America: Making eyes across the ocean + + + + + +German power companies: Breaking bad + + + + + +Schumpeter: Shhhh! + + + + + +Finance and economics + + + +Investing in commodities: Of mice and markets + + + + + +Buttonwood: Acclimatising + + + + + +The G20 and the world economy: Agreeing to disagree + + + + + +Kenya’s interest-rate cap: Ceiling whacks + + + + + +Offshore finance: The holdout + + + + + +Long-term private-equity funds: The Omaha play + + + + + +Financial education: Quantum of scholars + + + + + +Free exchange: All in the family + + + + + +Science and technology + + + +Building materials: Top of the tree + + + + + +The story of yeast: Domesticated tipple + + + + + +Military technology: Top Gun’s topper + + + + + +Books and arts + + + +China: Water, water, everywhere + + + + + +The right in America: Hand on heart + + + + + +Biography: Shades of Byzantium + + + + + +The Venice film festival: Showtime + + + + + +Johnson: Talking in tongues + + + + + +Obituary + + + +Obituary: Juan Gabriel: Mexico’s mirror + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +The Economist poll of forecasters, September averages + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.09.17.TXT b/homeworks/B20769/homework1/data2/2016.09.17.TXT new file mode 100644 index 0000000..4da98b1 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.09.17.TXT @@ -0,0 +1,5797 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: Companies + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Sep 17th 2016 | From the print edition + + + +A ceasefire went into effect across most of Syria, following an agreement between John Kerry, the American secretary of state, and his Russian counterpart, Sergei Lavrov. However, aid destined for the besieged city of Aleppo was still being held up at the Turkish border by arguments between the warring parties. Strikes against Islamic State and an al-Qaeda-linked group are not covered by the ceasefire. See article. + +Israeland America agreed on a new military-aid package, worth $38 billion over the next ten years. + +South Africa refused to grant an entry visa to Steven Anderson, an American preacher, saying that his comments criticising homosexuality amount to hate-speech. + +The president of South Sudan, Salva Kiir, and leader of the opposition, Riek Machar, were accused of enriching themselves during a civil war that broke out in December 2013. The Sentry, an American NGO, alleges the men accumulated foreign homes and extensive commercial holdings. + +They deny doing wrong + +Brazilian prosecutors investigating graft linked to Petrobras, the state-controlled oil giant, filed charges against Luiz Inácio Lula da Silva, a former president. The lower house of congress stripped Eduardo Cunha, its former speaker, of his mandate over his role in the affair. He was already facing corruption charges but enjoyed parliamentary immunity. See article. + +Mercosur, a South American trading bloc, said it might suspend Venezuela if it fails to meet a set of conditions over trade and human rights by December 1st. The regional challenge to Venezuela’s authoritarian regime came as it hosted a meeting of the non-aligned countries and prepared to take over the movement’s rotating presidency. + +A village under siege + +Police fired tear gas and rubber bullets during protests in the southern Chinese village of Wukan, a place long celebrated in China for its residents’ struggle for local democracy. The protests were triggered by the jailing of their elected leader on corruption charges. + +The acting Communist Party chief of Tianjin, a port in northern China, was dismissed for “serious violation of party discipline”, which is often a euphemism for corruption. The position is an important regional one in China. The new chief, Li Hongzhong, will be a strong contender for elevation to the ruling Politburo in a reshuffle due next year. + +North Korea conducted its fifth nuclear test, and the second this year. The force of the underground explosion was 10-12 kilotons, roughly twice the previous one. The UN Security Council is now debating whether to tighten sanctions on the rogue nation. + + + +America said it would soon lift decades-old sanctions on Myanmar, ahead of a visit by Aung San Suu Kyi, the country’s de facto leader, to the White House. But human-rights groups want sanctions to be maintained on officials in Myanmar’s armed forces until it is crystal clear that the new democratic system cannot be overturned. + +Rodrigo Duterte, the controversial president of the Philippines, said he wanted American forces to withdraw from the island of Mindanao, where they have been training Filipino troops. + +The Australian government introduced a bill to hold a non-binding plebiscite on whether same-sex marriage should be legalised. Gay-rights activists denounced the step as a cop-out. + +Critical philosophy + +Jean-Claude Juncker, the president of the European Commission, fretted in his state-of-the-union speech that the European Union is suffering from an “existential crisis”. Mr Juncker pledged more investment and better security co-operation; defended an unpopular trade deal with Canada; and said that the departure of Britain, a rather difficult member of the EU, could present an opportunity for the remaining 27 states. + +Turkey’s justice ministry submitted an arrest warrant to the Americans for Fethullah Gulen, an Islamic cleric living in self-imposed exile in Pennsylvania. The Turkish government accuses Mr Gulen and his followers of being behind the attempted coup in July (Mr Gulen denies this). The American government has so far refused to extradite him. + +The Dutch house of representatives voted to change the organ-donor system to one of “active registration”. If passed by the senate, people will be presumed to be a donor by default, unless they register to opt out. Belgium and Spain have similar systems, and higher organ-donation rates. + +The new British government gave the go-ahead to build a new nuclear plant at Hinkley Point, after unexpectedly ordering a review in part because of security concerns over Chinese involvement in its construction. That did not please China. The British government says that in future, it will take a “special share” in nuclear projects that cannot be sold without its consent. + +David Cameron announced that he was stepping down from Parliament, because he could not be a “proper backbench MP as a former prime minister” and would become a distraction for his successor, Theresa May. Her most pressing task is cleaning up the mess left behind by Mr Cameron over Brexit. Parliament’s foreign-affairs committee this week strongly criticised Mr Cameron for not having a coherent strategy when intervening in Libya in 2011. + +Faint recognition + + + +Hillary Clinton was taken ill at an event in New York to commemorate 9/11. After initially saying she was suffering from overheating, her aides revealed that Mrs Clinton had been diagnosed with pneumonia, prompting more criticisms that her campaign has a problem with the truth. Questions have been raised about the health of the 68-year-old Democrat, and of her 70-year-old Republican opponent, Donald Trump. See article. + +The National Collegiate Athletic Association said it would not hold any tournaments in North Carolina in the current academic year because of the state’s decision to overturn local laws that protect gay people against discrimination. The NCAA has been a leading proponent of using sport’s muscle to press states and cities into promoting an “inclusive atmosphere”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21707285-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Sep 17th 2016 | From the print edition + +Real median household income in the United States grew last year for the first time since 2007, to $56,500. That is up by 5.2% compared with 2014, the biggest percentage-point increase since the measure was introduced in 1967 (though, adjusted for inflation, household income was still 2.4% below its peak in the 1990s). The proportion of people below the poverty line fell by the most since 1999, to 13.5% of the population. The good news came eight weeks before America’s election. + +Increasing interest + +Uncertainty about whether the Federal Reserve will raise interest rates on September 21st caused jitters on global stockmarkets, some of which recorded their biggest daily falls since Britain’s vote in June to leave the EU. Janet Yellen, the central bank’s chairman, has suggested that the economic evidence for lifting rates is strong, but Lael Brainard, a senior Fed official, warned that tightening monetary policy now would be risky. + +Britain’s Council of Mortgage Lenders reported that the number of home loans fell sharply in July compared with the same month last year, but it could not determine if this was a reaction to Brexit or an indication of a market that was already cooling. Buy-to-let mortgages were down by 26%. + +Wells Fargo said it would ditch employee sales targets after it emerged that customers had been issued credit cards and bank accounts without their knowledge in order to meet branch goals. It is an embarrassing episode for Wells Fargo, which mostly avoided the allegations of impropriety that have tarnished the industry. Federal prosecutors are reportedly looking into the case. See article. + +Postal Savings Bank of China launched an IPO in Hong Kong to raise up to $8.1 billion, making it the world’s biggest flotation since Alibaba in 2014. Most of the shares are being sold to other Chinese state-owned enterprises, which cannot sell them for six months, a recurring feature of IPOs in Hong Kong that lessens the risk of a flop but also reduces market liquidity. + +Hailing a taxi + +Uber wheeled out a pilot programme in Pittsburgh in which some of its vehicles are self-driving. Although a driver still sits behind the wheel and takes control in some circumstances, such as in unusual traffic situations, Uber proclaimed it the most extensive public use yet of autonomous cars. Elsewhere, the mayor of London, Sadiq Khan, unveiled plans to protect the city’s traditional black-cab industry, a bitter foe of Uber, including grants for drivers to buy greener vehicles and promoting taxis as public transport. See article. + +A long-awaited report from the UN recommended that developing countries should be allowed to override patents on life-saving drugs and license generic versions. The pharmaceutical industry had fought hard to keep the recommendation out of the study, which they wanted to focus on issues such as inadequate storage facilities for medicine. The only industry representative on the report’s panel warned that compulsory licensing of generic drugs would cause uncertainty among investors. See article. + +In the biggest foreign takeover to date by a German company, Bayer agreed to buy Monsanto for $66 billion, after four months of courting its American rival. The deal will create the world’s biggest supplier of agricultural seed and crop spray, but it faces antitrust obstacles. The rapid pace of consolidation in the agribusiness industry means just three big players could soon dominate the sector. + +Jim Yong Kim will serve a second term as president of the World Bank, as the nomination process for candidates ended with no challengers. Mr Kim has been sharply criticised for his ham-fisted reforms of the institution, prompting an unprecedented rebuke from its staff association. In an outdated convention, America has the final say on who leads the bank. + +José Manuel Barroso hit back at the European Commission’s decision to treat him as a lobbyist for Goldman Sachs in future meetings. Mr Barroso is a former president of the commission but now advises the investment bank. He says the commission’s decision is “discriminatory”. + +Polymore + + + +Cash machines in England and Wales dispensed the Bank of England’s new polymer £5 note, Britain’s first plastic currency. Low interest rates are one reason why holding cash is still popular in an age of digital transactions. Polymer notes are much more durable than paper ones. One TV presenter spent a lot of time trying, without success, to damage or destroy the new fiver, dunking it in his coffee, chewing it and attempting to rip it. Mark Carney, the Bank of England’s governor, dipped a note in a pan of curry to publicise its sturdiness. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21707287-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Sep 17th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21707286-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +The superstar company: A giant problem + +British politics: Britain’s one-party state + +Syria’s ceasefire: A risky bargain + +Extinctions to order: Gene-ocide + +The World Bank: Lucky Jim + + + + + +Articles Sections Next + +The superstar company + +A giant problem + +The rise of the corporate colossus threatens both competition and the legitimacy of business + +Sep 17th 2016 | From the print edition + + + +DISRUPTION may be the buzzword in boardrooms, but the most striking feature of business today is not the overturning of the established order. It is the entrenchment of a group of superstar companies at the heart of the global economy. Some of these are old firms, like GE, that have reinvented themselves. Some are emerging-market champions, like Samsung, which have seized the opportunities provided by globalisation. The elite of the elite are high-tech wizards—Google, Apple, Facebook and the rest—that have conjured up corporate empires from bits and bytes. + +As our special report this week makes clear, the superstars are admirable in many ways. They churn out products that improve consumers’ lives, from smarter smartphones to sharper televisions. They provide Americans and Europeans with an estimated $280 billion-worth of “free” services—such as search or directions—a year. But they have two big faults. They are squashing competition, and they are using the darker arts of management to stay ahead. Neither is easy to solve. But failing to do so risks a backlash which will be bad for everyone. + +More concentration, less focus + +Bulking up is a global trend. The annual number of mergers and acquisitions is more than twice what it was in the 1990s. But concentration is at its most worrying in America. The share of GDP generated by America’s 100 biggest companies rose from about 33% in 1994 to 46% in 2013. The five largest banks account for 45% of banking assets, up from 25% in 2000. In the home of the entrepreneur, the number of startups is lower than it has been at any time since the 1970s. More firms are dying than being born. Founders dream of selling their firms to one of the giants rather than of building their own titans. + +For many laissez-faire types this is only a temporary problem. Modern technology is lowering barriers to entry; flaccid incumbents will be destroyed by smaller, leaner ones. But the idea that market concentration is self-correcting is more questionable than it once was. Slower growth encourages companies to buy their rivals and squeeze out costs. High-tech companies grow more useful to customers when they attract more users and when they gather ever more data about those users. + +The heft of the superstars also reflects their excellence at less productive activities. About 30% of global foreign direct investment (FDI) flows through tax havens; big companies routinely use “transfer pricing” to pretend that profits generated in one part of the world are in fact made in another. The giants also deploy huge armies of lobbyists, bringing the same techniques to Brussels, where 30,000 lobbyists now walk the corridors, that they perfected in Washington, DC. Laws such as Sarbanes-Oxley and Dodd-Frank, to say nothing of America’s tax code, penalise small firms more than large ones. + +None of this helps the image of big business. Paying tax seems to be unavoidable for individuals but optional for firms. Rules are unbending for citizens, and up for negotiation when it comes to companies. Nor do profits translate into jobs as once they did. In 1990 the top three carmakers in Detroit had a market capitalisation of $36 billion and 1.2m employees. In 2014 the top three firms in Silicon Valley, with a market capitalisation of over $1 trillion, had only 137,000 employees. + +Anger at all this is understandable, but an inchoate desire to bash business leaves everyone worse off. Disenchantment with pro-business policies, particularly liberal immigration rules, helped the “outs” to win the Brexit referendum in Britain and Donald Trump to seize the Republican nomination. Protectionism and nativism will only lower living standards. Reining in the giants requires the scalpel, not the soapbox. + +That means a tough-but-considered approach to issues such as tax avoidance. The OECD countries have already made progress in drawing up common rules to prevent companies from parking money in tax havens, for example. They have more to do, not least to address the convenient fiction that different units of multinationals are really separate companies. But better the grind of multilateral negotiation than moves such as the European Commission’s recent attempt to impose retrospective taxes on Apple in Ireland. + +Concentration is an even harder problem. America in particular has got into the habit of giving the benefit of the doubt to big business. This made some sense in the 1980s and 1990s when giant companies such as General Motors and IBM were being threatened by foreign rivals or domestic upstarts. It is less defensible now that superstar firms are gaining control of entire markets and finding new ways to entrench themselves. + +Prudent policymakers must reinvent antitrust for the digital age. That means being more alert to the long-term consequences of large firms acquiring promising startups. It means making it easier for consumers to move their data from one company to another, and preventing tech firms from unfairly privileging their own services on platforms they control (an area where the commission, in its pursuit of Google, deserves credit). And it means making sure that people have a choice of ways of authenticating their identity online. + +1917 and all that + +The rise of the giants is a reversal of recent history. In the 1980s big companies were on the retreat, as Margaret Thatcher and Ronald Reagan took a wrecking ball to state-protected behemoths such as AT&T and British Leyland. But there are some worrying similarities to a much earlier era. In 1860-1917 the global economy was reshaped by the rise of giant new industries (steel and oil) and revolutionary new technologies (electricity and the combustion engine). These disruptions led to brief bursts of competition followed by prolonged periods of oligopoly. The business titans of that age reinforced their positions by driving their competitors out of business and cultivating close relations with politicians. The backlash that followed helped to destroy the liberal order in much of Europe. + +So, by all means celebrate the astonishing achievements of today’s superstar companies. But also watch them. The world needs a healthy dose of competition to keep today’s giants on their toes and to give those in their shadow a chance to grow. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21707210-rise-corporate-colossus-threatens-both-competition-and-legitimacy-business/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +British politics + +Britain’s one-party state + +Labour’s implosion leaves Britain without a functioning opposition. That is more dangerous than many realise + +Sep 17th 2016 | From the print edition + + + +CHEERING crowds flock to his rallies. Youngsters embrace him for selfies and hang on his every tweet. Jeremy Corbyn, improbable, crinkly rockstar of the far left, is on course to be re-elected Labour’s leader on September 24th in a landslide vote among the party’s members, hundreds of thousands of whom have joined up in the past year just to back him. + +Yet Mr Corbyn’s popularity among Labour’s half-million members and affiliates is not replicated among Britain’s 45m voters, most of whom do not share his desire to overthrow capitalism and unilaterally forsake the country’s nuclear weapons, nor his soft spot for strongmen such as Vladimir Putin and the late Hugo Chávez. The party is polling at its lowest in opposition for 30 years. Among young people, his most sympathetic constituency, Mr Corbyn has an approval rating of -18%. Among the over-65s it is -68%. Labour is on course to lose scores of seats at the next election. And it will not end there. Parties often pick bad candidates—mainstream Republicans recoil at Donald Trump, for instance—but it usually costs them no more than one election. Mr Corbyn, by contrast, is packing Labour with allies and seems more concerned with building a long-term “movement” than winning power. The Conservative government can expect years without being seriously challenged in Westminster. + +The story of how one of the most reliable vote-winning machines in the West drifted into irrelevance is a warning to parties everywhere (see Briefing). It is a tragedy for Labour, which under its recent centrist leaders was in power for 13 years, introducing reforms from a minimum wage to gay unions. And it is bad news for Britain. Experience, from Mexico to Japan, suggests the long-term absence of serious political opposition leads to bad government. Worse, Labour’s meltdown comes as Britain begins complex and perilous Brexit negotiations, which need scrutiny. What opposition there is will come from the Tories’ eccentric fringes and from the undemocratic House of Lords. And Scotland may wonder more than ever why it should remain attached to its Brexiteering big brother. + +Left foot backward + +Labour’s feebleness has already contributed to Britain’s most calamitous decision in a generation, that of leaving the EU. Although the party is pro-Europe, Mr Corbyn’s half-hearted campaign to Remain (he is a lifelong Eurosceptic who voted to leave in 1975) was one reason that the referendum slid in favour of Brexit. Since then, Labour’s leader has yet to ask a question about Brexit at his weekly grilling of the prime minister in Parliament. The shadow cabinet is so thin—three-quarters of Labour MPs have publicly called on their leader to quit—that the job of shadow Brexit secretary is being done part-time by the shadow foreign secretary. If the opposition did its job properly the government might be forced to come up with a Brexit plan that was halfway acceptable to the 48% who voted to stay. Instead it faces a louder and more serious threat from the more extreme Tory Brexiteers, who are urging an economically disastrous “hard Brexit”: leaving the single market entirely in order to impose controls on immigration. + +The absence of an opposition will have an equally damaging effect on domestic policies. Theresa May, who became prime minister via a Tory leadership contest rather than a general election, is launching a prospectus unapproved by the electorate. She has set out a bold pitch to working-class voters who feel abandoned by Labour. This is welcome. Yet her proposals will suffer from lack of serious scrutiny. This week she announced plans to allow more state schools to select children based on ability, a laudable effort to help poor children but which could actually do the opposite (see article). For once, Mr Corbyn landed a few blows on her in Parliament. But the biggest push-back will come from backbench Tories; Labour is on its third shadow education secretary of the summer. + +Perhaps the strongest brake on the government will be the House of Lords. The Conservatives have less than one-third of its members; contentious policies like the schools proposal are likely to run aground there even if they do not in the Commons. Yet the Lords—who are unelected, unrepresentative and include a bench of Church of England bishops—would provoke crisis if they went beyond their historical role of fine-tuning legislation to become a serious check on the government. + +The zombie opposition + +Labour’s malaise could even loosen the fraying union. Long allergic to the Tories and more recently out of love with Labour, Scotland has itself become something of a one-party state under the Scottish National Party (SNP). Mr Corbyn promised to win back Scotland by moving Labour leftward. Yet the Islington socialist is as unpopular there as he is in England. Scots now have little time for either of the parties that would rule them from Westminster. That may make independence (already back on the agenda following the vote for Brexit, which Scots opposed) more appealing. Brexit is also complicating relations with Northern Ireland, another place where Mr Corbyn—whose shadow chancellor, John McDonnell, praised the “bombs and bullets and sacrifice” of the Irish Republican Army in 2003—is not taken seriously. + +In many democracies, parties come and go; there would be little to mourn if Labour were to wither and be replaced by others more in tune with voters. Under a proportional electoral system, Labour might shed seats to the leftish Liberal Democrats and the populist UK Independence Party. Moderate Labour MPs might even break away to form a rival outfit. Yet Britain’s first-past-the-post system makes it fiendishly hard for small parties to make headway. Labour’s crisis will therefore probably translate not into the birth of a bold new opposition movement but simply a Conservative landslide. Until Labour comes to its senses, those who oppose the government—particularly centrists and the 48% who voted to stay in the EU—will be poorly represented. Disaffection with the political process will fester. The witless Mr Corbyn was at least right when he promised his followers a “new kind of politics”. But a one-party state was probably not what they had in mind. + +Correction (September 15th): An earlier version of this leader said that Mr Corbyn voted "against joining" the European Economic Community in 1975. In fact Britain had been a member since 1973; we should have said that in 1975 Mr Corbyn voted "to leave" it. Sorry. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21707209-labours-implosion-leaves-britain-without-functioning-opposition-more-dangerous/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Syria’s ceasefire + +A risky bargain + +A pause to the fighting is welcome. But America may be playing into the hands of Russia and the jihadists + +Sep 17th 2016 | From the print edition + + + +AS The Economist went to press a big consignment of aid was poised to arrive in eastern Aleppo, a Syrian city that has been under siege, off and on, for four years. It contained food, medicines, clothes—even toys for toddlers who have lived their whole lives under the shadow of a war that is estimated to have killed more than 400,000 people. This respite is the fruit of a deal between Russia and America on September 10th that imposed a ceasefire across much of the country. + +It appears to be holding, for now. But as with the previous cessation of hostilities in February, this agreement may be short-lived. And by appearing to tie America to Russia’s game plan, it may even make things worse. + +Agreement in a vacuum + +After months of negotiation, John Kerry, the American secretary of state, and his Russian counterpart, Sergei Lavrov, have put together a deal that is remarkable for what is not in it. None of the combatants on the ground signed the pact. It falls instead to Russia to try to restrain its ally, Bashar al-Assad, Syria’s brutal ruler, and to America to corral a multitude of rebel groups into acquiescence. Nor, crucially, does the agreement say anything about the next steps. + +All attempts to bring peace to Syria have foundered on the question of what will happen to Mr Assad. Russia, Iran and Mr Assad himself view it as non-negotiable that he will remain in office throughout any transitional period leading to an election, in which he intends to be a candidate. For America, Sunni Arab states and the rebels, Mr Assad’s departure is an essential precondition for peace. They cannot abide the prospect of a man who gases civilians and deliberately bombs hospitals clinging to power. Stuck, Mr Kerry has fallen back on counter-terrorism: if the ceasefire holds for a week, then America and Russia will jointly fight the jihadists of Islamic State (IS). + +Anything that will hasten the end of the jihadists’ vile “caliphate” is welcome. IS is well on the way to defeat in Syria: it has lost most of the territory it once controlled there, and its last big stronghold, Raqqa, could fall in the next few months. In Iraq, Kurdish forces and the Iraqi army are closing on IS’s other “capital”, Mosul. The sooner the caliphate is destroyed, the easier it will be to deal with Islamic radicalism across the world. + +A second part of the deal is riskier, however. America and Russia are also to join forces to destroy the jihadist group that until recently called itself Jabhat al-Nusra, an offshoot of al-Qaeda. Quite right, American voters will doubtless say: al-Qaeda was the group that felled the twin towers. But labels can mislead. In Syria Jabhat al-Nusra has shown striking pragmatism, as well as prowess in fighting Mr Assad (see article). In July it renamed itself “Jabhat Fatah al-Sham” (JFS) and said it was severing its “external” links with al-Qaeda. It now hopes to merge with other, more nationalist Syrian rebel groups. It says it has no intention of attacking the West. Indeed, some think the West should put out feelers to JFS. + +Yet al-Qaeda poses a real danger. Some of its most senior figures are gathering in Syria, and counter-terrorism officials rightly worry that they are creating another base for jihadist attacks on the West. But dealing with that threat requires more than just bombing JFS. The West should give more support to moderate rebels and help establish safe zones. It needs a credible plan to get rid of Mr Assad. Without one, it will be playing into Vladimir Putin’s skilful hands. JFS fighters are hard to separate from other rebel groups, who will stick with the jihadists as long as they fear Mr Assad may come back. Attacking JFS would thus be seen as defending Syria’s dictatorship. And that would surely inspire yet more jihadism around the world. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21707213-pause-fighting-welcome-america-may-be-playing-hands-russia-and/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Extinctions to order + +Gene-ocide + +The promise and peril of “gene drives” + +Sep 17th 2016 | From the print edition + + + +IN A competition to find the world’s least-loved animal, the mosquito would be hard to beat. Only a few species of the insect carry the parasites that cause human diseases such as West Nile virus, dengue and yellow fever, but the harm they cause is enormous. Malaria kills more than 400,000 people, mostly children, every year. Zika has spread to dozens of countries (see article). If species such as Anopheles gambiae and Aedes aegypti could be eradicated, the world would surely be a better place. + +Genetic engineers have already taken some steps in that direction: male A. aegypti mosquitoes that have been modified to become sterile have been released in Brazil, for example. Such approaches, controversial though they are among some greens, are limited in their impact and geographical range. A nascent technique called a “gene drive”, which could make it far easier to wipe out species, raises harder questions. + +The term refers to the engineering of genes so that they are almost guaranteed to be inherited by offspring (the conventional laws of inheritance predict that offspring have only a 50% chance of inheriting a specific gene). You might, say, be able to engineer A. gambiae to produce only male offspring, release the modified bug into the wild and extirpate the entire species. + +The use of gene drives in the wild is not imminent. But the research is proceeding rapidly, thanks to new gene-editing technology and to some lavish funding: this month the Bill and Melinda Gates Foundation said it would increase its investment in gene drives to $75m. Mosquito species are the main targets, but need not be the only ones. Some wonder if gene drives could be used on the ticks that carry Lyme disease, or to change the genetic makeup of bats, a reservoir of infectious diseases. As interest grows, however, so do the concerns. + +Dodos and don’ts + +Some take an absolutist stance: it is morally wrong to take a deliberate decision to eliminate any species, however unpleasant. Try explaining that piece of armchair ethics to the people who still suffer from horrors such as bilharzia and Guinea worm. The eradication of smallpox in 1980 was a monumental advance in public health. The removal of the malaria parasite would be bigger. If A. gambiaehas to go with it, then tough. + +There are other, more powerful causes for concern. One is that the impact of getting rid of a species is hard to predict. The mosquito that just fed on a person’s arm may go on to feed a swallow. The absence of one bug might lead another to thrive. However carefully scientists model the impact of gene drives, the risk of unintended consequences looms large in complex ecological systems. Another worry is that gene drives could be used for evil: a mosquito could just as well be engineered to be more suited to carrying deadly diseases, for example. + +That argues for two guiding principles in the use of the technology: reversibility and consent. Reversibility means that no species should be driven extinct in the wild without the means to reconstitute it. Colonies of unaltered organisms must always be retained, so that they can be reintroduced. + +The second principle concerns consent. The presumption behind the regulation of genetically modified organisms is that their spread can be contained. The Cartagena Protocol on Biosafety allows a country to refuse entry to a GM crop, for example. Such rules will not contain gene drives, which will spread across borders without permits. A decision by one nation, or one group, to release them might eventually affect every country where the species exists. Governance arrangements must be international from the start. + +The power of gene drives demands proper debate. Ensuring that the technology can be thrown into reverse, and that its use is subject to international monitoring and co-ordination, would make it easier to unlock its vast potential for good. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21707211-promise-and-peril-gene-drives-gene-ocide/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The World Bank + +Lucky Jim + +The extension of Jim Yong Kim’s term as president of the World Bank is a short-sighted stitch-up + +Sep 17th 2016 | From the print edition + + + +BACK in 2011 the World Bank’s governors committed themselves to an “open, merit-based and transparent” process to select its president. This week the American incumbent, Jim Yong Kim, was confirmed as the sole candidate for the next five-year term in another closed, patronage-based and opaque process. That falls short of the standards the bank seeks of its borrowers, let alone itself. It also hastens the rise of rival institutions. + +Mr Kim’s appointment stems from an archaic and now obsolete tradition dating back to the Bretton Woods conference of 1944, by which America chooses the boss of the World Bank and the head of the IMF is a European. That may have reflected the global pecking order as the second world war came to an end. But it does not suit the world today. + +The failure—due, largely, to America’s Congress—to reform the Bretton Woods institutions has spread cynicism about them. Countries such as India and, especially, China see such recalcitrance as part of a broader reluctance by the West to cede influence. They have set up multilateral banks where they can call the shots: the New Development Bank, owned by the “BRICS” (Brazil, China, India, Russia and South Africa), and the China-led Asian Infrastructure Investment Bank (AIIB). + +Facing new competitors in its core business (the financing of large development projects), the World Bank needs a clear sense of purpose under a leader who enjoys the respect of its staff—and its borrowers. Sadly, Mr Kim is not that leader. His previous career, distinguished though it was, as a medical doctor, co-founder of a public-health NGO and president of a liberal-arts college always seemed inadequate preparation for his current job. And he has failed to win the trust of the bank’s employees. The mood is disgruntled and rebellious. Last month the association representing the World Bank’s 15,000 staff, citing surveys showing their dismal morale, wrote in an open letter about a “crisis of leadership”. + +Some grumbling is inevitable. In any lumbering bureaucracy that is being forced to endure radical change, even loyal and idealistic staff will resist and complain—just ask a BBC journalist. Some of Mr Kim’s reforms, such as the shift from an organisation run on geographical lines to teams based on areas of expertise, are well-regarded by outsiders. It is hard to find anyone, however, who believes that the reform process, with its heavy reliance on external consultants, has been anything but an agonising, drawn-out shambles. Nor, claim NGOs, have the results made a big difference to the bank’s impact. + +Hang on to Mr Kim, for fear of someone worse than him + +It is puzzling, therefore, that Mr Kim is being so breezily awarded a second term nearly a year before the first expires. That is far from the norm. One possible explanation is panic that Donald Trump might win the American election and install one of his cronies. Another is that many members would rather see an American placeman hold the job than a candidate from a developing country. Even China is apparently backing Mr Kim, perhaps calculating he is preferable to a South Asian or African (or, worse, reckoning that the bank’s dysfunction might help the AIIB find its feet). This is no way to run a global institution. There is still just time for the bank’s board—and for the sake of his own credibility, Mr Kim himself—to recall that 2011 pledge and insist on a proper contest. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21707212-extension-jim-yong-kims-term-president-world-bank-short-sighted/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On the burkini, Citadel, Colombia, game theory, demography, Milton Friedman, Star Trek: Letters to the editor + + + + + +Articles Sections Next + +On the burkini, Citadel, Colombia, game theory, demography, Milton Friedman, Star Trek + +Letters to the editor + +Sep 17th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +What is a “burkini”? + +A “burkini” is not “a cross between a burqa and a swimsuit” (“Ill-suited”, September 3rd). Although the word is a portmanteau of “burqa” and “bikini”, the item itself is not. It is simply a swimsuit, albeit a modest one, and has nothing to do with a burqa. Rather, it is associated with the hijab. A woman who wears the hijab covers her hair and body in public, and so would not show her arms, legs and chest on the beach. Obviously, a substantial portion of Muslim women wear the hijab, whereas only a tiny minority wear a burqa or cover their faces. + +“Burkini” is English and does not come from Arabic. This kind of clothing is referred to natively as maayo muhtashim (modest swimsuit) or malaabis al-bahr al-muhtashim (modest beach clothes). The term “burkini” has started to appear also in Arabic news sources, but the spelling and the fact that it is often written in quotes mark it clearly as a borrowing from English. + +KAREN MCNEIL + +Revising editor + +Oxford Arabic Dictionary + +Providence, Rhode Island + + + + + +Citadel + +We certainly won’t argue with your assessment that Citadel has done “spectacularly well” of late (“Law of averages”, August 27th). The analysis by Novus, an analytics firm, of figures from Hedge Fund Research, a data provider, is thought-provoking. The chart you used in the story shows the reversal of fortunes (both positive and negative) for over 900 hedge funds relative to their performance during the 2008 financial crisis. However, the analysis suffers from a material survivorship bias because it does not reflect the performance of the roughly 5,000 hedge funds estimated to have been shuttered (or closed) since 2008. + +Citadel’s record in different market environments over the past 25 years speaks for itself. We will continue to focus on delivering investment results that help the sovereign-wealth funds, pension plans, endowments and others who have entrusted us with their capital meet their investment objectives. + +ZIA AHMED + +Head of media relations + +Citadel + +Chicago + + + + + +Colombia and the FARC + +You are right that it would be a tragedy if Colombians failed to approve the peace agreement with the FARC guerrillas (“Ending a half-century of war”, August 27th). I first served in Colombia in the late 60s when the FARC were a low-level insurgency but much talked about because of the Cuban Revolution. I returned in the early 90s when they were a much greater threat and peace talks with the ELN had failed in 1991 and again in 1992 and following the 1999-2002 peace process which collapsed so spectacularly. + + + +I share the relief of many Colombians that the FARC have finally agreed to lay down their arms: but also understand the fears of many others who find it hard to believe that the FARC will honour the agreement. Some worry that they will take advantage of the wealth accumulated from drug trafficking, illegal mining, kidnapping and extortion to secure political control of the areas where they have been based and from there possibly mount a popular mobilisation—farmers’ blockades/strikes(paros), industrial action, demonstrations—modelled on president Evo Morales’s successful route to power in Bolivia. + + + +It is also not hard to sympathise with Colombians who find it outrageous that the top leaders of the FARC should face very light non-custodial sentences and be permitted to hold political office immediately despite the crimes against humanity they have committed. International experts on peace processes generally believe that this has been a well managed process and these terms were necessary to secure a deal as the FARC like the IRA had been weakened but not defeated. + + + +Given the strong views on both sides it was a wise decision by president Juan Manuel Santos not to use the powers he has to conclude the deal but to hold a plebiscite, risky as such consultations can be. The agreement is very long and complex and needs to be debated fully. The No campaign in the plebiscite will be led, if not formally, by former president Álvaro Uribe, whose father was killed by the FARC and who himself was their target on several occasions. Ironically it was Mr Uribe’s vigorous campaign against the FARC that convinced them to enter negotiations with his successor. + + + +The implementation of the peace agreement will be a long and difficult task and a Yes vote should open the way for Mr Uribe and other opponents of the deal to contribute to its success by offering, if not support, at least constructive criticism. If this were to happen Colombia’s prospects would indeed be promising. + + + +SIR KEITH MORRIS + +British Ambassador to Colombia 1990-94 + +London + + + + + +Game theory applications + +Your article on John Nash and the prisoner’s dilemma undersold his contribution to understanding social behaviour (“Prison breakthrough”, August 20th). The Nash equilibrium not only describes optimal behaviour in settings such as markets and auctions, but also defines which traits will emerge stably from an evolutionary process. + +Nash equilibriums have been used to explain animal behaviours that evolve without any conscious strategy, such as the tendency for many animals to defend territory when they arrive first, or for male peacocks to grow long tails. Humans can arrive at similar behaviours via biological evolution, and also through reinforcement learning or by imitating success, processes that are mathematically similar to biological evolution and lead to similar outcomes. + +For example, co-operating in a repeated prisoner’s dilemma can be a Nash equilibrium if players condition their co-operation on others’ past co-operation. People could arrive at this behaviour through conscious deliberation, but also by evolving emotions such as gratitude, or adopting strong norms of reciprocity, precisely what we see in human psychology. + +You claimed that when people don’t play in line with a Nash equilibrium in the lab, Nash is not relevant. But when equilibrium behaviour evolves it may not adjust immediately to new circumstances. Peacocks grow long tails even when their mating is determined by zookeepers, and people co-operate in a one-shot prisoner’s dilemma. We would never conclude from captive peacocks that their tails did not evolve as a costly signal to attract mates. We shouldn’t draw the analogous conclusion for human behaviour in unusual contexts. + +BETHANY BURUM + +MOSHE HOFFMAN + +Programme for Evolutionary Dynamics + +Harvard University + +Cambridge, Massachusetts + +You mentioned the role of Nash equilibrium in redesigning the system of matching job offers at hospitals with medical students. Although a common story, the actual history does not line up as the triumph for non-co-operative game theory you think it is. The “deferred acceptance” algorithm now in use in the system was discovered by medical staff before its rediscovery by David Gale and Lloyd Shapley in the 1960s. In any case, it relies on a co-operative game theory of stability, which is an alternative to Nash’s non-co-operative equilibrium, not an application of it. + +Nash equilibrium has transformed the way economists think about their field, but clear practical applications of the concept are harder to pinpoint than they might at first appear. The same might be said of Newton’s theory of gravitation and many other great scientific achievements. + +E. GLEN WEYL + +Senior researcher + +Microsoft Research + +New York + + + + + +Demography or bust + +When writing about “the global scourge” of parents who have fewer children than they want (“The empty crib”, August 27th) you implied that those who fretted about exploding populations 50 years ago failed to predict the decline of births. In part, because we fretters actually did things to make contraceptives available and to promote smaller families and girls’ education, it is indeed true that birth rates have declined in some poor countries as well as rich ones. + +But when a wife, often accepting her husband’s authority, says she wants six children and proceeds to have even more, some fretting is warranted. Childbirth often interrupts a woman’s development and education. Poor parents with large families do not invest in their children’s education, especially for girls. + +There appears to be plenty of room for more people in many parts of the world, but opposition to immigration prevents the use of this safety valve. The world faces environmental pressures that have never quite come together as they do today. These interacting problems would be easier to solve without the continued growth of population, especially in areas most sensitive to their effects. + +JONATHAN BARON + +Professor of psychology + +University of Pennsylvania + +Philadelphia + + + +Reverend Robert Malthus must surely be turning in his grave at such Pollyannaish assertions as ‘it is not clear that there are too many people’ and ‘population growth…will eventually go into reverse’ (“Wanted”, August 27th). The global human population has doubled to seven billion in just fifty years. Collapsing biodiversity and concerns over fish stocks, land fertility, water security and climate change are all evidence that demand is exceeding supply. If population growth does reverse, the UN thinks it will not be until there are at least four billion more people. + +Your leader asserts that couples who have fewer children than they desire suffer ‘anguish’, ‘sorrow’, depression’ and even ’social catastrophe’. Well, boo-hoo. Greed and growth are not admirable or indeed sustainable in a crowded, finite planet. If such couples substituted social concern for self-centeredness, they might be more content. + +SIMON ROSS + +Chief Executive + +Population Matters + +London + + + + + +What a trilemma! + +Regarding the origins of the Mundell-Fleming trilemma in international economics (“Two out of three ain’t bad”, August 27th), John Maynard Keynes referred to the dilemma of choosing between internal price stability and external exchange-rate stability in his “A Tract on Monetary Reform”, published in 1923. In a 1950 draft of his famous essay “The Case for Flexible Exchange Rates”, Milton Friedman said that, with the introduction of exchange controls in the 1930s, Keynes’s dilemma “has become a trilemma: fixed exchange-rates, stable internal prices, unrestricted multilateral trade; of this trio, any pair is attainable; all three are not simultaneously attainable.” + +As early as 1948, Friedman had been discussing this point in his lectures at the University of Chicago. In a letter to The Economist (January 3rd 1953), he took you to task for ruling out flexible exchange rates as a cure for the dollar shortage, accusing you of perpetuating “mercantilist fallacies” dressed up in “egalitarian jargon”. Apparently The Economist of the day preferred to resolve the trilemma by maintaining exchange controls and fixed exchange-rates rather than choosing free trade and monetary-policy autonomy. Who do you now think had the better of that argument? + +DOUGLAS IRWIN + +Dartmouth College + +Hanover, New Hampshire + +Editor’s note: The letter from Milton Friedman can be found at: www.economist.com/friedmanletter + + + + + +They boldly went + + + +A leader and lengthy article on the exciting discovery of a new planet, and all that entails for space travel (“Brave new worlds”, “Proximate goals”, August 27th). But no reference to the 50th anniversary of the first episode of “Star Trek”? + +For shame. + +RICHARD ROBINSON + +Los Alamos, New Mexico + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21707171-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +The Labour Party: Salvaging Jerusalem + + + + + +Articles Sections Next + +The Labour Party + +Salvaging Jerusalem + +How Britain’s left got into its crisis—and how it can get out + +Sep 17th 2016 | NUNEATON | From the print edition + +A victor’s legacy + +NESTLED between Birmingham and Leicester, Nuneaton is the humdrum English suburb from central casting. Neat flower beds full of petunias punctuate the lawn outside the bus station. On benches between the chain stores in the pedestrian precinct, old folk throw the crusts of their sandwiches to the pigeons. On the outskirts new, faux-bucolic housing estates sprawl between their pre-war forerunners. + +Since 1983 this town has voted for the winning party in every general election but one. It was among the target seats the Labour Party recognised that it needed to win last year. The announcement, early on election night, that its Conservative MP had been re-elected with an increased majority was the point at which the party realised it had been trounced. + +Nuneaton rejected Labour. Labour subsequently rejected Nuneaton and all that it represents. In September 2015 the party elevated Jeremy Corbyn, a stalwart of its far left, to its leadership. Voters in Middle England, doubtful about the party’s competence and credibility even before its new leader took the reins, have been unimpressed by his tenure—as the burghers of Nuneaton willingly attest. Shoppers express cautious support for Theresa May, the new prime minister. They speak as one when it comes to the leader of the opposition: “A bit of joke”; “I don’t think he knows what the world is actually like”; “Nah”. + +In opinion polls the Tories now consistently post double-digit leads over Labour. This, along with massive internal dissent and the effect of changes to constituency boundaries that were announced this week, leads pessimistic MPs to suggest the party could lose up to 100 of its 230 parliamentary seats at the next election. + +The sound of someone losing the plot + +Mr Corbyn enjoyed little support in the parliamentary party even before he had proved such a threat to its members’ jobs. He only got the 36 nominations from fellow MPs that allowed him to stand in last year’s leadership election because some of them thought that his voice would serve to broaden the party’s internal debate. After the Brexit referendum campaign, during which many thought that Mr Corbyn, for a long time a Eurosceptic, put the party’s pro-EU case with insufficient vigour, most of his shadow cabinet resigned. In a subsequent confidence vote 40 Labour MPs voted for him and 172 against. It is hard to imagine any previous party leader so lacking in support choosing to continue; but Mr Corbyn never wavered. Angela Eagle, one of the resigning shadow ministers, put herself forward for the leadership, thus triggering an election for the top job, before withdrawing from the race in favour on another colleague, Owen Smith. + +On September 24th Mr Corbyn will almost certainly be announced the winner of this contest. Victory will give him a number of opportunities to consolidate his power, to force out some internal opponents (possibly including his deputy, Tom Watson), to use those changes to parliamentary boundaries to threaten pesky MPs, to further weaken the parliamentary party’s role in leadership elections and to give the membership at large and online activists more say over policy. + +Corbynistas insist, against all precedent, that the party can change the terms of British politics, and win power, by becoming a “movement”. They point to leftist politicians in southern Europe (especially Syriza, now governing Greece) as a model. Most MPs, and most commentators, believe that in trying to do so they will transform the party’s prospects of winning places like Nuneaton from remote to non-existent and make it electorally irrelevant. + +This is remarkable for a party which 20 years ago was about to kick off its best-ever streak of electoral results (see chart 1). But under Tony Blair nearly everything the party did was calibrated to fit the interests and outlooks of voters in decisive Middle England seats; the former prime minister recalls his connection to such voters as a sort of love affair. In 1997 and 2001, this passion swept the party to power in landslides (56% and then 52% of the vote in Nuneaton). Even in 2005, after the Iraq war, Labour secured a solid win over the Tories (and 44% in Nuneaton). + + + +After that third election, when David Cameron became their leader, the Conservatives began to push back against Mr Blair’s domination of the centre ground. When Gordon Brown, his pushy chancellor of the exchequer, elbowed Mr Blair aside in 2007, he did so in part by flashing a little collectivist ankle to the grassroots, as well as by nobbling more centrist alternatives, allowing a shift to the left. The financial crisis persuaded many in the party that capitalism had failed sufficiently egregiously that such a shift could work. At the same time control of some of the largest of the trade unions that are affiliated to the party moved somewhat to the left. + +After Labour’s defeat in the 2010 general election showed that the crisis of capitalism had not been quite the conflagration the left had counted on, those union leaders supported Ed Miliband, one of Mr Brown’s protégés, in his bid to become leader. During his tenure Mr Miliband nudged the party further leftward while failing to dislodge the Conservative narrative that the country’s economic difficulties were all the fault of Mr Brown, a failure that doomed the party at the 2015 elections. He also changed the way future leaders would be chosen. In what initially seemed like a sensible response to union stitch-ups and declining membership his new rules obliged members of affiliated unions to opt in if they wanted to vote and extended the franchise to any member of the public willing to pay £3 ($3.90). + +In last year’s post-Miliband leadership election none of the three mainstream candidates saw the potential for reshaping the party’s electorate implicit in these rules. Mr Corbyn did. With the help of allies in the unions he encouraged supporters to sign up to vote, bringing in idealistic middle-class youngsters and the sort of socialist old-timers who had quit under Mr Blair. Over the course of the campaign the party’s electorate more than doubled to some 550,000, much to his advantage. + +For many party members, their second general-election defeat proved that Mr Miliband had not moved the party far enough to the left. The animosity many felt towards Mr Blair and all he stood for—which, in the 1990s and 2000s, had been assuaged, a bit, by his habit of winning—went unbridled in defeat. Swathes of the parliamentary party, particularly those who supported, or might have supported, the Iraq war that Mr Corbyn implacably opposed, were held in scorn. Coupled with the influx of support from outside, these feelings gave the campaign an unstoppable momentum (a term later taken as its name by a grassroots movement that grew out of Mr Corbyn’s leadership campaign and now has local chapters in many constituencies). Mr Corbyn’s inexperience—never a minister or a shadow minister—was perceived as innocence, his constant rebellion—487 votes against the governments of Mr Blair and Mr Brown—as righteousness. A large plurality of full members (49.6%) backed him; his majorities among union affiliates (57.6%) and the £3 “registered supporters” (83.8%) propelled him to overwhelming victory. + +Tell me when the spaceship lands + +Not all Mr Corbyn’s policies and stances are unpalatable to the electorate: a majority supports his wish to take the railway system back into public ownership. But so much of what he does and stands for is unpopular both with the right wing of his own party and the centrists that Mr Blair wooed that he will never become prime minister. He did not join in the national anthem at a first-world-war commemoration; he opposes the renewal of Britain’s nuclear weapons capability; he supports the restoration of many lost powers to trade unions, including secondary picketing, and the nationalisation of the energy industry. In a YouGov poll published on September 8th 61% of the public said he was doing badly as leader of the opposition; only 21% said he was doing well. + + + +Yet so completely has the make-up of the Labour Party changed that none of these facts about the electorate matter as far as its internal politics are concerned. Some 200,000 people—mostly Corbynistas—have joined as full members over the past year. A poll published by YouGov on August 31st gave Mr Corbyn a 62%-38% lead over Mr Smith among the party’s electorate (see chart 2). He has been nominated by 285 Labour constituency parties, compared with 53 for Mr Smith. + +Even if, completely against the run of play, Mr Smith were to stage an upset, rather little might change. His leadership campaign has been based on the idea that the party’s electorate will not vote for a candidate who differs much from Mr Corbyn on policy: the party’s new left-wing make-up, his aides argue, militates against a more centrist challenge. So his criticisms have focused more on his opponent’s abilities as a media performer and team leader: process, rather than substance. If Mr Smith wins, he will have little mandate to reconcile the party to the sort of agenda and strategy that would win it Nuneaton. As one party insider supporting him observes: “As long as the left have the whip hand, they will crack the whip.” + +If Mr Corbyn wins he will surely face further leadership challenges: some MPs talk of a “war of attrition”. It could be a war that both sides lose. There is no cast-iron law saying Labour has to survive. Social democrats across Europe are struggling to combine distinctiveness and credibility in straitened times and to reconcile small-c conservative working-class voters whose economic interests they have championed with the agendas of their more liberal, middle-class supporters. As they do so they also have to compete with populists of left and right and fend off centre-right parties which have become increasingly deft at pilfering popular policies, such as minimum wages, that the left used to own. The struggle is not going well. Since the late 1990s support for social-democratic parties has fallen by about half in Germany, two-thirds in the Netherlands and over three-quarters in Poland. + +British parties have disappeared before. The Liberal Party spent much of the 19th century switching in and out of power with the Tories; then in the first third of the 20th century an inability to adapt to political and economic shifts brought what a contemporary writer, George Dangerfield, memorably called the “strange death of Liberal England”. Perhaps the “strange death of Labour Britain” has arrived. The Scottish National Party has all-but wiped it out north of the border. In the north of England the right-populist, anti-EU UK Independence Party (UKIP) threatens to nab some of its working-class strongholds (though whether it can get its own act together enough to do so is an open question). In big cities and university towns the humbled pro-EU Liberal Democrats want to pinch Labour voters fed up with the party’s lacklustre pro-EU campaigning. And in the first two months of her premiership Mrs May has emphasised her commitment to things like vocational training, social mobility and industrial policy that once-Labour centrists tend to like. + +Such tactics could give the country years of Conservative dominance, with major arguments about the future taking place inside the sprawling governing party, much as they do in Japan, rather than between government and opposition. If Labour declines far enough, another principal opposition will rise to replace it: a first-past-the-post system like Britain’s does not easily allow for one big party and a bunch of small fry. The new number two could be UKIP, especially if arguments about what Brexit should look like come to dominate the country’s politics. Britain might thus be dominated by a right-populist party and a Christian Democrat one, rather as Poland is today. Alternatively some new grouping might rise from Labour’s moderate wing and/or the currently tiny and unloved Liberal Democrats to appeal to liberal, pro-EU voters. Then the country would look more like Canada. + +You’ll never get it right + +What can Mr Corbyn’s internal opponents do to avoid these outcomes? Their strategy so far has been to hope either that Mr Corbyn’s supporters will tire of him, or that he can be worn down by their war of attrition. Now, eyeing Mr Smith’s undistinguished campaign and likely failure, some concede that a new approach is needed. Two big, bold ideas are in the ether. + +The first and worse is a split. If Mr Corbyn wins, MPs could form a separate caucus in Parliament, create their own alternative shadow cabinet and perhaps eventually form a new, Nuneaton-friendly party. If this group is larger than the parliamentary rump loyal to Mr Corbyn it should, with the speaker’s blessing, become the official opposition. + + + +This option is endlessly discussed by Westminster conspiracy-mongers but also widely seen as a non-starter. The experience of the 28 MPs who left Labour in 1981 to form the Social Democratic Party provides a cautionary tale; never successful enough to break through under first-past-the-post they ended up merging with the Liberals to form the Liberal Democrats, who currently have just eight MPs. In any case, moderate MPs add indignantly, why should social democrats be forced out of their own political family? “I have no intention of walking away from our party which, like no other, was founded to deliver progressive values in government under our albeit flawed first-past-the-post electoral system” asserts Chuka Umunna, Labour’s former shadow business secretary. Despite Mr Corbyn’s best efforts plenty of voters remain tribally loyal to Labour: polling published by YouGov on August 2nd showed that if Labour’s right (or left) split from the party, only a minority of its voters would follow them (see chart 3). + +That leaves the second option: beating Mr Corbyn at his own game. Shortly before the current contest began many on the right of the party threw their efforts into creating mechanisms for recruiting new, moderate members to rival the Corbynite surge. The result was Saving Labour, an initiative begun by, among others, Reg Race, once a left-wing MP and later a successful entrepreneur. It has been endorsed by plenty of Labour MPs and Labour-supporting public figures (the novelist Robert Harris among them). Yet as one major supporter concedes: “it was too little too late”. The group claims it has signed up 120,000 people; even if this is true, Mr Corbyn’s commanding poll lead suggests that it is not nearly enough. + +But proponents of this strikingly top-down bottom-up strategy think they can get a second bite at the cherry, and that a couple of things can be done to assure success next time. One is to put in place a much larger, more established recruitment network. That means setting up local and workplace branches to connect with the sort of centrist and centre-left folk who, as members, union affiliates or registered supporters, might re-anchor the party in election-winning ground. As Luke Akehurst, leader of the anti-Corbyn group Labour First, puts it: “We need to…playMomentum at its own game.” + +The second is to come up with a better candidate. Campaigns like that of Barack Obama against Hillary Clinton in 2008, Matteo Renzi’s lightning rise to Italy’s premiership in 2013 (supported by 1.9m in an open primary) and Donald Trump’s victory in this year’s Republican primaries show that a charismatic and dynamic figurehead can draw a lot of “ordinary” voters into an internal party contest. Mr Smith—decent but untested, gaffe-prone and rather unremarkable—is not that sort of candidate. Mr Umunna, Rachel Reeves, a former Bank of England economist, Dan Jarvis, a former soldier, Yvette Cooper, one of the candidates who stood against Mr Corbyn last time, and Sir Keir Starmer, once Britain’s director for public prosecutions, are among those often mentioned as at least slightly more stirring possible leaders for the next push. Their challenge will be not to gather support in Westminster tea rooms, but to show that they can recruit members en masse; only after that has been demonstrated will it be worth choosing the one or two who excel to stand in another leadership battle. + +Mr Corbyn and his surrogates will cry betrayal and disloyalty at such open manoeuvring. So be it. Labour’s MPs have little to lose. Some face deselection, others are near-guaranteed defeat at the next election (which is not due until 2020—but Mrs May can read polls). Plenty are already routinely and roundly abused by their leader’s online supporters and local cheerleaders. They should find liberation in all this, feeling free to organise, agitate and throw whatever reserves of piss and vinegar they have left into saving their party from its spiral of decline. They are tribal, defensive and desperate. But that, too, can be a form of strength. + + + +` + + + +` + +` + +` + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21707199-how-britains-left-got-its-crisisand-how-it-can-get-out-salvaging-jerusalem/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Trump and the Alt-Right: Pepe and the stormtroopers + +The campaigns: Heard on the trail + +Presidential health: Hillary-care + +Income and poverty: Great again? + +Playing at policing: Power of the county + +Election brief: The Supreme Court: About to tilt + +Lexington: Who’s deplorable? + +Lexington: Survey + + + + + +Articles Sections Next + +Trump and the Alt-Right + +Pepe and the stormtroopers + +How Donald Trump ushered a hateful fringe movement into the mainstream + +Sep 17th 2016 | From the print edition + + + +FIRST, an apology, or rather a regret: The Economist would prefer not to advertise the rantings of racists and cranks. Unfortunately, and somewhat astonishingly, the Alt-Right—the misleading name for a ragtag but consistently repulsive movement that hitherto has flourished only on the internet—has insinuated itself, unignorably, into American politics. That grim achievement points to the reverse sway now held by the margins, of both ideology and the media, over the mainstream. It also reflects the indiscriminate cynicism of Donald Trump’s campaign. + +Much of the Alt-Right’s output will seem indecipherably weird to those unfamiliar with the darker penumbras of popular culture. It has its own iconography and vernacular, derived from message boards, video games and pornography. Its signature insult is “cuckservative”, directed at Republicans supposedly emasculated by liberalism and money. Its favourite avatar is Pepe the frog, a cartoon-strip creature co-opted into offensive scenarios; one Pepe image was reposted this week by Donald Trump junior and Roger Stone, a leading Trumpista, the latest example of the candidate’s supporters, and the man himself, circulating the Alt-Right’s memes and hoax statistics. Its contribution to typography is the triple parentheses, placed around names to identify them as Jewish. + +To most Americans, the purposes to which these gimmicks are put will seem as outlandish as the lexicon. One of the Alt-Right’s pastimes is to intimidate adversaries with photoshopped pictures of concentration camps; a popular Alt-Right podcast is called “The Daily Shoah”. To their defenders, such outrages are either justified by their shock value or valiantly transgressive pranks. Jokes about ovens, lampshades and gas chambers: what larks! + +Jared Taylor of American Renaissance, an extremist website, dismisses these antics as “youthful rebellion”. (Mr Taylor is also involved with the Council of Conservative Citizens, which Dylann Roof cited as an inspiration for his racist massacre in Charleston last year.) But the substance behind the sulphur can seem difficult to pin down. The term Alt-Right, reputedly coined in 2008 by Richard Spencer of the National Policy Institute, a bogus think-tank, encompasses views from libertarianism to paleoconservatism and onwards to the edges of pseudo-intellectual claptrap and the English language. Many Alt-Righters demonise Jews, but a few do not. Some, such as Brad Griffin of Occidental Dissent, another website, think “democracy can become a tool of oppression”, and that monarchy or dictatorship might be better; others, such as Mr Taylor, disagree. Some are techno-futurists; others espouse a kind of agrarian nostalgia. Many mourn the Confederacy. Mr Griffin thinks that, even today, North and South should separate. + +Yet from the quack ideologues to the out-and-proud neo-Nazis, some Alt-Right tenets are clear and constant. It repudiates feminism with misogynistic gusto. It embraces isolationism and protectionism. Above all, it champions white nationalism, or a neo-segregationist “race realism”, giving apocalyptic warning of an impending “white genocide”. Which, of course, is really just old-fashioned white supremacism in skimpy camouflage. + +That is why the term Alt (short for “alternative”) Right is misleading. Mr Taylor—whom Heidi Beirich of the Southern Poverty Law Centre, a watchdog, describes as the movement’s “intellectual leader”—says it represents an alternative to “egalitarian orthodoxy and to neutered ‘conservatives’.” That characterisation elevates a racist fixation into a coherent platform. And, if the Alt-Right is not a viable political right, nor, in the scope of American history, is it really an alternative. Rather it is the latest iteration in an old, poisonous strain of American thought, albeit with new enemies, such as Muslims, enlisted alongside the old ones. “Fifty years ago these people were burning crosses,” says Jonathan Greenblatt of the Anti-Defamation League, a venerable anti-racist group. “Today they’re burning up Twitter.” + +Probably the best that can be said for the Alt-Right is that its mostly youngish adherents are naive: unaware that 21st-century America is not the worst society the world has ever conjured, and so prime exemplars of the pampered modernity they denounce. Their numbers are hard to gauge, since they mostly operate online and, as with most internet bullies, anonymously: like dissidents in the Soviet Union they must, Mr Taylor insists, for fear of punishment. As with pornographers, though, the web has let them forge like-minded communities and propagate their ideas, as well as harass critics and opponents (particularly those thought to be Jewish). Online, they have achieved sufficient density to warrant wider attention. There, too, they and Mr Trump found each other. + +The association precedes Mr Trump’s hiring as his campaign manager of Stephen Bannon, former boss of Breitbart News, a reactionary news website that Mr Bannon reportedly described as “the platform for the Alt-Right”, and which has covered the movement favourably. Already Mr Trump had echoed the Alt-Right’s views on Muslims, immigration, trade and, indeed, Vladimir Putin, whom Alt-Righters ludicrously admire for his supposed pursuit of Russia’s national interest. Pressed about these shared prejudices (and tweets), Mr Trump has denied knowing what the Alt-Right is, even that it exists—unable, as usual, to disavow any support, however cretinous, or to apply a moral filter to his alliances or tactics. + +This is not to say he created or leads it, much as Alt-Right activists lionise his strongman style. Mr Taylor says Mr Trump seems to have “nationalistic instincts that have led him to stumble onto an immigration policy that is congruent with Alt-Right ideas”, but that “we are supporting him, not the reverse.” Breitbart, Alt-Righters say, is merely Alt-Lite. The true relationship may be more a correlation than causal: Mr Trump’s rise and the Alt-Right were both cultivated by the kamikaze anti-elitism of the Tea Party, rampant conspiracy theories and demographic shifts that disconcert some white Americans. + +Unquestionably, however, Mr Trump has bestowed on this excrescence a scarcely dreamed-of prominence. As Hillary Clinton recently lamented, no previous major-party nominee has given America’s paranoid fringe a “national megaphone”. Many on the Alt-Right loved that speech: “it was great,” says Mr Griffin. “She positioned us as the real opposition.” Because of Mr Trump, the Alt-Right thinks it is on the verge of entering American politics as an equal-terms participant. “He is a bulldozer who is destroying our traditional enemy,” says Mr Griffin. Mr Trump may not be Alt-Right himself, but “he doesn’t have to be to advance our cause.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707201-how-donald-trump-ushered-hateful-fringe-movement-mainstream-pepe-and/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +Sep 17th 2016 | From the print edition + + + +Blue-collar champion + +“Hipster fries $16” + +The Trump International Hotel in Washington, DC, opened this week. + +Saving Private Ryan + +"I’m not going to sit up here and do the tit-for-tat on what Donald said last night...That is not my job. I’m not going to be the election year pundit." + +Paul Ryan, House speaker, is done answering questions about Trump statements. + +Friendship never ends + +“We were friends long before this election. We will be friends long after this election.” + +Chelsea Clinton on Ivanka Trump. Politico + +Sit, stay, roll over + +"He’s trainable." + +Overheard at the Values Voter Summit discussing Donald Trump. Jonathan Martin of the New York Times via Twitter + +Two-fingered salute + +“When [the Iranians] circle our beautiful destroyers with their little boats, and they make gestures at our people that they shouldn’t be allowed to make, they will be shot out of the water.” + +Donald Trump, campaigning in Pensacola, does not like rude gestures. + +Hydrophobia + +“You try telling Hillary Clinton she has to drink water.” + +A person in Mrs Clinton’s “orbit” explains her dehydration. Politico + +Secrets and lies + +"Her vulnerability is not health, it’s stealth." + +David Axelrod, Barack Obama’s chief campaign strategist, despairs. CNN + +The nice guy + +"I’m not in the name-calling business." + +Republican Veep candidate, Mike Pence, won’t admit that even David Duke, former grand wizard of the Ku Klux Klan, might be “deplorable”. CNN + +Special victims unit + +“Deplorable lives matter.” + +Trump fan’s sign at a rally in North Carolina at which a 69-year old female protester, with an oxygen tank, was punched. Washington Post + +Man of style + +"He had the taste not to go for the 10-foot version." + +Barack Obama, campaigning in Philadelphia, commented on a Washington Post story that Donald Trump used funds from his charitable foundation to purchase a 6-foot portrait of himself. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707202-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Presidential health + +Hillary-care + +Mrs Clinton’s pneumonia is serious, but candidates have endured far worse + +Sep 17th 2016 | From the print edition + +Blood pressure: 100/70 + +FOR a candidate who may feel she is required to project strength in a way that male politicians are not, it is hard to imagine a worse time to swoon than at a memorial event for those killed on 9/11. Worse, Hillary Clinton kept news of her pneumonia from her own campaign and from voters for a couple of days. She has pledged to be more transparent in the future, a promise she has made before, and issued detailed medical records. Donald Trump, who is a master at feigning the kind of openness that he demands from others, submitted himself to a conversation with Dr Oz, a daytime TV host, who in turn promised not to ask Mr Trump anything “he doesn’t want to have answered”. Mr Trump’s only medical note so far has come from a gastroenterologist, who later admitted it was scrawled in five minutes while a limousine waited downstairs. + +Mrs Clinton’s pneumonia may yet turn out to be trivial or serious for her campaign. What is clear is that it is barely a scratch compared with the maladies endured by previous candidates and presidents, beginning with George Washington’s excruciating toothaches. Mr Trump and Mrs Clinton may have traded barbs about the extent to which the other is being open about their health, but these exchanges have been tame compared with the presidential election of 1800, when Jefferson’s camp accused John Adams of having a “hideous hermaphroditical character” and Adams’s lot spread a rumour that Jefferson was in fact dead. + +For the combination of sheer agony and high secrecy, though, it is hard to beat the unfortunate Grover Cleveland. For four days at the beginning of his second term, notes Robert Dallek of Stanford University’s outpost in Washington, DC, he disappeared to a yacht, where six surgeons cut out a portion of his cancerous upper jaw. The offending bits were removed through his mouth so as not to damage his moustache, which might alert the public. + +During the 20th century, a ghastly illness was almost a presidential prerequisite. Woodrow Wilson suffered a stroke in his second term that his doctors concealed; Franklin Roosevelt’s heart problems killed him while in office; John F. Kennedy’s ailments could have filled an entire medical textbook, had they been disclosed. Richard Nixon’s anguish during Watergate placed a large nuclear arsenal in the hands of a president who may temporarily have been of unsound mind. With a history like this, it is understandable that the president’s health is subject to a formal bulletin, which is how we know that Barack Obama takes vitamin D supplements and chews nicotine gum (he also does aerobics and lifts weights), and why future historians will be able to pore over the results of George W. Bush’s colonoscopies. Yet candidates are not required to do the same. + +This seems like an easy thing to fix. But at what point ought such an examination to be carried out? If it were done after the party primaries, then a doctor might be obliged to disqualify a candidate who had already won a democratic mandate. If before, then should all 17 of the Republican contenders have been placed on the treadmill, turning the primary into a high-stakes version of The Biggest Loser? Better, perhaps, to accept that politicians—like humans—sometimes fall ill. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707205-mrs-clintons-pneumonia-serious-candidates-have-endured-far-worse-hillary-care/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Income and poverty + +Great again? + +Median incomes soared in 2015 + +Sep 17th 2016 | WASHINGTON, DC | From the print edition + + + +THE median real household income grew by a whacking 5.2%, or $2,800, in 2015, according to figures released on September 13th. A purring labour market accounts for the bulk of the rise: that year average weekly earnings in the private-sector grew by 2.4%, while the fraction of 25- to 54-year-olds employed rose by 0.7%. Low inflation also helped. Prices rose just 0.1% in 2015, down from 1.6% growth in 2014, primarily as a result of much cheaper petrol. Janet Yellen, chairman of the Federal Reserve, recently estimated that the average household saved $780 at the pump last year. + +Bucking recent trends, the wallets of the poor and least-educated swelled the most. Income at the twentieth percentile (meaning the level at which exactly one-fifth of the population earns less) grew by over 6%. The average income of households headed by someone who left school before ninth grade—typically reached at age 14 or 15— grew a fulsome 12.5%, compared with just 3.2% growth in those headed by someone with a bachelor’s degree or more. Just as the disadvantaged are usually the first to lose their jobs in a recession, they have been the last to benefit as the economy has recently closed in on full employment, argues Jared Bernstein, an economist at the Centre on Budget and Policy Priorities, a think-tank. That also helps to explain a fall in the poverty rate from 14.8% to 13.5%—the largest annual percentage-point drop in poverty since 1999. + +However, there is long way to go before recent rises in inequality are undone. Real incomes for low-and-middle earners are lower than before the financial crisis, and still further beneath where they were in 2000. For the richest, they are higher on both measures (see chart). Nonetheless, Americans’ economic spirits are high. Since the start of 2015 consumer confidence has, on average, been higher than in any year since 2004. In the second quarter of 2016, real consumption per person grew at an annual pace of 3.6%. Brakes remain on economic growth: business investment is weak and productivity is falling. But workers and consumers are apparently yet to notice. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707203-median-incomes-soared-2015-great-again/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Playing at policing + +Power of the county + +Riding along with Sheriff Joe Arpaio’s posse of steely retirees + +Sep 17th 2016 | From the print edition + +More fun than golf + +CONSERVATIVE voters have much at stake in this November’s general elections, but few feel this as keenly as the members of the Maricopa County Sheriff’s Posse. The posse is a 1,000-strong force of volunteers who buy their own police uniforms, guns and, in some cases, their own marked patrol cars. For more than 20 years members have served as unpaid auxiliaries for Sheriff Joe Arpaio, a law-and-order showman who styles himself “America’s toughest sheriff”. + +Mr Arpaio, a gruff 84-year-old, won election as sheriff of Maricopa County—a sprawling, sun-baked tract of Arizona that includes the city of Phoenix and is home to nearly 4m people—in 1992, cruising to re-election five times. He is a frequent guest on conservative television and talk radio, earning fame for housing county prisoners in a “tent city” where temperatures have been known to reach 145F (63ºC), for making inmates wear pink underwear and feeding them meals whose average cost is between 15 and 40 cents, and for establishing what he boasts are the “world’s first-ever female and juvenile chain gangs”. + +Critics single him out for other reasons, notably federal court rulings finding that he ordered his deputies to conduct immigration sweeps and raids that unlawfully targeted people who appeared to be non-white or Hispanic. Mr Arpaio, a Republican, is running for re-election this November, and—unusually—has fallen behind his Democratic challenger in some opinion polls. His woes may not end on election day. A federal judge has recommended that the sheriff be prosecuted for criminal contempt for defying court orders to stop racially biased policing: charges that could conceivably end in jail time. + +The ripples from this turbulence have reached the men and women of the sheriff’s posse. These helpers are as much a part of Mr Arpaio’s brand as his tents and chain gangs. Though the force dates back to Arizona’s rural past, when locals would turn out to help the sheriff find lost travellers or hunt down scofflaws on horseback, Mr Arpaio is proud of expanding it into what he calls America’s largest volunteer posse. In 2011 the sheriff assigned a five-member “cold-case posse”, funded by donations from conservatives across the country, to investigate whether President Barack Obama faked evidence of his birth in America. Mr Arpaio announced his conclusion the following year: that a birth certificate released by the White House was a “computer-generated forgery”. In early 2013, shortly after a mass shooting at Sandy Hook Elementary School, Connecticut, Mr Arpaio dispatched armed posse members to guard schools and invited Steven Seagal, an actor in action films, to help train them. + +John Pawloski is the grandfatherly, silver-moustachoied commander of a nine-member posse in Dreamland Villa, a no-frills retirement community dating back to the 1950s, comprising some 3,100 bungalows built around a community club, swimming pools and shuffleboard courts, near the city of Mesa. Mr Pawloski moved to Arizona from Buffalo, New York, after 32 years as a fireman. The volunteer, who will turn 70 at his next birthday, spends about six or seven hours a week on patrol and another ten hours on “office work”. He notes that people of his age “don’t believe in a slap on the hand for beating someone up” nor do they believe that drug addiction means “you can do what you like.” + +Mr Pawloski’s neighbours, who include retirees from the northeast, the Midwest and Canadian “snowbirds” who spend winters in Arizona, are not wealthy folk. But each year they dig deep for a fund-raising drive, whether buying new police radios at $6,000 a time, or a gleaming black and gold patrol car (the newest of the posse’s three vehicles cost $40,000). Four of the posse’s members live in Dreamland Villa, a quiet spot on a weekday afternoon, disturbed only by the thrum of a thousand air-conditioning units, and the purring of a lone golf cart carrying an old man in swimming trunks, still wet from the pool. Yet in his trim office, with its map of crime statistics on the wall, Mr Pawloski sees threats. Old people are trusting, he says and, to “the crooks”, communities like his resemble “a nice, ripe apple” for the picking. The commander wears a beige uniform, identical to that of a sheriff’s deputy except for his badge, a six-pointed badge bearing the sheriff’s crest and the word “Posse”. + +Mr Pawloski is not a swaggering vigilante-type. A typical patrol might involve checking on empty houses whose owners are away, directing traffic after an accident, offering water or a lift to an old person walking in the sun (people with dementia often wander), consoling a crime-victim whose cash was nabbed from a purse left by an open door, or quizzing homeless people loitering on a local nature trail. Holidays can be busy: Mr Pawloski cites the Christmas-time theft of an inflatable camel from a bungalow porch. Citing his age and a bad hip, he does not carry a gun, and is at pains to note that he is not a sworn police officer but a civilian, who only has authority when a sheriff’s deputy asks him to help. + +Other commanders are more gung-ho. David Isho runs the Desert Foothills Sheriff’s Posse, which has 16 members. He is a Qualified Armed Posseman (QAP), carrying a gun after special training topped up with an annual test at the sheriff’s range, and drives his own marked patrol car (he bought it second-hand for $4,000). Mr Isho, 57, runs a company that makes gadgets for “preppers”, as survivalists preparing for the possible collapse of Western civilisation are known, but still devotes 300 hours a month to the posse, mostly patrolling by night. Locals are very keen on Mr Arpaio, he says, and “see us as an extension of Joe.” + +The Carefree patrol + +The Desert Foothills posse used to be twice as large, sighs Mr Isho, who moved to Arizona from Maryland. Several members left rather than undergo court-ordered training on making lawful stops and arrests—mandated for all sheriff’s deputies and posse members after Mr Arpaio lost his racial-profiling case. The training was time-consuming, he says. Asked if some posse members simply disagreed with the court ruling, Mr Isho calls that possible, too, growling that the Obama government has pursued an “agenda” against Mr Arpaio. He expresses disbelief at claims of racial profiling by the sheriff’s department during traffic patrols. In broiling-hot Arizona, Mr Isho scoffs, drivers favour such dark-tinted windows that “you can’t tell who is in a car or not.” + +Mr Isho’s patch includes such affluent towns as Carefree, which are, he says, “very safe”. He works hard to make himself useful. His posse volunteers to transport prisoners to the county jail. It has helped deputies check ID cards at parties full of teenage drinkers. He recalls times when he has had to draw his gun, as when helping to check on an empty house by night, as a burglar alarm wailed. Still, there are limits. Not all professional deputies are “posse-friendly”, he concedes. So-called “self-activating”—as when a posse member drives a patrol car with lights flashing and siren wailing, without direct orders to do so from a sheriff’s deputy—is a serious no-no, which can see volunteers “booted” from the posse. + +The looming elections worry Mr Isho. Though he believes the posse system would survive a change of sheriff, he fears that a new boss might reduce the volunteers’ powers, “castrating the programme”, as he puts it with some vehemence. The next sheriff might not feel that civilian volunteers should carry guns, and Mr Isho, for one, would not put on the uniform if he were not armed. A police uniform is a “magnet for trouble”, he explains gravely. + +Encountered at the headquarters of the Arizona Republican Party in Phoenix, Mr Arpaio agrees that he has built up the role of the posse. He is proud of sending members out on raids to help catch criminals. “I don’t just send the posse out to rescue horses,” he says. As it happens, Paul Penzone, a veteran Phoenix police detective trying to unseat Mr Arpaio as sheriff, and therefore running as a (rather shy) Democrat, says that he is a “huge fan” of the posse, which he would not disarm. “This is Arizona. This is a state with a lot of gun-owners,” he notes tactfully. + +Still, he would make changes. The posse does not reflect the diversity of the county, which is almost one-third Hispanic. He says he has too often seen the posse, in common with county chain gangs, deployed on high-visibility missions in the most affluent bits of the county, where Arpaio-voters are thickest on the ground. Mr Penzone would rather see extra patrols in public parks where children cannot play safely. Above all, he says: “I’m not going to send the posse to fly to Hawaii to investigate the president’s birth certificate.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707113-riding-along-sheriff-joe-arpaios-posse-steely-retirees-power-county/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Election brief: The Supreme Court + +About to tilt + +This election could determine the shape of the Court for a generation + +Sep 17th 2016 | NEW YORK | From the print edition + +The big reveal + +“OUR country is going to be Venezuela,” Donald Trump said over the summer, if Hillary Clinton gets to nominate Supreme Court justices. Her picks will be “so far left,” Mr Trump said, that America will slide into socialism. For her part, Mrs Clinton says the Republican nominee’s Supreme Court appointments would threaten the “future of our planet”, among other things. Melodramatic campaigning is nothing new, and the Supreme Court is an issue every four years. But with Republicans in the Senate refusing to consider Barack Obama’s choice of Merrick Garland to fill the late Antonin Scalia’s seat—and the remaining eight justices divided and a bit flummoxed in the meantime—this go-round is different. Change is coming, in one direction or another. + +Both camps say that the next president could appoint as many as four justices (Mr Trump once said five), including a replacement for the very conservative Mr Scalia. These predictions are a rather morbid nod to demographics: Ruth Bader Ginsburg, the longtime leader of the court’s left wing, is 83. The slightly less liberal Stephen Breyer is 78, and Anthony Kennedy, sitting in the ideological middle of the bench, is 80. Each of the four most recent presidents has seated two justices, so having the chance to name four would give the next White House an outsize influence on the shape of American law for a generation. Yet even if these three jurists, along with their five younger colleagues, muster four more years in their robes and the number of vacancies stays at one, the next president will still help determine the shape of the Supreme Court for years. + +The octogenarians are showing few signs of slowing down. The cherubic Mr Kennedy is still prone to syrupy prose early in his ninth decade. Despite her bouts with cancer and an occasional nap during a State of the Union address, Mrs Ginsburg does 20 push-ups a day, pulls all-nighters and remains ruthless when peppering lawyers during oral arguments. If anything, she is gathering steam. Her fellow Bill Clinton appointee, Mr Breyer, spins impromptu hypotheticals that box advocates into their own illogic. His health scares? Just a few broken bones and a punctured lung suffered during bicycling accidents. + +If they stay put for the next four years, the balance of the court will turn on the identity of the next appointee. There are three possibilities. The Senate may relent after November 8th and consider President Obama’s nominee, Mr Garland. In 1996, when Mr Garland was nominated by Bill Clinton to sit on the District of Columbia Court of Appeals, he garnered praise from many Republicans. Senator Orrin Hatch called him “a fine nominee” whose “intelligence and…scholarship cannot be questioned”. Charles Grassley, the judiciary committee chair who has stonewalled Mr Garland’s high-court nomination for a record-breaking 184 days (Louis Brandeis, now in second place, had a 125-day wait in 1916), said two decades ago that the same man was “well-qualified”. After a pledge of no hearings before the next president takes office, Mr Grassley is now hedging. + +Filibust + +But if Mr Garland continues to languish in no-man’s-land, everything will hang on what happens in November. Mr Trump has released a list of deeply conservative judges whom he would consult when filling vacancies. If Mrs Clinton wins, her decision on whether to resubmit Mr Garland or tap her own nominee may depend on which party controls the Senate. If the Democrats retake the chamber, she may be emboldened to choose someone younger and more liberal. + +Under current Senate rules, nobody too far to the left or the right will stand a chance. But since neither party seems likely to have the 60 votes necessary to stave off interminable filibusters, the days of that venerable (if diminished) Senate tradition may be numbered—at least with regard to Supreme Court appointments. Richard Primus, a law professor at the University of Michigan, notes that the filibuster “relies on a kind of comity and mutual regard” between Republicans and Democrats that “unfortunately…is just gone”. The outgoing Senate minority leader, Harry Reid, agrees: “What choice would Democrats have? The country can’t be run this way, where nothing gets done.” Privately some Republican senators say that, whoever wins, the filibuster will go. + +While they await a ninth colleague, some justices lament their existential bind. “Eight…is not a good number for a multimember Court”, Mrs Ginsburg said in May. That same month, Mr Breyer downplayed the worry, observing that the court is unanimous about half of the time and finds itself closely divided in only a handful of controversial cases. The chief justice, John Roberts, has doubled down on his penchant for narrow rulings that change as little as possible. Consensus, he says, is “not something I can do on my own”. + +On four occasions in the spring—including in controversial cases on union dues and deporting undocumented migrants—the justices’ attempt to find common ground failed, resulting in a split of 4-to-4. A tie means that the ruling in the court below stands but has no value as a precedent and does not bind other courts. The justices also unanimously sent a case on religious freedom and contraception back to the lower courts with orders to encourage the parties to “resolve any outstanding issues”. Like exasperated parents unwilling to adjudicate a settlement for warring children, the Supreme Court simply told the parties to work things out. This strategy of avoidance now passes for jurisprudence. + +Aware of the Senate’s inaction across the street, the justices seem stuck in standby mode. The docket for their upcoming term is looking wan, with fewer cases and less controversy than the court has seen in a long time. Contentious cases involving religious liberty and property rights have yet to be scheduled for oral argument, apparently in the hopes that a ninth justice might be seated in the spring. + +The Supreme Court cannot fend off controversy for long, though. Fights over presidential power, administrative leeway, freedom of speech, abortion, race, religion and discrimination against gays and lesbians—to name a few—are sure to arrive at the justices’ doorsteps. Mr Primus notes that with the court tottering on an ideological divide, it takes only one newcomer to push it left or right. “It’s a hinge”, he says, “on which the direction of constitutional law could turn for decades”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707206-election-could-determine-shape-court-generation-about-tilt/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Who’s deplorable? + +It is perilously hard to criticise Donald Trump without seeming to insult his voters + +Sep 17th 2016 | From the print edition + + + +WHEN Hillary Clinton recently said that she puts half of Donald Trump’s supporters in a “basket of deplorables”, calling such folk “racist, sexist, homophobic, xenophobic, Islamophobic—you name it,” her Republican rival gleefully dubbed this outburst “the single biggest mistake of the political season”. Certainly, Mrs Clinton does seem to have broken a cardinal rule of politics: attack those running for office and their policies by all means, but never blame the voters. As Democrats scrambled to defend their nominee, they urged Americans to consider Mrs Clinton’s remarks in context, and to study the kindlier thoughts that she shared next, about how she puts other Trump backers into a second “basket”, unhappily filled with folk who feel the government and the economy has let them down, leaving them “just desperate for change” and deserving of understanding. + +Alas, if Clinton allies think that sympathy will get them off the hook, they may be misjudging how much voters enjoy being called “desperate”. Take a step back, and the whole Trump-bashing riff by Mrs Clinton, delivered on September 9th against the slightly unhelpful backdrop of a fund-raising gala in Manhattan, points to a dreadful dilemma that the Republican presidential nominee represents for the entire political establishment, meaning not just Mrs Clinton and the Democrats, but principled and thoughtful Republicans, and (at the risk of navel-gazing) journalists trying to report fairly on this election, too. + +Put simply, Mr Trump’s shtick should not be working. In part, that is because he has repeatedly made appeals to bigotry since entering the race more than a year ago. It is dismaying to see so many Americans either nod in agreement or pretend not to hear what he is really saying. To be still more blunt, to anyone with their critical faculties undimmed by partisan rage or calculation, he is obviously a con-man. He is a self-styled billionaire who will not reveal his tax returns and claims credit for acts of charity that others funded. He is a portly 70-year old who likes to insinuate that Mrs Clinton is in desperate health while declining to reveal his own medical records. Then there are his promises to restore American greatness if elected president, and to do this at head-spinning speed (“so fast”, is a favourite Trump boast). In a country long used to fibbing candidates and policy platforms constructed out of flim-flam and magic money, Mr Trump breaks new ground. He is, arguably, the first major party nominee to realise that when working to please a crowd, there is no reason to offer policies that even try to make sense. Just start with the businessman’s most famous promise, that he can make Mexico pay for a 2,000-mile border wall which will stop both illegal migration and drug smuggling: a nonsensical claim that reliably provokes roars of delight at Trump rallies, and chants of “Build That Wall”. + +Mrs Clinton has now revealed that two aspects of the Trump phenomenon appal her. She is disgusted by how many of her countrymen cheer his nastiest attacks on women and minorities—though she later expressed regret for saying that she thinks fully “half” his supporters are prejudiced. She also sorrows that so many are wretched enough to fall for his empty promises—though, during her riff in Manhattan about understanding Trump-fans, she correctly noted that those pinning their hopes on the Republican may not buy “everything that he says”. Conventional wisdom holds that her disgust will hurt her more than her sorrow. The Trump campaign clearly agrees, rushing out TV ads for use in battleground states, replaying the “deplorables” line and accusing Mrs Clinton of “viciously demonising hard-working people like you.” Conventional wisdom is wrong. Calling Trump-backers bigots is a gamble that could yet pay off. Greater peril lurks in telling them that they are marks for a con-man. + +True, Mrs Clinton’s analysis of Trumpian bigotry was horribly sweeping. At one point she called some Trump voters “irredeemable”, which was inexcusable. She has further enraged conservatives: some Trump-backers struck defiant poses in hastily printed “Deplorables” T-shirts. But here is another truth, born of today’s deep partisan divisions. Most Trump-backers were lost to Mrs Clinton long ago. If she is lucky, her words will help her, by firing up apathetic Democrats and by depressing the Trump vote among squeamish Republicans—among them moderate professionals and suburban women who do not want to back a bigot. + +If the question from enraged Trump voters is: “Who are you calling racists?”, Mrs Clinton may yet feel safe staring them down. The rest of the political establishment is more or less comfortable weighing that question, too: rival politicians, journalists and the fact-checkers employed by news outlets are all accustomed to assessing claims that a given policy will have an outsize impact on a particular race, ethnicity or religious group. Instead, it is another question from Trump-backers that makes political professionals squirm with discomfort, including many reporters and pundits. That question is: “Are you calling us stupid?” Social class makes that discomfort still sharper, as polls and campaign-trail interviews reveal how much of Mr Trump’s support comes from blue-collar whites who hail him not just a candidate, but a champion who sees the world as they do and speaks for them, only with the authority of a fabulously successful businessman. + +Fact-checking a peddler of dreams + +In short, Mr Trump has brilliantly manoeuvred himself into a place in which fact-checking him sounds like snobbery. As his campaign manager, Kellyanne Conway, has bragged: “He’s built a movement and people are proud to be a part of it. When you insult him, you insult them.” That makes the presidential debates, set to start on September 26th, more important than ever: they are Mrs Clinton’s best chance to challenge Mr Trump’s nonsense directly, without seeming to scold his fans. The Republican is already trying to intimidate the moderators, growling that debates will be “rigged”. Good. That means he knows what is at stake. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707207-it-perilously-hard-criticise-donald-trump-without-seeming-insult-his-voters-whos/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Survey + +Sep 17th 2016 | From the print edition + +Editor’s note: The Economist is conducting a survey of readers and subscribers. We are keen to find out more about your views of this newspaper. To take part please visit: economist.com/survey16 + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707200-survey/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +A Brazilian politician’s fate: An end to power-broking + +Canada and peacekeeping: Helmets back on + +Argentina’s crime capital: A lethal location + +Bello: From comrade to caudillo + + + + + +Articles Sections Next + +A Brazilian politician’s fate + +An end to power-broking + +The fall of the house of Cunha + +Sep 17th 2016 | SÃO PAULO | From the print edition + + + +EVEN by the eccentric standards of the Brazilian congress’s lower house, it was an odd sight. On September 12th, shortly before midnight, Sílvio Costa of the Brazilian Labour Party clenched André Moura, a conservative deputy from the Christian Social Party, in a bear hug. By day, the two barely speak. Before Dilma Rousseff was suspended as president in May, pending impeachment over dodgy public accounts, Mr Costa led her government in the chamber. Mr Moura now does the same job for Michel Temer, Ms Rousseff’s deputy-turned-foe who succeeded her last month. So what lay behind the warm embrace? + +It was to celebrate fellow deputies’ decision moments earlier, by 450 votes to ten, to expel a former speaker. Not long ago Eduardo Cunha (pictured), who belongs to Mr Temer’s centrist Party of the Brazilian Democratic Movement (PMDB), seemed omnipotent. His is now the latest head to roll in a bribery scandal centred on Petrobras, a state-controlled oil giant. The affair has engulfed Ms Rousseff’s Workers’ Party (PT) and its allies, which once included the PMDB. On September 14th prosecutors denounced her predecessor and the PT’s founder, Luiz Inácio Lula da Silva, as the linchpin of the scheme and charged him with bribe-taking (he denies wrongdoing). While less momentous than Ms Rousseff’s fall, and less resonant than Lula’s case, Mr Cunha’s fate matters deeply for politics. + +Unlike Ms Rousseff, who was never personally accused of graft, Mr Cunha already faces trial for corruption. In March the supreme court indicted the then-speaker, who enjoyed parliamentary immunity from prosecution in lower courts, on accusations of accepting $5m from a shipbuilder for a contract to sell oil rigs to Petrobras. He was also charged with keeping secret Swiss bank accounts to stash illicit gains. Then in May, the justices also suspended Mr Cunha from congress. But criminal proceedings in the supreme court take years. While that was grinding on, only fellow lawmakers could end his mandate. + +On paper, it was lying about the Swiss accounts to a parliamentary inquiry into the Petrobras affair—one that Mr Cunha had set up at the urging of the centre-right opposition—that cost him his congressional seat. The political background was popular disgust at his endless pursuit of self-interest with no fear of consequences. Many think he accepted the impeachment motion against Ms Rousseff so as to deflect attention from his own legal woes. + +To a lot of Brazilians, the speaker epitomised their country’s flawed system. “Out with Cunha!” banners fluttered at anti-Rousseff rallies in the run-up to impeachment, and later at anti-Temer marches. As October’s local elections loom, deputies once loyal to Mr Cunha—in particular the centrão (big centre) block of small parties and backbenchers which he nurtured—ignored this fury at their peril. In the end even his own PMDB ditched him. + +In February 2015, when Mr Cunha trounced Ms Rousseff’s candidate in the speakership contest, this outcome would have seemed fanciful. His crafty use of the rulebook prompted comparisons to Frank Underwood, the protagonist of “House of Cards”, a political TV drama. There was talk of a presidential bid in 2018. + +For a man who has lost his immunity along with his congressional seat, a more likely prospect is a spell behind bars. His two indictments, plus two related ongoing cases, should land with Sérgio Moro, the crusading federal judge who oversees the Petrobras probe. Mr Moro is already trying Mr Cunha’s wife, Cláudia Cruz, for money-laundering. An arrest warrant for the couple, who deny wrongdoing, seems likely. + +In practical terms, Mr Cunha’s departure from congress is good news for Mr Temer, at least for now. With its patron gone, the centrão should cause fewer headaches for the new administration as it trims public spending, a necessary first step to reviving Brazil’s economy and boosting Mr Temer’s political ratings. + +A mountain of dirt + +But fear of jail could prompt Mr Cunha to work with Petrobras prosecutors in exchange for leniency. That could spell trouble for an unpopular government. Over a quarter-century, Mr Cunha is thought to have amassed dirt on politicians of all hues, maybe including Mr Temer’s inner circle (though probably not the president himself, to whom he was never close.) + +Mr Cunha denies rumours that his lawyers are probing such a deal. “Only criminals strike plea bargains,” he told reporters, adding that he was no such thing. He pledged instead to publish a memoir telling how Ms Rousseff’s impeachment was stitched up. Still, even a remote chance of a Cunha testimony will worry lawmakers. Mr Cunha may be gone but his shadow will haunt them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21707231-fall-house-cunha-end-power-broking/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Canada and peacekeeping + +Helmets back on + +Something old and something blue + +Sep 17th 2016 | OTTAWA | From the print edition + +We’ve missed one another + +EVER since the country won global kudos for sending UN forces to calm the Suez crisis in 1957, Canadians have seen peacekeeping as a token of national virtue. Yet years have passed since more than a handful of them did that job. Before two fiascos in the mid-1990s, in Somalia and Rwanda, Canada took part in almost all UN missions. But today only 112 Canadian soldiers, police and military observers feature in a global total of 100,000 blue-helmets. + +The Liberal government led by Justin Trudeau is vowing to improve on that and restore Canada’s “compassionate and constructive role” in the world. But far from being universally welcomed at home, a decision to deploy up to 600 troops and 150 police and spend C$450m ($340m) over three years on international peace operations has proved divisive. + +The Conservatives, who form the official opposition, say the Liberals are indulging in nostalgia: traditional peacekeeping no longer exists. They want a parliamentary vote if Canadians are put in harm’s way. Others retort that peacekeeping was always perilous: more than 130 Canadians have died on UN missions. But doveish sorts fear a mere rebranding rather than a change from the more hawkish stance of the Conservatives, who when in power keenly backed NATO’s combat mission in Afghanistan. + +In both camps, some sense a political move to help Canada win a seat on the UN security council in 2021. The government has fuelled suspicion about its motives by refusing to say where the first peacekeepers will go: Mali seems likely. Mr Trudeau will probably name the destination when he addresses the UN later this month, but the response back home may still be less than irenic. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21707243-something-old-and-something-blue-helmets-back/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Argentina’s crime capital + +A lethal location + +How an Argentine port became a gang war zone + +Sep 17th 2016 | ROSARIO | From the print edition + + + +IN AUGUST 2014 Enrique Bertini was arriving home in Echesortu, a middle-class neighbourhood of Rosario, Argentina’s third-largest city. While he was preparing to park his pickup truck, Mariano, his 22-year-old son, came downstairs to open the garage from the inside. As soon as he opened the door two armed men drew up on a motorbike. One approached the car while the other forced his way into the garage. In the ensuing struggle Enrique was shot in the thigh and pelvis, and Mariano in the head, fatally. The older man still struggles to make sense of the attack: “This kind of tragedy robs you of your daily life. You lose your north and your south. You have to start all over again.” + +Rosario and its 1.3m residents have in recent years been notorious for a nasty reason: a crime rate that far exceeds that of other Argentine cities (see chart). The frequency of murders is nearly triple the national average; 137 people have been killed so far this year. On August 25th more than 20,000 Rosarinos marched through the streets demanding action. Half of residents surveyed in a recent poll said they or a family member had been a victim of crime in the past year. + + + +Other parts of the country can be rough, too. Two-thirds of Argentines say they feel unsafe walking in their neighbourhoods or cities, according to Isonomía, a consultancy. Insecurity is top of the list of national worries, ahead of inflation, poverty and unemployment. But Rosario, located at one of the country’s nodal points, stands out. + +Santa Fe, the province which governs Rosario, is home to a network of 32 ports which export grain and soya around the world. That, of course, is an economic asset. But those commercial facilities make Rosario an ideal staging post for transporting drugs to Europe, typically via west Africa. Bolivian cocaine arrives in the city by road; Paraguayan marijuana by river. Most is shipped abroad, but some is distributed in Rosario’s villas: poverty-stricken districts on the city’s outskirts where local gangs fight an increasingly brutal turf war. “Problems used to be resolved through insults or a punchup—now it’s with bullets,” says Gerardo Bongiovanni, who runs Fundación Libertad, a think-tank. + +Rosario’s poorest neighbourhoods are most affected, but the spread of violence to richer parts of the city has pushed the issue up the political agenda. Last year Sandro Procopio, a 48-year-old architect, was slain by a bullet outside a construction site. On August 15th Nahuel Ciarrocca, a 28-year-old athlete, was shot dead during a robbery. His murder proved to be a tipping point. “Nahuel awoke the collective conscience,” says Diego Giuliano, president of Rosario council’s security committee. After his death a protest named “Rosario Sangra” (Rosario bleeds) was organised through Facebook. + +Santa Fe’s provincial police force, tasked with protecting Rosario’s residents, is clearly part of the problem rather than the solution. Many in its ranks are thought to have close links with the city’s narco gangs. Around 200 are currently under federal investigation. The rot extends to the very top: last October the provincial chief of police was sentenced to six years in prison for involvement in drug trafficking. Miguel Lifschitz, Santa Fe’s governor since December, has struggled to find a replacement: the current chief is the third to hold office so far this year. + +The judiciary is in disarray. Provincial judges hand down lenient sentences and allow dangerous criminals out on probation. One reason for this is an overburdened prison system. A fifth of Santa Fe’s 5,000 prisoners are held in police stations because prisons are too full to accept them. In the absence of state justice, some of Rosario’s residents have taken the law into their own hands. After detaining a mugger in February, a group of vigilantes stripped him naked before calling the police. He was fortunate: an 18-year-old was lynched after robbing a pregnant woman in 2014. + +Cristina Fernández de Kirchner’s government did little to address the concerns over security. Since replacing her as president in December Mauricio Macri has tried to make up for lost time. In January he declared a national “security emergency” and authorised the air force to shoot down aircraft suspected of flying drugs across Argentina’s borders. In April his government published the first crime statistics since 2008. The figures show that crime has increased by 10% since then. On August 30th Mr Macri announced a new national strategy to “defeat narcotrafficking”. Although thin on detail, the plan aims to tackle both addiction and dealing. + +Although likely to benefit from such measures, Santa Fe is recognised as requiring special treatment. On September 12th the national government agreed to post federal police officers to the province until the end of next year. This was last tried in 2014; it had some effect on the murder rate, as the chart shows, but the root problem was left unsolved. This time both federal and provincial forces will be co-ordinated by a “strategic committee” which will evaluate progress every three months. Some doubt whether the policy will work. Mr Bongiovanni reckons its ministers should seek foreign expertise. While Argentina’s politicians scramble to find a lasting solution, Rosarinos will continue to watch their backs. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21707244-how-argentine-port-became-gang-war-zone-lethal-location/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +From comrade to caudillo + +Daniel Ortega imposes a dictatorial dynasty in Nicaragua + +Sep 17th 2016 | From the print edition + + + +IT MAY be small and poor, but Nicaragua claims a comparative advantage in poetry. Its people celebrated this year the centenary of the death of Rubén Darío, who is widely held to have brought Spanish-language verse into the modern age. “In Nicaragua everybody is considered to be a poet until he proves to the contrary,” wrote Salman Rushdie, a British novelist. In a brief trip to the country during the Sandinista revolution, which toppled the dictatorship of the Somoza dynasty in 1979, he kept bumping into versifiers. They included one Daniel Ortega, whose most memorable ode was entitled “I never saw Managua when miniskirts were in fashion”, written when he was in jail. + +The Sandinista revolution inspired a generation of leftists around the world. Its Marxism was leavened by Christian liberation theology and an idealistic commitment to social justice. Never mind that it was backed with Fidel Castro’s arms and know-how. To its fans, Sandinista Nicaragua was a saintly David which, having overthrown a brutal and corrupt regime, was then besieged by the Contras, armed by the United States Goliath. Thanks to the ebbing of the cold war and outside pressure, the revolution’s most obvious legacy was to create a democracy—“although this was not its most passionate objective”, as Sergio Ramírez, the Sandinista vice-president and an accomplished novelist, wrote in a memoir. + +Mr Ortega, who had led the Sandinista government, lost an election in 1990. Back in the presidency since 2007, he has turned Nicaragua into an elected dictatorship and the Sandinista party into his personal fief. Only one among the six other surviving commanders of the revolution still supports him. Thanks to a pact with a corrupt Conservative leader, Mr Ortega took control of the supreme court and the electoral authority, and knocked down a ban on presidential re-election. + +Now he has gone a step further. Earlier this year, the supreme court awarded control of the main opposition party, the Independent Liberals, to a surrogate of Mr Ortega. Because they rejected the change, last month 16 of the 26 opposition members in the 92-seat National Assembly were expelled, and Eduardo Montealegre, Mr Ortega’s chief opponent, has been deprived of the Liberals’ presidential candidacy. + +An election on November 6th, at which Mr Ortega will seek a third consecutive term, has thus become a charade. “We’re moving to a single-party regime with ever fewer freedoms,” Mr Ramírez told Confidencial, a website. Not even Nicolás Maduro, Venezuela’s dictatorial president, has dared shut down his country’s opposition in this manner. + +Unlike Mr Maduro, Mr Ortega is popular. The former socialist’s formula for success is based on crony capitalism. He set up social programmes financed at first with Venezuelan money and now with loans from multilateral banks. Nowadays he is friendly to the private sector and his economic policy is prudent. The revolution created an effective police force, so there is little violent crime. Though Mr Ortega still denounces American imperialism rhetorically, Nicaragua remains in the Central American Free-Trade Agreement with the United States, which has allowed it to create a large garment industry. For the past five years the economy has grown at an annual average rate of 5.2%. + +Behind the scenes the government is run by Rosario Murillo, Mr Ortega’s wife (who, inevitably, also claims to be a poet). They keep a tight hold on the country through Cuban-style Councils of Citizen Power, which have taken over some of the functions of elected municipal councils. By naming his wife as his running mate this year Mr Ortega, who is 70 and rumoured to be ill, signalled that he wants to keep power in the family. In this dynastic reflex, Mr Ortega resembles the Somozas. So, too, does the corruption surrounding a rather whimsical project for a transisthmian canal. + +What is to be done about Mr Ortega’s dictatorship? His coup against the opposition has received far less attention than Mr Maduro’s disastrous authoritarianism in Venezuela. Ileana Ros-Lehtinen, a Republican congresswoman from Florida, has introduced a bill that would require the United States to vote against multilateral loans to Nicaragua. But even if this were implemented it would hurt Nicaraguans rather than the Ortegas—that is the lesson of the Cuban embargo. + +Nicaragua is not Venezuela. It poses no threat to its neighbours, nor is it a humanitarian tragedy. The most useful thing outsiders can do is to denounce Mr Ortega’s dictatorship publicly and succour, as best they can, its opponents. Nevertheless, November 6th will be a sad day for Latin American democracy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21707245-daniel-ortega-imposes-dictatorial-dynasty-nicaragua-comrade-caudillo/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +The Philippines under Rodrigo Duterte: Sceptred bile + +North Korea’s nuclear programme: Bangs and bucks + +Mahathir Mohamad: Can a leopard change its spots? + +Water in India: A kink in the hose + +Banyan: Knife-edge lives + + + + + +Articles Sections Next + +The Philippines under Rodrigo Duterte + +Sceptred bile + +The new president may undo the economic gains of recent years + +Sep 17th 2016 | MANILA | From the print edition + + + +UNDER Rodrigo Duterte, the president of the Philippines since late June, things have a habit of spiralling out of control. First came his campaign against the drug trade, which has led to the killing of almost 3,000 suspected dealers by police and unknown assailants, without even a nod at due process. In less than three months, he has presided over three-quarters as many extrajudicial killings as there were lynchings of black people in America between 1877 and 1950. + +When Barack Obama expressed concern about the killings, Mr Duterte called him a “son of a whore”. America’s president tried to shrug off the insult. But Mr Duterte took the row to a new level this week, calling for American special forces to leave the southern island of Mindanao, where they have been training Filipino troops fighting several long insurgencies. “For as long as we stay with America,” he said, brandishing a picture of an atrocity committed by American soldiers more than a century ago, “we will never have peace”. + +On September 13th he told his defence secretary to buy weapons from Russia and China rather than America, hitherto the Philippines’ closest ally, and the source of hundreds of millions of dollars in military aid each year. He also said the navy would no longer patrol the South China Sea alongside American vessels. This reversal is all the more surprising given America’s huge popularity in the Philippines. + +In other words, Mr Duterte is not just crass and brutal; he is alarmingly volatile. He has little experience of national politics, let alone international affairs, having been mayor of Davao, a city of 1.5m or so, since 1988 (apart from a brief stint as vice-mayor to his daughter and three years as a congressman). Since becoming president, he has threatened to withdraw from the United Nations and to declare martial law. He idolises Ferdinand Marcos, a former dictator who did impose martial law. He says he wants to give Marcos a hero’s burial in Manila. All this, naturally, frightens both local and foreign investors and threatens to undermine the Philippines’ newly acquired status as South-East Asia’s economic star. + + + +The Philippine economy grew by 7% in the second quarter, year-on-year, roughly double the long-run rate, and faster than China, let alone most other countries in the region. Unemployment, at 5.4%, has been falling steadily. The population is young and English-speaking, and a booming service sector is keeping more educated Filipinos from seeking their fortunes abroad. This burgeoning middle class—along with growing remittances from Filipinos abroad—anchors strong domestic consumption. During the six-year term of Mr Duterte’s predecessor, Benigno Aquino, the Philippine stock market boomed. Foreign direct investment tripled between 2009, the year before Mr Aquino took office, and 2015 (see chart). + +Mr Duterte thus took over a country that was doing very well economically. His campaign focused not on abstractions such as foreign investment and the proper strategic balance between China and America, but on quotidian concerns: crime, traffic, corruption. After admitting that economic policy was not his strong suit, he promised to “employ the economic minds of the country” and leave it to them. His advisers duly released a sensible ten-point plan for the economy: it emphasised macroeconomic stability, improved infrastructure, reduced red tape and a more straightforward and predictable system of land ownership. Mr Duterte has also promised to focus on rural development and tourism. Workers’ advocates are pleased with his promise to crack down on “contractualisation”, whereby employers hire labour from third-party suppliers on short-term contracts to avoid paying benefits. Internet in the Philippines is slow and expensive; Mr Duterte has warned the incumbent telecoms firms to improve service or face foreign competition. + +Unfortunately, Mr Duterte’s love of lynching and his propensity to slander the mothers of foreign dignitaries are making investors nervous. This month the American Chamber of Commerce warned that the anti-drug campaign was calling into question the government’s commitment to the rule of law. One financial adviser says that since Mr Duterte took over, investors are demanding a higher risk premium to hold Philippine assets. As Guenter Taus, who heads the European Chamber of Commerce in the Philippines, puts it, “A lot of people are hesitant to put their money into the Philippines at this point.” + +Mr Duterte’s critics fear that the drug trade will only subside temporarily, but the damage done to democratic institutions will linger. The police freely admit that drug syndicates have taken advantage of Mr Duterte’s green light to kill rivals or potential informants. Police impunity makes many nervous: one longtime foreign resident of Manila says he has started to hear fellow expats talk about leaving. He worries that an off-duty policeman could take issue with something he did, shoot him and get away scot-free. “This didn’t happen under Aquino,” he says. “You didn’t feel there was a group of people who could kill someone and not go to jail.” + +Local businessmen worry that the president might simply denounce their firms as transgressors in some respect, without producing any evidence. Mr Duterte, after all, did something similar when he published a list of officials he accused of being drug dealers. By the same token, Mr Duterte singled out Roberto Ongpin, the chairman of an online-gambling company, as an example of a businessman with undue political influence. Shares in Mr Ongpin’s company promptly plunged more than 50%; Mr Ongpin resigned a day later, and promised to sell his stake in the firm. “Everyone is scared,” says one corporate bigwig. “None of the big business groups will stand up to him. They’re all afraid their businesses will be taken away.” + +A similar uncertainty hangs over Mr Duterte’s foreign policy. He seems to be inclined to strengthen the Philippines’ ties with China, at the expense of its alliance with America. During the campaign he criticised his predecessor’s frosty relations with China. The two governments are said to be preparing for bilateral talks—something that has not happened since 2013, when Mr Aquino’s government took a territorial dispute with China to an international tribunal. Shortly after Mr Duterte took office, the tribunal ruled in the Philippines’ favour, but he seems reluctant to press the point. + +During the campaign Mr Duterte mused about the dispute with China over Scarborough Shoal, a rich fishing ground in the South China Sea, “Build me a train around Mindanao, build me a train from Manila to Bicol…I’ll shut up.” He also admitted that an anonymous Chinese donor had paid for some of his political ads. His reticence with China is all the more striking given his otherwise belligerent rhetoric and swaggering persona. + +Of course, it is not clear that Mr Duterte will be able to strike a deal with China, or even that he will continue to pursue the diplomatic volte-face he seems to be contemplating. The optimistic view sees Mr Duterte as more bluster than substance. His chief of police claimed this week that the anti-drug campaign had reduced the supply of illegal drugs by 90%. That claim may allow him to declare victory and stir up some new furore, even as his advisers soldier on with the mundane business of government. Optimists speculate that if he follows through on his pledges to improve infrastructure and boost rural development, he might even leave the Philippines in a better condition than he found it. + +The pessimistic view sees Mr Duterte continuing to lose friends and alienate people. He picks fights with America, with business, with the other branches of government. China exploits his weakness, increasing its military presence around Scarborough Shoal without building any railway lines in Mindanao. Investors stay away, and growth declines. The strongman ends up weakening his country. In the Philippines, sadly, that is a familiar story. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21707167-new-president-may-undo-economic-gains-recent-years-sceptred-bile/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +North Korea’s nuclear programme + +Bangs and bucks + +America is looking for new ways to curb the North’s nuclear ambitions + +Sep 17th 2016 | SEOUL | From the print edition + +Another rib-tickler from the God-king + +EVER since North Korea first tested a nuclear bomb, in 2006, it has repeatedly thumbed its nose at those seeking to halt its nuclear programme. Three more tests followed, in 2009, 2013 and January this year. Sooner or later, North Korea was expected to conduct a fifth test. + +It came sooner than expected: on September 9th, a mere eight months after the previous test. It was also much bigger, with an explosive yield roughly twice the previous one, at 10-12 kilotons. Both these facts are alarming. Three of the North’s five tests have occurred under the leadership of Kim Jong Un (pictured), who came to power in 2011 on the death of his father, Kim Jong Il. Mr Kim has also conducted ballistic-missile tests at a frenzied pace: 22 so far this year. That is more than in the entire 18 years of his father’s rule. + +Mr Kim’s boast in January that he had tested a hydrogen bomb is seen as bluster. Many of the missiles have fizzled after take-off. Still, one was successfully launched in August from a submarine, and three, fired simultaneously this month into the Sea of Japan (East Sea), all landed close together. And the latest test may well have been of a device small enough to be fitted onto a variety of missiles, as the regime proudly claimed. + +North Korea, in short, is making much faster progress than many had hoped. Siegfried Hecker, an American nuclear scientist who has visited nuclear facilities in the North, says that, at the current rate, it may have the capacity to send a nuclear-tipped missile to the American mainland in as few as five years. + +The UN Security Council swiftly denounced the latest test and began discussing new sanctions, six months after it imposed the “toughest ever” penalties on North Korea. Yet North Korea is not alone in thinking efforts to tighten sanctions are “laughable”. It has proven adept at skirting them, thanks largely to China, its ally and biggest trading partner, which has enforced them only laxly. China opposes its neighbour’s bomb-building, yet is reluctant to punish it seriously. Though China agreed to a ban on North Korea’s exports of coal (which earned it $1 billion last year, a third of its total export revenue), anecdotal evidence suggests cargo inspections at its border have been patchy. The prices of imported goods in North Korea have remained stable, says Stephan Haggard of the Peterson Institute for International Economics, an American think-tank, suggesting that the latest round of sanctions has not led to a shortage of foreign currency. + +A senior American official says that North Korea’s fifth test is a “game-changer”: whereas past negotiations with China had focused on improving enforcement, there is now talk of “new measures altogether”. Yet it is hard to imagine what more China would sign up to. It was China that insisted on the biggest loophole in the current regime, which allows exports of coal for “livelihood purposes”. Moreover, China is cross about America’s installation of a missile-defence system known as THAAD in South Korea. The system is intended to stop a nuclear attack from the North, but China sees it as a threat to its own nuclear weapons. Evan Medeiros, formerly a member of Barack Obama’s National Security Council, says the battery’s deployment is an indication of a “hardening of views” about the North. America, he says, is likely to start meting out stiffer punishments, even if that risks friction with China. Already Hillary Clinton, the Democratic candidate for president, has called for a “rethinking” of strategy on the North. + +One step could be to expand unilateral sanctions that America adopted earlier this year, despite Chinese protests, that compel banks to freeze the assets of anyone doing business with North Korea in certain sectors. Remittances from North Koreans working abroad could be seized; by some estimates Pyongyang grabs as much as $2 billion of these a year. A former American official with long experience of North Korea suggests that even riskier options may be considered, such as cyberattacks and information warfare. Hackers might push subversive messages onto North Korea’s 3m-odd mobile phones. More vigorous efforts might also be made to recruit North Korean defectors. + +Yet odious as Mr Kim’s regime is, China is not alone in fearing the consequences of squeezing it. Sanctions, an American official said recently, are “designed to bring the North to its senses, not to its knees”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21707239-america-looking-new-ways-curb-norths-nuclear-ambitions-bangs-and-bucks/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Mahathir Mohamad + +Can a leopard change its spots? + +A former prime minister seeks to topple the party that brought him to power + +Sep 17th 2016 | KUALA LUMPUR | From the print edition + +A handshake that shook Malaysia + +FROM a cavernous office in a posh part of Kuala Lumpur, Malaysia’s capital, Mahathir Mohamad is sowing dissent. “This government is really destroying the country,” complains the cantankerous former prime minister, now 91 and still sporting his trademark safari suit. His 22 years in power came courtesy of UMNO, the party that has led Malaysia’s ruling coalitions since independence in the 1950s. But Dr Mahathir has lost all faith in UMNO: it is time, he says, to overthrow it. + +On September 8th Dr Mahathir became the founding chairman of a new political party which aims to do just that. The registration of Bersatu, which means “United” in Malay, is the latest step in a long campaign that Dr Mahathir has been waging against Najib Razak, Malaysia’s scandal-hit prime minister. Even more strikingly, Dr Mahathir is seeking help from Anwar Ibrahim, his former deputy and now Malaysia’s opposition leader, with whom he fell out in dramatic fashion in 1998. The two men met for the first time since then earlier this month. + +Dr Mahathir resigned Malaysia’s premiership in 2003, but has found it impossible to resist bashing his successors. In 2009 his carping helped to bring down the prime minister of the day, Abdullah Badawi, and usher Mr Najib into power. Since Mr Najib fumbled a general election three years ago, Dr Mahathir has campaigned for his removal too. + +What looked like a personal vendetta became a national cause last year, when it emerged that billions had been looted from 1MDB, a state-owned investment firm. American investigators have indirectly accused Mr Najib of receiving hundreds of millions of dollars from the beleaguered company. Mr Najib admits to having banked whopping sums, but says the money was a gift from an unnamed Saudi royal, and that most of it has been returned. + +To widespread disgust, Mr Najib has managed to squelch dissent within UMNO, thereby hanging onto his job. Indeed, he appears more safely enthroned than ever. He has brushed aside official enquiries and replaced critics in the cabinet with flunkeys. Long fading in the cities, UMNO has whipped up support among rural voters who have only limited knowledge of the scandal—to whom it bleats that it is being picked on by foreigners and ethnic minorities. The next general election is not due until 2018, but some think Mr Najib may be feeling confident enough to call it next year. + +Bersatu aims to field as many candidates as possible in the coming polls, and promises to target UMNO’s seats in particular. At its heart are several former government officials whom Mr Najib has recently purged. They include Muhyiddin Yassin, a former deputy prime minister sacked last year after speaking out about the 1MDB affair, and Dr Mahathir’s son, Mukhriz, who used to run Kedah, a small northern state. Dr Mahathir says he will not stand for parliament himself. + +The former prime minister still has many fans in Malaysia, including among young ethnic Malays who have little memory of his time in power. But snagging more than a handful of seats will be tough. Malaysian elections heavily favour incumbent governments, which control most print media and can train vast resources on gerrymandered constituencies. + +To stand any chance, Bersatu will need to cosy up to Malaysia’s other opposition parties, which nearly toppled the government in 2013 but are now squabbling. That explains the courting of Mr Anwar, who was arrested shortly after Dr Mahathir sacked him, beaten by the chief of police and jailed for corruption and sodomy after a farcical trial, as Dr Mahathir stood by. Since last year Mr Anwar has been back in prison, convicted in a new sodomy case which looks just as suspect as the last. Dr Mahathir says he has “no problem with him now”. On September 5th he made a surprise appearance at a court hearing which Mr Anwar had been allowed out of his cell to attend (pictured). The two men spoke privately for half an hour. + +A pact of some sort seems likely, and is essential if Mr Najib’s enemies are not to squander the next election through three- or four-cornered fights. But Malaysia’s liberals would feel much happier if Dr Mahathir were more contrite about his part in the country’s present predicament. He is probably right to insist that, on his watch, corruption was more limited than the lurid misdeeds of which the present leadership stands accused. But it was under his tenure that UMNO’s leaders became so hard to dislodge, and Malaysia’s courts so cowed. + +One big worry for the opposition is how far Dr Mahathir’s conversion goes. No one doubts his visceral disdain for Mr Najib. Less certain is whether, given a choice, he and his party would stop short of ousting UMNO altogether. Previous splinters from UMNO have eventually reattached themselves to the party. The government claims Dr Mahathir’s real goal is to install his son as prime minister. + +Dr Mahathir scoffs at all this. He admits he once thought that replacing the prime minister would be enough to put UMNO back on track. But he says Mr Najib has “totally corrupted” the party, which now “just functions to support him”. He says there is no way Bersatu would consider a deal that leaves UMNO in government, even under a new leader. “The time for UMNO is over,” he insists. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21707236-former-prime-minister-seeks-topple-party-brought-him-power-can-leopard-change-its/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Water in India + +A kink in the hose + +Shrinking supply and rising demand stir anger + +Sep 17th 2016 | DELHI | From the print edition + +Fighting drought with fire + +THE toll was not shocking by Indian standards: two dead, nearly 100 vehicles torched and some 400 “miscreants” arrested. Nor did the violence that erupted on September 12th in Bangalore, capital of the southern state of Karnataka, last long. Within 48 hours police, their numbers boosted to 15,000 by reinforcements sped from across the country, had lifted a curfew. The prospering city of 8.5m, which happens to be India’s high-tech Mecca, was soon back to its normal bustle. + +But the issue that stoked the unrest is a perennial one: the division of the water of the Cauvery, an 800km- (500 mile-) long river that rises in Karnataka’s western highlands and supplies rich farmland in the south of the state, as well as thirsty Bangalore itself, before tumbling east into the even thirstier state of Tamil Nadu. The two states have long tussled over rights to the Cauvery. The spark for the riots was a ruling by India’s supreme court ordering Karnataka to open its reservoirs to relieve its downstream neighbour. + +In a country as crowded, rural and dependent on fickle rains as India, troubles over water are to be expected. This dispute dates to 1892, when the British rulers of what is now Tamil Nadu extracted a promise from Mysore, a princely state that included most of what is now Karnataka, not to build dams on the Cauvery without their permission. A further treaty in 1924 underlined the principle of dividing the waters, with farmers downstream, where the river flows through densely populated regions and a highly fertile delta, getting the lion’s share. + + + +After independence, things got trickier. In 1974 Karnataka declared the 1924 treaty void. It had been imposed by imperialist Britain, the state argued, and farmers in Tamil Nadu had expanded land under irrigation at Karnataka’s expense. In the four decades since, the two states have continued to wrangle even as their populations have grown, irrigation has extended further and cities such as Bangalore have swollen beyond recognition. + +As politicians seeking rural votes in both states have fulminated, India’s institutions have dithered. It took 17 years for a special tribunal to decide how to allocate the river’s water and after it did, in 2007 (recognising the 1892 and 1924 treaties and again granting Tamil Nadu a bigger share), another six years followed before India’s national government approved the deal. Even so, Karnataka has resisted applying the terms stipulated by the tribunal, including the creation of independent bodies to manage the river. + +In times of good monsoon rains none of this has mattered much. But in years of shortage there has been trouble: in 1991 riots in Karnataka left 18 dead, most of them Tamil-speaking immigrants. In tit-for-tat moves, both states temporarily banned films in the “enemy” state’s language. + +This year the monsoon has been good nearly everywhere, with the glaring exception of the Cauvery basin. There, rainfall from June to mid-September was 23% below normal. Thanks to prior shortfalls, the amount of water in reservoirs is now 47% below the average level of the past decade. The biggest reservoir on the Cauvery stands at an alarming 31% of capacity. It is this dam that supplies Bangalore’s drinking water, and it is this dwindling supply that Karnataka has been ordered to share. + +The supreme court’s order does not just anger Karnataka’s farmers, or the urban thugs who attacked Tamil Nadu-registered vehicles. It worries water experts, who note a convergence of alarming trends. One is a longer-term decline in rainfall in the region. Another is the failure of government institutions to monitor water supply or demand properly: the supreme court’s ruling was based on guesswork, and even as the riot raged, a committee charged with delivering a more precise figure for how much water Karnataka owes its neighbour had to adjourn for lack of adequate data. + +What statistics do show is that, with or without more water in the Cauvery, farmers in Tamil Nadu are sucking up too much of the stuff. Since the river-flow is unreliable, they have turned increasingly to pumps. Wells are growing steadily deeper as groundwater dries up, yet there has been no effort to persuade farmers to plant less thirsty crops. A third of the state’s farmland is rice paddy. The reason is simple: obsessed with the farming vote and guided by fears of famine that are absurdly outdated for a country that is now a big net exporter of food, the government subsidises inputs such as power and fertiliser and guarantees farmers a plum price. In other words, while more rain would certainly be nice, what the Cauvery basin really needs is better government. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21707238-shrinking-supply-and-rising-demand-stir-anger-kink-hose/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Knife-edge lives + +The effects of discrimination against transgender Asians are huge, if hidden + +Sep 17th 2016 | From the print edition + + + +IT’S a matter of survival, one Indian transgender woman explains: never make eye contact with anyone potentially threatening. Yet in the warren of alleys, workshops and tenements that is Old Delhi, Mallika, with a defiant gleam, is having none of it. Until recently neighbours used to mock her and denounce her as a danger to their children. With police connivance, they pressured her to leave. But then SPACE, an NGO working with transgender people, took up her cause. It taught Mallika her rights, and engaged the whole area in discussions, warning neighbours as well as the police that discrimination against trans or “third gender” people was illegal, and that prosecutions and fines would follow. Now, Mallika says, her street has stopped mocking her, and she can go about “full of attitude”. “It’s them who don’t dare look at me,” she boasts. + +There are 9m-9.5m transgender people in Asia and the Pacific, according to an estimate by Sam Winter of Curtin University in Australia, equivalent to 0.3% of the population. Others say the figure could be much higher. In some countries, in some respects, their life is getting better. Courts or governments in Bangladesh, India, Nepal and Pakistan have all recognised transgender people as a legal category and defended their rights to a certain extent. A group of Muslim clerics in Pakistan recently declared that it was haram to persecute them. Singapore has allowed hospitals to perform sex changes since the 1970s and formally legalised trans marriages (although not gay ones) in 1996. + +Yet discrimination remains horrific. Transgender people are often the targets of violence, as a UNDP report highlighted last year. In China, the attackers are often relatives of the victim. One survey in Australia reported that three-fifths of trans men (ie, people who were deemed female at birth but now identify as male) suffer abuse from their partners. And in Fiji 40% of trans women have been raped. + +School dropout rates are invariably high, with an 85% rate among trans girls at secondary school surveyed in Vietnam. There are problems of getting work even in relatively tolerant societies: in Hong Kong, trans people have an unemployment rate four times the territory’s average. Trans people are often stressed and suffer high levels of mental ill-health, yet the stigma makes it hard for them to find help. + +Some resort to selling sex, making them vulnerable to arrest, violence and disease. (Almost a quarter of trans sex workers surveyed in Port Moresby, the capital of Papua New Guinea, were HIV positive.) Trans people are often targeted for harassment by the authorities under public-nuisance and vagrancy laws, too. If jailed, they are often beaten up by fellow prisoners. + +All this is despite long traditions of relative tolerance for transgender people in many Asian countries. In India, for instance, hijras, a category of men who dress as women, many of them castrated, have a certain standing. They are thought to derive spiritual power from their sexual status, and so can bestow blessings or curses. They sing and dance at weddings. Failure to pay for their (often unbidden) attendance risks misfortune. + +Yet hijras, and their counterparts in other Asian societies, remain on society’s margins. As Anjaann Joshii of SPACE puts it: “You can sing, dance, bless, curse—but that’s it.” The linguistic roots of the word hijra convey a sense of leaving one’s tribe. Many hijras find life in a new community, usually called a dera, run by a guru-mother. Yet such protection comes at a cost. Three of the five hijras whom Banyan met in Old Delhi had been castrated. In modern practice, the surgical element of a sex change takes place at the very end of a careful process of counselling, hormone therapy and plastic surgery. But for many hijras, surgery would be too grand a term for the removal of the testicles and penis and the insertion of a silver pin into the urethra, with no anaesthetic but alcohol and marijuana. + +Worse, many gurus are mafia bosses running rackets in defined territories. They pocket four-fifths of hijras’ earnings. Any hijra setting up as a guru herself risks murder. And running away to another dera, even if to the far end of the country, will be reported back to the guru. It is, in effect, a system of bonded labour. And when you die, say the hijras, your guru won’t even come to claim your corpse—unless there is gold to strip off it. + +There is even less protection for those who sell sex or beg. Mehak, a trans beggar, faces violence in male shelters and is refused entry to female ones, so she sleeps in a park each night. Every few days, young thugs steal her paltry takings at knifepoint. + +Justice delayed + +Although the courts in some Asian countries are beginning to uphold transgender rights, laws are often confused and enforcement rare. In 2014 India’s Supreme Court recognised a third gender, yet the British-era penal code still criminalises sexual activities against the “order of nature”. The current draft of a bill working its way through Parliament enshrines transgender rights by mandating inclusive education for trans children, and special employment and health provisions. Yet it denies individuals the right to “self-identify”—ie, choose their own gender, a key desire. That would be left to “experts” instead. Trans activists are lobbying to have that changed. + +Elsewhere in the region, the law is an ass. Several Pacific nations ban cross-dressing (another hand-me-down from prudish Victorians). Even in Thailand, supposedly tolerant of cross-dressing men, vagrancy laws are used to harass trans women. In Cambodia police conduct regular round-ups of trans women under public-safety laws and demand bribes to let them go. Many countries still define transsexualism as a mental illness. Trans people adopting children is illegal in most Asian countries. Activist groups like SPACE have made strides in a few short years. But they are baby steps for what needs to come. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21707216-effects-discrimination-against-transgender-asians-are-huge-if-hidden-knife-edge-lives/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Tibet: The plateau, unpacified + + + + + +Articles Sections Next + +Tibet + +The plateau, unpacified + +Tibetans’ culture is changing, by their own will as well as by force + +Sep 17th 2016 | YUSHU | From the print edition + + + +AN ELDERLY woman with long, grey plaits, wearing a traditional Tibetan apron of wool in colourful stripes, has spent her day weaving thread outside her home near the southern end of Qinghai Lake, high on the Tibetan plateau. She is among hundreds of thousands of Tibetan nomads who have been forced by the government in recent years to settle in newly built villages. She now lives in one of them with her extended family and two goats. Every few months one of her sons, a red-robed monk, visits from his monastery, a place so cut off from the world that he has never heard of Donald Trump. Her grandson, a 23-year-old with slick hair and a turquoise rain jacket, is more clued in. He is training to be a motorcycle mechanic in a nearby town. Theirs is a disorienting world of social transformation, sometimes resented, sometimes welcome. + +Chinese and foreigners alike have long been fascinated by Tibet, romanticising its impoverished vastness as a haven of spirituality and tranquillity. Its brand of Buddhism is alluring to many Chinese—even, it is rumoured, to Peng Liyuan, the wife of China’s president, Xi Jinping. Many Tibetans, however, see their world differently. It has been shattered by China’s campaign to crush separatism and eradicate support for the Dalai Lama, their spiritual leader who fled to India after an uprising in 1959. The economic transformation of the rest of China and its cities’ brash modernity are seductive, but frustratingly elusive. + +The story of political repression in Tibet is a familiar one. The Dalai Lama accuses China’s government of “cultural genocide”, a fear echoed by a tour guide in Qinghai, one of five provinces across which most of the country’s 6m Tibetans are scattered (the others are Gansu, Sichuan, Yunnan and the Tibet Autonomous Region, or TAR—see map). “We know what happened to the Jews,” he says. “We are fighting for our existence.” Less commonly told is the despair felt by many young Tibetans who feel shut out of China’s boom. They are victims of Tibet’s remote and forbidding topography as well as of racial prejudice and the party’s anti-separatist zeal. They often cannot migrate to coastal factories, and few factories will come to them. Even fluent Mandarin speakers rarely find jobs outside their region. + + + + + +Yet Tibetans are not cut off from the rapidly evolving culture of the rest of China, where more than 90% of the population is ethnic Han. Mayong Gasong Qiuding, a 26-year-old hotel worker in Yushu in southern Qinghai, listens to Mandarin, Tibetan and Western pop music in tandem. He can rattle off official slogans but can recite only short Tibetan prayers. His greatest wish, he says, is to go to the Maldives to see the sea. Tibetan women in Qinghai use skin-whitening products, following a widespread fashion among their Han counterparts; a teenager roller-skates anticlockwise around a Buddhist stupa, ignoring a cultural taboo. Young nomads frustrate their elders by forsaking locally-made black, yak-hair tents for cheaper, lighter canvas ones produced in far-off factories. + +Han migration, encouraged by a splurge of spending on infrastructure, is hastening such change. Although Tibetans still make up 90% of the permanent population of the TAR, its capital Lhasa is now 22% Han, compared with 17% in 2000. Many Tibetans resent the influx. Yet they are far more likely to marry Han Chinese than are members of some of China’s other ethnic groups. Around 10% of Tibetan households have at least one member who is non-Tibetan, according to a census in 2010. That compares with 1% of households among Uighurs, another ethnic minority whose members often chafe at rule by a Han-dominated government. + +Core features of Tibetan culture are in flux. Monasteries, which long ago played a central role in Tibetan society, are losing whatever influence China has allowed them to retain. In recent years, some have been shut or ordered to reduce their populations (monks and nuns have often been at the forefront of separatist unrest). In July buildings at Larung Gar in Sichuan, a sprawling centre of Tibetan Buddhist learning, were destroyed and thousands of monks and nuns evicted. Three nuns have reportedly committed suicide since. Of the more than 140 Tibetans who have set fire to themselves since 2011 in protest against Chinese rule, many were spurred to do so by repressive measures at their own monastery or nunnery. + +Cloistered life is threatened by social change, too. Families often used to send their second son to a monastery, a good source of schooling. Now all children receive nine years of free education. “The young think there are better things to do,” says a monk at Rongwo monastery in Tongren, a town in Qinghai, who spends his days “praying, teaching [and] cleaning”. New recruits often come from poorly educated rural families. + +Mind your language + +In the TAR (which is closed to foreign journalists most of the time), the Tibetan language is under particular threat. Even nursery schools often teach entirely in Mandarin. A generation is now graduating from universities there who barely speak Tibetan. Some people have been arrested for continuing to teach in the language. In April last year Gonpo Tenzin, a singer, was sentenced to three-and-a-half years in prison for his album, “No New Year for Tibet”, encouraging Tibetans to preserve their language and culture. + +In some areas outside the TAR, however, the government is less hostile to Tibetan. Since the early 2000s, in much of Qinghai, the number of secondary schools that teach in Tibetan has risen, according to research there by Adrian Zenz of the European School of Culture and Theology at Korntal, Germany. The range of degrees taught in Tibetan has expanded too. Unlike elsewhere, someone who has studied mainly in Tibetan can still get a good job in Qinghai. A third of all government roles advertised there between 2011 and 2015 required the language. Despite this, many parents and students chose to be taught in Mandarin anyway, Mr Zenz found. They thought it would improve job prospects. + +Karma chameleon + +But work can be difficult to get, despite years of huge government aid that has helped to boost growth. Government subsidies for the TAR amounted to 111% of GDP in 2014 (see chart), according to Andrew Fischer of Erasmus University Rotterdam. Eleven airports serve Qinghai and the TAR—they will have three more by 2020. A 156-mile train line from Lhasa (population 560,000) to Shigatse (population 120,000), which was completed in 2014, cost 13.3 billion yuan ($2.16 billion). A second track to Lhasa is being laid from Sichuan, priced at 105 billion yuan. + +Better infrastructure has fuelled a tourism boom—domestic visitors to the TAR increased fivefold between 2007 and 2015—but most income flows to travel agents elsewhere. Tourists stay in Han-run hotels and largely eat in non-Tibetan restaurants (KFC opened its first Lhasa branch in March). Tibetan resentment at exclusion from tourism- and construction-related jobs was a big cause of rioting in Lhasa in 2008 that sparked plateau-wide protests. Other big money-spinners—hydropower and the extraction of minerals and timber—are controlled by state-owned firms that employ relatively few Tibetans. The Chinese name for Tibet, Xizang, means “western treasure house”. But Tibetans have little share in its spoils. The rehousing of nomads has helped provide some with building jobs, but has also brought suffering: those relocated sometimes find it harder to make a living from herding. + +In most other parts of China, villages have been rapidly emptying as people flock to work in cities. In the country as a whole, the agricultural population dropped from 65% to 48% as a share of the total between 2000 and 2010. On the plateau it fell only slightly, from 87% to 83%. It is hard for Tibetans to migrate to places where there are more opportunities. Police and employers treat them as potential troublemakers. In 2010 only about 1% of Tibetans had settled outside the plateau, says Ma Rong of Peking University. They cannot move abroad either. In 2012 Tibetans in the TAR had to surrender their passports (to prevent them joining the Dalai Lama); in parts of Qinghai officials went house-to-house confiscating them. + +Karma chameleon + +For university graduates, the prospects are somewhat better. There are few prospects for secure work in private firms on the plateau. But to help them, the government has been on a hiring spree since 2011. Almost all educated Tibetans now work for the state. A government job is a pretty good one: salaries have been rising fast. Few Tibetans see such work as traitorous to their cause or culture. But the government may not be able to keep providing enough jobs for graduates, especially if a slowdown in China’s economy, which is crimping demand for commodities, has a knock-on effect on the plateau. + +Many of the problems faced by Tibetans are common in traditional pastoral cultures as they modernise. But those of Tibetans are compounded by repression. They are only likely to increase when the Dalai Lama, now 81, dies. The central government will try to rig the selection of his successor, and no doubt persecute Tibetans who publicly object. + +In private, officials say they are playing a waiting game: they expect the “Tibetan problem” to be more easily solved when he is gone. They are deluding themselves. They ignore his impact as a voice of moderation: he does not demand outright independence and he condemns violence. Tibetan culture may be under duress, but adoration of the Dalai Lama shows no sign of diminishing. Poverty, alienation and the loss of a beloved figurehead may prove an incendiary cocktail. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21707220-tibetans-culture-changing-their-own-will-well-force-plateau-unpacified/print + + + + + +Articles Sections Next + + + + + +Middle East and Africa + + + + +African cities: Left behind + +Industry in Africa: In or out? + +Health care in Rwanda: An African trailblazer + +Egypt’s Nubians: Let them go home + +Divorce in Iraq: Breaking up in Baghdad + + + + + +Articles Sections Next + +African cities + +Left behind + +All over the world, people escape poverty by moving to cities. Why does this not work so well in Africa? + +Sep 17th 2016 | LAGOS | From the print edition + + + +IT HAS been a week since Mohammed Sani moved to Lagos, Nigeria’s commercial capital. A scrawny 22-year old from Kebbi State in the north-west, he came looking for work. He has certainly found it. At 5am each morning he fills ten 25-litre plastic jugs with water from a borehole, paying 20 naira for each one (about $0.05). He then pulls them around Yaba, his new neighbourhood, on a cart, selling each one for 25 naira. By sunset at 7pm he has perhaps 700 naira of profit ($2) in his pocket—not much in Lagos. “If I find a better business, I will try it,” he says. But for the moment, this is as good at it gets. + +Young people migrate to cities the world over looking for opportunity. Lagos, a sprawling lagoon city of some 21m people (pictured), is no exception. In dense traffic jams, young men weave through the cars selling plastic pouches of drinking water and tissues. On street corners they run generators and will charge your phone or photocopy a document. But most people never get much further than where they start: working extraordinarily hard for very little. Migrants to African cities are not worse off than they were in the countryside. If that were the case, they would move back. But urbanisation in Africa does not provide nearly as good a ladder out of poverty as it does elsewhere. + +Africa is the world’s fastest urbanising continent. In 1950, sub-Saharan Africa had no cities with populations of more than 1m. Today, it has around 50. By 2030, over half of the continent’s population will live in cities, up from around a third now. The fastest growing metropolises, such as Nairobi, Kenya’s capital, are expanding at rates of more than 4% per year. That is almost twice as fast as Houston, America’s fastest-growing metropolis. + +In most parts of the world, crowding people together allows businesses that wouldn’t otherwise exist to thrive. In Africa this process seems not to work as well. According to one 2007 study of 90 developing countries, Africa is the only region where urbanisation is not correlated with poverty reduction. The World Bank says that African cities “cannot be characterised as economically dense, connected, and liveable. Instead, they are crowded, disconnected, and costly.” + +Not all African cities are the same, of course. Kigali, Rwanda’s capital, is amazingly clean—the result of having a stern disciplinarian as a president. South Africa’s big cities somewhat resemble American ones, only with shanty towns at the edges. What ties them together, and sets them apart from cities elsewhere in the world, according to the Brookings Institution, an American think-tank, is that urbanisation has not been driven by increasing agricultural productivity or by industrialisation. Instead, African cities are centres of consumption, where the rents extracted from natural resources are spent by the rich. This means that they have grown while failing to install the infrastructure that makes cities elsewhere work. + +In Lagos, the island of Ikoyi, which was once a garden suburb for British colonial officers, is now a wealthy residential area lived in by oil executives and politicians, with a golf course. But if you want to live here, you must “bring your own infrastructure”, jokes Giles Omezi, a Nigerian architect. Every private home or apartment block has not only its own security guards and generator, but its own borehole and water treatment system too. Even street lighting and roads can be privately provided: a thriving business in Lagos is reclaiming land on which to build fancy gated communities. The biggest of them, Eko Atlantic, is being built by a Lebanese family business, and stretches way out into the Atlantic Ocean. + +The poor new arrivals, meanwhile, get by with almost nothing. Underneath a bridge that connects the Nigerian mainland to Lagos’s islands, the slum of Makoko sprawls out into the lagoon—the houses at the edge are built on stilts in the water on foundations of rubbish. Once a fishing village, it is now home to anywhere between 80,000 and 300,000 people from all over west Africa. Water has to be brought in by cart. Sewage runs in the narrow streets. The police, when they come in at all, do so mostly to demand bribes. “The government doesn’t want us to be here,” says Isaac Dosugam, a resident who works as a driver. In 2012 part of the slum was indeed demolished by the authorities. But it has grown back since. + +In Dar es Salaam, Tanzania’s commercial capital, 28% of residents live at least three to a room; in Abidjan, Ivory Coast’s economic hub, the figure is 50%. In Nairobi, around two-thirds of the population occupy 6% of the land. Slums bring with them filth and disease. Across sub-Saharan Africa, only 40% of urban residents have access to proper toilets—a figure that has not changed since 1990. + +Formal jobs are rare. Most slum dwellers scrape by on informal work in their neighbourhoods. Those who can find jobs with salaries usually have long commutes to distant city centres. In Nairobi, the primary means of transport is on foot. In South Africa the average commute by bus is 74 minutes each way. + +The unequal distribution of land doesn’t just create slums: it also raises costs for businesses. In Lagos, expat tenants of new apartment blocks are typically expected to pay an entire year’s rent in advance. For a modest three-bedroom apartment on Ikoyi, this might come to $65,000. And yet the city is littered with empty and half-finished buildings, even in the most fashionable districts. Much of it is government-owned: office blocks abandoned since Nigeria moved the capital from Lagos to Abuja in 1991. But privately owned land is often underdeveloped too, partly thanks to a law which requires any sale to have the governor’s consent. + +There is some progress. Traffic in Lagos is no longer as punishing as it once was, largely thanks to new roads built by Babatunde Fashola, the city’s previous governor. A light-rail system—expensive, long delayed and badly planned—is almost complete. When it opens, Lagos will join Addis Ababa, Ethiopia’s capital, which opened the first sub-Saharan metro system outside of South Africa last year. In cities such as Abidjan and Kampala expressways funded by tolls are easing bottlenecks and opening up agricultural land to developers, fuelling suburban construction booms. + +But the trouble is that changes often seem to benefit the relatively rich most. Better roads typically do not reach into slums; new apartments are never targeted at people earning a few dollars a day. Politicians across Africa often seem to see the poor as a problem to be swept away, rather than people whose lives need improving. In Lagos, the state government frequently bulldozes slums, but almost never provides alternative housing. In Kigali, according to Human Rights Watch, a lobby group, unsightly street traders are often beaten up and imprisoned without trial. + +Real change is possible, but politically hard. If Africa’s wealthy paid more taxes, the extra cash could pay for infrastructure that would eventually benefit everybody. Clearer land registration would lower the cost and risk of building new homes. Devolution that made city leaders more accountable might produce planning policies that help the poor. Some of these reforms are being tried in a few African cities, but rarely all at once. + +So most African city dwellers have to rely on their own hard work and enterprise. In his tiny shop on the Lagos mainland, Colin Alli is one of the luckier ones. He explains how he built up his bedsheets business from a single market stall. Now he employs four men. “Tomorrow I can be governor,” he jokes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21707214-all-over-world-people-escape-poverty-moving-cities-why-does-not/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Industry in Africa + +In or out? + +Should Africa concentrate on serving local or global markets? + +Sep 17th 2016 | From the print edition + +Too many bottlenecks + +DRIVE north-east from Lagos along a potholed highway lined by the shells of burned-out trucks and, as you approach Ibadan, you can see a few modern factories sprouting amid the rusted tin roofs. Most produce basic goods for local markets such as cigarettes or cardboard packaging, rather than the mobile phones, cars and computers that the government would like Nigeria to export. Yet a new report from the McKinsey Global Institute (MGI), a think-tank run by a consulting firm, suggests that these sorts of low-tech and local products represent a huge opportunity for industrialisation in Africa. + +McKinsey reckons that Africa’s manufacturing output could double over the coming decade—a remarkably ambitious forecast, since it would imply a trebling of the growth rate since 2000. Most of the gain is supposed to come from making things that would be sold in the region; many would replace imports. That there is scope for import-substitution is clear. Africa imports about a third of its processed food and drink, a far higher share than developing Asia or Latin America; much more of that could be made locally. It also buys in goods that do not travel well, such as cement (about 15% of local consumption comes in on ships), milk and cornflakes. + +Yet the report also puts its finger on a reason why many African countries make so little: the paucity of big firms. The authors, who have constructed a new database of Africa’s big companies, think that the continent has about 400 companies with annual revenues of more than $1 billion each and 700 with revenues of more than $500m. Those numbers may seem surprisingly high, even to seasoned investors on the continent—a reflection of how few African firms have graduated to international capital markets. But once one excludes South Africa, the biggest and most industrialised economy, the rest of the continent has some 60% fewer large firms relative to its economic output than places such as India and Brazil. This meshes with data gathered by others such as the International Growth Centre (IGC) at the London School of Economics. It found that Tanzania, for instance, had only 80 manufacturing firms employing more than 100 people and 695 employing 10-99 people. + +Acha Leke, of McKinsey, says there is a case for African governments to adopt industrial policies such as supporting exporters and imposing tariffs on imports to promote local champions. He cites Nigeria’s Dangote Cement, which prospered thanks to draconian restrictions on imports. It is doubtful, however, that ordinary Nigerians have benefited from Dangote’s near-monopoly of their cement market (it at one point charged double the international price and still has a 68% market share). The IGC finds that few if any big African industrial exporters were built on such policies. Rather they emerged from a range of sources including foreign investments or local trading companies. + +The MGI report will be widely read by African politicians and civil servants. They will no doubt start drafting new industrial policies aimed at picking winners and protecting them. That would be a shame. The main impediments to Africans making and selling more things are rapacious governments, potholed roads, inefficient ports and power lines without electricity. How about fixing those things instead? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21707225-should-africa-concentrate-serving-local-or-global-markets-or-out/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Health care in Rwanda + +An African trailblazer + +How a poor country brought health insurance to 91% of the population + +Sep 17th 2016 | MUSHISHIRO | From the print edition + + + +STANDING outside her home in central Rwanda, 19-year-old Ernestine Ituze describes falling ill last year. She was coughing violently and had lost her appetite. A community health worker diagnosed tuberculosis and Ituze was treated at the nearby government hospital, a few kilometres down a red dirt road lined with banana and mango trees. A few months later, she is healthy and continuing her studies to be an accountant. + +Ituze’s treatment cost her almost nothing under Rwanda’s national health insurance programme, Mutuelles de Santé, which covers 81% of the population of 11m. Another 10% are covered by government insurance for soldiers and civil servants. At 91%, the proportion of Rwandans who have health insurance is by far the highest in Africa. Those lacking it are mostly hard-to-reach rural poor. + + + +From the ashes of the 1994 genocide Rwanda has emerged as an unlikely public-health exemplar (see chart). In 1990 some 1,400 women died for every 100,000 live births. By 2015 that figure had dropped to 290, making the country one of just a few in Africa to meet the Millennium Development Goal of cutting it by three-quarters. Rwanda has made similar strides in curbing infectious diseases and infant mortality. Between 2000 and 2011, the mortality rate for tuberculosis fell from 48 per 100,000 cases to 12. The health-insurance programme was a big part of the reason for all these successes. + +How did a poor, rural country (income per head is $690 a year) manage to create a reasonably effective national health system? Aid helped: half of Rwanda’s health budget still comes from foreign donors. But similar volumes of aid have yielded scant results in other countries, so that cannot be the whole story. + +Well-trained gatekeepers have made a big difference in Rwanda. Health workers from villages were trained to give primary care and refer people like Ituze to clinics for serious illness. Today there are 45,000 of these community health workers. They also encouraged people to join Mutuelles de Santé after a pilot plan was launched in 1999. + +Jean-Olivier Schmidt of GiZ, the German government aid agency, helped advise Rwanda on setting up Mutuelles de Santé. At first, people asked if they would get their money back if they didn’t get sick, he recalls. The programme eventually gained momentum; but then membership plateaued. To expand it further, Mutuelles de Santé started giving discounts to the poor. The most hard-up pay nothing for membership of the programme; wealthier folk pay about $8 a year. Visits to doctors then cost just 30 cents or so. + +Foreign aid still covers 30-40% of Rwanda’s overall budget. If donors were to become disillusioned with the country, its health services would struggle. But despite the government’s autocratic record, there is not much sign of that; it’s tough attitude towards corruption is one reason why the scheme is managed so well. + +Rwanda shows how quickly a nation can improve its health by tackling the diseases of poverty, such as diarrhoea and pneumonia, that are widespread and deadly but cheap to treat. (A dose of oral rehydration salts for diarrhoea, for example, costs only a few cents.) The next challenge will be to treat chronic diseases such as cancer and heart disease, which grow more common as more people survive to old age. These will be much harder and costlier to deal with. However, their prevalence will be a sign that Rwanda has got the basics right. + +Other African countries should take note, though few have. About one-third of Ghanaians are covered by a National Health Insurance Agency and community funds. Tanzania is trying to boost enrolment in its community health programme, with help from GiZ and the American and Swedish aid agencies. Coverage in rural areas is only about 20% of the population. Other countries including Mali and Senegal have introduced small health insurance programmes in the past 20 years. But they have failed to take off—probably because of a lack of government engagement, says Mr Schmidt. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21707226-how-poor-country-brought-health-insurance-91-population-african/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Egypt’s Nubians + +Let them go home + +The Nubians have given much to Egypt. Time for the country to give back + +Sep 17th 2016 | ASWAN | From the print edition + + + +FROM a boat on the reservoir between Egypt’s high and low dams in Aswan, a local Nubian man called Haj Omar points to where the ancient temple of Philae used to be. After the low dam was completed in 1902, the site was often flooded, so in the 1960s the temple was moved, piece by piece, to higher ground some 500 metres downriver. Mr Omar then points down, towards his grandfather’s house—it was not moved and is now underwater. + +The Nubian people are descended from an ancient African civilisation that once ruled a large empire, including all of Egypt for a brief period. For thousands of years they have lived on the banks of the Nile river, from southern Egypt to northern Sudan. Christianity penetrated the region in the 4th century, but most Nubians converted to Islam in the 15th and 16th centuries, as they came under the sway of Arab powers. When Sudan seceded from Egypt in 1956, the Nubian community was split between the two countries. + +Despite efforts to save Nubian monuments, much of this rich history was washed away by the construction of a series of dams, culminating with the Aswan high dam in 1970. Most of the Nubian homeland now sits under the reservoir called Lake Nasser. Tens of thousands of Nubians were forcibly resettled. Ever since then they have been marginalised politically, socially and economically, says Maja Janmyr of the University of Bergen. + +The “Nubian issue”, as it has come to be known in Egypt, simmered for decades without much pushback—in part, out of fear that dissent would lead to more repression. But a new generation of Nubians, emboldened by the Egyptian revolution of 2011, has become more assertive in pressing the group’s demands, most notably their right to return to the area around their ancestral homeland. + + + +In the mid-1960s some 50,000 Nubians were resettled around Kom Ombo, about 50km (30 miles) north of Aswan and some 25km away from the Nile. Their number has now swelled to almost 90,000, by one estimate. Few are satisfied with their new home. Villagers complain that the government-built houses are crumbling and that their compensation was inadequate. But their primary objection is over the location. “Take a Nubian away from the Nile and he cannot live,” says Mr Omar. + +A turning point appeared to come in 2014, when Egypt’s post-revolution constitution was rewritten with the help of Haggag Oddoul, a respected Nubian novelist. The document represents the first official recognition of the Nubian homeland and establishes the goal of developing the area, with local input, within ten years. It also outlaws discrimination. Most importantly, article 236 sets out a Nubian right of return. + +Yet little has changed. “Since the constitution was ratified, the state has been stalling,” says Muhammad Azmy, head of the Public Nubian Union, a pressure group. A draft law on resettlement has “disappeared”, he says. Meanwhile, a decree issued by Abdel-Fattah al-Sisi, the president, and approved by parliament in January, designates many of the villages to which Nubians hope to return as off-limits and under military control. + +Officials fear that Nubians might one day demand independence. There is little sign of that, but the government is breeding resentment. Many Nubians now suspect article 236 was simply a way to gain their support for the constitution. Even Mr Oddoul is sceptical. “Egypt’s corrupt institutions are working on preventing Nubians from returning so they can take over the Nubian land and use it [for] their benefit,” he says. + +Some believe there is an official effort, beginning with the displacements, to wipe out Nubian culture. The state has long cultivated a single, Arab identity. (The census, for example, does not record ethnic data.) As Nubians were uprooted and spread out, many lost touch with their heritage. Few who were born in cities such as Cairo, Alexandria and Suez speak the Nubian language. “If we don’t return soon to our home, we will only be Nubians by colour,” says Mr Oddoul, referring to Nubians’ generally darker skin. + +With the help of the internet, and through art and music, younger Nubians have tried to reinvigorate their culture. They have also organised protests and lawsuits against Mr Sisi’s decree. This has led to tension between Nubians. “The older generation is more accommodating of the state,” says Mr Azmy. They are also more patriotic: many supported the dam because they thought it would benefit Egypt. Yet they have little to show for their patriotism. The least the government could do is let Nubians go home. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21707224-nubians-have-given-much-egypt-time-country-give-back-let-them/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Divorce in Iraq + +Breaking up in Baghdad + +A rise in divorces is blamed on Islamism, poverty and Turkish soap operas + +Sep 17th 2016 | From the print edition + + + +BETWEEN 2004 and 2014 there was one divorce for every five Iraqi marriages. This is low by Western standards, but many Iraqis call it a crisis. Cases have been growing steadily since the compilation of proper statistics began in the year after the country’s invasion by American-led forces and the overthrow of Saddam Hussein. The number of divorces exceeded 4,000 in both June and July this year—almost double the monthly average in 2004, according to the government. “The judiciary is working hard in order to prevent the occurrence of divorce cases because of its negative effects on society,” said Saad al-Ibrahimi, a judge. + +Some blame the spread of a stricter Islam over the past decade. Sex outside marriage has become even more taboo than it was. So more people are getting married simply in order to have sex. Under Muslim law, such quickie marriages can easily be dissolved. (Though many will not have been recorded in the first place, muddying the data.) More recently, the rise of Islamic State has deepened sectarian divisions, which may have led to the break-up of some of the country’s many Sunni-Shia marriages. Poverty, too, plays a role. “A large number of divorces these days are men dropping their wives because they are not in a financial position to bear the burden of looking after a family,” Bassam al Darraji, a Baghdad-based sociologist, told a Gulf newspaper. The official poverty rate in Iraq this year is more than 30%, up from 19% at the end of 2013. + +Another factor, some sociologists argue, is Turkish soap operas, which are very popular and often depict men treating their wives romantically. They also portray women who dump bad husbands positively, not as wicked harlots. All this may be giving Iraqi women ideas. Two-thirds of divorces are initiated by women. + +Some historical perspective is in order. Divorce was more common in Saddam Hussein’s day, though the data are murky and often interrupted by wars. Under his mass-murdering regime, Iraqi family law was more secular and allowed women more freedom within the home. Many, it seems, would like that back again. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21707172-rise-divorces-blamed-islamism-poverty-and-turkish-soap-operas-breaking/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Jihadism in French prisons: Caged fervour + +Russia’s elections: Duma-day machine + +Post-communist chic: You must remember this + +Serbia’s prime minister: The changeling + +Germans against trade: Fortress mentality + +Charlemagne: State of disunion + + + + + +Articles Sections Next + +Jihadism in French prisons + +Caged fervour + +Should jails segregate jihadists? + +Sep 17th 2016 | PARIS | From the print edition + + + +AFTER nightfall one Saturday in January 2015, Bilal Taghi set off on a road trip with two friends, his wife and their infant child. They left their home town of Trappes, near Paris, bound for a wedding in Turkey, they said. About 400km (250 miles) from the border with Syria, where they hoped to join Islamic State (IS), their car overturned. Arrested in Turkey, they were expelled to France and convicted earlier this year of association with planned terrorist activities. Mr Taghi, a 24-year-old French citizen, was jailed in a special unit at a prison in Osny, near Paris, set up to isolate detainees linked to terrorism. + +Earlier this month, Mr Taghi was taken from his cell at Osny for a routine exercise session. Hidden under a towel, he clutched a sharp metal rod, fashioned from his cell window. Summoned by a prison guard, the inmate turned on him, stabbing him nine times, and then slashed a second guard in the face and arm; both survived. + +With all of the recent terrorist attacks in France—most recently a failed plot to blow up a car near Notre-Dame cathedral—the bloody attack in Osny barely made the news. Yet it exposed a fraught policy dilemma: how to manage the incarceration of Islamists so as to curb jihadist ideology inside prisons? This is not only a French problem. Britain announced recently that it would reverse its policy of dispersing such inmates, and instead build segregated units for those linked to terrorism. Concern mounted in August after the conviction of Anjem Choudary, a British-born Islamist preacher linked to IS, who has vowed to “radicalise everyone in prison”. + +Prison recruitment is worrying because inmates have access to an underworld of weapons and violence. Anxiety is especially acute in France, where several terrorists in recent attacks were groomed while serving jail terms—and where the Muslim incarceration rate is very high. Muslims make up an estimated 8-10% of France’s population (the exact share is unknown because collecting religious statistics is banned). Yet they are perhaps 60% of prison inmates, according to a parliamentary report. Farhad Khosrokhavar, the author of a forthcoming book, “The Prisons of France”, says a more realistic estimate is 40-50%, with 60-70% only in certain big prisons near Paris. Such skewed proportions are not unique: in England and Wales, 15% of the prison population is Muslim, compared with 5% of the population. But the French ratio appears to be particularly high. + +The French experiment with segregation, launched in 2014, involves five units inside existing prisons, one in the northern city of Lille and the others at Fresnes, Osny and Fleury-Mérogis, near Paris. The latter also houses Salah Abdeslam, the sole survivor of the terrorist commando unit behind the Bataclan attacks in November 2015. The most dangerous prisoners, such as Mr Abdeslam, are held in solitary confinement. He exercises, eats and reads alone in a special cell, equipped with a rowing machine, under 24-hour video surveillance. The segregated units are for the other jihadist inmates. The idea is to keep them as far as possible from other prisoners, and to put them through programmes of “deradicalisation”. + +The justice ministry says it is too soon to evaluate the policy. In theory, the teams of educators and mentors in the units could help turn young minds away from jihadism. But the attempted assassination at Osny, the first such attack in the new units, is not a good sign. According to Le Monde, security footage shows Mr Taghi’s fellow prisoners sharing big fragments of broken mirror shortly after the attack. Was there a wider plot that never took place? + +Toying with the authorities + +The main flaw, says Jean-François Forget, head of UFAP-UNSA, a prison-guards’ union, is the “failure to make isolation watertight”. The units are installed in prisons which are already shockingly overcrowded. Fleury-Mérogis has 4,400 inmates for 2,340 places. And the layout of some buildings makes it difficult to prevent contact with other prisoners. At Fresnes, a report in June by France’s official prison watchdog noted a practice it calls yoyotage: inmates in the special unit share notes and items with ordinary prisoners on different floors via yoyos between cell windows. + +Even when the units are properly isolated, inmates can meet. Those in segregation have the same rights to exercise or use the library as other prisoners. Osny’s special unit keeps inmates in individual cells, but they take part in a daily two-hour exercise session in the prison yard. “They wander around, take part in social activities and sport,” says Mr Forget: “Many are using this contact time to proselytise.” + +Not all detainees are former combatants with blood on their hands. Some have been jailed for, say, attempting to leave France for Syria. The risk is that the units turn into organised camps for jihadism, setting up networks and links, if not command structures. Countering this within prison walls is hard. Deradicalisation programmes are still experimental. Providing moderate forms of religious activity is difficult: France has only 178 Muslim prison chaplains, compared with 684 Catholic ones, for a total prison population of 68,000. Besides, piety plays only a small role in radicalisation. The inmates most vulnerable to “falling under the spell of jihadists”, says Mr Khosrokhavar, are the psychologically disturbed. + +French policymakers, anxious over the lure of jihadism, are struggling to find the right response. The prison watchdog concluded that it was “not in favour” of segregated units. Jean-Jacques Urvoas, the justice minister, told a parliamentary commission in June that he was aware of possible “perverse effects”. Better mentoring, or exchanges with those who have renounced jihad, could help, as might psychiatric care. But there are no easy options for handling potentially violent prisoners susceptible to extremism. Segregated units may be the best of a bad bunch. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21707230-should-jails-segregate-jihadists-caged-fervour/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Russia’s elections + +Duma-day machine + +Vladimir Putin has the country’s ballot under control + +Sep 17th 2016 | From the print edition + + + +SINCE Russia’s last parliamentary election in 2011, when widespread fraud triggered mass protests, millions of Russians have fallen into penury. Wages have plunged, and labour protests are on the rise. Vladimir Putin’s forces are fighting openly in Syria and secretly in Ukraine. Polls show that 33% of Russians believe the country is heading in the wrong direction, though 82% approve of Mr Putin. With so much at stake, why are so many ignoring the parliamentary election due on September 18th? Golos, an election monitoring group, calls the campaign the “most sluggish and inactive” of the past decade. + +This sterility is the Kremlin’s strategy. The election will be seen as a success if it is uneventful. The vote was moved forward from December to September, a move that critics contend was designed to keep turnout low, as summer holidays and the new school year keep people preoccupied. While some dissidents have been allowed to run, the strongest opposition leader, Alexei Navalny, has been convicted on trumped-up charges to keep him out of the race. As Mr Navalny points out, many of those running have been around since 1993. Russian voters are bored: 43% say they are not paying attention to the campaign, compared with 31% in 2011. + +Nonetheless, the Kremlin needs the elections to retain a veneer of legitimacy. Keen to avoid accusations of vote-rigging, the government replaced the odious head of the Central Election Commission, Vladimir Churov (nicknamed “The Magician” for his ability to make results come out just right), with Ella Pamfilova, a respected former human-rights ombudsman. The ratings of United Russia, Mr Putin’s ruling party, have been falling. Mr Putin calls this a sign of “an active election campaign”. + +It will not threaten his grip on the Duma. While half the seats will be elected by proportional representation, half will be head-to-head contests in individual districts, most of which will go to United Russia candidates. The nominal “opposition” parties that are gaining ground—the Communists, the Liberal Democratic Party and A Just Russia—are largely under the thumb of the Kremlin. + +The real drama lies not in the election’s results, but in the jockeying around it. The campaign has served as a testing ground for a more important vote: the presidential elections in 2018. Mr Putin has been shaking up his team following the dismissal of his powerful chief of staff last month. More changes are expected after the elections. Bigwigs are attempting to secure their roles in the new political season, argues Tatiana Stanovaya of the Centre for Political Technologies, a think-tank: the Duma contest is “turning into elections for the future elite of Putin’s fourth term”. + +So far, the more conservative forces within the regime seem to have the advantage. In recent weeks, Mr Putin has replaced his education minister and children’s rights ombudsman with figures close to the Russian Orthodox church. The Levada Centre, Russia’s last independent polling agency, was declared a “foreign agent”, a ploy the government uses to harass organisations it dislikes with red tape. Lev Gudkov, the centre’s director, says the designation makes it “impossible to work”. There have been 31 such rulings this year. + +Despite mounting budgetary pressure, painful but necessary economic reforms are unlikely to be taken up before the presidential elections. Facing no pressure from the Potemkin electoral system, Mr Putin has little reason to rush. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21707229-vladimir-putin-has-countrys-ballot-under-control-duma-day-machine/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Post-communist chic + +You must remember this + +In central and eastern Europe, socialist beer is hip again + +Sep 17th 2016 | BRATISLAVA | From the print edition + +Second time as farce + +IN THE giddy capitalist dawn of the 1990s, many of the tawdry products that stocked Soviet-bloc stores (when you could find them) were driven out by better-made, better-packaged foreign ones. Milk in plastic bags, canned “luncheon meat” and Pitralon aftershave (which, as readers of old samizdat know, doubled as an aperitif among vodka-deprived prisoners) disappeared from the shelves. + +Lately, these old products have been making a comeback. Polish hipsters are buying retro furniture in the pupil-dilating browns and oranges of the Jaruzelski era. Proletarian beer brands have been resurrected from Belgrade to Bratislava. In Germany the popular television series “Deutschland ‘83”, which follows an East German spy in the West, has been given the go-ahead for a second season. + +Communist nostalgia is not new, but it does seem to be having a moment. This makes some sense in Russia, which ruled the empire. It is harder to understand among the central and eastern Europeans whom the Soviets ground under their boots. And in a twist that should set apparatchiks rolling in their graves, affection for the socialist era is mainly embodied in consumer products, some of them marketed by Western multinationals. + +“It doesn’t necessarily mean a desire to return to the pre-1989 era,” says David Zappe, marketing director in Slovakia for Heineken, a Dutch brewing conglomerate. Most people in the region are simply discouraged about the future, he says, and “returning to the good old things brings a sense of security.” In May a Heineken-owned Slovak brewery, Zlaty Bazant, introduced a premium version of its beer based on a 1973 recipe, priced 20% higher than its standard suds. Retro brands have also been introduced by Heineken-owned labels in Serbia, Bulgaria and Croatia. All have been successful. + +Such products are in tune with the region’s politics these days. Nationalism and populism are in, liberalism and globalisation out. Where earlier marketing emphasised Europeanness and modernity, Zlaty Bazant’s new slogan, Na zdravie, Slovensko! (“Cheers, Slovakia!”) vaunts its local roots. Just 30% of Slovaks now have a positive view of the European Union, according to the most recent Eurobarometer survey, while 26% see it negatively. Among Czechs, the numbers are 26% and 34%. Poland and Hungary are more pro-European, but have elected governments determined to check the power of Brussels. + +Of course, the fact that a Serb enjoys quaffing a Tito-era brew does not mean he supports nationalising the auto industry. Maria Todorova, a Bulgarian historian, explains that the signals sent by reappropriating socialist culture are complicated, and do not imply rejecting capitalism. In Poland, Warsaw liberals may embrace ironic communist nostalgia as a rejection of the current nationalist government. Meanwhile, government supporters denounce liberals as somehow heirs to the communists, even as they pine for 1970s television reruns. + +“Nobody is nostalgic for the communist era, but many people are nostalgic for their youth,” as Ivan Klima, a Czech novelist, put it. Yet the communist-culture buffs are not just ageing pensioners, either. Retro socialist chic often targets young urbanites with disposable income. In Prague, the best way to get kitted out in ersatz communist products is to watch for the “Retro Week” promotional sales at Lidl, a German supermarket chain. Nikita Khrushchev always believed that the consumerist West would end up buried in socialist products. He probably did not envision it happening like this. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21707228-central-and-eastern-europe-socialist-beer-hip-again-you-must-remember/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Serbia’s prime minister + +The changeling + +Ex-ultranationalist Aleksandar Vucic is Europe’s most surprising Europhile + +Sep 17th 2016 | BELGRADE | From the print edition + +A less acerbic Serb? + +ALEKSANDAR VUCIC is not a man afraid to change his mind. In 2005, when Serbs were still furious over Britain’s participation in NATO’s war in Kosovo, he co-edited a book entitled “English Gay Fart Tony Blair”. Last year, he employed the former British prime minister as an advisor to the Serbian government. Times change, Mr Vucic explains. During the Kosovo war, he was serving as propaganda chief for Slobodan Milosevic, Serbia’s leader in the days of war and ethnic cleansing. (Mr Milosevic died in 2006 while on trial for war crimes.) But since 2014, the 46-year-old Mr Vucic has been prime minister himself. His chief strategic goal now, he says, is to secure Serbian accession to the European Union—while maintaining good relations with Russia, of course. + +Mr Vucic (pictured) concedes that some people consider him “a bad guy”. Most of them are foreigners, but many are Serbs. His critics call him an authoritarian who surrounds himself with yes-men, and recall his days as a rabid ultranationalist. This, he says, is just resentment: “They are living in the 1990s.” + +Mr Vucic is certainly enjoying a moment in the sun. Early this year he called new elections, saying he wanted to confirm his mandate to pursue EU accession. His coalition won a modest majority. In August Joe Biden, America’s vice president, visited Belgrade. Dmitri Medvedev, Russia’s prime minister, is due to drop in later this year. Western leaders regard Mr Vucic, in the words of Sebastian Kurz, the Austrian foreign minister, as “an anchor of stability” in the region. + +That assessment partly reflects Serbia’s improving economy. Shortly after taking office Mr Vucic implemented tough austerity measures and negotiated a $1.2 billion stand-by facility with the IMF. After shrinking for years, GDP grew 0.5% in 2015 and is expected to grow 1.8% this year. But much of the credit comes from Serbia’s pro-European diplomatic stance. In 2015, during the refugee crisis, Mr Vucic was one of the few leaders offering unreserved support for the policy of Germany’s Angela Merkel, while criticising some of his own central European neighbours. + +Mr Vucic’s opponents find his good reputation abroad infuriating. They call him a petty autocrat who governs by text message and fills his cabinet with political pygmies to enhance his own authority. “It is like a one-man theatre performance,” says a source who has worked with him. A foreign ministry official describes an influx of “friends, mistresses and cousins” to staff offices for which they have no qualifications: “It is nepotism big-time.” + +Others describe a yet darker sort of authoritarianism. Sasa Jankovic, Serbia’s ombudsman, says the state is being reduced to a single person. The prime minister, he says, interferes with the police, the judiciary, the secret service and most of the country’s other significant institutions. After he investigated a case of alleged malfeasance involving the prime minister’s brother, Mr Jankovic says, police files concerning the 1993 suicide of a friend were released to a government minister. The files were leaked to the press; some stories suggested Mr Jankovic had murdered the man himself. Mr Jankovic says police told him they had been ordered to hand over the files by their superiors. + +The ebullient Mr Vucic waves such accusations off as sour grapes. His concern is with regional stability and development, and with the risk of a new Bosnian conflict, he says. His overarching priority of EU membership, meanwhile, faces serious obstacles. In the post-Brexit environment, the union is in no mood for expansion. And Croatia threatens to block Serbian accession unless Belgrade renounces prosecuting its veterans for war crimes. + +But Mr Vucic has demonstrated a remarkable talent for diplomatic pivots. In October he will stage a meeting in the central city of Nis with Edi Rama, prime minister of Albania, whose people Serbs traditionally view as an enemy. Officials from Kosovo, which declared independence from Serbia in 2008, will attend as well. + +“Ninety-eight percent of Serbs hate that,” Mr Vucic proclaims gleefully. Yet Serbs and Albanians are the biggest nations in the western Balkans, and they need to do business. “I think it is important.” If Serbs don’t like it, he says, they can toss him out. That seems unlikely. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21707240-ex-ultranationalist-aleksandar-vucic-europes-most-surprising-europhile-changeling/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Germans against trade + +Fortress mentality + +Protectionists and scaremongers are winning in Germany + +Sep 17th 2016 | BERLIN | From the print edition + +Athwart history, yelling “stop” + +A MOVEMENT is sweeping across Germany. Its followers say delightedly that it reminds them of the peace protests in the 1980s. At stake today, they claim, is nothing less than democracy itself: multinational companies—especially American ones—are trying to foist their wares on helpless European consumers. These behemoths, the protesters warn, could feed Europeans food that is genetically modified or even toxic, and sue into submission democratic European governments that pass laws the corporate honchos dislike. + +Energised by this dystopian vision, more than 100,000 demonstrators are expected on September 17th at protests in Berlin, Hamburg, Leipzig, Munich, Cologne, Frankfurt and Stuttgart. Their slogan: “Stop CETA and TTIP!” CETA is a free-trade agreement with Canada which the European Union has been negotiating since 2009, slated to be signed next month. TTIP is its bigger sibling, a trade deal with America that has been in talks since 2013. Last month a truck delivered 125,000 signatures in 70 boxes to the supreme court in Karlsruhe to file a case against CETA, the largest such petition ever in Germany. + +Behind this activism is a concerted effort by some 30 organisations on the left, from environmental lobbies to trade unions. According to the European Centre for International Political Economy in Brussels, no other country in the EU approaches this level of anti-trade mobilisation; only Austria comes close. A poll commissioned by the think-tank found that support for TTIP is lowest in Germany, at 49%, compared with 61% in the EU as a whole. + +The rejectionist groundswell spells trouble for Germany’s government. The EU has promised to submit the trade deals to all of its members for approval. Angela Merkel, the chancellor, officially supports both CETA and TTIP, but needs to save her political capital for the refugee crisis. Her junior partner in government, Sigmar Gabriel, is in even more of a bind. As boss of the centre-left Social Democrats, he is also the vice chancellor and economics minister. Knowing that the left wing of his party loathes both trade agreements, he proclaimed in August that the negotiations with America have “de facto failed”. But he still wants to save the Canadian deal. + +Mr Gabriel’s political future—as the party’s leader and its presumptive challenger to Mrs Merkel in next year’s federal election—hinges on a party gathering scheduled for September 19th. Delegates there will vote on his proposal to refer the CETA deal to the next phase in parliamentary consultations. If the Social Democrats vote it down, Mr Gabriel’s position as leader will become untenable, and neither CETA nor TTIP will have a plausible path to German ratification. This is why anti-trade groups chose the Saturday before the party gathering for their rallies. + +The activists’ biggest bugbear is the sort of arcane legal instrument that is hard to fit on a protest banner: the treaties’ provision for “investor-state dispute settlement” (ISDS). This allows firms that invest abroad to sue governments that make decisions which damage their interests. The suits are usually heard by private arbitrators. Germany has already agreed to this in some 130 other bilateral trade agreements. Negotiators have moved to accommodate the protesters, partly at Mr Gabriel’s urging: in CETA private arbitration has been replaced by public investment courts, and the EU wants to do the same in TTIP, though America has not agreed. But the courts are not good enough for anti-trade activists, who think the whole idea of ISDS gives foreign firms a veto over democracy. + +The activists’ other fear concerns environmental, product and labour standards. Most Germans assume that their standards are stricter than anything in North America. In 2013, the first year of the TTIP negotiations, the country was in a media-fuelled panic over chlorinated chicken, which America was allegedly planning to export en masse into German supermarkets. Lately, the anxiety has shifted to genetically modified foods. Opponents worry that the trade deals will replace the EU’s “precautionary principle”, under which products must be proved safe before they are sold, with North America’s approach, which waits for proof that a product is harmful before banning it. + +Missing from the German debate is any sense of the advantages of free trade. Trade would make consumers, including German ones, better off. It would help exporters and create jobs. Harmonising standards, it is hoped, would ensure that global norms are set in Europe and North America—rather than, say, China. And there would be geopolitical benefits from tying Western societies closer together at a time of threats from Russia and the Middle East. + +The protesters on September 17th will brush these advantages aside and focus only on the risks. Some are motivated by anti-Americanism. But most oppose the trade talks as remnants of “a certain philosophy and era” that predates the 2008 financial crisis, says Ernst-Christoph Stolper of Friends of the Earth Germany, one of the organisers of the demonstrations. Convinced that this “neoliberal” worldview has since been debunked, he says, Germans will march because they distrust markets, firms and globalisation. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21707241-protectionists-and-scaremongers-are-winning-germany-fortress-mentality/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +State of disunion + +Cheerleading for Europe has become an almost impossible job + +Sep 17th 2016 | From the print edition + + + +NO ONE will stand up for Europe these days, sigh its dwindling band of supporters. National leaders stay mute about the bits of the European Union they like and rage against those they don’t. Eurosceptics are given free rein to vent their populist outrage. The advantages of European integration—freedom to work and travel, trade and cross-border investment, grants for poor areas—are banked and forgotten. The challenges are magnified and manipulated. + +That leaves only the leaders of the EU institutions to mount a defence of their troubled project. And so this week Charlemagne clambered aboard the gravy train to Strasbourg to watch Jean-Claude Juncker, president of the European Commission (the EU’s executive arm) deliver his “state-of-the-union” address to the European Parliament. The annual speech, a wheeze cooked up a few years ago, features the closest thing the EU has to a president, grandstanding before the closest thing it has to a legislature.Well-meaning it may be, but this ersatz accountability is ill-suited to times of crisis. In their addresses to Congress, American presidents typically proclaim the strength of their union in rousing perorations met with hearty rounds of applause. That was not an option available to Mr Juncker. Brussels is on the back foot; Eurosceptics, many of them inside the chamber he addressed, seek not just its defeat but its destruction. Wary of inflaming Europe’s divisions further, EU officials briefed journalists that the watchwords this year would be humility and unity, bolstering a relentless focus on matters of concern to “ordinary people”. + +Gone, therefore, were the divisive themes of last year’s speech, such as the management of refugees. Brexit, a subject on which Mr Juncker’s opinions have not always proved welcome, hardly warranted a mention. In their place came a clutch of moderately sized proposals, including funds for investment and for defence research, and the offer of free Wi-Fi for all population centres by 2020. A €44 billion ($50 billion) development fund for Africa was promised, a ploy to keep economic migrants away from European shores (though research suggests it could have the opposite effect). During a speech that at times tilted more towards Europeans’ fears than their aspirations, Mr Juncker vowed endless forms of “protection”: from terrorism, globalisation, corporations and competition. Euro-enthusiasts cheered the ambition. Sceptics claimed the lesson of Brexit had been ignored. + +Mr Juncker’s first problem lay in his surroundings. The charge against the European Parliament’s second seat—the absurdity of dislodging MEPs and their entourages from Brussels to Strasbourg once a month, at an annual cost of €114m—is not dulled by familiarity. Meanwhile, the gossip in the bars and restaurants of Strasbourg was fixed on the obscure matter of whether Martin Schulz, the president of the parliament, should retain his post once his term expires in January, which would violate a parliamentary agreement over the distribution of top EU jobs among parties. Institutional arcana are frustrating for leaders seeking to defend the EU’s relevance, but this is how it works. + +Yet Mr Juncker’s difficulties ran deeper than buildings and institutions. The authority of the commission has dwindled in recent years as governments have reasserted control over their treasuries and territories. What kind of inspiration can the commission’s chief offer? Promise too much and face accusations of imperial overreach (and irritate governments). Say too little and be attacked for complacency. In America a strong presidential speech can concentrate minds in a crisis. In the EU, with its diffusion of power and uncertain lines of authority, the spotlight only exposes the highest officials’ impotence. Mr Juncker’s wizened features and sometimes halting delivery embodied the drain of power from the institution he represents. + +Smart observers thus recommended ignoring Strasbourg and turning to Bratislava, where the leaders of EU governments (bar Theresa May, Britain’s prime minister) will meet on September 16th to thrash out their post-Brexit future. It was once hoped that the 27 might stride boldly forth into uncharted territory of integration. These hopes have faded as their differences reassert themselves. The leaders may find common ground on matters like a single headquarters for EU military missions, a Franco-German proposal endorsed in Mr Juncker’s speech. They will assert the importance of control over the EU’s external borders. But on meatier matters like harmonising asylum rules or euro-zone integration, agreement looks more elusive than ever. + +Hope over experience + +No matter, say optimists: this is the beginning of a “period of reflection” that will culminate in a set of shiny new initiatives next March, when the EU will mark the 60th anniversary of the Treaty of Rome, its founding document. Charlemagne hopes his scepticism will be forgiven. The EU is in a bind. Its institutional leaders are too weak to battle its crises; its heads of government see little advantage in defending its achievements and are plagued by disagreements. Austrian, Dutch and French elections in the months ahead will further test the mood. It is telling that these days the EU’s most robust defenders are found outside its borders, as a visit to Ukraine or Georgia will reveal. (Many in Brussels still swoon at the memory of a stirring defence of European integration delivered by Barack Obama at a German trade fair in April.) + +In time, that could change. The benefits of the EU will start to feel all too real to refugee-phobic states in the east if their subsidies are threatened in the coming round of budget talks. Euro members may be roused from their slumbers when crisis next hits. But if the failed attempt to keep Britain inside the EU provides any lessons for others, it is that years of unchecked attrition warfare on Brussels may have nasty consequences. European leaders facing domestic insurgencies might do well to listen. No doubt Mr Juncker would approve. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21707217-cheerleading-europe-has-become-almost-impossible-job-state-disunion/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Economic geography: How the other three-quarters live + +Schools and social mobility: A new syllabus + +Slimming the House of Commons: Boundary dispute + +National museums: Existential rethink + +Brexit and trade: Not so simple + +Food and the law: Full English Brexit + +Drug overdoses: Shooting up + +Drug overdoses: Survey + + + + + +Articles Sections Next + +Economic geography + +How the other three-quarters live + +London and the south-east power Britain’s economic growth. But the rest of the country is getting richer quicker + +Sep 17th 2016 | From the print edition + + + +PLENTY of Londoners secretly suspect that beyond the M25 motorway that encircles the capital, nothing very much happens. Their city is the most economically important in Europe, perhaps anywhere, as well as the most fun according to the votes of reviewers on TripAdvisor. London and the south-east region have long been more prosperous than the rest of the country, where the remaining three-quarters of the population live. In July Theresa May, who likes to contrast herself with her posh, metropolitan predecessor, David Cameron, began her time as prime minister with a promise to help “every single” British city, an appeal to those who feel left behind by the country’s London-led growth. + +Certainly the Britain beyond London and the south-east that Mrs May wants to conquer—call it the Mayan Empire—is less economically advanced. If it were a country it would be about as rich as Spain, with a GDP per person one-tenth below the EU average. Some parts are a lot worse off. On the Isle of Anglesey, in Wales, income per person is 57% of the EU average, lower than most of Sicily. The gap between the richest and poorest parts of Britain is greater than in any other EU country; London’s GDP per person is 186% of the European average. + +By almost any measure, the Mayans’ recent GDP growth has been unimpressive. Data from the OECD, a club of rich countries, suggest that if you ignore London and the south-east, Britain’s GDP growth between 2008 and 2014 was slower than France’s. Sluggish economic activity keeps property prices down. House prices have risen by over one-fifth in London and the south-east since 2008 but fallen by more than 5% elsewhere in England. + +There is little to suggest that GDP growth will soon pep up. The number of Mayan firms annually registered has risen by 10% since 2010, half the rate of London and the south-east. Investment is low, too. Its share of overall R&D spending is much lower than its share of the population. + +The familiar phenomenon of a “north-south divide” is thus alive and kicking. But dig into the data and a puzzle emerges. The Mayan Empire’s GDP growth may be sluggish, but in recent years the lot of its people has been improving faster than that of people in London and the south-east. + +However you measure pay—hourly, weekly or annual, mean or median—since 2009 that of the Mayans has grown faster in cash terms than the pay of those in the London region, in contrast to pre-crisis trends. After housing costs, Mayans’ median real household incomes have held steady since 2008, compared with a 6% fall in London. Indeed, after housing costs the incomes of working-age folk are now higher in Scotland and the east of England than they are in London. + +The disconnect between GDP growth and how workers actually fare is best captured by a measure called the “labour share”, defined as wages and salaries as a proportion of GDP. Economists have recently noted that Britain’s overall labour share is falling. But this is driven by London and the south-east; elsewhere labour’s share is stable (see chart). + + + +Not only that, but in recent years income inequality has grown in the capital, while falling elsewhere. Since 2009 the real annual pay of a Londoner at the tenth percentile (ie, near the poorest) has fallen by an astonishing 23%. The official figures may even understate the reality at the top. The richest folk, who disproportionately live in the capital, hide income. “There has been a huge rise since 2009 in people starting companies which have no employees. I can’t help but think that a large part of this is to avoid tax,” says Danny Dorling of Oxford University. + +There are many reasons for Mayans’ relatively strong wage growth. They may have experienced a lighter squeeze on pay because they tend to be older, and so have more experience and bargaining power than others, points out Stephen Clarke of the Resolution Foundation, a think-tank. About one-quarter of employees are unionised, compared with one-fifth in London and the south-east. And Mayans have been protected by their reliance on public-sector jobs. Since the crisis, public-sector pay has grown faster than private. + +Others argue that the high number of immigrants who settle in London and its surroundings may push down on low-end wages. But this is less convincing: in recent years the immigrant population has grown quicker outside the capital. A more plausible explanation is that more Mayans are on the minimum wage, which in recent years has risen faster than average earnings. + +The most intriguing explanation for relatively strong pay growth outside the capital concerns technology. In a recent speech Andrew Haldane of the Bank of England examined the effect of automation on wages. As machines have replaced men and women across a growing number of tasks, he suggested, the balance of bargaining power has swung against labour, especially low-skilled workers. Wage growth can thus be weak even as GDP rises. + +That process may be most pronounced in London and the south-east. The region buzzes with innovation; investment in new technologies is high. And because of the south-east’s monstrously expensive housing, it is hard to locate low-value-added activities there. (Secretarial and administrative jobs in the region are disappearing 50% faster than elsewhere.) Londoners are also more likely to work in the “gig economy”, via platforms like Uber and PeoplePerHour, than Mayans, whose wages may thus suffer less from the disruption associated with rapid technological changes. + +These trends may not continue for long. Public-sector jobs could be cut. Labour-saving technology may soon sweep across the country. Still, common misconceptions about the British economy outside London and the south-east need setting straight. Output is lower, and growing slower, beyond the capital. But the incomes of the three-quarters of Britons who live there are catching up with those of Londoners—and in a few places are already ahead. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21707246-london-and-south-east-power-britains-economic-growth-rest-country-getting/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Schools and social mobility + +A new syllabus + +Plans to let more schools select pupils on ability divide parents and politicians + +Sep 17th 2016 | From the print edition + + + +THERESA MAY clearly wants to be remembered for more than overseeing Brexit. On September 9th the new prime minister set out plans to build a “truly meritocratic Britain” that stretched “the most academically able, regardless of their background.” The details, presented in Parliament three days later, included some minor fiddles, such as opening more religious schools and getting universities and private schools more involved in state education. But the centrepiece was a big policy shift that delighted some within her Conservative Party and appalled others: away from comprehensive education and towards academic selection. + +British governments since 1997 have sought to improve education without sorting children by ability. They can claim a big success in London, once home to some of the country’s worst schools, where better teacher training and school management have raised attainment at all ability levels without academic selection. Around 15% of 16-year-old Londoners poor enough to receive free school meals get good enough grades to be on course for a prestigious university; across England the share is just 6%. + +The new plan to increase academic selection has gone down badly with most educationalists (the chief inspector of schools, Sir Michael Wilshaw, called it a “retrograde step”) and even many Tory MPs (who note that it did not feature in the manifesto on which they were elected last year). But others, like Mrs May, thank selection for their own success, and regard fans of comprehensives as hewing to an outdated egalitarianism. + +Mrs May has identified two real problems: poor social mobility and a failure to stretch able children. Compared with those in other rich countries, British state schools produce few very high achievers. Private-school alumni are over-represented in well-paid jobs. Many British schools are “complacent”, says Andreas Schleicher of the OECD club of rich countries. “What is most striking is not that some schools in poor areas do remarkably well, but that some very privileged schools do so-so.” + +Proponents of academic selection point out that, in their 1960s heyday, selective state “grammar” schools sent pupils on to university and the professions in droves. Opponents attribute that to economic shifts that created vastly more white-collar jobs; there is no such expansion today. And they cite evidence that children who narrowly failed the 11-plus went on to get fewer qualifications and earn less than those who barely passed. Again, the relevance today is disputed: the “secondary modern” schools which took the children who did not get into grammars failed their brightest pupils in part by not teaching courses that prepared them for university. Nowadays all schools do. + +In Northern Ireland, nearly half of children still go to grammar schools—and it has more high-attaining school-leavers than other parts of Britain. Moreover, an increase in grammar-school entry in 1989 was followed by one in exam results. Supporters conclude that more grammars means higher attainment; opponents, that if such a big share of children benefit from academic rigour, it should be a feature of all schools. + + + +As for England’s 163 remaining grammar schools, a review by the Sutton Trust, a charity, found that they improved the results of the children they taught, but not by much, since their able, well-off pupils would also have done well in comprehensives. For poor children the boost was more marked—but few of them get in (see chart). Other analyses suggest that, overall, a smaller share of poor children get high grades in areas with lots of grammar schools than elsewhere. + +Mrs May’s plan to increase academic selection would probably boost the number of high achievers. But it would not be “regardless of their background”: most would be from well-off families and if many schools opted for entrance exams, poor children would be harmed. A less flashy policy brought in by her predecessor, David Cameron, might raise standards more widely. Schools will no longer be rated according to the share of pupils achieving five C grades in exams taken at age 16 (which encouraged them to focus on the middle of the ability range) but on the share who do as well as expected given their ability on entry. That will promote high achievement—in every school. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21707247-plans-let-more-schools-select-pupils-ability-divide-parents-and-politicians-new-syllabus/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Slimming the House of Commons + +Boundary dispute + +Redrawing Britain’s political map will hurt Labour most + +Sep 17th 2016 | From the print edition + + + +THE view from the tower of the old Stoke Newington Pumping Station, a Victorian edifice in the style of a Scottish castle, is no different to a week ago. But in electoral terms, the landscape has changed. Where once five Labour-held constituencies could be seen from its ramparts, soon only four will exist, under proposals from the Boundary Commission of England. The plans amount to “gerrymandering”, according to Labour’s leader, Jeremy Corbyn, whose Islington North seat is among those facing abolition. + +The redrawing of Britain’s parliamentary map, the biggest such exercise since Ireland became independent in 1922, is a long time coming. Five years ago the Conservative-led government asked the boundary commissions of England, Scotland, Wales and Northern Ireland to create 600 parliamentary constituencies of roughly equal population out of the existing 650, which on the mainland range from 38,000 voters to more than 90,000. But the project was delayed after their Liberal Democrat coalition partners withdrew their support. + +Reducing the size of the House of Commons will cut its costs by £13.6m ($17.9m) per year and bring it more in line with other Western democracies. France, with about the same population, has 577 members in its lower house; America, five times as populous, has just 435. Equalising the number of voters in each constituency, to between 71,031 and 78,507, will better balance representation across the country. + +Based on its share of the vote in last year’s election, Labour would lose some two-dozen seats. The Lib Dems could lose up to four of the eight they hold. The Conservative government’s majority would increase from 16 to 36, estimates Martin Baxter, who runs the Electoral Calculus website. Moderate Labour MPs further worry that Mr Corbyn will use the boundary changes as an excuse to purge the party of his enemies (see article). + +Complaints of gerrymandering stretch the word beyond any reasonable boundaries of its own, argues Iain McLean of Oxford University. The status quo favours Labour, which dominates in Wales, where the average constituency size is only 55,000, and northern England, where populations are shrinking. + +That is not to say the proposals contain no whiff of bias. To trim the Commons while stuffing the Lords (more than 250 new peers were ennobled under David Cameron’s government) is democratically dubious. The Conservatives have also played down claims that the electoral registers on which the new map is based are incomplete. Some 2m new voters registered between the cut-off point in December and the EU referendum in June. + +Yet adding them would not dramatically change the picture: research by the House of Commons Library suggests Labour-leaning London would gain two seats and the true blue south-west would gain one. What is more, the boundary commissions will consider new electoral data during the public consultation period. + +The new maps must still be agreed by Parliament; the odds of MPs voting to cut their own number are perhaps only slightly better than 50:50. The Tories were expecting Labour to be hit even harder. Now the government must persuade 16 of its own MPs to vote to abolish their own jobs. That, awkwardly, is exactly the size of its working majority. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21707235-redrawing-britains-political-map-will-hurt-labour-most-boundary-dispute/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +National museums + +Existential rethink + +Curators, overwhelmingly Remainers, ponder how to respond to Brexit + +Sep 17th 2016 | From the print edition + +What will be the fate of the Tate? + +THE enlarged Tate Modern gallery opened on June 17th with a new display determined to show that Modernism had not just been made by white men in New York, Paris and London. Instead, there were many Modernisms: artists in 1960s eastern Europe developed their own vision, just as the artists of the Gutai movement were doing the same in Japan and legions of women artists were producing works of power and originality in Brazil. + +Could Tate Modern’s reopening turn out to have been the high point of Britain’s easy cultural engagement with the world? In the three months since, Britain’s national museums seem to have gone through an existential crisis. On the question of the EU, museum curators are to a man (and woman) Remainers. Many of them come from Europe; even more have studied there. Cultural exchanges are part of their daily life. Most see the vote for Brexit as running counter to their deep belief that museums are a distillation of man’s common humanity, proof that what unites people is stronger than what divides them. + +On September 5th Martin Roth, the director of the Victoria & Albert Museum (V&A), announced he was leaving. The 61-year-old German wants to go into politics. Born in 1955, when Germany was beginning to question how it turned to Nazism, he says he is determined not to stand silently and let right-wing nationalism take hold across the continent. Two days later Tate’s director, Sir Nicholas Serota, now 70, let it be known he would retire next year. + +This may put museum trustees in a quandary. As civil servants, Britain’s national museum directors are meant to be apolitical. They are not meant to speak out, no matter how strong their beliefs. One need only look at Hartwig Fischer, the new head of the British Museum (BM). Also German, Mr Fischer took a strong stand in his previous job as director of the 14 Dresden state art museums, corralling his cultural colleagues into confronting Pegida, Germany’s anti-Muslim, anti-migrant movement, which was born in Dresden. + +The turning point came in December 2014, when the museum projected the words “Dresden for all” on its façade. This attracted Pegida supporters chanting slogans with a Nazi tinge: Lügenpresse (“liar press”) and Volksverräter (“traitor to the people”). “I consciously took the decision not to remain neutral,” Mr Fischer says. He persuaded the government to allow the museum to hang long banners outside the building boasting: “The State Art Collections Dresden. Works from Five Continents. A House Full of Foreigners. The Pride of the Free State of Saxony.” Mr Fischer has been at the BM for five months, but he has yet to say a word on the deep schism that has opened up in Britain. + +Two days before Tate Modern reopened, Lord Browne, the chair of the Tate trustees, told the House of Lords that leaving the EU would be a “backward step”. So what sort of directors should he and his fellow national museum trustees be looking for at the V&A and at Tate? Civil servants who keep their lips zipped or cultural warriors prepared to speak their mind? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21707249-curators-overwhelmingly-remainers-ponder-how-respond-brexit-existential-rethink/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit and trade + +Not so simple + +Britain will not find it easy to strike comprehensive trade deals quickly + +Sep 17th 2016 | From the print edition + + + +THE grittiest part of the Brexit negotiations will be over trade. Brexiteers correctly argue that you do not need a trade deal to trade: America has not got one with the European Union, after all. But without a liberal and comprehensive free-trade deal with the EU, British exporters could face tariffs and, especially, non-tariff barriers, where it currently faces neither. The gravest estimates of Brexit’s economic damage are those that assume trade in future is done only under World Trade Organisation (WTO) rules. + +The big argument within government is over how hard to try to stay in the EU’s single market and customs union. For Brexiteers, both are problematic. The EU insists that single-market membership like Norway’s means accepting free movement of people, paying into its budget and observing its rules with no say in them. Being in the customs union would prevent trade deals with third countries, putting Liam Fox, the international trade secretary who recently denounced British business as “too lazy and too fat” to export, out of a job. + +It is more likely that a post-Brexit Britain will be out of the customs union and not a full member of the single market. Dr Fox would then have his work cut out. His first task would be to negotiate a free-trade agreement (FTA) with the EU. Admittedly, nobody wants tariffs on goods. But the bigger concern is non-tariff barriers such as regulations, especially for services, which make up 80% of the British economy. Outside the customs union Britain would also face customs checks for rules of origin, which could add between 4% and 15% to the costs of exports. + +An FTA with the EU would take time, even if drawn up in parallel to the Article 50 negotiations for Brexit. Lobbies from farming to financial services would pile in. And ratification by every EU country and the European Parliament would extend the process beyond the two-year limit set by Article 50 (Canada began negotiating its free-trade deal with the EU in 2007; it is still not in force). So an interim deal may be needed. Alan Winters of the UK Trade Policy Observatory at Sussex University suggests agreeing informally to keep current trade arrangements until an FTA is in force. But that would in effect prolong EU membership, which Brexiteers would hate. + +It may also be impossible for Britain to keep in place the EU’s 53-odd free-trade deals with third countries. Roderick Abbott, a former deputy director-general of the WTO, says these cannot simply be inherited after Brexit. Third countries will want to know first about Britain’s future trade relations with the EU. South Korea conceded fuller access for the EU to its market in hopes of using Britain as a gateway to the single market. It will be reluctant to give Britain alone similar terms. + +For all Dr Fox’s enthusiasm over deals with the likes of Australia, India and America, they too will first want to see the terms of a putative EU-Britain FTA. Many are negotiating trade deals with the EU, which a post-Brexit Britain would be left out of. Yet there is a glimmer of hope for Brexiteers. If accords like the planned EU-US Transatlantic Trade and Investment Partnership fizzle because of opposition in Europe, Britain might be better placed to do bilateral deals, albeit with less bargaining power. + +The final puzzle for Dr Fox will be the fallback should free-trade deals prove impossible or take too long: trading on WTO terms. Brexiteers say this is simple, as Britain is already a member of the WTO. Yet its tariff, quota and subsidy rules are fixed by its EU membership. Post-Brexit it needs terms of its own, and they have to be negotiated and approved by all 163 other WTO members, a process that the WTO’s director-general has called “tortuous”. The alternative of scrapping all tariffs and quotas might appeal to some economists, but it would not be welcomed by British farmers or manufacturers, and it would deprive Britain of bargaining chips for future bilateral trade deals. Trading with the EU under WTO rules would mean tariffs on cars, pharmaceuticals and most agricultural products, and it would not cover services. + +British exporters may have gained from a lower exchange rate since the Brexit referendum. But they face huge future uncertainties over their terms of trade—no matter how fat and lazy they may be. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21707251-britain-will-not-find-it-easy-strike-comprehensive-trade-deals-quickly-not-so-simple/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Food and the law + +Full English Brexit + +Protecting traditional produce is another complication of leaving the EU + +Sep 17th 2016 | From the print edition + +The Brexit blues + +WHAT makes a Cornish pasty legally a Cornish pasty? The requirements are strict. It must be D-shaped, with pastry crimped on one side (never on top). Its filling must include beef, swede, potato and onion, lightly seasoned, appropriately chunky. Finally it must be prepared—though not necessarily baked—in Cornwall. These strictures are enforced under the EU’s protected food-names scheme, which safeguards products made in a traditional fashion, tied to particular locations. Replacing this legal framework will be another tummy ache for those negotiating Brexit. + +Britain’s protected foods include such delicacies as Melton Mowbray pork pies (which must use diced or minced uncured pork and exhibit bowed pastry sides) and Arbroath smokies (haddock smoked in a traditional manner no more than 8km from Arbroath Town House on Scotland’s east coast). The EU’s scheme forbids competitors, in the rest of Britain or in other EU member states, from producing knock-offs. After Brexit, that protection will no longer be guaranteed. + +Producers are cheesed off at the prospect of losing protection for their products. The Cornish Pasty Association is concerned about the potential impact. It is not alone. Kenneth MacLeod, one of only four butchers who produce Stornoway black pudding, a Scottish blood sausage from the Isle of Lewis, explains that they sought protected status under the EU rules to eliminate inferior copies. Others were cooking up imitations that used pork fat and trimmings—forbidden ingredients in an authentic pudding—and selling it under the Stornoway name. He fears that in the absence of the EU’s guarantees such counterfeits could reappear. + +Without the EU’s legal framework, British producers would have to rely on local laws to protect their comestibles at home. Courts have in the past ruled against fraudulent foods, preventing Spanish fizz from being labelled champagne, for example. Scotch whisky was protected by an act of Parliament in 1988. But such an ad hoc system is unlikely to reassure foreign producers and so protection for British products abroad could lapse. Butchers and bakers could turn to the World Trade Organisation for help, but dealing with an international intergovernmental organisation is not easy. Producers are hoping Britain will somehow replicate the current system. But in the midst of complex trade negotiations, pies and pasties may not be a priority. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21707250-protecting-traditional-produce-another-complication-leaving-eu-full-english-brexit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Drug overdoses + +Shooting up + +Deaths from heroin have reached a record high. Many would be easy to prevent + +Sep 17th 2016 | GLASGOW | From the print edition + +The £15 lifesaver + +FOR the benefit of anyone who has not heard a “death rattle” before, Jason Wallace puts on a short video clip. One second a cheerful Bulgarian heroin addict is shooting up. The next he goes limp, and the sound of a chilling, throaty rasp fills the room. Mr Wallace stops the tape. As the national training officer of Scotland’s naloxone programme, he is here to show a group of ex-users—about half of whom have in the past overdosed on heroin themselves—how to save the life of anyone they hear making that dreadful noise. + +Not all overdoses are fatal. But the death rattle, which signals the collapse of the respiratory system, is bad news: if oxygen does not reach the vital organs in short order, the body will die. This is where naloxone comes in. When injected, it blocks heroin’s access to opioid receptors in the brain, allowing a user’s lungs to kick back into action. You hear a gasp “like a baby’s first breath”, says Mr Wallace. At the end of the session, in the Gorbals district of Glasgow, bright yellow naloxone packs, small enough to fit into a pocket, are handed out. + +Spiralling drug deaths load his message with urgency. Figures for England and Wales released on September 9th showed that annual fatalities involving heroin have doubled in the past three years, to 1,201, the highest since comparable records began in 1993. Some blame the end of a “heroin drought”, which coincided with the departure of British troops from the Afghan province of Helmand and its poppy farms. Purity has risen and the price of a gram has dropped, from £74 ($100) in 2011 to £45 in 2014. Others suggest that the “Trainspotting” generation of users, who started to inject in the late 1980s, are becoming more frail. + +Naloxone has been used by medical professionals for more than 40 years. But the attempt to make it more widely available—distributing it in hostels for the homeless and to heroin users themselves—is just beginning. Activists underline the potential. “Nobody needs to die from a heroin overdose,” says Judith Yates, a former doctor in Birmingham. So long as an overdose is witnessed (and 80% are), a jab of naloxone in the thigh will revive those in even the most perilous of “nods”, as the state of being very high is known. A trial in Scotland on recently released prisoners reported a 36% decline in fatalities. + +Since last October drug-treatment staff in England who are not medically trained have been allowed to hand out naloxone kits themselves to anyone, including children, who they think might run into an overdose situation. The number of packs circulating has almost doubled as a result. + +But provision is patchy. Unlike Scotland and Wales, England has no national naloxone programme. Local authorities have controlled their own health budgets since 2013 and roughly one-third spend nothing on the drug. Addicts in Liverpool and Leeds, to name two heroin hotspots, rely on pot luck if they overdose. During summer last year, six heroin users died in Nottinghamshire; had they lived within the city of Nottingham they would have had access to naloxone. “It’s a postcode lottery,” says Mr Wallace, comparing support in England with the system he co-ordinates over the border in Scotland. + +It is not hard to see why local health-commissioners might drag their heels. Heroin users are an unpopular group. Nor will naloxone necessarily do much to persuade them to change their ways: those injected with it sometimes score in the hours after they have been “brought back”. Some areas may lack a local advocate to pester bureaucrats until they cough up for the drug. + +Health budgets are strained. But that is all the more reason for shelling out for naloxone. A pack costs about £15. A 2013 study found that one would have to cost over £1,825 before it stopped being cost-effective, given the savings it generates in police work, autopsies and other things. + +Australia, Norway and Sweden licensed over-the-counter sales of naloxone earlier this year. Britain should follow suit, reckons Kevin Jaffray, a former addict who was saved five times by the drug in his using days. “I wouldn’t be here without it,” he says. “From the moment of my last injection, I changed the direction of my life.” It would be cheap and easy to give thousands more like him another chance. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21706733-deaths-heroin-have-reached-record-high-many-would-be-easy-prevent-shooting-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Survey + +Sep 17th 2016 | From the print edition + +Editor’s note: The Economist is conducting a survey of readers and subscribers. We are keen to find out more about your views of this newspaper. To take part please visit: economist.com/survey16 + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21707232-survey/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Al-Qaeda: The other jihadist state + + + + + +Articles Sections Next + +Al-Qaeda + +The other jihadist state + +Eclipsed by Islamic State, al-Qaeda may be making a comeback in a more pragmatic, and dangerous, form + +Sep 17th 2016 | BEIRUT | From the print edition + + + +SOON after it attacked America on September 11th 2001, al-Qaeda issued a book by its co-founder, Ayman al-Zawahiri, setting out a grand strategy. “Knights under the Prophet’s Banner” explained that striking America, not local regimes, would galvanise Muslims everywhere; jihadists had to cleave “to the masses” and needed a “base in the heart of the Muslim world” to achieve eventual success. + +In the event, al-Qaeda was chased from Afghanistan and dispersed by American forces, which eventually killed its leader, Osama bin Laden. In Iraq, the jihadists were nearly wiped out as the masses turned against them, for a time. And with the subsequent collapse of Syria and Iraq, al-Qaeda was eclipsed by its rebellious progeny, Islamic State (IS), which declared a caliphate in 2014 and has inspired jihadists—and earned the enmity of everyone else—ever since. + +Yet the threat from al-Qaeda never disappeared. Its central leadership remains committed to attacking the West; its regional branches are active; and Mr Zawahiri remains at large. The IS caliphate looks likely to be dismantled as American-backed forces close on its strongholds of Raqqa and Mosul. By contrast, Mr Zawahiri’s dream of a secure base for al-Qaeda in the Arab world may be turning into reality. So, at least, fear Western governments. + +Al-Qaeda’s Syrian branch, Jabhat al-Nusra (“The Support Front”), has taken a central role in the fight against Bashar al-Assad’s regime. Mr Zawahiri’s deputy, Abu Khayr al-Masri, released by Iran in a prisoner swap last year, has moved to Syria with several other senior al-Qaeda figures, Western officials say. There is talk that al-Qaeda may soon declare an Islamic “emirate” (one notch down from a caliphate). + +Such worries go some way to explaining the terms of the latest ceasefire in Syria negotiated by America and Russia. Its central bargain is this: if the Russians restrain Mr Assad and allow humanitarian supplies into besieged areas held by rebels, America will join Russia in targeting Jabhat al-Nusra (as well as IS). The first such joint operations since the end of the cold war will start if the ceasefire holds for a week after coming into force on September 12th. + +John Kerry, the American secretary of state, and his Russian counterpart, Sergei Lavrov, did not agree on a future government for Syria, let alone a timetable for Mr Assad to step down. But Mr Kerry rejects the notion that America has, in effect, bowed to Russia and its intervention to prop up Mr Assad: “Going after Nusra is not a concession to anybody,” he says. “It is profoundly in the interests of the United States to target al-Qaeda.” + +But America risks being seen as doing Mr Assad’s bidding. “This is a conspiracy against the Syrian people to bring their revolution to an end,” says Mostafa Mahamed, the Nusra front’s English-language spokesman. “We are one of the strongest forces fighting the regime, and the world knows it.” + +On the eve of the Kerry-Lavrov deal, someone appears to have made a down-payment: an unknown aircraft struck a meeting of rebel commanders, killing Abu Omar Saraqib, a prominent Nusra figure. Whoever carried it out, rebels of all persuasions mourned his death. “Saraqib was the engineer of the military operations of one of the strongest rebel alliances in Syria. His death will weaken the revolution,” says Zakaria Malahfeji of Fastaqim Kama Umirt, a rebel faction in Aleppo that receives military support from America. Such sentiments say much about the failures of American policy in Syria, and the success of al-Qaeda’s belated pragmatism. + +Think global, act local + +Jabhat al-Nusra has played a long game. Like IS, its roots lie in al-Qaeda’s jihad against American troops (and increasingly against Shias) in Iraq; both later grew in Syria’s blood-soaked soil. But whereas IS doubled down on its anti-Shia sectarianism and the “management of savagery”, Jabhat al-Nusra sought to learn from the excesses of Iraq. IS favours ostentatious brutality, the extermination of rivals and the imposition of strict sharia rules. It took the fast lane to the caliphate, and calls on supporters worldwide to attack the West by whatever means. Jabhat al-Nusra, by contrast, seeks to win the respect of brutalised Sunnis by fighting Mr Assad; sharia strictures have, for the most part, been light; the caliphate is a long-term objective, to be established when conditions are ripe. Jabhat al-Nusra has formed alliances with more moderate groups; and it has focused on the fight in Syria rather than global jihad. + +In July Jabhat al-Nusra declared it had severed “external” ties with al-Qaeda, and rebranded itself Jabhat Fatah al-Sham (Front for the Conquest of the Levant, or JFS). Western counter-terrorism experts tend to dismiss the move as cosmetic. But in Syria it proved contentious enough that some hardline jihadists left. JFS now seeks a full merger with other rebel groups; purists think that its global ambition will be diluted by the nationalist Syrian rebel agenda. David Petraeus, a former CIA chief, has suggested talking to its “reconcilable” elements. Some are even pushing Staffan de Mistura, the UN special envoy to Syria, to start putting out feelers to the front. + +“Al-Nusra is still an integral part of al-Qaeda despite the name change. The danger is that they are acquiring popular support. If it continues to grow then it could become a genuine mass movement,” says Charles Lister of the Brookings Institution, an American think-tank. “With a large enough majority behind them they could establish an emirate, a kind of protected territorial base on the borders of Europe that the international community would find very hard to root out.” + +There is little evidence so far that the group has sought to carry out attacks against the West. Indeed its leader, Abu Muhammad al-Julani, says Mr Zawahiri has expressly forbidden him from doing so. But counter-terrorism officials worry that it is just a matter of time. America has been targeting what it calls the “Khorasan group” within the front, a nucleus of al-Qaeda figures who have moved to Syria and were allegedly plotting international attacks. For the most part, though, American bombing has been directed at IS. + + + +The front’s fighters have acted as the shock troops of the Sunni rebellion, especially in northern Syria. Its cadre of suicide-bombers, known as inghimasi, was used with devastating effect to breach the Syrian regime’s lines before rebel assaults. “Al-Nusra’s fighters have become to the opposition what Russian and Syrian jets are to the regime,” says a seasoned observer. Soon after its rebranding, JFS was instrumental in breaking the siege of rebel-held Aleppo. The respite was brief but earned JFS the gratitude of many in the city. + +Other units have little choice but to work alongside the front. It has attracted many recruits; more than two-thirds of its roughly 7,000 fighters are thought to come from Syria. They see it as a better-trained, better-equipped, more disciplined force that takes greater care of its wounded. It has even drawn fighters from IS. + +Though Syrian rebel groups are more or less keeping the ceasefire, few will obey America’s order to separate from JFS. They fear that, should fighting resume—as after an abortive ceasefire in February—Mr Assad’s forces will reclaim territory. Many think strikes against JFS would be like “ripping a vital organ from the body of the revolution”, as one Syria-watcher puts it. + +The softer side of jihadism + +Like IS, the front presents itself as a quasi-government in areas where it is dominant. Its Department of Relief paves roads, repairs electricity lines, pumps water and rebuilds damaged infrastructure. To prevent looting, its police guard marketplaces. It subsidises bread, runs flour mills and bakeries, offers Islamic education, provides health care and ensures rents remain low for families displaced by the fighting. At “family fun days” locals compete in games of tug-of-war and enter raffles to win TVs. + +Many regard the front as less corrupt than other rebel factions. By controlling the judicial system, and access to marriage certificates and property deeds, it seeks to settle disputes and steer locals towards its ideology. “They don’t intervene in people’s affairs like before. Even around Idlib, their main stronghold, you can see girls and women not wearing the niqab,” says Sami al-Raj, an activist from Aleppo. “Many people consider it the only rebel group that can protect their property and money. You rarely find robbery in the areas it controls.” + +Already in 2013, before the split with IS, Mr Zawahiri was urging moderation on jihadists. Except for some places—such as Afghanistan, Pakistan, Somalia and Saudi Arabia—they should as far as possible avoid clashing with local regimes. They should resist fighting “deviant sects” like Shias, and “avoid meddling” with non-Muslim minorities. The priority should be to strike America “until it bleeds to death both militarily and financially”, he said in a public missive. “Our struggle is a long one and jihad is in need of safe bases and consistent support in terms of men, finances and expertise.” + + + +The move from avoiding unnecessary friction to taking care of populations is a new stage in al-Qaeda’s pragmatism, which has been visible in Yemen, too. With the collapse into civil war last year, caused by Shia rebels’ armed takeover of much of the country and a Saudi-led intervention to push them back, al-Qaeda took control of the port of al-Mukhalla. It kept it running, levying taxes on oil imports. It administered the city through existing tribal structures. Supplies of water and electricity increased. Visitors described security as better than elsewhere in Yemen. “They wanted to show that they could rule better than anyone else,” says Elisabeth Kendall of Oxford University. By and large, she says, they succeeded. + +In April, though, special forces from the United Arab Emirates, with the reported help of American ones, put an end to al-Qaeda’s “Hadramawt province”. Its fighters moved east into al-Mahra, prompting internecine fighting for control of smuggling routes into Oman. Far from the rivalry in Syria, al-Qaeda is flirting with a nascent IS offshoot in Yemen. + +Harried by American strikes, and more involved in local conflicts, jihadists have not been able to attack the West on the scale of 9/11. But 15 years on, says Nicholas Rasmussen of America’s Counterterrorism Centre, “the array of terrorist actors around the world is broader, wider and deeper than at any time since that day.” + +IS and al-Qaeda may yet swap roles. If and when the IS caliphate is destroyed, say Western officials, it might go global, dispersing among its regional franchises, or turning to full-blown international jihad. It would thus become a bit like the al-Qaeda of yesteryear. And if there is no reasonable settlement to the war in Syria, al-Qaeda will plant stronger local roots. Its future emirate, should it come to it, may be more firmly supported by the local population, and therefore even harder to extirpate, than the barbarous IS caliphate. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21707208-eclipsed-islamic-state-al-qaeda-may-be-making-comeback-more-pragmatic-and/print + + + + + +Articles Sections Next + + + + + +Special report: Companies + + + + +Companies: The rise of the superstars + +A history lesson: What goes around + +Driving forces: Why giants thrive + +Misconceptions: The new Methuselahs + +Key attributes: The alphabet of success + +Joining the ranks: Do you blitzscale? + +Downsides: The dark arts + +Future policy: A delicate balance + + + + + +Articles Sections Next + +Companies + +The rise of the superstars + +A small group of giant companies—some old, some new—are once again dominating the global economy, says Adrian Wooldridge. Is that a good or a bad thing? + +Sep 17th 2016 | From the print edition + + + +ON AUGUST 31ST 1910 Theodore Roosevelt delivered a fiery speech in Osawatomie, Kansas. The former president celebrated America’s extraordinary new commercial power but also gave warning that America’s industrial economy had been taken over by a handful of corporate giants that were generating unparalleled wealth for a small number of people and exercising growing control over American politics. Roosevelt cautioned that a country founded on the principle of equality of opportunity was in danger of becoming a land of corporate privilege, and pledged to do whatever he could to bring the new giants under control. + +Roosevelt’s speech sounds as fresh today as on the day he made it. A small number of giant companies are once again on the march, tightening their grip on global markets, merging with each other to get even bigger, and enjoying vast profits. As a proportion of GDP, American corporate profits are higher than they have been at any time since 1929. Apple, Google, Amazon and their peers dominate today’s economy just as surely as US Steel, Standard Oil and Sears, Roebuck and Company dominated the economy of Roosevelt’s day. Some of these modern giants are long-established stars that have reinvented themselves many times over. Some are brash newcomers from the emerging world. Some are high-tech wizards that are conjuring business empires out of noughts and ones. But all of them have learned how to combine the advantages of size with the virtues of entrepreneurialism. They are pulling ahead of their rivals in one area after another and building up powerful defences against competition, including enormous cash piles equivalent to 10% of GDP in America and as much as 47% in Japan. + +In the 1980s and 1990s management gurus pointed to the “demise of size” as big companies seemed to be giving way to a much more entrepreneurial economy. Giants such as AT&T were broken up and state-owned firms were privatised. High-tech companies emerged from nowhere. Peter Drucker, a veteran management thinker, announced that “the Fortune 500 [list of the biggest American companies] is over.” That chimed with the ideas of Ronald Coase, an academic who had argued in “The Nature of the Firm” (1937) that companies make sense only when they can provide the services concerned more cheaply than the market can. + +But now size seems to matter again. The McKinsey Global Institute, the consultancy’s research arm, calculates that 10% of the world’s public companies generate 80% of all profits. Firms with more than $1 billion in annual revenue account for nearly 60% of total global revenues and 65% of market capitalisation. + +The quest for size is producing a global bull market in mergers and acquisitions. In 1990 there were 11,500 M&A deals with a combined value equivalent to 2% of global GDP. In the years since 2008 the number has risen to 30,000 a year, worth about 3% of global GDP. America’s antitrust authorities have recently given Anheuser-Busch InBev, one of the world’s biggest drinks companies, the all-clear to buy SABMiller, another global drinks firm, for $107 billion. + +The superstar effect is most visible in America, the world’s most advanced economy. The share of nominal GDP generated by the Fortune 100 biggest American companies rose from about 33% of GDP in 1994 to 46% in 2013, and the Fortune 100’s share of the revenues generated by the Fortune 500 went up from 57% to 63% over the same period. The number of listed companies in America nearly halved between 1997 and 2013, from 6,797 to 3,485, according to Gustavo Grullon of Rice University and two colleagues, reflecting the trend towards consolidation and growing size. Sales by the median listed public company are almost three times as big as they were 20 years ago. Profit margins have increased in direct proportion to the concentration of the market. + +Startups, meanwhile, have found it harder to get off the ground. Robert Litan, of the Council on Foreign Relations, and Ian Hathaway, of the Brookings Institution, note that the number of startups is lower than at any time since the late 1970s, and that more companies die than are born, pushing up their average age. American workers are also changing jobs and moving across state borders less often than at any time since the 1970s. + +Competition is for losers + +The superstar effect is particularly marked in the knowledge economy. In Silicon Valley a handful of giants are enjoying market shares and profit margins not seen since the robber barons in the late 19th century. “Competition is for losers,” says Peter Thiel, a co-founder of PayPal, a payments system, and the first outside investor in Facebook. On Wall Street the five largest banks have increased their share of America’s banking assets from 25% in 2000 to 45% today. + +The picture in other rich countries is more varied. Whereas in Britain and South Korea the scale of consolidation has been similar to that in America, in continental Europe it has been much less pronounced. In a list of the world’s top 100 companies by market capitalisation compiled by PwC, an accountancy firm, the number of continental European firms has declined from 19 in 2009 to 17 now. Still, in most of the world some consolidation is the rule. The OECD, a club of mostly rich countries, notes that firms with more than 250 employees account for the biggest share of value added in every country it monitors. + +There are good reasons for thinking that the superstar effect will gather strength. Big and powerful companies force their rivals to bulk up in order to compete with them. They also oblige large numbers of lawyers, consultancies and other professional-services firms to become global to supply their needs. Digitisation reinforces the trend because digital companies can exploit network effects and operate across borders. + +James Manyika, of the McKinsey Global Institute, points out that today’s superstar companies are big in different ways from their predecessors. In the old days companies with large revenues and global footprints almost always had lots of assets and employees. Some superstar companies, such as Walmart and Exxon, still do. But digital companies with huge market valuations and market shares typically have few assets. In 1990 the top three carmakers in Detroit between them had nominal revenues of $250 billion, a market capitalisation of $36 billion and 1.2m employees. In 2014 the top three companies in Silicon Valley had revenues of $247 billion and a market capitalisation of over $1 trillion but just 137,000 employees. + + + +Yet even “old” big companies employ far fewer people than they used to. Exxon, the world’s most successful oil company, has cut back its workforce from 150,000 in the 1960s to less than half that today, despite having merged with a giant rival, Mobil. At the same time “new” big companies are becoming more like the corporations of yore. High-tech companies often give senior jobs to former Washington insiders and employ armies of lobbyists. Many modern superstar companies park their money in offshore hideaways and devote considerable efforts to keeping down their tax bills. Superstar companies tend to excel at everything they do—including squeezing as much as they can out of government while paying the lowest possible taxes. + +This special report will explain why the age of entrepreneurialism, ushered in by Britain’s Margaret Thatcher and America’s Ronald Reagan, is giving way to an age of corporate consolidation even as most companies are becoming more virtual. It will examine the forces behind the rise of the superstars and reveal their managerial secrets. And it will attempt to answer the question that Roosevelt raised in Osawatomie: are such corporate giants a cause for concern or for celebration? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21707048-small-group-giant-companiessome-old-some-neware-once-again-dominating-global/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +A history lesson + +What goes around + +America’s corporate world alternates between competition and consolidation + +Sep 17th 2016 | From the print edition + + + +ALFRED CHANDLER, AMERICA’S leading business historian, once summed up the history of American business after the civil war as “ten years of competition and 90 years of oligopoly”. American business history has been defined by periods of intense competition followed by long periods of consolidation. The digital revolution is likely to repeat that pattern, but on a global scale. + +The decades after the civil war saw bursts of intense competition in America’s two leading industries, oil refining and steelmaking, in which the robber barons quickly built up giant companies. Economies of scale and technological innovation caused productivity to rise and prices to fall, allowing the robber barons to present consolidation as the friend of the common man. + +The same thing happened in retailing and consumer products as a handful of companies established a lead over less agile competitors. Sears, Roebuck and Company set up a giant mail-order operation in Chicago that crushed smaller rivals, as did Procter & Gamble, Heinz, Philip Morris, Ford and General Motors as they worked to become national brands. The first Dow Jones Industrial Average index in 1896 included 12 leaders of the emerging industrial economy. Ten years later two-thirds of the names had changed. Another 20 years on, the list had begun to settle down and the same names appeared again and again. + +J.P. Morgan, America’s most powerful banker, increased the pace of consolidation by buying Carnegie Steel from Andrew Carnegie, combining it with dozens of smaller steel firms he already owned and selling the resulting company to the public at a valuation of $1.4 billion, a vast sum at the time. Naomi Lamoreaux, of Yale University, studied 93 such consolidations between 1895 and 1904 in detail and found that 72 of them created companies that controlled at least 40% of their industries, with 42 controlling at least 70%. These 42 included General Electric and American Tobacco, each of which dominated 90% of its respective market. The people who controlled these giant companies accumulated money and power on an unprecedented scale. The Senate was so full of them and their placemen that it was known as “the millionaires’ club”. + +Americans grew uneasy as their faith in business clashed with their faith in equality of opportunity. The Sherman Act of 1890 tried to tackle monopolies. The 16th amendment to the American constitution introduced an income tax and the 17th decreed that US senators should be elected by popular vote, not by local legislatures. + +But the backlash remained relatively mild. Periods of anti-corporate sentiment such as the 1910s and 1930s were invariably followed by periods of pro-corporate policies such as the 1920s and 1950s. And whichever way the wind blew, big companies showed a genius for turning federal regulations into barriers to entry. By 1930 most big companies were run by professional managers and owned by small shareholders. In the 1950s the giant corporations formed half a century earlier consolidated their position. Every industry was dominated by a small group of companies, such as Ford, General Motors and Chrysler in cars and General Electric and Westinghouse in electrical goods, all of which had a close relationship with government. In the 1980s deregulation and globalisation helped unpick corporate America. But the digital revolution seems likely to bring another about-turn. + +Like the robber barons, the captains of new technology are replacing a freewheeling culture with the rule of a handful of corporations. They dominate a growing share of their respective industries. Google controls 69% of the world’s search activity; Google and Apple between them provide the operating systems of 90% of smartphones. They both grab market share by cutting prices and eliminating competitors, often buying them. + +Tech titans such as Mark Zuckerberg, Sergey Brin and Larry Page are expanding into more and more industries as technology transforms everything that it touches. Just as General Electric diversified into everything electrical, so Google is diversifying into everything to do with information. + +Yet there are also striking differences between the big companies of yesterday and today. Today’s giants have fewer assets and fewer roots in local society. They are also much more global. In the second Industrial Revolution politicians used the power of national governments to tame their corporations. Taming highly agile global corporations is much more difficult. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21707051-americas-corporate-world-alternates-between-competition-and-consolidation-what-goes-around/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Driving forces + +Why giants thrive + +The power of technology, globalisation and regulation + +Sep 17th 2016 | From the print edition + + + +ACROSS NORTHERN CALIFORNIA the world’s best-known tech companies are engaged in a construction contest. Facebook got off to an early start with a building of 430,000 square feet (40,000 square metres) that looks like a giant warehouse. It is said to be the largest open-plan office building in the world. Google is hard at work on a new headquarters to replace its Googleplex: a collection of movable glass buildings that can expand or contract as business requires. Samsung and Uber, too, are in construction mode. But the most ambitious builder is Apple, which is spending $5 billion on something that looks like a giant spaceship. + +Silicon Valley is a very different place from what it was in the 1990s. Back then it was seen as the breeding ground of a new kind of capitalism—open-ended and freewheeling—and a new kind of business organisation—small, nimble and fluid. Companies popped up to solve specific problems and then disappeared. Nomadic professionals hopped from one company to another, knowing that their value lay in their skills rather than their willingness to wear the company collar. Today the valley has been thoroughly corporatised: a handful of winner-takes-most companies have taken over the world’s most vibrant innovation centre, while the region’s (admittedly numerous) startups compete to provide the big league with services or, if they are lucky, with their next acquisition. + +Most of the new tech firms are “platforms” that connect different groups of people + +Tech aristocracy + +The most successful tech companies have achieved massive scale in just a couple of decades. Google processes 4 billion searches a day. The number of people who go on Facebook every month is much larger than the population of China. These companies have translated vast scale into market dominance and soaring revenues. The infrastructure of the information economy is increasingly controlled by a handful of companies: Amazon has almost one-third of the market for cloud computing, and its cloud-services division has grown by more than half over the past year. The world’s three most valuable companies at present are all tech companies, and Amazon and Facebook come in at number six and seven (see chart). + + + +In the industrial era companies used economies of scale to become giants: the more a steel company could produce, the more it could cut its unit costs, driving its smaller competitors to the wall, and the more money it had to invest in research, marketing and distribution. The same applied to any other physical product. Tech companies have reinvented this principle for the virtual age by shifting their attention from the supply side (production efficiencies) to the demand side (network effects). Just as the old industrial giants used technological innovations to reduce their costs, the new tech giants use technological innovations to expand their networks. + +Powerful connections + +Network effects have always been powerful engines of growth: not only is success self-reinforcing but it follows the law of increasing returns. Some network companies even pay people to become customers in order to achieve scale. And those effects become even more powerful if networks connect with each other to produce multi-sided versions. Most of the new tech firms are “platforms” that connect different groups of people and allow them to engage in mutually beneficial exchanges. Older tech companies too are putting increasing emphasis on the platform side of their business. Everyone wants to sit at the heart of a web of connected users and devices that are constantly opening up further opportunities for growth. + +In some ways these tech giants look not so much like overgrown startups but more like traditional corporations. The open-plan offices and informal dress codes are still there, but their spirit is changing. They are investing more in traditional corporate functions such as sales and branding. This corporatisation is one reason for the companies’ success. Startups are increasingly willing to sell themselves to established companies, which can provide everything from legal services to quality control. Whereas most startups are happy to get things right 90% of the time, customers demand perfect products. + +The most powerful force behind the rise of the new giants is technology. But two other forces are pushing in the same direction: globalisation and regulation. + +The biggest beneficiaries from the liberalisation of the global economy from 1980 onwards have been large multinational companies. An annual list of the world’s top multinationals produced by the United Nations Conference on Trade and Development (UNCTAD) shows that, judged by measures such as sales and employment, such companies have all become substantially bigger since the mid-1990s. They have also become more and more complex. UNCTAD points out that the top 100 multinationals have an average of 20 holding companies each, often domiciled in low-tax jurisdictions, and more than 500 affiliates, operating in more than 50 countries. + +Big companies have reaped enormous efficiencies by creating supply chains that stretch around the world and involve hundreds of partners, ranging from wholly owned subsidiaries to outside contractors. Companies are chopping their businesses into ever smaller chunks and placing those chunks in the most cost-effective locations. They are also forming ever more complicated alliances. Pankaj Ghemawat, of the Stern School of Business at New York University and the IESE Business School at Navarra, Spain, calculates that America’s top 1,000 public companies now derive 40% of their revenue from alliances, compared with just 1% in 1980. + +Multinationals are increasingly focusing on building up knowledge networks as well as production networks. Strategy&, the consulting arm of PwC, an accountancy giant, produces an annual survey of the world’s 1,000 most innovative companies. It found that last year those that deployed 60% or more of their R&D spending abroad enjoyed significantly higher operating margins and return on assets, as well as faster growth in operating income, than their more domestically oriented competitors. Global companies can buy more innovation for their money by doing their R&D in cheaper places. They can also tap into local innovation resources. General Electric develops more than a quarter of its new health-care products in India to take advantage of the country’s frugal innovation. Its revenues outside America have risen from $4.8 billion in 1980 to $65 billion in 2015. + +Such companies are starting to be challenged by non-Western competitors. Fortune magazine’s annual list of the world’s 500 biggest companies now features 156 emerging-market firms, compared with 18 in 1995. McKinsey predicts that by 2025 some 45% of the Fortune Global 500 will be based in emerging economies, which are now producing world-class companies with huge domestic markets and a determination to invest in innovation. China’s Tencent rolled out its mobile text and messaging service, WeChat, to 700m customers in just a few years. At China’s Huawei, which makes networking and telecommunications equipment, half the staff of 150,000 works in the research department. If Western companies are to survive against such competition, they have to become even bigger and more innovative. + +The growth in regulation has also played into the hands of powerful incumbents. The collapse of Enron in 2001 arguably marked the end of the age of deregulation, which began in the late 1970s, and the beginning of re-regulation. The financial crisis of 2008 served to reinforce that trend. The 2002 Sarbanes-Oxley legislation that followed Enron’s demise the previous year reshaped general corporate governance; the 2010 Affordable Care act re-engineered the health-care industry, which accounts for nearly a fifth of the American economy; and in the same year the Dodd-Frank act rejigged the financial-services industry. + +Regulatory bodies have got bigger. Between 1995 and 2016 the budget of America’s Securities and Exchange Commission increased from $300m to $1.6 billion. They have also become much more active. America’s Department of Justice has used the Foreign Corrupt Practices act of 1977 to challenge companies that have engaged in questionable behaviour abroad. The average cost of a resolution under this act rose from $7.2m in 2005 to $157m in 2014. + +Regulation inevitably imposes a disproportionate burden on smaller companies because compliance has a high fixed cost. Nicole and Mark Crain, of Lafayette College, calculate that the cost per employee of federal regulatory compliance is $10,585 for businesses with 19 or fewer employees but only $7,755 for companies with 500 or more. Younger companies also suffer more from regulation because they have less experience of dealing with it. Sarbanes-Oxley imposed a particularly heavy burden on smaller public companies. The share of non-executive directors’ pay at smaller firms increased from $5.91 out of every $1,000 in sales before the legislation to $9.76 afterwards. The JOBS act of 2012 exempted small businesses from some of the more onerous requirements of the legislation, but the number of startups and IPOs in America remains at disappointingly low levels. + +Too much to read + +The complexity of the American system also serves to penalise small firms. The country’s tax code runs to more than 3.4m words. The Dodd-Frank bill was 2,319 pages long. Big organisations can afford to employ experts who can work their way through these mountains of legislation; indeed, Dodd-Frank was quickly dubbed the “Lawyers’ and Consultants’ Full-Employment act”. General Electric has 900 people working in its tax division. In 2010 it paid hardly any tax. Smaller companies have to spend money on outside lawyers and constantly worry about falling foul of one of the Inland Revenue Service’s often contradictory rules. + +Both Sarbanes-Oxley and Dodd-Frank set the tone for legislation in Britain and mainland Europe. China has also become more zealous about regulation, partly in order to pursue nationalist and political goals and partly because of worries about conflicts of interest. But different regions have adopted different approaches to regulation, exacerbating the problem of complexity. As a result, in many markets all but the most sophisticated companies can find it impossible to do business. + +An additional problem that companies have to face today is disappointing economic growth, particularly in the West, at a time of widespread technological disruption. This paradox is easier for big companies to deal with. Martin Reeves, of BCG, a consultancy, argues that such companies are good at “buffering”. They have enough spare resources to absorb external shocks or ride out temporary downturns, and they can move operations from one part of the world to another if the political climate turns against them. Mr Reeves points out that the mortality rate for all American listed companies over a five-year period is as high as 36%, but for companies worth more than $1 billion it is only half that. + +Slow growth also plays into the hands of incumbents. Joseph Gruber and Steven Kamin, two economists at the Federal Reserve, find that big companies are increasingly saving more than they spend. Apple, for instance, holds about a quarter of its market capitalisation in cash. These huge cash piles allow leading companies to consolidate their position by buying startups and hoovering up the most talented employees. + +The superstar companies, then, seem to have all the advantages. But two arguments are being advanced to suggest that their success may not last. One is that the forces speeding up creation, which currently work in their favour, could also speed up destruction. The other, more fundamental one is that these companies are merely holdouts against a general trend towards a more fluid economy. The next article will consider these objections. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21707049-power-technology-globalisation-and-regulation-why-giants-thrive/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Misconceptions + +The new Methuselahs + +Superstar companies are far more resilient than critics give them credit for + +Sep 17th 2016 | From the print edition + + + +IN SEPTEMBER 2009 Fast Company magazine published a long article entitled “Nokia rocks the world”. The Finnish company was the world’s biggest mobile-phone maker, accounting for 40% of the global market and serving 1.1 billion users in 150 countries, the article pointed out. It had big plans to expand into other areas such as digital transactions, music and entertainment. “We will quickly become the world’s biggest entertainment media network,” a Nokia vice-president told the magazine. + +It did not quite work out that way. Apple was already beginning to eat into Nokia’s market with its smartphones. Nokia’s digital dreams came to nothing. The company has become a shadow of its former self. Having sold its mobile-phone business to Microsoft, it now makes telecoms network equipment. + +There are plenty of examples of corporate heroes becoming zeros: think of BlackBerry, Blockbuster, Borders and Barings, to name just four that begin with a “b”. McKinsey notes that the average company’s tenure on the S&P 500 list has fallen from 61 years in 1958 to just 18 in 2011, and predicts that 75% of current S&P 500 companies will have disappeared by 2027. Ram Charan, a consultant, argues that the balance of power has shifted from defenders to attackers. + +Incumbents have always had a tendency to grow fat and complacent. In an era of technological disruption, that can be lethal. New technology allows companies to come from nowhere (as Nokia once did) and turn entire markets upside down. Challengers can achieve scale faster than ever before. According to Bain, a consultancy, successful new companies reach Fortune 500 scale more than twice as fast as they did two decades ago. They can also take on incumbents in completely new ways: Airbnb is competing with the big hotel chains without buying a single hotel. + +Next in line for disruption, some say, are financial services and the car industry. Anthony Jenkins, a former chief executive of Barclays, a bank, worries that banking is about to experience an “Uber moment”. Elon Musk, a founder of Tesla Motors, hopes to dismember the car industry (as well as colonise Mars). + +It is perfectly possible that the consolidation described so far in this special report will prove temporary. But two things argue against it. First, a high degree of churn is compatible with winner-takes-most markets. Nokia and Motorola have been replaced by even bigger companies, not dozens of small ones. Venture capitalists are betting on continued consolidation, increasingly focusing on a handful of big companies such as Tesla. Sand Hill Road, the home of Silicon Valley’s venture capitalists, echoes with talk of “decacorns” and “hyperscaling”. + +Second, today’s tech giants have a good chance of making it into old age. They have built a formidable array of defences against their rivals. Most obviously, they are making products that complement each other. Apple’s customers usually buy an entire suite of its gadgets because they are designed to work together. The tech giants are also continuously buying up smaller companies. In 2012 Facebook acquired Instagram for $1 billion, which works out at $30 for each of the service’s 33m users. In 2014 Facebook bought WhatsApp for $22 billion, or $49 for each of the 450m users. This year Microsoft spent $26.2 billion on LinkedIn, or $60.5 for each of the 433m users. Companies that a decade ago might have gone public, such as Nest, a company that makes remote-control gadgets for the home, and Waze, a mapping service, are now being gobbled up by established giants. + +Buying up smaller companies is usually part of a wider strategy: investing in their proprietary technologies. The tech giants climbed to the top of the pile because they were significantly better than their rivals at what they did. Amazon, for example, offered a choice of millions of books when local booksellers had just thousands. Their success provided them with piles of cash that they could invest in improving their own ideas and protecting them with armies of lawyers, and buying other people’s ideas in the market. Google purchased Motorola Mobility for $12.5 billion in order to acquire the company’s portfolio of patents. These tech giants relentlessly extend their businesses into adjacent areas: thus Amazon expanded from books and retailing generally into internet servers, and Google is expanding into everything to do with information. + +In praise of asymmetries + +Derek Kennedy, of BCG, a consultancy, says that one of the tech companies’ most powerful defences in the long term will be their ability to combine “asymmetries of information” with “asymmetries of execution”. These companies have unmatched stores of information, as well as an unmatched ability to use that information to reshape their existing businesses or create new ones. Not only do they know what you want before you know yourself but they can also deliver it to you. Companies can use these combined asymmetries to shift into new areas. + +The rise of the internet of things (IoT) will give a powerful push to consolidation. Gartner, a research firm, predicts that the number of products connected to the internet will increase from 6.4 billion today to 21 billion by 2020 as companies discover the power of software. The process has already begun. Coca-Cola uses microchips to track the whereabouts of its bottles. Tesla improved its cars’ uphill starts by transmitting a software update. General Electric thinks that the IoT will be the biggest revolution of the coming decades. + +The increasing convergence of hardware and software lets companies establish much closer relations with their customers. They can gather up-to-the-minute information on the response to their products and use it to make improvements. They can tailor products to the needs of individual customers. Sonos, a maker of music systems, produces speakers that can tune themselves to the acoustic qualities of the room they are placed in. They can sort out problems before they arise. Diebold monitors its cash machines for signs of trouble, either fixing problems remotely by means of a software patch or sending a technician. They can also branch out into delivering services. John Deere, a maker of heavy machinery, is building sensors for tractors that can receive data on weather and soil conditions, enabling farmers to make more informed decisions on the use of their land. + +Older companies such as GE and Caterpillar may well have a fight on their hands with born-digital companies such as Google and Amazon that try to extend their empires into the physical world. But the overall effect will be consolidation. Only companies that can afford to make substantial investments in both the physical and virtual worlds will prosper. And once companies have established strong relationships with their customers, they will have a good chance of keeping them regardless of price. The more that things are connected to each other and to the companies in charge of the networks that control them, the harder it will be for insurgents to get a foothold in the market. + +A symbiotic relationship + +Most management gurus have a Manichean view of the relationship between big companies and startups: the more you have of one, the less you have of the other. They also add an evolutionary twist: the more advanced a society becomes, the better small organisations will do in relation to big ones. Gerald Davis, of the University of Michigan’s Ross School of Business, has just published a new book, “The Vanishing American Corporation”, in which he points out that the classic argument for the existence of corporations—that the cost of doing things through them is lower than through the market—has lost its force because advances in technology (of the sort that Silicon Valley has pioneered) have slashed the cost of doing things through the market. + +Likewise, he says, limited-liability companies replaced other corporate forms because firms in capital-intensive industries such as steel needed to raise a lot of capital, but software companies typically do not need to raise much money. Mr Davis argues that in future companies are likely to become much more fluid: entrepreneurs can raise money from Kickstarter, rent employees from Upwork, computer power from Amazon cloud and tools from TechShop, register their companies in Liberia and still reach a global audience thanks to cloud computing. There are also ever more ways of organising co-operation; Wikipedia has already produced the world’s biggest encyclopaedia by using volunteers. “The Web and the smartphone allow pervasive markets and spontaneous collaborations at minimal cost. They make institutions like the modern corporation increasingly unsustainable,” he explains. + + + +RocketSpace, which makes its living by looking after startups, at first sight looks like an example of what Mr Davis had in mind. Its basic business is to sell space in its nine floors of offices in the heart of San Francisco, though it does a lot more than that. Starting a company can be lonely as well as gruelling, and working in RocketSpace provides you with an instant network and access to good advice. The company has been so successful that it turns away 90% of companies that apply for accommodation. As a result, being admitted provides instant cachet (former occupants include Uber and Spotify). + +But look again, and a more complicated picture emerges. RocketSpace is increasingly acting as a middleman between startups and big companies. The IPO market has shrunk into insignificance; about 90% of today’s successful startups “exit” by selling themselves to an established company. RocketSpace makes that easier by introducing them to the right partners. Big companies outside the tech industry, in turn, benefit from RocketSpace helping them understand the tech world. + +The story of RocketSpace suggests that big and small organisations have a symbiotic relationship. Duncan Logan, RocketSpace’s founder, argues that corporations are, in effect, outsourcing some of their tech R&D to the startup world. This is true not only of non-tech companies that do not understand the tech world but also of big tech companies that do some of their R&D in-house but leave some of it to the market to get the best of both worlds. Big companies have much to gain from contracting out their R&D to startups. They can make lots of different bets without involving their corporate bureaucracies. But startups also have a lot to gain by selling themselves to an established company that can provide stability, reliability and predictability, all of which can be hard to come by in the tech world. Big companies have phalanxes of lawyers to protect intellectual property, bureaucrats to make sure that the t’s are crossed and the i’s dotted, and slick marketing machines. + +Mr Davis is right that it is getting easier to put together a company from a variety of components, but he is wrong to conclude that big companies are in retreat. The “virtualisation” of some sectors of the economy and the “corporatisation” of others are going hand in hand. Superstar companies try to keep their costs under control by contracting out any functions they regard as non-core. Startups try to reach global markets with the help of platforms such as eBay and Alibaba. The upshot is the development of a multi-tiered economy. The commanding heights of the global economy may be dominated by familiar companies: a premier league of superstars that constantly jostle to avoid relegation, and a first division of less stellar performers that struggle to be promoted. But the lower rungs are studded with large numbers of Mr Davis’s pop-up companies. + +If corporatisation and virtualisation can coexist, two of the basic tenets of modern management theory need to be rethought. The first is that corporate man (and woman) is a thing of the past, and that the only way to succeed in business is to turn yourself into an entrepreneur. The reality is more nuanced. Big companies are certainly cutting back on long-term employees. Dan Kaminsky, chief scientist and a co-founder of White Ops, one of RocketSpace’s startups, recalls that, in a previous corporate job, he filled out a form in which a “mid-career worker” was defined as someone who had been in the same post for two or three years. And employment patterns are becoming much more varied. Lawrence Katz, of Harvard, and Alan Krueger, of Princeton, calculate that the proportion of American workers engaged in “alternative work arrangements” (working as freelancers, temporary contractors and the like) increased from 10.1% in 2005 to 15.8% in late 2015. + +But big companies nevertheless preserve a core of employees who help maintain a long-term institutional memory and a distinctive culture. Strategy& has been collecting data on the chief executives of the world’s top 2,500 public companies for more than 15 years. The consultancy’s Per-Ola Karlsson notes that more than 80% of these companies’ CEOs are internal appointments. Almost two-thirds of them have spent 12 years or more climbing up the corporate hierarchy. They are drawn from a large cadre of long-term employees who dominate the upper ranks of the organisation and usually outperform external recruits because they have far more company-specific knowledge. + +Conversely, entrepreneurship is not necessarily a road to success. Reid Hoffman, the co-founder of LinkedIn, a social-networking company, and author of “The Start-Up of You”, may have made $2.8 billion by selling his own startup to Microsoft, but the coffee shops of San Francisco are full of middle-aged hopefuls scratching a living without a pension. + +The second idea that needs overhauling is the transaction-cost theory of the firm formulated by Ronald Coase 80 years ago: that firms are worth having only if they can do things more cheaply than the market can. Since firms continue to occupy a central place in the modern economy despite the enormous advances of the market in recent years, there must be other factors at work. Companies are not just a way of keeping transaction costs to a minimum. They are proof that when people are trying to solve common problems, they are wiser collectively than they are individually. Such collective wisdom can accumulate over time and be embodied in corporate traditions that cannot be bought in the market. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21707050-superstar-companies-are-far-more-resilient-critics-give-them-credit-new/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Key attributes + +The alphabet of success + +Superstars need a dazzling range of qualities + +Sep 17th 2016 | From the print edition + + + +GENERAL ELECTRIC, THE product of an alliance between Thomas Edison, America’s greatest inventor, and J.P. Morgan, its greatest banker, was the technology superstar of the early 20th century. Edison’s patents have long since expired and electricity has become a commodity, but GE remains a commercial empire, the only intact survivor of the companies that made up the original Dow Jones index. GE employs 330,000 people in 180 countries, owns $493 billion-worth of assets and earned $117 billion in 2015. It has survived where other technology stocks have faded because it has fully mastered the art of management. Its slogan, “Imagination at work”, could just as easily be “Management at work”. + +Every superstar company is a superstar in its own way. Great companies have distinctive cultures and traditions that are all their own and inhabit well-defined market niches. But they also share a set of common characteristics. The first is an obsession with talent. The only way to remain on top for any length of time is to hire the right people and turn them into loyal corporate warriors. GE spends a billion dollars a year on training. Its success has been such that between 2003 and 2011 about 40 GE vice-presidents have become CEOs of other major companies. Google, which is doing for information what GE once did for electricity, is similarly obsessed with training. + +Superstar companies tend to be unashamedly elitist. GE fast-tracks its most promising employees. Hindustan Unilever compiles a list of people who show innate leadership qualities (and refers to them throughout their careers as “listers”). Laszlo Bock, Google’s head of human resources, argues that a top-notch engineer “is worth 300 times more than an average engineer”. + +Such companies keep a watchful eye on their high-flyers throughout their careers. Jeff Immelt, GE’s boss, prides himself on his detailed knowledge of the 600 people at the top of his company, including their family circumstances and personal ambitions. Hindustan Unilever’s managers constantly test potential leaders by moving them from one division to another and subjecting them to “stretch assignments”. Procter & Gamble talks about “accelerator experiences” and “crucible roles”. + +The second obsession superstar firms share is with investing in their core skills. Corning, the company that made the glass for Edison’s first light bulb, started life producing the raw material for bottles and windows. It now manufactures the glass used in the majority of the world’s electronic devices. Its fibre optics carry information around the world. Its “Gorilla” glass helps prevent your iPhone from shattering when you drop it, and is starting to be used in cars. Next will be huge glass screens that cover entire walls, flexible ones that can be rolled up like scrolls and windows that operate like giant sunglasses for the office. The company’s R&D centre in upstate New York resembles a university campus. Its best scientists have the equivalent of academic tenure (some stay around into their 90s), publishing academic papers and notching up scientific breakthroughs. + +The same obsession can be found in all successful tech companies. Amazon sacrificed dividends for years in order to establish its mastery of online shopping. Today it is taking an equally long-term view of the computer cloud by pouring money into servers. Google is putting the riches generated by its search engines into more adventurous technologies. BMW is investing in new materials such as carbon fibre and enhancements such as parking assistance. + +Remaining focused on the long term is difficult in a world where public companies are answerable to the stockmarket every quarter, and it turns out that a remarkable number of superstar companies have dominant owners who can resist the pressure for short-term results. According to one study, more than one in ten of tech companies that went to the market between January 2010 and March 2012 had dual voting structures giving their founders extra rights. Both Facebook and Google explicitly justify such structures by the need to pursue long-term projects. + +Family companies frequently punch above their weight because their dominant owners are free to think about the long term. Companies in emerging countries typically put more emphasis on long-term growth than on short-term results. The best widely held companies have developed formidable skills at managing the financial markets and making the case for long-term goals. + +But investors cannot be expected to be patient for ever; they need a mechanism to tell them when they are pouring money down the drain. Striking the right balance between the long and the short term is the first on a long list of balancing acts that superstar companies have to perform in order to earn their laurels. + +All of them set themselves extravagant goals. Coca-Cola does not just want to sell a lot of fizzy drinks, it wants to put a can of Coke within easy reach of everyone on the planet. And when they have achieved those goals, they move the goalposts. Google has expanded its vision from “just” wanting to organise the world’s information to wanting to use that information to reinvent transport, beside a host of other things. Amazon, having become the world’s biggest bookstore, now wants to be the world’s biggest everything store. + +At the same time they all pay endless attention to detail. When Steve Jobs was in charge of Apple, he agonised over every tiny detail, down to the exact shade of grey to be used for the signs in its stores’ lavatories. Ingvar Kamprad, the founder of IKEA, a homeware giant, continually toured his stores until well into his 80s (he is now 90). Superstar companies are particularly good at establishing a link between their strategic vision and their everyday operations. Disney, for instance, is utterly committed to projecting wholesomeness. + +Great companies combine a strong sense of identity with a fierce hostility to groupthink. Andy Grove, a CEO of Intel, advised CEOs to balance the sycophants they inevitably attract by cultivating “Cassandras” who are “quick to recognise impending change and cry out an early warning”. These Cassandras are often middle managers who “usually know more about upcoming change than the senior management because they spend so much time ‘outdoors’ where the winds of the real world blow in their faces”. GE insists that its high-flying executives, most of whom are engineers by training, take courses in painting in order to “loosen them up” a little. + +Such companies also regularly reassess their investment decisions in the light of changing markets. McKinsey measured the agility of more than 1,600 companies by looking at how much of their capital they reallocated every year, and found a strong positive correlation between the companies’ willingness to move their capital around and the total return to shareholders. + +How to stay lithe + +Superstars do everything they can to remain agile despite their size. They fight a constant war against bureaucratic bloat, unnecessary complexity and overlong meetings. They often locate themselves in the latest tech hotspot in order to absorb its ideas and energy. In 2014 Pfizer opened an R&D facility with 1,000 employees near MIT in Cambridge, Massachusetts. Apple and Intel have set up R&D labs in Carnegie Mellon’s Collaborative Innovation Centre in Pittsburgh. Every car company worth its salt has opened an office in Silicon Valley. They also form close relationships with startups. In 2012 GE launched GE Garages, a lab incubator, to provide startups with access to its experts and to equipment such as 3D printers and laser cutters. + +Successful big companies strike a balance between global scale and local roots to become “rooted cosmopolitans”. LG, a South Korean conglomerate, can tailor its products for specific markets: microwave ovens destined for east India, for example, have an autocook option for Bengali fish curry. Kraft has re-engineered the Oreo biscuit for Chinese taste buds, using less sugar and more familiar flavours such as green tea. + +Such companies also understand that they need to keep undergoing radical changes in order to survive, as companies such as Google and Facebook have done on several occasions. They are even willing to disrupt their own core businesses before someone else does. Netflix disrupted its video-delivery business by embracing streaming. China’s Tencent disrupted its own social-media business by introducing WeChat, a platform that allows users to book taxis, order food and so on. Again, GE was a trailblazer. In the 1980s and 1990s its then boss, Jack Welch, decreed that it should be among the world’s top three in all the businesses it was involved in, or get out. Now Mr Immelt is restructuring the company for the digital age, selling off GE appliances, buying France’s Alstom, investing heavily in the internet of things and moving the company’s headquarters to Boston to be closer to the heart of high-tech. + +Thanks to all these changes, even the classic companies are becoming more asset- and employment-light. In 1962 Exxon, one of the world’s most durable and financially successful corporations, had 150,000 employees; today it has half as many. As for the new breed of tech firms, they typically employ as few people as they possibly can. + +But for all their virtues, superstar companies, both old and new, have their dark sides. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21707053-superstars-need-dazzling-range-qualities-alphabet-success/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Joining the ranks + +Do you blitzscale? + +How superstars are made + +Sep 17th 2016 | From the print edition + +SUPERSTAR COMPANIES CAN create powerful barriers to entry. Their success allows them to generate huge piles of cash, and that cash allows them to attract talent and buy up competitors. So how do aspiring companies break into the magic circle? The answer depends very much on the industry. + +High-tech companies rely on discovering niche markets and scaling up as fast as possible. Peter Thiel, the co-founder of PayPal, points out that almost all successful startups begin by dominating a niche market. Facebook dominated social networking at Harvard University before branching out to other universities and then to social networking in general. Reid Hoffman, who at one time was PayPal’s COO, has coined the phrase “blitzscaling” to describe the road to success. The term refers to the Blitzkrieg (lightning war) that Germany pioneered in the second world war. Software allows companies to advance rapidly because the marginal costs of adding new customers is more or less zero. Globalisation has a similar effect because it lowers the barriers to entry across countries. Facebook’s old motto, “Move fast and break things”, captures the spirit of the Blitzkrieg perfectly. + +Blitzscaling is necessary for both offensive and defensive reasons. Offensively, software businesses become valuable only once they have acquired lots of customers. Markets like eBay are not useful until they have both buyers and sellers. Defensively, businesses have to scale faster than their customers because the first to reach those customers often end up owning them. + +Blitzscaling initially burns through a lot of cash quickly without producing much revenue. To attract people to a firm with an uncertain future, you have to generate a buzz in the tech world and offer your staff generous stock options. You also have to subordinate everything to immediate problem-solving. Mr Hoffman says that every blitzscaling organisation he has worked in seemed close to collapsing in chaos. “The thing that keeps these companies together—whether it’s PayPal, Google, eBay, Facebook, LinkedIn or Twitter—is the sense of excitement about what’s happening and the vision of a great future.” + +The dangers of blitzscaling will become much clearer as technology transforms wider areas of the economy. Theranos, a company that claimed to have invented a new way of testing blood, expanded at breakneck speed before the Wall Street Journal revealed that its tests were unreliable. + +There are some echoes of this strategy in the emerging world. Emerging-market companies establish a fortress in their domestic markets before invading foreign markets. Grupo Bimbo, which started out as Mexico’s biggest baked-goods company, has since become the biggest baker in the United States as well, through a combination of exporting its goods and buying bits of famous American brands such as Weston Foods and Sara Lee. Such emerging-market champions frequently advance at great speed, often buying in more sophisticated skills like branding and R&D by acquiring Western companies. For example, Lenovo, a Chinese computer company, bought Microsoft’s ThinkPad division in order to break into foreign markets. + +Some of the brightest rising stars are emerging-market tech companies. China’s Alibaba, an e-commerce firm, raised $25 billion when it went public on the New York Stock Exchange in 2014, the largest IPO in history. Didi Chuxing, a Chinese taxi service, this summer merged with Uber, which took a 20% stake in the combined company, valued at $35 billion, after a prolonged battle. + +Outside the tech industry and away from emerging markets, rising stars often sparkle by consolidating existing markets and squeezing out costs. A prime example is 3G Capital, a Brazilian-rooted company that specialises in taking over mature companies and bringing in its own managers to streamline them. It forces firms in its portfolio to justify their spending afresh every year, consolidate their product lines and trim excess brands. 3G is exceptionally stingy with its managers, making them share rooms on business trips, but also motivates them by giving them stock options. Having started off small in Brazil, it has taken over a succession of beer giants, including Anheuser Busch and SABMiller. Its acquisitions have given it control of a third of the world’s beer market and several large food companies, including Heinz, Burger King and Kraft. + +Some of the world’s most successful family companies practise a gentler version of consolidation, buying up smaller family companies to add scale but allowing them to keep their names and identities. The luxury and drinks sectors excel at this. LVMH, a French luxury-goods company, has acquired a succession of other family companies such as Bulgari, Dior, Krug and Dom Perignon, as has Estée Lauder with Tommy Hilfiger, Bumble and Bumble and Jo Malone. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21707052-how-superstars-are-made-do-you-blitzscale/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Downsides + +The dark arts + +Superstar companies are good at everything, including pushing the boundaries + +Sep 17th 2016 | From the print edition + + + +COMPANIES ARE BY nature competitive. That is mostly to be welcomed, but sometimes their competitive instincts play out in less welcome ways as they engage in some of the darker arts of management. The two most obvious ones are to pay as little tax as is legally possible, and to lobby governments and a variety of other bodies to gain an advantage over rivals. To a greater or lesser extent all companies do this. The big difference is that the superstar companies, being good at everything they do, are also much better than the rest at practising these dark arts and taking them mainstream. + +This raises three worries. The first is that they will keep getting better at them, applying the same creative excellence to rule-bending as they do to running their business in general. Second, superstars might use the combination of these and other skills to build up impregnable advantages, giving them growing monopoly power. Third, as their businesses become more mature, they may come to rely increasingly on those dark arts. + +Multinationals routinely use foreign direct investment (FDI) in order to reduce the amount of tax they have to pay. They create holding companies to keep their corporate assets in low-tax jurisdictions. These holding companies in turn put their subsidiaries in the most tax- and regulation-efficient jurisdictions, creating a constant cascade of ownership and control. The volume of money moving through such havens on the way to their final destination has risen sharply since 2000 and currently makes up about 30% of all FDI. In 2012 the British Virgin Islands were the world’s fifth-largest recipient of FDI, with an inflow of $72 billion. Britain, with an economy 3,000 times larger, had an inflow of only $46 billion. The Netherlands and Luxembourg also attracted big inflows, and there are many more such hubs. + + + +Superstar companies are naturally better at tax and regulation shopping than the rest, partly because of their size and partly because they can afford to employ the best managers and professional advisers. According to UNCTAD, the world’s 100 most globalised companies each have an average of 20 holding companies that in turn sit on top of a complicated chain of ownership, part-ownership and co-ownership. More than 40% of foreign affiliates have several national identities because they are co-owned by companies from different countries. The ownership structure of new high-tech multinationals is often particularly convoluted, often more so than that of low-tech companies that have been around for a century. + +Such companies have pioneered two highly successful techniques for exploiting differences in tax codes. One is transfer pricing, or charging one affiliate for using intangible assets (such as brands, intellectual property or business services) said to originate in another part of the company. The more that companies rely on knowledge rather than physical assets to make their money, the greater their opportunities for shifting profits from one jurisdiction to another. Apple established a cosy deal with Ireland that allowed it to channel most of its non-American sales and profits through special corporate entities, saving itself €13 billion in taxes over ten years, the European Commission has recently claimed. Google achieved an effective tax rate of 2.4% on its non-American profits in 2007-09 by routing profits to Bermuda, via Ireland and the Netherlands (known as a double Irish). + +Habit-forming products help companies squeeze even more money out of their customers + +Another technique is “inversion”, or buying foreign companies and shifting nominal headquarters to the junior partner in the acquisition. Pfizer, one of America’s leading pharmaceutical companies, contemplated engaging in a giant inversion by buying Allergan for $160 billion and moving its headquarters to Ireland, but retreated in the face of strong political pressure. + +Superstars are also devoting increasing resources to lobbying, an industry that is at its most advanced in America. Companies and their associations are easily America’s biggest lobbyists, accounting for over 70% of all expenditure on lobbying. And the biggest companies are pulling ever farther ahead of their smaller rivals in getting their voices heard. Lee Drutman, of New America, a think-tank, points to a paradox. The past 20 years have seen an enormous increase in lobbying, with more than 37,700 interest groups now saying they are active in the field, but a handful of organisations seem to dominate the conversation. They are having to spend ever more to retain their position. Back in 1998, the minimum an organisation had to shell out in order to be included among the top 100 spenders was $2.4m. By 2012 that sum had nearly doubled, to $4.4m. + +Friends in Washington + +Superstar firms will generally keep a dozen or more full-time registered lobbyists of their own on Capitol Hill, but also use a couple of dozen lobbying firms to be called upon as and when needed. This allows them to keep constant pressure on lawmakers to advance their cause, as well as to flood Congress with extra hired hands in the event of a crisis. + +Tech giants have been particularly successful in getting their voices heard. They were originally reluctant to play the lobbying game, but soon realised that was a mistake: Microsoft’s prolonged legal battle with the Department of Justice over whether its was abusing its dominant position in the software market, which was finally settled in 2001, persuaded the whole industry that it pays to have friends in Washington. Since then tech companies have turned into some of America’s most assiduous lobbyists and most enthusiastic employers of Washington insiders. Barack Obama’s former press secretary, Jay Carney, now works for Amazon and his former campaign manager, David Plouffe, has joined Uber. + +Investment in lobbying is paying bigger dividends than in the past as the federal government extends its power over economically sensitive areas such as health care and financial services. Lobbyists can earn their keep by influencing the direction of the debate. For example, back in 2003 the pharmaceutical industry pushed successfully for a revision of America’s Medicare health-insurance programme for older people. This included a new prescription-drug benefit but no measures to control the costs of that benefit through means-testing or bulk-buying. John Friedman, an economist at Brown University, estimated the resulting benefits to drugmakers at $242 billion over ten years, a healthy return on the $130m the industry spent on lobbying in the year the law was passed. + +The American government has also got into the habit of producing open-ended pieces of legislation such as the Dodd-Frank financial-reform bill, which ran to 2,319 pages. Again, lobbyists can earn their keep by writing bits of the legislation, as they clearly did with Dodd Frank, or by lobbying Congress over its interpretation. + +Companies are also becoming more ambitious in what they are trying to achieve. In the past they put most of their effort into heading off tax increases or regulatory changes that might damage them; today they are trying to boost their profits and shape future markets. In his book, “The Business of America is Lobbying”, New America’s Mr Drutman shows that companies are increasingly using lobbyists to set the terms of the debate by funding Washington’s innumerable talking-shops, then putting pressure on politicians and officials to ensure that the legislation works to their advantage. + +The same pattern is being repeated in the European Union. The Corporate Europe Observatory, an NGO, calculates that Brussels is home to at least 30,000 lobbyists, almost the same number as the staff employed by the European Commission. These official lobbyists are part of a large army of people who try to influence legislation and regulation for more than 500m European citizens. + +The revolving door + +Superstar companies are hiring the best lobbyists and employing the most prominent politicians. In July this year José Manuel Barroso, until recently president of the European Commission, joined Goldman Sachs, a bank, as the non-executive chairman of its international arm, replacing Peter Sutherland, a former EU trade commissioner. Mr Barroso’s appointment has caused widespread protests. Such high-profile recruits not only give big companies access to information about past policymaking, they allow them to influence serving politicians who would like to join the board of a big company when they retire. + +Superstar companies are also particularly good at getting inside their customers’ skin and shaping their habits. Great companies have excelled at doing this since the birth of mass advertising in the 1890s, but today’s superstars are using modern science to push advertising into areas that have not been tried before, raising difficult ethical questions about what “free choice” means in a capitalist economy. + +Many of the new tech giants are at heart advertising companies: they persuade customers to give away personal details (for instance, by allowing them to Google something or Facebook a friend without charge) and then selling that information, duly anonymised, to their clients. These internet services are not really free. Users are paying for them indirectly by allowing the companies that provide them to gather information about their online behaviour through cookies (small pieces of code) lodged in their computers. + +Professional data-miners use this information to build up detailed pictures of what people have bought in the past (“history-sniffing”), and how they have gone about it (“behaviour-sniffing”). They can use this information to draw people’s attention to products they might want to buy in the future or to bargains that are on offer. They are getting increasingly sophisticated about predicting users’ behaviour, working from hidden signals. For example, when people are depressed, they tend to post darker pictures online than when they are feeling cheerful. + +Tech companies take advantage of the fact that a large number of tech products are habit-forming. A typical user reportedly checks his smartphone at least 150 times a day. This is mainly because many tech products are interactive. In his book, “Hooked: How to Build a Habit-Forming Product”, Nir Eyal points out that services such as Facebook and Twitter are constantly being adjusted according to what users put into them and comments from their friends. Internet entrepreneurs devote a lot of thought to getting users hooked on their products, providing them with endless feedback (such as beeps and pings) in order to keep them coming back. Habit-forming products help companies weave their devices into their customers’ daily routines and squeeze even more money and information out of them. + +That pervasive influence is now being extended into new parts of the economy. Google is using its mastery of information to work on interactive “smart homes” that can be controlled from afar. It may not be long before the company starts suggesting what people need to put in their fridge and where they can get the best deal on their groceries. Amazon, meanwhile, is relentlessly extending its retail empire, drawing on its command of information and logistics. Apple and other companies are trying to anticipate what consumers might want before they know they want it, and then co-ordinate networks of app-makers to ensure that their devices arrive fully loaded with those apps. + +This has produced an extraordinary situation. Tech companies have persuaded their customers to carry devices in their pockets that can constantly nudge them in some direction or other. Seventy years ago Vance Packard wrote a bestseller called “The Hidden Persuaders” which revealed some of the sophisticated psychological techniques advertisers then used to persuade consumers to buy their stuff. Today billions of people voluntarily carry around their own private “hidden persuaders” that allow global behemoths to monitor their behaviour and influence their choices. “We know where you are,” says Eric Schmidt, the chairman of Alphabet, Google’s holding company. “We know where you’ve been. We can more or less know what you’re thinking about.” + +But increasing numbers of consumers are becoming disillusioned with big and powerful companies. That is generating a growing backlash. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21707055-superstar-companies-are-good-everything-including-pushing-boundaries-dark-arts/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Future policy + +A delicate balance + +How to keep the superstars on their toes without making them fall over + +Sep 17th 2016 | From the print edition + + + +ARTHUR SCHLESINGER, A historian, claimed that American history moves in 30-year cycles, with each period responding to the excesses of the previous one. The laissez-faire Gilded Age that ended around 1900 led to the progressive era, when government stepped in to regulate business and create a social safety net. That was followed by the laissez-faire roaring 20s, which in turn led to the New Deal and then the pro-business Eisenhower era, followed by the progressive 1960s and the laissez-faire Reagan era. Schlesinger’s theory of 30-year cycles doesn’t quite work: the roaring 20s, when President Calvin Coolidge pronounced that “the business of America is business”, interrupted a long cycle of pro-government progressivism. But his point about each era reacting to the excesses of the previous one is surely right. The long pro-business era that began under Ronald Reagan in the 1980s and continued under Bill Clinton in the 1990s is giving way to a much more anti-business mood. + +The Republican Party, the traditional party of business, now has a presidential candidate who fiercely rejects corporate America’s two most cherished policies, free trade and liberal immigration. “I am not going to let companies move to other countries, firing their employees along the way, without consequences,” Donald Trump warned in his acceptance speech for the presidential nomination in July. + +His Democratic opponent, Hillary Clinton, bruised by a powerful challenge from Bernie Sanders, has chastised big companies for “using their power to raise prices, limit choices for consumers, lower wages for workers and hold back competition from startups and small businesses”. The share of Americans who hold “very” or “mostly” favourable opinions of corporations has fallen from 73% in 1999 to 40% today, according to the Pew Research Centre. Surveys by Gallup of views on big business show less extreme swings, but point in the same direction (see chart). Over 70% of America’s population believes that the economy is rigged in favour of vested interests. + + + +Such growing hostility to business is in evidence across the rich world. Britain’s decision in June to leave the European Union was driven in part by popular discontent with big business, which had lobbied heavily to remain. Many continental Europeans are becoming ever more vocal in expressing their long-standing doubts about “Anglo-Saxon capitalism”. + +This backlash against big business is already having an impact on policymakers. The antitrust division of America’s Department of Justice says that under President Obama it has won 39 victories in merger cases—deals blocked by courts or abandoned in the face of government opposition—compared with 16 under George W. Bush. Those victories included a string of blockbuster deals such as Comcast’s proposed bid for Time Warner Cable and Halliburton’s planned takeover of Baker Hughes. The European Union has launched a succession of tough measures against Silicon Valley’s tech giants, such as asking Apple to stump up billions of euros in allegedly underpaid taxes in Europe, and allowing European news publishers to charge international platforms such as Google that show snippets of their stories. Britain’s new prime minister, Theresa May, has said that she may cap CEO pay and put workers on boards. Governments worldwide have started co-operating to curb the use of tax havens. + +This special report has shown that there are good reasons to worry about corporate consolidation. The age of entrepreneurialism that started in the early 1980s is giving way to a new age of corporatism. This has been particularly true in the world’s most advanced economy, America, and in the world’s most knowledge-intensive industries. Big companies have been getting bigger and putting down deeper roots. In the technology industry a handful of companies have grown into giants in a couple of decades and are now making sure they stay on top, hoovering up talent, buying up patents and investing in research. At the same time the rate of small-business creation is at its lowest level since the 1970s. + +The perils of consolidation + +Such consolidation is worrying for lots of reasons. Over-mighty companies exacerbate inequality because they reap abnormally high profits and allow senior managers to pocket an unseemly share of them. The proportion of corporate income going on the pay of the top five executives of large American public companies increased from an average of 5% in 1993 to more than 15% in 2013, even though research has shown that there is a negative relationship between CEO pay and performance (see chart). + + + +Such companies also create political problems by concentrating power in the hands of fewer people. The more entrenched companies get, the more unhealthy their relations with government are likely to become as they employ large numbers of lobbyists and put former politicians on their boards. The tech companies have added a new concern by amassing unprecedented volumes of information on ordinary people. + +But a great deal of anti-business sentiment is also being driven by xenophobia, protectionism and resentment. Utopian socialists such as the leader of Britain’s Labour Party, Jeremy Corbyn, dislike business in any shape or form. Right-wing nationalists such as Donald Trump and France’s Marine Le Pen dislike foreign business giants rather than business giants as such. The European Union’s crusade against America’s tech giants is partly based on protectionism. + +As the backlash against big business mounts, three things need to be kept in mind. First, the superstar companies at the heart of the current consolidation of capitalism are for the most part forces for progress. Apple’s iPhones and iPads have become people’s constant companions because they are portable miracles. In disrupting many industries, tech giants are changing them for the better. Uber provides a service superior to that of established taxi companies, and is forcing them to improve. Airbnb offers a cheap and convenient alternative to hotels. Some high-tech companies, such as Amazon and Uber, exert downward pressure on prices. Others, such as Google and Twitter, provide services without charge. McKinsey calculates that consumers in America and Europe alone get about $280 billion-worth of “free” services—such as search or directions—from the web that would once have cost their users a significant amount of money or time. + +Vijay Govindarajan, of the Tuck School of Business at Dartmouth College, points out that big companies can solve economic and social problems that are too big for small companies and too complicated for governments. They have the financial muscle to make long-term investments, the global scale to mobilise resources across borders and the management skills to deliver on their promises. They can use their expertise in supply-chain management to get resources to the poor or teach governments and NGOs how to do it. They can use their scale and management expertise to co-ordinate many different resources, spread best practice across the world and scale up clever ideas. + +Don’t overdo it + +The second point is that government intervention can easily backfire. The European Union’s hard line on American tech companies such as Apple or Google threatens to provoke a trade war between the world’s two biggest trading blocks, partly because the EU’s rhetoric is so fierce and partly because its methods, such as trying to force Apple to pay taxes retrospectively, are so questionable. Regulation that is supposed to promote competition can often have the opposite effect, killing off small companies and protecting big ones by raising barriers to entry. Regulation meant to prevent companies from getting too rich can sometimes discourage them from making long-term investments in research. Policymakers need to balance consumers’ preference for lots of competition against businesses’ legitimate desire to reap appropriate rewards from their investments. + +In his book, “Capitalism, Socialism and Democracy” (1942), Joseph Schumpeter argued that concentration is both a cause and a consequence of success. Successful companies race ahead of their rivals in order to enjoy the advantages of temporary monopolies. They invest the super-profits that they gain from those temporary monopolies in more R&D in order to stay ahead in the race. Great firms “largely create what they exploit”, as he put it. Rob them of the chance of exploiting what they create, and they will stop investing. + +The third point is that the decline in entrepreneurialism is more often the fault of bad government than of big business. In the European Union the proposed single market in services is being strangled by national regulation. Even in supposedly freewheeling America, regulation has quietly become more obtrusive. The share of jobs that require licences has increased from 5% of the total in the 1950s to more than 25% today, including occupations such as hair-braiding and interior design. Doctors who want to be reimbursed by medical insurers have to fill in a form with 140,000 coding categories, including 23 different codes for spacecraft-related injuries. Firing a worker who is not pulling his weight is an invitation to file a lawsuit. + +The great policy challenge of the coming years is to deal with legitimate worries about business concentration without succumbing to anti-business sentiment that will punish success and reduce overall prosperity. Policymakers will need to become more vigilant about preventing business concentrations from developing in the first place. In the 1980s and 1990s, when many markets were opening up, antitrust authorities were probably right to give the benefit of the doubt to business, but now they will need to think again in the face of so much more concentration. + +Above all, policymakers need to revamp antitrust policy for a world based on information and networks rather than on selling lumps of stuff. Up to now companies such as Uber have focused on running ahead of regulators, quickly building up a body of loyal customers and then daring the regulators to challenge them. Antitrust authorities need to start setting the agenda by examining the ways that digital companies are using network effects to crowd out potential competitors, or inventing new ways of extracting rents by repackaging other people’s content. But the regulators must also beware of trying to load too much onto the rules: the point of antitrust policy is to promote competition and hence economic efficiency, not to solve problems such as inequality. + +Policymakers also need to get much tougher on the dark arts of management such as tax-dodging. Superstar companies are already making impressive returns; there should be no need for fancy tax-avoidance schemes that undermine the legitimacy of the system in the eyes of the public. But any moves to discipline companies need to be made multilaterally in order to prevent potential trade wars. And excessive government is as problematic as excessive corporate power. + +This special report started by quoting Theodore Roosevelt thundering about the evils of giant corporations before a crowd in Kansas. Once again, the world needs some thunder about the excesses of giant companies, which are beginning to produce a popular backlash that threatens the success of the global economy. But there is a need for subtlety too, so that consolidation is challenged without discouraging innovation, and excesses are curbed without overregulation. Policymakers must aim to promote vigorous competition so that the world keeps existing superstars on their toes but also continues to create new ones. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21707054-how-keep-superstars-their-toes-without-making-them-fall-over-delicate-balance/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +A tech icon’s future: Twitter in retweet + +Online media: Three-hit wonder + +Europe’s digital single market: Incumbents rule + +Retailing: Long journey + +Multinationals in Venezuela: Stay or go + +The drug industry: Growing pains + +Autonomous cars: Pitt stop + +BASF: Chemical reaction + +Schumpeter: Risky business + + + + + +Articles Sections Next + +A tech icon’s future + +Twitter in retweet + +It is too late for the social-media firm to become the giant that people once expected + +Sep 17th 2016 | SAN FRANCISCO | From the print edition + + + +BEFORE Jack Dorsey helped found Twitter, the social-media firm known for snappy, rapid-fire updates, he worked briefly as a masseur. More recently, Mr Dorsey has been trying to massage away the aches and pains that afflict his creation. He returned as the firm’s chief executive in July 2015, taking over from Dick Costolo, who presided over a period of slowing growth and a string of departures by senior executives. + +Twitter’s problems have continued despite Mr Dorsey’s ministrations. The biggest is that it has largely stopped growing. Its tally of monthly users, at around 313m, is barely rising. Americans who use the service via their smartphones spend around 2.8 minutes on it each day, which is around a third less than they did two years ago and far less than they spend on rival apps, such as Facebook and Snapchat. In the next quarter, revenues are expected to fall. Even though sales will probably increase for the full year, a quarterly drop is worrying for an internet company which is a household name and only ten years old. + +In bringing back Mr Dorsey, who was pushed out in 2008, Twitter’s board was betting that his earlier knack for unruly creativity could work once again. Soon after arriving he announced a new offering called “Moments”, which shows Twitter users what subjects are trending, and said the service would loosen some restrictions on its strict 140-character limit, which dates from its early days as an SMS messaging service. Mr Dorsey has also expanded the firm’s video offering. Twitter won the rights to stream ten matches from the National Football League, the first of them on September 15th. + +Its biggest strength remains its well-known brand, and its central place in users’ lives. “Every sentient, literate being on earth has heard of Twitter,” says Peter Stabler, an analyst with Wells Fargo Securities, a bank. Well before Donald Trump made it one of his main campaign tools, it was the most popular platform for posting and discovering news. The video that captured Hillary Clinton stumbling near New York City’s 9/11 memorial this week, shortly before she admitted to having pneumonia, was first posted on Twitter, some time before professional news outlets picked it up. + + + +But Twitter’s share price has fallen by half since Mr Dorsey returned, to around $18. And the reasons to be pessimistic are multiplying. The first problem is Mr Dorsey himself. Considering the firm’s challenges, it needs a full-time boss if it is to have any hope of rebounding. Yet Mr Dorsey continues to split his time between Twitter and Square, another public company he co-founded which manages financial payments (and which has also struggled of late). Far more of his net worth is tied to Square’s performance than to Twitter’s. Having a boss who shows up part-time affects morale at Twitter’s San Francisco headquarters, say people there. Because he is often working at Square, many managers arrive late, depart early and generally show up just to “punch the time card”, says one former senior executive who has sold all of his shares. + +Second, Mr Dorsey’s conviction that there is no need for a radical overhaul of the core product looks like a mistake. Twitter has a loyal base of users—probably around 20m-40m—who adore the service and want only minor tweaks. But the vast majority of people find it fiddly. Mr Dorsey has tweaked some algorithms, as well as launching Moments, but bigger changes are needed to win back lapsed users and bring in new ones. Some observers recommend eliminating the 140-character limit to allow far freer expression. Twitter also needs to rid itself of trolls who harass users, and to close down its millions of false accounts. According to a website called Twitter Audit that analyses followers, 35% of Mr Dorsey’s own 3.8m followers are fake. + +Third, and most worryingly, while Twitter was distracted by dysfunction and turnover at the top, rival firms have pushed into the space it once might have owned. Twitter was early to recognise the potential of video. It bought Vine, an app specialising in six-second videos, in 2012, and Periscope, a live-streaming app, last year. But Facebook is energetically pushing into video, and Snapchat, a mobile messaging app that launched in 2011 and is popular with youngsters, is heavy on video, too. Facebook has now added the option of following people, a signature feature of Twitter. It has also invested in news, which people used to go to Twitter to read. Referral traffic to external websites from Twitter, including to many news websites, has declined by a fifth in the past 15 months, according to Chartbeat, a web-analytics firm. + +Celebrities and politicians still tweet, but they are sharing photos on Instagram (a photo app owned by Facebook) and posting videos on Snapchat, too. Messaging apps, such as WhatsApp and Facebook Messenger, are hugely popular. People who might have chirped at each other on Twitter are spending more time in these apps. In short, while Twitter used to have an edge because it anticipated people’s desire to share news and details about their lives online, it has been painfully slow to defend the territory it helped popularise. + +Twitter will survive, but it has lost its chance to be the sort of internet giant it might have become under better management. Advertisers go where users spend time. Although many brands buy ads on Twitter, they are unlikely to increase spending unless more users flock to the service, or existing users spend more time there. In 2017 Twitter’s revenues will probably rise by a paltry 6%, to $2.7 billion, according to Brian Nowak of Morgan Stanley, a bank. The firm is not profitable according to normal accounting standards (GAAP, or generally accepted accounting principles) because of the huge amount it pays out to employees in the form of stock-based compensation. + +Some people wonder if it could make an acquisition and transform its fortunes. So far there is little sign that it has the appetite. It was reportedly in discussions to buy Medium, a platform for long-form writing owned by Evan Williams, who co-founded Twitter and still sits on its board (see article). But that purchase, of a small company, would not solve its problems. + +It is far more likely that Twitter itself will eventually be bought. A deal may not arrive quickly, for Twitter’s share price, and its market value, at more than $12 billion, are still high. Several analysts are expecting a steep fall in its shares, possibly to as low as $13, a level at which it would make a tempting target. Some in Silicon Valley speculate that a media firm, such as Disney, might come forward. Mr Dorsey serves on Disney’s board. But the wholesome media giant may shy away from a platform that throws up daily crises over hate speech and undesirable users, including terrorists. + +Another possible acquirer is 21st Century Fox, whose founder, Rupert Murdoch, might have a stronger stomach. Yet most people reckon that Google is the natural buyer, because it could tie Twitter in to its other properties, including search and YouTube, and sell more ads than Twitter can on its own. It has already agreed to help it sell some ad inventory and is showing tweets in its search results. Google could easily afford a high price. + +It may so far have shied away from a purchase because of its clashes with European regulators on whether it is a digital monopoly and how it delivers online news articles. They might not look fondly on it controlling an important platform for news and free speech. + +That sentiment may be widespread. Whether people use Twitter regularly or not, most would say they want it to thrive, whether on its own or under the wing of another company. The firm has helped raise awareness of conflicts and injustices, for example, in Egypt, Iran and Tunisia that would otherwise have attracted less attention. Much of the world will keep watching Mr Dorsey’s attempts to pound Twitter into shape, even if people increasingly do so on Facebook and Snapchat. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21707258-it-too-late-social-media-firm-become-giant-people-once-expected-twitter/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Online media + +Three-hit wonder + +A co-founder of Twitter is betting he can revolutionise digital publishing once again + +Sep 17th 2016 | SAN FRANCISCO | From the print edition + +Hack with a future + +FEW feel as conflicted about the internet’s descent into glib, 140-character tweets as Evan Williams. As a co-founder of Twitter, he has profited handsomely from the social-media firm’s rise and remains its largest shareholder. Yet now his main project is to ensure that serious-minded, long-form prose will offset the torrent of tweets, often penned by twits. + +Mr Williams’s latest venture, Medium, which launched in 2012, is a clean, elegant-looking destination for essays, open letters and “big think” pieces. It is trying to become the central hub for writing by the public at large, as YouTube is for amateur videos. Journalists, business executives and heads of state, including Barack Obama, have all published on Medium. When Amazon disagreed with a New York Times article on the e-commerce giant’s apparently brutal work culture, a senior executive from the firm wrote a long retort on Medium. Small papers and digital-media firms, such as the Pacific Standard and The Ringer, are using it to publish content. + +As in Hollywood, it is easier to sell a sequel in Silicon Valley. In 1999 Mr Williams co-founded Blogger. The startup helped popularise the concept of blogging and the word itself by making it simple for people to post their musings without needing to code. After Google bought the company in 2003, Mr Williams worked on a podcasting firm called Odeo that ended up launching a text-messaging service, which became Twitter. “Anyone who has changed the world twice, I would bet on a third time,” says Jeff Jarvis, a professor of journalism at City University of New York. + +Some venture capitalists have done so: they have joined Mr Williams in financing Medium to the tune of $130m, valuing it at around $600m. Investors hope that Medium will be able to rival Facebook as a place for personal commentary and news discovery. “The world needs a hedge to Facebook,” says Kevin Thau of Spark Capital, a venture-capital firm that has invested in Medium. (That view will have been boosted by a recent controversy over the social-media firm’s censoring in Norway of an iconic photograph of a naked girl in a napalm attack during the Vietnam war.) + +The site certainly is not Facebook: Medium’s sleek, minimalist look is heavy on blank space and has raised the bar for reading on the web. Users like its features, such as the estimated time an article will take to read, and one that shows which passages were highlighted frequently in an article, though Mr Williams himself has some criticisms. “We were a little too precious about the design, engineering and who could write on the platform,” he says, admitting that he probably rolled out new features too cautiously early on. + +Medium has only just begun experimenting with how it will make money. One option is to take a cut of the subscription fees charged by publishers on its platform. So far it is working mainly with small firms, but eventually some bigger newspapers and magazines could sign on. Medium also has plans to make money by means of sponsored advertisements, where companies pay to promote posts they have written. + +Yet to build a large advertising business, it will need many more readers. With 30m monthly users and a reputation cultivated mainly among coastal, tech-savvy elites, Medium is a long way from the scale of a Twitter, which has more than ten times as many users, let alone a Facebook, which has 1.7 billion. + +For John Battelle of NewCo, a digital publisher that posts articles on Medium, the big question is whether the site’s focus on lengthier prose leaves it vulnerable to short attention spans. Elsewhere online, stories are increasingly told with images, emojis and videos. Mr Williams remains optimistic. Having trained people to express themselves in short, snappy quips, he believes they still have a “hunger for substance”. This may be true, but whether it makes for a thriving business is an entirely different question. Plenty of newspaper and magazine bosses can testify to that. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21707261-co-founder-twitter-betting-he-can-revolutionise-digital-publishing-once-again-three-hit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Europe’s digital single market + +Incumbents rule + +The European Union’s online reforms help the old more than the new + +Sep 17th 2016 | From the print edition + + + +LOBBYING is big in Brussels (see chart). As well as lots of cash, it takes up vast amounts of time. Between December 2014 and this July, members of the European Commission, the EU’s executive body, and their closest advisers held more than 11,000 meetings with lobbyists. Among the most approachable, it seems, were commissioners Andrus Ansip and Günther Oettinger and their teams. They clocked up 2,156 meetings, or 6.5 per working day on average, according to Transparency International, an anti-corruption group. + +It helps to keep these numbers in mind to understand the evolution of what is arguably the commission’s most important economic initiative, led by Messrs Ansip and Oettinger. This is to create a digital single market across all of the EU’s member states. On September 14th the commission unveiled its most controversial proposals thus far, one on telecoms regulation, the other on copyright reform. The plans have to be approved by national governments and the European Parliament, and they are already being fought over. + +The commission’s intentions are laudable. In the digital realm Europe is still very much a patchwork. Digital businesses must work around 28 sets of national contract laws, which add an estimated €4 billion-8 billion ($4.5 billion-9 billion) a year to their costs. That is a big reason for the region’s dearth of big technology businesses: only 27 of the 176 tech platforms identified by the Centre for Global Enterprise, a think-tank, hail from Europe. + +Some of what the commission has proposed, together with what it plans to unveil later this year, would chip away at such virtual borders. One idea is to make it easier for consumers to access online content in another country. Today firms often block it for copyright reasons. More importantly, the EU wants to boost digital connectivity across the continent. Proposals include common rules for radio spectrum and incentives to invest in broadband networks. The commission also wants to sponsor free Wi-Fi across the EU. + +Yet vital bits of the proposed rules do not seem aimed at creating a single market. Rather the goal is to arbitrate between battling corporate interests: European telecoms operators and big media firms in one corner and American tech giants in the other. Firms such as Deutsche Telekom and Spain’s Telefónica have long pushed for a “level playing-field” with online rivals. The commission now proposes that certain offerings, such as internet-telephone services including Skype, must obey telecoms regulations, including the requirement to allow emergency-call services. + +News publishers, similarly, want internet platforms such as Google to pay for the snippets of articles they display. The new regulatory proposals give them a new sort of copyright on these, to strengthen their ability to negotiate fees with the tech platforms (although it doesn’t introduce a “tax” on web links, as some had feared). + +The interests of European startups, originally seen as a high priority, have got short shrift. Thus far the EU’s digital strategy includes little to make life easier for them. The commission decided not to include them in an important copyright exception, for example. Academic researchers will be allowed to mine bodies of text and data without having to pay extra for this, but, oddly, not if the purpose is to set up a new firm. Another round of telecoms and copyright regulations is likely to make it more difficult for young firms to expand. + +There is also the likelihood that the commission’s planned new rules will become still more unfocused as they wind their way through the legislative process. Meanwhile, American platforms will broaden their footprint even further, perhaps into manufacturing industries where the continent’s firms have more clout. “Europe has lost the first half-time of the digitisation game,” said Timotheus Höttges, the boss of Deutsche Telekom, a few years ago. The outcome of the second half may not be that different. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21707189-vital-bits-proposed-rules-do-not-seem-aimed-creating-single-market-european/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Retailing + +Long journey + +Why Asian fashion brands struggle to wow the masses in America and Europe + +Sep 17th 2016 | NEW YORK | From the print edition + +Rihanna shows the way + +ASIAN designers have little trouble appealing to wealthy fashionistas in the West. Last year, a long yellow cape dress worn by Rihanna at the Met Gala made a celebrity of Guo Pei, a Chinese designer. Winning over the mainstream shopper is another story. In 2005 Uniqlo, a Japanese brand with a genius for selling multicoloured basics, entered the American market with three stores in suburban shopping malls in New Jersey, only to close them within two years. It has yet to turn a profit in America with its other stores; between this January and June it closed five outlets. + +Now Muji, another Japanese clothing and lifestyle giant, is expanding. It has ventured into New Jersey with a big new store in a glitzy mall. The difficult thing is reaching local people and selling them ordinary, daily essentials, says Asako Shimazaki, the head of operations in America. Customers queued for the store’s grand opening last month. But their aim, they said, is to be part of a cool, niche group of Muji fans: not exactly what the brand had in mind. + +The majority of the world’s clothes, bags and shoes are manufactured in Asia. But the region’s brands have made little headway in the West. Of the ten most valuable global apparel labels ranked by Millward Brown, a market-research firm, only Uniqlo is Asian. Li-Ning, one of China’s best-selling sportswear brands, tried to enter America in 2010. It opened a flagship store in Portland, Oregon and later launched an English-language online store. Both failed. Other “Asian” labels, such as SuperDry and Shanghai Tang, are actually owned by Europeans. + +What makes the journey so hard? Adjusting to Western tastes takes time. Although Uniqlo became the largest Japanese apparel brand by selling US-style clothing, it still encountered cultural barriers in America itself. For example, vests are one of Uniqlo’s most popular products at home, but relatively few Americans and Europeans wear an additional layer beneath their shirts, says Dairo Murata, an analyst at JPMorgan Chase, a bank. It was only two years ago the firm also realised that XL was not big enough in America; it now duly provides XXXL. + +Another problem, at least outside the big cities, is price. Uniqlo takes pride in the use of high-tech, comfortable fabrics, an attempt to differentiate itself from other basic clothing brands like Gap and Old Navy. But at Danbury Fair, a Connecticut shopping mall that is a barometer for retail trends in the suburbs, people prefer Primark, a super-cheap Irish retailer which recently opened, to Uniqlo, which shut up shop in June. Mall visitors are conservative about fashion and about spending, explains F.K. Grunert, its leasing manager. + +What still seems to work better is concentrating on chic urban centres, even though that means a smaller potential market. This month Uniqlo opened a revamped stand-alone store in Manhattan’s Soho; such shops tend to do well. In 2002 it had 21 stores in Britain, dotted around the north-west, Midlands and south-east; now eight of the ten it still has are in London. + +One answer could be e-commerce. Uniqlo is shifting its attention to the internet. But Asian retailers in America face the same hardships as local vendors: matching the convenience of Amazon is difficult. Not even Alibaba, China’s biggest e-commerce firm, could make a fashion website work. Last year it sold its American online boutique store, 11 Main, a year after the launch. Customers declined to visit in large enough numbers, and 11 Main had to ask merchants to ship their products directly to consumers, which meant high costs and inconsistent delivery speed. It was a humiliating moment for a company that, like most of Asia’s big retailers, usually gets it right at home. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21707265-why-asian-fashion-brands-struggle-wow-masses-america-and-europe-long-journey/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Multinationals in Venezuela + +Stay or go + +Companies in the age of chavismo + +Sep 17th 2016 | CARACAS | From the print edition + + + +EIRA, a 38-year-old Venezuelan, used to like shopping. Now she stands beside barren shelves in a Caracas supermarket. The average Venezuelan spends 35 hours each month queuing for food. This supermarket’s few products include Kellogg’s Zucaritas, its muscular tiger cartoon strangely pallid in hue—supposedly to make the packaging more eco-friendly but, many Venezuelans reckon, more likely the result of an ink shortage. + +The dearth of goods reflects the fact that Venezuela, led by Nicolás Maduro, the president, is in freefall. The International Monetary Fund expects output to shrink by 10% this year and inflation to top 700%. Businesses are prostrate. The country has never been rich, but having the world’s largest oil reserves once meant many citizens could afford foreign brands. Not now. Firms have long grappled with price controls, bizarre labour laws, the threat of expropriation and, since 2003, currency restrictions. Plunging oil prices have further exposed the system’s frailty. As the bolívar’s value has tumbled, firms with profits in the currency have reported big losses—for example, Merck, an American drugmaker, announced a hit to its earnings of $876m for 2015. + +For most firms, there is no easy solution. Two years ago Clorox, which makes household products, decided to leave. That meant giving up not just sales but assets: the government seized its factories. A more common approach has been to “deconsolidate” a subsidiary. When a country’s rules are so restrictive that a parent firm cannot control its local operations, American accounting rules let a firm mark its subsidiary to fair value and classify it as an investment. The parent company’s earnings no longer recognise profits stuck in Venezuela, but the subsidiary continues to exist. Goodyear, a tyremaker, and Ford, a carmaker, have done this. The cost of the accompanying write-down can be high—for Procter & Gamble, it was a whopping $2.1 billion. But the move lets firms maintain some presence in Venezuela in the hope that the country might someday recover. + +Those that have stayed operate in a morass. The government controls where goods are sold, often directing products to neighbourhoods where it wants to boost political support, explains Risa Grais-Targow of Eurasia, a research outfit. Parts and supplies are scarce. Many firms get creative. Coca-Cola Femsa, a Mexican bottler that is partly owned by the American drinks giant, has little sugar, for example, so it is making diet soda. + +For the staff who remain, the outlook is bleak. Threats of arrests of employees are common, since Mr Maduro blames shortages of essential items on a guerra económica waged by foreign and local firms to stir discontent. Companies cannot afford to raise wages at the pace of inflation. Some are at least providing a few important necessities. Many workers are bringing their cafeteria lunches home, to share with their families. Given the conditions, one former executive of a multinational who is based in Caracas thinks that foreign firms are hanging on for too long. But they doubtless hope that tenacity will benefit them if and when a new regime comes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21707257-companies-age-chavismo-stay-or-go/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The drug industry + +Growing pains + +Sep 17th 2016 | From the print edition + + + +LAST year, Pfizer almost became the world’s largest drug firm when it tried to merge with Allergan, an Irish company that makes Botox, among many other products. The deal would have been worth $160 billion, but was indirectly blocked by the American government (via a change in tax rules) because it appeared to be aimed at avoiding taxation. In the confused aftermath, Pfizer said it would return to an earlier plan: breaking itself up. Then last month it gobbled up Medivation, a cancer-drug company, in a $14 billion deal, followed by AstraZeneca’s antibiotics division for $1.6 billion, and questioned whether a split would be worthwhile. + +By wrestling with the question of its corporate structure, Pfizer is having a debate that echoes throughout the industry. Investors have pressed many diversified drug firms this year over whether they should break themselves up into more specialised units. Diversified firms are those that typically have consumer-health divisions offering low-margin products such as plasters and talcum powder. Meanwhile, “pure-play” drug companies focus on innovative medicines—for example, a full cure for Hepatitis C—that command high margins. + +Companies such as Johnson & Johnson (J&J), GSK and Novartis fall into the first camp, and have all recently wrestled with the question of splitting themselves up. Investors and analysts tell them that they may be worth more broken into their parts than as a whole, and ask whether capital is being allocated efficiently across their divisions. These sort of questions inspired Pfizer to sell its consumer-products division to J&J in 2006, and Merck, an American drug firm, to divest its consumer unit to Bayer in 2014. + +Neil Woodford, an influential shareholder in many pharma companies, including the British drug firm GSK, accused it in January of being four FTSE 100 companies bolted together. GSK includes its core medicines and vaccines outfit, a consumer-healthcare division, a dermatology unit and a specialist HIV business. Andrew Witty, its boss, explains that some time ago he took a long-term view of his company, anticipating greater pressure on drug prices. The firm wanted to offset lower drug prices with higher sales of low-margin, high-volume products. The aim was to invest in businesses that were less exposed to a “pricing dynamic”. + +Other diversified pharma companies make the same case. Consumer divisions smooth out the bumpy revenue that comes with the uncertain business of inventing drugs—which may fail to win approval, and eventually come off patent. + +In recent months the argument has gone their way. There has been heavy pressure on drug pricing in America after a series of firms, most recently Mylan, were pilloried for stratospheric rises. The NASDAQ biotech index, comprising mostly small firms pursuing innovative drug research, fell by 3.6% on a single day in August when Hillary Clinton sharply criticised the industry’s decisions on pricing. Advocates of diversification were boosted by GSK’s strong performance in the second quarter of this year. It handily beat expectations thanks to those boring, low-margin areas like consumer health and vaccines. + +Even firms that publicly profess a desire to slim down are likely to buy others. Cash is piling up on the balance-sheets of many companies in the industry. Japan’s Takeda is the latest to indicate that it is on the prowl for acquisitions. Firms may be looking for new drugs to sell, or different geographical regions to operate in. In specific areas such as cancer, points out Matthias Evers, a partner at McKinsey, a consultancy, scale and the depth of drug pipelines matter enormously. Pfizer’s purchase of Medivation, for example, allows the bigger firm to bolster its oncology portfolio. However much pharma bosses and investors debate the merits of focus versus diversification, they will keep doing deals. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21707260-growing-pains/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Autonomous cars + +Pitt stop + +Uber launches its first self-driving cars + +Sep 17th 2016 | PITTSBURGH | From the print edition + + + +SITTING in the back seat of the self-driving Uber as it navigates narrow streets in Pittsburgh’s old industrial heart, the Strip District, is surreal. The global ride-sharing firm chose the area as the spot to develop and test driverless cars, and picked up its first customers on September 14th. Your correspondent got a ride the day before. The vehicle moves smoothly down busy Penn Avenue, stopping at four-way stop signs and traffic lights, slowing to allow other cars to parallel park. It navigates around double-parked delivery vans. It even stops to allow jaywalking pedestrians to cross. + +The cars are not truly driverless yet. During the trial an Uber employee sits behind the wheel, ready to take over should something go wrong. A second employee, a sort of co-pilot, sits in the front passenger seat, monitoring a screen, alerting the pilot to what the car “sees”, including other cars, upcoming traffic, potential obstacles and elevation—Pittsburgh is very hilly. Another monitor in the back seat allows passengers to see what the car is seeing. + +By the end of the year, 100 Volvos will be on the road, but in the meantime a fleet of Ford Fusions are picking up passengers. A large rotating laser (that strongly echoes the flux-capacitor from the film “Back to the Future”) is mounted on the roof. The car is also fitted with 20 external cameras, measurement devices for acceleration and orientation, 360-degree radar sensors and separate antennae for GPS positioning and wireless data. + +Pittsburgh is ideal for the tests. It has the talent, because Uber poached Carnegie Mellon University’s robotics department last year. Raffi Krikorian, who heads up the company’s research centre in Pittsburgh, calls the city the “double-black diamond of driving”. It has a winding road system, extreme weather conditions and lots of traffic. Drivers there are used to odd quirks like the “Pittsburgh left”, as it is known, where oncoming traffic yields to cars making left-hand turns. If Uber can master autonomous driving in Pittsburgh, Mr Krikorian says, it can make it almost anywhere. + +Having City Hall’s support for the urban lab helps. Even before Uber came to Pittsburgh, Bill Peduto, the mayor, was fighting state lawmakers to allow ride-sharing. Local government must take risks and behave like a startup, he says. “Regulation will never be ahead of innovation. If you sit and wait, the innovation will happen, but somewhere else.” The city is small enough that it can get things done, but large enough that the world should notice. + +Put in the actual driver’s seat, for a short spell, your correspondent did need to intervene when midway through a turn, the traffic light turned red and the car suddenly stopped. But The Economist felt very safe. Not all Pittsburghers are convinced. “I’d want to know that it’s 100% foolproof before I’d get in,” says Shelby Rocco, a student. Mike Taylor, a banker, who uses Uber all the time, has no reservations. He feels bad for the drivers, who he suspects may lose their jobs, but “it’ll be nice not to have to keep up any more awkward conversations.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21707263-uber-launches-its-first-self-driving-cars-pitt-stop/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +BASF + +Chemical reaction + +How the world’s largest chemical company brews innovation + +Sep 17th 2016 | Ludwigshafen | From the print edition + +Green and pleasant innovation + +ALONG the west bank of the Rhine, south of Frankfurt, cormorants and herons frolic as barges moor at Ludwigshafen. Here the world’s largest chemical park stretches out over ten square kilometres. Streets such as Chlor-, Ammoniak- and Methanolstrasse are shaded by 2,850 kilometres of pipes that connect everything like arteries; red is for steam, yellow for gas, green for water. The saying goes that most Westerners touch at least one product from a BASF site before leaving home. + +It is the world’s largest chemical company, and one of Europe’s largest manufacturers. Because it sells chemicals and chemical products to other companies, such as BMW, Nestle and Procter & Gamble, BASF is little known to consumers. It isn’t one for blowing its own trumpet. “We will try our best to remain spectacularly unspectacular for the media,” said Kurt Bock, the CEO, at last year’s 150th anniversary. But BASF repays attention for two reasons: the sheer impact of what it does, given its size, and its systematic approach to innovation. + +Big and bold + +The two go together. Mr Bock thinks size helps it make big bets on long-term innovation, which he calls an “increasingly lonely activity”. Last year the company spent nearly €2 billion ($2.2 billion) on R&D—its revenues last year were €70.4 billion—and devoted 10,000 employees to coming up with new ideas. It generated 1,000 patents, a typical number in any given year. + +BASF’s most celebrated breakthrough was its discovery in 1913 of a way to mass-produce fertiliser, which helped eliminate mass hunger. The real innovation of this “Haber-Bosch process”, named after the two scientists who won Nobel prizes for it, was not converting nitrogen and hydrogen into ammonia, but doing so on an industrial scale. Subsequent inventions have ranged from the tape in cassettes (1935) to an aroma called citronellal (1982) to drought-tolerant corn (2013). The new Adidas Boost, a running shoe that promises extra bounce using “energy capsules”, relies on a BASF invention. + +The firm’s next big bet is on electric cars. Some 200 metres from where Mr Bosch (of fertiliser fame) made his breakthrough, Marina Safont Sempere, a young chemist from Spain, is working on what could be another. Her team is working on next-generation battery materials. Today, she explains, electric cars typically contain 50 big, heavy batteries, which weigh them down, take up space and run out after 150km-200km. BASF hopes to create a powder that packs more energy into less space, weighs less and comes at a lower cost. Such investments are partly a bet on the future, partly a hedge on current revenues tied to the combustion engine. + +One tested strategy for BASF is trying to anticipate exactly how future markets will develop. As the middle classes grow, for example, sales of dishwashers and dishwasher tablets are booming. But phosphate, which removes scale, will be banned in the EU from January. Scientists at BASF started thinking about this over 20 years ago and worked on Trilon M, a chemical that performs as well as phosphate but is biodegradable. + +Its approach is founded on an extensive network. It works with 600 universities, research institutes and companies, and has its own venture-capital outfit. It seeks out joint ventures and makes small strategic acquisitions, such as the recent purchase of Verenium ($62m), an enzyme-research company. It also increasingly works in partnership with customers, as an inventor-for-hire, on whatever they need (non-sticky sunscreen, carbon-free packaging, lighter cars), marking an expansion to downstream and service provision. + +Some of BASF’s customers increasingly request help to meet their environmental goals, although the company acknowledges that there are many clients for whom this is a much lower priority. It is a dilemma for the chemicals industry whether or not to shift more quickly to sustainable production than clients actually demand. The firm claims that by now, 27% of its products contribute in some way to “sustainability”, a figure that it wants to increase. Its Verbund principle, a system whereby it recycles waste products—for example, by selling excess carbon to the beverage industry—is good for profits. It saves some €1 billion a year from such processes. + +Another feature is BASF’s habit of quickly shedding businesses when new iterations no longer pay off. This happened in the textile-chemicals business, and in parts of the paper-chemicals industry, when customers told it that there was no need for further product refinements. Similarly, it got out of fertilisers, caffeine and standard plastics because they all became too commoditised, making it hard to compete. + +Steady as she goes + +Discipline has some drawbacks. Stockmarket analysts like BASF’s vertically-integrated structure—it owns most of its supply chain—and its strong focus on innovation. Its share price has risen over the past decade. But the firm’s methodical approach to acquisitions could also work against it. + +On September 14th Monsanto, the world’s biggest seed producer, accepted a takeover by Bayer, a German drugs and chemicals giant, worth $66 billion (€59 billion). Amid a wave of consolidation in the agribusiness industry, says Lutz Grueten of Commerzbank, BASF could be left behind because it does not possess its own seeds business and has instead relied on partnerships, including with Monsanto. It is unclear whether this contract will be renewed. BASF emphasises that it is serious about its crop-protection business, that it has €6 billion in sales and that it devotes 26% of its R&D to agribusiness. The firm will be on the lookout for anything coming onto the market as a consequence of the Bayer-Monsanto deal. + +Another worry for Mr Bock is a zeal for regulation on the part of European governments. The continent’s approach to scientific testing is becoming too cautious compared to that of America, he reckons. A current debate over research on, and use of, endocrine-disrupting chemicals (substances that can have harmful effects on the body’s hormone system) is one example. But Mr Bock is optimistic about his industry’s ability to help solve mankind’s problems as a silent enabler of progress. He apologises for sounding pompous, but promises that “if you want to improve the state of the world, chemistry can really help.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21707259-how-worlds-largest-chemical-company-brews-innovation-chemical-reaction/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Risky business + +Managers need to watch political risk in developed markets as well as emerging ones + +Sep 17th 2016 | From the print edition + + + +MULTINATIONAL companies have always paid careful attention to political risk in the developing world. No surprise there, given the risk premium attached to investment in emerging markets. Western businesses turn for advice to consultancies that keep a watchful eye on alarming developments in far-flung places. There is booming demand for political-risk insurance that can protect companies against shocks, be they coups in Turkey, sanctions against Russia or a debt default by Venezuela. + +Now, however, firms need to pay the same attention to political risk in the developed world. Just consider the latest news from the American election trail. The woman who stands between the presidency and a hot-head who wants to tear up the world’s trading system is losing her air of invincibility, due to an unguarded comment about a “basket of deplorables”, a bout of pneumonia and a foolish decision to conceal the illness from voters. + +Britain’s vote on Brexit in June was a reminder that impossibles may turn into improbables, and then quickly become fact. Businesses now face years of uncertainty as politicians thrash out the details of the Anglo-continental divorce settlement. Europe faces various possible crises. Spain is on its way to its third election in a year. Matteo Renzi, prime minister of Italy, has promised to resign if he loses a constitutional referendum due by the end of the year, which would threaten political turmoil just when the banking system is particularly shaky. Angela Merkel, Germany’s chancellor and until now the iron woman of European politics, is weakening rapidly because of her unpopular policy on refugees. + +Plenty of commentators reckon the world of risk is turning upside down. “Political risk has shifted to the developed world,” gloated a recent column in South Africa’s Rand Daily Mail. It is easy to see why this idea has traction. The Indian government is both stable and pro-business. Vladimir Putin has imposed order on Russia, albeit at a horribly high cost. China produces five-year plans while America struggles to pass a budget. + +But it is a misguided view, nonetheless. Brazil lurches from one corruption-driven crisis to another. Jacob Zuma’s government in South Africa is riven by graft and incompetence. The Philippines, which has one of the world’s best recent records on economic growth, has elected a Trumplestiltskin of its own, Rodrigo Duterte. There isn’t a fixed lump of “instability” to be distributed around the globe. At the moment political turmoil is on the rise across most of the world. + +That still represents a big change. For the past 30 years multinationals in developed markets have mostly operated in a benign environment. Political parties worked within relatively narrow parameters, and pro-business policies, such as the liberalisation of trade and of rules on immigration, rolled forward. Shocks were few. No longer. The political spectrum is widening. In Britain, Jeremy Corbyn, an old-fashioned leftist, controls the Labour Party, which was once the apogee of pro-business leftism. In France, Marine Le Pen, the leader of the National Front, who boasts that she wants to add “Frexit” to “Brexit”, is almost certain to be one of the final two candidates for the French presidency next year. Unprecedented shocks are almost routine. In 2011 Standard & Poor’s downgraded America’s sovereign-debt rating for the first time. Greece’s default in 2015 to the International Monetary Fund was the first by a rich-world country. Donald Trump upends political convention on a daily basis. + +Companies need to recognise that many developed countries are becoming high-risk markets that do not compensate for those risks by delivering higher returns. They may need to import risk-management practices that they already apply to emerging markets: making sure not to concentrate their investments in too few countries; developing “emergency response plans” in the event of a sudden crisis; and planning how they will cut their losses and move, or slim, their businesses if a populist seizes power. + +Firms are already wary of long-term investments given slow growth. Political risk could reinforce such hesitancy. For the time being they may prefer shorter-term bets. There is evidence that companies are stashing cash in safe securities as they wait to see what “Brexit means Brexit” actually means. In August sterling-denominated money-market funds held £180 billion ($240 billion) in assets, up by almost a fifth since the start of the year. + +Tumbrils could roll + +Yet if businesses pull back on long-term investments, they may only encourage more instability. A vicious cycle, of low corporate spending that encourages stagnation that in turn produces popular discontent and more political turmoil, may spin faster. Companies need to supplement prudence with something more proactive. Defusing popular anger at corporate excesses is a business priority as well as a political one. Over the past 30 years companies got into the habit of thinking about things like executive pay in purely market terms. For example, they devoted a great deal of thought to making managers behave like owners rather than employees, by granting stock options. But public perception matters as much as complex calculations. + +Firms’ efforts to grapple with such issues can easily backfire. Conclaves of the super-rich meeting together to talk about the ills of inequality reek of aristocrats debating whether to share some crumbs from their tables. The World Economic Forum’s decision to make “responsive leadership” the theme of its next annual meeting in Davos is almost an invitation for ridicule. + +But that is an argument for thinking harder rather than giving up. By-invitation chinwags do not cut it. Companies need to be conscious of political—indeed, populist—considerations in their day-to-day operations, from how they set the pay of their executives to who they appoint to their boards to how much they spend on corporate entertainment. The price of freedom to do business in the rich world today is eternal vigilance. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21707264-managers-need-watch-political-risk-developed-markets-well-emerging-ones-risky/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Chinese investment: A sponge wrung dry + +Buttonwood: Trust busting + +Wages in Japan: Behind a pay wall + +American property: The REIT stuff + +Global inequality: Shooting an elephant + +Hank Greenberg: Final claims + +Misbehaving bankers (1): Accounts receivable + +Misbehaving bankers (2): Accounts payable + +Free exchange: Stealth socialism + + + + + +Articles Sections Next + +Chinese investment + +A sponge wrung dry + +China’s private investors keep their hands in their pockets + +Sep 17th 2016 | SHANGHAI | From the print edition + + + +ORDERS from on high can shape the Chinese economy. In 2013 Xi Jinping, the president, said cities should be more like sponges, sopping up rainwater for reuse when parched. China is now working on some 30 “sponge cities”. Then in 2014 Mr Xi said the government should encourage businesses to invest in state projects. Since then China has announced plans for thousands of “public-private partnerships” (PPP), including sponge cities. But investors do not seem interested. Sponge cities are struggling to soak up private capital. + +This month Guyuan, a city in Ningxia, a north-western region that is dry most of the year, launched China’s first sponge-city PPP. However, as is the case with others that are in the works, the “private” side of the partnership was not all it was cracked up to be. The investor, Beijing Capital, is in fact a government-owned firm. And to make the deal viable, the government pitched in a subsidy worth nearly one-fifth of the 5 billion yuan ($750m) total cost. + +This points to a bigger problem: a sharp slowdown in private investment in China. New data on September 13th underlined the trend. Over the first eight months of 2016, private-sector investment rose by just 2.1% from the same period a year earlier, virtually the lowest rise since records began in 2005. Meanwhile state-backed investment has soared (see chart). It might seem unsurprising that the government is driving China’s economy. But it marks a big shift: the private sector was responsible for roughly two-thirds of investment over the past decade. And since investment accounts for nearly half of GDP, private caution clouds the growth outlook. + + + +The simplest explanation for the slowdown is that the state has crowded out the private sector. Government-backed entities have long had better access to banks. In the past private companies have compensated by using their own earnings and tapping shadow lenders. Both routes are harder this year. Profits are not growing at the heady double-digit rates of not long ago. At the same time regulators have curbed shadow banks, leery of the risks brewing inside them. A side-effect has been to deprive some private firms of financing. + +Yet that is only part of the problem. Many companies have money but are not spending it, says Zhu Haibin of JPMorgan Chase. They are keenly aware of the overcapacity in industries from coal mining to solar-panel making. Returns on capital have fallen by a third since 2011 to about 7%, according to Société Générale. With average bank lending rates just a touch lower at 5.25%, many are holding back, hoping profitability will improve. State firms can afford to pay less attention to the bottom line. Despite weaker returns than their private peers, they have kept investing. + +The politics of big infrastructure projects are also a stumbling block. Local governments are reluctant to cede their most promising projects to private investors. Many officials are suspicious of private firms. Beijing municipality recently signed a PPP agreement for a new highway, and picked China Railway Construction Corp, a mammoth state-owned enterprise, as its partner. The official in charge suggested that private companies had neither the ability nor the capital necessary. And with ventures such as the sponge cities, it is not clear to private investors how they will make returns. Unlike toll roads or power stations—normal fodder for PPP deals—better drains and reservoirs are not easily converted into profits. + +This being China, there are, as ever, questions about the quality of the data on investment. Some economists believe the public-private gap is exaggerated because of the government’s stockmarket rescue last summer, when the state acquired bigger stakes in companies. As these ownership changes filter into the data, they may be adding to the apparent increase in state investment. Separately, catastrophic numbers from Liaoning, a north-eastern province, have wreaked havoc with national statistics this year. Investment there is down by nearly 60%, but this may largely reflect a clean-up of previously embellished figures, not an economic disaster. + +The government itself, however, is certainly behaving as if the problem is more than a statistical accident. This summer it dispatched teams of inspectors to 18 of China’s 31 provinces to see why private companies were not investing. Earlier this month the cabinet unveiled measures to encourage them to spend more. It promised to treat private firms the same as public ones when investing in sectors such as health and education. It called on banks to lend more to them. And it said it would roll out more PPP projects, enticing private investors with larger state subsidies. + +These pledges may well show some results in the coming months, especially now that the government is talking so openly about the need to spur private investment. But many economists say that bigger changes are needed. To begin with, China could make it easier for private businesses to invest in state-controlled sectors such as finance and transportation. The government could also break up some of the state-owned enterprises that currently dominate these sectors. For the time being, though, it is moving in the opposite direction, merging state firms to create even bigger national champions. + +The silver lining in all this is in what it says about the acumen of China’s private investors. Their caution reveals how big a role market forces, as opposed to top-down orders, now play. The government would love to see companies open their wallets. Instead, they are behaving like sensible businesses anywhere. They are conserving their cash and waiting for better opportunities than sponge cities to emerge. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21707192-chinas-private-investors-keep-their-hands-their-pockets-sponge-wrung-dry/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Trust busting + +The dangerous contradiction between economic reality and political rhetoric + +Sep 17th 2016 | From the print edition + + + +MANY political upheavals of recent years, such as the rise of populist parties in Europe, Donald Trump’s nomination for the American presidency and Britain’s vote to leave the EU, have been attributed to a revolt against existing elites. People no longer trust mainstream politicians, nor indeed the media that report on them. This of course has huge economic as well as political consequences. + +Some populist political leaders try to exploit this climate of mistrust—and extend it to encompass foreigners and minorities within the domestic population. These people, it is alleged, intend to cheat, rob or sponge off the voters. By extension, international agreements, it is implied, are a betrayal of domestic voters—backroom deals cooked up by global elites looking after their own interests. + +Trust is built into the heart of almost all economic activity. Once humans specialised, they required others to produce what they themselves did not—the farmer needed the blacksmith to produce his tools, the blacksmith needed the farmer to supply his food. A global trading system requires us to deal with complete strangers on a daily basis. We must trust companies to deliver the goods we order, our employers to pay our wages and the banks to keep our deposits safe. + +Any hint of a general erosion of trust—of a retreat to the kind of economic nationalism that marked the 1930s—would be a very worrying sign. Already new trade agreements, such as the Trans-Pacific Partnership and the Transatlantic Trade and Investment Partnership, face an uphill struggle to be implemented. As yet, however, nothing suggests that the angry political mood is being converted into boycotts of foreign goods or firms. Consumers seem to value their iPhones and Volkswagens too highly to deprive themselves of them on political grounds. + +Yet complacency would be unwarranted. The 2007-08 crisis showed what can happen when belief in the financial system breaks down. Banks lost confidence in each other’s creditworthiness and refused to lend; a knock-on effect was that companies found it hard to get trade credit. Economic activity suffered. In 2011 investors lost confidence in the creditworthiness of some European governments; bond yields spiked, recessions followed. + +Disaster was avoided with the help of immense efforts from central banks. As a result, bond yields have fallen sharply. Historically, this has been a sign that investors are less risk averse than before—they trust debtors will not default and that central banks will not stoke inflation. + +Yet it is harder to argue that negative interest rates and bond yields are a sign of enhanced trust—instead, it seems that investors are so desperate to park their money with safe lenders that they are willing to pay a penalty to do so. Furthermore, central banks are in a vulnerable position. They have been able to act decisively in the past few years because they are free of democratic constraints. But their actions have attracted criticism—from the right in America and Britain and from all quarters in the euro zone. Central bankers were given policy freedom because they were perceived to be disinterested experts. Now both their impartiality and their expertise are in question. The powers that democratic governments bestow, democratic governments can take away. + +The dependence on trust makes the global economy vulnerable in another way, too. Systems benefit from being more open; the more people that can take part, the more potentially profitable connections can be made. But open systems can be exploited by those with malign intentions. The laxity of boarding procedures on American domestic airlines was exposed by the 9/11 attacks. + +Every system of exchange ever devised has been exploited; coins made of precious metals were debased; paper notes were forged; cheques bounced. Today money largely consists of bits on a computer, a staggeringly convenient system that allows people to pay instantly for goods (often denominated in different currencies) from all over the world. But it also causes immense frustration for consumers and retailers when systems are disrupted and internet connectivity breaks down. Cyberwarfare is an increasingly tempting tool for the ill-intentioned; the source of an attack is hard to trace and responsibility is easy to deny. + +That again brings the problem of declining trust into focus. Today’s economy and financial system depend on global co-operation; today’s political system is one where such co-operation is increasingly seen by voters as intrinsically suspicious. That is a dangerous disconnect. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21707193-dangerous-contradiction-between-economic-reality-and-political-rhetoric-trust/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Wages in Japan + +Behind a pay wall + +Raising Japanese wages is harder than it looks + +Sep 17th 2016 | TOKYO | From the print edition + +Looking for a rise + +IT WAS, for the IMF, an unorthodox suggestion. Last month a report from the fund suggested that Japan should take measures to prod companies into paying higher wages. It came on the heels of an exhortation from Olivier Blanchard, a former chief economist at the IMF, and Adam Posen, another economist. They argued that in the next year the country should increase nominal wages and other benefits by 5% to 10% “by fiat”. + +Wage policies have long been out of favour with economists. Their return to fashion among Japan-watchers shows just how deep concerns about the economy run. Fiscal and monetary easing has failed to stimulate consumption. Some 61% of GDP comes from private consumption, but Japanese are not spending. That is not because they reckon that entrenched deflation means things will get cheaper in the future. Rather it is because they expect to be more squeezed financially thanks to their stagnating incomes. + +The IMF says wages have increased by only a paltry 0.3% since 1995. In 2015 Toyota, a carmaker, increased employees’ “base” pay by only 1.1%. The average wage increase by 219 firms in Keidanren, a business association made up mainly of large manufacturers, was 0.4%, according to the IMF. Yet Japan Inc sits on a massive pile of cash: some ¥377 trillion ($3.7 trillion). + +Shinzo Abe, the prime minister, who has staked his reputation on Japan’s economic recovery, has tried to push up pay. He has increased minimum wages, which will rise again on October 1st. But they are modest and affect only a small proportion of the workforce. In the 2016 annual pay round, when government observers join talks for the permanent, unionised section of the labour force, Mr Abe asked Keidanren to raise wages. He will do so again in the next round. + +Wages have fallen less slowly since 2014 (see chart) and are rising this year, but they are not doing so fast enough. Robert Feldman of Morgan Stanley, a bank, reckons wages would have to rise by 4% rather than the current 2% to hit the government’s inflation target (also 2%). Takashi Suda of Rengo, Japan’s largest trade union, argues that pay must rise faster at small and medium-sized firms where wages are lower and are rising more slowly than at big firms. Also, he says, to encourage spending it is more effective to raise low-earners’ incomes than high-earners’. + + + +But Keidanren’s members, which do not face a labour shortage and are struggling with the costs of a stronger yen, are not playing ball, despite sitting on hoards of cash. This is much to the chagrin of Mr Abe’s people, who thought they had a deal: bigger wage increases in return for a cut in corporate tax. It is far from obvious, however, what more Mr Abe can do. He is unlikely to outrage the private sector (and traditional economists) by mandating pay hikes. Instead, the government is said to be mulling a tax on corporate savings. “I believe that’s only a threat, but it’s a good threat,” says Takeshi Niinami, the head of Suntory, a beverage company, who sits on a government council for labour reform. + +Executives retort that the government needs to look at its own behaviour. Keidanren calculates that a third of wage increases are absorbed by social-security payments, which are due to rise again in October. In an ageing country the mounting costs of pensions and medical care mean this share is unlikely to fall. + +But given Japan’s ageing and shrinking population, and hence tightening labour market, it seems odd it should be so hard to nudge wages upwards. One reason is that some industries that need to raise wages are unable to. Public nurseries, for example, are desperately short of staff yet cannot increase pay because of government rules. Many employers are resorting to golden handshakes and other incentives, but the Ministry of Health, Labour and Welfare says higher monthly wages have a far greater impact on spending than bonuses and overtime. + +Further, pay discrepancies for similar work are bigger than can be explained by skills gaps. Using government figures, Morgan Stanley calculates that civil servants are paid ¥8.8 per minute, workers in large firms ¥7.1 and those in medium ones ¥4.2. Such inequities, and the divide between traditional, regular “salarymen” jobs and non-regular workers, distort the labour market. Regular workers are more willing to trade higher wages for job security. Most Japanese companies reward staff for seniority rather than ability, which stops people moving companies. Mr Niinami calls Japanese business practices “dinosaur systems”. + +Tackling such issues has frustrated Japanese governments for decades. Some reckon the introduction of artificial intelligence to workplaces, to make up for the falling labour force and poor productivity, will actually push down wages in many industries. Already sushi restaurants with almost no staff are common: dishes are ordered on a tablet and delivered by conveyor belt. Wage hawks have a lot on their plates. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21707221-raising-japanese-wages-harder-it-looks-behind-pay-wall/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +American property + +The REIT stuff + +Explaining the boom in property-based investment trusts + +Sep 17th 2016 | From the print edition + + + +THEY did not know it, but when a group of merchants raised money for the Boston Pier in 1772, they were early pioneers of a vehicle known today as a REIT (real-estate investment trust). The financing structure for the pier—the merchants owned the land together and shared the rent—in essence describes an investment product that, 250 years on, is all the rage. + +A REIT is a legal structure that owns, or finances, property that generates income. It pays no taxes itself but has to distribute over 90% of earnings to shareholders. Crippled by the financial crisis in 2008, they have since grown fast. This year their market capitalisation passed $1 trillion, or 4% of the American total, close to the size of the utilities sector. They have been performing well, beating the market in 2014, 2015 and so far this year, when they have generated a return of 18.1%, and are trading at an average multiple of 23 times earnings, compared with 17 times for the S&P 500 index as a whole. In a mark of their new prominence, this month S&P and MSCI, another index provider, classified real estate as a distinct sector. + +The early REITs of the 1960s were seen as dull, niche investment vehicles designed to collect a steady stream of rental income. But what used to make them boring—that they resemble fixed-income bonds—is positively exciting in today’s low-interest-rate world. REITs churn out stable and predictable cashflows from five- to ten-year-long property leases. Their current yield is 3.6%, higher than the 1.7% yield offered by a ten-year Treasury bond. + +Moreover, the growth of REITs has coincided with a soaring rental market after America’s housing crisis in 2008. As more people have opted to rent than own, rents have surged by as much as 3-6% a year in cities such as New York and San Francisco. Even in the suburbs, national REIT operators have emerged, buying and leasing batches of single-family homes with gardens. As a group, three of these have made a return of 33% this year. + +A third reason for the current craze for REITs is that, since the crisis, they have become more diverse. Businesses not traditionally seen as part of the property sector, such as telecom towers, data centres and forestry concessions, have labelled themselves as REITs to avoid corporate tax and achieve higher market valuations. They now make up one-sixth of REITs’ total market capitalisation. Between 2013 and 2015 a wave of casinos and hotels spun off their properties, listed the assets separately as REITs, and leased them back to the operating business. Big firms such as Macy’s and McDonald’s have faced pressure from activist investors to do something similar. + +The REIT-creation frenzy, however, may already have passed its zenith. In June the Internal Revenue Service, America’s tax bureau, issued regulations banning companies outside the property industry from abusing the tax-free REIT structure. So far this year only one REIT has listed its shares, compared with seven last year and 19 in 2013. Another looming risk is an interest-rate rise. When the Federal Reserve hinted at tighter monetary policy in 2013, REITs prices dropped by 13.5% in five weeks. And the rental market is coming to a peak as supply picks up and demand weakens. “The days of 6% rent growth in lots of markets are probably over,” says Mike Kirby, the chairman and co-founder of Green Street Advisors, a property-advisory firm. + +But REITs also look more resilient than they were in 2008. They have reduced their debt-to-asset ratio from about 70% then to 31% today. E-commerce may threaten some shopping malls, but also boosts demand for facilities such as warehouses and data centres. Last year four out of the seven top-performing REITs were data centres. The industry today bundles a range of different businesses whose only similarity is checking the same tax-free box. Another pier, anyone? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21707223-explaining-boom-property-based-investment-trusts-reit-stuff/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Global inequality + +Shooting an elephant + +Charting globalisation’s discontents + +Sep 17th 2016 | HONG KONG | From the print edition + + + +THE “elephant chart” began life in 2012, hidden in the middle of a World Bank working paper by Branko Milanovic, an authority on global inequality. It turned a few heads in the New York Times in 2014, then graced Mr Milanovic’s well-received book on global inequality earlier this year. Somewhere along the way it acquired its name, which helped it stampede across social media, brokers’ notes and even a ministerial speech this spring and summer. “I’m about to bring an elephant into the room. A wild, angry, and dangerous elephant,” joked Lilianne Ploumen, the Dutch trade minister, last month, before unveiling the chart to her audience. Now, its critics are trying to shoot it. + +The distinctively shaped chart summarised the results of a huge number (196) of household surveys across the world. It was created by ranking the world’s population, from the poorest 10% to the richest 1%, in 1988 and again in 2008. At each rank, the chart showed the growth in income between these two years, an era of “high globalisation” from the fall of the Berlin Wall to the fall of Lehman Brothers. + + + +When drawn for individual countries, charts of this kind tend to slant upwards (the rich gain more than the poor) or downwards. The global chart was unusual in sloping up, down, then upwards again, like an inverted S on its back, or an elephant raising its trunk. The chart showed big income gains at the middle and very top. But the era of globalisation seemed to offer little for the people in between: households in the 75th to 85th percentile of the income distribution (who were poorer than the top 15% but richer than everyone else) seemed scarcely better off in 2008 than they had been 20 years before. They constituted a decile of discontent, squeezed between their own countries’ plutocrats and Asia’s middle class. This dramatic dip in the chart seemed to explain a lot. “Cue Donald Trump. Cue nationalism. Cue Brexit,” wrote Mr Milanovic’s publisher. + +But who exactly occupies this dangerous decile? A report this week by Adam Corlett of the Resolution Foundation, a British think-tank, examines this group more closely, taking aim at some simplistic interpretations of the chart. Many people assume the chart shows how people in this controversial income bracket back in 1988 fared over the subsequent 20 years. But that is not quite the case. Instead it compares the people in this bracket in 1988 with people in the same bracket 20 years later. They may not be the same people. They may not belong to the same class. They may not even belong to the same country. + +What accounts for the changing constituents of each income bracket? Fast growth will, of course, carry people up the income ranks. Data, dissolution and demography also play a part. The countries included in the 1988 and 2008 rankings differ because data did not exist for both years or because the country did not (several emerged only after the Soviet Union dissolved). In addition, faster population growth among people in the lower reaches of the income distribution will automatically shunt everyone above them further up the income ranks, even without any improvement in their fortunes. + +To see why, imagine a simple world populated by 750m poor Southerners and 250m rich Northerners. Imagine that incomes do not change over the next 20 years, but the South’s population doubles. That would increase its share of mankind from 75% to over 85%. For that simple reason, in the 75th to 85th percentiles of the global income distribution poor Southerners would replace rich Northerners. Any comparison of this income bracket with the same bracket 20 years before would thus show a big decline in fortunes, even though no one is worse off. + +Turbulent deciles + +In reality, better-off Latin Americans and Westerners of modest means dominated the 75th-80th percentiles of the global income distribution in 1988. By 2008, rich Chinese had encroached upon this income bracket. The flat incomes shown by the elephant chart do not, then, reflect the stagnant fortunes of Trumpians and Brexiteers. They instead reflect a comparison between the original Latin American and Western occupants of this income bracket and the Chinese who jumped into it 20 years later. + +None of this will be new to readers of Mr Milanovic’s academic work. He and his co-author, Christoph Lakner, were quite clear about the shifting composition of the troublesome deciles. Their journal article also included an alternative chart, which does what many people assumed the elephant chart had done: it illustrates how each income group in each country in 1988 fared over the subsequent 20 years. In its shape, the chart looks recognisably elephantine. But the top 1% do markedly less well in this alternative chart than in the more famous one, and even the worst performing groups (now around the 90th percentile) boast income growth of 20% or more over 20 years. + +Both charts show that China’s middle classes and the world’s rich have gained handsomely in the era of globalisation. It also remains true that the lower middle classes in rich countries have fared less well. The elephant shape remains, even if its dimensions are different. The Resolution Foundation’s critique added little to the original academic papers (except a reason to go back and read them). But it clarified a misunderstanding shared by many of the pundits and drumbeaters who made such a noise about the rampaging chart. Like the elephant George Orwell described in a famous essay about his time as a colonial policeman in Burma, this one was shot chiefly to silence a crowd. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21707219-charting-globalisations-discontents-shooting-elephant/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Hank Greenberg + +Final claims + +An insurance legend has his day in court in a fight to save his name + +Sep 17th 2016 | From the print edition + +Hank has legacy issues + +A QUEUE began forming early. By the time the doors swung open at 2pm, there was a mob. After 11 years of legal skirmishes, including eight pre-trial appeals, the case of the people of the state of New York versus Maurice (Hank) Greenberg, a former chief executive of AIG, once the world’s largest insurer, and against Howard Smith, AIG’s former chief financial officer, began at last on September 13th. + +Mr Greenberg was one of the last to arrive. Still spry at 91, he wore an elegant dark suit, sporting the red-and-white pin from his recent induction to the French Légion d’Honneur. As he sat, looking attentive and relaxed, it was indeed his honour at stake. + +Opening, David Ellenhorn, counsel for the state of New York, accused Mr Greenberg and Mr Smith of concocting two sham transactions to mask problems in the company’s core insurance operations. These took place between 2000 and 2003, when AIG was perceived by the stockmarket as that insurance rarity, a firm capable of producing high growth at low risk. + +Even at the time, however, there were whispers of problems. The most prominent of the controversial transactions occurred after AIG’s share price briefly plunged following a quarterly financial disclosure. A trend of declining reserves was tarnishing AIG’s reputation for underwriting prowess and mitigating risk. + +In response, Mr Ellenhorn said, Mr Greenberg called the chief executive of General Re at the time, Ronald Ferguson, to initiate a deal that enabled AIG to pay $5m to bolster the appearance of its reserves. Two General Re executives pleaded guilty to federal charges as a result of the transaction. Five other executives from AIG and General Re were subsequently found guilty in a trial. The verdict was later reversed and charges dropped, but the defendants acknowledged fraud. + +The second transaction was prompted by losses in a car-warranty business run by Mr Greenberg’s son, Evan. Mr Greenberg was irate, Mr Ellenhorn said, and took complete control of the organisation. An offshore company secretly controlled by AIG was used to disguise underwriting losses as an investment. Mr Ellenhorn said Mr Greenberg “designed, created, negotiated and implemented every aspect” of both transactions. His direct involvement reflected how important he believed the underlying issues to be, particularly because they could have an impact on AIG’s share price, which Mr Greenberg saw as an external report card on AIG and himself. + +None of the state’s accusations, responded Mr Greenberg’s lawyer, David Boies, could be substantiated by an individual or a document. The state’s case, he added, is “devoid of any admissible evidence”. Also, the transactions were too small to have a material impact on AIG’s results, and thus to have legal relevance. + +Resolving these claims will take many months. Perhaps the oddest aspects are the potential penalties. The state seeks to recover past bonuses and bar the defendants from senior roles in public companies and the securities industry. Given the defendant’s age, Mr Boies responded, the ban is superfluous and any return of bonuses would be unjustified given the company’s performance at the time. Mr Ellenhorn countered that Mr Greenberg continues to run an important insurer, C.V. Starr, that buried within its operations is control of a securities firm, and that he remains sprightly. + +None of this suggests unbridgeable differences between the two sides. But that may be because the penalties should not be viewed literally. Both sides accept the case is really about Mr Greenberg’s legacy. He needs to be found accountable, said Mr Ellenhorn: that would send a message to other CEOs that they cannot get away with fiddling with the books. + +The importance of the charges being heard, moreover, pales beside a possible inference from a guilty verdict. That might raise the suspicion that Mr Greenberg condoned accounting fraud to mask deteriorating earnings and risk-control shortcomings. That, in turn, might make some wonder whether the AIG that blew up during the global financial crisis, after his departure, had long been a house of cards. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21707222-insurance-legend-has-his-day-court-fight-save-his-name-final-claims/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Misbehaving bankers (1) + +Accounts receivable + +At an American bank, staff found dodgy ways to meet targets set by higher-ups + +Sep 17th 2016 | From the print edition + + + +PEOPLE respond to incentives. When bankers at Wells Fargo were paid to sign customers up for more and more products, that’s exactly what they did. To a fault. Over around five years, starting in 2011, up to 1.5m deposit accounts and 565,000 credit-card accounts may have been opened without clients’ permission; unwanted debit cards were issued; fake e-mail addresses were created to enroll people for online banking. + +The gain to Wells was tiny. America’s second-biggest deposit-taker and biggest mortgage-lender, which earned $5.6 billion in the second quarter, has so far refunded $2.6m in charges for overdrafts, failing to maintain minimum balances on unwanted accounts and so on. The punishment, at first blush, is small too. At $185m, the fines announced by regulators on September 8th are loose change next to the ten-digit penalties coughed up by banks since the financial crisis. But the damage done to Wells’s reputation, on both Main Street and Wall Street, is harder to gauge. + +Wells emerged strongly from the financial crisis, spreading across America from its western base after buying stricken Wachovia, once the country’s fourth-largest bank, in 2008. Its watchword was “cross-selling”—prodding customers into taking extra services, to tie them more tightly to the bank. “Eight is great”, staff were told. They got pretty close: in the second quarter households with current (checking) accounts had on average 6.27 products. The bank is not abandoning cross-selling. It says it erred on the side of caution in totting up the number of dodgy accounts. But it said on September 13th that it would cease to set staff targets for product sales. + +What went wrong? According to the bosses, a few rotten apples in a retail bank employing 100,000: it sacked 5,300 people over the five years. John Shrewsberry, the chief financial officer, has said those at fault were poor performers, “making bad choices to hang on to their job”. Of the sacked staff, one-tenth were branch managers or above. They do not include the head of the retail bank, Carrie Tolstedt. Wells said in July that Ms Tolstedt, who was paid $9.1m in cash and shares last year, would retire at the end of 2016, after 27 years’ service. John Stumpf, the chief executive, piled on the praise. + +The bank’s embarrassment is not about to end. Federal prosecutors have reportedly begun investigations. Mr Stumpf has been summoned to appear before the Senate Banking Committee on September 20th. With elections looming, senators will doubtless queue up to give him a good shoeing in front of the cameras. + +The stockmarket has already kicked the share price: this week Wells lost its place as America’s biggest bank by market capitalisation to JPMorgan Chase. Investors may worry that less pushy selling may dampen earnings—or that the scandal will cost Wells custom. But people stick with their banks, even after bigger blunders than this. Mr Shrewsberry said this week that Wells had been braced for a flood of calls, e-mails and social-media traffic but “we’ve had very low volumes”. Inertia can be a bank’s best friend. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21707233-american-bank-staff-found-dodgy-ways-meet-targets-set/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Misbehaving bankers (2) + +Accounts payable + +At Indian banks, staff found dodgy ways to meet targets set by higher-ups + +Sep 17th 2016 | MUMBAI | From the print edition + +Where cash is still the raj + +PEOPLE respond to incentives. But as economists have long recognised, often not in the way they were supposed to. Take an odd Indian phenomenon: bank branch managers have personally been donating tiny amounts of money to their own customers. Their aim was to please their political masters by boosting the usage rates of a government scheme to bring banking to the poor. + +“The One-Rupee Trick”, as it was dubbed by the Indian Express newspaper, which uncovered it this week, is a hare-brained attempt by bankers to spare politicians’ blushes. In 2014 a bold financial-inclusion plan known as Jan Dhan (whose full name translates as “Prime Minister’s People’s Wealth Scheme”) was launched by the newly elected prime minister, Narendra Modi. It promised basic bank accounts for all Indians. Hundreds of millions of accounts were opened. But as with past schemes, manyremained unused. + +Then the scheme seemed to take off. The proportion of such “zero-balance” accounts began to fall, from roughly half a year ago to under a quarter at the end of August. The apparent success was trumpeted widely, including by Mr Modi. But it is now clear a large part of the decline was fictitious. A cheap way to massage the figures was to deposit as little as one rupee (1.5 cents) into each account. Many bank managers used their own money. + +So far, over 10m one-rupee accounts have been found at 34 banks, out of 240m accounts opened since 2014. One, Punjab National Bank, had boasted that only 9% of its 13.6m Jan Dhan accounts were zero-balance. It was forced to admit that a whopping 29% had only one rupee, and a further 5% no more than ten rupees. + +The vast majority of the fiddling was at state-owned banks. Many are struggling and have either been rescued by a government bail-out or may need one soon—not the ideal time for a bank boss to admit he has failed to keep a flagship government promise. Some bank bosses were reported as having complained about “pressure” from above. + +The revelation lends credence to claims that big poverty-reduction schemes are often mainly public-relations exercises. That is a shame: Jan Dhan is part of a sensible attempt to move away from inefficient subsidies of staples such as rice and kerosene to deposits made directly into poor people’s bank accounts. For now, all many poor Indians have to show for it is a single rupee. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21707234-indian-banks-staff-found-dodgy-ways-meet-targets-set-higher-ups-accounts/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Stealth socialism + +Passive investment funds create headaches for antitrust authorities + +Sep 17th 2016 | From the print edition + + + +THERE is a contradiction at the heart of financial capitalism. The creative destruction that drives long-run growth depends on the picking of winners by bold, risk-taking capitalists. Yet the impressive (if not perfect) efficiency of markets means that trying to out-bet other investors is almost inevitably a losing proposition. Algorithmic punters trade away the tiniest of arbitrage opportunities near-instantaneously. Active investment strategies therefore amount to little more than a guessing game: one in which, over time, the losses from bad guesses eventually top the gains from good ones. Betting with the market—through broad index funds, for instance—is therefore a good way to maximise returns. Yet where does that leave capitalism, red in tooth and claw, and its need for bloody-minded nonconformists? + +“Passive” investment vehicles, like those low-fee index funds, now soak up enormous amounts of cash. In America, since 2008, about $600 billion in holdings of actively managed mutual funds (which pick investments strategically) have been sold off, while $1 trillion has flowed into passive funds. So the passive funds now hold gargantuan ownership stakes in large, public firms. That makes for some awkward economics. Research by Jan Fichtner, Eelke Heemskerk and Javier Garcia-Bernardo from the University of Amsterdam tracks the holdings of the “Big Three” asset managers: BlackRock, Vanguard and State Street. Treated as a single entity, they would now be the largest shareholder in just over 40% of listed American firms, which, adjusting for market capitalisation, account for nearly 80% of the market (see chart). The revolution is here, but it was not the workers who seized ownership of the means of production; it was the asset managers. + +A growing number of critics reckon this cannot be good for capitalism. Some argue that because such funds take investors out of the role of allocating capital the outcome does indeed resemble Marxism (or worse, since communists at least dared to suggest that some activities were more deserving of capital than others). In August analysts at Sanford C. Bernstein, a research firm, thundered: “A supposedly capitalist economy where the only investment is passive is worse than either a centrally planned economy or an economy with active market-led capital management.” This is over the top. Passive investment pays because active investors rush to price in new information. If passive investors took over the market entirely, unexploited opportunities would abound, active strategies would thrive and the passive-fund march would stall. + +Others worry that concentrated ownership will lead to managerial complacency. Actively traded mutual funds might sell a stake in a poorly managed firm; passive funds lack that option. Captive shareholders could allow management to run amok. Yet that worry, too, seems overstated. Passive asset managers can still be active shareholders. Most have signalled their intent to push executives for good performance. Rather, the big problem with concentrated ownership may be that firms are too mindful of the interests of their biggest shareholders. A fund with a stake in just one firm in an industry wants that firm to out-compete its rivals. Big asset managers, which take large stakes in nearly all of the dominant firms in an industry, have a somewhat different view. From their perspective, the best way to generate portfolio returns might be for rivals to treat each other with kid gloves. + +In a series of recent papers, Martin Schmalz of the University of Michigan and a cast of co-authors work to detect the anti-competitive effects of concentrated ownership. Their results are striking. Institutional investors hold 77% of the shares of the companies providing services along the average airline route, for instance, and 44% of shares are controlled by just the top five investors. Adjusting measures of market concentration to take account of the control exercised by big asset managers suggests the industry is some ten times more concentrated than the level America’s Department of Justice considers indicative of market power. Fares are perhaps 3-5% higher than they would be if ownership of airlines were truly diffuse. In theory large asset-management firms might be quietly instructing the firms they own not to undercut rivals. But the writers suggest nothing so nefarious need occur to cause trouble. Fund-appointed board members could simply refrain from urging conservative CEOs to compete aggressively, or CEOs might anyway conclude that their big shareholders would prefer peace and profits. + +Buy low, sell high + +A similar analysis suggests bosses are rewarded handsomely for playing along. The authors note that large funds often approve generous pay packets for executives whether or not they are performing well. Indeed, in industries with highly concentrated ownership, bosses receive relatively less pay than peers when their firm does well, and relatively more when competing firms do well. The authors reason that a weaker link between executive pay and firm performance makes CEOs lose interest in aggressive competition, boosting profits across the portfolio as a whole. + +Such findings should trigger alarm bells among regulators. There are no easy fixes, however. Limiting the ownership stakes of the large, passive asset managers might boost competition, but it would undercut the cheapest and most effective investment strategy available to retail investors. Forcing asset managers to be entirely hands-off, on the other hand, might also boost competition, but neuter shareholder oversight of management. + +Yet despair is premature. Common ownership is not the only barrier to competition in the American economy. Corporate giants are all too good at buying up troublesome rivals and lobbying for privileges. As evidence of the side-effects of growth in passive funds accumulates, the best remedy might be for Washington to take its antitrust responsibilities more seriously. + + + +Sources: + +"Hidden power of the big three? Passive index funds, re-concentration of corporate ownership and new financial risk", Jan Fichtner, Eelke Heemskerk and Javier Garcia-Bernardo, August 2016. + +"Anti-competitive effects of common ownership", José Azar, Martin Schmalz and Isabel Tecu, Ross School of Business Paper No. 1235, July 2016. + +"Common ownership, competition and top management incentives", Miguel Anton, Florian Ederer, Mireia Gine and Martin Schmalz, Ross School of Business Paper No. 1328, Augugst 2016. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21707191-passive-investment-funds-create-headaches-antitrust-authorities-stealth/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +The Zika virus: A mystery no more + +Precision agriculture: TV dinners + +Similarities in language: You say potato... + +Medical treatment: Feed a virus, starve a bacterium + +Aviation safety: Flight response + + + + + +Articles Sections Next + +The Zika virus + +A mystery no more + +Scientists have learned a great deal about Zika since the outbreak began. Now for the task of stopping it + +Sep 17th 2016 | From the print edition + + + +A YEAR ago, most people would have drawn a blank if asked about Zika. Since then, an outbreak of the mosquito-borne virus that began in early 2015 in Brazil has spread to more than 60 countries in the Americas, Africa, Asia and the Pacific islands (see chart). A study published on September 1st in the Lancet estimates that 2.6 billion people live in areas to which Zika could eventually spread. + +At first, scientists knew little more than anyone else. Zika is not new; the virus was first isolated in Africa in 1947. But it was obscure, and therefore little studied. Only during the present outbreak did it become clear that infection among pregnant women was associated with birth defects and neurological problems in babies. But there has been much progress, and scientists now know far more about the disease than they did when the outbreak began. + + + +Start with transmission. The vast majority of Zika infections occur through the bite of Aedes aegypti, a mosquito common in tropical climates and especially in cities. Another species, A. albopictus, which thrives in cooler climes, may also be able to transmit the bug, though possibly not as efficiently. Unusually for a mosquito-borne virus, Zika can also be transmitted sexually (the first case of transmission in the United States occurred this way). Studies are under way to find out how long after infection that remains possible, but traces of the virus’s genetic code have been found in semen six months after the onset of symptoms. Infection through blood transfusion has been confirmed as well. The virus has also turned up in urine, tears and saliva, though that does not necessarily mean that it can spread through them. + +The health effects of the virus are becoming clearer too. Something like four in five Zika infections cause no symptoms. The rest usually pass with only mild discomfort, including a rash and red eyes. Occasionally, infected people develop Guillain-Barré syndrome, a condition in which the immune system goes awry, causing weakened muscles and temporary paralysis. Death is rare, but some sufferers spend weeks hooked to a breathing machine. + +Infection is also dangerous if it occurs during pregnancy: in perhaps 1-2% of cases the virus attacks the brain tissue of the fetus. That causes microcephaly, a condition characterised by an abnormally small head, a result of the skull collapsing around the shrunken brain. Babies who escape that fate may suffer other Zika-related damage, including eyesight and hearing loss. Scans of apparently healthy babies born to infected mothers sometimes show brain abnormalities, though it is too early to know whether these will lead to developmental problems later in life. And there are worries, as yet unresolved, about the neurological implications in adults, too. + +Then there is the question of tracking and diagnosis. Working out just how far Zika has spread within a country is tricky. A common test works by testing for antibodies, specialised proteins produced by the immune system that are designed to disable the virus. But it cannot distinguish easily between antibodies for Zika and those for dengue fever, another mosquito-borne illness, which is related to Zika and often occurs in the same sorts of places. That may turn out to be a good thing: antibodies against dengue may provide some defence against Zika. But it muddles attempts to track the disease, and to predict how it might spread. + +Two open questions are whether a Zika infection confers lasting immunity to the virus, and how strains from the two known lineages—one African and one Asian—might interact. There are reasons to worry: an initial infection with one of the four strains of dengue is usually harmless, but subsequent infection with another strain can be fatal. + +An ounce of prevention + +Official advice continues to evolve with the stream of new findings. Preventing mosquito bites is the main line of defence. The World Health Organisation prescribes condoms or sexual abstinence for at least six months for those returning from areas where Zika is spreading. Several countries have begun screening blood donors. + +The most encouraging news is on the vaccine front. Several are in early-stage trials. Two—one developed by the National Institutes of Health in America, and the other by Inovio Pharmaceuticals, a private firm—use a new technology called “DNA vaccination”. Traditional vaccines use either dead viruses or weakened live ones to provoke an immune response. DNA vaccines introduce snippets of the viral genome into the patient’s cells, relying on the cells themselves to produce viral proteins that are then recognised by the immune system. DNA is much easier to handle than weakened or dead viruses; and by focusing on genetic sequences common to different variants, a vaccine may offer protection against several strains of the virus. If all goes well, large-scale trials could begin early next year, with results by mid-2018. + +By contrast, efforts to cull mosquitoes have been less successful. Aedes aegypti is a hardy creature, happy to breed in water pools as tiny as a bottle cap; it has also learned to live indoors, in nooks where outdoor spraying cannot reach it. + +So the hunt is on for other ways to limit mosquito numbers. One is to unleash mosquitoes pre-infected with Wolbachia, a bacterium that impairs their ability to transmit Zika, and makes males sterile. The hope is those males will mate with wild females but produce no offspring, shrinking the size of the next generation. An alternative is to release mosquitoes sterilised with radiation, though this may make them less appealing suitors. Oxitec, a British firm, has developed genetically modified Aedes aegypti whose offspring die before reaching adulthood; in trials, releasing them into the wild has cut mosquito counts by 90%. + +The trouble with such ideas is that they give evolution a powerful incentive to select its way around the problem. Over time, that could make them less effective. One option that might avoid that problem is a “gene drive”, a new technique that tweaks genomes in a way that ensures that the modified, damaging traits are inherited by all of a mosquito’s offspring. Gene drives are highly controversial: if they work, they could give humans the power to wipe out—with minimal effort—any species that engages in sexual reproduction. They are also experimental and confined to labs; no one knows how effective they would be in the wild. Last week the Bill and Melinda Gates Foundation, a charity, announced it would boost its funding of gene-drive research to $75m. That will speed up the work—and the debate about deliberately wiping out a species. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21707184-scientists-have-learned-great-deal-about-zika-outbreak-began-now/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Precision agriculture + +TV dinners + +Unused TV spectrum and drones could help make smart farms a reality + +Sep 17th 2016 | CARNATION, WASHINGTON | From the print edition + + + +ON THE Dancing Crow farm in Washington, sunflowers and squashes soak up the rich autumn sunshine beside a row of solar panels. This bucolic smallholding provides organic vegetables to the farmers' markets of Seattle. But it is also home to an experiment by Microsoft, a big computing firm, that it hopes will transform agriculture further afield. For the past year, the firm's engineers have been developing a suite of technologies there to slash the cost of "precision agriculture", which aims to use sensors and clever algorithms to deliver water, fertilisers and pesticides only to crops that actually need them. + +Precision agriculture is one of the technologies that could help to feed a world whose population is forecast to hit almost 10 billion by 2050. If farmers can irrigate only when necessary, and avoid excessive pesticide use, they should be able to save money and boost their output. + +But existing systems work out at $1,000 a sensor. That is too pricey for most rich-world farmers, let alone those in poor countries where productivity gains are most needed. The sensors themselves, which probe things like moisture, temperature and acidity in the soil, and which are scattered all over the farm, are fairly cheap, and can be powered with inexpensive solar panels. The cost comes in getting data from sensor to farmer. Few rural farms enjoy perfect mobile-phone coverage, and Wi-Fi networks do not have the range to cover entire fields. So most precision-agriculture systems rely on sensors that connect to custom cellular base stations, which can cost tens of thousands of dollars, or to satellites, which require pricey antennas and data plans. + +In contrast, the sensors at Dancing Crow employ unoccupied slices of the UHF and VHF radio frequencies used for TV broadcasts, slotting data between channels. Many countries are experimenting with this so-called "white space"; to unlock extra bandwidth for mobile phones. In cities, tiny slices of the white-space spectrum sell for millions of dollars. But in the sparsely populated countryside, says Ranveer Chandra, a Microsoft researcher, there is unlicensed space galore. + +The farmer's house is connected to the internet in the usual way. A special white-space base station relays that signal to a shed elsewhere on the farm that sports an ordinary TV aerial. Individual sensors talk to the shed using TV transceivers with a range of more than 8km—enough for all but the biggest farms. And those transceivers are cheap: "We've already built sensors for less than $100," says Mr Chandra. "Our aim is to get them to under $15." + +Microsoft is not the only organisation hoping to make agricultural sensors practical. Researchers at the University of Applied Sciences in Mannheim, for instance, have developed a sensor network that relies on a technology called software-defined radio, which uses computers to simulate an ultra-flexible, very sensitive radio receiver. And scientists at the University of Nebraska-Lincoln are working on sensors that communicate with radio waves that propagate through the soil rather than the air, and which draw their power from the vibrations generated by farm vehicles moving about on the surface. + +But although such sensor data are useful, but they cannot tell you everything. To fill in the gaps, Dancing Crow uses a drone. These are getting cheaper (a basic model costs $1,000) but they require some skill to fly, and their small batteries mean limited flight times. So Microsoft's team wrote an autopilot that lets a farmer outline a plot to survey, works out the most efficient route and sends the drone on its way, reducing the time taken to cover a farm by over 25%. + +The resulting imagery contains useful information on growing conditions, crop health and insect pests, but interpreting it properly is beyond most farmers. So Microsoft also developed software that runs on an ordinary laptop, and can stitch together individual pictures into a single panoramic view of the entire farm. Sensor data can be laid atop this view, and the computer can then extrapolate a handful of sensor readings into predicted values for moisture, acidity and so on at any given point. + +When the nearby Snoqualmie River rises up to flood Dancing Crow farm in a couple of months, as it does most winters, Mr Chandra plans to take his technologies to India. For the very poorest farmers, even a cheap drone will be beyond their budget. He wants to see if a lower-tech solution will work just as well—simply attaching a smartphone to a $5 helium balloon and walking it through the fields. + +Correction: An early version of this article misspelled Mr Chandra's name. We apologise for the error. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21707242-unused-tv-spectrum-and-drones-could-help-make-smart-farms-reality-tv-dinners/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Similarities in language + +You say potato... + +Distant languages sound more similar than you might expect + +Sep 17th 2016 | From the print edition + + + +IN ENGLISH, the object on your face that smells things is called a “nose”, and, if you are generously endowed, you might describe it as “big”. The prevailing belief among linguists had been that the sounds used to form those words were arbitrary. But new work by a team led by Damian Blasi, a language scientist at the University of Zurich, and published in Proceedings of the National Academy of Sciences, suggests that may not be true—and that the same sounds may be used in words for the same concepts across many different languages. + +Dr Blasi was struck by the fact that, although the idea that sounds were arbitrary was firmly entrenched, there was strikingly little evidence for it. So along with his team, which combined skills in anthropology, linguistics, cognitive science, history and statistics, he decided to examine as many languages as possible to see if it was true. They analysed word lists derived from 4,298 of the world’s 6,000-odd languages, which accounted for about 85% of its historical linguistic diversity. + +They focused on words for 100 basic concepts, including the names of body parts, such as “bone” and “ear”, and natural phenomena, like “leaf” and “star”. Verbs, including “bite”, the pronouns “I”, “you” and “we”, and descriptive properties, such as “red”, were also studied. The words were transcribed using a sort of universal alphabet that reduced all sounds to 34 distinct consonants and 7 vowels. Then they ran the numbers. + +Dr Blasi knew that some words, such as “language”, “langue” and “lingua”, would be similar because they have a common history. Others, including “sugar”, “tea” and “coffee”, have similar-sounding names in different languages because they are traded goods. The people exchanging them were thus exposed to each other and had strong incentives to make themselves understood. But even when keeping all of that in mind and trying to control for it, the team found a lot more consistency across languages than they had expected. + +The words for “nose”, for instance, often involve either an “n” sound or an “oo” sound, no matter the language in question. The concept of “round” was noticeably likely to be conveyed using a word containing the “r” sound. Employing an “s” sound in the word for “sand” is similarly common. In fact, the researchers found that almost a third of their 100 concepts had more similarities in the sounds used by languages to express them than expected. That suggests there must be some deeper reason for the commonalities. + +There are several theories. One is that some objects have names whose sounds bring them to mind, a sort of “sound symbolism”. Employing a nasal “n” sound to name a nose would be one example. Another is that sensory associations play a role. Studies have found that people routinely associate darker colours with lower sounds and lighter colours with higher ones, for instance. Such shared synaesthesia might account for some of the similarities. Or the commonalities might be leftovers from some ancient, now-forgotten proto-language. + +Dr Blasi and his colleagues are reluctant, at this stage, to endorse one theory over another. But there is a more prosaic possibility—expediency. “Huh” is a word that has been found to be remarkably similar across languages. “It’s cheap, short and understandable,” says Dr Blasi—convenient for something you might say hundreds of times a day. Ditto for a pronoun like “I”. Perhaps parsimony is what ultimately unites the world. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21707185-distant-languages-sound-more-similar-you-might-expect-you-say-potato/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Medical treatment + +Feed a virus, starve a bacterium + +An old wives’ tale gets some support from medical science + +Sep 17th 2016 | From the print edition + + + +WHETHER it is best to feed a fever and starve a cold, or vice versa, varies with the grandparent being asked. Medicine has decided that it is always a bad idea to deny food to the ill. Now a new study suggests that by ignoring such old wives’ tales, medics may have missed a trick. A paper just published in Cell by a team of researchers led by Ruslan Medzhitov at Yale University suggest that force-feeding mice infected with influenza keeps them alive—but doing the same to mice with bacterial infections is fatal. + +Dr Medzhitov was inspired by experiments conducted not by medics, but by zoologists. Most animals instinctively respond to infection by cutting back on food, and a slew of studies in recent years have shown that when diseased animals are force-fed they are more likely to die than if they are allowed to abstain. But Dr Medzhitov wondered whether that held true for all types of disease. + +To investigate, he and his team infected one group of mice with a murine influenza virus, and the other with Listeria monocytogenes, a bacterium that causes food poisoning. Some mice in each group were force-fed rodent chow, while others were force-fed nutrition-free saline. Every single mouse that was infected with the bacterium died if they were given food, but half survived on the saline. The results of the viral infection were less stark, but still clear: 77.8% of infected mice survived if given food, but only 10% did so when given saline. + +One clue as to what might be going on lies in the fact, identified in earlier research, that cells infected with bacteria often prefer to burn fat instead of glucose, their usual fuel. Further experiments led the team to confirm that glucose specifically was the key to survival in both viral and bacterial infections. As with the rodent chow, mice with bacterial infections that were fed glucose died. But infected mice fed a version of glucose that they could not metabolise lived. Again, those results were nearly reversed in mice suffering from a viral infection. All of those fed the unusable variant of glucose died within ten days; 40% of those fed the ordinary stuff survived. + +The glucose seemed to make no difference to the bugs, nor to the immune systems of the mice. Instead, it altered the biology of the infected cells. In viral infections, many infested cells were committing suicide, a cellular scorched-earth strategy designed to slow the spread of the virus. Providing glucose seemed to bolster their ability to fight the infection without resorting to such drastic measures. + +The opposite was true for bacteria. Burning fat protected infected mice. But swamping the cells with glucose caused them to produce prodigious quantities of highly reactive chemicals known as free radicals, which damage cells. That collateral damage made survival less likely. + +The precise biological details of why glucose is good for viral infections and bad for bacterial ones are not yet known. And Dr Medzhitov’s results will have to be tested in humans before medics can apply them. But they are a useful reminder that there is sometimes genuine wisdom hidden in folksy homilies. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21707186-old-wives-tale-gets-some-support-medical-science-feed-virus-starve/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Aviation safety + +Flight response + +An artificially intelligent autopilot that learns by example + +Sep 17th 2016 | From the print edition + +Just relax and enjoy the view, Captain + +ON JUNE 1st 2009, an Air France airliner travelling from Rio de Janeiro to Paris flew into a mid-Atlantic storm. Ice began forming in the sensors used by the aircraft to measure its airspeed, depriving the autopilot of that vital data. So, by design, the machine switched itself off and ceded control to the pilots. Without knowing their speed, and with no horizon visible in a storm in the dead of night, the crew struggled to cope. Against all their training, they kept the plane’s nose pointed upward, forcing it to lose speed and lift. Shortly afterwards the aeroplane plummeted into the ocean, killing all 228 people on board. + +French air-accident investigators concluded that a lack of pilot training played a big part in the tragedy. As cockpits become ever more computerised, pilots need to keep their flying skills up to date. But pilots are also in short supply. In July Airbus predicted that 500,000 more will be needed by 2035 to keep pace with aviation’s expected growth. That means there is pressure to keep aircrew in their cockpits, earning money, rather than in the simulators, taking expensive refresher courses. + +Help may be at hand, though, from artificial-intelligence (AI) experts at University College London (UCL). Inspired by the Air France tragedy, Haitham Baomar and his colleague Peter Bentley are developing a special kind of autopilot: one that uses a “machine learning” system to cope when the going gets tough, rather than ceding control to the crew. + +Today’s autopilots cannot be trained, says Mr Baomar, because they are “hard coded” programs in which a limited number of situations activate well-defined, pre-written coping strategies—to maintain a certain speed or altitude, say. A list of bullet points (which is what such programs amount to) does not handle novelty well: throw a situation at the computer that its programmers have not foreseen, and it has no option but to defer to the humans. + +Mr Baomar suspected that a machine-learning algorithm could learn from how human pilots cope with serious emergencies like sudden turbulence, engine failures, or even—as happened to the Air France jet—the loss of critical flight data. That way, he says, the autopilot might not have to cede control as often, and that, in turn, might save lives. + +AI takes off + +Machine learning is a hot topic in AI research. It is already used for tasks as diverse as decoding human speech, image recognition or deciding which adverts to show web users. The programs work by using artificial neural networks (ANNs), which are loosely inspired by biological brains, to crunch huge quantities of data, looking for patterns and extracting rules that make them more efficient at whatever task they have been set. That allows the computers to teach themselves rules of thumb that human programmers would otherwise have to try to write explicitly in computer code, a notoriously difficult task. + +UCL has lots of experience in this area. It was the institution that spawned DeepMind, the company (now owned by Google) whose AlphaGo system this year beat a human grandmaster at Go, a fiendishly complicated board game. The UCL team has written what it calls an Intelligent Autopilot System that uses ten separate ANNs. Each is tasked with learning the best settings for different controls (the throttle, ailerons, elevators and so on) in a variety of different conditions. Hundreds of ANNs would probably be needed to cope with a real aircraft, says Dr Bentley. But ten is enough to check whether the idea is fundamentally a sound one. + +To train the autopilot, its ten ANNs observe humans using a flight simulator. As the plane is flown—taking off, cruising, landing and coping with severe weather and aircraft faults that can strike at any point—the networks teach themselves how each specific element of powered flight relates to all the others. When the system is given a simulated aircraft of its own, it will thus know how to alter the plane’s controls to keep it flying as straight and level as possible, come what may. + +In a demonstration at a UCL lab, the system recovered with aplomb from all sorts of in-flight mishaps, from losing engine power to extreme turbulence or blinding hail. If it were to lose speed data as the Air France flight did, says Mr Baomar, the machine would keep the nose low enough to prevent a stall. The newest version will seek speed data from other sources, like the global positioning system (GPS). + +To the team’s surprise, the system could also fly aircraft it had not been trained on. Despite learning on a (simulated) Cirrus light aircraft, the machine proved adept with the airliners and fighter jets also available in the database. That is a good example of a machine-learning phenomenon called “generalisation”, in which neural networks can handle scenarios that are conceptually similar, but different in the specifics, to the ones they are trained on. + +UCL is not the only institution interested in better autopilots. Andrew Anderson of Airbus, a big European maker of jets, says his firm is investigating neural networks, too. But such systems are unlikely to be flying passenger jets just yet. One of the downsides of having a computer train itself is that the result is a black box. Neural networks learn by modifying the strength of the connections between their simulated neurons. The exact strengths they end up with are not programmed by engineers, and it may not be clear to outside observers what function a specific neuron is serving. That means that ANNs cannot yet be validated by aviation authorities, says Peter Ladkin, a safety expert at Bielefeld University in Germany. + +Instead, the new autopilot will probably find its first uses in drones. The system’s versatility has already impressed delegates at the 2016 International Conference on Unmanned Aircraft Systems in Virginia, where Mr Baomar presented a paper. The system’s ability to keep control in challenging weather might see it used in scientific investigations of things like hurricanes and tornadoes, says Dr Ladkin—some of the most challenging flying there is. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21707187-artificially-intelligent-autopilot-learns-example-flight-response/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +Medieval manuscripts: Patricians of parchment + +Russia today: Cluster bomb + +Practical ethics: How to live well + +Mankind tomorrow: Future shock + +Ebola: Best practice + +New film: Man of the moment + +New film: Correction: Water, water, everywhere + + + + + +Articles Sections Next + +Medieval manuscripts + +Patricians of parchment + +Why manuscripts matter + +Sep 17th 2016 | From the print edition + + + +Meetings with Remarkable Manuscripts. By Christopher de Hamel. Allen Lane; 632 pages; £30. + +ON MAY 4th 1945, when Allied troops entered Adolf Hitler’s mountain retreat in the Bavarian Alps, they discovered devastation—and some very valuable art. Later, American troops would display a selection under an improvised sign reading: “The Hermann Goering Art Collection: Through Courtesy of the 101st Airborne Division”. Among the Rembrandts and Renoirs, few paid much attention to two small, dull, squarish objects. A French officer trod on one, thinking it was a brick; another was scooped up by an army doctor. + +That initial diagnosis proved incorrect, though. It was not a brick, but a medieval manuscript (the word means “written by hand”.) The second was one of the most famous manuscripts ever made: a prayer book for a medieval queen that had fetched a record-breaking price at Sotheby’s in London in 1919. This was the “Book of Hours” made for a French queen, Jeanne de Navarre. In “Meetings with Remarkable Manuscripts” Christopher de Hamel, fellow and librarian of the Parker Library of Corpus Christi College, Cambridge, reminds readers why this was such a thrilling discovery. + +Mr de Hamel is an unashamed manuscript groupie. The 12 works he writes about are, he explains, superstars of vellum. Like many celebrities, some are tastelessly glitzy, gleaming with gold and studded with jewels. All are closely guarded, spending their days in climate-controlled confinement and travelling in bomb-proof cases. “It is easier,” says Mr de Hamel, “to meet the pope or the president of the United States than it is to touch the ‘Très Riches Heures’ of the Duc de Berry.” + +When one New York bookseller was asked to explain in a few sentences who buys such objects, he replied, “I can tell in two words: the rich.” These books, patricians of parchment, have circulated in European society at the very highest level for centuries. Queens inherit them. Saints travel with them. Popes, even now, bow down before them. Jeanne de Navarre’s “Hours”, before Goering got it, was made for the 14th-century French queen and later owned by Baron Edmond de Rothschild. + +To touch a manuscript is to touch another world. And what an otherworldly world this is. Half of the works here were written between the sixth and 11th centuries, when Vikings ruled the waves and men had names like Ecgfrith and Ceolfrith. A little of this mystery still clings to their pages: when Mr de Hamel takes the Gospels of St Augustine (pictured) to a service in Canterbury Cathedral he notices that its leaves are so light they flutter and hum in time to a hymn, “as if the sixth-century manuscript…had come to life”. + +Manuscripts are words written down, but they impart far more than sentences. Precise moments in time can be found, like pressed flowers, preserved in their pages. In one ninth-century manuscript a picture of the planets in orbit has been drawn with such precision that astronomers say this configuration happens only once in 17 trillion years. They have dated the manuscript to March 18th 816. + +These books may no longer be owned by monarchs, but modern libraries can be as well-defended as medieval kings. Mr de Hamel’s interviews are the closest most readers will come to meeting these books themselves. Like all good interviewers, he leaves the reader with the sense of what it was like to meet each star—their aura, their attire and their size (frequently, as is so often the case with celebrities, smaller than expected). Erudite and enthusiastic, Mr de Hamel is not so star-struck that he cannot be critical: a famous illustration in the “Book of Kells” is “dreadfully ugly”; a naked Adam and Eve look “knobbly-kneed” and “brightly pink like newly arrived English holidaymakers on Spanish beaches”. + +He concludes with a call to arms: manuscripts are a neglected corner of academia and he wants more people to study them. Mr de Hamel has catalogued more medieval manuscripts than anyone in history; everyone, not only academics, should listen to what he has to say. These books are object lessons in impermanence. Only one, the “Hours” of Jeanne de Navarre, remains in the country where it was made. The rest have been dispersed. + +In much the same way that oceanographers study the paths of plastic ducks to understand currents, or economists study shipping routes to observe the world economy, one could follow these manuscripts to understand a millennium of European history. Churches are overthrown. Empires fade. Thousand-year Reichs crumble after just a few years. As powers move, so too do manuscripts. Intended to be monuments to their owners’ everlasting potency they serve mainly as their tombstones. A medieval lesson for us all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21707176-why-manuscripts-matter-patricians-parchment/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Russia today + +Cluster bomb + +How Russia is ruled + +Sep 17th 2016 | From the print edition + +The godfather of them all + +All the Kremlin’s Men: Inside the Court of Vladimir Putin. By Mikhail Zygar. Public Affairs; 371 pages; $27.99. + +“WHO is Mr Putin?” a foreign-affairs columnist famously asked when the then unknown Vladimir Putin took office in 2000. Now, more than 16 years into his rule, the question has become: Which Mr Putin is the real Mr Putin? Is it the coolly pragmatic accidental president who once discussed joining NATO? The swaggering manager of a country drunk on petrodollars? Or the new tsar, out to restore Russian greatness, annexing Crimea and relentlessly challenging the Western order? + +The answer, Mikhail Zygar argues in a compelling new book, “All the Kremlin’s Men”, is that all of these hold true. Mr Zygar, a leading Russian journalist, portrays a ruler who has transformed himself in response to outside events. This is especially so regarding the Western world. Mr Zygar argues that Mr Putin began his presidency convinced that he could build good relations with the West, particularly with America. By his third term, having accumulated a litany of grievances and grudges, he has become what Mr Zygar describes as a “world-weary…Slavophile philosopher” who reportedly told Joe Biden, America’s vice-president: “We are not like you. We only look like you.” + +Refreshingly, Mr Zygar chooses to focus not on the president himself, but on the courtiers who have shaped and shepherded him. He tells an insider’s tale, drawing on material collected over many years, latterly as editor-in-chief of TV Rain, Russia’s last independent television network (Mr Zygar stepped down last December, not long after this book was published in Russia). He brings fresh insight to characters such as Mikhail Khodorkovsky, the ex-boss of Yukos who was convicted of underpaying taxes, and Dmitry Medvedev, Russia’s prime minister. And he pulls back the curtain on several key figures whom Western readers may not know, such as Viktor Medvedchuk, the chief-of-staff of the former Ukrainian president, Leonid Kuchma, and Vyacheslav Volodin, a political strategist who engineered Mr Putin’s conservative turn in his third term. + +Mr Zygar portrays Mr Putin as a reactionary tactician rather than a nefarious grand strategist. Fate and opportunity play more of a role than calculated scheming. One example was the decision to clamp down on the independent media after its withering coverage of Mr Putin’s clumsy handling of the Kursk submarine sinking in August 2000. But two important constants emerge. At home, Mr Putin is driven by the pursuit of power, and abroad, by the perception that the West does not respect Russia and its interests (including its primacy over former Soviet neighbours). From the start, Ukraine occupied a central place. “We must do something, or we’ll lose it,” Mr Putin often repeated to his staff (or so Mr Zygar reports). + +What unfolds is a tale of Russian politics based on personalities, ego and ambition, rather than policy, convictions or ideology. Mr Zygar focuses on the fluid allegiances of the polittekhnologs, the uniquely Russian spin doctors who shaped the recent political landscape. Mr Volodin began his career running Yevgeny Primakov’s campaign against Mr Putin’s nascent Unity party; only in recent years did he become Mr Putin’s chief political adviser. Vladislav Surkov, an architect of Unity, meanwhile, aligned himself with Mr Medvedev during Mr Putin’s interregnum, only to return to the fold as his point man on the Ukraine crisis. If there is any question, Mr Zygar writes, that a given event is the result of “malicious intent or human error, rest assured that it is always the latter”. + +The stream of court intrigue gives “All the Kremlin’s Men” the juicy allure of a Russian thriller. But structuring the book around members of Mr Putin’s entourage leads to some confusing chronological leaps. Foreign readers may struggle; the English edition has a list of characters, but a timeline would also have come in handy. + +More troubling is Mr Zygar’s reliance on hearsay and anonymous sources, a flaw he readily owns up to and tries to parlay into insight. Thus, readers should take his verbatim report of some of Mr Putin’s private remarks, for example, with a grain of salt. Even so, the conflicting accounts and confused recollections of his subjects lead him to identify one of the Putin era’s defining features: the absence of plans or strategy. As Mr Zygar concludes, “It is logic that Putin-era Russia lacks.” That, more than the master plots often ascribed to Mr Putin, is reason for the West to fear him. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21707179-how-russia-ruled-cluster-bomb/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Practical ethics + +How to live well + +A moral philosopher offers handy hints on how to live an ethical life + +Sep 17th 2016 | From the print edition + + + +Ethics in the Real World: 82 Brief Essays on Things That Matter. By Peter Singer. Princeton University Press; 355 pages; $27.95 and £19.95. + +SEARCH on Google, buy products on Amazon or share a friend’s post on Facebook and, after a while, the invisible algorithms that underpin these websites will start subtly changing their offerings in an effort to please. As algorithms like these improve the way they serve up content that people like, they may create for their users a false, virtual world where their values go unchallenged. + +Those wishing to escape this cosy cocoon should welcome a robust test of the ethical assumptions by which they live. There are few people better qualified to provide this challenge than Peter Singer, a moral philosopher and professor of bioethics at Princeton University. “Animal Liberation”, an earlier book by Mr Singer, is credited with giving the animal-rights movement intellectual heft. “The Life You Can Save”, which proposes minimum ethical standards for charitable donations, was cited by Melinda Gates in an interview about “The Giving Pledge”, a campaign to encourage billionaires to give the majority of their fortunes to good causes (over 150 have signed so far). + +Mr Singer’s latest book, “Ethics in the Real World”, is a collection of 82 essays, each rarely more than three or four pages long. As such, it is an accessible introduction to the work of a philosopher who would not regard being described as “accessible” as an insult. As Mr Singer notes drily in the introduction, “I suspect that whatever cannot be said clearly is probably not being thought clearly either.” + +Despite their brevity, the essays do not shirk the big moral questions including perhaps the biggest of all: can there be objectively true answers to the question of how one ought to act? In a piece about “On What Matters” by Derek Parfit, a philosopher, Mr Singer distils more than 1,400 pages of argument down to a scant three and concurs with him that moral judgments can, indeed, be true or false. + +Most of Mr Singer’s book, though, deals with pressing contemporary moral issues including abortion (he argues that the interests of a conscious, rational being trump those of the fetus, which only has the potential to become self-aware in the future), voluntary euthanasia (he is in favour) and the importance of acting to prevent catastrophic climate change. + +Perhaps the most arresting essay is a previously unpublished piece in which Mr Singer urges readers to spare a thought for the poor, benighted turkey during Thanksgiving. The breast of the standard American turkey has become so enlarged by selective breeding that it can no longer mate because the male’s breast gets in the way. Mr Singer describes how thousands of such sexually disabled male turkeys are masturbated by workers and the females artificially inseminated using the tube of an air compressor (at the rate of one every 12 seconds at one turkey farm). Mr Singer advises serving a vegetarian Thanksgiving meal or, at the very least, forking out for a more expensive heritage breed that has been raised humanely. + +Agree with him or not, Mr Singer practises what he preaches. He has not eaten meat for more than 40 years, and in 1996 he stood (unsuccessfully) as a Senate candidate for the Australian Greens. One essay from 2012 celebrates the European Union’s ban on the use of battery cages for hens, a ban he and others helped to bring about through protests beginning in the 1970s. + +However, agreeing with Mr Singer that objective ethical truths exist and imagining anyone, even a moral philosopher, has a monopoly on divining what these might be are not the same. Among the best essays in this collection are those that demonstrate that Mr Singer is alive to the possibility of being wrong. In “A Clear Case for Golden Rice” he admits that “none of the disastrous consequences” that Greens feared would result from planting genetically modified (GM) crops have come to pass and some GM crops may have a role to play in public health or in feeding the planet in an era of climate change. A welcome admission that even a much-feted moral philosopher may sometimes err. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21707177-moral-philosopher-offers-handy-hints-how-live-ethical-life-how-live-well/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Mankind tomorrow + +Future shock + +A bestselling Israeli historian looks at where mankind is heading + +Sep 17th 2016 | From the print edition + + + +Homo Deus: A Brief History of Tomorrow. By Yuval Noah Harari. Harper; 440 pages; $35. Harvill Secker; £25. + +“SAPIENS”, Yuval Noah Harari’s previous book which came out in 2011, looked to the past. Zipping through 70,000 years of human history, it showed that there is nothing special about our species: no divine right, no unique human spark. Only the blind hand of evolution lies behind the ascent of man. That work ended with the thought that the story of Homo sapiens may be coming to an end. In his new book, “Homo Deus”, the Israeli historian heads off into the future. + +In one thrilling sweep, Mr Harari proclaims that the old enemies of mankind— plague, famine and war—are now manageable. “For the first time in history,” he writes, “more people die today from eating too much than from eating too little; more people die from old age than from infectious diseases; and more people commit suicide than are killed by soldiers, terrorists and criminals combined.” Instead, the challenges of the third millennium will be how to achieve immortality, happiness and divinity, the latter in the sense of enhancing people’s physical and cognitive abilities beyond the biological norm. + +This might sound like good news, but the author has a dystopian vision. People, increasingly, will cede jobs and decisions to machines and algorithms. The “useless masses” cast aside by this development will pursue the mirage of happiness with drugs and virtual reality. Only the super-rich will reap the true rewards of the new technologies, commandeering evolution with intelligent design, editing their genomes and eventually merging with machines. Mr Harari envisages an elite caste of Homo sapiens evolving into something unrecognisable: Homo deus. In this brave new world, the rest of mankind will be left feeling like “a Neanderthal hunter in Wall Street”. + +Mr Harari’s prophecy is bleak, but it is far from new. More interesting is the way he roots his speculation about technology in the context of how liberal democracy has evolved. For most of human history, Mr Harari says, humans believed in gods. This lent their world a cosmic order. But then, at least in some parts of the world, science began simultaneously to give mankind power and to strip it of meaning by relegating religion to the sidelines. This existential hole was filled by a new religion, humanism, that “sanctifies the life, happiness and power of Homo sapiens”, he writes. The covenant between humanism and science has defined modern society: the latter helps people achieve the goals set by the former. + +But the life sciences are now undermining free will and individualism, which are the foundations of humanism. Mr Harari describes scientific research that, in his eyes, proves that the “free individual is just a fictional tale concocted by an assembly of biochemical algorithms”. As it dawns on mankind that free will is an illusion and external algorithms can predict people’s behaviour, Mr Harari believes liberal democracy will collapse. What will replace it? Perhaps a techno-religion such as “Dataism” that treats everything in terms of data processing and whose supreme value is the flow of information. In this context, Homo sapiens is a rather unimpressive algorithm, destined for obsolescence—or an upgrade. + +Although there is plenty to admire in the ambitious scope of this book, ultimately it is a glib work, full of corner-cutting sleights of hand and unsatisfactory generalisations. Mr Harari has a tendency towards scientific name-dropping—words like biotech, nanotechnology and artificial intelligence abound—but he rarely engages with these topics in any serious way. Instead, he races along in a slick flow of TED-talk prose. Holes in his arguments blur like the spokes of a spinning wheel, giving an illusion of solidity but no more. When the reader stops to think, “Homo Deus” is suddenly less convincing, its air of super-confidence seductive but misleading. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21707180-bestselling-israeli-historian-looks-where-mankind-heading-future-shock/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Ebola + +Best practice + +Dispelling myths about the spread of a deadly disease + +Sep 17th 2016 | From the print edition + + + +Ebola: How a People’s Science Helped End an Epidemic. By Paul Richards. Zed Books; 180 pages; $24.95 and £12.99. + +AS THE Ebola virus galloped across Guinea, Liberia and Sierra Leone two years ago causing mounting panic in Europe and America, familiar tropes about west Africa began to reassert themselves. “Many locals seem unwilling to break with age-old customs,” fretted an exasperated foreign doctor who was evacuated from Sierra Leone to Germany in December 2014. West Africans, it seemed to some, were stuck in the fatal grip of irrational superstition. Dogged fealty to immutable traditions, above all funeral practices that insisted upon the ritual washing of the dead, had condemned the region to an epidemic of potentially biblical proportions. + +But as the West became more fretful, west Africans were quietly doing the opposite. And it was this calm, considered and deeply rational response to the disease among affected populations that meant that the doom-laden predictions—the hundreds of thousands of cases prophesied by some epidemiologists at the height of the crisis in late 2014—in the end failed to materialise. This is the argument of Paul Richards, a British anthropologist specialising in the Mano River region where Sierra Leone, Guinea and Liberia intersect and the 2014-15 Ebola epidemic first appeared. The most important lesson, he argues in his new book, “Ebola: How a People’s Science Helped End an Epidemic”, is that money and technology—from vaccines and drugs to robot nurses—ultimately mattered much less than indigenous know-how. + +This is not an entirely new argument, since many at the time noted the chiefs’ central role in leading the fight against the disease. It is also well-known that Sierra Leone’s rural south-east saw Ebola decline much earlier than the north-west, despite receiving less aid and technical assistance. This is, however, the first book-length ethnographic study of the epidemic, and represents the first serious attempt to grapple with some of the practical as well as epistemological questions posed by the local response to the outbreak. + +Mr Richards’s work is in places controversial. His suggestion that better-functioning health systems might have made the epidemic worse in its early stages is questionable. His criticism of the public-health propaganda put out by the World Health Organisation (WHO) is perhaps unduly harsh. And his conviction that “local ideas changed independently of the loudhailers” is supported by too little hard evidence. + +But he offers important insights, especially concerning the central issue of burial practices, one of the epidemic’s main routes of infection. Tradition, it turned out, was mutable. Villagers on the front line quickly came to see the risks, and rituals were adapted accordingly. The problem was that the “safe burials” ordered by the WHO—with its understandable yet singular fixation on biosafety—were insensitive to the sacred dimensions of funeral custom. Burial teams were made up of outsiders, with no social connection to the dead that they buried; religious respect was an afterthought. Friction with central governments—Sierra Leone’s government, for example, made washing corpses a criminal offence—was the predictable result. + +In the final analysis, though, Mr Richards’s argument is a surprisingly optimistic one. The Ebola epidemic pitted an underfunded and sluggish international public-health infrastructure against supposedly ignorant rural communities. Doomsday did not result. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21707178-dispelling-myths-about-spread-deadly-disease-best-practice/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +New film + +Man of the moment + +At 90, Andrzej Wajda has made a poignant new film + +Sep 17th 2016 | From the print edition + +Remembering the struggle + +HE WAS a friend of Kazimir Malevich and Marc Chagall, champions of Russia’s avant-garde, and he founded Poland’s foremost museum of modern art, in Lodz. But that didn’t save Wladyslaw Strzeminski from humiliation, persecution and destitution when he refused to toe the party line during Stalin’s Sovietisation of Poland. Now, focusing on the years between 1949 and 1952, the country’s greatest film-maker, Andrzej Wajda, has told the visionary art theorist’s story in “Afterimage”, one of a new crop of biopics dealing with great artists. + +The film, shot by Pawel Edelman (whose previous works include “The Pianist”), is a haunting depiction of a tragic life. Pictures are smashed; so are illusions. Strzeminski was missing an arm and a leg—he was wounded in the first world war—and also emotionally crippled. He was angrily estranged from his late ex-wife, Katarzyna Kobro (who had to burn her own sculptures to keep the family warm in wartime Poland). Their small daughter Nika, brilliantly played by Bronislawa Zamachowska in her film debut, is devoted to her workaholic father—but decides she would feel more at home in an orphanage than living with him. When a besotted student declares her love, he grunts, “and I thought that it couldn’t get any worse.” + +Strzeminski is initially unbroken, contemptuously dismissing the guardians of obligatory Socialist-Realist orthodoxy, with their leaden rhetoric and aesthetic illiteracy. He has influential friends. He is a world-famous academic. He is an outspoken critic of the suffocating cultural conservatism of pre-war Poland. His students rally round, demanding to be taught. “Art has a right to take part in life, and life has a right to play in art,” he argues. + +But brains and beauty break on the grim, grey rocks of the Communist bureaucracy. Strzeminski (played by Boguslaw Linda) is expelled from the artists’ association—a body he helped found. His great achievement, the Neoplastic room in the city’s art museum, is painted over. Even his students’ artworks are smashed by secret-police goons. He tumbles down the artistic ladder, first painting propaganda posters, and finally, half-starving, getting a job dressing shop windows. As an artistic unperson he is banned even from buying paints. + +Mr Wajda, aged 90, lived through that era, fighting Communist censorship to make films like “Ashes and Diamonds” and “Man of Marble”. Many thought he had already made his last film, his Oscar-nominated masterpiece, “Katyn”, from 2007, about the wartime Soviet massacre of 20,000 Polish officers (one of whom was his father). They were wrong. “Afterimage” adds a powerful final note to a stellar career. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21707175-90-andrzej-wajda-has-made-poignant-new-film-man-moment/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Correction: Water, water, everywhere + +Sep 17th 2016 | From the print edition + +The Three Gorges dam is on the Yangzi River in China, and not on the Yellow River as implied in our review last week (“Water, water, everywhere”). + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21707174-correction-water-water-everywhere/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Phyllis Schlafly: “Ms” for “misery” + + + + + +Articles Sections Next + +Obituary: Phyllis Schlafly + +“Ms” for “misery” + +Phyllis Schlafly, a firebrand critic of American feminism, died on September 5th, aged 92 + +Sep 17th 2016 | From the print edition + + + +SINCE the Pilgrim Fathers wisely abandoned their “naive and nonsensical” socialist experiment, America had thrived on hard work, motivated by family, in a climate of freedom, lately defended by the atom bomb: “a marvellous gift that was given to our country by a wise God”. Such was Phyllis Schlafly’s creed and as every liberal-minded American agreed it was outdated, extreme and repellent: obsessively anti-communist, anti-immigration, anti-abortion, anti-gay. Yet those who patronised or ignored her regretted it. + +She cut her political teeth chewing up the internationalist Republican establishment, personified by the 1964 presidential contender, Nelson Rockefeller. Her first book, “A Choice not an Echo”, a 121-page, 75 cent self-published polemic, sold 3m copies and helped the populist Barry Goldwater (“in your heart you know he’s right”) snatch the nomination. He plunged to defeat against Lyndon Johnson, who countered: “in your guts you know he’s nuts.” + +Her next target was the treacherous, weak-willed foreign-policy elite: people like Robert McNamara who blundered into Vietnam but were scared to fight properly, or that deluded appeaser Henry Kissinger, whom she lambasted in a densely argued 800-page tome. Rather than wasting money on the “moondoggle” America should scare the Soviet Union by maintaining an overwhelming superiority in those God-given nuclear weapons. Arms-control talks were a dangerous distraction too: the Communists would cheat as they always did—the only deal they honoured was the one with Hitler in 1939. + +Her consuming interest in the Soviet menace meant she came late—almost too late—to what proved to be her most notable fight: stopping the Equal Rights Amendment. By 1972 the ERA had passed both houses of Congress overwhelmingly. It was quickly adopted by 30 of the 38 states required. Her decade-long crusade to block “lesbians, radicals and federal employees” from seeking a “constitutional cure for their laziness and personal problems” was one of the most striking feats of grassroots organisation in American political history. + +She united socially conservative Catholics, Protestants, Mormons and Orthodox Jews, previously mistrustful and distant camps, with tens of thousands of women enraged by their supposed champions. In halting a juggernaut backed by almost the entire political establishment she also brought the ultraconservative right from the fringe to the mainstream, paving the way for the Moral Majority of the 1980s, the Tea Party and ultimately Donald Trump—the first Republican nominee since Reagan, she said, “who actually represents the average American worker”. + +The “men’s liberation amendment”, she argued, destroyed women’s rights to be mothers and homemakers, and to be gently treated in hard manual jobs. Mandatory equality would mean conscription for women—even into combat units; she mockingly sent quiches to legislators who failed to see how cowardly that was. + +Cooked up + +Her wider battle was against what she claimed was the feminist aim to make women and men interchangeable. Her arguments ranged from history (the Christian age of chivalry) to theology (the honour and respect due to Mary). The claim that American women were downtrodden was the “fraud of the century”, she wrote in “The Power of the Positive Woman”, a book published in 1977. If women were underrepresented in Congress, that was because they mostly wanted to do more important things, like having babies. Free enterprise helped far more than feminism—household appliances ended drudgery. Above all: marriage was the best deal ever devised for women. + +She delighted in the ire she aroused. In a debate in 1973 Betty Friedan, a leading American feminist, called her an “Aunt Tom”, adding “I would like to burn you at the stake.” She was doused in pig’s blood, hit in the face by an apple pie and lampooned in the “Doonesbury” comic strip (delightedly, she framed it). Her opponents saw her as an arch-hypocrite: married to a wealthy lawyer, a fortunate lady of leisure who sought to deny equality to her sisters. She thought the abuse proved her point: her opponents were smug, intolerant and out of arguments. + +In fact Mrs Schlafly (not “Ms”, which stood for “misery”) was no more the child of privilege than she was a powder-puff. Born into a family hard-hit by the Great Depression, she worked her way through college doing night shifts in an ammunition factory, testing machineguns. Under her carefully coiffed locks—like a treble clef, the New York Times wrote unkindly—was a formidably effective brain. It was honed by a master’s degree from Radcliffe gained at 20; at 51 (having gained her husband’s permission) she whizzed through law school. + +A deeper paradox, which she fiercely denied, was that sexism in her own ranks held her back. A male politician with her brains, charm, drive, grit and following—and 20-plus books, a syndicated column and a radio show—would have surely landed a job in Ronald Reagan’s Pentagon. But she never held or won public office. Not that she cared. Her biggest achievement, she insisted, was raising her six children: all breast-fed, against (like so much) the fashion of the times. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21707169-phyllis-schlafly-firebrand-critic-american-feminism-died-september-5th-aged-92-ms/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +World GDP + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Sep 17th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21707215/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Sep 17th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21707194-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Sep 17th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21707195-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Sep 17th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21707197-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +World GDP + +Sep 17th 2016 | From the print edition + + + +The world economy grew by 2.7% in the second quarter of 2016 compared with a year earlier, according to our estimates. China’s second-quarter GDP grew at an annual rate of 6.7%, largely because of government stimulus that helped shore up demand. Growth slowed in India, but a 7.1% expansion was still the fastest of any big economy. Together, China and India accounted for 63% of global growth. The United States also saw its growth slow, to a year-on-year rate of 1.2%, after business inventories fell for the first time in nearly five years. Britain’s GDP grew by 2.2%, up from 2% in the prior quarter, suggesting that uncertainty in the run-up to the Brexit referendum in June did not much affect the economy. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21707196-world-gdp/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Sep 17th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21707188-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Thu, 15 Sep 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +The superstar company: A giant problem + + + + + +British politics: Britain’s one-party state + + + + + +Syria’s ceasefire: A risky bargain + + + + + +Extinctions to order: Gene-ocide + + + + + +The World Bank: Lucky Jim + + + + + +Letters + + + +On the burkini, Citadel, Colombia, game theory, demography, Milton Friedman, Star Trek: Letters to the editor + + + + + +Briefing + + + +The Labour Party: Salvaging Jerusalem + + + + + +United States + + + +Trump and the Alt-Right: Pepe and the stormtroopers + + + + + +The campaigns: Heard on the trail + + + + + +Presidential health: Hillary-care + + + + + +Income and poverty: Great again? + + + + + +Playing at policing: Power of the county + + + + + +Election brief: The Supreme Court: About to tilt + + + + + +Lexington: Who’s deplorable? + + + + + +Lexington: Survey + + + + + +The Americas + + + +A Brazilian politician’s fate: An end to power-broking + + + + + +Canada and peacekeeping: Helmets back on + + + + + +Argentina’s crime capital: A lethal location + + + + + +Bello: From comrade to caudillo + + + + + +Asia + + + +The Philippines under Rodrigo Duterte: Sceptred bile + + + + + +North Korea’s nuclear programme: Bangs and bucks + + + + + +Mahathir Mohamad: Can a leopard change its spots? + + + + + +Water in India: A kink in the hose + + + + + +Banyan: Knife-edge lives + + + + + +China + + + +Tibet: The plateau, unpacified + + + + + +Middle East and Africa + + + +African cities: Left behind + + + + + +Industry in Africa: In or out? + + + + + +Health care in Rwanda: An African trailblazer + + + + + +Egypt’s Nubians: Let them go home + + + + + +Divorce in Iraq: Breaking up in Baghdad + + + + + +Europe + + + +Jihadism in French prisons: Caged fervour + + + + + +Russia’s elections: Duma-day machine + + + + + +Post-communist chic: You must remember this + + + + + +Serbia’s prime minister: The changeling + + + + + +Germans against trade: Fortress mentality + + + + + +Charlemagne: State of disunion + + + + + +Britain + + + +Economic geography: How the other three-quarters live + + + + + +Schools and social mobility: A new syllabus + + + + + +Slimming the House of Commons: Boundary dispute + + + + + +National museums: Existential rethink + + + + + +Brexit and trade: Not so simple + + + + + +Food and the law: Full English Brexit + + + + + +Drug overdoses: Shooting up + + + + + +Drug overdoses: Survey + + + + + +International + + + +Al-Qaeda: The other jihadist state + + + + + +Special report: Companies + + + +Companies: The rise of the superstars + + + + + +A history lesson: What goes around + + + + + +Driving forces: Why giants thrive + + + + + +Misconceptions: The new Methuselahs + + + + + +Key attributes: The alphabet of success + + + + + +Joining the ranks: Do you blitzscale? + + + + + +Downsides: The dark arts + + + + + +Future policy: A delicate balance + + + + + +Business + + + +A tech icon’s future: Twitter in retweet + + + + + +Online media: Three-hit wonder + + + + + +Europe’s digital single market: Incumbents rule + + + + + +Retailing: Long journey + + + + + +Multinationals in Venezuela: Stay or go + + + + + +The drug industry: Growing pains + + + + + +Autonomous cars: Pitt stop + + + + + +BASF: Chemical reaction + + + + + +Schumpeter: Risky business + + + + + +Finance and economics + + + +Chinese investment: A sponge wrung dry + + + + + +Buttonwood: Trust busting + + + + + +Wages in Japan: Behind a pay wall + + + + + +American property: The REIT stuff + + + + + +Global inequality: Shooting an elephant + + + + + +Hank Greenberg: Final claims + + + + + +Misbehaving bankers (1): Accounts receivable + + + + + +Misbehaving bankers (2): Accounts payable + + + + + +Free exchange: Stealth socialism + + + + + +Science and technology + + + +The Zika virus: A mystery no more + + + + + +Precision agriculture: TV dinners + + + + + +Similarities in language: You say potato... + + + + + +Medical treatment: Feed a virus, starve a bacterium + + + + + +Aviation safety: Flight response + + + + + +Books and arts + + + +Medieval manuscripts: Patricians of parchment + + + + + +Russia today: Cluster bomb + + + + + +Practical ethics: How to live well + + + + + +Mankind tomorrow: Future shock + + + + + +Ebola: Best practice + + + + + +New film: Man of the moment + + + + + +New film: Correction: Water, water, everywhere + + + + + +Obituary + + + +Obituary: Phyllis Schlafly: “Ms” for “misery” + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +World GDP + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.09.24.TXT b/homeworks/B20769/homework1/data2/2016.09.24.TXT new file mode 100644 index 0000000..04f8de1 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.09.24.TXT @@ -0,0 +1,5080 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Sep 24th 2016 | From the print edition + + + +A UN convoy attempting to supply aid to rebel-held areas in Syria was bombed, apparently by Russian jets. Twenty people were killed. The UN and other humanitarian groups briefly suspended aid deliveries. John Kerry, America’s secretary of state, called on Russia and Syria to stop flying warplanes over northern Syria, as he tried to salvage a ceasefire that began only recently. See article. + +Iraq’s finance minister, Hoshyar Zebari, was sacked by parliament over allegations of corruption. Mr Zebari is a prominent Kurdish politician who had served as foreign minister and was well known to international creditors and donors. + +Israel saw a surge in attacks on soldiers and policemen by Palestinians armed with knives, shattering several months of relative calm. Some of the attackers were killed. + +At least 44 people were killed in the Democratic Republic of Congo during protests against unconstitutional manoeuvrings by President Joseph Kabila to stay in office beyond the end of his second term. + +UN investigators found evidence that 564 people have been executed in Burundi since April 2015, when protests first broke out against plans by Pierre Nkurunziza to run for a third term as president. The investigators have named several suspects whom they say should be charged with crimes against humanity. + +Rocketing ahead + +North Korea claimed to have tested a powerful new engine for a rocket, little over a week after its fifth test of a nuclear device. It said the engine would be used to launch satellites. + +Militants attacked an Indian army base in Kashmir, killing 18 soldiers. The government blamed Pakistan. + +Renho, a former model and minister, was elected leader of the Democratic Party, Japan’s main opposition force. She is the first woman to lead her party. + +A study by academics at Columbia and Harvard universities found that pollution from forest fires in Indonesia caused over 100,000 premature deaths in South-East Asia last year. + +Why isn’t he smiling? + + + +In Russia the party of President Vladimir Putin won three-quarters of the 450 seats up for grabs in a parliamentary election. But turnout, at 48%, was an all-time low. See article. + +Alternative for Germany, a far-right party, won 14% of the vote in elections to Berlin’s regional assembly, and will enter the local parliament for the first time. Angela Merkel, the German chancellor, has admitted her policy of welcoming refugees is unpopular and is open to changing aspects of it. + +A trade deal between the European Union and Canada edged forward after the Social Democrats, Germany’s junior coalition partner in government, voted in favour of it. But Sigmar Gabriel, the party’s leader, who had staked his political future on the vote, is opposed to the EU’s trade deal with America, known as TTIP. + +A fire destroyed large parts of the biggest refugee camp in Lesbos, an island in Greece, where around 5,000 asylum-seekers were being held. Conditions in the camps across Greek islands and the mainland have long been dire. + +The EU accepted Bosnia’s application to join it. The Balkan country will now be assessed on whether it meets certain criteria on human rights and the rule of law. + +The contest to lead Britain’s Labour Party appeared to be conceded by the challenger, Owen Smith, soon after the voting closed, when he said he would not serve under Jeremy Corbyn. The contest was triggered after Mr Corbyn, the incumbent, lost the support of 75% of his MPs following the referendum to leave the EU. He has the support of most of the party’s membership. + +Tony Blair decided to close Tony Blair Associates. The firm was criticised during Mr Blair’s time as Middle East peace envoy, when its clients included oil groups. The former prime minister will retain “a small number of personal consultancies”, and still earn hundreds of thousands of pounds for giving a speech. + +Gaming the vote + +Venezuela’s electoral commission said that a referendum to recall President Nicolás Maduro will not take place until the middle of the first quarter of 2017. That means it will not be held by January 10th, which would allow for a fresh election. If the referendum passes after that date the vice-president takes over and the ruling party stays in power. + +Thousands of demonstrators marched to the Zócalo, the main square in Mexico City, on Mexico’s independence day to demand the resignation of the president, Enrique Peña Nieto. They are angry with Mr Peña in part because he invited Donald Trump to the presidential residence. Undeterred by the hostility, Mr Peña gave the traditional Grito de Dolores (“Cry of Dolores”), which began Mexico’s war of independence against the Spanish government in 1810. + +Sérgio Moro, the Brazilian judge who is leading the investigation of a corruption scandal centred on Petrobras, a state-controlled oil company, said that the country’s former president, Luiz Inácio Lula da Silva, will go on trial. He denies wrongdoing. + +Terror in the Big Apple + +A suspected Islamist was charged with setting off a bomb in Manhattan that injured 30 people and another in New Jersey, where no one was hurt. Other bombs were found nearby. Ahmad Khan Rahami is of Afghan descent and lived for a while in Pakistan. See article. + +The governor of North Carolina declared a state of emergency in Charlotte when rioting broke out in the city after a black man was fatally shot by a policeman, who was also black. The police said the man was armed and had posed a “deadly threat”. The violence spread to the nearby freeway, where lorries were looted. + + + +Illegal immigration to the United States is being driven less by Mexicans and more by people from Central America and India, according to a report from Pew, though Mexicans still account for half the total. Immigration is a big issue in the election campaign, with Donald Trump promising to build a wall along the border with Mexico. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21707593-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Sep 24th 2016 | From the print edition + +The Bank of Japan announced a further easing of monetary policy. It said it would cap the yield on ten-year government bonds at about 0% and also committed itself to buying assets until inflation exceeds its target of 2%. The BoJ has been one of the more interventionist central banks over the past few years, but its radical policies have done little to bring an end to Japan’s low inflation. + +The Federal Reserve took few by surprise when it left interest rates unchanged at its latest policy meeting. In recent weeks some of the central bank’s more hawkish officials have been pushing the case for lifting ultra-low rates, but their doveish colleagues were ultimately persuaded by a run of weaker economic data. The Fed did, however, drop a strong hint that it would raise rates by the end of the year. + +Stumpfed for words + +John Stumpf, the chief executive of Wells Fargo, was hauled in front of a Senate committee to explain the bank’s conduct in a scandal where fake accounts were created for customers in order to meet branch targets. Mr Stumpf admitted that he knew about the practice in 2013 and that the board was informed in 2014. The senators were in an unforgiving mood, and wanted to know why no senior executives had been sacked. + +Deutsche Bank’s share price plunged after it confirmed that America’s Department of Justice wants it to pay $14 billion to settle claims related to mortgage-backed securities that the German bank underwrote and sold between 2005 and 2007. Deutsche said it would not resolve the claims for “anywhere near” what the government is seeking. In a bad week for the bank, Deutsche’s ratio of capital to assets, a measure of its ability to weather a financial storm, came last in a ranking compiled by Thomas Hoenig, the vice-chairman of America’s Federal Deposit Insurance Corporation. See article. + +The Securities and Exchange Commission charged Leon Cooperman, one of America’s most successful hedge-fund managers, and his firm, Omega Advisors, with insider trading. The indictments relate to knowledge that Mr Cooperman allegedly obtained about the sale of a natural-gas plant in Oklahoma. He denies any wrongdoing. + + + +Countries must reduce their reliance on central banks as “monetary policy has become overburdened”, the OECD has warned. Its latest economic outlook, which slightly lowered world-growth forecasts for this year and next, also said that exceptionally low and negative interest rates “are distorting financial markets and raising risks”. + +Airbus and Boeing were given permission by the American government to sell commercial aircraft to Iran. It is the most significant business development yet since last year’s agreement with Iran on its nuclear programme led to a reduction of sanctions. + +Sailing into the sun + +A.P. Moller-Maersk announced that it would split up its transport and energy businesses. Its major focus will be the shipping industry, which has been hit by a slowdown in global trade and a glut in capacity. Meanwhile Hanjin, a South Korean shipping line, was ordered by a bankruptcy court to return vessels it had chartered to their owners, indicating that the company might be wound down. + +America released its first official guidelines for autonomous cars. The federal government usually regulates vehicles, leaving each state to set rules for drivers, but it is steering states towards adopting seamless laws for driverless cars. Carmakers may bristle at some of the proposed requirements, such as putting software updates through the same safety process that new vehicles must undergo and making data public. See article. + +In China, meanwhile, Tesla Motors defended its Autopilot system, as the father of a driver who was killed while allegedly using the feature took his lawsuit to court. Tesla has reiterated that its Autopilot is not intended as a fully automated system; drivers must keep their hands on the wheel while using it. + +In only the fourth time in its history, the United Nations met specifically to discuss a health issue: the rise of superbugs that are resistant to antibiotics. Described by some medical professionals as the most acute problem facing mankind, the World Bank has estimated that by 2050 the issue could cost up to 3.8% of world GDP. See article. + +A study by John Coates, a neuroscientist and former trader at Goldman Sachs, suggested that traders who are more in tune with their bodies’ “interoception” (inner sense) and follow their gut feelings can outperform algorithms in high-frequency trading. In order to cope with the pressures of modern finance a trader must be able to stomach the job. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21707592-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Sep 24th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21707591-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +The global economy: The low-rate world + +European defence: Potemkin Euro-armies + +America’s presidential election: Indecision time + +Religion and state in Malaysia: Adulterers beware + +Internet governance: The road to surfdom? + + + + + +Articles Sections Next + +The global economy + +The low-rate world + +Central banks have been doing their best to pep up demand. Now they need help + +Sep 24th 2016 | From the print edition + + + +THEY do not naturally crave the limelight. But for the past decade the attention on central bankers has been unblinking—and increasingly hostile. During the financial crisis the Federal Reserve and other central banks were hailed for their actions: by slashing rates and printing money to buy bonds, they stopped a shock from becoming a depression. Now their signature policy, of keeping interest rates low or even negative, is at the centre of the biggest macroeconomic debate in a generation. + +The central bankers say that ultra-loose monetary policy remains essential to prop up still-weak economies and hit their inflation targets. The Bank of Japan (BoJ) this week promised to keep ten-year government bond yields around zero. On September 21st the Federal Reserve put off a rate rise yet again. In the wake of the Brexit vote, the Bank of England has cut its main policy rate to 0.25%, the lowest in its 300-year history. + +Come Yellen and high water + +But a growing chorus of critics frets about the effects of the low-rate world—a topsy-turvy place where savers are charged a fee, where the yields on a large fraction of rich-world government debt come with a minus sign, and where central banks matter more than markets in deciding how capital is allocated. Politicians have waded in. Donald Trump, the Republican presidential nominee, has accused Janet Yellen, the Fed’s chairman, of keeping rates low for political reasons. Wolfgang Schäuble, Germany’s finance minister, blames the European Central Bank for the rise of Alternative for Germany, a right-wing party. + +This is a debate on which both sides get a lot wrong. It is too simple to say that central bankers are causing the low-rate world; they are also reacting to it. Real long-term interest rates have been declining for decades, driven by fundamental factors such as ageing populations and the integration of savings-rich China into the world economy (see article). Nor have they been reckless. In most of the rich world inflation is below the official target. Indeed, in some ways central banks have not been bold enough. Only now, for example, has the BoJ explicitly pledged to overshoot its 2% inflation target. The Fed still seems anxious to push up rates as soon as it can. + +Yet the evidence is mounting that the distortions caused by the low-rate world are growing even as the gains are diminishing. The pension-plan deficits of companies and local governments have ballooned because it costs more to honour future pension promises when interest rates fall (see article). Banks, which normally make money from the difference between short-term and long-term rates, struggle when rates are flat or negative. That impairs their ability to make loans even to the creditworthy. Unendingly low rates have skewed financial markets, ensuring a big sell-off if rates were suddenly to rise. The longer this goes on, the greater the perils that accumulate. + +To live safely in a low-rate world, it is time to move beyond a reliance on central banks. Structural reforms to increase underlying growth rates have a vital role. But their effects materialise only slowly and economies need succour now. The most urgent priority is to enlist fiscal policy. The main tool for fighting recessions has to shift from central banks to governments. + +To anyone who remembers the 1960s and 1970s, that idea will seem both familiar and worrying. Back then governments took it for granted that it was their responsibility to pep up demand. The problem was that politicians were good at cutting taxes and increasing spending to boost the economy, but hopeless at reversing course when such a boost was no longer needed. Fiscal stimulus became synonymous with an ever-bigger state. The task today is to find a form of fiscal policy that can revive the economy in the bad times without entrenching government in the good. + +That means going beyond the standard response to calls for more public spending: namely, infrastructure investment. To be clear, spending on productive infrastructure is a good thing. Much of the rich world could do with new toll roads, railways and airports, and it will never be cheaper to build them. To manage the risk of white-elephant projects, private-sector partners should be involved from the start. Pension and insurance funds are desperate for long-lasting assets that will generate the steady income they have promised to retirees. Specialist pension funds can advise on a project’s merits, with one eye on eventually buying the assets in question. + +But infrastructure spending is not the best way to prop up weak demand. Ambitious capital projects cannot be turned on and off to fine-tune the economy. They are a nightmare to plan, take ages to deliver and risk becoming bogged down in politics. To be effective as a countercyclical tool, fiscal policy must mimic the best features of modern-day monetary policy, whereby independent central banks can act immediately to loosen or tighten as circumstances require. + +Small-government Keynesianism + +Politicians will not—and should not—hand over big budget decisions to technocrats. Yet there are ways to make fiscal policy less politicised and more responsive. Independent fiscal councils, like Britain’s Office for Budget Responsibility, can help depoliticise public-spending decisions, but they do nothing to speed up fiscal action. For that, more automaticity is needed, binding some spending to changes in the economic cycle. The duration and generosity of unemployment benefits could be linked to the overall joblessness rate in the economy, for example. Sales taxes, income-tax deductions or tax-free allowances on saving could similarly vary in line with the state of the economy, using the unemployment rate as the lodestar. + +All this may seem unlikely to happen. Central banks have had to take on so much responsibility since the financial crisis because politicians have so far failed to shoulder theirs. But each new twist on ultra-loose monetary policy has less power and more drawbacks. When the next downturn comes, this kind of fiscal ammunition will be desperately needed. Only a small share of public spending needs to be affected for fiscal policy to be an effective recession-fighting weapon. Rather than blaming central bankers for the low-rate world, it is time for governments to help them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21707533-central-banks-have-been-doing-their-best-pep-up-demand-now-they-need-help-low-rate-world/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +European defence + +Potemkin Euro-armies + +Grand talk of a “defence union” risks exposing Europe’s weakness + +Sep 24th 2016 | From the print edition + + + +THE idea of a European army is as old as the hope for European unity. After creating the European Coal and Steel Community, the embryo of today’s European Union, the six founding members agreed in 1952 to form a supranational European force. But the plan was voted down by the French parliament; thereafter countries focused on gradual economic integration. + +Now that the EU is in trouble and Britain has voted to leave, the idea of military integration is being revived (see article). Some countries talk of a “European Defence Union”. Others, evoking the “Schengen” passport-free travel area, envisage a “Schengen for defence”. Eurocrats want to show there is life in the EU after Brexit: with the British gone, they say, the biggest obstacle to defence integration will be gone, too. France, left as the unrivalled EU military power, delights in the chance to reclaim leadership from Germany. The danger is not that such big talk will threaten NATO, as some fear, but that it will come to nothing and expose Europe’s weakness. That would aggravate two big threats to its security: bullying by an emboldened Russia and abandonment by an exasperated America. + +EU and whose army? + +Europeans have every reason to do more. Russia is a growing menace, and the transatlantic alliance is fraying. American isolationism, were Donald Trump to be elected president, could wreck NATO; Hillary Clinton would like Europeans to do more. Why should America, with a smaller population and economy than the EU, keep underwriting Europe’s security? Only four of its 25 European allies—Britain, Estonia, Greece and Poland—meet the minimum standard of spending 2% of GDP on defence. And Europeans waste much of their money on mostly useless toy armies, navies and air forces. Any serious European policy must start from the fact that Europeans have to spend more on defence. And they should share critical equipment. Not even the biggest EU powers can do it all alone, as Britain and France discovered in Libya in 2011. + +The EU can add value. Many modern-day threats—from terrorism to energy blackmail and cyber-security—are best dealt with by civilian bodies. The EU is better placed than NATO to muster these. In Afghanistan, Iraq and other places, the generals have learnt that soldiers alone cannot fix broken countries; they are the first to plead for the aid and state-building advice that the EU can offer. The EU can also provide a stepping-stone for neutral Nordic countries, Sweden and Finland, to be more involved in the defence of vulnerable Baltic states and ultimately join NATO. And the European Commission can put up money for defence research; as with its monitoring of deficits, it can scrutinise national defence budgets. + +The risk is that, in their desire to show quick results, European leaders will seize only on the symbols of military integration and not the substance. One obsession is a separate headquarters for EU operations. This is a waste: NATO and EU states already have lots of headquarters. But it would be churlish for Britain, as it negotiates its new ties with the EU, to block the idea; and the EU should still aim for close defence co-operation with Britain. The EU’s military ambitions need not displace NATO: they will remain puny compared with America’s heft. + +A Franco-German defence paper talks vainly of “strategic autonomy”. But there is nothing less autonomous than armies that cannot move, fight or even see the enemy without American help. The Europeans need transport planes, air-refuelling tankers, helicopters, drones, satellites, field hospitals and much else. It does not matter whether these are acquired in the name of NATO or the EU. Military forces are national: the stronger they are, the stronger will be both the EU and NATO. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21707544-grand-talk-defence-union-risks-exposing-europes-weakness-potemkin-euro-armies/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +America’s presidential election + +Indecision time + +An unusually large number of undecided voters will pick the next president + +Sep 24th 2016 | From the print edition + + + +ON SEPTEMBER 26th two candidates will debate against each other on live television during what will probably be the most-watched political broadcast in American history. One of them is a former First Lady, senator and secretary of state. The other has never been elected to any office before and was, until last year, the host of “Celebrity Apprentice”. Yet this is not the most remarkable thing about America’s presidential election. What is truly extraordinary is that the polling currently suggests that these two candidates are, if not quite tied, then far closer than most people expected them to be at this stage of the race. + +After the Democratic National Convention at the end of July, betting markets gave Donald Trump just a 20% chance of becoming the 45th president. His attacks on the parents of a soldier who was killed in Iraq seemed to have crossed a line. In the intervening weeks, his tone has not been moderated so much as become familiar. When he praises Vladimir Putin (“If he says great things about me, I’m going to say great things about him”), or suggests that Hillary Clinton’s security detail be disarmed, many voters now just shrug. Mrs Clinton, meanwhile, had to absent herself briefly from the campaign trail after a bout of pneumonia. The bombs in New York and New Jersey probably helped the candidate calling for fortified borders and profiling of Muslims. + +Although the national polls have been edging closer for a while, what is even more striking is how polls of voters in individual states have tightened, sending forecasters scurrying to recalibrate their predictions (see article). Mrs Clinton is still the favourite, and Mr Trump has yet to score much above 40% in a national poll. But this is not because of any real enthusiasm for the Democratic candidate, who admits she is not much of a campaigner and has faced a barrage of questions about her trustworthiness. A higher proportion of voters are turned off by both of the main candidates in November than in any election since 1992, when Ross Perot mounted a strong third-party run, winning 19% of the vote. + +This time it is not a populist third party that is threatening to siphon off tens of millions of votes from the Republican and Democratic candidates, but powerful feelings of reluctance and repulsion. Many Americans would like to start over with two new candidates, which is not an option. After the most unpleasant election campaign for half a century, nearly 20% say they remain undecided or plan not to vote for the Democrat or the Republican. What these voters do in six weeks’ time will determine the outcome of the election. + +For those—including many lifelong Republicans—who are alarmed by Mr Trump’s recent advances in the polls, the first debate looks like a good opportunity for Mrs Clinton to win the waverers over. That may be wishful thinking. Throughout the campaign the two candidates have been judged by different standards. As a seasoned politico, Mrs Clinton is expected to deliver a polished performance. Mr Trump can exceed expectations just by not insulting lots of people or losing his temper. Interviewing him is like trying to catch fish in a fast-moving river with your bare hands. Debating against him will not be any easier. + +Besides, at a time when Americans are sick of politicians, Mrs Clinton is a near-perfect avatar for all the things they do not like about politics (see article). Even though he has been running for president for over a year, has taken in $166m in political donations and has a pollster in charge of his campaign, Mr Trump still manages to avoid being thought of as a politician. There is just a chance, however, that the debate next week and the ones that follow it will at long last turn attention to something that has been largely ignored in all the fuss over the candidates’ personalities: their actual policies. + +Chalk and cheese + +Perhaps out of weary cynicism, many of the undecided look at Mr Trump and Mrs Clinton and think there is nothing to choose between them. This is not the case. In fact it is hard to think of two major-party candidates who have ever been as far apart on what they say they intend to do when installed in 1600 Pennsylvania Avenue than this pair. For once it is not an exaggeration to say that this election is not just about who should be president, but about what sort of country America should be. And with all due respect to Gary Johnson, an affable libertarian, and Jill Stein, an environmentalist, there are only two candidates who can win. Americans who vote for a third party, or who abstain because they think politics is something that happens elsewhere, far removed from their daily lives, may be in for a surprise. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21707539-unusually-large-number-undecided-voters-will-pick-next-president-indecision-time/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Religion and state in Malaysia + +Adulterers beware + +Malaysia’s government is stirring up religious tensions to distract attention from its own shortcomings + +Sep 24th 2016 | From the print edition + + + +FOR decades Malaysia’s Islamist opposition party, PAS, has been agitating for the adoption of bloodthirsty Islamic punishments, such as amputations and stonings. It had seemed a forlorn quest. Malaysia is a multi-religious, multi-ethnic country, with Muslims (most of them ethnic Malays) accounting for only 60% or so of the population. The Indian and Chinese minorities and indigenous people from the Malaysian part of Borneo are largely Buddhist, Christian and Hindu. The governing coalition includes parties representing each group. Successive governments, with the backing of Malaysia’s moderate Muslims, have shrugged off PAS’s demands. + +Malaysia’s current government, alas, is unlike its predecessors. It lost the popular vote at the most recent election, remaining in power thanks only to assiduous gerrymandering. Since then news has emerged of the looting of hundreds of millions of dollars from a state development agency. Officials in America have indirectly accused Najib Razak (pictured), the prime minister, of pocketing some of the missing money, along with his stepson and others. Mr Najib acknowledges that $681m showed up in his personal bank accounts, but says the money was a legal donation, most of which was returned. + +Malaysians are disgusted. The scandal has accelerated the decline of UMNO, Mr Najib’s party, among urban voters, so Mr Najib is courting less sophisticated rural Malays. Malaysia already has Islamic courts, to handle disputes among Muslims in matters of family law, such as divorce and inheritance. The government has said it is willing to put to a vote a bill introduced by PAS to expand the Islamic punishments these outfits can prescribe. PAS wants adulterers, for example, to receive as many as 100 lashes with a rattan cane. + +The ratchet of imposed piety + +UMNO’s sudden turn has created an uproar. Moderate Malaysians, Muslim and non-Muslim alike, are appalled. The idea that their relatively rich and cosmopolitan country might resort to flaying the promiscuous is bad enough; worse, perhaps, is any concession to a party that suggests such floggings are a step on the path to amputations. Mr Najib has pooh-poohed such talk as alarmist, but Malaysians know all too well that the ratchet of imposed piety turns only in one direction. + +No attempt used to be made to enforce rules barring Muslims from consuming alcohol, for example, or having sex outside marriage. Now the religious authorities raid bars and hotels to check the patrons’ religion. The law in effect bars Muslims from converting to other religions, and the Islamic authorities can jail those who stray from the official interpretation of the faith, including Shias. Brides have been dragged out of weddings because a long-absent parent turns out to have registered them as Muslims. Transgender Muslims have been arrested in droves, their very existence seen as an affront to Islam. A pop star was recently detained over a video that appeared—horrors!—to show dancing in a mosque (see article). + +In theory, non-Muslims are exempt from all this. But in practice they can be dragged into the Islamic courts, too. For instance, a Hindu man who was worried that he would lose custody of his children in an impending divorce converted to Islam. The Islamic courts, as is their wont, handed the kids to the Muslim parent, stoking outrage among minorities. + +Mr Najib’s implicit embrace of the idea that the government must enforce a dour version of Islam has two baleful consequences, beyond the distress of those persecuted by the religious authorities. First, it emboldens the country’s most reactionary Muslims. In a recent survey, an alarming 11% of Malaysians said they had a “favourable view” of Islamic State. Police recently arrested three Malays planning to mark Malaysia’s national day with attacks on nightclubs and a Hindu temple. Second, the increasing emphasis on Islam threatens the social compact that underpins Malaysian society. Indians and Chinese must already put up with an elaborate system of official handouts and preferences for Malays. By championing Islam, the government is heightening the sense that minorities are second-class citizens. The country was riven by race riots in the 1960s, before Mr Najib’s father, Abdul Razak Hussein, put together the multi-ethnic coalition that has kept the peace ever since. It would be ironic, and tragic, if Mr Najib undid his father’s legacy to preserve his own career. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21707537-malaysias-government-stirring-up-religious-tensions-distract-attention-its-own/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Internet governance + +The road to surfdom? + +The internet is not American, whatever Ted Cruz thinks + +Sep 24th 2016 | From the print edition + + + +WHOEVER controls the internet’s address book has the power over life and death on the network. Delete a domain name (economist.com, for example), and a website can no longer be found and an e-mail no longer delivered. + +Such authority currently falls under the auspices of America, but not for much longer. On October 1st the federal government is scheduled to let lapse a contract that gives it control over part of the Internet Corporation for Assigned Names and Numbers (ICANN), the body that oversees the internet’s address system. Some—notably Ted Cruz, a Republican senator from Texas, who seems willing to risk a shutdown of the government to block the transfer—argue that this amounts to giving away the internet. He says that the handover would allow governments in autocratic countries such as China, Iran and Russia to have greater control over what is available online. In fact, the opposite is true. + +It was the American government that helped bring ICANN to life in 1998, to avoid having the internet overseen by a UN-type intergovernmental organisation. Instead, it pushed for a “multi-stakeholder” model, which gives not just governments, but all involved—including engineers, network operators and even internet users—a say. Because there was no precedent for this kind of organisation and because of a fear that ICANN would lack legitimacy, America reserved to itself the right to veto changes to the internet’s master list of addresses, but promised to pull back once the new entity had proved itself. + +When ICANN was created this set-up made sense: the internet had a strongly American flavour and most of its users were American. But now most netizens live elsewhere—China and India are home to the greatest number of them—and most traffic no longer passes over American cables. Following revelations in 2013 that the National Security Agency had spied on internet users around the world, pressure grew for America to fulfil its pledge and relinquish control. In 2014 the government in Washington, DC, duly said that it would do so, provided that ICANN was truly independent and that it was able to resist power grabs by other governments and commercial interests. After ICANN agreed to implement a number of reforms earlier this year, the Obama administration decided to give the organisation full responsibility. + +It is right to do so. The internet is meant to be global. But it is at risk of splintering, whether as a result of national firewalls or rules mandating that certain types of data need to be stored within a country. Russia’s new data-localisation law, which came into effect on September 1st, for instance, requires that personal information from Russian citizens is kept in databases located in Russia. America’s withdrawal from its oversight role at ICANN will not stop the likes of China and Russia from trying to impose their own rules on their patch of the internet. But it will remove an obvious excuse for them to demand an even greater say in how it is run. + +In contrast, blocking ICANN’s independence would weaken the consensus-driven model that has propelled the internet forward. The thorniest issues related to the internet, from cyber-security and hate speech to international data flows, are a complex mixture of the political and the technical. ICANN has its flaws, not least its hyper-bureaucratic processes, but it has shown that the multi-stakeholder model can solve tricky problems such as creating new suffixes for internet addresses. Almost 1.1 billion websites are currently online; global internet traffic will surpass 1 zettabyte for the first time this year, the equivalent of 152m years of high-definition video. + +Yes ICANN + +Mr Cruz may well fail to block the handover at the end of this month. But legal uncertainties would remain: Republicans could try to block the transition process in court, forcing the American government to take back control of ICANN (Congress has previously passed spending bills that prohibit the administration from spending any money on it). That would be the wrong fight to pick. Blocking ICANN’s independence would not save the internet but hasten its Balkanisation. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21707538-internet-not-american-whatever-ted-cruz-thinks-road-surfdom/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On Uber, Melungeons, Davos, post-truth politics: Letters to the editor + + + + + +Articles Sections Next + +On Uber, Melungeons, Davos, post-truth politics + +Letters to the editor + +Sep 24th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +In cars + +Uber is to be congratulated on its achievements (“Uberworld”, September 3rd). Yet its service depends on fragile technology. The traditional black-cab industry in London relies on “The Knowledge” of its drivers: cognitive navigation. Uber relies on technical navigation in the form of GPS, Galileo, GLO-NASS and BeiDou and their various regional add-ons, all free at the point of use. But satellite-navigation systems rely on a weak signal, comparable to the power of a light bulb, out in space. Those signals are vulnerable to corruption and jamming, accidental or malign, by hackers, terrorists and Mother Nature, the latter in the form of solar winds. + +What we loosely term “navigation” is more accurately PNT: position (where are we?), navigation (how do we get from A to B?) and timing, which is the key. Without constant, reliable, accurate timing-signals, global navigation satellite systems (GNSS) will not operate effectively. To protect this infrastructure we need a non-space-based alternative timing-mechanism to complement GNSS, providing a backup in the event of distortion or loss. Governments should push for this, as should Uber to protect its considerable investment, and its passengers. + +JAMES TAYLOR + +President + +Royal Institute of Navigation + +London + +Some scepticism about autonomous cars is in order. The projects so far come nowhere close to revealing technology that could be counted on to traverse any road, weather situation or irregularity with no input at all from a driver. + +JAKE HILDNER + +Chicago + +A lot of people may criticise describing Uber, a seven-year-old firm that has raised billions of dollars, as a “startup”. But you are using the correct term. We techies use startup to describe any private, venture-funded firm that has not yet set out an exit for investors, regardless of how old it is. So, a brand-new barbershop is not a startup, but firms backed by venture capital that are not preparing an IPO, such as Airbnb, Dropbox and Uber, most certainly are. + +ANDREW COHEN + +Chief executive + +Brainscape + +New York + + + + + +The Melungeons + +* I read with interest your article on the Melungeons in Hancock County, Tennessee (“Down in the valley, up on the ridge”, August 27th). I grew up in south-east Kentucky, just over the Cumberland Gap, and it is refreshing to read a piece about Appalachia that is not about opiate addiction, methamphetamines, middle-age mortality, or the war on coal and the decline of unions. My mother hails from Lee County, Virginia, on the northern side of Powell Mountain featured in your story. Her father, Dr Grover Cleveland Sumpter (yes, really) was one of the few doctors in far south-west Virginia from the 1920s to the 1960s and attended to the births of many Melungeon babies. + + + +When submitting the birth record in Richmond, the state capital, he left the race of the child blank, much to the consternation of state officials. He never said why he did that, but he certainly knew that in the early and mid-20th century listing a Melungeon baby as non-white would consign the child to Virginia’s Jim Crow system. Listing the child as white would most likely provoke a backlash in Richmond, or at the very least grumbling at the county level. So he left the data line blank. Perhaps he thought that it just wasn’t his job to decide race policy. + + + +JOHN BLAKEMAN + +Professor and chair + +Department of Political Science + +University of Wisconsin-Stevens Point + + + + + +The power of meetings + +Schumpeter is right in claiming that the worst of the world’s challenges will not be solved by invitation-only chinwags (September 17th). Regardless of the quality of participants, meetings are only as good as the outcomes that their convening power is able to produce. At the most recent annual meeting of the World Economic Forum, leaders from businesses with a combined annual turnover of $2.1 trillion pledged to help meet UN goals to keep global temperature rises to under 2%. Others, meanwhile, hatched a plan to prepare the world for future epidemics and secured private-sector investment for the IFRC’s One Billion Coalition for Resilience, a humanitarian-assistance programme. + +Good meetings act as platforms, convening people with energy, ideas and resources to go away and make a difference in the world. Having a theme to focus attention can be a good thing; sometimes ours have even inspired The Economist’s own events. + +OLIVER CANN + +Spokesperson + +World Economic Forum + +Geneva + + + + + +A certain truthiness + +Your package on “post-truth politics” lamented the credence given to internet fabrications over mainstream media (“Art of the lie”, September 10th). The mainstream media only have themselves to blame. Gone are the days when most of the media engaged in independent, investigative journalism and fact-checked even their own most reliable reporters. Now, the content is mostly low-cost opinion pieces, while the “facts” upon which those opinions are based are copied from outside sources. Quoting “facts” from other mainstream media, and assuming they have done their research, is the media equivalent of Donald Trump’s post-truth line: “A lot of people are saying…” + +I wrote a book about these issues in Germany, and its reception proved the point. On the day of publication an implicated politician wrote a self-interested condemnation in the mainstream press. Within hours, replicative book reviews appeared in media around the country, spawning full-page outraged editorials in many newspapers. None questioned the validity of the initial source. + +The mainstream media must embrace the challenge of their new responsibilities in the internet age: to provide a bastion of independent, fact-based journalism as a serious alternative to popular web forums. After all, if the content of a traditional newspaper is no more informative or reliable than the result of a Google search, why buy the paper? + +VIVIEN STEIN + +London + +I think more subtle, yet more accurate and frightening, is Roger Scruton’s point of view as described in “Notes from Underground”. This newspeak was perfected in the Soviet era, where “The goal…was not to tell explicit lies, but to destroy the distinction between the true and the false, so that lying becomes neither necessary nor possible.” The purpose of this is to “remove emotion from reality and invest it in a world of fantasy, where nothing has a value, though everything has a price.” + +DAVID LEVY + +New York + +More than in the recent past, political campaigns are marred by the excessive use of puffery, misrepresentations, fibs and worse. I doubt, however, that it will redress this problem, even at the margin, if those of us opposed to or even appalled by the “post-truth” crowd identify ourselves as members of the “pro-truth” brigade. Euphemisms of this kind just draw guffaws from Mr Trump and his ilk. + +JOSEPH LAPALOMBARA + +Professor emeritus of political science and management + +Yale University + +New Haven, Connecticut + +The ability of politicians to deceive us is historic. It is believed that the term “parliament” originates from the Anglo-Norman parlement, derived from parler (talking). Politicians have successfully diverted attention from the origin of the second part of the noun, which is mentir (lying). + +NICO VAN BELZEN + +Steenbergen, Netherlands + +No, not “post-truth”. Do not drag a venerable English word, or any of its relatives, into disreputable company. If there is need for a new word use “plausibull”: a noun combining “plausible” and the popular word for nonsense. For extra emphasis, another well-known four-letter word can be appended to it. And it is easy to use as a verb. + +BOB FRENKEL + +Roseville, Australia + + + +Give the last word to Homer Simpson: “Facts are meaningless. You could use facts to prove anything that’s even remotely true.” + +DAVID LINDLEY + +Crick, Northamptonshire + +* letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21707505-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +The fall in interest rates: Low pressure + +Pensions: Fade to grey + + + + + +Articles Sections Next + +The fall in interest rates + +Low pressure + +Interest rates are persistently low. In our first article we ask who or what is to blame. In the second we look at one outcome: a looming pensions crisis + +Sep 24th 2016 | From the print edition + + + +THE story of rich-world central banks and their protracted entanglement with near-zero interest rates was given another twist this week. One of their number gamely announced it still hoped for a more distant relationship, even if it couldn’t bring itself to turn its back on them yet. Another renewed its vows to stick with them. + +On September 21st the Federal Reserve kept its target for overnight interest rates at 0.25-0.5% but indicated that, after raising the target for the first time in a decade last year, it hoped to raise it for a second time soon—possibly in December, after America’s presidential elections. Its rate-setting committee said the case for an increase had “strengthened” since its meeting in June, but it decided to wait for more convincing evidence. Earlier that day, the Bank of Japan (BoJ) said it was staying with its target of raising inflation to 2%. Indeed it went further. The bank said it would continue to buy bonds at a rate of around ¥80 trillion ($800 billion) a year, until inflation gets above 2% and stays there for a while. To help meet this “inflation-overshooting commitment”, the bank said ten-year-bond yields would remain at around zero. + +The BoJ also stuck with another unorthodox policy. Along with the European Central Bank (ECB) and a handful of smaller central banks, it charges commercial banks a small fee (a negative interest rate) to hold cash reserves. This through-the-looking-glass practice has spread to capital markets. Sanofi, a French drugmaker, and Henkel, a German manufacturer of detergent, both this month issued bonds denominated in euros with a negative yield. Investors will make a guaranteed cash loss if they hold the bonds to maturity. Earlier Germany became the first euro-zone government to issue a bond that promises to pay back to investors less than the sum it raised from them. A large proportion of all rich-country sovereign bonds now have negative yields. + +You can’t always get what you want + +The debt-laden are delighted with the persistence of a low-rate world. It costs much less to service their obligations. But savers are increasingly grumpy. Economists are simply baffled. In the 1980s and 1990s, the high real cost of borrowing (ie, after adjusting for inflation) was the puzzle. Today’s interest-rate mystery is more troubling and there is division over the reasons for it. + +One side says it is simply the consequence of the policies pursued by the rich world’s central banks. The Fed, ECB, BoJ and Bank of England have kept overnight interest rates close to zero for much of the past decade. In addition, they have purchased vast quantities of government bonds with the express aim of driving down long-term interest rates. + +It is hardly a mystery, on this view: central banks have rigged the money markets. They have been aided in this task by new regulations, written in the wake of the global financial crisis, that require banks and insurance companies to keep more of their assets in safe and liquid instruments, such as government bonds. That is helpful, say sceptics, to rich-world governments with large debts which need to keep interest costs low. But it is punishing the thrifty and those who rely on bonds for their income. + +On the other side of the divide are those who argue that central banks are merely responding to underlying forces. In this view the real interest rate is decided by the balance of supply and demand for the pool of global savings. The fall in interest rates since the 1980s reflects a shift in this balance: the supply of savings has increased as demand for it has crashed. Short-term nominal interest rates are stuck at zero, or a little below, because, in the absence of inflation, real interest rates cannot fall far enough to clear the world market for savings. Far from rigging things, central banks are struggling to find ways to help the market work so that the economy can function normally. Which side is right? + +The present combination of low nominal and real interest rates is unprecedented. David Miles, a member of the Bank of England’s monetary-policy committee, has worked out that the average short-term interest rate set by the bank since 1694, when it was founded, is around 4.8% (see chart 1). Indeed, for over a century after 1719, the bank kept its main interest rate at exactly 5%. But it is the real (ie, inflation-adjusted) rate that keeps the demand and supply of savings in balance. + + + +If savers believe inflation will rise, they will demand a higher nominal interest rate to compensate for the expected loss of spending power. Borrowers, by contrast, will be keen to take on debt if they believe they can pay it back in devalued currency. Mr Miles calculates that inflation in Britain was around 2% in the three-and-a-bit centuries after 1694. That means the real interest rate was around 2.8%, assuming that inflation lived up (or down) to expectations. + +That is a bold assumption. Thankfully, these days it is possible to work out long-term interest rates in real terms from the yields on inflation-protected bonds. Mervyn King, a former governor of the Bank of England, and David Low of New York University have estimated a real interest rate for G7 countries, excluding Italy, using such data going back to the mid-1980s. It shows a steady decline over the past 20 years. This era of falling real rates might usefully be split into two distinct periods: before and after the financial crisis of 2008-09. In the first period, real rates fell from above 4% to around 2%. Since the start of 2008, real long-term rates have fallen further, and faster, to around -0.5% (see chart 2). + + + +Down, down, deeper and down + +By the 2000s it was already becoming clear that something was afoot. In 2004 the Fed began to increase short-term rates. That would normally be followed by a rise in long-term bond yields. Instead, bond yields fell, not only in America but across the world. That might make sense if bond investors expected durably lower inflation. In fact most of the fall was down to a decline in real interest rates; expectations of inflation had hardly changed. This was a “conundrum”, said Alan Greenspan, then chairman of the central bank. Ben Bernanke, a Fed governor who later took over from Mr Greenspan in the top job, identified a worldwide “saving glut” as the culprit for the decline in real rates. + +This ongoing glut in savings is due to two factors in particular, according to last year’s Geneva Report, an annual study from the International Centre for Monetary and Banking Studies and the Centre for Economic Policy Research. The first is changing demography, mostly in the rich world but also in some emerging markets. Populations are ageing. At the same time, the average working life has not changed much. So more money has to be squirrelled away to pay for a longer retirement (see article). A lot of that saving takes place during the best-paid years in middle age. The size of the world population (excluding China) of peak-earning age (40-64) was rising over the past two decades relative to those of retirement age. As a consequence of this, saving increased and real interest rates have steadily fallen. + +A second, related, factor is the integration of China into the world economy. “A billion people with a 40% savings rate; that brings a lot more supply to the table,” says Randall Kroszner of the University of Chicago’s Booth business school, one of the authors of the Geneva Report and a former Fed governor. Even though a massive slug of its GDP goes on investment, China still has savings left over to send abroad. That is why Mr Bernanke also blamed the saving glut for America’s current-account deficit: if China saved a lot, every one else must save less. Explanations for its unusually high savings pile are also in part demographic. In the absence of a broad-based pension system, the family is the main social safety net. But family networks are a weak form of insurance because of China’s one-child policy. So working people have had to save furiously. + +Ageing is not the only long-run influence that has tilted the savings-investment scales. By skewing income to the high-saving rich, an increase in income inequality within countries has added to the saving glut. A fall in the relative price of capital goods means fewer savings are needed for a given level of investment. Both trends predate the fall in real interest rates, however, which suggests they did not play as significant a role as demography or China. + +Others reckon the drop in real interest rates reflects a shift down in underlying trend growth, both before and since the crisis. For Larry Summers of Harvard University, this “secular stagnation” is a consequence of a chronic shortfall in demand. Robert Gordon of Northwestern University reckons the trouble lies with the economy’s supply-side. The new digital and robot technologies cannot match the surge of productivity from past inventions such as electricity, the motor car, petrochemicals and indoor plumbing, he argues. + +In fact, the historical relationship between real interest rates and economic growth is weak, according to a recent study by James Hamilton of the University of California at San Diego, and his co-authors. They find that the correlation between GDP growth and the real short-term interest rate across the seven most recent economic cycles in America was only mildly positive—and then only if the brief recovery before the second dip of the early 1980s “double-dip” recession is excluded. Include it and the correlation is negative (see chart 3). + + + +In the period since the financial crisis, real rates have fallen even faster. The same secular forces have been at work, plus some new ones—notably “deleveraging”. Though middle-aged households were saving hard in the run-up to the crisis, many younger ones were piling on debts to buy overpriced homes. When house prices and incomes started to fall, those mortgage debts loomed much larger and so they saved more. + +A related reason for more saving is fear. The severity of the Great Recession belied the relative economic stability that preceded it. Mr Miles calculates that the probability of a decline in British output as sharp as that in 2009 was 0.0004% (or one in 240,000 years) based on the volatility of GDP growth between 1949 and 2006. As people become aware of the possibility of such rare events, their caution could cut the risk-free real interest rate by 1.5-2 percentage points on plausible assumptions. + +Low rider + +Ageing populations, debt hangovers, fear and secular stagnation: if low real rates are a crime, there is no shortage of suspects. Some look guiltier than others. But for many the principal villains are central banks. They have pushed short-term interest rates to zero and kept them there. They have also spent huge sums of electronic cash buying long-term bonds. + +Their defenders say central banks are typically reacting to economic trends, not shaping them. A lodestar for central-bank policy is the idea of the “neutral” real interest rate, a close cousin of the real rate determined in the market for long-term savings. This is the short-term real interest rate that keeps inflation stable when the economy is running at full capacity, with no idle workers, factories or offices. + +When inflation is low and the economy weak, as has been the case since 2008, central banks should aim to set nominal interest rates below the sum of the neutral real rate and the inflation target. The higher propensity to save means the neutral real rate is lower—probably much lower—than in the past. Since short-term nominal interest rates cannot be pushed much below zero, central banks have resorted to bond purchases to depress long-term borrowing rates and push investors into riskier assets, to give a fillip to the economy. And if interest rates and bond yields were really too low, it should lead to overheating and rising inflation. There are no signs of this. + +Even so, something is amiss in bond markets when many rich-country government bonds have a negative yield and firms can sell debt by promising to pay back less than they borrow. This might be fitting if economies were in a deflationary spiral. But GDP growth is not collapsing. Inflation is low, but is in general moving sideways, not downwards. Big budget deficits in many rich countries mean the supply of new government debt is hardly drying up. + +Free falling + +The promise of continuous central-bank action has affected bond markets. Calling the top of the bull market in bonds has for years been a fool’s errand. Still, it is becoming ever harder to make sense of today’s bond prices. The idea that there is, or ought to be, a link between the amount of public borrowing and interest rates has become almost quaint. The yields on the bonds of high-debt, low-growth Italy are lower than the yields on the bonds of low-debt, high-growth Australia. It is difficult to explain Italy’s yields without reference to the ECB’s bond-buying programme. + +What is more, the impact of ever-lower rates may be starting to pall. In principle, cuts in interest rates boost the economy by nudging consumers and companies to spend now and save later. But there are forces working in the other direction, too. If savers have a target level of savings in mind to fund retirement, low or negative interest rates slow down the progress in reaching their goals. For such people, low rates mean less spending now, not more. Similarly, a low risk-free rate of interest drives up the present value of future pension obligations for employers who have promised their workers a defined benefit on their retirement. + +Such firms may find that the profits they are obliged to set aside to fill the growing holes in their pension funds leave them little left over for investment. They could of course borrow but the magnitude of some pension deficits means that lenders might view such firms as a poor credit risk. It is likely that in the tug-of-war between the parts of the economy that are induced to spend now and save later by low rates, and those that are spurred to do the opposite, the former is stronger. But with risk-free interest rates at such low levels for such a long time, the fight is probably far less one-sided than in normal times. + +Indeed attempts to guard against the impact of low rates may perversely become a cause of even lower rates. Accounting rules and solvency regulations are a spur to bond-buying even at super-low interest rates. To understand why, consider the business of life-assurance companies. They pledge to pay a stream of cash to policyholders, often for decades. This promise can be likened to issuing a bond. Insurance firms need to back up these promises. To do so they buy safe assets, such as government bonds. + +The trouble is that the maturities on these bonds are shorter than the promises the insurers have made. In the jargon, there is a “duration mismatch”. When bond yields fall, say because of central-bank purchases, the cost of the promises made by insurance companies goes up. The prices of their assets go up as well, but the liability side of the scales is generally weightier (see chart 4). And it gets heavier as interest rates fall. That creates a perverse effect. As bond prices rise (and yields fall), it increases the thirst for bonds. Low rates beget low rates. + + + +This dynamic might materially affect bond yields if the weight of forced buyers were large enough. In 2014-15 yields on ten-year German bonds fell from around 2% to a low of close to zero, in response to expectations of quantitative easing by the ECB. A study by Dietrich Domanski, Hyun Song Shin and Vladyslav Sushko of the Bank of International Settlements finds that the fall in yields induced German insurers to buy more bonds. Insurers started 2014 with €60 billion-worth of government bonds but ended it holding €80 billion-worth. + +Such a rapid rate of government-bond purchases was out of keeping with previous years. Long-maturity bonds were particularly sought after. This episode lends support to the idea that demand for bonds increases even as their price rises, where there is a mismatch of assets and liabilities. Those who worry that central-bank actions have led to distortions in capital markets seem to have a point. + +If a growing bulge of middle-aged workers is behind the secular decline in real interest rates, then the downward pressure ought to attenuate as those workers move into retirement. Japan is further along this road than other rich countries. Yet its long-term real interest rates are firmly negative. That owes at least something to the open-ended quantitative easing by the Bank of Japan. A concern is that as more people retire, and save less, there will be fewer buyers for government bonds, of which less than 10% are held outside Japan. Another of the Geneva Report’s authors, Takatoshi Ito of Columbia University, reckons there will be a sharp rise in Japanese bond yields within the next decade. There may be political pressure on the Bank of Japan to keep buying bonds to prevent this. + +Slip sliding away + +A chorus of economists will vigorously dispute the idea that central banks have lost their power to pep up the economy. In principle, they could print money to buy any number of assets, including stocks (Japan’s central bank is already a big buyer of equities). They could test the lower bounds of standard monetary policy by edging interest rates further into negative territory. And they could raise their inflation targets so that an interest rate of zero translates into a lower real interest rate. + +But a lesson from the 1980s is that inflation expectations can take a long time to adjust fully to a new target. Each new round of central-bank action seems to bring less stimulus and more side-effects. The concept of using fiscal policy to fine-tune the economy went out of style around the time when economists were trying to work out why real interest rates were unusually high. Perhaps it is time to dust that idea down. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21707553-interest-rates-are-persistently-low-our-first-article-we-ask-who-or-what-blame/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Pensions + +Fade to grey + +It costs a lot more to fund a modern retirement. Employers, workers and governments are not prepared + +Sep 24th 2016 | From the print edition + + + +EMPEROR AUGUSTUS came to power with the help of a private army. So he was understandably keen to ensure the loyalty of his soldiers to the Roman state. His bright idea was to offer a pension for those in the army who had served for 16 years (later 20), equivalent in cash or land to 12 times their annual salary. As Mary Beard, a classical historian, explains in her history of Rome, “SPQR”, the promise was enormously expensive. All told, military wages and pensions absorbed half of all Rome’s tax revenues. + +The emperor would not be the last to underestimate the burden of providing retirement benefits. Around the world a funding crisis for pension schemes is coming to the boil. Rahm Emanuel, Chicago’s mayor, is struggling to rescue the city’s pension plans; the municipal scheme is scheduled to run out of money within ten years. In Britain the pension problems of BHS scuppered attempts to save the high-street retailer; the same issue is complicating a rescue of Tata Steel’s British operations. + +The roots of the predicament lie in defined-benefit (DB) pensions, which guarantee a pension linked to workers’ salaries. These may provide security for the retired but have been expensive for employers. In many cases, DB pensions were offered decades ago when they seemed like a cheap alternative to awarding pay rises. Private-sector employers now usually offer new workers defined contribution (DC) schemes, which hand them a pot of money on retirement with no promise of the income it will generate. In time, this will create its own huge problems as workers face an impecunious retirement. + +The DB problem is most obvious in Britain and America where many employers operate funded systems, in which contributions are put aside and invested to pay pensions. Many European countries operate on a pay-as-you-go basis, in which retirement incomes are paid out of current profits or taxes. That does not mean the problems have disappeared; they are just harder to quantify. Citigroup reckons that, in 20 OECD countries, the unfunded government liability is around $78 trillion. + +There are two reasons that funding pensions is becoming ever more troublesome. First, people are living longer. In 1960 the average American, British or Japanese 65-year-old man could expect to live for another 11-13 years. Women could look forward to 14-16 more birthdays. Now it is 18-19 years for men and 20-24 years for women. + +Funding decent pensions is all the more difficult given that the proportion of retired workers is also growing. Around 600m people aged over 65 now make up around 8% of the world’s population; by 2050 there will be 1.6 billion, more than 15% of the total. Some countries face a bigger problem than others. In Japan, a third of the population will probably be over 65 by 2050; in Europe, the proportion will be more than a quarter. + +Second, the low level of interest rates and bond yields means the cost of paying pensions has gone up, even without the longevity factor. Investors who have to buy their own pensions know this only too well. In the late 1990s, £100,000 ($164,000) would have bought a 65-year-old British man a lifelong income of £11,170 a year; now it will earn £4,960, according to Moneyfacts, a data firm. In other words, paying out a given level of income now costs more than twice as much as it did. + +Government-bond yields in rich countries are at historically low levels; in some countries, they are even negative. This has a direct impact on pension deficits, by increasing the value of future pension liabilities. Because the cash cost of a pension will not fall due for decades, pension schemes must discount this cost at some rate to calculate how much they need to put aside now. If the cost next year will be $100, and the discount rate is 5%, then the cost in today’s terms is $95. The higher the discount rate, the lower the present cost. + +For a long time, most company pension schemes used the assumed rate of return on their assets as the discount rate. The rationale was simple; a combination of contributions and investment returns will eventually pay the benefits. But this approach was prone to wishful thinking; if markets have performed well in the past, the temptation is to assume they will continue to do so. The higher the assumed future return, the less cash the company has to put aside today. + +Actuaries and financial economists started to think more deeply about how to account for pension costs in the 1990s. Using investment returns is theoretically dubious. A company is required to pay pensions whether or not high investment returns are achieved. A pension promise is like a bond; a promise to pay a series of cashflows in future. That suggests the yield on long-term debt is the appropriate discount rate. In the early 2000s accounting regulations began to require companies to use a corporate-bond yield as the discount rate. Since the bond yield was much lower than the assumed investment return, the effect was to increase the stated level of pension liabilities. + +You’re a liability + +Bond yields have fallen steadily and so liabilities have risen significantly. In Britain the fall in yields following the unexpected Brexit vote (and a renewal of quantitative easing by the Bank of England) has made matters considerably worse. PwC estimates that the total deficit of all British DB pension funds rose by £100 billion in August alone. The Bank of England, which matches its pension liability by buying inflation-linked government bonds (as theory suggests), was forced to pay 55% of its payroll on pensions last year. + +Finance directors must feel like Sisyphus, doomed to push a rock uphill for eternity. In America, the estimated deficit of large firms at the end of last year was $570 billion, according to Mercer, a consultancy. The average funding level was 77%. In Britain publicly quoted companies in the FTSE 350 paid £75 billion into their schemes between 2010 and 2015, according to Mercer, but their collective deficit still grew by £34 billion over the same period. + +Stirring the pension pot + +The struggles of the private sector create a public-policy problem. A 20-year-old worker may still be receiving a pension 70 years hence. Few companies can be relied on to last that long. If a company goes bust while its pension scheme is underfunded, the result could be an unhappy retirement. To safeguard pensions the American and British governments set up insurance schemes that stand behind corporate plans; the Pension Benefit Guaranty Corporation (PBGC) in the former and the Pension Protection Fund (PPF) in the latter. Both fund themselves through levies on the corporate-sector plans they insure; both cap the amount of pension protection that individual workers receive. + +Creating the PBGC and PPF has recast the problem of more expensive pensions in a different form. Regulators try to protect schemes by ensuring they are well-funded and that companies do not take advantage of the potential “moral hazard”—underfunding their plans because of the insurance protection. But make funding of the schemes too strict and firms will complain; some may even be forced to the wall. + +So the temptation is to allow a lot of flexibility and hope that funding levels recover. BHS went into administration (the British equivalent of Chapter 11 bankruptcy protection) with a pension deficit of £571m. The company has been struggling for years; it had a recovery plan for its pension scheme that was scheduled to take 23 years. Should the regulator have allowed the company such latitude? The regulator is negotiating with the business’s previous owner, Sir Philip Green, about his making payments that will reduce the deficit. The saga has triggered a fierce debate about the moral and legal responsibility of business owners to ensure pension schemes are fully funded. + +In America the PBGC depends on Congress to ensure it is properly resourced. As well as covering the pension plans sponsored by large firms, the PBGC backs schemes in industries with lots of small employers, such as mining and trucking. At the moment the PBGC estimates that it faces a potential liability of $52 billion on these multi-employer schemes over the next decade. The Central States pension fund, responsible for the benefits of 400,000 truck drivers and warehouse workers, recently said it would run out of money by 2025. But Congress has set a levy of just $27 for this type of employee per year; an annual sum of only $270m, ludicrously short of the amount needed. + +The PPF is better funded than the PBGC. It has reserves of more than £3.6 billion before the impact of intervening at BHS’s fund (and possibly Tata Steel’s). Nevertheless, the fund has assets of £23 billion and the companies it covers have an aggregate funding deficit of £459 billion. Moreover, both insurance schemes face the long-term problem that they were established to back DB schemes, often set up many decades ago by manufacturing firms. As those types of companies die off, new services and technology firms are not joining the fund, because they do not offer DB pensions. The levy’s burden is falling on a dwindling number of companies. + +Governments, which often offer their workers DB pensions, have been far slower than the corporate sector in attempting to reduce the cost. In large part this is because of the way they account for pensions. In America they are allowed to assume a return of 7.5-8% on their investments, making deficits look a lot smaller. But generous accounting assumptions do not make the problem go away. The Centre for Retirement Research (CRR) at Boston College has looked at around 4,000 American state and local-government pension plans. Even using the accounting standards permitted, the plans were on average 72% funded at the end of 2015. On a more conservative 4% discount rate, this drops to 45%. On the former basis, the collective deficit is $1.2 trillion; on the latter $4.1 trillion. + + + +Difficulties are starting to emerge in America. Detroit’s bankruptcy in 2013 was in part the result of a huge shortfall in its pension fund; some retired workers suffered cuts to their income and health-care benefits. But the city still has a long-term pension problem, with a $195m payment to the plan due in 2024. Cities in better health than Detroit are also grappling with the pensions burden. In Texas, Fort Worth’s credit rating was reduced by Moody’s, a rating agency, in May in response to a $1.5 billion pension-fund shortfall. + +The hole keeps getting bigger. Required public-sector employer contributions have nearly trebled as a proportion of payroll since 2001. But in practice, they have not been paid: since 2006, contributions have been regularly less than 90% of what is due. Closing the deficit will require higher taxes, or benefit cuts. But states and local governments are constrained by laws which say that benefits, once promised, cannot be reduced. Unless markets deliver implausibly high returns, more and more cities and states will be forced to juggle the interests of workers and taxpayers, with angry voices on both sides. + +What is the answer? The Dutch have a robust pension system which is still linked to salaries. The regulations demand that schemes are fully funded at all times; if funding falls below 105% of liabilities, then there is scope to reduce benefits. + +Some American states and cities have likewise been able to reduce their pension costs by limiting the amount of inflation indexation that applies (of course, that will only work if there is some inflation). In Arizona, voters approved in May a proposition that limited inflation increases for policemen and firefighters to 2% a year. But aping the Dutch model in America and Britain would require huge amounts of money to eliminate current pension deficits—money that employers may not have available. + +The private-sector funding problem will, at least, diminish in the long run as old DB schemes run down. But there will be no respite for governments. They have been slow to switch workers to DC schemes, because the power of public-sector trade unions to resist lower benefits is greater than in much of the private sector. A two-tier system may emerge, with retired private-sector workers finding themselves worse off than their public-sector counterparts, but still funding those luckier workers through their taxes. + +Retired hurt + +This is a slow-motion crisis in which the casualties—the weakest companies and cities—appear intermittently rather than all at once. Although the commitment to pay retired public-sector workers is in effect a debt, it does not show up in the official figures. Nine countries—Austria, Britain, Denmark, France, Germany, Italy, Poland, Portugal and Spain—have public-sector pension liabilities of more than 300% of GDP, according to Citigroup. + +The essence of the problem is clear. Low rates mean that employers and workers need to put more money aside for retirement. Many are either not contributing enough or ignoring a problem that seems a distant threat. They would do well to remember that in Augustus’s time the Roman Empire looked invincible. But the troubles that overwhelmed it were already taking firm root. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21707560-it-costs-lot-more-fund-modern-retirement-employers-workers-and-governments-are-not/print + + + + + +Previous Articles Sections Next + + + + + +United States + + + + +The campaign: President Trump? + +Bombs in New York: Sangfroid city + +The campaigns: Heard on the trail + +Cyber-spying: Bear on bear + +Safe passage: Chicago schools + +Campus sexual assault: Re-education + +Election brief: Fiscal policy: Money’s the conversation + +Lexington: Millennial falcon + + + + + +Articles Sections Next + +The campaign + +President Trump? + +What was once unthinkable has now become only mildly improbable + +Sep 24th 2016 | NEW YORK | From the print edition + + + +IF A week is a long time in politics, then a month is an eternity. In mid-August, Hillary Clinton had opened up a seemingly unassailable polling lead of eight percentage points over Donald Trump. Quantitative forecasting models pegged her odds of victory near 90%, and betting markets approached an 80% probability. Mrs Clinton’s cushion has now all but deflated. By Labour Day, Mr Trump had trimmed her lead in half. And just when the race appeared to be stabilising, the underdog had another growth spurt, picking up about three more points over the past two weeks. Mrs Clinton is now barely clinging to a one-point lead. That puts a man who calls for “unpredictability” in America’s use of nuclear weapons in a near-tie for a presidential election just six weeks away. + +Barack Obama held a similarly slim edge in national polling over Mitt Romney on the eve of an election he won comfortably in 2012. But the president had plenty of breathing room in state-specific polls, which turned out to be a better predictor of the outcome. By contrast, Mrs Clinton has lost even more ground in many state polling averages than she has nationally. Iowa, which Mr Obama carried by ten and six points in 2008 and 2012, seems to have slipped from her grasp entirely: the last two polls there have her trailing by eight and five. Recent surveys of Maine’s second congressional district, which awards an electoral vote independent of the statewide winner, put Mr Trump up by 11, ten and five points; Mr Obama won it by nine. Four of the past five Ohio polls give Mr Trump a lead of at least three points. And Florida, which Mrs Clinton led by four in late summer, now looks like a coin-flip. + +Mrs Clinton could afford to lose all of these places and still eke out a win. Recent polls show her maintaining an edge in Michigan, Wisconsin, Pennsylvania, Virginia and New Hampshire. But those states alone would leave her short of victory. With those in the bag, her easiest path to the presidency runs through Colorado, whose electorate is better-educated and more Hispanic than the national average. In July and August, her polling leads there ranged from five percentage points to 13. But the only survey taken of the state so far this month gave Mr Trump a four-point lead. If Mrs Clinton cannot hold on in the Centennial State, expect Mr Trump to be sworn in on January 20th. + +There is no doubt that current polling suggests the election would be close to a toss-up if it were held today. As a result, betting markets now give Mrs Clinton just a 65% chance of victory. Democrats, as well as never-Trump Republicans and independents can only hope either that recent surveys misrepresent public opinion, that Mrs Clinton’s superior campaign infrastructure will enable her to outperform them or that the polls will eventually swing back in her direction. There is solid evidence to back all three claims. + +The news has recently been unkind to Mrs Clinton. On September 9th she said that half of Mr Trump’s supporters belong in a “basket of deplorables”. She then fell ill with pneumonia, and unwisely tried to conceal the ailment, giving ammunition for two of Mr Trump’s attacks—that she is untrustworthy and that she is frail. Moreover, she had to take three days off from campaigning to convalesce, ceding the spotlight to Mr Trump. These stumbles coincided with his gains. + +However, they may not have actually led many voters to change their minds. Some studies suggest that sharp swings in the polls, such as the “bounces” candidates enjoy after their conventions, are caused mostly by partisans being more eager to talk to interviewers following good news for their preferred candidates than they are after a setback. Andrew Gelman, a professor at Columbia University, has found that when a candidate seems to surge in the polls, the share of respondents who say they belong to that politician’s party—and were thus always likely to be supporters—also increases. + + + +Sure enough, recent battleground-state surveys showing Mr Trump ahead, like one in Ohio conducted from September 9th to 12th by the well-respected Ann Selzer, often contain more people calling themselves Republicans than do earlier polls. It is possible—though far from certain—that disgruntled Democrats haven’t felt like picking up the phone of late when pollsters call, even if they are sure to pull the lever for Mrs Clinton in November. + +Another argument for Mrs Clinton’s chances is the disparity between her war chest and ground game and Mr Trump’s. Even as small donors, whom Republicans have historically had trouble courting, have flocked to Mr Trump, his fund-raising lags far behind the establishment favourite’s: Mrs Clinton pulled in $143m in August, compared with his $90m. That has enabled her to clobber him on the airwaves—she is outspending him on advertising by a factor of five—and to invest in a formidable get-out-the-vote operation. Mrs Clinton has opened over three times as many field offices in battleground states as Mr Trump has. And Mr Trump’s continued battles with much of the Republican establishment—particularly in Ohio, whose governor, John Kasich, still refuses to endorse him—may also hinder co-operation between his staff and those working for down-ballot Republican candidates. + +Moreover, Mrs Clinton’s vaunted analytics department can target persuadable voters whose doors await a knock, and likely supporters with a middling propensity to vote who could use a ride to the polls, with the pinpoint accuracy of a Facebook advertisement. In contrast, Mr Trump has scoffed at data-driven campaigning, calling it “overrated”. No one knows quite how much of a difference these factors will make, because in the past presidential candidates have generally fought each other to a draw in the ground game. But as long as they are worth more than zero, Mrs Clinton should show better results at the ballot box than she does in telephone polls. + +The final argument in favour of Mrs Clinton’s chances is that polling averages tend to revert towards their means, and that Mr Trump is now bumping up against his previous ceiling of around 40% of the vote. She will presumably benefit from returning to the campaign trail, and could get a boost from increased efforts on her behalf by Democratic heavyweights. Even if Mr Trump does well in the debates, they will likely push talk of deplorables and pneumonia off the front pages. Moreover, both the economy and the president’s approval ratings have been on the rise of late, strengthening the appeal of Mrs Clinton’s run for a third Obama term. + +The two third-party candidates could also lose some of their lustre. They currently appear to be taking more votes away from the Democrat than the Republican—by a slight margin in the case of the Libertarian Gary Johnson, but a large one in that of the far-left Green Party’s Jill Stein, who gobbles up 3% in national polls. But support for third parties tends to dwindle as elections draw near. The combination of the also-rans’ expected absence from the debates, which only admit candidates averaging at least 15% in the polls, and the growing plausibility of a Trump presidency could drive Stein supporters worried about her playing Ralph Nader to Mrs Clinton’s Al Gore into the Democratic camp. + +For all these reasons, it is far too early for Mrs Clinton’s supporters to panic. But even though virtually every variable besides recent polls points in her favour, the race is now close enough that even a mild “October surprise”—perhaps in the form of the unflattering document-dump that Julian Assange, the head of WikiLeaks and a harsh critic of Mrs Clinton, promises is forthcoming—could vault Mr Trump ahead. Even without that, the idea that a Clinton landslide would lead to the banishment from American politics of Mr Trump’s appeals to racial and cultural resentment is receding fast. + +What academics call the fundamentals of the race—the economy is performing modestly well, the same party has held power for eight years, and neither side benefits from incumbency—suggest a tie between an identikit Democrat and a generic Republican. Mrs Clinton is the second-least-popular major-party candidate in modern history. The main reason she is ahead is that Mr Trump is the first. But in the month since he hired Kellyanne Conway as his campaign manager, he has mostly avoided self-sabotage. If he can continue to do so, the election could remain the nail-biter that fundamentals have indicated all along. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707541-what-was-once-unthinkable-has-now-become-only-mildly-improbable-president-trump/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Bombs in New York + +Sangfroid city + +New York and New Jersey react calmly to a terrorist attack + +Sep 24th 2016 | NEW YORK | From the print edition + + + +“INSHALLAH the sounds of the bombs will be heard in the streets. Gun shots to your police. Death to your oppression.” So wrote Ahmad Khan Rahami in a bloodstained journal found after his arrest for planting bombs in Manhattan and in New Jersey. “Attack the Kuffar [non-believers] in their backyard,” he also wrote. + +That is exactly what Mr Rahami did. Rather than attack a landmark, such as Times Square, which had been unsuccessfully targeted in 2010, he is accused of placing bombs in Chelsea, a bustling Manhattan residential neighbourhood with lots of lively restaurants and bars. Thirty people were hurt in the bomb that exploded on the evening of September 17th. A second bomb, found four blocks away, was discovered and removed before it could harm. Earlier that day a bomb went off at a 5k fun-run for a military charity at the New Jersey Shore. No one was hurt. Bombs were also placed at a transport hub in Elizabeth, New Jersey. They were found by vigilant locals before the devices could explode. + +The mayor of New York promised that the police presence, already increased because of the United Nations General Assembly, which draws 135 heads of state, would be “bigger than ever”. For the most part New Yorkers just got on with it. By the next morning, they were back walking their dogs, jogging and brunching. But many were shaken by a text message from authorities at around 8am on Monday, asking for help in apprehending Mr Rahami. Commuters quietly locked eyes with each other. Less than two hours later, after a shoot-out with police, Mr Rahami was captured in New Jersey. + +Prosecutors linked Mr Rahami to the bombs with fingerprint evidence and online sales records allegedly showing him buying ingredients for a bomb, from citric acid to ball bearings (to cause nastier injuries). The FBI also recovered video showing Mr Rahami practising planting a bomb. + +His journal praises Anwar al-Awlaki, a radical cleric and al-Qaeda recruiter killed by American drone strike in 2011. He refers to the Boston marathon bombers, who used a pressure cooker similar to the ones he allegedly planted. He mentions Nidal Hasan, who killed 13 people at Fort Hood. It is not yet known if he acted alone. He was discovered sleeping in a doorway, which indicates that “he had nowhere to go,” says Jimmy O’Neill, New York’s police commissioner. An American citizen who left Afghanistan when he was about seven years old, Mr Rahami reportedly began to visit Afghanistan and Pakistan in 2011. He subsequently began wearing more traditional clothing and became more religiously observant. His family ran a fast-food restaurant called First American Fried Chicken. + +On the same day as the Chelsea bombing, a man, who came to America when he was three months old from Somalia, stabbed ten people in a Minnesota shopping centre. Islamic State claimed him as one of its soldiers. So far no terrorist group has claimed Mr Rahami. He was not on any watch-list, but two years ago his own father had told authorities his son was acting like a terrorist. An FBI investigation drew a blank though Mr Rahami was arrested for hitting his mother and stabbing his brother. Inevitably, the case became presidential campaign fodder. Donald Trump called the attacks fresh evidence that America has an “extremely open immigration system” and needs to become less squeamish about profiling terror suspects by racial or religious background. Hillary Clinton chided Mr Trump for harsh anti-Muslim rhetoric and called him a “recruiting sergeant for the terrorists”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707543-new-york-and-new-jersey-react-calmly-terrorist-attack-sangfroid-city/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +Sep 24th 2016 | From the print edition + + + +Soul searching + +“He asked me about the painting. I said, ‘I paint souls, and when I had to paint you, I asked your soul to allow me.’ He was touched and smiled.” + +Artist Havi Schanz, on the portrait of Donald Trump that the candidate purchased at a charity auction. Washington Post + +Best laid plans + +"Plans you don’t even know about will be devised because we’re going to come up with plans—health-care plans—that will be so good." + +Mr Trump tells Dr Oz about his replacement for Obamacare. + +Gun-free zone + +"I think that her bodyguards should drop all weapons. They should disarm immediately. Take their guns away, let’s see what happens to her." + +Mr Trump has advice for Hillary Clinton’s security detail. + +J’accuse + +“I think that “Veep” has torn down the wall between comedy and politics, our show started out as a political satire but it now feels more like a sobering documentary. So I certainly do promise to rebuild that wall and make Mexico pay for it.” + +Julia Louis-Dreyfus, star of “Veep”. + +Line of fire + +“I think that you have a lot of negativity in these questions.” + +Ivanka Trump, upset at tough questions, ended an interview with Cosmopolitan. + +Special bus + +“Those people need to get on board. And if they’re thinking they’re going to run again someday, I think that we’re going to evaluate the process.” + +Reince Priebus, RNC chair, to the Trump holdouts in his party. CBS News + +Crossing the Rubicon + +“The president told me he’s voting for Hillary!!" + +Former president George H. W. Bush allegedly told the board of his foundation that he plans to vote for Mrs Clinton. + +Pre-gaming + +“It’s a phony system. [The debate moderators] are all Democrats. It’s a very unfair system.” + +Donald Trump complains about the debates. Fox News. + +Worst of times + +"Our African-American communities are absolutely in the worst shape they’ve ever been in before. Ever. Ever. Ever.” + +Donald Trump continues his outreach to African-Americans in North Carolina + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707542-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cyber-spying + +Bear on bear + +What’s worse than being attacked by a Russian hacker? Being attacked by two + +Sep 24th 2016 | From the print edition + +Fancy meeting you here + +THE breach of Democratic Party computer systems attracted plenty of headlines this summer. What has attracted less attention is that two separate teams of Russian hackers were at work, evidently unaware of each others’ activities. One of them—nicknamed Fancy Bear by the cyber-security firm Crowdstrike—is thought to be linked to Russian military intelligence, the GRU. Its aim was to steal information and leak it. Dmitri Alperovitch of Crowdstrike, which was hired by the victims, terms this “active measures”: spy parlance for direct intervention in a foreign country’s affairs. + +But another group, code-named Cozy Bear, was also inside the Democratic Party’s computer networks. It was engaged in traditional espionage, quietly collecting information about the party’s inner workings—a high-priority target for any foreign government, but particularly the Kremlin. Its interests, and the more sophisticated technical means it used, suggest that it was working for another part of Russia’s intelligence apparatus. Don Smith of Dell Secureworks, another cyber-security company, reckons that the subtler of the two bears was probably rather annoyed by the crudeness of the other attack. Without the leak of the e-mails, its victims would probably have remained unaware that they were being monitored. + +The rambunctious Fancy Bear group also left some interesting fingerprints while stealing the Democrats’ porridge. Previously unpublished analysis by SecureWorks gives some of the details. The groups took the day off on April 15th—which just happens to be the day Russia honours its military electronic-warfare service. The main means of attack was authentic-seeming e-mails containing a bogus “change password” link. When clicked on this opened an (equally bogus) Gmail log-in page. Anyone typing in his credentials then gave the attackers access to his e-mail account (Hillary for America used a version of Gmail). + +But to help the links evade spam filters, the attackers used a free, public link-shortening service called bit.ly—and were oddly careless in the way they did so. Unscrambling the links makes it possible to see whom else they attacked. Secureworks reckons the group created 213 short links aimed at 108 e-mail addresses on the hillaryclinton.com domain, ranging from senior advisers to junior staff involved in scheduling and travel. Around a fifth of the links were clicked on—though this does not reveal whether victims were also tricked by the bogus Gmail log-in page. Fancy Bear has used the same technique in previous attacks. Most were in the former Soviet Union (notably Ukraine), either politicians and officials or journalists and activists. + +The big worry so far in America has been over what feels like direct Russian interference in the electoral process—not just with hacks and leaks, but the fear that voting machines might be targeted, to try to undermine the credibility of the result. The Democratic Party may be the tip of an iceberg. And the ease with which both lots of bears breached what should have been well-guarded systems highlights the gullibility and carelessness which lie behind most successful cyber-attacks—in politics, business or indeed everywhere else. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707574-whats-worse-being-attacked-russian-hacker-being-attacked-two-bear-bear/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Safe passage + +Chicago schools + +Amid growing violence, Chicago now escorts one in five students to school + +Sep 24th 2016 | From the print edition + + + +Nearly 400,000 public-school students made their way through the streets of Chicago to attend their first day of school on September 6th. For some, the journey can be perilous. As these students walked through streets plagued by gang violence, they were joined by 1,300 security guards in yellow vests stationed along predefined routes in the city’s most dangerous neighbourhoods. + +These “community watchers” are part of a programme designed to protect Chicago students as they travel to and from school. The initiative began in 2009, after a 16-year-old honour-roll student was beaten to death in the street. This school year 142 schools with a total of 75,000 students have safe routes. Since the start of 2016 Chicago has recorded over 500 murders, more than New York and Los Angeles combined and a 50% increase over the same period last year. Figures compiled by the Chicago Tribune reveal 33 of these victims were under 17. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707573-amid-growing-violence-chicago-now-escorts-one-five-students-school-chicago-schools/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Campus sexual assault + +Re-education + +Students starting college are trained in how to avoid committing rape + +Sep 24th 2016 | LOS ANGELES | From the print edition + + + +AT THE University of Minnesota, some 5,700 new students arrived on campus for orientation earlier this month. Each one of them has taken a course on campus sexual assaults. A new law, which came into effect on August 1st, made it mandatory for all university freshmen in the state of Minnesota to be given training within the first ten days of the school year. Minnesota is unusual for the breadth of its decree, but students, parents and university administrators across the country are asking the same questions about how widespread campus rape is and what to do about it. + +California was the first state in the country to pass a law colloquially referred to as “Yes means yes”, which requires affirmative consent for sex to be considered legal. New York followed suit in 2015. Last year George Washington University became the first to make training on sexual assault compulsory for new students. The White House has its own task force on protecting students from sexual assault. + +Crime statistics suggest universities are no more dangerous in terms of sexual violence than other places where men and women both congregate, but that is not much solace. Statistics on sexual assault are notoriously hard to compile, but the best attempt from the Association of American Universities found that 23% of female undergraduates reported some form of sexual assault. An internal poll at Harvard suggested almost a third had. Victims of sexual assault rarely speak up; even when they do, sexual assault can be devilishly hard to prove. Yes to Sex, a phone application that was introduced in April, aims to help partners clarify and document sexual consent in under 30 seconds. But use of the service has not taken off: it has only a few, mediocre reviews on the iTunes store. Without such pre-planning, proving consent was or wasn’t given after the fact is often difficult. + +Many sexual assaults happen during the “red zone”, the time between the start of the school year and Thanksgiving, says Kathryn Nash, co-founder of TrainED, a company that counsels colleges on legal compliance. “A high percentage” of these cases involve freshmen. Miss Nash attributes this to freshmen being on their own and having access to alcohol for the first time. She says that in 75% of cases one or both parties have been drinking. Various public-health studies link sexual assault and binge-drinking, though some students think this is blaming the victim. Sheryl Morrison, whose daughter Victoria is a freshman at Saint Thomas University in Saint Paul, blames “irresponsible drinking behaviour” for the majority of incidents, adding that her daughter does not drink. Tony Burton, a freshman at the University of Minnesota, says that most of the tips in the training he went through were “common sense.” This is not the case for everyone. “A lot of kids arrive at college thinking ‘if someone doesn’t say ‘no’ I can keep going,’” Miss Nash explains. + +Ann Olivarius, a lawyer for victims of sexual assault, believes the problem has been exacerbated by the availability of pornography. The internet has made sexually explicit images and videos accessible to anyone with a smartphone. This, she says, has engendered a sense of sexual entitlement among men. On the other hand, the web has focused attention on the problem. News of sexual assault spreads much more quickly and widely than it did before the era of digital media, which may encourage more people to come forward. + +Because rape violates criminal law, it must be proved beyond reasonable doubt. To increase conviction rates, the White House is pressuring univerities—by naming them publicly, fining them or threatening to withhold funds—to deal with more cases on campus, where rape has to be proved just on the balance of probabilities. The sanctions a university can administer are less severe than prison time, but on the extreme end they can still amount to “career capital punishment” says one university president, who is hiring former judges to staff his college’s tribunal. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707572-students-starting-college-are-trained-how-avoid-committing-rape-re-education/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Election brief: Fiscal policy + +Money’s the conversation + +Hillary Clinton’s fiscal plan is fiddly. Donald Trump’s is absurd + +Sep 24th 2016 | WASHINGTON, DC | From the print edition + + + +FISCAL policy has tumbled from the top of the political agenda with remarkable speed. For most of Barack Obama’s presidency, controlling the national debt, which spiked from 35% of GDP to over 70% after the recession, was a priority for Republicans. Democrats were less worried, but still saw the need for America to fix its long-run challenge: soaring spending on Medicare (public health insurance for the over-65s) and Social Security (public pensions). Mr Obama set up a doomed bipartisan commission with the task of doing just that. Yet in this election, the Republicans have abandoned their fiscal hawkishness. And the long-run barely gets a look-in. + +That is not all down to Donald Trump. The economic recovery, combined with sharp cuts to spending (triggered by the failure to reach a deficit-reduction deal) have reduced borrowing significantly, from 9.8% of GDP in 2009 to 2.5% in 2015 (in 2016 it will be a little higher). Republicans in Congress—which, unlike the president, actually writes the budget—have also had a change of heart. Their economic priority is now to boost growth by cutting taxes and red-tape, which they blame for the slow recovery from the financial crisis. Faster growth, they say, would lead to healthier public finances. + +Mr Trump has assumed that cause with gusto. He promises to raise economic growth to 3.5% or even 4%, up from an average of 2.1% since the end of the recession. But he also pledges extra spending, on infrastructure, veterans, education, child care and so on, as well as defence, a more usual GOP priority. Mr Trump is imprecise about numbers. But his expansion of the military would alone cost $450 billion over a decade, says the Committee for a Responsible Federal Budget (CRFB), a fiscally hawkish think-tank. (For comparison, today’s total national debt is about $14 trillion, or 77% of GDP.) + +Big spending on top of tax cuts has transformed an unrealistic agenda into a fantasy. Start with the growth predictions. America is growing slowly in part because baby-boomers are retiring. The population aged 25-54 will grow by just 0.3% a year until 2024, compared with 0.9% between 1994 and 2004. Mr Trump promises to create 25m new jobs, presumably over two terms—20m more than is forecast today. It is not clear who would fill these vacancies. Restoring the labour-force participation of prime-age workers to its record high would unearth only 4.3m new workers. To achieve rapid growth Mr Trump would instead need productivity growth to average 2.6%, says the CRFB, a level not reached in any ten-year period in modern history. + +Even conservative economists see this. Growth of only 2.8% would call for a “gold medal”; reaching just 3% would put Mr Trump in the “hall of fame”, says Douglas Holtz-Eakin, who ran the Congressional Budget Office for two years under George W. Bush. The Tax Foundation, a non-partisan think-tank, reckons tax cuts can significantly boost growth, but still says that Mr Trump’s tax plan would cost $2.6 trillion-3.9 trillion over a decade. + + + +Mr Trump promises to free up funds by lopping 1% a year off the roughly one-third of the budget that is left after defence, Social Security and Medicare. This adds up to a 29% real-terms cut over a decade to budgets that have already been slashed since 2011. Even assuming he manages this, and that there is no new infrastructure spending, the CRFB reckons Mr Trump would send the national debt soaring to 105% of GDP by 2026 (see chart). And this is before accounting for growth, which, in spite of Mr Trump’s tax and regulatory policies, would probably fall as a result of his immigration crackdown and trade barriers. + +Mr Trump has launched his tax plans three times, yet they remain vague. At first, he promised to tax income from small firms, which are usually treated like any other earnings, at a maximum rate of 15%. After many analysts noted that this might cause high-earners to masquerade as small-businesses, the policy disappeared. It had been dropped, the campaign told the Tax Foundation, before promising the small-business lobby that it remains. + +Finally, the plan is steeply regressive. The incomes of the poorest rise by 1-8% (depending on growth effects, and on small-business taxes). But thanks to a whacking cut to the top rate of tax, from 39.6% to 33%, the incomes of the top 1% of earners would surge by 10-20%. Yet Mr Trump claims, inexplicably, that a couple earning $5m a year would see a tax cut of just 3%. + +Compared with such a shambles, it is obvious that Hillary Clinton’s policies are much more serious. But that is not the same as saying they are desirable. + +Mrs Clinton, whose pledges are precise enough to be quantified, wants new spending totalling about $1.7 trillion over a decade. Her best ideas concern infrastructure, on which she would spend an extra $250 billion. A further $25 billion would capitalise a federal infrastructure bank. This would lend $250 billion to projects that can make a return, such as toll bridges. (Mr Obama has tried to set up such a bank; 32 states already have their own.) + +Many other programmes make up the other spending. Having been pushed leftward on the issue by Bernie Sanders, Mrs Clinton would guarantee that by 2021 households earning less than $125,000 pay no tuition fees at public universities in their states. She would cap child-care costs at 10% of income, fund paid parental leave and create tax-credits to encourage firms to share their profits with workers, hire apprentices and invest in manufacturing. + +Mrs Clinton promises to pay for all this with a combination of higher taxes on the rich—for example, an additional 4% tax on incomes over $5 million. She has also proposed various new taxes on business, such as a fee on big banks. Her plan very nearly funds itself, according to the CRFB. + +The Clinton agenda, though, is too complicated. America’s clunky tax and welfare system needs simplification, not endless new deductions, credits and phase-outs. American businesses take 175 hours per year to comply with all taxes, compared with 110 hours in Britain. Complexity is hardly unique to Mrs Clinton’s policies: it is a product of America’s incrementalism and lobbying. But it is still unwelcome. + +To the extent that the candidates do talk about America’s longer-term fiscal woes, Mrs Clinton is the more credible. For instance, she promises to expand the Affordable Care Act’s fledgling cost-saving experiments in Medicare. Yet because the trust fund for Medicare runs dry only in 2028, and the Social Security fund only in 2034, this issue will only really grab politicians—and electorates—later. Mr Trump is not interested; Mrs Clinton, for once, not scrutinised. America would be best-served by a rigorous contest of economic ideas. It is not getting that. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707558-hillary-clintons-fiscal-plan-fiddly-donald-trumps-absurd-moneys-conversation/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Millennial falcon + +Hillary Clinton’s attempts to swoop on young voters are meeting with some resistance + +Sep 24th 2016 | From the print edition + + + +IT IS hard to know whether Hillary Clinton should be cheered by the lightning visit that she paid on September 19th to Temple University, a large, publicly funded college in Philadelphia—or plunged into gloom. On the upside for Team Clinton, it was easy to find students won over by her half-hour speech, a strikingly personal appeal to young voters that painted Donald Trump as a bigot and herself as a lifelong advocate for progressive causes. The candidate pandered on policies, but also sought to recruit the young as partners in a mission to fix the country. “I need you”, Mrs Clinton pleaded at one point, adding a promise that “young people will always have a seat at any table where any decision is being made”—a pledge which, depending on how the Clinton White House defines the meaning of “young”, “seat” and “at”, should enliven meetings with the joint chiefs of staff. + +One convert was Michelle Ferguson, a 20-year-old linguistics major who, like many Temple students, backed Mrs Clinton’s leftist rival, Senator Bernie Sanders of Vermont, during the Democratic presidential primary. “She earned my vote today,” Ms Ferguson enthused as she left the Clinton rally, held in a hall with room for just 300 students, decorated with campaign placards bearing the artful slogan “Love trumps hate”, and an array of large red letters simply saying: “Love”. What won over Ms Ferguson was hearing Mrs Clinton recall her youth as an activist, whether campaigning for boys imprisoned in adult jails in South Carolina, or urging schools to build wheelchair ramps. The undergraduate was taken aback to hear Mrs Clinton recall her reluctance to run as a senator for New York, because the former First Lady thought of herself as “an advocate, not a politician”. Ms Ferguson called that “really inspiring”, because she is an activist herself, and had always been unsure whether Mrs Clinton shared her values or was merely driven by ambition. + +On the downside for Team Clinton, it is dauntingly late to be making such conversions. Less than two months before the general election, Mrs Clinton remains unloved by many young Americans who came of age around the year 2000 or later (earning them the demographic label millennials). When pollsters offer young people a four-way choice between Mrs Clinton, Mr Trump and casting protest votes for the Libertarian and Green Party candidates, as few as 31% of them have backed the Democrat in some recent polls. That the young dislike Mr Trump still more, handing him as little as a quarter of their votes in those same four-way surveys, offers scant comfort. In 2008 and 2012 President Barack Obama did not just win 60% or more of votes cast by millennials, he prodded record-breaking numbers of the young to turn out. That not only made the electorate youthful, but more diverse too—because younger Americans are less likely to be white. In 2016, given Mr Trump’s thumping leads among older voters and among white voters, Mrs Clinton can ill-afford to leave millennials feeling “meh”. + +To hear Mrs Clinton described by many students, she sounds less like a working politician than a figure from history, ready to be cast in bronze or engraved on a postage stamp. The Democrat does not excite the young because “God bless her, she’s been around for ever,” suggested Conor Freeley, a Temple student and Democratic activist volunteering at her rally. A former Sanders-backer, Mr Freeley is now working hard to register voters on his overwhelmingly Democratic campus. Complicating his task, classmates raise qualms about Mrs Clinton’s character—meaning her honesty—more often than her policies, while her status as the first woman nominee of a major party is “absolutely taken for granted”. Another student at the speech, Tom Sacino, lamented that many of his friends want nothing to do with this election: “They say: Trump’s a racist, and Hillary’s a liar.” + +Mrs Clinton finds herself in the painful position of being at once tiresomely familiar to many younger voters, and yet mysterious to them. A Clinton campaign bigwig, watching the Temple speech from the back of the room, noted polls showing that a “not insignificant percentage of millennial voters” see no real difference between Mr Trump and Mrs Clinton on climate change. “That’s not true, he thinks climate change is a hoax,” the bigwig growled, predicting “a lot of work” to educate young voters. In her speech Mrs Clinton duly recited something like a progressive credo. Her promises included new gun-safety laws, tackling the “soaring cost of college” with advice from Mr Sanders, a higher minimum wage, cheaper child-care and a big push on renewable energy: all issues that millennials say are important in polls. + +Bernie’s harvest + +In campaign appearances, Mr Obama has chided the young to remember “all the work” that Mrs Clinton has done over the years and the obstacles that she has overcome. Mr Sanders has spoken on college campuses in swing states, and urged his admirers to defeat Mr Trump by backing Mrs Clinton—the woman he painted for so long as an unprincipled agent of the billionaire classes. Until a few days ago such appeals to pragmatism pained Laurana Seymour, a student of English and political science who co-founded “Temple Students for Bernie Sanders” during the presidential primary. She says that during the primary Mr Sanders “clarified” why she dislikes Mrs Clinton, with his scathing attacks on his rival for giving paid speeches to Goldman Sachs, a bank, for backing free-trade deals and supporting the 2003 invasion of Iraq. Ms Seymour was reluctant to hear Mr Sanders in his new role on the general-election trail, explaining: “I didn’t want to be scared into voting for Clinton.” But now she will “most likely” vote for Mrs Clinton. She blames headlines predicting that Pennsylvania could be the state that decides the election, and the nastiness of the Trump campaign. In short, she has been scared into a Clinton vote. That is hardly an uplifting way to win over the young. In a brutal election season, it may have to do. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21707536-hillary-clintons-attempts-swoop-young-voters-are-meeting-some/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Paraguay: Polka lessons + +Declassifying documents: Sunlight diplomacy + +Bello: Of growth and globalisation + + + + + +Articles Sections Next + +Paraguay + +Polka lessons + +The surprising success of a landlocked country + +Sep 24th 2016 | ASUNCIÓN | From the print edition + + + +MANY visitors to Paraguay never get beyond Ciudad del Este, the second-largest city. Brazilian day-trippers cross the Paraná river on the Friendship Bridge, shop in grungy malls and return laden with cheap electronics, Chinese-made blankets and Armani jeans, some of them genuine. The law limits the bargain-hunters to $300-worth of duty-free goods a month; they, and the border guards, ignore it. + +Brazil’s recession has dented this tacky trade. “Normally, you couldn’t pass through here because of the crowds,” sighs a taxi driver on Monseñor Rodríguez, the main thoroughfare. Sales at SAX, the city’s swankiest mall, fell 90% last year. Other sources of export earnings are also suffering; the price of soyabeans has halved since 2012. Only electricity, powered by the massive Itaipu dam near Ciudad del Este and sold to Brazil, is doing well. + +And yet this landlocked, sparsely populated country is coping better than many in the region. Its GDP grew by 6.2% year-on-year in the second quarter of 2016. It will expand by around 3% this year and next, forecasts the IMF. That would place it in the top tier among South American economies (see chart). A recovery in commodity prices is expected to help, but some of Paraguay’s success comes from adding new activities to its traditional ones. Instead of just farming and flogging cut-price goods to tourists, the country is starting to manufacture things. Its own consumers are shopping more. Though outsiders still think of it (if they think of it at all) as a cheap bazaar and weird haven for fugitive Nazis, Paraguay is becoming a modern country. + + + +At X-Plast, on the southern fringes of Ciudad del Este, room-sized injection moulders extrude plastic toys and garden chairs, one every minute or so, mostly destined for customers in Brazil. The slump there has hurt sales and profits but not obliterated them, says Regina Toyota, the firm’s manager. That is because production costs are low. Itaipu’s electricity powers the machines. Labour is relatively cheap. Non-wage costs add a third to basic pay in Paraguay but double the cost in Brazil, Ms Toyota says. Taxes on sales and incomes are the lowest in Latin America. + +A dozen maquilas in the suburbs of Ciudad del Este churn out everything from clothing to car parts; five years ago there were none. Across Paraguay investors have set up 70 such firms in the past three years, more than during the previous decade. + +These ventures are the basis of an industrial sector that could end Paraguay’s reliance on weather-dependent farming and electricity exports, says Gustavo Leite, the industry minister. Brazil imports $70 billion-worth of goods annually from Asia. Mr Leite thinks Paraguay could capture a tenth of that, doubling its industrial production and transforming the country into “Brazil’s China”. That is a worthy, if hyperbolic, goal. To achieve it, Paraguay will have to maintain its sensible economic policies and do far better in providing infrastructure, education and health care. + +It is reaping the benefits of economic orthodoxy, which was introduced by Alfredo Stroessner, a strongman who also murdered dissidents and promoted smuggling during his long reign from 1954 to 1989. His successors have largely kept to his fiscal philosophy. Budgets have been roughly in balance and public debt is low. The central bank aims for an inflation rate of 4.5% and usually gets close. Commercial banks are healthy (in part because they charge high interest rates and face little competition). Regulation, like the tax code, is business-friendly. Independent trade unions, suppressed under Stroessner, are weak. + +Paraguay’s president, Horacio Cartes, who belongs to the Colorado party, once led by Stroessner, has tried to modernise the dictator’s framework. He has replaced political hacks in ministries with Western-educated technocrats (the finance ministry and central bank were already staffed by professionals). He has pushed through a law to limit central-government deficits to 1.5% of GDP but continues to spend money on anti-poverty programmes. Along with steady economic growth and rising wages, these have cut the poverty rate in half, to 20%, between 2003 and 2014. + +While Brazilian shoppers are holding back, Paraguayans are spending more. Shopping centres, blocks of flats and hotels are springing up in Asunción, the once-sleepy capital. Its residents are imbibing less tereré, a traditional cold drink made from the yerba mate plant, and more lattes in new European-style cafés. Its streets, unlike those of Ciudad del Este, are congested. But Mr Cartes’s socially sensitive version of laissez-faire has its drawbacks. Matthias Otto, owner of a trendy café in Asunción, likes low taxes but not the crappy public services that go with them. Blackouts are common, he complains. + +Mr Cartes, a tobacco magnate, won the presidency in 2013 in part by promising to ramp up spending on public works with cash from the private sector. But turning aspirations into asphalt has been difficult. A new law promotes public-private partnerships (PPPs) but officials lack the expertise to set them up. A tender to build and operate a motorway through the semi-arid Chaco region attracted a single bid (which was accepted). A new transmission line from Itaipu has helped reduce power cuts at X-Plast, says Ms Toyota. But a plan for a second line from the smaller Yacyretá dam down the Paraná river has stalled. + +Nor has Mr Cartes reduced much the shadow economy, which employs perhaps two-thirds of workers and pays salaries that are 40% lower than those in the formal sector. Although the unemployment rate is just 6%, the share of workers who are underemployed is twice that. Fujikura, a maker of electrical wiring for cars in Ciudad del Este, tutors workers to make up for their lack of a basic education. In the neglected north a Marxist insurgency simmers (and boiled over in August, when guerrillas killed eight soldiers). + +Mr Cartes’s attempt to modernise Stroessner’s model has met resistance from his own Colorado party, which has a majority in congress. A law passed in 2014 allowed citizens to look up salaries of civil servants; it turned out that several were drawing more than one. They were sacked. Party hacks took revenge by blocking Mr Cartes’s initiatives in congress. It stripped the government of its power to sign PPPs without congressional approval. Unable to offer shiny infrastructure projects, the president has seen his popularity slide. His attempt to amend the constitution to let him seek a second term in 2018 looks doomed. If it succeeded, he might lose to Fernando Lugo, a left-wing former bishop who was president until 2012, when he was impeached over allegations of failing to keep order or prevent nepotism. Mr Lugo is now a popular senator. + +Paraguay’s next president is unlikely to abandon economic caution. Even Mr Lugo did not run ruinous deficits. The country’s gradual progress is thus likely to continue. It is coming to resemble its more prosperous neighbours: Brazil, Argentina and Uruguay. With that comes a new sense of national self-confidence. “We used to dance tango or samba,” notes Santiago Peña, the finance minister. “Now we dance the polka,” the national dance brought by central European immigrants. Perhaps the Brazilians crossing the Friendship Bridge will take the time to learn a few steps. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21707589-surprising-success-landlocked-country-polka-lessons/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Declassifying documents + +Sunlight diplomacy + +The United States tries to win friends by revealing past misdeeds + +Sep 24th 2016 | BUENOS AIRES | From the print edition + +Truth at last + +ON THE morning of September 21st 1976, Orlando Letelier, a Chilean dissident, was at the wheel of his Chevrolet Malibu on his way to work at a think-tank in Washington, DC. A former foreign minister in Salvador Allende’s government, he had been jailed by the military regime that took power in 1973. After his release, he went to the United States and became one of the junta’s most prominent critics. He wrote letters and lobbied Congress to withdraw military aid to the generals. His work had not gone unnoticed in Santiago, Chile’s capital. As his car rounded Sheridan Circle a bomb beneath his seat exploded, killing him and Ronni Moffitt, a colleague sitting beside him. The murder is the only state-sponsored terrorist attack to have struck the United States’ capital. + +For decades people suspected that Augusto Pinochet, Chile’s military dictator, was behind the murder. Evidence of that came to light only in October 2015, when John Kerry, America’s secretary of state, gave Michelle Bachelet, Chile’s president, a pen drive containing hundreds of newly declassified documents. One of them, a memo in 1987 from George Shultz, an earlier secretary of state, to Ronald Reagan, quoted a CIA finding that “President Pinochet personally ordered his intelligence chief to carry out the murders.” The revelation came too late to be used to try the despot; he died in 2006. Chile welcomed it anyway. “It helps us to clarify a painful historical moment for our country,” said Heraldo Muñoz, Chile’s then-foreign minister. + +Mr Kerry’s disclosure was an example of “declassification diplomacy”, the use of once-secret documents to shed light on the United States’ role in past conflicts (or knowledge about them) and thereby improve its standing in the world. Some of the revelations make past administrations look bad. But those who support the policy say they can heal wounds, advance American goals and provide evidence in trials of abusive officials. + +Mr Kerry delivered the Letelier documents to Ms Bachelet as part of an effort to persuade her to accept detainees released from Guantánamo Bay. In 2014 Joe Biden, the United States’ vice-president, handed documents to Brazil’s then-president, Dilma Rousseff, with information about torture by the country’s military government in the 1970s. This was an attempt to repair relations after Edward Snowden disclosed that American spies had tapped her phone. In March this year Barack Obama said the United States would give Argentina files on its role in the “dirty war” waged by Argentina’s military government against its own citizens in the 1970s and 1980s. These revealed that Henry Kissinger, the United States’ top diplomat in the 1970s, had continued after he left office to express sympathy for a crackdown on dissent by Argentina’s military rulers. Mr Obama hoped the declassification would deflect criticism during his visit to Buenos Aires on the 40th anniversary of the coup. + +Bill Clinton was the first American president to authorise a project to declassify Pentagon and CIA documents related to human-rights abuses in Latin America. During the 1990s his administration released material on military regimes in El Salvador, Guatemala and Chile. But these disclosures were generally reactions to events, such as Pinochet’s arrest in London in 1998, argues Peter Kornbluh of the National Security Archive, a Washington-based NGO that helps researchers find such documents. Mr Obama, by contrast, uses document dumps proactively as a tool of United States foreign policy, Mr Kornbluh says. + +It is earlier disclosures that are now showing up as evidence in courts. One haul, released in 1993, may help the prosecution in the trial of 20 military officers accused of murdering six Jesuit priests and two women in El Salvador in 1989. Declassified documents will provide 40% of the evidence against the defendants, says Almudena Bernabeu, who has prosecuted human-rights cases in Latin America. + +Declassification diplomacy has critics. People who regard Mr Obama as the United States’ “apologist-in-chief” think it strengthens their case. A more convincing objection is that it can upset settlements in countries trying to overcome past conflicts. Ironically, “here the US is intervening again, this time with a moral heavy hand,” says Christopher Sabatini, a lecturer at Columbia University in New York. “That can reopen old wounds.” He is worried about Colombia, which is on the verge of ending a 52-year-long war with the leftist FARC guerrilla group. Fighters who confess to human-rights crimes will not serve time in jail under the proposed peace agreement. The United States will have to be careful about declassifying documents that might disrupt that accord, Mr Sabatini says. + +Nor does declassification always work as a diplomatic gambit. Ms Bachelet did not accept Guantánamo detainees. Still, the United States has set an example of openness that should be copied by more secretive regimes, such as Cuba’s. Further releases of American documents could help convict perpetrators of crimes in Chile and El Salvador. But time is running out. Whether ageing war criminals are brought to justice will depend in part on the next occupant of the White House. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21707587-united-states-tries-win-friends-revealing-past-misdeeds-sunlight-diplomacy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +Of growth and globalisation + +Latin America wants to rejoin the world. Will the world reciprocate? + +Sep 24th 2016 | From the print edition + + + +“FROM Argentina to the World” is the slogan. This month President Mauricio Macri welcomed 1,600 business leaders to Buenos Aires, inviting them to invest in and trade with his country. That marked a big change. During 12 years of rule by Cristina Fernández de Kirchner and her late husband, Néstor Kirchner, Argentina cut itself off from the world, nationalising foreign businesses, curbing imports and severing normal ties with the IMF. The Kirchners once stood up Carly Fiorina, the boss of Hewlett-Packard, an American computer giant, when she went to visit them at the Casa Rosada. + +Some countries in Latin America, especially those on the Pacific seaboard, like Mexico, Chile and Peru, never turned their backs on globalisation. Others did. Boosted by record prices for their commodity exports, they turned inward and subjected their economies to state controls, repeating on a smaller scale the model that failed the region in the 1970s. + +Mr Macri’s initiative is not the only sign of a renewed desire to connect with the world. Brazil’s congress is poised to roll back a law that gave Petrobras, the state-controlled oil company, a monopoly over deep-water operations. Michel Temer, the new president, is set to loosen rules governing national content in the oil industry. In Ecuador Rafael Correa, a left-wing populist who boasted that his country was doing well because it disregarded the IMF’s recipes, plans to stand down as president next year amid a recession. His government has already accepted a $364m no-strings loan from the fund for earthquake reconstruction; whoever wins the election is likely to seek a conventional IMF programme. + +These changed attitudes respond to a harsh reality. Because of the end of the commodities boom, 2016 will be the sixth successive year of economic deceleration in Latin America. True, the IMF’s forecast of an aggregate contraction of 0.4% this year is depressed by the recessions in Brazil, Argentina and Venezuela. The fund assumes the first two will recover next year, and that the region will post a return to growth, of 1.6%. In other words, even those countries that pursued responsible macroeconomic policies are growing at a mediocre rate of 3% or so. The IMF reckons that the region’s potential (ie, non-inflationary) growth rate has fallen from 4.5% to 3%. That is not enough to satisfy the aspirations of an expanded middle class, nor to complete the task of abolishing poverty. + +So what is to be done? Thanks to better policies, some countries have adjusted smoothly to lower commodities prices. Their currencies have depreciated without triggering high inflation. With central banks now poised to cut interest rates, cheaper currencies ought to trigger strong export-led growth. But there is little sign of that. During the years of boom and strong currencies, many Latin American manufacturing firms lost the links they once had to export markets. Restoring them takes time and effort. It is harder still because world trade is now expanding much more sluggishly than in the recent past. + +Latin America’s need to conquer new markets comes as globalisation is in retreat elsewhere. After years of procrastination, the Mercosur trade group (based on Brazil and Argentina) in April began formal negotiations for a trade pact with the European Union. Because of the farm protectionism of France and others, the Europeans are unlikely to offer anything useful. Earlier this year, Chile, Mexico and Peru signed the proposed 12-country Trans-Pacific Partnership. This now looks stillborn, since both candidates in the American presidential election oppose it. Donald Trump threatens to throw up barriers around what is still, despite the rise of China, by far Latin America’s single largest export market. + +At the turn of the century, parts of Latin America suffered the kind of backlash against globalisation that now affects Europe and the United States. The likes of the Kirchners and Venezuela’s Hugo Chávez railed against “neoliberalism” and “savage capitalism”, by which they meant the free trade and free markets that underlie globalisation. They attributed the extreme inequality which scars Latin America to “imperialism”, just as Mr Trump blames foreigners for the loss of American industrial jobs. + +One lesson from Latin America is that governments can ease inequality through social programmes. Another is that disconnecting from the world makes the poor worse off, as they are today in Venezuela. Having gone through its anti-globalisation backlash, Latin America is finding that the world now offers fewer easy gains than in the past. So it will be hard to make up for lost time. But at least the region is (mostly) back on the right track. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21707588-latin-america-wants-rejoin-world-will-world-reciprocate-growth-and-globalisation/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +India’s armed forces: Guns and ghee + +Driving in Vietnam: Four wheels good, two wheels better + +The Japanese addiction to tuna: Breeding bluefin + +A trans-Pacific obsession: Bottling hipness + +Religious freedom in Malaysia: Taking the rap + +Banyan: A ham-fisted hegemon + + + + + +Articles Sections Next + +India’s armed forces + +Guns and ghee + +India is wise to speak softly, but it could do with a bigger stick + +Sep 24th 2016 | DELHI | From the print edition + + + +TO MANY Indians, their country’s strategic position looks alarming. Its two biggest neighbours are China and Pakistan. It has fought wars with both, and border issues still fester. Both are nuclear-armed, and are allies with one another to boot. China, a rising superpower with five times India’s GDP, is quietly encroaching on India’s traditional sphere of influence, tying a “string of pearls” of alliances around the subcontinent. Relatively weak but safe behind its nuclear shield, Pakistan harbours Islamist guerrillas who have repeatedly struck Indian targets; regional security wonks have long feared that another such incident might spark a conflagration. + +So when four heavily armed infiltrators attacked an Indian army base on September 18th, killing 18 soldiers before being shot dead themselves, jitters inevitably spread. The base nestles in mountains close to the “line of control”, as the border between the Indian and Pakistani-administered parts of the disputed territory of Kashmir is known. Indian officials reflexively blamed Pakistan; politicians and pundits vied in demanding a punchy response. “Every Pakistan post through which infiltration takes place should be reduced to rubble by artillery fire,” blustered a retired brigadier who now mans a think-tank in New Delhi, India’s capital. + +Yet despite electoral promises to be tough on Pakistan, the Hindu-nationalist government of Narendra Modi has trodden as softly as its predecessors. On September 21st it summoned Pakistan’s envoy for a wrist-slap, citing evidence that the attackers had indeed slipped across the border, and noting that India has stopped 17 such incursions since the beginning of the year. Much to the chagrin of India’s armchair warriors, such polite reprimands are likely to be the limit of India’s response. + +There are good reasons for this. India gains diplomatic stature by behaving more responsibly than Pakistan. It is keenly aware of the danger of nuclear escalation, and of the risks of brinkmanship to its economy. Indian intelligence agencies also understand that they face an unusual adversary in Pakistan: such is its political frailty that any Indian belligerence tends to strengthen exactly the elements in Pakistan’s power structure that are most inimical to India’s own interests. + +But there is another, less obvious reason for reticence. India is not as strong militarily as the numbers might suggest. Puzzlingly, given how its international ambitions are growing along with its economy, and how alarming its strategic position looks, India has proved strangely unable to build serious military muscle. + +India’s armed forces look good on paper. It fields the world’s second-biggest standing army, after China, with long fighting experience in a variety of terrains and situations (see chart). It has topped the list of global arms importers since 2010, sucking in a formidable array of top-of-the-line weaponry, including Russian warplanes, Israeli missiles, American transport aircraft and French submarines. State-owned Indian firms churn out some impressive gear, too, including fighter jets, cruise missiles and the 40,000-tonne aircraft-carrier under construction in a shipyard in Kochi, in the south of the country. + + + +Yet there are serious chinks in India’s armour. Much of its weaponry is, in fact, outdated or ill maintained. “Our air defence is in a shocking state,” says Ajai Shukla, a commentator on military affairs. “What’s in place is mostly 1970s vintage, and it may take ten years to install the fancy new gear.” On paper, India’s air force is the world’s fourth largest, with around 2,000 aircraft in service. But an internal report seen in 2014 by IHS Jane’s, a defence publication, revealed that only 60% were typically fit to fly. A report earlier this year by a government accounting agency estimated that the “serviceability” of the 45 MiG 29K jets that are the pride of the Indian navy’s air arm ranged between 16% and 38%. They were intended to fly from the carrier currently under construction, which was ordered more than 15 years ago and was meant to have been launched in 2010. According to the government’s auditors the ship, after some 1,150 modifications, now looks unlikely to sail before 2023. + +Such delays are far from unusual. India’s army, for instance, has been seeking a new standard assault rifle since 1982; torn between demands for local production and the temptation of fancy imports, and between doctrines calling for heavier firepower or more versatility, it has flip-flopped ever since. India’s air force has spent 16 years perusing fighter aircraft to replace ageing Soviet-era models. By demanding over-ambitious specifications, bargain prices, hard-to-meet local-content quotas and so on, it has left foreign manufacturers “banging heads against the wall”, in the words of one Indian military analyst. Four years ago France appeared to have clinched a deal to sell 126 of its Rafale fighters. The order has since been whittled to 36, but is at least about to be finalised. + +India’s military is also scandal-prone. Corruption has been a problem in the past, and observers rightly wonder how guerrillas manage to penetrate heavily guarded bases repeatedly. Lately the Indian public has been treated to legal battles between generals over promotions, loud disputes over pay and orders for officers to lose weight. In July a military transport plane vanished into the Bay of Bengal with 29 people aboard; no trace of it has been found. In August an Australian newspaper leaked extensive technical details of India’s new French submarines. + +The deeper problem with India’s military is structural. The three services are each reasonably competent, say security experts; the trouble is that they function as separate fiefdoms. “No service talks to the others, and the civilians in the Ministry of Defence don’t talk to them,” says Mr Shukla. Bizarrely, there are no military men inside the ministry at all. Like India’s other ministries, defence is run by rotating civil servants and political appointees more focused on ballot boxes than ballistics. “They seem to think a general practitioner can perform surgery,” says Abhijit Iyer-Mitra, who has worked as a consultant for the ministry. Despite their growing brawn, India’s armed forces still lack a brain. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21707562-india-wise-speak-softly-it-could-do-bigger-stick-guns-and-ghee/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Driving in Vietnam + +Four wheels good, two wheels better + +A proliferation of cars threatens to clog Vietnam’s big cities + +Sep 24th 2016 | From the print edition + +Jam today and probably jam tomorrow + +CARS and motorbikes are banned from the old heart of Hoi An, a pretty tourist town in central Vietnam. When the country’s newish prime minister paid a visit, he obligingly travelled on foot. But as Nguyen Xuan Phuc strode manfully around, his motorcade crept along behind him. Outraged netizens disseminated photos of the incident, forcing Mr Phuc to apologise—a rare step for a senior official in Vietnam’s authoritarian regime. + +Not many Vietnamese can afford a fleet of blacked-out saloons. But car-ownership in the communist country is soaring, bringing worries about pollution and congestion. Sales of cars, vans and lorries rose 55% by volume in 2015, albeit from a low base; so far this year they are up another third. Most went to Hanoi and Ho Chi Minh City, which between them house about half of Vietnam’s urban population. + +Compared with its choked neighbours, Vietnam’s big cities are relatively uncongested. The country’s 40m or so motorbikes terrify pedestrians, but can thunder 10-abreast along thoroughfares as well as worm down dark alleyways. Cars, by contrast, block up the pipes. Only 9% of land in the heart of Hanoi is given over to primary and secondary roads, compared with 32% in Manhattan. The World Bank in 2011 calculated that if car-use were to reach even the moderate level seen in nearby Malaysia, Vietnam’s capital would grind to a complete halt. + +The government is conflicted, says Arve Hansen, an academic. It champions the local car-assembly industry but also slaps stiff taxes on buyers, in part for fear of jams. A suite of recent trade deals will eventually limit authorities’ power to control car-use through tariffs. A pact with South-East Asian neighbours, which comes into full force in 2018, could see cheap cars pour in from Thailand. + +The appeal of buying a car may grow even as Vietnam’s roads clog up. The growing risk of collision with a car is making motorcycling more dangerous. Motorists who know they will end up in jams prefer to do it in air-conditioned vehicles than perched on sweaty bike seats. Longer travel times are also putting Vietnamese off buses, which were anyway hot and unreliable. Use of Hanoi’s underfunded public buses has dropped 14% in a year. + +New urban rail systems should help a little. The first of at least six metro lines is under construction in Ho Chi Minh City; two elevated railways are being built in Hanoi. But it will take years to complete these networks, and the fast-growing cities they will serve are transforming as they are built. Hanoi in particular is sprawling, helped along by policies that encourage local authorities to build outward, rather than up. + +City officials are making do. Bigwigs in Ho Chi Minh City talk of narrowing pavements to widen roads; Hanoi insists more and better buses are revving up. In June cadres in the capital said they thought improvements in public transport would eventually allow them to ban Hanoi’s 5m motorbikes from the heart of the city. It would be better to ban cars. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21707434-proliferation-cars-threatens-clog-vietnams-big-cities-four-wheels-good-two-wheels-better/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Japanese addiction to tuna + +Breeding bluefin + +Fish-farming is the latest, slim hope for Japan’s favourite fish + +Sep 24th 2016 | TOKYO | From the print edition + + + +THE Kindai University Fisheries Laboratory might not be the most enticing name for a fancy restaurant, but its customers are undeterred. On weekdays they line up in Ginza, a ritzy shopping district in Tokyo, to sample the fish. Diners appear satisfied with the quality of the sashimi, including the juicy slices of bluefin tuna, one of the most prized species of all. But the tuna in the restaurant differs from that available elsewhere in one crucial respect: it was not caught in the wild, but farmed. + +Japanese call bluefin tuna “the king of fish”. They eat about 40,000 tonnes of it a year—80% of the global catch. Demand is also growing rapidly elsewhere. Yet Pacific bluefin stocks are down by 97% from their peak in the early 1960s, according to a recent report from the International Scientific Committee, an intergovernmental panel of experts. (Japan disputes its findings.) In some places, fishing is three times the sustainable level, the committee says. + +Japan did agree to halve its catch of juvenile bluefin (fish too young to reproduce) in the northern Pacific last year. But it has resisted more stringent measures, including the complete ban on bluefin fishing advocated by America, among other countries. The Japanese government says that would not be warranted unless stocks drop for three years in a row—a hurdle that most conservationists consider too high. + +Aquaculture might seem to offer a way out of this impasse. But the bluefin is hard to breed in captivity. In the open sea, it can roam for thousands of miles and grow to over 400kg. It is highly sensitive to light, temperature and noise. Early attempts to farm it fizzled, but Kindai University persisted long after an initial research grant from the government ran out in the early 1970s. In 2002, funding itself from sales of other fish, it managed to rear adult tuna from eggs for the first time, rather than simply fattening up juveniles caught at sea. Now the chefs in Ginza can have a tuna zapped with an electric prod and yanked out of the university’s tanks on demand. + +However, just 1% of the bluefin the university rears survive to adulthood. “We expect this to improve but it will take time,” predicts Shukei Masuma, the director of its Aquaculture Research Institute. Worse, the tuna gobble up lots of wild mackerel and squid. Scientists have experimented with soy-based meal and other alternatives. A company in south-western Japan said this month that it had managed to raise tuna using feed made of fishmeal, but it is costly and the fish are slow to thrive. Using wild fish for feed makes bluefin farming unsustainable, says Atsushi Ishii of Tohoku University. He sees aquaculture as a distraction from the thorny task of managing fisheries properly. + +This debate is slowly seeping into the public consciousness. In 2014 the media made much of the decision of the International Union for Conservation of Nature, a conservation body, to put bluefin tuna on its “red list” of species threatened with extinction. Newspaper editorials have begun to criticise the government’s stance. The popularity of Kindai’s restaurant suggests that consumers are becoming aware of the problem too. But in the end, says Naotoshi Yamamoto of Nagasaki University, they may just have to eat fewer fish. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21707570-fish-farming-latest-slim-hope-japans-favourite-fish-breeding-bluefin/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A trans-Pacific obsession + +Bottling hipness + +Japan ponders the true meaning of Portland + +Sep 24th 2016 | From the print edition + +LANETTE FIDRYCH knew that people in Portland, Oregon, were obsessed with the tacky carpet at the city’s airport. Enraptured hipsters snap up everything from mousepads to underpants emblazoned with its dated 1980s design. But she had no idea that the carpet was almost as well known in Japan. When she landed in Tokyo carrying a water bottle bearing the same pattern, she was stopped by a dozen strangers on the street who, recognising the carpet, asked if she was from Portland. On hearing that she was, they went on to list the restaurants in Portland they most wanted to visit or the beers from Oregon they most liked. + +In America, Portland is shorthand for trendiness run amok. In Japan, it is simply trendy. Ms Fidrych is the founder of Cycle Dog, a company which sells dog collars, leads and other paraphernalia made from recycled bicycle parts (the collars all have bottle openers attached). She was visiting Tokyo to participate in the third annual “Portland Popup”, at which Tokyoites can buy goods from Portland and learn about Portland’s way of life. Speeches this year included “Creative Entrepreneurs of Portland” and “What Tokyo Can Learn from Portland”. Yokohama and Osaka also hold similar events annually. Cycle Dog’s kit sells well at these shindigs, Ms Fidrych says. + +Oshuushu, a popular Japanese blog, is dedicated entirely to beers from Oregon. The PDX Taproom opened less than a year ago in Tokyo’s fashionable Shibuya district (Portland’s airport code is PDX). The bar serves beer from Oregon only and has a small square of the famous carpet on the wall. Many eateries in Portland, rather than expanding in America, have decided to leap across the Pacific. Blue Star Donuts, which serves delicacies with names like Blueberry Bourbon Basil and Cointreau Creme Brulee, will soon have seven stores in Japan compared with six in America. + +Teruo Kurosaki, author of a Japanese-language guidebook, “True Portland: Unofficial Guide for Creative People”, says Japanese are interested in Portland not just because of its nifty gadgets or funky food, but because of its “future vision”—a combination of individualism, enterprise and greenery. For those who chafe at Japan’s stale economy and hidebound culture, the image of young creative types, knitting old inner tubes into dog collars before cracking open a local brew, holds great allure. + +Japan’s political leaders are even getting in on the act. The mayors of several small Japanese cities, which face gradual extinction if young people cannot be persuaded to stay instead of moving to Tokyo or Osaka, have been visiting Portland in search of ideas. Mitsuhiro Yamazaki, who works in Portland’s planning and development agency, has been invited to sprinkle some Portland magic over Aridagawa, a shrinking Japanese town, in part by redesigning a rural creche in a bid to persuade young women not to move away. He has not yet chosen a pattern for the carpet. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21707571-japan-ponders-true-meaning-portland-bottling-hipness/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Religious freedom in Malaysia + +Taking the rap + +Malaysia’s culture of tolerance is under threat + +Sep 24th 2016 | KUALA LUMPUR | From the print edition + + + +NAMEWEE is a Malaysian rapper with a penchant for extravagant eyeware and a dangerous interest in politics. Police picked him up at the country’s main airport in August, when he flew home from a spell abroad. A score of touchy groups had complained that an early cut of his latest video—which featured performers dressed as religious leaders gadding about a church, a mosque and a Chinese temple—insulted the dignity of Islam, a charge punishable by two years in prison. Authorities talked about asking Interpol to help them question his collaborators, a three-piece band based in Taiwan. + +In gentler times Namewee’s only offence might have been crimes against music. But Malaysian Islam is gradually growing sterner, and its promotion by the state more aggressive. These trends are getting a boost under the government of the prime minister, Najib Razak. Tormented by claims that a national investment firm has been looted, his party is keen to change the subject. So it is recasting itself as a defender of Islam, the religion of its ethnic-Malay supporters. All this is souring race relations and worrying neighbours, who fear the shift will nurture extremism. + +A little over 60% of Malaysia’s 32m citizens are Muslims, mainly ethnic Malays. Most of the rest—including Malaysians of Chinese and Indian descent, as well as various indigenous tribes—are Buddhist, Christian, Hindu or not religious. A constitution propagated at the end of British rule in 1957 guarantees non-Malays the right to follow a religion of their choosing, while also proclaiming, “Islam is the religion of the Federation.” + +That compromise has spurred endless debate over how far the government should patronise the faith of the majority. The United Malays National Organisation (UMNO), the outfit that has led Malaysia’s ruling coalitions since independence, found religion in the 1980s while fending off a challenge from a pious opposition party. Mahathir Mohamad, UMNO president and prime minister from 1981 to 2003, claimed that Malaysia was an “Islamic country”. His government created a department within the prime minister’s office to regulate and promote Islam. + +Malaysian Islam has grown increasingly conservative in the years since, influenced by austere theologies from the Middle East. Its promotion is a particular preoccupation of Malay nationalists, who insist the country’s minorities have secured an unfair helping of its wealth. (Chinese and Indian Malaysians do better in school and tend to earn more.) Meanwhile the country’s Islamic bureaucracy has expanded at both the federal and state level. Religious officials occasionally raid hotels in search of unmarried Muslim couples and other deviants (Justice for Sisters, a campaign group, says that at least 63 transgender women were arrested between January and May); Shia Muslims are also persecuted. A ruling in August reiterated that Malaysian Muslims may not leave the faith without the consent of the Islamic authorities, who never give it. + +In theory Malaysia’s non-Muslims are not subject to religious rules, but the atmosphere often affects them. Hostility towards church-building means that growing Christian congregations are meeting in warehouses and empty shops, says a clergyman. Functionaries in some public buildings have required Malaysians to cover their legs before gaining access to government services. Only last month bureaucrats said they preferred not to let Muslim families hire non-Muslim maids. Critics of religious authorities are often branded anti-Muslim; outspoken ones have sometimes been charged with sedition. + +Mr Najib says the government will give secular courts, not Islamic ones, the sole right to rule in divorces when only one spouse is Muslim. That will simplify a handful of cases where people try to game the system. (For example, a divorcing husband converts to Islam on the assumption that the Islamic courts will give him custody of the kids.) Yet broadly Mr Najib is seen to be less independent-minded than his predecessors about religious policy, and more reliant on Islamic advisers. + +Moreover, his party looks less inclined to rein in Islamist firebrands as threats to its six-decade rule mount. Mr Najib nearly lost a general election in 2013, when minority voters abandoned UMNO’s coalition partners. Since then it has emerged that billions of dollars went missing from 1MDB, a state-owned investment firm, during the prime minister’s first term. Mr Najib denies receiving any of the cash. He has kept his job even though an investigation by America’s Department of Justice, made public in July, appears to implicate him. + +Perhaps seeking an alliance that could sustain UMNO even without support from minorities, Mr Najib is cosying up to the Islamist opposition. In May his party fast-tracked the reading of a bill proposed by the Pan-Malaysian Islamic Party (PAS), which is seeking to increase the punishments Islamic courts may inflict on Muslims convicted of religious offences. Currently these are limited to a fine, six strokes of the cane or three years in jail. Some in PAS think that Muslims who drink alcohol should receive as many as 80 lashes, and those who have sex outside marriage 100. + +UMNO had long opposed such measures, which some see as a step towards hand-chopping and stoning. The party may simply be dwelling on the subject because it has helped to tear apart the uneasy opposition alliance, which until recently included both PAS and secular parties. But UMNO may eventually conclude that more floggings are a reasonable price to pay for support from PAS. + +All this is bound to exacerbate an exodus of young Malaysians, including many moderate Muslims. The World Bank has found that the number of Malaysians living in rich countries roughly tripled between 1990 and 2010, and that more than half of these emigrants have university degrees. A gradual exodus of minorities delights Malay supremacists but will make the country poorer. + +A more immediate worry is that a rise in racially charged rhetoric will encourage radicals. Nearly 70 Malaysians have had their passports cancelled after joining Islamic State (IS) in the Middle East. Police recently arrested three men said to be plotting attacks on nightspots and a Hindu temple. Last year 11% of Malaysians quizzed by Pew, a pollster, claimed to have a “favourable” view of IS, compared with only 4% in neighbouring Indonesia. That, surely, should be a more pressing concern than Namewee’s videos. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21707565-malaysias-culture-tolerance-under-threat-taking-rap/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +A ham-fisted hegemon + +Despite its economic and military might, China lacks the finesse to shape Asia to its liking + +Sep 24th 2016 | From the print edition + + + +IT IS already being described as the moment when America’s “pivot” to Asia was seen to have gone awry. Not the shock when Rodrigo Duterte, the new president of the Philippines, an American ally, caused titters by calling Barack Obama the “son of a whore”—but when he called a few days later for an end to American military assistance, including joint patrols in the South China Sea. “China is now in power,” he declared, “and they have military superiority in the region.” + +China is chuffed. The Philippines, after all, had brought a landmark case against China’s activities in the South China Sea to an international tribunal at The Hague. In July the tribunal rubbished China’s territorial claims and criticised its construction of artificial islands. Outraged, China swore to ignore the ruling. America insisted it must be binding. Its interest in the South China Sea, it has always said, is in upholding international law. So imagine its embarrassment now. The vindicated plaintiff appears to be saying to China, “Go ahead, help yourself.” + +The intention of the pivot was to reassure America’s allies in the region. Admiral Harry Harris, the commander of American forces across Asia and the Pacific, boasted last week that, in terms of American military hardware, “Everything that’s new and cool is coming to the region.” That includes the first of the Zumwalt class of destroyer, with looks straight out of “Star Trek” and a captain by the name of James Kirk. Yet although America has boosted its strength in the Pacific, its defence budget is severely constrained. Chinese military spending, meanwhile, has been growing by 10% a year, much of it on naval, satellite and cyberspace programmes designed to deny America access to the airspace and seas around China in any conflict, and to undermine America’s commitments to its Asian allies. + +America still has the world’s strongest armed forces, and even the most fearsome military presence in East Asia. Yet the alchemy of power involves more than iron force, as Admiral Harris underlined by stressing another vital aspect of the pivot: the Trans-Pacific Partnership (TPP), a 12-country free-trade pact foundering in Congress. In August the prime minister of Singapore, Lee Hsien Loong, called TPP’s ratification “a litmus test” of American credibility in Asia. With both presidential candidates opposed to TPP, and Mr Obama’s chances of pushing it through the lame-duck Congress looking ragged, it is a test America will probably fail. + +And yet it is still too early to call time on the pivot and declare China the next Asian hegemon. China remains far less adept as an alchemist of power—though not for want of trying. Its diplomacy towards its neighbours is full of “mutual respect”, “win-win” relationships and “common destiny”. President Xi Jinping makes much of his “One Belt, One Road” initiative to create infrastructure tying Eurasia closer to China by land and sea. Meanwhile China lavishes aid and state-led investment on smaller countries in South, Central and South-East Asia. + +China’s munificent approach towards its periphery, as Evelyn Goh of the Australian National University points out, is supposed to make it harder for countries drawn into China’s economic embrace to maintain a system of regional security with America at the core. Some already see a new order asserting itself, with China again at the celestial heart of things, and neighbouring states orbiting like planets around it. Mr Duterte’s own pivot would seem to be a case in point. + +It all sounds very benign, especially since China’s courtship emphasises a shared approach to development. That, in turn, rests on continuity in neighbouring states, reinforcing political elites and their existing priorities. Who would argue with that? + +Well, for a start, anyone who opposes the prevailing political order in the courted countries. China’s close involvement with the ruling elites in such places only adds to local resentment. In 2011 widespread animosity, even within the regime, led the head of Myanmar’s military government, Thein Sein, to halt construction of a huge dam being built by Chinese state companies. The weakened junta subsequently ceded much of its power to Aung San Suu Kyi, who now heads an elected government, further diminishing China’s influence. An own goal, in other words. + +In Sri Lanka last year the surprise electoral defeat of the strongman president, Mahinda Rajapaksa, happened in part because his family had openly courted Chinese investment and benefited from it. The defeat put China on the back foot and opened the way for Indian re-engagement with the island. Tiny Laos is increasingly unhappy at being a Chinese client state, with locals chafing at Chinese loggers and plantations. The closed, communist country gave Mr Obama a hearty welcome earlier this month. + +Next door in Cambodia, the flagrant cronyism from which key Chinese businessmen profit may prompt a backlash as soon as the ageing and thuggish ruler, Hun Sen, is seen to be ailing. Even in the Philippines, a provocation in the South China Sea, such as the start of construction on the Scarborough Shoal, from which China dislodged the Philippine navy four years ago, might cause Mr Duterte to tack back to the United States. Ordinary Filipinos, after all, are wildly pro-American. + +Losing sight, losing its cool + +China has two blind spots, Ms Goh concludes. The first is its tendency to downplay what she calls the “autonomous agency” of small neighbours. Any discomfort with its embrace is mistakenly ascribed to the machinations of America. The second is its failure to grasp how aggressive behaviour—not least in the South China Sea—undermines China’s more benign efforts to win influence. The gap between growing material power and lagging status and clout is the “dissonance” that so frustrates Chinese leaders. And so the concern in the next few years is not that China gets its way, but that it doesn’t, and proceeds to vent its spleen. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21707564-despite-its-economic-and-military-might-china-lacks-finesse-shape-asia-its-liking/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Nuclear power: A glowing future + +Social mores: Shacking up + + + + + +Articles Sections Next + +Nuclear power + +A glowing future + +China wants its nuclear industry to grow dauntingly fast + +Sep 24th 2016 | LIANYUNGANG | From the print edition + + + +UPON learning (via a terse government statement) that their bustling port city in eastern China had been tipped as the likely site of a plant to recycle used nuclear fuel, residents of Lianyungang took to the streets last month in their thousands. Police, whose warnings against demonstrations were ignored, deployed with riot gear in large numbers but only scuffled with the protesters, who rallied, chanted and waved banners in the city centre for several days. “No one consulted us about this,” says one woman who participated in the protests. “We love our city. We have very little pollution and we don’t want a nuclear-fuel plant anywhere near us. The government says it is totally safe, but how can they be sure? How can we believe them?” she asks. + +Such scepticism is shared by many in Lianyungang, which already hosts a nuclear-power plant (pictured), and elsewhere in China, where the government plans to expand nuclear power massively. China started its first nuclear plant in 1994. There are now 36 reactors in operation, and another 20 under construction (see map). A further four have been approved, and many more are in the planning stages. Only one new plant has been built in America, in contrast, since 1994; four more are under construction. By 2030 China is projected to get 9% of its power from nuclear, up from 2% in 2012. In absolute terms, its nuclear generation capacity will have increased eightfold over the same period, to 750 billion kilowatt-hours a year, roughly America’s current level. + + + +After disaster struck Japan’s Fukushima nuclear power station in 2011, the Chinese authorities briefly halted this pell-mell rush toward the nuclear future, announcing a moratorium on the construction of new plants, urgent safety checks on existing ones and a prolonged policy review to decide whether nuclear power would remain a part of China’s energy strategy. The following year, however, the government resolved to carry on with its nuclear-energy programme. + +The need is clear. Despite slowing economic growth, energy consumption per person is projected to rise dramatically, with no plateau in sight before 2030. Pollution from coal-fired power plants, China’s main source of electricity, causes widespread respiratory disease and many premature deaths each year, a source of persistent public anger. China has also made ambitious promises to reduce greenhouse-gas emissions. If it hopes to meet such targets, it will need to embrace nuclear, “because the only other truly reliable 24/7 source of electric power is coal,” says Zha Daojiong of Peking University. + +China’s utilities are also keen. The state-owned firms that run all the country’s nuclear plants are thought to earn a good return on their investment (their accounts are too murky to be certain), in part because their official backing allows them to finance new reactors very cheaply, and in part because regulators have fixed power tariffs in a favourable manner. One estimate put the return on nuclear assets between 2002 and 2012 at 7% a year, compared with 3% for coal- and gas-fired plants. + +China even harbours ambitions to export its growing expertise in nuclear power. After relying first on Russian designs, and more recently importing American and French ones, China has also developed indigenous nuclear reactors. A recently approved deal with Britain, valued at $23 billion, will see China help finance a French-designed nuclear-power station and possibly build one of its own design later. + +But China’s nuclear push has its critics. These include those who live near proposed nuclear facilities. Many, like the protesters in Lianyungang, are happy to have the power they need to run their air-conditioners but want to keep the unpleasant parts of the operation far from their doorsteps. Chinese now has a word for NIMBY: linbi, a fusion of the words for “adjacent” and “shun”. The government has repeatedly backed down in the face of public demonstrations, twice agreeing to relocate a uranium-enrichment plant, for example. It has also put the decision about the reprocessing plant in Lianyungang on hold. + +Yet attitudes to nuclear power may be less hostile than in many Western countries. A study published in 2013 found an even split between supporters and opponents of expanding China’s nuclear-power industry. Compared with their counterparts in the rich world, Chinese citizens showed much greater “trust and confidence in the government” as the manager of nuclear policy and operations, the emergency responder in case of accidents and the provider of reliable information about the industry. The lead researcher for that study, He Guizhen of the Chinese Academy of Sciences, says that even protesters like those in Lianyungang are not implacably opposed. “Their message is not really that you can’t build these things no matter what, but that we are concerned about safety, especially after Fukushima, and we demand that you take safety seriously,” she says. + +It appears this message is getting through. Early this year the government acknowledged in a white paper that its system for responding to a nuclear accident had “certain inadequacies”. In April officials revealed plans to draft a national nuclear-safety law. In May officials announced 600m yuan ($91m) in funding for six new nuclear-emergency squads, which would be ready for action by 2018. In August—on the same day that protesters marched in Lianyungang—China conducted its first “comprehensive nuclear-security emergency drill”. This week the government said officials must consult locals before settling the location of new nuclear facilities. + +Deborah Seligsohn of the University of California, San Diego, says that because China’s nuclear-power industry is centrally run and limited to a handful of companies, authorities are able to keep tight control over safety standards, and that they have not hesitated to slow projects down when seeing signs of strain. Supervision, however, falls to several different agencies and levels of the bureaucracy. The burden of inspecting and managing the growing number of plants, she says, could be better handled by a more independent regulator in charge of its own budget. + +In July China Energy News, a newspaper, reported that “quality problems” with domestically manufactured pump-valves were forcing some plants to shut down unexpectedly. (Most plants have since switched to imported valves.) More alarmingly, regulators this month revealed that a radiation-monitoring system at the Daya Bay nuclear-power station, which is within 50km of the huge cities of Shenzhen and Hong Kong, had been turned off inadvertently for three months before anyone noticed. Since no radiation leaked, the government deemed the oversight an event of “no safety significance”—one of several such lapses this year. The residents of Shenzhen and Hong Kong, presumably, would not see it in quite the same way. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21707576-china-wants-its-nuclear-industry-grow-dauntingly-fast-glowing-future/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Social mores + +Shacking up + +A rapid rise in cohabitation does not spell the end of marriage + +Sep 24th 2016 | BEIJING | From the print edition + + + +WHEN Da Lin moved in with his girlfriend two years ago, his mother tried to stop them: she feared that their living together unmarried would sully his girlfriend’s reputation and, by association, his too. She will be happy only after they finally marry next year (his family is buying the apartment, hers the car). That generational clash is replicated in thousands of families across China: cohabitation without marriage was long anathema and officially illegal until 2001. Today it is commonplace. + +China’s social mores are changing astonishingly quickly. Before 1980 around 1% of couples lived together outside wedlock, but of those who wed between 2010 and 2012, more than 40% had done so, according to data from the 2010 and 2012 China Family Panel Studies, a vast household survey (see chart). Some reckon even that is an underestimate. A recent study by the China Association of Marriage and Family, an official body, found that nearly 60% of those born after 1985 moved in with their partner before tying the knot, which would put the cohabitation rate for young people on a par with that of America. + +The number of unmarried couples living together is growing for many of the same reasons it has elsewhere: rising individualism, greater empowerment of women, the deferral of marriage and a decline in traditional taboos on pre-marital sex. Greater wealth helps—more couples can afford to live apart from their parents. Yet Chinese cohabitation has distinctive characteristics. In rich countries, living together is most common among poorer couples, but in China youngsters are more likely to move in together if they are highly educated and live in wealthy cities such as Beijing and Shanghai. Shacking up is seen as a sign of “innovative behaviour”, say Yu Xie of Princeton University and Yu Jia of the Chinese Academy of Social Sciences. + +Elsewhere rising cohabitation represents the fraying of marriage: many couples never bother to wed. In China, however, cohabitation is almost always a prelude to marriage—as for Da Lin and his girlfriend—rather than an alternative to it. Marriage is still near-universal, although the skewed sex ratio resulting from China’s one-child policy and a cultural preference for boys has resulted in a surplus of poor rural men who will remain unhappily single. Some highly educated women in cities forgo marriage too. + +In some Western countries those who live together for an extended period enjoy some of the same legal rights and obligations as married couples. In China cohabitation carries no legal weight. And it is very hard for a child born out of wedlock to acquire a hukou, or residency permit, which provides access to health care, education or other public services. + +In the 1980s virginity was considered a woman’s chief asset and few couples dared to date openly, let alone live together. Now China is in the midst of a sexual revolution—some 70% of people have sex before marriage, according to a study conducted in 2012. Many young Chinese, however, still have conservative ideas about how their elders should behave: although cohabitation is also on the rise among the elderly, many of them avoid remarrying because their adult children oppose it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21707577-rapid-rise-cohabitation-does-not-spell-end-marriage-shacking-up/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Syria’s widening war: The ceasefire unravels + +Saudi Arabia: The real game of thrones + +Free speech in Palestine: Gagged in Gaza + +Uganda’s Jobless Brotherhood: Snouts in the trough + +Johannesburg’s new mayor: Capitalist crusader + +Nigeria’s war against indiscipline: Behave or be whipped + + + + + +Articles Sections Next + +Syria’s widening war + +The ceasefire unravels + +A resumption in fighting signals even darker days for Syria + +Sep 24th 2016 | BEIRUT | From the print edition + + + +AFTER months of diplomatic wrangling America’s secretary of state, John Kerry, hoped he had finally struck a deal with Russia that would help end the war in Syria, which has killed perhaps half a million people. For the plan to work, both sides needed to lay down their weapons for one week and allow aid into besieged parts of the country. If that happened the truce would then be extended, paving the way for Russia and America to launch joint military action against Islamic State and Jabhat Fatah al-Sham (JFS), a terrorist group and former al-Qaeda offshoot. + +But the plan never got that far. Although the fighting ebbed, the Syrian government blocked most aid deliveries into rebel-held areas, and stripped vital medical supplies from the few that it did allow across the front lines. On September 19th the Syrian regime refused to extend the seven-day ceasefire, accusing rebels of failing to uphold their side and citing an air strike by American and coalition forces that mistakenly killed 62 Syrian soldiers. + +But the real breach came soon after Russian and Syrian warplanes went back into action, pounding rebel-held neighbourhoods in the northern city of Aleppo. A UN aid convoy was bombed—the first attack of its kind since the start of the war. American officials said Russian jets were to blame, citing radar tracks that showed them above the convoy when it was hit. Russia denied it, claiming variously that the trucks had simply caught fire or been shelled. + +Ban Ki-moon, the secretary-general of the UN, called it a “sickening, savage and apparently deliberate attack”. His officials said that if the convoy was deliberately targeted, that would amount to a war crime. (Syria has seen many war crimes in the past five years.) A day later aircraft bombed a mobile clinic in a rebel-held part of Aleppo, killing four medical staff. The UN and several other humanitarian groups said they were suspending aid convoys. + +A ceasefire that had taken months to negotiate took only hours to unravel. “They were unloading the aid in a warehouse when the bombs hit. I spent the night pulling the dead out,” says Ammar al-Selmo, the director of Aleppo’s White Helmets, a volunteer civil defence force that works in rebel-held areas, of the attack on the UN aid convoy. + +Mr Kerry, whose plan probably represented America’s last real diplomatic effort under the presidency of Barack Obama to slow the killing, is still scrambling to salvage what is left of it. But unless he can convince his Russian counterpart, Sergei Lavrov, to renew the ceasefire (and persuade the Syrian regime to ground its aircraft, an appeal Mr Kerry made at the UN on September 21st), then dark days lie ahead. + +Fighting will probably intensify as the Syrian government, backed by Iran and Russia, doubles down on its efforts to crush rebels in eastern Aleppo, their only major urban stronghold. The fall of Aleppo would at last give President Bashar al-Assad what he craves: dominion over the country’s main cities, industrial hubs and transport links, including access to the sea (see map). In a troubling sign of the fighting to come, Iran has apparently taken advantage of the truce to reinforce its militias around the city. America is now considering arming Kurds in northern Syria, which would pit it against Turkey, a NATO ally. + + + +Rebel forces are also preparing for another round of fighting. A long-discussed merger between more mainstream Islamist groups and JFS is back on the cards. + +Rebels in arms + +“The merger is a goal for all the Syrian rebel factions. If it was successfully done it would mean a significant turn in the path of the revolution,” says Captain Abdul Salam Abdul Razaq, a military spokesman for Nour al-Din al-Zinki, a key rebel group in northern Syria that once received American military support. + +The merger talks are still at an early stage. Mainstream rebels fear that forming a coalition with JFS would expose them to American air strikes. The two sides also disagree on their visions for Syria’s future. Still, if a fresh round of fighting begins, then a stronger military alliance of Islamist factions would stand a better chance of fending off Mr Assad’s advances. + +Such a deal would probably torpedo Mr Kerry’s ceasefire plan as well as America’s broader aim of trying to arm moderate rebels to fight against Islamic State. Moscow already accuses America of failing to separate mainstream rebel factions from “terrorist” groups like JFS, a precondition of any joint military action between the two countries. Rebels have so far been reluctant to separate, fearing that doing so will only result in them ceding territory to the Syrian army. + +Even if Mr Kerry persuades the warring parties to extend the ceasefire, there is little chance that peace talks will yield results. The political opposition to Mr Assad is weak and the rebels’ trust in the UN has reached a new nadir. America has little leverage over Russia, Iran or Syria. + +“The longer this goes on for, the more difficult it will be to hold the centre ground together,” says Salman Shaikh, a former UN official and expert on the Middle East. “One consequence is likely to be the further radicalisation of the mainstream opposition ... a five-year conflict could easily become a 10-year conflict.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21707495-resumption-fighting-signals-even-darker-days-syria-ceasefire-unravels/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Saudi Arabia + +The real game of thrones + +The crown prince stands between the king and his favoured successor + +Sep 24th 2016 | RIYADH | From the print edition + + + +IF YOU turned on the news in Saudi Arabia a decade ago, you were likely to see a relatively young, reform-minded prince who was bent on securing the kingdom’s future. Muhammad bin Nayef was out front, dealing with the country’s most pressing challenge, terrorism. He was clever, media-savvy and ambitious. There was little doubt that he wanted to be king. + +In April last year, four months after King Salman, his uncle, had ascended to the throne, he duly became crown prince. That was a dramatic break with tradition, because the past six kings of Saudi Arabia have all been sons of the founding monarch and several more are still alive. They were waiting in a brotherly queue. But at last it was decided that the succession would jump a generation. Prince Muhammad bin Nayef, now 57, is officially next up. + + + +That now seems less certain. In the past year King Salman’s own much younger son, also a Muhammad, aged only 31, has burst onto the scene as minister of defence and deputy crown prince, tasked with weaning the kingdom off oil. Overshadowing his older cousin, he has hogged the limelight, promising a string of drastic reforms. King Salman seemed to be grooming him to be his immediate successor. + +Crown Prince Muhammad is unlikely to take the mooted demotion lying down. He has been in tough spots before. He has survived several assassination attempts. In 2003 he bolstered his reputation by personally accepting the surrender of an al-Qaeda leader. In 2009 he was nearly killed at a similar meeting when a supposedly rehabilitated terrorist exploded a bomb apparently placed in his rectum. + +This week Crown Prince Muhammad (or MBN, as he is known in diplomatic circles) represented Saudi Arabia at the UN general assembly in New York where world leaders congregate, dampening speculation that he may have been formally sidelined in favour of his young cousin. Although such speculation is taboo in the kingdom Saudis whisper about palace intrigue. Each prince respects the other in public, but signs of tension abound. + +Take the Saudi-led war in Yemen, spearheaded by Muhammad bin Salman (MBS) just weeks after he became defence minister last year. At first he flaunted his leadership, meeting generals and visiting foreign capitals, always with the press in tow. But as the intervention turned sour, it was re-spun as a collective decision. Blame, in other words, should be shared. “What was noticeable was that Muhammad bin Nayef didn’t come rushing in to say, ‘Yes, that’s right’”, says Bruce Riedel of the Brookings Institution, a think-tank. + +In December MBN seemed to go into a sulk. He went to Algeria, oddly staying there for six weeks and neglecting his duties back home. There has since been an effort to display harmony in the royal family. But if the crown prince did become king, he might well sack his young cousin. So the 80-year-old King Salman, whose faculties are said to be fading, may need to move fast if he wants his boy to succeed. + +That may not be easy. The kingdom has traditionally been ruled by a royal consensus. Many princes are loth to let MBS jump the queue. The war in Yemen is already an albatross around his neck. His economic reforms are causing real pain. + +Moreover, the crown prince is well liked. Saudi royals and Western diplomats praise him as serious and hard-working. Ordinary Saudis view him as their protector. He boosted his standing this month by overseeing a tranquil haj, the Muslim pilgrimage to Mecca, marred last year by a deadly stampede. Human-rights groups are less impressed, blaming him—among other things—for the execution in January of a Shia cleric accused of terrorism. But he seems steadier than his youthful cousin. As the kingdom undergoes an economic shake-up, no one is sure who will lead it. The only thing you can bet on is that his first name will be Muhammad. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21707546-crown-prince-stands-between-king-and-his-favoured-successor-real-game/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free speech in Palestine + +Gagged in Gaza + +Hamas and Fatah try to silence the press + +Sep 24th 2016 | RAMALLAH | From the print edition + + + +LAST month Human Rights Watch (HRW) accused Palestinian authorities of detaining and torturing critical journalists. Two days later the secret police proved the human-rights campaigners right. Plainclothes officers arrested Mohammed Othman, a journalist who has criticised Hamas. He was detained for a day and a half and, he says, beaten, deprived of food and forced into painful positions. + +Freedom of speech is enshrined in Palestine’s basic law. However, researchers from HRW found five other journalists and activists who were detained recently in Gaza and the West Bank (which are ruled respectively by the Islamist Hamas and the secular Fatah movements). Most of the detained journalists said they had been tortured. One was threatened by an officer brandishing a gun. + +There are few data on such arrests, which both factions deny are politically motivated. Anecdotally, though, many Palestinians say they have increased. Just 20% think they enjoy press freedom, according to a March poll; 66% believe they cannot openly criticise the Palestinian Authority (PA). Even a Facebook post can provoke a visit from the authorities. In May, for example, officers hauled in a student who called the PA “rotten” on social media. + +The attack on free speech is a symptom of the rot in Palestinian politics. Mahmoud Abbas, the president, has served 11 years of a four-year term, with few accomplishments to show for it. Two-thirds of his constituents want him to resign. Hamas won legislative elections in 2006 as the alternative to a corrupt Fatah, but today presides over a scene of utter despair in war-ravaged, blockaded Gaza. + +Both organisations have been jittery ahead of a municipal election that was scheduled for early October. Palestinians have not held a nationwide ballot since 2006, so the smallest votes, even on university campuses, become fraught with meaning. Fatah campaigners have complained of harassment from the Hamas authorities in Gaza, and vice versa. + +Both sides, then, breathed a quiet sigh of relief on September 8th, when the Palestinian high court suspended the election. It will be delayed at least until next year. + +Mr Othman, for his part, is already back at work. A week after his release, he filed a story on Hamas’s efforts to restrict the foreign press. There was much to say. In May the group banned an American photographer from entering the territory, saying that her work “reflects badly on Gaza”. A new intelligence office at the border peppers arriving journalists with questions; on a recent trip, one agent took an oddly detailed interest in how often your correspondent visits Washington, DC. + +Young Palestinians often joke that their next intifada, or uprising, will be against their own leaders instead of Israel. For now, their rebellion is largely confined to news websites and social media. But without any way to express their views at the ballot box, it is unlikely to stay there. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21707540-hamas-and-fatah-try-silence-press-gagged-gaza/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Uganda’s Jobless Brotherhood + +Snouts in the trough + +Protesting against porky politicians + +Sep 24th 2016 | NAIROBI | From the print edition + + + +SQUEALING, the ten tiny piglets ran around in panic as policemen booted them with such force that they flew into the air. What ought to have been a comical sight—painted pigs dashing around outside Uganda’s parliament—was marred by the same violence that is meted out to all opposition, no matter how peaceful, against the government of Yoweri Museveni, who has been in power for 30 years. + +The pigs were released on September 15th by two activists from the self-styled Jobless Brotherhood in protest against a decision by MPs (or “MPigs” as the group calls them) to award themselves 200m Ugandan shillings ($59,000) each to spend on fancy new cars. + +It was not the Brotherhood’s first porcine protest. In June 2014 two members made it into the lawmakers’ car park with animals. Last year they dropped piglets in Kampala and Jinja (in the latter a police chief accused the Brotherhood of “holding an unlawful assembly and violating the rights of pigs”). + +“If you started feeding a pig in the morning...it will continue eating up to evening,” one activist told the local press. “This is the same way our MPs are behaving; they never get tired of money.” + +Graft in Uganda made headlines in 2012 when it emerged that $12.7m in donor funds had been siphoned from the Office of the Prime Minister, prompting a number of European nations to suspend aid. Pig protests are a form of dissent that is also used in neighbouring Kenya, which is also under the microscope amid allegations of corruption. Both countries are seen as equally crooked by foreign investors: they are tied at 139th out of 167 in Transparency International’s Corruption Perceptions Index (where number 1 is the cleanest country). + +The Brotherhood, which claims to have 5,000 members, blames graft and cronyism for Uganda’s high rate of underemployment. Norman Tumuhimbise, one of the group’s founders, angrily recalls being turned down for a job as a policeman after finishing six months of training because better-connected Ugandans were hired instead. + +The official unemployment rate in Uganda is only 1.4%. But there is a catch: some 90% of Ugandan workers have informal jobs, says Gemma Ahaibwe of the Economic Policy Research Centre in Kampala. Those jobs are often ill-paid and unproductive. The growth of the formal economy is hampered by red tape and bad infrastructure, just as millions of young people are entering the labour market (almost half of Ugandans are under the age of 15). Economic growth, which was rapid from 1987 to 2010, has fallen dramatically and is now barely faster than the rise in Uganda’s population. Small wonder that disaffected youngsters are demanding that their rulers take their snouts out of the trough. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21707545-protesting-against-porky-politicians-snouts-trough/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johannesburg’s new mayor + +Capitalist crusader + +A hair-care tycoon aims to put a shine on the city of gold + +Sep 24th 2016 | JOHANNESBURG | From the print edition + +Afro capitalist at the helm + +A FEW weeks after Herman Mashaba became mayor of South Africa’s biggest city, tragedy struck. A group of illegal miners known as zama-zamas (“chancers”, for the risks they take) were trapped in an old mineshaft at Langlaagte, the Johannesburg farm where prospectors first discovered gold in 1886. At least three of them died. + +To Mr Mashaba, the disaster was a symptom of the breakdown of law and order. It was also a chance to look for capitalist solutions to lingering problems, such as the sky-high unemployment that makes zama-zamas risk their lives. Langlaagte is the “commercial foundation” of Johannesburg, Mr Mashaba declared in his inaugural speech to the city council a few days later. It ought to be a tourist site, and have its “commercial potential” unleashed. + +Mr Mashaba, 57, calls himself the “Capitalist Crusader” (the title of a book he published last year). Among South African politicians he is a rare breed: a scrappy self-made millionaire, a libertarian and a capitalist in a country so left-leaning that even the finance minister is a former member of the communist party. Mr Mashaba, who hates red tape and statism, decries the “culture of dependency” that has developed under the African National Congress (ANC), which has ruled since the first democratic elections in 1994. He criticises the party’s racial affirmative-action policies and is against a proposed national minimum wage, calling it “an evil system” designed to prevent the poor from advancing. “The ANC’s corrupt patronage policies have killed entrepreneurship,” he says. + +Raised in a backwater near Pretoria, Mr Mashaba was cared for by his sisters while their mother, a domestic worker, raised other people’s children. Angry at the lack of opportunities for blacks under apartheid, he dropped out of university and got a job at a supermarket before starting his own business, Black Like Me, that makes hair-care products for black consumers. The venture made him rich. + +He has since handed control of the business to his wife, and more recently served as chairman of South Africa’s Free Market Foundation, a think-tank. Frustrated with the ANC’s corruption under President Jacob Zuma, in 2014 he joined the opposition Democratic Alliance (DA), a liberal, pro-business party. Being mayor was the last job he ever wanted, Mr Mashaba says, sitting in his new office. But the DA was keen to have a high-profile black businessman as its candidate, and won him over. + +His victory came as a surprise. The DA never expected to win control of Johannesburg, and did so only with the support of smaller parties, including the populist Economic Freedom Fighters (EFF). (The ANC won more votes than the DA, but not a majority.) Mr Mashaba is now the flag-bearer for the DA’s strategy to break out of its base in the Western Cape. Its plan is to win big cities and run them well. This, it hopes, will persuade voters to give it a shot at running the country. + +So how much can Mr Mashaba do? South African municipalities are “masters of their own destiny”, says Andrew Siddle, a consultant. They have considerable autonomy in some areas. But they have little say over important issues such as policing and education. Despite such constraints, successive DA mayors in Cape Town have won over black voters by cutting graft, encouraging private investment and diverting money from rich (and still mainly white) suburbs to poorer townships. + +Johannesburg, with a population of nearly 5m, has scope to do more. It has a budget of 54.8 billion rand ($3.9 billion) and collects most of its own taxes. Transfers from the National Treasury are allocated by formula, so there is little that the ANC-controlled national government can do to trip him up. His main challenge will be to keep the support of the EFF without making too many concessions to its (radical, leftist) ideology. It voted for him mainly to spite the ANC, and has declined to enter a formal coalition. That means that city budgets and other votes can only pass with the EFF’s support. Mr Mashaba will also have to contend with a city bureaucracy that is politicised and largely pro-ANC. Many civil servants resent his plans to stop them giving jobs to party loyalists and contracts to pals. + +Mr Mashaba argues that he can be both pro-poor and pro-business. He promises to boost Johannesburg’s economic growth rate to 5% a year and to cut unemployment from 31% to less than 20%. Already he has started handing out title deeds to residents of Soweto, giving them formal ownership of their own homes. This week he said that the city’s tender process would be opened to public scrutiny. But when he announced plans to privatise the city’s strike-plagued rubbish-collection service, Pikitup, the EFF threatened to vote him out of office. He swiftly retreated. + +The DA has had a run of good publicity. Its other new mayors, in Tshwane (Pretoria) and Nelson Mandela Bay (which includes Port Elizabeth), have won plaudits for turning down the luxury cars that come with their jobs. But the real test in all three cities will be whether the DA can cut crime and graft, improve services and boost growth. Only if it governs better than the ANC will it win national power. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21707547-hair-care-tycoon-aims-put-shine-city-gold-capitalist-crusader/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nigeria’s war against indiscipline + +Behave or be whipped + +A former dictator dredges up old social policies + +Sep 24th 2016 | LAGOS | From the print edition + +The frog jump—a national sport + +NIGERIANS might be forgiven for thinking they have travelled back in time. Their president, Muhammadu Buhari, has revived some of the economic policies he favoured when he was last in power, as a military dictator in the 1980s, such as restricting imports and propping up the currency. Such retro thinking has failed to rescue Nigeria from its first recession in 20 years; indeed, it has probably made it worse. And now social policy is going back in time, too. + +Under a new “national reorientation” campaign called “Change Begins with Me” Mr Buhari wants to tame Nigerians. Moral “degeneration”, he says, is the reason that drivers run red lights and militants blow up pipelines. “Our value system has been badly eroded,” the president lamented in a speech that plagiarised Barack Obama’s 2008 victory address. A presidential spokesman blamed an “overzealous” speech-writer who will face “appropriate sanction”. + +Others may face the same fate. A “War Against Indiscipline” brigade, first drafted by Mr Buhari in 1984, was relaunched last month and is hunting for funds for its 150,000 volunteers, who are patriotically clad in green and white. According to the National Orientation Agency (whose Orwellian departments include one for “Behaviour Modification”), their job is to restore order and “inculcate the spirit of nationalism in all Nigerians”. + +Nigeria’s public services have been hollowed out by years of corruption, and some locals remember the era of military rule as more orderly. Others remember it as brutal. During Mr Buhari’s first War Against Indiscipline soldiers used horse whips to beat those who littered or jumped queues and punished others by making them jump like frogs. “It became totally arbitrary,” says Clement Nwankwo, a human-rights campaigner. One of his friends, he recalls, was jailed for owning an unlicensed telex machine. + +The dangers of unleashing the moral police are manifest. One man has been arrested for naming his dog after the president. In Kano, a mostly Muslim northern state, an Islamic unit called the Hisbah has long terrorised people accused of committing adultery. + +Mr Buhari’s critics gripe that, if he wants to make Nigeria a more moral country, he should start by cleaning up the government. Police officers regularly extort bribes with menaces. The army is accused of killing and torturing civilians. In Lagos the state government’s “Kick Against Indiscipline” enforcement team demands weekly bribes from long-suffering roadside vendors. + +Matthew Kukah, a bishop in the northern city of Sokoto, doubts that Mr Buhari’s campaign will work. “Chaos is a function of scarcity,” he argues. “You cannot expect hungry people to line up for a few bags of rice.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21707549-former-dictator-dredges-up-old-social-policies-behave-or-be-whipped/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +European defence: The fog of politics + +Russian politics: The hollow election + +Criminal justice: Think before you clink + +Drug wars: Hash and burn + +Architecture in Sweden: Nobel, unprized + +The politics of haute coiffure: Scissor and tongs + +Charlemagne: The parable of Ticino + + + + + +Articles Sections Next + +European defence + +The fog of politics + +After the Brexit vote, the European Union is pushing for more military integration. Its proposals mostly miss the point + +Sep 24th 2016 | From the print edition + + + +TERRORISM, Russian bullying, chaos in the Middle East and the possibility of a President Donald Trump: it is no surprise that the European Union wants to put defence and security at the top of its agenda. As the European Commission’s president, Jean-Claude Juncker, put it in his “State of the Union” speech on September 14th: “Europe needs to toughen up. Nowhere is this truer than in our defence policy.” + +Although personally devoted to the federalist vision of a European army, Mr Juncker was careful not to raise its spectre on this occasion. Instead, he rattled off a number of ostensibly more achievable goals, some of which had been floated a few days before in a paper prepared by the French and German defence ministers. It was discussed at last week’s informal summit of European leaders in Bratislava; next week, EU defence ministers will be back there to take the talks further. The goal is to have a set of proposals agreed in time for the next summit in December. + +Most of the ideas are fairly old ones to enhance co-operation between the armed forces of willing EU members; they are being dusted off to meet the new mood of anxiety. The proposals include the establishment of a permanent military headquarters to plan and run EU military and civilian missions, such as Operation Sophia, launched last year against migrant-traffickers in the Mediterranean, and Operation Atalanta, an anti-piracy campaign off the coast of Somalia that began in 2008. Up till now, such missions have been run from HQs in nominated member states. + +Britain has long vetoed the idea, worried that it would be expensive, duplicate stuff that NATO is much better equipped to do and unsettle the alliance. Brexit makes the new HQ more probable. NATO seems relaxed, as long as it stays relatively small: say, a few hundred people compared with the 8,500 NATO employs to do this sort of work. Finding the money for even such a modest outfit, though, will not be easy. + +Another goal of the Franco-German plan is something called “permanent structured co-operation”, or PESCO. This would allow a core group of countries voluntarily to take steps towards greater integration of their military capabilities. There has been nothing to prevent it being used in the past; Britain could not have stopped it. But the desire to do so has been lacking. Nick Witney, a former head of the European Defence Agency (EDA), which promotes co-operation in acquiring military equipment, remains sceptical of PESCO because it is hard to decide who should join and who should not. + +Relations between NATO and the EU, often tense, have recently improved. At the NATO summit in Warsaw this summer, the two organisations issued a joint declaration on how they would work together against new threats such as cyber-attacks, uncontrolled migrant flows and “hybrid warfare” (the mix of conventional force, political subversion and disinformation that helped Russia conquer Crimea). NATO insiders say “the atmospherics are different now” and there is little risk of the EU supplanting NATO. + +An idea that deserves a cautious welcome is the creation of an EU fund to finance defence-related research and development. It will start small but the aim is for it to grow to around €3.5 billion ($3.9 billion) within a few years. Again, the problem is not the concept, but getting member states to cough up the money. + +Similarly, a new emphasis on “pooling and sharing” military kit, a longstanding aim of the EDA and of NATO, is nice in theory but has proved hard in practice because governments fret about losing control of their forces. Some countries have come together to share aerial-tanker capacity, but pooling and sharing can work only if there is a firm understanding about how such assets will be used in a crisis. + +Europe’s biggest shortcoming in defence is not its command structure but its capabilities. Successive American administrations have implored their European allies to stop cutting their military budgets and to spend what money they have on the things that matter. That means modern equipment rather than static divisions, bloated bureaucracies and pork, says Kori Schake, a former Pentagon official now at the Hoover Institution, a think-tank. + + + +In the past year, most European defence budgets have stopped declining. Some are now gently rising. But only a handful of NATO’s European members—Britain, Estonia, Greece and Poland—meet the alliance’s 2% of GDP spending target (see chart). If the new push for EU defence acts as a spur to more spending on modern kit, the Americans will be happy; but if it is just posturing, their exasperation will only be reinforced. + +Jonathan Eyal of RUSI, a British think-tank, has a different concern. Much of this activity, he believes, is a sign of desperation on the EU’s part that the member state with the most effective armed forces will soon quit the club. But Europe, he says, is having the wrong debate. “The most urgent need,” he says, “is to find a way to keep Britain as integrated in Europe’s defence as possible.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21707499-after-brexit-vote-european-union-pushing-more-military-integration-its-proposals/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Russian politics + +The hollow election + +The lowest-ever turnout for Duma elections suggests Vladimir Putin is losing touch with his political base + +Sep 24th 2016 | MOSCOW | From the print edition + +Only one name matters + +ON THE face of it, Vladimir Putin got everything he wanted. On September 18th his United Russia party won a thumping three-quarters majority in the parliamentary elections. There were no protests of the sort that marred its last victory in the Duma five years ago. The president called this a sign of stability and trust in his party. + +It is anything but that. The Kremlin made every effort to ensure the elections were as sterile and low-profile as possible. It banned and harassed genuine opposition parties and their leaders. And it persuaded many that nothing depended on voters. The official turnout was 48%—the lowest ever in the history of Russian elections. This average included several ethnic regions, such as Chechnya and Dagestan, where the turnout was an improbably high 80% or more. In the largest cities, such as Moscow and St Petersburg, only a third of voters cast their ballots, down from two-thirds five years ago. Alexei Navalny, an opposition politician who led the protests in 2011 and was barred from taking part in this election, told his followers: “You have not lost because this was not an election.” + +After Mr Putin’s first term in office, which ended in 2004, the Duma ceased to be a democratic forum; it merely rubber-stamped the Kremlin’s edicts. But its standing—and that of United Russia—was sustained to an extent by high oil prices and a growing economy. At least the Duma could not be ignored, as it provided a rare means of access to the Kremlin, which distributed the oil rent. With the sharp fall in oil revenues, the economy in recession and real incomes dropping, this is no longer the case. Social scientists note that the urban middle class—the most economically active part of the country—has no real representation; United Russia is just a vehicle for the Kremlin to exert power. + +By shutting out the opposition and marginalising even the tame Duma, the Kremlin is pushing Russian politics into unchartered and potentially dangerous territory. Mr Putin’s latest victory turns the Duma into more of a sham. As a result, he risks becoming detached. In the view of Gleb Pavlovsky, a political analyst and former adviser to Mr Putin, Russia’s leaders are like pilots flying in heavy turbulence with the cockpit dials all painted over. + +There are signs of tension even among Mr Putin’s core voters. According to the Centre for Social and Labour Rights, a monitoring group, the number of labour protests has grown by 22% since 2014. Tractor drivers who recently staged a protest, taking a cue from long-haul lorry drivers last year, were promptly detained. The main causes of the almost daily labour unrest are not political, but bread-and-butter issues such as incomes falling and wages not being paid. Strikingly, some of the regions most prone to stoppages also had the lowest turnout in the elections, among them Irkutsk in south Siberia, where just 28% of voters cast their ballots. + +Beyond the factories, Russian politics is being conducted mostly among the Kremlin’s power cliques. Recent “soft” purges include the sacking of Sergei Ivanov, Mr Putin’s chief of staff; elsewhere tactics are harsher as sacked regional governors and mayors increasingly end up in jail. As the economic pie shrinks and civil ways of balancing interests disappear, expect the internal struggles to turn nastier. + +One harbinger is the growing power of the Federal Security Service, the successor to the Soviet KGB. On election night Kommersant, the country’s first private newspaper, reported that the Kremlin intended to recreate the Ministry of State Security, as the KGB was known under Stalin. It would incorporate separate agencies dealing with foreign intelligence and the protection of top officials. + +As a former KGB man, Mr Putin sees himself as the only decision-maker and the secret police as his most effective tool to ensure stability. Soviet leaders had the same impression. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21707554-lowest-ever-turnout-duma-elections-suggests-vladimir-putin-losing-touch-his/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Criminal justice + +Think before you clink + +Why a rise in community punishment is not cutting prison rates + +Sep 24th 2016 | RIGA | From the print edition + + + +ILONA SPURE sighs with regret when she recalls how, in Soviet times, a thief could get two years in prison for pilfering a jar of jam. Now the director of Latvia’s prison service, she says that even after the country regained independence in 1991 it kept the Soviet habit of putting a lot of people behind bars. In 2004, when it joined the EU, Latvia still had its highest rate of incarceration: 337 people per 100,000, compared with the EU average of 122. + +“We thought there was no alternative to prison,” says Ms Spure. No longer. In recent years judges have been handing out ever more “community work service”, in which offenders perform unpaid jobs like sprucing up shabby buildings or cleaning parks. Last year such punishments were applied in 53% of convictions, up from 28.5% in 2011 and none at all before 1999. + +In this way Latvia is part of a broader pattern. The use of alternative sentences, such as community service and electronic monitoring, has been rising across Europe. In the early 1990s few countries bothered to collect data on what were then rare sentences. By 2010, however, 17 out of 29 countries surveyed had more probationers than prisoners (see chart), according to a paper published last year by researchers from the University of Lausanne. This trend is also apparent in America. Michelle Phelps of the University of Minnesota has found that the number of adults under some form of probation increased from 1.1m to 4m, or 1 in 60 adults, from 1980 to 2011. She calls it the rise of “mass probation”. + +Yet alternative sentences have not been matched by a fall in the incarceration rate. A study in 2014 by Natalia Delgrande of the University of Lausanne found that from 2000-12 rates of community service and imprisonment both increased in most of Europe. In other words, countries that lock up more people also tend to hand out more non-prison sentences. + +What has happened is a “widening of the net”, says Catherine Heard of the Institute for Criminal Policy Research, a British think-tank. Rather than serving as an alternative to prison, such sentences are often applied as additional punishments—often to deal with newly criminalised offences, such as breaking welfare rules or anti-social behaviour. Ms Heard says that non-prison sentences are increasingly designed to control and monitor offenders rather than reform them. + +Judges often remain attached to jail terms, or lack discretion. Mandatory minimum sentences or compulsory punishments for parole breaches mean they are left with no choice but to send convicts to prison. (From 1995 to 2009 there was a 470% increase in the number of people imprisoned in England and Wales for non-compliance with community sentences.) + +Latvia is thus unusual, in that the use of alternative punishments has coincided with a sharp drop in prisoners, from 7,646 in 2004 to 4,409 in 2015. This is in large part because in 2013 the cash-strapped government cut the sentences of non-violent prisoners and decriminalised several other offences. “We could no longer afford the prison population that we had,” says Anhelita Kamenska of the Latvian Centre for Human Rights. Imants Jurevicius, the head of Latvia’s probation service, is keen to expand the use of counselling and addiction treatments. But he says it is hard to convince older judges of their merits. + +Good pointers are to be found in Norway, Scotland and, indeed, in parts of Latvia, where the probation services work closely with the rest of the legal system. Judges are given more discretion and seek advice on sentencing from probation officers. Such an approach is harder to sell to the public, acknowledges Laila Medin of Latvia’s ministry of justice. But she argues that even in a country with prisons dating back to 1833, another form of criminal justice is possible. “We will never be fully Norwegian but we can be less Soviet.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21707559-why-rise-community-punishment-not-cutting-prison-rates-think-you-clink/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Drug wars + +Hash and burn + +Albania seeks to contain the spread of cannabis plantations + +Sep 24th 2016 | TRAGJAS | From the print edition + + + +IT IS peak season and dozens of sweat-drenched men are labouring in the fields near the Albanian town of Tragjas, harvesting a bumper crop of cannabis. Overseeing them are policemen with submachine-guns and face masks. Saimir Tahiri, Albania’s interior minister, swoops down in a helicopter to observe the destruction of the plantations. Piles of two-metre high bushes are set on fire. Mr Tahiri admits the choking fumes can be a problem for the policemen but adds that this is the least of their concerns. Europe’s drug war is being fought here, he says, and billions of euros are at stake. + +Albania is a major entrepot of the European drugs market. The country has long been a base from which criminal gangs smuggle everything from cigarettes to heroin, cocaine, cannabis resin and other illicit substances into the rest of Europe, according to the European Monitoring Centre for Drugs and Drug Addiction, Europe’s drug agency. Increasingly, Albania has also become a big outdoor producer of the cannabis herb, which is distributed with the help of a complex network of Albanian organised-crime groups. + +One of the biggest destinations is Italy, where dope is smuggled in on speedboats, lorries and private planes; last month smugglers tried to slip through on jet skis. One Italian newspaper headline declared, only somewhat hysterically, that “rivers of drugs” are flowing from Albania to its shores. Each day this summer Italy’s Guardia di Finanza, a paramilitary police force, has overflown Albanian territory to relay the co-ordinates of cannabis plantations to Mr Tahiri’s men. Nearly all reported plantations are destroyed, he says. By late August this year, he claims his men destroyed a million cannabis plants—up from the half million recorded in 2014. + +Others are less sure. Locals complain that several plantations—those which are hardest to get to—have survived. Albanian politics is rich with accusations of links between politicians and the drugs mafia. Lulzim Basha, the head of the opposition Democratic Party, claims that even Mr Tahiri himself is protecting key drug lords. Mr Tahiri vehemently denies the claim. Mr Basha also alleges that during the election campaign three years ago Edi Rama, Albania’s Socialist prime minister, made dirty deals with local mafiosi in order to deliver votes; now, he thinks, Mr Rama is in hock to them. The Socialists dismiss this; they argue instead that in the eight years when Mr Basha’s centre-right party was in charge cannabis was openly grown in the small village of Lazarat. Production was so extensive that it was reported by the interior ministry be worth to €4.5 billion ($6 billion), or half of Albania’s GDP, in 2014, when Lazarat was raided by police. + +Through the haze of burning cannabis, facts are difficult to establish. Plantations have spread beyond Lazarat. But Italian officials refuse to talk about whether the Albanians are serious in dealing with them. Last year Dritan Zagani, a senior Albanian policeman, sought political asylum in Switzerland after allegedly telling the Italians about a new drugs route; the Albanian police say he was leaking information to the mafia. + +One diplomatic source says that the cannabis problem is “getting worse”. But regardless of the true scale of the eradication, it is unclear whether the policy has any real impact. Other countries, such as Morocco, also supply pot to Europe. In Latin America the destruction of coca bushes generally hurts small producers but leaves the kingpins untouched. Mr Tahiri is defiant, however. Despite tiny resources pitted against big drug money, he says, his men are working better than ever this year. For the Albanian government it is a question of law and order, and of credibility in Europe—particularly as it seeks to join the EU. Mr Tahiri says mafiosi should know there are “no more untouchables”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21707556-albania-seeks-contain-spread-cannabis-plantations-hash-and-burn/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Architecture in Sweden + +Nobel, unprized + +Protests reveal NIMBYism mixed with indifference to the past + +Sep 24th 2016 | STOCKHOLM | From the print edition + +But the design is dynamite + +FEW Swedes have been as influential as the bearded chemist and inventor of dynamite, Alfred Nobel. Yet his countrymen appear reluctant to promote him. And this is not because they think it outrageous that Leo Tolstoy and Mark Twain never won the Nobel Prize for literature, but Eyvind Johnson and Harry Martinson (who just happened to sit on the Nobel panel) did. Rather, it is more a question of indifference to history. + +Take the kerfuffle over a plans for swanky new centre in Stockholm, the Nobel Centre or Nobelhuset. Since 2011 the city of Stockholm and the Nobel Foundation, the non-profit group which administers the prizes, have been discussing a sea-front edifice to serve as a new prize-giving venue and research centre. In April Stockholm’s municipal council approved its construction; the county council will decide later this year, with building due to start in 2017. + +David Chipperfield, a British architect, won the commission over several Swedish bidders. His design is a shimmering block of copper, glass and stone in Blasieholmen, an area which faces the Baltic Sea and is close to the well-heeled east side of the city. The total cost of the project, which is partly funded by donations from local bigwigs, is 1.2 billion Swedish krona ($140m). + +But locals are not impressed. Three protests have taken place outside the Nobel Foundation headquarters over the past six months, each drawing crowds of around 700 people. “It’s an insensitive, brutal assault on Stockholm’s beautiful cityscape,” argued Gosta Grassman, an organiser, before the most recent protest. A historic customs house, which is due to house refugees, will be torn down. Others argue that the peninsula is not equipped to handle tourist buses. Even Carl XVI Gustaf, the king of Sweden, has uncharacteristically weighed in, telling Swedish media that the customs house should be preserved and that the Nobel centre did not need to be “so gigantic”. + +Most protesters are driven by NIMBYish concerns: many worry that the centre will reduce the value of their homes. But the debate also hints at how little Swedes celebrate Nobel himself. Only a small museum exists in his home town Karlskoga, close to Bofors, an arms manufacturer which he helped build. Another smallish museum, which mostly focuses on the prize, opened in Stockholm in 2001. He left his fortune to the pursuit of peace; but his fellow Swedes don’t care. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21707555-protests-reveal-nimbyism-mixed-indifference-past-nobel-unprized/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The politics of haute coiffure + +Scissor and tongs + +French politicians ruffle hairdressers at their own peril + +Sep 24th 2016 | PARIS | From the print edition + +The sharp end of the campaign + +IT IS a rite of passage for any French politician seeking high office to linger at the annual Paris agricultural fair, petting heaving bulls and nibbling regional charcuterie. This bestows on besuited city types essential national virtues, linked to the land, earthy muscularity and la France profonde. Last week, though, saw a parade of male would-be candidates for next year’s presidential election pressing the flesh in a less traditional setting: amid the heat tongs, hair extensions and tubs of cream peroxide at the Paris hairdressing fair. + +Hair, it seems, is a new political battleground. At the Mondial Coiffure et Beauté on September 11th-12th Bruno Le Maire, a centre-right would-be candidate on his way to a lesson in lissage brésilien (Brazilian hair-straightening), bumped into Emmanuel Macron, an aspirant from the left, fresh from a barber’s shave. Even Alain Juppé, another centre-right hopeful, turned up, though the balding former prime minister conceded wryly that his own needs were minimal. In July it emerged that the Elysée palace was paying nearly €10,000 ($11,000) a month—more than three times the national average wage—to employ President François Hollande’s personal hairdresser. + +Political hair wars are partly to do with the industry’s popularity. More employees work in hairdressing in France today than in the wine industry. With over 83,000 hair salons, and 95,000 workers, French heads are among the best tended in Europe. The number of salons has grown 20% over the past decade. It is easier to find a hairdresser in many French villages than a butcher. With 1m clients coiffed every day, hairdressers have the ear of their customers for long periods, as peroxide bleaches or perms set. Charm a hairdresser, and electoral rewards may follow. + +A year ago Mr Macron, then economy minister, tried to trim regulations protecting the profession as part of a broader liberalisation designed to help newcomers set up businesses. Existing rules require hairdressers to hold a brevet professionnel, or professional qualification, before opening a salon. The two-year course includes a written exam in applied physics and chemistry and a three-hour written French paper. When Mr Macron said he wanted to cut the requirement, the profession was livid. “Ours is a métier where you absolutely need a qualification,” says Bernard Stalter, head of France’s National Union of Hairdressing Businesses. Hairdressers downed scissors and took to the streets. In the end the minister backed down, and quit last month. The whistling that greeted his arrival at the Paris salon suggests that they have not forgotten. Politicians, beware of ruffling hairdressers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21707557-french-politicians-ruffle-hairdressers-their-own-peril-scissor-and-tongs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +The parable of Ticino + +The harsh lessons from Switzerland for Brexiteers + +Sep 24th 2016 | From the print edition + + + +FOR the European Union’s high priesthood in Brussels, the right of people to live and work anywhere in Europe is sacred. But free movement is a worldlier concern for Franco Puffi, who runs Precicast, a high-tech metal foundry in Ticino, a Swiss canton next to the Italian border. Fully 90% of those who toil in its workshops are Italian, as are the engineers who design its moulds and the managers who seek new export markets for aerospace and biomedical components. Mr Puffi would like to employ more locals, but says the Swiss prefer banking and public-sector jobs. Northern Italians, by contrast, value industrial work and have the technical skills he needs. Their country’s economic woes make them “hungrier”. And there are a lot more of them. + +For others, that is precisely the problem. “Ticino is confronted with Italy,” says Norman Gobbi of the Ticino League, a local party that backs immigration curbs. “And Italy is an example of the non-functioning of the EU.” Switzerland, a small, federal construct that protects its sovereignty furiously—it became a full UN member only in 2002—is in many respects a curiosity. Its relationship with the EU, governed by a complex set of bilateral deals, is no exception. But its recent experience provides lessons for others, not least a Brexiting Britain, on how far European states outside the EU can set the terms of their relationship with the union. + +Since 2002 all EU citizens have had the right to live and work in Switzerland (and vice versa). Millions of Italians live within 50 kilometres of the border. Tens of thousands of them commute across it every day. In 2014 concerns that Italians were undercutting local wages drove 68% of Ticinese to vote “yes” in a national referendum that called for curbs on immigration and cross-border commuting. The proposal squeaked through by 20,000 votes. Some credit the Ticinese with its victory. + +In doing so they landed Switzerland with a giant headache. A “guillotine” clause in Switzerland’s accords with the EU means that unilaterally overturning the free-movement provisions jeopardises the rest of the agreements reached in 2002, which cover everything from procurement to agriculture. One government study found that scrapping all this could, by 2035, leave Swiss GDP 7.1% lower than it would otherwise be. + +Owing largely to immigration, the Swiss population has grown by over 10% in a decade. As a country of nothing but “water and rocks”, in the words of Paolo Beltraminelli, the centrist president of Ticino, Switzerland has always had to look abroad to plug labour gaps. But anti-immigrant populists have a deadly weapon: the popular initiative, which triggers lots of referendums. In 1970 a proposal to cap immigrants at 10% of the total population (bar Geneva) almost succeeded; today the figure is 23%. Votes against burqas and minarets have followed, as concerns about asylum-seekers and Muslims were added to the mix. + +The EU was at first minded to compromise with Switzerland over free movement. But that changed after last year’s election in Britain returned a government with a mandate to renegotiate its EU membership. Fearful that concessions to the Swiss would be seized on by the British, the EU toughened its stance; the Brexit vote in June made things worse. Now the Swiss look set to back down. This week the lower house of parliament approved a law that encourages employers to recruit in Switzerland before looking abroad; hardly the strict curbs demanded by the right-wing Swiss People’s Party (SVP) that proposed the referendum. + +Infuriated, the SVP could seek a second referendum to overturn the law, or to tear up the bilateral deals entirely. The Ticinese won’t wait: on September 25th they are set to approve a local initiative, backed by Mr Gobbi, to privilege Swiss workers over foreigners. The proposal is a legal nonsense; such matters are national rather than cantonal responsibilities. Much more of this sort of thing, says Mr Puffi, and he will move Precicast to Italy. + +Given the choice, Swiss voters tell pollsters they would not ditch the accords with the EU to cut immigration. But hardliners think the backlash against migration across the EU means that one day Brussels will have to take a less rigid stance; and that it is in the EU’s interest to keep Switzerland happy. The parallels with the British debate are irresistible: Brexiteers, too, argue that the EU will have to bow before the will of referendum voters. Yet Britain’s vow to cut immigration from the EU will mean losing some access to the single market, possibly including the “passporting” rights that allow financial firms to operate freely across the EU. Confronted with the potential collapse of Britain’s most important trading relationship, the promise to keep out Polish workers will look less compelling, or so some pro-EU voices suggest. + +The meaning of sovereignty + +There is another lesson from the Alps. The Swiss are hanging tough for now on a further EU demand: that the “static” bilateral agreements become “dynamic”, meaning that Switzerland automatically accepts new developments in EU law, be they new rules from Brussels or rulings by the European Court of Justice. Foreign judges are as distrusted in Switzerland as they are in Britain, and the Swiss can in theory pick and choose which rules to apply (in practice many are simply copy-pasted from Brussels). Refusing the EU’s demands means Switzerland will be cut out of future single-market developments, such as energy integration. + +Britain will face a similar dilemma. Whatever access it maintains to the single market, the rules will inevitably change; if Britain does not apply them automatically it will be progressively excluded from it. Britain may be far larger than Switzerland, a small country surrounded by the EU; and its security and police ties with the rest of Europe give it extra clout in striking a deal. But like Switzerland, Britain will face tough questions about what it means to preserve sovereignty when its biggest trading partner is making rules over which it will have no say. Immigration could be the least of its worries. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21707550-harsh-lessons-switzerland-brexiteers-parable-ticino/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Prisons: Jails break + +Chinese investment in Britain: Hinkley hangover? + +Housing in British cities: Little Londons + +UK Independence Party: What now? + +Higher education: Universities Inc. + +Professional services and Brexit: A lob and a smash + +Live-streaming funerals: Online send-off + +Bagehot: Not drowning but waving + + + + + +Articles Sections Next + +Prisons + +Jails break + +Proposed reforms will do little to improve the deplorable state of prisons in England and Wales + +Sep 24th 2016 | From the print edition + + + +ON SEPTEMBER 20th riot police were summoned to Lincoln prison and inmates moved out after what tight-lipped authorities called a “disturbance”. The week before, a coroner’s court blamed failings at Glen Parva, a young-offenders institute, for a prisoner’s death last year. The governor said that squeezed resources meant staff were unable to stop inmates killing or hurting themselves. Police in Cumbria this month launched an investigation into two deaths and spiralling allegations of sexual assaults at HMP Haverigg; its population is to be halved amid concerns over safety. + +Conditions in prisons in England and Wales are grim and getting worse, according to the official inspectorate. The performance of a quarter is worrying, up from less than 2% in 2012, says the prison service. Buildings are crumbling, infested with rats and cockroaches. They have become unacceptably violent and dangerous, say inspectors. In the year to June 2015, 105 prisoners killed themselves, compared with 59 in 2010. More men and women are hurting themselves and they are doing so more frequently. Assaults, both on other prisoners and on staff, are soaring (see chart). Eight people were murdered last year; none was in 2012. Those released are coming to them for help because prisons are so violent that they dread returning, say Steve Freer and Val Wawrosz, retired prison officers and founders of Tempus Novo, a charity that helps ex-offenders find work. Liz Truss, the new justice secretary, faces a crisis. So far, she has been slow to react. + + + +At the root of this lie two structural problems: overcrowding and understaffing. Even as crime has fallen in England and Wales, the prison population has remained high. Prisons hold 11% more people than they can decently accommodate, by the government’s own standards. Locking up just ten more inmates each would push 32 of the 117 prisons over their “operational capacity”, above which they would be officially unsafe. + +These figures are fractionally better than two years ago but conditions have worsened as budgets have been squeezed. The prison service is doing more with less. Between 2010 and 2015 it was forced to cut its budget by a quarter, making savings of £900m ($1.2 billion). Last year its riot squad was called out over 340 times—up from 118 in 2010. In the past five years the squad’s budget rose from £1.6m to just £1.8m. + +Crucially, the number of front-line officers has fallen by a quarter since 2010 (see chart). Increasingly aware of the impact, the prison service has been trying to recruit new ones. It has hired 2,250 officers since 2015 but so many others have left—a third resigning—that there has been a net gain of just 440. Fewer staff means prisoners spend longer banged up. Nearly a fifth spend less than two hours a day outside their cells. In Belmarsh in London some are let out for just 30 minutes. + + + +On top of these systemic problems has come another challenge: the increased use of synthetic drugs, particularly cannabinoids such as “spice” and “black mamba”. In 2010 there were only 15 prison seizures of spice. By 2014 that had risen to 737. According to User Voice, a charity, a third of prisoners surveyed this year said they had used spice in the past month: just 8% had used heroin and 14% cannabis. The drug, which is sprayed onto plant matter and smoked, can cause vomiting, seizures and heart attacks. Prisoners on spice can become violent, hurting themselves or others. It is often stronger than the cannabis it resembles so people mistakenly overdose. So common are call-outs to deal with bad reactions that the emergency vehicles are known as “mambulances”. + +Spice does not show up in prison drugs tests. It is easy to get hold of. Possession of such substances by the general public was only banned in May this year (smuggling them into prisons has always been illegal). Synthetic drugs are cheap on the outside but sell for up to ten times their street value in prison. Dealers are keen to get them into prisons because they can test new versions there. Dilapidated buildings are making that easier; drones have been caught flying them through broken windows in Pentonville prison in London. Spice is so common that prisoners say it is being sold for coffee and exchanged for food. + +More drugs and fewer staff is a toxic mix. Officers are rarely searched, making smuggling easier for them. Low wages make it appealing. Frequent trips to accompany inmates to hospital mean even fewer officers on prison wings. Overstretched and inexperienced staff search cells less frequently and less effectively so drugs and weapons are easier to hide. “It’s a perfect storm,” says one ex-con. In the past, officers worried that such conditions would lead to riots. Better security systems make mass disturbances less likely, reckons the same ex-offender, but concerns are growing that officers will be murdered. + +Michael Gove, briefly justice secretary before being fired by the new prime minister, Theresa May, proposed giving governors more autonomy in a series of “reform prisons”. He also talked quietly of reducing the prison population. Campaigners listened with interest. But reform prisons were a distraction from wider problems, suggests Andrew Neilson of the Howard League for Penal Reform, a charity. Fixing the overcrowding and shoring up staff are more pressing. Ms Truss says she is committed to reform but has yet to reveal her plans, leaving Mr Gove’s in doubt. Since being appointed she has emphasised the need to improve prison safety, a focus that Mr Neilson welcomes. But she has also ruled out any “arbitrary” reductions in the prison population. Ms Truss may be biding her time, working out the best strategy. But time is not on her side. She once suggested that prisons ought to be “tough, unpleasant and uncomfortable”. They are. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21707583-proposed-reforms-will-do-little-improve-deplorable-state-prisons-england-and/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Chinese investment in Britain + +Hinkley hangover? + +A ding-dong over a nuclear plant should not deter Chinese investors + +Sep 24th 2016 | GLASGOW | From the print edition + +Raising some red flags + +RESPLENDENT in a pinstriped suit, Sun Lizhi talks of the opportunities for his waste-recycling company, Linyi Tianwei, in Britain. From Shandong province in eastern China, Mr Sun was in a large delegation of Chinese businessmen visiting Scotland this week. He is looking for business partners and hopes that British investors will be attracted by the 20 patents he has developed. Asked why he is in Britain rather than Germany, Italy or anywhere else, he answers with one word: “trust”. Mr Sun, like many Chinese investors, perceives Britain to be a fair and honest place to do business. + +If he had been a government official, his answer may have been a little more cautious, following a summer of back-and-forth between the two governments over proposals to build a new nuclear plant at Hinkley Point in Somerset. Having suspended the controversial project shortly after succeeding David Cameron as prime minister, Theresa May on September 15th finally gave it the green light again, albeit with conditions attached. Électricité de France (EDF), a French state-owned firm, is building the reactor, and the Chinese have stumped up £6 billion ($7.8 billion)—about one third of the cost. Chinese officials accepted Mrs May’s right to review it, argues Paola Subacchi of Chatham House, a think tank, but they felt “betrayed” by the manner in which it was done. They were not consulted, so the episode has “undermined the trust that the Chinese have in this government,” says Ms Subacchi. + +So far, however, the Hinkley hoo-ha does not seem to have dulled the Chinese appetite, especially among private companies, for British expertise and assets. Last year, Chinese inward investment in Britain reached $3.3 billion. Gordon Orr, formerly of McKinsey in China, hopes that the bust-up might yet turn out to be just a blip. But he says that the Chinese certainly noticed that, just as the Hinkley deal was delayed, SoftBank, a Japanese company, was allowed to snap up ARM, Britain’s most successful technology company, for £24 billion with hardly a murmur of official disapproval. To the Chinese, says Mr Orr, this was like the American government letting a foreigner buy Google. Chinese diplomats still talk of a possible golden era of co-operation between the two sides, but Xu Jin, a counsellor at the Chinese embassy in London, also talks of the need for “trust” in a trading partner. He now expects China to begin a feasibility study on building a nuclear reactor at Bradwell in Essex when Hinkley is finished. + +It is private businessmen who are most worried about any official fallout from Hinkley, says Mr Orr. If the mood in Beijing sours towards Britain, they fear they might be discouraged from continuing their buying spree of British assets, which has been boosted by the post-referendum fall in the value of the pound. Chinese companies have been active recently in the renewable energy, oil and gas, and biomedical sectors. In May China’s Creat Group Corporation bought Bio Products Laboratory, a leading maker of blood plasma products, for £820m. As the Chinese economy grows more sophisticated, there is huge interest in buying or partnering with British technology companies to help in China. + +And then there is the promise of the “northern powerhouse”—a scheme proposed by the former chancellor of the exchequer, George Osborne, to boost the north of England—and HS2, a high-speed rail link. Mr Osborne launched the £12 billion procurement process in Chengdu last year, wanting China to part-finance some of the projects. With his departure from government, the Chinese have lost their main cheerleader and, with doubts over whether such costly projects will continue, there could be more trouble ahead. + +Increasingly, people wonder whether Mrs May is as committed to the projects or the co-operation with the Chinese that characterised the Cameron-Osborne era. But with all the money looking for opportunities abroad, it may take more than that to stop the flow of Chinese investment. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21707579-ding-dong-over-nuclear-plant-should-not-deter-chinese-investors-hinkley-hangover/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Housing in British cities + +Little Londons + +Britain’s second cities also suffer from property problems + +Sep 24th 2016 | BIRMINGHAM AND MANCHESTER | From the print edition + + + +FOR Londoners fed up with outrageous house prices, an attractive alternative is to live and work in Manchester or Birmingham. They are Britain’s joint second-biggest urban areas, with around 2.5m people each, and they are on a roll. Birmingham claims to be the only part of Britain with a trade surplus with China. In the past decade the number of professional jobs in Manchester city rose by 50%. Both have a buzzing nightlife and cultural scene, too. + +Small wonder Londoners are flocking. But a familiar spectre is following them up the M40 motorway: housing troubles. A few years ago supply and demand of homes more or less balanced out, but now there is a shortfall of about 10,000 homes in Manchester city and 20,000 in Birmingham city, according to data from JLL, a property firm. Since 2005 the housing stock in the greater Manchester and Birmingham areas has grown by just 6%, half the rate seen in inner London. + +By London standards, property in both areas is cheap, but that is changing. According to the Resolution Foundation, a think tank, in recent years the rate of home-ownership in Manchester has dropped further from its peak than any other region. The decline in Birmingham appears similarly large. Last year house prices in Manchester rose by 10%. Top-end office rents in Birmingham grew by one-tenth last year; it now costs just 15% less per square foot than it does in downtown Manhattan. (The City of London is still twice as expensive.) + +Pricey property constrains the economy by making it hard for people to move to places where they are more productive. Manchester and Birmingham are supposed to be the engines of the non-London economy, so this is bad news for all Britain. + +What is to blame? Some housebuilders are leery of urban markets outside London. In the 2000s they ploughed in, only to get their fingers burned in the crisis of 2007-08. Financiers are cautious too. + +However, land regulation may play a bigger role. According to a recent paper by Christian Hilber and Wouter Vermeulen of the London School of Economics, alongside Greater London, scarcity of open, developable land is greatest in and around Birmingham and Manchester. + +The cities’ large green belts—land whose only real function is to stop urban growth—hem them in. Manchester’s is five times the size of the city. Birmingham’s is smaller, but fiercely defended. The city council has submitted a modest plan to put 6,000 homes on the green belt. The central government recently blocked the proposal after a local MP, worried about the reaction of his constituents, caused a fuss. + +Local politics is also to blame. Birmingham and Manchester cannot hope to house all their workers themselves; neighbouring councils must assist too. However, councils in greater Birmingham with lots of Conservative councillors resent becoming dormitory towns for a fast-growing Labour part. Trafford, probably greater Manchester’s best-off council (and its only Tory-controlled one), has seen almost no housing construction in recent years. + +To be fair, these councils are given little incentive by central government to allow much development. Whitehall gives out grants to councils in such a way that almost eliminates any extra revenue (in the form of additional council tax, say) that councils could earn by allowing more development, says Mr Hilber. They are, though, left to pick up the tab for the added infrastructure needed to support the incomers. + +Things may soon improve. Growing appetite from foreign investors could help solve the financing problem. Stephen Hogg of JLL says that interest from China soared after President Xi Jinping was pictured in a selfie with Sergio Agüero, a Manchester City footballer, on a visit to the city in 2015. “The phones in our Shanghai office were ringing off the hooks,” he says. + +The political architecture of both cities is also changing. In 2017 each will acquire a “metro mayor” like London’s, accountable to the city-region. Ed Clarke of the Centre for Cities, a think-tank, argues that the mayors will pay less attention to local squabbles and aim to make decisions for the good of the whole city. Someone with gravitas may also do a better job of standing up to the central government’s pro-green-belt leanings (though the mayors of London have so far shied away from such battles). Unless something changes, cheap property in Manchester and Birmingham will soon be a thing of the past. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21707582-britains-second-cities-also-suffer-property-problems-little-londons/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +UK Independence Party + +What now? + +UKIP’s new leader has a surprisingly difficult job + +Sep 24th 2016 | BOURNEMOUTH | From the print edition + +Faragexit + +WHAT does a single-issue political party do when it achieves its goal? Diane James is going to have to answer that question. After an unorthodox campaign in which she dodged hustings, refused television appearances and declined to outline new policies, the home affairs spokesperson of the UK Independence Party was elected as its new leader on September 16th with nearly half the vote. Having helped win the Brexit referendum, Ms James (pictured) says UKIP’s next task is to become “the opposition party in waiting”. + +Step one, she announced, would be to professionalise the party. That will be a tall order. The mood at the party conference in Bournemouth was more pantomime than policy seminar (boos at the mention of Barack Obama were matched only by the jeers for Guy Verhofstadt, the European Parliament’s Brexit negotiator). UKIP’s internecine strife may not be on the same grand scale as the Labour Party’s but it is no less vicious. In his final speech as deputy leader, Paul Nuttall accused the party’s senior members of “creating a cancer in the heart of the party”. Ms James plans to curb the power of party officials, suggesting there will be further struggles. But she was quick to befriend Douglas Carswell, UKIP’s sole MP and a persistent critic of the party’s previous leader, Nigel Farage. + +Otherwise, Ms James seems to be short of a plan. In a dreary acceptance speech she advanced few ideas beyond holding the government to account over Brexit. Prior to the conference, two former senior party officials defected to the Tories. “The party’s over, mission accomplished,” said one. Theresa May’s Conservative Party is a welcoming home for defectors, having co-opted UKIP’s support for selective state education through more grammar schools, and by taking a harder line on immigration. + +Partly as a result, many reckon UKIP’s future lies in Wales and northern England, where they hope to win votes from disaffected former Labour votes. But Ms James, who grew up in the south and worked in private health-care, seems ill-placed to woo such voters. She has none of her predecessor’s folksy charm. Members will give her the benefit of the doubt, but she will struggle to match the “god-like” Mr Farage, predicted one. + +UKIP is thus in a trickier position than might be expected, considering its recent triumph. Still, Brexit will provide the party with a cause to rally around for a little longer. It would be a betrayal should the government go for associate membership of the European Union, retain access to the single market or allow freedom of movement, said Ms James. Such cries will only grow louder. At some point, though, UKIP will have to develop an appeal beyond forcing through Brexit. There is little to suggest Ms James is the person to do it. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21707340-ukips-new-leader-has-surprisingly-difficult-job-what-now/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Higher education + +Universities Inc. + +Universities are starting fewer businesses, but are bringing in more money + +Sep 24th 2016 | CULHAM | From the print edition + +Hooray! We’re entrepreneurs + +IN A research park in Culham, a sleepy village south of Oxford, a driverless car pootles around a short track. The ride is steady, the experience unspectacular. But the software directing the car could one day challenge that produced by Google and Uber, suggest the founders of Oxbotica, a “spin-off” company set up by academics at Oxford University’s robotics institute. They hope the technology will be used to run autonomous vehicles in warehouses, mines and, perhaps, on British roads. A version of it guided small transportation pods around pedestrianised parts of Greenwich and Milton Keynes this summer. + +It is the sort of ambition Whitehall policymakers applaud. Until quite recently, British universities lagged behind their foreign counterparts when it came to turning journal articles into cash. The process was always the same, says Adrian Day of the Higher Education Funding Council for England. An academic at a British university would publish something, it would lie unread on a dusty shelf, then someone else would use it “to make a widget”, thus scooping up the profits. + +No longer. In a 2014 survey by the Massachusetts Institute of Technology (MIT), Cambridge, Oxford and Imperial College London took three of the top five spots in rankings of the universities most supportive of technological development. And it is not just the best universities that have become more business-minded. Across the sector, income from sponsored research, consultancy, use of facilities and intellectual property has grown by an average of 4.8% a year over the past decade. One-third of dons now work with private companies. What changed? + +Part of the answer is that British universities previously underperformed. According to the MIT report, the key factors for success are excellent research, a good quality of life, entrepreneurial students, institutional and government support and a culture of innovation. Universities had plenty of good research and tended to be nice places to live. But they had little of the support needed from the institution, the government or business to take advantage. + +As a result, bringing in investment from beyond the usual sources was “a minority sport for enthusiasts”, says Phil Clare of Oxford University. Less enthusiastic people only started to get interested in the early 2000s as the government and research councils prioritised funding to universities, researchers and projects that could show their benefit to wider society. Now such an approach is firmly embedded. + +Sponsored research has grown particularly fast, increasing by an average of 5.5% a year over the past decade. Around 40% of such funding comes from the public sector. And universities have long had relationships with pharmaceutical giants. But recent deals attest to the widening focus of collaboration with the private sector. Liverpool University has joined with Unilever to create a £65m ($110m) chemistry research hub. Southampton University is working with firms including Airbus, Network Rail and Rolls-Royce to build a new engineering campus. British universities are unusually good at attracting foreign investment, says David Docherty of the National Centre for Universities and Business, a think-tank. + +Yet though British universities are bringing in more money, fewer businesses emerge from them than at their American counterparts. Indeed, the number of spin-off companies like Oxbotica created in British universities is falling. That is mainly because they have discovered that, while it is easy to start a business, it is harder to start a successful one. From the late 1990s, the government sought to inculcate the entrepreneurial spirit found in leading American universities, particularly Stanford and MIT. “Universities all wanted to outdo each other with how many spin-offs they had,” recalls Nick Hillman of the Higher Education Policy Institute, “but many were tiny and didn’t go anywhere.” Funding metrics are no longer so focused on spin-offs, meaning fewer (but hopefully better) businesses are produced. + +By not making “lots of small bets”, the hope is that a “real global player” emerges from a British university, says Tony Raven, who runs Cambridge University’s commercialisation arm. Cambridge, Oxford and Imperial have set up investment funds to put money into early-stage funding for business spin-offs, of which there is a relative dearth in Britain. It is an approach now being copied across the Atlantic. That, in itself, is a sign of how far British universities have come. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21707580-universities-are-starting-fewer-businesses-are-bringing-more-money-universities-inc/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Professional services and Brexit + +A lob and a smash + +Law firms and consultancies enjoy a Brexit boost, but probably not for long + +Sep 24th 2016 | From the print edition + + + +NO SECTOR is more valuable to Britain’s GDP than “professional and business services”—those 4m or so lawyers, accountants and consultants who make up 12% of Britain’s workforce and grease the wheels of the country’s (and much of the world’s) economy. Their strength has been compared to the “Wimbledonisation” of British tennis. Although Britain has few world-class tennis players, it wrote the rules and hosts the world’s biggest tournament; although there are few big British banks, the rules by which finance is governed were largely devised by British lawyers, many of whom enforce them. The sector is one of the country’s few undisputed world leaders, and biggest overseas earners; its share of exports to developed economies, at 12%, is second only to America’s, and Britain’s law firms have 20% of Europe’s market in legal services. + +Much of this is a result of Britain’s openness to the world, so the vote to leave the EU on June 23rd came as a nasty jolt. There had been warnings about the dire consequences. Analysis by the Law Society, a lobby group, showed a soft Brexit, in which most of Britain’s trading relations with the EU were kept intact, might lead to a loss of £225m off revenues for the legal sector by 2030. A hard Brexit could lop off £1.7 billion—equal to the combined current revenues of four of the biggest law firms. + +In the short term, however, the outlook is rather different as many law firms and consultancies are asked for help navigating Brexit. Most have set up specialist units. As Dominic Cook, an associate fellow at Oxford University’s Said Business School argues, over the 43 years of British membership, regulations and laws made in Brussels have permeated almost every aspect of domestic activity. “Everything will have to be looked at,” he says. The government, too, has been looking to law firms and consultants to make up its own shortfall in expertise. The Department for Exiting the European Union, only created in mid-July, has already spent at least £260,000 ($340,000) on fixed-fee legal advice. Richard Cranfield, a senior partner at Allen & Overy, a law firm with a 100-strong Brexit team, says there will be much more work when details of the deal are finalised. + +However, what some call a Brexit bonanza is already being tempered by a downturn in mergers and acquisitions (M&A) activity, one of the most important sources of income for many big law firms. Mr Cranfield says that transactions were down a bit in the first few months of the year, and since the referendum have dropped further. According to the ninth annual research survey by Thomson Reuters Legal, nearly a quarter of the finance directors of Britain’s top 100 law firms fear that weakness in M&A work is now a major risk to profitability, up from 8% last year. + +Worries about this sort of slowdown are compounded by fears that many banks, deprived of the “passporting” rights that allow them to work across the EU, might migrate to Paris or Dublin in the event of a hard Brexit. (Figures published by the financial regulator show 5,500 companies registered in Britain rely on such rights to do business in other European countries.) This would mean less work for those legal firms that have focused particularly on finance. Companies are nervous, suggests Mr Cook, although those that cover all sectors of the economy, including the public sector, should not be too affected. Mark Paulson of the Law Society sums it up: “It’s a bit like being a doctor in a plague year; you’ll be busy for a while, but it doesn’t bode well for the long term”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21707585-law-firms-and-consultancies-enjoy-brexit-boost-probably-not-long-lob-and-smash/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Live-streaming funerals + +Online send-off + +Technology is starting to change British funerals + +Sep 24th 2016 | THATCHAM | From the print edition + +Logging off + +TURN around in your seat at the crematorium in the Berkshire town of Thatcham and you will see a web-cam, fixed to a beam, following the proceedings. It enables anyone who could not make it to the service to follow from afar. The valley of the shadow of death is now being live-streamed. + +Demand is growing. The crematorium gets one live-streaming request a week. Obitus, the company that hooked up the system, currently has cameras in 25 locations, charging £2,500 ($3,245) to install and manage the technology. + +Forty years ago, “virtually every funeral was the same,” says Paul Allcock, president of the national funeral directors’ society—from the cortege to the Church of England rites. Nothing like the outdoorsy family that inquired this week about using a camper van as a hearse—typical, says Mr Allcock, of a customer base that is less religious, more diverse, and keen to personalise their departure. + +Even so, plenty of funeral directors are resisting. A recent survey showed 61% had received requests about live-streaming but many, in what is a “conservative” profession, are wary of what they consider intrusive technology, complains James Crossland, Obitus’s founder. Around a fifth of Britain’s 281 crematoriums have webcams in place. Tech-savvy families ask funeral directors to point them to one that does. The changing geography of modern family life provides more users. The number of Brits living abroad has risen 27% since 1990, to 5m. Some of them cannot make it back for funerals. Migrants to Britain, whose numbers have risen 133% in the same period, to 8.5m, may need webcams, too. + +Although the elderly can expect to live longer, they are often less mobile and unable to travel when they do—a problem, notes one staff member at Thatcham, that also faces the black sheep of the family who end up behind bars. + +Fairweather friends may use the live-stream as a way not to have to show up in person. In other spheres, such as sports, televised matches attract fewer fans. Mr Allcock says it would be a shame if live-streaming grew too much: personal sympathies given over the cold cuts after a service offer relatives great solace, he says. Death is not a football game. It is much more important than that. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21707584-technology-starting-change-british-funerals-online-send/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +Not drowning but waving + +Their scepticism about Brexit gives the Liberal Democrats a welcome new distinctiveness + +Sep 24th 2016 | From the print edition + + + +THERE was a time when a whiff of existential angst wafted about Liberal Democrat conferences. The Conservatives under David Cameron had turned all modern and reasonable. Labour under Ed Miliband had shed its authoritarian streak. Were the Lib Dems too indistinct from their Tory coalition partners? Or did they risk becoming a pale replica of Labour? What exactly were they for, again? With little room on either side, positioning the party was like reversing a car into a tight parking space without mirrors. At times it felt the Lib Dems were just splitting the difference between their rivals: before last year’s general election Nick Clegg, then their leader, pledged to bring “heart” to a Tory government or “head” to a Labour one. + +By contrast Tim Farron, his successor, enjoys the freedom of the open road. Labour has pirouetted off to the left. Under Theresa May the Conservatives are edging away from some of Mr Cameron’s liberalism. And there is Brexit. Three months after the referendum, right-wing Eurosceptics are setting the agenda, the country is heading for a hard break from the European Union and Labour is putting up little opposition (its MPs are now overwhelmingly for abandoning free movement of people). + +Thus there was a purposeful swagger to the Lib Dems who gathered in Brighton from September 17th. The party may have been reduced from 56 to eight MPs in last year’s election—the price of five years in power—but it now holds an uncontested, positive role: as the only unequivocal, nationwide, functional advocate of a properly open Britain. In his speech on September 20th, Mr Farron declared himself ashamed by Britain’s reluctance to take in refugees: “I will not stand by and watch my country become smaller, meaner and more selfish,” he spat. He invited businesses worried about Brexit to ditch the Tories and switch to his own truly “free market, free-trade, pro-business” party. In a portentous passage recalling Tony Blair’s penchant for grand historical narratives he cast British politics today as a giant Kulturkampf between open and closed. + +At the heart of the speech were two gambles. The first was a commitment to giving Britons a vote on the Brexit deal Mrs May negotiates, before it is inflicted on them. Plenty take umbrage at the idea. Vince Cable, the former business secretary, called it “seriously disrespectful” to voters. Mr Farron’s other risk was to admire some of Mr Blair’s reforms, like the minimum wage and investment in public services. This was a bold move in a party many of whose members joined as a statement of opposition to Mr Blair (and some of whom had sung “Tony Blair can fuck off and die” at a conference disco the night before). + +But so it had to be. With so few MPs, the Lib Dems need stark, attention-grabbingly polarising messages. Such is their puny size and such is the muscular role they seek to play, now is not the time for nuance; something which Lib Dems—who like restraint and middle ways—will have to get used to. Mr Farron is also right to focus on winning voters from Labour. Mrs May remains popular. It was among centre-left voters that Lib Dem support fell most precipitously during the coalition years, observes Mr Clegg. And it is among these folk, in metropolitan Lib Dem-turned-Labour seats like Cambridge and Bristol West, that the opposition’s flaccid anti-Brexit exertions create the largest opening for the party (unlike the 15 broadly Eurosceptic seats in rural south-west England which they lost to the Tories last year). + +This deserves to be seen as part of a longer mission: to create a Lib Dem core vote. The party collapsed so ubiquitously last year partly because it does not have any socio-economic base on which to fall back. The Tories have family, faith and flag. Labour has what remains of the industrial working class. The Lib Dems, according to a paper published in 2015 by Mark Pack and David Howarth, two party strategists, need to forge a similar relationship with the well-educated, internationalist urban types who make up the most pro-openness fifth of the British population, but who have no fixed abode in the party-political spectrum. Mr Farron’s uncompromising hostility to Brexit is the substantiation of this strategy. + +Harder, faster, liberaler + +But is he the right figurehead? The Lib Dem leader’s cheeky-chappy routine is less statesman than Sunday-school teacher. Watching his speech Bagehot half expected him to address the crowd as “boys and girls”, or perhaps whip out a tambourine. He is not a forceful orator; his address was better on the page than in the hall. And while the conference was atwitter about the Lib Dems’ successes (they have won lots of recent council by-elections and gained some 16,000 members immediately after the referendum), in national polls they have made no progress since the election. In London, surely the capital of the putative Lib Dem core vote, they performed abysmally in May’s mayoral election despite fielding a good candidate. Mr Farron may be part of the problem. One year into his leadership, fully 65% of voters do not have any opinion of him, positive or negative; the figure seemingly not improving with time. Even allowing for his party’s Lilliputian profile, that is grim. + +Mr Farron has set his party on the right post-referendum course and deserves more time to make a go of it. But if he fails to deliver in the next year his party must be ruthless and replace him. Mr Clegg—who might offer the heft Mr Farron lacks, though he is loyal to his successor—sums up the conditions well: “We have an electoral system that blocks competition; a government that a vast number of people didn’t back and just bromides and platitudes on how Brexit is going to happen. When I write that all down…it just doesn’t seem sustainable to me.” These circumstances make the Lib Dems distinctive. They also intertwine the party’s pro-openness vocation with the national interest like never before. For the party to fall short would be unforgivable. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21707581-their-scepticism-about-brexit-gives-liberal-democrats-welcome-new-distinctiveness-not/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +The Montreal protocol: To coldly go + + + + + +Articles Sections Next + +The Montreal protocol + +To coldly go + +Extending an old treaty that saved the ozone layer could improve cooling technology—and slow global warming + +Sep 24th 2016 | From the print edition + + + +THE world’s most lauded environmental treaty could be about to notch up a new success. In 1974 scientists discovered that chlorofluorocarbons (CFCs), chemicals used in refrigeration and as propellants in products such as hairsprays, release chlorine into the stratosphere as they decompose. This depletes the ozone that protects Earth from ultraviolet radiation. CFCs are also powerful greenhouse gases, which absorb solar radiation reflected back from the planet’s surface and so trap heat in the atmosphere. + +Initially, the consequences for the ozone layer caused most concern. In 1985 a gaping hole in it was found above Antarctica. Two years later, leaders from around the world acted decisively. They signed a deal, the Montreal protocol, to phase out CFCs. Now ratified by 197 countries, it has prevented the equivalent of more than 135 billion tonnes of carbon-dioxide emissions, and averted complete collapse of the ozone layer by the middle of the century. Instead, by that point the ozone hole may even have closed up. + +Now America and China are leading efforts to use the Montreal treaty to solve another urgent problem—one that is a legacy of its original success. Barack Obama and Xi Jinping are among the presidents and prime ministers pushing for a deal at meetings in Rwanda next month. In order to manage without CFCs, firms replaced them in applications such as refrigeration, air-conditioning and insulation with man-made hydrofluorocarbons (HFCs). These substances do not deplete ozone and last in the atmosphere for just a short time. However, they still contribute hugely to global warming. + +The average atmospheric lifetime for most commercially used HFCs is 15 years or less; carbon dioxide can stay in the atmosphere for more than 500 years. But, like CFCs, HFCs cause a greenhouse effect between hundreds and thousands of times as powerful as carbon dioxide while they linger. Total emissions are still relatively low, but are rising by 7-15% a year. Controlling HFC emissions has been under discussion for the past decade; America and China, the world’s two biggest polluters, made a deal on the issue in 2013, which paved the way for co-operation on limiting carbon emissions ahead of UN-sponsored climate talks in Paris last year. There leaders agreed to keep warming “well below” levels expected to be catastrophic. + +Average global temperatures are already 1°C higher than in pre-industrial times; along with urbanisation, electrification and rising incomes in developing countries, this is boosting demand for air-conditioning. In several large, hot countries, including Brazil, India and Indonesia, the number of units sold is rising by 10-15% annually. Cavernous fridges and freezers mean that HFCs can account for almost half a supermarket’s greenhouse-gas emissions. Other big polluters include fast-food outlets, with their under-counter refrigerators, ice-cream machines and the like. These are gaining popularity in the developing world: one estimate suggests that by the end of this year India’s fast-food industry will be twice as large as four years ago. Globally, cooling devices could cause HFC emissions equivalent to 8.8 gigatonnes of carbon dioxide by 2050—almost as high as the peak level of CFCs in the late 1980s. + +Move along, please + +America wants action on HFCs speedy enough that emissions will peak in 2021 and then start to fall; after recent talks in Hangzhou between Mr Obama and Mr Xi China may be ready to commit to reaching that point by 2023. Brazil, Indonesia and Malaysia lean towards 2025, and India has lobbied for a later date, closer to 2030. But many African countries and low-lying island states, concerned already by the changing climate, are pushing for a tighter timetable. Whatever the deadline, and however steep the cuts, the plan is to require rich countries to act faster, while allowing poorer ones more time to adjust. + +In 1991 a fund was established to help developing countries meet their obligations under the original Montreal protocol. Its cash grants, training and technical assistance since then have amounted to more than $3 billion. Though the exact sum needed to sweeten an HFC deal will not be decided until next year, it will need to be considerable, since many developing countries manufacture the white goods that will be affected. Though the fund will only partially cover countries’ costs, rich countries look set to offer more to poorer ones that act ahead of schedule. + +Action on short-lived climate pollutants such as HFCs, methane and soot is not an alternative to cutting emissions of carbon dioxide, which hangs around doing harm much longer. But a deal on HFCs would benefit the climate fast—and not only in the most obvious way, by obliging countries to cut emissions of these powerful greenhouse gases in order to meet their obligations. On its own this direct effect could make a real difference. An ambitious deal, for example one demanding that they start to be phased out by 2020, would avert the equivalent of 100 billion-200 billion tonnes of carbon-dioxide emissions by 2050, enough to chop 0.5°C from the rise in average global temperatures by 2100 (see chart). In the context of the agreed goal of global climate policy, which is to limit such warming to less than 2°C, this is significant. + + + +Just as important is that the Montreal protocol is a “start and strengthen” treaty, says Durwood Zaelke of the Institute for Governance and Sustainable Development, an American think-tank. The improvements to technology and manufacturing spurred by even a modest deal could lead to a transition from HFCs much more quickly than envisioned, as firms, knowing they will have to switch eventually, decide not to delay. + +This is what happened with CFCs: progress was so fast that the original timetable, which varied between rich countries and poorer ones, was replaced by a goal of complete elimination within a decade when it became clear that this was feasible. In some sectors firms are already preparing to move away from HFCs: in 2015 the Consumer Goods Forum, an international industry group whose members include Walmart and Tesco, began enacting a plan to phase out the substances. + +A big question is what to use instead. Since different HFCs remain in the atmosphere for varying lengths of time, and therefore have varying impacts on the atmosphere, one possibility is to substitute the shortest-lived for those that linger. Some HFCs commonly used in refrigeration could be replaced by others that would have an impact more than 1,000 times smaller. Honeywell, an electronics giant, already makes air-conditioning units containing these less-damaging alternatives. But patents covering such substances have been a sticking point in past discussions, says Achim Steiner, until recently the head of the UN Environment Programme. + +Survival kits, new and improved + +Other possible replacements include isobutane, propane and propylene, all of which occur naturally. These hydrocarbons are cheap and non-toxic, and can be used as coolants without the same harm to the ozone layer. Another option is ammonia, which is already present in some large industrial cooling systems. Even carbon dioxide can be used, though that may seem counter-intuitive, since it is the gas most to blame for global warming. But tonne for tonne it is far less warming in the short term than many other greenhouse gases. The reasons it is of such concern are that so much more of it has been released, and that it hangs around for so long. + +Officials representing extremely hot countries, such as Kuwait and Saudi Arabia, at climate talks fret that these natural replacements for HFCs will simply not be as effective. But there is a good reason to focus research and development on them, says Drew Shindell, who works for Duke University on aerosols and climate change. Their effects on the atmosphere are already known. No one wants more unintended consequences, as with the replacement of CFCs with HFCs. + +The third way in which extending the Montreal protocol could benefit the environment is that, as devices are redesigned to use new coolants, firms can take the opportunity to make them more energy-efficient as well. That would cut carbon emissions from power generation. Again, this happened after the original deal: some cooling appliances sold afterwards were 60% more efficient than those they replaced. By 2000 close to half of America’s large air-conditioning units—the types found in office buildings—had been converted or replaced to eliminate CFCs. According to America’s Environmental Protection Agency, the switch saved enough electricity to power 620,000 homes. + +Efficiency gains from the original protocol were less pronounced in the developing world, since fewer appliances were in use at the time. That is changing. In hot spots such as Delhi, air-conditioning can make up half the power load on a summer’s day. A deal to tackle HFCs could be the catalyst for a much-needed efficiency drive. Without it, if global warming continues unabated, rising demand for fans, refrigeration and air-conditioning could increase electricity usage by four-fifths globally between 2010 and 2100. Less wasteful cooling methods could avert that rise, which would have climate-changing implications, no matter the coolant used. The scale of the possible savings can already be seen in South Korea. Air-conditioning units on sale there require half as much energy as is typical elsewhere. + +Lee Kuan Yew, the first prime minister of Singapore, once said that air-conditioning was the greatest invention of the 20th century (since it enabled people to work comfortably in offices in the tropics). Over the next 100 years, it may prove even more important. As well as contributing to climate change, it will play a big part in enabling humanity to adapt to it. Research published last year in Nature, a scientific journal, found that warmer-than-usual years boosted economic growth in both rich and poor countries, but only up to an annual average of 13°C, above which temperature productivity suffered. As 2015 proved the hottest year on record, and 2016 looks certain to steal that title, a deal that means air-conditioning does as much good and as little harm as possible is what a warmer world needs. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21707531-extending-old-treaty-saved-ozone-layer-could-improve-cooling-technologyand-slow/print + + + + + +Articles Sections Next + + + + + +Business + + + + +Tata Group: Mistry’s elephant + +Autonomous vehicles: Who’s self-driving your car? + +Autonomous car insurance: Look, no claims! + +A Chinese steel merger: Welding bells + +Stock splits: Split ends + +Berlin’s tech scene: The freaks are coming + +Schumpeter: Against happiness + + + + + +Articles Sections Next + +Tata Group + +Mistry’s elephant + +India’s most important business group is socially responsible but financially disappointing + +Sep 24th 2016 | Mumbai | From the print edition + + + +CHIEF executives in the West share some familiar gripes: quarterly-results-obsessed analysts who make it impossible to think about the long term; activists pressing for change before investments come to fruition; and sluggish economic growth. How envious they must be of Cyrus Mistry, the boss of the Tata Group, India’s largest conglomerate. Its central firm, Tata Sons, is unlisted. Tata Trusts, the charities that own two-thirds of Tata Sons, think in terms of decades, not years. India is the world’s fastest-growing large economy. Given such favourable circumstances, Mr Mistry’s peers might well look at the uninspiring financial performance of much of his group since he took over in December 2012 and conclude they could do better. + +The firm is rightly admired at home. Founded in 1868, it has long embodied the notion of corporate social responsibility. Employing nearly 700,000 people, it operates in a wide array of industries, among them table salt, IT, steel, watches, power plants, leather goods, a slew of shopping chains, tea, trucks and buses, undersea cables, mobile telephony and luxury cars and hotels. It has not relied on political favours to grow, unlike many rivals. Its expansion abroad, for example with its purchase in 2000 of Tetley, a maker of tea, and in 2008 of Jaguar Land Rover (JLR), a carmaker, filled many Indians with pride. + +Many people had nonetheless expected Mr Mistry to usher in change. He is only the sixth group chairman in nearly 15 decades. He is also the first from outside the Tata family, hailing from a construction dynasty that owns the only substantial stake in Tata Sons that is not owned by Tata Trusts. The expansionist strategy of his long-standing predecessor, Ratan Tata, which increased the group’s revenues from around $6 billion to $100 billion over two decades, had expanded the firm’s girth but dented returns in some parts of its business. A period to take stock of Tata’s portfolio of businesses would hardly have been controversial. Expand-then-refocus cycles are routine at multinationals. + +But there is little sign that Mr Mistry is inclined that way. Tata remains active in 100 different business lines, many of which are themselves diversified. Far from slimming down, Tata is eyeing still further expansion: defence, infrastructure and financial services are the latest targets. There is a growing sense that it lacks the “refocus” gene altogether. Nearly four years into Mr Mistry’s tenure, the listless performance that could once have been blamed on things like slowing Chinese demand seems to be entrenched. One former adviser to several Tata CEOs says that “the risk is that Tata uses its long-term emphasis and ethical way of doing business as an excuse to tolerate underperformance.” + +The results of only two of its main businesses stand out: JLR, which Tata rescued from a period of mismanagement by Ford, and Tata Consultancy Services (TCS), an extremely well-run IT-services firm. Last year this business generated profit of 244 billion rupees ($3.7 billion); Tata’s total profits are probably not far north of 300 billion rupees (the figure is not public but can be estimated). TCS’s share-price surge in the past decade is responsible for roughly 80% of the growth in value of Tata Sons’ holdings in Tata’s listed operating companies (now worth $65 billion) in that period. + +The rest is a mixed bag. Seven of the nine-largest listed Tata entities in terms of capital employed have negative economic value added, meaning that their earnings before interest and tax translate into a return below their overall cost of capital. Roughly six in ten rupees deployed by Tata are in businesses yielding returns below its cost of funding, up from three in ten rupees eight years ago. + +When TCS is included, Tata claims a decent-enough 12.5% return on capital employed. Without it, the figure for the major listed companies dips into single-digits. The Tata Trusts might be accepting a trade-off: lower returns in exchange for the Tata Group behaving in a socially responsible fashion. But they have not said this. + +The steel business eats up about half of the capital that earns low returns. Tata catapulted itself onto the global stage with its $13.1 billion acquisition of Corus, an Anglo-Dutch rival, in 2007. A turn in the commodity cycle from 2012, along with Chinese industrial overcapacity (see article), has hit it particularly hard. Corus was at one point reportedly losing £1m ($1.3m) a day. Most other groups would have long ago taken action to stem the losses, such as closing down the firm’s operations in Britain. But that is not the Tata way. Having sold part of the British business for £1, it is belatedly exploring a joint venture to share the pain of the remaining losses. + +Several other of the group’s big businesses are visibly struggling. A power-generation unit guzzles capital but emits little profit. A sub-scale mobile-telecoms operator is in a costly row with NTT DoCoMo, a Japanese joint-venture partner; Tata is disputing a $1.2 billion arbitration award against it. Its hotels subsidiary, which operates the Taj brand at home and beyond, is a perennial lossmaker. The domestic automotive business, which makes half of all India’s trucks and cheap passenger cars, has long struggled. There are dozens of other smaller businesses, but they hardly affect the conglomerate’s bottom line. + +Tata’s sprawl is made possible in part by its structure. Although Tata Sons, the parent company, is not listed, most of the operating companies are—and they are usually majority-owned by outside shareholders. So Tata Sons owns just over a quarter or so of Tata Steel, for example, or of Tata Motors. Those businesses own small stakes in each other and, jointly, 13% of Tata Sons. Such cross-ownership means that while understanding what is happening at individual Tata companies is fairly easy, judging (and managing) the direction of the entire group is fiendishly hard. + +In theory outside shareholders could push for changes, for example divestments. Small spin-offs occur but rarely anything sizeable. In practice shareholders nearly always defer to Tata Sons, which has a great deal of say over who goes on the subsidiaries’ boards and grants the right to use the powerful Tata brand. Many are big Indian institutional investors with little appetite for taking on Tata. + +Nirmalya Kumar, Tata’s head of strategy, argues that the group’s set-up (which is common in India and other emerging markets) is ideally suited to business houses building new ventures. Tata’s heft has indeed been useful in the past for entering markets. Size helped it raise capital when it was scarce and to lobby government. At the same time, the presence of outside shareholders brings at least some market discipline. + +But the structure also adds another layer of bureaucracy to a group that scarcely needs it. Tata is “deliberate in its thinking in a way that can feel like obstructivism”, is how one business partner of the group puts it. According to a former senior employee, the aim is to move steadily forward while avoiding difficult decisions. + +The structure also makes it harder to enjoy the benefits of being a diversified group. Silos are hard-wired into it. Because they are owned by different sets of shareholders, Tata’s telecoms and cable arms are unable to offer a lucrative “triple play” of services, for example. Three different Tata companies have large Indian retail networks (it is a partner of Zara, a clothing group, and of Starbucks Coffee in India, as well as running its own shops). But as these are separate legal entities they cannot jointly negotiate cheaper leases or merge their supply chains. At least seven different Tata companies vie for defence contracts but must do so separately. Some Tata companies openly compete against each other: Tata Technologies, a division of Tata Motors, is increasingly in the same business as TCS, for example. + +The companies cannot co-operate financially, either. Tata Group presentations advertise healthy overall financial metrics, such as net debt levels that are barely higher than equity. On the face of it, the group’s companies certainly generate enough profits to pay creditors. But that assumes the net cash on TCS’s balance-sheet can be used to service, say, Tata Steel’s debt. Outside shareholders make that impossible. + +As a result, there are pockets of financial strain inside the group. One gauge of stress is the proportion of net debt held by units that are highly leveraged relative to their profits. Five years ago, 37% of net debt contracted by major listed Tata companies was held by entities whose net debts were more than three times EBITDA (earnings before interest, tax, depreciation and amortisation). Now the figure is over 90%. + +Bits of Tata pay big risk premiums to borrow while others have oodles of spare cash, an approach that makes no sense, especially in India, where capital is expensive to begin with. Most bankers who lend to Tata firms do expect that Tata Sons would ultimately bail out creditors to a company facing default even absent a formal guarantee. But Tata Sons insists it would not. Such uncertainty may raise the cost of capital across the entire group. + +Tata higher-ups make another argument: that the success of TCS shows the merits of diversification. True, but the group’s reliance on its star performer goes beyond merely flattering group-level financials. TCS’s dividends, instead of being paid out to Tata Sons’ shareholders (including the charities), are mostly retained there and finance much of the conglomerate’s growth, including capital calls from other listed entities that have performed poorly. + +And what if, as many expect, the IT outsourcing industry gets tougher? TCS is not invincible. Its growth has slowed in recent years. Annual increases in sales dropped from an average of 30% in 2011-13 to half that in the past two years. Further slowing is expected: the firm’s shares dropped by 5% on September 8th because it gave a gloomier outlook for future results. Some analysts now factor in revenue growth below 10%, and compressed margins to boot. + +Will Indian ingenuity hold the fort? + +Part of that is cyclical: global banks and insurance firms, which are big customers, are cutting costs where they can, for example. But there are structural factors at play too. The business model that propelled TCS and its rivals to their current heights—using lots of skilled but cheap Indian IT engineers to install and maintain international companies’ computer systems—is evolving rapidly as clients turn to automated solutions. TCS’s sheer size also makes further growth harder. + +If Tata did wish to put more emphasis on shareholder returns—it says that it is only one metric it uses to gauge success—the next steps are obvious: it would flog some businesses, concentrate on improving the returns of others, and use the resulting proceeds to buy out outside shareholders in its operating firms. The group could then function as one entity, taking advantage of synergies among the different business lines. With the exception of JLR and TCS, which have proved their worth abroad, it might also refocus its attention on fast-growing India, where just a third of its turnover now comes from. + +It is possible that Mr Mistry knows this, and is biding his time until he has fully grasped how different bits of the group work. Mr Tata regularly spoke up for his company and for Indian business, but his successor is retiring, inside the firm and out. A quarter of his time each year is swallowed up by around 700 hours of chairing meetings with the boards of the major operating companies. “He’s very analytical, a numbers guy, but if he has a grand vision he hasn’t shared it,” says an employee. He has not given an interview to the media since taking over. But in a statement on September 13th he did speak of Tata companies needing “to earn the right to grow”. + +That the revered Mr Tata still chairs the Trusts that bear his name may make it trickier for Mr Mistry to be his own man, however. Upon retirement, Mr Tata publicly called for his successor to target $500 billion in revenues by 2021, a figure that group executives say is still on the cards. Mr Mistry has shown some signs that he knows what needs to be done. For the moment, however, he appears dangerously content just to sit atop what has grown into an impressive but lumbering pachyderm. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21707595-indias-most-important-business-group-socially-responsible-financially/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Autonomous vehicles + +Who’s self-driving your car? + +The battle for driverless cars revs up + +Sep 24th 2016 | From the print edition + +But can it fly? + +WITH its successful test of robo-taxis on the streets of Pittsburgh last week, Uber has dominated recent headlines on autonomous vehicles. But behind the scenes three groups—technology giants such as Uber, carmakers and a whole fleet of autoparts suppliers—are in a tight race. Each is vying to develop the hardware and software that make up the complex guts of a self-driving vehicle. + +A couple of years ago tech firms appeared well ahead in this battle. But, Uber aside, they have dabbed the brakes of late. The recent departure from Google of Chris Urmson, the company’s figurehead for autonomous vehicles and the man who once promised it would put self-driving cars on the road by 2017, is a significant reversal. The recent slimming of the team at Apple that is devoted to building an autonomous electric car, also shows that tech firms are not having it all their own way (though Apple’s possible tie-up with McLaren, a British maker of sports cars and Formula 1 racing team, would be one way to put its carmaking ambitions back on track). + +Carmakers, meanwhile, are making more of the running after a slow start. Despite recent safety concerns, Tesla, an electric-car maker, is making progress with its Autopilot system. In 2017 Volvo, which is also working with Uber to get cars to drive themselves, will test self-driving cars by handing them for the first time to a select group of ordinary motorists. And in August, Ford said it would launch a fully-autonomous car, without steering wheel or pedals, for car-sharing schemes by 2021. + +All parties recognise that the biggest profits from autonomy will come from producing an “operating system”—something that integrates the software and algorithms that process and interpret information from sensors and maps and the mechanical parts of the car. Tech firms probably have the edge here. But carmakers and suppliers are not giving up easily. So they are involved in a bout of frenzied activity to keep control of the innards of self-driving cars. In July, for example, BMW, Mobileye, an Israeli supplier that specialises in driverless tech, and Intel, the world’s biggest chipmaker, said they were joining forces. + +Another strategy for carmakers is to develop autonomous driving in-house. They are hoovering up smaller firms that have useful self-driving technology, notes Andrew Bergbaum of AlixPartners, a consulting firm. Ford has put money into a lidar company (lidar is a type of remote-sensing technology), and into another that sells mapping services. It has also acquired two other firms that specialise in machine-learning and other artificial-intelligence technology. + +The losers in this race look likely to be the big parts-makers, whose relationship with their main customers could become strained. Over time carmakers have largely ceded to them the job of developing new technology. If they turn back the clock and reintegrate vertically that may leave less business for the suppliers. + +The tech giants still have huge advantages. As well as their financial resources, they are in the best spot to claim the big profits from the operating system. Apple’s plans to build a car may be swiftly revived if it buys McLaren. And Google is ahead in machine-learning, the vital element in developing algorithms that will eventually replace drivers. But carmakers are coming up surprisingly fast on the inside lane. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21707600-battle-driverless-cars-revs-up-whos-self-driving-your-car/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Autonomous car insurance + +Look, no claims! + +Self-driving cars are set radically to change motor insurance + +Sep 24th 2016 | From the print edition + + + +ON THE list of industries set to be disrupted by autonomous cars, the motor-insurance business can claim a high place. The regime of compulsory insurance in rich countries, with the insurer of the at-fault driver paying for damage, is reasonable in a world where 90% of accidents are caused by human error. But autonomy is supposed to mean that accidents drop by up to four-fifths, and those that occur may not be a human’s fault. The motor-insurance market may shrink by 60% by 2040, according to KPMG, an accounting firm. + +Lawyers and insurers concur that liability will move from private car-owners towards manufacturers for crashes when a car is in autonomous mode. But under the current legal system in Britain and America an owner might still be blamed for an accident in self-driving mode if, say, he neglected to install the latest software update, says Richard Farnhill of Allen & Overy, a law firm. A manufacturer might equally well try to shift the blame to a components supplier. + +The best way to avoid endless blame-shifting and litigation may be what lawyers call a “strict” liability regime that automatically places responsibility on the owner. The insurer would keep an important role, of ensuring speedy victim compensation and assigning blame to the manufacturer or other at-fault parties. But that approach would still mean lower risk, and hence lower premiums, for insurers. + +That regime also assumes that private car ownership remains widespread. But autonomous cars in the future may well be owned and operated in fleets, perhaps by a souped-up Uber or by car manufacturers. Personal motor insurers would be out of luck. Only those who specialise in commercial fleet insurance would do well. Some manufacturers would simply “self-insure” and assume liability. Volvo, Google and Mercedes have said they will do so with their self-driving cars. + +Hélène Chauveau, head of emerging risks at AXA, a French insurer, reckons that the persistence of existing risks, like manufacturing defects, and the emergence of new threats like hacking, will leave a role for insurers. Yet generally, notes Anand Rao of PwC, an accounting firm, they have been slow to react to faster-than-expected technological progress. There are no actuarial tables, it seems, to help insure against that. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21707598-self-driving-cars-are-set-radically-change-motor-insurance-look-no-claims/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A Chinese steel merger + +Welding bells + +Will China cut overcapacity in steel? + +Sep 24th 2016 | SHANGHAI | From the print edition + +Plenty more where that came from + +FEW industries are in worse shape than China’s steel sector. Years of over-investment and a cooling economy have resulted in vast excess supply. Crude steel-making capacity reached a record level of 1.2 billion tonnes at the end of 2015. China’s steelmakers lost some $10 billion last year, with more than 90% of those losses coming from state-owned firms. + +This is the background to the news on September 20th that two state-run steel firms, Baosteel and Wuhan Iron and Steel, are to be joined. The two firms are far from being equals. Wuhan is in financial distress; Baosteel, which brings in three times as much revenue and is better-run to boot, has probably been forced into the deal. The bigger firm’s listed arm will issue shares and absorb Wuhan’s publicly-traded division. The parent companies are also expected to merge. The resulting colossus, which the Chinese media has dubbed Baowu, will have over $100 billion in assets. It will produce 60m tonnes of steel a year, making it second only to Luxembourg’s ArcelorMittal. + +The reason to cheer is that this deal might spark a wave of consolidation. There are some 200 steel firms on the mainland. Other countries often accuse China of dumping cheap steel on the global market; such charges cropped up again at the recent G20 summit in Hangzhou. Despite official promises to rationalise the industry, mainland mills produced over 100m tonnes in June; exports shot up by nearly a quarter. The cut-throat competition that results erodes margins for all. Local patronage and subsidies prevent money-losers from ever going bust. + +News of this week’s deal sparked renewed interest in another long-talked-of merger, of Bengang Steel Plates and Angang Steel, first mooted over a decade ago. Both firms halted trading of their stocks, denying any plans to merge. There was also speculation that Hebei Iron & Steel Group and Shougang Group, two state-owned firms in northern China, might merge into another national champion. + +Even if, as seems likely, a few more big mergers do happen, scepticism is warranted. If officials force strong firms to absorb loss-making mills, instead of shutting them down, they may create bigger, weaker companies. A record of failed policies around steel suggests that the promise of capacity cuts that mergers offer may be hollow. This is especially so in the cases of Baosteel and Wuhan, which have both recently been replacing older mills with new steel-making capacity; it may be hard to turn them in the direction of cutting it. + +The government naturally claims that it is serious about slashing excess capacity in industrial sectors, including in steel. But occasionally it acknowledges the obvious. In May a senior Chinese official let slip that there has, in fact, been “no improvement in overcapacity”. The Baowu deal could provide a template for reforming the entire steel sector, but only if it is done properly. As one veteran steelman in China puts it: “the devil is in the details, and now we get to see some of the details.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21707597-will-china-cut-overcapacity-steel-welding-bells/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Stock splits + +Split ends + +A Wall Street practice is dying out + +Sep 24th 2016 | NEW YORK | From the print edition + + + +LAST month Intercontinental Exchange (ICE), an American firm that owns financial exchanges, said it would do a stock split, dividing each of its existing shares into five new ones. The split won’t increase ICE’s underlying value—slicing a pizza three or four times doesn’t make it bigger. But an old Wall Street rule of thumb holds that more shares with a lower price means a broader investor base. Retail investors can better afford a $60 stock than a $280 one. + +That argument ought to resonate strongly. Share prices are near an all-time high. The average cost to buy a single share for a member of the S&P 500 index is now $88. But ICE is unusual. The incidence of stock splits is near an all-time low. In the past decade only 3% of S&P 500 firms each year split their shares, compared with 13% in the 1980s. + +Several factors explain the decline. The more companies finance themselves with debt, and the less equity they raise, the less they care about whether their shares are bite-sized. Today equity raising in America is at subdued levels. + +The proportion of the American stockmarket that is owned by large institutions—as opposed to retail punters—has more than doubled since 1980 to 70%. They are indifferent to paying $60 or $600 for a security. + +And more bosses seem to have bought into Warren Buffett’s view of stock splits. They attract low-quality, short-term speculators, the famed investor has long argued. He only reluctantly issued a new class of Berkshire Hathaway B-shares in 1996 to let small investors in and split those in 2010 because of an acquisition. Berkshire’s B-shares trade at $145, while its A-shares are the most expensive of any public firm, at $218,000 a pop. + +So, when Facebook, a social network, splits its stock in the nearish future—approved in June by its shareholders—it will not signal a revival. It says it is creating class-C shares, without voting rights, to ensure that Mark Zuckerberg can maintain long-term control of the firm. + +Indeed, the main fans of stock splits these days are high-frequency traders, share exchanges and brokers, who like them because they lift trading volumes and boost their profits. American managers mostly appear to believe that their shares are already traded quite frequently enough, thank you—and have decided to quit the split. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21707596-wall-street-practice-dying-out-split-ends/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Berlin’s tech scene + +The freaks are coming + +As Rocket Internet fizzles, other startups take off + +Sep 24th 2016 | Berlin | From the print edition + +PowerPoint slide, Berlin style + +ROCKET INTERNET has just moved into a splendid, red building in central Berlin, around the corner from Checkpoint Charlie. The lease runs for the next 15 years, a signal of intent from a firm that brags of becoming the biggest online conglomerate outside America and China. Inside, everything is new. Alexander Kudlich, the managing director, jokes he should remove his shoes before stepping on a just-laid, thick, grey carpet in the boardroom. + +The timing is awkward. Just as staff entered the building, in early September, Rocket warned about its financial performance this year. It had losses of €617m (just under $700m) in the first six months; the full details came in earnings announced this week. Few are surprised that Rocket, which went public in 2014, had to lower the values of some of its creations. Kinnevik, an investment firm with shares in Rocket that had some of the same holdings, had already done so. + +Mr Kudlich claims “we are more bullish than five years ago”. But Rocket is finding life tougher than before its IPO. Its shares are down by almost half in the past year, leaving it valued at some €3 billion. + +The most creative digital types have long scorned Rocket as a factory for copycat startups. Nonetheless, it used to do three things very well. It built up e-commerce companies quickly, often within days, mimicking other (usually American) startups. It pumped its own versions full of capital and they often became market leaders, typically in emerging markets. Second, it raised that capital effectively: tapping stuffy (and mostly German) investors who twigged that they should have a digital strategy but who found tech entrepreneurs baffling. Lastly, Rocket was skilled at recruiting brainy-but-conservative business-school graduates, who were taught to execute plans and made to toil frantically hard. + +But being a company builder got much harder once startups such as Uber and Airbnb showed they could quickly internationalise themselves. One prominent investor in Berlin’s technology scene says that founders should throw a parade for Oliver Samwer, Rocket’s chief executive, for jumpstarting the city’s tech ecosystem, but still calls the firm’s copy-cat approach “an abomination”. The era of Rocket-style incubation is over: “nobody does it now”. + +Rocket itself seems to accept as much. It plans to refocus itself as a later-stage investment firm, more like a private-equity outfit. That reflects how the wider Berlin scene is evolving. Startups are no longer content to copy others; they want to build empires that rival some of the biggest names in tech. “We need a Tesla or a Google to change the ecosystem,” says another founder of tech firms, arguing that Berlin is well-placed to match traditional German engineering strengths with more creative technology types. In other words, he says, “we need more freaks.” + +They may be coming. Christophe Maire, a veteran of the Berlin scene, says it is flourishing, with firms scaling up in fintech, digital health, artificial intelligence, mobility, food technology, cyber-security and more. “We see formidable, original companies emerging.” + +Some, such as SoundCloud, a music-streaming service, are struggling to find a business model in the face of more established outfits, such as Spotify. But newer firms are rising. One is Relayr, which was founded in 2013 and has ambitions to become a platform for the “internet of things”. It works with firms such as Bosch to develop sensors that set up machinery (such as lifts, kitchen appliances or elaborate espresso machines) to send data to and receive instructions from owners. + +Another is ResearchGate, a social network for scientists founded in 2008 that has completed three rounds of funding, including a $35m investment from Bill Gates and a few other investors in 2013. It has over 10m members. Its founder, Ijad Madisch, claims to lead, with some justification, the “coolest startup in Germany” because it has succeeded in creating a place for researchers from all around the world to collaborate. They share vast amounts of data and experiments—including failed ones. Neither Relayr nor ResearchGate resemble Rocket-style copies, and many more firms should be able similarly to draw on Germany’s strength in industrial products and in scientific research. + + + +Meanwhile, Berlin startups’ success in attracting finance is continuing (see chart). More venture-capital funds are setting up, as well as additional accelerators and “business clubs” for startups. One of them, The Factory, in a renovated brewery, is putting entrepreneurs in the same building as people from SoundCloud, but also from big old firms such as Deutsche Bank or Siemens. The hope is that Germany’s stock of financial and engineering knowledge can be brought fruitfully together with people who have bright ideas. Hardly rocket science, but it might take off. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21707599-rocket-internet-fizzles-other-startups-take-freaks-are-coming/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Against happiness + +Companies that try to turn happiness into a management tool are overstepping the mark + +Sep 24th 2016 | From the print edition + + + +LORD Percy of Newcastle, Britain’s minister of education in 1924-29, was no fan of the fad for happy-clappy “progressive” education that spread among the country’s schools on his watch. He declared that it was all nonsense: “a child ought to be brought up to expect unhappiness.” This columnist feels the same suspicion of the fashion for happy-clappy progressive management theory that is rushing through the world’s companies and even some governments. + +The leading miscreant is Zappos, an online shoe shop. The firm expects its staff to be in a state of barely controlled delirium when they sell shoes. Pret A Manger, a British food chain, specialises in bubbly good humour as well as sandwiches. Air stewards are trained to sound mellifluous but those at Virgin Atlantic seem on the verge of breaking out into a song-and-dance routine. Google until recently had an in-house “jolly good fellow” to spread mindfulness and empathy. + +A weird assortment of gurus and consultancies is pushing the cult of happiness. Shawn Achor, who has taught at Harvard University, now makes a living teaching big companies around the world how to turn contentment into a source of competitive advantage. One of his rules is to create “happiness hygiene”. Just as we brush our teeth every day, goes his theory, we should think positive thoughts and write positive e-mails. + +Zappos is so happy with its work on joy that it has spun off a consultancy called Delivering Happiness. It has a chief happiness officer (CHO), a global happiness navigator, a happiness hustler, a happiness alchemist and, for philosophically minded customers, a happiness owl. Plasticity Labs, a technology firm which grew out of an earlier startup called the Smile Epidemic, says it is committed to supporting a billion people on their path to happiness in both their personal and professional lives. + +The trend is not confined to the private sector. Several governments, including those of America, Britain, France and Australia, now publish for the benefit of their citizens regular reports on levels of national well-being. Bhutan has long measured its gross national happiness, and the United Arab Emirates boasts a brand-new Ministry of Happiness. + +Businesspeople have long known there is money to be made in the field. Dale Carnegie, a leadership guru, said the best way to win friends and influence people was to seem upbeat. Disneyland is still “the happiest place on Earth”. American firms regularly bid their customers to “have a nice day”. One of the sharpest books published on the phenomenon is “The Managed Heart” from 1983, in which Arlie Hochschild, a sociologist at the University of California, Berkeley, noted that many employers demanded “emotional labour” from workers in the form of smiles and other expressions of “positive emotion”. Firms are keen to extract still more happiness from their employees as the service sector plays an ever greater role in the economy. Run-of-the-mill service firms are fighting for their lives against discounters. As customers, most people prefer their service with a smile rather than a snarl. + +Some firms are trying to create some wellbeing, too, showering their employees with mindfulness courses, yoga lessons and anything else that proves that managers are interested in “the whole person”. Only happy fools would take that at face value. Management theorists note that a big threat to corporate performance is widespread disengagement among workers. Happy people are more engaged and productive, say psychologists. Gallup claimed in 2013 that the “unhappiness” of employees costs the American economy $500 billion a year in lost productivity. + +One problem with tracking happiness is that it is such a vague metric: it is difficult to prove or disprove Gallup’s numbers since it is not entirely clear what is being measured. Companies would be much better off forgetting wishy-washy goals like encouraging contentment. They should concentrate on eliminating specific annoyances, such as time-wasting meetings and pointless memos. Instead, they are likely to develop ever more sophisticated ways of measuring the emotional state of their employees. Academics are already busy creating smartphone apps that help people keep track of their moods, such as Track Your Happiness and Moodscope. It may not be long before human-resource departments start measuring workplace euphoria via apps, cameras and voice recorders. + +Be miserable. It’ll make you feel better + +The idea of companies employing jolly good fellows and “happiness alchemists” may be cringe-making, but is there anything else really wrong with it? Various academic studies suggest that “emotional labour” can bring significant costs. The more employees are obliged to fix their faces with a rictus smile or express joy at a customer’s choice of shoes, the more likely they are to suffer problems of burnout. And the contradiction between companies demanding more displays of contentment from workers, even as they put them on miserably short-term contracts and turn them into self-employed “partners”, is becoming more stark. + +But the biggest problem with the cult of happiness is that it is an unacceptable invasion of individual liberty. Many companies are already overstepping the mark. A large American health-care provider, Ochsner Health System, introduced a rule that workers must make eye contact and smile whenever they walk within ten feet of another person in the hospital. Pret A Manger sends in mystery shoppers to visit every outlet regularly to see if they are greeted with the requisite degree of joy. Pass the test and the entire staff gets a bonus—a powerful incentive for workers to turn themselves into happiness police. Companies have a right to ask their employees to be polite when they deal with members of the public. They do not have a right to try to regulate their workers’ psychological states and turn happiness into an instrument of corporate control. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21707502-companies-try-turn-happiness-management-tool-are-overstepping-mark/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Norway’s global fund: How to not spend it + +Buttonwood: Take cover + +Asian markets: Chinese sneezes + +Wall Street: Waking up + +Deutsche Bank: Won’t pay! Can’t pay? + +Free exchange: The emperor’s new paunch + + + + + +Articles Sections Next + +Norway’s global fund + +How to not spend it + +It is tough for a small democracy to run the world’s biggest sovereign-wealth fund + +Sep 24th 2016 | From the print edition + + + +TWO decades after Norway’s government paid a first deposit into its sovereign-wealth fund, the country is learning how to manage a behemoth. The vehicle, which is used to invest abroad the proceeds of Norway’s oil and gas sales, has amassed a bigger fortune than anyone expected, thanks to bumper oil prices. As the direct benefits of oil decline—around 46% of Norway’s expected total haul of oil and gas is gone—the relative importance of the fund will grow. The annual revenues it generates now regularly exceed income from oil sales. + +This week the “Pension Fund Global” was worth Nkr7.3 trillion ($882 billion), more than double national GDP. No sovereign-wealth fund is bigger. It owns more than 2% of all listed shares in Europe and over 1% globally. Its largest holdings are in Alphabet, Apple, Microsoft and Nestlé, among 9,000-odd firms in 78 countries. + +In designing the fund, Norway got a lot right. Its independence is not constitutionally guaranteed, but it is protected as a separate unit within the central bank, overseen by the finance ministry and monitored by parliament. It is run frugally and transparently; every investment it makes is detailed online. + +Other funds might copy those structures, but would struggle to mimic the Nordic values that underpin them. Yngve Slyngstad, the fund’s boss, says growth came “faster than anyone had envisaged”, and that a culture of political trust made it uncontroversial to save as much as possible. A budgetary rule stops the government from drawing down more than the fund’s expected annual returns (set at 4% a year). The capital, in theory, is never touched. Martin Skancke, who used to oversee the fund’s operations from the finance ministry, attributes the trust the institution enjoys to relatively high levels of equality and cultural homogeneity. It also helps that many rural areas recall poverty just two generations ago. + +Yet expectations of the fund may change as Norway itself does. Tesla-driving Norwegians are now less shy about flaunting their wealth. Those under 50 have known only a world in which the 5.2m Norwegians are among its wealthiest people. Immigration is higher than ever, especially after an influx of Syrian refugees. + + + +Progress, a populist, anti-immigrant party, has long wanted more oil cash spent at home. As a junior coalition partner since 2013, in charge of the finance ministry, it has curbed its urge to splurge. But in the first half of this year the government for the first time took more from the fund than it deposited from its oil revenues: a net withdrawal of Nkr45 billion. Recent low returns meant that the fund’s capital fell slightly, too. + +It is too early to see any long-term trend, but some are worried. “It is very hard to have a huge sum of money at the bedside and to tighten your belt at the same time,” says someone close to the fund. Mr Slyngstad is sanguine but acknowledges that few democracies sustain sovereign-wealth funds: politicians always prefer higher spending and lower taxes. He denies ever feeling political pressure. But others’ appetites are evidently growing—if not to spend more, then to use the fund differently. One complaint is that relatively modest dollar returns on investments (5.5% a year since 1998) reflect too much caution among those who guide the fund’s strategy. + +Sony Kapoor, a leading critic of the fund, argues that it “screwed up” in the past decade by failing to invest in emerging markets that were hungry for capital, and by ignoring unlisted assets, such as infrastructure. He says the fund missed out on “$100 billion to $150 billion” as a result. Worse, he says, its supposed caution in fact exposed it to high risk by concentrating its assets in rich economies. + +Defenders of the fund’s strategy dismiss this criticism, arguing that poorer countries often offer too few suitable, big investment opportunities. But this is not the only criticism from Mr Kapoor and others. In a democracy, morality counts. The ethics of investment are debated ever more hotly. Politicians, NGOs and others increasingly say moral concerns should outweigh others, and even profits. + +The fund refuses to invest in firms with products deemed unethical, such as tobacco or many sorts of weapons. It is also becoming more activist in the approach to its portfolio, divesting from those seen as grossly corrupt and flagging concerns over companies’ misuse of water and energy, or any risk that they benefit from child labour. + +It is also getting more outspoken on subjects like high executive pay. It has said it will join class-action lawsuits against Volkswagen over the firm’s fiddling of fuel-emissions results. The fund has been instructed by parliament to help fight climate change. So 1% of its portfolio is in firms deemed to be green. It has divested from heavy polluters, firms involved in deforestation and, this year, from coal companies. + +Such restrictions create dilemmas. The fund still invests in oil, for example: Royal Dutch Shell is one of its biggest holdings. Its ethical advisers argue that it can achieve more by promoting good practices within oil firms. But a former adviser admits the fund’s climate-change brief makes such investments a “paradox”. + +In effect, the fund is exporting Norwegian values as well as capital. In the future it could turn against more products—sugar and fast-food, say, because of obesity. So far the fund’s managers see no serious financial cost from blacklisting 100 or so companies. But they do not deny that some ethical decisions do entail trade-offs. Their own shareholders, the Norwegians themselves, may not always let them do what is right rather than what pays. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21707435-norways-global-fund-its-tough-small-democracy-run-worlds-biggest/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +Take cover + +An anomaly that shows markets are not as liquid as before + +Sep 24th 2016 | From the print edition + + + +THE most dangerous words in finance are: “This time is different.” But sometimes markets can genuinely change. After the 2007-08 financial crisis, markets are less efficient and liquid than before. + +The evidence can be found in the currency markets, as a paper* in the latest quarterly bulletin from the Bank for International Settlements (BIS) explains. In foreign-exchange markets it is possible to buy currency at today’s rate (the spot market) or at some future point (the forward market). Any student of the currency markets will quickly come across the idea of “covered-interest parity”. This states that the gap between the spot price and the forward price will equal the interest-rate differential between the two countries. + +Imagine that American 12-month interest rates are 10% and Japanese rates are 5%. Japanese investors will be tempted to buy dollars, earn interest on them for a year and then cover the exchange-rate risk through a forward deal. So lots of people will be selling dollars in the forward market. They will keep doing so until the dollar is 5% cheaper there than in the spot market, and there is no profit in the trade. + +In the foreign-exchange market, which is highly liquid, the possibility of profitable arbitrage should be rare—the equivalent of $100 notes lying on the pavement. But the covered-interest parity rule has been consistently breached in some corners of finance since 2008. In the immediate aftermath of the collapse of Lehman Brothers, the anomaly could be put down to a temporary freezing of markets. Yet the world is not in crisis mode today. + +The BIS argues that two factors explain the phenomenon. First, many participants in the foreign-exchange markets are seeking to hedge their exposures, almost regardless of the costs. Take a Dutch pension fund which decides to invest in Treasury bonds because it trusts the American government’s creditworthiness. The pension fund’s liabilities—payments to Dutch retirees—are in euros and it does not want to take the currency risk of owning dollars. So it will borrow dollars (in order to buy the bonds) and exchange them for euros in the swap market, the equivalent of doing a forward currency deal. + +Another group of inveterate hedgers are international banks which, by the nature of their business, will have both assets and liabilities in a wide range of currencies. When those assets and liabilities are not matched, they will want to eliminate the foreign-exchange risk. + +If hedging demand was evenly balanced between currencies, this would not be a great problem. But it seems there is more demand to hedge American-dollar risks or exposures, relative to the yen and the euro, than the other way round. (The reverse is true for Australian dollars, as the chart shows.) + +The effect is to drive up the cost of dollar borrowing in the foreign-exchange swap market, to a point where it is out of line with the cost of borrowing dollars in the money markets. Or to express the problem in a different way, the forward currency rate gets out of line with the interest-rate differential between the two currencies (as conventionally measured in money markets). + +At this point, if theory held, the arbitrageurs should swoop in and eliminate the discrepancy. Either the banks could do this themselves (via their trading desks) or they could lend money to hedge funds that hoped to profit from the anomaly. But in the post-2008 world, banks are constrained in the way they can use their balance-sheets. Regulators have insisted that banks hold more capital to reflect the risks involved in arbitrage activities. + +The financial sector will not collapse because covered-interest parity no longer applies. But it is a sign of the times: similar oddities have emerged in the interest-rate swap market. For the efficient-market hypothesis to hold true, markets must be liquid enough for arbitrageurs to bring prices back to normal when anomalies occur. But banks are unable to provide the same levels of liquidity as they did in the past. In a sense, that is a good thing. Banks were not charging enough for the use of their balance-sheets before 2008 and many got into trouble as a result. + +But it is also a bad omen for when the next crisis hits. Markets may freeze even more quickly than before and asset prices may get even more out of whack than they did in 2008. As long as central banks are still pumping liquidity into the markets, it is tempting not to worry. But they won’t always be so generous. + +Economist.com/blogs/buttonwood + +* “Covered interest parity lost: understanding the cross-currency basis”, BIS Quarterly Review, September 2016 + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21707528-anomaly-shows-markets-are-not-liquid-take-cover/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Asian markets + +Chinese sneezes + +Financial contagion from China now rivals that from America + +Sep 24th 2016 | From the print edition + + + +INVESTORS have long been wary of America’s sneezes, knowing they can give the world a cold. In Asia they now also fret about Chinese rhinitis, which is proving just as contagious. For financial epidemiologists, this is something of a puzzle. It is to be expected that germs can spread from China, Asia’s biggest economy, to others in the region. But it is surprising quite how infectious they are proving. Unlike America, enmeshed in global markets, China’s economy is in self-imposed quarantine, protected by capital controls that limit its interactions with others. + +Yet China’s impact on Asian stockmarkets is now nearly as potent as America’s. Two recent papers, one from the IMF and one from the Bank for International Settlements (BIS), a forum for central banks, reveal the extent of the change over the past decade. The IMF estimates that the correlation between the Chinese stockmarket and those in other Asian countries has risen to more than 0.3 since June last year (1 is a “perfect” correlation), double the level before the global financial crisis. That is still below the 0.4 correlation between America and Asia, but the gap is closing fast (see chart). According to the BIS, Asian equities track swings in the Chinese market about 60% more closely since the crisis. + + + +Investors already knew that China’s problems can ripple through Asian and, indeed, global markets. When Chinese shares crashed last summer and early this year, so did shares almost everywhere else. And when China let the yuan fall by 2% in August 2015, the currencies of other emerging markets tumbled. (The IMF found that the correlation between Asian currencies and the yuan is now more than 0.2, twice the pre-2008 level.) + +Both reports cite the sheer heft of China’s economy as the main driver of the rising correlations. The data show that Asian countries with the strongest China trade ties are most affected by its market moves. Investors there are more likely to hold shares in companies that sell lots of widgets to China. They are understandably alarmed when stockmarket falls suggest that the Chinese economy is in trouble. And depreciation of the yuan, along with signalling economic weakness, makes it more expensive for those in China to buy things from abroad. + +Trade, however, is not the only means of transmission. Financial linkages now account for about two-fifths of the correlations between China and other Asian markets, up from virtually nothing before 2008. Despite capital controls, China has opened channels that allow investors to buy its shares or lend to its companies. These foreign investments may be tiny relative to the size of China’s economy, but China’s wealth is now so great that they are still big in absolute terms. Foreign holdings of Chinese shares and bonds are worth about $2 trillion, more than for any other emerging market. + +Asian investors have been particularly bold: claims on China and Hong Kong are worth more than 10% of GDP for South Korea, Taiwan and Singapore. As capital controls are relaxed, these financial connections will only deepen. For now, China’s bond market exists in a universe of its own. When the yuan becomes a funding currency for others, Chinese interest rates will affect those around Asia. + +A tightening of correlations in Asia could, as the BIS notes, be welcome. In recent years markets across the globe have tended to move in the same direction, making it harder for investors to diversify. As cross-holdings proliferate in Asia, with China as a focal point, there is a real possibility that Asia’s financial cycles will find their own rhythm, pulling apart from other bits of the world. China and America will still suffer sneezing fits. With any luck, they will catch their colds at different times. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21707534-financial-contagion-china-now-rivals-america-chinese-sneezes/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Wall Street + +Waking up + +A spate of mergers, public offerings and even a rumour: streetlife stirs + +Sep 24th 2016 | NEW YORK | From the print edition + +Jessica, a unicorn in nappies? + +IGNORE the record share prices and what that would seem to suggest about the year unfolding on Wall Street. Activity has been so slow that many bankers off for their August holidays wondered if there would be any reason to return. That has abruptly changed. “Every product we have is busier post-Labour Day than pre-,” says J.D. Moriarty, of Bank of America Merrill Lynch, referring to the holiday on September 5th. Eighteen companies plan to list this month and a further 100 are getting ready, according to Renaissance Capital, a research firm. + +Normally, a soaring stockmarket would be a fillip for all corners of finance. But until the holiday, the only consistently busy area this year had been the debt market. Low rates led borrowers to issue as many new bonds and refinance as many old ones as they could. + +Elsewhere: no animal spirits. Investors seemed tired of punting or lacked funds. Their brokers were scared to encourage business because of a vastly complex new regulation, known as the “fiduciary rule”, introduced in April. Trading volumes—and commission income—were weak. + + + +Nor had record share prices led to the usual spate of public offerings. 2013 and 2014 each saw more than 200; 2015 started in the same vein. Then the business froze. Companies evidently found the money they needed from private sources, or decided whatever they needed was not worth the (increasing) cost of listing. In the first quarter of 2016, just eight companies listed. This expanded to 59 by the end of August, but that still marked a rotten year. + +Higher share prices and low interest rates would normally also stimulate mergers and acquisitions. But these have been rarer as well. Several large deals blew up because of regulatory intervention, perhaps the most important being the alliance of Pfizer and Allergan, an effort by Pfizer to shift from a high tax-regime in America to Ireland’s low-tax one. Antitrust concerns thwarted some other deals, such as the proposed merger last December of Staples and Home Depot, two large retailers facing internet competition. + +Many had expected things to continue in the same vein. Brexit was seen as a blow to any firm operating in Europe; China’s slowdown to any operating in Asia. The American election campaign unnerved businesses about the prospects for growth and more adept regulation. Yet, suddenly, the mood has changed—for no obvious reason. Rather, the old magic—of rock-bottom interest rates and sky-high share prices—seems to be working at last. After the initial shocks, people have stopped talking about Brexit and China’s slowdown—or at least have stopped citing them as reasons to derail deals. + +The new listings reflect an unusually broad spectrum of businesses: from a Bermudian bank (Butterfield) that began trading on September 16th to the pending offerings by AzurRX Biopharma, a Brooklynbased pharma developer, Valvoline, a producer of car lubricants, e.l.f. Beauty, which sells low-cost cosmetics, and several software companies. + +The merger market is also sparky. One massive deal (which may also face antitrust hurdles) was announced this month—the acquisition by Bayer, a German chemicals giant, of Monsanto, the world’s biggest seed company. Several smaller but still chunky deals are in the pipeline. The Honest Company, a baby-products business created only five years ago by Jessica Alba, a movie star, is rumoured to be for sale for $1 billion. + +Steven Chubak, an analyst at Nomura, still reckons the investment-banking world will be subdued for the rest of 2016—but far less so than earlier this year. The bankers who work on mergers, new offerings and the like are more bullish. Call them up and the reply is a garbled excuse, as they rush to catch a flight. Time to get up! + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21707566-spate-mergers-public-offerings-and-even-rumour-streetlife-stirs-waking-up/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Deutsche Bank + +Won’t pay! Can’t pay? + +A $14 billion demand from America adds to the German lender’s troubles + +Sep 24th 2016 | From the print edition + + + +BILLS for pre-crisis buccaneering are still coming in. Deutsche Bank, Germany’s biggest lender, confirmed on September 15th that America’s Department of Justice (DoJ) had asked for $14 billion to settle possible claims connected with the underwriting and sale of residential mortgage-backed securities (RMBSs) between 2005 and 2007. The next day Deutsche’s share price, already reeling after a wretched year, plunged by 8%. It was groggier still after the weekend, closing on September 20th at a 30-year low (see chart). + + + +American banks have settled with the DoJ for amounts between $3.2 billion (Morgan Stanley) and $16.7 billion (Bank of America), as well as agreeing on smaller sums with the Federal Housing Finance Agency (FHFA), another regulator. Deutsche, which settled with the FHFA for $1.9 billion in 2013, insists that it will not pay anything near to what the DoJ has asked for, and it surely won’t. Citigroup, which reached an RMBS deal with the department in 2014, reportedly haggled its way from $12 billion to $7 billion. + +Even so, Deutsche can ill afford a hefty bill. In 2015 it lost €6.8 billion ($7.4 billion). John Cryan, the chief executive for the past 14 months, scrapped the dividend and has told shareholders to expect nothing (and no profits) in 2016. After the shares’ latest tumble, Deutsche trades at around a quarter of the net book value of its assets. The price of five-year credit-default swaps (a form of insurance against default) on its senior debt is well above that paid by Europe’s other leading banks. Data released this week by America’s Federal Deposit Insurance Corporation on capital-asset ratios suggested that Deutsche’s status as the riskiest of a score of big banks is worsening. + +Deutsche’s ratio of equity to risk-weighted assets, an important measure of a bank’s resilience, was 10.8% at the end of June, weaker than its peers’. Mr Cryan intends to raise it to 12.5% by 2018. With risk-weighted assets of around €400 billion, that 1.7% gap works out at nearly €7 billion. + +The disposal of Deutsche’s stake in Hua Xia, a Chinese bank, is expected to make up around 0.5 points of that gap. The sale of Postbank, a German retail business, though put off for the time being, should eventually fill a bit more of the hole. So will cost cuts and the ditching of other, “non-core” assets. (Changes to international bank-capital rules, which will increase risk-weighted assets by giving extra emphasis to operational risk, will push in the other direction.) A big fine will make it harder to close up the rest without asking investors for more capital. + +The bank has already set aside €5.5 billion for litigation expenses. However, that covers not only the RMBS claims but also the potential cost of investigations by American and British authorities into whether lax controls at Deutsche allowed money-launderers to whisk cash out of Russia. Every extra euro of penalties, on either count, will take Mr Cryan further away from his equity-ratio goal. + +Analysts had reckoned that Deutsche might pay $3 billion or so—around the bottom of the American banks’ range of penalties—from its litigation pot for RMBSs. Now the market guesses, from the scant evidence of the DoJ’s demand, that the price may be twice that, or more; uncertainty about the outcome is adding to the jitters. + +Other European banks—Barclays, Credit Suisse, HSBC, the Royal Bank of Scotland (RBS) and UBS—are also in the DoJ’s sights. Shares in Credit Suisse and RBS shuddered most after the DoJ’s demand to Deutsche, falling by 4% or so. The Swiss lender has provided SFr1.6 billion ($1.6 billion) for legal costs of all sorts. RBS has set aside £7.5 billion ($9.7 billion), but this does not include possible RMBS penalties. (Among the state-owned British bank’s woes are the mis-selling of insurance and a shareholder lawsuit over a rights issue in 2008, months before calamity struck.) But if estimating Deutsche’s bill is brave, taking a stab at the rest is downright foolhardy. + +Recently rumours have swirled that Deutsche might merge with its domestic rival, Commerzbank, or sell its asset-management arm to raise cash. Mr Cryan has told his staff not to “become distracted by speculation about alleged mergers or sales plans.” The boss continued: “We have enough on our plate to solve on our own.” Indeed they do. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21707567-14-billion-demand-america-adds-german-lenders-troubles-wont-pay/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +The emperor’s new paunch + +No holds are barred in Paul Romer’s latest assault on macroeconomics + +Sep 24th 2016 | From the print edition + + + +PAUL ROMER made his name modelling the production of knowledge and the growth of economies. Now the World Bank’s chief economist, his latest, unusual, contribution to economics includes a “meta-model” of himself. “For more than three decades,” he alleges, “macroeconomics has gone backwards.” Why, his meta-model asks, is he one of the few willing to say so? + +What Mr Romer says is unusually brutal. After over 30 years of “intellectual regress”, the study of booms and busts now reminds him of a lipstick-wearing pig or an obsolete scientific embarrassment like the phlogiston theory of fire. The field is dominated by a tight-knit congregation, he argues, unified by deference to authority, not facts. Their revered leaders rely on high-handed assumptions to make their models work. But they do not admit to these inadequacies, pretending their naked assumptions are clothed in fine theoretical robes. + +One illustration is their answer to an old scientific problem: identification. This problem besets even the simplest blackboard model of demand and supply, represented in textbooks by two intersecting diagonal lines, one sloping upwards (because sellers supply more when prices are high) the other downwards (because buyers demand more when prices are low). Drawing these lines is necessary to answer many big economic questions, such as how many extra jobs will be created if a payroll tax is cut (increasing the demand for labour by reducing its price) or how many additional rigs become viable when the oil price rises. + +But how do we know a curve’s true slope and position? The lines themselves are unobservable. A diligent economist can only note their intersections, recording each combination of price and quantity, perhaps as dots on a graph. If supply (and only supply) moved randomly, the resulting dots would trace out the demand curve: they would show how much demand expands and contracts when prices fall and rise, thanks to variations in supply. The curve’s slope and position would be “identified”. + +But that is not how the world typically works. Instead, the pattern of dots will probably reflect shifts in demand as well as supply. That makes it impossible to identify either curve from the dots alone. This identification problem is particularly severe in macroeconomics, which has a lot of moving parts, many of which move each other. To estimate one popular macroeconomic model, an economist must pin down the equivalent of 49 “slopes”, Mr Romer points out. + +Solving this problem is fiendishly difficult. Economists can hunt for scraps of relevant microeconomic evidence, such as household surveys. They can wait for natural experiments. Or they can make flat assumptions: presuming, for example, that the monsoon affects food supply but not demand. Alternatively, they can rely on theory. Through logical reasoning they can try to deduce some law of markets or behaviour (perhaps that pay reflects productivity or that markets clear). Whatever the merit of these deductions, they make it far easier to draw lines through dots. + +Indeed, many economists cling to stark, crude theories about market efficiency or rational behaviour precisely because it helps them pin down all those slopes and other parameters. If they did not care about these defining numbers, they could afford to entertain messy, finespun beliefs about human nature and market institutions. But then they would be called sociologists. + +The pressures of identification can thus lure macroeconomists into bad or narrow theories. But Mr Romer also accuses them of something worse: hypocrisy and obfuscation. They purport to solve the identification problem by relying on deep theory, but in fact resort to shallow assumptions. Indeed, economists used humbly to admit they had pinned down their models by assuming one thing or another. Now, they do so by theorising one thing or another. But these deductive proofs often rely on earlier, questionable assumptions. In between the assumptions and the proof is enough mathematical “blah blah blah” (as Mr Romer puts it) to hide the assumptions’ full role. And an arbitrary assumption in one part of the model can affect everything else in it. + +The ridicule-intimidation equation + +Mr Romer says these analytical habits flow from the top. If Nobel laureates indulge in them, others will follow suit. Even sceptics clever enough to spot what is going on will keep quiet. + +But will they? Several prominent economists have voiced similar doubts about the field. One paper Mr Romer cites is entitled “back to square one”; another complains about “unappealing assumptions”. A third, uncited, even argues that macroeconomics has cultivated a “pretence of knowledge”: it acts as if it is better than it is. These contributions back up Mr Romer’s complaints about economics, but not his gibes about deferential economists. + +In his meta-model of himself, Mr Romer explains that because he is now a practitioner, with no need to add to his research credentials, he faces an unusually low price of dissent. Other leading critics are also professionally secure. But their continued interest in research proves that you do not have to leave the ivory tower to criticise it. What distinguishes Mr Romer’s dissent is not the content but the tone, full of what the kids call “snark”. He observes that the emperor has no clothes, then laughs at his paunch. Mr Romer’s meta-model of himself can explain what he says, but not how he says it. It is, in effect, missing one equation. + +To complete Mr Romer’s model, we could rely on theoretical deduction. Instead we turned to survey evidence: asking the man himself. He replied, via his blog, that gentle criticism had failed and that “ridicule is the best antidote to intimidation.” Through satire, he wants to allay people’s fears of criticising the macroeconomic papacy. But if the intimidation is less than he supposes, perhaps the ridicule had a sharper gradient than he intended. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21707529-no-holds-are-barred-paul-romers-latest-assault-macroeconomics-emperors/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Why bad science persists: Incentive malus + +Wireless communication: In a whole new light + +Computerising archaeology: Burnt offering + +Vaccine manufacture: Rehydration therapy + +Resistance to antibiotics: The other global drugs problem + +Data security: That’s the way to do it + + + + + +Articles Sections Next + +Why bad science persists + +Incentive malus + +Poor scientific methods may be hereditary + +Sep 24th 2016 | From the print edition + + + +IN 1962 Jacob Cohen, a psychologist at New York University, reported an alarming finding. He had analysed 70 articles published in the Journal of Abnormal and Social Psychology and calculated their statistical “power” (a mathematical estimate of the probability that an experiment would detect a real effect). He reckoned most of the studies he looked at would actually have detected the effects their authors were looking for only about 20% of the time—yet, in fact, nearly all reported significant results. Scientists, Cohen surmised, were not reporting their unsuccessful research. No surprise there, perhaps. But his finding also suggested some of the papers were actually reporting false positives, in other words noise that looked like data. He urged researchers to boost the power of their studies by increasing the number of subjects in their experiments. + +Wind the clock forward half a century and little has changed. In a new paper, this time published in Royal Society Open Science, two researchers, Paul Smaldino of the University of California, Merced, and Richard McElreath at the Max Planck Institute for Evolutionary Anthropology, in Leipzig, show that published studies in psychology, neuroscience and medicine are little more powerful than in Cohen’s day. + +They also offer an explanation of why scientists continue to publish such poor studies. Not only are dodgy methods that seem to produce results perpetuated because those who publish prodigiously prosper—something that might easily have been predicted. But worryingly, the process of replication, by which published results are tested anew, is incapable of correcting the situation no matter how rigorously it is pursued. + +The preservation of favoured places + +First, Dr Smaldino and Dr McElreath calculated that the average power of papers culled from 44 reviews published between 1960 and 2011 was about 24%. This is barely higher than Cohen reported, despite repeated calls in the scientific literature for researchers to do better. The pair then decided to apply the methods of science to the question of why this was the case, by modelling the way scientific institutions and practices reproduce and spread, to see if they could nail down what is going on. + +They focused in particular on incentives within science that might lead even honest researchers to produce poor work unintentionally. To this end, they built an evolutionary computer model in which 100 laboratories competed for “pay-offs” representing prestige or funding that result from publications. They used the volume of publications to calculate these pay-offs because the length of a researcher’s CV is a known proxy of professional success. Labs that garnered more pay-offs were more likely to pass on their methods to other, newer labs (their “progeny”). + +Some labs were better able to spot new results (and thus garner pay-offs) than others. Yet these labs also tended to produce more false positives—their methods were good at detecting signals in noisy data but also, as Cohen suggested, often mistook noise for a signal. More thorough labs took time to rule these false positives out, but that slowed down the rate at which they could test new hypotheses. This, in turn, meant they published fewer papers. + +In each cycle of “reproduction”, all the laboratories in the model performed and published their experiments. Then one—the oldest of a randomly selected subset—“died” and was removed from the model. Next, the lab with the highest pay-off score from another randomly selected group was allowed to reproduce, creating a new lab with a similar aptitude for creating real or bogus science. + +Sharp-eyed readers will notice that this process is similar to that of natural selection, as described by Charles Darwin, in “The Origin of Species”. And lo! (and unsurprisingly), when Dr Smaldino and Dr McElreath ran their simulation, they found that labs which expended the least effort to eliminate junk science prospered and spread their methods throughout the virtual scientific community. + +Their next result, however, was surprising. Though more often honoured in the breach than in the execution, the process of replicating the work of people in other labs is supposed to be one of the things that keeps science on the straight and narrow. But the two researchers’ model suggests it may not do so, even in principle. + +Replication has recently become all the rage in psychology. In 2015, for example, over 200 researchers in the field repeated 100 published studies to see if the results of these could be reproduced (only 36% could). Dr Smaldino and Dr McElreath therefore modified their model to simulate the effects of replication, by randomly selecting experiments from the “published” literature to be repeated. + +A successful replication would boost the reputation of the lab that published the original result. Failure to replicate would result in a penalty. Worryingly, poor methods still won—albeit more slowly. This was true in even the most punitive version of the model, in which labs received a penalty 100 times the value of the original “pay-off” for a result that failed to replicate, and replication rates were high (half of all results were subject to replication efforts). + +The researchers’ conclusion is therefore that when the ability to publish copiously in journals determines a lab’s success, then “top-performing laboratories will always be those who are able to cut corners”—and that is regardless of the supposedly corrective process of replication. + +Ultimately, therefore, the way to end the proliferation of bad science is not to nag people to behave better, or even to encourage replication, but for universities and funding agencies to stop rewarding researchers who publish copiously over those who publish fewer, but perhaps higher-quality papers. This, Dr Smaldino concedes, is easier said than done. Yet his model amply demonstrates the consequences for science of not doing so. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21707513-poor-scientific-methods-may-be-hereditary-incentive-malus/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Wireless communication + +In a whole new light + +Lighting fixtures that also transmit data are starting to appear + +Sep 24th 2016 | From the print edition + +Once upon a time + +FLICKERING lamps are normally a headache-inducing nuisance. But if the flickering happens millions of times a second—far faster than the eye can see or the brain respond to—then it might be harnessed to do something useful, like transmitting data. That, at least, is the idea behind a technology dubbed Li-Fi by its creators. + +Li-Fi works with light-emitting diodes (LEDs), an increasingly popular way of illuminating homes and offices, and applies the same principle as that used by naval signal lamps. In other words, it encodes messages in flashes of light. It can be used to create a local-area network, or LAN, in a way similar to the LANs made possible by standard, microwave-based Wi-Fi. + +Such LANs would, Li-Fi’s supporters believe, have two advantages over standard Wi-Fi. One is that light does not penetrate walls. A Li-Fi LAN in a windowless room is thus more secure than one using Wi-Fi, whose microwave signals pass easily through most building materials and can thus be listened to by outsiders. The other advantage is that light does not interfere with radio or radar signals in the way that microwaves sometimes do. Li-Fi can therefore be installed in hospitals, nuclear plants and other sites where Wi-Fi might create dangerous interference with electronic kit. + +One business about to benefit from this selectivity is commercial aviation. Though aircraft avionics have been hardened over the years, to reduce the risk of interference from radio and microwave signals, using Li-Fi would make absolutely certain. It would mean that LANs could be set up in the cabin, distributing entertainment to passengers and permitting those with Li-Fi-equipped phones and computers to contact the outside world. + +This arrangement would also save on weight, as passenger-entertainment systems would no longer have to be fed by cables. To this end Airbus, a big European aircraft-maker, let Velmenni, an Indian firm, spend six months earlier this year installing and testing a Li-Fi network in a mocked-up passenger cabin of one of its planes. Velmenni hopes to use passengers’ reading lights to broadcast the signal. Luciom, a French firm, is even further advanced. In January 2017 it will begin installing Li-Fi on passenger jets built either by Airbus or by its American rival, Boeing (a non-disclosure agreement forbids it from saying which one). + +In the longer run, though, it is buildings that Li-Fi’s manufacturers have their eyes on. PureLiFi, a British firm that sells components to lighting manufacturers, plans to use the same cable to carry power and data to the LEDs themselves. That should make the system simple to install. PureLiFi is also designing LEDs that radiate data even when dimmed, so that a film can be streamed into a room and shown with the lights down. + +Installing a Li-Fi LAN, then, should not be too difficult. But for the technology to succeed, computers, phones and other signal-receiving devices will also have to be modified, so that they can pick up and reply to optical transmissions. To give that capability to existing kit engineers at Luciom have made a dongle that plugs into a standard USB port. This dongle contains both an ordinary LED (though it is one that emits infra-red flashes, which are invisible to the human eye) to send data to the LAN, and the opposite of an LED—a photodiode that converts light into electricity rather than the other way around—to receive data. + +PureLiFi, looking further ahead to a time when Li-Fi has become routine, is miniaturising such components with the intention of embedding them into devices at the point of manufacture. Nor is it alone in this desire. Zero.1, based in Dubai, says it has managed to tweak the cameras in the latest smartphones to run Li-Fi. Perhaps more pertinently, the intentions of Apple, the world’s most valuable listed company, were revealed earlier this year when it emerged that the term “LiFiCapability” is buried in the code of the iOS 9.1 operating system used by one of its most successful products, the iPhone. + +Li-Fi may spread outdoors, too. Sunlight spoils its signals during the daytime, but in the hours of darkness Li-Fi-enabled streetlamps should work perfectly well. Gabe Klein, an entrepreneur who was once the boss of Chicago’s transport department, says the city has begun testing the idea of adding Li-Fi to the LED-based street lighting now being installed there. One potential beneficiary of this idea, if it succeeds and spreads, is Trópico, a Brazilian streetlamp-maker. According to Daniel Auad, Trópico’s owner, the Li-Fi-enabled streetlamps the firm is now working on should sell for about $325 a piece—a premium of only $75 over the non-enabled variety. + +The technology may even be co-opted as a navigation tool in places, such as many buildings, that signals from the satellite-based global-positioning system cannot reliably penetrate. In this case the flickering LEDs act not as message-carriers but as beacons, permitting suitably equipped devices to locate themselves. Luciom has already installed such beacons in the ceiling lights of Orly airport, near Paris, and in a hypermarket in Lille. In Orly, the beacons (which are currently under test and used only by employees) will eventually show passengers to, for instance, the correct baggage carousel for their flight. In the hypermarket they direct shoppers with a Luciom dongle on their smartphones to the locations of desired items. + +Li-Fi, then, seems to be developing as a useful addition to the list of ways electronic devices can communicate. That it will actually replace conventional Wi-Fi seems unlikely. But by extending the amount of spectrum available for communications it may, as it were, lighten the load. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21707515-lighting-fixtures-also-transmit-data-are-starting-appear-whole-new/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Computerising archaeology + +Burnt offering + +How to read an old scroll without opening it + +Sep 24th 2016 | From the print edition + +Read all about it + +IN 1970 archaeologists digging at Ein Gedi, an ancient settlement on the shores of what is now called the Dead Sea, dug up the ark of a synagogue that had stood on the site from about 800BC until it was destroyed by fire in around 600AD. Within was a trove of scrolls but sadly, though the ark had protected them from the worst of the blaze, they were badly scorched. They were, indeed, so damaged that any attempt to handle them simply made things worse. That left archaeologists with a cruel dilemma: attempt to read their discoveries, which would destroy them, or preserve them as found, but remain ignorant of what they said. + +Technology, however, marches on. In a paper just published in Science Advances, a team led by William Seales, a computer scientist at the University of Kentucky, describe how they have managed to read one of the charred scrolls without having to open it—or, indeed, to touch it at all. + +The first part of Dr Seales’s remote-reading method was to take an X-ray of the scroll—or, rather, multiple X-rays from different directions that could be combined by a computer into a three-dimensional representation of the scroll’s interior. This is a well-established procedure. It is, for example, the basis of medical CAT scanning. The real wizardry came when the 3D image was fed into a series of computer algorithms that attempted to “unroll” the scroll virtually, leaving it to be read at an archaeologist’s leisure. + +To do this, the algorithms in question had to perform several tricky tasks, the first of which was to work out, purely from the swirling shapes present in the 3D model, how to distinguish particular layers of a rolled-up scroll from those above and below. In the case of the Ein-Gedi scroll, that was made harder by the fire, which had damaged individual layers unpredictably. + +This done, the next step was to look for subtle density variations that might correspond to the presence or absence of ink—and thus reveal individual letters. The final task was to take the hundreds of small images spat out by the algorithms and stitch them into a single, larger one. This was a matter both of science and of art. The algorithms got the jigsaw right only half of the time, meaning people had to do much of the work by hand. + +The result, though, was worth the effort. The outcome of Dr Seales’s labour is a computer image showing the scroll as it would look if it were unrolled (see picture). The resolution is so good that the text is easily legible, as are the guidelines scored by its scribe. The scroll, which was written around 200-300AD, turns out to be part of Leviticus. It is thus the oldest known example of one of the books of the Pentateuch, the first five books of the Bible. + +A tour de force, then—and not, Dr Seales hopes, a one-off. His technique should be usable on other damaged scrolls, of which archaeologists have plenty. Besides those recovered from Ein Gedi, there is, for example, the trove found in the library of a villa in Herculaneum, a Roman town that was destroyed by an eruption of Vesuvius in 79AD. Similar techniques to Dr Seales’s have read parts of some of these, but no one has yet “unrolled” one in its entirety. Other objects, such as lockets or amulets that have written messages (of love, perhaps, or prayers or magical spells of protection) inside them, should be suitable too. There is even a rumour that America’s spooks are interested. It is not only archaeologists who might want to read something without opening it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21707518-how-read-old-scroll-without-opening-it-burnt-offering/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Vaccine manufacture + +Rehydration therapy + +A new technique may democratise vaccine production + +Sep 24th 2016 | From the print edition + +MAKING vaccines often involves growing bugs—and these days the bugs in question are frequently genetically modified. There are, with good reason, strict regulations about the use and transport of such modified organisms, for fear that something bad might escape and thrive in the wild. And this has led to vaccine-producing bugs being grown in secure, centralised “foundries”, whence their products are distributed to the wider world. + +That works well when the relevant bits of the wider world have decent infrastructure for handling vaccines—particularly networks of reliable refrigerators, known as cold chains, to keep them stable. But this is not always so, especially in certain parts of the tropics, where vaccines are often needed most. So it would be nice to have a safe and robust way of making vaccines on site in such places, thereby shortening the cold chain. And, as he reports in Cell, James Collins of the Massachusetts Institute of Technology thinks that he may have developed one. + +The fear of an engineered bug escaping and thriving does not extend to bits of bugs, since these cannot reproduce by themselves. Dr Collins therefore set himself the task of assembling a vaccine factory consisting only of the cellular components needed to synthesise the pertinent molecules, rather than of whole cells—and doing so in a way that could be freeze-dried for easy transport and storage. + +He knew from previous work on these components that it was possible to isolate and freeze-dry them individually in ways that permitted them to be reactivated by the addition of water. What he did not know was whether they could then be assembled into something that would yield medically useful proteins if provided with the appropriate DNA. + +Building on the previous work, he and his colleagues studied how solutions containing rehydrated protein-production machinery responded when given DNA templates that encoded (among other things) the antigens used to make vaccines against anthrax, botulism and diphtheria. All were readily turned out by the rehydrated cellular machinery. + +In the case of diphtheria they also tried exposing their antigens to the antibodies which need to bind to them in order to let the immune system develop resistance. Such binding, they found, took place—meaning antigens produced this way might, in principle, be used as a vaccine. Given that diphtheria vaccine is extremely sensitive to temperature and is thus one of the most challenging to distribute to remote places, this is an encouraging result. If it can be commercialised, the process of vaccine manufacture and distribution might be greatly simplified. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21707516-new-technique-may-democratise-vaccine-production-rehydration-therapy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Resistance to antibiotics + +The other global drugs problem + +A neglected health problem is debated by the UN + +Sep 24th 2016 | From the print edition + + + + + +All around the world, drug-resistant infections are on the rise. They now kill more than 700,000 people a year. In 2014 nearly 60% of samples of Escherichia coli, a common gut bacterium, collected from patients in hospital were strains that could not be treated with penicillins. About 25% were resistant to one or both of two other commonly used sorts of antibiotics. + +The main reason for this resistance is overuse of antibiotics by people, both on themselves and on their animals. Between 2000 and 2014, the number of standard doses of antibiotics used increased by 50%. By 2050 drug-resistant infections could cost between 1.1% and 3.8% of global GDP, according to a report published on September 19th by the World Bank. + +Two days later, the United Nations held a meeting of heads of state to mull the matter over—only the fourth occasion that the General Assembly has debated a health problem. The assembly did not adopt any targets to curb the use of antibiotics, as some scientists have urged it to do. But its members did promise to draw up and pay for national plans to tackle the issue. There is no time to waste: on current trends, drug-resistant bugs could kill as many as 10m a year by 2050. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21707519-neglected-health-problem-debated-un-other-global-drugs-problem/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Data security + +That’s the way to do it + +A Cambridge don shows the FBI how to save money on phone hacking + +Sep 24th 2016 | From the print edition + + + +IN FEBRUARY the Federal Bureau of Investigation (FBI), America’s national police force, took Apple, a tech giant, to court. At issue was an iPhone that had belonged to Syed Farook, a terrorist who, with his wife, had shot and killed 14 people in California the previous December. Farook was subsequently killed. + +The FBI wanted Apple to write a special operating system to let it bypass the phone’s security and get at any data stored inside. Apple objected, on the ground that doing so would undermine the security of its own products and that, once created, such a digital “skeleton key” would pose a risk to every iPhone in existence. The FBI, for its part, insisted there was no other way into the iPhone in question. + +Security experts were dubious about the bureau’s argument. A paper published by Sergei Skorobogatov, a computer scientist at Cambridge University, proves that they were right to be sceptical. Farook’s phone, it seems, could probably have been cracked in two days, using off-the-shelf electronics equipment, for less than $100. + +The problem the FBI faced was that the phone was encrypted, as are all iPhones. It was also locked with a PIN. Encryption meant the information stored in it was a mass of meaningless gibberish. To restore it to readability required that the phone be unlocked, by entering the PIN correctly. On the face of it, that is not a big obstacle. By default, such codes are four digits long, giving only 10,000 possible combinations. In principle, it is easy to try every combination until you hit the right one by chance. + +But iPhones also contain features designed to make such “brute-forcing” hard. After six wrong guesses a user must wait a minute before trying again. That delay rises rapidly with subsequent failures. And iPhones can also be set to wipe themselves clean after ten failed attempts to log in. + +At the time of the court case, therefore, several independent experts suggested the FBI try something called NAND mirroring (“NAND” refers to the type of memory used in smartphones). James Comey, the FBI’s boss, said that would not work. But it is exactly what Dr Skorobogatov has done. NAND mirroring makes a copy of a phone’s memory in its undisturbed state. Using an iPhone of his own, Dr Skorobogatov was able repeatedly to overwrite its memory with the copy he had made before he began his guesses. This caused the instrument to forget that he had made any guesses at all, avoiding any temporary lockouts and ensuring that the data would never be wiped clean. That, in turn, permitted him to brute-force the PIN six guesses at a time, resetting the phone to its original condition between each batch of guesses. + +Each PIN must be entered by hand, which is laborious. Resetting the phone’s memory requires that the device be rebooted, which takes several seconds each time. An exhaustive check of all 10,000 variants of a 4-digit PIN would therefore take about 40 hours, he reckons, although on average the time to find the correct number will be half as long. + +Why, then, did the FBI believe going to court was the only way to recover Farook’s data? One suspicion at the time was that it did not. Instead, it wanted to set a broader legal precedent, forcing information-technology firms to help it when asked. On this view, the case was chosen because refusing would make Apple look bad. + +In the event, the bureau pulled out just before an appeal was to be held. And it did, eventually, find a way into the phone. Reports suggest it paid an unknown cyber-security company $1.3m to hack the phone. On the basis of Dr Skorobogatov’s evidence, it seems it overpaid by $1,299,900. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21707514-cambridge-don-shows-fbi-how-save-money-phone-hacking-thats-way/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +American art: Rediscovery + +Contemporary art: Join the queue + +Shirley Jackson: Ghost stories + +The Pentagon: The space between + +Johnson: Hidden in plain sight + + + + + +Articles Sections Next + +American art + +Rediscovery + +How forgotten African-American artists are coming back into the mainstream + +Sep 24th 2016 | From the print edition + + + +THROUGHOUT history artists’ canvasses have mostly been stretched on a frame. “Carousel Change” is an exception. This work, painted by Sam Gilliam in 1970, hangs loosely from five knots, a mass of glowing pink, yellow and orange folds like a partly gathered sail. It hangs in the California home of Pamela Joyner, a prominent collector of African-American art. Nicholas Cullinan, who has curated several important American art exhibitions, calls Mr Gilliam “one of America’s greatest living abstract painters”. Which will surprise some, because even in the art world there are those who do not know of the 82-year-old African-American. + +Ms Joyner is one of several private collectors who are pushing museums to show more work by black Americans—not just by today’s superstars, but also by their forgotten predecessors. Their efforts are paying off. In 2015 the Obamas hung a new acquisition, a radiant circle painting by Alma Thomas, a pioneering abstract artist, in a prominent position in the White House (pictured). Placed near works by Josef Albers and Robert Rauschenberg, two white men who are much more famous, it was a statement. + +On September 24th the president will open the National Museum of African-American History and Culture in Washington, DC: in the lobby is a lustrously glazed installation by Mr Gilliam. The trend is spreading. The Kunstmuseum Basel also has plans for a Gilliam show. Next month the Musée du Quai Branly in Paris will open an exhibition of almost 150 years of African-American art. And in 2017 Tate Modern will mount a show of mid-20th-century black American artists. Ms Joyner’s 300 works dating back to the 1950s, the subject of a book published this month, will form the basis of a touring show, starting at the Ogden Museum in New Orleans at the end of next year. + +The embarrassing, some say shameful, question is how artists like Mr Gilliam and Thomas, and Norman Lewis, another abstract expressionist, were ever forgotten. Lewis was the only black artist to take part in the discussions that founded abstract expressionism at Studio 35 in New York in 1950, alongside Willem de Kooning and Robert Motherwell. Thomas became, in 1972, the first black woman to have a solo show at the Whitney Museum of American Art. Mr Gilliam, early in his career, was given a rare introductory exhibition at the Museum of Modern Art (MoMA). + +But in the 1960s, 1970s and 1980s, African-American abstract artists were caught in a lose-lose situation. “The conventional art world expected black painters to paint black subject matter; meanwhile the black community felt that the artistic community should create uplifting images of black people,” Ms Joyner says. Figurative artists, like Charles White, a socialist-realist, were often considered by museums to be formally uninventive. All found it hard sustaining a presence in what was, by today’s standards, a small, exclusive art market. + +Forty years later the picture has radically changed. A younger generation of black American artists—Kerry James Marshall, Glenn Ligon, Kehinde Wiley, Kara Walker, Theaster Gates and Njideka Akunyili Crosby (see article)—have found international success. Next year Mark Bradford, a social-abstractionist based in Los Angeles, will represent America at the Venice Biennale. Christopher Bedford, director of the Baltimore Museum of Art, calls Mr Bradford “one of the most significant painters of his generation”. + +These artists did not forget their African-American predecessors; indeed, they often championed them in discussions about their work. This endorsement has influenced the art market, especially as collectors often start with contemporary art and work back. Mr Bradford is represented by one the market’s leading galleries, Hauser & Wirth, which earlier this year took on one of his inspirations, a 76-year-old abstract painter, Jack Whitten. “The market is hungry for material, and if the material is good—and relatively undervalued—it will eat it up,” says Franklin Sirmans, director of the Pérez Art Museum in Miami. Swann Galleries, which has dedicated African-American sales, confirms that the market for many of the older generation of artists is growing rapidly. + +Mr Gilliam’s prices at auction have risen threefold in just three years. Last December a work by Lewis set a record at Swann, making just under $1m. “Norman Lewis is the founding father of African-American abstract painting and has had a significant influence on the painters of today,” says Mr Bedford. + +Market validation is one thing, but for many collectors, it is museums that really matter. In America and increasingly abroad, museums are dependent on philanthropists to collect art, fund exhibition programmes and lend works. Young curators who are keen to make their mark are working more and more closely with philanthropists eager to make a case for under-represented artists. Patrons like Patricia Phelps de Cisneros and Estrellita Brodsky have helped museums build their Latin American collections. Now philanthropists like Raymond McGuire, a banker, and A.C. Hudgins, a collector, are doing the same for African-American artists. + +Ms Joyner says that 30 years ago Lowery Sims, the first black curator at the Metropolitan Museum of Art, “planted the seed in my mind, that these artists don’t get enough backing from the traditional art world, so it’s necessary for the African- American community to instigate and participate in their support.” A member of the president’s committee on arts and humanities, a trustee of the Tate Americas Foundation and on the board of the Art Institute of Chicago, she says she approached her art activities “with a mission and a strategy to be a catalyst to reframe history”. + +As the displays at Tate Modern and MoMA demonstrate, museum collections are changing. For a few, this represents the triumph of identity politics over aesthetic value. For many more, it is a reminder that museums are not, and never were, neutral spaces; their collections and judgments are shaped by the new as much as they are by new vistas on the old. It is a chance to contemplate a wider, more complex and exciting narrative: how African-American artists show a different version of America, and how some, like Mr Gilliam, have changed the language of art itself. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21707510-how-forgotten-african-american-artists-are-coming-back-mainstream-rediscovery/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Contemporary art + +Join the queue + +Managing one African-American artist’s career + +Sep 24th 2016 | From the print edition + +The smile is real + +NJIDEKA AKUNYILI CROSBY, a young artist based in Los Angeles, is currently the talk of the art world. Dozens of wealthy collectors want to buy her latest works, yet none is for sale—at least, not to private individuals. + +Ms Crosby’s first European solo show will open at the Victoria Miro Gallery in London on October 4th, the week that Frieze Art Fair starts. Now 33, she moved from Nigeria to America at the age of 16. Her “Afropolitan” identity has forged a highly distinctive visual style. She works mostly on paper, creating large-scale interiors that combine serene human figures with dense areas of collage and image-transfer that subversively evoke her Nigerian heritage. “Her paintings have a distinct vocabulary,” says Glenn Scott Wright, a director at Victoria Miro, which represents Ms Crosby. “You can go around an art fair with 10,000 works and you would know hers immediately.” + +In June, at the Art Basel fair in Switzerland, the gallery sold Ms Crosby’s “Super Blue Omo” (pictured), a painting from 2016. The buyer was the Norton Museum of Art in West Palm Beach, Florida. Having held the first major museum survey of the artist earlier this year as part of its “Recognition of Art by Women” series, it was at the head of a queue of more than a dozen public institutions waiting to buy Ms Crosby’s painstakingly crafted works. Victoria Miro has pitched the prices at below $100,000, enabling museums to buy with their own funds. + +In March at the Armory Show in New York, Victoria Miro offered a self-portrait diptych, showing Ms Crosby seated on a wooden chair, that was bought by the Whitney Museum of American Art. Displayed, at the artist’s request, unframed and suspended from metal clips, it can currently be seen in the museum’s “Human Interest: Portraits from the Whitney’s Collection” exhibition in New York. Other works have been acquired by Tate Modern in London, the Museum of Modern Art in New York, the Los Angeles County Museum of Art and the Yale University Art Gallery. + +“Super Blue Omo” will be one of ten works in Victoria Miro’s Crosby show, “Portals”. About half of these will be new paintings that will be for sale, but only to public museums (private museums also cannot buy her work). “We don’t want her art to become all about money and reselling,” says Mr Scott Wright, who estimates that it will take another two years before Victoria Miro begins to offer the artist’s work to private collectors. + +Meanwhile, the waiting list of museums has risen to 18. For all Victoria Miro’s attempts to keep the stopper in, though, the resale market for Ms Crosby’s work may be about to be released from the bottle. On September 29th, at Sotheby’s, a private New York collector is selling “Untitled”, a painting from 2011, at an estimated price of $18,000-$25,000. With its pair of bare feet in front of a mirror, this might not be the most alluring of her compositions. But it is the first to appear at auction. Food for the impatient. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21707507-managing-one-african-american-artists-career-join-queue/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Shirley Jackson + +Ghost stories + +The hidden life of an American writer who should be read and reread + +Sep 24th 2016 | From the print edition + +Hidden turmoil + +Shirley Jackson: A Rather Haunted Life. By Ruth Franklin. Liveright; 607 pages; $35 and £25. + +NEARLY 70 years after it was first published, Shirley Jackson’s short story, “The Lottery”, is still chilling. It begins benignly: on an otherwise “clear and sunny” day, every household in an unnamed village gathers to draw lots. But this unfussy account of an arcane local ritual ends with screams. “It isn’t fair,” cries the woman with the marked slip as everyone, even her own children, pelts her with stones. + +Never before had the New Yorker, which printed the story, received so much mail about a work of fiction. Calling it “shocking” and “pointless”, many outraged readers cancelled their subscriptions. Others were simply confused. Jackson, then a 31-year-old mother of two and pregnant again, wrote the story in a single sitting, but was never able to offer consistent explanation for what it was about. The notion that otherwise ordinary villagers were capable of such extraordinary inhumanity seemed fairly obvious to her, especially after the second world war. + +Jackson would complete ten books for adults—two of them bestsellers—before she died of heart failure at 48 in 1965. Yet she is still known primarily for “The Lottery”, which was published in an anthology of American classics for students as early as 1950. This oversight of her other work is a shame, writes Ruth Franklin in her lively and authoritative new biography. The problem, she suggests, is that critics have tended to underestimate Jackson’s haunting stories, often dismissing them as genre fiction. But the author needs to be seen among such American Gothic masters as Henry James and Edgar Allan Poe, who used terror as a way to reveal the darkest corners of the psyche. + +Jackson wrote mostly about women. Before the rise of feminism, she considered those who wanted to be more than obedient wives and mothers. Many of her novels, particularly her late, great “The Haunting of Hill House” (1959) and “We Have Always Lived in the Castle” (1962), essentially transform a home into a prison. Quite a few of her heroines go mad. Even as Jackson sold amusing essays to women’s magazines about her madcap life with four children and a hapless husband, her menacing fiction revealed the turmoil roiling beneath the surface. “Her body of work constitutes nothing less than the secret history of American women of her era,” Ms Franklin writes. + +Born to a well-to-do family, Jackson always felt an outsider. She never met the expectations of her mother, who would criticise her all her life. Ms Franklin suggests that this toxic relationship not only informed Jackson’s fiction (her heroines are all “essentially motherless” ), but also prepared her for marriage to Stanley Edgar Hyman, a literary critic she met at university, who tormented her with his cruelty and infidelity. As both a housewife and breadwinner, Jackson struggled to balance life and work (like many men of his generation, Hyman refused to lift a finger at home). But she found that motherhood helped her writing, as it forced her to concentrate during the few hours she could steal at her typewriter. + +Hyman’s hectoring and her mother’s apparent disdain steadily eroded Jackson’s confidence and precipitated an extended bout of agoraphobia, which imprisoned her in her home. She seemed destined to live the remainder of her days like one of the lonely and anxious characters from her stories. But she began writing and lecturing again before she died. Jackson may have been unable to venture out on her own, but she plotted her escape in her fiction. In a novel she began writing before she died, the narrator abandons her husband and children and takes a room in a boarding house. “All I had”, she writes, “was myself.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21707511-hidden-life-american-writer-who-should-be-read-and-reread-ghost-stories/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Pentagon + +The space between + +As the distinction between peace and war has become blurred, the Pentagon has become a one-stop shop to solve global problems + +Sep 24th 2016 | From the print edition + + + +How Everything Became War and the Military Became Everything: Tales from the Pentagon. By Rosa Brooks. Simon & Schuster; 438 pages; $29.95. + +IT SEEMED simple enough. The White House wants a surveillance drone to monitor an evolving showdown over human rights in Kyrgyzstan. A member of staff at the National Security Council calls the author, Rosa Brooks, at the Pentagon to tell her to send it on its way. Ms Brooks explains that this is not how the chain of command works in the military. Where would the drone come from? Which job would it no longer be doing? Who was going to pay for it? Whose airspace would it operate from? The incredulous response: “We’re talking about like, one drone. You’re telling me you can’t just call some colonel at CentCom and make this happen?” + +The story illustrates two themes in an interesting and worrying book, “How Everything Became War and the Military Became Everything”. The first is the growing tendency of politicians and bureaucrats in Washington to turn to the armed forces when something, almost anything, needs doing. The second, despite or perhaps because of this, is the gulf in understanding that is making civil-military relations increasingly fraught. But Ms Brooks has a wider purpose, which is to examine what happens to institutions and legal processes when the distinctions between war and peace become blurred and the space between becomes the norm, as has happened in America in the decade and a half since the attacks of September 11th 2001. + +Ms Brooks, a law professor at Georgetown University and a columnist for Foreign Policy, has direct experience of what she writes. Not only did she marry a lieutenant-colonel in the army’s special forces, but she went to work for the “vast, bureaucratic death-dealing enterprise”, otherwise known as the Pentagon, in 2009, serving for two years as an adviser to the formidable Michèle Flournoy (who would probably be defence secretary in a Clinton administration). + +What she found there is that as the money available for conventional diplomacy and development aid precipitately declines, so the armed forces with their relatively inexhaustible resources are called upon to fill the gap. As one general puts it, the American military is becoming “a Super Walmart with everything under one roof”. Because its culture is proudly can-do, it gets on with the demands made on it without much complaint. + +One consequence is that actual fighting has become something that only a small minority of soldiers do. Ms Brooks finds that through the recent, long wars most soldiers have spent their time supervising the building of wells, sewers and bridges, resolving community disputes, working with local police, writing press releases, analysing intelligence and so on. In many ways, Ms Brooks finds this admirable. The problem, she says, is that soldiers are not necessarily the best people to do this kind of work, lacking the inclination, the training or the experience to be much good at it. + +The hope in the Pentagon nowadays is that it can return to its core purpose of deterring and preparing for proper, high-tech state-on-state wars. Counter-insurgency and nation-building have fallen out of fashion. Hillary Clinton has recently echoed Barack Obama in promising no “boots on the ground” in Iraq (despite the fact that there are about 5,000 pairs of them there and twice as many in Afghanistan). The reality is that you do not always get to choose the kind of wars you fight or how you fight them. + +The muddying of the lines that normally exist between peace and war also has implications for what happens at home. Laws may be suspended or passed during a war that has a clear beginning and end without too much lasting damage. But when a state of semi-war becomes more or less permanent, the erosion of basic legal and democratic principles becomes a greater danger. The difficulty in closing down Guantánamo; the continuing arguments over where the line between vigorous interrogation and torture lies; the legal murkiness of using drones to carry out the targeted killing of America’s enemies are all reasons for concern. + +Ms Brooks struggles to find solutions to these intractable problems. But she suggests that a more phlegmatic approach to the limited threat that terrorism really represents, along with an acceptance that eradicating it may not be possible, would allow people to think more clearly about how far they want to sacrifice civil liberties in responding to it. + +She also calls for better understanding by politicians and national-security civilians of what the armed forces can and should be used for. Yet while she deplores the tendency to “dial 1-800-Military” whenever there is a problem, she sees no way out of the continuing expansion of the army’s role. If that is so, she argues, perhaps the best option is to start recruiting into the armed forces more of the kind of people who can respond effectively to a wide range of “complex and often inchoate threats” from refugee flows driven by climate change, ethnic conflicts, cyber-attacks or terrorists intent on developing biological weapons. In other words, military skills would be integrated with civilian skills “within a single large but agile organisation”. It is a nice idea. But one guaranteed to annoy almost everybody. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21707508-distinction-between-peace-and-war-has-become-blurred-pentagon-has-become/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +Hidden in plain sight + +Most people don’t know they know most of the grammar they know + +Sep 24th 2016 | From the print edition + + + +WHO can say what order should be used to list adjectives in English? Mark Forsyth, in “The Elements of Eloquence”, describes it as: opinion, size, age, shape, colour, origin, material, purpose and then Noun. “So you can have a lovely little old rectangular green French silver whittling knife. But if you mess with that word order in the slightest you’ll sound like a maniac.” Mr Forsyth may have exaggerated how fixed adjective order is, but his little nugget is broadly true, and it has delighted people to examine something they didn’t know they knew. + +Clearly, then, the discipline of linguistics needs a marketing overhaul, because this is exactly what linguistics consists of: describing the rules, many of them hidden and not obvious, of the human language ability. Given how eagerly word-nerds recently shared this tit-bit about adjective order on social media, the lecture-halls for linguistics classes should be crammed to the rafters. + +Instead, as most linguists only too ruefully admit, upon confessing their profession at cocktail parties they tend to be told: “Oops, better watch my grammar around you.” Just as many psychologists moan that outsiders think the discipline is mainly about abnormal psychology, linguists haven’t sufficiently spread the word that they are not out to ban split infinitives or correct the misuse of “whom”. They consider themselves scientists (in a discipline that overlaps with psychology, cognitive science and others) in trying to learn how the human mind works. + +They’ve found out many wonderful things about rules you know, but don’t know you know. For example, a question can be formed from a statement by turning the questioned element into a question-word (like “where”) and moving it to the front of a sentence. “Steve went to Toronto. Where did Steve go?” But that doesn’t work when the element in question is itself a clause: in “John wonders where Steve went to university” “went” can’t become “Where does John wonder that Steve went to university?” Everyone knows that the latter is awkward or even unacceptable, but very few people outside the world of linguistics know why. In fact, it took linguists themselves quite a while to work out the details. + +There are hidden rules not just in grammar, but at every level of language production. Take pronunciation. The –s that marks a plural in English is pronounced differently depending on the previous consonants: if the consonant is “voiced” (ie, the vocal chords vibrate, as in “v”, “g” and “d”), then the –s is pronounced like a “z”. If the consonant is “unvoiced” (like “f”, “k” and “t”), then the –s is simply pronounced as an “s”. Every native English-speaker uses this rule every day. Children master it by three or four. But nobody is ever taught it, and almost nobody knows they know it. + +Because linguists spend their careers trying to tease out what people actually do say and why, they get cross when people equate “grammar” with a host of rules that most people don’t actually observe. Take the so-called rule against ending sentences with a preposition. In fact, saying things like: “What are you talking about?” is deeply embedded in the grammar of English. “About what are you talking?” strikes real speakers of English as absurd. So it annoys linguists to no end to hear the latter “rule” associated with “grammar”, while the real, intricate grammar already embedded in the mind is ignored. + +Sometimes our mental grammars don’t know what to do with unusual cases. Take the newish verb “to greenlight”, meaning to approve a project. What is its past tense? “Light” has the past tense “lit”. But some people go for “greenlighted” (Variety, a film-industry magazine, prefers this) whereas others go for “greenlit”. Why the confusion? It’s because “to greenlight” was formed anew from a noun phrase, “a green light”. One mental rule is that new words are always regular; hence “greenlighted”. But other people’s mental grammars see “greenlight” as a form of the verb “to light”, an existing irregular verb with the past tense “lit”; hence “greenlit”. + +This implicit grammatical knowledge overwhelms, in its intricacy and depth, the relatively few rules that people must be consciously taught at school. But since the implicit stuff is hidden in plain sight, it gets overlooked. It is cheering to see that things like the adjective-order rule can go viral on social media. Perhaps it can make people more likely to associate “grammar” not with drudgery, but with fascinating self-discovery. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21707509-most-people-dont-know-they-know-most-grammar-they-know-hidden-plain-sight/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Vertamae Smart-Grosvenor: Sizzling + + + + + +Articles Sections Next + +Obituary: Vertamae Smart-Grosvenor + +Sizzling + +Vertamae Smart-Grosvenor, Gullah writer and culinary griot, died on September 3rd, aged 79 + +Sep 24th 2016 | From the print edition + + + +HERE is how to cook cow peas: “Remove all the peas that look weird and wash and soak in cold water. Cook in some kind of boiled meat until done.” That was how her Aunt Rose cooked them—Rose Ritter Polite, fine as she could be, who used to cry when she got her hair cut, who saved her baby niece from being thrown into the fireplace (her mother had a touch of “childbirth fever”), and who also made the best red rice: “Fry smoke bacon in a skillet and then add your fresh tomatoes. Cook for a hot minute and then add cold cooked rice and cook for another 20 minutes.” + +The recipes in Vertamae Smart-Grosvenor’s first book, “Vibration Cooking: or, The Travel Notes of a Geechee Girl”, include no lists of ingredients or numbered steps and few precise measurements. Instead, she talks to the reader. Her book is an extended disquisition on art, family, race and food; she had been everywhere, met everyone and had strong opinions about everything. + +Her recipes came wrapped in stories. “Neal fried chicken” was for her friend Larry Neal, a scholar of African-American theatre; its three-hour soak in milk because “we hadn’t seen each other for a long time…I took the chicken and soaked it for three hours so we could talk.” + +She was not a trained chef. She cooked by “vibration”, meaning the intuition that comes from practice, observation and curiosity. Drawing on west Africa’s oratary tradition, she called herself a “culinary griot”: interested in the stories behind the food, and its route to the table. On the page and in the kitchen she excavated American cuisine’s half-forgotten African roots. + +She took a meandering path to the page. Born in South Carolina, she spent her adolescence in Philadelphia, where she befriended Eunice Waymon, another precocious young black woman who was as interested in music as Ms Smart-Grosvenor was in theatre (and later found fame as Nina Simone). When Ms Smart-Grosvenor was 18, she boarded a boat for Paris, where she fell in with expatriate Beats: William Burroughs, Allen Ginsberg, Gregory Corso, James Baldwin and a painter named Robert Grosvenor, whom she married (they later divorced). + +Kitchen talking + +After she returned to America, she became active in the Black Arts Movement, a politically engaged group of black poets, playwrights and other artists that emerged in the wake of Malcolm X’s assassination in 1965. She began acting, appearing on Broadway and staging improvised performances in Tompkins Square Park, in the now-trendy East Village neighbourhood of New York. For around three years, she was a Space Goddess in Sun Ra’s Solar Myth Science Arkestra, reciting her poetry while Mr Ra improvised on the keyboards. + +Through it all, she cooked. Artists need to eat, after all, and “cooking”, she wrote to a friend, “is a creative thing. Cooking is one of the highest of all the arts.” Food, for Ms Smart-Grosvenor, was never just sustenance. It connects people to their pasts and experiences. It is a means of expressing and receiving love, of making people feel welcome and appreciated. + +Her heritage left her with closer connections to Africa than most other Americans have. She was born in South Carolina’s Lowcountry—a rural, marshy, estuarine region then unconnected to the American mainland—and grew up speaking Gullah, a creole English similar to dialects used in the Caribbean and Sierra Leone. Other Americans long looked down on Gullah or Geechees (Clarence Thomas, a reticent American Supreme Court justice born just down the coast from Ms Smart-Grosvenor in Georgia, attributes his reluctance to speak from the bench to childhood mockery of his accent). Gullahs were so used to hiding or downplaying their heritage that her book’s “Geechee Girl” subtitle struck some as shockingly bold. + +Ms Smart-Grosvenor was not afflicted by reticence: a regal figure, six feet tall, with a warm but appraising gaze. Her smoky, honeyed voice, with just a slight Gullah lilt, perfectly suited her radio work, which ranged well beyond food; a series on AIDS in America won a big award in 1990. + +She favoured African clothes—headwraps and bright colours. In her first book she recalls a white man from Georgia who asked her why she dressed like an African when she was an American. “I am free and free to define myself,” she wrote. “Now, if a squash and a potato and a duck and a pepper can grow and look like their ancestors, I know damn well that I can walk around dressed like mine.” + +“Vibration Cooking” made her famous when it came out in 1970, but she bristled at being known as a “soul food” cook. “While certain foods have been labelled soul food,” she wrote, “and associated with Afro-Americans, Afro-Americans could be associated with all foods.” Her book includes recipes not just for collard greens and gumbo, but also for Turkish coffee, saltimbocca and salade niçoise, which she admits “is a French name, but just like with anything else when soul folks get it they take it out into another thing.” She chose to write about the cuisine of black Americans because that was what she knew best, and because she believed black American cooks and the food they created were long unappreciated. But she was at home in the kitchen and the world beyond. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21707504-vertamae-smart-grosvenor-gullah-writer-and-culinary-griot-died-september-3rd-aged/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +On and offline + +Markets + +Interactive indicators + + + + + +Articles Sections Next + +Output, prices and jobs + +Sep 24th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21707535-output-prices-and-jobs/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Sep 24th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21707525-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Sep 24th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21707524-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +On and offline + +Sep 24th 2016 | From the print edition + + + + + +By year’s end some 3.5 billion people, or 45% of the world’s population, will be internet users, according to the ITU. China and India, the world’s most populous countries, do not just boast the top two spots in online population rankings; they are also home to the most people still offline, accounting for over 40% of the world’s unconnected. Thanks to the rapid expansion of mobile networks, and wider ownership of the devices that connect to them, internet access has spread to places where traditional infrastructure is lacking. Mobile subscribers are expected to outnumber those with electricity or running water at home by 2020, by which time the ITU hopes three-fifths of the world will be netizens. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21707526-and-offline/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Sep 24th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21707523-markets/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Interactive indicators + +Sep 24th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21707521/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Thu, 22 Sep 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +The global economy: The low-rate world + + + + + +European defence: Potemkin Euro-armies + + + + + +America’s presidential election: Indecision time + + + + + +Religion and state in Malaysia: Adulterers beware + + + + + +Internet governance: The road to surfdom? + + + + + +Letters + + + +On Uber, Melungeons, Davos, post-truth politics: Letters to the editor + + + + + +Briefing + + + +The fall in interest rates: Low pressure + + + + + +Pensions: Fade to grey + + + + + +United States + + + +The campaign: President Trump? + + + + + +Bombs in New York: Sangfroid city + + + + + +The campaigns: Heard on the trail + + + + + +Cyber-spying: Bear on bear + + + + + +Safe passage: Chicago schools + + + + + +Campus sexual assault: Re-education + + + + + +Election brief: Fiscal policy: Money’s the conversation + + + + + +Lexington: Millennial falcon + + + + + +The Americas + + + +Paraguay: Polka lessons + + + + + +Declassifying documents: Sunlight diplomacy + + + + + +Bello: Of growth and globalisation + + + + + +Asia + + + +India’s armed forces: Guns and ghee + + + + + +Driving in Vietnam: Four wheels good, two wheels better + + + + + +The Japanese addiction to tuna: Breeding bluefin + + + + + +A trans-Pacific obsession: Bottling hipness + + + + + +Religious freedom in Malaysia: Taking the rap + + + + + +Banyan: A ham-fisted hegemon + + + + + +China + + + +Nuclear power: A glowing future + + + + + +Social mores: Shacking up + + + + + +Middle East and Africa + + + +Syria’s widening war: The ceasefire unravels + + + + + +Saudi Arabia: The real game of thrones + + + + + +Free speech in Palestine: Gagged in Gaza + + + + + +Uganda’s Jobless Brotherhood: Snouts in the trough + + + + + +Johannesburg’s new mayor: Capitalist crusader + + + + + +Nigeria’s war against indiscipline: Behave or be whipped + + + + + +Europe + + + +European defence: The fog of politics + + + + + +Russian politics: The hollow election + + + + + +Criminal justice: Think before you clink + + + + + +Drug wars: Hash and burn + + + + + +Architecture in Sweden: Nobel, unprized + + + + + +The politics of haute coiffure: Scissor and tongs + + + + + +Charlemagne: The parable of Ticino + + + + + +Britain + + + +Prisons: Jails break + + + + + +Chinese investment in Britain: Hinkley hangover? + + + + + +Housing in British cities: Little Londons + + + + + +UK Independence Party: What now? + + + + + +Higher education: Universities Inc. + + + + + +Professional services and Brexit: A lob and a smash + + + + + +Live-streaming funerals: Online send-off + + + + + +Bagehot: Not drowning but waving + + + + + +International + + + +The Montreal protocol: To coldly go + + + + + +Business + + + +Tata Group: Mistry’s elephant + + + + + +Autonomous vehicles: Who’s self-driving your car? + + + + + +Autonomous car insurance: Look, no claims! + + + + + +A Chinese steel merger: Welding bells + + + + + +Stock splits: Split ends + + + + + +Berlin’s tech scene: The freaks are coming + + + + + +Schumpeter: Against happiness + + + + + +Finance and economics + + + +Norway’s global fund: How to not spend it + + + + + +Buttonwood: Take cover + + + + + +Asian markets: Chinese sneezes + + + + + +Wall Street: Waking up + + + + + +Deutsche Bank: Won’t pay! Can’t pay? + + + + + +Free exchange: The emperor’s new paunch + + + + + +Science and technology + + + +Why bad science persists: Incentive malus + + + + + +Wireless communication: In a whole new light + + + + + +Computerising archaeology: Burnt offering + + + + + +Vaccine manufacture: Rehydration therapy + + + + + +Resistance to antibiotics: The other global drugs problem + + + + + +Data security: That’s the way to do it + + + + + +Books and arts + + + +American art: Rediscovery + + + + + +Contemporary art: Join the queue + + + + + +Shirley Jackson: Ghost stories + + + + + +The Pentagon: The space between + + + + + +Johnson: Hidden in plain sight + + + + + +Obituary + + + +Obituary: Vertamae Smart-Grosvenor: Sizzling + + + + + +Economic and financial indicators + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +On and offline + + + + + +Markets + + + + + +Interactive indicators + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.10.01.TXT b/homeworks/B20769/homework1/data2/2016.10.01.TXT new file mode 100644 index 0000000..c06bfe5 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.10.01.TXT @@ -0,0 +1,3899 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: The world economy + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Politics this week + +Oct 1st 2016 | From the print edition + + + +A record audience tuned in to the first presidential debate of the election campaign. Polling suggested that most voters thought Hillary Clinton put in a better performance than Donald Trump. He blamed the moderator and a defective microphone, and said he had held back because he “didn’t want to hurt anyone’s feelings”. See here and here. + +Congress overrode a presidential veto by Barack Obama for the first time, voting overwhelmingly to reinstate a bill that allows Americans to sue foreign governments if they are found to have played a role in terrorist attacks. Mr Obama had vetoed the bill on the ground that it would open America to reciprocal lawsuits from foreign countries. See article. + +The number of murders in America rose by 10.8% last year, according to the FBI, the sharpest rise in decades. The murder rate rose to 4.9 for every 100,000 people, the highest since 2009. + +Peace in our time + +The government of Colombia and the FARC guerrilla army signed an agreement to end their 52-year-long war. Colombia’s president, Juan Manuel Santos, and the FARC’s leader, known as Timochenko, used a pen fashioned from a bullet casing to sign the accord. Colombians are to vote on the peace deal in a referendum on October 2nd. + +Brazilian police arrested Antonio Palocci, a former finance minister and chief of staff of the former president, Dilma Rousseff, in connection with the corruption scandal centred on Petrobras, the state-controlled oil giant. Mr Palocci’s lawyers say he did nothing wrong. + +Unrelenting + +Russian and Syrian air strikes continued in Aleppo, where rebel forces occupy the eastern part of the city. Most of their stronghold is now without water. No aid is getting in, and hospitals and bakeries are being targeted. See here and here. + +Shimon Peres, a former president and prime minister of Israel, died at the age of 93. He was the last of Israel’s founding fathers and the architect of its nuclear programme. Mr Peres shared the Nobel peace prize in 1994 for his efforts to bring peace to the Middle East. See article. + + + +Around 15,000 Saudi women signed a petition to abolish laws barring them from marrying, travelling or working without permission from a male guardian. + +A jihadist who had pleaded guilty at the International Criminal Court to destroying ancient shrines in Mali was sentenced to nine years in prison. It was the first case of its kind to be heard at the ICC. + +The long arm of the law + +China criticised America’s decision to impose sanctions on a Chinese company dealing in industrial machinery. The Treasury banned American firms from doing business with Dandong Hongxiang because of alleged links to North Korea’s nuclear programme. China had said it was investigating the links itself. It accused America of attempting “long-arm jurisdiction”. + +Chinese fighters and bombers flew close to Japanese territory on their way to take part in an exercise in the western Pacific. They traversed the Miyako Strait between Taiwan and the Japanese island of Okinawa. Japan said it was the first time that Chinese aircraft had used the route. It scrambled its own jets, but no violations of Japan’s airspace were reported. + +India said it had carried out strikes against Pakistan-based militants on the border with the disputed state of Kashmir. Two Pakistani soldiers were killed in the barrage. With tensions on the rise, India decided to boycott a regional summit in Pakistan, and also threatened to review water-sharing agreements and trade arrangements with its neighbour. + +A court in Malaysia jailed an opposition politician, Tian Chua, for sedition. He had urged the public to protest against the government. + +Amnesty International cancelled a public briefing about torture in Thailand after the police said the speakers would face arrest. A Thai government committee ordered Yingluck Shinawatra, a former prime minister ousted in a military coup, to pay a fine of $1 billion for negligence related to a subsidy scheme for rice farmers. Ms Yingluck said the fine was politically motivated. + +The evidence mounts + +A Dutch-led criminal investigation found that a Malaysian Airlines flight, MH17, was shot down over Ukraine in 2014 by a BUK anti-aircraft missile that had been brought in from Russia, and fired from territory held by Russian-backed separatist rebels. The investigators released telephone intercepts of Russian-speaking forces requesting the missiles to stop Ukrainian air-force attacks. See article. + +Italy’s prime minister, Matteo Renzi, set December 4th as the date for a national referendum to approve constitutional changes simplifying the country’s Byzantine parliamentary system. Mr Renzi, a reformist centre-leftist, has staked his political future on the referendum’s success. + +Moody’s, a credit-rating agency, downgraded Turkey’s bonds to junk status. A government adviser compared the ratings decision to the failed coup attempt in July, and the prime minister declared it was “not impartial”. + +François Hollande, the president of France, promised to demolish the migrant camp outside Calais known as “the Jungle”. Mr Hollande said that the agreement under which British border checks take place on the French side would stand, but vowed to press Britain for more aid for the refugees drawn by the tunnel. + + + +Jeremy Corbyn won re-election as leader of Britain’s Labour Party, slightly increasing his share of the vote to 61.8%. The bulk of his support came from members who joined after the general election in 2015. The result will not resolve the party’s deep divisions. John McDonnell, the shadow chancellor, promised to bring socialism back to the mainstream, which is unlikely to be popular with voters. See article. + +Sam Allardyce resigned as the manager of England’s football team after a newspaper caught him on camera advising a fake Asian firm on how to circumvent Football Association rules. Several football agents were filmed making various claims about corruption, with one saying the problem was worse in England than in his native Italy. Another said one manager had taken more backhanders than Wimbledon. See article. + + + + + +Business this week + +Oct 1st 2016 | From the print edition + +Deutsche Bank denied reports that it had discussed a rescue package with the German government following a request from American regulators that it pay $14 billion to settle claims related to mortgage-backed securities. Speculation about the discussions further spooked investors already jittery about its weak capital position. Trying to address some of those concerns, Deutsche this week sold its Abbey Life insurance business, raising $1.2 billion. + +On the defence + +Mario Draghi, the president of the European Central Bank, was dragged into the furore over Deutsche when he went to Germany to face lawmakers who have voiced doubts about the ECB’s policies. His first such trip in four years came amid intensifying criticism in Germany that low interest rates are hurting the economy. + +The state of California suspended its business dealings with Wells Fargo in response to the bank’s admission that employees created up to 2m fake customer accounts to hit sales targets. The bank’s board stripped John Stumpf, the beleaguered chief executive, of $41m in stock awards and his bonus for the year. Mr Stumpf was once again hauled in front of Congress this week. + +The Chicago Board Options Exchange, best known for its Vix indices of market volatility, agreed to buy BATS Global Markets for $3.2 billion. Based in Kansas, BATS started life only in 2005 and is now America’s second-largest equities exchange. + +Taking markets by surprise, OPEC announced that its members had reached a preliminary deal to reduce oil output, the first cut in production since 2008. Oil prices surged after the announcement. However, few details were provided about how much each country would trim back. OPEC said the specifics would be thrashed out at a meeting in November, but given long-standing disputes between Iran and Saudi Arabia, doubts were raised that the plan would come to pass. See article. + + + +Almost a year after announcing their intention to merge, and having sold off assets to satisfy antitrust regulators, shareholders in both Anheuser-Busch InBev and SABMiller agreed to the deal. The more than $100 billion acquisition creates a brewer with 30% of the global market. + +Google’s autonomous-car technology hit a bump in the road when another of its vehicles was involved in a crash. Described as the worst accident so far, the car was hit by a van that passed a red light. Google’s cars have been involved in a number of collisions but most, including the latest incident, have been the fault of the other car. It has 58 vehicles on the road, which in August covered a total distance in autonomous mode of 126,000 miles (200,000km). That is more than the average American drives in ten years. + +Politicians in America demanded more information from Yahoo about the hacking of 500m customer accounts in 2014. Thought to be the biggest data breach to date, Yahoo says that it only discovered the hack this summer. Questions were asked about how quickly it moved to inform investors and users. + +A former addiction + +BlackBerry threw in the towel and announced that it will no longer design or make smartphones, and instead outsource their development to other companies so that it can focus on software and services. BlackBerry shaped the emerging smartphone industry of 15 years ago, but rapidly fell behind its rivals: it now has less than 1% of global sales. + +It was a big week for tech-takeover rumours. Twitter’s share price surged amid reports that Salesforce, a provider of cloud-based software, was interested in taking it over. Other companies, including Disney and Google, are also said to be tempted. And Spotify was rumoured to be in talks to buy SoundCloud, which would shake up the digital-music industry. + +After toying with the idea for years, Pfizer decided not to split into two companies. It said the financial incentive for hiving off its business in drugs that are no longer protected by patents had narrowed. + +Rocket man + +Elon Musk set out his long-awaited vision for sending people to Mars. The founder of SpaceX and Tesla Motors thinks this could be possible within ten years if there are no hitches, though he admits there is a “good chance” of not succeeding that quickly. His detractors decried it as pure science fiction; his backers point out that SpaceX has already overturned conventional wisdom about rocketry. Mr Musk says his goal is to bring the cost of going to Mars down to $200,000 for a ticket, though it is unclear if this is for a one-way trip or a return. See article. + + + + + +KAL's cartoon + +Oct 1st 2016 | From the print edition + + + +More KAL's cartoons + + + + + +Leaders + + + + +Anti-globalists: Why they’re wrong + +Election 2016: Lessons of the debate + +The war in Syria: Grozny rules in Aleppo + +Ending Latin America’s oldest war: A messy but necessary peace + +Colonising Mars: For life, not for an afterlife + + + + + +Anti-globalists + +Why they’re wrong + +Globalisation’s critics say it benefits only the elite. In fact, a less open world would hurt the poor most of all + +Oct 1st 2016 | From the print edition + + + +IN SEPTEMBER 1843 the Liverpool Mercury reported on a large free-trade rally in the city. The Royal Amphitheatre was overflowing. John Bright, a newly elected MP, spoke eloquently on the merits of abolishing duties on imported food, echoing arguments made in The Economist, a fledgling newspaper. Mr Bright told his audience that when canvassing, he had explained “how stonemasons, shoemakers, carpenters and every kind of artisan suffered if the trade of the country was restricted.” His speech in Liverpool was roundly cheered. + +It is hard to imagine, 173 years later, a leading Western politician being lauded for a defence of free trade. Neither candidate in America’s presidential election is a champion. Donald Trump, incoherent on so many fronts, is clear in this area: unfair competition from foreigners has destroyed jobs at home. He threatens to dismantle the North American Free Trade Agreement, withdraw from the Trans-Pacific Partnership (TPP) and start a trade war with China. To her discredit, Hillary Clinton now denounces the TPP, a pact she helped negotiate. In Germany, one of the world’s biggest exporters, tens of thousands took to the streets earlier this month to march against a proposed trade deal between the European Union and the United States (see article). + +The backlash against trade is just one symptom of a pervasive anxiety about the effects of open economies. Britain’s Brexit vote reflected concerns about the impact of unfettered migration on public services, jobs and culture. Big businesses are slammed for using foreign boltholes to dodge taxes. Such critiques contain some truth: more must be done to help those who lose out from openness. But there is a world of difference between improving globalisation and reversing it. The idea that globalisation is a scam that benefits only corporations and the rich could scarcely be more wrong. + +The real pro-poor policy + +Exhibit A is the vast improvement in global living standards in the decades after the second world war, which was underpinned by an explosion in world trade. Exports of goods rose from 8% of world GDP in 1950 to almost 20% a half-century later. Export-led growth and foreign investment have dragged hundreds of millions out of poverty in China, and transformed economies from Ireland to South Korea. + +Plainly, Western voters are not much comforted by this extraordinary transformation in the fortunes of emerging markets. But at home, too, the overall benefits of free trade are unarguable. Exporting firms are more productive and pay higher wages than those that serve only the domestic market. Half of America’s exports go to countries with which it has a free-trade deal, even though their economies account for less than a tenth of global GDP. + +Protectionism, by contrast, hurts consumers and does little for workers. The worst-off benefit far more from trade than the rich. A study of 40 countries found that the richest consumers would lose 28% of their purchasing power if cross-border trade ended; but those in the bottom tenth would lose 63%. The annual cost to American consumers of switching to non-Chinese tyres after Barack Obama slapped on anti-dumping tariffs in 2009 was around $1.1 billion, according to the Peterson Institute for International Economics. That amounts to over $900,000 for each of the 1,200 jobs that were “saved”. + +Openness delivers other benefits. Migrants improve not just their own lives but the economies of host countries: European immigrants who arrived in Britain since 2000 have been net contributors to the exchequer, adding more than £20 billion ($34 billion) to the public finances between 2001 and 2011. Foreign direct investment delivers competition, technology, management know-how and jobs, which is why China’s overly cautious moves to encourage FDI disappoint (see article). + +What have you done for me lately? + +None of this is to deny that globalisation has its flaws. Since the 1840s advocates of free trade have known that, though the great majority benefit, some lose out. Too little has been done to help these people. Perhaps a fifth of the 6m or so net job losses in American manufacturing between 1999 and 2011 stemmed from Chinese competition; many of those who lost jobs did not find new ones. With hindsight, politicians in Britain were too blithe about the pressures that migration from new EU member states in eastern Europe brought to bear on public services. And although there are no street protests about the speed and fickleness in the tides of short-term capital, its ebb and flow across borders have often proved damaging, not least in the euro zone’s debt-ridden countries. + +As our special report this week argues, more must be done to tackle these downsides. America spends a paltry 0.1% of its GDP, one-sixth of the rich-country average, on policies to retrain workers and help them find new jobs. In this context, it is lamentable that neither Mr Trump nor Mrs Clinton offers policies to help those whose jobs have been affected by trade or cheaper technology. On migration, it makes sense to follow the example of Denmark and link local-government revenues to the number of incomers, so that strains on schools, hospitals and housing can be eased. Many see the rules that bind signatories to trade pacts as an affront to democracy. But there are ways that shared rules can enhance national autonomy. Harmonising norms on how multinational firms are taxed would give countries greater command over their public finances. A co-ordinated approach to curbing volatile capital flows would restore mastery over national monetary policy. + +These are the sensible responses to the peddlers of protectionism and nativism. The worst answer would be for countries to turn their backs on globalisation. The case for openness remains much the same as it did when this newspaper was founded to support the repeal of the Corn Laws. There are more—and more varied—opportunities in open economies than in closed ones. And, in general, greater opportunity makes people better off. Since the 1840s, free-traders have believed that closed economies favour the powerful and hurt the labouring classes. They were right then. They are right now. + + + + + +Election 2016 + +Lessons of the debate + +The first presidential debate underlined how much Donald Trump diverges from long-held Republican ideals + +Oct 1st 2016 | From the print edition + + + +MUCH analysis of the first presidential debate between Donald Trump and Hillary Clinton focused on Mr Trump’s boorishness. Mrs Clinton accused him of having called a beauty queen “Miss Piggy”. Mr Trump explained the next day that the lady in question had “gained a massive amount of weight”. No one in the audience, which included 85m Americans and many others around the world, was reminded of the Lincoln-Douglas debates. + +The evening did underline, however, vast differences of substance between the two candidates. On policy, Mrs Clinton is solidly within the mainstream of the Democratic Party and not much different from her predecessor. Mr Trump represents something completely new for the Republican Party, as a comparison of his performance on September 26th with the arguments made by Mitt Romney in the debates four years ago makes clear. + +In 2012 the Republican nominee chided Barack Obama for his naive attempts to reset relations with Russia, suggesting that Mr Obama had been conned by an ex-KGB spy. In 2016 the Republican nominee praises Vladimir Putin, even as Russian planes rain death on Syria, and reckons that the FBI is mistaken when it suggests that Russian hackers targeted the Democratic National Committee’s computers. In 2012 the Republican nominee was a strong supporter of trade with Mexico and Canada, and hoped to pursue more free-trade deals. In 2016 the Republican nominee calls NAFTA “the worst trade deal maybe ever signed anywhere”, and chides unpatriotic American firms for moving jobs to Mexico. Mr Romney fretted about the national debt; Mr Trump would send it soaring. + +Four years ago, Mr Romney was thought to have made a costly mistake when he dismissed the 47% of Americans who pay no federal income tax as moochers. Mr Trump boasted about his skill in reducing his tax bill (“That makes me smart”). After Mr Romney lost the election in 2012, some Republican strategists concluded that he had seemed too much like a CEO. In the first debate, Mr Trump gave a class on his company’s finances (“I’m extremely under-leveraged”), on its terrific assets and why he sometimes didn’t pay contractors (see article). + +Until this year, a conservative record on questions of faith and personal morality was a prerequisite for winning the Republican nomination. During the 2012 primaries there was speculation about whether Mr Romney’s quiet Mormon faith would put off such values voters. In 2016 this has all been erased. When Mr Trump divorced the first of his three wives, Ivana, he let the New York tabloids know that one reason for the separation was that her breast implants felt all wrong. + +Wanted: any good ideas + +Just over a month from the election is a good time to wonder why the Republican Party has a nominee who has abandoned so many conservative ideas and trampled over conservative values. One charitable interpretation is that everything can be explained by Mr Trump’s fame and charisma, which enable him to tap into a deep vein of voter vitriol against established politicians and give him permission to do and say things that other candidates cannot. Another is that, for some Republicans, hatred of Mrs Clinton has become more important than any idea or principle. Most simply, this election has laid bare the party’s intellectual exhaustion. Conservative leaders have spent years draping a tired tax-cutting agenda in populist slogans. Now a true populist has taken charge, and party grandees can only hope he does not mean all that he says. It is a stunning shift. And it matters. Presidential elections, unlike beauty contests, have consequences. + + + + + +The war in Syria + +Grozny rules in Aleppo + +Why the West must protect the people of Syria, and stand up to Vladimir Putin + +Oct 1st 2016 | From the print edition + + + +\JUST when it seems that the war in Syria cannot get any worse, it does. On September 19th Syrian and Russian planes struck a convoy about to deliver aid to besieged parts of Aleppo. The attack wrecked the ceasefire brokered by America and Russia, and was followed by the worst bombardment that the ancient city has yet seen. Reports speak of bunker-buster, incendiary and white phosphorus bombs raining down. + +Bashar al-Assad, Syria’s president, is destroying his country to cling to power. And Vladimir Putin, the Russian president, is exporting the scorched-earth methods that he once used to terrify the Chechen capital, Grozny, into submission. Such savagery will not halt jihadism, but stoke it. And American inaction makes it all worse. The agony of Syria is the biggest moral stain on Barack Obama’s presidency. And the chaos rippling from Syria—where many now turn to al-Qaeda, not the West, for salvation—is his greatest geopolitical failure. + +Mr Obama thinks that resolutely keeping out of the Syrian quagmire is cold, rational statesmanship. He may be “haunted” by the atrocities, but is convinced there is nothing he can usefully do. “Was there some move that is beyond what was being presented to me that maybe a Churchill could have seen, or an Eisenhower might have figured out?” Mr Obama mused in a recent interview with Vanity Fair. Mr Obama is right to think that the world’s problems cannot all be solved by American power, and that ill-considered intervention can make them worse, as when America invaded Iraq. But Syria’s agony shows that the absence of America can be just as damaging. + +Cool, rational and wrong + +As America has pulled back, others have stepped in—geopolitics abhors a vacuum. Islamic State (IS) has taken over swathes of Syria and Iraq. A new generation of jihadists has been inspired to fight in Syria or attack the West. Turkey, rocked by Kurdish and jihadist violence (and a failed coup), has joined the fight in Syria. Jordan and Lebanon, bursting with refugees, fear they will be sucked in. The exodus of Syrians strengthens Europe’s xenophobic populists and endangers the European Union. A belligerent Russia feels emboldened. + +By sending warplanes to Syria to prop up Mr Assad, Mr Putin has inflamed the struggle between Shia and Sunni Muslims. Mr Putin and Mr Assad now seem determined to take control of “useful Syria”—the line of cities from Damascus to Aleppo, and the territories to the west, forsaking the desert and the Euphrates valley—before a new American president takes office next year. Hence the ferocity of the assault on east Aleppo, the last major rebel-held urban area. + +None of this is in America’s interest. Being cool and calculating is not much use if everybody else thinks you are being weak. Even if America cannot fix Syria, it could have helped limit the damage, alleviate suffering and reduce the appeal of jihadism. This newspaper has long advocated safe areas and no-fly zones to protect civilians. The failure to strike Mr Assad’s regime after he crossed the “red line” on the use of chemical weapons damaged American credibility, as many around Mr Obama admit. Now it is Russia that sets the rules of the game. Western action that once carried little risk now brings the danger of a clash with Russia. + +Mr Obama says that Mr Assad eventually must go, but has never willed the means to achieve that end. (Some rebel groups receive CIA weapons, but that is about it.) Instead he has concentrated on destroying the caliphate: its Syrian capital, Raqqa, is under threat, and the assault on the Iraqi one, Mosul, is imminent. The president wants to avoid thankless state-building and focus on fighting terrorists. This is important, but jihadism is fed by war and state failure: without a broader power-sharing agreement in Syria and Iraq any victory against IS will be short-lived; other jihadists will take its place. To achieve a fair settlement, the West needs greater leverage. + +We still hope that Mr Obama will take tougher action. More likely, he will leave the Syrian mess in his successor’s in-tray. Any Western strategy must start from two realisations. First, the most important goal in the Middle East is to assuage Sunnis’ grievances enough to draw them away from the death-cult of jihadism and into more constructive politics. Second, Russia is not part of the solution, but of the problem. + +The West must do more to protect Syrians, mostly Sunnis, who are still beyond the grip of Mr Assad. An undeclared no-fly zone over Aleppo may be feasible. America could retaliate against Mr Assad’s forces after particularly egregious actions. It could air-drop aid into besieged areas (see article). In zones freed from IS, America should establish a secure hinterland where an alternative government can take root. + +As a Dutch-led inquiry into the destruction of flight MH17 over Ukraine in 2014 makes clear (see article), the challenge of Russia is not only, and not mainly, in Syria. The West must keep talking to Mr Putin, but resist his adventurism—starting with the maintenance of EU sanctions. Mr Putin is a bully, but not irrational. He will keep gambling for advantage for as long as he thinks the West is unwilling to act. But he will, surely, retreat as soon as he feels it is serious about standing up to him. + + + + + +Ending Latin America’s oldest war + +A messy but necessary peace + +Colombians should vote to approve the peace deal with the FARC + +Oct 1st 2016 | From the print edition + + + +FOR longer than most Latin Americans have been alive, Colombia has been at war. The conflict has claimed perhaps 220,000 lives, displaced millions and made Latin America’s third-most-populous country far poorer than it would otherwise have been (see pages 23-25). Its main belligerent was the Revolutionary Armed Forces of Colombia (FARC), a Stalinist rural army that outlived the cold war by turning to drug-dealing and extortion. Now, at last, Colombians have a chance to make peace. In doing so, they could offer an example to other war-racked countries. + +The agreement between the government of President Juan Manuel Santos and the FARC, signed in the presence of a dozen heads of state in a moving ceremony in Cartagena on September 26th, carries an unavoidable tension: between justice and peace. If Colombia had insisted that the guerrillas who maimed and murdered be properly punished for their crimes, they would have no incentive to lay down their arms. That is why in Northern Ireland, South Africa and Central America the settlement of armed conflicts involved amnesties. + +International law now requires a greater measure of justice. In Colombia the insurgents will not just disarm but will also appear in court. FARC leaders accused of crimes against humanity will appear before a special peace tribunal to face charges brought by Colombia’s attorney-general. Anything less than a full confession, up front, and they will go to jail (albeit for shorter-than-normal periods). Confess, and they will face several years of “effective restrictions on their liberty”. The agreement places the victims of the conflict at the centre of the judicial process. The aim is “restorative” justice: no court can bring back a murdered relative, but FARC leaders may be ordered to remove anti-personnel mines they laid, or rebuild shattered villages. + +Colombians will be the judge of this compromise, in a plebiscite on October 2nd. Polls suggest they will back the deal, but referendums are unpredictable (remember Brexit?). Critics complain that it offers impunity for heinous crimes. It is indeed hard to accept that FARC leaders who were responsible for holding hostages in chains for years on end, or for terrorist bombs against a Bogotá club and defenceless villagers, should end up in congress rather than in jail, as may happen. But the concessions the government has made are smaller than they look. The tribunal is likely to be rigorous. Colombian public opinion will demand that. And so will the International Criminal Court, which is watching closely. + +Álvaro Uribe, a former president, accuses Mr Santos of handing Colombia over to “Castro-chavismo”. That shows little faith in his compatriots. The country has a strong and longstanding commitment to democracy, and Colombian voters have shown no liking for Marxists. It will take a generation, genuine contrition and an ideological conversion for the FARC to become electorally competitive. The notion that the agreement will generate further violence, because it rewards crime, is similarly hard to credit. The security forces can now crack down on the remaining illegal armed groups in Colombia, including the organised criminal gangs related to the drug trade. They will have a free hand, too, to tackle any backsliding by the FARC. In Central America, peace was followed by spiralling crime. Because Mr Santos rejected the FARC’s demand to weaken the security forces, Colombia can avoid that. + +Advocates of a “No” vote say it would allow a renegotiation, and tougher terms. That is unlikely. The accord comes after four years of hard talking by an able team of government negotiators. The FARC, though weakened, was not defeated. The alternative to the deal is years of further bloodshed. + +Peace will not come overnight. The government has pledged to bring roads, public services and development to the remote rural areas hit hardest by the war. The FARC has promised to get out of drugs. Mr Santos says he will pay farmers to grow things other than coca, despite Colombia’s squeezed budget. It is vital that Colombians in conflict areas feel a swift improvement in their lives. + +Peace, or more war? + +Despite its imperfections, the peace agreement deserves voters’ backing. Its biggest prize is the least noticed one. The FARC has accepted democracy, the rule of law and the market economy—exactly the things the Colombian state has been struggling for decades to extend to the whole country. That represents enormous progress. Colombia could set an example for other war-torn places to imitate—if Colombians vote “Yes”. + + + + + +Colonising Mars + +For life, not for an afterlife + +Seeking to make Earth expendable is not a good reason to settle other planets + +Oct 1st 2016 | From the print edition + + + +MARS has been much possessed by death. In the late 19th century Percival Lowell, an American astronomer, persuaded much of the public that the red planet was dying of desertification. H.G. Wells, in “The War of the Worlds”, imagined Martian invaders bringing death to Earth; in “The Martian Chronicles” Ray Bradbury pictured humans living among Martian ghosts seeing Earth destroyed in a nuclear spasm. Science was not much cheerier than science fiction: space probes revealed that having once been warmer and wetter, Mars is now cold, cratered and all-but-airless. + +Perhaps that is why the dream of taking new life to Mars is such a stirring one. Elon Musk, an entrepreneur, has built a rocket company, SpaceX, from scratch in order to make this dream come true. On September 27th he outlined new plans for rockets that dwarf the Apollo programme’s Saturn V, and for spaceships with room for around 100 passengers that can be refuelled both in orbit and on Mars. Such infrastructure, he says, would eventually allow thousands of settlers to get there for $200,000 each—roughly the median cost of an American house. To deliver such marvels in a decade or so is an order tall enough to reach halfway to orbit itself (see article). But as a vision, its ambition enthralls. + +How odd, then, that Mr Musk’s motivation is born in part of a fear as misplaced as it is striking. He portrays a Mars colony as a hedge against Earth-bound extinction. Science-fiction fans have long been familiar with this sort of angst about existential risks—in the 1950s Arthur C. Clarke told them that, confined to Earth “humanity had too many eggs in one rather fragile basket.” Others agree. Stephen Hawking, a noted physicist, is one of those given to such fits of the collywobbles. If humans stick to a single planet, he warns, they will be sitting ducks for a supervirus, a malevolent artificial intelligence or a nuclear war that could finish off the whole lot of them at any time. + +Claptrap. It is true that, in the long run, Earth will become uninhabitable. But that long run is about a billion years. To concern oneself with such eventualities is to take an aversion to short-termism beyond the salutary. (For comparison, a billion years ago the most complex creature on the planet was a very simple seaweed.) Yes, a natural or maliciously designed pandemic might kill billions. So might a nuclear war; at a pinch climate change might wreak similar havoc. But extinction is more than just unprecedented mass mortality; it requires getting rid of everyone. Neither diseases nor wars do that. + +Otherworldly concerns + +An asteroid as big as the one that dispatched the dinosaurs might take out the whole species, but humans have had the foresight to catalogue the asteroids up to the task and none is coming close in the foreseeable future. So the chance of earthly extinction from any known cause in the next few centuries is remarkably low. As for the unknown—an evil AI, or predatory aliens with intellects as “vast and cool and unsympathetic” as those of Wells’s Martians, or the good old-fashioned wrath of God—why would they wipe humans from the face of one planet while leaving those on the rock next door in peace? + +If worrying about imminent extinction is unrealistic, trying to hide from it is ignoble. At the margins, it is better that the best and brightest share Earth’s risks than have a way to run away from them. Dream of Mars, by all means, but do so in a spirit of hope for new life, not fear of death. + + + + + +Letters + + + + +On the NHS, Hong Kong, alternative voting, socialist beer: Letters to the editor + + + + + +On the NHS, Hong Kong, alternative voting, socialist beer + +Letters to the editor + +Oct 1st 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + +Casualty + + + +You are right, if hardly alone, in pointing out that the National Health Service is in a mess (“Accident and emergency”, September 10th). But perhaps you are a little late? A royal commission reported in 1979 that, with an older population and often-expensive technical advances, costs would inevitably grow. We concluded that society must therefore “establish priorities” that would “satisfy reasonable expectations”. To do so would require extensive discussions that must be “conducted in public” and “illuminated by fact”. + +Reorganisation has been succeeded by reorganisation for nearly 40 years, but this basic debate has never been held, for unfortunately obvious reasons. Any admission that health demands must be modified and services restricted, which reasonable expectations and priorities must imply, would be politically embarrassing. But the pill, if bitter, must be swallowed, and the sooner the better. + +FRANK WELSH + +Member of the Royal Commission on the NHS 1976-79 + +Confolens, France + +The prescriptions you offered for the ailing NHS were almost as adroit as the overall diagnosis. However, introducing additional fees at the point of access would be a mistake. A five pence charge for plastic shopping bags has suppressed frivolous demand for them because consumers are well placed to balance the pros and cons. The inherent information asymmetry within a consultation carried out by a general practitioner makes it hard for patients to know whether getting that funny mole seen to is worth £10 ($13). The fact that those with the lowest incomes tend to have the worst health compounds the problem. + +Regressive fees exacerbate inequalities and encourage patients to present themselves later on with more advanced disease. Financial reform should promote equity and prevention. User fees are the wrong kind of medicine. + +DR LUKE ALLEN + +Academic clinical fellow + +University of Oxford + +I applaud you for calling for a health model focused on prevention, and for highlighting the cost savings of tackling obesity rather than spending 10% of the NHS budget on treating diabetes. Yet when I attended my local GP centre I sat in the waiting room next to large machines selling cola, Lucozade and Mars bars. We are very far from a joined-up system when commissioned services are allowed to pursue short-term income at the expense of their own patients’ longer-term health. + +PAUL KEEN + +Sheffield + + + + + +* Kudos for lifting the debate on the NHS to its fundamentals—clearly an ounce of prevention is better than a pound of cure (“Bitter pills”, September 10th). Yet, while your diagnosis is spot on, your prescription is at odds with over a century of evidence on population health improvements. Essentially, not all ounces of prevention are equivalent when it comes to prolonging life or preventing the impairments of ill health. Empowering people with responsibility for their health may make some difference to life expectancy at the margins. However, the director general of WHO has stated that the biggest threat to human health is from non-communicable diseases which are “driven by the effects of globalisation on marketing and trade, rapid urbanisation and population ageing—factors over which the individual has little control and over which the health sector has little sway”. If British politicians and policymakers want to ward off the real possibility of life expectancy decline, they must embrace, rather than hide from, the broader commercial and economic determinants of ill health and death. + +KENT BUSE + +UNAIDS + +Geneva + +Sarah Hawkes + +UCL + +London + + + + + +Politics in Hong Kong + +We would like to respond to your article on elections in Hong Kong (“A spot of localist bother”, August 27th). You erroneously said that “China insisted on being able to vet the candidates through an ‘election committee’ dominated by the party’s sympathisers in Hong Kong”. The committee in question is not the election committee. It is the nomination committee charged with nominating candidates for election by universal suffrage. This is a provision in the Basic Law, Hong Kong’s mini-constitution passed by China’s National People’s Congress in 1990. Student protesters were calling for “civic nomination”, which is not part of the Basic Law. + +You also said that the University of Hong Kong’s recommendation of Johannes Chan as its deputy vice-chancellor was “vetoed by a governing council packed with outside members appointed by Mr Leung”. But only seven of the university’s 24 council members are appointed by Hong Kong’s chief executive, C.Y. Leung, acting as chancellor of the university. Upon taking office Mr Leung followed the rule of reappointing some of these seven members who were appointed by his predecessor and who had served for less than their six-year terms. + +Finally, you suggested that “the direction of travel under a man assumed to be a closet member of the Communist Party” is clear. Mr Leung has categorically stated that he has never been a member of the Communist Party in any form or description. Indeed, he made public statements to this effect and signed a declaration as required by law upon his election. He has not joined any political party since then. + +ANDREW FUNG + +Information co-ordinator + +Office of the Chief Executive of Hong Kong + +The localists’ desire to change Hong Kong’s status as an “inalienable” part of China is doomed and there are legitimate questions to be asked regarding their motives, arguments and strategy. Localist Cantonese sentiment in Hong Kong is remarkably similar to that of Brexit: inward-looking, chauvinistic and hindered by a misplaced superiority complex. Besides rattling China, their all-or-nothing approach is sending chills through Hong Kong’s establishment. A substantial part of the population has a strong interest in holding on to the status quo. They have a lot to lose and are reluctant to provoke China and harm their unique position to surf on the surging wave of its prosperity. + +By taking on both the Chinese and the Hong Kong governments the localists not only diminish their chances of success but also pose a threat to the city’s future. Enter Hong Kong’s youth who, despite being dependent on China, resolutely reject everything Chinese. International firms increasingly rate young mainland Chinese as more worldly, more flexible, better at English and better educated all round. + +In the meantime, the media in the West look on approvingly, wishing the localists success in a war no one else is prepared to wage. + +JOSEPHINE BERSEE + +Hong Kong + + + + + +To AV and AV not + +You warn Labour centrists against splitting from the party, noting how hard it is to break through under a first-past-the-post electoral system (“Salvaging Jerusalem”, September 17th). You should take your share of the blame. Britain had a chance in a referendum to modestly improve its electoral system in 2011, to one that would let social democrats stand against Corbynites without splitting the vote. But you rejected it, complaining that “it encourages voters to flirt with extremists, knowing they can make centrist parties their second preference” (“Yes or No?”, April 28th 2011). + +Well, now we know. It would have encouraged voters to flirt with centrists, knowing they could make Jeremy Corbyn’s Labour their second preference. + +IAN MCDONALD + +London + + + + + +Only here for the beer + +With reference to your article on socialist beer (“You must remember this”, September 17th) Pilsner Urquell, brewed in the Czech city of Plzen, is the oldest brand of pale ale and the origin of the term “pils”. It used to be widely available in Europe and America but seems to have been squeezed out of the market almost entirely now. + +WALTER LASSALLY + +Chania, Greece + +* Letters appear online only + + + + + +Briefing + + + + +Colombia’s peace: A chance to clean up + + + + + +Colombia’s peace + +A chance to clean up + +For all its imperfections and complexities, the agreement between the government and the FARC can transform a country that has been at war for 52 years + +Oct 1st 2016 | TUMACO | From the print edition + + + +A FEW decades ago, Tumaco must have been a kind of paradise. Built on two small islands in the glaucous shallows of a large bay on the Pacific, its beaches are watched over by frigate birds and pelicans. Now its population of 115,000, most of whom are Afro-Colombians, live in some of the most deprived conditions in Colombia. Yet bottles of Royal Salute 21-year-old whisky, priced at 500,000 pesos ($172), “sell like water”, says a sales assistant in one of the port’s liquor stores. + +The reason why can be found an hour’s drive east and a further hour’s ride in a fast launch up the Mira river. El Playón is a clutch of huts and bars blasting out vallenato folk music. The ensign of the Revolutionary Armed Forces of Colombia (FARC)—the national flag with an image of two AK-47 rifles crossed over a map of Colombia superimposed on it—flies from a tall pole at the waterside. + +For most of this century, the slice of land between the river and Ecuador has been FARC territory. That has helped the coca trade that entrenches inequality and violence—and drives the demand for pricey Scotch—down on the coast. It also led to almost daily firefights with government troops. Until a few weeks ago it would have been unthinkable for your correspondent to drop in unannounced. + +But if all goes well, El Playón will soon be becoming a normal part of Colombia. In October some 200 FARC troops here, like up to 15,000 of their comrades across the country, will assemble at a designated area and start putting their weapons into containers under the watchful eyes of a UN mission that will later supervise their destruction. “There’s optimism, but there’s also a lot of mistrust,” says a burly man who is the civilian leader in the FARC territory and gives his name as “Grossman”. + +The FARC’s disarmament and conversion into a political party is the crux of a peace agreement forged over four years of hard talking in Havana and signed in Cartagena on September 26th. It is not quite true to say, as Juan Manuel Santos, the president, told the UN General Assembly on September 21st, that “the war in Colombia is over.” There are other illegal armed groups. But the struggle between the FARC and the state, exacerbated in earlier years by right-wing paramilitaries, was by far the biggest conflict (see chart). It was responsible for most of the 220,000 deaths due to conflict and thousands of kidnappings seen over the past five decades. It displaced perhaps 6m people. + + + +The agreement comprises 297 dense pages. It is of enormous complexity and involves controversial trade-offs, especially between peace and justice. Politically, if not legally, it can only come into effect if it is ratified by Colombian voters in a plebiscite on October 2nd. Polls suggest that around 60% of those that turn out will vote Yes. But will enough do so to meet the minimum 4.5m votes (13%) required by the law under which it is being held? The country has been split by a campaign in which the naysayers, inspired by Álvaro Uribe, a former president, accuse Mr Santos of selling out democracy and claim he could and should have struck a harder bargain. The Yes campaign counters that its opponents really favour war. “This is the best agreement that was possible,” Mr Santos told The Economist. + +A libertarian streak + +Most Colombians yearn to see the back of a conflict that is unique in Latin America in both its longevity and intensity. It owes much to both geography and history. The size of France and Spain combined, Colombia’s mountain chains, deep valleys, trackless tropical lowlands (llanos) and inhospitable coasts make it hard for the state to control. Its people have long had a libertarian streak. “We always thought we could rebel against an unjust order. That’s how we Colombians were brought up,” says César Gaviria, a former president. Colombia was exceptional in Latin America in having just one military president in the 20th century—and only for four years. + +That did not make it peaceful. Two political parties, the Liberals and Conservatives, fought periodic civil wars. The FARC, founded in 1964, grew out of communist peasant guerrillas in the mountains south of Bogotá who had supported the Liberals in the last of those civil wars. In its first two decades its impact was marginal. But in the early 1980s Colombia became the supply hub for the growing demand in the United States for cocaine. Taxing drug production, along with kidnapping and extortion, gave the FARC the resources to expand even though it had little popular support—a lack which distinguished this conflict from the earlier civil wars. It built a rural army that had some 20,000 troops, at its peak, backed by a mainly urban militia of similar size and, for a while, a legal political party, the Patriotic Union (UP); the aim was to take over the state. + +The threat the FARC posed engendered a lawless response. Land-owner self-defence groups, later reinforced by drug-trafficker foot-soldiers, created a national paramilitary structure which, with the complicity of some army officers, slaughtered some 3,000 UP members and visited terror upon villages seen as sympathetic to the FARC—which responded with terrorism of its own. By the turn of the century, Colombia began to look like a failed state. In 2002, normally moderate voters turned in desperation to Mr Uribe, a rancher-politician who promised to hound the FARC to defeat and, to popular acclaim, presided over a big security build-up. + +Mr Uribe and Mr Santos, his defence minister in 2006-09, pushed the FARC back, away from the cities, deeper into the mountains and jungles. Using precision bombs, helicopters and much better intelligence, the government killed three of the FARC’s senior leaders. Desertion thinned its rank and file. The FARC knew it could no longer win the war. + +The negotiations launched by Mr Santos in 2012 had a single aim: to end the conflict. Two things made them difficult. The vast majority of Colombians abhor and mistrust the FARC. And international law is much tougher than it was. Colombia used to use unconditional amnesties to curtail conflicts—it did so in the 1950s and 1989-91—but these are now frowned upon under the Rome statute which set up the International Criminal Court. + + + +Apart from procedures for the FARC’s disarmament, the agreement covers just four points. One commits the government to rural development and land reform—something Colombia, one of the world’s most unequal countries, needs anyway, as Sergio Jaramillo, one of the government’s negotiators, points out. Another commits the FARC to stop drug trafficking and help government attempts to eradicate coca. And then there are the provisions under which the FARC will submit to justice and take part in democratic politics, which form the deal’s controversial core. + +The agreement applies the principles of transitional justice, a branch of international law which tries to reconcile the tension between justice and peace in conflict-resolution. The FARC rank-and-file will receive amnesties. Leaders who are charged with crimes against humanity, which include kidnapping, rape and recruitment of child soldiers as well as murder, must go before a Special Peace Tribunal which will be appointed by a panel drawn from respected Colombian and international institutions. Those who make a full confession up front will face five to eight years of “effective restriction of liberty”; how restricted will be up to the tribunal. Those who do not confess and who are found guilty will go to jail. The tribunal will also have jurisdiction over crimes by members of the armed forces, and the power to review sentences currently being served. + +A free pass to politics + +The agreement allows the FARC’s leaders to run for office (though the tribunal might restrict those who had confessed to war crimes from serving in office if they won). For the next two elections, it sets aside a minimum of 10 seats in the legislature for the FARC’s future political party, five in the 166-seat house of representatives and five in the 102-seat senate. The accord also creates 16 seats in areas battered by the conflict where only locals will be able to run. + +Add all this up and it amounts to “impunity for the FARC” and its crimes, says Ivan Duque, a senator who heads the No campaign. At the very least, he thinks those guilty of crimes against humanity should serve time on prison farms and be barred from taking part in politics while doing so. As for the FARC’s new party, “It’s crazy that they have these benefits that parties which didn’t kill don’t get, when they haven’t said sorry or renounced their Marxist-Leninist ideology,” argues Rafael Nieto, a deputy justice minister under Mr Uribe. The free pass into Congress is even harder for many Colombians to swallow than lenient treatment by the courts. + +His critics accuse Mr Santos of being in too much of a hurry to sign a deal, motivated by vanity and a desire to win the Nobel peace prize (which he might). Had he held out, they say, he might have got the FARC to hand over its ill-gotten gains to victims. He bridles at the suggestion: “At the outset of the process I set out my red lines and we haven’t crossed any of them”. There was, for example, no question of amnesties for crimes against humanity. And some tougher demands might have meant no deal. The talks stalled for almost a year on the government’s initial requirement that at least some FARC leaders go to jail. “You can’t ask a guerrilla movement to go into politics without its leaders,” says Malcolm Deas, a British historian of Colombia. + +Despite its length and detail, the agreement leaves a lot to be fudged and finessed (what one source involved in the talks, referring to the president, calls “Santista constructive ambiguity”). The tribunal, which will play a key role in the interpretation of all those details, is likely to have a bias for rigour. Its 74 judges, including 15 foreigners, will receive charges and evidence from Colombia’s powerful attorney-general’s office. Néstor Humberto Martínez, the attorney-general, says he has prepared eight detailed reports on more than 100,000 FARC crimes. He will seek to track down any assets the FARC does not declare. + +One of the criticisms of the agreement is that it will be incorporated into the constitution. This was something that the FARC insisted on, following the Colombian habit of trying to write everything into law rather than trusting in political guarantees. Enshrining the agreement’s public-policy choices (some of them politically justifiable but less than optimal, such as subsidies for peasant farming and FARC co-operatives) in the country’s basic law looks bad. But the appearance is probably worse than the reality. “It’s not a constitutional reform by the back door,” says Humberto de la Calle, the government’s chief negotiator. “It’s a transitional article to guarantee that future governments comply with the agreements.” Some parts of the agreement may not survive the scrutiny of Colombia’s powerful constitutional court. + +Concord in Cartagena + +Much will depend on the speed and effectiveness with which the agreement is implemented. Shortly after the plebiscite the FARC will assemble in 27 areas across the country, including the one over the river from El Playón; 30 days after the signing ceremony its soldiers must start placing their weapons in the UN’s containers, a process to be completed four months later. The guerrillas, many of whom were recruited as peasant children, will be trained in trades and, where necessary, taught to read; they will also get a subsidy equal to 90% of the minimum wage for two years. + +Because a group of serving generals joined the Havana talks, trust between the FARC’s military leaders and the armed forces is surprisingly high. And because this time few doubt that the FARC has given up its war for good, there is little likelihood that its new political party will suffer the fate of the UP. One small FARC front on the Brazilian border has rejected the peace agreement. But the vast bulk of the guerrillas are set to demobilise. Guerrilla delegates from around the country endorsed the agreement at a FARC conference held in the llanos in September. + +The big security worry concerns who will fill the vacuum the FARC will leave behind in the areas they controlled. One candidate is the ELN, a much smaller guerrilla group that shows no sign of wanting peace. Then there are organised criminal gangs which include recycled paramilitaries. According to General Óscar Naranjo, a former national police chief and a member of the government negotiating team, there are some 5,000 people in the three biggest gangs, 2,000 of them armed. They are reported to be offering mid-ranking FARC commanders $300,000 each to join them. + +The defence ministry is implementing a plan to move beyond the all-consuming focus on the FARC that has shaped the security forces over the past 15 years. The army is stepping up operations against the ELN and against cocaine laboratories, and is forming a joint task force with the police to tackle organised crime, according to Luis Carlos Villegas, the defence minister. “We have begun to occupy FARC territory” to prevent criminals from doing so, he adds. + +What looks neat and tidy in Bogotá looks messier on the ground. Take the Tumaco area, where under the FARC’s aegis, coca cultivation has surged from 1,800 hectares (4,500 acres) in 2000 to 16,900 hectares in 2015; critics of Mr Santos blame his decision to stop spraying coca crops. In the port the FARC’s militias have degenerated into sicarios (guns for hire) and are in the process of switching to the Urabeños, a criminal gang. A community policing scheme exists, in theory; but where General Naranjo, who introduced such schemes nationally, recommended 12 officers per barrio, here there are only two. Nobody doubts that the battle for control of drug exports to Mexico is the main driver of violence. + +From Bogotá to reality + +Government officials see the peace agreement as offering the first real opportunity to wipe out coca for good. Some 40% of Colombia’s coca is in just 11 FARC-dominated municipalities, says Rafael Pardo, Mr Santos’s minister for the post-conflict. Now the government plans to combine attacks on drug processing with voluntary agreements for eradication and substitution. + +Will it work? “Every farmer here has coca, not because we support drug trafficking but because nothing else gives you a decent income,” says Mr “Grossman” in El Playón. “We don’t trust the state, there’s corruption, but if there’s money from the United States, you could have substitution.” (So much for the FARC’s anti-imperialism.) Creating viable economic alternatives depends on building roads and providing technical support, and the cash for such ventures will be tight; peace has come at a time of low oil prices. The myriad government agencies involved find it hard to co-ordinate with each other and with local government. “The first thing they have to do is de-Bogotá-ise this,” says Edwin Palma, the secretary of Tumaco’s town council. + +The most overblown of the many fears surrounding the peace agreement is the notion that the FARC will win power at the ballot box. The guerrillas are the political bosses of only 500,000 Colombians (barely more than 1% of the population) and impose their domination by force. “They can’t go on threatening and narco-ing to the same extent as they did in the past,” points out Mr Deas. That means their power will decline, not increase. + +For these reasons, Claudia López, a senator from the centre-left Green Alliance, doubts that the FARC’s candidates will win many of the 16 new electoral districts. But the FARC’s irruption, and its money, will prompt a realignment on Colombia’s left, which the conflict has made unusually weak. “This has been a country in which it’s been easier to exterminate political foes rather than compete with them,” says Ms López. Even so, she doubts any coalition containing the FARC would get more than 5% of the vote in 2018. Its chances depend on it communicating a genuine sense of contrition for its crimes, and abandoning the Stalinist dogmatism that few share. + +Amid the arguments over detail, some Colombians risk losing sight of what they are gaining. At the opening of the talks Iván Márquez, the FARC’s chief negotiator, demanded: “a peace which implies a profound demilitarisation of the state and radical socioeconomic reforms to found true democracy, justice and freedom...Today we’ve come to unmask that metaphysical assassin that is the market, to denounce the criminality of finance capital, to put neoliberalism in the dock as the hangman of peoples and the manufacturer of death.” + +None of that happened. The agreement involves the FARC’s acceptance, for the first time, of democracy, the rule of law and the market economy. Back in 2001, during a failed peace process, Alonso Cano, then the FARC’s number two, told The Economist: “Our struggle is to do away with the state as it now exists in Colombia.” He added that the FARC would not demobilise for “houses, cars and scholarships…or a few seats in Congress”. That is more or less what they are about to do. + +Many of the poorest areas of the country, like Tumaco, can now be connected to the national market for the first time and receive the public services they lack. And with the war with the FARC over, the Colombian state can concentrate on tackling organised crime, which is responsible for most of the remaining violence. Whatever the caveats, these are enormous gains. + + + + + +United States + + + + +The Clintons’ financial affairs: Bill and Hillary Inc. + +Donald Trump’s finances: Touching the void + +Saudi Arabia and 9/11: Enter the lawyers + +The campaigns: Heard on the trail + +Florida: Where past and future collide + +Election brief: climate change: Notes from the undergrowth + +Lexington: No happy ending + + + + + +The Clintons’ financial affairs + +Bill and Hillary Inc. + +The Clintons’ activities outside politics are both inspiring and worrying + +Oct 1st 2016 | From the print edition + + + +SEVERAL years ago your correspondent attended a talk that Bill Clinton gave to the rich and powerful of a megacity in Asia. On a sweltering night the former president discussed his philanthropic foundation and the global battle against AIDS, climate change and poverty. The host, the boss of a local bank, then asked Mr Clinton to give the audience a special insight into whether his wife would run again for president. Mr Clinton sidestepped the question—while trying to give the star-struck crowd a sense that they really had a window into American power. His financial disclosures later indicated he was paid $500,000 for the speech, one of hundreds of talks he has done for his personal benefit, not for his charity. + +The mix of politics, profit and philanthropy evident that evening has become a problem for the Clintons. Their foundation and financial affairs are now a liability: a swirl of truth, innuendo and crazed conspiracy theories. What shortcomings there are, it is true, pale into insignificance compared with Donald Trump’s empire of lies and misconduct (see article). But Mrs Clinton has been repeatedly forced to defend her own financial affairs, weakening her campaign. + +Scrambling to limit the damage, the Clintons say they will wind down part of their activities, including the Clinton Global Initiative (CGI), a philanthropic event that operates as a division of the Clinton Foundation, their charity. In New York on September 21st, at the CGI’s final gathering, Mr Clinton croaked that it had “turned out better than I ever dreamed”. The crowd, including the actor Ben Affleck, New Zealand’s prime minister, activists and weepy billionaires, hugged to John Lennon’s “Imagine”. Yet a review of the Clintons’ affairs suggests there are things to worry about as well as admire. + +You may say I’m a dreamer + +The Clintons’ activities have three pillars. First, their role as politicians and the holders of public office. Second, their private income-generating activities, mainly “for-profit” speeches that they give for their own gain rather than for the foundation or other causes. The Economist estimates that, based on their tax returns and other disclosures, the couple have given 728 such talks since Mr Clinton left office in 2001, making $154m of fee income. Of this, 86% came from Mr Clinton. Mrs Clinton gave no for-profit speeches while in office, but because of Mr Clinton’s speaking tours, $49m, or 32% of the couple’s for-profit speech revenue, was made while she was secretary of state in 2009-13. Some gigs echoed the banality of the campaign trail—try the American Camping Association in Atlantic City. Others were far-flung, with visits to Moscow, Jeddah and Beijing. About 43% of total revenue came from events abroad. + +After the crisis of 2008-10 concerns rose about banks “capturing” regulators and politicians, so payments from these firms are controversial. The frequency of the Clintons’ for-profit speaking appearances at some banks does raise eyebrows: 13 talks for Toronto Dominion, 12 for Goldman Sachs and ten for UBS. Of the 23 Western banks that regulators classify as systemically important, 12 have paid the Clintons on a for-profit basis. Still, overall only 15% of the Clintons’ cumulative speech income came from financial firms. Mrs Clinton’s campaign declined to comment on the figures in this article. + +The third pillar is the Clinton Foundation, a sprawling philanthropic conglomerate. It was formed in 1997 to fund Mr Clinton’s presidential library and then morphed into something bigger. Mr Clinton says the inspiration came just after he left office, in 2001, when he was based in Harlem and helped local firms there. He realised the benefits of partnerships. After the attacks of September 11th 2001, he raised funds to help the victims’ children. In 2002 the foundation took on HIV in the emerging world. Since then, new divisions have been added to respond to new problems. Today it has 12 divisions, including its health activities abroad, the CGI events and its work in Haiti. + +The foundation’s expansion and operating performance have been impressive. But its governance, sources of capital and approach to related parties are flawed. + +Revenues from donations and grants rose from $10m in 2001 to $338m in 2014, the last year for which accounts are available. Assets rose from $21m to $440m. Unlike many foundations, the Clinton Foundation operates projects on the ground and employs 2,000 staff. It runs a fairly tight ship, with 64% of revenues in 2014 spent on its projects rather than on overheads. + +The foundation is surrounded by hyperbole, so judging the outcomes it has delivered is difficult. It claims to have helped 100m people, and if you include the activities by participants at CGI events, this number rises to 535m, or one in every 14 people on Earth. Even if you discount this figure by 90%, it would be a major achievement. About two-thirds of the foundation’s spending is by the division that works on HIV. Here its record is indisputably good, particularly in working to reduce the price of antiretroviral drugs. + +The foundation’s governance shows little sign of independence from the family or their political careers. Chelsea Clinton acts as vice-chairman. (Dynastic appointments are common in American philanthropy: Michael Bloomberg’s daughters are on his foundation’s board, for example.) The chairman, president and several senior executives worked for the Clintons in government or on their political campaigns. + +Mr Clinton wanted a philanthropic empire, but unlike America’s tycoons he had to do it with other people’s money. The foundation is mainly financed by the pillars of society, for example the Gates Foundation. But an estimated $181m, or 9%, of its cumulative revenues has come from foreign governments and $54m of that, or 3% of the total, from autocratic states such as Saudi Arabia and Kuwait. A further 40% has come from other foreign sources, including multilateral bodies and companies. Donations are either earmarked for specific projects, or go into a general kitty. + +An obvious question is what ancillary benefits donors thought they were getting, and here the Clintons’ sloppy approach to conflicts of interest is evident, with the three pillars of their activities—public, private and charitable—colliding. Donors to the foundation attempted to get, and on occasion may have got, favours from Mrs Clinton while she was secretary of state. Most of these requests appear to have been for meetings with her. There was a flow of communication between donors, aides and Mrs Clinton’s government office. + +The $154m that the Clintons have made from for-profit speeches also involves potential conflicts of interest. You might expect the cost of hiring an ex-president for an evening to atrophy over time as his proximity to power declines. But Mr Clinton’s for-profit speaking fees have risen since Mrs Clinton became a big political figure in her own right, especially for events abroad (see chart). The benign explanation is that there has probably been a general inflation in the fees famous speakers get over the past decade. But the Clinton Foundation has sustained Mr Clinton’s profile. And some customers may have perceived that Mr Clinton’s marriage gave him an insight into the government while Mrs Clinton was secretary of state. + + + +Belatedly the Clintons have realised how damaging their arrangements are. If Mrs Clinton becomes president, Mr Clinton says he will step down from the foundation and that it will stop taking donations from foreigners and private firms. In a similar effort to resolve potential conflicts of interest, Tony Blair, who seems to have mimicked the Clintons’ business model, said this month that he would cease much of his commercial work and focus on his charitable activities. It seems likely that the Clinton Foundation will eventually be broken up, with each division having to secure its own donors. + +The foundation has done many good works. But it grew in an innocent phase of globalisation, when the public were a little more forgiving of politicians getting rich while simultaneously seeking office, helping the needy and raising funds from business people and foreign governments. After the financial crash, and at a time when a majority of Americans feel the economy is rigged by an elite, the collision of politics, power, money and suffering seems tawdry. It will become tragic if the Clintons’ financial affairs assist the election of a demagogue. + + + + + +Donald Trump’s finances + +Touching the void + +Weeks from a presidential vote, one candidate’s finances are impenetrable + +Oct 1st 2016 | NEW YORK | From the print edition + + + +“IT’S about time that this country had somebody running it that has an idea about money,” Donald Trump said during the presidential debate on September 26th. Yet Mr Trump’s finances are the murkiest of any candidate in memory. He makes the Clintons look like paragons, and also makes a mockery of disclosure rules for candidates. + +There are four problems. First, Mr Trump’s business is baffling. There is no holding company with accounts, and no major part of it has been publicly listed for long. Mr Trump has made a 104-page declaration of wealth to the electoral authorities. But the rules governing these forms are hopeless—they do not distinguish between revenue and profit, and any asset worth over $50m need not have its precise value specified. Mr Trump says he is worth $10 billion. An analysis by The Economist in February suggested $4 billion, but without audited accounts, who knows? The same forms show that Hillary Clinton is worth $11m-53m. This appears to exclude property and, perhaps, some of Bill’s assets. + +Second, Mr Trump has not made public his tax returns. During the debate he again claimed that he is unable to because the Internal Revenue Service is auditing him, but the IRS says he is free to reveal what he likes. His reticence may be because he has paid little tax (the Clintons have paid a rate of 37-46% over the past decade). But he may also be nervous because the tax returns will show that he is fibbing about how rich he is. It seems impossible to establish the truth. + +The third problem is that unethical conduct may have taken place within Mr Trump’s realm. Accusations of dubious behaviour abound, from casino deals and defaults in Atlantic City, to the fate of students at the failed Trump University. This month the Washington Post reported that Mr Trump’s small foundation used $258,000 of donors’ cash to settle his commercial legal disputes. Mr Trump’s spokesman says the report is “peppered with inaccuracies and omissions”. + +Finally, it is unclear how financial conflicts of interest would be managed by a President Trump. He wants to put his business friends into his cabinet. By convention businessmen-turned-politicians put their activities into blind trusts, as Ross Perot promised to in 1992 and 1996. But Mr Trump has indicated that any trust would be run by his children, who are involved in his campaign. + +The complete absence of a boundary in Mr Trump’s mind between politics and profit was shown during the debate, when he gave a thinly disguised plug for one of his new hotels. Perhaps, if he wins, he will shift America’s seat of government from 1600 Pennsylvania Avenue, Washington, DC, to Trump Tower at 725 Fifth Avenue, New York. + + + + + +Saudi Arabia and 9/11 + +Enter the lawyers + +The president’s veto is ringingly overturned by Congress + +Oct 1st 2016 | WASHINGTON, DC | From the print edition + +Demanding justice, at a price + +UNDER pressure from families bereaved by the terror attacks of September 11th 2001, and with the threat from Islamic extremism a potent talking-point in the general-election campaign, Congress has voted overwhelmingly to allow Americans to sue foreign governments for aiding and abetting terrorist acts in America. The decision on September 28th overturned a veto by President Barack Obama and brushed aside furious lobbying by Saudi Arabia, the primary target of the new law. A vote in the Senate passed 97-1, followed by a 348-77 vote in the House of Representatives, easily clearing the two-thirds hurdle for a veto override: the first of Mr Obama’s time in office. + +The vote prompted something close to presidential scorn, with Mr Obama, in an interview with CNN television, calling the congressional decision a “mistake”, driven by the desire not to be seen “voting against 9/11 families right before an election”. His press spokesman went further, calling the Senate vote “the single most embarrassing thing” the chamber had done in decades. + +The law, the Justice Against Sponsors of Terrorism Act (JASTA), weakens the longstanding principle of “sovereign immunity”, under which governments are mostly shielded from lawsuits filed in the courts of another country. Before its passage such officials as John Brennan, director of the CIA, John Kerry, the secretary of state, and the chairman of the joint chiefs of staff, General Joseph Dunford, all expressed concerns that the law may harm security co-operation with allies and prompt other countries to pass reciprocal laws, potentially exposing American troops, spooks and envoys to lawsuits. + +Mr Obama raised the hypothetical example of an attack in America by a radicalised British citizen, prompting a victim to use the new law to sue the British government, “our closest ally”, allowing lawyers to demand “all kinds of documents” from Britain. He further imagined American troops facing lawsuits after a traffic accident during disaster relief in, say, the Philippines, noting that America’s ability to secure immunity from local prosecution for its personnel is “mainly” based on offering reciprocal rights to foreign governments. + +Supporters of JASTA, who come from both parties, say that the law merely gives September 11th victims a chance to hold foreign sponsors of terrorism to account, and to explore in an American court long-standing allegations that Saudi authorities knew about or supported the hijacking plot, which involved 15 citizens of that country—though Saudi officials deny such links, and the formal 9/11 Commission that probed the attacks found no evidence that the Saudi government as an institution was involved. Backers of JASTA note that sovereign immunity is already not absolute, because lawsuits are allowed under some circumstances against countries that have been officially designated as “state sponsors of terrorism” by the American government. Only three countries—Iran, Sudan and Syria—currently labour under that badge of dishonour, which is imposed after lengthy official review. + +Politicians made uneasy by JASTA include the chairman of the Senate Foreign Relations Committee, Bob Corker of Tennessee, a Republican. Shortly before the vote to override the president’s veto, Mr Corker told reporters that the danger of the new law was that “you end up exporting your foreign policy to trial lawyers”. Even some co-sponsors of JASTA admit that their bill may have “ramifications” that have not been properly considered. + +Members who think JASTA a mistake may return to the law after November 8th and seek legislative fixes, perhaps by narrowing its scope to the victims of the 2001 attacks. Congress is not at its bravest weeks before a general election. + + + + + +The campaigns + +Heard on the trail + +Oct 1st 2016 | From the print edition + + + +Ladies’ night + +“She gained a massive amount of weight and it was a real problem.” + +Donald Trump fat-shames Miss Universe 1996. Fox and Friends, post-debate + +A bad workman ... + +“My microphone was terrible. I wonder, was it set up that way on purpose?” + +Mr Trump explains his poor debate performance. Fox News + +... blames his tools + +“Anybody who complains about the microphone is not having a good night.” + +Hillary Clinton responds + +American History X + +“I think even most eight-year-olds will tell you that whole slavery thing wasn’t very good for black people.” + +Barack Obama takes issue with Mr Trump’s assertion that blacks have never been worse off. ABC News + +Grumpy old men + +“He’s up in years.” + +Donald Rumsfeld, 84, judges former president George H.W. Bush, 92, on his rumoured support for Mrs Clinton. MSNBC + +The enemy of my enemy + +“Trump…[says] anything that comes to his tongue.” + +Taliban leaders on the debate. They were sorry Afghanistan got no mention. NBC + +Selling your soul + +“I’m just trying to get this Cruz sticker off my car.” + +Ted Cruz’s ex-spokesman decries his endorsement of Mr Trump. New York Times + +Art for art’s sake + +“We found Mr Trump. He arrived some time after five. He has damage.” + +Miami police announce the recovery of a nude Trump statue. Palm Beach Post + +Don’t call us + +“REMINDER…being mad at a presidential candidate in a debate is NOT a reason to call 911.” + +The Lawrence, Kansas, police department appeals for calm + +Whoops + +“Today I received an e-mail from @realDonaldTrump asking for money ... Of course I had an answer for him.” + +Vicente Fox, former president of Mexico + + + + + +Florida + +Where past and future collide + +The most important state battle looks likely to be another nail-biter + +Oct 1st 2016 | KISSIMMEE AND MELBOURNE | From the print edition + + + +DAMARIS OLLER came to America from the Dominican Republic in 1974, worked hard, lived legally and raised two children. But she did not become a citizen—because she saw no need to—until last April. “It was because of that man,” she explains at the El Jibarito café in Kissimmee, in central Florida, where she serves tasty slow-roast pork, plantains and beans. “I was afraid that if Donald Trump becomes president I’d be kicked out the country.” + +Ms Oller is the Hispanic voter of Hillary Clinton’s dreams. Frightened and disgusted by Mr Trump’s promise to deport 11m undocumented people, and by his slandering of Mexicans as rapists and the Spanish language as unAmerican, she says she will vote for the Democratic nominee as if her life depended on it: “Estoy con ella” (“I’m with her”). She is also a Floridian Hispanic, which makes her one of the most important voters in America. + +Florida is the biggest swing state, with 29 electoral-college votes up for grabs, so more likely to determine who wins on November 8th than any other. Shifting from red to blue to red, then blue again, Floridians have picked the winner in the past five elections. And if Mrs Clinton can muster a big turnout among Hispanics—only around 25% of whom say they are for Mr Trump—they will probably pick her. + +Once staunchly Republican, Hispanic Floridians were already turning deep blue, as the community gets younger and less dominated by conservative Cuban-Americans, even before Mr Trump’s obscenities. In 2012 60% of them backed Barack Obama, which helped him win the state by less than one percentage point. A subsequent increase in the Hispanic population, partly driven by a massive influx of Puerto Ricans propelled by the economic crisis on their island, should help Mrs Clinton emulate that success. She would probably then become president. Because while she, at a pinch, could lose Florida and still triumph overall—provided she wins one or two other big swing states, such as Pennsylvania and Virginia—Mr Trump’s lower threshold in the electoral college means he does not have that luxury. Lose Florida, and he is probably toast. + +Hence the huge effort Mrs Clinton has been putting into the Sunshine State. Her campaign has opened 57 field offices there, staffed by several hundred paid employees, and plans to spend $36.6m on television advertising, especially in central Florida—the epicentre of the battleground state. There, along the densely populated route of the interstate highway that links Tampa to Daytona Beach, the state’s ethnically diverse and Democratic-voting south meets its more conservative, whiter north—and Florida’s elections are traditionally settled. Yet Mrs Clinton is currently getting a poor return on her efforts. Last month she was around five points up in Florida. Now she and Mr Trump, who has spent little on his campaign by comparison, are tied. + +In part, this illustrates what a weirdly deadlocked condition Florida is in. It is where America’s past and future collide—a destination for aged middle-class white sun-seekers and working-class Hispanics, a place where pick-up trucks flying Confederate flags roar through Spanish-speaking enclaves. As a political counterweight to the growing Hispanic population, the influx of white pensioners, who are likelier to vote Republican and to vote at all, largely explains why Florida’s Republican past is proving so unyielding. Of the 1.46m people added to the state between 2010 and 2015, 46% were aged over 65, and most of those were white. That is a group Mr Trump should win handsomely. + +At a rally held in an airport hangar in Melbourne, south of Daytona Beach, on September 27th, the enthusiasm of his supporters was impressive. It was his first appearance since the debate with Mrs Clinton, which many in the huge crowd felt he had fluffed—but none seemed to care. “He dropped the ball, but then he’s not a professional politician, and that’s what we need,” said Josh, a self-described professional hunter. “It’s time we had an honest person in the White House,” said his wife, Susie, a housewife. When Mr Trump’s vast, Trump-branded plane landed and came sharking towards the hangar, the huge crowd surged towards it, phone cameras raised, mouths gaping. When their champion (and he alone) stepped from the plane’s belly and surveyed the Earth, like some visiting alien in a business suit, they gasped in wonder. The contrast with Mrs Clinton’s smaller, more downbeat rallies is hard to exaggerate. No wonder her supporters, in Florida and elsewhere, are worried. + +The polls suggest she is on course to lose white Floridians by around 20 points—almost as badly as Mr Obama did in 2012. Despite the Trumpian bogey, she is meanwhile getting only around 55% of Hispanics. She is also slightly lagging Mr Obama’s imposing 95% success rate with black voters, the state’s third-biggest ethnic group. Mrs Clinton’s best hope of winning Florida is to compensate for these shortfalls, and counter Mr Trump’s more fired-up supporters, with a brilliant voter-turnout operation. To that end, her campaigners are labouring to help tens of thousands of Puerto Ricans, who have settled in and around Orlando, to register to vote. + +It is a laborious task; on an afternoon in the arcades and Puerto Rican cafés of Kissimmee, with one of Mrs Clinton’s registration teams, no one was added to the electoral roll except Ms Oller. Grumbling also abounds about Mrs Clinton’s campaign; it is said to be making too much of Mr Trump’s remarks on immigration, which Puerto Ricans, as American citizens, only care about up to a point. That may well be so; though carping about a campaign, five weeks before an election, is often a proxy for shaky confidence. That would be understandable. Florida is shaping up to be a nail-biter. + + + + + +Election brief: climate change + +Notes from the undergrowth + +Hillary Clinton’s environmental plans are pragmatic. Donald Trump’s are non-existent + +Oct 1st 2016 | From the print edition + +In Flint, don’t drink the water + +DESPITE deluges in the South, droughts in the West and fires throughout national forests this year, the words “climate” and “change” have seldom been uttered together on the campaign trail. Fifteen of the 16 hottest years on record have occurred since 2000. Yet Donald Trump has claimed that global warming is a Chinese hoax designed to thwart American businesses (he also denied saying so at the first debate between the candidates, on September 26th). Hillary Clinton believes that “climate change is real” and that dealing with it will create jobs in the renewable-energy sector. In sum, the two candidates offer completely different environmental platforms. + +Uncoupling emissions growth and economic expansion is important to slowing climate change. Total energy consumption in America has dropped 1.5% since Barack Obama became president, according to the White House; in that time the economy has swelled by 10%. America now generates more than three times as much electricity from wind, and 30 times as much electricity from solar, as it did eight years ago. + +Most voters accept that climate change is happening. But Republicans and Democrats disagree as to why, according to the Yale Programme on Climate Change Communication, a research group. Half of Mr Trump’s supporters reckon natural causes explain it, whereas three in four of Mrs Clinton’s backers say, with almost all climate scientists, that man-made emissions are to blame. + +In 2015 the most robust deal yet on curbing global carbon emissions emerged. The Paris Agreement aims to limit global warming to “well below” 2ºC above pre-industrial temperatures. For its part, America promised to lower its emissions of carbon dioxide by 26-28% by 2025, as measured against the levels of 2005. + +An important step to achieving this goal was unveiled last year: the Clean Power Plan. This proposes the country’s first national standards to limit carbon-dioxide emissions from power plants—America’s largest source of greenhouse gases. Legal challenges from fossil-fuel groups and two dozen mostly Republican-led states saw the Supreme Court put it on hold eight months ago. Some opponents argue the plan is unconstitutional; far stronger claims are made that the Environmental Protection Agency (EPA) is overstepping its remit. Hearings on the plan began on September 27th. Whatever the outcome, the EPA retains the right to regulate carbon dioxide: the justices ensured that by declaring it a pollutant in 2007. + + + +This is one area where Mrs Clinton is running for a third Obama term. She intends to make America a “clean energy superpower” by speeding up the process of greening that Mr Obama began. Within four years she wants half a billion solar panels installed, and by 2027 she plans for a third of electricity to come from renewables. Mrs Clinton laments that poorer areas are often the most polluted—citing, for example, the filthy water in Flint, Michigan. States and cities which build greener infrastructure, such as more thermally efficient buildings, will get handouts worth $60 billion. Mrs Clinton is vague about how she would pay for this, but slashing fossil-fuel subsidies could be part of the answer. Such handouts came to nearly $38 billion in 2014, according to Oil Change International, a research outfit, though estimates vary wildly. + +Green types argue that such ambitious plans are possible. But since America is already lagging on its climate pledges for 2025, according to a study just published in Nature Climate Change, such optimism appears misplaced—especially as Mrs Clinton has no plans either to price or to tax carbon. In this she has learned from Mr Obama’s failures. His attempt to pass a cap-and-trade bill floundered in 2010, and he has tried to avoid Congress on environmental issues ever since. The Clean Air Act of 1963, for example, supposedly underpins the Clean Power Plan, allowing him to dodge the Senate. Mr Obama has also used his executive authority to ratify the Paris climate deal and to create the world’s largest protected marine area off Hawaii. + +Mrs Clinton may follow suit with environmental executive actions of her own, according to hints from her campaign chief, John Podesta, Mr Obama’s environmental mastermind. She may seek to regulate methane leaking from existing gas installations and to tighten fuel-efficiency standards. + +But what one president enacts, the next can challenge. Mr Obama’s penchant for executive action leaves the door open for Mr Trump to stall and perhaps reverse environmental policies if he becomes president. His intention to rip up the Paris Agreement will prove hard to carry out in a single term, however: it comes into force before January, and untangling America from its provisions could take around four years. Mr Trump favours oil and gas production on federal lands and opening offshore areas to drilling. He also plans “a top-down review of all anti-coal regulations”. Such moves could imperil the Paris deal anyway. If the world’s second-largest polluter shirked its pledges to cut emissions, many other countries would wriggle out of theirs. + +Either candidate, as president, would be at the mercy of the markets. A glut of fossil fuels means that coal production has declined by almost a quarter since the highs of 2008. Improvements in fracking technology may see American shale output stabilise, and perhaps even grow, if it allows firms to compete more efficiently with rivals in Saudi Arabia. But the cost of solar and wind power, and of the storage needed to smooth out their variations, will keep dropping. If Mr Trump becomes president, energy firms may reduce emissions anyway. If Mrs Clinton does, they may give her green policies a needed boost. + + + + + +Lexington + +No happy ending + +Hillary Clinton goaded Donald Trump into rash admissions, but America remains divided + +Oct 1st 2016 | From the print edition + + + +“WE LIVE in a world that has walls. And those walls have to be guarded by men with guns,” snarls the demonic Colonel Jessep at the end of “A Few Good Men”. Moments later he admits that, to maintain standards in his front-line unit, he ordered the fatal bullying of a young Marine: “You’re goddamn right I did.” It is one of cinema’s great confession scenes, and unexpectedly came to mind during the first presidential debate at Hofstra University on Long Island, on September 26th. + +Time and again Donald Trump was baited by Hillary Clinton into outbursts of Jessep-like candour. Reminded that in 2006 he had wished aloud for the property crash that would cost millions their homes, deeming such a slump a chance to “make some money”, Mr Trump leaned to the mic and growled: “That’s called business, by the way.” Another rash boast concerned Mr Trump’s refusal to release his tax returns. Perhaps, Mrs Clinton mused, her rival does not want Americans to know that he is not as rich as he claims, or that in the only annual returns that he has ever made public (while seeking a casino licence), he paid no federal income taxes. “That makes me smart,” snapped Mr Trump. + +What about Mr Trump’s reputation for refusing to pay contractors in full after they install marble in his hotels, or design his latest golf course, Mrs Clinton demanded to know? Why, she told her opponent, in a small flourish of political theatre, an architect whom you failed to pay is in the debate audience tonight. Mr Trump scoffed: “Maybe he didn’t do a good job.” He was as defiant when the moderator, Lester Holt of NBC television, asked what he would say to non-white Americans after years of promoting the racially charged conspiracy theory that President Barack Obama was not born in America. “I say nothing,” retorted Mr Trump, instead praising himself for forcing Mr Obama to release his long-form birth certificate in 2011. + +The surface explanation is that Mr Trump is too thin-skinned to help himself. Certainly Mrs Clinton provoked her opponent masterfully. She cast him as a child of privilege, bankrolled with millions from his late father’s property empire (which was sued for racial discrimination, she noted). This worked, up to a point. A distracted Mr Trump used debating time to quibble about his father’s generosity—“a very small loan”. In an ambush that was still generating headlines days later, Mrs Clinton reminded him of his insults towards a woman in a beauty contest that he oversaw, whom he mocked as “Miss Piggy” and, allegedly because she is Latina, as “Miss Housekeeping”. + +Mr Trump’s nastiness helped Mrs Clinton all the more because she did not make the best use of her own speaking time, too often reciting wish-lists of policies as if reading the minutes from a committee meeting. In part, she waffled because she has some real political vulnerabilities. Mr Trump was effective (if wrong in his economic analysis) when he attacked Mrs Clinton in harsh, simple terms for supporting the NAFTA trade pact with Mexico and Canada in the 1990s, and for initially endorsing a big new push for a Trans-Pacific Partnership (TPP) opening up trade with Asia-Pacific countries. Mr Trump accused Mrs Clinton of turning against the TPP after hearing him criticise the deal. The sad reality, for free-trade advocates, is that Mrs Clinton was not just frightened by Trump rallies in rustbelt swing states. She also ran scared of the TPP-bashing wing of her own party, stirred up by the old leftist who made her Democratic presidential primary such a slog, Senator Bernie Sanders of Vermont. + +But there is a deeper explanation for Mr Trump’s willingness to admit to dodging taxes and bilking small contractors. Though the businessman lacks the medals and the coiled-spring physique of the fictional Colonel Jessep (played by a wolfish Jack Nicholson), both men confess out of defiant pride, not shame. Both prize their personal codes of hyper-masculine, authoritarian success above the complaints of soft, hand-wringing critics. And both love walls. “You fuckin’ people. You have no idea how to defend a nation,” spits the colonel at his tormentors, a team of city-dwelling, highly educated military lawyers. More important, many Trump supporters would cheer that sentiment. It is one reason why they forgive their candidate, though they hardly love all rich men who avoid taxes, or rip off small businesses. + +What makes a good man, anyway? + +The first presidential debate exposed, with unhappy clarity, how the candidates are speaking to two different Americas. The Trump and Clinton coalitions do not just disagree about tax rates or health policy. Their worlds hardly overlap. Among white men without college degrees, Mr Trump leads Mrs Clinton four-to-one, while she leads him among non-whites by three-to-one. Among college-educated white women (normally a swing voter bloc), Mrs Clinton has an almost two-to-one edge. Vitally, their coalitions subscribe to different value systems. To Mr Trump and his backers, politicians like Mrs Clinton have allowed jobs to be stolen, let murderous immigrants and terrorists stream across open borders, and spent American blood and treasure on naive attempts at nation-building in far-flung corners of an ungrateful world. And by failing to secure America, such self-dealing, rotten elites have lost the right to be heard on any other subject. Meanwhile, in pressing the case that Mr Trump is guilty of racism and sexism, Mrs Clinton is appealing to slices of the electorate that she needs in her corner—black voters, Hispanics, young people and college-educated whites—and whose moral code says that an unrepentant bigot can hardly claim to be a good person. + +Colonel Jessep meets a satisfying fate, raging as he is led away by grim-faced military police. But that is because in court, laws beat personal honour codes. No consensus exists among American voters about what qualifies a leader to rule. Whoever wins the 2016 election, half the country will think them a disgrace on Day One. This is a drama with no neat ending. + + + + + +The Americas + + + + +Venezuela: The angry 80% + +Bello: A discredited profession + + + + + +Venezuela + +The angry 80% + +How a much-loathed regime hangs on to power + +Oct 1st 2016 | CARACAS | From the print edition + + + +“WE ARE the 80%!” declared Henrique Capriles, governor of the Venezuelan state of Miranda and a leader of the opposition to the country’s autocratic left-wing government. He was one of a parade of speakers who took to a makeshift stage at the Miranda sports complex in Caracas on September 26th to rail against the regime. The week before it had taken steps that will make it far more difficult to remove the president, Nicolás Maduro, by constitutional means. + +Protests will start immediately, said the opposition Democratic Unity alliance (MUD). October 12th will be “a special day of national mobilisation”. It will be followed by the “real conquest of Venezuela”, on October 26th-28th. Those are the days fixed by the national electoral council (CNE) to record public support for launching a referendum to recall Mr Maduro. + +Mr Capriles is right. Venezuelans have been driven to near-desperation by shortages of food, medicines and other basic goods and by inflation of around 700%. Millions are having to skip at least one meal a day. According to one recent poll, 84% would vote to remove Mr Maduro from office. But the regime is manoeuvring to ensure they do not get that chance, or that it happens too late to trigger a fresh presidential election. Despite economic catastrophe and popular rage, the government is finding ways to cling to power. + +The most blatant is its control of institutions that should be independent. The opposition rally was a response to a decision by the CNE on September 21st to put up every obstacle it could think of to an early recall referendum. Under the constitution, 20% of the electorate must register their support for the initiative. The CNE ruled that this must take place on three days at polling stations that will be open for seven hours a day (they will close for lunch). It will make available less than a third of the 19,500 voting machines the opposition asked for. People will have no more than 90 seconds to cast their votes, if the threshold is to be crossed in the time allocated. + +Recall waiting + +Although the 20% bar set by the constitution is a national one, the CNE insists that the opposition meet it in each of Venezuela’s 24 states. The biggest hurdle thrown up by the CNE is its ruling that the referendum, if it takes place, will be held in the middle of the first quarter of 2017 at the earliest. If Venezuelans vote Mr Maduro out of office after January 10th the vice-president will serve out the rest of his term, which ends in January 2019. That job is now held by Aristóbulo Istúriz, who may be marginally less dogmatic than Mr Maduro. But Mr Maduro, or factions in the regime that may prove to be more powerful than he is, can change the vice-president at any time. The opposition’s plan to hold a referendum this year never had a chance, sneer senior officials. + +The regime shows no desire to correct policies that have wrecked the economy, such as price controls and artificial exchange rates. But it is finding ways to stop a horrible situation becoming worse, at least for a while. Despite a fall in oil production, a recent modest recovery in its price helps. The heavily indebted state oil company, PDVSA, is trying to stave off the threat of default by offering to swap $5.3 billion-worth of bonds held by investors for new bonds with longer maturities. China, which has lent Venezuela at least $50 billion in return for oil, is thought to be accepting later deliveries. + +After widespread looting in June, the regime found enough money to import more flour. It has partly reopened its border with Colombia after shutting it last year (largely to stop smuggling of fuel and other subsidised goods into Colombia). Thousands of Venezuelans have crossed over to shop in Colombia’s relatively well-stocked stores. The army took over the distribution of essential goods in July, putting one general in command of toilet paper, another in charge of potatoes and so on. Bizarre though it is, the “Great Mission of Sovereign Supply” may be reducing the leakage of goods to the black market. Bimonthly deliveries of subsidised goods are now arriving on time in many states. Queues still snake outside bakeries, but supplies of bread now sometimes last until those at the back reach the tills. + +None of this has assuaged the anger of ordinary Venezuelans or of the organised opposition. “This government is going to fall,” proclaim graffiti daubed on city walls. That slogan is chanted by participants in small sporadic protests that have broken out across the country. The MUD, while united in wanting to end the ruinous reign of chavismo, which began under the late Hugo Chávez in 1999, has been divided on how to bring that about. Luis Vicente León, a pollster, identifies three “clusters” of opinion within the opposition: those who want to pursue the referendum despite the CNE’s intransigence, those who want to boycott it and a smaller group that calls for a mass uprising. + +The plan put forth by the MUD has the assent of all three tendencies but no one pretends it is a blueprint for the “real conquest of Venezuela”. Protests big enough and prolonged enough to rattle the regime require sacrifice and staying power from beleaguered Venezuelans. Many are too caught up in the struggle for survival to fill the streets for weeks on end. Selective repression frightens many. Some opposition supporters admit that the government will survive at least until 2019. + +That does not preclude change. The embattled president is hinting that he may become a bit more pragmatic. At the signing of an accord to end Colombia’s war with the FARC guerrilla army on September 26th, he invited the American secretary of state, John Kerry, to visit Venezuela this year. Mr Maduro said that he hoped this would lead to a “new era of good relations” with the country he (falsely) blames for Venezuela’s economic woes. José Luis Zapatero, a former Spanish prime minister, has been a frequent visitor to Caracas. He is trying to broker a dialogue between the regime and the opposition, the release of political prisoners and measures to safeguard the powers of the opposition-controlled national assembly. + +Mr Maduro might not be the one to preside over such an arrangement. Even if the referendum to topple him fails, chavistas may replace him with a less discredited figure well before the next election. His enemies “are coming from inside”, says Mr León. But it will take more than a new figurehead to win over the 80%. + + + + + +Bello + +A discredited profession + +Young Latin Americans are political, but are not becoming politicians + +Oct 1st 2016 | From the print edition + + + +ON THE eve of independence day in Mexico last month, thousands of protesters marched through the capital to demand the resignation of the president, Enrique Peña Nieto. The demonstration was not huge, and in other countries would have been unremarkable. But not in Mexico, where the presidency has long been viewed with deference. + +Mexicans blame Mr Peña for a sluggish economy, a renewed rise in violent crime, perceived (though denied) conflicts of interest and, most recently, for inviting and then being humiliated by Donald Trump. His approval rating of 23% is the lowest for a Mexican president since records began. Yet Mr Peña is not the most unpopular leader in Latin America. That dubious honour does not even belong to Venezuela’s Nicolás Maduro (21%) but rather to Luis Guillermo Solís of Costa Rica (10%), according to Consulta Mitofsky, a Mexican pollster. Chile’s Michelle Bachelet languishes in the low 20s. Colombia’s Juan Manuel Santos has only recently risen above that, in part because of his peace deal. Only half a dozen of the region’s presidents, headed by Danilo Medina of the Dominican Republic, get a thumbs-up from their electorates. + +A few years ago leaders were generally popular. That was largely thanks to the commodity boom, which gave them money to splurge on social programmes and subsidies. Now governing is harder: money is tighter, and public intolerance of corruption has grown. That has prompted an anti-incumbent mood, but not yet an opening for a new generation of leaders. Rather, a gulf has opened up between an increasingly dynamic civil society and fossilised political systems. + +Peru’s election in June was won by Pedro Pablo Kuczynski, then 77 years old. Chile’s contest next year is likely to be between Ricardo Lagos (who will be 79) and Sebastián Piñera, both former presidents. Polls for Mexico’s election in 2018 are headed by Andrés Manuel López Obrador, who will run for the third time, and Margarita Zavala, whose husband, Felipe Calderón, was president in 2006-12. In Brazil no new faces are among the leading candidates to succeed Michel Temer (aged 76), who took over from the impeached Dilma Rousseff. + +What is preventing political renewal? The discredit of politics and the alienation of the young are common to democracies around the world. So are political parties based on 20th-century ideologies that are struggling to adapt to a new world of individuals empowered by social media. It is particularly worrying that bright young people are turned off politics as a career in Latin America because of the weight of its “millennials”: 156m Latin Americans, or 26% of the total population, are aged 15-29. “Everybody thinks that politics is for the corrupt, for opportunists, so the challenge now is to give it a new meaning and a new value,” according to Cecilia Chacón, a youngish city councillor in La Paz. + +A factor blocking renewal is presidential re-election, allowed in 14 countries. Even when this is non-consecutive, “it sends presidents not into retirement but to the substitutes’ bench, from where [as in basketball] they expect to return,” says Daniel Zovatto of International IDEA, a body that promotes democracy. + +A second factor in some countries is that the battle against corruption risks degenerating into a demagogic criminalisation of politics, says Luiz Felipe d’Avila of the Centre for Public Leadership, an NGO in São Paulo. Brazilian prosecutors have rightly pursued the huge corruption scandal centred on Petrobras, but honest ministers may spend years fighting lawsuits. + +Mr d’Avila does sees new leadership emerging, but at local level, where entrepreneurs and activists are running in mayoral elections this month. Those with a local reputation have less need of a party machine or corporate donations. He hopes new local leaders will go on to run for congress. + +It is not that young Latin Americans are apolitical. Street demonstrations demanding accountability from leaders have become a feature of the region. Many home-grown NGOs have sprung up (in the past they tended to depend on foreign charities, with their own agendas). As well as wanting better health care, education, public services and more opportunities, millennials mobilise about other issues, ranging from gay marriage and animal rights to climate change. + +There are some younger entrants to formal politics, such as former student leaders still in their 20s who are now in Chile’s congress. But in the region’s established political parties, it is hard to rise to the top. Unless the parties find ways to adapt to rapidly changing societies, they risk paving the way for a new crop of populist outsiders or for chronic conflict. + + + + + +Asia + + + + +Thailand’s economy: The dangers of farsightedness + +Cambodian politics: The velvet glove frays + +Protest in South Korea: Death by water cannon + +Mould-breaking politicians (1): Going into battle + +Mould-breaking politicians (2): Twice a minority + + + + + +Thailand’s economy + +The dangers of farsightedness + +The junta lavishes attention on the economy’s future but neglects the poor of today + +Oct 1st 2016 | KHON KAEN | From the print edition + + + +IN PLANNING for the future, democratic politicians dare not look far beyond the next election, lest they lose power before the future arrives. Thailand’s military rulers have no such qualms. They have rewritten the constitution to guarantee themselves a guiding hand over future governments even after elections resume. That has given them the confidence to draw up a 20-year plan for the economy. In a speech in Bangkok on September 28th, Prayuth Chan-ocha, coup leader and prime minister, promised to turn Thailand into a developed country by 2036. + +The junta sees Thailand climbing to a fourth stage of economic development (“Thailand 4.0”) beyond agriculture, light manufacturing and heavy industry. This next stage will feature new “growth engines”, such as biotechnology, the internet of things and “mechatronics” (a fusion of mechanics and electronics). + +In pursuit of this vision, some welcome structural reforms are under way. The junta has passed an inheritance tax; one on land and property will follow. It has also begun to reform the corporate governance of the country’s 56 state-owned enterprises, hoping to free them from political interference, even if not from public ownership. To bind the country closer together, the government is contemplating big outlays on infrastructure, including $51 billion to be spent on railways, roads and airports. + +Much remains to be done. Thailand’s service sector is the most protected in South-East Asia. Neither America nor the European Union is willing to negotiate a free-trade deal with the junta, even as they talk to such regional rivals as Indonesia, the Philippines and Vietnam. + +Nonetheless, the regime’s economic plan has left it open to an unusual charge: it is holding too many seminars on the long term and neglecting the short term, says Suradech Taweesaengsakulthai, a businessman in Khon Kaen, a north-eastern provincial capital. The junta’s efforts to advance structural reform are more impressive than its efforts to revive demand. That is not something that can be said about most of the world’s governments. + +A revival of domestic demand is necessary. Thailand’s economy is operating well below capacity. Inflation is far less than the central bank’s target; the current-account surplus is strikingly high (about 10% of GDP); private credit is subdued (growing by 5% in the first quarter) and sovereign debt is modest (44% of GDP in 2015). Public investment, thanks to the junta’s big plans, is growing at a double-digit pace, but Thailand’s indebted consumers remain cautious and private investment is stagnant (see chart). + + + +The overall shortfall in demand will amount to about 1.4% of GDP this year, according to the IMF. Strip out spending by foreign tourists and the gap is even larger, as the current-account surplus attests. This lack of spending is manifest in the inflation figures: consumer prices fell for 15 straight months last year and this. They rose by only 0.3% in the year to August. + +Stagnant demand is especially visible in the provinces. The rural economy has contracted for seven quarters in a row. Nongpetch Khunnasarn, a used-car dealer outside Khon Kaen city, the political heartland of the government ousted by the junta, has not made a sale for two months. Under Yingluck Shinawatra, the deposed prime minister, she sold one a week. + +In Ban Phue, an hour’s drive from Khon Kaen, two years of drought and falling agricultural prices have led to a collapse in farm incomes. Last year Bangkok ordered farmers not to plant a second crop, because of poor rains. This year farmers are running a lottery to determine who can draw stored rainwater. + +Thailand’s farmers used to rely on ballots, not lottery tickets, to get what they needed. When Thaksin Shinawatra, Yingluck’s brother, became prime minister in 2001 he aimed to bolster the income of the poor who voted for him. He introduced cheap medical care, accessible rural credit, higher minimum wages and generous price floors for agricultural goods. At one point in his sister’s tenure, a tonne of rice brought in as much as 20,000 baht ($625). It now fetches 8,000 baht, thanks to the fall in global prices and the removal of the government’s price floor. “If the government does not pay more, what can we do?” asks Anong Wannasupring, a farmer. + +For all of its waste and corruption, the Shinawatra style of clientilistic mass politics helped to spread spending power to the poorer regions, where local bigwigs doled out funds disbursed from the central government. All that has changed under the junta, which has kept a firmer grip on the purse-strings. + +The National Village Community Fund, which has allocated 500,000 baht each to almost 80,000 villages for rural projects, is now administered by the ministry of interior. The state’s Special Financial Institutions, which provide rural credit, are now regulated by the central bank, having previously been the playthings of provincial politicians. These days, if you wait for money from Bangkok, “you’ll wait forever,” says Mr Suradech. + +His complaint is confirmed by a startling calculation. The World Bank reckons that over 70% of Thailand’s public expenditure in 2010 benefited Greater Bangkok, home to 17% of the country’s population. In no other economy with a comparable level of income is government spending as skewed, say the bank’s economists. + +Rather than lift the shopping power of the rural masses, the junta has aimed to boost spending by tourists and urbanites. It has cut taxes markedly for the relatively few businesses and people that pay them. It has also succeeded in doubling the number of visitors from China to 10m a year. + +Bangkok’s efforts to claw back fiscal decision-making may curb clientelism. But this reconcentration of power may also result in a reconcentration of prosperity. The renewed centrality of “one man in Bangkok”, says Ms Nongpetch, the used-car dealer, has been bad for business. + + + + + +Cambodian politics + +The velvet glove frays + +A strongman falls back on old habits + +Oct 1st 2016 | PHNOM PENH | From the print edition + +An opposition politician’s lot + +LIKE many old people new to social media, Hun Sen, Cambodia’s longtime strongman, has swiftly gone from sceptic to oversharer. Visitors to his Facebook page see him not only praying at temples and gravely shaking hands with world leaders; he also mugs for selfies with adoring crowds, plays with his grandchildren and hacks his way around a golf course. Scarcely a moment of his recent tour of the provinces went undocumented. + +Politicians everywhere use social media to humanise themselves and connect directly with voters. Mr Hun Sen faces local elections next year and a national contest in 2018. On his recent provincial swing he pressed flesh, announced local infrastructure projects as though they were acts of personal largesse and even freed birds from captivity—a ritual good deed in local Buddhist practice. But in case his efforts to win hearts and minds fall short, he appears to have a contingency plan: intimidate the opposition and civil society. + +At a meeting of the UN Human Rights Council this week, Samol Ney, Cambodia’s ambassador, insisted: “The judiciary is…an independent institution.” But in July the Phnom Penh Post published minutes from a central-committee meeting of the ruling Cambodian People’s Party (CPP): it said that, to avoid being toppled by popular protests, it would have to “strengthen the state’s equipment of power, especially the armed forces and the courts”. The government has brought defamation suits against an array of opposition politicians and activists, including Ny Chakrya, a human-rights advocate sentenced on September 22nd to six months’ imprisonment and a hefty fine. In August three employees of an environmental NGO were convicted, despite the prosecutor admitting in court that there was no evidence to support the charge. + +Mr Hun Sen fears a repeat of the election of 2013, in which the CPP won only a narrow victory over the Cambodia National Rescue Party (CNRP), amid an atmosphere of general discontent. The CNRP alleged election fraud and declared it would boycott parliament; violent protests followed, in which at least four people died. + +Unlike other regional strongmen, such as Prayuth Chan-ocha in Thailand, or the leaders of Vietnam and Laos, both avowedly single-party states, international opinion matters to Mr Hun Sen. Cambodia relies on foreign aid and NGOs; to keep funds flowing, he must maintain at least a veneer of democracy. A genuine opposition party and a lack of electoral bloodshed are essential. + +The trick is keeping the opposition genuine but unthreatening. One tactic is to alternate between conciliation and repression. The government lured the CNRP’s president, Sam Rainsy, back from his Parisian exile in 2013 with swiftly broken promises of reform. Mr Sam Rainsy returned to Paris last year, pursued by an arrest warrant. The party’s second-in-command, Kem Sokha, has been holed up in its headquarters since May to avoid appearing in court in various cases related to his alleged affair with a hairdresser. On September 9th a court convicted him in absentia of refusing to appear for questioning, sentencing him to five months in prison and a fine of 800,000 riel ($200). He should have parliamentary immunity, but the courts say it does not apply, although CPP officials have ignored summonses to appear before the tribunal investigating atrocities under the Khmer Rouge regime without consequence. Mr Kem Sokha reportedly plans an appeal; if it is denied, he will be expelled from parliament. + +Since the trial, the government has taken to staging military exercises near the CNRP headquarters. The CNRP has threatened massive demonstrations. In turn, Mr Hun Sen has vowed to “eliminate” protesters. One rumour holds that tanks and other military gear have been redeployed from the Thai border to Phnom Penh. + +In recent days cooler heads have prevailed: Mr Kem Sokha has urged followers to avoid “violent, rude or attacking” speech, and Mr Hun Sen has declared a temporary “ceasefire” for the Pchum Ben holiday this week. The CNRP said on September 27th that it would end its boycott of parliament; the next day representatives of the two parties met for talks. The CNRP has a list of demands. The government may agree to some of them, and may even honour its word for a few months. But Cambodians are familiar with this pantomime. It never ends well for the opposition. + + + + + +Protest in South Korea + +Death by water cannon + +The violent demise of a demonstrator touches a chord + +Oct 1st 2016 | SEOUL | From the print edition + + + +“ANOTHER has been killed like this, again,” lamented the mother of Lee Han-yeol, who was fatally injured by a tear-gas canister in 1987 during a demonstration against the military regime of Chun Doo-hwan. She was among many attending the funeral of Baek Nam-gi, a 69-year-old South Korean activist and farmer. Mr Baek was knocked over by a blast from a police water cannon during a demonstration last year; after ten months in a coma, he died on September 25th. + +Clashes between demonstrators and police have a special resonance in South Korean politics. The death of Mr Lee became one of the defining moments of the country’s transition to democracy. As he lay in a coma, fellow students circulated a photograph of him, bloodied and slumped in the arms of a friend. Almost 30 years on, protests, frequent and raucous, are still a big part of public life. But just how far it is legitimate for protests to go, and how police should respond, are still matters of fierce debate. + +Mr Baek’s death struck a chord in part because he epitomised the dogged activism that helped to put an end to the authoritarian order that endured from the second world war until the late 1980s. He first protested against Park Chung-hee, president from 1962 to 1979 and father of South Korea’s current, democratically elected president, Park Geun-hye. He was twice expelled from university in Seoul in the 1970s for his dissent. + +At one point, when a warrant was put out for his arrest, he found refuge in a cathedral, and subsequently spent five years as a monk. The law did eventually catch up with him: he spent time in prison for violating the strict restrictions on political activity imposed by martial law. He was so committed to the cause that he named one of his children Minjuhwa, which means “democratisation”. + +Even after a series of former opposition figures were freely elected president (starting in 1992), Mr Baek continued to join protests, in support of another cause dear to many Korean hearts: rice farming. The protest during which Mr Baek was injured was intended to persuade the new President Park to keep her promise to maintain huge subsidies and an artificially high price for rice, which had fallen thanks to free-trade agreements, but is still double the world price. At least 68,000 farmers, unionists and other activists (130,000, according to the organisers) faced off against 20,000-odd police (the authorities typically aim for an overwhelming police presence at big demonstrations). + +The police shot water laced with pepper spray at protesters from their cannons, and continued to blast water at Mr Baek even as he lay on the ground. A photograph of the scene was shared widely on social media, prompting outrage. Many of the protesters, some of whom carried iron bars, were also violent: 100 policemen were injured and 40-odd police buses damaged. + +When two farmers objecting to early plans to open the rice market a little died after a battle with police in 2005, the president of the day, Roh Moo-hyun, a former human-rights advocate, sacked senior officers and apologised. Ms Park, a conservative, has not apologised for Mr Baek’s treatment. The police said apologising for every injury was “inappropriate”; they have repeatedly requested an autopsy (a court ordered one on September 28th), presumably in the hope of being exonerated. The UN’s special rapporteur on freedom of assembly this year noted “a slow, creeping inclination” in South Korea to erode it; the use of water cannons to target lone protesters, he said, was “difficult to justify”. + +Im Byeong-do, a blogger, says that South Korea’s democratic governments still view demonstrations as a challenge to their authority. Han Sang-gyun, a union leader who helped organise the rally in November, was held accountable by the courts for the violence that ensued and sentenced to five years in prison—an unusually harsh penalty. As democracy has flourished, the nature of protests has shifted. Candlelit rallies, for example, have become common. Yet those too are still often treated as riots, says Mr Im—and that pressure may in turn be hardening the culture of protest. + + + + + +Mould-breaking politicians (1) + +Going into battle + +A new governor takes on vested interests, up to a point + +Oct 1st 2016 | TOKYO | From the print edition + + + +IN HER first two months on the job Yuriko Koike, Tokyo’s governor, has ruffled many feathers. She began before she was even elected, by running without the endorsement of the Liberal Democratic Party (LDP), of which she is a member but which supported another candidate. Since taking office she has revealed that the site to which the city’s main fishmarket is supposed to move has not been properly decontaminated; she is banning her staff from working past 8pm in the name of “life-work balance” and she has declared war on financial waste and corruption—taking the lead by pledging to halve her own salary. The hallmark of her tenure, she says, will be “major change” to the way the city is run. + +In fact, it is a major change simply having someone like her as governor—mayor, in effect, of Tokyo prefecture, with a population of 13.6m and an economy roughly the size of Canada’s. Not only is she a woman (unlike 87% of Japanese parliamentarians). She is also neither a political dynast (unlike five of the past seven prime ministers), nor a party stalwart. That played to her advantage in the election, but, alas, will limit her clout when taking on the old-boys’ network of city politics, as she has promised to do. + +Pledges to take on vested interests tend to be popular in Japan. Fully 85% of Tokyo-ites approve of Ms Koike’s handling of the fishmarket issue, for instance. But changing her pay and her staff’s working hours is one thing; shaking things up outside her austere, cavernous offices in north-western Tokyo is quite another. + +Ms Koike may well be able to rein in the rapidly rising budget for the 2020 Olympics, which Tokyo will host. And she seems likely to triumph in the row about the fishmarket, although it has infuriated developers and brought her into conflict with Shintaro Ishihara, a former governor who is being blamed for the failure to decontaminate. But she will struggle to eliminate incestuous practices, such as amakudari, or “descent from heaven”, the system by which senior bureaucrats glide into cushy jobs in one of the many public or private bodies affiliated with the city government after retirement, earning as much as 10m yen ($100,000) a year. “She is in a bind,” says Koichi Nakano of Sophia University. “She needs popular support and that means looking unafraid of vested interests, but if she continues like this she will face a nasty counter-attack.” As it is, the tabloid press has begun to publish unfavourable stories. + +Ms Koike, who has changed party several times, has a knack for political survival. But her record is not quite as iconoclastic as she suggests. Although she was Japan’s first female defence minister, she resigned after less than two months in office, over a minor scandal. She is best known for promoting “cool biz” dress during a stint as minister of environment, an effort to get businessmen to doff jackets and ties in summer to save electricity. + +Some observers speculate that Ms Koike will take her battle against corruption only so far, and focus on other priorities instead. One pledge she highlights is a plan to provide more nurseries, making it easier for mothers to work—something needed to ease Japan’s labour shortage and stubborn sexism. That is an indication of her pragmatism: as a conservative and member of Nippon Kaigi, a nationalist group which champions traditional values, this is not natural ground for her. She is also likely to reach an accommodation of some kind with the LDP, on similar grounds. She does not rule out setting up a party of her own, boasting, “I could create a party in three days.” But she would probably prefer to have the LDP’s imprimatur as she confronts many of the party’s members and allies in Tokyo. Just how far the confrontation will go, however, remains an open question. + + + + + +Mould-breaking politicians (2) + +Twice a minority + +An unlikely candidate is leading in the race to run Indonesia’s capital + +Oct 1st 2016 | JAKARTA | From the print edition + +The anti-infidel lobby + +MANY pundits have predicted that the race to become the next governor of Jakarta will be an especially nasty one, fraught with racial and religious discord. It began harmoniously enough on September 24th, the day after the deadline to register as a candidate, with all three contenders and their running-mates smiling and laughing as they posed together for a photo. But the front-runner, Basuki Tjahaja Purnama, known to all as Ahok, is both Christian and of Chinese descent—and thus a member of two tiny minorities in a mostly Muslim, Malay country. How voters will respond is anyone’s guess. + +Ahok is already governor (in effect, mayor) of Indonesia’s teeming capital, a city of about 10m people. He had been deputy governor, but won an automatic promotion when his predecessor, Joko Widodo, stood down to run for president in 2014. That means he has never faced the voters at the top of a ticket, only as the running-mate of Jokowi, as the president is known, during the previous election for governor in 2012. + +As recently as 1998 hundreds of ethnic Chinese were raped and killed in riots in Jakarta. Christians have been the victims of pogroms elsewhere in the country in recent years too. Were Ahok to secure his own mandate in the upcoming elections, which are scheduled for February 15th, it would be startling and heartening proof of Indonesians’ open-mindedness. + +Throughout Ahok’s four years in office hardline Islamists have sought to unseat him, staging frequent rallies against him (one is pictured on the right) and deriding him as a “kafir”, or infidel. But his blunt speech and impatience with pettifogging bureaucrats have won over many in Jakarta. A recent survey by Poltracking, a local pollster, put his approval rating at a towering 69%. Voters seem to care more about his efforts to curb Jakarta’s notorious floods and traffic jams and spur the local economy than they do about his race or religion. Evan Laksmana of the Centre for Strategic and International Studies, a think-tank in Jakarta, says they realise that they will end up “paying the price” of poorer municipal services if they elect a leader on a sectarian basis. + +The campaign for governor seems to be following a similar pattern. Amien Rais, a former speaker of parliament, recently labelled Ahok a “false prophet”, only to be shouted down by various Islamic authorities. At a gathering at Jakarta’s biggest mosque, several speakers claimed it was “haram”, or sinful, for Muslims to vote for a non-believer. But Muhammadiyah, one of Indonesia’s biggest Muslim organisations (formerly headed by Mr Rais, as it happens) swiftly condemned such talk. + +Encouragingly, Ahok’s main rival for the governorship, Anies Baswedan, until recently education minister in Jokowi’s government, is a noted moderate. The other candidate is Agus Yudhoyono, the eldest son of Indonesia’s previous president, who revealed his resignation from the army on the day of the deadline to file his papers, catching everyone by surprise. Neither looks the type to resort to dog-whistle politics. + +As the election draws nearer, however, chauvinist attacks will doubtless proliferate. Moreover, not all Indonesians are as open-minded as Jakartans. Elections will also be held early next year for thousands of posts in local government across the sprawling archipelago. Minorities, many of whom have been targeted by discriminatory local by-laws in recent years, worry that they will face more hostility during the campaign. + +Even in Jakarta, Ahok is by no means a shoo-in. Polling shows that Mr Baswedan, a charismatic academic who made his name through a volunteer scheme that sends young graduates to teach in remote corners of the country, poses a credible challenge. With luck, whichever candidate triumphs, it will be because of his ideas and abilities, not his background. + + + + + +China + + + + +Regional development: Rich province, poor province + +Banyan: The eyes have it + + + + + +Regional development + +Rich province, poor province + +The government is struggling to spread wealth more evenly + +Oct 1st 2016 | BEIJING | From the print edition + + + +EARLY in the summer Xi Jinping, China’s president, toured one of the country’s poorest provinces, Ningxia in the west. “No region or ethnic group can be left behind,” he insisted, echoing an egalitarian view to which the Communist Party claims to be wedded. In the 1990s, as China’s economy boomed, inland provinces such as Ningxia fell far behind the prosperous coast, but Mr Xi said there had since been a “gradual reversal” of this trend. He failed to mention that this is no longer happening. As China’s economy slows, convergence between rich and poor provinces is stalling. One of the party’s much-vaunted goals for the country’s development, “common prosperity”, is looking far harder to attain. + +This matters to Mr Xi (pictured, in Ningxia). In recent years the party’s leaders have placed considerable emphasis on the need to narrow regional income gaps. They say China will be a “moderately prosperous society” by the end of the decade. It will only be partly so if growth fails to pick up again inland. Debate has started to emerge in China about whether the party has been using the right methods to bring prosperity to backward provinces. + +China is very unequal. Shanghai, which is counted as a province, is five times wealthier than the poorest one, Gansu, which has a similar-sized population (see map). That is a wider spread than in notoriously unequal Brazil, where the richest state, São Paulo, is four times richer than the poorest, Piauí (these comparisons exclude the special cases of Hong Kong and Brasília). + + + +To iron out living standards, the government has used numerous strategies. They include a “Go West” plan involving the building of roads, railways, pipelines and other investment inland; Mr Xi’s signature “Belt and Road” policy aimed partly at boosting economic ties with Central Asia and South-East Asia and thereby stimulating the economies of provinces adjoining those areas; a twinning arrangement whereby provinces and cities in rich coastal areas dole out aid and advice to inland counterparts; and a project to beef up China’s rustbelt provinces in the north-east bordering Russia and North Korea. The central government also gives extra money to poorer provinces. Ten out of China’s 33 provinces get more than half their budgets from the centre’s coffers. Prosperous Guangdong on the coast gets only 10%. + +The number, range and cost of these policies suggest the party sees its legitimacy rooted not only in the creation of wealth but the ability to spread it around. Deng Xiaoping’s economic reforms, launched in the late 1970s, helped seaboard provinces, which were then poorer than inland ones, to catch up by making things and shipping them abroad. (Mao had discouraged investment in coastal areas, fearing they were vulnerable to attack.) In the 1990s the coast pulled ahead. Then, after 2000, the gap began to narrow again as the worldwide commodity boom—a product of China’s rapid growth—increased demand for raw materials produced in the interior (see chart). That was a blessing for Mr Xi’s predecessor Hu Jintao, who made “rebalancing” a priority after he became party chief in 2002. It also boosted many economists’ optimism about China’s ability to sustain rapid growth. Even if richer provinces were to slow down, they reckoned, the high growth potential of inland regions would compensate for that. + + + +But convergence is ending. GDP growth slowed across the country last year, but especially in poorer regions. Seven inland provinces had nominal growth below 2%, a recession by Chinese standards (in 2014 only one province reported growth below that level). In contrast, the rich provincial-level municipalities of Shanghai, Beijing and Tianjin, plus a clutch of other coastal provinces including Guangdong, grew between 5% and 8%. Though there were exceptions, the rule of thumb in 2015 was that the poorer the region, the slower the growth. Most of the provinces with below-average growth were poor. + +Of course, 2015 was just one year. But a longer period confirms the pattern. Of 31 provinces, 21 had an income below 40,000 yuan ($6,200) per person in 2011. Andrew Batson of Gavekal Dragonomics, a research firm, says that of these 21, 13 (almost two-thirds) saw their real GDP growth slow down by more than 4 points between 2011 and 2014. In contrast, only three of the ten richer provinces (those with income per person above the 40,000 yuan mark) slowed that much. In 2007 all of China’s provinces were narrowing their income gap with Shanghai. In 2015 barely a third of them were. In other words, China’s slowdown has been much sharper in poorer areas than richer ones. + +There are three reasons why convergence has stalled. The main one is that the commodity boom is over. Both coal and steel prices fell by two-thirds between 2011 and the end of 2015, before recovering somewhat this year. Commodity-producing provinces have been hammered. Gansu produces 90% of the country’s nickel. Inner Mongolia and Shanxi account for half of coal production. In all but four of the 21 inland provinces, mining and metals account for a higher share of GDP than the national average. + +Commodity-influenced slowdowns are often made worse by policy mistakes. This is the second reason for the halt in convergence. Inland provinces built a housing boom on the back of the commodity one, creating what seemed at the time like a perpetual-motion machine: high raw-material prices financed construction which increased demand for raw materials. When commodity prices fell, the boom began to look unsustainable. + +The pace of inland growth was evident in dizzying levels of investment in physical assets such as buildings and roads. Between 2008 and last year, as a share of provincial GDP, it rose from 48% to 73% in Shanxi, 64% to 78% in Inner Mongolia, and from 54% to an astonishing 104% in Xinjiang. In the country as a whole, investment as a share of GDP rose only slightly in that period, to 43%. In Shanghai it fell. + +This would be fine if the investments were productive, but provinces in the west are notorious for waste. In the coal-rich city of Ordos in Inner Mongolia, on the edge of the Gobi desert, a new district was built, designed for 1m people. It stood empty for years, a symbol of ill-planned extravagance (people are at last moving in). + +Investment by the government is keeping some places afloat. Tibet, for example, logged 10.6% growth in the first half of this year, thanks to net fiscal transfers from the central government amounting to a stunning 112% of GDP last year. Given the region’s political significance and strategic location, such handouts will continue—Tibet’s planners admit there is no chance of the region getting by without them for the foreseeable future. + +Tibet is an extreme example of the third reason why convergence is ending. Despite oodles of aid, both it and other poor provinces cannot compete with rich coastal ones. In theory, poorer places should eventually converge with rich areas because they will attract businesses with their cheaper labour and land. But it turns out that in China (as elsewhere) these advantages are outweighed by the assets of richer places: better skills and education, more reliable legal institutions, and so-called “network effects”—that is, the clustering of similar businesses in one place, which then benefit from the swapping of ideas and people. A recent study by Ryan Monarch, an economist at America’s Federal Reserve Board, showed that American importers of Chinese goods were very reluctant to change suppliers. When they do, they usually switch to another company in the same city. This makes it hard for inland competitors to break into export markets. + +There are exceptions. The south-western region of Chongqing has emerged as the world’s largest exporter of laptops. Chengdu, the capital of neighbouring Sichuan province, is becoming a financial hub. But by and large China’s export industry is not migrating inland. In 2002 six big coastal provinces accounted for 80% of manufactured exports. They still do. + +This contrast is worrying. Though income gaps did narrow after 2000 and only stopped doing so recently, provinces have not become alike in other respects. Rich ones continue to depend on world markets and foreign investment. Poor provinces increasingly depend on support from the central government. + +A divergence of views + +Officials bicker about this. Mr Xi asserted the Robin-Hood view in Ningxia that regional gaps matter and that redistribution is needed. “The first to prosper,” he said, “should help the latecomers.” But three months earlier, an anonymous “authoritative person” (widely believed to be Mr Xi’s own adviser, Liu He) took a more relaxed view, telling the party’s mouthpiece, the People’s Daily, that “divergence is a necessity of economic development,” and “the faster divergence happens, the better.” + +It is unclear how this difference will be resolved, though the money must surely be on Mr Xi. Economically, though, Mr Liu is right. Regional-aid programmes have had little impact on the narrowing of income gaps. More of them will not stop those gaps widening. Socially, a slowdown in poorer provinces should not be a problem so long as jobs are still being created in richer ones, enabling migrants from inland to find work there and send money home. But politically the end of convergence is a challenge to Mr Xi, who has been trying to appeal to traditionalists in the party who extol Mao as a champion of equality. Wasteful and ineffective measures to achieve it will remain in place. + + + + + +Banyan + +The eyes have it + +It is not easy to capture China’s contradictions on film. But it is possible + +Oct 1st 2016 | From the print edition + + + +ABOUT 30 years ago, Er Housheng, a folk singer from Inner Mongolia, slept with another man’s wife. In revenge, the outraged husband and his brothers ambushed him and gouged out his eyes. At first the singer wanted to die. Then he turned his trauma into a hit song. Now in his 50s, he still performs, travelling from stage to stage across the Mongolian grasslands, counting with his fingers the 100-yuan bills he earns. + +Mr Er’s life and music is depicted in “Cut Out the Eyes”, a documentary by Xu Tong which was screened in September at a film festival in Hong Kong. The film, like its protagonist, has led an itinerant life. It was scheduled to appear as one of 31 documentaries at the Beijing Independent Film Festival in 2014. But the event became a high-profile victim of China’s new climate of censorship. The authorities cut electricity to the venue, hired goons to block the path of attendees and briefly detained the festival’s organisers, who had to cancel the event. Independent documentaries are one way a country as complex and compelling as China can see itself. But the government seems increasingly determined to gouge out those eyes. + +No vulgarity, please, this is China + +To make an independent film in China, film-makers must apply for what is sometimes called a “dragon” licence, named after the logo of the Film Bureau of the State Administration of Radio, Film and Television. What the Communist Party expects from China’s artists was laid out by Xi Jinping, China’s president, party leader and chief critic, in 2014. He expressed disapproval of nakedly commercial works that “blindly chase…vulgar interests”, an accusation that cannot be levelled at the loss-making documentaries that fill most festival schedules. He also warned about art in which “good and evil cannot be distinguished…and the dark side of society is over-emphasised”. That sounds like many of Banyan’s favourite films. + +Mr Xi’s tastes have left space in China for lots of documentaries that conform to what Tammy Cheung of Visible Record (the organiser of Hong Kong’s recent film festival) calls “TV style”. These are mostly less than an hour long, with clunky voice-overs and staged interviews. More challenging documentaries find an audience outside the Chinese mainland—gracing festivals in Hong Kong and abroad and appearing on public television channels. At home they remain obscure, shown only at low-key events, often in academic settings. To screen such films in China now requires greater caution than a secret love affair, as one Chinese director put it to Shelly Kraicer, a critic in New York. “It’s almost as if we’ve already gone to sleep with other men’s wives.” + +But censorship has not stopped documentarians making their films, any more than Mr Er’s attackers stopped his songwriting. (Even the closure of the Beijing festival was turned into a film in its own right.) And despite the obstacles, documentary-making in China still has a number of things going for it. To start with the most obvious: everyone now has a smartphone or camera. One of the most memorable films of recent years is “Disorder”, an artful weaving together of artless footage of Chinese cities on the boil. After the Sichuan earthquake in 2008, amateur footage of death, destruction and despair was sold on DVDs to visiting disaster tourists. The grisly images escaped official censorship—as well as any standards of decency or taste. + +China also has no shortage of drama to document. The Sichuan earthquake inspired Du Haibin’s well-received film “1428” (named after the time the disaster struck) as well as films like “Shangshu Seminary”, which appeared at the Hong Kong festival. The seismic movements in China’s economy have also inspired memorable work. “Last Train Home”, a film launched in 2009 by Lixin Fan, followed a family of factory workers back to their native village for the Chinese new year. The multitude of migrants fighting to board trains allowed an intimate tale to double as an economic epic. A similar magic is at work in the opening eight-minute tracking shot in “Manufactured Landscapes”, a film released in 2006 by a Canadian, Jennifer Baichwal. The camera takes the audience past row after row of assembly lines in a factory that makes coffeemakers and irons (for clothes, not for whacking golf balls). What begins as a mundane shot becomes mesmerising as minutes go by and the factory floor rolls on. + +Sometimes it is not necessary to emphasise the dark side of society. It emphasises itself. In his latest film, “A Young Patriot”, Mr Du turns away from migrants, vagabonds and disaster victims to focus instead on a fierce nationalist, Zhao Changtong. Mr Zhao, who shares a birthday with Mao, waves a red flag and shouts anti-Japanese slogans in the streets of his picturesque hometown of Pingyao in Shanxi province. He hopes to become a propaganda photographer for the army—the kind of documentarian of whom Mr Xi would no doubt approve. His gratitude to his country is deeply felt and finely observed. When he was young, his TV antenna hung from a poplar tree, he points out. Now he watches television with a remote control, cosy on his sofa. + +Then things change. Over the next three years, Mr Zhao enters university, joins the student union propaganda unit, finds a girlfriend and gradually loses his idealism. He is charmed by the simply dressed Japanese guests, who carry their own luggage at the hotel where he works briefly as a doorman. He is confused by the downfall in 2012 of Bo Xilai, a charismatic, Mao-loving party chief in Chongqing, a south-western region. During 15 days as a volunteer teacher in a remote, mountain village, he complains that party-picked legislators are all “fucking CEOs” and political mobilisation is “brainwashing”. He still has enough patriotic feeling to raise a red flag outside the one-room school and teach his pupils the national anthem. But their commitment, like his, wavers. As the lesson proceeds, the camera is distracted by a cock fight. Disillusionment is, in some ways, as powerful as dissent. + + + + + +Middle East and Africa + + + + +Syria’s civil war: The agony of Aleppo + +The destruction of Aleppo: Crushed flowers + +Morocco’s elections: A “weird and strange” campaign + +Nigerian vigilantes: The home guard + +Endangered species: To sell or not to sell? + +Congo’s political crisis: A burnt-out case + + + + + +Syria’s civil war + +The agony of Aleppo + +America’s ceasefire deal with Russia never stood a chance + +Oct 1st 2016 | GAZIANTEP | From the print edition + + + +IN THE past week eastern Aleppo, a rebelheld area that is home to more than 250,000 people, has endured a typhoon of shrapnel. Rebel groups say the regime of Bashar al-Assad is pursuing “a scorched earth policy to destroy the city and uproot its people”. Mr Assad is trying to regain full control over the western slice of the country, where some 70% of Syrians live. His Russian allies are helping, using the same tactics and some of the weapons that turned the Chechen capital, Grozny, into a smouldering ruin in 1999. + +Since the collapse of the short-lived ceasefire brokered by America and Russia, hundreds of air strikes and shells have slammed into the eastern part of the city. Activists counted 250 separate strikes on a single day last week as the regime seeks to seize the opposition’s last big urban stronghold. On September 27th the regime, backed by Shia militias from Iraq, Iran and Lebanon, launched a ground assault targeting rebel positions across the divided city. + +“The situation is intense,” says one of the few remaining paediatricians in eastern Aleppo, who calls himself only Dr Hatem. “Many children have died. There is a shortage of medical staff, food and fuel. Everything is terrible now. It is as if they want to delete more than 250,000 people from the Earth’s surface.” The White Helmets, a volunteer civil-defence group, says that 450 people have been killed and 1,600 injured since fighting started again. Save the Children, a charity, says that half of the casualties at the medical facilities it supports in the east have been children. + +Adding to the slaughter, the Russian air force is using more sophisticated weapons. Among them are the TOS-1A, a form of giant flamethrower that can also fire thermobaric missiles that suck oxygen out of the air and create huge blast waves; the BETAB-500, a massive bomb that penetrates buildings before exploding; and the RBK-500, an incendiary cluster munition. + +When there is a brief pause in the bombing people come out of their homes and shelters to look for food and medicine, but there is little left in the markets and the price of meat has rocketed. They know they have only a couple of hours before the bombing resumes. “Every day when I leave my home to look for supplies, I tell myself that this will be the last time I see my family,” says one Aleppo resident. “This is the worst bombing we’ve seen since the start of the war. The new weapons make the ground beneath our feet shake. It feels like the end of the world.” Many stay hunkered inside in cellars or in makeshift bomb shelters underground. + +“What Russia is sponsoring and doing is not counter-terrorism, it is barbarism,” America’s ambassador to the UN, Samantha Power, told the Security Council on September 25th. “Instead of pursuing peace, Russia and Assad make war. Instead of helping get aid to civilians, Russia and Assad are bombing the humanitarian convoys, hospitals and first responders who are trying desperately to keep people alive.” Britain’s envoy, Matthew Rycroft, said that Russia was “partnering with the Syrian regime to carry out war crimes”. + +For months the regime has slowly tightened its grip on eastern Aleppo. Food is so scarce that many people survive on only one meal of rice a day. Medical supplies are running dangerously low as hospitals overflow with wounded patients. The World Health Organisation says there are only 35 doctors left in the city and that all of the 25 medical facilities that still stand are on the verge of complete destruction. No aid is getting into Aleppo at all. + +What quagmire? + +In the year since Russia came to the rescue of Mr Assad’s brutal regime, the course of the Syrian civil war has fundamentally shifted. Russia’s decision was prompted by fears that its ally was about to be overthrown. Barack Obama said that Russia was stepping into a quagmire—perhaps projecting his own fears. That now looks wide of the mark. At relatively little cost—about $480m and the loss of 20 servicemen—Russia appears well on the way to preserving the regime and making itself the arbiter of any eventual settlement. + +More secure than at any time since 2011, Mr Assad is now confident that a victory that will leave him in control of most of western Syria is within reach. With Mr Obama congratulating himself for his wisdom in not intervening in the civil war more forcefully, the regime and its Iranian and Russian backers are calculating that they will have a free hand over the next five or six months to establish control over more territory before a new president can reset America’s policy, should he or she even wish to. Mr Obama disposed of Syria in just two sentences in his valedictory speech at the UN last week. + + + +It is against this backdrop that John Kerry, America’s secretary of state, laboured for months to stitch together the temporary cessation of hostilities deal that fell apart as soon as it began. The deal was doomed from the outset. Russia and America have wholly divergent aims in Syria. Vladimir Putin wants Mr Assad to be part of any transitional political arrangements; Mr Obama sees him as the main obstacle. + +Even the hope that they could find common ground on fighting two terrorist groups—Islamic State and al-Qaeda’s recently rebranded Syrian affiliate, Jabhat Fatah al-Sham (JFS)—has been dashed. The Russians regard any rebel group that fights alongside JFS (formerly Jabhat al-Nusra), including those supported by America, as a legitimate target. The main purpose of the JFS tactic of distancing itself from al-Qaeda was to reassure other less extreme outfits that it shares their patriotic ambitions and does not have some wider jihadist agenda. It is apparently working. In Aleppo, the sense of abandonment by the West has driven more moderate groups into the arms of JFS. + +Winter is coming + +Fred Hof, a former adviser on Syria at the State Department, brands Mr Kerry’s efforts as “the sad, pointless diplomacy of desperation and wishful thinking”. Michael O’Hanlon of the Brookings Institution, a think-tank, sees little hope of the fighting easing because Aleppo is so important to both sides. He argues that with winter coming and the siege continuing, a huge programme of humanitarian air drops may be the only way to keep the city’s inhabitants alive. It would require co-ordination with the Russians and the regime, but they would know that the opportunities for weapons smuggling would be far less than with aid brought in by road. + +Despite the ferocity of the bombardment of the past few days and the start of a new ground offensive, the regime and its allies will struggle to take and hold territory unless they can traumatise the civilian population into a mass exodus. That is not yet happening. With only about 25,000 troops to call on, the regime lacks the numbers both to occupy eastern Aleppo and to continue the campaign against rebel groups in neighbouring Idlib province. + +For their part, the rebels remain defiant. Yasser al-Yousef, a political officer with the Nur el-Din el-Zinki group, the largest rebel unit in eastern Aleppo, says that “this is a fight for our existence. Our front lines are fully prepared…Assad will have to turn Aleppo into sand to win. We have no choice but to resist.” He claims there are “tens of thousands of fighters in Aleppo”. Although few military supplies are getting through now, there are reports of the Saudis and Qataris preparing to send more heavy weapons to the defenders, including shoulder-fired anti-aircraft missiles. + +The priority for Mr Obama’s successor will be to find a policy that provides America with at least some leverage over what happens in Syria’s endgame, rather than giving Russia free rein. Mr O’Hanlon says that the willingness to use some force is essential, both through air power and a few more boots on the ground. He advocates establishing a number of protected areas—“inkspots”—which could become autonomous zones in a more confederal Syria. To that end, he suggests carrying out reprisal strikes against Syrian aircraft and artillery units attacking civilians. He believes it would be relatively easy to take out Syrian aircraft once they had landed and that a “very careful, very selective” approach would avoid hitting Russian planes but would “let them know you are serious”. There would be some risk, he admits. But fears that it could start a war with Russia are probably wide of the mark. + + + + + +The destruction of Aleppo + +Crushed flowers + +A historical and cultural treasure is being bombed to rubble + +Oct 1st 2016 | From the print edition + +ALEPPO’S location was always a blessing and a curse. It lay at the fork on the Silk Road where goods went south to Africa and the Middle East or north into Eurasia. Merchants milked the proceeds, helped by carrier pigeons from Baghdad bringing daily updates on shifting commodity prices. But it was also a prize. Empires battled for its wealth. + +In the tenth century it shifted from Christian Byzantine to Shia Fatimid to Sunni Abbasid hands, sometimes every few days. Merchants nodded, checked the wind and kept out of the fray. Its location was too important not to overcome earthquakes or sacking by the Mongols or Tamerlane. “It was just about trading,” says Philip Mansel, who this year published a timely book on Aleppo’s rise and fall. + +Prosperous local merchants invested in music, poetry and food, rather than shrines, of which there are remarkably few. “Excess is obnoxious, even in religious worship,” is an oft-quoted Aleppo proverb. Unlike Damascus, which traditionally was more devout, Aleppo embraced Turkish-speaking Ottoman rulers as readily as French imperialists. Access to their new markets was too attractive to do otherwise. The Ottomans made it their second city after they seized it in 1516. It was the only Arab city where their sultans spent much time. + +Aleppo’s architecture and culture reflected its grandeur. The Prophet Muhammad had likened the gardens around Damascus to paradise. But Abu al-Tayyib al-Mutanabbi, considered the greatest of the classical Arabic poets, deemed them merely a route to something even better. Aleppo, he wrote, was his destination. + +Many others followed suit. Jews poured in after the Spanish Inquisition. Armenians did likewise when the Turks cleansed Anatolia of Christians. While other cities indulged in occasional bouts of sectarian bloodletting, Aleppo welcomed all comers. Sultan Suleiman the Magnificent celebrated the entrepot’s pluralism and diversity as “a quantity of fine flowers of diverse colours”. And now the list of lost buildings reads like a register of UNESCO World Heritage Sites. One of the world’s oldest vaulted markets lies torched and ruined. Khan al-Jumruk, which once housed the English, French and Dutch consulates, has gone. While the world does nothing, Russia’s bombers are turning history into rubble. + + + + + +Morocco’s elections + +A “weird and strange” campaign + +The ruling Islamists face strong and unusual opposition + +Oct 1st 2016 | CASABLANCA | From the print edition + +The forces of Justice and Development + +SINCE making gains in municipal elections last year, things have gone downhill for Morocco’s ruling Justice and Development Party (PJD). First, a former candidate was accused of sexual harassment. Then in July a party member was arrested with three tonnes of cannabis. One of its governors is accused of trying to influence a big property deal. And in August two sexagenarian leaders of the party’s religious wing, one married, were caught by police in a “sexual position” on a beach. + +This would be bad for any party, but the PJD is Islamist and its members are prone to moralising. So some Moroccans have revelled in its misfortune, especially as it comes in the run-up to parliamentary elections on October 7th. Over 30 parties will compete for 395 seats, but the real battle is between the PJD and the Party for Authenticity and Modernity (PAM), which vows to “liberate” Morocco from the Islamists. The PAM won about the same number of votes as the PJD in the municipal polls. + +These are the second parliamentary elections since thousands of Moroccans took to the streets in 2011 demanding curbs on the near-absolute monarchy. That year King Muhammad VI ceded some of his power to parliament and the people, and thereby avoided the worst of the Arab spring. But many people think the royal palace is now conspiring against the PJD in favour of the PAM. The latter’s founder is now a royal adviser. “Weird and strange things are happening,” wrote Mustapha Ramid, the PJD’s justice minister, on Facebook this month. + +On September 18th hundreds gathered in Casablanca, the commercial capital, ostensibly for a rally against “Islamisation”. But when questioned, some protesters said they did not know the meaning of the word. The PJD suspects that the PAM was behind the event, egged on by the interior ministry, which is led by a royal appointee. A week earlier the ministry rejected the candidacy of a conservative cleric from Marrakech allied to the PJD. Many Moroccans also question the party’s recent troubles. “Those ‘scandals’ were used to disqualify the PJD,” says Muhammad Sammouni, who will vote for a third party. “The police reports that should have been secret were given to certain press and published.” + +On the issues, the PJD rightly argues that it has made tough decisions to put the country’s finances in order. These include cutting subsidies, reforming the pension system for public servants and freezing government hiring. As a result, the country’s fiscal deficit dropped from 7.3% of GDP in 2012 to 4.3 % last year. Low oil prices have helped Morocco cut its current-account deficit, too. Analysts are generally bullish on the country’s prospects. + +But a drought has hit the economy hard and unemployment remains stubbornly high. “The executive of the PJD promised a growth rate of 7%,” says Samir Aboulkacim of the PAM. “We ended up with 1.5%.” The PJD’s promise to root out corruption, a centrepiece of its last campaign, has gone largely unfulfilled. Forces close to the king still control key sectors of the economy. The PAM, for its part, promises to lower state debt and create 150,000 jobs per year. + +While the economy is voters’ main concern, some fear that Morocco’s movement towards a more democratic system—and a more constrained monarchy—is faltering. “The big issue here is to respect the will of the Moroccan voters and not to go back to the days where the results were cooked by the regime,” says Najib Chaouki, a journalist. He believes the PJD would win free and fair elections. But even it does not challenge the authority of the king. + + + + + +Nigerian vigilantes + +The home guard + +The volunteers who helped beat back Boko Haram are becoming a problem + +Oct 1st 2016 | MAIDUGURI | From the print edition + + + +MOHAMMED JAAFAR, a commander of Nigeria’s Civilian Joint Task Force (CJTF), recalls his first arrest with relish. It was in 2013, shortly after the vigilante group had been formed to fight the Islamist rebels of Boko Haram. A distressed neighbour appeared at his door in Maiduguri, the birthplace of Boko Haram, reporting that a radicalised relative was hiding in his house. “I knew I was now a target,” Mr Jaafar says. So he summoned his men, scaled his neighbour’s wall and seized the suspect, who was an emir: one of Boko Haram’s spiritual leaders. + +Many Nigerians are proud of such derring-do on the part of the CJTF, which has swollen into an army of over 26,000 in Borno, the state worst affected by the insurgency. As north-easterners, its members claim to know the suspects in their communities, saving innocent bystanders from being rounded up by ill-informed regular soldiers. They tried to protect their towns when Nigerian troops fled the front line (a common occurrence until early last year). Some fought bravely alongside the army, too. As Boko Haram advanced on Maiduguri in 2014, for example, the vigilantes helped avert the fall of the city, which was then home to about 2m people. Today, they man checkpoints on roads and at refugee camps, logging trucks and farmers in tatty notebooks as they pass. + +The CJTF has lost about 600 members, often to suicide-bombers whom they frisk at mosques and in market places: quite a sacrifice, especially given that only 1,800 of them receive a salary, a mere $50 a month. Many left good jobs to serve as volunteers. Mr Jaafar, a former cosmetics seller, reckons the vigilantes have handed over 5,000 jihadists to the army—some captured as far away as Lagos. That may be an exaggeration: at the height of the insurgency, American officials said that Boko Haram had between 4,000 and 6,000 “hard-core” fighters. Either way, the soldiers are mostly grateful for the help. + +Yet the vigilantes, like the regular army, are accused of abuses. A video released by Amnesty International in 2014 appeared to show them, together with soldiers, slaughtering men beside a mass grave. When unarmed suspects escaped from a barracks at Giwa the same year, locals recall that the volunteers cordoned off streets in Maiduguri and killed them. More recently the CJTF has been implicated in the diversion of food destined for starving families. (“If they get rations, then why not us?” asks a perfectly healthy guard from his sandbag checkpoint.) Men who escape occupied villages complain of beatings in camps, where women and girls are subjected to systematic sexual violence, according Human Rights Watch, a New York-based monitor. On certain posts, the volunteers are clearly children. + +Only a tiny fraction of the vigilantes have received any military training, yet many are armed with cutlasses or handmade muskets known as “Dane guns” (after the European traders who first introduced firearms in the 19th century). Some of those who helped the army reclaim towns that were once occupied by Boko Haram say that the soldiers taught them how to handle automatic weapons, which they picked up from fallen fighters. “They don’t know how many guns their volunteers have, or under what circumstances they are used,” says Mausi Segun, a researcher at Human Rights Watch. At one camp visited by your correspondent, a CJTF recruit fires a warning shot over an unruly crowd. As Boko Haram retreats, a partially armed militia is being left in its wake. “All these people know how to operate AK-47s,” Mr Jaafar says. “What does the government have planned for us? If there are no jobs, there will be trouble.” + +Recognising this, the government has already absorbed 500 CJTF members into the armed forces. A couple of thousand more will be employed as firemen and “vehicle inspectors” in Borno; a “sizeable chunk” will be sent to farm with “modern agricultural equipment”, says the state’s attorney-general. + +Yet good jobs are hard to create and sustain in the poor north-east of Nigeria—which is reckoned to be one of the reasons why the insurgency started there in the first place, back in 2009. And weak administration often causes plans to fall through. Jobs promised under an amnesty for militants in the oil-producing south, for instance, mostly failed to materialise. Borno’s governor, Kashim Shettima, seems understandably nervous: “If we can’t educate them, we have created a Frankenstein’s monster,” he says. + + + + + +Endangered species + +To sell or not to sell? + +Conservationists argue about ivory and rhino horn + +Oct 1st 2016 | JOHANNESBURG | From the print edition + + + +AT THE biggest-ever global wildlife conference, khaki-clad hunters rub shoulders with animal-rights activists, nerdy scientists and blustering politicians. All have one thing in common: a desire to save endangered species from extinction. The similarity ends there. Pelham Jones, a South African, leads a group of private rhino owners arguing that legal trade in horn would stop the slaughter of their animals by criminal gangs. Across from his booth sits a Vietnamese delegation that claims to have reduced demand among consumers back home, where rhino horn is proudly used as “medicine”. Around the corner are conservation groups that think legalising the trade will doom the rhino to extinction. “It’s very clear in this room there is total polarisation,” Mr Jones says. + +This is the first time for 16 years that Africa has hosted the Convention on International Trade in Endangered Species (CITES), which regulates trade in plants and animals. This one has record attendance: some 3,500 participants are meeting from September 24th to October 5th in Sandton, a swanky suburb of Johannesburg. The stakes are high for the continent’s most iconic fauna. Rhino poaching in Africa reached record levels last year, while the African elephant population is facing a precipitous fall. Census figures released at CITES show a continental decline of 110,000 elephants, to 415,000, over the past decade, though there are striking regional differences. + +The central issues at the conference concern the ban on trading ivory. Elephants are mostly listed under Appendix I of CITES, which prohibits all trade in animal parts. In southern Africa, though, they come under Appendix II, which permits regulated trade. That said, those countries still abide by a complete ban on the sale of ivory. Namibia and Zimbabwe, with support from South Africa, want to open the ivory trade in certain cases, arguing that elephant populations in southern Africa are large, growing and damaging to habitat. They have in the past threatened to withdraw from the ivory ban unless it is loosened. But a coalition of 29 African countries wants all elephants to be moved to Appendix I. Another attention-grabbing proposal, from Swaziland, seeks to legalise trade in rhino horn. This is expected to fail, though South Africa may decide to reopen the issue in the next few years. + +Bigger questions include whether trade bans work and, in the absence of trade that would allow private and public owners of wildlife to get an income from their animals, how to pay for conservation. There is friction between strict conservationists and those who support the “sustainable use” of wildlife—a euphemism for regulated hunting and trade. All sides say that, unless governments follow their prescriptions, the animals will die out. + +Countries such as Zimbabwe, as well as South Africa’s mostly white hunters, chafe at the West telling them what to do with their wildlife. John Hume, who owns 1,410 rhinos—more than any other private owner in the world—has five tonnes of horn stockpiled that he is not allowed to sell. He wants to be able to make money from his valuable property, and deter poachers, by cutting and selling their horns (which grow back, like hair and nails). “I breed and protect rhinos. That’s what I do. And I think that’s what we need to do to save them,” he says. + +Thumbing their noses + +Many conservationists think legalising trade in either ivory or horn is too risky, since demand is hard to predict. Regulated exports might not dislodge the poached stuff, as the criminal product might still be cheaper. And demand might be stimulated by marketing, leading to more poaching, not less. Dan Ashe, the head of the US Fish and Wildlife Service, calls the rhino horn proposal “a dangerous experiment with the future of this magnificent species”. + +But too often forgotten in the debate are the Africans, many of them poor, who live alongside elephants and rhinos. Ross Harvey, a researcher at the South African Institute of International Affairs, says it is vital that conservation should provide them with economic benefits. (Tourism is one, but not enough.) Otherwise, saving endangered animals “is going to be seen as a very middle-class issue”. + + + + + +Congo’s political crisis + +A burnt-out case + +An outburst of violence becomes a bargaining chip for the opposition + +Oct 1st 2016 | KINSHASA | From the print edition + +Kabila’s not going anywhere + +FROM the outside, the offices of FONUS, a political party in Congo’s capital, Kinshasa, look relatively unchanged. The gate is still in the blue and yellow colours of the national flag; the party president’s picture still hangs in the doorway. Inside, however, is chaos. Two large printing machines have been turned into a pile of blackened and twisted metal. The corrugated iron roofing is on the floor. A party member explains how at 3am on September 20th two jeeps full of soldiers arrived, broke in and poured petrol everywhere. Then one of them fired a rocket into the printing room. + +The FONUS office was not alone. The road it sits on, opposite the national football stadium, is lined with buildings festooned with political flags and posters. Several of them, all from opposition parties, now have smashed windows and blackened walls. They were attacked after a protest on September 19th against President Joseph Kabila’s failure to organise elections. That turned into a looting spree, which was in turn put down with bullets by Mr Kabila’s personal guards. Around 50 people were killed; two police officers were lynched in the street. It was an unhappy taste of what the Democratic Republic of Congo may face as Mr Kabila comes to the end of his second and supposedly final term in office. + +The crisis in Congo has been building for some time. In 2006 Mr Kabila, who took power after the assassination of his father Laurent in 2001, became Congo’s first elected president since 1960. He helped write a new constitution, limiting a president to two five-year terms. Since then, he has apparently changed his mind. After trying, and failing, twice to change the rules to allow him to run again, Mr Kabila has opted for a strategy of “glissement”, or slippage. He has refused to organise elections, citing logistical problems, while manoeuvring to stay in power after his term ends on December 19th. + +Not many people in Congo much like the president. Conspiracy theories fly that he is not really Congolese, or not really his father’s son. Educated in Tanzania, he speaks Lingala, the language of the Kinshasa street, poorly. And he is rarely seen in public: on September 26th he appeared for the first time since the protests: in Rome, shaking hands with the Pope. He is particularly unpopular in Kinshasa, a filthy, buzzing mega-city of perhaps 13m people, where the economy is turning sour. “The misery is at a level we have never seen,” says Jean-Pierre Tshibangu, who runs a street stall selling milk, sugar and rice. “The government gives us nothing.” + +Mr Kabila’s strategy for the past six months has been to try to buy off the opposition. The idea was to bring other parties into a “national dialogue” that would agree how to hold elections—and buy him another year or two as head of a “transitional government”. But so far the conversation has been rather one-sided, as Congo’s two biggest opposition figureheads have refused to join. In July Etienne Tshisekedi, an elderly politician who ran against Mr Kabila in 2011, returned from Belgium to Kinshasa to huge crowds, starting a new opposition alliance called Le Rassemblement (“The Rally”, in French). Moïse Katumbi, a flamboyant and wealthy former governor who fled Congo in May, is still abroad, but his money appears to be bankrolling opposition unity. + +Worn away by weather and patience + +What happens now depends on how the events of September 19th changed the bargaining power of each side. For the opposition, the protests proved that they can get people onto the streets and cause havoc. But Mr Kabila also showed that his personal security services remain loyal and will happily shoot at crowds. That may make it harder to get protesters out again, says Jason Stearns of the Congo Research Group, a New York-based outfit. + +What the opposition hopes instead is to force Mr Kabila into new talks. Delly Sesanga, an MP who is an ally of Mr Katumbi, says that his group is willing to re-enter the dialogue on certain conditions. A new mediator must be appointed; political prisoners must be released; and charges against Mr Katumbi must be dropped. But crucially he says that Mr Kabila can stay as president if he agrees to organise elections in 2017, promises not to stand and gives up some day-to-day power. + +According to Soraya Aziz, a campaigner for better governance, the opposition parties are probably hoping to get Mr Kabila to give them big jobs in government, in particular the post of prime minister. In Congo, that means access to money, and they hope to build war-chests for the eventual election. They hope that, with luck, they will then be able to eject the president. + +It is possible that Mr Kabila will accept such a deal. He is already on the ropes economically, says one businessman: the money he needs to pay the salaries of the police could run out in months. Over the past year the local franc has lost 20% of its value against the dollar. On September 28th, two senior security officials were hit with American financial sanctions, freezing their assets. Others may follow. Making some concessions would buy Mr Kabila time, with which he could look for a new opportunity to change the constitution, or at the least to promote a successor who as president would protect his interests. + +Mr Kabila has constraints of his own. Not all of his allies will want to risk giving up power meekly; some would probably prefer to shoot more protesters and lock up more opposition leaders than lose their seats. And not everyone in the opposition will compromise. Mr Tshisekedi, for example, wants to be president—and at 83, he cannot wait much longer. As Mr Kabila’s time runs out, this latest outburst of violence may just be the beginning of a round of bloody confrontations. + + + + + +Europe + + + + +Hungary’s anti-migrant vote: Boundary issues + +Turkey’s armed forces: Chains of command + +Russia and MH17: Brought to BUK + +AIDS in Russia: Immune to reason + +Danish culture: Cocoa by candlelight + +Charlemagne: A tale of two ethics + + + + + +Hungary’s anti-migrant vote + +Boundary issues + +A refugee referendum is mostly about showing Brussels who is boss + +Oct 1st 2016 | BUDAPEST | From the print edition + + + +HUNGARY will hold a referendum on October 2nd. (Such things have become a fad in Europe.) The question is: “Do you want the European Union to be entitled to prescribe the mandatory resettlement of non-Hungarian citizens in Hungary without the consent of parliament?” (Note the neutral wording.) At issue is the EU’s Emergency Response Mechanism, adopted in September 2015, under which 160,000 of the migrants who began surging into Europe last year are to be shared out between member states according to quotas. The decision passed the European Council by majority vote, but four countries voted against it: the Czech Republic, Slovakia, Romania and Hungary. Hungary and Slovakia have challenged the system in the European Court of Justice. It is “unlawful, unworkable and dangerous”, says Zoltan Kovacs, a government spokesman. + +The referendum is largely a popularity ploy by Viktor Orban (pictured, right), Hungary’s populist prime minister, and will have no legal effect. It is also a challenge to the authority of Brussels and the leadership of Germany’s Angela Merkel, who champions the relocation scheme. Mrs Merkel sees accepting refugees as a European commitment whose burdens must be shared. Mr Orban, who has clashed with the EU over his government’s illiberal media and economic policies, wants to stop the EU from issuing shared rules on asylum and much else. He wants the union to be a trading bloc of sovereign countries that keeps out of matters like migration and human rights. With sympathetic governments in the Czech Republic, Slovakia and Poland, Mr Orban thinks his vision for the future of Europe will prevail. + +The government is leaving nothing to chance. It has plastered posters calling for a “no” vote across the country. “Did you know that Brussels is planning to relocate a town’s worth of illegal immigrants in Hungary?” asks one. (In fact, asylum applicants are not illegal immigrants, and Hungary’s quota is a mere 1,294.) A leaflet sent to millions of homes claims that immigration has created “hundreds” of “no-go zones” in London, Brussels and Berlin. Britain, Belgium and Germany issued protests. Tension is rising. On September 24th a bomb exploded in downtown Budapest, injuring two police officers. + +Polls predict a comfortable majority of voters will choose “no”. Outside Budapest and the major cities, Hungary is a conservative and insular country, where many people speak no foreign languages and have little experience of those with different skin colours or faiths. But more than 50% of Hungary’s roughly 8m eligible voters must turn out for the result to be valid, and they may not. An invalid result would be seen as a failure for Mr Orban and his ruling Fidesz party, says Peter Kreko of Political Capital, a Budapest think-tank. + +One reason for the government to worry is that people have grown more sanguine about migration. At the height of the crisis in August 2015, thousands of migrants poured across the Hungarian border every day. Since then the government has built razor-wire fences along the frontiers with Serbia and Croatia. Of the handful of migrants who still enter, most are caught and expelled. The government, say critics, is diverting attention from issues such as corruption, health care and education. + + + +The reduction in migration has been purchased with cruelty, say human-rights groups. A report this week from Amnesty International claims that asylum-seekers in Hungary, including unaccompanied children, suffer abuse, violence and unlawful detention. “Orban has replaced the rule of law with the rule of fear,” says John Dalhuisen, Amnesty’s Director for Europe. It is almost impossible for asylum-seekers to assert their legal rights, says Gabor Gyulai of the Hungarian Helsinki Committee, a watchdog. The government has “intentionally destroyed” the asylum system for political reasons. + +Officials dismiss these claims as “sheer lies”. Hungary is simply protecting its border as required under Europe’s Schengen agreement, says Mr Kovacs. Legitimate claims for asylum, he insists, will be processed. Yet since the start of 2015 Hungary has received 203,898 asylum applications, and granted only 880 people any form of protection, according to the government. + +It is not clear how anti-migrant the public is. A poll in September by Publicus Research found that just 37% thought Hungary should accept as many refugees as it could, but 64% felt that “it is our duty to help refugees.” In any case, the referendum campaign faces little organised opposition. The Socialists and some smaller parties have called for voters to abstain. And it seems to be helping Fidesz, whose support climbed in a recent poll to 37%, while the ultranationalist Jobbik party fell to 12%. + +The most spirited resistance has come from a fringe group called the Two-Tailed Dog Party. Together with a number of NGOs, including the Hungarian Helsinki Committee, the party is calling for voters to spoil their ballots. It has crowd-funded advertising posters satirising the government’s “Did you know?” campaign. “Did you know a tree may fall on your head?” asks one. Falling trees or no, if the opposition’s biggest achievement is to keep voters away from the polls, it is not clear whether anyone will hear it. + + + + + +Turkey’s armed forces + +Chains of command + +Since the coup, the army is on a short leash + +Oct 1st 2016 | ISTANBUL | From the print edition + +Treading lightly + +LIEUTENANT Mehmet Ali Celebi has not sat in a gunship cockpit for years, but will jump back in at a moment’s notice if the Turkish army comes calling. A promising helicopter pilot, Mr Celebi was sentenced to 16 years in jail in 2013, framed by policemen who uploaded numbers belonging to Islamist radicals onto his phone. He was released a year later, along with hundreds of other secularist officers who had been locked away on trumped-up charges by prosecutors close to the Gulen community, a secretive Islamic movement. + +Since July’s thwarted coup, staged by an army faction believed to be led by Gulenists, the tables have turned. Today, it is Gulen followers in the bureaucracy who are being indiscriminately purged by their one-time patrons, the ruling Justice and Development (AK) party. Some 70,000 civil servants, including judges, prosecutors and teachers, have been sacked or suspended, sometimes on the thinnest of evidence. At least 32,000 people, including more than 100 journalists, are in prison. + +The crackdown has left the second-biggest army in NATO in turmoil—this at a time when it is supposed to be fighting in Syria, alongside Syrian rebels, to push back both Islamic State (IS) and Kurdish militias. + +About 5,000 soldiers, including almost half of all admirals and generals, have been sacked or detained. The air force has lost at least 265 pilots, leaving it with fewer pilots than fighter jets. Experts say replacing them may take ten years; the defence ministry says it can do so in three. + +Thanks to President Recep Tayyip Erdogan’s insistence that the coup was the work of a small cabal, the army’s reputation has only been lightly tarnished, despite a night of chaotic violence that left some 270 dead. A survey in August found that 66% of Turks still trust the armed forces, down from 78% at the start of the year. Indeed, soldiers who saw the Gulenists rise through the ranks, often replacing secularist officers arrested like Mr Celebi, hope the purges will make the army more transparent, says Hasan Selim Ozertem, an Ankara-based analyst. “But there’s also fear,” he adds. + +Many of the sacked generals have already been replaced. The air force, unless confronted with a full-scale war, should be able to cope. A handful of pilots imprisoned with Mr Celebi in the early 2010s have been reinstated. The successful operation in Syria has restored confidence in the army, and Mr Erdogan suggests it may push farther south to take the fight to IS. + +A bigger challenge is an emergency decree authorising the president and prime minister to issue orders to commanders. Military schools have been closed to make way for a government-run national defence university. Two ministries, defence and interior, now control separate branches of the armed forces. Cabinet ministers will outnumber generals in the council responsible for military appointments. These may be the most profound changes to the army’s structure since Turkey’s foundation, says Doruk Ergun of EDAM, an Istanbul think-tank. + +They may also be long overdue. For decades, the military enjoyed what Mr Ergun calls an “extrajudicial right” to overthrow governments, and did so on four occasions. Civilian control, which AK has sought since coming to power in 2002, should stop it from doing so again. “The military is finally shedding the Prussian school from its make-up,” says Soli Ozel, a professor at Kadir Has University. + +What worries former soldiers is that the new measures could let the government bypass the chain of command, confusing decision-making. “This will erode fighting capacity,” says Oktay Bingol, a retired brigadier general. Browbeaten generals may refer key matters to Mr Erdogan and his ministers, says Mr Ergun. Yet for many Turks, a timid army beats a disloyal one. + + + + + +Russia and MH17 + +Brought to BUK + +Dutch investigators strike a blow against Russia’s fact-free politics + +Oct 1st 2016 | MOSCOW | From the print edition + + + +THERE was never much doubt about what brought down Malaysia Airlines Flight 17 over eastern Ukraine on July 17th 2014, killing all 298 people on board: a Russian missile, fired from territory controlled by Russian-backed separatists. Still, it was important to see the facts confirmed. On September 28th the Dutch-led Joint Investigation Team (JIT) laid out its case, backed by an array of photo, video and forensic evidence, satellite and radar data, interviews with eyewitnesses and intercepted phone calls. The investigators called the findings “irrefutable”. + +The JIT’s preliminary report is the beginning of what is sure to be a long and trying path to justice for the victims. Many had boarded the flight from Amsterdam to Kuala Lumpur with suitcases stuffed with bathing suits, bound for beach holidays in South-East Asia. They were cut short, the JIT found, by a Russian-made BUK 9M38 surface-to-air missile, which had left Russia that morning. The launcher, and three unused missiles, returned there the day after. The launch site was a field near the town of Pervomaiskiy, under the control of pro-Russian fighters. Investigators say they have some 100 potential suspects, but identifying the perpetrators will be “a matter for the long haul”. + +Russia continues to dispute the findings. Vladimir Putin’s press secretary dismissed the JIT report as based on “speculation, unqualified and unprofessional information”. Earlier in the week, Russia’s defence ministry released radar data that it said proved the missile was launched from Ukrainian-held territory, the latest in a string of flimsy theories meant to muddy the waters. The Russians seem to have forgotten their earlier claim that a Ukrainian fighter-jet shot MH17 down. Russian media have suggested at various times that Ukrainian forces were trying to shoot down Mr Putin’s plane, or that the CIA, hoping to undermine Russia, had filled the plane with bodies and crashed it intentionally. + +The JIT, which also includes representatives from Australia, Belgium, Malaysia, and Ukraine, collected evidence of a standard intended for future use in court. It went beyond last year’s Dutch Safety Board report, which showed the plane was brought down by a BUK but did not assign blame. The JIT trail begins with photographs and video of the missile launcher near the town of Snizhne in eastern Ukraine on the day of the crash. It also includes intercepted phone calls of separatist fighters asking for a BUK to defend their forces against intense Ukrainian air strikes. The fact that the missile-launcher came from Russia and returned there after the crash seems to imply official involvement. + +Forensic clues also left little doubt about what happened. Satellite and radar data helped identify the launch site and determine that no other aircraft were flying in the vicinity of MH17. Inside the body of one of the pilots, investigators found butterfly-shaped shrapnel that comes from specific BUK warheads which the Russian army uses, but Ukraine’s does not. The shrapnel also carried traces of glass used for Boeing cockpit windows, making it highly difficult to fake. + +Delivering justice may prove even tougher than gathering the evidence. Russia has vetoed attempts at the UN to set up an international tribunal. If a case is brought in national courts, it is unlikely to extradite its citizens for trial. Still, at a time when Mr Putin and other demagogues are practicing a politics of outrageous lies, it is salutary to watch a team of meticulous investigators establish the cold, hard truth. The question now becomes: what will the world do about it? + + + + + +AIDS in Russia + +Immune to reason + +Russia’s contempt for effective drug and HIV policies is killing its citizens + +Oct 1st 2016 | ST PETERSBURG | From the print edition + +The HIV rate is shooting up + +THE front line in the fight against Europe’s fastest-growing HIV epidemic runs through a dark blue bus parked on the outskirts of St Petersburg. Two friends enter late one September evening to collect clean needles and condoms, and duck into a side cabin for an HIV test with a nurse from Humanitarian Actions, a local NGO. “You barely feel it, don’t be afraid,” one says. Several minutes pass with bated breath. Then the results appear: all clear. + +In most of the world the threat of HIV/AIDS has receded. The exceptions are eastern Europe and Central Asia. In Russia, which accounts for more than 80% of new infections in the region, 51,000 people were diagnosed in the first five months of this year. In January registered HIV cases there topped one million. Vadim Pokrovsky of Russia’s Federal AIDS Centre reckons the true figure may be 1.4m-1.5m, about 1% of the population; he warns there could be 3m by 2020. In some African countries prevalence can reach 19%, but the epidemic is slowing. In Russia, the infection rate is “getting worse, and at a very fast pace”, says Vinay Saldanha, UNAIDS’ director for eastern Europe and Central Asia. + +The Soviet Union began reporting HIV in 1987, and the virus took off in Russia in the early 2000s, mostly among intravenous (IV) drug users. Dirty needles remain the primary means of infection. But with more new transmissions through heterosexual sex, doctors warn that HIV may threaten the general population. Bad policies and neglect have fed the epidemic. Russia has eschewed the kind of sex-education and drug policies that have been shown to work elsewhere. Vladimir Putin’s government keeps getting more prudish. “Russia is always taking its own path,” says Sergei Dugin, director of Humanitarian Actions. “I would be happy about that, but it’s going in the wrong direction.” + +Harsh anti-drug laws keep users in the shadows. Methadone and other forms of non-injected opioid substitution therapy (OST) are illegal; in other post-Soviet states, such as Ukraine, they are legal. (After Russia annexed Crimea in 2014, 800 patients found themselves cut off. The UN believes some 10% have died, “mostly of overdose or suicide”.) The World Health Organisation calls methadone “the most promising method of reducing drug dependence”, and HIV-positive addicts who receive OST are 54% more likely to get the antiretroviral (ARV) drugs they need to stay healthy, according to studies. + +Russia’s foreign minister has derided OST as a “narcoliberal” idea. The country’s chief narcologist compares methadone to “treating a vodka-drinking alcoholic with cognac”. (Three activists have challenged the methadone ban in the European Court of Human Rights.) Harm-reduction programmes such as needle exchanges, while not illegal, receive little government support. As for sex education, Russia’s former children’s rights ombudsman declared that the best lessons lie in classic Russian literature. (Presumably he did not mean for disappointed lovers to throw themselves under trains.) The new ombudsman, the wife of an Orthodox priest, belongs to a social-media group called “HIV/AIDS is the Biggest Hoax of the 20th Century”. + +Skimpy funding has left gaps in treatment. Fewer than 25% of Russia’s HIV-positive patients receive ARV drugs, well below the global average of 46%. Costs are high, in part because drug procurement has been left to the 85 individual regions: the cheapest ARV treatments in Russia cost several times more than in Brazil or India. Patients who do not get medication are more likely to die of AIDS—and more likely to spread the virus. (ARV drugs suppress viral load and make patients less infectious.) + + + +Stigmatisation compounds the challenge. When Alexander, an HIV-positive drug user in Moscow, received his diagnosis, he says he “didn’t leave the house for a month and a half”. His mother gave him a separate cup and washed the shower after he used it, unaware of how HIV actually spreads. Drug users fear criminal repercussions if they seek help. And Russia’s “anti-gay propaganda” laws make it harder for gay-friendly charities to operate. + +Virulent prejudice + +Independent NGOs, many staffed by HIV-positive people, play a crucial role in reaching vulnerable groups. But Russia’s “foreign agents” legislation, which places bureaucratic restrictions around groups that accept foreign money, has made funding difficult. Several HIV and drug-policy advocacy groups have been labelled foreign agents this year, including the Andrey Ryklov Foundation, the only group offering free needle exchanges in Moscow. + +As the number of HIV cases grows, the government has been forced to address the problem. In October 2015 the prime minister, Dmitry Medvedev, held a meeting on AIDS. Russia’s health minister, Veronika Skvortsova, promised an extra 20 billion roubles ($315m) in AIDS funding in 2016. A new federal HIV strategy is expected within weeks. The government plans to centralise ARV procurement beginning in 2017, which ought to reduce costs. + +Some regions have made progress through co-operation between doctors, patients and activists. In St Petersburg, where the number of new cases is slowing, the city’s chief AIDS doctor, Denis Gusev, has worked with activists and opened a “prophylactic point” in the city’s AIDS Centre offering needle exchanges. An advertising campaign encouraging testing has brought more traffic to the AIDS Centre’s hotline and website. But without action at a higher political level, there will only be “islands of good practice, but never a good national response”, says Anne Aslett, director of the Elton John AIDS Foundation. + +Russia’s economic crisis has slashed health-care budgets, and more money for AIDS seems unlikely. Even this year’s promised extra federal funds have yet to materialise, says Mr Pokrovsky. Officials, he adds, must abandon the old saying that “what’s good for the German is death for the Russian.” Germany’s population is a bit over half the size of Russia’s, and it has one 25th the number of new HIV cases. “Narcoliberal” ideas save lives. + + + + + +Danish culture + +Cocoa by candlelight + +Why do so many foreigners want to copy Denmark? + +Oct 1st 2016 | COPENHAGEN | From the print edition + +Topping the cosiness index + +HOW big is the world’s appetite for things Danish? Foreign audiences have already binge-watched the country’s noir TV series (such as “The Killing” and “The Bridge”) and raved over the new Nordic cuisine of Noma, Copenhagen’s trend-setting restaurant. This autumn, publishers are testing the limits of the world’s Danomania. Before the Christmas season, at least nine English-language books will come out devoted to explaining the elusive quality of hygge. + +Hygge is difficult to pronounce. (Try “hew-geh”.) It is also tricky to describe. Writers have tried “the art of creating intimacy”, “cosiness of the soul” and “cocoa by candlelight”. It is an attitude rather than a recipe, evoking relaxation with close friends or family. Many see it as a quintessential element of Denmark’s national character. There is some evidence for this: the Danes are Europe’s biggest consumers of candles, burning through about 6 kilogrammes (13 pounds) per person every year. Runner-up Austria manages just half that. Denmark often leads (highly subjective) rankings of the happiest countries, and hygge is being marketed as a way for foreigners to imitate the Danes’ balanced, relaxed, egalitarian lifestyle. + +But not all Danes agree. Jeppe Trolle Linnet, an anthropologist at the University of Southern Denmark, argues that hygge is not the great social leveller it appears. Danes dislike acknowledging class differences, but his research finds that the habits of hygge vary by income and social status. For some, hygge is a bottle of burgundy with soft jazz on the hi-fi; for others it is a can of beer while watching football on telly. Worse, different groups are uncomfortable with others’ interpretations of hygge. Mr Linnet calls it a “vehicle of social control”, involving “a negative stereotyping of social groups who are perceived as unable to create hygge”. + +In this, hygge resembles the German quality of gemütlichkeit, which also implies a sense of cosiness, peace of mind and—crucially—social acceptance. And although the desire for communality does encourage social solidarity, it can also mean excluding strangers. Getting to hygge with a local is not always easy: in Denmark even crowded buses can be eerily silent. Danes have a reputation for aloofness. + +A recent report on the quality of life for expatriates in 67 countries, compiled by an organisation called InterNations, bears this out. Denmark’s own natives may rank it top for happiness, but the immigrants in the survey ranked it 60th in terms of friendliness, 64th for being made to feel welcome, and 67th for the ease of finding friends. Finishing just ahead of Denmark on the finding-friends measure was Norway, the country from which the Danes imported the word hygge. If cultures are obsessed with the joys of relaxing with old friends, perhaps it is because they find it stressful to make new ones. + + + + + +Charlemagne + +A tale of two ethics + +Why many Germans think impractical idealism is immoral + +Oct 1st 2016 | From the print edition + + + +THE phrases “ethic of conviction” and “ethic of responsibility” mean little to most English-speakers. In Germany the equivalent terms—Gesinnungsethik and Verantwortungsethik—are household words. Pundits drop them casually during television talk shows. Hosts use them as conversation-starters at dinner parties. The concepts draw on the opposition between idealism and pragmatism that runs through politics everywhere. But they also capture a specific moral tension that is “very German”, says Manfred Güllner, a sociologist and pollster. Anyone interested in understanding German politics, on anything from the euro to refugees, would do well to get a handle on them. + +The terms come from the sociologist Max Weber, who used them in a speech he gave in January 1919 to a group of leftist students at a Munich bookstore. Germany had just lost the first world war. The Kaiser had abdicated, the country was in the throes of revolution and Munich was about to become the capital of a short-lived “Bavarian Soviet Republic”. Armed with only eight index cards, Weber gave a talk that would become a classic of political science. (“Politics as a Vocation” was published in English only after the second world war.) The lecture ranged broadly through history, but its main purpose was to curb the Utopian romanticism then gripping the ideologues fighting over the direction of the new Germany, including those sitting in front of him. + +Weber described an “abysmal opposition” between two types of ethics. Those following their convictions wish to preserve their own moral purity, no matter what consequences their policies may have in the real world. “If an action of good intent leads to bad results, then, in the actor’s eyes, not he but the world, or the stupidity of other men, or God’s will who made them thus, is responsible for the evil.” By contrast, someone guided by responsibility “takes account of precisely the average deficiencies of people…(H)e does not even have the right to presuppose their goodness and perfection.” This sort of politician will answer for all the consequences of his actions, even unintended ones. Weber left no doubt about his sympathies. Ethicists of conviction, he said, were “in nine out of ten cases windbags”. + +The prevailing view today, like Weber’s in 1919, is that “Germany has a surfeit of Gesinnungsethik,” says Wolfgang Nowak, who served as an adviser to Gerhard Schröder when he was chancellor. The postwar yearning of Germans to atone for their nation’s Nazi past through extravagant moral posing exacerbates the tendency. In general, the ethic of conviction is most prevalent among leftists and Protestants, and slightly less so among conservatives and Catholics, says Mr Güllner. + +Thus the Social Democrats, who view themselves as crusaders for social justice, often give the impression that they are not only “unable but unwilling” to govern, lest they bear actual responsibility, Mr Güllner thinks. That may explain why there has been a Social Democratic chancellor for only 20 years since 1949, compared with 47 years under the Christian Democrats. Many of Germany’s most strident pacifists, meanwhile, are Lutherans. Margot Käßmann, the church’s former leader, dreams of Germany having no army at all. She disavows force even to prevent or stop a genocide. + +But an ethic of conviction also runs through the centre-right, which since the 1950s has approached the European project as an end in itself, a way for Germany to become post-national and dissolve its guilt along with its sovereignty. In the process, Germans deliberately overlooked the fact that most other Europeans never shared this goal. Once the euro crisis erupted, many conservatives opposed bail-outs out of an ethic of conviction, argues Thilo Sarrazin, a controversial pundit. They wanted to decry rule-breaking by crisis countries as inherently bad—even at the cost of letting the currency zone unravel. + +The ethic of responsibility holds that such stances are not merely impractical but wrong, and that what will not work cannot be moral. Those governing Germany have mostly been of this camp. In the 1980s millions of Germans marched against the modernisation of NATO’s nuclear arsenal, but Chancellor Helmut Schmidt let the missiles deploy, accepting the grim logic of deterrence. (His reward from his fellow Social Democrats was largely disdain.) In the euro crisis, Angela Merkel reluctantly agreed to bail-outs in order to hold the currency zone together. + +Transports of joy + +That is what makes Mrs Merkel’s historic opening of Germany’s borders to refugees on September 4th, 2015 so remarkable. “She galloped away with an ethic of conviction,” says Konrad Ott, a professor of philosophy and author of a book on migration and morality. At the time this aligned her with a euphoric “welcome culture”, as ordinary Germans volunteered to help refugees and the press celebrated the country’s humanitarian example. Mrs Merkel refused to put a numerical limit on accepting human beings in dire need, a position she still maintains. + +But as predicted by ethicists of responsibility (in whose ranks Mrs Merkel is usually found), the mood soon turned. Other Europeans accused Germany of “moral imperialism”, the flip side of Gesinnungsethik. And many Germans felt that too much was being asked of their society. Some, in a development that would not have surprised Weber, turned xenophobic. + +The history of the past year can thus be seen as Mrs Merkel’s attempt to return to an ethic of responsibility without betraying her convictions. This includes biting her tongue as she deals with an increasingly authoritarian Turkey, whose cooperation she needs to reduce the migrant flows, and other moral compromises. Max Weber would have found her dilemma compelling. Even someone with an ethic of responsibility, he said, sometimes “reaches the point where he says: ‘Here I stand; I can do no other.’ That is something genuinely human and moving.” + + + + + +Britain + + + + +The Labour Party conference: You say you want a revolution + +Sporting scandal: Own goals + +Immigration and Africa: Hello right hand, meet left hand + +Education: The road to London + +Looking after the elderly: Sans everything + +Child development: Baby steps + +Bagehot: Jeremy Corbyn, dodgy dealer + + + + + +The Labour Party conference + +You say you want a revolution + +They all want to change the world. But with the far-left Jeremy Corbyn entrenched as their leader, Labour’s half-million members will end up frustrated + +Oct 1st 2016 | LIVERPOOL | From the print edition + + + +THE key moment of this year’s Labour conference came before it began, when Jeremy Corbyn was re-elected as leader against his challenger, Owen Smith, with the support of 62% of party members, an even bigger majority than he took last year. Young Corbynites were duly energised; backers of Momentum, a grass roots pro-Corbyn group, were positively sunny at their alternative festival up the road from the main conference. But the mood of many Labour MPs was as dark as the skies over Liverpool. + +The reason is that, so long as Mr Corbyn remains leader, Labour seems sure to go on trailing the Tories. That ought to be surprising, given that David Cameron’s government blew up after losing its Brexit referendum in June, to be replaced by one led by Theresa May, who seems to have no coherent plan for how to leave the EU. Yet Mr Corbyn is too ineffectual a leader to benefit from this. Indeed, he often seems more interested in protest than in power. + +His unsuitability for the job of leader of the opposition was starkly revealed by two speeches to the conference. The first was by Sadiq Khan, the Labour mayor of London. He repeatedly noted that Labour could achieve nothing unless it was in office—and that meant in Westminster, not just in control of a few cities or councils. The second came from Tom Watson, Labour’s deputy leader. Although no Blairite, he went out of his way to praise the Labour governments led by Tony Blair and Gordon Brown from 1997 to 2010. Delegates gave Mr Watson a standing ovation while his leader looked on in stony silence. + +Mr Corbyn’s own speech on September 28th was more forceful and better delivered than last year’s. But he was stronger in attacking the Tories for looking after the privileged few than he was in setting out what a Labour government would do instead. His ten pledges focused mainly on the twin themes of motherhood and apple pie. He said almost nothing about Scotland, where Labour has to regain many lost seats if it is to have any chance of power. And, although he called for an end to trench warfare and pleaded for a restoration of party unity, he offered little to lure back moderate MPs who had resigned from his shadow cabinet. + +As Mr Corbyn proudly noted, Labour’s membership has ballooned so that it is now one of the biggest parties in western Europe, with more members than all other British parties put together (see chart). Next week he will rejig his shadow cabinet, probably bringing back some of those who quit in June. His team tried this week to assuage moderates’ fears that constituency-boundary changes might facilitate their deselection in favour of Corbynites. He also lost control of the party’s National Executive Committee after a change to include Scottish and Welsh members. Yet he is more firmly in charge than ever. + + + +Mr Corbyn also wants policies made from the bottom up, with a bigger role for the party conference (evidently not agreeing with Arthur Balfour’s dictum that he would prefer to take advice from his valet than from a Tory conference). This need not always produce barmy far-left results. He and John McDonnell, the shadow chancellor, made many extravagant spending promises, including to build 1m new homes (half state-owned), to renationalise the railways, to establish a “National Education Service” and to set up a £500 billion ($650 billion) national investment bank. Yet Mr Corbyn has not managed to overturn Labour’s commitment to renewing the Trident nuclear weapons system. Indeed, the Corbyn agenda is often less loony-left and inward-looking than was Michael Foot’s in the early 1980s. The difference is that Foot was a former minister who had the support of most Labour MPs. He still lost heavily. + +Although fringe meetings on Brexit were ram-packed, the conference chose not to debate the issue. Mr Corbyn said precious little beyond noting that Labour had campaigned to stay in the EU. Indeed, his insistence on the unfettered right to offer state aid to troubled industries like steel implies a desire to leave the single market. On immigration, he commendably refused to propose any new limits on numbers, suggesting instead a revival of the migrant impact fund, a mechanism to send extra cash to areas with high immigration which was scrapped in 2010. Many pro-European MPs, spooked because more than one-third of Labour supporters voted for Brexit and perhaps two-thirds of Labour-held seats returned Brexit majorities, believe free movement from the EU must be stopped even if that means losing membership of the single market. + +What can the moderates do now? Mr Corbyn won fewer votes than Mr Smith among members who joined the party before 2015. But unless tens of thousands more like-minded members can be recruited, there seems little point in another leadership challenge next year. The moderates lack a strong candidate: Mr Smith lost partly because he seemed little more than Corbyn-lite. Chuka Umunna, a former shadow business secretary, would be a better choice; he may mull a challenge in 2018. A few moderates will slink back into the shadow cabinet. Others are running in mayoral elections or hope to chair parliamentary committees (Hilary Benn, a former shadow foreign secretary, could chair the crucial Brexit committee). None now talks of splitting away to form a new party. + +Most are instead resigned to losing the next election, whenever it happens. But the real concern is that even then Mr Corbyn might cling on or be replaced by another far-left figure like Mr McDonnell. Corbynites are sure to blame defeat on dissenting Labour MPs who have created party disunity. Yet as other European countries have discovered, in today’s fluid political climate no party can be sure of its survival. Britain needs a centre-left opposition party. That need not always be Labour. + + + + + +Sporting scandal + +Own goals + +England’s football manager is sent off, as cyclists face questions about drug use + +Oct 1st 2016 | From the print edition + +Three lions in the dirt + +IF THE summer of 2016 was one of British sporting triumph, the autumn is becoming one of scandal and suspicion. Britons barely had time to celebrate Team GB’s performance in Rio de Janeiro, where it finished second in the medal table in both the Olympic and Paralympic games, before receiving embarrassing news. + +On September 27th “Big Sam” Allardyce, the new manager of the mediocre but beloved England football team, offered his resignation to the Football Association (FA) just 67 days into the job, after the Daily Telegraph newspaper published footage of him explaining how to circumvent FA rules to undercover reporters. Meanwhile Sir Bradley Wiggins, a cyclist who has won more Olympic medals than any other Briton, was defending himself against allegations of doping. Drug-testing records leaked by hackers on September 15th showed that Sir Bradley had in the past received medical exemptions to treat asthma with steroids that are normally banned. + +Both cases are tinged with hubris. The FA has long presented English football as a model of integrity. It was critical of FIFA, the sport’s international governing body, in the years before evidence of fraud committed by FIFA officials emerged in 2015. Earlier this week an FA-funded body criticised FIFA’s decision to drop an anti-racism task force. The FA was six years ahead of FIFA in outlawing third-party ownership of footballers’ rights, under which businesses could buy a player’s economic rights and sell his labour to a team. Mr Allardyce was recorded describing the FA’s ban as “ridiculous” and explaining various loopholes in the rules to reporters who were pretending to represent an Asian investment company, with whom he discussed a £400,000 ($520,000) fee. + +Team Sky, the British-run cycling outfit in whose colours Sir Bradley won the Tour de France in 2012, has also portrayed itself as a pillar of probity. It has a “zero tolerance” policy on employing past cheats and has promised to clean up cycling, a sport long associated with doping. Sir Dave Brailsford, who runs the team, was also until 2014 in charge of British Cycling, which has notched up 22 Olympic gold medals in the past decade, nearly one-third of Team GB’s total. He has explained that Team Sky and Sir Bradley acted within the rules to gain permission from the UCI, cycling’s international administrative body, to treat his asthma with injections of triamcinolone acetonide between 2011 and 2013. + +That steroid does indeed alleviate asthma; it also has a history of abuse in cycling, since it burns fat and reduces pain, according to Ross Tucker, a sports scientist at the University of the Free State in South Africa. Lance Armstrong, a disgraced American former champion, tested positive for it in 1999, before covering his tracks with a backdated permission for a saddle-sore cream containing the substance. There is no suggestion that Sir Bradley or his team have broken the rules. But his use of the drug appears to contradict the claim made in his autobiography in 2012 that, vaccinations aside, “I’ve never had an injection”. + +The affair threatens to tarnish Britain’s glittering Olympic success. As for the England football team, it is more than ever a “laughing stock”, in the words of Alan Shearer, a former captain. Its squad of millionaires was recently beaten by Iceland, a country whose entire population could fit inside four stadiums. Mr Allardyce can at least claim an unbeaten record: his career in charge lasted for only one game. + + + + + +Immigration and Africa + +Hello right hand, meet left hand + +British domestic politics clash with human rights in the Horn of Africa + +Oct 1st 2016 | From the print edition + + + +IT WAS no surprise that Theresa May chose to focus on immigration and Europe’s refugee crisis during her inaugural addresses to the UN on September 20th. She made her reputation at the Home Office as a tough gatekeeper dedicated to keeping the numbers of migrants down (even as they rose relentlessly). As her words at the UN demonstrated, she is now beefing up her predecessor’s policy to deal with the unprecedented flow of refugees from the Middle East and Africa by tackling the problem at source—or at least en route—before migrants have to be plucked out of the Mediterranean Sea or processed by Britain’s creaking asylum system. + +The policy sounds humane, as well as politically wise. But there is mounting concern that Britain and its EU partners will be propping up some of the most toxic regimes in Africa instead. + +The Khartoum Process, as the initiative is known, was launched in 2014 as a partnership between European and African states. The aim is to stem the flow of migrants to Europe by giving money to “transit” countries to police their borders and catch people-traffickers, as well as providing more aid to end the conflicts that produce refugees in the first place. Britain chairs the Khartoum Process’s steering committee and provides money for it, both through the EU and unilaterally. About €700m ($785m) from the EU has been set aside. To the same end Mrs May has announced a further £103m ($134m) for South Sudan; 100 British troops are also joining a UN peacekeeping force in the country. + +The worry is that a lot of this money may end up in the hands of governments which Britain and the EU regularly criticise for torturing and killing their own citizens. The British government says none of the money will go through government structures. But in many of the countries in question the government is so pervasive that it is almost impossible to separate it from private companies and NGOs. Lutz Oette of the School of Oriental and African Studies in London says that the Khartoum Process lacks transparency, so it will be hard to trace where the money is spent. + +The main concern is Sudan, whose president, Omar al-Bashir, has been indicted by the International Criminal Court for genocide over his army’s assaults in Darfur; the conflict has left at least 300,000 dead. Britain and the EU would prefer to see Mr Bashir in The Hague than in government, but as Sudan is such a big transit route for refugees (see map) it is now one of the main partners in the Khartoum Process, which is named after its capital. As Lady Cox, a veteran human-rights campaigner, argues, this gives “credibility and resources to the Khartoum government while it carries on with its barbaric policies”. She says that Western condemnation of the government’s bloody offensives in Darfur and other provinces have become muted since Sudan agreed to help with the migration plan. + + + +Money to help patrol Sudan’s borders will go to its corrupt and brutal police force, which has itself been implicated in people trafficking. Worse, the government has deployed the dreaded Rapid Support Force, successor to the paramilitary janjaweed that laid waste to Darfur, to patrol the Libyan border and round up Eritrean and Ethiopian refugees. They will not be treated with the dignity that Mrs May might want. + +Furthermore, Sudan is not just a “transit” country for refugees. Action by government forces and militias has created millions more (about 2.8m in Darfur and over 100,000 there in the first six months of this year), many of whom have tried to come to Britain. Officials argue that the Khartoum Process is at least worth pursuing to open up a dialogue on forced migration and related issues. But there is little evidence from the past to suggest that Mr Bashir’s regime will mend its ways. + + + + + +Education + +The road to London + +The capital’s schools are the best in the country. Can they be copied? + +Oct 1st 2016 | WELLS | From the print edition + + + +THE Blue School, a state secondary in Somerset, does not have much in common with its counterparts in London. It is set in immaculate playing fields, a ten minute stroll from the centre of Wells, the smallest city in the country. Visiting colleagues in other parts of the county is often “a day’s journey with emergency rations”, jokes Steve Jackson, the head teacher. Compared with schools in the metropolis, those in Somerset get lower funding, find it harder to convince ambitious teachers to move to the area and send fewer children to university, partly because there are no local ones. Yet when head teachers and the local authority sought to improve school standards, they turned to the capital. + +They are not alone in doing so. “London caught everyone’s eye,” notes one adviser to the Scottish government. The improvement in the capital’s schools began in the early 2000s and was sharpest among its poorest pupils. In 2002 less than a quarter of those on free school meals got five good GCSEs, the exams taken at 16. In 2013 48% did, nearly double the proportion across England. Poor pupils increasingly score high grades, too, in far higher numbers than in any other English region (see chart). + + + +Pinning down what happened in London is not easy. Unfortunately for those seeking to replicate its success, most educationalists agree that part of the answer lies beyond the school gates. According to a report last year by researchers at the Institute for Fiscal Studies and the London School of Economics, one-sixth of the improvement in central London schools was the result of growing numbers of ethnic minority children, who everywhere in Britain tend to do better in exams and improve more while in school than white pupils. Some also suggest that inner London’s startling gentrification has played a role, attracting better teachers to the capital and pushing out poor families, whose children tend to be less swotty. + +But London’s schools also got better. Its primaries focused remorselessly on the basics of numeracy and literacy. The abolition of a city-wide education authority in 1990 encouraged competition between local councils. And secondary schools helped to entrench the progress. Under the London Challenge, launched in 2003, the Department for Education worked with schools and councils to raise standards. Links between schools were fostered to help bad ones learn from the best. Teachers were bribed to stay in the capital with more money and training. The best head teachers were given more responsibility. + +And, though people tend to remember the “soft, cuddly” side of the initiative, “they forget how uncomfortable some of the Challenge was, and how hard-edged we were when things weren’t right for children,” says Jon Coles, a former civil servant who ran the London Challenge until 2006. Academies, independent of local authorities, enabled new leadership to be brought in to bad schools; the Teach First programme parachuted bright graduate teachers into tough areas. + +The result was “a really big virtuous circle” which is unlikely to be fully replicated elsewhere, says Jonathan Simons of Policy Exchange, a think-tank. But the government since has sought to apply at least some of what went on in London to other parts of the country. Michael Gove and Nicky Morgan, the education secretaries between 2010 and 2016, concentrated on getting all children to meet basic literacy and numeracy standards. Academies are now found everywhere in England. Teach First has expanded. And, as Conor Ryan of the Sutton Trust, an education charity, notes, the government’s new focus on pushing schools to join “chains” of academies is partly based on the benefits of collaboration that became evident in London. + +There have been about a dozen attempts directly to replicate the London Challenge in other parts of the country. Only a few have been remotely of the same scale. In 2008-11 the government put £78m ($144m) into schemes in Manchester and the Black Country. Results improved in the former but not by much in the latter. Some have blamed the schemes’ dulled impact on poor leadership and a failure to enthuse schools about the project. More recently, Scotland and Wales have given dollops of funding to initiatives that copy London’s approach. + +Other schemes tend to be smaller, and often operate beyond the Department for Education’s remit. The Somerset Challenge, for instance, runs on just £250,000 a year. Adapting London’s approach to local circumstances is not always easy. In Somerset it has meant finding new ways of building links between schools, which are more spread out than in the capital. Once linked, the schools have brought in outside advice to tackle common problems. “It’s far sharper, far more focused than any other collaboration I’ve been involved with,” says Mr Jackson. Whereas the London Challenge was big on experimentation, regional programmes have focused more on implementing what is now known to work, says Graeme Duncan of the Blackpool Challenge. + +Sceptics suggest many of the London replicas lack the outside perspective from government, businesses and universities that helped to inspire change in the capital. And although the government likes to trumpet the success of London, it has yet to provide the same combination of political will, funding and attention anywhere else, says Mr Coles. Working out what went on in London’s primary schools, and copying it, should be a priority, believes Mr Simons. London’s lessons are still being learned. But it is the capital’s homework that other regions should be copying. + + + + + +Looking after the elderly + +Sans everything + +Social care for pensioners is in crisis + +Oct 1st 2016 | From the print edition + +Second childishness and mere oblivion? + +IN HIS sheltered accommodation on the edge of London, Harry Jackson is worrying about the future. The 82-year-old lives alone, is confined to a wheelchair and cannot use the toilet unaided. He pays £520 ($676) a month to cover rent and four visits a day from a company contracted by the local council to feed and dress him. + +Mr Jackson (not his real name) is typical of pensioners being affected by the slow erosion of services for the elderly over the past decade. The council cancelled the bus that took him shopping twice a week, then it cut the number of people working in his building and stopped him using the communal room without paying. So now Mr Jackson seldom leaves his room except to go to church on Sunday. He pays for his care from the proceeds of the sale of his former flat, but that money has nearly run out. + +His case is a small part of a quiet emergency going on around the country. While the crisis in funding for the National Health Service (NHS) grows, and every closed ward is greeted by a chorus of outrage, funding for social care—which includes the in-home care Mr Jackson gets and the old folks’ homes he may one day have to move to—has discreetly been cut to the bone. + +Spending by local councils on social care for the elderly fell by 9% in real terms between 2010 and 2015. The number of elderly people receiving social care from their local authority declined by 26%. By 2019-20 the funding shortfall for social care will be at least £2.8 billion a year, says a report by the King’s Fund, a think-tank. + +“If the same level of cuts were occurring in the NHS, it would be a national outrage,” says Tom Gentry of Age UK, a charity. More than 1m people who have difficulty with the basic activities of daily life now get no help at all. Even Simon Stevens, the head of the NHS, recently said: “There is a strong argument that, were extra funding to be available, frankly we should be arguing that it should be going to social care.” + +Much of the problem lies in how social care is funded. Whereas NHS treatment is free at the point of delivery, social care is means-tested and provided by local authorities, whose grants from central government have been severely squeezed by austerity. Care for the elderly makes up 42% of local government spending on adult social care, or £7 billion in 2014-15. + +The threshold to qualify for help is £23,250 in savings or assets. Anyone who has more than that must pay their own way. More than 40% of care-home funding is thus met by individuals. Care homes catering to wealthy pensioners are doing well. But some are refusing to look after government-funded clients altogether, because they say local authority funding does not cover the cost. Those costs will rise as the minimum wage, currently £6.70 per hour for over-21s, rises to £9 per hour for over-25s by 2020. Brexit could also push up staffing costs, since 7% of the industry’s workers are EU migrants. + +Some 90% of social care is provided by 19,000 independent organisations, which are struggling to provide services for the price being offered by councils. Consequently, the number of beds in care homes fell by 3,000 last year, the first decline for a decade. In 2011 Southern Cross, a large provider, went bankrupt. Another, Four Seasons, has been on the edge for months. “The possibility of large-scale provider failures is no longer a question of ‘if’ but ‘when’,” says Richard Humphries of the King’s Fund. Some feel that would be the wake-up call the government needs. + +Home care is in even deeper trouble. Community-based services like those that visit Mr Jackson have faced the biggest cuts from local authorities; their funding has fallen by 30% since 2009. Two of the largest home-care providers have recently withdrawn from the market and two others have made losses in their home-care divisions. Other services are also squeezed: the ratio of GPs (family doctors) to elderly people has fallen and the number of district nurses declined by 28% in 2009-14. All of this leads to more pressure on informal carers, usually family members. + +Many admissions to hospital of elderly people could be avoided with more community services, says Mr Gentry. Delayed transfer of the elderly from hospital beds, when they are better and could leave, costs around £820m a year. + +A recent reform has allowed local authorities to raise council tax, a levy on property, by up to 2% to help pay for care for the elderly and disabled. This will help a little. But those most in need will benefit least: areas where there is a low council tax base are often the ones with the highest need for publicly funded social care. + +The siloed nature of health and social care does not help. Greater Manchester has been handed control of both in a devolution deal that will try to co-ordinate the two services better. Other cities may follow Manchester’s lead, although the new government of Theresa May seems less keen on devolution than its predecessor. + +The thinning out of state-provided social care may force a cultural shift towards families and neighbours lending more support. The local council is constantly asking whether friends or relatives could do more to help him, says Mr Jackson. People will also need to budget better for the possibility of living in a care home in later life, just as they plan for their pension. + +Local authorities’ vision of independent pensioners turning to the state for care only in extreme circumstances requires close family, a strong voluntary sector and health and care services able to support them in their own homes. That is all very well but, says the King’s Fund report, “We have not found evidence of these things being in place.” + + + + + +Child development + +Baby steps + +A policymaking fashion for ultra-early intervention has yet to produce results + +Oct 1st 2016 | From the print edition + +A life’s work + +IN HIS last speech on social mobility as prime minister, David Cameron talked of the “big responsibility parents face getting these early years right”. Citing neuroscience, he claimed that “mums and dads literally build babies’ brains”. In recent years policymakers have placed great emphasis on very early intervention in shaping children’s lives. In 2011 the covers of a pair of influential reports compared the plump, healthy brain of a normal three-year-old with the shrivelled one of a badly neglected child. In the first two years, “destinies can be altered,” Mr Cameron said this year. + +Yet programmes aimed at this crucial phase have not yet altered many destinies. In July the Early Intervention Foundation (EIF), a charity set up in 2013 with Mr Cameron’s support, summarised the evidence on 75 parenting programmes in Britain. It was distinctly mixed. Only three had robust evidence of long-lasting improved outcomes; 58 had only shaky evidence, or none. Those dealing with cognitive development were weakest. + +The EIF reported better results in behaviour management. Incredible Years, a programme that includes giving parents tips on maintaining discipline, scored well. Yet life-changing results were found only among children with diagnosed behavioural disorders. It made little difference when opened to all toddlers in deprived neighbourhoods. Improving parenting skills seems likely to have a big impact only on a highly targeted minority of the 2.3m children living in poverty, says Rosalind Edwards of Southampton University. + +A desire to spread support further may partly explain the hiccups experienced by one big programme, the Family Nurse Partnership. Its specially trained nurses visit new mothers 64 times from pregnancy until the child is two, at a cost of around £2,000 ($2,600). In America, trials reported dramatic results, from better school-readiness to lower levels of child abuse and, in one study, 59% fewer arrests before the child is 15. The British version—on which Mr Cameron doubled the number of places, to 10,000—opened entry to all first-time mothers aged under 20, rather than just the poorest. + +But a five-year review found the British programme “not cost-effective”. Though it “may promote” cognitive development better than standard services, it had poor outcomes in other areas. Children were more likely to visit hospital emergency departments, for instance. One reason for the transatlantic difference may be that British mums were better off than American moms: they could access free health care and already received home visits from nurses, for example. Either way, the shortage of success stories so far may make Mr Cameron’s successor less evangelical about focusing on the very youngest. + + + + + +Bagehot + +Jeremy Corbyn, dodgy dealer + +Light on substance and heavy on salesmanship, Corbynism is a political pyramid scheme + +Oct 1st 2016 | From the print edition + + + +ALL big suits and swagger, Vehbi Alimucaj was a symbol of Albania’s post-Soviet embrace of capitalism. The fall of communism had blown open the economy, people had money to invest and Mr Alimucaj—a businessman known as “the Pharaoh”—knew, or claimed to know, where to put it to work. Savers piled in, attracted by interest rates that looked too good to be true. They were: Mr Alimucaj was a fraudster and used the deposits of each new wave of investors to pay the dividends promised to previous waves. When his pyramid scheme and others like it brought down the Albanian economy in 1997 he was arrested and found guilty of stealing $325m from his fellow citizens. How had he done it? Albania’s then-unsophisticated financial culture had played a role. But so too had an eternal truth: it can be remarkably easy to sell an imaginary product if it sounds good enough. + +Bagehot recalled this tale as he watched Jeremy Corbyn’s big speech at the Labour Party conference on September 28th. Thousands of idealistic lefties had flooded into Labour to re-elect him as party leader. But why? Starchy and monotone, Mr Corbyn’s public speaking has improved in recent months, but only from terrible to mediocre. And for a man who had spent the past few days swanning about the conference telling everyone he was putting Labour on an election footing, he had a flimsy prospectus. + +On Brexit, Britain’s most pressing priority, he had nothing substantive to say. Likewise on the budget deficit, the root cause of Labour’s electoral defeat only last year. In his speech he wafted about a long shopping list—more research spending, infrastructure investment and cash for areas with high immigration rates—without saying where he would find the dosh. His wishlist of ten policies including “action to secure our environment” and “security of work” read as if he were the first person to think of the notions. The man proposing himself as Britain’s next prime minister offered only, to quote Kerry McCarthy, a former shadow cabinet minister, “things you could fit on a T-shirt”. + +Mr Corbyn was equally unconvincing about how he might one day reach Downing Street. Though his triumphant re-election subdued the party’s deep rifts during the conference, they remain live. From the podium Len McCluskey, the loyalist boss of Labour’s largest affiliated union, called for Mr Corbyn’s enemies to quit. Meanwhile Mr Corbyn himself betrayed next to no real curiosity in the electorate. He had nothing to say about the causes of Labour’s defeat last year, or why the party is on its lowest poll score in opposition for three decades. Nor was he any more willing to engage with a mass media he has, to date, treated as a walking insult. Instead of conducting the usual breakfast interview with the BBC on the morning of his speech, he recorded one in advance, his aides reportedly explaining that the would-be prime minister “is not a morning person”. + +Yet this potpourri of unfunded policies, nice words and electoral complacency has attracted legions to his party. Its membership has more than doubled since Mr Corbyn became leader; 15,500 joined after his re-election on September 24th. His rallies over the summer typically attracted thousands. This energy was palpable at The World Transformed, an alternative conference hosted by Momentum (Mr Corbyn’s unofficial cheerleading brigade) a short walk from Labour’s official gathering. In a cavernous former church stallholders representing anti-poverty and anti-racism campaigns vied with Corbynista platform speakers. One stand offered copies of the “Corbyn Colouring Book” and even a collection of poems praising the man: “Gee, Jeremy Corbyn, we’re sorry to say / That compromise and stalling have led us astray.” To thunderous applause Mr Corbyn told the conference: “Our hugely increased membership is part of a movement that can take Labour’s message into every community.” + +Like Mr Alimucaj he has made a virtue of having little of substance to offer those investing in him. He makes up for his lack of details about how he will win power in a sceptical country and realise socialism in a competitive world by hailing the almost mystical capacities of his movement. In Liverpool its growth was widely heralded as proof that ordinary Britons can be won over. In his punchy speech on September 27th Tom Watson, Mr Corbyn’s moderate deputy, praised the new mayor of London, Sadiq Khan, for winning elections. “Just like Jeremy Corbyn does,” heckled an old duffer in the crowd, revealingly eliding the Labour leader’s appeal to the half-million Britons involved in the party with the 45m-strong electorate at large. + +Mr Corbyn’s genius is that all this is self-reinforcing. The more vague and sweeping the promises and ideals he ascribes to the movement, the more people join it. The more who do so, the more formidable the movement seems. Labour’s leader is using the deposits of hope placed by one group to pay the dividends expected by the previous one. Overall the process gives the impression of success and motion that far outstrips any basic asset, including any kind of plan to win power and wield it effectively. + +The movement, c’est moi + +All pyramid schemes collapse eventually. It is not clear when that will happen to Corbynism. Most commentators and Labour moderates expect him to lose the next general election, probably badly. But there is no guarantee that this will end the cycle; that it will not just be seen as proof the movement is not yet big enough to take on interests—media, business, defence—that have supposedly conspired against Mr Corbyn. This vicious circle helps explain why Labour’s reality-based politicians, including Mr Watson and Mr Khan, seem stuck in a cul-de-sac. None wants to split Labour: the party is too tribal for that and most doubt a new moderate party could survive under Britain’s majoritarian electoral system. Yet recruiting enough centre-left types to take on Mr Corbyn’s uncannily pyramidical movement looks like a long shot. There are no good options. + +Economist.com/blogs/bagehot + + + + + +International + + + + +Transport as a service: It starts with a single app + + + + + +Transport as a service + +It starts with a single app + +Combining old and new ways of getting around will transform transport—and cities, too + +Oct 1st 2016 | HELSINKI | From the print edition + + + +AMONG Helsinki’s contributions to innovation in transport is a tram kitted out as a fully functioning pub, which trundles through its centre in the summer. But Finland’s capital will soon host schemes that appeal to more than beer-swilling sightseers. Residents will be able to travel quickly door-to-door within the city by using an app that mixes and matches a variety of public and private means of transport. Several such schemes are due to start this year. If they succeed they could do for personal mobility what Airbnb and Spotify have done for accommodation and music: turn it into a service, accessed and paid for on demand. + +MaaS Global (short for Mobility as a Service) is the startup behind the most ambitious of Finland’s schemes. At a tap of a smartphone screen its app, Whim, will show the best way to get from A to B by combining public transport and a variety of options from participating private firms. Whim is currently being tested; it is due to go live in Helsinki this autumn and in two other Finnish cities late in the year. + +If there is no obvious route, a scheme like these might suggest a bicycle from the city’s bike-share scheme (if one is close to your front door), followed by a train and then a taxi; an on-demand bus (“hail” it on the app and it will come and pick you up); or a one-way car-share to a tram and a rented “e-bike” with a small electric motor to alleviate the strain of pedalling for the final leg. Once a route has been chosen it will make any bookings needed, as well as ensuring that hire vehicles are available and public-transport sections are running on time. Costs will be displayed for every option, making clear the trade-offs between speed, comfort and price. Customers will be able to buy one-off journeys or “bundles” modelled on mobile-phone contracts, allowing a certain amount of travel each month. + +Commuters around the world are already accustomed to making journeys that combine public transport with walking, taxis or shared bikes. And preparing to take a trip has been transformed since the days of printed maps and timetables. Many countries have websites that give information on how to reach a destination by bus or train, both within cities and between them; in some places Google’s online maps have transport information built in. Buying tickets online is now common; Trainline, an online booking system for rail tickets, is rolling out across Europe. + +But planning a journey is one thing; making it another. After getting advice on their routes travellers have always had to find their own way to a bus stop or train station, or call a cab. Payment and booking systems have generally been separate for each leg of a journey, and the “last mile” between mass transit and final destination has not been covered at all. Services such as Whim aim to change all this: removing the guesswork, combining the various options in the most efficient and cost-effective ways, and getting the traveller seamlessly from door to door. + +Without such new thinking, cities will grind towards gridlock. In 2007 half the world’s population lived in cities; by 2050 it is expected that two-thirds will (see chart). According to Arthur D. Little, a consultancy, urban journeys already account for nearly two-thirds of all kilometres travelled by people. On current trends urban distance travelled each year will havetrebled by 2050, and the average time urban drivers spend languishing in traffic jams is set to double to 106 hours a year. + + + +The traditional policy responses to congestion—build more roads and expand public transport—are too expensive for these cash-strapped times. Hence the appeal to urban planners of the idea of travellers combining existing mass-transit schemes with a growing variety of private services. It offers a way to attract private capital into “public” transport. By enabling a closer link between supply and demand it will make mass transport more efficient. Congestion at peak hours will fall as travellers are diverted from crowded routes to less-packed ones; varying prices by time of day could help here, too. + +Public-health experts are also keen on the new approach. The apps through which the various options are accessed could be tweaked to encourage healthier choices, such as walking or cycling, if desired. Emissions of pollutants should also fall, because fewer vehicles would be idling in jams and there would be fewer cars on the street. Helsinki thinks it can make its centre free of cars by 2025—not by banning them, but by building a transport system that renders them redundant. + +As well as commuters’ lives, cities will be transformed, too. With fewer cars and parking spaces needed, they can be redesigned to be more pedestrian-friendly and to have more green spaces. Quicker journeys will increase the catchment area for job-seekers prepared to travel to work. + +Won’t the arrival of self-driving cars render such thinking unnecessary? Not quickly, and even then, not really. Affordable driverless cars that can handle both city driving and motorways safely are a long way off. And even after they arrive, mass transit systems will often remain the best way to move large numbers of people swiftly. If all of the 1.3m daily commuters into central London switched to autonomous vehicles, it would become a giant carpark. The better integrated a city’s transport system, the less demand there will be for driverless cars, and the easier those cars will be to combine with the other options. + +The new approach to transport as a service relies on two interconnected trends. The first is the spread of smartphones, which both generate the data required to manage a system that combines a wide variety of public and private transport options, and allow firms to offer the information via an app. They have already made navigating a city by public transport much easier. “Intelligent” journey planners, which use live information about congestion, disruption from accidents and the like to suggest the best route, are proliferating. Around 70% of Londoners regularly use an app such as Transport for London’s journey planner. Live travel information shows whether trains and buses are running on time. + +The second is the rise of the “sharing economy”, with businesses such as Airbnb making it possible to rent fixed assets such as apartments when they are not being used. Young urbanites, who have become accustomed to usership instead of ownership, find the notion of transport as a service both natural and appealing. Meanwhile the cost of running a car in a city goes ever upwards. Parking gets harder. Many city-dwellers are questioning whether the convenience is worth it. Between 1983 and 2014 the share of Americans aged 20-24 with a driving licence fell from 92% to 77%. + + + +Ride-hailing services are the most obvious response to these two trends. Since Uber turned the ignition switch in 2008 it has expanded to operate in 500 cities around the world. Competitors such as Lyft, which also uses an app to match riders with drivers and to handle payments, are growing rapidly, too. Didi Chuxing, China’s biggest e-taxi service, has 300m users in 400 cities and towns. + +Uber and Lyft essentially provide a new way of calling a cab. But both firms also offer ride-share services that promise to make journeys cheaper and only slightly less convenient. UberPool, Lyft Line and specialist ride-share companies such as Via, which operates in Chicago, New York and Washington, DC, put passengers going in the same direction together in shared cars and lets them split the bill. + +Passengers are being pooled in larger vehicles, too. Firms such as Bridj are using the wealth of data they collect from users’ smartphones to model travel patterns, and thus to run on-demand minibuses in several American cities, including Boston, Kansas City and Washington, DC. Book a ride and the app will show pick-up and drop-off points close to your origin and destination, any walking required and the fare. “It’s the bus that catches you,” says the firm’s founder, Matthew George. At $2-6 a trip it is not much pricier than a regular bus, but a comfortable seat is guaranteed. + +Ford is testing an on-demand shuttle bus around its vast plant at Dearborn, near Detroit. Several universities around the world run similar services for students around campuses. Plenty of firms now have pools of shared company vehicles available on demand, instead of giving one to every eligible employee. + +Self-driving is not out of the picture entirely. Car-sharing schemes, which offer most of the benefits of owning a car, but at much lower cost, are revving up. Some allow cars to be rented by the hour or even minute. Vehicles may have to be returned to the point of hire; or schemes may allow one-way trips between designated parking spots. Boston Consulting Group reckons that the 5.8m people now signed up to car-sharing schemes worldwide could grow to 35m in the next five years. + +These firms expand the traditional car-rental business by allowing shorter rental periods and more convenient pick-up and drop-off. Peer-to-peer schemes such as Getaround and Turo in America, and CarUnity in Germany, take car-sharing one stage further. These enable owners to rent out their cars for short periods, thus sweating assets that would otherwise sit at the kerb for as much as 95% of the time. Services that fill empty seats in cars and split the cost of petrol by connecting drivers with prospective passengers are also growing fast. The biggest by some way is BlaBlaCar, a French firm with operations in more than 20 countries. It mainly connects big cities rather than operating within them, taking a fee for matching passengers and drivers going the same way. + +Baby, you can drive my car + +Other niche services are springing up. In America Carpool Kids and Voom are among a band of new services that let parents connect and share rides. Zum, in San Francisco, is aiming to co-ordinate transport for children and child care such as babysitting in a single, on-demand system. + +The various permutations of car-sharing, car-pooling and ride-hailing pose a big threat to vehicle manufacturers’ sales. Some are rattled enough to get in on the act. The global car market is worth $2.3 trillion a year, of which Ford gets 6%, says Mark Fields, the firm’s boss. The market for transport services is $5.4 trillion a year, he estimates, of which it gets near to nothing. + +That is starting to change. Many carmakers already manufacture small electric vehicles that would suit a sharing scheme as they are easy to maintain and can be charged when they are parked, saving users the need to stop and pay for fuel. Some are planning powered scooters and electric micro-cars, which could also be used as shared vehicles for short urban trips. And most are busily reinventing themselves as mobility providers. In January GM announced it was investing $500m in Lyft to help it understand new transport models. In May Volkswagen put $300m into Gett, an Israeli rival to Uber; Toyota invested an undisclosed sum in Uber around the same time. + +Some carmakers have launched services of their own. Daimler has started a car-sharing service, car2go, which offers point-to-point rentals charged by the minute, hour or day. Users arrange, via an app, to pick a car up where a previous customer left it. Ford’s GoDrive, which operates in parts of London, also offers rental by the minute, as does DriveNow, a competitor, which is owned by BMW and Sixt, a car-hire firm. + +Get on the bus + +The next step is to combine these disparate experiments. Helsinki is not the only place seeking to integrate public and private transport, and do better at getting passengers from A to B. Switzerland’s national rail company has teamed up with car- and bike-sharing firms. Several Canadian cities have a scheme incorporating public transport, bike-sharing, taxis and Communauto, a car-sharing service; Brussels runs a similar scheme. But these only provide discounts for combined subscriptions and some limited integration of booking, though not payments. + +In Hanover, Germany’s 13th-largest city, Hannovermobil goes a bit further by charging users for their month’s travel in a single monthly bill. Moovel, owned by Daimler, operates a countrywide service in Germany that also knits different transport together—but booking and ticketing are still handled separately. Joint Venture in Silicon Valley is experimenting with integrating shuttle buses with other mobility apps that whisk users from door to door. After a successful pilot in Gothenburg, UbiGo will launch in Sweden this year, combining public and private transport. + +But truly turning transport into a service, as Helsinki is aiming to do, is a Herculean task. It not only means integrating the booking, payment and operating systems of dozens of transport providers. It also means persuading private firms to take part in the first place. Public-transport operators can be forced to do so by national or municipal authorities. But private operators may balk at sharing data and real-time information on customers with a third party, even if they are promised confidentiality. And why would a ride-sharing or taxi firm want to sign up to a scheme that may direct customers to its rivals? + +In Helsinki Sampo Hietanen, the boss of MaaS Global, has two answers. First, as the use of private cars declines many more people will use the firm’s app (and its competitors’), so taking part will mean getting access to an ever-growing pool of customers. Second, any firm that does not join will be left behind. And though the contractual negotiations are proving tricky, to some amazement nearly all Helsinki’s transport operators—even taxi-drivers—seem willing to give it a go. + + + +Finland’s sense of shared national endeavour probably helps. More important is the determination of the municipal and national governments. Indeed, without city authorities’ active encouragement mobility as a service will not take off, says Catherine Kargas of Marcon, a Canadian consulting firm. + +Finland’s national government is doing its bit by rewriting legislation to bring the various laws covering different modes of transport into harmony. The transport minister, Anne Berner, cites regulations that treat hire vehicles with fewer than seven seats as taxis, whereas minibuses are covered by the same laws as full-sized buses. Entirely separate laws cover vehicles that shift parcels and vehicles that shift people. That places an unnecessary obstacle in the way of any firm that might like to do both. + +Putting an independent tech firm like MaaS Global rather than an existing transport operator in charge of the app has some big advantages. A tech firm may be more innovative and more willing to take risks than a big incumbent. The likes of Deutsche Bahn, which already has a system to integrate trains and car-sharing, might still be slow to let innovators break in, reckons Mr Hietanen. Independent operators would be happy to offer a large ready-made market of travellers to any firm able to extend its range of offerings, and might be more willing to support small firms with new ideas. + +Mr Hietanen certainly has big plans. The Whim app includes pay-as-you-go “multi-modal” packages that bundle monthly travel requirements at a single price. For perhaps €95 ($106) a month it might offer free city-wide public transport, 100km of local taxi use, 500km of car rental and 1,500km on national public transport. He thinks that aiming mobility services at city-dwellers is too limited, and wants to integrate regional and national trains—as well as rural services, where on-demand buses and ride-sharing could prove handier than scheduled buses, which often travel half-empty. + +Other mobility evangelists go further. Some are eyeing big cities in the developing world, even though these rarely have good public-transport networks. Could the 50,000 minibuses and 150,000 taxis in Mexico City, for example, be better deployed as part of a system that encouraged ride-sharing and on-demand re-routing? Others talk of interoperability across borders; a few even suggest roping in airlines. Who knows: one day a wily entrepreneur may add an on-demand mobile pub. + + + + + +Special report: The world economy + + + + +The world economy: An open and shut case + +Free trade: Coming and going + +Migration: Needed but not wanted + +Capital mobility: The good, the bad and the ugly + +Deregulation and competition: A lapse in concentration + +Saving globalisation: The reset button + + + + + +The world economy + +An open and shut case + +The consensus in favour of open economies is cracking, says John O’Sullivan. Is globalisation no longer a good thing? + +Oct 1st 2016 | From the print edition + + + +THERE IS NOTHING dark, still less satanic, about the Revolution Mill in Greensboro, North Carolina. The tall yellow-brick chimney stack, with red bricks spelling “Revolution” down its length, was built a few years after the mill was established in 1900. It was a booming time for local enterprise. America’s cotton industry was moving south from New England to take advantage of lower wages. The number of mills in the South more than doubled between 1890 and 1900, to 542. By 1938 Revolution Mill was the world’s largest factory exclusively making flannel, producing 50m yards of cloth a year. + +The main mill building still has the springy hardwood floors and original wooden joists installed in its heyday, but no clacking of looms has been heard here for over three decades. The mill ceased production in 1982, an early warning of another revolution on a global scale. The textile industry was starting a fresh migration in search of cheaper labour, this time in Latin America and Asia. Revolution Mill is a monument to an industry that lost out to globalisation. + +In nearby Thomasville, there is another landmark to past industrial glory: a 30-foot (9-metre) replica of an upholstered chair. The Big Chair was erected in 1950 to mark the town’s prowess in furniture-making, in which North Carolina was once America’s leading state. But the success did not last. “In the 2000s half of Thomasville went to China,” says T.J. Stout, boss of Carsons Hospitality, a local furniture-maker. Local makers of cabinets, dressers and the like lost sales to Asia, where labour-intensive production was cheaper. + +The state is now finding new ways to do well. An hour’s drive east from Greensboro is Durham, a city that is bursting with new firms. One is Bright View Technologies, with a modern headquarters on the city’s outskirts, which makes film and reflectors to vary the pattern and diffusion of LED lights. The Liggett and Myers building in the city centre was once the home of the Chesterfield cigarette. The handsome building is now filling up with newer businesses, says Ted Conner of the Durham Chamber of Commerce. Duke University, the centre of much of the city’s innovation, is taking some of the space for labs. + + + +North Carolina exemplifies both the promise and the casualties of today’s open economy. Yet even thriving local businesses there grumble that America gets the raw end of trade deals, and that foreign rivals benefit from unfair subsidies and lax regulation. In places that have found it harder to adapt to changing times, the rumblings tend to be louder. Across the Western world there is growing unease about globalisation and the lopsided, unstable sort of capitalism it is believed to have wrought. + +A backlash against freer trade is reshaping politics. Donald Trump has clinched an unlikely nomination as the Republican Party’s candidate in November’s presidential elections with the support of blue-collar men in America’s South and its rustbelt. These are places that lost lots of manufacturing jobs in the decade after 2001, when America was hit by a surge of imports from China (which Mr Trump says he will keep out with punitive tariffs). Free trade now causes so much hostility that Hillary Clinton, the Democratic Party’s presidential candidate, was forced to disown the Trans-Pacific Partnership (TPP), a trade deal with Asia that she herself helped to negotiate. Talks on a new trade deal with the European Union, the Transatlantic Trade and Investment Partnership (TTIP), have stalled. Senior politicians in Germany and France have turned against it in response to popular opposition to the pact, which is meant to lower investment and regulatory barriers between Europe and America. + +Keep-out signs + +The commitment to free movement of people within the EU has also come under strain. In June Britain, one of Europe’s stronger economies, voted in a referendum to leave the EU after 43 years as a member. Support for Brexit was strong in the north of England and Wales, where much of Britain’s manufacturing used to be; but it was firmest in places that had seen big increases in migrant populations in recent years. Since Britain’s vote to leave, anti-establishment parties in France, the Netherlands, Germany, Italy and Austria have called for referendums on EU membership in their countries too. Such parties favour closed borders, caps on migration and barriers to trade. They are gaining in popularity and now hold sway in governments in eight EU countries. Mr Trump, for his part, has promised to build a wall along the border with Mexico to keep out immigrants. + +There is growing disquiet, too, about the unfettered movement of capital. More of the value created by companies is intangible, and businesses that rely on selling ideas find it easier to set up shop where taxes are low. America has clamped down on so-called tax inversions, in which a big company moves to a low-tax country after agreeing to be bought by a smaller firm based there. Europeans grumble that American firms engage in too many clever tricks to avoid tax. In August the European Commission told Ireland to recoup up to €13 billion ($14.5 billion) in unpaid taxes from Apple, ruling that the company’s low tax bill was a source of unfair competition. + +Free movement of debt capital has meant that trouble in one part of the world (say, America’s subprime crisis) quickly spreads to other parts. The fickleness of capital flows is one reason why the EU’s most ambitious cross-border initiative, the euro, which has joined 19 of its 28 members in a currency union, is in trouble. In the euro’s early years, countries such as Greece, Italy, Ireland, Portugal and Spain enjoyed ample credit and low borrowing costs, thanks to floods of private short-term capital from other EU countries. When crisis struck, that credit dried up and had to be replaced with massive official loans, from the ECB and from bail-out funds. The conditions attached to such support have caused relations between creditor countries such as Germany and debtors such as Greece to sour. + +Some claim that the growing discontent in the rich world is not really about economics. After all, Britain and America, at least, have enjoyed reasonable GDP growth recently, and unemployment in both countries has dropped to around 5%. Instead, the argument goes, the revolt against economic openness reflects deeper anxieties about lost relative status. Some arise from the emergence of China as a global power; others are rooted within individual societies. For example, in parts of Europe opposition to migrants was prompted by the Syrian refugee crisis. It stems less from worries about the effect of immigration on wages or jobs than from a perceived threat to social cohesion. + +But there is a material basis for discontent nevertheless, because a sluggish economic recovery has bypassed large groups of people. In America one in six working-age men without a college degree is not part of the workforce, according to an analysis by the Council of Economic Advisers, a White House think-tank. In Britain, though more people than ever are in work, wage rises have not kept up with inflation. Only in London and its hinterland in the south-east has real income per person risen above its level before the 2007-08 financial crisis. Most other rich countries are in the same boat. A report by the McKinsey Global Institute, a think-tank, found that the real incomes of two-thirds of households in 25 advanced economies were flat or fell between 2005 and 2014, compared with 2% in the previous decade. The few gains in a sluggish economy have gone to a salaried gentry. + +This has fed a widespread sense that an open economy is good for a small elite but does nothing for the broad mass of people. Even academics and policymakers who used to welcome openness unreservedly are having second thoughts. They had always understood that free trade creates losers as well as winners, but thought that the disruption was transitory and the gains were big enough to compensate those who lose out. However, a body of new research suggests that China’s integration into global trade caused more lasting damage than expected to some rich-world workers. Those displaced by a surge in imports from China were concentrated in pockets of distress where alternative jobs were hard to come by. + + + +It is not easy to establish a direct link between openness and wage inequality, but recent studies suggest that trade plays a bigger role than previously thought. Large-scale migration is increasingly understood to conflict with the welfare policy needed to shield workers from the disruptions of trade and technology. + +The consensus in favour of unfettered capital mobility began to weaken after the East Asian crises of 1997-98. As the scale of capital flows grew, the doubts increased. A recent article by economists at the IMF entitled “Neoliberalism: Oversold?” argued that in certain cases the costs to economies of opening up to capital flows exceed the benefits. + +Multiple hits + +This special report will ask how far globalisation, defined as the freer flow of trade, people and capital around the world, is responsible for the world’s economic ills and whether it is still, on balance, a good thing. A true reckoning is trickier than it might appear, and not just because the main elements of economic openness have different repercussions. Several other big upheavals have hit the world economy in recent decades, and the effects are hard to disentangle. + +First, jobs and pay have been greatly affected by technological change. Much of the increase in wage inequality in rich countries stems from new technologies that make college-educated workers more valuable. At the same time companies’ profitability has increasingly diverged. Online platforms such as Amazon, Google and Uber that act as matchmakers between consumers and producers or advertisers rely on network effects: the more users they have, the more useful they become. The firms that come to dominate such markets make spectacular returns compared with the also-rans. That has sometimes produced windfalls at the very top of the income distribution. At the same time the rapid decline in the cost of automation has left the low- and mid-skilled at risk of losing their jobs. All these changes have been amplified by globalisation, but would have been highly disruptive in any event. + +The second source of turmoil was the financial crisis and the long, slow recovery that typically follows banking blow-ups. The credit boom before the crisis had helped to mask the problem of income inequality by boosting the price of homes and increasing the spending power of the low-paid. The subsequent bust destroyed both jobs and wealth, but the college-educated bounced back more quickly than others. The free flow of debt capital played a role in the build-up to the crisis, but much of the blame for it lies with lax bank regulation. Banking busts happened long before globalisation. + +Superimposed on all this was a unique event: the rapid emergence of China as an economic power. Export-led growth has transformed China from a poor to a middle-income country, taking hundreds of millions of people out of poverty. This achievement is probably unrepeatable. As the price of capital goods continues to fall sharply, places with large pools of cheap labour, such as India or Africa, will find it harder to break into global supply chains, as China did so speedily and successfully. + +This special report will disentangle these myriad influences to assess the impact of the free movement of goods, capital and people. It will conclude that some of the concerns about economic openness are valid. The strains inflicted by a more integrated global economy were underestimated, and too little effort went into helping those who lost out. But much of the criticism of openness is misguided, underplaying its benefits and blaming it for problems that have other causes. Rolling it back would leave everyone worse off. + + + + + +Free trade + +Coming and going + +Truth and myth about the effects of openness to trade + +Oct 1st 2016 | From the print edition + + + +IN MARCH 2000, two months before a crucial vote in America’s Congress on whether to make normal trading relations with China permanent, Bill Clinton gave a press conference. In the first year of his presidency, 1993, he had made a bold case for the North Atlantic Free Trade Agreement (NAFTA) with Canada and Mexico, claiming it would create 200,000 jobs in America. Now, in the final year of his second term, he was even more bullish about a trade pact with China, which would allow that country to join the WTO. It would require China quickly to cut its average import tariff from 24% to 9%, to abolish import quotas and licences and to open up some industries to American investment. America, for its part, would not have to do anything. “This is a hundred-to-nothing deal for America when it comes to the economic consequences,” said Mr Clinton. + + + +Sixteen years on the mood is rather different. Job losses in manufacturing states such as Michigan, Ohio and Pennsylvania have made trade a key issue in America’s presidential election. Donald Trump has risen to prominence in part by promising to impose steep tariffs on imports from China and Mexico, claiming America’s trade deficit with both countries (see chart) shows it is “losing”. Hillary Clinton is no longer supporting the TPP trade deal she had earlier favoured. The demise of furniture-makers and textile firms, unable to compete with low-cost imports, belies the predictions made by her husband. Bernie Sanders, Mrs Clinton’s opponent in the Democratic Party primaries, said trade deals had been “a disaster for American workers”. A YouTube clip earlier this year showing the graceless manner in which bosses of Carrier, a maker of air-conditioners, told its workforce that it was moving production to Mexico seemed to confirm every fear about the exodus of jobs and the heartlessness of capitalism. + +What is behind the change in mood? The years after the NAFTA agreement came into force, in 1994, were actually rather good ones for America’s economy, including manufacturing. But China’s accession to the WTO caused a big shock. The country’s size, and the speed at which it conquered rich-world markets for low-cost manufacturing, makes it unique. By 2013 it had captured one-fifth of all manufacturing exports worldwide, compared with a share of only 2% in 1991. + +This coincided with a fresh decline in factory jobs in America. Between 1999 and 2011 America lost almost 6m manufacturing jobs in net terms. That may not be as dramatic as it sounds, since America is a large and dynamic place where around 5m jobs come and go every month. Still, when David Autor of the Massachusetts Institute of Technology (MIT), David Dorn of the University of Zurich and Gordon Hanson of the University of California, San Diego, looked into the job losses more closely, they found something worrying. At least one-fifth of the drop in factory jobs during that period was the direct result of competition from China. + +Moreover, the American workers who had lost those jobs neither found new ones close by nor searched for work farther afield. They either swelled the ranks of the unemployed or, more often, left the workforce. That contradicts the widespread belief that America’s jobs market is fluid and flexible. When men lose a factory job, they often stay put. Those who managed to find new jobs were paid less than before and were working in industries that were vulnerable to competition from imports. In subsequent research, the authors found that lost factory jobs also had a depressing effect on aggregate demand (and thus non-manufacturing jobs) in the affected areas. In total, up to 2.4m jobs may have been lost, directly and indirectly, as a consequence of imports from China. + +In other rich countries, regions or industries with heavy exposure to Chinese imports also suffered material losses in factory jobs. A study of Spain’s jobs market by Vicente Donoso, of the Complutense University of Madrid, and others found that provinces with the greatest exposure to Chinese imports saw the largest falls in the share of manufacturing employment between 1999 and 2007, but this was compensated for by an increase in non-factory jobs. Research in Norway, though, found that the main effect was to raise unemployment. João Paulo Pessoa of the London School of Economics found that British workers in industries exposed to high levels of import competition from China spent more time out of work than those in other industries. A wide-ranging study of the effect on Germany of more trade with China and eastern Europe in the two decades after 1988 concluded that industries competing with imports suffered job losses, but these were outweighed by job gains in regions focused on export industries. Those gains were due almost entirely to trade with eastern Europe, not China. + +China’s accession to the WTO was supposed to be a great bonus for America. So why was its impact on trade and jobs so unexpectedly large? One reason was that China got a very significant advantage out of the pact. A paper by Justin Pierce, of the Federal Reserve, and Peter Schott, of Yale School of Management, argues that joining the WTO removed the risk for China of a steep increase in America’s tariffs, making it less perilous for its companies to invest in new factories. The authors found that industries where the threat of tariff increases was most reduced suffered the greatest job losses in America. But the lopsided nature of trade between China and the rich world also played a part. After China joined the WTO, its current-account surplus widened from an average of around 2% of GDP in the 1990s to about 5% in the following decade. In other words, China saved more. That helps explain the modest offsetting gains in exports in the regions affected by Chinese imports. + +Done workin’ + +It is important to note that America’s growing inability to bounce back from losing manufacturing jobs predates the rise of China as an exporting power. A report published in June by the Council of Economic Advisers (CEA) charts the long-term decline in prime-aged men in America’s workforce. It shows that in the mid-1960s almost all men aged between 25 and 54 were either in work or looking for a job, but that in the past half-century the participation rate for this group has dropped below 90%. In every recession the rate falls more sharply, and when the economy picks up again it fails to make up all the lost ground. + + + +But there are big differences between the participation rates of different groups of men. In 1964 male high-school graduates were about as likely to be in the workforce as college-educated men, but now only 83% of those with a high-school degree or less are in the workforce, against 94% of those who finished college (see chart). This mirrors a growing divergence in wages. In the mid-1960s the pay of less educated men averaged 80% of college-educated ones, but by 2014 that proportion had fallen to 60%. + +It is unlikely that men are dropping out of work voluntarily. More than a third of inactive men live in poverty; less than a quarter have a working spouse. So the most obvious explanation is a fall in demand for less-skilled men. That in turn is partly linked to a long-term decline in manufacturing, whose share of the jobs market peaked in the days when almost all prime-age men worked. The CEA study found that states with a higher-than-average share of jobs in construction, mining and (to a lesser degree) manufacturing tend to have more prime-age men in the workforce. It does not help that men who lose their jobs are increasingly rooted in unemployment black spots. The propensity of people to move in search of work has dropped sharply since the early 1990s, for reasons that are not yet fully understood. + +A steady drop in the share of prime-age men in the workforce going back half a century cannot be pinned on America signing free-trade agreements or China’s emergence as an exporter of manufactures, both of which happened fairly recently. Factory jobs peaked in the 1970s, but manufacturing output has continued to increase. Indeed, America’s share of world manufacturing output, on a value-added basis, has been fairly stable at a bit under a fifth for the past four decades. Thanks to advances in technology, fewer workers are needed to produce the same quantity of goods. But since trade with lower-cost countries and technological change have similar effects on labour-intensive production in the rich world, it is hard to disentangle their effects. + +Still, some rich countries, such as Germany, Britain and Canada, have done rather better than America at keeping prime-age men in work, though others, including France, Italy and Spain, have done even worse. That is partly a matter of policy. Members of the OECD, a club of mostly rich countries, set aside an average of 0.6% of GDP a year for “active labour-market policies”—job centres, retraining schemes and employment subsidies—to ease the transition to new types of work. America spends just 0.1% of GDP. By neglecting those whose jobs have been swallowed by technology or imports, America’s policymakers have fuelled some of the anger about freer trade. + +Have trade deals really been a disaster for American workers? Trade with China seems to have had an unusually large effect. Since 1985, America has signed 15 free-trade agreements (FTAs) covering 20 countries. Exports to these countries account for nearly half of all the goods America sells abroad, even though FTA countries make up just a tenth of GDP outside America. In the five years after a new trade pact comes into force, America’s exports to new FTA partners typically grow around three times as fast as its overall exports, at least keeping pace with imports. In 2012, exports to the 20 countries covered by FTAs grew twice as fast as the average. In America, exporting firms pay a wage premium of between 13% and 18%, compared with non-exporters. This is hardly a disaster. + + + +America has run a trade deficit every year since 1976. On the other side of the global ledger are countries that consistently run big trade surpluses. These days the record is held not by China but by Germany, which last year had a current-account surplus of 8% of GDP (see chart). But this does not mean that America is “losing” at trade, as Mr Trump suggests, and China and Germany are winning. The purpose of exports is to pay for imports, either now or later. A trade surplus is not a virility symbol. In some cases, it is a sign of a strong national preference for saving (though other countries might describe it as a symptom of weak domestic demand). Countries rarely have balanced trade, where the value of exports and imports is exactly the same. It might seem plausible that restricting trade to eliminate deficits will create jobs, channelling existing demand towards goods made at home. But the reality is more complicated. In most rich countries, particularly America, the trade deficit widens when GDP growth is strong, and shrinks during recessions. The factors that drive demand for imports are the same as those that drive overall demand, and thus jobs. To balance trade, Americans would have to invest less or save more. Neither would create jobs. + +It would help a sluggish world economy if surplus countries, like China and Germany, were to spend more on imports. But for America to aim to balance trade with any one country would be pointless. In any case, a finished product exported from China to America, say, will include components made in third countries, and probably only a small fraction of the value will have been added in China itself. Four-fifths of all trade takes place along supply chains within, or organised by, multinational firms. Slapping a tariff on imports of intermediate goods from, say, Mexico would raise the price of America’s exports, which would probably be bad for its trade balance. Around 40% of the value of Mexico’s exports of final goods to America, for instance, was added in America itself. + +Sober advocates of free trade know that over time the gains from it come from greater efficiency, not from more jobs, the number of which is largely determined by demography and the strength of aggregate demand. It is easier to spot the link between freer trade and factory closures than the more dispersed benefits trade brings to workers across other industries. Exporting firms in all countries and across a variety of industries are more productive, grow faster and pay higher wages than non-exporting firms. But a lot of the gains from trade come from the direct benefit of cheaper imports and their indirect effect on productivity. + +The cost of protectionism + +A study by Pablo Fajgelbaum of the University of California, Los Angeles, and Amit Khandelwal, of Columbia University, suggests that in an average country, people on high incomes would lose 28% of their purchasing power if borders were closed to trade. But the poorest 10% of consumers would lose 63% of their spending power, because they buy relatively more imported goods. The authors find a bias of trade in favour of poorer people in all 40 countries in their study, which included 13 developing countries. An in-depth study of European industry by Nicholas Bloom, of Stanford University, Mirko Draca of Warwick University and John Van Reenen of the LSE found that import competition from China led to a decline in jobs and made life harder for low-tech firms in affected industries. But it also forced surviving firms to become more innovative: R&D spending, patent creation and the use of information technology all increased, as did total factor productivity. + +Taken together, these are large and permanent benefits. What is clear from the studies of Mr Autor and others is that the one-off integration of China had bigger and more lasting effects than expected. Too little attention has been paid in America to those whose jobs are displaced by new technology or imports. That has given an opening to protectionists, who are peddling a solution that will hurt the poor most. A similar sort of populism is rearing its head in Europe in response to migration. + + + + + +Migration + +Needed but not wanted + +Economic migrants are seen as a threat to jobs and the welfare state. The reality is more complex + +Oct 1st 2016 | From the print edition + + + +STOKE-ON-TRENT in northern England is home to the world’s second-oldest professional football club, Stoke City FC. Founded in 1863, it enjoyed its heyday in the mid-1970s, when the club came close to winning the top division. The playing style was described by its manager, Tony Waddington, as “the working man’s ballet”. These days the flair is often provided by players from far afield. More than half the first-team squad comes from outside Britain, mostly from other parts of Europe. But that is about as far as Europhilia in Stoke goes. In June’s referendum on Britain’s European Union membership, the city voted strongly for Brexit. + +A study by Italo Colantone and Piero Stanig of Bocconi University in Milan found that areas where jobs are vulnerable to competition from Chinese imports, mainly those in Britain’s faded industrial north, tended to be in favour of leaving. Stoke City FC are known as the Potters in tribute to the city’s once-great pottery industry. But Stoke also seemed predestined to be a Brexit supporter on another count. An analysis by The Economist earlier this year found that in places such as Stoke, where the foreign-born population had increased by more than 200% between 2001 and 2014, a vote to leave was almost certain. + +Immigration of low-skilled workers has become an increasingly contentious political issue in both America and Britain. Voters in host countries often see a sudden influx of people from places with lower wages, poorer working conditions and a less generous welfare system as a threat to their livelihoods and living standards. In America the debate is about whether migrants hold down the wages of native workers. In Britain the main concern is that migrants put additional pressure on housing, public health services, schools and transport systems. + +Along with trade, migration is one of the two main sources of public anxiety about globalisation. For the host economy, the gains and drawbacks are similar to those from trade. Immigration enriches the workforce, allowing for a more finely graded specialisation that raises average productivity and living standards. Diverse workforces are likely to be more productive, especially in industries where success depends on specific knowledge, such as computing, health care and finance. By easing labour bottlenecks, low-skilled migrants help to keep down prices of goods and services. + + + +The drawback for native workers is competition for jobs and public services. In principle, an influx of low-skilled workers depresses wages for competing native workers, in the same theoretical way that opening up to trade with poor countries does. The balance of benefits and costs will depend on income: the rich are likely to do better out of the bargain. Economists dispute the extent of the overall gains and losses to hosts and labour-sending countries respectively. + +Come pick my strawberries + +Some benefits are uncontested. For immigrants from poorer countries moving to Stoke, or indeed to any part of Britain, there are clear gains. They can hope for a better job, a marked improvement in their quality of life and access to better public services such as health care. Economic migrants are by definition a mobile labour force. Migration helps to deal with labour shortages in low- or mid-skilled industries, such as mining or agriculture, and in remote places where it is difficult to attract native workers. Migrants are also often granted work visas on the strength of having scarce skills. + +Many native workers see uncontrolled immigration as a break with an implicit contract: that the state will look after its own + +Other elements of migration are more controversial. If host countries benefit from immigrants, then the countries that send them must be losing out on manpower, skills and tax revenue. The people who move are often the brightest and best—those with the get-up-and-go, the languages and the connections—so their country of origin may suffer a brain drain. A recent paper from the IMF puts a number on this. Between 1990 and 2012 almost 20m people moved from central, eastern and south-eastern Europe to richer countries in western Europe. This east-west migration accelerated after 2004 when eight eastern European countries, including Poland, the Czech Republic and Hungary, joined the EU. The IMF researchers reckon this exodus lowered cumulative population growth in labour-sending countries by eight percentage points. If those mostly young and skilled workers had stayed put, the gap with the EU in income per person would have been five percentage points narrower. + +These results are open to dispute. Migrants typically move from places where economic prospects are poor, making it hard to establish whether weak growth is a cause or a consequence of their leaving. The chance of a better life elsewhere may also create a stronger incentive for those who remain to acquire new skills. Michael Clemens of the Centre for Global Development and Satish Chand of the Australian National University used a natural experiment provided by a military coup in Fiji in 1987 to study the effects of emigration on that country. The economy was split between indigenous Fijians and those of Indian origin. A large chunk of the second group, generally high-skilled, left after the coup. Most of them went to Australia and New Zealand, which admitted well-qualified migrants. It seemed the ideal opportunity to measure the effects of a brain drain. + +What the researchers found was that the Indian Fijians who stayed behind started to acquire skills at a faster rate in order to be able to emigrate (or at least to have the option of doing so). They also concentrated on disciplines that allowed them to meet the skills-based immigration criteria most efficiently. The increased investment in skills was large enough to raise the stock of human capital net of the first wave of emigration, in which a fifth of the Indian-Fijian population left. The brain drain was fully offset. + +What about the impact on host countries? Many native workers see uncontrolled immigration as a break with an implicit contract: that the state will look after its own. It creates a tension between immigration and the welfare state. That tension, though, is mostly policy-related. Where migrants’ employment rate is higher than that of natives (as is the case with migrants within the EU), fears that immigration will add to the welfare burden are largely unfounded, though much depends on how welfare policies are designed. In America, for instance, only those who have paid into the public Social Security (pension) scheme for at least ten years are entitled to benefits. A well-designed policy could make immigration and welfare provision complementary. + +The trouble is that at local level there is often a mismatch between the extra resources that immigrants add and the extra demand they create. Additional pressures on local public services are a particular problem in Britain, where central government raises taxes and allocates spending. Centralised budgets make it difficult for local authorities to respond flexibly to changes in local conditions, and strict planning rules limit the construction of new homes when demand surges. + +Some other European countries deal with economic migration rather better than Britain does. In Denmark a lot of budgetary policy is made at municipal level, says Jacob Kirkegaard of the Peterson Institute for International Economics. If an area has an influx of migrants, it receives more local tax revenues to expand public amenities, build more schools, hire more doctors and so on. + +Another concern among natives has been that immigrants put downward pressure on wages. In theory they should, but empirical studies come to different conclusions. On one side is George Borjas, of Harvard University, whose study in 2006 found that although immigration did not depress overall wages between 1980 and 2000, it did hold down the pay of the low-skilled by 5-10%. On the other side, David Card, of the University of California, Berkeley, concluded that there was no effect. His view was based on a study of the “Mariel boatlift”, an unexpected surge in Cuban migrants to Miami in 1980. Mr Card reckoned that Miami had become accustomed to handling large inflows of unskilled migrants. Mr Borjas has recently looked at Mr Card’s analysis again and claims that high-school dropouts, a subset of the low-skilled native workers in Mr Card’s study, did in fact suffer a material fall in wages. + +Until quite recently the academic literature treated migrants as substitutes for native workers. But what if they were complements; if low-skilled migrants helped to boost the productivity of low-skilled natives? Gianmarco Ottaviano, of the University of Bologna, and Giovanni Peri, of the University of California, Davis, find that for workers with at least a high-school qualification, the wage effects of low-skill immigration are positive if you drop the assumption that workers of the same age and education are perfect substitutes and that workers of one skill level, say cooks, do not affect the productivity of workers at other skill levels, say waiters or restaurant managers. The effect on the wages of high-school dropouts is only mildly negative. A paper by Marco Manacorda, Alan Manning and Jonathan Wadsworth, of the London School of Economics, similarly concludes that immigrants to Britain are imperfect substitutes for native-born workers, so they have little impact on natives’ job prospects or wages. New immigrants tend to affect only the pay of recently arrived immigrants. + +From these muddy waters, it is possible to draw two tentative conclusions about the broad impact of migration on wages. First, the effect on the bulk of low-skilled native workers has been fairly muted—perhaps because the way work is done changes in response to large-scale migration. However, the pay of some narrow categories of workers (say, farm labourers in Britain or high-school dropouts in America) may still be affected. + +To deal with the tension between immigration and the welfare state, three rules suggest themselves. First, make benefits conditional on having paid into the system. Second, tie the funding of local public services to local tax revenues to ensure an automatic response to an influx of migrants. Third, restrict migration to prime-age, skilled workers who are more likely to get jobs and less likely to lose them in a recession. + +But this may not be as straightforward as it sounds. Almost two-thirds of the new jobs that will be added to America’s economy in the next decade will be low-skilled or mid-skilled jobs, according to a projection by the country’s Bureau of Labour Statistics. Care workers, kitchen staff, auxiliary nurses and builders will be in strong demand in Europe, too. Such demand may not easily be met by indigenous workers, even at higher wages. + + + +Will these jobs be filled in a black market or in a formal labour market? This is a question America has faced before. In the 1980s the baby-boomers were moving towards middle age, causing a spike in demand for young, low-skilled labour. This coincided with a demographic bulge in Mexico. An overhaul of America’s immigration rules in 1986 regularised those Mexican workers who had arrived before 1982. Henceforth work visas would be granted only to high-skilled migrants. The interplay of supply and demand created a black market, causing the number of illegal migrants to reach 12m in 2007, when policing of the border was stepped up. It was only quite recently that the flow of migrants was reversed (see chart). + +Europe now faces a supply-demand dynamic similar to America’s in the 1980s. It has an ageing population, whereas on its doorstep, in the Middle East and Africa, populations are young and growing rapidly. A lesson from America’s engagement with Mexico is that a formal system for low-skilled immigration, perhaps with fewer entitlements than for skilled workers, is far preferable to turning a blind eye to informal migration. + +Only within the EU’s borders is the free movement of people tied to the free movement of trade and capital. For the most part, enthusiasts for globalisation have rooted only for freer trade and open capital markets, not migration. Yet many of them are now having second thoughts about the benefits of unfettered capital too. + + + + + +Capital mobility + +The good, the bad and the ugly + +Foreign direct investment is mostly welcome, but large short-term flows spell trouble + +Oct 1st 2016 | From the print edition + + + +SHANNON AIRPORT ON Ireland’s west coast has been a gateway from Europe to America since the 1940s. It was built across the estuary of the river Shannon from Foynes, a small town that had served in the interwar years as a refuelling stop for seaplanes and passengers on their way across the Atlantic. A local chef, Joe Sheridan, came up with the idea of Irish coffee when he added whiskey to the hot drinks served to shivering passengers from a Pan Am flying boat. In 1947 a catering manager, Brendan O’Regan, set up the world’s first duty-free shop at Shannon, allowing transit passengers to buy tax-exempt goods. + +Capital also disembarks in this part of Ireland, a country that, more than most, has been transformed by flows of capital from other places. In the 1980s Ireland seemed destined to be western Europe’s perennial laggard: “The poorest of the rich”, as a survey by The Economist put it in 1988. But within a decade Ireland had transformed itself into the Celtic tiger, Europe’s unlikely answer to the booming economies of South-East Asia. + +Central to this shift were American companies seeking a foothold in the EU ahead of the creation of the single market in goods in 1992 and lured by a well-educated, English-speaking workforce. The state offered inducements, such as grants and a low corporate-tax rate. Intel, a chipmaker, started production in Dublin in 1990. Other big firms followed. Boston Scientific, a maker of medical devices, set up shop in 1994 in Galway, an hour’s drive from Shannon. A medical-technology and pharmaceutical cluster emerged in the region. + +A textbook example + +Thanks to foreign direct investment (FDI) of this kind, Ireland went from the poorest of the rich to among the richest. It was a textbook example of the benefits of capital flows. But Ireland is also an archetype of the malign side-effects of capital mobility. As it became richer, other countries took exception to its low corporate-tax rate, which they saw as simply a device to allow global companies to book profits in Ireland and save tax. + +The scale of the problem was highlighted in July when Ireland’s statistical office revealed that the country’s GDP had grown by 26% in 2015. The figure said little about the health of the Irish economy. First, it was inflated by “tax inversions” in which a small Irish company acquires a bigger foreign one and the merged firm is registered in Ireland to benefit from its low corporate taxes. Last year saw a rush of transactions before a clampdown by America. Second, the GDP figures were distorted by the aircraft-leasing industry. The world’s two largest lessor fleets are managed from Shannon, though many of the 4,000 registered aircraft will never touch down there. + +But it is the damage wrought by short-term capital flows in Ireland that is most striking. After the launch of the euro in 1999, would-be homeowners were seduced by irresistibly low interest rates set in Frankfurt. Irish banks borrowed heavily in the euro interbank market to fuel the property boom and to speculate on assets outside Ireland. Bank loans to the private sector grew by almost 30% a year in 2004-06, at the peak of the boom. When that boom turned to bust, the country suffered a brutal recession and had to be bailed out by the IMF. Ireland still bears the scars. Preliminary figures from this year’s census show that almost 10% of homes in Ireland are permanently empty. Some of the worst-affected areas are in the west of Ireland, up or down the coast from Shannon. Ghost estates and failed bed-and-breakfast places are the legacy of a building boom that by 2007 had drawn one in eight of all workers into the construction industry. + +Unimpeded capital flows should be a boon. Like global free trade, global capital markets offer broader opportunities. More and better openings usually make people richer. Globalised capital breaks the tie between domestic saving and investment, giving poor and low-saving countries the wherewithal to speed up GDP growth. For developing economies, capital mobility is a conduit for new technology, management know-how and business networks. It also allows investors to vote with their feet, encouraging governments to follow prudent regulatory, monetary and fiscal policies. + +For a long time the liberal orthodoxy was against any kind of restriction on cross-border finance. A succession of financial calamities, starting in Latin America in the 1980s and continuing with the East Asian crisis of 1997-98, prompted a rethink. Rather than imposing discipline, access to foreign capital seemed to allow countries to get into bigger messes. Whereas academics argue about the pros and cons of free movement of goods or people, they now mostly agree that liberalising capital flows can sometimes do more harm than good. Politicians may occasionally rue the fickleness of international investors, but capital mobility is not, for the most part, a target for popular anger in the way free trade and immigration often are. + +There is plenty of evidence of the trouble that floods of short-term capital can cause. In a paper published earlier this year, Atish Ghosh, Jonathan Ostry and Mahvash Qureshi, of the IMF, identified 152 “surge” episodes (periods of abnormally large capital flows) between 1980 and 2014 in 53 emerging markets. A fifth of such episodes subsequently led to a banking or currency crisis. The surges most likely to end in tears were those made up mainly of cross-border bank lending; FDI-based ones were less likely to create trouble. The euro crisis in general, and Ireland’s spectacular banking bust in particular, have shown that the syndrome is not confined to developing countries. + +Markets for capital are error-prone in a way that markets for goods are not. Stocks, bonds and property are subject to wild swings in value. When capital moves across borders, these failures are amplified by distance, unfamiliarity and exchange-rate risk. There is more scope for getting things wrong, and the resulting economic crises are typically on a larger scale. It is fine for foreign companies to build or buy offices, factories and infrastructure, but the benefits of foreigners buying bonds or stocks are less obvious, and such investments tend to be volatile. Developing countries’ financial systems are not necessarily equipped to put inflows of this kind to productive use, still less to handle their sudden exit. Short-term foreign borrowing is often used to finance long-term domestic loans. The mismatch becomes even starker when the borrowing is in foreign currency. And countries subject to sustained inflows of hot money often contract “Dutch disease”, a condition that drives up their currency beyond its fair value, leaving their export businesses unable to compete in international markets. + +Filtering the flows + +Limits on capital flows other than FDI thus seem like a good idea. In 2012 the IMF conceded that capital controls of a temporary and targeted nature were warranted, as a last resort, where the scale of capital inflows put financial stability at risk and conventional monetary or fiscal policy was unable to respond effectively. But what can be done to stop bad capital flows while letting through the good ones? + +One approach is an entry (or Tobin) tax, proportionate to the size of the capital inflow and levied at the time when currencies are exchanged. Such a tax would bear more heavily on short-term inflows. Until recently controls of this kind were believed to have little effect on capital inflows. But a recent paper by Marcos Chamon, of the IMF, and Márcio Garcia, of PUC-Rio, suggests that they may be more effective than previously thought. + +The authors looked at the experience of Brazil, which in October 2009 imposed a 2% entry tax on portfolio investments. This was meant to stop the country’s currency, the real, from appreciating further. It was soon raised to 4% and then to 6% in short order. At first the measures did not seem to work, but that changed when in mid-2011 they were supplemented with a tax on the notional value of derivatives. Messrs Chamon and Garcia estimate that up to 10% of the subsequent fall in the real was due to the intervention. + +Once the real had fallen, in 2012, Brazil started to dismantle its capital controls. But if hot-money flows are an ever-present threat, would it not make more sense to have controls permanently in place? Michael Klein, of Tufts University, makes a distinction between “gates”, episodic controls in response to sudden inflows of a certain kind, and “walls”, long-standing controls on a broader range of assets. In a study of 44 countries between 1995 and 2010, he concluded that gates do not curb exchange-rate appreciation, raise GDP growth or stop the build-up of financial risks. But long-standing capital controls (walls) might. + +The ten countries in Mr Klein’s study with capital “walls”, including China, on average saw a slower rate of growth in private debt relative to GDP and weaker growth in bank lending than the 34 other countries. They were also less likely to experience abnormal capital surges. That suggests walls are effective. But countries with walls are generally poorer than countries with gates. And when Mr Klein controlled for GDP per head, the statistical distinction between gated and walled countries mostly disappeared. Neither type of capital control had much effect. + +This is an awkward finding. In principle, the flexibility of gates should make them a better instrument of control than walls, which can deter even the right sort of capital. Ideally capital controls should be tightened as inflows intensify. But gates may be ineffective for practical reasons. The tax rate required to stem a flood of inflows might be unfeasibly high. And gates are likely to be more permeable than walls, because countries with long-standing controls will have learned how to police capital inflows effectively. China, for instance, has been able to control its nominal exchange rate from behind its imposing capital walls. + +The best policy might be a mixture of both. Not everyone is convinced by Brazil’s experiment. It showed that a tax has to be fairly high and broadly applied before it has much effect. That makes it difficult to levy it only on “bad” capital flows. And just as heavier policing in one area may simply shift crime to a neighbouring area, Tobin taxes may simply divert capital flows rather than deter them altogether. A study by Kristin Forbes, now a member of the Bank of England’s monetary-policy committee, and others suggests that Brazil’s Tobin tax encouraged emerging-market bond and equity funds to flood into other commodity-rich countries instead. + +Observers with longer memories recall that before Brazil’s experiment, Chile was held up as an exemplar of the wise use of capital controls. In the 1990s capital imports into Chile were subject to an interest-free deposit of 30% of the investment. Chile’s central bank has since eschewed controls in favour of direct intervention in currency markets (selling pesos to build reserves when inflows are strong), a policy that has the virtue of being hard to circumvent. This helps guard against incipient Dutch disease, but it does little to deter inflows. If the main worry is too much lending on property, then macroprudential policy is probably a better bet. One useful measure is to limit the amount banks can lend as a proportion of the value of the property. + +A taxing question + +Economists in Ireland once made a distinction between the Celtic Tiger phase of the country’s economic boom, which was powered by FDI, and a second, “bubble”, phase, inflated by low interest rates and short-term capital. But these days FDI does not always result in a new factory, research facility or office building, with new jobs to match it. Often it amounts to a transfer of intangible assets for the purpose of lowering corporate tax. + + + +Ireland is among the world’s top countries for foreign direct investment relative to GDP (see chart). Most of the others on the list are also small countries with low rates of corporation tax. Luxembourg, for instance, accounts for 10% of the stock of global FDI but only 0.07% of world GDP. Competition is generally a good thing, but in matters of taxation that is not always true. + +Multinational companies are able to avoid tax because there are so few generally agreed principles of cross-border taxation. One approach, taken in America, is to tax a company’s global income on the basis of where it is “resident” (where its headquarters are), regardless of where its profits are made. A second method, widely adopted in Europe, is to tax profits where they are generated. In practice the two are often used in combination. “You can play one country off against another so you’re not resident anywhere,” says an expert on the subject. + +Globalisation and the growing importance of intangible assets, such as patents, have made concepts such as residence and sources of income much less useful. Supply chains are now so complex that it is hard to know where a source-based tax on profits should be applied. If the value of a drugs company lies mostly in its patents, for example, it can move to a tax haven and enjoy low taxes without uprooting any of its physical operations. + +The growing practice of using offshore investment to avoid corporate tax might make capital mobility the target of popular anger + +Purists argue that, since all taxes are ultimately borne by individuals, there is little point in chasing elusive companies all over the globe; better to abolish corporation tax and increase sales taxes instead. There are two objections to this. First, for reasons of equity it may be preferable to tax shareholders rather than consumers. Second, corporate taxes make up a large share of revenues in resource-rich poorer countries, where few workers are on formal payrolls and sales taxes are easy to evade. + + + +One way of dealing with that might be a special regime of royalties or land taxes levied on mining companies. Michael Devereux, a tax expert at Oxford’s Said Business School, predicts that in the long run tax competition and avoidance will erode rich countries’ corporate-tax base. He proposes a value-added tax with deductions for labour costs and other inputs. That would approximate to a tax on excess profits, or “rents”. + +True FDI is an unalloyed benefit. But the growing practice of using offshore investment to avoid corporate tax might make capital mobility the target of popular anger, alongside trade and immigration. The EU’s case against Apple may be just the beginning. Many people see footloose global companies and deregulation as the handmaidens of the worst kind of corporate practice. Yet economic ills such as weak real incomes, inequality and immobile workers may be partly due to a failure to liberalise product markets further. + + + + + +Deregulation and competition + +A lapse in concentration + +A dearth of competition among firms helps explain wage inequality and a host of other ills + +Oct 1st 2016 | From the print edition + + + +IN “THE FUGITIVE”, a 1960s television drama, David Janssen plays Richard Kimble, a doctor wrongly convicted of murdering his wife who escapes on the way to his execution. He claims, but cannot prove, that he encountered a one-armed man minutes before he discovered his wife’s dead body. After his escape he drifts from town to town trying to find the ghostly figure and to elude the man obsessed with recapturing him. + +The damage that globalisation has done to America’s economy is as obvious to some as Dr Kimble’s guilt was to his pursuers. Careful academic studies have linked competition by Chinese manufacturers to the growing propensity of prime-aged men to drop out of the labour force. A pillar of trade theory says that increased commerce with labour-rich countries will depress the pay of the low-skilled; and some reckonings of wage inequality in America pin part of the blame on trade and migration. GDP growth has been sluggish during the long hangover from the financial crisis. The globalisation of finance provided the kindling for America’s subprime crisis and spread its effects around the world. Globalisation is on the run. But might there be another brigand who bears responsibility for its alleged crimes? + + + +An intriguing line of research identifies an increase in the incidence of economic “rents” (profits over and above the levels needed to justify investment or input of work) as a possible villain. A study last year by Jason Furman, of the Council for Economic Advisers (CEA), and Peter Orszag, a former budget director for Barack Obama, found that the top 10% of firms by profit have pulled away sharply from the rest (see chart). Their return on capital invested rose from more than three times that of the median firm in the 1990s to eight times. This is way above any plausible cost of capital and likely to be pure rent. Those high returns are persistent. More than four-fifths of the firms that made a return of 25% or more in 2003 were still doing so ten years later. + +Other research suggests that this increasingly skewed distribution of profits goes a long way to explaining the rise in wage inequality. A paper in 2014 by Erling Bath, Alex Bryson, James Davis and Richard Freeman found that most of the growing dispersion in individual pay since the 1970s is associated with variations in pay between companies, not within them. In other words, the most profitable companies pay handsomely and people who work for them earn more than the rest. + +This finding was confirmed in a more recent study by Nicholas Bloom and David Price, both of Stanford University, with others, which found that virtually all of the rise in income inequality is explained by a growing dispersion in average wages paid by firms. This finding, the authors conclude, holds across all industries, regions and firm sizes. One of the most striking implications is that inequality within firms has not changed much: the relationship between managers’ and shop-floor workers’ pay in each firm is still roughly the same. But the gap between what the average and the best firms pay their workers at all levels has widened. Alan Krueger, of Princeton University, illustrated this point nicely at a presentation he gave while working at the CEA in 2013. Using data from the decade after 2003, he showed that where managers are well paid, so are janitors (see chart). + + + +More power, more profit + +This wider range of profits is likely to be related to increases in market power. Some of this is due to the rise of internet giants, which dominate their respective markets thanks to network effects. But many of America’s industries have also become more concentrated by a slow creep of acquisitions. A study by The Economist earlier this year divided the economy into 900-odd sectors covered by the five-yearly economic census and found that two-thirds of them were more concentrated in 2012 than they had been in 1997. The weighted average share of the total held by the leading four firms in each sector rose from 26% to 32%. + +America used to be famous for its workers’ willingness to follow the jobs, but they have become far less mobile. A paper by Raven Molloy and Christopher Smith of the Federal Reserve and Abigail Wozniak of the University of Notre Dame finds that over the past three decades migration rates between states have fallen by at least a third for most age groups. For those aged between 20 and 24, the most mobile group, the annual rate of internal migration fell from 5.7% in 1981-89 to 3.3% in 2002-12. + +Many of the reasons put forward for this are not wholly convincing. It cannot be the rise of the two-income family, because the trend to less mobility holds for workers of all ages. Nor is it the housing boom and bust: the decline in mobility started long before that, in the early 1990s, and has continued since. It is certainly not trade unions (membership of which has declined), labour-market regulation or unemployment benefits, claims for which have dropped sharply. + +A few researchers have made an intriguing link between the decline in labour mobility and wider profit dispersion. The argument has several steps. The average age of established businesses has risen steadily because fewer new firms are formed. Startups have a high labour turnover, but in mature firms fewer people join and leave in any given year. The lower the churn rate of jobs, the fewer the opportunities for job-changers to find new work. So it is possible that less dynamism in American business, characterised by industry concentration and lower job turnover, has reduced the incentive for jobseekers to go and look for work in another state. + +Another reason may be rent-seeking within the labour force itself. Another paper from the CEA finds that the share of America’s workforce covered by state-licensing laws has risen to 25%, from less than 5% in the 1950s. Much of this red tape is unnecessary. On the most recent estimates, over 1,000 occupations are regulated in at least one state but only 60 are regulated in all states. The scope of the rules vary from state to state. A licensed security guard requires three years of training in Michigan but only around two weeks in most other states, for instance. Licensed workers can command higher pay than the unlicensed kind because entry to the occupation is restricted, so consumers have to pay more. + +Success stories + +For much of the past 40 years economic liberals have argued for the dismantling of barriers to the free flow of commerce, such as state monopolies, trade unions and restrictive practices. Such policies have produced some clear successes. In Britain the privatisation of monopoly utilities, such as British Telecom, and the opening up of other sectors to competition was a spur to productivity and innovation, leading to better and cheaper services for customers. In America the deregulation of airlines brought lower fares and an increase in the number of trips. Labour markets in America and Britain became more flexible, and unemployment has generally been lower than in continental Europe. + +Deregulation is almost always a difficult task. Those whose interests are hurt by such reforms protest noisily. The political costs quickly become apparent, whereas the gains may not become clear before the next polling day. It is even harder to make changes when so many people feel that the cost of liberalising markets in the past was unfairly distributed. Critics of such liberalisation point to a decline in labour income as a share of GDP as evidence that wage earners have the odds stacked against them. They argue that blue-collar workers provide the flexibility, having to accept lower pay and less job security, whereas white-collar workers and bosses are protected. Increased openness to trade and the growing mobility of capital have made it harder for workers to push for pay rises, so they cling to the jobs they have. In an age of insecurity, it is hard to persuade anyone that they should give up such protections for the greater good. + +Market power is supposed to be policed by competition agencies, but they have lost some of their vim, particularly in America, where competition cases are fought out in the courts. A landmark Supreme Court judgment in 2004 said monopoly profits were the just reward for innovation. That has made it harder for trustbusters to root out rent-seeking or block mergers. Most big firms got where they are by being good at what they do, not because of coddling by regulators. But if firms can hold onto their market share for years, they create distortions in the rest of the economy. Incumbent firms are powerful lobbyists. + +Big tech firms also have a penchant for so-called “shoot-out” acquisitions, whereby a startup is bought to eliminate a budding rival. For many tech startups and their financiers, a buy-out by one of the big platform companies is a badge of success. But if small firms cannot become independently big, the market power of incumbents is not sufficiently challenged. + +Competition policy faces difficult questions in an age of superstar firms that dominate global markets. But the trickiest political problem for reformers is how to inject some dynamism into the economy without getting people even more worried about their livelihoods. Raising import tariffs or closing borders to people and capital is not the answer. Instead, policymakers should encourage more competition while putting in place adequate protections for those who lose out from it. + + + + + +Saving globalisation + +The reset button + +How to make economic liberalism fairer and more effective + +Oct 1st 2016 | From the print edition + + + +THERE MAY be few better advocates of the benefits to America of an open economy than Pin Ni, boss of Wanxiang America Corporation, part of a private firm based in Hangzhou that his father-in-law started as a bicycle-repair shop. Mr Ni launched the American subsidiary in 1994, suspending his studies at the University of Kentucky. He has been there ever since. + +During the car-industry meltdown in 2007-09 the company began buying moribund car-part suppliers and restoring them to health. It pushed its acquisitions to concentrate on their strongest suits, usually the relationship with the car manufacturers and engineering. It helped them to source components more cheaply and to gain a foothold in the Chinese market. Mr Ni is effusive about the prospects for American exporters. America has firms with technology and brands that are coveted around the world, he says. + +Such optimism about globalisation is all too rare these days. Neither candidate in America’s presidential race is an advocate of free trade. “If Trump is elected, it’s a mandate for isolationism,” says a seasoned observer at a think-tank in Washington, DC. “If Clinton is elected, the best we can hope for is we don’t go back very far.” Britain’s trading relationships with the rest of the world are up in the air, following the vote in June’s referendum to leave the EU. France is hostile to TTIP, a proposed trade agreement between the EU and America. Even in Germany, the self-declared world export champion, politicians are turning against the deal in the face of public opposition. Globalisation is increasingly blamed for job losses, rising wage inequality and sluggish GDP growth. + +How should politicians respond? Closing borders to trade, capital and people would cause great harm and do very little to tackle inequities in the economy. In some respects it would increase them. People on low pay spend a far greater proportion of their income on imports than the well-off. A growing body of research links economic maladies to more oligopolistic economies. Blocking imports would only entrench the market power of rent-seeking firms, further harming the prospects for higher productivity and pay. + +Easing the pain + +As borders have been steadily opened up, policies needed to complement globalisation have not kept pace, particularly in America. They need to catch up. A good place to start is demand management. The stability of the labour market depends on macroeconomic policies, not trade. In Europe the most effective policy would be to use public money to fix the banks. With monetary policy overstretched and bond yields low or negative, it is a shame that countries with room to borrow more, notably Germany, are seemingly addicted to thrift. The case for free trade is undermined when many countries in Europe are free to rack up persistent trade surpluses, which are a drag on global demand. + +In America and Britain, a strong case can be made for locking in low-cost long-term funding to finance a programme to fix potholed roads and smarten up public spaces. Private pension funds with expertise in infrastructure have a role to play in such schemes. Rich-country central banks, notably the Federal Reserve, can afford to be more relaxed about the threat of inflation. An economy at full pelt begins to draw people into the workforce who were thought to have opted out for good. “Ex-felons were doing pretty well in 2000,” notes Larry Mishel, of the Economic Policy Institute, a think-tank in Washington, DC. The risks of slamming the brakes on too quickly outweigh those of excessive policy stimulus. + +Demand management is (or ought to be) the bread and butter of economic policy. Curing the ills that feed public opposition to globalisation requires efforts to address two other problems. The first is the job churn caused by shifts in trade and technology. Too little effort and money has been expended on taking care of those who have been hurt by the opening up of markets. America in particular makes little attempt to assist people find new jobs to replace lost ones. Extra help need not blunt the incentives to look for work. For instance, more generous jobless benefits could be made conditional on attending a back-to-work programme. A valid criticism of government training schemes is that they cannot keep up with the fast-changing demands of the jobs market. A better option would be a system of wage insurance. That would nudge workers to acquire new skills by taking a less well-paid job when they lose a good one. + + + +Yet there is little point in helping people change careers if a lack of dynamism in the economy means that too few good jobs are being created. So a second prong of reform should be to spur greater competition so that startups can thrive and incumbent firms are kept on their toes. More competition is a hard sell when many people are already anxious about their jobs and income; but without it there is less chance of the dynamism that boosts productivity (and earnings) and creates new job opportunities. Europe has long been notorious for restrictive practices such as occupational licences, but state-level licences in America have proliferated almost unnoticed. Some are necessary, but most are simply a way of keeping prices higher and restricting entry. + +Competition policy needs to become more vigorous. In America the startup rate (the share of new firms in the total number) has fallen steadily since 1980. Most industries have become more concentrated. The profits of the leading companies have pulled well ahead of the rest. America’s courts have tended to view windfall profits as the rightful reward for innovation. There is much to be said for redrawing the boundaries of intellectual property so that incumbents can be more readily challenged. The growing habit of big tech firms to swallow startups that might become rivals is worrying. Such deals often suit both sides—the buyer gets the innovation and the startup makes a lucrative exit—but the practice saps dynamism from the economy. Trustbusters might be given more discretion when making judgments about how markets might evolve in future, though this is difficult to do well. + +Make it a threesome + +A three-pronged agenda of demand management, active labour-market policies and boosting competition would go a long way to tackling the problems that are unfairly laid at the door of globalisation. But a lot of the policies to make globalisation work better need international agreement to be fully effective. For instance, tackling troublesome capital flows requires co-ordination. A country might be able to head off capital inflows by taxing them, but it would only be diverting them to other countries that are more reluctant to impose capital controls. The best course would be to have a global standard on what sorts of controls are permissible and in what circumstances. The goal should be to ensure that individual countries retain control over their monetary policy. + +One way to put a speed limit on short-term capital flows is to require asset managers globally to lock in investors in funds specialising in less liquid emerging or frontier markets. Long-term capital flows are generally more beneficial, but they will lose public support if they are seen primarily as a way of avoiding tax. There are few agreed international rules on the taxation of cross-border firms, though the OECD has started to work on this. Dani Rodrik, of Harvard University, argues that a good way to build public support for globalisation would be to link trade pacts with agreements on, for instance, the taxation of multinational companies. Such a deal would give national governments more rather than less policy autonomy. + +Sceptics say that those who stand to lose from globalisation are given little thought when trade deals are signed. That is a fair point. But there is also a risk of the opposite error: that the enormous good that free trade has done for the bulk of humanity in both rich and poor countries over several decades is forgotten at times when people are feeling anxious about it. The benefits of globalisation are widely dispersed, often unseen and thus all too easily taken for granted. + +There is a wrong-headed tendency to conflate support for liberal internationalism with pushing the interests of big companies to the detriment of the less well-off. The opposite is true. This newspaper started in 1843 to campaign for free trade in general, and in particular for the repeal of the Corns Laws, which increased the price of imported grain to the advantage of landowners. Richard Cobden, the manufacturer who led the campaign against the Corn Laws, remarked that the main barrier to repeal was the self-interest of the landowning classes, the “bread-taxing oligarchy, unprincipled, unfeeling, rapacious and plundering.” + +Cobden argued that free trade would have four benefits. It would underpin the success of British manufacturing by providing access to bigger markets. It would lower the price of imports, notably food, for the poorer classes. It would make English farming more efficient by creating more demand for its products in cities and manufacturing regions. And it would usher in a new era of international peace and amity by fostering trade that would be to the benefit of all countries that took part in it. + +In contrast to popular caricature, free-traders are enemies of rent-seekers and those who are trying to protect their economic privileges. James Wilson, the founder of The Economist, said of the Corn Laws: “They are, in fact, laws passed by the seller to compel the buyer to give him more for his article than it is worth. They are laws enacted by the noble shopkeepers who rule us, to compel the nation to deal at their shop alone.” + +What Cobden and Wilson argued in the 19th century still holds. The free movement of goods, capital and people across borders is a source of greater choice and opportunity for those on both sides of the trade. What gives these arguments their force and staying power is that they happen to be true. + + + + + +Business + + + + +Nintendo: Jump-start + +Business in China: Mixed messages + +Ink wars: Blot on the landscape + +Digital advertising: Doesn’t ad up + +Europe’s outposts: Not always in clusters + +Voice computing: Prick up your ears + +Schumpeter: Don’t limit the revolution + + + + + +Nintendo + +Jump-start + +A giant of the console industry has lost a generation of gamers to smartphones. Can it reclaim them? + +Oct 1st 2016 | TOKYO | From the print edition + + + +THE trajectory of Nintendo’s stock price in the past year has been worthy of the vaults and free-falls of a particularly exhilarating round of “Super Mario Bros”. The Japanese video-gaming firm’s hit title helped start the era of living-room gaming over three decades ago, when it introduced Mario, the pudgy Italian plumber, to millions. But recently Nintendo has failed to keep pace with the rise of smartphone gaming. + +Many investors hoped that when the firm announced its first-ever game designed for smartphones in autumn 2015, Super Mario would be the one to make its long-awaited mobile debut. The company’s share price tumbled by 10% on the news that it was only Miitomo, a new chatting app. Then came “Pokémon Go”, a location-based game in which players catch virtual creatures on their screens while roaming the real world. Nintendo’s stock price more than doubled to over ¥32,000 ($318) within a few weeks of its release in July. Its market value briefly overtook that of Sony. + +Then down again. Nintendo’s shares plummeted by the most since 1990 when the firm made it clear that it had less of a stake in “Pokémon Go”, which was primarily developed by Niantic, a Google spin-off, than investors had believed. And up. In September, at Apple’s launch event for the iPhone 7, Nintendo’s Shigeru Miyamoto (pictured), guru of the gaming world, stole the show with the promise of “Super Mario Run”, the firm’s first ever Mario game for smartphones. It is being developed with DeNA, a Japanese mobile-gaming firm, for Apple’s iOS operating system, and will make its debut in December. + +Nintendo’s shares are up by 15% since that announcement and by 38% since the start of the year. The game is likely to be available on Android, Google’s mobile platform, next year. Serkan Toto, a games consultant in Tokyo, expects as many as 1.5 billion downloads across both systems. + +The advent of “Super Mario Run” represents a huge change for the company. Five years ago Satoru Iwata, Nintendo’s late boss, warned that “Nintendo would cease to be Nintendo” if it went mobile. Until now it has clung to its “walled garden” model whereby its Mario games could be played only on Nintendo hardware, enticing players to buy its new consoles as well as the latest hit game. + + + +The problem is that these days, not even Mario, Zelda or Donkey Kong can shift enough of Nintendo’s underwhelming consoles. Sales of hardware, which have accounted for 50-60% of its revenue each year since 2005, are slumping. Nintendo’s first Wii, aimed at casual gamers, was the best-selling console of its generation. But its successor, the Wii U—pricey and poorly marketed when it was launched in 2012—was a flop. A big reason is that families and youngsters, its target market, were playing games on their parents’ tablets and smartphones instead. In contrast, Sony and Microsoft, which make the PS4 and the Xbox, respectively, target hard-core gamers. Nintendo reported annual losses in 2011-2013. + +Free-to-play smartphone games always seemed to Nintendo like junk food, says Mr Toto, next to the gourmet fare—its $200 consoles and $60 games. The standard “freemium” revenue model for mobile games relies on in-app purchases of virtual goods that enhance the game. This is unpalatable to Nintendo as a games firm selling to families because it could be seen as taking direct advantage of the addictive qualities of its products. It also worried that allowing third-party games developers to use its characters willy-nilly in simple mobile games early on would cheapen them. When some repeatedly suggested going mobile, Mr Miyamoto declined. He was the only one at the company that Mr Iwata could not overrule, says a Nintendo-watcher at a bank in Tokyo. + +The firm has belatedly realised that its hesitation in embracing smartphones has already lost it a whole generation of potential gamers, says Mr Toto—and lots of revenue to boot. Nintendo owns only a third of The Pokémon Company, which licenses the Pokémon franchise, and of Niantic, but it could earn ¥7 billion-14 billion a year from “Pokémon Go”, says Haruka Mori of J.P. Morgan, an investment bank. It is already played in 100 countries. + +Underlining the potential of Nintendo’s intellectual property (IP) on platforms other than its own, it was only when Niantic overlaid Pikachus, Jigglypuffs and Digletts onto a niche augmented-reality game called “Ingress” that it took off. In two months “Pokémon Go” racked up a staggering 500m downloads. Jefferies, an investment bank, calls Nintendo’s IP an “unmatched treasure”. That it is now putting its most precious character on mobiles and tablets suggests that other creations will soon follow suit. + +But Nintendo is not jettisoning its conservative approach. The message at headquarters in Kyoto, says a local investor, is not to get “carried away” by the success of “Pokémon Go” or by Mario’s leap onto the iPhone. Its mindset is in some respects still that of an old hand in an oldish tech sector. Only last year Mr Iwata clarified that its mobile foray in no way suggested that it had lost any of its passion for consoles. + +Indeed, Nintendo says it is making the shift in the hope that mobile users—who may be encountering its games for the first time—will be enticed to buy its consoles and help perk up hardware sales. “Super Mario Run” will be free to download, but players will pay a flat fee after a few sample levels (the amount is as yet unknown, but probably ranging between $5 and $20). Company staffers are preoccupied with a new console to be launched in March, code-named the NX. It is said to be a hybrid between a console and a handheld device, to be played on the go or docked at home. The focus on the NX is partly because the firm badly needs a big technological splash. If the console is another dud, it could even be forced to think about shutting its consumer-hardware business. + +Its continued focus on hardware is of a piece with a firm that still sees itself primarily as a craftsman of boxed goods, says Mr Toto. At its headquarters (which he describes as a mix between a “Kafkaesque castle and Willy Wonka”) games designers sport dark-blue engineering jackets like those worn by Japanese factory workers, with pens in their breast pockets. Seth Fischer, an Israeli activist investor in the firm, says the building is “like a mausoleum”. For many observers the success of “Pokémon Go” shows the gulf between Nintendo’s offerings and what customers want: hobbled, perhaps, by monozukuri, a tendency for Japanese consumer-electronics firms to over-engineer products to best others on weight or size, say. + +Yet the firm has clearly shifted direction. For Nintendo to approve a partnership with a tiny foreign company like Niantic is an about-turn, as is its decision to put its mustachioed mascot on hardware made by Apple. Even two years ago, says Hideki Yasuda, an analyst at ACE Research Institute in Tokyo, Nintendo would not have agreed to Mario’s appearance at the closing ceremony of this summer’s Olympic games in Brazil. To the glee of many, Shinzo Abe, Japan’s prime minister, took up the baton for Tokyo 2020 dressed in Mario’s signature dungarees and red cap. In 2014 Nintendo launched wildly popular “Amiibo” figurines of its video characters that connect with its games. + +Continued success will of course depend on more than just endless recycling of IP. Nintendo will have to create new, compelling characters and stay on top of consumer hardware, which still accounts for a lot of its revenues. And the move into mobile carries risk. One is the clout that Apple and Google have in smartphone-gaming. Nintendo will have to hand over to Apple 30% of the revenues that “Super Mario Run” earns via its app store, for example. Its partnerships with DeNA and Niantic mean that it is relinquishing at least some control over game development, too, which could dilute quality. And it is unclear that casual gamers paying small amounts on their phones will fork out the money for a pricey Nintendo device. + +That said, Nintendo certainly has the skills on the software side: the firm is simply a fantastically good maker of games. Of the world’s 25 all-time, best-selling video games, it owns 17. It also has impressive staying-power in the business of fun. The firm began in 1889 with the production of handmade hanafuda playing cards decorated with flowers, and was one of the first to move into arcade games in the 1970s. It also likes to remind people that it invented the whole business of hand-held games played on the go. Seen that way, Mario is just returning to his roots. + + + + + +Business in China + +Mixed messages + +A missed opportunity to improve the environment for foreign companies in China + +Oct 1st 2016 | SHANGHAI | From the print edition + + + +LI KEQIANG, China’s prime minister, made a big promise to the world’s leading businessmen at the World Economic Forum’s annual gathering in Davos in January 2015. It was that China would introduce a new legal regime for foreign investment that would “treat Chinese and foreign companies as equals”. Its government has duly unveiled a set of revisions to its foreign-investment laws that come into force on October 1st. The standing committee of the National People’s Congress adopted the laws earlier this month and bureaucrats have drafted detailed rules. + +The revisions, and the extent to which they fulfil Mr Li’s grand pledge, are an important indicator of how serious the government is about pursuing other initiatives to liberalise rules on foreign investment. China is currently negotiating a bilateral investment treaty (BIT) with the United States. American businesses hope it will lead to greater market access. A BIT with Europe is scheduled to follow. + +How, then, do the changes measure up? On the face of it, they involve a welcome shift away from the current regime, which obliges foreign firms to win numerous approvals and is both burdensome and often influenced by domestic politics. The new framework pursues efficiency. Instead of demanding approvals, it seeks to usher in a simpler, registration-based system. Whereas the current approach is based on a long list of strategic industries in which foreign investment is either restricted or off-limits, the overhaul promises to replace it with a relatively short “negative list” of forbidden investments in areas such as defence and media. According to some, such as Hogan Lovells, a law firm, the reforms herald a sea-change in China’s foreign direct investment (FDI) regime. + +Yet the revisions leave intact much that is wrong. China has kept a complex set of rules restricting inflows for decades. As well as the long-standing practice of deeming many industries strategic, the government still requires foreign firms to form joint ventures with Chinese companies and to hand over intellectual property via technology transfers. Repatriation of profits is tightly controlled. And because the approvals-based approach is likely to persist, despite official promises, every foreign investment is subject to the vagaries and corruption that comes with a one-party, highly bureaucratic state. + +Most glaringly, there is nothing in the new changes that genuinely places foreign firms on an equal legal footing with local ones. The EU Chamber of Commerce in China dismissed the new reforms as “not bold enough”. It issued a thinly veiled warning that the EU may make it harder for Chinese to invest in Europe. + +Another big omission is the government’s failure to tackle the problem of offshore legal structures known as variable interest entities (VIEs). Foreign investment is banned in Chinese internet companies, but by getting foreigners to put money into VIEs to which the Chinese firm promises to pay dividends, many firms have got around this ban. A proper reform would have ended the ambiguity surrounding these vehicles. It was not forthcoming. + +The tape is red + +There are already signs of bureaucratic resistance even to the government’s modest revisions. It is questionable, for example, whether officials will accept the shift from an approvals-based scheme to a registration system. Bureaucrats at the top economic planning agency, the National Development and Reform Commission, are said to reject the idea that the approvals-based system is coming to an end. They say the new rules are just a modification of the existing approach to foreign investment. + + + +Meanwhile, multinationals are no longer clamouring to put money into China’s slowing economy. FDI has been flooding into the Middle Kingdom for two decades. Inbound direct investment reached a peak of nearly $300 billion in 2013 but has cooled off since. Foreign inflows are slowing just as Chinese outward investments are skyrocketing (see chart). It seems exactly the right moment to roll out the welcome mat, but the changes going into effect fall well short of what multinationals had hoped for. As Jake Parker of the US China Business Council, a lobby group for big American firms, points out, Chinese leaders have talked about lots of reforms but “the lack of implementation has created uncertainty about the policy direction and undermined confidence.” + + + + + +Ink wars + +Blot on the landscape + +A row over printer cartridges + +Oct 1st 2016 | From the print edition + + + +IT TOOK a while to join the dots. On the morning of September 13th owners of several types of HP OfficeJet, a printer designed for the home and for smaller offices that is manufactured by HP Inc, an American seller of printers and computers, switched on their machines and found them not quite the same. The night before they had been able to print with any sort of ink cartridge. Since that day only machines containing original HP cartridges have churned out copies. The cause, enraged customers came to realise, was the deployment by HP of a firmware update that blocks rival ink. + +HP had reason to act as it did. Though its printers business remains profitable, revenues fell by 14% in the year to July. More-paperless offices take most of the blame: printer shipments have tumbled by a fifth since 2007. But rivals in the market for ink squeeze margins. Non-original cartridges now make up about 26% of the trade in Europe, the Middle East and Africa, and 16% in North America. + +Dirt-cheap “clone” cartridges, mostly from China, have spread over the past decade. HP’s move obstructs fakes, which do break copyright law (and the odd printer). Also affected are lawful businesses, points out Tim Parsons of Promax Imaging, a small British firm which refills the ink in “original” branded printer cartridges (a cartridge “remanufacturer”, in the jargon). It is also quite legal for so-called “private label” companies to pull HP ink cartridges apart and create new versions that are compatible with HP printers. Their quality easily matches that of original cartridges and they can cost a quarter as much. + +Big manufacturers such as HP, for whom printer cartridges are highly profitable products, have long attempted to wipe out these bargain-basement rivals. From the early 2000s they have used smart chips in their cartridges to make them harder to copy or refill. In 2002 Lexmark, an American printer-maker, sued Static Control, a company that had found a way to befuddle those chips. But Lexmark lost. The court defended the right of Static Control to make parts that “interoperate” with the goods of another manufacturer. Small firms that provide private-label spare parts for a whole range of industries, such as car manufacturing, cheered. + +Firmware updates are another common way to repel rivals. But HP’s update stands out, says Cory Doctorow of the Electronic Frontier Foundation, for being a particularly extreme rewiring of its OfficeJet printers in the homes of customers. + +Can we even be said to own property, he asks, if digital-rights management grants the manufacturer control of one part of a product in perpetuity? Mr Doctorow frets that, as printer manufacturers load ever more chips with similar software, courts may be swayed to extend the reach of copyright to parts and refills businesses across many industries. General Motors, a car manufacturer, now claims to own parts of a vehicle after it has been driven off the forecourt. + +For the time being, HP’s rivals seem likely to carry on finding ways to sell their cheap cartridges. A Dutch private-label company, 123inkt, says it will be able to keep supplying the HP printers despite the firmware update. Chips from Static Control, which function in the cartridges of several private-label firms and remanufacturers, were not blocked by HP. But the recent purchase by HP of Samsung’s printer business, for $1.1 billion, does blot their prospects. According to Laura Heywood of Kleen Strike, a remanufacturer, cartridge makers may find it much harder to interfere with the printer chips made by Samsung, which are renowned for being “more complicated than Germany’s Enigma code machine.” + + + + + +Digital advertising + +Doesn’t ad up + +The advertising industry’s trust problem + +Oct 1st 2016 | NEW YORK | From the print edition + +They drink but you still can’t trust them + +ADVERTISING WEEK, an annual stretch of industry meetings that began on September 26th in New York, is usually defined by schmoozing and self-congratulation. This year’s event has been marred by suspicion. In the week leading up to it, Dentsu Aegis, a big agency, admitted overbilling by its digital-ad division in Japan; and Facebook, a tech giant, said it had inflated the average time people spent watching video ads. + +Such revelations have reinforced existing concerns among advertisers that they are having the wool pulled over their eyes when it comes to online advertisements. At an Advertising Week panel on “trust” on September 28th, Bob Liodice, the chief executive of the Association of National Advertisers (ANA), spoke of broad doubts among his members. + +It was not meant to be like this. Half of an advertiser’s budget is wasted, says the industry’s favourite truism, but no one knows which half. Digital ads were supposed to help. Cookies and other tags would direct the right advertisements to the right people, based on their activity online. Digital tools would track which ads inspire consumers to buy products. Indeed, on September 21st Facebook announced new methods to do just that. + +But as advertisers have gained greater control in some respects, they have lost it in others. One fear is practical: that they are paying for online ads that consumers don’t see, either because they are shown to robots, or tucked in obscure slots. Two underlying concerns are harder to address. + +The first is that Facebook and Google have simply become too dominant. Last year the pair accounted for more than 75% of online-ad growth in America, according to Mary Meeker of Kleiner Perkins Caufield & Byers, a venture-capital firm. “Google and Facebook have added a lot of value to our marketplace,” says Mr Liodice. “They also raise concerns.” Marketers are particularly worried by a lack of transparency. Facebook’s inflated numbers did not lead to overbilling, but may have prompted companies to advertise more on it. Google and Facebook have started to allow third parties to verify some data, but many metrics remain proprietary. + +The second concern is that ad agencies are not acting in their clients’ interests. In Japan, “clients are sort of at the mercy of the ad agency,” says Jason Karlin, who studies the industry at the University of Tokyo. In America an investigation backed by the ANA found that agencies were buying ad space and reselling it to clients at markups of up to 90%. Some agencies were also collecting undisclosed rebates from media firms for buying ad space. The agencies’ trade group, the 4As, blasted the report as “one-sided”. + +There are glimmers of change. The ANA has devised a model contract to protect its members’ interests. The recent outcry may prompt Facebook and Google to be more open. Facebook says it will let third parties measure how long a viewer sees a display ad, though the company has yet to set a date. Some are even prepared to vote with their feet: one agency executive has two multinational clients that have already cut their spending on Facebook. + +Yet marketers will not abandon Facebook or Google; they are too big. Nor will firms give up on agencies. In Japan Dentsu’s grip on media and advertising is too tight; everywhere, marketers depend on agencies to navigate advertising’s complexity. So mistrust will persist. “You’re either a cynic,” says Brian Wieser of Pivotal Research Group, which analyses the industry, “or you’re not paying attention.” + + + + + +Europe’s outposts + +Not always in clusters + +The allure of manufacturing out in the sticks + +Oct 1st 2016 | TUAM | From the print edition + + + +IRELAND’S Atlantic coast is sheep-rearing and pilgrim country. The drive to Tuam, a modest town of 9,550 residents, reveals mostly lush fields, low hills, stone walls and mist. Yet this unlikely spot has a hi-tech industrial side. Off Tuam’s main road a bunch of warehouses contains some 400 software engineers, researchers and artificial-intelligence experts, drawn from 35 countries. Next door is a manufacturing plant employing 650 people churning out circuit boards, cameras and sensors for driverless cars. + +The set-up in Tuam is operated by Valeo, a French car-parts firm with a market value of €12 billion ($13.4 billion), which brought in €500m in sales last year from producing 100m such products globally. Tuam is “our biggest R&D centre for surround cameras, with huge production capacity”, says Jacques Aschenbroich, the firm’s CEO. Tuam has also become Valeo’s global mother plant, overseeing its sensor factories in Hungary, Mexico and China. + +What possessed the French firm to keep such operations in a spot so far from customers such as BMW, Range Rover and Google, away from big pools of labour, and a lengthy drive from Dublin? History is one answer: in 2007 Valeo bought Connaught, a successful local firm making cameras for cars, and preferred to expand there rather than move. Fergus Moyles, who runs things in Tuam (and managed the old firm), says that attracting talent is not hard. Nearby Galway University offers useful ties. Property prices are low, which appeals to foreign engineers, for example from India, who intend to save while in Ireland. Land prices help when building new facilities. + +Setting up shop in a remote location like Tuam runs counter to conventional thinking about the gains from industrial clusters. But Valeo is not the only firm to see benefits from sticking operations in remote spots. Turbomeca, the helicopter-engine unit of Safran, a big French defence firm, is based in the Pyrenees on the French-Spanish border. That location, Bordes, with just 2,700 residents, makes Tuam look like a metropolis. Again, history explains the initial choice of location: Turbomeca was founded pre-war, then moved to a remote spot to avoid invading Germans. Being in the boonies means sympathetic local officials and staff who are extremely loyal. + +For high-end manufacturing firms that rely on highly skilled workers, a location with an appealing climate, good housing and other compelling virtues, like schools for young families, is a big draw. Another example is Medtech, a startup that makes surgical robots for spine and brain operations. Its “Rosa” products are widely used in American and European hospitals. The firm’s founder, Bertin Nahum, started and built the firm on the outskirts of Montpellier, a picturesque town on the Mediterranean coast. + +Wouldn’t Mr Nahum really be better off joining a cluster of other medical technology companies, for example in Grenoble, or around Paris? “I would much rather be here,” he says, talking warmly of support from the local mayor and of how attracting talent is no trouble at all. His robots can be flown to hospitals easily from Marseille airport. For some, the periphery appeals more than the centre. + + + + + +Voice computing + +Prick up your ears + +Wireless headphones and smart speakers herald a new class of devices + +Oct 1st 2016 | From the print edition + +The dog heard my homework + +WHEN Apple in early September introduced a new iPhone without a jack for headphones, together with pricey wireless earbuds that you speak into, it did not take long for mocking videos to appear online. In one, an enterprising soul reveals a “secret hack” to get back the jack: he drills a hole into a new iPhone. In another video, a fake commercial, the AirPods, as the untethered headphones are called, keep popping out of users’ ears and are eaten by a dog (pictured). + +Whatever one thinks of Apple’s AirPods, which cost $159 a pair and are expected to go on sale in late October, they stand not just for one, but two emerging markets in personal technology. One is called “hearables”—meaning “smart” ear devices. The other is “smart speakers”, like Amazon’s popular Echo product, which sits in people’s homes and can respond to voice commands. Both gadgets herald a world in which people communicate with machines by speaking, much like in the movie “2001: A Space Odyssey”, in which the crew talked to HAL, a chillingly sentient computer. + +Untethered headphones have been around for some time, although they are often a disappointment because the wireless connection with a smartphone is not stable enough. Hearables not only solve this problem, says George Jijiashvili of CCS Insight, a market-research outfit, but come with all manner of other components: processors, microphones and sensors, including accelerometers, a heart-rate monitor and a GPS receiver. + +The added intelligence enables all kinds of features. Smart earbuds can store music. They can monitor the user’s physical activity, for instance counting the number of push-ups he is supposed to perform. They can read his gestures, such as nodding. And they can, much like noise-cancelling headsets, suppress distracting background babble—or amplify sounds users want to hear, a bit like hearing aids. + +Apple’s AirPods will do well in the category of smart earbuds, but the market will be small—CCS Insight expects around 9m pairs to be sold each year by 2020—and it isn’t the pioneer in the field. Nikolaj Hviid, the boss of Bragi, a German firm, says that since its headphones went on sale six months ago, more than 100,000 have sold. Doppler Labs is on a similar path. If Microsoft put a computer on every desk and Apple one into every pocket, Doppler wants to put one “into everyone’s ears”, says Noah Kraft, the firm’s boss. One feature is “layered listening”, the audio equivalent of augmented reality. The firm’s new smart buds, due out in November, will be able to filter out specific sounds, such as a baby’s cry, and insert others, such as a football-match commentary. + +Such ambitions point to what is perhaps the most intriguing feature of smart buds: they are a convenient conduit to intelligent digital assistants, such as Apple’s Siri and Microsoft’s Cortana. Currently, these services, which can process natural speech and are powered by artificial intelligence in the computing clouds, reach users mostly through smartphones, where they help them search the internet or send texts without having to type or tap. + +People will not just talk to such digital assistants via hearables but also through the other new category of devices: smart speakers such as Amazon’s Echo. When the e-commerce conglomerate introduced it, many thought it was just another, possibly unnecessary gadget. For $180 a pop, owners of the cylinder-shaped device can use voice commands to play music, call a taxi and, of course, order stuff from Amazon. But the Echo has been surprisingly successful, with more than 3m units expected to be sold this year and 10m in 2017. + +One reason for the rapid adoption is that Amazon has turned Alexa, its digital assistant, into a “platform”: a set of services that other developers can combine to build a “skill”, the equivalent of an app on a smartphone. More than 3,000 such skills—some created by Amazon, many more by a growing number of third parties—are already available, ranging from simple tasks such as setting an alarm to more complicated ones such as managing a share portfolio. Lots of children have come to treat Alexa, in combination with Echo, as a sort of family member at home, market researchers say. + +Competitors are trying to catch up. When Google introduces a number of new products on October 4th, it is expected to unveil Google Home, which will probably offer much the same features as the Echo. Rumours have it that Apple, too, is working on a device in time for next year. Other firms, including China’s Baidu and South Korea’s Samsung, are expected to come out with smart speakers. Qualcomm, a big American chip designer, has already developed a circuit board that makes it easy to build such devices. As the hardware becomes a commodity, firms that offer the best voice service will win, predicts Martin Garner, also of CCS Insight. And quality, he argues, will mostly depend on access to data. Since Google, for instance, knows what people search for, it also knows how they ask questions, which will help make its digital assistant (creatively called “Assistant”) work well in different languages. + +“As accuracy of speech recognition goes from 95% to 99%, all of us…will go from barely using it to using it all the time,” said Andrew Ng, Baidu’s chief scientist, recently. But hearables and smart speakers have a drawback. When they get hacked, either by criminals or by intelligence services, they could become a bit like George Orwell’s “telescreens”. “Any sound that Winston made, above the level of a very low whisper,” Orwell wrote in his novel “Nineteen Eighty-Four”, would be picked up. + + + + + +Schumpeter + +Don’t limit the revolution + +For all its virtues, limited liability continues to provoke criticism + +Oct 1st 2016 | From the print edition + + + +THE limited-liability company is one of man’s greatest inventions. The company encourages co-operation by allowing people to join together under the same organisational roof, regardless of race, creed or nationality. Limited liability encourages investment by limiting people’s downside risk—they can lose only the cash they put in the corporation. Put the two things together and you have an institution that allocates spare money to productive purposes and minimises fear and friction by freeing investors from the threat of personal ruin. + +Economic historians have noted that limited liability sat at the heart of the Industrial Revolution. Before the 19th century you could obtain it in many countries only if you won special permission from the government. But as capital-hungry technologies such as the railroads arrived, followers of President Andrew Jackson (a prominent fan of limited liability) in America and free-market liberals in Europe threw the privilege open to all comers. + +That the revolution has gathered pace in recent years has not been as well noted. Limited liability has gone truly global. China’s New Company Law statute of 2005 introduced elaborate rules governing its operation. The structure has also spread from very large to tiny businesses. Limited-liability partnerships (LLPs) allow partnerships to dispense with unlimited liability, which was traditionally the rule for groups of lawyers, accountants and so on. Limited-liability companies (LLCs) allow smaller outfits with a handful of owners (or even just one owner) to enjoy the benefits of the structure. Since 1993 America has created over 2.2m LLCs compared with 1.9m corporations. + +Yet limited liability has always had a big weakness. Because shareholders don’t put their personal assets at risk, they stand to make huge gains if things go well but can lose their original stake only if they go badly. Even in the 19th century champions of unfettered free markets worried that this asymmetry—a sort of implicit subsidy—was unfair to society at large. A particular concern was that victims of corporate wrongdoing would get less money than they would have done under unlimited liability. The recent spread of limited liability to new regions of the world and to smaller firms has reignited the controversy. + +Lawyers have developed an answer to the problem. Judges can pierce the corporate veil and expose shareholders to personal liability if they decide that the corporate form is being used to pursue dubious purposes. Piercing has always been one of the most well-applied doctrines in corporate law. But it is particularly popular with lawyers in countries such as China and Brazil, where many of the principles of business law are still heavily contested, and in many geographies for cases involving LLCs and LLPs, where the doctrine of limited liability is fairly new. American trial lawyers are particularly keen on pursuing veil-piercing in the case of smaller companies. + +Critics of corporate “excesses” have developed an even more fundamental corrective: “concession theory”. Ronald Green of Dartmouth College says that society has a right to demand socially responsible behaviour in return for the privilege of limited liability and the right to impose externalities on society. Will Hutton, a British journalist with a certain following, calls for a new law for firms that would grant them the privileges of incorporation only if they pursue some “noble, moral business purpose”. + +In their new book, “Limited Liability”, Stephen Bainbridge of the University of California, Los Angeles and Todd Henderson of the University of Chicago give both arguments short shrift. Veil-piercing is hard to enforce because, in a world where the average holding period for shares is 22 seconds, it is impossible to determine who is liable for what. But even if you can enforce it there is no evidence that veil-piercing produces more responsible behaviour by firms. One reason is judges are unpredictable in when they choose to pierce the corporate veil. There are better ways of disciplining wayward companies, such as prosecuting managers. + +The problem with concession theory is that if it were applied, everyone would be worse off. The idea of demanding social responsibility in return for limited liability would make sense only if the latter involved the transfer of resources from one defined segment of society to another. In fact, limited liability makes society as a whole richer by increasing the amount of money available for productive investment. This rationale is particularly strong in the case of smaller firms. They have in the past created a disproportionate share of new jobs, but many are now struggling to expand in part because of government regulation. + +Another veil that needs to stay in place + +When it comes to finance, critics of limited liability have better arguments. Victorian liberals were more reluctant to let banks adopt limited liability. The reasons were that bank failures pose such a big risk to the economy and that unlimited liability reinforces the most important virtue of a banker—prudence. In Britain most banks did not adopt limited liability until the failure of the City of Glasgow Bank in 1878. Goldman Sachs remained a partnership right up until the late 20th century. Banks have better access to capital as a result, but take more risk. + +Many early banks tried to create mixed regimes combining the benefits of limited liability (more capital) with the discipline of unlimited liability. The British Companies Act of 1879 introduced the idea of “reserve” liability, under which a shareholder was liable to meet a failed bank’s debt up to a fixed multiple of their equity investment. But such systems frequently produced the worst rather than the best of both worlds. Reserve liability was complicated to enforce and did not in practice prevent excess risk-taking. There are better solutions to the problems of financial leverage and risk-taking, for example forcing banks to fund themselves with a lot more equity, than fiddling with a mechanism that has been at the heart of the world’s prosperity. + + + + + +Finance and economics + + + + +Trade deals: Hard bargain + +Oil: The little cartel that could + +The Mexican peso: Slip slidin’ away + +Buttonwood: Taking it to 11 + +Share trading in America: Warping the loom + +Psychometrics: Tests of character + +Chinese IPOs in Hong Kong: Cornering the market + +Food for refugees: Fat help + +Free exchange: Down to earth + + + + + +Trade deals + +Hard bargain + +Lacking clear American leadership, the global trade agenda is floundering + +Oct 1st 2016 | GENEVA | From the print edition + + + +ROBERTO AZEVEDO, the head of the World Trade Organisation (WTO), is not the architect of grand global trade deals that his title suggests. Sitting in his Geneva headquarters, he remembers only too well how the WTO’s Doha round collapsed under the weight of its own ambition. “Let’s do the trade deals that are in reach,” he says. Overambition is not the only problem. “Anti-trade rhetoric is catchy,” sighs Mr Azevedo. So catchy that it has infected deals beyond the WTO. The world’s most trumpeted regional trade deals are drifting out of grasp just when pep is most needed: on September 27th the WTO forecast that for the first time in 15 years, global trade growth this year, at just 1.7%, would not keep pace with global GDP. + +The Trans-Pacific Partnership (TPP), a deal between America, Japan and ten other countries around the Pacific, was signed in February but is now faltering. On September 26th Hillary Clinton and Donald Trump, the Democratic and Republican nominees for the American presidency, fought to distance themselves from it in their first televised presidential debate. Mr Trump labelled the deal “almost as bad as NAFTA” (the North American Free Trade Agreement, which came into force in 1994 and which he sees as the worst thing ever to happen to American manufacturing). + +The TPP is deeply controversial among the minority of Americans who have heard of it (a recent poll found that only 29% had, and most of them were unaware it excludes China). Nevertheless, Barack Obama wants to push it through in the “lame-duck” session of Congress at the end of this year. There he faces a mixture of poisonous partisan politics and genuine concerns over the deal. Many Republicans would relish thwarting an important part of Mr Obama’s legacy. Winning the Democratic votes he needs would be a stretch. + +The EU is also choking on its own processes when it comes to trade deals. After a recent bout of energetic protests against the Comprehensive Economic and Trade Agreement (CETA), a trade deal between the EU and Canada, an informal meeting of European trade ministers in Bratislava on September 23rd gave it the green light. But it could yet be undermined by any one EU member that refuses to ratify. The Austrians look particularly reluctant. + +If CETA is fragile, the Transatlantic Trade and Investment Partnership (TTIP), a deal still being hammered out between the EU and America, is flailing. Negotiations have proceeded at a snail’s pace. Britain’s vote to leave weakens the EU’s clout and makes the Americans even less amenable to meeting European concerns. Looming French and German elections have made protests against it harder to ignore. In Bratislava the ministers grudgingly agreed to continue talks. If the deal is not done by the time the next president is inaugurated, “there will be a natural pause,” says Cecilia Malmstrom, the EU’s trade commissioner. A revival would not be imminent. + +A nasty brew of opportunistic politicking and sceptical (and often misinformed) electorates is largely to blame for this halting progress. But there are other reasons why trade liberalisation is getting harder. TPP reduces some bilateral tariffs and quotas, such as those covering America’s imports of cars and Japan’s of beef. But since the deal includes the other NAFTA members (Canada and Mexico) and four other countries with which America already has bilateral free-trade agreements, most of it focuses on “behind the border” non-tariff barriers: ie, on harmonising regulations, removing privileges for state-owned enterprises, protecting intellectual property and so on. Such issues raise even greater hackles than old-style tariff-reduction talks; they inevitably encroach on areas covered by domestic law. + +The drugs don’t work + +Since tariffs are already on average below 3% between America and the EU, TTIP is even more focused on this sort of deep integration. But, to take just one example, persuading one drug-approval authority to update its regulations along with another is really hard; negotiators underestimated the difficulty of the task at hand. + +In both TPP and TTIP, investor-state dispute settlement provisions have provoked particular controversy. These set up a system for foreign investors to sue national governments if they breach standards of fairness. Opponents see them as a way for corporate fat cats to sue elected governments for things they don’t like. Christian Odendahl, an economist at the Centre for European Economic Reform, a think-tank, says that including such a controversial provision in TTIP was probably a mistake; legal systems in America and Europe are developed enough for investors not to need the extra legal certainty. + +The short-run trade impact of the collapse of TPP and TTIP would not be huge, because of their focus on rule-setting rather than tariff-scrapping. But it would mean an American retreat from its leadership role in global trade liberalisation. Mr Obama has advertised TPP as essential if America, not China, is to set the “rules of the road” for trade in the 21st century. + +A trade agenda led by China would be less ambitious than the American-led one. Hopes for global rules covering trade unions, competition from state-owned enterprises and free movement of data would fade, in favour of tariff reduction. Attention would shift to the Regional Comprehensive Economic Partnership (RCEP), a more traditional deal between the ten members of the Association of South-East Asian Nations and six other countries, including China, India and Japan. + +RCEP would, however, harvest much more of global trade’s low-hanging fruit. Its member countries cover 36% of global goods exports in 2015, compared with 28% for the TPP. Tariff walls protecting emerging markets are much higher than those around developed countries—China still has on average 10% tariffs, compared with 5% in Europe and under 4% in America—so the immediate boost to the economy from lowering them would be higher. + +As for the WTO, it will for now push “plurilateral” deals of its own, which embrace enough WTO members to be significant but which avoid the quagmire of having to secure the agreement of all its 164 members. It already boasts some successes: in September, for example, China started cutting tariffs on technology goods as part of the plurilateral Information Technology Agreement. + +Indeed, the failure of TPP and TTIP could provide an opportunity for the WTO to re-emerge as the main forum for the trade-liberalisation agenda. A return to the ambitious visions of the past, however, is unlikely. Mr Azevedo can imagine the WTO brokering another global trade deal, but only when expectations have been managed down from Doha. Above all, the politics needs to be fixed. Few political leaders around the world have done much to squash the anti-trade bug. To them Mr Azevedo says: “You have to speak up for trade.” But Mr Trump is speaking up for protectionism; and Mrs Clinton would rather change the subject. + + + + + +Oil + +The little cartel that could + +OPEC agrees its first production cut since 2008 + +Oct 1st 2016 | From the print edition + + + +DOES OPEC matter? Those who dismiss the significance of the Organisation of Petroleum Exporting Countries, a producers’ cartel, cite at least three reasons to think not. Its 14 members cannot agree among themselves, not least because they include bitter regional rivals like Iran and Saudi Arabia. Even if the cartel could agree, its pacts would not work, because so much crude oil is now produced outside the club, in the hinterlands of Siberia or the fracking fields of America. And if OPEC’s agreements will not work, its members will have no reason to stick to them. + + + +Those who think OPEC still matters can now make one powerful counterargument: Algiers 2016. On September 28th OPEC members gathered there for an informal meeting and agreed to cut output for the first time since 2008. The agreed cut was modest, limiting production to 32.5m-33m barrels per day, which is between 0.7% and 2.2% below current output. Saudi Arabia’s production was likely to fall anyway as the winter approaches. The agreement was also vague. Members will wait until their formal meeting in November to settle how the overall cut will be distributed among them. Nonetheless, within hours of the report, the price of oil rose by over 5% (before easing somewhat). To the question does OPEC still matter, the market had given its own emphatic answer. + +Even OPEC-doubters will take note of what the agreement says about Saudi Arabia. The kingdom had insisted that it would cut output only if other producers followed suit. This insistence that OPEC cut as one or not at all brought it into direct conflict with other members like Iran. After EU sanctions were lifted earlier this year, Iran has been set on ramping its oil production as fast as possible. The Algiers agreement became possible only because Iran seems to have won this argument. It would be allowed to produce “at maximum levels that make sense”, said Saudi Arabia’s energy minister—a softer Saudi attitude that may reflect harder constraints at home. Low oil prices left the kingdom with a budget deficit of 15% of GDP last year. + +But will the agreement work? It has already moved the oil price. But then, one might argue, what doesn’t? The oil markets have been unusually volatile this year, as they struggle to find their bearings in a new landscape, marked by slower global growth, resilient shale producers and the return of Iran. Amid great uncertainty about these changed fundamentals, commodity traders can lapse into second-guessing each other. Even if every trader suspects that OPEC in fact no longer does matter, OPEC will remain powerful until everyone knows everyone else agrees. + + + + + +The Mexican peso + +Slip slidin’ away + +Fear of a Trump presidency plays havoc with Mexico’s currency + +Oct 1st 2016 | From the print edition + + + +INVESTORS in Mexico were among those cheered by Hillary Clinton’s strong performance in the American presidential debate on September 26th. The country’s ailing peso has lost 12% of its value against the dollar this year. But either side of Mrs Clinton’s first joust with Donald Trump it climbed by 2%. + +The link between the peso and Mr Trump’s chances of becoming president seems clear enough. The Republican has talked loudly about withdrawing from the North American Free Trade Agreement, raising tariffs on Mexican imports and taxing remittances. How realistic any of this is, and what effect it would have on the Mexican economy, is unclear. But his hawkish trade policy gives investors plenty to worry about. + +The peso is a highly liquid currency frequently used to hedge against exposure to global risk. It fell sharply after Britons voted in June to leave the EU, even though Mexico and Britain do little trade. It is now being used as a hedge against the possible turmoil of a Trump presidency. “The peso is seen as the purest proxy for the American election,” says Andrés Jaime of Barclays Capital. + +The peso’s descent bothers the Mexican government because it draws unwanted attention to the country. “Investors are wondering if there is something wrong with Mexico that they’re not seeing,” says Luis Arcentales of Morgan Stanley. The central bank, which was meeting as The Economist went to press, may try to support the currency by raising interest rates, currently at 4.25%, for the third time this year. A widening current-account deficit and increasing debt argue for tightening; a second-quarter contraction of GDP and a desire to wait until after the American election might argue against. + +Even a rate rise would be unlikely to stem the peso’s slide should Mr Trump go on to win. The exchange rate, currently 19.6 pesos to the dollar, could well lurch towards 22. Yet although Mexicans need little excuse to excoriate Mr Trump, they cannot pin all their currency’s ills on him. Over 18% of government revenues come from oil. That share is shrinking but low oil prices and declining production have still hit the government budget. A contraction in American industrial production and weak economies in Latin America are also muting external demand. A Trump defeat will solve only one of the peso’s problems. + + + + + +Buttonwood + +Taking it to 11 + +How central banks are distorting the corporate-bond and equity markets + +Oct 1st 2016 | From the print edition + + + +IN THE spoof “rockumentary”, “This is Spinal Tap”, Nigel Tufnel, the band’s guitarist, displays his amplifiers with pride. The dials range not from one to ten, but up to 11. On a normal amp, he explains, when you reach ten, there is nowhere to go, but “these go to 11.” + +Three of the world’s most important central banks—the Bank of England, Bank of Japan (BoJ) and the European Central Bank (ECB)—have dialled monetary policy up to 11, expanding their asset purchases from government bonds to embrace corporate debt and even equities. With government bonds and short-term interest rates already at historically low (and in some instances, negative) levels, such asset purchases were seen as the next logical step. + +The expanded policy has several justifications. It is not clear that driving government-bond yields or short-term interest rates any lower will do a lot to help the economy; negative rates may dent bank profits, for example, making them more reluctant to lend. And if the aim is to get companies to borrow more, then buying their bonds will reduce the cost of that borrowing via lower yields. + +But there are many more types of private-sector assets than there are government bonds. (The ECB’s government bond-purchase programme is linked to the size of each euro-zone economy, so it cannot be accused of favouring one nation over another.) Central banks simply cannot buy all corporate bonds or equities in equal measure. + +Naturally, they choose the most liquid and the least risky. But the bonds and equities they buy are likely to perform better than others. Since the ECB announced its bond-buying programme on March 10th, the spread (or excess interest rate over government bonds) on corporate bonds that it deems eligible has fallen by over half, from 100 basis points (one-hundredths of a percentage point) to 44 basis points, reckons Citigroup. The spread on ineligible bonds has also fallen but by only a third, from 154 to 104 basis points. + +When companies seek to issue new bonds, the prices and yields of their existing bonds are an important benchmark. To the extent that central-bank actions lower the cost of capital of businesses within the programme, it must give them a competitive advantage over their rivals. The Bank of England, for example, is buying bonds issued by Walmart (which owns the Asda chain in Britain) but not bonds issued by Tesco or Morrisons, two rival supermarkets. The effect may be small, but it is still a questionable thing for a central bank to do. + +Moreover, the British corporate-bond market is not as deep as the American equivalent so the Bank of England is limited in the bonds it can buy. This leads to some odd-looking inclusions. Will the purchase of sterling bonds issued by Apple, Daimler or PepsiCo really lower the cost of capital for British finance? + +Investors will adjust their behaviour to allow for the actions of central banks. “It almost feels as if our role shifts from analysing the bonds’ fundamentals to advising clients on the eligibility criteria,” says Matt King, a bond strategist at Citigroup. + +The BoJ has already been forced to adjust its equity-buying programme after it seemed to distort the market. The bank might have thought it was playing safe by purchasing an equity index. But a lot of its money was going into the Nikkei-225 average, a benchmark weighted by share price rather than market value (see chart). So its investments were having a disproportionate effect on the share prices of some small companies. In the case of Fast Retailing, the BoJ already owns half of the free float (the shares available to outside investors). Future purchases will be weighted to the more sensibly constructed Topix index. + +Another issue is how the central banks will eventually dispose of their holdings. Although, when they started in 2009, government-bond purchase schemes were seen as short-term measures, central banks have yet to reduce their bond piles. The Federal Reserve is slowly tightening monetary policy by pushing up short-term interest rates, not by selling bonds. + +Corporate bonds are less liquid than government bonds, particularly since post-crisis rules have made banks less willing to hold inventories. A likely consequence of this is that central banks will be big owners of private-sector assets for a while, with all the distortions that implies. They will not want to risk a big shock by selling billions of bonds into an illiquid market. If that day comes, traders might be quoting Mr Tufnel again: “How much more black could this be? And the answer is none. None more black.” + +Economist.com/blogs/buttonwood + + + + + +Share trading in America + +Warping the loom + +The markets for trading financial products are themselves churning + +Oct 1st 2016 | NEW YORK | From the print edition + +Closed outcry + +THE controversies that beset America’s financial markets extend to even the most basic activities, such as trading a security. What was once the preserve of a stockmarket duopoly of the New York Stock Exchange and NASDAQ, and a handful of narrow commodity markets, is now a bewilderingly complex tapestry. It is also subject to incessant reweaving: take this week’s announcement that BATS Global Markets, an operator of four stock exchanges, will be sold to the CBOE, an options exchange, for $3.2 billion. + +BATS was founded in 2005 in Kansas by a man whose background was in trading shares from his bedroom. In 2012 it famously botched its first attempt to list its own shares, completing the job only this year. The price it now commands reflects its success in expanding to become America’s second-largest equity market, with a growing presence in options. It brings to the relatively long-established CBOE, founded in 1973, what is seen to be better, low-cost technology. The CBOE said that BATS will also play a role in developing new “tradable products and services”. + +This is a crowded field. More than a dozen exchanges deal in equities alone, to say nothing of scores of “dark pools” of liquidity for private trading and countless trading firms that fit into neither category. Then there are the markets that offer options or futures linked to shares. Exchanges now rely less on straightforward commission income—eg, from trading a company’s shares—and more on designing products that encompass a variety of financial instruments. BATS, for example, is popular for trading exchange-traded funds (ETFs), often themselves tied to options or futures. Among the CBOE’s most valuable products is an option contract tied to the S&P 500 index that tracks the American market. + +Trading volumes may have grown and innovations proliferated, but there are concerns about how much companies and long-term investors have benefited. The Securities and Exchange Commission (SEC) this week trumpeted a $12.5m settlement with Bank of America Merrill Lynch for “ineffective trading controls” that enabled “erroneous orders” to provoke a series of “mini flash-crashes” between 2012 and mid-2014, and, said the SEC, dented faith in the financial markets. + +Worse than such highly visible glitches are ones that steadily call into question the efficiency of the market. Such concerns have contributed to a drop in the number of companies willing to publicly list their shares. Charles Royce, who has specialised in small-company investments for decades and manages about $17 billion in various mutual funds, says it has become harder to buy and sell. Even though prices are displayed, the volume of shares available and demand for them is becoming more opaque. That is widely blamed on high-speed traders who put out a vast number of tiny buy or sell orders to gauge interest and then get in ahead of slower investors on larger trades. Mr Royce says it is hard to say whether these traders provide liquidity (as they claim) or rather make profits at the expense of long-term investors. + +In an effort to improve trading to help small companies, Congress inserted into a 2012 law known as the JOBS act a requirement that the SEC should consider tinkering with its rules about how bids and offers are denominated. Currently all offers are priced in pennies. It has taken the SEC four years to come up with a plan (despite the law’s 90-day stipulation). From October 3rd the shares of 1,200 companies with market capitalisations below $3 billion will be traded with quotes priced in five-cent gaps, in a two-year experimental period—a so-called “tick pilot”. + +It seems odd to expect higher spreads to lower the price of transactions. But the idea is that the large gaps create risk for high-speed traders. They will no longer be able to lay down a minefield of small orders without risking large losses. Mr Royce, and several other fund managers, are curious about the possible benefits from the study, though their expectations are limited. Two years in trading is a lifetime. Even if the plan works, by the time it is over the entire tapestry may once again have been unwoven and transformed. + + + + + +Psychometrics + +Tests of character + +How personality testing could help financial inclusion + +Oct 1st 2016 | From the print edition + +Lie-detection the old-fashioned way + +HOW would you feel if you were invited to the moon? If you found a gold coin, would you save it, give it to charity or splurge on a holiday? Personality quizzes of this kind—“psychometrics”, in the jargon—are already the bane of many a jobseeker. Now, it is being applied to the oldest problem in finance: will a borrower repay? + +In rich countries, lenders use credit scores to weigh risk. But just 7% of Africans and 13% of South Asians are covered by private credit bureaus. Bailey Klinger of the Entrepreneurial Finance Lab (EFL), which explores new kinds of credit data, argues that psychometrics could scoop many more people into the financial system. Everyone has a personality, after all. + +Judging character is not new. Psychometrics attempts to make it a science. EFL began life as a research initiative at Harvard. The model used by Creditinfo, a rival firm, was developed with help from Cambridge. Their online quizzes are road-tested and tweaked for different cultures. Sifting the data reveals telling patterns: for instance, EFL found that young optimists are risky, but old ones are a safe bet. + +Clever design cuts cheating. There are no obvious “right” answers; responses are cross-checked for consistency. The software monitors mouse movements for signs of indecision or distraction. And when the unscrupulous lie to get a loan, they often do so in predictable ways. In the Creditinfo test, people are shown pictures of five drinks and asked which one they would be. Choosing water over something fizzier may be a sign of cheating, says Clare McCaffery, its managing director in Britain. (Still or sparkling, you might ask.) + +This all sounds fanciful, but there is evidence that it works. EFL has honed its model through trials on three continents. In one Indonesian bank, combining psychometrics with existing customer data cut default rates for small businesses by 45%. A study by the World Bank and Inter-American Development Bank found that EFL’s model boosted lending to those without a credit history (a bad record betokened problems whatever the psychometrics said). + +Some lenders are convinced. Grupo Monge, a retailer, uses psychometrics to sell household goods on credit to low-income Peruvians. “Most of the time we are the first company to give them credit,” says Gabriel Trelles, its boss in Peru. The biggest market for psychometrics is for such consumer loans. But microlenders and banks are catching on. EFL’s software has been used in 690,000 loan decisions in 27 countries. Creditinfo will use its psychometrics unit, recently acquired from a marketing firm, to expand in emerging markets. + +Psychometrics has so far been merged into existing loan processes. Richer data could change that. Jared Miller, CEO of EFL, describes a future in which lending is almost entirely digitised, combining psychometrics with social media and mobile-phone records. Startups are rushing to make use of these “alternative data”. One example is First Access, in Tanzania, which uses data such as mobile records to gauge the strength of borrowers’ networks, and thus how likely they are to repay. + +The technique is still in its infancy and will not replace credit bureaus, says Miriam Bruhn of the World Bank. The best way to tell if somebody will repay a loan in future is to see if they have repaid one in the past. But bureaus improve more slowly than technology. Lenders, looking for an edge, will find ever more ways to peer into their customers’ souls. + + + + + +Chinese IPOs in Hong Kong + +Cornering the market + +One way to sell shares is to lock in your friends + +Oct 1st 2016 | Shanghai | From the print edition + + + +IN ARCHITECTURE, a cornerstone is laid where two walls meet, serving as a single point from which the building takes its shape. No one constructs an entire building out of these weighty slabs. So it is meant to be in finance. To perk up interest in initial public offerings (IPOs), companies sometimes invite in “cornerstone investors”: a small number of big investors who promise to buy a stake and hold it for a while, a vote of confidence from which the IPO takes shape. Odd, then, to see a trend in Hong Kong of IPOs constructed almost entirely out of these weighty pledges. + +The latest is the Postal Savings Bank of China, a lender with 500m retail customers. Its shares started trading on September 28th, capping a $7.4 billion IPO, the world’s biggest in two years. A share sale of that size would normally dominate headlines in the financial press. But this one passed quietly, and for good reason. Just a small portion of its shares were actually sold to the public. Nearly 80% went to cornerstone investors, just shy of a record. + +Cornerstones, still rare in other markets, have long been a staple in Hong Kong, accounting for about 13% of total IPO values in the first decade of this century. They used to serve as a stamp of approval. Hong Kong’s best-known tycoons, such as Li Ka-shing, regularly appeared on the list of cornerstones for Chinese companies that were not yet household names. + +Recently, though, they have gone from being a part of the foundation for Hong Kong deals to becoming the brickwork. This year, they have accounted for three-fifths of total IPO values (see chart). Firms that have sold more than half their offered shares to cornerstone investors in 2016 include a leasing arm of China Development Bank, a big state lender; Bank of Tianjin, a smaller bank; and Everbright Securities, a brokerage. + +Companies are using cornerstones to evade market forces. Instead of bringing in savvy investors who might persuade others to hop aboard, state-owned firms are cramming in other friendly state-backed investors to ensure that their IPOs are successful. The Postal Savings Bank had six cornerstones. All were affiliated with state-owned enterprises such as China Shipbuilding Industry Corporation and Shanghai International Port Group. These are not exactly known for their Warren Buffett-like stockpicking acumen. + +Cornerstone-heavy IPOs cause many distortions. Share prices are artificially high. Chinese banks already listed in Hong Kong trade at roughly a 20% discount to the book value of their assets: investors think their loan losses are higher than officially reported. But the Chinese government has a rule that state companies must sell shares at no less than their book value. Thanks to cornerstones, Postal Savings Bank was able to set a price for its IPO that just crossed the threshold, yet left its shares about 20% more expensive than its peers’. No wonder that few ordinary punters were interested. It hired 26 other banks, a record, to underwrite its IPO. + +Because prices are too high, liquidity is weak after shares start trading. Cornerstone investors are contractually obliged to hold them for months (six for the Postal Savings Bank). When the time comes to sell, there are worries about a sudden flood of shares on the market—a further disincentive for other investors. + +The cornerstones are a classic case of China Inc in action. The state is shifting money from pocket to pocket—from a shipbuilder to a bank in the Postal Savings case. With limited participation from outside investors, China brings little fresh capital into its listed companies. If no one is being fooled, what is the point of the charade? + +An adviser who has worked on several deals says that Chinese officials see share listings less as a way for firms to raise capital than as a way to subject them to greater discipline. Whoever owns its shares, the Postal Savings Bank will need to file regular financial reports that global investors can scrutinise. The IPO’s walls are built from cornerstones, but the market at least has a window onto its inner workings. + + + + + +Food for refugees + +Fat help + +Increasingly, hungry refugees receive aid not as food, but as cash + +Oct 1st 2016 | AMMAN | From the print edition + + + +BACK in Syria food was cheap, remembers Maya, as she sits cross-legged in the small flat she shares with her husband, their five children and another couple in Amman, Jordan’s capital. When she first arrived here, she had to cut back. But now, with her husband working and 20 dinars ($28) a month from the World Food Programme (WFP), a UN agency, she can buy the children a treat like fish or chicken. + +Scattered across Turkey, Lebanon and Jordan are 4.4m registered Syrian refugees, 90% of whom, like Maya, live outside formal refugee camps. This makes it a logistical nightmare to get the traditional food aid to them—sacks of rice and pulses. The WFP, the world’s largest food-aid provider, has adapted: a decade ago, it doled out aid only in kind. Now just over a quarter of its aid globally is cash-based. Every month Maya gets a text message alerting her that her special debit card, which she can use only to buy food, has been topped up. The WFP reaches around 1.1m refugees like this in Jordan, Lebanon and Turkey. + +This week saw the launch in neighbouring Turkey of the largest-ever humanitarian-aid project financed by the EU: a whopping €348m ($390m) for the WFP, in partnership with the Turkish Red Crescent, to be transferred to electronic cards held by up to 1m refugees. Unlike Maya’s, their cards will be unrestricted; they can withdraw cash from ATMs. In effect, the WFP is shifting from aid in kind to electronic distribution—first of food and now of cash—giving refugees more choice over what to buy. + +The vast majority of the WFP’s aid is still food in kind or in e-cards limited to food. Donors want to know that their money is being well spent (“food” is in WFP’s name, after all). In Mafraq, a city in Jordan where Syrians number 50% of the population, Nour Sahawneh directs volunteers handing out old-fashioned bags of rice and tea. He admits that some refugees sell them, perhaps to pay the rent. But at least he knows they are not overcharged. + +Delivering food as aid, even indirectly, by vouchers or e-cards, inevitably distorts markets. A shop sure of aid-financed customers may be tempted to raise prices. But money-based help at least takes procurement decisions away from well-meaning but misguided aid workers and pumps money directly into the local community. Also, studies have shown that recipients of cash-based aid consume a more varied diet (though, in fact, fewer calories). + +Your flexible friend + +The WFP has learnt that some forms of cash-based aid are better than others, however. The food vouchers it once used turned out to be a good way of transforming photocopiers into aid-printing machines. They also irritated users, who had to queue for the vouchers and spend them all at once. Maya prefers her e-card, though she still has to queue at the supermarket. Sometimes fights break out in the rush to the shops when the cards are topped up. + +The queues might be shorter if Maya could use her card at any shop. At first she had to spend 10 dinars just on the taxi to her closest WFP-approved supermarket. Saleh Dhnie, a 59-year-old Syrian refugee and a former civil servant, gets 20 dinars a month from the WFP in Jordan, but is convinced the chosen supermarkets raise their prices when cards are topped up. The street market, he grumbles, is much cheaper. + +Contracted shops certainly seem to be doing a brisk trade. In Lebanon the e-card programme doubled revenues at those taking part. Rami Al Shdeafat, who manages a supermarket in Amman, says he bought four extra card-readers to cope with the surge in custom. He insists his prices are competitive, boasting of the promotions on offer and pointing proudly to a bag of milk formula that normally sells for 11 dinars and that is on sale for 9.52 dinars. Besides, the Syrian customers are much more price-sensitive than Jordanians. + +The WFP doesn’t take his word for it: every 20 days it sends price-checkers. Some shopkeepers are deterred by this. Amer Shbeilaat runs a smaller food shop with, he claims, the lowest prices in Mafraq but doesn’t accept the WFP’s card. He heard some shops lost their contracts for raising prices. He can do without the bother. Letting competition drive down prices is more effective than intrusive checkers. In Lebanon, after WFP officials spotted that prices were lower in shops facing more competition, they enlisted more shops to accept their cards—up from 250 in 2014 to around 460 today. This has helped keep prices low. + +For now, in Lebanon and Jordan, unlike in Turkey, WFP officials are sticking to cash-based but restricted schemes—and hence to the agency’s mandate, as a single-purpose food-aid provider. Officials worry that to move to unrestricted schemes, as in Turkey, might in effect hand the cash to landlords in the form of higher rents. They also worry about funding. “You can’t get people used to cash one day and then go back the other day,” says Dominik Heinrich, head of the Lebanese branch of the WFP. And free-floating cash is harder to monitor. The WFP in Lebanon is busy analysing masses of transaction-level data from contracted shops. They hope these will serve to reassure donors that their funds are being well-spent, and could even be used to work out how much aid they should be giving. + +But aid-workers must have realised that, rather than spend hours checking up on grasping shopkeepers, it would be easier simply to hand out cash. It also would give refugees more freedom. An experiment with unrestricted cash handouts in Lebanon suggests that people do indeed like the chance to spend the money as they please. As a spokesman for the European Commission said, in justifying the EU’s intervention in Turkey: “Cash empowers the beneficiaries…They are the best placed to know what their basic needs are.” And few could begrudge them that little scrap of control over their tempest-tossed lives. + + + + + +Free exchange + +Down to earth + +Brexiteers need to respect gravity models of international trade + +Oct 1st 2016 | From the print edition + + + +AS BRITAIN contemplates its post-Brexit identity, government ministers are racking up the air miles. Theresa May, the prime minister, thinks Britain “should become the global leader in free trade.” Officials are discussing trade deals with a range of Asian and Middle Eastern countries. Daniel Hannan, a prominent Leave campaigner, even suggested in the Sun newspaper that he wanted Britain to join NAFTA, an intra-American trade agreement. The Brexiteers have spent less time wooing the EU, to which Britain sends roughly half its exports. Indeed, given promises made during the campaign to restrict the free movement of EU labour, reaching a post-Brexit trade deal may prove difficult. + +The focus on achieving trade agreements outside Europe may seem a smart move. The EU’s economy is weak: its demand for British exports has been depressed for years. Britain’s membership of the customs union prevents it from making trade deals with fast-growing economies such as India and China, where Savile Row suits and Scotch whisky find ready markets. Brexiteers say that if Britain quit the EU it could forge new deals wherever it liked, boosting trade even without a new agreement with the EU. + +That may sound reasonable, but mainstream economists argue that turning away from the EU, far from boosting Britain’s trade, would restrict it. The so-called “gravity model”, concocted in the 1960s by Jan Tinbergen, a Dutch Nobel-prize winner, makes two simple points about the geography of international trade. First, the bigger the GDP of the countries involved in a bilateral trading relationship, the more they trade with each other. Larger economies have more demand for goods and services and offer more products, supplying a broader range of consumers. + +Second, the farther away two countries are from each other, the smaller the volume of trade. That is partly related to transport costs: sending a parcel from Britain to France costs half as much as sending one to India. Cultural and linguistic differences also come into it. Exporters have a better feel for nearby markets and can meet suppliers more easily. According to official data only about 2% of Britain’s exports go to India (population 1.3 billion), much less than is sold to tiny Belgium (population 11m). + +The implications of the “gravity” model for a post-Brexit Britain seem to be clear. The EU is a trading bloc roughly the size of America and it happens to be on Britain’s doorstep. That explains why Britain has always traded heavily with the continent. It also suggests that trade deals with far-flung places may not compensate Britain for restricted access to such a market. + +However, that is not the end of the story. Brexiteers have studied gravity models and insist that they have been “long discredited”. Their critique rests on two points. First, says Patrick Minford of Cardiff University, gravity models are simple “associations” rather than causal relationships. Indeed it is even possible that the statistical relationship between GDP and trade volumes suffers from the problem of “endogeneity”. Large trade volumes may cause large GDP, rather than the other way around. + +This critique appears misplaced. A paper from Shang-Jin Wei, then of Harvard University, looked for a clean variable—one that runs from GDP to trade, but not the other way round. Mr Wei used data on population (since it is unlikely that lots of trade causes a large population). After correcting for the endogeneity problem, the gravity effect still held. Furthermore, according to Swati Dhingra of the London School of Economics, gravity models do a good job of predicting actual trading relationships today. + +The second Brexiteer criticism of gravity models is that geography may not matter as much as it once did. As emerging-market economies continue to outgrow the rich world, their increased pulling power may override distance. It will only be a few years before China’s GDP (as measured in dollars) exceeds the EU’s. + +As those economies grow, British trade with emerging markets will certainly increase. However, size alone does not make a faraway country an enormously attractive trading partner. Britain exports far less to America than it does to the EU. Moreover, for the foreseeable future, GDP per person in places like India and China will be lower than the EU’s, points out John Springford of the Centre for European Reform, a think-tank. It will be many years before these countries’ citizens are rich enough to demand the same sorts of goods and services from Britain as the EU does. + +In one other way, however, geography may matter less than economists assume. The logic of gravity models may be sound when applied to trade in goods, which cost a lot to move around, but its applicability to trade in intangible services is surely a little more suspect. After all, a website-designer or a financial adviser in London can deliver her services to a Chinese client costlessly and instantly over the internet. Britain is one of the world’s most service-intensive economies and is becoming ever more so. + +With a bump + +The gravity effect does indeed appear to be smaller for services. But it is still strong, according to a report on Brexit by the IMF. The reasons for this link are less explored in the literature, though shared time-zones and languages are likely to be important. A paper on Brexit from the National Institute of Economic and Social Research, another think-tank, also notes that much services trade is a by-product of goods trade. If Britain’s exports and imports of goods declined, Britain’s services exporters would also suffer. + +In the long term, better communications and cultural homogenisation may mean that international trade is less and less at the mercy of proximity. But for now, the central premise of Tinbergen’s model still holds for a post-Brexit Britain. Exploring trade deals with Asia and the Middle East is all well and good. But if Britain really wants to be a global leader in free trade, it needs to work with its closest, biggest neighbour. + +Visit our Free exchange economics blog + + + + + +Science and technology + + + + +Interplanetary settlement: The world is not enough + + + + + +Interplanetary settlement + +The world is not enough + +Elon Musk envisages a human colony on Mars. He will have his work cut out + +Oct 1st 2016 | From the print edition + + + +“I’D LIKE to die on Mars. Just not on impact.” Elon Musk has never been shy about his reasons for founding SpaceX, a rocketry firm that has become the flag-carrier for a buccaneering “New Space” industry. Although two recent rocket explosions have dented its halo, its launch prices are among the lowest in the world. It has pioneered the technology of returning expended rocket stages to Earth for later reuse, landing them back on special pads or on ocean-going barges, which should cut costs still further. As a result, it has a thick book of orders from private firms and the American government to fly satellites into orbit and cargo—and, eventually, astronauts—to the International Space Station. + +But building better rockets has never been the real point. Mr Musk, who grew up on a diet of science fiction and video games, sees the various companies he has founded as ways to help solve some of the world’s biggest problems. Tesla, an electric-car maker, and Solar City, a solar-power firm, were set up to encourage a switch to cleaner forms of energy. SpaceX’s goal is loftier. Mr Musk has repeatedly said that he believes that human beings must learn how to live on places other than Earth, as an insurance policy against a planet-wrecking disaster. A series of trips to Mars, paving the way for a permanent colony, has been the firm’s long-term goal ever since its beginning in 2002. + +On September 27th, in a speech to the International Astronautical Congress in Mexico that veered between hard technical specifics and wild speculation, Mr Musk outlined details of his grand vision. The idea was “to make Mars seem possible—like something we can do in our lifetimes. Is there a way that anyone could go, if they wanted to?” His goal, he said, was, in the coming decades, to allow people to buy tickets to Mars for something in the region of $200,000—about the median cost of an American house today. + +It sounds fantastical. The Apollo flights that took 12 astronauts to the surface of the Moon—around a six-hundredth of the distance to Mars—consumed at their peak around 4.4% of America’s federal budget. Since then human space flight has been stuck in Earth orbit. America’s Space Shuttle, which made its last flight in 2011, was an expensive fiasco; the International Space Station, which cost roughly $150 billion to construct, is one of the most expensive human artefacts ever built and hosts a crew of at most six people. Attempts by private firms such as Virgin Galactic to fly people into the lowest reaches of space have, so far, come to nothing. + +Yet the mood among the space fraternity is that Mr Musk has earned the right to a hearing. When SpaceX was founded the idea of a startup successfully launching a rocket—let alone making big inroads into the business—seemed ludicrous to many. Mr Musk has proved his doubters wrong. A permanent colony on Mars is undeniably a grand ambition, but his ideas about how to begin, and how to build the necessary infrastructure to get people there, are worth pondering. + +Mars is a harsh mistress + +Mr Musk is far from the first person to advocate going to Mars. Wernher von Braun, who built Germany’s V2 missiles and America’s Saturn V moon rockets, published plans for such a trip in 1953. After Apollo’s success he lobbied for America to execute it as a follow-up. That did not happen, but the idea never went away. A mission to Mars, sometime in the 2030s, is the notional end point of Barack Obama’s space strategy. China has talked, in vaguer terms, of doing something similar by mid-century. Science-fiction authors and rocket scientists have made detailed technical studies, and the topic is a perennial favourite at space-flight conferences. + +Besides the sense of prestige and derring-do, the reason Mars makes an attractive target is that it is, Earth aside, the friendliest world in the neighbourhood. Not that friendly, admittedly. Its average surface temperature is around -60°C, its atmosphere is unbreathably thin and made mostly of carbon dioxide, and its soil (technically, “regolith”) is rich in perchlorates, an unpleasant family of chemicals that terrestrial life does not like. Nevertheless, compared with the other six planets in the solar system it is a paradise. The outer four—Jupiter, Saturn, Uranus and Neptune—are gas giants, lacking a solid surface on which to land. Mercury is an airless world similar to the Moon and Venus suffers from the opposite problem, a crushingly thick (and oxygen-free) atmosphere. + +Mars, though, sits on the edge of the sun’s “habitable zone”, the band of space at the right distance away from a star to let liquid water exist on a planet’s surface—and despite Mars’s subfreezing average temperature, parts of its surface are occasionally warm enough to permit just that. An optimist might reckon it only a bit less friendly than Antarctica, a place that does play host to a permanent human presence. Antarctica, though, is within a few hours’ flight of civilisation and more hospitable climes. Depending on their relative positions in their orbits, Mars can be anything from 75m km to 375m km from Earth—so far away that even light (and therefore radio messages) take many minutes to cross the distance. To get there will mean building a spaceship that can keep its occupants alive for a journey that will last for months, and a rocket that can send it on its way. It was on this subject that Mr Musk spent most of his talk. + +The “Interplanetary Transport System” (ITS) comes in two parts. The spaceship itself would be 49.5 metres long, with room for around 100 passengers. It would be lofted into orbit by a gigantic, reusable carbon-fibre launch vehicle (referred to internally at SpaceX as the “BFR”, for “Big Fucking Rocket”) that would be, by some distance, the most powerful ever built (see chart). Once the spaceship had been placed into orbit, the rocket would fly itself back to its landing pad, using the technology that allows SpaceX’s present series of Falcon rockets to pull off the same trick. Further flights of the BFR would carry fuel, passengers and cargo to the orbiting spaceship. Once fully provisioned, that ship would set off for Mars. + + + +The journey would take around six months. This is a long time, but as Mr Musk pointed out, not unprecedented: passengers on sailing vessels once endured similarly long journeys. Upon arrival the ship would enter the Martian atmosphere in the same sort of way that the Apollo command module did when returning to Earth, using the planet’s atmosphere to shed speed. Unlike Apollo, though, Mr Musk’s vehicle would make a rocket-powered landing on the surface. + +One of these ships, landed permanently on Mars, could conceivably serve as the first Martian habitat. But the long-term goal is to send the spaceship home. Solar-powered machinery placed on the surface by an earlier mission would combine carbon dioxide in the planet’s atmosphere with water (which, as ice, appears to be fairly common beneath the regolith) to form methane and oxygen—an idea advanced by Robert Zubrin, an American engineer, in the 1990s. This fuel would be loaded into the spaceship’s tanks for the return journey to Earth. (The low gravity of Mars, which is around a third as strong as Earth’s, means the spaceship could take off without the need for a booster.) + +Every part of the ITS has been designed to be cheap. Compared with the Apollo missions, said Mr Musk, he would need to cut costs per person 50,000-fold to hit his $200,000 ticket price. Part of that would be done, as described, by making fuel from Martian resources, rather than lugging it all the way from Earth. But the bulk of the savings come from making every part of the system as reusable as possible, an approach that has been emphasised by SpaceX and its New Space rivals, particularly Blue Origin, a rocket firm founded by Jeff Bezos, the owner of Amazon. + +One reason rockets are so expensive is that they are, conventionally, single-use machines. Once they have done their job, they are either abandoned in space or left to crash back into the ocean. Rocket fuel is cheap. It is the rockets themselves that are costly. A reusable rocket would permit those construction costs to be spread across several flights. A BFR, reckoned Mr Musk, might be good for 1,000 flights before it needed replacing. The spaceships themselves might make a dozen trips to Mars each, limited by the travel time and the finite number of viable “launch windows” during which they could be sent. + +Theorising is the easy part. For now SpaceX is spending only “a few tens of millions” of dollars on designing the BFR and the spacecraft. But there has been progress: the snazzy videos that punctuated Mr Musk’s speech were generated, he said, from real design blueprints. He showed a video of a test-firing of SpaceX’s new methane-burning “Raptor” engine, 42 of which would power the BFR. The firm has a lot on its plate at the moment, not least tracking down the cause of an explosion that destroyed a Falcon 9 (and the satellite it was carrying) on September 1st and preparing for its first manned flight. Once those are done, and the firm’s next commercial rocket—an upgraded version of the Falcon 9 called the Falcon Heavy—is ready, he plans to devote more time and money to the ITS. + +Timescales could be only rough guesses, he said. But the first flight of the BFR should take place around 2020, with the first spaceship sent for orbital testing a year or two later. In the meantime SpaceX is planning to launch a smaller, uncrewed spacecraft—one of its existing Dragons, as depicted above—to Mars in 2018, and at the congress Mr Musk promised that he would follow up with a steady stream of further missions every two years, when the positions of Earth and Mars make the latter most reachable. + +Ticket to ride + +If you wanted to come up with a way of transporting large numbers of people to Mars, then the ITS—or something like it—seems a good place to start. But the bigger question is why you might want to do that in the first place. + +For decades human space flight has been an activity in search of a justification. In the 1960s the justification was that it was war by other means. The Apollo missions to the Moon, and the failed Soviet attempt to do likewise, were exercises in cold war propaganda, designed to prove that capitalism was better than communism, or vice versa. After America won the space race interest and funding dwindled, and advocates of human space flight were reduced to homilies about inspiring people to take up careers as scientists. Mr Musk instead makes an existential argument—spaceflight, he says, should be seen as an insurance policy. Only by becoming a multi-planet species, he argued, can humanity make itself safe from the sorts of disasters that might wreck Earth: asteroid strikes, say; or malevolent robots; or the gamma radiation from a nearby supernova. That means planting colonies on other planets, and nurturing them until they can survive without resupply from Earth. Various other luminaries, such as Stephen Hawking, a revered British physicist, have expressed similar worries. + +This argument sometimes turns quasi-mystical. Life seems to have begun on Earth shortly after the planet formed, which suggests that its emergence is easy and it should therefore be common elsewhere. But that does not seem to apply to intelligent life. Even at relatively slow speeds, an intelligent spacefaring species ought to be able to colonise a galaxy in a few hundred million years. The fact that there is no sign of this having happened in mankind’s own galaxy, the Milky Way, is sometimes taken as evidence that intelligence is either vanishingly rare, or else tends to blow itself up before it can leave its home planet. Either way, the mystics suggest, mankind has a duty as an intelligent species to look after itself. + +In the very long run, the doom-mongers are right: human beings may indeed have to migrate, assuming any are still around. Around a billion years from now the sun, which has been brightening slowly ever since its formation, will be shining fiercely enough to make Earth uninhabitable. If human beings want to survive, they will have to leave. (At the same time, the brighter sun would make Mars much more salubrious.) + +Critics argue that the shorter-run threats are either unlikely (malevolent robots); or would destroy a Martian colony too (gamma-ray bursts); or could be avoided by any species capable of planning to colonise other planets (killer asteroids can be deflected). But even if an interplanetary insurance policy were a prudent idea, could it be taken out? + +It was here in Mr Musk’s presentation that the technical details ran out and the speculation began in earnest. Living on Mars would be difficult: harder, probably, than getting there in the first place. Colonists would have to spend all their time in pressurised buildings. Communication with Earth would be doable but tedious. It might be possible to modify terrestrial plants to grow in a high-pressure version of the Martian atmosphere, but no one has tried. A closed, miniature ecosystem would have to be devised to recycle nutrients and waste products. A series of Earth-bound experiments, called Biosphere 2, which tried that out in the 1990s were abandoned after plants died, food became scarce and oxygen levels started dropping. + +When asked what such a habitat might look like, Mr Musk said that was not for him to say. “We see ourselves as being like the Union Pacific railroad,” he said, referring to the railway that opened up the American West in the 1860s. His focus was on building an affordable transport system. What the settlers did when they arrived would be up to them. He had given it some thought—he opined that you might need a million people to maintain the sort of industrial base necessary for true independence from Earth. But specifics were in short supply. + +One such specific was how much, in the end, such a scheme might cost. Working with Mr Musk’s own numbers, sending 1m people to Mars would cost in the order of $200 billion. That is too much for even his deep pockets. There are other rich men also keen on space flight, who might be persuaded to cough up. But he was candid that, for the scheme to work, governments would also have to open their chequebooks. That seems unlikely at the moment. + +Home away from home? + +One final question is why anyone would want to go to Mars, even if a ticket could be had by selling your house. Appeals to the future of the species are unlikely to motivate many individual members of that species to give up everything and move. Space advocates point to humans’ history of migration, saying that colonising Mars would be like the Polynesian conquest of the Pacific, say, or the European migrations to the New World. But historical migrations have happened either because those involved had no choice, or because there were big rewards from doing so. The founders of Virginia were seeking profit. The Pilgrim Fathers were fleeing religious persecution. And the lands they arrived at were not intrinsically hostile to human survival. + + + +It is hard to see how a life spent in an airtight chamber on the surface of Mars could be an improvement on one spent on Earth. Mr Musk agreed, and said that the few people who did want to go would likely be motivated by a sense of adventure or some notion of the manifest destiny of humanity. Perhaps there are some who would venture there on that basis. But finding a million such is a big ask. + +Mr Musk’s vision, then, is a grand one. Judging by the reaction of his audience, it is an inspiring one, too. But it is also unlikely to come to pass for the foreseeable future, at least on the scale that he hopes. That does not mean it is worthless. Even if the fleets of colonists never materialise, the smaller missions—such as the uncrewed landing planned for 2018—will be valuable in their own right, and will prove that interplanetary space flight is now within the means of an (admittedly unusual) private individual. Such a mission could convey two or three tonnes of cargo to the Martian surface. It is not hard to imagine universities and space agencies paying for their experiments to hitch a ride. + +And even if a colony might be a step too far, it seems likely that humans will one day arrive on Mars. Here, the comparison with Antarctica may be instructive. Though they are in no sense a colony, a small population of scientists does live there all year round, doing research that cannot be done anywhere else. A system like Mr Musk’s might one day make a Martian equivalent possible, although the price would still be eye-watering. + +Mr Musk admitted as much himself. He was thinking, he said, of calling the first Mars vessel Heart of Gold, after a ship in “The Hitchhiker’s Guide to the Galaxy”, a comic science-fiction story written by Douglas Adams. The fictional ship is powered by something called an “infinite improbability drive”. That, he mused, was perhaps the most appropriate way of thinking about the entire project. + + + + + +Books and arts + + + + +Bruce Springsteen: A whole damn city crying + +Violence in England: Killing fields + +Culture in Britain: Civilised and civilising + +Poetry and the poet: A display of digging + +The Federal Reserve: Man in the dock + + + + + +Bruce Springsteen + +A whole damn city crying + +The timely autobiography of an American mythologist + +Oct 1st 2016 | From the print edition + + + +Born to Run. By Bruce Springsteen. Simon & Schuster; 528 pages; $32.50 and £20. + +LIKE much great art, Bruce Springsteen’s finest songs transmute the particular into the eternal. The more tightly local their focus—those boys from the casino dancing with their shirts open in “Sandy”, that Tilt-a-Whirl down on the south beach drag—the more universal they magically become. As he puts it in “Born to Run”, his new autobiography, he sings about “the joy and heartbreak of everyday life”, of humdrum defeat and defiance, the pull of home and the road’s allure, familiar dichotomies somehow elevated, in his ballads, into a new American mythology. + +As “Born to Run” recounts, those songs feel authentic because they are. At the heart of his oeuvre, and of his book, is his painful relationship with his father, a sometime pool shark whom, as a child, Mr Springsteen fetched from bars in Freehold, New Jersey, for his long-suffering mother. He records their wars over his lengthening hair, which culminate in Springsteen senior calling in a barber when his son is incapacitated by a motorbike accident; the simmering silences and boozing; but also his unexpected, curt relief when Bruce fails his army medical (“That’s good”), and the old man’s crumpled awe when his son produces the Oscar he won for “Philadelphia” (“I’ll never tell anybody what to do ever again”). Mr Springsteen explains how he tried to dodge his inheritance of self-destruction and depression, treating the latter with counselling, pills and the self-administered therapy of music. “I’m a repairman,” he says of his craft. + +His mother rented his first guitar after, aged seven, he saw Elvis, “a Saturday night jukebox Dionysus”, on “The Ed Sullivan Show”. Theirs was a house without hot water or a phone, in a neighbourhood of other Irish-Italian families where “I never saw a man leave…in a jacket and tie unless it was Sunday or he was in trouble.” The Springsteens scavenged radios for his grandfather to repair and sell to migrant labourers. He hitchhiked with “every sort of rube, redneck, responsible citizen and hell-raiser the Jersey Shore had to offer”. A grandmother smothered him with “horrible unforgettable boundary-less love”; Catholicism imbued a spirit of rebellion and the ghost of faith. + +In the end, for all the young men busting out of town in his lyrics, it was his parents who left him, moving to California in 1969 when he was 19. His younger sister Virginia also stayed in Jersey. Soon, though, he too rode out of Freehold, perched in the dark on an old couch on the bed of a truck. + +In these passages the formula of his success begins to crystallise: a dark alchemy of indulgence and neglect, “the Fifties blue-collar world and Sixties social experience”, freedom and hardship. He slept in a surfboard factory and sometimes on the beach. This was the Vietnam era: an early drummer was killed by mortar fire, a manager mutilated a toe to avoid the draft. All those tensions, plus a staggering work ethic. His bands played “firemen’s fairs, carnivals, drive-ins, supermarket openings and hole-in-the-walls”, and countless bars where fistfights and police raids were common. He understood his limits (“My voice was never going to win any prizes”), but knew and honed his talents, namely songwriting and live performance. + +He laid down the law to wayward band members and predatory managers. “The buck would stop here,” he decided, “if I could make one.” After a long apprenticeship, an American picaresque that encompassed a flop in California, he was signed by Columbia Records. The album “Born to Run” made him a star. “Born in the USA” launched him into the stratosphere. + +The origin of poetry, thought William Wordsworth, was emotion recollected in tranquillity. That motto describes both Mr Springsteen’s memoir and the appeal of his songs, many of which look back on youthful traumas from a mature perspective and for older audiences. These days many in their ranks are as mature as Mr Springsteen himself, who at 67 still crowd-surfs his way through three-hour shows. “The exit in a blaze of glory”, he says of other rockers’ early combustions, “is bullshit.” + +The stories his songs tell, though, have not aged: on the contrary. His great theme is “the distance between the American dream and American reality”. He is the bard of deindustrialisation, of dreams murdered, escapes thwarted and accomplished, fates mastered and predetermined, and factories closed, such as the rug mill where his father once worked in Freehold, a place, in his memory, defined by the stink of its furnaces. “Lately there ain’t been much work,” he sings timelessly in “The River”, an ode to his sister’s struggles, “on account of the economy.” + +The race and class fissures that today seem so urgent rend his characters’ lives along with this slow-motion economic blight. The landscape of his youth, and of his music, has the peculiar worldliness that American parochialism can grittily contain: in the cults and tribes of the Jersey shore, the college-bound “rah-rahs” who spat at him at a beachside gig, the leather-clad “greasers”, all those toughs and crooks, the ethnic tensions and race riots. In his book, as occasionally in his lyrics, he writes frankly about race, though his deepest statements on it were made in the make-up of his band, his partnership with Clarence Clemons, his longtime black saxophonist—relations with his bandmates are chronicled like Platonic romances—and above all in his sound, which blends R&B and soul with folk, country and rock. + +People come to rock concerts, Mr Springsteen writes, “to be reminded of something they already know and feel.” That the problems America faces are old ones is among the consoling reminders of his albums and his book. More than that, though, they model an alternative response—one in which blue-collar woes are recognised and honoured by the white-collar fans Mr Springsteen has always attracted, the millions who chant “Thunder Road” despite never having encountered the skeleton frame of a burned-out Chevrolet. That transformation of the particular into the universal, experience into art, is also a spell that turns difference into compassion. It is a lesson in empathy for artists of all kinds, and not only artists. + + + + + +Violence in England + +Killing fields + +Life in England was nasty, brutish and short + +Oct 1st 2016 | From the print edition + + + +A Fiery & Furious People: A History of Violence in England. By James Sharpe. Random House; 751 pages; £30. + +IF ONE wants proof that the past is, indeed, a different country, it is instructive to look at the rate of baby-killing. In late-Victorian England, a fifth of all known murder victims were under a year old. Infanticide had been a common method to part with an unwanted child for centuries before abortion. Neglect was prevalent and in the most heinous cases, money provided the motive. + +Some parents insured the lives of their children in order to cash in on their deaths. Some Victorians were paid to adopt illegitimate children, but soon sold them on as cheap labour; many of those children died from neglect. Not all people regarded the lives of newborn babes as sacrosanct. One commentator declared he had no such “superstitious reverence”. + +Infanticide is the subject of one grim chapter of James Sharpe’s new book, “A Fiery & Furious People”, which examines a history of English violence from riots to highwaymen, and from executioners to serial killers. Mr Sharpe is a crime historian of many years and his book’s strength lies in its scope, which allows the reader to survey the changes and customs of English society. + +Most obvious, research suggests, is the decline in violence. Average annual homicide rates in 13th-century rural England were 20 per 100,000 of population. Oxford was particularly prone to student riots: one estimate puts the murder rate in the 1340s at as high as 120 per 100,000. Assaults from strangers were more common than today; modern killers are mostly close relations of the victim. + +Punishments differed in the Middle Ages, with an emphasis on public shaming. Women could be ducked in the village pond, many simply for scolding husbands or neighbours. Girls with too loose a tongue could be required to wear a bridle, an iron helmet with a bar inserted into the mouth to prevent them from speaking. Punishments in ecclesiastical courts may have involved just giving penance. + +Stocks and pillories were common, but their use diminished after 1660 as society grew more secular. Public whipping declined too. It took a little longer for public executions to die out; the last outdoor hanging took place in 1868. At the same time the rate of murders and assaults dropped. Knives and swords were carried less often by Georgians. Rules appeared to develop around duels and even fist fights, such that combatants were not beaten to a bloody pulp. This may have something to do with a growing concern for civility, thinks Mr Sharpe. + +Later an avowedly respectable Victorian middle class started to see violence as something done by other people; the violent were a lower class, they thought, operating in a separate moral universe. Murder fell by 70% between 1851 and 1911, even as capital punishment was less routinely relied upon. A more professionalised police force played its role in this. + +It may be too early to denigrate a past, blood-spattered age. England in the late 1800s, despite the killings of Jack the Ripper, had similar murder rates to today: 0.9 per 100,000 people. The London of Charles Dickens’s “Tale of Two Cities” was more peaceful than modern London, with 1.1 homicides against 1.7 per 100,000. + +Sexual-violence statistics are as high as ever, in part because of higher reporting rates. Riots still happen. And the English still succumb to newspaper-led moral panics, just as their forebears did. Crime rates have fallen, but experience suggests they do not always move in one direction; there were 10.8% more murders in America in 2015 compared with the previous year, according to recent FBI data. In Britain violence has sunk and risen in the past century. The decline of the English murder may prove to be an unfinished story. + + + + + +Culture in Britain + +Civilised and civilising + +A fascinating biography of Kenneth Clark that shows how much cultural life in Britain has changed—and for the better + +Oct 1st 2016 | From the print edition + + + +Kenneth Clark: Life, Art and “Civilisation”. By James Stourton. William Collins; 478 pages; £30. To be published in America by Knopf in November. + +LORD CLARK OF SALTWOOD, who was ennobled by Harold Wilson in 1969 after the triumph of his epic television series “Civilisation”, became known more familiarly as Lord Clark of Civilisation. To one unsympathetic academic critic in the art world, he was Lord Clark of Trivialisation. Friends and colleagues called him simply “K”. + +Neil MacGregor, formerly director of the National Gallery and the British Museum, argues that K “was the most brilliant cultural populist of the 20th century”. “Nobody can talk about pictures on the radio or on the television without knowing that Clark did it first and Clark did it better.” Clark’s hero was John Ruskin, who believed that beauty was everyone’s birthright; and his achievement was to make this sound like common sense. But his reputation was not sustained. After his death, he was probably better known as the father of Alan Clark, a flamboyant politician, seducer and diarist. + +In his working life, K had more pies than fingers to put them in: director of the National Gallery when it symbolised the cultural contribution to the war effort, with famous recitals by Myra Hess and the removal of the collection to the security of a Welsh quarry; chairman of the Arts Council and the authority that established commercial television in Britain; deeply involved in the revival of the Royal Opera House and the creation of the National Theatre; author of studies on Leonardo da Vinci and the nude in art. + +These positions made him a quintessential figure of the British establishment, admired and feared, though behind the façade he was prone to shafts of self-doubt. He was the only son of a family that founded mills making fine cotton thread in Paisley, and he inherited immense wealth, but he always insisted that he was a socialist. King George V was so anxious to have Clark as Surveyor of the King’s Pictures that he ignored protocol and visited him personally in the National Gallery to persuade him to take the job, which he did. Clark understood that the life he liked depended on close co-operation with the governing classes, but he could also despise them. + +James Stourton’s delightfully readable and authoritative biography is absorbing on the rise and rise of a gilded, lucky young man in a hurry. After Winchester (a school he did not like) and Oxford, he began work in Florence as a researcher for Bernard Berenson, a great student of the Renaissance. He was nearly 28 when he was offered the chance to become keeper of fine art at the Ashmolean Museum in Oxford, 30 when he was appointed director of the National Gallery. He already had a reputation for automaton-like, and often terrifying, efficiency, and he could be off-hand and impatient. But he was very good at running things. + +There was, however, more to his life. Mr Stourton, a former chairman of Sotheby’s in Britain, describes Lord Clark as a man who loved being in love. These affairs and dalliances must have stirred his vanity, but one result was that his wife, Jane, drank heavily. K remained a loyal social partner, but he did once confess: “All the ladies I loved took to the bottle.” + +His story could be read as a morality tale. For after Jane’s death, Lord Clark married Nolwen Rice, a woman he scarcely knew. She fought for possession with Janet Stone, the great love of the second half of his life. It was an ugly battle for succession in which Clark, all vanity spent, played no part. For a career that was propelled by a relentless pursuit of elegance, it was an inelegant finale. + + + + + +Poetry and the poet + +A display of digging + +Bringing alive Seamus Heaney’s spirit + +Oct 1st 2016 | BELLAGHY | From the print edition + +Hats off to Heaney + +SEAMUS HEANEY moved seamlessly through time, space and cultural worlds, or at least he made it appear that way. When, in 2013, the Irish poet was buried near his childhood home in the mid-Ulster village of Bellaghy, mourners ranged from senior Irish Republicans to British grandees, from rock stars and world-famous academics to local folk who were part of or knew his farming family. His poetry, too, was at once recondite and scholarly and deeply embedded in his home soil. Although he made bold new readings of Greek and Anglo-Saxon classics, his best-loved works speak of more immediate, tangible things like flax rotting in a dam or his father’s spade slicing the Derry mud. + +Visitors will gain new insights into the poet’s personal and family roots with the opening on September 30th of the Seamus Heaney HomePlace, a spanking new arts and literary centre in still-sleepy Bellaghy. Mementoes of his early life will form an interactive display along with reminiscences from local friends, and film of the writer in local settings. Over the next year it will host cultural performances with the ambitious goal of fusing the local and international dimensions of the poet’s world. The launch was due to include a concert by nine traditional musicians from across the globe and, a few days later, a dawn reading in nearby Church Island, a numinous ancient site dear to the writer’s heart, of a Heaney poem dealing with ancient Mycenae and hinting at the 1994 Northern Irish ceasefire. + +With his gentle humour, Heaney might have found that event slightly pretentious. But its staging reflects his keen sense of the multilayered riddles that can be contained in pieces of ground which have bound people together, and also divided them, over different eras. As the discerning visitor to HomePlace may sense, the poet emerged from a slow but conflict-ridden world: a place where Catholic and Protestant farmers could deal amicably over cattle or ploughing without ever forgetting that they were, ultimately, on opposite sides of an intercommunal divide which had drawn blood and might draw more. + +Heaney knew which side of that divide he came from: it was the Catholic, Irish-nationalist community, and he politely objected whenever he was carelessly described as British. But it was precisely that sense of security which steered him away from name-calling Anglophobia or from joining the militant end of Irish Republicanism. He had a keen sense of the pain of the Northern Irish conflict, including the sectarian murder of a young cousin, but showed no desire to become a foot-soldier. + +Perhaps abhorrence of bloodshed was one reason why the poet, who famously declared that he dug with his pen, felt moved to delve so very deep into the past, of his own country and others. He was seeking ways to transcend the feuds of the present, or at least to put them in better perspective. He had a particular affinity with Greece, another country where the landscape contains both traces of ancient mysteries and the detritus of sordid modern arguments. And in a line quoted at the time of the ceasefire, he never abandoned his belief in the advent of a day when, against all expectations, conflict would be overcome so that “hope and history rhyme”. + + + + + +The Federal Reserve + +Man in the dock + +Was Alan Greenspan to blame for the financial crisis? + +Oct 1st 2016 | From the print edition + + + +The Man Who Knew: The Life and Times of Alan Greenspan. By Sebastian Mallaby. Penguin Press; 781 pages; $40. Bloomsbury; £25. + +THE former chairman of the Federal Reserve was once a hero. Now he is being called a villain. Yet it is too soon to be sure what history will say about him. In a superb new book, the product of more than five years’ research, Sebastian Mallaby helps history make up its mind about Alan Greenspan, the man hailed in 2000 by Phil Gramm, a former senator, as “the best central banker we have ever had”, but now blamed for the financial crisis of 2007-08. Even today, Mr Greenspan, who famously once told Congress that “If I seem unduly clear to you, you must have misunderstood what I said”, remains a paradoxical figure. + +Mr Greenspan was a partisan Republican, who worked more closely with the Democrats under Bill Clinton than with either of the Bush administrations. He was a disciple of Ayn Rand’s libertarian ideology, but his forte was the mastering of data. He was a believer in the gold standard, but became the foremost exponent of discretionary monetary policy. + +The former central banker condemned the creation of the Fed as a disaster, but he became its most dominant chairman. He was a believer in free markets, but participated enthusiastically in bail-outs of failed institutions and crisis-hit countries. He knew the dangers of moral hazard, yet offered the support for markets labelled the “Greenspan put”. + +Mr Mallaby, formerly a journalist at The Economist and now a senior fellow at the Council on Foreign Relations in New York, takes readers on a long journey from Mr Greenspan’s childhood as the adored and awkward son of a single Jewish mother in New York, through his period as a “sideman” in a jazz band, his professional life as a data-obsessed forecaster, his engagement in Republican politics, his 18 years as chairman of the Federal Reserve and, finally, the post-crisis collapse of his reputation. Through the lens of this stellar career, the book also throws a sharp light on American policy and policymaking over four decades. + +Of his time as Fed chairman, Mr Mallaby argues convincingly that: “The tragedy of Greenspan’s tenure is that he did not pursue his fear of finance far enough: he decided that targeting inflation was seductively easy, whereas targeting asset prices was hard; he did not like to confront the climate of opinion, which was willing to grant that central banks had a duty to fight inflation, but not that they should vaporise citizens’ savings by forcing down asset prices. It was a tragedy that grew out of the mix of qualities that had defined Greenspan throughout his public life—intellectual honesty on the one hand, a reluctance to act forcefully on the other.” + +Many will contrast Mr Greenspan’s malleability with the obduracy of his predecessor, Paul Volcker, who crushed inflation in the 1980s. Mr Greenspan lacked Mr Volcker’s moral courage. Yet one of the reasons why Mr Greenspan became Fed chairman was that the Reagan administration wanted to get rid of Mr Volcker, who “continued to believe that the alleged advantages of financial modernisation paled next to the risks of financial hubris.” + +Mr Volcker was right. But Mr Greenspan survived so long because he knew which battles he could not win. Without this flexibility, he would not have kept his position. The independence of central bankers is always qualified. Nevertheless, Mr Greenspan had the intellectual and moral authority to do more. He admitted to Congress in 2008 that: “I made a mistake in presuming that the self-interests of organisations, specifically banks and others, were such that they were best capable of protecting their own shareholders and their equity in the firms.” This “flaw” in his reasoning had long been evident. He knew the government and the Fed had put a safety net under the financial system. He could not assume financiers would be prudent. + +Yet Mr Greenspan also held a fear and a hope. His fear was that participants in the financial game would always be too far ahead of the government’s referees and that the regulators would always fail. His hope was that “when risk management did fail, the Fed would clean up afterwards.” Unfortunately, after the big crisis, in 2007-08, this no longer proved true. + +If Mr Mallaby faults Mr Greenspan for inertia on regulation, he is no less critical of the inflation-targeting that Mr Greenspan ultimately adopted, albeit without proclaiming this objective at all clearly. The advantage of inflation-targeting was that it provided an anchor for monetary policy, which had been lost with the collapse of the dollar’s link to gold in 1971 followed by that of monetary targeting. Yet experience has since shown that monetary policy is as likely to lead to instability with such an anchor as without one. Stable inflation does not guarantee economic stability and, quite possibly, the opposite. + +Perhaps the biggest lesson of Mr Greenspan’s slide from being the “maestro” of the 1990s to the scapegoat of today is that the forces generating monetary and financial instability are immensely powerful. That is partly because we do not really know how to control them. It is also because we do not really want to control them. Readers of this book will surely conclude that it is only a matter of time before similar mistakes occur. + +MARTIN WOLF* + +*Our policy is to identify the reviewer of any book by or about someone closely connected with The Economist. Sebastian Mallaby is married to Zanny Minton Beddoes, our editor-in-chief. This review, by Martin Wolf, chief economics commentator of the Financial Times, has been edited for length only + + + + + +Obituary + + + + +Obituary: Shimon Peres: Intriguing for peace + + + + + +Obituary: Shimon Peres + +Intriguing for peace + +Shimon Peres, an Israeli statesman, died on September 28th, aged 93 + +Oct 1st 2016 | From the print edition + + + +HE OUTLIVED all his country’s other founding fathers, but failed in what he most yearned for: to lead it into a lasting peace. Missed opportunities dogged Shimon Peres’s career. He gained the highest offices—prime minister, twice, and president—but the political arithmetic invariably went against him. His forte was foreign policy, but his political nemesis, Menachem Begin, signed the peace treaty with Egypt in 1979, and his arch-rival, Yitzhak Rabin, got most of the plaudits for Israel’s deal in 1993 with the Palestinian leader, Yasser Arafat. + +Mr Peres’s imprint was lasting, nonetheless. As a precocious young civil servant, he brokered arms deals which helped his uniformed counterparts to get the weapons they needed. He circumvented arms embargoes with creative ruses, such as buying warplanes as, purportedly, film props, and cannily found leaky frigates and rusty tanks in places where they were no longer needed. He bargained hard, shaming rich countries for charging full price to tiny, beleaguered Israel, and cajoling rich sympathisers. It meant breaking a lot of rules. Jimmy Hoffa, boss of America’s Teamsters union, became a friend, and Israel’s rapprochement with West Germany was cemented with marathon drinking sessions with the arch-conservative Bavarian, Franz-Josef Strauss. + +Perhaps his greatest achievement in this sphere was a secret deal with France which laid the foundations for Israel’s never-avowed nuclear arsenal. Only this year did Mr Peres obliquely acknowledge it, saying that it made the Arabs realise that the Jewish state couldn’t be obliterated, thus laying the foundations for at least a partial peace. “There are two things that cannot be made without closing your eyes,” he told the New York Times in 2013: “love and peace. If you try to make them with open eyes, you won’t get anywhere.” + +Unpolished politician + +He switched from the civil service to electoral politics, but found it hard to make his mark in the Labour party—a cause he had served since his teens. A better backroom operator than campaigning politician, he slyly egged on the Jewish settler movement in the West Bank after 1967, at a time when it was still on the fringes of Israeli politics; the settlements have stymied peace efforts ever since. Rabin called him, aptly, “the tireless intriguer”. Though politics obsessed him from childhood, driving out (some said) all other interests, he was wooden on television and was perhaps too fond of aphorisms (“You can turn eggs into omelettes, but it is very difficult to turn omelettes into eggs.”) Personal political relationships were difficult. His closest ally was Moshe Dayan, but the adoration he bestowed on the dashing former general was not reciprocated. David Ben-Gurion, Israel’s first prime minister, appreciated his talents, but would not confide in him. + +The problem lay deep. He was never part of the bronzed sabra culture of Israel, having arrived as an immigrant from Poland at the age of 11. His Hebrew had a Polish twang, and his attempt to find a resonant Hebrew name to replace “Persky”, which he was born with, ended only in “Peres”, a sort of bird. In a country which reveres military valour, he was a man in a suit. Unlike many Jews of his generation, he did not fight the Nazis or put on uniform in Israel’s war of independence in 1948. Throughout his career he was ribbed for his vanity, including plastic surgery and, more recently, a diet consisting largely of low-fat cheese, salad and green tea. + +When at last he reached the top, as Labour leader in 1977, it cruelly coincided with a shift in the political climate. Religious and ultranationalist parties were on the rise; voters rejected a Labour elite they saw as weak and aloof. He led the party in five elections, but never won outright. + +Having helped to build Israel’s war machine, he became a dove; Israel was now strong, he argued, and could achieve true security through compromise. But this essentially optimistic message often fell flat. He opposed the bombing of Iraq’s nuclear reactor at Osiraq in 1981, which most Israelis thought a masterstroke. + +His best election result was a stalemate in 1984, which led to a two-year rotation of the top job with Yitzhak Shamir, the Likud leader. Labour did win in 1992, but under Rabin. Two years later he shared the Nobel peace prize with Rabin and Arafat: respected abroad, still unpopular at home. He returned to office on a wave of emotion after the assassination of Rabin in 1995. But his chance to achieve peace with the Palestinians was blown away by a spate of Islamist suicide-bombings and by Israel’s war in Lebanon. He was narrowly defeated by Binyamin Netanyahu in 1996. + +A new generation of Labour leaders tried, unsuccessfully, to force him to retire. Instead, on his second attempt and at 83, he became Israel’s largely ceremonial president. As head of state he was muzzled, forced in public to back Mr Netanyahu and defend his policies abroad; yet he conspired with the intelligence services to block the plans to attack Iran’s nuclear installations. Once more, the intriguer tirelessly intrigued. His doings seemed remarkably public, immediately posted on Facebook, Twitter and Instagram by his almost entirely female staff (males, he had found, betrayed him). Undoubtedly, other exploits will remain untold for years. + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Global mergers and acquisitions + +Markets + + + + + +Interactive indicators + +Oct 1st 2016 | From the print edition + + + + + +Output, prices and jobs + +Oct 1st 2016 | From the print edition + + + + + +Trade, exchange rates, budget balances and interest rates + +Markets + +Oct 1st 2016 | From the print edition + + + + + +The Economist commodity-price index + +Oct 1st 2016 | From the print edition + + + + + +Global mergers and acquisitions + +Oct 1st 2016 | From the print edition + + + + + +Mergers and acquisitions (M&A) announced in the first nine months of this year were worth $2.5 trillion, 24% less than in the same period of 2015—the first fall in three years. Britain’s vote to leave the European Union, uncertainty over the American presidential election and a fall in equity-capital raising may have discouraged would-be acquirers. The $66.3 billion bid by Bayer, a German chemicals firm, for Monsanto is the only acquisition over $50 billion announced so far this year. Cross-border M&A is down by 11% year on year and $753 billion-worth of deals have been withdrawn, the most since 2007. Goldman Sachs leads the way on advisory fees, accumulating $1.8 billion, 11% of the total, so far this year. + + + + + +Markets + +Oct 1st 2016 | From the print edition + + + + + +Table of Contents + +The Economist + +The world this week + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + +Anti-globalists: Why they’re wrong + + + + + +Election 2016: Lessons of the debate + + + + + +The war in Syria: Grozny rules in Aleppo + + + + + +Ending Latin America’s oldest war: A messy but necessary peace + + + + + +Colonising Mars: For life, not for an afterlife + + + + + +Letters + +On the NHS, Hong Kong, alternative voting, socialist beer: Letters to the editor + + + + + +Briefing + +Colombia’s peace: A chance to clean up + + + + + +United States + +The Clintons’ financial affairs: Bill and Hillary Inc. + + + + + +Donald Trump’s finances: Touching the void + + + + + +Saudi Arabia and 9/11: Enter the lawyers + + + + + +The campaigns: Heard on the trail + + + + + +Florida: Where past and future collide + + + + + +Election brief: climate change: Notes from the undergrowth + + + + + +Lexington: No happy ending + + + + + +The Americas + +Venezuela: The angry 80% + + + + + +Bello: A discredited profession + + + + + +Asia + +Thailand’s economy: The dangers of farsightedness + + + + + +Cambodian politics: The velvet glove frays + + + + + +Protest in South Korea: Death by water cannon + + + + + +Mould-breaking politicians (1): Going into battle + + + + + +Mould-breaking politicians (2): Twice a minority + + + + + +China + +Regional development: Rich province, poor province + + + + + +Banyan: The eyes have it + + + + + +Middle East and Africa + +Syria’s civil war: The agony of Aleppo + + + + + +The destruction of Aleppo: Crushed flowers + + + + + +Morocco’s elections: A “weird and strange” campaign + + + + + +Nigerian vigilantes: The home guard + + + + + +Endangered species: To sell or not to sell? + + + + + +Congo’s political crisis: A burnt-out case + + + + + +Europe + +Hungary’s anti-migrant vote: Boundary issues + + + + + +Turkey’s armed forces: Chains of command + + + + + +Russia and MH17: Brought to BUK + + + + + +AIDS in Russia: Immune to reason + + + + + +Danish culture: Cocoa by candlelight + + + + + +Charlemagne: A tale of two ethics + + + + + +Britain + +The Labour Party conference: You say you want a revolution + + + + + +Sporting scandal: Own goals + + + + + +Immigration and Africa: Hello right hand, meet left hand + + + + + +Education: The road to London + + + + + +Looking after the elderly: Sans everything + + + + + +Child development: Baby steps + + + + + +Bagehot: Jeremy Corbyn, dodgy dealer + + + + + +International + +Transport as a service: It starts with a single app + + + + + +Special report: The world economy + +The world economy: An open and shut case + + + + + +Free trade: Coming and going + + + + + +Migration: Needed but not wanted + + + + + +Capital mobility: The good, the bad and the ugly + + + + + +Deregulation and competition: A lapse in concentration + + + + + +Saving globalisation: The reset button + + + + + +Business + +Nintendo: Jump-start + + + + + +Business in China: Mixed messages + + + + + +Ink wars: Blot on the landscape + + + + + +Digital advertising: Doesn’t ad up + + + + + +Europe’s outposts: Not always in clusters + + + + + +Voice computing: Prick up your ears + + + + + +Schumpeter: Don’t limit the revolution + + + + + +Finance and economics + +Trade deals: Hard bargain + + + + + +Oil: The little cartel that could + + + + + +The Mexican peso: Slip slidin’ away + + + + + +Buttonwood: Taking it to 11 + + + + + +Share trading in America: Warping the loom + + + + + +Psychometrics: Tests of character + + + + + +Chinese IPOs in Hong Kong: Cornering the market + + + + + +Food for refugees: Fat help + + + + + +Free exchange: Down to earth + + + + + +Science and technology + +Interplanetary settlement: The world is not enough + + + + + +Books and arts + +Bruce Springsteen: A whole damn city crying + + + + + +Violence in England: Killing fields + + + + + +Culture in Britain: Civilised and civilising + + + + + +Poetry and the poet: A display of digging + + + + + +The Federal Reserve: Man in the dock + + + + + +Obituary + +Obituary: Shimon Peres: Intriguing for peace + + + + + +Economic and financial indicators + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Global mergers and acquisitions + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.10.08.TXT b/homeworks/B20769/homework1/data2/2016.10.08.TXT new file mode 100644 index 0000000..b0be1ed --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.10.08.TXT @@ -0,0 +1,5078 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Oct 8th 2016 | From the print edition + + + +Theresa May, Britain’s prime minister, outlined a timetable for Brexit negotiations, saying she would trigger Article 50, the formal process for leaving the European Union, by the end of March 2017. The pound fell to a fresh 31-year low against the dollar. But the FTSE 100 share index, which is made up of many export-dependent companies, surged to its highest level in more than a year. At the Conservative Party conference Mrs May promised to fight on a new centre ground in British politics. See here and here. + +The UK Independence Party, which pushed for the Brexit referendum, continued down its spiralling path to obscurity. Diane James resigned as leader, 18 days after winning a fractious leadership contest. Nigel Farage, the former leader, is technically back in charge. UKIP’s chairman said the situation was unfortunate, but he “wouldn’t call it a farce”. See article. + +Russia suspended an agreement with America to dispose of the two countries’ excess plutonium stockpiles safely. Vladimir Putin demanded that America roll back the expansion of NATO, end sanctions and pay compensation before reinstating the deal. Relations between the countries have deteriorated over the conflicts in Ukraine and Syria. See article. + +A referendum proposal in Hungary to reject EU refugee quotas was supported by 98% of voters. But turnout was well below the 50% threshold required to make the vote binding. It is a blow to the populist prime minister, Viktor Orban, who nevertheless declared the vote a resounding success. See article. + +A “women’s strike” in Poland brought 30,000 protesters onto the streets to demonstrate against a proposed ban on abortion in the country, which already has some of Europe’s toughest restrictions. It is the latest push towards cultural conservatism under the Law and Justice (PiS) government. See article. + +The International Organisation for Migration reported that 303,000 migrants entered Europe by sea from January 1st to October 1st. That is down by 40% from the same period last year, but the death toll is higher. Over 3,500 people have drowned or are missing. + +António Guterres, a former prime minister of Portugal, was the clear favourite to become the next secretary-general of the United Nations, replacing Ban Ki-moon early next year. Mr Guterres used to run the UN’s refugee agency. See article. + +Turkey’s president, Recep Tayyip Erdogan, asked parliament to extend his emergency powers, granted to him after the failed coup in July, by 90 days. + +Unfriendly fire + +At least 20 pro-government Sunni tribal fighters were killed in an air strike in Iraq after being mistaken for Islamic State militants. The accident happened as preparations for an imminent assault on Mosul intensified. Iraq’s second city has been held by IS since 2014. + + + +Fifty-two people died at a religious festival in Ethiopia’s Oromia region when an anti-government protest broke out. A stampede started after police used tear gas and rubber bullets to disperse the crowd. The country has been beset by ethnic-based violence over the past 12 months. + +A leading Nigerian actress was banned from the Hausa-language film industry because of her “immoral” behaviour. This consisted of her hugging a pop star to whom she is not married in a music video. + +The Trump of the Philippines + +In his latest tirade, President Rodrigo Duterte of the Philippines said Barack Obama could “go to hell” for criticising his bloody campaign against drugs. He warned that his country might “break up with America” and that he preferred ties with Russia and China. + +The authorities in Thailand barred Joshua Wong, a prominent pro-democracy activist from Hong Kong, from entering the country. He said he was told by Thai officials that he had been “blacklisted”. Mr Wong had planned to attend an event marking the 40th anniversary of a massacre of Thai students. + +The Taliban launched an assault on the Afghan city of Kunduz and raised their flag in the centre of the city. They withdrew after Afghan forces mobilised to repel them with the help of NATO “advisers”. A meeting of Afghanistan’s aid-donors agreed to provide civil aid worth $15.2 billion until 2020. See article. + +Tibet’s newly appointed Communist Party chief said the region must “deepen the struggle” against the Dalai Lama’s influence there. Doing so, he said, was the region’s “highest priority” in its efforts to forge “ethnic unity”. + +They won’t give peace a chance + +Colombians rejected in a plebiscite an agreement negotiated by the country’s president, Juan Manuel Santos, and the leftist FARC guerrilla army to end a 52-year war. Turnout was low and the difference between the number of votes for and against the accord was less than 0.5% of the total. Mr Santos hopes to keep the peace deal alive. He extended a government ceasefire until the end of October. See here and here. + + + +Hurricane Matthew, the strongest storm in the Caribbean in a decade, struck Haiti. Its path showed it moving on to Cuba and Florida. More than 20 people in Haiti died and around 10,000 were forced into temporary shelters. + +A more sedate affair + +The only debate during the election campaign between America’s vice-presidential candidates was held in rural Virginia. Mike Pence, the Republican, was widely judged to have got the better of Tim Kaine, the Democrat. + +Ohio said that it intends to resume executions in January, following a three-year hiatus. Ohio has executed 53 inmates in the past 40 years, the eighth highest of any state. + +Roy Moore, the controversial chief justice of Alabama’s Supreme Court, was suspended from office for advising state judges not to recognise gay marriage, despite its legalisation in America. His legal career over, Mr Moore is considering running for governor. + +Marathon man + +A man who once said he couldn’t run for a bus completed the equivalent of 401 marathons in 401 days in Britain. Ben Smith raised money for anti-bullying charities, having been targeted at school for being gay. He ran 16,900km (10,500 miles) in total, the distance from London to Sydney. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21708295-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Oct 8th 2016 | From the print edition + +Deutsche Bank’s battered share price rose, amid reports that it was negotiating a much smaller settlement with the US Department of Justice than the $14 billion it had been asked to pay for claims related to mortgage-backed securities. The German government reiterated that it had no plans to rescue the bank. Concerns about the health of the wider European banking industry were underscored by an announcement from ING, a Dutch bank, that it is shedding up to 7,000 jobs, a decision it in part blamed on ultra-low interest rates. Commerzbank, Germany’s second-biggest bank, announced 9,600 job losses. + +Delta Lloyd, one of the largest insurers in the Netherlands, received a hostile takeover bid from NN Group. The Dutch central bank has named insurers (and pension funds) as the greatest risks to the country’s financial stability. Across Europe, insurers are vulnerable to takeovers as they struggle to cope with low interest rates and increasing capital requirements. See article. + +Janus Capital, an American asset-management company, and Henderson Global Investors, an Anglo-Australian one, agreed to merge. The combined firm will have $320 billion in assets under management. Dai-ichi Life, a Japanese insurer, will hold around 9% of the combined company. See article. + +Buoyed by the strong yen, Sompo, a big property-insurance company in Japan, agreed to buy Endurance, which sells insurance in America, for $6.3 billion. + +In a surprise move, India’s central bank cut its key interest rate by a quarter of a percentage point, to 6.25%. It was the first pronouncement on rates by the Reserve Bank of India under its new governor, Urjit Patel, and the first made by a new six-member policy committee. Previous rate decisions were ultimately made by the bank’s governor; Mr Patel gets to cast a vote only if a decision is tied. Meanwhile, India’s government said that a tax amnesty had led to 64,000 people declaring hidden assets totalling $9.8 billion. + +Austerity lite + +Britain’s chancellor of the exchequer, Philip Hammond, officially abandoned the target of eliminating the government’s budget deficit by 2019-20. That goal had been championed by Mr Hammond’s predecessor, George Osborne, but it is now seen as too constraining given the economic uncertainties after Britain’s vote to leave the EU. + + + +The IMF said it thinks Britain’s economy will grow by 1.8% this year, up from the 1.7% it forecast in July. But it shaved its expectations for growth next year to 1.1%, from the 1.3% it had projected in the summer. With the economy proving more resilient after Brexit than many had thought—the services sector is expanding much faster than markets had expected, for example—the fund defended the doomsday predictions it had made before the vote, saying it would have been “malpractice” not to have raised concerns. + +The Chinese yuan was officially added to the IMF’s special drawing rights basket of currencies. It is the first currency to join since the euro in 1999. See article. + +Airbus announced plans to streamline management and merge its group corporate headquarters with that of its commercial-jet division. Although it has a bulging order book, Airbus is under pressure to improve profitability. See article. + +Theranos, a startup that promised to shake up the lab-testing market, closed its blood-testing laboratories and cut 40% of its workforce. The firm has been plagued by many problems, such as sending erroneous blood-test results to thousands of patients. + +In a rare intrusion by an American activist investor into corporate Asia, Elliott Management, Paul Singer’s hedge fund, called for Samsung Electronics to split in two, arguing that its share price is undervalued. Last year Elliott tried and failed to block a restructuring in another part of the Samsung empire. + +Tesla Motors reported its best quarter for sales, delivering 24,500 cars to customers. But it wasn’t all good news. California, Tesla’s home state, proposed that the company drop the name Autopilot as a feature following several accidents where drivers have not followed instructions to keep their hands on the wheel. + +Yes, but can you make a call? + +Google unveiled its new smartphone, the Pixel. It pitched the device as a rival to Apple’s iPhone, but with more emphasis on artificial intelligence. The Pixel is powered by a “digital assistant” with machine-learning technology combining elements of speech recognition, language transcription and word conversion that adapts to a user’s instructions. Google reckons this represents the future of searching the internet and of interacting with smart devices in the home. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21708292-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Oct 8th 2016 | From the print edition + + + +More KAL's cartoons + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21708284-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Britain and Europe: The road to Brexit + +Latin America: Saving Colombia’s peace + +The crisis of the Arab world: From Aleppo to Mosul + +Europe’s banks: The chronic continent + +America’s economy: A thoughtful to-do list + + + + + +Articles Sections Next + +Britain and Europe + +The road to Brexit + +Britain’s prime minister must resist her party’s dangerous instincts + +Oct 8th 2016 | From the print edition + + + +THE destination was decided in June, by simple majority: Britain is leaving the European Union. The journey, however, will be complex and perilous, beset by wrong turnings, chicanes and elephant traps. + +With 64m Britons in the back seat, perhaps that is why Theresa May has avoided talking about the road ahead. But at the Conservative Party conference this week the new prime minister could delay no longer. In a speech that thrilled party activists, she declared that she will invoke Article 50 of the EU treaty by the end of March, triggering a two-year countdown that should see Britain leave the union in early 2019. She also hinted that she would be prepared to steer Britain towards a harder sort of Brexit, involving a wide separation of labour, product and financial markets. + +Mrs May is at risk of putting her party before her country—with grave consequences. Brexit will determine Britain’s fortunes in the decades to come. If it is to be done at all, it must be done right. + +Hard, soft or half-baked? + +Mrs May faces an inevitable tension. Domestically, if she is not to be overwhelmed by the politics of Europe, as so many Tory prime ministers have been before her, she needs to convince those who voted to leave that their victory will be honoured. That is why her speech conveyed urgency and, when it came to immigration, sovereignty and the jurisdiction of the European court in Luxembourg, she took a hard line. + +In Europe, however, this domestic rhetoric will impede Mrs May’s task of negotiating the best possible form of Brexit. To maximise her bargaining power, Mrs May needs time. To get the best deal, she needs to be flexible on immigration. + +The centrepiece of the deal ought to be to secure maximum access to Europe’s single market. Brexiteers say that, once outside, Britain would eventually negotiate low or no tariffs on its trade with the EU. Yet, even if it did, tariffs are less than half the problem. Without harmonised regulations, British firms will discover that their products do not meet European requirements, and vice versa. And it is unlikely that a trade deal between Britain and the EU would cover services, including the financial sort that are among Britain’s biggest exports. A study by the Treasury before the referendum estimated that the hit to GDP within two years of Brexit would be nearly twice as large if Britain left the single market than if it remained a member. + +Mrs May seems to want to carve out a special deal with the EU, in which Britain limits immigration and determines product standards—on, say, food-labelling—while still operating fully in the single market. Perhaps the negotiations will show that this is possible. However, the signs are that she is overestimating the EU’s willingness to give ground. Each country has a veto over Britain’s status (see article). On almost every issue, from immigration to financial services, at least one of them will be reluctant to surrender its advantages. + +If that means Mrs May must give ground on immigration, remember that such “concessions” actually benefit Britain. The supply of workers and students from the EU has helped Britain grow faster than any other member state in recent years. To avoid suffocating industry, ministers have already indicated that they may let in financial-services employees, as well as seasonal agricultural workers. There are sure to be more exceptions as bottlenecks emerge. + +The second ingredient of a good Brexit is a sensible transition to the new regime—especially if Britain is about to walk away from the single market. The bureaucracy and cost of a sudden imposition of tariffs and non-tariff barriers would lead to a brutal dislocation. Separation from the EU will involve divvying up EU-owned assets, pensions and much else. Everything from fishing rights to aircraft-landing slots are agreed on at an EU level; these rules must be redrafted and re-regulated. + +Amid the world’s most complex divorce, Britain’s diplomats also have another vital task. Through its membership of the EU, Britain is a member of the World Trade Organisation (WTO) and party to free-trade deals with 53 other countries. When it leaves, it will lose all that. So Britain must urgently prepare to rejoin the WTO as an individual country—which, again, requires the consent of every other member. + +Mrs May seemed to acknowledge the benefits of a smooth transition this week. Her proposed “Great Repeal Bill”, which will get rid of all existing EU law from the statute book, will in fact merely translate it into British law, to be chipped away later at leisure if desired. She should likewise negotiate an interim trade deal—through temporary membership of the European Economic Area, say, of which Norway is part. This would mean paying into the EU budget and accepting free movement but, in return, Britain could take as long as it needs to line up WTO accession and trade agreements with the EU and other countries, while still under the shelter of the single market. + +Ardent Brexiteers worry that, ensconced in such a halfway house, Britain would stay put for ever. That is indeed a possibility, and there is no reason it should not be: with half the population having voted to Remain and many of those who voted to Leave reluctant to quit the single market, a majority might favour such a “soft” Brexit. + +Open all hours + +The final ingredient of the approach Mrs May put forward was her broad agenda to open Britain to the world beyond the EU—which she calls “Global Britain”. In theory this should entail a willingness to welcome international capital and labour, which would benefit the country whatever its relations with the EU. Sadly, the reality looks less rosy. The home secretary, Amber Rudd, this week complained that some companies were employing too many foreigners and talked about “flushing out” the worst offenders. Likewise, Mrs May’s conference rhetoric was strikingly interventionist, putting the state at the heart of the economy. A flirtation with industrial policy sounds worryingly as if it is designed to keep foreigners out. + +A Brexit of some sort looms and Mrs May will determine its course. If Britain is not to suffer a car crash, she must ignore the back-seat drivers and fix her eyes firmly on the road ahead. + + + +Mind your step + +Theresa May fires the starting gun for what looks likely to be a hard Brexit, taking Britain out of Europe’s single market + + + +May’s revolutionary conservatism + +Britain’s new prime minister signals a new, illiberal direction for the country + + + +Theresa May kicks off Brexit + +The prime minister promises to invoke Article 50 by the end of March. But just how hard a Brexit does she want? + + + +Parliament must push for a bigger role in the Brexit negotiations + + + +Down to earth + +Brexiteers need to respect gravity models of international trade + + + + + +More Brexit coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21708257-britains-prime-minister-must-resist-her-partys-dangerous-instincts-road-brexit/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Latin America + +Saving Colombia’s peace + +After voters reject the agreement, the country needs a political accord + +Oct 8th 2016 | From the print edition + + + +ASK the people a question, and you may not get the answer you expected. That happened to David Cameron with the Brexit referendum, and now it has happened to Juan Manuel Santos, Colombia’s president. In a plebiscite on October 2nd Colombians made fools of the opinion pollsters and voted to reject his government’s peace agreement with the FARC guerrillas by the narrowest of margins—less than 0.5%. + +For Mr Santos that was an embarrassment. He had lined up an array of international support for the deal. For Colombia it is dangerous. The agreement came after four years of hard talking, and almost certainly represented the best available compromise between peace and justice. FARC leaders who confessed to war crimes would not go to jail, but they would be judged and punished under a strict legal framework. + +Several factors explain the voters’ rejection (see article). The weather didn’t help: Hurricane Matthew struck a glancing blow to Colombia’s Yes-leaning Caribbean coast, where turnout was exceptionally low. Mr Santos, an aloof patrician presiding over a slowing economy, is unpopular. His predecessor-turned-foe, Álvaro Uribe, who inspired the No campaign, has the common touch. But the overwhelming factor was that, after decades of terrorism, extortion, kidnapping and drug-trafficking, many Colombians look upon the FARC with mistrust and hatred. + +The No campaign capitalised on these emotions with a simple and partly deceptive story: the agreement granted impunity to the FARC, it said, and tougher terms can be extracted from them. In fact, the talks stalled for a year over the FARC’s refusal to become the first guerrilla movement in history to agree to hand over its weapons in order to go straight to jail. + +So what now? Both Mr Santos and the FARC say they will honour a ceasefire but, on the government’s side, only until the end of the month. Mr Uribe has a political responsibility to back up his claim that such a complex agreement can be substantially renegotiated: he should offer a serious alternative to an early return to war. It is encouraging that he has met Mr Santos and named three representatives to talk to the government. It is helpful, too, that he has rejected calls for a constituent assembly. Rather than offering a solution, that would have been an unwarranted distraction. On the other hand, Mr Uribe’s proposal for isolated measures (such as an amnesty for rank-and-file guerrillas) outside the scope of the agreement looks like an attempt to impose elements of a unilateral deal on the FARC which has scant chance of success. + +The FARC should bend, too + +Mr Uribe and Mr Santos, once allies, abhor each other. If Colombia is to salvage anything from this mess, the two men have to find a way to work together. But the main onus now lies with the FARC. Their commitment to peace has recently started to look genuine. They cannot ignore the verdict of the voters, however much that might suit them. They should recognise that peace without political support is a mirage. + +The FARC should be pressed for at least two additional concessions. The first is to accept that their recent promise to declare ill-gotten assets and pay reparations to victims should become a binding addendum to the agreement. The second is that the “effective restrictions on liberty” to be imposed on sentenced guerrilla commanders should look more like a prison farm than a holiday camp. + +Time is short: the FARC’s troops cannot remain in limbo indefinitely, nor can the UN team that was to supervise their disarmament. Barring a tripartite commitment to reach a consensus, a slide back into war is all too likely. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21708249-after-voters-reject-agreement-country-needs-political-accord-saving-colombias-peace/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The crisis of the Arab world + +From Aleppo to Mosul + +The liberation of Iraq’s second-largest city offers a rare chance to assuage Sunni anger + +Oct 8th 2016 | From the print edition + + + +SURVEY the rubble of the Fertile Crescent, and a disturbing pattern emerges: from the Mediterranean to the Gulf, those bearing the brunt of war are for the most part Sunni Arabs. Though they form the largest ethnic group and are heirs of fabled empires, many of their great cities are in the hands of others: the Jews in Jerusalem; the Christians and Shias in Beirut; the Alawites in Damascus; and, latterly, the Shias in Baghdad. Sunnis make up most of the region’s refugees. Where Sunnis hold on to power, as in the Gulf states, they feel encircled by a hostile Iran and abandoned by an indifferent America. + +The malaise goes beyond sectarianism. The Arab state is in crisis almost everywhere, aggravated by decades of misrule, not least by Sunni leaders. Think only of Iraq’s appalling ex-president, Saddam Hussein, the quintessential Sunni Arab strongman; or of Egypt’s flawed leader, Abdel-Fattah al-Sisi. The Sunnis’ sense that they are assailed from all sides helps to explain how the jihadists of Islamic State (IS), offering to restore the ancient caliphate, were able to take over vast Sunni-populated areas in Syria and Iraq. No battlefield victory against jihadists will be complete, and no diplomatic solution will be lasting, until the Sunnis’ dispossession is dealt with. + +Right now the future of the region is being decided in two venerable cities: Aleppo, the last urban redoubt of the Syrian rebellion against Mr Assad; and Mosul, IS’s most prized possession in Iraq. The conduct of the battles, and the political order that follows them, will determine the course of the region’s barbaric wars. The best hope for peace lies in federalism and decentralisation to give Sunnis, and others, a proper voice. + +A tale of two cities + +Aleppo is the symbol of the worst sort of external intervention. Russia is helping Syrian troops, and their Iranian and Shia allies, pound the besieged Sunni rebels. It looks like an attempt to take the entire city before Barack Obama leaves office next year, convinced that he will do nothing to stop them. The deliberate brutality, in which hospitals are repeatedly attacked, will only feed Sunni resentment and extremism; so will Russia’s insistence that Mr Assad should remain in charge of any future power-sharing government. + +Mosul, by contrast, could yet become a model for defeating the jihadists and creating a saner politics that recognises Sunni Arabs’ stake in Iraq (see article). Iraqi, Kurdish and local Sunni forces are closing on the city, with American support; the jihadists are fraying. The operation to retake Mosul is due to begin this month, and may give Mr Obama a farewell triumph. The loss of Mosul would deal a blow to IS; it was from there that Abu Bakr al-Baghdadi, the IS leader, declared his caliphate. + +Much can go wrong in Mosul. Nobody knows how hard IS will fight. There are worries that the Iraqi government has not done enough to prepare for a mass exodus of civilians; or that it will be unable to prevent an armed free-for-all by Shia, Kurdish and rival Sunni militias. But for all of its violence and chaos, Iraq offers real hope. Its politics are more open than those of most Arab countries, with a feisty press and an obstreperous parliament. Cross-sectarian alliances are starting to form. Shia politicians want to shake off their image as clients of Iran, while Sunni Arab ones are moving away from the politics of rejection and the dream of reconquering Baghdad. + +After the failures of Arab nationalism, Islamism and jihadism, Iraq could yet give the Arab world a welcome new model of devolved power. This would make it harder for murderous dictators to terrorise their people, and give diverse ethnic groups the sense that they rule themselves. Would-be separatists, notably the Kurds, might be convinced to remain within existing frontiers. + +Looser, more flexible forms of government could ease some of the conflicts of the Arab world, even the terrible bloodletting in Syria. The balance of power will vary but should follow a few basic principles. First, because no region is ethnically pure, sub-entities must respect minority rights. Second, all groups should have a share of power in the central government. Third, national resources, eg, oil, must benefit the whole population. And fourth, the hardest, is to find the right balance of armed force between national armies and local police forces, so that minorities feel protected and local warlords are discouraged from rebelling or breaking away + +Iraq’s constitution provides for much of this, on paper at least. It should be made a reality. Devolution may not end political quarrels; but if it stops the bloodshed that will be progress indeed. So Mosul must be captured judiciously, with care for civilians and political agreement on how it will be run after the defeat of IS. The city is not only a test of the maturity of Iraq’s politics, but also of the responsibility of outside powers. Saudi Arabia and Iran should support reconciliation and reconstruction. Western forces should not rush out. + +Mosul offers a chance to convince beleaguered Sunnis that there is a better alternative to the nihilism of jihad. If Iraqi politics only feeds their sense of dispossession, expect the violence to go on. What happens in Mosul matters beyond Iraq; it could even give hope to poor, benighted Aleppo. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21708259-liberation-iraqs-second-largest-city-offers-rare-chance-assuage-sunni-anger/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Europe’s banks + +The chronic continent + +Deutsche Bank’s distress is symptomatic of a wider malaise + +Oct 8th 2016 | From the print edition + + + +IT MUST have been an exquisite moment. On September 30th the central bank in Athens issued a statement reassuring investors that the Greek banking system was safe—from a crisis engulfing Germany’s flagship bank. Any Schadenfreude felt in Europe’s periphery at Deutsche Bank’s tumbling shares should be stifled, however. Deutsche is not about to fail: it can survive a harsh funding squeeze, its solvency is not in doubt and if push came to shove, the German government would surely support it. But many of its woes are symptomatic of problems that bedevil the whole continent. + +Plenty would deny that. Deutsche is more leveraged than its peers; it is unusual in lacking a crown jewel around which it can base a business model; and it has a stack of derivatives whose prices are hard to observe in the market. More positively, it is light on the non-performing loans that clog the balance-sheets of banks in places like Italy. But in other ways its problems have a very familiar ring. Deutsche is struggling to make a decent return. It has taken too long to face up to its problems. And the market it operates in is overbanked. Years after American banks were forced to clean themselves up, too many European lenders are still flailing as a result (see article). + +Europeans prefer to blame others for the turmoil. Deutsche has lashed out at “forces in the market” for its most recent bout of trouble. But its shares had already fallen by 42% this year before news broke last month of a proposed Department of Justice (DoJ) fine of $14 billion for mortgage-related misdeeds. German politicians insinuate that the mooted fine represents revenge for Europe’s recent tax case against Apple, an American champion. Yet the DoJ has slapped large fines on American banks, too. Deutsche’s vulnerability to shocks is the problem, not the shocks themselves. + +Fingers also point at global regulators. The boss of Credit Suisse, Tidjane Thiam, says his sector is “not really investible”. It is true that the rules have got much stricter in the past few years, particularly for institutions, like Deutsche, that have big investment-banking arms. It is also true that ultra-loose monetary policy, and in particular the negative interest rates that now prevail in much of Europe, eat away at banks’ profitability. But some banks cope better than others in this painful environment. The IMF has compared returns on equity before and after the financial crisis. Those at large European banks fell by 11.4 percentage points, whereas those at American lenders dipped by only three points. Rather than blaming speculators, Americans and regulators, Europe’s bankers and policymakers need to put their own house in order. + +Within institutions, that means cutting costs and raising capital. According to S&P Global Market Intelligence, the average cost-to-income ratio at an American bank in 2015 was 59%; Italy’s figure stood at 67% and Germany’s at 72%. Scandinavian banks already operate with much lower costs than their peers elsewhere in Europe. The axe is now swinging: Commerzbank, another struggling German lender, and ING, a Dutch bank, have announced thousands of job cuts in the past few days (see article). + +But more can be done. Pay is one obvious lever. Deutsche’s bankers trousered roughly the same amount in annual compensation between 2011 and 2015, even as the bank’s share price dived. And before shareholders complain too loudly about that, recall that in 2007-15 the dividend payments by 90 euro-zone banks amounted to €223 billion ($250 billion). Their retained earnings would have been 64% higher at the end of that period if they had not paid out dividends. + +Within markets, consolidation is needed. Too much consolidation risks exacerbating the problem of overmighty banks. Too little, however, and earnings sputter. Some European markets have been clearing away excess capacity. Almost half of the decrease in euro-zone bank branches between 2008 and 2014 was accounted for by Spain alone. Again there is more to do. According to the IMF, 46% of European banks account for just 5% of deposits. Germany’s massed ranks of savings and co-operative banks, for example, drive down margins for everyone. Without pruning, their returns on equity are projected to fall towards zero as a result of ultra-low rates, regulation and “fintech” rivals. + +You’re still dead in the end + +Recovery would happen a lot faster if euro-zone policymakers grasped the simple truth that a banking calamity can unfold slowly as well as quickly. Bold solutions are needed. A deposit-guarantee scheme that stretches across the euro zone would encourage cross-border consolidation. Using public money to recapitalise the weakest banks in countries like Italy and Portugal, and requiring them to slim down in return, is the fastest way to return them to health. Proper fiscal stimulus by European governments would cut the chances that central banks have to keep interest rates so low. For questions about the survival of big European banks to be swirling almost ten years after the financial crisis started is utterly damning. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21708261-deutsche-banks-distress-symptomatic-wider-malaise-chronic-continent/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +America’s economy + +A thoughtful to-do list + +In his essay for this newspaper, Barack Obama raises the right questions about America’s economic challenges + +Oct 8th 2016 | From the print edition + + + +ONE of the many unfortunate consequences of America’s presidential election turning into a reality TV show is the near-total absence of serious debate about economic policy. The vitriol on both sides of the partisan divide has made it all but impossible to have a minimal agreement even on the facts. Mendacity and insults have left no room for any substantive discussion about what the next president’s economic priorities ought to be. Whatever you think of Donald Trump, his populist, protectionist prescriptions are woefully short on policy detail; the few areas where concrete plans exist are internally inconsistent (slash taxes, increase spending and eliminate government debt). Hillary Clinton has reams of wonkish proposals, but she has trouble articulating an overall economic agenda and, amid the rhetorical mud-wrestling, her fiddly ideas have received little scrutiny. + +That is the background against which we publish an essay this week by Barack Obama, in which America’s president lays out what he sees as the biggest economic challenges his successor will have to tackle (see Briefing). In a thoughtful argument pitched towards the centre ground of American politics, Mr Obama staunchly defends free trade, globalisation and American-style capitalism. He makes clear that America has gained “perhaps more than any other [nation] from immigration, trade and technological innovation” and criticises the “crude populism” on the left of his own party as well as that of the right which has bubbled up in 2016. + +The president grapples with the question of why this populism has become so popular. Some of the explanation is no doubt cultural. But to the extent that it is animated by economics, he offers a detailed to-do list designed to improve the conditions of those who feel most aggrieved, focusing on boosting productivity growth, countering rising inequality, and improving job opportunities and Americans’ financial resilience. Unusually for a sitting president, Mr Obama is willing to admit that his administration’s record is not spotless and that he will leave the White House with some things left undone. + +A serious bid for the centre + +These are his thoughts, lightly edited to be consistent with this (British) newspaper’s house style. In several areas, our priorities would be different. Mr Obama, for instance, barely mentions the stifling role of regulation in deterring investment, dampening productivity growth and dulling innovation. He does not do justice to subjects of fundamental importance to America’s long-term fiscal future, such as reform of the public pensions system. He makes no mention of the distortions that stem from well-meaning interventions, such as the complex mesh of means-tested welfare programmes that hinders the progress of poor workers into better jobs. But it is a serious and thoughtful attempt to assess America’s economic strengths and weaknesses. In today’s raucous and sometimes hate-filled campaign environment, that makes it all too rare. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21708260-his-essay-newspaper-barack-obama-raises-right-questions-about-americas-economic/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On companies, political parties, fiscal policy, geology, lords, happiness: Letters to the editor + + + + + +Articles Sections Next + +On companies, political parties, fiscal policy, geology, lords, happiness + +Letters to the editor + +Oct 8th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Company concentration + +As mentioned in your special report on the dominance of “superstar” companies (September 17th), the big increase in profits and market share in America are much less pronounced in Europe. In Germany the share of the 100 largest companies in value-added terms compared with all German companies has in fact decreased slightly, to 15.8% in 2014. Nevertheless, the challenges for competition policy that you pointed out surely apply to Germany and the rest of Europe. Specific recommendations have been made by Germany’s Monopolies Commission in the context of digital markets and include, for instance, the consideration of transaction volumes as a trigger of German and European merger control. + +But other sorts of entities pose an additional challenge for competition policy. Large institutional investors, which you wrote about in the “Free exchange” column in the same issue, create indirect links between rivals through their portfolio shareholdings. This may lessen competitive behaviour between these rivals. Such common ownership needs more attention. For example, when reviewing the Bayer-Monsanto merger, competition authorities should consider that powerful institutional shareholders, such as BlackRock, Vanguard and Deutsche Asset Management, not only hold shares in Bayer and Monsanto, but also in many of their rivals, thereby creating an additional source of concentration. + +JOHN WECHE + +Senior analyst + +Monopolies Commission + +Bonn, Germany + + + + + +Too many parties + +Several times in the past few months, most recently in “Britain’s one-party state” (September 17th), you have said that the first-past-the-post electoral system results in two dominant parties. This is not true. For more than 70 years Canada has had as many as five significant parties in the House of Commons. In America, first-past-the-post matters not a jot compared with gerrymandering, unlimited political funding and the partisan division of spoils. + +The preference for proportional representation is misguided. Would you really choose Spain or Belgium (no government), Italy (ineptitude), Greece (incompetence), or Israel (extremist intransigence) over the clarity and simplicity of Westminster? In Britain, the Liberal Democrats’ decision to join the Conservative-led coalition in 2010 was an act of self-inflicted annihilation. Do not blame first-past-the-post for the bad judgment of political leaders. + +KERN DEORKSEN + +Canberra, Australia + + + + + +* Your recent coverage on the state of the Labour Party makes grim yet accurate reading. However you suggest that outside of the Labour Party there is no significant opposition to Jermey Corbyn: this is simply not the case. In September 2014, aged 18, I joined the party through my university’s Labour society. I campaigned in a number of target seats in 2015 ahead of the general election and after the election, like many others of my age and background, enthusiastically flocked to Jeremy Corbyn, believing that through sheer force of will he could sweep Labour to power. + +After a few months this positivity diminished and it became increasingly clear that that the enemy was not just the Tories, but those in our own party—the Blairites, the Red Tories, those who doubted that our leader was up to the task of power. I became increasingly disillusioned with the abuse faced by any dissenter, and the seeming indifference of the leadership. + + + +But never fear, there are still many beyond Westminster who will fight to stop the Labour Party becoming a protest movement. Do not give up on a party that has achieved so much for this country and, given the chance, still can. And to those militant supporters of Mr Corbyn who intend to insinuate themselves into the fabric of Labour and take it from us section by section, I have four words: come and take it! + + + +LEON ALLEYNE-MCLAUGHLIN + +Vice-Chair + +Kent Labour Students + +Canterbury + + + + + +Of interest + +Living in “The low-rate world” (September 24th), you say, means finding “a form of fiscal policy that can revive the economy in the bad times without entrenching government in the good”. This fiscal policy already exists. Starting in Chile in 2001, more recently in Colombia and Peru, and soon in Paraguay, a group of Latin American countries have implemented a structural fiscal rule in which government spending is determined by long-term fiscal revenue rather than current revenues. + +Independent experts help estimate the growth trend and the long-term price of the main commodity that influences public revenues. Once this structural revenue is estimated, the government has to make explicit its commitment to the structural fiscal balance, a given number for deficit or surplus. + +With this kind of fiscal rule a government can truly run a counter-cyclical fiscal policy, allowing moderate deficits in bad times, which are compensated by fiscal surpluses in the good. The best way to accumulate surpluses is by implementing sovereign funds which normally invest their resources abroad in order to avoid a Dutch disease (currency appreciation following resource booms). Counter-cyclical fiscal policy makes the job of central bankers easier as well. + +FELIPE LARRAÍN + +Chile’s Minister of Finance, 2010-14 + +Santiago + +Your briefing on persistently low interest rates included the sub-heading “Down, down, deeper and down” (“Low pressure”, September 24th). Do I detect a bias towards the Status Quo? + +CHRIS WRIGHT + +Lower Shiplake, Oxfordshire + + + + + +Man’s brief time on Earth + +As a geologist I have been following the Anthropocene debate with mild amusement (“Dawn of a new epoch?”, September 3rd). No other geological unit of time bears the name of species. To accord that honour to our own exemplifies the ego that characterises Man. Given the short time frame, the low preservation potential in terrestrial environments and the subduction of oceanic sediments, one must question just how much of our record will be preserved in 100 million years. + +Regardless of the outcome of debates and votes cast by official stratigraphic commissions, we should at least enjoy an ironic chuckle that when the Anthropocene ends, we won’t know it. + +ANDREW CULLEN + +Vice-president of geology + +Warwick Energy + +Oklahoma City + + + + + +M’ lords and ladies + +Wulfila, who translated the Bible for the Goths, was not alone in choosing a non-military word for a leader (Johnson, September 10th). The English word “lord” comes from the Old English hlaford which derives from a compound hlaf (meaning bread, or loaf) and weard (meaning guardian) so that “our lord” is the keeper of the bread. The word lady means “the maker of the bread”. + +RONALD MACAULAY + +Claremont, California + + + + + +Smiley culture + +Schumpeter’s column “Against happiness” (September 24th) could have mentioned the well-accepted scientific evidence that faking happiness actually does make people happier. One study proved that clenching a pencil between your teeth and forcing the face into a smile released hormones that made the individual happier. A smile unconsciously draws positive responses from others. Like nudge theory in economics, it seems entirely appropriate that companies encourage their employees to use this technique. If those employees choose to reject this, as Schumpeter seems to, then it is not only themselves but their colleagues who will suffer. + +CAROLYN GIBSON + +Birmingham + +There is surely nothing more British than to proclaim the right to be miserable and taciturn. + +ALEX WAYGOOD + +Watford, Hertfordshire + +Schumpeter’s piece was fascinating. His descriptions of the heavy-handed attempts to enforce outwardly cheery behaviour reminded me of an old joke about a corporate memo to all employees informing them that, “The floggings will continue until happiness improves.” + +DAVID ROWE + +Saddlebrooke, Arizona + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21708212-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +Barack Obama: The way ahead + + + + + +Articles Sections Next + +Barack Obama + +The way ahead + +America’s president writes for us about four crucial areas of unfinished business in economic policy that his successor will have to tackle + +Oct 8th 2016 | Washington, DC | From the print edition + + + +WHEREVER I go these days, at home or abroad, people ask me the same question: what is happening in the American political system? How has a country that has benefited—perhaps more than any other—from immigration, trade and technological innovation suddenly developed a strain of anti-immigrant, anti-innovation protectionism? Why have some on the far left and even more on the far right embraced a crude populism that promises a return to a past that is not possible to restore—and that, for most Americans, never existed at all? + +It’s true that a certain anxiety over the forces of globalisation, immigration, technology, even change itself, has taken hold in America. It’s not new, nor is it dissimilar to a discontent spreading throughout the world, often manifested in scepticism towards international institutions, trade agreements and immigration. It can be seen in Britain’s recent vote to leave the European Union and the rise of populist parties around the world. + +Much of this discontent is driven by fears that are not fundamentally economic. The anti-immigrant, anti-Mexican, anti-Muslim and anti-refugee sentiment expressed by some Americans today echoes nativist lurches of the past—the Alien and Sedition Acts of 1798, the Know-Nothings of the mid-1800s, the anti-Asian sentiment in the late 19th and early 20th centuries, and any number of eras in which Americans were told they could restore past glory if they just got some group or idea that was threatening America under control. We overcame those fears and we will again. + +But some of the discontent is rooted in legitimate concerns about long-term economic forces. Decades of declining productivity growth and rising inequality have resulted in slower income growth for low- and middle-income families. Globalisation and automation have weakened the position of workers and their ability to secure a decent wage. Too many potential physicists and engineers spend their careers shifting money around in the financial sector, instead of applying their talents to innovating in the real economy. And the financial crisis of 2008 only seemed to increase the isolation of corporations and elites, who often seem to live by a different set of rules to ordinary citizens. + +So it’s no wonder that so many are receptive to the argument that the game is rigged. But amid this understandable frustration, much of it fanned by politicians who would actually make the problem worse rather than better, it is important to remember that capitalism has been the greatest driver of prosperity and opportunity the world has ever known. + +Over the past 25 years, the proportion of people living in extreme poverty has fallen from nearly 40% to under 10%. Last year, American households enjoyed the largest income gains on record and the poverty rate fell faster than at any point since the 1960s. Wages have risen faster in real terms during this business cycle than in any since the 1970s. These gains would have been impossible without the globalisation and technological transformation that drives some of the anxiety behind our current political debate. + +This is the paradox that defines our world today. The world is more prosperous than ever before and yet our societies are marked by uncertainty and unease. So we have a choice—retreat into old, closed-off economies or press forward, acknowledging the inequality that can come with globalisation while committing ourselves to making the global economy work better for all people, not just those at the top. + +A force for good + +The profit motive can be a powerful force for the common good, driving businesses to create products that consumers rave about or motivating banks to lend to growing businesses. But, by itself, this will not lead to broadly shared prosperity and growth. Economists have long recognised that markets, left to their own devices, can fail. This can happen through the tendency towards monopoly and rent-seeking that this newspaper has documented, the failure of businesses to take into account the impact of their decisions on others through pollution, the ways in which disparities of information can leave consumers vulnerable to dangerous products or overly expensive health insurance. + +More fundamentally, a capitalism shaped by the few and unaccountable to the many is a threat to all. Economies are more successful when we close the gap between rich and poor and growth is broadly based. A world in which 1% of humanity controls as much wealth as the other 99% will never be stable. Gaps between rich and poor are not new but just as the child in a slum can see the skyscraper nearby, technology allows anyone with a smartphone to see how the most privileged live. Expectations rise faster than governments can deliver and a pervasive sense of injustice undermines peoples’ faith in the system. Without trust, capitalism and markets cannot continue to deliver the gains they have delivered in the past centuries. + +This paradox of progress and peril has been decades in the making. While I am proud of what my administration has accomplished these past eight years, I have always acknowledged that the work of perfecting our union would take far longer. The presidency is a relay race, requiring each of us to do our part to bring the country closer to its highest aspirations. So where does my successor go from here? + +Further progress requires recognising that America’s economy is an enormously complicated mechanism. As appealing as some more radical reforms can sound in the abstract—breaking up all the biggest banks or erecting prohibitively steep tariffs on imports—the economy is not an abstraction. It cannot simply be redesigned wholesale and put back together again without real consequences for real people. + +Instead, fully restoring faith in an economy where hardworking Americans can get ahead requires addressing four major structural challenges: boosting productivity growth, combating rising inequality, ensuring that everyone who wants a job can get one and building a resilient economy that’s primed for future growth. + +Restoring economic dynamism + + + +First, in recent years, we have seen incredible technological advances through the internet, mobile broadband and devices, artificial intelligence, robotics, advanced materials, improvements in energy efficiency and personalised medicine. But while these innovations have changed lives, they have not yet substantially boosted measured productivity growth. Over the past decade, America has enjoyed the fastest productivity growth in the G7, but it has slowed across nearly all advanced economies (see chart 1). Without a faster-growing economy, we will not be able to generate the wage gains people want, regardless of how we divide up the pie. + +A major source of the recent productivity slowdown has been a shortfall of public and private investment caused, in part, by a hangover from the financial crisis. But it has also been caused by self-imposed constraints: an anti-tax ideology that rejects virtually all sources of new public funding; a fixation on deficits at the expense of the deferred maintenance bills we are passing to our children, particularly for infrastructure; and a political system so partisan that previously bipartisan ideas like bridge and airport upgrades are nonstarters. + +We could also help private investment and innovation with business-tax reform that lowers statutory rates and closes loopholes, and with public investments in basic research and development. Policies focused on education are critical both for increasing economic growth and for ensuring that it is shared broadly. These include everything from boosting funding for early childhood education to improving high schools, making college more affordable and expanding high-quality job training. + +Lifting productivity and wages also depends on creating a global race to the top in rules for trade. While some communities have suffered from foreign competition, trade has helped our economy much more than it has hurt. Exports helped lead us out of the recession. American firms that export pay their workers up to 18% more on average than companies that do not, according to a report by my Council of Economic Advisers. So, I will keep pushing for Congress to pass the Trans-Pacific Partnership and to conclude a Transatlantic Trade and Investment Partnership with the EU. These agreements, and stepped-up trade enforcement, will level the playing field for workers and businesses alike. + +Second, alongside slowing productivity, inequality has risen in most advanced economies, with that increase most pronounced in the United States. In 1979, the top 1% of American families received 7% of all after-tax income. By 2007, that share had more than doubled to 17%. This challenges the very essence of who Americans are as a people. We don’t begrudge success, we aspire to it and admire those who achieve it. In fact, we’ve often accepted more inequality than many other nations because we are convinced that with hard work, we can improve our own station and watch our children do even better. + +As Abraham Lincoln said, “while we do not propose any war upon capital, we do wish to allow the humblest man an equal chance to get rich with everybody else.” That’s the problem with increased inequality—it diminishes upward mobility. It makes the top and bottom rungs of the ladder “stickier”—harder to move up and harder to lose your place at the top. + +Economists have listed many causes for the rise of inequality: technology, education, globalisation, declining unions and a falling minimum wage. There is something to all of these and we’ve made real progress on all these fronts. But I believe that changes in culture and values have also played a major role. In the past, differences in pay between corporate executives and their workers were constrained by a greater degree of social interaction between employees at all levels—at church, at their children’s schools, in civic organisations. That’s why CEOs took home about 20- to 30-times as much as their average worker. The reduction or elimination of this constraining factor is one reason why today’s CEO is now paid over 250-times more. + +Economies are more successful when we close the gap between rich and poor and growth is broadly based. This is not just a moral argument. Research shows that growth is more fragile and recessions more frequent in countries with greater inequality. Concentrated wealth at the top means less of the broad-based consumer spending that drives market economies. + + + +America has shown that progress is possible. Last year, income gains were larger for households at the bottom and middle of the income distribution than for those at the top (see chart 2). Under my administration, we will have boosted incomes for families in the bottom fifth of the income distribution by 18% by 2017, while raising the average tax rates on households projected to earn over $8m per year—the top 0.1%—by nearly 7 percentage points, based on calculations by the Department of the Treasury. While the top 1% of households now pay more of their fair share, tax changes enacted during my administration have increased the share of income received by all other families by more than the tax changes in any previous administration since at least 1960. + +Even these efforts fall well short. In the future, we need to be even more aggressive in enacting measures to reverse the decades-long rise in inequality. Unions should play a critical role. They help workers get a bigger slice of the pie but they need to be flexible enough to adapt to global competition. Raising the Federal minimum wage, expanding the Earned Income Tax Credit for workers without dependent children, limiting tax breaks for high-income households, preventing colleges from pricing out hardworking students, and ensuring men and women get equal pay for equal work would help to move us in the right direction too. + + + +Third, a successful economy also depends on meaningful opportunities for work for everyone who wants a job. However, America has faced a long-term decline in participation among prime-age workers (see chart 3). In 1953, just 3% of men between 25 and 54 years old were out of the labour force. Today, it is 12%. In 1999, 23% of prime-age women were out of the labour force. Today, it is 26%. People joining or rejoining the workforce in a strengthening economy have offset ageing and retiring baby-boomers since the end of 2013, stabilising the participation rate but not reversing the longer-term adverse trend. + +Involuntary joblessness takes a toll on life satisfaction, self-esteem, physical health and mortality. It is related to a devastating rise of opioid abuse and an associated increase in overdose deaths and suicides among non-college-educated Americans—the group where labour-force participation has fallen most precipitously. + +There are many ways to keep more Americans in the labour market when they fall on hard times. These include providing wage insurance for workers who cannot get a new job that pays as much as their old one. Increasing access to high-quality community colleges, proven job-training models and help finding new jobs would assist. So would making unemployment insurance available to more workers. Paid leave and guaranteed sick days, as well as greater access to high-quality child care and early learning, would add flexibility for employees and employers. Reforms to our criminal-justice system and improvements to re-entry into the workforce that have won bipartisan support would also improve participation, if enacted. + +Building a sturdier foundation + +Finally, the financial crisis painfully underscored the need for a more resilient economy, one that grows sustainably without plundering the future at the service of the present. There should no longer be any doubt that a free market only thrives when there are rules to guard against systemic failure and ensure fair competition. + +Post-crisis reforms to Wall Street have made our financial system more stable and supportive of long-term growth, including more capital for American banks, less reliance on short-term funding, and better oversight for a range of institutions and markets. Big American financial institutions no longer get the type of easier funding they got before—evidence that the market increasingly understands that they are no longer “too big to fail”. And we created a first-of-its-kind watchdog—the Consumer Financial Protection Bureau—to hold financial institutions accountable, so their customers get loans they can repay with clear terms up-front. + +But even with all the progress, segments of the shadow banking system still present vulnerabilities and the housing-finance system has not been reformed. That should be an argument for building on what we have already done, not undoing it. And those who should be rising in defence of further reform too often ignore the progress we have made, instead choosing to condemn the system as a whole. Americans should debate how best to build on these rules, but denying that progress leaves us more vulnerable, not less so. + +America should also do more to prepare for negative shocks before they occur. With today’s low interest rates, fiscal policy must play a bigger role in combating future downturns; monetary policy should not bear the full burden of stabilising our economy. Unfortunately, good economics can be overridden by bad politics. My administration secured much more fiscal expansion than many appreciated in recovering from our crisis—more than a dozen bills provided $1.4 trillion in economic support from 2009 to 2012—but fighting Congress for each commonsense measure expended substantial energy. I did not get some of the expansions I sought and Congress forced austerity on the economy prematurely by threatening a historic debt default. My successors should not have to fight for emergency measures in a time of need. Instead, support for the hardest-hit families and the economy, like unemployment insurance, should rise automatically. + +Maintaining fiscal discipline in good times to expand support for the economy when needed and to meet our long-term obligations to our citizens is vital. Curbs to entitlement growth that build on the Affordable Care Act’s progress in reducing health-care costs and limiting tax breaks for the most fortunate can address long-term fiscal challenges without sacrificing investments in growth and opportunity. + + + +Finally, sustainable economic growth requires addressing climate change. Over the past five years, the notion of a trade-off between increasing growth and reducing emissions has been put to rest. America has cut energy-sector emissions by 6%, even as our economy has grown by 11% (see chart 4). Progress in America also helped catalyse the historic Paris climate agreement, which presents the best opportunity to save the planet for future generations. + +A hope for the future + +America’s political system can be frustrating. Believe me, I know. But it has been the source of more than two centuries of economic and social progress. The progress of the past eight years should also give the world some measure of hope. Despite all manner of division and discord, a second Great Depression was prevented. The financial system was stabilised without costing taxpayers a dime and the auto industry rescued. I enacted a larger and more front-loaded fiscal stimulus than even President Roosevelt’s New Deal and oversaw the most comprehensive rewriting of the rules of the financial system since the 1930s, as well as reforming health care and introducing new rules cutting emissions from vehicles and power plants. + +The results are clear: a more durable, growing economy; 15m new private-sector jobs since early 2010; rising wages, falling poverty, and the beginnings of a reversal in inequality; 20m more Americans with health insurance, while health-care costs grow at the slowest rate in 50 years; annual deficits cut by nearly three-quarters; and declining carbon emissions. + +For all the work that remains, a new foundation is laid. A new future is ours to write. It must be one of economic growth that’s not only sustainable but shared. To achieve it America must stay committed to working with all nations to build stronger and more prosperous economies for all our citizens for generations to come. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21708216-americas-president-writes-us-about-four-crucial-areas-unfinished-business-economic/print + + + + + +Articles Sections Next + + + + + +United States + + + + +Third-party candidates: Mr Johnson and Dr Stein + +The campaigns: Heard on the trail + +Donald Trump’s finances: Taxing patience + +Battleground states: Carolina crossfire + +Slavery on film: Blood on the leaves + +Election brief: student loans: More present than correct + +Lexington: Mainstream opposites + + + + + +Articles Sections Next + +Third-party candidates + +Mr Johnson and Dr Stein + +The Libertarian and Green candidates could help to make Donald Trump president + +Oct 8th 2016 | WASHINGTON, DC | From the print edition + + + +GARY JOHNSON, the presidential nominee of the Libertarians, and Jill Stein, his counterpart for the Greens, are idealists. Both believe they are fighting for a better politics, a kinder America and, in Dr Stein’s case, though not the globally incurious Mr Johnson’s, a safer world. So there is one question that really gets their goat: how do you feel about helping Donald Trump become president? + +“I’m the spoiler? I’m the wasted vote? It just pisses me off,” harrumphs Mr Johnson, a former Republican governor of New Mexico, known for his love of pot and extreme sports. “It’s not my job to tell people who is the second best,” grumbles Dr Stein, a Harvard-educated physician and former Democrat. “It is a unique election not only because Donald Trump is scary.” + +If the main purpose of a presidential election is to push unorthodox ideas and build space for new movements, their irritation is fully justified. If it is to elect a president, Mr Johnson and Dr Stein are on softer ground. For the 10% of the vote they are polling, including 7.5% for Mr Johnson, is hurting Hillary Clinton as much as it is hurting the unidealistic Mr Trump. In some important swing states, such as Colorado and Virginia, it is hurting her more. + +In a normal year, that tally would be expected to collapse as the election nears; in 2012 Mr Johnson and Dr Stein, running against Barack Obama and Mitt Romney, together won less than 1.5% of the vote. Yet America’s dislike of Mr Trump and Mrs Clinton—respectively, the most unpopular and second most unpopular nominees of a major party ever—suggests this may not happen. In a tight race, which is likely, despite Mrs Clinton’s recent rise to a four-point lead, the third-party nominees could help put Mr Trump in the White House. + + + +Dr Stein was bound to cost the Democrats votes; not many “Never Trump” Republicans like her plans to close 700 military bases and make America run on renewable energy. The Greens also have form; the 97,000 votes Ralph Nader won in Florida in 2000 probably cost Al Gore the presidency. That Mr Johnson, a social liberal but caustic fiscal conservative, who wants to slash spending on Medicare and Medicaid and take no action on global warming, is drawing as many votes from the left as the right is more surprising. + +It chiefly reflects Mr Johnson’s success in attracting disaffected, especially white, younger voters. Many backed Senator Bernie Sanders in the Democratic primaries—including Reese Sadler, a 20-year-old from Lynchburg, Virginia. “I was very disappointed Clinton had to steal the election from Sanders,” he lamented, at a rally for Mr Johnson in Washington, DC. (His analysis perhaps underrates the fact that Mrs Clinton beat Mr Sanders by over 3m votes.) + +In national polls, Mr Johnson is running second to Mrs Clinton with voters aged under 30, and in some states he is pushing her pretty hard. A recent poll in Virginia suggests he has the support of 27% of millennials there, compared to 34% for Mrs Clinton and 23% for Mr Trump. This is unlikely to cost Mrs Clinton Virginia. In a straight race with Mr Trump, she leads there by ten points. Include Mr Johnson, Dr Stein and also Evan McMullin, a Never Trumper running as an independent, who is on the ballot in 11 states, and Mrs Clinton’s lead drops to a still-solid six points. Moreover, a perception that Mrs Clinton has Virginia in the bag is probably inflating Mr Johnson’s vote there; if the race were to tighten, many youngsters would probably abandon their protest and vote blue. + +But the same effect could cost Mrs Clinton Maine, where her lead drops from five points in a straight race with Mr Trump to four in a four-way contest; or Colorado, where her lead is 3.5% points in a two-candidate race, and less with the third parties included. It could even cost her New Mexico, a bluer state, where Mr Johnson, whose two terms as governor are fondly remembered, takes a three-point bite out of her 11-point lead against Mr Trump alone. + +It is also possible Mr Johnson could hurt Mr Trump more—just as Ross Perot an independent who won 19% of the vote in 1992, damaged George H.W. Bush more than Bill Clinton in at least some states. He has picked up the endorsements of several conservative newspapers, including the Detroit News, which had hardly ever before failed to endorse a Republican in its 143-year history. Yet it is notable that Mr Johnson has been making a louder pitch for Sandernistas, by pushing himself more as an anti-establishment figure than a deficit hawk. It also seems likely that moderate Republicans offended by Mr Trump will be more concerned than the youngsters by Mr Johnson’s ignorance of foreign affairs. + +In a recent television interview, Mr Johnson confessed he was unfamiliar with the word “Aleppo”; in another, he was unable to name a single foreign leader he admired. He described that failure as another “Aleppo moment”—but now claims, implausibly, that it reflected the poor state of global leadership, not the state of his brain: “It’s been five days since the interview and I still can’t come up with a name. Maybe I think too much.” It is hard to imagine Jeb Bush, another former Republican governor, who is believed to be considering voting for Mr Johnson, enjoying that. + +For both campaigns, clawing back third-party votes is now the second biggest priority after maximising turnout. Swaying undecided voters, a pool that has shrivelled to around 6% of the total, is a lesser task. To this end, Mrs Clinton is now mobilising her most millennial-friendly surrogates, including Mr Obama. + +“If you vote for a third-party candidate who’s got no chance to win, that’s a vote for Trump,” the president recently warned, and history suggest a lot of voters will heed him. But the disillusionment with establishment politics that Mr Johnson and Dr Stein are tapping is here to stay. This is a promise of more and bigger flies in the two-party ointment to come. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21708238-libertarian-and-green-candidates-could-help-make-donald-trump-president-mr-johnson/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +Oct 8th 2016 | From the print edition + + + +Insomnia + +“Did Crooked Hillary help disgusting (check out sex tape and past) Alicia M become a U.S. citizen so she could use her in the debate?” + +Donald Trump’s early morning tweet + +Minority outreach continues + +“I think it’s so important Donald Trump went to that black church and spoke to the black people directly. And if they can be educated they certainly will come over to the side of Donald Trump and the Republicans.” + +Actor Jon Voight has been campaigning for Mr Trump. Sean Hannity Show + +The flopsy bunnies + +“Republicans are a bunch of frightened rabbits. Unfortunately, we have a party made up of a bunch of people who get frightened very easily, and their hands start to shake whenever something happens that they don’t like.” + +Trump fan Rudy Giuliani berates his fellow Republicans. Washington Post + +Surgical attack + +“It would have been a joke if it had been said, but I don’t recall that.” + +Hillary Clinton denied a claim from Wikileaks that she suggested a drone strike on Julian Assange. Washington Examiner + +Respect yourself + +“I have the issues on my side, and I have Trump, which I’ll take.” + +Mr Trump, quoted in the New York Times + +Gap year + +“And my husband has got to get a job—somebody has got to hire that man.” + +Michelle Obama doesn’t want POTUS hanging about the house next year. + +Be prepared + +“I’m not taking any chance and leaving it ’til the election. When you’re 103, you make every minute count.” + +Ruline Steininger, 103 years old, voted early in Iowa. CNN + +No regrets + +“Think about whether you made the right decision. Because it could be a long day in that office over there if you don’t agree with the president.” + +Vice-President Joe Biden advises the two men hoping to replace him. White House Pool Report. Via Tara McKelvey, BBC + +Fortune-telling + +“The consensus was clear after the dust settled, Mike Pence was the clear winner of the debate.” + +The Republican Party gave its verdict on the debate 90 minutes before it started. Vox + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21708237-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Donald Trump’s finances + +Taxing patience + +The candidate either made a huge loss or concocted one + +Oct 8th 2016 | WASHINGTON, DC | From the print edition + +Man contemplating $1 billion loss + +MITT ROMNEY, at least, knew it was coming. “I think we have good reason to believe that there’s a bombshell in Donald Trump’s taxes,” the 2012 Republican nominee warned in February. On October 1st the New York Times revealed Mr Trump’s 1995 state tax returns, which had been sent to the newspaper anonymously. They show a $916m loss—entered part-manually, because, his accountant said while confirming the leak’s authenticity, the figure was too big for his software to process. Set against later income, the loss could have allowed Mr Trump not to pay federal income taxes for many years. + +Unlike any other major-party nominee since 1976, Mr Trump has kept his returns under wraps. His fondness for so-called “pass-through” businesses explains this. These shunt profits and losses directly onto their owners’ tax returns (in contrast to corporations, which file their own papers). Pass-throughs have become curiously common in America. According to one recent study, such firms now account for over half of all business income. + +Pass-through firms, like any other, can offset taxable profits in one year with losses from another. In general, this rule makes sense economically. Without it, firms might be loth to sell in volatile markets. Making $50m profit one year and losing $49m the next would incur more tax, over both years, than earning $20m for two years running. For that reason, offsetting is common. Of the 35 countries in the OECD, 21 allow corporations to use losses from at least 20 years earlier to offset profits, according to Kyle Pomerleau of the Tax Foundation, a think-tank. + +Individuals, however, can face stricter laws. In Britain, for instance, corporations can roll forward losses indefinitely, but individuals can do so only for four years. America makes no such distinction. When Mr Trump filed his mammoth loss, losses could be rolled forward 15 years or rolled back three, meaning that if he earned on average less than $51m a year in regular income, Mr Trump might not have paid income-tax for nearly two decades. + +Mr Trump may also have benefited from another peculiarly American generosity: towards property moguls. Since 1986 most taxpayers have been unable to deduct losses which exceed their investment in a business, says Steve Rosenthal of the Tax Policy Centre, another think-tank. Real-estate investors are exempt. + +That matters because buildings are particularly good at generating paper losses. Investors can generally claim that non-residential property is depreciating over 39 years, even if its market value in fact rises. In theory, any capital gain is taxed later, when the property changes hands. But investors can avoid such a charge by replacing any building they sell with another of a “like-kind”. When the investor eventually dies and passes on his portfolio, the capital gains are forgotten. + +Mr Trump’s returns account for fully 1.9% of all similar losses filed in 1995. Without further revelations it will be impossible to say for sure which was more exceptional: his struggles, or his tax-planning. Meanwhile, he must battle another scandal. On September 30th New York’s attorney-general, who backs Hillary Clinton for president, ordered the Trump Foundation to cease fund-raising immediately, because it had not registered with or filed accounts to the charities regulator. When it does, perhaps Mr Trump will recommend his personal accountant. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21708242-candidate-either-made-huge-loss-or-concocted-one-taxing-patience/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Battleground states + +Carolina crossfire + +Donald Trump’s chances may hinge on the messy politics of a changing state + +Oct 8th 2016 | CHARLOTTE, FAYETTEVILLE AND LUMBERTON | From the print edition + +Purple haze + +“I LOOOOOVE Michelle,” proclaimed an African-American woman at a rally for Hillary Clinton in Charlotte on October 4th—stipulating those extra vowels as testament to her passion for the current first lady, the event’s star turn. The terms the attendees used to describe their feelings for the Democratic candidate herself were cooler: “like” and “support” cropped up more often than “love”. One man frankly admitted to voting for Mrs Clinton out of duty rather than devotion. Her biggest asset in crowds such as this, besides the backing of Michelle Obama and her husband, is fear of Donald Trump. “Let’s turn this mother out,” urged Alma Adams, a congresswoman, to a whoop. + +Roughly a quarter of North Carolina’s electorate is black. In 2012 they voted at a higher rate than whites—a showing that could not prevent Mitt Romney narrowly winning back the state for the Republicans, after Barack Obama scraped it, even more narrowly, in 2008 (by a handful of votes per precinct, as Mrs Obama reminded her acolytes in Charlotte). This time, unless Mr Trump can emulate Mr Romney’s performance here, he will likely match his overall defeat. For Mrs Clinton, therefore, the state offers the chance of a knockout blow; her campaign has mounted an energetic voter-registration drive in the hope of delivering it. To an unusual degree, though, the predictably tight contest has been coloured by lively down-ballot races and bubbling local controversies. + +Begin with the Senate. If Deborah Ross, a polished but hitherto little-known state representative, manages to unseat Richard Burr, the low-key Republican incumbent, she could help the Democrats retake control of the chamber. On a tour of a printing plant in Lumberton this week, wearing a safety-regulated hairnet but no socks (“it’s a Southern thing”), Mr Burr dispensed backslaps and fist-bumps with seasoned folksiness. Defending his support for Mr Trump, advertised by a bumper sticker, he was less assured. Waterboarding, said Mr Burr, who is chairman of the Senate Intelligence Committee, was “not coming back”, whatever his party’s nominee said. He maintains that Ms Ross, a former state director of the ACLU, is too left-wing for North Carolina. Yet he and his fellow Republicans have found themselves squirming over social issues, too. + +Especially Pat McCrory, the incumbent governor. In March he signed a bill that, among other regressive measures, required transgender people to use public restrooms aligned with the sex on their birth certificates—part of a reactionary tear on which Republicans in the state legislature embarked after winning supermajorities in 2012. Cue lost convention revenue, cancelled concerts and, most painfully for North Carolinians, the relocation of beloved basketball tournaments in protest. Mr Burr wants the governor to reach “a truce” with his adversaries; Roy Cooper, the attorney-general and Mr McCrory’s Democratic challenger, refused to defend the law against a federal suit. “Part of being a good lawyer,” he says, “is telling your clients when to stop.” His opponent has sullied the state’s reputation, Mr Cooper complains, deriding the “Trump-McCrory team”. The governor’s line is that the farrago is an intentional distraction from the state’s economic recovery. + +These attacks are pressed home in a dizzying crossfire of TV ads. Besides the discrimination row, two other furores have convulsed North Carolina’s politics. The site of the fatal police shooting of Keith Scott in Charlotte last month is now a calm shrine, but in the fiery aftermath the National Guard was called out and a state of emergency declared. A Republican congressman opined that the black protesters “hate white people, because white people are successful”; he later apologised. Then there was the state’s cynical voting law, which imposed an ID requirement and other restrictions that—said a federal court that squashed it—targeted black voters with “almost surgical precision”. + +These upheavals may galvanise voters, black and white, in unpredictable ways. Yet, demographically and politically, the state was already mixed-up. Mr Burr says it is growing rather than changing: that seems wishful thinking, even if the evolution has been slower than in neighbouring Virginia, which, in presidential contests, seems in short order to have become safely Democratic. Around a third of North Carolinians now come from beyond the South, many drawn by its tech and finance industries, a swelling counterbalance to the conservative suburbs and countryside. + +For all these wrinkles, and despite a burgeoning list of alleged anti-Trump conspiracies—media bias, skewed opinion polls, the earpiece Mrs Clinton apocryphally wore during the TV debate—the mood among Trump supporters at a get-together in Fayetteville was bullish. Their profane candidate can be sure of the godly vote in this devout region, one said, because if the Democrats are “on the side of any religion, it’s the Muslims”. An enthusiast in a cap emblazoned with “Deplorables” insisted it was they who “pay the taxes in this country”; Mr Trump’s own shiftiness on that score did not trouble him. From his canvassing, Jerry Reinoehl, a genial veteran and campaign volunteer, reckoned his man would do better than expected among minorities. But he needed to focus: by taking Mrs Clinton’s bait, his tweeting and outbursts had “squandered five days”, worried Mr Reinoehl. + +If, in fact, the polls are credible, Mr McCrory’s prospects look bleak. The fate of the sockless senator, meanwhile, may be tied to Mr Trump’s. And, in what may turn out to be the decisive swing state, that race is perilously close. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21708243-donald-trumps-chances-may-hinge-messy-politics-changing-state-carolina/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Slavery on film + +Blood on the leaves + +A new release raises questions about the past’s grip on the present + +Oct 8th 2016 | ATLANTA | From the print edition + +The unquenchable fire + +THE road from Hattie McDaniel’s turn as Mammy in “Gone with The Wind”, which earned her an Oscar in 1940, to “12 Years a Slave”, which won Best Picture in 2014, was long and steep. Mammy is the epitome of Hollywood’s old, morally purblind plantation mythology; Steve McQueen’s film strove to capture slavery’s incessant terrors. “The Birth of a Nation”, which is released this week, asks audiences to make another interpretive leap: to see that, since slavery was evil, it was legitimate, even righteous, for slaves to rise up against their tormentors. It raises questions about the past’s grip on the present, about injustice and redemption, but in more than the intended way. + +“The Birth of a Nation” retells the story of Nat Turner, leader of a slave rebellion in Virginia in 1831. That title, appropriated from D.W. Griffith’s racist classic of 1915, signals its historiographical ambition. An in-cinema voter-registration drive underscores the implicit link with today’s combustible racial politics, in which black Americans are renewing the fight against discrimination even as many whites believe it no longer exists—and as Donald Trump dogwhistles about urban crime. As Dexter Gabriel of the University of Connecticut says, cinematic slavery tends to reveal more about the filmmakers’ era than the antebellum one. He notes that today’s interest in rebel slaves, also manifest in the TV drama “Underground” and a slew of novels and plays, echoes that of the late 1960s and early 1970s, another period of black activism. + +Like many African-American leaders, during slavery and since, Turner was a preacher: his Bible is displayed in the new National Museum of African-American History and Culture in Washington. In the film his owner hires him out to help neighbours pacify their own slaves, a task that becomes a Dante-esque descent into slavery’s hell. Turner incrementally realises both his own complicity and that the notion of a benevolent master is illusory. The bloodiness of the revolt is frank (an endnote acknowledges that its targets included children), as are the awful reprisals inflicted as panic spreads across the South, here set to Nina Simone’s piercing version of “Strange Fruit”. “They killin’ people everywhere for no reason at all but bein’ black,” says Turner’s wife Cherry, a line that, at a preview in Atlanta, elicited sighs of assent. + +The camera flinches only once, panning away when Cherry is savagely raped by a white gang. Unfortunately, sexual violence has come into focus through a related story of ugliness and its aftermath. Turner is played by Nate Parker, who also co-wrote, directed and produced the film. In 1999, when he was a wrestler at Penn State, Mr Parker and his roommate—and now writing partner—Jean Celestin were accused of raping a fellow student. Mr Celestin was convicted of sexual assault, though the verdict was later overturned. Mr Parker was acquitted, though in a recent comment on the episode, which to some seemed insufficiently contrite, he conceded that “there are things more important than the law”. Details of the incident disclosed in court records are nauseating. Their accuser later killed herself. + +To a few, such as Al Sharpton, the re-emergence of this 17-year-old case in the run-up to the film’s release suggests a bid to blunt its impact; others whisper about commercial machinations meant to derail its Oscar prospects, which, in the faddish, ingratiating world of Hollywood, seemed strong after this year’s #OscarsSoWhite outcry. Conversely some prominent black women have called for a boycott, seeing Mr Parker’s past as a disqualifying stain. Discussion has threatened to devolve into a competition between the moral claims of different kinds of victims. + +A better question may concern the relevance of an artist’s biography to assessments of his work. After all, plenty of celebrated writers, composers and indeed directors have led indefensible private lives: Sir Thomas Malory may have scribbled parts of “Le Morte d’Arthur”, the greatest depiction of Arthurian romance, in prison, possibly for rape. How long ago such offences occurred, and how grave they were, are bound to affect estimations of their relevance. So, in even more complex fashion, does the importance and quality of the art itself. + +In the case of “The Birth of a Nation”, the answer is: mixed. Mr Parker’s performance is admirable, as are his efforts to humanise both slaves and masters and his portrayal of the uses and abuses of faith. Occasionally, though, it lapses into corniness or cliché. Probably the only way to judge whether its merits outweigh his shortcomings is to see it for yourself. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21708168-new-release-raises-questions-about-pasts-grip-present-blood-leaves/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Election brief: student loans + +More present than correct + +Hillary Clinton’s college-funding plan is better politics than policy + +Oct 8th 2016 | WASHINGTON, DC | From the print edition + +Many happy repayments + +TO BELIEVE some young voters—especially those who showed up at Bernie Sanders rallies earlier this year—America is in the midst of a student debt crisis. In 2010 student loans overtook credit cards to become the biggest source of American household debt other than mortgages. Today, they total about 7% of GDP. Of those who have borrowed from the federal government and began repayments in 2011, 10% defaulted within two years, up from 4.5% in 2003. The problem animates the left: whereas Donald Trump has talked about the subject only fleetingly, Hillary Clinton has detailed policies for helping penniless scholars. Who could oppose such a worthy aim? + +Defaults on student debt are highest among so-called “non-traditional” students. They attend community colleges, which provide short, typically two-year courses, or profitmaking universities, which offer heavily marketed and pricey degrees which are sometimes of dubious merit. According to number-crunching by Adam Looney of the Treasury Department and Constantine Yannelis of New York University, non-traditional students made up more than half of all new borrowers from the federal government between 2004 and 2014. They accounted for fully 70% of those who defaulted within two years of starting repayments in 2011. + +The problem non-traditional students face on graduation is more often low incomes than high debts. In 2014 the median graduating borrower from a community college owed $11,700, compared with $26,500 among those who had attended a selective, four-year course. Yet while 25- to 34-year-olds with bachelor’s degrees or more earned an average of $59,000 in 2015, those with two-year degrees made only $38,500. Just as those with large mortgages typically have big houses, those with huge student debts usually have a graduate degree in, say, business or medicine, and can expect a bumper salary as a result. The average aspiring medic borrows $138,000 for her graduate education; lawyers-to-be, $107,000. Yet the three-year default rate among graduate students is only 3%. + +At first, during the primaries, Mrs Clinton promised to make community college free. She also said she would make public colleges “debt-free”—ie, cheap—for low- and middle-income students who study in their home states. This makes some sense. But a need to appeal to Mr Sanders’s fans led her to expand her plan in July. Mrs Clinton now pledges that by 2021 no American from a household earning less than $125,000 will need to pay any tuition fees at all to instate public universities. + +Mrs Clinton’s refreshed plan will cost anywhere between $350 billion and $800 billion over a decade, according to the Committee for a Responsible Federal Budget, a think-tank. Much of that cash will flow to students who will go on to be affluent. The returns to college education have never been higher (a fact which helps to explain Mr Trump’s success with voters who have spent less time studying). Over a career college graduates can expect to earn twice what high-school graduates make, according to one estimate. + + + +Reforms during Barack Obama’s presidency have already made student debt much more manageable. Congress and the Obama administration have expanded income-linked repayment programmes for those with federal loans. Today, any student who faces repayments exceeding 10% of her income can cap her repayments at that fraction of her earnings. After 20 years, the government will write off any remaining balance. This makes student debt resemble a tax more than conventional borrowing. In 2015 the education department started offering a similar deal to those with loans predating 2007. One-in-five borrowers, together owing fully 37% of all student debt, are now enrolled in income-linked repayment. + +There are problems with these schemes, notes Susan Dynarski of the University of Michigan. Students must opt in to them, which requires knowing that they exist, and must then renew their paperwork every year. Perhaps as a result, fewer than half those eligible have enrolled. And the income used to calculate repayments is based on the preceding year. So someone whose income tanks can still struggle to service his debts. To her credit, Mrs Clinton wants to improve income-linked repayment, in part by making enrolment automatic. (Another attractive idea is to collect student-loan repayments through employer payrolls, as happens in Britain). + +If such reforms happen, means-tested free tuition would offer few extra benefits. Such a policy would also redistribute arbitrarily. A student from a poor family who becomes rich will have no debts, whereas students from families earning above the $125,000 cut-off may still need to borrow and hence repay 10% of their income for years, even if they end up poor. The withdrawal of tuition subsidies as income rises could sharply increase implicit marginal tax rates. And subsidising only instate tuition creates a pointless incentive for students to avoid venturing further afield. + +An existing programme illustrates the dangers of careless subsidies. Since 2012 those enrolled in income-based repayment who also work for the government, or a not-for-profit organisation, can have their debts written-off after only a decade. This includes borrowing for pricey and lucrative graduate degrees. So far, 432,000 borrowers have signed up to the scheme, nearly 30% of whom have loan balances exceeding $100,000, according to Jason Delisle of the American Enterprise Institute, a think-tank. This gives a windfall to those who aim to work for the government anyway, and who expect to spend at least ten years repaying their undergraduate debts that greatly exceeds the maximum support the government provides to low-income undergraduates. + +The Obama administration now wants to rein in this programme. Worryingly, Mrs Clinton makes no mention of curtailing the largesse. Instead, she calls for still more ways for students to be able to discharge debts via public service. + +Padding the pockets of well-off graduates should be a low priority for the federal government. Mrs Clinton should concentrate on funding community colleges, regulating for-profit universities and improving income-linked repayment. But whatever she does, it is not hard for her ideas to beat Mr Trump’s, which amount to doing “something with extensions, and lower interest-rates, and a lot of good things”. Here, as on so many other issues, Mrs Clinton wins by default. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21708241-hillary-clintons-college-funding-plan-better-politics-policy-more-present/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Mainstream opposites + +More evidence from the running-mates that America’s divisions run deep + +Oct 8th 2016 | From the print edition + + + +KEEP Donald Trump off the stage and wash this presidential campaign’s mouth out with soap, and American politics is still broken. That is the result that emerged from a controlled experiment in political science conducted on October 4th—more formally known as the only vice-presidential debate of 2016. + +The debate pitted Hillary Clinton’s running-mate, Senator Tim Kaine of Virginia, against Mr Trump’s sidekick, Governor Mike Pence of Indiana. The two men, both sons of the Midwest with a neat line in folksy, aw-shucks modesty, spent quite a lot of their 90-minute clash stressing how much they respected each other’s faith and essential decency, even as they sparred about tax rates, how to fight terrorism and other questions of policy. As the pair bragged, competitively, about their middle-American credentials, Mr Pence took an early start by announcing: “I grew up with a cornfield in my backyard.” Mr Kaine countered that he had worked with Jesuit missionaries in Honduras as a young man. Neither man swanked about the size of his genitals, called anyone fat or declared himself a genius. With Mr Trump and his almost-as-disliked rival Hillary Clinton absent from the debating hall, whole minutes at a time sounded pretty reasonable. + +The vice-presidential debate was a test of the question: what happens when a centrist Democrat with minimal political baggage is pitted against a fairly conventional, Reagan-quoting Republican from the Christian conservative wing of the party? Many conditions for a successful experiment were met. It seems safe to assume that the encounter, hosted by Longwood University in rural Virginia, will have had millions of watching Democrats and Republicans nodding along as their party’s nominee spoke. That is because the two hewed closely to positions that, polls show, are seen as no more than sound common sense by each party’s respective partisans. + +Mr Pence repeated his stern views on abortion, predicted that tax cuts would cause the economy to take off like a rocket and said that American “strength” should be used to counter bullying by Russia’s president, Vladimir Putin (most recently displayed by Mr Putin’s repudiation of a plutonium-reduction deal in response to unfriendly American policies). In each instance these were pillars of Republican orthodoxy—and, in the case of Russia, Mr Pence was in disagreement with Mr Trump, who has praised Mr Putin’s “very strong control” of his country. Mr Pence defended his attempt, as governor of Indiana, to halt all resettlement of Syrian refugees in his state on grounds of public safety—a policy which a federal court this week called unconstitutional discrimination, but which makes ample sense in the light of polling by the Pew Research Centre, showing that 74% of Republicans (and a non-negligible 40% of Democrats) call refugees from the Middle East a “major threat” to America’s well-being. + +In his opening statement Mr Kaine noted that the debate site, the small town of Farmville, was the scene of an early civil-rights protest by black school pupils, led by a 16-year-old student, Barbara Johns. The tribute was doubtless sincere: his own father-in-law, a Republican governor of Virginia, had an unusually progressive record on racial segregation. As a young man Mr Kaine worked as a civil-rights lawyer. But the political advantages were not hard to spot: black Americans, the young and women are all voter blocs that must turn out in large numbers if the Clinton-Kaine ticket is to win. Not for nothing did Mr Kaine hail Miss Johns for believing that the nation is “stronger together”—a phrase which just happens to be Mrs Clinton’s campaign slogan. + +On issue after issue Mr Kaine and Mr Pence represented the mainstream views of their parties, while avoiding the deeply personal attacks that so blight the Clinton-Trump contest. And yet the results from this experiment should give Americans pause. For the debate revealed vanishingly little common ground between the two men—to the point that it is hard to see that divided government between their two parties would work. And if Mrs Clinton wins the White House in November, she will face divided government: Republicans will keep control of the House of Representatives, and could well hold the Senate too. + +Press headlines after the debate focused on Mr Pence’s greater fluency and air of authority, on Mr Kaine’s nervousness, and on the theory that Democrats could console themselves that at least the Republican on stage spent much of his time being invited to defend Mr Trump’s nastiest insults. Certainly it was striking to see Mr Pence variously deny that he had heard Mr Trump make such remarks, or simply dismiss them. Asked about Mr Trump’s claim that Mexico sends “rapists” across the border, the Indiana governor scoffed: “You’ve whipped out that Mexican thing again,” before insisting that “criminal aliens” are committing violence and “taking American lives”. + +Through different lenses + +But the debate also revealed something that will matter long after this election: America’s two parties struggle to agree even on a common set of facts about the state of the nation. Squabbling about whether the economy under Mr Obama has been a disaster or a stirring success, Mr Pence told his rival that what counted was that voters in mostly white, working-class rustbelt cities are flocking to Mr Trump’s populist banner: “Honestly, senator, you can roll out the numbers and the sunny side, but I got to tell you, people in Scranton know different. People in Fort Wayne, Indiana, know different.” + +For sure, Mr Trump’s demagoguery and Mrs Clinton’s unpopularity go a long way towards explaining this horrible election. But to extend a laboratory analogy rather far, Mr Trump is like a powerful electrical charge, catalysing and speeding up a reaction already under way. Take Mrs Clinton off the stage, and even a generic Democrat as amiable as Mr Kaine struggles to defend the status quo in a time of voter rage. This crisis is structural. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21708236-more-evidence-running-mates-americas-divisions-run-deep-mainstream-opposites/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +Colombia’s peace process: What now? + +Hurricane Matthew: Hammering Haiti + +Brazil’s local elections: Mayor none-of-the-above + +Bello: The once and future bully + + + + + +Articles Sections Next + +Colombia’s peace process + +What now? + +No one wants a return to war. But voters have blocked the path to peace + +Oct 8th 2016 | BOGOTÁ | From the print edition + + + +ON SEPTEMBER 26th Colombia’s president, Juan Manuel Santos, gleaming in a white shirt, appeared before more than a dozen heads of government and other dignitaries to sign, with a pen fashioned from a bullet casing, an accord to end the country’s 52-year-long war with the FARC rebel army. The FARC’s top commander, Rodrigo “Timochenko” Londoño, equally resplendent, added his name. Less than a week later, on October 2nd, Colombian voters rejected the peace deal in a plebiscite. Mr Santos appeared on television, dark-suited as if in mourning. “I will not give up” on peace, he vowed. + +The grim prospect is that, although no one wants it, Colombia could return to war. Mr Santos extended the ceasefire declared by the government in August, but initially only until the end of October. The message is double-sided. The government is still working for peace, but if necessary is prepared to resume hostilities. The short extension is partly designed to put pressure on the FARC. They read the ceasefire decision as an “ultimatum” and ordered their troops, which had begun to move toward demobilisation zones, to “secure positions”. Whether low-level combat erupts again now depends on a complicated three-way dialogue among the government, the FARC and the foes of the peace deal, led by Álvaro Uribe, a former president who is now a senator. + +No one foresaw this result—certainly not Mr Santos and the FARC leaders, who celebrated the deal with premature pomp, nor Mr Uribe, who campaigned unremittingly against it. Pollsters predicted a comfortable victory for Yes. The win for No was in many ways accidental. The margin was tiny: 50.2% to 49.8%. Just 13m of Colombia’s 35m voters turned up at polling stations. If Hurricane Matthew had not drenched the Caribbean coast, where support for the peace deal is high, the vote might have gone the other way. Ordinary Colombians, huddled in anxious conversations in cafés and corner stores, seem stunned by what they have brought about. + +The roots of rejection are multiple and entangled. Some voted against the deal to register their dislike of Mr Santos, an awkward and unpopular politician who seemed too confident about winning support for it. Some devout Christians objected to the accord because it recognises the rights of gay people. Mr Santos met church leaders on October 4th, a gesture that would have made more sense before the vote. People who live in areas where the FARC has recently been active mostly backed the deal. “We are the ones who’ve had to live with bullets flying around us,” says Freddy Rendón, a cattle rancher in Uribe, a town in Meta, in central Colombia, where Yes won 93.5% of the vote. Those who live in more peaceful parts, including cities, voted No. + +Two intertwined reasons for that pattern stand out. The first is that many Colombians have not forgiven the FARC for the terror they inflicted across much of the country for decades. Although the group preaches social and economic equality, it has practised kidnapping, extortion and forced recruitment while earning billions of dollars from drug-trafficking and illegal mining. Some 220,000 people died and perhaps 7m were displaced during the FARC’s long war against the state. + +Parliament or prison + +The peace deal, Mr Uribe argued, would reward the criminals. Under its provisions for “transitional justice” FARC leaders who confessed to war crimes would have been sentenced by a special tribunal to up to eight years of “restricted liberty” but would not be sent to prison. The deal would have eased the FARC’s transformation into a normal political party by reserving for it ten seats in the 268-seat congress in two elections, starting in 2018. + +The second main motive for voting No was Mr Uribe’s seductive argument that these flaws in the deal could be corrected without a return to war. Rather than sacrifice justice for peace, Colombians could have both, he suggested. Colombia’s fate now depends on whether he is right. + +The “correctives” Mr Uribe seeks will be fiendishly difficult to achieve. It took four years of formal negotiations in Havana (and nearly two years of talks about talks before that) to arrive at the 297-page accord. It deals with issues ranging from rural development and the drug trade to demobilisation, disarmament and punishment for perpetrators of war crimes. The changes Mr Uribe demands are to points on which agreement was hardest to reach. Government negotiators tried for a year to get the FARC to consent to jail time for war criminals; they flatly refused. + +The rebels are now reluctant to tinker. “Having a will for peace doesn’t mean that the agreement can be modified,” tweeted Carlos Antonio Lozada, a FARC negotiator, during meetings with government representatives in Havana. Colombia’s foreign minister, María Ángela Holguín, who is also a member of the negotiating team, warned that the scope for renegotiation is small. “Just as the government has its deal-breakers, so does the FARC. So we have to see if they are willing to reopen the accord,” she said. + +Mr Uribe has now thrust himself into the centre of the conversation. His opening gambit has been to propose legislation granting a blanket amnesty to rank-and-file FARC guerrillas who are not wanted for serious crimes. That is not a contradiction of his no-impunity line. It is rather an inducement to fighters to desert the FARC, undermining the group’s plan to keep together and to reorganise as a political party. On October 5th Mr Santos and Mr Uribe, who have come to loathe each other, met for the first time in almost six years to begin a search for common ground. They agreed that a commission will propose revisions to the accord, which will be forwarded to the FARC. + +A new understanding may be possible. The FARC seem genuinely committed to peace. In the final days of the campaign—far too late—they apologised publicly for their crimes and promised to declare their assets and use them to make reparations to victims. Mr Londoño reacted to the No vote like a politician rather than a guerrilla: “We know that our challenge as a political movement is even bigger,” he said. + +Perhaps, faced with the prospect of going back to war, the FARC’s leaders will accept stiffer punishments. Perhaps Mr Santos and Mr Uribe will then go jointly to congress with a modified peace proposal. For that to happen, however, Colombia’s political leaders will have to end their war with each other. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21708281-no-one-wants-return-war-voters-have-blocked-path-peace-what-now/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Hurricane Matthew + +Hammering Haiti + +Oct 8th 2016 | From the print edition + + + +Hurricane Matthew, the strongest storm in the Caribbean in nearly ten years, struck Haiti and then moved on to Cuba. It is expected to reach Florida, Georgia and South Carolina. In disaster-prone Haiti, the poorest country in the Americas, winds of up to 230kph (145mph) and heavy rain forced some 10,000 people to take refuge in temporary shelters; more than 20 people have died. The storm destroyed crops and cut off southern regions from the capital, Port-au-Prince. Aid agencies fear that the flooding will worsen a cholera epidemic, which followed a massive earthquake in 2010. After the latest storm passed, the electoral council postponed the first round of a long-delayed presidential election, which had been scheduled for October 9th. The vote is a rerun of an election held in October 2015. Its disputed results provoked widespread protests. A caretaker president has governed the country since the last duly elected president, Michel Martelly, stepped down in February this year. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21708279-hammering-haiti/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brazil’s local elections + +Mayor none-of-the-above + +Voters show their disdain for politicians + +Oct 8th 2016 | SÃO PAULO | From the print edition + + + +BRAZILIANS find local elections dull. But the first round of voting in this year’s contests, on October 2nd, was anything but. It showed, first of all, just how fed up voters are with conventional politicians. Even though voting is obligatory, nearly a fifth of the electorate did not show up, a record high for a local poll. + +The second lesson is that the Workers’ Party (PT) of Dilma Rousseff, who was ousted from the presidency by congress in August, will struggle to regain anything like its former influence. It lost nearly two-thirds of the mayoral races that it had won in 2012, including in São Paulo, the biggest city (see chart). Though its rivals are hardly beloved by voters, that will make it harder for the PT to put up a fight in the next presidential election, in 2018. + +In many places the sum of no-shows plus blank and spoilt ballots outstripped votes for the winner. In Belo Horizonte, Brazil’s fourth-largest city, a former chairman of a local football club will face the team’s former goalkeeper in a run-off on October 30th. + +The anti-political mood owes much to recession and to the Petrobras scandal, which almost weekly exposes a new case of wrongdoing by one of the country’s most prominent politicians or businessmen. The PT’s standard-bearer, Luiz Inácio Lula da Silva, a once-popular former president, has been charged with corruption. He proclaims his innocence. + +New electoral rules put a damper on campaign hoopla. Last year the supreme court banned political donations by companies, so parties had less to spend on posters and flyers, and on people to stuff them through windows of cars stopped at red lights. The electoral tribunal cut campaigning time from 90 days to 45. + +Against this glum background, some candidates look like stars. João Doria, a businessman and political novice, is the first person to win the mayorship of São Paulo with a first-round majority (though none-of-the-above topped the ballot). He defeated the incumbent, Fernando Haddad, who governed relatively competently but had the misfortune to belong to the PT. Mr Doria’s victory boosts his centre-right Party of Brazilian Social Democracy (PSDB) and the presidential hopes of the governor of São Paulo state, Geraldo Alckmin, who championed Mr Doria against opposition from other party grandees. + +The results are also good news for Brazil’s new but unpopular president, Michel Temer. The rout of the PT undercuts its claim that Ms Rousseff was the victim of a “coup” and that Mr Temer’s presidency is therefore illegitimate. This gives him a window of opportunity to push through congress painful spending cuts, which are needed to reduce a massive budget deficit of 10% of GDP. Mr Temer’s centrist Party of the Brazilian Democratic Movement (PMDB) remained the biggest force in local politics, although it is as tainted by the Petrobras scandal as is the PT. + +After the ban on corporate donations such successes will matter more. Control of city halls and councils helps parties mobilise campaign workers, which will be an advantage in the presidential election. + +It is hard to see the PT making a comeback. In the first round it held on to just one of the four state capitals it governed, Rio Branco in the Amazonian state of Acre. Lula, who hopes to run again for president despite his indictment and his age (70), has become toxic for many of his fellow petistas. Mr Haddad declined to appear with him in television adverts. The PT was wiped out on Lula’s home turf, the industrial towns around São Paulo. In a contest of losers, he was the biggest loser of all. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21708285-voters-show-their-disdain-politicians-mayor-none-above/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello + +The once and future bully + +Anti-yanqui feeling is in remission in Latin America. Could Donald Trump revive it? + +Oct 8th 2016 | From the print edition + + + +“YOU are the United States, you are the future invader of the guileless America of Indian blood, which still prays to Jesus Christ and still speaks Spanish.” So goes the ode “To Roosevelt” of 1904 by Rubén Darío, a Nicaraguan writer. His poem was occasioned by the seizure of Cuba and Puerto Rico by the United States in the Spanish-American war of 1898, in which Theodore Roosevelt played a minor role that helped him win the presidency, and by his subsequent grabbing of Panama, a province of Colombia. + +Darío was prescient: in the next three decades there would be more than 30 military interventions by the United States in the Caribbean basin, in the name of what Roosevelt called “the exercise of an international police power”. These events, and the asymmetry of power and wealth that underlay them, gave rise to an enduring tradition of anti-Americanism (or “anti-yanquismo”, since “América” to Spanish-speakers means the entire land mass). In recent times this has been identified with the left—with Fidel Castro of Cuba, the late Hugo Chávez of Venezuela and Evo Morales of Bolivia. But there is a conservative, Hispanicist strain of anti-Americanism, too, expressed by Darío and others, which claims a superiority of culture and values for Latin America in the face of the bullying and vulgar materialism of the United States. + +One of the main aims of Barack Obama’s policy towards Latin America has been to dispel anti-Americanism. From the outset of his presidency he said he wanted “an equal partnership” in the Americas. His boldest stroke was the diplomatic opening to Cuba, which was applauded by both left and right across Latin America. And on issues such as Venezuela’s crushing of democracy, the United States has sought to work through partners in the region, though without conspicuous success. + +Mr Obama has had an impact in regional opinion. When he was elected in 2008 only 58% of respondents to Latinobarómetro, a region-wide poll, had a positive view of the United States. This year that figure was 74%. Governments’ attitudes have changed, too. Chávez and Argentina’s Cristina Fernández de Kirchner have departed. Brazil’s new government does not place the hopes that its predecessor did in “south-south” ties. Across Latin America, many governments are now seeking to draw closer to the United States. + +That means Latin Americans are especially alarmed by the prospect of Donald Trump occupying the White House. Along with Canada, as neighbours of the United States they have more to lose than anyone else from Mr Trump’s protectionist nationalism. Many Latin Americans see him as a racist who derides “the guileless America of Indian blood”, in Darío’s words. Latin American commentators see in Mr Trump a likeness to the region’s own populist leaders, such as Chávez. Some fear that his advent would prompt a revival of anti-Americanism in the region just when it was going into remission. + +In fact, responses are likely to be more considered. Take Mexico. Polls suggest that some 85% of Mexicans abhor Mr Trump. But they also suggest that Andrés Manuel López Obrador, a populist leftist hopeful for the 2018 election, who is in some ways a mirror image of Mr Trump, is not profiting from this anger. A poll by Reforma, a newspaper, found support for Mr López Obrador stable at around 28% in August. It is Margarita Zavala, a pro-American conservative, who has received a bounce. “If you have the biggest bully in the world across the border perhaps you don’t want your own bully” but rather a “softer style of leadership”, says Juan Pardinas of the Mexican Institute for Competitiveness, a think-tank. + +Mr Trump’s effect on Cuba, if he carries out his threat to annul Mr Obama’s diplomatic opening, might be different. That could remove any hope that the transition to a post-Castro leadership, which is due to start in 2018, will involve a loosening of political control. And it is hard to know what will guide Mr Trump’s approach to Latin America. His name is on businesses in Brazil, Panama and Uruguay, and has been linked to other ventures in the region. + +Although a President Trump’s blustering and protectionism would prompt anger and disappointment, they are more likely to be met in today’s Latin America with calm rationality than to be copied. Both Mexico and Brazil have experience of responding successfully to American violations of trade rules, for example on cotton, with sanctions targeted for maximum political effect in the United States. Latin American governments are anti-Trump, but that won’t necessarily make them anti-American. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21708289-anti-yanqui-feeling-remission-latin-america-could-donald-trump-revive-it-once-and/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +The war in Afghanistan: Help needed + +India and Pakistan: Reversing roles + +Tax policies: Amnesties international + +Gay marriage in Australia: Waiting for a vote + +Banyan: Evil genius + + + + + +Articles Sections Next + +The war in Afghanistan + +Help needed + +Foreigners pledge more aid to Afghanistan as security worsens + +Oct 8th 2016 | JALALABAD | From the print edition + + + +THE timing could not have been worse for Afghanistan’s beleaguered president, Ashraf Ghani. On the eve of a major conference of international donors in Brussels, at which the Afghan government would show off its achievements after two years in office and present its vision for the future, Taliban insurgents stormed into the northern city of Kunduz in the early hours of October 3rd. The militants occupied civilian houses and made it all the way to the city’s central square, where they hoisted their group’s white-coloured flag. + +It was almost a year to the day since the Taliban had seized parts of the city for the first time. A shaken Mr Ghani had promised then that it would never happen again. This time, within 24 hours, the Taliban retreated—at least from the centre—after the arrival of Afghan special forces and NATO “advisers” (backed by local militias, members of which are pictured). But the embarrassment had been inflicted. At about the same time, the Taliban also launched an attack from their southern front in Helmand, capturing a district on the edge of the provincial capital, Lashkar Gah. Only two of Helmand’s 13 districts are now fully under government control. + +The attack on Kunduz and the continued offensive in Helmand had been expected as a climax to what has been a summer of fierce fighting. Government forces, despite outnumbering the Taliban, are stretched thin. They have difficulty fighting in different regions simultaneously. Weakened by casualties and by leadership that is, at best, patchy, some units suffer poor morale. They are highly dependent on the 17,000-strong Afghan special forces rushing to the rescue whenever a Taliban attack threatens to overwhelm defenders. + +Increasingly, they are being backed up by international forces. Earlier this year, Barack Obama reluctantly relaxed the rules of engagement for NATO’s 13,000-strong “train, advise and assist” mission, known as Resolute Support (previously allowed only to intervene if a catastrophe was imminent). Air support has increased and NATO advisers are now more often found with Afghans at the sharp end. + + + +Offensive operations to reclaim territory from the Taliban are rare, but the insurgency has failed to capture any important city. It holds sway across large tracts, particularly in the rural south and east where it has retaken territory lost during the “surge” of 2009-12, when NATO could call on 130,000 troops. Bill Roggio of the Long War Journal reckons that up to half of Afghanistan may be under Taliban control or influence. However, General John Nicholson, the American commander of Resolute Support, says that equates to only about 10% of the population. He believes that around 70% of Afghans live in government-held areas. + +In one province, Nangarhar in the east, the Taliban has been pushed out not by government forces but by fighters claiming loyalty to Islamic State (IS). Exploiting divisions within the Taliban, IS is behaving with its customary brutality. Residents who have fled to the outskirts of Jalalabad from Achin, where IS has set up its headquarters, tell of decapitations of government workers, shrine-smashing and demands for women to don burqas. + + + +Villagers find themselves caught between the warring sides. On September 28th an American drone targeted the house of an alleged IS operative, but the UN says he was a civilian, as were at least 15 of those killed. On October 4th an American soldier, accompanying Afghan forces in Achin, was killed by a booby trap. It is unlikely that IS, which has scant local support, will gain much ground. But with al-Qaeda loyalists returning to parts of the country, security problems are mounting. + +It is against this sombre backdrop that the Afghan government sought to convince foreign aid-donors at this week’s conference hosted by the European Union that in some areas, particularly in the fight against corruption, progress is being made. Mr Ghani was also able to boast of a peace deal signed on September 29th with Gulbuddin Hekmatyar, the leader of the Hezb-e-Islami group who was once known as the “butcher of Kabul”. Afghan officials hope that some in the Taliban may follow Mr Hekmatyar’s example. That is optimistic. But his jihadist credentials could challenge the insurgency’s legitimacy. + +As expected, the conference agreed to provide civil aid to Afghanistan worth about $3.8 billion a year until at least 2020. Many pieties were expressed about the cash being conditional on political and economic reform. Mr Ghani, a former development expert at the World Bank, knows how to come up with credible-looking plans. But implementation of them remains slow and his government factious. + +The insurgency is a big handicap. Michael O’Hanlon of the Brookings Institution, an American think-tank, says it is hardly surprising that Afghan forces have struggled to contain it given the withdrawal of “125,000 of the world’s best soldiers”. Anthony Cordesman of the Centre for Strategic and International Studies, another think-tank, says the next American president must abandon Mr Obama’s obsession with finding an exit. + +Both Mr Cordesman and Mr O’Hanlon want a much bigger train-and-assist mission, additional troops to help Afghan forces when in difficulty and more combat air-support. Mr Obama’s successor should heed the military advice he rejected and increase the American contribution to Resolute Support from the current 8,400 to at least 13,000, with no artificial deadline for departure. Otherwise, the commitments made in Brussels will achieve little. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21708299-foreigners-pledge-more-aid-afghanistan-security-worsens-help-needed/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +India and Pakistan + +Reversing roles + +There is still more smoke than fire in heated exchanges, but for how long? + +Oct 8th 2016 | DELHI | From the print edition + +Peering towards Pakistan + +IF IT were not that India and Pakistan have been lobbing live mortar rounds at each other for the past few days, forcing the evacuation of thousands of villagers from border zones, or for the fact that both states are nuclear-armed, the latest jump in tension between the eternal rivals might seem silly. On September 29th India launched what an army spokesman called retaliatory “surgical strikes” against “terrorist launch-pads” in Pakistani-held territory. This followed an attack by Pakistan-based fighters two weeks earlier that had left 19 Indian soldiers dead and prompted angry Indian calls for revenge. + +But in a reversal of typical roles the apparent victim, Pakistan, denied that any such deadly Indian raids had taken place; it dispatched reporters to the border to check for themselves—under strict supervision, naturally. This embarrassed India’s government, which had won thundering applause from local media when it announced the revenge attacks. One animated cartoon pictured a giant prime minister Narendra Modi flicking his mosquito-borne Pakistani counterpart, Nawaz Sharif, into oblivion. But just when Indian sceptics began to wonder aloud whether their government was telling the truth, Pakistan sheepishly admitted that it had captured an Indian soldier on its side of the border, thus hinting that there had, after all, been some sort of incursion. + +The eruption of tit-for-tat shelling across the line of control, as the frontier between Indian- and Pakistani-administered bits of the disputed territory of Kashmir is called, also suggested that something provocative had happened (an Indian soldier is pictured near the line of control during the recent tensions). But it was only after days of frenzied speculation that a whiff of fact could be discerned through the dense smoke. Citing eyewitnesses and anonymous officials, journalists in both Pakistan and India pieced together an account of what happened in the early morning of September 29th that made sense of the conflicting versions. + +Instead of the resolute act of vengeance deep behind enemy lines described by Indian jingoists, it appears that small teams of Indian commandos had slipped across the line to strike at safe houses believed to be used by Islamist guerrillas. The number killed was estimated at a dozen or fewer, rather than the 38-50 initially claimed by India. None of those killed were Pakistani army personnel. And since the Pakistani government has no wish to inflame domestic opinion and so be forced to escalate matters, it preferred to pretend that nothing had happened. + +Following the revelation that its “surgical strike” was perhaps less devastating than first advertised, India has also preferred to remain silent. But Mr Modi came to power in 2014 with promises to be tough on Pakistan. With important state elections looming in the coming months, it is useful for him to look warlike. Along highways in India’s biggest state, Uttar Pradesh, devotees have put up billboards featuring pictures of the prime minister, finger raised next to a silhouetted soldier, declaring: “We will strike with our gun, and our bullet, in our own time, but in your territory.” + +The bellicose mood has prompted other kinds of posturing. Responding to calls to expel Pakistani actors who have gained big Indian audiences in recent years, an association of Bollywood producers declared they would hire no more enemy talent. An Indian satellite channel that gained top ratings by playing Pakistani serials has taken them off air. Officials of the Kabaddi World Cup, a traditional sport played on both sides of the border, have told the Pakistani team not to come. + +Pakistan is not taking this lying down. Its censors have sharply restricted the showing of Indian films. Indian military pilots complain their radios are being interrupted by bursts of patriotic Pakistani songs. And in a town near the border Indian police captured and caged a pigeon, apparently dispatched from Pakistan, which carried a warning to Mr Modi taped to its leg: “Now each and every child is ready to fight.” The tenor of recent exchanges between the two countries is suggestive of playground conflict. Both may hope that it will not become more deadly. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21708302-there-still-more-smoke-fire-heated-exchanges-how-long-reversing-roles/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Tax policies + +Amnesties international + +Tax dodgers in India and Indonesia have been given a chance to come clean + +Oct 8th 2016 | DELHI AND JAKARTA | From the print edition + + + +INDIA and Indonesia share a problem: too little tax revenue. Of the 3.8% of India’s 1.3 billion people whose incomes are logged by the tax authorities, barely one-quarter cross the tax threshold. The share of Indians who declare annual incomes of more than 1m rupees (about $15,000) is just 0.1%. Among Indonesia’s 255m citizens, 27m are registered taxpayers. But in 2014 only 900,000 of them filed a return. + +Indonesia’s tax-to-GDP ratio is around 11.4%—better than India’s 10.8%, but well below the OECD average of more than a third. Many people are simply not paying their dues. Both countries are stepping up efforts to bring dodgers in from the cold. + +India, where an amnesty on undeclared domestic income expired on September 30th, has been stricter. Penitents, many of whom received warnings that they were being monitored, had to surrender 45% of their newly declared income. The government expects to rake in $4.4 billion from the 64,275 people who turned themselves in. That will dwarf the amount taken from a similar campaign last year, which targeted overseas income. In that one, India earned $373m from 633 individuals who owned up. + +Indonesia has been trying an amnesty, too. Some 328,000 people took advantage of one launched in July during its first and most generous phase, which ended in September. They included prominent politicians and businessmen who posed for cameras as they handed over details of once-hidden wealth. They had to pay a penalty of just 2% on domestic or repatriated assets, and 4% on declared offshore assets. Penalty rates have now risen to 3% and 6%. They will rise again in January to 5% and 10% for the final three months of the amnesty. Income tax rates in Indonesia range up to 30% for individuals and 25% for firms. + +A lack of credibility often hinders amnesties—scofflaws figure they can just wait until the next one. But in Indonesia’s case the Common Reporting Standard, an international agreement reached in 2014 on the sharing of tax information, seems to have helped. In late September Joko Widodo, Indonesia’s president, reportedly held a dinner for tycoons, at which they were warned to come clean or else. The amnesty has boosted the government’s coffers by $7 billion, around 60% of the total target. But whether more people will come forward by the end of March, given the increase in penalty rates, is unclear. + +That some of Indonesia’s richest people appear to expect praise as patriots for taking part in the amnesty has angered many tax-paying Indonesians. On September 29th thousands of union members protested in Jakarta, demanding an end to the campaign. They say it rewards the tax-evading rich. Some opponents have taken their case to the constitutional court, arguing that the amnesty amounts to legalised money-laundering. But with commodity prices low and plans aplenty for big spending on infrastructure, the government believes it will help. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21708303-tax-dodgers-india-and-indonesia-have-been-given-chance-come-clean-amnesties-international/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Gay marriage in Australia + +Waiting for a vote + +The prime minister’s plan for a plebiscite is proving controversial + +Oct 8th 2016 | From the print edition + +Rainbow warriors + +WARREN ENTSCH is a former crocodile-catcher whose federal parliamentary seat covers a remote tropical region of Australia bigger than Bangladesh. His home state of Queensland and his party, the ruling Liberals, are both conservative. Mr Entsch calls himself “the stereotype redneck”. He is also one of Australia’s most unlikely and zealous advocates for making gay marriage legal. Malcolm Turnbull, the prime minister, has called a non-binding referendum on the issue early next year. Mr Entsch and fellow politicians, however, are bitterly divided over whether asking voters is the best approach. Their rancour will be evident when parliament reconvenes on October 10th after nearly a month’s break. + +Australia is one of the few rich countries that still bans same-sex marriage. When it was enacted 55 years ago, the federal Marriage Act never defined marriage. Pitching for votes on “family values” before an election in 2004, John Howard, a former Liberal prime minister, amended the law to say that it is “the union of a man and a woman to the exclusion of all others”. A recent opinion poll, however, showed that almost two-thirds of Australians disagree. Just 6% were undecided. + +During a federal election in July, Bill Shorten, the Labor opposition leader, promised to legalise gay marriage within 100 days if Labor won. Mr Turnbull, too, wants change. Last year he suggested a parliamentary vote to decide the issue “one way or another”. Since then, however, he has tailored his progressive views to keep in line with the stance of Tony Abbott, whom he unseated as Liberal leader and prime minister 13 months ago. + +Mr Abbott had supported his party’s gay marriage ban. But after wrangles within the conservative Liberal-National coalition, he had offered a plebiscite (as non-binding referendums are called in Australia) as a compromise. Mr Turnbull last month announced that such a vote would be conducted in February. + +A poll last month showed that only 39% of Australians backed holding a plebiscite. Many fear that some Liberals would simply ignore an outcome that favoured gay marriage. Alan Joyce, the openly gay chief executive of Qantas, an Australian airline, says the legislature has introduced numerous important reforms without a public vote. “So why can’t parliament be empowered to make this decision?” he asks. Penny Wong, Labor’s shadow foreign-affairs minister, says there is “disappointing evidence” that some will use “hurtful” arguments in a plebiscite campaign. + +Like Ms Wong, but unlike his own Liberal party, Mr Entsch (who is also a patron of a Vietnam war veterans’ motorcycle club in his outback region) would prefer a parliamentary vote. “We don’t need to vilify or persecute any minority,” he says. But he believes Mr Turnbull has little choice but to proceed with the plebiscite his party promised during the recent election campaign. + +Before one happens, parliament must pass an enabling bill. Mr Turnbull’s government has a majority (of just one seat) in the lower house, and can count on its support. But it has a minority in the Senate, meaning Labor will play a critical role. Mr Shorten says a plebiscite would represent a “fundamental failure” of parliament. + +Many take Mr Shorten’s comments as a sign that he will urge Labor to vote against the enabling bill, which would kill it. If that happens, Mr Turnbull would be unlikely to call for a parliamentary vote and thereby risk a revolt in his party. Labor would have to wait for the next general election, which is due in 2019. If it wins, it could push gay-marriage legislation through parliament. For now, it can only take solace in Mr Turnbull’s discomfiture. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21708198-prime-ministers-plan-plebiscite-proving-controversial-waiting-vote/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Evil genius + +North Korea’s nuclear threat is growing fast, but pre-emptive moves are not the answer + +Oct 8th 2016 | From the print edition + + + +IN A world starved of old-fashioned, plain-evil Bond villains, at least there is Kim Jong Un. Witness the cackling glee exhibited by the chain-smoking Mr Kim and his generals when they celebrated North Korea’s launch of a ballistic missile from a submarine in August; or the tear-choked euphoria of one newsreader, in traditional Korean dress, as she declared success in the country’s fifth and largest nuclear test last month. In a world where morality comes in many shades of grey, the nuclear ambitions of Mr Kim, running a gulag masquerading as a country, are painted in black and white. + +To many American policymakers, the submarine launch and nuclear test mark a turning point. Until now, North Korea’s missiles have threatened South Korea and Japan. Now its nuclear and missile programmes have improved with such speed and determination that they begin to threaten the United States itself. A nuclear attack on Los Angeles? Time to think about it. The summer’s tests, says Andrew Shearer of the Centre for Strategic and International Studies in Washington, point to a possible “game-changer” for America. North Korea is rapidly climbing up to the top of the to-do list for the next American president. The question is whether America, which has long struggled to contain the North’s nuclear programmes, has anything left in its playbook. + +The tests at least serve one useful purpose: to bury once and for all the delusions of successive American leaders that North Korea might be persuaded to negotiate away its nuclear programmes as a prelude to normalising ties. Such was the basis of the now-defunct “six-party talks” involving America, China, Japan, Russia and the two Koreas. The diplomacy was not wrong—you should want to negotiate with your enemy unless you have good reason not to. But the talks always favoured the North—winning it more aid, an easing of sanctions or more time for nuclear development. That was the point, as North Korea saw it. + +As Nicholas Eberstadt of the American Enterprise Institute puts it, Americans have approached the North as if both sides share common points in their worldview and moral compass—leading to a wholesale misunderstanding. Perhaps that is inevitable when dealing with something so alien as a hereditary despotism underwritten by Leninist police-state powers. But the consequence for America has been years of confused policies. + +One misunderstanding has been over the North’s hyperbolic propaganda. Of course, if you are a Hollywood screenwriter or even an American policymaker, the bombast is easy to satirise, as are Mr Kim’s jelly-bean looks, or the pantsuit and elevator shoes of his late father, Kim Jong Il. The elder Kim once kidnapped a South Korean film director and his actress wife because, he told them, he thought a lot of his own propaganda films were terrible. + +Yet the propaganda is deadly serious. It is the outward expression of a messianic ideology that, along with all the surveillance and repression, has kept the Kim regime in power for more years than seemed possible. As Brian Myers of Dongseo University pointed out in “The Cleanest Race”, his study in 2010 of North Korea’s domestic propaganda, the regime’s version of Korean history is of an innocent race oppressed by child-abusers—American, Japanese and Chinese. Extreme notions of ethnic purity lie at the heart of the ideology (South Koreans have not only been corrupted by American capitalism but polluted by miscegenation, too). The North’s zealous mission, on which the regime’s legitimacy is built, is to reunify the Korean race and avenge it. + +The road to this Elysium is where North Korea’s nuclear programmes come in, Mr Eberstadt makes clear. Once, other paths offered themselves, but that was before the sudden disappearance of Soviet patronage, the North’s own industrial decline and the South’s stubborn refusal to be swayed either by North Korea’s revolutionary message or its occasional acts of violent provocation. The nuclear option remains the only game in town. Its voluntary surrender would mean the end of the sacred mission of unification—and so the end of the regime itself. Forget it. + +What to do? Diplomacy now has even less to offer. Any appeals the North may make to America for the normalisation of ties have only one aim: the withdrawal of America’s 28,000 troops from South Korea. And so pre-emptive strikes against North Korea are being talked about. South Korea recently said it would hit first if it believed the North was about to throw a punch. In Washington, some think-tankers now discuss, with surprising acceptance, the merits of attacking North Korean nuclear facilities—or even taking out Mr Kim himself. It is far from clear how such out-of-the-blue strikes might succeed. And they would involve a huge risk of retaliation. With cosmopolitan Seoul just 60km (40 miles) south of the demilitarised zone, it is hard to see South Korea giving approval. Without it, an American strike would rupture the alliance. So forget pre-emption too. + +Let there be light + +That still leaves ways to defend against the regime’s threat and blunt its capacities. A new American missile-defence system being deployed in South Korea is a big start. And what if every North Korean sub that left port never returned? America has weaponry aplenty that could make them disappear, fingerprint-less. Soon, Mr Kim would have no submarine capability—without America ever having said a word. + +Elsewhere, sanctions could have much more bite—the measures that until recently applied to Iran were far harsher than the ones against the world’s most repugnant regime. America should go much harder after the money-laundering and trading networks that keep the North Korean regime afloat. All should demand that China agree to a safe route for refugees to get to the South. In the end, helping ordinary North Koreans to end their isolation would do more than anything to undermine the regime’s myths and enervate its sinews. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21708293-north-koreas-nuclear-threat-growing-fast-pre-emptive-moves-are-not-answer-evil-genius/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +The Hui: China’s other Muslims + +Halal food: Keeping pure and true + + + + + +Articles Sections Next + +The Hui + +China’s other Muslims + +By choosing assimilation, China’s Hui have become one of the world’s most successful Muslim minorities + +Oct 8th 2016 | TONGXIN | From the print edition + + + +THE faithful are returning from the haj. Waiting for prayers outside the Great Mosque in Tongxin, a remote town in the western province of Ningxia, Li Yuchuan calls his pilgrimage a liberation: “Our prayers are just homework for it.” His 84-year-old friend (pictured, right) leaps up and twists himself with lithe agility into the shape of a pretzel. “We Muslims pray five times a day,” he says. “We are flexible and tough.” China’s Muslims need to be. + +China has a richly deserved reputation for religious intolerance. Buddhists in Tibet, Muslims in the far western region of Xinjiang and Christians in Zhejiang province on the coast have all been harassed or arrested and their places of worship vandalised. In Xinjiang the government seems to equate Islam with terrorism. Women there have been ordered not to wear veils on their faces. Muslims in official positions have been forced to break the Ramadan fast. But there is a remarkable exception to this grim picture of repression: the Hui. + +China has two big Muslim groups, the Uighur of Xinjiang and the more obscure Hui. Though drops in the ocean of China’s population, they each have about 10m people, the size of Tunisia. But while the Uighur suffer, the Hui are thriving. + +The number of mosques in Ningxia (cradle of the Hui, as one of their number puts it) has more than doubled since 1958, from 1,900 to 4,000, says Ma Ping, a retired professor at Northern Nationalities University. New ones are being built across the province. The Hui are economically successful. They are rarely victims of Islamophobia. Few Muslim minorities anywhere in the world can say as much. + +The Hui’s religious practices reflect the waves of Islam that have washed over China. According to Ma Tong, a Hui scholar, just over half of them follow the Hanafi school of Sunni Islam, which was brought to China centuries ago. At the Najiahu mosque south of Yinchuan, Ningxia’s capital, banners adorn the entrance saying “ancient and authentic religion” and “cleave to the original path”. A fifth of the Hui follow the more austere code of Wahhabism brought to China in the 19th century (there are also a handful of more extreme Salafist converts resulting from recent contacts through the haj). And a fifth follow one of three Sufi schools of Islam, an esoteric and mystical branch derided as apostate by hardline Salafists. The Hui’s religious diversity makes it easier for the party to tolerate them. Divide and rule. + +But the real secret of the Hui’s success lies in the ways they differ from the Uighur. The Uighur, of Turkic origin, are ethnically distinct. They speak their own language, related to Turkish and Uzbek. They have a homeland: the vast majority live in Xinjiang. A wall of discrimination separates them from the Han Chinese. If they have jobs in state-owned enterprises, they are usually menial. + + + +In contrast, the Hui are counted as an ethnic minority only because it says so on their hukou (household-registration) documents and because centuries ago their ancestors came as missionaries and merchants from Persia, the Mongol courts or South-East Asia. Having intermarried with the Han for generations, they look and speak Chinese. They are scattered throughout China (see map); only one-fifth live in Ningxia. Unlike the Uighur and Tibetans, they have taken the path of assimilation. + +At the new Qiao Nan mosque in Tongxin, the congregation is celebrating the life of an important local figure in the mosque’s history. The ceremony begins with a sermon by the ahong (imam). Then come prayers chanted in Arabic. At the house of the local worthy’s grandson, the worshippers read from the Koran, then visit the tomb. But the afternoon ends very differently, with a reading from an 18-metre-long scroll written by the grandson, Ma Jinlong. This consists of excerpts from eighth-century classical Chinese poetry, illustrated with his own delicate water-colours. Mr Ma is both a stalwart of the mosque and a Chinese gentleman-scholar. + +A close connection with Chinese society is characteristic of the Hui. Some of the most famous historical figures were Hui, though few Chinese are aware of it. They include Zheng He, China’s equivalent of Columbus, who commanded voyages of discovery around 1400. Recently, the party chief in Jiangsu province as well as the head of the Ethnic Affairs Commission, a government body, were Hui. + +Relations with the Han have not always been good. The so-called Dungan revolt by the Hui in the 1860s and 1870s was a bloodbath. But since the death of Mao in 1976, the two sides have reached an accommodation. Dru Gladney, of Pomona College in California, says a hallmark of the Hui is their skill at negotiating around the grey areas of China’s political system. + +Thanks to this, they have been successful economically. They dominate halal food production (see article). They are emerging as the favoured middlemen between China’s state enterprises and firms in Central Asia and the Gulf. China’s largest school of Arabic is a private college, set up and partly financed by Hui, on the outskirts of Yinchuan. Most students are training to be corporate interpreters. + +One sign of how far the government tolerates the Hui is that they are even able to practice Islamic (sharia) law to a limited extent. Sharia is not recognised by the Chinese legal code. Yet at the Najiahu mosque, the ahong and the local county court share the same mediation office. Every week or so, the ahong adjudicates in family disputes using sharia. Only if he fails do civil officials step in. + +Surprisingly, the Hui have not lost their religion or identity despite centuries of assimilation. Mr Ma, the retired professor, says Hui people often form close-knit communities and pursue similar occupations; restaurants and taxis in many cities are run by Hui. But their religion is “still the most important binding factor”, he says. The Hui maintain a delicate balance. They can practise their religion undisturbed thanks to assimilation. But it is their religion that makes them distinct. + +This is a fine line, and it means the Hui are vulnerable to China’s shifting religious attitudes. They have so far mostly escaped Islamophobia. But bigotry is becoming more common on social media. “The greens” (a significant colour in Islam) has become an online term of abuse. So far the government has tolerated the Hui’s culture. But in Ningxia in July, Xi Jinping, the president, told his audience to “resolutely guard against illegal infiltration”—even though there is little sign of any. His government has become more repressive towards many religious groups. The Hui could be next. + +But the lessons offered by the Hui’s experience are largely positive. Islam, the Hui show, are not the threat that party leaders sometimes imply it is. They show that you can be both Chinese and Muslim. At Yinchuan airport, a returning pilgrim is waiting for his luggage. He wears a white robe with “Chinese pilgrimage to Mecca” stitched in green Arabic letters below a Chinese flag embroidered in red, the symbol of an atheist party-state. “It was the experience of a lifetime,” he says of the haj—and disappears into a sea of white hats worn by hundreds of cheering fellow Muslims who fill the arrivals hall to welcome him home. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21708274-choosing-assimilation-chinas-hui-have-become-one-worlds-most-successful-muslim/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Halal food + +Keeping pure and true + +Regulating halal food is creating headaches for the government + +Oct 8th 2016 | BEIJING | From the print edition + + + +CHINA’S cities abound with restaurants and food stalls catering to Muslims as well as to the many other Chinese who relish the distinctive cuisines for which the country’s Muslims are renowned. So popular are kebabs cooked by Muslim Uighurs on the streets of Beijing that the city banned outdoor grills in 2014 in order to reduce smoke, which officials said was exacerbating the capital’s notorious smog (the air today is hardly less noxious). + +Often such food is claimed to be qing zhen, meaning “pure and true”, or halal, prepared according to traditional Islamic regulations. But who can tell? Last year angry Muslims besieged a halal bakery in Xining, the capital of Qinghai province, after pork sausages were found in the shop’s delivery van. There have been several scandals in recent years involving rat meat or pork being sold as lamb. These have spread Muslim mistrust of domestically produced halal products. + +In response, some local governments have introduced regulations requiring food purporting to be halal to be just that (though not going into detail of what halal means, such as the slaughter of animals with a knife by a Muslim). Earlier this year, however, the national legislature suspended its work on a bill that would apply such stipulations countrywide. + +There is much demand for one. Local rules are often poorly enforced. Advocates of a national law say a lack of unified standards is hampering exports to Muslim countries. According to Wang Guoliang of the Islamic Association of China, the country’s halal food industry makes up a negligible 0.1% of the global market. + +The government began drafting a national halal law in 2002. But Muslim communities in China have varying definitions of the term. Work on the bill was slow. Each year, during the legislature’s annual session in March, Muslim delegates called for faster progress. But there were opponents, too. Some scholars argued that the government should not regulate on matters relating to religious faith. Others said that by giving in to the Muslims’ demands, China would encourage them to press for more concessions and ultimately form their own enclaves run by sharia. + +Such views may have given pause to China’s leaders. In April, at a high-level meeting on religious affairs, President Xi Jinping said religion should be prevented from interfering with the law. That month Wang Zhengwei, a Muslim official who had been pushing for halal legislation, was removed from his post as the head of the State Ethnic Affairs Commission. + +Also in April, the Communist Party chief of Ningxia urged officials to “sharpen [their] vigilance” against the use of halal labels on products such as toilet paper, toothpaste and cosmetics. And the government of Qinghai province ordered the inspection of Muslim-only toilets and hospital rooms, as well as shops catering to Muslims, to make sure that halal symbols were being used only on food. Xinjiang, the far-western region that is home to the Uighurs, recently introduced an anti-terrorism law threatening punishment of those who “overextend” halal rules. Officials clearly worry that those who do so might be the same sort of people who embrace jihad. + +Ismael An, a Muslim writer, says this is overreacting. “Supporters of the halal law are not the so-called extremists, because real extremists don’t make demands through legislation,” he says. On the internet, however, a small but vocal group of Islamophobes has been calling for a boycott of halal-certified products. They say the price of such goods factors in payments to Islamic groups that grant the certificates—they do not want to give the religion even indirect support. Ironically, it is the non-Muslim love of Muslim food that will ensure the campaign will not succeed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21708275-regulating-halal-food-creating-headaches-government-keeping-pure-and-true/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +The war against Islamic State: The battle for Mosul + +Iraq’s Sunni minority: The day after + +Zanzibar: Trouble in paradise + +Nigeria’s self-publishers: Fifty Shades, Sahel-style + + + + + +Articles Sections Next + +The war against Islamic State + +The battle for Mosul + +An imminent offensive hopes to end the jihadists’ reign of terror in Iraq’s second city. But the future is fraught with dangers + +Oct 8th 2016 | BAGHDAD | From the print edition + + + +AS IRAQ’S army, backed by America and its allies, mobilises at Mosul’s gates, Islamic State’s rigid hold over Iraq’s second city shows signs of slipping. In August an Iraqi ground offensive pushed IS from the Qayyara area, some 65km (40 miles) south of Mosul, and its adjacent oil wells, costing the self-styled caliphate much of its revenue, and allowing a big forward base to be built. Jihadists’ salaries, once higher than those of Iraqi soldiers, have plummeted. Its hope of retaining an industrial base is but a dream. When it left Qayyara IS set the oil wells aflame. An orderly tax regime is degenerating into extortion of the 1.5m people left under its rule. For the right price, anyone can leave the city. Even the “caliph”, Abu Bakr al-Baghdadi, is said to have fled to take refuge in a village. + +His military capabilities seem as shrunken as his financial ones. Mr Baghdadi has emulated the Prophet Muhammad’s defences of Medina from pagans, digging a trench around Mosul. But so severe has been the American-led bombardment by jets and drones that IS is now said to be deploying children instead of foreigners as suicide-bombers. All but two of IS’s 44 founding fathers are believed to have been killed, and Mr Baghdadi is struggling to find replacements. Inside the city his men grapple with a low-level insurgency. As under Saddam Hussein, the leader’s underlings see spies everywhere. They chop off the ears of men evading conscription. Mobile phones are banned, so people hide SIM cards in loaves of bread. So common are IS’s pre-dawn house raids that women wear veils in bed, says an exiled Mosul MP. + +As IS contracts, the coalition’s generals seem ever more confident. Iraq’s army, which crumbled in the face of IS’s advance to the outskirts of Baghdad in 2014, has recovered its strength, thanks to American retraining and arms supplies, including drones and F-16s for its rebuilt and retrained air force. Despite falling oil prices, rapidly expanding production has helped meet the cost. Iraq’s prime minister, Haider al-Abadi, from the Shia majority, has embraced Sunni Arabs, rebuilding their force of irregulars that his predecessor largely disbanded. And, crucially, he has quietly brought back the Americans, including parts of the 101st Airborne Division, which occupied Mosul in 2003. A third contingent in six months arrived last month, quietly pushing the total of American troops in Iraq to over 5,000. + +Reinvigorated, Iraq’s army has won every battle it has fought against IS since March 2015. IS has been pushed out of 17 cities and all but small pockets in Anbar, Diyala and Salahaddin, three of the four main Sunni Arab provinces of Iraq. This month, say coalition sources, the battle for the fourth, Nineveh, which surrounds Mosul, will begin. Officials in Baghdad predict that IS’s fighters will shave their beards, shed their uniforms and melt away, just as Saddam’s army did when America invaded in 2003. “It will be a military walk in the park,” says an Iraqi security official. “The jihadists will not risk 4,000 fighters for a battle they can never win.” + +Whether it will be quite such a pushover remains to be seen. In recent encounters IS has chosen to fall back rather than fight, perhaps giving Iraq’s forces a false sense of superiority. Some hope that IS fighters might accept an offer of a safe passage out to Syria. But the jihadists may think twice before trusting any such promises, particularly if Shia militias first take the town of Tel Afar, through which an escape route would pass. And having largely kept their powder dry, they may also reason that it is worth making a last stand for their biggest territorial asset. + + + +When IS fought to hold on to Tikrit two years ago, their 400-odd fighters resisted an enemy 25,000-strong for over a month. IS, says the coalition, has ten times that number dug down in Mosul, and has had over two years to prepare. By contrast, army forces seem significantly smaller this time. Some 7,000 soldiers are deployed around Mosul, says one source, though others estimate two or even three times that number, in addition to perhaps another 10,000 Sunni irregulars, with American special forces in support. More soldiers are said to be nearly trained. But most of the troops are still positioned over 40km away, and the road into Mosul will presumably be heavily mined. Despite Mr Abadi’s assurances that he is in charge of the timetable, critics say that Iraq’s army is marching to America’s electoral beat, looking for progress before election day on November 8th, in order to boost the Democrats. + +Even the most cautious expect the east bank of Mosul to fall quickly. Most of its well-to-do residents have long since escaped. But the 400,000 residents of the old city on the west side of the river are poorer and have fewer means to flee. Together with a profusion of classical Islamic monuments, they could become human and heritage shields should IS decide to make a last stand in the city. Artillery might take out the city’s infrastructure, still remarkably intact, just as it did in Khalidiya, a town of 30,000 in Anbar province, where only four buildings survived after IS chose to fight. The UN worries not only about how and where it might house up to 1m people displaced from Mosul, but about how many would be caught in the crossfire. On the eve of America’s election, if things went badly, Democrats could face uncomfortable comparisons with Russia’s siege of Aleppo. + +Fear of a free-for-all + +Iraq has a plethora of other armed groups, able to draft in well over 100,000 men, who might improve the coalition’s odds substantially. But an influx of Kurdish or Shia militias risks not only alienating Mosul’s large Sunni Arab population but increasing the prospect that they might fight each other to determine the city’s post-IS order. Mr Abadi seems sensibly intent on restricting the Kurds’ Peshmerga (“those who confront death”)and the Shias’ Hashd al-Shaabi (“popular mobilisation forces”) to laying a siege on the city’s outskirts. That would bring them financial benefits, since checkpoints are lucrative. And lest that prove insufficient, the government is also hoping to divert the Shia militias by having them launch an assault on two nearby towns under IS control, Hawijah and Tel Afar. + +The Iraqi army’s preferred backups are two Sunni irregular forces. Sadly, both are fierce rivals. The first is led by Atheel al-Nujaifi, Mosul’s former governor, whose family has held sway in the city since Ottoman times. Based in Kurdistan, his 5,000 armed men work closely with the Peshmerga and are trained by the Turks. The second group comes from south of Mosul and is drawn largely from the Jabouri tribe. It works closely with Mr Abadi’s lot and has contrived to replace Mr Nujaifi as Mosul’s governor and his brother as parliament’s speaker with their own people, both Jabouris. Should outside forces pile in, a free-for-all could ensue, pitting Shias against Sunnis, Arabs against Kurds, and Iraqis against Turks. + +Signs of just such a punch-up already loom. Some parliamentarians representing Mosul have appealed to Shia militias to help them regain the Arab lands that Kurdish forcestook when they pushed IS south with American help. Peshmerga leaders, for their part, have responded by pledging to prevent any non-Kurdish forces, the Iraqi army included, from entering areas currently under their control. + +Turkey, which has a detachment of troops and tanks near Mosul, has offered support, warning that Shia militias might reap revenge on IS and so push Iran’s influence north. Shia militiamen are threatening a forceful response. “If Turkey sends in its tanks to carve out another enclave in Iraq as it has done in Syria, we will turn Mosul into a Turkish graveyard,” says Hadi al-Amari, who commands the Badr force, Iraq’s largest Shia militia. + +Backed by the Americans, Mr Abadi, a civilian, is struggling to find a compromise. Late last month he persuaded Masoud Barzani, president of Iraq’s Kurdish enclave, to visit Baghdad for the first time in three years. The offer of salary payments and an oil deal, he hoped, might persuade cash-strapped Kurdish rulers to accept the authority of the governor he has appointed for Nineveh province, which includes Mosul. Others are unconvinced. “The governor doesn’t have the means to rule either Mosul city or the province,” says Mr Nujaifi, the deposed governor, suggesting his followers could mount a coup. He proposes instead that the province be divided into six cantons, including one each for the Yazidis, Christians, Shabaks and Kurds—all under Kurdish protection. That sounds like a recipe for conflict as well. + +Suspecting a plot to partition Iraq, Shia commanders have vowed to send in their troops “not just to Mosul but to Kurdistan”, says one. Should Turkish forces intervene in Mosul, warns parliament’s new speaker, “they’d be hit by the Iraqi army.” IS’s removal from the city will no doubt bring cheers. But without a deal securing agreement from the many parties with an interest in Mosul’s future, the danger is that the conclusion of one battle will merely sound the bugle for the next. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21708246-imminent-offensive-hopes-end-jihadists-reign-terror-iraqs-second/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Iraq’s Sunni minority + +The day after + +Once Islamic State is defeated, what will Iraq’s angry Sunnis do next? + +Oct 8th 2016 | From the print edition + +Samarra’s dome rebuilt + +A PROMINENT Sunni preacher is describing how the demise of Islamic State could herald a new era of Sunni-Shia reconciliation, when a Shia soldier at the checkpoint outside his home town of Samara interrupts his musings. “Your people blew up our shrines,” he says, ordering the sheikh, Salah al-Taha, out of the car. Left to wait in the sun for a couple of hours while a commanding officer is roused from his rest, the sheikh’s resentment returns. Samarra, 125km (80 miles) north of Baghdad, is no longer his own, he says. Shia militias have taken over the old city, and chased out its Sunni inhabitants. + +In place of Samarra’s past easy symbiosis—where Sunnis thrived from running hotels and restaurants for Shia pilgrims—the city is now divided in two. A seething outer new town of displaced Sunnis surrounds an inner pockmarked ghost-town manned by a conglomerate of Shia militias. Its centrepiece is the gold-plated dome over the shrine of the 10th and 11th Shia imams (rulers), which jihadists blew up in 2006. The shrine has been restored with even more glitter. The rare Sunni crossing its threshold still offers a prayer, but the Sunnis who once tended the shrine have been dismissed. Sunni couples no longer make the routine stop at its ornate inlaid doors on their wedding day. “We want freedom from military occupation,” says a Sunni local councillor. + +Under militia protection, Shia pilgrims celebrate their liberation from 1,400 years of Sunni oppression and tyrants who killed their founding imams. Samarra’s Sunnis clamber up the helter-skelter of their malwiya, the towering minaret with which the Abbasid caliphs adorned their capital 1,200 years ago when they ruled the Islamic world from this little bend in the Tigris. Even that is now topped by a militia flag and would, if the soldier at the checkpoint had his way, be out of bounds. “Our saints are buried underneath,” he explains. “Don’t walk on their graves.” + +The long decline + +Over the past century Sunnis have lost most of the capitals from where the caliphs once ruled their vast empire. From the ruins of Palestine’s Ramla to Baghdad, colonial powers took the Fertile Crescent from the Ottomans, and divided it into what would become Israel, Lebanon, Syria, Iraq, and Jordan, each bar the last now under non-Sunni rule. Though Sunnis still make up a majority in Islam’s heartland, they live in many places as subject populations. Of the Middle East’s 26m refugees and displaced, over 85% are Sunni. Wars raging in Syria, Iraq, Libya, Yemen mean the process of dispossession has not yet run its course. + +Nowhere is the loss felt more keenly than in Iraq. Since the 16th century, Sunnis have looked to it as the bulwark against the westward push of Shia Iran. But America’s invasion in 2003 upturned the old order in favour of Iraq’s Shia majority. In the name of extirpating Saddam Hussein’s tyranny, their new leaders replaced the old army and its Sunni officer class with a new Shia-based one, and through de-Baathification purged the ruling party’s Sunni officials from government. Across the country, from the plinths where Saddam Hussein once smiled down, ayatollahs now beam. Not a Sunni face is to be seen. “The state of Hussein” (the third Shia imam) reads the ensign on an advancing army jeep. + +The past ten years have been hard. In the name of fighting terror, Kurdish and Shia vigilantes chased former Sunni landlords off their lands, first in southern and northern Iraq and then in its centre. Checkpoints put Sunnis under a Shia siege, and in large parts prevent a mass Sunni return. “They displace Arabs from villages by calling them Daesh,” says a Kurdish intelligence officer, using the pejorative name for Islamic State (IS). The region’s former masters now inhabit tent camps. The numbers are uncertain, but of Iraq’s perhaps 7m Sunni Arabs, some 2.5m are displaced, many of them now in Iraqi Kurdistan where they have to renew permits every four months, as if in a foreign land. Some 1.5m have left Iraq altogether. A drive through the length of Iraq is like visiting the dead cities ancient Rome left behind in Syria. “I can’t go home,” complains Saleem Jabouri, who as speaker of parliament is Iraq’s most senior Sunni Arab official. The Shia militias ruling his home town in Diyala province, he says, won’t give him a permit. Relatives languish in secret prisons. His local Sunni mosque has become a Shia one. + +Population displacement is nothing new. Saddam Hussein, the Sunni ex-president, practiced it avidly against Shias and Kurds. But because they have fallen so far, Sunnis have found it harder to bear. Lieutenant-General Raad Hamdani, the last commander of Saddam Hussein’s Republican Corps, now exiled in Jordan’s capital Amman, entitled his published diary “Before History Forgot Us”. In their cafés in Erbil, lecturers from Anbar pass the days watching videos of wives and daughters in dusty deserts without latrines recounting the massacre of their kinsmen by Shia militias after the recapture of Falluja from IS. “Americans raised the Kurds, Iran raised the Shias, but we, Sunnis, are like abused children,” says a Sunni politician in Baghdad. “We’re the orphans of Iraq.” + +Typically, Sunnis’ response has been violent. Force, as Ibn Khaldoun, a great Islamic historian, notes in his classical treatise “al-Muqadamma”, is one of four legitimate ways Sunnis gain power. In multiple manifestations—from al-Qaeda to IS— they have fought to get Iraq back. At least at the outset, Abu Bakr al-Baghdadi’s caliphate won widespread Sunni support for retaking the lands from which the Kurds and Shias had pushed them. While IS purged its conquests of non-Sunnis, it largely avoided battling for Shia territory. One by one, recalls General Hamdani, his officers in Mosul called him to bid farewell before signing up. Ever since Rashid Rhidha, an early 20th-century Islamic reformer, Mosul had been identified as the seat of a potential modern caliphate. Perhaps Sunnis could regain their honour and grandeur again, he says. + +The jihadists’ rule, however, has been a rude awakening. “We discovered too late that Sunnis were the first victims of the caliphate,” says a Sunni exile from Mosul. For two years, the city’s children have attended public executions and learnt to count by enumerating apostates killed by suicide-bombers. Universities have shut. The industrial base has been destroyed. Towns have been devastated by coalition bombing, militia artillery and the booby-traps of retreating jihadists. But once IS loses Mosul, its biggest holding, where will angry, dispossessed Sunnis turn? + +Many might yet cling to IS, fearful of revenge attacks at the hands of Shia or Yazidi militias. Indeed, based on precedent, some will opt for more violent nihilism. Each stage of the erosion of Sunni territory has unleashed a fresh bout of jihadism, condemning the region (and much of the world beyond) to decades of mayhem. IS is already preparing for the day after Mosul falls. Anticipating its transition from territorial to metaphysical caliphate, Mr Baghdadi has designated a successor. Drawing on financial investments, expertise and diehards in sleeping cells, loyalists chatter on social media about resurrecting al-Qaeda’s strategy of tawahush, the unleashing of wildness and chaos. + +A new hope + +More pragmatic jihadists speak of reverting to membership of al-Qaeda, or rather its offshoots which in Syria have evolved into less vicious movements. Cheeringly, a far larger number now question the utility of jihad altogether. Jihadist projects to win back Sunni heartlands with barbaric levels of violence have consistently ended in failure, precipitating more retreats. Among many Sunni tribal and religious figures, grandiose plans for a comeback are losing their lure. “They thought they could contain Iran, and it’s backfired,” says a Kurdish intelligence officer. “Sunnis are displaced all over the world.” + +Out of such grievances, militant movements were repeatedly born in the past. This time, Sunnis are pausing for thought. Mr Jabouri insists Sunnis have “learnt the hard way the costs of extremism.” Like others, he speaks of the limitations imposed by Sunnis’ weakness and the need for greater pragmatism. Recent changes inside Iraq encourage those who previously damned the post-2003 government to ask whether it might be possible to find accommodation with it. Some diehards insist the system is too corrupt, too Iranian and too broken to fix, but fewer are listening. + +Haider al-Abadi, Iraq’s prime minister, seems more even-handed than his predecessors. He has promised to constrain the Shia militias. Other Shia leaders, too, seem to recognise the danger of leaving the conditions that spawn jihadism untreated. In 2008 the American and Iraqi forces booted al-Qaeda out of Mosul, only for it to morph into something worse. Parliament in Baghdad has signalled willingness, recently tinkering with new laws on de-Baathification. “If you end punitive de-Baathification as the Kurds have done in the north, the majority would go back,” says a sheikh whose council claims to represent 70,000 tribesmen exiled in Amman. + +Indicative of a post-IS hope, Sunni communities buzz with a host of proposals for ways forward. Most revolve around some form of devolution and self-rule, which might offer a haven for millions of displaced Sunnis. “We were always the most ardent proponents of a united Iraq,” says Ali Samir, the sheikh of Falluja’s Mhammada tribe. “Now we just want our own iqlim [region].” His relocation to Erbil, the capital of Kurdistan’s autonomous regional government, appears to have provided him with a model. Independent-minded Kurdish officials, anxious to win support for their vision of a United States of Iraq, talk up the advantages of a Sunni state, linked to Saudi Arabia and Jordan. + +That notion has many detractors. Nationalists denounce it as a slippery slope to partition, and a recipe for intensified battles between Sunnis and Shias grappling over boundaries. Other critics view it as economically unworkable. Kurdistan’s descent into insolvency is a lesson in how unviable little states are, even with oil (which the Sunni Arab areas lack). Above all, Sunnis lack any semblance of collective leadership. “If you put Mosul, Tikrit and Falluja together, they would fight each other for pre-eminence,” says a tribal leader from Anbar. A more popular model is to devolve more power to smaller units (ie, existing provinces). Local elections scheduled for next spring might yet encourage Sunnis to take part more fully in the political system. + +Can Abadi keep it together? + +Such a reconstitution of Iraq is fraught with difficulties. While Shia politicians accept devolution of services, like health and electricity, they bridle at provincial governors being allowed to raise their own security forces which might challenge the militias’ presence. “It will spur another sectarian civil war until Iraq falls apart,” says a militia leader. Still, led by Italy’s Carabinieri, the coalition is training 900 policemen every three months. After a local police force took shape in Tikrit, 95% of the population has returned. A tribal sheikh in Anbar is negotiating deployment of a force which could reopen the Baghdad highway to Jordan, part-funded by tolls. + +But ultimately, for the periphery to function, Sunnis will need to find faith in the centre. Yahya Kubeisi, who runs an Iraqi think-tank in Amman, advocates a distribution of senior posts by sect, as was done in Lebanon at the end of its long civil war. Gulf states, led by Saudi Arabia, will also need to work with Iraq and treat it as a fellow Arab state, not an Iranian satellite, supporting reconstruction of shattered Sunni provinces. “Since Salman became king we’ve had not a penny from the Saudis,” complains a senior UN official. Critical to all of the above will be an enduring American presence. “The West handed Iraq to Iran,” says the Falluja sheikh. “We want those who brought this tragedy on us—the Americans and Britain—to come back. To save Anbar from becoming an Iranian bridge to the Mediterranean we need an iqlim under US protection.” + +Attempts at reconciliation feel tortured, but at least the sects are again talking, not boycotting. “In the past each sect used to sit in separate corners of the parliamentary canteen,” says a Sunni MP from Mosul. “Now we argue at the same tables.” Quenching the schismatic flames depends on countries beyond Iraq’s control, like Iran and Saudi Arabia. But restoring Sunnis’ place in a post-IS Iraq would be a good place to start reducing the heat. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21708263-once-islamic-state-defeated-what-will-iraqs-angry-sunnis-do-next-day/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Zanzibar + +Trouble in paradise + +Tanzania’s two component parts are not getting on well + +Oct 8th 2016 | ZANZIBAR TOWN | From the print edition + +Not as nice as it looks + +THE young woman’s voice is flat, as she describes a group of masked men breaking down the door while she slept in March this year. She says she was then forced into a car, beaten and gang-raped. Afterwards a passer-by found her abandoned on the roadside, unable to walk unsupported. “It was so painful,” she says, staring into the middle distance. “When I remember it, it’s a trial.” The woman is one of dozens of people on the archipelago of Zanzibar who claim to have been attacked by plain-clothes militiamen, known as “zombies”, since March 2015. Their crime: supporting the main opposition party. + +In the West, Zanzibar conjures up images of sugary white sands, warm breezes and turquoise waters. But Tanzania’s islands have a darker side. From the 18th century an Arab elite grew rich there trading ivory, spices and slaves. The mainly Muslim archipelago gained independence from Britain in December 1963, though only very briefly: the sultan was overthrown a month later and the island was merged with Tanganyika on the mainland in April 1964. + +The country has been ruled since 1977 by the Chama cha Mapinduzi (CCM), the Party of Revolution, now the longest-surviving ruling party in Africa. But allegations of vote-rigging and demands for a change in Zanzibar’s relationship with the dominant mainland have followed every election since the advent of multi-party voting in 1995. + +The most recent contest, in October 2015, was particularly outrageous. During the campaign, the CCM claimed the sultan might return from exile in the British town of Portsmouth if the opposition was victorious. The head of Tanzania’s electoral commission annulled the Zanzibari presidential vote, claiming irregularities, when it became clear the candidate of the opposition Civic United Front (CUF) was likely to win. The CUF then boycotted the election re-run in March, handing victory to the incumbent, Ali Mohamed Shein. + +Tanzania has been lauded for its stability since independence. But this is partly because the CCM’s hold on the mainland has been relatively unchallenged, at least until now. Its response to the political challenge on Zanzibar, however, is typical of ruling parties in the region: tilt the playing field and allow extra-legal violence during election campaigns; then rig the vote and keep a lid on the ensuing discontent. + +After the re-run election in March the “zombie” attacks died down. But in the past couple of weeks the militia has again been harassing people and burning down houses in Zanzibar town, says Ismail Jussa Ladhu, a CUF politician. Meanwhile in the past few months dozens of opposition party officials and supporters in the northern island of Pemba have been arrested. + +The CUF claims to want only to return to the government of national unity that allowed it to rule Zanzibar with the CCM between 2010 and 2015. That would be sensible given the islands’ political divide: the CUF’s claimed victory in last October’s annulled election, with 52% of the vote, was a narrow one. But it has not mounted any real protest, despite having initially said it would lead a campaign of civil disobedience. America did suspend $472m of aid to Tanzania over the election re-run, deeming it “neither inclusive nor representative”. But the government shrugged off the rebuke, and the opposition’s plea for more international help went unanswered. “Zanzibar doesn’t feature highly on the agenda of the international community, particularly because there hasn’t been widespread violence,” says Adjoa Anyimadu of Chatham House, a London-based think-tank. + +Zanzibar has most of the ingredients for unrest: a population of mostly young, often unemployed Muslims that “view the mainland as a colonial master”, as a local journalist puts it, and could be tempted by Islamist extremism. Elsewhere that has been a recipe for disaster. But with the instruments of state power at its command, the CCM, like so many other ruling parties on the continent, is for now successfully tightening its grip over a divided society. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21708269-tanzanias-two-component-parts-are-not-getting-well-trouble-paradise/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Nigeria’s self-publishers + +Fifty Shades, Sahel-style + +Northern Nigeria’s subversive love literature + +Oct 8th 2016 | KANO | From the print edition + + + +A FEW minutes into Kantin Kwari market, sandwiched between the stalls selling grain and those hawking second-hand shirts, is a little alleyway where girls flock for advice. It is in short supply in Nigeria’s mostly Muslim north, where women are poorly schooled and married off at their fathers’ behest, often as children. Those with wedding woes or family dramas could do worse than consult the littattafan soyayya, or “love literature”, flogged by booksellers there. + +Written in Hausa, these romantic novels are the work of mostly female authors, who have been printing their own works in Kano since Nigeria’s publishing industry fell apart in the 1980s. They are not exactly “Fifty Shades of Grey”, the West’s self-published sex sensation of recent times: many are classic Cinderella stories or pious parables about housewifery. But there are also blistering tales of child marriage, polygamy and philandering; subversive stuff for a conservative region. + +This is sadly familiar to many of the authors. Balaraba Yakubu, a pioneer of the industry, recounts how she was removed from school to be married at 13. Another writer, Sa’adatu Baba Ahmed, had to marry her late husband’s polygamous brother. They say their books can teach lessons about equality that girls do not learn in school—if they go there at all. In some parts of northern Nigeria there are three boys in class for every girl. “A lot of women in our culture do not have a voice,” Ms Yakubu explains. + +As with Charles Dickens in Victorian England, soyayya books are often serialised. The poor can snap them up for as little as 50 naira ($0.15) in open markets, where the most popular authors sell tens, or even hundreds, of thousands of copies. Abdulkadir Dangambo, a local professor, says that more books are now printed in Hausa than in any other African language. Some are made into local movies; and self-publishers turn into agony aunts as they field calls from fans. + +That does not mean their stories go down well with the Muslim morality police in Kano, where a governor once incinerated a collection of their “pornographic” pages. State officials accused Ms Ahmed of being bribed by foreigners after she wrote about an HIV-positive character with a taste for prostitutes. The censorship board often removes writers’ steamier scenes. No surprise that many prefer to bypass the formalities and publish what they want from roadside stands. “Someone has to tell people about these things,” shrugs Ms Ahmed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21708268-northern-nigerias-subversive-love-literature-fifty-shades-sahel-style/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Italy’s referendum: A great big reform package + +Spain’s Socialists: The battle for a party’s soul + +German conservatives: Politisch inkorrekt + +Russia v America: Going nuclear + +Jean-Marie Le Pen: Un prophète + +Charlemagne: The wizard of Budapest + + + + + +Articles Sections Next + +Italy’s referendum + +A great big reform package + +Matteo Renzi faces a tough battle to fix Italian governance + +Oct 8th 2016 | SEREGNO | From the print edition + + + +AT SIX o’clock on a Sunday evening, Ettore Rosato is addressing an audience of fewer than 100 people in Seregno, a picturesque commuter town north of Milan. His brief: to persuade them to back the government’s constitutional reform in a referendum eight weeks hence. Earlier that day Mr Rosato, who leads the governing Democratic Party (PD) in the Chamber of Deputies, was in Switzerland canvassing expatriate voters; the day before, in Sardinia. He will not stop zigzagging through Italy until the vote is held on December 4th. + +That his party should deploy a politician of Mr Rosato’s stature to a place like Seregno (population: 45,000) attests to the fear that has seized the PD as poll after poll finds majorities ready to reject the reform. Matteo Renzi, the prime minister, has said he will resign if he loses. That has turned the referendum into a personal vote of confidence, at a time when his popularity is waning and the economy slowing. + +The gamble is understandable. Mr Renzi and his advisers are convinced Italy’s woes are institutional, that under the current system structural reforms will be thwarted by vested interests, and that only a government with wider powers can modernise the country. Yet for Italians, this evokes deep misgivings. Similar talk was used to justify the fascist dictatorship in the 1930s. After the second world war the authors of Italy’s republican constitution dispersed power so it could not be wielded by any one person or institution, giving the two houses of parliament equal powers. + + + +That creates problems, Mr Rosato explains. Bills go back and forth between the chambers until they can be passed in identical form. One recently approved measure was first tabled 30 years earlier. The constitutional reform would drastically reduce the powers of the senate, turning it into an assembly of regional worthies who for the most part could suggest, but not enforce, changes to legislation. Another inefficiency is that Italy has four levels of government. The reform would abolish provincial administrations and remove many of the overlaps between regional and central authorities. + +Were that all, Mr Rosato and other PD notables might not be slogging around Italy. For many opponents, the reform only becomes toxic when combined with an electoral law introduced last year that makes future governments virtually indestructible for the five years of their mandate. It gives them a guaranteed majority in the lower house. And since the chamber’s deputies will be elected on slates drawn up by their party leaders, those in government will be unlikely to rebel against their prime minister. + +Many see this as a potentially hazardous mix in today’s volatile European politics. In a televised debate with Mr Renzi, Gustavo Zagrebelsky, a former head of the supreme court who serves as honorary president of the No campaign, said: “I’m not thinking of you and your government, but of what could come tomorrow. I am thinking of the populist movements.” Italy’s populists, the Five Star Movement (M5S), are hard on the heels of the PD in the polls. Many rejectionists fear that Mr Renzi could win the referendum but lose the next election, ushering in five years of government by M5S’s leader, the ranting ex-comedian Beppe Grillo. + +M5S is nevertheless campaigning against the proposal, as are Italy’s other opposition groups and a dissident PD minority. Their motives are mixed. The referendum offers a chance to get rid of Mr Renzi and stymie a reform that threatens to reduce his opponents to irrelevance. Italian power-brokers worry that abolishing provincial governments would rob them of a handy source of patronage. And Silvio Berlusconi, the leader of the Forza Italia party, backed the reform at first, but changed his mind after Mr Renzi outwitted him in negotiations leading to the election of Italy’s president, Sergio Mattarella. + +The prime minister’s chances might be enhanced if he could proffer a few sweeteners to voters. But the lack of economic growth, and Italy’s euro-zone obligation to keep its budget deficit to 3% of GDP, limit his options. In a move smacking of desperation, he has revived a hoary pledge, made by many a government before, to build a bridge linking Sicily to the mainland. + +Much may depend on whether voters examine the merits of the reform, not those of the government. “The big weapon in the government’s armoury is that the reasons for a ‘yes’ are easier to get across than those for a ‘no’,” says Antonio Noto of IPR Marketing, a polling firm. He and other pollsters see evidence the government is picking up support on the right, particularly from Forza Italia supporters. Mr Renzi’s chances may not be as slim as they seem. But if the economy dips again before December 4th, all bets are off. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21708253-matteo-renzi-faces-tough-battle-fix-italian-governance-great-big-reform-package/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Spain’s Socialists + +The battle for a party’s soul + +The ousting of Pedro Sánchez may give the country a government + +Oct 8th 2016 | MADRID | From the print edition + +He said no, the party said go + +IF ANY political party can claim to have invented modern Spain, it is the Socialists. They have ruled for 21 of the 39 years of Spain’s restored democracy. Under Felipe González, the Spanish Socialist Workers’ Party (PSOE), to give it its full name, took the country into the EU and NATO and modernised its economy. And under José Luis Rodríguez Zapatero it modernised cultural attitudes, loosening restrictions on abortion and approving gay rights. + +Now the PSOE threatens to tear itself apart. Amid extraordinary scenes at its headquarters in the placid Madrid barrio of Argüelles, the party’s general secretary, Pedro Sánchez (pictured), clung to his post for three days after more than half his executive resigned. Following a 12-hour meeting of the party’s nearly 300-strong federal committee on October 1st, which featured shouts, tears and what looked like an attempt to rig a secret ballot, Mr Sánchez resigned, defeated by 132 votes to 107. He has been replaced by a caretaker committee. + +One cause of this internal warfare was the party’s string of electoral defeats. It faces new rivals, in Podemos on the far-left and in Ciudadanos, a centrist liberal party. After four years of an unpopular conservative government under Mariano Rajoy, in an election last December Mr Sánchez still lost almost half the PSOE’s seats compared with its recent peak of 2008. It did no better at a second election in June. + +Spain’s fragmented parliament left the Socialists with a uniquely uncomfortable dilemma. They could try to form a government with Podemos and Catalan separatists, which would be repudiated by their more moderate voters, or abstain to let Mr Rajoy govern, even though they are infuriated by his austerity measures and instances of corruption in his People’s Party (PP). Worried about letting Podemos claim the mantle of opposition, Mr Sánchez took the first course. “No means no,” he said of his refusal to end the deadlock. + +That stance would have meant a third election in December, at which the Socialists were likely to lose more ground. This alarmed most of the PSOE’s powerful regional barons and all of its previous leaders. After the party was trounced in regional elections in Galicia and the Basque country on September 25th, they acted. + +Mr Rajoy will probably have a second go at winning a parliamentary mandate later this month. At least some Socialists are likely to abstain. After ten months without a government, Spain would have one at last, in the form of a minority PP administration backed by Ciudadanos. + +This buys time for PSOE to renew itself. Mr Sánchez is a symptom rather than the cause of PSOE’s difficulties. As the first Socialist leader chosen in a primary of the membership, he claimed the backing of the grass-roots, ignoring the regional barons. “The PSOE does not just belong to its activists, but also to the citizens who voted for it,” replied Susana Díaz, the leader of the regional government in Andalusia and Mr Sánchez’s most powerful foe. The battle for the leadership may be rejoined at a party congress next year. + +The party is divided geographically. In eastern Spain it has cut deals with Podemos and nationalist parties. In the poorer south it practises clientelism. Spain’s two main parties wield enormous powers of patronage. “They are machines which have become disconnected from the citizens,” says José María de Areilza, a professor of constitutional law. Both Mr Sánchez and Ms Díaz have made their careers entirely within the party. + +The underlying problem is that the PSOE’s electoral base has shrunk to a core, mainly of the rural working class. It has lost the urban middle class: in most cities it came no better than third at the last election, points out Ignacio Urquizu, a Socialist deputy, writing in El País, a newspaper. + +The PSOE’s problems are those of all European social-democratic parties, writ large. It has lost more ground than any of the others apart from Greece’s PASOK, according to Kiko Llaneras, a political analyst. The party paid a price for being in office when the financial crisis broke in 2008. Any Socialist leader would have found it hard to respond to the rise of Podemos, which took 21% of the vote at the last two elections by voicing young Spaniards’ rage at a self-serving political establishment. + +All is not lost for the PSOE. The 22% vote share it won in June is relatively high. And Podemos has its own problems as it tries to go beyond a protest movement. It is visibly split three ways between Pablo Iglesias, its Leninist leader; Iñigo Errejón, his more moderate deputy; and its big-city mayors, who take little notice of either. As for Mr Rajoy, he will probably be rewarded for his strategic patience. But to get much done, he may need the votes of the Socialists in parliament. That gives the PSOE a chance to take the initiative again, if only it can find leaders imaginative enough to seize it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21708250-ousting-pedro-s-nchez-may-give-country-government-battle-partys-soul/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +German conservatives + +Politisch inkorrekt + +A right-wing German media brand builds a following + +Oct 8th 2016 | BERLIN | From the print edition + + + +DIETER STEIN, the editor of Junge Freiheit (“Young Freedom”), a newspaper, represents the German right wing’s thoughtful side, rather than its demagogues. In his office, a poster of Frederick the Great, a Prussian monarch beloved by conservatives, hangs on one wall. Another has a picture of Dresden’s Church of Our Lady—destroyed by the Allied firebombing of 1945, fully rebuilt only in 2005, and today iconic for German nationalists. Above his desk hangs a portrait of Count Claus von Stauffenberg, an army officer executed after trying to assassinate Adolf Hitler in 1944. Mr Stein considers him a conservative patriot, part of a “positive tradition” that Germans can be proud of. He thereby draws a hard line between his newspaper and the neo-Nazi right. + +Yet for most of the three decades since Mr Stein founded Junge Freiheit—first as a student newspaper and, since 1994, as a general weekly—the label “right” condemned him to the margins of Germany’s media landscape. In German usage, the term does not include the centre-right. For instance Bild, the largest tabloid, opposes tax rises, eurozone bail-outs and uncontrolled immigration. But its pro-American and pro-Israeli stances keep it well within the postwar political consensus. “Right”, by contrast, implies a step outside the mainstream and, given Germany’s Nazi history, into the danger zone. The constitutional protection office, founded after the second world war to stifle totalitarian tendencies, placed Junge Freiheit “under observation” until Mr Stein won a court case against it in 2005. Advertisers and interview partners used to shun the paper. + +That began to change in 2013, when a populist party, the Alternative for Germany (AfD), was founded. Newspaper and party are officially unaffiliated, but they overlap much as Fox News does with America’s Republicans. Like the AfD, Junge Freiheit extols the traditional family and disdains feminism and sexual adventurism. It yearns for law and order, and is remarkably empathetic towards Russia. And, of course, it is aghast at the alleged threat to German culture posed by Muslim immigrants. Readership soared after September 4, 2015, when Chancellor Angela Merkel opened Germany’s borders to refugees in what the newspaper sardonically calls a “welcome putsch”. Circulation was 28,246 in the second quarter of 2016, up 18% over that period in 2013. + +That is modest compared with right-wing media in the Netherlands or France. But for Germany it represents the first counterweight to the mass media’s leftist tilt. A study in 2005 found that 62% of German journalists sympathise with centre-left parties. Accusations that political correctness prevails on public television and radio have a kernel of truth. Supporters of the AfD are rebelling against this mainstream fare at least as much as they oppose immigrants or euro-zone bail-outs. Lügenpresse (“liars’ press”), a loaded term once used by the Nazis, is a common chant at party rallies. According to a poll in 2015, 44% of all Germans share the sentiment behind the word. + +Mr Stein does not use the word Lügenpresse, nor does he term himself a man of the “right”. He considers both words contaminated by German history. Instead he criticises what he calls “nanny journalism”. He knows that his will always be a minority view in Germany; even in his own family, his four siblings are all leftists. One new poll gives the AfD 15% of the vote. Whether that share grows or shrinks, the presence of a right-wing voice in Germany’s media landscape is part of the country’s path to political normality. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21708256-right-wing-german-media-brand-builds-following-politisch-inkorrekt/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Russia v America + +Going nuclear + +Angry over sanctions, Russia suspends an arms-control deal + +Oct 8th 2016 | MOSCOW | From the print edition + + + +THE list reads like a hostage-taker’s demands. Russia wants America to roll back the expansion of NATO, repeal the Magnitsky Act, end sanctions and pay compensation for Russia’s losses. Until it does, Vladimir Putin declared this week, Russia will stop abiding by an agreement regulating the disposal of plutonium. Russia was forced to act, Mr Putin claimed, because of “the threat to strategic stability posed by America’s hostile actions” (and its failure to deliver on its end of the deal). The move is a reminder that, unlike America, Russia is happy to throw nuclear arguments into the mix when it does not get its way. + +The suspension of the Plutonium Management and Disposal Agreement (PMDA) is a message intended not so much for Barack Obama as for his successor. “Russia does not plan to work seriously with America” until a new administration arrives in 2017, says Andrey Kortunov, head of the Russian International Affairs Council. Mr Putin’s demands serve as a “wish list” should the next American president seek to restore the relationship. + +Tensions between Russia and America have been building over Syria, where ceasefire efforts have failed and Russian jets continue to pound rebels in Aleppo. On October 3rd, the day Mr Putin issued his decree, American officials announced they were pulling out of talks with Russia over Syria. “Russia failed to live up to its own commitments,” the State Department declared. Since the war in Ukraine, according to Samuel Charap of the International Institute for Strategic Studies, a think-tank based in London, Russia and America have managed to protect some islands of co-operation, such as over Iran’s nuclear programme. Now, he says, the tensions have “begun to sweep over those islands”. + +Russia’s willingness to invoke its nuclear might for political aims is alarming. A year after annexing Crimea in 2014, the Kremlin announced it could deploy nuclear weapons there. Even before suspending the PMDA, Russia had eroded the spirit of nuclear co-operation that prevailed after the end of the cold war. For the past three years, America has alleged that Russia is in breach of the 1987 Intermediate-range Nuclear Forces treaty (INF) because it has tested a ground-launched cruise missile with prohibited range. Russia has also refused to discuss limits on tactical nuclear weapons, the anticipated follow-up to the New START strategic weapons treaty of 2010. Mr Putin snubbed Mr Obama’s final Nuclear Security Summit earlier this year. + +Russia’s complaint that it has observed the PMDA more diligently than America does have some substance. Dogged by delays and rising costs in building a special facility to dispose of its plutonium, Mr Obama has opted for a cheaper method of treatment than the one specified in the agreement. Russia has declined to consent to this, putting America in technical breach of the deal. + +To keep the spirit of the agreement, America could press ahead with getting rid of its excess plutonium. Russia says it has no intention of using its stockpile for new warheads. Ridding the world of some of the stuff would make it marginally safer. The danger of suspending the PMDA is not so much in leaving more plutonium about, but in demonstrating that the Kremlin considers nuclear security just another bargaining chip. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21708251-angry-over-sanctions-russia-suspends-arms-control-deal-going-nuclear/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Jean-Marie Le Pen + +Un prophète + +The National Front’s founder thinks he, not his daughter, deserves credit for populism’s success + +Oct 8th 2016 | PARIS | From the print edition + + + +FROM his ridge-top mansion in Saint-Cloud, a suburb west of Paris, Jean-Marie Le Pen commands a sweeping view of the French capital. The 88-year-old founder of the far-right National Front (FN) keeps an antique telescope mounted on a tripod by the window, as if to watch for the hordes of migrants he fears are on their way to “submerge” Europe. Mr Le Pen believes himself to be equally far-sighted when it comes to politics. Donald Trump, he suggests, is benefiting today from his prescience in sensing the nationalist mood decades ago. “Public opinion that once thought we were extremists,” he declares, “now realises that Le Pen was right.” + +Today, the FN’s founder surveys the rise of populist nationalism in the West with a mix of self-satisfaction and regret. His brand of xenophobic outrage has toxic anti-Semitic roots, and last year he repeated an old claim that the gas chambers were a mere “detail” of the second world war. In response Marine Le Pen, his daughter and the current FN leader, evicted the former paratrooper from his own movement and stripped him of the title of honorary president—a decision that on October 5th Le Pen père challenged in court. + +Yet 60 years after Mr Le Pen was first elected to the French parliament, his anti-immigrant, anti-establishment discourse has moved from the margins to the mainstream in liberal democracies from America and Britain to Poland and Hungary. This is cause for much self-congratulation in the mansion in Saint-Cloud. With a laugh that has lost its former throatiness, he compares his role to that of a military advance scout, who “lights the way” and clears a path for others. In a tweet earlier this year, he announced that he backed Mr Trump for the American presidency; he predicts that he will win. Indeed, in a single breath, the FN founder applauds Mr Trump, the Russian president, Vladimir Putin, and Brexit. + +If history, in his telling, has finally shifted his way, however, any sense of triumphalism is tempered by the dynastic fall-out with his daughter. At a time when many of his ideas have taken hold, Mr Le Pen himself is out in the cold. This is because Ms Le Pen has wholly different ambitions, and judged that her father was obstructing them. Whereas Mr Le Pen revelled in provocation and flirted with the law on racism, periodically ending up in court, Ms Le Pen is bent on securing respectability and power. To this end, she has distanced herself from her father’s thuggish cronies, built a team of number-crunching policy wonks and a network of local offices, and shed much of the imagery linked to her father. Her most recent campaign poster does not even mention the FN or display its logo. + + + +This strategy of dédiabolisation (“de-demonisation”) seems to be working. Polls of voting intentions for the presidential elections next spring show Ms Le Pen reaching the second-round run-off, whoever the Socialists or centre-right Republicans field. If Nicolas Sarkozy, a former president, wins the Republicans’ primary next month, she would win the first-round vote, with 27% to his 23%. This far exceeds the 17% her father achieved when he shocked France by securing a second-round place in 2002 . Ms Le Pen has turned the FN from a national embarrassment into a fixture of the French party political set-up. More voters want an “important role” for the party (see chart). And she has established it—remarkably—as the top choice for both working-class voters and the young. At regional elections in December 2015, fully 51% of workers and 28% of under-25s voted for the FN, according to Ifop, a polling group. + +The drama of the Le Pen family fall-out periodically captivates French media. Mr Le Pen still grumbles that his daughter’s rejection of him is “scandalous” and calls her Bruta. (“Rather than Brutus,” he adds, in case the reference is lost, and laughs thunderously at his own joke.) He also thinks it a strategic error. Ms Le Pen has become “too moderate”, he argues. By “evacuating” the ground on the nationalist right, she has opened the way for Mr Sarkozy, the most right-wing contender, to outflank her. + +Mr Sarkozy recently called, for example, for the detention of those suspected of jihadism by the intelligence services, regardless of whether charges have been brought against them. By contrast Ms Le Pen, with improbable restraint, has dismissed such calls and urged respect for the law. This week Mr Sarkozy promised an outright ban on the Muslim veil in France; Ms Le Pen has been careful to cloak her disapproval in secular rules that in theory target all religions, not only Islam. + +Identity politics is fast becoming France’s new campaign ground. The summer has been occupied with a frivolous argument over banning the “burkini” on beaches. But serious concerns persist about terrorist networks and the appeal of jihadism. The risk is that these will lead to widespread fear and the targeting of Muslims. Mr Le Pen may be banished from his daughter’s campaign in 2017. But, when it comes to the battle for ideas, his legacy will be lasting. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21708255-national-fronts-founder-thinks-he-not-his-daughter-deserves-credit-populisms-success-un/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +The wizard of Budapest + +Viktor Orban succeeds only because Europe cannot hold together + +Oct 8th 2016 | From the print edition + + + +“THE moment Hungary is no longer European,” wrote Milan Kundera, a Czech-born novelist, “it loses the essence of its identity.” In his own way Viktor Orban, Hungary’s prime minister, would not disagree. Having bent the Hungarian state to his will, crushed his domestic foes and spun political gold from Europe’s migrant crisis, Mr Orban now has his sights trained on the immigration-friendly elites he claims seek to destroy Europe’s nations from within. Together with Jaroslaw Kaczynski, the de facto leader of Poland, he promises a “cultural counter-revolution” in Europe, based on a defence of nation, family and Christianity. + +Charismatic, bombastic and unembarrassable, Mr Orban squats toad-like astride the Hungarian political landscape. His Fidesz party dominates parliament. Setbacks are skated over. On October 2nd only 40% of Hungary’s electorate cast valid votes in a referendum on the European Union’s refugee-relocation plan, well below the 50% threshold needed to give the result force. No matter: Mr Orban saluted the “excellent result” (98% of voters rejected the EU scheme) and promised to insert it into Hungary’s constitution. The formidable Fidesz spin machine manufactured sophistries to explain how an illegitimate outcome represented the inviolable democratic will of the Hungarian people. + +To many outside Hungary, the government’s brutal treatment of asylum-seekers, its atavistic rejection of outsiders and its elimination of domestic checks and balances place it outside the European mainstream. Fidesz’s steady assault on Hungary’s independent institutions has earned it the wrath—and exposed the impotence—of the European Commission. (Mr Kaczynski is now undergoing a similar experience.) Last month a minister from Luxembourg called for Hungary to be expelled from the EU. + +Mr Orban welcomes their hatred. Surveying Europe’s liberal leaders, he sees a complacent elite ignorant of a quickly changing world. “Europe”, Mr Orban once declared, “is staggering towards its own moonstruck ruin.” If its leaders fail to acknowledge that voters do not share their taste for mass migration and Euro-integration, they will be squashed by the populists rising all around them. After all, Mr Orban has stolen the thunder of Jobbik, a thuggish nationalist party that constitutes the most organised opposition in Hungary, by tacking hard-right on migration. + +Mr Orban presents a unique danger, argues Gerald Knaus of the European Stability Initiative, a think-tank, because he injects a far-right virus into the bloodstream of Europe’s political centre. Fidesz’s membership of the European People’s Party, a centre-right pan-EU political group, gives Mr Orban the ear of Angela Merkel, Germany’s chancellor, and other mainstream conservatives. Yet while he may spurn hard-right outfits like France’s National Front or the Austrian Freedom Party, he borrows from their playbook. He lays charges of treason against those who seek to import “hundreds of thousands of people” from “groups outside European culture”. Migrants have turned parts of cities like Berlin and Stockholm into “no-go zones”, his government argues. + +Mr Orban is hardly alone among central European leaders in his hostility to refugee-redistribution schemes. But he started rehearsing his lines before others did. The crisis, when it hit, slotted neatly into a national-conservative shtick that Mr Orban had honed for years, including in a notorious speech in 2014 celebrating the virtues of “illiberal democracy”. When Hungary found itself, for a time, squarely in the middle of the migratory route between Greece and Germany, Mr Orban fleshed out his creed with action, building border fences to keep migrants out. + +But it was Europe’s failings that enabled Mr Orban’s success. As Mrs Merkel struggled to maintain support for her refugee policy, in Germany and abroad, some of her supposed allies, such as Horst Seehofer, the premier of Bavaria, began to align themselves with Mr Orban instead. Apparent failures of integration, from sexual assaults in Cologne to terrorist attacks in France, seemed to vindicate Mr Orban’s clash-of-civilisation warnings. Europe’s leaders began to tighten asylum policy and to talk seriously about border protection, just as Mr Orban had said they should. + +The spoils of Viktor + +One should not exaggerate Mr Orban’s influence. Despite his tub-thumping, he is no ideologue. He saves his fiercest attacks for relatively powerless “Brusselians”; leaders like Mrs Merkel, who is most responsible for the refugee policies Mr Orban detests, are largely spared. His small, landlocked country cannot afford to alienate its neighbours, including rich EU countries that channel structural funds to Hungary and employ its workers. Comparisons of Mr Orban’s Brussels-bashing to Brexiting Britain miss the mark: polls show Hungarians to be among the EU’s biggest fans. + +Second, Mr Orban’s rabble-rousing offers little to policymakers grappling with mass migration. True, he saw earlier than others that borders had to be controlled before grand resettlement schemes could be countenanced. His scepticism about the EU’s relocation plan has been borne out by its failure to move more than a few thousand migrants, even to willing countries. But his acolytes have no answer to the problem of refugees already in Europe. His ideas on African migrants (build a giant camp in Libya) or Europe’s demographic problems (encourage natives to have babies) expose a fundamental unseriousness. Pull aside the screen, argues Mr Knaus, and the scary Mr Orban will be revealed as a shrivelled demagogue with nothing to say. + +So why the fuss? From Hungary’s feeble opposition to Europe’s faltering leaders, Mr Orban has been lucky in his adversaries. Restlessly seeking the fresh enemies he needs to sustain his support, Mr Orban immediately grasped the opportunity presented by Europe’s incoherent response to the refugee crisis. Soon he will need something else to bash; the post-Brexit EU looks promising, particularly if Brussels seeks to centralise more powers. Next time, Europe should be better prepared. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21708252-viktor-orban-succeeds-only-because-europe-cannot-hold-together-wizard-budapest/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +The Tories and Brexit: Mind your step + +The Conservatives and business: Not business as usual + +The UK Independence Party’s leader: Exit stage right + +Rethinking the public finances: Plan B + +Britain’s top cop quits: Plodding off + +Bagehot: May’s revolutionary conservatism + + + + + +Articles Sections Next + +The Tories and Brexit + +Mind your step + +Theresa May fires the starting gun for what looks likely to be a hard Brexit, taking Britain out of Europe’s single market + +Oct 8th 2016 | BIRMINGHAM, BRUSSELS AND PARIS | From the print edition + + + +GIVEN that Britons voted on June 23rd by 52% to 48% to leave the European Union, Theresa May had to say something about Brexit at her first Conservative Party conference as prime minister. By choosing, unusually, to open proceedings on October 2nd, she hoped to park the subject for the rest of the week, letting her big speech on October 5th dwell on the broader theme of “a country that works for everyone”. No such luck. In practice she just advertised the fact that Brexit will be the issue that makes or breaks her government. + +The essential problem that Brexit poses for her is clear. On the one hand, she wants to keep the economic benefits of facing no barriers to trade in the world’s largest single market, the EU. But on the other, her 27 EU partners are not willing to agree to this unless she also accepts the single market’s obligations, including free movement of workers and a plethora of EU regulations. The dilemma has come to be known as “soft” or “hard” Brexit. Soft Brexit means giving priority to the single market at the price of accepting some limitations on control over borders and laws, as well as contributing to the EU budget. Hard Brexit puts the emphasis on taking back such controls even if that means walking away from the single market. + +Mrs May, who had previously kept silent about her plans, offered the mostly Eurosceptic party faithful two juicy titbits which were interpreted as leaning towards a harder Brexit. The splashier but less significant one was a plan to include a “Great Repeal Bill” in next year’s Queen’s Speech. Contrary to its portentous title, this would actually be more of an unrepeal measure, since it would incorporate into British law the whole gamut of current EU legislation. It would also pave the way for scrapping the 1972 European Communities Act, which gives effect to EU law, as soon as Britain leaves, but this is little more than a statement of the obvious. + +More important was Mrs May’s promise to invoke Article 50 of the EU treaty, the legal route to Brexit, before the end of March 2017. Some advisers favoured postponement until the French presidential election next spring, or even the German election in September, partly because Britain will lose bargaining clout as soon as it kicks off the negotiations. Yet Mrs May suggested that those who wanted to put off Article 50 were in reality closet Remainers seeking to subvert the democratic choice of June 23rd. Since Article 50 sets a two-year deadline for a deal, after which a country departs unless all 27 other members agree to extend the time limit (which is unlikely), her decision means that Britain should leave by the end of March 2019. + +Mrs May presented these two promises as necessary to give business the certainty it needs in the period up to and beyond Brexit. Yet she ducked the key question of what future relationship Britain will have with the EU, which takes 44% of Britain’s exports. And in her remarks to the conference in Birmingham, Mrs May only increased businesses’ worries. She talked of Britain becoming a “fully independent, sovereign country” that once again had the freedom to make its own decisions, from how to label its food to the way it controls immigration, adding that it was not about to leave the EU only to return to the jurisdiction of the European Court of Justice. + +What matters about these statements is that they sound incompatible with remaining in the EU’s customs union and single market, pointing to a hard Brexit under which Britain leaves both. + +Because it eliminates not just tariffs but non-tariff barriers, the single market is hugely valuable. Most economists say a hard Brexit would be far costlier than a soft one that put Britain closer to the situation of a country like Norway, which is not in the EU but in the European Economic Area. EEA members accept free movement of labour and observe single-market rules in which they have no say—implicitly accepting the European court’s jurisdiction. Switzerland, which is in neither the EEA nor the single market, still has to accept free movement, as well as most EU regulations. Both countries also pay into the EU budget, which would be unpopular with Brexiteers, although Mrs May has not ruled out some British contribution post-Brexit. + +Dismissing these existing models, Mrs May talked of securing a bespoke agreement with the EU. She said she wanted to keep free trade in goods and services, and promised British companies maximum freedom to trade with and operate in the single market. Yet these objectives may prove impossible to square with the Brexiteers’ goal of “taking back control” of Britain’s borders, laws and the money it pays the EU. That is why the odds of a hard Brexit are rising. + +There are other reasons. One is the feisty mood in Birmingham of Tory Brexiteers, who were ecstatic over Mrs May’s speech. Many insisted that, even if a bilateral free-trade deal were desirable, Britain had nothing to fear from trading with the EU under normal World Trade Organisation (WTO) rules, just as America, China and other countries do. Remainers lay low at the party conference (even though the prime minister was herself one). And although Mrs May praised her predecessor, David Cameron, the name of George Osborne, his former chancellor, who has said that Britons voted for Brexit but not for hard Brexit, was barely mentioned. + +Another is that, contrary to the prognosis of Mr Osborne, the economy has performed tolerably well since the referendum. The index of manufacturing activity rose in September to a two-year high, and the stockmarket is close to its all-time record. Brexiteers crow that doomsters were wrong about the short-term risks of a vote to leave the EU, and they now say economists are just as incorrect to warn of large output losses after a hard Brexit. Many welcome the fall in sterling since June as a boost to exporters—and one that more than outweighs any tariffs if Britain reverted to trading on WTO terms. + +Divorce is seldom happy + + + +Yet there have been some warning shots. The pound fell to a 31-year low against the dollar after Mrs May’s speech, reminding investors that Britain still has a huge current account deficit (see chart). Philip Hammond, her chancellor, talked of a “rollercoaster ride” ahead, adding that Britons did not vote for Brexit to make themselves poorer. Although consumption has held up strongly since June, growth forecasts for next year have been reduced, and many investment plans are on hold. + +A striking example came when Carlos Ghosn, the boss of Renault-Nissan, a carmaker, said he could not commit himself to expanding Nissan’s plant in Sunderland, the biggest in Britain, unless the government guarantees compensation if it faces tariffs of 10% on exports to the EU, which takes two-thirds of the factory’s output. Lobbies from the food industry to the City of London are increasingly vociferous in warning about the dangers of a hard Brexit. Leaving the single market could cost 35,000 jobs in finance, according to Oliver Wyman, a consultancy. + +One other reason why a hard Brexit has become more likely is the stiffening attitude of other EU leaders, each of whom has a veto over any subsequent trade deal with Britain. Many thought Mr Cameron was unwise to promise an in/out referendum. But they understood the politics that drove him to it; many have Eurosceptics of their own to reckon with and several have experience of losing referendums. Although immediately after June 23rd some hoped British voters might be induced by the economic fallout or deeper reflection to think again, most now accept Mrs May’s dictum that “Brexit means Brexit”. + +Yet many on the continent are irritated by the naive attitude of some of Mrs May’s Brexiteer ministers, and especially by their assumption that, as her foreign secretary, Boris Johnson, likes to say, Britain can both have its cake and eat it. Mr Johnson may be right to argue that free movement of labour is not economically necessary to a single market, and Britain has long complained that the single market in services is incomplete. But other EU countries still see the “four freedoms” of goods, services, people and capital as the cornerstone of the entire European project. That is why they insist on EEA countries accepting all four, with minor derogations. There is also a big difference between a generous offer to countries that might one day join the club and the less generous one suitable for a country that has voted to leave. + + + +Such thinking has led Britain’s European partners to two firm conclusions. First, they cannot allow cherry-picking, by which they mean letting Britain have membership of the single market while rejecting free migration and budget payments. And second, an exiting country cannot be allowed to end up in a better position than it was as a member. Evidence of how strongly EU countries feel came in their condemnation of a proposal for a “continental partnership” by analysts from France, Germany, Britain and Belgium that suggested a new multi-tier model that would give Britain privileged status in the single market, and some influence over its rules (the diagram above shows how Europe is structured now). + +The fear is that if the EU gives way on its principles, other countries might follow Britain’s example. In fact, although some Brexiteers once gleefully suggested that Brexit could lead to the collapse of the EU, this looks unlikely. Other countries have too much political capital tied up in the project and too much to lose economically to risk walking out. Yet populist parties in France, Italy, Sweden and eastern Europe are watching Brexit closely, and some are calling for referendums of their own. There is some concern over the Dutch, who have elections in March and seem deeply disillusioned with the EU. + +Some Brexiteers claim that other countries secretly share their aversion to Brussels, its excessive red tape and unlimited EU migration. They cite Nicolas Sarkozy, who is running to be France’s next president and has talked of a new treaty to repatriate powers and limit free movement. Yet the appetite for a new treaty is tiny. Many countries are hostile to any concessions for Britain that would seem to be giving in to blackmail. And the concern in other countries over immigration is not about EU migrants, but about those from the Middle East and Africa. + +The other countries also dismiss claims by Brexiteers that, because the EU sells more to Britain than the other way round, Britain has the whip hand in negotiations. EU exports to Britain make up 3% of the EU’s GDP, whereas British exports to the EU are worth some 12% of British GDP. In financial services, in particular, other countries are keen to poach back the lucrative business of euro clearing and settlement, and none sees why a country outside the single market should have “passporting rights” that allow financial firms to trade freely out of London. British suggestions that a system of “regulatory equivalence” should qualify meet hollow laughs: the moment that British regulation deviates from the EU’s, equivalence will be lost. As for the claim that, because German carmakers want tariff-free access to the British market they will argue for the same deal for British firms, this would be strongly opposed by carmakers in Spain and France that would welcome an edge over their British rivals. + +Unbalanced bargaining power + +One big problem for Mrs May is the unequal bargaining power between Britain and the EU. She and her officials had hoped to negotiate informally before Article 50 was triggered. Liam Fox, the international-trade secretary, has been scoping out free-trade deals with third countries. Yet the first has proved all but impossible, partly because the others know that the Article 50 process suits them better than Britain. As for free-trade deals, Brussels notes that Britain cannot legally embark on any until after Brexit; indeed, there is talk of suing if Mr Fox goes too far in seeking deals with what one official dismisses as “planet Earth and other planets”. + +The complexity and size of the new deals Mrs May must strike to make Brexit a success is daunting. Charles Grant of the Centre for European Reform, a London think-tank, says the prime minister needs to plan for six broad sets of treaty arrangements. The first is the Article 50 negotiation, meant to be completed within two years, which will cover such matters as pensions for British Eurocrats and MEPs, dividing up EU assets and working out what to do with the European Medicines Agency in London. This deal needs approval from a qualified majority of EU members, minus Britain, and a majority in the European Parliament. + +Second is a new trading arrangement with the EU. If it is not based on membership of the single market, this must be a special deal, similar to Canada’s (still unratified) free-trade agreement. Brexiteers say a deal with Britain should be easier, as the two sides start as part of the same market. Yet the Canadian agreement does not include all goods, and it excludes financial services. A free-trade deal with the EU is likely to require unanimous approval by all EU members and ratification by national and regional parliaments, which may be especially hard in countries such as Romania or Poland that have to accept limits on the free movement of citizens to Britain. + +Third are replacements for the EU’s existing free-trade pacts with some 53 countries. This is not straightforward: South Korea says its deal with the EU was based on Britain being in the single market, so it will not wish to grandfather any concessions into a bilateral agreement with Britain alone. Mr Fox also wants to negotiate deals with countries like America, China, India and Australia that have none with the EU. But these countries will want to know what trade arrangement Britain has with the EU first. And they will not wish to jeopardise their planned deals with the EU. + +Judging by experience, both a trade arrangement with the EU and free-trade deals with third countries will take far longer than two years to negotiate. In some cases talks cannot even begin until after Brexit. So the fourth and perhaps most pressing requirement for Mrs May will be an interim, time-limited measure to fill the gap between Britain’s exit under Article 50 and the entry into force of new trade arrangements. Prolongation of the present relationship could be one option; temporary membership of the EEA another. Without such a deal, Britain would revert immediately to trading under WTO rules, implying tariffs. But interim deals can be as hard to negotiate as final ones, partly because some fear that they can become near-permanent. + +In any event a fifth requirement is for Britain to resume full membership of the WTO, to which it now belongs merely via the EU. That is less simple than it sounds. In many areas, it can be achieved by simply inheriting the EU’s tariff schedule, at least initially. But Britain will have to divide up import quotas and other trade preferences with its EU partners, which may not be straightforward. The WTO always proceeds slowly and by consensus among its 163 other members, any one of which could obstruct the British. + +Finally, Britain must find a way to replicate its commitments to co-operate with EU partners in intelligence, policing, counter-terrorism and foreign policy. These matters ought to be uncontroversial, as even Brexiteers see good arguments for them. In her previous job as home secretary Mrs May put security co-operation at the heart of her case for staying in the EU. Yet some measures, such as the European Arrest Warrant, still attract opposition in her party. And although efforts can be made to keep working together, the vital institutional sharing of information and analysis is likely to be lost post-Brexit. + + + +This intimidating list of requirements leads to two conclusions. The first is that negotiating Brexit and its consequences could take several years. That is why some analysts put such emphasis on the need for an interim solution that avoids the risk of Britain falling off a cliff at the end of the Article 50 process. Mrs May and her team will have to focus on this issue soon after invoking the article. They may need to keep paying into the EU budget to win better terms. + +The second is that neither side is ready for the challenge of such complex negotiations. David Davis’s Department for Exiting the EU is brand new, though it has grown fast. Mr Fox is short of experienced trade negotiators. Mr Johnson’s Foreign Office has been pared to the bone recently. The civil service is now expanding again, at considerable cost to the taxpayer. There will be turf wars among these three Brexiteers and between them and the chancellor of the exchequer. One diplomat says gloomily that for 30 years Britain’s EU policy was run by Foreign Office officials and then for 15 years by Treasury mandarins. Now it is run by Home Office people who know a lot about immigration and security but nothing about economics. + +There will also be differences in Brussels, however. The European Commission has picked a former French foreign minister and commissioner, Michel Barnier, to take charge of the negotiations. The European Council has a former Belgian diplomat, Didier Seeuws. And the European Parliament has chosen a former Belgian prime minister and keen EU federalist, Guy Verhofstadt. These three can be expected to have disagreements over the best way to handle Brexit. + +It is evident from this that Brexit will be a process, not a single event. And that is why it will haunt Mrs May’s government. The cabinet battle over the concessions needed to secure barrier-free access to the EU’s single market may well pitch the Treasury against the three Brexit ministers. Mrs May will then discover what many predecessors have: that, despite the vote on June 23rd, the issue of Europe still divides her party and her government. Tories at this week’s conference might have contemplated the scene outside, as swathes of central Birmingham are being demolished. Birmingham has more than once torn down its city centre, only to find the replacement unsatisfactory. There is a risk of something similar happening with Brexit. + + + +The road to Brexit + +Britain’s prime minister must resist her party’s dangerous instincts + + + +May’s revolutionary conservatism + +Britain’s new prime minister signals a new, illiberal direction for the country + + + +Theresa May kicks off Brexit + +The prime minister promises to invoke Article 50 by the end of March. But just how hard a Brexit does she want? + + + +Parliament must push for a bigger role in the Brexit negotiations + + + +Down to earth + +Brexiteers need to respect gravity models of international trade + + + + + +More Brexit coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21708264-theresa-may-fires-starting-gun-what-looks-likely-be-hard-brexit-taking-britain-out/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The Conservatives and business + +Not business as usual + +A rough ride for Britain’s bosses at the Tory conference + +Oct 8th 2016 | BIRMINGHAM | From the print edition + + + +IT WAS a bracing experience for the captains of industry. Used to being feted at Conservative Party conferences, this week they were almost as scarce as Cameroons, and little more popular. Like the leaders of the ancien régime, they have been feeling the chill winds of change. The Tories used to be reliably business-friendly, yet under Mrs May things could be rather different. + +The government has sketched out a new agenda that its supporters describe as responsible capitalism. Ministers will use the state to curb what they see as abuses, and shift more power towards employees and away from the boardroom, to enhance workers’ rights, as Mrs May put it. This might be clever politics to swipe some of Labour’s crumbling vote, but could add to the burden of business regulation just at the moment when many were hoping to see it reduced by leaving the EU. The government has also talked up a new “industrial strategy”, which it promises will help business. But this remains more inchoate than the headline-grabbing pledges to bend business to Mrs May’s will. + +If the bosses are grumpy about all the new regulations, so the argument goes, they only have themselves to blame. Sir Philip Green, formerly of BHS, and Mike Ashley of Sports Direct were name-checked throughout the conference, almost as frequently as they were during the Labour Party’s gathering the previous week; the scandals that hit their retail empires this year have become emblematic of all that is supposed to be wrong with Britain’s selfish, overpaid executives. Thus on October 1st it was announced that Mrs May has asked Matthew Taylor, a former head of Tony Blair’s policy unit in Downing Street, to carry out a review of employment practices, looking particularly at those on so-called “zero hours” contracts, the self-employed and temporary workers. These are the people “just managing”, in Mrs May’s phrase, without sick pay and other benefits, toiling in the warehouses of firms like Sports Direct. The review may lead to a new “workers’ charter” of rights. The government has also suggested that workers should sit on company boards. + +The new home secretary, Amber Rudd, wants her pound of flesh too. Charged with the task of getting annual net migration down to the “tens of thousands” from its current level of more than 300,000, on October 4th she attacked businesses for employing too many foreigners. She said that companies could be forced to reveal the number of migrants on their books, in effect naming and shaming those that fail to take on Britons. + +Those that have pushed for the Tories to become the “party of the workers”, in the phrase of Robert Halfon, the MP for Harlow and a junior minister, were cheered by this new agenda. “People need to know that we are the party of the underdog,” he says: “the party of the NHS, not BHS.” + +Businessmen were less impressed. Few details were provided about the new industrial strategy, other than warm words about helping the regions and a bit of money for high-tech industries. One owner of a ceramics business in Stoke said that he had heard nothing about removing the obstacles to helping his business grow, such as reducing business rates or energy prices. Terry Scuoler, the head of EEF, a manufacturers’ lobby group, argued that business was being penalised for the behaviour of a few “bad apples”. Many also attacked the home secretary’s proposals to make it more difficult to hire overseas. Yet with Labour calling for a revival of socialism, Mrs May will not worry too much about businessfolk griping. To which party, she might ask, are they going to defect? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21708288-rough-ride-britains-bosses-tory-conference-not-business-usual/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The UK Independence Party’s leader + +Exit stage right + +Britain’s most dysfunctional party descends further into chaos + +Oct 8th 2016 | From the print edition + +Diane James, committed Leaver + +DIANE JAMES’S time as leader of the UK Independence Party (UKIP) was short and shambolic. She was elected on September 16th with a plan to turn the party into the “opposition in waiting”. Yet in her 18 days in charge she unveiled no new policies and avoided giving interviews—though she did confirm to a journalist that Vladimir Putin was one of her political heroes. On October 4th she quit, complaining that she lacked the support of her colleagues. Nigel Farage will once again head the party before handing over to a new leader. + +The job of deciding what UKIP stands for, having achieved its unifying goal of Brexit, is therefore left to Ms James’s successor. That person must come up with an answer while seeing off attempts by the Conservatives to woo the party’s voters. At UKIP’s conference last month in Bournemouth, speaker after speaker cheered that Theresa May’s Tories were adopting UKIP policies. A more sober analysis might have wondered if this posed a threat to the party. If the Tories back Brexit, want tighter controls on immigration and support the creation of new selective grammar schools, what is the point of UKIP? + +Insiders tend to think that part of the answer lies in an appeal to working-class voters in Labour heartlands, many of whom have a tribal dislike for Tories yet are fans of their policies. Ms James, a former private health-care consultant, might have struggled to attract them to UKIP. The party is now aiming to have the “A-team” leadership contest it ought to have had last time around, says a party spokesman. Suzanne Evans, a former deputy leader who was once suspended from the party after criticising Mr Farage, may be one option, though she is not popular among the rank-and-file. Steven Woolfe, a Manchester-born barrister who failed to submit his nomination papers on time for the previous vote, is the bookmakers’ favourite. But on October 6th, as we went to press, he was admitted to hospital with a head injury after a fight with a UKIP colleague. + +Whoever wins will not have it easy. The party lacks money, is losing members to the Tories and could soon lose politicians, too, says Matthew Goodwin, a UKIP expert at Kent University. Some senior Kippers have considered defecting. Mr Farage seems to be the only politician able to keep the party’s warring factions more or less under control. Polls suggest that voters are turning to other parties following the Brexit vote. + +Ms James’s tenure was so short that it will be quickly forgotten. The new leader does not have a hard act to follow. It will nonetheless be an extremely tricky job. An ugly fight over the leadership will only make it trickier. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21708294-britains-most-dysfunctional-party-descends-further-chaos-exit-stage-right/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Rethinking the public finances + +Plan B + +The chancellor charts a new fiscal course for the bumpy Brexit years + +Oct 8th 2016 | From the print edition + + + +IT HAD been trailed for months, but in a speech on October 3rd Philip Hammond confirmed that he would no longer seek to eliminate Britain’s budget deficit by 2020. Instead, the chancellor said, fiscal policy would reflect “the new circumstances we face”. With the prospect of an economic slowdown caused by the Brexit vote, he said there was a case for “careful, targeted public investment in high-value infrastructure”, in order to boost demand. + +This is music to the ears of economists, who have long argued that when productivity growth is low and interest rates are on the floor—both true in Britain—investment in large capital projects makes sense. However, Mr Hammond’s speech was thin on specific commitments. He promised some spending on housebuilding, but most of it had been announced by the previous government. The poor state of Britain’s public finances prevents Mr Hammond from splurging, but bolder declarations will be needed at the autumn statement, a mini-budget to be delivered on November 23rd. + +In 2015-16 the budget deficit (the difference between taxation and spending), as a percentage of GDP, fell to 4.1%, the lowest since 2007-08 but much higher than the historical average of 2.5%. The Office for Budget Responsibility (OBR), an official fiscal watchdog, made its latest forecasts back in March. It suggested that the deficit would be eliminated entirely by 2019-20. + +Much has changed since then. Even before the Brexit referendum, the deficit was not closing as fast as the OBR had predicted. Weak income-tax receipts and higher-than-expected welfare spending meant that by June economists were pencilling in a deficit of around 3.5% of GDP for the current financial year, not the 2.9% predicted by the OBR. Few believed, even before the referendum, that the government would eliminate the deficit by 2020, not least because it would require a huge dose of austerity just before the general election due that year. + +Brexit is likely to push the public finances further in the wrong direction. Using rules of thumb from the OBR, and assuming no change in government policy, Britain’s borrowing requirements over the next five financial years may be in the region of £120 billion ($153 billion) higher than forecast, as a result of weaker growth in GDP. Even if the government did not relax its programme of austerity, next year’s deficit would probably be little narrower than last year’s. + +So Mr Hammond does not have much room for manoeuvre. Nonetheless, in his autumn statement he will need to stimulate the economy. Directing even more money towards housebuilding would be welcome: such construction can start rapidly, giving the economy a useful jolt. Some analysts expect the government to announce extra spending on infrastructure of around £20 billion a year, which would increase the deficit by about 1% of GDP. A deficit of 5% is manageable when the cost of borrowing is so low. As Brexit negotiations get under way, a steadying fiscal hand will be much needed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21708282-chancellor-charts-new-fiscal-course-bumpy-brexit-years-plan-b/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Britain’s top cop quits + +Plodding off + +His successor will have to please two political masters, on a tight budget + +Oct 8th 2016 | From the print edition + + + +BRITAIN’S biggest police force is looking for a new boss. Sir Bernard Hogan-Howe, the head of the Metropolitan Police, announced on September 29th that he would retire early next year. It was “exactly the right time” to go, he explained—surprisingly, since the 58-year-old had been expected to serve for at least another year. The quirks of replacing him highlight what a tricky job it is. + +Sir Bernard has been in charge of the capital’s coppers during testing times. He was appointed in September 2011, shortly after the worst riots in at least a generation struck London and other English cities, after which the police came under heavy criticism. In 2013 Lee Rigby, a soldier, was murdered by Islamist extremists in broad daylight on the streets of London, prompting fears of further terrorist attacks. Despite these challenges, during Sir Bernard’s tenure the Met’s budget, which represents more than one-quarter of the money spent on policing in England and Wales, has been cut by almost one-fifth. + +The outgoing commissioner has done a decent job. Crime has fallen faster in the capital than in England and Wales as a whole. The policing of the London Olympics was praised. But he has come in for criticism, too. Sir Bernard’s rather macho style of “total policing” riled some. There was irony in his attempts to keep secret some parts of an inquiry into the Met’s policy on undercover officers. Recently he has been bashed over Operation Midland, a lengthy and expensive investigation into claims of a murderous paedophile ring that ended without any charges being brought. Last month his force backtracked on plans to use “spit hoods” in London police stations after Sadiq Khan, the city’s new Labour mayor, objected. + +The commissioner’s relationship with Mr Khan has come under scrutiny, with suggestions—which both men deny—of tension. Sir Bernard was appointed under Boris Johnson, Mr Khan’s Conservative predecessor. His departure mirrors the American model of switching police chiefs when the regime in City Hall changes, says Peter Neyroud, a former chief constable now at Cambridge University. But in cities such as New York mayors get to choose their police chiefs. Sir Bernard’s replacement will be appointed by Amber Rudd, the Conservative home secretary. + +That reflects the fact that the Metropolitan Police is not just a local force. Its officers lead Britain’s counter-terrorism efforts, police international events and provide protection for VIPs. The mayor cannot veto the home secretary’s choice, but without his support the commissioner’s job is difficult. In 2008 Sir Ian (now Lord) Blair resigned as commissioner after failing to win the backing of the recently elected Mr Johnson. London has whipped through police chiefs in recent years. The last to serve a full term was Sir John (also now Lord) Stevens, who retired in 2004. + +Sir Bernard will stay in his post until February to allow time to find his successor. Names mentioned include Sara Thornton, a former chief constable who is now head of the National Police Chiefs’ Council, and Cressida Dick, a Foreign Office official whose previous career in the Met was marked by her command of an operation in which officers shot dead Jean Charles de Menezes, an innocent man mistaken for a terrorist. Whoever gets the job will face the enduring threat of terrorism, as well as the question of how to deal with new kinds of crime, especially online, and a growing number of large inquiries into such issues as historical sex abuse. The Met chief’s lot is not an easy one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21708280-his-successor-will-have-please-two-political-masters-tight-budget-plodding/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +May’s revolutionary conservatism + +Britain’s new prime minister signals a new, illiberal direction for the country + +Oct 8th 2016 | From the print edition + + + +MAINSTREAM politicos in Britain have long held these truths to be self evident. The left won the social battles of the past decades. The right won the economic ones. The resulting consensus combines free-market liberalism with broadly permissive cultural instincts. But on October 5th Theresa May strode up to the podium at the Conservative Party conference, awkwardly waved at the crowd, cleared her throat and unceremoniously drove a bulldozer through those assumptions. + +Mrs May began with a short tribute to David Cameron. Her predecessor had presided over rising employment, improving schools and falling crime, she noted, before adding: “But now we need to change again.” And then came the tornado. Britain’s vote to leave the EU in June was about much more than Brexit. It was a “quiet revolution”, a “turning point”, a “once in a generation” revolt by millions of ignored citizens sick of immigration, sick of footloose elites, sick of the laissez-faire consensus. “A change has got to come,” she said, four times. + +The nation state is back: “Time to reject the ideological templates provided by the socialist left and the libertarian right and to embrace a new centre ground in which government steps up,” Mrs May declared. So borders will be strengthened, foreign workers kept out, patriotism respected, order and discipline imposed, belonging and rootedness enshrined. “If you believe you’re a citizen of the world, you’re a citizen of nowhere. You don’t understand what the very word citizenship means,” she said. + +On the economy, the Conservatives are moving left. Parts of Mrs May’s speech recalled Ed Miliband, Labour’s previous leader, whose market interventionism earned him an anti-business reputation. She went on about bosses who do not look after their staff, companies that do not pay enough tax and utility firms that rip off consumers (even hinting at the sort of meddling in energy markets that won Mr Miliband particular barbs). Her government, she said, would identify the industries that are of “strategic value to our economy” and boost them “through policies on trade, tax, infrastructure, skills, training, and research and development.” At one point she even questioned the independent Bank of England’s low interest rates. + +Socially, meanwhile, Mrs May is taking her party rightward and at moments sounded more like Nigel Farage, the doyen of the populist UK Independence Party. She took aim at liberal politicians and commentators who “find your patriotism distasteful, your concerns about immigration parochial, your views about crime illiberal” and “left wing, activist human-rights lawyers”. Companies will be made to declare how many of their staff are foreigners, to shame those who do not hire natives. + +It remains to be seen precisely what will come of all this. The almost comically small-bore policies announced so far—including cadet forces in two-dozen state schools and a review into labour conditions—hardly correspond to the daring rhetoric. Every new prime minister since Thatcher has arrived in office promising to revive manufacturing, lubricate social mobility and do more for hacked-off, hard-pressed strivers. Still, the sheer intellectual swagger of its authoritarianism sets Mrs May’s speech apart. It is worrying: a systematic rejection of the way the country has been governed, for worse and mostly better, for decades. Like it or not, Britain’s strengths are its open, flexible, mostly urban service economy and its uncommonly mobile and international workforce. That fact cannot simply be wished or legislated away. + +Mrs May makes it clear that liberal London should not take precedence over post-industrial areas. Yet the citizens of that great deracinated, metrosexual Babylon pay more in work taxes than do those of the next 36 cities combined. Brexit, it is true, was partly a vote against the aloofness of the capital and its arrogant captains of finance. But it was not a vote for a poorer country, higher unemployment or shabbier public services. The prime minister’s speech does not fill Bagehot with confidence about her ability, or even willingness, to find the right balance as she sets the country’s post-Brexit course. + +Au revoir, laissez-faire + +Yet it will resonate with the public and may propel the Tories to a landslide at the next election. Its premise—that the vote for Brexit was a revolt against globalisation—was sound. Touring pro-Leave events during the referendum campaign, Bagehot heard again and again that the cards were stacked in favour of fat cats and foreigners. One can disapprove of Mrs May’s prospectus without denying that it speaks to these concerns, and to the pathology that has emerged with each recent tale of elite complacency, corporate malfeasance and political corruption; from the MPs’ expenses scandal of 2009 to the shoddy treatment of workers at BHS, a collapsed retail giant, this spring. + +So it is not enough for liberals to shake their heads at Mrs May’s populism. They have to grapple with the reasons for its appeal. Areas with fast-rising migrant populations do not receive corresponding resources fast enough. The country’s infrastructure is patchy, the health service is at breaking point and jobs are plentiful but low-paying. It is not illiberal to recognise that London and the rest of Britain can feel like different countries. + +Those who resent the prime minister’s protectionist, authoritarian gloom must, then, do more than hyperventilate and pearl-clutch. They should cheer Mrs May when she gets things right; perhaps on house-building, where her government has declared war on NIMBYs who oppose new construction projects. And when they disagree, they should come up with better solutions: better ways to reform corporate governance, increase competition, improve public services and adapt the workforce to change. No one can accuse the prime minister of being vague about the course she wants Britain to take. At the very least, opponents must rise to the same standard—and offer an alternative. + +Economist.com/blogs/bagehot + + + +The road to Brexit + +Britain’s prime minister must resist her party’s dangerous instincts + + + +Mind your step + +Theresa May fires the starting gun for what looks likely to be a hard Brexit, taking Britain out of Europe’s single market + + + +Theresa May kicks off Brexit + +The prime minister promises to invoke Article 50 by the end of March. But just how hard a Brexit does she want? + + + +Parliament must push for a bigger role in the Brexit negotiations + + + +Down to earth + +Brexiteers need to respect gravity models of international trade + + + + + +More Brexit coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21708223-britains-new-prime-minister-signals-new-illiberal-direction-country/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +Finance for the poor: Your inflexible friend + +Microfinance by phone: Cash call + + + + + +Articles Sections Next + +Finance for the poor + +Your inflexible friend + +Microlending is booming once again. If it is to help people out of poverty, though, it needs to work much better + +Oct 8th 2016 | LUCKNOW | From the print edition + + + +ON A shelf in Buland Iqbal’s tiny roadside shop, cassette tapes are slowly turning pale in the sun. Nobody wants them these days, even in a dusty suburb in one of India’s poorest states. So Mr Iqbal has branched out. First he moved into renting DVDs, then, more boldly, into pay-television. A loan of 31,000 rupees ($465) from Sonata, a microfinance firm, helped him acquire a few satellite dishes and decoder boxes. It seems like a clear-cut success for microlending. In fact, Mr Iqbal’s loan illustrates why microlending does not work all that well, and how it needs to change. + +The idea of springing people from poverty by advancing them small amounts of money is old: in the 1720s the author Jonathan Swift was lending to “honest, sober and industrious” men in Dublin. But the modern template was created in the 1970s. Grameen, a Bangladeshi outfit, encouraged poor women who lacked collateral to form small groups in which each borrower was liable for all the others’ debts. Groups met weekly and handed their payments to a loan officer. Astonishingly few defaulted. By transferring tasks normally done by well-paid bankers to poor people, Grameen had brought costs down so much that it could afford to lend tiny amounts. + +Grameen Bank and Muhammad Yunus, its founder, were jointly awarded the Nobel peace prize in 2006. Almost immediately, microlending ran into trouble. The poor women in the borrowing groups proved as ruthless as any bailiff: researchers turned up stories of delinquents forced to sell livestock and cooking pots to make weekly payments. Soon came over-indebtedness and mass defaults in the Indian state of Andhra Pradesh, in Pakistan and in Nicaragua, where the president, Daniel Ortega, sided with the “no pago” movement. + + + +Then the “randomistas” put the boot in. In 2015, after examining the results of randomised controlled trials in Bosnia, Ethiopia, India, Mexico, Morocco and Mongolia, American researchers questioned whether microlending worked at all. As expected, offering small loans increased business investment. But it had a negligible effect on poor people’s fortunes. Borrowers seemed to cut back on wage work in order to spend more time bent over their sewing machines or running their small, not terribly profitable shops. + +These days international donors and charities are much more excited about other approaches, including mobile money and “graduation” programmes, which give livestock to indigent people and teach them how to take care of them. As the development caravan rolls away, though, microlending is booming. MIX, which collects data on the industry, estimates that the number of borrowers worldwide grew by 16% between 2014 and 2015, to 130m. The total loan portfolio is now worth about $96 billion. In India, which has more microborrowers than any other country, lending was 64% higher in the second quarter of this year than a year earlier, according to MFIN, a national industry body. + +In Latin America (the biggest market for microloans by value, though not by number of borrowers) and Africa, much microlending is funded by deposits. That slows its growth, as raising deposits from people quickly is hard. But Indian microloans are funded largely by bank debt. Microlenders borrow at an average cost of just under 15% and usually charge interest of 20-25%. By law, the large ones may not lend at more than 10% above their cost of funds. + +Succeeding in such a constrained market means becoming big and efficient. The large lenders increasingly sign up clients using tablet computers and allow repayments through terminals in local shops. They can reach more remote districts that way, and need not open so many branches. They still have plenty of room to grow. Only 6% of Indians borrowed from a formal lender in 2014, according to the World Bank, whereas 14% went to a loan shark. + +If capturing new clients is essential to success in microlending, creating new loan products is not. “There is zero innovation,” says Ratna Vishwanathan, the head of MFIN. “It’s a vanilla product”. That is a shame because, although small loans are plainly popular and do no economic harm to the average borrower, they could equally plainly do a much better job of helping people become less poor. + +Like many tiny businesses, Mr Iqbal’s shop swings up and down. He can be extremely busy around Hindu festivals, when people like to shop, but is idle at other times (when your correspondent arrives at his shop, he is napping). In the slowest months, he cuts back spending on himself and his family until he can scrape together enough for the monthly payment. And he knows to take on only as much debt as he can service in the lean season. At this rate, he is no more likely to prosper than he is to default on his loan. + +Mr Iqbal enjoys more freedom than most. He repays monthly rather than weekly and has borrowed not in a group but individually, with two friends as guarantors. His loan might be unusually large as a result. Anup Kumar Singh, Sonata’s managing director, says that peer pressure in groups tends to shrink loans: many people doubt their acquaintances will repay large debts. Individual microloans have long been common in Latin America, and seem to be spreading in South Asia. But assessing individual borrowers is expensive. Lenders cannot afford to do much of it until technology brings the cost down (see article). + +An excess of caution + +What tiny entrepreneurs like Mr Iqbal really need are microloans that can be repaid when their businesses start bringing in more money. An experiment in Kolkata by two American researchers, Erica Field and Rohini Pande, found that offering borrowers a grace period of just two months at the beginning of a microloan doubled the rate at which new businesses were created. Borrowers were able to take bigger risks, which brought bigger rewards on average. After three years business profits were 41% higher and household incomes were up by 19.5%. If microlending could routinely deliver results like that, it would still be the height of fashion. + +IFMR Lead, a research organisation based in India, is now testing an even more flexible loan. In conjunction with Sonata, it is offering a few hundred people microloans with two three-month “holidays”. Borrowers will still have to pay something each month, but much less than usual. So far, about a third of borrowers offered these loans have taken them up, even though they carry a slightly higher interest rate. Encouragingly, the more competent entrepreneurs seem keenest on them. + +Lenders will want to know one thing above all: does more freedom cause more loans to go bad? In Kolkata, default rates for borrowers who were given two months’ grace went up from 2%—fairly standard for a microloan—to 9%. If further research confirms that flexible loans are risky, microlenders will struggle to offer them: they cannot cover their increased costs by raising interest rates because these are often capped. The loan officers will probably keep turning up in new villages with their tablet computers, hawking the same old products. + +One hint that microlending can get out of its rut comes from the fields of Africa. One Acre Fund, a charity, offers small farmers a bundle of seeds, fertiliser, crop insurance and training, all on credit. Its loans are extremely flexible. Although the charity expects some repayment before it hands out seeds and fertiliser, farmers can pay off the balance at any point in the year. With no weekly or monthly payments looming, they might play the market, holding back crops from sale until prices rise. One Acre Fund boasts a low default rate, and calculates that it boosted its clients’ farm incomes by 55% in 2015. But the parallel is not perfect. One Acre Fund offers more than just loans—and it depends on donations. + +In many countries, lifting restrictions on interest rates would encourage lenders to create better products. A calibration of expectations would help, too. Microlending has gone from being the silver bullet to end poverty, to the poor man’s snare, to largely ignored. It would be better to think of it as a vital work in progress. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21708258-microlending-booming-once-again-if-it-help-people-out-poverty-though-it/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Microfinance by phone + +Cash call + +Microlending might work better if it were more impersonal + +Oct 8th 2016 | From the print edition + +Micro-managing + +GETTING a microloan is far easier than getting a bank loan. But in east Africa many people have access to an even easier source of credit. It takes just a few taps on a phone to obtain a short-term loan, which will arrive in a mobile-money account almost immediately. It is an exciting, scary development, says Dean Karlan, a development economist at Yale University. + +Mobile wallets such as M-PESA and Tigo Cash have already transformed microfinance. In the African countries where they are widespread, microlenders no longer need to distribute and collect piles of bank notes—always a cumbersome task and often a dangerous one. VisionFund, which is part of World Vision International, a Christian charity, channels 95% of its Kenyan loan payments and 98% of its Tanzanian ones through mobile wallets. + +Now mobile-network operators and their financial partners are rushing into lending. GSMA, an industry group, says that 45 mobile-credit services were operating in December 2015, four-fifths of them in sub-Saharan Africa. Some are growing fast: M-PAWA, a mobile savings-and-loan service in Tanzania, acquired 1m customers in just five months. + +The mobile networks seldom compete directly with microlenders. Most of their loans are tiny—more nano than micro—and must be repaid in a month or two. They are strongest in Africa, where microlenders have always been scarce. But some are now offering bigger, longer-term loans. And mobile money is spreading: it has taken off even in Bangladesh, where microlending was born. + +Mike Gama-Lobo of FINCA, a microfinance pioneer, is particularly excited by the possibility of fusing mobile money with traditional microlending. Mobile-network operators know a good deal about their customers from the phone calls they make and receive, and the records of money passing through their mobile wallets. FINCA and others are now trying to use those data to filter potential borrowers. + +Microlending shows that villagers and slum-dwellers are pretty good judges of each others’ finances. But their phones often know more about them than their neighbours do. And nobody spreads malign rumours about phones. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21708254-microlending-might-work-better-if-it-were-more-impersonal-cash-call/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +The global casino business: Putting it all on grey + +Airbus: In formation + +Online surveillance: They’re watching Yahoo + +Corporate campaigning: Techno parties + +Discount retailing: A yen for cheapness + +The music business: Change of tune + +Management horizons: Quick and dirty + +Martial arts in Asia: Bloodsport, hold the blood + +Schumpeter: Peacocks of the sea + + + + + +Articles Sections Next + +The global casino business + +Putting it all on grey + +The casino industry may be too risk-averse to lure in younger customers + +Oct 8th 2016 | LAS VEGAS and MACAU | From the print edition + + + +SHORTLY after Mark Frissora took over as chief executive of Caesars Entertainment last year, he paced the floors of his American casinos, with their rows and rows of idle slot machines, and grasped the scale of the existential threat that faces his industry. Casino customers are ageing, and younger people have little interest in taking their place. Mr Frissora called on his company to brainstorm a new “casino within a casino” to draw in millennials who grew up playing video and mobile-phone games. + +Next door on the Las Vegas Strip, Jim Murren, CEO of MGM Resorts International, the city’s largest gaming operator, is making similar moves. Mr Murren has convened a committee of millennial employees to work out how to keep the business relevant to future generations. Both firms will soon open experimental spaces for young people, including new types of slot-machine games that test players’ skills as much as their wallets. + +These offer a glimpse of a casino of the future that looks very different indeed. There are gravity-free rooms where you can literally climb the walls; LED screens that continuously change interior backgrounds; and combinations of gambling machines and virtual-reality shoot-em-ups that allow you to bet on how many monsters you (and your friends) can blast away. Instead of individuals standing solo at one-armed bandits, groups of players might compete against each other over wireless-enabled consoles offering a menu of wagering games. Instead of magic acts and yesterday’s pop stars, electronic-sports tournaments and the latest in live music will draw in spectators. + +Hip, high-tech casinos sound like a lot of fun. But they may not come into being. Building and maintaining them would be expensive, and in the end they still might not appeal to younger people. More to the point, gambling executives may not have the stamina to see the projects through. Most of them today are curiously short of two things: free cashflow and, above all, the readiness to gamble big. + +“The industry is not filled with creative geniuses,” says Mr Frissora, who came to Caesars from Hertz, a car-rental company. Casinos used to make a lot of money and didn’t need to innovate. That has changed. Smartphones and consoles make traditional slots and table games look stodgy. The list of new competitors for their customers’ attention—daily fantasy sports contests, legal and unregulated internet gambling, video lottery terminals, online social casino games (played with virtual currency)—goes on and on. Some people worry that casino firms will become like Blockbuster, a film-rental business annihilated by the internet. Alex Bumazhny of Fitch Ratings suggests they might become like Xerox machines, used less frequently but not entirely obsolete. + + + +The signs of stagnation are clearly visible. Gaming revenues on the Las Vegas Strip peaked at $6.5 billion in 2007, fell in 2010 to $5.2 billion and then rose modestly (see chart). In Atlantic City revenues have halved since 2006. Nationally, state-regulated casino-gaming revenues (including from Las Vegas and Atlantic City) have grown by just 7% since 2007, to $40 billion last year, despite greatly expanded offerings. The states of Pennsylvania and Maryland, which had no casinos until a decade ago, now account for more than $4 billion in gaming income (in part, by taking away customers from Atlantic City). Revenue from operations on Native American territory has risen by only 12% since 2008, to $29.9 billion last year. + +Wheel of fortune + +The world’s biggest publicly owned casino companies would now be in worse straits if not for a couple of things. One was a change in how Las Vegas made its money. Two magnates, Sheldon Adelson and Steve Wynn, led its transformation in the late 1980s from Sin City to a convention and entertainment destination. Mr Adelson built the Sands Expo and Convention Centre, the first private convention venue in the city, and Mr Wynn built The Mirage, a casino resort with 3,000 rooms—and white tigers—that opened in 1989. Everything built on the Strip since has been an attempt to build bigger, better Mirages. The strategy has worked there—non-gaming revenue now accounts for almost two-thirds of all money that comes in, much of it from hotel rooms. Outside Las Vegas, however, casinos still depend on gaming revenues. The lack of fresh thinking to attract new dollars is painfully apparent. + +The second boost came from the rise of Macau as a gambling destination for Asians, especially Chinese. Starting in 2003, the year before Mr Adelson opened Sands Macao, the territory’s first big casino backed by foreign money, gaming revenues there rose by 12 times in a decade. In 2013 they reached $45 billion, which is equivalent to nearly eight Las Vegas Strips. Macau’s ascent cushioned the blow of the 2007-08 financial crisis at home. + +In recent years China’s president, Xi Jinping, has dealt the territory an extremely poor hand. His anti-corruption campaign, and tighter government supervision of the flow of money in and out of Macau, have decimated the territory’s VIP baccarat business. Revenues fell by 34% in 2015 to $29 billion and were down another 11% in the first half of this year. Yet Macau may still benefit from the emergence of the Chinese upper middle-class, despite Mr Xi’s crackdown, and it remains the closest thing there is to a growth story in casinos. + +Mr Adelson and Mr Wynn, along with Mr Murren at MGM, have invested heavily in expanding further there. In August Mr Wynn opened the $4.2 billion Wynn Palace, a luxury destination for high-end gamblers. To coincide with the opening, Macau had its first small monthly uptick in gaming revenues (1%) in more than two years. On September 13th Mr Adelson opened the Parisian Macao, a 3,000-room resort on the Cotai Strip (costing $2.9 billion) complete with a half-scale Eiffel Tower. (MGM Cotai, a $3.1 billion casino, will open next year). Mr Adelson, now 83, appeared at the opening, one hand on a man’s shoulder and the other gripping a walking stick as he took the stage to announce: “I’m still around”. + +But Macau’s rise has only delayed the industry’s reckoning with the problem of its ageing customer base at home. Slot machines, for example, account for only 5% of Macau’s gaming revenues (baccarat makes up most of the rest) but the majority of American casino earnings. The Las Vegas Strip, for its part, can continue to expect modest increases in non-gaming revenues. Casinos everywhere else are badly stuck. As Mr Murren notes, many have become commodities. That’s a bad business, he says. The typical casino floor today welcomes visitors with loud carpeting, cavernous rooms and an ocean of slot machines. Even on the Strip, young nightclub-goers pass by the gaming areas. + +The industry is not best-placed to do much about its lack of appeal to the young. Casino companies and slot-machine makers are heavily indebted, an overhang from the financial crisis and a series of debt-financed projects and consolidations. Wynn Resorts, for example, has $9.5 billion in debt, partly from building in Macau, compared with $1.1 billion in annual earnings before tax, interest and depreciation. Caesars is only now emerging from bankruptcy. High interest payments have kept Las Vegas Strip operators in the red for much of the past decade. + +Even so, it would not be impossible for them to invest. But they would have to answer questions from shareholders. A strategy that takes away traditional slot machines or gaming tables that older people are known to like, to take a chance on something new for the young, is hard to buy into. Even though Mr Frissora and Mr Murren, among others, have made it clear that they want new types of games to attract younger customers, established makers of slot machines, themselves heavily indebted, have evinced little interest in undermining their existing business with costly, experimental new games. + +Mr Frissora, for instance, wants to open up their gaming platforms to allow young players to choose their games and compete against each other on the casino floor. Instead, slot-machine companies have innovated on the margins, says Melissa Price, an executive at Caesars. They are now housing traditional slots in sleek new cabinets with “skins” from hit television shows such as “Game of Thrones”. These make money but they are not game-changers, she says. + +Startups have been readier to invent. At the Global Gaming Expo in Las Vegas in September, crowds lined up at the booth of Gamblit Gaming, a California startup, to try out its wager-ready version of The Brookhaven Experiment, a virtual-reality first-person shooter game. Players can bet on such outcomes as their accuracy in shooting down monsters. The game should be ready for casinos in a year’s time. GameCo, a New York startup, is expected to be the first to market with such a “skill-based” game this month, when Caesars installs a small number of so-called “Danger Arena” slots at its three casinos in Atlantic City. The video-game gambling machine, as GameCo calls it, is another first-person shooter (with no VR headset), in which the enemies are vicious robots. + +Inside the industry, some executives look askance at what Caesars and MGM are planning. Video-arcade-style games might appeal to the young, they say, but not in large enough numbers to keep casino revenues high. One argument that traditionalists make is that once millennials have some money in their pocket, a bit later on, they will come and gamble at a conventional casino just like their parents did. Mr Frissora says he’ll be taking the other side of that bet. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708278-casino-industry-may-be-too-risk-averse-lure-younger-customers-putting-it-all-grey/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Airbus + +In formation + +Europe’s big planemaker takes another short hop towards being a “normal” firm + +Oct 8th 2016 | From the print edition + +The A380 rarely flies economy + +TEN years ago this September Airbus’s first A380 superjumbo, laden with passengers, took to the skies over Toulouse. Airbus’s bosses hoped that the world’s largest jetliner, the first with two full decks, would help the European planemaker get even with its American rival, Boeing. But problems quickly mounted. In October 2006 Airbus revealed the third delay to the A380 programme. Development costs spiralled out of control, to $15 billion; three chief executives lost their jobs in succession that year. + +The trauma prompted a sweeping modernisation effort that went further on September 30th with a restructuring announcement by Tom Enders, Airbus Group’s chief executive. The company began as a jumble of the national aerospace firms of France, Germany, Britain and Spain, jointly known as EADS, in 1967. Mr Enders has laboured, with much success, to reduce state influence on the group and to create a profit-driven firm like any other. But the roots of the past run deep. Airbus Group sits at the top of three divisions—jetliners, defence and space, and helicopters. The jetliner division, for example, still thinks of itself as French in character, and the defence and space unit keeps some sense of its former German identity. + +Now the top entity, Airbus Group, headed by Mr Enders, will be merged into the most important division, which builds civil aircraft including the A380, and will be called just “Airbus”. The other two divisions are to become that entity’s subsidiaries, so that in theory, there will be less scope for national loyalties. Another aim of the restructuring is to focus the group more on the market for jetliners—which is booming, thanks largely to rising demand for air travel from the expanding middle classes in emerging economies. + +Mr Enders’s principal goal is to close the long-standing profitability gap with Boeing. The European firm’s average pre-tax profit margin was 2.2% in the decade to 2015, compared with 6.8% for Boeing. That was before a fresh list of problems hit Airbus, wiping nearly a fifth off the firm’s market valuation since December. + +The bad news began in April, when the group’s defence and space division, which produces a fifth of group revenues, revealed new engine problems on its A400M military transporter, which had already accumulated more than €5 billion ($5.6 billion) in write-downs. The jetliner business, which makes 70% of group sales, also hit turbulence. Expensive defects on its new A320neo and A350 planes led to a halving of profits, year on year, in the first quarter. Airbus Helicopters, meanwhile, suffered as demand fell for choppers in the offshore oil and gas industry. + +Regulatory setbacks have piled up, too. At the start of August Britain’s Serious Fraud Office (SFO) opened a full criminal investigation into allegations of bribery by the firm that have already cost it access to cheap export financing. And in September the WTO ruled that the EU had failed to cut illegal state aid to Airbus, which Boeing alleges is worth $22 billion over decades. The ruling opens the door to America imposing tariffs on Airbus’s planes, although an appeal could delay any such action for years. + +Airbus’s management is moving to contain the technical troubles on its new planes. Few sales have been lost at Rolls-Royce, an enginemaker, since a similar SFO investigation began there in December 2013. More of a concern is Airbus’s flagship superjumbo. Although passengers love the A380, few airlines do because they find it too big to fill profitably. Early on, Airbus hoped to sell up to 1,200 supersize planes over two decades; it has produced only 194 so far. Just 125 orders remain, and half of those are likely to be cancelled. Airbus’s executives are keen to prop up production in the hope that demand will rebound, but it will cost them. In July the firm said it would cut production from 27 a year, which is the number at which the plane can be made profitably, to just 12 by 2018. At that rate, Airbus would lose as much as €250m a year on making the planes, says Sandy Morris, an aerospace analyst at Jefferies, a bank. + +Each of Airbus’s problems is manageable by itself because of the firm’s sheer size: this year the group is forecast to generate €65 billion in revenues. Airbus now has around half of the global jetliner market, up from 19% in 1995, and its share is expanding. It has received a tenth more orders across its range than its American rival over the past decade. + +Mr Enders’s next challenge will be margins. The firm’s run of problems pose a threat to slim profits of around €2 billion a year. In the 2000s Airbus’s government shareholders often saw propping up local plants as more important than profits. It now returns the cost of capital invested in it; but there is still a way to go. “They now not only need to deliver their planes on time—but their profits too,” chides one adviser to Airbus’s management. Mr Enders has weakened the influence of state investors in his efforts to make Airbus a more normal company. Private shareholders are likely to be harder to please. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708286-europes-big-planemaker-takes-another-short-hop-towards-being-normal-firm-formation/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Online surveillance + +They’re watching Yahoo + +More trouble for a former internet star + +Oct 8th 2016 | From the print edition + + + +A FAILED turnaround and then, last month, the biggest data breach from a single site in history. Yahoo, an online firm, has had a bad run of news. On October 4th came a fresh blow when Reuters, a newswire, reported that the company had written customised software to scan all incoming e-mail for certain keywords, complying with a request either from America’s National Security Agency or the FBI. + +The company’s first response was to say that it is a law-abiding company. It later issued a statement saying that the Reuters article was “misleading” and that the “mail scanning” the article described “does not exist on our systems”. But that is only a partial denial, and does not rule out the possibility that Yahoo did some kind of scanning. According to Reuters, Yahoo’s chief information-security officer, Alex Stamos, left Yahoo in 2015 because of a decision by Marissa Mayer, its chief executive, to obey an order from a government agency. (He now does the same job at Facebook.) + +Even the possibility of a real-time wiretap raises important questions. If the government has demanded such bulk scanning it may represent an expansion of surveillance. If so, it would run counter to efforts by Congress to rein in such programmes, following revelations in 2013 by Edward Snowden, a former NSA contractor, of online spying (on October 5th it emerged that another NSA contractor was arrested in August for stealing classified information). Other tech firms, including Apple and Google, said this week that they had never received such a directive, nor would they accept it without challenging it in court. + +Second, the alleged wiretap reinforces concerns about how Yahoo treats all of its user data. Last month it emerged that hackers, probably state-sponsored, had in 2014 stolen account details of more than 500m users, including phone numbers, birth dates and encrypted passwords. Critics found it galling that Ms Mayer is reported to have been aware of the theft since July but said nothing. + +A third question is what all this means for the sale of Yahoo’s core business to Verizon, a telecoms operator, for $4.8 billion, a deal announced in late July. If Yahoo’s management did not disclose the data breach in the negotiations, Verizon could have the right either to walk away or to ask for a lower price. The allegations about e-mail scanning, if they are substantiated, would probably also be reason for further negotiations. + +Verizon declined to comment this week. The news is another blow to Yahoo’s brand, which has sunk in recent years as a series of chief executives tried and failed to revive its fortunes. Many more of its users may now type in: “How do I delete my Yahoo account?” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708291-more-trouble-former-internet-star-theyre-watching-yahoo/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Corporate campaigning + +Techno parties + +For technology giants, it’s not just about the next big thing + +Oct 8th 2016 | From the print edition + + + +CAMPAIGNING is no longer the preserve of big organisations like political parties and trade unions. Online platforms have given voice to individuals around the world and increasingly, the firms behind those platforms are taking activist positions of their own. Facebook’s founder, Mark Zuckerberg, is on a mission “to connect the world”. Apple’s boss, Tim Cook, has vigorously defended customers’ privacy rights. This week the campaigning side of two other technology giants was on display. + +On October 3rd Microsoft published a book that could easily be mistaken for a manifesto. Entitled “A Cloud for Global Good”, the 200-page volume offers no fewer than 78 “public-policy recommendations” in 15 “categories”, ranging from protecting privacy to preventing cybercrime. Most intriguing, Microsoft wants the computing clouds to be inclusive. They shouldn’t just benefit the rich and the able, says the firm. As income inequality widens, the book notes, “there are very real concerns about who will benefit.” + +The next day 170,000 people descended on San Francisco to attend Dreamforce, a shindig organised by Salesforce, a big provider of online business services. It is mainly a gathering for customers and developers but also has the air of a music festival cum party congress: it featured U2, a rock band, numerous Buddhist monks and a socially minded speech by the firm’s chief executive, Marc Benioff. He has long been one of Silicon Valley’s most generous philanthropists, but more recently has become a vocal advocate of various causes, including gay and transgender rights. + +Some of this is a product of personality. Mr Benioff always wanted his firm to be more than a mere moneymaker (perhaps a reaction to his time at Oracle, a hyper-focused, no-fun software giant). Satya Nadella, Microsoft’s boss (pictured), is a particularly avid reader. Brad Smith, the firm’s chief legal officer, is of an activist bent. + +But tech firms’ power means they also need to confront political issues. Some, such as Facebook, have more monthly users than the populations of the world’s biggest countries. Their products are penetrating—and “disrupting”, in the lingo—every nook and cranny not just of business, but society as a whole. They need to win people’s trust if they don’t want to become the target of a backlash. “We really need to think about public policy that connects technology with inclusive growth,” says Mr Smith. + +He was the force behind the book, as well as a recent case Microsoft won against the American government. It wanted the firm to turn over the e-mails of a suspect in a drug investigation, which were housed in a data centre in Ireland. If allowed, Microsoft says, such extraterritorial data grabs would make it difficult to resist orders from non-democratic governments. + +Big tech’s political awakening only goes so far. Mr Benioff’s real goal is annual revenues of $20 billion. A full-price Dreamforce ticket costs no less than $1,799. As for Microsoft, at its book launch in Dublin Mr Nadella first gave a full rundown of the firm’s main commercial offers. Still, tech giants seem to have realised that they must think about more than just churning out their next hit products. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708290-technology-giants-its-not-just-about-next-big-thing-techno-parties/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Discount retailing + +A yen for cheapness + +Can Japan’s biggest ¥100 chain continue its winning streak? + +Oct 8th 2016 | HIROSHIMA | From the print edition + +Best-sellers from Tokyo to Texas + +IT HAS become a staple story in the local American press: a Daiso store opening near you. Last month it was the turn of Plano, Texas, to get a branch of the Japanese chain of shops where everything costs ¥100. (In America it actually charges $1.50 per item, giving it a premium over the current exchange rate of 97 cents per ¥100.) The Plano store is the second of 44 shops planned for the state. To date California has 49 branches. + +America is far from alone. As well as its 3,000-odd stores in Japan, Daiso has 1,500-plus outlets abroad. Its bargain range of products, from value-for-money bags to Japanese “kawaii” or “cute” figures, are sold around the world, from countries in Latin America to the Gulf states and throughout the rest of Asia. (As yet there are no ¥100 stores in Europe.) + +This roll-out is orchestrated from a headquarters in the eastern suburbs of Hiroshima. The building looks bland from the outside. But its interior is decked out in Daiso’s trademark pink. One floor is abuzz with buyers examining packs of wet wipes and plastic toys; tables are scattered with everything from children’s stickers to fancy-dress outfits. By the standards of disciplined Japanese business, Hirotake Yano, who started the company in 1977, is unusually open to experimentation. He says he is not a “cool” or “modern” manager; his gut feeling guides most decisions. “I don’t have any clear vision or strategy,” he says. “I just like to try things out.” + +So far that has worked. Daiso dominates what analysts reckon is a ¥600-800 billion ($5.8 billion-7.7 billion) market in Japan, and is the only ¥100 chain to have expanded abroad. Company revenue was ¥396 billion in 2015; this year Kantar Retail, a consulting firm, projects that will grow by over 6%. Daiso’s signature flat price is reliably attractive to Japanese consumers worried about their country’s economic woes. The most popular items are batteries and small household goods. Japan’s convenience stores, such as Lawson, a giant with over 12,500 stores at home, are trying to edge into the market with low-price ranges. + +Similarly, Daiso’s initial expansion in America coincided with the 2007-08 financial crisis and subsequent recession. But affordability is not the only ingredient in Daiso’s success. “Daiso’s store experience is unique at a time when shoppers are becoming bored with constant price wars,” says Sara Altukhaim, an analyst with Kantar Retail. + +At home Daiso has far outstripped its Japanese competitors, including Seria, Watts and Can Do. Initial success has allowed it to build superior scale—it sells 50,000 items compared with Seria’s 20,000, and its network of stores and warehouses is far larger. Not that rivals have given up. Kosuke Narikiyo, an analyst with Nomura, a Japanese securities company, says Seria has eaten some of Daiso’s market share by making its stores cleaner in design and more spotless, and by using calmer colours such as light green. Takahiro Kazahaya, an analyst with Deutsche Bank in Tokyo, says Seria’s profit margin is now higher than Daiso’s. + +Seria’s boss, Eiji Kawai, says Seria’s use of data on purchases explains the difference in margins as well as ranges. It eliminates 600 items that sell badly every month, and replaces them with new ones. Daiso, by contrast, holds no truck with big data and rarely looks at figures. “We don’t like to take focus away from the basics of more stores and products,” says Mr Yano. For him just one number—¥100—counts. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708301-can-japans-biggest-100-chain-continue-its-winning-streak-yen-cheapness/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The music business + +Change of tune + +Once enemies of record labels, Spotify and Apple are now spinning profits for them + +Oct 8th 2016 | NEW YORK | From the print edition + + + +IT WAS an eventful summer in the business of streaming music. Taylor Swift and other artists attacked YouTube over rampant free streaming. Frank Ocean and Katy Perry cut exclusive deals with Apple Music, to the dismay of executives at Spotify, a Swedish rival. Behind the scenes, Pandora, a radio-like service, and Amazon, an e-commerce giant, stepped up their efforts to take on Spotify and Apple. Then last month Spotify began talks to buy SoundCloud, another streaming firm. + +All this drama obscures two emerging realities. The first is that subscription streaming is now the future of the music business. The industry suffered a catastrophic collapse in sales from 1999 onwards before beginning to recover last year. Selling music to own, whether via iTunes downloads or CDs, is still a declining business globally. + +But American record labels and music publishers are now on track for a second consecutive year of growth. Recent reports on sales of music from Europe, where some countries are experiencing double-digit increases in revenues, suggest that the recovery will also continue in other parts of the world. + +Most of that rebound is due to growth in subscription-streaming revenues. In the first half of 2016 subscription streaming in America reached a retail value of $1 billion, up by over $500m in just one year, putting it on a par with digital downloads. Retail revenues from radio-like services such as Pandora, and from ad-supported on-demand streaming such as YouTube and Spotify’s free service are faring much less well—they grew in America by less than a tenth, to $600m. + +The second reality is that since Spotify and Apple have close to two-thirds of the world’s nearly 90m paying subscribers to streaming services, they are the ones shaping the future. If Spotify acquires SoundCloud, a mostly free service that claims to have 175m monthly listeners, its position would be stronger still. Last month Daniel Ek, the co-founder and chief executive of Spotify, tweeted that his company had surpassed 40m subscribers—adding 20m since June 2015, as many as it had acquired in its first seven years in operation. Spotify reached this milestone despite intense competition from Apple Music, which has won 17m subscribers since its start in 2015. The smaller firm hands over close to 70% of its revenues to the music business in royalties, says an industry executive. + +Hogging the mic + +Indeed, peel back the figures and the industry’s reliance on Spotify and Apple’s paid services becomes even clearer. The number of subscribers to all others combined shrank slightly—from 31m to 30.5m—in the year after Apple launched its service, notes MIDiA Research, a London-based consulting firm. Artist-backed services such as Tidal, which is co-owned by Jay Z and other performers, and which claims 4.2m subscribers, aren’t getting anywhere. + +As a result, music companies are keenly watching what Apple Music and Spotify might do next. The industry remains nervous of Apple, since its size and multiple lines of activity may at some point allow it to force down royalty payments. In other words, the music industry knows that it needs Apple more than the other way around. Spotify, on the other hand, is a lossmaking firm with only one string to its bow. Record labels have their niggles about Spotifiy but are eager for it to succeed. + +The change in attitude is striking. Once the bête noir of the industry for not paying recording labels enough in royalties, Spotify is fast becoming their most reliable moneymaker. The firm recently disclosed that it has paid $5 billion to the music industry to date. Apple, once vilified for decimating album sales with iTunes, is the second-biggest earner. If the music industry is singing a new and catchier tune, it has some erstwhile enemies to thank. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708300-once-enemies-record-labels-spotify-and-apple-are-now-spinning-profits-them-change/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Management horizons + +Quick and dirty + +Are companies too short-termist? + +Oct 8th 2016 | NEW YORK | From the print edition + +THERE are 68,000 firms listed around the world, most of which have little in common. Yet one thing unites bosses from Shanghai to San Francisco—the sense that capitalism has become too hyperactive, forcing them to take ever shorter-term decisions at the expense of their owners and of society. It’s as close to received wisdom as you can get in business. On September 28th a body called Focusing Capital on the Long Term (FCLT) announced its board of directors, now devoted to fighting myopia among investors and managers. Some mighty names have signed up, including BlackRock, the largest fund manager, and Unilever, a consumer-products firm. + +The new body’s biggest challenge is proving that short-termism is a problem. Of the two main bits of evidence, one is circumstantial. It seems horribly frenetic that the average holding period for a share in America is only 200 days, mainly because of computerised trading. The other is subjective—managers’ perception that they are harried. In a study commissioned by FCLT of 1,000 executives around the world, 51% felt under most pressure to deliver financial results within a year or less. Rather than take the long view, they feel obliged to cut costs, massage quarterly profits and buy back shares. + +A clear-cut case? Not really. Corporate investment in America has been sluggish in the last year, but at 13% of GDP, its level is in line with its post-1945 average. Firms are buying back shares because profits are so high rather than because investment is so low. It is healthy for investors to force mature firms to penny-pinch—however much their bosses grumble—and redirect funds to growing companies. The same American system that is accused of short-termism has poured capital into Tesla and Uber, two highly valued firms that are years from breaking even. + +Nor is short-termism a particularly helpful lens through which to view the world. The country with the most hyperactive capital markets, America, has the rich world’s best-performing big economy and its firms are more dominant than ever. Places with lower-tempo corporate cultures, such as Japan and much of Europe are performing less well. Trying to classify companies based on whether they take the long view can also throw up unexpected results. A newish index created by Standard & Poor’s, a rating agency, that claims to track firms with a particularly long-term focus has three of its ten largest holdings in cigarette firms, which may outlive their customers for all the wrong reasons. + +The risk for FCLT is that it ends up entrenching the power of incumbent executives. Better to focus on a different goal, which is prodding passive asset managers to communicate more with companies. Such managers have grown quickly and now own 10-20% of most big listed companies in the West. Because they buy and hold every share in an index they are stable owners, but so far they have tended to keep schtum on how firms are run, risking a vacuum in governance. Larry Fink, the boss of BlackRock (which runs mostly passive funds), is a commendable exception. More should follow his lead. Trying to stipulate the optimal period over which decisions are made is a waste of time. Instead it is the continual tension between the short term and the long term, and between engaged owners and talented managers, that makes capitalism tick. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708287-are-companies-too-short-termist-quick-and-dirty/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Martial arts in Asia + +Bloodsport, hold the blood + +The rapid rise of ONE Championship, an Asian sports league + +Oct 8th 2016 | SINGAPORE | From the print edition + +Oh so gentle + +CONOR MCGREGOR, an Irishman who is perhaps the world’s most famous mixed-martial arts (MMA) fighter, is as famous for his mouth as for his quick feet and hands. He boasts about how much more money he makes than his opponents. He has referred to other fighters as “twerp” and “snake”. + +The co-founder of ONE Championship—an MMA league stealing a march in Asia on Mr McGregor’s American-based league, Ultimate Fighting Championship (UFC)—is disdainful of such behaviour. Martial arts, insists its founder, Chatri Sityodtong, who is Thai-American, is about discipline and humility, not brashness. Most of a fighter’s work, after all, takes place outside the ring. Promotional videos for ONE’s fighters tend to depict them training rather than fighting. The point, says Mr Sityodtong, is to inspire viewers to achieve their dreams in their own lives, rather than just getting them to cheer the biggest bully on the block. + +ONE has pursued a policy that might be described as “hyperlocalism”. Western sports properties, such as the English Premier League (EPL), a football championship, seek to sell their brands transnationally in Asia. ONE builds up local fighters in each market. In May Angela Lee, a 19-year-old Canadian-American of Singaporean descent (pictured, upside down) won the atomweight championship in Singapore. In December the men’s heavyweight champion, Brandon Vera, a tattooed Filipino-American with a gentle manner and dangerously quick leg work, will defend his title in Manila. + +Asian viewers clearly like the approach. Since its launch only five years ago, ONE has grown rapidly, with events held in 11 countries and televised in at least 100 more. The footprint in Asia of UFC, which was bought by an American talent agency, WME-IMG, in July for a whopping $4 billion, meanwhile, has shrunk. In 2014 UFC held four events in Asia; this year just one. + +Victor Cui, ONE’s other founder, who is Canadian-Filipino-Chinese, believes the league’s success stems from its fealty to “Asian values”. “We’re different in Asia,” he says. “Western sports seem to encourage disrespect, breaking of the rules, arrogance [and] finding the most undisciplined, fastest route to fame.” Some will roll their eyes at such clichés, and point to another explanation. The main reason why no pan-Asian sports league has flourished is that sport is fragmented: South Asians play cricket but East Asians do not, while the reverse is true of basketball. That is why local talent in these sports dreams of heading for the likes of the EPL and their deeper pockets, not being stars at home. But ONE may be able to keep hometown fighting talent from heading West. As Mr Sityodtong points out, Asia has been the home of martial arts for a mere 5,000 years. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708283-rapid-rise-one-championship-asian-sports-league-bloodsport-hold-blood/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +Peacocks of the sea + +A glimpse inside the world of the superyacht owner + +Oct 8th 2016 | From the print edition + + + +THE Monaco Yacht Show, which ran from September 28th to October 1st, is arguably the world’s most extravagant game of one-upmanship. This year more visitors than ever—34,500—came to gawp at 125 superyachts with a collective value of $2.7 billion, tied up in the principality’s Port Hercules. But the yachts were only the beginning. Monaco is essentially a bazaar for the 0.1%: everywhere you look there are hawkers in pop-up tents trying to sell things that you never knew you needed. There were submersibles that can take six people to the bottom of the ocean; armour-plated Land Rovers; jet-skis and 3D goggles; military-style helicopters and flying boats. Among the variety of servants for hire were armed guards and on-board DJs. + +In this world, size counts for a lot. The bit of the yacht industry that has recovered most strongly since the financial crisis is the “monster yacht” segment. The Superyacht Intelligence Agency says 62 yachts of 70 metres plus were delivered in 2011-16. Another 59 are under construction, despite the fact that some of the usual big spenders have pulled in their horns a bit. The decline in the oil price has hit both Middle Easterners and Russians; the latter have also been hit by economic sanctions. The biggest spenders now are the Americans, who account for a third of the market, and the British, who account for a tenth. + +Extravagant toys are the other obvious signifier of status at sea. Now that helicopters and on-board swimming pools are taken for granted, the battle has moved onto new ground. The hottest fashion is for “support vessels”. Why load down your 150 metre yacht with toys when you can put them on a smaller support ship and have them provided to you on demand? One ancillary vessel in Monaco displayed a typical collection of must-haves: a Vespa scooter, a speedboat, diving equipment, water- and jet-skis. They are particularly useful for transporting your very own submersible. (Nothing, it turns out, splits the superyacht world like the debate over the merits of round submarines that are shaped like pods versus long submarines that resemble cigars.) + +Getting the most out of your yacht doesn’t just mean adding more deck space. Boat owners are learning how to squeeze more out of existing resources. They convert their helipads into squash courts by day and into cinemas by night. They are also investing heavily in the virtual world. The idea of getting away from it all doesn’t encompass getting away from broadband: even sailing boats come with ugly-looking radar dishes. JStar, an American startup, offers a voice-command system so you can bark orders at your smartyacht just as you command your smarthome. + +Such conspicuous consumption makes sense of a sort. Many ultra-rich people want to display their wealth in a way that even the most ignorant oaf can understand. But they also want to be able to retreat into their private empires. You can display your yacht in a way that you can’t show off your house or hotel suite, because there is always the option of weighing anchor and taking it into the middle of the ocean where you don’t have to socialise with anybody except the glitterati. Superyacht owners are always dropping in on each other as they criss-cross the seas, to compare not just their vessels but also their guest lists. + +But there are plenty of more subtle ways to outdo fellow yachties. The sailing crowd (who tend to be old European or New England money) look down on the motorised lot. Some boat makers emphasise simplicity rather than bling: one says you want your yacht to be a floating beach house rather than a floating Versailles palace. There is also a pronounced fashion for old-style adventure rather than just playing with the jet-skis. A new generation of superyacht-owners want to make passage for far-flung places such as the northernmost Norwegian fjords or even to Antarctica. Young tech entrepreneurs, in particular, are more interested in chalking up experiences than piling up possessions. + +Whatever the buyers’ motivations, a thriving business has resulted. When the Monaco Yacht Show started in 1991 there were just 1,147 superyachts (that is, yachts longer than 30 metres) in the global superyacht fleet. Today there are 4,473, with another 473 under construction. Warsash Superyacht Academy, which trains people to work on boats, calculates that the industry has an annual turnover of €24 billion ($26.9 billion) and employs around 150,000 people. The industry not only includes those who make the boats, outfit them, staff them and insure them. One company, DYT Yacht Transport, even boasts the world’s first purpose-built yacht motor vessel to carry yachts to the Caribbean and other typical hangouts round the world. + +Not your average gin palace + +A few of the more reflective superyachties worry about whether the industry can continue to prosper in the rising tide of populism. It doesn’t help, for example, that Sir Philip Green, a vilified former owner of British Home Stores, a bankrupt retailer, possesses one of the world’s biggest yachts, the 90-metre Lionheart (his third). The working super-rich do allow yachting prestige to trickle down a bit. Boats need to be kept shipshape all year round and the running costs are high. When they are not using them, they are happy to sell time on their yachts to the slightly downmarket rental crowd. But it’s not exactly redistribution. + +The industry easily recovered from the financial crisis. Owners are always trading up to something better (the average length of ownership is three years). By constantly displaying their boats and looking at other peoples’, they ensure that the market remains dynamic. Yachtbrokers resell boats; interior designers adjust them to new owners; and glossy magazines sell their virtues to potential new owners and renters. For pristine yachts, there are still underexploited markets such as Asia. The first generation of Asian billionaires have been too busy making money to hear the call of the ocean. But it cannot be long before their Western-educated heirs start adding yacht shows to their social calendars. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21708202-procuring-superyachts-worlds-most-extravagant-game-one-upmanship-glimpse-inside/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Banking in Europe: Autumn blues + +European banking jobs: Career breaks + +The yuan in the SDR: From base to gold + +Buttonwood: An emerging threat + +The Green Climate Fund: The green light + +GE quits financial services: Capital punishment + +Asset management: Active defence + +Free exchange: How the other tenth lives + + + + + +Articles Sections Next + +Banking in Europe + +Autumn blues + +Worried about Deutsche Bank? Alas, there’s little to cheer elsewhere + +Oct 8th 2016 | From the print edition + + + +QUEASY calm is unpleasant, but it beats sickening panic. Late on September 29th Deutsche Bank’s share price lurched downwards again, to a 34-year low, after Bloomberg reported that “about ten” hedge funds had switched some business away from the troubled German lender. That capped a stomach-churning fortnight, after America’s Department of Justice (DoJ) requested $14 billion to settle claims that Deutsche mis-sold residential mortgage-backed securities (RMBSs) before the financial crisis. Hopes that it might settle with the DOJ for $5 billion-odd, though so far unfulfilled, have since brought uneasy respite. On October 5th Deutsche’s shares were some 20% above their nadir. + + + +A swift, affordable agreement would end uncertainty about the bill and quieten chatter, pooh-poohed by government and bank, that the German state might have to prop up the country’s biggest lender. It would also buy breathing space. Despite the recent rally, Deutsche’s shares are down by more than half this year. Deutsche has a thinner capital cushion than other leading European banks (see chart). It may yet have to ask investors for money, although it says not: it plans to sell assets and has begun an overdue restructuring. But the last thing it wants (apart from the shame of a bail-out) is to go begging now. The DoJ might merely pocket the proceeds. + +Simply put, Deutsche’s basic problem is that it is hard to see where profits will come from. + +Investment banking is subdued worldwide, and once-buccaneering Deutsche is losing out to American banks. Worse, unlike the Americans, it lacks a domestic stronghold. It is only a bit-part player in German retail banking (and intends to sell Postbank, which it bought in 2008-10). In a land of 1,750 lenders, mostly local public-sector banks or co-operatives, pickings are slim. Commerzbank, its biggest local rival, is shedding 9,600 jobs (see article). + +Some of Deutsche’s difficulties are its own, or shared only with a few other big European banks. The DoJ is also chasing Barclays, Credit Suisse, HSBC, the Royal Bank of Scotland and UBS over RMBSs. But in its struggle for profitability, Deutsche is far from alone. Especially in the euro area, lenders large and small are suffering. + +A prime reason is the currency zone’s slow growth, coupled with ultra-low interest rates—the product of desperate efforts to goose inflation by the European Central Bank (ECB)—and a flat yield curve. That has squeezed the margin between borrowing and lending rates: although the ECB has pushed its deposit rates below zero, few banks have dared do likewise. ECB officials argue that their policy has aided banks, because rising bond prices and improved credit quality have offset the crush on margins and cheap money has stimulated lending. Bankers beg to differ. + +So far, says Stuart Graham of Autonomous, a research firm, the effects of negative interest rates on banks’ already sagging profitability are hard to pinpoint. But lenders are in for a lot more pain. The degree of tenderness varies from country to country. Simpler retail banks, relying on deposits for funds and on loans for revenue, notably in Germany and Italy, are most vulnerable (regional banks in Japan, where rates are also negative, are in a similar boat). Mr Graham reckons that the return on equity of German savings banks will fade from 6.5% to just 2% by 2021. Italian and Spanish banks’ hefty bad debts mean they cannot benefit from the low loan-loss provisions implied by ultra-low rates. + +Nevertheless, if blessed by stronger growth and equipped with better business models, banks can withstand negative rates. Swedish banks, notes Mr Graham, returned 11% last year and Swiss cantonal banks managed 9.9%; in some euro-zone countries returns were below 2%. The Swedes and Swiss depend less on net interest income or deposit funding than do German or Japanese local lenders. According to S&P Global Market Intelligence, Swedish banks boast a cost-income ratio of 46%, against Germany’s 72% and Italy’s 67%. + +Some countries have made extensive post-crisis repairs to tattered banking systems. In Spain, where savings banks were bailed out in 2012 and lenders have set aside billions to cover bad debts, non-performing loans have fallen from 13.6% of the total in 2013 to 9.4%. The number of bank branches has been cut by one-third since 2008. A pickup of GDP growth to 3.2% last year also helped. But profitability remains a worry, in part because Spain’s biggest banks rely more on interest margins and less on fees than the euro-zone average. + +Elsewhere, restoration has further to go. In Italy, bankers led by J.P. Morgan are trying to save Monte dei Paschi di Siena, the country’s third-biggest bank and the world’s oldest. The plan involves hiving off €27.7 billion-worth ($31 billion) of bad loans (gross) into a separate entity, and injecting new equity into the cleaned-out bank. UniCredit, the biggest bank, is reviewing its strategy under a new boss. Atlante, a private fund financed by banks, insurers and others, has taken over two small ailing banks and will also buy bad loans. + +Bankers grumble about regulation as well as low interest rates. Italian complaints may be loudest of all. First, whereas Germany, Spain and others gave banks oodles of state money after the crisis, Italy supplied just a drop. But the economy stagnated and the bad-loan burden grew; meanwhile, European Union rules on state aid were tightened, obliging Italy to rely on private rescues. Second, Italian bankers reckon that a reform of co-operative banks, turning them into joint-stock companies, should have sparked a merger wave. But they say the ECB’s tardiness in approving the union of Banco Popolare and Banca Popolare di Milano, to which it eventually gave the nod last month, has deterred other potential deals. And the takeover of four small, troubled banks salvaged by the state last year is reportedly being held up as the ECB insists that the buyer of three of them, UBI Banca, raise €600m in extra capital. + +Continuing demands for capital are another general gripe. Few dispute that banks were too thinly capitalised before the crisis. Had today’s definitions been used in 2007, reckons Mr Graham, Deutsche Bank’s ratio of common equity to risk-weighted assets (an important gauge of resilience) would have been just 1.8%. Now it is 10.8%; regulators want 12.25% by 2019; Deutsche’s own target is 12.5% by 2018. But more changes are coming, which some European banks think too burdensome. + +Yet banks protest too much. Between 2007 and 2015, calculates Hyun Song Shin of the Bank for International Settlements, 90 euro-zone banks paid dividends of €223 billion, retaining earnings of just €348 billion. Had they kept that money, their capital cushions could in theory have been bolstered by 64%. And since stronger banks tend to lend more, Mr Shin adds, profits, earnings and capital would have been even higher. Doubtless these are hard times for Europe’s banks. But many might have made life easier for themselves. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708239-worried-about-deutsche-bank-alas-theres-little-cheer-elsewhere-autumn-blues/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +European banking jobs + +Career breaks + +A grim new world, one with fewer bankers + +Oct 8th 2016 | From the print edition + + + +FRANK LLOYD WRIGHT quipped that “the modern city is a place for banking and prostitution and very little else.” Little did the early 20th-century architect know how banks would flourish, hoovering up much of the world’s talent by the early 2000s. But this golden age is ending: bankers’ jobs are at risk from the digital revolution on the one hand, and falling profits on the other. + +Nowhere have bankers fallen from grace with such a bump as in Europe. This week ING, the Netherlands’ largest bank, announced that up to 7,000 jobs would be cut in the next five years. Commerzbank, Germany’s second-largest bank, had already reported it would cut its workforce by 9,600, nearly a fifth. + + + +Across Europe, bankers are packing up. In Britain more than 10% of bank jobs were cut between 2011 and 2015; in Germany the workforce has shrunk by around 20% since 2001. Since the start of the year Credit Suisse has got rid of nearly 5,000 jobs and Barclays has shed 13,000. In Spain Banco Popular is cutting about one-fifth of jobs. “Desperate times call for desperate measures,” notes Naeem Aslam, of Thinkmarkets, a broker. With today’s low interest rates, slow growth and rising regulatory costs, it is much harder for banks to be profitable. + +In such a choppy environment, costs are one of the few things a bank can control and these come primarily from the workforce. By cutting headcount and branches, frugal Scandinavian banks have brought their cost-to-income ratio, a measure of efficiency, down to the mid-40s. The European average is around 60%. But at Commerzbank the ratio is 79% and at Deutsche Bank 89%. + +Brexit complicates matters further. A report this week by Oliver Wyman, a consultancy, estimated Britain might lose 35,000 jobs in financial services. Thorsten Beck of Cass Business School in London thinks some jobs will move to the euro zone. But others might be gone for good because of rigid labour laws and because some might be less worthwhile inside the euro area than in London. + +Young people have heard enough: whereas in 2007 around 28% of MBA graduates from INSEAD, a European business school, chose a career in finance, last year only 15% did. Within that group fewer are opting for investment banking. That is good news for talent scouts at tech companies; bad news for tailors of bespoke pinstripe suits. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708244-grim-new-world-one-fewer-bankers-career-breaks/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The yuan in the SDR + +From base to gold + +The IMF gives its blessing to China’s controlled currency + +Oct 8th 2016 | SHANGHAI | From the print edition + + + +WHEN Marco Polo travelled to China in the 13th century, he found that among its wonders was “the secret of the alchemists”. Its imperial court could turn mulberry bark into money. It simply printed paper notes, decreed that people must accept them and killed counterfeiters. For a Venetian used to gold coins, the world’s first fiat currency was a marvel. Its value derived not from precious metal but from the credibility of the regime issuing it. This month China achieved another kind of monetary alchemy: to fashion a global reserve currency out of one that, by a range of criteria, does not yet merit such status. + +On October 1st the yuan became the fifth entrant in the basket of currencies that forms the Special Drawing Right, a reserve asset created by the IMF. Immediate implications are limited. SDRs are a unit of account, not a real currency; inclusion in the basket does not force anyone to acquire the yuan. Symbolically, though, it is a big deal: the IMF’s seal of approval for China’s monetary system. It has deemed it safe for central banks around the world to add the yuan to their reserves. Dozens of central banks in fact already do so, with about 1% of global reserves now held in yuan. SDR status should add momentum. + +This is a remarkable achievement for China. Typically, reserve currencies are issued by countries that have large economies, flexible exchange rates, open capital accounts and deep financial markets. China certainly meets the first requirement of size, but the others are works in progress. Nevertheless, the IMF judged that China had done enough to make the yuan usable, notably by opening its bond market to foreign institutions and shifting to a slightly more market-oriented exchange rate. + +In “Gaining Currency”, a book about the yuan’s rise, Eswar Prasad of Cornell University looks at China’s tactics. A series of careful initiatives—trade invoicing, overseas loans and swaps with other countries—have nudged the yuan into global markets. It now accounts for about 2% of global cross-border payments, up from virtually zero five years ago, making it the fifth-most used currency. + +Unquestionably, politics also played a part in the decision. China had lobbied for SDR inclusion. It was a way for the IMF to acknowledge its real, if gradual, progress in financial reforms. There was also an element of anticipation: should China continue on its development path, the yuan’s global importance is sure to increase. + +The irony of the yuan’s ascendancy in the IMF’s books is that it comes after a year when, for the market, the Chinese currency was on the decline. A small devaluation of the yuan in August 2015, partly to make it more flexible, set off a storm of speculation that China wanted a much bigger devaluation to support its slowing economy. Companies and investors bet against the yuan in large numbers. To defend it, China’s central bank has tightened capital controls and burnt through nearly $500 billion of its reserves over the past year. + +The gap between the fears and hopes surrounding the yuan can sometimes seem like a chasm. To optimists, it will soon rival the dollar. To pessimists, it is only a matter of time before it resumes its descent. In truth the two are not necessarily contradictory; the dollar is the world’s leading currency but it still goes through regular bouts of depreciation. + +Yet there is also a big difference between being a reserve currency and being the world’s pre-eminent currency. As Mr Prasad argues, China’s controlled approach could soon reach its limits. Ultimately, for the yuan really to challenge the dollar, China must win trust as a safe haven for assets. It will not only need deeper, more open financial markets; it will also need an open political system, governed by rule of law. That transition would be alchemy of a different kind. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708262-imf-gives-its-blessing-chinas-controlled-currency-base-gold/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood + +An emerging threat + +Investors are buying emerging-market bonds as the fundamentals are deteriorating + +Oct 8th 2016 | From the print edition + + + +WHEN the returns on cash and government bonds in the developed world are zero, or even negative, it is hardly surprising that investors are casting their nets more widely. In the process the “search for yield”, as it has been called, has inevitably turned its attention to emerging markets. + +One or two decades ago, emerging-market sovereign debt might have been the only beneficiary of these flows. But government bonds do not offer such a juicy return these days; the yields on ten-year bonds issued by Malaysia and the Philippines, for example, are around 3.6%. + +As a result, investors are taking a big extra risk and piling into emerging-market corporate debt. So far this year bond funds in that sector have received inflows of $11.5 billion, according to HSBC. Their enthusiasm has been rewarded. Bloomberg’s emerging-market corporate-bond index has returned 13.4% since January 1st, compared with a return of just 4.4% from American Treasury bonds (see chart). This rally has occurred despite early-year wobbles about the strength of the Chinese economy and the impact of higher American interest rates. + +The improved performance of emerging-market bonds reflects, in part, greater economic optimism. Commodity prices have rebounded since the start of the year—good news for raw-materials producers. The IMF has just revised its forecast for emerging-economy growth this year to 4.2%, the first acceleration in growth in six years; it expects even-faster growth of 4.6% next year. It is not just emerging-market corporate bonds that have rallied as a result; so have equities and currencies. + +But investors need to be careful. Just as they are piling into this asset class, its credit fundamentals are deteriorating. In 2015, 26 emerging-market issuers defaulted, compared with 15 in 2014. That took the default rate on speculative debt up to 3.1%, the highest rate since 2009, according to Standard & Poor’s (S&P), a rating agency. Already this year another 18 emerging corporates have defaulted, taking the trailing 12-month default rate up to 3.7%. + +Although the downturn is gathering pace, that default rate has moved only just over the historic mean of 3.5%. However, that backward-looking number was boosted by a high level of failures around the turn of the century. The highest-ever default rate (17.6%) was recorded back in 2002. + +More defaults are probably on the way. More than half of all emerging-market issuers are speculative grade (or “junk” as less polite investors tend to call their bonds). Last year S&P downgraded 290 emerging-market issuers and increased the rating of just 80; another 152 issuers were ranked as having the potential to be downgraded, compared with just 19 that might be uprated. + +When things do go wrong for emerging-market borrowers, it seems to happen faster. On average, the gap between the issue of a soured bond and its default is 3.6 years in emerging markets, compared with a global mean of 5.8 years. + +What might happen to make the fundamentals for emerging-market economies deteriorate even further? The OECD recently warned that “continued weak trade growth, and the sharp slowdown [in trade] in 2015 and 2016, underlines concerns about the robustness of global growth.” Citigroup reckons that not since the 1930s has world trade growth been so weak relative to global GDP growth. + +Explaining the sluggishness of trade, the OECD points to a “slowdown and reversal of trade liberalisation”, along with the “weakening of global value chains”—the relationships between multinational companies in the West and their suppliers in developing economies. Both trends are bad news for the kind of emerging-market companies that have issued bonds. + +The rise of populist politicians in the developed world—including the possible election of Donald Trump as America’s president next month—could pose an even greater threat to trade growth. A trade war between America and China, as threatened by Mr Trump, would cause a lot of collateral damage. + +So eventually investors might find themselves trying to find an exit from an asset class with rapidly deteriorating fundamentals. Unlike holders of bonds in the markets in Europe and Japan, they won’t be able to rely on central banks and their quantitative-easing programmes to soak up their unwanted assets. And regulations mean that investment banks are no longer willing to act as marketmakers on the scale that they were before 2008; liquidity will be hard to find. The contours of a future market crisis are already clear. + +Economist.com/blogs/buttonwood + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708265-investors-are-buying-emerging-market-bonds-fundamentals-are-deteriorating/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Green Climate Fund + +The green light + +A UN climate fund seeks a role + +Oct 8th 2016 | GASHORA, RWANDA | From the print edition + +Vestine sees the light + +WHEN Vestine Mukeshimana bought electric lights last month from BBOXX, an off-grid solar company, it helped her spot snakes in her garden and stopped thieves making off with her cow. In her Rwandan village she and her neighbours now cook after dark and their children study in the evenings. They have never heard of the Green Climate Fund (GCF), a UN initiative to bring climate finance to developing countries. But last month such household solar schemes became its first disbursed investment. + +Understaffed and buffeted by politics, the GCF is struggling to define itself. It started operations last year after coaxing $10.3 billion from governments. Raising money was hard; spending it is proving even harder. Its board meets on October 12th in Songdo, South Korea, to weigh up proposals. It will also have to mull appointing a new boss. Héla Cheikhrouhou, the old one, has left, warning that the wrong projects are being financed. + +The debate goes to the very purpose of the GCF. It was set up in 2010, part of a pledge to transfer $100 billion of climate cash a year by 2020. Developing countries had long lamented that they bear the brunt of climate change, having done little to cause it; the GCF gave them equal board representation and promised that half the money would be used to deal with the impacts of climate change (not just reducing emissions). Rich countries, which pay, wanted a role for the private sector, too. + +The talk is of “paradigm shifts”. But of the 17 projects approved so far, few are transformational. In June, for instance, the board approved $49m to plonk more solar panels in a Chilean desert so baked in solar energy that some suppliers had been giving it away. Over 90% of the money is being funnelled through the usual suspects, such as multilateral development banks and UN agencies. Many of them, says one observer, have been pulling old proposals out of drawers. National authorities are puffing to keep up. + +Part of the problem is politics. With one eye on future fund-raising, the board has set an ambitious target of approving $2.5 billion of investment by the end of the year (the total now stands at $257m). So far it has waved through every proposal put to it, from wastewater management in Fiji to weather-warning systems in Malawi. + +A deeper issue is who leads the management of the projects. Rather than running its own, the GCF channels money through “accredited entities”. A decision to accredit big commercial banks, Deutsche Bank and HSBC, has stirred controversy. Yet the process stretches the capacity of smaller institutions. The GCF should do more to understand local contexts, says Alex Mulisa, who heads Rwanda’s own climate fund. Another developing-country technocrat grumbles “we’ll be under water” by the time his project is considered. + +But good ideas are out there—like Ms Mukeshimana’s solar panels. The GCF is putting $25m into a fund raised by Acumen, an impact investor, to be invested in off-grid solar firms in east Africa (it bought equity in BBOXX in August). Private co-financing will magnify the impact and money is put aside for consumer protection, like keeping the lights on if the firm servicing the system goes bust. + +Or take a scheme in El Salvador, which will give small businesses greater certainty about investing in energy efficiency, by insuring against the risk that the cost savings are less than promised. By being bolder itself—through offering insurance or partial guarantees—the GCF can reassure private firms nervous of new technologies and unpredictable markets. + +If it is to have any point, the GCF must go where the World Bank or private money dare not. It must also sort out its own processes. Beefing up the secretariat is one step; devolving some smaller decisions from board level would help too. The GCF (which turned down The Economist’s requests for an interview) still has a lot going for it. It is young. It has rare political legitimacy. It has moved further, faster, than other climate funds (like the Adaptation Fund) had at a similar stage. + +But now is the moment when precedents are set. “The GCF is under pressure to be everything to everyone,” says Niranjali Amerasinghe of the World Resources Institute, a research organisation. Bankers want to lure investment from pension funds; the World Bank is promoting dam projects; civil-society groups demand “locally driven” development. The GCF cannot give them all a green light. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708267-un-climate-fund-seeks-role-green-light/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +GE quits financial services + +Capital punishment + +The conglomerate’s race to shrink its finance business is not cost free + +Oct 8th 2016 | From the print edition + + + +AMONG the proud titans humiliated in the financial crisis of 2007-08 was GE, forced to take a government bail-out in 2008. In response it swiftly slimmed down its lending arm, GE Capital. But the regulators were still not happy. In 2013 they labelled it a “systemically important financial institution” (SIFI), ie, one big enough to pose a global risk. That imposed costly regulatory burdens and encouraged GE’s boss, Jeffrey Immelt, to announce in April 2015 the closure of GE’s finance division within three years. + +In a remarkable corporate transformation, he is ahead of schedule. The disposal to Wells Fargo this week of GE’s global inventory-financing business means that GE has sold $193 billion of “ending net investment”, or ENI (an adjusted asset figure), in the past 18 months, covering more than 25 lending units. + +It has taken almost a decade. But GE is, almost, an ex-bank. As Mr Immelt promised last year, it is also much simpler. It shed its SIFI status in June. Lending, in ENI terms, is down by 85% from its peak in 2008 (see chart) and now focuses on its core industrial businesses. Its reliance on short-term funding has fallen by 86%. + +GE was clearly right to get out of financial services, which were a drag on the rest of the group. Since the announcement last year, GE’s share price has beaten the Dow Jones Industrial Average by about 12 percentage points, largely thanks to the hope it would return “more than $90 billion” to shareholders during the three-year winding-down period, of which up to $50 billion will be in the form of share buybacks—one of the most aggressive such programmes in American business. + +But this represents a return of capital, not a return on capital. And the price GE has received appears mediocre. It notes that buyers have paid 1.1 times tangible book value for the financial assets that they have acquired. But any resulting gain for GE appears to have been entirely offset by restructuring, tax and other one-off charges incurred in 2015 and this year. + +Refocusing on industrial businesses, which account for over 80% of profits, up from 60% in 2008, is expected to raise GE’s return on equity. But the main immediate beneficiaries of GE’s asset sales seem to be its old financial competitors, which have seen a chance to bulk up. Large banks joined buyers’ consortia in roughly three-quarters of the deals. The acquisition of GE’s railcar-leasing business by Wells Fargo and Marmon, a Berkshire Hathaway company, almost doubled Wells’s fleet, making it the industry leader. + +A quarter of the assets sold were nudged out of regulatory reach into the hands of non-bank lenders and private-equity firms. This reduces the concentration of assets in SIFIs but will do little to enhance competition. Blackstone, the world’s largest private-equity firm—and, says its boss, its largest owner of property—acquired global real estate and debt worth about $25 billion. + +Antares Capital, a lender to medium-sized corporate acquirers, dominated its market before it was bought in 2015 by Canada Pension Plan Investment Board (CPPIB) for $12 billion. Under GE’s ownership, Antares was barred for a decade from financing health-care deals, lest it compete with a fellow subsidiary. In CPPIB’s portfolio, it expects to expand into health care. + +So dismembering a SIFI has unintended consequences. In some cases competition may be sharpened. Goldman Sachs, an investment bank, recently unveiled Marcus, an online-lending platform, on the back of $16 billion in deposits purchased from GE. But many lending markets now have one fewer big competitor. + +GE’s sprawling and once-profitable finance arm was, in the 1980s, a lure to investors. It became a disaster, and Mr Immelt, who took over in 2001, deserves some credit for grappling head-on with the consequences. His new promise—to turn GE into “the world’s premier digital industrial company”—is at least unlikely to be such a rollercoaster ride. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708270-conglomerates-race-shrink-its-finance-business-not-cost-free-capital/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Asset management + +Active defence + +A merger reflects how the fund-management industry is changing + +Oct 8th 2016 | From the print edition + + + +WHEN firms merge, their bosses gush Panglossian jargon. So it was with the tie-up announced this week of Henderson Global Investors, an Anglo-Australian asset manager, and Janus Capital, an American one. Janus Henderson, as the combined business will be known, will become a “truly global” asset manager that will deliver “compelling value creation”, boasted its American half. Yet behind the boosterism lie the real fears of active fund managers: of losing business to passive ones—ie, those offering funds that simply track a market index. It is hard not to see the merger as, more than anything, a defensive move. + +To be fair, the companies do have a strong business case for merging. Janus is deeply established in America and Japan. It is famous for having in 2014 hired Bill Gross, the “bond king”, when he abruptly left Pacific Investment Management Co, PIMCO, the firm he co-founded and turned into a giant. Henderson’s sales network is centred on Europe. The firms stand to gain more from selling each other’s products in new markets than they will lose from stepping on each other’s toes. + +Moreover, the combined firm will have around $320 billion in assets under management. This is enough to propel it into the ranks of the world’s 60 largest asset managers, up from 90th place for Janus and 116th for Henderson, according to Willis Towers Watson, a consultancy. The increased size should create economies of scale: they have the ambitious aim of cutting $110m a year in costs. They also hope the much greater choice the combined firm can offer will help broaden their customer base. + +Yet in the background to the merger is the onslaught on active fund managers from research showing they tend not to outperform benchmarks. For example, a recent study by Standard & Poor’s, a credit-rating agency, showed that nearly 99% of active managers in American equities underperformed the S&P 500 index over ten years while in Europe, 86% lagged behind their benchmark over the same period. + +According to Morningstar, a data provider, since December 2007 passive assets under management have tripled to $5.7 trillion, while assets in active funds have increased by only 54%, to $23.2 trillion (see chart). In the first eight months of this year, investors drew down $166.2 billion from actively managed funds specialising in American equities alone. In contrast, passive funds attracted almost $110 billion in new investment. Henderson and Janus have not been spared, with both experiencing net outflows in the first half of 2016. + +The shareholders of both Janus and Henderson have reacted positively to the deal, with share prices of Janus jumping by 12.2% and Henderson by 16.7% on the day it was announced. If the switch to passive investing continues at such a breakneck pace, other asset managers will surely follow their lead. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708271-merger-reflects-how-fund-management-industry-changing-active-defence/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +How the other tenth lives + +The world should be both encouraged and embarrassed by the latest global poverty figures + +Oct 8th 2016 | From the print edition + + + +WHAT is the most important number in global economics? Judging by the volume of commentary it excites, America’s monthly payrolls report (released on October 7th) might qualify. Other contenders include the oil price or the dollar’s exchange rate against the euro, yen or yuan. These numbers all reflect, and affect, the pace of economic activity, with immediate consequences for bond yields, share prices and global prosperity—which is what economics is ultimately all about. + +But if global prosperity is the ruling concern of economics, then perhaps a more significant number was released on October 2nd by the World Bank. It reported that 767m people live in extreme poverty, subsisting on less than $1.90 a day, calculated at purchasing-power parity and 2011 prices. The figure is not up-to-the-minute: such is the difficulty in gathering the data that it is already over two years out of date. Nor did the announcement move any markets. But the number nonetheless matters. It represents the best attempt to measure gains in prosperity among the people most in need of them. + +The latest figures should arouse mixed feelings. They are simultaneously a cause for celebration, pity, scepticism and shame. The poverty headcount is worth cheering because it is so much lower than it was. Over the 20 years from 1993 to 2013, the number of poor people fell by over 1 billion, from roughly one in three to about one in ten. Even the global financial crisis did not interrupt this progress (see left-hand chart). + +The biggest declines took place, unsurprisingly, in the world’s two biggest countries. In India, the number of poor people fell by 218m from 2004 to 2013, according to the World Bank. In China, it fell by more than 320m from 2002 to 2012. These grand human achievements are often taken for granted. The governments in power during these periods (led by Hu Jintao and Wen Jiabao in China and by Sonia Gandhi and Manmohan Singh in India) are commonly described as disappointments, even though half a billion people escaped poverty on their watch. If only the rest of the world’s governments could disappoint in a similar fashion. + +Yet the World Bank’s report is cause for pity as well as celebration. After all, 767m is still a lot of people and $1.90 is not a lot of money. It is hard to imagine how anyone could subsist on so little. The World Bank’s yardstick is based on the poverty lines for 15 dirt-poor countries. Their lines typically calculate an amount of money that would allow a person to eat enough calories, given the national diet and other pressures on their budgets. In Zambia, for example, a person on the poverty line can afford a daily diet of two-three plates of nshima (a maize staple known as mealie meal), a sweet potato, a few spoonfuls of oil, a couple of teaspoons of sugar, a handful of peanuts and twice a week, a banana or mango and a small serving of meat. Such a person would have just 28% of his budget left over for other things. + +As well as pity, the World Bank’s global poverty tally should also invite some scepticism. Counting the poor is laborious and treacherous, as the bank freely admits. Fewer than 40 countries actually carried out a new survey of households in 2013, leaving the bank to fill in the gaps with projections. India’s last survey was in 2012. China, which replaced separate rural and urban surveys with an integrated survey in 2013, also started including as income the implicit household rent owner-occupiers pay themselves. That switch lowered its poverty count by over 30m. + +Even innocuous tweaks in survey questions can make a big difference. An experiment in El Salvador, cited by the World Bank’s researchers, managed to cut measured poverty by over 30% simply by asking more specific questions. Instead of asking how much was spent on fruit, vegetables and legumes, it asked about plantains, mangoes, green chilies, and so on. Owing to a printing error, a Ugandan survey failed to mention public-transport fares as an example of travel expenses. The error seems to have reduced reported transport spending by over 70%. + +One-thousandth for the tenth + +The global poverty count should also elicit a kind of embarrassment. As the world economy grows ever more prosperous and sophisticated, the problem of extreme poverty looks less like a tragic inevitability and more like a peculiar anachronism. The average person in extreme poverty lives on $1.33 per day. It would therefore take just $0.57 per day to rescue them from this plight. That observation invites a thought experiment. If it were somehow possible to transfer without cost the right amount of money into the right hands, how much would it take to end extreme poverty altogether? The answer is just $159 billion a year, according to the World Bank, or less than 0.2% of global GDP. + +That estimate is calculated at purchasing-power parity. If an actual dollar were transferred to a poor country from America, it would stretch much further, because prices in poor countries tend to be lower (a point made years ago by Surjit Bhalla, an Indian economist, now of Observatory Group, a macroeconomic advisory firm). Taking these lower prices into account, the amount needed to bring all the world’s poor up to the poverty line drops to $78 billion a year, or just 0.1% of global GDP (see right-hand chart). In reality, of course, money cannot be directed so precisely to the poor, nor transferred cost-free. In some countries, the infusion of money might also push up prices and currencies, making the endeavour more expensive. Nonetheless, this thought experiment illuminates the diminishing size of the problem. The world can afford to end poverty. Indeed, it might end poverty before it figures out how to measure it accurately. + +If the World Bank’s dream of a world free of poverty is ever fulfilled, will the bank then sit back and rest on its laurels? No chance. It has adopted another dream: “shared prosperity”, which obliges it to care about the poorest 40% in each country, however rich they may be. Even if extreme poverty is eventually eradicated, the bottom 40% will always be with us. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708245-world-should-be-both-encouraged-and-embarrassed-latest-global-poverty/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +The 2016 Nobel science prizes: Seven tickets to Stockholm + +Senescience: Greying + +Medical linguistics: Sounds like trouble + +Botany: Summoned by screams + +Cyber-security: The internet of stings + + + + + +Articles Sections Next + +The 2016 Nobel science prizes + +Seven tickets to Stockholm + +This year’s awards go to work on nanotechnology, cellular refuse-recycling mechanisms and the applications of topology + +Oct 8th 2016 | From the print edition + + + +BIGGER is not always better. Anyone who doubts that has only to look at the explosion of computing power which has marked the past half-century. This was made possible by continual shrinkage of the components computers are made from. That success has, in turn, inspired a search for other areas where shrinkage might also yield dividends. + +One such, which has been poised delicately between hype and hope since the 1990s, is nanotechnology. What people mean by this term has varied over the years—to the extent that cynics might be forgiven for wondering if it is more than just a fancy rebranding of the word “chemistry”—but nanotechnology did originally have a fairly clear definition. It was the idea that machines with moving parts could be made on a molecular scale. And in recognition of this goal Sweden’s Royal Academy of Science this week decided to award this year’s Nobel prize for chemistry to three researchers, Jean-Pierre Sauvage, Sir Fraser Stoddart and Bernard Feringa, who have never lost sight of nanotechnology’s original objective. + +Dr Sauvage’s contribution, for which he won a third of the SKr8m ($930,000) prize money, was to link atoms together in a new and potentially useful way. Conventional molecules are held together by bonds in which electrons from neighbouring atoms pair up. Sometimes (as in the case of benzene) the result is an atomic ring. Dr Sauvage realised that rings of this sort might then be joined with each other in the way that the links of a metal chain are, to create a “supermolecule” that is held together mechanically rather than by conventional chemical bonds. In 1983 his research group at Strasbourg University, in France, managed to make a supermolecule of this sort and, 11 years later, they demonstrated an arrangement, consisting of two such links, that had special properties. Applying energy to it caused one of the links to rotate around the other, creating a species of molecular motor. + +Small is beautiful + +Sir Fraser won his third of the prize for work on a similar miniature machine. In 1991 he and his colleagues at Northwestern University in Illinois managed to thread a tiny molecular axle through a ring-shaped molecule. Heating the result caused the ring to slide between the ends of the axle. That produced a molecular shuttle. Since then his group has diversified into other machines, including an atomic-scale lift, artificial muscles and even a simple mechanical computer made of molecule-sized components. + +The most desired goal of nanotechnology research, however, has always been a motor that rotates around an axle, rather than just sliding up and down it. And it was for creating such a device, in 1999, that Dr Feringa will receive his share of the prize. His insight was to work out how to make the ring spin reliably in a single direction—because a motor that might, at random, turn either way when you start it up is not much use. By 2011 his team at Groningen University, in the Netherlands, had grown sufficiently dexterous to make a “nanocar”. This consists of a molecular chassis connected to four wheels which move the car (very slowly) across a surface. + +How long it will take to turn any of these inventions into products remains to be seen. Optimists talk of manufacturing molecule-sized machines ranging from drug-delivery devices to miniature computers. Pessimists recall that nanotechnology is a field that has been puffed up repeatedly by both researchers and investors, only to deflate in the face of practical difficulties. + +There is, though, reason to hope it will work in the end. This is because, as is often the case with human inventions, Mother Nature has got there first. One way to think of living cells is as assemblies of nanotechnological machines. For example, the enzyme that produces adenosine triphosphate (ATP)—a molecule used in almost all living cells to fuel biochemical reactions—includes a spinning molecular machine rather like Dr Feringa’s invention. This works well. The ATP generators in a human body turn out so much of the stuff that over the course of a day they create almost a body-weight’s-worth of it. Do something equivalent commercially, and the hype around nanotechnology might prove itself justified. + +How cells eat themselves + +Another example of natural nanotechnology is “autophagy” (from the Greek for “self-eating”). This is the system which breaks up and recycles worn-out cellular components. And the Nobel prize for physiology or medicine, awarded by the Karolinska Institute, went to one of the researchers most involved in discovering how autophagy works: Yoshinori Ohsumi of the Tokyo Institute of Technology. + +When Dr Ohsumi began his studies biologists did know that autophagy was a two-step process. First, the cellular components to be recycled are enclosed in a fatty membrane, to create a bubblelike vesicle called an autophagosome. Then the autophagosome merges with a second vesicle known as a lysosome. This is filled with digestive enzymes that break up the autophagosome’s contents. They did not, though, know the details. In particular, how autophagosomes formed was a mystery. It is for supplying those details that Dr Ohsumi has been awarded his prize. + +He began working on the problem in 1988, looking at autophagy in yeast. This is a well-studied organism, often used by biologists to examine fundamental cellular processes. Unfortunately, yeast cells are small. This meant that, to start with, Dr Ohsumi could not easily distinguish the autophagosomes within them under a microscope. He dealt with this difficulty by disabling the manufacture of the lysosomic digestive enzymes. That meant autophagosomes were no longer destroyed, and accumulated to the point where they could be seen and studied. + +This work, published in 1992, was the key to the rest—the identification of the genes involved in autophagosome assembly, which in turn led to an understanding of how those vesicles come into being. Here, Dr Ohsumi’s choice of yeast paid off. The yeast genome was already well studied when he started his work, and then became one of the first to be elucidated in its entirety as part of the Human Genome Project. By knocking out genes so that they stopped working, and then examining the consequences of their absence, he was able to build up a complete picture of the process by which autophagosomes are assembled. And, though yeast and humans are not closely related, autophagy is such a fundamental cellular process that its course in the two species is more or less the same, so yeast autophagy is a good model of its human equivalent. + +That is important, because Dr Ohsumi’s work has wider ramifications than merely illuminating an important piece of cellular housekeeping. It also helps explain how invading pathogens bacteria and viruses are dealt with (such unwelcome guests are gobbled up by autophagosomes), and shines light on diseases, including Parkinson’s and some sorts of diabetes, caused when autophagy goes wrong and cellular rubbish accumulates. + +Understanding autophagy, then, has important practical consequences. The opposite seems true of the subject of the physics prize, as the panel which announced the winners were the first to admit. The panellists emphasised the beauty of the mathematics underlying the prize-winning work and de-emphasised the practical applications—of which, at the moment, there are none. + +The maths in question is topology, a branch of geometry which deals in “invariants”, such as holes, that can exist in geometric shapes only in discrete, integer numbers (nothing can have half a hole in it). The prizewinners—David Thouless of the University of Washington, in Seattle, Duncan Haldane of Princeton University, in New Jersey, and Michael Kosterlitz of Brown University, in Providence, Rhode Island—have applied topology to materials science and come up with theoretical explanations about the behaviour of unusual states of matter as a result. + +The all-consuming vortex + +Intriguingly, all three prizewinners are products of the 20th-century “brain drain” that saw British-born researchers head west to the larger salaries and better laboratories of America. Dr Thouless, who takes home half the prize money, collaborated with Dr Kosterlitz, who shares the other half with Dr Haldane, in the 1970s, when both were still in the old country. The fruit of their collaboration was to overthrow the idea that superconductivity (a phenomenon in which the resistance of an electrical conductor vanishes, usually when it has been cooled to a temperature near absolute zero) could not occur in thin layers of material. It could, according to their calculations, because of the effects of paired vortices within such a layer. + +Vortices, a type of hole, are topological invariants. It is the liberation of these vortices to move around as a material warms up which destroys superconductivity. Such liberation is, in effect, a phase change from one state of matter to another, just as the liberation by heat of atoms from a crystal lattice causes a phase change from solid to liquid. + +Dr Thouless then went on, after he had moved to America in the early 1980s, to show that stepwise transitions to and from full superconductivity in the presence of a magnetic field (a phenomenon known as the quantum Hall effect) are also a type of topological invariant. And in the late 1980s, after his own transatlantic migration, Dr Haldane showed that magnetic fields need not be involved in the process at all. + +Choosing to honour such esoteric stuff this year, in particular, was a surprise to many observers, who had thought the discovery in 2015 of gravitational waves, by an experiment called LIGO, might win. That would have been in the spirit of Alfred Nobel’s will, which refers (see article) to his posthumous awards as being for work from the previous year. For whatever reason, however, the great and good of the Royal Academy of Science, who choose the winners of the physics prize as well as that for chemistry, decided to keep ignoring this part of the prizes’ founding document. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21708196-years-awards-go-work-nanotechnology-cellular-refuse-recycling/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Senescience + +Greying + +Oct 8th 2016 | From the print edition + + + +Alfred Nobel’s fortune should, according to his will, endow “prizes to those who, during the preceding year, shall have conferred the greatest benefit to mankind”. But the committees that select the recipients of Nobel prizes often pick discoveries made, or books written, decades earlier. Partly as a result of that, winners’ ages have been inching steadily upwards. Since 2000 only 8% of those winning prizes in chemistry, physics and medicine have been under 50. This compares with 36% of those who received awards in those subjects in the 20th century. As of 2015 (the 2016 award had not been made when The Economist went to press) no one under 50 has yet won the economics prize—though this is not a real Nobel prize, and is therefore not covered by the will’s prescriptions. The peace prize is the lone exception to the trend. Its recipient in 2014, 17-year-old Malala Yousafzai, is the youngest Nobel laureate ever. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21708221-greying/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Medical linguistics + +Sounds like trouble + +How to spot children’s speaking and listening problems early + +Oct 8th 2016 | From the print edition + + + +LINGUISTIC disorders of speech or of comprehension are awkward for anyone who suffers from them. For children, who are just beginning to make their way in society, they can be disastrous. Teasing, bullying, lack of friends and poor school performance may all follow from an inability to talk or listen normally. Early intervention and therapy, though, can make a big difference—if diagnosis comes quickly enough. + +Often it does not. In America, 60% of such disorders go undiagnosed until a child goes to school. But Jen Gong and John Guttag of the Massachusetts Institute of Technology hope to change that. As they outlined at the Interspeech Conference in San Francisco in September, they have devised a method that, when refined, may yield an automated test which can spot the subtle clues, such as pauses during speech, that indicate a disorder to a professional ear but may not be obvious to parents. + +Ms Gong and Dr Guttag, both computer scientists, wondered whether they could teach their machines to distinguish the speech of children with disorders from that of children without them. To this end, they first wrote an algorithm they hoped might do so, and then collaborated with two speech pathologists, Tiffany Hogan and Jordan Green of the MGH Institute of Health Professions, to test it. Together, the researchers recorded 231 children between the ages of four and 17 retelling a story in their own words while being shown visual prompts. Dr Hogan and Dr Green had previously identified 192 of these children as developing normally in matters linguistic, while 39 had, in the two experts’ opinion, a speech or language disorder. + +Ms Gong and Dr Guttag then let their algorithm loose on the audio samples. After chewing on the files in question, it noted that many characteristics—including the number of pauses, variations in pause durations, and the ratio between pauses and distinct segments of speech—were useful for detecting the presence of language and speech disorders. Ms Gong reported to the conference that the system was able to detect 72% of the children diagnosed by Ms Hogan and Dr Green as having an impairment. It also had a fairly low false-positive rate, suggesting impairments in only 18% of children not so diagnosed by the two human experts. + +Neither of those numbers is good enough for a clinical system, but they provide a starting-point for one. And if such a system were developed, it would easily be translatable into the sort of app parents might routinely use to test their children—and thus receive early warning if something is wrong. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21708217-how-spot-childrens-speaking-and-listening-problems-early-sounds-trouble/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Botany + +Summoned by screams + +The ways plants attract pollinators can be strange indeed + +Oct 8th 2016 | From the print edition + +Come into my parlour + +THE botanical kingdom is rife with deceivers. Carrion flowers mimic the smell of rotten meat in order to attract scavenging beetles and flies and then cover them in pollen. Passion vines, beloved by some butterflies as food for their caterpillars, have yellow spots on their leaves that make them look as if they have already had an egg-laying visit from a gravid female. And numerous carnivorous plants lure insects with sweet odours, only to devour them. Now Stefan Dötterl and Annemarie Heiduk, of the Universities of Salzburg and Bayreuth respectively, think they have uncovered yet another form of deception. As they describe in Current Biology, a vegetable called the parachute plant uses chemical signals to trick carnivorous flies into believing the insects those flies prey on are lying wounded inside it. + +At first sight parachute plants, which have cone-shaped flowers (see picture) decorated inside with needlelike inward-pointing hairs, look as though they might be carnivorous themselves. They are not, though they come close to it. Insects that enter a parachute-plant flower fall into a pit of pollen and cannot escape past the needle-hairs until the flower begins to wilt—by which time they are thoroughly covered in the stuff. + +That raises the question of why those insects go inside in the first place, for parachute-plant flowers do not smell of any of the conventional odours, sweet or rank, that plants employ to attract attention. To answer that, the two researchers asked themselves two other questions: exactly which insects do parachute flowers attract and what volatile chemicals, if any, do those flowers produce? + +By collecting the victims of many wild parachute plants Dr Dötterl and Ms Heiduk discovered that most of the trapped insects were flies of the genus Desmometopa, a group with a predilection for sucking up vital fluids that leak out of honey bees as their bodies are pierced by the fangs of spiders. Meanwhile, collecting chemicals given off by the flowers and running them through a gas chromatograph showed a combination of four molecules—2-heptanone, geraniol, 2-nonanol and (E)-2-octenyl acetate—previously unknown in plants. When Dr Dötterl and Ms Heiduk caught some foraging bees, stuck them in test tubes and poked them with the tip of a glass pipette to mimic a spider attack, the bees produced exactly these four compounds. And when the two researchers set traps containing the four chemicals out in the wild, they instantly attracted a goodly haul of Desmometopa. + +An examination of past apiological research showed that the compounds in question are already known to students of bees. The insects’ mandible glands produce 2-heptanone when they are attempting to bite predators, and this chemical has a debilitating effect on such threats to the hive as predatory moth larvae and mites. The other three compounds, meanwhile, are signal molecules released by bees fighting for their lives, to notify colony members of the danger. Together, then, these four substances are a good indication of a honey bee in the sort of trouble that is a dinner gong to Desmometopa. That parachute plants have evolved to mimic this gong is yet another example of the deceptive power of plants. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21708222-ways-plants-attract-pollinators-can-be-strange-indeed-summoned-screams/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Cyber-security + +The internet of stings + +An electronic tsunami crashes down on a solitary journalist + +Oct 8th 2016 | From the print edition + +Mr Krebs contemplates life + +TO A layman, the phrase “Internet of Things” (IoT) probably conjures up a half-fantastic future in which refrigerators monitor their own contents and send orders direct to the grocer when the butter is running out, while tired commuters order baths to be drawn automatically using their smartphones as they approach their houses in their self-driving cars. Actually, though, a version of the IoT is already here. Wi-Fi hubs, smart televisions, digital video-recorders and the like are all part of a network of devices run by microprocessors that, just as much as desktop, laptop and tablet computers, form part of the internet—but with one crucial distinction. Unlike things immediately recognisable as computers, these devices are often designed with poor security, or even none at all. They are wide open to malicious hackers who might wish to misuse them. And there are already around 5 billion of them, according to Cisco, the world’s largest computer-networking company, with billions more to come in the years ahead. + +One favourite trick of such hackers is the distributed denial of service attack, or DDoS. This temporarily enslaves a number of internet-enabled devices into an arrangement known as a botnet, and then directs this net to send simultaneous requests for attention to a single machine or cluster of machines, thus overwhelming it and making it unusable. Such attacks may be carried out by organised criminals, to hold a firm to ransom; by cyber-savvy countries, as a tool of low-level warfare—or, as in the case of one of the latest attacks, for revenge. + +The victim is Brian Krebs (pictured above), an American journalist who often reports on internet criminals, including those who run DDoS-for-hire services, and also those involved in the “dark” markets that trade in stolen identities and credit-card details. In the past, some of the people he has annoyed have sent heroin to his home while alerting the police to the fact they might find the drug there. This time, the very internet itself was turned against him. On September 20th Mr Krebs’s web server became the target of one of the largest DDoS attacks ever recorded—between 600 billion and 700 billion bits per second, or almost half a percent of the internet’s entire capacity, for hours at a time. + +At first, his “network mitigation provider”, a firm called Akamai that was supplying its services to him free, for the general good of the field, was able to ward off these attacks. Eventually, though, it had to surrender. On September 23rd, with his agreement, it cut him loose and he had to shut down until he could make alternative arrangements. + +Though Mr Krebs’s case is extreme by current standards, there is a risk it will soon become typical. Matthew Prince, the boss of CloudFlare, a firm that helps websites manage heavy traffic and deal with assaults of this sort, says his firm has already seen a sustained ten-day trillion-bits-per-second DDoS attack—though that was launched by a country (he declined to say which) rather than by a private criminal organisation. Other firms, such as OVH, a French web-hosting service, have also reported attacks of this magnitude. + +On September 17th analysts at Flashpoint, Intel’s business-security division, announced that they had found a botnet composed of 1m devices, mostly digital video-recorders. And on October 1st the source code for “Mirai”, the botnet that attacked Mr Krebs’s computer, was released to an internet hackers’ forum by a pseudonymous individual. Mirai scans the internet for devices protected by factory-default usernames and passwords (which is often the case for machines that are part of the internet of things, since their owners rarely bother to change these defaults). It then recruits them into the network. + +For the perpetrators, DDoS attacks are a perfect example of asymmetical warfare—cheap to carry out and expensive to prevent. The cost to Mr Krebs’s attackers, whoever they were (he has his suspicions, but no proof), would have been negligible even before Mirai’s source code was released; a few thousand dollars at most. Now, it is, in effect, zero. Defending against such attacks, though, is by no means cheap. Mr Krebs says he has been quoted rates of $150,000 to $200,000 a year for full-time protection. That is a lot of money for a freelance to fork out. + +One way around this is to sign up for Project Shield, a programme (free to those accepted for enrolment into it) run by Google and designed to keep independent news organisations online. Google says Project Shield already protects both individual journalists and editorial organisations, including Rafael Marques de Morais, who reports on corruption and politics in Angola, and El Ciudadano, a Chilean periodical that promotes social and political reform. Since September 25th it has been protecting Mr Krebs, too—though attacks on his web server continue. CloudFlare offers a similar service, Project Galileo, which protects the American Civil Liberties Union, the Committee to Protect Journalists and others. + +Ultimately, however, the answer to DDoS attacks like that perpetrated by Mirai is to build better security into both devices and the networks they are attached to. Edith Ramirez, chairwoman of America’s Federal Trade Commission, said as much in January 2015 when she delivered a polite but blistering speech about privacy and security practices at one of the electronic industry’s main trade meetings, the Consumer Electronics Show, in Las Vegas. Equally politely, deaf ears were turned. Andy Ellis, Akamai’s chief security officer, says network operators could introduce filters that would prevent common illegitimate traffic from reaching its destination, but the costs and complexities involved mean they do not want to—particularly if their competitors are not forced to bear similar costs. + +One answer might be government action, in the form of required security standards, to level the playing-field by making all firms bear the same burden. There is no immediate sign of that happening, but if DDoS attacks in the trillions of bits per second range proliferate, that may change. In the meantime, though, people like Mr Krebs will continue to suffer from what Bruce Schneier, an internet-security guru at IBM, aptly describes as “the democratisation of censorship”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21708220-electronic-tsunami-crashes-down-solitary-journalist-internet/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +The Russian revolution: Missed connection + +Authorial anonymity: Unmasked? + +Friendship and competition: Creative tensions + +Messiness: Autopilot is the enemy + +Semyon Bychkov: From refugee to maestro + +Johnson: Weapons of crass construction + + + + + +Articles Sections Next + +The Russian revolution + +Missed connection + +Vladimir Lenin’s railway journey from Switzerland to Russia changed history + +Oct 8th 2016 | From the print edition + + + +Lenin on the Train. By Catherine Merridale. Allen Lane; 353 pages; £25. To be published in America by Metropolitan in March. + +A BRITISH intelligence officer dismissed Vladimir Lenin and his fellow revolutionaries as “fanatical and narrow-minded”. That was an understatement. But by early 1917 power in Russia was there for the taking. That February, 300 years of Romanov autocracy had been ended in a few dizzying days, while nothing had been put in its place. Russia, exhausted and desperate from three years of disastrous war with Germany and its allies, was being run by ineffectual and well-meaning moderates. Lenin knew exactly what he wanted, and he would deploy extraordinary energy and ruthlessness to achieve it. + +But first he had to get there. The future Soviet leader had spent the war in Switzerland, marooned on a neutral island in a sea of belligerents. As the news broke of the upheaval at home, he became increasingly desperate. He even considered trying to reach Russia on a false passport, as a Swedish deaf mute. His ever-practical wife reminded him that this was bound to fail because of his habit of talking—in Russian, angrily, about politics—in his sleep. + +Catherine Merridale is one of the foremost foreign historians of Russia, combining wry insights with deep sympathy for the human beings suffering the tragedies she writes about. She made her name in 2000 with “Night of Stone”, a book about victims of Soviet violence. In the first of what will be many offerings pegged to next year’s centenary of the Bolshevik revolution, she now tells the story of the world’s most fateful railway journey. + +It combines diplomatic intrigue, spycraft, towering personalities, bureaucratic bungling, military history and ideology. Ms Merridale neatly unites background and foreground, and deftly evokes the atmosphere of the time, with references to John Buchan’s madcap wartime thriller, “Greenmantle”, whose plot neatly matches Lenin’s adventures. Details abound: Lenin’s sectarianism, for example, meant that he would not share the anti-war cause with others. He lambasted an anti-war article in The Economist—dismissing it caustically as “a journal which speaks for British millionaires”—on the ground that the authors wanted peace only because they were “afraid of revolution”. The central thread of the book is the journey itself, which took eight days and stretched over more than 2,000 miles (3,200km). Ms Merridale is no railway buff, which will be a relief to most readers if a disappointment to some. But she expertly pieces together the personal and the political. + +A mischievous Estonian called Alexander Keskula was the first to suggest to Germany’s spy service that bringing Lenin home could serve a vital strategic goal. Strengthening the anti-war camp there would raise the chances that Russia would stop fighting, giving Germany time to beat Britain and France before America entered the war. Germany was soon convinced. The deal took just two weeks to negotiate: Lenin insisted that the train should be designated an extraterritorial entity. It was not to stop, and its passengers (a motley 32 in all) were not to be checked. + +It was not a jolly journey. The Swiss authorities had confiscated their provisions on departure. The workaholic Lenin imposed strict Bolshevik discipline, including a sleep rota and two classes of tickets for the only lavatory. This was accompanied by much wrangling about the relative importance of smoking and using the toilet, which Ms Merridale primly terms “the two different types of physical imperative”. The trickiest part was crossing from Sweden to Russia. Ms Merridale unpicks the contradictory accounts of what happened on the border. Lenin and his party insisted that they were journalists heading home. A British spy, who had been posted to the crossing as a passport-control officer, tried gamely to delay them. But the authorities in Petrograd (soon to be Leningrad and now once again St Petersburg) believed that a democratic country should not ban its own citizens from entry. For that mistake, millions died. + +Unfazed by the showy and unexpected reception that his Bolshevik colleagues had laid on for him at Petrograd’s Finland Station, Lenin jumped onto an armoured car and gave a fiery impromptu speech. The revolutionary message was hopeful and seductive: peace, bread, power to the masses and not to the plutocrats, radical redistribution of wealth, the transformation of social relations. It was achievable, as a less hungry and desperate people might have realised, only through extreme violence, including mass murder, colossal economic dislocation, the extinction of political freedoms and the eventual creation of a privileged, bureaucratic boss caste. + +The most thought-provoking pages are on modern Russia’s undigested history. The political calendar celebrates both victims and perpetrators of communist terror. Everything is sacred but signifies nothing, such as Lenin’s embalmed corpse, still creepily lodged in its mausoleum in Red Square. Ms Merridale’s excellent book finishes with a reflection on the clock in the dictator’s Petrograd apartment (still reverently preserved as a museum): too precious to be moved, too costly to repair. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708206-vladimir-lenins-railway-journey-switzerland-russia-changed-history-missed/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Authorial anonymity + +Unmasked? + +A journalist claims to have revealed the real Elena Ferrante—to readers’ fury + +Oct 8th 2016 | From the print edition + +She preferred her back to the cameras + +THESE are tough times for champions of transparency. Julian Assange languishes at the Ecuadorean embassy in London; Edward Snowden in an undisclosed place in Russia. Rudolf Elmer, a Swiss banking whistle-blower, is contesting a 14-month suspended jail sentence. And if Claudio Gatti, an Italian investigative journalist, expected plaudits for a story he published on October 2nd claiming to identify Elena Ferrante, the world’s most famously pseudonymous novelist, he was spectacularly wrong. + +Since “My Brilliant Friend”, the first of her four “Neapolitan novels”, was published to international acclaim in 2011, speculation about Ms Ferrante’s identity has become a literary pastime. More than a dozen names have been suggested, including those of male writers such as a Strega-prizewinning novelist, Domenico Starnone. Using data leaked from Edizioni E/O, Ms Ferrante’s publishing house, Mr Gatti made a persuasive case that Mr Starnone’s wife Anita Raja, a translator, is the real Elena. The data showed her earnings soaring after the Ferrante novels’ international success, reaching €7.6m ($8.5m) in 2015. + +The reaction has been a storm of criticism and an angry debate over the right to literary anonymity. As the New Yorker succinctly put it, “People are pissed.” None more so than the magazine’s own commentator, Alexandra Schwartz, who laid into Mr Gatti, an award-winning foreign correspondent, calling him “a puffed-up pedant straight out of Nabokov”. + +Many are doubtless disappointed that the guessing game is over. By describing Mr Gatti’s story as “disgusting”, Edizioni E/O’s Sandro Ferri all but acknowledged it was true. Few have seen the mystery surrounding the author, and the growing number of interviews she gave by e-mail in recent years, as a marketing ploy. Readers and critics have tended to accept Ms Ferrante’s explanation to Vanity Fair that anonymity had given her “a space of my own, a space that is free, where I feel active and present”. The evidence from social media and published commentaries is that women feel particularly outraged by its violation. + +Pen-names are almost as old as literature, variously employed to escape persecution, deceive creditors and separate authors’ literary identities from their private lives. But for women, pseudonymity has had a special role: as a means of achieving credibility by posing as men, as George Sand, George Eliot and the Brontë sisters did in the 19th century. Even today, many female authors have used initials that mask their sex, most notably J.K. Rowling. + +If correct, Mr Gatti’s story will be of value to future literary critics. It would show the novels are not, as was widely assumed, autobiographical (Ms Raja’s mother was born in Germany, and Ms Raja herself grew up in Rome). It would show too that the author used her e-mail interviews to lay false trails, while hinting as much with Italo Calvino’s quip: “Ask me what you want to know, but I won’t tell you the truth.” Perhaps most important, though, Mr Gatti will have dispelled the suspicion that this outstanding novelist was a man. + +The concern now is whether, if she has lost her precious, private space, “Elena Ferrante” will ever write again. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/culture/21708194-journalist-claims-have-revealed-real-elena-ferranteto-readers-fury-unmasked/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Friendship and competition + +Creative tensions + +Oct 8th 2016 | From the print edition + + + +The Art of Rivalry: Four Friendships, Betrayals, and Breakthroughs in Modern Art. By Sebastian Smee. Random House; 390 pages; $28. Profile; £16.99. + +ART history is sometimes written like an account of a game of chess, each move met by a counter-move in a cerebral process removed from human passions. Alternatively, it is a soap opera in which everything is reduced to petty spite and furtive liaisons. “The Art of Rivalry” by Sebastian Smee—a Pulitzer-prizewinning art critic for the Boston Globe—is one of those rare books that manages to show, convincingly, the exalted stuff of genius emerging from the low chaos of life. “There is an intimacy in art history that the textbooks ignore,” explains Mr Smee. + +He organises his book around four tempestuous friendships that shaped the course of modern art: between Lucian Freud and Francis Bacon; Edouard Manet and Edgar Degas; Pablo Picasso and Henri Matisse; and Jackson Pollock and Willem de Kooning. In each case, the forces that drew these talented men together were matched by forces pulling them apart. Admiration and affection vied with ambition and jealousy to forge relationships with more than their share of explosive outbursts and maudlin reconciliations. As Mr Smee makes clear, the strain of creativity imposed almost unbearable pressures on those involved. Dysfunction was the norm, with drunken brawls, sexual entanglements and physical assaults, not to mention subtle betrayals that are no less appalling for involving no actual violence. + +Mr Smee begins the chapter on Manet and Degas with Manet taking a knife to Degas’s double portrait of him and his wife, cutting off the portion depicting Madame Manet. Upon seeing his ruined canvas, Degas removed it from Manet’s home. Deeply hurt, he sent back the still-life his mentor had given him, along with a curt note: “Monsieur, I am returning your Plums.” The falling out between Pollock and de Kooning occurred in 1953, when Pollock was suffering from a creative block just as de Kooning was reaching the apogee of his career. Appearing at his friend’s opening, Pollock, drunk as usual, shouted: “Bill, you’ve betrayed it. You’re doing the figure, you’re still doing the same goddamn thing.” To which de Kooning replied coolly: “Well, what are you doing, Jackson?” Three years later Pollock was dead, having driven his car into a tree. + +For all the drama of these personal stories, Mr Smee never neglects the work that fed off these stormy encounters. He is eloquent about the art, capturing the essence of a painting in a few deft strokes. He describes Pollock’s breakthrough drip paintings as “slashed by thin flicks, like streaking comets or wind-whipped rain”, and a group of de Kooning’s as filled with “marks suggesting speed and blur, or animal fur”—phrases that evoke the works, and the differences between them, without relying on description. He is equally deft at capturing the essential differences between artists. “For Manet, truth was slippery and manifold,” he writes, while “[Degas] had developed a determination to pierce the festive veil; to skewer the truth.” + +One drawback to Mr Smee’s approach is that he sometimes resorts to speculation, filling out unknowable details with phrases like “It’s possible that Matisse may have noticed, with some unease, how Picasso now looked at [his daughter] Marguerite”; or “What may have irked [Manet] about Degas’s portrait of his marriage…” This kind of hedging is unsatisfying, forcing readers to question the author’s version of events. But when Mr Smee is able to fill in the details, weaving the art into stories of these combustible friendships, both come alive in ways that neither could have done alone. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708209-creative-tensions/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Messiness + +Autopilot is the enemy + +Oct 8th 2016 | From the print edition + +Creativity’s brewing there, somewhere + +Messy: The Power of Disorder to Transform Our Lives. By Tim Harford. Riverhead; 327 pages; $28. Little, Brown; £20. + +SELF-HELP books offer ways for readers to whip their lives into shape. A new book by Tim Harford, an economist and columnist at the Financial Times, argues that we need to whip our lives out of shape. According to his new book “Messy”, the order that we crave is our own worst enemy, and disorder sets us free. + +Mr Harford’s book strays well beyond mess of the physical sort (though he devotes a whole section to railing against oppressive tidy-desk policies, which he argues disempower workers and make them unproductive). Most of the book is about other types of mess: randomness, experimentation and human autonomy. + +Intellectual mess, such as flitting between projects, breeds insight and helps make connections. Paul Erdos, a nomadic mathematician, leapt between collaborators, cross-fertilising projects with abandon. The chaos he brought with him was tiresome for some (if he felt peckish in the middle of the night, he was known to bash saucepans until his host gave him food). But it also meant that he produced a peer-reviewed paper with a stranger on average every six weeks for 60 years. + +Mr Harford argues that we should resist our instincts when faced with a disorderly world. Too often policymakers try to tame complicated systems using simple targets, and inadvertently create nasty unintended consequences. When the British government set waiting-time targets for doctors’ appointments, for example, doctors responded by making the appointments difficult to book in advance. + +More detailed targets are no solution—they can be gamed too, and risk tidying smaller problems out of sight while more catastrophic ones brew. In the mid-2000s, banks faced sophisticated capital requirements, which regulators thought would act as a buffer when a shock hit. But the fiddly requirements simply lulled regulators into a false sense of security and allowed bigger, systemic, risks to build. The meticulously calculated buffers were then no match for the massive financial crisis. + +Mr Harford warns against a creeping force for neatness: automation. It makes lives simpler to delegate complex, wearying tasks to robots. But convenience breeds complacency. In 2012 some Japanese students visiting Australia were told to drive into the Pacific Ocean because of a glitch in their GPS system. Rather than question their technology, they ploughed on. (They were fine; their car was not.) While readers may worry that the robots are coming for our jobs, Mr Harford thinks we should be just as worried about them taking our judgment. + +“Messy” masterfully weaves together anecdote and academic work. But Mr Harford’s call may ring hollow for some. He is rewarded for his messy creativity with money. The person packing his book in an Amazon warehouse is not. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708211-autopilot-enemy/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Semyon Bychkov + +From refugee to maestro + +The rise of a passionate and charismatic conductor + +Oct 8th 2016 | From the print edition + + + +WHEN Semyon Bychkov raises his baton at the start of his Tchaikovsky series at London’s Barbican on October 19th, the hall will be packed, as will New York’s Lincoln Centre when he arrives in January. Few conductors fill large auditoriums through their own charisma. Mr Bychkov is one of them. + +Yet no personality cult has ever surrounded this great Russian bear (whose physical presence that cliché fits perfectly). He much prefers talking about music to talking about himself. Born in Leningrad in 1952, he studied piano and conducting at the conservatory, where music was pursued with a do-or-die intensity unimaginable to students in the West. Mr Bychkov recalls climbing over the concert-hall roof to sneak in on the other side to hear the visiting Berlin Philharmonic, and long nocturnal discussions about the transition from page to stage of Tchaikovsky’s “Eugene Onegin”. That later became the first opera he conducted, and his recording of it from 1993 remains a benchmark today. + +Increasingly penalised for his open contempt for Soviet officialdom, he applied to emigrate in 1974, at a time when the Soviet Union was relaxing emigration rules for Jews in exchange for technology from the West. He jokes that he was traded for a computer. But the KGB ensured that the process was sadistic and expensive, leaving him and his first wife with no money when the plane dumped them in Vienna. + +Mr Bychkov recalls with bemused gratitude how the Hebrew Immigrant Aid Society (HIAS) gave them money to rent a room and eat. He also recalls a bitter moment, finding himself outside Vienna’s opera house where a new production of “Lohengrin” was advertised, with tickets he could not afford. One of his life’s triumphant symmetries is that, 30 years later to the day, he conducted that opera there. + +HIAS shepherded them on, first to Rome and finally to New York, where their passports were stamped “Refugee Conditional Entrance”. He gave private music lessons to make ends meet, cut his teeth as conductor of the Mannes College of Music’s orchestra in New York, and moved on to the Grand Rapids Symphony in Michigan and the Buffalo Philharmonic, building a reputation that won him a ten-year recording contract. He began by conducting the Berlin Philharmonic—with Herbert von Karajan’s enthusiastic blessing—in Shostakovich’s Fifth Symphony. + +He then moved to Europe, taking top conducting jobs in Paris, Dresden and Cologne. Praised for the beauty and integrity of his interpretations, he is now a globe-trotting guest conductor (his wife, Marielle Labèque, is often the piano soloist). He is widely tipped as successor-in-waiting to Sir Antonio Pappano as music director of London’s Royal Opera House, where Mr Bychkov is currently conducting “Così fan tutte”. His metaphor for conducting—building a house to an architect’s plans—reflects his finely calibrated approach to Mozart’s intentions. + +The upcoming Tchaikovsky project is called “Beloved Friend”—not only the way the composer and his patron Nadezhda von Meck referred to each other, but the way Mr Bychkov feels about Tchaikovsky himself. “Tchaikovsky knew how to twist the knife in the hearts of the audience—that’s one of the miracles of his music,” he said recently. For his forthcoming Tchaikovsky recordings he chose the Czech Philharmonic, which for him combines a Western mindset with a Slavic soul. At the core of the concert series will be Tchaikovsky’s piano concertos and his “Manfred” and “Pathétique” symphonies. + +In the perennial debate as to what the latter work means—if music can ever “mean” anything beyond itself—Mr Bychkov takes up the cudgels against those who say it means a meek acceptance of death by a man about to commit suicide. For a start, he says, the composer was only 53, relatively young and in his successful prime. Then Mr Bychkov produces a facsimile of Tchaikovsky’s annotated score, and, jabbing excitedly with his forefinger at the composer’s stress-markings, shows how physically tortured the finale is. The simulated expiring heartbeats at the close suggest, he says, not acceptance, but a furious protest against the idea of extinction. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708208-rise-passionate-and-charismatic-conductor-refugee-maestro/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Johnson + +Weapons of crass construction + +Most swearing is perfectly harmless + +Oct 8th 2016 | From the print edition + + + +AMERICA’S Supreme Court allows them to be banned from public spaces, and permits heavy fines for their improper handling, making rare exceptions to the protections of the constitution’s Bill of Rights. Guns? Only in a saner world. The weapons in question are swear-words, and readers who agree that they are objectively dangerous will want to stop reading at this point, as Johnson does not share the court’s view. + +The Federal Communications Commission may warn or even impose six-figure penalties on a broadcaster that allows even a “fleeting” expletive on air, as when Bono, a singer, told an awards-show audience that winning was “fucking brilliant”. A mother in South Carolina was arrested for shouting “Stop squishing the fucking bread!” at her family. (Witnesses said she shouted at her children; she said it was at her husband.) A North Augusta city ordinance includes in its definition of disorderly conduct “any bawdy, lewd or obscene words…while in a state of anger, in the presence of another”. + +As with guns, attitudes towards swearing vary widely. Big majorities of New Zealanders rate words like shit and balls as“acceptable”. The French are blasé about their “c-word”, con. Japanese has insults, and of course words for genitalia and excretion. It even has special polite registers that must be mastered to avoid offence. But it has no real taboo words. + +This and more is the focus of a delightful new book, “What the F?”, by Benjamin Bergen, a cognitive scientist at the University of California, San Diego. Despite the regional variation, there are four near-universal sources of swear-words: religion, sex, bodily wastes and slurs. As befits Mr Bergen’s discipline, the core of the book is about swearing in the mind itself. On hearing the bluest of blue words, people’s heart rates speed up, and their palms begin to sweat. Their concentration on tricky tasks can be severely disrupted. Merely being told to free-associate with the word faggot (frocio in Italian) made experimental subjects less willing to allocate funds for an HIV centre in a subsequent simulation. But Mr Bergen criticises bans or fines, arguing that education about the harm slurs can do is more effective. + +Some swearing is hard to stop. Automatic swearing—the kind that happens when your hammer meets your thumb—seems to have its own brain circuitry: Mr Bergen tells the tale of the French priest who lost all language ability but the words je (I) and foutre (fuck). Reflexive swearing seems to be routed through a part of the brain that is evolutionarily older, and may be analogous to the circuitry that causes calls of fear or surprise in other animals. Swearing can increase pain tolerance. + +Though taboos are everywhere, they change over time. English law forbade swearing by the deity in plays in 1606; this means that Shakespeare’s later plays see the drop-off of “zounds” (“by His wounds”) and the like. The Victorian era was notorious for sexual prudery. Today, it is slurs that pack by far the biggest punch. A survey in 2000 found that British respondents rated wanker as more unacceptable than nigger, but a 2016 study found the reverse. And words like cripple and retarded, formerly unimpeachable medical terms, have become unusable in polite company. + +Swear-words in English tend to be short with hard-sounding consonants, especially k and g. But there is nothing strictly taboo about curse-words’ sounds; truck and punt are not taboo. Nor do the referents alone make a word taboo: copulate and vulva aren’t unmentionable to little ears. But when children see their parents cringe at the use of their sweary synonyms, they quickly pick up how powerful they are. Taboo words, ultimately, are those that people treat as taboo, the treatment itself giving them their force. + +It would be better to take a more lighthearted view. Cuss-words can no more be wished or censored out of existence than colour-terms or animal words. A widely reported article in 2011 in Pediatrics, a medical journal, claimed that merely hearing swear-words made children aggressive, but this conclusion was based on a long string of debatable assumptions that Mr Bergen unpicks with gusto. Studying swearing is a way of studying human nature itself. “Strong Language”, a group blog by language experts, “Holy Sh*t”, Melissa Mohr’s book on the history of profanity, “In Praise of Profanity” by Michael Adams of Indiana University, or Mr Bergen’s own fine book would all be good places to start. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708207-most-swearing-perfectly-harmless-weapons-crass-construction/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Obituary: Arnold Palmer: King of the green + + + + + +Articles Sections Next + +Obituary: Arnold Palmer + +King of the green + +Arnold Palmer, golfer, died on September 25th, aged 87 + +Oct 8th 2016 | From the print edition + + + +GOLF clubs abounded in Arnie Palmer’s life. By the end he had roughly 10,000, divided between his warehouse at the Latrobe Country Club in Pennsylvania, where it had all begun, and his workshop behind his house, also in Latrobe. If you asked, he could root out the driver with which he had whacked the ball 346 yards from the first tee to the green, 22 feet from the hole, at the US Open at Cherry Hills in 1960; the five-iron with which, in 1986, he holed in one at the same hole at Avenal Farm in Maryland on two successive days; even, from somewhere, the four-iron he had used around 1950, when he was still in college, to get out of the rough, cut through the trees and hook onto the green in a single shot, one putt away from a birdie. + +These were the tools with which he had won seven majors (the US Open, the British Open twice, the Masters four times) in seven seasons, and 92 professional tournaments worldwide. They made him the most celebrated player in America and his sport, once the preserve of snobs in plus-fours, a popular sensation. He did not play like other people: he was muscular, dramatic, with his flopping hair and working man’s hands, sharp-creased trousers and shirt-tail ever pulling out, hitting the ball with apparent abandon as his gallery of fans roared him on. Thanks to him, golf became a TV fixture and a maker of millionaires. He was the first. + +His style was not subtle. His father, a professional and greenskeeper at Latrobe who had set him up with a cut-down three-iron when he was four, told him to hit the ball hard, and he obeyed. Even his putts, delivered pigeon-toed and slightly knock-kneed, packed a punch. To play any other way, he said, would be to deny his feelings. His swing was so forceful that, stuck in a bush once, he uprooted it on his way out. (The ball ended up on the green.) “Go for broke” was his motto, and his speciality was the “Palmer charge”, where he would roar in from behind to clinch a title: most famously at the 1960 Open again, with seven birdies in the final round. + +It seemed risky, and often was. Double bogeys might be followed directly by eagles, and vice versa. It all made great television as elation and dejection chased across his handsome face. (Between holes, in his prime in the early 1960s, a cigarette added to the glamour.) But the risk seemed less to him. First, he found golf pure joy, despite the exasperation; as a boy he had even played in deep snow, towards cups frozen solid on iced-over greens. Risk added sweetness. Second, though he didn’t relish booming shots into trees and sandtraps, he found the getting-out fun. And third, he never tried a shot he couldn’t make. “Powerhouse Palmer” always believed he could pull it off. And he generally did. + +This made him sound cocky, but there wasn’t an ounce of arrogance in him. He had come into golf the hardscrabble way, allowed to play the course at Latrobe only on non-member days, and getting his upper-body strength from manhandling the heavy mower over the greens. He doubted that the explosion in golf’s popularity had much to do with his talent, but revelled in his raucous gallery of ordinary folk. The high-level perks of the job, such as playing rounds with golf-mad President Eisenhower, meant less to him than spreading his enjoyment to Japan, Europe, New Zealand, or wherever asked him along. He relished especially the British Open, once disdained by Americans, because it gave him the chance to play, and win, in the rain-and-windswept cradle of the game. + +His heart was simple; a man for steak, beer and Westerns, a conservative and unashamed provincial who spent most of his time in Latrobe, looking out at the woods where he had practised escapes to an audience of trees. His champions’ medals were set in an old walnut table in the games room—with a few holes left ready to take the ones he felt sure he could win in future. + +His wealth, though, meant he also had to become a businessman, which he found harder. To him, money was safe only in his hands or in the bank. From 1959, though, his business manager Mark McCormack taught him the ropes of borrowing, investing, sponsorship and endorsements, and two years later Arnold Palmer Enterprises Inc. marked the first transformation of golfing prowess into a business empire. Eventually his name was attached not only to golf clothing, clubs and course-building but also to tractors, deodorants, dry-cleaning, shaving cream, power tools and aircraft (he was a keen, skilled aviator). He ran his own tournament at Bay Hill in Florida, and his personal blend of iced tea and lemonade was on every supermarket shelf. + +Back in the workshop + +To see his name on things was satisfying. But anyone who thought they were playing with an Arnold Palmer club, the same model that had worked such aggressive magic at Augusta and Troon, was likely to be disappointed. The workshop tinkering was never done. Obsessively he trimmed the shafts, rewrapped the grips and altered the lofts with a hammer, seeking that right feel in his hands and that flight of a good drive which moved him as much as any poetry: perfect golf. Once or twice, he thought he’d come close; but in his typically self-effacing way, as gentle off the course as he was bold on it, he admitted he hadn’t quite got perfection nailed. His search was compulsive viewing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21708059-arnold-palmer-golfer-died-september-25th-aged-87-king-green/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +The Economist poll of forecasters, October averages + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Oct 8th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21708235/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Oct 8th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21708228-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Oct 8th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21708229-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Oct 8th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21708230-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist poll of forecasters, October averages + +Oct 8th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21708231-economist-poll-forecasters-october-averages/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Oct 8th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21708213-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Thu, 06 Oct 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Britain and Europe: The road to Brexit + + + + + +Latin America: Saving Colombia’s peace + + + + + +The crisis of the Arab world: From Aleppo to Mosul + + + + + +Europe’s banks: The chronic continent + + + + + +America’s economy: A thoughtful to-do list + + + + + +Letters + + + +On companies, political parties, fiscal policy, geology, lords, happiness: Letters to the editor + + + + + +Briefing + + + +Barack Obama: The way ahead + + + + + +United States + + + +Third-party candidates: Mr Johnson and Dr Stein + + + + + +The campaigns: Heard on the trail + + + + + +Donald Trump’s finances: Taxing patience + + + + + +Battleground states: Carolina crossfire + + + + + +Slavery on film: Blood on the leaves + + + + + +Election brief: student loans: More present than correct + + + + + +Lexington: Mainstream opposites + + + + + +The Americas + + + +Colombia’s peace process: What now? + + + + + +Hurricane Matthew: Hammering Haiti + + + + + +Brazil’s local elections: Mayor none-of-the-above + + + + + +Bello: The once and future bully + + + + + +Asia + + + +The war in Afghanistan: Help needed + + + + + +India and Pakistan: Reversing roles + + + + + +Tax policies: Amnesties international + + + + + +Gay marriage in Australia: Waiting for a vote + + + + + +Banyan: Evil genius + + + + + +China + + + +The Hui: China’s other Muslims + + + + + +Halal food: Keeping pure and true + + + + + +Middle East and Africa + + + +The war against Islamic State: The battle for Mosul + + + + + +Iraq’s Sunni minority: The day after + + + + + +Zanzibar: Trouble in paradise + + + + + +Nigeria’s self-publishers: Fifty Shades, Sahel-style + + + + + +Europe + + + +Italy’s referendum: A great big reform package + + + + + +Spain’s Socialists: The battle for a party’s soul + + + + + +German conservatives: Politisch inkorrekt + + + + + +Russia v America: Going nuclear + + + + + +Jean-Marie Le Pen: Un prophète + + + + + +Charlemagne: The wizard of Budapest + + + + + +Britain + + + +The Tories and Brexit: Mind your step + + + + + +The Conservatives and business: Not business as usual + + + + + +The UK Independence Party’s leader: Exit stage right + + + + + +Rethinking the public finances: Plan B + + + + + +Britain’s top cop quits: Plodding off + + + + + +Bagehot: May’s revolutionary conservatism + + + + + +International + + + +Finance for the poor: Your inflexible friend + + + + + +Microfinance by phone: Cash call + + + + + +Business + + + +The global casino business: Putting it all on grey + + + + + +Airbus: In formation + + + + + +Online surveillance: They’re watching Yahoo + + + + + +Corporate campaigning: Techno parties + + + + + +Discount retailing: A yen for cheapness + + + + + +The music business: Change of tune + + + + + +Management horizons: Quick and dirty + + + + + +Martial arts in Asia: Bloodsport, hold the blood + + + + + +Schumpeter: Peacocks of the sea + + + + + +Finance and economics + + + +Banking in Europe: Autumn blues + + + + + +European banking jobs: Career breaks + + + + + +The yuan in the SDR: From base to gold + + + + + +Buttonwood: An emerging threat + + + + + +The Green Climate Fund: The green light + + + + + +GE quits financial services: Capital punishment + + + + + +Asset management: Active defence + + + + + +Free exchange: How the other tenth lives + + + + + +Science and technology + + + +The 2016 Nobel science prizes: Seven tickets to Stockholm + + + + + +Senescience: Greying + + + + + +Medical linguistics: Sounds like trouble + + + + + +Botany: Summoned by screams + + + + + +Cyber-security: The internet of stings + + + + + +Books and arts + + + +The Russian revolution: Missed connection + + + + + +Authorial anonymity: Unmasked? + + + + + +Friendship and competition: Creative tensions + + + + + +Messiness: Autopilot is the enemy + + + + + +Semyon Bychkov: From refugee to maestro + + + + + +Johnson: Weapons of crass construction + + + + + +Obituary + + + +Obituary: Arnold Palmer: King of the green + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +The Economist poll of forecasters, October averages + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.10.15.TXT b/homeworks/B20769/homework1/data2/2016.10.15.TXT new file mode 100644 index 0000000..ce93b63 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.10.15.TXT @@ -0,0 +1,5068 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Articles Sections Next + +Politics this week + +Oct 15th 2016 | From the print edition + + + +Donald Trump had the worst week so far of his presidential campaign. A tape from 2005 caught him making obscene and aggressive comments about women, which prompted many senior Republicans, including John McCain, to withdraw their support. Paul Ryan, the Speaker of the House, said he would now focus only on elections for Congress. In the debate, Mr Trump threatened to lock up Hillary Clinton if he wins the White House. There is a little over three weeks left until campaigning is over. See here. + +A judge in Florida, the biggest of the battleground states that will decide the election, extended the deadline for voter registrations in the state by a week because of the disruption caused by a hurricane. + +The American government formally accused Russia of authorising the hacking of Democratic Party e-mails, which were published by the WikiLeaks website. It stopped short of blaming Russia for also trying to scan electronic voter rolls, but said those attacks did originate from servers in Russia. See article. + +What next? + +Thailand’s 88-year-old King Bhumibol Adulyadej died after 70 years on the throne. He was the world’s longest-reigning monarch. His death may exacerbate Thailand’s deeply fractious political divisions. For more coverage see our website at economist.com. + +At least a dozen people were killed in Rakhine, a state in Myanmar, by suspected militants from the Muslim Rohingya minority. An outbreak of communal violence between the Rohingyas and the Buddhist majority in 2012 killed at least 100 people. See article. + +China’s president and Communist Party boss, Xi Jinping, said there must be no “weakening, fading, blurring or marginalisation” of the party’s leading role in state-owned enterprises. He said party control of such firms gave them a “unique advantage”. + +A bill that would have allowed for a plebiscite on gay marriage in Australia was blocked in Parliament. Opposition MPs want Parliament to legalise gay marriage, because, they say, a national referendum would be costly and incite homophobia. + + + +Hong Kong’s Legislative Council held a swearing-in ceremony for its 70 members following recent elections. Several of the legislators used the occasion to express displeasure with China’s control of the territory and the lack of full democracy in Hong Kong. Three were barred from taking their posts because they failed to recite their oaths properly. + +Clamping down + +Ethiopia declared a six-month state of emergency following months of protests by the country’s two largest ethnic groups. The scale of protest has intensified since a clash earlier this month between government forces and Oromo demonstrators in which at least 52 people died. See article. + +South Africa’s respected finance minister, Pravin Gordhan, was ordered to appear in court on fraud charges. Critics say the charges are politically motivated, following his falling-out with the president, Jacob Zuma. See article. + +More than 140 people were killed while attending a funeral in Yemen in an airstrike by Saudi war planes. The incident focused attention on Western backing for the Saudi’s operations in its attempt to restore the ousted government of its southern neighbour. For the first time America carried out airstrikes against Houthi rebels after they had fired on a US navy warship. See here and here. + +Man of peace + +Several days after Colombian voters rejected a peace agreement between the government and the FARC, a left-wing guerrilla army, Colombia’s president, Juan Manuel Santos, won the Nobel peace prize. Both sides have maintained their ceasefire. The FARC’s leader, Rodrigo Londoño, said he was willing to “enrich” the deal in response to criticisms of it, but not to renegotiate it. The government said it will start peace talks with the ELN, a smaller rebel group. See article. + +The head of state security for Rio de Janeiro resigned following a surge of violence since the end of the Olympic games. José Beltrame was credited with a “pacification” programme that had reduced crime. He is stepping down because of what he claims is a lack of commitment to rebuild neighbourhoods where drug lords have been pushed out. + + + +The death toll soared in Haiti from Hurricane Matthew. Some 1,000 people are thought to have died in the storm, 60,000 were left homeless and 1.4m need assistance. Matthew was the strongest storm in the region in a decade. See article. + +Making the case + +Painful preparations for Britain’s exit from the EU started to take shape. A government proposal that would force companies to disclose the proportion of foreign workers they employ prompted a backlash from business. Legal cases were also lodged requiring Parliament to be consulted over negotiating the terms of leaving. In a further blow to the Westminster government, Nicola Sturgeon, Scotland’s first minister, pressed ahead with plans for a second referendum on Scottish independence; 55% voted to stay in the UK in the first vote in 2014. + +Vladimir Putin cancelled a trip to Paris after the French government accused Russia of war crimes in Syria. Russia accused Boris Johnson, Britain’s foreign minister, of “Russophobic hysteria” after he called for anti-war protests outside the Russian embassy in London. Meanwhile, Russia strengthened its ties to Turkey by signing new trade deals and a natural-gas pipeline project. + +Airbus threatened to sue the Polish government, after it scrapped plans for the French-German aerospace company to provide Poland with military helicopters. The government, led by the nationalistic Law and Justice party, instead opted for an American company which has a factory in the country. Trade unions were against the Airbus deal. Although diplomatically ill-advised, the row is likely to boost support for the government at home. + +In Germany a Syrian migrant suspected of planning terrorist bombings and of links to Islamic State killed himself in the prison cell where he was being held. The suspect had been turned in by three refugees, also Syrian, who overpowered him when he asked for help hiding from police. + +Bob Dylan won the Nobel prize for literature for creating “new poetic expressions within the great American song tradition”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21708732-politics-week/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Business this week + +Oct 15th 2016 | From the print edition + + + +The pound took another battering in currency markets, at one point falling below $1.20, as investors reacted negatively to the British government’s indication that it is set on a hard exit from the European Union. Trading was febrile, with sterling plunging by 6% within a few minutes in Asia. The “flash crash” turned out to be more than a fleeting event, as the pound continued to suffer from fears about the economic effects of Brexit. See article. + +One of those effects was brought home to British consumers when Tesco, a supermarket chain, ran low of certain products made by Unilever, after the conglomerate failed to get Tesco to pay for the higher cost of importing commodities. Items that shoppers found in short supply included Marmite, a spread made from brewing by-products, which is famous for being both loved and loathed. + +A sour Note + +Samsung decided to stop selling its Galaxy Note 7 smartphone following further reports of the device catching fire. It has only been on the market since August, as a rival to larger versions of the iPhone. It is one of the most remarkable, and swiftest, reversals of fortune for a consumer product. Samsung reduced its estimate of quarterly profit by a third, but the damage to its reputation may end up costing it a lot more. See article. + +Twitter’s share price plunged again, amid rumours that potential suitors interested in taking it over are backing away. The social-media company is struggling to monetise revenue from advertising, and the growth in the number of people who use it has slowed. + +In a controversial move, China published guidelines that will allow companies to exchange debt they owe to banks for shares. Corporate debt has ballooned in China in recent years, to around $18 trillion. In March the government raised the idea of debt-for-equity swaps, but it was resisted by some bankers for fear of propping up zombie firms. The government says that only viable companies will qualify for the scheme, which it promises will be market-driven. + +Oil prices shot up when Vladimir Putin threw his weight behind a proposal by OPEC to rein in production. Russia is the biggest oil producer outside the cartel and is willing to participate in freezing or even cutting output, which Mr Putin said would be “the right decision” to maintain stability in energy markets. Brent crude traded above $53 a barrel for the first time in a year following his remarks. But the International Energy Agency threw cold water over the rally when it reported that OPEC had raised production in September to a record 33.64m barrels a day, adding to a worldwide glut of oil despite forecasts of much-reduced demand. + +Once praised for steering Wells Fargo through the financial crisis relatively unscathed, John Stumpf resigned as chief executive of the bank with immediate effect. He had faced intense criticism over the past month for his handling of a scandal that involved staff creating fake customer- accounts to hit sales targets. Mr Stumpf’s appearance before Congress was a PR disaster. + +Double stakes + +William Hill, a betting company based in Britain, confirmed it was in merger talks with Amaya, the Canadian owner of the Full Tilt and PokerStars websites. It is the latest move towards consolidation in the gambling industry, where many of the big players have combined forces over the past year. A deal could be worth £4.5 billion ($5.5 billion). + +Boeing once again pushed back the date for the first manned flight of its new space taxi, and now hopes that a crew will take the helm of its CST-100 Starliner in mid-2018. The aerospace company is racing with Elon Musk’s SpaceX to be the first to take American astronauts back into orbit again following the end of NASA’s space-shuttle programme in 2011. + +The Japanese government published its findings into suicide driven by overwork, known as karoshi. Its survey found that more than a fifth of companies employed staff who did up to 100 hours of overtime a month, in a culture that prides itself on putting the hours in at the office. By industry, IT workers were the most stressed; 44% of IT companies said their employees put in more than 80 hours of overtime a month. + +Wired for sound + +Amazon launched its new music-streaming service. It enters a market dominated by Spotify and Apple, but it is differentiating itself by emphasising the artificial intelligence aspect of its service. Users that own one of Amazon’s voice-controlled Echo speakers can ask it to fetch the “latest song” by an artist, to find a song by relaying the lyrics if the title is unknown, or play music to suit a certain mood (and it won’t turn itself off if “The Sound of Silence” is requested). + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21708733-business-week/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +KAL's cartoon + +Oct 15th 2016 | From the print edition + + + +More KAL's cartoons + + + +This article appeared in the Print Edition with the headline: KAL's cartoon + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21708729-kals-cartoon/print + + + + + +Previous Articles Sections Next + + + + + +Leaders + + + + +Election 2016: The debasing of American politics + +Pharmaceuticals: Bad medicine + +Intervention in Yemen: The forgotten war + +China’s property market: Rotten foundations + +Sterling: Taking a pounding + + + + + +Articles Sections Next + +Election 2016 + +The debasing of American politics + +Healthy democracies depend on unwritten rules. The Republican nominee has trampled all over them + +Oct 15th 2016 | From the print edition + + + +HOW do people learn to accept what they once found unacceptable? In 1927 Frederic Thrasher published a “natural history” of 1,313 gangs in Chicago. Each of them lived by a set of unwritten rules that had come to make sense to gang members but were still repellent to everyone else. So it is with Donald Trump and many of his supporters. By normalising attitudes that, before he came along, were publicly taboo, Mr Trump has taken a knuckle-duster to American political culture. + +The recording of him boasting about grabbing women “by the pussy”, long before he was a candidate, was unpleasant enough. More worrying still has been the insistence by many Trump supporters that his behaviour was normal. So too his threat, issued in the second presidential debate, to have Hillary Clinton thrown into jail if he wins. In a more fragile democracy that sort of talk would foreshadow post-election violence. Mercifully, America is not about to riot on November 9th. But the reasons have less to do with the state’s power to enforce the letter of the law than with the unwritten rules that American democracy thrives on. It is these that Mr Trump is trampling over—and which Americans need to defend. + +Hurt locker + +If this seems exaggerated, consider what Mr Trump has introduced to political discourse this year: the idea that Muslims must be banned from entering the country; that a federal judge born of Mexican parents was unfit to preside over a case involving Mr Trump; that a reporter’s disability is ripe for mockery; that “crooked” Mrs Clinton must be watched lest she steal the election. Daniel Patrick Moynihan wrote that when many bad things happen at once, societies define deviancy down, until the list of what is unacceptable is short enough to be manageable. When parents wonder if a presidential debate is suitable for their children to watch, Mr Trump’s promise to build a wall on the Mexican border no longer seems quite so shocking. + +This way of doing politics is not new. Mr Trump is bringing into the mainstream a strain of for-profit bigotry and pessimism that believes life in the world’s richest, most powerful country at the beginning of the 21st century could not possibly get any worse (see Schumpeter). On this view, it is not specific policies that are at fault, but the system itself, which must be broken in order to solve America’s problems. + +Mr Trump’s reality-television persona makes that proposition appear less alarming. It creates an ambiguity about how serious he is, and how seriously his audience needs to take him. With each outrage he has an iota of plausible deniability (“he’s just being Trump!”). With each sign that he is unfit to be head of state, some supporters can cling to an alternative reality (“I believe he’s a good man, really, and he’s a great businessman, so he’ll surely hire a great team”). + +Not all those at Trump rallies are bigoted. But they are prepared to stand next to someone shouting chauvinist abuse or wearing a “Trump that bitch” T-shirt and conclude that if that’s what’s needed to defeat Mrs Clinton, then so be it. The best of Mr Trump’s supporters hope that, by letting a wrecking ball loose to demolish the slums and tenements of Washington politics, public life can be rebuilt—so that it represents real people, rather than elites and interest groups. When people conclude that politics is disgusting or absurd they lose faith in it. That usually makes things worse. + +If Mr Trump actually wins the election, Republicans will have to meet the expectations he has created—of protectionism, spending increases allied to tax cuts, hostility to foreigners and a retreat from decades of foreign policy. That would make America poorer, weaker and less secure. Meanwhile, the Republican Party would still need the support of those who have cheered on Mr Trump (see Lexington). Far from being renewed, politics would become even nastier and more brutal. + +If Mr Trump loses, Mrs Clinton will begin her presidency with tens of millions of people believing that she ought to be in jail. Perhaps he will lose so comprehensively that he takes the Republican majorities in both chambers down with him. That would afford Mrs Clinton at least two years, before the next mid-term elections, during which she might push through an immigration reform, increase spending on infrastructure and change the balance on the Supreme Court. These would be big achievements, but something close to 40% of voters would feel they were being steamrollered by a hostile government. Politics could become yet more polarised. + +Partly because Mrs Clinton is mistrusted and disliked, the more probable outcome in November is that she will be the next president but will face a House of Representatives controlled by Republicans—and perhaps a Senate, too. This is a recipe for furious, hate-filled gridlock. There would be more government shutdowns and perhaps even an attempt at impeachment. It would also mean yet more government by executive actions and regulation to get around Congress, feeding the widespread sense that Mrs Clinton is illegitimate. + +Tied down and unpopular at home, Mrs Clinton would be weaker abroad as well. She could less easily take risks by, say, standing up for trade or robustly seeing off challenges to American power from China and Russia. America’s role in the world would shrink. Frustration and disillusion would grow. + +The city on a hill + +Must it be this way? Once you start throwing mud in politics, it is very hard to stop. Yet, every so often, you get a glimpse of something better. When Todd Akin lost a winnable Senate seat in 2012, after haplessly trying to draw a distinction between “legitimate rape” and the not so legitimate sort, Republican candidates and political consultants took notice. + +Such a realisation needs to strike home on a grand scale. Healthy politics is not gang warfare. It involves compromise, because to yield in some areas is to move forward in others. It is about antagonists settling on a plan, because to do nothing is the worst plan of all. It requires the insight that your opponent can be honourable and principled, however strongly you disagree. The 2016 election campaign has poured scorn on such ideas. All Americans are worse off as a result. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21708723-healthy-democracies-depend-unwritten-rules-republican-nominee-has-trampled-all-over/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Pharmaceuticals + +Bad medicine + +Approving an unproven drug sets a worrying precedent + +Oct 15th 2016 | From the print edition + + + +DUCHENNE muscular dystrophy is a horrible disease. Afflicting mainly boys, it weakens their muscles and eventually confines them to wheelchairs. In the end, typically when they are in their 20s, it kills them. Patients and parents are understandably elated, therefore, at the decision taken last month by America’s drug agency, the Food and Drug Administration (FDA), to approve the first treatment for Duchenne. No one could fail to be moved by their campaign to win approval. At an FDA meeting this year one sufferer pleaded: “please don’t let me die early.” + +Nonetheless, the decision bodes ill for drug discovery in America. Sarepta Therapeutics, the firm behind the drug, did not meet the usual standards for approval to market it. Staff at the FDA’s drug-evaluation division are sceptical about the efficacy of Exondys 51 (also known as eteplirsen). They argue that the clinical evidence before them involved a flawed experiment on only 12 patients. But Janet Woodcock, the division’s director, overruled them. The FDA has asked Sarepta to conduct further trials to confirm that its drug works. + +Shareholders in Sarepta do not have to wait that long to reap the benefits. After the news of the approval broke, the firm’s share price rose from $28 to $49. On September 28th a health insurer announced that it would pay for the drug in certain cases (others are not so keen). The treatment will not come cheap: its gross annual cost could be as much as $665,600 per patient. Ms Woodcock made the argument that Sarepta needed to be “capitalised” to fund more research. Her wish has now been granted. Sarepta looks a picture of corporate health: it has been doing deals, securing the rights to another anti-Duchenne drug on October 4th, and issuing new shares. + +The judgment is the more worrying because it does not come out of the blue. Politicians have been urging the FDA to be more responsive to the needs of patients; the families of Duchenne sufferers did what anyone would, given the choice between the certainty of a bad outcome and the possibility of a better one, and campaigned for treatments to come to market. Exondys 51 was approved under a special programme that allows drugs to go on sale more quickly when they treat grave conditions with unmet needs. But that should not mean that standards for clinical trials are watered down. + +Patients, not always a virtue + +The pact between drugmakers and society is that innovative drugs win market exclusivity as a reward for the money that has been spent developing them. Weakening the FDA’s standards for approval has two pernicious effects. First, it creates an incentive for meaningless innovation: for drug companies to tilt investment towards drugs that may not work but which patients definitely want, and towards pursuing novelty at the expense of efficacy. Second, it passes more of the risk involved in drug development to consumers and taxpayers. Politicians in America routinely castigate the pharmaceutical industry for charging too much for its products. And now Sarepta’s post-hoc testing programme will, in effect, be paid for by the American government and by insurers. + +Payers ought to dump this conundrum back into Sarepta’s lap and insist on a rebate arrangement if the drug proves to be ineffective. And in the future the FDA ought to stick to the clear standard that has served it well for decades: do not approve a drug unless it has been shown to work. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21708726-approving-unproven-drug-sets-worrying-precedent-bad-medicine/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Intervention in Yemen + +The West should help Saudi Arabia limit its war in Yemen, and end the conflict + +The bombing of a funeral in Sana’a draws attention to a forgotten war + +Oct 15th 2016 | From the print edition + + + +THE air strike that blasted a funeral in Sana’a on October 8th did more than kill around 140 civilians and wound 500: it drew rare attention to Saudi Arabia’s 20-month war in Yemen and strained its alliance with America, which is now reconsidering its military support for the campaign (see article). + +Critics say it is time for the West to abandon its embarrassing alliance with the Saudis. How, they ask, can the West denounce the carnage in Syria when its own ally is bombing civilians in Yemen? If the Saudis, with Western support, can intervene to defend the government of Yemen, why should Russia not defend Bashar al-Assad’s regime in Syria? Morally and perhaps legally, America and Britain are implicated in Saudi actions: they sell warplanes and munitions to the Saudi regime; they also provide air-refuelling and help with targeting. What is more, critics say, Saudi Arabia is a woeful ally against jihadism. Indeed, it inflames global extremism through its export of intolerant Wahhabi doctrines. + +These arguments have strength. On balance, though, the West should not forsake the Saudis; instead it should seek to restrain the damage of their air campaign, and ultimately bring it to an end. But Western support cannot be unconditional. + +Start with the moral balance. The two conflicts are both horrible, but not equally so. About 10,000 people have died in Yemen: too many, but far fewer than the 400,000 or more who have perished in Syria. The Saudi-led coalition has not used poison gas—though it has been careless, and probably worse. It has bombed several hospitals. The blockade of Yemen and the damage to its infrastructure are causing dire hardship; famine looms, with half the country going hungry or malnourished. + +The political context is different, too. The Assad dynasty took power in a coup, and kept it through brutality. Its crushing of peaceful protests in 2011, and the indiscriminate killing it has carried out since then, removed what speck of legitimacy it still had. By contrast Yemen’s president, Abd-Rabbo Mansour Hadi, though weak and flawed, at least presided over a broad coalition established through UN-backed negotiations following the resignation of the former strongman, Ali Abdullah Saleh. The Shia Houthis and Mr Saleh, backed by Iran, overturned that deal by force. They often fire missiles at Saudi cities; these cause limited damage, but are indiscriminate. + +The West has little reason to join the war, but has much at stake if it goes wrong. Al-Qaeda’s local arm has been strengthened, and even took over the port of al-Mukalla for a time. The Houthis have started firing missiles at ships in the Bab al-Mandab strait, one of the world’s vital sea lanes; America launched “limited” cruise-missile strikes against Houthi-controlled radar sites after attempts to attack one of its warships. + +The West’s involvement derives from its long alliance with the Al Sauds, which dates back nearly a century, as well as its extensive commercial interests in the Gulf. Over the decades, Saudi monarchs put up with many American blunders in the Middle East—the invasion of Iraq in 2003, for example. They were shocked by how the West abandoned the former Egyptian dictator, Hosni Mubarak, during the mass protests of 2011. Last year’s deal between America and Iran to restrict the latter’s nuclear programme, and Mr Obama’s offhand tone about the Saudis, deepened their fear of abandonment. Congressional approval for a bill to allow the families of victims of the September 11th 2001 attacks to sue Saudi Arabia, overriding Mr Obama’s veto, is evidence that the disenchantment is mutual. + +Yet there are good reasons for the West to maintain ties to Saudi Arabia. The alternative to the Al Sauds is not liberalism but some form of radical Islamism. Saudi Arabia is the world’s biggest oil exporter, and guardian of Islam’s two holiest shrines. Better these be in the hands of a friendly power than a hostile one. Belatedly, Saudi Arabia has become a vital partner in the fight against jihadists; it is better placed than the West to challenge their nihilist ideology. The chaos of the Middle East stems at least in part from Sunni Arabs’ sense of dispossession. The best hope of containing the mess is to work with Sunni powers like Saudi Arabia. + +Hold their hand, hold them back + +So the West should stay close to the Saudis, uncomfortable though this may be. It must encourage them to reform economically and politically, while acknowledging Gulf leaders’ concern about the spread of Iranian influence. Western support cannot be “a blank cheque”, as America bluntly puts it; the more the West helps Saudi Arabia wage war in Yemen, the more it becomes liable for potential war crimes. If the Saudis want to fight with Western weapons, they must respect the laws of war. Above all, the West should use its influence to help the Saudis end the bloody stalemate. They should promote a reasonable power-sharing settlement that includes the Houthis. That would make Yemen a model for the future of Syria, not a pale copy of it. + +This article appeared in the Print Edition with the headline: The forgotten war + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21708725-bombing-funeral-sanaa-draws-attention-forgotten-war-west-should-help-saudi/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +China’s property market + +The rotten foundations of China’s real-estate market + +In real estate as elsewhere in its economy, China’s short-term fixes mask deep structural problems + +Oct 15th 2016 | From the print edition + + + +JUST over a year ago, policymakers were having conniptions about China’s tumbling stockmarkets. Now it is China’s frothy property market that is causing worries at home and abroad. Because the property sector accounts for about a quarter of demand in the world’s second-largest economy, a market collapse would have far more than a local impact. In fact, for now, China can probably avoid a disastrous crash (see article). But it shows little sign of being able to implement the fundamental reforms needed to fix the distortions that make the market so volatile and, in the long run, dangerous. + +One reason for optimism that a crisis can be averted is that the risk has been identified. With property prices in many big cities soaring—by more than 30% a year in Shanghai, Shenzhen and Nanjing—even the central bank’s chief economist has warned of a “bubble”. Wang Jianlin, China’s richest man (and a property developer), last month went further, calling it “the biggest bubble in history”. Foreign-bank economists, local brokers and state-run think-thanks have all joined in. Fears have been stoked by a steep rise in mortgages this year. In July and August, they accounted for nearly 80% of new bank loans. + +The government is clearly heeding the warning signs: in the past two weeks rules on property purchases have been tightened in some two dozen places, suggesting a central-government push to tell municipalities to curb their local excesses. Tightening measures (typically raising the percentage of a purchase price to be paid as a cash down-payment) can be effective. And despite the recent mortgage boom, Chinese households still have strong balance-sheets. When shadow banks began to lend to homebuyers to cover their down-payments earlier this year, regulators quickly snuffed out the practice—a telling contrast with the authorities’ inaction last year when hidden borrowing helped inflate the stockmarket bubble. + +The upturn has also been a powerful reminder of just how insatiable demand for property remains in China. Fitch, a ratings agency, calculates that it will need about 800m square metres of new housing—roughly the size of Singapore—every year between now and 2030 to meet demand from people moving to cities and buying nicer homes. That is in fact less than the billion or so square metres that China has recently completed every year, but still remarkable. + +The market for all those homes, however, remains subject to serious distortions, thanks to government policy. The most fundamental is that the government does not make it possible to build homes where people want to live. Because it wants to contain the growth of the big cities, little urban land is made available. Scarcity drives prices up; builders and homebuyers alike pay a steep premium to be there. Smaller cities still have a vast inventory of unsold homes. The current rally has done little to chip into it. Matching supply and demand is often not the main consideration: land sales are an important source of local-government revenue. Nor may everybody live where they want, as residence permits can still be used to block outsiders. + +My home is my nest egg + +A further distortion lies in a repressed financial system that restricts investment opportunities. Capital controls hamper legal investment abroad; state banks keep deposit rates low; the stockmarket has been a rollercoaster. So property looks a very attractive destination for surplus cash. Surveys suggest that, of those buying homes in China these days, perhaps one-fifth are doing so as investors rather than owner-occupiers. State-owned enterprises, limping in their core businesses but resisting break-up and reform, have turned to property development to make up for flagging profits. + +The cooling measures in so many Chinese cities do nothing to tackle these structural issues. No wonder. They are at the heart of the Communist Party’s abiding dilemmas: how to maintain rapid economic growth without increasing the risks of an abrupt “hard landing”, and how to let markets flourish while maintaining the party’s control. At least when it comes to property, solutions are at hand. China must press on with opening its financial system and, most crucially, overhaul its land policy. If not, property mania will sweep its big cities again and again, and those booms will one day end in a bust. + +This article appeared in the Print Edition with the headline: Rotten foundations + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21708730-real-estate-elsewhere-its-economy-chinas-short-term-fixes-mask-deep-structural/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sterling + +Taking a pounding + +The fall in sterling hints at how painful a “hard” Brexit would be + +Oct 15th 2016 | From the print edition + + + +RARELY do people compare the British pound to the Nigerian naira, Azerbaijani manat or Malawian kwacha. But on a measure of year-to-date change against the American dollar, sterling is near the bottom of the 154 currencies tracked by Bloomberg. The pound is down by 15% on a trade-weighted basis since the Brexit vote, and is plumbing the depths it reached in the 2008-09 financial crisis (see Buttonwood). + + + +The cause of sterling’s fall is the realisation that Theresa May’s government is moving towards a “hard” Brexit, which involves Britain leaving the European Union’s customs union and its single market. It is also driven by the fear that Britain is turning into a xenophobic, interventionist and unpredictable place, with calls to clamp down on foreign workers and foreign capital. For a country that is used to attracting swathes of investment from abroad because of its membership of the single market and stable political climate, this is a huge shift. + +With Britain’s current-account deficit (a measure of what it borrows from abroad) equal to a gigantic 6% of GDP, it is also a dangerous one. True, Britain is not heading for a balance-of-payments crisis. Its debts are issued in its own currency, so the cost of meeting its obligations will not soar as the currency falls. And Britain’s net capital flows tend to come in the form of foreign direct investment (FDI), as opposed to deposits or short-term debt. FDI will not disappear overnight in the way that deposits could. But it can be hard to recover from a loss of confidence. If foreign investment dries up, and the pound stays weak, Britons will be left permanently poorer. + +The penny needs to drop, too + +Unfortunately, far too many in Mrs May’s government are complacent about this. Many Brexiteers wrongly conclude that the pound’s slump is nothing but good news. Their argument is that a weaker pound will send exports soaring, herald a manufacturing renaissance and “rebalance” the economy away from services. Yet recent experience suggests that British exports do not respond quickly or strongly to a cheaper currency. The volume of exported goods is actually lower than it was before the Brexit vote. Exporting requires importing of supplies and other materials, and these are now more expensive. Within just a few weeks the year-on-year change in producer prices has neared 10%, the highest since 2011. + +The Brexiteers also fail to acknowledge the immediate hit to living standards that the pound’s slump has caused. Britons enjoy consuming things from abroad. Some 5% of household spending goes on foreign holidays. Domestic prices are affected, too: the pressures surfaced this week in a dispute between Tesco, a supermarket, and Unilever, a consumer-goods firm, which wants to increase the price of brands such as Marmite, a yeasty spread. Inflation may jump from its current level of 0.6% to 3% by next year, well above the Bank of England’s 2% target. This will be bitter medicine for the average Briton, whose real weekly pay is already about 4% lower than in 2007. Nominal wage growth fell to a measly 2% in the run-up to the referendum, and bosses are in no mood to offer pay rises now. Real wages will soon be falling once again. + +The combination of a slowing economy, rising inflation and shaky confidence constrains fiscal and monetary policy. The Bank of England is unlikely to raise interest rates in response to the temporary spurt of inflation caused by sterling’s fall. Yet gone are expectations that the bank will soon reduce the base rate of interest from 0.25% to 0.1%; a cut would prompt still more foreign capital to leave the country. + +The government may have a little room for manoeuvre. In its autumn statement, it is likely to change course from aggressive fiscal consolidation to mild expansion. But it, too, must be careful. Gilt yields have crept upwards as investors reassess the British economy, and could go a lot higher if the nasty rhetoric coming from ministers continues. + +The most sensible course, then, would be to heed markets’ concerns. The overwhelming weight of evidence shows that leaving the customs union and single market would exact a heavy toll on Britain’s economy. Remaining within them would require political courage, but has clear economic benefits. It is not too late to change course. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21708724-fall-sterling-hints-how-painful-hard-brexit-would-be-taking-pounding/print + + + + + +Previous Articles Sections Next + + + + + +Letters + + + + +On Venezuela, aid, Syria, tax, Mars, adjectives: Letters to the editor + + + + + +Articles Sections Next + +On Venezuela, aid, Syria, tax, Mars, adjectives + +Letters to the editor + +Oct 15th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Politics in Venezuela + +In response to your suggestion that Venezuela’s political opposition is divided, I want to stress that the Democratic Unity coalition is committed to a democratic transition of power (“The angry 80%”, October 1st). We are moving forward with a petition drive in late October and putting pressure on the government to safeguard our constitutional right to a referendum to recall the president in 2016. + +You alluded to the possibility that the international community will help broker a dialogue between the Maduro regime and the opposition. Democratic Unity has repeatedly stated that it is open to dialogue with the ruling Socialist Party as long as it is not used as an attempt to run down the clock on holding a recall referendum in 2016, which is the present strategy. However, we welcome foreign co-operation in alleviating Venezuela’s humanitarian crisis, though aid in the form of food and medicine has thus far been rebuffed by the administration. What is clear is that, despite their efforts, President Nicolás Maduro and his cronies can no longer ignore the desire of the vast majority of Venezuelans for political and economic change. + +EUDORO ANTONIO GONZÁLEZ DELLÁN + +Deputy to the National Assembly + +Caracas + + + + + +What form of aid? + +“Fat help” (October 1st) examined how direct cash to refugees is an increasing part of aid policy. That reflects our practice at the International Red Cross. But a word of caution: cash aid has its limits and is not a cure-all, especially in urgent situations. Cash transfers are useful in restoring people’s ability to earn independently and to make choices according to their needs and priorities. But in emergencies and war-torn countries, the infrastructure, such as functioning markets and reliable transfer mechanisms, is not always in place for providing relief and recovery programmes this way. + +Our response is tailored to the needs we find. In Syria for example, a cooked meal helps people to survive in hard-to-reach areas. In Iraq disabled people and women caring for their families much prefer to have cash grants for generating their own income. + +Humanitarian organisations must be more prepared to use cash transfers in emergencies. But the bottom line is that decisions about cash versus food relief must ultimately be guided by realities in the field. + +MATTHEW MORRIS + +UK and Ireland spokesperson + +International Committee of the Red Cross + +London + + + + + +Europe could do more + +The “failure” of Barack Obama to strike the Assad regime after it crossed the “red line” by using chemical weapons in Syria does not fit with my recollection of the facts (“Grozny rules in Aleppo”, October 1st). Mr Obama expected support from Europe, but did not get it. Britain’s Parliament voted against military action in Syria. Why should the burden of the Middle East always fall on America? + +PHIL KAUPAS + +Somerset, New Jersey + + + + + +Tax privacy + +You are right to argue that tax evasion is out and that offshore countries should not drag their feet (“The holdout”, September 10th). However, there are real concerns relating to the privacy and data-protection implications of the global automatic information-exchange system, known as the Common Reporting Standard. + +A group of experts appointed to supervise implementation of the standard within the European Union has warned that in many respects it resembles a data-retention directive that has been ruled illegal by the European Court of Justice. The court has also held that “legislation permitting the public authorities to have access on a generalised basis to the content of electronic communications must be regarded as compromising the essence of the fundamental right to respect for private life.” + +What is at stake here is not the right to privacy of tax evaders, in the same way as the Apple versus FBI smartphone case was not about the right to privacy of a dead terrorist. Instead, what is at stake is the right to privacy of compliant citizens who are concerned about the magnitude of (often irrelevant) information about them and their finances that will travel through the internet and may fall prey to hackers. + +FILIPPO NOSEDA + +Partner + +Withers Solicitors + +London + + + + + +Humanity’s extinction + + + +You are right to argue that colonising Mars would not hedge against some sorts of extinction risk (“For life, not for an afterlife”, October 1st). But it is wrong to dismiss the possibility of human extinction as “claptrap”. Some novel or unknown threats, like those from engineered pathogens, might indeed endanger humanity’s future. Even unlikely risks put a lot at stake. + +We have a responsibility to our children and future generations to manage the risk of extinction cautiously. The “very simple seaweed” that was the most complex creature on the planet a billion years ago lacked our ability to develop unprecedented technologies over the course of years or decades. The past billion years are not a representative model for the next. Spreading humanity over two planets may be a step in the right direction, though not necessarily the most cost-effective option, and no panacea. Diversifying one’s portfolio is what any smart business person would consider. + +MAX TEGMARK + +Professor of physics + +Massachusetts Institute of Technology + +Cambridge, Massachusetts + +SEAN O’HEIGEARTAIGH + +Executive director + +Centre for the Study of Existential Risk + +University of Cambridge + +ANDERS SANDBERG + +Research fellow + +Future of Humanity Insitute + +University of Oxford + + + +SEBASTIAN FARQUHAR + +Director + +Global Priorities Project + +Oxford + + + +Space tourism is, charitably, an indulgence for the super-rich. As for colonising other planets, there’s a reason they call that stuff science fiction. As millions on Earth die from preventable illness, poor sanitation and famine, technologies that serve alleged convenience and fantasy are irresponsible, not laudable. + +I am encouraged to see that you have retained your admirable scepticism in most other regards. But if you must keep at it with plutocrats in orbit (and robotic cars, which won’t make a material dent on the highways until the 2030s, if ever), may I suggest that for convenience you centralise the articles in a new section. Perhaps you could title it Implausibilities and improbabilities. + +RICHARD WYNNE + +Seattle + + + + + +Sounds of the Sixties + +I was pleased to read Mark Forsyth’s recommendations on adjective order as “opinion, size, age, shape, colour, origin, material, purpose and then Noun” (Johnson, September 24th). I put them to the test. They failed the first, “big, bad wolf”, but were spot-on for “itsy-bitsy, teeny-weeny, yellow, polka-dot bikini”. + +JIM BIRKETT + +Nobleboro, Maine + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21708641-letters-editor/print + + + + + +Articles Sections Next + + + + + +Briefing + + + + +The Trump tape: With these hands + +The politics of sexual assault: It’s not just the powerful + + + + + +Articles Sections Next + +The Trump tape + +With these hands + +The Republican nominee has violated his party and America + +Oct 15th 2016 | WASHINGTON, DC | From the print edition + + + +THE most shocking part of the cyclone that hit Donald Trump’s presidential campaign on October 7th was not the contents of a videotape in which the Republican presidential nominee was heard boasting of being able to get away with sexual assault. To anyone who has followed the presidential campaign, Donald Trump’s misogyny and alleged habit of groping women were old news. More troubling, for what it said about the moral condition of America, was a profound uncertainty among pollsters and pundits about what effect, if any, the scandal might have on Mr Trump’s poll numbers. + +The tape, which was discovered in the archives of an NBC entertainment show, “Access Hollywood”, and leaked to the Washington Post, was foul. It opened with Mr Trump, in conversation with Billy Bush, a television presenter who happens to be a nephew of George H.W. Bush, describing his attempt to sleep with a television presenter: “I did try and fuck her. She was married…I moved on her like a bitch, but I couldn’t get there.” + +Billy Bush, who has arguably had a bigger impact on the election than his cousin Jeb, whom many Republicans expected to win it, then spots an attractive television actor awaiting Mr Trump. “I better use some Tic Tacs just in case I start kissing her,” says the Republican nominee, silky smooth. “When you’re a star they let you do it. You can do anything. Grab them by the pussy. You can do anything.” + +It is hard for a presidential candidate to recover from such a revelation. Yet Mr Trump’s supporters have strong stomachs. When their champion called Mexicans rapists they cheered. When he refused to disavow the endorsement of a former Grand Wizard of the Ku Klux Klan, they shrugged it off. His support shrank a bit, it is true, after he spent a week in August denigrating the grieving parents of a dead war hero; but the setback proved temporary. What difference could some decade-old “locker-room banter”, as Mr Trump called his comments, possibly make? + +Not much, among the faithful. Polls sampled after the tape was aired show his share of the vote has only slightly dipped, to around 39%, which suggests 60m Americans are still planning to vote for him. At his bear-pit rallies, men in “Trump that bitch” and “I wish Hillary had married OJ” T-shirts say they do not give a damn about any tape (and whatever is on it, they add, Bill Clinton did worse). Yet such devotees, 90% of whom are white and 60% of whom did not attend college, are not on their own numerous enough to give Mr Trump victory in an increasingly diverse and educated America. And the response of almost every other category of voter to his political freak show, of which the tape was merely the latest sordid act, is revulsion. + +As The Economist went to press Hillary Clinton had jumped to a lead of more than five points in the RealClearPolitics average of recent polls. That may well increase; a couple of polls that gathered data after the tape aired put her up by 11 points. The Democratic nominee has a lead in almost all the battleground states Mr Trump would need to win to bag the requisite 270 electoral-college votes, including Florida, Pennsylvania and Ohio. For that matter, she is also ahead in North Carolina and level-pegging in Arizona, two of the states Mr Trump’s predecessor, Mitt Romney, won in 2012. An election predictor built by Nate Silver, a data journalist and revered prognosticator, gives Mrs Clinton an 87% chance of becoming America’s first woman president. + +That looked on the cards even before the cyclone hit. Through most of September Mr Trump’s numbers were climbing; he closed to within a point or two of Mrs Clinton. But after a loutish performance in the first television debate, on September 26th, which was watched by a record-breaking audience of 84m, combined with revelations that he had bullied a beauty queen with bulimia and perhaps paid no income tax for almost two decades, his advance stalled. By the time the tape was leaked, Mrs Clinton had a three-point lead, and many Republican politicians had concluded Mr Trump could not win. + +The hardening pre-tape conviction that Mr Trump was doomed helps explain why over 25 Republican federal legislators and state governors abruptly rescinded their endorsements of Mr Trump shortly after it aired. It was not only, as many claimed, that their consciences were pricking them. Many are fighting tough re-election battles which their association with Mr Trump has made much tougher. An analysis by Sarah Binder of the Brookings Institution, a think-tank, of the members of the House of Representatives who shelved Mr Trump suggests the propensity to ditch him rises rapidly with the share of the vote in their districts that Barack Obama won in 2012. + +Very weak and ineffective + +In distancing himself from Mr Trump, John McCain, an Arizona senator, wrote that “He alone bears the burden of his conduct and alone should suffer the consequences.” Really? The Republican Party nominated Mr Trump with a bumper vote in the primaries. Almost all its leaders endorsed him, as Mr McCain did, ignoring overwhelming evidence that he was a charlatan. The racism, misogyny and threats of violence that peppered his speeches were not merely apparent before he won their party’s nomination, they were his means of winning it. What explains that moral failure? + +The answer starts with the Republican voters. In the dowdier parts of white America, a combination of economic and cultural anxieties has caused real misery. That cannot be dismissed. Yet it has also exacerbated deep chauvinisms without which the explosive success of Mr Trump’s racist dog-whistling and the seething mood of his lily-white crowds cannot easily be explained. Cynical partisans, especially the conservative talk-radio hosts from whom millions of older whites get their views, made money fuelling those prejudices (see Schumpeter). By pushing a form of “common sense” conservatism that demonised immigrants, liberals and scroungers, and throwing in a good dose of conspiracy theory, they gave them a voice. Mr Trump’s success was built on his understanding that no Republican leader subscribed to this guff to anything like the same degree as millions of Republican voters did, and that that created an opening for an unscrupulous demagogue. + +Mr Trump’s lies—that Barack Obama is a Muslim, say, or that global warming is a Chinese con—are the sorts of thing his audience has been hearing on the radio and reading on blogs for years. So are his insults; Mr Trump’s mocking impression of a disabled reporter was in essence an attack on the hated mainstream media and the culture of political correctness his supporters loathe. Republican leaders were blind-sided by the gulf revealed between themselves and a large portion of their voters and feared widening it. + +There were exceptions to this spinelessness. Ben Sasse, a senator from Nebraska, took an early and trenchant stand against Mr Trump. John Kasich, the governor of Ohio, refused to attend Mr Trump’s coronation at the Republican convention even though it was in his state. The semi-retired Mr Romney and Jeb Bush were openly critical. But as the Trump train kept rolling, most of the party’s leaders shrugged and wrapped themselves in a predictable partisan excuse: Mrs Clinton is worse. + +More striking than the recent denunciations of Mr Trump is the fact that the majority of elected Republicans are still on board the train. Mr Trump can take some credit for that, having steadied their nerves with a competent showing in the second televised debate, in St Louis, Missouri on October 9th. It was a disgraceful performance. Mr Trump held a press conference, shortly before the debate, flanked by three women who claim to have been abused by Bill Clinton. Continuing the attack, he sought to shift attention from questions about the tape by telling Mrs Clinton that, if he was elected president, he would have her thrown “in jail” over her use of a private e-mail server while secretary of state. + +Mr Trump’s followers are convinced that the e-mail affair amounts to a set of crimes that should see Mrs Clinton in a cell. Never mind that the issue has been investigated by the State Department’s independent watchdog and the FBI, which released a 250-page report last month to support its argument that Mrs Clinton was guilty of nothing except carelessness; Mr Trump said he would appoint a special prosecutor to investigate her—and the verdict, he made clear, would not be in doubt. + +With this unprecedented threat he continued to subvert America’s democracy, and also delighted Republicans beyond his core support. It is not only those who turn up at Mr Trump’s rallies who like an aggressive conspiracy theory. Mainstream Republicans have been spinning them about the Clintons for decades—another reason why they have found Mr Trump’s calumnies easier to swallow than they should. + + + +There have been no further renunciations of Mr Trump. Indeed, on October 11th, the other senator from Nebraska, Deb Fischer, who had previously called on him to quit, said she would vote for him anyhow. Most Republican congressmen fear renouncing him might cost them his supporters—perhaps permanently splitting the party. They also fear it would depress Republican turnout at the general election, which would hurt them in the congressional races on the ballot. + +If Mrs Clinton won by a decent margin, the Democrats would probably capture the Senate; there are 24 Republicans up for re-election, and the Democrats need a net gain of only four seats. A majority in the Senate would allow a second President Clinton to get her cabinet and judicial nominations approved. But the real prize, because it would also enable her to pass legislation, would be if the Democrats could take the House of Representatives, where all 435 seats are up for grabs, and the Republicans are defending a much bigger majority. + +For that to happen, the Democrats would need to improve their current tally by 30 seats. That looks a stretch, given how few competitive seats gerrymandering has left. But if Mrs Clinton won by a landslide it might be possible. Staving off such a defeat is an imperative for Paul Ryan, the Speaker of the House. He has put as much distance between himself and his party’s nominee for the Oval Office as he can without formally unendorsing him. + +Talking to congressional candidates on October 10th, Mr Ryan announced that he would no longer defend Mr Trump and in effect invited them to act accordingly. “You all need to do what’s best for you in your district,” he was reported to have said. This suggests Republican congressmen are free to explicitly bash Mr Trump. + +The nominee’s response was vicious and highly wrought. In one of his characteristic tweet storms he accused Mr Ryan of being “very weak and ineffective”. “Disloyal R’s are far more difficult than Crooked Hillary. They come at you from all sides,” he wrote. + +What could he hope to achieve by caving in the roof on his own party? Perhaps he has concluded that rallying his angry, mistrustful troops against one last enemy, the party itself, is his best means to a respectable defeat. Perhaps he is burnishing his credentials for some post-electoral enterprise; it has long been rumoured that he means to launch a conservative media company targeted at the “alt-right”, a fringe of racists and conspiracy theorists, after the election. Perhaps he is merely raging and, as ever, out of control. + +It seems he means to rage on. In recent days, while castigating Mr Ryan, he has advised a white crowd in Pennsylvania that “other communities”—by which he meant black people—were planning to steal the election; claimed the debates commission was “rigged”; and accused the Justice Department and Mrs Clinton of “collusion and corruption of the highest order”. Mr Trump’s campaign, it seems, is going to have the end it deserves, nasty, brutish and harmful to America. The next month already feels too long. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21708704-republican-nominee-has-violated-his-party-and-america-these-hands/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The politics of sexual assault + +It’s not just the powerful + +Privilege lets predatory men get away with a lot, be they rich and famous or not + +Oct 15th 2016 | AMSTERDAM, LOS ANGELES, PARIS AND ROME | From the print edition + +She shouldn’t have to make nice with the creeps + +“WOMEN: tweet me your first assaults. They aren’t just stats. I’ll go first: Old man on city bus grabs my ‘pussy’ and smiles at me, I’m 12.” Kelly Oxford, a screenwriter and blogger, was not sure whether her tweet in response to Donald Trump’s open-mic bragging about sexual assault would get any responses at all. In fact it got hundreds of thousands. Many, like Ms Oxford’s initial tweet, describe offences remarkably similar to those Mr Trump brags about: crotch-grabs and tongues forced into mouths. Other women tell of rapes. A striking number were first assaulted before reaching their teens. + +By so clearly associating himself with such memories Mr Trump has deepened the degree to which women dislike him, and may have denied himself the presidency (see chart). There is a well-established gender gap in American politics, with men favouring the Republicans, but its current level is unprecedented. Recent polls show women favouring Hillary Clinton by 49% to 34%; men favour Mr Trump by 42% to 39%. Female Collective, a feminist brand, is rush-printing T-shirts depicting a snarling cat and the words “Pussy grabs back”; they urge women to wear it to the polling booth on November 8th. + + + +Michele Paludi of Excelsior College in New York state, who has written widely about sexual harassment, says that “moments like this can change a culture.” She points to Anita Hill’s testimony in Senate confirmation hearings for Clarence Thomas, a Supreme Court nominee, in 1991. Ms Hill’s account of her former boss’s unwelcome sexualised talk and repeated propositions (which he strongly denied) broadened conceptions of what constituted sexual harassment. New laws and stiffer penalties were brought in. Many private companies created anti-harassment policies in response. Could Mr Trump have created a similar moment? + +Some of the response to the tape shows the need for such a change. Many reports focused on Mr Trump’s vulgarity, rather than his ugly meanings. The Washington Post, which broke the story, described the recording as an “extremely lewd conversation”; the Guardian referred to it as a “sex-boast tape”. Fox News said that Mr Trump “uses a vulgar anatomical term and discusses trying to have sex with an unidentified, married woman.” Mr Trump’s defence, such as it was, took a similar tack, apologising for “locker-room banter” outside the locker room. + +But, as many women pointed out on social media, the really offensive word was not “pussy”—even though, of all the demeaning words used for women’s genitals, it is the one most commonly used to describe women collectively as sexual objects and prey. The word that stung was “grab”. “You bragged that you have sexually assaulted women. Do you understand that?” Anderson Cooper, one of the moderators of the presidential debate held in Missouri on October 9th, asked Mr Trump. Mr Trump denied any such thing. + +Responses from senior Republicans missed the mark in other ways. Many cited their wives, daughters and so on as their motivation for denouncing Mr Trump’s words. “Women are to be championed and revered, not objectified,” said Paul Ryan, the House Speaker, in a textbook example of what feminists call “benevolent sexism”: a belief in the wondrousness of women that perpetuates harm by casting them as weak. + +Since the tape’s release, women have come forward who say they were indeed groped and unwillingly kissed by Mr Trump. In general, though, Deborah Cameron, the author of “The Myth of Mars and Venus”, a book about how men and women speak, cautions against always interpreting words like Mr Trump’s as accounts of things that actually happened. Their boasts, coarse language and demeaning of women are not necessarily used to convey facts, she notes. They are there to build fraternal bonds—in this case with the television presenter Billy Bush and their shared entourage. The woman under discussion plays the same role as the fish in a fisherman’s tale, or the enemy in an old soldier’s. + +But to describe the exchange as locker-room banter does not excuse it, says Ms Cameron. Such talk can pave the way to harassment and assault. Research on fraternities and sports teams suggests that, by reducing women to objects and ostracising men who do not join in, banter can make sexual assaults more likely—and make it less likely that men on the scene will intervene, or report the culprits later. + +The recording reveals how this works at a less extreme level. Mr Trump says he may force a kiss on Arianne Zucker, the actor they are about to meet, and refers to her as “it”. The tenor of the conversation shapes what follows. Mr Bush urges Ms Zucker to give “the Donald” a “little hug”. He demands one too and asks whom she would date. “Both,” she replies, with a false laugh. “She’s obviously been here before,” says Ms Cameron. “She obviously sees making nice with creeps as going with the job.” + +“When you’re a star, they let you do it,” Mr Trump assures the craven Mr Bush. As Ms Oxford’s Twitter timeline attests, many perfectly ordinary men feel a similar entitlement to women’s bodies. And most sexual offenders, famous or obscure, get away with it. Their crimes are rarely reported, let alone prosecuted. Many men are oblivious to the level of harassment and worse women have to put up with, as some bewildered responses to the revelations on Ms Oxford’s timeline showed. Coping mechanisms and a sense of powerlessness keep the scale of the problem hidden. + +Famous and powerful men have extra protection. The fact that they have favours to bestow can lead to acquiescence. It can also lead to accusations of opportunism if victims risk public shaming by speaking up. When Mike Tyson, a boxer, was tried for rape in 1992 his legal team tried to paint his accuser, a teenage beauty-pageant winner, as money-grubbing. Asked why she waited 32 years to come forward, Janice Dickinson, a former model who is one of dozens of women to have accused Bill Cosby, an actor, of sexual assault, said on “Entertainment Tonight”, a television show: “I was afraid of being labelled a whore or a slut and trying to sleep my way to the top of a career that never took place.” + +If not now, when? + +Sexual harassment and assault are more common in places where women are heavily outnumbered and the most powerful positions are disproportionately held by men, says Stefanie Johnson, a management professor at the University of Colorado, Boulder. In most places politics as a whole fits her description very well, with no party or ideology enjoying a monopoly on malfeasance. Ali Goldsworthy, one of four women who accused a British politician, Lord Rennard, of unwanted sexual touching in 2013, said she heard similar stories from women across the political spectrum. (Lord Rennard denied the accusations; an internal investigation by his party, the Liberal Democrats, found that “the evidence of behaviour which violated the personal space and autonomy of the complainants was broadly credible.”) + +Mr Trump’s supporters like to point to the sexual misconduct of Mrs Clinton’s husband, Bill. Mr Trump brought several women associated with Mr Clinton to the debate, including Juanita Broaddrick, who has accused him of rape (he has never been charged or tried in the matter). It is an uncomfortable comparison for Democrats convinced that, if they were forced, like Republicans, to choose between victory and a sexually predatory presidential candidate, they would make the right choice. + +In 2011 Dominique Strauss-Kahn, then the managing director of the IMF and a likely Socialist candidate for the French presidency, was arrested on charges of sexually assaulting a maid. The charges, eventually dropped, unleashed a torrent of stories about Mr Strauss-Kahn’s predatory behaviour, which had been known about by journalists and politicians, but barely discussed in public. The affair appeared to break a taboo of silence and Mr Strauss-Kahn’s career was ended. But little seems to have changed as a consequence. + +Last year over a dozen female journalists wrote in Libération, a newspaper, of the way they are treated by male politicians. From suggestive comments—“it would be better if you were wearing nothing underneath”—to gross physical advances behind closed doors, they still face sexist behaviour daily. “We thought that the [Strauss-Kahn] affair had changed the situation and that macho habits…were on the way out. Alas...” they wrote. + +Earlier this year Denis Baupin, the deputy speaker of the National Assembly—which is 73% male, with half the members over 60—resigned after women in his party accused him of sexual harassment and aggression (which he denies). Those accused of sexual harassment, Catherine Le Magueresse, a lawyer, told French television earlier this year, “are often convinced that they are entitled to women’s bodies and that their power permits everything.” + +Powerful men do not always have to impose themselves on women in order to indulge their appetites inappropriately. Mr Clinton’s best-known sexual transgression was with Monica Lewinsky, an intern who actively sought the affair. Silvio Berlusconi, Italy’s former prime minister, while debauched, does not appear to have had a taste for assault. That said, catching Mr Berlusconi’s eye was worthwhile, in its way. In 2010, while he was still in office, it emerged that he had been hosting “Bunga Bunga” parties attended by many pretty young women, some of them prostitutes. In his book “Being Berlusconi: The Rise and Fall”, Michael Day, a journalist, reports that some of the guests were offered coveted jobs presenting weather forecasts on one of the six free-to-air television channels the tycoon politician controlled. + +Up to the Bunga Bunga revelations Mr Berlusconi’s many female supporters appeared not to care about his attitude to women; some continued not to. But the scandal inspired a wave of protests under a slogan borrowed from the title of a novel by Primo Levi: “If not now, when?” In response the country’s political parties increased the number of female parliamentary candidates; the number of women in government rose. In 2014 the current prime minister, Matteo Renzi, formed a cabinet of which half the members are women. + +Getting more women into politics at the highest level should help make sexual harassment rarer. But formal policies are needed, too. Here, the private sector has done more than politicians. One former researcher at the European Parliament describes how she lost her job after complaining that her boss asked her to go for a drink but then took her to a strip bar. She now works in the corporate world and is struck by the lack of such harassment. + +Many firms have banned socialising in strip clubs, which intimidates or excludes female employees. High-profile dismissals can help ensure that such anti-harassment policies have bite. Mr Bush has been suspended from his television job and looks likely to be sacked. The board of American Apparel, a clothing retailer, ousted its founder, Dov Charney, for alleged misconduct, including sexual harassment, in 2014. After numerous allegations of harassment and abuse Roger Ailes, the head of Fox News, resigned in July. He now advises Mr Trump’s campaign. + +The misogynist banter that facilitates so much assault and harassment is unlikely to be swept away by formal measures. But what is acceptable in private conversations can be shifted, says Ms Cameron. The sort of racist remarks that would once have been commonplace have become much rarer, as fewer listeners let them go by unchallenged. Homophobic remarks also seem to be on their way out. For misogynist ones to follow, the many men who have publicly declared themselves disgusted by Mr Trump’s words need to start making that clear in private, too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21708705-privilege-lets-predatory-men-get-away-lot-be-they-rich-and-famous-or-not-its-not-just/print + + + + + +Previous Articles Sections Next + + + + + +United States + + + + +Hillary Clinton’s campaign: Hacked off + +The campaigns: Heard on the trail + +The evangelical vote: Absalom’s revenge + +Washington state’s carbon tax: Of wood and trees + +Bilingual education: Learning to assimilate + +Lexington: Growing Cotton in Iowa + + + + + +Articles Sections Next + +Hillary Clinton’s campaign + +Hacked off + +What looks like a Russian hack of the Clinton campaign chairman’s e-mail account would, in another year, be causing the candidate problems + +Oct 15th 2016 | WASHINGTON, DC | From the print edition + + + +IF OPINION polls maintain current trends, the sounds of pursuit by Donald Trump will reach Hillary Clinton’s ears ever-more faintly as she enters the final straight of a long, slog of a race for the White House. But even if the Republican nominee continues to run out of puff (see Briefing) one last worry haunts Democrats: that Mrs Clinton, an uninspiring candidate lugging decades of political baggage, could still somehow slow and lose all by herself. Those concerns have not been eased by a remorseless, ongoing effort by WikiLeaks, an online clearing-house for leaked and hacked information, to load fresh baggage onto the Democratic nominee. + +In recent days alone WikiLeaks has published thousands of e-mails that appear to have been hacked from the Gmail account of John Podesta, the chairman of Mrs Clinton’s presidential campaign and a former close aide to President Barack Obama. Though Mr Podesta has not confirmed the authenticity of individual documents, he told reporters aboard a campaign aeroplane that “it doesn’t feel great” to have ten years of e-mails dumped into the public domain. + +The stolen information includes politically awkward extracts from paid speeches given by Mrs Clinton to Wall Street banks and other deep-pocketed organisations, and which she steadfastly refused to make public during a drawn-out presidential primary fight against a left-wing populist challenger, Senator Bernie Sanders. Her yen for secrecy is explained by the extracts, flagged up in an internal campaign review of lines likely to make Democratic activists cross. They include praise for free trade, including Mrs Clinton’s dream of a common market throughout the Western hemisphere with “open trade and open borders”. In another address Mrs Clinton ponders the unseemly business of law-making, citing Abraham Lincoln’s willingness to have “both a public and a private position” on sensitive issues. + +The hacked e-mails also reveal wrangling about how to minimise negative publicity around Mrs Clinton’s use of a private e-mail server to send and receive secret government information; internal discussions about how to handle touchy Democratic grandees (including at the Obama White House); the uselessness of sundry reporters; and how to finesse moderate policy positions liable to displease the party’s leftish activists. They include spats among members of the Clinton inner circle, as when Chelsea Clinton raises “serious concerns” about a perception that a consulting firm was cashing in on its access to her father, former president Bill Clinton, blurring the lines between business, government and the family’s charitable arm, the Clinton Foundation. Yet mostly the impression is of political operatives doing what might be expected—being political. To date the revelations come closer to gossip than to the campaign-ending “October surprise” that Clinton foes had been looking forward to. + +Predictably in this age of canyon-deep political divisions, the actual content of the hacked e-mails is now being overshadowed by partisan squabbling about the motives of those who stole them and made them public, and about the honesty of the news organisations sifting through them and assessing their importance. + +In July WikiLeaks released almost 20,000 e-mails from the accounts of officials at the Democratic National Committee, showing that the supposedly neutral party headquarters was rooting for Mrs Clinton to beat Mr Sanders—a not-very-startling revelation that led to the resignation of the DNC chairman, Debbie Wasserman Schultz. Hackers linked to Russian intelligence agencies were quickly accused of involvement. On October 7th the Department of Homeland Security and the Director of National Intelligence, James Clapper, issued a remarkable statement declaring their confidence that the Russian government directed “recent compromises of e-mails” of individuals and political organisations in order to “interfere with the US election process”. + +Mr Trump has pushed back on such findings, including in his most recent TV debate with Mrs Clinton, when he said that his opponent “doesn’t know if it’s the Russians doing the hacking,” and speculated: “Maybe there is no hacking.” Mr Podesta, in his airborne press briefing two days after that debate, said that the FBI is investigating a “criminal hack” of his account, adding: “Russian interference in this election and apparently on behalf of Trump is, I think, of the utmost concern to all Americans, whether you’re a Democrat or independent or Republican.” That vision of cross-party consensus is a trifle optimistic. + +In a campaign rally in Florida, Mr Trump denounced Mrs Clinton’s leaked daydreaming about a common market of the Americas, declaring: “American soldiers have fought and died to win and keep America’s freedom, and now Hillary Clinton wants to surrender that freedom to these open borders, open trade, and a world government.” Warming to his theme, he decided that the leaked e-mails confirm that Mrs Clinton is the “vessel” of a “criminal government cartel [that] doesn’t recognise borders but believes in global governance, unlimited immigration and rule by corporations.” Later, in an angry tweet, the Republican nominee accused news outlets of burying the story, grumbling: “Very little pick-up by the dishonest media of incredible information provided by WikiLeaks. So dishonest! Rigged system!” + +To simplify, Mr Trump has two main goals in these final weeks. First, to bring home unhappy voters who voted Republican in previous presidential contests but who loathe him: a group that notably includes educated white women in suburbia. Second, to depress Mrs Clinton’s support among Democrats and swing voters. Mr Trump’s rhetoric about hacked e-mails may help him with the second task, but does almost nothing to help with the first. Hence Mr Trump’s rage. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21708687-what-looks-russian-hack-clinton-campaign-chairmans-e-mail-account-would/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The campaigns + +Heard on the trail + +Oct 15th 2016 | From the print edition + + + +Bad boys + +“This was locker-room banter, a private conversation that took place many years ago. Bill Clinton has said far worse to me on the golf course—not even close.” + +Trump attempts an apology. + +Quitting time + +“I’m out.” + +Congressman Jason Chaffetz was the first of several Republicans to jump ship. Fox 13 News + +Et tu, Brute + +“So many self-righteous hypocrites. Watch their poll numbers—and elections—go down!” + +Donald Trump was furious about the defections. + +Alpha Romeo + +“Sometimes that’s what happens when alpha personalities are in the same presence [sic].” + +Eric Trump explains his father’s behaviour. Colorado Gazette + +Legal advice + +“I don’t characterise that as sexual assault. I think that’s a stretch.” + +Senator Jeff Sessions, former lawyer and Trump surrogate, disagrees with the Justice Department. Weekly Standard + +Grit those teeth + +“It’s the greatest honour of my life, to have been nominated by my party.” + +Mike Pence stays on the ticket despite rumours that he was planning to drop out. CNN + +Candyman + +“Tic Tac respects all women. We find the recent statements and behaviour completely inappropriate and unacceptable.” + +Tic Tac rejects any association with the nominee’s seduction technique. + +The hedgehog and the fox + +“I wouldn’t want to be in a foxhole with a lot of these people that I can tell you, including Ryan...especially Ryan.” + +Mr Trump is upset with the Speaker of the House. Fox News + +Let Donald be Donald + +“It is so nice that the shackles have been taken off me and I can now fight for America the way I want to.” + +Mr Trump suggests he will abandon his hitherto disciplined messaging strategy. + +Democracy is so overrated + +“We need a Donald Trump to show some authoritarian power.” + +Paul LePage, governor of Maine, chooses the Republican over the republic. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21708683-heard-trail/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The evangelical vote + +Absalom’s revenge + +Convolutions and heartache in Donald Trump’s godly flock + +Oct 15th 2016 | GAINESVILLE, GEORGIA | From the print edition + +Let down + +SAVE, perhaps, for the preacher’s warning that God’s works may involve mess and tears, there was no mention of Donald Trump’s groping imbroglio during Sunday service at Free Chapel, a snazzy mega-church in Gainesville, Georgia. But a pamphlet on sale by its senior pastor, Jentezen Franklin, makes the church’s stance clear. Recommending three days of fasting before November 8th, it advises that, since the country is in crisis, this is no time to be squeamish. Mr Franklin is a member of Mr Trump’s evangelical advisory board. + +Of all the mental gymnastics required of Trumpsters, none are more excruciating than the rationalisations offered by his evangelical cheerleaders. In the past Jerry Falwell junior, president of Liberty University, enlisted both his illustrious father and Jesus in his praise of Mr Trump—a profane business shark who bragged about his penis on TV, makes humiliating gaffes about Christianity and whose wife posed for Sapphic porn. After the emergence of his old boasts about committing sexual assault, Mr Falwell limply insisted that “We’re all sinners”, hinting that the furore was got up by anti-Trump Republicans. “Nothing can tear me away from your love, Lord,” sang Free Chapel’s rock ensemble: something similar seems to go for the candidate’s evangelical toadies. + +Two tropes recur in the arguments these erstwhile moralisers continue to make for the casino-owner. One is that no candidate is perfect: “until Jesus runs for office,” Mr Franklin laments, “it will always be a choice between the lesser of two evils.” The other is that the position at stake is commander-in-chief, not Sunday school teacher. The president’s power to nominate Supreme Court justices, and thus sway the law on marriage, abortion and religious liberty, outweighs everything else. This realist case was epitomised by Tony Perkins of the Family Research Council, who explained that his support for Mr Trump “was never based upon shared values.” After all, runs the biblical back-up, God often deploys flawed strongmen as his rod. Lustful King David is the most commonly cited precedent. + +Some, however, have heard enough. On October 9th Wayne Grudem, an influential theologian who had endorsed the adulterous nominee, said he hoped Mr Trump would quit. And, especially in the younger ranks, some never signed on. Russell Moore, of the Ethics and Religious Liberty Commission, an arm of the Southern Baptist Convention—“A nasty guy with no heart!”, according to Mr Trump—says that, among his acquaintances, every pastor under 40 is revolted by the campaign. The generational divide, he says, partly concerns race. Many younger evangelicals want both to atone for old racial wrongs and expand their faith’s appeal; countenancing Mr Trump’s “racist invective,” thinks Mr Moore, is “morally problematic but also self-defeating”, since “angry old white people” are not the church’s future. + +Still, in one analysis, all this is the culmination of a prior trend. Since the presidency of Ronald Reagan, a divorced movie star, white evangelical Protestants have become ever-more affiliated with the Republican Party. But, says Wayne Flynt, author of an illuminating new book on southern religion, while puritanical in the private sphere, in politics evangelical bigwigs “increasingly defined morality in terms of policy instead of character”. Ultimately, he thinks, the alliance that “they thought was their salvation will be their damnation,” since their moral authority now stands diminished. After this bout of relativism, agrees Mr Moore—who opposes Hillary Clinton as well—old-school evangelists who invoke moral character will seem like “political hacks.” To their critics, such hypocrites have forsaken God for Caesar, becoming less churchmen than spokesmen for a grumpy demographic group. + +Happily for the Republican Party, the white evangelical vote—typically more than a third of its total—seems unlikely to desert en masse. Partisanship is too fierce and the Democrats too unpalatable. Still, in this election there are ominous signs. Many evangelicals, pollsters recount, were always motivated more by aversion to Mrs Clinton, whom they regard as a liberal-feminist anathema, than by enthusiasm for Mr Trump. A survey by Lifeway Research found that, among Protestant pastors, Mr Trump’s lead was much smaller than previous Republican candidates’; a plurality were undecided. His overall support among evangelicals, while still strong, is lower than his predecessor’s. More may chose to stay at home on polling day, hurting down-ballot Republicans too. + +That could yet make a difference in swing states such as Florida and North Carolina. Perhaps, as Mr Flynt notes, evangelical leaders should pay more attention to their own parables. King David’s lusts return to haunt him: a love-child perishes and his son Absalom revolts. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21708690-convolutions-and-heartache-donald-trumps-godly-flock-absaloms-revenge/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Washington state’s carbon tax + +Of wood and trees + +Environmentalists against the environment in the Evergreen state + +Oct 15th 2016 | SEATTLE | From the print edition + + + +ASK an economist how best to reduce pollution, and the chances are that they will recommend taxing carbon emissions. And with good reason: doing so should encourage markets to find the least costly way to reduce pollution, something governments will struggle to discover themselves. In November Washington state’s voters will decide whether their state should mimic neighbouring British Columbia’s carbon tax, after a grass-roots campaign put the proposal on the ballot. It would be the first such policy in America. You might think environmentalists would unite behind such a pathbreaking effort. Instead, many oppose it. + +Initiative 732, as it is known, would tax carbon emissions at a rate reaching $25-a-ton in 2018 and then rising by 3.5% plus inflation every year, to a maximum of $100 in 2016 dollars. Today’s levy in British Columbia is C$30 ($23) a ton. As in the Canadian province, the proceeds would be recycled into tax cuts elsewhere. The sales tax would fall from 6.5% to 5.5%. Low-income workers would get a tax rebate. And, to help placate affected businesses, manufacturing taxes would fall. + +Yoram Bauman, who heads the Yes campaign (and who somehow makes his living by performing economics-themed stand-up comedy) proudly notes that three Republican state legislators support the initiative, and that it has not attracted the well-funded opposition from the oil lobby that a revenue-raising proposal might. Unfortunately, the price of that has been to alienate left-wing environmentalists, who are loth to give up the opportunity to use a carbon tax to fund new spending. + +Their favoured projects include ideas to reduce emissions further, such as improving public transport. This is necessary, they say, because of the source of Washington’s pollution. Clean hydroelectric power accounts for almost three-quarters of the Evergreen state’s electricity production. As a result, transport is the biggest source of pollution. The estimated 25 cents that the initiative would add to the price of a gallon of petrol in 2018 seems unlikely to change driving habits. However, a recent study by Werner Antweiler and Sumeet Gulati at the University of British Columbia contradicts this argument, finding that the carbon tax there has encouraged people to buy more fuel-efficient cars, helping to reduce gas-guzzling by 7% per person. + +Left-wing groups also insist that climate policy should include new spending on those worst affected by climate change. Near coastal Seattle, this means poor non-white neighbourhoods which are more vulnerable to flooding and, because they are nearer roads, have dirtier air, explains Ellicott Dandy of OneAmerica, a lobby group. As a reason to oppose the initiative, however, this too is unconvincing: any group that is disproportionately harmed by climate change should also benefit the most from the emission reductions. + +More compelling is an urge to compensate or retrain workers in energy intensive industries who might lose their jobs as a result of the tax. But those who suffer because of market forces or technological change get little government help; it is oddly particular of environmentalists to hold up green policies on this basis, rather than arguing separately for, say, wage insurance. + +The debate is ill-tempered. Mr Bauman did not get things off to a good start in 2015 when he complained about the left’s “unyielding desire to tie everything to bigger government” and “willingness to use race and class as political weapons in order to pursue that desire”. Members of one environmental group, the Sierra Club, performed parliamentary manoeuvres worthy of Ted Cruz: an attempt to change the group’s position from “do not support” to a more neutral stance was thwarted with help from Robert’s Rules of Order. + +There are some problems with the initiative. It might encourage some businesses exposed to trade, such as aluminium manufacturers, simply to relocate to a different state. But environmentalists would be mad to pass up the opportunity the high turnout of a presidential election year presents to pass green initiatives—especially one as desirable as a carbon tax. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21708684-environmentalists-against-environment-evergreen-state-wood-and-trees/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bilingual education + +Learning to assimilate + +In November Californians will also be voting on teaching in English + +Oct 15th 2016 | LOS ANGELES | From the print edition + +We’re going to need some new cards + +MARY KEENAN chuckles as she recalls the time that her son, Austin, had to talk his father out of a customs fee in Chile. While his dad frantically tried to explain why he had neglected to declare a snack, Austin, then 10-years old, translated his father’s pleas from English into Spanish. Since kindergarten, he had been enrolled at a dual immersion programme in English and Spanish at Thomas Edison school in Glendale, a suburb of Los Angeles. Speaking Spanish had helped Ms Keenan’s career at a trading company, so when it came time to educate her sons she wanted to be sure they also learned the language. She suspected that a few hours of foreign language instruction a week—as is the norm in most American public schools—would not be enough. Proposition 58, which will appear on California’s November 8th ballot, aims to spread such multilingual programmes across the Golden State. + +This is much more contentious than it sounds. California has by far the largest foreign-born population of any state. Ten million—or nearly a quarter of all immigrants in the country—call the sprawling state home; they speak over 200 languages. In 2014, Latinos overtook whites as the most populous ethnic group and will account for nearly half of California’s population by 2060. The scale of these demographic changes means questions around cultural assimilation versus cultural preservation tend to arise first in California. + +The new measure, proposed by Ricardo Lara, a state senator who was born in California to Mexican parents, seeks to repeal parts of Proposition 227, a ballot initiative that put restrictions on bilingual education in 1998. Before the implementation of Proposition 227, which was colloquially called “English for the Children”, around 30% of the state’s English learners were enrolled in bilingual programs, most of which catered to Latinos. The hope was that instructing English-learners partially in their first languages would keep their spirits high and their academic progress on track. + +But Ron Unz, a software entrepreneur, and Gloria Matta Tuchman, a teacher in Santa Ana, a predominantly Latino area of Los Angeles, felt bilingual education was failing non-native English speakers. Pointing to the large gap in test scores between those who were proficient in English and those who were not, they teamed up to write Proposition 227, which made English the default language of instruction in all state public schools. Multilingual education was not banned, but parents wishing to enroll their children in multilingual programmes had to sign waivers to do so. Teachers who wilfully used languages other than English during English-immersion classes could face legal action. + +That measure received the support of 61% of California’s voters. Looking back, Kelly King, the assistant superintendent of the Glendale school district—which offers programmes in seven languages—attributes the resounding victory to anti-immigrant prejudice. The vote followed shortly after the success of another ballot measure, which made illegal immigrants ineligible for public assistance (including schooling) and is now widely thought responsible for sinking the state’s Republican Party. Mr Unz rejects that assessment; he says the “English for the Children” initiative was hugely popular among immigrant parents. + +In the years following Proposition 227’s implementation, enrolment in bilingual programmes quickly fell. Test scores for English learners subsequently rose, but so did those proficient in English, suggesting the decline of bilingual education was not the sole cause. Today, the California Department of Education counts only 312 of 10,393 schools that offer multilingual programming. Mr Lara and his supporters believe this number is far too low. + +Mr Lara, who was at high school shortly before Proposition 227 passed, excelled in English-only education. “There is nothing more important for an immigrant child than learning English,” he says. By the age of 12 he was helping his parents with their tax returns. But he says that each child learns differently. His brother and sister struggled with English immersion. It was only when they were transferred to a bilingual classroom that their academic performance improved and their morale with it. + +Recent research conducted by professors at the University of Oregon and Stanford University suggests English learners enrolled in bilingual and dual immersion programmes take longer than their peers in English-only ones to become fully proficient in English. But by high school, English learners in multilingual courses catch up to and surpass the academic performance of their peers in English immersion classes. Mr Unz is sceptical. “For as long as bilingual education has been around, each side seems to be able to find evidence to support their side,” he says. + +Although a poll published in June suggested 69% of California’s voters support Proposition 58, it is one of a whopping 17 propositions that will appear on the November 8th ballot. Bombarded with so much information, voters might not take the time to parse each initiative, says Mark Baldassare, the president of the Public Policy Institute of California, a think-tank. Advertising has been sparse. Parents picking up their children from Brooklyn Avenue Elementary School in East LA, where 97% of the population is Latino, looked puzzled when asked about the proposition. Laurie Sanchez, who was born in Los Angeles to Mexican parents and has a 5-year-old and a 7-year-old, says she would like her kids to be taught in Spanish and in English. She also has two children in their 20s and laments that when they were young they could not speak enough Spanish to communicate with their grandpa. Yoanna Contreras, on the other hand, thinks the current system works fine. “Spanish at home, English at school—that’s the way it is.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21708701-november-californians-will-also-be-voting-teaching-english-learning-assimilate/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Lexington + +Growing Cotton in Iowa + +An ambitious young senator offers a revealing glimpse of a post-Trump Republican Party + +Oct 15th 2016 | From the print edition + + + +AS THE election of 2016 lurches to an unmourned end, it feels cruel to report that the presidential race of 2020 is already under way. This haste makes sense, at least on the Republican side. If voters on November 8th consign Donald Trump to a life of brooding defeat, filled with cable TV interviews, restless travel and insomniac tweeting, he will leave a party primed for civil strife. For a tough dilemma confronts Republicans. Full-blown Trumpism—a retro creed that blends America First nationalism, paranoia worthy of Joseph McCarthy, George Wallace-style nativism and Hugh Hefner-ish lechery—is a recipe for losing a national election. Yet without those voters who hear and see a champion in Mr Trump, Republicans will struggle to win most other elections, whether to Congress or at state level. + +Mr Trump has revealed that, for many, conservatism is as much an identity as a set of principles. Mr Trump could not care less about shrink-the-government orthodoxy. He blithely opposes moves to reform federal aid for the old, despite its spiralling costs. He promises such expensive schemes as a federal deportation force targeting “criminal aliens”. Mr Trump doubts that American leadership is needed to keep the world safe, questions alliances like NATO, denounces George W. Bush for invading Iraq and praises Russia’s autocratic president, Vladimir Putin. His threat to slap tariffs on Chinese or Mexican imports mocks Republican leaders who back free trade. + +On October 8th Senator Tom Cotton of Arkansas, a 39-year-old star of the doctrinaire right, arrived in Iowa for a four-day visit. In theory, Mr Cotton was in Iowa to campaign for Republicans who, unlike him, are up for re-election this year. But politicians do not visit Iowa by accident. Its caucuses are the first winnowing contest of the presidential primary season. Those with White House ambitions must spend months wooing the state’s farmers at county fairs, and its evangelical Christians at church pancake breakfasts. While in Iowa Mr Cotton addressed two party fundraising dinners whose previous speakers include most major Republican presidential candidates of the past decade. + +On paper, Mr Cotton is an unlikely figure to reconcile Mr Trump’s burn-it-all-down followers with conventional conservatives. The son of a cattle farmer, he is a beakily intense six-foot-five-inch Harvard law graduate and former McKinsey consultant, who enlisted in the army in 2004 and served as an infantry officer in Iraq and Afghanistan. He was elected to the Senate in 2014, after a brief stint in the House of Representatives, with the help of two distinct bands of admirers. First, anti-government groups such as the Club for Growth, who hail his willingness to vote against disaster-relief funds or food stamps (Mr Cotton talked of recipients with new cars and “steak in their baskets”). Second, foreign-policy hawks, who cheered when, two months after entering the Senate, he wrote to Iran’s leaders, warning them that any nuclear agreement they struck with President Barack Obama might be overturned by Congress—a letter that made Senate veterans wince, though 46 other senators eventually signed it. + +Mr Cotton is a hardliner on law and order, too. This year he helped block a bipartisan criminal-justice bill that would give judges more flexibility when sentencing, among other reforms meant to address decades of soaring jail populations (America, with less than 5% of the world’s population, accounts for almost 25% of the world’s prisoners). Mr Cotton argued in May that because most crimes go unpunished, “if anything, we have an under-incarceration problem”. + +Interviewed before addressing the Reagan dinner of the Iowa Republican Party in Des Moines, the senator played down differences between his interventionist views, Mr Trump’s scorn for nation-building and public opinion. Detached from its roots in 1940s pacifism, the slogan America First “makes a lot of sense” to voters, Mr Cotton says. He thinks Mr Trump is wrong to question the wisdom of overthrowing Saddam Hussein, arguing that the Iraq war made Americans safer, and so put America first. Chiding the Bush administration for years of drift before the Iraq troop surge of 2007, and accusing Mr Obama of allowing the rise of Islamic State, Mr Cotton says the American people are not fundamentally anti-war, just “fundamentally opposed to losing wars.” + +If Harvard did populism + +Elections turn on many issues, he goes on, but the one issue on which Mr Trump differed from almost every Republican he beat in the 2016 primary was immigration. Mr Cotton supports Mr Trump and is sure that a key to navigating an era of “populist insurgencies”, from Britain to continental Europe and America, lies in acknowledging the “reasonable, legitimate concerns” of working families about low-skilled migration and its effects on society and on wages—even if a “transnational cosmopolitan elite” is left unscathed by them. + +Addressing the party faithful, moments later, Mr Cotton presented himself as a member of the generation moved by the patriotic spirit that America showed after the September 2001 terror attacks, leaving civilian careers to join the army and learn a “warrior ethos”. He combines that pitch with Trumpian vows to secure the border and reject a “new normal” that, he says, sees riots on the streets and “cops assassinated on the beat”, while sneering liberal elites “live behind high walls with armed guards”. + +After the speech Jeff Kauffman, chairman of the Iowa Republican Party, reported praise from the party faithful for Mr Cotton’s “freshness”. The challenge for his party, whatever the result in November, is to keep the new voters brought in by Mr Trump and to capture his populism, “but package it so it is more mainstream”, Mr Kauffman says. Between now and 2020, expect to hear more about Tom Cotton—and about other, rival Republicans with schemes to make American populism mainstream again. Even in defeat, Mr Trump will shape the party’s future. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21708635-ambitious-young-senator-offers-revealing-glimpse-post-trump-republican/print + + + + + +Previous Articles Sections Next + + + + + +The Americas + + + + +US-Mexico trade: In the shadow of the wall + +US-Canada trade: The other neighbour + +Haiti after the hurricane: Matthew’s fury + +Bello: Whether ’tis Nobeler in the mind + + + + + +Articles Sections Next + +US-Mexico trade + +What Trumponomics means for the border region + +Its not just the wall that appals + +Oct 15th 2016 | SAN DIEGO AND TIJUANA | From the print edition + + + +ASKED what he thought of Donald Trump’s plan to build a wall on the border, a Mexican official smiled and reached for his smartphone. He called up a map of Mexico in 1824, when it included California, Texas and most of what is now the southwestern United States. We’ll gladly pay for a wall on that border, he joked. + +For most Mexicans, the prospect of a Trump triumph—however unlikely—is less amusing. The Republican nominee says he would slap a 35% tariff on Mexican goods and maybe scrap the North American Free-Trade Agreement (NAFTA). Just the tariff would hit Mexico like a hurricane, says the central bank’s governor. Other economists think it would quickly knock 5% off Mexican GDP. The Peterson Institute, a think-tank in Washington, DC, predicts that Mr Trump’s protectionist policies would spark a trade war, push America into recession and destroy 4.8m American jobs by 2019. + +A visit to the sunny sister cities of Tijuana (in Mexico) and San Diego (in California) gives a sense of what is at stake. The border that bisects them is the busiest in the Western hemisphere. Mexicans cross it to work, shop and visit friends. Americans head south for beaches and cheap dentistry. Kevin Faulconer, San Diego’s Republican mayor, is keen to encourage cross-border business. “My job is to take away roadblocks,” he says. + +Such trade has risen more than sixfold since NAFTA passed (see chart). Mexico is America’s second largest export market; America is Mexico’s largest. The two countries “no longer simply sell finished products to one another. Instead, they build things together,” note Christopher Wilson and Duncan Wood of the Wilson Centre, a think-tank; they pool their comparative advantages to create an “ultra-competitive” regional economy. + + + +In a gigantic factory in Tijuana, for example, hundreds of blue-uniformed workers assemble headphones and headsets. Many stare at screens that magnify the tiny components, so they can see what they are fiddling with. Plantronics, the American firm that owns the factory, is consistently voted one of the best employers in Mexico. + +It illustrates a trend that makes Mexico especially useful for American manufacturers: mass customisation. Consumers increasingly want to personalise purchases—from made-to-measure golf clubs to cars with cool gadgets—and have them delivered straight away. This is easier when they are made nearby. Plantronics lets customers choose colours and designs (“power blue” and sweat resistant, for example), and ships them to America and Canada within 48 hours. “Today’s production goes across the border tomorrow,” says Jorge Ruvalcaba, a vice-president of the firm. “We couldn’t do that from China.” + +Manufacturing in Mexico has become more attractive since wages for factory workers in China started to soar around 2010. (Mr Ruvalcaba adds that intellectual property is safer in Mexico, too.) The most sophisticated work tends to be done in the United States. But companies do not simply marry American brains with cheap Mexican brawn. Mexico produces more engineering graduates, relative to its population, than the United States, and has strong vocational training. Thermo Fisher Scientific, an American medical-technology firm, uses geeks in Tijuana to write software that helps doctors make sense of data generated by medical devices. + +Mexico cannot match China’s scale when it comes to mass-producing cheap goods. But it is well placed to offer services that are often more profitable. For example, 3DR, a firm based in Berkeley, California, sells aerial drones that are used to survey construction sites. The machines are assembled in China but the firm has a tech-savvy, English-speaking workforce in Tijuana to test them, repair them and offer technical support to customers. The real value is not the drone itself but the software and services that come with it, says Chris Anderson, the boss of 3DR (and a former journalist for The Economist). + +The employment machine + +Cross-border trade boosts jobs. Theodore Moran and Lindsay Oldenski of the Peterson Institute find that between 1990 and 2009, a 10% increase in employment at US firms’ Mexican operations was associated with a 1.3% increase in their US workforce. Granted, the new jobs tend to be for skilled workers, and some unskilled ones lose out. But everyone benefits from lower prices. If an American family saves $100 buying a washing machine made in Mexico and uses that money to go to the cinema, it supports the jobs of the ticket-seller, the cinema manager “and maybe even Brad Pitt”, argue Mr Wilson and Mr Wood. + +Border businessfolk offer varying views of Mr Trump’s plan to disrupt this delicate ecosystem. Some are sure he will lose. Some are scared to speak up—unsurprisingly, given Mr Trump’s habit of chastising named firms for making things in Mexico. Others are openly aghast. “We’d have to shut down,” says one manager. The effect on the region would be “horrific”, says Mark Cafferty, head of the San Diego Regional Economic Development Corporation, a trade body. Cristina Hermosillo, his counterpart from Tijuana, agrees. This month the San Diego Union-Tribune, a conservative daily, endorsed Hillary Clinton—the first time in 148 years that it has backed a Democrat for president. + +Mr Trump has already hurt Mexico. “Integration has been put on hold for a year,” says Sárah Martínez Pellégrini of the College of the Northern Border in Tijuana. “Just the possibility of a Trump victory makes Mexico less attractive for foreign investors.” And Mrs Clinton, fighting off Mr Trump and Bernie Sanders, her Democratic primary rival, has grown more protectionist (at least, in public). So a trans-Pacific trade deal, which would boost both Mexico and the US, is on hold. On the plus side, by depressing the peso, Mr Trump has made remittances from Mexicans in the US more valuable. Gracias, Señor Trump. + +This article appeared in the Print Edition with the headline: In the shadow of the wall + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21708666-its-not-just-wall-appals-what-trumponomics-means-border-region/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The US-Canadian border + +Vancouver and Seattle seek to come closer together + +Meet the northern neighbours + +Oct 15th 2016 | VANCOUVER | From the print edition + + + +UNLIKE San Diego and Tijuana, Seattle and Vancouver are both rich and speak the same language. But connections between Washington state’s commercial capital and Canada’s biggest western city are sparse. Professionals in Seattle have more contacts in Atlanta, across the continent, than in Vancouver, just 190km (118 miles) away, according to an analysis of LinkedIn data by the Boston Consulting Group (BCG). Vancouverites talk more to people in San Francisco than in Seattle. + +Seeking to profit by doing more together, last month Washington state’s governor, Jay Inslee, and the premier of British Columbia, Christy Clark, agreed to create the “Cascadia Innovation Corridor”, named for the Cascade mountains that range up the Pacific coast of North America. + +It is not a partnership of equals. The Seattle area hosts such behemoths as Microsoft, Amazon and Boeing; Vancouver’s biggest tech company is Telus, which provides telecoms services mainly in Canada. High-tech industry accounts for 22% of Washington’s GDP; its contribution to British Columbia’s smaller economy is just 7%. Venture-capital firms invest five times more in Seattle than they do in Vancouver. + + + +But the Canadians are ambitious upstarts. Salaries for software engineers in Vancouver are about half what they are in Seattle (although property prices are higher). Business taxes are lower, too. Canada is more open to foreign talent than the United States. Seattle’s tech giants have set up satellite offices in Vancouver. In June this year Microsoft opened its “Canada Excellence Centre”, a training and software-development office, doubling its workforce in Vancouver to 700. Microsoft’s co-founder, Bill Gates, has praised Canada’s “enlightened” immigration policies and “good, strong universities”. + +Vancouver wants to be more than just a bargain bazaar for technology talent. Ms Clark talked of creating joint degree programmes and common curriculums between the universities of British Columbia and Washington. John Wenstrup of BCG thinks venture-capital firms in Seattle should finance more start-ups in Vancouver. “Both cities could benefit from a reduction in barriers for skilled workers to work and travel on both sides of the border,” he thinks. To that end, Mr Inslee is trying to persuade the US Congress and Canada’s Parliament to end the border-control stop on the Vancouver-Seattle train. + +Visionaries have whizzier ideas for speeding up the journey, which can take three or four hours by car. One $30 billion idea is for a bullet train, which could cut the journey of four hours to one. A cheaper proposal is for a special highway for driverless cars. Either would improve connections between neighbours that do not know each other as well as they should. + +This article appeared in the Print Edition with the headline: The other neighbour + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21708667-meet-northern-neighbours-vancouver-and-seattle-seek-come-closer-together/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +After the storm + +The misery of Hurricane Matthew is deepened by human failure + +Why Haiti did worse than Cuba in protecting its people + +Oct 15th 2016 | PORT-AU-PRINCE | From the print edition + +Livelihoods blown away + +THE scene is appallingly familiar: entire towns in ruins; thousands of people without food, water or shelter; clothes and belongings strewn across the landscape; the dead buried in mass graves. Nearly seven years after an earthquake wrecked Haiti, killing perhaps 200,000 people, disaster has struck again. This time it was wind and waves that brought devastation. + +Hurricane Matthew made landfall close to Haiti’s westernmost point, ripping across the Grand’Anse region before heading back into the Caribbean. The town of Jérémie, home to about 30,000 people, has been largely destroyed; perhaps 1,000 people have died. + +Like Jérémie, Baracoa in Cuba was devastated by Matthew’s winds of about 225kph (140mph). But unlike Jérémie, no deaths have been reported in Baracoa. Cuba’s communist government has a well-rehearsed drill. State-controlled media warn residents for days of approaching hurricanes; schools are closed and turned into shelters. State-owned buses are dispatched to evacuate residents. Local party snoops, known as the Committee for the Defence of the Revolution, with representatives on every block, make sure the elderly or infirm are not left behind. + +In contrast with Cuba’s authoritarian state, Haiti’s government barely functions. The infrastructure is poor, with few solid buildings. Haiti’s media are chaotic. High crime rates mean residents refuse to leave their homes unattended. + +“We knew it was coming, but we didn’t know what to do,” says Alexis Bernard, a 22-year-old man, sitting in the ruins of his now roofless house in the hamlet of Torbeck. Haunted by the earthquake of 2010, he feared being buried under falling masonry. He and 12 other members of his family, including a baby girl, spent the worst hours of the storm in the open. They survived with only minor injuries. + +Haiti’s interim president, Jocelerme Privert (elections to choose his successor were again postponed after the hurricane) says his government did its best: “We undertook an extensive campaign to make people aware, to mobilise them, to alert them to move away from the zones at risk. Had we not undertaken this I fear we would be looking at a higher death toll.” + +The aftermath of Matthew may prove even worse. Mr Privert has warned of the risk of “widespread famine”. The UN says 1.4m people need immediate assistance. One big worry is the spread of cholera, which the UN inadvertently brought to Haiti when Nepalese peacekeepers, infected with the disease, were deployed following the earthquake. About 10,000 Haitians have died of cholera since then. Much of the water supply in the hurricane-struck region risks being contaminated. + +Lewis Lucke, a former head of USAID in Haiti, notes another problem: unlike the earthquake, which destroyed buildings, the storm damaged fishing boats and agriculture. That leaves a large part of the country unable to fend for itself. Take Grand’Anse: it had recently been the source of some optimism, following the building of a new road and the arrival of mobile-phone coverage. Banana and cocoa plantations were beginning to flourish. Much of that has gone. + +This article appeared in the Print Edition with the headline: Matthew’s fury + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21708664-why-haiti-did-worse-cuba-protecting-its-people-misery-hurricane-matthew/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bello: the fate of Colombia’s peace deal + +Will the Nobel prize bring peace to Colombia? + +The prize exposes the gap in perceptions over the rejected accord with the FARC rebels + +Oct 15th 2016 | From the print edition + + + +THEY may be overrated and politicised, but Nobel peace prizes are still nice to have. Ask Juan Manuel Santos: on the evening of October 2nd, after Colombians had voted narrowly to reject the peace agreement his government had negotiated with the FARC guerrillas, he was contemplating the ruins not just of six years of work but also of his presidency. Five days later the Norwegian committee announced that Mr Santos had won this year’s peace award. It was a tonic; even Álvaro Uribe, his chief political foe and the inspirer of the No vote, offered guarded congratulations. + +The prize underlines the gap in perception between outsiders and many Colombians. For the former, the agreement concluded in August, after two years of preliminary negotiations followed by four years of talks in Havana, represents a necessary compromise to end a costly internal conflict; it sets a new international benchmark for reconciling peace and justice. But for the latter, it treats the FARC too leniently. Guerrilla commanders guilty of war crimes who make a full confession to a special peace tribunal will avoid incarceration. Many Colombians want to see FARC leaders in jail, not in congress (as some could be). Mr Santos’s opponents accuse him of failing to hold out for tougher terms because of a desire to clinch peace (and, yes, the Nobel prize) before his term ends in 2018. Its award vindicates their cynicism. + +The gap in perceptions reflects confusion over the nature of the peace talks. Many Colombians thought they would be about the terms of the FARC’s surrender. After all, Mr Uribe, president for eight years, and then Mr Santos (who had been his defence minister), had reduced the FARC from a peak of 20,000 troops to 5,800. Three of the guerrillas’ top commanders were killed in targeted attacks; the others could no longer feel safe. + +By entering talks the FARC implicitly recognised that they could no longer win the war. But they view themselves as an undefeated army motivated by communist ideology, rather than as the drug-trafficking terrorists other Colombians perceived them to be. They were determined not to be the first guerrilla leaders to disarm in order to serve long prison sentences. And they wanted things they could claim as political conquests, such as a government commitment to land reform. But the FARC’s arrogant insistence on presenting the talks as being between two equally legitimate sides was a political mistake that made the agreement look more generous to them than it actually was—and made winning the plebiscite harder. + +Salvaging Colombia’s peace will not be easy. The No campaign and the FARC will have to find common ground. Mr Uribe has adopted a conciliatory tone since the vote, even meeting Mr Santos for the first time in six years. On October 9th he set out the changes he wants to the peace agreement. Some echo what is already the government’s position—that the pace of rural development and land reform will take into account fiscal constraints, for example. Others are points on which, in light of the plebiscite, the government should press the FARC: Mr Uribe wants the “effective restrictions on liberty” that would apply to those who confess to war crimes to involve confinement, though not prison, and for these to be incompatible with a seat in congress. Harder to accommodate is Mr Uribe’s insistence that FARC leaders should be tried by Colombia’s supreme court, rather than by the special tribunal, the centrepiece of the agreement’s chapter on justice. + +At least all sides are talking. On October 7th the government and the FARC agreed quickly to consider proposals for “adjustments and clarifications” to the agreement. While that happens, they will maintain the ceasefire (and the UN its mission to monitor both this and the guerrillas’ disarmament). + +But time is short. Mr Uribe prefaced his proposals by calling for both “urgency” and “patience”. That suggests he may want to spin out the consultations so that they merge with the campaign for Colombia’s presidential election in 2018. It is hard to see the ceasefire holding until then. The start this month of peace talks with the ELN, a smaller guerrilla group, may also complicate matters. + +Whether or not the government holds another plebiscite on a revised agreement, it is clear that peace requires a broader political accord. That is where the Nobel prize might just help. It is encouraging that 400 business leaders this week called for a “swift search for a definitive, inclusive and sustainable peace”. The world is watching Colombia, and thus Mr Uribe’s and the FARC’s next moves. But its attention span is short. + +This article appeared in the Print Edition with the headline: Whether ’tis Nobeler in the mind + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21708665-prize-exposes-gap-perceptions-over-rejected-accord-farc-rebels-will/print + + + + + +Previous Articles Sections Next + + + + + +Asia + + + + +Nuclear energy in Japan: Stop-start + +Politics in Thailand: Holding their breath + +Booming Bangladesh: Tiger in the night + +Myanmar’s Muslims: Sparks near tinder + +Graft-busting in South Korea: Trick or treat + +Banyan: Let not a billion tongues bloom + + + + + +Articles Sections Next + +Nuclear energy in Japan + +Stop-start + +One plant illustrates the bleak outlook for the country’s idle reactors + +Oct 15th 2016 | KASHIWAZAKI-KARIWA | From the print edition + + + +THE Kashiwazaki-Kariwa nuclear plant, the world’s largest, is a hub of activity. Its 6,619 employees dutifully clock on and off every day. Tokyo Electric Power Company (TEPCO), its owner, spent ¥606 billion ($5.8 billion) last year maintaining it and its other nuclear plants. Yet Kashiwazaki-Kariwa has not generated a single watt of electricity since 2011, when it was shut down along with the rest of Japan’s nuclear reactors after the Fukushima Dai-Ichi nuclear accident. + +TEPCO has applied to Japan’s Nuclear Regulatory Authority (NRA) to restart two of the plant’s seven reactors. But even if the regulators approve the request, politics may stymie it. On October 16th voters in Niigata, the prefecture in which Kashiwazaki-Kariwa is located, will elect a new governor. The two leading candidates have not been as vocally opposed to the restart as Hirohiko Izumida, the outgoing governor, but public opinion is strongly against. + +Before the disaster, Japan had 54 working reactors. The six at Fukushima Dai-Ichi (pictured) are to be decommissioned. Of the remaining 48, the NRA has received applications to restart 26. It has approved only eight of them so far, and just two reactors are currently operating (see map). A third is closed for maintenance. Local officials—who have some say over restarts—adverse court rulings and other glitches have held up the others. Meanwhile, an anti-nuclear governor is suing to get one of the two working reactors shut down again. + + + +Before the disaster, Japan got 25% of its electricity from nuclear plants. The government of the day was hoping to raise that to 50% by 2020. The present government hopes nuclear power will supply 20-22% of its electricity by 2030. But the slow progress on restarting mothballed plants is calling its plans into question. Nuclear plants currently supply less than 1% of Japan’s electricity; few see that rising beyond 10% by 2030. “Nuclear’s comeback will be modest and brief,” predicts Robert Feldman of Morgan Stanley, a bank. + +Concerns about public safety are understandably acute in one of the world’s most earthquake-prone countries. No deaths have been linked to the Fukushima Dai-Ichi accident (though many fear that cancer rates will increase in future), but at least 150,000 were displaced from the vicinity of the plant, almost all of whom still live in temporary housing. (More than 15,000 people were killed by the earthquake and tsunami that led to the disaster.) + +Regulators’ authority has been hugely enhanced since the creation of the NRA in 2012. It has introduced a host of new safety requirements. TEPCO has spent ¥470 billion ($4.6 billion) upgrading Kashiwazaki-Kariwa alone. Employees point to its many fail-safes: a 15-metre-high sea wall to protect it from tsunamis (the main cause of the Fukushima Dai-Ichi meltdown), multiple backup power sources, scores of fire engines and a huge reservoir of cooling water. In one room, instructors watch as trainees respond to simulated emergencies. Today’s involves turbine trouble. + +Yet problems remain. Posters at Kashiwazaki-Kariwa encourage workers to adopt a “questioning attitude”—part of an attempt to change a culture of deference to authority. This is “a work in progress”, says Dale Klein, a former head of America’s nuclear regulator who now chairs TEPCO’s safety commission. Mr Izumida argues that evacuation plans for people living close to the plant are inadequate. “It is unclear how we will get the 10,000 buses needed to transport the 440,000 people living in the vicinity of Kashiwazaki-Kariwa,” he says. It doesn’t help that responsibilities in an emergency are not clearly apportioned among the utilities, the central government and municipalities. + +Anti-nuclear groups maintain that concerns over the financial health of Japan’s utilities are playing too big a part in the government’s decisions about nuclear power. They maintain that Japan can do without nuclear by boosting the role of renewables. Energy demand is rising only modestly, since the population is shrinking and the country has become far more energy-efficient since the disaster. The American Council for an Energy-Efficient Economy, an NGO, ranks it as the second most frugal country in the world, after Germany. + +But the lack of nuclear power leaves Japan heavily dependent on imported energy, points out Jun Arima of the University of Tokyo. Before the disaster, imported fossil fuels accounted for 64% of the electricity it generated; now that share has risen to 82%, one of the highest among rich countries (see chart). Steady imports require good relations with the Middle East, a combustible region. The expense of importing more natural gas, the main substitute for the lost nuclear capacity, has prompted power prices to soar. That is unpopular with the public, and has contributed to a deteriorating trade balance. + + + +The loss of nuclear generation has environmental consequences, too. Power plants that run on natural gas (and, worse, the old coal-fired plants that have been started up again to make up for the lack of nuclear power) emit far more greenhouse gases. Coal alone accounts for 31% of the country’s total energy mix, compared with 25% in 2010; add in oil and natural gas, and the total contribution of fossil fuels has risen from 61% in 2010 to 85% today. All this makes it highly unlikely that Japan will meet its pledge to cut its carbon-dioxide emissions by 26% by 2030. + +Moreover, even if Japan manages to restart a few more of its reactors, many of them are old. If restarting the current fleet is unpopular, building new ones would be toxic to many voters. And then there is the question of what to do with Monju, a fast-breeder reactor (one that generates more fuel than it consumes) which cost $10 billion to build but has generated power for only one hour since its inauguration in 1995 owing to a series of accidents. Even if the government decommissions it, there will be no nuclear-power plants to consume the fuel it has already produced. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21708727-one-plant-illustrates-bleak-outlook-countrys-idle-reactors-stop-start/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +The king and them + +Thailand is on tenterhooks over the king’s health + +A country holds its breath + +Oct 15th 2016 | BANGKOK | From the print edition + +Hoping against hope + +BHUMIBOL ADULYADEJ, the 88-year-old king of Thailand, has been in poor health for so long that each fresh bout of illness seems scarcely newsworthy. But this week the palace announced that his health was “not stable”, instead of its usual practice of waiting for him to recover from whatever ailment had been troubling him before releasing any information about it. On October 12th the Bangkok stock exchange dropped by 7%, on rumours that his 70-year reign is coming to an end, whether by abdication, death or incapacity (which would allow the crown prince to be declared regent). + +The jitters come just as the junta that has run the country since 2014 was beginning to get comfortable. Two months ago it engineered the approval of an authoritarian constitution through a flawed referendum. In theory, that started a countdown to fresh elections, presently scheduled for late 2017. But the death of the king, if it comes soon, would provide the generals with the perfect excuse to delay a new election. Indeed, the army’s desire to secure an orderly royal handover seems to have been one of the reasons it took power in the first place. + +In the meantime, the junta’s toadies have continued to tinker with the text of the constitution, even after the voters signed off on it. One change concerns a proposal—lazily added as an additional question to the referendum ballot—to give senators selected by the junta a say in who becomes prime minister. The new text, finalised on October 11th, makes it much more likely that Thailand’s next prime minister will be unelected. + +Prayuth Chan-ocha, the junta leader, says he will probably not be the new prime minister. But that is getting harder to believe. Some loyalists serving in Mr Prayuth’s present government plan to start a political party which will lobby to keep him in office (the new constitution’s election rules will give such upstart outfits oomph). The junta anyway says it will retain authority throughout any period of post-election coalition-making, which in theory means it could install any prime minister it desires. + +The junta is also tidying up loose ends, and putting opponents in their place. Last month a junta-appointed committee concluded that Yingluck Shinawatra, the prime minister whom the generals ousted in 2014, should be fined around $1 billion for enacting a costly rice-subsidy scheme while in office. (That dismayed some of her enemies, who say the fine is far too low.) The ruling was issued even though Ms Yingluck is still undergoing trial for alleged negligence in connection to the rice scheme, at a risk of ten years in jail. + +Many others are also being put in their place. In early October immigration authorities denied entry to Joshua Wong, the teenage leader of Hong Kong’s pro-democracy “Umbrella Movement”, who had been invited to address students in Bangkok. In recent weeks the government has threatened to arrest authors of an Amnesty International report which details allegations of torture by the military, and launched a sedition case against a well-known human-rights lawyer. + +Meanwhile the government has been deflecting claims of corruption within its own ranks. It has had to defend the deputy prime minister’s decision to charter a jumbo jet to whizz 40 or so people to an international summit in Hawaii (the total bill came to $588,000, including $17,000 for catering). When journalists noted that a construction company associated with Mr Prayuth’s nephew had won several sizeable army contracts, officials warned that they would scour social media to identify people who accused the prime minister of wrongdoing. + +The junta is not thought to be held in great esteem by voters; such incidents further dent its standing. Crown Prince Maha Vajiralongkorn is even more unpopular. The army’s machinations should ensure that the succession, whenever it comes, passes without great drama, at least in the short term. But inept generals ruling in the name of a little-loved king is hardly a formula for stability. + +This article appeared in the Print Edition with the headline: Holding their breath + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21708728-country-holds-its-breath-thailand-tenterhooks-over-kings-health/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Booming Bangladesh + +Tiger in the night + +Bangladesh’s economy is on a roll, even as its democracy weakens + +Oct 15th 2016 | DHAKA | From the print edition + + + +THE last time a Chinese president visited Bangladesh, back in 1986, things were rather different. For one thing, he did not carry $40 billion in his pocket. This is the sum that government sources say Xi Jinping, China’s current leader, is bringing for a day-long stopover on October 14th, on his way to a summit of big developing countries in the Indian resort of Goa. Admittedly, the windfall will come in the form of loans for some 21 infrastructure projects including elevated expressways, railroads, bridges and power plants. But it is welcome all the same. + +Bangladesh, too, has changed a lot in 30 years. Even if its 160m people remain mostly poor, the country can no longer be dismissed as “the armpit of India”. Its GDP is growing by 7% a year, as fast as China’s, and by some social indicators it has overtaken its giant neighbour India. With a booming garment industry that now ranks second only to China’s in exports, plus some 10m diligent overseas workers sending money home, Bangladesh has enjoyed current-account surpluses for all but one of the past ten years. + +It helps that Bangladesh has other suitors just now. Japan recently gazumped China’s offer to build a new seaport, with a $6.7 billion project that includes a liquefied-natural-gas terminal and four coal-fired power plants. In July Russia promised $11.4 billion in loans towards a pair of nuclear reactors. Earlier this year India, which is already supplying Bangladesh with power from its grid, agreed to finance another big coal-fired power plant to the tune of $1.5 billion. Multilateral institutions such as the Asian Development Bank and World Bank have also upped their aid. + +This is not to say that Sheikh Hasina, the prime minister, will be deaf to China’s overtures. Despite its recent rude health, Bangladesh’s economy still needs all the help it can get. As even the briefest exposure to Dhaka’s cacophonous parade of tinkling cycle rickshaws, tooting three-wheelers and honking SUVs reveals, this is a country of bottlenecks. + +Traffic relief for the capital city’s 17m people—who, the UN predicts, will number 27m by 2030—will not come soon. There are no plans at present for any mass-transit system, and the first of three phases of a cross-city expressway is not due to open until 2018. + +By the same token, some 13m Bangladeshi households currently go without electricity. Even with all the added power from aid-funded plants, the country may still face future energy shortages. A recent report from the ADB suggests it will need to triple generating capacity by 2030 to meet expected demand, and warns that it must not only build new plants but replace ageing ones. + +Yet perhaps the biggest bottlenecks are not physical but political. Sheikh Hasina’s Awami League party has been in power since 2009, and faces a weakened opposition in the run-up to general elections scheduled for 2019. This does not mean it is popular, however. Most of the opposition boycotted the last national polls in 2014, which took place amid widespread violence and resulted in what is virtually a one-party parliament. While international attention has focused on a string of gory killings by Islamist radicals, culminating in the attack on a posh restaurant in Dhaka in July that left 20 mostly foreign patrons dead, what worries Bangladeshis more is what many perceive as a broader collapse of the rule of law. + +Despite considerable turbulence since breaking from Pakistan following a bloody war in 1971, Bangladesh has a tradition of respect for dissent. This has eroded in recent years as the Awami League, which itself had been a victim of previous purges, has turned on its rivals with a vengeance. “The media are controlled, the judiciary is controlled, and the police are even more enthusiastic than their masters,” says Fakhrul Islam Alamgir, the secretary-general of the Bangladesh National Party, the largest opposition group. Aside from extra-judicial killings and disappearances targeting Islamists and other dissidents, the ruling party has instigated a crippling barrage of lawsuits—some 37,000 against the BNP alone. “I spend four days a week attending court hearings, and two hours stuck in traffic for every one,” grumbles Mr Alamgir. + +Perhaps, like previous generations of Asian tigers, Bangladesh will endure a spell of autocracy before its politics become more democratic. But in the meantime, as the head of one Dhaka NGO says with a shake of the head, the country is walking a tightrope: “It is a dangerous thing when people have no vehicle to express their unhappiness.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21708737-bangladeshs-economy-roll-even-its-democracy-weakens-tiger-night/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Sparks near tinder + +New fears of communal violence in Myanmar + +The Rohingya are fighting back? + +Oct 15th 2016 | YANGON | From the print edition + + + +NINE police officers were killed early on October 9th in a series of apparently co-ordinated attacks on border-guard posts in the troubled state of Rakhine in Myanmar’s west. The attackers were armed with knives, slingshots and only a few guns—and reportedly made off with dozens more guns and thousands of bullets. The Buddhist majority in Rakhine has long oppressed the state’s Muslim Rohingyas. Now the victims may be starting to fight back. + +Nobody has yet claimed responsibility, but police say the attackers—at least two of whom were captured and eight killed—were Rohingyas. One local official blamed the Rohingya Solidarity Organisation, a militant group that has been dormant for decades. The two who were detained reportedly told authorities that they planned the raids with fellow locals. + +The central government’s response has been reasonably level-headed. On the same day it held a press conference to appeal for caution and restraint. Two days later it dispatched high-ranking officials to talk to local leaders in the Muslim-majority townships where the attacks took place. Aung San Suu Kyi, the country’s de facto leader, did not cast blame, but reiterated her commitment to “peace and stability”. “Rakhine State’s problem is Myanmar’s problem,” said the information minister. + +Since the attacks in northern Rakhine, however, clashes have broken out there leaving at least a dozen people dead—including unarmed civilians, according to locals. The government has beefed up an already heavy military presence. Some worry that the stolen guns will be used in future attacks on security forces, or that in trying to retrieve the weapons, the police will target innocents. + +By far the biggest concern is that unrest could spread, as it did in 2012, when communal violence between Buddhists and Muslims killed scores and displaced tens of thousands. Many outside Myanmar have criticised Miss Suu Kyi for failing to speak up for the Rohingyas. Anti-Muslim sentiment runs deep among the Burman Buddhist majority. Wirathu, a virulently nationalist monk and master of social media, posted a video on his Facebook page this week that he claims shows the attackers calling for Rohingyas to join the jihad. + +In August Miss Suu Kyi invited Kofi Annan, a former UN secretary-general, to head a commission investigating human-rights abuses in Rakhine. Buddhist nationalists protested, and the Rakhine parliament passed a resolution condemning the commission. But as this week’s events have shown, efforts to bring about a just and durable peace in Rakhine are more urgent than ever. + +This article appeared in the Print Edition with the headline: Sparks near tinder + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21708736-rohingya-are-fighting-back-new-fears-communal-violence-myanmar/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Jeopdae in jeopardy + +Korea cracks down on bribes in brothels + +A new law aims to curb gifts for officials + +Oct 15th 2016 | SEOUL | From the print edition + +Split the bill or go to jail + +A JOURNALIST, a public servant and a beggar walk into a bar, runs a South Korean joke. Who ends up paying for the drinks? The beggar. The quip illustrates the expectations surrounding jeopdae, a widespread form of business entertainment in South Korea in which firms lavish generous hospitality not only on clients but also on reporters and public officials. + +Weekend rounds of golf, posh dinners and nights on the town—from karaoke bars to hostess clubs called “room salons” that offer sex for money—have long been a staple of conducting business. Good relations with the bureaucracy are seen as essential to success in business, a legacy of South Korea’s state-centred economic development in the 1960s and 1970s. Local etiquette also creates a sense of obligation among relatives (however distant), former schoolmates or even people from the same home town, another source of bonhomie. Last year 591,000 companies spent 10 trillion won ($9 billion) on entertainment, according to the National Tax Service. + +But the distinction between courtesy and bribery can be fuzzy. Now the government wants to put a stop to jeopdae: last month it introduced strict new limits on the favours and benefits that can be asked for or given to 4m public officials, teachers and journalists (on the basis that their work too is in the public interest). The new anti-corruption law does away with the need to prove an explicit link between a gift and a favour, which had often stumped prosecutors. It considers some requests to officials, such as asking for help securing a licence or getting a fine waived, to be automatically criminal, even without any obvious inducement. Receiving any benefits, whether money, meals or memberships, is banned above set limits: up to 30,000 won for dining and 50,000 won for presents (up to 100,000 won at weddings and funerals). Both the giver and the receiver can be prosecuted. Gifts to a spouse are considered no different from those received directly. Fines and jail time await wrongdoers. + +Seven in ten South Koreans support the new rules, popularly known as the “Kim Young-ran act” after the former head of the state’s anti-corruption body, who drafted the new law in 2012. It had languished in parliament until the fatal overloading of a ferry in 2014 prompted outrage over cosy ties between businessmen and bureaucrats, which were thought to have contributed to the disaster. + +According to a government poll conducted in 2014, 70% of respondents said they had no trust in either the civil service or the courts. Though South Korea is Asia’s fourth-largest economy and a healthy democracy, it ranks 27th out of 34 rich countries in an index of perceived levels of corruption compiled by Transparency International, a pressure group. In January a former prime minister, who stepped down last year, was charged with accepting illegal campaign funds from a businessman; in August a chief editor at Chosun Ilbo, the country’s biggest daily newspaper, was fired over allegations that DSME, a local shipbuilder, had provided him with a luxury trip in return for positive coverage. + +The law amounts to a revolution in local business culture. Officials and journalists are being encouraged to “go Dutch” on bills, hitherto a cultural no-no; restaurants have devised special menus that squeak under the new spending limit. Lawyers are advising companies to exercise extreme caution until prosecutors set a few precedents, says an executive in charge of government and press relations at a large conglomerate. No one wants to be a test case. He has cancelled all dinners and golf outings with journalists or officials (green fees are typically 250,000 won a head) until the end of the year. + +At Hyundai Card, part of the Hyundai Group, screensavers quiz employees on the law, with pop-ups that do not go away until answered correctly. Staff must sign written pledges to abide by the act. CJ, a food and entertainment firm, has swapped all of its corporate credit cards for “clean” ones. These, introduced to the public sector in 2005, block payments at lavish or shady venues, such as nightclubs, massage parlours, casinos and room salons. + +But once the initial caution subsides, the law’s success will depend on public reporting, says Lee Sung-bo, formerly head of the anti-corruption agency. Already private institutes are offering courses to a fleet of amateur detectives, known as “ranparazzi”, to instruct them on hunting for discarded receipts and filming deviant officials with hidden cameras, for rewards of up to 200m won. + +The worry is that high-level bribes will continue, hidden by money-launderers. Chung Jae-won of Kookmin University in Seoul says that the law’s woolliness means it might apply differently to those in power. He notes that local media have reported on low-level graft involving lunches and gifts, but not the darker room-salon culture controlled by cartels “at the core of high-level bribery”. Outing the most toxic deals at big secretive firms will depend on insiders, not scrappy “ranparazzi”. + +Much will depend, too, on how police and prosecutors apply the law. They themselves are not immune to influence: in July a prosecutor was arrested on charges of receiving millions of dollars in shares and cash from the founder of Nexon, South Korea’s biggest online-gaming firm. + +This article appeared in the Print Edition with the headline: Trick or treat + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21708735-new-law-aims-curb-gifts-officials-korea-cracks-down-bribes-brothels/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Banyan + +Let not a billion tongues bloom + +Mandarin is becoming the world’s most commonly spoken language. It is contentious at home + +Oct 15th 2016 | From the print edition + + + +LAST year a parody video appeared in China making fun of an awful shampoo commercial featuring Jackie Chan. In both versions, the martial-arts star uses the word duang to describe bouncy hair; in the spoof he keeps repeating the syllable, before suggesting the product is fake. + +Thanks to the video, Mr Chan’s neologism (best translated as “boing”) set off a storm of online metalinguistic analysis, as David Moser describes in his monograph on the Chinese language, “A Billion Voices”. Which of the four tones in Mandarin should the new word be assigned? Was it even Mandarin, given that duang, though pronounceable in that language, is not part of its standard phonology? After all, Mr Chan is from Hong Kong, where Cantonese is the native tongue. And then how should it be written? Netizens took the two characters of Mr Chan’s stage name, Cheng (“become” or “accomplish”) and Long (“dragon”), and stacked them one above the other to create a new character. Brilliant. Yet it bred another problem. Two written forms exist in the Chinese-speaking world. In the 1950s the mainland adopted a “simplified” system (all things are relative). But in Hong Kong and Taiwan, the traditional, “complex” characters are still used. Before you could say duang, Mr Moser relates, a complex version of the character sprang up online, too. + +The episode reflected a struggle with language that has plagued Chinese reformers for over a century. When a republic was declared in 1912, there was no common spoken language in China. Yes, imperial officials had communicated in a tongue used by the elites in Beijing. But the rest of the vast country was linguistically fractured. Experts today identify half a dozen mutually unintelligible language groups spoken by Han Chinese, along with hundreds of dialects. (And that is before considering the languages of Tibetans, Uighurs, Mongols and many other non-Han peoples.) The lack of a common tongue has always seemed to threaten the daunting project of nation-building. Even to refer to different Chinese “languages” remains taboo—they must be “dialects”, or risk undermining the hallowed notion of “one China”. + +The first committee to create a standard Chinese was convened in 1913. Many meetings later the choice fell on the Beijing vernacular as the basis. After they seized power in 1949, Mao and his fellow guerrillas (despite hailing from far-flung regions) retained this form, calling it putonghua, or “common language”. His enemies in Taiwan did so too, even though the island’s own dialects are very different from Beijing’s. Faraway Singapore adopted it as one of its “mother tongues”. + +Mandarin is now challenging English as the most used language in the world. Yet for all that, it is artificial, with a built-by-committee feel—the vocabulary, grammar and even accent of the Beijing dialect have all been sanitised. Its spread across China is backed by coercion, its use enshrined in the constitution. In 2000 a law signed by the then-president, Jiang Zemin (a heavily accented speaker), linked putonghua to state sovereignty and socialist progress. Since the mid-1990s teachers as well as broadcasters have had to sit proficiency tests—presenters are fined for using the wrong tone. Even though Mao from Hunan and Deng Xiaoping from Sichuan had famously thick accents, edicts used to assert that actors should portray the Communist greats speaking putonghua (imagine Lyndon Johnson with the accent of an NPR presenter). The rules are now only a bit more relaxed. + +Yet when loopholes allow local dialects on air, such as in traditional opera, they are exploited. In the lucrative children’s market, “Tom and Jerry” was dubbed into the Shaanxi, Henan, Hubei and Shanghai dialects until banned—a cat-and-mouse game between local outlets and the regulator, as Mr Moser puts it. + +And while many local Chinese dialects and languages—Hakka, for instance—are losing ground in the face of a pro-putonghua policy, others have the scale and prestige to hold their own. In 2010 in Guangdong, which has 60m Cantonese speakers, thousands took to the streets over a proposal to cut Cantonese from broadcasts. In Shanghai popular comedians help stem the decline in the use of Shanghainese. And exploding social-media use gives flabby dialects needed exercise. Hip-hop is recorded in the Chongqing and Changsha tongues. Fans even got together to record “Let It Go”, a song from “Frozen”, a Disney blockbuster, in 25 dialects other than Mandarin. + +Some bureaucrats, recognising the tragedy of losing local variants, now urge their protection, along with endangered languages of minority ethnic groups. Last month an education-ministry official opined that learning Mandarin didn’t have to be at the expense of dialects, and that studying multiple languages could even be good for children’s development. + +A new rival? + +As for Mandarin itself, the once-artificial construct is now showing signs of becoming a living, protean thing—witness the fun around duang. That speaks to its success. But its shortfalls are also striking. The education ministry says that 30% of the population in 2014, or roughly 400m, still could not speak standardised Mandarin, while only a tenth of those who could spoke it properly. + +Meanwhile, Mandarin’s supremacy is still being challenged, above all in Hong Kong. There, resentment at the spreading use of putonghua is growing. Indeed, since protests two years ago—partly in defence of a local Hong Kong identity in the face of mainland rule—Jette Hansen Edwards of the Chinese University of Hong Kong reports a sharp increase in the number of Hong Kong people who believe the local form of English, jokingly called “Kongish”, is a unique variety. In other words Hong Kong English appears to be turning into another dialect spoken by Chinese—a means of asserting a separate identity from the mainland. As Mr Moser says, a shared language does not imply a shared vision. China’s quest for national unity has a lot further to go. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21708731-mandarin-becoming-worlds-most-commonly-spoken-language-it-contentious-home-let-not/print + + + + + +Previous Articles Sections Next + + + + + +China + + + + +Hong Kong politics: No swearing + +Dysfunctional constituencies: Too many seats for farmers + +A policeman’s lot: Not happy + + + + + +Articles Sections Next + +No swearing + +China is snubbed by Hong Kong legislators at their oath-taking + +New tensions loom in Hong Kong’s troubled politics + +Oct 15th 2016 | HONG KONG | From the print edition + + + +WATCHED from Beijing, where the national parliament never shows a glimmer of disloyalty to the Communist Party and its members usually rubber-stamp any bill, the swearing-in of Hong Kong’s recently chosen legislators on October 12th must have been unnerving. Even by the standards of Hong Kong’s far more querulous politics, the scene was striking. One legislator (pictured) draped himself in a banner saying “Hong Kong is not China” and crossed his fingers as he delivered the oath, which includes words that make clear the territory is part of it. Two others pronounced China in a derogatory way used by Japanese in imperial days. During the chaotic ceremony, the three were declared unqualified to take up their posts. Hong Kong’s legislature has entered a rocky new relationship with the central government that will fuel political tension in the territory. + +The authorities in Beijing knew that such displays were likely. In elections for the Legislative Council (usually called Legco) that were held on September 4th, six people gained seats in the 70-member body who belong to a new political force known as “localists”. They say Hong Kong people should be allowed to decide what sort of relationship the territory has with China (they had no say in the matter when Britain handed Hong Kong over to China in 1997). As the banner sported during the swearing-in suggested, some localists are sympathetic with the idea of independence. A handful of the newly elected legislators said they would reflect this during the ceremony, either by adjusting the words of the oath or through other actions. + +On the eve of the swearing-in, Hong Kong’s government (which sticks closely to the Communist Party’s line on such matters) issued an unprecedented warning that failure to take the oath in “a manner or form” consistent with the law would result in disqualification. It asked legislators to behave in an “orderly” way at the ceremony to allow Legco business to “commence without delay”. + +As they mean to go on + +With 40 seats in the new legislature, government supporters have a majority (helped by a voting system that skews the outcome in favour of pro-establishment politicians; see story on next page). But members of the pro-democracy minority, including the radical localists, clearly paid little heed to the last-minute attempt to keep them in line. One of them, Raymond Chan, tore up a copy of the warning before reading his oath in the harbour-front Legco building. The government, he said, had no right to interfere in Legco’s affairs. + +Despite his gesture, Mr Chan’s oath was accepted by the clerk. Others, too, managed to get away with making anti-government statements before or after their oaths. One called for universal suffrage. Another recalled the Umbrella Movement of 2014, when thousands of Hong Kong residents blocked streets in busy commercial areas for 11 weeks to press their demands for full democracy in the territory (China’s parliament had ruled that the public could choose Hong Kong’s leader, but only from among candidates vetted by a committee packed with the party’s supporters). “We will put up resistance. We are back,” he said, jabbing his fist in the air. Two of those who failed to pass muster were localists. One was Sixtus Leung, the legislator who crossed his fingers. Another was Yau Wai-ching, who, like Mr Leung, began her oath by swearing allegiance to the “Hong Kong nation”. Also disqualified was Edward Yiu, who swore in his oath to “fight for genuine universal suffrage”. + +It is not yet clear whether the three politicians will be barred permanently from taking up their seats. They were, however, excluded from the first item of business: electing Legco’s president. The winner was a pro-government candidate, Andrew Leung, but only after a stormy session in which legislators raised questions about his nationality and right to residency abroad (he has held British citizenship, but says he has given it up). Pro-democracy members tore up their ballots and left the chamber in protest. + +The government in Beijing made its views clear in editorials that were published the day before the ceremony in newspapers in Hong Kong that it controls: Wen Wei Po and Ta Kung Pao. Both warned that if court battles ensue between disbarred legislators and the government, and the courts cannot decide whether their oaths meet the requirements of Hong Kong’s constitution, then China’s parliament, the National People’s Congress, will adjudicate. Such an intervention would create a furore in Hong Kong, which prides itself on the independence of its judiciary. + +It may also play into the hands of the localists, who took 19% of the vote in September’s elections—largely thanks to support from young people worried by what they see as the mainland’s growing control over the territory. Localism barely existed as a political force until the Umbrella Movement ended, having failed to extract any promises of full democracy. + +Hong Kong’s courts will soon be grappling with other politically sensitive cases involving several people who were barred from standing in the recent elections because of their pro-independence views. At least one such challenge has already been filed. But the editorial in Ta Kung Pao said that no one should “underestimate the resolve and confidence of the central [authorities] in eliminating separatism”. The stage is set for growing antagonism between the party and the territory’s increasingly feisty politicians. + +This article appeared in the Print Edition with the headline: No swearing + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21708651-new-tensions-loom-hong-kongs-troubled-politics/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +A bizarre idiosyncrasy + +Hong Kong’s dysfunctional constituencies + +Oct 15th 2016 | From the print edition + + + +Of the 70 members of Hong Kong’s Legislative Council, half represent “functional constituencies”, composed mostly of local industries, professions, trade unions and other interest groups. These constituencies date back to 1985, when Hong Kong’s British rulers, in a fit of amateur sociology, decided to give political voice to “major sectors of the community [with] common social, economic and occupational interests”. + +They are not representative in any democratic sense. Nor can they even claim to reflect Hong Kong’s evolving economy. Agriculture and fisheries, for example, now accounts for less than 0.1% of Hong Kong’s GDP, but still has a seat. Labour provides over half of Hong Kong’s output if the professions are included, or over a third if not. (The best proxy for labour’s contribution is the share of national income paid in wages.) But it has only three seats. + +A more rational allocation of seats would reflect each constituency’s economic contribution, as measured by profits, wages or both. That is not easy to calculate, given Hong Kong’s coarse statistics, and such a distribution of political power would be no more democratic. But it would be a little less idiosyncratic. + +This article appeared in the Print Edition with the headline: Too many seats for farmers + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21708702-hong-kongs-dysfunctional-constituencies/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Law and order in China + +A policeman’s lot in a police state: not happy + +Chinese cops are overworked, underpaid and miserable + +Oct 15th 2016 | BEIJING | From the print edition + + + +IN THE southern province of Fujian last year, a 43-year-old police officer shot himself in the dormitory of the station where he worked. His suicide note said that he could no longer cope with the pressure of his job. Wang Kun, a 24-year-old rookie in the same province, understands what he went through. “What really gets me,” he says, “are the long hours and lack of sleep. People don’t understand what we do and often think we’re out to get them. The pressure is huge.” + +Such stresses are common across China, according to a new study by Suzanne Scoggins and Kevin O’Brien at the University of California, Berkeley. They argue that a policeman’s lot is “filled with uncertainty, hardship and feelings of powerlessness”. The authors conclude that one must “rethink the image” of the much-disliked police in China’s authoritarian state. + +Heavy caseloads, administrative drudgery and low pay are constant grievances. “At the paichusuo [local police station] I sometimes go 36 hours without rest,” says a junior officer in Shaanxi province in the west. “My girlfriend wishes I had never become a policeman.” Police are supposed to respond to every request (in party-speak they are the “people’s police”). One who worked in a rural part of Hunan province in the south says he has looked for stray cows in the middle of the night and helped people who had forgotten their online passwords. + +As cops move up the pecking order, their gripes change. A supervisor in Hunan grumbles about interference by political appointees. “We know what needs to be changed but [the leaders] don’t listen. They have no experience.” An officer in Shaanxi complains that colleagues over 50 find it hard to get training. “We old guys get left behind.” Another officer in Hebei, a province surrounding Beijing, recounts police lore about the old days when citizens were more in awe of the law. “In the 1980s,” he says, “one officer could catch ten bad guys by walking into a restaurant and yelling ‘Stop!’ These days it takes ten of us to catch a single criminal.” + +Low morale has consequences. Like disgruntled workers everywhere, China’s police goof off. Patrol cars filled with somnolent officers are a common sight. Many police are also corrupt. Few respondents in the survey were willing to talk about this. But one detective described some of the gifts he took, only for his wife to protest: “His colleagues accepted far more! We wouldn’t have been so poor… if he had been truly corrupt.” + +China’s public-security services are not among the world’s more transparent organisations. The researchers nevertheless managed to study them through long interviews with 31 serving or newly retired police. This is a tiny sample but the method enabled the researchers to drill down into the officers’ daily lives. Their conclusions are consistent with research by Chinese academics. A study last year in the Journal of Shandong Police College found that 16% of officers in the province showed signs of depression or other mental-health problems. + +China’s domestic security services are vast. There are 2m policemen and women and their esprit de corps matters. They are still capable of suppressing political dissent when the party orders them to. But the party also needs day-to-day maintenance of law and order. An aggrieved, overburdened police force does not seem the best way of ensuring this. Unhappy police make for an unhappy police state. + +This article appeared in the Print Edition with the headline: Not happy + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21708700-chinese-cops-are-overworked-underpaid-and-miserable-policemans-lot-police-state-not-happy/print + + + + + +Previous Articles Sections Next + + + + + +Middle East and Africa + + + + +Ethiopia: The downside of authoritarian development + +Agriculture and climate: Fertile discussion + +Yemen: Deaths at a funeral + +South Africa: Rolling the rand + +Morocco’s election: More of the same? + +The rise of Syria’s White Helmets: Local heroes + + + + + +Articles Sections Next + +The downside of authoritarian development + +Ethiopia cracks down on protest + +Once a darling of investors and development economists, repressive Ethiopia is sliding towards chaos + +Oct 15th 2016 | From the print edition + + + +IT WAS meant to have been a time for celebration. When on October 5th the Ethiopian government unveiled the country’s new $3.4 billion railway line connecting the capital, Addis Ababa, to Djibouti, on the Red Sea, it was intended to be a shiny advertisement for the government’s ambitious strategy for development and infrastructure: state-led, Chinese-backed, with a large dollop of public cash. But instead foreign dignitaries found themselves in a country on edge. + +Just three days earlier, a stampede at a religious festival in Bishoftu, a town south of the capital, had resulted in at least 52 deaths. Mass protests followed. Opposition leaders blamed the fatalities on federal security forces that arrived to police anti-government demonstrations accompanying the event. Some called the incident a “massacre”, claiming far higher numbers of dead than officials admitted. Unrest billowed across the country. + +On October 8th, a week after the tragedy at Bishoftu, the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF) announced a six-month state of emergency, the first of its kind since the former rebel movement seized power in 1991. The trigger was not clear: violent clashes between police and armed gangs, and attacks on foreign-owned companies, had been flaring across the country for several days (and have occurred sporadically for months) but seemed to have plateaued by the weekend. On October 4th an American woman was killed while travelling outside the capital. Protesters have blockaded several roads leading in and out. + + + +One factor in the government’s decision was a spate of attacks on holiday lodges at Lake Langano, and on Turkish textile factories in Sebeta, both in the restive Oromia region south of the capital, on October 5th. The attackers were well-organised and armed, some of them reportedly mounted on motorbikes. These acts, officials suggest, were the final straw. + +The government is rattled by the prospect of capital flight. An American-owned flower farm recently pulled out, and it fears others may follow. After almost a week of silence, the state-of-emergency law was a belated attempt to reassure foreign investors, who have hitherto been impressed by the economy’s rapid growth, that the government has security under control. + +A calm of sorts now prevails. On October 10th parliament, which since last year’s elections has been entirely populated by members of the EPRDF and its allies, predictably rubber-stamped the decree, which provides for sweeping powers of arrest and a draconian ban on free assembly and expression. The prime minister, Hailemariam Desalegn, was confident enough to attend to diplomatic pleasantries. Germany’s chancellor, Angela Merkel, arrived in the capital the following day to talk about refugee flows from the region. Mobile internet access, which the government blocked in order to disrupt the protests, flickers occasionally and feebly back to life. The hustle and bustle of Addis Ababa continue as before, though an uneasy silence has settled across towns like Bahir Dar in the Amhara region where strikes have emptied the streets for weeks. In Addis Ababa, at least, a mood of resignation has taken hold. Better dictatorship than civil war, residents shrug. + +Still, the future is troubling. Over 500 people have been killed since last November, and tens of thousands have been detained. What began nearly a year ago as an isolated incidence of popular mobilisation among the Oromo people, who make up at least a third of the population and opposed a since-shelved plan to expand Addis Ababa into their farmland, has spread. It is now a nationwide revolt against the authoritarianism of the EPRDF and the perceived favouritism shown to a capital whose breakneck development appears to be leaving the rest of the country behind. + + + +The young are frustrated. They feel that growth has yet to bring the broader prosperity promised by the government in return for their political obedience. Thanks in large part to foreign aid, expansive public spending supported by Chinese loans and an uptick (from a very low base) in foreign investment, Ethiopia was Africa’s fastest growing economy in 2015—a remarkable feat for a still largely agrarian country. But the expectations of an increasingly educated population have grown even faster. Despite big strides, a third of Ethiopians, who now number nearly 100m, still live on less than $1.90 a day. + +The Oromos are not the only ones with grievances. Many others have been driven off their land to make way for commercial farms and factories. And the Amharans, who have historically been Ethiopia’s dominant ethnic group, resent the leadership of the much smaller Tigrayan group (who make up around 6% of the population) at the heart of the ruling EPRDF. The comparative quiescence of Addis Ababa’s citizens has further fuelled resentment. Angry farmers in parts of the country have been choking the movement of goods towards the city. The opposition calls for political prisoners (who are reckoned to number in the thousands) to be freed, but the government is in no mood to oblige. However, on October 10th the president promised to introduce some form of proportional representation in elections, which would allow all groups a share of power. + +Tinkering is unlikely to be enough. The EPRDF has weathered storms before. Civil strife after disputed elections in 2005 resulted in at least 193 deaths and many thousands of arrests. This time Ethiopians are calling just as fiercely for regime change, and not just reform. Ethiopia, until recently a darling of Western donors and security hawks alike, is edging closer to the brink. + +This article appeared in the Print Edition with the headline: The downside of authoritarian development + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21708685-once-darling-investors-and-development-economists-repressive-ethiopia/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Fertile discussion + +World climate talks address agriculture + +More productive African farms could help both people and planet + +Oct 15th 2016 | MARRAKESH | From the print edition + +Organic, locally sourced and woefully inefficient + +SINCE the 1960s farm production has risen fourfold in Africa. But the continent still lags far behind the gains seen in South America and Asia. The extra food has appeared largely because more land has been planted or grazed, rather than because crop yields have improved. Instead, poor farming methods progressively deplete nutrients from soils; almost all arable land in Africa lacks irrigation, for example. This is a particular problem in a continent whose population is set to double by 2050 and which faces regular droughts, floods and heatwaves. + +The world is already 1°C warmer than it was in pre-industrial times. As it heats further, weather cycles are set to speed up, leaving wet parts of the world wetter, and dry parts drier. At either end of the scale, extreme weather events will probably intensify. By 2050, even if temperature rise is successfully limited to 2°C, crop yields could slump by a fifth. The costs of climate change already come each year to 1.5% of the continent’s GDP, according to the European Commission, and adapting to it will cost another 3% each year until 2030. This is in spite of the fact that, overall, Africa is responsible for just 4% of global emissions annually. + +Morocco is a prime place to discuss such issues. Not only is it hosting the next round of UN climate negotiations in November, it is also one of the world’s largest producers of phosphorus (a raw material used to make fertiliser). This is particularly important given that according to the UN’s Food and Agriculture Organisation, 124kg of artificial fertiliser is used worldwide per hectare of farmland on average each year, while in Africa the amount used is just 15kg. Getting hold of the stuff is a challenge throughout the continent, especially when crooked officials pocket subsidies for it. But high transport costs along potholed roads also help make fertiliser up to 50% more expensive in Tanzania and 80% more expensive in Mali than in Thailand, according to Amit Roy, formerly of the International Fertiliser Development Centre, an American charity which supports better farming practices. + +Fertiliser is fantastically important. Boosting the productivity of Africa’s lands is not only necessary for feeding larger populations, but also a possible means of reducing emissions. Currently vast areas are cleared for new fields because too little grows in existing ones. But reducing deforestation in Africa by just a tenth would be equivalent to cutting a year’s worth of Brazil’s emissions, says Mostafa Terrab, head of the OCP Group, a huge Moroccan phosphate firm. (Cynics may well say that he has an interest in encouraging more people to buy fertiliser.) His company is dedicating a 1m-tonne fertiliser unit specifically to African customers. + +Well-nourished soils are better at absorbing carbon dioxide rather than allowing it to enter the atmosphere. But the continent’s over-grazed, over-used soil currently means Africa only stores 175 gigatonnes of carbon each year of the 1,500 gigatonnes stored in the world’s soils. Smarter farming could change all that. But as is so often the case in Africa, the road to modernisation is full of potholes. + +This article appeared in the Print Edition with the headline: Fertile discussion + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21708691-more-productive-african-farms-could-help-both-people-and-planet-world-climate/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Yemen’s “forgotten war” + +Deaths at a Yemen funeral + +The carnage in Yemen is at last attracting the world’s attention + +Oct 15th 2016 | CAIRO | From the print edition + + + +OVER 9,000 people have died in Yemen since Shia rebels, the Houthis, forced the government into exile, prompting a Saudi-led military intervention in March 2015. Some 3m people have been displaced. Cholera has struck Sana’a, the capital, and the threat of famine looms. Yet the suffering in the Arab world’s poorest country has been overshadowed by the far bloodier conflict in Syria. + +That changed on October 8th, when two missiles, probably from Saudi aircraft, tore through a crowded funeral hall in Sana’a, killing more than 140 mourners and wounding over 500. Even for Yemen, a country accustomed to violence, the carnage was shocking. The attack has finally drawn attention to the “forgotten war”, which has intensified since peace talks broke down in August. It may also alter the course of the deadlocked conflict. + + + +Among the dead were members of several powerful tribes from northern Yemen, including supporters of peace talks such as Abdulqader Hilal, the mayor of Sana’a. Survivors now speak of revenge. Analysts fear they will line up with the Houthis, who have already stepped up their attacks on Saudi Arabia—and, perhaps, America. On two occasions this week missiles were fired from Houthi-held territory at an American destroyer in the Bab al-Mandab strait, though none hit the ship. The Houthis deny launching the attack, but on October 12th America struck back at Houthi radar sites. + +Officials in Washington have long worried that America may be implicated in Saudi atrocities. It has backed the bombing campaign, providing targeting advice and refuelling sorties that have allowed Saudi jets to linger over the war zone. But America is now reviewing that support, which was offered, in large part, to allay the kingdom’s concerns over a nuclear deal with Iran, the main backer of the Houthis. + +The commitment has proved larger than expected for America. A bombing campaign that was meant to be short and defensive in nature is now in its 20th month. Saudi-led air strikes were responsible for 60% of civilian deaths in the year starting in July 2015, according to the UN. In total over 4,000 civilians have died in the fighting. This is the result of ineptitude, not malice, say American officials. But they have already pulled back some support. + +The Saudis have struck schools, hospitals and critical infrastructure, despite using precision-guided bombs made in America. They blame the Houthis for fighting near civilians. The UN has also accused the group of using human shields. But a Dutch proposal to set up an independent UN inquiry was reportedly blocked by Britain, an ally of Saudi Arabia, in September. + +Some in America and Britain propose cutting off arms sales to Saudi Arabia. Others want them to use their leverage to push harder for peace. John Kerry, America’s secretary of state, has called for an immediate ceasefire. But he has struggled to restart peace talks. Abd-Rabbo Mansour Hadi, the unpopular president in exile, seems reluctant to give up his claim to power. The Houthis have balked at demands that they cede their weapons and territory before a unity government is formed. + +Earlier this month, the Houthis announced the creation of a government of “national salvation” that is meant to rival the administration of Mr Hadi, which has international recognition. In his own assertion of authority, Mr Hadi has moved the country’s central bank from Sana’a to the southern city of Aden, where his government has a foothold. Some analysts fear, however, that the move will disrupt the bank’s activities and exacerbate the country’s economic crisis. + +“Surely enough is enough,” said Stephen O’Brien, the UN’s emergency relief co-ordinator, in response to the attack on the funeral. But new reports of civilian deaths are coming in from the central city of Taiz, under siege by the Houthis and forces loyal to their ally, Ali Abdullah Saleh, a former dictator. Neither side has exhausted its capacity to create misery. + +This article appeared in the Print Edition with the headline: Deaths at a funeral + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21708695-carnage-yemen-last-attracting-worlds-attention-deaths-yemen/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +A critic of Jacob Zuma faces criminal charges + +South Africa’s finance minister under fire + +A politically motivated attack roils the rand + +Oct 15th 2016 | JOHANNESBURG | From the print edition + +SOUTH AFRICA’S currency, the rand, is a volatile one. It is prone to sharp drops when its finance ministry, responsible for the National Treasury, comes under attack from President Jacob Zuma or his cronies. This week it plummeted again: Pravin Gordhan, the respected finance minister and guardian of the public purse, is being hit with dubious charges of criminal misconduct. This latest twist in a protracted struggle over control of the Treasury is playing out against a fractious backdrop. South Africa’s economy is limping, violent protests have closed many universities and the ruling African National Congress (ANC) appears paralysed by factional disputes. + +The case against Mr Gordhan appears thin. He is facing fraud charges related to the approval of an early retirement package for an ex-colleague. The investigation was handled by the Hawks, an elite police unit tasked with handling “priority crime”, which is seen as close to Mr Zuma. The charges were announced by the country’s chief prosecutor at a press conference attended by clapping supporters. Mr Gordhan faces another investigation by the Hawks, too: into his role, when he was head of the South African Revenue Service, in setting up a surveillance unit which asked too many awkward questions. + +Mr Gordhan questions the timing of the charges, ahead of a mid-term budget due October 26th, and just after a trip to America to woo investors. Analysts now expect a cabinet reshuffle that will see him ousted, a move that would cause further turbulence. “If President Zuma does succeed in removing another respected finance minister, we expect that the rand will continue to fall sharply,” says John Ashbourne of Capital Economics, a consultancy. + +Mr Zuma too is on his heels. The country’s anti-corruption watchdog is due to deliver a preliminary report on October 14th into whether the Gupta family, wealthy friends of Mr Zuma, have had undue influence on government appointments and contracts. The president is also facing renewed charges related to a 1999 arms deal. He is currently appealing a court decision that found the dropping of 783 counts of fraud, racketeering and corruption shortly before 2009 elections was “irrational”. + +Some top ANC officials have leapt to Mr Gordhan’s defence. The party’s chief whip called him “an honest man”. Opposition parties have expressed universal support, with the leftist Economic Freedom Fighters instructing its members to “occupy the streets” when Mr Gordhan appears in court in November. + +This article appeared in the Print Edition with the headline: Rolling the rand + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21708692-politically-motivated-attack-roils-rand-south-africas-finance-minister-under/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +More of the same? + +Elections in Morocco + +The challenge to provide more modernity and authenticity + +Oct 15th 2016 | RABAT | From the print edition + + + +AT HIS final rally before Moroccans went to the polls on October 7th, Abdelilah Benkirane, the incumbent prime minister, took a moment from lauding the economy to attack his rivals. The Authenticity and Modernity Party (PAM) were bandits, he said, and drug dealers. He questioned whether they loved their children and taunted the monarchy-controlled press who’d backed them from the start. + +He had good reasons to be upset. Mr Benkirane’s ruling Justice and Development Party (PJD) claims to have encountered big obstacles in the run up to the election. The press was plainly skewed in favour of the opposition while the king himself seemed to many to be pulling strings in an election he is supposed, as a constitutional monarch, to stay out of. The Ministry of the Interior, run by a close friend of the king’s, was also forced to deny it had organised an anti-PJD rally. + +Despite the whiff of royal electioneering, the PJD found its way to victory, increasing its seats in parliament from 107 to 125. Driss Ksikes, a local journalist, says the prime minister has so far failed to take full advantage of powers ceded to parliament in the wake of 2011’s pro-democracy protests. Now “he could be more confident to use the authority already given,” he says. + +As last time, neither side has a majority. The crucial question now is who the PJD will deal with. In 2011 they drew on the support of eight other parties, shutting out the PAM. This time, the PAM has eaten away at those coalition partners and moved from fourth- to second-largest party. But the party’s secretary-general, Ilyas El Omari, ruled out entering government with the PJD. Mr Benkirane, for his part, had already dismissed the idea. + +The PJD may find it difficult to form a new coalition. One of its former partners, the conservative Istiqlal party, took 46 seats in the election. But it fell out with the PJD in 2013 over the government’s economic reforms. Another former partner, the centre-right National Rally of Independence, won 37 seats, but it has said it would not link up with the Islamists again. Other parties that won seats are small and politically divided. + +The turnout—reported at 43%—was worst in cities, with the young and educated especially difficult to motivate. Outside the central train station in Rabat, Bilal, an urbane 32-year-old, said he hadn’t voted, “because I don’t believe it would change anything”. As with many young people, he supported the 2011 protests; but the momentum towards democracy which followed the Arab Spring has been replaced by disenfranchisement and a reluctance on the part of the government to challenge the monarchy. Now that it is (probably) back in power, that could just change. “This is a fight for democracy,” a PJD minister told The Economist on the night before the election. Now the voting is over, it remains to be seen if it stays that way. + +This article appeared in the Print Edition with the headline: More of the same? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21708688-challenge-provide-more-modernity-and-authenticity-elections-morocco/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Syria’s heroes + +The rise of Syria’s White Helmets + +Amid the chaos and destruction of the ever bloodier civil war, volunteer rescuers go where few dare to tread + +Oct 15th 2016 | GAZIANTEP | From the print edition + +Noble work + +AMMAR AL-SELMO no longer bothers to identify the dead bodies he pulls from the rubble of Aleppo. There are simply too many. The dead are given numbers rather than names, and buried in trenches in the city’s parks; often ten to a grave. + +Sometimes, as he searches for survivors amid the twisted metal and concrete slabs of buildings destroyed by air strikes, Mr Selmo finds the severed hand of a child. At night, he wonders who the hands belonged to; which family lost a son or daughter that day. + +“The worst part of my job is watching people die in the ambulances,” the 32-year-old says, interviewed in Gaziantep in Turkey. “They just hold me. They clutch onto me. It is their last breath and they grab me by the hair or by the shirt as if doing this will save them from death.” + +A teacher before the war, Mr Selmo is now the head of Syria’s civil-defence unit in the rebel-held half of Aleppo. His team of volunteers is the first to respond when bombs flatten buildings, rushing into the thick clouds of fine white dust to dig through the rubble for survivors. + +Operating across rebel-held parts of the country, Syria’s civil-defence team has grown from small, ragtag bands of untrained volunteers into a formidable search-and-rescue force. The group has rescued more than 60,000 people since 2014, when it began to keep count. Known as the White Helmets for the colour of the hard hats they wear, the rescue workers were nominated for this year’s Nobel Peace Prize, though they did not win. + +The work is lethal. Roughly one in six volunteers has been killed or badly wounded, many by “double-tap” Russian and Syrian strikes on the same site as they search for bodies. Like most of the 3,000-strong team, many of the casualties were carpenters, electricians and plumbers before the war broke out, ordinary men pulled onto the front lines of a savage conflict by a desire to save lives. “The feeling of helping people cannot be described with words. When you see a kid or an old man still alive under the wreckage and looking into your eyes with a look of hope, asking you to help him, it’s an amazing feeling,” said Abdo al-Abtar, a civil-defence worker in Aleppo contacted by phone. + +The need for an urban search-and-rescue team became apparent in 2012 when Syrian aircraft began to drop bombs on civilian buildings in opposition-held parts of the country. Following an air strike, entire neighbourhoods would swarm over the rubble to look for survivors, often digging with their bare hands. Others hacked at the concrete with pick axes, sometimes killing those still alive. + +As the bombing intensified, small teams of volunteers began to emerge, first in Aleppo and then in other parts of the country. But the turning point came in 2013, when they began to receive their first support from outside the country as part of Britain and America’s package of non-lethal aid to the opposition. + +Groups of volunteers were sent to Turkey, where an international contracting firm, ARK, had set up a training centre modelled on parts of downtown Aleppo. Based on manuals written in 1947 that describe how to save Londoners from air raids, the training focused on basic search-and-rescue techniques. The teams received simple equipment at first—battery-powered hand tools and hand-cranked air-raid sirens. Seismic listening devices, ambulances, fire engines and hydraulic tools followed as funding increased. + +The success of the White Helmets has drawn the fury of the regime. Just days after the collapse of a short-lived ceasefire last month, Syrian and Russian air strikes destroyed three of the group’s four centres in eastern Aleppo in a single day. Many see in the White Helmets a long-term solution to the country’s destruction; a highly motivated and well-trained civilian force that can be expanded to rebuild the country once the war ends. Such thoughts are far from the minds of exhausted rescue workers pulling out the bodies the bombing leaves behind. “Before the war I hated funerals, I hated the sight of blood,” said Mr Selmo. “Now I feel numb. I have become iron. The killing and the massacres have become normal. We have all become ill. We need an asylum for all of us. When this is over I will go home and sleep forever.” + +This article appeared in the Print Edition with the headline: Local heroes + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21708515-amid-chaos-and-destruction-ever-bloodier-civil-war-volunteer-rescuers/print + + + + + +Previous Articles Sections Next + + + + + +Europe + + + + +Poland’s populist government: Ladies in black + +Refugees and sex: Belgian girls aren’t easy + +German business and Brexit: BMW won’t save Britain + +Charlemagne: Two cheers for hypocrisy + + + + + +Articles Sections Next + +Poland’s populist government + +Ladies in black + +The government loses a battle, but remains popular and illiberal + +Oct 15th 2016 | AUGUSTOW AND WARSAW | From the print edition + + + +THE Law and Justice (PiS) party, which has governed Poland for the past year, does not scare easily. But the tens of thousands of black-clad women who filled city centres across the country on October 3rd seem to have shaken it. They were protesting against a bill to tighten Poland’s restrictions on abortion, which is already illegal in most cases. The bill would have banned it even in cases of rape and incest (but not when needed to save the mother’s life). + +Lots of PiS MPs initially backed it. However, in the face of this so-called “black protest”, PiS retreated. On October 6th Jaroslaw Kaczynski, the party’s leader, who is the country’s most powerful figure despite having no government post, spoke of an “enormous misunderstanding”. Many of the PiS deputies who had earlier supported the ban abruptly changed their minds, voting it down. + +Ever since coming to power in November, Poland’s government has been drawing fire at home and abroad. Warsaw has seen marches by tens of thousands of protesters against the government’s efforts to limit the powers of the constitutional tribunal and pack it with PiS supporters. Brussels is angry about the tribunal, too: in July the European Commission, in an unprecedented move, said the government’s actions threatened the rule of law and gave Poland until the end of October to reverse them or risk losing its vote in the EU’s Council of Ministers. + +The abortion bill marked the first time the government had backed down. But there is less to this defeat than meets the eye. Making abortion nearly impossible was never a priority for PiS. (The bill was proposed by Catholic groups, not party leaders.) So the retreat was not a sign of weakness. Far from it: outside the big cities, PiS’s nationalism and anti-elitism are popular. The party is likely to remain in power despite all the controversies—or perhaps because of them. + +From teacher’s pet to class clown + +Poland is one of the EU’s biggest success stories. Since it joined the club in 2004 its GDP per person has almost doubled. But not everyone has benefited equally. Warsaw is full of hipster cafes and gleaming office blocks, but elsewhere wages are sluggish and good jobs scarce. + +“Poland is a bit like Italy,” says Mateusz Morawiecki, the deputy prime minister, with “islands of prosperity” between depressed areas. Augustow, a faded town in the north-east, is full of “pensioners and [people on] benefits”, says 43-year-old Agnieszka Witkowska, who lives in Germany but occasionally returns to her hometown. She cannot imagine moving back; compared with western Europe, she feels, wages in Augustow have barely budged. + +PiS has capitalised on this divide. Like Britain’s UK Independence Party, it appeals to those who have been “left behind”, says Benjamin Stanley of Warsaw’s University of Social Sciences and Humanities. In last year’s elections PiS came first among all age groups: although it won only 38% of the vote, it has a majority in parliament. Its supporters are disillusioned with mainstream politics and tend to be rural, less educated and over 50 years old. + +Since coming to power, PiS has tried to please its base. Its main initiative is the “500-plus” scheme, a tax-free handout of 500 zlotys ($128) per month for each family’s second and subsequent child. For many, this is a hefty sum. Andrzej, a 61-year-old shopkeeper in the town of Sokolka, loves it. “The previous government did not give anything,” he complains. + +Mr Kaczynski has accused that government, led by the centre-right Civic Platform party, of being too friendly to Germany and Russia, Poland’s historic enemies. More recently he has threatened to oppose the re-election of Donald Tusk, the former Civic Platform prime minister, for a second term as president of the European Council. (His reasons are tied up with the crackpot theory that Civic Platform helped Russia conceal the truth about an aeroplane crash near Smolensk in 2010 that killed Mr Kaczynski’s twin brother Lech, who was Poland’s president at the time.) + +Worse, Mr Kaczynski clings to the idea that Poland’s ex-Communists secretly ran the country until last year. In February the government-affiliated institution in charge of Poland’s Soviet-era archives eagerly released evidence that Lech Walesa, a former president who led the Solidarity movement which brought down Communism, had worked as an informer for the secret police. The aim is to discredit the heroes of the post-communist liberal transition. The government promotes a “nationalistic, populistic counter-revolution”, says Eugeniusz Smolar, a foreign-policy analyst. + +Most worrying are the changes to the constitutional tribunal. In December, PiS sacked five judges whom Civic Platform had rushed to appoint before leaving power, replacing them with its own partisans. It also changed the law to require a two-thirds majority for all verdicts, making it hard to overturn PiS legislation. The tribunal itself ruled the changes unconstitutional, but the government has subverted the court’s verdict by not publishing it. According to Rafal Trzaskowski, a Civic Platform politician, the government is attacking the institutions that “made the difference between Poland and Kazakhstan”. + +PiS’s social-spending hikes have sparked fears that Poland may breach the EU’s 3% deficit limit next year. The 500-plus policy will cost 22 billion zlotys next year, or about 1.2% of GDP. A tax on supermarkets (mostly foreign-owned ones) to help pay for the programme was ruled illegal by the European Commission in September. + +The government also seems ill-prepared for the coming demographic crunch. Poland expects to lose 40% of its working-age population by 2060, the largest drop in the rich world (see chart). This problem will be aggravated if the 500-plus policy encourages women not to work. (Their labour-force participation rate is 13.5 percentage points lower than men’s.) A government proposal to lower the retirement age would make matters worse. Among the ratings agencies, Standard and Poor’s has downgraded Poland’s credit rating, while Moody’s has it on negative watch. + + + +Despite their unpopularity with foreign analysts and Warsaw liberals, PiS look likely to hold on to power for some time. The opposition is scattered. Over eight years in power, Civic Platform developed a reputation for sleaze. PiS supporters appear not to care about the controversy the government creates: the party is ahead of its rivals in the polls with 30% support, compared with 24% for the liberal Nowoczesna party and just 16% for Civic Platform. + +The government’s mix of nationalism and free money is wildly popular. Only Nowoczesna has dared oppose the 500-plus policy; Civic Platform wants to make it more generous. The debate over the benefit brings out a conflict between “two different Polands”, says Adam Bielan, a PiS politician. Educated urbanites who stage protests over constitutional issues are too few to sustain a party. Everyone must compete for the votes of average workers in places like Augustow. Currently, only one party can. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21708689-government-loses-battle-remains-popular-and-illiberal-ladies-black/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Sex education + +Europe is trying to teach its gender norms to refugees + +This turns out to be more complicated than it sounds + +Oct 15th 2016 | BROECHEM | From the print edition + + + +FEW men can roll a condom onto a plastic penis with a straight face, and Ali and Ahmadzai are no exceptions. The two Afghan asylum-seekers and ten other men are taking a sex-education class at the refugee centre where they live in the Flemish town of Broechem, and the giggles are flying. “In Logar, where I’m from, you don’t talk with girls,” explains Ahmadzai. If you do, the Taliban “kill you with stones”. Belgium has been a bit of a culture shock, though he still doesn’t dare talk to girls: “It is good just looking at them.” + +Ever since the mass sexual assaults in Cologne last New Year’s Eve, in which groups of mainly North African men groped, robbed or raped hundreds of women, European governments have worried that the chauvinist values of some of the immigrants they are absorbing could lead to trouble. Hence the classes at Broechem, which cover sexual health and respect for women. For now they are voluntary, but Belgium plans to make sex education mandatory for all asylum-seekers by next year, as it already is in Norway. In Germany, too, the government decided in July to shift the focus of its integration courses from language learning to cultural values, including equality of the sexes. + +One priority is preventing rape. Thomas Demyttenaere of Sensoa, a Belgian organisation that is designing a course on sexually transgressive behaviour, says he has never met a refugee who said it was acceptable to force someone to have sex. But understandings of consent can differ: “In a strong patriarchal society,” be it Muslim, Christian or Hindu, men “often feel they are entitled to have aggressive behaviour towards women.” The swarming sexual attacks seen in Cologne, reminiscent of similar behaviour in north African countries, have Europeans especially worried. Linda Hagen of Hero Norway, an organisation that manages 40% of that country’s refugee centres, says one goal of sex education courses there is simply to teach refugees that if they try anything like that in Scandinavia, “they will get caught.” + +At the same time, the courses may be just as necessary for the refugees’ own integration in European societies as they are to protect the women with whom they interact. Staff at the Broechem centre regularly receive complaints from local parents that asylum applicants are harassing their daughters. New female staff are also frequently hit upon. Carla Pannemans, who has been teaching sex education to refugees there for ten years, says many simply do not understand local codes of behaviour; when they try to talk to girls, “people will see it as aggressive.” + +Teaching sexual norms is tricky, though, particularly when European societies do not agree on what those norms should be. In Norway, Ms Hagen’s course uses photos of pop stars to explain that styles of dress, however scanty, are expressions of individual freedom rather than signals of availability, and must be respected. At the same time, bizarrely, it coaches male refugees to protect their reputations by not seeking girls who are “easy”. Meanwhile in Wallonia, the French-speaking region of Belgium, an information sheet used in integration classes cites “gallantry” as an ideal: men should open the door for women, carry their heavy bags and offer to help them put on their coats. Plenty of feminists, in Belgium or elsewhere in Europe, would find this patronising. + +Most of the refugees who receive the classes seem to welcome them. Many have never had any formal sex education: of the 12 men in the class at Broechem, most of whom hail from African or Middle Eastern countries, only one, an Albanian refugee, said he received any form of sex education at school. Abdullah Sameer, a 21-year-old refugee from Baghdad who lives in the Broechem centre, calls the courses “perfect”. “Everybody should respect women,” he says—though he considers himself among the few enlightened men in his country. Most people, he says, “need some classes”. + +It is not clear to what extent European fears of sexual assault by migrants are founded in reality. There have been no more attacks of the magnitude of those in Cologne. A report in February by Germany’s federal criminal police, the Bundeskriminalamt, showed that refugees were responsible for only 3.6% of the sexual offences in Germany in 2015. Many of the refugees are victims of rape rather than perpetrators: female refugees face sexual abuse at the hands of smugglers and even reception-centre staff, according to a report by Amnesty International. + +Indeed, while Europeans may feel anxious that migrants are importing Middle Eastern values, the migrants are having at least as hard a time adjusting to European ones. Mr Demyttenaere says many of the migrants he knows find Belgian sexual morals “shocking”. “On the one hand, there are adverts with half-naked women,” he says. “On the other, it is very hard to ask women out. They find this confusing.” Welcome to the West. + +This article appeared in the Print Edition with the headline: Belgian girls aren’t easy + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21708722-turns-out-be-more-complicated-it-sounds-europe-trying-teach-its-gender-norms/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The quest for Brexit allies + +German business lobbyists will not stop tariffs against Britain + +Unfortunately for Brexiteers, BMW cannot tell Angela Merkel what to do + +Oct 15th 2016 | BERLIN | From the print edition + + + +MANY Britons worried about a “hard Brexit” are clinging to a reassuring thought. Germany, the most important country in Europe, trades so much with Britain that it would suffer from a messy divorce between Britain and the European Union. So even if countries such as France want to teach Britain a lesson, the theory goes, Germany’s carmakers will use their vast influence to sway Angela Merkel, the German chancellor, to go easy on Britain in its coming negotiations with the EU. + +The first part of this thesis is true. Britain is Germany’s fifth-largest trading partner and its third-largest export market (after America and France). Some 750,000 German jobs depend on those exports, and Germany’s trade surplus with Britain is second only to the one it runs with America. Every fifth car made in Germany is sold in Britain, as are many German chemicals, machines and electronics. Britain is the biggest foreign investor in Germany, and some 2,500 German firms have subsidiaries in Britain, employing about 400,000 people there. + +But the rest of the theory gets progressively weaker. Start with the notion that industrialists call the shots in Germany. They were certainly influential between 1998 and 2005, when the chancellor was Gerhard Schröder, nicknamed Genosse der Bosse (“fat cats’ comrade”). His signature economic reform, a labour-market liberalisation called “Agenda 2010”, was conceived in co-operation with businesses. + +Under Mrs Merkel, however, “our influence has been shrinking,” says Lutz Goebel, president of the lobby representing the family-owned firms which many people think are the backbone of Germany’s economy. Business lobbies have lost many skirmishes in recent years. To their horror, the government has enacted a minimum wage, early retirement at 63 for certain workers, quotas for women on corporate boards and more. Business folk did win exemptions for about 2,000 energy-intensive manufacturers from paying the big surcharges that fund Germany’s subsidies for renewable energy. But it could not prevent the country’s reckless decision in 2011 to end the use of nuclear power. + +Moreover, German business associations accept what they call “the primacy of politics”: that national priorities set by government can trump their own. A recent example was Mrs Merkel’s drive to convince the EU to impose sanctions on Russia after its invasion of Ukraine. A pro-Russian lobby called the Ost-Ausschuss (Committee on Eastern Europe) opposed the sanctions. But the Federation of German Industry, an affiliated but much larger lobby, declared that it accepted them as necessary in the long-term interest of maintaining the international order. That ended the controversy. + +Brexit raises similar questions of principle, notes Volker Treier, the head of foreign trade for the Association of German Chambers of Commerce and Industry, of which almost all German firms are members. “Two hearts are beating in our breast,” he says. One worries about the economic consequences of Britain leaving the single market. The other worries about the integrity of that single market, should Britain or any other state cherry-pick conditions for membership. + +That emphasis on principle extends even to the carmakers. “Yes, we certainly have influence,” says Matthias Wissmann, president of the German Association of the Automotive Industry. “But we are at least as interested in keeping the European Union together—in fact, that is our priority.” Britons are deluded, he adds, if they think German carmakers care only “about selling five more cars” rather than taking a long-term view. + +Contrary to the illusions of some in Britain, Mrs Merkel thus has her own business lobbies firmly behind her. “We have to present our interests coherently,” she told a conference of the Federation of German Industry this month. Lobbies, she added, should avoid putting pressure on the negotiators for “comfortable” deals that jeopardise the single market’s four freedoms—of moving goods, services, capital and people. Asked whether he agreed with Mrs Merkel, Ulrich Grillo, the federation’s boss, had a simple answer: “Yes.” + +This article appeared in the Print Edition with the headline: BMW won’t save Britain + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21708720-unfortunately-brexiteers-bmw-cannot-tell-angela-merkel-what-do-german-business-lobbyists/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Charlemagne + +Turkey’s bid to join the EU is a bad joke; but don’t kill it + +Two cheers for hypocrisy + +Oct 15th 2016 | From the print edition + + + +THE two young women glance at each other before confiding their secret. Turkey has become such a fearful place, they say, that they have formed a pact never to have children. Amid official reprisals and purges after a failed coup in July, the lights of democracy are dimming. Each week brings a fresh wave of detentions or sackings, and no one is immune. The women have a friend who was stripped of a degree because of her university’s links to Fethullah Gulen, a Pennsylvania-based preacher whom the government accuses of plotting the coup. Official paranoia scales heights of absurdity: last week a textbook was banned for using the letters “f” and “g”, Mr Gulen’s initials, in a geometry puzzle. “Everybody’s scared shitless,” says one prominent academic. + +Might the women turn to the European Union, which shares their concerns, for support? Hardly. Europe is hypocritical, they say; it expects solidarity after terror attacks but offered little after the coup. Their sentiments are widely shared, and not only in Fatih, a pro-government area of Istanbul roamed this week by Charlemagne. As the women divulged their laments, across town Recep Tayyip Erdogan, Turkey’s hot-headed president, was slamming “countries that...are still preaching to us about human rights”, in front of leaders from such beacons of democracy as Azerbaijan, Venezuela and Russia. Mr Erdogan and Vladimir Putin vowed to push on with Turkish Stream, a mooted gas pipeline. “Russia treats us better than Germany,” says Nazif Özbek, a shop-owner in Fatih. “Europe always stabs us in the back.” + +It is hard to remember the last time EU-Turkey relations were this sour. The Turks, with good reason, are furious with the EU’s sluggish show of support after a coup attempt that left about 270 people dead, an elected president nearly toppled and parts of the parliament in Ankara bombed to dust. It took weeks for EU officials to visit. Many Turks, including those who are no fans of Mr Erdogan, suspect the Europeans wanted the plotters to succeed. + +As for the Europeans, they are struggling to maintain diplomatic decorum as Mr Erdogan tightens the screws. It was bad enough, they say, that last year’s migrant crisis forced them to bribe Turkey to keep refugees away. Worse, Turkey is negotiating to join the EU. The accession process is supposed to bind candidates closer to European norms. But under its would-be sultan, Turkey is sinking into the marsh of dictatorship. + +Turkey has never been close to membership. But for a time that didn’t matter. Before talks began in 2005 Mr Erdogan used the popular prospect of accession to anchor domestic reforms, such as scrapping the death penalty and allowing Kurdish-language broadcasts, and to shove the meddlesome army back in the barracks. Exporters rubbed their hands at the prospect of deeper links with European firms and investors. If some Europeans were sceptical—Angela Merkel, Germany’s chancellor, once said Turkey should settle for a “privileged partnership” short of membership—others, cheered by the EU’s expansion into the former Soviet bloc, believed in the power of enlargement to transform their giant neighbour (and NATO ally) from the inside. + +No one makes that claim any more. For years Mr Erdogan’s government has been locking up journalists, compromising the judiciary and allowing corruption to flourish. The accession talks have long been a polite fiction, and the post-coup reprisals have exposed the hypocrisy to a harsh glare. The Austrian government, never a fan of Turkey’s membership bid, now wants to kill it. Nicolas Sarkozy, running for a second shot as France’s president, says the EU should tell Turkey it belongs in Asia. Mr Erdogan, meanwhile, recently told parliament that Turkey and the EU had come to the “end of the game”, days after he hinted at territorial ambitions over Greek islands. He accuses the EU (unfairly) of breaking its promise to grant visa-free access to Turks. + +Each side’s interests now lie elsewhere. Turkey’s energies are focused on stopping Syria’s Kurds from carving out a statelet along the border, and on weakening the Gulenists’ extensive international ties. It is quietly drifting from the EU, quitting joint cultural and educational institutions. Europeans, for their part, fear the poisonous effects of the universal unpopularity of Turkish accession among voters. Surveying all this with a weary eye, some pro-EU Turks wonder if the relationship needs a different footing. + +Don’t go cold Turkey + +Time, then, to pull the plug? Tempting, but no. After the coup, amid credit-rating downgrades and signs of an investment freeze, Turkey can ill afford to turn its back on its largest trading partner. For all his ranting, Mr Erdogan is unlikely to cut his links to Europe as instability roils his southern neighbourhood. The Europeans hate having to play nice to Mr Erdogan, but fear where his instincts could take him if the relationship were entirely severed. In their darker moments, sceptics should think of that far-off day when Mr Erdogan is no longer in charge. If happier times come, the comatose patient can always be awoken. + +But the two sides cannot sleep through their immediate concerns. From counter-terrorism to trade to migration, the EU and Turkey urgently need fresh ways to work together. Biannual summits would be a start. The refugee agreement, which is just about holding, may provide a model for future co-operation. A deal on Cypriot reunification, which is within reach, would be another. If Turkey meets the EU’s conditions for visa liberalisation, which one Eurocrat says is “eminently” achievable, countries like France and Austria should not block it out of spite. + +Accession was supposed to be a noble process that would expand European ideals of freedom and democracy to regions that had known little of either. In Turkey’s case, it is a seductive narcotic that has become dangerous for the addicted patients to give up. For the foreseeable future, Turkey will remain a troublesome neighbour for the EU, irascible but utterly indispensable. Europeans will have to swallow a degree of hypocrisy. + +This article appeared in the Print Edition with the headline: Two cheers for hypocrisy + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21708693-two-cheers-hypocrisy-turkeys-bid-join-eu-bad-joke-dont-kill-it/print + + + + + +Previous Articles Sections Next + + + + + +Britain + + + + +Airport expansion: Final call + +International students: Hasta la visa + +Brexit and Article 50: Parliament rules, not OK? + +Second thoughts on Europe: After Brexit, Bregret + +Government and entrepreneurship: More slowdown than startup + +London river crossings: The Thames barrier + +Devolution: Brum Brum + +Bagehot: The isle is full of noises + + + + + +Articles Sections Next + +Airport expansion + +Final call + +The long debate over where to put London’s first full-sized runway for 70 years is drawing to a close. It may not be long before the city needs another one + +Oct 15th 2016 | From the print edition + + + +IN 1944 Heathrow was a rural hamlet best known for its fruit trees and ploughing contests. But in May that year its residents were evicted from their cottages to make way for an international airport. After opening with two runways in 1946, Heathrow immediately planned a third to cope with rising passenger traffic. But although over a dozen commissions and policy papers have subsequently been produced on where to site new runways near London, seven decades of political dithering have meant that none has been built in south-east England since the second world war. + +Within days Theresa May, Britain’s new prime minister, is expected to end the procrastination by approving the construction of a third runway at Heathrow, over a rival proposal to build a second one at Gatwick airport, south of London. The long-delayed decision will give an overdue boost to the economy and shape British aviation for decades. + +More runway capacity cannot arrive too soon. It has been needed since the 1990s, when Heathrow became full, says Tim Coombs of Aviation Economics, a consultancy. This year 75m passengers are forecast to use Heathrow’s two runways, which are operating at 99% of capacity. Gatwick’s single landing strip is now full most of the day too. Together they handle 45% of Britain’s air passengers. + +Congestion increases delays, raises air fares and encourages travellers making connecting flights to use rival “hub” airports like Amsterdam or Dubai. Pricey tickets also deter businessfolk and tourists. Lack of airport capacity means Britain will miss out on trade worth £14 billion ($17 billion) over the next ten years, according to Frontier Economics, another consultancy. + +In 2012 David Cameron handed the dilemma to a commission of experts led by Sir Howard Davies, to report after the 2015 general election. Sir Howard shortlisted three options: a new airstrip to the north-west of Heathrow, a runway extension there, or a new runway at Gatwick. + + + +More capacity at Heathrow would restore its position as one of the world’s busiest airports (it currently lies sixth). This is more than a matter of national pride: by pooling passengers from around the world at Heathrow, airlines can offer flights to more places than they otherwise could. + +But Gatwick’s promoters say they can get the same increase in runway capacity for around £9.3 billion, far less than Heathrow’s estimated price tag of £18.6 billion. It would need no public subsidy either, unlike Heathrow, which will run up a big bill in moving the M25 motorway and upgrading local transport links. Gatwick, surrounded by fields instead of London suburbs, would affect fewer people with noise and pollution, leaving it less open to legal challenge. But swayed by the wider choice of destinations offered by a bigger Heathrow, last year Sir Howard recommended it should get its third runway. + +Mr Cameron delayed the decision three times, in part to avoid clashes with London’s mayoral election this May and the EU referendum in June. Environmental problems have also stymied progress. Previous attempts to expand Heathrow have been contested in court for breaking climate-change laws. This time the problem is that levels of nitrogen oxides, caused by vehicles servicing the airport, are breaching EU limits. But new research commissioned by the government has helpfully found that as car engines get cleaner, and measures such as congestion charging take effect, pollution around the airport will fall as Heathrow expands. + +So now Mrs May is intent on getting the project off the ground. By pressing on with Heathrow, which most businesses favour over Gatwick, she will boost her pro-enterprise credentials, which have been damaged by her hardline approach to Brexit. With no general election due until 2020, and Labour hobbled by an unpopular leader, she can afford to annoy voters in marginal constituencies under Heathrow’s flight path. + +Parliament, which is expected to be given a free vote on the matter later this month, also now favours Heathrow’s expansion. Several Tory MPs with constituencies near Heathrow oppose a new runway, including Boris Johnson, the foreign secretary, who has promised to lie down in front of the bulldozers if it goes ahead. Yet the government should win the vote. It recently got the support of the Scottish National Party, which came out for Heathrow in the hope that it would most increase the number of flights to Scotland. + +Brexit has strengthened the case, claims Heathrow’s boss, John Holland-Kaye. A third runway would help the airport offer more routes to cities in fast-growing economies such as China and India, which Britain will need to trade with more after leaving the EU. And it is better placed than Gatwick to boost trade. By value, 29% of Britain’s exports to outside the EU leave Heathrow, compared with 0.2% from Gatwick, which deals mainly with tourists. + +Yet even after the bulldozers get going on Heathrow’s new landing strip, the government should leave the door open for other airports, including Gatwick and Stansted, to the north-east of London, to build new runways. Demand for air-passenger travel is growing far faster than Sir Howard forecast, says Nick Dunn, Gatwick’s chief financial officer. This year Gatwick will handle as many passengers as the Airports Commission predicted it would in 2034. A new runway is already needed if it is to increase its capacity at peak times. The airport’s owners want to press ahead with one even if Heathrow gets the nod. It would be no bad thing for Heathrow to face the added competition. + +The government may offer a sweetener for Gatwick and Stansted to deter them from asking for a lengthy judicial review over the decision to expand Heathrow. Such legal problems are not new. Heathrow’s first two runways were built using emergency wartime powers; they would never have received permission otherwise, says Philip Sherwood, a historian of the airport who has lived in the area since it was still mainly fruit farms. Siting a new runway will never be easy, but with Labour in the doldrums and the public distracted by Brexit, the government has an opportunity to push it through. Mrs May should do so—and then start thinking about where to build the next one. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21708681-long-debate-over-where-put-londons-first-full-sized-runway-70-years-drawing/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +International students + +Hasta la visa + +The government is foolishly making life harder for foreign students + +Oct 15th 2016 | From the print edition + +Gown and out + +“THEY are not, and never have been, immigrants.” So declared Enoch Powell of international students in an infamous speech against migration in 1968. Ending up to the right of Powell, who was as fierce a critic of immigration as they come, is an uncomfortable position. But that is where Theresa May’s government finds itself with respect to overseas students. As part of a plan to reduce the number of migrants, on October 4th Amber Rudd, the home secretary, announced new restrictions on foreign students, including tougher entry requirements for those going to lower-quality institutions. The proposal is merely the most recent attempt to deter foreigners from paying tens of thousands of pounds to study in Britain. + +Since the turn of the century the number of foreign students in Britain has more than doubled (see chart). In contrast to Britain’s overall immigration trend, growth has come not from Europe but from the rest of the world. Chinese students are by far the biggest group, numbering 89,540 last year, up from 47,740 in 2004. The steep fees paid by non-EU citizens have made higher education an important British export. By one estimate foreign students contribute £7 billion ($8.6 billion) a year to the economy in fees and living expenses. + + + +Yet in the past few years the growth has stalled. To find out why, visit any student common room. An American PhD student at Cambridge University complains that acquiring a visa for her doctorate was more onerous than when she studied in Britain a decade ago. This time she had to list every trip she had taken outside America since the age of 18. Applicants have to prove they have more money than they used to: £9,135 in the bank plus their tuition fees, up from £7,380 last year. And the government has introduced an annual “immigration health surcharge” of £150. The doctoral student says she gets e-mails almost weekly from the university citing new requirements it faces with regards to its foreign students. + +The government has also removed provisions that allowed students to stay on after graduation to seek work. In 2012 it abolished a visa which allowed those who had completed degrees in Britain to remain in the country for two years without the firm offer of a job. The withdrawal of this perk put off many South Asian students, thinks Ruth Owen Lewis, director of the international office at Aberystwyth University. The number of Indian students, which soared from 14,625 in 2004 to 39,090 in 2011, has fallen to 18,320 since then. + +The recent rhetoric may exacerbate this trend. Following Ms Rudd’s announcements, one Indian newspaper advised those considering studying in Britain to revisit their plans. Others see it differently: William Vanbergen, head of BE Education, a consultancy in China that advises those wishing to study abroad, says that some Chinese parents imagine that Brexit will mean fewer refugees and terrorists sneaking into Britain, making the country less dangerous for their offspring. + +Other countries spy an opportunity. Australia and Canada, popular alternatives for Asian students seeking an English-language education, offer (limited) chances to stay and work, making them attractive destinations. Australia has simplified its student visa system to boost its appeal. Germany is offering more courses in English. And since 2014 public universities there have largely abolished tuition fees, including those for foreigners. This month the Irish government revealed plans to encourage more foreign students. “Everybody is doing the exact opposite to us,” laments Ms Owen Lewis. While the number of foreign students in Britain has stalled, in other countries it is zipping up. In Australia it increased by 11% last year. + +Nor does the crackdown look politically necessary. A YouGov poll last year found that students were the most popular group of migrants among voters, three-quarters of whom thought their numbers were about right or should be higher. Even supporters of the right-populist UK Independence Party were keen on them. Reducing immigration in general will hurt Britain’s economy; barring fee-paying students is a particularly damaging way to do it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21708682-government-foolishly-making-life-harder-foreign-students-hasta-la-visa/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Brexit and Article 50 + +Parliament rules, not OK? + +The government faces legal as well as political challenges to triggering Brexit + +Oct 15th 2016 | From the print edition + + + +THE answer to the question whether Parliament should exert democratic control over the process of leaving the European Union ought surely to be obvious. Yet in a statement and, later, a full debate this week David Davis, the Brexit secretary, rejected repeated demands by MPs that Parliament should have a vote over the invocation of Article 50 of the EU treaty, the legal route to Brexit. Article 50 sets a two-year deadline after which Britain will cease to be a member unless the other countries of the EU unanimously agree to an extension. Mr Davis argued that the Leave vote in the June 23rd referendum gave the government sufficient authority to invoke the article, which it plans to do by the end of March. + +The issue is not just political but legal, as two court cases, one in London and the other in Belfast, show. The High Court began hearing the former this week. The core argument is over whether the government is right to be relying on the royal prerogative that gives it sole authority to make (or unmake) treaties. The plaintiffs claim that the EU goes much deeper than other treaties, for instance in conferring citizenship rights. They also argue that, because Article 50 can lead automatically to Brexit, invoking it may in effect overturn the 1972 European Communities Act, breaching the principle that a parliamentary act can be reversed only by another act. + +The Northern Irish case adds another argument, which is that Britain’s EU membership is entrenched in both the 1998 Good Friday peace agreement and the subsequent Northern Ireland Act. The plaintiffs in Belfast say that Britain’s membership can be overridden only by a change in the act, which requires the assent of Northern Irish voters, giving them an effective veto over Brexit (a majority in the province voted to Remain in June). The two cases are likely to be joined before the Supreme Court in London, which has already set aside two days to hear them in December. + +Why is the government so resistant to letting Parliament vote on Article 50? One answer is a narrow desire to protect its royal prerogative. It is similarly loth to give the devolved administrations in Northern Ireland (or Scotland or Wales) any direct role in Brexit negotiations. Yet over the centuries the royal prerogative has been eroded, most notably through judicial review. One former senior legal adviser calls the government’s defence “surprisingly weak”, suggesting that the Supreme Court may yet rule against it. + +The bigger reason for the government’s intransigence is political. Brexiteers’ deepest fear is that Remainers may yet manage to overturn the referendum result. Mr Davis argued that the 17.4m voters who backed Leave constituted the largest mandate in British history. And he said that MPs who demanded a vote were confusing accountability, which the government promises to observe through many questions and debates, with micromanagement of negotiations best carried out in secret. + +The underlying problem about Brexit is that, although voters decided by 52% to 48% to leave the EU, they said nothing about what should replace membership. In particular, they did not vote to leave the EU’s single market, which is what backers of a “hard Brexit” now favour. Indeed, as Sir Keir Starmer, the new shadow secretary to Mr Davis, reminded him, the 2015 Tory manifesto that promised the referendum also pledged to “safeguard British interests in the single market”. Nick Clegg, the Liberal Democrats’ former leader, justifiably asked what constitutional principle gave the government the exclusive right to interpret what Brexit meant and to impose that on the country, rather than protecting the rightful role of Parliament. + +Even if the Supreme Court does not require it, the case for parliamentary approval before invoking Article 50 remains. Last month a House of Lords report concluded that it was “constitutionally appropriate” to secure the assent of both houses of Parliament. The royal prerogative also applies to a decision to go to war; yet since the government lost a parliamentary vote on war in Syria three years ago, the convention has become that military action needs prior parliamentary authority. + +As for micromanagement and secrecy, Andrew Tyrie, chairman of the Treasury select committee, correctly noted that EU talks always leak, so the government might as well publish details itself. MPs also commented widely on the irony that it should be Brexiteers, who campaigned most fiercely to take power back from Brussels to Westminster, who now seem keenest to trammel Parliament’s role in the process. Whatever the courts decide, the political battle is far from over. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21708649-government-faces-legal-well-political-challenges-triggering-brexit/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Second thoughts on Europe + +After Brexit, Bregret + +A minority of Leavers have changed their minds. Others are bailing out + +Oct 15th 2016 | From the print edition + + + +SINCE the Brexit referendum victory on June 23rd by 52% to 48%, the Leave side has told “Remoaners” to stop whingeing about the result: the win was slim but clear enough. Yet new evidence suggests that more than a few Leavers are having second thoughts about how they cast their ballots. + +The British Election Study, a long-running panel survey, asked voters in July whether they regretted their choice. Only 1% of Remainers did; another 1% of them were unsure. Among Leavers, 6% wished they had not voted the way they did, and a further 4% were in two minds. That may not be much—and the authors point out that voters for the winning side feel some regret after most elections—but it suggests that the slim pro-Brexit majority had evaporated within a month of the referendum. Remorse was strongest among Leavers who didn’t expect their side to win, adding some weight to the idea that many were motivated by frustration with the establishment rather than by Euroscepticism. + +Some Britons are voting with their feet. The Irish foreign ministry reports that since the referendum passport applications in Britain have risen to double their level last year. An Irish passport will enable continued freedom of movement within the EU. Anyone with a parent or grandparent born on the island of Ireland (including Northern Ireland) is entitled to one. On that basis, upwards of 6m Britons are eligible—enough to double the number of Irish citizens. Remainers’ eyes may not be smiling, but some will yet have a twinkle in them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21708679-minority-leavers-have-changed-their-minds-others-are-bailing-out-after-brexit-bregret/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Government and entrepreneurship + +More slowdown than startup + +Fears for the future of one of the economy’s most successful sectors + +Oct 15th 2016 | From the print edition + + + +ONE of the proudest boasts of David Cameron’s government was that it had turned Britain into one of the world’s most entrepreneurial countries. In the Global Entrepreneurship Monitor, an international index of startup activity, Britain is ahead of Europe’s other large economies, although still lagging America. Last year a record 608,110 businesses were born in “Startup Britain”, as the Cameroons liked to call it, about 27,000 more than the previous year. Moreover, an increasing proportion of these were set up by what managementologists call “opportunity entrepreneurs”: those who bring innovative products and services to the market, rather than setting up a firm simply because they have lost their job. + +Yet some businessfolk now fear that Theresa May’s new government could let this progress stall. Lord Young of Graffham, a former trade minister under Margaret Thatcher, laments: “This is the first government since Mrs Thatcher came into office that doesn’t feature enterprise, startups and small businesses” among its priorities. + +Lord Young was brought back into Downing Street by Mr Cameron to boost business formation. He and other Cameroons argue that the advance in startup rates was partly a consequence of their policies to remove regulations and help people, for instance, to set up businesses at home. However, most of the people who worked on this have left government and the evidence so far suggests that Mrs May is less interested in entrepreneurship than concerns she has brought from her previous department, the Home Office, such as keeping the immigration figures down. + +Alarm bells were ringing among the Cameroons at the announcement by the new home secretary, Amber Rudd, at last week’s Tory party conference that businesses would have to declare the proportion of foreign workers among their staff, as a means of shaming them into taking on more British ones. Rohan Silva, a former adviser to Mr Cameron and the brains behind Tech City, a government initiative to encourage the digital economy in east London, describes the government’s new tone as “absolutely terrifying”. The tech sector relies heavily on overseas talent; one in five directors of tech companies is a foreign citizen. The government faced such an outcry that it has already been forced to backtrack on some of its plans. “This would never have seen the light of day under the old regime,” another former Cameron adviser tuts. + +Furthermore, says Max Chambers, who advised Mr Cameron on immigration, the new government’s change in approach comes at a time when shoring up business confidence should be the priority, given the uncertainty over Brexit. Already there is evidence that the startup rate is slowing. According to one survey, new business registrations rose by only 1.5% in the 100 days after the referendum on June 23rd, compared with 4% during the same period in 2015. + +Worried by the drift in government policy, entrepreneurs are taking the initiative. Emma Jones, head of Enterprise Nation, a lobby group, who used to help Mr Cameron’s advisers on policy, has co-founded a new Small Business Taskforce. Comprised of like-minded outfits such as the Entrepreneurs Network, it will campaign for policies like cutting corporation tax and for guarantees on the long-term residence rights of EU citizens. Another new outfit, Open Britain (run by Ms Rudd’s brother, Roland), will campaign for a business-friendly Brexit. Mr Silva supports the idea of “city visas”, championed by London’s mayor, Sadiq Khan, whereby control of immigration would be devolved to the regions. The fightback has begun. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21708708-fears-future-one-economys-most-successful-sectors-more-slowdown-startup/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +London river crossings + +The Thames barrier + +To learn about London’s new mayor, look to the river + +Oct 15th 2016 | From the print edition + +Troubled water + +WINSTON CHURCHILL is said to have called the River Thames the “silver thread which runs through the history of Britain.” First it provided early Londoners with fish suppers. Later it brought the country wealth as the shipping trade joined the capital to European ports and the world beyond. But today, in some parts of the city, the Thames is more of a hindrance than a boon. + +Central and western parts of the river are criss-crossed by many bridges. But “stand on Tower Bridge looking east,” says an official in the mayor’s office, “and you will basically see a big gap.” The lack of crossings in east London reflects both geography and history. As the Thames winds its way to Essex, it broadens and the rock beneath it softens, making tunnelling difficult. Since big ships still visit docks in the east, any new bridge would have to be taller than those upstream. + +The lack of crossings lengthens commutes. It jams the few available ways to get from north to south London. And, partly as a result, it stymies housebuilding: sprawling brownfield sites in east London remain undeveloped. + +Plans to improve transport across the river have been knocking around since the 1930s. One of the first acts of Boris Johnson, the mayor of London from 2008 to 2016, was to give in to locals who opposed a large bridge in east London, though he later came around to the case for more crossings. This month Sadiq Khan, the new mayor, gave his support to five proposals, some of which were drawn up under his predecessor. That suggests a more mature approach to big infrastructure projects, says David Leam of London First, a lobby group. + +While Mr Khan has given these projects a boost, he has cooled on a fancier proposed crossing in central London. The Garden Bridge, drawn up by a famous designer and supported by a cast of glitzy socialites, as well as Mr Johnson, has had a bad few months. In July Mr Khan said he would not commit any more cash to the project. This month the National Audit Office, a watchdog, revealed that civil servants were concerned by public spending on the bridge. + +For better or worse, the Garden Bridge is the “equivalent of a country garden folly”, says Tony Travers of the London School of Economics. Focusing on transport in east London is a “more utilitarian thing to do”, he says. Mr Johnson was criticised for investing in vanity projects (as foreign secretary, he has proposed a new Royal Yacht). The new mayor seems to be taking a more practical approach. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21708707-learn-about-londons-new-mayor-look-river-thames-barrier/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Devolution + +Brum Brum + +As the North East rejects a devolution deal, the West Midlands embraces one + +Oct 15th 2016 | BIRMINGHAM | From the print edition + +A circus in paradise + +A BRUMMIE resurgence is in full swing. Visitors arriving at New Street railway station are met by a wall of quotes, trumpeting the advantages of the city: first for quality of life outside London; 40% of the population under 25; the highest concentration of companies outside the capital. Foodies note that Birmingham has five restaurants with a Michelin star. The sense of revitalisation is all over, not least at the construction of a central complex called Paradise Circus, alongside a swanky new library and a symphony hall housing one of the best orchestras in Europe. + +It is not before time. Birmingham has spent much of the post-war era down in the economic and architectural dumps. Unemployment is falling but still high. Local politicians now hope that a new devolution deal could help the reboot, unlocking billions of pounds of investment in the city over the next couple of decades. + +The devolution of power to English cities was championed by the previous chancellor of the exchequer, George Osborne. Manchester, Birmingham’s great rival, was first out of the blocks. Manchester has agreed to a deal in which it will have an elected mayor from May 2017, and more control over budgets for transport and skills training. Earlier this year the government devolved to it the whole £6 billion ($7.3 billion) budget for health and social care in the region. There were fears that the new prime minister, Theresa May, and her chancellor, Philip Hammond, had cooled on the idea. Some took the resignation of Lord O’Neill, Mr Osborne’s right-hand man on the issue, and the retirement of Sir Howard Bernstein, Manchester’s chief executive, as a vote of no confidence. + +Yet at the Conservative Party conference earlier this month, Mrs May clarified that she was committed to devolution. Brexit-supporting, working-class voters in the north need something to boost their economic fortunes, and more empowered local government could help. Where Mr Osborne touted the “Northern Powerhouse”, anchored in Manchester, Mrs May seems keener on revving up the “Midlands Engine”, based around Birmingham. In Andy Street, a former boss of the John Lewis retail chain, the Tories have a candidate running for mayor of the West Midlands next year who has a chance of winning, unlike in Manchester and Liverpool, which are both more solidly Labour. + +The West Midlands was late to put forward a devolution bid and some thought the political diversity of the region might scupper co-operation. The deal offered in return for signing up for a mayor is modest: about £37m a year over 30 years. But, says Bob Sleigh, the councillor co-ordinating the initiative, it could unlock as much as £7 billion more, including £4.4 billion attached to the construction of HS2, a high-speed railway due to reach Birmingham by 2026. “If there were no devolution it would make it much more difficult for us to maximise the economic benefits of HS2,” he says. Fiscal devolution is a future aim. + +Though the Brummies are on board, the Geordies are not. The North East formed an alliance of seven councils including Newcastle and Sunderland with a view to taking advantage of devolution. But last month they voted, by four to three, to reject a similar deal for reasons that seem part parochial politics, part cynicism of Westminster and part anger at austerity. “We’d be getting central government functions devolved with massively reduced budgets for us to administer our own cuts,” says Martin Gannon, leader of Gateshead council. Ben Harrison of the Centre for Cities, a think-tank, says the absence of a big project with regional implications like HS2 may have made it harder for local leaders to see how devolution would improve things across the region. But “it is highly unlikely that turning down a devolution deal means you’ll avoid needing to implement cuts,” he says. “It just means less control over the future of your economy.” + +Even with its deal, the West Midlands has a big task. Productivity is below the national average. Only one of its seven councils is a net contributor to the Treasury. Across the region there is a higher than average proportion of unskilled people and a lower than average proportion of graduates. Devolution is part of a long game to address this. And Birmingham has a head start over some northern regions, where progress could be even slower. + +Perhaps most difficult will be overcoming the cynicism, and apathy, of the public. “There’s no point in a mayor,” says Phil Reeves, a 56-year-old railway worker smoking a cigarette outside New Street station, echoing a widely held view. “I don’t trust any of them, and I don’t believe the ordinary man will benefit from any of it.” It will be up to the West Midlands’ new mayor to prove him wrong. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21708706-north-east-rejects-devolution-deal-west-midlands-embraces-one-brum-brum/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bagehot + +The isle is full of noises + +For a smooth Brexit, Britain must drop the boorish language and try to understand its neighbours + +Oct 15th 2016 | From the print edition + + + +THE crowd chattered impatiently, the Dutch, British and European flags twitched in the autumn breeze and staffers hurried by with trays of pastries. Mark Rutte paced the red carpet nervously. “Do you know who this is?” the Dutch prime minister asked the tourists as Theresa May’s convoy swept up the cobbles: “It’s my new British colleague.” As she emerged he repeated the formulation, now in English: “My new British colleague. So happy to see you.” They laughed a little too emphatically then marched inside, briskly followed by Mrs May’s chief of staff, her top Europe adviser and the British ambassador. The jittery air in The Hague was hardly surprising: Brexit brings a newly adversarial dimension to British-European relations. + +Consider what was happening elsewhere. Up the road at the Clingendael Institute of International Relations, a Dutch-French-Austrian panel was discussing Brexit and agreeing that a tough line was needed (“If the British grow faster outside the EU than in it, we have a problem”) and that the EU should move on quickly (“We need to reassert what it is to be European without the Brits”). Meanwhile in the House of Commons, David Davis, Mrs May’s Brexit secretary, had his own ideas. “The balance of negotiating advantage is incredibly heavily stacked our way,” he insisted. “It will cost them much more than it will cost us,” agreed a Tory MP. As the clock ticks down to the start of formal talks in the spring, the tone is hardening on both sides of the Channel. + +That was always likely. Mrs May and the likes of Mr Rutte will soon be on opposite sides of the negotiating table. But the peevish mood, particularly in Britain, does not bode well. Mr Davis jokingly terms Guy Verhofstadt, the European Parliament’s point man on Brexit, “Satan”; Michael Fallon, the defence secretary, vows to stymie European military integration; Liam Fox, the trade secretary, calls EU nationals in Britain “one of our main cards” to bargain with; the Sun rails against Michel Barnier, the European Commission’s “anti-Brit” negotiator. Mrs May has echoed the ugly tenor, mocking “citizens of the world” and only reluctantly dropping a plan to shame firms that hire foreigners. + +Such messages are bids to meet the growing belligerence in Britain at least half way. “Damn the unpatriotic Bremoaners and their plot to subvert the will of the British people,” bellowed one typically contra mundum headline on October 12th (another article called for anti-Brexit MPs to be locked in the Tower of London). Yet they also lob a chair through the café window of continental sensibilities. “We forget that other people watch us,” despairs Charles Grant of the Centre for European Reform in London. + +Sure enough, the foreign coverage of Mrs May’s recent comments has been grim. A column in the Süddeutsche Zeitung in Germany compares her “nasty sneer that will lead [Britain] into the abyss” to the politics of Marine Le Pen and Donald Trump. El País in Spain says she wants “the most extreme sort of Brexit”. A cartoon in La Repubblica in Italy quips that Britain will be introducing racial laws next. Mrs May’s counterparts have been more circumspect, but are clearly losing patience: in recent days François Hollande, Jean-Claude Juncker and Angela Merkel have all expressed concern at the noises wafting across the sea. “There must be a price,” the French president told a European gathering in Paris on October 6th. + +The root of all this is not fundamental hostility, but mutual bafflement. To follow debates on Brexit in different parts of Europe means navigating not just different languages but different epistemological planes. Continentals tend to overestimate the odds of Britons regretting their decision. Britons overstate their neighbours’ desperation to cosset British trade, wrongly assuming that every container ship docking at Felixstowe is another bargaining chip for London. Culture, too, divides. Political styles on the mainland, though varied, tend to be less aggressive and theatrical than in Britain. The latest all-or-nothing spasm in London (“It’s free trade or a trade war,” froths one MP) does not easily translate in those more consensus-oriented polities. + +More jaw-jaw, less war-war + +Take the Netherlands. It is a natural British ally, stresses Han ten Broeke, a Dutch MP and Anglophile: another seafaring sort of country; an economy so integrated with Britain’s that several big firms (like Unilever and Shell) straddle the North Sea. The harder the Brexit, the higher the costs. But certain political truths, he explains, override even this sympathetic interdependence: the EU must survive, Brexit must not spur others to quit, The Hague’s first loyalty is to Berlin. London’s language makes it harder to sandpaper these sharp edges, reckons Michiel van Hulten, a Dutch academic and former politician. “Everything being said seems destined for domestic consumption. But it has the effect of alienating allies on the continent...they are fed up with UK exceptionalism.” + +It is in the interests of both sides to make Brexit work, but the onus is on the British. If they fly off a cliff edge on leaving the club in 2019, with no decent interim arrangement because, say, the European Parliament vetoed it, they will pay the highest price. + +Time, then, for a charm offensive. Not just nice words and royal visits (Kate Middleton materialised in The Hague a day after Mrs May), but real attempts to level with Britain’s partners. “Be polite, know your priorities, understand other political contexts,” advises Mr Grant. Denis MacShane, a former Europe minister and a rare British politician with a European network, recently urged Mr Barnier to take Mr Davis hiking in the Alps, at 2,000 metres (Non, replied the Frenchman: “3,000 metres”). And Mrs May should set an example by adopting a more conciliatory tone, especially ahead of her first European Council summit on October 20th. At home, that will not be easy. But the prime minister is new, popular and unrivalled. She knows her premiership depends on making Brexit work. A downward spiral of chest-puffing and mutual incomprehension would hurt her most of all. + +Economist.com/blogs/bagehot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21708680-smooth-brexit-britain-must-drop-boorish-language-and-try-understand-its/print + + + + + +Previous Articles Sections Next + + + + + +International + + + + +The United Nations’ secretary-general: Can the next man do better? + +The shadow economy: Unregulated, untaxed, unloved + + + + + +Articles Sections Next + +The United Nations’ secretary-general + +Can the next man do better? + +António Guterres is the right man for an almost impossible job + +Oct 15th 2016 | From the print edition + + + +SIX months ago the cognoscenti of Turtle Bay, the UN’s location on the east side of Manhattan, were pretty sure that the next head of the nearest thing to a world government would—for the first time on two counts—be an east European and a woman, quite likely the one who runs UNESCO, the UN’s education and culture agency. Instead, it will be a 67-year-old man, who was a social-democratic prime minister of Portugal from 1995 to 2002 and then head of the UN’s refugee body for a decade from 2005. A second Bulgarian candidate, also a woman, but with a rosier reputation as a punchy ex-dissident than her ex-communist compatriot, caused a momentary frisson of gamblers’ excitement by throwing her fur cap into the ring at the last minute. But she was too late and too controversial. António Guterres, who will succeed Ban Ki-moon at the year’s end, has been welcomed across the global board. + +The final decision, as ever, depended on the White House and the Kremlin agreeing not to block each other’s favourite (or most unobjectionable) candidate. The surprise was that Mr Guterres so swiftly won the acquiescence of both superpowers, even though relations between the two are probably at their grumpiest since the end of the cold war. It has been surmised that Mr Guterres, as part of a back-room bargain, will appoint a Slav, indeed maybe a Bulgarian, as his deputy. + +His victory was partly thanks to the novel, relative openness of the competition. In the past the choice had been made entirely behind closed doors, with no candidates openly declaring themselves. This time, starting in April, a series of public hearings before the UN General Assembly was followed by a string of straw polls among the 15 countries represented in the UN Security Council, each one anonymously suggesting which of the candidates should be “encouraged” or “discouraged”, or neither. But in the sixth and final straw poll, the five permanent members of the council (America, Britain, China, France and Russia), each having the power to block any candidate, were to cast coloured ballots, signifying their veto-wielding status. Mr Guterres had easily topped each of the first five polls. In the final poll he again far outshone his opponents, with no country casting a negative ballot, which meant that the superpowers had all agreed to embrace him. + +Various candidates had been thought to have a chance, backed by a superpower sponsor. But none seemed to match Mr Guterres’s qualities. He won respect as prime minister of a notable if currently beleaguered country and as an adroit international operator; as head of one of the UN’s most essential bodies, he understands the inner workings of the vast and cumbersome UN bureaucracy. He is multilingual and articulate. Moreover, he is universally considered decent and able, pragmatic and principled, affable but steely. He knows how to communicate to the world and knock powerful heads together. + +Mr Guterres “will take charge of an organisation close to political bankruptcy,” says Richard Gowan, a UN expert at New York’s Columbia University. The Syrian catastrophe, he says, marks “the worst institutional crisis the Security Council has seen since the Iraq war”. Yet the secretary-general is a cajoler and fixer, not a global boss. He is “not a politician with an election victory under [his] belt but a civil servant with 193 stroppy masters”, says Lord (Mark) Malloch-Brown, a Briton who was once the UN’s deputy head. The secretary-general is also an accountant, overseeing a budget for an array of UN bodies that often compete more than they co-operate. + +Mr Guterres must fortify the UN’s three main pillars: economic development (especially for the poor); human rights; and making and keeping the peace. This last is the biggest and trickiest: witness Syria. However feeble the UN can seem, it is still the global body with by far the widest reach and heaviest weight. With 100,000-plus blue-helmeted soldiers and police on a score of missions across the world, it has easily the biggest capacity as a neutral arbiter for stopping death and destruction. Preventing wars before they happen will inevitably be Mr Guterres’s intention. More often he will have to pick up the pieces after disaster has struck. + +His first task will be to recapture the UN’s primacy in world security—devilishly hard when America and Russia are at loggerheads. The crises in Yemen, Libya and South Sudan, as well as in Syria, need his urgent attention. He will have no time to catch his breath. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21708676-ant-nio-guterres-right-man-almost-impossible-job-can-next-man-do-better/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +In pursuit of the untaxed + +Bringing light to the grey economy + +New technology may persuade informal businesses and workers to become formal + +Oct 15th 2016 | CATANIA AND MUMBAI | From the print edition + + + +IT IS not what Kavita Ahuja, a tutor in Mumbai, does at her job that marks her out from around nine in ten of her fellow Indian workers, but what she does afterwards. As one of her private economics lessons ends, she does not ask her pupil for cash. Rather, her fee of 400 rupees ($6) is settled with a few taps of a smartphone. A side-effect of receiving pay digitally is that she has joined the 48m Indians—in a country of 1.3 billion—who work in the formal, regulated economy. Eduwizards, the app that matches Ms Ahuja to her pupils, deducts what she owes in income tax before paying her, as well as incurring a slew of taxes on its cut. + +Moving from the informal to the formal economy can be that simple. But in many countries the transition remains rare. Half to three-quarters of all non-agricultural workers in poorer countries (perhaps 2 billion people) fall outside the purview of officialdom and so can be categorised as “informal” (or “shadow” or “grey”). In rich countries the share is much smaller, though still significant. One-tenth of Britain’s economy is thought to be informal. + +Informal businesses typically sell legal goods and services. They include everyone from Italian restaurateurs who do not issue receipts, Ukraine’s ubiquitous street vendors selling fruit and vegetables and Indian households who pay their servants cash-in-hand. World Bank data suggest that informality is expanding. Over the past decade the world’s working-age population has been growing faster than the number of people officially employed, implying that there are more and more people in jobs outside the mainstream. + +Is that so bad? Informal workers might otherwise have no job and even harder lives. When famine struck North Korea in the 1990s, millions broke the law by selling smuggled food. Plucky entrepreneurs who operate beyond the grasp of venal bureaucrats should surely be celebrated. Robert Neuwirth, an author, refers to Lagos’s largest rubbish dump as a “business incubator”, such is the enterprise that flourishes there. Much informal activity is also tolerated in practice. Nobody expects teenagers with the odd baby-sitting gig to set up limited companies with audited accounts. + +But large-scale informality has malign effects. A paper from Friedrich Schneider of Johannes Kepler University in Linz, Austria, suggests that the tax loss from informality in the European Union was about €450 billion in 2011, or 4% of GDP—money the region’s indebted governments would find handy. And if every country in the world reduced its informal economy by 10% of GDP, back-of-the-envelope calculations suggest that they would garner $1 trillion or so extra in tax each year. For comparison, economists reckon that roughly $200 billion of tax is lost each year because of crafty use of tax havens. + +Informal workers also get a bad deal. They earn no pension and may be paid on average half as much as formal employees. Wages are low in part because informal firms are less productive than formal ones. They are also smaller—expanding can mean catching the eye of officialdom and is hard to do without bank loans, which require proper book-keeping. In poor countries the average formal firm employs 126 people, compared with just four for informal ones, according to Rafael La Porta of Tuck School of Business at Dartmouth and Andrei Shleifer of Harvard University. + +Beware of the dark + +For years the received wisdom was that the remedy for informality was development. As countries become richer, so the theory went, formal sectors grow and those where informality reigns, such as street-vending, shrink. But that is a slow process, and it is made slower by informality itself. Whatever cash an informal firm generates sits outside the financial system, making it harder to invest in other businesses. + +Governments have come to realise that they need to do something about informality. One approach is to cut bureaucracy. Many countries aim to make registering a firm a breeze—not least to improve their rankings in the World Bank’s closely watched annual ease-of-doing-business index. Someone in Burkina Faso now needs to complete just three steps to start a business, fewer than in Norway and down from 12 a decade ago. Making it easy to pay tax matters, too. Nevertheless small businesses often fear that coming out of the shadows will mean more shakedowns by corrupt officials, or being entangled in reams of red tape. Research suggests that in practice, streamlining registration has little effect on informal firms that already exist. + +The next generation of businesses, however, might find informality much harder. Firms that deal in cash have an incentive to underreport their income or employ staff informally. About 84% of all consumer transactions worldwide are still cash-based, according to MasterCard, a credit-card provider. But that share will fall as more workers ply their trades on digital platforms, whether tutors on Eduwizards or drivers on Uber, a ride-hailing app. About half the world’s adults now own a smartphone; by 2020 80% will. + + + +Digital platforms allow electronic payments, which are easy for tax authorities to track. When taxi drivers in Brussels complained that Uber used elaborate tax-avoidance methods, Belgium’s deputy premier retorted that the average Brussels cabbie declared an implausibly low €25 ($28) of cash income a day. Who exactly was doing the tax dodging? Most e-commerce is formal: as it grows, it displaces at least some economic activity that is not. + +And it is possible to accelerate the transition away from cash, making outliers of those who use it. South Korea drove down the share of coins-and-notes transactions from 40% to 25% between 2002 and 2006 by applying a lower sales-tax rate to card payments. An effective payments infrastructure (for example, free and fast transfers between bank accounts) also helps. A number of countries have banned cash for transactions above a certain threshold. Italians are lovers of cash. Many were furious when a cap on cash payments over €1,000 was introduced in 2011. Partly in response to the outcry, Matteo Renzi, Italy’s prime minister, last year raised it to €3,000. In Sweden and other parts of northern Europe, by contrast, paper money is becoming a rarity. Many shops and even bars refuse to accept the folding stuff, and cash machines are hard to find. + +In countries where cash is king, forcing people to record transactions makes it harder to evade tax. Receipts are the norm in business-to-business transactions, especially if value-added taxes (VAT) are applied. An entrepreneur can deduct input costs from profits that are liable to be taxed—an artist can claim for the cost of papers and pencils, for instance. But he must prove he paid for those supplies. This prompts the artist’s suppliers to be formal, and their suppliers too. A desire to increase formalisation is one reason why India is implementing a nationwide VAT. + +Consumers have much less incentive to ask for receipts, particularly for small-value transactions. Italian restaurateurs know that few customers will protest if they give them a receipt scrawled on the back of a napkin (a wheeze that allows them to avoid declaring the transaction). Even the spread of credit cards does not guarantee improvement: restaurant owners and shopkeepers often turn up the palms of their hands as they tell you that “purtroppo” the card machine is broken. Sicilians are so bad at paying their taxes that around Catania the guardia di finanza (finance police), a branch of the armed forces, are a noticeable presence. + +The problem of the panopticon + +Forcing informal firms out of the shadows carries one big risk. A recently formalised firm may struggle to survive if regulations are burdensome. If a boss must pay high payroll taxes or pension contributions for his workers, he may have to employ fewer people. South Africa has cracked down on its informal economy, but it is a Pyrrhic victory. Formal jobs have not filled the gap; half of its young people are unemployed. + +Governments therefore need to reduce the burden of taxation and regulation on business. The Baltic states have low business taxes, especially on small firms, alongside crafty formalisation schemes. They have seen large drops in informality compared with other OECD countries in the past decade. Compare that with Italy, where a growing tax burden means that its informal economy, relative to GDP, is now 50% larger than it was in the 1970s. + +Grand reforms are important. But there are also wheezes that will nudge citizens to behave better. For example some countries have tried to encourage consumers to ask for receipts. Several have enacted “receipt lotteries”, where proofs of payment become de facto lottery tickets. Taiwan’s dates back to the 1950s. European countries such as Portugal, Poland and Slovakia (where prizes include the chance to appear on the local version of “The Price is Right”) introduced them in the aftermath of the financial crisis. + +The lotteries’ proponents say that their aim is to entice shoppers and vendors to register activity. Technology can help there too. Since 2007 shoppers in São Paulo have received lottery tickets and rebates on the VAT applicable to their purchases if they can match them against receipts. Better yet, the database of receipts they submit digitally can be cross-checked against the income that businesses have declared. Joana Naritomi at the London School of Economics estimates that revenues declared by paulistano shopkeepers jumped by over 20% in four years as a result. + +Cross-checking of different sources of information is a smart way to compel people to pay tax, says Ms Naritomi. That too is becoming easier. Matching a firm’s pay slips with its employees’ tax returns used to take an age; a computer can now do it quickly. In Italy, comparing aerial images with land-registry maps identified 2m “ghost buildings” that authorities were unaware of—and thus not levying property taxes on. Inhabitants of southern Italy were the most egregious violators. + +Technology can also make formality attractive by enabling registered firms to get more out of it than a tax bill. For many, that means access to credit. Lots of startups are using digital records, from phone bills to app payments, to gauge a potential borrower’s ability to repay. Such data are generated, by and large, only by those willing to play by the rules. “If people get access to credit they are willing to pay taxes,” notes Nandan Nilekani, a former boss of Infosys, an IT services firm, who went on to advise the Indian government. + +Combining structural reform, clever wheezes and technology to curb informality would be good for government finances, growth and poverty reduction. No economy will get rid of informality entirely, but bringing some unregulated activity out of the darkness would improve millions of lives. + +This article appeared in the Print Edition with the headline: Unregulated, untaxed, unloved + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21708675-new-technology-may-persuade-informal-businesses-and-workers-become-formal-bringing-light/print + + + + + +Previous Articles Sections Next + + + + + +Business + + + + +Samsung’s smartphone woes: Charred chaebol + +Working style in Japan: Overdoing it + +Apple in Italy: Made men + +Advertising: Gold posts + +Privatisation in Vietnam: Cream of the crop + +Technology in China: Insanely virtual + +Business schools: Campus vs beach + +The world’s best MBA programmes: Worth it? + +Schumpeter: The business of outrage + + + + + +Articles Sections Next + +Samsung’s smartphone woes + +Charred chaebol + +Burning batteries are not the only problem facing the world’s second-biggest technology firm + +Oct 15th 2016 | SEOUL | From the print edition + + + +WHEN Samsung Electronics announced on October 11th that it would discontinue its flagship smartphone, the Galaxy Note 7, one crucial event in the history of the world’s second-biggest technology company by revenues (after Apple) sprang to mind. In 1995 Lee Kun-hee, then its boss, ordered 150,000 mobile phones burned and bulldozed in front of 2,000 weeping employees. Business partners who had received the devices as gifts from him had reported back that they did not work properly. + +The South Korean auto-da-fé is said to have helped create a culture of permanent crisis at the firm, which drives employees to work incredibly hard. Now the question is how the ignominious end of the Galaxy Note 7 handset, which some hardware aficionados had called the best “phablet” (or large smartphone) ever made, will change Samsung, which is going through a leadership transition. In the midst of the crisis, the firm announced that Lee Jae-yong, the son of Mr Lee, would join the board of Samsung Electronics later this year, taking another step towards succeeding his father, who two years ago suffered a debilitating heart attack. + +Samsung had thought that it was over the worst of the Note 7 crisis by early September. It had swiftly recalled 2.5m of the phones after the batteries in some had caught fire (the result of one such conflagration is pictured). But earlier this month it emerged that the replacement units, which came with different batteries, were also prone to combustion. Shortly after two of America’s leading mobile operators decided to stop selling the phones, Samsung scrapped the whole lot to avoid further damage to its brand. + +It is still not known what exactly made the Note 7s catch fire. Lithium-ion batteries, which power most mobile phones, have caused trouble before. But in its rush to get replacements out, Samsung overlooked the root cause, while appearing to blame suppliers. Experts suspect that the device was too tightly packed, leaving no room for the batteries to expand as they need to when charged quickly or used heavily. The resulting pressure can damage batteries’ innards, causing them to short-circuit and release densely stored energy in the form of excessive heat. + + + +Commercial forces encourage Samsung to push the envelope. Since the Galaxy phones run on Android, Google’s operating system, which is used by most mobile-device makers, the firm needs to differentiate its high-end devices with ever better design and hardware. The Note 7, which sold for more than $800, is replete with all kinds of features, including a super-high-resolution camera, an iris scanner (to unlock the phone)—and an especially powerful battery. “There is now so much that can go wrong in such devices,” says Carolina Milanesi of Creative Strategies, a consultancy. + +The financial cost of removing the device from the market will be substantial. On October 12th the company said that profits in the past quarter will be a third lower than expected because of the recall. Many Note 7 owners will now opt to buy Apple’s iPhone 7 Plus or a Pixel phone from Google. But Samsung will move on fairly swiftly even if it kills the Note brand altogether, which some analysts are calling for. Within its extensive smartphone and tablet portfolio the Note is a niche product (it would be a different story if its bestselling Galaxy S7 devices were affected). And if the firm’s new models, to be unveiled early next year, have no major flaws, it should be able quickly to restore its reputation as a maker of excellent hardware. + +But the crisis has posed a number of questions for the company, and underlined longer-term problems. It now needs carefully to consider the increasing complexity of the products and of its supply chain in the light of the Note 7 debacle, argues Chang Sea-jin of the National University of Singapore. + +Another contributing factor, albeit an indirect one, is Samsung’s convoluted corporate structure, which features cross- and even circular shareholdings. This has allowed the Lee family to exert control over the group with an overall stake of a few percent. But the set-up has serious drawbacks. Corporate governance is below the standard of global firms. Most of the non-executive directors, for example, have limited experience in the technology industry. + +The Note 7 crisis should put wind in the sails of Elliott Associates, a hedge fund whose affiliates own 0.62% of Samsung Electronics. On October 5th it sent a letter to the Samsung directors with a detailed proposal for untangling the firm’s hairball of shareholdings without the Lee family having to give up control (even at the point when they have to pay inheritance tax after the death of the older Mr Lee, which could amount to $6 billion). The core of the plan is to simplify the structure by splitting Samsung Electronics into an operating and a holding company. + +Although the younger Mr Lee is said to favour such a restructuring, he is unlikely to approve of Elliott’s plan. It also provides for Samsung to make regular dividend payments, and to pursue a listing in America, obliging it to comply with international standards on corporate governance. But Elliott now stands a better chance of influencing matters than it did last year, when it failed to block the merger of C&T and Cheil, two Samsung firms, which helped consolidate the Lee family’s control. + +The battery crisis should also make Samsung move more vigorously to address another structural problem. Despite the firm’s efforts to keep its devices at the cutting edge, smartphones and other connected devices are becoming ever more of a commodity. How useful and competitive they are will increasingly depend on the software and services they offer. But Samsung’s culture is still based around a fast-follower mentality centred on hardware, notes Park Kang-hee of IBK Economic Research Institute, a think-tank in Seoul. Internally, he says, there will now be louder calls to alter that. + +Samsung has so far responded mainly by buying startups, such as LoopPay and SmartThings, which have respectively developed a mobile-payment system and a platform for connected devices. But the value in digital technology is shifting from software and services to data and artificial intelligence. One example is the emergence of so-called smart speakers, such as Amazon’s Echo and Google Home. These are delivery vessels for the two firms’ digital assistants, Alexa and Assistant, and allow owners to use voice commands for playing music and ordering goods online. + +To catch up, on October 6th Samsung acquired Viv, another digital assistant, created by the same people who had developed Siri, Apple’s offering in this category. Although Samsung can build Viv into many of the devices it makes, ranging from smartphones to household appliances, the service may not be able to compete because Samsung lacks the data and skills to make use of them. + +This weakness means that Samsung is unlikely to remain as dominant in smartphones as it is today (see chart). That is a far more intractable problem than burning batteries. Still, it would be wrong to predict a decline on the scale of Nokia, which only a decade ago was the world’s number one handset maker but has since exited to focus on making gear for networks (another difficult business, as a profit warning on October 12th from Ericsson, a Swedish firm, confirms). Samsung also has several other thriving businesses to rely on, such as semiconductors and electronic displays. + + + +Perhaps one day Samsung will be as well known for its smart drugs as for its smartphones. In November the firm plans to take public its subsidiary BioLogics, a drugmaker, hoping to raise more than $2 billion. Some of the money is earmarked to help it become a big contract manufacturer for biotech drugs. It has worked out that growing proteins in animal cells, at massive scale in ultra-clean factories, is quite similar to “growing” circuits on silicon wafers. Happily, in that business the risk of spontaneous combustion is very low. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708712-burning-batteries-are-not-only-problem-facing-worlds-second-biggest-technology/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Working style in Japan + +Overdoing it + +A new report shows how badly Japan needs labour reform + +Oct 15th 2016 | TOKYO | From the print edition + + + +LATE of an evening, Japan’s black-suited salarymen let their hair down in the streets of Shimbashi, a district of Tokyo. Shirts untucked, ties off, liquor flowing, they stagger around before heading home, or directly back to the office via a konbini (convenience store) to buy a clean shirt. + +This is the harmless outlet for their stress: karoshi, or death by overwork, is the darker, and until recently, more overlooked one. This month the first ever government report into the scale of karoshi found that employees put in over 80 hours of overtime a month at almost a quarter of companies surveyed. At 12% of those firms the figure rose to a whopping 100 hours. These numbers may underestimate the problem; under a fifth of 10,000 companies contacted responded, which is a normal response rate, but firms with still worse overtime figures may have kept out of the study. + +Little wonder that 93 people committed or attempted to commit suicide in the year to the end of March 2015 because of overwork. These are the cases where the government has officially recognised that families are owed compensation; activists against karoshi reckon the number is too low. Other workers perish from heart attacks or strokes due to long hours. The latest high-profile case is a 24-year-old female employee for Dentsu, a Japanese advertising giant, who committed suicide in December. + +Things have got somewhat better in recent years; more overtime is paid, for example. But further steps are needed. Shinzo Abe, the prime minister, says that changing the working style in Japan is one of the main aims of labour reforms that he plans to introduce next year. Yuriko Koike, the new governor of Tokyo, wants to improve the city’s work-life balance and has banned workers in her office from staying past 8pm. + +But it remains hard to overhaul business practices when the culture values face time and dedication to the job far ahead of performance. “The company is like a big team. If I leave work early, someone else has to shoulder my work and that makes me feel terribly guilty,” says a 42-year-old IT worker who preferred to remain anonymous. It does not help that the shrinking and ageing of Japan’s population means labour shortages. And all this overwork does little for the economy, because (thanks to the inefficient working culture as well as low use of technology) Japan is one of the least productive economies in the OECD, a club of rich nations, generating only $39 dollars of GDP per hour worked compared with America’s $62. So the fact that workers are burning out and sometimes dying is pointless as well as tragic. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708721-new-report-shows-how-badly-japan-needs-labour-reform-overdoing-it/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Apple in Italy + +Made men + +An unlikely choice for Apple’s new app academy could boost Italy’s south + +Oct 15th 2016 | NAPLES | From the print edition + +AT A bar called “University” in San Giovanni a Teduccio, a rundown suburb of Naples, two blown-up photos adorn the walls: Albert Einstein and Steve Jobs, founder of Apple. Nelson Ciarravolo, the owner, put them up when the bar opened two years ago, long before the news came that Apple would open its first European iOS (its mobile operating system) developer academy in the district. Locals joke that Mr Jobs’s photo may have gone up more recently. Either way, it signals that Naples has embraced the American tech giant. On October 6th Apple held the opening event for the new academy, which it will run in collaboration with Federico II University, after which the bar is named. + +“We go to places nobody thought were possible”, explained Lisa Jackson, vice president of environment, policy and social initiatives at Apple, at the inaugural event. Naples lags far behind northern Italy for transport and digital infrastructure, and criminality is rife. The Camorra, a mafia gang, runs one of the biggest drug-trafficking enterprises in the world from the city. The neighbourhood in which Apple has opened the academy (it is located inside a new campus of Federico II University) used to be more dangerous. “We used to see our friends die on the ground,” recalls Davide Varlese, a cousin of Mr Ciarravolo. But things have improved over the past decade as authorities have clamped down. At least the Camorra doesn’t come asking for money in bars any more, locals say. + +Apple says the point of the app academy is to go where it can have the most impact. Tim Cook, its chief executive, said the aim was partly to be a good corporate citizen. The firm will train around 200 mostly southern Italian students how to code and write apps. A similar program exists in Rio de Janeiro. The company was also attracted by the prospect of working with a network of good universities in the area. The Campania region boasts seven, and Federico II is especially strong in engineering, accounting for a tenth of Italy’s engineering graduates every year. + +In addition, Matteo Renzi, Italy’s prime minister, coaxed Mr Cook to invest in Naples. He wants to show that he is focusing on the country’s south. Some also speculate that an agreement on Apple’s tax bills may have accompanied the academy’s genesis. The initial announcement in January came weeks after Apple agreed to pay €318m ($350m) in taxes to Italy’s treasury to settle a dispute. The firm may need to burnish its reputation further: in August the European Commission told the Irish government to recover up to €13 billion in unpaid taxes from it. + +Gaetano Manfredi, the rector of Federico II University, points to buildings nearby the new campus. Residents themselves repainted them to welcome their new neighbours—an almost unheard of happening in the south, he says. The hope is that Apple’s facility could help stem the region’s brain drain. Youth unemployment in Campania is 53%. Dario, an engineering student who has just started at the app academy, says he hopes not to have to escape Naples once he graduates. Growing up in difficult circumstances makes you stronger, adds Antonio Caraviello, the boss of Sophia High Tech, a spin-off of the university which tests materials for the aerospace industry. Good news, then, for Apple’s new recruits. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708716-unlikely-choice-apples-new-app-academy-could-boost-italys-south-made-men/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Advertising + +Gold posts + +Social-media endorsements are the latest thing in advertising + +Oct 15th 2016 | NEW YORK | From the print edition + +He’s got the moves + +HAVING just received the latest PlayStation console from Sony, Dele Alli, an English footballer, posts a photo of it to his Instagram account. He dutifully thanks his benefactor and concludes the message: “#ad”. + +It is the latest frontier of a rapidly growing industry. Since January, more than 200,000 posts per month on Instagram, a picture-sharing app owned by Facebook, have been tagged with “#ad,” “#sp” or “#sponsored”, according to Captiv8, a firm that connects brands to people like Mr Alli. Most are reaching Instagram users via such celebrities. Hiring “influencers”, as they are known, connects brands to a vast network of potential customers. Kim Kardashian West, a reality-TV star, for example, reaches 160m people across Facebook, Instagram and Twitter. + +Consumers love the unprecedentedly deep access to the lives of the rich and/or famous that platforms offer. DJ Khaled, a music producer and prolific poster on Snapchat (another picture-messaging app), delighted millions of his followers with live video updates of himself lost at sea at night on a jet ski. He is also an influencer for a brand of vodka. Paul Pogba (pictured), who became the world’s most expensive footballer when he joined Manchester United, often shares videos of himself and friends practising dance routines at home, which all translates into valuable social-media exposure for Adidas, his sponsor. + +Advertisers thus build a relationship with potential customers that traditional methods cannot reach. Sponsors value that highly (and whether the celebrity or their social-media manager does the posting seems not to matter). + +Yet as media agencies and brands have piled in, the grey area between voluntary celebrity endorsements and paid advertisements has grown murky. Not all influencers label their posts clearly with “#ad”. Consumer watchdogs are crying foul. One, Truth in Advertising, recently accused Ms Kardashian and her sisters of running “deceptive marketing campaigns”. + +Regulators have little choice but to respond. This summer America’s Federal Trade Commission (FTC) successfully pursued Warner Brothers, a film studio, for failing adequately to disclose that it paid online influencers to give computer games rave reviews (the firm settled its case). The FTC plans to bring more. Media agencies say defining right and wrong practice would help. The FTC first raised concerns about social-media endorsements in 2009, but the rules are unclear. + +The reaction from celebrities has also been swift. High-profile influencers on Instagram and Snapchat quickly began labelling their sponsored content with “#paid” and “#sponsored”. The Kardashians amended their social-media feeds to say “#ad”, or deleted posts. Nevertheless, social media is likely to remain a powerful enabler of the soft sell. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708717-social-media-endorsements-are-latest-thing-advertising-gold-posts/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Privatisation in Vietnam + +Cream of the crop + +Vinamilk is one of the attractive firms on sale from Vietnam’s government + +Oct 15th 2016 | HANOI | From the print edition + + + +TO CELEBRATE its 40th birthday, Vinamilk, a big Vietnamese dairy firm, filmed a children’s choir crooning adorably from the helipad of one of the country’s tallest towers. In truth the company hardly needs to sing its own praises. Vinamilk is probably Vietnam’s most familiar consumer brand, and it is widely considered to be the country’s best-run firm. Over a decade its profits have grown by close to one-third each year. + +Hence the interest among foreigners in a 9% share to be sold by the government this year—the first tranche in a disposal which should eventually see Vietnam’s communist government give up its entire 45% stake in the firm. It is one of several big companies which the ruling party now promises to part with; two others are the Hanoi and Saigon beer companies, known as Habeco and Sabeco. After years of divesting mainly small slivers of unappealing enterprises, Vietnam is at last offering foreigners a slice of its best assets. + +Vinamilk meets much of Vietnam’s daily demand for dairy products, including four-fifths of its condensed milk (most often found lurking sweetly at the bottom of the country’s famous coffees). Last year it earned pre-tax profits of around $420m on revenues of $1.8 billion, and has plenty of further room to grow. Vietnam’s economy is expanding at more than 6% annually. For now, its 93m people drink far less milk than their neighbours. + +Foreign investors already own about half of the firm (an unusually high share), which has a market valuation of more than $9 billion. They praise the steady hand of Mai Kieu Lien, its boss for 23 years, who has kept Vinamilk closely focused on its core business while many other large Vietnamese companies have sprawled. It now wants to invest in more foreign ventures, beyond its present outposts in America, Poland, Cambodia and New Zealand. But it also aims to get more raw milk from within Vietnam itself, where dairy farming remains a fairly small business. + +One keen bidder may be ThaiBev, a food-and-drink conglomerate attracted in part by Vinamilk’s enormous distribution network. It already owns 11% of the dairy firm through a subsidiary, Fraser and Neave, and has cash to spend. Thai companies are piling into Vietnam, driven both by their neighbour’s zingy consumer markets and by fears of stagnation at home. In December Singha, another Thai brewer, said it was pumping more than $1 billion into Masan Group, a conglomerate with operations in food, mining and banking. + +ThaiBev is also thought to be among a half-dozen brewers eyeing the government’s stakes in Sabeco and Habeco, which bureaucrats talk of selling by the end of next year. Vietnam’s boozers drink almost solely beer. A big swig of it is still home-brewed and served in salty roadside pubs. The industry says production among corporate brewers has been growing by about 7% annually and could jump another quarter by 2020. Sabeco and Habeco hold around three-fifths of the local beer market; the sale of the government’s 90% and 82% stakes, respectively, in the two firms should raise more than $2 billion. + +The government’s pledges are a relief to investors who worried that after the Communist Party’s five-yearly congress back in January, a conservative faction had gained in influence. The new leadership has tightened its grip on civil society, but appears ready to tackle vested interests which have previously held up sales of state-owned firms. It needs cash to fund new infrastructure and to rein in the national debt, which is nearing its legal limit of 65%. + +Hiccups are inevitable. Many consumers worry that the impending sales to foreigners will kill off well-loved local brands (though that seems unlikely). There is some ominous talk of creating “golden shares” which could help the party’s bigwigs retain influence over firms even when their stakes are depleted. The schedules will doubtless slip. But in contrast to previous sales, the government has made its plans for the country’s leading companies surprisingly explicit and its timetables unusually clear. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708713-vinamilk-one-attractive-firms-sale-vietnams-government-cream-crop/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Technology in China + +Insanely virtual + +China leads the world in the adoption of virtual reality + +Oct 15th 2016 | SHANGHAI | From the print edition + +Better reality + +AT THE heart of an emerging technology cluster in London’s Shoreditch lies the Stage, a big mixed-use building complex that is being developed by Vanke, a Chinese real-estate company, among a few others. A potential Chinese buyer of one of the flats in its 37-storey residential tower recently had a look around. She went from room to room, observing the furnishings and fittings. She marvelled at the city views from the balcony and peeped inside the refrigerator. There was no need for a flight to London. She toured the property using virtual reality (VR) goggles at Vanke’s global marketing centre in Shanghai. + +The use of VR kit is quickly becoming widespread in China’s property industry. Few real-estate firms in other countries are as advanced. China is fast emerging as the world’s most important VR market, thanks to rapid adoption by property firms and by companies in other industries. The prompt take-up is not because Chinese firms make the best VR headsets, which they do not. In fact, the pioneers in cutting-edge hardware are America’s Oculus, which is owned by Facebook, Japan’s Sony, South Korea’s Samsung and Taiwan’s HTC. It is in California, not Chengdu or Chongqing, that the best software for VR games and movies is being developed. + +But professional use of VR by Chinese companies (rather than by consumers) means that the place where the fledgling industry may make its very first fortune is the Middle Kingdom. Goldman Sachs, an investment bank, forecasts that the global VR market could well expand from next to nothing now to be worth as much as $60 billion by 2025. Hardware would account for half of the market and software the rest. Goldman also predicts that mainland China will already account for a third of global VR headset sales this year (see chart). + + + +In the West the interest in VR has mainly focused on consumer applications like gaming. By contrast, in China business applications are an immediate and profitable avenue for growth. Property developers like Vanke are using VR to peddle expensive properties that are overseas or not yet built, and architects are using it in design. Education is another promising field. NetDragon, a Chinese software firm that attracted attention when it acquired Britain’s Promethean World, an online education outfit, for some $100m last year, is testing how VR software and hardware can be used in mainland schools (one idea is that headsets could tell when children are tilting their heads, indicating boredom, meaning a change of subject or teaching method is required). + +Companies specialising in VR are spending a great deal of time examining the growth in China’s market. In addition to the quick adoption by Chinese businesses, this is for two other reasons to do with the consumer side, reckons Huang Zhuang, founder of China’s Nao Chuan Yue, a startup VR outfit. First, mainlanders are enthusiastic early adopters of whizzy technologies, even if the early versions are somewhat imperfect. Second, China leads the world in the use of the mobile internet. Mr Huang is convinced that the majority of users in future will access VR via their web-connected smartphones, not via goggles attached to personal computers or self-contained devices. + +In other countries, including America, it is difficult for people to try out VR technology, notes Ryan Wang of Outpost Capital, a Californian venture-capital firm with investments in the sector. They have to fork out $1,000 or more to experience high-end VR. That means there is as yet no clear, affordable path for American consumers to adopt the technology, says Mr Wang. + +China, on the other hand, already has a full infrastructure in place for consumers to try it out. The very best VR equipment, such as HTC’s snazzy Vive goggles, can be found at theme parks, shopping malls and experience centres right across the mainland. There are over 100,000 internet cafés offering VR sessions for just a few dollars. Dozens of local manufacturers are making cheap VR adaptors for smartphones. Purists look down on them, yet they could prove useful “gateway drugs” into what VR could eventually become, says Anjney Midha of KPCB Edge, a technology investment firm in Silicon Valley. + +So great is China’s potential that HTC is treating the market as its first priority. The firm has forged alliances with Suning and Gome, two Chinese electronics retailers, to distribute its products. It plans to set up over 10,000 sophisticated “experience centres” for VR across the country. It has made deals with thousands of karaoke bars and gaming cafés. Alibaba, a big e-commerce firm, plans soon to launch a service that will allow the purchase of physical goods using VR equipment. VR movies are soon coming from Tencent, a gaming and messaging giant. “There is faster adoption and a wider embrace of VR here than in any market in the world,” declares Alvin Graylin, a VR executive at HTC. + +It is possible that VR executives are making overly optimistic projections, as if wearing their own headsets, but the moneymen are certainly listening. A consortium of several dozen venture-capital firms that are investing in the sector, organised by HTC, held its first meeting on September 20th. Fittingly, although the group included several Silicon Valley firms, the get-together took place in Beijing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708715-china-leads-world-adoption-virtual-reality-insanely-virtual/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Business schools + +Campus vs beach + +The full-time MBA is under pressure from specialist degrees and online education + +Oct 15th 2016 | From the print edition + + + +THE CONVICTION that the secrets of commerce can be taught in a classroom, whether real or virtual, shows little sign of fading. In America, more master’s degrees are awarded in business than in any other discipline—over 189,000 in the 2013-14 academic year, the latest for which figures are available. Business is the most sought-after master’s qualification in the world. The majority are masters of business administration (MBA), covering a broad range of business skills, a qualification that is close to a mandatory requirement for a budding tycoon. At any one time, around two-fifths of chief executives at Fortune 500 companies are likely to hold an MBA. + +Yet a fresh case study on the MBA may be in the making. Interest in the full-time variety has waned markedly in recent years. Applications to most programmes are either falling or static, according to the Graduate Management Admission Council (GMAC), an association of business schools. Data from The Economist’s own latest ranking of full-time MBA programmes tell the same story. Five years ago, a business school on our list could typically expect to receive 17 applicants for each available full-time MBA place. This year the figure is 10. + +The MBA is under pressure on two fronts; from specialist masters degrees, for example in finance or data, which are growing in popularity; and also from online education, which is quickly shedding its former, shoddy reputation. Specialist degrees are taken straight after a bachelor’s degree, and appeal to today’s new graduates, many of whom are still feeling the effects of the Great Recession. Unemployment among recent graduates in America is back to pre-recession levels, but underemployment is higher, at 12.6% compared with 9.6% in 2007, according to the Economic Policy Institute (EPI), a think-tank. + +This has encouraged many to shelter in education for a while longer and to learn a specialised discipline. Yulia Kot, a 21-year-old graduate reading for a masters in international finance at HEC Paris, says she needed a “big push” before embarking on a career in investment banking. Because jobs in that sector are now hard to come by, she says, she has to have the specialised qualification. Big data is another growing area of study. Last year, 94% of schools that offer a masters in subjects such as business analytics saw applications rise significantly. It was big business itself that lobbied for the programmes, says Daniel Wright, vice dean of Villanova University’s business school in Pennsylvania, because firms found that traditional MBAs were falling short in areas such as statistics. + +Students who take the specialist business degrees and who then start in the workforce are far less likely to want to stop five years into their job and take a full-time MBA. And recruiters, too, are less keen on hiring MBAs. Big banks, in particular, hit by the crisis, no longer run huge business-school recruiting programmes. Employers now have two main needs, say MBA experts. They are looking for people they think have leadership skills, and who can come up with ideas on strategy, but they also need graduates who can carry out specific, complex tasks. They tend to raid generalist MBA programmes for the former and specialised masters programmes for the latter. + +Those bent on the generalist qualification, meanwhile, are increasingly choosing internet MBAs. These used to be thought of as a poor substitute for the real thing, offered by so-called degree factories, from which few of the thousands of business students who joined would actually graduate. But things have moved on. The very best business schools are offering online MBA programmes, and their number will grow by 9% next year, according to GMAC. “We often mistake the fact that millennials were born digital with a desire for online formats,” says Sangeet Chowfla, the president of GMAC. In fact, millennials want the experiences that come from campus education. Online options appeal most to the older generation, who can combine them with their full-time jobs, he says. + + + +The high cost of the traditional MBA has left it particularly vulnerable both to specialist degrees and to the online sort. Tuition fees for HEC Paris’s 16-month MBA, for example, are €58,000 ($63,768), compared with €31,000 for its one-year masters in international finance. The return on investment—ie size of salary—from an expensive, traditional MBA has gone down since the recession. + +There are online courses that cost nearly as much as their full-time cousins—the online MBA at the University of North Carolina, which comes 22nd on The Economist’s ranking, for example, costs $105,000, not much lower than the flagship campus programme—but most are far cheaper. Many students enrolled on the course at the University of North Carolina are firmly attached to their jobs and would not have considered an MBA course were it not for the chance to study online. Michelle Middleton, the chief operating officer of an insurance firm in New York, says that, 28 years after she took her undergraduate degree, returning to campus for an MBA was never an option, but with the online version she was able to complete classes on planes, trains and even the beach. Her firm promoted her twice as she studied. + +Critics of online programmes argue that nothing beats the immersion that a university campus offers, where students mix daily with members of faculty and with well-connected peers. It is a selling point for the best business schools. Mid-ranking institutions may be struggling to fill classes for traditional, full-time, campus-based MBAs, but those at the top have no shortage of applicants. As the number of average MBA courses expanded in recent years, it is seen as more important to make an impression on employers by attending one of the top schools. The dean of the Tuck school at Dartmouth College, Matthew Slaughter, says that nothing could convince him, for that reason, to launch a wholly online MBA (it is a highly-ranked school). + +For most in the sector, it seems inconceivable that a serious business school would not offer a full-time MBA. But over the past few years some, including ones formerly included in The Economist’s ranking, such as North Carolina’s neighbour, Wake Forest University, have abandoned their flagship campus programmes and now offer only part-time courses. More may soon depart from the traditional approach. As one old business-school saw has it, organisations must adapt or die. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708714-full-time-mba-under-pressure-specialist-degrees-and-online-education-campus-vs-beach/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The world’s best MBA programmes + +Worth it? + +Oct 15th 2016 | From the print edition + + + +While many MBA programmes are feeling the pinch, life is rosy for the very best business schools. Chicago retains its place at the top of our ranking of full-time MBAs. It is the sixth time in seven years that it has taken first place. Like most of Chicago’s peers, nearly all of its MBA class can expect to find a job immediately after graduation, with a basic salary well in excess of $100,000. Such degrees do not come cheap. The average cost of tuition at the top 15 schools is $112,000. America, the spiritual home of the MBA, dominates our list, accounting for 11 of the top 15 schools. The ranking is based on a mix of hard data and subjective marks given by students. It weights data according to what students tell us is important. The four categories covered are: opening new career opportunities (35% weighting), personal development and educational experience (35%), increasing salary (20%) and the potential to network (10%). + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708719-worth-it/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Schumpeter + +The business of outrage + +Some Americans are getting rich by pushing politics to extremes + +Oct 15th 2016 | From the print edition + + + +ONE of the gentler quips uttered by the writer and thinker H.L. Mencken was that nobody ever went broke underestimating the intelligence of the American public. By the same token, nobody ever went broke overestimating the anger of the American people. The country is in an unusually flammable mood. This being America, there are plenty of businesspeople around to monetise the fury—to foment it, manipulate it and spin it into profits. These are the entrepreneurs of outrage and barons of bigotry who have paved the way for Donald Trump’s rise. + +The very first of them was Rush Limbaugh who, back in the 1980s, transformed himself from a disc jockey into a radio commentator. Mr Limbaugh shook up the ossified talk-show format by dispensing with the tedious call-ins and adding anarchic humour. Soon an army of “ditto-head” followers hung on his every word. He has 13m regular listeners and hundreds of imitators, ranging from national stars such as Sean Hannity to local ranters. + +The second entrepreneur of outrage was Roger Ailes, a Republican operative who teamed up with Rupert Murdoch to build Fox News. Mr Ailes took talk radio and added TV production values and 24-hour news. Mr Ailes has now left Fox News following a sex scandal. But his formula—outspoken conservative pundits (such as Bill O’Reilly and the ubiquitous Mr Hannity) plus serious journalists—continues to produce results. Fox is the highest-rated cable-news channel but is also respectable enough to host presidential debates. + +The internet produced a new crop of outrage merchants. Matt Drudge got in early with a quirky website that published material the mainstream press deemed too hot to handle. Then 9/11 and an outpouring of patriotism gave another boost to the conservative blogging industry. But the most successful of the internet generation was Andrew Breitbart. He started in journalism working for Mr Drudge, then helped Arianna Huffington set up her website and put the two experiences together to launch Breitbart News—a no-holds-barred website that spends at least as much time attacking liberal institutions as it does commenting on daily news. Mr Breitbart died of a heart attack in 2012, aged 43, but found an equally hard-edged successor in Stephen Bannon. + +Messrs Limbaugh and Breitbart were quintessential examples of Clay Christensen’s “disruptive innovators”. They discovered a vast, underserved market—people who were interested in the news but who had little in common with the Ivy League university-educated liberals who dominated regular news outlets such as NPR. Mr Limbaugh used a technology that was supposed to be dying—AM radio—but which allowed him to communicate with his followers as they drove to work. Breitbart News built an audience of millions without backing from a bigger media company. Contrary to what Marshall McLuhan, a media scholar, said, what mattered was not the medium but the message. + +The message that flew off the shelves was outrage. Messrs Limbaugh & Co divided the world into two camps—hardworking Americans struggling to make a living versus liberals bent on taking them for a ride. They railed at limousine liberals who preached one thing and did another. They reserved particular venom for internal traitors—RINOs (Republicans in name only) and (soft) squishes—who were constantly selling them out in return for establishment kudos. Mr Limbaugh summed up the outrage entrepreneur’s formula for success in a single phrase: “What the hell is happening out there?” + +Fury can easily turn into bigotry. Mr Limbaugh called Sandra Fluke, a student who campaigned for free contraception, “a slut”. And, like drug addicts, outrage junkies require ever stronger fixes to achieve the same effect. Breitbart News, in particular, has excelled in pushing boundaries. It has employed undercover “journalists” to get people to say shameful things. It specialises in publishing items of “click bait” that have little factual basis but create an image of a world gone wild. It has provided platforms in its comment section for members of far-right hate groups who rail against immigration and Jews. + +The outrage industry has clearly reached a milestone with Donald Trump’s presidential campaign. Mr Trump’s training for his reinvention as a politician was the show “The Apprentice” on NBC. He won the hearts of 13m Republican primary voters by recycling conservative media hits such as “build a wall” and “ban all Muslims”. He tried to rescue his troubled campaign by drafting Mr Bannon as his chief executive. + +There are big bucks in bigotry + +The question in American politics is whether the milestone is the end point or another marker on a long road. Many Republicans reckon the outrage industry is a mortal threat to their party, landing them with an unelectable candidate for what should have been a winnable election. “They’re in the hate business, they’re a bunch of nuts,” Stuart Stevens, Mitt Romney’s chief election strategist, said on CNN about Breitbart. The formula may not last. The audience for talk radio and Fox News is ageing. Advertisers are reluctant to be associated with toxic content. Several mainstream brands fled Mr Limbaugh’s show after his “slut” remarks. + +Yet anyone who thinks the outrage boom is finished is likely to be disappointed. If Mr Trump wins the election, America will discover what it is like to be run by the entrepreneurs of outrage. If he loses, he may turn his presidential campaign into a media empire, encompassing 24/7 Trump TV and more. Conservative media will still have the doings of the Clinton family to help propel profits from all those who hate them. And foreign markets beckon. Breitbart News has opened offices in London, and is producing a stream of stories about Islamic terror attacks, the refugee crisis and Brexit. It plans to expand into Belgium, Germany and France. Whatever happens on November 8th, Mr Trump’s presidential campaign signals that there is worse to come. + +This article appeared in the Print Edition with the headline: The business of outrage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21708718-some-americans-are-getting-rich-pushing-politics-extremes-business-outrage/print + + + + + +Previous Articles Sections Next + + + + + +Finance and economics + + + + +Chinese property: When a bubble is not a bubble + +Buttonwood: Flash and the firestorm + +Wells Fargo’s boss stands down: Stumpfed + +Portugal’s economy: Adventure tourism + +America’s workers: Feel the force flow + +Bangladesh’s missing millions: Hide and seek + +Payment-card fees: Marked cards + +Free exchange: Hard bargains + + + + + +Articles Sections Next + +Chinese property + +When a bubble is not a bubble + +A severe imbalance in land supply fuels China’s wild property market + +Oct 15th 2016 | SHANGHAI | From the print edition + + + +ESTATE agents in China, as elsewhere in the world, are normally a smooth-talking, self-assured bunch. But Liu Zhendong, a salesman at a large development in the northern reaches of Shanghai, is afflicted by doubts. He had expected business to be solid and steady this year. Instead, it has been manic, with clients jostling to see show apartments. Some had hoped to wait for the market to cool, but capitulated and bought as prices climbed higher week after week. Flats in the area, the once-rural village of Malu, still dotted with fields and scruffy wholesale food markets, now cost 90% more than a year ago. “It feels a bit like a bubble,” he says. + +Mr Liu is in good company. Even the head of the central bank’s research bureau, usually cautious in his choice of language, has said a property bubble must be stopped before it gets too big. House prices have climbed by 16% nationwide over the past year, and double or even triple that in big cities. So in the past two weeks more than 20 municipalities have tried to calm the market down—for example, by requiring higher down-payments or limiting purchases by residents of other cities. + +As the past decade has shown, the ups and down of China’s housing market are of global significance. Totting up the property sector’s impact on investment and consumption (all the furniture and gizmos that fill new homes), it accounts for about a quarter of Chinese GDP. So this year’s rebound has prompted both hope and dread. It has helped GDP growth stabilise at about 6.7%, faster than most analysts forecast in January (third-quarter data will be released on October 19th). Stronger demand for iron ore and copper has given beleaguered miners a measure of relief. + +Optimism, however, has been tempered by concerns about the nature of the revival. Surveys indicate that about one-fifth of buyers are investors rather than owner-occupiers. CEBM, a research firm, estimates that this share rises to up to 60% in core districts of mid-sized cities. Even more worrying has been the increase in property developers’ borrowing. Zhang Zhiwei of Deutsche Bank says they face a prisoner’s dilemma: if too conservative, they will get squeezed out of the market; so they choose to be aggressive. They have driven up land prices by 66% this year, according to an index of 100 leading cities. Mr Zhang examined 252 of these land auctions and concluded that two-fifths of winning bidders will lose money if house prices level out, let alone decline. + + + +The sharp rise in house prices also seems out of kilter with the broader economic picture. Income growth is slowing as the economy matures, making homes steadily less affordable. That helps explain the frenzy in the market. During a holiday week at the start of October, huge crowds swamped sales centres when new properties were put on the market. In Shanghai, divorces have spiked as people take advantage of a loophole in regulations. Couples can get a preferential mortgage rate only on their first home. Divorced spouses can benefit by buying homes separately and then remarrying. + +Such behaviour smacks of irrational exuberance, but caution is in order before delivering that verdict. Investors, analysts and the press have been predicting Chinese real-estate Armageddon for the better part of a decade. But there has been no nationwide crash. Prices have weakened for a time, typically when the government clamps down on buying, only to take off again every few years. + +For all the signs of excess, officials have in fact done well to guard against the biggest potential vulnerability: over-borrowing by homebuyers. Despite a recent surge in mortgage lending, household balance-sheets are on the whole in good shape. Moreover, strict down-payment rules mean that buyers typically put up cash for as much as half the price of the home. Even if prices fall, they are unlikely to walk away from their mortgage debt. This helps insure against the downward spiral of foreclosures and falling prices that has wreaked havoc in other countries. + +This is not to deny that the Chinese property market faces serious problems. But “bubble” may be a misdiagnosis. The real pathology is a severe imbalance in land supply, argues Larry Hu of Macquarie Securities. Smaller cities have plenty of land for building but shrinking populations. Big cities, where people actually want to live and work, are sitting on large land banks but releasing only small plots. Shanghai has about 1,800 sq km of farmland but sold only five sq km for home-building last year. The result, predictably, has been soaring home prices. + +Why not sell much more land in big cities? Doing so would fundamentally alter the rules of the game, causing pain for lots of important players, Mr Hu argues. Governments in big cities count on incremental land sales as a source of revenue; governments in small cities hope the restrictions will eventually send people their way. This is, in other words, a political problem as much as an economic one. + +Mr Liu, the agent at the Malu development, knows both sides of the property market. A few years ago he bought a flat in his home town of Jiuhuashan, a five-hour drive to the south-west. It now gathers dust, empty except for a week during the Chinese New Year holiday, when he returns home. Still young, he has no intention of moving back to Jiuhuashan permanently. The mountains there are stunning but the economy sleepy. Rather, Mr Liu hopes to buy a home in Shanghai eventually and has started saving up for it. The booming prices of the past year have kept him busy at work, but pushed his dream ever further into the distance. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708674-severe-imbalance-land-supply-fuels-chinas-wild-property-market-when-bubble/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Buttonwood: Sterling’s woes + +Why sterling suffered a “flash crash” + +The pound’s weakness is a vote of no confidence in Brexiting Britain + +Oct 15th 2016 | From the print edition + + + +IF A country’s exchange rate represents international investors’ confidence in its government’s policies, the markets have given Britain the thumbs-down. So far this year, only the Nigerian naira among major currencies has put in a worse performance. + +The decline seems to be accelerating. On October 7th the pound fell from $1.26 to $1.18 against the dollar within a few minutes, with one trade reported below $1.14. The shift occurred during Asian trading, when liquidity in sterling is likely to be thinnest. The most likely explanation for the plunge lies in the action of algorithmic trades—computer programs that automatically buy and sell assets, from currencies to commodities. Such programs may be designed to sell when an asset’s price falls below a certain level. These sales can be contagious, with one program’s trades setting off the sell signals of other algorithms. + +The most famous “flash crash” occurred on Wall Street in May 2010, when the Dow Jones Industrial Average fell by almost 1,000 points in the middle of a trading day. On that occasion, the market righted itself before drifting lower in subsequent weeks. This time, even an initial rebound in the pound still left the currency significantly weaker on the day and it dropped below $1.21 on October 11th. In trade-weighted terms, it is close to a record low (see chart). + +That points to three conclusions. The first is that there was more at work than algorithms. The pound’s fall followed a series of speeches at the annual conference of the ruling Conservative Party, which were widely perceived as anti-business and anti-immigrant. + +Following the referendum in which Britain voted to leave the EU, the government appears to be pursuing a “hard Brexit”, in which economic aims (free trade and membership of the single market) are subordinated to the political priorities of legal sovereignty and reduced immigration. Analysts at UniCredit, an Italian bank, said that “investors are now perplexed by the country’s vision on immigration, openness and business friendliness. This will be detrimental to the outlook for sterling given the global status that the UK has enjoyed for many years.” + +When investors lose confidence in a country’s policy, they can show their displeasure by selling its government debt, forcing yields higher. That was the cause of the firestorm in the euro zone in 2010-11. But in Britain, which has issued debt in its own currency, its central bank can buy it. It has recently resumed doing so, via a quantitative-easing (QE) scheme. Its ten-year bond yields have drifted higher but they are still just 1%, close to historic lows. + +The second lesson of the flash crash is that volatility will emerge where it can. Europe had tried to reduce foreign-exchange risk by creating a single currency. So the bond market took the strain. Now that several central banks are pursuing QE policies, the bond-market vigilantes, who so terrorised governments in the 1980s and early 1990s, have been neutered. + +According to analysts at HSBC: “The question we have asked hundreds of investors throughout the world is ‘do you want to buy a currency that has massive twin deficits [ie, in its government budget and current account] with an unknown political direction and for that risk you can get zero rates?’ We should have some kind of risk premium.” Since it is not showing up in the bond markets, they argue, the currency takes the heat. + +Because inflation is below target, the Bank of England will probably be relaxed about the impact of a weaker pound; indeed, since its last action was to cut interest rates, it seems unlikely to tighten monetary policy to defend sterling. But the effect of higher inflation will be a squeeze on real incomes for British workers. Unless a currency is overvalued (as the pound was in 1992), voters should not generally cheer rapid depreciations. Repeated devaluations have not made Venezuelans or Zimbabweans rich. + +The third lesson of the flash crash is that markets are not as liquid as they used to be. This seems to be a consequence of tighter banking regulations after the 2007 crisis: banks are less willing to commit capital to trading. + +That is probably a net gain for financial stability. Banks have lots of leverage and big losses create a systemic risk; long-term institutional investors such as pension funds and insurance companies can absorb the pain of short-term asset-price moves. But it means that market-watching will increasingly resemble the life of a soldier: long periods of calm interspersed with moments of blind panic. + +Economist.com/blogs/buttonwood + +This article appeared in the Print Edition with the headline: Flash and the firestorm + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708673-pounds-weakness-vote-no-confidence-brexiting-britain-why-sterling/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Wells Fargo’s boss stands down + +Stumpfed + +What a scandal says about Americans’ attitude towards banks + +Oct 15th 2016 | NEW YORK | From the print edition + +Retired hurt + +WHEN you consider the hundreds of billions of dollars of losses and fines that the banking industry has made or incurred over the past decade, the affair that has just ended the career of John Stumpf, the boss of Wells Fargo, may at first seem innocuous. In September Wells admitted that its retail-banking sales people had been too pushy, and agreed to pay regulators a $185m fine, a tiny sum by recent standards (Deutsche Bank is presently in negotiations to pay a fine of perhaps $5 billion to American regulators). Mr Stumpf probably thought that he had a couple more happy years to go as the head of the world’s most valuable bank. + +But on October 12th, he stepped down after being roasted alive for weeks in an inferno of criticism. Wells’s transgressions have caught the public mood far more than esoteric abuses in the mortgage-backed-security market ever did. The bank admitted that its staff created up to 2m bogus accounts, without customers’ permission, in order to meet aggressive sales targets. To many Americans fed up with banks’ red tape and lousy service that seemed reckless, unforgivable and possibly criminal. + +Wells had already sacrificed some lambs, having fired over 5,000 employees involved in the fake accounts, and engineered the retirement, in July, of the executive in charge of its retail arm. But over the course of the past month the pressure grew on Mr Stumpf, who forfeited $41m in compensation. He was savaged in a congressional hearing, where he said that he, as chief executive, was accountable to the board, of which he was chairman. Politicians asked why bank regulators took the mass fabrication of accounts so lightly. Chicago’s city council said it would boycott the bank. Eventually the episode began to squeeze the bank where it really hurt: its share price. Wells’s market capitalisation has dropped by $25 billion since the start of September, and it has lost the global top spot to JPMorganChase. + +Wells will hope that the scandal will now pass. Mr Stumpf has been replaced as chief executive by Tim Sloan, a bank veteran. Unusually for a big American bank, it will now have a non-executive chairman, Stephen Sanger. Despite the fake accounts scandal, the bank is in decent condition. It sailed through the 2008-10 crisis, buying a distressed competitor, Wachovia, and is profitable and well capitalised. It is relatively simple and focused on America. + +Even so, investigations and legal cases relating to the affair will simmer for years. The hostility comes from both left and right. Elizabeth Warren, a left-wing senator, has denounced the bank in furious terms. But so has Jeb Hensarling, a libertarian congressman in charge of the House Financial Services Committee, who has previously argued that banks are over-regulated. He has said his committee’s inquiry into the bank will continue. + +For the rest of the industry, the Wells affair has three lessons. First, the cumulative effect of bank scandals and a mood of populism means that the environment may still be as dangerous as immediately after the 2008-10 crisis. Investors are worried that scandals they once would have viewed as minor can spiral out of control. A mesh of litigation, boycotts and bad publicity can damage long-term profits. + +Second, banks may need to make their boards more independent, to create a firebreak when executives mess up. Wells Fargo is not the first big bank to split the chairman and chief-executive roles—Citigroup did in 2007. But JPMorganChase, Morgan Stanley, Bank of America and Goldman Sachs are still ruled by all-powerful figures, such as Jamie Dimon (JPMorganChase) and James Gorman (Morgan Stanley). That is now harder to justify. + +The final lesson is for those all-powerful figures. Mr Stumpf was a highly regarded figure in the industry, and Wells viewed as a well-run firm. Yet, at best, he seems to have been unable to control the workings of his organisation, with its $2 trillion balance-sheet and 265,000 staff. Several other banks are as big as Wells and almost all are more complex than it, straddling lots of different countries. It seems unlikely that Wells Fargo is the only one that has become a nightmare to manage. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708696-what-scandal-says-about-americans-attitude-towards-banks-stumpfed/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Portugal’s economy + +Adventure tourism + +Weak growth makes Portugal vulnerable again + +Oct 15th 2016 | From the print edition + + + +VISITORS to Lisbon, Portugal’s hilly capital, usually seek its nightlife, its sweet custard tarts (pasteis de nata) or its gothic architecture. But no guidebook could help two visitors on October 10th. The pair of analysts, from Dominion Bond Rating Service (DBRS), a Canadian credit-ratings agency, went to assess the creditworthiness of the Portuguese government. + +Markets are waiting anxiously for October 21st, when DBRS will update its rating of Portuguese sovereign debt. Hints from DBRS have been playing havoc with the ten-year bond yield: in August a gloomy comment from Fergus McCormick, DBRS’s chief economist, saw it climb 14 basis points (hundredths of a percentage point). This week, word that DBRS was “totally comfortable” with the government’s fiscal position saw it dip by ten basis points. + +This unusual attention to a little-known ratings agency is due to the eligibility rules for the European Central Bank’s (ECB) quantitative-easing scheme. The ECB will buy only sovereign debt that is rated as investment grade by at least one of four approved ratings agencies: Fitch, Moody’s, Standard and Poor’s and DBRS. At the moment, only DBRS grades Portuguese sovereign debt above the threshold. A downgrade would also prevent the ECB accepting Portuguese debt as collateral for banks within its liquidity scheme. + +A negative decision would hit confidence and demand for Portuguese government bonds. In September alone the ECB bought €1 billion ($1.1 billion) of them, a big amount in a market worth just €112 billion overall. A rise in borrowing costs would hurt, though a lurch back into full-fledged crisis is unlikely. The government’s debt-management agency has a lot of cash on hand, and it has been actively refinancing its borrowing on longer maturities. According to Kathrin Muehlbronner, of Moody’s, it “can certainly stay out of markets for quite a while.” + +Higher debt yields would, however, dampen the economic outlook. A downgrade would also put pressure on the Portuguese banks, by depressing the value of the government bonds they hold and obstructing their access to ECB liquidity. Andre Rodrigues of Caixa-Banco de Investimento, an investment bank, does not think access to liquidity is a problem in the short term, because bank balance sheets are “awash” with liquidity. But a downgrade would make it pricier. + +All this puts DBRS in a tricky position. It has become part of the risk it is trying to assess. But Mr McCormick insists its decision will be based on longer-term fundamentals. Even the details of the budget for 2017, due to be presented to the European Commission by October 15th, are unlikely to influence its decision too much, as shaving the deficit by a few percentage points will not alter the basic fiscal position. + +Deep problems lurk in the Portuguese economy, particularly in its banking sector. Portuguese banks suffer from a squeeze on profit margins from low interest rates, high costs and murky asset quality. On October 11th the Bank of Portugal, the central bank, revealed that 16.5% by value of corporate loans were non-performing, and as much as 36% in the construction sector. And although in August the European Commission agreed that the Portuguese government would be allowed to inject up to €2.7 billion of capital into Caixa Geral de Depositos (CGD), the state’s exposure to CGD (the country’s largest bank) could still amount to 1.5% of GDP. + +An even bigger concern is the pace of Portuguese economic growth. In January the government expected GDP to grow at 2.1% in 2016, but so far this year it has staggered ahead at less than half that rate. The outlook is grim: structural reforms have disappointed; euro-zone demand is weak; and the hawkish glare of the commission limits room for a fiscal kick. + +Weakness is self-reinforcing. Investment is being stifled by the weight of the corporate sector’s debt, which is close to 140% of GDP. And unhealthy banks cannot afford to force borrowers to the wall. In theory, the previous government made it easier to restructure debt, but in practice this is not being seen, says Ms Muehlbronner. + +Commenting on the most important factors influencing DBRS’s decision, Mr McCormick says, “it’s not debt, it’s growth.” The days up to October 21st will be spent trying to work out whether recent weakness is enough to destabilise the Portuguese government’s debt-to-GDP ratio. A decision of no change would be a vote of confidence, at least for now. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708686-weak-growth-makes-portugal-vulnerable-again-adventure-tourism/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +America’s workers + +Feel the force flow + +How long can America create jobs without unemployment falling? + +Oct 15th 2016 | WASHINGTON, DC | From the print edition + + + +YOU would expect strong job growth to be accompanied by falling unemployment, but America is proving that one does not always entail the other. Over the past year, employment is up by fully 3m but the unemployment rate has stayed around 5%. In fact, a few more workers are unemployed than a year ago (see chart). The reason is that more Americans are seeking jobs. Over the past 12 months the labour-force participation rate of so-called “prime-age” workers—those between 25 and 54—is up by just under one percentage point, the fastest growth recorded since January 1989. Economists trying to spot inflation on the horizon want to know how long this trend can continue. + +The recent surge in prime-age participation follows a long decline from its peak, 84.6%, scaled in January 1999. Between then and September 2015, it tumbled by an average of about a fifth of a percentage point a year. Among men, it had been falling since the mid-1960s. The long slide accelerated after the financial crisis, as laid-off workers quit the labour force in droves. + +Hence the refrain of some that low unemployment is a mirage: stronger economic growth, they say, could draw plenty of folk back into work. Indeed, some 1.8m people say they want a job, but are not technically in the labour force because they have not recently looked for one. Restoring the employment-to-population ratio among prime-age workers to its pre-crisis high would require getting all these hands to work and then some: a total of at least 2.9m new jobs would be needed (or more, since the prime-age population is growing by about 0.3% a year). + +This reservoir of potential workers remains untapped. Rising participation does not reflect more Americans getting off the couch to seek work. Rather, the long-term unemployed are less likely to stop looking for a job. The probability of a worker who has been unemployed for 53 weeks or more leaving the workforce in a given month is about 25% today, down from over 30% at the end of 2015, according to Zach Pandl and David Mericle of Goldman Sachs. That more than accounts for higher participation, they say, because rejoining the workforce has become slightly less common over the same period. The newfound reluctance of jobseekers to give up may reflect the restoration in January in 22 states of strict limits on the period when the jobless can claim food stamps. + +This wealth of potential workers suggests that participation could rise much further. But there are reasons for scepticism. A new paper by Alan Krueger of Princeton University finds that participation is only loosely connected to short-term swings in the economy. Instead, Mr Krueger identifies several underlying factors holding it down. For instance, even within the prime-age bracket, the population has been ageing. Those aged 45-54 have long been less likely to work than those aged 25-34. And prime-age men outside the workforce are in startlingly bad health. Nearly half of them take painkillers daily; 34% report at least one disability (though only 25% receive disability benefits). A vast majority say that their disability is a barrier to employment. + +An unpublished paper by Mark Aguiar at Princeton University and three co-authors suggests another potential obstacle: that better video games could be luring young men away from work. Mr Krueger reports that among men aged 21-30 “idleness”—meaning not working, seeking work or studying—rose by 3.5 percentage points between 1994 and 2014. Over the past eight or so years, the time young men outside the labour force spent gaming rose from 3.6 to 6.7 hours per week. + +Any of these forces could halt the recovery of participation, but it is hard to know whether they will. Messrs Pandl and Mericle think the remaining slack in the labour market is equivalent to only 0.5% of the workforce. But their estimate has been roughly flat since early 2016, suggesting the economy’s speed limit is not being tested. Until it is, the Federal Reserve, which is pondering raising interest rates, should let employment keep growing strongly. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708694-how-long-can-america-create-jobs-without-unemployment-falling-feel-force-flow/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Bangladesh’s missing millions + +Hide and seek + +The Great Central Bank Robbery is a mystery—and likely to remain one + +Oct 15th 2016 | DHAKA AND MANILA | From the print edition + + + +IT WAS one of the most spectacular robberies of modern times. In February thieves tried to steal nearly $1 billion from accounts held by Bangladesh Bank, the central bank, at the Federal Reserve Bank of New York. They were thwarted, but only after spiriting away $101m. Since then Bangladesh’s government has twice suppressed the publication of a report into the heist, most recently last month, on the ground that making it public would jeopardise efforts to retrieve from the Philippines $81m that is still missing. Interviews with officials and others in Dhaka lead to an obvious conclusion: the report will almost certainly never be made public. + +The investigating panel’s remit was to establish why the central bank kept the theft secret for a month, whether bank officials were involved in it and how to avert a similar heist in future. Mohammed Farashuddin, a former central-bank governor, who led the probe and once advocated its publication, will not comment on its findings. The word in Dhaka is that the report is being buried because it exposed lapses at the central bank and implicated its officials or consultants. The government has consistently blamed outsiders: hackers, the New York Fed and SWIFT, the messaging network for cross-border payments on which the transactions took place. + +The government is still trying to retrieve stolen money from the Philippines. Much of it flowed through casinos in Manila. The country’s president, Rodrigo Duterte, has promised to help. In September a court in the Philippines ordered the central bank, which received some of the stolen money, to return $15m. Filipino officials may be hoping the Bangladeshis will take their money and leave them in peace. That is a small price to pay for keeping their money-laundering controls lax enough to continue to attract wealthy Chinese gamblers. + +Nobody has yet explained how the thieves managed to send the New York Fed properly authenticated SWIFT transfer orders. Nor is it clear why the Fed’s controls failed to stop odd-looking transfers to accounts held by individuals. Few think it possible to hack into the SWIFT systems at Bangladesh Bank and issue transfer orders without the physical presence of a person inside the central bank. If it did turn out to be possible, it would be hugely worrying for the global payments system: SWIFT covers half of all big cross-border transfers. It is more likely that the criminals did have access to the SWIFT terminals in the bank. That would suggest the heist was at least in part an inside job: a collaboration of hackers and bank employees or others who were allowed close to its SWIFT terminals. + +As Bangladesh’s politicians stonewall, that is the line of inquiry that its sleuths are pursuing. The police’s Criminal Investigation Department (CID) wonders if the SWIFT staff or consultants who installed the central bank’s systems were involved (or at least negligent); SWIFT denies this. The CID wants to talk in Dhaka to these eight individuals—Indian and Sri Lankan nationals—but has not yet managed it. The race is not always to the SWIFT. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708670-great-central-bank-robbery-mysteryand-likely-remain-one-hide-and/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Payment-card fees + +Retailers and issuers are still battling over payment –card fees + +Five years after a crackdown by the Federal Reserve, the credit-card industry is earning more from interchange fees than ever + +Oct 15th 2016 | From the print edition + + + +IN 1966 a medical journal identified a condition it dubbed “credit-carditis”: lower-back ache, with pain radiating down the leg—caused by a back-pocket wallet stuffed with plastic. Payment cards still inflict pain of a different sort. American merchants paid more than $40 billion to process debit- and credit-card transactions in 2015. Despite a reform by the Federal Reserve in 2011 aimed at reducing these costs, revenue from these so-called “interchange fees” has more than doubled since the financial crisis. Retailers are still in revolt; banks are still resisting. That is not surprising, since they rely on the fees for a large and growing share of their income. + +American consumers favour debit and credit cards over cash by more than two to one. But this convenience comes at a cost. The seller is charged a fee for every card purchase: in America, typically 0.5% to 3% of its value. These fees are set by payment-card networks, such as Visa and MasterCard and collected by card issuers, such as Wells Fargo and JPMorgan Chase. Some portion of these fees is borne by consumers, including those who pay by cash, in the form of higher prices. + +Retailers have long argued that card networks use their market power to set excessively high fees. Card providers maintain that such fees are necessary to cover the cost of processing payments and combating fraud. Policymakers have struggled to settle the debate. Payment-card markets are hard to regulate. Cap fees too harshly and banks may not bother issuing cards; allow them to climb too high and merchants will stop accepting them. Either way, the consumer would be the loser. + +In 2011 the Federal Reserve capped fees on most debit-card transactions at 21 cents plus 0.05% of the value of the transaction. Payment networks responded by ending discounts on low-price transactions, so fees went up for many small outlets, such as convenience stores. Meanwhile, banks raised customer fees and cut rewards. In 2014 economists at the Federal Reserve estimated that banks recouped nearly half of the lost income with higher service charges and lower card rewards. + +Interchange fees have continued to grow—by over 8.5% a year between 2012 and 2015. Many banks have become increasingly reliant on these fees, which now account for 43% of card fees, according to R.K. Hammer, a bank-card advisory firm (see chart). Chase, America’s largest credit-card issuer, earns nearly 16% of its total revenue from interchange fees. + +Merchants have developed strategies for avoiding card fees. Some no longer accept more expensive cards, or impose credit-card minimums. Others steer their customers to cheaper payment methods. In 2015, Kroger, a Cincinnati-based grocer, installed point-of-sale terminals that routed debit-card payments over PIN debit networks, rather than more expensive, less secure signature networks. After Visa fined it $7m for the offence, Kroger filed suit. Walmart and Home Depot have each sued Visa over similar disputes. + +To offset rising costs, some merchants—from taxi-drivers to utilities—now charge customers for paying with cards. This practice, known as “surcharging”, is no longer banned by payment-card rules, but is still illegal in ten states. The Supreme Court will soon weigh in, hearing a case brought by a group of New York retailers who say the state’s ban on credit-card surcharges is unconstitutional. Whoever wins the legal battle, the plastic wars will rumble on. + +This article appeared in the Print Edition with the headline: Marked cards + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708669-five-years-after-crackdown-federal-reserve-credit-card-industry/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Free exchange + +Hard bargains + +Two economists win the Nobel prize for their work on the theory of contracts + +Oct 15th 2016 | From the print edition + + + +ECONOMICS can seem a rather bloodless science. In its simplest models, prices elegantly balance supply and demand, magically directing individuals’ pursuit of their own self-interest towards the greater good. In the real world, humans often undermine the greater good by grabbing whatever goodies their position allows them. The best economic theorising grapples with this reality, and brings us closer to understanding the role of power relationships in human interactions. This year’s Nobel prize for economic sciences—awarded to Oliver Hart and Bengt Holmström—celebrates their study of economic power, and the tricky business of harnessing it to useful economic ends. + +Behind the dull-sounding “contract theory” for which the two were recognised lies an important truth: that when people want to work together, individual self-interest must be kept under control. For a chef and a restaurant-owner to work together productively, for example, the owner must promise not to use the power he has to change the locks in order to deny the chef his share of future profit. Mr Hart, a British economist working at Harvard University, tackled power dynamics while seeking to explain the existence of firms—a question which has troubled economists since the work of the late Ronald Coase, another Nobelist, starting in the 1930s. Firms provide some advantage over dealing with others through exchanges of cash for services in the open market, but economists have struggled to pinpoint what that advantage is. + +The difficulty in writing contracts that cover all future situations seems to be crucial. Agreeing beforehand how any hypothetical future windfall or loss ought to be shared can be impossible. Yet the uncertainty of working without such a complete contract could be big enough to prevent potentially profitable partnerships from forming. In work with Sanford Grossman, (an economist who might plausibly have shared the prize), Mr Hart reasoned that firms solve this problem by clever use of the bargaining power bestowed by the ownership and control of key assets, such as machines or intellectual property. Instead of fussing over how to divide up the spoils in every possible future, in other words, workers agree to sell their labour to a firm that owns the machinery or technology they use, in the knowledge that ownership gives the firm the power to hoover up a disproportionate share of the profits. + +This power comes with costs as well as benefits, which help shape how big companies become and exactly what they do. In other work, Mr Hart noted that workers and managers who look after equipment can make decisions to improve its productivity (like maintaining the machinery and investing in training). But just how much time and energy they spend on such efforts depends on what share of future profits they can expect. A publisher might buy a printing company in order to have more control over its assets, and ensure its presses are used to print its own books first. Yet if the takeover means that the workers tending the presses see smaller rewards for their efforts, and their managers cannot keep tabs on them, they might shirk the extra sorts of work that keep the presses running as productively as possible. So the theory has real-world relevance; Mr Hart used it to explain precisely why inmates may fare worse at privately run prisons than at public ones. Managers of both care about the bottom line, but the incentive to cut costs is sharper in private prisons, because the profits flow into the pockets of owners who benefit directly. + +The work of Mr Holmström, a Finnish economist at the Massachusetts Institute of Technology, centres on the behaviour of individuals rather than organisations. Many of the basic power dynamics in society boil down to the relationship between one person—a principal—who needs another—an agent—to do something for him. The principal can use contracts to shape the incentives facing the agent, the better to get him to direct his activities. Yet getting the incentives just right is no easy feat. + +A firm owner setting pay for a senior manager wants to get his employee to deliver the best possible results. Linking a bonus to performance—to profits, for example—would seem to be the order of the day. Yet profits rise and fall for reasons which have nothing to do with managerial effort, such as the health of the economy. Bonus payments that mostly reward this sort of noise actually dull the incentives facing the manager. Better to base contracts only on information (like profits relative to the industry average) which sheds light on the manager’s true performance. + +The small print + +Yet surprisingly often, firms opt not to structure pay in this way. Mr Holmström’s work describes why that might be so. Most jobs are made up of many different tasks, for instance, some of which are easier to assess than others. Bonuses linked to the easily measured stuff, like profits, encourage agents to spend more time boosting those measures, at the expense of other, harder-to-measure things that are nonetheless important, like brand reputation or product quality. In some cases, firms might therefore opt to pay fixed salaries, or to separate roles into those specialising in the easy-to-assess tasks, who can be offered high-powered incentive pay, and others paid fixed rates for woollier sorts of work. Throughout his career, Mr Holmström has worked out how the ways contracts can and cannot be made to manipulate others determine the structure of jobs, firms and even industries. + +Like many of the most deserving laureates, Mr Hart and Mr Holmström opened whole new lines of inquiry to later economists (indeed, the winner of the prize in 2014, Jean Tirole, did important work in response to their contributions). The Nobel committee should be applauded for rewarding economists who place power dynamics front and centre. Economic life is messy, but it is also, occasionally, comprehensible. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21708671-two-economists-win-nobel-prize-their-work-theory-contracts-hard/print + + + + + +Previous Articles Sections Next + + + + + +Science and technology + + + + +Depression and its treatment: Sniffing at a new solution + +Civil engineering: Scouring, the future + +Manufacturing ultracapacitors: Baltic exchange + +Social attitudes: Not worth a second glance + + + + + +Articles Sections Next + +Sniffing at a new solution + +Novel drugs for depression + +A new generation of drugs could change the way depression is treated + +Oct 15th 2016 | From the print edition + + + +IT STARTED out as LY110141. Its inventor, Eli Lilly, was not sure what to do with it. Eventually the company found that it seemed to make depressed people happier. So, with much publicity and clever branding, Prozac was born. Prozac would transform the treatment of depression and become the most widely prescribed antidepressant in history. Some users described it as “bottled sunshine”. It attained peak annual sales (in 1998) of $3 billion and at the last count had been used by 54m people in 90 countries. And, along the way, it embedded into the public consciousness a particular idea about how depression works—that it is caused by a chemical imbalance in the brain, which the drug corrects. Unfortunately, this idea seems to be only part of the story. + +In science it is good to have a hypothesis to frame one’s thinking. The term “chemical imbalance” is just such a thing. It is a layman’s simplification of the monoamine hypothesis, which has been the prevalent explanation for depression for almost 50 years. Monoamines are a class of chemical that often act as messenger molecules (known technically as neurotransmitters) between nerve cells in the brain. Many antidepressive drugs boost the level of one or other of these chemicals. In the case of Prozac, the monoamine in question is serotonin. + +The monoamine hypothesis, though, is under attack. One long-standing objection is that, although drugs such as Prozac raise levels of their target monoamine quite quickly, the symptoms of depression may take weeks, or even months to abate—if, indeed, they do abate, for many patients do not respond to such drugs at all. Now, to add to that, a second objection has emerged. This is the discovery that ketamine, a drug long used as an anaesthetic and which is also popular recreationally, works, too, as a fast-acting antidepressant. Ketamine’s mode of action is not primarily on monoamines, so the race is on to use what knowledge there is of the way it does work to design a new class of antidepressant. This is a change of direction so radical that some think it heralds a revolution in psychiatry. + +Special K + +Ketamine works for 75% of patients who have been resistant to other forms of treatment, such as Prozac (which works in 58% of patients). Moreover, it works in hours, sometimes even minutes, and its effects last for several weeks. A single dose can reduce thoughts of suicide. As a result, although it has not formally been approved for use in depression, it is widely prescribed “off label”, and clinics have sprouted up all over America, in particular, to offer infusions of the drug (which must be taken intravenously, if it is to work). Anecdotal reports suggest that it has already saved many lives. + +Ketamine’s rise has been gradual. The discovery of its efficacy against depression happened a decade ago. Conducting clinical trials of new uses for drugs whose patents have expired is not a high priority for pharmaceutical companies, which generally prefer to test new molecules whose patents they own—and without such trials, formal approval for a new use cannot be forthcoming. Now, though, novel ketamine-related treatments are emerging. + +One such is esketamine. Normal ketamine is a mixture of two molecules that are mirror images of each other. Esketamine is just one of these “optical isomers”. Though it, too, is off-patent, Johnson & Johnson, a large American drug company that is developing it for use, hopes it will have the same positive effects as the unsorted isomeric mixture, but without side-effects such as hallucinations, dizziness and “dissociation”—a feeling of being awake but detached from one’s surroundings. + +By changing its formulation so that it can be administered in the form of a nasal spray, the firm both makes esketamine easier to use than isomerically mixed ketamine and creates something patentable. Preliminary evidence suggests esketamine does indeed work, and the firm is seeking approval for it to be used to treat two conditions: major depressive disorder with imminent risk of suicide, and treatment-resistant depression. + +Other companies, though, are taking a different approach, by studying ketamine’s mode of action and attempting to imitate the way it works. Many people think ketamine affects the action of a common neurotransmitter called glutamate, by blocking the activity of receptors for this molecule. One hypothesis is that it interacts with a glutamate receptor called NMDA that had never previously been thought to be involved in depression. Several firms are therefore seeking to mimic the effect of ketamine by aiming at the NMDA receptor. + +One such is Allergan, an Irish company that last year paid $560m to buy Naurex, an American biotech firm whose NMDA-blocking drug rapastinel is intended as a once-a-week intravenous treatment. Evidence from an early trial shows rapastinel is well tolerated, does not induce hallucinations and seems to work quickly. Allergan plans to start more extensive trials later this year. Nor is Allergan alone in its interest in the NMDA route. Other firms working on molecules that interact with this receptor, or with a special flavour of it called NR2B, include AstraZeneca, Avanir Pharmaceuticals and Cerecor. + +Reception committee + +It would be a mistake, though, to think that science has now reached a neat conclusion about how depression acts in the brain. One surprise came earlier this year in the form of work published by Carlos Zarate of America’s National Institutes of Health, who is a pioneer in the field. This study suggests that, in mice at least, ketamine is not working directly on the NMDA receptor, but rather on another glutamate receptor. This finding will not matter to Johnson & Johnson, because esketamine mimics the effects of normal ketamine, which is known to work. But it may mean those taking the NMDA route with other molecules are barking up the wrong tree. + +As to the specifics of Dr Zarate’s study, Husseini Manji, the head of neuroscience at Johnson & Johnson, says it is possible that this work identified an additional way to generate antidepressive effects. Even if ketamine is found to work via another receptor, this does not preclude it working via NMDA. Armin Szegedi, who runs clinical development of the drug rapastinel at Allergan, makes the same argument. He explains that all the glutamate receptors seem to interact with each other as well, and act as a complicated system. + +Time will tell who is correct, but such minutiae will matter less than whether one of these new approaches works. Lots of drugs, for many indications, work well, even though no one knows precisely how. The important point, though, is that ketamine has opened up a new line of attack on a horrible illness—and that this attack is being pressed relentlessly home. + +This article appeared in the Print Edition with the headline: Sniffing at a new solution + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21708655-new-generation-drugs-could-change-way-depression-treated-novel-drugs/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Scouring, the future + +Stopping bridge collapses + +New ways to detect when bridges are in trouble + +Oct 15th 2016 | From the print edition + +Scoured away + +ON AUGUST 2nd a century-old bridge carrying the road from Mumbai to Goa over the Savitri river collapsed (see picture), killing at least 20 people. The probable cause was that the river, swollen by monsoon rains, had scoured away the foundations of the bridge’s piers. Such erosion-induced collapses are not peculiar to India. In 2009 the Malahide viaduct, north of Dublin, failed similarly just after a train had crossed it. This was despite its having been inspected and pronounced safe a few days earlier. In America, meanwhile, foundation-scouring is reckoned to be the leading reason for bridge failure. Half of the 500 collapses that happened there between 1989 and 2000 were caused by it. + +If detected early enough, foundation-scouring is easy to fix. Dumping rubble, known as riprap, into the water around a bridge’s piers stabilises the riverbed they are sunk into. But until now such detection has involved the deployment of teams of divers, which is expensive. Hence a search for technology which can substitute for the men and women in the wetsuits. + +Ken Loh of the University of California, San Diego, thinks he has an answer. He has created flexible rods that, when inserted into a riverbed, monitor erosion quite simply. The exposed portion of a rod undulates in the water. Piezoelectric polymers in the rod convert this motion into electricity, with the frequency of the undulation (and therefore of the electric current) indicating the length of the rod’s exposed part. As the bed erodes, this portion gets longer and the frequency drops. That tells the riprap tippers when to get busy. + +Genda Chen of Missouri University of Science and Technology has a more unusual proposal: to throw magnetic “rocks” (artificial boulders with magnets embedded inside them) into the river. These rocks roll around in the riverbed until they settle in dips in the sediment, which are generally places where erosion is at its greatest. Sensors fitted to a bridge’s piers then estimate the amount of scouring, and where it is, from the strength and direction of the magnetic field they detect. + +Some researchers, like Luke Prendergast of Delft University of Technology in the Netherlands, think installing sensors below the waterline like this is too expensive—and is also unreliable. He worries that heavy storms will wash them away when they are needed most. He has focused instead on monitoring the part of the bridge above the water, using accelerometers of the sort found in most smartphones. All bridges vibrate, as traffic bumps over them or winds rattle their decks. If their foundations begin to erode, the pattern of these vibrations will change, much as the pitch of a tuning fork varies with its length. Accelerometers, Dr Prendergast suggests, could monitor such changes and forewarn of problems. + +Accelerometers are not the only way to measure vibrations, though. David Mascareñas of Los Alamos National Laboratory videos them. He then uses a computer algorithm to analyse the resulting footage and determine a structure’s properties, even if the vibrations recorded have an amplitude of less than a millimetre. + +Whether methods that study vibrations in these ways can detect problems early enough to prevent collapses remains to be seen. Branko Glisic of Princeton University, by contrast, thinks the best approach is to detect threatening cracks directly. He has created special sensor sheets, designed to be pasted onto the sides of a bridge. Wires within a sheet elongate if a crack opens underneath them. That changes their resistance. The arrangement of the wires means such changes in resistance give away precisely where the crack is. + +If methods such as these can be made to work in practice, then it will, more often, be possible to send the riprappers in at the appropriate moment to save a bridge that is otherwise sound. And, for those bridges that are not, timely warning will be provided that a crossing needs to be closed before someone is killed traversing it. + +This article appeared in the Print Edition with the headline: Scouring, the future + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21708658-new-ways-detect-when-bridges-are-trouble-stopping-bridge-collapses/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Baltic exchange + +Manufacturing ultracapacitors + +An Estonian firm gives electricity storage more oomph + +Oct 15th 2016 | From the print edition + + + +ALMOST every week seems to bring reports in scientific journals of new electricity-storage devices—batteries and capacitors—being invented in laboratories around the world. The journey from bench-top to assembly line, though, is fraught with hazard and few of these ideas end up as products able to withstand the rough and tumble of industrial and consumer use. Fewer still hail from beyond the laboratories of North America, western Europe and Japan. But one which does is Skeleton Technologies’ ultracapacitor, which was developed, and is now being manufactured, in Estonia. + +Unlike batteries, which store energy chemically by squirrelling it away in the materials of their electrodes, capacitors store it physically as static electricity clinging to the surfaces of their equivalents of electrodes, which are known as plates. This static can be tapped or added to more swiftly than any chemical reaction can manage, so capacitors both store and discharge electricity more rapidly than batteries do. That makes them ideal for delivering short bursts of power. But they cannot accommodate nearly as much energy as batteries, so they soon run out of vim. + +Supercapacitors, and their upscale cousins ultracapacitors, attempt to bridge this gap by increasing the surface areas of their plates, and also by adding an electrolyte of the sort found in batteries. Skeleton Technologies’ device, the company claims, does these things so well that it can deliver four times more power per kilogram than anything else on the market. Its secret is that its plates are coated with graphene, a form of carbon a single atom thick. Graphene has a surface area of more than 2,000 square metres per gram, and Skeleton’s graphene is also penetrated by pores that permit the passage of ions from the electrolyte. These are inculcated by a proprietary process, using silicon carbide and titanium carbide, and are precisely engineered to permit the ions’ passage. + +Skeleton Technologies itself is the creation of Taavi Madiberk and Oliver Ahlberg, who set up their company in 2009 based on the work of a group of Estonian researchers. Initially, it produced a limited number of ultracapacitors for motor racing, where they are used in kinetic-energy recovery systems (KERS) that recycle energy which would otherwise be lost as heat during braking and turn it into electricity to assist acceleration. Another early customer was the European Space Agency. It uses ultracapacitors to handle peak-power demand in its satellites, such when they are moving the arms of their solar panels. Not only are ultracapacitors more efficient than lithium-ion batteries at harvesting energy from solar panels, they are also lighter, smaller and have a longer life—up to 1m cycles of charging and discharging, according to Mr Madiberk. A lithium-ion battery fades after about 1,000 cycles. + +Back on Earth, the company is now working with vehicle-makers. Adgero, a French firm, is using Skeleton’s devices to fit KERS to diesel-powered lorries. Adgero’s system, which it claims provides fuel savings of 25%, is being tested by operators including Eddie Stobart and Fraikin, two large British trucking companies. Similar arrangements would work well on trains, and also on dockside cranes, providing spurts of power when goods need to be lifted and recovering energy when they are lowered again. + +With new investment the company went into full production in April, when it opened a new factory near Tallinn, Estonia’s capital, that is capable of turning out half a million of the devices a year. Next February, if all goes well, this will be joined by a second plant near Dresden, Germany, to take the company’s combined output to 5m a year. At the moment, then, Skeleton’s ultracapacitor seems the bee’s knees. How long that will last depends on when the next big idea makes it from the lab to the world. The latest candidate is offered by Mircea Dinca and his colleagues at the Massachusetts Institute of Technology in this week’s Nature Materials. Its plates are coated with materials called metal-organic frameworks. Whether it will ever be heard of again remains to be seen. + +This article appeared in the Print Edition with the headline: Baltic exchange + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21708656-estonian-firm-gives-electricity-storage-more-oomph-manufacturing/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Not worth a second glance + +Social attitudes to faces + +Your class determines how you look at your fellow creatures + +Oct 15th 2016 | From the print edition + +Not only looking down, but for less time + +IN 2009 a team of psychologists at the University of California, Berkeley, who were studying people from different walks of life, noticed that those from the upper classes were less good than those from the lower at discerning emotions on the faces of others. This led them to speculate that such empathy weakens as you go up the social scale. The theory might be true. But a paper just published in Psychological Science, by Pia Dietze and Eric Knowles of New York University, offers an alternative hypothesis—that it is not the emotional sensitivity of patricians to plebs which is impaired, but their attention to them. + +Dr Dietze and Dr Knowles began their study with an experiment that they told participants was a study of Google Glasses. They were, though, lying. The test was not of these pieces of apparatus (tiny video cameras hidden in pairs of spectacles, which let wearers take surreptitious footage of whatever they are looking at), but rather of the participants’ behaviour. The 61 volunteers were all asked to wear a Google Glass headset, walk for a block in New York and focus their attention on whatever captured their interest. Their souped-up specs then recorded everything they looked at. Afterwards, they filled out a questionnaire that asked, along with matters of age, sex and ethnicity, about their income, their level of education and the social class they believed they belonged to. + +This done, the researchers handed the videos over to six “coders”—people trained to parse video recordings for teams of psychologists without knowing the purpose of an experiment. The coders were asked to identify participants’ glances at other people, and also to record the duration of each gaze. + +When Dr Dietze and Dr Knowles correlated the coders’ conclusions with the data from the questionnaires, they found that the number of gazes at strangers did not vary with social class, but their duration did. Specifically, upper-middle-class and upper-class people gazed at the faces of others for a fifth of a second less than members of lower social classes. + +To explore further, the two researchers set up a second experiment. In this they asked 82 volunteers to place their heads on chin rests and have their eyes monitored as they were shown a variety of street scenes from New York, San Francisco and London. This time, working-class people spent a tenth of a second longer looking at faces than did upper-middle-class people—a difference that did not apply when the same people looked at inanimate objects. + +Dr Dietze and Dr Knowles then ran one more experiment. This was a version of Kim’s game, in which they presented 397 participants with an array of six randomly arranged images (one of a face and five of inanimate objects such as fruits, houseplants or musical instruments) that alternated with a second array which either had identical images to the first, but differently arranged, or had one of those images changed (and was also differently arranged). Participants had to work out which image, if any, had been substituted. + +Once again, there was no difference between classes’ success in doing this when the altered image was of an object. When it was of a face, though, lower-class people did better than upper-class ones. + +It seems, then, that those from the lower classes really do take more notice of faces than those who inhabit the top of the heap. Why, is open to speculation. Dr Dietze’s and Dr Knowles’s own view is that the upper classes pay less attention because they believe random strangers have little to offer. Perhaps one way to test that hypothesis would be to rerun their experiment at a Buckingham Palace garden party. + +This article appeared in the Print Edition with the headline: Not worth a second glance + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21708573-posh-people-spend-less-time-noticing-others-your-class-determines-how-you-look/print + + + + + +Previous Articles Sections Next + + + + + +Books and arts + + + + +China today (1): To have and to hold + +China today (2): Build, and they will come + +Afghanistan: Karzai Inc + +Classical music: Piano man + +On Broadway: The stories people tell + + + + + +Articles Sections Next + +China today + +To have and to hold + +How China’s elite has taken control of the economy—and the country + +Oct 15th 2016 | From the print edition + + + +China’s Crony Capitalism: The Dynamics of Regime Decay. By Minxin Pei. Harvard University Press; 365 pages; $35 and £25.95. + +IN 1989 the movement for democracy brought the Chinese Communist Party to within days of extinction. According to official reports, on one day alone, May 22nd, 6m people joined demonstrations in 132 cities across the country. The party’s immediate response was to use the people’s army to crush the people by force, in Tiananmen Square. To rebuild the loyalty of those who would continue to rule in the party’s name, its leaders went on to create the conditions in which officials at all levels could loot state property. Thus, the biggest democracy movement in history was countered by the greatest opportunity for predation the world has ever seen. + +China has never had a formal privatisation programme. Instead, as Minxin Pei, a professor of government at Claremont McKenna College in California, writes in “China’s Crony Capitalism”, decentralising the rights of control over state property without clarifying the rights of ownership gave those who rule “maximum advantage to extract wealth from society”. Rights of control have been separated from rights of ownership in China—and where ownership is uncertain, control is key. + +Mr Pei’s book is quietly devastating. In sober, restrained language, he exposes the full gravity of corruption in China. Presenting a wealth of evidence, he shows that this is not the unfortunate by-product of rapid economic growth but the result of strategic choices by the party. With clinical precision, Mr Pei explains how corruption operates at every level, perverting each branch of the party-state and subverting the political authority of the regime. The party cannot mitigate, let alone eradicate, “crony capitalism” because, since 1989, it has been “the very foundations of the regime’s monopoly of power”, the author argues. The conclusion, he believes, is that far from saving the regime, President Xi Jinping’s anti-corruption drive may accelerate its demise by creating divisions within the ruling elite even as it reinforces strong popular resentment of corruption. + +The state continues to hold the residual property rights to at least half of the net worth of the economy. Since 1978, when Deng Xiaoping launched his economic programme, the party-state has jealously guarded this walled garden for its officials and their business cronies. Throughout this time there has been some economic reform but no political reform. Thus the party, as Mr Pei points out, can only protect its interests with the full Leninist range of repressive instruments—and daily displays its willingness to do so. + +This exercise of power is not subject to any of the checks and balances of a liberal democracy. China’s structure of government makes it impossible to staunch the corruption. There is a lack of probity at the highest levels of the party, as seen in the imprisonment of former members, including the former chief of security, Zhou Yongkang. The improper exercise of power is most obvious in property development, mining and the restructuring of state-owned enterprises. Corrupt officials collude with superiors as well as subordinates. Their venality has infected every province. Some regions have become mafia states. Only highly competitive sectors, where property rights are better defined, such as consumer goods and high-tech manufacturing, mostly in the private sector, are largely free of it. + +Thanks to the extensive decentralisation of administrative power, local party chiefs have “acquired the authority to allocate capital, award large contracts and determine land use”. Local businessmen bribe these local bosses to their own advantage. Starting in 1994, local governments have been allowed to keep all the receipts from land sales, using them largely to finance infrastructure projects. + +But lax controls have allowed officials to exploit these projects for personal enrichment. State assets are not the only area in effect to have been privatised; so too has the power of the state. Appointments and promotions in every department have been for sale for a quarter of a century. “Bribes, instead of merit, determine who is chosen,” Mr Pei writes. Mr Xi said the same to a gathering of party officials on October 16th 2014: “Corruption in personnel matters is a prominent problem…Our system of cadre management is for show only.” Court documents reveal that this practice has extended to environmental-protection agencies, the police, secret intelligence services, judiciary and the highest ranks of the armed forces. + +As Mr Pei explains, anti-corruption investigations are carried out by the party itself. Courts rubber-stamp the party’s own verdicts on its own officials. The author exposes the weaknesses of the investigatory organisations and shows that only a small percentage of officials are seriously sanctioned. He goes on to point out that Mr Xi’s anti-corruption campaign is dealing only with the symptoms of the disease, not the underlying causes. + +Corruption in China has been made easy by ill-defined property rights, decentralised administrative authority and the absence of democratic checks and balances, such as an independent judiciary, a free press and political competition. Only by improving all of these can it be permanently reduced. Belatedly, the party under Mr Xi has recognised that corruption poses a mortal threat to the regime, but it has, at the same time, rejected the very reforms that offer the only prospect of a remedy. + +Mr Pei grew up in Shanghai and lived there in the hopeful early 1980s, but he is not optimistic now: “Even a revolutionary overthrow of the old order may not usher in the dawn of a liberal democracy. The legacies of crony capitalism…will enable those who have acquired enormous illicit wealth under the old regime to wield outsized political influence in a struggling new democracy that will have poor odds of survival,” he writes. He fears that Russia and the Ukraine may show China what can happen when a one-party dictatorship is overthrown, as it so nearly was in 1989. This book is essential reading for anyone who wishes to understand China today, or engage with it at any level, in any field. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708644-how-chinas-elite-has-taken-control-economyand-country-have-and-hold/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Fiction: Yan Lianke + +Build, and they will come + +A rip-roaring Swiftian satire from a contemporary Chinese master + +Oct 15th 2016 | From the print edition + + + +The Explosion Chronicles. By Yan Lianke. Translated by Carlos Rojas. Grove Press; 457 pages; $26. To be published in Britain by Chatto & Windus in March 2017. + +IN BOOM-TIME China, the mayor of an expanding city only has to sign a decree for its weather to brighten. A brand new subway line and Asia’s biggest airport are completed in a week. The civic militia had merely to march around a building site, and a Hall of the People that holds 50,000 “sprang up like a tree”. When a decision in Beijing upgrades the city of Explosion to a “provincial-level metropolis”, “all of the seasonal fruits began to mature at lightning speed”. No wonder Mayor Kong Mingliang commands obedience from the wildlife in his courtyard: “Even the insects and sparrows listened to him.” + +The elements of fairy-tale fantasy scattered across “The Explosion Chronicles” help to sweeten a tough-minded satire. Yan Lianke, one of China’s most forthright and versatile novelists, enlists extravagant comedy and far-fetched fable to propel his critique of a society where “power and money have colluded to steal people’s souls”. As the four Kong brothers and their equally ambitious wives and concubines steer Explosion from obscure mountain village to seething mega-city, pride swells into megalomania. Hope rots into hubris. Crazy for wealth, the folk of Explosion rush headlong into a high-consumption future and lose the habit of “weeping at the graves” of their relatives. Early in the novel, which parodies the dynastic histories that have been well-known in China for two millennia, the author makes plain that his fictitious township “replicated in miniature the pain and prosperity undergone by the nation itself”. + +Born in 1958 in rural Henan, Mr Yan wrote propaganda for the army before breaking free. He depicts China through an assortment of lenses: rip-roaring Swiftian satire in “Lenin’s Kisses”, when a village buys the corpse of the Soviet patriarch and builds a sort of Red Disneyland around it. In the haunting “Dream of Ding Village”, an HIV epidemic caused by contaminated blood plasma shows how corruption ripens into tragedy. “The Four Books”, which was shortlisted for the Man Booker International prize this year, borrows the conventions of legend, history and even scripture to count the human cost of Mao Zedong’s Great Famine. Serially banned on the mainland but protected by his global renown, Mr Yan still lives in Beijing. + +The fantastical world of “The Explosion Chronicles”, in which official decrees make flowers bloom out of season and skyscrapers rise overnight, follows the principles of what Mr Yan’s afterword calls “mythorealism”. This style aims to capture the “hidden internal logic” behind China’s thunderous stampede into modernity. Even in Carlos Rojas’s robust and well-paced translation, such a diet of supersized wonders can try the reader’s patience. Like his greedy citizens, Mr Yan sometimes fails to put a brake on grotesque excess. Many of the strongest episodes keep to a more domestic scale. The plot pivots on the strategic marriage between the mayor and Zhu Ying: iron-willed entrepreneur, brothel madam and grieving daughter of the old village chieftain. In the midst of miracles, their love-hate liaison never loses its rivalry—or its poignancy. + +Alone among the siblings, a younger brother, Kong Minghui, forsakes wealth and status to rediscover the ancient pieties. His fellow citizens decide that he must be suffering from “mental illness”. But this defection allows Mr Yan to liberate the subtler, more lyrical side of his writing. When, under the eerie gaze of a prowling cat, Minghui gathers shards of moonlight and learns the future from a long-lost almanac, post-Mao “mythorealism” falls away. The reader slips into a literary China of poetry and mystery that flourished long before the boom—and will certainly outlive it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708645-rip-roaring-swiftian-satire-contemporary-chinese-master-build-and-they-will-come/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Afghanistan + +Karzai Inc + +At war with Afghanistan’s first family + +Oct 15th 2016 | From the print edition + +Keep looking over your shoulder + +A Kingdom of Their Own: The Family Karzai and the Afghan Disaster. By Joshua Partlow. Knopf; 422 pages; $28.95. Simon & Schuster; £20. + +MIGHT things have turned out better in Afghanistan without Hamid Karzai? The many critics of the former Afghan president blame him for tolerating corruption and for undermining the West’s war against the Taliban. As Robert Gates, once America’s defence secretary, said: Mr Karzai was the most “troublesome ally in war since Charles de Gaulle”. + +America initially regarded the dashing Pushtun tribal leader as just the man to run post-Taliban Afghanistan, Joshua Partlow, a journalist with the Washington Post, writes in “A Kingdom of Their Own”. Western diplomats made sure he was appointed interim leader in 2001 and elected president in 2004. But America came to have grave doubts about him. “I hate that guy,” Richard Holbrooke, then a senior American diplomat in the region, let slip to Afghan officials in the run-up to the fraud-ridden presidential election of 2009. Mr Karzai’s naive pacifism and his disdain for military affairs maddened American generals. When one commander reported that a remote town had fallen to the Taliban, Mr Karzai snapped back: “So it was liberated.” + +Things went from bad to worse as America became increasingly frustrated at its inability to crush a ragtag Islamist militia. In 2010 it seized on the notion that public anger with government corruption was behind the growing support for the Taliban. But an anti-corruption campaign provoked a confrontation with members of Mr Karzai’s family, which included some thoroughly Americanised Afghans who had returned from exile after making their careers in the restaurant trade. + +Mr Partlow describes how American officials, tapping telephones, uncovered the brazen malfeasance of the Afghan elite. Much of this focused on Kabul Bank, an institution that turned out to be little more than a Ponzi scheme which provided multi-million-dollar, interest-free loans to its shareholders. Among them was Mahmood Karzai, Hamid’s elder brother, a dealmaker and businessman who dreamed of creating American-style suburbia in the deserts of Kandahar. + +Mr Karzai personally abhorred corruption and angered his relatives by frustrating their attempts to obtain government contracts and jobs. But he also blocked foreign would-be corruption-busters. Any arrests would undermine Mr Karzai’s own political base of tribal leaders and the businessmen who had made millions out of the wartime economy and vast amounts of civil aid after 2001. + +America also bears much of the blame for its failures in Afghanistan, as this finely reported book shows. Policy changed with each new rotation of diplomats and generals. Early on, the Bush administration was not interested in nation-building and was happy with a conciliatory president who would co-opt corrupt warlords, not imprison them. Later, when it decided to throw money and troops into a massive counter-insurgency campaign to boost the war effort, it wanted a no-nonsense technocrat in charge. That was not the style of Mr Karzai, who loved to rule in the manner of a king, meeting tribal delegations and micromanaging the country by mobile phone from his presidential palace. The historic compound, with its gardens and its decorative giant employed to “walk around the palace and be tall”, looms large in this book. + +One of America’s biggest U-turns was over Ahmed Wali Karzai, another sibling who became the president’s man in Kandahar, the historic heartland of the Pushtuns. Over the years many Americans, from Vice-President Joe Biden down, argued that Ahmed Wali was like a mafia godfather, his behaviour fuelling support for the Taliban. But when President Obama decided to increase the number of troops in Afghanistan in 2010, Ahmed Wali became essential to the war effort after all. + +Mr Partlow overstates the extent to which the Afghan people shared their president’s disillusionment with his tormentors. But he is right that Mr Karzai identified many of the mistakes America made, only to be ignored. He railed against the killing of civilians and harassment of villagers during NATO raids long before General Stanley McChrystal tried to confront the problem. And he was right to blame the Taliban’s resilience on Pakistan’s harbouring of Afghanistan’s enemies. + +Some American officials who were sent to Afghanistan came to wish they had listened more. Of all the many brothers and lesser Karzai cousins Mr Partlow encountered in his reporting, Hamid was, he believes, the “most misjudged of all”. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708643-war-afghanistans-first-family-karzai-inc/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Van Cliburn + +Piano man + +How a young Texan pianist won the heart of Russia in the midst of the cold war + +Oct 15th 2016 | From the print edition + + + +Moscow Nights: The Van Cliburn Story—How One Man and His Piano Transformed the Cold War. By Nigel Cliff. Harper; 452 pages; $28.99. To be published in Britain in November; £20. + +ONE night in April 1958, the cold war was broken by a gap-toothed smile. The jury of the International Tchaikovsky Competition in Moscow had reached a near-unanimous decision and the audience was going wild over the likely winner: a 23-year-old Texan called Van Cliburn. But Stalin was barely five years dead and no one was going to risk a spell in Siberia by awarding first prize to an American. So a nervous Emil Gilels, a pianist, was dispatched to see the minister of culture, and the minister went trembling to report to the Communist Party chief, Nikita Khrushchev, who was just back from reimposing Russian terror in Budapest. + +“We don’t know what to do,” bleated the minister, presenting the jury’s report. + +“Is he the best?” Khrushchev demanded. “In that case, give him the first prize.” + +The Soviet leader followed up with a beaming public bear-hug for the victorious Cliburn, who towered a head above the pudgy Khrushchev. In that historic freeze-frame, the cold-war ice cap began to melt. + +Nigel Cliff, a British journalist and one-time contributor to The Economist, has written a freshly sourced account of these momentous Moscow nights. He places them aptly at the heart of the nuclear conflict and poignantly in the personal odyssey of a lanky, gay pianist from a small prairie town who never wanted to do much except play Russian music. His mother, it was said, had once met Rachmaninoff. + +When the Soviet Union announced a contest that would demonstrate cultural and educational superiority over a decadent West, Cliburn was living in digs near Carnegie Hall, taking lessons with Rosina Lhevinne at the Juilliard School. He had always wanted to see Moscow and many other Westerners were too scared to go. The Russians rustled up two front-runners, Lev Vlassenko and Naum Shtarkman. The Chinese sent Liu Shikun. But from the moment Cliburn first played, the Moscow public took him to their hearts. He had a unique stage presence, at once languid and intense, projecting an almost papal serenity. No other pianist matched Cliburn’s poise or his physical appeal. The inimitable Sviatoslav Richter, a loner in the jury room, reportedly awarded him full marks for each round and zero to other contenders. In the streets of Moscow the winner was mobbed like a Hollywood star. + +His victory made headlines in New York, but it took two days for the State Department to wire official congratulations and even longer for President Eisenhower to respond. Returning home to a ticker-tape parade, Cliburn insisted on being conducted in America by Kirill Kondrashin, a Russian, thus doing all he could to extend the cultural thaw, even as the Cuban crisis was growing. + +Cliburn enjoyed a life of glory, with a Texas piano competition endowed in his name and recordings that sold in millions. Arriving once in Washington, DC, without his concert wear, he borrowed tie and tails from a fellow Texan, Lyndon B. Johnson. Leaders of both powers vied for his attention. Spy agencies kept him under a wary eye. Cliburn returned to Moscow for the last time in 2011, two years before his death, to serve as honorary chairman of the Tchaikovsky piano competition. He did not vote for fear of harming another artist. + +His fellow runners-up in 1958 all had to give up music. Vlassenko became a teacher, Shtarkman spent eight years in Soviet jails for homosexuality and Mr Liu was incarcerated for seven years during Mao’s Cultural Revolution. Cliburn knew that his glory was earned at the expense of his Moscow friends. Mr Cliff does well, despite some musical infelicities, to describe the big game of culture wars and Khrushchev’s capricious adventurism. Cliburn himself remains an enigma, even if his triumph was to show that music sometimes has the power to shape history. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708646-how-young-texan-pianist-won-heart-russia-midst-cold-war-piano-man/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Simon McBurney’s “The Encounter” + +Into the forest + +A British stage director takes an existential journey into the Amazon + +Oct 15th 2016 | NEW YORK | From the print edition + + + +FOR a couple of hours each night a modest stage with little more than a desk, some water bottles and a funny-looking microphone is transformed into a humid Amazonian forest. Leaves crunch, crickets chirp, birds trill and mosquitoes buzz right into your ears. The dense murmur of the jungle is somehow vivid enough to evoke a thicket of trees before the audience’s very eyes. This feat of alchemy is the handiwork of Simon McBurney, director of a reliably adventurous British theatre company, Complicite, who has brought his acclaimed “The Encounter” to the John Golden theatre in Manhattan. + +The production has delighted audiences since its premiere at the Edinburgh festival last year, selling out its limited run at the Barbican in London before it even opened this past February. But it is a daring choice for Broadway. The 59-year-old Mr McBurney stars in this strange and often mesmerising trip into the Amazon basin, which uses the story of one man’s interactions with an elusive tribe to raise all sorts of questions about the nature of consciousness, the tyranny of time, the power of stories and the mutability of reality. The layered soundscape of the jungle is piped through headphones worn by every member of the audience, with separate sounds transmitted into each ear, courtesy of a binaural microphone on stage (which looks rather like an Easter Island head). The effect is as unsettling as it is transporting. + +“The Encounter” is based on Petru Popescu’s book, “Amazon Beaming”, an account of Loren McIntyre’s attempt in 1969 to take the first-ever photographs of the Mayoruna tribe, otherwise known as “the cat people” for their habit of piercing their noses with palm spines. Soon after McIntyre set up camp, he spotted a few Mayorunas and followed them deep into the jungle, armed with only his Minolta. His scramble to get the perfect shot left him lost and at the mercy of the tribe, which he joined as they migrated steadily away from the threat of developers and towards a place they called “the beginning”. Although McIntyre was unable to communicate with the Mayorunas, he claimed he was able to exchange telepathic messages with the tribe’s leader. + +“I was fascinated by this book,” Mr McBurney says. “On a superficial level, it seems to be a sort of classic tale about a white man going into a situation that he doesn’t understand. But what became clear to me is that this is a man who is utterly lost in every sense. He comes in with all of these assumptions about who he is, why he’s there, and gradually has every single one challenged, right down to the question of what is time, how do we perceive it, how do we live it.” + +Mr McBurney knew he wanted to adapt the book ever since a friend gave him a copy in 1991. But he wasn’t sure how to make McIntyre’s existential loneliness feel palpable to theatregoers. Inspired by “Swimming to Cambodia”, the one-man monologue that Spalding Gray wrote first for the stage and then for the screen, Mr McBurney experimented with telling the story into a microphone. But it was only with the binaural technology that he felt he could really put theatregoers in McIntyre’s shoes and put McIntyre’s voice in everyone’s head. With the help of Gareth Fry and Pete Malkin, both sound designers, Mr McBurney was at last able to “achieve what I was looking for, a profound sense of solitude while sitting amongst a large group of people.” + +Mr McBurney narrates the show and performs most of the voices, including McIntyre’s swaggering American drawl. Other elements are pre-recorded, including the throbbing sounds of the Amazon and the musings of academics on whether time exists in multiple dimensions. In a few cases Mr McBurney’s ingenious use of a prop creates an apt new sound, such as when he moves a water-bottle to evoke lapping waves. Recordings of Mr McBurney’s young daughter, Nona, also break into the narrative occasionally, calling attention both to the artifice of storytelling and the competing timelines on stage. Without these interruptions it can be easy to get lost in the Amazon yourself. + +“The truth is I find it very difficult to talk about the piece,” Mr McBurney says. Indeed, the play poses far more questions than answers, in part because it addresses matters—about consciousness and memory, time and nature—that defy easy resolutions. But Mr McBurney hopes it will show viewers how the stories people tell go on to shape their reality. + +This article appeared in the Print Edition with the headline: The stories people tell + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708647-british-stage-director-takes-existential-journey-amazon-forest/print + + + + + +Previous Articles Sections Next + + + + + +Obituary + + + + +Hanoi Hannah: The music of English + + + + + +Articles Sections Next + +Hanoi Hannah + +The music of English + +Trinh Thi Ngo (“Hanoi Hannah”), broadcaster for Voice of Vietnam, died on September 30th, aged 87 + +Oct 15th 2016 | From the print edition + + + +THE voice was faint, for the signal was weak between Hanoi and the Central Highlands. Nonetheless, at 8pm Saigon time, after a day spent avoiding mantraps and pursuing the ever-elusive Vietcong, GIs would try to unwind by listening to the young woman they called “Hanoi Hannah”. As they cleaned their rifles, smoked herbs and broke out a beer or two, their precious radios, strapped up for protection with ragged black tape, crackled with tones that might have been those of a perky high-school cheerleader. “GI Joe, how are you today?” asked the sweet-sounding girl, of men to whom any girl would have sounded sweet. “Are you confused? Nothing is more confused than to be ordered into a war to die or be maimed for life without the faintest idea of what’s going on. You know your government has abandoned you. They have ordered you to die. Don’t trust them. They lied to you.” + +Some soldiers would scoff or talk loudly for the time the programme lasted. Others would throw empty cans towards the voice. They listened, though, to the songs she played, sent over by Stateside sympathisers: Joan Baez, Bob Dylan, Elvis Presley and her own favourite, Pete Seeger’s deeply melancholy “Where Have All the Flowers Gone?” Upbeat numbers, such as Petula Clark’s “Downtown”, would have even dog-tired men frenziedly dancing. But then Hannah would switch the mood again, reading out (courtesy of Stars and Stripes,the soldiers’ own newspaper) the names of recent American casualties and their home towns. “Defect, GI,” she would urge each man. “It is a very good idea to leave a sinking ship. You know you cannot win this war.” + +The range of her knowledge was disturbing. She announced exactly where units were and, though troops cheered when she mentioned them, they were chilled to be tracked down. She knew the names of all the crew on ships that had just arrived, and once wished a wistful happy birthday to a soldier who had just been killed. Many listened because her information, written by the North Vietnamese defence ministry, was sometimes more accurate than what could be gleaned from sanitised US Armed Forces Radio: revealing in 1967, for example, that rioting was going on in Detroit. Some believed she even knew whether their girls were cheating on them back home, and with whom. + +Schooled by the stars + +Of course, she was not omnipotent at all: just a petite, smiling, lively young woman who translated, and then read faithfully in faultless American-English, the scripts she was given. Voice of Vietnam had started, in 1945, with Ho Chi Minh’s declaration of the independence of his country; but when she joined ten years later, at 25, she was reading English-language news bulletins rather than full-fledged propaganda. With the mass arrival of American troops in 1965 her broadcasts, previously 5-6 minutes once a day, were extended to 30 minutes three times a day. And it was she who had the exaltation of announcing to the world, on April 30th 1975, that Saigon was at last liberated and Vietnam unified. + +She spoke out for the cause, but also because she adored the English language: the language, that is, as mediated by Hollywood and spoken by stars. Her education, in a prosperous family under French colonial rule, had been in French schools, but she was lured very early by the cinema and, there, the fascinating “music” of English. She reckoned she went five times to “Gone with the Wind”, fortified with bread and sausages for the length of the film, listening intently to the raptures of Vivien Leigh and whatever Clark Gable drawled from under his pencil moustache. Private English lessons soon followed, and English at university. As well as perming her hair and applying bright lipstick to look at least a little like a starlet, she practised and practised her English intonation. In her early days at Voice of Vietnam she had Australians for mentors; but it was America that echoed in the way she spoke. + +This being so, her broadcasts were not aggressive. Ideology played little part in them; she never joined the Communist Party, feeling patriotic enough. Her delivery was pitched to be persuasive, neither intimate nor tough: striving to demoralise each man a little, advising him to go AWOL or frag his officers, yet evincing concern for him. Only the bombing of Hanoi in December 1972, which forced them to abandon the studio, made her angry. The programmes were explicitly dedicated “to the American people”, or “our American friends”, meaning all Americans who opposed the war. Early on, that meant agitators like Jane Fonda, who sent her good tapes and then, mystifyingly to her, seemed to abandon the cause. Later, increasingly, she felt she had the tactit support of most citizens of the United States. + +Ex-soldiers who visited her in later years, when she had given up her broadcasting in Hanoi for domestic calm in hotter, noisier Saigon, found a woman of impeccable manners in exquisite silk blouses and strings of pearls. She dreamed of following her painter son to America, of seeing New York and the Golden Gate Bridge. She had no animus against Americans. Her English, however, was getting rusty, and needed the lubricant of speaking it. So she was happy to say, laughing, “Let bygones be bygones,” as often as she was asked. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21708668-trinh-thi-ngo-hanoi-hannah-broadcaster-voice-vietnam-died-september-30th-aged/print + + + + + +Articles Sections Next + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Remittances + +Markets + + + + + +Articles Sections Next + +Interactive indicators + +Oct 15th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21708652-interactive-indicators/print + + + + + +Articles Sections Next + + + + + +Previous Articles Sections Next + +Output, prices and jobs + +Oct 15th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21708672-output-prices-and-jobs/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Trade, exchange rates, budget balances and interest rates + +Oct 15th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21708660-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +The Economist commodity-price index + +Oct 15th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21708662-economist-commodity-price-index/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Remittances + +Oct 15th 2016 | From the print edition + + + +Migrants from developing countries sent home $439 billion during 2015, slightly less than the year before. However, the World Bank forecasts that remittance flows will grow this year, driven by a 6% increase in the amount sent back to Latin America and the Caribbean. In Haiti, remittances made up 25% of GDP in 2015. Flows into Europe and central Asia fell by 23% last year, pushed down by the weak Russian economy. The value of remittances sent back to south Asia is likely to drop in 2016, in part due to labour-market policies in Saudi Arabia which favour hiring nationals over migrants. Although India is forecast to receive $66 billion this year, the most of any country, this is still 5% less than in 2015. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21708663-remittances/print + + + + + +Previous Articles Sections Next + + + + + +Previous Articles Sections Next + +Markets + +Oct 15th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21708661-markets/print + + + + + +Previous Articles Sections Next + + + +Table of Contents + +The Economist [Thu, 13 Oct 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Election 2016: The debasing of American politics + + + + + +Pharmaceuticals: Bad medicine + + + + + +Intervention in Yemen: The forgotten war + + + + + +China’s property market: Rotten foundations + + + + + +Sterling: Taking a pounding + + + + + +Letters + + + +On Venezuela, aid, Syria, tax, Mars, adjectives: Letters to the editor + + + + + +Briefing + + + +The Trump tape: With these hands + + + + + +The politics of sexual assault: It’s not just the powerful + + + + + +United States + + + +Hillary Clinton’s campaign: Hacked off + + + + + +The campaigns: Heard on the trail + + + + + +The evangelical vote: Absalom’s revenge + + + + + +Washington state’s carbon tax: Of wood and trees + + + + + +Bilingual education: Learning to assimilate + + + + + +Lexington: Growing Cotton in Iowa + + + + + +The Americas + + + +US-Mexico trade: In the shadow of the wall + + + + + +US-Canada trade: The other neighbour + + + + + +Haiti after the hurricane: Matthew’s fury + + + + + +Bello: Whether ’tis Nobeler in the mind + + + + + +Asia + + + +Nuclear energy in Japan: Stop-start + + + + + +Politics in Thailand: Holding their breath + + + + + +Booming Bangladesh: Tiger in the night + + + + + +Myanmar’s Muslims: Sparks near tinder + + + + + +Graft-busting in South Korea: Trick or treat + + + + + +Banyan: Let not a billion tongues bloom + + + + + +China + + + +Hong Kong politics: No swearing + + + + + +Dysfunctional constituencies: Too many seats for farmers + + + + + +A policeman’s lot: Not happy + + + + + +Middle East and Africa + + + +Ethiopia: The downside of authoritarian development + + + + + +Agriculture and climate: Fertile discussion + + + + + +Yemen: Deaths at a funeral + + + + + +South Africa: Rolling the rand + + + + + +Morocco’s election: More of the same? + + + + + +The rise of Syria’s White Helmets: Local heroes + + + + + +Europe + + + +Poland’s populist government: Ladies in black + + + + + +Refugees and sex: Belgian girls aren’t easy + + + + + +German business and Brexit: BMW won’t save Britain + + + + + +Charlemagne: Two cheers for hypocrisy + + + + + +Britain + + + +Airport expansion: Final call + + + + + +International students: Hasta la visa + + + + + +Brexit and Article 50: Parliament rules, not OK? + + + + + +Second thoughts on Europe: After Brexit, Bregret + + + + + +Government and entrepreneurship: More slowdown than startup + + + + + +London river crossings: The Thames barrier + + + + + +Devolution: Brum Brum + + + + + +Bagehot: The isle is full of noises + + + + + +International + + + +The United Nations’ secretary-general: Can the next man do better? + + + + + +The shadow economy: Unregulated, untaxed, unloved + + + + + +Business + + + +Samsung’s smartphone woes: Charred chaebol + + + + + +Working style in Japan: Overdoing it + + + + + +Apple in Italy: Made men + + + + + +Advertising: Gold posts + + + + + +Privatisation in Vietnam: Cream of the crop + + + + + +Technology in China: Insanely virtual + + + + + +Business schools: Campus vs beach + + + + + +The world’s best MBA programmes: Worth it? + + + + + +Schumpeter: The business of outrage + + + + + +Finance and economics + + + +Chinese property: When a bubble is not a bubble + + + + + +Buttonwood: Flash and the firestorm + + + + + +Wells Fargo’s boss stands down: Stumpfed + + + + + +Portugal’s economy: Adventure tourism + + + + + +America’s workers: Feel the force flow + + + + + +Bangladesh’s missing millions: Hide and seek + + + + + +Payment-card fees: Marked cards + + + + + +Free exchange: Hard bargains + + + + + +Science and technology + + + +Depression and its treatment: Sniffing at a new solution + + + + + +Civil engineering: Scouring, the future + + + + + +Manufacturing ultracapacitors: Baltic exchange + + + + + +Social attitudes: Not worth a second glance + + + + + +Books and arts + + + +China today (1): To have and to hold + + + + + +China today (2): Build, and they will come + + + + + +Afghanistan: Karzai Inc + + + + + +Classical music: Piano man + + + + + +On Broadway: The stories people tell + + + + + +Obituary + + + +Hanoi Hannah: The music of English + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Remittances + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.10.22.TXT b/homeworks/B20769/homework1/data2/2016.10.22.TXT new file mode 100644 index 0000000..46f8cac --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.10.22.TXT @@ -0,0 +1,6371 @@ +2016-10-22 + + + +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: Russia + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +| Next section | Main menu | + + + + +* * * + + + +The world this week + + + +Politics this week [Fri, 21 Oct 02:42] + +Business this week [Fri, 21 Oct 02:42] + +KAL’s cartoon [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Politics this week + +Oct 22nd 2016 | From the print edition + + + +Vladimir Putin attended a summit with Angela Merkel in Berlin that also included the leaders of France and Ukraine. Russia’s involvement in the war in Syria has put a further strain on its relations with Europe and Mrs Merkel is threatening sanctions. Mr Putin had not visited Germany since Russia attacked Ukraine in 2014. He recently pulled out of a trip to France after François Hollande suggested that he wanted to discuss Syria. See article. + +After seven years of negotiations, a trade deal between the European Union and Canada faced a big hurdle when the parliament of the Belgian region of Wallonia rejected it, saying it fell short on social and environmental standards. Negotiators in Brussels scrambled to overturn the decision. See article. + +Barack Obama praised Matteo Renzi, the beleaguered prime minister of Italy, at a state dinner in Washington. Mr Renzi is staking his political reputation on a referendum in December to reform the political system. Leaders of the opposition, most of whom do not support the reform, were unimpressed by the endorsement from the American president. + +The front-runner to be the next leader of the UK Independence Party, Steven Woolfe, withdrew from any potential contest and the party itself, claiming it was “rotten”. His decision to quit followed a “scuffle” with a fellow member, Mike Hookem, which had left Mr Woolfe in hospital. That ruckus came after the farce of its previous leader resigning after just 18 days in the job. + +Fright night + +At the final presidential debate Donald Trump said that he might not accept the result of the election, which Hillary Clinton described as “horrifying”. Mr Trump has asked his supporters to watch over polling places for fraud, leading to fears that voters will feel intimidated on the day. Barack Obama told him to “stop whining”. See article. + +Underlining the ugly mood of the election, local Republican offices in North Carolina were firebombed and graffitied. + +The government of Ecuador cut off Julian Assange’s internet access at its embassy in London, where the WikiLeaks founder has sought refuge since 2012. WikiLeaks has published hacked e-mails from the Clinton campaign in an attempt to embarrass the candidate, prompting Ecuador to act for fear of being seen to interfere in a foreign election. + +Harder to recall + +Venezuela’s supreme court ruled that, in order to launch a referendum to recall President Nicolás Maduro from office, the opposition must gain the support of 20% of the electorate in each of the country’s 24 states. The opposition maintains that under the constitution the 20% threshold is a national one. + +A Mexican judge who had ruled on requests for the extradition of drug lords was murdered by two men while jogging. The judge had suspended the extradition to America of Joaquín Guzmán (“El Chapo”), who has twice escaped from Mexican jails. + +Police in Brazil arrested Eduardo Cunha, a former speaker of congress’s lower house, on charges of corruption. Mr Cunha, who helped initiate the impeachment of the former president, Dilma Rousseff, is the subject of other investigations into a scandal centred on Petrobras, the state-controlled oil company. He denies wrongdoing. + +A text of wills + +Hong Kong’s Legislative Council again witnessed stormy scenes over the swearing-in of two lawmakers who support self-determination for the territory. In their first attempt they had changed the wording to disparage China. As they prepared for a second attempt, dozens of legislators sympathetic with the Chinese Communist Party walked out. + + + +A Chinese spacecraft docked successfully with a new spacelab. Two astronauts entered the orbiting module for a month-long stay—the longest in space by Chinese citizens. + +The president of the Philippines, Rodrigo Duterte, arrived in China for a state visit and said he would not raise his country’s dispute with China over maritime territory. Mr Duterte has been trying to strengthen ties with China, while distancing himself from America. See article. + +Leaders of the five BRICS countries—Brazil, Russia, India, China and South Africa—met in the Indian state of Goa. Apart from India, the BRICS economies have suffered from the fall in commodity prices. India’s prime minister, Narendra Modi, and Russia’s president, Vladimir Putin, reached deals in energy and defence worth billions of dollars. + +Officials in Thailand said the country’s crown prince, Maha Vajiralongkorn, would delay assuming the throne for an unspecified period. The prince reportedly wants more time to mourn the death of his father, King Bhumibol Adulyadej. See article. + +The Maldives withdrew from the Commonwealth, after the organisation had warned the government of the archipelago that it might be suspended for subverting democracy. + +The long haul + +The long-expected operation to recapture Mosul from Islamic State began. Iraqi government troops and Kurdish Peshmerga converged on Iraq’s second city, taken by the jihadists in June 2014. At least a million civilians are thought to be still inside, though thousands have fled. Earlier, IS lost the town of Dabiq, in Syria, to Turkish-backed rebels. Dabiq is held by Muslim tradition to be the future site of a battle that will mark the end of the world. See article. + +Raif Badawi, a Saudi Arabian blogger, faced a new round of lashes, part of a sentence of 1,000 lashes and ten years in prison for “insulting Islam”. Meanwhile, a Saudi prince was executed for murder. It is rare for a Saudi royal, who number the thousands, to be put to death. + +Meeting in Rwanda, nearly 200 countries agreed to phase out the use and production of hydrofluorocarbons, which are used in fridges and air-conditioning units and contribute to global warming. Big concessions were granted to China and India. + + + +Nigeria’s president, Muhammadu Buhari, attracted worldwide criticism for saying that his wife belonged in the kitchen. She had earlier warned that she might not back him for re-election unless he got a grip on his government. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21709069-politics-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Business this week + +Oct 22nd 2016 | From the print edition + +China’s GDP grew by 6.7% in the third quarter, exactly the same pace that was recorded in the first and second quarters and raising more questions about how the country’s national accounts are tallied. The government cited the figure as evidence that the economy is stabilising, but it has hit its growth target by expanding credit, which is up by 16% this year. Corporate debt has swollen, to $18 trillion, which officials are trying to rein in by allowing firms to swap debt they owe to banks for shares. See blog. + + + +Inflation in Britain rose to 1% in September, the highest since November 2014. The Office for National Statistics urged caution in making too strong a link between the increase and the plunge in sterling since Britain’s vote in June to leave the European Union. Earlier, Mark Carney, the governor of the Bank of England, said that families who were just managing to get by would be hit disproportionally hard by price rises. A household- finance index published by IHS Markit reported a 22-month high in future inflation expectations, and a three-month low in the financial outlook for the year ahead. See article. + +The sell-off in British ten-year government bonds continued, pushing the yield up to its highest level since the vote for Brexit on June 23rd. The bond yields for other countries also climbed, as investors mulled over forecasts of rising inflation. America’s annual consumer-price index jumped 1.5% last month, but the yield on ten-year Treasury bonds fell because markets welcomed the news that core inflation, which excludes food and energy, was down slightly. See article. + +Gulf economics + +Saudi Arabia raised $17.5 billion in its first-ever international bond sale, a record amount for an emerging market. It issued the bonds in five-, ten- and 30-year tranches amid heavy demand. The country has turned to global markets to finance a budget deficit that has been fuelled by the depressed price of oil, the country’s main source of income. + +The weaker pound was the main factor behind a profit warning from Ryanair, its first in three years. Around a quarter of revenue at Europe’s biggest budget airline is accounted for in sterling. Like its rivals, Ryanair is having to reduce the price of fares more than it had anticipated in response to a drop in demand following the past year’s terrorist attacks in Europe. + +America’s big banks reported a solid set of earnings for the third quarter. Net profits at JPMorgan Chase and Citigroup were lower compared with the same period last year, at $6.3 billion and $3.8 billion respectively, whereas Bank of America’s rose to $5 billion (its best quarterly profit since the financial crisis). But all three saw revenues soar from bond trading, as investors repositioned themselves in anticipation of higher interest rates and uncertainty over Brexit. Morgan Stanley’s profit surged by 57%, to $1.6 billion and Goldman Sachs’s net income climbed to $2.1 billion buoyed by a similar rise in income from trading. + +The former poster boy + +Wells Fargo, another American bank, set aside more money to pay for potential legal costs that may arise from a scandal wherein branch employees created fake accounts to meet sales goals. The division at the centre of that scandal saw a 9% fall in profit, though the bank’s overall net income fell by just 3%, to $5.6 billion. Worryingly for Wells Fargo, new customer accounts plunged by 30% in September from August. + +A surprise drop in America’s store of oil pushed the price of West Texas Intermediate, the benchmark for American oil, to $51.60 a barrel, its highest level in 15 months. Oil markets have rallied in the past few weeks on hopes the OPEC oil cartel will cut production. + +Netflix gained 3.2m new international subscribers in the latest quarter, offsetting a slowdown in its domestic American market, where it added 370,000 customers. It has expanded its video-streaming to a further 130 countries. The glaring exception is China, where Netflix has dropped plans to push into the market in the short-term. It also announced an increase in spending on original programming, which could dent profits. Still, investors were happy with its overall performance; its share price leapt by 20%. + +Having a flutter + +Australia’s two biggest non-casino betting companies, Tabcorp and Tatts, discussed merging in an A$9 billion ($6.9 billion) transaction. But shares in an Australian gaming company, Crown Resorts, fell after 18 of its employees were detained in China. A proposed deal between William Hill in Britain and the owner of the PokerStars website was called off, in part because the British firm’s biggest shareholders were nervous about taking a gamble on a business that is expanding in America’s heavily regulated market. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21709072-business-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +KAL’s cartoon + +Oct 22nd 2016 | From the print edition + + + +More KAL’s cartoons + + + +This article appeared in the Print Edition with the headline: KAL’s cartoon + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21709076-kals-cartoon/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Leaders + + + +Russia: Putinism [Fri, 21 Oct 02:42] + +The battle for Mosul: Crushing the caliphate [Fri, 21 Oct 02:42] + +Business in America: Float like a butterfly [Fri, 21 Oct 02:42] + +Thailand’s succession: A royal mess [Fri, 21 Oct 02:42] + +Trade agreements: Asterix in Belgium [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Russia + +The threat from Russia + +How to contain Vladimir Putin’s deadly, dysfunctional empire + +Oct 22nd 2016 | From the print edition + + + +FOUR years ago Mitt Romney, then a Republican candidate, said that Russia was America’s “number-one geopolitical foe”. Barack Obama, among others, mocked this hilarious gaffe: “The 1980s are now calling to ask for their foreign policy back, because the cold war’s been over for 20 years,” scoffed the president. How times change. With Russia hacking the American election, presiding over mass slaughter in Syria, annexing Crimea and talking casually about using nuclear weapons, Mr Romney’s view has become conventional wisdom. Almost the only American to dissent from it is today’s Republican nominee, Donald Trump. + +Every week Vladimir Putin, Russia’s president, finds new ways to scare the world. Recently he moved nuclear-capable missiles close to Poland and Lithuania. This week he sent an aircraft-carrier group down the North Sea and the English Channel. He has threatened to shoot down any American plane that attacks the forces of Syria’s despot, Bashar al-Assad. Russia’s UN envoy has said that relations with America are at their tensest in 40 years. Russian television news is full of ballistic missiles and bomb shelters. “Impudent behaviour” might have “nuclear consequences”, warns Dmitry Kiselev, Mr Putin’s propagandist-in-chief—who goes on to cite Mr Putin’s words that “If a fight is inevitable, you have to strike first.” + +In fact, Russia is not about to go to war with America. Much of its language is no more than bluster. But it does pose a threat to stability and order. And the first step to answering that threat is to understand that Russian belligerence is not a sign of resurgence, but of a chronic, debilitating weakness. + +Vlad the invader + +As our special report this week sets out, Russia confronts grave problems in its economy, politics and society. Its population is ageing and is expected to shrink by 10% by 2050. An attempt to use the windfall from the commodity boom to modernise the state and its economy fell flat. Instead Mr Putin has presided over a huge increase in government: between 2005 and 2015, the share of Russian GDP that comes from public spending and state-controlled firms rose from 35% to 70%. Having grown by 7% a year at the start of Mr Putin’s reign, the economy is now shrinking. Sanctions are partly to blame, but corruption and a fall in the price of oil matter more. The Kremlin decides who gets rich and stays that way. Vladimir Yevtushenkov, a Russian tycoon, was detained for three months in 2014. When he emerged, he had surrendered his oil company. + +Mr Putin has sought to offset vulnerability at home with aggression abroad. With their mass protests after election-rigging in 2011-12, Russia’s sophisticated urban middle classes showed that they yearn for a modern state. When the oil price was high, Mr Putin could resist them by buying support. Now he shores up his power by waging foreign wars and using his propaganda tools to whip up nationalism. He is wary of giving any ground to Western ideas because Russia’s political system, though adept at repression, is brittle. Institutions that would underpin a prosperous Russia, such as the rule of law, free media, democracy and open competition, pose an existential threat to Mr Putin’s rotten state. + +For much of his time in office Mr Obama has assumed that, because Russia is a declining power, he need not pay it much heed. Yet a weak, insecure, unpredictable country with nuclear weapons is dangerous—more so, in some ways, even than the Soviet Union was. Unlike Soviet leaders after Stalin, Mr Putin rules alone, unchecked by a Politburo or by having witnessed the second world war’s devastation. He could remain in charge for years to come. Age is unlikely to mellow him. + +Mr Obama increasingly says the right things about Putinism—he sounded reasonably tough during a press conference this week—but Mr Putin has learned that he can defy America and come out on top. Mild Western sanctions make ordinary Russians worse off, but they also give the people an enemy to unite against, and Mr Putin something to blame for the economic damage caused by his own policies. + +Ivan the bearable + +What should the West do? Time is on its side. A declining power needs containing until it is eventually overrun by its own contradictions—even as the urge to lash out remains. + +Because the danger is of miscalculation and unchecked escalation, America must continue to engage in direct talks with Mr Putin even, as today, when the experience is dispiriting. Success is not measured by breakthroughs and ceasefires—welcome as those would be in a country as benighted as Syria—but by lowering the chances of a Russian blunder. + +Nuclear miscalculation would be the worst kind of all. Hence the talks need to include nuclear-arms control as well as improved military-to-military relations, in the hope that nuclear weapons can be kept separate from other issues, as they were in Soviet times. That will be hard because, as Russia declines, it will see its nuclear arsenal as an enduring advantage. + +Another area of dispute will be Russia’s near abroad. Ukraine shows how Mr Putin seeks to destabilise countries as a way to stop them drifting out of Russia’s orbit (see article). America’s next president must declare that, contrary to what Mr Trump has said, if Russia uses such tactics against a NATO member, such as Latvia or Estonia, the alliance will treat it as an attack on them all. Separately the West needs to make it clear that, if Russia engages in large-scale aggression against non-NATO allies, such as Georgia and Ukraine, it reserves the right to arm them. + +Above all the West needs to keep its head. Russian interference in America’s presidential election merits measured retaliation. But the West can withstand such “active measures”. Russia does not pretend to offer the world an attractive ideology or vision. Instead its propaganda aims to discredit and erode universal liberal values by nurturing the idea that the West is just as corrupt as Russia, and that its political system is just as rigged. It wants to create a divided West that has lost faith in its ability to shape the world. In response, the West should be united and firm. + + + +This article appeared in the Print Edition with the headline: Putinism + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21709028-how-contain-vladimir-putins-deadly-dysfunctional-empire-threat-russia/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The battle for Mosul + +Crushing the caliphate + +The right way to capture the jihadists’ most important stronghold + +Oct 22nd 2016 | From the print edition + + + +TWO years after he vowed to “degrade and ultimately destroy” Islamic State (IS), Barack Obama is at last close to honouring his commitment. In the early hours of October 17th a long-planned military operation was launched to retake Mosul, Iraq’s second city. The battle will involve the Iraqi army, Kurdish soldiers, Shia militias, American special forces and the air power of a Western-led coalition. Mosul matters: it is the place from which the IS leader, Abu Bakr al-Baghdadi, declared his “caliphate”. The jihadists’ motto is “remain and expand”, but their state is fast retreating and shrinking. + +There is little doubt that Mosul will fall (see article). But how it is taken will determine whether the battle marks a lasting victory against jihadism or another chapter in the unending agony of the Arab world. If Iraq is ever to attain stability, its leaders must find ways of assuaging the resentment of its once-dominant Sunni Arab minority, and giving it a political voice. + +The meaning of Mosul + +Done properly, the recapture of Mosul would not just liberate the million or more people living under the brutal rule of IS; in a sense, it would relieve the world. Unlike other jihadist movements, IS set itself up as a standing challenge to existing structures, an alternative theocratic polity that expunged borders, plumbed new depths of televised barbarity and acted as a magnet for its death-cult. Smashing IS will give the lie to its founding myth, that a new God-ordained world order is at hand. With Mosul lost, its fantasy will lie in ruins. No territory of any significance will remain to IS in Iraq; in Syria it will hold only the remote city of Raqqa and a few dusty towns. + +That is not to say that the next weeks or months will be easy. No one knows how the battle for Mosul will unfold. Perhaps, as in Ramadi late last year, IS will stand and fight. That led to the destruction of much of the city and the flight of most of its population. Or perhaps, as in Fallujah in June, IS will simply run away. Most of its best fighters in Mosul, and almost all its leaders including Mr Baghdadi, have probably already gone. + +The liberators must act with extreme care. Mosul must not become another Aleppo, which is being reduced to rubble by Syrian and Russian forces. Instead all action must be targeted, avoiding harm to civilians whenever possible and properly policing areas as they are taken from IS. More humanitarian assistance is needed if the world is to cater both for those who have started to flee and those who hunker down in the city. + +Thereafter, it is important to avoid anything that looks like a Shia takeover of Mosul and the surrounding province of Nineveh. This is a majority Sunni Arab area, which should enjoy a large degree of autonomy. In turn, the rights of the many minority groups, among them Kurds, Christians, Yazidis and Turkomans, must also be protected. Above all, the many outsiders who would like a piece of Mosul for themselves—Kurdish forces, Shia militias, perhaps Turkey—must be kept out of the city. They would bring about only a violent free-for-all. + +Though it might seem perverse, the wisest thing the would-be liberators could do would be to leave IS a safe way out of the city, eastward to Syria, to avoid a long fight to the death. The prize of taking Mosul as quickly and bloodlessly as possible is worth the cost of allowing an isolated Islamic Statelet to survive in eastern Syria a bit longer. Raqqa is a more vulnerable target. And it will be easier to induce IS recruits to give up the fight if Iraq shows it can woo back its Sunni population. + +Having endured two insurgencies and 13 years of war, Iraq has a chance to rebuild itself. If it is not to be squandered, Mr Obama and his successor must not declare victory for a second time, rush for the exit—and leave Iraq to tear itself apart. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21709023-right-way-capture-jihadists-most-important-stronghold-crushing-caliphate/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Business in America + +Float like a butterfly + +Public companies are out of fashion. They need to be revived + +Oct 22nd 2016 | From the print edition + + + +MOST people know Elon Musk for his electric vehicles and desire to colonise Mars. He inspired the portrayal of the playboy and engineering genius who is the hero of the Hollywood blockbuster, “Iron Man”. + +Mr Musk is also one of the last entrepreneurs in America who seems to think that the publicly listed company can be useful. Two of his companies are listed: Tesla, a carmaker, and SolarCity, an energy firm. They have towering ambitions and valuations, and burn up cash as fast as his third company, SpaceX, burns up rocket fuel. Governance at Mr Musk’s firms is patchy and they may well fail (see article), but they are exactly the kind of exhilarating gamble that stockmarkets are meant to be good at funding. + +However, such octane-rich affairs have become rare. Listed giants such as Microsoft and Johnson & Johnson are more profitable than ever. Beneath these plump incumbents, though, public firms are fading. Their number has fallen from over 7,000 in 1996 to 4,000. Startups such as Uber and Airbnb have avoided floating their shares and instead raised money through private markets and venture-capital funds. The cash raised by initial public offerings (IPOs) in America in 2016 is likely to be 50-75% less than it was a decade ago. + +For mature companies, meanwhile, the private-equity industry has become the owner of choice, as our briefing explains (see Briefing). Businesses owned by Carlyle, a buy-out firm, are together America’s second-biggest employer after Walmart, with 725,000 staff. A quarter of midsized firms are under private-equity ownership, as are a tenth of large ones. The share of corporate America that is unlisted is likely gradually to rise further, as buy-out funds invest some of their $1.3 trillion of spare cash. + +Public firms are in decline for several reasons. Technological change may mean that startups are less capital-intensive, and so are less hungry for money. More worrying, managers grumble that being in the public eye has become a gigantic headache. Listed firms face ever more red tape. Then there is the treadmill of quarterly results—with the ever-present risk that Wall Street will punish even short-term slip-ups. + +Politicians see public firms as easy targets. Bernie Sanders has laid into General Electric and Donald Trump has slammed Ford for being too ruthless. Staying in the shadows can lower tax bills. Without the need to report steady quarterly results, firms pile on debt to cut their taxable profits. Private-equity and venture-capital managers use a perk called “carried interest” that lets them pay a low rate of tax on some income. + +Although the corporate quest for privacy is understandable, it is regrettable. At their best, stockmarkets are liquid, transparent, cheap for investors to use—so you do not have to be wealthy to own shares. At their worst, the forms of private ownership that are replacing them are illiquid, opaque, expensive and exclusively for the very rich. + +Investors in private firms cannot easily sell or value their holdings. That is their choice, but it can be a problem when the economy turns sour and they need to realise cash. Companies’ books are not subject to outside scrutiny. And the pension funds (often government-run) that invest through fiddly private structures are more prone to get bamboozled by fees. There are broader costs to society, too. Chunks of the economy become off-limits for retail investors, giving people less of a stake in capitalism. Already investing in technology startups has become as democratic as owning a ski chalet in Aspen. + +Public, for the public + +How can the public firm be saved? It is not up to governments to dictate how firms are owned. But they should not penalise companies for being public. That means abolishing the carried-interest perk, as Hillary Clinton and Mr Trump propose. One of the benefits of phasing out the tax advantages debt enjoys over equity would be to discourage leveraged buy-outs. The extra revenue could be used to slash the corporate-tax rate. + +America’s regulators could simplify the rules public firms face, and end the bank cartel that means the fees for an IPO are typically 7%, double the level in other rich countries. Big unlisted firms should publish a basic annual report, as they are already required to in Britain and elsewhere. The cost would be low, and creditors, customers, staff and competitors could get a sense of firms’ financial condition. A competitive, open economy cannot work well if large chunks of it are secret. + +Public firms also have work to do. By beefing up their boards, companies can make sure that operational managers are insulated from the short-term demands that some stockmarket investors make, as even autocrats such as Jamie Dimon at JPMorgan Chase, and Warren Buffett have recognised by backing a new code for how American boards should be run. + +The public company is a vital cog of capitalism. Ringing the bell at the New York Stock Exchange must become something that entrepreneurs aspire to, not fear and dread. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21709022-public-companies-are-out-fashion-they-need-be-revived-float-butterfly/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Thailand’s succession + +A royal mess + +The ruling junta is missing an opportunity to change Thailand for the better + +Oct 22nd 2016 | From the print edition + + + +IT IS hard not to be moved by the sight of Thailand in mourning for Bhumibol Adulyadej, its late king. A week after his death, huge crowds continue to gather outside the royal palace in Bangkok and across the country. Some hold pictures of him; others light candles; others simply stand and weep. The demand for black clothes is so great that impromptu dyeing shops have sprung up, offering to turn brighter garments into something suitably sombre. + +Respect for the Thai monarchy may be reinforced through the education system and bolstered by strict laws against insulting the king, but it is genuine nonetheless. King Bhumibol reigned for over 70 years with diligence and dignity. Many Thais are distraught at his death. + +Yet it is hard not to feel that an opportunity is being missed, both to reassure ordinary Thais at an unsettling juncture and to set a new tone for the next reign. The emotion around the king’s death is heightened by anxiety over the upheaval it may bring. Thai politics has been unstable for the past decade, bedevilled by popular protests and upended by two coups. Even before the instability there were worries about whether the succession would be smooth, given the often indecorous behaviour of the crown prince. The last thing Thailand needs is any hint that things are not going according to plan. + +Long live, er… + +And yet that is exactly what it is getting. On the day the king died, parliament convened. But it did not acclaim his successor, as had been expected. Instead, Crown Prince Maha Vajiralongkorn, in an apparent gesture of respect and humility, asked that the question of the succession be set aside for an indeterminate period, to give him and the rest of the country time to mourn (see article). The military junta that runs Thailand keeps insisting that the crown prince will eventually become king, although it also keeps changing its mind about when that will happen: perhaps this week, perhaps next year. The generals’ confusion may be just a sign of ill-preparedness. But the more they have to repeat themselves, the harder it is to suppress the impression that the succession is not quite a done deal. The generals also say airily that King Bhumibol’s death will not delay the restoration of democracy, but they remain studiously vague about when elections will be held. + +In the meantime the role of regent falls to Prem Tinsulanonda, the head of the privy council. That is unfortunate in several respects. For one thing, Mr Prem is 96, and does not exactly seem on top of things. For another, he is a former general and prime minister who is strongly associated with the idea that the monarchy and the army should play a big part in Thailand’s political life. + +In addition, the troubling vacuum at the top of Thai society means that no one is setting the tone for the period of mourning now under way. That has allowed a sort of hysteria to develop, in which people seen as insufficiently respectful are accosted by angry mobs. The police, instead of protecting the victims of such attacks, tend to arrest them, and in at least one case forced a suspect to prostrate herself before a picture of the late king. The minister of justice has condoned royalist vigilantism, and the authorities have opened a series of new investigations into supposed incidents of lèse-majesté. + +As it was, the army had been using lèse-majesté and other laws to suppress all manner of inconvenient debate, over the incompetence of the ruling junta, say, or shortcomings of the illiberal constitution it foisted on the country earlier this year. The accession of a new king gives the junta an opportunity to ease up, especially as there is little sign that advocates of democracy are seeking to exploit the moment. Instead it seems inclined to restrict freedom of speech even further. It has been encouraging Thailand’s main cable provider to censor foreign television channels, for example, and says it will seek to prosecute people outside the country who criticise the king. + +The foreign ministry, meanwhile, has issued a huffy statement complaining that foreign media are wilfully underestimating the crowds mourning the king. Such petty defensiveness is neither a fitting tribute to King Bhumibol nor a good way forward for Thailand. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21709021-ruling-junta-missing-opportunity-change-thailand-better-royal-mess/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Trade agreements + +Asterix in Belgium + +In the face of feisty opposition, politicians must do more to champion free-trade deals + +Oct 22nd 2016 | From the print edition + + + +PLUCKY little Wallonia! On October 14th the parliament of this rust-belt region of Belgium voted against the Comprehensive Economic and Trade Agreement (CETA), a proposed trade deal between the EU and Canada. To its admirers, this French-speaking corner of ancient Gaul, with a population of just 3.6m out of the EU’s 508m, has taken an Asterix-like stand against the implacable forces of globalisation. Free-traders may seethe that such a tiny minority can threaten a proposed treaty seven years in the making. But they cannot disregard it. Failure to secure a deal with Canada would undermine much of the EU’s trade-negotiating policy, and raise troubling questions for Britain about trade with the union after Brexit. + +Politix v economix + +Wallonia, once Belgium’s steel-and-coal heartland, is the sort of place where a bleak view of globalisation flourishes. Industrial plants are shutting down. Unemployment is high. In such poverty traps it is easy to misconstrue free-trade deals as giving supranational capital the right to trample over local legal systems, as well as environmental and labour standards. Yet political leaders, instead of facing up to this plight and presenting free trade as a way out of a dying past, make a case for it that is ever more convoluted. At best, they focus on technical fixes to finagle agreements such as CETA through. At worst they pander to rising protectionism with xenophobic rhetoric. + +CETA has raised hackles across Europe. It had already been dealt a blow by Germany’s constitutional court, which, in a suit with 190,000 plaintiffs, this month ruled that it must not cut across areas under national (as opposed to EU-level) “competences”. Protesters against CETA have taken to the streets of many European countries. Anti-globalisers fear that it would pave the way for a proposed EU-America agreement, the Transatlantic Trade and Investment Partnership (TTIP). + +If only. Trade pacts are the walking dead of diplomacy, repeatedly rising from the grave and lurching ghoulishly through yet more rounds of “last ditch” talks. So CETA is not buried yet—though, as we went to press, the prospect that it might be signed as planned on October 27th looked remote. TTIP, whose condition seems terminal, also limps on. The TransPacific Partnership (TPP), covering America, Japan and ten other Pacific-rim countries, has yet to be ratified by Congress. Hillary Clinton and Donald Trump both say they oppose it. + +Part of the problem is that even supporters of these agreements fail to defend them. In CETA negotiators have made striking improvements in contentious provisions, such as those for settling disputes between investors and governments—a bugbear of its opponents (see article). They have protected national laws on health and the environment and provided for transparent arbitration proceedings. They have guarded against a foreign-trade invasion to a fault: hundreds of its 1,598 pages cover national “reservations”, protecting everything from the livelihoods of veterinary surgeons in Alberta to executive-search services in Slovenia. + +All the carve-outs, side-letters and “interpretative declarations” point to how trade policy skirts around the benefits of more openness, more trade and more globalisation. Most leaders understand that, as Barack Obama wrote in these pages two weeks ago: “Trade has helped our economy much more than it has hurt.” Yet in America many still dream that the best way to pacify Congress is through procedural gestures, and that the lame-duck session after the presidential election will at last ratify the TPP. (Perhaps they hope the electorate will not notice.) As for Europe, its stuttering recovery can ill afford to forgo the fillip from CETA and TTIP. Britain would be foolish to rejoice in the idea that, if those deals fall through, the Conservative government might easily strike some post-Brexit bilateral replacements. Britain’s future arrangements with the EU will be far more important. And if the union cannot reach a trade agreement with cuddly Canada, what hope is there for renegade Britain? + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21709020-face-feisty-opposition-politicians-must-do-more-champion-free-trade-deals-asterix/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Letters + + + +On Brexit, Bob Dylan, bonds, Donald Trump: Letters to the editor [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +On Brexit, Bob Dylan, bonds, interest rates, Donald Trump + +Letters to the editor + +Oct 22nd 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Trading positions + +As someone who is familiar with trade policy of the past 40 years, I endorse what you say about how a good Brexit deal should be shaped (“The road to Brexit”, October 8th). You focus on the crucial importance of free trade and access to the European single market for trade in services, and the potential difficulty in achieving that. + +But I do have some reservations. The problem of “rejoining” the World Trade Organisation does not have to be as difficult as you make out, and an interim trade deal would not be necessary if trade arrangements with the European Union are discussed in parallel with the Article 50 process. A temporary deal styled on the European Economic Area is, I believe, unlikely to be offered, and might well be vetoed both in Brussels and by the Brexiteers. “In” is in and “Out” is out. + +RODERICK ABBOTT + +Brussels + +Trying to achieve trade deals outside the EU is critical for Britain as it enters the Brexit negotiations. Your bargaining power depends on what alternatives you bring to a settlement. Negotiating with the EU without any credible alternatives is foolish for Britain, hence the ministerial air miles trying to create them. Exploring trade deals with Asia and others is one way for Britain to get the best deal it can. + +JOHN CLARK + +Oxford + +If Britain is heading for a hard Brexit, the prime minister should push her “global Britain” agenda equally hard. In fields like science Britain is a world leader dependent on global connections. In a Europe where movement is less free there is an urgent need to develop policies that will protect this precious status. + +One solution would be explicitly to link scientific mobility with research funding. Any participant in EU-funded research projects would automatically receive a visa for free movement between Britain and the EU. This would disentangle science from the wider immigration debate and allow researchers to focus on what they do best. + +ALICE GAST + +President + +Imperial College + +London + +Just over a third of the total registered UK electorate voted to Leave. If a 40% threshold had been applied (as in the first Scottish referendum in 1979), we would not now be about to waste years of parliamentary time debating, and years of government time negotiating, our exit from the EU. + +KEITH RAFFAN + +Liberal Democrat Member of the Scottish Parliament, 1999-2005 + +London + +Stressing the economic benefits of migration misses the point. There is clearly an increasing number of people who see controlling immigration as a way of regaining control over their communities in a rapidly changing world. The success of the campaign to leave the EU suggests that national cultures and identities matter more to large sections of the electorate than the health of the economy, and that voters may be prepared to take a risk with the latter if they believe it is necessary to defend the former. Liberal commentators such as yourselves can keep telling these people that they are wrong, but it clearly isn’t working. + +DANIELE ALBERTAZZI + +Senior lecturer in European politics + +University of Birmingham + +I am the director of a small firm employing 50 people, a father of four and grandfather of nine. I am writing on behalf of the many people like myself who voted for Brexit and are fed up with being branded, xenophobic, racist, nationalist, populist and against free trade, immigration and globalisation. I am none of those things. I resent the implication that I am somehow morally inferior to those who want to remain in the EU, a bankrupt organisation run by unelected officials in partnership with arrogant self-serving politicians. + +MIKE WESTMORE + +Stroud, Gloucestershire + + + +* The Brexit vote exploded traditional left-right politics in Britain, and the Conservative Party is in a unique position to remake the political landscape. Theresa May is seizing that opportunity and positioning her party for not only the next election, but perhaps for a long-term realignment in British politics. If the Conservatives can capture a good share of the Labour Leave vote, and cosmopolitan Conservatives have nowhere else to turn, they will have an electoral majority for the foreseeable future. This is an amazing reversal of fortune for a party that only a short while ago was looking at a shrinking pool of potential voters. + +MARK WOLFGRAM + +Associate professor + +Department of Political Science + +Oklahoma State University + +Stillwater, Oklahoma + + + + + +Long time gone + +Three cheers for the Swedish Academy’s courageous decision to award this year’s Nobel prize in literature to Bob Dylan (The world this week, October 15th). It is a timely reminder that the lyrics of popular music can be poetry, too. But are writings on philosophy and history no longer considered to be also literature? The Nobel laureates Octavio Paz (1990), Elias Canetti (1981), Jean-Paul Sartre (1964), Albert Camus (1957), Winston Churchill (1953), Bertrand Russell (1950), Henri Bergson (1927) and Theodor Mommsen (1902) have had no peers in over a quarter of a century. Why should only fiction count? + +PROFESSOR MIGUEL ORELLANA BENADO + +Universidad de Chile + +Santiago + + + + + +Bond issues + +A lot of the concerns that Buttonwood raised about emerging-market corporate bonds are misguided (October 8th). Although inflows surged over the summer, this followed several years of investors bailing out of emerging markets. The $11.5 billion in inflows is chump change for a sector closing in on $1.5 trillion worth of bonds outstanding. Inflows were significantly higher into sovereign debt. + +Furthermore, the downgrades of Russia and Brazil last year prompted a wave of knock-on rating actions in the corporate sector, as companies can rarely “pierce the sovereign-rating ceiling”, in industry-speak. This skews the numbers you quoted on downgrades. In addition, the emerging-market corporate universe consists of around 40% in bank issuers, another third in commodity-related companies and nearly a tenth in utilities. These are hardly sectors sensitive to a drop in world trade, which you listed as the greatest threat. + +Consider that companies in emerging markets just went through a crushing period of declining oil prices and limited appetite from international investors to pump finance into their countries. Challenges remain—bond liquidity is the most pressing—but the sector just survived a hurricane and can handle a lesser storm. + +YACOV ARNOPOLIN + +Newport Beach, California + + + + + +Highs and lows + +* “Low pressure” (September 24th) concluded that living with low-interest rates means governments and private employers having to save a whole lot more. But isn’t there an alternative? Central banks could return interest rates to positive real returns (predicted inflation plus a premium for loaning money.) + + + +Most propositions in economics are as untestable as string theory in cosmology. If Keynesian central government spending doesn’t work, Keynesians say you didn’t do it hard enough. If the recovery from the financial crisis is moribund, classical economists say you should have let AIG, Bear Stearns and Lloyds Bank go bankrupt. But here we have the results of a long “experimental period” of breathtakingly low to negative interest rates, mediated by unprecedented bond-buying by central banks. The data are in: it didn’t work. Japan’s economy continues to contract, youth unemployment in Spain is rigidly high, and Greece teeters evermore on the brink. + + + +DAVID ROBINSON + +Senior lecturer + +Haas School of Business + +Berkeley, California + + + + + +Trumpety Trump + +Notwithstanding Donald Trump’s lewd behaviour (“With these hands”, October 15th), The Economist consistently ignores the basis of his support. This election is not about race or women, though I’m sure you wished it was. It is about the decades-long slide into economic oblivion experienced by many Americans, which undermines your arguments on the benefits of globalisation and free trade. + +TERRY MCGRAW + +Phoenix + + + +I must protest against your cover of October 15th equating the sayings of Mr Trump with elephant dung. Elephants are intelligent, sensitive, beautiful and endangered beings and their droppings are excellent natural fertiliser. The emanations from the mouth of Mr Trump are worthless, toxic bilge, harmful to any and all. Your equation of the two was egregiously unfair. + +MAC BRACHMAN + +Evanston, Illinois + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21708986-letters-editor/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Briefing + + + +Private Equity: The barbarian establishment [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Private Equity + +The barbarian establishment + +Private equity has prospered while almost every other approach to business has stumbled. That is both good and disturbing + +Oct 22nd 2016 | NEW YORK | From the print edition + + + +THIS year Henry Kravis and George Roberts, the second “K” and the “R” of KKR, celebrated their 72nd and 73rd birthdays, respectively. Steve Schwarzman, their equivalent at Blackstone, turned 69; his number two, Hamilton James, 65. In the past few months David Rubenstein, William Conway and Daniel D’Aniello, the trio behind and atop Carlyle, turned 67, 67 and 70. Leon Black, founder and head of Apollo, is just 65. + +These men run the world’s four largest private-equity firms. Billionaires all, they are at or well past the age when chief executives of public companies move on, either by choice or force. Apple, founded the same year as KKR (1976), has had seven bosses; Microsoft, founded the year before, has had three. On average, public companies replace their leaders once or twice a decade. In finance executives begin bowing out in their 40s, flush with wealth and drained by stress. + +The professional longevity of the private equiteers—whose trade is the use of pooled money to buy operating companies in whole or in part for later resale—is thus rather remarkable. But do not expect to see a lot of fuss made about it. Since the uproar over a lavish 60th birthday party for Mr Schwarzman on the eve of the financial crisis (guests were entertained by his contemporary, Rod Stewart), such celebrations have become strictly private affairs. At KKR there has been little fuss over the company’s 40th anniversary—a striking milestone, given the fate of the institutions that previously employed the big four’s founders: Bear Stearns (gone), Lehman Brothers (gone), First National Bank of Chicago (gone) and Drexel Burnham Lambert (gone). The company has announced a programme encouraging civic-minded employees to volunteer for 40 hours. + +Out of the private eye + +There are good reasons for this low profile. The standard operating procedures of private equity—purchasing businesses, adding debt, minimising taxes, cutting costs (and facilities and employment), extracting large fees—are just the sort of things to aggravate popular anger about finance. Investors in private-equity firms (as opposed to investors in the funds run by those firms) have their own reasons to withhold applause. All of the big four have seen their share prices fall over the past year; Blackstone, Carlyle and KKR are all down more than 20%. Apollo, Blackstone and Carlyle trade for less than the prices at which their shares initially went public years ago (see chart 1). First-quarter earnings were bleak, though things have picked up a little since. + + + +A chief executive in any other industry with challenging public relations, poor profits and a depressed share price would have a list of worries. There would be a restive board, a corporate raider, and possibly—ironically enough—a polite inquiry from a private-equity firm. Perhaps in the deep corporate waters such concerns are percolating; there may even have been a redundancy or two. But on the surface, things seem placid. There has been nothing like the rending of garments that would be seen if an investment bank were going through a similarly rough patch. The unusual design of private equity makes it resistant to all but the most protracted turbulence; its record redefines resilience. + +It is not just that old private-equity firms persist; new ones continue to spring up at a remarkable rate. According to Preqin, a London-based research house, there were 24 private-equity firms in 1980. In 2015 there were 6,628, of which 620 were founded that year (see chart 2). Such expansion looks all the more striking when you consider what has been happening elsewhere in business and finance. In America, for which there are good data, the number of banks peaked in 1984; of mutual funds in 2001; companies in 2008; and hedge funds, probably, in 2015. Venture-capital companies are still multiplying; but they are effectively just private equity for fledglings. + + + +Private equity’s vitality has seen it replace investment banking as the most sought-after job in finance. This is as true for former secretaries of the treasury (Robert Rubin departed the Clinton Administration for Citigroup; Timothy Geithner the Obama Administration for Warburg Pincus) as it is for business-school students. Some investment banks now pitch themselves to prospective hires as gateways to an eventual private-equity job. If banks resent their lessened status, they respond only with the kind of grovelling deference reserved for the most important clients. The funds made deals worth $400 billion in 2015 (see chart 3). The fees they pay each time they buy or sell a company provide a fifth of the global banking system’s revenues from mergers and acquisitions. + + + +The growth of private equity has been so strong it has a bubblish feel. “The existing number of private-equity funds won’t be topped for 20 years, if at all,” predicts Paul Schulte, head of a research firm in Hong Kong that carries his name. His sentiments are shared, if quietly, by many in the industry as well as outside it, and there is good reason for them. But there is also good reason to believe that the expansion will continue, at least for a while, if only because it is very hard for the money already in the funds to get out. + +Private-equity investments are sometimes liquidated and investors repaid. Firms can even be wound down. But investors in private-equity funds are called “limited partners” for good reason, and a key limitation is on access to their money. The standard commitment is for a decade. Getting out in the interim means finding another investor who wants to get in, so that no capital is extracted from the fund. That usually comes with off-puttingly large transaction costs. + +Billion-dollar roach motels + +The contrast with the alternatives is stark. Clients who want to withdraw money from a bank can do it on demand, from a mutual fund overnight, from a hedge fund monthly, quarterly, annually, or in very rare cases, bi-annually. It is because of the speed with which money can flee them that banks receive government deposit insurance; it shields them from market madness. It is because investors can get out that hedge funds suffering a spell of poor performance can find themselves collapsing even though they have investments that might, given time, pay off handsomely. + +The stability that their never-check-out structure provides has enabled private-equity firms to assemble enterprises of enormous scale. Look at the companies themselves and this is not immediately apparent. The market capitalisation of the big four is about $50 billion, which would barely break the top 100 of the Fortune 500; between them they employ only about 6,000 people. But the value and economic importance of the businesses held by their funds (which are owned by the limited partners, rather than being company assets) are far greater. The 275 companies in Carlyle’s portfolios employ 725,000 people; KKR’s 115 companies employ 720,000. That makes both of them bigger employers than any listed American company other than Walmart. + +The big four have by far the largest portfolios, but others such as TPG, General Atlantic and Mr Geithner’s Warburg Pincus have a long list of familiar businesses that they either used to own or still do. According to Bain, a management consultancy, in 2013 private-equity-backed companies accounted for 23% of America’s midsized companies and 11% of its large companies. + +Not long ago most of those companies were owned by armies of individual stockmarket investors—a system seen as both beneficial to business and befitting a capitalist democracy, and as such one that other countries sought to replicate. Private equity’s deployment of chunks of capital from holders of large pools of money has severely dented that model. And this, too, is being replicated abroad. Only half of the world’s private-equity firms, and 56% of their funds’ assets, are American. A quarter of private-equity assets are in Europe. There are funds in Barbados, Botswana, Namibia, Peru, Sierra Leone and Tunisia. + + + +The rise of private equity has always been subject to scepticism. When KKR launched the first big private-equity takeover, of RJR Nabisco in 1988, it and its cohorts were described in a bestselling book as the “Barbarians at the Gate”. Success, adroit public relations and strategic philanthropy have tempered these concerns, and political donations probably haven’t hurt, either. But the industry’s limitations are still apparent, and current conditions are exacerbating them. + +Private equity is structured around a small group of selective investors and managers whose efforts are magnified by the heavy use of leverage in the businesses that the funds control. This is an inherently pricey set-up. Investors need higher returns to offset illiquidity; interest costs are high to offset the risk that comes with leverage; managers who have demonstrated the skills needed to design these arrangements and to maintain strong relationships with providers of capital demand high fees. + +During the industry’s growth some of these costs were ameliorated by a long-term decline in interest rates, which enabled deals to be periodically refinanced at lower rates. Today rates can hardly go any lower, and should eventually rise. This is one of the reasons Mr Schulte and others see little growth to come. + +Political positions + +Another change is that banks which are under orders to curtail the risks that they face are reducing the amounts available for highly leveraged deals. That means borrowing will cost more. To see how that could throw a wrench into the system, look at the brief stretch between September 2015 and this February. The average yield on sub-investment grade, or “junk”, bonds jumped from 7% to 10%. Transactions all but ceased. The value of assets held by private-equity firms with any public stub had to be written down, resulting in those poor first-quarter results. Money was suddenly unavailable for new deals. Carlyle’s purchase of Veritas Technologies, announced just before the crunch, almost failed to close and was saved only after a renegotiation that led to a lower price and lower leverage. + +The political environment, too, may be changing. The industry benefits from two perverse aspects of the tax code—the incentive it provides for loading up companies with debt, and the reduced rate of tax the general partners benefit from owing to most of their personal income being taxed at the rate applied to capital gains. There are strong arguments for reform under both heads. In the second of the two cases a change looks quite likely. + +There is also a broader political risk, identified in a paper published in January by professors at New York University and the Research Institute of Industrial Economics, a Swedish think-tank, called “Private Equity’s Unintended Dark Side: on the Economic Consequences of Excessive Delistings”. As companies shift from being owned by public shareholders to private-equity funds, direct individual exposure to corporate profits is lost. The public will become disengaged from the capital component of capitalism, and as a consequence will be ever less likely to support business-friendly government policies. + +Another far-reaching question to consider is that sometimes the only truly “private” thing about private equity seems to be the compensation structure. The money within the funds is to a large extent either directly tied to public institutions (sovereign-wealth funds and municipal pensions), or, as a matter of public policy, tax-exempt (private foundations and school endowments). This irks both those who yearn for truly private markets and those dismayed at seeing public policy arranged so as to enrich particular groups of private citizens. The implicit tie between the allocation of funds, investments and the state creates a breeding ground for corruption and crony capitalism. + +The madding crowd + +The largest threat to the industry, though, comes not from its critics but its success, and those who seek to emulate it. According to Bain, the share of America’s midsized companies controlled by private equity tripled between 2000 and 2013; for large companies it increased more than fivefold (see chart 4). That doesn’t mean private equity is running out of road quite yet; but it does suggest that opportunities will get more scarce. + + + +At the same time other kinds of entities with access to cheap and often state-related capital have entered the buy-out market, including Chinese multinationals (financed by state banks), sovereign-wealth funds and pension funds that want to invest directly, such as the Ontario Teachers’ Pension Plan. That means more competition for new deals. In 2007 private-equity firms were responsible for 28% of the purchases of midsized health-care companies, according to Bain. In 2015 their share was only 8%. The trend has been similar, if not so pronounced, in the acquisition of retailers and companies involved in technology and consumer products. It is “the roughest environment for private equity I’ve ever lived in,” Joshua Harris, a co-founder of Apollo, told attendees at a Milken conference in early May. + +This may go some way to explaining the amount of money private-equity firms have on hand—their so-called “dry powder”. Preqin puts the current pile at over $1.3 trillion. Adjust for the leverage applied in private-equity deals (say two-to-one) and that sum by itself would account for roughly 70% of the value of acquisitions carried out in 2015. If fertile fields beckoned, the amount of available cash would be shrinking, not rising. A confirmation of tight conditions comes from the willingness of the largest private-equity firms to look further afield for new opportunities. Blackstone now has larger investments in property, $103 billion, than private equity, $100 billion (plus an additional $112 billion in hedge funds and credit). Less than half of Carlyle and KKR’s invested assets are now in corporate equity, and just one-quarter of Apollo’s. + +Competition has had an impact on fees, too. A decade ago the standard formula was a 2% annual management fee and 20% of profits. These are still the terms quoted. In reality, though, management fees have fallen to about 1.2%, according to one large firm—similar to what a plebeian mutual fund charges. The 20% slice of profits remains; but some clients are now allowed to “co-invest”, matching the stake in a company they buy through a fund with a stake bought directly. That reduces the fees on the deal. + +All good reasons for doubt. But although that mountain of dry powder may betoken a lack of opportunities, it also shows that there is a lot of money still eager to get in. Whether that is wise is not clear. The lack of daily pricing, used to assess mutual funds and, often, hedge funds, introduces doubt into the discussion of private-equity results. The “internal rate of return” measure that private-equity companies tout can be fudged. This makes academic assessments of performance hard. + +This July, in an update of a previous study*, business-school professors at the Universities of Chicago, Oxford and Virginia found that, although in recent years buy-out funds had not done much better than stockmarket averages, those raised between 1984 and 2005 had outperformed the S&P 500, or its equivalent benchmarks in Europe, by three to four percentage points annually after fees. That is a lot. Ludovic Phalippou, also of Oxford, is more sceptical; he argues that when you control for the size and type of asset the funds invest in, their long-term results have never looked better than market-tracking indices. That said, getting the same size and type of assets by other means is not easy. + +The average return, disputed as it may be, does not tell the whole story. Studies find some evidence that private-equity managers who do well with one fund have been able to replicate their success (though again the effect seems to have decreased in the past decade). The biggest inducement to invest may simply be a lack of alternatives. Private equity’s current appeal rests not on whether it can repeat the absolute returns achieved in the past (which for the big firms were often said to be in excess of 20% annually) but on whether it has a plausible chance of doing better than today’s lacklustre alternatives. This is a particular issue for pension funds, which often need to earn 7% or 8% to meet their obligations. + +The standard explanation for why private equity might be expected to outperform the market is that it can ignore the dictates of “quarterly capitalism”—meaning impatient investors. This is not particularly convincing. The people who work for private-equity firms are a caffeinated bunch. During volatile times they oftenrequire constant updates on their portfolio companies’ results, and can intervene to quash even the most trivial use of cash. + +What does differ, though, is focus. Private-equity funds, the boards they put in place and the top managers who work for them all tend to concentrate on underlying performance to the exclusion of almost everything else. Public companies face a mountain of often incomprehensible or conflicting regulatory demands that are not relevant to performance; that delisting has risen in step with such demands seems unlikely to be a coincidence. + + + +Disclosure requirements, in many ways the most appealing characteristic of the public company for investors, have come to constitute a legal vulnerability. A sharp drop in a company’s share price can prompt litigation based on the idea that investors caught in the downdraft were unaware of a possible risk. So too could any internal discussion of a potentially controversial issue, as reflected by the New York attorney general’s investigation into ExxonMobil’s lack of disclosure on the risks associated with climate change. + +Law is not quite the same sport outside America. But the ways that capital markets operate (or fail to) elsewhere provide other opportunities for private equity to outperform. In China, for example, the term structure for bank loans is only one year, and seeking the longer-term funding offered by a public offering means joining a government-controlled queue. Private-equity financing can be arranged in short order, with money coming in, and out, depending on the needs of the business. + +A recent working paper published by Harvard Business School** summarises the possible benefits of private-equity ownership: the substitution of debt for equity, thereby reducing taxes and magnifying profits; compensation structures that provide huge incentives to management for increasing benefits; the addition of new expertise; and transactional dexterity. Perhaps the most compelling point is speed. The upper managements and boards of firms the funds acquire are typically replaced within months. Purchases are done at what are perceived to be opportune moments. So too are sales and refinancings. When the public markets are cool, as has recently been the case, private-equity funds resist relisting holdings or taking on new credit, and may choose to repay some loans. When markets become accommodating, the flows reverse. + +Public companies could do much of this, too. They tend not to, perhaps because their inner workings are more open to inspection and criticism. Sometimes they bring in private equity to do what they would not. After acquiring Kraft and Heinz in deals that a Brazilian private-equity firm, 3G Capital, also took part in, Warren Buffett of publicly traded Berkshire Hathaway explained things like this in his annual report: “We share with [3G] a passion to buy, build and hold large businesses that satisfy basic needs and desires. We follow different paths, however, in pursuing this goal. Their method, at which they have been extraordinarily successful, is to buy companies that offer an opportunity for eliminating many unnecessary costs and then—very promptly—to make the moves that will get the job done.” Berkshire, it appears, with its annual meetings featuring happy shareholders applauding a jovial peanut-brittle-munching chief executive, outsourced the hard decisions to a less exposed firm happier to take them. + +There are other reasons for public companies and private equity to co-operate. In 2015, when GE undertook a massive reduction in its finance arm, a quarter of the more than 100 transactions that quickly unfolded involved private-equity firms. There were only three public offerings.As well as being speedy, private equity is innovative. When Walgreens Boots, a health-care company, sold a business providing intravenous fluid treatments to Madison Dearborn, a private-equity firm, it was able to retain a significant (if undisclosed) stake. This sort of transaction, which lessens the embarrassment of selling too cheap something which goes on to be a success, is referred to on Wall Street with a pejorative term that can be roughly translated as “sucker insurance”. + +They were a kind of solution + +Given the flexibility private equity displays, the time may come when there are fewer questions about why a company is held in a private-equity structure rather than a public one. Less taxation, fewer operating constraints and less legal vulnerability are all attractive. There are political risks: structures which skew their benefits to the privileged are always subject to popular backlashes. But that potential vulnerability is also a source of strength. Raise your money from the very wealthy and asset-rich, and from institutions such as the pension funds of state governments and municipal workers, sovereign-wealth funds and universities with large endowments, and you get a certain clout. + +In theory, there should be a cost to such privilege. Public markets are inclusive and deep; they should provide capital efficiently (meaning inexpensively and intelligently) and should, as a result, be the best solution for both companies and investors. They should thus outperform the competition. Alas, at the moment it seems that internal and external constraints on public companies are holding that performance in check. The result is that the old lions of private equity, and their many cubs, could be making themselves ever more comfortable for decades to come. + +* “How do Private Equity Investments Perform Compared to Public Equity?”, Robert Harris, Tim Jenkinson and Steven Kaplan, Journal of Investment Management, 2016. + +** “What Do Private Equity Firms Say They Do?”, Paul Gompers, Steven Kaplan and Vladimir Mukharlyamov, Working paper, Harvard Business School, 2015. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21709007-private-equity-has-prospered-while-almost-every-other-approach-business-has-stumbled/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +United States + + + +Election 2016: Hating Hillary [Fri, 21 Oct 02:42] + +The third debate: Final insult [Fri, 21 Oct 02:42] + +The campaigns: Heard on the trail [Fri, 21 Oct 02:42] + +Election brief: Infrastructure: A view from the bridge [Fri, 21 Oct 02:42] + +Lexington: How to shoot a man in Reno [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Election 2016 + +Hating Hillary + +America’s probable next president is deeply reviled. Why? + +Oct 22nd 2016 | NEW YORK AND WASHINGTON, DC | From the print edition + + + +TO UNDERSTAND how well-regarded Hillary Clinton was as a senator and then as secretary of state, forsake those closest to her. A coterie of longtime retainers, such as her factotum Huma Abedin and Maura Pally of the Clinton Foundation, appear to worship her with a protective fury that admits no fault. But then also discount the views of those sometime Clinton associates who earn their bread by trashing the Democratic nominee—such as Dick Morris, inventor of the phrase “triangulation” to describe Bill Clinton’s political method. When not writing anti-Hillary polemics, he is chief political columnist of the National Enquirer, a tabloid which describes the 68-year-old candidate as a predatory lesbian on the edge of death. + +For a more dispassionate critique of Mrs Clinton, who is reckoned to be the second-most-unpopular presidential nominee ever, after her Republican opponent, Donald Trump, listen to some of the less partial operatives and politicians who have worked with her over the past 25 years. Less favoured Clinton retainers offer more nuanced praise of their boss than the gilded coterie. A workaholic, she is relentlessly demanding of her employees’ time and loyalty and can be icily critical, sometimes unfairly, says an aide who has been drawn into playing a much bigger role in Mrs Clinton’s campaign than she wanted: “Hillary’s not always warm and fuzzy.” But by the standards of most politicians she considers Mrs Clinton a decent boss—one who calls her staffers on their birthdays and when they are bereaved: “Not many senators do that.” + +Mrs Clinton’s former congressional colleagues—including the Republicans she wooed assiduously on Capitol Hill, though they had sought to destroy her husband’s presidency, and her, in the 1990s—speak even more admiringly of her. “I got on very well with her, she’s a likeable person. When it comes to dealing with Congress, she’d be a big improvement on Barack Obama,” says Don Nickles, a former Republican senator from Oklahoma who helped wreck the health-care reform Mrs Clinton tried to launch in 1993, and with whom she then worked to extend unemployment benefits. “She’s hard-working, true to her word and very professional,” says Tom Reynolds, a former Republican congressman who collaborated with her in upstate New York. “That’s not just in the Senate. She’s been like that all her life.” + +This, to put it mildly, is not a characterisation supported by Mrs Clinton’s ratings. Around 55% of Americans have an unfavourable view of her; about the same number do not trust her (see chart). Yet, among those who know Mrs Clinton, even critics praise her integrity. She is a politician, therefore self-interested and cynical at times—yet driven, they say, by an overarching desire to improve America. More surprising, given the many scandals she has been involved in, including an ongoing furore over her use of a private e-mail server as secretary of state, not many of those who have dealt with her seem to think her particularly shifty. Even some of her foes say the concern about her probity is overblown. “People can go back decades and perhaps criticise some of the judgments that were made,” Michael Chertoff, who was the Republican lead counsel in one of the first probes into Mrs Clinton, the Senate Whitewater Committee, but has endorsed her, told Bloomberg. “That is very, very insignificant compared to the fundamental issue of how to protect the country.” + + + +What then explains the depths of Mrs Clinton’s unpopularity, which on November 8th will drive millions of Americans to justify voting for a man whom they have heard boast of groping women? Having opened up a six-point lead in recent weeks, she is nonetheless likely to prevail. Yet she would return to the White House as its most-reviled new occupant of modern times. Mr Trump has suggested she could even be assassinated—and the experience of his rallies suggests he might be right. Neck veins thrumming, his supporters call Mrs Clinton “evil”, and a “killer”. + +Yet the antipathy to Mrs Clinton is not merely a right-wing hate fantasy: she is also mistrusted within her party. Almost a third of Democrats said they disagreed with the FBI’s recent decision not to prosecute her—their presidential candidate—over her e-mail arrangements. It is hard to think of another politician whose public image is so at odds with the judgment of her peers. + +For Mrs Clinton’s cheerleaders, the disparity is enough to prove she has been traduced. Yet politics is about winning over the public, as well as colleagues, and the fact that Mrs Clinton is much less good at this is partly her fault. For such a practised politician—she delivered her first major address, on graduating from Wellesley College, almost half a century ago—she is a dreadful public speaker. Her speeches are mostly wonkish and dull, workaday constructions of a politician who appears to view human progress as a series of nudging policy improvements. Mr Obama’s vision is not dissimilar; but where the president elevates it with magical rhetoric, Mrs Clinton’s performance is so hammy as to annoy. “She sucks the life out of a room,” groans a member of her husband’s separate (and in fact rival) adoring coterie. + +This hurt her during her first presidential run, in 2008, when the public mood was less radically against the establishment politics that Mrs Clinton encapsulates almost to the point of parody. With trust in the federal government now at the lowest sustained level ever recorded, the damage was bound to be worse this time. Indeed, on the left, Mrs Clinton is especially unpopular among younger voters, who are most mistrustful of the government and most liable to demand radical change. + +Hence their voluble support for Bernie Sanders, whose outsiderish credentials were confirmed by the fact that he had only recently joined the party whose nomination he sought. By pillorying Mrs Clinton as an apologist for a predatory elite—to which effort her lucrative past speechmaking on Wall Street provided ammunition—the Vermont senator assisted in her vilification. Over the course of the primaries, her favourability ratings worsened especially among millennials; 60% voted for Mr Obama in 2012, but by the time Mr Sanders threw in the towel, only 31% had a positive view of Mrs Clinton. + +This was not only true of millennial men but also of women; the latter have proved largely unmoved by the prospect of America’s first woman president. Older women, who backed Mrs Clinton in the primaries by big margins, are often enraged by this. Madeleine Albright, a previous secretary of state, warned of a “special place in hell” for women who do not support other women. Yet it seems younger women do not see the logic of this, perhaps because they are less likely to have experienced maternity leave and gender-related pay disparities, two areas where women are most likely to report sexism. + +In short, it is also hard to think of a politician less suited than Mrs Clinton to combating America’s rock-throwing mood. But as an explanation for the strength of America’s antipathy to her, this is inadequate—not least because she was until recently one of America’s most popular figures. When she left the State Department, in 2013, 65% of Americans had a favourable view of her. Why do almost as many now feel the reverse? + +Hill-Billy elegy + +Two bits of context are important. First, Mrs Clinton has been here before. Almost from the moment she came to national attention, in 1991 during her husband’s first presidential campaign, people took against her. “Like horse-racing, Hillary-hating has become one of those national pastimes which unite the elite and lumpen,” read a profile of the by-then beleaguered First Lady in the New Yorker in 1996. The second bit of background is that no one quite knew why. + +That Mrs Clinton kept getting mired in scandals—including, by 1996, an alleged conflict of interest over a rotten property investment the Clintons had made in Arkansas—plainly didn’t help. They left an impression of her that was often unflattering. She came across as secretive and perhaps not quite punctilious in her observance of the law. There were suggestions she had overcharged clients of her legal practice (though she broke no law). But the most serious allegations, including several pursued by Kenneth Starr, the independent counsel who uncovered Mr Clinton’s dallying with Monica Lewinsky, were dismissed as unproven or baseless. + +A better characterisation of the antipathy to Mrs Clinton, which doubts about her probity reflected, was a vaguer sense that there was something inappropriate about her. This dogged her in Arkansas, where she was considered too independent-minded to be the First Lady of a southern state. It was unfair; even her reluctance to take her husband’s name was controversial. Yet sympathisers struggled with the way the personal and professional seemed to overlap with Mrs Clinton. + +The wellspring of that concern was the Clintons’ marriage. To their detractors, it has always seemed a cold-hearted professional agreement, mainly to the advantage of Mrs Clinton. Yet those who saw her as cynically piggybacking on her husband’s success underrated her accomplishments; by her mid-20s, she was a Yale legal scholar and social activist of national repute; her speech at Wellesley had been widely covered in the press. Moreover, the Clintons were always upfront about their collaboration; Mr Clinton promised a “two for the price of one” presidency. And if that could help explain why Mrs Clinton never forsook her adulterous husband, something her critics also object to, there have been stranger marriages. + + + +Even now—though it is reported Mr Clinton’s philandering never ended—friends of the couple convincingly describe their mutual affection. “They’re often holding hands,” says an aide to Mrs Clinton. Yet if their partnership was deeply rooted , that didn’t mean America had to like it. Indeed, there were reasons not to. + +During her husband’s first presidential run, Mrs Clinton was allegedly involved in trashing the reputations of women who had claimed to have had affairs with him. It was the sort of allegation that might be forgiven in a jealous wife, or in a professional campaign manager. But in a woman who claimed to believe her husband’s protestations of innocence, and an avowed feminist, it seemed obnoxious. + +As the most powerful First Lady there had ever been—with an office in the West Wing and responsibility for reforming a health-care system that represented 15% of the economy—she faced stiffer attacks. Again, these were often exaggerated responses to errors for which she was only partly to blame. “Hillarycare” was too complicated and pursued too secretively. But though the unelected Mrs Clinton was partly to blame, so was her husband. Yet it was she who got it in the neck. At a speech she gave for the reform in Seattle, protesters waved “Heil Hillary” placards and invited her to “Fly yo’ broom”. + +Both Clintons were flawed. Yet the ferocity of such barrages reflected something more: the deep fault-lines the couple were straddling. The first baby-boomer president and his pushy wife represented a cultural shift that much of America feared. “She was not only a baby-boomer but a strong woman, which was felt by some to be a threat,” says Robert Reich, labour secretary in Mr Clinton’s administration. The obvious inference, that Mrs Clinton’s unpopularity was fuelled by sexism, has always annoyed her critics almost as much as she has. But it is otherwise hard to explain the gap between the measured criticism Mrs Clinton’s behaviour has sometimes invited and the unbridled loathing that has shown up in its place. + +It was also apparent in the fact that Mrs Clinton’s standing improved after the revelation of her husband’s canoodling with Ms Lewinsky. Recast as a wronged woman, a less threatening female archetype, she seemed more likeable. Moreover, the criticisms most often levelled at Mrs Clinton are plainly sexist. She is said to be “shrill”, “ambitious” and, in the gutter where Mr Trump fills his opposition files, deviant. + +Whenever she has sought power, including in her two Senate and first presidential campaigns, such criticisms have been aired, and in the latter case her ratings plunged. That she was in for another pounding this time was predictable—yet the pitch of loathing is unprecedented. + +The press had a hand in that. An analysis by researchers at Harvard’s Kennedy School of eight mainstream outlets, including CBS, the New York Times and the Wall Street Journal, found they were more critical of Mrs Clinton than any other Republican or Democratic candidate. In the first six months of last year, she was the subject of three negative statements for every positive one; Mr Trump received two accolades for every carp. “Whereas media coverage helped build up Trump,” the researchers concluded, “It helped tear down Clinton.” + +An obvious explanation is that Mrs Clinton’s strengths, including the most detailed platform of any candidate, do not make interesting news. Compared with the surprising enthusiasm for Mr Sanders, they were therefore hardly covered. (Maybe that was a good thing; the Harvard researchers found Mrs Clinton was the only candidate whose platform received net negative coverage.) + +And, as so often, she was also quickly enshrouded by scandals. These concern her alleged culpability for the deaths of four Americans in Benghazi in 2012; her lucrative speechmaking; the governance arrangements at the Clintons’ foundation; and her private e-mail server, which was revealed in March 2015, shortly before she announced her run. Within weeks, Mrs Clinton the super-qualified front-runner had been recast as a scandal-dogged fading star. In the first year of her campaign, her net favourability fell by 20 points. + +Also characteristically, Mrs Clinton was partly to blame. However reasonably she must fear harassment, her e-mail arrangements and protracted efforts to deny there was anything wrong with them warrant criticism. Or as Joe Lieberman, a former Democratic senator and vice-presidential candidate, puts it: “The Clintons have been through a lot, they’ve had a lot of people searching through their garbage, but even so…” All the same, the weakness of her candidacy and the seriousness of her alleged offences have been exaggerated. + +The predominant journalistic take on Mrs Clinton’s primary campaign was that she risked losing to a wacky socialist no-hoper. In fact, she crushed Mr Sanders so utterly—by almost 4m votes, in the end—he clearly never stood a chance. Coverage of the scandals has been even more misleading. On Benghazi, which bothers Mr Trump’s supporters especially (at his rallies, people reel off lists of witnesses they say Mrs Clinton has had killed) seven official investigations have shown she has no case to answer. Her speeches and activities at the foundation have also been exaggerated; both were politically fatheaded but, on the evidence available, not corrupt. + +Then do it again 20 years later + +Because she was culpable over her “damn e-mails”, in Mr Sanders’s phrase, it is a more complicated case. Yet the prevailing view of the scandal, promulgated by the media and Mr Trump, that her misdeeds were serious enough to warrant an FBI indictment, always looked fallacious, and so it proved. A 250-page FBI report into its investigation into the affair, describes Mrs Clinton inheriting an institution with shambolic communication procedures, which she and her too-pliant aides perpetuated. It suggests her e-mail arrangement was motivated chiefly, as she maintained, by her desire to send private and personal e-mails from a single device, her BlackBerry. That was partly because Mrs Clinton is so technophobic she does not know how to use a desktop computer. It is also reasonable to assume the arrangement was intended to give her maximum privacy. Either way, it was permitted. + +The problem was that 193 e-mails containing classified information were exposed to Mrs Clinton’s private server, which was not permitted. Yet the FBI, predictably, concluded Mrs Clinton’s offence was not premeditated, a usual condition for a prosecution in such cases. In the annals of political misdeeds, future historians will not pause on Mrs Clinton’s e-mails long. But they will marvel at how an exaggerated belief in her malfeasance almost created the conditions for Mr Trump to seize the White House. + +What, in the end, is fuelling that belief? Mrs Clinton’s political failings and the insurgent mood are plainly contributing. Yet, even if you are inclined to judge Mrs Clinton harshly, it is hard not to conclude that latent sexism is a bigger reason for her struggles. With his feel for America’s worst instincts, Mr Trump sought to arouse a misogynist repulse to Mrs Clinton from the start. When she left a debate stage during the primaries to use the lavatory, he called it “disgusting”. A tweet reading “If Hillary can’t satisfy her husband what makes her think she can satisfy America?” was retweeted from his Twitter account (naturally, he said he knew nothing about it). + +He now suggests his opponent and former wedding-guest (“a terrific woman,” he used to call her,) is guilty of murder and adultery. His supporters wear T-shirts reading “Trump that bitch” and “Hillary sucks, but not like Monica”. More than half of white men, the engine-room of Hillary hatred, say they have a “very unfavourable” view of her—20 percentage points more than said the same of Mr Obama, whom they did not care for, in 2012. + +They are responsible for the pitch of Hillary-hatred in this election. It always seemed likely that women would, in the end, rally against that assault. And so, belatedly, they have, with a wave of women voters now breaking for Mrs Clinton. She leads among women by 20 points, while Mr Trump leads with men by seven. If that gender gap holds, it would be the biggest ever. According to simulations by Nate Silver, a data guru, if only women voted, Mrs Clinton would win with 458 electoral college votes to Mr Trump’s 80. If only men voted, he would win. + +This indicates the vast and countervailing social pressures, towards and against change, colliding in this election. Mrs Clinton, who has never felt able to protest against the chauvinism she has encountered, must feel vindicated, in a sense. But she is lucky, too. In Mr Sanders and Mr Trump, she has faced two opponents who could scarcely have been better designed to exaggerate her weaknesses and denigrate her strengths. Yet they were also, perhaps, the only plausible opponents that Mrs Clinton could actually beat. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21709053-americas-probable-next-president-deeply-reviled-why-hating-hillary/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The third debate + +Final insult + +Donald Trump suggests the election will be rigged + +Oct 22nd 2016 | WASHINGTON, DC | From the print edition + + + +TOWARDS the end of the third and final presidential debate, in Las Vegas on October 19th, Donald Trump was asked to confirm that he would accept the verdict of American voters on November 8th. “I’ll tell you at the time, I’ll keep you in suspense,” he replied. Mr Trump had in fact been rehearsing this line over the previous week. Trailing his Democratic rival, Hillary Clinton, by six percentage points (on average), he has repeatedly suggested the election will be rigged. A startlingly large portion of his supporters appear to agree; in a recent poll, 73% of Republicans say the election could be “stolen”. But it was still amazing to hear Mr Trump stoke that baseless fear—and whatever small but not insignificant risk of post-election violence is attached to it—at the final set-piece occasion of this wretched campaign. + +He had perhaps not even planned to air this latest conspiracy theory, which his running-mate, Governor Mike Pence of Indiana, has been quick to disavow. Because for most of the debate Mr Trump was restrained. He did not repeat his promise, made in the second debate, to imprison Mrs Clinton; he did not appear to boast of paying no income tax, as he had in the first. He spoke softly and, despite a few tics (his immigration policy, Mr Trump explained, was aimed at ridding America of “some bad hombres”) he appeared to be trying to articulate his positions: for example, on the sanctity of the Second Amendment, the disasters of recent American policy in the Middle East and the hurt inflicted on some communities by globalisation. He only plugged his hotel once. + +Ably moderated by Chris Wallace, a Fox News anchor, this debate was the most serious examination of the stark choice the nominees are offering Americans. Plump for Mrs Clinton on November 8th and they will have a continuation of Barack Obama’s presidency; albeit, she stressed, with a couple of differences. She will not rethink her rejection of the Trans-Pacific Partnership deal and she would try to pass immigration reform, including a path to citizenship for the undocumented, within 100 days of taking office. Or they can plump for Mr Trump and have a more conservative Supreme Court bench, more border security and an aggressively transactional trade and foreign policy that would transform American power. + +Mr Trump’s Republican advisers always wanted him to debate in this way, to woo the many conservatives who want reassurance of his seriousness. Had he done so earlier, he would be doing better. But this debate also underlined how difficult restraint is for Mr Trump. Because the longer he debates issues with Mrs Clinton, the more embarrassingly apparent it becomes that she knows what she is talking about and he mostly does not—and the more uncomfortable that makes him. He does not wear his inexperience lightly, as George W. Bush did in his sparring with the professorial Al Gore in 2000. And Mrs Clinton, who put in her best debate performance, is expert at needling him. + +In the end, sure enough, he fell apart. Castigated by Mrs Clinton, in response to his querying of the election’s legitimacy and for his lifelong habit of crying foul when he loses, he made himself look ridiculous. Mrs Clinton gave as an example Mr Trump’s past suggestion that the Emmy awards were rigged because a television show of his had not won; “Should have gotten it,” he growled. She later mused on her plans for welfare reform. “Such a nasty woman”, Mr Trump blurted into his microphone. He did not sound threatening so much as absurd. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21709049-donald-trump-suggests-election-will-be-rigged-final-insult/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The campaigns + +Heard on the trail + +Oct 22nd 2016 | From the print edition + + + +Protocols of the Elders of Palm Beach + +“Hillary Clinton meets in secret with international banks to plot the destruction of US sovereignty in order to enrich these global financial powers.” + +The Republican nominee borrows from history. + +American Beauty (1) + +“Look at her. Look at her words. You tell me what you think. I don’t think so.” + +Donald Trump suggests that a reporter for People magazine was not attractive enough for him to pursue. + +American Beauty (2) + +“Yeah, I’m gonna go after her. Believe me, she would not be my first choice.” + +Another woman who claimed Mr Trump interfered with her on a plane also isn’t up to his standards. + +American Beauty (3) + +“[Hillary Clinton] walks in front of me…and when she walked in front of me, believe me, I wasn’t impressed.” + +The Democratic nominee is safe from Mr Trump’s attentions. + +Vive la revolution + +“It is pitchfork and torches time in America!” + +Milwaukee County sheriff and Trump supporter, David Clarke, talks bold at a Trump rally. + +A complex Napoleon + +“There’s a big Trump and a little Trump. The little Trump is frankly pathetic.” + +Newt Gingrich, stalwart Trump supporter. Fox Business + +Warm bodies + +“Dead people generally vote for Democrats rather than Republicans.” + +Rudy Giuliani, former mayor of New York City, talks alleged voter fraud. CNN + +Cold comfort + +“I would like to reassure everyone, including our US partners and friends—we do not intend to influence the US election campaign.” + +Vladimir Putin reassures Americans. Reuters + +Liberty and death + +“We’re going to have a revolution and take them out of office if that’s what it takes. There’s going to be a lot of bloodshed. But that’s what it’s going to take…” + +A Trump fan in Ohio is ready to rebel. Boston Globe + +Couch warrior + +“The average American is very lazy. A rally is a very easy task, a revolution is not.” + +A Trump supporter in Green Bay, Wisconsin dismisses fears of post-election violence. NPR + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21709052-heard-trail/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Election brief: Infrastructure + +A view from the bridge + +It will take more than just money to get America moving + +Oct 22nd 2016 | WASHINGTON, DC | From the print edition + + + +IN SEPTEMBER the authorities in St Petersburg, on the west coast of Florida, released about 150m gallons of raw and partially treated sewage into Tampa Bay, the natural harbour on which the city sits. Flooding related to Hurricane Hermine had overwhelmed the city’s ageing wastewater system—the third such incident in 13 months. According to a whistle-blower, consultants warned the city in 2014 that closing one of its sewage plants could lead to such a catastrophe. But it did it anyway. + +Both candidates for president agree that America must spend more on its infrastructure which, though good, is deteriorating. It attracts a score of 5.9, on a scale of 1-7, from the World Economic Forum, down from 6.1 in 2007. (Over the same period, other rich countries saw their scores grow by an average of 0.3.) Government data show that in 2014 some 32% of America’s roads were rated “poor” or worse for bumpiness, up from 16% in 2005. The average annual delay faced by commuters has increased by 62% since 1990. + +The decline is the inevitable result of falling infrastructure investment (see chart). It tumbled after the recession as states and local governments, who provide nearly two-thirds of the money, scrambled to balance their budgets. The federal government’s recession-fighting stimulus package mitigated this only slightly. Between 2009 and 2014 just $55 billion of $828 billion in stimulus spending flowed to water and transport projects. From 2013 fiscal austerity made infrastructure funds still scarcer. In 2015 Congress scrimped together enough cash to keep the highway trust fund, which provides most of the federal funding for transport, in the black until 2020. But more money is needed to stop the decay. + +Hillary Clinton promises an extra $275 billion over five years, which should return infrastructure investment to close to its pre-recession level. Her shopping list is lengthy. It includes both sober promises, like fixing potholes, and fanciful ideas, such as creating a “world-leading” railway network (taken at its word, this would require sending Japanese style bullet-trains across the country). This first $275 billion would come from mostly unspecified changes to the corporate tax. + +Mrs Clinton would also continue Barack Obama’s quest to establish a national infrastructure bank, capitalised with $25 billion from the Treasury. The bank would borrow a further $225 billion, either from investors, or from Uncle Sam (which might be cheaper). In any case, the bank would funnel its cash to infrastructure projects in the form of loans and loan guarantees (it would support only projects which can make a return, like toll bridges). + +Donald Trump—as usual—has less of substance to say. He laments the state of the nation’s bridges and airports and promises to repair them. He also says he will deliver “gleaming new infrastructure”. Asked in August how much this would cost, he replied, ostentatiously, that he would “at least double” Mrs Clinton’s numbers. To achieve this, he would start “a fund” and—wait for it—make a “phenomenal” deal with investors to raise capital. + +Loose talk about loose purse-strings will make sceptics shiver. In the past, federal funds have flowed easily to boondoggles because politics, rather than thoughtful analysis, has directed the flow of money. For example, stimulus spending on transport was twice as generous, on a per-person basis, to sparsely populated areas than to densely populated ones, according to Edward Glaeser of Harvard University. It costs more to build in crowded cities than on empty fields, but low-density areas are, he notes, “remarkably well-endowed with senators per capita”. + +Useless projects excel at soaking up federal cash. Alaska recently abandoned a plan to build an infamous bridge connecting an island with just 50 residents to the mainland. But it did use federal cash to build a road leading up to where the “bridge to nowhere” would have stood. West Virginia has almost the opposite problem. It has been building a highway through the Appalachian mountains for over a decade. But the absence of a connecting road in neighbouring Virginia means the project lacks a clear purpose. + +Any new infrastructure programme must seek to avoid such profligacy. The priority should be unglamorous maintenance work, which has been neglected even as wasteful new projects have gone ahead. The Federal Highway Administration says that from 2011 until 2030 annual investment in roads must average $73 billion-78 billion, in 2010 dollars, just to restore existing roads to good condition (for comparison, such “rehabilitation” spending totalled only $60 billion in 2010). Maintenance could consume a big chunk of Mrs Clinton’s promised direct spending. + +An infrastructure bank could screen new projects for value-for-money. Mrs Clinton promises hers would be independent of government and would choose what to fund “based on merit, not politics”. The requirement that projects produce revenue to repay the bank would introduce market discipline to the process, especially if private money were involved (though some wonder just how many profitable infrastructure opportunities exist). + +Regulation might slow the diggers. A plethora of environmental, historical and other rules often restrict building. Many stimulus projects, far from being “shovel-ready”, took more than a year to get going because of local red tape. In May Larry Summers, a former treasury secretary and a vocal cheerleader for more infrastructure investment, complained in an article in the Boston Globe that regulation had delayed a project to repair a bridge near his office at Harvard University. The bridge took only 11 months to build in 1912, but the refurbishment, which began in 2012, is yet to be completed. When a contractor discovered it had to move a water pipe, the associated paperwork delayed work by a year. Another hold-up was a requirement, imposed by the Massachusetts Historical Commission, that the bridge had to have special bricks. + +Other barmy rules abound. The Davis-Bacon Act of 1931 requires workers on federal projects to be paid the “prevailing wage”—calculated by bureaucrats—in the local area. Law prevents the federal government from charging tolls on existing interstate highways, limiting a potential source of new funds (Mr Obama has tried, unsuccessfully, to change this). + +In recent years it has often taken disaster to spur investment. St Petersburg, Florida is now rushing to repair its leaky pipes; New Jersey at last raised its petrol tax to fund new transport spending after a fatal train crash in September. It is good that both candidates recognise the need for improvement. But that will require more than simply opening the chequebook. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21709038-it-will-take-more-just-money-get-america-moving-view-bridge/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Lexington + +How to shoot a man in Reno + +Nevada’s Senate race features two decent candidates whose reputations are being trashed + +Oct 22nd 2016 | From the print edition + + + +ASSUMING that her opponent fails to recover, Hillary Clinton can reach the White House even without Nevada, which polls suggest is in her grasp. Yet Nevada could hardly matter more to her. To achieve much as president Mrs Clinton will need a Democratic majority in the Senate, and her party’s path to retaking the Senate runs through Nevada, one of a few states that will decide the majority. And as in other swing states, its Senate race is on a knife-edge, thanks to a Republican candidate running ahead of Donald Trump. + +Nevada’s contest carries a special charge because Democrats are defending the seat of their Senate leader, Harry Reid, a whisper-voiced partisan who is retiring, and who hand-picked his successor, Catherine Cortez Masto. The two main candidates are not obviously nasty people. The granddaughter of a Mexican immigrant, Ms Cortez Masto is a cautious, hardworking former state attorney-general, who was known for crossing party lines and would be the first Latina in the Senate. Her Republican opponent, Joe Heck, is a cautious, hardworking congressman, doctor and brigadier-general in the Army Reserve: “When America is Fighting for Its Future…Send a Soldier” proclaims the Heck campaign, touting images of their man wielding a stethoscope and looking masterful in camouflage fatigues. + +On paper, demographic changes favour the Democrat (Mr Obama won Nevada twice). The state has been transformed from a cows-cactus-and-casinos backwater into the third-most-urbanised state in the country. More than 28% of its residents are now Hispanic, and they are strikingly young. Add a fast-growing Asian community and sizeable black population, and whites of European descent will lose majority status by the decade’s end, a seismic event that will occur in America as a whole by mid-century. For a Democratic Party increasingly reliant on urban, non-white and young voters, Nevada looks a cheering vision of the future. + +Strength on paper can be deceiving, though. Strip out non-citizens and minors, and fewer than half of Nevada’s Hispanics are eligible to vote. Moreover, Nevada’s non-whites are on average younger than their white neighbours, and less educated—both of which predict low turnout. And when the electorate is much smaller than usual, as happened in the mid-terms of 2014, Democrats get thumped: high conservative turnout in “the rurals”, as the state’s vast hinterland is known, and in such swing districts as Washoe County around the northern city of Reno, swamps the Reid machine that mobilises casino workers and union members in Las Vegas. In 2016, there are other reasons why Mr Trump’s toxicity is not causing a landslide for Democrats in Nevada. + +Compared with battleground states such as Colorado, Pennsylvania or Virginia, Nevada has fewer of the suburban college graduates who have abandoned Mr Trump in such numbers, notes David Damore of the University of Nevada, Las Vegas. As for youth turnout, a Democratic event this week at the University of Nevada, Reno, watched by Lexington drew just six students, though it featured free pizza and a pep-talk by a visiting senator, Jeff Merkley of Oregon. Many classmates are uninspired by either Mrs Clinton or Mr Trump, sighed Oscar Carballo, an undergraduate who did show up: “Honestly, I think turnout will be low.” + +Republicans have their own woes. Dr Heck broke with Mr Trump earlier this month, after recordings emerged of the nominee boasting about groping women. Citing his “military code of honour” and his experiences treating women victims of sexual assault, the doctor has called for Mr Trump to quit the race. At the Washoe County Republican Party in Reno, the chairman, Roger Edwards, stopped assembling Trump lawn signs to report that members are “pissed off” at Dr Heck, who is “kind of a RINO”—using the acronym for Republicans In Name Only, a jibe hurled at politicians who occasionally compromise to secure larger goals. Mr Edwards hopes Republicans will think of the Senate majority and back Dr Heck anyway: “We have to hold our nose and pull the handle.” Yet at a Democratic office a few miles away, Dr Heck’s conversion earned him no credit with Mr Reid. Leaning on a silver-topped cane, the leader of the Senate’s Democratic minority murmured that Dr Heck is “a Trumpite who has been voting with Tea Party folks to close the government”. + +Don’t ever play with guns + +Both parties should ponder the effects of an estimated $80m spent by groups from out of state on Nevada’s Senate race, dwarfing spending by the candidates. Mr Damore argues that, with so many negative TV ads aired by outside groups, “the candidates don’t have control of the message”—leaving Ms Cortez Masto and Dr Heck to emphasise their life stories, hoping some light pierces the murk. Spending by outside groups tends to nationalise races, too, forcing every candidate into familiar partisan templates. Tom Mannigel, a Republican volunteer in Reno, notes with approval how TV ads have portrayed Ms Cortez Masto as corrupt and greedy, “very similar to the way they’re painting Hillary”. + +Much outside spending comes from a network of donors led by two conservative industrialists and brothers, Charles and David Koch. On a crisp afternoon 22 days before the election, paid canvassers from the Libre Initiative, a Koch-supported group that promotes free markets and limited government to Hispanics, knocked on doors in a Reno suburb. Ostensibly conducting a survey, the canvassers read questions from digital tablets such as: “Democrat Catherine Cortez Masto has proven to put special interests ahead of job growth and our children’s future. This November 8th, will you be sending a message by voting against Catherine Cortez Masto for US Senate?” After several such leading questions, a sleepy Latino shift-worker in pyjamas agreed he was less likely to back her. On the left, union-funded ads have distorted Dr Heck’s views on pensions and other issues. In 2016 the poison starts at the national level and trickles down. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21709044-nevadas-senate-race-features-two-decent-candidates-whose-reputations-are-being-trashed-how/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +The Americas + + + +Canada’s climate policy: Let the haggling begin [Fri, 21 Oct 02:42] + +Bello: A model Latin American [Fri, 21 Oct 02:42] + +Clowns in Cuba: The red-nosed gold rush [Fri, 21 Oct 02:42] + +Informality in Latin America: Casual Mondays to Fridays [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Canada’s climate policy + +Let the haggling begin + +With the announcement of a national carbon price, Justin Trudeau opens a new phase of his government + +Oct 22nd 2016 | OTTAWA | From the print edition + + + +“THIS is betrayal,” thundered Saskatchewan’s long-serving premier, Brad Wall. His grievance: the decision this month by Canada’s prime minister, Justin Trudeau, to set a minimum price for carbon emissions that all provinces would have to adhere to. Since taking office nearly a year ago, Mr Trudeau and his ministers have spent much of their time consulting the provinces (and ordinary Canadians) on such issues as judicial reform and defence. His carbon-price announcement marks a transition from talking to acting, and a new contentious phase in relations between the federal government and the ten provinces. Canada’s grand political bazaar, in which the prime minister and the premiers strike the bargains that determine how the country will be governed, is again open for business. + +Despite Mr Wall’s profession of shock, the carbon-price policy is no surprise. Mr Trudeau has made it plain that, unlike his Conservative predecessor, Stephen Harper, he takes the threat of climate change seriously. One of his first acts in office was to agree last December to sign the Paris climate accord, under which Canada is to reduce its emissions of greenhouse gases by 30% below the levels of 2005 (see chart). The deadline is 2030. Although Canada emits just 2% of the world’s greenhouse gases, it is one of the world’s biggest emitters per person. Without carbon pricing, it will not keep its climate promises. + + + +During Mr Harper’s laissez-faire reign, some provinces came up with their own schemes. British Columbia introduced a revenue-neutral carbon tax in 2008; it is now C$30 ($23) a tonne. Quebec linked its cap-and-trade system, which issues tradable permits to emit greenhouse gases up to a certain level, to that of California. Ontario plans to join. Energy-producing Alberta levied a small tax on large emitters. It plans a C$20-a-tonne tax on emissions from fuel. Some 80% of Canada’s population is covered by a carbon-pricing scheme of some kind. + +Now Mr Trudeau wants a national standard, in part to discourage firms from migrating to provinces, like Saskatchewan, with no carbon price, or with very low ones. The national price will start at C$10 a tonne in 2018 and will rise by C$10 a year, reaching C$50 by 2022. Then the system will be reviewed. Mr Trudeau’s plan is not ambitious enough to meet Canada’s emissions-reduction target; some analysts think the price should be C$200. But it is a start. Provinces will be free to choose the system that best suits local industry. Those that opt for cap-and-trade schemes will have to meet or exceed Canada’s target of cutting emissions by 30%. Provinces will be allowed to keep the money they raise. + +That will not mollify them. Energy-producing provinces, such as Alberta, Saskatchewan and Newfoundland & Labrador, worry about the effect of carbon prices on the oil industry and on export-dependent livelihoods, such as lentil farming. They are in the second year of a recession caused by a slump in oil prices. Citizens in those provinces are hostile, although 63% of Canadians support Mr Trudeau’s climate policy, according to a new poll. On October 3rd, the day he announced it, the environment ministers of Saskatchewan, Nova Scotia and Newfoundland & Labrador walked out of a meeting with the federal minister, Catherine McKenna. “Now is not the time for that levy,” Mr Wall says. + +Most premiers sense more opportunity than threat in Mr Trudeau’s plan, seeing it as a chance to extract goodies from the federal government. Friendly collaboration is finished, says Tracy Snoddon of the C.D. Howe Institute, a think-tank. Now “a period of hard bargaining, posturing and demands for compensation and concessions begins.” Rachel Notley, Alberta’s premier, gave Mr Trudeau a taste of what is in store when she huffed that she would not support a national carbon price until she saw progress on plans for a pipeline to carry her province’s crude oil to one of Canada’s coasts. Quebec wants the federal government to give $1 billion to Bombardier, a struggling aircraft-maker. Other provinces have their own wish-lists. + +The biggest prize, universally coveted, is more federal money for health care, the largest item in provinces’ budgets. To help pay for it, the federal government will this year give them C$36 billion, its biggest transfer. This has been growing by 6% a year since 2004. Mr Harper’s government decided that from 2017 the rate of growth would fall to that of nominal GDP, which is projected to average 3.8% over the next few years. (There is a floor of 3%.) + +That is what really worries the provinces. Seven will have budget deficits this year. The rising cost of caring for an ageing population will add to the pressure. A spate of elections will sharpen some premiers’ hunger for popularity-boosting cash. British Columbia votes next May; four other provinces will do so in 2018. + +The federal government is cautious. Jane Philpott, the health minister, notes that overall spending on health care has recently risen at less than half the rate of federal transfers. That suggests that provinces have been taking advantage of federal generosity to spend money on other things. She says that the only extra money available is C$3 billion promised over four years for home care by Mr Trudeau’s Liberal Party during the election campaign. + +During his decade-long tenure, Mr Harper avoided meeting premiers as a group, knowing they would press him for money. Mr Trudeau is a more collegial sort. He will parley with the provincial chiefs on December 8th and 9th, knowing what to expect. His agenda will be to push forward his plan to make Canada a more responsible consumer of energy. The premiers will try to change the subject. In the end, some sort of bargain will be struck. It’s the Canadian way. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21709058-announcement-national-carbon-price-justin-trudeau-opens-new-phase-his/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Bello + +A model Latin American + +The concrete message of an abstract artist + +Oct 22nd 2016 | From the print edition + + + +THIS has been a good year for Joaquín Torres-García, a Uruguayan artist who died in 1949 but whose reputation continues to wax. Last winter the Museum of Modern Art (MoMA) in New York staged a panoramic exhibition of his work; after summering in Madrid, the exhibition opened this month at the Picasso Museum in Malaga. Last November one of his large “constructivist” panels, as he called them, sold for $2.1m at auction, a record price for his work. A more intimate exhibition at the Guillermo de Osma gallery in Madrid showcases both his sketches and his craftsmanship as a maker of wooden sculpture and toys. + +This interest in Torres-García shows that an artist who sometimes seemed behind his times was, in many ways, ahead of them. He was a bridge between Latin America and the diverse vanguards of the School of Paris. More important, he gave birth to a radical tradition of abstract and geometric art in South America. To outsiders, Latin American art means the Mexican muralists, Frida Kahlo and “indigenism” (the highlighting of pre-Columbian roots). But the abstract tradition is coming into its own. This week Patricia Phelps de Cisneros, a collector, donated to MoMA 102 works of geometric abstraction from the region (see article). + +Torres-García was an unlikely artistic revolutionary, an “Arcadian Modern” as the MoMA exhibition puts it. Yet he spent his long life in an ultimately successful search for an artistic language that offered answers to the fundamental question that faces all Latin American artists—who are we? Europeans or Americans, colonisers, indigenous or mestizos? + +The child of a Catalan émigré merchant and a Uruguayan mother, Torres-García moved with his family to Barcelona in 1892, when he was 18. There he was drawn to classical Greek art and a conservative, Catholic artistic circle, linked to Catalan nationalism. He worked with Antoni Gaudí, the architect, on stained-glass windows for the cathedral at Palma de Mallorca. Such was his success as a painter that he was awarded a commission to decorate a chapel at the Palace of the Generalitat, today the seat of the Catalan government. But his bold symbolist frescoes offended traditionalists and were later covered up. + +That rebuff and two years in New York propelled Torres-García to an art of the present. After dabbling in futurism and Cubism in vibrant street scenes, and moving to Paris, he arrived in the late 1920s at his artistic destination: what he called “architectural art” or “constructive universalism”. On a geometric grid he assembled pared-down symbolic pictograms. There is an esoteric quality to these recurring stylised objects: man, woman, fish, anchor, clock, bottle and so on. They drew on the orderly shelves of his father’s shop in Montevideo and his childhood memories of its great port. His constructivist panels were sometimes painted in black and white, or in the gently glowing primary colours of stained glass; sometimes they were scored onto wood. + +In Paris Torres-García became friends with Piet Mondrian and Theo van Doesburg, two Dutch abstract painters. But he rejected their dogmatic divide between abstraction and figuration; his stance is taken by many artists today. Rather, he counterposed abstraction to what he called “the concrete”, while marrying the modern to the primitive. He sought a universal language, deep in the unconscious, of visual symbols. While indigenism imprisoned Latin American art in folklore, Torres-García incorporated pre-Columbian imagery, from Inca walls and Nazca ceramics, into that universal language. + +In Paris he was at last able to make a living from painting. Then the Great Depression struck. In 1934, aged 60, Torres-García set out for Uruguay, more than 40 years after he had left it. There, in a tall house just off the main square in the colonial centre of Montevideo that is today his museum, he founded the School of the South to teach constructive universalism to a younger generation of artists. It was perhaps the most successful venture of his chequered life. Large posthumous exhibitions of his late work in Brazil in the 1950s testified to that. + +Torres-García was the most original and thoughtful artist Latin America has produced. His claiming of its indigenous heritage as part of a universal human experience is a welcome antidote to those in the region who would turn their backs on the world. In a continent given to fragmentation, so is his insistence on synthesis and unity. In these senses, Torres-García, who became a cantankerous old man in a straggling white beard and a long overcoat, was a model Latin American. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21709063-concrete-message-abstract-artist-model-latin-american/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Clowns in Cuba + +The red-nosed gold rush + +There’s money to be made wearing floppy shoes + +Oct 22nd 2016 | HAVANA | From the print edition + + + +ONE recent Saturday afternoon three performers, dressed in clownish finery, clambered out of a rusty 1950s pickup truck in a suburb of Havana and spent the next hour cavorting, breakdancing and sashaying for the amusement of a dozen children. One of the troupe, Ángel Kike Díaz, a cartoon-voice star and stage puppeteer, is a Cuban celebrity. As a clown employed by the state, he makes a salary worth $30 a month. A single children’s birthday party will pay him nearly that much. + +With inducements like that, clowning is a growth industry in Cuba. A timid economic liberalisation has created a small entrepreneurial class and attracted foreigners with money to spend on private displays of pranks and pratfalls. It has also opened up the clowning profession. “Clowns”, “party entertainers”, and “party-service providers” are among the 181 jobs that may now be done by self-employed workers. At least 200 clowns romp around Havana at such events as quinceañeras (15th-birthday celebrations for girls), weddings and feasts honouring the saints of Santería, an Afro-Cuban religion. + +Clowning is a Cuban vocation, brought by French and Spanish settlers in the 18th century and Americanised in the 20th (the Ringling Brothers and Barnum & Bailey circus visited in 1949). Fidel Castro shook up a largely hereditary profession by founding the National School of Circus in the 1970s, staffed largely by clowns trained in the Soviet Union. Its alumni are mostly on the payroll of the ministry of culture. Hard times came with the fall of the Soviet Union. Teachers went home; circuses closed. The school stopped training clowns in 2010. When the circuses eventually reopened, it was with fewer animals but a full complement of clowns. “It’s easier to feed a clown than an animal,” jokes one. + +Around half the moonlighting payasos are graduates of the national school. Among the self-taught are a doctor, a former priest and a postal worker. Clowns with proper credentials do not appreciate the competition. “The amateurs are like bad weeds,” says one. Cuba does not make it easy for either sort to freelance. With rubber noses and floppy shoes in short supply at home, clowns buy them when they or friends go abroad. The regime restricts access to the internet, so clowns advertise their services on the paquete, a hard drive packed with entertainment downloaded illegally and passed from house to house. + +Stingy with freedom and consumer goods, the communist system provides plenty of subjects for comedy, though clowns must be cautious in exploiting them. One skirts the borders of what is permissible by satirising Cuba’s police. “We are natural clowns,” says a payaso who combs his hair into a spiky ponytail that resembles a Wi-Fi antenna. “When we open our fridges in the morning and see that they’re empty, we laugh.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21709077-theres-money-be-made-wearing-floppy-shoes-red-nosed-gold-rush/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Informality in Latin America + +Casual Mondays to Fridays + +The high cost of joining the formal sector + +Oct 22nd 2016 | From the print edition + + + +MORE than half of all workers in Latin America are employed off the books in the informal economy. That share has barely fallen since 2003. Informal workers are excluded from safety-net programmes such as pension plans, unemployment insurance and some public-health services. + +A report by the OECD, a club of mostly rich countries, shows one reason why workers remain in the shadows: the cost of formality is too high (see chart). A large share of employees—from at least 20% in Bolivia to at least 80% in Honduras—earn wages that are below their country’s statutory minimum. Social-security contributions, if low-wage workers paid them, would consume much of their incomes. For the poorest tenth, contributions owed by both employers and employees would average three-quarters of their wages (if those workers paid the amount levied on formal employees earning the minimum wage). In five of the 18 countries covered by the report, that share would be more than 100%. + +Latin American tax burdens are not excessive by rich-world standards. For workers earning average wages in the formal sector, the tax take is less than 22%. Income taxes begin to bite only at the highest salaries. But for low-paid workers, especially those earning less than unrealistically high minimum wages, the cost of becoming formal is prohibitive. + +Even workers who could afford to make social-security contributions are often reluctant to do so. Some doubt that state pension schemes will be solvent by the time they retire. Others are deterred by the poor quality of public health-care programmes. The OECD would like the state to subsidise social-security payments by people who earn the minimum wage or less. That might induce some to join the formal economy. But formality is unlikely to become the norm if the benefits that go with it continue to be so poor. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21709073-high-cost-joining-formal-sector-casual-mondays-fridays/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Asia + + + +Thailand’s monarchy: An empty throne [Fri, 21 Oct 02:42] + +Bhutan: Happy-grow-lucky [Fri, 21 Oct 02:42] + +South Asian media: All hail [Fri, 21 Oct 02:42] + +Assisted suicide in Australia: On the brink [Fri, 21 Oct 02:42] + +Maternity culture in Japan: No pain, no gain [Fri, 21 Oct 02:42] + +Preservation in India: Brick by brick [Fri, 21 Oct 02:42] + +Banyan: Duterte’s pivot [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Thailand’s monarchy + +An empty throne + +As Thais mourn their king, confusion swirls over the succession + +Oct 22nd 2016 | From the print edition + + + +WHITE tents encircle Sanam Luang, a vast grassy parade ground in the heart of Bangkok. From their shade volunteers distribute simple meals, cold water and ice creams to crowds dressed in black or white. Off-duty rescue workers stir deep basins of diced chicken, turning the sizzling mixture with scoops the size of spades. A soldier in camouflage hands out sweets. + +The refreshments have been laid on for mourners waiting to pay their respects to Bhumibol Adulyadej, Thailand’s king, who died in hospital on October 13th. His body rests in the Grand Palace, an enormous white-walled complex just across the road, where it will stay for the next year. Visitors to the palace kneel before a picture of the king; soon they will be allowed into a throne room containing his coffin. Next year Sanam Luang will be the site of the royal cremation pyre—an ornate wooden pavilion which will probably take weeks to build. + +Immediately after the king’s death was announced all television stations suspended their normal programming in favour of documentaries about him, streamed in monochrome from a government pool. Newspapers and magazines started publishing in black and white; many websites did too. Funereal bunting now hangs from government buildings, as well as some banks and big department stores. Ads have stopped gushing from video billboards; noisy concerts and some festivals are postponed. Authorities have declared an end to the professional football season, abandoning several rounds of matches. + +Yet while grief is deep and genuine, in most practical ways Bangkok chugs on. Authorities declared a public holiday on the day after King Bhumibol’s death, but only after some commuters had already left for work. Bangkok’s stock exchange opened as usual, earning back some of the losses it had incurred earlier in the week. Public services and almost all businesses are operating normally, though some bars remain subdued. Everyday life has returned quickest outside the cities and in less royalist provinces, far from the capital, where black-clad mourners are rarer. + +There are limits + +Sensing the mood—and probably eager not to harm the economy—the military junta which has ruled Thailand since 2014 has toned down some of its early edicts. After negotiations with TV bosses the junta decided that stations would be entitled to run their own programming from the evening of October 14th, rather than waiting 30 days as planned (they have promised not to air anything too frivolous). The government wants public servants to wear mourning garb for a year; it says it will hand out black shirts to the poor, as well as teach them how to dye clothes they already own. But it is possible that simpler gestures, such as sporting a black ribbon, will eventually suffice. + +Little flexibility is evident, however, in the enforcement of Thailand’s strict lèse-majesté law, which in practice criminalises all but the most banal analysis of the palace’s influence, and which can make it risky to intimate that esteem for royalty is uneven and nuanced. The government was quick to “deplore” foreign coverage of the occasion. It accused journalists of playing down the size of mourning crowds, but probably only because it did not dare mention even more vexing content, including analysis of the king’s questionable democratic credentials and the crown prince’s louche personal life. Cable providers have temporarily interrupted local transmission of the BBC’s international news channel when it has covered the mourning. + +The government has asked local internet providers to monitor their networks around the clock, warning that it would pursue those found to be carrying content which might offend the grieving. It advertised e-mail addresses and phone numbers allowing Thai web-users to report worrisome content directly to the ministry of communications. Prompted by royalist groups, it says it will renew vain efforts to persuade foreign governments to extradite Thais whom royalists accuse of insulting the royal family from abroad. + +Of most concern are a handful of cases in which mobs of mourners have gathered outside the homes of Thais accused of making comments they consider insensitive. One man was beaten, his assault streamed on social media by a bystander; police forced a woman to prostrate herself in apology before a picture of the king, watched by a jeering crowd. The junta has condemned such incidents, but on October 18th the justice minister appeared to agree that “social sanctions” were a good way of dealing with Thais who refuse to respect the monarchy. + +Thailand will find it easier to get back to business once the next king’s reign begins. For the moment the succession is strangely stalled. Prayuth Chan-ocha, the coup leader turned prime minister, says Crown Prince Maha Vajiralongkorn has asked not to be proclaimed king until after the country has had more time to grieve. By law Prem Tinsulanonda, the 96-year-old chief of the former king’s privy council, will serve as regent in the interim. + +This turn of events has surprised everyone, apparently including the junta. It is not unusual for a new king to postpone his coronation until mourning for his predecessor is over, nor even unheard of to leave affairs in the hands of a regent (in the early years of his reign the young King Bhumibol did both). But delaying the formal acclamation of the new monarch by parliament is a strange decision indeed. + +The wildest speculation is that the crown prince is still deciding whether or not he wants the job—or that aristocrats inside the court are trying to persuade him to decline it. Prince Vajiralongkorn is not much loved by the masses and widely loathed among Bangkok’s elite, who fear his reign will dent the monarchy’s prestige. For years there have been rumours of efforts to elevate a better-loved royal. + +The longer Thailand’s odd interregnum persists, the more credible these theories will become. For the time being the prevailing view in Bangkok is that the succession will eventually proceed. The prime minister has assured Thais that the crown prince will accept the throne. Mr Prayuth says he may be acclaimed within days; other officials suggest the wait will be longer. Some commend the prince’s decision to forgo the crown briefly, seeing it as a sign of humility and respect. But for many Thais the gesture appears not to be dispelling misgivings but sowing confusion. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21709027-thais-mourn-their-king-confusion-swirls-over-succession-empty-throne/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Bhutan + +Happy-grow-lucky + +The stars align for a reclusive kingdom + +Oct 22nd 2016 | THIMPHU | From the print edition + +A Bhutanese GDP chart + +THE national sales pitch of Bhutan sounds oddly boastful for a shy mountain kingdom. “Happiness is a place,” it declares. But for the numerologically obsessed citizens of this Switzerland-sized country squashed between India and China, happiness may also be a time. This year happens to be not only the 400th anniversary of Bhutan’s creation as an independent state, but also the most auspicious point in the 60-year cycle of Bhutanese astrology: the Year of the Fire Male Monkey marks the birth anniversary of the country’s patron saint, Guru Rinpoche, a powerful 8th-century mystic who conquered demons and spread Buddhism across the Himalayas. + +This year also began with the best of news for the 750,000 Bhutanese: the birth of a male heir to Jigme Khesar Wangchuck, the fifth in the line of Druk Gyalpos or Dragon Kings. Loyal subjects, which is to say just about everyone, now beam that they have not one but three kings: the reigning monarch, who is 36, his baby son Jigme Namgyel, and also the fourth king, Jigme Singye. The king-father, as he is known, ruled the country for 34 years, gently steering Bhutan out of isolation and towards democracy before his abdication in 2006. Still hugely popular, the 60-year-old ex-king lives in a modest house outside the capital, Thimphu, visits his children and grandchildren by four wives (who happen to be sisters) and is occasionally spotted cycling along country roads. + +Outside Bhutan the fourth king is best known for his institution, in the 1970s, of Gross National Happiness as a measure for national achievement. Despite the government’s best intentions, improving GNH remains a vague goal. Yet by more pedestrian measures Bhutan is doing very well. The Asian Development Bank expects GDP to grow by 6.4% this year. For a country that had no secular schools before the 1950s, no paved roads before 1961, no commercial airport before 1983 and no television, internet or mobile-phone network before 1999, the progress is striking. Infant mortality has halved since 2000 and poverty fallen by 90%. Incomes have tripled and the spotless capital, where one in five Bhutanese now lives, buzzes with new cars and new buildings that are, without exception, painstakingly adorned with mythical symbols to ward off evil. To know whether a day is auspicious, Bhutanese now consult not monks but smartphone apps or the state broadcaster’s website. + +Whatever the stars say, Bhutan’s fortune also hinges on the whims of its twin neighbours and their 2.5 billion people. Fearful of China, India has long subsidised Bhutan’s budget. The country’s biggest export, hydroelectric power, relies on Indian capital and demand. The Indian army builds Bhutan’s roads; its “training camps” block possible Chinese invasion routes. But a more likely invasion is of tourists. Chinese already make up 20% of Bhutan’s visitors; from their smoky cities its green hills look tempting indeed. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21709030-stars-align-reclusive-kingdom-happy-grow-lucky/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +South Asian media + +All hail + +India’s press is more craven than Pakistan’s + +Oct 22nd 2016 | DELHI | From the print edition + + + +THERE is no question that India’s democracy is stronger than Pakistan’s. It is less prone to coups and violence. Its minorities are more secure. And, most Indians assume, their media are freer. When Cyril Almeida, a Pakistani journalist, revealed earlier this month that he had been banned from travelling abroad after writing a story that embarrassed Pakistan’s security forces, India’s tabloid press gloated. + +The Schadenfreude proved short-lived. To general surprise, Mr Almeida’s colleagues rallied in noisy support. Pakistani newspapers, rights groups, journalists’ clubs and social media chorused outrage at his persecution. The pressure worked; the ban got lifted. + +Mr Almeida had been reporting on tensions between the Pakistani army and civilian leaders over the border crisis with India, which began last month when infiltrators from Pakistan killed 19 Indian soldiers. On the Indian side of the border, however, there has not been much critical examination of the government’s actions. Instead, Indian media have vied to beat war drums the loudest. + +When an army spokesman, providing very few details, announced on September 29th that India had carried out a retaliatory “surgical strike” against alleged terrorist bases along the border, popular news channels declared it a spectacular triumph and an act of subtle statecraft. Some anchors took to describing India’s neighbour as “terror state Pakistan”. One station reconfigured its newsroom around a sandbox-style military diorama, complete with flashing lights and toy fighter planes. A parade of mustachioed experts explained how “our boys” would teach Pakistan a lesson it would never forget. + +Such jingoism was predictable, given the fierce competition for ratings among India’s news groups. Disturbingly, however, the diehard nationalists have gone on the offensive against fellow Indians, too. + +This month NDTV, a news channel with a reputation for sobriety, advertised an interview with Palaniappan Chidambaram, a former finance minister from the opposition Congress party. Mr Chidambaram was expected to say that previous governments had also hit back at Pakistan, but with less fanfare than the present one. Abruptly, however, NDTV cancelled the show. An executive sniffed that it was “not obliged to carry every shred of drivel” and would not “provide a platform for outrageous and wild accusations”. + +Arnab Goswami, the anchor of a particularly raucous talk show, has declared that critics of the government should be jailed. Extreme nationalists in Mumbai, India’s commercial capital, have urged filmmakers to ban Pakistani actors. One party has threatened to vandalise cinemas that dare show a Bollywood romance, “Ae Dil Hai Mushkil”, due for release later this month, which features Fawad Khan, a Pakistani heartthrob. The film’s director, Karan Johar, has aired a statement declaring his patriotism, explaining that the film was shot before the current trouble and promising never again to work with talent from “the neighbouring country”. One commentator described his performance as akin to a hostage pleading for mercy. + +Why, asks Mr Chidambaram, are the media toeing the government line so slavishly? Some answer that they have become ever more concentrated in the hands of big corporations, many of which carry heavy debts and so are wary of offending the party in power. Others ascribe the shrinking space for dissent to the unchecked rise of chauvinist Hindu-nationalist groups. Repressive colonial-era laws on sedition and libel also play a part. + +Happily, India’s press still brims with multiple voices. Critics of Mr Modi may worry about internet trolls, but they do not fear assassination by terrorists or shadowy government agencies, as those in some neighbouring states do. The Indian public is, in fact, tired of endless brinkmanship with Pakistan and yearns for stronger, more effective government. Of course, to be truly strong and effective, governments need to tolerate and even heed critics. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21709039-indias-press-more-craven-pakistans-all-hail/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Assisted suicide in Australia + +On the brink + +South Australia contemplates legalising assisted dying + +Oct 22nd 2016 | SYDNEY | From the print edition + + + +THE state of South Australia is often in the vanguard of social change. In 1894 it became the first place in the world to let women stand for parliament; in 1976, the first English-speaking jurisdiction to ban rape within marriage. It was the first place in Australia to decriminalise gay sex and outlaw racial discrimination. Now its parliament may make it the first Australian state to legalise assisted dying. + +This week two members of the state parliament introduced a bill that would allow terminally ill patients to end their lives with medical assistance, provided that doctors thought they had six months or less to live, that their suffering was “intolerable” and that it could not be relieved by any “reasonably available medical treatment”. Assisted dying is legal only in Colombia, Canada, a few European countries and a handful of American states. But the practice has a long history in Australia. In 1996 the Northern Territory became the first place in the world to legalise it. Four people made use of the law in the nine months before Australia’s federal government overturned it and passed a law to prevent Australia’s three self-governing territories from legislating on the matter. + +But the federal government cannot overturn laws in Australia’s six states. Assisted-dying bills have been introduced in South Australia’s parliament 14 times since 1995. Marshall Perron, the chief minister of the Northern Territory when it permitted assisted dying, sees a growing national momentum behind the idea. Bills introduced in South Australia in 2012 and Tasmania in 2013 were both defeated by just two votes. In Victoria, a cross-party parliamentary inquiry has endorsed legalisation. Polls suggest 70-75% of Australians support it. “The politicians lag the community’s expectations by a very significant degree,” says Mr Perron. + +The Labor majority in South Australia’s parliament includes several devout Catholics such as Tom Kenyon, the chief whip. He has urged Christians to “pray for defeat of this bill”. But the state premier, Jay Weatherill, backs it; the opposition leader, Steven Marshall, has been evasive. Both parties intend to allow members to vote according to their conscience. + +Nat Cook is a Labor MP and former nurse who has “seen the terrible suffering people go through” and is satisfied that the bill contains enough safeguards, such as a requirement for patients to be assessed by two doctors, to prevent abuse. In Victoria the parliamentary inquiry heard testimony from the state’s coroner, John Olle, about elderly people driven to lonely suicides. He mentioned the case of a 90-year-old who killed himself with a nail gun. + +But opponents say it would be better to improve end-of-life care. Richard Chye, director of palliative care at a big Sydney hospital, says 5% of patients ask for their lives to be ended, but most change their minds after receiving effective pain relief. Paul Russell of Hope, an anti-euthanasia group, says: “Whichever way you look at it, euthanasia is an act of killing. Do we really want to cross that Rubicon?” The answer is uncertain. The vote on the South Australian bill, both its supporters and opponents agree, will be close. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21709043-south-australia-contemplates-legalising-assisted-dying-brink/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Maternity culture in Japan + +No pain, no gain + +Why expectant mothers in Japan don’t get pain relief + +Oct 22nd 2016 | TOKYO | From the print edition + + + +THE Mejiro Birth House in a northern district of Tokyo is eerily quiet: no babies crying, no wails of women in labour. That, explains Yuko Hoshino, the chief midwife, is because it is empty. Only four to six babies are born there each month, compared with 14 to 16 a few years ago. The problem is not just Japan’s low birth rate. “Fewer women want a natural birth today,” she says ruefully. “They go with doctors in hospitals rather than with midwives in birth houses.” + +The culture of maternity in Japan is slowly becoming more like the rest of the rich world, but several practices differ. Women are generally treated as fragile during their pregnancy. But during labour itself they are expected to suffer. Painkillers are doled out sparingly, if at all. Doctors say growing numbers of women are keen to have an epidural (an anaesthetic injected into the spine), but few obstetric centres, hospitals included, offer them, and almost never outside normal working hours. The payment of ¥420,000 ($4,053) that the national health-insurance scheme makes towards the cost of having a baby would not typically cover one, anyway. + +For most women, however, the issue is neither the cost nor the longer time it takes to recover after an epidural. Local Buddhist tradition holds that women should embrace the pain of natural childbirth. The experience is said to prepare them for the challenges of being a mother and to encourage bonding with the baby. Yoshimi Katsube, who is 35, says her parents criticised her when she told them she would be having an epidural at the birth of her first child. Nonetheless, she plans to have one again when the baby she is now expecting is born. + +More fathers attend births than used to be the case, but many still don’t come into the delivery room. “My husband will come to the hospital, but we have yet to decide whether he will come into the room,” says Mayuka Yamazaki, who is expecting her first child this month. “I am not sure if I want him to see me like that.” + +In most countries, the received wisdom about what women should do in pregnancy relies as much on the local culture as on science. Expectant mothers in France drink wine and eat pâté, for instance; their American counterparts see this as one step short of infanticide. In most places pregnant women would be steered away from raw fish, but not in Japan. The main obsession, however, is with body temperature. While Western mothers-to-be are advised not to get too hot, those in Japan are told to keep warm. They happily bathe in hot springs but avoid ice cream and chilled water. Restaurants offer blankets to pregnant women, even in the height of summer. + +One element of the standard advice for pregnant women in Japan is worrying, however. The country has a high and rising proportion of underweight babies, defined as 2.5kg or less at birth. In 2015 9% of babies were underweight. One reason, says Zentaro Yamagata of the medical department of University of Yamanashi, is that women do not put on enough weight during pregnancy. Doctors advise their patients to put on no more than 6-10kg, compared with 11-16kg in Britain. + +The government, which is keen to push up the fertility rate from the current 1.5 children per woman to 1.8 to slow the shrinking of Japan’s population, might ponder all this. The causes of Japan’s demographic decline are many and to some degree intractable. But making childbearing a less forbidding experience could not hurt. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21709041-why-expectant-mothers-japan-dont-get-pain-relief-no-pain-no-gain/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Preservation in India + +Brick by brick + +Battling to save old buildings in a city with an embarrassment of them + +Oct 22nd 2016 | LUCKNOW | From the print edition + +A mongoose-magnet + +HIDDEN behind the fashion boutiques of Mahatma Gandhi Marg in Lucknow is an architectural gem. The mausoleum of Amjad Ali Shah, a king of Oudh, was built in the 1840s in Indo-Islamic style. Though large, it is delicate, with fine flowers in red plaster over the archways. But Mohammad Haider, a trustee of the mausoleum, mostly spies threats to the monument. He stalks the courtyard, snapping pictures of parked cars and ticking off a building labourer for dumping a large pile of rubble. “Illegal,” he says. “All illegal.” + +India has an enormous number of beautiful old buildings and an instinct for preserving them, which it inherited partly from its colonial rulers. Unfortunately, the country also has a corrosive climate, a growing crush of people and cars in its cities and a bureaucracy that is sadly not up to the task of preservation. Its heritage is crumbling. But in Lucknow, a northern city blessed with many historic buildings, that is starting to change. + +In the early 20th century India’s British rulers drew up a list of monuments worth protecting, which has hardly changed over the years. Today the Architectural Survey of India (ASI) oversees some 3,600 sites, with a heavy emphasis on colonial cemeteries. The Amjad Ali Shah mausoleum made the cut, along with 60 other monuments in and around Lucknow. Many others did not. Not surprisingly, the British did not list the Rifa-e-Aam Club, an important nationalist hangout. Once glorious, it is now in an awful state. One wing has become a hospital, while squatters inhabit other rooms. The courtyard doubles as a bus station and a rubbish dump. + +Even an ASI listing is no guarantee that a building will be preserved. One of Lucknow’s finest buildings, the Chhota Imambara (pictured), was recently “repaired” with modern cement, wrecking its subtle plasterwork. Mongooses scurry in and out of protected buildings; crows nest in rotting cupolas. It can be hard to find artisans who know how to handle traditional plaster and other authentic materials, says N. K. Pathak, the ASI’s superintending archaeologist in Lucknow. Some conservation architects say the ASI simply isn’t up to the job. + +Yet there are signs of a turnaround. The national government has increased the penalties for damaging protected buildings and stiffened a 100-metre exclusion zone around monuments, where (in theory) nothing can be built. Some of Lucknow’s monuments are now being sensitively repaired. There is even slight evidence to suggest that antiquity is becoming a selling point, rather than an irksome obstacle to development. Perhaps the best-preserved colonial building in Lucknow is Constantia, owned by an elite private school. + +Above all, Lucknow has Mr Haider. A one-man preservation movement, he drives out encroachers, harries the ASI and files endless petitions to the courts (when not defending buildings, he works as a corporate lawyer). In the past few years he has driven four car-repair shops from the courtyard of the Amjad Ali Shah mausoleum. But the battle never stops. As your correspondent leaves the courtyard, two labourers with baskets of rubble on their heads turn to go inside. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21709035-battling-save-old-buildings-city-embarrassment-them-brick-brick/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Banyan + +Duterte’s pivot + +Is the Philippines, until now a staunch American ally, falling into the Chinese camp? + +Oct 22nd 2016 | From the print edition + + + +EVEN in a year of extraordinary reversals, few would have expected it. In July China reacted with fury when an international tribunal upheld a complaint from the Philippines and rubbished China’s territorial claims in the South China Sea. This week it is rolling out the red carpet for the mercurial Philippine president, Rodrigo Duterte. He is being feted in a four-day state visit, with 400-odd businessmen in tow. Rub your eyes: America’s strongest ally in South-East Asia appears to be plopping like a ripe mango into China’s hands. + +Consider what Mr Duterte, in power since June, has said in recent weeks. He has branded Barack Obama a “son of a whore” for criticising his “kill them all” war on drug dealers and addicts, which has claimed thousands of lives, many of them innocent. He has demanded an end to joint naval patrols and to America’s assistance in the southern jungles of Mindanao, where American special forces advise Filipino troops fighting against Abu Sayyaf, a violent group linked to al-Qaeda. And he has questioned whether America would honour its treaty obligation to come to the Philippines’ aid if the archipelago were attacked. + +What that means for the American “pivot” to Asia scarcely bears thinking about. But do the eyes deceive? American officials—from Admiral Harry Harris, commander in the Pacific, down—insist that all is dandy. Joint naval patrols continue, as does co-operation in Mindanao; and America still has five bases on Philippine soil. The close working relationship with Filipino counterparts, the Americans insist, is as strong as ever. The Filipinos, for their part, report no change of orders from the new chief. + +Yet Mr Duterte talks of China like a moonstruck lover. On the eve of his visit he told Xinhua, the Chinese news agency, that China’s generosity to poor countries was without reproach. China “deserves the kind of respect that [it] now enjoys…It’s only China that can help us.” He has been at pains to point out that one of his own grandfathers was Chinese. Thrilled, the Chinese ambassador in Manila talks of “clouds fading away” and the sun rising to “shine beautifully on the new chapter of bilateral relations”. + +What is Mr Duterte up to? Bear in mind that development and growth are his priority—one reason for his sky-high popularity in a country with an entrenched plutocracy lording it over legions of urban and rural poor. But development needs capital, and the Philippines has been excluded from recent Chinese largesse showered around the rest of the region. Relations suffered in 2012 after China dislodged the Philippine navy from the Scarborough Shoal, which is just over 200km from the Philippines proper, within its exclusive economic zone, and almost 900km from China. Filipino businesses have struggled in China, while little Chinese investment has come to the Philippines. The tribunal’s ruling only made matters worse: afterwards, China told even its tourists to stay away. + +The Philippines had been plucky in standing up to China. But it has paid a price. Now, the goodies that China is dangling look irresistible. Mr Duterte wants lots of infrastructure, particularly railways. China is offering cheap loans. He wants the country to export more. China is offering to reopen its markets to Philippine fruit. He wants help with the war on drugs. A Chinese businessman is building a big rehab centre. And he wants Filipino fishermen to be able to return to their traditional fishing grounds around the Scarborough Shoal. China has told Philippine officials that it is open to an accommodation. + +Perhaps America, in banking so much on its plucky ally, should have been more clear-eyed about the cost to the Philippines of standing up to Chinese aggression in the South China Sea. Perhaps, too, it should not have assumed that all Filipino politicians have an instinctive allegiance to America. + +Although Filipinos are overwhelmingly pro-American, they are also patriotic. The American colonial period saw its share of atrocities, especially in Mindanao. One colonial general mused that it might be necessary “to kill half the Filipinos in order that the remaining half of the population may be advanced to a higher plane of life”. Mr Duterte himself says he was molested by an American priest as a child. The landed elite that he claims to be displacing achieved its ascendancy under American rule. And standing up for the little guy is part of his shtick. The insistence of his foreign secretary, Perfecto Yasay, that Filipinos will not be America’s “little brown brothers” does not go down too badly. + +Yet it is not only Americans who lament the impetuousness of Mr Duterte’s tilt to China: many Filipinos, including senior officials, are worried sick. Jay Batongbacal of the University of the Philippines fears Mr Duterte “is squandering all the practical leverage that comes from being in alliance with the United States”—without knowing what assurances, in terms of sovereignty in the contested South China Sea, the Philippines will get in return. + +Bide your time + +It is a reckless approach, but not necessarily a lasting one. For the time being, China wishes to draw the Philippines into its camp. That is why it has not yet attempted to build the kind of military facilities on Scarborough Shoal that it has constructed on other reefs in the South China Sea and that many Western analysts had assumed were imminent. + +But China will have to offer more than fishing rights to make any deal acceptable to Filipinos. Even the China-loving Mr Duterte has talked about leaping onto a jet ski to defend the Philippines’ interests in person if need be. So the Chinese idea of a “package deal” in which Chinese sovereignty over the Scarborough Shoal is acknowledged in return for fishing rights which Filipinos had anyway long enjoyed will be greeted as an insult back in the Philippines. + +America, in short, can be patient. The Philippines may yet return to its camp. If so, both sides will claim it never left. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21708984-philippines-until-now-staunch-american-ally-falling-chinese-camp-dutertes-pivot/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +China + + + +Politics: Master of nothing [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Chairman of everything, master of nothing + +Xi Jinping is a strongman. That does not mean he gets his way + +Changing China is tough, even for a man with Xi’s powers + +Oct 22nd 2016 | TANGSHAN | From the print edition + + + +BY NIGHT the fires of Tangshan burn and the air stinks. In this city in the northern province of Hebei, more than 100,000 people work in factories making steel and many more in firms serving the industry. “Save energy and cut emissions,” reads a red slogan outside one plant, heavy machinery roaring within. Earlier this year China’s president, Xi Jinping, ordered the steel business to cut production. Small and inefficient mills like this one were supposed to close and larger ones to shut down some furnaces. Yet many still operate around the clock. Their city is close to Beijing, virtually on Mr Xi’s doorstep, but the steel bosses openly flout his orders. + +Nearly four years into his rule, Mr Xi is commonly described as the most powerful Chinese leader in decades. He has taken charge of all the most important portfolios, cultivated a huge personal following and purged his opponents. Bypassing ministries, he rules through informal “leading small groups”, heading so many of them that foreign commentators have labelled him “chairman of everything”. Rumours fly (without evidence) that Mr Xi may even try to extend his powers beyond the normally allotted ten years. Given his seeming strength, it would be logical to suppose that he could do almost anything he pleases. The toiling mills of Tangshan, however, suggest how hard the president often finds it to persuade local officials to carry out his wishes. Mr Xi may be chairman of everything, and he may well be stronger than any leader since Deng Xiaoping. But in a country so vast, diverse and with so many entrenched interests, he often seems to be master of nothing. + +Mr Xi spars with crusty generals, powerful bureaucracies and large state-owned enterprises controlled by the central government. But an even greater impediment to his power is an age-old one: local authority. This is reflected in a popular saying that refers to the compound in Beijing where China’s leaders live and work: “Policies do not go beyond Zhongnanhai.” + +Xi’s out of control + +As the Communist Party prepares to hold a five-yearly congress late next year at which sweeping leadership changes will be announced, Mr Xi is fighting on two broad fronts. One is with rivals in Beijing who want the reshuffle to favour their own cronies. The other is with footdraggers in the provinces who want to do their own thing, regardless of who wins in the capital. It is with the wider country in mind that Mr Xi is now focusing on what he calls “party building”, ie, instilling loyalty and discipline into the party’s myriad cells. This will be a theme at an annual four-day meeting of 350 or so of the party’s most senior members that is due to begin on October 24th. In July Mr Xi warned starkly what a slackening of discipline could mean: “Our party will sooner or later lose its qualifications to govern and will unavoidably be consigned to history.” + +China is eminently capable of getting things done, even in the face of considerable NIMBYist resistance. Its thousands of miles of high-speed rail and its mushrooming cities testify to that. But because its leaders are afraid to delegate power, they can give their attention only to a limited range of priorities. Many government schemes, particularly ones that are tricky, pricey or unpalatable to local politicians, go largely unheeded. + +Strikingly, Mr Xi even sometimes fails to implement policies that he has declared to be a priority. He reportedly said that he had the capacity to tackle only one big economic issue this year, and that was to trim the bloated steel and coal industries. As a result, in February, the government revealed plans to cut steel capacity by 100m-150m tonnes in the next five years and surplus capacity in coal production by 500m tonnes. To give his edict extra prominence, officials took the rare step of inviting foreign journalists to Zhongnanhai to quiz a deputy finance minister on it. + +Yet, as the smoky streets of Tangshan show, the president’s stentorian words do not always translate into local deeds. Since February, steel output has risen nationwide every month year-on-year (see chart). By the end of July producers had cut less than half of the capacity they were supposed to. Custeel, an industry body, says this includes many facilities that had already been mothballed. The central government admits that only four provinces have made substantial progress out of the 22 for which it has published results. Only one of the four, Jiangsu, is among the big steel-producers. + + + +Local businesses often pay more heed to the market than to mandates. Some larger mills relit their burners as global steel prices rose. Local governments have their eye on their revenues, too. Hebei produces nearly a quarter of China’s steel. In places like Tangshan the steel industry contributes substantially to tax revenues. Local banks risk writing off large loans if mills have to shut. At one, Tangshan Baotai, workers live on-site in low, grey housing. Those who lose their job lose their home as well. Local governments fear that lay-offs could fuel unrest. + +People desperate to get on China’s property ladder may wish that their plenipotentiary president could do better. Mr Xi was clearly behind measures announced this month aimed at holding down soaring house prices in the biggest cities. But this effort seems as doomed as previous ones, partly because local governments delight in the market’s surge. Selling land is a big source of their income; big cities control a very limited supply of it, because of tight restrictions on their expansion. + +The weakness of Mr Xi in the face of local power has been evident even in his efforts to curb tobacco use (his wife, Peng Liyuan, is an “anti-smoking ambassador”). In 2015 he backed a stringent ban on smoking in indoor public places in Beijing. Yet a recent draft of a law to enforce this nationwide offers a big loophole: smokers would still be able to use designated indoor areas. The interests of tobacco-producing areas may explain why. In Yunnan province in the south-west, tobacco accounts for over half the tax take, compared with 7.5% of government revenue in China overall. + + + +Policies that lack the president’s personal endorsement are all the more likely to stall. For example, there has been little progress in reforming hospitals, despite widespread anger at doctors who boost their incomes by prescribing expensive drugs that patients have to pay for. Local officials reckon this gouging is preferable to paying doctors better wages from government funds. + +Despite outcries, too, over appalling lapses in food safety, and high-level promises to improve it, enforcement has not been markedly strengthened. Provincial agencies do not have the will, capacity or financial incentive to regulate the food chain. Officials in Beijing privately admit that localities cannot afford to carry through a nationwide plan for reducing soil pollution that was announced in May. + +The problem is partly one of the party’s own making. Since the late 1970s the central government has deliberately delegated much decision-making to lower levels of government, encouraging local officials to launch pilot projects and spread good practice. This has helped the economy become agile and adaptable. But it has also made top-down government more difficult, sometimes to the detriment of reform. China’s political system displays “fragmented authoritarianism”, as Kenneth Lieberthal of the Brookings Institution calls it. + +Raising the red lanterns + +Market forces, rather than political ones, increasingly dominate government decision-making beyond the capital—as long as social stability is not compromised. And with the flourishing of private enterprise, and the collapse of many state-owned firms, the party’s once omnipresent and all-powerful cells have atrophied and weakened. So Mr Xi wants to put politics back in command. In a private speech he gave only a month after taking power in 2012, he railed that the Soviet Union had collapsed because nobody in the party had been “man enough to stand up and resist”; he noted that Russia’s corrupt security services had “left the party disarmed”. He evidently saw signs of similar laxness taking hold in China. + +Mr Xi’s fierce campaign against corruption has been aimed at tightening his grip and strengthening the party’s discipline (as well as settling scores with enemies). Hundreds of thousands of officials have been punished for graft. At the same time, Mr Xi has tried to instil a sense of accountability among local officials. The country’s latest five-year plan (a quaint reminder of the days when the central leadership pulled more levers) for the first time makes local officials personally liable for causing environmental damage, even if it is discovered only after they have left office. The government now threatens to punish civil servants who ignore court rulings or fail to observe party policies. + +But it is hard to legislate for loyalty. The party’s discipline-enforcement agency said this month that party leadership had “weakened” in four provincial-level areas, implying that this had continued even after the agency had read them the riot act. The errant regions include the municipality of Tianjin near the capital. Jin Canrong of Renmin University in Beijing said in a recent lecture that Mr Xi was facing widespread “soft resistance” among local elites. Instead of openly opposing him they were practising “inaction” instead. Mr Jin concluded that all policies were “empty”. + +The fight against corruption may have scared officials, but even fear is no match for bureaucratic inertia. Next week’s gathering of party leaders is unlikely to help much. Xinhua, a state news agency, says they will adopt measures to improve the party’s ability at “self-cleansing, self-consummating, self-innovating and self-enhancing”. That does not sound like much of a game-changer. + +At least the meeting may help Mr Xi strengthen his position in Zhongnanhai. It will launch preparations for next year’s congress, after which five of the seven members of the Politburo’s Standing Committee are due to retire, along with one-third of the Politburo’s other 18 members. The Politburo’s current make-up was largely decided by Mr Xi’s predecessors. This will be his chance to stack it with his allies. + +There will be much speculation about which one of them, if any, will succeed him. Some analysts believe he has no successor in mind, and interpret his willingness to flout party convention as a sign of Mr Xi’s self-confidence. Yet it may be that he does not want to start grooming an heir (in China, this tends to begin very early). If so, that could suggest something else: that neither at the centre nor in the provinces does Mr Xi feel strong enough. Therefore he cannot trust anyone else with what he calls his “Chinese dream” of the country’s “great revival”. + +This article appeared in the Print Edition with the headline: Master of nothing + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21709005-changing-china-tough-even-man-xis-powers-xi-jinping-strongman-does-not/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Middle East and Africa + + + +Iraq: Marching on Mosul [Fri, 21 Oct 02:42] + +Jordan: The uneasy crown [Fri, 21 Oct 02:42] + +Saudi Arabia’s religious police: Advice for the vice squad [Fri, 21 Oct 02:42] + +South Africa: This other Eden Project [Fri, 21 Oct 02:42] + +Justice in Africa: Poor law [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Iraq + +Marching on Mosul + +Iraq’s second-largest city will be liberated from Islamic State. But at what cost, and with what result? + +Oct 20th 2016 | From the print edition + + + +“THE time of victory has come…today I declare the start of these victorious operations to free you from the violence and terrorism of Daesh [Islamic State].” With these words, broadcast at 2am on October 17th, Iraq’s prime minister, Haider al-Abadi, announced the start of the long-awaited offensive to liberate Mosul, the country’s second city. First captured by the jihadists in June 2014, it is the only big town in Iraq that they still hold. + +This will be the most complex military operation in the country since the American invasion in 2003. The opening phase alone may take several weeks. It began with some 4,000 Kurdish Peshmerga forces advancing on three fronts from the east to within about eight miles (13km) of the city. With support from attack helicopters and air strikes by the American-led coalition, their initial aim was to take control of a number of IS-held villages covering a 45-square-mile (115-square-km) area across the Nineveh plain. Iraqi forces pushing up from the south were joining them as the offensive met its first objective, but briefly stalled because of bad weather, pockets of IS resistance (including suicide-bombers) and the need to clear large numbers of previously buried roadside bombs. + +Overall, the advance is still on track. But it took the Iraqi army six hours of fierce combat on October 17th to chase IS fighters from Ibrahim Khalil, a village 20 miles south of Mosul. Overpowered, the militants fled into the parched plains. But they returned as night fell to attack the Iraqi forces with suicide bombs, mortars and heavy machine guns. “No reinforcements showed up so when they attacked we had to retreat from the five villages we captured on Tuesday. We ended up right back where we started,” said Lieutenant-Colonel Mohammed Hadi. “We took back three today but we can’t advance further towards Mosul until the others arrive.” . + +It is too early to say how stiff a fight IS will put up. It has had many months to prepare its positions—tunnels have even been dug in some of the outlying villages. It may take another week for Iraqi forces to reach the outskirts of the city, and another month to achieve a degree of control within it. Some commanders are even more cautious about the timetable. + +Michael Knights of the Washington Institute, an American think-tank, describes a multi-phased operation, which began with the refurbishment of the Qayyarah air base, some 40 miles south of Mosul, after it was recaptured by the ISF in early July. Qayyarah, which can now handle coalition cargo aircraft, is both the logistical base and the collecting point for Iraqi forces gathering for the attack. About 600 American military advisers (and special forces) arrived there a couple of weeks ago to train and prepare the Iraqis. In all, there appear to be some 25,000 Iraqi army and special-forces troops in place. These, says Mr Knights, have been drawn from across the country to form multi-ethnic, cross-sectarian units. Another 6,000 or so mainly Sunni tribal forces have been recruited from the surrounding area. + +As well as the Kurdish Peshmerga, Shia popular-mobilisation forces, most of them backed by Iran, are keen to join the action. However, the aim is for them to secure areas to the west of Mosul. They will do this by stopping IS fighters from fleeing into Syria, by helping take back the town of Tal Afar and by stopping Turkish-backed Kurds from entering Mosul. They seem to have accepted that they will not join in the fighting for the city. Their entry there certainly would not be welcomed by the city’s mainly Sunni-Arab inhabitants, who know the militias’ reputation for killing suspected “collaborators”. + + + +The plan for retaking Mosul has been adapted from a well-thumbed manual. The liberation of Fallujah, which took less than four weeks in June, provides a template. The opening phase of the battle is essentially an ever-tightening encirclement operation intended to cut off the IS fighters inside the city from reinforcements or supplies and to seal off their escape routes west into Syria. + +The second phase will see Iraqi forces meeting the enemy at an increasing number of points around the edges of the city. IS positions in Mosul are already being pounded by French and American artillery. Micro drones capable of transmitting images from inside buildings are telling the gunners exactly where to aim. Once the position of IS fighters is known, say American military advisers, they can be quickly picked off by artillery or by coalition aircraft stacked in the skies above Mosul. + +The third phase of the operation will be led by Iraq’s elite counter-terrorism units, who will enter the city at different points to kill those IS fighters remaining. The final phase will see the introduction of other Iraqi forces, including police, to help in mopping-up operations, defuse booby traps and begin the task of restoring governance to the traumatised inhabitants. + +How smoothly things go will depend in large part on whether IS sees the need to go down fighting for propaganda purposes or whether it makes a tactical retreat to Syria, perhaps to conserve its strength for a last stand there. It may well decide to fight because retreat may not be possible. When fleeing IS convoys left Fallujah, they were an easy target for prowling coalition aircraft. Some strategists have argued for an escape corridor to be left open. + +Given the impossibility of defending an area as big as Mosul, Mr Knights expects IS fighters to fall back to a couple of places where they can sell their lives most dearly. One is likely to be the government centre in the west of Mosul; the other is almost certain to be the narrow streets of the old city, where superior firepower is least effective and the danger to civilians is highest. + +That the Iraqi government will retake Mosul is not in doubt. But much else remains uncertain. The battle could be over in a few weeks, or it could drag on for months. As IS control begins to slip, many of the 1m or more civilians thought to be in the city may try to escape. Preparations for a big exodus have been made, but confidence in them is not high. + +In the slightly longer term, once the relief has worn off, much will depend on the confidence that Mosul’s citizens have in Baghdad’s willingness and ability to secure and rebuild their city. Strapped for cash by low oil prices and riven by sectarian divisions, the Iraqi government will need help from the international coalition. Sunni Arabs will want more of a voice within Iraq, and more power devolved from Baghdad. Lastly, even when IS has lost its territory in Iraq, it may still be able to wage guerrilla war. Unless the politics can be got right, the liberation of Mosul could mark the end of one horror and the beginning of something almost as bad. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21708891-iraqs-second-largest-city-will-be-liberated-islamic-state-what-cost/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Jordan + +The uneasy crown + +Discontent is growing at King Abdullah’s increasingly autocratic rule + +Oct 22nd 2016 | AMMAN | From the print edition + +Still plucky, but more nasty + +“A TRUE triumph of progress over regression,” claimed King Abdullah, boasting about Jordan’s elections from the UN podium in New York on September 20th, the day his kingdom went to the polls. Many Jordanians thought otherwise. Despite a relentless public-information campaign and the participation of the pro-Islamist Muslim Brotherhood for the first time in nine years, turnout slumped to a dismal 37%, down from 56% at the election before. In parts of Amman, the capital, barely one in five of those eligible to vote bothered to cast a ballot. + +The low turnout is a sign that many people saw the elections as a waste of time. The king swiftly reappointed the same unelected cabinet with only a few minor alterations, and since then has proceeded to push through a host of decrees. Wise but unpopular decisions to buy gas from Israel and to revise the school curriculum by removing troublesome Koranic verses were issued as decrees. + +Ever since it was fashioned by Britain after the first world war, Jordan has served as a pro-Western outpost and a buffer keeping its petulant neighbours at bay. But as it transforms from empty deserts roamed by Bedouin into a populous Arab state, the kingdom shows signs of strain. Economically and politically it is struggling to make the transition, say critics; “plucky little Jordan” is acquiring some of the attributes of the authoritarian regimes that surround it in all directions. + +In the absence of a credible opposition, Jordanians are starting to look for less established ways to make their voices count. Across the kingdom, protesters have taken to the streets to denounce the gas deal and education reform, despite a heavy police presence. On October 9th riots erupted in Quwaismeh, a suburb of Amman, after a series of police raids there. And with the Brotherhood, Jordan’s historically pro-royal Islamist movement, widely seen as compliant and divided, there are signs that the aggrieved are finding more extreme outlets. Islamic State flags have been spotted flying in Salt, an old trading town west of Amman. + +The kingdom’s tranquillity is threatened in other ways, too. Crime is climbing. At the end of September a well-known journalist, Nahid Hattar, was shot dead on the steps of Amman’s courthouse before a hearing on blasphemy charges; the killer was an education-ministry official. In rural areas, where elections are fiercely contested as tribal shows of strength, the losers have blocked roads and clashed with police. “The ballot boxes were stolen,” says Hind al-Fayez, a candidate who accused the interior minister of corruption and then lost her bid for re-election. “They were carried away by thugs wearing masks before the eyes of the security forces.” + +Ms Fayez has gone to court alleging that the vote was rigged, but even if the result is reversed she says she will not take her seat. “Street movements have more power than parliament,” she says. Other disillusioned politicians are also challenging the system. A former parliamentarian from Tafila, in southern Jordan, is trying once again to register a new party calling for a true constitutional monarchy. Marwan Muasher, a once loyal foreign minister, has launched a campaign for citizens’ rights. + +Jordan’s Western benefactors play down the unrest. “Little flashpoints,” says a diplomat. But others wonder whether, after four years of successfully managing the turbulence of the Arab spring, the country is wobbling. + +Economic hardship has accompanied the political. Growth has fallen to less than 2%. Public debt has leapt to 93% of GDP since the Arab spring. A fresh bout of tax and price increases on essentials like water and bread is in the offing, as part of a loan deal with the IMF. A huge refugee influx from Syria increases the battle for jobs and resources. Economic trouble in the rich Gulf states, particularly in Saudi Arabia, suggests worse could be coming. Aid, tourism, investment and remittances (the last alone worth 14% of GDP), are all sharply down. “The economy is based on foreign aid,” says Samer Tawil, a former economy minister. “We cannot prosper without it.” + +Years of price rises and subsidy cuts have eroded the kingdom’s once-comfortable middle class. Amman, where almost half of the country’s 9m people live, is the Arab world’s most expensive capital, but salaries are among the lowest. Cuts to education and health services feed discontent. + +The spectre of a friendly monarch under pressure has long induced external patrons to stump up cash for Jordan. But for all its Western orientation, the kingdom remains deeply conservative. Fewer women go to work than in Saudi Arabia. Mr Hattar’s killer might have been a lone wolf, but social media was full of support for him. Thousands of Jordanians are waging jihad abroad and might one day come back and wage it at home. Jordanians felt the regional storm had passed them. Now they are fretting again about how strong their borders are, and what depth of support the jihadists could expect should they come. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21709014-discontent-growing-king-abdullahs-increasingly-autocratic-rule-uneasy/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Saudi Arabia’s religious police + +Advice for the vice squad + +The government wants the piety police to be less thuggish + +Oct 22nd 2016 | RIYADH | From the print edition + + + +NOT long ago even members of the royal family were cowed by Saudi Arabia’s religious police, formally known as the Commission for the Promotion of Virtue and the Prevention of Vice. The mutaween, as they are called in Arabic, roamed the malls and streets, enforcing the kingdom’s strict interpretation of Islamic law. Their zeal was matched only by their cruelty. Most notoriously, in 2002 15 schoolgirls died in Mecca after members of the mutaween allegedly prevented them from fleeing a burning building because they were not covered up. + +Today the mutaween are a weakened force, partly thanks to social media. Saudis have taken to filming their excesses and posting the footage online. Anyone with a smartphone can watch these courageous guardians of virtue harassing women for wearing nail polish. This has provoked a backlash. In April the government declared that the mutaween could no longer stop, pursue or arrest people and ought to be “gentle and kind” in their conduct. + +Still, as the government enacts painful economic reforms, it needs the support of the religious establishment. So many people feared that the curbing of the piety police would turn out to be merely symbolic. But six months on, the change is striking. The mutaween, thought to number several thousand, have disappeared from public spaces. In Riyadh, the capital, men express relief at not being hounded to attend mosques during prayer time. Women wear more colourful (and sometimes open) abayas, a mandatory robe-like overgarment. “Now when I leave my house, I don’t expect someone chasing me in his car. When I go to the shopping centre, they are not following me,” says Fawzia al-Bakr, an activist and writer. “They were out of their minds.” + +Founded in 1940, the religious police were popular at first. (Many Saudis, after all, favour virtue and deplore vice.) In 1979, after Islamic extremists seized the Grand Mosque in Mecca and denounced the royal family, the state doubled down, handing more power to conservative clerics and allowing the mutaween to grow more assertive. There were few repercussions when, for example, they reportedly chased two brothers off a bridge in 2013 for playing loud (though patriotic) music in their car on Saudi Arabia’s national day. + +Now, instead of dishing out punishments on the spot, the mutaween must report violators of Islamic law to the police. The government is also trying to suppress vice among the vice-suppressors. Many mutaween were ex-convicts whose only qualification for the job was that they had memorised the Koran in order to reduce their sentences, wrote Lawrence Wright in his book, “The Looming Tower”. Now they must be “of good character and behaviour, known for their good reputation” and must not have served more than a year in prison. A stricter chain of command now has them answering directly to the king. + +Liberals applaud the changes, but few Saudis believe the mutaween should be completely disbanded. Conservatives fear that morals will decline if less vigorously policed. In April a prominent cleric, Nasser al-Omar, said the mutaween should be given more power, “otherwise, this portends great danger.” Such as women flagrantly wearing nail polish, presumably. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21709016-government-wants-piety-police-be-less-thuggish-advice-vice/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +No country for old racists + +A whites-only “Eden Project” in South Africa + +A plan for an Afrikaner homeland attracts hardly any support + +Oct 22nd 2016 | JOHANNESBURG | From the print edition + +A racially pure enclave of one + +JAQUI GARY GRADWELL sports a bushy beard in the style of his voortrekker ancestors—the pioneers who fled British rule in ox-drawn wagons. Also in the spirit of the voortrekkers, he vows to lead his people away from oppression. Afrikaner culture is under threat in the new South Africa, he reckons. White people face “genocide”. So Mr Gradwell (pictured) wants to lead like-minded whites—40,000 of them, he predicts—to a farm in a remote part of the Eastern Cape to live together in an agrarian idyll. + +A promotional video for Die Eden Projek (The Eden Project) contrasts images of black rioters, black criminals and President Jacob Zuma with soft-focus photos of happy white families with tractors and chickens. It does not, however, mention Mr Gradwell’s somewhat chequered past, which includes being convicted of firearms offences while living in America. + +Mr Gradwell’s plan has generated many headlines but little support. Disgruntled whites already have an enclave, but hardly anyone wants to live there. Orania, an Afrikaner-only town in the Karoo desert, has been around since 1991. Despite impressive organisation and towering ambitions (it has its own currency, the Ora, and a flag, which features a white boy rolling up his sleeves), it is home to just 1,100 people. Orania’s isolation has left it economically unattractive and politically irrelevant. + +Frans Cronje of the Institute of Race Relations, a liberal think-tank, says that news stories about white separatists can reinforce the gloomiest perceptions about South Africa: “that we’re only one step away from a race war”. But they are piffle. “Rank and file South Africans are actually pretty committed to making it work with each other,” he says. A survey from the IRR found that 76% of South Africans thought race relations had improved or stayed the same since 1994, when apartheid ended. In another poll, 68% of respondents said that they expected a happy future for South Africans of all races. Nonetheless, according to the Institute for Justice and Reconciliation, another think-tank, more than half of South Africans barely interact with people of other races except when at work or while shopping. + +Still, some South Africans worry that tough times may aggravate racial tension. Youth unemployment is around 50%. The economy is dicing with recession. Mr Zuma’s approval rating is a miserable 21%. A skilful demagogue could whip up something nasty from these ingredients. + +This article appeared in the Print Edition with the headline: This other Eden Project + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21709012-plan-afrikaner-homeland-attracts-hardly-any-support-whites-only-eden/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Justice in Africa + +Poor law + +The rise of paralegals + +Oct 22nd 2016 | GULU | From the print edition + + + +GODFREY EBREYU has a captive audience, in every sense. A throng of inmates has gathered in the prison yard in Gulu, northern Uganda, as he explains the intricacies of plea-bargaining. Like 55% of prisoners in Uganda, these men are awaiting trial; some have been here for years. They are still asking questions when, at four o’clock, they are ushered back into their crowded cells for the night. + +Mr Ebreyu is a paralegal working for the Foundation for Human Rights Initiative, a Ugandan NGO. Paralegals have some legal training, but they are not lawyers. Across Africa they are helping to unclog courts, resolve disputes and bring justice to the most vulnerable, from suspects deprived of their liberty to farmers robbed of their lands. Some are paid, others are volunteers; they typically work for civil-society groups and tend to be locals. + +Their work is desperately needed. Africa’s people are mostly rural and poor; its fully qualified lawyers are mostly urban and expensive. In Uganda just one in a hundred disputes ever reaches a lawyer. When the civil war ended in Sierra Leone, the country’s legal fraternity could have fitted in a couple of buses. In Malawi, murder trials were suspended in April this year because the legal-aid board couldn’t afford defence lawyers; it has just nine of its own, and four of those are studying abroad. + +Paralegals cannot take the place of lawyers in court. But legal representation is “the tip of the iceberg”, says Clifford Msiska, who runs the Paralegal Advisory Service in Malawi. His workers teach those on remand how to ask for bail. They sift cases, alerting the courts when someone has been held beyond the legal limit. They track down relatives to stand surety, and push for children to be diverted into rehabilitation programmes instead of prison. + +Criminal justice is just the start. In many places paralegals mediate in civil disputes, such as arguments over land, reducing pressure on formal courts. That can create tensions with traditional leaders, who play a similar role (and often charge for it). Mechanisms such as community-oversight boards can reassure local big shots. Keeping the chiefs onside gives paralegals space to nudge customary law in more progressive directions, giving a bigger voice to women and the young. + +Paralegals are particularly important in societies under stress. “Most prisoners are here as a result of land wrangles,” says Aceng Jolly, a paralegal in Gulu, where land disputes have intensified as people return to villages abandoned in war: it only takes a flying fist or a false accusation to turn a civil issue into a criminal one. South African paralegals trace their origins to the anti-apartheid struggle. Sierra Leone’s landmark legal-aid law, which promises paralegals in every chiefdom, was in part a response to the injustices which stoked a brutal civil war. + +Even where states function well, they need to be held accountable. Paralegals increasingly guide people through complex bureaucracies or demand that promises are kept. In Kenya, they help stateless Nubians acquire citizenship. In Mozambique they secure access to anti-retroviral drugs for people with HIV. The Community Law and Rural Development Centre, which runs paralegal offices in KwaZulu-Natal, South Africa, recovered 4.3m rand ($300,000) last year from unpaid state benefits and the like. + +Paying for all this is hard. Most paralegals are funded by foreign donors; this can mean that programmes are cut back when fashions change. One South African advice centre finances itself through a recycling business. Barefoot Law, a Ugandan non-profit run by volunteer lawyers, uses phones and social media to reach people cheaply. In Sierra Leone, a new land policy requires investors to pay into a fund supporting local paralegals (who help resolve land disputes, among other things). Lotta Teale of Open Society Foundations, a charity that promotes better governance, wants donors to set up endowments to pay for paralegals over the long term, though obviously this would be expensive. + +Only a few countries recognise paralegals in law. Bar associations can be sniffy, pointing out that some paralegals take only a two-week crash course before being thrust into the field (though others train for two years). Organisations that employ paralegals could do more to monitor standards and maintain databases of cases. + +The challenge is to become more professional while retaining the grassroots ethos. The best paralegals teach people to solve problems themselves, says Vivek Maru of Namati, an international legal network. Take Boxton Kudziwe, a mobile-phone salesman in Malawi. He was charged in 2006 with murder and spent seven years in prison awaiting trial, only to be found not guilty. Today he works as a paralegal, using his experience to help others get bail. “Then I was ignorant,” he says, recalling his arrest. No longer. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21709011-rise-paralegals-poor-law/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Europe + + + +Ukraine’s future: Bone of contention [Fri, 21 Oct 02:42] + +Ukraine’s rock-star politician: Front man [Fri, 21 Oct 02:42] + +Russia’s Bashneft deal: Easy sale [Fri, 21 Oct 02:42] + +Italy’s Five Star Movement: Requiem for a dreamer [Fri, 21 Oct 02:42] + +The Canada-EU trade deal: Hot-air Walloons [Fri, 21 Oct 02:42] + +Charlemagne: Couleurs primaires [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Winding down Ukraine’s war + +Russia is negotiating with Germany and France over Ukraine + +While foreign powers argue about its future, Ukrainians struggle to take their destiny in hand + +Oct 22nd 2016 | From the print edition + + + +ON THE morning of October 19th thousands of people in Donetsk, the main city occupied by the Russian-backed separatists of eastern Ukraine’s Donbas region, attended the funeral (pictured above) of a notorious warlord assassinated two days earlier. Arsen Pavlov, better known as Motorola, was a Russian irregular who boasted of killing Ukrainian prisoners-of-war and had started to act independently of Moscow. He was the latest of a half-dozen unruly separatist commanders to be eliminated in recent months, according to Nikolay Mitrokhin, a Ukraine expert at the University of Bremen. That evening, the leaders of Russia, Ukraine, France and Germany met in Berlin to discuss the region’s stalled peace process, known as Minsk-2. + +The two events were both signs that Russia is trying to establish firmer control over the lawless Donbas. Though it has stopped trying to spread the conflict to other parts of Ukraine for now, it still wants to cement Donbas’s special status inside Ukraine. As part of Minsk-2, Moscow demands that Ukraine hold a local election in the rebel-held territories. Kiev has refused to do so until shooting stops and international monitors from the Organisation for Security and Co-operation in Europe (OSCE) are given access. + +In Berlin, Vladimir Putin suggested he would let the OSCE in. Petro Poroshenko, Ukraine’s president, said this would pave the way for elections. That could create a Moscow-controlled region within Ukraine that could be used to block government reforms and international agreements by the Kiev government and undermine Ukraine’s integrity without direct military involvement. + + + +Ukraine is at the centre of Russia’s conflict with the West, playing a vital role in Mr Putin’s ambition to restore Russia’s great-power status. The Kremlin has used the upheaval since Ukraine’s revolution of 2014 to cow its own dissidents by demonstrating that rising up against corrupt, authoritarian regimes lead to chaos. The West, meanwhile, wants to show that liberal democracy can succeed in a state that was at the core of the former Soviet empire. + +But while Russia and the West fight over Ukraine, it is events inside the country that will determine its destiny. Two years after the Maidan revolution, Ukraine is stuck in a grey zone of half-reforms and half-war. While the country has held together better than many had expected, it has not transformed itself into a modern nation-state. After the revolution, power was seized not by a new political generation but by “those who were the closest to the government chairs when the music stopped,” says Yulia Mostovaya, editor of Zerkalo Nedeli, a Ukrainian weekly. Young Ukrainians are frustrated by their inability to keep the revolution’s promises, but unable to form a political force strong enough to challenge the government. + +One reason is the war, which has given the government a cause around which to unite the country without having to reform itself. Television channels are filled with images of the brutal fighting, in which 10,000 people died, and of volunteers carrying food and clothing to Ukrainian soldiers. Yet, as one Ukrainian observer said, the worst thing that could happen to the country now would be for the devastated Donbas region to return to Kiev’s control. Ukraine has neither the money nor the state institutions to re-integrate it. But Russia, which started the war, does not want Donbas either. + + + +Western countries discouraged Ukraine from fighting when Russia invaded Crimea, and Mr Poroshenko resists calling the conflict a war. But the war has become big business on both sides of the border. Corruption, in both Ukraine and Russia, is so ubiquitous that it is better described as the capture of the state by oligarchs and vested interests. According to Zerkalo Nedeli some 30 defence manufacturers have been transferring state money into fake firms as “payment” for non-existent equipment. Some pro-Ukrainian militias, who answer to no one but their own field commanders, are growing impatient with corruption and the lack of reform. + +Yet instead of concentrating on fighting large-scale corruption, Ukrainian prosecutors are targeting journalists, activists and pro-European members of parliament. Sergii Leshchenko, an anti-corruption journalist and MP, has been attacked by the prosecutor’s office for acquiring a 7.5m hryvnia ($292,000) flat in Kiev, bought with a loan from a friend. “The purpose of this campaign is to discredit us, to show that everyone in Ukraine is the same and anyone who fights against corruption is himself corrupt,” says Mustafa Nayem, another pro-European MP. + +Some new, clean institutions have been set up with the help of Western donors, such as the National Anti-corruption Bureau of Ukraine (NABU). But they are locked in a struggle with the old guard. The General Prosecutor, Yuri Lutsenko, is trying to limit the powers of NABU and hand over serious corruption cases to other agencies. + +Francis Malige of the European Bank for Reconstruction and Development says there has been much progress in the banking and energy sectors. But the key tests, including privatisation of state assets, are still to come. The central bank has yet to deal with the country’s largest bank, PrivatBank, which belongs to Ihor Kolomoisky, one of its richest oligarchs. + +As for energy, the intermediaries between Gazprom, Russia’s state natural gas giant, and Naftogaz, its Ukrainian counterpart—a vast source of corruption—are gone. But Rinat Akhmetov, a former supporter of the deposed president, Viktor Yanukovych, is still making a killing on government-regulated schemes in the coal and electricity sector. + +As Mikheil Saakashvili, a former president of Georgia and the governor of Odessa region, says, for all the differences between Russia and Ukraine, the elites in the two countries have much in common. “Ukraine has to build up a critical mass of reformers,” he says. The EBRD and the EU have launched a programme to reform public administration, hiring dozens of young Ukrainians to create new layers of civil servants in four key ministries. + +But this will take years. What Ukraine needs most is a leader with vision and political will. In the words of Ms Mostovaya, Mr Poroshenko is like a “rusty and infected nail that holds things in place”. Pulling him out now would be dangerous, but he is hardly the man with whom to build the future. Mr Putin may hope that the combination of keeping Donbas inside Ukraine, growing disillusionment with the Maidan revolution and the radicalisation of some Ukrainian militias will be enough to cause the country to explode. It is up to Ukraine to prove that he is wrong. + +This article appeared in the Print Edition with the headline: Bone of contention + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21709066-while-foreign-powers-argue-about-its-future-ukrainians-struggle-take-their-destiny/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Ukraine’s rock-star politician + +Front man + +A pop star tries to help a country at war reinvent itself + +Oct 22nd 2016 | MARIUPOL | From the print edition + +Unacknowledged legislator + +THE crowds in Mariupol, a factory town on the front line in eastern Ukraine, began lining up at six in the morning. It was late spring, and the rock group Okean Elzy were playing. “You might only see them once in your life,” said a young boy in line. Some 30,000 people turned out to see the band and its front man, Svyatoslav Vakarchuk (pictured). “He’s now the voice of the younger generation, the voice of the agents of change,” says Yaroslav Hrytsak, a Ukrainian historian. + +Mr Vakarchuk is the son of a physicist from Lviv in western Ukraine, and his most significant recent performance was not a concert but a speech marking his return to the political arena. (He served a one-year stint in parliament between 2007 and 2008.) + +Taking a stand against the identity politics that Ukrainian leaders have long used to distract from failed reforms, Mr Vakarchuk articulated a vision of Ukrainian identity for the 21st century. “We need to stop building a state based on blood patriotism, and begin building a state based on constitutional patriotism,” he declared. “We shouldn’t be united by a common past, heritage, blood or appearance, but by a common set of values, lifestyles, rules and a constitution.” + +Throughout Ukrainian history, “the main articulators of identity have been writers and poets,” Mr Hrytsak explains. “Most have been very strongly ethnically inclined.” Taras Shevchenko, whose poetry helped codify the modern Ukrainian language in the mid-1800s, propounded an ethnic nationalism that divided Ukraine from its imperial Russian masters. “Fall in love, you dark-browed girls, but not with Moskali,” he warns in “Kateryna”, using a Ukrainian slur for Russians. “For Moskali are strangers / They will do you wrong.” + +For post-Maidan Ukraine, Mr Vakarchuk wants to replace this ethnic nationalism with a more civic sort, to overcome the regional divisions that have hamstrung the country’s development. “The problem is that both those who speak Ukrainian and those who speak Russian are stealing,” says Mr Vakarchuk. “We should be joined by the desire to build a just society.” Yet the more Ukraine’s reforms falter, the more politicians exploit divisions over history and language. “The worse things get for the living, the more we talk about the memory of the dead,” says Mykhailo Minakov, a political philosopher. + +Many of Mr Vakarchuk’s fans, longing for an inspiring leader, hope that he will return to politics. President Petro Poroshenko’s administration has already commissioned polls on him, preparing for his appearance as a potential rival, reports Ukrainskaya Pravda, a news site. But Mr Vakarchuk insists he can accomplish more with his music. As he sings in “Not Your War”, a new hit released last year: “A battle at dawn, sun and smoke / Few know what will become of it / What will fill tomorrow’s young minds / For some there is hope, for others fear.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21709067-pop-star-tries-help-country-war-reinvent-itself-front-man/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The oil business in Russia + +In Russia, privatisation can mean selling one state-owned company to another + +The government sells Bashneft to Rosneft, and books a profit + +Oct 22nd 2016 | MOSCOW | From the print edition + +Pumping up the price + +WHEN Russia’s government floated the idea that its supposedly ambitious privatisation plans should include selling Bashneft, a state-controlled oil firm, to Rosneft, another state-controlled oil firm, many officials were opposed. One presidential adviser called it “idiocy”. Even President Vladimir Putin said it was “not the best option”. But Igor Sechin, the head of Rosneft, is a persuasive man. On October 9th the government announced that Rosneft’s 330 billion rouble ($5.3 billion) bid had been accepted. + +The main imperative was the government’s urgent need for money. The quasi-privatisation “helps them to resolve the budget problem, but doesn’t reduce the role of the state in the economy,” says Oleg Kouzmin of Renaissance Capital, an investment bank. Rosneft’s offer was above the value an independent analyst had put on the company. Leonid Fedun, vice-president of Lukoil, Russia’s largest remaining privately held oil firm, said his company could not have matched such a high bid, but for a state-owned company like Rosneft that is too big to fail, “it doesn’t matter how much they pay.” + +Rosneft falls under Western sanctions on Russia, which restrict its access to financing. But it has $22 billion on hand and says it will not have to borrow for the deal. (Much of the cash comes from Chinese pre-payments on a 25-year oil deal signed in 2013.) Rosneft was already Russia’s largest oil company, having absorbed assets from two former competitors, Yukos in 2004 and TNK-BP in 2013. + +Critics contend that the move simply shifts money from one state pocket to another. While the proceeds from the sale will allow the government to claim a smaller budget deficit, they ultimately come out of the assets of Rosneft, a mostly state-owned company. Some analysts think the merger involves synergies that will increase Rosneft’s value, though by how much is unclear. In any case, such accounting tricks will not improve the long-term health of Russia’s economy, still sputtering under the pressure of Western sanctions and depressed oil prices. Nor will the decision help attract investment into a country where, by the measure of Russia’s own Federal Anti-Monopoly Service, the share of GDP controlled by the government and state-owned firms has risen from 35% in 2005 to 70% in 2015. + +Bashneft’s fate had as much to do with politics as with budget maths. “It’s a story of the relations between clans around Putin,” says Konstantin Simonov, director of the National Energy Security Fund, a think-tank. From 2009-2014, Bashneft belonged to Vladimir Yevtushenkov, a Kremlin-friendly oligarch. After Mr Yevtushenkov rejected Mr Sechin’s overtures to buy Bashneft, he found himself under house arrest and his company seized by the state. Many in Moscow believe this was orchestrated by Mr Sechin, a security-services veteran and close ally of Mr Putin. He has denied any involvement. + +Mr Yevtushenkov was later released, but the jockeying for Bashneft continued after it appeared on a list of assets up for privatisation earlier this year. Allowing Rosneft to buy Bashneft, Mr Simonov says, is an “open slap in the face” to the government’s more liberal economic advisers, who sought to prevent the sale. + +Next on the “privatisation” chopping block is a 19.5% stake in Rosneft worth some $11 billion. The state owns nearly 70% of Rosneft’s shares; the rest are held privately, including a 20% stake belonging to British Petroleum. While Western investors have stayed away because of sanctions, the company has attracted interest from Asian and Arab investors. Wang Yilin, CEO of the China National Petroleum Corporation, said in an interview with a Russian television network that his company would be interested—but only if it meant influence over Rosneft’s management, something Russia is loth to allow. In lieu of other suitors, the government may turn again to a familiar customer: Rosneft itself. Mr Putin says that the government has already approved the unorthodox plan, calling it an intermediate step before real privatisation. “We’re not planning to build state capitalism,” he insists. One might be forgiven for thinking otherwise. + +This article appeared in the Print Edition with the headline: Easy sale + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21709065-government-sells-bashneft-rosneft-and-books-profit-russia-privatisation-can-mean/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Italy’s new populists + +The Five Star Movement is chaotic, but as popular as ever + +The late Dario Fo’s favourite party is getting ever closer to power + +Oct 22nd 2016 | ROME | From the print edition + + + + + +THE funeral in Milan on October 15th of Dario Fo, Italy’s irrepressibly subversive Nobel laureate for literature (see Obituary), may have seemed like a commemoration of the old, Marxist left. On the rain-sodden Piazza del Duomo, clenched fists were raised, a Che Guevara banner unfurled and the great jester dispatched to his grave with a rendering of “Bella Ciao”, the anthem of Italy’s partisans in the second world war. + + + +Yet the best-known mourners were not Marxists at all. They included the founder of the Five Star Movement (M5S), Beppe Grillo (pictured, right); the mayor of Rome, Virginia Raggi; and other leading figures in what has become Italy’s main opposition group. Late in life, Mr Fo transferred his enthusiasm from the radical left to the M5S. He even wrote a book with Mr Grillo and the party’s co-founder, the late Gianroberto Casaleggio, explaining its ideas. These include attacking corruption in Italy’s mainstream parties, transcending the conventional distinction between right and left, and replacing representative democracy with a system of direct, Athenian-style rule by the people. + +Unabashedly populist and Utopian, the M5S can also be sternly pragmatic. For example, Ms Raggi has abandoned cash-strapped Rome’s bid for the 2024 Olympics. But M5S is often disconcertingly eccentric. Mr Casaleggio’s bequest to his followers was a video predicting that robots with artificial intelligence would soon exterminate the human race. + +True to its beliefs, the M5S chooses its electoral candidates in online ballots. Save in municipal elections, it does not accept anyone who has served more than a term as a political representative of any sort. The intention is to guarantee that its lawmakers and office-holders are free of the compromising links that are rife in Italian politics. But one effect is to ensure they are equally untainted by experience and, sometimes, ability. + +As Italy prepares for a referendum on December 4th that could open the door to an eventual M5S government, the issue of the party’s competence is becoming pressing. Polls show voters evenly split between supporters and opponents of a government-sponsored constitutional reform. The prime minister, Matteo Renzi, has vowed to resign if the reform is rejected. That would not automatically lead to the M5S taking power, but Mr Grillo’s movement is the obvious beneficiary of the instability that would follow. + +Its record in office is not reassuring. Since her election in June, the M5S mayor of Turin, Chiara Appendino, has made a solid enough start. But her counterpart in Rome, Ms Raggi, has lurched from one crisis or controversy to another. It took her three months to form an administration, and the all-important job of overseeing the budget eventually went to her fourth choice, after her first three picks either refused or resigned. + +It is probably too early to pass judgment on either woman. Ms Appendino inherited a city competently administered by the outgoing mayor; Ms Raggi took over one deep in debt, racked by scandal and notorious for cronyism. + +More conclusive is the movement’s experience in the northern city of Parma. In 2012 Federico Pizzarotti was elected mayor there, giving the M5S its first big electoral success. Earlier this month, he resigned from the movement, ending a turbulent association with its leaders. Relations began to fray after he rowed back on a campaign pledge to close the city’s waste incinerator, saying it was too expensive to do so. + +“Once inside the institutions, [M5S office-holders] realise how they work and then have the difficult job of telling the rest of the party that what they promised can’t be done,” says Maria Elisabetta Lanzone, a political scientist at the University of Genoa and author of a book on the party. + +The movement’s recent setbacks have eroded its popularity. Yet on average, the polls still put it within four percentage points of the governing Democratic Party. For many voters, experience and competence are less important at the moment than honesty and idealism. As Mr Fo knew, Utopian dreams go down very well with audiences. + +This article appeared in the Print Edition with the headline: Requiem for a dreamer + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21709064-late-dario-fos-favourite-party-getting-ever-closer-power-five-star-movement/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Stopping CETA + +Wallonia is adamantly blocking the EU’s trade deal with Canada + +A tiny region of Belgium opposes trade for reasons that are hard to understand + +Oct 22nd 2016 | From the print edition + +Bravely resisting the Canadian menace + +“HEY Canada, fuck you.” Within hours this tweet (the result of a hack) from the Belgian foreign minister’s account was replaced with a friendlier message: “keep calm and love Canada”. Yet his country’s actions are closer to the original. On October 14th the regional parliament of Wallonia voted to block the Comprehensive Economic and Trade Agreement (CETA), a trade deal between the European Union and Canada. + +Twentieth-century trade deals slashed tariffs. Newer ones between rich countries, such as CETA, focus on cutting other barriers to trade. After seven years of haggling, European negotiators dream of European toys and electrical products being sold straight to Canadians, without having to go through a second round of health and safety checks. + +Coordinating standards with another country inevitably means surrendering a little sovereignty. This riles many Europeans, who worry that CETA will dilute environmental standards and labour laws; they suspect that new courts established by the treaty to settle investor disputes with governments will favour corporations over regulators. + +But plans for such courts have already been reformed, notes Marietje Schaake, a liberal Dutch MEP. The latest proposals make them more independent and transparent. On October 18th Cecilia Malmstrom, the EU’s trade commissioner, wearily offered to add a “plain language” declaration to clarify the deal. + + + +CETA has other more traditional detractors who hate the fact that it also hacks away at 99% of customs duties between Canada and the EU. Wallonia boasts one cow for every three humans and its lavishly subsidised farmers are wary of cheap Canadian competition. Erwin Schöpges, a Walloon dairy farmer who joined the protests outside parliament, says he already faces milk prices below his production costs. “We want to trade with Canada, but we would rather not abolish tariffs,” he says. + +In any trade deal there are winners and losers: the former, more numerous; the latter, more passionate. The Belgian government may buy off its farmers, but even so more hurdles await. CETA must be ratified by 38 regional and national EU parliaments before it can be implemented fully. Mr Schöpges says the protest in Wallonia was less lively than the one he attended in Hamburg a few weeks earlier; opposition in Germany and France could just as easily derail proceedings. + +CETA would make Europe €5.8 billion a year richer, by one estimate. But the real danger of letting Wallonia derail it is the precedent it would set. With so many potential vetoes, says Chad Bown of the Peterson Institute for International Economics, it is hard to imagine the Transatlantic Trade and Investment Partnership (a much bigger deal between America and the EU) being passed. And as for Britain’s prospects after Brexit, Ms Malmstrom says: “if we can’t make (a deal) with Canada, I’m not sure we can make (one) with the UK.” + +This article appeared in the Print Edition with the headline: Hot-air Walloons + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21709060-tiny-region-belgium-opposes-trade-reasons-are-hard-understand-wallonia/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Charlemagne: Couleurs primaires + +France picked a funny time to adopt America’s political primary system + +A move designed to produce a French Barack Obama has not worked as planned + +Oct 22nd 2016 | From the print edition + + + +WEEK after week, Europeans turn their gaze to the American presidential election with consternation and bewilderment. How is it that the world’s second-biggest democracy, with its orderly primary system, comes up with a candidate like Donald Trump? The sense of stupeur is perhaps most acute for the French, whose presidential system resembles America’s more than it does Europe’s parliamentary democracies. For the first time ever, both of the two main French political parties—the Socialists and the centre-right Republicans—are about to stage American-style primaries to select candidates for next spring’s presidential election. French parties used to pick candidates based on a mysterious alchemy of deal-making, seniority and clout. The advent of primaries is altering campaign politics, but not in the way that was expected. + +Donald se Trompe + +The immediate concern in France is not that the primaries will yield a Trump à la française. The country already has one of those in Marine Le Pen, leader of the National Front (FN), who firmly occupies the role of the populist, nativist outsider. Though she has yet to stage a campaign rally, she is on top of the polls for the election’s first round. Her France-first, close-the-borders politics are in tune with the continent-wide nationalist trend. Unless opinion shifts radically, Ms Le Pen is set to repeat in April 2017 the shock her father, Jean-Marie Le Pen, caused in April 2002, by securing one of the two places in the presidential run-off. With Ms Le Pen looking a sure bet in the first round, France’s primaries are becoming a contest over who can beat her in the second. This makes the experimental process hugely important. + +As an exercise in popular participation, the French experience so far has been positive. When the Socialist Party first introduced a primary open to all supporters in 2011, nearly 3m took part—seven times the number of voters in Britain’s Labour Party leadership election in 2015. For their primary on November 20th and 27th, France’s Republicans have followed suit. Any voter who turns up, pays €2 ($2.20), and endorses the “values of the right and the centre” and a “change of power” can take part. When the seven Republican candidates lined up in a brightly lit studio for the first televised debate last week, a stunning 5.6m viewers tuned in—as many as watch the trashy French reality-TV shows that usually air in that time-slot. The party may well match the Socialists’ turn-out. It will be difficult for losers to cry foul. + +Yet the original purpose was not only to model the American system’s virtues of transparency and openness: it was also to encourage fresh political talent. French parties used to stitch up candidates behind closed doors, or restrict voting to card-carrying members. It was time, argued a report in 2008 by Terra Nova, a think-tank close to the Socialist Party, for a system that could enable a “Barack Obama français” to emerge. On this count, the record is rather less compelling. In 2011 the primary winner was François Hollande, a hack who had formerly led the party for 11 years. The Republicans are now busy doing their own recycling. Only one candidate, Nathalie Kosciusko-Morizet, is a woman. Another, Bruno Le Maire, tried to look hip by not wearing a tie. Among the rest are a former president, Nicolas Sarkozy, and two former prime ministers, Alain Juppé and François Fillon. When the front-runner, Mr Juppé, and Mr Sarkozy first went into politics, in the mid-1970s, Mr Obama was still in high school. + +If there is a novelty, it lies partly in the crushing of old hierarchies. The sight of Mr Sarkozy stripped of the pomp of high office, just one TV-debate contestant among many, was a tribute to the democratic process. Should the unpopular Mr Hollande seek re-election, he will have to venture outside the ornate Elysée Palace to campaign against his (many) Socialist critics in a primary in January. Perhaps the most unforeseen change, though, is the way the primaries are polarising debate within parties. The tensions are not new, but a primary makes them cruelly visible. + +The first Republican debate was mostly measured and wonkish. Mr Sarkozy controlled his finger-jabbing. Mr Juppé acted ponderous and professorial. A full hour was devoted to fiscal policy, welfare rules and public finances. Yet the campaign has also been vicious at times. Mr Juppé, who was convicted of political corruption in 2004 and struck off the electoral register for a year, snapped that it was “better to have been in the dock in the past than in the future”. That was a jab at Mr Sarkozy, who is under investigation for alleged breaches of campaign-finance rules. Mr Sarkozy called Mr Juppé “odourless, colourless and flavourless”. Mr Sarkozy, chasing the FN vote, would ban the Muslim veil from universities and the burkini from beaches. Mr Juppé, who seeks a “happy identity” for France and urges the left to vote in the primary, warns against stoking a “war of religion”. + +France’s encounter with primary politics is still in its early days. In some ways the idea runs counter to the spirit of the Fifth Republic. Charles de Gaulle introduced the directly elected presidency in 1962 in order to take power away from political parties, which he blamed for the “disastrous” manoeuvrings of the Fourth Republic. A president elected directly by the people would—like le général—embody the nation, and rise above the grubby business of party politics. Primaries, by contrast, seem to strengthen the party filter. + +Yet in another sense, they may weaken it. The parties’ internal divisions on some issues—counter-terrorism, religious expression—are as great as those between them. Primaries lay this bare, and could in time reorder the political map. That is what Emmanuel Macron, Mr Hollande’s former economy minister, is gambling on. Rather than running in the Socialist primary, he is contemplating an independent candidacy, hoping to draw support from left and right. If it works, it may be because the primaries intended to revitalise France’s parties have instead split them apart. + +This article appeared in the Print Edition with the headline: Couleurs primaires + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21709059-move-designed-produce-french-barack-obama-has-not-worked-planned-france-picked-funny/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Britain + + + +Social mobility: A class apart [Fri, 21 Oct 02:42] + +Inflation: Only the beginning [Fri, 21 Oct 02:42] + +Politics: Theresa’s way [Fri, 21 Oct 02:42] + +Policing: The long lens of the law [Fri, 21 Oct 02:42] + +Porn and protest: Obscene and not heard [Fri, 21 Oct 02:42] + +Britain and the European Union: Brexit à la carte [Fri, 21 Oct 02:42] + +Housebuilding: Prefabs sprout [Fri, 21 Oct 02:42] + +Public inquiries: Question time [Fri, 21 Oct 02:42] + +Education: Not-so-super heads [Fri, 21 Oct 02:42] + +Bagehot: The spectre of Scoxit [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Social mobility + +A class apart + +Improving social mobility will mean allowing rich children to move down as well as helping poor ones to move up. Does the government have the stomach for it? + +Oct 22nd 2016 | From the print edition + + + +THERE is little doubt about which subject will define Theresa May’s government. But the prime minister has made clear that during whatever time is not gobbled up by Brexit negotiations she wants to turn Britain into “a country that works for everyone”. Such talk is hardly new. In 1990 John Major spoke of his desire to forge “a genuinely classless society”. Every prime minister since has made similar noises. Yet few have placed as much emphasis on social mobility as Mrs May. + +This focus is inspired by the fact that, by many measures, Britain is not a socially mobile place (see chart). Many also sense that things have taken a turn for the worse. Like most rich countries, after the second world war Britain saw a big increase in the number of well paid, white-collar jobs. The proportion of people born to parents in professional or managerial jobs tripled between the generation of 1946 and the one born in 1980-84. Poor children won places in the civil service or the City of London, earning far more than their parents. But as the creation of professional jobs slowed, the scope for children to make dramatic leaps up the social pecking-order narrowed. In this sense the Britain of today is a less upwardly-mobile place than that of Mrs May’s youth. + + + +The overall picture is more complicated. Mobility is measured not only in absolute terms—that is, how well people fare compared with their parents—but also in relative terms, meaning how well they do compared with their peers. By this definition, the change has been somewhat less dramatic. Among men born in the poorest income quartile in 1958, 31% remained there as adults. Among the generation born in 1970, the figure crept up to 38%. Academics who study mobility based not on income but on social class—normally defined by occupation type—detect even less change. By their reckoning, mobility has changed little during the past century (although women became a bit more mobile, probably reflecting better access to education and work). Most see little prospect of an increase in mobility in years to come. + +But not all are so gloomy. The gap in exam performance between rich and poor children is falling, notes Jo Blanden of Surrey University. In 2005 30% of children eligible for free school meals got five good grades at GCSE, the exams taken at 16, compared with 59% of others. By 2013 that 29 percentage-point gap had shrunk to 16 points. There has been a similar narrowing of the difference in university participation rates and performance in SATs, the exams taken at 11. Since studies suggest that more than half of the link between parental and child income develops as a result of what happens in the classroom, the convergence of rich and poor pupils’ exam results bodes well for social mobility. + +What goes up… + +Yet the slowing down of the economy from its post-war clip means that the increase in well qualified youngsters has no corresponding increase in good jobs. In the past, there was plenty of room at the top. Now, it is painfully clear that social mobility must mean people going down as well as up. + +Well-off parents have many weapons with which to defend their children from this fate. The bluntest is by passing on wealth. Last year the government announced plans to shield inheritances of up to £1m ($1.2m) from tax. And money helps youngsters to maintain an educational edge. In 1996 just 4% of Britain’s workforce had postgraduate qualifications; today 11% do. The relative scarcity of funding for postgraduate study means postgrad qualifications are more open to wealthy students. Moreover, the graduate wage premium is highest for those at the most prestigious universities, where the gap between rich and poor pupils has remained wide. + +Access to good jobs is increasingly gained through internships, often unpaid and given out informally. The government has shown limited interest in enforcing the minimum wage in this area (indeed, two years ago Mrs May’s Conservative Party wrote to its MPs with advice on diplomatic ways to advertise unpaid internships). Thus, even among children with identical educational qualifications, the privately schooled are more likely to get the best jobs and to take home fatter pay-cheques, according to a study in 2014 by academics at the UCL Institute of Education and Cambridge University. + +Chipping away at these privileges will not be easy. But in an era of limited growth, improving social mobility is as much about dismantling the barriers that keep wealthy children at the top as it is about pulling poor children up from the bottom. Promising to increase social mobility has long been a popular pledge. It may become a more controversial one when voters realise that mobility goes in two directions. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709013-improving-social-mobility-will-mean-allowing-rich-children-move-down-well-helping-poor/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Only the beginning + +The fall in the pound begins to eat into living standards + +Not for the first time, the relatively poor households who tended to vote Leave will suffer most + +Oct 22nd 2016 | From the print edition + + + +FOR the 354 years for which there are data, Britain’s average annual inflation rate has been about 2%. So the news that inflation rose to 1% in September, up from 0.6% in August, may not seem significant. But it is bad news: there is a lot more inflation to come, and the big losers from rising prices will be the poor. + +The obvious culprit for rising prices is the 15% drop in sterling since June. Britain imports nearly all of its clothes, and month-on-month inflation in clothing now exceeds 5%. However, elsewhere sterling’s decline has not yet been felt. Currency-hedging by wholesalers stops prices from rising immediately. Retailers pressurise suppliers not to raise prices, as demonstrated by a recent spat over the price of Marmite, a yeasty spread. The overall price of food did not budge in September (the average price of a jar of Marmite actually fell, as shops cut prices to lure customers). + +Despite pricier clothes, inflation’s rise was caused largely by factors unrelated to sterling. It was already trending upwards from a low of -0.1% last October. In 2014-15 there were sharp drops in energy prices, which have fallen out of the year-on-year comparison used to calculate the rate. + +Sterling’s slide will eventually make itself felt, however. Consumer-price inflation is likely to hit 3% in 2017. Though that is higher than the Bank of England’s 2% target, the bank is loth to raise interest rates lest it tip the economy into recession. Holding off is the right move, though a controversial one. Theresa May, the prime minister, has expressed reservations about loose monetary policy. And MPs are more willing than in the past to challenge the Bank of England’s independence. Addressing Mark Carney, the bank’s governor, David Davies, a Tory backbencher, tweeted that Mrs May “has got every right to tell you how to do your job!” + +Politicians should know better than to interfere with the bank’s decision-making. Nonetheless, rising inflation does have its costs. Real weekly pay is already about 4% lower than in 2007. Nominal wage growth is just 2%. Once inflation goes above this rate, real wages will fall. + +Rising inflation may be particularly damaging to the poor. They devote a large proportion of their income to food and energy, which are greatly affected by the value of sterling, whereas the rich spend more on services, which are not. + +Welfare recipients will also suffer from high inflation, according to the Institute for Fiscal Studies, a think-tank. Usually, benefits rise in line with prices. No longer: last year, most working-age benefits were frozen in cash terms until 2020. Relative to previous plans, about 12m families are expected to lose an average of £360 ($442) a year in real terms thanks to the jump in inflation. The relatively poor folk who tended to vote Leave will suffer most. + +This article appeared in the Print Edition with the headline: Only the beginning + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709015-not-first-time-relatively-poor-households-who-tended-vote-leave-will-suffer/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Politics + +Theresa’s way + +The new government’s fault-lines point to two big shifts on Whitehall + +Oct 22nd 2016 | From the print edition + +Cabinet of curiosities + +WHEN Theresa May arrived in 10 Downing Street in July, after six years as home secretary, her watchword was competence. She would bring Home Office control and discipline to the post-Brexit chaos. Yet three months on her government seems remarkably leaky and fractious. On October 16th she ruled that collective cabinet responsibility would be suspended in a delayed vote on the expansion of Heathrow airport, to allow dissenters like Boris Johnson, the foreign secretary, to demur. + +Heathrow is just one case. Even Justine Greening, the education secretary, is uncomfortable about the prime minister’s enthusiasm for selective state schools. And Downing Street has repeatedly backed away from Mr Johnson’s statements: from the case for a new royal yacht to that for expanding military intervention in Syria. Then there is Brexit. Philip Hammond, the chancellor, is emerging as the loudest voice for a pro-market, liberal sort of deal. Related battles over immigration rend the cabinet. + +Where has Mrs May’s iron fist gone? The first explanation is her governing style. Concentric circles radiated out from David Cameron when he was prime minister: first the “sofa” government, then the most loyal ministers, then the cabinet outsiders. Under Mrs May things are different. She has allies (like Mr Hammond) but no diehard gang. Instead of rule by clique, she prefers the cabinet and its subcommittees. These now meet without the prime minister having fixed the outcome with a few pals beforehand. Insiders claim this makes for more sincere discussions. But it also means more splits and leaks. + +The second factor is Mrs May’s broader project: noting a troubled Labour Party to her left and a troubled UK Independence Party to her right, she wants to colonise new ground on both sides. The advantage of this strategy is its electoral virility: an Ipsos MORI poll published on October 19th put her party on 47%, higher than the Tory vote share in any election since 1959. The disadvantage is that this broad coalition contains multitudes—from rich to poor, cosmopolitan to nativist, libertarian to paternalist—and Mrs May lacks the parliamentary strength to ride out the contradictions (she inherited a majority of just 16 seats). + +For this reason it is hard to believe her aides when they insist she has not contemplated calling an early election. On the current polls, the Conservatives would increase their majority to over 100. That would create space for all the cabinet and parliamentary battles Mrs May’s sprawling and often contradictory politics demands. Britain’s other parties should assume an election footing. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709009-new-governments-fault-lines-point-two-big-shifts-whitehall-theresas-way/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Policing + +The long lens of the law + +Fitting officers with cameras is good for the public and the police alike + +Oct 22nd 2016 | From the print edition + +You’ve been framed + +THE footage is jumpy and at times blurry, but the voices are clear. A suspect’s rights are read—and then a police officer is heard crying “Get off me! Get off me!” as the suspect tries to strangle her. The Metropolitan Police released the video as it announced that 22,000 of its officers are to be issued with body cameras, representing the biggest roll-out of such technology anywhere in the world to date. The evidence that cameras can improve the quality of police work is mounting. + +A study published in September by researchers at the University of Cambridge suggested that body cameras can dramatically reduce the number of complaints made against the police. Over the course of a year almost 2,000 officers, in four forces in Britain and two in America, were randomly given cameras. Compared with the previous year, the number of complaints brought against them dropped by a stonking 93%. Strikingly, complaints also fell when officers were not wearing the cameras, an effect the authors call “contagious accountability”. They reckon the drop was caused by a reduction in bogus complaints as well as police misconduct. + +Cameras work best when officers tell the public that they are using them and when they have little discretion over when they can turn them off. According to Barak Ariel, one of the researchers on the Cambridge study, officers who wore cameras but started recording only in the middle of interactions with the public were more likely to use force than those who did not use them at all. + +The police tend to be wary of new technology (patrol cars and radios were initially regarded with scepticism). But the response to cameras has been enthusiastic. After a trial on the Isle of Wight, over 85% of frontline officers agreed that all should wear cameras while on duty. In America police unions have protested about the increased workload associated with cameras, but in Britain boosters point out that they can cut the time spent dealing with vexatious complaints, and allow officers to record crime scenes rather than write down laborious descriptions. Studies in the Isle of Wight and Essex show that they can increase the number of convictions in domestic-abuse cases. And cameras are a useful tool for training. Officers can watch their colleagues and learn what they should—or should not—do. Even civil libertarians are cautiously optimistic, welcoming increased opportunities to keep an eye on what the police are up to. + +Cameras bring new challenges. They generate vast quantities of data, and questions remain about how the recordings should be stored. At present they are kept for a month unless labelled as evidence. But members of the public can complain to the police for up to a year, meaning the relevant footage may have been wiped by the time a complaint is made. Arguments are brewing over who can access the data and when the information should be released more widely. But so far the benefits of such gadgets seem to outweigh concerns. Better for everyone that crime is recorded. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709024-fitting-officers-cameras-good-public-and-police-alike-long-lens/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Pornography and the law + +Obscene and not heard + +New legislation for adult websites draws protests + +Oct 22nd 2016 | From the print edition + + + +After relishing a summer of success at the Olympics, Britain experienced a new kind of games on October 17th. Outside Parliament demonstrators staged a “Kink Olympixxx”, including a spanking relay race, in protest at the government’s Digital Economy Bill. The legislation would introduce age-verification requirements for pornographic websites. Campaigners say this is unworkable. Not only would British sites have to check the ages of their users—a cost they are unwilling to bear—but sites worldwide would have to verify the age of British consumers. A committee of MPs is to iron out the kinks. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709025-new-legislation-adult-websites-draws-protests-obscene-and-not-heard/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Britain and the European Union + +Brexit à la carte + +It will be hard to win unfettered access to the single market for specific sectors + +Oct 22nd 2016 | From the print edition + + + +THE debate over Brexit is becoming feverish. The past week has seen reports of cabinet splits; of the European Council’s president saying, just before Theresa May’s first EU summit, that the only choice is between a hard Brexit and no Brexit; and of the government’s plan to allow Parliament a vote on the eventual terms of a deal. All this comes before formal negotiations have even begun. One observer says the government is behaving as if it is negotiating with itself, not with 27 other countries and the EU institutions. + +One example is the issue of whether, if Britain quit the EU’s single market, it could secure special access for key industries. The City of London wants a deal for financial services, and there is talk of paying into the EU budget to secure one. Mrs May has assured Nissan, whose Sunderland car plant is the biggest in Britain, that it will not lose from Brexit; at least one other carmaker has had a similar pledge, and others will no doubt ask too. Universities have suggested that students might be exempt from visas for EU migrants. + +How plausible are sectoral deals? In principle, the EU can agree to anything. Norway is in the single market (but not the customs union) via the European Economic Area. Switzerland is not, but it has bilateral deals, including one giving it full access for non-life insurance. John Springford at the Centre for European Reform, a think-tank, says it would be technically possible for the British car industry to remain in the EU’s customs union. Malcolm Harbour, a former Tory MEP who chaired the European Parliament’s internal market committee, suggests the entire transport sector might stay in the single market. + +Yet there would be a price to pay. Mujtaba Rahman of the Eurasia group, a consultancy, says the other 27 EU countries are clearer than ever on the indivisibility of the single market’s “four freedoms” of movement of goods, services, capital and labour, which apply also to Norway and Switzerland. Any sectoral deal would be policed by the European Commission and the European Court of Justice. Yet Mrs May has ruled out unfettered free movement of people and the jurisdiction of the court. As for continuing budget payments, an idea she has not dismissed, Mr Rahman says they might improve the mood, but not enough to secure special deals that override the four freedoms. + +The politics of sectoral deals could be even worse. The other 27 countries insist that Britain should not be better off than it was as an EU member, and they are united in opposing cherry-picking. Yet that is exactly what sectoral deals would do. If the British win special treatment for finance and cars, why not the Dutch for tulips and windmills, the French for cheese and cosmetics, the Germans for machine tools and engines—or the Poles for fruit-pickers and builders? Were all countries to get special privileges for their favoured industries, warns Neil Carmichael, a pro-EU Tory MP, the single market could collapse into a mess of protection and subsidies. + +World Trade Organisation (WTO) rules would also make sectoral post-Brexit deals harder. If Britain were to agree bilaterally with the EU not to apply tariffs on cars, the WTO’s “most favoured nation” principle might force it to offer tariff-free access to the rest of the world as well. The only way to avoid this would be a full-blown free-trade agreement, which is by definition not sectoral but covers most trade. + +Mrs May’s eventual choices will boil down to three. First is an option like Norway’s that secures largely barrier-free access to the single market but involves customs controls and accepting EU laws, migrants and budget payments. Second is a free-trade agreement that avoids such obligations but excludes most services and would take years to negotiate and ratify. And third is trading on plain WTO terms, which implies tariffs on cars and other products and also excludes services. The Treasury’s central estimate is that this option would lower GDP by 7.5% after 15 years. No wonder the Brexit debate is so febrile. + + + +The spectre of Scoxit + +Do not rule out Scotland’s departure from the United Kingdom + + + +Brexit means…higher prices + + + +The isle is full of noises + +For a smooth Brexit, Britain must drop the boorish language and try to understand its neighbours + + + +Parliament rules, not OK? + +The government faces legal as well as political challenges to triggering Brexit + + + +After Brexit, Bregret + +A minority of Leavers have changed their minds. Others are bailing out + + + + + +More Brexit coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709026-it-will-be-hard-win-unfettered-access-single-market-specific-sectors-brexit-la/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Housebuilding + +Prefabs sprout + +Off-the-peg homes could solve a shortage of houses and builders + +Oct 22nd 2016 | From the print edition + +They tried to make me buy a prefab, I said no, no, no + +A CAVERNOUS factory just outside Leeds may point to a shake-up of Britain’s construction industry. The building, which covers an area equivalent to seven football pitches, has just been kitted out by Legal and General Homes, a wing of the insurance and pensions giant. In the new year it will start producing pre-manufactured, or “modular”, houses. Using ten production lanes and 12 assembly stations per lane, the factory will turn out about 3,000 new homes a year, making it the biggest such operation in Europe. “It will be like a car production line,” says Nick Frankland, the head of L&G’s modular unit. + +Britain needs about 250,000 new homes a year, but has consistently built fewer than 150,000. By producing complete houses which are then delivered to building sites, the pre-manufactured process does away with much of the subcontracting that can slow and complicate construction. Labour requirements are at least 25% lower than for traditional on-site construction methods, reducing costs. The houses are said to be more energy-efficient to run, too. L&G’s new Leeds factory, and the future it represents, could be a game-changer, believes Adam Challis of JLL, a property consultant. + +Pre-manufactured housing has had a bad reputation in Britain, based on the poor-quality “prefab” huts that were built to deal with the post-war housing crisis. Modular housing is different, insists Mr Frankland: “It’s not flat-pack, prefab or cheap. It does not mean inferior quality.” + +Yet Britons remain sceptical. A recent study by the Queensland University of Technology in Australia found that whereas 80% of detached houses in Sweden use prefabricated timber elements, and in Japan up to 16% of new houses are prefabricated, in Britain (like America and Australia) no more than 5% of permanent housing has any significant prefabrication, never mind being fully pre-made. Contractors such as Laing O’Rourke produce modular components for housing and infrastructure, but not on the scale that L&G hopes to achieve with its complete houses. L&G plans to invest several hundred million pounds more in the idea in future. + +A government-commissioned review of the construction industry’s labour model, published on October 17th, suggests that L&G has chosen a good time to start disrupting things. The review, by Mark Farmer, head of Cast, a construction consultancy, is ominously entitled “Modernise or Die”. It excoriates the industry for its low productivity, unreliable delivery and fragmentation through subcontracting. There exists “a general acceptance of failure and underperformance”, it says. + +The report argues that the efficiency of pre-manufactured housing will be crucial as the workforce ages and fewer new labourers come into the industry. And all of that is before Britain’s exit from the European Union is considered. About 15% of construction workers nationwide, and getting on for half in London, are foreign-born. “Brexit is the very last thing we need in an industry struggling for long-term manpower,” says Mr Farmer. Without more builders, Britain will have to find cleverer ways of building. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709029-peg-homes-could-solve-shortage-houses-and-builders-prefabs-sprout/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Public inquiries + +Question time + +The child-abuse inquiry is not going well. What makes for a successful one? + +Oct 22nd 2016 | From the print edition + + + +TO LOSE one inquiry chairman may be regarded as a misfortune; to lose three looks like carelessness. If the ongoing inquiry into whether the British establishment overlooked decades of child abuse were not so serious, it would have become a farce. In recent days Lowell Goddard, the New Zealand judge appointed as the investigation’s third chairman, has been accused of racism and misconduct. (Justice Goddard, who stood down in August, strenuously denies the allegations.) The problems highlight how inquiries have changed and what challenges they pose. + +Britain is keen on public inquiries. That is partly because of its political set-up. The government sits in Parliament, so people are reluctant to entrust MPs with the job of investigating problems in which state institutions are implicated. Canada, with its similar system of government, is also enamoured of them, says Kent Roach of the University of Toronto. America, whose executive and legislature are separate, tends to hand over such matters to congressional committees. + +Rules laid down in 1921 governed how inquiries were run until 2005, when a new act was introduced. That was in part inspired by the Saville inquiry into Bloody Sunday, the British army’s massacre of 13 civil-rights marchers in Northern Ireland in 1972. It marked a turning point. Though widely regarded as a success, the cost—around £195m ($240m)—was prohibitive. The government introduced the 2005 act in part so that the expense of future investigations could be limited. Inquiries became narrower in their scope. Lord Hutton’s scrutiny of the death of David Kelly, a government weapons-scientist, cost a mere £2.5m and heard evidence for just 22 days. The child-abuse inquiry breaks with that trend. The budget for 2015-16 alone was £17.9m. Theresa May, who initiated the investigation as home secretary, has ordered an interim report by the end of 2018, but the inquiry has no end date. + +Its vast remit has prompted criticism. It will examine instances of child abuse dating back to 1970 in institutions in England and Wales as wide-ranging as the army, churches, the police, Parliament, schools and health services. But the subject of such investigations does not necessarily determine their length or cost. The Saville inquiry focused on events that took place over a matter of minutes. The investigation took 12 years. Meanwhile the hearings for an inquiry into child abuse in Jersey, examining wrongdoing as far back as the second world war, took two years (it has yet to publish its report). + +Success has more to do with how well inquiries are managed. Each is set up individually; there is little institutional memory because there are no institutions associated with them. Judges, the preferred chairmen, rarely lead more than one. It takes years out of their career and often means moving to a different part of the country for the duration. Alexis Jay, a former chief inspector of social work for Scotland who is now leading the child-abuse inquiry, ran a successful investigation into the sexual exploitation of children in Rotherham. Her experience is a point in the current inquiry’s favour. Trevor Buck, a professor of socio-legal studies at De Montfort University, reckons a central unit should be established to capture the knowledge gleaned from previous inquiries. + +Success also depends on how aims are defined. Inquiries determine facts and allow the airing of grievances. They also make recommendations which may lead to change. The Scarman report into the Brixton riots of 1981 led to improvements in policing. But no mechanism exists to guarantee that such proposals are acted on. And if inquiries take too long, they become irrelevant. The child-abuse investigation has been running for two years and has yet to hear any evidence. Whatever the challenges, it must get a move on. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709054-child-abuse-inquiry-not-going-well-what-makes-successful-one-question-time/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Education + +Not-so-super heads + +Beware head teachers promising quick improvements + +Oct 22nd 2016 | From the print edition + +Dumbledore, cynical careerist + +AS ANY schoolchild knows, a good head teacher can make a difference. Not only do assemblies become less boring but, if the head sets sensible priorities, pushes funding to the right places and hires great teachers, the school will thrive. Fail to do so and it may flounder. Some research suggests that about a quarter of the difference in schools’ impact on pupil attainment is explained by the quality of the head. + +A study published in the Harvard Business Review on October 20th suggests that the best heads are not always the most celebrated. Academics at the Centre for High Performance, a research group, looked at changes made by 411 heads over a seven-year period. The results imply that parents and policymakers should be wary of head teachers who bring fast improvements in exam results. + +For quick gains often come at the expense of long-term advances. Typical measures that heads employ to boost exam results include putting the best teachers in charge of classes that are about to take tests, excluding unruly pupils and cutting the time devoted to activities unrelated to exams. Grades rise, but only briefly. Focusing on the pupils about to take their exams means that younger year-groups are neglected. Excluding disruptive pupils means less cash from the government. + +Among the heads who employed such tactics, results always declined in the years after they left, with 37% of schools ending up worse than when they started. And because this sort of head teacher often leaves after a couple of years, the subsequent decline is attributed to their absence rather than their poor management while in charge, says Alex Hill, one of the authors. + +The best heads sometimes take a while to make an impact. Many have previously worked outside education and thus bring a new perspective. They link up with nearby primary schools so they can shape pupils from an early age. They tackle misbehaviour by moving the most disruptive children to separate classes, rather than excluding them. They focus on improving the quality of teachers. Within three years or so, results improve—and they continue to do so long after the head has left. + +Yet those who “play the system” for quick improvements are rewarded with gongs by the government, says Mr Hill. This encourages others to follow their path. Moreover, the pressure on schools that fail to hit performance targets is as strong as ever. If ministers took a longer view, so might more head teachers. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709055-beware-head-teachers-promising-quick-improvements-not-so-super-heads/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Bagehot + +The spectre of Scoxit + +Do not rule out Scotland’s departure from the United Kingdom + +Oct 22nd 2016 | From the print edition + + + +AS INVITATIONS for haughty English scoffing go, Nicola Sturgeon’s opening speech at the Scottish National Party conference was irresistible. In the SNP manifesto for the Scottish Parliament elections in May, she had committed to a new independence referendum in the event of a Brexit without Scottish consent. Assembling in the lee of Scotland’s 62% vote against leaving the EU (outweighed by England’s 53% vote in favour), her members in Glasgow knew the score, studding themselves with stickers and badges reading “Yes2” (nationalist-speak for a new plebiscite), cheering a French delegate who praised the party’s Europeanism and experiencing paroxysms of delight when Ms Sturgeon announced that she would consult on a new referendum bill. But was that a note of hesitancy in her voice? A hint of trepidation on those thin lips and arched brows, as she took in the applause? Why, yes it was. + +Ms Sturgeon is in a bind. Many in her party, including Alex Salmond, her predecessor, are demanding a new referendum now, and no messing about. But, despite Scotland’s resounding vote against Brexit, and an initial post-referendum bounce in support for independence, opinion polls now put support for a “Scoxit” from the United Kingdom at or below the 45% achieved when the question was formally put in 2014. That is hardly surprising. An un-Brexited, independent Scotland would probably have a hard, costly border with England; the sort which threatens to complicate relations between Northern Ireland and the Republic. Then there is the 97% fall in North Sea oil incomes in the past year, which would force a huge rise in tax after independence. Were it held today, a referendum would probably be lost. + +So the first minister hedged, backing a new Scoxit vote before 2019 in a tortuous sentence that ended with the rider: “…if that is necessary to protect our country’s interests.” One for the lawyers, that. Then, to more muted cheers, came a weird formulation about being urged both to hurry up with, and hold off, the referendum by different people. What a huckster, Bagehot thought. She doesn’t want a doomed vote but is stringing the members along. She is merely after a new dose of devolution within the United Kingdom. She is bluffing. The union is safe. + +But this sort of thinking grows cracks when one starts to interrogate the steps needed for Scoxit. Take the referendum. Ms Sturgeon’s only proximate chance of losing power is if her own party turns against her. Apart from the punchy Ruth Davidson, leader of the rising but still marginal Scottish Tories, she faces little external opposition. The SNP holds 54 of Scotland’s 59 seats in Westminster and over half the seats in the Scottish Parliament, the next election to which is not until 2021. The first minister is not without her critics inside the party, hyper-centralised and stage-managed though it is. So if the yellow-lanyarded troops really want a new vote, she will eventually have to produce it. Publishing the draft referendum bill will only stoke their appetite. + +Moreover, Ms Sturgeon does not just ride her party’s frustration at the Scottish referendum result in 2014 and the English vote for Brexit this year: she shares it. According to David Torrance, her biographer, the old SNP slogan “Independence in Europe” is something like her “personal manifesto”. And although Whitehall technically has the final say on whether a new referendum goes ahead, the Scottish government can point to the commitment in its May electoral programme, endorsed by an unprecedented 47% of Scots, as a mandate to hold one now. So it is entirely possible that Ms Sturgeon will make good on her threat in the probable event of a hard Brexit. + +And what if she does? Once Yes2 is triggered, anything could happen. As Mr Salmond likes to brag, he pushed the referendum button when just 27% of Scots supported quitting the United Kingdom, but on the day almost half of them backed it. Brexit could yet transform the independence debates of 2014 into something new, different and dangerous for the union. + +Newly sprung in June + +Consider the basic dynamic of the referendum in 2014: the nationalists had emotion and the thrill of the gamble on their side, while the unionists had reason and numbers. Reason won. But now that picture is blurred. Is it riskier to stay in a Britain without the EU, or an EU without Britain? With the pound sinking, is joining the euro as horrifying a prospect as it was two years back? And with wide-eyed Brexiteers in Whitehall making all sorts of dubious claims about the benefits and ease of leaving the EU, the gap between unionist sense and nationalist emotion is closing. This could tilt the allegiances of the sort of middle-class voters who strongly opposed both independence and Brexit: say, the Edinburgh professional working in finance and now worried about the effects of leaving the single market. + +The heart of the SNP argument in 2014 was the claim that a Tory-led government in Westminster with little support north of Hadrian’s Wall was fundamentally at odds with a more left-leaning, liberal Scotland. This was a gross exaggeration, but Ms Sturgeon could not have scripted a better illustration than the Brexit vote and its aftermath: a mean, isolationist England (where the political mood is increasingly nasty) dragging out a Scotland where every single local authority area voted to stay. Brexiteer exuberance south of the border could make the SNP’s own nationalist excesses look more reasonable. A Britain flouncing blithely out of the EU with little regard for jobs, investment or liberal values is a workable case for Scoxit. + +It remains in Scotland’s interests to stay in the United Kingdom. Yet it is also true that the two largest parts of Britain’s union are growing apart. Brexit is both a symptom and a catalyst of that process, lending nationalism momentum and allowing unionists no room for complacency. They underestimate Ms Sturgeon at their peril. + + + +Brexit à la carte + +It will be hard to win unfettered access to the single market for specific sectors + + + +Brexit means…higher prices + + + +The isle is full of noises + +For a smooth Brexit, Britain must drop the boorish language and try to understand its neighbours + + + +Parliament rules, not OK? + +The government faces legal as well as political challenges to triggering Brexit + + + +After Brexit, Bregret + +A minority of Leavers have changed their minds. Others are bailing out + + + + + +More Brexit coverage + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709006-do-not-rule-out-scotlands-departure-united-kingdom-spectre-scoxit/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +International + + + +Migration to Europe: Travelling in hope [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Migration to Europe + +Travelling in hope + +The flow of Africans from Libya to Italy is now Europe’s worst migration crisis + +Oct 22nd 2016 | AGADEZ AND ON A BOAT IN THE MEDITERRANEAN | From the print edition + + + +BEFORE dawn the Dignity 1 has completed her first rescue, scooping 114 migrants without lifejackets from a rubber dinghy adrift in the Mediterranean. The crew, who include a doctor and two nurses from Médecins Sans Frontières (MSF), the charity that operates the boat, check the arrivals to see who needs immediate care. No sooner have they finished than the ship is called to assist the Samuel Beckett, an Irish military vessel also engaged in search-and-rescue. Several migrants she has picked up need urgent medical help: they have chemical burns from fuel leaking in their sinking boat. In the evening the Italian coastguard brings 196 more people on board. By midnight the Dignity 1 is carrying 417 migrants. Cordoned off at her prow is the body of Joy, a 23-year-old Nigerian who had been six months pregnant. She died of a heart attack after getting petrol in her lungs. + +Some people the boat picks up have fled persecution. Hassan, a 14-year-old Somali picked up the previous day (see picture), is escaping civil war. It has taken him five months to get this far, three of them in Libya, sleeping in animal coops. Kaifa, a 20-year-old from Liberia, travelled through Guinea, Mali, Burkina Faso, Niger and Libya; he says he was arrested for taking part in a peaceful protest in his home country. Many have suffered terribly en route. Aruna, a 21-year-old from Sierra Leone, has a broken hand from the smugglers’ beatings, and marks on his back from their whips. A Nigerian woman is keening: her two children were lost overboard before rescue arrived. + +But most are seeking a job of some kind, often to support families back home. Although they speak of escaping poverty, most will have had to scrape together large sums to pay for their journeys, often by getting relatives to chip in. Others will pay after arriving in Europe, perhaps by working as prostitutes, though they may not realise that that is what is in store for them. The journey has often been embarked on without much planning, and with little idea of what lies at its end. + +Mette, a pregnant 20-year-old from the Ivory Coast, ran away from her violent husband on impulse when he left the door on the latch. She has seen and suffered “many things in the world”, she says through tears, and declares she will take any job to support her child. The medics flag her up for referral to a psychologist once she lands in Italy. Smart, a 27-year-old Nigerian, fell out with his half-brother, who wanted to kill him. He told a man whose car he washed, who in turn put him in touch with people-smugglers. Soon Smart was travelling to Libya in a series of cars. Bashir, a 17-year-old from Somalia, is one of the few with any idea of where he would like to end up: Geneva, because he has heard that many NGOs are based there. “Maybe they can assist me,” he says. + +Daring to dream + +Migrants have been making their way on boats to Europe for more than a decade. But in the past few years their numbers have soared. Last year over a million crossed the Mediterranean. By far the largest share—around 850,000—travelled from Turkey to Greece, most of them Syrians fleeing their country’s bloody war. The sudden influx brought Europe’s asylum system to the brink of collapse. + +A lasting solution will require peace in Syria, which seems as distant as ever. But in the meantime it has proved possible to reduce the flow. In March the EU struck a deal with Recep Tayyip Erdogan, Turkey’s president, to take back any Syrians who made it as far as Greece. Although very few have yet been returned, arrivals fell from 55,000 in February to 3,000 in August, as fewer Syrians attempted the journey. + +Now the longer and more perilous central Mediterranean crossing, from Libya to Italy, has once again become the main migrant route to Europe. The influx has grown markedly in recent years—150,000 last year, up from 64,000 in 2011. This is still smaller than the peak flow on the Turkey-Greece route, but it poses an even more troubling conundrum. The influx is almost impossible to stem. It originates in dozens of countries, and moves via shifting networks of people-smugglers. Most of those who make it to Europe will eventually be judged economic migrants, not refugees. But Libya, without a government since 2011, is so lawless that they cannot be sent back there. Nor is it always possible to send them home, as their governments often refuse to accept them. Most end up staying in Europe despite being denied asylum. + + + +Italy’s sluggish legal system drags out the time spent in limbo. In a state-funded house for migrants in Catania, Sicily, Josef, a young Gambian who arrived in Italy in 2014, says he has been denied asylum but has appealed. Many in his situation enter the shadow economy. In Palermo, Sicily’s capital, many migrants live in Ballarò, a shady part of town where drug-dealing is rife. Some end up working as prostitutes. + +When Muammar Qaddafi ruled Libya, Italy struck deals with him so that its navy could return migrants who had attempted the trip. But after his death in 2011 the bargain broke down, and in 2012 the European Court of Human Rights declared that these “push-backs” to Libya breached human-rights law. + +Since then the EU has responded to one crisis after another, rather than settling on a consistent plan. In 2013 the Italian government started Operation Mare Nostrum, a search-and-rescue effort that plucked 150,000 people from the seas in a single year. After other European countries, notably Britain, argued that saving migrants inspired more of them to attempt the trip, it was replaced with a scaled-down version, closer to the Italian coast. But the number attempting the crossing fell only slightly, and the number of deaths increased. + +Next, the EU took aim at the smugglers. In May 2015 it launched Operation Sophia, with patrolling warships seeking to destroy suspected smuggling vessels close to the Libyan coast. Though they often get involved in rescues, the effect has been to make the route riskier without much reducing the number trying it. This year 3,173 migrants are known to have died or gone missing in the central Mediterranean, up from 2,794 in 2015 (the real numbers will be higher). + +Once one group of people-smugglers has been identified and arrested another will pop up, says Calogera Ferrara, an Italian prosecutor in Palermo. And their methods also shift in response to changing policies. As their wooden boats have been destroyed, they have switched to flimsy rubber dinghies, which are hard to spot on the horizon and carry barely enough fuel to reach international waters, where the migrants on board have a chance of being picked up. One of the men rescued by Dignity 1 says that the smugglers gave him a satellite phone with which to call the Italian coastguard, and told him to throw it overboard afterwards so it could not be traced back to them. + +The routes African migrants take to reach the Libyan coast form a web across the continent (see map) along which are strung safe houses, brokers and drivers, loosely linked by personal connections. Many pass through Agadez in northern Niger, the last settlement before the Sahara desert. A dusty city of 120,000 souls, it was founded a millennium ago for caravans of camels carrying salt and gold to west Africa. Now its trade is in people. + + + +According to the International Organisation for Migration (IOM), which monitors checkpoints, some 270,000 people passed through Agadez on their way towards Libya between February and the end of September this year. Some were locals, crossing for short spells of work, despite Libya’s civil war. But most were young men originating from the west African coast who do not plan to return home. + +These migrants will often spend time in safe houses, which the residents of Agadez call “ghettos”. The English words “You are all welcome” are scrawled on the red steel door of one, a small house on a back street, but the scene behind it is uninviting. In a space roughly the size of a hotel room, a couple of dozen young men, mostly Gambian and Senegalese, lie in the stupefying heat. Sachets of detergent and cigarette boxes litter the dirt floor; backpacks and clothes are piled in corners. From here, they plan to take pickup trucks across the desert to Libya, to cross the Mediterranean and, eventually, to reach Europe. + +Shani, who runs a ghetto, explains how it works. Migrants come to him through a broker, who is connected to marketeers in their countries of origin. They pay the broker for their passage; Shani puts them up and arranges transport. For each he is paid a fixed fee. The money is released by the broker when the migrant has crossed the desert and arrived in Sebha, in Libya. + +Migrants are encouraged by family, friends who have already made it—and rapacious recruiters, who promise a cheap and easy trip. Some think it is “only 15km over the sea to Italy”, says Maurice Miango of the IOM’s Agadez office. Others do not know that Libya is at war, or that they will have to travel across desert. And many do not understand that in Europe they may not have the right to work or attend school. + +Typical is Aliher Silah, a 21-year-old Gambian who was persuaded to set out by a relative in Oslo. He borrowed money from his family and paid 19,000 Gambian Dalasi (about $450) to a trafficker to get as far as Libya. Now he is waiting in a ghetto for more money: extortion at official checkpoints has made the journey much pricier than he expected. He does not seem to know that Oslo is in Norway, or have any idea how he could get there from Italy. His aim is “to get money to help my family”, he says. But he does not know that he will (in theory, at least) need papers to get a job. + +Anywhere but here + +According to Peter Tinti and Tuesday Reitano, the authors of “Migrant, Refugee, Smuggler, Saviour”, the route to Europe through Libya became popular with sub-Saharan Africans in 2012 thanks to Syrian refugees who travelled to Libya through Egypt. They were much richer than the locals, and it was their demand that created the trafficking networks. When their numbers fell, smugglers turned to Libya’s resident population of sub-Saharan Africans to maintain demand, and then to recruiters in west Africa to bring more. + +Yet unlike Syrians, sub-Saharan Africans cannot pay much. As the people-traffickers’ margins have been squeezed, the extortion of migrants has grown. At the IOM’s transit centre, men relay horrifying stories of being robbed or imprisoned for ransoms. “In Libya, everyone has a gun,” says Marcel Kalla, a 34-year-old Cameroonian. “Even the children have guns.” When he ran out of money, he was locked up and half-starved for two months. The women held with him were raped, he says. He was freed only when a Nigerian took pity on him and helped him get back to Agadez. + +Until recently, people-smuggling went on quite openly in Agadez, says Mr Miango. Most of the migrants could come to Niger legally, as citizens of the Economic Community of West African States. They would arrive at the bus station, collect money at the bank and hire smugglers. After a few days in a ghetto they would leave. On Mondays convoys of white Toyota pickup trucks, each holding around 25 people, would roar off into the desert. + +Since August Niger’s government has been enforcing a law passed last year that criminalises people-smuggling, and departures for Libya recorded by the IOM have dropped off. In September it registered around 27,000 desert crossings, down from a peak of 72,000 in May. The fall is partly because of the weather: as European winter approaches, the sea is harder to cross. But the new restrictions have had a big effect, too, says Mr Miango. Vehicles have been seized and 22 traffickers jailed. + +En route to Italy, at the end of a long journey + +Nevertheless, people-smuggling has been driven underground, rather than dealt a lasting blow. Instead of departing direct from Agadez, Shani now pays drivers from the Tuareg desert tribe to drive his charges, hidden in lorries, to an oasis 80km from Agadez. There they are transferred to pickup trucks which go the rest of the way across the desert. And instead of leaving in convoys, the lorries now depart separately late at night, and take back streets. To cover the extra cost, Shani has raised the price he charges brokers from 90,000 CFA francs per migrant (about $150) to 105,000. The bribes to police at checkpoints (which migrants must pay) have also risen sharply. + +And it is debatable whether the crackdown will last. The new law was passed after intense European pressure; Niger’s government was rewarded with €596m ($656m) in budget support, to be paid over six years. But in May, after the EU’s deal with Turkey, Niger claimed it needed a further €1 billion to combat trafficking. Migration is a useful way to squeeze money from Europe—but arguably little more than that. + +Indeed, officials have plenty of reason to let the trade continue. “Migration is a network of powerful people, people who have got money,” says Rhissa Feltou, Agadez’s Tuareg mayor. The region around Agadez was hit hard by the fall of Qaddafi. Tuaregs had benefited from his largesse: his portrait still hangs in houses across Agadez. They are no fans of Niger’s government. Though Mr Feltou denies that migration helps the town much, he admits that ending it could hurt. “The guides and drivers, they have no other opportunities,” he says. Without work they could be easy recruits for Islamist insurgents—like many Tuaregs in neighbouring Mali. + +During recent months the number of migrants who have abandoned the attempt to make it to Europe, and the number being helped to return home by the IOM, have climbed. Mr Kalla is one of them. The idea of Europe was too good to turn down, he says. “You think there is money on the streets. How can you not be excited? The smugglers told me it would be like a dream, almost as easy as flying.” But he would not try to go through Libya again, “not even for millions”. + +Perhaps, if that message gets out, it will prove a deterrent. It would be reinforced if more of the migrants who make it to Europe, but are refused asylum, were returned home. The EU also needs to do what it can to undermine the smugglers’ business model, though this is hard without a functioning Libyan state to deal with. An important step, says Federico Soda, the IOM’s director in Rome, would be for Europe to allow some legal immigration for unskilled Africans. That would redirect at least some migrants away from irregular, dangerous channels towards managed ones, and enable Europe to reap the economic benefits of immigration, such as easing seasonal labour shortages. + +The hardening of anti-immigration attitudes across the continent probably makes such a policy politically impossible. Without it, though, the flow of Africans daring everything for a better life in Europe will continue. As poor countries develop, emigration rates tend to rise until annual GDP per person reaches $7,000-8,000, says Michael Clemens of the Centre for Global Development, a think-tank in Washington, DC. Most African countries are far poorer than this; income per head in Gambia is only about $500 a year. + +A rare moment of calm + +“We are here because we fill a void,” says Nicholas Papachrysostomou, the MSF leader on board the Dignity 1 (pictured with a child migrant). The charity was not set up to carry out rescue missions, he laments. The ship will sail the Mediterranean waters for a few weeks more, until the weather worsens and leaving Libya becomes nearly impossible. But she will be back early next year. + +Our correspondent’s diary of her five days on board Dignity 1 is at http://www.economist.com/rescuediary + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21709019-flow-africans-libya-italy-now-europes-worst-migration-crisis-travelling/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Special report: Russia + + + +Russia: Inside the bear [Fri, 21 Oct 02:42] + +The economy: Milk without the cow [Fri, 21 Oct 02:42] + +Power structures: Wheels within wheels [Fri, 21 Oct 02:42] + +Foreign policy: The fog of wars [Fri, 21 Oct 02:42] + +Modern life: Tell me about Joan of Arc [Fri, 21 Oct 02:42] + +Past and future: Take care of Russia [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Russia + +Inside the bear + +When the Soviet Union collapsed 25 years ago, Russia looked set to become a free-market democracy. Arkady Ostrovsky explains why that did not happen, and how much of it is Mr Putin’s fault + +Oct 22nd 2016 | From the print edition + + + +ON AUGUST 20th Guzel Semenova, a 25-year-old Muscovite, was strolling through the grounds of Muzeon, one of the city’s parks, and stopped by a burnt-out, rusty trolleybus. Inside its shattered interior a small video screen was playing black-and-white footage of events that unfolded in the year she was born. A volunteer explained that the trolleybus had been part of an anti-tank barricade during a coup 25 years ago and symbolised the people’s victory. Ms Semenova looked confused. The 22-year-old volunteer, herself unsure what exactly had happened during those three days in August 1991, said it was when “Russia became free.” Ms Semenova listened politely, then walked on. + +A patchy knowledge of those events is nothing unusual in Russia. A survey by the Levada Centre, the country’s leading independent pollster, shows that half the overall population and as many as 90% of young Russians know nothing about the drama that began in the small hours of August 19th 1991. + +That morning the world woke up to news of a coup. Mikhail Gorbachev, the last Soviet leader, was detained in Crimea, “unable, for health reasons, to perform his duties”. Power had been seized by a group of hard-line Communists, the chief of the KGB and senior army generals, who declared a state of emergency. Tanks were rumbling through the centre of Moscow. The television, overrun by the KGB’s special forces, was playing Tchaikovsky’s “Swan Lake” on a loop. It was a last, desperate attempt to save the disintegrating empire. + +But on the day of the coup not a soul came out to support the Soviet regime. Instead, tens of thousands of Muscovites took to the streets to build barricades and defend their new freedoms. Boris Yeltsin, the first democratically elected president of Russia, then a subordinate part of the Soviet Union, called for resistance. The KGB’s special forces were told to attack the Russian parliament, the epicentre of the opposition, but nobody was prepared to give a written order. Two days later three young men died under a tank. A few hours after that the troops were withdrawn and Gorbachev returned to Moscow. Jubilant crowds marched to the KGB’s headquarters and toppled the statue of its founder, Felix Dzerzhinsky. + +Those three days marked the end of the Soviet Union, but they did not become a foundation myth for a new Russia. The country was tired of myths. Modern school textbooks barely mention them. Russian officials used to lay flowers at a small monument to the three young men killed by the tanks, but even this modest gesture stopped in 2004. This year liberals were banned from marching to the place of their victory 25 years ago. The small festival at the Muzeon attracted a few hundred people who watched a stylised performance of “Swan Lake” and a documentary from those days. Shot in St Petersburg, the cradle of the Bolshevik revolution, it showed a vast, peaceful crowd in the main square watching the death throes of the Soviet empire. The camera also captured a young Vladimir Putin by the side of his boss, Anatoly Sobchak, then the mayor of St Petersburg, who had defied the coup. A demonstrator was heard to shout: “When we get rid of the communist plague, we will again become free and we won’t have to fight [a war] again.” + +The revolution of 1991 overturned the Soviet Union’s political, economic and social order and put 15 countries on the map where there had previously been only one. But like many revolutions in history, it was followed by a restoration. + +The tsar the Kremlin most admires is Alexander III, who on taking office in 1881 reversed the liberalisation overseen by his father, who was assassinated, to impose an official ideology of Orthodoxy, nationalism and autocracy. His portrait and his famous saying, “Russia has only two allies: its army and its navy,” greet visitors to a revamped museum of Russian history at VDNKH, a prime example of Stalinist architecture in Moscow. Stalin himself has had a makeover too. Gigantic portraits of him line the roads in Crimea, proclaiming: “It is our victory!” + +The two main pillars of the Soviet state, propaganda and the threat of repression, have been restored. The KGB, which was humiliated and broken up in the aftermath of the coup, has been rebuilt as the main vehicle for political and economic power. The secret police is once again jailing protesters and harassing civil activists. In September the Kremlin designated the Levada Centre a “foreign agent”, which could be the end of it. Television has been made into a venomous propaganda machine that encourages people to fight “national traitors” and “fifth-columnists”. Boris Nemtsov, a liberal politician who once represented Russia’s hopes of becoming a “normal” country, was murdered outside the Kremlin last year. + +After nearly a decade of economic growth spurred by the market reforms of the 1990s and by rising oil prices, the Russian economy has descended into Soviet-era stagnation. Competition has been stifled and the state’s share in the economy has doubled. The military-industrial complex—the core of the Soviet economy—is once again seen as the engine of growth. Alternative power centres have been eliminated. Post-Soviet federalism has been emasculated, turning Russia into a unitary state. + +Reactionary restoration at home has led to aggression abroad. Russia has invaded Georgia and Ukraine, two of the most democratic former Soviet republics. It has intervened in the conflict in Syria, propping up the regime of President Bashar al-Assad. It has attempted to undermine Euro-Atlantic institutions, backed right-wing parties in Europe and tried to meddle in America’s presidential election. And it is once again using the threat of nuclear arms to blackmail the West. + +After the defeat of the 1991 coup, Russia was widely expected to become a Westernised, democratic, free-market country. This special report will explain why that did not happen, and ask whether the West has a Putin problem or a much deeper and more enduring Russia problem. + +Mr Putin was originally chosen for the top job by Yeltsin, Russia’s first president, not least for being on the “democratic” side in 1991. When he came to power in 2000, he was expected to consolidate the country. Instead, he has reinstated an archaic model of the state. + +It was naive to expect that after 74 years of Soviet rule, and several centuries of paternalism before that, Russia would rapidly emerge as a functioning Western-style democracy. But this report will show that Russia’s relapse into an authoritarian corporate state was not inevitable. It was the result of the choices made by the country’s elite at each new fork in the road. And although those choices cannot be unmade, they do not predetermine the future. + +Not the Soviet Union + +The collapse of the Soviet Union brought a massive change to Russia. The creation of private ownership launched industries that did not exist before, such as private banks, restaurants and mobile-phone networks. People are free to make money, consume and travel on a scale never seen before in Russia’s history. They consume not just more goods and services but more culture and information. The state no longer dominates people’s lives. Although it controls television, the internet remains largely unconstrained everywhere, and radio and print still have some freedom. Even Alexei Navalny, an opposition politician, admits that “despite the curtailing of political and civil freedoms, the past 25 years have been the freest in Russian history.” + +People are becoming increasingly alienated from politics, as demonstrated by the low turnout in the parliamentary elections in September, but they are finding other ways of expressing their views. Although few Russians remember quite how the Soviet regime ended, many enjoy the results. Russia has a vibrant urban middle class which, until recently, was richer than its equivalents in eastern Europe. Russia’s cities, with their cafés, cycle lanes and shopping streets, don’t look very different from their European counterparts. + +A new generation of Westernised Russians born since the end of the Soviet Union has come of age. The children of the Soviet intelligentsia—a vast educated professional class that supported Gorbachev—dress, eat and behave differently from their parents’ generation. They have a spring in their step. + +Many of these young, educated Russians owe their comfortable lives to a decade of economic growth that began in 1998 and ended with the economic crisis in 2008-09. The impact of that crisis exposed the limits of Mr Putin’s model of governance. And although economic growth recovered fairly quickly, trust in Mr Putin’s model of governance declined sharply, from 35% at the end of 2008 to 20% in early 2012, whereas support for Western-style democracy shot up from 15% to 30%. + + + +Those who felt that Russia needed both economic and political modernisation pinned their hopes on Dmitry Medvedev, who served as president from 2008 to 2012. The Russian elite wanted him to stay for a second term, but in September 2011 he announced that Mr Putin, who was then prime minister, would resume the presidency, while Mr Medvedev would become prime minister. He indicated that this job swap had been planned right from the start of his presidency. Many people felt they had been duped. When three months later the Kremlin blatantly rigged the parliamentary elections, they took to the streets, demanding the same sort of respect from the state as citizens as they were enjoying as private customers at home and abroad. They wanted Russia to become a European-style nation state, an idea formulated by Alexey Navalny, an anti-corruption blogger who had galvanised the protests through social media. His definition of the governing United Russia as a party of “crooks and thieves”, and the mood of protest, spread across the country. + +Mr Putin was rattled and angry, but having witnessed the failure of the 1991 coup he knew that tanks were not the answer. Instead he trumped civic nationalism with the centuries-old idea of imperial or state nationalism, offering the idea of Russia as a besieged fortress. In 2014 he annexed Crimea. The tactic worked. The protests stopped and Mr Putin’s personal approval ratings shot up from 60% to 80%. By attacking Ukraine after its own revolution in 2014, Mr Putin persuaded his country and its neighbours that any revolt against the regime would be followed by bloodshed and chaos. + +Smoke and mirrors + + + +Mr Putin’s Russia is a slippery construct in which simulation and bluff play a big part + +The Soviet Union had many faults, but postmodernism was not one of them. Mr Putin’s Russia is a more slippery construct in which simulation and bluff play a big part. Nothing is what it seems. Elections are held not to change power but to retain it; licensed “opposition” parties are manufactured by the Kremlin; Mr Medvedev’s modernisation was an illusion; doctorates awarded to scores of Russian officials, governors and even to Mr Putin himself were based on plagiarism or cheating, according to Dissernet, a grassroots organisation. + +In 2014 Russia put on a remarkable show with the costliest winter Olympics ever staged, in Sochi on the Black Sea. The host country’s athletes got the largest number of gold medals, not least thanks to a massive doping operation in which the Federal Security Service (FSB), the KGB’s successor and Russia’s main security organisation, swapped urine samples through a hole in the wall between an official laboratory and a secret one next door. (That caused many Russian athletes to be banned from this year’s Rio Olympics.) In the same way that Russia has been doping its athletes, its state media have been doping the population with military triumphs and anti-American propaganda, conveying an artificial sense of strength. But unlike those sport victories, Russian violence in Ukraine and Syria is real enough. + +Mr Putin’s restoration project is working because the disintegration of the Soviet Union was not complete. The remains of the Soviet and even pre-Soviet system, its institutions, economic structure and social practices, which lay dormant during the first post-Soviet decade, have been revived and strengthened by the current regime. + +But just as the Soviet and pre-Soviet legacies cannot be erased, nor can the quarter-century since the USSR ceased to exist. The fundamental conflict between a modern lifestyle and the political restoration under Mr Putin, exposed by the protests of 2011-12, has been suppressed, not resolved. No restoration has ever ended in a return to the past, and none has been permanent. + +Russia, perhaps more than other countries, advances through generational shifts. The current reactionary phase may turn out to be no more than a detour on the path towards a modern, federalist nation state. Or it could lead to further decline, interspersed with outbursts of aggression. Which is it to be? + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21708879-when-soviet-union-collapsed-25-years-ago-russia-looked-set-become-free-market/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The economy + +Milk without the cow + +Political reform is an essential prerequisite to a flourishing economy + +Oct 22nd 2016 | From the print edition + +No oil, no spoils + +JUST ACROSS THE mighty Volga river from Sviyazhsk, an island fortress built by Ivan the Terrible in 1552 to help him conquer the Khanate of Kazan, stands a brand new city. It is the first to appear on Russia’s map since the fall of the Soviet Union. Innopolis, 820km (510 miles) due east of Moscow, was founded in 2012 as an IT park and a model for the sort of modernisation that Dmitry Medvedev, Russia’s prime minister and before that its president, had proclaimed a main priority. Now two years old, it is the smallest town in Russia, with the large ambition to launch the country into a high-tech era. Designed by Liu Thai Ker, the chief architect of Singapore, it has a university where 350 students are taught in English. Just half an hour’s drive away is Kazan, the capital of Tatarstan, an oil-rich republic that has recently adopted a new 15-year strategy to turn itself into a hub of creativity and growth. “We are competing not with Russian regions but with the world. Our new oil is human capital,” says Vladimir Gritskikh, a former physicist who co-ordinates the programme. + +Innopolis has comfortable town houses, playgrounds with Wi-Fi and a large swimming pool. Igor Nosov, its manager, holds an American MBA. The city’s free economic zone is dominated by a circular office building for high-tech firms. There is just one thing in short supply: the firms themselves. So far the building has only about a dozen occupants. “Well, we’ve built a collective farm. Now we need the farmers,” quips one of the Tatar officials. Whether those farmers will come depends on a range of factors mostly outside Tatarstan’s control. + +Technical modernisation has been one of Russia’s obsessions for centuries. At this year’s St Petersburg Economic Forum, Herman Gref, the chairman of Sberbank, Russia’s largest state bank, asked a short and simple question: “Can Russia compete?” The answer supplied by an American participant, Loren Graham, a historian of science at the Massachusetts Institute of Technology, was somewhat longer. + +There was a difference between invention and innovation, he said. Russian scientists and engineers invented the laser, electric light and hydraulic fracking, yet time and again the country failed to reap any economic benefit from its scientific brilliance. The reason, Mr Graham explained, was not a lack of business talent but the adverse social, political and economic environment. Russia’s authorities build expensive innovation cities, “but at the same time they prohibit demonstrations, suppress political opponents and independent businessmen, twist the legal system and create a regressive, authoritarian regime…They want the milk without the cow.” + +None of this was particularly new to Mr Gref. In 2000 the liberal economist, then aged 36, was picked by Mr Putin to draft a ten-year economic programme and lead reforms. “The centrepiece of the new social contract is the primacy of the citizen over the state,” Mr Gref wrote at the time. “The country has a unique chance provided by political stability, appetite for reform and rising oil prices to renew itself. Unless that chance is used, economic regression is inevitable, threatening not only social stability but the existence of Russia as a state.” Mr Putin signed off on Mr Gref’s plan and hired Andrei Illarionov, a determinedly libertarian economist, as his adviser. + +During the first eight years of Mr Putin’s reign the economy grew by an impressive average of 7%, kickstarted by a 70% rouble devaluation in 1998. As state finances and economic rules became more stable, the market reforms of the 1990s began to have an impact. From the mid-2000s soaring oil prices stimulated further growth, mainly in the services and construction sectors, but also fuelled imports, and the economy started to overheat. When the financial crisis hit in 2008, the Russian economy crashed, contracting by 10% from the peak of 2008 to the trough of 2009. + +The subsequent recovery was driven by higher government spending that propped up consumption. Between 2010 and 2014 the economy grew by only 3% a year, even though revenues from oil exports were 70% higher than during the oil boom of 2004-08. Russia used its abundance of natural resources to create a corporatist state that suppressed competition. Between 2005 and 2015 the share of the state in the economy doubled, from 35% to 70%. + +Now the economy is in recession. Last year GDP shrank by 3.7% and real disposable income fell by 10%. Investment in fixed assets declined by 37% over the past four years, with the steepest fall coming after Russia’s attack on Ukraine in 2014. + + + +The people running the economy are competent, well-educated technocrats (such as the head of the central bank, Elvira Nabiulina). But there are limits to what they can achieve. A depreciation of the rouble against the dollar of almost 50% since the start of 2014 has failed to rekindle economic growth, partly because Russian producers in the past preferred to import parts and materials rather than invest in domestic capacity. Those intermediate imports have now become unaffordable. + +The slump in the oil price and Western sanctions have exacerbated the problems, but they did not cause them. Growth started to slow down in 2012 and 2013 when the oil price was still high and before the invasion of Ukraine. The root causes are that Russia’s market is not free, and the rules are opaque and enforced inconsistently. As an upper-middle-income country, it can develop only if its economy is integrated with the rest of the world. Its confrontations with the West and the activities of its security services make it an unenticing target for investment. “The investment climate matters in an open market economy. A state economy does not need an investment climate; it needs security services,” jokes Sergei Belyakov, a former deputy economics minister. Russian businessmen have stopped investing in their own country mainly because they see no future. + +Property and power + +When the Soviet Union collapsed, many people hoped that once liberated from communist ideology and enjoying a free market, Russia would be able to make good use of its immense natural and intellectual resources. Yegor Gaidar, the architect of the Russian reforms, was among the few who realised that the market alone could not solve Russia’s fundamental problem: the close nexus between political power and property. In an article published two years before he took charge of the economy, he wrote: “A market [by itself] does not answer the key question of who is supposed to benefit from the results of economic production; it can serve different social structures. Everything depends on the distribution of property and political power.” Yet although the 1991 revolution overturned the political and economic system and led to the sale of state assets, it did not sufficiently separate political power and property. + +Part of the problem was the type of economy modern Russia had inherited from the Soviet days. Stalin’s crash industrialisation and urbanisation was designed to create a militarised autarky with a total disregard for cost, financial or human. Factories were built in cold and inaccessible places, using forced labour. The output of those factories was often worth less than the input in energy and materials. After Stalin’s death they were kept going by oil and gas money. The factory managers, known as “red directors”, travelled to Moscow to haggle with the relevant ministries for resources. They employed millions of people and had enormous lobbying power. When the Soviet Union collapsed, the only way to keep them quiet was to sell them their factories, which meant that much of industry remained in the hands of the old elite. Mr Gaidar reckoned that this was a price worth paying to prevent civil conflict. + +Yet many of these companies could survive only if their energy and transport costs were subsidised. For example, Yukos, once Russia’s largest oil firm, was forced to sell 70% of its oil in the domestic market, yet since its buyers could not afford to pay an open-market price, they accumulated huge debts that in the end had to be written off, says Mikhail Khodorkovsky, the company’s former owner. + +But whereas Gaidar’s government in 1992 had to act urgently to stop the country from falling apart, Mr Putin had no such excuse. When he first took over, oil prices were rising and there was broad political support for reforms. However, according to Clifford Gaddy and Barry Ickes, two American economists, Mr Putin did not merely fail to dismantle the Soviet structure; he used Russia’s windfalls to reinforce it in order to preserve social stability and votes. + + + +It was always unrealistic to think that after the fall of the Soviet Union Russia would be able to build institutions overnight. Russia had been subjected to totalitarian rule for so long that it had no memory of life before it. Douglass North, a Nobel prizewinning economist, and co-authors have written that in Russia, as in many other countries, access to valuable rights, economic activities and resources is determined by privilege enforced by the political and military elites. This system, which he calls a “limited-access order”, relies on the ability of the elites to control rents, be it from land, raw materials or jobs for cronies. Its main objective is to preserve stability and prevent uncontrolled violence by giving those elites access to streams of rent. But that state monopoly on rent and violence collapsed with the Soviet Union. + +Oligarchs and beyond + +In the mid-1990s control over natural-resource firms passed to the oligarchs, a powerful group of business tycoons who emerged from the rubble of the Soviet Union. Their power rested not so much on violence but on entrepreneurship, which allowed them to accumulate capital. But they also cultivated personal connections with the liberals in the government to gain privileged access to the most valuable assets. + +In 1995 they struck an audacious deal, offering to lend money to the cash-strapped government and put their resources, including the media they controlled, behind an ailing Yeltsin. In return, they asked to manage the government’s shares in natural-resource firms. When Yeltsin was re-elected in 1996, they were allowed to auction off those shares to themselves. This “loans for shares” privatisation undermined the legitimacy of Russian capitalism and compromised the idea of property rights. + +To protect their assets, the oligarchs had to ensure the continuity of the regime. In 1999, as Yeltsin prepared to step down, Boris Berezovsky, the ultimate oligarch, who had worked himself into the president’s family, proposed Mr Putin as Yeltsin’s successor. According to Berezovsky, Mr Putin had originally wanted to be chairman of Gazprom, Russia’s natural-gas behemoth, but instead he was offered the job of running Russia Inc. + +Mr Putin was shaped mainly by two experiences. One was his service in the KGB, which made him a statist. The other was his time in St Petersburg, where he served as deputy mayor in the early 1990s, dabbling in business. That turned him into a capitalist, but of a particular kind. Capitalism to him meant not free competition but connections, special access and, above all, deals. As Fiona Hill and Clifford Gaddy wrote in their book, “Mr Putin: Operative in the Kremlin”, “Capitalism, in Putin’s understanding, is not production, management and marketing. It is wheeling and dealing. It is not about workers and customers. It is about personal connections with regulators. It is finding and using loopholes in the law, or creating loopholes.” Mr Putin did not destroy the oligarchy but merely changed the oligarchs, creating much closer links between property and political power. He wanted to control the market, transferring its benefits to the people he trusted—friends from St Petersburg and former KGB colleagues. + +But whereas the oligarchs in the 1990s were ruthless self-made businessmen driven by profit, the men Mr Putin brought to power were specialists in suppression, violence and control, driven by revenge. The siloviki, people with roots in the KGB and other powerful ministries, had no special business skills, but quickly took over the commanding heights of the economy, capitalising on popular discontent with the oligarchs and using their licence to exert violence to amass property. In 2003 they jailed Mr Khodorkovsky, the most independent and politically ambitious of the oligarchs. A year later Yukos, his oil company, was dismembered and its assets taken over by Rosneft, a state oil firm chaired by Igor Sechin, one of Mr Putin’s most trusted lieutenants and an informal leader of the siloviki. + +During the years when the oil-price boom fuelled domestic consumption, the new elite not only came to control the distribution of rent, it also limited access to the market in order to reduce competition, developing a system which Kirill Rogov, a Russian political economist, describes as “soft legal constraints”. It involves writing the rules in such a way that to observe them is either prohibitively expensive or downright impossible, then handing out informal licences to break those rules. + +Licence to offend + +Just as in the Soviet era red directors haggled for resources, market participants now haggle for the right to break the rules, so the system gives the security services ultimate economic and political control. The licence can be withdrawn at any time if its holder steps out of line or gets too greedy, or if his assets start to look too attractive. + +The story of Igor Pushkarev, a former mayor of Vladivostok, illustrates the point. In the early 2000s Mr Pushkarev, the owner of a large cement firm in Russia’s far east that got a lot of orders from the government, joined Mr Putin’s United Russia party, and in 2008 he was elected mayor of the city. Earlier this year he challenged Vladimir Miklushevsky, the regional governor, in the party primaries. Mr Miklushevsky went to see Mr Putin, and the next day Mr Pushkarev was arrested for “abuse of office”. The FSB started to expropriate his assets straight away. + +Such lack of clear property rights creates distrust at all levels of Russian society, heightens the role of the security services and raises transaction costs. Every other Russian shop or restaurant employs security guards. While the economy was growing, there were plenty of profits to spread around and keep everyone happy, but now that it is shrinking, the rules have become even less clear and the fight for resources has turned more brutal. Property can be taken away regardless of political loyalty, turning owners into temporary holders. + +Take Vladimir Yevtushenkov, the owner of Sistema, a holding company, who is perfectly loyal to the Kremlin. In 2009 Sistema bought a controlling stake in Bashneft, a medium-sized oil firm, from a local authority for $2.5 billion. It had been given explicit approval by Dmitry Medvedev, who was president at the time. But in September 2014 Mr Yevtushenkov was arrested and charged with buying stolen goods. His real crime was reportedly to refuse to sell Bashneft, which had become one of the world’s fastest-growing oil firms, to Rosneft, at a price below its market value. After three months under house arrest, Mr Yevtushenkov was released and cleared of all charges—but not before giving up Bashneft, a contolling stake in which has now been sold to Rosneft for $5.2 billion. The day after he was released, Mr Yevtushenkov (who still owns MTS, Russia’s largest mobile-phone company) went to a drinks party at the Kremlin and spoke to Mr Putin. “I thanked him for his wise decision…to release me,” Mr Yevtushenkov recently told Dozhd, an independent internet television channel. He continued: “If [you] like any of my other companies—[you are] welcome.” + + + +Faced with prolonged economic stagnation, the Kremlin is now trying to stimulate growth by pouring money into the military-industrial sector and into infrastructure projects. Given the level of corruption, though (see chart), the cost of these projects could outweigh their benefits. And in the absence of a thriving private sector, those new roads and bridges may not do much good. + +The main problem with Russian modernisation, says Mr Rogov, is that the new, competitive urban middle class that has emerged as the economy has developed has no place in the current authoritarian model, which is designed for those who depend on the state but cannot compete. + +The prospects for change are not encouraging. As North observed, limited-access orders have been in operation for thousands of years: “No forces inherent in the logic, social structure or historical dynamics of limited-access orders inevitably lead them to become open-access orders. Because natural states have internal forces built on exclusion and rent-creation, they are stable orders…extremely difficult to transform.” Technology does not help because the elites can adopt it selectively, without having to face competition. + +Natalia Zubarevich, a Russian economist and geographer, argues that one of the biggest risks for Russia is not an implosion but a slow economic and intellectual degradation. As long a Russia’s elite sees modernisation as a matter of technology rather than of open access based on the rule of law, Innopolis is likely to remain the smallest town in Russia. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21708876-political-reform-essential-prerequisite-flourishing-economy-milk-without/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Power structures + +Wheels within wheels + +How Mr Putin keeps the country under control + +Oct 22nd 2016 | From the print edition + + + +MYSTERY, MIRACLE AND authority are three powers alone able to hold the conscience of people captive, explains Fyodor Dostoyevsky’s Grand Inquisitor in “The Brothers Karamazov”. Mr Putin has mastered all three. Yet none of these is as important as secrecy, the main tool of a good spy. Nobody really knows what goes on behind the Kremlin’s thick walls, or inside Mr Putin’s head. But several things are becoming clearer. Mr Putin’s rule is turning increasingly personal; a generational shift is taking place within his entourage; and the FSB, the successor organisation to the KGB, is emerging as the main mechanism for exercising power, often at the expense of all other security services, including the police. + +Mr Putin had always relied heavily on his former KGB colleagues, but after the annexation of Crimea the expansion of the FSB gained new momentum and greater public legitimacy. It now openly wields political and economic power. Mr Putin has recently appointed three members of his security detail and one former KGB officer as regional governors. + +After Stalin’s death in 1953, the KGB was a “combat division” of the Communist Party, tightly controlled by its central committee, which did not want to see a repeat of Stalin’s purges. When the party collapsed in 1991 the KGB lost its lustre, but the new rulers never dismantled it. Though the party could not survive without ideology, the KGB could. + +Today the FSB is personally overseen by Mr Putin. “There is no political control over the FSB. It is a self-contained and closed system,” says Andrei Soldatov, an expert on Russia’s security services. Behind the scenes, the FSB controls the Investigative Committee, the Russian equivalent of America’s FBI. The prosecutor’s office, in effect, has no independent oversight of the FSB and the courts take their cue from it. + +On September 18th, the day of the parliamentary elections, Kommersant, an authoritative daily newspaper, reported the Kremlin’s plan to fold other parts of the former KGB, including the foreign intelligence services (SVR) and the Federal Protection Service, which is responsible for guarding top Russian officials, into a new megastructure: the Ministry for State Security, or MGB, which is what the KGB was called under Stalin. The date of the report is telling. The parliament has become an appendix of the FSB. As Tatyana Stanovaya of the Carnegie Moscow Centre notes, the FSB drafts most of the repressive laws that are rubber-stamped by the parliament. + +The FSB is emerging as the main mechanism for exercising power in Russia + +The FSB is a notoriously opaque organisation, but one of its most powerful figures appears to be Sergei Korolev, who used to head the internal-security department that can investigate the staff of all security services, including its own. He has recently been promoted to the job of overseeing all financial and business activity in Russia. His team was behind most of the high-profile arrests of governors, mayors and policemen in recent years. These started with two young generals from the interior ministry, Denis Sugrobov, the head of the ministry’s economic-crime and anti-corruption department, and his deputy, Boris Kolesnikov. Both in their mid-30s, they had been installed in their jobs by Dmitry Medvedev, Russia’s current prime minister and former president, and given carte blanche to go after corrupt senior officials. + +Yet soon afterwards they became victims of a sting operation set up by the FSB. In his prison cell Mr Kolesnikov suffered a head injury and six weeks later, during a formal interrogation, he apparently killed himself by jumping out of a sixth-floor window. Mr Sugrobov remains in jail. + +The public is regularly treated to footage of governors, policemen and officials being led away in handcuffs, their homes being searched and enormous piles of cash being confiscated. The most spectacular arrest so far has been that of Dmitry Zakharchenko, a police colonel who had hidden $120m in cash in his sister’s flat. A few weeks earlier the FSB had raided a vast mansion belonging to Andrei Belyaninov, the head of the customs service and a former KGB officer, and found $670,000 in cash, a one-kilo gold ingot and assorted old-master paintings. Mr Belyaninov was fired from his job but not charged. + +Hardly anyone believes that such raids help the fight against corruption, which remains an organising principle of Russia’s political system, but they go down well with the public. It is said that Mr Putin is using men like Mr Korolev to purge the ranks of the FSB itself and keep its members on their toes and the elites in check. The practice harks back to Stalin, who wielded his power almost exclusively through the NKVD, the KGB’s predecessor, regularly purging the party. + +Mr Putin’s rotation of cadres so far has been much softer. None of the senior people in his entourage has yet lost his freedom or his fortune. Mr Belyaninov has said he is hoping to find another government post. Mr Korolev’s rival has been “exiled” to Rosneft, the mammoth oil company. Every important Russian firm and institution has an FSB officer seconded to it, a practice preserved from Soviet days. + +But as Mr Putin’s personality cult grows, he is severing his connections with the old comrades who remember him as a lowly young KGB officer and bringing in new people who have known him only as president. Many of those who had started with him have already stepped down, including Sergei Ivanov, a long-serving chief of staff and former KGB general, Viktor Ivanov, the former head of an anti-drugs agency, and Evgeny Murov, the trusted (but ageing) head of the Federal Protection Service. Mr Putin has also got rid of some of the old KGB guard who had headed Russia’s largest state-owned corporations. + +Pass it on + +They have been replaced by youngish men who owe their careers entirely to Mr Putin. Mr Putin’s new chief of staff, Anton Vaino, aged 44, is the grandson of a Soviet-era Estonian Communist Party leader and a third-generation bureaucrat. But while civilians have been installed to run the Kremlin apparatus, the children of the old siloviki are moving into key positions in state banks and natural-resource companies. The son of Mr Murov is chairman of the management board of the state-owned Federal Grid Company, Russia’s main electricity supplier. Dmitry Patrushev, the son of the Security Council chief, Nikolai Patrushev, heads the Russian Agricultural Bank, a large state-owned bank. + +One of the communist regime’s key weaknesses was the impossibility of passing on wealth. When old party bosses died, their families were mostly left with nothing. It was also one of the main reasons why many members of the Soviet nomenklatura supported the revolution in 1991. These days Russia’s elite can pass on its possessions to its children, but its wealth and its physical safety depend on Mr Putin. + +Perhaps in an effort at diversification, Mr Putin recently announced the creation of a new security structure, the National Guard. Headed by Viktor Zolotov, who used to be one of Mr Putin’s bodyguards, it has 25,000-40,000 special commandos at its disposal, along with 400,000 troops. These are not part of the regular army of about 930,000 and report directly to Mr Putin. + +The creation of the National Guard is meant to head off the threat of another colour revolution (as the series of peaceful uprisings in former Soviet republics became known), explains Alexander Golts, a Russian military analyst. The scenarios used in its training are based on the protests in Ukraine and involve the use of tear gas and water cannon as well as conventional weapons. One of the lessons the Kremlin learned from the failed coup of August 1991 was that in a political crisis a regular army may be reluctant to use force against protesters. + +As a former bodyguard, Mr Zolotov is responsible for Mr Putin’s personal safety, but also for providing some balance to the powers of the FSB. In a closed political system, trust is low. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21708877-how-mr-putin-keeps-country-under-control-wheels-within-wheels/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Foreign policy + +The fog of wars + +Adventures abroad boost public support at home + +Oct 22nd 2016 | From the print edition + + + +RUSSIA HAS NO intention of going to war with America or its allies. Instead it will act through non-military means “to undermine the general political and strategic potential of major Western powers, to disrupt national self-confidence, to increase social and industrial unrest, to stimulate all forms of disunity…Anti-British talk will be plugged among Americans, anti-American talk among British. Germans will be taught to abhor both Anglo-Saxon powers. Where suspicions exist, they will be fanned; where not, ignited.” So wrote George Kennan, the “wise man” of American diplomacy, in a famous telegram from Moscow in 1946. Seventy years later the telegram seems as relevant as ever, because the system that Kennan described is being rebuilt. + +Russia has launched cyber-attacks, spread disinformation and interfered in the domestic affairs of both neighbouring and faraway countries. Its military jets are buzzing NATO’s ships and flying close to American reconnaissance aircraft in Europe. The American government has formally accused Russia of meddling in the presidential election by means of extensive hacking. In Syria it has subverted America’s efforts to defeat Bashar al-Assad and threatened to shoot down American warplanes if they attack his army. + +The BND, Germany’s foreign-intelligence agency, is investigating Russian activity in Germany after Russia’s state television ran a fake story about a 13-year-old Russian-German girl being raped by Arab immigrants in Berlin. Spread through social media, the story sparked protests against Angela Merkel, the German chancellor. + +Russia has provided funds for the French right-wing party of Marine Le Pen. RT, the Kremlin’s foreign-language propaganda TV channel, has offered a regular spot to Nigel Farage, the former leader of Britain’s far-right UKIP party. Russia’s support for Donald Trump, the Republican presidential candidate, who has also appeared on RT, has become a talking-point in America’s forthcoming election. + +None of this is particularly new. Subversion, disinformation and forgery, combined with the use of special forces, were at the heart of the Soviet Union’s intelligence services. The KGB had a special department responsible for “active measures”, designed to weaken and undermine the West. It stirred racial tension by posting bogus letters from the Ku Klux Klan, planted stories about AIDS having been invented in America as a biological weapon and put it about that John F. Kennedy’s murder was plotted by the CIA. + +Yuri Andropov, the head of the KGB in the 1970s and one of Mr Putin’s heroes, set up special courses to train operatives in the use of active measures. At the height of the cold war 15,000 officers were working on psychological and disinformation warfare. When the Soviet Union collapsed, the department was renamed but never dismantled. + +Modern technology has helped it widen its scope; the Kremlin now uses large numbers of “trolls” that spread disinformation and propaganda through online communities and social media. It also helps Russia to sow confusion by putting out multiple versions of events. According to Alexander Vershbow, NATO’s deputy secretary-general and a former American ambassador to Moscow, it is “an endlessly changing storyline designed to obfuscate and confuse to create the impression that there are no reliable facts, and therefore no truth.” + +This echoes Kennan’s observation in 1946 that “the very disrespect of Russians for objective truth—indeed, their disbelief in its existence—leads them to view all stated facts as instruments for furtherance of one ulterior purpose or another.” Unlike Soviet propaganda, which aimed to promote communist ideology, modern Russian propaganda aims to show that Western policies are as rigged and hypocritical as Russian ones. + +Assessing the effectiveness of these Russian attempts to influence opinion abroad is hard because they often tap into existing sentiments, from disenchantment with elites to resentment of immigrants. But research by Finland’s Institute of International Affairs has found that Russian propaganda has had very little impact on mainstream Western media and has never resulted in any change in policy. A strong and confident West should find it easy to brush off Russian media assaults. But sober political thinkers have noted some signs of a “Putin panic” in the West, and Mr Putin himself has said that America’s attempts to present Russia as an “evil empire” indicates “Russia’s growing influence and significance”. + +In the eyes of his own people, Mr Putin has restored his country’s status to that of the Soviet Union. According to a recent report by the Aleksanteri Institute in Finland, a think-tank, “the West’s response to the Crimea annexation partially did exactly what Putin had demanded: putting forward the notion of Western weakness in the face of Russia’s superior ‘hybrid warfare’ capabilities implies respect and even fear of Russia as a powerful global actor.” + +The country’s intervention in Syria in the autumn of last year was designed to reinforce the image of Russia as a global power. It did change the course of events, saving Bashar al-Assad from a seemingly inevitable fall, and made the humanitarian situation in Syria far worse. But Russia cares little about the future of Syria. It sees the war there as a way of forcing America to recognise a Russian sphere of influence in the former Soviet Union. + +Weakness in strength + +The wars in Ukraine, Georgia and Syria have demonstrated Russia’s willingness and ability to use its military power to achieve political goals. But they are not a sign of Russia’s strength; instead, they indicate deep insecurity. As Kennan wrote: “At [the] bottom of [the] Kremlin’s neurotic view of world affairs is [the] traditional and instinctive Russian sense of insecurity…This thesis provides justification for that increase of the military and police power of the Russian state…Basically this is only the steady advance of uneasy Russian nationalism, a centuries-old movement in which conceptions of offence and defence are inextricably confused.” This nationalism continues to shape Russia’s behaviour today. + +Mr Putin sees Russia’s wars as a form of self-defence, driven by the need to deter the West. That is what he meant when he gathered the country’s elite in the Kremlin’s gilded hall to announce Russia’s “reunification” with Crimea on March 18th 2014. “Like a mirror, the situation in Ukraine reflects what has been happening in the world over the past several decades. Our Western partners, led by the United States of America, prefer not to be guided by international law but by the rule of the gun.” In Ukraine, he said, the West had crossed a red line. Western actions left Russia with no choice but to send its troops into Crimea. + +Yet only a few days earlier Mr Putin had told the German chancellor, Angela Merkel, that there were no Russian troops in Crimea. “He lives in another world,” she was reported to have said to Barack Obama. In his world the West was trying to undermine Russia. The colour revolutions across the former Soviet Union and the protests in Russia in the winter of 2011-12 were Western plots. + +Yet his view of the West as a threat was not, as many have argued, his starting position; it developed in response to changes inside Russia and the former Soviet republics. When Mr Putin became president in 2000, he showed no overt hostility towards America or the West, despite a recent NATO bombing raid on Belgrade without a UN resolution that had triggered a shrill anti-American response. In his first interview with Britain’s BBC, Mr Putin said: “I cannot imagine my own country in isolation from Europe, so it is hard for me to visualise NATO as an enemy.” Russia, he said, might become a member of NATO if it were treated as an equal partner. Even when the three Baltic states joined NATO in spring 2004, Mr Putin insisted that relations with the defence organisation were “developing positively” and he had “no concerns about the expansion of NATO”. + +The breaking-point in Mr Putin’s relationship with the West came towards the end of that year when several seemingly unrelated events coincided. The first was a terrorist attack on a school in Beslan, in the north Causasus, in which 1,200 people, mostly children, were taken hostage. After Russia’s special forces stormed the school, leaving 333 people dead, Mr Putin accused the West of trying to undermine Russia. He cancelled regional elections and handed more powers to the security services. + +The next key event was the dismemberment and expropriation of the Yukos oil firm, which further emboldened and enriched the siloviki with roots in the Soviet KGB. They thrived on the idea of a Western conspiracy and an exaggerated sense of the West as an enemy. + +The call of liberty + +Just such an enemy was provided by the Orange revolution in Ukraine in 2004-05, a popular uprising against rigged presidential elections in which Mr Putin had backed Viktor Yanukovych, a corrupt thug. His defeat at that time (he was elected later) was seen as a humiliation for the Kremlin and an ominous sign of American meddling, underlined by George W. Bush’s praise for democracy in Georgia and Ukraine and his comment that “eventually the call of liberty comes to every mind and every soul.” Mr Putin saw Georgia’s successful reforms and its determination to break out of the post-Soviet system and move towards the West as a threat, in the same way as the Soviet Union had felt threatened by liberal reforms in Czechoslovakia in 1968. And just as the Kremlin had responded by ordering tanks into Prague to stop the reforms spreading to the Soviet Union, so Russia sent its tanks and planes into Georgia in August 2008. Immediately after that war Mr Putin ordered a thorough modernisation of the Russian armed forces. + +America chose to follow the war in Georgia with a “reset” initiated by the new Democratic president, Mr Obama, and his secretary of state, Hillary Clinton. But when protests broke out in 2011-12 Mr Putin accused Mrs Clinton of spurring protesters on: “She set the tone for some actors in our country and gave them a signal…They heard the signal and with the support of the US State Department began active work.” As Ms Hill and Mr Gaddy wrote, “America and Europe encourage political and economic change as a matter of course in their foreign policies. The essence of Western political systems extends to promoting democracy and liberal markets abroad.” But whereas Western governments see such efforts as benign, Mr Putin considers them a danger, they continue: “Western-style democracy and open markets are a clear threat to a Russian political system that thrives as a closed one-body network and an economic protection racket.” In Russia’s new military doctrine, signed by Mr Putin at the end of 2014, popular uprisings against an oppressive regime were classified as a military aggression which warrants a military response. + +In January 2013 Valery Gerasimov, then newly appointed as chief of staff, had spoken about a new type of warfare that Russia had to face. “The emphasis in methods of struggle is shifting towards widespread use of political, economic, informational, humanitarian and other non-military measures…Overt use of force, often under the guise of peacekeeping and crisis management, occurs only at a certain stage, primarily to achieve definitive success in the conflict.” The revolution in Kiev in the winter of 2013-14 which overthrew Viktor Yanukovych was perceived by the Kremlin as an escalation of hostilities by “hybrid means”. + +Russia’s heavy propaganda campaign which portrayed Ukraine’s post-revolutionary government as fascists paved the way for its own special forces in Crimea, allowing them to stage a coup, overthrow the legitimate government and appoint its placemen who quickly called an unconstitutional referendum on joining Russia. In Mr Putin’s mind, Russia’s actions in Crimea and eastern Ukraine merely mirrored Western “hybrid” tactics, including special forces, disinformation and mobilisation of the protest potential of the local people. The annexation of Crimea was bloodless. + +In eastern Ukraine the task was different. It was not to annex territory but to spark a conflict that would undermine Ukraine’s territorial integrity and its chances of moving towards the West. Whereas in Crimea Russia relied on a disenchanted population nostalgic for the Soviet era, in Donbas it was supported by the core of Mr Yanukovych’s voters who considered the government in Kiev illegal. But Russia’s operations in both Crimea and eastern Ukraine were limited in scale and depended on a power vacuum in Kiev. As Alexander Nevzorov, a Russian journalist, wrote, “Crimea was taken not from a strong, rich and brave country but from a wounded, bleeding and motionless one.” + +Samuel Charap of the International Institute for Strategic Studies notes that if Russia had attempted to deploy its “little green men” (soldiers in unmarked green uniforms) in Western Ukraine, for example, “they would have likely been hanging from the lamp-posts, not leading an armed insurgency.” Even in Donbas, Russia had to use its conventional military force to stop the Ukrainian army from defeating the Russian-armed rebels. Russia’s Ukraine operation, therefore, should not be seen as a template for a potential conflict with NATO, Mr Charap argues. + +Belarus, another Slavic, Russian-speaking country that was one of the founding members of the Soviet Union, could also be a target. It is ruled by Alexander Lukashenko, often called the last dictator in Europe, and so far Russia has kept him going with its gas subsidies. But should the Kremlin sense that Mr Lukashenko’s grip is weakening or that he is turning towards the West, it could easily stage a coup and take the place over. + +The perception of Russia’s military advantage rests on two main elements, argues Alexander Golts, a Russian military analyst. One is unpredictability and surprise, because Mr Putin is not constrained by any formal institutions or by his own team. The other is Russia’s ability quickly to deploy well-trained, disciplined and equipped troops, thanks to the modernisation of its forces enabled by a 30% increase in spending in real terms since 2008. Russia has about 80,000 elite troops that can be sent into battle within hours. + +Russia’s conventional military expansion is limited by its demography. According to its own estimates, this year it will be able to increase its forces by only 10,000 men, barely enough for one division. It also needs to be careful to minimise casualties, which go down badly with a population that sees war as a television show. The number of people who supported Russia’s military invasion in Ukraine declined from 47% in June 2014 to 25% a year later, according to the Levada Centre. + +The nuclear option + +Russia’s military-industrial complex is unable to produce anything close to Soviet volumes of hardware. But the country’s relative economic and military weakness compared with NATO does not make the country any safer; on the contrary, it poses a big risk. The only way Russia can compensate for the gaps in its conventional forces is to invoke the threat of a nuclear strike. After the annexation of Crimea Mr Putin said he had been ready to use nuclear arms to defend his country’s “historic territory”. And after Russia showed off its long-range cruise missiles in Syria, Mr Putin said that it was prepared to use its powerful weapons if its national interests were infringed upon, implying that those missiles might one day carry nuclear warheads. America’s “impudent behaviour” would have “nuclear consequences”, said one of Mr Putin’s chief propagandists. + + + +After Stalin’s death the Soviet Union was ruled by a generation of leaders who, having emerged as victors from the second world war, were naturally averse to another big war and genuinely fearful of the use of nuclear arms. They were also restrained by the collective power of the Politburo, which had ousted Nikita Khrushchev soon after he dragged the Soviet Union into the Cuban missile crisis. + +Mr Putin, on the other hand, is bound by few constraints and has no particular aversion to war. His initial popularity as president rested on the war he had waged against Chechnya in 1999, and his sagging ratings were restored by the war in Ukraine. + +Yet Mr Putin would not unleash a war for ideological reasons. He will continue to present his actions as defensive. What he is ultimately after is a new pact along the lines of the Yalta agreement after the second world war which would create a buffer zone between Russia and the West. In the absence of such a deal, Mr Putin will continue to confront his perceived enemies by both non-military and military means. Western sanctions only reinforce his determination. + +Mr Putin has no plans to conquer the world. He may be impervious to logic or reason, but he is highly sensitive to force. He knows he cannot afford a conventional war with the West, but he could quickly raise the stakes to the verge of a nuclear war, believing that the other side would always blink first. Over the past 16 years the West has done little to persuade him otherwise. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21708880-adventures-abroad-boost-public-support-home-fog-wars/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Modern life + +Tell me about Joan of Arc + +Young people are finding new ways of signalling dissent + +Oct 22nd 2016 | From the print edition + +A thirst for knowledge + +“THE TEN BEST Patisseries in St Petersburg”, “12 Crazy Photographs of Famous Sites”, “A South Korean Erotic Thriller”. These are just some of the main headlines colourfully displayed on the Russian news site Bumaga (Paper). “We modelled it on Vox and the Boston Globe,” says Anna Kosinskaya, its co-founder and editor. Bumaga is totally independent. When it started four years ago, it had no funding. Now it makes money from advertising. + +Ms Kosinskaya, red-haired and open-faced, is 26, just one year older than post-Soviet Russia. She spends her time in a part of St Petersburg well supplied with cool lofts, funky bars and gastropubs. Though not rich, she has travelled the world. Her generation of educated, urban young Russians has very little in common with the cowed Homo sovieticus who still abounds. In 2011 they took to the streets to protest against rigged parliamentary elections. For Ms Kosinskaya this was the first election in which she was able to vote. She would not accept the standard practice of rigging, not because she had a particular preference for any party, but because she thought it was disrespectful and wrong. + +Ms Kosinskaya was ten when Vladimir Putin became Russia’s president. “I liked him. He was young and energetic,” she says. Her lifestyle owed much to the economic growth over which Mr Putin presided. But gradually she became disillusioned both by the president and by Russia’s general political direction, and in the winter of 2011 she had to watch her friends being bundled into police vans for trying to uphold the law. The demands of Ms Kosinskaya and her friends echoed the slogan of the Soviet human-rights activists: “State, respect your own laws.” + +Watch the graffiti + + + +Five years on, last month’s parliamentary elections passed without incident. Alexei Navalny, one of the leaders of the 2011 protests, says people have lost interest in politics. Many of his former supporters switched sides following Russia’s annexation of Crimea. Street artists who were drawing anti-Kremlin graffiti five years ago have switched to anti-American themes. One drawing shows a fish with blue stripes and red stars inside a blender in the colours of the Russian flag. + +But many young, liberal Russians feel frustrated. “We live with the feeling that something really important did not happen in our lives,” says Phillip Dziadko, a former editor of Bolshoi Gorod, a Moscow magazine which five years ago was the flag-carrier of the protest movement. Its owners have since closed it down. “Many of my friends feel as though we have gone into internal exile,” says Ms Kosinskaya. + +Until recently young Russians did not see themselves as part of the intelligentsia. “This was something rather archaic for us; people who talked a lot and did very little,” says Ms Kosinskaya. But now the survival strategies developed by their parents’ generation, particularly their ability to carve out niches where they could apply their skills and knowledge, have become relevant to younger people too. + +One of the most popular authors among the new generation is Sergei Dovlatov, a Soviet writer from the 1970s. He emigrated to America where he died in 1990. In his prose he cultivated self-irony and sought privacy and autonomy from the Soviet state. In the words of a friend, Joseph Brodsky, Dovlatov “belonged to that generation which took the idea of individualism and the principle of autonomy of human existence more seriously than anyone, anywhere.” On September 3rd this year thousands of people in St Petersburg celebrated what would have been Dovlatov’s 75th birthday and unveiled a privately financed statue of him. + +Say it with culture + +Although the state today suppresses independent civil and political activity, it allows a lot more personal freedom than it did in 1979 when Dovlatov left. Since the mainstream media are mostly pumping out government propaganda, Russia’s modern intellectuals have got involved in cultural projects. Public lectures by notable scholars, both Russian and foreign, on subjects from urbanism to artificial intelligence gather mass audiences. Tickets to such talks sell out within hours. Every night dozens of events take place in Moscow and other cities. Book fairs attract queues to rival those for pop concerts. A new shopping centre in Yekaterinburg, in the Urals, has organised a book round-table as one of its opening events. + +Public lectures, intellectual discussions and excursions have evolved into a business. “Ten years ago, to raise money from investors, you needed to say only one word: ‘media’. Today all you have to say is ‘education’,” says Yuri Saprykin, a former editor of Afisha, a listings magazine that helped shape the tastes of the urban middle class. The trend started a few years ago when a site called “Theory and practice” began to provide a wide variety of courses and lectures. The young are wild about classical music and art museums. “If you are not learning something outside your work, you are a loser,” says Ms Kosinskaya. + +Mr Dziadko, the grandson of Soviet dissidents and human-rights activists, and a group of friends have launched a popular multimedia education and entertainment project called Arzamas, a name borrowed from a 19th-century literary society of which Pushkin was a member. The subjects range from Elizabethan theatre and medieval French history to the anthropology of communism and the mythology of South Africa. A few months ago Arzamas organised an evening lecture about Joan of Arc, including a recital of medieval music, at Moscow’s main library. “We thought it would be attended by a few intellectuals. But when we turned up 15 minutes before the lecture, we saw a long queue of young people and hipsters trying to get in,” says Mr Dziadko. + +The boom in “enlightenment” projects is not so much a reversal of the rise of consumerism in the previous decade but a complement to it. Just as Russian people were suddenly presented with a vast choice of consumer goods, they now have a large array of intellectual pursuits to choose from. And whereas Russia’s government can impose a ban on imports of Western food, barring the spread of knowledge is much harder. + +The main producers and consumers of these enlightenment projects are young Westernised Russians who are part of a global culture. Their pursuit of a wide range of knowledge is a way of fighting the isolationism and aggressive obscurantism imposed by both state and church. This takes many forms, from banning modern-art shows to organising anti-gay campaigns, promoting anti-Darwinism and attempting to stop abortions. + +Popular books about biology and physics currently sell better than detective stories. Yulia Shakhnovskaya, the director of the Moscow Polytechnic Museum, where Evgeny Yevtushenko read his poetry in the 1960s, says that education and science have become a form of resistance to politics. “We can’t win but that does not mean we should stop resisting, so we try to grow a garden in the middle of hell.” She says her main target audience is teenage schoolchildren, who are desperate for knowledge: “Good marks are no longer the main prerequisite for getting a good job in Russia…but the demand for knowledge is still there, so we try to satisfy it by other means.” + +Ms Shakhnovskaya’s patrons include Igor Shuvalov, the first deputy prime minister in charge of the economy, and Anatoly Chubais, the father of Russia’s privatisation programme. They are helping to promote an educated and emancipated elite that could gradually begin to change the system, which is what happened in the 1980s. + +For now at least, the educated urban class does not pose a serious political threat to Mr Putin. But it represents a different and more fundamental challenge that has to do with values and ideas. Some of the most striking independent public-lecture projects recently launched had titles such as “The return of ethics” and “Public lies”, involving both Western and Russian philosophers, economists, sociologists and writers. + +This new generation of educated young urbanites has criticised Russian politicians and opinion-formers of the 1990s and 2000s for viewing human-rights abuses and the lack of independent courts as unfortunate impediments to business and foreign investment, rather than bad things in themselves. Yet “despite the total amorality of politicians and bureaucrats, or maybe because of it, the demand for ethics in the public sphere is growing, not falling,” says Andrei Babitsky, a former editor of the Inliberty website that organised the lectures on ethics and lies. The power of ideas should never be underestimated, especially in Russia. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21708882-young-people-are-finding-new-ways-signalling-dissent-tell-me-about-joan-arc/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Past and future + +Take care of Russia + +But Mr Putin is not setting about it in the best way + +Oct 22nd 2016 | From the print edition + +WHEN BORIS YELTSIN walked out of his office for the last time, at the end of 1999, he famously told Mr Putin: “Beregite Rossiyu!”, which translates as “take care of Russia” or “preserve Russia”. But what did he mean by “Russia”? Was it a new country born from the 1991 revolution, or was it an old Russia restored after the Soviet regime? Unlike other Soviet republics, it could not celebrate its independence from the Soviet Union because it had been its core. Nor could it hitch its wagon to the European Union and NATO—it was simply too big. + +Russia’s freedom in the 1990s had been sustained not by the institutions of an enlightened state but by a plurality of economic and political actors, the weakness of the security services and Yeltsin’s determination to defend it. His legitimacy and support rested largely on the Russian people’s rejection of the communist system that produced plenty of missiles and tanks but little that anyone wanted to consume. + +When they rejected communism in the 1990s, Yeltsin and his colleagues portrayed Russia not as a new nation state but as an heir to its pre-Bolshevik self, borrowing many of its symbols, including its flag. They depicted the Soviet period as an anomaly that had interrupted the course of Russian history. But they could not come up with a clear identity and a destination for the new post-Soviet Russia. + +The 1991 revolution had been largely bloodless because the old nomenklatura retained its economic and often its political power. (Yeltsin himself was a former Communist Party boss.) It did not and could not bring in a new elite because after 74 years of Soviet rule there was none. And although the oligarchs who in the 1990s took over the commanding heights of the Russian economy and the media had all the appearance of an elite, they lacked any sense of responsibility for their country. + +It was partly the failures and in-fighting of that Westernised ruling class that prompted Yeltsin to pick Mr Putin as his successor in 2000. By that time the Russian economy was starting to benefit from the transition to a market economy, complete with coffee shops and the first IKEA superstore. + +An opinion poll in 2000 found that 55% of the population expected Mr Putin to return Russia to the status of a great and respected country + +Mr Putin was neither a liberal nor a Stalinist. His manifesto, published on the eve of the new millennium, was all about the value to the Russian people of a strong, centralised state. An opinion poll in January 2000 found that 55% of the population expected Mr Putin to return Russia to the status of a great and respected derzhava, which most Russians equate with “fear of their country”. Only 8% thought he would bring Russia closer to the West. Today half the population reckons that Mr Putin has indeed restored Russia’s position as a great power. + +Mr Putin took the next logical step: he incorporated the Soviet period into the historical continuum of Russian statehood. Soon after coming to power he ordered the restoration of the Soviet anthem, which had been abolished when the Soviet Union collapsed. New lyrics were set to the music originally composed in 1938, at the height of Stalin’s terror. While Russian liberals cringed, most people saw it as a fairly harmless symbolic gesture to placate ageing Communist Party voters. After a decade of freedom under Yeltsin it seemed impossible that Russia would lapse back into Stalinism. + +In a press conference in 2004 Mr Putin said: “Despite all the difficulties, we managed to preserve the nucleus of that giant, the Soviet Union. And we called this new country the Russian Federation.” He was not interested in its communist ideology or its hopeless central planning system. What mattered to him was the state, which had served the Russian empire and the Soviet Union equally well. + +Alexander Yakovlev, the author of Gorbachev’s reforms, understood the challenge better than anyone else. In 1985 he had written to Gorbachev: “For a thousand years we have been ruled by people and not by laws…What we are talking about is not the dismantling of Stalinism but a replacement of a 1,000-year old model of statehood.” That model was never properly dismantled, and Mr Putin set about restoring it. According to Andrei Illarionov, his adviser until 2005, Mr Putin was haunted by fears of disintegration and saw the 1990s as a period not of freedom and stabilisation but of chaos. + +In trying to preserve the nucleus of an old empire, Mr Putin eliminated all alternative power centres. He stopped direct regional elections, standardised legislation across the whole of Russia and appointed his own representatives to the regions. He thus destroyed the principle of federalism, which had kept Russia together and politically stable throughout the economic upheavals of the 1990s. Like many of his predecessors, including Stalin, Mr Putin believed, and still believes, that a country of Russia’s size and ethnic complexity can be kept together only by centralising economic resources and political power, and that the security services are the best tool for achieving that. + +Yet Moscow, St Petersburg and even Kazan are modern European cities. They have little in common with Chechnya, a tyrannical state where elements of sharia law have been reintroduced. They also have little in common with Russia’s grim, small towns in the hinterland which form the core of Mr Putin’s electorate. The only way in which these differences can be peacefully reconciled is through decentralisation and political competition. Rather than being run as a centralised state, Russia would work much better as a federation in which each region can develop in its own way. This idea of Russia as a “united states” was first voiced by the Decembrists, a group of aristocratic revolutionaries who led an unsuccessful uprising in 1825. + +To head off such notions, Mr Putin needed a unifying narrative about the past. The only one available was the Soviet victory in the second world war, which he presented as an exemplar of state power rather than a triumph of human values achieved by all allies. The sanctification of that victory, and Stalin’s role in it, has become the main ideological foundation of Mr Putin’s velvet Stalinism, disguised as patriotism—an old mix of Russian Orthodoxy, state nationalism and autocracy. + +Stalin regilded + +As a victor in the second world war, Russia was never forced to reject Stalinism in the way that Germany was forced to reject Nazism, even though the two regimes had much in common. In an insult to the millions of Stalin’s victims, the Kremlin has recently called Memorial, a long-established human-rights organisation set up to draw attention to the crimes of Stalin’s regime, a “foreign agent”—a synonym for “traitor”. + +“Putinism”, writes Mr Gudkov of the Levada Centre, “is a modified version of a repressive and centralised state system which imitates the Soviet style of a totalitarian regime.” But for all his faults, Mr Putin is not a bloodthirsty tyrant. Although he has resorted to coercion and selective violence, both at home and abroad, he is neither willing nor able to reproduce the economic foundation of Stalin’s regime or impose a reign of terror. His system uses more subtle methods of control and manipulation such as rigging elections, demoralising or co-opting the liberal opposition and, most important, deploying television as a propaganda tool. + +Old injuries + +The reason Russia’s current nationalistic, anti-American propaganda is so much more effective than the Soviet version is that people choose to believe it. It plays to their feelings of jealousy, resentment and victimisation. As Mr Gudkov notes, television propaganda exploits the syndrome of “learned helplessness”—a psychological condition where people who have been repeatedly abused give up control and start believing that “nothing depends on us”. Having a mighty enemy, such as America, helps alleviate their feelings of failure and weakness. Russia’s anti-Americanism is based not on any real interaction between the two countries but on Russia’s domestic failures. America’s perceived aggression allows Mr Putin to present himself as the leader of a country at war. + +The extraordinary support for Mr Putin (82%) as a head of state who stands up to this American aggression contrasts starkly with the deep contempt people feel for the power elite generally, whom they see as corrupt, amoral and callous. They applaud the annexation of Crimea but do not want to accept any responsibility for it. Like most other people, Russians on the whole have little interest in the outside world. They care far more about their families and their jobs than they do about foreign adventures. They have no wish to go to war. + +Russia’s perceived resurgence is not a sign of strength but of deep weakness and insecurity. Its anachronistic state cannot deal with modern challenges, resolve contradictions and injustices or offer any vision of a common future. Russia’s regional diversity, its growing inequality and the contrast between the urban middle classes and the paternalistic periphery will remain causes of tension. + +As Dominic Lieven, a British historian of the Russian empire, has observed: “For most of Russian history…aggression was the same thing as survival. In the 20th century Tsarist and Soviet Russia smashed itself to pieces by competition first with the Germanic bloc in central Europe and then with Anglo-Americans. The limited recovery of Russian power under Mr Putin cannot hide the fact that Russia is weaker than it has been in the last 300 years.” + +Mr Putin knows he has a problem and is looking for ways to change the system while retaining personal power and dealing with the problems of elections and legitimacy. He may promote himself as a new national leader, a Russian late-period Deng Xiaoping. That would allow him to combine confrontation with the West with some degree of economic liberalisation (he has recently appointed Sergei Kiriyenko, a liberal of the late 1990s, as his deputy chief of staff). But Russia is not China. And Mr Putin will be aware that, as de Tocqueville said, the most dangerous moment for a bad government is when it begins to reform. + +The Russian empire had been overdue for transformation back in 1914, but Tsar Nicholas II’s insistence on ruling like a 17th-century absolute monarch made it impossible. In the 1930s Stalin managed to hold the empire together by extreme violence. After the Soviet Union finally expired in 1991, the new regime gave federalism a chance for a decade. But since Mr Putin has been in charge, he has been trying to hold Russia together with the same anachronistic methods that had pushed his country into decline and political upheaval at earlier points in its history. Unless Russia can complete the transformation into a modern nation state that began in 1991, what Mr Putin tries to present as his country’s resurgence may in fact be one of the last phases of its decline. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21708881-mr-putin-not-setting-about-it-best-way-take-care-russia/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Business + + + +Elon Musk’s empire: Countdown [Fri, 21 Oct 02:42] + +Media models: Channelling Trump [Fri, 21 Oct 02:42] + +Biotechnology: The trials of Juno [Fri, 21 Oct 02:42] + +Retailing: Push my buttons [Fri, 21 Oct 02:42] + +African airlines: Well-connected [Fri, 21 Oct 02:42] + +Indian furniture makers: Turning the tables [Fri, 21 Oct 02:42] + +Schumpeter: Techno wars [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Elon Musk’s empire + +Countdown + +The entrepreneur’s finances are as jaw-dropping, inventive and combustible as his space rockets + +Oct 22nd 2016 | NEW YORK | From the print edition + + + +LIKE most technology tycoons, Elon Musk exudes disdain for finance. Convertible bonds and lease accounting are problems for Wall Street, while the visionaries in California focus on driverless cars and space travel. Yet while he might be loth to admit it, Mr Musk has become America’s most audacious corporate financier as well as its best-known entrepreneur. In just over a decade he has created an empire valued at a cool $44 billion despite its heavy losses (see chart). A blend of financial laboratory, corporate labyrinth and buttock-clenching thrill ride, Musk Inc has pushed the boundary of what was thought possible. + + + +As has been the case for a decade, Mr Musk’s businesses face a difficult struggle to sustain their market valuations over the next 18 months, and to bolster confidence he is expected to unveil new financial measures and also new products over the next few weeks. Mr Musk has repeatedly defied the odds. But the stakes have got bigger now that shareholders, creditors and counterparties have tens of billions of dollars at risk. Tesla, an electric-car manufacturer, must ramp up production quickly and also meet the threat from new electric models designed by traditional car firms. Mr Musk wants to merge two of his firms, Tesla and SolarCity, a company which installs rooftop solar panels. Both firms burn up cash. He already has a place in American business history, but whether as a cautionary or inspiring tale will soon become clear. + +As a child growing up in South Africa, Mr Musk would enter trances in which he could imagine complex computer systems. His business can be visualised as having four parts (see diagram). The biggest one is Tesla, which is publicly listed. SpaceX launches rockets for government and commercial clients and is financed by private investors. SolarCity is listed and struggling, so Tesla is trying to buy it in a backdoor bail-out. Lastly there is Mr Musk’s personal balance-sheet. It is rich in assets—his stakes in the firms are worth $13 billion—but he has little cash on hand. + + + +In total Musk Inc has perhaps $8 billion of sales, and is set to burn $2.3 billion of cash during 2016. Its structure developed in a haphazard fashion. It includes both public and private firms, reflecting the fact that Tesla and SolarCity floated before the craze for so-called unicorns, or technology firms such as Uber that rely on private investors. Musk Inc also carries echoes of Asian and Italian business federations, which pool resources and people: SolarCity uses batteries made by Tesla, for example, and SpaceX has made loans to SolarCity. Mr Musk is the chairman of all three firms, which share some directors. His cousins manage SolarCity. Fidelity, a big asset manager, owns large stakes in each of the trio. + +Mr Musk dreams of populating Mars and of hyperloops that transport people in pods between Los Angeles and San Francisco in 35 minutes. But his financial objectives are probably identical to those of carpet or chewing-gum tycoons: to raise cash, to get a high valuation and to keep control. + +Consider the ways in which Mr Musk drums up cash, first of all. He has raised an epic $6 billion of equity from investors, staff and even from Tesla’s competitors (for a while, Toyota and Daimler owned stakes in the carmaker). Musk Inc also owes about $6 billion of debt to bond investors and banks. But what sets it apart is the $7 billion of cash and revenue that it has squeezed from unconventional sources. That includes deposits from customers before their cars are delivered; asset-backed securities and special-purpose funding vehicles that raise funds against assets without guarantees from Mr Musk’s firms; emissions credits, loans from the government and deals under which leasing firms purchase cars in return for a guarantee that Tesla will buy them back. (Mr Musk’s firms dispute our total figure on their unconventional sources of funds). + +It’s lonely out in space + +The second goal, a high valuation, is vital to command confidence and for raising cash. The business itself is volatile—in April, 400,000 people pre-ordered Tesla’s $35,000 new car, the Model-3, a welcome surprise. In September one of SpaceX’s rockets exploded. So the key is to control perceptions of the distant future, in order to influence financial forecasts from banks and investors. Here Mr Musk is dazzlingly skilful. He publishes plausible “master plans” and uses shifting targets to anchor expectations. For example, in May he said Tesla would make 500,000 cars a year by 2018, ahead of his previous target of 2020. It will make only about 85,000 this year. + +The result is spectacular: the average of investment-bank analysts’ projections says that Tesla’s revenues will soar from $7 billion to about $30 billion by 2020, following a path like those of three of history’s most successful firms, Google, Apple and Amazon, at their raciest point, in the mid-2000s. Only about a fifth of these cumulative sales are from existing customer orders, yet these medium-term bank forecasts, upon which the edifice partly rests, are stable despite operational wobbles. Incredulous short-sellers have queued up to bet against SolarCity and Tesla. But the Musk empire also has plenty of fans in Silicon Valley and on Wall Street. + +The last objective, control, is key to Mr Musk, who in 2000 was ousted as the boss of PayPal, an internet-payments firm he co-founded. He owns about 50% of SpaceX, but his shareholdings in Tesla (23%) and SolarCity (22%) are near the threshold where control is no longer guaranteed. + +To keep all these balls in the air, the firms must meet their targets. SpaceX generates cash and has an impressive order book, but must recover from the explosion in September. SolarCity needs to cut costs. Tesla must ramp up production of its Model X and Model 3 cars, and compete with rival electric cars to be launched by General Motors, Daimler and Audi, among others. + +If the firms fall behind, a cash crunch becomes likely. Mr Musk’s companies insist they will not burn up much more money. But they could easily eat up $4.5 billion, starting from the second half of 2016 to the end of 2018. They will also need to refinance $2 billion of maturing debt. Against this, the Musk group has about $5 billion of cash and liquidity lines from banks. Mr Musk’s own finances look stretched. He has spent most of the $180m in cash from selling his stake in PayPal to eBay in 2002. He has personally borrowed $490m, secured against his Tesla shares, and most of that comes from Morgan Stanley, a Tesla underwriter. The car firm’s shares would have to fall by more than half before the loans went underwater. + +In the event of a squeeze, the triple objectives of raising cash, boosting the valuation and keeping control will start to conflict. The proposed SolarCity acquisition illustrates this: by getting Tesla to buy the struggling SolarCity, Mr Musk can keep it alive and maintain control. But it could hurt the valuation of Tesla, which will be lumbered with its sister firm’s debt and losses. To his credit, Mr Musk has said that the independent shareholders of both firms must approve the deal. + +Similarly, if Tesla were to try to ease the financial pressure by raising lots of equity, Mr Musk’s stake could drop below 20%, threatening his control. He could issue non-voting shares—as Facebook has—or invoke the poison-pill provisions Tesla has in its statutes. But that might hurt the group’s valuation. He could try to sell Tesla to a car or technology firm (Google almost bought it in 2013), or SpaceX, through gritted teeth, to a defence firm. But their punchy valuations mean that they would be a mouthful for even giants such as General Motors or Lockheed Martin, a defence group. + +Given all this, it is likely that in the coming weeks Mr Musk will adopt a more familiar approach: squeezing costs in the short term, dreaming up new products and explaining how lean manufacturing techniques will allow his companies to revolutionise their industries. But with expectations already sky-high, it is hard to see how much more euphoria he can inspire. Mr Musk’s most extraordinary creation may not be cars or spacecraft, but a business empire with a financial structure that works only if risky companies perform perfectly on ambitious plans. Mr Musk is like an astronaut orbiting the earth with no easy way down. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21709061-entrepreneurs-finances-are-jaw-dropping-inventive-and-combustible-his-space/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Media models + +Channelling Trump + +The candidate’s fan base has what it takes to support a new TV service + +Oct 22nd 2016 | NEW YORK | From the print edition + +Hot property + +AS HIS chances of making it to the White House have narrowed in recent weeks, another avenue has opened for Donald Trump. The notion that he might start his own media network has been the subject of speculation for months. Now industry executives are discussing the possibility in some detail. + +In September the Republican candidate’s son-in-law, Jared Kushner, owner of the New York Observer, asked his friend Aryeh Bourkoff, a banker who has been a dealmaker in the media industry, for advice. (A spokeswoman for Mr Bourkoff said he personally had no interest in such a project). Mr Trump himself has denied any intention to start a network. But a look at the numbers suggests that Trump TV could be a success, media folk say—far from a juggernaut like Fox News, which has revenues of more than $2 billion a year, but lucrative nonetheless. + +Such a product would have a good shot at going mainstream because Mr Trump could sell it directly to consumers over the internet, as a subscription streaming service. The Trump brand may now be too toxic for a publicly-owned media company to go into business with him. “I would suspect there would be internal protests from women, Muslims and Hispanics and probably many others as well,” says Jeff Gaspin, former chairman of NBC Universal Television Entertainment (the company that made Mr Trump a reality-TV star with “The Apprentice”). An internet-only service would solve that problem. And industry analysts argue that his recent stepping up of attacks on the media and on Hillary Clinton for allegedly “rigging” the election have stoked the passions of his strong supporters—which could help turn more into Trump TV subscribers. + +The business model could well look like former Fox News personality Glenn Beck’s subscription streaming network, which shortly after its launch in 2011 claimed 300,000 subscribers, each paying $9.95 a month (though it has since sputtered). Mr Gaspin, who has helped launch similar subscription services in the past, reckons that Mr Trump, with his committed fan base, a social-media following of 24m on Twitter and Facebook, and his talent and energy for self-promotion, could quickly attract 250,000 to 500,000 subscribers. At $100 a year each that would equate to $25m to $50m in revenue, on perhaps $7m to $8m in production costs. + +The programming could be bare-bones—a few hours a day, with cheaply paid on-air talking heads spewing rage on Trumpian themes like trade and immigration—as long as it includes a good dose of Mr Trump. “You only need a half-hour of him a day,” says Mr Gaspin. “It really doesn’t take that much to keep a fan base satisfied.” + +An online-only Trump TV could start very soon after November 8th if he were to buy and rebrand an existing streaming service (starting a new one could take months, losing him valuable time). Building a full-fledged cable channel, by contrast, would be far harder. The conservative media standard-bearer, Fox News, is the highest-rated cable news channel, and the most profitable. But for significant revenues a channel has to get ratings. Mr Trump can obviously help with that—the Trump effect has boosted viewers for all news channels. But a cable network still would cost tens of millions of dollars upfront. Mr Trump may not be willing to risk so much of his own cash. + +For any TV venture Mr Trump will be able to look to friends who know how to profit from conservative outrage. Roger Ailes, who built up Fox News, left the channel in July after sexual harassment allegations. He is barred from working at a competitor, but has been advising Mr Trump on his candidacy (though the two men are reportedly not speaking at the moment). Stephen Bannon, boss of Breitbart News, a reactionary news website, is the billionaire’s campaign chief executive. This week, ahead of the third presidential debate, Mr Bannon fanned expectations when he answered pointed questions about Trump TV by saying, simply, that “Trump is an entrepreneur.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21709071-candidates-fan-base-has-what-it-takes-support-new-tv-service-channelling-trump/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Biotechnology + +The trials of Juno + +A young biotech firm focused on cancer promises both risk and reward + +Oct 22nd 2016 | From the print edition + + + +IN THE pharma business, Juno Therapeutics, a small firm based in Seattle, is just a stripling. It is three years old, has not a single drug approval to its name but is nonetheless valued at $2.8 billion. That value is derived from the fact that it is on the forefront of the most promising area of cancer treatments in decades: immuno-oncology. + +Juno’s edge comes from its attempts to master one of the most important parts of the immune system: the T-cell. It is developing a so-called CAR-T therapy, in which its scientists extract T-cells from a cancer patient, modify them with gene therapy so that they can recognise cancer cells, and then put them back in the patient’s body ready to attack. The process has a reputation for inducing rapid remissions in cancers of the blood for patients who have exhausted all other options. + +Small, innovative biotech firms such as Juno are intriguing because nowadays they are the main engine of global drug innovation. Alexis Borisy, a partner in Third Rock Ventures, a venture-capital firm in Boston, notes that pharma companies now buy in three-quarters of their pipelines, and develop only a quarter internally. Big companies eye the little ones hungrily as their main source of future growth. + +Juno is not the only biotech firm pursuing its particular technology. Kite Pharmaceuticals, based in California, is one rival. The giant Novartis is also investing. But Juno has stood out. Mark Simon, a partner at Torreya Partners, a consultancy, says that is because it is well run and has, so far, “some very positive, provocative data from the treatment of a number of tumours”. If CAR-T can move beyond its current niche into cancer more broadly the firm could help revolutionise its treatment. + +It has a full line-up of experienced researchers, including from the nearby Fred Hutchinson Cancer Research Center, which helped Juno become one of the best funded biotech startups ever. There is another more subtle distinction about Juno. It is developing “next generation” versions of CAR-T. Although it is not yet clear how useful or profitable these will be, the expectation is that fine tuning such therapies will lead to even better medicines. + +Despite its progress, investors balked when Celgene, a big pharma firm, paid it $1 billion in 2015 for a ten-year collaboration. It is not hard to see why they hesitated. Biotech is always inherently risky. There are big questions about whether CAR-T therapies can be extended to treat solid tumours. It is also unknown if the therapy will be durable enough to justify the side effects that can result from the treatment, as well as the high cost of such a personalised approach. + +The riskiness of the biotech business was underscored this summer when a trial of Juno’s lead drug candidate, JCAR015, was put on hold after three of the patients on a trial died. Juno’s stock swooned. But the firm convinced the drug regulator that the problem came from the addition of a chemotherapy drug to the treatment, and that removing it would rule out further deaths. Six days later the trial restarted and the company’s share price revived. + +The setback will nonetheless delay the approval of Juno’s first product, a treatment for acute lymphoblastic leukaemia, until 2018. It will also cost the company the bragging rights to being the very first firm to commercialise CAR-T. That now looks likely to be won by Kite Pharmaceuticals, which is aiming for the end of the year. But being first doesn’t matter, argues Hans Bishop, Juno’s boss. A few years is a “blink of an eye” in this industry, he says. That may be true, but Juno in its own first three years has made a big impact. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21709068-young-biotech-firm-focused-cancer-promises-both-risk-and-reward-trials-juno/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Retailing + +Push my buttons + +Experiments in automated consumption + +Oct 22nd 2016 | NEW YORK | From the print edition + + + +TRILLIONS of dollars of consumer spending have, historically, depended on a few steps. A shopper learns about a product, considers whether to buy it, decides to do so, goes to a shop. If he likes it, he may buy it again. Marketers have long obsessed over each step, and consultants have written treatises on how to nudge people along. E-commerce is already changing the process, but now retailing gurus are imagining a future in which shopping becomes fully automatic. + +The idea is that a combination of smart gadgets and predictive data analytics could decide exactly what goods are delivered when, to which household. The most advanced version might resemble Spotify, a music-streaming service, but for stuff. This future is inching closer, thanks to initiatives from Amazon, lots of startup firms and also from big consumer companies such as Procter & Gamble (P&G). + +Buying experiments so far fall into two categories. The first is exploratory. A service helps a shopper try new things, choosing products on his or her behalf. Birchbox, founded in 2010, sends beauty samples to subscribers for $10 each month. Imitators have proliferated, offering everything from dog toys to trainers. MySubscriptionAddiction.com, which reviews these services in English-speaking countries, counts 998 new subscription boxes so far this year, up from 284 new ones in 2013. Retailers such as Walmart have followed suit with their own boxes. The scope for such services, however, may be limited. One third of those surveyed by MySubscriptionAddiction.com said they cancelled at least as many subscriptions as they added this year. Consumers, naturally, will delegate purchases to a third party only when they receive products they like. In future, firms that comb purchase histories and search data may be able to send more reliably pleasing product assortments. For now, a consumer who becomes an unwitting owner of toeless socks, which were included recently in a box called FabFitFun, may decline further offers. + +The second category of automated consumption is more functional. A service automates the purchase of an item that is bought frequently. Nine years ago Amazon introduced a “Subscribe & Save” feature, offering consumers a discount for agreeing to buy certain goods regularly, such as Pampers nappies. Dollar Shave Club, a male-grooming-products firm, sells razors to subscribers directly, and P&G now has its own, similar service. It is also testing one for laundry detergent. + +Amazon is going further. Last year it began selling so-called Dash buttons, designed to be placed around the house to order everyday products—one for Campbell’s soup, for instance, and another for Whiskas cat food (pictured). Investors see this as the first step in its bid fully to automate buying of daily necessities. Already, some manufacturers have integrated Amazon into their devices; General Electric, for example, offers washing machines that shop for their own detergent. + +Such services have obvious appeal for Amazon and for big consumer brands. If a shopper automates the delivery of a particular item, the theory is that he is likely to be more loyal. For some brands, the buttons are working especially well: more than half of all the many Amazon orders for Maxwell House coffee in America, for example, are made through the Dash button. Amazon says that across America, an order from a Dash button is being placed more than twice each minute. + +But neither Amazon nor the big product brands should celebrate a new era of shopping just yet. Amazon does not release comprehensive data on its automated services, but Slice Intelligence, a data firm in California, reported in March that fewer than half of those with Dash buttons had ever pressed them. One problem may be the e-commerce giant’s prices, which fluctuate often. Another report, by Salmon, a digital agency inside WPP, an advertising group, found that far more British consumers would prefer a smart device that ordered the cheapest item in a category to one that summoned up the same brand each time. That suggests that automated shopping, as it expands, might make life harder for big brands, not prop them up. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21709070-experiments-automated-consumption-push-my-buttons/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +African airlines + +Well-connected + +Why one national airline is bucking a continent-wide trend + +Oct 22nd 2016 | ADDIS ABABA | From the print edition + + + +INSIDE the atrium of a gleaming new building on the outskirts of Addis Ababa, trainee air stewards flit between the classrooms and aeroplane simulators that surround a large indoor swimming pool. The expensive aviation academy belongs to Ethiopian Airlines, and seems a world away from the unrest that on October 9th prompted the government to declare a national state of emergency. The firm’s CEO, Tewolde Gebremariam, brushes off the idea that the airline will be affected. “We are not concerned,” he shrugs. + +He has reason to be confident about the business. Ethiopian is Africa’s largest and most profitable airline, earning more than its rivals on the continent combined. Its expansion has been rapid: by 2015 it served 82 international destinations, with 13 more added this year. According to unaudited figures, it nearly doubled its profits in the last financial year (see chart). And that is amid national turmoil. + +It helps that its regional rivals are competing only feebly on routes in Africa. According to the International Air Transport Association, African carriers are likely collectively to record a net loss of $500m this year. Kenya Airways, which has been in the red for four years on the trot, is flogging some of its aircraft and last month announced it would raise more equity. South Africa’s national carrier, which Ethiopian overtook in size last year, has been unprofitable since 2011, and could be insolvent without government guarantees. + + + +Ethiopian’s lead also comes from its own strengths. It took advantage of its plum location in the Horn of Africa. Mr Gebremariam circles Addis Ababa on a line connecting China with Brazil via India and the Gulf. It beat rivals who were still fixated on the former colonial routes to and from Europe, and captured Asian traffic. In particular it took an early punt on Chinese demand. In 1973 it was the first African carrier to fly to China. Today a bustling Chinese transit counter at Addis Ababa’s Bole airport testifies to the importance the company attaches to the market. And Ethiopian has reduced flights to small African capitals like Brazzaville, in the Republic of Congo, which offer little business, in favour of more flights to the country’s booming oil port of Point Noire. + +The fact that it is state owned helps keep costs low, but it behaves like an international firm, not a national flag carrier, says Rob Prophet, an aviation consultant. It takes no state subsidies. And although few doubt the closeness of senior executives to the ruling Ethiopian People’s Revolutionary Democratic Front, analysts say its management is independent-minded. + +Now it wants to be the continent’s first pan-African airline. It is opening hubs in Togo and Malawi, and teaming up with smaller rivals. But it is unlikely to be all smooth cruising. Middle Eastern rivals, including Qatar Airways, are expanding across the continent. Poor infrastructure is problematic. A new four-runway airport outside Addis Ababa may improve matters, but few expect it to open on time. And regional instability may hurt sales. Ethiopian was founded in 1945, but it was not until the country’s long peace from 1991 that it took off. If the country now nosedives, its national airline will take a hit too. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21709075-why-one-national-airline-bucking-continent-wide-trend-well-connected/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Indian furniture makers + +Turning the tables + +Rajasthan’s furniture-makers ride the unpredictable waves of globalisation + +Oct 22nd 2016 | JODHPUR | From the print edition + +All wood, few trees + +WALK through the workshop of Vinayak Home, a furniture-making outfit based in the outskirts of Jodhpur in the state of Rajasthan in north-west India, and the results of globalisation are evident. Sleek hardwood furniture that would suit Scandinavian interiors is being readied for shipment; carpenters distress the paint on a newly-made chest of drawers to make it look as if it has come straight from a flea market in Brooklyn. But the company’s order book suggests that globalisation is fading. Vinayak Home is one of a cluster of Rajasthan furniture-makers that used to do nothing except export to Europe and America, but nearly all of what they make today they ship into Indian living rooms. + +Jodhpur, on the edge of a desert with few trees to feed sawmills, is an unlikely woodworking hub. But when tourists came to survey the arid landscape and the 15th-century fort that overlooks the city, many also admired the hardwood carvings by skilled artisans (pictured). When India liberalised its economy in the early 1990s, a small group of European exporting agents encouraged independent furniture-makers. Then volumes grew, cheap power tools came from China, furniture fashions changed, and latticework made way for those Scandinavian, minimalist designs. + +Globalisation continued to spur growth. Like labour-intensive footwear and textiles, furniture-making has in recent decades shifted relentlessly from rich to poor countries. A skilled carpenter in India makes around 500 rupees ($7.50) a day. Large orders from companies such as Laura Ashley, a Malaysian-owned firm, or Crate & Barrel, an American interior-furnishings chain, poured in to Jodhpur’s craftsmen. + +But what the global market gave, it gradually took away. Foreign shipments have see-sawed since 2008, but are now flat or falling. Western economies are growing slowly and there is competition from other Asian manufacturers. Globalisation has brought rival opportunities, too. What the world wanted from Rajasthan a few years ago wasn’t tables and stools but an obscure crop called guar. Once a niche bean, producing gum used to thicken sauces and ice cream, it somehow became a key ingredient for fracking (hydraulic fracturing) shale oil in America. Around two-thirds of the world’s guar gum comes from Rajasthan, and the boom in production created a new class of farmer-millionaires. The riches to be made from farming drained furniture workshops of labour for a while. + +Luckily for Rajasthani workers, by the time the guar boom ended, global trends had inflated a new bubble. Firms such as Goldman Sachs, an investment bank, Sequoia, an American venture-capital company, and Rocket Internet, a German startup factory, were throwing money at Indian e-commerce sites dedicated to furniture. Three such young firms, Pepperfry, Urban Ladder and FabFurnish, have raised over $250m in funding in the past five years. Along with mainstream e-commerce sites, they now ship goods from Rajasthan and elsewhere within India worth over $200m each year, or roughly the same as Jodhpur’s furniture-makers are believed to export. The home market is booming. + +Just over half of Jodhpur’s furniture production still ends up overseas, notes Devashish Banerjee, a veteran of the export trade who now works at Pepperfry. But it was only five years ago that the proportion going abroad was 90%, and in another five years the domestic market will claim four-fifths of the desert city’s output, he says. Many middle-class Indians are moving out of homes that they used to share with their parents or other relatives, spurring rapid growth in property and furniture sales. + +The new e-commerce players may displace local mom-and-pop manufacturers, and the rise in domestic demand will benefit other woodworking clusters as well, such as Bihar and Kerala. But Rajasthan has geographical advantages: it is arid in an otherwise humid country, so furniture made there doesn’t warp so much. It also takes just a day in a lorry to get to Delhi and two to reach Mumbai, India’s biggest cities. + +Sukesh Bhandari, one Jodhpur entrepreneur, thinks of the domestic furniture market as a continuation of the export trade. “We are globalising and Indianising simultaneously,” he says. There are concerns that the venture-capital money sustaining the furniture websites may run out, even before all of them turn a profit, but for now the funds are flowing. + +As for globalisation, it will soon bring a new rival for Jodhpur’s vibrant domestic market. Next year a certain Swedish purveyor of mainly softwood and laminate furniture, IKEA, will open the first of 25 stores it plans for India. That will be competition, but potentially an opportunity, too: Indian rules stipulate it must source 30% of its inventory locally, and that could well include furniture. Jodhpur’s manufacturers may soon be carving a new, but strangely familiar, product range. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21709074-rajasthans-furniture-makers-ride-unpredictable-waves-globalisation-turning-tables/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Schumpeter + +Techno wars + +An earlier sunny mood about technology and innovation has given way to pessimism + +Oct 22nd 2016 | From the print edition + + + +THE most striking battle in modern business pits the techno-optimists against the techno-pessimists. The first group argues that the world is in the middle of a technology-driven renaissance. Tech CEOs compete with each other for superlatives. Business professors say that our only problem will be what to do with the people when the machines become super-intelligent. The pessimists retort that this is froth: a few firms may be doing wonderfully but the economy is stuck. Larry Summers of Harvard University talks about secular stagnation. Tyler Cowen, of George Mason University, says that the American economy has eaten all the low-hanging fruits of modern history and got sick. + +Until recently the prize for the most gloom-laden book on the modern economy has gone to Robert Gordon of Northwestern University. In “The Rise and Fall of American Growth”, published in January, Mr Gordon argues that the IT revolution is a minor diversion compared with the inventions that accompanied the second industrial one—electricity, motor cars and aeroplanes—which changed lives profoundly. The current information upheaval, by contrast, is merely altering a narrow range of activities. + +Now a new book, “The Innovation Illusion” by Fredrik Erixon and Bjorn Weigel, presents a still more pessimistic vision. Messrs Erixon and Weigel write that the very engine of capitalist growth, the creative destruction described by Joseph Schumpeter, is kaput. Aside from a handful of stars such as Google and Amazon, they point out, capitalism is ageing fast. Europe’s 100 most valuable firms were founded more than 40 years ago. Even America, which is more entrepreneurial, is succumbing to middle-aged spread. The proportion of mature firms, or those 11 years old or more, rose from a third of all firms in 1987 to almost half in 2012, and the number of startups fell between 2001 and 2011. + +People who extol free markets often blame such stagnation on excessive regulation. That has certainly played its part. But the authors argue that stagnation has most to do with the structure of capitalism itself. Companies are no longer actually owned by adventurous capitalists but by giant institutions such as the Vanguard Group (with more than $3 trillion under management) which constantly buy and sell slivers of ownership for anonymous investors. These institutions are more interested in predictable returns than in enterprise. + +It is not all Mark Zuckerbergs at the top, the authors posit. Most big firms are answering the call for predictability by hiring corporate bureaucrats. These people shy away from risky investments in new technology. After rising relentlessly as a share of GDP in 1950-2000, investment in IT began declining in the early 2000s. Instead of shaking up markets, bureaucratic CEOs focus on squeezing the most out of their sunk costs and fight to defend niches. They hoard cash, buy back their firms’ shares and reinforce their positions by merging with former rivals. + +The gloomsters’ case is true to some extent but it is overstated. Mr Gordon is right that the second industrial revolution involved never-to-be-repeated changes. But that does not mean that driverless cars count for nothing. Messrs Erixon and Weigel are also right to worry about the West’s dismal recent record in producing new companies. But many old firms are not run by bureaucrats and have reinvented themselves many times over: General Electric must be on at least its ninth life. And the impact of giant new firms born in the past 20 years such as Uber, Google and Facebook should not be underestimated: they have all the Schumpeterian characteristics the authors admire. + +On the pessimists’ side the strongest argument relies not on closely watching corporate and investor behaviour but rather on macro-level statistics on productivity. The figures from recent years are truly dismal. Karim Foda, of the Brookings Institution, calculates that labour productivity in the rich world is growing at its slowest rate since 1950. Total factor productivity (which tries to measure innovation) has grown at just 0.1% in advanced economies since 2004, well below its historical average. + +Optimists have two retorts. The first is that there must be something wrong with the figures. One possibility is that they fail to count the huge consumer surplus given away free of charge on the internet. But this is unconvincing. The official figures may well be understating the impact of the internet revolution, just as they downplayed the impact of electricity and cars in the past, but they are not understating it enough to explain the recent decline in productivity growth. + +Back-seat producers + +Another, second line of argument—that the productivity revolution has only just begun—is more persuasive. Over the past decade many IT companies may have focused on things that were more “fun than fundamental” in Paul Krugman’s phrase. But Silicon Valley’s best companies are certainly focusing on things that change the material world. Uber and Airbnb are bringing dramatic improvements to two large industries that have been more or less stuck for decades. Morgan Stanley estimates that driverless cars could result in $507 billion a year of productivity gains in America, mainly from people being able to stare at their laptops instead of at the road. + +The real question is not whether the IT revolution has run out of steam or whether creative destruction is grinding to a halt. In fact, the IT revolution is probably gathering pace and Google and Amazon are two of the most innovative firms to emerge in the past 50 years. Rather it is whether the new economy can counteract the forces ranged against it: ageing populations; a political class responding to populism by restricting trade and by over-regulating business; and education systems that in many places are failing. The big danger is that, while optimists and pessimists battle it out, the world becomes ever more divided between islands of high productivity surrounded by a vast ocean of stagnation. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21709062-earlier-sunny-mood-about-technology-and-innovation-has-given-way-pessimism-techno-wars/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Finance and economics + + + +Government bonds: Who’s scary now? [Fri, 21 Oct 02:42] + +Venezuelan government debt: Running out of time [Fri, 21 Oct 02:42] + +Italian banks: Spectral forms [Fri, 21 Oct 02:42] + +Buttonwood: Mutual incomprehension [Fri, 21 Oct 02:42] + +Watson and financial regulation: It knows their methods [Fri, 21 Oct 02:42] + +Free exchange: Subtract and divide [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Government bonds + +Who’s scary now? + +The bond market is transformed: fewer vigilantes; more forced buyers + +Oct 22nd 2016 | From the print edition + + + +JAMES CARVILLE, political adviser to Bill Clinton, the former president, famously said that he wanted to be reincarnated as the bond market so he could “intimidate everybody”. He was frustrated by the administration’s inability to push through an economic stimulus for fear of spooking investors and pushing bond yields higher. + +More than 20 years later, the world looks very different. Many developed countries have been running budget deficits ever since the global financial crisis of 2008; their government debt-to-GDP ratios are far higher than they were in the early 1990s. Yet the bond market looks about as intimidating as a chihuahua in a handbag; in general, yields are close to historic lows. + +In the 1990s “bond-market vigilantes” sold their holdings when they feared that countries were pursuing irresponsible fiscal or monetary policies. In Britain even fear of a “hard Brexit” is only now being reflected in rising gilt yields—and they are still below the (very low) levels seen before the vote to leave the EU in June. Even developing countries with big budget deficits can borrow easily. This week, for example, Saudi Arabia tapped the markets for the first time, raising $17.5 billion—the largest-ever emerging-market bond issue. + +Vigilantes have become vastly outnumbered by bondholders with no real interest in maximising the return on their portfolios. Central banks have been the biggest factor in the market’s transformation. After the crisis, they turned to quantitative easing (QE), ie, expanding their balance-sheets by creating new money in order to buy assets. The collective balance-sheets of the six most active (the Federal Reserve, Bank of Japan, European Central Bank, Swiss National Bank, Bank of England and People’s Bank of China) have grown from around $3 trillion in 2002 to more than $18 trillion today, according to Pimco, a fund-management group. These central banks want to lower bond yields—indeed, the Bank of Japan intends to keep the ten-year Japanese bond yield at around 0%. Instead of acting as vigilantes patrolling profligate politicians, central banks have become their accomplices. + +Then there are pension funds and insurance companies, which buy government bonds to match their long-term liabilities. Neither group has an incentive to sell bonds if yields fall; indeed, they may need to buy more because, when interest rates are low, the present value of their discounted future liabilities rises. Banks, too, play an important role. They have been encouraged to buy government bonds as a “liquidity reserve” to avoid the kind of funding problems they had in the 2008 crisis. They also use them as the collateral for short-term borrowing. + +Yielding to none + +With so many forced buyers, trillions of dollars-worth of government bonds are trading on negative yields. “When you have so many price-insensitive buyers, the price-discovery role of the market doesn’t work any more,” says Kit Juckes, a strategist at Société Générale, a French bank. + +For much of the 20th century, bonds were the assets of choice for investors wanting a decent income. No longer. Government bonds now seem to be a home for the rainy-day money of institutional investors. The rules say government bonds are safe, making it virtually compulsory to own them. “It’s about the return of capital, not the return on capital,” says Joachim Fels, Pimco’s chief economist. + +If central banks are willing buyers of an asset, that asset is as good as cash for most investors. So like cash, government bonds generate a very low return. Always true of the shortest-dated bonds, to be repaid in a few weeks or months, this now applies to a much broader range; two-year debt yields are negative in Germany and Japan and below 1% in America. Open-market operations, in which central banks buy and sell securities, used to focus on debt maturing in less than three months; now they cover bond yields at much longer maturities. + +This new-style bond market has created a problem for those who run mutual funds or who manage private wealth—and who do care about the return. Large parts of the bond market no longer offer the rewards they used to. As each year begins, polls show that fund managers think bond yields are bound to rise (and prices to fall); each year they are surprised as yields stay low. “When your old-fashioned pricing model doesn’t work, how do you decide when the asset is cheap?” asks Mr Juckes. + +In practice, such investors have been forced to take more risk in search of a higher return. They have bought corporate bonds and emerging-market debt. And in the government-bond markets they have bought higher-yielding longer-term debt. + +A key measure of risk is duration; the number of years investors would take to earn back their money. In Europe the average duration of government debt has increased from six to seven years since 2008, according to Salman Ahmed of Lombard Odier, a fund-management group. That doesn’t sound much. But the longer the duration of a portfolio, the more exposed it is to a rise in bond yields. Mr Ahmed reckons that a half-a-percentage-point rise in yields “would create significant and damaging mark-to-market losses”. + +Another change in the bond markets exacerbates the problem: liquidity has deteriorated. There have been some sudden jumps in yields in recent years—the “taper tantrum” in 2013, when the Fed started to reduce its QE programme; and a surge in German bond yields in 2015, for example. + +Banks may hold bonds for liquidity purposes. But because they are required to put capital aside to reflect the risk of holding corporate debt, they have become less keen to own them for market-making, or trading. Before 2008, bond dealers had inventories worth more than 2% of the corporate-bond market; now their inventories are only a tenth of the size, in relative terms (see chart). + + + +So should a large number of bond investors decide to sell their positions in risky debt, buyers will be scarce; prices may move very quickly. Yet it is not difficult to imagine reasons for a sell-off. If the Fed decides to push up interest rates more quickly than the markets expect, bond yields could rise across the globe. The same could happen if central banks in Europe and Japan decided they no longer wanted to buy government debt: such fears this month nudged up yields in Europe. Or investors might start to fret about the amount of credit risk they have taken. In the emerging markets, for example, more than half of corporate bonds are ranked as “speculative” or “junk”, and the default rate has been steadily rising. + +In short, as Mr Juckes puts it, the bond market is “brittle”. It is priced for a world of slow growth and low inflation, leaving no margin for error if things change. The most intimidating thing about the modern bond market now is the risk that they do. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21709036-bond-market-transformed-fewer-vigilantes-more-forced-buyers-whos-scary/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Venezuelan government debt + +Running out of time + +A devastating spiral continues + +Oct 22nd 2016 | From the print edition + + + +TO MOST investors, Venezuela looks less like a market than a mess. The IMF expects output to shrink by 10% this year and inflation to exceed 700%. As the bolívar’s value has plunged, multinational firms have announced billions of dollars of write-downs. For much of this year, however, some strong-stomached investors have scented an opportunity. They rushed to buy bonds issued by the government and by the state-owned oil company, PDVSA. + +They have been rewarded handsomely. Venezuelan government bonds have outperformed other emerging-market sovereign bonds tracked by JPMorgan (see chart). The government, led by Nicolás Maduro, boasts it has never missed a debt payment. Indeed he has given priority to debt service over other urgent needs, such as importing food. Mr Maduro is keen not to scare off the foreign creditors sorely needed by PDVSA. + +However, Venezuela looks increasingly stretched. Two big PDVSA payments, of $1 billion and $2 billion, are due on October 28th and November 2nd. Last month the company proposed a bond swap to ease a looming payments crunch: investors holding PDVSA bonds maturing in 2017 (which are not backed by a full sovereign guarantee), would exchange them for bonds maturing in 2020. This would buy Venezuela time, perhaps in the hope that oil prices rise. + +Not so fast. Even sweetened terms for the swap have failed to lure investors. PDVSA has four times delayed the deadline for the exchange, most recently to October 21st. PDVSA warned in a press release on October 17th that if its offer is not accepted, “it could be difficult” to make its scheduled payments. + +Francisco Velasco of Exotix, a brokerage specialising in frontier markets, says investors face a prisoner’s dilemma. They could agree to a swap, with terms that are less than ideal, in the hope that others investors will do the same. Or they could decline PDVSA’s offer. But that would make default ever more likely. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21709042-devastating-spiral-continues-running-out-time/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Italian banks + +Spectral forms + +Two lenders seal a merger, while another ponders its options + +Oct 22nd 2016 | MILAN | From the print edition + +Will they Passera? + +FROM the mists of Italian banking, new shapes are emerging. One is at last becoming flesh: on October 15th the shareholders of two lenders, Banco Popolare and Banca Popolare di Milano, approved a merger that has been months in the making. The substance of another—Banca Monte dei Paschi di Siena, the world’s oldest bank as well as Italy’s most troubled—is still shrouded, but it is likely to become clearer at a meeting of Monte dei Paschi’s board on October 24th. + +The merged bank, to be called Banco BPM, will surpass Monte dei Paschi to become Italy’s third-largest lender. Its creation is a small triumph for Matteo Renzi, the centre-left prime minister. Last year Mr Renzi introduced a reform obliging Italy’s ten biggest popolari, or co-operative banks, to become joint-stock companies by the end of 2016. The hope was that this would spur takeovers, yielding fewer, stronger, more efficient banks. + +The Banco BPM deal, which promises annual savings of €290m ($318m), or 10% of the combined cost base, is Mr Renzi’s first result. Two awkward obstacles stood in its way. Voting rules at the popolari give all shareholders an equal say, regardless of their stake: some retired Banca Popolare di Milano staff were against the merger, but failed to block it. And the European Central Bank imposed demanding conditions, including a €1 billion capital increase for Banco Popolare, that threatened to scupper the deal, the first since it started supervising the euro zone’s most important banks in 2014. The delay, Italian bankers grumble, has discouraged other possible mergers. That said, further consolidation could be on the way: UBI Banca, Italy’s fifth-biggest bank, is said to be eyeing three of four small lenders rescued by the state last year. + +Compared with rebuilding Monte dei Paschi, such takeovers are child’s play. The lender’s woes stretch back years. In 2007 it overpaid for Antonveneta, a bank it bought for €9 billion from Spain’s Santander. After the financial crisis it was laid low by losses on derivatives trades. It has since been crushed by bad loans, which make up about one-third of its book, the worst in Italy. Monte dei Paschi has had two bail-outs from the state. It raised €8 billion from share issues in 2014 and 2015, partly to repay the government. To little avail: its market capitalisation is a mere €600m. + +In July, anticipating dismal results in stress tests by European regulators, Monte dei Paschi presented a rescue plan. The brainchild of advisers led by JPMorgan, it envisages stripping bad loans with a gross value of €27.7 billion out of the bank. At their net value, estimated at €9.2 billion, these would become the assets of a separate entity. This entity would be funded by: €6 billion-worth of investment-grade notes, which would be eligible for a state guarantee; a mezzanine tranche of €1.6 billion, to be taken up by Atlante, a fund backed by several financial institutions, set up to invest in bad loans and ailing banks; and €1.6 billion of junior bonds, to go to Monte dei Paschi’s shareholders. + +The spruced-up Monte dei Paschi would be recapitalised with a €5 billion share issue. The details have mutated over time, but the rough plan is to raise maybe €1.5 billion from a voluntary swap of subordinated debt for equity, perhaps a little more from an “anchor” investor and the rest from a rights issue. The original idea was that the bank’s board should approve the plan in late September. That was pushed back after a change of chief executive in the middle of last month. + +Finding investors to put up money for a third capital increase in as many years, even in a bank cleansed of duff loans, was always going to be hard. Worse, investors are unsettled by a constitutional referendum on December 4th. If the reform fails, Mr Renzi may be unhorsed. If it passes, markets may become more benevolent. + +In a further twist, Corrado Passera, a former government minister and ex-banker, has pitched an alternative. This would tap investors for only €3.5 billion, and somehow squeeze €1.5 billion from earnings, and bring in a private-equity investor. The bank’s board said on October 18th it would press on with the July scheme, but “continue to analyse in depth” Mr Passera’s idea. It is due to approve its new business plan on October 24th. The search for investors will then begin in earnest. + +The mist is lifting elsewhere, too. UniCredit, Italy’s biggest lender, is also preparing to ask investors for money. On October 13th it sold 20% of Fineco, a digital bank, for €552m. Two days later it confirmed that it was in talks with PZU, a Polish insurer, about Bank Pekao, Poland’s second-biggest bank, of which UniCredit owns 40.1%. Jean-Pierre Mustier, who became chief executive in July, is due to present a strategic review on December 13th. By then, one way or another, much more may be clearer about Italy’s beleaguered banks. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21709045-two-lenders-seal-merger-while-another-ponders-its-options-spectral-forms/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Buttonwood + +Mutual incomprehension + + + +A book investors will read with disquiet + +Oct 22nd 2016 | From the print edition + + + +AMERICANS who want a comfortable retirement, and who work in the private sector, have to look after their own interests these days. No longer can most rely on their employer to pay a pension linked to their final salary; such defined-benefit promises are too expensive. + +Instead, workers are promised something called a defined-contribution (DC) pension which, truth be told, isn’t a pension at all. It is a savings pot to which employers and employees contribute, with some tax advantages. How big that pot will be, and what kind of income it will provide, is unknown. + +Most of those savings will probably be invested in mutual funds. Yet as William Birdthistle, an academic lawyer, writes in an entertaining new book*, small investors need to become better informed about the way mutual funds work. + +One might think, for example, that all investors in a fund are treated equally. But Mr Birdthistle cites a set of JPMorgan equity funds which have seven different types of shares, with opaque names such as Class R5. The main difference tends to be the fees that funds charge. Small investors usually pay most, even those in some DC schemes. These fees often seem excessive. The author reproduces a table from a single fund managed by Oppenheimer, which has six classes of shares, with the cost determined by nine sets of separate figures for each class. Total annual fees range from 1.01% to 2.2%. + +Fees are normally charged as a proportion of the fund’s assets, and so rise and fall with the overall market. But does it really cost more to run a fund if the market rises by 20%? Not all fund managers share economies of scale with their investors. + +One particular fee sticks in the craw. That is the distribution-and-service, or 12b-1, fee, which is used to market the fund to new investors. But why should existing investors pay for this process, which will benefit the fund manager? Studies suggest that existing investors get no benefit at all from an increase in fund size. But the industry mopped up more than $12 billion from 12b-1 funds in 2014. + +Remarkably, the fees listed in a mutual-fund prospectus are not the only charges investors face. Funds also incur expenses, such as brokers’ commissions, when they buy and sell securities. These fees are deducted from investors’ returns. + +Fair enough, one might argue. Such charges are an inevitable cost of running a fund, and a mutual-fund manager can deal much more cheaply than retail investors would be able to do on their own. But sometimes the fund manager receives services from the broker in exchange for trading—a system know as “soft dollar”. Some of these services may look benign, such as investment research to help a manager pick the best shares (though isn’t this supposed to be his or her expertise?). But investigations by the Securities Exchange Commission, a regulator, have found more dubious uses for soft dollars, such as paying hotel and mobile-phone bills. Although these arrangements are legal, they represent a potential conflict of interest—and their cost is not disclosed to investors. + +Mr Birdthistle also outlines serious abuses that have occurred in the mutual-fund industry—particularly over late trading and market timing, where privileged clients were able to make profits at the expense of ordinary investors. These cost the fund-management firms concerned billions of dollars in fines. + +With luck, the industry has reformed and such scandals are things of the past. Mr Birdthistle accepts that mutual funds play a useful role in giving small investors access to diversified portfolios, sometimes at very low cost. Yet the structure of the industry needs further reform; only 40% of the trustees (the people responsible for looking after investors’ interests) are required to be independent of the fund manager. It would be better if independents were in the majority. + +The rise of passive index-tracking funds with ultra-low fees will surely put downward pressure on the fees commanded by the rest of their industry. Some high-charging managers can outperform their index, but there is no reliable way of picking them in advance. Assuming a 6% gross return, an extra percentage point in annual fees over the course of a career can reduce your pension by about 30%. Investors who bear the responsibility of building their own pension pot need to understand the huge impact that charges can have. Reading Mr Birdthistle’s book would be a very good place to start. + +Economist.com/blogs/buttonwood + +* Empire of the Fund: The Way We Save Now by William A. Birdthistle, published by Oxford University Press + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21709037-book-investors-will-read-disquiet-mutual-incomprehension/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Watson and financial regulation + +It knows their methods + +New banking rules baffle humans; can machines do better? + +Oct 22nd 2016 | NEW YORK | From the print edition + +When you’ve eliminated the impossible… + +JOINING “Hamilton”, a Broadway show, and concerts by Adele, a British soul diva, on the list of tickets-to-kill-for in New York is a screening in an ugly new office building that recently popped-up in the East Village, a place best known for offbeat culture. There is a ten-week-long queue to see simulations by Watson, IBM’s cognitive artificial-intelligence platform. + +Initially known for stunts such as beating the world’s best chess player, Watson has been seeking a wider audience. It has found a vast potential one in the world of financial regulation. Rules have become so sprawling and mysterious that even regulators have begun asking for a map. In response, a market is springing up: for “regtech”, fintech’s nerdy new offspring. + +On September 29th, IBM announced the purchase of Promontory, a 600-strong consultancy whose senior staff include former officials from the Federal Reserve, the World Bank, the Securities and Exchange Commission and other regulators. The hope is that person and machine will combine into a vast business. Promontory was founded in 2001 by Eugene Ludwig, who had headed one of America’s primary bank-supervisory agencies. It grew first because of the slathering of new rules during the previous, Bush administration and then prospered, says Mr Ludwig, as this process expanded under Barack Obama. + +Promontory has recently dabbled in software, but is best known for its employees’ background and their capacity to provide expertise (its contention), contacts (its critics’) or both. Either way, it is a profoundly human business. Watson, for all its charms, is not. Automation of financial institutions has long been a core business for IBM. It played a central role in the development of the ATM; its systems keep many banks and insurance companies around the world humming along. Aware that annual expenditure on regulation and compliance is vast—it reckons in excess of $270 billion, of which $20 billion is spent simply on understanding the requirements—it began work on adding this business to Watson in early 2015. Chief compliance officers and lawyers were interviewed to break down their tasks and needs. + +The first area of focus was trading, which has the virtue of being both discrete and wildly complex. A pilot programme with half a dozen banks and three exchanges began in July, providing surveillance. A library of possible illicit schemes is fed into Watson, which can then evaluate trading patterns and communications ranging from overt messages to social media (voice analysis will be added in November). Scrutiny can extend to the network of people on the other end of trades in order to untangle complex relationships. + +The next area is to provide clarity about rules. They are sorted by jurisdictions, institutional divisions, products and so forth, and then further broken down between rules and guidance. Watson is getting better at categorising the various regulations and matching them with the appropriate enforcement mechanisms. Its conclusions are vetted, giving it an education that should improve its effectiveness in the future. Promontory’s experts are expected to help Watson learn. A dozen rules are now being assimilated weekly. Thousands are still to go but it is hoped the process will speed up as the system evolves. Ultimately, IBM hopes speeches by influential figures, court verdicts and other such sources will be automatically uploaded into Watson’s cloud-based brain. They can play a role in determining what regulations matter, and how they will be enforced. + +Global financial institutions provide an obvious market for these services, but so too do small, local ones that lack the scale to justify the cost of a team of legal experts. A third group is the regulators themselves, who often privately grouse about being bewildered by their own remit and distrust other regulators with overlapping briefs. + +To some extent Watson’s success depends on whether the rules are consistent, make sense and are fairly applied. At the very least, it will be able to highlight anomalies. If successful, Watson could shift legal authority from individuals to laws. That, of course, may be its greatest virtue. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21709040-new-banking-rules-baffle-humans-can-machines-do-better-it-knows-their-methods/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Free exchange + +Subtract and divide + +Both economic hardship and racial divisions fuel support for Donald Trump + +Oct 22nd 2016 | From the print edition + + + +AMERICA’S presidential contest offers voters a stark choice. Hillary Clinton represents continuity with the Obama administration—not a bad pitch to voters, given low unemployment, steady job growth and a recent upturn in the rate of increase of real incomes. In the opposite corner is Donald Trump, standing on a radical platform of protectionism, draconian immigration restrictions, massive defence spending and construction of a big, beautiful wall along the Mexican border. Mr Trump’s dangerous economic nationalism demands an explanation. Is he the predictable consequence of years of hardship for many Americans? + +Two broad theories vie to explain Mr Trump’s ascent. One camp sees him as an inevitable backlash against economic-policy priorities that have left many Americans behind. As America and the world have grown more economically integrated, growth in household incomes has stagnated and inequality soared. The costs of freer trade were borne most acutely in Southern and Mid-Western manufacturing towns exposed to competition from cheap Chinese imports. A series of recent papers shows that the most affected labour markets have experienced a long period of depressed wage growth, low rates of labour-force participation and high unemployment. These trends carved out a political niche ready to be filled by someone like Mr Trump. + +There is another camp, however, which suggests that worker anxieties, though real, have little to do with Trumpism. Instead, his rise is the product of a Republican electoral strategy of maximising turnout among older white voters. An effective way to achieve this goal, goes the argument, is to stoke their racial fears; the white, non-Hispanic share of the population has fallen from nearly 90% in the 1940s to about 60% now and will continue to drop, fuelling unease among older whites. Mr Trump’s winning message is about ethnic demagoguery and little else. + +Some evidence supports a race-based interpretation of the election. Mr Trump has often been openly hostile to racial and religious minority groups. Race and religion strongly predict whether someone supports or opposes Mr Trump; a vast majority of Americans who are black, Hispanic, Jewish, Muslim or atheist favour Mrs Clinton. Income, on the other hand, is less predictive. A recent analysis of polling data by Jonathan Rothwell, of Gallup, finds that Mr Trump’s supporters tend to come from the middle of American economic distribution rather than the very bottom (or top). “Racial isolation”, or living in communities with comparatively little contact with other races, is strongly predictive of support for the Republican nominee. Places with high levels of exposure to trade and immigration, in contrast, are not areas of traditional Republican support. + +It would be wrong, however, to dismiss the role of economic anxiety. Mr Rothwell notes that Trump-backers, including the better-off ones, are far more likely to report worries about financial insecurity than those who do not favour Mr Trump (see chart, left panel). Though his followers tend to enjoy higher rates of employment and higher incomes than people of similar education levels who do not support Mr Trump, they look economically vulnerable in other important ways. Mr Rothwell finds that they disproportionately live in areas where white mortality rates and dependence on government support seem higher than the norm, and where rates of social mobility are lower. It is not surprising, then, that whereas Mrs Clinton’s supporters reckon future generations of Americans will be better off than those living today, Mr Trump’s backers are far more gloomy (see chart, right panel). + +Considering recent polling out of context can also be misleading. James Kwak, of the University of Connecticut, argues that Mr Trump’s supporters have relatively high incomes on average because such people tend to vote Republican. Yet among those voters earning less than $50,000 a year, Mr Trump is polling 17 percentage points better, relative to his opponent, than did Mitt Romney, the Republican candidate for president in 2012. + +Global fundamentals + +Economic and racial explanations of political shifts need not be mutually exclusive. In a paper in 2014 analysing political polarisation in America, David Schleicher of Yale University points out that shifts toward “radical and fundamentalist opinion” are by no means confined to America. The phenomenon is also seen across Europe and elsewhere, suggesting global trends are at work, not just a Republican electoral strategy. Moreover, economic trends seem to make issues of race or nationality more salient. A paper published in April found evidence for this dynamic in American cities exposed to import competition. It found that voters in trade-exposed labour markets tended to replace their moderate representatives with left-wing Democrats or right-wing Republicans, depending on whether whites were a minority or a majority of the local population, respectively. + +Economic hardship appears to strengthen the ideological fringes. Yet why should it also widen racial divisions? Perhaps economic insecurity simply generates a need for scapegoats, and minorities are easy targets—especially if they rely on taxpayer-financed benefits. That chimes with the experience of places heavily exposed to imports, where labour-force participation has fallen and reliance on government disability insurance has risen. And at the same time as more people are relying on handouts, America has become less white. Studies show that support for redistribution is weaker where racial and ethnic diversity is greater. Mr Trump tends to draw support from places with high levels of government dependency. Given a pool of racial unease, economic woes that increase reliance on the social safety-net may also enhance the attraction of the politics of racial resentment, and hence of Trumpism. + + + +Sources: + +“The China shock: Learning from labour market adjustment to large changes in trade“, David Autor, David Dorn and Gordon Hanson, NBER working paper, January 2016. + +“Explaining nationalist political views: The case of Donald Trump“, Jonathan Rothwell, Gallup, September 2016. + +“Things aren’t going that well over there either: Party polarisation and election law in comparative perspective“, David Schleicher, University of Chicago Legal Forum, 2015. + +“Importing political polarisation? The electoral consequences of rising trade exposure“, David Autor, David Dorn, Gordon Hanson and Kaveh Majlesi, NBER working paper, September 2016. + +“Why doesn’t the United States have a European-style welfare state?“, Alberto Alesina, Edward Glaeser and Bruce Sacerdote, Brookings Papers on Economic Activity, October 2001. + +Visit our Free exchange economics blog + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21709018-both-economic-hardship-and-racial-divisions-fuel-support-donald-trump-subtract/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Science and technology + + + +Making sex cells from body cells: The ancestor’s tail [Fri, 21 Oct 02:42] + +Urban planning: Listen to the music of the traffic in the city [Fri, 21 Oct 02:42] + +Anti-malaria drugs: Do you yield? [Fri, 21 Oct 02:42] + +Exploring Mars: Triumph or disaster? [Fri, 21 Oct 02:42] + +Sexual cannibalism: Nature’s cruellest one-night stand [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Infertility + +Making sex cells from body cells + +An experiment on mice offers hope to infertile people + +Oct 22nd 2016 | From the print edition + + + +ISSUES of safety aside, the very idea of cloning people—of taking, say, a cell from the skin of a man or a woman and growing it into a new human being with exactly the same genes as its progenitor—is anathema to many. But what about taking such a cell and creating from it an egg or a sperm that can be used for in vitro fertilisation? That would enable infertile men and women, and gay couples, who wanted to raise children genetically related to both parents to do so, rather than relying on the assistance of an unrelated egg or sperm donor to start a family. + +In people, this is not yet possible. But Katsuhiko Hayashi and his colleagues at Kyushu University, in Fukuoka, Japan, have done the equivalent in mice. As they report this week in Nature, there are animals now scampering around cages in their laboratory whose maternal antecedents are egg cells derived not from the ovaries of their mothers, but from body cells (known as somatic cells), in this case from those mothers’ tails. Nor does it stop there. In the past, using a slightly different technique from the one that he describes this week, Dr Hayashi has bred mice using somatic-cell-derived sperm. + +Both of these sorts of animals have gone on to breed successfully. So, not only are Dr Hayashi’s creations viable, they are fertile. Moreover, in principle—though he has not yet done so in practice—he could fertilise his somatic-cell-derived eggs with his somatic-cell-derived sperm to create an entirely somatic-cell-derived adult animal. He might even, if he so chose, be able to derive sperm and eggs from the same animal, for the processes do not require that the eggs be made from female cells and the sperm from those of males. That would create a mouse which had only one parent, yet was not a true clone of that parent because the sex cells which united to form it would both have undergone the internal genetic mixing that biologists call meiosis. + +One step back, two steps forward + +Dr Hayashi and his colleagues do not create their eggs and sperm directly from somatic cells. First, those cells have to undergo an alchemical transformation to rejuvenate them into an ancestral form known as a pluripotent stem cell. Mature body cells (eggs and sperm included) derive from progenitors, known as stem cells, that have the power to divide, proliferate and eventually to turn into particular cellular components of a particular tissue. Pluripotent stem cells are, in turn, the ancestors of these tissue-forming stem cells. + +In nature, pluripotent cells are restricted to embryos. The first students of cloning and its related arts had therefore to “harvest” them for their experiments—which created ethical dilemmas when the embryos involved were human. Such harvesting is no longer necessary. Instead, for mice, men and many other species, pluripotent cells can be made to order by taking an ordinary body cell and adding to it active copies of the four genes which encode the genetic switches that cause pluripotency. + +It was such “induced” pluripotent cells that formed Dr Hayashi’s starting-point. As he had discovered in his experiments creating sperm, judicious application of a molecule called bone morphogenetic protein 4 turns pluripotent cells into primordial germ cells—the type of stem cell ancestral to both sperm and eggs. Which of these a primordial germ cell goes on to become depends on the sex of the tissue it finds itself in. In those earlier experiments Dr Hayashi injected them into the testes of newly born mice, thus persuading them to become sperm when they underwent meiosis. This time he used ovarian tissue extracted from mouse fetuses to induce egg-forming meiosis. + +To keep track of this process, and to avoid confusion, Dr Hayashi took the cells used to make the eggs from a dark-eyed mouse. He then fertilised the eggs he had created in vitro with sperm from a pink-eyed male, and also implanted the resulting embryos into pink-eyed females. To everyone’s delight the pups born of this arrangement had dark eyes (see picture)—caused by a gene that could have come only from the tail-derived eggs. Furthermore, as had happened before with the somatic-cell-derived sperm, these pups developed normally into adults and were themselves able to reproduce. + +All this is a long way from enabling scientists to perform the same trick with people. First and foremost, using human embryonic tissue in any part of the process is out of the question for ethical reasons. That means someone needs to work out exactly which of the chemicals in testes and ovaries tell primordial germ cells whether to become eggs or sperm. Second, at the moment the process is extremely inefficient. Only 3.5% of Dr Hayashi’s tail-derived embryos grew into pups, compared with about 60% of embryos from normal eggs. Third, though mice have proved useful models for examining many questions of human medicine, mere models is all they are. A lot more research will be needed before anyone (or, at least, anyone with any ethical sensibility) tries something similar on a human being. If and when that day comes, though, the unwillingly childless around the world will be watching with great interest. + +This article appeared in the Print Edition with the headline: The ancestor’s tail + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21708892-experiment-mice-offers-hope-infertile-people-making-sex-cells-body/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Urban planning + +Listen to the music of the traffic in the city + +Places, like people, have pulses—if only you know how to measure them + +Oct 22nd 2016 | From the print edition + +Like the Rockefeller Centre, but different + +THE Rockefeller Centre sprawls across 89,000 square metres of midtown Manhattan. Curiously, Alcatraz, in San Francisco Bay, the island home of America’s most famous former prison (see picture), has exactly the same area. That coincidence aside, few might imagine the manicured roof gardens and art deco office buildings of the one have much in common with the brutal crags and blockhouses of the other. But they do. For research by Claudio Silva of New York University and his colleagues suggests that the two have a striking resemblance when it comes to the daily ebb and flow of tourists, as judged from the level of activity on Flickr, a photo-hosting site. Dr Silva thinks the peaks and troughs of Flickr activity that his research has discovered in this and other cases are a measure of an area’s “urban pulse”. If so, the Rockefeller Centre and Alcatraz share a pulse. + +On October 25th, at a meeting of the Institute of Electrical and Electronics Engineers in Baltimore, Dr Silva plans to present the idea that, like real pulses, urban pulses have useful diagnostic and prognostic properties. He thinks his system to analyse them might help urban planners and architects identify footfall and other patterns that emerge from past developments, and make better choices in future. + +At the moment, when such planners try to understand patterns of activity in a district, they do so by conducting surveys, counting the number of people passing important road junctions and measuring traffic volumes. This, though, takes years. One way to speed up the process is to use the reams of data now available from social-media platforms. Flickr, for example, records the location and time of every photograph uploaded to the site. It is especially popular with holidaymakers. Thus, by using the Flickr data as a surrogate measure of their activity, Dr Silva’s program can show in minutes how tourists are moving through a district, and may also highlight areas of activity that conventional methods have missed. + +Dr Silva’s work is part of a broader trend, dubbed “smart cities” by some, towards using the vast amounts of data generated by the inhabitants of urban areas to make them better places to live. Carlo Ratti and his colleagues in the Senseable City laboratory at the Massachusetts Institute of Technology (MIT), for example, used mobile-phone records, and also traffic data from 500 pressure sensors on roads, to help guide construction of the new metro system in Saudi Arabia’s capital, Riyadh. And César Hidalgo and Elisa Castañer, who work at MIT’s Media Lab, last year published an algorithm to recommend which types of new business were needed in particular districts, based on the locations of over 1m cafés, bars, shops, schools and so on in 47 American cities. + +Dr Silva says that what distinguishes his work from these and other studies is the speed with which he and his team can analyse large data sets such as those from Flickr. The conventional approach is to break such data into chunks for analysis—dividing them up geographically on a grid, for example, or temporally, into days. Researchers then search for patterns by comparing these chunks with each other. The problem is that more detailed analysis requires more such chunks, and the computing time needed to calculate the relationships between them thus spirals. + +To avoid this, Dr Silva turned to computational topology—a field that finds algorithms to describe complicated shapes and surfaces as simply as possible. (In this context, “shapes” and “surfaces” are wider ranging than a layman might think, because they can have more than three dimensions.) These algorithms let computers create, analyse and manipulate such multidimensional shapes quickly. + +Computational topology is already employed in tasks as diverse as loading goods at dockyards and studying the way protein molecules fold, so many topological algorithms already exist. To take advantage of this trove, Dr Silva’s team had to represent their Flickr data as a topological shape. They did so by calculating, from the number of photos taken there, the level of “activity” at each point in an area of interest. They plotted the results on a grid, to create a three-dimensional representation of tourist activity across a city at a given moment—then added a fourth dimension by repeating the process for every hour of data available. The result was a topological surface whose peaks, troughs, furrows and holes—which could be identified by their algorithms—corresponded to changes in activity over time and space. + +This approach means not only that Dr Silva’s programs whizz along much faster than conventional software, but also, because they do not have to filter the data or use a small subset of it, they see patterns that might otherwise slip through the net. Users can compare years’ of Flickr data from whole cities in minutes, thus taking their urban pulses. Indeed, Dr Silva hopes to make these pulses still more accurate, and also extend their analysis beyond tourism, by tapping other sources of information, such as Twitter and Instagram. + +Social pulse-taking is not mere theory. Kohn Pedersen Fox Associates (KPF), a firm of architects based in New York, is collaborating with Dr Silva on several as-yet-undisclosed projects. KPF’s past work includes the Shanghai World Financial Centre, the World Bank’s headquarters in Washington, DC, and a recent revamping of Covent Garden, an old fruit and vegetable market, in London. Whether the algorithms of computational topology would show any similarities between those locales is an intriguing question. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21709002-places-people-have-pulsesif-only-you-know-how-measure-them-listen/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Do you yield? + +Growing anti-malaria drugs in tobacco plants + +How to increase the supply of artemisinin + +Oct 22nd 2016 | From the print edition + + + +ONE of the most valuable weapons in the war on malaria is artemisinin, a drug derived from the leaves of sweet wormwood. Its discovery, inspired by wormwood’s use as a herbal remedy for the disease, brought Tu Youyou, the scientist responsible for making it, the first Nobel prize for medicine awarded to a researcher working in China. Artemisinin has, though, proved stubbornly difficult to synthesise chemically, meaning that extract-of-wormwood is still the main source of supply. That is a problem, for wormwood plants take between 190 and 240 days to mature. Moreover, yields are not huge—a mere half a milligram per gram of dried wormwood leaves. Alternative sources would thus be welcome. + +One is to engineer relevant genes into yeast cells. That works, but only up to a point. The commercial process based on this method turns out artemisinic acid, not artemisinin. Further chemical treatment is needed to produce the drug, and the end product has had difficulty competing with artemisinin derived from plants. However, Shashi Kumar of the International Centre for Genetic Engineering and Biotechnology, in New Delhi, is proposing a different approach, using a plant instead of a fungus. As he reports in Molecular Plant, he has engineered tobacco to make artemisinin faster and better than wormwood can. + +Tobacco is a well-understood plant, often used in genetic-engineering experiments. Indeed, Dr Kumar himself had tried once before to persuade it to synthesise artemisinin. He did this by adding to its chloroplasts 12 genes for enzymes that govern the biochemical pathway which produces the drug. That he was able to do so is because chloroplasts, the sub-cellular structures which carry out photosynthesis in plants, are the descendants of once-free-living photosynthetic bacteria that teamed up with an ancestral plant cell around a billion years ago. They thus have their own genomes. That he wanted to do so is because the precursor molecules for part of the photosynthetic apparatus (which are abundant in chloroplasts) are also precursors of artemisinin. + +Unfortunately, this early attempt, written up and published in 2014, did not work. It produced plants with stunted leaves and artemisinin yields of only 0.1 milligrams per gram of dried tissue—a fifth of that from wormwood leaves. + +Dr Kumar suspected the problem was that putting genes for the whole artemisinin pathway into the chloroplasts had diverted too many of the precursor molecules away from photosynthesis, thus stunting the leaves. He therefore decided to spread the burden by inserting six of the genes into the cell nucleus instead. That worked. All of the tobacco plants with the new genetic layout grew normally. Moreover, they produced 0.8 milligrams of artemisinin in each gram of dried leaves after being raised for a mere 60 days. + +Dr Kumar also questions whether extracting the drug from the leaves is really necessary. Past research of his has suggested some plant cells protect pharmaceutical chemicals from acids and enzymes in the stomach. That makes it easier for such chemicals to reach the intestine—the part of the gut where they are absorbed. + +To test this herbal approach, he infected some mice with malarial parasites and then dosed them with either artemisinin extracted from wormwood or an equivalent dose in the form of leaf tissue from his engineered tobacco plants. He found that, after 15 days, parasite loads in animals fed the leaves were two-thirds of those in animals dosed with pure artemisinin. + +Confirming that result, then testing human volunteers to see if the same is true in people, will take time, and is likely to be controversial. Dr Kumar plans to try—though he will use genetically engineered lettuce rather than tobacco, or even wormwood, both of which are too toxic. But many, probably most, doctors are suspicious of herbal remedies in principle, because it is hard to control their quality in the same way as a factory-made chemical. Dr Kumar’s findings are, nevertheless, interesting. And regardless of whether his experiments in herbalism lead anywhere, his genetic engineering of artemisinin-producing tobacco plants is a result that deserves close scrutiny and follow-up. + +This article appeared in the Print Edition with the headline: Do you yield? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21709001-how-increase-supply-artemisinin-growing-anti-malaria-drugs-tobacco/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Exploring Mars + +Triumph or disaster? + +Well, neither actually + +Oct 22nd 2016 | From the print edition + + + +THAT space flight is as much show business as science was confirmed on the evening of October 19th, when members of the ExoMars team put on the bravest of faces for a broadcast from their mission control in Darmstadt, Germany, about the arrival of the project’s craft at Mars. ExoMars is a joint endeavour by Europe’s and Russia’s space agencies. If science were its only criterion, team members would have been cock-a-hoop. Their main research vehicle, the Trace Gas Orbiter (TGO), had successfully entered almost precisely its designated orbit around Mars, and looked well placed to do its job of mapping concentrations of the minor chemical components of the Martian atmosphere, which is composed mostly of carbon dioxide. This is an important task, for one such component is methane—and that may be a sign the planet harbours life. + +Instead, there were the flat, controlled voices of those trying to come to terms with disappointment, while hoping against hope that their worst fears are wrong. The reason was that the other part of the mission, a cone-shaped landing craft called Schiaparelli, had abruptly gone silent on its way to the surface. Schiaparelli’s only scientific payload was a small weather station that would have run out of battery in four days. The craft’s real purpose was to test descent and landing technologies. And test them it did, apparently to destruction. But a brave little lander is always going to trump a clunky workhorse satellite in the public imagination—so, unless Schiaparelli does start talking again (which, at the time The Economist went to press, it had not), what is actually a pretty good success will seem a disappointment. + +The search the TGO will engage in is also, in its way, based on a lingering hope—one which started, albeit accidentally, with the man the landing craft was named after. This hope is that Mars is inhabited. When Giovanni Schiaparelli, a 19th-century Italian astronomer, drew the first maps of Mars (pictured on previous page), he described some linear features on them as canali. This word can translate into English either as channels (natural) or as canals (artificial). Schiaparelli had intended the former, but the ambiguity spawned the romantic idea that Mars was home to a dying civilisation desperately piping water from the planet’s polar ice caps. + +There are no canals on Mars, and certainly no dying civilisation. But the hopeful suggest that there may be life there of the microbial sort—and that if there is, it may explain the traces of methane in the planet’s atmosphere. That gas’s source is certainly a mystery, for methane is broken down rapidly by ultraviolet light, and this reaches Mars from the sun in abundance because the planet’s atmosphere is too scanty to block it. That means any methane in the Martian air should quickly disappear. But it does not. This suggests something is replenishing the gas. The process involved may be geological. But maybe, as is the case for most of the methane in Earth’s rather thicker atmosphere, it is actually biological. + +One of the TGO’s jobs is therefore to map methane concentrations in the Martian atmosphere. That may point to promising, methane-generating landing spots for a follow-up probe—for ExoMars is a mission in two parts. The second act will be a Russian-built lander and a European rover. These are planned to arrive in 2021. The rover will be equipped to analyse the Martian regolith (the layer of rock fragments on the planet’s surface that passes for soil) for signs of biological activity. + +To do that, though, it will have to land successfully. And, as Schiaparelli’s apparent fate shows, landing on Mars is hard. With luck, data the probe broadcast on its way down, before silence enveloped it, will tell engineers what went wrong, and help them stop the same thing happening to the next lander. In the meantime, TGO will continue to orbit, and the methane data will flow in. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21708996-well-neither-actually-triumph-or-disaster/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Nature’s cruellest one-night stand + +Sexual cannibalism in spiders + +Male dark fishing spiders sacrifice themselves for the good of their offspring + +Oct 22nd 2016 | From the print edition + +Gone fishin’ + +ANIMAL mating can be a cruel and unusual process. Male bedbugs inseminate females by piercing their bellies and depositing sperm inside their paramours’ body cavities. Male chimpanzees and lions kill the suckling infants of females before mating with them, as this brings those females more rapidly into oestrus. Male dolphins routinely engage in rape. Nor are aggressive mating practices perpetrated solely by males against females. In many species of insects and spiders, females eat their partners after sex. + +Such cannibalism clearly brings advantage to the female, who gets an easy snack. But the benefits (if any) for the male are less obvious. That there might sometimes be such benefits, though, is an idea that intrigues zoologists—and so, from time to time, some of them look into the matter. + +The latest to do so are Steven Schwartz of Gonzaga University, in the American state of Washington, and Eileen Hebets of the University of Nebraska-Lincoln. Dr Schwartz and Dr Hebets note that, after mating, the males of one species of arachnid, the dark fishing spider, spontaneously die and thus ensure that they get eaten. This is in contradistinction to the behaviour of most male spiders, who usually attempt at least some sort of a getaway, even if it is futile. And, as the two researchers report in a forthcoming paper in Current Biology, there is, indeed, method in the male fishing spider’s suicidal madness. + +Dr Schwartz and Dr Hebets came to this conclusion by collecting male and female dark fishing spiders and subjecting them to an experiment. In one group of the animals, females were allowed, as per normal, to eat their deceased partners after mating. In a second, the males’ bodies were removed and the females ate nothing. And, in a third, the males’ bodies were substituted by a cricket of about the same weight as a male spider. + +Not surprisingly, the offspring of females in the first group—those allowed to cannibalise their partners—were bigger, more numerous and longer-lived than those of females in the second. But they were also bigger, more numerous and longer-lived than those of females in the third, cricket-fed group. In fact, the offspring of the third group did no better than those whose mothers had received no extra nutrients at all. Evidently, something in male fishing-spider flesh is particularly advantageous for the production and development of young. + +Exactly what this something is, Dr Schwartz and Dr Hebets cannot yet say. But they do have a theory about what is going on. The fact that the male spider dies after mating, and thus makes sure his body is available as a feast for his mate, suggests the mysterious extra nutritional value of that body has evolved specifically for the purpose of nurturing the eggs that will turn into his offspring. Possibly, in the past, females have been so good at catching males that few survived to father a second brood anyway. In that case, any adaptation which enhanced the number and fitness of a male’s firstborn clutch, even at the expense of his life, would be favoured by natural selection. Whatever the truth, though, the fate of the poor male dark fishing spider is surely the cruellest and most unusual one-night stand of all. + +This article appeared in the Print Edition with the headline: Nature’s cruellest one-night stand + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21709003-male-dark-fishing-spiders-sacrifice-themselves-good-their/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Books and arts + + + +The meaning of jihad: Men of war [Fri, 21 Oct 02:42] + +Migrants: Making profits out of hope [Fri, 21 Oct 02:42] + +Ngugi wa Thiong’o: A song of Africa [Fri, 21 Oct 02:42] + +Latin American Modernism: A time of gifts [Fri, 21 Oct 02:42] + +Fiction from Israel: Delusion chronicle [Fri, 21 Oct 02:42] + +Steven Isserlis: String fellow [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +The meaning of jihad + +Men of war + +What jihadists believe, and why it matters + +Oct 22nd 2016 | From the print edition + + + +Salafi-Jihadism: The History of an Idea. By Shiraz Maher. Oxford University Press; 292 pages; $29.95. Hurst; £25. + +WHAT IS jihad? It defines this age of violent Islamist radicalism, yet the meaning of the word and its relevance for modern-day Muslims are both contested. The term derives from jahada, an Arabic word meaning to labour, struggle or exert effort. Many Muslims emphasise “the greater jihad” of personal moral struggle over the “lesser jihad” of military combat; most authorities say that military jihad can be declared only by a rightful ruler—the caliph (a role abolished since 1924), or at least the leader of a Muslim country. + +For the likes of al-Qaeda and Islamic State (IS) real jihad is fighting for the sake of Allah. It is not only equal to the five traditional pillars of Islam—the testimony of faith, regular prayer, giving alms, fasting during Ramadan and the pilgrimage to Mecca; it is, in fact, the most important after the declaration of faith. It is the ultimate means of defending and exalting Islam; an obligation upon the individual, with no need for higher authority. Ayman al-Zawahiri, the co-founder and current leader of al-Qaeda, cites Ibn Taymiyyah, a medieval scholar, as saying that jihad “takes precedence over feeding the hungry, even if the hungry would starve as a result”. + +Most books on jihadism focus on what militant groups do, as well as the history of jihadism and the political context in which it evolved. By contrast “Salafi-Jihadism”, by Shiraz Maher of King’s College London, stands out as an excellent and original account of what jihadists actually think. Mr Maher goes well beyond previous works, such as “Jihad” by Gilles Kepel or “The ISIS Apocalypse” by William McCants, in setting out a taxonomy of jihadists’ system of beliefs. It will be a must-read work in the study of radicalism. + +The violence of jihadists “is neither irrational nor whimsical”, argues Mr Maher. The tenets of their ideology can be traced to mainstream Islamic thinking, although “the contemporary Salafi-Jihadi movement has interpreted and shaped them in unique and original ways”. This gives jihadism unique power. Every act, no matter how vile, finds some kind of justification in tradition; any denunciation by Muslim moderates is dismissed as, in effect, renouncing a part of true Islam. + +Jihadists are a subset of the puritanical Salafist movement that seeks “progress through regression”, as Mr Maher puts it. The movement aims for perfection by following the example of the first three generations of Muslims known as al-salaf al-salihin, starting with the companions of the Prophet Muhammad. These are deemed to embody the golden age, when Islam was spread by both the word and the sword. Mr Maher divides Salafists into three broad categories, based on their attitude to temporal authority: “quietists”, for example Wahhabi clerics who give discreet advice to Saudi rulers; “activist-challengers”, who agitate publicly (and sometimes violently) for governments to reform; and “violent-rejectionists” who regard the very notion of modern states as a heresy. + +The rejectionists are the focus here. Mr Maher sets out five “essential and irreducible features” that define Salafi-Jihadism. Tawhid (the oneness of God) and hakimiyya (securing God’s sovereignty in the political system) seek to promote their form of Islam. The others seek to defend Islam, or so jihadists claim: jihad, takfir (a form of excommunication) and al-wala wal-bara (to love and to hate for the sake of God). + +These concepts, particularly the laws of jihad and takfir, have evolved with successive conflicts. The jihad in Afghanistan in the 1980s was regarded, uncontroversially, as a defensive war to protect a Muslim country against the atheist Soviet communist invader. But when al-Qaeda turned to attack America, on the grounds that it was responsible, directly or indirectly, for countless assaults upon Islam, al-Qaeda had to overcome objections to the killing of civilians. Jihadists developed a dubious doctrine of vicarious liability: democracy, which they declare is an abomination for Muslims, taints all citizens of Western countries with the sins of their rulers because they vote them into office. Almost anything, including the use of weapons of mass destruction, is justified as retribution against their enemies—except, perhaps, for acts expressly forbidden by Islam, such as causing death through sodomy. + +When it comes to attacking the governments of Muslim-majority states, or rival groups, jihadists have stretched the rules of takfir (declaring a Muslim to be a kafir, or non-believer) almost beyond all recognition. In the name of defending Islam, jihadists have killed more Muslims than even the hated “Crusaders and Jews”. IS’s caliphate is odd, too: an act of modern state-building that also serves the eschatological purpose of hastening the End of Days. + +Mr Maher packs a lot of valuable but complex information into his book. Here and there, it could have explained concepts more fully. The section on Ibn Taymiyyah is too skimpy, given his importance. Some might level a second criticism: given that IS, in particular, seems more concerned with the theatre of gore than with Islamic jurisprudence, does jihadist ideology matter? The jihadists’ ability to survive decades of onslaught, by the West and local regimes, suggests their thinking is resilient and appeals to at least a significant minority of Muslims. Mr Maher recently answered the question thus: “Did every Nazi camp guard read ‘Mein Kampf’? No. Did Hitler’s ideas in the book matter? Of course they did.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708990-what-jihadists-believe-and-why-it-matters-men-war/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The migrant business + +Making profits out of hope + +How desperation and innovation combined to create a business + +Oct 22nd 2016 | From the print edition + +On our way + +Migrant, Refugee, Smuggler, Saviour. By Peter Tinti and Tuesday Reitano. Hurst; 331 pages; £20. + +A DEFINING image of the new wave of globalisation—and the attempts to hold it back—is a newly arrived migrant on a European beach, clutching a mobile phone and hoping for a new life. Never before have rich countries raised their walls so high to keep out refugees and the poor. Yet never have people tried so hard to leap over them anyway. + +The most important causes of this migration are wars in places like Syria and Somalia, and demography and poor prospects across Africa and the Middle East. New enablers are vital too: mobile phones, the internet, WhatsApp and Facebook. What is less understood is how business has changed this world. In “Migrant, Refugee, Smuggler, Saviour”, Peter Tinti and Tuesday Reitano, both researchers, explain how the numbers of people arriving in Europe have been made possible because of the emergence of innovative and opportunistic entrepreneurs. + +People-smuggling is just another part of the vast decentralised organised-crime economy. Those in the trade are not necessarily evil or part of a grand conspiracy: they are ordinary folk drawn into organised crime by profits and the prospect of a better life. And policies, particularly in Europe, that are intended to stop migration often have the effect only of rendering it more exploitative and dangerous. + +To make this argument, the authors leap around, with vivid reporting from Niger, Libya, the Balkans, Turkey and Egypt, among other places. Their primary focus is not the migrants, but the smugglers—the people who make it possible to get to countries without a visa or a passport. Crackdowns and demand stimulate supply. Both in Turkey and Libya, it was Syrian refugees—and their ability to pay tens of thousands of dollars—that drove smugglers to develop sophisticated systems. Some refugees are even given bar codes to scan when they arrive in Europe, which help release their payments from escrow. These were built on existing systems, particularly the hawala networks of informal money transfer used by merchants across the developing world. + +The book’s key contention—that tighter rules inspire entrepreneurs to create new, more dangerous and criminal smuggling routes—is persuasive. But it could be more so. Although the blistering criticism of European policy seems right, a section at the end which brings in American policy is weaker. The authors are certainly right that crackdowns on the border with Mexico have created business for criminal cartels. But they are on weaker ground when they suggest it has not deterred migrants. Partly for economic reasons, more Mexicans return from America than go the other way. + +That sort of outcome may eventually be the result of Europe’s shift against migrants too. People-smugglers may well be saviours to some of their clients. But they are exploiters of plenty of others. In the long run death and danger does deter. The more criminal the networks are, the more they will be shunned. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708989-how-desperation-and-innovation-combined-create-business-making-profits-out-hope/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Memoir + +Song of Africa + +Ngugi wa Thiong’o recalls his upbringing in colonial Kenya + +Oct 22nd 2016 | From the print edition + + + +Birth of a Dream Weaver: A Writer’s Awakening. By Ngugi wa Thiong’o. New Press; 238 pages; $25.95. Harvill Secker; £14.99. + +IN THE latest volume of his memoirs, Ngugi wa Thiong’o advocates a certain revisionism about his native Kenya. In a brief preface titled “Note on Nomenclature” he asserts that the British-termed “Mau Mau” rebellion will instead be referred to as the “Land and Freedom Army”, the two main goals for those who rose up against the British colonial presence in Kenya. According to Mr Ngugi, the term “Mau Mau” comes from a corruption of the movement’s motto: “Oath of unity for (demanding) Land and Freedom”. It was the colonial state that opted instead, he says, to refer to the soldiers with the “meaningless mumbo-jumbo” of “Mau Mau” in order to obscure both their goals and their purpose. + +The uprising began in the early 1950s, when Mr Ngugi was still a teenager. It grew from the armed struggle for liberation by the Kikuyu and other tribes, but was characterised by the colonial power as “mass mania manifesting itself in violence and witchcraft”, what Elspeth Huxley, the white settlers’ literary spokesman, called the “yell from the swamp”. The rebellion would have a momentous impact on the novelist’s future work. + +Mr Ngugi’s unstated goal throughout this book is reclamation, not just of the Land and Freedom Army, but of much of the colonial endeavour in east Africa. Over and over again he condemns the denigration of Kenyans as “primitive” and “zoological” and goes on to present a clearer rationale for the Kikuyu people’s desire for freedom. Mr Ngugi’s own wish to wrest the narrative away from the colonial thread comes at a cost, though; at times the story of his development as a thinker and writer is muddled and seems secondary to the broad political and social upheavals happening across the region. + +Mr Ngugi attended the missionary-run Alliance High School near Nairobi and, later, Makerere University in Kampala, Uganda. It was here that he began writing plays and novels against colonial oppression in east Africa. The motto of Makerere University was “to seek the truth”, Mr Ngugi points out, but his accounts of the censorship and bigotry of that time are shocking. + +He describes attending the Conference of African Writers of English Expression, which was held at Makerere in 1962, near the end of his time as a student. Mr Ngugi was selected to participate alongside such writers as Kofi Awoonor, Christopher Okigbo, Chinua Achebe, Wole Soyinka—Africa’s first Nobel laureate in literature—and Langston Hughes, an American poet. + +The conference opened with a discussion on the nature and meaning of “African literature”, and its thematic debates have gone on to shape writing across the continent for the past 50 years. One heated point throughout was language itself, with Mr Ngugi arguing that African novels should be written in African languages, an idea he would promote two decades later in a collection of essays entitled “Decolonising the Mind.” He published several novels in English and then brought out one of the first novels ever written in his native language of Gikuyu, which he later translated into English. + +During the Makerere conference, Mr Ngugi offered Hughes a tour of the city and was given editorial advice by Achebe on the manuscript that would become his first novel, “Weep Not, Child”. The Heinemann African Writers series, for which Achebe was an editorial adviser, published the novel in due course. Later it would be revealed that, unbeknown to many of the participants, the CIA had been the original funder of the Makerere conference in an effort to influence the eventual decolonisation of east Africa. + +Mr Ngugi refers to Makerere as “hell in paradise”. Idi Amin, who seized power in Uganda in 1971, would send a generation of writers and thinkers into exile abroad. Yet the violence and depravity of Amin’s regime—including the decapitation of his captives and the subsequent feeding of their bodies to crocodiles—should have come as little surprise. Amin once served the British in Kenya as a member of the King’s African Rifles. He worked as a headhunter, in the literal sense, fighting a rebellion once called the “Mau Mau”. + +This article appeared in the Print Edition with the headline: A song of Africa + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708993-ngugi-wa-thiongo-recalls-his-upbringing-colonial-kenya-song-africa/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Art from Latin America + +A time of gifts + +A donation to MoMA will transform the study of Latin American Modernism + +Oct 22nd 2016 | From the print edition + + + +LATIN AMERICAN art has long been a feature of the collection of the Museum of Modern Art (MoMA) in New York. Ever since 1931, when Alfred Barr, the then-director, followed an exhibition of Henri Matisse with a one-man show of the Mexican modernist, Diego Rivera, the museum has collected design, photography, film, architectural drawings, paintings and sculpture from the region. In 2014 it put on the first American retrospective of Lygia Clark, a radical Brazilian who died in 1988, bringing together 300 works grouped around three themes: abstraction, Neo-Concretism and what was termed the “abandonment” of art. Now the museum can do even more, thanks to a donation from an important private collector. + +The gift of 102 works comes from Patricia Phelps de Cisneros, a MoMA trustee who has been buying art for more than half a century. The family has already given the museum 40 works. This most recent donation will increase MoMA’s holdings of Latin American paintings and sculpture by half as much again. It also includes plans for a Cisneros Institute to be opened in MoMA’s midtown Manhattan campus, which will focus on research, conferences and publications on art from Latin America. ““It’s the most important gift we’ve ever had,” says MoMA’s director, Glenn Lowry, “And in terms of size it’s the biggest.” + +The seed of the idea was sown in the first week of Mr Lowry’s directorship in 1995, but it was not until nine years ago that the two began discussing specifics. Mrs Cisneros offered the museum anything it wanted from her collection. The curators focused on geometric abstraction, a movement that spread in the 1940s, and evolved in four countries—Brazil, Venezuela, and the Río de la Plata region of Argentina and Uruguay—into an aesthetic all of its own. Artists such as Clark, Hélio Oiticica, Lygia Pape, Jesús Rafael Soto, Alejandro Otero and Tomás Maldonado have long been regarded as modernists, but it is only in the past decade or so that their work has been studied seriously alongside that of European and American artists. “A whole chapter of international modernism is revealed in these works,” Mr Lowry says. + +The Cisneros gift includes work by 37 artists, of which 21 are entering MoMA’s collection for the first time, many of them little-studied. “What is truly important,” Mrs Cisneros says, “is that it allows us now to tell the story of geometric abstraction as a whole. It brings the movement together.” + +The museum will arrange an exhibition of the Cisneros gift after its new extension is opened in 2019. It will also allow the museum to reassess its own modernist collection. “Our interest from the outset is about the ongoing dialogue between different artists who were grappling with similar sets of problems all over the world,” says Mr Lowry. The museum has important holdings of works by Jackson Pollock, Francis Bacon and Willem de Kooning. “Now we can do a room devoted to Lygia Clark, Alejandro Otero or Willys de Castro. In fact, we can show de Castro’s ‘Modulated Composition, 1954’ alongside the Piet Mondrian that inspired it. Because we own that Mondrian.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708994-donation-moma-will-transform-study-latin-american-modernism-time-gifts/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Fiction from Israel + +Delusion chronicle + +An Israeli novelist asks how anyone could serve Hitler or Stalin + +Oct 22nd 2016 | From the print edition + + + +Good People. By Nir Baram. Translated by Jeffrey Green. Text Publishing; 421 pages; $15.95 and £10.99. + +“OUR job is to write a story,” a Soviet agent tells a Nazi collaborator early in 1941, shortly before Hitler’s opportunistic pact with Stalin ended in the German invasion of Russia. “If we believe in it, maybe others will too.” The two years of Nazi-Soviet co-operation after 1939 prove that the bloodiest regimes of modern history could spin any yarn and forge any myth. In “Good People” an Israeli novelist, Nir Baram, asks what kind of people would choose to serve these empires of falsehood with their eyes open and their minds sharp. + +Not monsters or even cynics, he answers in a pacey, plot-heavy novel of dramatic events and big ideas, but gifted storytellers fuelled by ordinary motives of love, loyalty or ambition. Blessed or cursed by the “elasticity of the human soul”, they wield this suppleness of spirit as “the hidden hand that smoothed out every wrinkle in the flag of truth”. + +Born in 1976 into a family long established in Jerusalem, the son and grandson of Labour Party ministers in Israeli governments, Mr Baram seems an unlikely apologist for the compromises that might lead bright young folk to work for the architects of terror and genocide. “Good People” traces the parallel tracks of its fictional protagonists, a German advertising guru called Thomas Heiselberg, and a Russian-Jewish aspiring poet, Sasha Weissberg, with a keen-edged surgeon’s knife. Yet, the reader is made to feel pity for their all-too-human fate. + +The “perfect impostor”, Thomas switches from PR wizardry for an American firm in 1930s Berlin to ideological mumbo-jumbo on behalf of the German occupiers in Poland. Sasha’s mildly dissident parents are seized by Stalin’s secret police and sent to the gulag. To save her twin brothers, she agrees to edit the confessions tortured out of prisoners into “a complete, coherent and convincing story”. With cunning and verve, Mr Baram brings these virtuosi of the lie together in Brest-Litovsk as the sham alliance between their tyrants collapses. Jeffrey Green’s translation does page-turning justice to the progress of “a pair of talented forgers” whose artistry abets the worst crimes of the century. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708992-israeli-novelist-asks-how-anyone-could-serve-hitler-or-stalin-delusion-chronicle/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Steven Isserlis, musical educator + +String fellow + +The rich musical world of a British cellist + +Oct 22nd 2016 | From the print edition + +SHOULD people know the story behind the creation of a piece of music, or should they let it speak for itself? Steven Isserlis, a British cellist, poses this question in a note to a CD he has just recorded with an American violinist, Joshua Bell. The question is pertinent because the works they play, by Schumann and Brahms, are full of implicit messages from (or about) the composers. Brahms’s first Piano Trio reflected his admiration for Robert Schumann and his adoration of Clara Schumann. The theme of the slow movement in Schumann’s Violin Concerto was a melody revealed to him by Schubert in a dream. Knowing these things changes the way people listen. + +But Mr Isserlis, who has just republished Schumann’s “Advice to Young Musicians” (including some new advice of his own) is much more than a musicological sleuth: he is an acclaimed and a much-sought-after soloist. He also runs festivals, is artistic director of the International Musicians’ Seminar in Cornwall and champions music he regards as underrated. His children’s books about composers reflect a passionate commitment to music education. Few classical musicians can match his influence. + +Music from heaven + +Now 57, and perennially sporting a wild mop of hair suggestive of a surprised hedgehog, he has a Puckish air. What makes him tick? The key lies in his childhood, and a family tree he is proud to share with Felix Mendelssohn and Karl Marx stretching back to a 16th-century Polish Talmudic scholar, Moses Isserles. His grandfather, Julius Isserlis, was a Russian-Jewish pianist-composer who studied with Tchai-kovsky’s pupil, Sergei Taneyev. In the 1920s he was one of the first Soviet musicians allowed by Lenin to tour abroad (he never went back). Julius had a direct bearing on his grandson’s development. The cellist has recorded some of Julius’s charming, late-Romantic music, and the certificate of his gold-medal award from the Moscow Conservatoire now hangs on the wall of Mr Isserlis’s drawing room. + +Music-making was central to Isserlis family life. Steven’s mother was a piano teacher, his father played the violin, and his elder sisters are professionals on the viola and violin respectively; taking up the cello, he completed a family ensemble which gave public performances. At 14 he was taken out of school and spent three years sequestered in Scotland with a teacher who inculcated the basics of his immaculately expressive style; he then studied at the Oberlin conservatory. Mr Isserlis has always wanted to emulate the example of Daniil Shafran, a Russian cellist whose instrumental sound, he says, was like the voice “of a great Russian folk singer”. + +As a cellist, Mr Isserlis was a slow starter: the emptiness of his engagement diary in his 20s made him wonder if he would ever have a career. But when John Tavener wrote a concerto entitled “The Protecting Veil” for him in 1987, its unexpected success catapulted him to fame. It came at a time when audiences had tired of atonal experimentalism, and Mr Isserlis’s glowingly melodious account of Tavener’s meditation on Greek Orthodox themes chimed happily with the popular mood. + +Since then he has taken an unusually eclectic path, recording the concertos and sonatas of Mendelssohn, Grieg, Fauré and Walton on the one hand, while premiering works by cutting-edge contemporary composers on the other. The craggy Hungarian miniaturist, Gyorgy Kurtag, composed a solo elegy for Mr Isserlis to play after the cellist’s wife, Pauline, a flautist, died from cancer. Thomas Adès chose Mr Isserlis to premiere “Lieux retrouvés”, his most lyrical work to date. Yet Mr Isserlis is refreshingly ready to slaughter the avant-garde’s sacred cows, dismissing the late Pierre Boulez—the biggest such beast—as having had a deleterious effect on musical life. “Now there’s room for everybody, every style,” he proclaims cheerfully. “There’s never been such a great age for new music.” + +Mr Isserlis is really a chamber musician, whether in period-instrument performance with Robert Levin and Andras Schiff, both pianists, in Romantic music with Mr Bell, or in new music (including that of an American composer, Lowell Liebermann) with his north London neighbour Stephen Hough, also a pianist. As a soloist, meanwhile, he acknowledges Bach’s six Cello Suites as his cornerstone: sublime works which fill him with a mixture of fascination, awe and fear. + +After making his award-laden recording of them for Hyperion, he initially vowed he would never play them again: “I love them so much, and they make me so nervous, for fear of letting them down.” He would never emulate Yo-Yo Ma by performing them at one sitting—“the concentration would be too much, for both me and the audience”. But he recently interspersed them with Kurtag’s miniatures. If Bach’s suites fascinate him, it is partly because they exploit the cello’s capacities more satisfyingly than any other music has. And partly because, with his musicologist’s eye, he reads into them a mystical Christian programme, from the nativity to the crucifixion to the resurrection. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21708991-rich-musical-world-british-cellist-string-fellow/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Obituary + + + +Dario Fo: Italy’s jester [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Italy’s jester + +Obituary: Dario Fo + +Dario Fo, playwright, actor artist and all-round provocateur, died on October 13th, aged 90 + +Oct 22nd 2016 | From the print edition + + + +THE stone lions that guard the Romanesque cathedral at Modena, in northern Italy, were doubly dear to Dario Fo. As a lover of medieval architecture, he studied and revered the old beasts as art. But after roughly 2,000 years of roaring their noses were worn away, their teeth gappy and their expressions dimly surprised. These symbols of the combined might of church and state had been taken over by the people—usually small people, who rode on them laughing and kicked their curled manes with vicious little feet. + +All Mr Fo’s life in theatre and politics (the one infusing the other all the time) was dedicated to the idea of il popolo contro i potenti, the people against the powerful. He put himself squarely in the tradition of the giullari, the mocking, singing jesters of medieval Italy, who kept on the move because they were liable to be hanged if they stayed still. The work that made his name and notoriety, “Mistero Buffo” (“Comedy-Mystery”), was a one-man show in which, his long limbs feline in a black jumper and grey trousers, he told, mimed, sang and shouted New Testament stories like an idiot. His Jesus got drunk at the marriage at Cana, climbed on a table and exhorted everyone to forget the afterlife for the here and now; his raising of Lazarus was recounted by a furious pickpocket victim in the crowd. The line to the medieval mystery plays was direct. When Mr Fo won the Nobel prize in 1997 he received it on behalf of all mummers, tumblers and clowns. + +Ordinary people were the heroes of all his plays, or rather farces, and authorities of every sort his villains. This touched a raw nerve in the chaotic, kidnap-and-inflation-ridden Italy of the mid-20th century, but also far outside it. His most famous play, “The Accidental Death of an Anarchist” (1970), concerned the true, mysterious defenestration of an activist while in the hands of the police. His second-most-famous, “Can’t Pay? Won’t Pay!” (1974), starred two housewives driven to shoplifting by extortionate food prices. Both manic comedies were built up from outrage that made the laughter stick in your throat. Which was more dangerous, an innocent anarchist or a corrupt judicial system? Which was the greater crime, stuffing a jar of olives under your coat, or charging more than workers could possibly afford? + +He wrote as people spoke, with plenty of swearing, obscenity, Lombardy dialect, tall tales from smugglers and fishermen and the invented language, “grammelot”, he picked up from foreign workers in a glass factory near Lake Maggiore, where he grew up as a stationmaster’s son. His favourite local story mocked docile villagers on the Rock of Caldé who, even as the village and its church bells were sinking underwater (“Dong…ding…dop…plock…”), insisted they weren’t drowning. + +Riots and risotto + +Having written “lines to chew on” (in a few days, usually), and made the sets, costumes and masks, all in devoted partnership with his actress wife, Franca Rame, he would take his shows direct to the people. Early on he played regular theatres, but these were too cosily bourgeois. He sought “solidarity with the humble” in union halls, prisons, factories or park pavilions, places with bad acoustics but great for debate. La Comune, his theatre group, threw out the “fourth wall”, letting the audience mill onstage with their own interventi about rotten mayors, magistrates, bosses and the criminal state. They had plenty. + +The authorities raved at him. His plays were cut, thrown out, closed down; he was briefly arrested and frequently put on trial, though always rising up victorious. The Vatican declared “Mistero Buffo” to be the greatest blasphemy in the history of television. He was banned for 14 years from RAI, the state broadcaster, for proposing in 1962 a play in which factory bosses refused to shut down production after a visitor had fallen into the meat-grinder, preferring to turn out instead another 150 tins of mince. + +Like any jester, though, he couldn’t be kept down—not with Silvio Berlusconi’s bunga bunga around, or global financial collapse. (He dreamed that, after a double assassination attempt on Mr Berlusconi and Vladimir Putin, Italy’s then-prime minister was saved with a transplant of part of Mr Putin’s brain.) He was not a formal communist and, when he ran for mayor of Milan in 2005, seemed unsure which party he was in. But apparent chaos almost always masked careful preparation. “Accidental Death” took months of rigorous legal research. On a typically mad day in his flat, with the phone ringing off the hook and people rushing in and out, farce-like, he (and she) could still perfect the moves for his latest piece over Franca’s sublime risotto milanese. + +As if all that were not enough, he directed operas too; and painted. He had loved painting all his life, and thought it the highest form of art he attempted. It wasn’t pure, of course. Politics polluted that, too. And indeed it had to, if art was to have any use in its own time. His beloved cathedral of Modena had been built by simple, exploited workers like those who came to his shows. But if he himself had carved those guardian lions, they would have held in their teeth the greasy remains of a howling politician or a squealing, mangled judge. + +Our obituary of King Bhumibol of Thailand appeared online last week. + +This article appeared in the Print Edition with the headline: Italy’s jester + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21708977-dario-fo-playwright-actor-artist-and-all-round-provocateur-died-october-13th-aged-90/print + + + + + +| Section Menu | Main Menu | + + + + + +| Main menu | Previous section | + + + + +* * * + + + +Economic and financial indicators + + + +Interactive indicators [Fri, 21 Oct 02:42] + +Output, prices and jobs [Fri, 21 Oct 02:42] + +Trade, exchange rates, budget balances and interest rates [Fri, 21 Oct 02:42] + +The Economist commodity-price index [Fri, 21 Oct 02:42] + +Commodities [Fri, 21 Oct 02:42] + +Markets [Fri, 21 Oct 02:42] + + + + + +* * * + + + +| Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Interactive indicators + +Oct 22nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21709051/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Output, prices and jobs + +Oct 22nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21709046-output-prices-and-jobs/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Trade, exchange rates, budget balances and interest rates + +Oct 22nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21709047-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The Economist commodity-price index + +Oct 22nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21709048-economist-commodity-price-index/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Commodities + +Oct 22nd 2016 | From the print edition + + + +The Economist’s commodity-price index has climbed 10% this year, although it is still 40% below its peak in 2011. Over-supply and falling Chinese demand pushed down the value of raw materials in 2015, but government stimulus in China has boosted building activity and metal prices this year. Oil has also reached $50 a barrel again, partly because of expectations that OPEC, an oil cartel, may agree to curb production. Sugar is the best-performing commodity in our index: unfavourable weather in Brazil has pushed up the price by 56%. Grain prices have fallen after bumper harvests in the United States, while oversupply of cattle has pulled the price of beef down by 24%. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21709050-commodities/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Markets + +Oct 22nd 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21708987-markets/print + + + + + +| Section Menu | Main Menu | + + + +Table of Contents + +The world this week + +Politics this week + + + +Business this week + + + +KAL's cartoon + + + +Leaders + +Russia: Putinism + + + +The battle for Mosul: Crushing the caliphate + + + +Business in America: Float like a butterfly + + + +Thailand’s succession: A royal mess + + + +Trade agreements: Asterix in Belgium + + + +Letters + +On Brexit, Bob Dylan, bonds, Donald Trump: Letters to the editor + + + +Briefing + +Private Equity: The barbarian establishment + + + +United States + +Election 2016: Hating Hillary + + + +The third debate: Final insult + + + +The campaigns: Heard on the trail + + + +Election brief: Infrastructure: A view from the bridge + + + +Lexington: How to shoot a man in Reno + + + +The Americas + +Canada’s climate policy: Let the haggling begin + + + +Bello: A model Latin American + + + +Clowns in Cuba: The red-nosed gold rush + + + +Informality in Latin America: Casual Mondays to Fridays + + + +Asia + +Thailand’s monarchy: An empty throne + + + +Bhutan: Happy-grow-lucky + + + +South Asian media: All hail + + + +Assisted suicide in Australia: On the brink + + + +Maternity culture in Japan: No pain, no gain + + + +Preservation in India: Brick by brick + + + +Banyan: Duterte’s pivot + + + +China + +Politics: Master of nothing + + + +Middle East and Africa + +Iraq: Marching on Mosul + + + +Jordan: The uneasy crown + + + +Saudi Arabia’s religious police: Advice for the vice squad + + + +South Africa: This other Eden Project + + + +Justice in Africa: Poor law + + + +Europe + +Ukraine’s future: Bone of contention + + + +Ukraine’s rock-star politician: Front man + + + +Russia’s Bashneft deal: Easy sale + + + +Italy’s Five Star Movement: Requiem for a dreamer + + + +The Canada-EU trade deal: Hot-air Walloons + + + +Charlemagne: Couleurs primaires + + + +Britain + +Social mobility: A class apart + + + +Inflation: Only the beginning + + + +Politics: Theresa’s way + + + +Policing: The long lens of the law + + + +Porn and protest: Obscene and not heard + + + +Britain and the European Union: Brexit à la carte + + + +Housebuilding: Prefabs sprout + + + +Public inquiries: Question time + + + +Education: Not-so-super heads + + + +Bagehot: The spectre of Scoxit + + + +International + +Migration to Europe: Travelling in hope + + + +Special report: Russia + +Russia: Inside the bear + + + +The economy: Milk without the cow + + + +Power structures: Wheels within wheels + + + +Foreign policy: The fog of wars + + + +Modern life: Tell me about Joan of Arc + + + +Past and future: Take care of Russia + + + +Business + +Elon Musk’s empire: Countdown + + + +Media models: Channelling Trump + + + +Biotechnology: The trials of Juno + + + +Retailing: Push my buttons + + + +African airlines: Well-connected + + + +Indian furniture makers: Turning the tables + + + +Schumpeter: Techno wars + + + +Finance and economics + +Government bonds: Who’s scary now? + + + +Venezuelan government debt: Running out of time + + + +Italian banks: Spectral forms + + + +Buttonwood: Mutual incomprehension + + + +Watson and financial regulation: It knows their methods + + + +Free exchange: Subtract and divide + + + +Science and technology + +Making sex cells from body cells: The ancestor’s tail + + + +Urban planning: Listen to the music of the traffic in the city + + + +Anti-malaria drugs: Do you yield? + + + +Exploring Mars: Triumph or disaster? + + + +Sexual cannibalism: Nature’s cruellest one-night stand + + + +Books and arts + +The meaning of jihad: Men of war + + + +Migrants: Making profits out of hope + + + +Ngugi wa Thiong’o: A song of Africa + + + +Latin American Modernism: A time of gifts + + + +Fiction from Israel: Delusion chronicle + + + +Steven Isserlis: String fellow + + + +Obituary + +Dario Fo: Italy’s jester + + + +Economic and financial indicators + +Interactive indicators + + + +Output, prices and jobs + + + +Trade, exchange rates, budget balances and interest rates + + + +The Economist commodity-price index + + + +Commodities + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.10.29.TXT b/homeworks/B20769/homework1/data2/2016.10.29.TXT new file mode 100644 index 0000000..15f48b8 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.10.29.TXT @@ -0,0 +1,4552 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Politics this week + +Oct 29th 2016 | From the print edition + + + +In France the migrant camp at Calais was dismantled, with asylum-seekers sent to processing centres or to Britain, where many want to end up. Meanwhile, European Union officials met the Nigerian government to try to thrash out an agreement on sending failed asylum-seekers back to their countries of origin. A deal is sorely needed: the UN’s refugee body said that 2016 has been the deadliest for migrants crossing the Mediterranean, with more than 3,800 dead or missing. See article. + +Justin Trudeau, the prime minister of Canada, cancelled a trip to Brussels to sign a trade deal with the EU because the Socialist-led regional parliament of Wallonia in Belgium was refusing to support it. The deal, which has been seven years in the making, is opposed by many Europeans who worry that it will water down rules on environmental standards and labour laws. At the last minute Belgium cobbled together an agreement. See article. + +At a NATO meeting, Spain was criticised for agreeing to refuel Russian warships at its enclave in Ceuta in north Africa. Others in the military alliance feared that the warships could help bomb Syria. Russia later withdrew its request. + +Scrapping the vote + +Hundreds of thousands of people in Venezuela protested against the country’s authoritarian regime. The electoral commission had earlier blocked a referendum to recall the president, Nicolás Maduro, following court rulings that the collection of signatures at an earlier stage of the referendum process had been fraudulent. The national assembly, which the opposition controls, accused the government of conducting a coup d’état. See article. + +Donald Trump launched an attack on Obamacare after the government reported that the cost of an average health-insurance plan sold through government-run exchanges will rise by 22%. The three-month window for buying insurance on exchanges opens on November 1st, spurring a hefty rise in health bills for some voters a week before the presidential election. + +America’s election and tallying of the votes takes place on November 8th, but early voting in Florida, a key battleground state, got under way this week. Florida is one of 37 states that allow voters to cast their ballots before the official date of the election. Turnout was said to be brisk. + +Out-of-court disagreement + + + +The Gambia became the latest country to say that it is leaving the International Criminal Court, claiming that it is unfairly targeting African leaders for prosecution. Burundi and South Africa recently did likewise. The court was set up in 2002 to bring justice to those responsible for genocide, crimes against humanity and other war crimes. See here and here. + + + +Kurdish forces involved in the liberation of Mosul, Iraq’s second city, from Islamic State, besieged Bashiqa, a town just 8 miles (12km) away. Meanwhile, Iraqi special forces were approaching Mosul’s southern outskirts. Some 7,500 people are said to have fled so far. See here. + +The chief whip of the African National Congress, South Africa’s ruling party, called on its entire leadership, including President Jacob Zuma, to resign. He says that fraud charges being brought against the finance minister, Pravin Gordhan, are politically motivated. + +Ethiopia withdrew its troops from Somalia, where they had been fighting Islamist militants, blaming a cut in funding for the mission by the EU. + +Israeli prosecutors charged 13 people with inciting violence after a wedding video showed scenes of right-wing Jews mocking the death, last year, of a Palestinian toddler in an arson attack in the West Bank. + +Targeting the police + +Militants in Pakistan killed more than 60 people at a police-training academy near the city of Quetta. The cadets were asleep when the attackers struck. IS claimed responsibility, but Pakistani authorities suggested a local Islamist group was to blame. + +A group of 65 Burmese refugees who had been living in camps along the border with Thailand returned home voluntarily, the first repatriation to earn the approval of both governments. Thailand has long sought to send home some of the 150,000 Burmese refugees in the country. + +South Korea’s president, Park Geun-hye, apologised for sharing documents with a friend who had no official government position. Opposition lawmakers have accused the friend of using the president to secure donations for two foundations. See article. + +Chaos again erupted at Hong Kong’s Legislative Council amid disputes over the swearing-in of two legislators who support self-determination for the territory. Thousands of people gathered outside the building to demand that the two should not take up their posts because they used derogatory language about China when they took their oaths. + +A committee of Japan’s ruling Liberal Democratic Party proposed to allow party leaders to serve for a maximum of nine years instead of six. If approved, the rule-change might allow Shinzo Abe to remain in power until 2021. + +About 350 of the Chinese Communist Party’s senior members held a four-day meeting at which they discussed ways of tightening discipline within the ranks. It is likely that the secretive gathering also debated plans for sweeping leadership changes next year. President Xi Jinping is certain to keep his job. + +China accused America of trying to “stir up trouble” after a rapprochement between China and the Philippines, an ally of America. People’s Daily, a mouthpiece of the Chinese Communist Party, cited as evidence the recent passage of an American destroyer near two islands in the Paracels. + +Still facing headwinds + + + +The British government at last made a decision on expanding airport capacity, giving the go-ahead for a third runway at Heathrow. The proposal, initially put forward in 2009 by the then governing Labour Party, is controversial. In 2010 a Conservative-led government cancelled the project and a final decision has been repeatedly put off. Theresa May, the prime minister, whose constituency will be affected by the expansion, had pledged to fight the plan; every mayor of London has also opposed it; and Zac Goldsmith, a London Tory MP, resigned his seat in protest. After years of taxiing, campaigners hope a third runway may yet fail to take off. + + + + + +Business this week + +Oct 29th 2016 | From the print edition + +AT&T made an offer for Time Warner, in a deal valued at $109bn, underlining the push to establish giants in the media industry that combine distribution with content. If competition authorities approve, the acquisition will give AT&T possession of HBO and other premier cable channels, as well as a trove of films produced by Warner Bros. With its new assets, America’s second-biggest wireless-telecoms firm wants to set up a rival to Netflix and Amazon, which have disrupted cable-TV with cheaper services that stream content over the internet. See here and here. + +In a deal that will create the world’s biggest listed cigarette-maker, British American Tobacco offered to pay $47bn to take over Reynolds American. With sales of cigarettes declining around the world, tobacco companies are scrambling to develop vapour-based products such as e-cigarettes. See article. + +Mistry solved + +In a surprise move, Cyrus Mistry was replaced as chairman of Tata Group, India’s biggest conglomerate, by Ratan Tata, who had led the group for 20 years and now controls its holding company. Mr Mistry’s defenestration followed investor unease about Tata’s performance and a reported clash over the group’s culture with Mr Tata, who is returning on an interim basis. Mr Mistry didn’t go quietly, depicting his removal as “unparalleled in the annals of corporate history”. See article. + +Britain’s economy grew by 0.5% in the third quarter, which was much better than had been expected. The period covers the three months since Britain voted on June 23rd to leave the European Union. The manufacturing sector contracted in the quarter. Markets shrugged off the news. See article. + +A federal judge approved the $15bn settlement through which Volkswagen will compensate customers who bought cars that fail to meet pollution standards because it cheated in emissions tests. VW will offer to either buy back or fix the vehicles, though that fix has yet to be approved. + +Tesla Motors made a surprise profit, its first since 2013. The maker of electric cars reported net income of $22m for the third quarter; in the same period last year it had made a loss of $230m. Revenues zoomed to $2.3bn. + +Ericsson named Borje Ekholm as its new CEO. Mr Ekholm has been a board member at the struggling Swedish telecoms-equipment supplier for ten years, and will carry out his new duties from the United States, where he lives. The company recently issued a dire profit warning. + +The full Monte + +Monte dei Paschi di Siena, the most distressed bank in Italy’s troubled industry, announced it would shed a tenth of its staff and a quarter of its branches as part of restructuring. It also confirmed that it would launch a debt-for-equity swap to kickstart its recapitalisation plan. This will happen in early December, when Italians vote in a contentious referendum on political reform that may unnerve markets if it fails. + +Adding to its portfolio of hotels and airlines, HNA, a Chinese conglomerate, said it would take a 25% stake in Hilton for $6.5bn. It is buying the stake from Blackstone, which purchased the hotel chain in 2007. The private-equity firm has enlarged the business to more than 775,000 rooms worldwide, with Asia providing much of the expansion. + + + +Apple reported net income of $45.7bn for the 12 months ending September 24th, which was down by 14% from its previous fiscal year. Sales of the iPhone have been slowing, and Apple’s growth in China has tapered off. Still, the company reckons it will rack up sales of up to $78bn over the Christmas season, which would make this its best quarter ever. + +There were signs this week that antitrust regulators were raising doubts about the wave of merger proposals in agribusiness, possibly delaying their completion. Syngenta reassured investors that its takeover by ChemChina would be completed, but said it does not now expect this to happen until early next year. And Bayer defended its planned acquisition of Monsanto as “entirely logical”; it expects its deal to close by the end of 2017. + +The botnet battalion + +A massive “distributed denial-of-service” attack caused hundreds of popular websites, including Netflix and Twitter, to go offline. The perpetrators hacked devices, such as webcams and home routers, amassing a botnet, or online force, that then bombarded a server in New Hampshire which is part of the internet-address system. Shortly after the attack, a Chinese electronics maker recalled some of its products, mostly webcams. The hackers’ code is thought to have originated from an attack on Sony and Microsoft that frustrated online-gamers on Christmas Day in 2014. + + + + + +KAL's cartoon + +Oct 29th 2016 | From the print edition + + + +More KAL's cartoons + + + +This article appeared in the Print Edition with the headline: KAL's cartoon + + + +Leaders + + + + + +Canada’s example to the world: Liberty moves north + +The Bank of England: Hands off + +The International Criminal Court: Back it, join it + +Business in America: Vertical limit + +Investment banks: Too squid to fail + + + + + +Canada’s example to the world + +Liberty moves north + +It is uniquely fortunate in many ways—but Canada still holds lessons for other Western countries + +Oct 29th 2016 | From the print edition + + + +WHO will uphold the torch of openness in the West? Not America’s next president. Donald Trump, the grievance-mongering Republican nominee, would build a wall on Mexico’s border and rip up trade agreements. Hillary Clinton, the probable winner on November 8th, would be much better on immigration, but she has renounced her former support for ambitious trade deals. Britain, worried about immigrants and globalisation, has voted to march out of the European Union. Angela Merkel flung open Germany’s doors to refugees, then suffered a series of political setbacks. Marine Le Pen, a right-wing populist, is the favourite to win the first round of France’s presidential election next year. + +In this depressing company of wall-builders, door-slammers and drawbridge-raisers, Canada stands out as a heartening exception. It happily admits more than 300,000 immigrants a year, nearly 1% of its population—a higher proportion than any other big, rich country—and has done so for two decades. Its charismatic prime minister, Justin Trudeau, who has been in office a year, has welcomed some 33,000 Syrian refugees, far more than America has. Bucking the protectionist mood, Canada remains an eager free-trader. It was dismayed by the EU’s struggle to overcome a veto by Walloons on signing a “comprehensive” trade agreement that took seven years to negotiate (see Charlemagne). Under Mr Trudeau, Canada is trying to make amends for its shameful treatment of indigenous peoples, and is likely to become the first Western country to legalise recreational cannabis on a national level. + +Go, Canada! + +Irredeemably dull by reputation, less brash and bellicose than America, Canada has long seemed to outsiders to be a citadel of decency, tolerance and good sense. Charles Dickens, bewildered by a visit to America in 1842, found relief in Canada, where he saw “public feeling and private enterprise in a sound and wholesome state; nothing of flush or fever in its system.” Modern Canada’s social safety net is stronger than America’s; its gun-control laws saner. Today, in its lonely defence of liberal values, Canada seems downright heroic. In an age of seductive extremes, it remains reassuringly level-headed. + +Many of Canada’s virtues spring from its history and geography and are not readily exportable (see Briefing). It is easier to be relaxed about immigration when your only land border is protected by a wall the size of the United States. Appreciation for the benefits of trade comes more easily to countries next door to big markets. British Brexiteers might justifiably claim that they voted for exactly what Canada already has: control of immigration and the freedom to negotiate trade deals with any country willing to reciprocate. + +Despite such luck, Canada suffers from some of the stresses that feed populism in other rich countries. It has experienced a decline of manufacturing jobs, stagnant incomes for most of its citizens and rising inequality. It, too, frets about a shrinking middle class. Canadians worry about Islamist terrorism, though the country has so far been spared a big attack. Some right-of-centre politicians, playing on fears that one will happen, indulge in Trumpian rhetoric. Yet Canada does not seem tempted to shut itself off from the world. What can other Western countries learn from its example? + +First, Canada not only welcomes newcomers but works hard to integrate them. Its charter of rights and freedoms proclaims the country’s “multicultural heritage”. Not every country will fuse diversity and national identity in the same way that Canada does. Indeed, French-speaking Quebec has its own way of interpreting multiculturalism, which gives priority to the province’s distinct culture. But other countries can learn from the spirit of experimentation that Canada brings to helping immigrants find employment and housing. Its system of private sponsorship, in which groups of citizens take responsibility for supporting refugees during their first year, not only helps them adapt but encourages society at large to make them welcome. The UN High Commissioner for Refugees has called on other countries to copy it. + +Follow the moose + +The second lesson is the value of knowing when fiscal austerity does more harm than good. Canada has been managing its public finances conservatively for the past 20 years or so. Now in charge of a sluggish economy, Mr Trudeau can afford to give growth a modest lift by spending extra money on infrastructure. His government has given a tax cut to the middle class and raised rates for the highest earners to help pay for it. These economic policies deserve to “go viral”, the head of the IMF has said. Canada has a further economic lesson to impart in how it protects people hurt by globalisation. Compared with America, its publicly financed health system lessens the terror of losing a job; it also provides more financial support and training to people who do. And its policy of “equalisation” gives provincial and local governments the means to maintain public services at a uniform level across the country. + +Perhaps most important, this mixture of policies—liberal on trade and immigration, activist in shoring up growth and protecting globalisation’s losers—is a reminder that the centrist formula still works, if politicians are willing to champion it. Instead of folding in the face of opposition to liberal policies, Mr Trudeau and his ministers have instead made the case for them. Although free trade is not the hot-button issue in Canada that it is in America, they have been tireless in listening to critics and trying to take their concerns into account. + +Canada is far from perfect. It remains a poorer, less productive and less innovative economy than America’s. While championing freer international trade, Canada has yet to eliminate obstacles to trade among its provinces. For many liberals, Canada’s emphasis on “peace, order and good government”, enshrined in its constitution, is inadequate without an infusion of American individualism. But for now the world owes Canada gratitude for reminding it of what many people are in danger of forgetting: that tolerance and openness are wellsprings of security and prosperity, not threats to them. + + + + + +The Bank of England + +Hands off + +Politicians who casually attack the central bank’s integrity are playing with fire + +Oct 29th 2016 | From the print edition + +FOR nearly two decades Britain’s monetary policy has been independently set by the Bank of England, according to targets defined by the government. Removing direct control of interest rates from politicians, who were inclined to fiddle with them for electoral gain, has made for a better-run, more stable economy in Britain, as it has in many other countries. + + + +Yet one of the aftershocks of the Brexit earthquake in June is that the Bank of England’s independence has been called into question. There has been a growing chorus of criticism of the central bank, with increasingly senior pro-Brexit politicians calling for the government to boot out its governor and take back control of monetary policy. Such a course remains unlikely, for now. But the rhetoric is dangerous. The people chipping away at one of the remaining pillars of Britain’s financial stability should lay off. + +From the people who brought you Brexit + +The feistiest criticism has come from overexcited Tory backbenchers, giddy from their referendum victory over “experts”, among whom they include Mark Carney, the bank’s governor. They were infuriated by his willingness during the campaign to spell out the economic risks of Brexit, which they said compromised the bank’s political neutrality. They are now echoed by more influential figures. Michael Gove, a recently sacked cabinet minister, advised the “arrogant” Mr Carney to “ponder the fate of the Chinese emperors, overwhelmed by forces they could not control”. William Hague, a former Tory leader, threatened that if central bankers in Britain and elsewhere did not soon raise interest rates, “the era of their much-vaunted independence will come…to its end.” Most worryingly, the prime minister, Theresa May, warned in a clumsily worded speech that the bank’s regime of low interest rates and quantitative easing (printing money to buy government bonds) had penalised the poor, vowing: “A change has got to come. And we are going to deliver it.” + +Enough. This newspaper has been ready to criticise the bank when it errs, as it did in its handling of the financial crisis of 2007. There is, rightly, a lively public debate about the policies of central banks, from America’s Federal Reserve to the European Central Bank. Yet the present onslaught on the Bank of England is an attack not just on its policies but on its political neutrality and independence, which for 19 years have helped underpin Britain’s status as a haven of relative stability. + +This is a particularly dangerous time to launch such an attack. Sterling’s loss of nearly a fifth of its value since the referendum shows how Britain has already been devalued in the eyes of the world. The City of London risks losing some, and perhaps a lot, of the financial-services business that has powered Britain’s growth and provides a big chunk of its taxes (see article). And investors can hardly look to the opposition for reassurance: Labour has sent mixed signals, proposing a distinctly non-independent-sounding “people’s quantitative easing” and promising to review the Bank of England’s role. + +None of this makes anyone keener to invest in Britain. It may well make Mr Carney more likely to jump ship (as a Canadian migrant he is, after all, a “citizen of nowhere”, to use Mrs May’s ill-judged slur on high-flying globetrotters). A few sensible types, including Philip Hammond, the chancellor, seem to realise that Britain does not need further shocks to its financial stability, and are trying to play down the row. He and Mrs May must now speak out above the din, saying loud and clear that the Bank of England’s independence is beyond question. Having opted to leave the EU after a campaign that urged voters to ignore “experts”, Britain needs all the expertise it can get. + + + + + +The International Criminal Court + +Back it, join it + +African countries are wrong to leave + +Oct 29th 2016 | From the print edition + + + +SOUTH AFRICA’S decision to stomp out of the International Criminal Court (ICC) is deplorable. It is inconceivable that Nelson Mandela would have done such a thing. Virtually all right-thinking liberals and lawyers in his country have condemned the move. In the name of standing up against the supposed anti-African bias of the court, South Africa has aligned itself with the autocrats of the continent and given succour to those who have committed appalling human-rights abuses. Its announcement on October 21st followed that of Burundi, which is under “preliminary examination” by the ICC for its president’s bloody suppression of dissent; the Gambia, another nasty regime, followed suit this week (see article). It would be tragic if South Africa set in motion a domino effect that prompted ever more African countries to leave the court. A wave of withdrawals would reverse the progress towards greater rule of law across the continent and beyond. + +The charge of anti-African bias laid against the court, mainly by a clutch of governments whose leaders are vulnerable to its vigilance, is understandable—but wrong. True, eight of the nine countries about which cases have been heard, or are under way, are African. And all those so far convicted have been African. But that is because African governments, mindful of the horrors of apartheid and the genocide in Rwanda, have been keenest to sign up to the court and have actively initiated cases. Indeed, most of the ICC’s cases were referred to it by African governments themselves, while two (Libya and Sudan) were brought by the UN Security Council. The only exceptions to this pattern involve Kenya. The ICC indicted the current president and deputy president after at least 1,300 people were killed in post-election violence in early 2008. It was Kofi Annan, the UN’s former head, a Ghanaian, who recommended that the ICC bring charges. After the cases against President Uhuru Kenyatta and his deputy were dropped a year ago, the court issued a “finding of non-co-operation”, a polite term that included accusations of witness-tampering. + +Jacob Zuma, South Africa’s dire president, has already tarnished his country’s reputation as a beacon of morality by his own entanglements with the law at home. Now he has added to the damage by disdaining the ICC abroad. He thinks it should, among other things, grant immunity to incumbent leaders. Leaving the international court may, Mr Zuma hopes, make it easier for him to fend off the remonstrations of his own courts, which may yet punish him for inviting Sudan’s president, Omar al-Bashir, to cosy meetings in South Africa, despite his indictment by the ICC for mass murder in Darfur. + +African leaders who seek to play the populist, anti-Western card to fend off the long arm of the law, whether domestic or international, are—so far, at least—the minority. They belong to the bad old Africa of the past. The good Africa, still happily in the ascendant, has rallied to the ICC. All the same, the ICC and its admirable chief prosecutor, Fatou Bensouda (a Gambian woman), do need to reassure African countries that it is impartial. Even governments that take human rights seriously jib at the way non-Africans seem to get away with murder. + +Syria, a non-signatory along with most Arab countries, should obviously be in the ICC’s sights, but Russia would block its referral in the UN Security Council. Last year’s addition of Georgia to the list of places where war crimes are being investigated was timely. Of the ten other countries where “preliminary examinations” are under way but not yet close to a trial, half are outside Africa, namely Afghanistan, Colombia, Iraq, Palestine and Ukraine. It would be better still if big countries signed up to the court. But the United States has refused to do so, as have Russia and China. + +The wheels of justice move slowly + +International justice is plainly imperfect, but is worth pursuing. Patience is in order. Tribunals for Yugoslavia, Rwanda and Sierra Leone, whose experience led to the creation of the ICC’s permanent court, all took time to bear fruit. The ICC, though underfunded, has begun to speed up, and has established important new principles, including convictions for rape and destroying historic monuments in conflict, both now deemed potential war crimes. In any event, the ICC’s purpose is to bring justice to voiceless victims, not to let the powerful off the hook, be they from Africa or any other part of the world. + + + + + +Business in America + +Vertical limit + +AT&T’s takeover of Time Warner should be blocked + +Oct 29th 2016 | From the print edition + + + +ONE of the biggest problems facing America’s economy is waning competition. In the home of free enterprise two-thirds of industries have become more concentrated since the 1990s, partly owing to lots of mergers. Fat, cosy incumbents hoard cash, invest less, smother new firms that create jobs and keep prices high. They are rotten for the economy. + +Boosting competition should be a priority for whoever occupies the White House in 2017, and for Congress. Now a test case is waiting in the in-tray. AT&T, America’s fifth-biggest firm by profits, wants to buy Time Warner, the second-biggest media firm. The $109bn megadeal isn’t a simple antitrust case, because it involves a firm buying a supplier, not a competitor. But there is a strong case that it will limit consumer choice in a part of the economy that is rife with rent-seeking and extend a worrying concentration of corporate power. It should be stopped. + +Dial M for monopoly + +The business of what Americans watch and how they communicate has seen waves of change. In 1984 AT&T’s national phone monopoly was broken up. In 1990-2010 the rise of the web and mobile phones led to manic dealmaking. Today people are buying fewer bundles of shows from traditional TV firms and instead viewing online, including through Netflix and Amazon (see article). They are watching their phones more and TVs less. AT&T, which makes 80% of its sales from “pipes”—mobile and fixed broadband and voice lines—says it wants to buy Time Warner, which owns HBO and Warner Brothers, among other assets, to bulk up in the media business. + +Antitrust authorities have recently blocked “horizontal” telecoms mergers, in which a firm seeks to buy a rival. They stopped AT&T from buying T-Mobile in 2011, and Comcast, a broadband firm, from buying TWC in 2015. But they have been easier on “vertical” mergers, in which a firm ties up with a supplier—such as when pipe companies buy content firms. Comcast was allowed to buy NBC Universal, a broadcaster, in 2011, albeit with the condition that it made its content available to all its rivals and kept its pipes open to other content, so that customer choice was not hurt. + +There are two reasons why trustbusters should now take a tougher line. First, the telecoms industry is already a rent-seekers’ paradise. Americans pay at least 50% more for mobile and broadband service than people in other rich countries. For each dollar invested in infrastructure and spectrum, American operators make 28 cents of operating profit a year, compared with 18 cents for European firms. That reflects the lack of competition. AT&T and Verizon control 70% of the mobile market, and are the only firms that reach 90% or more of Americans with high-speed services. Half of the population has no choice of fixed-broadband supplier. The lack of downstream competition in pipes could distort competition in upstream content. + +A combined AT&T and Time Warner might seek to limit what any near-captive customers watch, for instance, thus denying other content providers viewers. Safeguards of the sort attached to the Comcast-NBC deal are not much use in practice. One way round them is “zero-rating” plans, in which pipe firms exempt some TV services from people’s monthly data caps, making them more attractive. Another is altering the placement of content in on-screen menus in order to bury rivals’ material. AT&T says this is not its aim, but why else would it pay a $20bn premium for Time Warner? + +A second concern is that AT&T-Time Warner would have vast political and lobbying power, allowing it to bend rules over time, including any antitrust remedies that it agreed with regulators. It would capture 28% of the media-and-telecoms industry’s pre-tax profits and 2% of all corporate profits, making it America’s third-biggest domestic firm. Media and telecoms regulation is already intensely political, and AT&T today is no shrinking violet, being a vocal opponent of net neutrality, the rules that ensure that all online traffic is treated equally. + +Precedent suggests that the trustbusters in the Department of Justice (under the auspices of the president), and not the Federal Trade Commission (a creature of Congress), will have the biggest say on the tie-up. This means the deal is being struck just as there is a change of leadership at the top. Those advising on the merger may be gambling that this makes the authorities unlikely to initiate a strong line on vertical mergers. That is all the more reason to be bold. Politicians and regulators may eventually resolve to open up the industry more, for example through “unbundling”, which lets upstart firms use others’ pipes. Until then they should block the AT&T-Time Warner deal and make clear that competition, not consolidation, is the way to get America’s economy working better. + + + + + +Investment banks + +Too squid to fail + +Goldman Sachs is a company people love to hate—but in one respect it is a model for its industry + +Oct 29th 2016 | From the print edition + + + +IN ITS pomp, Goldman Sachs was in a class of its own. No Wall Street investment bank was as well-connected, as arrogant, as influential—nor as feared and derided: the “Great Vampire Squid” of Rolling Stone legend. It still has the best brand name in the business. But like the rest of its industry, it has not fully recovered from the near-death experience of 2008. Banks are the untouchables of global stockmarkets. Even the boss of one, Credit Suisse, has described them as “not really investable”, and, sure enough, shares in many of the most prominent firms—Deutsche Bank, Citigroup, Bank of America—trade well below book value, suggesting they would be better off liquidated. Goldman’s shares trade virtually at book value. But even it is a shadow of its former self. + +Goldman, however, did not become a byword for financial acumen without acquiring some acute self-diagnosis skills. It is turning into an industry leader in another way: as an exemplar of the wrenching transformation banks need to undertake in order to survive and prosper (see article). + +This might seem an odd moment to be writing the obituary of a business model that has delivered such prestige, power and privilege for the Wall Street elite. Banks’ aggregate profits have long since recovered to pre-crisis levels, and the quarter for which results have just been published has been a particularly good one for those institutions still standing: Goldman reported its first double-digit return on equity for six quarters, and it did so by making money in its traditional trading and advisory businesses. The results seemed to vindicate those who have argued that the ever-thinner elite of global investment banks would eventually come good, as weaker rivals retrench and leave the field. + +Far from it. The good quarter was a single swallow. Returns on equity and assets have not rescaled former peaks. Rather, they have fallen to a new, significantly lower, plateau. The industry remains squeezed between two secular trends that are not going to ease. One is towards the “disintermediation” of banks, a decades-long process accelerated by a technological revolution. This led Wall Street firms to seek profits as risk-takers rather than intermediaries. But that trend runs counter to the second: tighter regulation imposed in the wake of the crisis in 2008, to try to ensure it never happens again. This is eliminating whole lines of business, and, through the imposition of higher capital requirements, is making others less profitable. + +Goldman sacks + +An obvious response to this squeeze is the most brutal and immediate form of cost-cutting: redundancies and the elimination of any expense seen as discretionary. At Goldman the number of people engaged in trading shares has fallen from a peak of 600 in 2000 to just two today. Buried within recent upbeat earnings reports by the banks were announcements of more job losses, including at Goldman. A more profound response, however, is to go beyond retrenchment to recognise that banks are, at their core, technology companies, whose business is to push numbers down digital pipes. Money has long been primarily an electronic construct. + +Goldman is ahead of the pack in embracing the changes this recognition implies. A plethora of new initiatives seeks to turn technology into its friend and take it into entirely new lines of business. In-house, it is automating and streamlining its traditional businesses, identifying 146 steps across 45 systems that can be simplified in an initial public share offering, for instance. This month it launched a new internet operation, named Marcus, to lend to consumers. It has incubated a number of tech firms. One, Symphony, offers a messaging platform, and dreams of rivalling Bloomberg. Another, Kensho, offers a kind of real-time cyber-encyclopedia to find correlations between world events and price-sensitive assets. + +Some of these Goldman initiatives may come to be seen as faddish indulgences and fail—and they are mirrored by a scramble for new ideas at its peers. But the effort puts Goldman on the right side of an embattled industry that, unable to transform its operating environment, must transform itself. + + + +Letters + + + + + +On globalisation, Thailand, new drugs, Bill Clinton, tourism: Letters to the editor + + + + + +On globalisation, Thailand, new drugs, sterling, Bill Clinton, tourism + +Letters to the editor + +Oct 29th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Why they’re right + +A lot of what you said in your leader on trade and globalisation made sense, but those who oppose trade deals are not “wrong” (“Why they’re wrong”, October 1st). Free-trade deals have changed remarkably since the repeal of the Corn Laws in the 1840s. Accords such as the Trans-Pacific Partnership, the Transatlantic Trade and Investment Partnership and the Comprehensive Economic and Trade Agreement are more about protecting the interests of large multinational corporations than they are about reducing costs for consumers and promoting competition. + +These deals expand intellectual property rights, increase patent protections and enable foreign companies to sue governments for alleged losses of potential profits in supranational courts through “investor state dispute settlements”. This is what the protesters are most opposed to: noxious provisions that boost the economic power of large corporations at the expense of democratic governments, smaller businesses and individual citizens. + +TOBY SANGER + +Economist + +Canadian Union of Public Employees + +Ottawa + + + + + +Globalisation is inevitable, but the current configuration favouring neoliberal politics and economics is not. It is entirely possible to integrate domestic economies in ways that do not favour capital over labour or inequality over equality. More social democracy would address that. + +The case for free trade has rested on a confusion between two notions of efficiency: Kaldor-Hicks and Pareto. Free-trade agreements are Kaldor-Hicks efficient because they produce overall net gains to welfare, but they are not Pareto efficient in that they do not make some better off without making some worse off. Economists and politicians have been too quick to point to the former type of efficiency but ignore or downplay the latter, thus producing a backlash. + +Something is Kaldor-Hicks efficient not only if it actually maximises net wealth but also when losers are compensated for their losses. Somewhere along the line economists and politicians forgot this part of the equation. + +PROFESSOR DAVID SCHULTZ + +Editor + +Journal of Public Affairs Education + +St Paul, Minnesota + + + + + +Thailand’s late king + +Your portrayal of Thailand’s late King Bhumibol Adulyadej as a tacit supporter of certain political groups couldn’t be further from the truth (Obituary, October 13th, online and digital editions). King Bhumibol performed his duties as a constitutional monarch in a neutral manner and stood far above the turmoil of Thai politics. When politics threatened to spill over into bloodshed, King Bhumibol would step in and demand compromises that saved lives. The idea that he encouraged political movements is ridiculous. + +Moreover, Thailand’s lèse-majesté law is an extension of the country’s libel laws. Its purpose is to protect the monarchy from defamatory statements. It does not exist to suppress freedom of speech. King Bhumibol was willing to accept criticism but was not in a position to change such laws, as legislative power lies absolutely with parliament. + +It was also wrong to claim that King Bhumibol was made “semi-divine” through ceremonial and ritualistic means. Throughout his 70-year reign, the king worked tirelessly to improve the livelihoods of his subjects. They regarded him as a father figure, a man who cared about the suffering of others. He lived in a humble wooden house, drove a simple car, wore an inexpensive watch and dressed in simple attire. He met the people in the most far-flung places of his kingdom, taking photographs, sharing rice and tea while sitting on the floor and hearing about their problems. It was through his compassion and actions that King Bhumibol achieved his divine-like status among the Thai people. + +Finally, the claim that it was in King Bhumibol’s self-interest to urge Thai people to favour moderation over wealth is absurd. No mention was made of the several thousand royal projects that distributed his wealth mainly to assist rural people. + +SEK WANNAMETHEE + +Spokesperson of the Ministry of Foreign Affairs + +Bangkok + + + + + +Niche medicine + +As a doctor I take issue with your arguments against the early approval of niche-treatment medicines, such as eteplirsen (“Bad medicine”, October 15th). These used to be know as “orphan drugs” because they applied to a tiny proportion of the public with rare conditions. Your line of thought suggests that any new drug not passing phases one to three in clinical protocols is ineffectual. I concede that advances in pharmacology such as eteplirsen do not offer cures per se, but in many cases they have prolonged life. + +The development of drugs for conditions that affect the masses, such as hypertension and diabetes, should be subject to the rigours of a randomised double-blind study before entering the market. But the poor unfortunates who have been dealt a losing hand by the genetic lottery should not be condemned to premature death because of a rigid bureaucratic monolith beholden to the status quo. + +J.A. MCERLEAN + +Farmington Hills, Michigan + + + + + +The happy French + +* We are a small manufacturer in Britain and all of our raw materials are traded in dollars. Your leader on the fall in sterling was the first which has spoken to our experience (“Taking a pounding”, October 15th). A relatively weaker currency makes us all relatively poorer. Our prices will have to increase across the board in the new year by up to 15%. Maintaining sales volumes after such a leap will be a challenge. + + + + + +With the exception of visitors to our shores and the French (delighted at being the world’s fifth largest economy once more) it is hard for us to see who gains in the long term from the pound’s precipitous plummet. + + + + + +GWERN EVANS + +Managing director + +Rhiannon Ltd + +Aberystwyth, Ceredigion + + + + + +A sex act + +I do not support nor do I admire Donald Trump. Having said that, I also do not admire Bill Clinton, whom you described as “dallying” with Monica Lewinsky in one sentence and then “canoodling” with her in another (“Hating Hillary”, October 22nd). Webster’s dictionary defines dallying as “to flirt or trifle with someone” and canoodling as “to kiss and cuddle amorously”. Really? + +Bill Clinton had oral sex in the Oval Office of the White House while serving as president of the United States. Not once, but on several occasions. His behaviour was not only lewd and offensive but also shocking. Your rendition of the matter suggests that the adage that boys will be boys still holds. I wonder if you would have used the same innocent adjectives if Bill had been a Republican president? + +BECKY WSZOLEK + +Dorset, Vermont + + + + + +A gorgeous view + + + +Richard Wynne criticised space tourism for being the plaything of “plutocrats” (Letters, October 15th). Yet all tourism started out aimed at the elites. Think of Lord Byron and the Grand Tour, spending a few months visiting Greece and southern Italy, seeing the sights and picking up the odd bit of statuary for one’s country estate. The first Western explorers to reach the Grand Canyon thought that theirs would almost certainly be the only party of Europeans to visit such a remote location. Today it is a huge tourist destination. There are always people prepared to go one better than the neighbours when it comes to choosing where to go on holiday. + +PETER DAVEY + +Bournemouth, Dorset + +* Letters appear online only + + + +Briefing + + + + + +Canada: The last liberals + + + + + +Canada + +The last liberals + +Why Canada is still at ease with openness + +Oct 29th 2016 | WINNIPEG | From the print edition + + + +MOST people “would give anything to trade places with you,” Dwight MacAuley, the province of Manitoba’s chief of protocol, tells his audience. No one disagrees. In a packed hall in Winnipeg’s century-old train station, 86 immigrants from 31 countries are becoming citizens of what Mr MacAuley characterises as one of the “greatest, freest, richest nations that has ever existed”. Some crowned with turbans, others with hijabs, they sing “O Canada” and take the oath of citizenship in English and French. A local member of parliament, Robert-Falcon Ouellette of the Red Pheasant First Nation, drums an honour song. A Mountie in red serge stands at attention; afterwards he poses for pictures with the new Canadians. + +Some 2,000 such events take place across the country every year. Fresh recruits keep coming (see chart 1). Canada admitted 321,000 immigrants in the year to June 2016, nearly 1% of its population; typically 80% of them will become citizens. It is contemplating an increase to 450,000 by 2021. A fifth of Canada’s population is foreign-born, nearly twice the share in America. + + + +The warmth of the welcome is as striking as the scale of the intake. Immigrants are encouraged to keep their cultures. Winnipeg’s public schools have classes taught in Spanish and Ukrainian as well as French and Cree. Its Central Mosque is a few blocks down Ellice Avenue from the Hindu Society of Manitoba. The Juliana Pizza & Restaurant serves its “Greek/Jamaican food” just a bit farther on. + +Canada’s openness is not new, but it is suddenly getting global attention. It is a happy contrast to what is happening in other rich countries, where anger about immigration helped bring about Britain’s vote for Brexit, Donald Trump’s nomination and the rise of populist parties across Europe. And it has an appealing new face: Justin Trudeau celebrates his first anniversary as prime minister on November 4th. Mr Trudeau comes from Canada’s establishment—he is the son of a former prime minister—but is not despised for it. A former high-school teacher and snowboarding instructor, his cheeriness played a large part in the Liberal Party’s victory over Stephen Harper, a dour Conservative who had governed Canada for almost ten years. + +Dancing across the water + +Where Mr Harper was liberal, for example on trade, Mr Trudeau carries on his policies. Where the Conservative clenched, the Liberal loosens. Mr Trudeau is seizing the opportunity offered by low interest rates to ramp up investment in infrastructure. He will end a visa requirement for Mexicans that Mr Harper imposed and plans to legalise recreational cannabis. Mr Harper was close to being a climate-change denier; Mr Trudeau announced in October that he would set a price on carbon emissions. A month into the job he went to Toronto Pearson International Airport to welcome some of the 32,737 Syrian refugees admitted since he took office. + +Building bridges is not enough + +Mr Trudeau’s domestic critics—so far a minority—deride him as “Prime Minister Selfie” for posing incessantly with fans and celebrities, sometimes (though not as pictured, above) with his shirt off. To European and American liberals he is a champion of embattled values and his country a haven with many charms (see chart 2). “The world needs more Canada,” said Bono, the activist and lead singer of U2, in September. When in Ottawa recently the IMF’s chief, Christine Lagarde said she hoped Canada’s pump-priming economic policies would “go viral”. Mr Trump’s “Super Tuesday” victories saw Google searches for “How to move to Canada” surge south of the border. + + + +Canada is not exempt from stresses that are causing other rich countries to freak out. “All the pressures and anxieties that people are feeling around the world exist here,” Mr Trudeau said in a recent interview with The Economist. But Canada seems to be coping with them less hysterically. In part, this is thanks to history. After Britain wrested control of Quebec from France in 1763 its new French-speaking subjects resisted assimilation. So did Canada’s indigenous groupings: Inuit, First Nations and mixed-race Métis. Such resistance was sometimes met with oppression and cruelty, and Canada’s treatment of its indigenous peoples has been atrocious in some times and places. But as Peter Russell, a Canadian historian, argues in a forthcoming book*, their “incomplete conquests” forced Canada’s overlords into habits of accommodation that have shaped the country ever since. “Diversity is our distinctive national value,” he says. + +Canada’s selective but eclectic taste in immigrants goes back a fair way, too. Clifford Sifton, the interior minister in the early 20th century, sought out farmers from Ukraine, Germany and central Europe in preference to British immigrants. His ideal was “a stalwart peasant in a sheepskin coat” with “a stout wife and a half-dozen children”. This does not mean that the country was always all-welcoming. Canada “turned away boatloads of Punjabi and Jewish refugees” in the 20th century, notes Mr Trudeau; 100 years ago Chinese immigrants had to pay a head tax. But by the middle of the century Canada was admitting non-Europeans on a large scale and in 1962 it scrapped all ethnic criteria for immigrants. Five years later it introduced its points system, which scores would-be immigrants on the basis of such criteria as skills, education, work experience and ability to speak English or French. + +As with people, so with goods. Canada’s vocation for trade began in the early 17th century, when French fur traders established bases in what are now Nova Scotia and Quebec. “We have always been dependent on trade with the world,” says Mr Trudeau. “So an anti-trade argument really doesn’t get very far in Canada from the get-go.” Exports plus imports account for 65% of Canada’s GDP, more than double their share of the American economy. Nearly three-quarters of Canada’s trade is with the United States. + +This habit of openness has not made Canada immune to its costs. Factory employment dropped from almost 2m in 2000 to 1.5m in 2015, with some of those jobs moving to Mexico—Canada’s partner, along with America, in the North American Free-Trade Agreement. South-western Ontario and the Niagara peninsula are as blighted by industrial decay as depressed parts of Pennsylvania and Michigan. + +Nor does the national creed of tolerance carry all before it. Mr Harper flirted with Islamophobia: during the election campaign he called for women at citizenship ceremonies to unveil. Kellie Leitch, an MP who aspires to succeed him as head of the Conservative Party, wants to screen immigrants for “anti-Canadian values”. Resentment against Chinese buyers who are driving up house prices in Vancouver can be tinged with racism. + +Questions of identity are particularly complex in Quebec, where the Parti Québécois has called for a ban on burqas for those seeking public services. The French-speaking province prefers “interculturalism” to Anglophone talk of “multiculturalism”, regarding its language and culture as the basis of its identity. Philippe Couillard, the province’s Liberal premier, likens that core to the trunk of a tree, from which other identities can branch off. For Anglo-Canada, dominant within Canada but overshadowed by America, cultural diversity itself is the trunk. + +When we were strangers + +But though there are some misgivings, some 80% of Canadians think immigrants are good for the economy, according to a recent survey by the Environics Institute, a polling firm. An ageing workforce means that belief is likely to strengthen: as Prime Minister John Diefenbaker put it in 1957, “Canada must populate or perish”. This is particularly true in the Atlantic provinces, where more Canadians die than are born and the median age exceeds that in the rest of the country by nearly five years. Nova Scotia, which received 200 refugees last year, has taken in 1,100 Syrians. Brian Doherty, himself an immigrant from Northern Ireland, hired four to work in the pubs he owns in Halifax, the province’s capital. “They are a net asset to the economy, and believe me in this part of the world we need more of them,” he says. + +Two linked factors bolster this pro-immigrant feeling. One is a matter of geography. Refugees do not arrive by the hundred thousand in overloaded dinghies; impoverished children do not sneak across the southern border. Illegal immigration, which so enrages Mr Trump and his acolytes, is “hardly noticeable” in Canada, says Jack Jedwab of the Canadian Institute for Identities and Migration in Montreal. + +The second is a matter of policy. Canada’s points system gives the government a way to admit only the sort of people it thinks the country needs. This ability to regulate the influx fosters public approval. Immigrants are twice as likely to have university degrees as people born in the country, notes Mr Jedwab. Refugees jump through hoops, too. The Syrians that Mr Trudeau embraced were first subjected by Canadian officials to the sort of extreme vetting that Mr Trump might approve of. + +None of this guarantees success in their new home. Immigrants struggle, especially during their first years in the country, although their children do much better. They have lower incomes than natives, unless they are from Europe or English-speaking countries such as India. Employers are more likely to interview applicants with English-sounding names than foreign ones, an experiment in Toronto showed. Foreign qualifications may not be recognised. But the points system gives politicians a way at least to appear to be doing something about such problems. Mr Harper introduced an “Express Entry” system which greatly increased the number of points for people with job offers. + +Another reason why Canadians are not worried about immigration is that they feel less insecure. Compared with the United States, Canada’s losers are less wretched and its winners less obnoxious. As in other rich countries, income inequality has increased since the early 1980s, but it remains considerably lower than in the United States. Poverty has fallen sharply since the mid-1990s. Low-income men—Mr Trump’s base in America—are less likely to die prematurely in Canada, which suggests they are less beaten down. In 2007 those in the bottom income quintile died 4.7 years earlier than those in the top. In the United States the gap was 12.1 years. + +America spends a larger share of its GDP on social programmes than Canada does, but Canada is more generous with spending that acts as a safety net. Unemployment benefits replace a much bigger share of lost income than in America. Universal health care “makes a huge difference in creating a high level of public security”, says the trade minister, Chrystia Freeland. + +Although the commodities boom, and the strong currency it brought with it, made life hard for manufacturers, it shortened the recession started by the global financial crisis. It also created lots of fairly high-paying jobs for low- and semi-skilled workers, mainly in western Canada. This kept inequality in check when it was rising elsewhere, notes France St-Hilaire of the Institute for Research on Public Policy, a think-tank. Now prices have fallen and the economy has slowed, she wonders whether inequality will creep back up. + +Finding out it’s real + +Even if it does, Canada’s fat cats are less reviled than those elsewhere. Its boringly profitable and well-regulated banks did not crash the financial system in 2008 and ask for bail-outs. Its conservatives have mostly been less ferocious tax-cutters and state-shrinkers than America’s Republicans, though Mr Harper was an exception. “Our one percent gets it,” says Ms Freeland, whose Rosedale-University riding (constituency) in Toronto contains one of the country’s richest neighbourhoods. + +Mr Trudeau acknowledges the country’s economic anxieties—“There hasn’t been enough growth, and the growth that there has been hasn’t benefited the majority of Canadians”—but campaigned on the basis of solutions, rather than scapegoats. In government his answer has been, first of all, to redistribute income on a modest scale. He raised taxes on the top 1% of incomes to help pay for a middle-class tax cut. This year’s budget subjected a universal child benefit to means testing, diverting cash from the rich to the bottom 90%. + +Mr Trudeau’s most eye-catching promise—and one which wrong-footed the New Democratic Party to his left—was to abandon Mr Harper’s goal of a balanced budget. Instead, the government plans a deficit of 1.5% of GDP this year and aims to spend C$60 billion ($45 billion) over ten years to give Canada a much-needed infrastructure upgrade. The extra spending will provide a stimulus to the sluggish economy worth 0.2% of GDP this fiscal year. As Mr Trudeau admits, his room for manoeuvre was bought by the prudence of his predecessors, who left federal debt at just 32.5% of GDP. But if wise spending increases the economy’s long-term growth, governments yet to come will have reason to thank him in their turn. + +Barack Obama had similar ambitions for investment in the future; unlike him, Mr Trudeau does not have to deal with a hostile legislature. Nor does he need to shout down demagogues to promote trade deals. He fought hard to save the “comprehensive economic and trade agreement” (CETA) with the European Union, which was negotiated by Mr Harper. Canada is part of the Trans-Pacific Partnership negotiations with 11 other countries, and though Mr Trudeau has not committed to ratifying it he is thought to support it. In September he announced that Canada would explore trade talks with China. + +Mr Trudeau has sought to allay scepticism about trade with what has fast become a hallmark of his government: incessant consultation. Ms Freeland boasts of holding one of the first formal dialogues by a trade minister with aboriginal communities. But there are issues ahead that consultation alone cannot solve. These include low productivity growth and an unimpressive record on innovation. Low interest rates have pushed house prices and consumer debt to alarmingly high levels. Beyond saying he will build more roads and tightening mortgage-insurance rules Mr Trudeau has so far given little clue about how he will deal with such problems. + +Whatever he does he will upset people. The announcement of a national price for carbon angered some in energy-rich provinces; the approval of a liquefied-natural-gas pipeline has alarmed green voters. He faces hard bargaining with the indebted provinces over federal transfers to cover their rising health-care costs. Mr Trudeau, in other words, is about to suffer typical political wear and tear. + +That will matter more to him, though, than to his country’s standing. With an admirably Canadian mix of personal modesty and national pride, Mr Trudeau credits the country’s stability not to “any particular government. It comes from Canadians themselves.” Had Mr Harper won last year Canada would have remained open to trade (though probably less keen to strike a deal with China) and welcoming to newcomers (though Mr Harper would not have let in so many Syrian refugees). Rock-star encomia would have been scarcer, but the Canadian model would have endured. + +Canadians do not take their openness for granted. A serious terrorist attack on Canadian soil, or a deep recession, could yet damage the dream. The country has seen “lone wolf” assaults, including an attack on parliament in 2014, and larger plots have been uncovered. But there have been no mass killings like that at the Bataclan in Paris. “We shouldn’t have any smug sense of ‘We would never do this’,” says Jodi Giesbrecht, head of research at the Canadian Museum for Human Rights in Winnipeg. Nor do they see it as a model for all. “What works in Canada may not work elsewhere,” cautions Michael Ignatieff, an unsuccessful Liberal candidate to be prime minister who now runs the Central European University in Budapest. “Many countries in the world are just dealt tougher hands to play.” But the sight of a continuing liberal success might make playing those tough hands just a bit easier. + +*“Canada’s Odyssey: A Country Based on Incomplete Conquests”, University of Toronto Press, 2017. + + + +United States + + + + + +Trump and Putin: My brilliant friend + +From DC with love: Naming without shaming + +The Affordable Care Act: Crunch time + +The campaigns: On the trail + +The presidential election: Making a U-tahn + +Election brief: Education: Little changes + +Lexington: Meet Kamala Harris + + + + + +Trump and Putin + +My brilliant friend + +What explains the Republican nominee’s fondness for Russia’s president? + +Oct 29th 2016 | ATLANTA | From the print edition + + + +IN JANUARY 1933, after months of rebuffs, the American poet Ezra Pound finally secured a meeting with Benito Mussolini, his idol, in Rome. Flicking through his admirer’s poems—and possibly distracted by the presence of a pretty young English teacher—Mussolini politely described them as divertente, or amusing. Pound chose to interpret this nicety as evidence of il Duce’s genius and appreciation of his own; his ruinous devotion to him intensified. In perhaps the weirdest subplot of America’s wild presidential election, an offhand comment by Vladimir Putin seems to have had a similar effect on Donald Trump. + +This is a season of conspiracy theories. In certain corners of the internet it is an item of faith that Hillary Clinton enabled the attack on Benghazi, to cover up illicit arms sales to terrorists. Analysis of Mr Trump’s attitude to Mr Putin can veer into the thrilleresque too. Yet there is a pattern in his remarks that, as polling day nears, deserves scrutiny. Tracing it lays bare his slipshod policymaking, even if his motives remain opaque. + +The “bromance”, to use Barack Obama’s term, was fuelled by Mr Putin’s reference, in December, to Mr Trump as yarki, or colourful, which he mistranslates as “brilliant”. But Mr Trump’s obeisances began even before this imaginary compliment. In a stark example of his habit of disparaging America, he compares Mr Putin’s strength and leadership favourably with Mr Obama’s, deflecting complaints about Russia’s human-rights record with the gibe that “our country does plenty of killing also.” Recently, he said that, should he win the election, he might fix a meeting with Mr Putin before his inauguration. (That would evidently be their first, despite his intimations that they have talked before. For example, after the Miss Universe pageant in Moscow in 2013, Mr Trump claimed Mr Putin “could not have been nicer.”) + +Lieutenant-General Keith Kellogg, one of his national-security advisers, optimistically describes this approach to Mr Putin as “Reaganesque”: “You can’t talk down to him,” he says. Major-General Bert Mizusawa, another adviser, maintains that Mr Trump’s praise for the Russian president’s strength “doesn’t mean he agrees with all of his policies”. If his warmth were confined to generalities, that rationale might seem plausible. The trouble is that—even allowing for his ignorance and incoherence, as when he seemed to imply that Russia had not invaded Ukraine—his statements have touched on specific, vital issues, often alarmingly. + +Such as NATO, probably Mr Putin’s greatest bugbear. To remind, Mr Trump has said the alliance is “obsolete”, upsetting Europeans by casting doubt on its mutual-defence commitment. It might depend, he has said, on an embattled nation’s defence expenditure. Or consider his record on Ukraine, another of Mr Putin’s preoccupations. Mr Trump has countenanced the idea of easing the sanctions imposed after Russia’s illegal seizure of Crimea, an annexation he has indicated he may recognise. He denies any role in the machinations at the Republican National Convention that blocked a pledge to provide weapons to Ukraine from the party platform; but, says Rachel Hoff, a delegate who was at the relevant meeting, members of his team were “absolutely” responsible. + +According to Lieut-General Kellogg, Mr Trump “wants to leave his options open” on Ukraine, considering it unwise “to start from an adversarial position”: his much-vaunted negotiating prowess is a catch-all excuse for otherwise indefensible pronouncements. The fanciful goal is to “make a great deal for our country”, in Mr Trump’s words, in which old enmities will be buried and Russia helps see off Islamic State. (Bilateral deals are Mr Putin’s favourite form of engagement; doing them with Western businessmen-politicians is one of his specialities.) If that is his purpose, Mr Trump is being uncharacteristically selfless, because his chumminess has no obvious electoral benefit. Unlike some of his other unorthodox views, such as his protectionism, beyond a few extreme nationalists who misguidedly revere Mr Putin there are far more votes to be lost than won by cosying up to him. + +Indeed, the risks for Mr Trump have risen as the campaign progressed, and even as he has finessed other awkward commitments. After Mike Pence said that “provocations by Russia [in Syria] need to be met with American strength,” Mr Trump disagreed—preferring to slap down his running-mate rather than rebuke Mr Putin for his barbarities in Aleppo. Astonishingly, he appeared to invite Russia to raid his opponent’s e-mails (“dry humour”, says Major-General Mizusawa). Yet he disputes the judgment of American intelligence agencies that Russian hackers, authorised by the country’s “senior-most officials”, were behind the intrusion into the Democratic National Committee’s servers. “Our country has no idea,” he insists. + +All this led a former overseer of the CIA to label Mr Trump an “unwitting agent” of the Kremlin. Madeleine Albright, a former secretary of state, chose Lenin’s phrase: she called him a “useful idiot.” + +Cui bono? + +What is going on? A popular view is that Mr Putin, whose aversion to Mrs Clinton is plain, is trying to lever Mr Trump into the White House, just as he supports isolationists in Europe. Witness the strategically timed publication of hacked e-mails by WikiLeaks and others. That may overstate the Kremlin’s ambition, assigning it greater clout than it wields: “We’re making them ten feet tall”, worries Fiona Hill of the Brookings Institution. Rather than altering the election’s outcome, reckons an American administration official, the aim may be to spread uncertainty about the process. That would avenge American criticism of Russian elections, discredit future admonishments and sully democracy itself. This race, Dmitry Kiselev, Mr Putin’s chief propagandist, recently assured his TV audience, “can’t be called free and democratic”. + +So much for Mr Putin; how about Mr Trump? He may feel a natural affinity for a fellow authoritarian, who shares his indifference to truth and his tastes for earthy language and humiliation as a political tool. His conciliations have also been linked to the alleged leanings of his staff. Some of those connections turned out to be flimsy, such as the Kremlin-friendly unknown named as an adviser by Mr Trump but soon disavowed by his campaign. One was substantial: Paul Manafort, the campaign manager who quit in August amid controversy over his ties to Viktor Yanukovych, the disgraced ex-president of Ukraine who has been given refuge in Russia. + +Time for active measures + +Mr Trump’s business interests have cropped up as well. In 2008 Donald junior told eTurboNews that “Russians make up a pretty disproportionate cross-section of a lot of our assets.” Possibly he was thinking of condominium sales (“I guess probably I sell condos to Russians, okay?”, his father has allowed); or of the Russian and ex-Soviet financiers involved in some Trump-branded properties. But the income from such projects is relatively small: most of Mr Trump’s revenue comes from older developments. He says he has no investments in Russia, which such records as are publicly available seem to confirm, nor any Russian loans. His most lucrative contact may have been the sale of a mansion in Palm Beach to a Russian tycoon. + +In the past, however, the Trumps longed to break into the Moscow property market. And, for all their unfamiliarity with geopolitics, they have grasped the rudiments of Russian capitalism. “It is a question of who knows who,” Donald junior noted, adding that “what it is they want to happen is ultimately what happens.” Mr Trump’s campaign did not respond to questions about his business plans, so whether that insight might inform his Russian stance is unclear. So is where—on a scale from seismic scandal to venality to naive narcissism—it belongs. Still, as Mr Trump said of someone else, his stubborn, illogical devotion to Mr Putin has made it seem as if “there is something going on with him that we don’t know about.” + + + + + +From DC with love + +Naming without shaming + +What is the right response to Russia’s attempt to interfere with the election? + +Oct 29th 2016 | From the print edition + + + +DONALD TRUMP may pretend to think that the hacking of the Democratic National Committee’s (DNC) e-mail system in July could have been carried out by a 400-pound nerd sitting on his bed; but on October 7th the director of national intelligence, James Clapper, and the Department of Homeland Security made official what had long been suspected. Their statement expressed confidence that the Russian government had “directed the recent compromises of e-mails from US persons and institutions, including from US political organisations”, and that the “thefts and disclosures” were “intended to interfere with the US election process”. + +A well as the DNC attack, there have been a spate of others, all aimed at showing Hillary Clinton in a poor light, all distributed by either WikiLeaks or the lesser-known DC Leaks. The hacker groups behind the scams are fronts for Russia’s FSB and GRU spying agencies and, according to Mr Clapper, could have been authorised only by officials at the most senior level. But what to do about it? + +Despite the seriousness of the charge (the hack by China’s PLA on US Steel, Iran’s Islamic Revolutionary Guards on American banks and by North Korea on Sony all pale by comparison), the decision to point the finger of blame unambiguously in Russia’s direction was not straightforward for the Obama administration. When it comes to responding to cyber-attacks, attribution is the first problem. First-rate cyberpowers, such as America, have developed sophisticated techniques for identifying perpetrators by analysing what are known in the business as “sources and methods”. + +But government-backed hackers know they can retain at least a degree of deniability if their accuser is reluctant to come up with the evidence. As Adam Segal of the Council on Foreign Relations argues, it is difficult to assign responsibility without revealing intelligence capabilities that will, in turn, allow foes to improve their defences and make spying on them harder. Although the American government had attribution information about the North Korean attack on Sony, it declined to put that information into the public domain for fear of exposing the National Security Agency eavesdropping capabilities which had produced it. Yet last year America backed a UN report on cyber-attacks which stated that, “accusations of organising and implementing wrongful acts brought against states should be substantiated.” + +Having declared on October 11th that the president “will consider a response that is proportional” and unlikely to “be announced in advance”, the administration now finds itself in a tricky spot. Soon after, Joe Biden, the vice-president, declared on NBC’s “Meet the Press” that America would be sending Mr Putin a message “at a time of our choosing and under circumstances that have the greatest impact”. When asked whether the American public would know when the message had been sent, Mr Biden said: “Hope not.” + +That appears to rule out new sanctions. Instead, it suggests that a covert, offensive cyber-operation may be in the works. That might mean going for Mr Putin by exposing compromising information about his accumulation of wealth—or at least communicating to him the threat of possible exposure unless he calls his hackers off. But unlike Russia, America cannot hide its activities behind proxy groups, particularly now it has made a specific threat. Nor does Mr Putin embarrass easily—he shrugged off the revelations in the Panama Papers as a Western plot to smear Russia. + +There is an even bigger problem. As Mr Segal points out, offensive cyber-operations of the kind Mr Biden was hinting at run directly counter to the norms of behaviour that America claims to be working with other states to establish. There is also the danger that such a well-trailed counter-attack would elicit escalatory retaliation from Russia, which might be more destructive than anything Fancy Bear or Cozy Bear could achieve, such as an attack on critical national infrastructure. A Kremlin spokesman described Mr Biden’s threat “as borderline insolence” and vowed that Russia would strike back. The uncomfortable reality is that the playbook for responding to cyber-attacks is still a work in progress. + + + + + +The Affordable Care Act + +Crunch time + +Big rises in premiums will cause most pain away from the exchanges + +Oct 29th 2016 | From the print edition + + + +FANS of the Affordable Care Act, Barack Obama’s health-care law, should spend November biting their nails. The first reason is the presidential election: Republicans want to repeal the law. The second is that the three-month window when Americans can buy insurance, if they are not already covered through their employer, opens on November 1st. Many will shop on government-run marketplaces, or “exchanges”. On October 24th the health department confirmed that buyers will pay a lot more this year. How they react will determine the future of the law—and not just because it may swing their votes. + +The average benchmark “silver”—ie, middling—plan sold on the exchange will cost 22% more for 2017. This steep increase partly reflects the fact that insurers have been charging far too little. Many were caught out by the sickliness of exchange customers, and have made big losses as a result. Some, like Aetna, have left most exchanges (in five states, only one insurer now remains). But despite this turmoil, insurance for 2017 will cost roughly what the Congressional Budget Office predicted it would when the law passed. + +Federal subsidies, offered to those earning less than 400% of the poverty line (which works out as $47,520 for individuals), will shield many buyers from the full effect of higher prices. Of the 12m people who bought insurance for 2016 on the exchanges, 10m received subsidies. Obamacare caps their costs. So long as some insurers stick around—which they should, as price rises return them to profit—federal cash will shore up this part of the market. + + + +That is the good news, as far as the law is concerned. The bad news is that 9m people buy coverage directly from insurers, without going through the exchanges or receiving any subsidies (see chart). And these folk, whose premiums help to finance care for everyone, on or off the exchanges, must also pay more. If the healthiest among them decide to forgo insurance, premiums will rise further next year. The only thing stopping them from doing so is a fine for going without insurance, which is small compared with the cost of coverage. + +If healthy people stop buying, insurance will become prohibitively expensive for those who do not qualify for subsidies. Obamacare has already raised prices for many in this group. By banning insurers from turning away customers with pre-existing health conditions, for example, it pushed up premiums. In 2015 households earning $70,000 or more spent 75% more on insurance, on average, than in 2010, despite the fact that coverage rose only slightly in this income bracket. That is before rising deductibles are accounted for. + +This helps to explain the ferocity of opposition to Obamacare. In most states, insurers will now have to tell all their customers about price rises or discontinued coverage by November 1st, just days before voters go to the polls. Expect disciplined Republicans in tight House and Senate races to talk about little else between now and November 8th. + + + + + +The campaigns + +On the trail + +Oct 29th 2016 | From the print edition + + + +Gettysburg redress + +“All of these liars will be sued after the election is over.” + +Donald Trump, at Gettysburg, on the women who have accused him of sexual assault. + +Weapons of mass destruction + +“Peanut-buttering is better than firebombing.” + +A woman in Wisconsin was arrested for smearing peanut butter on the cars of people she believed were Trump supporters. Stevens Point City Times + +From Russia with love + +“We are unable to accommodate your request to visit a polling station.” + +Texas and two other states have refused Russian requests to observe voting. Texas Tribune + +Don’t bake + +“She’s not coming over to your house! You don’t have to like her.” + +Oprah Winfrey found a novel way to sell Hillary Clinton to voters. Politico + +Let Donald be Donald + +“He delivers his own speeches…He’s the guy who’s running for the White House, and he has the privilege to say what he wants.” + +Kellyanne Conway, Mr Trump’s campaign manager, gives up managing. CNN + +Son of a gun + +“Boy you people, you do really like your guns.” + +Mr Trump gets a standing ovation for defending the Second Amendment. + +Candidate in the hat + +$3.2m + +The amount spent by the Trump campaign on hats. Washington Post + +Bully pulpit + +“I’ll get myself in trouble and say something like, ‘I’d like to take himself behind the gym if I were in high school’.” + +Vice-President Joe Biden campaigns. + +Fight club + +“Did you see where Biden wants to take me […]? He wants it. I’d love that.” + +Mr Trump responds. + +Mansplaining + +“Sometimes a lady needs to be told when she’s being nasty.” + +Congressman Brian Babin backs his candidate. Alan Colmes Show + +These boots are made for walking + +“On November 8th, we nasty women are gonna walk our nasty feet to cast our nasty votes to get you out of our lives.” + +Senator Elizabeth Warren, campaigning with Hillary Clinton, counters. + + + + + +The presidential election + +Making a U-tahn + +No third-party candidate has won a state since 1968. Could that be about to change? + +Oct 29th 2016 | SALT LAKE CITY | From the print edition + + + +WITH the Gothic spires of the Salt Lake Temple looming behind her, Diane, who works for the Mormon church, grimaces as she considers her political choices. “Well, Trump wants to be king, not president. And Hillary lacks integrity. I would vote for Mickey Mouse before I voted for either of them.” The only candidate she can stomach is Evan McMullin, a 40-year-old Mormon who served in the CIA. + +Mr McMullin announced his candidacy as an independent in August. He began with near-zero name recognition and made the ballot in just 11 states. Yet recent polls put him in a dead heat with Hillary Clinton and Donald Trump in his native Utah. An Emerson College survey on October 19th gave him a four-point lead, and betting markets put his chances there around 30%. No third-party candidate has won a state since the segregationist George Wallace swept the Deep South in 1968. + +Before the campaign of 2016, Utah seemed the least likely place in the country to give a Republican headaches. Republicans have won it by at least 18 percentage points in 12 straight general elections; both George W. Bush in 2004 and Mitt Romney took over 70% of the vote. The main source of the party’s dominance is the state’s Mormon population. They make up over 70% of the electorate, and lean more Republican than any other religious group. + +Mormons were not always stalwart Republicans. Before the 1960s, Utah’s politics were more balanced. But the Democratic Party’s support of abortion rights alienated Mormon voters, and they were strongly influenced by conservative figures like Ezra Taft Benson, who served as secretary of agriculture under Dwight Eisenhower before returning to Utah and leading the Mormon church. In 1974 Benson declared that any Mormon who “was living the gospel and understood it” could not be a liberal Democrat. In devout Mormon circles, the Democratic Party remains taboo. Crystal Young-Otterstrom, the chair of LDS Democrats, said that when she first switched from being a Republican, she told her parents and friends she was a communist because, “that was easier, somehow”. + +Nonetheless, Mormons have developed a unique brand of conservatism. Last year the church helped pass a law that prohibited discrimination in housing and employment on the basis of sexuality. Utah has accepted over 60,000 refugees since the end of the Vietnam war; in recent years it has had one of America’s highest refugee-resettlement rates. Yet the Mormon aspiration to “secure to each individual the free exercise of conscience, the right and control of property, and the protection of life”, plus the emphasis on each individual being responsible for their own fortune, have kept them in the Republican fold. + +Mr Trump’s relatively weak showing in Utah is partly explained by the strength of the state’s economy. Utah’s unemployment rate is only 3.4%, 1.6 points below the national average. The poverty rate is 2.3 points below the nationwide mark, and incomes are more equal than in any other state. But it mostly reflects Mormon values, which include decency, kindness and humility. The emergence earlier this month of an 11-year-old tape, which showed Mr Trump bragging that he could grope women and get away with it, caused several prominent Utah Republicans, including the state’s governor, Gary Herbert, to drop their support. Jon Huntsman, a former governor who had surprised many by endorsing the Republican nominee, went a step further and urged him to drop out of the race. And the Deseret News, a newspaper owned by the Mormon church, broke an 80-year tradition of neutrality to implore Mr Trump to quit. + +Even before October, though, this election was unusual for the role played by the usually apolitical Mormon church. It responded to Mr Trump’s proposed ban on Muslim immigration by posting on its website two quotes about religious liberty from Joseph Smith, the faith’s founder. “Many members of the Mormon church feel like refugees, having been chased from place to place,” says Jeff, a church employee. “Many of us have done missions to foreign places and fallen in love with the people there.” A walk around the campus of Brigham Young University, a place so Mormon that even the sodas in the campus store are caffeine-free, revealed stickers and luggage tags on students’ backpacks and cars that read “I <3 Okinawa”, “Eu amo o Brasil” and “Guangdong Soccer League”. + +Do Mr Trump’s struggles in Utah signal the end of its long run as a near-one-party state? Greg Hughes, the Republican Speaker of the Utah House of Representatives, who continues to support Mr Trump, says the Republican Party will remain dominant. It currently boasts 87 lawmakers in Utah’s legislature to the Democrats’ 17. “No matter what happens, I just don’t think there’s going to be such a big impact down-ticket,” he says. Richard Davis, a professor at Brigham Young University, isn’t so sure. “Once people start disassociating from their usual party, it will probably be easier for them to do so in the future.” + +If Mr McMullin does triumph, the effects will reverberate far beyond Utah. It is conceivable, though vanishingly unlikely, that he could become president: if no candidate secures 270 electoral votes, the House of Representatives would pick the victor from the top three finishers, and he might emerge as a compromise candidate. Far more plausibly, he could pave the way for future challenges to America’s political duopoly. Although Ross Perot took 19% of the vote in 1992, he did not come close to winning any states. Mr McMullin’s surge suggests that third-party candidates should focus on cultivating a strong regional base. In a close election, that could potentially make one a kingmaker. + + + + + +At a Trump rally in North Carolina + +Signs of a shrinking campaign + + + +A matter of life and death in California + +Californian voters will consider their state’s death-penalty regime in a ballot + + + +The state of the race + +An interactive guide to the election, including historical results + + + +Do Trump’s calls for poll watchers constitute incitement? + +Minorities fear they will be harassed + + + +Donald Trump’s slimming odds of victory + +The outlook for his presidential hopes appears grim + + + + + +More US election coverage + + + + + +Election brief: Education + +Little changes + +George W. Bush and Barack Obama made school reform a priority. The next president will look elsewhere + +Oct 29th 2016 | NEW YORK | From the print edition + + + +FOR a president, making education policy can be like running a school with thousands of unruly pupils. He can goad states and coax school districts, offering gold stars to those who shape up. But if a class is defiant he can do little. Just 12.7% of the $600bn spent on public education annually is spent by the federal government. The rest is split almost equally between states and the 13,500 school districts. Many presidents end up like forlorn head teachers. America spends more per child than any big rich country but its pupils perform below their peers on international tests. + +Despite the constraints, George W. Bush and Barack Obama both used the regulatory power of the federal government to spur reform. Through the No Child Left Behind (NCLB) Act of 2001, the Republican president launched a flurry of standardised tests, sanctioning schools whose pupils failed to progress. Through his “Race to the Top” initiative, announced in 2009, the Democratic one offered cash to states in exchange for reforms such as higher standards and evaluating teachers based on pupils’ results. Similar policies were implemented by 43 states in exchange for federal waivers from the testing mandates of NCLB. Mr Obama has also championed charter schools, the part-publicly funded and independently run schools hated by teachers’ unions. + +But the era of regulation-driven school reform is now coming to an end, for two reasons. The Every Student Succeeds Act (ESSA), passed in December as a replacement for NCLB, hands back power to states over standards and tests, making it hard for a future president to seek to micromanage school reform. And in any case, neither Donald Trump nor Hillary Clinton are inclined to imitate the past two presidents. Mr Trump is “totally against” and “may cut” the Department of Education. Declaring that “it is time to have school choice”, in September he pledged to give states $20bn to fund school vouchers for parents of poor children. + +Mrs Clinton has also been keen to defer to states. This is partly because she knows ESSA shrinks her room for manoeuvre. But she has also made a political calculation. Unlike Mr Obama, she is backed by teachers’ unions. They oppose tying teacher evaluations to pupils’ results and want to keep the caps on charter schools in place in the 23 out of 43 states that permit them. Mrs Clinton has been studiously ambiguous on such limits, to the regret of reformist Democrats, who note that in most cities charter schools outperform ordinary public schools. Though she has sent Tim Kaine, her vice-presidential nominee, to mollify funders of charters, they are braced for a change of tone. Charters will still expand, but they will receive less federal support. “We reformers have had a big tailwind under Obama, which we’re unlikely to have under Clinton”, says Whitney Tilson, an investor and education philanthropist. + +The Democratic candidate’s wish to neutralise the toxic politics of school reform has another, less cynical cause. She wants to focus on what comes before and after school, the “bookends” of pre-school and higher education. America “has fallen off the pace when it comes to early childhood education”, says Steve Barnett of the National Institute for Early Education Research, at Rutgers University. About half of all three- to four-year-olds are enrolled in pre-school, less than in many poor countries (see article) and one of the lowest shares in the OECD. And yet the country is third-highest in the club of mostly rich countries for the share of net income spent on child care. In 31 states a place at a child-care centre is more expensive than at a public university. America is the only country in the OECD without universally guaranteed maternity leave. + +Both Mr Trump and Mrs Clinton have pledged to do something about all this. Asked last year about federal funding for pre-school, the Republican said, “well, I don’t like it”. But in September, prodded by his daughter, Ivanka, Mr Trump said he wanted to allow the costs of child care to be deducted from income taxes and to introduce six weeks of paid maternity leave. + +Mrs Clinton can point to a longer commitment to early childhood development. As first lady of Arkansas in the 1980s she set up one of the country’s first schemes to help poor parents educate their toddlers at home. Today she says she will introduce 12 weeks of guaranteed paid family leave, and ensure that child care costs no more than 10% of a family’s income, in part by offering a tax credit. She also wants to use federal funds to provide pre-school for all parents who want it for their children. + + + +As most children know, nice things cost money. Mrs Clinton has not given a detailed plan for how to pay for her early childhood policies. Much will depend on whether Democrats take Congress. But this is increasingly a bipartisan cause. Of the 42 states that provide funding for pre-school education, most have Republican governors. Georgia, Oklahoma and Florida have led the way in offering near-universal coverage (see map). + +The results at the state level, however, suggest realism is required. According to a study led by Dale Farran of Vanderbilt University, Tennessee children who attended that state’s scheme performed no better (and in some cases worse) in school tests than similar children who did not attend. Ms Farran argues that some “states are so busy ramping up pre-K that they are not paying attention to what is actually going on in classrooms”. She argues that grafting a year of pre-school onto poorly performing public school systems will not help children, especially those whose parents actively help them learn outside of class. + +Better results can be found in cities such as Tulsa and Boston. Then there is New York, which Mrs Clinton has cited as a model. Since 2014 it has expanded the number of free all-day pre-school slots for four-year-olds from 19,000 to 71,000, one of the fastest roll-outs anywhere in the world. Richard Buery, the deputy mayor in charge of the scheme, argues that its success requires well-trained staff, a rigorous curriculum—and money. The average wage of a child-care worker in America is less than that of a dog-walker. In New York the cost per child for a year of pre-school is $12,000, more than twice as much as in Tennessee. “Doing it on the cheap will get you universal child care but not high-quality pre-K’, says Mr Buery. + +What of the other bookend? Mrs Clinton wants to make tuition at public universities free for many more students. She is also mulling whether to offer financial rewards to universities that increase the entrance and graduation rates of poorer students. She may appoint a university president as education secretary. Even as an era of activist schools policy ends, the federal government still has bold plans to improve education. + + + + + +Lexington + +Meet Kamala Harris + +California’s tough, technocratic attorney-general will be a star of the next Senate + +Oct 29th 2016 | From the print edition + + + +IF THE Democratic Party were a business, investors would mutter that it has a succession crisis. Its presidential nominee is 69 years old, and its leaders in Congress—Representative Nancy Pelosi and Senator Harry Reid—are both 76. That pin-up of the campus left, Senator Bernie Sanders, is 75. The young thruster set to lead Senate Democrats after January, Charles Schumer of New York, is 65. Nor is the galaxy of Democrats outside Washington thick with dazzling stars: after several bruising elections, the party currently holds just 18 out of 50 governors’ mansions. + +Talk to thoughtful Democrats about the future and one name inspires more hope than most: Kamala Harris, the attorney-general of California and, barring a meteor-strike between now and November 8th, that state’s next member of the Senate. Insiders noticed when Ms Harris, 52, was endorsed by President Barack Obama, even though, under a run-off election system used in California, her opponent is a long-serving Democratic congresswoman, Loretta Sanchez. + +Ms Sanchez has ascribed this snub to race solidarity between her opponent and the president, sniffing: “She is African-American, he is too.” In fact, Ms Harris and Mr Obama share bonds more subtle than similarly complex life-stories (the attorney-general’s parents, an Indian-born cancer researcher and a Jamaican economist, met at the University of California, Berkeley, and divorced when she was young). Both began political careers in places where success required coalition-building across party lines: Mr Obama in the fusty, cronyish Illinois state Senate, and Ms Harris in the lock-’em-up world of elected public prosecutors, starting as a district attorney for San Francisco, before becoming head of law enforcement across California in 2010. + +A recent weekday found Ms Harris at John Muir Elementary School in San Francisco. As happy playground shrieks drifted through the windows, she faced TV cameras to unveil her fourth annual report on chronic school truancy. A populist firebrand would not have lacked for material. Surrounded by Victorian houses snapped up by tech millionaires, stoking local resentments, John Muir serves mostly poor families from other, less gentrified neighbourhoods. Ms Harris began studying truancy after learning that 94% of San Francisco’s murder victims under 25 were high-school dropouts. Research showed that three-quarters of young children who often miss days at kindergarten later fail California’s maths and reading tests in third grade. Pupils who fail those tests are in turn four times likelier to drop out of high school, and those who drop out are eight times likelier to end up in jail. Chronic truancy is much more common among black children, moreover. Yet as she explained her findings, the attorney-general did not thunder about racial injustice or inequality. Instead she noted that high-school dropouts cost the state more than $46bn a year in public-safety and public-health spending. Letting children miss school offers taxpayers a poor “return on investment” and deprives California of a skilled workforce, Ms Harris argued. It stops government being “efficient and effective”. + +That technocratic tone does not surprise a long-standing ally, Lateefah Simon. When the pair first met, Ms Harris was a young city lawyer, working on sex-trafficking cases. Ms Simon was just out of her teens, a radical activist working with troubled young women, and, she recalls proudly, “known for bringing hundreds of young girls into police commission meetings, shutting them down.” Ms Harris finally advised her that systems change under pressure from the outside and the inside: “Kamala said to me, you can’t always win with a bullhorn.” When Ms Harris became district attorney she hired Ms Simon to run a programme for low-level, non-violent drug offenders. Though strikingly cheap, it drew national attention for preventing 90% of its graduates from reoffending. Ms Simon explains how Ms Harris would tell youngsters their chances of going to jail or dying if they did not change course. Then she would offer help with everything from housing to remedial education and apprenticeships—even dentistry cadged from a local university, after she read research linking job prospects to bad teeth. Ms Simon calls her old boss both “data-driven” and tough: “If you hurt a woman, she wants you in jail.” + +More than a decade later, Ms Harris still puts her faith in data, as she cites crises that Republicans and Democrats alike know need to be addressed, in fields as diverse as criminal justice, immigration, the costs of higher education or the drugs epidemic that is as cruel a scourge in conservative rural states as it is in inner cities. Over a stop for iced coffees on the campaign trail, she says transparency is the key to building trust among people, and then between communities and government. To that end in 2015 her department began releasing torrents of statistics about arrests and deaths in custody across California. Nor is keeping the trust of the police forgotten: Ms Harris’s department publicises data on law-enforcement officers killed or assaulted on duty. + +The case for the prosecutor + +Washington sceptics may dismiss Ms Harris as a typical Californian progressive. It is true that her campaign ads boast of suing big banks for fraud. She also has a distinctly paternalist streak. Greeting an eight year old in his classroom, the attorney-general solemnly coaches him: “We shake hands and look each other in the eyes.” Asked by a little girl about favourite foods, Ms Harris replies: “I like French fries, but I love spinach.” + +But Ms Harris is a prosecutor to her core, who approaches voters as she would 12 jurors of different backgrounds: “You have to point to the facts.” Contemplating a country where millions feel displaced by change, she yearns to see another approach to politics tried: “to give people an image of what the future looks like, and to paint that image in a way that they can see themselves in it.” Fierce, charming and eloquent, Ms Harris may be a big part of the Democratic Party’s future too. + + + +The Americas + + + + + +Venezuela: Fighting their chains + +Brazilian sport: Something new to cheer + +Nicaragua: Fourth time unlucky + +Bello: Ciudad Juárez trembles again + + + + + +Venezuela + +Fighting their chains + +A lurch towards dictatorship, massive protests and no sign of regime change + +Oct 29th 2016 | CARACAS | From the print edition + + + +THIS time, the protests were nationwide. From Maracaibo in the west to Ciudad Guayana in the east, hundreds of thousands of Venezuelans filled the streets to call for an end to the authoritarian left-wing regime led by Nicolás Maduro. More than 100 people were arrested and one policeman in the state of Miranda died. “This government is never going to leave through an election,” said María Gil, a masseuse who joined the throng in Caracas, Venezuela’s capital. “All that is left is protest.” David Mujica, a street trader, agreed that voting “changes nothing”. + +Both protesters branded Mr Maduro a “dictator”, a term Venezuelans have been using more freely after the events of the past fortnight. On October 21st, days before voters were to go to polling stations to register their signatures in favour of holding a referendum to recall the president from office, the process came to an abrupt halt. Five criminal courts in five separate states declared that the conduct of an earlier stage in the process—the submission of signatures from at least 1% of the electorate—had been fraudulent. That is nonsense. The opposition submitted 2m signatures in April, ten times the minimum number. The electoral council, which is supposedly independent but kowtows to the regime, had said that 1.4m of those were valid. The five courts did not explain their reasoning. + +The government, which is presiding over the deepest recession in Venezuela’s history and acute shortages of food and medicine, has given up all pretence that it will work with any institution that it does not control. It has ignored the national assembly, which is dominated by the opposition. The legislature still summons ministers to explain plans or provide information, but none ever appears. On October 14th, the president passed next year’s government budget without sending it to the assembly, in violation of the constitution. A compliant supreme court, stuffed with pro-government cronies, waved it through. The court has vetoed every law that parliament has passed this year. + +Now the assembly is in open revolt. On October 23rd, after the suspension of the referendum, it met in emergency session to declare that a coup had taken place. A pro-government mob entered the parliament building during the meeting, in a clumsily stage-managed attempt to demonstrate to television viewers that a popular “revolution” continues. Some of the intruders were armed. The assembly has since declared that the president may have abandoned his duties and should therefore stand trial. No one thinks this will happen. The constitution does not explicitly provide for the possibility of such a trial, and Mr Maduro would not show up if it did. + +The squelching of the recall referendum is a signal that the regime has made a decision about how to deal with the crisis. Some in the socialist chavista movement—founded by Mr Maduro’s charismatic predecessor, Hugo Chávez—are thought to have argued for allowing a recall vote in 2017, past the date when it would have triggered a fresh presidential election. If Mr Maduro had lost next year, a near certainty given his 20% approval rating, the vice-president, currently Aristóbulo Istúriz, would have taken over from him. + +Hardliners privately argued for holding no referendum at all. The governors of the five states whose courts blocked it are thought to be among their number. That decision seems to mean that they intend to stick with Mr Maduro, at least until the next presidential election in 2018. Some now wonder whether that election will be held. + +Talk is expensive + +Mr Maduro’s favourite word at the moment is “dialogue”, robotically invoked in his interminable speeches. He paid a surprise visit on October 24th to the pope, who has been trying to arrange a meeting between the government and the opposition. The effort seems to be working in the government’s favour. A senior opposition official, Jesús Torrealba, appeared at an awkward photo-call alongside a representative of the ruling party and a papal envoy. The government suggested that they had reached an agreement to begin formal talks at the end of October. + +That was an exaggeration. Most opposition leaders have no intention of sitting down with a regime they regard as illegal. Henrique Capriles, who nearly defeated Mr Maduro in a presidential election in 2013, has made clear his refusal to attend any talks. “We are fighting against the devil,” he says. The episode has been a gift to Mr Maduro, who can now present himself as open to dialogue, and the opposition as divided and intransigent. + +The opposition has now responded by issuing an ultimatum. If Mr Maduro fails to restart the recall process, it will call for a march on the presidential palace on November 3rd. But there is little prospect that protest alone can dislodge the regime. + +The stance of the army, long the arbiter of power, remains crucial. The opposition is trying to sow dissension by calling on the armed forces to uphold the constitution. But the tactic is unlikely to succeed. Underpaid junior officers might be receptive, but the top brass, which controls most sectors of the economy, will not be. + +On October 25th Vladimir Padrino López, the defence minister, delivered a rare television speech, dressed in full combat uniform. The army, he said, has no political allegiances. But then he showed just how firmly it backs the bankrupt regime, ending his address by paying homage to Chávez, who devised the economic policies that have impoverished the country. “Long live Chávez,” he cried, fist raised high. + + + + + +Brazilian sport + +Something new to cheer + +Why rugby could be the next craze + +Oct 29th 2016 | SÃO PAULO | From the print edition + + + +WHEN Charles Miller, son of an English railway engineer posted to Brazil, returned to São Paulo from a British boarding school in 1894, he brought back a football—and popularised a game that would help define Brazilian identity. Miller’s other sporting import, rugby, had less appeal. It was played at a few posh boarding schools and almost nowhere else. But now rugby is beginning to find a mass audience. + +Asked which sport would grow most, more Brazilians picked rugby than any other in a survey conducted in 2011 by Deloitte, a consultancy. Since then its popularity has shot up as if propelled by a well-taken conversion kick. Some 60,000 Brazilians are thought to play rugby, far fewer than the 30m who play football or the 5m-10m who take part in volleyball—but up from 10,000 five years ago. The national team, the Tupis, named after a family of indigenous peoples, draw audiences of 10,000 to stadiums and 7m to television screens. (The league is still amateur.) Highlights from European games pop up on the São Paulo metro’s in-train television. + +Rugger’s return to the Olympics at the Rio de Janeiro games last August, after a 92-year hiatus, spurred interest. The sport’s good governance helps win fans in a country beset by corruption scandals. The Brazilian Rugby Confederation (CBRu), which replaced an amateurish association in 2010, is run like a business. Its chief executive, Agustin Danza, holds an MBA and answers to a 12-member board. In November last year a non-profit group gave the CBRu Brazil’s first sport-governance trophy. The volleyball federation has sent five scouts to learn its management tricks. + +Sponsors have taken note. The Tupis now have two dozen, including Unilever, a consumer-goods giant, and Bradesco, a Brazilian bank. The CBRu’s budget has swelled from 1.3m reais in 2011 to 18m reais ($6m). Mr Danza has used the money to lure coaches from rugby powerhouses like New Zealand and Australia. His objective is to qualify for the World Cup in 2023. + +It will take plenty of training. Brazilian women came a respectable ninth in the Olympic seven-a-side tournament, but the men came last. They are ranked 36th in the world. Argentina, Brazil’s rival in all things sporting and otherwise, is ninth. Mr Danza (himself Argentine) is banking on support, and cash, from the sport’s global governing body. He is hoping that World Rugby will soon name Brazil as one of its priority markets. With more exposure and money, the amateur league could turn professional. + +The CBRu is trying broaden the sport’s appeal—and talent pool—beyond the upper class. “In my day the team was all pale posh guys,” recalls Jean-Marc Etlin, a financier and former Brazil forward. Thanks to programmes that promote the sport in state schools, his son’s team-mates on the under-19s national side now include players from poor backgrounds. + +The biggest obstacle to rugby’s popularity remains Brazilians’ obsession with football. “Every other sport is peripheral,” sighs Mr Etlin. Mr Danza thinks football’s woes, including sleaze in the federation and the national team’s underwhelming performance (by Brazilian standards), give rugby an opening: “When the footballers disappoint, Brazilians start looking for someone else to cheer.” + + + + + +Nicaragua + +Fourth time unlucky + +Daniel Ortega could win a fair election. But he is fighting dirty + +Oct 29th 2016 | MANAGUA | From the print edition + + + +MANAGUA, Nicaragua’s capital, is not throbbing with campaign fever. With days to go before presidential and parliamentary elections on November 6th, political posters are nowhere to be seen. Campaigning, when it happens, is low-key. Yadira Ríos, the vice-presidential candidate of the Independent Liberal Party (PLI), has taken to obstructing rush-hour traffic at a roundabout just to get noticed. “We have a small budget,” she says from a garageforecourt as drivers honk at her 20-odd supporters on the road, “so we do this”. + +Their antics will be in vain. Daniel Ortega, a former guerrilla commander who first won the presidency in 1985, is almost certain to win a third consecutive term, and his fourth overall. According to one recent poll, he will win 65% of the vote. That endorsement owes something to the president’s success in managing the economy and reducing poverty. But it also comes from an undemocratic suppression of the opposition to him and his Sandinista National Liberation Front (FSLN). + +The election is, in effect, a one-party event. Mr Ortega’s main political foe, Eduardo Montealegre, was removed as the PLI’s leader by the Ortega-friendly supreme court in June. A month later 16 PLI deputies were expelled from parliament for refusing to accept the authority of the new leader, Pedro Reyes, who is thought to have close links to Mr Ortega. Mr Reyes then decided not to run for president and presented José del Carmen Alvarado, as the PLI’s new candidate. He and his running mate, Ms Ríos, are leaders of a neutered party. + +European Union observers criticised the latest presidential election, in 2011, for a “lack of transparency and neutrality”. The multiparty system, declared Mr Ortega on a visit to Cuba in 2009, “is nothing more than a way to disintegrate the nation.” + + + +He would have little trouble winning a fair election. Nicaraguans are still grateful to him for leading the overthrow of the dictatorial Somoza family in 1979. Although Nicaragua is the second-poorest country in the Americas, social programmes instituted by the FSLN government (and financed with oil supplied on favourable terms by Venezuela) have helped reduce the poverty rate from 43% in 2009 to 30% in 2014. The murder rate is lower than in neighbouring Honduras and El Salvador. GDP growth exceeded 4% for the fifth consecutive year in 2015. Public finances are sound. + +Why, then, does Mr Ortega fight dirty? No one is sure. One analyst suggests that his seven years in a Somoza-regime prison made him mistrustful and inflexible. Since becoming president for the second time in 2007 he has become more like his former jailers. He has increased the army’s responsibilities and allowed officers to hold government posts. In 2014 he took direct command of the police. Local leaders are under his thumb. “Municipal governments have to consult with the central executive on all important decisions,” says Elvira Cuadra of the Institute for Strategic Studies and Public Policy, a think-tank in Managua. + +Now 70 years old and thought to be ailing, Mr Ortega is trying to entrench his family’s power. His running mate is his 65-year-old wife, Rosario Murillo, the government’s chief spokesperson. That has angered Nicaraguans who remember the 43-year rule of the Somoza dynasty, a sentiment the opposition is trying to exploit. Ms Murillo is “a witch,” shout Ms Ríos’s roundabout-obstructing supporters. + +Nicaragua may be heading into rockier times. Venezuela’s PetroCaribe programme, under which Nicaragua buys oil on very easy repayment terms, is threatened by the benefactor’s economic collapse. In the first six months of this year loans fell by 37%. A bill in the United States Congress would cut off another important source of cash by barring international financial institutions from lending money to Nicaragua unless it holds fair elections. + +Mr Ortega is trying to placate foreign critics. He has started a dialogue with the Organisation of American States about strengthening democracy and has signalled that he may talk to the opposition after the election. That will matter only if it leads to a real political thaw. But the omens for Mr Ortega’s fourth term as president are not encouraging. + + + + + +Bello + +Ciudad Juárez trembles again + +A Mexican security success story faces a new test + +Oct 29th 2016 | From the print edition + + + +IN PUERTO DE LA PAZ, a settlement of hardscrabble houses and shacks in the western suburbs of Ciudad Juárez, a new three-storey community centre offers taekwondo, five-a-side football and classes in baking and giving beauty treatments. It is one of 49 such centres in poorer parts of this sprawling industrial city jammed against Mexico’s border with Texas. Intended to offer young people alternatives to organised crime, they are a sign of change in a place that became known as “the world’s most dangerous city”. + +There are other changes. Restaurants and bars are full. “There are parts of the city that are heaving with nightlife where a few years ago you wouldn’t have seen a soul,” says Nohemi Almada, a lawyer and activist. The local economy is booming. Factories lining Juárez’s urban highways, making everything from car parts to wind turbines, sport job-vacancy signs. + +Between 2008 and 2011 Juárez descended into hell. It felt the knock-on effects of the offensive against drug mobs launched by Mexico’s then-president, Felipe Calderón. “Here the war on drugs was a massacre,” says Ms Almada. “We all grew used to seeing bound corpses in the street.” A city of 1.4m people suffered more than 300 murders a month. Extortion, kidnapping and carjacking became endemic. The nadir came in January 2010, when gunmen slaughtered 15 students at a birthday party. A chastened Mr Calderón went to Juárez and promised help. + +Nowadays the city is touted as a success story. Murders fell steeply, to 311 in the whole of 2015. Three things were behind the turnaround. First, the federal government poured money into the city. Some of it went into community centres, parks and sports centres. Another chunk transformed the local police, whose officers are now better educated, trained and paid, says a local official. The Chihuahua state government has set up a task force of detectives and prosecutors. + +The second factor was community mobilisation. Representatives of business and professional associations formed a security round-table in 2010, which still meets. They have drawn up security indicators and hold the authorities accountable for meeting targets, pressing them to co-ordinate closely, says Arturo Valenzuela, a surgeon and member of the group. + +The third factor has little to do with the government. The violence in Juárez surged when rivals battled the Sinaloa drug mob for control of the city, an important drug export route. Each side made alliances with youth gangs and elements in the security forces. Sinaloa appeared to win, ending the war. + +Enrique Peña Nieto, who replaced Mr Calderón in 2012, has continued the effort in Juárez, but has tried only fitfully to reproduce its success elsewhere. Having initially played down security issues, Mr Peña now faces mounting alarm among Mexicans, who worry that half a dozen of the country’s states have become ungovernable because of organised crime, corruption and social conflicts. Such concerns prompted Mr Peña to replace the attorney-general this week. + +After falling for the first two-and-a-half years of Mr Peña’s presidency, the national murder rate has risen sharply this year. Businesses complain of the mounting cost of extortion and highway robbery. Because of the weakness of government forces, armed vigilantes now operate in 20 states, according to Eduardo Guerrero, a security consultant. “Everything is very reactive, and there is a lack of foresight regarding the knock-on effects of interventions,” he says of government policy. + +There is nervousness in Juárez, too, because of a rise in murders this year. Some blame the uncertainty among the criminal classes prompted by the election of a new state governor and new mayor, and the tensions between them. Others point to the recapture in January of Joaquín “El Chapo” Guzmán, the head of the Sinaloa mob, who has escaped twice from prison. Awaiting extradition to the United States, he is being held in the turreted bulk of a federal prison in the Chihuahua desert, just outside Juárez. The government is taking no chances: a dozen army vehicles, some with guns mounted, guard the prison entrance. + +Mr Guzmán’s arrest appears to have triggered a renewed battle for territory among rival drug gangs that may be behind the resurgence of violence. On average, half of murders are linked to organised crime, reckons Mr Guerrero. That bodes ill for Mexico. Juárez shows that a concerted political effort and community involvement can bring improvements, at least for a time. But across too much of the country, the basics of the rule of law—an effective police force and a capacity to prosecute crimes—are still missing. + + + +Asia + + + + + +India’s Muslims: An uncertain community + +Bailing out Mongolia: A wrong direction in the steppe + +Influence-peddling in South Korea: Gift horse + +Politics in the Maldives: Sibling rivalry + +Pakistan’s business climate: If you want it done right + +Banyan: A shrimp among whales + + + + + +India’s Muslims + +An uncertain community + +India’s biggest minority grows anxious about its future + +Oct 29th 2016 | DELHI | From the print edition + + + +FOR a community of 172m, almost 15% of the population, Muslims at first glance appear oddly absent from the pages of India’s newspapers. In fact, they crop up a lot, but not by name. Instead, reporters coyly refer to “a certain community”. The clumsy circumlocution is a way of avoiding any hint of stoking sectarian unrest. The aim is understandable in a country that was born amid ferocious communal clashes and which has suffered all too many reprises. But the dainty phrase also hints at something else. Since India’s independence in 1947, the estrangement of Muslims has slowly grown. + +India’s Muslims have not, it is true, been officially persecuted, hounded into exile or systematically targeted by terrorists, as have minorities in other parts of the subcontinent, such as the Ahmadi sect in Pakistan. But although violence against them has been only sporadic, they have struggled in other ways. In 2006 a hefty report detailed Muslims’ growing disadvantages. It found that very few army officers were Muslim; their share in the higher ranks of the police was “minuscule”. Muslims were in general poorer, more prone to sex discrimination and less literate than the general population (see chart). At postgraduate level in elite universities, Muslims were a scant 2% of students. + + + +A decade later, with most of the committee’s recommendations quietly shelved, those numbers are unlikely to have improved. Indeed, since the landslide election win by the Hindu-nationalist Bharatiya Janata Party (BJP) in 2014, some gaps have widened. There are fewer Muslim ministers now in the national government—just two out of 75—than at any time since independence, even though the Muslim share of the population has grown. + +India remains a secular country, yet some laws proposed by the BJP bear a disturbingly sectarian tint. One bill would allow immigrants from nearby countries who happen to be Hindu, Sikh, Christian or Buddhist to apply for citizenship, while specifically barring Muslims. Another would retroactively block any legal challenge to past seizures of property from people deemed Pakistani “enemies”, even if their descendants have nothing to do with Pakistan and are Indian citizens. Courts have repeatedly ruled in favour of such claimants—all of them Muslim—but their families could now be stripped of any rights in perpetuity. + +Far more than such legislative slights, what frightens ordinary Muslims is the government’s silence in the face of starker assaults. A year ago many were shocked when a mob in a village near Delhi, the capital, beat to death a Muslim father of three on mere suspicion that he had eaten beef. Earlier this month, after one of his alleged killers died of disease while in police custody, a BJP minister attended the suspect’s funeral, at which the casket was draped, like a hero’s, with the Indian flag. + +Earlier this month, too, newspapers reported a disturbing discrepancy between the fates of two men arrested for allegedly spreading religiously insulting material via social media. One of the men, a member of a right-wing Hindu group in the BJP-run state of Madhya Pradesh, was quickly released from custody after the customary beating. The arresting officers have been charged with assault; their superiors up to the district level transferred. In the other case, in the state of Jharkhand, a Muslim villager was arrested for posting pictures implying he had slaughtered a cow. Police claimed he died of encephalitis following his arrest. A court-ordered autopsy revealed he had been beaten to death. To date, no police officers have been charged. + +The BJP’s handling of a popular uprising in India’s only Muslim-majority state, Jammu and Kashmir, has also raised Muslim concern. Four months into the unrest, in which dozens of civilians have been killed and hundreds injured, with continuous curfews and strikes keeping schools and shops closed, the government still refuses to talk to any but the most supine local politicians. “You don’t understand,” snaps a cabinet minister, “It’s a violent movement to build an Islamic theocracy. No democracy can tolerate that.” + + + +Omair Ahmad, a writer on Muslim affairs, scoffs at this. The problem, he says, is that Indian governments insist on treating Kashmir as a “Muslim issue” when the real question is one of democratic representation. Yet most Indian Muslims tend to toe the official line, either from a desire to appear loyal or because they genuinely feel only a faint bond with Kashmir. + +The fact is that India’s Muslims are divided, not only between dominant Sunnis and a large Shia minority but also between starkly different social classes and regions: a Muslim in Bengal is likely to share no language and few traditions with a co-religionist far to the south in steamy Kerala. The divisions may soon get deeper. Both India’s supreme court and the national law commission, a state body charged with legal reform, are deliberating whether laws governing such things as divorce and inheritance should remain different for different religious groups, or should be harmonised in a uniform national code, as the constitution urges. Spotting another “Muslim issue”, past governments have let conservative clerics control family law. As a result India, unlike most Muslim-majority countries, still allows men to divorce simply by pronouncing the word three times. + +The BJP, however, is calling for sweeping reform, with Narendra Modi, the prime minister, painting the issue as a straightforward question of women’s rights. Much as many Muslims heartily agree that change is long overdue, suspicions linger that the BJP’s aim is less to generate reform than to spark inevitable protests by Muslim conservatives, so uniting Hindus in opposition to Muslim “backwardness”. + +This question may play out in elections this winter in Uttar Pradesh, India’s most populous state, nearly 40m of whose 200m people are Muslim. The state has witnessed repeated communal clashes since the destruction by Hindu activists, in 1992, of a medieval mosque said to have been built over an ancient temple marking the birthplace of Rama, a Hindu deity. Many expect the BJP to play the “Muslim card” in an effort to rally Hindu votes. + +There is hope: a similar ploy flopped last year in the neighbouring state of Bihar. Whatever the outcome, India’s Muslims feel increasingly like spectators in their own land. “They called it a secular state, which is why many who had a choice at partition wanted to stay here,” says Saeed Naqvi, a journalist whose recent book, “Being the Other”, chronicles the growing alienation of India’s Muslims. “But what really happened was that we seamlessly glided from British Raj to Hindu Raj.” + + + + + +Bailing out Mongolia + +A wrong direction in the steppe + +The government turns to the IMF for the second time in seven years + +Oct 29th 2016 | BEIJING | From the print edition + + + +“THINGS really get messy when politicians see money,” mused Tsakhiagiin Elbegdorj, Mongolia’s president, earlier this month. He was discussing his country’s request for an emergency loan from the IMF to help ward off a balance-of-payments crisis. The messiness might be avoided, Mr Elbegdorj added, if the IMF forced Mongolia to observe a little more budgetary discipline than it is used to. + +Although sparsely populated and vastly endowed with mineral wealth, Mongolia has yet to set its economy on a stable footing. Squabbling and delays over big foreign investments in mining projects, along with low global commodity prices, have stemmed inflows of foreign currency, prompting the local currency, the togrog, to wilt. It has declined 17% against the dollar since late June. The government’s lavish spending in expectation of big mining revenues, meanwhile, has boosted its debt to almost 80% of GDP, much of it denominated in dollars. The togrog’s slide has prompted fears that the government will struggle to service its foreign debt. + +When the IMF last came to Mongolia’s rescue, in 2009, it seemed to be providing just the leg-up the country needed. Mongolian politicians and IMF officials took to a hotel ballroom in Ulaanbaatar in 2010 to celebrate the successful conclusion of a $242m bail-out. Champagne and optimism flowed freely. Mongolia’s “determined policy implementation”, the IMF said, had fostered “a remarkable economic turnaround”. Foreign reserves were up; the budget deficit and inflation were down. Arrears on foreign debts had been paid, and confidence in the currency restored. + +For the next three years Mongolia enjoyed double-digit growth. But the good times did not last. Growth dipped below 8% in 2014 and was just 2.3% last year (see chart). To succour the togrog and sap inflation, the central bank raised interest rates in August by 4.5 percentage points, to 15%, further slowing the economy. The budget deficit has swelled to around 20% of GDP. + +In a parliamentary election in June, the Mongolian People’s Party (MPP) triumphed over the Democratic Party (DP), which Mr Elbegdorj leads. The change in government provided a convenient opportunity for Mongolia to turn to the IMF again, says Julian Dierkes of the University of British Columbia. It will be easier for the new government to accept conditions imposed by the IMF early in its term, he says, when it can still blame the previous one for all the country’s problems. + +It remains unclear just how severe the IMF might be. If its proposed terms seem too onerous, Mongolia could always turn to China, which has extended it some credit in recent years and seems prepared to offer more. Many Mongolians fret, however, over the political and commercial leverage this would give their giant neighbour. Either way, Mongolia will find itself beholden to China. In spite of all the upheaval, the share of Mongolia’s exports going to China has hovered steadily between 80% and 90% over the past six years. + + + + + +Influence-peddling in South Korea + +Gift horse + +Allegations about the conduct of a friend of the president prompt outrage + +Oct 29th 2016 | SEOUL | From the print edition + +Ewha takes all sorts + +PARK GEUN-HYE’s presidency, soon entering its fifth and final year, may well be remembered for its apologies. The first was a tearful televised address in 2014 to atone for her government’s botched response to a ferry accident in which over 300 were killed. On October 25th Ms Park apologised again, this time for sharing advance drafts of dozens of speeches with a confidante, Choi Soon-sil, who has no government position. + +A day earlier JTBC, a local cable-television network, said it had retrieved presidential files and e-mails from a computer discarded by Ms Choi. Ms Park said that she had sought her friend’s opinion only early on in her presidency, before her staff had hit their stride, but the media have been portraying Ms Choi as the eminence grise of her administration, pulling strings behind the scenes. + +The revelation is the latest twist in a political drama that has embroiled Ms Park’s conservative government and gripped the nation. Daily press reports and social-media chatter present new claims about Ms Choi’s influence over Ms Park, and how Ms Choi is alleged to have exploited it. If the latest footage put out by TV Chosun, a conservative outlet, is to be believed—of a dressmaking studio where Ms Choi appears to be directing presidential staff—she even exerted authority over Ms Park’s wardrobe. In an interview from Germany this week with Segye Ilbo, a newspaper, Ms Choi confirmed that she had edited some of Ms Park’s speeches. She apologised, but denied any other wrongdoing. + +In early October prosecutors launched an investigation into claims that Ms Choi and Ahn Chong-bum, one of the president’s secretaries, had “arm-twisted” some of South Korea’s biggest conglomerates into paying 80bn won ($72m) to two new non-profit groups promoting Korean culture overseas, the Mir and K-Sports Foundations. Executives at the Federation of Korean Industries, a business lobby that helped set up the two outfits and raise money for them, are being questioned. Ms Choi, who is sought by prosecutors, is accused of having siphoned off funds for her private use, including to cover training expenses for her daughter, Chung Yoo-ra, who hopes to compete in dressage at the Tokyo Olympics in 2020. + +Ms Chung’s education has also become a focus of popular anger, and the subject of a separate investigation: an opposition MP has alleged that Ewha Women’s University, among the country’s most prestigious, gave Ms Chung undeserved grades. Other critics say it changed its rules to help her gain admission in early 2015 (it suddenly began offering extra points to applicants with gold medals in equestrianism). The university’s president, who resigned on October 19th, had also been dogged by months-long protests (one of which is pictured) against a scheme to set up a college of continuing education with government funding, which some believe Ewha won through ties to Ms Choi. + +The allegations of the manipulation of admissions have stoked particular ire in South Korea, where the state-administered university-entrance exam is “the only way to climb the social ladder”, says Kwon Jong-seong, a South Korean blogger. Many of the country’s unemployed youth see a system in which the privileged get ahead while more deserving but less connected youngsters struggle. When the daughter of the chairman of Korean Air, a local airline, threw a public tantrum over macadamia nuts in 2014, South Koreans seethed about the culture of impunity at its big family-owned businesses. Now the feeling is that political power at the highest level is protecting such privilege, says Mr Kwon; Ms Park’s supporters, many of them middle-class, “feel betrayed”. + +Ms Park’s approval rating has slumped to 26%, its lowest since she took office in 2013. Disaffection with her handling of South Korea’s stuttering economy is a big reason. But on social media discussion of almost any subject now concludes with a hashtag that translates “And what about Choi Soon-sil?” Following the JTBC report, MPs in Ms Park’s own Saenuri party began to call for an independent probe into the charges of abuse of power; one spoke of “contempt for the country’s democracy”. After the president’s apology, “impeachment” was the most-searched word on Naver, South Korea’s biggest web portal. + +Influence-peddling is “systemic and endemic” in South Korea, says David Kang of the University of Southern California. Every former South Korean president of the past three decades has been hounded by corruption scandals: Roh Tae-woo went to jail for having accepted hundreds of millions of dollars in bribes; the sons of Kim Young-sam and Kim Dae-jung went to prison for graft. Roh Moo-hyun, who made a counter-corruption drive a centrepiece of his presidency, jumped to his death in 2009 as charges of wrongdoing mounted against him. Many suspect a recent crackdown on gift-giving to officials will do nothing to stop high-level graft. + +Ms Park says her dealings with Ms Choi have been conducted “with pure motives”—to improve the workings of her office. It is ironic, then, that the scandal that has ensued seems to have brought her administration almost to a standstill. + + + + + +Politics in the Maldives + +Sibling rivalry + +The president falls out with his brother + +Oct 29th 2016 | MALE | From the print edition + + + +THE president of the Maldives, Abdulla Yameen Abdul Gayoom, has fallen out with all manner of people in his three years in office: two successive vice-presidents, both turfed out of office; his first defence minister (ditto); the failed assassins who bombed his yacht last year (he blamed one of the deposed veeps); Mohamed Nasheed, his predecessor but one, who says the president is turning the Maldives into a dictatorship; and the Commonwealth, a club of former British colonies, which has questioned his democratic credentials. But his newest adversary is by far the most surprising: Maumoon Abdul Gayoom, his half-brother and another former president, who was the country’s strongman from 1978 to 2008. + +The dispute between Mr Yameen, as the current president is called, and Mr Gayoom, the former one, centres on the Progressive Party of the Maldives (PPM), which Mr Gayoom founded in 2011 (for most of his presidency, political parties were banned). The party nominated Mr Yameen as its presidential candidate in 2013, but Mr Gayoom remained head of the party. The two seemed to get on well enough until June, when Mr Gayoom opposed a bill to allow the government to lease islands for development as resorts without competitive bidding. His son, an MP, voted against it, and was expelled from the PPM for his pains. The same day Mr Gayoom’s daughter, Dunya Maumoon, resigned as foreign minister. + +Mr Gayoom has refused to endorse Mr Yameen as the PPM’s candidate for the next presidential election, in 2018. Mr Yameen’s supporters dragged the dispute into the courts, where Mr Gayoom has been dealt a series of reversals. This week an appeals court affirmed a ruling from a lower court stripping Mr Gayoom of leadership of the party and handing it instead to Mr Yameen. On October 27th the supreme court rejected a further appeal by Mr Gayoom. + +The rift between the brothers could perhaps be mended. Mr Gayoom has not publicly criticised Mr Yameen; Mr Yameen, for his part, insists Mr Gayoom “is my beloved brother. So I cannot talk ill of him.” The opposition has asked Mr Gayoom to join them, but he has ignored their pleas so far. + +Mr Yameen has weathered plenty of adversity, as the long list of his opponents attests. Media reports in August about moves to oust him came to nothing. But the only person with more experience navigating Maldivian politics is Mr Gayoom. The elections in 2018 might even pit brother against brother. + + + + + +Pakistan’s business climate + +If you want it done right + +How a small Pakistani city became a world-class manufacturing hub + +Oct 29th 2016 | SIALKOT | From the print edition + +Keeping her eye on the ball + +PHOTOGRAPHY is fiercely restricted inside Khawaja Masood Akhtar’s factory in Sialkot, a small city in northern Pakistan. His products—top-of-the-range footballs—must be zealously guarded until the time comes for his customers, big international sports brands, to unveil their offerings for the new season. Until then the latest ball designs are subjected to a battery of tests in windowless laboratories. They must endure everything from hard poundings from mechanised boot studs to repeated dusting with fungus spores. The quality of the factory’s output is so high that Adidas chose it as one of only two in the world to manufacture the balls used in the World Cup in 2014. + +Pakistan has precious few globally competitive exporters, but a good number of them are clustered in Sialkot, an out-of-the-way city of fewer than 1m people in north-eastern Punjab. It supplies the world with all sorts of sporting gear, from hockey sticks to judo suits, as well as leather goods and surgical instruments. Sialkoti Lederhosen are all the rage in Bavaria. The city’s 8,000-member chamber of commerce says Sialkot exported $2bn-worth of goods last year, or 9% of the country’s total exports of $22bn. + +Sialkot’s success is especially surprising as it was cut off from its natural economic hinterland, the Kashmir Valley, when the subcontinent was split between India and Pakistan in 1947. Yet it is doing much better these days than the rest of the country. Its exports have remained reasonably steady for the past two years, even as those of the country as a whole have fallen by 12%. How are firms from such a backwater thriving, ask the exporters of Lahore and Karachi, while they struggle? + +Pakistani businesses tend to blame the government for the country’s feeble export performance. Domestic and foreign investors alike are put off by the breakdown of law and order in Karachi, the commercial capital, and the storm of Islamic militancy across the rest of the country (a suicide attack on a police training college on the outskirts of the city of Quetta claimed over 60 lives this week). Manufacturers must endure crippling shortages of electricity in the summer and gas in the winter. Antiquated land administration and customs systems make buying property and exporting goods tiresome. It can take almost three years to settle a commercial dispute. Pakistan ranks a lowly 144th out of the 190 economies assessed in the World Bank’s latest “Doing Business” report. + +Mr Akhtar, however, dismisses these “lame excuses”: any half-decent entrepreneurs, he insists, should be able to find their own solutions to such problems. That is what the businessmen of Sialkot have done, at any rate: instead of waiting for politicians to stump up for local infrastructure, they have built it themselves. The Chamber of Commerce set up the country’s first privately financed dry port, where goods can clear customs before being shipped to a conventional port. It later charged members a special fee to raise funds to contribute towards the resurfacing of the city’s once-appalling streets. Local businesses also funded the construction of the city’s airport, the only private one in the country. It boasts both the longest and hardiest runways in the region, and handles 53 flights a week. That helps bring in foreign buyers who do not fancy the wearisome drive from Lahore. Some of the investors in the airport are now on the verge of launching their own airline. + +As well as determination, Sialkot’s businessmen have had their fair share of luck. The city happens to specialise in niche products, which are relatively insulated from competition from China. The nearby towns of Wazirabad and Gujrat, once known for their cutlery and electrical goods respectively, have struggled against a tide of cheap Chinese exports. But even Sialkot is not immune to competition. Local manufacturers lost their grip on the world market for badminton rackets when they failed to anticipate the switch from wood to aluminium and graphite. If anything, however, that has only made the Sialkotis more vigilant. The local business community is now trying to set up a technology university in the city. + + + + + +Banyan + +A shrimp among whales + +As the threat from the North grows, South Korea finds itself in a lonely place + +Oct 29th 2016 | From the print edition + + + +FOR hundreds of years Korea was China’s vassal state. Then it came under the heel of imperial Japan at the start of the 20th century. After Japan’s defeat in 1945 the Soviet Union occupied northern Korea. That led to the creation of the implacably hostile North Korea, an existential threat to the South ever since. America has acted as the South’s guarantor, keeping tens of thousands of troops there since the Korean war ground to a bloody halt in 1953. The South swings between resenting the American presence and worrying that it might come to an end. + +South Korean officials, in short, have long had plenty to worry about. But their angst these days is unusual in its intensity. Life in Seoul may be carrying on as normal, with pop-up food stalls doing brisk business and rock bands performing lustily in open spaces, but the nuclear-armed North, 60km (35 miles) up the road, is looming especially large in policymakers’ minds. + +The threat from the North has always been tangible. For years, its commandos would slither across the demilitarised zone to launch unnerving attacks, such as the one in 1968 that targeted Park Chung-hee, South Korea’s strongman, in the presidential Blue House in Seoul (it failed). More recently, in 2010, a North Korean submarine sank a South Korean naval vessel, the Cheonan, killing 46 seamen. Nor is the nuclear threat new. North Korea’s nuclear programme has been decades in the making. Its first, shocking nuclear test was ten years ago—half a lifetime for the young couples grazing at Seoul’s food stands. + +Yet in recent months something has changed. Kim Jong Il, whose regime was responsible for the first test and who died in 2011, had only a rudimentary nuclear device, useful mainly for blackmail. Under his son, Kim Jong Un, the programme has rapidly gathered pace, with two nuclear tests this year alone. The North has also conducted 21 missile tests this year, including one from a submarine—a first. The ability to miniaturise a tactical nuclear weapon on a working missile could be just two or three years away, with an intercontinental ballistic missile capable of hitting California possible in five years’ time. Chun Yung-woo, a South Korean former national security adviser, talks of “growing outrage…after five tests, a change of mood, a sense of urgency.” + +Once, it was possible to hope that the North’s isolated regime would implode under its own contradictions before it gained a proper nuclear capability. But the spread of informal markets and, for some North Koreans, a measure of prosperity may have strengthened the regime’s chances of survival. A consensus in Seoul is forming that Mr Kim now aims to dictate events on the peninsula—including the ability to demand that the Americans leave. One senior foreign diplomat in Seoul says that for the first time he hears people wondering openly whether there will be a major conflict on the peninsula in their lifetime. + +Officials under President Park Geun-hye (daughter of Park Chung-hee) direct their frustration at China. For most of her nearly four years in office, Ms Park has wooed China’s dictator, Xi Jinping, partly to promote economic ties, and partly in hopes of making China acknowledge South Korea’s concerns over the North. In particular, if China enforced existing UN sanctions on North Korea, the regime would be feeling the pain—nine-tenths of all North Korea’s trade is with its giant neighbour. + +As she leaned to China, relations with Japan grew bitter over issues to do with colonial history. Recently, though, she has leaned the other way. China has not allayed South Korea’s concerns. Indeed it has loudly criticised Ms Park’s go-ahead for an American high-altitude missile-defence system in her country. As for South Korea’s economic relationship with China, it too has changed. Mutual opportunities are now overshadowed by competition as China develops the same industries that are central to South Korea’s economy, such as shipbuilding and steel. + +Meanwhile, South Korea’s relations with Japan seem to be improving fast. Late last year Ms Park and Shinzo Abe, Japan’s prime minister, sought to settle once and for all the matter of the Korean women, some of them still alive, who were forced to work in Japanese military brothels during the war. The two sides are even exchanging intelligence about North Korea. + +Ms Park’s government has also been trying to persuade America to punish China for failing to rein in the North. America could blacklist Chinese state enterprises and banks doing business with the North, for instance. (It has just announced sanctions on one Chinese firm, but only after the Chinese authorities themselves had moved against it.) That would immediately exclude the miscreants from global payments systems and trading networks. But America is reluctant. After all, tensions in the South China Sea are already headache enough, while it wants to co-operate with China on other topics, such as climate change. + +That leaves South Koreans worried about the commitment of their American ally. Donald Trump’s threats to pull American troops from South Korea have hardly helped. A President Hillary Clinton would certainly reassure. But the nagging fear of an eventual American withdrawal, perhaps as part of a power-sharing agreement with China in Asia, still gnaws at South Korea. + +Thinking some unthinkables + +Meanwhile, the North Korean threat grows. There is talk of urging the Americans to shoot down the missiles North Korea keeps testing in breach of UN sanctions, despite the risks to the South of retaliation from the North. There is even a revival of the debate about South Korea developing its own nuclear weapons—a majority of South Koreans polled are in favour. + +Scratch a South Korean, says the foreign diplomat, and he will be unsure of America’s commitment, ready to believe that Japan might turn aggressive again, resentful that China ignores his country’s concerns and alarmed by a dangerous North Korea. South Korea, he adds, “looks a fundamentally lonely place.” + + + +China + + + + + +History: Nihil sine Xi + +Parking: The other car problem + + + + + +Nihil sine Xi + +China is struggling to keep control over its version of the past + +A battle is raging in the realm of historiography + +Oct 29th 2016 | BEIJING | From the print edition + + + +THE Chinese Communist Party likes to describe threats to its grip on power in barely comprehensible terms. Over the past three decades, it has struggled against the menace of “bourgeois liberalisation” (leaving many wondering whether there is an acceptable proletarian kind) and fought against “peaceful evolution” (exceedingly dangerous, for some reason, unlike “reform and opening up”). Now Xi Jinping, China’s president, is waging war against “historical nihilism”, a peril as arcane-sounding as it is, to his mind, grave. As a state news agency recently warned, there is a “seething undercurrent” of it in China. Failure to stamp it out, officials say, could lead to Soviet-style collapse. + +Days before the party’s 350 or so most senior officials gathered in Beijing this week for a secretive conclave (as they normally do in the autumn), a party website published a compendium of Mr Xi’s public remarks on the nihilist problem (intriguingly headlined: “Xi Jinping: There Can Be No Nothingness in History”). People’s Daily, the party’s main mouthpiece, marked the start of the meeting with a commentary laced with references to the lessons of history, including the collapse of the Soviet Communist Party. + +In party-speak, historical nihilism means denying the “inevitability” of China’s march towards socialism (the country is currently deemed only to be in the early stages of it). It is a term that came into vogue among party officials after the crushing of the Tiananmen Square protests in 1989. Jiang Zemin, who was then party chief, declared that historical nihilism was one of several ideological vices that had “seriously eroded” the party. Other, more obvious ones, included yearnings for freedom and democracy. By reviving Mr Jiang’s rhetoric on nihilism, Mr Xi is signalling that the party could again face regime-threatening danger unless it tightens its grip on the way history is told. + +Against the flow + +So what are the nihilists doing that so troubles China’s leaders? Mr Jiang’s main concern was a television series broadcast in 1988 called “River Elegy”, which had portrayed China as a country weighed down by a long history of backwardness and inward-looking conservatism. The documentary programmes had prompted energetic debate among intellectuals about how to reform China that helped foment the following year’s unrest. + +No reflection on history has stirred the public in recent years as much as “River Elegy” did in the build-up to Tiananmen. But there has been a steady stream of articles chipping away at the party’s account of history. Some have appeared in officially published journals; the more revelatory ones have circulated in samizdat form in print and online. They have included a Chinese journalist’s investigation of the famine of 1958-1962 during which tens of millions died, and accounts of the horrors of the Cultural Revolution in the 1960s and 1970s. + +Mr Xi sees such writings as a challenge to the legitimacy of party rule. Already in 2013 the party issued secret orders (subsequently leaked) that its members must be on guard against historical nihilism. The following year Mr Xi said an important reason for the Soviet party’s collapse had been historical nihilism, including attacks on Lenin and Stalin. Mr Xi sees Mao’s legacy as being under similar assault. + +A journal specialising in historical critiques, Yanhuang Chunqiu, recently became the most prominent victim so far of Mr Xi’s campaign. To the horror of its liberal fans, the magazine was taken over in July by hardliners; its feisty staff resigned. In 2014 Yanhuang Chunqiu had published articles that daringly disputed the party line on historical nihilism. One of them said the party should focus on fighting those trying to reawaken the “old dreams of the Cultural Revolution”—in other words, take on diehard Maoists instead. + +Mr Xi has enlisted the judiciary to help him. On October 19th the supreme court called a press conference to give its views on recent legal cases that state media have linked with historical nihilism. In one case a historian, Hong Zhenkuai, was told by a court to apologise for challenging the party’s story of how five Communist soldiers had jumped off a cliff during the second world war rather than surrender to the Japanese. Mr Hong said two of them may simply have slipped. Another case involved little more than black humour: JDB Group, a beverage-maker, and Sun Jie, a blogger, were ordered by a court in September to apologise for their tweets referring to a war hero who burned to death during the Korean war. Mr Sun had called him “barbecued meat”. JDB had jokingly offered to provide free drinks at Mr Sun’s barbecue restaurant, should he open one. At the press conference, a supreme-court official said those guilty had attempted to “unravel core socialist values”. + +There have been other examples, too: a blogger who was detained for several days in 2013 for retweeting a claim that the cliff-leaping soldiers had bullied local civilians; four others who were hauled in that year for questioning the frugality of Lei Feng, another model soldier (two of them were later jailed for publishing these and other online “rumours”); and a television anchor, Bi Fujian, who was fired for poking fun at Mao at a private party. + +Mr Xi has justified his vigilance by quoting the words of a Chinese reformist in the 19th century: “To annihilate a country, you must first eradicate its history”. Mr Xi takes that as a warning that rewriting history can cause catastrophe. When it comes to wiping out history, however, the party itself has been trying dangerously hard. + +This article appeared in the Print Edition with the headline: Nihil sine Xi + + + + + +A lack of parking spots worries Chinese car-owners + +China’s other car problem + +Fixing it will be hard + +Oct 29th 2016 | WENZHOU | From the print edition + +Looking out for willing donors + +IT IS barely eight in the morning and the two levels of a hospital’s car park are already full. A queue of backed-up vehicles snakes around the corner and onto a major street, causing a traffic jam in downtown Wenzhou, a coastal city. “Reverse, reverse, reverse,” barks an attendant, blowing on a whistle and pointing this way and that as he guides one car out to let another in. Tempers flare amid a cacophony of horns. A young man, Yang Linfeng, seems untroubled by the chaos as he walks back to his car. In for his annual physical, he says he knew exactly what to expect: he came an hour early just to find a parking spot. + +Similar scenes play out around China every day. Whether at hospitals, near schools and offices or outside popular restaurants and shopping malls—just about anywhere people congregate—parking has become a major aggravation of urban life. It is in some ways a good problem for China, a sign of growing prosperity. Car ownership is expanding by about 10% a year, even as the economy slows. + +But it also suggests a flaw in the country’s approach to building cities. In their rush to construct roads and housing to accommodate the 400m people who have moved to cities from the countryside over the past two decades, officials have paid insufficient attention to many basics such as drainage and green spaces. As the country’s parking headache shows, making up for these oversights is not easy. + +In March parking was identified as a priority in the prime minster’s annual report to parliament. Little wonder: the government reckons China has a shortage of roughly 50m parking spaces. Its target is 1.3 parking spaces per car, the norm in richer countries (including residential parking). In China’s biggest cities, the ratio is 0.8. Smaller cities have just 0.5 spaces per car. + +Frustration is spreading. In an official survey conducted over the past two months, nearly two-thirds of respondents said that parking had become “unbearable”. By contrast, only about a third said they lived in places with frequent traffic jams, a problem for which China is much more notorious. The two nuisances can be related. The harder it is to find a place to park, the more cars circle around and around. Illegally parked cars spill onto the pavement and crowd out pedestrians. + +One solution might be to build more car parks, but this is not straightforward. Many apartment blocks were built before car ownership became common, so neighbourhoods have limited space to build places to park. As one joke goes, bachelors used to need an apartment and a car before being able to find a wife; now, they need a flat, a car and a parking space. Some cities have started to experiment with making parking spaces a prerequisite—not to get married, but to buy a car. Would-be car owners must first show they have a space, an approach that Japanese cities have used successfully. + +The morass illustrates how a government that many perceive as all-powerful can find itself constrained. Cars jostle for cheaper roadside spots, leaving more expensive ones beneath office buildings underused. The Institute for Transportation and Development Policy (ITDP), a think-tank in New York, found that the occupancy of car parks in two major new commercial buildings in Guangzhou, a southern city, never exceeded 58%. + +It would help to charge more for roadside parking, nudging drivers to use underground car parks. But officials fear higher prices may cause public anger. It is easily aroused. After Beijing officials increased roadside parking fees in 2011, there were dozens of assaults on attendants. Residents often protest when owners of their apartment blocks raise parking prices. + +Another good idea would be stricter enforcement of no-parking zones, which would curb superfluous parking demand in busy areas and encourage people to use public transport. However, policy co-ordination is poor. The ITDP says there are six municipal agencies or departments in Guangzhou with responsibility for some aspect of parking management. + +Many cities are investing huge sums in public transport, as well as making some effort to raise roadside parking fees and crack down harder on illegal parking. In Wenzhou, an officer walks methodically up a line of cars parked under a no-parking sign next to a tall commercial building. He writes out a fine for each one and takes photos for use as evidence. But the car park inside the building is two-thirds empty. + +An attendant there clearly doubts the efficacy of fines. “People here have so much money that they don’t know what to do with it,” he quips. “So they donate it to the traffic department.” + +This article appeared in the Print Edition with the headline: The other car problem + + + +Middle East and Africa + + + + + +Off-grid solar power: Africa unplugged + +The International Criminal Court: Exit South Africa + +African economies: The oil effect + +Iraq: Tightening the noose + +Turkey’s intervention in Syria and Iraq: Erdogan’s war game + +Medical marijuana in Israel: Light-up nation + +Islamic State’s loss of Dabiq: Apocalypse postponed + + + + + +Off-grid solar power + +Africa unplugged + +Small-scale solar power is surging ahead + +Oct 29th 2016 | GAKENKE | From the print edition + + + +A FEW miles down a rutted dirt road, and many more from the nearest town, a small farmhouse stands surrounded by dense green bush. On the inside of one wall gangly wires reach down to a switch and light that are connected to a solar panel. Readers in rich countries may well consider electric lighting mundane. But in northern Rwanda, where fewer than one in ten homes has access to electricity, simple solar systems that do not rely on the grid—and use a battery to store electricity for use at night—are a leap into modernity. A service once available only to rich Africans in big towns or cities is now available for just a few dollars a week. People are able to light their rooms, charge a smartphone and listen to the radio. In a few years they will probably also be watching television, powering their irrigation pumps and cooling their homes with fans. + +In short, poor people in a continent in which two of every three people have no access to power may soon be able to do many of the things that their counterparts in rich countries can do, other, perhaps, than running energy-hogging appliances such as tumble dryers and dishwashers. And they will be able do so at a fraction of the cost of traditional sources of energy while also acting as a testing ground for technologies that may even make their way back from poor countries to rich ones. + +Off-grid solar is spreading at an electrifying pace. An industry that barely existed a few years ago is now thought to be providing power to perhaps 600,000 households in Africa. The pace of growth is accelerating in a continent that, more than any other, is rich in sunshine (see map). Industry executives reckon that over the next year the number of home-power systems on African roofs will grow by 60-100%. M-Kopa, the market leader, has installed 400,000 systems and, at its current rate of growth, may add another 200,000 to that number over the next year. Smaller rivals such as Off Grid Electric, Bboxx and Azuri Technologies may well double their client base over the same period. + + + +This fast pace of growth suggests that, if sustained, off-grid connections will within a few years outstrip the rate at which people are being connected to the grid, leapfrogging power lines in much the same way that mobile phones bypassed fixed-line telephone networks. This promises not just to improve millions of lives but to help deal with a chronic shortage of power that, the World Bank reckons, trims about two percentage points from Africa’s annual economic growth. + +Extending electricity grids across Africa might seem a better alternative. But, for the moment, it is unrealistic. Rwanda, one of Africa’s most densely-populated countries, found that it costs an average of $880 to link a house to the grid. Yet even that figure is misleading since it changed its policy to concentrate on connecting only those homes that are already close to existing power lines. Before this change it cost an average of about $2,000 per connection, about ten times the cost of an off-grid system. The Africa Progress Panel, a group of experts led by Kofi Annan, a former UN secretary-general reckons that more than 600m people are not connected to grids and that to wire them up, investment in electricity infrastructure would have to rise to about $55bn a year from the current $8bn. On current trends it would take until 2080 to link all Africans to the grid. + +Just a few years ago the idea that “off-grid” systems could fill the gap seemed preposterous: the market was dominated by charities giving away solar-powered lanterns that could produce a few hours of light at night. But as technology and venture capital firms have entered the market, the industry has quickly evolved, helped by three developments. + +The first has been an 80% fall in the cost of solar panels since 2010, according to the International Renewable Energy Agency to as little as 52 American cents per watt of capacity. A more important innovation has been the “pay-as-you-go” business model, based on selling electricity as a service rather than selling solar cells. A bevy of companies have sprung up offering to install systems and then charge customers a weekly or monthly fee. This allows poor households to have part-use of solar systems costing as much $250 that they would struggle to buy outright. Many firms have connected their systems to mobile phone networks so that they can bill customers using mobile money and cut them off the moment a payment is missed (some are building in Wi-Fi routers to offer internet connections, too). Default rates are anyway low because many rural Africans already spend some $100-$140 a year on kerosene lamps and candles, and another 15-25c each time they charge their phones. + +The third big change has been in the development of devices that use less electricity. The most important of these are light-emitting diode (LED) bulbs, which provide illumination with about 20% of the energy of conventional bulbs. But energy savings are also spreading to phones, televisions, fans and radios. Azuri Technologies is taking this a step further by building intelligent solar systems that learn how their users typically use energy. The system then uses this information to ensure it never leaves them in the dark. If a cloudy day reduces the amount of power it collected then it will imperceptibly dim the lights and television to keep them running. + +The biggest constraint to faster growth is a shortage of finance, since most off-grid firms are putting up the money for new installations, but are only getting paid back by their customers over time. A second constraint is production. Mansoor Hamayun, the CEO of Bboxx, laments that he can’t make systems quickly enough. “It’s not about a lack of demand…we run out of stock frequently,” he says. + +To be sure, home solar will not solve all of Africa’s power problems. Current systems can already light up small shops and service businesses such as hairdressers—Lumos Global reckons that about a quarter of its systems are used in hospitals and businesses. Several firms are working on scaling them up to to provide power to small factories and farms. But even so, off-grid power will not displace the traditional sort when it comes to big industries. + +For the moment many policymakers in Africa see the two technologies as competing and fret that off-grid power companies will eat into the customer base of state-owned electricity monopolies. Instead they should encourage the competition that is lifting the burden of rural electrification from the state while allowing it to concentrate its investment in improving power supplies in those areas where it can be used to power industrial growth. + + + + + +The International Criminal Court + +Exit South Africa + +A terrible blow for the court, and for a beleaguered country + +Oct 29th 2016 | JOHANNESBURG | From the print edition + + + +UNDER Nelson Mandela’s government, South Africa championed the creation of a court to try the world’s worst criminals. Out of apartheid and the Rwandan genocide came a boon for international justice. “Our own continent has suffered enough horrors emanating from the inhumanity of human beings towards human beings,” Mr Mandela said ahead of the Rome statute adopted in 1998, which established the International Criminal Court (ICC). So strongly felt was this mission that South Africa incorporated the ICC’s founding treaty into its own domestic laws. + +But under President Jacob Zuma the country has taken a radically different turn. On October 21st South Africa’s government filed notice of its intention to quit the ICC (the process will take a year). This puts South Africa in the company of Burundi, which said it was leaving after the ICC began investigating the wave of killings that followed President Pierre Nkurunziza’s decision to cling to a third term. Other African countries may follow suit. The Gambia, another human-rights abuser, says it will do so. Kenya, Uganda and Namibia have made similar threats. + +South Africa’s explanation for leaving rings hollow. Its official notice complains that its obligations under the Rome statute clash with conventions around diplomatic immunity for heads of state and hinder its ability to broker “peaceful resolution of conflicts.” This was the case when Sudan’s president pitched up in Johannesburg for an African Union summit last year. Under the ICC rules, South Africa was obliged to arrest Omar al-Bashir, who is wanted by the ICC on genocide charges for the deaths of hundreds of thousands in Darfur. Instead Mr Zuma (pictured, left) welcomed him. Mr Bashir bid a hasty retreat back to Khartoum when civil-society groups took the South African government to court in an attempt to force his arrest. + +Many South Africans, including the liberal opposition and human-rights bodies, see the decision to leave the ICC not as a triumph for pan-Africanism but as another moment in the country’s descent under Mr Zuma, who has repeatedly shown little respect for the law. Even the leftist Economic Freedom Fighters (EFF), which roundly criticises the ICC for bias against Africans, has condemned the move as irresponsible. + +The timing is also questioned, with Mr Zuma and his government facing a string of legal challenges. Two lower courts have ruled that the government broke the law by failing to arrest Mr Bashir. The Constitutional Court was due to hear an appeal next month, though the justice minister now says it will be withdrawn. There are also questions over the process of leaving the ICC. The opposition Democratic Alliance has launched a court challenge arguing that the move is unconstitutional because the government failed to seek approval from Parliament. + +Meanwhile the president, beset by a battered economy, violent student protests and factional disputes within his party, has his own legal woes. Earlier this year Mr Zuma was found to have violated the constitution in a row over expensive improvements to his house. He now faces the potential reinstatement of corruption charges linked to an arms deal. At the same time the country’s respected finance minister, a rival of Mr Zuma, is due in court on spurious charges. George Kegoro of the Kenya Human Rights Commission reckons that South Africa’s move to withdraw from the ICC is a response to Mr Zuma’s political problems: “Impervious to the country’s political history…the South African leadership is marching the country to a legal wilderness, where South Africa will be accountable for nothing.” + + + + + +The oil effect + +African economies are growing at very different speeds + +New numbers from the IMF tell a tale of two Africas + +Oct 29th 2016 | From the print edition + + + +HOW are sub-Saharan African economies doing? It depends on where you look, says the IMF in its latest survey of the continent, which was published this week. Regional growth will slow to just 1.4% this year, the most sluggish pace for two decades. Things look grim in Nigeria, which is mired in recession. But the Ivory Coast, a short flight away, is thundering along at a growth rate of 8%. Similar contrasts are found across the continent. Better to talk of two Africas, says the IMF, moving at different speeds. + +The big divider is resources. As commodity prices have slumped, so too have the fortunes of big exporters. As a group, resource-rich countries will grow on average by 0.3% of GDP, says the IMF. Take oil-rich Angola, once the fastest-growing country on the continent: it will not grow at all this year, and is wrestling with inflation of 38%. Commodity-exporting countries saw the value of their exports to China almost halve in 2015. Public debt is rising sharply. Exchange rates are falling. Private consumption has collapsed. + +Things look very different in countries which are less resource-dependent. They will grow at 5.6% this year, the IMF reckons. They have been helped by falling oil prices, which makes their imports cheaper. They are stronger in other ways. In east Africa, for example, a wave of public investment in infrastructure has boosted demand. + +Governments cannot set commodity prices. Nor can they stop drought, which has hit agriculture in countries such as Ethiopia and Malawi. But their decisions do make a difference. Nigeria’s disastrous attempt to prop up its exchange rate hurt far more than it helped. Investors in Mozambique were unimpressed when the country revealed hidden debts in April. Growth in South Africa has slowed to almost zero amid political wrangles. Now is the time to get the policies right, urges the IMF. + +The numbers should be read warily: GDP figures are only ever a best guess, and the large informal economy in most African states makes the calculation even harder. Talk to traders in Uganda, for instance, and you will hear a story very different from the IMF’s rosy forecast of 5% growth. The overall lesson, though, is clear. If you rely on commodities, diversify—or face the consequences. That is easier said than done. Look to east African countries, hailed for their innovations in mobile banking, which are now touting a fresh source of riches: oil and gas. + +This article appeared in the Print Edition with the headline: The oil effect + + + + + +Iraq + +Tightening the noose + +Iraqi and Kurdish troops fight their way towards the heart of the caliphate + +Oct 29th 2016 | NAWARAN | From the print edition + + + +HARASSED by sniper fire and slowed down by the suicide bombers of Islamic State (IS), Kurdish and Iraqi forces have taken heavy casualties as they fight their way towards Mosul, Iraq’s second-largest city and the place where the jihadists first announced the creation of their “caliphate” two years ago. + +Villages freshly captured by the Iraqi army and Shia militias on the roads leading to Mosul show signs of the jihadists’ hasty retreat. Weapon caches are abandoned, pots of uneaten food still sit on stoves and medical clinics have been pilfered for supplies. But there are signs, too, of the defences dug by IS to evade air strikes: deep, wide subterranean tunnels with room enough to sleep and eat, their entrances concealed inside one-storey buildings. + +The operation to retake Mosul began on October 17th. Since then an awkward coalition of Iraqi and Kurdish forces has swept across the vast, sun-baked plains of Nineveh to seize a string of villages to the east, north and south. As The Economist went to press, some units were within 6km (4 miles) of the city. + +Kurdish and Iraqi troops, supported by American-led air strikes, Western special forces and American artillery guns, have inflicted heavy casualties on IS. Residents in Mosul say the city’s hospitals are full of wounded IS fighters returning from the front. “It’s pretty significant (resistance),” said Lieutenant-General Stephen Townsend, the commander of American-led forces in Iraq. “The Iraqis expected this and they’re fighting through it.” + +Less expected has been IS’s ability to attack its enemies on other fronts. On October 21st about 100 well-organised IS fighters infiltrated the oil-rich city of Kirkuk and engaged security forces in running street battles that lasted three days. Experts say the attack is a portent of what lies ahead. They suspect IS will return to the shadows to wage a bloody guerrilla war against the Iraqi state once the city falls. + +If the battle in the countryside around Mosul has been fierce, then commanders expect an even bloodier fight once their troops enter the city. Intelligence reports indicate that hundreds of IS fighters have moved to Mosul in recent weeks to reinforce the 4,000 to 8,000 fighters estimated to be inside already. + +IS has had two years to prepare its defences. Its fighters have rigged the city with explosives, mined and booby-trapped roads, filled trenches with oil they can set alight as the Iraqis advance and dug a network of tunnels deep underground. There are also fears that the jihadists will use the 1m-1.5m civilians trapped in the city as human shields to slow the offensive. Officials say there is every indication IS will fight rather than flee. If so, some think the battle could last until February. + +Solid intelligence about the location of IS positions inside the city will be key to limiting the damage. To encourage informants, troops have erected a number of mobile-phone masts near the front line and phone operators have given residents 60 minutes of free credit. “It’s still dangerous to make calls,” said Mahmoud, a Mosul resident who was too scared to give his real name. “They’re searching people for SIM cards because they’re worried about spies.” The UN fears IS may have executed dozens of people as the militants retreat from surrounding villages. + +While militarily the battle has largely progressed according to plan, fissures have begun to emerge among the region’s powers. The main source of friction stems from Turkey’s role in the fight (see article). Limited for the time being to occasional artillery fire from a ridge to the east of the city, Turkey’s involvement has infuriated the Shia-dominated government in Baghdad. + +Another emerging problem is the absence of order in newly liberated areas. Many blame a dysfunctional government for the ease with which IS captured Mosul and the surrounding countryside two years ago. At a checkpoint on the outskirts of Qayyarah, 60km (40 miles) south of Mosul, a frustrated colonel in the Iraqi air force pointed to thick columns of smoke still billowing from an oil refinery that IS fighters had set on fire as they retreated from the town in August. Mixed with noxious fumes from a burning sulphur plant, the smog has put hundreds in hospital. + +“This is a disgrace,” said Colonel Khalid Jasim al-Jabardi, who had been sent from Baghdad to report back on progress at the front. “The mayor is still in Erbil, millions of dollars have been sent but there’s still no electricity, no food, no water. People are starting to say that life under Daesh [IS] was better. If the same happens when Mosul falls then we will have big problems. Perhaps not Daesh, but another terrorist group will emerge.” + + + + + +Turkey’s intervention in Syria and Iraq + +Erdogan’s war game + +The Turkish president is pushing into both his southern neighbours + +Oct 29th 2016 | JARABLUS | From the print edition + + + +TWO months after Turkish tanks flanked by Syrian insurgents wrested it from Islamic State (IS), the border town of Jarablus, in Syria’s north, is slowly getting back on its feet. Schools have reopened. Aid has begun to trickle into the area, as have thousands of people from neighbouring villages and some 7,700 Syrian refugees returning from Turkey. “Finally we have enough food,” says Aminah Hardan, a young mother of nine who arrived in Jarablus from Aleppo in early 2013, only to watch IS take over the city months later. The militants, she says, once asked her husband to whip her for not wearing a niqab. Since the Turks rolled into town, she has swapped it for a yellow headscarf. + +For years, Turkey’s president, Recep Tayyip Erdogan, has urged his Western allies to help him carve out a buffer zone in Syria’s north to provide refugees with a haven and anti-regime insurgents with a bridgehead. He now has what he wished for. With Turkish troops and their Syrian proxies in control of an area stretching from Jarablus to Azaz, some 90km (55 miles) west, Mr Erdogan has killed two birds with one stone. He has pushed IS militants far enough from the border to lower the risk of rocket attacks against Turkish towns. And he has stopped the People’s Protection Units (YPG), a Kurdish militia backed by America but regarded by the Turkish government as a terrorist group, from linking its eastern and western cantons. + +Turkish and rebel forces intend to push further south. Earlier this month they easily overran the town of Dabiq (see article). They now plan to march on al-Bab, where the fighting is expected to be much more intense. Mr Erdogan says they may soon head towards Raqqa, the jihadists’ capital. All this may become a drain on resources. Turkey cannot make much more headway without additional troops, says Can Acun, a researcher at SETA, a pro-government think-tank. + +Some of the rebels in Jarablus would eventually like to take the fight to the regime of Bashar al-Assad. “For us, the most important thing is to break the siege of Aleppo,” says Fikret, a young fighter. They may not get their wish. Having grudgingly accepted that Mr Assad is not going away, Turkey is no longer in the business of regime change in Syria. Focused instead on its backyard, it has struck a bargain with Russia, analysts say. “Russia will let Turkey keep the Jarablus pocket, and in exchange Turkey will pull back the opposition from Aleppo,” says Behlul Ozkan, an assistant professor at Marmara University. “This makes Turkey dependent on Russia. If it acts against Russian interests, Russia can make problems for it in Syria.” + +Even if the increasingly unpredictable Mr Erdogan has reconciled himself to Mr Assad’s rule in Syria, his ambitions extend rather further than Jarablus. Over the past couple of weeks, he has repeatedly claimed a century-old right to intervene on his southern periphery. “From now on…we will not wait for terrorist organisations to come and attack us,” Mr Erdogan said in a speech on October 19th. “They will not have any place to find peace abroad.” Turkish jets struck YPG positions in Syria just hours later, a new front in a war with Kurdish insurgents, the PKK, who are linked to the YPG. The bombing killed up to 200 fighters, the army said. + +Over the objections of his Iraqi neighbours and American allies, Mr Erdogan has also clamoured for a greater role in the offensive against IS in Mosul, citing a duty to protect his fellow Sunnis from Shia militias. His talk of an incursion is probably bluster, designed to sustain a wave of nationalist frenzy that Mr Erdogan seeks to ride to a new constitution and an executive presidency next year. “For that rhetoric to have any weight, you need to have 50 times as many troops and tanks on the ground in Iraq,” says one analyst. But Mr Erdogan may surprise. “We know this business in this region,” the president warned the West in his speech. “You are foreigners here. You do not know.” + + + + + +Medical marijuana in Israel + +Light-up nation + +The tech sector prepares for booming global demand + +Oct 29th 2016 | JERUSALEM | From the print edition + + + +ISRAEL’S right-wing government is adamantly opposed to the legalisation of cannabis for recreational use. But it is also rather lax when it comes to medical marijuana. The health ministry is currently licensing a new list of 100 or so doctors who will be allowed to prescribe the drug for a growing list of medical conditions, and is allowing regular pharmacists to stock it. In August the agriculture minister announced that local cannabis growers will soon be allowed to export medical marijuana. + +Israel has a number of advantages. It has booming agricultural and medical technology sectors, a strong record in creating start-ups and a large venture-capital industry to fund them. In addition, marijuana research in Israel, which has been going on since the 1960s, has a head-start over America, where both the medical community and pharmaceutical companies are heavily restricted by laws which are only now being slowly reviewed. Although a growing list of American states are allowing legal marijuana use, both for medical and recreational purposes, there are very few clinical trials of the suitability of various strains and active ingredients for treating illnesses. By contrast, in Israel extensive data are already being compiled, not only on the more traditional use of cannabis for pain-relief but also for a wide variety of other conditions and disorders, ranging from Alzheimer’s disease to Tourette’s syndrome. + +Three private funds have already been formed to raise investment for cannabis-related start-ups. Saul Kaye, the CEO of iCAN, a venture fund and technology incubator, says there are already 36 Israeli companies doing clinical research on cannabis. The big tobacco companies, which are hoping to profit from the expected boom in marijuana, are also interested in Israeli technology. Altria Group, owners of Philip Morris, bought Green Smoke, which specialises in e-cigarette manufacture, for $110m in 2014. Earlier this year it invested $20m in Syqe Medical, developer of an inhaler for vaporised marijuana. + +Local dope-smokers still run the risk of arrest for possessing even tiny quantities. They hope that once hundreds of acres are under cultivation for export in the Negev Desert, and weed becomes a major crash-crop, the legal environment will also find itself in an altered state. + + + + + +Last days of the caliphate + +Islamic State’s messianic apocalypse is postponed + +But the defeat of the jihadist group may revive realism among Sunnis + +Oct 29th 2016 | From the print edition + +Waiting for the end + +THE fate of a small rural town in northern Syria might seem inconsequential when faced with a multinational assault on the group’s main stronghold, Mosul. But few places were more central to the image of Islamic State (IS). The jihadists lauded Dabiq as the locus, as cited in an obscure Hadith, or saying of the Prophet Muhammad, of the battle of the end of days; in their vision it would be the site of an apocalyptic showdown between the self-styled caliphate’s faithful and Western crusaders. It named its glossy English-language e-zine after the town, and beheaded its victims, including Peter Kassig, an American aid worker, in its foothills. As the day of reckoning approached, observers reported that IS had fortified Dabiq with 1,200 fighters. + +In the end, IS went with barely a whimper. The jihadists folded before the advance of Turkish-backed rivals after just a day’s battle. IS’s “caliph”, Abu Bakr al-Baghdadi, had foretold of the capitulation in a dream, explained apologists. IS’s propagandists even pre-empted the fall with the launch of a new English title, Rumiya, deferring the end-of-days battle until IS reaches Rome. + +IS’s eschatology—the theology of death, judgment and the end of the world—has always been flexible. Experts see it more as a recruitment tool than a tenet of faith. “Opportunistic apocalypticism,” is what one French scholar, Jean-Pierre Filiu, has called it. Mr Baghdadi seemed more interested in state-building than doomsday. He called himself caliph, an earthly ruler, rather than a mythological mahdi, or messiah. But theological hype helped whip up impressionable Muslims abroad, like Mohammed Emwazi, a London dropout who executed Mr Kassig and others. “Apocalyptic motifs helped recruit people unfamiliar with the tradition. Europeans fit into that category,” says David Cook, an American professor and author of “Contemporary Muslim Apocalyptic Literature”. In the words of Ibn Khaldoun, classical Islam’s greatest and most cynical historian, “The Arabs obtain power only by relying on a religious movement.” + +Traditionally, Sunni Islam—the dominant sect—sought to prop up the world order. The notion of upending it was a Shia belief, offering Islam’s battered minority a hope of redemption. At the appointed hour, their 12th imam, who disappeared in 941 to avoid the persecution Sunni despots had inflicted on his 11 predecessors (pictured below), would return as al-mahdi al-muntadhar, “the awaited saviour”, and vanquish the oppressors. + +But during this century Sunnis have come to see the world differently. Western armies upturned the old order of Islam’s Iraqi heartland, replacing Sunni masters (a minority) with non-Sunni ones (the Shia majority). Sunni confidence has turned to despair. Jihadists like al-Qaeda had scant time for the apocalyptic, but as successive waves of jihad floundered and the Sunni lot worsened, some Sunnis adopted some of Shia Islam’s more fantastical thinking. “Millennial traits were always there in Sunni Islam but undeveloped in any great detail,” says Robert Gleave of Exeter University. After America killed Abu Musab al-Zarqawi, al-Qaeda’s leader in Iraq, in 2006, and put his jihadists to rout, a despondent remnant unearthed references buried in canonical compilations of Muhammad’s sayings. They turned up alamat al-saa, “signs of the hour”, including the race to construct sky-high buildings, the rising of the sun in the west and an army brandishing black banners in the east—all signs that Zarqawi’s devotees claimed to discern. Accompanying the mahdi, Jesus would return, they claimed, bearing a bloody lance. + +By contrast, as Iraq’s Shias grew accustomed to power, their own apocalyptic impulse waned. “When we suffered, we prayed for the imam,” says a taxi driver in Baghdad’s teeming Shia shantytown, Sadr City. “Now that victory is here, we’ve forgotten him.” In Iran, laymen and low-level clerics have still found the notion of apocalypse useful in taking on establishment clerics. When challenged by ayatollahs, Mahmoud Ahmadinejad, the Islamic Republic’s ex-president and the only layman to have held the job, would convene his cabinet in Jamkaran, one of the bling-emblazoned sites where the 12th imam is expected to return. But on the whole, Shias have tempered their talk of extra-worldly deliverance. Even Muqtada al-Sadr, a lowly but firebrand Iraqi cleric, renamed his Mahdi Army the Brigades of Peace. + +Now that Dabiq has failed to deliver, might jihadists ditch their more nihilistic ideas? Precedent suggests that, for some, failure will only redouble their flights of fancy. But from the pavements of Cairo to Karbala, Mr Cook detects a decline in apocalyptic publications. Under tighter surveillance, the more hysterical might have gone underground or found a home on the deep web. But many Sunni Iraqis are as appalled by IS’s brutality as anyone else. Preachers in Baghdad say a new realism is taking hold. Better, perhaps, that the appointed hour is postponed. + +This article appeared in the Print Edition with the headline: Apocalypse postponed + + + +Europe + + + + + +Migration in France: The end of an ugly affair + +Inequality and education: Germany’s Sandernistas + +Regional inequality: A tale of more than two cities + +Spanish politics: Back again + +Energy efficiency: Populism tastes best hot + +The impact of Brexit: Britain shoots Ireland, too + +Charlemagne: The age of vetocracy + + + + + +Migration in France + +Calais migrant camp is cleared, but problems remain + +Bilateral tensions with Britain will linger + +Oct 29th 2016 | CALAIS | From the print edition + + + +“SIX places left for Rouen!” calls the official in a red jacket, approaching the queue of refugees hoping to board coaches. “Where’s that?” asks Dilo, a 24-year-old Afghan, his belongings stuffed into a small zip-up bag. The official pulls out a plastified map of French regions, and points to Normandy. “Near Paris? OK,” Dilo agrees. His name is recorded, a green wristband fitted, and he is shepherded with other volunteers through the hangar which serves as a processing centre, and on to the waiting coach outside. As it pulls away, the advertising slogan on this tourist bus comes into view: “Follow your dreams”. + +For the 8,000 or so refugees, most of them from Sudan, Afghanistan and Eritrea, who had made the camp in the Calais dunes their home, there are few dreams left. Many had hoped to reach Britain, across the English Channel. But the construction of ever-higher walls topped with razor wire around the undersea tunnel and now the port (financed by the British government), along with heavy French policing, has sealed the route. “I’ve tried so many times, but it’s impossible,” says Jan, a 29-year-old Afghan, clutching a cricket bat. He is now heading for Normandy too. + +The French effort to clear and close the camp, announced a month ago by President François Hollande, was always going to be delicate. There is deep French frustration that the British government was not prepared to be more welcoming to refugees, whatever its legal rights to deny entry. Britain has taken in some 200 unaccompanied children, out of the 1,400 or so found to be living in “the Jungle”, as the Calais camp is known. As a general rule, Britain will not take adults, who under EU rules are supposed to apply for asylum in their country of arrival. This week British officials were in the camp to assess which children qualified. + +Yet, despite moments of tension, the initial clearance was orderly. After three days, 5,596 migrants had left in coaches bound for reception centres across France. Over 1,200 children were in a provisional reception centre in Calais, though aid workers said up to 200 others were still without shelter. Many of those queuing for coaches seemed accepting, even eager. “I’ve decided to stay,” says Hassan, wearing an NY baseball cap, who made it to Calais from Sudan via Libya and Italy, and had hoped to reach Britain. What does he feel about settling in France? “Merci beaucoup.” + +As the tents emptied this week, small diggers moved in. Refuse workers pulled apart the wood-framed shacks, loading piles of blankets, flip-flops and charred frying pans on to a dump. Bulldozers were kept at bay until migrants had left. Riot police encircled the areas being cleared. Fires broke out, flattening whole sections of the camp, including the “high street”, where an “Afghan kitchen” offered chicken and falafel. Things could yet get tense once the voluntary departures come to an end. + +Calais has long taken on a broader meaning. The shocking sight of a muddy, foul-smelling camp in the heart of rich Europe has come to symbolise the continent’s ambivalence to the refugee crisis. In theory, the EU was supposed to share responsibility for the asylum-seekers who arrived en masse from Syria, via Greece, last year. In practice, Germany has been by far the most generous, with 477,000 people applying for asylum in 2015 alone—over five times the number of refugees who applied for asylum last year in France, and next to just 39,000 in Britain. + +Playing politics with people + +France, in reality, has found itself to be a country of transit rather than a destination, and as such a reluctant gatekeeper for the British. Around Calais, exasperation about the camp has stirred support for the far-right National Front. It has also been exploited for broader political ends ahead of France’s presidential election next spring. Both Alain Juppé, the leading aspirant on the centre-right, and Nicolas Sarkozy, a former president hoping to run again, have threatened to tear up the Le Touquet agreement which gives Britain the right to conduct border checks at Calais. “We cannot accept making the selection on French territory of people that Britain does or doesn’t want,” Mr Juppé has declared. + +Even if the camp is cleared without mishap, bilateral tensions will remain. Some refugees will indeed make a life in France. According to Pascal Brice, head of the French Office for the Protection of Refugees and the Stateless (OFPRA), 70% of those who applied recently from Calais were given asylum. Last year, OFPRA chartered coaches to bring Syrian refugees from Germany. Migrants housed in towns such as Cergy-Pontoise, near Paris, have learned French and begun to settle. Yet others will disappear, heading for Paris, or back to the northern coast. In 2002, a refugee camp in Calais, at Sangatte, was closed by Mr Sarkozy, then interior minister, only for the Jungle to emerge. Today, camps near Calais—in Dunkirk, or Saint-Omer—have already sprung up along the coast. + +Back in the Jungle, the mood is one of resignation. Silent and alone on the top of a dune, Ibrahim watches the demolition below. Behind him is his own condemned shack, a structure of wood and tarpaulin, on which he has painted “London Hotel”. With the diggers closing in, he has given up hope of reaching United Kingdom’s capital, and cleared out his home. He carries its contents in a small back-pack. Sudan, his former home, is a long way away. What does he feel? “Nothing.” + +This article appeared in the Print Edition with the headline: The end of an ugly affair + + + + + +Inequality and education + +Social justice is becoming a bigger issue in Germany + +Expect it to come up in the federal election next year + +Oct 29th 2016 | BERLIN | From the print edition + + + +THE refugee crisis is not the only issue that could decide next autumn’s election of the Bundestag. If Germany’s three left-wing parties get their wish, social justice may become just as contentious. The Social Democrats (who currently govern as junior partners under the chancellor, Angela Merkel), along with the Greens and The Left, which descends from the Communist Party in the former East Germany, are hoping to form a leftist coalition on this issue to unseat Mrs Merkel in 2017. Their dream is to spark a Bernie Sanders-like movement that—this being Germany, not America—could sweep them into power. So they have begun reciting a menacing-sounding metaphor: the “scissors” (ie, the gap) between rich and poor will keep widening unless they get to run the country. + +Whether or not the divide between haves and have-nots is increasing is debatable. Compared with the 1990s, income inequality is higher as measured by the Gini coefficient. But it peaked in 2005 and has since remained broadly stable. Within the EU, Germany is a middling country in terms of income inequality, behind a few more egalitarian countries, such as Sweden, and well ahead of more unequal societies in southern and eastern Europe, as well as Britain. But when it comes to the distribution of wealth, Germany is near the top of the inequality scale, behind only Austria in the euro zone. The top 10% of German households own about 60% of the country’s wealth, whereas the bottom 20% own nothing, or are in debt (this is largely explained by Germans renting homes more than owning, and by relying more on government pensions). + +Whether all of this amounts to a crisis depends on one’s vantage point. The Institute of Economic and Social Research (WSI), which is affiliated to the trade unions, concludes that Germany has a big problem. The Cologne Institute for Economic Research, which has ties to employers’ organisations, argues the opposite. Nonetheless, the perception of growing inequality is widespread. And according to a study in 2013 by the Allensbach Institute, a polling outfit, 69% of Germans think that income and wealth are unfairly distributed. But they may in fact be confusing actual inequality with something else: declining social and economic mobility. The WSI has found that moving either up or down has become harder since the 1990s, and much trickier in eastern Germany. Compared with other countries, intergenerational mobility (children ending up in a different class from their parents) is low. + +Much of the problem lies in the education system. In Germany success at school and university is more strongly correlated with the education of parents than elsewhere in Europe. There has traditionally been little emphasis on pre-school education, even though it has long-term benefits, especially for children from poor families. And Germany, like Austria, has an unusual school system that sends pupils, usually after the age of ten, either on an academic track or a blue-collar career path. + +The Allensbach study found that what Germans mean by “social justice” is a fair chance of success and fair (but not equal) rewards for achievement. They are also concerned about young people not being overburdened by providing for the old. Brute redistribution ranked lowest as a definition of the term. As such, just promising to soak the rich—by calling for new wealth taxes, say, as the leftists are doing—misses the point. It makes more sense, for any political party, to invest in better schools and, as the centre-right parties argue, to keep the employment motor humming. That may be why, even taken together, Social Democrats, Greens and The Left would not be able to win a majority of the Bundestag if voting took place today. Like Mr Sanders, they may be doomed to succeed by raising the issue but letting somebody else, most likely Mrs Merkel, find the solution. + +This article appeared in the Print Edition with the headline: Germany’s Sandernistas + + + + + +Inequality in the euro zone + +The gap between poor and rich regions in Europe is widening + +Austerity is partly to blame + +Oct 29th 2016 | CATANIA | From the print edition + + + +THE beautiful but rubbish-strewn streets of Catania, Sicily’s second-biggest city, are a world away from swanky Trento, in the country’s richer north. About a quarter of Sicilians are “severely materially deprived”—meaning that they cannot afford things like a car, or to heat their home sufficiently—compared with just 5% in Trento. Italy is not unique. In many places, the divide within countries appears to be getting worse. + +According to an analysis by The Economist, the gap between richer and poorer regions of euro-zone countries has increased since the financial crisis. Our measure of regional inequality looks at the average income per head of a country’s poorest region, expressed as a percentage of the income of that country’s richest part. The weighted average for 12 countries shows that regional inequality was declining in the years leading up to the financial crisis of 2007-08, but has increased since then (see chart). + +The poorest area in Slovakia, the euro zone’s most geographically unequal economy, now has an income per person of just 28% of the richest, a slight fall from before the crisis. In Calabria, Italy’s poorest region, income per person as a share of the country’s best-off part, the province of Bolzano, was 45% in 2007 but is only 40% now. Elsewhere poor regions of the euro zone have seen income falling in both relative and absolute terms. + +An exception is Germany: in its once-communist east, excluding Berlin, GDP per person reached 67% of that in former West Germany last year. (Most of the catch-up took place in the early 1990s, but continues more slowly.) + +Deindustrialisation is partly to blame. Most of the euro zone’s 19 members have fewer manufacturing jobs than in 2008. Manufacturing employment is high in many of Europe’s poorer countries, but they have lost international competitiveness in part because of an overvalued euro. Tight public spending also plays a role. Since 2008 the number of civil servants in the euro zone has fallen by about 6%. This has often hurt needy regions most. Cuts in welfare benefits also hit harder. A paper by Luca Agnello, Giorgio Fazio and Ricardo Sousa, three economists, found that austerity led to higher regional inequality in 13 European countries between 1980 and 2008. + +This suggests that the problem will continue: public funds will be tight for years to come, while weak public spending on education and infrastructure will crimp future growth. Even if the euro zone starts to grow strongly again, the geographical scars will be plain to see. + +This article appeared in the Print Edition with the headline: A tale of more than two cities + + + + + +Spanish politics + +Mariano Rajoy finally comes to power again + +But how much can he actually do? + +Oct 29th 2016 | MADRID | From the print edition + + + +EVEN Pablo Iglesias, the leader of the leftist Podemos party, this week recognised that one of the political qualities of Mariano Rajoy, Spain’s conservative prime minister, is patience. Having endured seven years as opposition leader, Mr Rajoy won power in a landslide in 2011 and had to pick up the pieces of his country’s housing bust. His fiscal curbs and a raft of financial and labour-market reforms speeded up a vigorous economic recovery, but were unpopular. Together with corruption scandals in local government, that cost Mr Rajoy his majority in an election last December. His People’s Party (PP) remained the largest party, but in a newly fragmented parliament. + +Since then, Spain and Mr Rajoy, reduced to an impotent caretaker, have waited for more than 300 days. No party has been able to assemble a parliamentary majority. A second election in June boosted the PP (from 123 seats in December to 137 out of 350) but failed to break the deadlock. Then after a wrenching internal struggle and faced with a third election at which they would probably lose more seats to the PP, the opposition Socialists at last agreed to abstain. That should allow Mr Rajoy’s new government to be approved in a parliamentary vote expected on October 29th. + +How much the prime minister can achieve with his powers restored is unclear. Mr Rajoy has the support of Ciudadanos, a new liberal party with 32 seats. To approve a budget, and the further belt-tightening required to meet the targets agreed with the European Commission for the fiscal deficit (to 3.1% of GDP next year, from a target of 4.6% this year), the prime minister will have to try and scrape up votes from Basque nationalists or rely on further Socialist abstentions. + +This is new territory for a Spanish government. The PP has the fewest seats of any ruling party since democracy was restored in the 1970s. Accustomed to steamrollering laws through, Mr Rajoy acknowledged that he will now have “to earn governability…day by day”. He has some cards: he can threaten to call a fresh election, and can only be overthrown if the opposition unites around an alternative. + +Apart from the economy, the most pressing issue facing the new government is Catalonia. Its regional government plans to hold a referendum on independence next September. Mr Rajoy, backed by Ciudadanos, refuses even to talk about that. Catalans could still be dissuaded if offered more autonomy, as the Socialists propose. But confrontation looks likely. + +A minority government will test the opposition, too. The Socialists fear ceding to Podemos the mantle of opposition to Mr Rajoy. Having flirted with a post-modern politics of the centre, Mr Iglesias has retreated towards the hard left. + +Many Spaniards dislike Mr Rajoy, but they want a government and the signs are that they want their politicians to co-operate. Last year the rise of Podemos and Ciudadanos prompted many commentators to write the obituary of the two traditional parties. In the new world of minority government, Mr Rajoy and the Socialists will still be the key players. And patience may continue to gain its reward. + +This article appeared in the Print Edition with the headline: Back again + + + + + +Energy efficiency + +Populism tastes best hot + +Toasters and kettles are no longer within the EU’s grasp + +Oct 29th 2016 | From the print edition + + + +EARLIER this year David Coburn, who sits in the European Parliament for the UK Independence Party, a Eurosceptic group, came up with an eccentric argument for leaving the European Union: the quality of his morning toast. He claimed that EU regulation meant toasters had only “the power of one candle or something”, leaving his bread “all peely-wally” rather than nicely roasted. Brexiteers cheered: yet another example of croissant-scoffing continentals meddling with British traditions, such as burning bread to a crisp. + +In fact, the EU does not regulate the energy consumption of toasters—and on October 25th it appeared to abandon any plans of doing so. According to internal documents from the European Commission, toasters, kettles and hairdryers are unlikely to be included on a list of new products covered by the Ecodesign Directive, which sets rules on improving the energy efficiency of appliances. + +Such rules are wildly unpopular, and not just with grumpy Brits. On its website, the right-wing Alternative for Germany party sells incandescent lightbulbs (which the EU has phased out) as a rather dimly lit protest gesture. Even in Denmark, some newspaper readers were urged to rush out and buy powerful vacuum cleaners “before it’s too late” when the EU included them in the directive two years ago. + +But although the commission’s decision will delight Eurosceptics, consumers may be less happy. The Ecodesign Directive makes products more energy-efficient. This means that their appliances—whether fridges, vacuum-cleaners or televisions—are cheaper to run over their lifetime, even if the product is initially more expensive. According to the commission’s latest report, energy consumption for the average product covered by the directive will be around 18% lower by 2020 than it would have been without it. The energy savings are equivalent to around 165m tonnes of oil per year—more than half of Germany’s energy consumption, and half of the European energy-savings target for 2020. + +Greener types argue that the commission’s decision not to include more appliances on the list could deprive consumers and firms of up to €10bn ($11bn) of savings by 2030. Apart from failing to regulate toasters and kettles, they also worry that the EU’s more cautious approach could delay the revision of existing standards that have either been overtaken by advances in efficiency or were set too low to start with. + +Jean-Claude Juncker, the president of the commission, is not known for backing down easily in the face of opposition. Yet he appeared to be particularly concerned by the backlash against the energy-efficiency policy. This hints at how sensitive the EU has become to populist discontent, which is now fairly mainstream: according to the latest poll Brussels is trusted by barely a third of Europeans. From free trade to migration to household appliances, the EU’s policies seem as appetising as a piece of burnt toast. + + + + + +Brexit repercussions + +Ireland may suffer the most from Brexit + +Making it one of the few European countries that wants to be kind to Britain + +Oct 29th 2016 | From the print edition + + + +ON OCTOBER 25th John Bruton and Bertie Ahern, two former Irish prime ministers, appeared before a committee in Britain’s House of Lords to discuss the impact of Britain’s decision to leave the European Union on its western neighbour. Both men were sombre. Brexit, said Mr Bruton, might deal Ireland’s economy an even heavier blow than Britain’s—even though, as he added wryly, “we had no say in that decision.” Since 1973, when both countries joined the EU’s precursor, the European Economic Community, Irish businesses have become intertwined with British ones, said Mr Ahern. Unpicking those ties would be “devastating”. + +The first blow has already fallen, says Fergal O’Brien of IBEC, a business lobby group. As sterling has weakened, exports to Britain have become less competitive, and imports from Britain cheaper. Britain takes two-fifths of Irish-owned firms’ exports, and a similar share of all agricultural exports. Beef and dairy farmers are struggling, and several of Ireland’s mushroom farms, which export four-fifths of their produce to Britain, have already closed. The pain will worsen as sterling’s fall and Brexit-induced business uncertainty hit demand in Britain, says Mr O’Brien. “When your partner shoots itself in the foot, you’re bound to suffer too.” + +Once Britain actually leaves the EU, Irish firms will face further difficulties. Those thinking of exporting generally start with Britain, points out Alan Barrett of the Economic and Social Research Institute, a think-tank in Dublin. And many Irish workers gain experience and training across the Irish Sea. Post-Brexit, Irish firms will struggle to break out of their small domestic market and will recruit from a shallower talent pool. Distribution and supply chains criss-cross both islands. If customs checks and tariffs were reintroduced, those links would have to be broken. Trade would fall further as rules on everything from food labelling to environmental standards diverged. + +Ireland’s government is particularly worried about the border between Northern Ireland, part of the United Kingdom, and the southern Republic. For decades Northern Ireland suffered civil conflict between Republicans, who fought for a united Ireland, and Unionists committed to remaining in the United Kingdom. The Good Friday peace agreement of 1998 committed the British and Irish governments, and Northern Ireland’s devolved administration, to removing controls on the north-south border. + +This has facilitated business, political and cultural links—as has the “common travel area”—a long-standing agreement that citizens of both islands can move freely between them. Brexit could “wake a lot of sleeping dogs”, says Noel Whelan, a political analyst in Dublin. Unless Britain stays in the EU’s single market and accepts free movement of people—which seems unlikely—the north’s stability is at risk. + +One mooted solution is to impose customs and immigration controls not between the two countries but between the two islands. British officials would set up in the Republic’s ports and airports; Northern Irish residents would show passports to travel to the rest of the United Kingdom. That might be less unpalatable than reinforcing the north-south border. But that border will soon divide the EU from Britain, points out Dara Murphy, Ireland’s minister for European affairs, and the EU will have to agree to any deal the British and Irish governments might make. Ireland’s main concern, he says, is to ensure that both Britain and the rest of Europe understand the risks Brexit poses to peace and prosperity in both parts of Ireland. + +The Irish government is seeking to salvage what it can. IDA Ireland, the national investment agency, is redoubling its efforts to sell Ireland’s well-educated workforce and low corporation tax to foreign investors. Financial services offer the most promise, says Feargal O’Rourke of PwC’s Dublin office. Irish consultants are touting the notion that banks based in London could keep the “passport” that entitles them to do business across the EU by moving a chunk of their activities to Ireland, which would be less disruptive than full-blown relocation. Some talk of Ireland gaining as many as 20,000 jobs from this. + +Given the many ways in which Brexit will damage Ireland, these jobs would be merely a consolation prize. But there is no room for bitterness. The less Brexit harms Britain, the better for Ireland, points out Johnny Fallon, a political commentator—and that means Ireland must try to persuade the rest of Europe to grant Britain generous exit terms. “Some in Europe would be very happy to see post-Brexit Britain collapse,” he says. “Not Ireland. We’re very eager to see Britain hold up.” + + + + + +From Big Bang to Brexit + +The financial-services industry considers its future outside the European Union + + + +What do the latest GDP data say about the post-Brexit economy? + +The post-Brexit GDP figures + + + +How to be a good bastard + +What Tory Europhiles can learn from their Eurosceptic colleagues + + + +The spectre of Scoxit + +Do not rule out Scotland’s departure from the United Kingdom + + + +Brexit à la carte + +It will be hard to win unfettered access to the single market for specific sectors + + + + + +More Brexit coverage + +This article appeared in the Print Edition with the headline: Britain shoots Ireland, too + + + + + +Charlemagne + +If the EU cannot do trade, what can it do? + +The CETA debacle heralds the age of “vetocracy” + +Oct 29th 2016 | From the print edition + + + +IN HAPPIER days for the European Union the arcana of international trade policy were a matter for harmless eccentrics, while the intricacies of Belgium’s constitutional arrangements were reserved strictly for masochists. Not in today’s Europe, where crises strike in the most unexpected places. Behold the fiasco of the Comprehensive Economic and Trade Agreement (CETA) with Canada. Last-minute stonewalling by the Socialist-led parliament of Wallonia, the French-speaking bit of Belgium, meant that Justin Trudeau, Canada’s prime minister, had to hold off visiting Brussels for a summit on October 27th to sign the trade and investment deal which has been seven years in the making. As The Economist went to press the federal government had succeeded in winning the Walloons round. Thus did a regional parliament representing 3.6m people nearly thwart the will of governments representing 545m. + +The debacle has many fathers. Wallonia’s Socialists, out of national office for the first time in decades, are troubled by fringe leftists and keen for attention. The Flemish, their richer (and more trade-friendly) partners in Belgium’s awkward federal construction, have long pushed for decentralisation that has now come back to bite them. The European Commission, which negotiates foreign trade on behalf of EU governments, should have foreseen that a “next-generation” deal such as CETA, replete with special courts for investors and complex provisions on the mutual recognition of standards, would attract next-generation opposition. + +But the contingencies of CETA slot into a broader pattern. From regional parliaments to national referendums and restive constitutional courts, numerous spoilers have been hindering what should be routine European business. The EU is supposed to provide a forum in which governments can mediate their differences and forge compromises. But referendums are impervious to negotiation; regional parliaments are answerable only to their voters. Instead obscure politicians, like Paul Magnette, the indomitable minister-president of Wallonia, can extract concessions as ransom for their political hostage-taking, or simply hog the limelight. As regions or countries transfer their pathologies upwards to Europe, the EU risks sliding towards what Americans call a “vetocracy”. + +What’s worse, trade is the one thing the EU is supposed to be able to do well. The Treaty of Rome, signed in 1957, granted Brussels the exclusive right to negotiate trade deals on behalf of governments. Since then the EU has concluded such accords with more than 50 countries; dozens more are in the pipeline. By the commission’s reckoning, one-seventh of the European workforce depends, directly or indirectly, on external trade (and all citizens benefit from cheaper goods). Last week Donald Tusk, who chairs summits of EU leaders, warned that failure on CETA would mean the EU could never strike a trade deal again. Not only would that choke off an important source of growth; it would make it difficult to see exactly what the point of European co-operation is. + +The mess over CETA is in part collateral damage from the row over the Transatlantic Trade and Investment Partnership (TTIP), a bigger and more vexatious EU-America agreement. Protesters transferred their outrage seamlessly from one to the other, dismissing cuddly Canada as a Trojan horse for rapacious American multinationals seeking to trample on European standards. The investment-protection provisions of the two deals (supposedly the main Walloon grievance) proved another source of trouble. Even after they were watered down, Europe’s governments forced the commission to declare CETA a “mixed” deal, meaning it required ratification by each national parliament (and, in Belgium’s case, five regional assemblies) rather than the European Parliament alone. If TTIP is ever signed—which now looks increasingly unlikely—it will surely face the same tortuous fate. + +Deals that do not carry a transatlantic whiff may fare better. As Jean-Claude Juncker, the commission president, noted in frustration last week, the EU has recently concluded an agreement with Vietnam, a country not noted for its dedication to human rights, without a whisper of protest. Talks with Japan, too, are quietly approaching the finishing line. + +Yet the EU’s credibility as a trade negotiator rests on its ability to speak for its members. Without that, the world’s largest consumer market starts to lose its allure. The agonising course of CETA will not quickly be forgotten by potential partners. If boning up on the niceties of Belgian regional politics, or the details of national referendum laws, becomes a prerequisite for negotiating with the EU, they will start to wonder if it is worth the bother. + +Worthwhile Canadian initiative + +More worrying is the damage to the EU’s self-esteem. The club is trying to get over its funk about Britain’s vote to leave by pushing something called the “Bratislava roadmap”, a policy blueprint of sorts for the months ahead. If its initiatives do not amount to much, it is at least an attempt to demonstrate that Brexit will not paralyse ordinary decision-making. Plainly, the Walloons did not get the memo. Striking a trade deal with a friendly partner like Canada should have been about as easy as it gets for the EU. + +Few can take heart from this embarrassment. Eurosceptic governments that have sought to take back powers from Brussels, like Hungary and Poland, certainly did not have trade in mind. Trade-phobic leftists who cheered the plucky Walloons should remember that the next referendum or parliamentary vote might be turned against one of their own causes, such as generosity to refugees. In fact, the only politicians with cause for celebration are those who argue that the EU itself is past its sell-by date. True to form, Marine Le Pen, leader of France’s National Front, denounced the “totalitarian” EU for attempting to squash Wallonian democracy. Though it has squeaked through, CETA will leave an unhappy legacy. + +This article appeared in the Print Edition with the headline: The age of vetocracy + + + +Britain + + + + + +Brexit and the City: From Big Bang to Brexit + +Child refugees: Gnashing of teeth + +The post-Brexit economy: Measuring the fallout + +Industry in the north-east: Parked + +Managing globalisation: To the losers, the scraps + +The Liberal Democrats: Cleared for take-off + +Technical education: The new three Rs + +Drugs policy: Qat flap + +Bagehot: How to be a good bastard + +Bagehot: Journalist wanted + + + + + +Brexit and the City + +From Big Bang to Brexit + +The financial-services industry considers its future outside the European Union + +Oct 29th 2016 | From the print edition + + + +THE City of London is fretting about Brexit, especially about talk of a “hard Brexit” that takes Britain out of the European Union’s single market. That raises doubts about the future of passporting, which allows financial-services providers to trade across the EU without separate regulatory or capital requirements. Another concern is that the government’s plan to start the formal process for Brexit by the end of March will mean that Britain may be out of the EU as early as 2019, yet banks must plan two or three years ahead. Hence the latest warning from Anthony Browne, chief executive of the British Bankers’ Association, that banks may start shifting jobs to Europe early next year. + +It is a nice irony that such jumpiness should coincide with this week’s 30th anniversary of Big Bang, the deregulatory step that largely created today’s City (hugely helped by the expansion of Canary Wharf). Before Big Bang, says one financier, the City was backward and parochial, and there were real fears that it might lose out not just to New York but to continental Europe. It was Big Bang that underpinned London’s dominance of European finance. And it is Brexit that may now challenge it. + +There is no disputing the importance of financial services to the British economy. TheCityUK, a lobby group, says 1.1m people work directly in the business, rising to 2.2m if jobs in supporting infrastructure are included. Two-thirds of them are outside London. Financial services contribute some 12% of the national tax take. Banking is the country’s biggest single export. Financial and related services generate an annual trade surplus of £55bn ($67bn). + +Yet many Brexiteers are unfazed by bankers’ threats to decamp. They say that as finance goes global, passporting will no longer matter. Nowhere else in Europe could replicate London, whose competitors are New York, Singapore and Hong Kong. The City expressed similar fears of job losses after Britain’s decision not to join the euro, which proved empty. And they argue that London is a huge asset for the EU, not just Britain; European companies and banks need it, so their politicians will not damage it. + +This seems complacent to those working in the City. Take passporting. There are many kinds of passport, from asset management to insurance to banking. For some sectors, like hedge funds and general insurance, passporting may not matter much. But as a report from Open Europe, a think-tank, notes, it is critical for investment banking. Some banks are established in more than one place already: Citibank has a separately capitalised subsidiary in Dublin. But most are not. The EU accounts for a fifth of their business; if they lose the passport, they must set up elsewhere (estate agents already report inquiries about space in Frankfurt). That could cost billions, when profit margins are tiny. + +As for claims that nowhere else can compete, London will surely remain Europe’s biggest financial centre. But finance is not static. Young people in the fast-expanding “fintech” business could shift almost anywhere. There are many rival places for financial services to go, from Frankfurt to Amsterdam to outside Europe. Morgan Stanley’s first overseas office was in Paris, not London. JPMorgan Chase has warned that Brexit might lead to 4,000 job losses; HSBC has talked of transferring 1,000 staff to Paris. Oliver Wyman, a consultancy, estimates in a report prepared for TheCityUK that a hard Brexit could immediately cost as many as 75,000 jobs in all, a significant hit. Mark Boleat of the Corporation of London reckons a third of lost jobs might go to the continent, a third to New York—and the rest could just disappear. + + + +Nor is there much sign of other countries backing the City. The financial-services industry is hardly popular across Europe, where it is widely blamed for the financial crisis. Other governments itch to pinch parts of London’s business. Clearing and settlement is a prime example. London handles the bulk of clearing of trades in euros, but the European Central Bank has long wanted to repatriate this to Frankfurt. An earlier attempt was rebuffed by the European Court of Justice, but Brexit may deprive London of judicial protection. Profits from clearing matter a lot to the London Stock Exchange. + +Are there alternatives to passporting? Some have suggested relying on regulatory equivalence or mutual recognition. The argument is that post-Brexit Britain starts with the same rules as the EU, so regulators should give banks the same freedom. But this would work only if Britain follows all future EU regulations despite having no say in them—and Brexiteers are keen to tear up red tape, starting with the EU’s foolish cap on bank bonuses. + +Migration is another worry. The industry needs to hire staff from the rest of Europe at short notice, yet Brexiteers want to introduce work permits or visas. A report by PwC, a consultancy, for the Corporation of London floats the idea of regional visas for London alone. Yet it is hard to see a carve-out for the City from broader controls, just as it is hard to imagine a deal that gives it alone full access to the EU’s single market (and bankers snort at any notion that they might pay for the privilege). + +Grim noises from the City may be partly designed just to shock pro-Brexit ministers. But bankers are deadly serious over needing clarity about post-2019 transitional arrangements if they are not to start shifting jobs abroad soon. Their big hope is that Philip Hammond, the chancellor, makes continuation of the banking passport in some form his priority for Brexit negotiations. But they are not sanguine. + + + + + +What do the latest GDP data say about the post-Brexit economy? + +The post-Brexit GDP figures + + + +Ireland may suffer the most from Brexit + +Making it one of the few European countries that wants to be kind to Britain + + + +How to be a good bastard + +What Tory Europhiles can learn from their Eurosceptic colleagues + + + +The spectre of Scoxit + +Do not rule out Scotland’s departure from the United Kingdom + + + +Brexit à la carte + +It will be hard to win unfettered access to the single market for specific sectors + + + + + +More Brexit coverage + + + + + +Child refugees + +Gnashing of teeth + +A very British tabloid fuss highlights a very European problem + +Oct 29th 2016 | From the print edition + +Minor on the move + +THE “Jungle” camp in Calais—squalid, ramshackle and lawless—was no place for children. In May the British government agreed, rather reluctantly, to take an unspecified number of minors from the camp to live in Britain. This week, as the Jungle was demolished (see article), a few hundred started to arrive under the scheme. But some British tabloids, not known for their excessive sympathy towards asylum-seekers, queried whether the new arrivals were under 18. The debate, conducted on the front pages of an excitable press, seems quintessentially British. Yet it hints at a broader European dilemma. + +Over the past two years tens of thousands of unaccompanied minors have turned up in European cities. Last year 35,000 lone children sought refuge in Sweden. As of September there were 51,000 in Germany. Britain receives many fewer, but the numbers are growing: in the year to September 2015, 2,564 unaccompanied children applied for asylum there, 50% more than the year before. + +No standardised procedure exists to work out the age of these youngsters. And their age can make a big difference to their fate. On arrival in Greece, some minors claim to be over 18 to avoid being put in detention centres. In Sweden, by contrast, being under 18 means that an asylum-seeker gets a place in a special home and, in some cases, better access to lawyers. + +In Britain some MPs suggested that the Jungle children should be subjected to dental checks to determine their age (“Tell us the tooth,” roared the front page of the Sun). There was outrage at the uncharitable tone of the demand. Yet Britain is relatively unusual among European Union countries in not using dental X-rays as part of its age assessments (such tests are generally used as a last resort in those countries that do practise them). Instead, in Britain child refugees are interviewed by social workers, while the Home Office checks European records to see whether the children have been processed earlier in their journey across Europe and, if so, what age they gave at the time. + +Dental checks are in fact of limited use. By the time people are in their late teens there is a “huge range” of development, says Judith Husband of the British Dental Association. Such tests therefore have a margin of error of about four years. The result should also be compared with a reference group of the same ethnicity or nationality, which European governments may lack. And it will differ if the subject is malnourished or has had chronic diseases. + +Though it takes a miserly number of refugees compared with many European countries, Britain’s age-verification system is more rigorous than most, thinks Taimour Lay, an asylum lawyer. Of the 574 asylum-seekers who underwent age checks in Britain in the year to September 2015, 65% were found to be over 18, despite having claimed to be children. With fewer asylum applications than many neighbouring countries, Britain should at least have the resources to identify those who fib about their age. + + + + + +Measuring the fallout + +What do the latest GDP data say about the post-Brexit economy? + +The post-Brexit GDP figures + +Oct 29th 2016 | From the print edition + + + +HAPPILY, it is now certain that the British economy will not fall into recession in 2016. On October 27th the Office for National Statistics estimated that in the third quarter of the year GDP grew by 0.5%. This is a big improvement on the 0.1% growth that the Bank of England had forecast in August, and far better than some economists had predicted immediately following the Brexit referendum in June. British growth is good by international standards, and is in line with the average since 2010. + +Yet markets shrugged. The pound registered little change against the dollar, against which it has lost nearly a fifth of its value since the referendum. The muted reaction was due to the fact that, beneath the impressive headline figure, there were signs that the British economy has not simply brushed off the Brexit vote. Of particular concern is the manufacturing sector, which economists had hoped would benefit from the weak pound. In the event it shrank by 1% compared with the previous quarter, its worst performance since 2012. Construction saw a bigger fall, of 1.4%, suggesting that firms and individuals are holding back on investment spending. Most of the economy’s growth was in services, which grew by 0.8%. + +This was a preliminary estimate, based on sparse data; readings of GDP are sometimes significantly revised years later. Other data give a fuller picture of Britain’s post-Brexit economy, and it is not encouraging. Rising inflation will soon cause real wages to fall, pushing down living standards. The latest batch of public-finance figures (for September) made for painful reading. Tax receipts grew far more slowly than was forecast at the budget in March. By the end of this financial year the budget deficit is unlikely to be much lower than last year’s, at around 4% of GDP. + +With decent growth in 2016, the Bank of England and the chancellor, Philip Hammond, will probably adjust their immediate plans. At its next interest-rate meeting in November, the bank is unlikely to cut the base rate from its level of 0.25%, as had been widely predicted a few weeks ago. And Mr Hammond may feel that he can get away with a smaller fiscal stimulus in his autumn statement, a mini-budget due on November 23rd (a relief, given the poor public-finance figures). But expect further monetary and fiscal loosening in the future—after all, Brexit itself is still to come. + + + + + +From Big Bang to Brexit + +The financial-services industry considers its future outside the European Union + + + +Ireland may suffer the most from Brexit + +Making it one of the few European countries that wants to be kind to Britain + + + +How to be a good bastard + +What Tory Europhiles can learn from their Eurosceptic colleagues + + + +The spectre of Scoxit + +Do not rule out Scotland’s departure from the United Kingdom + + + +Brexit à la carte + +It will be hard to win unfettered access to the single market for specific sectors + + + + + +More Brexit coverage + +This article appeared in the Print Edition with the headline: Measuring the fallout + + + + + +Industry in the north-east + +Parked + +Nissan announces that it is staying put, to sighs of relief + +Oct 29th 2016 | SUNDERLAND | From the print edition + +Not going anywhere, for now + +“PROUD to be a European city,” proclaims a piece of promotional literature from Sunderland city council. Presumably that was printed before June 23rd. On the night of Britain’s EU referendum, Sunderland’s early declaration was the first big win for the Leavers, showing clearly which way the vote would go. The pound plummeted on the Sunderland result and has scarcely stopped dropping since. + +The 61% of local voters who backed Brexit soon wondered if they would regret their decision. Nissan, a Japanese carmaker, let it be known that it would think twice about whether to build its new Qashqai model at its Sunderland plant—Britain’s biggest, where it currently makes 300,000 Qashqais a year—perhaps choosing another one of its factories overseas instead. If Britain leaves the EU’s single market, Nissan might have to pay a tariff of 10% on its cars to enter Europe, where 60% of Sunderland’s output is exported. This and non-tariff barriers would add considerably to Nissan’s costs. The company needs to start production of the new Qashqai within three years, so could not afford to sit around waiting to see if Britain eventually negotiated a soft or hard Brexit. + +On October 27th the firm announced that it would stick with Sunderland, following the “support and assurances” of the British government. As well as building the Qashqai there, it will make its new X-Trail SUV at the plant. As The Economist went to press it was unclear quite what “assurances” the government had given—or who might foot the bill. + +The announcement is a relief for the north-east. Since the Nissan factory opened 30 years ago it has helped to revive a region that was devastated by the collapse of the mining and shipbuilding industries in the 1980s. This year the Nissan plant will churn out 550,000 cars, about a third of Britain’s total output. It employs 6,800 people directly and supports another 30,000 jobs in the national supply chain, of which half are in Sunderland. If the current Qashqai assembly line had closed, over half the jobs in the factory would have been at risk, along with more in the supply chain. + +Nissan employs 6% of Sunderland’s workforce and pays 9% of the wages. City residents employed at the plant take home more than £1m ($1.2m) a week, supporting jobs in local shops, pubs and restaurants. There is now a good business back-office sector in Sunderland, employing about 14,000 people, and the city has had some success attracting software designers. But the Nissan jobs are vital. + +The rest of Britain’s carmakers have been watching Nissan’s decision closely, says Michael Hawes, head of the Society of Motor Manufacturers and Traders, a lobby group. The Sunderland plant is a bellwether for the industry. Nissan has poured £3.7bn into making its factory one of the most efficient in Europe. Nissan pioneered single-union agreements in Sunderland, helping to transform industrial relations in the country; the factory has never lost a day’s production to strike action. Nissan’s decision not to walk away will boost confidence throughout the industry. + +Local politicians have done their bit to make sure the company stayed put. Paul Watson, leader of Sunderland city council, says that his officials have been meeting Nissan weekly to help improve the plant’s competitiveness as it bid against its global rivals for the new Qashqai. The company complained that energy, for instance, was about 15% more expensive than in Europe, so the council is helping with plans to build a waste-gasification unit to lower costs. Transport links from the factory are being improved. + +The announcement that the plant is safe ends months of worry in Sunderland. One local with friends who work at the plant admits that he voted for Brexit himself. But like many, he says he was snubbing the politicians who had ignored decades of stagnation in the north-east, not attacking Europe. It now seems that those politicians have persuaded Nissan to secure the factory’s future. It may turn out to be an expensive promise. + + + + + +Helping the losers + +Policies to help Britons who lose out from free trade are woefully inadequate + +How not to cope with globalisation + +Oct 29th 2016 | From the print edition + + + +THERE is an odd inconsistency in the government’s approach to economics. On the one hand, ministers constantly fret about the effect of free movement of labour on Britons’ jobs and wages, and have pledged tighter controls on immigration when Britain leaves the EU. On the other hand, the government takes a gung-ho approach to free trade, promising lots of post-Brexit deals with countries whose export industries might threaten British jobs and wages in much the same way. Whereas competition from foreign workers bothers politicians a great deal, the adverse effects of competition from foreign companies seem not to worry them. + +Perhaps it should. A body of research shows that, rather like free migration, free trade has big overall benefits but creates some losers. Most governments take steps to compensate them. America’s Trade Adjustment Assistance programme, with a budget of roughly $1bn a year, funds training for those who are made redundant because of free trade and compensates some for lost wages. The EU has a Globalisation Adjustment Fund, which does something similar. + +Britain is about twice as exposed to foreign trade as America. Yet its specific programmes to help the losers from import competition are much more modest. Britain is eligible (for now) to tap the EU’s fund, but has never done so. Instead, the government insists that its own scheme—the Rapid Response Service (RRS)—is up to the job. The RRS is supposed to provide training and support when there are mass redundancies. + +Oddly, no figures are published about its budget or its operations. So The Economist made a freedom-of-information request and found that last year the RSS’s budget was just £2.5m ($3.1m), less than 1% of the value of the American fund, which is itself hardly generous. Unless the government gets better at helping the losers from free trade, anti-trade sentiment may one day rival the hysteria over foreign workers. + +This article appeared in the Print Edition with the headline: To the losers, the scraps + + + + + +The Liberal Democrats + +Cleared for take-off + +A runway, a resignation and a chance for the Lib Dems to rise + +Oct 29th 2016 | From the print edition + +Goldsmith flies solo + +THE government’s long-delayed announcement on October 25th that it intends to build a new runway at Heathrow airport has big implications for Britain’s economic future. More immediately, it means a by-election in the nearby constituency of Richmond Park, over whose sprawling parks and Edwardian terraces early-morning planes from across the Atlantic fly, low and loud. There Zac Goldsmith, an environmentalist Conservative MP, has resigned in protest at the decision. He plans to stand again as an independent candidate, and on paper he should storm it: his horror at the prospect of another runway is shared by his constituents, who re-elected him last year with 58% of the vote. + +But Mr Goldsmith, a languid Old Etonian, also backed Brexit, whereas Richmond strongly opposed it (with 69% against, compared with 48% nationally). That has put him in the crosshairs of the increasingly confident Liberal Democrats, who held Richmond until 2010, oppose Heathrow expansion and loathe Brexit. + + + +The centrist party, which was clobbered all over the country in last year’s general election, is making a comeback in such well heeled, pro-EU parts of England. It has gained support in almost every council by-election it has contested since the referendum. What’s more, in Tory areas it seems to do better the higher the share of the Remain vote (see chart). Hence, too, its storming result on October 20th in Witney, the posh, Remain-voting parliamentary seat in Oxfordshire vacated by David Cameron. There the Lib Dems enjoyed a 19 point swing from the Tories, to finish second. + +So Mr Goldsmith should watch out. If the national pattern of Lib Dem success in Conservative-held seats holds, his rivals might gain as much as 30 points. Running as an independent may handicap him further (although he will be helped by the fact that the Tories have opted not to field a candidate against him). And his failed campaign to become mayor of London earlier this year, in which he tried to link his Muslim rival to Islamic extremists, may have got up the nose of liberal Tories. + +All of this could hand Richmond to the Lib Dems and thus humiliate the government of Theresa May. That would at least make Mr Goldsmith’s protest rather effective, albeit in a kamikaze way. + + + + + +Technical education + +The new three Rs + +A bold attempt to transform technical colleges runs into difficulties + +Oct 29th 2016 | LEEDS | From the print edition + + + +HOW can technical education be improved? It is a question Whitehall policymakers have struggled with for more than a century. Whereas countries like Austria and Germany have well-established vocational routes into work, in Britain repeated reforms have failed to establish what educationalists delicately refer to as “parity of esteem” with traditional academic education. Most technical instruction occurs in further-education colleges, where the quality of teaching is patchy. + +University Technical Colleges (UTCs) are a new attempt to answer the question. At the opening of UTC Leeds on October 21st Mark Goldstone, the chair of governors, joked that the school would teach “the three Rs: rockets, robots and racing cars”. A few years ago, the building was a disused part of a metalworks littered with rusting oil cans. Now, behind the brick facade lies an airy, modern school filled with whizzy equipment, such as 3D printers. It will specialise in teaching advanced manufacturing and high-tech engineering. + +Growth has been fast since the first UTC opened in 2010. There are now 48 around the country, teaching more than 11,000 pupils from age 14 to 18. They connect with local employers and universities to ensure that students will be suited to the local labour market (for instance, in Elstree, a London suburb close to a big film studio, that means a focus on production techniques and film studies). Much of the work is project-based or done in groups. The school day mirrors a working day, running from 8.30am to 5pm. “The first two weeks were tough,” admits one pupil in Leeds, “but you get used to it.” + +The aim is to ease the transition between study and work. Students regularly mix with potential employers. One former pupil at a UTC in Sheffield recalls how work on a project to create the perfect golf club led to work experience at a local firm. Early signs suggest it is a successful approach: 97% of 18-year-olds who left UTCs in July this year were in education or employment three months later, according to the Baker Dearing Educational Trust, a charity which oversees the programme. And unlike many other technical colleges, UTCs have managed to attract rich as well as poor pupils. + +Not all is rosy, though. UTCs struggle to attract female pupils: 78% of current students are boys. Academic results are so far mediocre. According to analysis by SchoolDash, a data firm, this year 35% of pupils got five good GCSEs, the exams taken at 16, compared with 51% at schools with a similar intake. And keeping the high-tech equipment up to date will be expensive. + +Most troubling is the struggle to attract pupils. Four colleges have closed owing to low numbers; three others were cancelled before opening for the same reason. The main problem is the decision to recruit from age 14. It is the natural age of transfer since most children have an idea of what they want to do by then, argues Lord Baker, an education secretary under Margaret Thatcher who came up with the idea for UTCs. Yet doing so jars with the rest of the system, which runs from age 11 to 16. Schools sometimes block UTCs from advertising to their pupils, fearful of losing pupils and the funding that follows them. + +Lord Baker says enrolment would go up if a more supportive education secretary could ensure that UTCs were better promoted to parents by local authorities. Justine Greening, the new education secretary, has made positive noises. But admissions difficulties also reflect parents’ desire for their children to receive a broad academic education until at least the age of 16. If they are to thrive, UTCs will have to prove they can teach the old three Rs, as well as the new ones. + + + + + +Drugs policy + +Qat flap + +Drug bans can work—depending on your definition of success + +Oct 29th 2016 | From the print edition + +The last laugh + +“ASK any Somali mother who Theresa May is, and she will say, ‘Bless her, that’s the woman who saved my family’,” declares Abukar Awale, a Somali activist in London. His enthusiasm is explained by the government’s ban in 2014 of qat, a leafy plant which is a mild psychoactive stimulant chewed in Britain mostly by Somalis. + +Attempts to outlaw the stuff had failed previously because experts were unconvinced it was sufficiently harmful. Those experts remained unconvinced. Both the government’s advisory council on drugs and a parliamentary committee cautioned against the ban. But Mrs May, then home secretary, was concerned that Britain risked turning into a distribution hub since the drug had been banned elsewhere, worried about the intoxicant’s harmful effects and convinced that the mafrishes where men went to chew were breeding radicalism. The ban went ahead. + +Many Somalis cheered. “She felt our pain,” says Mr Awale, a self-described ex-addict and prominent anti-qat campaigner. He claims that many of those who once idled their days away in qat dens are now hard at work. Khadijah Shireh, the director of British Somali Community, a charity led by women in north London, believes that men who once stayed up all night chewing the plant are now spending more time with their families. + +Government statistics offer some support for such claims. According to the Crime Survey of England and Wales, just 0.06% of 16- to 59-year-olds said they had used qat in 2015, compared with 0.2% who said the same in 2011. The Metropolitan Police say that domestic-abuse reports involving Somalis, Eritreans or Kenyans—all qat enthusiasts—dropped by 23% in the year after the ban was introduced (though the numbers are small). And prices in Kenya, where much of the drug is grown, have dropped as exports to Britain have fallen, says Neil Carrier of the African Studies Centre at Oxford University. + +The government has been busy banning other drugs, too. As part of the Psychoactive Substances Act, which came into force in May, a slew of “legal highs” are now outlawed. The biggest impact has been on nitrous oxide (more commonly known as laughing gas), says Fiona Measham, a criminologist at the University of Durham. It has not been banned outright, because of its many legitimate uses: in dentistry, for example, and in cans of whipped cream. Possession is still legal but selling it to those planning to get high is not. The impact can already be seen at festivals, a popular spot for the drug. The steady hiss of balloons being filled with nitrous oxide was notably diminished at the Glastonbury music festival this year, says Professor Measham. + +But prohibitionists should be wary of drawing too many lessons from these two unusual drugs. Neither is particularly addictive, so consumers should find it relatively easy to go without. Qat should ideally be consumed within 48 hours of being picked, so smuggling, which may involve delays, is trickier than for other drugs. And the distinctive bundles of the plant, wrapped in banana leaves, are easily recognised by customs officials. + +Imports of dried qat, which lasts longer, have risen, says Mr Carrier, but it is less potent and more expensive: £20-30 ($24-37) a bag compared with the £3 that an equivalent bundle of the fresh kind cost before the ban. Somalis are among the poorest in Britain, so price hikes may be particularly offputting. And qat’s bulk means that almost any other drug would be more profitable to smuggle. Nitrous oxide, meanwhile, is an “icing-on-the-cake” drug, says Professor Measham, often taken alongside other drugs. Few are so devoted to it that they would dive into the black market. + +Qat, used largely by a small, marginalised group, is also a useful drug for sending political signals, namely that the government is tough on drugs. That has worked. Banning nitrous oxide was a way of getting rid of “head shops” that sold it and other legal highs openly on high streets. That, too, has been a success. But those selling laughing gas at festivals now are far more likely to have links to organised crime. And the government’s failure so far to assess the impact of either ban (analysis of qat’s prohibition to date consists of a single parliamentary question) makes it hard to know whether people are moving on to more dangerous habits. Evidence from the Netherlands, where qat was banned in 2013, suggests that some users shifted to alcohol, legal but more harmful. + +Even those Somalis who support the qat ban say the government has failed to do much to support former users. The decline of qat cafés means Somalis have lost one of their few secular social spaces. Some harms are hard to measure. + + + + + +Bagehot + +How to be a good bastard + +What Tory Europhiles can learn from their Eurosceptic colleagues + +Oct 29th 2016 | From the print edition + + + +WINSTON CHURCHILL’S dictum—“We shape our buildings; thereafter they shape us”—may account for the distinctively cabalistic quality of British politics. The Palace of Westminster is a maze of sticky-carpeted little bars, poky wood-lined offices and forgotten meeting rooms up twisting staircases. It urges those who work in it to agglutinate and machinate. Thus tribes, gangs and factions drive politics in Britain to a greater extent than elsewhere. Recently three have produced national transformations: the Thatcherite cabal of the late 1970s, the New Labourites around Tony Blair in the 1990s and the anti-Europeans who have marked Conservative politics for the past three decades. + +The third of these groups stands out, for it achieved its revolution without taking power. Inspired by Thatcher’s late, Eurosceptic turn and appalled by the disloyalty of the Europhile “grey men” who booted her out, they soared to prominence under John Major as he tried to secure support for the Maastricht treaty. “Bastards!” raged the then-prime minister of the rebels (later reflecting: “What I said was unforgivable. My only excuse is that it was true”). Back then they were relatively isolated. But over the long years of Labour government, the Conservative membership turned Eurosceptic; two “bastards”, Iain Duncan Smith and Michael Howard, served as leader; their successor, David Cameron, pandered to the gang. Having won Mr Cameron’s EU referendum, the bastards are supreme. Some are in the cabinet, others are breathing down their necks and a hard Brexit seems likely. + +But if the old “awkward squad” is now the mainstream, what will take its place? Step forward, the Europhiles. The country’s nationalist direction since June 23rd has unified a new, younger band of continentally minded Tories. One is Anna Soubry, a former business minister who does not mince her words. “He looks like somebody has put their finger up his bottom and he really rather likes it,” she memorably told a television interviewer when asked about Nigel Farage of the Eurosceptic UK Independence Party. Nicky Morgan, a former education secretary, and Nick Herbert, an ex-policing minister, are her allies. George Osborne, a former chancellor and keener European than Mr Cameron ever was, is their shop steward. Ken Clarke, the rumpled, jazz-loving Europhile par excellence, serves as the resident greybeard. + +There are differences within the gang. Mr Osborne favours a smaller state than the others. Only Mr Clarke doubts that the Brexit referendum should be treated as binding. But there are many more affinities. All are socially liberal. All question Theresa May’s tough line on immigration and her plans to create more academically selective state schools. All campaigned heart-and-soul for Britain to stay in the EU, question the prime minister’s rush to Brexit and want a “softer” break from the union, preserving the country’s membership of the single market. Sometimes they even sit together in the Commons: Mr Osborne has joined Ms Soubry on the bench farthest back from the prime minister, now dubbed the “naughty corner”. + +Expect this group to gain influence once Mrs May triggers Article 50 in 2017, beginning the two-year countdown to Brexit. Already the prime minister is doing battle with Parliament. She wants to conduct the negotiations unscrutinised, but many MPs demur. A showdown will be the debate on the Great Repeal Bill, the legislation revoking the automatic transmission of European laws onto British statute books. This will create all sorts of opportunities for MPs to fiddle with the many volumes of European legislation reverting to Westminster’s control. Mrs May has a working majority of 15, which gives the soft Brexiteers (who number at least 20) the ability to intervene where they do not like the government’s line, just as their Eurosceptic predecessors so routinely and implacably did in the past. “They’ve certainly no reason not to fight just as dirty as the ‘bastards’ once did,” says Tim Bale, a historian of the Conservative Party. + +Listen to the naughty corner + +If they get it right, the soft Brexiteers could tilt Britain towards a more open, rational sort of Brexit. Yet they face all sorts of perils: irrelevance, disunity, submission. To avoid these, they could do worse than learn from the bastards. First, that means sticking together. For decades the hardline Eurosceptics have worked in unison, co-ordinating their campaigns and voting as a bloc to encourage party leaders to seek their favour. Second, the soft Brexiteers must build up an institutional network. The Tory right has had the Bruges Group, Better Off Out and Business for Britain; not to mention the editorial pages of the Daily Mail, Telegraph and Express. The Tory left has Open Britain, a pressure group patched together from the ashes of the Remain campaign, but little else. + +Third, the soft Brexiteers need a limited list of incrementalist goals. The bastards rarely talked publicly about leaving the EU, but little by little edged the country towards that outcome. Applying that lesson, the Tory moderates might seek to keep Britain in the single market, curb the aggressive tone of Britain’s negotiators and rehabilitate Mr Osborne ahead of any future leadership race. Fourth and finally: they should reach out. The right always nurtured both sympathetic frontbenchers and the party’s base. Ambitious Tories, from Mr Cameron to prospective parliamentary candidates, have long had to convince the party of their Eurosceptic bona fides. So the Conservative left needs to create its own litmus test: aligning itself with friendly ministers (like Damian Green, the welfare secretary) and making its endorsement a valuable asset for those who want to make their way in the party. + +Pro-market and socially liberal, the soft Brexiteers represent Britain’s truest instincts, as a mongrel nation created, whether it likes it or not, by grafters, merchants and immigrants. The Conservative Party has not always been a natural vessel for such people. But today it has a unique chance to represent them. It should do so with confidence. + +Economist.com/blogs/bagehot + + + + + +From Big Bang to Brexit + +The financial-services industry considers its future outside the European Union + + + +What do the latest GDP data say about the post-Brexit economy? + +The post-Brexit GDP figures + + + +Ireland may suffer the most from Brexit + +Making it one of the few European countries that wants to be kind to Britain + + + +The spectre of Scoxit + +Do not rule out Scotland’s departure from the United Kingdom + + + +Brexit à la carte + +It will be hard to win unfettered access to the single market for specific sectors + + + + + +More Brexit coverage + + + + + +Journalist wanted + +Oct 29th 2016 | From the print edition + +The Britain section is looking for a new political correspondent. A lively style and an eye for a good story are more important than an encyclopedic knowledge of British politics. Please send a 1,000-word article suitable for publication in the Bagehot column, along with a CV, to britainwriter@economist.com by November 30th. + + + + + +International + + + + + +Early childhood development: Give me a child + + + + + +Early childhood development + +Give me a child + +Boosting the health of toddlers’ bodies and brains brings multiple benefits. But too often the wrong methods are used + +Oct 29th 2016 | BULAKABYA, JOHANNESBURG AND NAIROBI | From the print edition + + + +THERE are no nurseries in Bulakabya, a hamlet hacked out of sugar-cane fields in eastern Uganda. That is not for a lack of children: most women will have at least eight and, since polygamy is widespread, some fathers have more. Until recently these children had few chances to learn. Parents often left them to their own devices until they could hold a hoe. + +This is changing. On a tarpaulin mat in a church built from wood and mud, toddlers take turns at playing games that help them count, spell and get on with peers. Lively Minds, a charity, teaches the mothers how to foster children’s cognitive and social skills. It also advises them on nutrition and hygiene. It says its intervention doubles the number of children scoring highly enough on cognitive tests to be thought of as “school-ready”. Cases of diarrhoea and malaria have also fallen. + +This is just one example of the multiple benefits that come from putting more emphasis on early childhood development (ECD), a term that includes everything that can be done to boost the physical and intellectual health of youngsters before they reach the age of eight. + +According to the Lancet, a medical journal, in 2000 just seven developing countries had a comprehensive approach to ECD. Now almost half do. The UN’s Sustainable Development Goals, a well-meaning set of targets launched in January, call for universal access to good-quality ECD by 2030. + +As well as concern for children, the new zeal among development economists and poor-world governments for ECD reflects a desire to make it easier for their mothers to work. Globally just 55.3% of women of working age are employed or looking for a job—less than in 1990. But the usefulness to society of early development goes far beyond giving parents a place to park a kid. + +The youngsters themselves are the main, though not the sole, beneficiaries. Another recent study in the Lancet reckons that 43% of under-fives in poor countries, in other words about 250m kids, will fail to meet their “developmental potential” because of avoidable deficiencies in ECD. + +Their young brains are sensitive. In the first three or so years after birth, when up to 1,000 synapses are formed per second, they are vulnerable to trauma which triggers stress hormones. Though some stress is fine, too much is thought to hinder development. Neglect is also corrosive. Young children benefit from lots of back-and-forth dealings with adults. Research by the Rural Education Action Programme, based at Stanford University, suggests that rural children in China have “systematically low cognition”, partly as a result of being reared by grandparents who pay them little attention while parents work in cities. + +The evidence from neuroscience is sometimes exaggerated. Researchers still have a patchy understanding of the timeline for brain development. Some early adversity can be overcome. But the longer trauma or neglect goes on, the harder it is to counteract. And lots of studies now suggest that intelligent policy can help. One landmark programme began in the 1980s, when health workers started visiting Jamaican mothers to tell them about nutrition and learning through play. Compared with peers whose mothers had no such advice, these children had higher IQs, were less violent and earned 25% more at age 22. + +Supporters of ECD add that its benefits go well beyond the children. Better-raised toddlers mean less need to cope with dysfunctional adults at public expense. The World Bank says every dollar spent on pre-school education earns between $6 and $17 of public benefits, in the form of a healthier and more productive workforce with fewer wrongdoers. Many developing countries seem to have accepted this case. China has vowed to provide pre-school facilities for all youngsters; India has the same goal. African countries are also investing in toddlers. Ethiopia says it will increase pre-school enrolment to 80% by 2020, from 4% in 2009; Ghana has added two years of pre-school education to its system. Uganda wants every state primary school to have a nursery. + +This burst of enthusiasm is welcome and overdue. In the OECD club of mainly rich countries, spending on ECD amounts to around 2.4% of GNP; in poorer countries, where there is so much scope for improvement, the share is less than 1%, says the World Bank. Poor countries spend far more on regular schools. In Latin America, for every dollar spent on children under five, $3 is spent on those between six and 11. + +The case for boosting the share benefiting from ECD is strong, but expenditure has to be well-aimed. Subsidies for all children to attend nursery are popular among parents and politicians; but unless kids get the right kind of attention, they are little better off than those who stay at home. + + + +A report in May by Harvard University’s Centre for the Developing Child found that the average impact of ECD experiments studied over the past 50 years has fallen. “There is huge potential in ECD intervention,” says Orazio Attanasio of University College London. “The danger is to assume that any intervention no matter how ill-conceived and ill-designed will work.” Although getting the right answers can improve tens of millions of young lives, there is a real risk that the current wave of enthusiasm for ECD will crash if bad methods are adopted and results disappoint. The latest research suggests at least four things which governments should keep in mind. + +First, ECD must focus as much on physical well-being as on training the mind. That element is now missing: most ECD policies put the stress simply on educating kids aged four or five. In fact, health and nutrition are at least as important. A paper in 2008 by Cesar Victora of Federal University of Pelotas in Brazil tracked cohorts of children in five countries (Brazil, Guatemala, India, the Philippines and South Africa) and found a strong correlation between height at the age of two, school results and wages in later life. So correcting the bad nutrition (of expectant mothers as well as infants) that leads to stunting should be a priority. Supplements like iodine and iron for pregnant mothers and vulnerable babies can boost educational performance. + +A second problem is that efforts to boost development in the first years of life can be shoddily run because they fall in the bureaucratic gaps between health and education policies. There are exceptions, such as a good Chilean initiative: known as Chile Crece Contigo (Chile Grows with You),the project has operated across the country since 2007, reaching 80% of the poorest mothers before they give birth and continuing until the child is four. + +It offers a personalised service, from home visits to screening (for inherited diseases, for example) and there are cash incentives for taking part. Another lesson from Chile: what matters is how, not where, adults and children interact. In other countries, ECD policy amounts to building new subsidised child-care centres with little regard to what happens there. “Too often ECD is just child care,” says Sonja Giese, director of Innovation Edge, part of a South African early-development foundation. Few parents see the need for all-round development of mind and body, she laments. + +Colombia offers examples of good and bad spending. In 2011, the government launched De Cero a Siempre (From Zero to Forever). Children were moved from small local facilities to larger ones costing twice as much per child. The shift to an impersonal setting harmed children’s language and motor development, according to a study led by Raquel Bernal of the University of Los Andes, in Bogotá. A cheaper home-visit programme for even younger children had better results. + +One reason for its success was that its curriculum suited the age of the children. Few toddlers are like John Stuart Mill, the thinker who began ancient Greek at three; and in some east African countries, the teaching of toddlers is utterly ill-adapted to their age. In those places, expanding ECD simply means putting kids in traditional schools a year or two earlier. In Kenya’s state sector, for example, pre-school classes resemble a mini-secondary school, with tiny desks and chairs. Teaching is dull and based on rote learning; results are bad. About 40% of Kenyan seven-year-olds cannot read a word. Across the region, figures are even worse. + +Bored by the board + +As researchers from Cambridge University found, a good ECD curriculum is the opposite of Kenya’s. It needs play-based learning and lots of speaking, or just babbling, back and forth. But Betsy Chumo, who runs a play-based centre in a Nairobi slum, finds parents sceptical. “They want strict teachers and children behind desks.” + +As a third big pointer, experience suggests that private efforts are often the most innovative; governments should avoid getting in their way. Chile’s programme, for example, is a healthy mix of private and public. In many countries, private initiatives become franchises that spread fast with only a touch of state encouragement. One case is Kidogo, co-founded by Sabrina Habib after she nearly stumbled over supine infants on the floor of a badly-run day-care centre in Nairobi. Kidogo trains “mamapreneurs” such as Ms Chumo to run centres that offer healthy meals and an age-appropriate curriculum while also making a profit. Another voluntary effort is SmartStart, in South Africa, which wants to bring ECD to the 1m kids between three and five who have none. The charity hires unemployed people to set up franchises, trains them in care methods based on good research and monitors their quality. + +Where such franchises work, governments offer incentives, such as vouchers for poor parents. For all the differences, expertise gained from private-public partnerships in rich-world educational outfits (like American charter schools or England’s semi-independent academies) can have a bearing on ECD. Ark, a group of English academies, will soon help test a new ECD model at nearly 100 places around Nairobi. + +Fourth, technology can help in places where finding and paying decent staff is hard. Most child-care workers get little training and are paid a pittance. But new inventions boost teachers’ skills cheaply and fast. Take a project in Kenya called Tayari; this involves issuing 1,700 pre-school teachers with tablets on which they get a curriculum, updated daily. In South Africa, Innovation Edge funds dozens of similar projects, from an app containing an ECD curriculum to a virtual-reality (VR) game showing good teachers at work. + +Some claims for the benefits of all this excellent work may be overblown; ECD is not the only thing required to turn most children into successful adults. But it is one of the necessary conditions. Whether it is done through VR headsets or by playing on mats in a mud church, improving ECD can give millions of youngsters a better shot at overcoming life’s other problems. + + + +Business + + + + + +AT&T; and Time Warner: Angling for the future of TV + +Big tobacco: All fired up + +Tata Group: Mistry exit + +Companies’ dark pasts: Ghosts in the machine + +Brazilian business: Out of the gloom + +The sharing economy: Deflating Airbnb + +Schumpeter: Jail bait + + + + + +AT&T; and Time Warner + +Angling for the future of TV + +A huge merger tries to follow the change in the way people watch television + +Oct 29th 2016 | New York | From the print edition + + + +IMAGINE a television which, as in the old days, has only a handful of channels to choose from instead of hundreds, as a typical cable set-up might offer today. In a decade or so TVs will once again have only a few channels, but each will run miles deep, with content that can be viewed on demand. Netflix might be one such offering; Amazon another. Both firms are spending billions of dollars making and buying TV shows and films to sell directly to viewers to watch when they like, and on devices other than the box in the corner of the room. And other rich tech firms may join them. + +It is this vision that is now driving the direction of television and media. Broadcasters are willing to pay more to show live sporting events, and to invest more in producing TV shows, to make their networks the must-see choice for viewers. This trend has spurred the largest-ever merger of a telecommunications company with a media firm. AT&T, America’s wireless and pay-TV giant, announced on October 22nd an offer for Time Warner, the owner of HBO, CNN and Warner Brothers studio, worth $109bn. In doing so AT&T is betting that a few vertically integrated platforms will dominate the future of viewing. This huge deal follows the $30bn purchase in 2011 by Comcast, a cable-TV company, of NBC Universal. + +If approved, it would not be the last such merger. And the next buyers could be content companies buying distribution platforms. At 21st Century Fox, Rupert Murdoch might go after the rest of Sky, a British pay-TV firm, that he does not already own (Sky is a cheaper target with the fall of the pound). At Disney, Bob Iger mused recently about the need to reach consumers directly in an increasingly uncertain media landscape, leading many to speculate that he wants to buy Netflix, which has a market value of $54bn (almost one-third of Disney’s). At present such a mammoth deal appears to be unlikely, but were it to happen it could trigger a bidding war with Apple and Google weighing in as well. + +Some analysts describe AT&T’s strategy as diversification or empire-building, not integration. AT&T is the second-largest wireless carrier in America, behind Verizon Communications. Last year AT&T completed the $48.5bn purchase of DirecTV, a satellite provider, making the company the largest pay-TV distributor in America with 25m subscribers. The new deal adds the biggest available prize in film and television (as Disney is not for sale), with a vast library of films and TV shows including hits such as the “Dark Knight” movies and “Game of Thrones”, besides multiple cable channels. + + + +The backdrop to this is that Americans are watching 11% less television than six years ago, and those aged 12 to 24 see more than 40% less (see chart). In recent weeks a vital bulwark of pay-TV, live sports, has shown unusual weakness; ratings for American football have declined compared with a year ago. Last year traditional pay-TV lost more than 1m subscribers, about 1% of the total in America, as more viewers “cut the cord” to expensive cable and switched to streaming video services. + +In the near term AT&T’s business logic for buying Time Warner is not obvious. Cord-cutting will continue to put pressure on profit margins at the combined company, which will also become highly indebted. Nor will AT&T be able to offer Time Warner content exclusively to its customers. It will license it to as many distributors as possible to boost revenue—just as Time Warner does now. And AT&T will not be able to get that content at a lower price for DirecTV because clauses in pay-TV contracts prevent that and regulators would not permit it. Randall Stephenson, AT&T’s chief executive, and Jeff Bewkes, Time Warner’s boss (who would leave under the deal), argue that benefits will come from being able to target advertising better to viewers of Time Warner content, thanks to AT&T’s knowledge of what people are watching. It is unclear how much that will help the bottom line. + +Despite all that, regulators will be wary about AT&T wielding a competitive advantage from owning a combination of content, delivery and wireless spectrum (as well as broadband). In a display of the company’s muscle, on October 25th Mr Stephenson announced that a new internet-streaming service in America, DirecTV NOW, will offer more than 100 TV channels (including Time Warner networks) for $35 a month, far cheaper than existing packages. Speaking at a conference in California, Mr Stephenson said he would not have been able to strike such a deal if he did not have DirecTV: “we cannot get the media companies to participate in this until we have scale.” AT&T wireless customers will come off best as they will be able to stream the service without data charges. The Federal Communications Commission, a regulator, is already looking at AT&T and Verizon’s practice of not charging mobile customers more to stream certain video content—called zero-rating. Mr Stephenson has said that the ability to drive down prices shows AT&T’s big acquisitions are good for consumers. Trustbusters might see things differently. + +Power from the pipes + +Regulators will be extra cautious because of their experience with Comcast, the target of multiple complaints that it failed to abide by restrictions agreed as part of its purchase of NBC Universal. In 2015 antitrust authorities blocked Comcast’s $45bn takeover of Time Warner Cable (which had previously been spun off from Time Warner). Craig Moffett of MoffettNathanson, a research firm, notes that a central concern in that case—how Comcast’s control of broadband capacity could help the firm’s vertically integrated structure discriminate against competitors like Netflix—would seem to apply to AT&T’s combined market power in wireless, satellite and broadband. In addition politicians, sensitive to public perceptions that such mergers are bad for consumers, have raised concerns about the Time Warner transaction. + +Mr Stephenson says his aim is to foster more competition—namely, to be a national competitor to the cable providers, each of whom have regional near-monopolies in broadband. The roll-out of 5G wireless technology in the coming years will, he reckons, also give consumers a mobile broadband option. In that sense AT&T is waging a bigger battle for the “primary customer relationship” in distributing video, as one senior media executive puts it. In order to command customers’ loyalty and attention, premium content could in future be a valuable weapon in that fight. + +Owning content might become more imperative as the multi-channel pay-TV system falls apart. Smaller TV networks and studios could be rolled into bigger ones. A recombination of CBS and Viacom would become more likely. Another Silicon Valley firm, like Apple, might jump into the production business as Netflix did, pouring billions more into programming. + +In that world AT&T’s purchase of Time Warner might then make more commercial sense. HBO NOW, the network’s new streaming service, could be one of the standalone channels on that TV set of the future. Or perhaps there will be just a Time Warner service, combining everything that the group has to offer. But would that be worth the price AT&T has agreed to pay for it today? There is a reason Mr Bewkes and the Time Warner board took the offer at $107.50 a share, two years after rejecting a bid from Fox worth $85 a share. The future of TV may be blurry, but that is AT&T’s problem now, not theirs. + + + + + +Smoking + +Big tobacco’s new ambitions + +A huge deal points to broad changes for cigarette makers + +Oct 29th 2016 | From the print edition + +Innovator at work + +BIG Tobacco is about to get even bigger. On October 21st British American Tobacco (BAT) announced that it had bid $47bn for the 58% of Reynolds American that it does not already own. Though Brexit has weighed on some British companies, BAT is unencumbered, with most of its revenue earned overseas. Many investors expect the deal to go ahead, although BAT might need to puff up its offer. BAT would then become the world’s largest tobacco company by sales and profits. + +As in other volume businesses, like beer, some of the merger logic is simply to cut costs. With consolidation, BAT reckons its deal would generate $400m of annual savings. However, it also underscores two big, long-term changes for cigarette-makers. + +The first is that America has become an attractive market for tobacco firms and buying Reynolds, whose brands include Camel and Newport, is the easiest way for BAT to grow there. This is a reversal from the recent past. Not long ago America seemed stale and overrun by lawsuits, particularly compared with fast-growing economies. Cigarette firms quarantined their American businesses. In 2004 BAT sold Brown & Williamson, its American subsidiary, to R. J. Reynolds. That gave BAT its stake in the newly dubbed Reynolds American, but shielded the firm from belligerent lawyers. In 2008 Altria, another tobacco giant, split into two: Altria, which sells cigarettes in America, and Philip Morris International, which peddles tobacco elsewhere. + +Cigarette-makers remain subject to a vast settlement reached with American states in 1998, but fears of huge class actions have proved overblown. “The damages they’ve had to pay in the cases they’ve lost—in the tobacco company context—have been very small,” points out James Bushnell of Exane BNP Paribas, a stockbroker. Meanwhile other countries have become less hospitable. In Europe, for example, governments are demanding plain packaging devoid of even company logos. + +The second change is potentially bigger. Tobacco firms are in fierce competition to come up with safer products, and buying Reynolds gives BAT more R&D clout and a larger portfolio of what the industry likes to call “reduced-risk” items, including e-cigarettes. These are a tiny but growing part of the market. + +The race is on to come up with safer, more satisfying offerings. Philip Morris International, which spends nearly twice as much on research as BAT, reckons its new offering, iQOS, might add more than $1bn in profit by 2020. IQOS is a new type of e-cigarette, heating a tube of tobacco rather than a liquid. All this means more deals may be simmering: Bonnie Herzog of Wells Fargo, a bank, predicts that BAT’s move will prompt Philip Morris to bid for its former parent, Altria. + +This article appeared in the Print Edition with the headline: All fired up + + + + + +Ratan for now + +Cyrus Mistry hits back at being ousted from Tata + +India’s biggest conglomerate unceremoniously sacks its boss + +Oct 29th 2016 | From the print edition + + + +THERE have been only six chairmen of the Tata Group since it was founded in 1868. There will soon be a seventh after Cyrus Mistry, the first boss of the conglomerate not connected to the founding family, was ousted after less than four years in charge. Even though he undertook few of the reforms needed to bring vast swathes of the Tata empire to profitability, he will prove a difficult act to follow—not least because he has embarked on an extraordinary rampage against his old employer. + +Mr Mistry might reasonably have expected to serve for a couple of decades at the helm of India’s biggest group, with interests from IT to cars, hotels, salt, steel and much else besides. For a company with a culture of consensus, the abruptness of his sacking on October 24th—the board did not even give him the option of stepping down—is about as brutal as it comes. Many of the executives he hired have also been purged. Ratan Tata, his predecessor, will take over while a new boss is found. + +The catalyst for the defenestration was the lack of performance at some of the group’s big companies. Some felt Mr Mistry was doing too little to boost profits. Beyond Tata Consultancy Services, an IT firm, and Jaguar Land Rover, a maker of posh British cars Tata acquired in 2008, the conglomerate’s 100 or so operating companies make lousy returns. Others felt, on the contrary, that the “tough love” Mr Mistry said was needed to whip the group into shape (though seldom applied) was unbefitting of a company with Tata’s commitment to putting ethics before profits. + +Overall Tata’s financials—profits of around $5bn on sales of $108bn in 2015-16, and debt roughly the size of its equity—look just about right. But that is to misunderstand what is a complex investment company that often owns minority stakes in its operating companies rather than controlling them outright. Bits of the group, notably its steel and telecoms arms, are labouring under hefty debts even as other Tata companies are flush with cash. + +Awkwardly, though Mr Mistry has been sacked from Tata’s parent company, he remains the non-executive chairman of the largest operating entities. And he is not going down without a fight. Lawyers have been mobilised on all sides to contest or confirm his dismissal. At the very least, the board’s manoeuvrings have dented Tata’s reputation as a beacon of sound corporate governance in a country where other conglomerates pay the notion little more than lip service. + +In a letter to the board of directors of Tata’s main holding company, Mr Mistry is scathing about the firm’s culture and ethics. Its hotels arm bought property at inflated prices and parked it in off-balance-sheet vehicles, he alleges, and faced hefty losses as Mr Mistry unwound the “flawed” strategy. The finance arm made loans, some of which seem to have soured, under the “strong advice” of higher-ups. Tata Motors deferred losses using “aggressive accounting”. An airline joint venture created “ethical concerns” over transactions worth millions of dollars. Spokespeople for Tata did not respond to calls for comment. The letter includes a claim that write-downs of 1.18trn rupees ($18bn) may be warranted. Among the biggest losers of the ruckus will be Mr Mistry’s own family, who own nearly a fifth of the parent company. + +His rearguard action will prove a distraction for Mr Tata, whom the ousted man described as a “lame duck”. Mr Tata, the revered elder statesman of Indian business, is a steady interim hand on the tiller. But his return will confirm suspicions Mr Mistry was never fully in charge. + +Finding a replacement for Mr Mistry will be tricky. There are no obvious Tatas angling to take over. Few outsiders will agree to serve if they feel their decisions will be second-guessed by the man whose name is on the door. The group’s decentralised structure in any case means the bosses of its operating companies have no experience outside their particular silos. Tata’s relentless expansion into everything from watches to undersea cables, property, tea and finance, among many other businesses, makes the group very unwieldy, if not entirely unmanageable. The need for reform has not gone away with the man who failed to make it happen. + +This article appeared in the Print Edition with the headline: Mistry exit + + + + + +Ghosts in the machine + +How to confront a dark corporate past + +A Dutch case suggests firms with horrible stains on their history are better off facing up to them + +Oct 29th 2016 | From the print edition + +“WE THOUGHT we knew our story, and we knew it wasn’t great,” says Maurice Brenninkmeijer, chairman of COFRA Holding, which owns C&A, a 175-year-old Dutch clothing retailer with over 2,000 stores globally. Yet the full account of how the German branch of his family behaved in the second world war “tore through your heart when you heard it”, he adds. Mr Brenninkmeijer’s ancestors—considered to be genial, virtuous, Catholic and reserved—turned out to have been avid Nazi collaborators. Old letters revealed cosy, corrupt, ties to Hermann Goering. From 1942 onwards C&A and Siemens, a German engineering firm, together exploited forced Eastern European labourers in Germany, keeping them in such a wretched state that malnutrition killed several women and children. C&A profited from “Aryanisation”, grabbing business and property from terrified Jewish owners. Perhaps worst, it used Jewish tailors and leather-workers, corralled in Lodz, a dreadful ghetto in Poland. Of some 200,000 people trapped in inhumane conditions there, only 1,000 survived to liberation. + +Such grim details are now public thanks to Mark Spoerer, a historian in Regensburg who specialises in archival research to assess companies’ dark pasts, putting “immoral business behaviour” into historical context. Remarkably, his new book “C&A: A family business in Germany, the Netherlands and the United Kingdom 1911-1961”, was commissioned by the notoriously reclusive family. Mr Spoerer, over five years and with generous funds, was given unrestricted access to private files, conducted interviews freely and had the right to publish all he found. + +Being low-profile went from being something worthy, to something strange, and now suspect, says Mr Brenninkmeijer, in a rare interview. Though some relatives were said to be reluctant to confront old horrors, he says all now agree on the need for a sort of corporate therapy, “so we have an understanding of our history, not as a burden but as a platform”. This, he says, helps the family get a deeper sense of itself. A core of 30 family members are active owners and managers of the firm; around 1,300 Brenninkmeijers form an outer circle. + +It is rare for a company to confront an ugly past so openly, especially as C&A faced no looming pressure from victims’ relatives, journalists or other outsiders. Firms are most likely to do so if they have a strong international presence and deal directly with consumers, says Mr Spoerer. Another corporate historian, Lutz Budrass, assessed 100 companies that thrived in Germany in 1938 and still exist in some form today. He suggests that only 30 have yet organised a serious scholarly assessment of their wartime activities, while 40 have done nothing at all, including five companies which, he says, “were very heavily involved” in Nazi crimes. + +He points to Deutsche Post, a successor of Reichspost, and much of the German steel industry as particularly hostile to the idea of exploring their pasts. Siemens has made only partial efforts to assess its wartime role. In the car industry, Volkswagen, BMW and Daimler have owned up to their intimately close associations with Nazis, but other firms have not. Mr Budrass is especially dismissive of German aircraft companies. He was commissioned in 2002 by Lufthansa to write part of its 75th anniversary, especially in explaining its use of 8,000 forced labourers in 1944. But the firm refused to publish it, acceding only this year once Mr Budrass brought out a separate book on the airline’s past. He also argues that Airbus, the European aircraft-manufacturing group which incorporated old entities including Messerschmitt (one of the largest users of concentration-camp labour), is “trapped by fear of its past” in failing to commission a proper history. + +How cleansing is the sunshine? + +Perhaps it is not irrational for firms to shy away from difficult memories. And German firms are more transparent than most. Some 6,000 companies and the German state contributed to a €5.1bn ($4.5bn) fund created in 2000 to compensate victims of forced labour. By contrast, it took until 2014 for foreign relatives of holocaust victims transported by SNCF, the French railway, to be allowed to seek compensation from the state. Many Japanese firms can trace their histories back to wartime exploits, including the use of slave labour, but are far less likely to assess what went on than German ones. Similarly it is rare for American financial firms to admit to profiting from businesses related to slavery in the mid-19th century, as Aetna and JPMorgan Chase have. Nor is there any serious discussion to suggest firms which made money in apartheid South Africa should today offer compensation. + +Mr Brenninkmeijer and the historians say that understanding the past brings deeper strengths—virtues that can help the business today. Finding out the whole story can be liberating and “helps you understand who you are”, he says. The boss of C&A is preparing for members of the sixth generation of his family to run the private firm and wants them to learn how to hold serious discussions of ethical dilemmas, citing as an example his own worry over the firm’s high consumer-credit charges in Brazil in the early 1990s. + +He argues, too, that managers must give more thought to their supply chain, as in Bangladesh where 30% of the firm’s goods are made, and consider how best to assess whether child labour or dangerous conditions exist; in 2012 a fire in a Dhaka factory supplying Western firms, including C&A, killed 117 people. If Mr Brenninkmeijer is right, then instead of worrying about skeletons in the cupboard, a firm that squarely faces up to its yesterdays should learn how to behave better today. + +This article appeared in the Print Edition with the headline: Ghosts in the machine + + + + + +Brazilian business brightens + +Brazilian firms emerge from the gloom + +With a stand-in leader a little optimism returns + +Oct 29th 2016 | From the print edition + + + +“BRAZIL is back in business,” proclaimed Abílio Diniz, chairman of BRF, a Brazilian pork and poultry giant, at a recent investor shindig. Really? The economy, mired in recession since mid-2014, is not expected to stir before the end of the year—and then only sluggishly. After rebounding in the first half of 2016, industrial production plummeted again in August. Retail sales fell by more than forecast. Firms expect to hire just 100,000 temporary workers in the run-up to Christmas, 3% fewer than last year’s already low tally. BRF’s own domestic operations are hardly a picture of health. Sales dropped by 5% in the second quarter, year on year (though this was offset by rising global revenues). + +For all that, Mr Diniz is not alone in his optimism. Surveys point to rising confidence among bosses and consumers alike (see chart). Investors’ spirits are up—and with them the São Paulo stockmarket, which has returned to levels last seen in 2012. The real has strengthened by a third against the dollar since January. + +The collective mood swing has less to do with the real economy, and more with realpolitik. In August the left-wing president, Dilma Rousseff, was impeached, ending months of uncertainty. Her pragmatic deputy, Michel Temer, will serve out the remaining 26 months off her term. + +Brazil Inc wasn’t always anti-Rousseff. When she came to office in 2011 and lavished cheap credit and tax breaks on firms, bosses did not complain. They rebelled when her constant meddling first distorted, then crippled, the economy. + +The Temer government looks both more fiscally responsible than its predecessor, and more responsive to businesses’ concerns. Bosses gush about easy access to ministers, even the president himself. They applaud the administration’s commitment to narrow the confidence-sapping budget deficit, which exploded to 10% of GDP on Ms Rousseff’s watch. Mr Diniz’s remarks came after Mr Temer’s proposed constitutional amendment to freeze government expenditures in real terms for 20 years handily cleared the first of four congressional votes. It passed the second on October 25th. A complementary reform to over-generous public pensions is in the works. + +A promise of fiscal rectitude has helped dampen inflation expectations, allowing the central bank to cut interest rates for the first time in four years on October 19th, from 14.25% to 14%. Further cuts to Brazil’s high rates—the number-one bugbear of many a Brazilian boss—are expected. So too are other market-friendly measures, such as easing onerous local-content requirements for some industries and enlisting the private sector to build and run roads, ports and airports. + +Still, notes Carlos de Freitas of the National Confederation of Commerce, a lobby group, “The real economy does not live on expectations alone”. For business to thrive, bosses never tire of repeating, Brazil must also tackle assorted structural deficiencies. Besides costly credit, perennial grumbles include shoddy infrastructure, unskilled workers, convoluted taxes, rigid labour laws and Byzantine bureaucracy. + +Some take matters into their own hands. Daimler, a German carmaker, teaches English to technicians so that they can read technical manuals. Fed up with waiting for Rio de Janeiro’s municipal government to build a promised access road to its research centre, General Electric paid for it to be paved. Singaporean shareholders of Aegea, a water utility, could not understand why a firm with revenues of 795m reais needed a private jet—until Hamilton Amadeo, its boss, showed them it was cheaper than relying on commercial flights and cars once the cost of executives’ lost time was added in. + +Most companies cannot afford language classes, let alone jets. All abhor red tape. In the office of Guilherme Afif, chairman of SEBRAE, a group for small businesses, a printout of all the rules even tiny firms must obey takes up fully five metres of shelf space. The average Brazilian corporation spends 2,600 man-hours annually complying with the tax code, ten times the global figure (see article). + +For decades, fixing these gripes has eluded even popular presidents. Mr Temer isn’t one, at least outside business circles. Some bosses urge him to undertake tough, early action. Others reckon that an all-out assault on workers’ rights or states’ tax-raising powers do not behove a president who lacks the legitimacy of an elected leader. Better to stick with emergency fiscal measures and leave deeper reforms to his successor. Many would be content with stop-gaps: a law to make outsourcing easier, say, rather than an overhaul of the sacrosanct labour code dating back to 1943. + +In the meantime, euphoria over Ms Rousseff’s exit is tempered with caution. A tractor-maker in the southern state of Santa Catarina could use an extra 50 staff, its boss admits. But he is loth to hire, lest Mr Temer stumbles and confidence evaporates. “We are hoping for the best,” echoes the boss of a big education provider who has also ordered a hiring freeze. “But we are planning for the worst.” + +This article appeared in the Print Edition with the headline: Out of the gloom + + + + + +The sharing economy + +New York deflates Airbnb + +New rules may temper Airbnb in New York, but its future still looks bright + +Oct 29th 2016 | From the print edition + +No rules broken here + +IN 2007, Brian Chesky and Joe Gebbia came up with a wheeze to rent out two air beds in their San Francisco apartment, because a conference had left the local hotels full-to-overflowing. Thus, Airbed & Breakfast was born. Since then, the firm’s only contraction has been its name. Today, Airbnb’s website lists over 2m properties for short-term let in 191 countries. Piper Jaffray, an investment bank, estimates that bookings through the firm will reach $14.4bn in 2016, compared with $52m in 2010. Analysts think the upstart might fetch $30bn were it to be taken public. That would make Airbnb worth more than Marriott, the world’s largest hotel chain. + +But legislation signed in New York state on October 21st has taken some of the puff out of Airbnb’s mattress. New York City is the firm’s largest market in America, with around 35,000 properties available for rent. But many of the hosts offer their apartments illegally. In 2010, the state passed a law banning rentals of whole units in residential blocks for less than 30 days. (It is legal to do so if the tenant is living there at the same time.) To encourage people to comply, Andrew Cuomo, the state governor, approved fines for those who flout the rules of $1,000 for a first offence, rising to $7,500 for recidivists. + + + +The bill will severely limit Airbnb’s ability to operate in the city. At issue is the way that its business model has evolved. The firm was conceived as a marketplace to rent a spare room to tourists. Entrepreneurs, however, quickly spied a more lucrative opportunity: acquiring a portfolio of empty properties and offering them as a direct, often cheaper, competitor to hotels. According to data gathered by Tom Slee, author of “What’s Yours Is Mine”, a book on the sharing economy, 27% of Airbnb listings in New York are offered by people who own multiple properties (see chart). + +Locals complain that Airbnb guests, filled with the holiday spirit, can be noisy and inconsiderate neighbours. Worse, they say that as apartments are scooped up by investors to be rented out on a short-term basis, residents are forced out of town. Arun Sundararajan, a professor at New York University and author of “The Sharing Economy”, thinks this idea is overplayed. Pressure on housing stock in New York, he says, is affected more by population increase and rent controls than sharing-economy rentals. But not everyone agrees. According to Mr Slee, while Airbnb may indeed have a limited impact on a city in aggregate, for those who live in neighbourhoods that become Airbnb hotspots such effects are all too real. + +Still, some worry that Mr Cuomo has bowed to pressure from powerful vested interests, including hotel lobbyists and unions. The occupancy rate in New York’s hotels is close to 90%, among the highest in the country. Limited supply means premium prices and such advantages are jealously guarded. A study commissioned by the Hotel Association of New York found that people switching to Airbnb will directly cost its members around $780m in the city in 2016. It projects that by 2018 that will rise to over $1bn a year. Professional Airbnb hosts, say industry groups, should be classed as hoteliers, pay taxes as such and comply with the relevant health and safety regulations. + +Airbnb is challenging the state law on the grounds that, as an online marketplace, it is not responsible for the content that others place on its site. (The state counters it is going after the hosts, not the site.) The firm has a good case, reckons Mr Sundararajan. Firms such as YouTube and Facebook have already invoked such a defence successfully. But perhaps the greater danger is that other cities will feel emboldened to craft their own restrictions. Last year Airbnb agreed to require people in San Francisco who rent out their entire homes to register with the city, and to cap the number who can do so. But when few hosts signed up, the city decided to apply more pressure, with fines of $1,000 a day for each unregistered San Francisco host on the site. + +Europe has acquired a similar taste for regulation. Earlier this year, Berlin banned most short-term apartment lettings in response to a dearth of residential housing and the unsociable behaviour of lessees. Hosts flouting the rules face a €100,000 ($109,000) fine. (As with New York, those renting out a portion of their own apartments are unaffected.) According to Mr Slee’s data, the proportion of serial hosts in Berlin listing on Airbnb has fallen from 36% in 2014 to 20% today. + +In Barcelona, meanwhile, authorities have threatened to fine the firm €600,000 for such illegal listings and required hosts to obtain a licence. Ada Colau, the city’s mayor, was elected after promising to rein in holiday rentals. Not all cities see Airbnb as a curse. London, which has some 47,000 Airbnb-listed properties, has talked up the advantages of encouraging sharing-economy accommodation, particularly for its unfashionable outer boroughs where few hotel tourists ever venture. + +This article appeared in the Print Edition with the headline: Deflating Airbnb + + + + + +Schumpeter + +Jail bait + +The lock-’em-up mentality for white-collar crime is misguided + +Oct 29th 2016 | From the print edition + + + +ONE thing right-wing populists and left-wing progressives can agree on is that society is too soft on white-collar crime. Conservatives abandon their admiration for business when it comes to “crooked bankers”. Left-wingers forget their qualms if locking up “corporate evil-doers”. Hillary Clinton’s line that “there should be no bank too big to fail but no individual too big to jail” would go down equally well at a Donald Trump rally. + +But is society really soft on corporate wrongdoing? And would locking up bankers and businessmen and throwing away the key really solve any problems? Two new books try to inject reason and evidence into a discussion more commonly driven by emotion and hearsay: “Why They Do It: Inside the Mind of the White Collar Criminal” by Eugene Soltes, of Harvard Business School, and “Capital Offenses: Business Crime and Punishment in America’s Corporate Age” by Samuel Buell, the lead prosecutor in the Enron case, who now teaches at Duke University. + +Messrs Soltes and Buell both demonstrate that America is getting tougher on business crime. Between 2002 and 2007 federal prosecutors convicted more than 200 chief executives, 50 chief financial officers and 120 vice-presidents. Those at the heart of two big corporate scandals in 2001 and 2002 received harsh treatment: Bernard Ebbers, WorldCom’s chief executive was sentenced to more than 20 years without the possibility of parole—the equivalent of a sentence for murder in many states—and Kenneth Lay, Enron’s former boss, died awaiting sentence. Between 1996 and 2011 the mean fraud sentence in federal courts nearly doubled, from just over a year to almost two years, as the average sentence for all federal crimes dropped from 50 months to 43. + +America is constantly giving way to the temptation to punish white-collar criminals more severely: the Sarbanes-Oxley act (2002) and the Dodd-Frank bill (2010) both include measures designed to punish corporate types more severely. Other countries are moving in the same direction. In South Korea, Cho Hyun-ah, the daughter of the chairman of Korean Air, was imprisoned for a year for delaying the departure of a plane because she didn’t like the way a plate of nuts was served. In Oman, Adel al-Raisi, the boss of a state-owned oil company, was sentenced to 23 years in prison for accepting bribes. In 2012 Carmelo Aured, a Spanish developer, was fully prepared to pay a fine for evading about €1m ($1.1m) in taxes but was sentenced to three-and-a-half years in prison. The global war on white-collar crime is giving rise to a new global industry: advisers such as Wall Street Prison Consultants and Executive Prison Consultants specialise in helping white-collar criminals adjust to life behind bars. + +Prosecutorial zeal does not always result in convictions, but that is because prosecutors face some difficult trade-offs—including respecting the rights of some of the world’s most unpopular people. Mr Buell points out that America’s Department of Justice could have bowed to popular pressure by prosecuting senior bankers for selling mortgage-backed securities and the like. But this would have been foolish: the products were perfectly legal (if unwise) and the people doing the buying were just as well-informed as the people doing the selling. The DoJ could bring far more individual prosecutions. But most corporate crime is the result of collective action rather than individual wrongdoing—long chains of command that send (often half-understood) instructions, or corporate cultures that encourage individuals to take risky actions. The authorities have rightly adjusted to this reality by increasingly prosecuting companies rather than going after individual miscreants. + +Prosecuting firms may not have the smack of justice that populists crave: you can’t imprison a company, let alone force it to do a humiliating “perp walk”—being paraded in handcuffs in public. And the people who end up paying the fines are shareholders rather than the executives or employees who actually engaged in the misconduct. But it saves the taxpayer a great deal of money: the DoJ routinely asks firms to investigate themselves on pain of more serious punishment if they fail to do so. It also advances the cause of reform, if not retribution: companies are routinely required to fix their cultures and adjust their incentive systems. + +’Allo, ’allo + +Populists like to think that there is a bright line between right and wrong: overstep it and you should go directly to jail. But a great deal of wealth-creation takes place in the grey area between what is legal and questionable. Some of the world’s greatest business people have overstepped the mark. Bill Gates was hauled up before the authorities at Harvard University when he was a student for using computers without permission. Steve Jobs participated in backdating stock option-based compensation at Apple, including his own, in order to inflate the options’ value. Some of the world’s most admired firms specialise in applying new technologies to markets that are governed by outdated regulations: Uber in transportation and Airbnb in accommodation are engaged in frequent legal battles with regulators. But both companies are clearly advancing the common good by offering services that people want and forcing judges to modify outdated rules. + +The strongest populist argument is about double standards: it is wrong to let the rich get away with a slap on the wrist while poor youths are put in prison for possessing an ounce of cocaine. Messrs Soltes and Buell have clearly demonstrated that the rich aren’t getting away with a slap. But even if they were, this would argue for reforming criminal law for the poor rather than extending the lock-’em-up mentality to the rich. Society should by all means punish white-collar criminals if they have obviously committed crimes and imposed harm. But it should resist the temptation to criminalise new businesses testing the rules. And it should certainly resist the temptation to single people out for harsh punishment simply because they are rich and successful. + + + +Finance and economics + + + + + +Investment banking: Rebooting + +Buttonwood: No Trumps! + +Digital money: Known unknown + +Asian deflation: Steel trap + +China’s growth: The greatest moderation + +Clean energy v coal: Fighting the carbs + +Free exchange: Passing the buck + + + + + +Investment banking + +Rebooting + +Both revered and reviled, Goldman Sachs struggles to stay relevant + +Oct 29th 2016 | PALO ALTO, CALIFORNIA | From the print edition + + + +JUST outside Stanford University’s campus sits the headquarters of Symphony, one of the myriad tech companies that sprout like weeds in Silicon Valley. After a lunch break exercising in a nearby park, a dozen fit-looking employees, still in workout clothes, help themselves from buckets of fruit, energy bars and the food of the day (Indian), before plopping themselves in front of monitors in an airy room bathed in natural light. For the sought-after engineers making up most of the company’s 200-strong workforce, this sort of environment is the norm. Work is supposed to be healthy and relaxed—a far cry from the terrors of a New York bank with its incessant pressure to sell and complex internal politics, not to mention often unappetising, pricey food. + +Across the continent, in a newly opened tower within the World Trade Centre, Kensho, a three-year-old company, has a similar feel. Like Symphony but a bit smaller, it is stuffed with talented engineers. In a New York approximation of the West Coast, it boasts “vertical gardens”—rectangular patches of vegetation like framed paintings—and a pool table. + +Symphony is a messaging platform, owned by a consortium of investment firms. It offers a critical function at present almost monopolised by Bloomberg: the seamless incorporation of data and communication that makes the terminal the most important conduit in finance since Wall Street went from thoroughfare to metaphor. Kensho screens vast amounts of information—speeches, earnings, earthquakes and on and on—to help investors find correlations among all these data that might move prices. + +If the two companies succeed—a big if—their products could become pervasive. They are tiny entities with vast potential. And they are examples of technology firms backed and used by Goldman Sachs, a big investment bank, in its efforts to transform itself, and indeed its industry, at a time when its core business is being pummelled by technology and regulation. + +In 2014 Goldman spun out a messaging technology developed internally as a new company, Symphony. Kensho was formed with backing from Goldman in 2013. Early on, the investment bank had a contractual right to be the sole user of its products among brokers. Goldman continues to be the only outside investor with voting rights on the company’s board, but many other banks have taken stakes in it and are customers. + +It is possible that these two companies will provide little benefit to Goldman. Cynics are entitled to wonder whether these and similar efforts are merely a way of putting a modern veneer on an old structure. Tech companies are fashionable and widely perceived as helpful; banks are unfashionable and seen as parasitic. The non-cynical take is that Goldman understands that answers to the challenges it faces will have to come, at least in part, from outside its mirrored-glass headquarters in downtown Manhattan. It may have many flaws; a failure to grasp corporate vulnerability is not among them. + +Goldman, with its enormous influence, lavish compensation and alumni network in pivotal political roles looks anything but embattled. But the firm—derisively dubbed a “great vampire squid” by Rolling Stone magazine—is in the process of seeing its tentacles severed. + +Lost prop + +Since 2009 revenues have dropped by a quarter; they remain below where they stood a decade ago (see chart). Even in a good quarter, such as the one just completed, its return on equity barely exceeds single digits. “Principal transactions”, ie, proprietary trading and investments, produced $25bn in revenues in 2009 and $18bn in 2010 but only $5bn in 2015. The decline is a result of new rules that limit these activities—and regulators threaten more. + + + +Fixed income, commodities and currency (FICC), the once immensely lucrative niche that nurtured the careers of Goldman’s chief executive, Lloyd Blankfein, and its president, Gary Cohn, has also been hit hard. Revenues reached $22bn in 2009. In the first three quarters of this year they totalled $5.6bn. + +Richard Bove, an analyst at Rafferty Capital Markets, concludes Goldman has just one superb business left among its distinct parts: its traditional niche of providing advice on important transactions, notably mergers. Goldman remains the global leader, despite having missed out on a role in the year’s biggest proposed deal—AT&T’s attempt to take over Time Warner. Even its M&A business is in some difficulty—as exemplified by its big cutbacks in Asia, where governments in China and elsewhere still favour local institutions. Goldman also has a good business in wealth-management, which thrives on sophisticated schmoozing and does not require much capital. + +Its other businesses, which collectively still account for about 60% of revenues, face unrelenting pressure from regulatory and technological change. None of this is unique to Goldman. A recent survey of 35 global investment banks by the Boston Consulting Group implied a long-term, industry-wide contraction: over the past five years, revenues have declined by 20%, return on equity has slipped from an inadequate 9% to 6%, and almost every business area has shrunk, with the exception of the advisory work that represents only about one-tenth of the overall pie. + +Regulators want investment banks to reduce risk, and to do so by cutting out businesses that directly support their own returns as opposed to those of clients. That means they cannot hold large inventories of securities, must reduce proprietary trading and must take on ever more capital (diluting returns). They should, in short, be intermediaries. + +But that intermediary role is also under attack. Big fixed-income investors say they can underwrite many debt offerings directly. Fewer companies want to issue public shares. New competition has emerged in the shape of more than 300 “fintech” companies, a broad term for entities using technology to do what existing banks do with more people and at higher cost. + +Monetary stimulus + +So far-reaching are these changes that it is surprising bank revenues have not fallen further. The most common explanation is that repressed interest rates have stimulated many borrowers to refinance their debt more cheaply. If so the positive news will be transitory; the pressures will endure. + +In deference to these trends, Goldman describes its strengths in terms of characteristics—superior contacts and execution—rather than specific franchises (which may be imperilled). That provides a framework for four intertwined strategies. + +The first involves collaborative efforts or strategic investments that gave rise to Symphony, Kensho and a number of similar ventures. “Orbit”, for example, is a suite of smartphone apps Goldman developed that enable e-mailing, browsing and file-saving within an environment controlled by an employer (and thus accessible by a regulator). It was spun off last October to another publicly traded company, Synchronoss, in exchange for a minority stake. Such ventures are more valuable if used more broadly than just by Goldman. If it had retained control, potential customers might be unwilling to allow a competitor access to sensitive information. + +The second prong is automation. Not all that long ago, 600 people worked on a vast floor trading shares. Traders yelled and phones were slammed (though perhaps with more decorum at blue-blooded Goldman than elsewhere). Obscured by the din were 66 distinct actions, many of them amenable to mechanisation. Now, Goldman has two people who trade equities and another 200 software engineers who work on systems that, in effect, do the job on their own. Traditional investment-banking is ripe for change as well. Goldman has mapped each of the 146 steps of an initial public offering in 51 charts that appear in proper sequence on a five-foot long roll-out. Costly, redundant steps are being cut or, once again, automated. + +The next big change is in the bank’s sources of funds and its lending. Goldman pays just under 5% interest on its long-term debt, the most stable component of its funding. Its competitors, JPMorgan Chase and Bank of America, pay a fraction of one per cent on trillions of dollars of government-insured deposits. It is not feasible for Goldman to open branches. Nor, these days, is it necessary. In April, it acquired GE’s internet bank with $16bn in savings accounts, on which it pays an average of 1% in annual interest. + + + +On October 13th, as expected, it launched an online lending arm to match, named Marcus after the firm’s founding Goldman. Clients will pay from 6% to 23% a year for loans of up to $30,000, to be used to repay more expensive credit-card debt. The clients are those huddled masses previously not affluent enough to afford a human Goldman account-manager, but now, apparently, an attractive market for a Goldman machine. + +And that leads to the fourth change—in how Goldman interacts with clients. Not long ago, it was almost entirely through phone-calls, e-mails, electronic orders and presentations delivered in person. Now, a client portal named “Marquee” gives access to tools such as Goldman’s risk analytics for trading shares or arranging hedges (named “Studio”) or for corporate clients to create strategies for executing large share buy-backs (“Athena”). + +Behind the paywall + +Among the largest challenges for this effort at reinvention is how to charge. The old methods—large fees on deals, commissions on trades, extraction of spreads (often in opaque ways) between the price paid by buyers and that received by sellers, the use of information gained in transactions for proprietary trades—are somewhat compromised. Clients know too much and can do too much on their own. New methods are being considered, such as a fee based on the number of employees at a firm, or number of users, or some form of subscription-based remuneration. + +The change in environment is accompanied by a change in the Goldman kind of person. One-quarter of its employees now have a background in some facet of technology, be it a degree in mathematics, engineering, computer science or the like. That is up from 5% not long ago (a number it believes is still common for other banks). And the number of internal engineers underestimates the change since it does not include outside investments, such as Symphony and Kensho. + +Perhaps the oddest aspect of this transformation is how little evidence exists of a payoff. Athena, the firm says, has been used in many share buy-backs. Another tool named “Simon” is widely used by customers who want to create customised “structured notes”, or debt instruments. Kensho is profitable. Symphony has many adopters. But it is early days and in many ways these are just experiments. + +Further transformation is still to come and if, as seems probable, it enhances efficiency, then the Goldman of the future may do as much as it does now with far fewer people and smaller costs. In the past, Goldman’s rise to the pinnacle of the investment-banking stack was a consequence of besting its rivals. The challenge now is less from them than from a difficult external economic, technological and regulatory environment. As for every other bank, change is not a matter of choice. + + + + + +Buttonwood + +No Trumps! + +For once, Wall Street does not favour the Republican candidate + +Oct 29th 2016 | From the print edition + + + +TRADITION suggests that Wall Street should favour the Republican Party. America’s conservatives usually back low taxes, free trade and a reduction in regulation. But the 2016 election seems to be an exception. A Bank of America Merrill Lynch poll of fund managers in October found that a Republican victory was seen as one of the biggest risks facing financial markets, along with the disintegration of the EU. + +A study* by Justin Wolfers of the University of Michigan and Eric Zitzewitz of Dartmouth College found that in the wake of the first debate, there was a six-percentage-point rise in the probability of a Hillary Clinton victory on betting markets. In reaction, stockmarkets rose, and gold and Treasury bonds (two assets that benefit when investors become risk-averse) fell. “Financial markets expect a generally healthier domestic and international economy under a President Clinton than under a President Trump,” the authors concluded. + +What makes this election different for investors is the nature of the Republican candidate—Donald Trump is a long way from the party’s mainstream. A Trump victory would throw up all kinds of uncertainty about the likely tone of economic and foreign policy. It is not just that the candidate’s pronouncements have been vague and inconsistent; he has not surrounded himself with the kind of mainstream policy advisers that backed past candidates such as Mitt Romney or John McCain. “This will be totally uncharted territory,” says Mitchell Harris, chief executive of the investment-management arm of BNY Mellon. + +A range of issues causes investors concern. On trade, Mr Trump’s threats to tear up the North American Free Trade Agreement and to take a more aggressive line with China risk economic disruption, as does his policy on the deportation of illegal immigrants. Then there is his desire to walk away from (or at least renegotiate) some of America’s defence alliances—an approach that would heighten geopolitical risk. Another worry is his attitude towards Janet Yellen, the chairwoman of the Federal Reserve. Mr Trump has said that Ms Yellen should be “ashamed” of her low-rate policy, implying he would appoint a more hawkish candidate when her term expires in January 2018, or perhaps even earlier. Investors would welcome neither aggressive Fed tightening nor any sense that central-bank independence was under threat. All of these factors would affect global, not just American, financial markets. + +The risks are not all on the Trump side. A Democratic sweep in which the party controlled the White House, Senate and the House of Representatives would also be seen as a negative for the markets. It would strengthen the hands of those on the left of the party, such as Bernie Sanders and Elizabeth Warren, who would promote higher taxes and greater regulation. + +The least worst result, from a market point of view, would be a win by Mrs Clinton, with the Republicans still controlling the House. Kate Moore of BlackRock, a fund-management group, says that a split government is seen as good for business. Such an outcome might even result in a modest fiscal stimulus, something that the markets would welcome. + +As Michael Zezas, an analyst at Morgan Stanley, points out, the candidates have some common ground on corporate taxation—favouring proposals designed to make companies repatriate overseas earnings and to limit the tax deductibility of interest payments, for example. That suggests it might be possible for President Clinton to do a deal with House Republicans, trading lower tax rates for the elimination of deductions. When she was a senator, Mrs Clinton was seen as someone who was willing to co-operate with the opposing party. + +A final oddity of this election is that Mr Trump is seen as a populist champion for the common man, even though he plans to cut taxes for the rich and raise prices for the poor (assuming he pushes through tariffs on goods from China, as he has threatened). In contrast, Mrs Clinton has been painted as the Wall Street candidate even though she plans to raise the top rate of income tax and tighten the tax treatment of capital gains. In many ways, indeed, her agenda resembles that of a traditional Democrat. That makes it all the more telling that the financial markets have so little enthusiasm for a Trump victory. This is a an electoral choice investors would rather not have to make. + +Economist.com/blogs/buttonwood + +*What do financial markets think of the 2016 election? https://www.brookings.edu/research/what-do-financial-markets-think-of-the-2016-election/ + + + + + +Digital money + +Known unknown + +Another crypto-currency is born + +Oct 29th 2016 | From the print edition + + + +COMPETITION between currencies is the stuff libertarian dreams are made on—and central bankers’ nightmares too. Already digital monies, in particular Bitcoin and Ethereum, are rivals. On October 28th a new crypto-currency will join the fray: Zcash. Many such “altcoins” are dubious affairs and don’t add much. But this one brings important innovations. + +Zcash is based on Bitcoin’s code, but its creators, a bunch of cryptography researchers, have tweaked it. The new digital cash is minted more quickly and the system can handle more transactions. This makes for more liquidity and shorter transaction times, says Zooko Wilcox, who leads the project. + +The newcomer also differs in the way it is governed. The incumbent started—and is still run—as an open-source project: a small group of volunteer developers decides which changes are made. Zcash’s code is also open-source, but its inventors have formed a company and accepted money from investors. In addition, 10% of the 21m coins to be issued are earmarked for founders, investors, employees and a putative Zcash foundation. All this, says Mr Wilcox, is to align incentives for all involved, allow the firm to hire a great team and enable quicker decisions—all problems for Bitcoin. + +Yet the biggest step forward is confidentiality. Bitcoin obscures the identity of currency owners, but the “blockchain”, the ledger that keeps track of all the coins, is open and can be analysed to see the flows of funds. This is a serious barrier for banks: blockchains could reveal their trading strategies and information about their customers. Zcash, by contrast, shields transactions from prying eyes with a scheme based on “zero-knowledge proofs” (hence the “Z” in its name). These are cryptographic protocols proving that a statement (who owns coins, for instance) is true without revealing any other information (how many and where the money came from). And it is by selling this technology—called “zk-SNARK” (don’t ask)—to banks that Zcash, the company, wants to earn its keep. + +This sounds promising, but Zcash, the currency, may not be able to give incumbents much of a run for their money. After a governance crisis, the Bitcoin community thinks it has found a way to increase the system’s capacity (which has reached its limit: many transactions are being delayed). And Ethereum, whose claim to fame is to enable “smart contracts”, has recovered after one of these self-executing business agreements, a venture fund called the DAO, went terribly wrong (although other crises have erupted since). + +But crypto-currencies are not only competitors. They represent different trade-offs between security, complexity, performance, cost and other factors, so each is likely to find its niche. They are also a case of co-operation: since their software is open-source, developers can easily learn and copy from each other. If Zcash’s zero-knowledge scheme works, it may one day become part of Bitcoin. And some coders are working on ways to connect different blockchains. One day, perhaps, the collaboration will give rise to an ÜberCoin that floats across all blockchains—which would cheer up some central bankers. + + + + + +Asian deflation + +Steel trap + +Producer prices perk up in Asia + +Oct 29th 2016 | SHANGHAI | From the print edition + + + +BESIDES being dirty and dangerous, making steel in China has been a good way to burn through money over the past few years. But in recent months, the fires from the country’s blast-furnaces have started to emit the warm glow of profits. Steel prices have risen by nearly 50% this year. Production, which fell in 2015 for the first time in decades, is also up. Smelters are set for a strong recovery after losing $10bn last year. And it is not just the steelmakers who will be pleased. Asia’s central bankers can also take some comfort in the rising prices: they suggest that the threat of deflation might be receding. + +Once seen in Asia as a peculiarly Japanese phenomenon, deflation spread throughout the region’s factories in the past half-decade. The prices that consumers see in shops have on the whole continued to increase, albeit more gently than before. But the prices that companies charge for goods as they leave their factories’ gates have dipped lower and lower. Virtually all big Asian economies, including South Korea, India, the Philippines, Taiwan and Thailand, have experienced prolonged bouts of falling producer prices. + +China, the biggest economy and the centre of the deflationary spiral, recorded 54 consecutive months of declines. It broke that gloomy run at last in September, when prices increased by 0.1% from a year earlier, thanks to rebounds in the steel and coal industries. Elsewhere in Asia, producer prices are now also rising, or at least falling more gradually than before (see chart). + +This turnaround should be cause for relief. Deflation is often a symptom of economic torpor. For companies, falling prices cut into revenues and make it harder to repay debts, which are fixed in nominal terms. As companies sour on future prospects, they also pare back their investment—a potentially vicious circle. In its outlook for 2016, the Asian Development Bank (ADB) called producer-price deflation the “new spoiler” for the region. This is one forecast it would be glad to get wrong. + +Still, no one is about to declare victory yet. A couple of years ago, producer prices also appeared to be edging up, when they were battered by a renewed slowdown in China’s industrial sector. The ebbing of deflation now is partly thanks to a much lower base of comparison. Oil at $50 a barrel is still relatively cheap by the standards of the past decade, but it is two-thirds higher than the lows of January. + +More promisingly, the rise in producer prices does point to vigour in the Chinese economy. A big jump in property sales ignited demand for steel, with iron ore and coal rallying alongside it. Some of the excitement is clearly speculative, with investors punting on commodities as they have in the past. Official orders to curb excess capacity in the coal industry also proved rather too effective (see article), and led to supply shortages. The government has now shifted gears, instructing miners to increase coal production ahead of the winter, when demand for heating spikes. + +Whatever the future course of prices, Asia’s half-decade of deflation has already yielded valuable lessons. It is clear that prices around the region are closely linked. Prices for commodities are, of course, global, explaining some of the similarity in inflation trends but not all of it. Researchers at the Hong Kong Institute for Monetary Research calculated that the correlation between Chinese producer prices and those of most Asian economies is very high, at about 0.7-0.9 (with 1 being a perfect correlation). A research paper for the Federal Reserve Bank of Dallas argued that the integration of the supply chain in Asia might explain the tight relationship: inflation rates are more similar in countries that trade more with each other. + +Asia’s long battle with falling factory prices should also affect the way that policymakers think about inflation. It is common to dwell on consumer prices, not least because of their impact on just about everyone’s pocketbook. But for consumers, deflation is not necessarily bad. If, for instance, technological innovation leads to lower prices, this can create more, not less, prosperity. An ADB study examined nearly 150 years of deflationary episodes and came to a sobering conclusion. Although in many cases, consumer-price deflation has not caused a growth slowdown, producer-price deflation does indeed tend to be a big drag on investment. The message for central bankers is simple: keep a close eye on those Chinese steel mills, and hope their good fortune lasts. + + + + + +China’s growth + +The greatest moderation + +Has any country ever grown as repetitively as China? + +Oct 29th 2016 | From the print edition + + + +ON OCTOBER 19th China reported that its economy grew by 6.7% in the third quarter. It would have been an unsurprising, reassuring headline, except that China had reported exactly the same figure for the previous quarter—and for the quarter before that. This freakish consistency invited the scorn of China’s many “data doubters”, who have long argued that it fudges its figures. China has expanded at the same pace from one quarter to the next on numerous occasions. But it has never before claimed to grow at exactly the same rate for three quarters in a row. + +Has anywhere? This growth “three-peat” is not entirely without precedent. Seven other countries have reported the same growth rate for three quarters in a row, according to a database spanning 83 countries since 1993, compiled by the Economist Intelligence Unit, our sister company. The list includes emerging economies like Brazil, Croatia, Indonesia, Malaysia and Vietnam, but also two mature economies: Austria and Spain. Indeed, Spain has performed this miracle of consistency twice. It grew by 3.1% (year-on-year) in the first three quarters of 2003 and by 4.2% in the first three quarters of 2006. Those were the days. + +Contrary to popular belief, China’s GDP statistics have not always been unusually smooth. Since 1993, the average gap between one quarter’s growth and the next has been (plus or minus) 0.77 percentage points (see table). Fourteen countries, including America, have reported a smaller average gap. But in recent years, the zigzags in China’s growth have been less pronounced. Since 2012 only France and Jordan have enjoyed more stable growth (as measured by statistical variance, a common measure of volatility) and only Indonesia has recorded a smaller average gap between one quarter’s growth and the next. + +Either China’s policymakers are newly successful at stabilising growth or its statisticians are newly determined to smooth the data. But if the number-crunchers are to blame, one wonders why they do not try harder to hide it. + + + + + +Fighting the carbs + +Wind and solar advance in the power war against coal + +Clean energy surges, so does the price of coal + +Oct 29th 2016 | From the print edition + + + +THE battle between clean energy and dirty coal has entered a new phase. The International Energy Agency (IEA), an industry forecaster, this week reported that in 2015 for the first time renewable energy passed coal as the world’s biggest source of power-generating capacity. + +The IEA, whose projections for wind and solar energy have in the past been criticised as too low, accepted that renewables are transforming electricity markets. Last year 500,000 solar panels were installed every day around the world. In China alone, home to a whopping 40% of the 153 gigawatts (GW) of global growth in renewable-energy installations, two wind turbines were erected every hour. Based on existing policies, it forecasts that from 2015-21, 825GW of new renewable capacity will be added globally, 13% more than it projected just last year. + +All those new wind and solar plants will not generate electricity all the time. Unlike coal, which burns around the clock, renewables are intermittent. But the IEA expects the share of renewables in total power generation to rise to almost 28% from 21%. Government policies to curb global warming and reduce air pollution are the driving force behind the clean-energy revolution, as well as falling prices of solar panels and wind turbines. The IEA expects America to eclipse the EU to become the second-biggest market for renewables (after China) in the next few years, thanks to an extension of federal tax credits to wind and solar producers. Because electricity demand in rich countries is falling, renewables are driving out other sources of electricity. But in developing countries, they are still not being built fast enough to keep up with demand (see chart). + +Lauri Myllyvirta, a Chinese-energy expert at Greenpeace, an environmental NGO, says the IEA may still be underestimating the “exponential growth dynamics” of renewables. For instance, more grid-connected solar energy was installed in China in the first half of 2016 than in the whole of last year, he says. + +Yet coal is also showing surprising resilience. Earlier this year the betting was that thermal-coal prices would sink because of falling investment in new coal-fired power plants and a decline in long-term demand. Since mid-year, however, they have doubled to $100 a tonne. The reason, again, is China. Its authorities imposed restrictions on its debt-strapped coal miners, limiting them to 276 working days of production a year, in order to push up prices. Partly because of rampant speculation in the Chinese futures market, the measures worked better than expected. Faced with an unwanted surge of imports, the government has since set out to loosen them. Yet if the rally continues, it would give a further fillip to the green brigade: higher coal prices will squeeze the margins of their dirty rivals. + +This article appeared in the Print Edition with the headline: Fighting the carbs + + + + + +Free exchange + +Passing the buck + +Too often, efforts to make financial systems safer shift risk rather than eliminating it + +Oct 29th 2016 | From the print edition + + + +IN 2007 financial dangers, piled up like so much tinder, ignited at last and caused a swathe of destruction across the global economy. The blaze also engulfed governments, which faced intense public pressure to prevent such calamities from recurring. Much has happened on the regulatory front since then. Few believe, however, that the problem of financial instability has been solved. To regulators’ frustration, in a world of global financial flows, efforts to safeguard one country often endanger others. + +This bothersome tendency has become harder to ignore as cross-border capital flows have swollen. Annual gross financial flows in rich countries soared from roughly 5% of GDP in 1980 to around 25% of GDP on the eve of the financial crisis. This worldwide torrent of money has its benefits. Investors can more easily diversify their portfolios. Investors in slow-growing rich countries gain access to higher-yielding investments in poorer, capital-starved economies, and those poorer economies gain access to desperately needed capital relatively cheaply. + +Yet there are costs as well. Emerging economies with less sophisticated financial markets and weaker regulatory institutions can mismanage the great tides of global capital; even mature economies sacrifice a degree of macroeconomic control when they open themselves to global capital markets. Most aggravatingly, protective measures in some countries divert or increase global financial risks rather than reduce them. + +Take foreign-exchange reserves. Emerging economies burnt by fickle foreign investors learned that a defensive hoard of reserves, made up of safe assets like American Treasury bonds, could protect them in times of trouble. But as they built their war chests, the demand for such bonds pushed down interest rates around the world. That encouraged greater risk-taking. As yields on Treasuries fell, for example, investors, including these same emerging-market governments, turned instead to mortgage-backed securities, which seemed nearly as safe but offered higher returns. The dynamic created a “conundrum” for Alan Greenspan who, as chairman of the Federal Reserve in the early 2000s, found that raising short-term interest rates had little effect on long-term interest rates—including the rate on mortgages. + +Worryingly, the main strategies available to central bankers for curtailing systemic risk share these negative side-effects. Despite Mr Greenspan’s experience, some economists reckon interest rates ought to be used more aggressively to rein in credit-market exuberance; while a governor at the Federal Reserve Board, Jeremy Stein, now back at Harvard University, argued that the Fed should consider financial stability while setting monetary policy. If the yields on risky bonds relative to safe ones reveal an imprudent disregard for risk among investors, the Fed could then set rates higher than inflation alone might demand. Recent Fed minutes show some members thinking along similar lines. Yet even if financial excess can be calmed at an acceptable price to the economy, such preventive rate increases impose a cost on others. American rate rises often draw money away from emerging economies, placing stress on their financial systems. Elsewhere, higher rates reduce investment and increase saving, adding to the global glut of capital and depressing global interest rates. + +Economists have higher hopes for “macroprudential” policies: regulations designed to reduce systemic risk. The Basel III guidelines agreed on in 2010 include measures like countercyclical capital buffers: bank-capital requirements which can be tweaked as lenders look more or less reckless. In 2015 economists at the IMF wrote that advanced economies could use such policies to lean against capital inflows, in lieu of the blunter instrument of capital controls. Alas, life is not so simple. Effective macroprudential policy should work much like an interest-rate rise: by reducing borrowing. In a global financial system, less borrowing in one country means more money sloshing around in others. + +Is there nothing, then, to be done? Co-operation between governments could help; co-ordinated macroprudential measures would reduce the risk that some countries face an unmanageable fire-hose of money. Yet the international goodwill this would require is scarce. And co-ordination can do only so much in a world awash with capital, facing chronically low interest rates. If governments somehow manage to rein in private borrowing, the global glut will grow worse. Interest rates around the world would stay lower for longer, raising the odds that dangers build up in dark corners of the markets beyond regulators’ reach. + +Asset hounds + +Sensible regulation would work better if combined with the clever provision of more of the safe assets markets crave. In a recent paper Mr Stein and several co-authors note that when governments provide too few safe, short-term assets, private firms such as banks step in to issue more, in the form of short-term debt. Such short-term private bonds are prone to runs. So more government issuance would reduce risk. + +Trusted governments could help in other ways as well. America might run larger budget deficits than would normally seem appropriate to help sate market demand for the world’s favourite safe asset, its Treasury bonds (just as financial-stability worries might lead the Fed to choose a higher interest rate than would typically seem prudent). Europe could chip in. In September François Villeroy de Galhau, the governor of the French central bank, called for the creation of European safe bonds, backed by the bonds of member states. Such measures are admittedly unorthodox and politically fraught. But if the world cannot find better ways to prevent financial risks spilling across borders, governments will eventually decide global capital markets are more trouble than they are worth. + +Visit our Free exchange economics blog + + + +Science and technology + + + + + +Bathymetry: In an octopus’s garden + +The world’s weirdest place?: Topsy turvy + +Cyber-security: Crash testing + +Schiaparelli’s end: Flash, bang, wallop, what a picture + +Dealing with autism: First, treat the parents + +Shark behaviour: Waste not, want not + + + + + +Bathymetry + +In an octopus’s garden + +Researchers have a plan to chart in detail the depths of the ocean floor + +Oct 29th 2016 | From the print edition + + + +THREE billion dollars sounds a lot to spend on a map. But if it is a map of two-thirds of Earth’s surface, then the cost per square kilometre, about $8.30, is not, perhaps, too bad. And making such a map at such a cost is just what an organisation called the General Bathymetric Chart of the Oceans (GEBCO) is proposing to do. GEBCO, based in Monaco, has been around since 1903. Its remit, as its name suggests, is to chart the seabed completely. Until now, it has managed less than a fifth of that task in detail. But means of mapping the depths have improved by leaps and bounds over recent decades. So, with the aid of the Nippon Foundation, a large, Japanese philanthropic outfit, GEBCO now proposes to do the job properly. It plans to complete its mission by 2030. + +The area of Earth’s ocean is two and a half times the area of Mars—and it is often claimed that Mars’s surface is the better recorded of the two. It took mere hours to find the crash site of Schiaparelli, an ill-fated Mars-bound space craft (see article). By contrast, the resting place of MH370, an airliner that disappeared over the Indian Ocean in 2014, remains unknown. + +In large part, this is because peering through Mars’s thin atmosphere from an orbiting satellite is easier than peering through hundreds or thousands of metres of water from an equivalent satellite in orbit around Earth. Despite water’s apparent transparency, the sea absorbs light so well that anywhere below 200 metres is in pitch darkness. Radio waves (and thus radar) are similarly absorbed. Sound waves do not suffer from this problem, which is why sonar works for things like hunting submarines. But you cannot make sonic maps from a satellite. For that, you have to use the old-fashioned method of pinging sonar from a ship. Which is just what GEBCO plans to do. + +Ping me when you’re ready + +Sailors have taken soundings since time immemorial, to avoid running aground. Their equipment was a plumb line—a piece of cord with a lead weight at the bottom. The term “sounding” has nothing to do with noise, echoes or anything like that (it comes from the old English sund, meaning a sea or strait), but the coincidence is a neat one, for the modern version of swinging the lead is “echo sounding”, using sonar reflected from the seabed. Marie Tharp and Bruce Heezen of Columbia University, in New York, pioneered the technique in the 1950s and 1960s by using technology developed during the second world war. With it, they mapped part of the Mid Atlantic Ridge, an underwater mountain chain. + +Tharp and Heezen employed single-beam sonar, which yielded a fairly fuzzy image. These days, sounding sonars broadcast a fan-shaped series of beams. This means a wider strip of the seabed can be mapped during a single pass. It also increases accuracy, because signals from neighbouring beams, which overlap to a certain extent, can be compared with one another. That, plus the invention of special housings fitted onto platforms under sounding-ships’ bows, which stop bubbles generated as the vessel rides the waves interfering with the signal, means mapping can be done to a far higher standard than it was in the past. + +Such mapping has not, however, been well co-ordinated. Cable-laying companies, oil firms, academic oceanography laboratories, national hydrographic surveys and the world’s navies all have oodles of sounding data. One of GEBCO’s jobs is to gather this existing information together and sew it into a new database, to create a coherent portrayal of the known ocean floor. + +The organisation is also keen to include data collected by helpful volunteers. A new digital platform overseen by America’s National Oceanic and Atmospheric Administration encourages the crowdsourcing of bathymetric data, letting mariners upload their findings easily. Recent political initiatives, such as a deal made in Galway in 2013 between America, Canada and the European Union to support transatlantic floor-mapping, will also boost efforts. National icebreakers are gathering information in parts of the ocean too frozen for other vessels to reach. And GEBCO is trying to persuade governments and companies with proprietary data on the sea floor to share them. One such firm, a cable-laying outfit called Quintillion, has already agreed to do so. + +The other, larger job that GEBCO faces is filling in the blanks. Larry Meyer of the University of New Hampshire, who is helping co-ordinate this task for the organisation, estimates it would take a single research vessel 200 years to do so. A simple calculation therefore suggests hitting the target of 2030 requires a few more than a dozen such vessels working simultaneously, which does not sound unreasonable. GEBCO hopes to co-opt shipping companies and other waterborne industrial concerns, together with various academic groups, into contributing to an ad hoc fleet to do this. These manned vessels will be joined by an array of robots that will include sea gliders (underwater drones requiring minimal propulsion) which have been kitted out with multi-beam sonar, and also unmanned barges steered by satellite. Such robots could prove particularly helpful in places with little shipping, like the South Pacific. And there is hope for improvement. New deep-sea technologies for mapping are part of this year’s Shell Ocean Discovery XPRIZE. The winner of this will scoop $4m and the runners up will share another $3m. + +Mere curiosity aside, an accurate map of the seabed may help open this unknown two-thirds of Earth’s surface to economic activity. How quickly Davy Jones’s locker yields anything valuable will depend on the technological difficulty, and therefore the expense, of bringing useful discoveries back to dry land. But the sort of data that will contribute to GEBCO’s map should help spot petroleum and natural gas seeps, and may point to ore-bearing geological formations. The world’s navies (or, at least, those among them with submarine capability) will also take an interest—for an accurate seabed map will both show good places for their boats to hide and suggest where their rivals’ vessels might be secreted. Whether they will welcome GEBCO making this information public is a different question. + + + + + +The world’s weirdest place? + +Topsy turvy + +A piece of sea floor, stranded on dry land, may hold clues to life’s origin + +Oct 29th 2016 | The Danakil depression, Ethiopia | From the print edition + +Afar horizon + +STUDYING the seabed does not always mean penetrating the sea itself, even if that penetration is done using sound waves rather than submarines (see article). There are a few places where what a geologist would call the ocean floor is actually dry land. One such is the Danakil depression, which lies near the northern vertex of the Afar Triangle, a rift valley stretching from the Dallol volcano in Ethiopia past the salt plains of Lake Assal, in Djibouti, to the north-west tip of Somalia, and then inland to Awash. Millions of years ago, the Danakil was indeed covered by the sea—in its case, the Red Sea. But volcanic eruptions formed barriers of lava that isolated it from the ocean. What water remained evaporated in the intense heat, leaving brine lakes and saline flats. These are mined, and the resulting slabs of salt exported by camel, by nomadic Afars who are the nearest thing the depression has to permanent inhabitants. + +Dallol, appropriately, means disintegration in Afar. For this is a place where Earth’s crust is, indeed, disintegrating. The triangle sits at the convergence of three tectonic plates, which are slowly separating. A glance at the map shows that, were the whole triangle to flood (not possible at the moment, because not all of it is currently below sea level), the African and Arabian coasts would run parallel, as they do farther north along the Red Sea. That sea is an incipient ocean. The continents either side of it are being pushed apart by basaltic eruptions along a line that will, in millions of years’ time, form a mid-ocean ridge. + +The Danakil is geologically a part of the ocean floor because it is underlain by this erupted basalt, rather than by granitic continental rocks. It is also close enough to the infant ridge to be volcanically active. Rising magma heats the area’s groundwater, which wells up—dissolving salt, potash and other minerals from the rocks it travels through—to emerge as hot springs. The water then evaporates, leaving crusty formations (see picture) coloured both by minerals like iron and copper, and by such algae and bacteria as can survive the salinity. The result, to human eyes, is surreal. + +It is also scientifically interesting. Many who speculate about life’s origin think hot springs were involved. The dissolved minerals and gases these springs eject provide chemical possibilities for fuelling living creatures that are independent of the photosynthesis which drives modern biology. As a consequence, underwater springs of this sort team with life adapted both to the chemistry and to the temperature. + + + +If the speculators’ line of thinking is correct, these “extremophile” organisms may once have dominated life on Earth, but those of them that now live deep in the ocean are hard to collect. In Danakil, collecting them is easy—at least, it is once you have made the journey there to do so. + +And some have. Earlier this year Felipe Gómez Gómez of the Astrobiology Centre in Madrid led an expedition to the Dallol, and he plans to return in the winter. Just as, in the 19th century, biologists scoured the tropics for new species of animal and plant, so Dr Gómez Gómez is scouring them for microbes. Whether he will find within his discoveries clues to life’s origins on Earth, and thus some indication of the likelihood it has emerged on other planets, too, remains to be seen. In the meantime, it can be said with reasonable confidence that places like Danakil are about as otherworldly to human eyes as it gets. + + + + + +Cyber-security + +Crash testing + +Recent attacks on the internet could be a prelude to far worse ones + +Oct 29th 2016 | From the print edition + + + +“SOMEONE is learning how to take down the internet.” This was the headline of a blog post Bruce Schneier, a noted cyber-security expert, wrote in mid-September. It looked prescient when, on October 21st, Dynamic Network Services (Dyn), a firm that is part of the internet-address system, was disrupted by what is called a “distributed denial of service” (DDoS) attack. (Essentially, a DDoS floods servers with requests until they can no longer cope.) For hours, hundreds of sites were hard to reach, including those of Netflix, PayPal and Twitter. + +The attack on Dyn was only the latest in a string of similar ones. On September 20th, for instance, the victim was Brian Krebs, an American journalist who often reports on internet criminals. The server where he hosts his blog became the target of one of the largest DDoS attacks on record (it was bombarded with data equivalent to almost half a percent of the internet’s entire capacity). Most of the other recent digital assaults, however, were more discerning—as if the attacker “were looking for the exact point of failure,” Mr Schneier wrote in his blog post. + +It is not clear who the attackers are, although security analysts suspect they are either Chinese or Russian. At any rate, all the attacks used the same software, called Mirai, whose source code has been leaked online. It mainly scours the internet for devices such as webcams, digital video recorders and home routers in which easy-to-guess factory-set passwords (“12345” or even “password”) have not been changed. The program then turns those it can gain access to into a huge army of digital slaves that can be directed to inundate targets with requests. Shortly after the attack on Dyn, XiongMai Technologies, one of the biggest makers of webcam components, announced it would recall some products and provide owners of others with software updates to improve security. + +This may help, but not much can be done in the short run other than to appeal to owners of internet-connected devices to change their passwords. To fix the problem properly, Mr Krebs argued in a blog post, the makers of such devices, collectively called the “internet of things” (IoT), would all have to recall vulnerable systems and change their careless approach to security. Since this is unlikely to happen, regulators may have to step in. Indeed, the European Commission is already working on legislation to require better security in IoT devices. Lawsuits against negligent device-makers would also help. + +As for the goal of the attacks, it could be something other than to take down the internet. Many fret that such virtual weapons could be turned to full blast just before or on November 8th, when America will elect a new president and House of Representatives, and also many senators and state governors. A DDoS could not paralyse voting machines, for hardly any of them are connected to the internet. But striking all kinds of websites, from those of online media to the government’s, could spread chaos—and the feeling that the elections are somehow being “rigged”. + + + + + +Schiaparelli’s end + +Flash, bang, wallop, what a picture + +A Mars probe’s impact crater is discovered + +Oct 29th 2016 | From the print edition + + + +THE dark splodge near the top of the enlarged part of this picture of the Martian surface, taken on October 20th by Mars Reconnaissance Orbiter, an American satellite circling the planet, is thought to be the crash site of Schiaparelli, a European and Russian probe that arrived there on October 19th, but with which contact was lost during its descent to the planet’s surface. The white speck near the bottom is likewise believed to be the probe’s jettisoned parachute. + +What went wrong is not clear. Communication with the craft ended 50 seconds before its scheduled touch down. Data transmitted in advance of this loss of contact suggest Schiaparelli jettisoned both its parachute and its heat shield early, and fired its retro-rockets for only three to five seconds, rather than the 30 seconds that had been planned. It probably hit the ground at more than 300kph (200mph). + +Since Schiaparelli’s main job was to test the landing gear for a future rover its failure is not, as it were, a complete write-off. It has at least shown that work needs to be done before a more expensive piece of equipment is hazarded in this way. Meanwhile, its companion on its journey to Mars, a satellite called the Trace Gas Orbiter, seems to be working well. + + + + + +Dealing with autism + +First, treat the parents + +Turning mothers and fathers into therapists helps autistic children + +Oct 29th 2016 | From the print edition + + + +AUTISM may bring a lifetime of disability and difficulty to the most severely afflicted. As children, they often struggle to communicate, are anxious in situations unproblematic for anyone else and may behave in repetitive ways that disturb others. As adults, they may be shunned—or even ostracised. + +Medical science has little to offer. Drugs have limited effects, and although there have been claims for many years that therapies aimed at training a child directly to behave in desirable ways (known as behavioural intervention) can work, the evidence they actually do so is poor. All this, observes Tony Charman, a clinical psychologist at King’s College, London, leaves parents of autistic children vulnerable to false promises. Only this month, for example, a four-year-old boy had to be taken to hospital in Britain after being subjected to a bizarre array of treatments described as “holistic medicine”. + +Incidences of such quackery should be reduced by a study published in this week’s Lancet by Dr Charman and his colleagues. The “Pre-school Autism Communication Trial” (PACT) attempted to answer, once and for all, the question of whether behavioural intervention in autism works—and, in particular, whether it does so in the most severe cases. It is the largest such trial yet attempted, and the one with the longest period of follow up. Its answer was: yes, it does. The PACT team found not only that, if carried out correctly, behavioural intervention has an immediate effect, but also that this effect persists. Even six years after therapy, autistic children could communicate better and had a lower level of repetitive behaviour than did a control group of their peers. + +The crux of PACT was the nature of the intervention employed. This was designed to train not the children but their parents. The idea was to alter parental behaviour in ways that would then go on to encourage desirable changes in offspring. Specifically, PACT’s intervention trained parents how to communicate with an autistic child. This is rarely a problem with “neurotypical” children, who provide plenty of opportunities for engagement. But autistic children can be difficult to engage with, and their attempts at communication can be so subtle that parents need assistance in detecting them, and advice about how to respond appropriately. + +The approach used by PACT involved parents being videoed while playing with their children. Those videos were then replayed to the parents under the tutelage of a speech therapist, who pointed out moments, which might not otherwise have been obvious, when children were attempting to communicate. Even just turning towards a parent may be such an attempt. Having seen when to respond, parents then learned how to do so in the way a therapist would, in order to draw the child out. Parents are thus taught to become therapists themselves. + +Family values + +This therapy, encouragingly, is neither invasive nor intensive nor costly. It involves sessions once a fortnight for six months, and then a further six sessions, once a month. The results, though not startling, are encouraging. In families who were coached, the percentage of children with severe symptoms (such as having difficulties speaking and learning things) fell from 55% to 46%. In those who formed the control group, and were not so coached, they actually rose—from 50% to 63%. + +The study adds to evidence that therapy delivered by parents is helpful for a range of childhood mental-health conditions, including aggression and anxiety. Yet, in the case of autism, some crucial scientific questions remain to be answered. One is whether the age of intervention matters. A second is whether this approach might help less severely afflicted children than those chosen for the study. And a third is whether a similar approach, taught to teachers rather than parents, might permit the method to be extended to schools. + +Perhaps the greatest unanswered question, though, is practical. It is how such a therapy might be adopted swiftly and widely. Those involved in the PACT study have already made a start on this. They are creating training materials to be posted on their website, so that therapists who work with autistic children can adapt their methods accordingly. With luck, those methods will spread, and the lives of such children will improve accordingly. + + + + + +Shark behaviour + +Waste not, want not + +One fish’s excretions are another’s vital resource + +Oct 29th 2016 | From the print edition + +Is that ammonia I sniff? + +AMMONIA is as repulsive to most marine animals as it is to land-lubbing ones—and for good reason. It is extremely toxic. But there is an exception. Far from being repelled by ammonia, sharks are actually attracted to it. The longtime assumption has been that this is because it is a waste product, voided into the water by fish and other creatures, that signals the presence of potential prey. But Chris Wood and Marina Giacomin of the University of British Columbia, in Vancouver, think there may be more to it than this. As they describe in the Journal of Experimental Biology, they suspect that for sharks, ammonia is itself a useful resource. + +All animals make ammonia. It is a compound of nitrogen and hydrogen produced by the breakdown of amino acids, the building blocks of proteins. Marine creatures can flush it directly into the sea (fish do so through their gills), since it is soluble in water. Land animals often add carbon and oxygen to convert it into urea, which is far less toxic, and store the result in solution in a bladder, for periodic evacuation. Sea creatures can make urea too, though—and in sharks this molecule, which they synthesise in their gills, plays a crucial role in stabilising the salinity of their tissues. + +Dr Wood and Ms Giacomin knew from the work of others that sharks forced to swim in water containing unnaturally high concentrations of ammonia absorb the chemical into their gills, convert it into urea and then expel that urea back into the water. The presumption was that this was an anti-poisoning mechanism. That, though, is a slightly odd idea. In the wild, unconfined by an experimenter’s tank, it would surely be simpler and safer for a shark to swim away from the dangerous area and avoid the problem altogether. The two researchers therefore wondered if what had been seen in these previous experiments was really an accidental consequence of something else. Given urea’s role in shark salinity-stabilisation (a role which it does not play in other groups of fish), they wondered if the animals’ eagerness to find water with lots of ammonia in it was as much to do with replenishing their urea supplies as with locating prey. They therefore decided to run some experiments of their own. + +To this end, they exposed ten Pacific spiny dogfish (a type of small shark easily maintained in the laboratory) to ammonia concentrations ranging from 100 micromoles per litre (µmol/l), a level commonly found in the wild, to 1,600 µmol/l, an unnaturally high level, while monitoring the water’s chemistry closely. + +Whatever the initial level of ammonia, they found, that substance’s concentration began declining almost as soon as the sharks were put into the tank. The animals were, indeed, absorbing it. They were not, though, automatically excreting the resulting urea. Levels of this in the water rose only when the dogfish were exposed to ammonia concentrations of 800 µmol/l or more. And a closer look at the animals’ gills and blood confirmed that they were retaining urea. + +All this makes perfect sense. The importance of urea to shark physiology means they have to make it from something. Amino-acid breakdown, the alternative source of its central element, nitrogen, requires otherwise-valuable proteins. Calculations performed by Dr Wood and Ms Giacomin suggest dogfish swimming in ammonia-rich waters would be able to scavenge from those waters almost a third of the nitrogen they need to make urea. That adds up to a tidy saving in protein. So, sharks may well be driven by appetite to swim towards places where their prey have been releasing large amounts of waste ammonia. But, contrary to past theories, the appetite that takes them there may really be for the waste itself. + + + +Books and arts + + + + + +Eleanor Roosevelt: Ahead of her time + +Europe’s single currency: France v Germany + +American fiction: Dope and the doppelganger + +Modernist art from Mexico: Evolutionary tales + +Johnson: Lexicography unbound + + + + + +Eleanor Roosevelt + +Ahead of her time + +Two biographers reassess a woman who towered over the 20th century + +Oct 29th 2016 | From the print edition + + + +Eleanor Roosevelt: The War Years and After, 1939-1962. By Blanche Wiesen Cook. Viking; 670 pages; $40. + +Eleanor and Hick: The Love Affair That Shaped a First Lady. By Susan Quinn. Penguin; 404 pages; $30. + +IT IS tempting to think that in a different era, Eleanor Roosevelt could have become president of the United States. Widely loved, the longest-serving first lady was on the right side of history on virtually every subject, including civil rights, acceptance of European refugees and the need to end empires. She was fierce in support of her causes. Impatient as well as impassioned, she tirelessly lobbied her husband, Franklin Delano Roosevelt (FDR), to embrace her projects too. Theirs was “one of history’s most powerful and enduring partnerships”, her biographer Blanche Wiesen Cook explains. “She understood his needs, forgave his transgressions, buried her jealousies, and embarked on her own independent career…FDR encouraged her independence and when he silenced her did so for reasons of state.” + +The third and final volume of Ms Cook’s life of Eleanor Roosevelt is concerned mainly with the second world war years. Eleanor, like her husband, was early to see the clouds forming in Europe, and together they tried to coax the American public to prepare for involvement. It was a difficult task. Isolationism had taken hold, and when the war in Europe began, some Americans viewed it, as one union official said, as being “between two thieves”. + +Eleanor campaigned for economic and social equality. How, she questioned, could America promote democracy abroad while stifling minorities at home? As the Nazi horrors became clear, she worked in private on Franklin, and in public through her near-daily newspaper column, “My Day”, urging that refugees from abroad be let in to America. “People are not throwing Americans out of work to employ refugees, though isolated cases of this might be found,” she wrote in 1939, sounding a theme that resonates today. + +As the war progressed, FDR sought Eleanor’s counsel less frequently; he didn’t want to be accused of running a “petticoat government”. More significantly, his ill health, especially his worsening heart problems, reduced his tolerance for argument. So as Eleanor pushed her causes—ending discrimination against black troops, for example, or promoting low-cost housing for workers in defence industries—he tried to dodge. Courting Winston Churchill, the president sought to contain Eleanor’s criticism of Churchill’s relentless imperialism. To her daughter Anna, Eleanor described Churchill as “lovable and emotional and very human, but I don’t want him to write the peace…” + +Through decades of exhaustive research, Ms Cook, a history professor at John Jay College in New York, has emerged as the voice of authority on Eleanor Roosevelt. Yet in isolation, this final volume offers only occasional glimpses into the complex bond between the first couple. Both signed their letters with endearments like “much love” and depended on each other for counsel, yet romance seemed long gone. “There is no fundamental love to draw on, just respect and affection,” Eleanor wrote in one letter to a friend. Forthright about her loneliness, she turned to other deep friendships for sustenance. + +In “Eleanor and Hick” Susan Quinn focuses on the first lady’s relationship with Lorena Hickok (known as Hick), a journalist with the Associated Press. Assigned to cover the first lady, Hick fell in love instead, and Eleanor seems to have reciprocated. They shared difficult childhoods. Eleanor’s emotionally distant mother had called her “Granny” as a child because she was so serious; Hick had been beaten by her father and the family moved constantly to try to escape poverty. Both craved love. Eleanor had been forced to turn outside her marriage in 1918 after uncovering an affair between her husband and her secretary. + +Hard-charging yet fragile, Hick drew out the emotionally reserved Roosevelt. Together they worked to help those needing jobs and food as the Great Depression tightened its grip. Their letters, covered extensively as well in the earlier volumes of Ms Cook’s biography, are extraordinarily expressive: “Oh! How I wanted to put my arms around you in reality instead of in spirit,” Eleanor wrote to Hick in 1933, not long after FDR took office. “I went and kissed your photograph instead and the tears were in my eyes.” Hick’s letters contained equal passion. Once, after a long time apart, she wrote, “I remember your eyes, with a kind of teasing smile in them, and the feeling of that soft spot just north-east of the corner of your mouth against my lips.” + +Ms Cook’s book essentially ends with FDR’s death in April 1945, with just 30 pages of “epilogue” devoted to the final 17 years of Eleanor’s life—years in which she became unshackled, so to speak, from her role as a politician’s wife. During that time, despite the low expectations of male delegates at the founding of the United Nations (UN), she was the driving force behind the Universal Declaration of Human Rights, a UN document that endures to this day. Across 30 articles, it lays out fundamental principles, including that every human being deserves freedom and must not be tortured or arbitrarily arrested. + +Eleanor’s increasingly busy life meant she had limited time. So Hick makes only brief appearances in Ms Cook’s final volume, despite living in the White House during much of the war. It is difficult to understand the full scope of the relationship; Hick burned some of the letters from the most intense period of their involvement, and as Ms Cook likes to say, “I do not know what two people do when they are alone together.” What is clear is that Eleanor Roosevelt, a woman who could never find the lifelong loving relationship to salve her inner loneliness, instead shared her love with those closest to her—and with the world at large—as she strove unceasingly to make it better. + + + + + +Europe’s single currency + +France v Germany + +The founders of the euro have fundamentally different ideas about how the single currency should be managed + +Oct 29th 2016 | From the print edition + + + +The Euro and the Battle of Ideas. By Markus Brunnermeier, Harold James and Jean-Pierre Landau. Princeton University Press; 440 pages; $35 and £24.95. + +THE euro crisis that first blew up in late 2009 has revealed deep flaws in the single currency’s design. Yet in part because it began with the bail-out of Greece, many politicians, especially German ones, think the main culprits were not these design flaws but fiscal profligacy and excessive public debt. That meant the only cure was fiscal austerity. In fact, that has often needlessly prolonged the pain. Later bail-outs of countries like Ireland and Spain showed that excessive private debt, property bubbles and over-exuberant banks can cause even bigger problems for financial stability. + +That is one early conclusion of “The Euro and the Battle of Ideas”, by three academics from Germany, Britain and France. They describe thoroughly the watershed moments of the crisis, how power shifted to national governments (especially in Berlin) and the roles played by the IMF and the European Central Bank (ECB). They blame euro-zone governments for failing to sort out troubled banks more quickly, for not realising that current-account deficits matter when public debts are in effect denominated in a foreign currency, for not making the ECB into a lender of last resort and for not pushing through structural reforms in good times. + +Such complaints are often heard, not least from Britain and America. But more originally, the authors find the roots of these failings not in stupidity but in clashing economic ideas. Simplifying a bit, they focus on Germany and France. The Germans like rules and discipline, and fret about excessive debt and the moral hazard created by bail-outs. The French prefer flexibility and discretion, and worry about large current-account surpluses and the lack of a mutualised debt instrument. The Germans favour budget austerity even in hard times; the French favour fiscal stimulus on Keynesian lines. German policymakers are often lawyers, French ones more frequently economists. + +Examples of such ideological clashes run throughout the book. They range from the design of the Maastricht treaty and the later stability and growth pact to the constitution of the ECB and the application of the fiscal compact. Throughout the crisis the French tended to see bank or national-debt woes as cases of illiquidity whereas the Germans usually viewed them as signs of insolvency. Similar divides have emerged in rows over Eurobonds (backed by France, opposed by Germany) and over accountability and democratic control at supranational level (backed by federal Germany but not by centralised France). + +As the authors note, such differences in ideas are not party-political (they persist regardless of whether the two countries have centre-left or centre-right governments). Nor, interestingly, are they fixed forever in history: in the 19th century, and even more in the 1930s, it was France, not Germany, that favoured rigid rules, big surpluses and the discipline of the gold standard. Only after 1945 did that change. + +The authors end on an optimistic note, with proposals for a Europe-wide insurance mechanism built on a form of Eurobonds designed to please both France and Germany. But their analysis might equally lead to pessimism. The euro crisis is far from over, with Greece needing more debt relief, Italy mired in banking problems and chronic slow growth and high unemployment almost everywhere. Britain’s Brexit vote will not help the mood, even if it was greeted by some as one more reason to push towards deeper fiscal and political union in the euro zone. + +The trouble is that, as the book shows, France and Germany still have huge differences over the direction of travel. The French want debt mutualisation and more fiscal flexibility first, and are only then ready to talk about more discipline and deeper integration. The Germans are the reverse, pushing for discipline and integration before being ready even to think about debt mutualisation. After next year’s elections in both countries, such deep differences are likely to cause continuing problems for the single currency. + + + + + +Paul Beatty’s fiction + +A Swiftian hero + +The first American winner of the Man Booker prize + +Oct 29th 2016 | From the print edition + + + +The Sellout. By Paul Beatty. Farrar, Straus & Giroux; 304 pages; $26. Oneworld; £12.99. + +THE narrator of Paul Beatty’s fourth novel, “The Sellout”, is Bonbon, a black man who grows artisanal watermelons and marijuana in southern California. One of the finer strains of weed that he develops is called Anglophobia. The joke, however, is now on the author. Earlier this year “The Sellout” was shortlisted for the Bollinger Everyman Wodehouse prize, a British award that rewards humour in fiction. On October 25th, Mr Beatty became the first American to win the Man Booker prize for fiction. + +Born in 1962, Mr Beatty won his initial literary award in 1990 while making his name as a performance poet, both at festivals and on television. After publishing two volumes of poetry, his debut novel, “The White Boy Shuffle”, was described by the New York Times as “a blast of satirical heat from the talented heart of black American life”. “Slumberland”, his third novel, was about a black American DJ in Berlin. + +In 2006 Mr Beatty went on to bring out “Hokum”, an anthology of African-American humour. In the introduction he wrote that he had read the canonical black American writers. While he welcomed their rhetoric, he said he came to miss “the black bon mot, the snap, the bag, the whimsy upon which ‘fuck you’ and freedom sail. It was as if the black writers I’d read didn’t have any friends.” The book included contributions from Toni Cade Bambara and Henry Dumas, but also pieces by writers not known for being funny or even writers at all, including Mike Tyson and the Reverend Al Sharpton. Mr Beatty ended the introduction thus: “I hope ‘Hokum’ beats you down like an outclassed club fighter…each blow plastering that beaten boxer smile on your face, that ear-to-ear grin you flash to the crowd to convince them that if you’re laughing, then you ain’t hurt.” + +The laughter and the hurt are both wholly there in “The Sellout”. Bonbon, the hero, lives in Dickens, a fictional town on the southern outskirts of Los Angeles that is so run down it has been excised from the map to save California from embarrassment. In the novel’s opening pages, Bonbon’s hands are cuffed and crossed behind his back as he awaits the start of his trial in the Supreme Court. Bonbon has been indicted for trying, with the help of an old man called Hominy, to reinstate slavery and segregate the local high school as a way of bringing about civic order. + +What follows is a filling-in of Bonbon’s back story, starting with his upbringing by his single father, a fixated social scientist who carries out experiments on the boy and is eventually shot by the police. Bonbon pulls his father’s body up onto the horse he keeps on his urban farm and plods home. The novel’s first 100 pages are searing; no racial or cultural stereotype is safe from Mr Beatty’s satirical eye. Tiger Woods, Bill Cosby, Oreo cookies, cotton-picking and penis size are all taken out and given a shaking. As for Stevie Wonder, Bonbon says his Latin motto should be, “Cogito, ergo Boogieum. I think, therefore I jam.” + +“The Sellout” took Mr Beatty more than five years to finish. “I hate writing,” he admitted as he accepted a cheque for £50,000 ($61,000) from the Duchess of Cornwall at a dinner in London where the Man Booker winner was announced. “This is a hard book,” he went on. “It was hard for me to write, I know it’s hard to read.” The five judges were not put off: “This is a book that nails the reader to the cross with cheerful abandon,” Amanda Foreman, the chair of the panel, told the dinner guests. “But while you are being nailed you are being tickled.” + +This article appeared in the Print Edition with the headline: Dope and the doppelganger + + + + + +Modernist art from Mexico + +Evolutionary tales + +A ground-breaking art show explores what it meant to be Mexican in the mid-20th century + +Oct 29th 2016 | PHILADELPHIA | From the print edition + + + +IN 1927 John Dos Passos, an American writer and artist, returned from a long stay in Mexico where he had been soaking up the vibrant cultural scene south of the border. Reporting on what he found in an article for the New Masses, he proclaimed: “Everywhere the symbol of the hammer and sickle. Some of it’s pretty hasty, some of it’s garlanded tropical bombast, but by God, it’s painting.” + +“Paint the Revolution: Mexican Modernism 1910-1950”, a fascinating exhibition that has just opened at the Philadelphia Museum of Art and will travel to the Museo del Palacio de Bellas Artes in Mexico City next year, takes its name from that essay and largely confirms the writer’s judgment. The kind of painting that the novelist had in mind is epitomised by Diego Rivera’s “Sugar Cane” (1931, pictured), a scene of plantation life filled with tropical scenery and, yes, plenty of bombast. Much of the work in the show preaches and hectors, stokes nationalist fervour and promotes Marxist ideology. But most of it has such gusto, such sense of purpose and a conviction that images well made and well intentioned can change the world for the better, that one can forgive the occasional heavy-handed messaging. + +As is inevitable with any survey of Mexican art from the first half of the 20th century, “Paint the Revolution” is dominated by the muralists who rose to international fame in the years following the decade-long turmoil that ended in 1920. Put to work by a reformist government that was anxious to heal the wounds of the recent past, these artists participated through vast mural cycles combining indigenous imagery with socialist agitprop in the great patriotic project of rebuilding the nation. + +The “big three”—Rivera, José Clemente Orozco and David Alfaro Siqueiros—are well-represented with paintings that reveal powerful narrative styles that were at once both passionate and didactic. Typical of the way in which the language of modernism was harnessed for polemical ends is Orozco’s “Barricade” (1931), a painting in which the violence of revolutionary struggle is enhanced by bold simplification and spatial compression borrowed from Cubism and Expressionism. Of course the works that made these men famous are the mural cycles in buildings across Mexico and the United States. They cannot travel, so video installations in the museum galleries provide an experience that is the next best thing to being there. + +“Paint the Revolution” enriches this familiar tale, showing how, for instance, the cause of nation-building spurred experimentation in photography and printmaking, and even transformed arts education. Crucially, the show provides a more nuanced understanding of the age, puncturing the myth that everyone was marching in lockstep towards a common goal, and exposing the contradictions and cross-currents that characterised this most innovative period. + +One group, known as the Estridentistas, rejected the impulse to fall back on traditional imagery. Instead, they tried to hitch Mexican modernism to the wider avant-garde by imitating the promotional techniques of Dada and Futurism. Also running against the grain were the Contemporáneos, a group associated with a literary magazine of the same name. Whereas the muralists proclaimed, “[Our] aesthetic aim is to socialise artistic expression, to destroy bourgeois individualism,” the Contemporáneos tried to carve out a private space where individual sensibility could endure. Roberto Montenegro’s “Portrait of Xavier Villaurrutia” portrays an elegant, dandified figure who is the polar opposite of the macho, chest-thumping strivers who populate the work of the muralists. + +What all these artists share, and what gives the period its peculiar urgency, is their common search for identity. Whether making works for public consideration or private consumption, each of them wrestled with what it meant to be Mexican in the wake of civil war and in the aspirational decades that followed. + +Nowhere is the fraught question of identity more movingly explored than in the work of Frida Kahlo. All her life she toiled in the shadow of Rivera, her larger-than-life husband, and for decades after her death in 1954 she remained a forgotten figure. It was not only the prejudices of a patriarchal society that were responsible for her obscurity, but the fact that her idiosyncratic, even neurotic, paintings did not fit the heroic story the nation preferred to tell about itself. Kahlo’s approach is intimate and introverted. + +The gemlike “Self-Portrait on the Border Line Between Mexico and the United States” is as topical on the subject of national identity as any of Rivera’s murals, but Kahlo’s approach is meditative and confessional. Caught between two worlds, she appears frail, vulnerable and out of place in her Sunday best. Her patriotism is heartfelt but tinged with sadness, and even a bit of irony. The Mexican flag held tentatively in her left hand is mocked by the cigarette she holds in her right. This tiny work speaks as eloquently about an exciting but anxious age as the booming voices that surround it. + +“Sugar Cane” Fresco by José Diego María Rivera, 1931 + +© 2014 Banco de México Diego Rivera Frida Kahlo Museums Trust, Mexico, D.F. / Artists Rights Society (ARS), New York + + + + + +Johnson + +Lexicography unbound + +Dictionaries have found their ideal format + +Oct 29th 2016 | From the print edition + + + +THERE is something comforting in a dictionary: right angles, a pleasing heft, reassuringly rigid covers. A new one is tight, a bright sheaf of discoveries yet to be made; an old one is a musty but trusted cosy friend. A good dictionary is the classic school-leaving gift from ambitious parents to their children. A great dictionary might even be passed on through several generations. + +But maybe the most reassuring thing about a dictionary is its finite nature. A small dictionary contains all the words you need to know, and a really big one seems to contain all the words in existence. Having one nearby seems to say that the language has boundaries, and reasonable ones at that. + +It might surprise dictionary-owners to know that most lexicographers do not think of their subject in this way at all. The decision to impose a page-count on a dictionary is in fact a painful one. Definitions can almost never cover the full complexity of a word, even in huge dictionaries. And even more painful is leaving words out simply for reasons of space. + +Many readers think that something is a “real word” if it’s “in the dictionary” (raising the question of which of the hundreds of English dictionaries they mean). But lexicographers don’t like to regard themselves as letting the trusty words in and keeping the bad guys out. Erin McKean, who left traditional lexicography to found an online dictionary, Wordnik, explained why she chose a format that could allow virtually limitless entries: “I don’t want to be a traffic cop!” + +Lexicographers prefer to think they are a different kind of cop: the kind in the title of John Simpson’s “The Word Detective”, published in October, a memoir of his time as editor-in-chief of the Oxford English Dictionary (OED). Mr Simpson’s lexicography career began in the 1970s, scouring books for example usages and writing them down on notecards. (The original OED was published in alphabetically consecutive volumes between 1884 and 1928; Mr Simpson worked on the supplement of new words and meanings.) In 1982 a new boss shocked the then-editor with a plan to computerise the dictionary’s ways: both the lexicographic work itself, with digital research files, and its outcome, an OED on compact disc. But that wasn’t the final shape either: by the end of Mr Simpson’s tenure in 2013, the OED’s flagship product was a website with entries richly linked to one another and updated at regular intervals. + +A dictionary is really a database; it has fields for headword, pronunciation, etymology, definition, and in the case of historical dictionaries like the OED, citations of past usages. Its natural home is one that allows the reader to consult it in any way that makes sense. Look up a single word. Or look up all the citations by a single author. Or those which share a root: only such a tool can tell you that the OED knows of 1,011 words ending in –ology, against 508 with –ography. + +When a new word like “grok” appears or the meaning of a word like “marriage” expands, as it has recently, readers need not wait for years for a new print dictionary. Once the new word or meaning seems here to stay, it can be added in an instant. The OED is conservative: a rule of thumb is to wait until a word has hung on for at least ten years. But the principle is to catch all of the language in use, and not merely to admit the good words, whatever those are. + +Ten years is still a long time. Lexicographers, aware that people still look to them for guidance on what is a “real” word and what isn’t, whether or not they like this role, can still be conservative. Those who long for a conservative dictionary should seek one, but this is not the only way of doing things. “Green’s Dictionary of Slang” first appeared as a chunky three-volume work of historical lexicography in 2010, with over 100,000 entries. But Jonathon Green did not hang up his hat when the books hit the shelves; he went on to add an online edition that was to be continually updated. + +At the free-for-all end are the online and completely crowdsourced dictionaries from Wiktionary to Urban Dictionary. Whatever one may think of the latter—which includes terms of rank racist and misogynist abuse as well as a broad fare of drug- and sex-related terms—it is useful, allowing oldies to find out what their kids are talking about. That may be an inversion of the old dictionary, the graduation present—but discovery, in whatever format, is after all what dictionaries are for. + + + +Obituary + + + + + +Andrzej Wajda: Obituary: Conscience-keeper + + + + + +The conscience keeper + +Obituary: Andrzej Wajda died on October 9th + +Poland’s greatest film-maker was 90 + +Oct 29th 2016 | From the print edition + + + +THE life’s work of Andrzej Wajda was to tell Poles forbidden truths about their country and explain simpler ones to foreigners. Neither should have been necessary. Nazis and communists smothered Poland in fear and lies. The country of Chopin, Conrad and Copernicus was cut off from the European cultural mainstream, to be patronised, misunderstood and forgotten. + +He would have loved to make films about something else, to have dumped the tragic national themes and their well-worn symbols—sabres, white horses, red poppies—for something more exotic, such as “a handful of sexual symbols from a Freudian textbook”. But that was a luxury for film-makers in happier countries. + +Since pictures were harder to censor than words, he set himself to making films that would evade the official scissors, giving his compatriots a chance to see, think and breathe freely, at least in the darkness of the cinema. At first, his work avoided direct confrontation. Instead he stuck to the rules while quietly subverting them, with bleak, anti-heroic films that could be seen as stories about people, not dangerous ideas. A favourite image in the early work was a lit match burning away a glass of alcohol: nothing to the censors but, to him, idealism evaporating in the war. + +The closing scene of his greatest early work, “Ashes and Diamonds” (1958), showed an anti-communist guerrilla dying on a rubbish dump after botching an assassination—an image as powerful as those of Goya or Delacroix. That grim end, he knew, would make the censors glad, but audiences would ask themselves: “What kind of system is this that forces such a sympathetic lad to die on a garbage heap?’ In an earlier film, “Kanal” (1956), young soldiers in the Warsaw Uprising of 1944 perished hopelessly in the city’s sewers. He did not say explicitly that the Soviet Red Army callously stood by while Nazis crushed the flower of the resistance—but no Pole needed reminding of that. + +Double vision + +As a young man he went to art school in Cracow, and film-making remained a second-choice career. Film, for him, had to be based on painting, especially the tortured victim-figures of his idol Andrzej Wroblewski, who had recorded the Nazi occupation. Mr Wajda’s 40 films became his own great mural of Polish misfortunes. And since the good Lord had given him two eyes, one to look into the camera and the other to notice what was going on around him, he managed to make history, too. His work subtly undermined communism’s grip on Polish life; audiences could see that the system was based on lies, and could be outwitted. + +Only after martial law was declared in 1981 did the authorities crack down. Mr Wajda’s “Man of Iron”, about the Gdansk shipyard strike of 1980, had just won the Palme d’Or at Cannes, and he was increasingly caught up in the Solidarity movement; 22 years later he made a biopic of his close friend Lech Walesa, its founder. The prize saved him from prison, but the government shut down his production company. Or so it thought. In secret he then made “Interrogation”, a nightmarish exposé of Stalinist brutality, regarded as the most anti-communist film ever made in Poland, and not shown publicly until 1989. + +Pigeonholing him was hard. His films were realistic and romantic, classic and innovative; his baroque leanings became starker as he matured. Little of himself was allowed to show. Only “The Birch Wood” (1970) was an indulgence, and he felt guilty to be out in nature, watching leaves unfurl, while Poland was dying; but lyricism could leaven the relentlessly political. + +Optimistic by nature, a man of winning smiles, he still firmly expected to die in the communist system, and was astonished when freedom came. Modest in manners, he was also utterly confident. It was not arrogance, but a statement of fact, when he said he was the only director who could make a film about the “unhealed wound” of Katyn, the secret Soviet massacre in 1940 of 20,000 Polish officers. His father Jakub, a cavalry officer, was one of those murdered; he never forgot his mother’s desperate search for news of her missing husband. Under communism the topic had been taboo, for the butchery was followed by a lie: that it had been the work of the Nazis. + +After 1989, when Poles began to gorge on Western culture, Mr Wajda would not hear a word against the American films he so admired. But he worried that Polish cinema, “born only to speak about the disasters of our nation”, was now unfashionable and unnecessary. He fretted, too, that Western audiences found his subject matter “as antediluvian as the battle for workers’ rights in England in the time of Karl Marx”. Groundless fears: four of his films were nominated for Academy Awards. + +Among them was “Katyn”. The harrowing film was a great success, especially as it coincided with fresh worries about Russian mendacity and menace. History may sometimes seem optional in Poland; geography shapes its destiny. As he received an honorary Oscar in 2000, Mr Wajda admitted how distant and unknown Poland was; but his work could not stray from it, nor would he happily make films anywhere else. “I think I have things to say,” he declared once. “But they are only important if I say them from Poland.” + +This article appeared in the Print Edition with the headline: Obituary: Conscience-keeper + + + +Economic and financial indicators + + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Doing business + +Markets + + + + + +Interactive indicators + +Oct 29th 2016 | From the print edition + + + + + +Output, prices and jobs + +Oct 29th 2016 | From the print edition + + + + + +Trade, exchange rates, budget balances and interest rates + +Oct 29th 2016 | From the print edition + + + + + +The Economist commodity-price index + +Oct 29th 2016 | From the print edition + + + + + +Doing business + +Oct 29th 2016 | From the print edition + + + +A record number of economies have adopted reforms to make “doing business” easier, according to the latest World Bank report. New Zealand, which has the fewest number of procedures and shortest time required to start a business, ranks highest this year, overtaking Singapore. It also ranks first for dealing with construction permits, registering property and providing access to credit. But for paying taxes it ranks 11th out of 190 countries. Businesses there take on average 152 hours a year preparing and paying taxes—the global average is 250 hours. Brazil ranks 123rd overall, and red tape makes it a taxpayers’ nightmare. Firms in the United Arab Emirates spend a mere 12 hours a year on their tax returns. + + + + + +Markets + +Oct 29th 2016 | From the print edition + + + + + +Table of Contents + +The Economist + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Canada’s example to the world: Liberty moves north + + + + + +The Bank of England: Hands off + + + + + +The International Criminal Court: Back it, join it + + + + + +Business in America: Vertical limit + + + + + +Investment banks: Too squid to fail + + + + + +Letters + + + +On globalisation, Thailand, new drugs, Bill Clinton, tourism: Letters to the editor + + + + + +Briefing + + + +Canada: The last liberals + + + + + +United States + + + +Trump and Putin: My brilliant friend + + + + + +From DC with love: Naming without shaming + + + + + +The Affordable Care Act: Crunch time + + + + + +The campaigns: On the trail + + + + + +The presidential election: Making a U-tahn + + + + + +Election brief: Education: Little changes + + + + + +Lexington: Meet Kamala Harris + + + + + +The Americas + + + +Venezuela: Fighting their chains + + + + + +Brazilian sport: Something new to cheer + + + + + +Nicaragua: Fourth time unlucky + + + + + +Bello: Ciudad Juárez trembles again + + + + + +Asia + + + +India’s Muslims: An uncertain community + + + + + +Bailing out Mongolia: A wrong direction in the steppe + + + + + +Influence-peddling in South Korea: Gift horse + + + + + +Politics in the Maldives: Sibling rivalry + + + + + +Pakistan’s business climate: If you want it done right + + + + + +Banyan: A shrimp among whales + + + + + +China + + + +History: Nihil sine Xi + + + + + +Parking: The other car problem + + + + + +Middle East and Africa + + + +Off-grid solar power: Africa unplugged + + + + + +The International Criminal Court: Exit South Africa + + + + + +African economies: The oil effect + + + + + +Iraq: Tightening the noose + + + + + +Turkey’s intervention in Syria and Iraq: Erdogan’s war game + + + + + +Medical marijuana in Israel: Light-up nation + + + + + +Islamic State’s loss of Dabiq: Apocalypse postponed + + + + + +Europe + + + +Migration in France: The end of an ugly affair + + + + + +Inequality and education: Germany’s Sandernistas + + + + + +Regional inequality: A tale of more than two cities + + + + + +Spanish politics: Back again + + + + + +Energy efficiency: Populism tastes best hot + + + + + +The impact of Brexit: Britain shoots Ireland, too + + + + + +Charlemagne: The age of vetocracy + + + + + +Britain + + + +Brexit and the City: From Big Bang to Brexit + + + + + +Child refugees: Gnashing of teeth + + + + + +The post-Brexit economy: Measuring the fallout + + + + + +Industry in the north-east: Parked + + + + + +Managing globalisation: To the losers, the scraps + + + + + +The Liberal Democrats: Cleared for take-off + + + + + +Technical education: The new three Rs + + + + + +Drugs policy: Qat flap + + + + + +Bagehot: How to be a good bastard + + + + + +Bagehot: Journalist wanted + + + + + +International + + + +Early childhood development: Give me a child + + + + + +Business + + + +AT&T; and Time Warner: Angling for the future of TV + + + + + +Big tobacco: All fired up + + + + + +Tata Group: Mistry exit + + + + + +Companies’ dark pasts: Ghosts in the machine + + + + + +Brazilian business: Out of the gloom + + + + + +The sharing economy: Deflating Airbnb + + + + + +Schumpeter: Jail bait + + + + + +Finance and economics + + + +Investment banking: Rebooting + + + + + +Buttonwood: No Trumps! + + + + + +Digital money: Known unknown + + + + + +Asian deflation: Steel trap + + + + + +China’s growth: The greatest moderation + + + + + +Clean energy v coal: Fighting the carbs + + + + + +Free exchange: Passing the buck + + + + + +Science and technology + + + +Bathymetry: In an octopus’s garden + + + + + +The world’s weirdest place?: Topsy turvy + + + + + +Cyber-security: Crash testing + + + + + +Schiaparelli’s end: Flash, bang, wallop, what a picture + + + + + +Dealing with autism: First, treat the parents + + + + + +Shark behaviour: Waste not, want not + + + + + +Books and arts + + + +Eleanor Roosevelt: Ahead of her time + + + + + +Europe’s single currency: France v Germany + + + + + +American fiction: Dope and the doppelganger + + + + + +Modernist art from Mexico: Evolutionary tales + + + + + +Johnson: Lexicography unbound + + + + + +Obituary + + + +Andrzej Wajda: Obituary: Conscience-keeper + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Doing business + + + + + +Markets + + + + + +Table of Contents + +The Economist + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Canada’s example to the world: Liberty moves north + + + + + +The Bank of England: Hands off + + + + + +The International Criminal Court: Back it, join it + + + + + +Business in America: Vertical limit + + + + + +Investment banks: Too squid to fail + + + + + +Letters + + + +On globalisation, Thailand, new drugs, Bill Clinton, tourism: Letters to the editor + + + + + +Briefing + + + +Canada: The last liberals + + + + + +United States + + + +Trump and Putin: My brilliant friend + + + + + +From DC with love: Naming without shaming + + + + + +The Affordable Care Act: Crunch time + + + + + +The campaigns: On the trail + + + + + +The presidential election: Making a U-tahn + + + + + +Election brief: Education: Little changes + + + + + +Lexington: Meet Kamala Harris + + + + + +The Americas + + + +Venezuela: Fighting their chains + + + + + +Brazilian sport: Something new to cheer + + + + + +Nicaragua: Fourth time unlucky + + + + + +Bello: Ciudad Juárez trembles again + + + + + +Asia + + + +India’s Muslims: An uncertain community + + + + + +Bailing out Mongolia: A wrong direction in the steppe + + + + + +Influence-peddling in South Korea: Gift horse + + + + + +Politics in the Maldives: Sibling rivalry + + + + + +Pakistan’s business climate: If you want it done right + + + + + +Banyan: A shrimp among whales + + + + + +China + + + +History: Nihil sine Xi + + + + + +Parking: The other car problem + + + + + +Middle East and Africa + + + +Off-grid solar power: Africa unplugged + + + + + +The International Criminal Court: Exit South Africa + + + + + +African economies: The oil effect + + + + + +Iraq: Tightening the noose + + + + + +Turkey’s intervention in Syria and Iraq: Erdogan’s war game + + + + + +Medical marijuana in Israel: Light-up nation + + + + + +Islamic State’s loss of Dabiq: Apocalypse postponed + + + + + +Europe + + + +Migration in France: The end of an ugly affair + + + + + +Inequality and education: Germany’s Sandernistas + + + + + +Regional inequality: A tale of more than two cities + + + + + +Spanish politics: Back again + + + + + +Energy efficiency: Populism tastes best hot + + + + + +The impact of Brexit: Britain shoots Ireland, too + + + + + +Charlemagne: The age of vetocracy + + + + + +Britain + + + +Brexit and the City: From Big Bang to Brexit + + + + + +Child refugees: Gnashing of teeth + + + + + +The post-Brexit economy: Measuring the fallout + + + + + +Industry in the north-east: Parked + + + + + +Managing globalisation: To the losers, the scraps + + + + + +The Liberal Democrats: Cleared for take-off + + + + + +Technical education: The new three Rs + + + + + +Drugs policy: Qat flap + + + + + +Bagehot: How to be a good bastard + + + + + +Bagehot: Journalist wanted + + + + + +International + + + +Early childhood development: Give me a child + + + + + +Business + + + +AT&T; and Time Warner: Angling for the future of TV + + + + + +Big tobacco: All fired up + + + + + +Tata Group: Mistry exit + + + + + +Companies’ dark pasts: Ghosts in the machine + + + + + +Brazilian business: Out of the gloom + + + + + +The sharing economy: Deflating Airbnb + + + + + +Schumpeter: Jail bait + + + + + +Finance and economics + + + +Investment banking: Rebooting + + + + + +Buttonwood: No Trumps! + + + + + +Digital money: Known unknown + + + + + +Asian deflation: Steel trap + + + + + +China’s growth: The greatest moderation + + + + + +Clean energy v coal: Fighting the carbs + + + + + +Free exchange: Passing the buck + + + + + +Science and technology + + + +Bathymetry: In an octopus’s garden + + + + + +The world’s weirdest place?: Topsy turvy + + + + + +Cyber-security: Crash testing + + + + + +Schiaparelli’s end: Flash, bang, wallop, what a picture + + + + + +Dealing with autism: First, treat the parents + + + + + +Shark behaviour: Waste not, want not + + + + + +Books and arts + + + +Eleanor Roosevelt: Ahead of her time + + + + + +Europe’s single currency: France v Germany + + + + + +American fiction: Dope and the doppelganger + + + + + +Modernist art from Mexico: Evolutionary tales + + + + + +Johnson: Lexicography unbound + + + + + +Obituary + + + +Andrzej Wajda: Obituary: Conscience-keeper + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Doing business + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.11.05.TXT b/homeworks/B20769/homework1/data2/2016.11.05.TXT new file mode 100644 index 0000000..2473e9f --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.11.05.TXT @@ -0,0 +1,4396 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + + +Politics this week + +Business + +KAL's cartoon + + + + + +Politics this week + +Nov 5th 2016 | From the print edition + + + +The FBI waded into the American presidential election by rebooting its investigation into Hillary Clinton’s use of a private e-mail server while secretary of state, four months after exonerating her. The bureau’s director, James Comey, faced fierce criticism for being vague about the new probe. The news was the latest “October surprise” to shake up a race between Mrs Clinton and Donald Trump that has tightened in its final days. See blog. + +Two police officers were shot dead while sitting in their cars in Des Moines, Iowa. Local authorities later arrested a 46-year-old man suspected of carrying out the “ambush-style” attacks. + +America’s longest sporting drought ended when the Chicago Cubs won the World Series. They defeated the Cleveland Indians 8-7 in Game Seven of the Major League Baseball finals, after enduring more than a century without winning a trophy. + +Venezuela’s leftist government and the opposition began talks mediated by the Vatican. Tensions between the two sides increased after the government blocked a referendum to recall the president, Nicolás Maduro. The negotiations will cover restoring the rule of law, the schedule for elections, human rights and the economic crisis. See article. + +Police in El Salvador arrested a former president, Elías Antonio Saca, on suspicion of money laundering and embezzlement. Mr Saca governed from 2004 until 2009 as a member of the conservative ARENA party. During his tenure officials put nearly $250m of public money into private accounts, prosecutors say. + +Marcelo Crivella, a Pentecostal bishop, was elected mayor of Rio de Janeiro, Brazil’s second-most-populous city. He has promised to continue providing public financing for the city’s gay-pride parade and samba schools. See article. + +Trouble brewing + +China’s legislature, the National People’s Congress (NPC), was reportedly preparing to intervene in a row in Hong Kong over whether two legislators who support greater autonomy for the territory should be allowed to take up their posts. The politicians used derogatory language about China when they were sworn in. A court in Hong Kong began hearing a case filed by the local government apparently aimed at blocking them, but the NPC wants to move faster. See article. + +A gas explosion at a privately owned coal mine in the south-western region of Chongqing killed 33 workers who were trapped underground. Two miners survived the blast. + +China allowed Philippine vessels to fish near Scarborough Shoal, a disputed tidal atoll. China’s navy had been chasing them away, but seems to have halted after overtures from the Philippines’ new president, Rodrigo Duterte. See article. + + + +Prosecutors detained Choi Soon-sil, a South Korean woman accused of exploiting her friendship with the president, Park Guen-hye, to raise money for foundations she controlled and to meddle in government affairs. Ms Park appointed a new prime minister, reshuffled her cabinet and dismissed ten close aides in response to the scandal. See article. + +Thai authorities announced that Crown Prince Maha Vajiralongkorn will assume the throne on December 1st, after the death of his father, King Bhumibol, in October. The prince had initially demurred out of respect for the late king. + +Seize and desist + +Iraqi troops moved into an outlying district of Mosul, which Islamic State has held since 2014. But the battle for the city has been running for two weeks, and progress is slow. See article. + + + +Michel Aoun, a Maronite Christian and former warlord, became president of Lebanon, ending an impasse that lasted two-and-a-half years. See article. + +Syrian rebels launched an offensive to try to break the siege of Aleppo. But an escalation of the bombing there is expected within days as a Russian aircraft-carrier nears the eastern Mediterranean. + +South African prosecutors withdrew flimsy charges of fraud that had been brought against the finance minister, Pravin Gordhan. The politically motivated charges were part of a struggle between Mr Gordhan and the president, Jacob Zuma. Separately, an report called for a judicial inquiry into corruption involving Mr Zuma. See article. + +Egypt said it will float its pound. The central bank announced a series of reforms designed to help secure a $12bn bail-out from the IMF. The currency had been trading well below the official rate on the black market. + +The United Nations sacked the Kenyan head of a peacekeeping force in South Sudan after finding it had failed to respond to an attack on civilians by South Sudanese forces. Kenya, in turn, said it would withdraw its troops from the force. + +The genuine article + +The British High Court ruled that the government does not have the right to invoke Article 50, the legal mechanism for triggering Brexit, without the approval of Parliament. The pound rose following the news. The verdict is a setback for Theresa May’s government, which said it would appeal. See article. + +Geert Wilders, leader of the Party for Freedom, a populist Dutch group which has been leading in the polls, failed to turn up for the first day of his trial for hate speech. Instead Mr Wilders took to Twitter to espouse more of the anti-Muslim views that had landed him in trouble. + +Germany’s EU commissioner, Günther Oettinger, apologised after an video showed him mocking Chinese people and decrying gay marriage. Germany’s Social Democrats criticised him, but Chancellor Angela Merkel, the leader of Mr Oettinger’s Christian Democrat party, stayed mum. + +Politicians in Ukraine backtracked on a pay rise that would have doubled their earnings, following public outrage after details of their property holdings were published. Some 50,000 officials had been required to declare their assets, which include vintage wine, luxury watches, flashy cars and a church. + +Iceland’s centre-right Independence Party came first in the country’s general election and was asked to form a coalition. The result was disappointing for the Pirate Party, which won just 14.5% of the vote despite polling at 40% earlier this year. See article. + + + + + +Business this week + +Nov 5th 2016 | From the print edition + +Mark Carney, said he would continue as the governor of the Bank of England until 2019, a year beyond the end of his five-year term. Speculation had mounted that he would quit the role early. Mr Carney has come under pressure from some pro-Brexit MPs, who say that he crossed the bounds of political neutrality before the referendum by warning of the economic repercussions of leaving the European Union. Mr Carney’s announcement was welcomed by Theresa May, the prime minister, who said it would bring much-needed stability. See blog. + + + +Facebook announced that its quarterly revenue had increased by 56% compared with the year before. The social-media giant now controls more than 13% of the worldwide digital-ad business, second only to Google. But it has recently been dogged by a succession of controversies, including overstating how much time people spend watching videos on the site, censoring a famous photograph of a naked young napalm victim from the Vietnam war, and revelations that advertisers can choose to exclude certain racial groups from targeted messages. + +Three Japanese shipping firms are to merge their container divisions. Nippon Yusen, Mitsui O.S.K. Lines and Kawasaki Kisen Kaisha will control around 7% of the world shipping market if the deal goes ahead. + +Google must respond next week to antitrust allegations levelled by the European Commission. The commission has brought three charges: that the technology giant has abused the dominance of its Android operating system; that it has been blocking rivals in online-search advertising; and that it favoured its own shopping-comparison services over competitors’. Google, which could face hefty fines, seems unwilling to settle the case. + +Definitely maybe + +Japan’s central bank pushed back the date it expects to meet its inflation target once again. It said it now expects inflation to hit 2% by March 2019, a year later than it had hoped. A bold monetary-easing policy, introduced in 2013, has proved only a limited success. The Bank of Japan insists it can ease further if necessary. + +There were contrasting results for two oil majors. Royal Dutch Shell said underlying profits had risen by 18% to $2.79bn in the third quarter, compared with the same period last year, well ahead of market expectations. BP, however, revealed its profits had fallen almost by half to $933m over the same period. Many energy firms’ results have been affected by lacklustre oil prices, which averaged $47 a barrel during the third quarter. + +General Electric is to merge its oil-and-gas business with Baker Hughes, a Texas-based firm. The deal could be worth $30bn if it goes through. A proposed merger of Baker Hughes with Halliburton, its main rival in oilfield services, was thwarted by regulators in May. + +Separations + +Three senior executives at Tata Group resigned, deepening the turmoil at India’s largest conglomerate. The departures follow the sacking of the group’s chairman, Cyrus Mistry, who was fiercely critical of the decision by Ratan Tata to remove him. + +Canada and the European Union finally signed the Comprehensive Economic and Trade Agreement, which removes almost all tariffs on trade between the pair. The deal had been vetoed by the Belgian region of Wallonia. It dropped its opposition after being given assurances on labour and environmental standards. + +America’s central bank kept short-term interest rates unchanged, but implied that a rise in December is now likely. The Fed is keen to tighten policy rather than risk overshooting its 2% inflation target. The announcement followed news that America’s economy grew strongly in the third quarter: GDP increased by 2.9% compared with a year earlier. + +Standard Chartered and UBS revealed that they are being investigated by regulators in Hong Kong. Reports suggest that there are concerns about their role in the 2009 flotation of China Forestry Holdings, which was co-sponsored by the banks. + +Pills ‘n’ thrills and bellyaches + +Reports suggested that Valeant, a Canadian drugs firm, was close to selling its Salix division to Takeda, a Japanese rival. Salix specialises in gastrointestinal drugs. It is thought that any deal might be worth around $10bn. Valeant could use the money: it has debts of some $30bn. + +Gannett, publisher of USA Today, abandoned its pursuit of Tronc, owner of the Los Angeles Times and the Chicago Tribune. The two firms had agreed on a purchase price, but the deal fell apart after Gannett’s uninspiring quarterly earnings last week. + +This article appeared in the Print Edition with the headline: Business + + + + + +KAL's cartoon + +Nov 5th 2016 | From the print edition + + + +More KAL's cartoons + + + +This article appeared in the Print Edition with the headline: KAL's cartoon + + + +Leaders + + + + + +The presidential election: America’s best hope + +Water: The dry facts + +Lebanon: Time to talk Taif + +Taxation in India: Take it easy + +Britain’s House of Lords: Time to ennoble Nigel + + + + + +The presidential election + +America’s best hope + +Why we would cast our hypothetical vote for Hillary Clinton + +Nov 5th 2016 | From the print edition + + + +A QUARTER of Americans born since 1980 believe that democracy is a bad form of government, many more than did so 20 years ago. If the two main parties had set about designing a contest to feed the doubts of young voters, they could not have done better than this year’s presidential campaign. The vote, on November 8th, is now in sight, yet many Americans would willingly undergo the exercise all over again—with two new candidates. Of course that is not on offer: the next president will be either Donald Trump or Hillary Clinton. + +X marks the spot + +The choice is not hard. The campaign has provided daily evidence that Mr Trump would be a terrible president. He has exploited America’s simmering racial tensions (see article). His experience, temperament and character make him horribly unsuited to being the head of state of the nation that the rest of the democratic world looks to for leadership, the commander-in-chief of the world’s most powerful armed forces and the person who controls America’s nuclear deterrent. + +That alone would stop us from casting a vote, if we had one, for Mr Trump. As it happens, he has a set of policies to go with his personality. A Trump government would cut taxes for the richest while imposing trade protection that would raise prices for the poorest. We disagree with him on the environment, immigration, America’s role in the world and other things besides. His ideas on revenue and spending are an affront to statistics. We would sooner have endorsed Richard Nixon—even had we known how he would later come to grief. + +Our vote, then, goes to Hillary Clinton. Those who reject her simply because she is a Clinton, and because they detest the Clinton machine, are not paying attention to the turpitude of the alternative. Although, by itself, that is not much of an endorsement, we go further. Mrs Clinton is a better candidate than she seems and better suited to cope with the awful, broken state of Washington politics than her critics will admit. She also deserves to prevail on her own merits. + +Like Mr Trump, Mrs Clinton has ideas we disagree with. Her tax plan is fiddly. Her opposition to the trade deal with Asia that she once championed is disheartening. The scale of these defects, though, is measured in tiny increments compared with what Mr Trump proposes. On plenty of other questions her policies are those of the pragmatic centre of the Democratic Party. She wants to lock up fewer non-violent offenders, expand the provision of early education and introduce paid parental leave. She wants to continue Barack Obama’s efforts to slow global warming. In Britain her ideological home would be the mainstream of the Conservative Party; in Germany she would be a Christian Democrat. + +In one sense Mrs Clinton is revolutionary. She would be America’s first female president in the 240 years since independence. This is not a clinching reason to vote for her. But it would be a genuine achievement. In every other sense, however, Mrs Clinton is a self-confessed incrementalist. She believes in the power of small changes compounded over time to bring about larger ones. An inability to sound as if she is offering an overnight transformation is one of the things that makes her a bad campaigner. Presidential nominees are now expected to inspire. Mrs Clinton would have been better-suited to the first half-century of presidential campaigns, when the candidates did not even give public speeches. + +However, a prosaic style combined with gradualism and hard work could make for a more successful presidency than her critics allow. In foreign policy, where the president’s power is greatest, Mrs Clinton would look out from the Resolute desk at a world that has inherited some of the risks of the cold war but not its stability. China’s rise and Russia’s decline call for both flexibility and toughness. International institutions, such as the UN, are weak; terrorism is transnational. + +So judgment and experience are essential and, despite Republican attempts to tarnish her over an attack in Benghazi in 2012, Mrs Clinton possesses both. As a senator she did solid work on the armed-services committee; as secretary of state she pursued the president’s policies abroad ably. Her view of America has much in common with Mr Obama’s. She rightly argued for involvement early on in Syria. She has a more straightforward view of America’s capacity to do good; her former boss is more alert to the dangers of good intentions. The difference is of degree, though. Mrs Clinton helped lay the foundations for ending the embargo on Cuba, striking a nuclear deal with Iran and reaching agreement with China on global warming. A Clinton presidency would build on this. + +Keep America great + +The harder question is how Mrs Clinton would govern at home. It is surely no coincidence that voters whose political consciousness dawned in the years between the attempted impeachment of Bill Clinton and the tawdriness of Mr Trump have such a low opinion of their political system. Over the past two decades political deadlock and mud-slinging have become normalised. Recent sessions of Congress have shut the government down, flirted with a sovereign default and enacted little substantive legislation. Even those conservatives inclined to mistake inaction for limited government are fed up. + +The best that can be said of Mr Trump is that his candidacy is a symptom of the popular desire for a political revival. Every outrage and every broken taboo is taken as evidence that he would break the system in order that, overseen by a properly conservative Supreme Court, those who come after him might put something better in its place. + +This presidential election matters more than most because of the sheer recklessness of that scheme. It draws upon the belief that the complexity of Washington is smoke and mirrors designed to bamboozle the ordinary citizen; and that the more you know, the less you can be trusted. To hope that any good can come from Mr Trump’s wrecking job reflects a narcissistic belief that compromise in politics is a dirty word and a foolhardy confidence that, after a spell of chaos and demolition, you can magically unite the nation and fix what is wrong. + +If she wins, Mrs Clinton will take on the burden of refuting the would-be wreckers. In one way she is the wrong candidate for the job. The wife of a former president, who first moved into the White House almost 24 years ago, is an unlikely herald for renewal. In her long career she has at times occupied a no-man’s-land between worthy and unworthy, legal and illegal. That is why stories about the Clinton Foundation and her e-mails, which the FBI is looking at again, have been so damaging. They may barely register on the Trump-o-Meter of indiscretions but, in office, Mrs Clinton’s reputation for rule-breaking could destroy her. + +In another way, she is well-suited to the task. Herding bills through Congress to the point of signing requires a tolerance for patient negotiating and a command of sleep-inducing detail. Though it has been hard to hear above the demand to “lock her up”, Mrs Clinton has campaigned for an open, optimistic country. She can take heart from the fact that, outside Washington, there is more bipartisanship and problem-solving than most Americans realise, and from the fact that popular pessimism has far overshot reality. Around 80% of Trump supporters say that, for people like them, America is worse than it was 50 years ago. That is false: half a century ago 6m households lacked a flushing lavatory. It is also a most un-American way to see the world. The time is ripe for a rebound. + +In elections we have sometimes hoped for Congress and the presidency to be controlled by different parties. Some who cannot bring themselves to vote for Mr Trump but do not care for Mrs Clinton either will opt for that choice. Yet the loss of Congress would increase the chances of a Republican Party reformation that both the party and the United States need. + +Hence our vote goes to both Mrs Clinton and her party. Partly because she is not Mr Trump, but also in the hope she can show that ordinary politics works for ordinary people—the sort of renewal that American democracy requires. + + + + + +Water + +The dry facts + +Water is scarce because it is badly managed + +Nov 5th 2016 | From the print edition + + + +“THOUSANDS have lived without love; not one without water,” observed W.H. Auden. He omitted to add that, as with love, many people have a strong moral aversion to paying for the life-sustaining liquid. Some feel that water is a right, and should therefore be free. Others lobby governments to subsidise its distribution to favoured groups. All this results in vast and preventable waste. + +Water covers two-thirds of the Earth’s surface. It is not used up when consumed: it just keeps circulating. So why do researchers from MIT predict that by the middle of the century, more than half of humanity will live in water-stressed areas, where people are extracting unsustainable amounts from available freshwater sources? + +One reason is that as the world’s population grows larger and richer, it uses more water. Another is climate change, which accelerates hydrologic cycles, making wet places wetter and dry places drier. The World Resources Institute, a think-tank, ranked 167 countries, and found that 33 face extremely high water stress by 2040 (see map). But a lot of the problem stems from lousy water management, and that is something the officials who meet in dusty Marrakesh this week for the next round of annual UN climate talks should ponder. A crucial part of adapting to a warmer world is to work out how to allocate water more efficiently (see article). + +Each person needs to drink only a few litres a day, but it takes hundreds of litres to grow food—and thousands to put a joint of beef or pork on the table. Farming accounts for 70% of water withdrawals and industry accounts for most of the rest. Because farmers and factory bosses are politically powerful, they typically pay far too little for their water. Some pay for the operational costs of supplying it, but not the infrastructure that enabled it to flow from the tap. Many pay nothing to raid underground aquifers—India pumps two-thirds of its irrigation-water this way. When something is too cheap, people squander it. Chinese industry uses ten times more water per unit of production than the average in rich countries, for example. Farmers in parched places like California grow thirsty cash crops such as avocados, which could easily be imported from somewhere wetter. + +The key to managing water better is to price it properly, giving consumers a reason not to waste it and investors an incentive to build infrastructure to supply it. Vast sums are needed: over $26trn between 2010 and 2030, by one estimate. Before water can be properly priced, however, it needs to be clear who owns it (or, more precisely, who has the right to extract how much from rivers, aquifers and so on). Australia has led the way in creating such a system of tradable water rights. + +Current accounts + +The aim is to ensure that water winds its way to those who can make the best use of it. Calculating how much is being used, and how much actually ought to be used, is essential. In Australia old rights (typically belonging to landowners) were replaced with shares in perpetuity that grant holders a proportion of any annual allocations. This means that the only way one person can have more of the liquid is if another person has less. Two markets have emerged: one in which seasonal allocations of available water can be traded, and another in which shares themselves can be. + +For the system to work, extra care should be taken to ensure that tradable water rights are allocated in a fair and open way. The “blockchain”, a cryptographic technology that allows strangers to make fiddle-proof records of who owns what, could help. + +Getting water policy right will not only encourage everyday conservation; it will also stimulate the development of technologies such as artificial meat (which uses far less water than the real stuff) and cheaper desalination. The alternative is to prove Mark Twain right when he said: “Whiskey is for drinking; water is for fighting over.” + + + + + +Lebanon + +Time to talk Taif + +Lebanon’s political system is creaking, and needs reform + +Nov 5th 2016 | From the print edition + + + +GOOD news is in short supply in the war-torn, economically stagnant Arab world. So even small doses of it are worth celebrating. This week Lebanon at last got a new president, after two-and-a-half years when the job was vacant. He is, admittedly, 81 years old and a former Christian general-cum-warlord, but Michel Aoun (pictured) has made himself acceptable to the country’s three main groups: Christians, Shias and Sunnis. No other candidate managed that. + +The average Lebanese citizen may not notice much difference, though. Rubbish is likely to remain uncollected, and the electricity supply sporadic. For one thing, the president is not responsible for day-to-day administration. More important, the ridiculously long time it took to find a president is a symptom of a systemic flaw in Lebanese politics. The Taif agreement, struck in 1989 to end 15 years of civil war, has ossified a constitutional settlement that is manifestly unfair to Lebanon’s Muslims. + +Taif was based on the fiction that Christians, once a majority, still made up half the population of Lebanon. Accordingly, it reserved half the seats in parliament for them. (An agreement in 1943 had reserved the post of president for a Maronite Catholic as well, with the job of prime minister going to a Sunni and the post of parliamentary Speaker to a Shia.) There were two reasons. First, since its creation in the 1920s Lebanon had been intended as a haven for Christians in a predominantly Muslim region. Second, over-representation was the price of peace, to buy Christians’ acceptance of their defeat in war. + +Although the demographic numbers were deliberately left vague (there has been no census since 1932), all knew the parliamentary allocation was unfair. The Economist has now been able to analyse voter-registration lists—briefly posted online earlier this year and then taken down again—to show conclusively that this is the case (see article). Only 37% of Lebanese voters are Christian today, because of emigration and lower birth rates (and they are probably an even smaller share of the total population). Shias are 29%; Sunnis, 28%. Yet the Christians get 64 of parliament’s 128 seats, whereas the Sunnis and Shias get only 27 each, with the remainder going to the Druze and Alawites. And this takes no account of the other glaring flaw: almost half a million Palestinians, most of them Sunnis, who have arrived in Lebanon since 1948 cannot vote at all. (Never mind the million or so mostly Sunni refugees from Syria.) + +Think again + +Ought these data to prompt a rethinking of the Taif agreement? It was never meant to be permanent: the stated aim was for non-sectarian elections to take place in the future. The time has never seemed right; it is tempting to say that now is not right either, given the chaos in the region. For all that it is dysfunctional, Lebanon has limped along thanks to the pragmatism of its sects. The impasse over the presidency was ended by a deal between Hizbullah (the main Shia party), Saad Hariri (a Sunni politician expected to become prime minister) and Mr Aoun’s Christian faction. The share-out may suggest the Shias are hard done by; in fact, Hizbullah remains the country’s strongest political and military force, backed by Syria and Iran. + +Lebanon needs a more normal sort of politics. That requires a more normal sort of state: not just one with a fairer parliamentary balance, but also one based less on the sharing of spoils by sects, and one that has a monopoly of force. Will Hizbullah give up its guns? That will depend on how it fares in the war in Syria. For the moment, Lebanon has shown that sectarian wars can end, and that power can be shared, somehow. That is a precious lesson for the Arab world. + + + + + +Taxation in India + +Take it easy + +India risks squandering the benefits of a ground-breaking economic reform + +Nov 5th 2016 | From the print edition + + + +NOTHING in India is ever simple. It is too vast, too diverse, too argumentative and too democratic for any of its problems to lend themselves to easy answers. So an idea as revolutionary in its simplicity as a single, nationwide goods-and-services tax (GST) was never likely to go smoothly. Even so, it is disappointing that negotiations under way this week seem likely to result in a tax so complicated and multi-tiered that many of the benefits it offers will be bickered away before it is launched (page 72). One of its architects has lamented that, on present plans, it will reap only one-quarter of the extra economic growth that it could have stimulated. + +Introducing a nationwide tax to subsume India’s bewildering profusion of central, state and lower-level indirect taxes has been a decades-long effort. Passage of the legislation in August was seen as a triumph for Narendra Modi, the prime minister, and the biggest proof of his reformist credentials. The tax’s precise mechanics are being determined by a new body, the GST Council, combining the federal government and representatives of India’s 29 states. The hope is to reach agreement in time for the beginning of the next fiscal year in April 2017. + +Advocates see three great benefits from the tax: the creation of a single market, greater efficiency and a shift of activity into the formal economy. India has been engaged in a long, slow transformation from a federation of states with their own tax systems and border controls into a single national market. This year a government study found that the average Indian lorry spends 16% of its time waiting at checkpoints. The GST should remove one of the biggest causes of delay—the levying of local sales taxes. It will also do away with the distortions caused by the same products being taxed at different rates in different states. + +This significant economic boost is not yet in danger. But current plans forgo the second benefit, the tax’s efficiency-enhancing potential, by having a complex set of rates for different goods—perhaps seven or more, ranging from 4% to 26%. This will distort the economy by nudging producers towards goods subject to the lowest tax rates. + +Many countries, including rich ones, charge different levels of sales tax on different products. Those such as India, with many poor people, are right to exclude food and basic consumer goods from the tax regime altogether (about half the basket of goods covered by the consumer-price index will be GST-exempt). Punitive “sin” taxes on, say, tobacco also have a place. But administering complexity of the level that India is contemplating will be a nightmare—and expensive, too. Because the rates will probably be set high, the tax will also foster evasion. That will threaten the GST’s third big advantage, of bringing business into the formal economy. And the high differentials will spawn “classification” disputes, like the one that reached the Supreme Court in 2006 on whether a hair-oil should be exempt from sales tax because, as coconut-oil, it was edible. + +Aiming too high + +The complexity stems from the fear that the shift from the present labyrinthine system would cost too much in lost tax revenue. The central government has promised to reimburse the states for the revenue lost from local sales taxes. The direct-tax base is narrow: of India’s 1.3bn people, only some 4% pay direct taxes. So the central government’s bias is to set indirect-tax rates high lest it miss its fiscal targets, and this urge is leading to the possible miasma. Better to introduce the GST in a less compromised form, even if that means a temporary widening of the budget deficit. And better to fix the deficit through the higher sales-tax receipts that enhanced growth would bring—and through finding ways of making more well-off Indians pay their dues. + + + + + +Britain’s House of Lords + +Time to ennoble Nigel + +The UK Independence Party should not be barred from the upper house of Parliament + +Nov 5th 2016 | From the print edition + + + +SPORTING Union Jack socks and Spitfire cufflinks, Nigel Farage was the unofficial standard-bearer of the campaign for Britain to leave the European Union. With the referendum won, he announced that he would step down as head of the scrappy UK Independence Party, which he has led on and off for ten years. The main candidates to succeed him later this month agree on one thing: for his role in liberating Britain from Europe, Mr Farage should be elevated to the House of Lords. + +The thought of the arch Brexit rabble-rouser donning an ermine robe has invited horror and ridicule. UKIP, which David Cameron branded a bunch of “fruitcakes, loonies and closet racists”, has never been allowed to nominate a peer to the upper house of Parliament (though it has three ex-Tory defectors there). It is far more reactionary than any other party represented in the Lords. Mr Farage is a cheerleader for Donald Trump; the front-runner to succeed him as party leader wants referendums on the death penalty and abortion. + +Good Lord + +Too bad. This newspaper is no fan of UKIP, but nor can it abide the antidemocratic stitch-up by which lords are currently appointed. Even before its regrettable triumph in the Brexit referendum, UKIP was the third-biggest party in Britain by general-election vote share. That it must still beg to nominate a single member of the bloated, 812-member upper house is a scandal. Mr Farage should be ennobled at once, along with a few of his colleagues, peerless fools though they may be. + +Aside from 26 bishops of the Church of England, who get an automatic place, Lords are appointed at the discretion of the prime minister. Prime ministers normally claim to make their appointments reflect either the popular vote or the make-up of the elected House of Commons, both of which tend to let them nominate more from their own side. Yet neither approach justifies overlooking UKIP. By vote-share, UKIP has for more than a decade trumped various smaller parties that are represented in the Lords; last year it eclipsed even the Liberal Democrats, who have 104 peers. Governments sometimes argued that UKIP could be ignored because of its failure to win any seats in the Commons, something those smaller parties had all managed. (This argument also justified not giving peerages to the far-right British National Party.) But in 2014 UKIP won its first Commons seats. The injustice now is glaring. + +Brexit makes it more so. Without the rise of UKIP Mr Cameron would probably never have called his panicky referendum, let alone lost it. Mr Farage is thus an accidental colossus of British politics, a far more significant figure than most recent nominees to the Lords. And although his blokeish persona masks nasty views—see, for instance, his warnings about HIV-positive immigrants—he is not morally unfit to join a body whose current membership includes several convicted criminals. (Any concerns can always be passed to the Lords’ ethics committee, whose chairman last year stepped down after being filmed snorting white powder from the breasts of prostitutes.) + +Liberals who despair at the thought of Mr Farage enjoying a second act in public life may yet find that he makes a better peer than they expect. He has spent 17 years as an MEP highlighting the absurdities of undemocratic governmental bodies in Brussels, to the point where the public decided they had had enough of them. Were he elevated to the upper house, Lord Farage would not be short of new, better targets. + + + +Letters + + + + + +Jordan, democracy, Brexit, depression, infrastructure, Spain, private equity, Van Cliburn, Elon Musk: Letters to the editor + + + + + +Jordan, democracy, Brexit, depression, infrastructure, Spain, private equity, Van Cliburn, Elon Musk + +Letters to the editor + +Nov 5th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + +Jordan’s election + +I found some of the erroneous representation of the facts supporting your article on Jordan to be worrying (“The uneasy crown”, October 22nd). Your claim that voter turnout in the 2016 election “slumped to a dismal 37%” from 56% at the election in 2013 is misleading. In 2013, the election law stipulated that voters had to pre-register to vote. Official figures correctly reported voter turnout at 56% of registered voters. At the time, you wrote that “Some pollsters argue that, out of an adult population of 3.7m, only 35% voted, once soldiers, expatriates and those who refused to register are excluded, not the 56% the government claimed” (“Calming down”, February 23rd 2013). The government never took issue with the 35% figure as a percentage of eligible voters. Both figures are correct depending on which baseline you use. + +In order to encourage participation, the 2016 election law eliminated the registration requirement so that any eligible voter could cast a vote, even at the last minute. Using your own figures, voter participation in 2016 was 37% of eligible voters, up from 35% in 2013. This contradicts your assertion that massive voter apathy resulted in a “dismal” drop in turnout. Moreover, a large percentage of Jordanians live abroad and the country has an overwhelmingly young population, both factors which typically have a dampening effect on voter participation. + +You also claim that “crime is climbing” in Jordan. Government statistics say otherwise; that the crime rate has declined by more than 16% over the past two years. Not that crime, serious as it is, was ever a major challenge in Jordan compared with many countries. Surely The Economist should not support such absolutist claims by pointing to individual crime cases, however horrendous they may be. + +My country has weathered the international financial crisis, the spillover effects of the Arab spring and the ongoing crises in the region. Jordan hosts the largest number of registered refugees in the world (per head) and not just from Syria. Given the turmoil in the region, it should come as no surprise to anyone that all Jordanians are feeling “uneasy”, the crown included. With our limited resources and challenged economy, we are dealing with the humanitarian spillover of these crises on behalf of the international community as part of our shared global responsibility, while also being proactive in trying to resolve the region’s many conflicts. + +Our elections were conducted smoothly, professionally (as reported by international observers), were transparent and represent a triumph of progress over regression and a triumph for Jordan. Are we a mature democracy? We are not there yet, but determined to get there, and we will. + +NASSER JUDEH + +Deputy prime minister + +Minister of Foreign Affairs & Expatriates + +Amman, Jordan + + + + + +The royal prerogative + +“Parliament rules, not OK?” (October 15th) missed the point about democracy and parliamentary sovereignty. Parliament has not been ignored over Brexit. It was consulted about leaving the European Union before the referendum when MPs voted unanimously for the 2015 Referendum Act, which handed the democratic mandate to the people to vote yes or no. + +Whether or not the government uses the royal prerogative to trigger Article 50 to start negotiations to leave the EU, it is simply carrying out the will of Parliament and of the people. Unfortunately, the use of the royal prerogative muddies the democratic waters. Usually it can be used to carry out certain acts (for example, withdrawing from treaties) without consulting Parliament or the people. Unusually in this case, the government wants to use it having consulted Parliament and the people. + +If we want to abolish or reform the royal prerogative we need to change our constitution. This is a separate matter and it should be done by democratic means, that is, another referendum or act of Parliament. And not, as is currently happening, reform by judicial review. + +TESSA MAYES + +Documentary film director + +London + + + + + +Asterix would Leave + +“Asterix in Belgium” bemoaned the ability of the parliament in Wallonia to block a free-trade deal between the European Union and Canada (October 22nd). The wonder is that with situations such as this, those who voted to remain in the EU in Britain’s referendum still cannot fathom why those who voted Leave did so in order to unshackle themselves from the EU corpse. + +ROGER LEWIS + +Toronto + +Talking about the British government’s strategy to exit the EU, Luxembourg’s prime minister recently observed that: “Before they were in, they wanted many opt-outs. Now they want to be out, with many opt-ins.” The British Election Study found many Leave votes were registering a protest vote (“After Brexit, Bregret”, October 15th). + +Many people now believe free movement of people may be a price worth paying for staying in. With regards to U-turns, Theresa May should ignore Margaret Thatcher and recall John Maynard Keynes: “When somebody persuades me I am wrong, I change my mind.” + +REV JOHN CAMERON + +St Andrews, Fife + + + + + +Dealing with depression + +The new discoveries for treating depression are fascinating (“Sniffing at a new solution”, October 15th). The World Health Organisation considers depression to be the leading cause of disability worldwide. It is surprising that intravenous ketamine infusions are still not formally recommended by psychiatric associations, despite 14 years of research that repeatedly demonstrate their effectiveness in treating resistant depression. + +As you say, off-label use is common in medical practice. Ketamine has a long safety record in anaesthesiology and emergency care. Abuse is unlikely with supervised intravenous application. It also remains unclear why psychoactive effects of the drug are considered a drawback rather than a possible part of the mechanism of action. + +Patent protection has long expired, making ketamine unattractive for drug firms, but it is a rare opportunity for health-care providers and public-health systems to offer a new treatment at reasonable costs and with huge potential benefits. + +NIELS MADERLECHNER + +Anaesthesiologist + +Berlin + + + + + +Funding infrastructure + +“In the past, federal funds have flowed easily to boondoggles because politics…has directed the flow of money” (“A view from the bridge”, October 22nd). How true. The prime exhibit is New Orleans. In October 2001, Scientific American published a long report on what was likely to happen if a hurricane struck America’s Gulf coast. The response was almost immediate; some $20 billion of federal funding came flowing from Washington. But between DC and New Orleans, the stream was diverted into housing schemes and unnecessary roadworks. In 2005, Hurricane Katrina arrived, and every one of Scientific American’s predictions came true. The resulting damage is estimated at between $96bn and $125bn. + +PROFESSOR PHILIP LLOYD + +Cape Peninsula University of Technology + +Bellville, South Africa + + + + + +Taking Spain into NATO + +You claimed that “if any political party can claim to have invented modern Spain, it is the Socialists” (“The battle for a party’s soul”, October 8th). The problem is that you wrongly credited the Socialists for doing something that other people did. It was not the Socialist Felipe González who took Spain into NATO in 1982. It was my father, Leopoldo Calvo-Sotelo, who was Spain’s prime minister at the time and a member of the centrist UCD. + +The UCD party was also responsible for managing Spain’s transition to democracy. In fact, the Socialists voted against joining NATO in 1982, only to change their mind four years later, in what became one of Mr González’s most notable about-turns. + +JOSÉ MARÍA CALVO-SOTELO + +London + + + + + +Valuing private equity + +Too often your briefing on private equity reduced the industry’s strategies to financial engineering (“The barbarian establishment”, October 22nd). The value that private-equity firms brings to their investments extends far beyond the addition of debt. Moreover, leveraged buy-outs, or LBOs, have steadily decreased as a share of private-equity deals over the past decade. Even among LBOs, debt levels have lessened significantly since the days of the RJR Nabisco deal in the 1980s, which featured prominently in your piece. The industry has shifted to growth strategies, with a particular focus on the middle market. + +The article also claimed that private equity benefits from the “perverse aspects” of the capital-gains treatment of carried interest and interest deductibility. These have been part of our tax code for decades, well before they became political sound bites. They exist because they properly incentivise entrepreneurial risk and help to drive improvements in companies across all industries. Removing them would undoubtedly curtail investments and hurt employment as well. + +Even taking fees into account, private equity’s long-term investment strategies routinely beat market returns, including the S&P 500. In fact, it is the top-performing asset class for American public-pension funds, beating stocks, bonds and other investments over the long term. + +MIKE SOMMERS + +President + +American Investment Council + +Washington, DC + +You underplayed private-equity’s raison d’être as an active owner, which is in stark contrast to taking passive shareholdings in companies. You argued that public markets are inclusive and deep. But they do disregard the large swathes of small- and medium-sized companies in need of equity investments to whom public markets are off-limits. + +Private equity has been at the vanguard of a movement towards increasingly varied and efficient capital allocation, which now includes direct investments from institutional investors, co-investments and search funds. + +JOACHIM SATCHWELL + +Copenhagen + +Private-equity funds were once more accurately called leveraged buy-out funds, or sometimes management buy-out funds. At some stage in the 1990s, the more genteel term “private equity” was hijacked, leaving minority investing in growing companies to some tongue-twister such as “later-stage venture capital”. But now we read that “venture-capital companies …are effectively just private equity for fledglings”. Truly, ambition scorns the steps by which he did ascend. + +Interestingly, some practices of private equity, especially the use of a target company’s assets as security for an acquisition, were until quite recently unlawful in several countries, including Britain and Canada. They were once considered to be exploitative and destabilising, but an earlier deregulation did away with the restrictions. + +RICHARD RUTHERFORD + +Former chief investment officer at the International Finance Corporation + +Washington, DC + +Venture capital and private equity are fundamentally different beasts. Private-equity managers take boring, cash-generating businesses, load them up with debt (hence gaining the risk-profile they are seeking, and thus the potential returns) and use that funding to expand the businesses until they are ready to exit. + +Venture capital’s risk/return profile derives from the inherently risky nature of the businesses themselves, usually because of their early stage. More King Arthur than Genghis Khan? + +SIMON GOLDMAN + +Investment manager + +Albion Ventures + +London + + + + + +Tchaikovsky was gay, too + +As you say in your review of a book on Van Cliburn, an American pianist, the award of the first prize of the International Tchaikovsky Competition to an American back in 1958 was probably a conscious decision by the Soviet leader, Nikita Khrushchev, to thaw the cold-war ice cap of those days (“Piano man”, October 15th). However, the important point is not whether Cliburn deserved the prize. According to all indications, he was definitely the best among the competitors, even if the jury had to seek the approval of Khrushchev before announcing its decision. + +The great irony is that while Cliburn, a gay man, went on to become a close friend of Russia in the following five decades, his runner-up, Naum Shtarkman, spent eight years in Soviet jails for being a homosexual. + +The contrast could not have been more compelling. + +THANOS CATSAMBAS + +Potomac, Maryland + + + + + +The public purse + +The Economist’s study of Elon Musk’s finances was good, but omitted a key element of his success: government subsidies (“Countdown”, October 22nd). Mr Musk may be a clever entrepreneur and shrewd financier, but he is also a crony capitalist. Tesla’s electric cars are wonderful machines, but the buyer of each one gets a $7,500 tax credit, a gift from all other taxpayers. Tesla’s new megafactory for batteries has received subsidies from the government of Nevada, where the factory is based. + +SolarCity, another enterprise of Mr Musk’s, reaps tax credits at the federal and state level. SolarCity is generally paid at retail rates for the power it generates, rather than wholesale (the cost of generation), meaning that it receives a subsidy from all other power-company customers. + +SpaceX, his third company, does big business with the federal government, including more than $5bn in air force and NASA contracts. + +The Economist is a champion of free-market capitalism. Elon Musk is not one of its practitioners. + +ROBERT ARIAS + +Crownsville, Maryland + +Mr Musk may have inspired the portrayal of Tony Stark in the film version of “Iron Man”, but he is a poor shadow of that character (“Float like a butterfly”, October 22nd). Tony Stark is a fictional engineering genius who has innovated computer programming (Jarvis), mechanical engineering (Iron Man), as well as energy production (the fusion reactor that he exploded in the first “Iron Man” film). + +Mr Musk probably couldn’t change a flat tyre on one of his Tesla vehicles. + +W.J. TATE IV + +Ewing, New Jersey + + + +Briefing + + + + + +Water scarcity: Liquidity crisis + + + + + +Water scarcity + +Liquidity crisis + +As water becomes ever more scant the world needs to conserve it, use it more efficiently and establish clear rights over who owns the stuff + +Nov 5th 2016 | TEL AVIV | From the print edition + + + +“NOTHING is more useful than water,” observed Adam Smith, but “scarcely anything can be had in exchange for it.” The father of free-market economics noted this paradox in 18th-century Scotland, as rain-sodden and damp then as it is today. Where water is in ample supply his words still hold true. But around the world billions of people already struggle during dry seasons. Drought and deluge are a costly threat in many countries. If water is not managed better, today’s crisis will become a catastrophe. By the middle of the century more than half of the planet will live in areas of “water stress”, where supplies cannot sustainably meet demand. Lush pastures will turn to barren desert and millions will be forced to flee in search of fresh water. + +Where water is available, when and in what condition matters hugely. About 97% of the water on earth is salty; the rest is replenished through seasonal rainfall or is stored in underground wells known as aquifers. Humans, who once settled where water was plentiful, are now inclined to shift around to places that are less well endowed, pulled by other economic forces. + +Climate change is making some parts of the planet much drier and others far wetter. As people get richer, they use more water. They also “consume” more of it, which means using it in such a way that it is not quickly returned to the source from which it was extracted. (For example, if it is lost through evaporation or turned into a tomato.) The big drivers of this are the world’s increased desire for grain, meat, manufactured goods and electricity. Crops, cows, power stations and factories all need lots of water. + +To make matters worse, few places price water properly. Usually, it is artificially cheap, because politicians are scared to charge much for something essential that falls from the sky. This means that consumers have little incentive to conserve it and investors have little incentive to build pipes and other infrastructure to bring it to where it is needed most. In South Africa, for example, households get some water free. In Sri Lanka they pay initially a nominal 4 cents for a cubic metre. By contrast, in Adelaide in Australia, which takes water conservation seriously, an initial batch costs $1.75 per cubic metre. Globally, spending on water infrastructure faces a huge funding shortfall. A hole of $26trn will open up between 2010 and 2030, estimates the World Economic Forum, a think-tank. + + + +In many countries people can pump as much water as they like from underground aquifers, because rules are either lax or not enforced. Water use by farmers has increased sharply in recent decades (see chart). This has allowed farmers to grow huge amounts of food in places that would otherwise be too dry to support much farming. But it is unsustainable: around a fifth of the world’s aquifers are over-exploited. This jeopardises future use by causing contamination. It also damages the layers of sand and clay that make up aquifers, thereby reducing their capacity to be replenished. + +People do not drink much water—only a few litres a day. But putting food on their tables requires floods of the stuff. Growing 1kg of wheat takes 1,250 litres of water; fattening a cow to produce the same weight of beef involves 12 times more. Overall, agriculture accounts for more than 70% of global freshwater withdrawals. + +And as the global population rises from 7.4bn to close to 10bn by the middle of the century, it is estimated that agricultural production will have to rise by 60% to fill the world’s bellies. This will put water supplies under huge strain. + +Food for thought + +Extravagance must be tamed. Farmers produce far more food than finds its way into stomachs. Some estimates suggest that as much as a third of all food never actually makes it to a plate, wasting as much water as flows down Russia’s Volga river in a year. Richer households are responsible for throwing out the largest share of unwanted victuals. Poorer ones may never even see the produce that rots on slow, bumpy journeys to market. + +Water is vital not only for food and domestic well-being. It is “fundamental to economic growth”, points out Usha Rao-Monari, head of Global Water Development Partners, an investment outfit backed by Blackstone, a private-equity giant. Scarcity stalls industrial development by squeezing energy supplies. Electricity generation depends upon plentiful quantities; nuclear power requires water both for cooling turbines and the reactor core itself, for example. Coal-fired plants cannot function without it. + +Power generation is a thirsty business. Overall about 41% of America’s withdrawals go towards cooling power stations. In countries such as Brazil, where hydroelectric power provides more than two-thirds of the country’s needs, scarcity is also a worry, particularly when dam designs rely on rivers fed by rainfall (see article). Spikes in energy prices often follow dry periods. Zambia endured sporadic blackouts that began a year ago and lasted until April, when drought crippled power generation from the Kariba dam. + +As poor countries develop, global demand for electricity from industry is expected to increase by 400% over the first half of the 21st century. The majority of water-intensive industries, such as coal mining, textiles and chemicals, are found in countries that are particularly prone to water shortages: China, Australia, America and India. Industry can increase strains on supplies too, by polluting water, making it unfit for human use. Over a third of China’s waterways have been spoiled by industrial effluent and other nasties. + +Climate change will only make the situation more fraught. Hydrologists expect that a warming climate will see the cycle of evaporation, condensation and precipitation speed up. Wet regions will grow wetter and dry ones drier as rainfall patterns change and the rate increases at which soil and some plants lose moisture. + +Deluges and droughts will intensify, adding to the pressure on water resources. Late or light rainy seasons will alter the speed at which reservoirs and aquifers refill. A warmer atmosphere holds more moisture (the water content of air rises by about 7% for every 1ºC of warming) increasing the likelihood of sudden heavy downpours that can cause flash flooding across parched ground. This will also add to sediment in rivers and reservoirs, affecting storage capacity and water quality. + +Less snow in a warmer world creates another problem. Places such as California depend upon mountain meltwater flowing down in time for summer. Climate change will make the availability of water more variable in Southern Africa, the Middle East and America. The World Resources Institute, a think-tank, ranked 167 countries, and found that 33 face extremely high water stress by 2040 (see map). + + + +Uncertainty surrounds what this will mean for crop yields but a study by academics at Columbia University is not encouraging. Higher concentrations of carbon dioxide in the atmosphere may make plants use water more efficiently in some parts of the world (they will lose less moisture during photosynthesis). Average yields of wheat-growing areas fed by rainfall—mostly located in North America and Europe—might rise almost 10% by 2080 and water consumption decline by the same proportion. But average yields of irrigated wheat—common in countries such as China and India—could drop by 4% and maize harvests would fall everywhere. + +High and dry + +Altered weather patterns will mean that crops may wither where they once thrived. By 2050, even if temperature increases can be limited to 2°C, crop yields could slump by a fifth in Africa. Altered rainfall patterns could make conditions too dry and hot to grow beans in Uganda and Tanzania, for example, according to a study published this year in Nature Climate Change. But forecasting precisely how regions will fare from deluges or drying is difficult as past weather records are a less useful guide as the climate changes. + +There is no single solution for the world’s water crisis. But cutting back on use, improving the efficiency of that use and sharing out water more effectively would all help. There are many schemes around the world to meet each objective but so far these tend to be implemented piecemeal rather than in a co-ordinated effort to preserve the world’s supplies. + +Farming, because it uses water so heavily, is an important target. Changing agricultural practices is vital and farmers, at least in the rich world, are becoming more shrewd in their use of water. Precision planting, hybrid seeds that require less watering and other technologies are all helping to conserve precious supplies. Drip irrigation, which targets water directly to the roots of plants rather than spreading it indiscriminately, can cut use by 30-70%. + +Water for farming can be gathered through means other than raiding aquifers. Schemes for harvesting rainwater, by collecting it in tanks rather than letting it run away, are commonplace. Recycling wastewater has huge potential. Fruit trees in Israel are showered with it. Overall the country recycles 86% of its sewage, a vastly higher share than any other; Spain is next at just 20%. Israel does not think it can rely on its neighbours to supply it with water. Singapore, reluctant to depend on Malaysia, recycles sewage into drinking water. But politicians elsewhere are too squeamish to let people drink recycled waste. + +Water stress afflicts one in four cities worldwide. Policymakers could do a lot of basic things better to cope with it. Plugging leaky pipes would be a start: they cause some big cities in the Middle East and Asia lose up to 60% of their water. Rich cities still have a long way to go too: London wastes 30% of its water through leaks, equivalent to a bathful a day for every household, by one estimate. In Chicago wooden pipes still carry water. Fixing pipes could soon become easier and cheaper. Robotic systems are being tested which can detect and repair leaks by sensing pressure changes around them and plugging holes while pipes are still in use. + +Poor countries, where millions live in slums without proper sanitation, need more pipes in the first place, not to mention reservoirs and purification works. Where new infrastructure is required, better methods of modelling scarcity could help. They would let new installations be sited where they will guarantee supplies, even if climate change has an effect on patterns of rainfall. Space Time Analytics, a Brazilian company, is working on a global water-risk management system that will have the ability to predict likely shortages with much more precision. + +To understand why water supplies become insecure, you first need to know two things that affect the volume of water stored in lakes and reservoirs, says Juan Carlos Castilla-Rubio, the firm’s boss. The first is the changes in the volume stored over the years. The second is the variability during any given year. This is because, in many places, water storage represents the buffer between triumph and disaster during unexpected dry spells. And knowing how it may be likely to vary in the face of climate change could justify appropriate infrastructure investment ahead of time. + +Go with the flow + +Better modelling tools may also convince governments everywhere of the urgency of dealing with water scarcity. There is plenty of capital available for water infrastructure, reckons Ian Simm of Impax Asset Management, an investment firm. The problem lies in securing consistent political support for it, especially at the local level. Hard-nosed private investors have turned away from water, reluctant to risk vast sums for uncertain returns stretched across future decades. “If I build a billion-dollar desalination plant, will I get paid? That is the sector’s biggest issue,” explains Ms Rao-Monari. + +Desperately dry countries have shown that impressive infrastructure can be built with money and consistent political support. Desalination plants convert seawater to drinking water, but at a cost that can induce tears. Unsurprisingly, most of the biggest are in the Middle East. The Sorek plant in Israel, the country’s largest, supplies more than 1.5m people—equivalent to about 20% of municipal demand. But the process is still more expensive than almost all other ways of supplying fresh water because of the enormous quantities of electricity required. + +Desalinated water is far too expensive for irrigation, points out Mike Young, a water-policy expert at the University of Adelaide. Better for countries to eke out the little they have more efficiently, he argues. Existing management systems often hinder such sharing. In poor countries they are often rudimentary. In rich countries entitlement and allocation schemes largely came into being during times of abundance. They are often slow, bureaucratic and far too scattered. America, for example, has more than 50,000 water utilities. Everywhere, water is devilishly difficult to manage. As it flows, it is used and reused, making it hard to track and measure. + +Rights regimes that are well designed and implemented are among the most effective tools for distributing water fairly and sustainably. Under one such system, Australian states began reforming water management in 1994. Few others have followed, though attempts at reform in Chile and Yemen have met with varying degrees of success. + +An “unbundled” system, in which component parts are managed separately, could replace irrigation systems where those who arrived first enjoy more senior rights. In California this has created a division between those who came to the state before and after 1914, for example. And as any water saved by irrigators passes down to more junior rights holders, there is little incentive there to adopt technologies which boost water efficiency. + +To create tradable water rights, Australia first drew up a baseline for water use, taking into consideration past commercial, social and environmental needs. Next, old water rights were replaced with shares that granted holders (usually landowners) a proportion of any annual allocations. Clever formulae take account of the seniority of pre-existing rights. Different classes of shares determine who gets what and when to balance the competing claims of upstream farmers and downstream urbanites. After that a regulatory board makes sure that all users get as much as they are entitled to. + +A drop worth fighting over? + +Allocations made to shareholders are tradable, but those receiving them can also store them for the future. This prevents any sudden wasting of water at the end of each year and encourages thrift during a drought. Issuing shares in perpetuity ensures that a holder can have more water only if someone else is prepared to have less. A centralised register holds everything together. Two markets for trading have been created: one in which shares are exchanged, and another for allocations of water in a given year. The idea is not a new one. In places such as Oman, aflaj systems involve villages trading in shares and in minutes of water flow. + +Pooling resources + +Such regime change originally met strong resistance from farmers and other big users in Australia. But trading allocations reaped enormous rewards for shareholders. During the first decade of reform the annual internal rate of return from owning a water right was over 15%; those who held water shares saw the value of their rights double every five or so years. But following this example elsewhere will be tough. Even rich countries will struggle to unbundle rights that have accumulated over decades. + +Reforming water management is urgent nonetheless. More than two centuries ago Adam Smith was only moderately gloomy about the precious liquid. Filmmakers today take a more dystopian view. In the latest “Mad Max” film, for example, armed gangs race around desert landscapes, fighting and dying for water. Such scenarios are still fiction, fortunately. But the prospect of water wars is far from fanciful. Some think that global drying is one of the causes of bloodshed in such places as Somalia, Sudan and Syria. + +With clever pricing, clearer ownership and a bit of co-operation, water scarcity can be alleviated. If humanity fails to act, it will get just deserts. + + + +United States + + + + + +The battleground: Countdown + +White voters: What’s going on + +The campaigns: On the trail + +The African-American vote: Early, but less often + +Election brief: Foreign policy: World-shaking + +Lexington: Donald Trump, vigilante + + + + + +The battleground + +Countdown + +A late flurry of support for Donald Trump erodes Hillary Clinton’s lead + +Nov 5th 2016 | WASHINGTON, DC | From the print edition + + + +SO MUCH for Hillary Clinton’s predicted cake-walk. So much for steady nerves. As the countdown of days to the most divisive general election of recent times dropped into single figures, a surge of support for Donald Trump made the contest appear suddenly much closer. + +As The Economist went to press, Mrs Clinton’s lead, which stood at seven percentage points in mid-October, had fallen to less than two points in an aggregate of recent polls. In other words, Mrs Clinton has a clear advantage, but Mr Trump could yet win this. + +To get the requisite 270 electoral-college votes, he probably needs to win all the states Mitt Romney won in 2012—including North Carolina, where he has been trailing for most of the past few weeks—plus almost all the battleground states where he looks even competitive. They include Florida and Ohio, which would be daunting swing states even for a Republican less unsavoury to moderates and unpopular among non-whites than Mr Trump is. Mrs Clinton appears to have an easier path. Merely tallying those states that are safely Democratic gets her to 226 in the electoral college, which leaves her with a wider array of winning combinations. Thanks to a “firewall” of states where she has enjoyed steady polling leads, such as Colorado and New Hampshire, she could afford to lose Florida, Ohio, North Carolina and Nevada and still win the election. Yet those Democrats who suppose electoral-college arithmetic would save Mrs Clinton if she were to lose the popular vote are setting themselves up for a shock. + +As the polls have tightened nationally, so Mr Trump’s must-win states have drifted towards him. In North Carolina, he was three points down at the end of October in an aggregate of polls collected by Real Clear Politics, a website; the state is now a toss-up. In Florida he has closed a four-point gap over roughly the same time. He has a small lead in Ohio, thanks to its relative sparsity of non-whites and many working-class whites (see article). Win those three, and Mr Trump need only bag Iowa, where he is also ahead, and perhaps one other state, such as Pennsylvania or Wisconsin. That still looks tough, which is why betting markets gave Mrs Clinton around a 70% chance of victory. Yet a one-in-three chance of the Oval Office getting a Trumpian makeover is hardly a long shot. + +Many headline-writers have pinned this shift on the Halloween surprise delivered by the FBI’s director, James Comey, on October 28th. In a letter to Congress, Mr Comey reinvigorated a zombie scandal over Mrs Clinton’s use of a private e-mail server as secretary of state by announcing that, over three months after the FBI concluded that she had done nothing worthy of an indictment, he had in effect launched a new probe into the affair. A batch of e-mails belonging to a close aide of Mrs Clinton’s, Huma Abedin, had come to his attention; they turned out to have been found on a device belonging to Anthony Weiner, a disgraced former Democratic congressman and Mrs Abedin’s estranged husband. It also turned out that, far from knowing whether the e-mails involved Mrs Clinton or whether they contained classified information, Mr Comey’s investigators had not even obtained permission to examine them. There appeared to be no chance they could do so before the election. + + + +Even some Republicans condemned Mr Comey’s intervention as reckless and unnecessary. They had a point. Mr Comey, a Republican who was appointed by Barack Obama, had been castigated by Republicans after letting Mrs Clinton off first time around, though the decision, he informed colleagues, was not even close (“At the end of the day,” he wrote in an internal memo, “the case itself was not a cliff-hanger.”) It seems likely that, faced with a certainty of being rubbished all over again if the new e-mail trove had come to light after voting day, he acted to cover his agency. Given how readily voters tend to think the worst of Mrs Clinton, the consequences could matter. + +A poll sampled after Mr Comey’s intervention suggests Mr Trump is now much more trusted than she is, which is amazing, given how riddled his stump speeches are with lies. That low opinion of Mrs Clinton perhaps makes it even likelier that Republicans will maintain their control of the Senate, another close contest, which has the potential to doom a Clinton presidency from the outset. That is because reluctant supporters of Mrs Clinton may now be even likelier to vote for Republicans down-ballot to keep her in check. Yet the polls, it is important to note, were tightening even before Mr Comey’s gambit. + +Mrs Clinton’s vote-share has in fact hardly fallen since the scandal. She has around 45% of the vote, which is close to her all-time best. The big change is a flurry of backing for Mr Trump from erstwhile undecided voters and supporters of Gary Johnson, the Libertarian nominee, whose vote-share has fallen by around three points in recent weeks. This suggests many of his remaining supporters, representing around five percent of the electorate, are disaffected Democrats—a group Mr Johnson’s running-mate, Bill Weld, appeared to be addressing on November 2nd when he described Mrs Clinton as “a person of high moral character, a reliable person, and an honest person”. A former Republican governor of Massachusetts, running for the Libertarians, who appears to be inviting his supporters to switch to the Democratic nominee: this was an illustration of the trauma Mr Trump has caused America’s political establishment. + +On the basis of previous elections (which, admittedly, could mean little in this one) the polls are unlikely to move much before November 8th. There are not many undecided voters left; and pollsters have a habit of herding together towards the end of any campaign, which makes big polling shifts less likely. Perhaps only a big new scandal for Mr Trump—to be sure, a serious possibility—could change things much. That would leave the election to be decided by the parties’ relative success in turning out their supporters to vote. + +If the Democrats can get out their more populous coalition of non-whites, college-educated whites and millennials, Mrs Clinton will win. Her superior campaign organisation will help; the traditionally poor voting-record of non-whites and youngsters will not. The low enthusiasm many feel for her could exacerbate that. Indeed there is already evidence of such reluctance. Early voting suggests a lead for Mrs Clinton in several battlegrounds, but also points to much lower turnout by black voters than in 2012. That looks ominous for her in North Carolina, where nearly a quarter of the electorate is black. The state could turn out to be her insurance policy, or else her Waterloo. + + + + + +White voters + +What’s going on + +Support for Donald Trump from working-class whites is not what it seems + +Nov 5th 2016 | YOUNGSTOWN AND DELAWARE, OHIO | From the print edition + +What makes them tick + +ON A building site outside Youngstown, Ohio, a crowd of workmen are labouring through drizzle to get a nursing home finished on schedule. None is eager to talk politics with a nosy reporter. But your correspondent’s guide is Rocco DiGennaro, boss of the Local 125 construction-workers union to which they belong, and he urges them to speak freely. + +“I’m not voting for the c**t. Why? Because she’s a no good fucking c**t!” says Paul, a carpenter, and no fan of Hillary Clinton. “I’m voting for Trump.” There are two dozen builders and joiners on the site, all middle-aged white men, and most say much the same. “She pisses me off,” says Don, a cement-mixer. “I’d be interested to see what a non-politician can do.” “I don’t trust that broad with my guns,” says Clyde, another cement man. “Since I’ve been voting, it’s always been Clinton or Bush; I want a different name,” says Rob, the site superintendent. + +On the face of it, this is irrational. The men’s union membership brings privileges, including pay a third higher than their non-unionised colleagues make, which Mrs Clinton supports and Mr Trump threatens to dismantle. The Republican nominee says American wages are too high. He says he “loves” right-to-work laws, an anti-union measure passed by Republicans in 26 states, which has exacerbated a steep drop in union membership in recent years. In business, Mr Trump shuns unions; outside New York and Atlantic City, where the building guilds are still fierce, he has hired non-union workers 80% of the time when contractually free to. So why are these Ohioans for Trump? + +Understood broadly, that is perhaps the biggest question of this election. The Republican nominee trails Mrs Clinton by fat margins among almost every main category of voter, including non-whites, millennials and college-educated whites. Yet he is trouncing her among working-class white men; they back him by 30 points. They are the engine of the Trumpian insurgency, the group Republicans will find hardest to mollify if it fails, and a source of heartache for Democrats, too. Mrs Clinton’s party was largely deserted by working-class whites after the passage of the Civil Rights Act in 1964—four years later less than 40% voted Democratic, around the same proportion Barack Obama won in 2012—yet its residual attachment to the unions and their concentration in Midwestern battlegrounds such as Ohio, which has picked the winner in 28 of the past 30 presidential elections, make the Democrats nonetheless concerned for their welfare. + +Two main explanations have been offered for Mr Trump’s success with working-class white men. First, wage stagnation is estimated to have left them worse off in real terms than they were in 1996. That is partly due to the decline of unions, which has reduced American workers’ collective-bargaining power. It is also due to heightened competition from China and to technological change. By hammering trade deals, to which he inaccurately attributes most of those problems, Mr Trump has aimed to vindicate the sense of grievance over globalisation that many working-class whites feel. + +Others, meanwhile, especially on the left, point to the racist nature of his appeal, as illustrated by Mr Trump’s denigration of Hispanics, condescension, or worse, towards blacks and misty-eyed lauding of a past when whites were almost as synonymous with America as he makes them sound. “So important that you watch other communities, because we don’t want this election stolen from us,” he said, referring to blacks, before a lily-white crowd near Pittsburgh last month. In his secret heart, Mr Trump is said not to be particularly racist; he is nonetheless the most racially divisive presidential nominee since the segregationist George Wallace in the 1960s. + +Both explanations for Mr Trump’s success with working-class whites are true to a degree. Yet the nature of the privation and chauvinism that have attracted millions to him, including working-class white men especially, are often misunderstood. + +An analysis of over 100,000 adults by Jonathan Rothwell of Gallup found that Mr Trump’s supporters are most likely to live in areas beset with problems associated with economic duress, including ill health and low rates of social mobility. Some of the most wretched sinks of white poverty, including depressed mining towns in Appalachian Ohio, Pennsylvania and West Virginia, have fallen heavily for him. Youngstown, a steel city whose long decline was accelerated by the recession of 2007-09, also voted for Mr Trump in the Republican primaries—and around a quarter of the voters there were Democratic apostates. Yet the pitch of economic anxiety motivating Mr Trump’s supporters has been exaggerated. + +Great again + +Struggling Appalachians, a group synonymous with geographical and cultural isolation as well as poverty, are not typical Trumpkins. They, the Gallup analysis also showed, are in fact considerably better off than non-Trump voters with comparable levels of education—even after controlling for race, to account for the fact that whites are richer than non-whites. The workmen on that site in Youngstown, some of whom were planning to vote Republican for the first time, make between $40,000 and $60,000 a year, which is not bad for pouring concrete. Indeed construction in Youngstown is booming. “I can’t get enough people to make America great again,” quips another local union boss, Robert Gerst of the Plasterers and Cement Masons. “If we get any greater I’m going to run out of guys to do the work.” + +Nor is resentment of free trade so powerful an explanation for Trumpism as is often made out. A poll by the Pew Research Centre during the primaries found that 60% of Mr Trump’s supporters believed trade had hurt their family’s finances; by comparison, only 42% of backers of John Kasich, the governor of Ohio, said the same. Yet, according to Mr Rothwell, Mr Trump’s supporters were not especially likely to have been hurt by free trade, or to live in the most manufacturing-heavy areas. Industrial regions hardest-hit by Chinese competition still tend to vote Democratic, as Youngstown probably will. Again, this chimes with the attitudes of those Ohioan builders. According to Dennis Duffey, secretary-treasurer of the statewide builders’ union, Mr Trump’s hostility to free trade was a big attraction to his 137,000 members; yet their industry is sheltered from its immediate effects, and, as it happens, none of the workmen in Youngstown mentioned the issue. + +It is also worth noting that, though working-class white men are responsible for most of Mr Trump’s net gains over Mrs Clinton and his Republican predecessors, they represent only around a third of his total vote. And the peculiar combination of pessimism and fervour that Mr Trump’s supporters exude is similarly evident among many of his richer, better-educated fans. At a rally in Delaware, a suburb of Columbus, Ohio, a brief survey revealed a computer programmer, three teachers, a botanist, several small businessmen, and not a single working-class man. “I’ve owned three nurseries, a gas station, been the national director of a fabrics company and have a four-year college degree,” is how Gil Burns, a 64-year-old Trump supporter who said he had last voted Republican in 1984, described himself. At over a dozen Trump rallies, in almost as many states, over the past year, your correspondent has met lawyers, estate agents and a horde of middle-class pensioners—and relatively few blue-collar workers. + +Mr Trump’s biggest supporters, in short, tend to live in down-at-heel and depressed parts of the country, but not to be struggling particularly themselves. This has driven some pundits to look for an alternative, or additional, explanation for Mr Trump’s success—which racism might seem to supply. A growing number of surveys suggest Trump voters are unusually resentful at the steady draining away of the privileges American whites have traditionally enjoyed, which Barack Obama’s victory in 2008 has come to symbolise. + + + +According to the Pew Research Centre, Republican voters who viewed the prospect of America becoming a non-white majority country negatively were likely to have “warm” or “very warm” feelings towards Mr Trump. According to analysis by Philip Klinkner of Hamilton College, the most accurate way to pick a Trump supporter is to ask him whether he thinks Mr Obama is a Muslim. A belief that he is—a common proxy for hostility to the first black president—was held by around 60% of Mr Trump’s primary supporters. As a predictor of Trump support, it is “more accurate than asking people if it’s harder to move up the income ladder than it was for their parents, whether they oppose trade deals, or if they think the economy is worse now than last year,” wrote Mr Klinkner. “It’s even more accurate than asking them if they are Republican.” + +The wall + +No wonder Mr Trump’s dog-whistling and pledges to reassert the primacy of English are popular. Whites, polls suggests, are much less racist than they were, even if, under Mr Obama, that progress appears to have stalled. Yet the casual acceptance, at best, of Mr Trump’s bigotry reflects a pattern seen in other countries when demographic and social change results in a group losing status. None of the workmen in Youngstown, some of whom had forsaken Democrats for the first time to vote against Mr Obama, considered Mr Trump’s chauvinism off-putting. “He talks the same way we do,” almost all said approvingly. Then again, why should they be put off, when Republican leaders are also supporting Mr Trump? Paul Ryan, the Speaker of the House, described Mr Trump’s attack on a Hispanic judge as a “textbook definition” of racism, but still backs him. It is a failure that will haunt his party. + +Yet if many Trump supporters are to some degree racially resentful, this may not be what primarily motivates them. The chauvinism of the average Trump fan is less aggressive, and more despondent, than that would imply. The racist shouts common at Trump rallies are defensive and reactive; they are aimed at the Hispanic immigrants Mr Trump slanders and the black protesters who come to shout at him, not at blacks and Hispanics per se. Both these counts, a sense of economic grievance that is more generalised and fearful than acute, and a sense of racial grievance without racial superiority, reflect a wider feeling of malaise which has many causes. + +It is fuelled by economic changes, but also the decline of once-cherished institutions, including family, church and labour unions, all contributing to a fear that the world is changing in ways that American workers, or else their children, cannot keep up with. Mr Trump’s exaggerated miserabilism, about the state of America and the world, chimes with that pessimism. “Everything’s a problem for us,” said Don, who earns $25 an hour for pouring concrete. “There used to be a lot more middle-class jobs,” said Clyde bleakly, another concrete ladler. “These days there are just people high up working on computers and a lot of guys working in Denny’s.” Mr Trump has no good answers to the gloom he describes. But his aggrieved supporters are so mistrustful of government (84% agree with his assertion that the election might be rigged) that they do not believe anyone else does either. + +The decline of institutions has directly enabled Mr Trump’s rise among unionised workers. Ohio’s construction unions have endorsed Mrs Clinton, and in recent elections Mr DiGennaro reckons that would have been enough to ensure around 80% of his 7,500 members voted Democratic. But he expects 40% to vote for Mr Trump on November 8th—and that was before visiting the worksite. “It could be higher”, he said afterwards. “Thank God the blacks and Latinos can see through Trump’s bullshit. I’m embarrassed by it.” + +Another enabling factor is that the bullshit was already familiar to millions of whites, because of the decline of another important institution, the mainstream media. Many of Mr Trump’s supporters are more likely to get their information from right-wing blogs and talk-radio shows, which for the past two decades have been pushing hateful slanders against liberals, immigrants and non-whites. It can be disconcerting at Mr Trump rallies to hear how thoroughly their nonsense is believed. “I can’t think of anything Trump could do that would stop me voting for him,” said Suzy Carter, a computer programmer in Delaware, who was convinced Mrs Clinton had had “over 100” people killed, which made her decision to vote for Mr Trump an easy one. + +Viewed this way the real, but exaggerated and racially tinged, sense of grievance that on November 8th will drive millions of working-class whites to vote for Mr Trump seems just a little less dismal. That a swathe of voters are chauvinist and anxious is not news, after all. It has taken bad leadership and much rabble-rousing to make it a significant factor in how working-class whites are about to vote. It follows that more constructive politics, as well as faster economic growth, could do much to calm the fury. But neither of those things is currently easy to imagine. + + + + + +The campaigns + +On the trail + +Nov 5th 2016 | From the print edition + + + +Donald Troubadour + +“Love can kill, too.” + +Donald Trump is worried that his supporters might stampede for love of him. Los Angeles Times + +Street style + +“I think Death Row [Records] and a lot of other fashion sources have influenced my look.” + +Hillary Clinton acknowledges hip-hop influence on her clothing choices. Power 105.1 radio station + +Turn down for what? + +“We have three major voter-suppression operations under way.” + +The Trump campaign hopes to lower turnout among Mrs Clinton’s voters. Bloomberg + +Make America eat their greens again + +“Now [Michelle Obama] also planted an amazing vegetable garden at the White House. And I can promise you if I win, I will take good care of it.” + +Hillary Clinton appeals to locavores. + +Class struggle + +“Trump has chosen his own way of reaching the hearts of the voters...He is representing the common people, and he is acting like a common guy himself.” + +Vladimir Putin on the Republican nominee. + +Cries from the heart + +“Why are you even interviewing me? I don’t get it. If I’m doing so poorly, is this to preside over a funeral here?” + +Libertarian candidate, Gary Johnson, was confused by attention from the Guardian. + +Double trouble + +“I wasn’t planning on doing it twice, it was a spur of the moment. The polls are rigged.” + +A Trump supporter in Iowa was arrested for voting twice. Iowa Public Radio + +Lies and statistics + +“When you’re working for Hillary, she wants to let people just pour in. You could have 650m people pour in...You triple the size of our country in one week.”Mr Trump refuses to bow to the fact-checkers once again. + +Basket case + +“That man’s conduct was deplorable.” + +Trump’s campaign manager on a supporter shouting “Jew-S-A” at a rally. CNN + +American Valhalla + +“In a Donald Trump administration, there will be no bullshit!” + +An infamous retired basketball coach, Bobby Knight, campaigned with Mr Trump. + + + + + +The African-American vote + +Early, but less often + +Black voters’ enthusiasm—or lack of it—will help decide the election + +Nov 5th 2016 | From the print edition + +Enthusiasm curbed + +PAULETTE SMITH is so keen on Donald Trump that she wrote a tune about him. “God’s not running for president,” she sang before a rally in Marietta, Georgia, attended by his daughters, Ivanka and Tiffany, “So he sent Donald Trump to make America great again.” There is a dance to go with it, called the Trump Train. Ms Smith, who is black, is untroubled by the Republican nominee’s attitude to women or portrayal of inner cities as “war zones”. “He’s telling the truth,” she insisted. + +At a get-together with black business-owners in nearby Atlanta, a city with a well-established black elite, Donald Trump junior reiterated his father’s view that blacks had nothing to lose by picking him—a grim pitch to which, belatedly, Mr Trump has added some thoughts on school choice and investment incentives. Alveda King, a niece of Martin Luther King, announced that she had already voted for him; her uncle might have done so too, she reckoned, out of concern for family breakdown. That old (if eroding) strain of social conservatism may be the main reason for Republicans to think they can one day regain some of the black votes they forfeited during the civil-rights era. + +One day, perhaps, but almost certainly not this time. Mr Trump’s black supporters maintain, like him, that the opinion polls are misleading, complaining that African-Americans who publicly back him risk insult and harassment. (Some are franker about the challenge: “This is the most black Republicans I’ve ever seen in one place,” said William Givens, pastor of a Baptist church, at the Atlanta event.) But, in Georgia as in the country overall, surveys consistently suggest Mr Trump will claim an even tinier proportion of black voters than his recent predecessors. The consolation is that for him to win key states—and even the election—it might be enough for a chunk of them to abstain. + + + +In 2008 blacks turned out in unprecedented numbers to elect Barack Obama; then and in 2012 they voted at higher rates than whites for the first times in history (see chart). That enthusiasm was vital in swing states with large African-American populations—places such as North Carolina, where roughly a quarter of the electorate is black, and which Mr Obama narrowly won in 2008 before narrowly losing in 2012. Florida, Ohio and Pennsylvania also have potentially decisive black constituencies. “In a really close race,” says Andra Gillespie of Emory University, “African-American turnout puts you over the top.” Hillary Clinton will snatch Georgia, as some polls have hinted she may, only with a powerful showing among black voters, who make up 30% of the registered total. + +She might not get one. First, and most obviously, because Mr Obama is no longer on the ballot, though at his campaign appearances he declares that his legacy is. Those well-received stump speeches have inadvertently pointed up the tepidness of Mrs Clinton’s support; so have Michelle Obama’s wildly popular turns. Yet the disappointment also stems from Mr Obama’s own performance in office, which some black voters regard as timid, draining their faith in what even well-intentioned presidents can deliver. + +Then there is Mrs Clinton herself. She talks more often and explicitly about racism and bias, including among police officers, than Mr Obama did as a candidate; but some still hold her use of the loaded term “super-predators” in the 1990s, and her husband’s criminal-justice policies, against her. Who has done black Americans more harm, one fatalistic Atlantan asks: a Trump fan waving a Confederate flag, or the Clintons? Some feel betrayed by Democratic politicians as a whole. “I grew up being told that as a black man I should vote Democrat,” says Michael McNeely, who wants to become the first black president of Georgia’s Republican Party, “and that’s not good enough.” + +The Clinton team is aware of all this. In Georgia, North Carolina and elsewhere, there has been an energetic push to mobilise black voters—in the face of insidious efforts to disenfranchise them, activists say, such as the partisan purging of voter rolls or local restrictions on early voting. (Such ruses, they allege, have continued despite high-profile court rebuffs to voter-ID laws.) At Sunday service in Ebenezer Baptist Church, once co-pastored by MLK, Raphael Warnock, the current pastor, told worshippers that voting was a means to praise God. Along with 2 Chainz, a rapper, after the service he whisked some off in a “Souls to the Polls” bus convoy. Young people had to vote, he told his congregants, “so they don’t end up in chains.” The idea that his predecessor might have voted for Mr Trump was, he said incredulously, “ridiculous”. + +At the polling station a child asked John Lewis, the congressman and civil-rights leader, what would happen if Mr Trump won. “He wants to take us back to another place and another time,” Mr Lewis said. In black communities as elsewhere, that fear is Mrs Clinton’s greatest asset. Her opponent’s depiction of their woes seems, to many blacks, less a bid to recruit them than to persuade moderate whites of his compassion, or to pander to negative stereotypes. Few share his nostalgia for a supposedly glorious past; instead they recall the sort of discrimination of which, as a landlord in the 1970s, Mr Trump was accused. + +Factor in his inflammatory talk of vote-rigging in “certain areas”, his leadership of the birther movement, advocacy of stop-and-frisk policing tactics and flirtation with white supremacists, and it is unsurprising that, as Celinda Lake, a Democratic pollster, says, African-Americans are even more united in disliking Mr Trump than they were in liking Mr Obama in 2012. According to a report released this week by the Joint Centre for Political and Economic Studies, younger black voters—the hardest to enlist—are especially likely to be motivated by dismay at Mr Trump rather than affection for Mrs Clinton. Black voters “know what is at stake,” Mr Lewis says. Mr Warnock expects a robust showing from the “the huge swathes of humanity” that Mr Trump has insulted. + +Perhaps—but there are signs that aversion to him may not be enough. Analysis of early voting in Florida and North Carolina reveals that black turnout has declined. Last-gasp visits by Mr Obama to both states are evidence of how worrying that trend is for Mrs Clinton. + + + + + +Election brief: Foreign policy + +World-shaking + +Hillary Clinton’s foreign policy would be similar to Barack Obama’s. Donald Trump’s would be like nothing America has seen before + +Nov 5th 2016 | WASHINGTON, DC | From the print edition + +Where next? + +TO EXPLAIN what foreign policy would be like under Hillary Clinton, allies start by describing her feelings about America. It matters that the former secretary of state grew up in the Midwest and was a young “Goldwater girl”, backing the sternly anti-communist Barry Goldwater, during his failed presidential run in 1964. Mrs Clinton “sees America as a force for good”, and as First Lady was marked by seeing her husband use military power to bring peace to the Balkans, says a former senior official. He draws a contrast with Barack Obama, a man instinctively wary when the clamour mounts for American intervention. + +Another former official calls Mr Obama unusually focused on “global” threats, such as climate change, pandemics, nuclear non-proliferation and far-flung terror networks. To secure Chinese co-operation on climate change, or Russian help in curbing Iran’s nuclear programme, Mr Obama has been willing to downplay “geopolitical” threats, such as Chinese land grabs in the South China Sea or Russian incursions in Eastern Europe. Mrs Clinton, predicts that ex-official, “is likely to tilt the balance back” towards “traditional” geopolitics. + +Yet other insiders caution against assuming that Mrs Clinton would be much more hawkish in her actions than Mr Obama—not least because some intractable problems will dominate her in-tray. Start with Syria. In the presidential debates she talked of pushing for a no-fly zone and safe havens in Syria. But in a speech to bankers in 2013, recently leaked, she noted that a no-fly zone would require risky strikes on Syrian air defences, some in heavily populated areas. Insiders predict she will begin with a review of how the Assad regime’s resilience, Russian intervention and opposition weakness have limited her options since she was last in office. + +Veterans of the Obama administration expect Mrs Clinton to reach out to Israel, Egypt, Saudi Arabia and Turkey—long-time partners whose relations with Mr Obama are dire. But they predict limits to such bridge-building. An ex-official notes that Mrs Clinton calls Middle East peace “a priority” (without clarifying how much of one), but for Israel’s prime minister, Binyamin Netanyahu, peace with Palestinians is “no priority at all”. Another colleague suggests that Mrs Clinton will keep Mr Obama’s nuclear-arms deal with Iran, but will be more willing publicly to counter such Iranian provocations as weapons transfers to terror groups or harassment of American ships. During the campaign she talked of an “intelligence surge” against Islamic State (IS). That empty phrase distracts from her likely approach, involving more continuity than change. + +In Asia, North Korea’s recent aggressive actions involving nuclear tests and missile trials will head Mrs Clinton’s agenda. Allies say she has signalled support for tougher sanctions, perhaps on North Korean workers overseas and on North Korean access to banks, and for anti-missile defence co-operation with Japan and South Korea—all steps that alarm China. Chinese officials have further reasons for anxiety. They recall Mrs Clinton’s defence of women’s and human rights at a conference in Beijing in 1995, and have not quite trusted her since. Chinese leaders quietly cheered when the present campaign saw Mrs Clinton forced to disavow the Trans-Pacific Partnership (TPP), a trade pact that would bind America more closely with 11 Asia-Pacific nations, not including China. + +If elected, her relations with Russia’s autocratic leader, Vladimir Putin, would begin in a glacial state. Mr Putin did not hide his anger when, in 2011, the then-secretary of state questioned the fairness of Russian parliamentary elections. In 2016 the Clinton campaign, backed by American spy chiefs, accused Russia of trying to meddle in the presidential election by stealing e-mails from leading Democrats. + +In contrast, when Trump advisers explain their candidate’s worldview, they start with how their boss feels about himself, his gut instincts and abilities as a negotiator—with pesky policy details to be filled in later. They describe a “realpolitik kind of guy” who sees a dangerous, ungrateful world, which for too long America has been asked to fix on its own. Keith Kellogg, a retired lieutenant-general and adviser to Mr Trump, compares his boss to Ronald Reagan for his willingness to treat Russia as a competitor with whom deals can be made, notably when making common cause against Islamists in Syria. + +Critics call Mr Trump a man of thoroughly un-Reaganesque views. After all he has praised Mr Putin for his “very strong control over his country”, and suggested that America’s duty to defend NATO allies might be conditional. Asked by the New York Times if he would defend the Baltic republics from Russia, he replied: “If they fulfil their obligations to us, the answer is yes,” grumbling about NATO members who missed targets for defence spending. + +Interviewed by The Economist in 2015, Mr Trump called China’s construction of airstrips on reefs in the South China Sea a hostile act, adding: “However, it is very far away. And they’re already built.” He breezily predicted that Japan might offer a solution: “If we step back they will protect themselves very well Japan…used to beat China routinely in wars.” + +Mr Trump says he will renegotiate the nuclear-arms deal with Iran, and pressure China into neutralising the North Korea threat. He has called climate change a hoax and promised to cancel billions of dollars in payments to United Nations climate-change programmes. He says he would “bomb the shit” out of IS, without explaining how this would be done. + +Mr Trump is at his most detailed when outlining his suspicion of free trade. In his first days in office he pledges to renegotiate the NAFTA trade pact with Canada and Mexico and put the TPP on hold. He would have China declared a currency manipulator, saying the yuan is undervalued—a charge most economists think out of date. Asked about the risks of a trade war, Mr Trump’s trade adviser, Dan DiMicco, says his candidate thinks that America has been in a trade war with China for 20 years. Mr DiMicco, a former CEO of Nucor, a big steelmaker, says: “The era of trade deficits is over,” predicting that the threat of tariffs can be used to achieve balanced trade. + +Mr Trump knows what his voters want to hear: that America holds a winning hand, if it is ruthless enough to play it. Many of his promises are nonsense. But given the chaos he could unleash, voter anger in America will be the least of the world’s worries. + + + + + +Lexington + +Donald Trump, vigilante + +Good people have been frightened and angered into backing a dangerous man + +Nov 5th 2016 | From the print edition + + + +ON NOVEMBER 8th around 60m Americans are likely to cast ballots for Donald Trump to be president. That will present the country with a puzzle. If nearly a quarter of the adult population are Trump-backers, many good people will have ended up supporting a bad man. + +Partisanship explains some of this gigantic folly, as does widespread distrust of the Democratic nominee, Hillary Clinton. But another cause lies in something harder to criticise: the desire of most people to think of themselves as good and useful citizens, capable of providing for and keeping safe those people and values dear to them. After more than a year of meeting Republican voters and Trump supporters at rallies and campaign events and twice interviewing the candidate himself, Lexington is unexpectedly struck on election eve by echoes from America’s stand-your-ground movement. That movement has led dozens of states to pass laws which allow gun-owners to use lethal force when they reasonably believe that their safety is threatened, with no duty to retreat when they are in their home or other lawful place. Vitally, this defence can be invoked even if householders misjudge the perils that they face, in the heat of the moment. + +Critics call such laws vigilante justice. They cite horrible mistakes, as when stranded motorists are shot dead for knocking on a door in search of directions or a telephone. Some see racial bias at work when courts absolve white householders of killing black men who alarmed them. But once passed, such laws are difficult to repeal. For that would involve convincing supporters that they are wrong to believe that they are the last and best line of defence for their family and property—a hard task. + +Quite a few Republicans, including those who initially backed more mainstream rivals in their party’s presidential primaries, sound strikingly like stand-your-ground advocates when defending a vote for Mr Trump. Even if not every Trump voter takes all his promises literally, they feel heeded and respected when someone of his stature—a very rich man who could be a member of the elite, but instead chooses to side with them—agrees that their home, America, is under assault, whether from foreign governments scheming to “rape” the economy or by Muslim terrorists allowed in as refugees. At rallies in swing states from Arizona to North Carolina, this reporter has heard the cheers when Mr Trump roars that America has every right to fight back, even if that involves rough justice or being “so tough”, as he puts it. + +Looking back, perhaps political opponents or news outlets were wasting their time when they challenged Mr Trump for exaggerating and making up his facts. Critics were missing the point when they chided the Republican for policies that sound like appeals to bigotry, sexism or other forms of prejudice. For if a vote for Mr Trump feels like an act of self-defence, his supporters no more want him to be fact-checked or nagged than they themselves would care to be second-guessed after blasting away at a shadowy figure on a darkened porch. What counts is their sense that when respectable people are protecting their own, they should be afforded the benefit of the doubt. + +During the campaign Mr Trump has explicitly encouraged such thinking. His original call in December 2015 for a “total and complete shutdown” on Muslims entering America, later modified to become a ban on immigration from terror-prone regions, was justified as a reasonable response to uncertainty, rather than as a fully worked-out counter-terrorism strategy. Not long after a mass-shooting in southern California apparently inspired by the Islamic State terror network, the businessman called for a Muslim ban “until our country’s representatives can find out what the hell is going on.” To the election’s last days he has shown a talent for fanning fearful conspiracy theories, most recently by falsely claiming that the election will be rigged by corrupt officials allowing large numbers of illegal immigrants or the dead to vote. + +Not all who will vote for him are diehard Trump supporters. Many Republicans have fallen in line behind him, rather than fallen in love. But his talk of jobs, lives and values under assault unites conservatives. Party grandees appalled by their nominee’s success should ponder how they have spent years denouncing Washington as corrupt, and accusing Democrats of threatening the country’s future. Not many months ago Senator Ted Cruz of Texas, who came second in the Republican primaries, went around wooing Christian conservatives by beseeching God to “awaken the body of Christ, that we might pull back from the abyss.” As the primary contest began in the new year his supposedly less doctrinaire rival, Senator Marco Rubio of Florida, made his pitch to the hard right by asserting that Barack Obama had “deliberately weakened America”, accusing the president of gutting the armed forces and betraying allies because he saw America as “an arrogant country that needs to be cut down to size”. + +Republicans reap what they sowed + +Having painted the established order as an assault on all that America cherishes, however, Mr Trump’s rivals offered only a reshuffling of political leaders in Washington as their solution. Mr Trump proposed something much more stirring: to take protection of the homeland into his own hands, as a sort of vigilante strongman. “I alone can fix it,” as he told the Republican National Convention. “I am your voice.” That is one reason why so many will forgive his boorishness, his refusal to release his tax returns, his praise for sundry foreign autocrats and other flaws that would normally doom a presidential nominee. Supporters hear a presidential candidate talking of the need for desperate measures in the name of self-defence, and that resonates. As a result, they judge him as they would judge themselves, should they hear window-glass shattering in the dead of night. Such voters will not easily be stood down, however this election ends. Mr Trump’s malign influence will not quickly fade. + + + +The Americas + + + + + +Dams in the Amazon: Not in my valley + +Rio de Janeiro: A Pentecostal’s progress + +Violence against women: Murder and machismo + +Bello: What is to be done in Venezuela? + + + + + +Dams in the Amazon + +Not in my valley + +Hydropower is not as reliable as people thought. New ways to generate electricity are becoming more attractive + +Nov 5th 2016 | SÃO PAULO | From the print edition + + + +EARLIER this year Arnaldo Kabá, chief of Brazil’s Munduruku people, journeyed from his home in Brazil’s Tapajós valley to London to demand a halt to projects which, he believes, threaten his people’s land. Flanked by activists in monkey costumes, he showed up at the steel-and-glass British headquarters of Siemens, a German engineering firm that makes turbines for hydroelectric dams, and demanded an audience with its boss in the country. The boss was not around; the company promised Mr Kabá a meeting later. + + + +The chief is especially exercised about the São Luiz do Tapajós (SLT) project, in which Siemens is not involved. It would dam one of the last big unobstructed tributaries of the Amazon (see map). The project would provide about a third of the hydropower that Brazil plans for the forthcoming decade, but it would also flood 376 square km (145 square miles) of land where the Munduruku hunt, fish and farm. “The Tapajós valley is our supermarket, our church, our office, our school, our home, our life,” explained Mr Kabá. + +The Munduruku won a battle in August when IBAMA, Brazil’s environment agency, suspended licensing for the project, saying that Eletrobrás, the utility leading it, had provided too little information on its social and environmental impact. + +That decision might still be reversed. Since it was made Brazil has impeached one president and installed another, Michel Temer. His priority is restoring growth to an economy suffering its worst-ever recession. The new government has put IBAMA’s decision-making, which many investors regard as too slow and cumbersome, under review. + +The tussle over the Tapajós dam is part of a bigger fight about Brazil’s energy future. SLT is an example of a new sort of hydropower project, which floods a smaller area than traditional dams and therefore ought to cause less disruption and environmental damage. The massive Itaipu dam on the border with Paraguay inundated an area nearly four times as large. But critics of hydropower say “run of river” projects like SLT, which use a river’s natural flow to turn turbines, do not work as well as advertised. Though less destructive than conventional dams, which require bigger reservoirs, they still provoke opposition from people like the Munduruku. Other energy sources, such as gas and wind, are becoming more competitive. Brazil has “an opportunity” to rethink its energy policies, says Paulo Pedrosa, an energy official. + +Hydropower has long been Brazil’s main way of generating electricity. Most forecasts suggest it will remain so. The government intends to build more than 30 dams in the Amazon over the next three decades. The military dictators of the 1970s had little compunction about flooding vast areas of forest and displacing thousands of families. More recent (democratic) governments have turned to run-of-river dams. The world’s third-largest hydropower plant by output, Belo Monte on the Xingu river, opened earlier this year. + +But newfangled dams have problems. More than conventional ones, their output of electricity fluctuates with the seasons. Belo Monte can produce 11,000MW when the Xingu is in spate, but less than a tenth of that in the driest months (September and October). Climate change may worsen the problem. Some climate models predict that river flows in large parts of the Amazon will fall by 30% in coming decades. Deforestation is delaying the onset of the rainy season in some areas by six days a decade, according to research published in Global Change Biology, a journal. + +A river crawls through it + +Drought can be expensive. In 2014 power from conventional dams dipped because of a dry spell, forcing electricity companies to buy from gas- and coal-powered generators at high spot prices. The risk of such fluctuations rises with run-of-river dams. Carlos Nobre, a former chief of research at the ministry of science, technology and innovation, thinks more frequent droughts will make future hydropower projects in the Amazon unprofitable. + +Some energy planners think the answer to the shortcomings of run-of-river dams is to go back to the big-reservoir dams of the past. That is the solution favoured by Romeu Rufino, chief of Brazil’s electricity regulatory agency. It would eliminate the problem of variation in river flow (though not the risks that come with drought). The price would be causing environmental and social damage on the scale that earlier dams did. + +New fuels may give Brazil other options. Its potential for solar and wind energy is among the highest in the world. The government has promoted them with lavish tax breaks. In the blustery north-east, wind power overtook hydropower this year; wind turbines now generate 36% of the region’s electricity, up from 22% in 2015. The Energy Research Company, a firm linked to the energy ministry, expects renewable generating capacity apart from hydropower to double by 2024. + +Generators fuelled by natural gas have been hurt by the subsidies lavished on renewable energy. But, though less climate-friendly than hydropower, they are beginning to compete with it as a source of steady baseload electricity. Brazil now produces gas in abundance as a by-product of pumping oil from its offshore wells. Its marginal cost of production is nearly zero. The future of baseload energy is “hydro-thermal”, rather than hydro alone, says Adriano Pires of the Brazilian Infrastructure Centre, a think-tank in Rio de Janeiro. + +What Brazil’s planners will ultimately decide is unclear. Decision-making is split among various agencies, including the energy ministry and the National Council for Energy Policy. Many officials, in their posts for decades, have pet projects, among them dams in the Amazon. + +The recession gives them extra time to reconsider the future energy mix. It has caused a sharp and unexpected drop in electricity use; consumption is unlikely to return to its pre-recession level until 2018. By then, Mr Kabá and his allies hope, dams like the one that threatens to flood the Tapajós valley will be deemed obsolete. + + + + + +Rio de Janeiro + +A Pentecostal’s progress + +Sin city elects a preacher as mayor + +Nov 5th 2016 | SÃO PAULO | From the print edition + + + +RIO DE JANEIRO is better known for bikinis than fire and brimstone. But on October 30th Cariocas, as the city’s residents are known, elected a Pentecostal bishop, Marcelo Crivella, as their mayor. Mr Crivella, a senator from the conservative Brazilian Republican Party (PRB), trounced Marcelo Freixo of the leftist Socialism and Liberty Party. + +Mr Crivella’s victory—after two unsuccessful campaigns—has rekindled talk of Pentecostals’ ascendancy in Brazilian politics. The PRB is the political arm of the Universal Church of the Kingdom of God (UCKG), Brazil’s second-biggest Protestant sect. It was founded in 1977 by Edir Macedo, a former Rio state lottery official (and Mr Crivella’s uncle). The UCKG’s prosperity gospel, preached in thousands of churches and through the 16 radio and television stations that helped make Mr Macedo a billionaire, appeals to Brazil’s aspiring poor. Besides capturing Rio, the PRB increased its nationwide vote share by half compared with its performance in the last local elections four years ago. + +This has liberal Cariocas and other like-minded Brazilians quaking in their Havaianas. Many fret about the spread of Pentecostals’ stern views on such issues as gay rights and abortion. So far, though, they have been political underachievers. Protestants (of whom Pentecostals are a subset) are thought to make up a quarter of Brazil’s population. But just 15% of deputies in Brazil’s congress share their faith. Despite its gains, the PRB won just 3.8% of the votes in local elections. Mr Crivella, the first Pentecostal to govern a big city, played down his links to the UCKG during the campaign. + +His victory owes more to his conservatism than to his faith, argues Edin Abumanssur of the Pontifical Catholic University in São Paulo. Voters abandoned the left, blaming it for Brazil’s recession and for sleaze under left-wing presidents over the past dozen years. + +Rio’s earthly concerns will prevent Mr Crivella from pursuing a religious agenda. He has already pledged to continue public financing for Rio’s gay-pride parade and its salacious samba schools. He has promised to improve schools, hospitals and public transport. Mr Crivella will be judged on his temporal successes. So will his fellow Pentecostal pols. + + + + + +Violence against women + +Murder and machismo + +Fighting femicide in Argentina + +Nov 5th 2016 | BUENOS AIRES | From the print edition + + + +POLICE called to a house near the Argentine city of Mendoza on October 23rd made a grim discovery. They found the body of Claudia Arias, a 31-year-old mother of three, alongside the corpses of her aunt and grandmother. The women had been beaten and stabbed to death. Two of Claudia’s children, an 11-year-old boy and a ten-month-old girl, were seriously wounded. Daniel Zalazar, her ex-partner, was arrested on suspicion of murder. Police believe the couple had fought over the paternity of her youngest daughter. The children are recovering in hospital. + +The triple murder shocked Argentines. So too did its timing. Four days before, thousands of demonstrators, mostly women dressed in black, marched through Buenos Aires and other cities to demand that the government do more to prevent violence against women. Claudia Arias was among them. It was the third march called by Ni Una Menos (Not One Less) since June 2015, when hundreds of thousands protested in Argentina, Uruguay and Chile. The latest demonstration—“Black Wednesday”—was a response to the rape and murder of Lucia Pérez, a 16-year-old student, in Mar del Plata in Argentina on October 8th. + +Last year an estimated 235 Argentine women were victims of “femicide”, defined as the murder of a woman because of her sex. Horrific though the number is, Argentina is less dangerous for women than most other Latin American countries. The murder rate for women is around a tenth of that in El Salvador and Honduras and is lower than in the United States. Where Argentina stands out is in the activism that the violence has stirred up. + + + +The country has relatively high levels of education, strong civil-society groups and a “long history of feminist activism”, points out Maxine Molyneux, a sociologist at University College London. La Voz de la Mujer (“Voice of Women”), an anarchist-feminist newspaper, was published at the end of the 19th century. Protest has forced the government to act, sluggishly at first, but with increasing urgency. + +Until now, it has focused on law enforcement. In 2009 the government of then-president Cristina Fernández de Kirchner enacted the “women’s comprehensive protection law”, which pledged to “prevent, punish and eradicate” violence against women. In 2012 her government joined others in Latin America in introducing anti-femicide laws, which raised the maximum prison sentence from 25 years to life. The next year she launched a helpline for victims of domestic violence. + +Progress has been slow. Government financing for the national women’s council, the agency responsible for putting the protection law into practice, was derisory until last year, when its budget was trebled. Although the law mandated annual reporting of femicide statistics, poor co-ordination between the statistics institute and the supreme court, which puts out the data, delayed publication until last year. Women calling the helpline wait up to half an hour to get through. + +The police do not yet take domestic violence seriously enough. At least a fifth of the women killed last year had complained to police about the men who were later accused of their murders. Many officers still believe, wrongly, “that domestic violence is a private matter”, says Sabrina Cartabia, a leader of Ni Una Menos. + +Mauricio Macri, who succeeded Ms Fernández as president at the end of 2015, is trying to do better. Under a new plan the government will spend 750m pesos ($50m) over three years to build 36 women’s refuges and increase the electronic tagging of violent men. + +Activists say that the urge to commit violence comes from a culture of machismo that encourages male misbehaviour. To eradicate such attitudes “you have to start young,” says Ms Molyneux. Mr Macri, who once suggested that women were in fact pleased to be the object of catcalls, is now heeding that lesson. His new plan would introduce “gender perspectives” into the national curriculum, encouraging teachers “constantly to refer to both sexes” and to abjure sexual stereotypes. It will take more than that to uproot machismo. But investing in classrooms as well as police stations is a good idea. + + + + + +Bello + +What is to be done in Venezuela? + +Vatican-sponsored talks are more promising than they look + +Nov 5th 2016 | From the print edition + + + +BOTH the timing and the presentation were inauspicious. On October 24th Nicolás Maduro, Venezuela’s embattled president, made an unscheduled call on Pope Francis. Meanwhile, in Caracas, a papal envoy announced that the Vatican had agreed to co-sponsor talks between the government and the opposition. The news came just days after the government-controlled electoral authority suspended—and perhaps cancelled—the referendum to oust Mr Maduro that the opposition seeks and the constitution allows. The opposition, which had long sought papal mediation, was at first taken aback when it came. + +The talks, which also involve the South American Union (Unasur), were widely written off even before they began, under the aegis of Claudio Maria Celli, an experienced Vatican diplomat, on October 30th. In fact, they offer the only chance of a swift and peaceful return to constitutional rule in Venezuela. + +That is urgent. Since replacing the late Hugo Chávez in 2013, Mr Maduro has presided over the dissolution of his country. His state-socialist economic policies, combined with lower oil prices, have produced a savage slump: according to the IMF, by the end of this year the economy will be 20% smaller than in 2013. Inflation is surging. Prolonged shortages of basic goods are causing palpable hunger. Infant mortality is rising sharply. + +The people have turned against the regime. In December the opposition won an election for the national assembly. Polls show that 80% of respondents want a change and more than 60% would vote to recall the president. Mr Maduro, a bovine figure, is a prisoner of Chávez’s ghost. He sees himself as the guardian of his mentor’s “revolution”. Rather than share power, he has slid into dictatorship. He rules by decree, ignoring the assembly. Many analysts think his plan is to tough it out until his term ends in 2019. + +Can he get away with it? Twice in the past two months the opposition has organised vast demonstrations to press for the recall referendum. But the regime retains a monopoly of hard power. In what a foreign security analyst calls “a creeping military coup”, Mr Maduro has turned many government responsibilities, including food distribution, over to the armed forces. He uses selective repression to intimidate opponents. According to the Venezuelan Penal Forum, an NGO, there are more than 100 political prisoners. + +Radicals in the opposition, among them Leopoldo López, a prisoner since 2014, trust in further mass protests. Their implicit strategy is to force the army to choose either to fire on unarmed demonstrators or to break with the regime. That is risky. A descent into violence would help neither the opposition nor the country. Many Washington think-tankers are huffing and puffing for the United States to take tougher action. It is hard to see that helping. In 2015 it imposed sanctions on several Venezuelan officials; Mr Maduro milked the episode for nationalist propaganda. + +Since 2014 he has had desultory conversations with the opposition, through Unasur, whose secretary-general, Ernesto Samper, is sympathetic to chavismo. The opposition, rightly, suspects that Mr Maduro used this “dialogue” to play for time. This week it called off a protest march after the government released five political prisoners. But Mr López’s party and others are suspicious of the talks. Mr Maduro’s aim may be to use them to divide the opposition. + +That Unasur is still at the table obscures the fact that the Vatican’s involvement changes the nature of the negotiations. For the first time, the two sides have sat down to discuss an agenda. This includes restoring the rule of law, human rights (read, releasing all political prisoners), the economy and the electoral timetable. Thomas Shannon, an American diplomat, visited Caracas this week to back the talks. By agreeing to intervene in Venezuela at last, Pope Francis has put his prestige on the line. + +The negotiations will not be easy. The aim should be to broker a transition that would see Mr Maduro restore constitutional rule or be replaced, either through an early election or by a national-unity government. Despite public pledges of loyalty, much of the army wants a transition. And Mr Maduro is running out of cash. The government faces debt payments of $13bn over the next year, while its international reserves have sunk to just $10.9bn (mainly in gold). The constitution requires the assembly to approve increases in the debt limit. Investors are likely to insist on that. Mr Maduro’s bargaining position is less impregnable than it looks. That is why the talks offer the best hope of saving Venezuela. + + + +Asia + + + + + +South Korean politics: No confidantes + +Australia and asylum-seekers: Bashing the boat people + +Sex education in Japan: Tiptoeing around + +The South China Sea: Duterte waters + +Politics in Tamil Nadu: Suspended animation + + + + + +South Korean politics + +No confidantes + +An influence-peddling scandal threatens to hobble the president + +Nov 5th 2016 | From the print edition + + + +“ARE we living in the Republic of Choi?” asks the Korea Times, a local newspaper. It is the question that has consumed South Korea for the past fortnight, and filled columns of conjecture. Park Geun-hye, the conservative president, has admitted that she turned to an old friend, Choi Soon-sil, for advice on matters of state, even though she had no official position in government. But press reports and opposition politicians suggest that Ms Choi’s influence went much further: that she was in effect a puppeteer controlling Ms Park’s administration, deciding everything from cabinet appointments to policy on North Korea and, prosecutors claim, using her clout to obtain money and favours. + +In an effort to contain the explosion of popular anger at the revelations, Ms Park has in the past week fired ten of her aides, including her chief of staff; reshuffled the cabinet; and appointed a new prime minister, Kim Byong-joon. Mr Kim was an aide to Roh Moo-hyun, a liberal former president, and so is notionally a political opponent of Ms Park. His appointment is therefore supposed to be an overture to the opposition. On November 3rd Mr Kim said he would “use 100%” of his rights as prime minister, suggesting a more expansive role for a position that is mostly ceremonial—though whether the National Assembly will approve his appointment is unsure. Cho Kuk of Seoul National University says the president, whose party recently lost its parliamentary majority but who has 15 months of her single five-year term left, is not just a lame duck, but a “dead duck”. + +Ms Park had apologised publicly after JTBC, a local cable-television network, said last month that it had found edited presidential speeches and cabinet-meeting briefs on a discarded computer used by Ms Choi. The president said that she had consulted her friend with good intentions, and that Ms Choi had in the past helped her “through a difficult time”. + +Ode to Choi + +Her relationship with the Choi family is no secret, though its details are fuzzy and the subject of popular lore. Soon after the president’s mother was assassinated in 1974, with a bullet that was meant for her father (then-president Park Chung-hee), Ms Park was befriended by Ms Choi’s father, Choi Tae-min. He is the founder of a cult called the Church of Eternal Life, and claimed that he could contact her dead mother. Ms Park spoke at one of his services in 1975. In a diplomatic cable from 2007 released by WikiLeaks, a whistle-blowing website, the American embassy in Seoul reported rumours that the late Choi had had “complete control” over Ms Park’s “body and soul during her formative years and that his children accumulated enormous wealth as a result”. + +Now Ms Choi is accused of using her presidential connections to convince some of South Korea’s biggest firms to funnel 80bn won ($70m) into two cultural foundations she controlled, K-Sports and Mir, for her personal benefit. She returned to South Korea from Germany on October 30th to face questioning by prosecutors, who have requested a warrant for her arrest on charges of fraud and abuse of power. Ahn Chong-bum, one of the fired presidential aides, is also being interrogated on suspicion of pressing the conglomerates (some of which are being questioned). Ms Choi said she had “committed a crime” that she “deserved to die for”, but has denied allegations of corruption and influence-peddling. Claims of wrongdoing have now spread from her daughter, Chung Yoo-ra (who is thought to have received favours at a prestigious university thanks to her family’s connections) to her sister and niece. + +Thousands have protested in Seoul, calling for Ms Park to resign. This week’s sacking and reshuffle struck many as a diversion (many of those fired are not suspected of misconduct). Her approval ratings have sunk to single digits. This week Park Won-soon, the liberal mayor of Seoul and a possible presidential candidate (no relation to Ms Park), urged her to resign. Choo Mi-ae, leader of the main opposition party, Minju, lambasted Ms Park’s rule as “frightening theocratic politics”. + +Even some in Ms Park’s own party are deserting her: over 20 Saenuri MPs have formed a coalition to press for its leaders to resign. Victor Cha of the Centre for Strategic and International Studies, a think-tank, says she may well serve out her last year “without a party to support her”. Some think factions keen to distance themselves from her may be behind the allegations that have swirled in the conservative press, previously a staunch defender of Ms Park. + +But Ms Park’s opponents will hesitate to push too hard for her removal; if Ms Park were to step down (a first for a democratically elected president), a vote for her successor would be held within 60 days—and neither Minju nor Ms Park’s Saenuri party have strong contenders lined up. MPs are likely also to resist calls for her impeachment: when the constitutional court dismissed the only previous case, made against Roh in 2004 for minor election-law violations, voters punished the MPs who had supported it in legislative elections. + + + +Most of South Korea’s presidents have ended their terms weighed down by corruption scandals and rock-bottom approval ratings. Yet Mr Cho says that, if the charges are true, this is different in nature from previous cases: the governing system this time “proved to be useless”. The biggest daily, Chosun Ilbo, said this week that the political imbroglio was “a tragedy” for Ms Park—but “a bigger tragedy for Korea”. + + + + + +Australia and asylum-seekers + +Bashing the boat people + +The government searches for ways to treat refugees even more harshly + +Nov 5th 2016 | SYDNEY | From the print edition + +A fair dinkum Aussie welcome + +IT HAS become something of a parlour game among Australian politicians. Ever since 2001, when John Howard, the prime minister of the day, turned away a trawler that had rescued 433 refugees from the sinking boat smuggling them to Australia, successive governments have competed to come up with ever harsher measures to deter asylum-seekers. + +They have been detained, children and the elderly included, in remote desert camps. They have been locked up for years on the Pacific islands of Manus (part of Papua New Guinea) and Nauru while their claims of asylum are processed. One government declared that the Australian islands closest to Indonesia, and hence easiest for refugees to reach, would no longer be considered Australian for the purposes of claiming asylum; a subsequent one went further and declared that all of Australia would no longer be considered Australian for the purposes of claiming asylum. Since December 2013 the navy has simply turned or towed boats of refugees entering Australian waters back out to sea. + +Now Malcolm Turnbull’s conservative government has found a way to tighten the screws yet further. Australia had already said that it would not allow anyone arriving by boat without a visa to settle in the country. Instead, such people have been packed off to Manus or Nauru to have their asylum claims reviewed. Australia is trying to find third countries to accept those deemed genuine refugees. + +But what if some of those refugees end up somewhere more welcoming (New Zealand has offered to admit some of them), obtain a passport and then come to Australia on a holiday or a business trip? Mr Turnbull finds the idea so harrowing that his government is introducing legislation to prevent it. The bill would ban all adults whose claims have been processed in Manus and Nauru from ever setting foot in Australia. The ban will be retroactive, applying to anyone processed after the government first declared that no one arriving by boat could settle in Australia. + +The boats have slowed to a trickle: 29 have been intercepted since December 2013, whereas 300 arrived in the 12 months before. But Mr Turnbull says the new rule is needed to “send the strongest possible signal to the people-smugglers”. Refugee advocates, human-rights groups and political opponents suspect a baser motive. Mr Turnbull is grappling with poor approval ratings, mutinous right-wingers in his government and One Nation, a resurgent anti-immigrant party. + +At least 1,500 people will be affected by the government’s posturing. One is Nayser Ahmed, a member of Myanmar’s persecuted Rohingya minority. He was separated from his wife and two children while travelling across Indonesia. His family arrived before the cut-off in 2013; he came just after. They are now living in Sydney; he has been on Manus for three years, hoping, says his lawyer, that Australia will relent. “Now he’s facing the prospect that he might not ever see his kids again.” + + + + + +Sex education in Japan + +Tiptoeing around + +Better to learn about sex in school than from pornographic comics + +Nov 5th 2016 | TOKYO | From the print edition + + + +FIVE 17-year-old students take turns to give a three-minute presentation at Koishikawa high school in Tokyo. The first speaks about government services for pregnant women; next come the risks of childbearing for women older than 35, then the history of contraception, the morning-after pill and infertility. The teacher gives a brief outline of abortion law in Japan before turning to sexually transmitted diseases (STDs), and the 45-minute sex-education lesson is over. + +Japan has a complex relationship with the birds and the bees. Sex is everywhere, in gleefully commercialised form, from explicit manga comics to love hotels where rooms are rented by the hour. Some of these businesses involve young people: “JK” services, for example, involve men paying schoolgirls to lie next to them or go for a walk. Yet in many respects Japan is very conservative: sex remains a subject that parents and teachers are embarrassed to discuss. When they do, it is usually in the context of having a family. + +That makes good sex education all the more important, but critics say schools teach too little, too late. Government guidelines, almost unchanged since the 1990s, only outline a minimum content that schools must impart, during time set aside for health and sports. A survey conducted in 2008 found that on average students only received around three hours of sex education a year. This is “totally inadequate”, says Mieko Tashiro of Saitama University. Teaching methods are old-fashioned, too. Koishikawa prides itself on interactive methods such as the presentations. But even these lessons are still mainly an outline of facts—how many weeks abortion is available for, the cost of IVF—rather than an open discussion. + +Nanako Oba was so disillusioned with what her five children learned at school that she set up a company to teach sex education and train others to do so. She thinks schools should try not just to explain the mechanics of sex, but also to help young people cope with the emotional upheaval of puberty. She also advocates much more explicit and practical instruction, such as demonstrating how to use a condom and bringing babies into schools. + +Such ideas are controversial. As recently as 2002 the government urged teachers of pupils below the age of 16 to explain contraception without mentioning sex. When in 2003 a teacher used dolls to explain reproduction to his students, who had mental disabilities, Tokyo’s education board disciplined him for “extreme” teaching. To this day many teachers avoid using words like “penis” or “vagina”. New government guidance due to be issued next year is likely to make it compulsory for schools to talk to pupils about different sexual orientations, says Ryoichi Mori of the ministry of education. Perhaps aware of the inhibitions of their staff, 40 schools have already asked Ms Oba to teach the subject. + +In fact, data from the Japanese Family Planning Association suggest that public attitudes are becoming less permissive, not more. In 2014 the proportion of people who thought that everyone 15 or older should know how to use a condom had dropped, to just over half. Meanwhile, over 90% thought children should learn about the ethics and morals of sex, up from three-quarters in previous years. + +There is even controversy about the purpose of sex education. Mr Mori says that hitherto the main goal has been to prevent STDs, but that Japan’s shrinking population has started a debate about whether the aim should be, in part, to encourage childbearing. A couple of years ago, when the government began handing out a leaflet about the optimal age for a woman to become pregnant, there was a huge backlash. + +Japan’s teenagers appear to be less promiscuous than their peers in the rich world. A study in 2013 by Sagami, a Japanese condom company, found that on average men and women in their 20s had lost their virginity at 19 (the age of consent is 13). STD rates are low. So is the teenage birth rate: just four teenage girls in every 1,000 give birth each year, according to the World Bank. That is higher than in South Korea (two), but far lower than in Britain (15) or America (24). However, abortions—which are relatively common in Japan—may be masking the scale of the problem, says Ms Oba. Some 80% of teenage pregnancies end in abortion in Japan, compared with 46% in America. + + + + + +The South China Sea + +Duterte waters + +Filipino fishermen return to waters disputed with China + +Nov 5th 2016 | BEIJING AND SINGAPORE | From the print edition + + + +LIKE the dog that didn’t bark in the night, Chinese coastguard vessels around one tidal atoll in the South China Sea have recently distinguished themselves through inaction. For the past four years—ever since Philippine naval inspectors tried to arrest some Chinese fishermen for illegally harvesting endangered species—Chinese ships have blocked Filipino fishermen from plying their trade near Scarborough Shoal. This week, however, Philippine television has shown fishermen returning from the shoal grinning, their boats full. + +After China began its blockade, the president of the day, Benigno Aquino, filed a complaint against it at an international tribunal in The Hague, which ruled in the Philippines’ favour earlier this year. The shoal, after all, is only some 220km from the Philippine mainland, within its exclusive economic zone, but almost 900km from China. Mr Aquino also signed an Enhanced Defence Co-operation Agreement (EDCA) with America, which lets American troops operate out of five Philippine military bases. He called for a military response from America were China to begin building on the shoal—as it has on several other disputed reefs and islets in the South China Sea. + +In June, however, Rodrigo Duterte replaced Mr Aquino as president, and changed course abruptly. He has announced an end to joint Philippine-American military exercises and threatened to abrogate the EDCA. To drive this shift home, on a state visit to China two weeks ago, he announced his “separation” from America, and told his hosts: “I have realigned myself in your ideological flow…I will be dependent on you for all time.” + +Following this display of fealty, China promised billions of dollars in loans and investment, and ended its blockade of Scarborough. The message for the other South-East Asian nations with competing claims in the South China Sea could not be clearer: accept China’s sovereignty and riches will follow. Najib Razak, Malaysia’s embattled prime minister, turned up in Beijing this week cap in hand. + +Not only has Mr Duterte completely undermined America’s efforts to preserve a united front by other littoral states against China’s territorial ambitions in the South China Sea, he has also saved Xi Jinping, China’s leader, from a dilemma. After the adverse ruling from the tribunal, hardliners in China, especially in the military, were urging Mr Xi to hit back by, for example, building an air strip on Scarborough Shoal. Others argued that his tough line was already too risky, so he should adopt a more emollient approach. Thanks to Mr Duterte, China has got most of what it wanted—most notably, bilateral talks, which it has long asked for but the Philippines had rejected—without lifting a finger. + +Nonetheless, China should be wary of interpreting Mr Duterte’s enthusiasm for Chinese investment as acquiescence. A justice on the Philippine supreme court has warned Mr Duterte that ceding the shoal would be unconstitutional, and thus an impeachable offence. Among Filipinos, America remains broadly popular, and China broadly loathed. And while Mr Duterte is telling the Chinese leadership what they want to hear, he has said seemingly contradictory things in Japan and Vietnam, both of which also have maritime disputes with China. + +In Vietnam Mr Duterte stressed the need for maritime “freedom of navigation and overflight [and] unimpeded commerce...particularly in the South China Sea”. A joint statement in Japan emphasised respect for the UN treaty on which the tribunal’s ruling on Scarborough Shoal was based. China, for its part, may also be double-dealing: it seems to be letting Filipinos fish around the atoll, but not inside the huge lagoon it forms, as they used to. + + + + + +Politics in Tamil Nadu + +Suspended animation + +A South Indian state awaits news of its ailing leader + +Nov 5th 2016 | CHENNAI | From the print edition + +Flowers for Mother + +FOR 40 days and counting, the 78m citizens of Tamil Nadu have neither seen nor heard their chief minister, Jayaram Jayalalithaa. In her absence admirers have organised marches and mass prayers, pleading to higher powers for her speedy recovery from an undisclosed illness. Last week a different Tamil lady in her 60s was killed when a procession in Ms Jayalalithaa’s honour turned into a stampede. + +The epicentre for the well-wishers’ demonstrations is the Apollo hospital in the state capital of Chennai, formerly known as Madras. Ms Jayalalithaa has been there since September 22nd, her condition a closely guarded secret. Phalanxes of police stop and search everyone entering the building, including ambulances. Clusters of anxious citizens, many of them party workers, sit on the street outside, taking turns singing hymns, laying offerings of fruits and flowers, chatting and sometimes weeping openly. Men from her party, the All-India Anna Dravida Munnetra Kazhagam (AIADMK), wear white shirts with a filmy pocket sewn over the heart. Tucked in each, a photograph of the chief minister smiles through the fabric. The men express faith that “Amma” or “Mother”, as many Tamils call her, will be all right. + +In the first weeks of her seclusion the only official reports on her condition were vague and implausible. The local press took to scrutinising comings and goings from the Apollo with the intensity of cold-war Kremlinologists. Every outlet held a 24-hour stakeout; the Hindu newspaper created a special inset titled “Apollo Diary”. The arrival of a British doctor, a specialist in treating sepsis, was noted with great interest. On October 21st the hospital produced a clearer statement about her condition: Ms Jayalalithaa was “interacting and progressing gradually”. The unsatisfied media have to tread carefully, however. Eight people have been arrested for joking or spreading rumours about the chief minister’s health on social media. + +There are few democracies in which elected officials are accorded such deference. Across from the headquarters of the state government, on the seafront in downtown Chennai, a series of vaulting arches, imposing obelisks and gilt statues memorialise two of the chief ministers who preceded Ms Jayalalithaa: Annadurai, for whom the AIADMK is named, and M.G. Ramachandran or “MGR”, the screen idol who founded the party in his honour. Ms Jayalalithaa was an actress in the Tamil cinema too, and MGR’s mistress (his wife also served briefly as chief minister). A conspicuous space next to the two monuments stands ready to welcome a third. + +But there is another potential claimant, Ms Jayalalithaa’s arch-rival, M. Karunanidhi. He has been chief minister for five spells starting in 1969 and is supremo of the DMK party, which Annudurai founded and from which MGR split to found the AIADMK. Mr Karunanidhi was originally a screenwriter, and wrote songs and scripts for MGR and Ms Jayalalithaa before they all fell out. He is 92 and uses a wheelchair. + +Dravid and Goliath + +The parties share origins in the Dravidian movement, an assertion of the rights and dignity of South Indians, and particularly Tamils, against the primacy of North India and the Hindi language. They believe that invasive northerners long ago installed themselves as Brahmins in the South at the expense of other castes, in whose favour they have tended to govern. They are generally friendly to business, their spendthrift populism aside. Mainly they compete to offer voters ever more lavish handouts. In 2006 the DMK triumphed in state elections after it offered voters free televisions; it subsequently handed out some 13m of them. At the next election, the AIADMK matched its pledge of free blenders and fans, and romped home. Perhaps unsurprisingly, Tamil Nadu’s state debt ballooned by 92% between 2010 and 2015. + +Yet as vapid, incestuous and irresponsible as state politics sounds, Tamil Nadu has prospered under the pair’s rule. From 2004 to 2015, its economy grew at an average rate of over 12% a year. Average annual income, at $2,431 per person, is now 50% higher than the national figure. + +That is not just luck. For one thing, much of the lavish spending gets to the right people, helping to stimulate growth, points out A.R. Venkatachalapathy, a historian of the Dravidian movement. Free meals at schools and subsidised ones at “Amma”-branded canteens, where a good meal costs 5 rupees ($0.08), have ended severe malnutrition in the state, for instance. + +It also helps that the two parties have run the state since 1967, to the exclusion of national parties. That is important, since their delegations to the national parliament in Delhi are sometimes big enough to hold the balance of power. That makes it hard for national governments to stand up to Tamil Nadu on matters such as the sharing of water between states, and easier for the two to extract goodies of various sorts from the centre. + +“Tamil Nadu combines relatively successful economic growth with a positive performance in regard to social development, in a way that is distinctive, if not absolutely unique” among India’s big states, argue John Harriss of Simon Fraser University and Andrew Wyatt of the University of Bristol in a forthcoming study. The parties’ weakness, however, may be succession. Mr Karunaridhi is banking on his son, who is called Stalin. The AIADMK, according to Mr Venkatachalapathy, is organised around a “queen bee” or “mother termite” principle, and may not be able to function at all without her. Ms Jayalalithaa’s deputy conducts every meeting beneath a massive portrait of his boss. He keeps an empty chair for her. Forty days and counting. + + + +China + + + + + +Politics in Hong Kong: China’s wrath + +Politics: Esprit de core + +Fakes: Seeing red + +Banyan: Sun-worshippers + + + + + +The localists’ curse + +China wants to nip in the bud any talk of Hong Kong’s independence + +A ruling by its legislature will inflame passions in the territory + +Nov 5th 2016 | HONG KONG | From the print edition + + + +SO ANGRY were senior members of the Chinese Communist Party about the China-baiting manner in which two legislators in Hong Kong took their oaths of office that “their lungs exploded”. So said a party-controlled newspaper in the territory in an editorial this week warning that the pair, and others like them who call for Hong Kong’s independence, would “pay the price”. Hyperbole is common in the party’s rhetoric, but it is clear that the government in Beijing has lost patience with Hong Kong’s radicals. It appears ready to intervene to prevent the two from taking up their seats. Such a move is likely to fuel resentment in the territory of the party’s political control there. + +As The Economist went to press, senior members of the National People’s Congress (NPC), China’s parliament, were believed to be meeting in Beijing. They were expected to discuss a response to the oath-taking on October 12th by Sixtus Leung and Yau Wai-ching, both from a party called Youngspiration. Mr Leung and Ms Yau pronounced China in a derogatory way and displayed a banner saying “Hong Kong is not China”. Ms Yau mumbled her words to make them sound like “People’s re-fucking” of China. + +To judge from Beijing-controlled newspapers in Hong Kong, the response will be clear: the two will not be given another chance to take their oaths, and will be disbarred from the Legislative Council, known as Legco. That would be a relief to some people in the territory. Since the swearing-in, Legco has been paralysed by bickering and brawls among legislators over whether the two should be allowed to swear in again, and whether they should be admitted to the chamber. In the latest such outbreak, on November 2nd, six of Legco’s security guards were taken to hospital after mêlées erupted (Ms Yau, in blue dress, and Mr Leung, rear centre, are pictured during one of them). + +Courting trouble + +But to many in the territory, intervention by the NPC would be a hugely unwelcome shock. Just as Chinese legislators were beginning their discussions in Beijing, Hong Kong’s High Court was launching proceedings in a case filed by the territory’s government that also aims to block the two from swearing in again. The local government’s legal move had already riled pro-democracy politicians in the territory, who note that legislators are often given another chance to swear in (playing with the wording of oaths on the first attempt is something of a tradition among feistier lawmakers). But the NPC’s effort to pre-empt the court’s decision by issuing a ruling of its own would be widely seen as a blow to Hong Kong’s judicial independence. + +Although many had feared the NPC would eventually step in, few had expected it to show its hand without waiting for the case to make its way to Hong Kong’s Court of Final Appeal. Just this week, Hong Kong’s secretary for justice, Rimsky Yuen Kwok-keung, had implied the case could be handled well enough by Hong Kong’s courts. He said Hong Kong’s judges would deal with it “in a fair, just and professional manner”. However, the chief executive, Leung Chun-ying, said there was a “possibility” that he might ask the NPC for help. + +Few dispute that the national legislature has a right to make its own interpretations of the Basic Law, as Hong Kong’s constitution is known. Oath-taking by legislators is an issue covered by that document. But this would be the NPC’s first such pre-emptive move in a case only just getting under way in a Hong Kong court. + +That it appears ready to do so is a sign of China’s fear of the rapid emergence of groups like Youngspiration. Their members, often called “localists”, not only resent the party’s political influence in Hong Kong, but also an influx of mainlanders into the territory. Localists won about 20% of the vote in elections to Legco that were held in September, enabling six of them (including the controversial pair) to win seats. It is their first representation in the 70-member body. + +By intervening, however, the central government would risk reigniting the passions that flared in 2014 when demonstrators paralysed business districts with sit-ins for several weeks. The “Umbrella Movement”, as it was called, grew out of fears that the Communist Party was trying to cripple Hong Kong’s democracy. The protesters’ failure to win concessions gave birth to the localist cause. A hard line from the NPC on the oath-taking case would give their campaign yet more impetus. + +This article appeared in the Print Edition with the headline: China’s wrath + + + + + +Esprit de core + +Xi Jinping gets a new title + +He wants to show who’s boss in the struggle that will now unfold + +Nov 5th 2016 | BEIJING | From the print edition + + + +COMMUNIST leaders relish weird and wonderful titles. Kim Jong Il, the late father of North Korea’s current “Great Leader”, was, on special occasions, “Dear Leader who is a perfect incarnation of the appearance that a leader should have” (it doesn’t sound much better in Korean). China’s rulers like a more prosaic, mysterious epithet: hexin, meaning “the core”. Xi Jinping—China’s president, commander-in-chief, Communist Party boss and so forth—is now also officially “the core”, having been called that in a report issued by the party’s Central Committee after a recent annual meeting. + +The term was made up in 1989 by Deng Xiaoping, apparently to give his anointed successor, Jiang Zemin, greater credibility after the bloody suppression of the Tiananmen Square protests. Just as Mao had been the core of the first generation of party leaders and Deng himself of the second, so Mr Jiang was of the third. (Hu Jintao, Mr Xi’s predecessor, was supposedly offered the title of fourth-generation core but modestly turned it down.) + +Being core confers no extra powers. Mr Xi has little need of those; he is chairman of everything anyway. Status, though, is what really matters in China (Deng ruled the country for a while with no other title than honorary chairman of the China Bridge Association). And Mr Xi seems to be finding that all his formal power does not convey enough. Early this year, in what looked like a testing of the waters, a succession of provincial party leaders kowtowed verbally to Xi-the-core. But the term soon disappeared from public discourse. Its revival makes it look as if Mr Xi has won a struggle to claim it. + +That may augur well for him in his forthcoming battles over the appointment of a new generation of lesser officials (the peel?) at a party congress next year. Mr Xi wants to replace some of the 350-odd members of the central committee with his own people, while keeping as many of his allies as he can. In a sign that he might be able to do that, officials have started dismissing as “folklore” an unwritten rule that members of the Politburo have to retire at 68. The rule is commonly known as “seven up, eight down” (qi shang, ba xia), meaning 67 is fine, 68 is over the hill. Getting rid of it would seem to open the way to the non-retirement of several of Mr Xi’s close allies, notably 68-year-old Wang Qishan, who is in charge of fighting graft. It might even pave the way for Mr Xi’s own refusal to collect his pension when his second (and supposedly final) term as party chief is up in 2022, and he will be 69. + +There is another parallel between political language now and in 1989. The recent meeting eschewed the party’s usual practice of tying current events to the triumphs of earlier Communist history and instead set the scene by referring mostly to the congress in 2012, when Mr Xi became leader. Another time when the party ignored history in this way was after the Tiananmen killings, when it wanted to draw a veil over what had just occurred and signal a fresh, dictatorial start. Mr Xi seems to be saying, implicitly, that a new era has begun with him, core among equals. + +This article appeared in the Print Edition with the headline: Esprit de core + + + + + +Seeing red + +Chinese women rage about unsafe sanitary towels + +A once-taboo subject is emerging into the open + +Nov 5th 2016 | BEIJING | From the print edition + +The periodic fable + +IN RECENT years Chinese consumers have been duped by misbranded, shoddy condoms; tainted alcohol; 40-year-old meat and, in 2008, contaminated baby milk that killed four children and landed 50,000 in hospital. Knock-off brands of sanitary towels are the latest example of China’s enduring failure to keep products safe. In late October police arrested two suspects in Nanchang in the southern province of Jiangxi, accusing them of making some 10m pads since 2013 in a dirty workshop and packaging them with popular trademarks. Most were sold at small shops in the countryside. + +Almost all women in China within a certain age-range worry about the quality of their pads—even legitimate ones sometimes fail safety tests. Sanitary towels are must-buy items for many Chinese tourists when they go abroad (along with Japanese toilet seats and designer handbags). + +Many netizens have accused the authorities of being patronising and negligent in their handling of the recent scandal. People’s Daily, the Communist Party’s main mouthpiece, ran an online infographic headlined: “Girls, after all these years, are you really using sanitary pads correctly?” With it was an illustration of a stick-thin ballerina, leg held high. Articles elsewhere advised people how to spot fakes by checking for a chemical smell or irregular shape. One netizen complained about a litany of things that Chinese consumers have to watch out for, from cooking-oil scooped from drains and reused by restaurants, to fake medicines dispensed by doctors. “It’s so awesome living in China,” the blogger wrote. + +The scandal may have one positive outcome: bringing a once-taboo subject further into the open. Menstrual blood is often seen as dirty; girls in China receive little education in options for coping. Most women prefer to use pads—tampons are expensive and hard to find in shops (most are imported). Only 2% of Chinese women use them compared with some 70% of Americans, according to a survey in 2015 by Cotton Incorporated, an American trade body. A third of Chinese women have never heard of them. + +Widespread misunderstanding about periods was evident when Fu Yuanhui (pictured), a celebrity Olympic swimmer, said she had swum badly at this summer’s games in Rio de Janeiro because she had her period. Many Chinese asked how it was even possible to swim at such a time. Chinese women often avoid cold food, cold drinks and physical activity while menstruating. Many praised Ms Fu’s use of the word “period” rather than the far more popular euphemism, “My aunt has come.” Greater debate now may prompt some to realise they have let menstruation cramp their style for too long. + +This article appeared in the Print Edition with the headline: Seeing red + + + + + +The Sun belt + +China and Taiwan struggle over Sun Yat-sen’s legacy + +Which side is the true heir, and does Taiwan’s new president care? + +Nov 5th 2016 | From the print edition + + + +FOR decades Taiwan’s rulers have paid their respects from afar to Sun Yat-sen, also known as Sun Zhongshan: “father of the nation”, founder of the Kuomintang (KMT) or Nationalist Party, and first president of the Republic of China. In a ritual called yaoji, they face towards Sun’s mausoleum in Nanjing, 800km (500 miles) to the north-west in China, and offer fruit, burn incense and recite prayers. + +Now that links across the Taiwan Strait are better, Sun-worshippers may make the pilgrimage in person. On October 31st it was the turn of the KMT’s chairwoman, Hung Hsiu-chu. But not only do some Taiwanese adore Sun. Museums in his honour also exist in Hong Kong, Macau, Singapore and Penang. He has a memorial park in Hawaii, where the great republican spent his teenage years, and a plaque in London, where he lived in exile from 1896-97. Most striking of all, he is admired by the Chinese Communists, who “liberated” China in 1949 from KMT rule. + +In the Communist telling, Sun is the “forerunner of the democratic revolution”. As one visitor to his mausoleum put it this week: just as one sun and one moon hang in the sky, “there is only one father of the country.” There may be more Zhongshan Streets in China’s cities than Liberation Avenues. To mark this month’s anniversary of Sun’s birth 150 years ago, the state is minting a set of commemorative coins, including 300m five-yuan (75-cent) pieces that will go into circulation. It is a signal honour for a non-Communist. The party views Sun as a proto-revolutionary. + +He makes an unlikely hero. Sun spent much of his life not in the thick of action but abroad. Half-a-dozen revolts that he helped organise against an ossified Qing dynasty were failures. As for the Wuchang uprising of October 1911, the catalyst for the end of three centuries of Manchu domination, he learnt of it from a Denver newspaper. He was back at the head of China’s first republican government early the following year, but merely as “provisional” president. Lacking the military strength to pull a fractured country together, he said he was the place-warmer for a strongman, Yuan Shikai. The nascent republic soon shattered and Yuan crowned himself emperor. Pressure from Western powers and Japan exacerbated China’s bleak situation. By 1916 Sun was back in exile again, in Japan. + +For all that, Sun had brought down a rotten empire. For years he had raised the alarm over China’s direction, denouncing the Manchus and the rapaciousness of external powers. All his life, Sun had strived for a new republican order to turn a stricken China into a modern nation-state. + +His ideas were hardly systematic, but he never deviated from the priorities of fostering national unity among Chinese, promoting democracy and improving people’s livelihoods—his “Three Principles of the People”. While railing against foreign depredations, he called for Chinese to embrace Western freedoms and rights (Sun’s messianic drive may have derived from his version of Christianity). His was an astonishingly more cosmopolitan world-view than that displayed by today’s Chinese leaders. + +Yet the longest-lasting impact of Sun on Chinese political life derives from something different. In the early 1920s he listened to advisers from the Soviet Union, which had won his admiration by renouncing territorial claims in China. He reorganised the KMT along Leninist lines, giving himself almost dictatorial powers (in Leninspeak: “democratic centralism”). The immediate effects were striking: an alliance between the KMT and the young Communist Party and a northward military advance in 1926 under Chiang Kai-shek, Sun’s heir, that toppled the warlords who were then wreaking havoc. Sun had died of liver failure the year before. He did not live to experience the brief national unity that Chiang imposed, nor the parties’ fatal split and descent into bloodshed, nor their struggle over Sun’s mantle. + +Follow the Sun + +And his legacy today? Consider that among his three principles, the two 20th-century dictators, Mao Zedong in mainland China and Chiang Kai-shek on Taiwan, gave a damn only about the first, national unity, on which, by their standards, they must be judged poorly. Sun’s Leninist party organisation—never one of his hallowed principles—had a far more profound impact on the two autocrats, and still does on China’s rulers today. + +In Taiwan dictatorial KMT rule began crumbling a few years after Chiang’s death in 1975. Democratic development since then, including within the KMT, and the growth of a prosperous civil society, seem in line with Sun’s second and third principles relating to democracy and prosperity. But as for the first, a Chinese nationalism: forget it. Sun’s portrait still hangs in schools and government offices, and looks serenely down on the frequent fisticuffs in Taiwan’s parliament. But after resounding defeat in elections early this year, the KMT struggles for relevance on an island that is proud of its separateness from China. If there is any echo of Sun’s idealism, it is in the student “Sunflower Movement”, which wants to keep China at bay. For many Taiwanese, the Republic of China, Taiwan’s official name, is a figleaf for independence; Sun is an old ineffectual ghost. The current president, Tsai Ing-wen of the pro-independence Democratic Progressive Party, performed no yaoji this year. + +And China? Democratic centralism still prevails—exemplified by the party’s monopoly on power, Xi Jinping’s autocratic rule and the suppression of dissent. Were Sun to speak from his tomb, he might remind Mr Xi how, under the Communist Party, national unity, real democracy and even broad-based prosperity remain elusive. He might point out, too, that when Sun adopted Leninism it was to advance rather than trump his beloved principles. In his final will, Sun wrote: “The work of the revolution is not done yet.” “Blimey,” he might now say: “Couldn’t you think of trying something different?” + +This article appeared in the Print Edition with the headline: Sun-worshippers + + + +Middle East and Africa + + + + + +Lebanon: Census and sensibility + +Saudi Arabia’s reforms: Building on sand + +Cronyism in South Africa: Friends with benefits + +Boko Haram: Rounding up the survivors + +Censorship in Kenya: X-rated everything + + + + + +Lebanon + +Census and sensibility + +New data reveal a looming crisis for Lebanon’s ruling elite, exposing the fiction at the heart of the country’s politics + +Nov 5th 2016 | BEIRUT | From the print edition + + + +FEW Lebanese politicians have weathered their country’s rolling political storms better than Michel Aoun. The 81-year-old rose from warlord to military commander to prime minister at the end of the country’s lengthy civil war, before Syrian warplanes bombed him into exile in 1990. Having made peace with his former enemies, he returned years later to lead the most powerful Christian party in Lebanon. On October 31st he became the country’s 13th president. + +It has taken Lebanon more than two years and 45 failed attempts to elect a president. The political deadlock has paralysed decision-making and crippled basic services in a country already buckling under the strain of 1m Syrian refugees. It has also exposed the clunky inadequacies of Lebanon’s political system. + +When it was first carved out of the crumbling Ottoman empire, Lebanon was intended as a haven for Christians in the Middle East. Their numbers have since dwindled after decades of war, emigration and low birth rates. But their political clout remains. Half of the seats in parliament are reserved for Christians, a number pegged to a national census conducted in 1932 when Christians made up 50% of the population. There has been no census since. + +Official government figures obtained by The Economist show just how lopsided this arrangement has now become. The data, taken from the voter registry, reveal that only 37% of Lebanese voters are Christian. It is little wonder that many fear a new census may inflame tensions in a country deeply divided along sectarian lines. + +“A new census would upset the order of things,” says Walid Jumblatt, the leader of Lebanon’s Druze (a small esoteric sect which developed out of Islam but has little in common with it) and chairman of the Progressive Socialist Party. “It is a very sensitive issue. The results of a new census would cause many problems. It would irritate some sections of the community. There are already too many tensions between Shias, Sunnis and Christians. A census is not something we need right now.” + +The Economist obtained the voter registration lists, which include information on the religious affiliation of the country’s 3.6m eligible voters, after they were posted on a website belonging to the Interior Ministry. They have since been taken down. + +The data show that Maronite Catholics, once the largest sect in Lebanon, now make up only 21% of voters. That crown has passed to the Shias, now 29% of those listed, followed closely by the Sunnis, who make up 28%. Given their lower birth rates and higher rates of emigration, Christians are likely to be an even smaller share of the general population than they are of voters. Yet while the Sunnis and Shias each have 27 seats in the 128-member legislature, the Maronites have 34 (see chart 1). + + + +Whenever Lebanon erupts in violence, efforts are made to tinker with, though not fundamentally alter, these imbalances. The Taif Agreement, which ended the country’s 15-year civil war (1975-1990), stripped the Maronite presidency of much of its original power and strengthened the roles of both prime minister and Speaker of parliament, which are always held by a Sunni and Shia, respectively. Another agreement in Doha after violence flared up in Beirut in 2008 saw the Shia-led opposition under Hizbullah win the right to veto major decisions. Parliament’s dysfunction, seen in its inability to elect a president for more than two years, is partly a product of these power-sharing agreements. + +Dally as the parliamentarians may, the fib underpinning Lebanon’s political system will only become more egregious. Records of voter age also included in the registry show how Muslims make up a large majority of the country’s young (chart 2). So Christians will find their control over half of parliament even harder to justify in the years to come. Try as he may, Mr Aoun will face an uphill battle if he attempts to claw back the presidential powers lost by Christians at Taif. + + + +Change will be hard, though. Any new formula will lead to sectarian strife, which no one wants to see in Lebanon,” says Randa Slim of the Middle East Institute, a think-tank based in Washington.“The Christians have half of parliament, the Sunnis have the prime minister’s office and Hizbullah are too busy in Syria. The men who run this country have no interest in renegotiating the status quo. It would lead to conflict.” + +Another problem looms for tiny Lebanon. Since the civil war began in neighbouring Syria, Lebanon has taken in 1m refugees, who are now roughly a quarter of the population. The great majority of them are Sunni, making their absorption as citizens impossible without upending the already strained sectarian balance. Lebanon faced a similar conundrum over the 450,000 Palestinian refugees who entered it from Israel and Palestine from 1948 onwards. Rather than integrate them, the government issued repressive laws limiting their ability to get work, creating an underclass where radicalism was free to fester. + +Christians in Lebanon fear, with good cause, that rebalancing the country along new sectarian lines will leave them a depleted minority in their own land. Yet the current order of parliamentary over-representation may be sustainable for another decade or even two; it also may not. Stony silence on the matter appears to be the government line. But ignoring impending crises such as these in the Middle East has a tendency to lead to bloodshed. + + + + + +Saudi Arabia’s reforms + +Building on sand + +The kingdom’s young reformers are meeting old obstacles + +Nov 5th 2016 | RIYADH | From the print edition + +The prince with a plan + +FOR evidence that a new era has dawned in Saudi Arabia, look no further than the cabinet. Out are the stodgy old princes; in are the (relatively) youthful reformers. Since assuming the throne last year, King Salman has installed a new generation of ministers closely aligned with his son, 31-year-old Muhammad bin Salman, the deputy crown prince. On October 31st the king completed the reshuffle by replacing Ibrahim al-Assaf, the old finance minister (in place for the past 20 years), with Muhammad al-Jadaan, head of the country’s Capital Markets Authority. + +The change comes as Prince Muhammad tries to implement an ambitious set of reforms, known as “Vision 2030”, aimed at weaning the kingdom off oil by curbing public spending, diversifying the economy and attracting foreign investment. The kingdom’s new leaders, many of whom are former businessmen or bankers, are expected to boost that effort. Mr Jadaan, for his part, oversaw the cautious opening of the Saudi stockmarket to big foreign investors last year. + +But it will take more than new management to convince analysts that the kingdom is serious about reform. “They’ve been talking about this stuff for 30 years,” says a diplomat in Riyadh, the capital. He points to the King Abdullah Financial District (KAFD), a cluster of gleaming skyscrapers in the northern part of the city. When laying the foundation stone a decade ago, the late King Abdullah envisioned the district as a pillar of the non-oil economy. But KAFD is a flop. Banks and other businesses looked past the towers and saw a closed economy and stifling social restrictions, which never changed. + +Today the government is more focused on enacting its bold plans, says Muhammad al-Tuwaijri, the former boss of HSBC’s Middle East and north Africa division, who is now deputy minister of economy and planning. “Believe me, this is discussed every week,” he says. Progress reports are required from each ministry. For doubters, KAFD is still a useful barometer. Prince Muhammad hopes to salvage the project by making it a “special zone” with light regulations, a more flexible visa regime and a direct connection to the airport. None of that has happened yet. + +Smaller steps have already been taken that show progress, but also a lack of touch. In September, for example, the government slashed salaries and benefits for public-sector employees, who make up two-thirds of Saudi workers. But the move was made with little warning, contributing to a collapse in consumer confidence. Earlier in the year, cuts to generous subsidies led to a spike in water bills and an outcry on social media. The veteran minister for water and electricity was duly fired and replaced by a former businessman. “He took the blame for a policy that wasn’t thought through,” says John Sfakianakis of the Gulf Research Center, a think-tank. + +A bigger problem is that the vision itself is fuzzy. Prince Muhammad commands an army of Western consultants, but his National Transformation Programme, the follow-up to Vision 2030, is both oddly specific and frustratingly vague. It includes benchmarks for such things as the issuing of halal certificates, but fails to explain how the government intends to achieve more important goals, such as more than doubling foreign-direct investment by 2020. Many of its objectives are still “under study”. The reformers have prioritised the “low-hanging fruit”, admits Mr Tuwaijri. More complicated initiatives, such as his own effort to privatise public companies, will follow in due course, he says. + +Business-minded ministers are eager to promote private investment, but other reforms are making this work more difficult. A sevenfold hike in business-visa fees will probably deter foreign firms. Local companies that depend on cheap inputs are suffering. Almarai, a big dairy, has said its earnings will decline by over $130m due to the government’s austerity measures. There has also been a rise in public arrears to construction firms, which has led them to cut staff and withhold salaries. Some foreign labourers have been left stranded without pay in desert camps. + +Before the collapse in oil prices, two large Saudi contractors—the Saudi Binladin Group and Saudi Oger—were responsible for most of the kingdom’s infrastructure projects. But state spending cuts have left both firms mired in debt. Saudi Oger is owed billions of dollars by the government, most for work it has completed. It, in turn, owes billions to banks (and still more to contractors, suppliers and workers). The Binladin Group also complains of unpaid contracts. Neither firm is known for its efficiency, so the government may be trying to set a new tone. But its actions have unsettled the Saudi banking system and the wider economy. + +Local motion + +Businesses have also been vexed by the government’s efforts to make private firms replace relatively cheap foreign workers with more expensive Saudi nationals, a policy referred to as “Saudisation”. The mobile-phone industry was ordered to employ only locals by September. The government has provided training for locals and now pays some of their salaries. But in general Saudis lack the skills that employers want. Schools stuff young heads with religion, but neglect more practical subjects such as maths and science. Few Saudis are willing to take entry-level or blue-collar jobs. To meet the government’s quotas, some companies simply pay locals to stay at home. + +The IMF recently cut its economic growth forecast for the kingdom’s non-oil sector this year to 0.3%, from 1.6%, on account of the government’s austerity. But it is expected to rebound next year. “The majority of the necessary public-spending cuts have already happened,” says Capital Economics, a consultancy. A successful $17.5bn international bond sale, the largest ever from an emerging market, has already allowed the government to resume paying contractors, and investors’ enthusiasm for snapping up the paper is a good sign. + +But the reforms envisioned by Prince Muhammad and his team run much deeper than mere austerity. Investors are still waiting for more meaningful changes, such as the promised listing of shares in Saudi Aramco, the gigantic national oil company. “This is the medium-hanging fruit that the world will be watching to see if the reform project will be successful,” says Mr Sfakianakis. + + + + + +Thuli Madonsela’s last report + +South Africa’s Public Protector finds “state capture” by the president’s pals + +A clock has been started that could lead to Jacob Zuma’s removal + +Nov 5th 2016 | From the print edition + +Zuma’s latest headache + +ON THE day that Jacob Zuma, South Africa’s president, was due to meet his Zimbabwean counterpart in Harare, an anti-corruption ombudsman back home released a report that may make his continued rule every bit as precarious as that of the ailing Robert Mugabe. The report into “State Capture”, compiled by the former Public Protector, Thuli Madonsela, details a disturbing web of influence exerted over parts of the South African state by a powerful family of Mr Zuma’s chums. + +The report does not provide proof of criminal wrongdoing by Mr Zuma. But it presents more than enough evidence to suggest that his wealthy benefactors—the brothers Atul, Ajay and Rajesh Gupta—were involved in the firing and appointment of government ministers and the award of large contracts by Eskom, the large state-owned electricity utility. + +Mr Zuma’s dwindling band of supporters will, no doubt, argue that the report exonerates him of any wrongdoing. But that would be to misread the nature of Ms Madonsela’s findings; for this is but a first salvo in a legal barrage that may see Mr Zuma out of office before the end of 2017. All that Ms Madonsela had to do in this report was show that there was enough apparent evidence of wrongdoing to justify her binding order that the government establish a judicial commission of inquiry that, in turn, must now investigate alleged influence-peddling by the president more fully. + +Take the details in her report of testimony by the deputy finance minister, Mcebisi Jonas, who said that he had been offered 600m rand ($44m) by Ajay Gupta. All he had to do in return was agree to be appointed finance minister and then to replace key executives in the National Treasury, which was a “stumbling block” to the Gupta family’s business ambitions. When Mr Jonas declined the offer Mr Gupta upped it, asking if he had a bag big enough to hold 600,000 rand in cash that he could take with him right away. A few months later the finance minister, Nhlanhla Nene, was abruptly fired and replaced by an unknown backbencher who appears to have spent more time with his friends the Guptas than he did in his ministerial office. + +The call for a judicial commission is worrying in that it would seem to suggest that Ms Madonsela had little faith in the independence of her successor, Busisiwe Mkhwebane. But it is also tactically astute. Throughout her report Ms Madonsela complains of how her investigation was hamstrung by a shortage of money and obstruction by the president. Her order (which Mr Zuma may now try to block) that the government appoint a commission that is “adequately resourced” and run by a judge chosen solely by the Chief Justice ought to lead to a robust probe into the relationship between Mr Zuma and his friends. Ms Madonsela has ordered that the commission report back in no more than 180 days after its appointment—starting the ticking of a clock that may count down Mr Zuma’s last days in office. + +This article appeared in the Print Edition with the headline: Friends with benefits + + + + + +Boko Haram + +Rounding up the survivors + +If you are young and male the army may arrest you as a jihadist + +Nov 5th 2016 | MAIDUGURI | From the print edition + + + +THE men who queue for food in a camp in Bama have something in common: almost all of them are old. Young men who were fit to fight have been either conscripted or killed by Boko Haram, says a commander of the government forces that pushed the jihadists out of this town in north-eastern Nigeria last year. + +Now more than 10,000 people live behind the high walls of a former hospital in Bama, which has been converted into a camp for the internally displaced and is guarded by soldiers. Among the throngs, women sit sewing prayer hats and children roll tyres through the dust. But hardly a working-age man can be seen. Data from the International Organisation for Migration show that there are more than two adult women for every man aged 18 to 59 in Bama, which previously sat in the centre of Boko Haram’s self-declared caliphate. + +Since they started fighting for an Islamic state in 2009, the jihadists have kidnapped more than 10,000 boys and trained them in boot camps. Those loyal to Boko Haram’s recently deposed leader, Abubakar Shekau, murder Muslims who refuse to join them. But there is another explanation for the discrepancy, and it comes from the army itself. + +Young men who escape to government-controlled areas are often separated from their families and detained, survivors told The Economist. Being young, male and alive is seen as evidence of guilt, according to Amnesty International, a human-rights group. “Any man of 20 to 30 is taken straight for screening,” says a 54-year-old cattle trader, who was held for two months. A second survivor calls the screening process an “attempt at removing young men”. Arrests are sometimes conducted en masse. Both men say they were rounded up and taken from Bama’s camp to a detention centre. They claim that boys as young as ten were arrested with them. Amnesty had recorded three such mass arrests by May. Less commonly, city residents are also targeted. Rabiu Usman, a taxi driver, was arrested last year after attempting to tip off vigilantes about a suspicious passenger. The man detonated a suicide vest, killing only himself, after Mr Usman stopped at a checkpoint. Mr Usman then spent four months in detention. + +The government acts as if anyone in a rebel-held area supports Boko Haram, says an aid worker in Maiduguri, the biggest city in the north-east. Yet 2.1m people are thought to be stuck in such areas. The jihadists often kill those who try to flee, even though the group has been pushed out of major towns. + +The army has no legal right to detain civilians. The International Criminal Court lists the mass arrest and abuse of male suspects by the Nigerian army as a potential war crime. It believes that more than 7,000 people have died in military detention. That is almost half the number of deaths attributed to Boko Haram since May 2011, according to the Council on Foreign Relations, a think-tank. + +Perhaps the most notorious of the Nigerian armed forces’ screening facilities is Giwa barracks in Borno state, where about 1,200 people, including children, are incarcerated. At least 149 of Giwa’s detainees (mostly men) died between January and May this year, according to Amnesty. Some appeared to have suffered gunshot wounds. Survivors report horrific conditions, including overcrowding, hunger and disease. They sleep in a squat and defecate into bags. “The first thing they did every morning was to ask if any people had died,” the cattle-herder reports. + +Several female suspects told The Economist that they witnessed men being rounded up in groups of tens or hundreds, blindfolded, and loaded onto Hilux trucks. “There was one day when they took three sets of men, maybe 150 of them each time,” claims a woman who was released last year. “We never saw them again.” No independent investigation has been conducted into the killing of 640 recaptured Giwa detainees, who escaped during a Boko Haram attack in 2014. + +Rabe Abubakar, a defence spokesman, denies allegations of abuse, saying that “these are all efforts to ensure the safety of people in camps.” He adds that human-rights desks have been set up within each military unit since President Muhammadu Buhari, a former dictator, came to power last year promising to end the insurgency and address the abuses that had proliferated under his predecessor. Some inmates do report an improvement in conditions. “The soldiers themselves said that in previous times they killed, and now they don’t,” recalls one man, who was released this year. Over 3,000 detainees have been freed by an investigation committee comprising members of the government and the armed forces, says Borno’s attorney-general. Suspects are tried before being found guilty, he said, though lawyers retort that few trials have actually taken place. + +Boko Haram has kidnapped girls as sex slaves and conscripted boys as fighters, so north-easterners are understandably keen to see its “caliphate” destroyed. But they do not welcome the persecution of anyone who looks vaguely like a jihadist. As Boko Haram is pushed out of the huge territory it controlled two years ago, further abuses seem likely. And the rage at the Nigerian government that sparked the insurgency in the first place will not be extinguished. + + + + + +Censorship in Kenya + +X-rated everything + +Is the film censor out of control? + +Nov 5th 2016 | NAIROBI | From the print edition + + + +WHAT does a film certification board do? In Kenya, the job seems to have expanded a lot. As well as certifying films, Ezekiel Mutua, the head of the Kenya Film Classification Board (KFCB), has also promised to raid strip clubs to prevent a wave of “bestiality”. Also, he has raged against homosexuality and threatened to regulate Netflix as a possible threat to national security. This wave of censoriousness has amused the Kenyan press and made Mr Mutua into a national figure. But some Kenyans worry that it hints at the government’s growing willingness to use censorship ahead of a tense general election next year. + +The KFCB has existed since 1963. It has long been moralistic: in 2014 it banned “The Wolf of Wall Street” from distribution because of its “extreme scenes of nudity”. Under Mr Mutua, who became the CEO last year, it has become far more active. In March he claimed that foreigners were organising a mass sex and drugs party called “Project X” in Nairobi, which they would film and sell as pornography. In July he threatened a nightclub over a speed-dating night he claimed was an “orgy of lesbians”. On October 17th he said that women were being paid “peanuts” to perform sex acts on dogs. + +It is questionable whether any of these accusations are real—or that the KFCB even has the authority to make threats based on them. Nonetheless, they have been splashed across the Kenyan press, and won Mr Mutua a following among social conservatives. + +The worry is that, in time, the country’s self-appointed moral guardian will go beyond policing morality. Mr Mutua seems to have plenty of fans in government, says Patrick Gathara, a Kenyan cartoonist. A bill in parliament to widen the remit of the film board would also give him more power to regulate advertisements and live events, such as plays. Some of that could easily tip into political censorship. “At the moment, they’re seeing what they can get away with,” says Mr Gathara. The next stage, he worries, will be to use the film board to choke off political criticism. First they came for the alleged lesbian orgies, and Kenyans did not speak up. + + + +Europe + + + + + +The battle for Russia’s history: Remember, remember + +Putinism’s icons: A tale of two Vladimirs + +France’s president self-destructs: Into the abyss + +More arrests in Turkey: Goodbye, “Republic” + +The German elections in 2017: Best frenemies + +Charlemagne: For our freedom and yours + + + + + +The battle for Russia’s history + +Remember, remember + +Memorial was founded to commemorate victims of state repression. Now the human-rights group may fall victim itself + +Nov 5th 2016 | MOSCOW | From the print edition + + + +“HE WHO controls the past controls the future. He who controls the present controls the past,” George Orwell wrote in “1984”. As Russia’s politics grows more Orwellian, the fight over its past is heating up. The Kremlin’s latest target is Memorial, the country’s most respected human-rights group, set up in the 1980s to commemorate victims of Stalin’s terror. + +On October 29th thousands of people queued in a park opposite the headquarters of the agency once known as the KGB to read out the names of some of those whom Stalin had executed. The park features a monument to those victims, a large stone brought from the Solovetsky Islands, site of one of the first Soviet labour camps. Volunteers handed out bits of paper with names printed on them: “Zherebenkov, Dmitry Filatovich, 57, a worker in a cement factory. Executed on September 21st 1937. Zherikov, Semen Nikiforovich, 26, a labourer in a limestone quarry. Executed on March 9th 1938.” + +The event has been held annually for ten years, but Arseny Roginsky, Memorial’s chairman, said he had never seen so many people. Ordinary Muscovites kept arriving from 10am until 10pm, undeterred by rain and snow. The names they managed to read were a drop in the bucket of Stalin’s terror. In the peak years of 1937 and 1938, according to Memorial’s figures, at least 30,000 people were executed in Moscow, and 700,000 throughout the country. + +Memorial was perhaps the most successful civic institution created during Mikhail Gorbachev’s perestroika reforms. Among the founders was Andrei Sakharov, the Nobel Prize-winning physicist and human-rights activist. Another member of the original group was Mr Roginsky, a historian jailed in 1981 for publishing a samizdat almanac entitled Pamyat (“Memory”). By the time of his release in 1985, the word pamyat had become the name of an anti-Semitic nationalist movement. Mr Roginsky’s group ended up adopting the foreign-sounding name “Memorial”. + +In the wars in Chechnya beginning in the 1990s, Memorial investigated and denounced abuses by the Russian army, including murdering civilians and torturing detainees. Journalists came to rely on the group for information. Its human-rights activists were constantly under pressure; some, including Natalia Estemirova, lost their lives. But until recently, the group was allowed to pursue its historical activities untouched. No longer. Last month the government declared Memorial a “foreign agent”—once a Stalinist term for traitors, now a legal classification intended to throttle troublesome civil-society groups. + +The foreign-agents law was introduced in 2012, at the outset of Vladimir Putin’s third presidential term. It required any organisation receiving money from abroad and engaging in “political activity” to register. At first, none did. The issue was not the money—charities with foreign donors were happy to acknowledge them—but the definition of “political activity”. + +“We understand political activity as taking part in a competition for political power,” says Mr Roginsky. But under the Kremlin’s definition, any attempt to shape public opinion or influence government policy was “political activity”. In the case of Memorial this included statements objecting to the war in Ukraine and the killing of Boris Nemtsov, an opposition leader; and opposing the law on foreign agents. + +Memorial must now label all of its publications—including lists of Stalin’s victims—as the work of a foreign agent. This will put pressure on anyone who comes into contact with the group, such as the thousands of teachers and schoolchildren from remote parts of the country who had participated in its education projects. + +Fun with facts + +That the Kremlin has struck against Memorial now is no surprise. In Mr Putin’s third presidential term, control over Russia’s history has become as important as control over television, oil and gas were in his first two. Unable to deliver economic growth, the Kremlin needs to cook up reasons to keep the population in a constant state of mobilisation against external threats. The way the propagandists tell it, Russia is surrounded by enemies and can only be defended by Mr Putin. The past is reshaped to fit this story. The second world war is presented as a Russian victory over the West; the government has commissioned new history books that present the Molotov-Ribbentrop pact to carve up Poland between the Soviet and Nazi regimes as a self-defence measure.Even national security organs are caught up in the struggle over the past. According to Kommersant, a daily, a recent meeting of Russia’s security council focused on measures to prevent the “falsification” of history by foreign states and international organisations. It identified six sensitive historical issues, including the ethnic policy of the Russian empire, Russia’s role in defeating fascism in the second world war, and “political crises” (read: Soviet crackdowns and invasions) in East Germany, Hungary and Czechoslovakia. + +Mr Putin derives his legitimacy not from free elections, but from a historical narrative that links him to the long procession of Russia’s rulers. This starts with Prince Vladimir the Great, the tenth-century ruler of the Kievan Rus proto-state that Russians see as the progenitor of their own. Mr Putin has just had a huge statue of Vladimir erected opposite the Kremlin; another Russian city recently built one of Ivan the Terrible (see article). Stalin, who is presented as a strong imperial ruler, is another role model. Olga Vasilyeva, a religious nationalist recently appointed as education minister, has praised the Soviet dictator for restoring state patriotism to the centre of Russian history: “The highest interest of any citizen is the interest of the nation.” + +Russian liberals are not surrendering their history easily. The more pressure the state applies to Memorial, the stronger is the counter-reaction. The past few years have seen the birth of a grassroots movement calling itself “last address”. Volunteers erect plaques at the final known addresses of those who were arrested in the Stalin years and never returned. Although supported by Memorial, it has no formal organisation that can be shut down. + +Mr Roginsky says Memorial now faces three key tasks: “We must not let them kill us, we must retain our dignity and we must carry on our work.” Judging by the growing number of plaques on Russian houses and the lines of people queuing up to read out the names of Stalin’s victims, the fight is far from over. + + + + + +Putinism’s icons + +A tale of two Vladimirs + +In Russia, statues are politics by other means + +Nov 5th 2016 | MOSCOW | From the print edition + +Vlad the Great, hint-hint + +VLADIMIR PUTIN has a new neighbor: a 16-metre-tall bronze monument to Vladimir the Great, a tenth-century Slav prince. The statue stands just outside the Kremlin’s red walls. “In Soviet times it would have been Lenin,” says the sculptor, Salavat Shcherbakov. + +The monument’s backers claim it commemorates the thousand-year anniversary of Vladimir’s death in 2015, but the political subtext is clear. The proto-state which Vladimir ruled was based in Kiev (it is known as Kievan Rus), and Ukraine sees him as its founding father. His face adorns Ukraine’s hryvnia note, and another monument to him already towers over the Dnieper river, where he baptised his people into the Orthodox faith. (He supposedly first rejected Judaism, Catholicism and Islam, telling Muslim envoys who demanded abstinence that “drinking is the joy of the Rus.”) Russia’s leaders, in turn, see the prince as the progenitor of modern Russia. “He’s our prince,” says Mr Shcherbakov. + +Critics call the monument a crude gesture of Russian dominance. “It’s plain for all to see that Prince Vladimir is actually President Vladimir,” wrote Ekaterina Schulmann, a political scientist, when the plans were made public. Historians, too, question the logic. “When Vladimir was alive, Moscow did not exist,” notes Igor Danilevsky, an expert on ancient Rus. The prince, who married the sister of the Byzantine Emperor Basil II and was baptised in Crimea, died in the early eleventh century. His domain split into warring fiefs that eventually gave rise to Russia, Belarus and Ukraine. + +In March 2014 Mr Putin invoked the prince’s legacy to justify the annexation of Crimea. “Suddenly people were interested in ancient Rus,” says Mr Danilevsky. Soon afterwards, the Russian Military-Historic Society (RVIO), a Tsarist-era body revived in 2012, announced plans for the monument. The design-selection committee was headed by Bishop Tikhon, a clergyman believed to be Mr Putin’s dukhovnik, or spiritual adviser. + +Russia has been on a monument-building spree lately. Last month the city of Oryol unveiled a statue of Ivan the Terrible. Mr Shcherbakov is working on a likeness of Mikhail Kalashnikov, inventor of the famous rifle. In the current Russian political model, says Evgeniy Asse, a prominent architect, “the past is the main source of greatness.” + + + + + +France’s president self-destructs + +Into the abyss + +François Hollande’s approval falls to 4% + +Nov 5th 2016 | PARIS | From the print edition + + + +THE French have an expression, l’appel du vide (“the call of the void”), to refer to the compulsive urge to do something self-destructive, such as leap off a cliff. It captures the frisson felt in contemplating the act, but resisting it. President François Hollande, however, seems to have surrendered. In a 662-page book published last month by two journalists, based on recorded interviews with the Socialist president, Mr Hollande insults all and sundry: judges, footballers, his own ministers and more. That a leader seeking re-election could engage in such a politically suicidal exercise, six months before France’s presidential election, has left his allies dumbstruck and his political future in freefall. + +It was surprising enough that a sitting president in such turbulent times chose to meet the reporters, Gérard Davet and Fabrice Lhomme, fully 61 times over four years. Often they chatted at the Elysée Palace; sometimes he dined at their place. More shocking was what Mr Hollande said. He called the judiciary a “cowardly institution”, the national football team “badly brought-up kids”, the poor “toothless”. He belittled the stature of Claude Bartolone, the speaker of parliament, and the education of Najat Vallaud-Belkacem, his education minister, neither of whom—unlike Mr Hollande—went to the Ecole Nationale d’Administration, the elite civil-service graduate school. En passant, Mr Hollande admitted to having authorised four targeted killings by the French secret services. + + + +The damage was instant. Within days, the president dispatched eight letters of apology—to bodies representing judges, magistrates and prosecutors—claiming, creatively, that his comments bore “no relation to the reality of my thinking”. A poll taken after the book’s publication recorded his approval rating at just 4% (see chart). In the past, when Mr Hollande has dug himself into a hole, his friends have helped him clamber back out. This time, they handed him a spade. Manuel Valls, the prime minister, spoke of his “anger” and his deputies’ “shame”. Mr Bartolone described his “stupefaction”: a president, he added, has an “obligation of silence”. + +The French elected Mr Hollande in 2012 as an antidote to the frenetic Nicolas Sarkozy, his centre-right predecessor. They wanted, to use Mr Hollande’s campaign slogan, a “normal” president. At times, notably after the Charlie Hebdo terrorist atrocities last year, Mr Hollande has looked the part. Yet despite his reputation for private charm, he has mostly failed to appear presidential. He does not make voters angry so much as indifferent. “I am the ghost of the Elysée,” he says in the book. Relations between Mr Hollande and French voters now look irreparable. + +How did the president end up here? He suffers from “hyperconfidence”, suggests a former aide, which might explain his naive faith that the reporters would publish a less devastating book. This trait may yet lead Mr Hollande to run again, against all odds (and the desires of a growing list of Socialist deputies). With unemployment beginning to drop, and the economy doing a bit better, he might think he has a chance. He must decide by December 15th, the deadline to stand for the party’s primary. + +Yet even if Mr Hollande were to stand aside, polls suggest that the Socialists would perform disastrously in the presidential election’s first round, failing to make it to the run-off ballot. The party’s best alternative, Mr Valls, would not beat either the centre-right candidate or the nationalist Marine Le Pen. The prime minister’s mistake, says a friend, was not resigning earlier this year to preserve his own political future. Mr Valls has begun to warn that the party could “exit” history. Faced with the prospect of annihilation, Mr Hollande would appear to have little choice but to give up. Unless, as the book suggests, he really is unafraid of the void. + + + + + +More arrests in Turkey + +Goodbye, “Republic” + +A flagship secular newspaper is hit as the purges spread + +Nov 5th 2016 | ISTANBUL | From the print edition + +It’s our last real newspaper, leave it alone + +LOADED with page-turners such as the latest exam procedures for food inspectors, Turkey’s official gazette, the journal that archives the everyday business of state, used to be as good a cure as any for insomnia. No longer. In the wake of this summer’s violent attempted coup against the government of Recep Tayyip Erdogan, no newspaper in Turkey is read with more trepidation. With its lists of thousands of universities, news outlets and hospitals closed since the coup, and of the 100,000 officials sacked from state institutions, the gazette has turned into the chronicle of a seemingly insatiable purge. Under a state of emergency that allows Mr Erdogan to rule by decree, it may soon become the only Turkish paper worth reading. + +Much of the media were already controlled by government loyalists. Now nearly all are muzzled or intimidated. Over a hundred journalists have been jailed. On October 31st the crackdown hit Cumhuriyet (“Republic”), a flagship daily of the secular left as old as modern Turkey itself. Police detained the paper’s editor, Murat Sabuncu, its leading cartoonist and a dozen or so columnists and executives. An arrest warrant was issued for its former editor, Can Dundar, who already faced charges for publishing articles on secret Turkish arms shipments. Mr Dundar fled the country earlier this year. + +Prosecutors accuse Cumhuriyet of acting in cahoots with the Gulen movement, an Islamic sect suspected of engineering July’s coup, and with the Kurdistan Workers’ Party (PKK), which Turkey and Western countries consider a terrorist group. To most observers, that sounds bonkers. Cumhuriyet had been savagely critical of the Gulenists long before the ruling Justice and Development (AK) party, which allied itself with the movement for nearly a decade, broke with it around 2013. + +The detentions suggest that few government critics are safe. Some 40,000 people, ranging from generals directly involved in the coup to Gulenist bureaucrats, Kurdish activists and leftist writers, have been detained since the summer. “[Erdogan] wants to establish a new country under his authority,” says Ozgur Mumcu, one of Cumhuriyet’s writers, “and everything the old Turkey represents will be eradicated sooner or later.” + +AK insists it is simply protecting Turkey from enemies at home and abroad. “We just saved this country from a bloody coup attempt,” says Taha Ozhan, an influential MP. His office is a short walk away from a wing of the parliament bombed by jets during the coup. “This is the context.” Critics say the government is gutting what remains of Turkey’s democracy. Only a day before the Cumhuriyet detentions, the official gazette announced the closure of 15 other news outlets, most of them Kurdish. The same decree dismissed 10,131 more public officials and 1,267 academics. Another decree suspended attorney-client privilege in terrorism cases. It scrapped a system that offered academics a say in electing heads of their universities. Mr Erdogan will now appoint rectors directly. + +Meanwhile, the Turkish strongman is whipping up support among nationalists and Islamists, an alliance he expects to hand him additional powers in a referendum in 2017. He has revived plans to restore the death penalty, a move that would spell the end of Turkey’s membership negotiations with the European Union. In the country’s southeast, scarred by a year of deadly clashes between the PKK and the army, his government has ousted scores of elected Kurdish officials. The arrests of the co-mayors of Diyarbakir, the region’s biggest city, on terrorism charges were followed by an internet blackout in as many as 15 provinces. Mr Erdogan now says he will take the fight to the PKK in northern Syria so as to protect gains made by Turkish troops in an incursion in August. He has also demanded a bigger role in Iraq’s offensive against Islamic State forces in Mosul. + +The Republican People’s Party (CHP), the main secular opposition, swept up initially by the nationalist exhilaration that followed the failed coup, has turned into a shellshocked bystander. Emergency rule by decree has rendered parliament useless, says Selin Sayek Boke, the CHP’s deputy head. It is “a preview”, she adds, of what Turkey will look like if Mr Erdogan gets the additional powers he wants. + +By the time the preview is over, there may be no critical media outlets left to report on it. The official gazette will happily pick up the slack. + + + + + +The German elections in 2017 + +Best frenemies + +Germany’s chancellor and Bavaria’s premier prefer not to share a stage + +Nov 5th 2016 | BERLIN | From the print edition + +Angela’s Horst of troubles + +THE next election for Germany’s parliament, the Bundestag, is less than a year off, but as the country mercifully lacks America’s interminable primary system, its campaign season is only now getting underway. The kick-off was a gathering on November 4th of Bavaria’s centre-right party, the Christian Social Union (CSU). The party, led by the Bavarian premier, Horst Seehofer (pictured, right), hoped to appeal to conservatives with tough talk on immigration. But one figure was conspicuously absent. For the first time since 2000, the CSU did not invite Angela Merkel, the boss of the Christian Democrats (CDU) and Germany’s chancellor. + +The CDU is the CSU’s national sister party, and the two back Mrs Merkel as a bloc in Bundestag elections. But since September 2015, when the chancellor opened Germany’s borders to refugees, Mr Seehofer has become her most vexing critic. At the CSU’s convention in November 2015, he harangued her for nearly 15 minutes with demands for a limit to the number of refugees Germany would accept, addressing her with the informal pronoun Du. + +Refugee numbers have since dropped, and Mrs Merkel has tightened policy in many ways. But she still rejects Mr Seehofer’s demand for a fixed limit as unconstitutional. (He wants at most 200,000 a year; more than that had already arrived in the first nine months of 2016.) This intramural fight is the main reason why Mrs Merkel has not yet declared that she will run for a fourth term. She will probably do so at the Christian Democrats’ convention in December. Mr Seehofer is not invited. + +In theory the centre-left Social Democrats (SPD) should benefit from this bickering. Although they are the third party in the “grand coalition” that now governs Germany, they will revert to being the CDU/CSU’s arch-rivals during the campaign. But the SPD is notoriously disorganised, and at the moment it is uncertain who its candidate for chancellor should be. + +The default is Sigmar Gabriel, the party’s current boss and Mrs Merkel’s economics and energy minister and vice chancellor. Rotund and jovial, Mr Gabriel can be a loose cannon; he recently gave a group of far-right protesters the middle finger. Many in his party consider him erratic, and would prefer to run Martin Schulz, president of the European Parliament. But he may prefer to stay in Strasbourg. + +In a direct match-up, Mrs Merkel would beat either of them. According to polls, voters would pick her over Mr Gabriel by a 62% to 25% margin. In a contest with Mr Schulz, she would win by 48% to 37%. But Germans do not choose their chancellor directly; that is the job of a majority in the Bundestag. So everything comes down to coalition politics. + +On February 12th a so-called federal convention, consisting of the Bundestag and an equal number of delegates from the 16 federal states, will choose Germany’s next president. The head of state—currently Joachim Gauck, who is retiring—is largely a figurehead who is expected to stand above partisan politics. But the process of choosing him is a dry run for possible coalitions in the Bundestag. + +Setting a president + +The CDU/CSU controls only 43% of the federal convention. Mrs Merkel had hoped to find a CDU/CSU candidate who could win the support of either the Social Democrats or the Greens. (A new party on the populist right, the Alternative for Germany, is considered a pariah.) But several possible candidates turned her down, including the president of the Bundestag, Norbert Lammert, a Christian Democrat who commands cross-party respect. + +Mrs Merkel’s back-up plan was to suggest Frank-Walter Steinmeier, the foreign minister. He is a Social Democrat and the most popular politician in Germany, though after losing to Mrs Merkel in the race for chancellor in 2009 he is not seen as posing her any threat. By presenting Mr Steinmeier as above politics, she might have swayed the CDU to vote for him along with the SPD. But last month Mr Gabriel gauchely put Mr Steinmeier forth as the SPD’s partisan favourite, making it harder for the Christian Democrats to support him (and annoying both Mr Steinmeier and Mrs Merkel). + + + +Mrs Merkel’s worry now is that each major party will enter the convention with its own candidate. That could send voting into the third round, where a plurality suffices. An alliance of the three leftist parties—the Social Democrats, the Greens and the Left, an ex-communist party—could then defeat and embarrass the CDU/CSU. This would raise the spectre of a “red-red-green” government come the autumn, even though current polls do not give the trio of parties a majority (see chart). + +For Mrs Merkel and Mr Seehofer, this “leftist front” is the greatest threat. And that is why this estranged couple will, sooner or later, kiss and make up. + + + + + +Charlemagne + +For our freedom and yours + +Poland’s illiberal turn poses a wicked dilemma for the European Union + +Nov 5th 2016 | From the print edition + + + +IF EUROPEAN history once seemed to have arrived at its terminus in 1989, it has sped off in a new direction in Poland. After winning the country’s first post-1989 outright majority in elections one year ago, the populist Law and Justice party (PiS) immediately set about undermining independent checks on its power, from the constitutional court to public media. Such antics would disqualify an aspirant from membership of the European Union, but it is harder to punish miscreants once they are inside. Surrounded by problems outside its borders, from Russia to Turkey to Libya, the EU now confronts a particularly chewy one within. + +Outsiders sometimes lump Poland’s government in with the other populists making the running in much of western Europe. But while it shares their hostility to outsiders and taste for economic statism, PiS is a very Polish phenomenon. Its chairman, Jaroslaw Kaczynski, who runs the country from the party’s headquarters (the prime minister, Beata Szydlo, is a cipher who does her leader’s bidding), is fixed on completing what he considers an unfinished revolution. Mr Kaczynski believes the Polish state was captured by a cosy, treacherous elite after 1989, with the connivance of the EU. His aim is to overturn and replace it. + +Mr Kaczynski often clashed with Poland’s constitutional court during a previous stint in office, from 2006-07. That explains his attempt this time around to stack the court with cronies, the proximate cause for the row with the EU. But perhaps a more important lesson was provided by the EU’s experience with Hungary. Under Viktor Orban, who took office in 2010 with a booming majority, Hungary’s government began its own assault on independent institutions. The EU howled but proved powerless; other governments chose to remain largely silent. Mr Orban now sits supreme on top of the “illiberal” state he boasts of building, taking regular potshots at Brussels. + +Bruised by its experience with Hungary, in 2014 the European Commission, the EU’s executive arm, established a “rule of law framework” as a means to bring wayward governments to heel, which fell short of suspending their EU voting rights, as Article 7 of the treaty allows. But talks with Poland have gone nowhere: last week, as the latest Brussels deadline whooshed by, the government dismissed its concerns as “groundless”. Frans Timmermans, the first vice-president of the commission and Poland’s chief tormentor, has vowed not to back down. Article 7 may yet be invoked. But it can be applied only with the backing of EU governments, and Mr Orban has Mr Kaczynski’s back. + +Here lies a lesson. Most countries of the former eastern bloc joined the EU not to dissolve their sovereignty, but to safeguard it. That preserves the EU’s popularity in the region—support for membership remains strong in Hungary and Poland—but leads governments to different places. Donald Tusk, Mr Kaczynski’s predecessor (and arch-enemy), sought to place Poland at the heart of Europe and to bind it close to Germany. Mr Kaczynski, by contrast, is doubling down at home and picking fights with Brussels where useful. In the summer EU officials thought they had clinched a deal on the court with the government, before Mr Kaczynski blew it up at the last minute. + +This is bad news for Brussels. Like all its deadliest weapons, Article 7 was designed never to be used. But the theory of deterrence works only if the threat is credible, and the Poland row is testing that proposition to destruction. By pursuing its case against Poland to the end in order to deter others from imitating Mr Kaczynski, the commission may instead turn the spotlight on its own impotence (and fuel accusations of arrogance). Just as Mr Kaczynski has aped Mr Orban’s success, Europe’s next delinquent government will learn the lessons of Warsaw. + +That does not mean Poland will seek to export its illiberalism, as some have supposed. Mr Kaczynski has muttered about reopening the EU’s treaties; his Europe minister, Konrad Szymanski, speaks vaguely of returning powers from Brussels to governments. But in truth Poland’s gaze is fixed firmly inward. Nursing grievances and lacking allies, Mr Kaczynski is without the means to bring change to Europe. Poland’s relationship with Germany has foundered. Its bond with France has been shattered by PiS’s bungling of a deal to buy Airbus helicopters. Mr Kaczynski’s supposed friends in the central European Visegrad group are shuffling away in embarrassment; even Mr Orban is said, sotto voce, to consider him a little unhinged. + +Poland is not yet lost + +Domestically, PiS does face one near-term threat: its reckless fiscal pledges, including a generous child-benefit payment and a plan to cut the retirement age. Some European politicians now think a borrowing crisis is the only way Mr Kaczynski can be stopped. Another problem is the government’s insistence on stuffing the bureaucracy with unqualified loyalists. Shorn of expertise, the civil service is struggling even to spend its EU subsidies. Nonentities have been placed in positions of authority; a former kebab-shop owner and PiS councillor now oversees research in a large state energy firm. Government contractors speak of brazen incompetence. Scandals look likely before PiS’s term expires. + +Because their country needs Europe—on energy, Russia policy and EU subsidies—PiS’s Poland-first approach will ultimately prove self-defeating. Yet that leaves plenty of time to do lasting damage to Poland’s democratic institutions and political culture. Mr Kaczynski’s reign has already proved worryingly polarising. European politicians insist that theirs is a club of values, not convenience, and respect for the rule of law is baked into the treaties. But just as it cannot force governments to curb deficits or accept refugees, Brussels cannot impose liberalism by diktat; and other governments do not seem minded to rock the boat when they are trying to plug the leaks sprung by other crises. Mr Kaczynski will win this battle, because Europe has no idea how to fight. + + + +Britain + + + + + +The Chinese in Britain: Raise the red lantern + +Life sciences: Life after Brexit + +Cyber-security: Britain flexes its cyber-muscles + +The Article 50 case: Taking back control + +Heroin addiction: Fixing problems + +The intern economy: The road from serfdom + +Manufacturing fetishism: A false idol + + + + + +The Chinese in Britain + +Raise the red lantern + +Helped by high-end immigration from the mainland, the Chinese community is coming out of its shell + +Nov 5th 2016 | From the print edition + + + +IN MANY ways, Alan Mak was a classic child of immigrants. His parents came from what was then the British colony of Hong Kong to run a takeaway in York in the late 1970s. He shared a room with them until he was in secondary school, in a flat above the shop with no inside bathroom. But he worked hard, got into Cambridge and became a lawyer and small-business owner. Then, last year, he took a step that few other ethnic Chinese have taken: he stood for Parliament in the seat of Havant in southern England and won, becoming the first MP of Chinese origin. Whereas there are about a dozen black MPs and about twice that many of South Asian descent, Britain’s Chinese have long been a silent minority, in politics and wider society. That is now changing, spurred on by a new mindset among British-Chinese and changes in China itself. + +The 2011 census recorded 390,000 ethnic-Chinese in Britain. Jackson Ng, a second-generation Chinese barrister and one of about ten other Chinese to stand for Parliament last year, believes the real number could be more than 600,000. “Many people don’t engage with the census,” he says. + +The Chinese have in many ways been a model minority as well as a silent one. They have no religious reasons to clash with Britain’s mildly Christian culture. They are highly dispersed, which eases their integration. What’s more, community workers say, they claim even less from the state than they are entitled to. “Chinese people try to be self-sufficient and some feel they lose face if they claim benefits,” says Mei Sim Lai of the Chinese Welfare Trust, a charity. Only 7% of Chinese 16-year-olds receive free school meals, compared with 12% of whites and 24% of Pakistanis. + +Chinese children are Britain’s cleverest. In GCSE exams, taken at 16, last year 77% achieved five good grades, slightly more than Indians (72%) and streets ahead of the national average of 57%. Even more impressive, among those on free school meals 74% achieved the same standard; the national average was 33%. Unsurprisingly, Chinese students’ entry rate to university, at 58%, is the highest of all ethnic groups. + +But for decades this success has not translated into higher visibility, or even better chances of employment. Second-generation Chinese have typically gone into solid professions, such as accountancy and medicine, like their Indian counterparts. But their employment rate, at just 57%, is much lower than that of other, less well-qualified groups (see chart). And very few Chinese have moved into civic positions of influence, such as school governors. Of 18,000 local councillors around the country, perhaps a dozen are Chinese, reckons Alex Yip, a councillor in Birmingham. “We are by culture inward-looking. We look after our families first, we don’t want trouble,” says Ms Lai. She drums into foreign Chinese students that it is not enough just to get good grades. + + + +The challenge now, says Mr Mak, is to turn a strong story of integration into influence and engagement. British-born Chinese are starting to do that, he says, and getting a boost from a new type of migrant. Students from mainland China, many of them now more affluent than those from Hong Kong, make up a quarter of all those entering full-time taught master’s degrees in Britain. The number coming from China to study at British universities has nearly doubled in the past decade, to around 90,000. Nearly a quarter of foreign pupils at private boarding schools are Chinese. + +Many stay on in well-paid jobs. One in ten works in finance. They are more likely to be found enjoying a glass of bubbly at the monthly gathering of the Association of Chinese Finance Professionals than washing dishes in Chinatown. The Sunday Times Rich List has long been peppered with South Asian names. But now a few Chinese ones are cropping up among the wealthy. Yan Huo is the founder of Capula, a hedge fund; Ning Li is the boss ofMade.com, a bespoke-furniture website. + +Some of the newcomers are getting involved politically. Xingang Wang arrived in 2001 for a master’s degree at Imperial College London. He now works in finance and ran for Parliament last year, unsuccessfully. He intends to try again. Once you have a good economic life, he says, you want to participate more. + +The balance of the community is being changed not just by more wealthy arrivals at the top but by fewer poor ones at the bottom. Illegal Chinese immigration came to public attention in 2000 when 58 Chinese migrants were found dead in the back of a lorry that had come through the Channel Tunnel. Then, in 2004, 23 drowned working as cockle-pickers in Morecambe Bay. + +Chinese social organisations say that, in the past decade, opportunities in a booming China and tighter immigration controls in Britain have meant that fewer illegal migrants are trying to come. Tougher penalties on employers have had an impact. So has the introduction, in 2007, of fingerprinting of those on visas. There may be as many as 100,000 illegal migrants in Britain, says Mr Ng, many in debt to traffickers. But he estimates that illegal arrivals are about a tenth of what they were in 2004. + +The tilt towards Mandarin-speaking mainlanders has caused some friction. For decades, the majority of Chinese came from Hong Kong. They spoke Cantonese and tended to look down on the poorer, less cosmopolitan mainlanders. Now, though, the prejudices are starting to reverse. Some of the older, Hong Kong-born generation, less worldly and less well integrated, feel left behind. + +And being a model minority has often worked against the Chinese. The squeaky wheels get all the oil, says one community worker. The different origins of Chinese groups, whose roots are in Singapore, Malaysia and Taiwan, as well as China and Hong Kong, mean the community is not united. But that also helps integration. Some South Asian MPs focus on issues in Asian communities. But Havant has very few Chinese. “I am not representing the Chinese,” says Mr Mak. “I am serving all the people of my constituency.” + + + + + +Life sciences + +Life after Brexit + +Medical and pharmaceutical firms ponder their position outside Europe + +Nov 5th 2016 | From the print edition + +The late Dolly: ewe and European + +WITH its world-class research universities and embrace of exotic new medical technologies, Britain has long been a leader in the life sciences. The first mammal to be cloned—a sheep called Dolly—was born in Scotland. The creation of so-called “three-parent babies”, the result of a technique to prevent mitochondrial diseases from being passed from a mother to her child, was pioneered and has so far been legalised only in Britain. + +Innovations such as these help the industry to generate over £60bn ($74bn) a year and employ 220,000 people, many of them in the “golden triangle” of research sites in Oxford, Cambridge and London, whose universities are among the world’s top ten. This strong research base supports a sizeable and flourishing private sector. As a result, Britain has the largest pipeline of new pharmaceutical candidates in Europe; it raised a third of all European biotech venture capital last year. The European Medicines Agency (EMA), the European Union’s main pharmaceutical regulator, is based in London. + +At least, it is for now. That, and much else, has been thrown into doubt by the vote in June to leave the EU. Many now wonder whether this hotspot for life sciences, which many had thought might come to rival San Francisco or Boston, will continue to thrive. Brexit presents the industry with problems in four main areas: winning research funding, finding talent, dealing with regulation and trading with other countries. + +Britain is a net beneficiary of EU research funding, attracting €8.8bn ($9.8bn) in such grants in 2007-13, equal to 19% of the total. This support has mitigated the effects of flat government funding for science in recent years. The government has said only that it will make good any shortfall in money from Horizon 2020, the EU’s scientific-research programme. + +There is also angst over the uncertain future of EU nationals in Britain, who make up 17% of researchers and academics in higher education in the country. Foreign scientists are already turning down jobs because of lack of clarity over their future immigration status. Like those in every other industry, scientists want an easy, rapid immigration system for students, researchers and workers in order for the sector to thrive. Yet movement of labour is almost certain to be restricted by Brexit. + +Another coming headache is the question of common regulatory standards. Europe accounts for a quarter of worldwide pharmaceutical sales, and an authorisation from the EMA opens the door to this market. David Davis, the Brexit secretary, says he wants to agree with the EU on a “standardised” approval process. If that effort fails and Britain creates its own system, it is likely that the introduction of new medicines to British patients will be delayed. The EMA’s departure from London, which will surely follow any kind of Brexit, will further reduce the sector’s influence. Japan’s foreign ministry has warned that if the EMA were to go, “the appeal of London as an environment for the development of pharmaceuticals would be lost”. + +Last, there are concerns about trade. Access to the EU market is a significant factor in firms’ decisions to invest and operate in Britain. Pharma is a global industry with supply chains and processes that cross borders. Almost 45% of Britain’s exports in the life sciences go to the EU’s market of 500m consumers; EU trade deals have provided access to a further 50 foreign markets. Selling more to emerging markets, as many Brexiteers are keen to do, will not plug the gap, since these countries are focused on low-cost generic drugs. + +The government has made the continued growth of the life sciences a priority; the sector may be among those to benefit from Theresa May’s promised “proper industrial strategy”, whatever that turns out to be. Yet, as a recent report by QuintilesIMS, a health-care consultancy, concludes, although some measures may mitigate the decision to leave the EU, the consensus in the industry is that these cannot match the opportunities offered by EU membership. The lobbying is already well under way. On October 31st AstraZeneca, a multinational based in Cambridge, warned that pharma companies would leave unless Britain’s health service loosened its famously tight purse-strings when it comes to paying for breakthrough drugs. Persuading companies to stay could prove an expensive business. + + + + + +Cyber-security + +Britain flexes its cyber-muscles + +Online attacks by foreign powers will be met in kind, vows the government + +Nov 5th 2016 | From the print edition + + + +PHILIP HAMMOND, the chancellor of the exchequer, is not a man given to making dramatic statements. Known as “Spreadsheet Phil” during his cost-cutting stint as defence secretary, he does dry better than the Sahara. Yet on November 1st, addressing a geeky conference hosted by Microsoft, Mr Hammond declared that not only was Britain developing its offensive cyber-capabilities, but it was doing so “because the ability to detect, trace and retaliate in kind is likely to be the best deterrent”. It was a statement of intent that few Western governments have been prepared to make so explicitly. + +Mr Hammond went on to say that a “small number of hostile foreign actors” had developed capabilities that threatened the security of Britain’s critical national infrastructure and industrial control systems. Faced with such an attack, Britain needed to be able “to respond in cyberspace” because the alternative was to turn the other cheek or to retaliate by conventional military means, with all the legal and escalatory risk that entails. + +To be fair, this was only one part of a speech launching a £1.9bn ($2.3bn) investment in a national cyber-security strategy that will include wide-ranging defensive measures designed to protect government, industry and private citizens from the growing threat of criminal activity on the internet. But it was by far the most controversial part, and also the part that raises the most questions. + +It has long been accepted that an offensive cyber-capability is as much part of fighting a modern war as planes or missiles. Since Russia’s war on Georgia in 2008, cyber-attacks have been established as the way in which state-on-state conflicts are most likely to begin. Nor has anyone expressed much surprise to learn that Britain and America have recently been using cyber-offensives to cut Islamic State off from the internet. + +But it gets more complicated when it comes to responding to attacks of the kind that the Obama administration last month officially accused Russia of carrying out on American political institutions. Mr Obama has promised a “proportional” response. Joe Biden, the vice-president, went further, implying that Vladimir Putin would soon be on the receiving end of a covert cyber counter-attack. + +Mr Hammond appears to have something similar in mind should the need arise—which, if Andrew Parker, the head of Britain’s security service, is right, could be at any time. Possibly by coincidence, a Guardian interview with Mr Parker (the first a head of MI5 has given to a newspaper) appeared on the same day as Mr Hammond’s announcement. While nodding his head to the enduring menace of terrorism, Mr Parker singled out the threat represented by Russia and its use of espionage, subversion and cyber-attacks across Europe to achieve its foreign-policy aims. It is “MI5’s job to get in the way of that”, he said. + +None of this makes it clearer what Britain would actually do if faced with a serious cyber-attack by a foreign power. The rules of this game have yet to be written. But the message that Mr Hammond wanted to deliver both to adversaries abroad and voters at home was clear enough: do not think you can attack us with impunity. The prime minister, Theresa May, was defined by her six years running the Home Office. She wants the cornerstone of her government to be security. Cyber-security is no exception. + + + + + +The Article 50 case + +Taking back control + +The High Court rules that Parliament must vote to trigger the Brexit process + +Nov 5th 2016 | From the print edition + +Still sovereign + +IT IS rare for a court judgment to cause turmoil in the foreign-currency markets. Yet the pound soared on the morning of November 3rd after the High Court in London ruled that only Parliament has the authority to trigger Article 50 of the European Union treaty, the legal route for Britain to leave the EU. The markets’ response reflects the view either that Parliament might choose to block Brexit altogether or, perhaps more plausibly, that it will attach conditions to an act invoking Article 50 that make a “soft” Brexit more likely. + +The government is appealing to the Supreme Court, which will take the case early next month. The government still asserts that it alone has the right to invoke Article 50 under the royal prerogative, which gives it sole authority over foreign policy and over the making (and unmaking) of treaties. But the High Court explicitly rejected this line in its judgment. Its argument is that the 1972 European Communities Act, which gives effect to Britain’s EU membership, is a matter of domestic law, not of foreign policy. A decision to invoke Article 50 could lead to Britain’s exit from the EU within two years without any further parliamentary involvement, in effect overturning the 1972 act. The court’s judgment is that any such step requires prior parliamentary approval. + +Beyond the arcane issues of Britain’s unwritten constitution and the royal prerogative lie some big political arguments. Although Brexiteers campaigned on the promise to take back powers from Brussels and Luxembourg to Westminster, they have resisted the closer involvement of Parliament in the process because a large majority of MPs in the House of Commons and of peers in the House of Lords backed the Remain side in the referendum. Yet since the referendum produced a clear majority to Leave on a very high turnout, it seems unlikely that Parliament will actually block Brexit. + +The prime minister has promised to keep Parliament informed over her plans for Brexit, but not to give a “running commentary” for fear that this will undermine her negotiating position. Yet she has also promised a Great Repeal Bill that will give domestic effect to most EU law after Britain leaves the club. And it is also clear that Parliament will need to approve the terms of Britain’s departure and of its future relations with the EU. + +The Supreme Court may well endorse the High Court’s judgment. But even if it does not, the political argument for giving Parliament greater say both in the triggering of Article 50 and in the lengthy negotiating process that will follow now seems unanswerable. + + + + + +Heroin addiction + +Fixing problems + +A Scottish city pioneers a radical new drugs policy + +Nov 5th 2016 | From the print edition + + + +ON OCTOBER 31st the Glasgow City Integration Joint Board, a multi-agency committee of council leaders, police and health officials, approved plans to open a “safer consumption facility” for drugs. Such facilities, sometimes dubbed fix rooms or shooting galleries, are sites where heroin users can take their drugs under medical supervision. A handful of patients would be offered medical-grade heroin, while the rest would have to bring their own junk. Countries such as Canada and Switzerland already offer drug users the opportunity to get high under the watchful eyes of medical professionals, and Ireland plans to do so later this year. Glasgow’s would be the first such site in Britain. + +Rising numbers of deaths and increasing rates of HIV connected to drug use have prompted the move. The rate of drug-related deaths in Scotland is higher than in the rest of Britain; Dundee and Glasgow top the grim league (see map). The absolute number of deaths in Glasgow last year—157—was second only to London and Birmingham, both much bigger cities, and the highest for at least a decade. More than two-thirds were a result of taking heroin or similar drugs. Last year some 47 new HIV infections in people who inject drugs were reported, compared with a previously steady annual average of about ten. + + + +Heroin addicts are an ageing, sickly group, particularly vulnerable to the harms of their drug habit. Fix rooms eliminate many of the health risks of taking heroin. People there use clean needles and inject the stuff properly. Those who overdose get help immediately. + +But some worry that such facilities encourage drug abuse. Perhaps in anticipation of such criticism, the Glasgow venture will offer addiction counselling as well as housing and welfare advice and other health-care services. The experiences of other countries are encouraging. Vancouver saw a 35% reduction in overdose deaths in the vicinity of its safe-injection facilities in the two years after they opened compared with the two years before (in the rest of the city they dropped by 9%). No one has ever died in a safe injection site, says Danny Kushlick of Transform, a pro-legalisation charity. Their success has even won over some sceptics. Police in Vancouver were initially dubious but officers now escort addicts to the facilities. + +The acuteness of Scotland’s drug problem has spurred the innovation. But the country has a political climate that is well suited to such experiments. Scottish politicians, including some Tory ones, have welcomed Glasgow’s heroin initiative. By contrast, in England Mike Barton, the chief constable of Durham Police, was criticised last year by the then policing minister for even suggesting that drugs such as heroin could be made available on the National Health Service. + +Scotland prides itself on taking a more liberal approach to public policy issues than its southern neighbour. It still has plenty of problems, from the police’s use of stop-and-search to its stubbornly high prison population. But violence and drugs are increasingly seen as public health issues. One of the hopes of devolving power to governments in Scotland and Wales was that they would experiment with policies that could spread to the rest of Britain. Glasgow’s promising trial should be watched closely by other cities. + + + + + +The road from serfdom + +Unpaid internships come under fire in Britain + +The government spies an opportunity to increase social mobility—and to win votes + +Nov 5th 2016 | From the print edition + + + +AS MORE CVs glitter with university degrees and straight A-grades, companies have devised a new tiebreaker for admission to the best jobs: the internship. Careers in finance, the media, politics and other popular fields now often begin with a temporary stint lasting from a few weeks to more than a year. The government reckons that at any time up to 70,000 interns are toiling in Britain. Yet about a third are unpaid. This gives rich, London-based candidates an edge. + +There are growing attempts to make companies pay up. On November 4th Alec Shelbrooke, a Conservative MP, is due to present a bill to grant all interns the minimum wage, as long as they are above school age and their internship is not part of a degree course. The spread of unpaid work means that bright graduates are being leapfrogged by richer rivals who, at university, “pissed about a bit, got a 2:2, but got the job because they had money put behind them,” he says. + +Private members’ bills such as Mr Shelbrooke’s tend to fizzle out. But Damian Hinds, the employment minister, said on October 30th that the government, too, was “looking at” unpaid internships, which he linked to social mobility, the subject Theresa May has put at the centre of her domestic agenda. + +An outright ban on unpaid experience, of the sort proposed by Mr Shelbrooke, is ruled out by Downing Street. But there may be scope for stricter enforcement of the minimum wage. Interns qualify for the minimum wage if they are doing something that constitutes work. Many unpaid internships are thus already illegal, says Ben Lyons of Intern Aware, a pressure group which has helped indignant serfs to claim backpay from companies including Harrods and Sony. Yet tax inspectors have little capacity to investigate, and interns are anyway unlikely to complain if it scotches their prospects of future employment. + +Nor is it always clear whether pay is due. Some internships begin with merely observing how a company works—which doesn’t qualify for the minimum wage—before drifting into something more like work as the intern makes himself useful. An official commission on social mobility has suggested a four-week cut-off, after which interns must be paid. Two years ago France introduced a two-month cut-off, after which stagiaires get a reduced minimum wage, currently €3.60 ($3.95) per hour, or a little over a third of the ordinary rate. + +With Labour under the unpopular management of Jeremy Corbyn, an Islington-based socialist, the Conservatives have a chance to win over what Mrs May calls the “just managing” classes. These folk are increasingly likely to send their children to university, but could not bankroll them for a months-long internship in London. If the Tories could win their loyalty, more seats like Mr Shelbrooke’s middle-class Yorkshire constituency might be up for grabs. + +This article appeared in the Print Edition with the headline: The road from serfdom + + + + + +A false idol + +Britain’s manufacturing sector is changing beyond all recognition + +Manufacturing is less and less the industry for Britain’s man on the street + +Nov 5th 2016 | From the print edition + +Trouble at t’ millinery + +POLITICIANS of all stripes agree: Britain needs more manufacturing. George Osborne, the previous chancellor of the exchequer, promised that the country would be “carried aloft by the march of the makers”. To persuade Nissan and other carmakers to stay put after Britain leaves the European Union, the government has offered them “support and assurances”, including a pledge to seek tariff-free access to Europe. John McDonnell, the shadow chancellor, wants to extend such guarantees to “manufacturing as a whole”. + +Why do politicians so love manufacturing? It is hardly a recent affair: in the 1960s Britain slapped a tax on the service sector in order to subsidise manufacturing. But the obsession has intensified recently, partly because the industry seems to be doing so badly. From the 1840s to the 1960s, manufacturing employed roughly 40% of workers. Now it employs only 8%. In 2005-10 alone, 600,000 manufacturing jobs disappeared. The sector still accounts for about a tenth of GDP, though that has fallen too in recent years. + +Some say that a weak manufacturing sector holds back overall growth. Ha-Joon Chang of Cambridge University points out that some of the very richest countries have thriving manufacturing sectors. Switzerland has manufacturing output of $12,000 per person, three times Britain’s. Manufacturing tends to be more export-intensive than services, so boosting it might help to close Britain’s gaping current-account deficit, which at the last count was 6% of GDP. + +Perhaps the most powerful draw of manufacturing for politicians, however, is the notion that it can help those who have been left behind by globalisation and the country’s recent service-sector-led growth. The shrinking of manufacturing has coincided with the emergence of a more divided Britain. The country is Europe’s most regionally unequal. Median real weekly pay is still about 5% lower than before the financial crisis of 2008-09, but the incomes of the top 1% have pulled away. + +It is tempting to believe that a revival in manufacturing would help to reverse these trends. The thinking goes that the sector can provide good jobs for ordinary Britons, and particularly those who live in struggling parts of the country. Unfortunately, however, changes in technology and trade patterns mean that these rosy assumptions are far wide of the mark. British manufacturing is turning into an elite industry, most suited to a small number of highly skilled people. + +First, consider the parts of the country where manufacturing employment is growing. Only four sub-regions in England and Wales saw a rise in manufacturing employment in 2004-16. These included Cambridge and inner London. Customers are willing to spend good money on products associated with these vibrant places: facilities such as “Hackney Brewery” have a certain cachet. More important, both cities are stuffed with highly skilled folk. + +That is vital for modern manufacturers. Brompton, a high-end bike-maker in London, employs 30-40% more people than in 2010. It has recently opened a new factory in the city. Despite its high rents, London is where it can get the best people for things like design and marketing, says Will Butler-Adams, the chief executive. + +At your service + +The Brompton example hints at something bigger. British manufacturing firms increasingly compete globally on quality, not price. And they are also more reliant on things like research and servicing. Of the £2bn ($2.5bn) of defence-aerospace revenues recorded in 2015 by Rolls-Royce, the archetypal British manufacturer, 61% came from services, rather than sales of original equipment. Is Rolls a manufacturer or a service-provider? This ambiguity bedevils official statistics: one analysis found that 10% of the decline of manufacturing employment in 1998-2006 was explained by manufacturing jobs simply being reclassified as service-sector ones. + +As the industry has evolved, so its workforce has changed. Less than 2% of manufacturing employees had a further degree in the late 1990s, but now 7% do, a faster growth rate than the average. The proportion of manufacturing workers in professional or technical occupations has also jumped in recent years. + +To find the right workers, bosses must look to foreign climes: 17% of the manufacturing workforce was born outside Britain, higher than the average proportion and a similar share to those working in banking and finance. Manufacturing’s use of higher-skilled staff is reflected in higher wages. In 2000 manufacturing workers earned 17% more than the average drudge. Now they earn 21% more. + +Low-skilled workers, meanwhile, have lost out. They struggle to find jobs at places like Rolls or Brompton, but they are also too costly for more menial tasks: hourly compensation costs in British manufacturing are roughly five times what they are in Mexico. The share of manufacturing workers in the lowest skill brackets is down by three percentage points since 2009, one of the steepest falls in any industry. + +All this has implications for government policy. To recognise that British manufacturing is no longer the industry for the man on the street does not mean that efforts to promote it are pointless. The economy might benefit from a healthier manufacturing sector. But the increasing sophistication of the industry, and the decline in its overall employment, are only going to continue. If politicians really want to help Britain’s left-behind regions, they will need to look elsewhere. + +This article appeared in the Print Edition with the headline: A false idol + + + +International + + + + + +Online governance: Lost in the splinternet + + + + + +Online governance + +Lost in the splinternet + +Left unchecked, the growing maze of barriers on the internet will damage economies and hamper political freedom + +Nov 5th 2016 | From the print edition + + + +FREE-SPEECH advocates were aghast—and data-privacy campaigners were delighted—when the European Court of Justice (ECJ) embraced the idea of a digital “right to be forgotten” in May 2014. It ruled that search engines such as Google must not display links to “inadequate, irrelevant or no longer relevant” information about people if they request that they be removed, even if the information is correct and was published legally. + +The uproar will be even louder should France’s highest administrative court, the Conseil d’État, soon decide against Google. The firm currently removes search results only for users in the European Union. But France’s data-protection authority, CNIL, says this is not enough: it wants Google to delete search links everywhere. Europe’s much-contested right to be forgotten would thus be given global reach. The court will hear the case on December 2nd and may hand down a verdict by January. + +The spread of the right to be forgotten is part of a wider trend towards the fragmentation of the internet. Courts and governments have embarked on what some call a “legal arms race” to impose a maze of national or regional rules, often conflicting, in the digital realm. Left unchecked, the trend towards a “splinternet” will cause economic damage, hamper digital innovation, restrict free speech—and, according to a recent report for the World Economic Forum, a conference organiser-cum-think-tank, ruin the “internet’s enormous capacity to facilitate human progress”. + +The internet has always been something of a subversive undertaking. As a ubiquitous, cross-border commons, it often defies notions of state sovereignty. A country might decide to outlaw a certain kind of service—a porn site or digital currency, say—only to see it continue to operate from other, more tolerant jurisdictions. + +As long as cyberspace was a sideshow, governments did not much care. But as it has penetrated every facet of life, they feel compelled to control it. The internet—and even more so cloud computing, ie, the storage of vast amounts of data and the supply of myriad services online—has become the world’s über-infrastructure. It is creating great riches: according to the Boston Consulting Group, the internet economy (e-commerce, online services and data networks, among other things) will make up 5.3% of GDP this year in G20 countries. But it also comes with costs beyond the erosion of sovereignty. These include such evils as copyright infringement, cybercrime, the invasion of privacy, hate speech, espionage—and perhaps cyberwar. + +In the analogue age, such transnational problems would have been dealt with in the appropriate intergovernmental organisation. On criminal matters, information was exchanged through bilateral mutual legal-assistance treaties (MLATs). But such mechanisms are designed for limited amounts of information in a slow-moving world. Now cross-border data flows are the rule (see chart 1) and technology is evolving fast. Urs Gasser, executive director at the Berkman Klein Centre for Internet & Society at Harvard Law School, says that the existing system of international co-operation is becoming overwhelmed. + + + +A complication is the conflict over jurisdiction, whereby laws in one country are irreconcilable with those in another. The problem is fed, in turn, by the fact that governments struggle to obtain data held in foreign countries, notably America, where most of them are stored. Foreign law-enforcement agencies, even those from friendly democratic countries, must go through a cumbersome procedure to secure a warrant from an American judge before asking companies to hand over data. + +In response, governments are trying to impose their laws across the whole of cyberspace. The virtual and real worlds are not entirely separate. The term “cloud computing” is misleading: at its core are data centres the size of football fields which have to be based somewhere. Facebook, Google and other tech giants have offices and employees worldwide. So governments, especially those of big countries, can often find a vital point to squeeze and force companies to comply with national laws and regulations. + +Internet & Jurisdiction, a think-tank based in Paris, has documented dozens of cases of such extraterritoriality. Some are crude, as when police in Brazil in March arrested a local Facebook executive because WhatsApp, the firm’s messenger service, did not provide information requested for a criminal investigation (WhatsApp does not keep copies of messages). + +Some cases attempt to set legal precedents: for example, on whether data should be subject to the laws of the country where they are held, or where a company is based. In 2013 a judge in New York told Microsoft to turn over the e-mails, housed in a data centre in Ireland, of a suspect in a drug investigation. In July the firm won an appeal against the order, but America’s Department of Justice is seeking to reopen the case. New laws often include clauses with extraterritorial reach. The EU’s General Data Protection Regulation will apply from 2018 to all personal information on European citizens, even if the company holding it is based abroad. + +In many cases, laws seek to keep data within, or without, national borders. China has pioneered the blocking of internet addresses with its Great Firewall, but the practice has spread to the likes of Iran and Russia. Another approach is “data localisation” requirements, which mandate that certain types of digital information must be stored locally or remain in the country. A new law in Russia, for instance, requires that the personal information of Russian citizens is kept in national databases. Controlling access to information makes it easier for autocrats to keep tabs on the population. Elsewhere, though, data-localisation polices are meant to protect citizens from snooping by foreign powers. Germany has particularly stringent data-protection laws which hamper attempts by the European Commission, the EU’s civil service, to reduce regulatory barriers to the free flow of data between member-states. + +Fragmentation caused by government action would be less of a concern if other factors were not also pushing in the same direction. One of the founding principles of the internet—that any device on the network should be able to communicate with any other—is being eroded by new technologies, such as firewalls and a separate “dark web”, which is only accessible using a special browser. Commercial interests, too, are a dividing force. Apple, Facebook, Google and other tech giants try to keep users in their own “walled gardens”. Many online firms “geo-block” their services, so that they cannot be used abroad. + +All this does not yet spell the end of the open, freewheeling internet, cautions Vint Cerf, one of the inventors of the internet, who now works for Google. And he accepts that governments have a duty to protect their citizens. Yet Mr Cerf worries about the damage that will be caused if barriers continue to be erected. Some problems are technical: fragmentation tends to reduce the internet’s resilience, for instance its ability to function reliably even when part of the network is damaged. + +More important are the economic costs. A splintered internet would hamper its role as a remarkable innovation engine. Start-ups, in particular, would find life harder. Data-localisation requirements and other barriers can cut GDP growth by more than one percentage point in some countries, reckons the European Centre for International Political Economy, a think-tank, in a study published in 2014. + +The highest price, though, would be the harm to political freedom. Never has it been easier for people to express and organise themselves. Although the internet has given a stage to many unpleasant characters, including terrorists, it has also been a boon to free speech—especially in authoritarian states that regard the internet as a tool for subversion by the CIA. + +Elders of the internet—among them politicians, entrepreneurs and others who want the network to remain an open global commons—have started to push back. On November 14th like-minded souls will gather in Paris for the first international conference dedicated to finding ways for countries to co-ordinate internet policies. + +Obstacles on the internet, just like barriers to trade, are easy to decry but hard to prevent. The experience of governing other global commons offers little help. When governments were negotiating treaties to regulate the use of the seas and outer space, they were talking about realms beyond territorial sovereignty, not a domain that overlaps with and undermines it. + +Agreeing on common rules, let alone creating an intergovernmental “World Internet Organisation” would take decades. Nor would it be desirable: putting governments in charge is unlikely to produce decisions acceptable to those who run the internet—or to those who seek to defend political freedom. “We need to be as creative as the inventors of the internet,” says Paul Fehlinger of Internet & Jurisdiction, which is organising the Paris conference. + +Internet experts distinguish between governance “of” the internet (all of the underlying technical rules that make it tick) and regulation “on” the internet (how it is used and by whom). The former has produced a collection of “multi-stakeholder” organisations, the best-known of which are ICANN, which oversees the internet’s address system, and the Internet Engineering Task Force, which comes up with technical standards. + +Finding consensus on technical problems, where one solution often is clearly better than another, is easier than on legal and political matters. One useful concept might be “interoperability”: the internet is a network of networks that follow the same communication protocols, even if the structure of each may differ markedly. Perhaps, say some, law-enforcement agencies could agree on how to streamline the growing volume of requests they make for digital information (see chart 2). + + + +Institutions that deal with rules “on” the internet are emerging, notes Carl Bildt, a former Swedish prime minister. He is the chairman of the Global Commission on Internet Governance, a group of experts which in June published a report on online policy. The Freedom Online Coalition is a partnership of 30 governments co-ordinating their efforts to protect human rights in cyberspace. The Internet Governance Forum, a series of events sponsored by the UN, offers a place for all “stakeholders” to pitch in. The countries that have signed the Budapest Convention on Cybercrime are working to harmonise their laws. + +“Multi-stakeholderism” may be, like democracy, the worst form of governance except for all the other ones. If nothing is done the open internet could, in a decade or two, be a thing of the past. Take the right to be forgotten: the ECJ meant it to cover only search results, and made exceptions for journalistic content. But two other courts, in Belgium and Italy, recently ruled that a newspaper and a website, respectively, had to modify or delete content in their archives. “What we currently have,” says Mr Bildt, “is the law of the jungle.” + + + +Business + + + + + +Tech firms’ pay wars: Money honeys + +Startups: Silicon Beach + +Japanese entrepreneurs: Slow to startup + +Chinese aerospace: We are sorry to announce + +Online advertising: Keeping watch + +Niche smartphones: A sea of black mirrors + +Schumpeter: Political business + + + + + +Money honeys + +Tech firms shell out to hire and hoard talent + +As tech firms battle to hire and hoard talented employees with huge pay packages, Silicon Valley may be changed for the worse + +Nov 5th 2016 | SAN FRANCISCO | From the print edition + + + +LARGE technology firms used to hold on to their high-flying employees by agreeing not to poach them from each other. “If you hire a single one of these people, that means war,” Steve Jobs, Apple’s then boss, warned Sergey Brin, a founder of Google, in 2005. That was an illegal arrangement, and in 2015 Apple, Google, Adobe and Intel paid a $415m settlement to engineers whose pay had been held down as a result. + +Today wage suppression in Silicon Valley is even more of a distant memory than dial-up internet and mainframe computers. Last year technology companies in America recorded expenses of more than $40bn in stock-based compensation. Exact comparisons are difficult, but to put that sum in perspective it is roughly 60% more than the bonus pool paid to the New York employees of Wall Street banks. + +The money tech firms throw at employees has ballooned as competition to hire and hang on to top talent in engineering, data science, artificial intelligence and digital marketing has soared. Even entry-level engineers can easily earn $120,000 a year, more than most people their age can make on Wall Street; mid-career executives with technical expertise who choose to work at large public companies such as Apple, Google and Facebook will pocket several million, including stock grants. The boss of one startup complains that he cannot find a competent chief operating officer who will work for less than $500,000 a year. + +All this is driven by a number of elements. The price of housing plays a part in pushing up salaries. The cost of living in the Bay Area is now 41% higher than the national average and 7% higher than the next most expensive place, New York City, according to Brant Shelor of Mercer, a consultancy. But the biggest spur of change is the enormous appetite for talent. Unlike the best lawyers or doctors, who can see only a limited number of people each day, those with exceptional technical expertise can transform a company because they are capable of creating products that are many times more attractive and thus a lot more lucrative, explains Marco Zappacosta of Thumbtack, a digital marketplace. + +Come into my parlour + +Google, Facebook and Amazon alone probably hire around 30% of all American computer-science undergraduates, reckons Roelof Botha of Sequoia, a venture-capital firm. These big public companies not only pay handsomely, but also wield a hiring advantage with the huge amount of stock they are willing to hand to promising candidates. Last year Alphabet, Google’s parent company, issued around $5.3bn in stock-based compensation, equivalent to a fifth of its gross profits. That amounts to an average of $85,000 in stock-based compensation per full-time employee. + + + +Whereas non-tech companies in the S&P 500 give out, on average, the equivalent of less than 1% of their revenues in stock-based compensation, the norm for big technology firms is around five times that (see chart). Last year Facebook, for example, recorded stock-based compensation expenses equivalent to around 17% of its sales; Workday, a software firm, and Twitter had stock-based charges of some 20% and 31% of their revenues, respectively. + +Stock-based compensation has its roots in the early days of Silicon Valley, when startups could not afford to pay employees much, if anything, and asked them instead to take a small piece of the company that might rise in value later. What is different today is that many of the Valley’s firms are mature with proven track records, so their stock is already valuable and can be used to greater effect. It is being deployed to “strategically hoard” the best talent, says Patrick Moloney of Willis Towers Watson, a consultancy. Once locked in, that talent is then assigned to important projects. This deters people from going to rivals or launching their own startups. + +To maintain their grip on top employees, the tech giants use several tactics in addition to handing out stock. Some provide generous signing-on bonuses that can be clawed back if an employee leaves within three years. Amazon heavily weights stock grants to an employee’s third and fourth year with the company, as an incentive for them to stay and continue to work hard. Another common practice is to offer a “retention” bonus to make employees who are considering going elsewhere reconsider. Apple, Google and Facebook are rumoured to keep a list of companies they do not want to lose talent to, and supervisors are empowered to offer large bonuses to prevent people moving in that direction. A famous example of this occurred in 2011, when Neal Mohan, a senior Google executive, was considering leaving for Twitter. Some say he was offered a bonus of $100m in stock to stay at Google. + +The top ten + +“It’s gone too far,” says one venture capitalist among the many bemoaning how large public technology companies suck up so much talent with their lucrative equity packages. The munificence of the large tech firms raises the stakes for others. Word of lavish offers spreads among colleagues. As a result, the top 10% of talent are getting paid what only the top 2% would otherwise fetch, says Richard Lear of Vantage Partners, a consultancy. + +Even companies that are not doing well offer financial incentives to keep people. Twitter, whose stock is languishing as it struggles to make money from its social-media platform, has seen many talented people depart. The firm is believed to be offering bonuses of up to $1m to persuade its top engineers to stay for another few years. + +Not surprisingly, startups find it hard to compete in the war for talent. The best positioned are high-flying “unicorns”, Valley-speak for private companies valued over $1bn. These companies, such as Uber and Airbnb, have raised lots of money and are willing to use it lavishly to lure people out of the large public firms. They can offer high cash salaries, but also try to attract employees by suggesting their stock will look better when they finally go public. After someone has been at a unicorn for around four years, they can receive “refresher” grants of stock to give them an additional incentive to remain. + +Lacking the same resources, smaller startups blame the giants for distorting the market for high-flyers. “I get the feeling that I can’t compete for objectively proven, brilliant talent,” says Mike Driscoll, the boss of Metamarkets, an analytics startup. “All I can do is hire diamonds in the rough, who will almost certainly get poached away by larger companies when they start to emerge as very talented.” Smaller fry try to find employees with a different temperament, perhaps those willing to take greater risks or others who find working at a large company dispiriting. + +The rising cost of talent has also pushed up the level of funding startups need to raise. The idea that it is cheap to launch a firm is a myth, says Evan Williams, who co-founded Twitter and set up Medium, an online-publishing platform. “It’s harder and more expensive than ever to make a startup successful.” The more money young companies raise from investors to pay their employees, the harder it is for them to break even or become profitable. + +The tactics employed by the large tech firms carry risks. One is to the entire ecosystem of Silicon Valley. In the future, entrepreneurs with a world-beating idea for a startup may recoil at the price of a garage to launch it in. Some startups are already moving elsewhere to hire cheaper engineers and reduce other costs. They don’t have to go very far from the Bay Area, perhaps to southern California (see article) or other states. In the long term, there is a risk that the Valley could resemble South Korea: dominated by a handful of giant chaebol-like companies that soak up all the talent and squeeze out smaller startups. + +Another risk is the wrath of investors and the public. Under generally accepted accounting principles, companies are required to deduct stock-based compensation to calculate profits, but many emphasise alternative measures, and as a result plenty of shareholders have not been paying attention to the vast amounts being doled out. Spencer Rascoff, the boss of Zillow Group, an online property firm, thinks that stock-based compensation should be paid a lot more attention. “When it’s ignored by companies and investors it gives companies the opportunity to use stock compensation like funny money,” he says. “It’s not. It’s dilutive to shareholders.” + +Few shareholders question expenses when firms are flying high, but the mood could change swiftly if the stockmarket plunged, or a company’s performance were to falter, as happened this year at Twitter and LinkedIn. Tech bosses may think that because they deliver products and services people like, even adore, they do not have to worry about the kind of backlash against high pay that Wall Street suffered. They shouldn’t count on it. + +This article appeared in the Print Edition with the headline: Money honeys + + + + + +Silicon Beach + +Los Angeles booms as startup hub + +A cheaper location for tech companies takes off + +Nov 5th 2016 | From the print edition + +Better than surfing down Sand Hill Road + +HOLLYWOOD has produced plenty of films about underdogs rising to claim the limelight. Now Los Angeles is experiencing its own real-life Cinderella story, as the area’s technology scene has been transformed from backwater to boomtown in just a few years. Hordes of venture capitalists from northern California, once long dismissive of their southern neighbour, now regularly commute in search of deals in a less heavily hunted spot than the Bay Area. In 2016 the city’s startups received around $3bn in funding, around six times more than in 2012, according to CB Insights, a research firm. + +Evan Spiegel went to Stanford University in the heart of Silicon Valley, but he wanted to live and work close to the sea. So he based his new company one block from the Pacific in Venice Beach, which is better known in Los Angeles for its silicone-enhanced bodies than the silicon chips that gave the Valley its name. Mr Spiegel’s firm, Snap, is best known for its ephemeral Snapchat social-media messages and is now valued at a whopping $18bn. Other successful technology firms are thriving nearby, including Dollar Shave Club, an e-commerce firm recently sold to Unilever for $1bn; Ring, a “smart” doorbell company, and Riot Games, maker of “League of Legends”, a popular online multiplayer contest. + +Los Angeles is now the third-most-prominent outpost for startups in America, after San Francisco and New York. It has several advantages, including good universities, warm weather, a relaxed culture, proximity to San Francisco and much lower costs. Michael Schneider, the boss of Service, a customer-relations startup, reckons he would need to have raised at least 40% more money if based in San Francisco, “just to pay for the same space and people”. + +Although Los Angeles has fewer experienced engineers, those that are there tend to be more loyal, not least because there are fewer firms out to poach them. Startups can convince people to move. Ophir Tanz of GumGum, an advertising startup, says he has recruited several employees looking for a more balanced life away from cities like New York and San Francisco. + +Los Angeles may at last be getting the attention it deserves. “The original monetisation of the internet was created here, not Silicon Valley,” says Mark Suster, a venture capitalist with Upfront Ventures, referring to pioneers such as Applied Semantics, bought by Google. But for Los Angeles to establish itself as an enduring place for startups, it needs Snapchat to continue to thrive and go public, which could happen as soon as next year. + +This article appeared in the Print Edition with the headline: Silicon Beach + + + + + +Entrepreneurs in Japan + +How to rev up Japanese startups + +Japan needs to do more to encourage new businesses + +Nov 5th 2016 | TOKYO | From the print edition + +Naka does it her way + +WANTEDLY, a LinkedIn for Japan’s millennials, would not be out of place in California. The thriving firm’s offices feature trendy furniture and a ping-pong table. Akiko Naka, the 32-year-old chief executive leads a young team that forgoes the usual black-and-white attire of Japanese business to pad around in jeans and socks. Meeting rooms are named after characters from a famous manga comic. + +Yet Wantedly is a rarity. Since the fertile years of the 1980s, and a brief dotcom boom that began in the late 1990s, Japan has fared badly in encouraging similar startups. Just 31% of Japanese think being an entrepreneur is a good career choice, beating only Puerto Rico at the bottom of a study carried out in 2014 by Global Entrepreneurship Monitor (GEM), a report compiled by a group of universities worldwide. By comparison, America scored 65%, China 66% and the Netherlands 79%. Shinzo Abe, Japan’s prime minister, has tried to encourage people to start new businesses to help revive the economy. Startups create more jobs, and more productive ones—something Japan desperately needs. (Its productivity per hour worked is approximately 65% of America’s.) + +Mr Abe has made it easier and faster to start a business, and things have improved modestly. Venture capitalists, for example, stumped up ¥92.8bn ($900m) in the first half of this year, up from ¥76.5bn in the same period in 2015. A stronger stockmarket means initial public offerings are more common. A few promising companies are emerging, mainly in life sciences and biotech. Spiber, one such firm, makes new materials from proteins, such as a super-strong silk similar to that spun by spiders. + +Far more needs to be done, especially about risk aversion. Most Japanese are afraid of failure. Tamako Mitarai, who set up a firm selling knitwear made by people affected by the 2011 earthquake and tsunami in Tohuku, says she wanted to inspire people who had lost their livelihoods with the hope that they would follow suit. Yet five years later, few have done so. + +“It doesn’t have to be like this,” says William Saito, an entrepreneur turned government adviser, who adds that Japanese companies carried on funding him when he was setting up businesses and failing on the west coast of America. “This is not about something in the Japanese DNA, but about social structures,” reckons Jiro Kokuryo of Keio University. + +The main problem is an inflexible labour market. Although the system is loosening a little, Japanese companies value and reward lifetime service. The typical salaryman slowly working his way up the company ladder remains an alluring role-model for graduates, and people are unlikely to hop from company to company. This makes it hard for startups to attract mid-level people—hence, says Ms Naka, all her fresh-faced employees. + +Wantedly provides a forum for businesses and jobseekers to find one another. But Ryo Ishizuka of Mercari, an online peer-to-peer Japanese marketplace that has expanded to America, says it is hard to fire people, which makes life difficult for startups as they grow and evolve. + +These things may account for why young women head many of Japan’s successful new businesses. “They already face problems of upward mobility in the workplace, so they have less to lose by going it alone,” says Mr Saito. It needs to be easier for companies to close, too. Only 12% of Japan’s small- and medium-sized firms are under five years old, compared with 33% in America. Old companies are kept on life support, sometimes with government assistance, impeding new ones from starting. + +Established companies also receive more attention than startups from government schemes designed to help small firms, such as R&D tax credits. Meanwhile, too much of the burden falls on individuals if their firm goes bankrupt, as banks—the main source of financing—demand onerous guarantees. + +The government could also do away with a host of regulations that restrict or ban many of the most popular forms of startup. Uber operates only luxury cars in Japan, not its regular service. Airbnb’s room-letting takes place in a grey area. That is a shame, says Mercari’s Mr Ishizuka, as consumer-to-consumer businesses have most potential in Japan. + +As the costs of starting a business fall, and the security of lifetime employment becomes harder to find, it is a good time for Japan to tackle these issues. The GEM numbers suggest that although the overall appetite for starting a business may be small, 19.5% of Japanese who believe they have the ability set up a firm actually do so, which is more than Americans manage at 17.4%. Japan has the potential, but its entrepreneurs need a break. + +This article appeared in the Print Edition with the headline: Slow to startup + + + + + +Chinese aerospace + +China’s big aerospace ambitions are delayed + +A new airliner from China is taking time + +Nov 5th 2016 | ZHUHAI | From the print edition + +I think we need to make it bigger + +STEALTH fighter jets are designed to be as furtive as possible and sneak through radar without being noticed. China’s new J-20 stealth fighter demanded plenty of attention as it roared over the heads of spectators during its public debut at the Zhuhai air show this week. The message was clear: China is aiming high in the aerospace business. That ambition, though, is as much about commercial aircraft as it is about fighter jets, and in particular one model was noticeably absent from the show: the C919, a single-aisle short-haul passenger jet which China is developing to take on Airbus and Boeing. + + + +\Over the next 20 years both the European and the American aerospace giants forecast that China will become their biggest single market due to demand for new aircraft by Chinese airlines keen to meet the rising middle classes’ desire for air travel. Boeing estimates that China will need 6,810 jets worth $1trn over that period (see chart). The state-owned Commercial Aircraft Corporation of China (COMAC) is eager to supply some of those planes. This puts Airbus and Boeing in a tricky spot: “Their problem is that their biggest customer wants to become their biggest rival,” is how Michael Goldberg of Bain & Company, a consultancy, sums it up. + +China’s aerospace ambitions are not just a matter of national pride. The country is keen to move up the manufacturing value chain. Making military jets is one thing, but mastering complex production systems to produce relatively large numbers of passenger aircraft that must meet the extremely high quality and reliability standards demanded by international airlines is quite another. The bigger game is that, if China can manage this, the lessons can be applied across other industries. + +Tally-ho! + +COMAC was founded in 2008 to develop a range of aircraft. In an impressive display of its determination, within just two years it had built a factory and offices for more than 50,000 workers in Shanghai. But then it hit turbulence. The first aircraft, a regional jet called the ARJ21, only entered service in June with Chengdu Airlines, eight years behind schedule. And the larger C919, designed to compete directly with the popular Boeing 737 and Airbus A320 family of short-haul models, is now three years behind schedule. Although the first mock-up was revealed at a glitzy party in Shanghai last November, only a scale model appeared at Zhuhai. The aircraft is now unlikely to enter service until 2019 or 2020. + +The ARJ21 has suffered problems with dodgy wiring, cracks in the wings, faulty doors and its performance in rain. This has led COMAC to proceed more cautiously with the C919 to try to make sure everything is right by the time it enters service. Taking extra care is laudable, but its adds time and that is costing COMAC orders. Most analysts say that by the time the C919 flies, its technology will be that much older so that its fuel efficiency will lag newer versions of Boeing’s 737 and Airbus’s A320. Foreign buyers have therefore steered clear. Although COMAC has received more than 570 orders from 23 customers for the C919, and more than 400 for the ARJ21, virtually all of these are from Chinese airlines and leasing companies, which presumably have been subjected to some patriotic arm-twisting. + +Still, the Chinese are pressing on. At the air show COMAC announced a joint venture with Russia’s United Aircraft Corporation to build a wide-bodied jet to carry around 280 passengers. Although it is due to enter service in 2025, analysts believe it, too, will arrive much later. The Chinese government also wants to make more of the sophisticated systems that it currently buys from Western firms for its aircraft, such as engines and avionics. In August, China set up a state-owned engine maker with $7.5bn of capital to produce engines for COMAC’s future programmes. + +At present, Western suppliers see the rise of Chinese aerospace as a boon. If COMAC produces all the C919s on its books, Honeywell, an American engineering group, would make $15bn from supplying it with parts. CFM International, a joint venture between General Electric and Safran of France, stands to earn $16bn from the list price of its engine sales. So far, neither Airbus or Boeing see COMAC as much of a threat to their sales outside China. But the Chinese have made it clear that both companies will be expected to help build China’s aerospace industry if they want to win future orders for larger aircraft. + +That means working with the Chinese without giving away too much technology. Airbus has built two final-assembly plants in northern China for planes which China has purchased. Boeing has just entered into a similar collaboration with COMAC to complete work on 737s. Boeing also buys some basic parts from Chinese firms, like the rudder for the 787. But so far trickier tasks—including those involving a bit of secret sauce, such as wing assembly—have stayed at home. It is not clear how much all of this will help the Chinese. If it comes together, the C919 just might fly at Zhuhai’s next air show in 2018. + + + +This article appeared in the Print Edition with the headline: We are sorry to announce + + + + + +Keeping watch + +Digital advertisers battle over online privacy + +The escalating fight over users’ data and targeted ads + +Nov 5th 2016 | NEW YORK | From the print edition + +ONLINE advertising is booming. Digital-ad revenues in America in the first half of the year reached a record $32.7bn, according to the latest figures from the Interactive Advertising Bureau, a trade group. For marketing folk, digital ads have great appeal because consumers’ online data can be used to direct what they think are the right advertisements to the right shoppers. But tracking has become increasingly contentious in both America and Europe. + +On October 27th America’s Federal Communications Commission (FCC) announced a new rule to protect personal privacy online. Internet-service providers, such as AT&T and Comcast, must now ask consumers for permission if they want to gather and share data deemed to be sensitive, including financial information and users’ browsing history. + +However, the FCC’s rule is notable not for settling a debate, but stirring it. Marketers and digital-ad firms insist that they already police themselves well. They consider data on browsing and apps, in particular, to be essential for targeted advertising. Under the FCC’s rule consumers can “opt in” to share this information, but firms fear that many will not. + +There is a limit to the FCC’s order, which perversely makes it only more controversial. It will restrict data collection by internet providers, but have little impact on broader online tracking. Notably, it does not affect so-called “edge-providers” such as Google and Facebook, which have operated under a separate privacy framework from another agency, the Federal Trade Commission (FTC). + +For advertisers, the result is an increasingly lopsided industry. Any new restrictions on companies, such as Verizon, which are vying to expand their digital ad businesses, will bestow more power to the already mighty Google and Facebook, points out Brian Wieser of Pivotal Research Group. For consumers, the result is a muddle: limits for gathering data depend on the identity of the gatherer. “Nothing in these rules will stop edge-providers from harvesting and monetising your data, whether it’s the websites you visit or the YouTube videos you watch or the e-mails you send,” declares Ajit Pai, an FCC commissioner who voted against the order. + +The question now is whether regulators will look at this mishmash and apply stricter limits to Google and Facebook, too. “I think they have started a snowball rolling down the hill,” says Dan Jaffe of the Association of National Advertisers (ANA). He calls the FCC’s rule “highly misguided and harmful”. The matter may well be decided in court. Even before the new order was issued, broadband firms were challenging the FCC’s authority to regulate them as utilities. If they succeed, the new rule will probably be thrown out. + +As this fight continues, another front is opening up in Europe. On October 19th the European Court of Justice ruled that internet-protocol addresses, which identify connected devices, are subject to Europe’s data-protection laws. This could restrict ad companies’ activity even more. Then Irish privacy advocates filed a suit challenging the “Privacy Shield”, the name of a new deal between America and the European Union for sharing personal data across the Atlantic. And a group of European privacy commissioners wrote to WhatsApp, a messaging firm owned by Facebook, questioning WhatsApp’s new policy of sharing consumers’ data with its parent. + +In America, Marc Rotenberg of the Electronic Privacy Information Centre, an advocacy group, contends that if the FTC fails to take action over WhatsApp’s new policy, Europe might doubt the agency’s ability to enforce privacy protection. That, he argues, would undermine the Privacy Shield. The ANA’s Mr Jaffe is apprehensive: “There are multiple sets of attacks that have taken place in the past week or two that have dramatically increased concerns about privacy and the ability to utilise consumer data.” Stand by for a long struggle. + +This article appeared in the Print Edition with the headline: Keeping watch + + + + + +A sea of black mirrors + +The niche in phones that are different + +How to stand out from the crowd + +Nov 5th 2016 | From the print edition + +You’ll have to speak up, I’m on my niche phone + +ON JANUARY 9th 2007 Steve Jobs stood before an audience of some 45,000 people in San Francisco and announced a “revolutionary and magical product”: a slight slab of expansive black touchscreen with just a single button. Compared with the ugly, cluttered devices of the day, the iPhone was revolutionary. It was also hugely influential. A technicolour pageant of rival designs—the clamshell, the slide, the banana, the candybar and the BlackBerry—resolved into a uniform black mirror. And nearly every smartphone on the planet still looks like the device which Jobs revealed that day. + +Nor is that similarity to be found just in hardware design. Nearly a fifth of smartphones sold last year operate on Apple’s iOS software. The rest run variations of Android, an open-source operating system provided by Google. Just two companies—Apple and Samsung—accounted for over 40% of smartphones sold in 2015, according to CCS Insight, a research firm. Huawei came in a distant third with 8%. + +In this bland and uniform market some producers spy an opportunity. One of those is Kodak, which invented the digital camera that led to the loss of its lucrative film and chemicals business and to its own demise. Kodak emerged from bankruptcy protection in a much reduced form in 2013 and is now taking aim at the way most people today snap pictures: on their mobile phones. The company has just launched the Ektra, a heavily customised Android phone with features designed to appeal to photography enthusiasts. + +Kodak’s phone is made for it by Bullitt Group, a small British firm that also produces Caterpillar-branded “rugged” phones. In May, Bullitt tied up with Jaguar Land Rover, a British carmaker, to make phones which are supposed to reflect the endurance of its go-anywhere four-wheel-drive vehicles. Sonim, an American firm, also churns out rugged phones. In China, Snail Mobile produces a phone purely for gamers—it has side buttons of the sort usually found on hand-held gaming controllers. A Russian mobile network makes the YotaPhone, which has two screens, one similar to a regular smartphone and a second black-and-white low-power display, like those used by e-book readers. This set-up extends the phone’s battery life. Vertu, a British producer once owned by Nokia, manufactures high-end luxury smartphones with high-end prices to match. + +Niches are not just found, but also made: AG Mobile, a South African firm, this year launched a range of inexpensive Nelson Mandela-branded phones and tablets. Another AG phone is branded in the name of a local rapper. Xiaomi, a Chinese company that now competes with global phone-makers, got its start in niches and gained plenty of attention by offering users a say in new software features. + +Peter Stephens, Bullitt’s boss, reckons that the various niches bundled together account for maybe 4-5% of the entire smartphone market. That is tiny, but with some 1.4bn smartphones shipped last year, it is still a substantial chunk. And while the overall market for smartphones notched up annual growth of 7% in 2015, the “other” category (which excludes most big makers) grew at twice that rate. Profit margins should be better, too—if the niche operators can stand the pace and the big boys don’t move in to some of their patches. + +This article appeared in the Print Edition with the headline: A sea of black mirrors + + + + + +Schumpeter + +Political business + +American business finds itself without a political home + +Nov 5th 2016 | From the print edition + + + +AS AMERICA’S presidential election approaches the country’s business class is in its weakest political position for decades. Twenty years ago both parties competed to be the most pro-business. Today they compete to denounce the malefactors of great wealth. The most startling change is that business has lost control of its ancestral party, the Republicans. Donald Trump may well embody many an American business type: somebody who inherits a fortune and goes on to make it even bigger. But he has taken over the Republican Party by channelling blue-collar anger against all elites. + +Mr Trump has trashed free trade, liberal immigration rules and other corporate non-negotiables. Big companies have shied away from donating to his campaign. Meg Whitman, the boss of Hewlett Packard Enterprise, has called him “reckless and uninformed”. Tom Donohue, head of the United States Chamber of Commerce, has described his policies as “pretty sort of stupid”. + +All this has driven lots of business people to cross the political aisle: an Ipsos poll shows that 53% of those earning $250,000 or more (the top 5% of households) plan to vote for Hillary Clinton, compared with 25% who intend to vote for Mr Trump. Yet the Democratic Party is hardly a comfortable home. Mrs Clinton may share her husband’s enthusiasm for business, but her party has shifted sharply leftward since the 1990s. She has abandoned her former support for the Trans-Pacific Partnership trade deal and unveiled a slate of policies for micromanaging the business world, such as “nudging” companies to invest long-term. + +There are big structural reasons why business finds itself homeless. The financial crisis of 2008 and the prolonged stagnation that followed have poisoned the well of pro-business feeling. The political system has become more hostile to liberal Republicans (a near-extinct breed anyway, most of them from the north-east) and conservative Democrats (many of them from the South) who supported pro-business policies. + +That said, business has also contributed to its own problems. The elite is increasingly divided between big businesses (which have done relatively well in recent years) and small business (which has suffered), and between knowledge-based industries (which like to flaunt their cultural liberalism) and Main Street firms (which are more traditional). Business has also lost its old claim to bipartisan respect. Companies have focused on campaigning for their narrow commercial interests. Washington is packed full of lobbying shops and industry groups that concentrate on stuffing legislation with titbits or creating special privileges. Those business groups that have continued to dwell on broader problems have thrown in their lot with the radical right. This made sense in the 1970s, when America needed to undo the New Deal economic model to cope with competition from Japan and the Asian tigers. But it has become counter-productive as the conservative movement has turned increasingly doctrinaire. After the presidential race of 2008 many leaders of small businesses supported Tea Party activists, who want to destroy the state despite the fact that the real challenge lies in reinventing it; Michael Porter of Harvard Business School points out that America’s public investment in transport infrastructure is a lower proportion of its GDP than either Europe or China. + +What should business do about its newly homeless state? One argument is that it should just wait for the inevitable return to normality. This is short-sighted. The populist wing of the Republican Party is probably here to stay (and Mr Trump is likely to keep stoking its anger with a new television channel). Mrs Clinton will face formidable opposition from new liberal lions, such as Bernie Sanders and Elizabeth Warren, if she tries to move to the right (ironically, the fact that she has spent so much time giving highly paid speeches and hobnobbing with billionaires will make it harder for her to move to the centre). + +The current anti-business mood is more than a local squall. Messrs Trump and Sanders have their counterparts across the world: Britain voted for Brexit despite vigorous opposition from business leaders. The millennials increasingly associate business with crookery rather than prosperity. One poll, conducted by Frank Luntz, a Republican, found that only 2% of his respondents in the 18-26 age group respected bankers and only 6% admired business people. For a striking number of young people the business of America is not business, but atoning for past sins. + +Back to basics + +Business elites need to recover their sense of collective mission and collective responsibility to fight these deeply rooted changes. They must improve the image of business; the majority of ordinary people own America’s giant corporations through their pensions, so “they” are actually “we”. Business needs to rethink support for anti-government radicals and look at fixing America’s most obvious problems: its deteriorating infrastructure, a labyrinthine tax code, a second-rate education system, stagnant wages for average workers, and poor productivity growth. Such pragmatism would align business with the broad mass of Americans who worry that a polarised political system is contributing to the country’s woes: there are substantially more Americans who identify themselves as independents (42%) than either Democrats (28%) or Republicans (28%). + +The American businesses have an impressive record of helping the country address its deepest political problems. In the mid-19th century the northern business elite embraced “internal improvements” and opposed slavery. During the second world war, business leaders helped turn the country into an arsenal of democracy. In the 1970s and 1980s they embraced deregulation and tax reform. It is time for American business to recover its public spirit—or it will enter the next presidential election in an even weaker position than it is in today. + + + +Finance and economics + + + + + +Shale oil: Permian hyperbole + +Buttonwood: A turning-point? + +China’s industrial policy: Plan v market + +America’s foreign debts: Net debt, big returns + +Brexit and venture capital: Turning off the tap + +Taxation in India: Lost in transition + +Aid in kind: Free two shoes + +Refugees in Sweden: Seeking asylum—and jobs + +Free exchange: Apps and downsides + + + + + +Shale oil + +Permian hyperbole + +A seductive myth is in the making about the “Saudi Arabia” of Texas + +Nov 5th 2016 | From the print edition + + + +ON THE outskirts of this west Texan city, on top of one of America’s most prolific oilfields, sit 230 square miles (600 square km) of scrubland owned by one family for more than a century. David Fasken, a Canadian lawyer, paid about $1.50 an acre ($3.70 a hectare) back in 1913, hoping to make a fortune out of cattle. But the land lacked sufficient groundwater. Before he died some years later, he swore it was the worst deal he had ever done. + +Today the farm, still owned by a few Fasken heirs, is valued in the billions. Oil-rich land in the Permian Basin, a 250m-year-old sea of oil lying up to 12,000 feet (3.7km) underground, has changed hands this year for an average of more than $25,000 an acre. On October 31st Occidental Petroleum (Oxy), a large American oil company, said it had paid $2bn in cash for 59,000 acres in the Permian. Amid a flurry of such deals, Bernstein, a research firm, predicts prices will go as high as $100,000 an acre. The nicknames range from “Saudi America” to “Texarabia”. + +But Tommy Taylor, head of oil at Fasken Oil and Ranch, smells a rat. He has worked on the Permian, where oil was first struck in the 1920s, long enough to sense its booms and busts. (“In the 80s, man, this place dried up and looked like it was going to blow away.”) He cannot afford to be swept up by the whiff of Wall Street hype. Fasken survives on its own cashflow, which means watching the pennies on each well it drills, and every hydraulic-fracturing (fracking) crew it employs. Mr Taylor says it is hard to justify the high land prices with oil at less than $50 a barrel—especially the costly horizontal wells that run pipes for miles underground. So Wall Street’s excitement perplexes him. “Our recoveries suggest it will be very difficult for wells to be economic at these prices,” he says. + +Another Permian veteran, Scott Sheffield, chief executive of Midland-based Pioneer Natural Resources, tells a more seductive story. The Permian, he argues, has as much oil beneath it as the biggest field in Saudi Arabia, Ghawar. The oil is cheaper to extract than in most countries within the OPEC oil cartel. It could last 100 years. + + + +His view has helped stoke excitement on Wall Street. Of the new rigs deployed to drill oil in America since the nadir in May, more than 60% have been in the Permian (see chart). The vast majority are horizontal ones. Deloitte, a consultancy, says more than $20bn was raised in public markets in the first half of the year, much of it to finance acquisitions in the Permian. IHS, another consultancy, calculated in late September that access to oil in the Permian explained 40% of all upstream oil merger deals in America this year, up from 7% in 2011 at the start of the shale boom. + +According to the most recent figures from government’s Energy Information Administration (EIA) the Permian is the only prolific shale bed in America where net production is still rising. The field’s resilience underpins the view that shale producers have weathered the storm unleashed in 2014, when OPEC flooded the market to drive out high-cost producers. Rabah Arezki of the IMF says they have avoided bankruptcy by cutting costs to improve efficiency. He reckons they have permanently added to supply which, combined with slower demand-growth in emerging markets and efforts to reduce consumption to slow global warming, will prevent oil prices recovering to the $100-plus levels of a few years ago. + +But analysts say that, if the excitement over the Permian is to last, oil prices will need to stabilise at above $50 a barrel, and the banks will need to keep funnelling money to Permian producers, because without it their cash flows are insufficient to finance expansion. + +This week prices of West Texas Intermediate fell to around $46 a barrel, after OPEC’s efforts to agree on a global production cut by November 30th frayed at inconclusive talks on October 28th-29th in Vienna. Disputes persist about how much to cut. Saudi Arabia, historically the swing producer, is loth to bear a disproportionate share of the burden. + +The Permian has many layers of oil-bearing “stacked” shale which, Mr Sheffield says, has the same sort of recoverable-resource potential as Saudi Arabia’s Ghawar. But that is using the term “resources”, unrelated to the cost of extraction. The EIA’s latest estimate is that proven reserves in the basin are 722m barrels. That, as Arthur Berman, a Houston-based petroleum geologist, points out, is comparable to Denmark’s. By contrast, Saudi Arabia’s proven reserves (albeit unaudited by outsiders) are given as 268bn barrels. + +Costs are also debated. Some Permian producers claim their “break even” costs are below $30 a barrel. But, says Mr Berman, that usually excludes interest payments, corporate costs and other components of profitability. And, says Fasken’s Mr Taylor, investors need to factor in how fast shale wells decline, and the limit to how many can be drilled horizontally before they start crowding each other out. + +None of this suggests the Permian is a bad bet. Oxy, for instance, floods depleted oil wells with carbon dioxide to enhance recovery, which helps explain its investment. As long as interest rates remain low and investors are hungry for yield, they can probably justify a splurge in west Texas, and help influence global oil prices to boot. But they would be wise to listen to a penny-pincher like Mr Taylor as well as to the Permian’s perma-bulls. + + + + + +Buttonwood + +A turning-point? + +The deflationary theme in financial markets was overdue for correction + +Nov 5th 2016 | From the print edition + + + +EVERYONE wants to spot the moment when markets change trend. By riding one of the great bull markets—the rally in equities from 1982 onwards, for example—or avoiding a crippling bear market like that of 2007-08, fortunes can be made, or saved. The key lies in spotting the turning-point. + +Commentators see several potential turning-points in today’s markets. The first is in government bonds. The ten-year American Treasury bond yield bottomed at 1.37% on July 7th and has since risen to 1.80%. The ten-year German bond yield reached a low of -0.18% on around the same date and has since edged back into positive territory, at 0.13%. British bond yields of the same maturity have shown an even sharper shift, rising from 0.61% to 1.17% thanks to worries about the economic impact of Brexit. + +These yields are still very low by historical standards. But there has been a revival of talk that the long downward march of bond yields (and upward march of bond prices) dating back to 1982 may at last have reached an end. + +A second turning-point may already have occurred, earlier in the year. Risky assets seem to have recovered in unison, with emerging-market equities, speculative or “junk” bonds, commodities and American property funds all reversing their poor performances of 2015 (see chart). David Ranson of HCWE, a research firm, says the trigger for the turnaround was the rally in the price of gold, which suffered its latest low at the end of 2015 and has rebounded by 20% this year. + +The start of 2016 was marked by nervousness about the Chinese economy, the speed of monetary tightening in America and the risks of deflation. But China’s economy has continued to grow and the Federal Reserve has yet to push up interest rates again after its first increase in December 2015 (it may raise rates again next month). Deflation fears seem to have receded a bit. Gavyn Davies of Fulcrum Asset Management says that the headline inflation rate in advanced economies has risen from zero at one stage last year to 0.5%, and may reach 1.5% next year. + +So one possible explanation for the market shifts is a perception that this is now a reflationary, not a deflationary, era. Gold has pulled out of a precipitate bear market; it fell by 44% between September 2011 and the end of last year. Perhaps its rebound is a sign that gold bugs’ worst fears about inflation and depreciating paper currencies are coming true at last. + +Maybe. But Mr Davies points out that the pickup in headline inflation is largely the result of the rebound in commodity prices. Core inflation remains stuck in a narrow 1-1.2% range and seems likely to stay there. This is hardly a sign that we are heading for Weimar Germany-style hyperinflation. + +More plausible, perhaps, is the idea that financial markets had overdone the deflationary fears. Bank of America Merrill Lynch has compiled data on financial assets (equities and government bonds) and real assets (commodities, property and collectibles) going back to 1926. It found that the latter are cheaper, relative to the former, than at any time in this 90-year period. The adoption of quantitative easing (QE) by central banks has had a much greater impact on the price of financial assets than on property. + +So some of the recent market trends may simply stem from a feeling that real assets have become too cheap (or financial assets too expensive). Perhaps this may turn out to be a significant change in trend, but even then the really tricky bit will be deciding whether there is more money to be made from buying property and gold, or from selling equities. + +It would be surprising, however, if real assets rose as far (or financial assets suffered as much) as they did in past cycles. First, the commodity bull market of the 2000s was largely driven by China’s investment boom, and it is hard to see that being repeated. Second, as the developed world ages, baby-boomers will be trying to offload their properties to struggling millennials—hardly the recipe for an extended property boom. + +Meanwhile, central banks have repeatedly shown that they will fire the monetary bazooka if financial markets take fright; they would welcome neither a collapse in equity markets nor a big leap in bond yields. + +In short, there may well have been a short-term turnaround in financial markets because deflationary fears went too far, and bond yields fell too low. But a lot more evidence is needed to declare this a long-term turning-point of the kind seen back in 1982. + + + +Economist.com/blogs/buttonwood + + + + + +China’s industrial policy + +Plan v market + +Nov 5th 2016 | SHANGHAI | From the print edition + +Lin-Keynes is on the left + +IT IS not quite Keynes-Hayek, but Lin-Zhang is a marvel in its own right. Perhaps the most famous debate in the history of economics was that between John Maynard Keynes and Friedrich Hayek—a clash over the benefits and perils of government intervention that exploded in the 1930s and still reverberates today. It has echoed around Chinese lecture halls in recent months. Justin Lin, a former chief economist of the World Bank, who leans to Keynesian faith in public spending, has squared off against Zhang Weiying, a self-professed Hayekian who doubts bureaucrats can ever beat the free market. + +Like their predecessors, Mr Lin and Mr Zhang have been sparring over two decades. And whereas Keynes and Hayek were down the road from each other (respectively, in Cambridge and London), the Chinese professors are now only a few paces apart, both at the prestigious Peking University. Their latest debate has been one of their fiercest, becoming a talking point for the domestic press, other academics and even officials. + +At issue is one of the big questions facing China’s economy: does industrial policy work? The idea that the government can champion specific industries is central to Chinese policy. Officials have long favoured different sectors, from textiles in the 1980s to renewable energy this decade. China’s growth record would seem to vindicate this. But critics disagree, arguing that favoured companies produce little innovation. The prominent airing of the Lin-Zhang debate reflects concerns as debt levels rise and the economy slows. + +Mr Zhang kicked things off in August with a speech on why industrial policy is “certain to fail”. The core problem, in his eyes, is the limits of human cognition. State planners may think they know which technologies will be important, but they are gambling. In the 1990s, the Chinese government spent vast sums building a television industry, only for cathode ray tubes to become outdated. Mr Zhang also worries about incentive problems. The safest choice for local officials is simply to follow the central government’s direction, but that leads to the kind of overcapacity that has plagued China’s solar-panel industry. + +For Mr Lin, such views are almost heretical. Much of his work has revolved around the idea that countries can succeed by promoting industries that play to their comparative advantages. Early innovators take big risks and may not be rewarded; the government needs to encourage them by building infrastructure and giving tax breaks. And because resources are limited, it should help identify which industries are most important. China, Mr Lin insists, is a model of this approach. + +Others have piled in to the debate, often trying to find a middle ground. Huo Deming, a leading economist, highlighted their different perspectives: Mr Zhang focuses on policy failures and Mr Lin on market failures. Li Daokui, another high-profile economist, noted the irony that government support has been critical to China’s growth, but that the best companies rarely start with state backing. An official with the National Development and Reform Commission, a central-planning agency, cryptically acknowledged the need to “adjust” industrial policies in line with China’s more challenging economic backdrop. + +Mr Zhang and Mr Lin, for their part, are not about to declare a truce. Peking University has scheduled a one-on-one debate between them on November 9th. It should be a lusty, though good-natured, clash. And if Keynes and Hayek are any guide, the dust will never settle on it. + + + + + +America’s foreign debts + +Net debt, big returns + +The exorbitant privilege looks greater than ever + +Nov 5th 2016 | WASHINGTON, DC | From the print edition + + + +AS DONALD TRUMP sees it, America’s trade deficit is a sign of economic weakness, proof that lousy trade deals have sent production overseas. But Uncle Sam does not just import goods from the rest of the world and send nothing in return (though that would be a lucrative arrangement). Rather, the net inflow of goods is matched by a net outflow of stocks, bonds and other financial assets. + +That makes America a debtor. In theory the interest and dividends paid to foreigners should chip away at national wealth in future. Since 1989 foreigners have owned more assets in America than Americans have owned overseas; in the jargon, the net international investment position (NIIP) has been negative. But America is an unusual borrower. For almost all of that time, it has received more income on its overseas investments than it has paid out to foreigners. This is strange: it is akin to someone’s savings earning more than enough interest to service his far bigger debts. + +This contrast is getting starker (see chart). In recent years the NIIP has tumbled to -44% of GDP, the lowest since 1976, when the data begin. Yet net primary income—the returns—has held steady at about 1% of GDP. In dollar terms, America’s NIIP deficit is almost seven times as big as any other country’s. As a percentage of GDP, 11 rich countries have worse NIIPs; only one—Greece—earns net positive returns (probably thanks to its bail-outs). + +The disparity between America’s balance-sheet and its earnings is sometimes attributed to the “exorbitant privilege” of printing the dollar, the world’s reserve currency. Everyone wants dollars, it is said, so America can raise funds more cheaply than others. Two other factors help. First, foreigners like to buy low-yielding American debt, but Americans investing overseas are keener on higher-yielding equities. Second, America seems to earn more on some of its investments of a given type. + +A paper last year by Stephanie Curcuru and Charles Thomas of the Federal Reserve argues that the second effect is by far the most important. Between 1990 and 2010 the average yield America received on its foreign direct investments (FDI) was about 6.2 percentage points higher that what it paid out on comparable liabilities. The authors attribute this mainly to the greater risk of investing overseas and to America’s high corporate taxes, rather than to any mysterious benefit attached to issuing the world’s reserve currency. + +But that does not help to explain the recent widening of the gap between the NIIP and net returns. The current-account deficit, which includes the trade deficit, is only partly to blame for the worsening balance-sheet. At 2.6% of GDP in 2015, it was less than half what it was in 2006. The NIIP is being pushed higher because of the strong dollar (which reduces the dollar value of American overseas investments) and the rapid rise in American share prices, says the IMF; it forecasts that the NIIP will reach -63% of GDP by 2021. So, because the economy has performed strongly, foreign investors in America have booked bigger paper gains than Americans invested overseas, despite generating less income. Sometimes privilege isn’t all its cracked up to be. + + + + + +Brexit and venture capital + +Turning off the tap + +British venture capitalists, it turns out, voted Bremain + +Nov 5th 2016 | From the print edition + + + +EUROPE has yet to produce a rival to Silicon Valley, but London’s “Silicon Roundabout” by Old Street station is closest. As a funding hub, the city’s venture-capital industry tends to attract more money than rivals in Berlin, Munich or Paris. And more venture capital is invested in Britain, relative to its GDP, than in any other big European economy. Britain’s vote to leave the European Union threatens this lead. Besides unknown risks, there is a prosaic worry: the most important backer of such firms is the European Investment Fund (EIF), an EU institution, whose mandate includes “fostering EU objectives”. + +As the biggest investor in European venture funds, the EIF supplied almost a fifth of all commitments last year, with Britain, France and Germany the main recipients. It is also among the largest and earliest investors in any fund. For every pound it pumped into Britain in 2015, the EIF reckons it mobilised another four of private capital. Venture-capital managers debate the extent to which the EIF spurs private investment, but generally accept it is a linchpin of the industry. Nenad Marovac, of DN Capital, a technology investor, says its withdrawal from Britain would be “devastating”. It would exacerbate other difficulties caused by Brexit uncertainty. American institutional investors have “turned off the UK,” says one manager; European family offices are putting their venture allocations on ice, complains another. + +At present it is business as usual, at least until there is “some clarity about the relationship between the UK and the EU”, insists the EIF’s Ulrich Grabenwarter. This has reassured firms such as London-based Isomer Capital, which applied for EIF money after the referendum. Yet huge uncertainty remains about what happens once Britain starts the leaving process, expected to be triggered by March. After then, whatever the EIF’s public stance, some fear that British applications will gather dust. + +The first to suffer will probably be Britain-focused funds, says Matthias Ummenhofer, formerly of the EIF, and founder of Mojo Capital, a Luxembourg-based venture-capital fund. But British firms that invest at least two-thirds of their capital in the EU might retain a good case for EIF support, he adds. Much will depend on how the Brexit talks go, and on Britain’s future relationship with the European Investment Bank, the EIF’s main shareholder. If Britain stops contributing to the bank, its other members may well direct venture funding elsewhere. If so, the British taxpayer would be asked to plug the gap, perhaps via the state-owned British Business Bank. + +British venture-capital managers argue it would make sense for the government to pick up the tab, given the sums involved: the EIF invested €656m ($728m) in Britain last year, of which €295m went directly into venture-capital funds. The Treasury has merely promised consultations to “ensure appropriate investor certainty”. Looking on the bright side, the British Private Equity & Venture Capital Association, a trade body, says Brexit could give a boost to venture-capital trusts and enterprise-investment schemes, tax-advantaged vehicles whose privileges are currently limited by EU state-aid rules. Optimists also note that the EIF does invest outside the EU. But the amounts are smaller and usually limited to multi-country managers. + +Rated People, a London-based online marketplace, is the sort of internet company all governments like to foster. Its chief financial officer, Tim Parsons, says that its growth depended on an injection of equity in 2011 from Frog Capital, an EIF-backed fund, that it used to add staff and expand across the country. Other European governments have provided more funds for innovation. Bpifrance, for instance, a sovereign fund, committed €685m to French venture-capital firms last year, compared with just £78m ($120m) from the British Business Bank for its venture-capital firms. + +London’s status as a financial hub has kept it just ahead of the venture-capital pack until now. But, like other British business sectors, the venturers are now looking to the government for assurances that, for them, Brexit does not mean Brexit. + + + + + +Taxation in India + +Lost in transition + +India’s tangled system of taxes will be simplified rather than overhauled + +Nov 5th 2016 | MUMBAI | From the print edition + + + +AIR-CONDITIONING doesn’t feel like much of a luxury in parts of India, but the taxman begs to differ. Cooled restaurants are deemed posher. Their patrons are liable to additional taxes the unventilated masses do not bear. Luckily for sweat-prone diners there is a catch: the tax only applies to the service and not the food, so only part of the tab incurs the extra levy. In their wisdom, India’s bureaucrats once decided that 60% of a restaurant’s offering is food, and so air-conditioning triggers a service tax payable on just 40% of the bill. + +Indirect taxation in India often seems the product of a micromanaging bureaucracy run amok. The result of combined taxes levied by its 29 states, union territories and the central government is that the same products in different regions, or different products in the same region, are taxed at different rates. This makes it difficult to trade between states. Tariffs are enforced by internal borders at which lorries languish for hours. It also distorts the economy in favour of goods and services taxed at lower rates (usually as a result of energetic lobbying). The agreement in August to subsume all manner of national and regional levies into a single goods-and-services tax (GST), applicable nationwide, was hailed as a historic opportunity to rid the economy of both problems, potentially adding two percentage points of GDP growth a year. + +Since then, as so often happens, politics seems to have got in the way of sound economics. Whereas it had once been assumed the GST would be levied at a single rate, with a few exemptions (eg, for food, health care, etc) and a “sin” rate (tobacco and alcohol), the end result is looking far more complicated. The central government, in negotiations with state authorities, has put forward a schedule of seven different GST slabs ranging from 4% for gold to 26% or more for middle-class goods, with other goods being taxed at 6%, 12% or 18%, and basic goods remaining exempt. + +Economists are aghast: much of the gain from moving to a single tax-rate nationwide came from stamping out the inefficiency of multiple rates, which prod businesses towards providing goods and services favoured by the tax code rather than by consumers. Government officials have justified the newly added complexity by arguing that a sudden move to a single headline rate would have resulted in sudden price surges for goods that are currently taxed at a lower level. + +In fact, the central and state governments involved are trying to reduce the costs and risks of moving to a new tax structure, even if it means some of the benefits are lost. The new system has to be agreed by a new “GST council” made up of the finance minister and his counterparts at state level. It is meeting over the course of October and November. The states are concerned they are giving up their right to levy their own consumption taxes and will be inadequately compensated. The central government has had to guarantee states they will be reimbursed if they lose out, at least for the first five years. + +Because revenue data are so poor, nobody can precisely gauge the potential impact of moving to new tax rates, much less model it. But bureaucrats in Delhi are said to be fretting that a bold move to a new single-rate system might leave them on the hook at a time when the government has pledged to cut the budget deficit. To avoid losing out, they want the new GST rates to mirror existing taxes, complete with their favourable treatment for unventilated eateries. So biscuits will continue to fall in different bands depending on how luxurious the government judges them to be. Creamy ones, for example, will suffer particular punishment. + +Things will be a touch simpler—the seven rates will replace several hundred tax levels nationwide, estimates Neelkanth Mishra of Credit Suisse, a bank. That levies will be the same across India will create a true single market for the first time in its history. And there are fervent hopes that, because businesses will have to register invoices in order to qualify for tax rebates, more will be pushed into the formal economy, so boosting both long-term economic growth and the tax kitty. + +A lack of resolve on indirect taxation bodes ill for the next stage of fiscal reform. Praveen Chakravarty of the IDFC Institute, a think-tank, points out that India is far too reliant on indirect taxes, such as those on goods and services, rather than direct levies on income or wealth. Fewer than 50m pay direct taxes in a country of 1.3bn. Shifting the burden to direct taxes would be fairer but involve taking on entrenched interests far more powerful than non-air-conditioned restaurateurs. + + + + + +Aid in kind + +Free two shoes + +New studies should cool the warm glow surrounding shoe donations + +Nov 5th 2016 | From the print edition + +Not a model of philanthropy + +CAPITALISM has clocked the ethical consumer. Shoe brands like TOMS and Skechers tease in customers by matching purchases with a donation of a pair of shoes to a child in need. So far, TOMS has handed out 60m pairs of shoes, letting fashion-conscious consumers feel good about boosting children’s health, access to education and confidence. But evidence suggests that shoppers’ warm glow is unjustified. + +Handing out aid in kind gives plenty to worry about. It could suck life from local markets, and foster a culture of aid-dependency. Handing out goods rather than cash runs the risk of spending money on things people neither need nor want. To find out if its intervention had worked, TOMS, to its credit, asked a group of academics to investigate and gave them assurances that they could publish whatever they liked. In late 2012 they randomly picked which of 1,578 children across 18 rural communities in El Salvador would receive pairs of TOMS’ black-canvas, rubber-soled shoes. By comparing the places and children who received the shoes with ones that did not, they could work out how much these boots really gave back. + +The first of two studies found that TOMS was not wrecking local markets. On average, for every 20 pairs of shoes donated, people bought just one fewer pair locally—a statistically insignificant effect. The second study also found that the children liked the shoes. Some boys complained they were for “pregnant women” and some mothers griped that they didn’t have laces. But more than 90% of the children wore them. + +Unfortunately, the academics failed to find much other good news. They found handing out the free shoes had no effect on overall shoelessness, shoe ownership (older shoes were presumably thrown away), general health, foot health or self-esteem. “We thought we might find at least something,” laments Bruce Wydick, one of the academics. “They were a welcome gift to the children…but they were not transformative.” + +More worrying, whereas 66% of the children who were not given the shoes agreed that “others should provide for the needs of my family”, among those who were given the shoes the proportion rose to 79%. “It’s easier to stomach aid-dependency when it comes with tangible impacts,” says Mr Wydick. + +The findings have prompted TOMS to change its strategy. It is adopting approaches more likely to have a big impact, such as matching purchases of sunglasses with free sight-correction. Increasingly it gives shoes as rewards for children who join community-building projects. Even so, its “one for one” shoe offering faces a basic problem: it is aimed at children who want shoes, but are too poor to buy them. For children that poor, other things would help more. As Mr Wydick notes: “You can’t eat shoes.” + + + + + +Refugees in Sweden + +Seeking asylum—and jobs + +Too few refugees, not too many, are working in Europe + +Nov 5th 2016 | STOCKHOLM | From the print edition + +Unskilled, unemployed and unhappy + +WHEN Ameen first arrived from Aleppo, he was thrilled to have made it to Sweden. Speaking as he takes a break from a protest near parliament, he says he thought there would be plenty of jobs. But none was available. Now that the government has made it harder for family members to join the refugees, some have taken to Stockholm’s cobbled streets. The rules on asylum-seeking in Europe mean refugees like him have to stay in their country of arrival. “If we could leave, many of us would,” he says. + +A big reason refugees cause alarm across Europe is the fear that they will steal jobs. But a more serious problem may be their joblessness. France, Germany and Norway all have big employment gaps between native- and foreign-born workers. But the gap is widest in the Netherlands and Sweden—and these figures do not yet include the 163,000 asylum-seekers who arrived in Sweden last year (see chart). + + + +In part, Sweden is a victim of its own generosity and success. No European country has a larger proportion of refugees in its population and in 2015 none welcomed a larger flow of asylum-seekers, proportionate to its population, than Sweden did. Employment rates for refugees are no lower than in most European countries, but the difference with Swedish-born workers is striking. Partly it is because many Swedish-born women work and Swedes are highly educated. Nevertheless, fears are mounting about the social impact of the two-tier labour market that is developing. Magnus Henrekson, an academic, fears further ghettoisation and alienation. + +On the surface, Sweden has one of the least troubled labour markets in the world. The economy is growing, vacancies are plentiful, only 5% of 15-74-year-old native-born workers are jobless and the unemployment rate is falling. But foreign-born workers are three times as likely to be unemployed, and the ratio is rising. For those from outside the EU it is higher still (22.5% are unemployed). Hidden discrimination, housing problems and a Swedish reliance on informal networks help explain the gap. But many refugees simply lack the skills for Sweden’s job market. + +The issue is not unique to Sweden. In a report published in September, the OECD and UNHCR found that many employers do not see recruiting refugees as a business opportunity, but as a “CSR” (corporate social responsibility) issue. Large employers made a big fuss about providing apprenticeships and mentoring schemes, but few offer jobs. The obstacles employers cite include uncertainty about refugees’ qualifications and their right to work, sceptical public opinion, and worries that language barriers will mean lower productivity. + +The concerns reflect changes in Sweden’s employment market. Fewer than 5% of jobs are now low-skilled, requiring less than a high-school qualification, compared with 9% in Germany and 16% in Spain. Countries such as Greece and Italy have larger shadow economies, helping explain why refugees there have higher employment levels than natives. “High-school diplomas are Sweden’s biggest divider,” says Anna Breman, chief economist at Swedbank. Nearly all Swedes have them, yet only half of new arrivals do, according to government statistics. + +The paradox, says Thomas Liebig, from the OECD, is that Sweden has among the most advanced refugee-integration policies. A two-year programme is meant to make refugees “job-ready”, but is often too long for educated refugees and too short for those lacking basic literacy and numeracy. Only 22% of low-educated foreign-born men and 8% of women found work in the year after completing the programme. On average it takes seven to eight years for newcomers to find employment. According to a survey in 2014, across Europe it takes refugees and other beneficiaries of international protection 20 years to reach employment rates similar to natives. This contrasts with America, where research has shown that refugees find work faster than other immigrants, and even do better than economic migrants over time. + +Highly educated migrants also lag behind their Swedish-born peers in finding work. The biggest difficulties are posed by the large group with few qualifications. The obvious way to help is to train them better, particularly the young. Around 70,000 of last year’s arrivals were minors, half of them unaccompanied. But a large proportion of 15-24 year-olds, especially women, drop out of education or training. + +Ms Breman thinks the real bottleneck in Sweden is that the lowest wages are so high. But cutting wages or lowering the minimum wage is impossible: powerful unions would object. So instead, successive governments have experimented with wage subsidies for certain sectors, such as restaurants, as well as tax credits, for example for house renovation. Supporters argue that such subsidies compensate employers for taking a risk and a (temporary) fall in productivity. + +Worries about unemployed refugees have been masked by the recent strong performance of Sweden’s economy—ironically boosted by increased spending on refugees. (IKEA, a furniture chain, is reported to have run out of mattresses at one point.) But there is a growing realisation that Sweden—and Europe as a whole—cannot afford to delay reforms to ease the integration of refugees. The numbers now are simply too big. + +Like most of Europe, Sweden’s population is ageing. Educating and integrating young refugees could help plug gaps in the labour market. Failure to do so will exacerbate pressure on government spending and could lead to permanent exclusion and further polarisation. Europe is right to be worried about refugees and jobs—albeit for the wrong reasons. + + + + + +Free exchange + +Apps and downsides + +“Gig-economy” work sits outside normal employment categories + +Nov 5th 2016 | From the print edition + + + +DURING a recent ride with Uber, this passenger received a surprising word of thanks for talking softly. To complete the job, the driver needed to follow the route provided by Uber, read out turn-by-turn by his phone; noise from the back seat drowned out the critical instructions. The control Uber exercises over its drivers, whom it calls “independent contractors”, is increasingly a point of dispute. Two were recently judged to be entitled to some employment benefits—such as a minimum wage and holiday pay—by a tribunal in London sceptical of the degree of independence they actually enjoy. In fact, the drivers sit within a grey area in employment law; rules regarding firms’ obligations to their workers will need to adjust in response. + +More than the profitability of Uber is at stake. According to a recent report by the McKinsey Global Institute, 162m people in America and Europe, or more than 20% of the working-age population, work outside normal employment. Nearly half rely on such work for their primary income. Sensible changes to work rules to take account of the rise in gig work could make life better for millions of workers; bad ones could mean fewer new jobs will be provided by gig-economy apps. + +The way employment relationships are classified is commonly based on who is empowered to take which decisions. In a contract relationship, for example, the hiring party might choose what is to be supplied, but not how, while in an employment relationship the firm can specify the worker’s equipment and how and when to use it. Economic logic often pushes partners towards one arrangement rather than the other. Self-employment works best when the value of the service provided is easier to assess than the effort a worker expends on providing it. A firm which retains a graphic designer on contract knows whether or not it likes the resulting logo, but cannot easily say which of the sketches that went into it was time well spent (nor does it care). + +Over the past 150 years, regular employment has been the norm. Worker protections have evolved accordingly. Most rich countries accord particular privileges to those considered to be employees, including the right to earn a minimum wage, a minimum of paid holiday and sick leave, and (in some cases) the right to severance payments or pension and health benefits. Some economists grouse about such rules, which can interfere with the smooth functioning of competitive labour markets and impose some efficiency costs. Societies have nonetheless chosen to adopt such rules in order to reduce the risk borne by employees and make labour markets more equitable. Yet such benefits are not usually extended to the self-employed. The difficulty in monitoring the time and effort spent at a task and other factors that often make independent work an economically sensible arrangement also make it hard to know when a self-employed worker should be able to collect unemployment benefits or how minimum-wage payments should be determined. + +The threadbare safety net available to the self-employed can be a problem. Independent work is not always the result of a willing free agent taking greater control over production. It can instead reflect a dearth of attractive employment options for struggling workers. When good jobs are scarce and the search for new or better employment is costly, firms have the opportunity to cut costs by using more contract workers. Outsourcing tasks to independent workers frees firms from the expense of mandated benefits and shifts risk onto workers which might otherwise be shouldered by the firm. A shortfall in work, for example, falls directly on independent workers in the form of lost pay rather than on the firm, which might otherwise face the choice to pay the worker to stay idle or to accept the cost of severance pay. + +Whether Uber drivers are empowered to be their own bosses or are the victims of a powerful corporation is debatable. Those who reckon drivers are employees point to the extensive control Uber exercises over its workers. It sets guidelines for behaviour and vehicle choice, and its app governs which passengers can be picked up, what the fare will be and what route the driver ought to take. On the other hand, drivers can choose to operate whenever they please, for as long or as short a period as they like. They are also able to select where they will operate, and can accept or decline potential fares as they see fit. Resolving whether the workers who provide services on platforms like Uber’s are employees or contractors is difficult, because they are not obviously either. + +Over and above + +Uber’s self-employed contractors are good for its bottom line. They cost the company less and improve the function of the service. If it had to pay all drivers a minimum wage, more of them would stay on the road when demand is low; either revenue would have to fall or fares rise. At the same time, the elements of control Uber exercises—like management of ride matches and payment, and the routes it provides to drivers—make it easier for inexperienced drivers to start working. The ability to earn income driving for Uber increases workers’ flexibility and, therefore, their ability to drive harder bargains with other employers. + +Not without cost. Uber asks its drivers to accept all the financial cost when weak demand or a bout of illness keeps them from working: a hardship for those who depend on income from driving to make ends meet. Though Uber and its gig-economy peers are right that their workers are not traditional employees, regulators are justified in concluding that they owe workers more than wages alone. As work arrangements grow more flexible, work categories and benefits should too: paid leave could be allocated to workers in proportion to hours worked, for example. To get there, technology firms and workers must each show a willingness to bend in response to the concerns of the other. + +Visit our Free exchange economics blog + + + +Science and technology + + + + + +Military supply lines: Having no truck with it + +How to store electricity underwater: Depths of imagination + +Scrutinising science: The watchers on the Web + +Tracking down missing clinical trials: Tested, and found wanting + +Oenology: The war on terroir + +Cancer treatment: Missile tracking + + + + + +Military supply lines + +Having no truck with it + +Instead of shipping parts to battlefields, why not print them there? + +Nov 5th 2016 | From the print edition + + + +“AMATEURS talk strategy, but professionals talk logistics.” That military maxim’s latest consequence is the adoption by the world’s armed forces of three-dimensional (3D) printing on the front line. It will be a while before weapons robust enough for military use can be printed on demand (though civilian ones can be, see article). But if it is a question of replacing a small but crucial component that has broken—the modern equivalent of reshoeing a horse—then making what is needed to order in this way has huge potential. Moving replacement parts through a long supply chain to a far-flung ship or base can take weeks. And, if a war is on, such convoys make tempting targets. Yet it is unrealistic to keep a full range of spares near the front line. Far better to produce what is needed, when it is needed. + +Having access to a printer can even encourage innovation. For example, the USS Harry S. Truman, an American aircraft-carrier, took two 3D printers on her most recent tour of duty in the eastern Mediterranean and the Persian Gulf, which began in November 2015. During the eight months she was at sea her crew devised and printed such items as better funnels for oil cans (to reduce spillage), protective covers for light switches (to stop people bumping into them and inadvertently plunging, say, the flight deck into darkness) and also a cleverly shaped widget they dubbed the TruClip. This snaps onto walkie-talkies, reinforcing a connection that is otherwise prone to break in the rough-and-tumble of naval usage. According to Commander Al Palmer, one of the Truman’s maintenance officers, TruClips alone have saved more than $40,000 in replacement parts. The printers themselves, by contrast, cost about $2,000 each. On the basis of his experience using it, Commander Palmer reckons 3D printing will become an important part of the American navy’s supply chains. + +Keep your powder dry + +At the moment, only plastic items can be printed at sea. Landlubbing printers can make things out of metal by building up layers of metallic powder that are then melted with a laser or electron beam and allowed to cool into a solid. But printers, like people, get seasick. A ship’s constant yawing, pitching and rolling disturbs the powder before the beam can do its work. This is why a printer of metal ship parts operated by Canada’s navy sits safely on dry land, at the Cape Scott fleet-maintenance facility in Halifax, Nova Scotia. + +In time, however, metal parts may also be printed at sea. The head of engineering at the American navy’s supply command, Captain Armen Kurdian, says his organisation is looking for ways to overcome the problem of instability. Mounting printers on damping platforms that hold them steady by compensating for a ship’s motion could be one answer. Another might be to form the metal “ink” into wires instead of powders, for wire is more easily held in place than a layer of dust is. In this arrangement the laser or electron beams would melt the tips of the wires. + +Nor are sailors the only servicemen who will benefit from 3D printing. China’s army prints both basic items, such as ratchets, and more sophisticated ones, including physical relief maps of local terrain that help soldiers plan operations more effectively than a paper map or screen display could. Israel’s air force prints plastic parts that are as strong as aluminium, in order to keep planes that date from the 1980s flying. And America is advising the governments of Australia, Britain and France on 3D printing, in order to speed up these allies’ supply chains, says Chris Wood, a captain of marines who works at the Pentagon and is in charge of this joint enterprise. + +Captain Wood will also, within the next three months, be supervising the distribution of 3D printers to American marines in Europe, the Middle East and the Pacific. In October marines at Camp Pendleton in California finished converting a shipping container into a rugged “expeditionary-manufacturing facility” movable by lorry, ship, train or aircraft. In addition to a 3D printer, this contains conventional machining equipment. Another such mobile workshop is under construction in North Carolina. And the army, too, is involved. It has already sent some 3D printers to bases in Afghanistan. + +For now, like those on board ship, “forward deployed” printers of this sort make items out of plastic only. In their case the problem with printing in metal is not constant movement but grit—for this is a much more sensitive process than printing in plastic. Even that limitation will be overcome, though, according to the United States’ Army Research Laboratory (ARL). The ARL is paying two firms to develop technologies which can turn blocks of metal into printable powder within the confines of a shipping container. The purpose of this is to recycle battlefield scrap into new equipment. + +At the moment this “atomisation” process works like an old-fashioned shot tower. Molten metal poured in at the top of a chamber breaks into droplets that cool and solidify on their way down. But this requires a chamber at least six metres high, which is too tall to fit upright inside a standard shipping container. One of the firms the ARL has contracted, MolyWorks Materials of Los Gatos, California, has managed to shrink the process so that it does fit inside such a container. It does so by orienting the chamber diagonally, and employing jets of inert gas to stop the droplets touching the sides before they have cooled. If printers that make use of these solidified droplets can also be made rugged enough to withstand the battlefield, then broken parts themselves will become recyclable, supply chains may no longer need to deliver even raw materials and, the logistics taken care of, more thought can be given to the little matter of strategy. + + + + + +How to store electricity underwater + +Depths of imagination + +Pumped storage gets a makeover + +Nov 5th 2016 | From the print edition + +WIND farms and solar-energy plants have the advantage that their fuel is free, but the disadvantage that the availability of that fuel may change from minute to minute. If they are to become the large-scale contributors to power generation that their boosters suggest, then cheap and reliable means of smoothing their output, by storing surpluses for use during times of scarcity, need to be developed. + +At the moment, there is only one good way of saving surplus grid electricity, regardless of how it is generated. This is pumped storage. It requires two reservoirs at different elevations, linked by tunnels and pumps in order to create a head of water whose pressure, when released, can drive the pumps backward, to act as generating turbines. + +Pumped storage is cheap to run, but needs convenient geography to build in the first place. Or, rather, it did. For a pair of alternatives to the two-reservoir model, both of which still exploit the power-generating potential of a head of water by pumping fluids around, are now being investigated. One is a year old this month. The other is about to start trials. + +The one-year-old project is in Toronto, Canada—or, rather, just offshore, at the bottom of Lake Ontario. It was designed and built by Hydrostor, a company founded by Cameron Lewis, who developed the technology after working in the oil industry. The plant is operated by Toronto Hydro, a local power utility. + +In this case the working fluid is air rather than water. The air is compressed on land and pumped through 2.5km of pipes to a station on the lake bed 55 metres below the surface, a head of water that generates a pressure five atmospheres above normal atmospheric pressure. Here, the air is stored in six spherical bags, known as accumulators, made of a proprietary material. Each accumulator has a capacity of 100 cubic metres. + +Compressing air heats it, and the heat thus generated is also stored for later use. This is done by melting a material with a high heat capacity (exactly which, remains a trade secret—though paraffin wax is often used in similar, commercially available heat-storage devices). Then, when the time comes to generate electricity from the energy stored in the compressed gas, the process is simply put into reverse. The air is released into the pipes, travels back to the onshore plant, and its expansion there as it returns to normal pressure drives a turbine. Just as compressing air heats it, so expansion cools it. To stop the machinery freezing, therefore, the compressed air entering it is first warmed up using the stored heat from the original compression. + +According to Hydrostor, the Ontario plant can regenerate 60-70% of the electricity put into it, and produces around 400kW of power. The firm now plans, in partnership with AECOM, an American engineering company, to build a 1.75MW plant in Goderich, Ontario, on the shores of Lake Huron. It has also signed an agreement with Aruba’s electricity provider, WEB Aruba, to build a plant to be connected to wind farms there. + +The newcomer, which will begin operating on November 11th, is a system called StEnSea (“Storing Energy at Sea”). This is being developed by the Fraunhofer Institute for Wind Energy and Energy System Technology in Kassel, Germany. In its case the working fluid is water itself, but, like Hydrostor’s system, the pressure head is created by putting the storage vessels underwater—in this case, 100 metres down in Lake Constance, a depth that creates an excess pressure of ten atmospheres. + +Balls of fire + +Unlike Hydrostor’s system, StEnSea uses rigid pressure vessels, made of concrete, that have a volume of 12 cubic metres (see diagram). This gives them an energy-storage capacity at this depth of 3kWh each. When the system is charging up, the water in these vessels is pumped out of them into the surrounding lake. When it is generating, the water is let back in, turning turbines as it travels. StEnSea’s advantage over Hydrostor’s system is that no pipework is needed to connect the storage vessels to the land (though it does need cables, to carry generated power). Its disadvantage is that all the machinery is underwater, and thus harder to inspect and service. + +The plant in Lake Constance is a pilot. If it works, the plan is to build a commercial version at sea. Jochen Bard, the project’s boss, has his eye on the Norwegian trench, which is over 600 metres deep. Combining that depth with spheres 1,000 times the volume of the pilot’s would create a system that stored 20MWh per sphere, and supplied 5MW of power. + +Whether this could compete with conventional pumped storage remains to be seen. The Cruachan pumped-storage station in Scotland, for example, has a capacity of 7GWh. StEnSea would need 350 spheres in the Norwegian trench to match that. But both StEnSea and the Hydrostor system have the advantage over plants like Cruachan that you can start small and add extra units as needed—rather like wind and solar energy themselves. + + + + + +Scrutinising science + +The watchers on the Web + +A court case may define the limits of anonymous scientific criticism + +Nov 5th 2016 | From the print edition + + + +MANY scientific studies are flawed. Often, the reason is poor methodology. Sometimes, it is outright fraud. The conventional means of correction—a letter to the journal concerned—can take months. But there is now an alternative. PubPeer is a website that lets people comment anonymously on research papers and so, in theory, helps purge the scientific literature of erroneous findings more speedily. + +Since its launch in 2012, PubPeer has alerted scientists to mistakes and image manipulation in papers, and exposed cases of misconduct. But it has also attracted criticism, not least from journal editors, some of whom argue anonymity’s cloak lets vendettas flourish unchecked. Now the site is embroiled in a court case that tests the limits of free speech under America’s First Amendment, and may define what it is permissible for researchers to say online and anonymously about science. + +The proceedings centre on discussions that began on the site in November 2013. These highlighted apparent similarities between images showing the results of different experiments in papers by Fazlul Sarkar, a cancer researcher who was then based at Wayne State University in Detroit. Dr Sarkar alleges that certain commenters insinuated he was guilty of scientific fraud. The comments, he says, together with anonymous e-mails sent to the University of Mississippi, cost him the offer of a professorship there. In October 2014 he sued the commenters for defamation and subpoenaed PubPeer to disclose their identities. A court is now expected to decide whether the site will be forced to do so. + +The American Civil Liberties Union has taken on the case on PubPeer’s behalf. Its lawyer, Alex Abdo, says that the anonymity of PubPeer’s commenters is protected by American law unless Dr Sarkar can provide evidence that their statements are false and have damaged his reputation. Evidence filed by PubPeer from John Krueger, an image-analysis expert, states the images in question “did not depict different experiments as they purported to” or contained other “irregularities”, and may have been manipulated. Mr Abdo asserts that the comments identified by Dr Sarkar are not defamatory. Therefore PubPeer should not be forced to disclose the commenters’ identities. + +Who blows the whistle? + +By contrast, Dr Sarkar’s lawyer, Nick Roumel, argues the law should not provide anonymous commenters with more protection than it gives those who post under their real names. It is impossible to contact PubPeer’s commenters to establish what they know about the allegations without knowing their identities, he says. + +In March 2015 a judge at the Wayne County Circuit Court agreed that PubPeer need not disclose the identities of any of its commenters except for one. That commenter had confirmed on the site that he or she had notified Wayne State University of problems with Dr Sarkar’s papers. A prolific pseudonymous whistle-blower named Clare Francis is known to have e-mailed Wayne State in November 2013, to notify it of concerns with Dr Sarkar’s work aired on PubPeer, adding in her e-mail (if, indeed, “Clare Francis” is a woman) that, in some cases, they amounted to “what many think of as scientific misconduct.” Whether Clare Francis and the subject of the judge’s order are the same is not clear. + +Both sides lodged appeals against the ruling. PubPeer objects to revealing the identity of the last commenter. Mr Roumel wants to know the identities of them all. + +Two goliaths of information technology, Google and Twitter, lodged a brief in support of PubPeer in January 2016. So did two giants of science: Harold Varmus, a Nobel prize-winning cancer researcher, and Bruce Alberts, a former president of the National Academy of Sciences. They argued that the First Amendment protects “unfettered scientific discourse”. + +On October 19th the Scientist, a magazine, published some findings of a misconduct investigation carried out by Wayne State University in 2015. The report of this investigation, which the magazine obtained under America’s Freedom of Information Act, states that Dr Sarkar “engaged in and permitted (and tacitly encouraged) intentional and knowing fabrication, falsification, and/or plagiarism of data”. Furthermore, 18 papers from Dr Sarkar’s laboratory have been retracted from five different journals. + +Dr Sarkar rejects all the investigation’s findings. He states that he provided the correct images to the university but his explanations of how the errors occurred were dismissed out of hand. Despite his having more than 500 peer-reviewed papers to his name, his reputation has been destroyed because of “minor errors in a few articles,” he says. Philip Cunningham, who convened the Wayne State panel that investigated Dr Sarkar, says all evidence was carefully considered and the university stands by the integrity and accuracy of the report. + +Normally, neither Dr Sarkar’s retractions nor Wayne State University’s report would have any bearing on the case because appeals can only consider evidence presented during an earlier trial. But on October 28th, in what may be a decisive ruling, the court allowed PubPeer to enter the Scientist’s story about the report into the official record of the case. The results of the appeal hearing itself, which took place on October 4th, are expected imminently. + +Whichever way that decision goes, at least one side is likely to appeal against it. But however the case eventually ends, its outcome will affect the process of “open peer review” that PubPeer is pioneering by determining whether or not anonymous critics of scientific papers can, in the last analysis, retain their anonymity. + + + + + +Tracking down missing clinical trials + +Tested, and found wanting + +Nov 5th 2016 | From the print edition + + + +HALF of clinical trials do not have their results published. Those behind the TrialsTracker, a web tool created by the Evidence-Based Medicine Data Lab, at Oxford University, hope to change this. Using clinicaltrials.gov, an American database that covers 193 countries, Ben Goldacre and Anna Powell-Smith can track automatically whether results have been put into the public domain. Proportionally, the worst culprits are government and academia. In absolute terms, the biggest offenders are two drug giants, Sanofi and Novartis, and the National Cancer Institute, an American government body. Companies that do well include Shire, Bristol-Myers Squibb and Eli Lilly. + + + + + +Oenology + +The war on terroir + +How to get the wine you really want + +Nov 5th 2016 | From the print edition + + + +IT’S enough to make sommeliers splutter into their spittoons: a wine-blending machine that lets drinkers craft a glass specifically to their personal palate, rather than having to pick a tipple, possibly as a result of guesswork, from the range a restaurant or bar chooses to stock in its cellar. + +Vinfusion, as the machine in question is called, was launched this week by Cambridge Consultants, a British technology company. In designing it the firm’s researchers first undertook a study of the wines people buy in pubs, bars and restaurants. They found that most customers are stick-in-the-muds. Instead of sampling different regions, grape varieties and vintages, they tend to order the same plonk every time they go out. + +Many of the survey’s participants admitted reluctance to ask for advice—often because of the snobbery and mystique that (at least in Britain) surround wine drinking. This conservatism does not, however, lead to satisfaction. The survey, which polled 138 drinkers, found that 70% were frequently disappointed by the wines they ordered. But it also found that the idea of having wines customised on the fly to individual tastes was appealing. + +To design a machine to do this Sajith Wimalaratne and his colleagues at the firm had first to get past the arch language of connoisseurs: “raspberry notes”, “elderflower aftertastes”, “prune flourishes” and so on. They therefore asked survey-participants which adjectives they would use. The most popular were “light”, “full bodied”, “dry”, “mellow”, “sweet”, “sharp” and “fiery”. + +Armed with that information, and concentrating at first on reds, Mr Wimalaratne and the team analysed 20 wines to see which, both individually and in combination, best produced the flavours and aromas people wanted. They also matched these results to the popular descriptions. From their original 20 wines they picked four that act like the primary colours of a spectrum of viniferous flavours. Different combinations of this quartet yield something approaching the full range of gustatory hues. The wines in question are a pinot noir and a merlot from Chile, a shiraz from Australia, and, despite its whiteness, a French muscat. This latter they picked because it adds sweetness to a blend. + +Your Château Lafite, sir + +To create a new wine the customer manipulates three sliders on a touch screen attached to the machine. One moves between the extremes of “light” and “full-bodied”. A second runs from “soft”, via “mellow” to “fiery”. The third goes from “sweet” to “dry”. No confusing descriptions like “strawberry notes with a nutty aftertaste” are needed. + +The desired glass is then mixed from tanks of each of the four primaries, hidden inside the machine’s plinth. The requisite quantities are pumped into a transparent cone-shaped mixing vessel on top of the plinth. Added air bubbles ensure a good, swirling mix and flashing light-emitting diodes give a suitably theatrical display. + +Traditionalists may be appalled by all this, but they should not be. In Mr Wimalaratne’s mind, the function of the Vinfusion system is in principle little different from the blending of grape varieties that goes on in many vineyards, to produce wines more interesting than those based on a single variety. Moreover, if Vinfusion works as intended, it will let people experiment with oenological flavours in a way that is currently impossible and which lets them discover what appeals. A decent sommelier ought then to be able to recommend wines vinified in the conventional way that will taste similar. + +In the longer run, recording and collating the requests made to a group of Vinfusion machines might even help restaurants and bars stock bottles that people will like, rather than merely tolerate. And if all this happens, the snobbery and mystique surrounding wine—whether blended in the vineyard or the restaurant—may disappear for good. + + + + + +Cancer treatment + +Missile tracking + +How to use a body scanner to follow drugs around + +Nov 5th 2016 | From the print edition + +MANY anti-cancer drugs are packaged for delivery into tiny fatty envelopes called liposomes. Because tumour cells are bound more loosely than healthy cells, liposomes squeeze between them more easily. They thus tend to accumulate in cancerous tissue and so, when they degrade, release their payloads there rather than in healthy tissue—to which many of the drugs concerned are equally dangerous. + +Such medical missiles can, however, go astray. Even when the same drug in the same sort of packaging is used against the same sort of cancer, the degree to which it strikes its target differs markedly from patient to patient. A way of discovering where the liposomes are going in a particular individual might permit treatments to be tailored to that patient’s needs. And, as they write in ACS Nano, Rafael de Rosales of King’s College, London, and Alberto Gabizon of the Shaare Zedek Medical Centre in Jerusalem, think they have found one. + +Many anti-cancer drugs bind readily to metal ions, including those of copper, manganese and zirconium. That interested Dr de Rosales and Dr Gabizon, because these three elements all have radioactive isotopes that release a particle called a positron as part of their decay. Positrons, which are antimatter versions of electrons, are the agents of a body-scanning technique called positron-emission tomography, or PET. This fact, the two researchers hoped, might let them track where the liposomes are going. + +It did—in mice, at least. They injected mice that had metastatic breast cancer with their doped liposomes and were able, using a PET scanner, to follow what happened to the drugs therein over the course of a week. As they had hoped, the radioactive metal ions (and therefore, presumably, the drugs) concentrated themselves in the animals’ tumours. At least, they did so most of the time. But there was one genetic strain of mouse in which they also ended up in the uterus, even though that organ was free from cancer cells. + +If this were to happen to a woman undergoing chemotherapy for breast cancer, it might damage her fertility. But the technique Dr de Rosales and Dr Gabizon have invented may be able to stop that—either by letting doctors work out in advance which people are most susceptible to a drug going off-piste, or by tracking what is happening in individual patients, and taking evasive action. + + + +Books and arts + + + + + +Contemporary America: Death by the barrelful + +Fiction from Israel: To laugh, to weep + +Football writing: A game of two halves + +Philip Roth: America across the river + +Christianity and history: The search goes on + +Maps: X marks the spot + + + + + +Contemporary America + +Barrel of deaths + +Why Americans love guns + +Nov 5th 2016 | From the print edition + + + +Another Day in the Death of America: A Chronicle of Ten Short Lives. By Gary Younge. Nation Books; 267 pages; $25.99. Guardian Faber; £16.99. + +Rampage Nation: Securing America from Mass Shootings. By Louis Klarevas. Prometheus; 397 pages; $25. + +Come and Take It: The Gun Printer’s Guide to Thinking Free. By Cody Wilson. Gallery Books; 320 pages; $26. + +ONE of the peculiar things about America is the extraordinary frequency with which people who live there are shot to death. There are well over 30,000 gun deaths in America each year, roughly two-thirds of them suicides and one-third murders. This firearm homicide rate, 3.4 per 100,000 inhabitants in 2014, is more than five times that of any other developed country. Yet America’s political system steadfastly rejects every attempt to do anything about it. Massacres in schools have become regular occurrences, yet Congress has consistently voted down even weak gun-control measures. The Supreme Court decided in 2008 that the constitution’s Second Amendment, which begins with a clause about militias, gives individuals the right to own guns. Many Americans have come to embrace a novel political ideology, concocted by pro-gun lobbying groups, which holds that firearms are the cornerstone of political liberty and that restricting them would cause more crime. + +Other Americans find such reasoning absurd. But the country already has over 300m firearms in private hands. For those who see America’s high rates of gun murder as largely caused by its high rates of gun ownership, this leads to a sense of acute despair. Faced with a situation they find morally unacceptable and practically unsolvable, many prefer not to think about it. + +The approach adopted by Gary Younge, a journalist on the Guardian, is to immerse himself in the misery. In “Another Day in the Death of America”, Mr Younge examines the most excruciating gun casualties of all: children and teenagers. The book recounts the stories of the ten young people, aged 19 or under, who were shot and killed on the arbitrarily selected date of Saturday November 23rd 2013. + +The result is a sharp portrait of America, painted in blood. The victims are white, black and Latino (though mainly the latter two), from all over the country. Nine-year-old Jaiden Dixon was shot at his home in a small-town Ohio subdivision by his mother’s vengeful ex-boyfriend. Tyler Dunn, 11, was shot in the head by a friend as they played with a rifle in rural Michigan. In an apartment complex in Houston, a friend killed Edwin Rajo, 16, while goofing around with a pistol they had bought. + +Mr Younge’s determination to give a chapter to every victim, in chronological order, inevitably strains the narrative a bit. Some of the chapters are thin: when the deceased had a criminal record or ties to gangs, relatives were often unwilling to talk. But the random tragedy of the stories he encounters underlines the intractability of the problem. As Mr Younge writes, his book is not so much a plea for gun control as a “long, doleful, piercing cry” in a country so overwhelmed by gun violence that it has almost given up trying to stop it. + +Those who still hope to make progress must break off a piece small enough to chew. In “Rampage Nation”, Louis Klarevas, a security expert, looks at what could be done to stop just one type of gun violence: mass shootings, such as the school massacres at Virginia Tech and Sandy Hook. These attacks account for a tiny fraction of firearm homicides (904 deaths in 111 incidents since 1966, by Mr Klarevas’s count), but they spread fear out of all proportion to their numbers. + +All violent crimes, Mr Klarevas notes, are composed of a perpetrator, a target and a weapon. Preventing them involves removing at least one of those elements. But the perpetrators of gun massacres cannot be deterred (most already plan to die); anyone can be a target, and protecting everyone all the time is impossible. Thus the only plausible strategy is to restrict the weapons that let shooters rapidly fire large numbers of bullets. Mr Klarevas debunks the claims of John Lott, a conservative gun researcher, that laws allowing citizens to carry guns openly reduce the number of massacres. His own statistics are more convincing: in the four years after the American government passed a ban on so-called assault weapons in 1994, there was not a single mass shooting. + +That ban expired in 2004, and mass shootings are on the rise again. Politics will probably doom Mr Klarevas’s recommendations, including banning the extended-capacity magazines that allow shooters to fire dozens of bullets without reloading, and barring those convicted of domestic violence from owning guns. Such reforms require Americans to trust their government and public institutions. Unfortunately, many people in America revile them. And this hatred is bound up with their desire to own guns—as becomes clear in Cody Wilson’s strange memoir, “Come and Take It”. + +Mr Wilson is famous for one reason: in 2013 he dropped out of law school at the University of Texas having designed a gun that could be made with a 3D printer, with code that could be leaked on the internet. It was a clever idea, fusing libertarian pro-gun ideology with libertarian tech-world Utopianism, and it gained him attention from media outlets like Wired and Vice. He used this to raise money for his project, and managed to print a prototype handgun soon after. + +In “Come and Take It” Mr Wilson tries to extend his moment of fame by recounting, in tedious detail, the process of creating his gun. This entails a great deal of overwritten diary material punctuated by resentful libertarian screeds. Mr Wilson’s slacker gun-enthusiast friends, all male, are described reverently (“a practising Buddhist and an urban guerrilla”). Women, when they appear, are a collection of physical attributes (blonde hair, nose rings, “she wore fur boots for me”). Corporations, schools and, above all, government organisations are invoked with contempt throughout. (Amusingly, agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives turn out to be quite friendly.) + +There is an unbridgeable gap between the ways Mr Younge and Mr Klarevas think about guns, and the way Mr Wilson does. For the first two, guns are public-health threats or devices of pointless tragedy. For Mr Wilson, they are agents of masculine power and violent freedom. Addressing a campus libertarian group, Mr Wilson claims that the Second Amendment, the text of which extols “a well regulated Militia, being necessary to the security of a free State”, in fact enshrines “a citizen’s right to violently abolish the law”. True revolutionary thought, he continues, requires “a passion for a real and virtuous terror”. This is a horrifying passage. In the season of Trump, it feels like a warning of madness and violence to come. + +This article appeared in the Print Edition with the headline: Death by the barrelful + + + + + +Fiction from Israel + +Funny man + +How David Grossman draws laughter from tears + +Nov 5th 2016 | From the print edition + + + +A Horse Walks into a Bar. By David Grossman. Translated by Jessica Cohen. Jonathan Cape; 197 pages; £14.99. To be published in America by Knopf in February 2017. + +IN A shabby club in the Israeli city of Netanya, a diminutive, rake-thin, 57-year-old comedian takes the stage. Illness, death, war: all is fair game for a motor-mouthed provocateur whose onslaught of outrage draws his audience—aghast but spellbound—into an “alluring abyss”. Soon, though, the reader grasps that the masochistic Dovaleh is turning his whiplash tongue not so much on taboo topics as on himself—and on a retired judge, an old classmate summoned by the stand-up to the show, who recounts this story. Justice Lazar now fears that a shameful tale of teenage betrayals will come to light. Will Dovaleh put the judge himself in the dock? + +In drama, film and fiction, comic turns usually bomb. But in his new novel, a monologue intercut with the judge’s memories, David Grossman, a fine Israeli writer, dares to turn the spotlight on a real, if ruinous, talent. Although an embittered, multiply divorced cancer survivor from a family blighted by the Holocaust, Dovaleh can elicit a “laugh of wonder at his precision, his subtlety, his theatrical wisdom”. The crowd, even the hecklers, become “partners in some sort of evasive, fluid transgression”. + +It takes an author of Mr Grossman’s stature to channel not a failed stand-up but a shockingly effective one, and to give him salty, scabrous gags that—in Jessica Cohen’s savoury translation—raise a guilty laugh. Dovaleh’s edgy, “tightrope-walking” shtick narrows into a lacerating narrative of the cadet camp where, at 14, he learned of a parent’s death. The tortured judge’s own misery is compounded by the recent death of his wife. As the punters drift away, Mr Grossman unearths the twisted roots of both men’s self-disgust. + +This book feels far removed from “Falling Out of Time”, the eerie elegy with which Mr Grossman in 2011 broke the silence of bereavement that had afflicted him when his soldier son Uri was killed in the war with Lebanon. Both works, however, circle around dramatic acts of mourning: the first as lyric tragedy, the second as pitch-black comedy. The lights dim, the club clears, but the pain and grief—which Dovaleh dubs “my own private Chernobyl”—still glow, still burn. + +This article appeared in the Print Edition with the headline: To laugh, to weep + + + + + +Football writing + +A game of two halves + +An unusual account of the 2014 World Cup + +Nov 5th 2016 | From the print edition + + + +Home and Away: Writing the Beautiful Game. By Karl Ove Knausgaard and Fredrik Ekelund. Harvill Secker; 412 pages; £18.99. To be published in America by Farrar, Straus and Giroux in January 2017. + +“MY STRUGGLE”, the six-volume, 3,600-page series of autobiographical books by Karl Ove Knausgaard, is a daunting work. In it he ruminates on his life and his thoughts, often in excruciating detail. Readers looking for a gentle introduction to Mr Knausgaard’s work could do worse than pick up a copy of “Home and Away”, a new book co-written with Fredrik Ekelund, a Swedish author. + +The book is an exchange of letters between the two men, around the time of the 2014 World Cup, which was held in Brazil. With Mr Ekelund in Rio de Janeiro for the championship and Mr Knausgaard at home in Sweden, they write about the experience of watching the tournament from start to finish. + +In common with Mr Knausgaard’s other works, the book has its weak points. Both men have a habit of long, winding sentences with plenty of commas, which some readers may find tricky to follow. At various points, one of the authors raises an idea, but then the other fails to develop it, making it seem as though they are talking past each other. And in a book about football (where a certain amount of banality is inevitable), the writers repeatedly swap predictions about who will reach the final, which gets a little trying. + +The trick is to let the writing wash over you, rather than fighting it, and even to skip certain passages. Happily, readers will find themselves needing to do this less and less in the second half of the book, as the final nears and both authors get into their stride. + +Mr Knausgaard offers incisive observations on football in his typically understated tone, which can often be hilarious. “When do you see such elation in real life?” he wonders, describing a player who has just scored a goal: “Not even when a child is born do you see such comprehensive and systematic unalloyed joy.” He (a middle-aged man) also perceives that “footballers on TV are always older than me,” because “viewers watch in exactly the same way they did when they were 12.” He may only be describing his feelings while watching a football match from his sofa, but as in his autobiographical “My Struggle” there is a sense that something bigger lurks beneath. + +The best part of the book focuses on Brazil’s 7-1 thrashing in the semi-final at the hands of Germany. Mr Knausgaard’s description of David Luiz, a defender whose mistakes cost Brazil the game, captures the sense of panic at the Mineirão stadium. And Mr Ekelund’s portrait of Rio after the match is haunting. He sees “a restaurant that’s open but empty of customers, hundreds of vacant seats, and the rain pours.” The morning after, the impersonal sounds of a city reluctantly back at work—“a jackhammer…a street cleaner sweeping up a pile of leaves, a taxi moving at full speed, a bus thundering inexorably on”—signify definitively that Brazil has been knocked out. For a book which, at heart, is no more than two friends chatting about football, there is a lot to like. + + + + + +Philip Roth + +America across the river + +A great novelist has bequeathed his book collection to a struggling public library + +Nov 5th 2016 | NEWARK | From the print edition + +Hometown hero + +ONE of the reading rooms of the public library in Newark, New Jersey, where the teenage Philip Roth fired his imagination, is an events room now, empty of books. Another is a dusty storeroom for the library’s collection of art-history volumes. Hardly anyone reads them. + +Erected by public demand in the 1890s as one of the first civic buildings in what was then a swelling industrial town near the mouth of the Hudson river, the library is now as much an information service for the poor as a books repository. Half the 10,000 people who pass through the main library and its seven branches each week are looking for help getting access to social services, or to type out a job application, or to learn English. This is important work, but not what its ambitious architects—who modelled the library on a 15th-century Florentine palazzo—had in mind. Paying for the library is a constant worry; its main benefactor, the city, is one of America’s poorest. During the recession in 2008, the library had its annual funding of $11m slashed by a third. + +To this pathetic tale of urban decline, Mr Roth has added an interesting twist. The 83-year-old novelist, who used the library as a student and later researched his monumental “American Trilogy” in one of its reference rooms, plans to bequeath his personal library to it. Mr Roth has annotated many of the 4,000 books; they are a record of how, as well as what, the novelist spent a lifetime reading. It should be compelling to scholars and thrilling to his fans. + +Timothy Crist, president of the library’s board, is naturally cock-a-hoop. He talks of the library becoming a global “literary destination”. “There are probably as many Roth fans in France as there are in America,” he says gleefully. The unloved art-history tomes will be shifted and their high-ceilinged storeroom lavishly renovated to accommodate Mr Roth’s gift. + +To evoke the author’s Connecticut house, the redesign of the library will have a modernist twist. Mr Roth is also donating a couple of his writing desks, reading chairs and a long refectory table, at which people will be able to peruse his books pretty much as he did. The books will be available to all. Tentative fundraising for the project has been “very encouraging” says Mr Crist; so much so, that he hopes to make this part of a much grander, $20m refurbishment of the entire library. Architects’ plans have already been approved. + +It is a splendid, quietly subversive, gesture by Mr Roth; a rich university would have paid handsomely for his books. It is also a reminder of how touchingly respectful of Newark, transformed though it has been by immigration, deindustrialisation and riots, he always is. Not for him or any of his fictional alter-egos the traditional contempt of the homeward-looking literary exile—of James Joyce for Ireland, the “old sow that eats her farrow”. Before entering the library, you pass through the straggly inner-city park outside it, where Neil Klugman, the librarian protagonist of Mr Roth’s “Goodbye, Columbus”, acknowledges his “deep knowledge of Newark, an attachment so rooted that it could not help but branch out into affection”. The real Mr Roth has explained his bequest as motivated by a “long-standing sense of gratitude to the city where I was born”. + + + + + +Christianity and history + +The search goes on + +The West has gained a lot from Christianity. There is still more to learn + +Nov 5th 2016 | From the print edition + + + +The Evolution of the West: How Christianity Has Shaped Our Values. By Nick Spencer. SPCK; 190 pages; £9.99. + +IN THE early years of the Enlightenment, a few brave philosophers challenged the Christian order—an apparently hopeless task. But their efforts paid off, and tomes have since been written, by authors from Diderot to Richard Dawkins, about the triumph of secular man. What, after all, has Christianity ever done for us? + +Rather a lot, argues Nick Spencer in an excellent new book, “The Evolution of the West”. Mr Spencer, who is research director at Theos, a religious think-tank in London, picks up from Larry Siedentop’s epic work from 2014, “Inventing the Individual”—a reassertion of how much the Western world owes to Christianity. It is not a popular thesis but, like a prophet crying in the post-modern wilderness, Mr Spencer provokes reflection that goes far beyond the shallow ding-dongs of the modern culture wars. He wants to make sure Westerners know where they came from as a way to illuminate where they are going. + +Starting with the ancient world, he takes the reader on an extravagant journey to meet, among many others, Augustine of Hippo and John Locke as well as Thomas Piketty. The author believes that the fact that Christianity became the religion of the European establishment has blinded people to what a revolutionary doctrine it was (and is). And he clearly believes it can still play a role. The Christianisation of Europe, he says, was not a bunch of reactionary clerics trying to shut down a noble, free, secular ancient world, but a new idea of “a voluntary basis for human association in which people joined together through will and love rather than blood or shared material objectives”. Christianity declared that humans “have access to the deepest reality as individuals rather than merely as members of a group”. + +Out of this, with a reinjection at the Reformation, came the origins of the modern world: a belief in equality of status as the proper basis for a legal system and the assertion of natural rights leading to individual liberty, as well as the notion that a society built on the assumption of moral equality should have a representative form of government. + +The book is not a tragic lament for lost Christendom. Mr Spencer is frank about the sins of the church. But too often, he says, they blind people to the communal, psychological, educational and creative benefits that have flowed from Christian belief. And he worries about how the absence of deep cultural norms will play out in the West. Can secular creeds bind people together now that there is plenty of pluribus but not much unum? + +Shorn of its establishment baggage, Mr Spencer argues, Christianity still has much to say to an amnesiac world about human dignity, political freedom and economic inequality. And, quoting William Wilberforce, he warns that Christian values are inseparable from Christianity itself. + +After the aggression of the God v science debates, Mr Spencer’s book is a gentler, though no less provocative, contribution to the discussion. It is beautifully written, too. The author believes that not everyone in the West is disenchanted with religious faith, and that the end of religion is no nearer than Francis Fukuyama’s end of history. Lurking everywhere in the secularised West is what he calls a “disenchantment with disenchantment”. People still want more than just freedom and choice. They want to belong, they want community rooted in something shared and they want to find meaning beyond themselves. “Having arrived at the secular self,” says Mr Spencer, “we kept on searching.” + + + + + +Maps + +X marks the spot + +A new exhibition in London looks at the 20th century through its maps + +Nov 5th 2016 | From the print edition + +MODERN cartography began to emerge in the 16th century as an instrument of power for rulers. But it was in the 20th century, with all its wars, revolutions, upheavals and helter-skelter technological change, that maps became truly democratised. In rich countries, near-universal education and the teaching of geography in schools ensured that most people could make sense of them. World wars required maps to be produced by the million. Meanwhile in civilian life the spread of the motor car, along with growing affluence that allowed more people to travel, expanded the private market. Mapmaking technology developed by leaps and bounds, progressing from land-based surveys to aerial photography to the Global Positioning System (GPS). + +A new exhibition, “Maps and the 20th Century: Drawing the Line”, at the British Library (BL) in London until next March, examines the history of the past 100 years through maps. It considers their role in war and peace as well as in everyday life, their economic impact and, particularly towards the end of the period covered, their increasingly dynamic quality. Many of the 200 on show are drawn from the BL’s own remarkable collection of 4m maps. + +Spot the submarines + +The exhibits are strikingly varied: detailed first-world-war trench maps (with annotations like “badly shelled” and “full of dead”); second-world-war silk escape maps made into a dress; an early sketch for Harry Beck’s famous map of the London underground that was eventually published in 1933; a fascinating map of the Atlantic Ocean floor (pictured), based on research commissioned by the American navy to identify hiding places for its nuclear submarines; and the awe-inspiring photograph of Earth taken during the Apollo Moon mission in 1968. + +Maps have always had to be useful, and most people think of them as objective representations of reality. But “maps are not innocent bystanders,” says Tom Harper, lead curator of the exhibition. “They help shape people’s perceptions.” + +That starts with technical points such as the projections that turn a three-dimensional world into a two-dimensional map. Most world maps (including Google’s) use a variant of a projection invented in 1569 by a Flemish mapmaker, Gerardus Mercator, which was handy for navigation but exaggerates the apparent size of the temperate zone where most rich countries are concentrated. An alternative projection now called Gall-Peters, which properly reflects the relative size of continents, was promoted in the 1970s but did not catch on widely. + +Maps are also used as propaganda tools, distorting certain features or pushing particular messages. The exhibition offers many examples, including motivational second-world-war maps, Vietnam-war-era protest maps and depictions of environmental pollution and tax havens. + +In the past few decades the digital revolution has utterly transformed mapmaking. Instead of being frozen in time, maps can now capture and reflect the constant change taking place in the real world. Thanks to Google Earth, every smartphone owner has the world at his fingertips, and will automatically find himself at the centre of it. The GPS system will make sure he never (well, hardly ever) gets lost. Mr Harper thinks the next big thing in maps will be virtual reality. But despite all this extraordinary technological change, he reckons there will always be a space for traditional mapmaking techniques. + + + +Obituary + + + + + +Valerie Hunter Gordon and Junko Tabei: Climb every mountain + + + + + +Climb every mountain + +Obituary: Valerie Hunter Gordon and Junko Tabei died on October 16th and 20th respectively + +These pioneers of women’s freedom from domestic drudgery were 94 and 77 + +Nov 5th 2016 | From the print edition + + + +IF YOU mentioned the word “mountain” to Valerie Hunter Gordon in 1947, she didn’t instinctively think of the glories of the Alps or Himalayas. Instead she envisaged a giant pile of two-foot squares of terry towelling, the nappies she used for her children. Day after day—like almost all women then—she had to soak the stinking things in chlorine in a bucket, heave them heavily up with wooden tongs and plonk them in a bowl, wash them, mangle them, dry them on the line and iron them. For an army wife in suburban Surrey, it filled the hours. And she hated every moment. + +The maths was shocking. Seven nappies a day, seven days in the week, 52 weeks in the year; sum total, 2,548 nappies a year for every child. She had had two babies, with a third on the way; eventually, she would have six incontinent little treasures. Why had no one, even in America, devised a disposable nappy? Undoubtedly because inventors and corporations, being mostly men, didn’t do the laundry. + +Far away in Japan, a decade later, Junko Tabei was wrestling with similar problems of mountains and male expectations. She wanted to be a climber: if possible, conquering the highest mountains in every country in the world. A school trip up Mount Asahi, to a strange volcanic region of bleak rocks and hot springs, had made her determined to do nothing else. But women in Japan, much like Mrs Hunter Gordon in leafy Camberley, were expected to spend their lives looking after houses and children. Mrs Tabei rejected that. Why should the men who ruled the world smother women’s dreams in domesticity? Doubtless because they wanted to keep them at their beck and call—and not standing on some distant peak with an ice-pick raised triumphant in the air. + +Determined to free her sex from their “meaningless” lives, she began to join all-male climbing clubs. Many of the men objected, refusing to climb with this diminutive, sparky woman, or accusing her of joining only to find a husband. (She did find a husband that way, as it happened, on a climb on Mount Tanigawa in 1965, but love was not her motive.) In 1969 she set up a ladies’ climbing club with the motto, “Let’s go on an overseas expedition by ourselves!” It was expensive; to save money, they recycled car-seats into over-gloves and sewed their own sleeping bags. Eventually the team scaled both Annapurna III and, in 1975, Mrs Tabei’s greatest dream, Everest. She became the first woman ever to reach the summit: finding, to her surprise, that it was “smaller than a tatami mat”. + +Equally determined to strike a blow for women, Mrs Hunter Gordon got out her mother’s old Singer sewing machine and began to experiment. Using parachute nylon left over from the war, and later PVC, she ran up short pants that closed with press-studs and cellulose-wadding pads to fit inside. The pads were thrown away, but were biodegradable; the pants could be wiped and re-used. At the wives-and-babies teas she attended they were such a hit that she ended up making 400 to sell for five shillings each. Eventually, in 1949, she got her patent and proper manufacturing started. By 1960 6m “Paddis” had been sold, and multitudes more Paddi pads. + +Under the avalanche + +Both women still found it tricky to negotiate a man’s world. Their husbands were wonders: Mrs Hunter Gordon’s, an army officer, cutting out pads in the attic; Mrs Tabei’s looking after their two children while she climbed. But other men often patronised them. Paddis did not get going until Mrs Hunter Gordon’s father had a word with the manufacturer: this “silly woman”, obviously couldn’t attempt mass-marketing herself. They were probably right, she thought; even in the peak-sales years, her registered office was a walk-in cupboard in the lounge. When, inevitably, Procter & Gamble roared into the disposable-nappy business with Pampers in 1961, she didn’t seem too downcast. She was free now to build other labour-saving devices, such as self-drawing curtains. + +Mrs Tabei, too, was not fired by any competitive spirit. She climbed for the sheer joy of being free, usually refusing corporate sponsorship; to accept funding from that male world made her feel she was “just working for the company”. Nor did she need to prove how strong or daring she was; on the last knife-edge traverse just below the peak of Everest, with drops of more than 5,000 metres on either side, she proved it beyond dispute. When the Japanese press called her crazy and said she should stay at home, she laughingly ignored them; though when an avalanche buried her, 12 days from the summit, her last thought before she blacked out was of her two-year-old daughter playing. + +Perhaps it was also because she was a woman, expected to keep her house spotless, that she so lamented the despoiling of Everest by climbers. She became a director of campaigns to get their rubbish and, especially, their deep-frozen sewage moved off the mountain. The urine left behind by climbers, she pointed out, could fill 3,300 bathtubs, and 11,800kg of faeces were dug out of the snow every season. That sounded like the sort of mountain Mrs Hunter Gordon knew all about. + +Our obituary of Andrzej Wajda (October 29th) claimed that Mr Wajda was the maker of “Interrogation” (1982); it was, of course, Ryszard Bugajski. Our apologies. + +This article appeared in the Print Edition with the headline: Climb every mountain + + + +Economic and financial indicators + + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Pension funds + +Markets + + + + + +Interactive indicators + +Nov 5th 2016 | From the print edition + + + + + +Output, prices and jobs + +Nov 5th 2016 | From the print edition + + + + + +Trade, exchange rates, budget balances and interest rates + +Nov 5th 2016 | From the print edition + + + + + +The Economist commodity-price index + +Nov 5th 2016 | From the print edition + + + + + +Pension funds + +Nov 5th 2016 | From the print edition + + + +Pension-fund assets in OECD countries have grown by 54% over the past ten years to $25trn. In Australia, the number of pension schemes has soared by 83% over this period and the value of the funds by 167%. The industry’s search for returns in a low-interest world has prompted consolidation in other countries, though. Britain saw the biggest decrease in funds in absolute terms: last year there were 48,000 fewer schemes than in 2005. In the same decade the size of the average British pension fund increased by 229% to $62m. Many defined-benefit funds, still reeling from the financial crisis, are struggling to meet funding requirements: around 80% of the 6,000 British schemes are in deficit. + + + + + +Markets + +Nov 5th 2016 | From the print edition + + + + + +Table of Contents + +The Economist + +The world this week + + + +Politics this week + + + + + +Business + + + + + +KAL's cartoon + + + + + +Leaders + + + +The presidential election: America’s best hope + + + + + +Water: The dry facts + + + + + +Lebanon: Time to talk Taif + + + + + +Taxation in India: Take it easy + + + + + +Britain’s House of Lords: Time to ennoble Nigel + + + + + +Letters + + + +Jordan, democracy, Brexit, depression, infrastructure, Spain, private equity, Van Cliburn, Elon Musk: Letters to the editor + + + + + +Briefing + + + +Water scarcity: Liquidity crisis + + + + + +United States + + + +The battleground: Countdown + + + + + +White voters: What’s going on + + + + + +The campaigns: On the trail + + + + + +The African-American vote: Early, but less often + + + + + +Election brief: Foreign policy: World-shaking + + + + + +Lexington: Donald Trump, vigilante + + + + + +The Americas + + + +Dams in the Amazon: Not in my valley + + + + + +Rio de Janeiro: A Pentecostal’s progress + + + + + +Violence against women: Murder and machismo + + + + + +Bello: What is to be done in Venezuela? + + + + + +Asia + + + +South Korean politics: No confidantes + + + + + +Australia and asylum-seekers: Bashing the boat people + + + + + +Sex education in Japan: Tiptoeing around + + + + + +The South China Sea: Duterte waters + + + + + +Politics in Tamil Nadu: Suspended animation + + + + + +China + + + +Politics in Hong Kong: China’s wrath + + + + + +Politics: Esprit de core + + + + + +Fakes: Seeing red + + + + + +Banyan: Sun-worshippers + + + + + +Middle East and Africa + + + +Lebanon: Census and sensibility + + + + + +Saudi Arabia’s reforms: Building on sand + + + + + +Cronyism in South Africa: Friends with benefits + + + + + +Boko Haram: Rounding up the survivors + + + + + +Censorship in Kenya: X-rated everything + + + + + +Europe + + + +The battle for Russia’s history: Remember, remember + + + + + +Putinism’s icons: A tale of two Vladimirs + + + + + +France’s president self-destructs: Into the abyss + + + + + +More arrests in Turkey: Goodbye, “Republic” + + + + + +The German elections in 2017: Best frenemies + + + + + +Charlemagne: For our freedom and yours + + + + + +Britain + + + +The Chinese in Britain: Raise the red lantern + + + + + +Life sciences: Life after Brexit + + + + + +Cyber-security: Britain flexes its cyber-muscles + + + + + +The Article 50 case: Taking back control + + + + + +Heroin addiction: Fixing problems + + + + + +The intern economy: The road from serfdom + + + + + +Manufacturing fetishism: A false idol + + + + + +International + + + +Online governance: Lost in the splinternet + + + + + +Business + + + +Tech firms’ pay wars: Money honeys + + + + + +Startups: Silicon Beach + + + + + +Japanese entrepreneurs: Slow to startup + + + + + +Chinese aerospace: We are sorry to announce + + + + + +Online advertising: Keeping watch + + + + + +Niche smartphones: A sea of black mirrors + + + + + +Schumpeter: Political business + + + + + +Finance and economics + + + +Shale oil: Permian hyperbole + + + + + +Buttonwood: A turning-point? + + + + + +China’s industrial policy: Plan v market + + + + + +America’s foreign debts: Net debt, big returns + + + + + +Brexit and venture capital: Turning off the tap + + + + + +Taxation in India: Lost in transition + + + + + +Aid in kind: Free two shoes + + + + + +Refugees in Sweden: Seeking asylum—and jobs + + + + + +Free exchange: Apps and downsides + + + + + +Science and technology + + + +Military supply lines: Having no truck with it + + + + + +How to store electricity underwater: Depths of imagination + + + + + +Scrutinising science: The watchers on the Web + + + + + +Tracking down missing clinical trials: Tested, and found wanting + + + + + +Oenology: The war on terroir + + + + + +Cancer treatment: Missile tracking + + + + + +Books and arts + + + +Contemporary America: Death by the barrelful + + + + + +Fiction from Israel: To laugh, to weep + + + + + +Football writing: A game of two halves + + + + + +Philip Roth: America across the river + + + + + +Christianity and history: The search goes on + + + + + +Maps: X marks the spot + + + + + +Obituary + + + +Valerie Hunter Gordon and Junko Tabei: Climb every mountain + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Pension funds + + + + + +Markets + + + + + +Table of Contents + +The Economist + +The world this week + + + +Politics this week + + + + + +Business + + + + + +KAL's cartoon + + + + + +Leaders + + + +The presidential election: America’s best hope + + + + + +Water: The dry facts + + + + + +Lebanon: Time to talk Taif + + + + + +Taxation in India: Take it easy + + + + + +Britain’s House of Lords: Time to ennoble Nigel + + + + + +Letters + + + +Jordan, democracy, Brexit, depression, infrastructure, Spain, private equity, Van Cliburn, Elon Musk: Letters to the editor + + + + + +Briefing + + + +Water scarcity: Liquidity crisis + + + + + +United States + + + +The battleground: Countdown + + + + + +White voters: What’s going on + + + + + +The campaigns: On the trail + + + + + +The African-American vote: Early, but less often + + + + + +Election brief: Foreign policy: World-shaking + + + + + +Lexington: Donald Trump, vigilante + + + + + +The Americas + + + +Dams in the Amazon: Not in my valley + + + + + +Rio de Janeiro: A Pentecostal’s progress + + + + + +Violence against women: Murder and machismo + + + + + +Bello: What is to be done in Venezuela? + + + + + +Asia + + + +South Korean politics: No confidantes + + + + + +Australia and asylum-seekers: Bashing the boat people + + + + + +Sex education in Japan: Tiptoeing around + + + + + +The South China Sea: Duterte waters + + + + + +Politics in Tamil Nadu: Suspended animation + + + + + +China + + + +Politics in Hong Kong: China’s wrath + + + + + +Politics: Esprit de core + + + + + +Fakes: Seeing red + + + + + +Banyan: Sun-worshippers + + + + + +Middle East and Africa + + + +Lebanon: Census and sensibility + + + + + +Saudi Arabia’s reforms: Building on sand + + + + + +Cronyism in South Africa: Friends with benefits + + + + + +Boko Haram: Rounding up the survivors + + + + + +Censorship in Kenya: X-rated everything + + + + + +Europe + + + +The battle for Russia’s history: Remember, remember + + + + + +Putinism’s icons: A tale of two Vladimirs + + + + + +France’s president self-destructs: Into the abyss + + + + + +More arrests in Turkey: Goodbye, “Republic” + + + + + +The German elections in 2017: Best frenemies + + + + + +Charlemagne: For our freedom and yours + + + + + +Britain + + + +The Chinese in Britain: Raise the red lantern + + + + + +Life sciences: Life after Brexit + + + + + +Cyber-security: Britain flexes its cyber-muscles + + + + + +The Article 50 case: Taking back control + + + + + +Heroin addiction: Fixing problems + + + + + +The intern economy: The road from serfdom + + + + + +Manufacturing fetishism: A false idol + + + + + +International + + + +Online governance: Lost in the splinternet + + + + + +Business + + + +Tech firms’ pay wars: Money honeys + + + + + +Startups: Silicon Beach + + + + + +Japanese entrepreneurs: Slow to startup + + + + + +Chinese aerospace: We are sorry to announce + + + + + +Online advertising: Keeping watch + + + + + +Niche smartphones: A sea of black mirrors + + + + + +Schumpeter: Political business + + + + + +Finance and economics + + + +Shale oil: Permian hyperbole + + + + + +Buttonwood: A turning-point? + + + + + +China’s industrial policy: Plan v market + + + + + +America’s foreign debts: Net debt, big returns + + + + + +Brexit and venture capital: Turning off the tap + + + + + +Taxation in India: Lost in transition + + + + + +Aid in kind: Free two shoes + + + + + +Refugees in Sweden: Seeking asylum—and jobs + + + + + +Free exchange: Apps and downsides + + + + + +Science and technology + + + +Military supply lines: Having no truck with it + + + + + +How to store electricity underwater: Depths of imagination + + + + + +Scrutinising science: The watchers on the Web + + + + + +Tracking down missing clinical trials: Tested, and found wanting + + + + + +Oenology: The war on terroir + + + + + +Cancer treatment: Missile tracking + + + + + +Books and arts + + + +Contemporary America: Death by the barrelful + + + + + +Fiction from Israel: To laugh, to weep + + + + + +Football writing: A game of two halves + + + + + +Philip Roth: America across the river + + + + + +Christianity and history: The search goes on + + + + + +Maps: X marks the spot + + + + + +Obituary + + + +Valerie Hunter Gordon and Junko Tabei: Climb every mountain + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Pension funds + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.11.12.TXT b/homeworks/B20769/homework1/data2/2016.11.12.TXT new file mode 100644 index 0000000..44c9f7c --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.11.12.TXT @@ -0,0 +1,6446 @@ +2016-11-12 + + + +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +Special report: Espionage + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +| Next section | Main menu | + + + + +* * * + + + +The world this week + + + +Politics this week [Thu, 10 Nov 22:25] + +Business this week [Thu, 10 Nov 22:25] + +KAL’s cartoon [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Politics this week + +Nov 12th 2016 | From the print edition + + + +Donald Trump won America’s presidential election, an astonishing victory that wrongfooted the predictions of pundits and pollsters. Mr Trump triumphed by winning states in the rustbelt Midwest, such as Pennsylvania and Wisconsin, that had voted Democrat for decades but where voters were receptive to his populist pledges to repatriate jobs and curb free trade. In her concession speech Hillary Clinton wished Mr Trump good luck and urged Americans to unite behind him. See here and here. + +With counting still going on, Mrs Clinton was narrowly ahead in the popular vote. It was Mr Trump’s performance in the electoral-college system, which decides the presidency, that confounded the polls. He won Ohio by nine percentage points and Iowa by ten, much bigger margins that had been expected, and also took Florida, the biggest swing state. See here and here. + +The Republicans also held on to both chambers of Congress. In the Senate the Democrats gained two seats, in Illinois and New Hampshire, giving them 48 out of 100. A run-off for the seat in Louisiana will be held in December. + +Voters in California, Massachusetts and Nevada all passed measures to legalise marijuana for recreational use in their states. + +In governors’ races Republicans picked up Missouri, New Hampshire and Vermont. The result in North Carolina, where the incumbent Republican has come under fire for passing an anti-gay-rights law, went down to the wire. + +Parliamentary privileges + +China’s legislature, the National People’s Congress, ruled that legislators in Hong Kong must take their oaths of office “accurately, completely and solemnly”, with no retakes allowed for violators. Its aim was to bar at least two lawmakers from taking up their seats after they had used derogatory language about China when swearing in. In anticipation of the NPC’s verdict, thousands of people demonstrated outside the central government’s office in Hong Kong. + +China’s finance minister, Lou Jiwei, was replaced. Mr Lou, who had reached the normal retirement age of 65, was unusual among Chinese bureaucrats for his unabashed free-market views. His successor, Xiao Jie, is also reputed to be a reformer. See article. + +The Chinese government passed a tough new law on cyber-security. Firms worry that it will be used to force them to turn over security keys and proprietary technologies. + + + +In Indonesia, perhaps 100,000 people demonstrated in Jakarta against Basuki Tjahaja Purnama, the city’s governor and leading candidate in next year’s governor’s election, after he made comments they deemed insulting to Islam. Mr Basuki is Christian. + +Australia’s parliament voted against the government’s plan to hold a referendum on gay marriage. The opposition says that a referendum would be expensive and divisive, and that parliament should handle the matter instead. + +Park Geun-hye, the embattled president of South Korea, said she was willing to be questioned by prosecutors investigating an influence-peddling scandal and offered to cede her power to nominate a new prime minister to parliament. Her approval rating has fallen to 5%. + +Scouring for deals + +Theresa May, Britain’s prime minister, went to India on her first stop for sounding out post-Brexit trade deals. Although Mrs May talked of shared connections and values her counterpart, Narendra Modi, seemed more concerned about visas and restrictions on Indian immigration to Britain. Despite Mrs May’s attempt to present her visit as a success it underlined the difficulties for post-Brexit Britain. See article. + +Mikheil Saakashvili, the former Georgian leader who had been serving as governor of the Odessa region in Ukraine, resigned. Mr Saakashvili, known as a reformist, accused the government of Petro Poroshenko of fostering corruption by backing two of the country’s oligarchs. + +Lawmakers in Hungary voted down an amendment to the country’s constitution that would have blocked compulsory refugee quotas set by the European Union. A referendum on the same topic failed to pass in October. + +Montenegro accused Russia of backing what it said was a plot to assassinate its prime minister shortly before elections last month. The country is in the process of joining NATO. Russia denied any involvement. + +The happy couple + +Daniel Ortega won re-election to a third consecutive term as Nicaragua’s president with 72.5% of the vote. The new vice-president is his wife, Rosario Murillo. Although Mr Ortega might have won a fair election, he was helped by court rulings that prevented his strongest rivals from competing. + +Pensioners and civil servants invaded the legislature of the state of Rio de Janeiro in Brazil to protest against plans to raise taxes and transport fares and to cut social spending. Earlier, the federal government froze the state’s bank accounts because it failed to pay debts. + + + +Tens of thousands of people protested against Chile’s privatised pension scheme. Some blocked streets and burnt buses in the capital, Santiago. The protesters complain that the scheme pays out less than they had expected. Those who put little in get little in return. + +Advancing forces + +Iraqi forces made their first push into the city of Mosul proper, Iraq’s second city, which has been held by Islamic State for the past two years. They captured a district only a few miles from the centre. Outside Mosul, troops discovered a mass grave containing the decapitated bodies of 100 people. In Syria, Kurdish troops began a small-scale advance on Raqqa, the capital of the self-styled caliphate. + +Egypt’s currency continued to slide after the government decided to float the pound. See article. + +At least 29 people were killed and another 50 wounded in fighting between rival militias in Somalia, ending a week-long ceasefire between two groups trying to control the city of Galkayo. + +Good for his golf club + +Mr Trump’s victory was greeted by a newspaper in Scotland with the headline, “Aberdeenshire business-owner wins presidential election”. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21710025-politics-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Business this week + +Nov 12th 2016 | From the print edition + + + +Markets swung back and forth after Donald Trump’s unexpected win in America’s presidential election. Stockmarkets dropped as the results unfolded and the Republican racked up state after state, but bounced back exuberantly after he gave a conciliatory victory speech. Trading was brisk in gold and the Japanese yen, traditional havens in times of volatility. The Mexican peso suffered further heavy losses amid concerns about the country’s relationship with the United States. Mr Trump has promised to tear up NAFTA and curtail Mexican migration. See here and here. + +Bearing fruit + +Iran signed a preliminary deal with Total of France and CNPC, a Chinese state-controlled oil company, to develop offshore gasfields. It is the first deal of its kind since sanctions on Iran were lifted as part of an agreement with world powers that curtails the country’s nuclear programme. But a cloud of uncertainty hangs over future Iranian contracts with multinationals following the election of Donald Trump, who has vowed to scrap the nuclear agreement. + +Ferrari’s business raced ahead in the third quarter. Net profit was up by 20% compared with the same period last year, to €113m ($125m), on the back of €783m in sales. The maker of luxury cars also benefited from spending less money on its Formula One racing team. Ferrari was spun out of Fiat Chrysler Automobiles and floated on the stockmarket in January. Its share price has only recently risen above the price that was set at its IPO. It has continued climbing and is now 10% higher. + +Less than a month after it issued a profit warning because of a plummeting pound and Brexit anxieties, Ryanair increased its long-term growth forecast and said it now expects to fly 200m passengers a year by 2024, up from the 119m it will carry this year. + +Money go round + +India’s government made a surprise decision to withdraw current 500- and 1,000-rupee banknotes ($7.50 and $15) from circulation in an effort to clamp down on black marketeers and corruption. People who hold the cash have until the end of the year to deposit it in savings accounts, but the notes are no longer legal tender and cash-dispensing machines were closed for a day to stop panic withdrawals. New 500- and 2,000-rupee notes were issued featuring a portrait of Mahatma Gandhi. See article. + +Navinder Sarao pleaded guilty at a court in Chicago to being the cause of the stockmarket “flash crash” in May 2010. Mr Sarao worked from his parents’ home in London. He was extradited to America where the authorities charged him with manipulating the market by spoofing, which is when a large number of small orders are placed electronically to create the illusion of demand and drive prices higher before they are cancelled. + +Tesco Bank fully refunded 9,000 customers after thieves hacked their accounts and stole £2.5m ($3.1m). The raid was one of the biggest cyber-attacks yet on a British bank. See article. + +The share price of Valeant plunged after the troubled drugmaker cut its profit and sales outlook for next year. The company has been immersed in problems about how it reports its accounts as well as numerous investigations on its method of charging for medicine. At the start of the year Valeant’s share price was over $100; it is now around $15. + +Volkswagen revealed that Hans Dieter Pötsch, the chairman of its supervisory board, was under investigation in Germany for allegedly not telling investors in a timely manner about an emissions-cheating scandal. Some investors in Germany are suing the carmaker for losses they say they incurred because of the delay. Mr Pötsch was VW’s finance officer at the time. Martin Winterkorn, who resigned as chief executive, is already under investigation. See article. + +In a closely watched case a federal judge in San Francisco upheld the city’s ban on Airbnb from doing business on home rentals that have not been registered with local authorities. Airbnb had argued that the ban contravened laws that protect internet firms from culpability for users’ transgressions and that it was not its responsibility to enforce the regulation. It will appeal against the ruling. + +A steady target? + +Smith & Wesson, a maker of firearms, wants to change its name to American Outdoor Brands. The company will seek the approval of shareholders at a special meeting next month, at which it hopes there will be no hold-up to its plans to broaden its base and expand its non-weapons-based operations. Its latest earnings overshot even the higher end of its own forecasts, but switching from its traditional customers to aim more for the “rugged outdoor enthusiast” is a gamble for such a well-known brand. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21710029-business-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +KAL’s cartoon + +Nov 12th 2016 | From the print edition + + + +More KAL’s cartoons + + + +This article appeared in the Print Edition with the headline: KAL’s cartoon + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21710026-kals-cartoon/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Leaders + + + +America’s new president: The Trump era [Thu, 10 Nov 22:25] + +Negotiating Brexit: The way forward [Thu, 10 Nov 22:25] + +Hong Kong: China’s new Tibet [Thu, 10 Nov 22:25] + +Egypt’s reforms: Two cheers for the general [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +America’s new president + +The Trump era + +His victory threatens old certainties about America and its role in the world. What will take their place? + +Nov 12th 2016 | From the print edition + + + +THE fall of the Berlin Wall, on November 9th 1989, was when history was said to have ended. The fight between communism and capitalism was over. After a titanic ideological struggle encompassing the decades after the second world war, open markets and Western liberal democracy reigned supreme. In the early morning of November 9th 2016, when Donald Trump crossed the threshold of 270 electoral-college votes to become America’s president-elect, that illusion was shattered. History is back—with a vengeance. + +The fact of Mr Trump’s victory and the way it came about are hammer blows both to the norms that underpin politics in the United States and also to America’s role as the world’s pre-eminent power. At home, an apparently amateurish and chaotic campaign has humiliated an industry of consultants, pundits and pollsters. If, as he has threatened, President Trump goes on to test the institutions that regulate political life, nobody can be sure how they will bear up. Abroad, he has taken aim at the belief, embraced by every post-war president, that America gains from the often thankless task of being the global hegemon. If Mr Trump now disengages from the world, who knows what will storm through the breach? + +The sense that old certainties are crumbling has rocked America’s allies. The fear that globalisation has fallen flat has whipsawed markets. Although post-Brexit Britons know what that feels like, the referendum in Britain will be eclipsed by consequences of this election. Mr Trump’s victory has demolished a consensus. The question now is what takes its place. + +Trump towers + +Start with the observation that America has voted not for a change of party so much as a change of regime. Mr Trump was carried to office on a tide of popular rage (see article). This is powered partly by the fact that ordinary Americans have not shared in their country’s prosperity. In real terms median male earnings are still lower than they were in the 1970s. In the past 50 years, barring the expansion of the 1990s, middle-ranking households have taken longer to claw back lost income with each recession. Social mobility is too low to hold out the promise of something better. The resulting loss of self-respect is not neutralised by a few quarters of rising wages. + +Anger has sown hatred in America. Feeling themselves victims of an unfair economic system, ordinary Americans blame the elites in Washington for being too spineless and too stupid to stand up to foreigners and big business; or, worse, they believe that the elites themselves are part of the conspiracy. They repudiate the media—including this newspaper—for being patronising, partisan and as out of touch and elitist as the politicians. Many working-class white voters feel threatened by economic and demographic decline. Some of them think racial minorities are bought off by the Democratic machine. Rural Americans detest the socially liberal values that urban compatriots foist upon them by supposedly manipulating the machinery in Washington (see article). Republicans have behaved as if working with Democrats is treachery. + +Mr Trump harnessed this popular anger brilliantly. Those who could not bring themselves to vote for him may wonder how half of their compatriots were willing to overlook his treatment of women, his pandering to xenophobes and his rank disregard for the facts. There is no reason to conclude that all Trump voters approve of his behaviour. For some of them, his flaws are insignificant next to the One Big Truth: that America needs fixing. For others the willingness to break taboos was proof that he is an outsider. As commentators have put it, his voters took Mr Trump seriously but not literally, even as his critics took him literally but not seriously. The hapless Hillary Clinton might have won the popular vote, but she stood for everything angry voters despise. + +The hope is that this election will prove cathartic. Perhaps, in office, Mr Trump will be pragmatic and magnanimous—as he was in his acceptance speech. Perhaps he will be King Donald, a figurehead and tweeter-in-chief who presides over an executive vice-president and a cabinet of competent, reasonable people. When he decides against building a wall against Mexico after all or concludes that a trade war with China is not a wise idea, his voters may not mind too much—because they only expected him to make them feel proud and to put conservative justices in the Supreme Court. Indeed, you can just about imagine a future in which extra infrastructure spending, combined with deregulation, tax cuts, a stronger dollar and the repatriation of corporate profits, boosts the American economy for long enough to pacify the anger. This more emollient Trump might even model himself on Ronald Reagan, a conservative hero who was mocked and underestimated, too. + +Nothing would make us happier than to see Mr Trump succeed in this way. But whereas Reagan was an optimist, Mr Trump rails against the loss of an imagined past. We are deeply sceptical that he will make a good president—because of his policies, his temperament and the demands of political office. + +Gravity wins in the end + +Take his policies first. After the sugar rush, populist policies eventually collapse under their own contradictions. Mr Trump has pledged to scrap the hated Obamacare. But that threatens to deprive over 20m hard-up Americans of health insurance. His tax cuts would chiefly benefit the rich and they would be financed by deficits that would increase debt-to-GDP by 25 percentage points by 2026. Even if he does not actually deport illegal immigrants, he will foment the divisive politics of race. Mr Trump has demanded trade concessions from China, Mexico and Canada on threat of tariffs and the scrapping of the North American Free Trade Agreement. His protectionism would further impoverish poor Americans, who gain more as consumers from cheap imports than they would as producers from suppressed competition. If he caused a trade war, the fragile global economy could tip into a recession. With interest rates near zero, policymakers would struggle to respond. + +Abroad Mr Trump says he hates the deal freezing Iran’s nuclear programme. If it fails, he would have to choose between attacking Iran’s nuclear sites and seeing nuclear proliferation in the Middle East (see article). He wants to reverse the Paris agreement on climate change; apart from harming the planet, that would undermine America as a negotiating partner. Above all, he would erode America’s alliances—its greatest strength. Mr Trump has demanded that other countries pay more towards their security or he will walk away. His bargaining would weaken NATO, leaving front-line eastern European states vulnerable to Russia. It would encourage Chinese expansion in the South China Sea. Japan and South Korea may be tempted to arm themselves with nuclear weapons. + +The second reason to be wary is temperament. During the campaign Mr Trump was narcissistic, thin-skinned and ill-disciplined. Yet the job of the most powerful man in the world constantly entails daily humiliations at home and abroad. When congressmen mock him, insult him and twist his words, his effectiveness will depend on his willingness to turn the other cheek and work for a deal. When a judge hears a case for fraud against Trump University in the coming weeks, or rules against his administration’s policies when he is in office, he must stand back (self-restraint that proved beyond him when he was a candidate). When journalists ridiculed him in the campaign he threatened to open up libel laws. In office he must ignore them or try to talk them round. When sovereign governments snub him he must calculate his response according to America’s interests, not his own wounded pride. If Mr Trump fails to master his resentments, his presidency will soon become bogged down in a morass of petty conflicts. + +The third reason to be wary is the demands of office. No problem comes to the president unless it is fiendishly complicated. Yet Mr Trump has shown no evidence that he has the mastery of detail or sustained concentration that the Oval Office demands. He could delegate (as Reagan famously did), but his campaign team depended to an unusual degree on his family and on political misfits. He has thrived on the idea that his experience in business will make him a master negotiator in politics. Yet if a deal falls apart there is always another skyscraper to buy or another golf course to build; by contrast, a failure to agree with Vladimir Putin about Russia’s actions leaves nobody to turn to. Nowhere will judgment and experience be more exposed than over the control of America’s nuclear arsenal—which, in a crisis, falls to him and him alone. + +The pendulum swings out + +The genius of America’s constitution is to limit the harm one president can do. We hope Mr Trump proves our doubts groundless or that, if he fails, a better president will be along in four years. The danger with popular anger, though, is that disillusion with Mr Trump will only add to the discontent that put him there in the first place. If so, his failure would pave the way for someone even more bent on breaking the system. + +The election of Mr Trump is a rebuff to all liberals, including this newspaper. The open markets and classically liberal democracy that we defend, and which had seemed to be affirmed in 1989, have been rejected by the electorate first in Britain and now in America. France, Italy and other European countries may well follow. It is clear that popular support for the Western order depended more on rapid growth and the galvanising effect of the Soviet threat than on intellectual conviction. Recently Western democracies have done too little to spread the benefits of prosperity. Politicians and pundits took the acquiescence of the disillusioned for granted. As Mr Trump prepares to enter the White House, the long, hard job of winning the argument for liberal internationalism begins anew. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21709951-his-victory-threatens-old-certainties-about-america-and-its-role-world-what-will-take/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Negotiating Brexit + +The way forward + +Voting was just the start of a long process. To determine what Brexit means is a job for Parliament + +Nov 12th 2016 | From the print edition + + + +THE rallying cry of the campaign for Britain to leave the European Union was that it was time for the country’s own national institutions to seize power from the unaccountable courts and parliaments across the Channel. So there is some irony in the fact that, on November 3rd, Brexiteers spluttered with indignation when three British judges, sitting in the High Court in London, ruled that under English law the business of triggering Brexit should fall to Britain’s sovereign Parliament, rather than the government alone. + +The haziness of Britain’s unwritten constitution contributes to the confusion around the ruling (see article). In fact, the High Court’s judgment may delay Brexit by a few weeks, but it does not imperil it. If the government loses its appeal in the Supreme Court next month it will have to seek Parliament’s approval before triggering Article 50 of the EU treaty, the legal route to Brexit. Theoretically, MPs could vote it down, but they won’t: although most would prefer to remain, they will not ignore the referendum held in June, which resulted in a clear vote to leave. + +Nor should they. But the case provides an opportunity for Parliament to assert its role in the Brexit negotiations, from which it has so far been marginalised by the government (see article). Untangling Britain from Europe will be a multi-year process involving hundreds of difficult choices, not a quick separation whose instructions were provided by the referendum’s single-word verdict. The details of the proposed divorce should be thrashed out in public by Britons’ elected representatives, not determined by their unelected prime minister alone and in secret. + +The people have spoken. But what did they mean? + +The referendum was supposed to resolve Britain’s relationship with Europe once and for all. Yet in laying the In/Out debate to rest, it sparked many more questions. Should Britain seek to stay in the EU’s single market, or its customs union? How much should it pay into the EU budget for the privilege? Should it maintain the free movement of people? What sort of border should it have with Ireland? Countless more puzzles await, on everything from patent protection to space exploration. + +The referendum result is no help on any of these matters. Nor are the promises made by Brexiteers during the campaign. Some, such as the notion that Britain could maintain its trading privileges with Europe and simultaneously end the free movement of migrants, are mutually exclusive. Others, like the claim that Britain could take back hundreds of millions of pounds a week from the EU to spend on the National Health Service, were simply untrue. + +Theresa May, who voted to remain and then became prime minister when her Brexiteer rivals tripped over their own shoelaces, is presumably formulating answers to these questions. Yet Britons are in the dark as to where she intends to lead them. She has published no plan, nor even a statement of objectives. Her comments suggest that she has chosen to prioritise the control of immigration, even if it means giving up membership of the single market (she says only that Britain should go on “trading in and operating within” it). This sort of “hard Brexit” is favoured by the keenest Brexiteers. But it is unclear that the public agree. One recent poll found that most would rather have single-market membership than controls on immigration. + +Time to take back control + +Trying to read the minds of voters by studying polls or tabloid headlines is the wrong approach. Instead, the path to Brexit should be a matter for transparent public debate. Britain has a body designed for just that purpose. Yet the government has resisted giving Parliament any say in, or even any real oversight of, its strategy. One reason is paranoia about a counter-revolution. Brexiteers see establishment plots everywhere: from the Bank of England, whose governor they have done their best to hound out, to the High Court, whose judges were labelled “enemies of the people” by one hysterical newspaper. Britain must urgently get over the idea that even to discuss the possible versions of Brexit is to challenge the result of the referendum. The vote in June provided no blueprint; all options must be considered. + +The other reason the government gives for its secrecy is that it doesn’t want to show its hand in the negotiations: if Britain is to outwit its foes in Brussels, it must keep its strategy under wraps. Parliamentary debate would supposedly give the game away. Yet this misunderstands the task ahead. Negotiating Brexit is not like selling a second-hand car with a dodgy secret under the bonnet. The breaking up of a 40-year legal, political and economic union, and the trade talks that will follow, should be done in the open. In America Congress demands a detailed outline of the president’s plans before granting him permission to negotiate trade deals that it promises not to amend. In the EU Brussels is notoriously leaky. Besides, negotiations there do not rely on secret fall-back positions, but a gradual fumbling toward compromise. + +Britain did not vote to take back control from Europe only for decisions to be made by a prime minister pretending somehow to channel the will of the people by intuition alone. Parliament is the place for Brexit’s knotty details to be untangled. Those who would deny Britons that right are the real enemies of the people. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21709952-voting-was-just-start-long-process-determine-what-brexit-means-job/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +China’s new Tibet + +Hong Kong faces new political turmoil + +Silencing separatists is not the answer + +Nov 12th 2016 | From the print edition + + + +HONG KONG’S Legislative Council, or Legco, has descended into chaos over how members should take their oaths of office after elections in September. Pro-establishment lawmakers dominate the 70-member chamber, thanks to a voting system skewed towards those who support the government and the Communist Party in Beijing. Despite that, voters elected half a dozen candidates who want Hong Kong to be more independent—some even favour outright separation from China. At their oath-taking two members of a new party, Youngspiration, pledged allegiance to “the Hong Kong nation”, used the imperial Japanese pronunciation of “China”, and displayed a banner declaring that “Hong Kong is not China”. The theatrics by Sixtus Leung and Yau Wai-ching at times seemed puerile. On November 7th the central government made clear that it was in no mood for farce. Its rubber-stamp parliament, the National People’s Congress (NPC), issued a ruling aimed at barring Mr Leung and Ms Yau from Legco (see article). Few doubt that the NPC will get its way. Other independence-leaning lawmakers may also be ejected. + +The intervention has angered many in Hong Kong. Though the NPC oversees the territory’s constitution, its rulings were always intended as a last resort in a place that was promised “a high degree of autonomy” on its reversion from British rule to China in 1997. In this instance, Hong Kong’s own judiciary had just begun hearing a case brought by the territory’s government aimed at disqualifying the two members. Never before have Hong Kong’s courts been pre-empted like this. The ruling undermines the judicial independence that makes the territory so successful as a global financial hub. + +Worse, it betrays the NPC’s refusal to acknowledge how the Communist Party’s own miscalculations have created today’s dissent. In 2014 the NPC declared that Hong Kong would not get the full democracy that many thought they had been promised: only candidates approved by the Communist Party’s backers in Hong Kong could become chief executive. Public anger erupted into weeks of protests that spawned a “localist” movement. Its members called for self-determination for Hong Kong. The party’s hard line fuelled support for them, especially after a Hong Kong bookseller dealing in gossipy tales about China’s leaders appeared to have been kidnapped by the party’s goons and taken to the mainland. Four of his colleagues were also snatched away, either while visiting the mainland or, in one case, from Thailand. + +Hong Kong is still far freer and more open than anywhere on the mainland—home to a lively press, a mostly clean and efficient civil service and a political culture still largely unrestrained by fear. But the Basic Law only promises that Hong Kong will keep its capitalist way of life until 2047. Many people worry that China will tighten its grip long before the reprieve runs out. Every sign that it is doing so plays into the localists’ hands. Hours before the NPC’s ruling, thousands took to the streets in anticipation of what it would say; some shouted “Hong Kong independence” and scuffled with riot police. + +Scare tactics + +The best way to ease the desperation that feeds the separatists’ cause would be to give Hong Kong’s citizens what they want: full democracy. Alas, the Communist Party is as unlikely to agree to that in Hong Kong as it is in the rest of China (local elections under way on the mainland are of a kind that North Korea would admire—see article). The party is spooked by the thought of localists gaining power. + +Once, Hong Kong was viewed by China’s rulers as their star exhibit for wooing Taiwan back into the fold. Now they are beginning to view the territory as yet another restive province with ungrateful subjects—a better-washed version of Tibet or Xinjiang. China does not appear to be mulling the use of its troops to crush unrest—that would be calamitous for business and the much-vaunted policy of “one country, two systems”. But it is baring its teeth. It is not only Hong Kongers who should be concerned. So should all those who look to Hong Kong’s freedom and prosperity as a future path for China itself. + +This article appeared in the Print Edition with the headline: China’s new Tibet + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21709953-silencing-separatists-not-answer-hong-kong-faces-new-political-turmoil/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Egypt’s reforms + +Two cheers for the general + +Belatedly and under pressure, Abdel-Fattah al-Sisi has done some hard, necessary things + +Nov 12th 2016 | From the print edition + +WHEN you have no other options left, you may as well bow to the inevitable. That is what Egypt’s president did last week. With a budget deficit running at over 12% of GDP and a dollar shortage driving the black-market value of the Egyptian pound to barely half its official price, Abdel-Fattah al-Sisi had no choice. Back in August the IMF had offered the former general a $12bn lifeline, but it came with tough conditions attached. At long last he has fulfilled them, and the IMF money will soon start to flow. But this must be the beginning, not the end, of his reforms. + +So far Mr Sisi has attempted three difficult but necessary things, as demanded by the IMF. On November 3rd he allowed the Egyptian pound to float. It is now trading at a market rate of 18 or so to the dollar; previously it had been propped up at a crazily overvalued rate of about 8.8. However, it is still not clear whether this float is genuine. The pound could easily come under renewed pressure, and there is no guarantee that the government will not suspend the float and see the black market return. External credit-card transactions are still restricted, so the market is not free even now. + +Similarly, the other two main IMF conditions have been fulfilled only up to a point. In August parliament passed a long-promised law introducing a value-added tax. It is subject to many exemptions; but it will still bring in badly needed revenue, and the rate is set to rise next year. The work of reducing government subsidies was also advanced last week, with increases of up to 50% in the local-currency price of petrol, after earlier rises in the price of electricity. But both are still well below their true market prices. And, lamentably, food subsidies have not been cut at all—despite their cost, complexity and vulnerability to fraud. Rather than subsidising the price of bread, the government would help more people if it simply handed out cash to poor Egyptians. + +Still, give the general his due: he has done enough of what the IMF asked to get his money, and he is hardly the first leader to resist doing painful things until he had no alternative. What is crucial is what happens next. First, it is essential that there is no backsliding on the reforms. The economy may start to rebound quickly. Since the currency has fallen by half, Egypt is now much more attractive to foreign investors and even to tourists, so long as they are prepared to forget about last year’s Islamic State bomb attack on a plane flying out of Sharm el-Sheikh (not to mention the torture and murder of an Italian researcher). If the pressure on Mr Sisi’s budget eases, he may well be tempted to reverse course on the subsidies. + +Second, the government must not imagine that its work is now done. Egypt remains a deeply frustrating place to run a company, ranking a woeful 122nd in the World Bank’s ease-of-doing-business index. The seizure of thousands of tonnes of “overstocked” sugar from PepsiCo and a number of local manufacturers last month will hardly have improved the country’s reputation. The army still interferes in the economy, a habit that has only worsened since Mr Sisi installed himself in a coup in 2013. A long-established tradition of crony capitalism, with large incumbent firms favoured in myriad ways, from licences to access to capital, makes it hard for startups to breathe. A wholesale onslaught on red tape should be Mr Sisi’s next big target. And too much public money is squandered on grand projects, such as widening the Suez Canal, which have failed to bring much benefit. The money would be better spent fixing decrepit infrastructure and improving public services. + +Sisi the day + +Most important, though, is how Mr Sisi handles the inevitable reaction to his reforms from ordinary Egyptians, who are bound to feel the pinch (see article). Inflation is already painfully high, at 14% or so, and costlier imported fuel and food will lift prices higher this year. It was precisely the fear that discontent over rising prices would fuel instability (in a region that has seen mayhem) that held Mr Sisi back for so long. Protests are likely. He must not meet them by over-reacting with teargas, baton-blows and mass arrests. Scaling back inefficient subsidies and using the money to make direct cash payments to the poor would be a better approach. The protesters, for their part, should make their points peacefully. + +It is galling when an undemocratic government asks for sacrifices. But investors and tourists will not return to a country that looks as though it is once again on the brink of chaos. If Egypt stays the course, the short-term pain of reform will eventually be followed by the long-term benefits of growth. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21709955-belatedly-and-under-pressure-abdel-fattah-al-sisi-has-done-some-hard-necessary-things-two/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Letters + + + +On central banks, Poland, Denmark, companies, Frida Kahlo, democracy: Letters to the editor [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +On central banks, Poland, farming, Denmark, companies, Frida Kahlo, democracy + +Letters to the editor + +Nov 12th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + + + +Handling central banks + +The issue of central-bank independence is a complex and difficult one (“Hands off”, October 29th). Monetary policy has significant social and political effects and as such should be subject to some form of political accountability. The artificial institutional separation between fiscal and monetary policy is unhealthy. In Britain it allowed George Osborne to pursue a policy of fiscal austerity through the Treasury while leaving the Bank of England to do all the heavy lifting in monetary policy. The same has happened in the euro zone. + +The vast majority of central banks across the world do not have operational independence. Neither did most of the European central banks until the launch of the euro. In the Netherlands, for example, the final decision on monetary policy rested with the minister of finance. + +It is essential that the question of what “central-bank independence” means in practice is the subject of public debate. In the current difficult political atmosphere, how does one balance the judgments made by technocrats with the political accountability that is essential if we are not to continue eroding people’s confidence in democracies? As John Kay stated in his foreword to our recent report, “No democracy can accept that policy decisions which have large effects on the distribution of income and wealth, on financial stability and economic growth, are off limits.” + +JOE ZAMMIT-LUCIA + +Trustee + +Radix + +London + +I agree with your defence of the Bank of England’s independence, particularly when it is levelled against those who brought us Brexit. The likes of Michael Gove wish to return the bank’s responsibilities to government so that economics can be politicised further to win votes. The complex topic of economic policy should be removed from the political minefield as far as possible or, at least, to hold politicians to account when they make brazen remarks about the public finances without the slightest acknowledgment that economics is not a right-wrong subject. You can never have enough experts. + +GABRIEL OSBORNE + +Bristol + + + + + +Poland’s film stars + +Andrzej Wajda was truly a great film-making voice of Poland in the 20th century (Obituary, October 29th), but Krzysztof Kieslowski was his equal. Wajda focused on Poland’s troubled history under the shadow of the Soviet Union, but it was Kieslowski who chronicled, subtly and sympathetically, the moral evasions that the communist system provoked. Both were remarkable humanists. + +There is however no question that “Interrogation”, made in 1982 and officially released in 1989, was written (with Janusz Dymek) and directed by Ryszard Bugajski. Wajda’s role was to co-produce it, which was a crucial one but not the same as making the film, as your obituarist writes. + +TIM CAWKWELL + +Norwich, Norfolk + + + + + +Fertilising by tree + +* You are right to point out that poor access to fertilisers has hobbled agriculture in Africa, is worsening hunger and feeding the vicious cycle of climate change (“Fertile Discussion”, October 15th). But you focus entirely on fertilisers while ignoring a natural and cost-effective approach to restoring degraded soils and boosting crop yields—regenerating trees across agricultural landscapes with the help of local farmers. By adding vital nutrients to exhausted soil, trees can double crop yields when grown alongside maize and millet. Trees in farming systems also work well in combination with chemical fertilisers, as they replenish soil organic matter, which makes fertilisers more efficient. This approach is also cheap—trees can be regenerated from existing root systems or from tree seeds that germinate in livestock manure. Farmers in the Maradi and Zinder regions of Niger have already discovered this, restoring trees across five million hectares and turning a degraded landscape into a breadbasket. + + + +ROBERT WINTERBOTTOM + +Senior Fellow + +World Resources Institute + +Washington, DC + + + + + +Despondent in Denmark + +You are right to question the increasingly irritating portrayal of Danes as a bunch of happy clappies living close to Nirvana (“Cocoa by candlelight”, October 1st). Denmark is one of the world’s largest consumers of lykkepiller (happiness pills, or antidepressants), for instance. Virtually all organisations are grappling with stress. And its young people are increasingly baffled and bewildered by the complexities of the modern world. My wife is a professionally qualified family therapist, who specialises in teenagers. She is not short of clients. + +Denmark’s problems are those of a rich, peaceful, well-functioning society. But they are problems, nevertheless. + +WALTER BLOTSCHER + +Haarby, Denmark + + + + + +Taking companies to court + +Because companies encourage risky behaviour, Schumpeter says, it is right that prosecutors go after the company itself for wrongdoing rather than “individual miscreants” (October 29th). The idea of prosecuting corporations has become an obsession, perhaps fuelled by the desire to generate funds for governments. However, crimes are committed by real people, not legal entities. If one of the principal objectives is to deter wrongdoing, then the prosecution of the corporation itself does nothing. What deters individuals is the personalisation of responsibility and the fear that blame will be attributed to them when things go wrong, coupled with the threat of enforcement action, potential prosecution and even jail time. + +The real question is how to persuade companies to report illegal activity voluntarily. If it is likely that the company itself will be prosecuted then there is little incentive to do so. The consequence is that things are swept under the carpet and authorities are left to make their own discoveries. Proper incentives to self-report, perhaps by way of some promise of a lesser penalty for the corporation itself, such as a civil settlement, will ensure the right flow of information to regulators, enabling them to act against those individuals who have perpetrated the crimes, rather than damaging shareholders and employees who are the very people that the system ought to protect. + +JONATHAN PICKWORTH + +Partner + +White & Case + +London + +Schumpeter lauded firms like Uber and Airbnb for disrupting “markets that are governed by outdated regulations”. But what is the point of having a system of regulations if people can simply decide arbitrarily that some are justified and some are obsolete? Who decides that a business illegally operating taxis or rental accommodations is an acceptable testing of the rules, while one that enables the distribution of copyrighted music or psychotropic drugs is not? Our economic system is built on the assumption that competitors abide by the same rules. + +KENNETH KUNIN + +Montreal + + + + + +Mexico’s number one + + + +During her life Frida Kahlo was indeed overshadowed by her husband Diego Rivera (“Evolutionary tales”, October 29th). However Frida, as she is generally known, has exacted posthumous revenge. According to a study from the Massachusetts Institute of Technology in 2014, Frida is the best-known Mexican worldwide. Rivera did not even make the top ten. + +PHILIP L. RUSSELL + +Austin, Texas + + + + + +A democratic choice + +In the October 29th issue Banyan referred to Xi Jinping as China’s “dictator”. On the very next page, he appears as China’s “president” (“China is struggling to keep control over its version of the past”). As our own president remarked a while ago, “words matter”. Please break the tie and let us know which title is more appropriate. Furthermore, please stop confusing this American, who is writing this letter as he is about to cast his vote for either a president or a dictator. + +JEFFREY MILLER + +North Woodmere, New York + +* Letters appear online only + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21709942-letters-editor/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Briefing + + + +America and the world: The piecemaker [Thu, 10 Nov 22:25] + +The world reacts: “Do nightmares come true?” [Thu, 10 Nov 22:25] + +Nuclear codes: A new finger on the button [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +America and the world + +The piecemaker + +For seven decades America has been the guarantor of global order. It may now become a force for instability + +Nov 12th 2016 | From the print edition + + + +WHEN Donald Trump started to assemble his national-security team, he asked his advisers: “Do you know what constant pour is?” At least one of the generals present confessed that he did not. Well, explained Mr Trump, it is the process whereby the concrete foundations of buildings cannot be allowed to set before being filled; cement mixers must be lined up for many blocks at the ready. The lesson was: the generals may know a lot of fancy jargon, but so does he. + +It was quintessential Trump: prickly yet boastful. The assertion that the world is complicated is but a con-trick to befuddle honest Americans who wonder why their country seems less feared by enemies and less respected by allies. In his telling, America’s problems are simple, self-inflicted and reversible. It is hard to think of a president-elect less versed in the workings of the world than Mr Trump; or of one more willing to upturn the global order shaped by America in the seven decades since the end of the second world war. + +Mr Trump has described his foreign policy in only the vaguest terms, preferring such bumper-sticker slogans as “America First” to detailed plans. To the extent that it can be divined, his programme involves threatening to slap tariffs on imports from China and Mexico; demanding that allies like Japan and the Europeans pay more for their defence; and being nicer to strongmen like Russia’s president, Vladimir Putin. A good president, like a real-estate mogul, must be “prepared to walk” away from a bad deal; and it helps if he is unpredictable. Richard Nixon may have resorted to the madman theory of diplomacy to frighten enemies during the cold war. But Mr Trump’s politics of deliberate uncertainty is terrifying America’s friends and partners: no trade treaty, international institution or alliance is sacrosanct. + +America’s allies, though mostly horrified, are scrambling to congratulate him in the hope of limiting the damage he might cause. Other demagogues who denounce elites and the liberal, multilateral, rules-based order are elated. Florian Philippot, an adviser to Marine Le Pen, leader of the xenophobic National Front (FN) in France, exulted on Twitter: “Their world is falling apart. Ours is being built.” + +The one area of foreign policy about which Mr Trump’s views are clear and consistent is trade. He has grumbled about it since the 1980s, when he would appear on TV and claim that Japan was robbing America blind (by selling Americans reliable cars at reasonable prices). On the campaign trail, he has redoubled his anti-trade tirades. Whether addressing grey-haired ex-factory hands in Ohio or greeting reporters at his brass-plated skyscraper in Manhattan, he has denounced incompetent and corrupt elites for shipping jobs abroad. China is “killing us”, Mr Trump told The Economist last year. “The money that they took out of the United States is the greatest theft in the history of our country.” (In fact, the money in question was willingly paid for Chinese products.) + + + +Depending on the week, Mr Trump’s remedies have included a promise to declare China a currency manipulator, and threats to slap tariffs of 5%, 10% or even 45% on imports to close America’s trade deficit (see chart 1). He has vowed to tweak the tax code and browbeat the bosses of such giant firms as Ford, Apple and Boeing until they make more of their products at home. + +Miffed with NAFTA + +Speaking before the election, Mr Trump’s senior trade adviser, Dan DiMicco, the former boss of Nucor, a big steelmaker, set out several actions the president will take in his first 100 days. These include starting to renegotiate trade pacts such as the NAFTA accord with Mexico and Canada (and threatening to pull out if they won’t play ball). Every future trade agreement, among them the Trans-Pacific Partnership (TPP) between America and 11 other Asia-Pacific countries, and the Transatlantic Trade and Investment Partnership (TTIP) with the European Union (EU), will be put on hold. “Whether they go forward depends on whether we can return to balanced trade, and whether they add to GDP growth,” Mr DiMicco said. “The era of trade deficits is over. It will be: let’s talk, but otherwise we put tariffs on.” + +Mr DiMicco cited the decision by Ronald Reagan (a favourite of Trump supporters) to impose a 45% tariff on Japanese motorcycles in the 1980s: “That brought people to the negotiating table.” Yet it seems implausible that trading partners will stand idly by should America raise tariffs. A trade war would come as protectionism is already on the rise. The World Trade Organisation predicts that global trade this year will grow less quickly than the world’s GDP for the first time in 15 years. + +The Peterson Institute for International Economics (PIIE), a think-tank, has estimated the impact of Mr Trump’s trade policies under three scenarios, ranging from “aborted trade war”, in which Mr Trump is forced to lower tariffs within a year of imposing them, to a “full trade war” with Mexico and China. In the former case, global supply chains are disrupted and 1.3m private-sector American jobs are lost; in the latter, the damage includes the loss of 4.8m American jobs and would spill over into the services sector, too. Adam Posen of the PIIE says Mr Trump’s trade policies would be “horribly destructive”. + +Neighbour makes bad fences + +They may prove even more devastating abroad, especially in Mexico, where the peso slumped against the dollar. Enrique Peña Nieto, the Mexican leader, was chastised for inviting Mr Trump for talks in August. Mr Trump’s habit of insulting Mexican immigrants and his rallying cry—that he would build a wall along America’s southern border and make Mexico pay for it—have earned him much hostility in Latin America. But Mr Peña may now feel vindicated, as he has to deal with the president of his giant northern neighbour. + +Mr Trump’s victory comes, cruelly, just as left-wing populism in Latin America is in retreat, opening opportunities for closer trade between the two halves of the Americas. Before the election, Latin Americans’ opinion of the United States was warmer than at any point this century. Mr Trump’s victory risks rekindling anti-yanqui sentiments, especially if he repudiates Barack Obama’s policy of normalising relations with Cuba. + +Across the northern border, meanwhile, Canada frets about the economic harm that will be caused should NAFTA collapse. The United States buys about three-quarters of Canada’s exports. Some Canadians fondly imagine that a wave of young, well-educated Americans will move north, as they did during the 1970s. However, this is unlikely. A Trump presidency will hardly scare people in the way that the prospect of being drafted to fight in Vietnam did. (As Mr Trump doubtless recalls, though he was lucky enough to receive five deferments during the war.) + +Mr Trump has repeatedly said that America’s willingness to defend its traditional allies should depend on whether they pay their fair share for their defence—which in Mr Trump’s view includes paying America in cash to cover the costs of protecting them. America has a justified complaint: it spends far more on defence than its European and Japanese allies put together (see chart 2). But Mr Trump risks upending the basis of post-war global security—particularly in Asia, where China is menacing its neighbours; and in Europe, where Russia has annexed Crimea and stirred a proxy war in eastern Ukraine. + + + +In Asia American strategy has for decades been built on three pillars: open trade and the prosperity that flows from it; strong formal and informal alliances, from Japan to Australia to Singapore; and the promotion of democratic values. It is not clear that Mr Trump cares for any of them. + +Mr Obama’s “pivot to Asia”—a promise to pay more attention to the world’s largest and most buoyant region—is under threat. Mr Trump will unnerve Japan, America’s staunchest friend in Asia. China may risk greater assertiveness—particularly in the South China Sea, where it has built up several reefs and atolls into military bases. + +Mr Trump has suggested that Japan and South Korea should develop their own nuclear weapons rather than shelter under America’s umbrella—a recipe for regional instability and a nuclear arms race. Neither country is close to considering the possibility, and Mr Trump has played down the remarks. But fear will grow of American disengagement from Asia. + +The TPP trade deal, the economic pillar of Mr Obama’s pivot to Asia, was sold as an attempt to set the world’s economic rules before they are dictated by China. But Mr Trump sees it as allowing China to come in through the back door. TPP’s proponents held out a faint hope that it could pass in the lame-duck Congress. That is now impossible. Mr Trump also says he will pull America out of the Paris climate treaty and abrogate Mr Obama’s climate agreement with China—one of the few bright spots in Sino-American relations. + +Though China would be hurt by a trade war with America, Chinese hawks spot a geopolitical opening. They see Mr Trump’s election as confirmation that China is a rising power and America a declining one. “We may as well let the guy go up and see what chaos he can create for the US and the West,” wrote Global Times, a Chinese newspaper with links to the armed forces. + +The thin Baltic tripwire + +Mr Trump’s victory is sending shock waves through NATO, the world’s most successful military alliance. In his book “The America We Deserve” in 2000 he said that eastern Europeans should be left alone to fight out their ancient feuds. The most vulnerable point for NATO will be the Baltic states—lying on a small, flat, thinly populated strip of land with few natural frontiers and nowhere to retreat to. Providing a credible defence for Estonia, Latvia and Lithuania has been NATO’s biggest headache in recent years. The alliance has started to rotate tripwire forces through them and has cobbled together rapid-reaction forces. But NATO’s ability to deter Russia rests chiefly on Russia believing that America will act decisively and speedily in a crisis. + +Fearing that Mr Trump would not, the Baltic states will now start preparing for the worst—they have boosted their territorial defences and conduct regular drills in guerrilla warfare; and they have developed defence ties with neighbouring countries such as non-NATO Sweden and Finland. They worry that Russia might seek to exploit the lame-duck period in Washington to create new facts on the ground. + +Whether or not Russia takes such a gamble, the Kremlin is already crying victory. Two days before Americans voted, Dmitry Kiselev, Russia’s propagandist-in-chief, declared that the campaign had been the dirtiest in America’s history: “It was so horribly noxious that it only engenders disgust towards what is still inexplicably called a ‘democracy’ in America.” Mr Putin hopes that if Western democracy seems less attractive, there is less risk of more “colour revolutions” in Russia’s backyard. + +That Mr Trump openly admires Mr Putin is a welcome bonus for the Kremlin. Mr Putin expressed the hope that Russian-American relations would improve. His dream is to see Western sanctions lifted and for Mr Trump to agree to a Yalta-style deal that would recognise a Russian sphere of influence in its “near abroad”. + +There are jitters in the Middle East, too. Mr Trump has mocked the folly of toppling dictators in Iraq or Libya (though he once backed both interventions). He has also blamed American leaders for not seizing oilfields in Iraq. “We go in, we spent $3trn. We lose thousands and thousands of lives, and then look, what happens is we get nothing. You know it used to be to the victor belong the spoils,” Mr Trump said in September. + +Mr Trump called Mr Obama the “founder” of the Islamic State (IS), because his withdrawal of troops from Iraq created a vacuum in which the terrorist group thrived. Without offering much detail, Mr Trump has said he would “bomb the shit out of” IS. He has also appeared to accept the notion, pushed by Russia, that Syria’s dictator, Bashar al-Assad, is a bulwark against Sunni extremism rather than a despot who provokes it. That suggests that Mr Trump will probably let the Pentagon finish the job of driving IS out of the Iraqi city of Mosul if it has not already fallen by the time he is inaugurated on January 20th. But he has shown little appetite for sustained engagement in the Middle East. + +Critics, and there are many among veterans of recent Republican administrations, note that many of Mr Trump’s ideas would break American or international law. They shudder when he calls for the return of torture for terrorist suspects, and for the killing of terrorists’ families as a deterrent (which would be a war crime). + +Gulf Arab leaders have been appalled by Mr Obama’s policy—his support for revolts against Arab dictators, his reluctance to be drawn into the war in Syria and his decision to sign an agreement with Iran to limit its nuclear programme. But they are even more worried about Mr Trump’s unpredictability and possible isolationism. “Russia, Iran, Iraq’s Shia militias, Syria and Hizbullah all benefit from America’s vacuum in the region and support Mr Trump,” says Oraib Rantawi, a Jordanian analyst. To that list add Egypt’s strongman, Abdel-Fattah al-Sisi, to whom Mr Trump has promised “loyal friendship”. + +Like Mr Obama, Mr Trump refers to the Gulf’s oil-rich Sunni monarchies with disdain. He has also caused outrage by showing contempt for Muslim migrants and demanding that “radical Islam” be named as the true cause of terrorism. + +“Trump will cut off America’s aid to the opposition,” says a forlorn Syrian rebel spokesman in Istanbul. “Aleppo will fall to the regime and opposition units either dissolve or shift to the extremists.” Iraq’s marginalised Sunnis are similarly downbeat. Many had hoped that American forces would stay the course after the expected recapture of Mosul to oversee their rehabilitation in Iraqi politics. + +When talking about the Israeli-Palestinian conflict, Mr Trump pointedly does not mention the need to establish a Palestinian state. The Israeli prime minister, Binyamin Netanyahu, will probably be happy to have an American president who never presses him to trade land for peace or stop Jewish settlement-building in the West Bank. But those who know Mr Netanyahu say he is sceptical. “Bibi is risk-averse and hates surprises,” explains an ally in his Likud party. “Trump is unexpected and volatile and Bibi is like many in the Republican establishment who see him as a wild card and don’t trust him.” + +America’s dealings with Iran seem likely to shift in ways that, paradoxically, may please the hardliners there. During the campaign, the state broadcaster devoted much airtime to Mr Trump’s mudslinging. The Supreme Leader, Ali Khamenei, joined in, praising the “straight-talking” Mr Trump. Confidants cheered Mr Trump’s anti-Saudi rhetoric and his good relations with Mr Putin. And so what if he loathes the nuclear agreement, or assents to Congress killing it off? Iranian conservatives have always viewed that deal with grave suspicion, as part of an American plot to gain control of their country. + +Following close on Britain’s referendum to leave the European Union, Mr Trump’s election will boost populists everywhere, especially in Europe, by breaking the myth that anti-establishment groups are unelectable. The next test will be Italy’s constitutional referendum in December. A defeat for the prime minister, Matteo Renzi, which seems likely, could lead to the undoing of his government and the rise to power of the populist Five Star Movement, which wants a referendum on the euro. + +Trumpeting the Donald + +Then there is France. Could Marine Le Pen, leader of the ultranationalist FN, win the presidential election next spring? Before Mr Trump’s victory, the question seemed absurd. Polls suggest that she will win one of two second-round places. This in itself would be a victory of sorts, repeating the achievement of her father, Jean-Marie Le Pen, in 2002. But no polls have indicated that she could beat any of the centre-right candidates likely to face her. Now, her victory is no longer unthinkable. There was no disguising the delight at the FN headquarters in Paris. A jubilant Ms Le Pen, congratulated the American president-elect and praised the “free” American people. Even Mr Le Pen, who has fallen out with his daughter, tweeted: “Today the United States, tomorrow France!” + +The parallels between Ms Le Pen and Mr Trump are striking. Both trade on simplified truths and have built platforms on rejection and nostalgia. Both have cast themselves as outsiders who stand up for people scorned by the elite. Mr Trump and Ms Le Pen are both protectionist, nationalist and fans of Mr Putin. Mr Trump wants to scrap trade deals and is impatient with encumbering alliances. Ms Le Pen wants a referendum on “Frexit”; if it passed it would spell the end of the EU. + +One difference is rhetorical excess. Ms Le Pen is in some ways a Trump lite. She may share many of his reflexes, but her language is more cautious. She has never, for instance, called for all Muslims to be banned from entering France, but rather for an end to an “uncontrolled wave” of immigration. She does not promise to build walls, but to control borders. The problem, she says, is not Islam but what she calls the “Islamification” of France. In France, where Ms Le Pen is trying to transform a one-time pariah movement with neo-Nazi links into a credible party of government, such nuances remain an asset. + +Viktor Orban, the prime minister of Hungary and prototype European populist, who talks of creating an “illiberal” democracy, was one of the few European leaders to endorse Mr Trump’s campaign. The Polish government, which is in many ways as populist and nationalist as Mr Trump, has been more cautious. It may dislike Muslim migrants, but it fears Russia more, and would love to see more American troops deployed on its territory. + +With America in isolationist mood, Britain on the way out and France paralysed, it falls increasingly to Germany to preserve the European order. Many Germans are horrified by Mr Trump’s disdain for due process. “What sets Trump apart from any major US politician—let alone presidential candidate—in living memory is his overt, chilling contempt for the fundamental principles of the constitution. That is familiar to a German in the worst possible way,” says Constanze Stelzenmüller of the Brookings Institution, a think-tank. Yet the chancellor, Angela Merkel, weakened by the past year’s refugee crisis, will be largely reduced to “lots of hand-wringing and rhetoric and virtually no action”, says John Kornblum, a former American ambassador to Germany. + +If Mr Trump’s triumph augurs yet more populist victories elsewhere, the EU itself may find it hard to hold together. A remote, complex and technocratic body, the EU is the perfect whipping boy for demagogues. As Gérard Araud, the French ambassador to Washington, put it in a tweet (now deleted): “After Brexit and this election, everything is now possible. A world is collapsing before our eyes.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21709998-seven-decades-america-has-been-guarantor-global-order-it-may-now-become-force/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The world reacts + +“Do nightmares come true?” + +Nov 12th 2016 | From the print edition + + + +“Russia is ready and wants to restore fully fledged relations with the US.” Vladimir Putin, Russia’s president + + + +If he [Trump] is in office for eight years, he will successfully be the first US president to lead America’s economy from number one in the world to number two. Yes he can!” Zhang Zhaozhong, Chinese military commentator, Weibo + +“My wife’s latest comment: one Donald is more than enough!” Donald Tusk, president of the European Council, on November 5th, Twitter + +“We extend our sincere congratulations…We would take this opportunity to invite you to visit Europe for an EU-US Summit at your earliest convenience.” Joint letter from Donald Tusk and Jean-Claude Juncker, President of the European Commission, on November 9th + +“What great news. Democracy is still alive.” Viktor Orban, prime minister of Hungary, on Facebook + +“We have to assume that American foreign policy will be less predictable for us…Nothing will get easier, much will get harder.” Franz-Walter Steinmeier, foreign minister of Germany + +“As of this night Europe is more alone, and I don’t believe it is equipped for that.” Benedetto Della Vedova, Italy’s junior foreign minister + +“We once again thank Americans for keeping this warmonger [Hillary Clinton] from the reins of power.” Editorial in The Herald, Zimbabwe + +“Because of Melania, Sevnica is now more recognised in the world. And we hope that she will now bring her husband, the new president, to Slovenia and to Sevnica.” Srecko Ocvirk, mayor of Sevnica (population 5,000), birthplace of Melania Trump (née Knauss) + +“I consider the Trump hypothesis a nightmare. Do nightmares sometimes come true? They do, but I prefer not to think about it.” José Serra, Brazil’s foreign minister, in Correio Braziliense + +“Travel to the US while you are still allowed to.” Facebook ad by Royal Jordanian Airlines + +“Aberdeenshire business-owner wins presidential election.” The Buchan Observer, Peterhead, Aberdeenshire + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21709997-do-nightmares-come-true/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The button panic + +Donald Trump and the nuclear codes + +Mr Trump will soon control America’s nuclear codes + +Nov 12th 2016 | From the print edition + + + +IN A ritual out of sight of the cameras on Inauguration Day in January, America’s “nuclear briefcase” will change hands and President Donald Trump will receive a card, sometimes known as the “biscuit”. The card, which identifies him as commander-in-chief, has on it the nuclear codes that are used to authenticate an order to launch a nuclear attack. At that point, should he wish, Mr Trump can launch any or all of America’s 2,000 strategic nuclear missiles. + +There are no constitutional restraints on his power to do so. Even if all his advisers have counselled against it, as long it is clearly the president giving the command, the order must be carried out. There are no checks and balances in the system. Moreover, once the order is given there is likely to be only a matter of minutes in which it could be rescinded. Once the missiles are flying, they cannot be called back or disarmed. Mr Trump, from what he has said, does not take this responsibility lightly. Indeed, he has often stated that he believes nuclear weapons to represent the greatest threat to humanity and that he will not be trigger-happy, “like some people might think”. But in common with his predecessors, he does not rule out their use. + +With little more than ten minutes to take a decision that could kill hundreds of millions of people, even the calmest individual would be under intolerable stress if informed that America was under imminent attack. It is not Mr Trump’s fault that the system, in which the vulnerable land-based missile force is kept on hair-trigger alert, is widely held to be inherently dangerous. Yet no former president, including Barack Obama, has done anything to change it. + +Of greater concern would be how Mr Trump might behave in an escalating confrontation if Russia were to rattle its nuclear sabre even more loudly. It is possible that his apparent desire to be buddies with Vladimir Putin might help defuse a dangerous situation. He is, however, notoriously thin-skinned and unable to stop himself responding to any perceived slight with vicious (verbal) attacks of his own. He also revels in braggadocio and is known to be reluctant to take advice. Marco Rubio, a rival for the Republican nomination, questioned whether he had the temperament to be put in charge of the nuclear codes. So did Hillary Clinton. They were right to do so. But it is now Mr Trump, not them, who takes the biscuit. + +This article appeared in the Print Edition with the headline: A new finger on the button + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21709999-mr-trump-will-soon-control-americas-nuclear-codes-donald-trump-and-nuclear-codes/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +United States + + + +Election 2016: How it happened [Thu, 10 Nov 22:25] + +The Trump administration: What to expect [Thu, 10 Nov 22:25] + +Trump and the economy: Strap up [Thu, 10 Nov 22:25] + +Polling and prediction: Epic fail [Thu, 10 Nov 22:25] + +The Democrats: Destiny derailed [Thu, 10 Nov 22:25] + +Lexington: The people v the people [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Election 2016 + +How it happened + +Donald Trump won fewer votes than Mitt Romney in 2012. But Hillary Clinton did much worse than Barack Obama + +Nov 12th 2016 | WASHINGTON, DC | From the print edition + + + +DONALD TRUMP’S road to the White House, which he completed with his stunning victory over Hillary Clinton on November 8th, began on an escalator at Trump Tower in Manhattan 17 months ago. Descending at a stately pace to the foyer, where a crowd of bemused journalists awaited him, the reality-television star was lampooned as a false prophet on a conveyor belt. What followed struck many pundits as even more ridiculous. “Our country is in serious trouble,” he said. “We used to have victories, but we don’t have them. When was the last time anybody saw us beating, let’s say, China in a trade deal? They kill us. I beat China all the time.” + +It seemed like a bad joke. Mr Trump was a billionaire property developer who surveyed the world from the 26th floor of a Manhattan skyscraper he built: America hadn’t done him too badly. Moreover, his zero-sum view of diplomacy and protectionism were, at best, marginal positions in the party whose nomination he sought. Many also noted that Mr Trump, a political gadfly who is on his third party, had until recently espoused different views, including on immigration, which he announced as the cornerstone of his campaign. + +After Mitt Romney lost the 2012 presidential election, Mr Trump seemed to berate “the Republicans”, as he still calls his party colleagues, for failing to back immigration reform. But in Trump Tower he raged against Mexican immigrants whom he called “rapists.” It was hard to recall a presidential contender making such bigoted remarks since the civil-rights era. Many commentators gawped, fascinated, then dismissed his chances. + +But what the pundits decried—his contempt for conservative orthodoxy, his dystopian vision, bigotry, anti-intellectualism and egomania—now looks like a fully formed, stunningly successful campaign which, if it has not rewritten the rules of electioneering, got away with flouting most of them. Mr Trump raised less money than Mrs Clinton, built less campaign infrastructure, had few thought-out policies and was endorsed by almost no newspaper and none of his predecessors as Republican nominee, except Bob Dole. And instead of restraining his intemperance, as his advisers often told him to, he let it rip. + +Unqualified success + +He backed torture, a border ban on Muslims, murdering the families of suspected terrorists and using nuclear arms as a tactical weapon. He denigrated women, Muslims and blacks, performed a mocking impression of a disabled journalist, incited his crowds to beat up protesters, and was heard, on a videotape aired a month before the election, boasting of his ability to grab women by the genitals. There is an interesting dispute about what role the media, hungry for the conflict Mr Trump stirred, played in his rise. But Americans heard these things unfiltered—and even many of Mr Trump’s supporters disapproved of them. Exit polls suggest 61% of voters considered him unqualified to be president and only 34% said he had the right personality and temperament. Yet almost 60m Americans, including many of those doubters, voted to make him president. How did this happen? + +Chance and the complacency of others played a part. For most of the Republican primaries, Mr Trump profited from a crowded field. While his 17 opponents, including solid conservatives such as Governor John Kasich and Senator Marco Rubio, fragmented the vote, he built a steady lead among disaffected voters, especially blue-collar workers who shared his pessimism and hostility to immigrants and free trade. It was not until the 36th state up for grabs, his own New York, that Mr Trump won a majority; and that the increasingly horrified Republican leadership gave much thought to stopping him. Having bagged the nomination nonetheless, he enjoyed other advantages. After eight tough years, of a Democratic government blighted by slow wage growth and, for most of that time, political deadlock imposed by a Republican Congress, voters wanted change. Only 31% say America is on the “right track”. The gravity-defying popularity of Barack Obama—whose 52% approval rating makes him more popular than Ronald Reagan at the end of his second term—had seemed to soften that anti-incumbency kick. Yet Hillary Clinton, despite some dazzling last-ditch campaigning by Mr Obama and his even more popular wife, Michelle, could not reap the benefit of it. + +An establishment figure in a time of anti-establishment rage, the Democratic nominee was another gift to Mr Trump. Her strengths include deep understanding of the political system, acquired over three decades in or close to power, and a flair for policy; but most voters consider the system corrupt and, thundering for change, her vision of progress by inches inadequate. She was crippled by her weaknesses, including an inability to enthuse and a much-exaggerated reputation for deceitfulness, which an unending controversy over her e-mail arrangements as secretary of state exacerbated. Had Mrs Clinton roused Mr Obama’s coalition of non-whites, the young and well-educated she would have won. In Philadelphia, where she held a pre-election rally on November 7th, at which her husband Bill, Mr and Mrs Obama and Bruce Springsteen all performed, she won 28,000 fewer votes than Mr Obama in 2012. That was close to her margin of defeat in Pennsylvania, a state where she had led in 107 of the 125 most recent polls and which last went red in 1988. Following Mr Trump’s victories in Florida and North Carolina, this made his victory look probable. + +Clinton’s curse + +In almost every group, Mrs Clinton underperformed her predecessor. She won non-whites and young voters by 74 and 55 percentage points respectively, around ten points less than Mr Obama had. Her saviours were predicted to be the two groups most insulted by her rival, Hispanics and women. Yet she won only 65% of the first and 54% of the second, six points and a point less than Mr Obama managed. College-educated women, who backed her in recent polls by 2:1, ended up favouring her by just six percentage points. + +Great expectations + +A more appealing Democrat could have beaten Mr Trump. But it is not clear who that might have been; Bernie Sanders, Mrs Clinton’s much-loved socialist rival in the primaries, and Joe Biden, the vice-president, are not as formidable as bruised Democrats now imagine them to be. After eight years in power, their party looks denuded of top-level talent. This was especially evident in the Senate races, for which it put up too many has-beens, like Governor Ted Strickland in Ohio and Governor Evan Bayh in Indiana, and greenhorns such as Katie McGinty in Pennsylvania, all of whom lost. + +The stronger Republican slate had consistently outpolled Mr Trump, but he probably ended up helping it, especially in Wisconsin, which he turned red for the first time since 1984, helping Senator Ron Johnson to a surprise victory. Despite having 24 senators up for re-election, the Republicans lost only two seats, leaving them with a thin majority. More predictably, they also maintained their previously thumping majority in the House of Representatives. The Democrats needed a net gain of 30 seats to overturn it, and picked up eight. Under Mr Trump, who has promised to kick off his presidency by appointing a conservative to the Supreme Court and dismantling much of Mr Obama’s legacy, America will have a unified government for the first time since the beginning of Obama’s first term. + +Despite his advantages, he was also responsible for that, for there was a method in his approach. Mr Trump’s erstwhile pragmatic remarks on immigration suggest he was at least familiar with the prevailing view that, to regain power in an increasingly diverse society his party needed to expand its appeal beyond whites. Yet his chauvinism and miserabilism pointed, from the start, to the opposite conclusion: that by stirring up a racially infused white nationalist sentiment, which a combination of economic and cultural grievances had spawned, he could turn a losing coalition into a winning one. + +Most likely, this was intuitive, a quality Mr Trump praises in his decision-making. Though born rich, he seemed genuinely attuned to those grievances. Asked, in an interview with The Economist during the primaries, how this was possible, he said: “You know my father was a builder in Brooklyn and Queens, predominately. And I worked with subcontractors…somehow even though I live on Fifth Avenue and all of these things, I very much relate to those people.” + +Berned then burned + +He was being too modest. Mr Trump won big among whites without a college degree. They made up a third of the electorate, and backed him over Mrs Clinton by 39 points. But at Mr Trump’s hate-charged rallies, at which his supporters yelled “Burn her at the stake” of Mrs Clinton and “Kill Obama”, middle-income white professionals were easy to find; 49% of college-educated whites voted for him, only slightly fewer than had backed Mitt Romney. + +Though some votes are yet to be counted, overall Mr Trump won 1m fewer than Mr Romney, and ended up trailing Mrs Clinton—who for her part won 6m fewer than Mr Obama—in the popular vote. He beat her, by 279 to 228 votes in the electoral college, because his strength with white, working-class voters was sufficient to flip Michigan, Pennsylvania and Wisconsin, all of which Mrs Clinton had been expected to win easily. It was close, with Mr Trump’s combined advantage in that trio a little over 100,000 votes. Perhaps the damage Mrs Clinton suffered from an ill-judged intervention from the FBI’s director, James Comey—eleven days before the poll he raised a fresh suspicion about her e-mails, which he then tried to allay a week later—accounted for some of those votes, which, combined with winning the popular vote, will feed Democrats’ sense of grievance. + +Mr Trump’s victory has left a country shocked and ravaged by discord, especially along racial lines. This goes far beyond the usual partisanship. Half of America can scarcely believe the other half has chosen Mr Trump. At his celebrations in New York, the Republican victor struck a gracious note: “Now it’s time for America to bind the wounds of division.” In the background, one of his supporters meanwhile hollered: “Kill Obama”. His presidency will be defined by how he reconciles those competing instincts. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21710028-donald-trump-won-fewer-votes-mitt-romneyin-2012-hillary-clinton-did-much-worse/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The Trump administration + +What to expect + +Something between Reaganism and France’s National Front, probably + +Nov 12th 2016 | JANESVILLE, WISCONSIN | From the print edition + +Get to work, Mike + +AMERICA is about to take a hard right turn. All that is in doubt is whether the final destination is one that Ronald Reagan might have saluted—a country of low taxes, light regulation and free markets, in which individuals and businesses are free to seek prosperity with a minimum of government involvement—or a more nationalist, populist and even statist place, with questions of law, order, identity and cultural tradition playing a role that demagogic European politicians might both recognise and applaud. + +In their hearts many Republican leaders in Congress prefer something closer to the first vision. But on the morning after election day the party’s keeper of the Reaganite flame, the Speaker of the House of Representatives, Paul Ryan, stepped to a podium in his hometown of Janesville, Wisconsin, and pledged fealty to Donald Trump. Mr Ryan, a free-trader and fiscal conservative who had rebuked Mr Trump several times during the campaign, credited the president-elect with securing a mandate for his version of government. He thanked Mr Trump for providing electoral coat-tails long enough to create the first unified Republican government in Washington since 2007. + +But if Mr Ryan and his fellow congressional leaders are to survive this new order, they will have to embrace some unfamiliar positions. Mr Trump won office by challenging Republican orthodoxy on trade barriers (he likes them, though they alarm big business), spending (the president-elect sees no pressing need to reform Social Security payments to the old), relations with Russia’s president Vladimir Putin (Mr Trump is a fan) and immigration. Trump supporters are sure they have been promised that government agents will round up and expel millions of foreigners without the right papers, possibly including hundreds of thousands of youngsters brought to the country as children and shielded from deportation by executive orders signed by Barack Obama. They also expect a wall on the border with Mexico, and something tangible will probably have to be built to stem a voter-revolt—though Congress may balk at spending the vast sums needed for the fortifications Mr Trump has described. + +(Story continued below.) + + + +Many in the party are now eager to show that it can synthesise long-held conservative principles with Mr Trump’s worldview. Mr Ryan talked of freeing ordinary workers from the Obamacare health law. Signalling an all-out assault on the environmental rules and schemes that Mr Obama had hoped would be a big part of his legacy, Mr Ryan spoke of reining in oppressive federal officials to save the livelihoods of coal miners, farmers and ranchers who use public lands in Western states. Yet Senator Mitch McConnell, the Republican leader in the Senate, moved quickly after the election to quash Mr Trump’s promises to impose term limits on members of Congress as part of a plan to change the culture in Washington. + +Optimistic Republicans predict that Mr Trump will be a sort of CEO-president, setting grand strategy while delegating day-to-day governance to Congress and to his vice-president, Mike Pence, a sternly conventional Christian and fiscal conservative who served in the House of Representatives before becoming governor of Indiana. They describe Mr Trump as a boss who disdains policy memos in favour of face-to-face briefings, and is more fussed by what works and what resonates with his base of working-class voters than with the niceties of ideology. Republicans certainly have a chance to shape America as they will. Mr Trump will get to appoint at least one justice to the Supreme Court, and in the country at large will enjoy support from 34 Republican governors. Overall the party of Mr Obama is weaker than it has been in generations, and faces still more losses in 2018, when the Senate map strongly favours Republicans. + +Expect conservative action in every field of domestic policy. Obamacare will be an early target for dismantling, says Senator John Barrasso of Wyoming, a surgeon by background and a member of the Senate leadership. Several colleagues credit the unpopularity of the health law with securing their re-election this week, Mr Barrasso says. Republicans do not need to present a 2,000-page replacement bill on the Senate floor, he explains—Mr Trump can do a lot to dismember the law by appointing a new Health and Human Services Secretary who relaxes the many rules and mandates in the act, as Congress prepares alternatives that use tax credits, savings accounts and greater competition to provide cheaper, if less comprehensive health cover. With tens of millions of Americans covered by Obamacare, Republicans will look to states to step in and take the lead role currently played by the federal government, though Democrats predict millions will still fall through the gaps. + +Congressional bosses and Trump advisers predict swift moves to expand production of American gas, oil and coal, whether by building new pipelines (including the long-delayed Keystone XL pipeline from Canada), easing exports of natural gas or opening public lands to new drilling and mining. Environmental agencies and the Department of the Interior will be staffed with pro-business executives, says a senior Trump adviser, following the dictum that “personnel is policy.” + +Change of climate + +Business leaders tipped for such posts as energy secretary or interior secretary include Harold Hamm, an Oklahoma oilman, and Forrest Lucas, the founder of an energy-services firm. Campaign advisers have told Mr Trump—who has called climate change a hoax—that domestic energy output could be increased by $150bn a year, and have urged him to swiftly withdraw from climate change commitments made by Mr Obama. They predict that a new conservative majority in the Supreme Court will doom the Clean Power Plan, an Obama-era scheme to limit coal’s use in electricity generation, and kill rules that increased federal oversight over waterways. President Trump probably has the legal power to withdraw from the Paris Agreement on climate change, ratified by America this year, though it might take time. Expect lawsuits from Democratic-run states, demanding more federal action to curb greenhouse gases as pollutants. + +A senior economic adviser suggests that Mr Trump could achieve sweeping tax cuts within his first 100 days. Trimming corporate tax rates may be politically easier than reforming taxation on individuals, including popular tax breaks on mortgage interest. A Trump administration may offer big firms an amnesty if they repatriate profits held overseas, spending some of the proceeds on big new infrastructure schemes, though in the Senate Mr McConnell has suggested infrastructure is not a high priority. + +Mr Trump’s populist rhetoric may not stop him appointing Steven Mnuchin, a former Goldman Sachs banker and finance director of the Trump campaign as his Treasury secretary. Other big jobs are expected to be offered to Republicans who came out early for the president-elect, such as Senator Jeff Sessions of Alabama, an anti-immigration hardliner and close adviser, and a former mayor of New York (and campaign attack dog), Rudy Giuliani. Representative Tom Price of Georgia is spoken of as a possible budget chief in the White House, while contenders for secretary of state include a former House speaker, Newt Gingrich, Senator Bob Corker of Tennessee and Governor Chris Christie of New Jersey (who is also talked of as attorney-general, but reportedly thinks the job insufficiently grand). National-security posts are likely to go to such advisers as Lieut-General Michael Flynn, a fiery Obama-critic and former head of the Defence Intelligence Agency, and another retired three-star general, Keith Kellogg. + +During the campaign foreign-policy grandees from prior Republican administrations were among Mr Trump’s harshest critics, shuddering at his geopolitical views. Now they must decide whether to help a new president with no experience in public office. Stephen Hadley, a national security adviser in George W. Bush’s White House who refrained from comment on Mr Trump, is tipped to be one of them. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21710012-something-between-reaganism-and-frances-national-front-probably-what-expect/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Trump and the economy + +Strap up + +Congress can constrain only parts of Donald Trump’s economic policy + +Nov 12th 2016 | WASHINGTON, DC | From the print edition + + + +MARKET reaction to Donald Trump’s win has been something between sanguine and elated. But if you set out to design policies to do long-term harm to the economy, you might end up with something resembling Mr Trump’s agenda. The next president threatens to erect trade barriers, which would disrupt supply chains and dampen productivity growth. He wants to deport many of America’s 11m illegal immigrants, which could reduce the size of the labour force by up to 5%. And his tax plan is ruinously expensive, costing almost $7trn over a decade, or around half of America’s outstanding national debt. + +How much damage is President Trump actually likely to do? That depends first on how much of his policy he can get enacted. Until recently, his tax cuts would have been vulnerable to a Democratic filibuster in the Senate. But thanks to a rule change in the latest budget deal, the Republicans can now pass even unfunded tax cuts with only a simple majority, explains Richard Kogan of the Centre on Budget and Policy Priorities, a think-tank. (To do so, they must include sunset clauses, as George W. Bush did when he cut taxes in 2001.) + +Congressional Republicans might moderate Mr Trump’s plan. The tax cuts Paul Ryan, Speaker of the House of Representatives, wants are expensive, but much less so than Mr Trump’s (see chart). The corporate tax may end up at Mr Ryan’s proposed 20% rather than Mr Trump’s desired 15%. Mr Trump’s costly promise to offer the same rate to sole traders may not survive. Both men agree that there should be three tax rates for individuals (12%, 25% and 33%), but there will be debate over the generosity of deductions. + + + +Debt would rise significantly even under Mr Ryan’s plan. More borrowing will give the economy a boost in the short term. Mr Ryan’s tax cuts would be much bigger than Barack Obama’s fiscal stimulus in 2009. Add in the infrastructure spending Mr Trump also wants, and the economy could get much hotter, which helps to explain the rally in financial markets on November 9th. The question is to what extent this will jeopardise America’s long-term fiscal health. + +While Congress might rewrite the Trump tax plan, it has much less power to restrain Mr Trump’s protectionism. Existing laws allow the president to impose tariffs in very broadly defined circumstances, as Mr Trump gleefully noted during the campaign. He could use the president’s prerogative over foreign affairs to withdraw from the North American Free Trade Agreement with just six months’ notice, according to the Peterson Institute, a think-tank. + +Mr Trump has said that he is merely threatening to tear up trade agreements and impose tariffs, in order to achieve better trade deals. The goal of such new deals, according to his advisers, will be to eliminate the trade deficit. That is all but unachievable. The trade deficit is the result of low national saving, which will fall still further if the government borrows more. And no one knows how other countries will react to Mr Trump’s threats. + +Monetary policy is another cause for worry. Mr Trump has railed against low interest rates, saying they had stoked an economic bubble (a sentiment repeated by one of his advisers, to the Financial Times on November 9th). He also claimed that Janet Yellen, chairman of the Federal Reserve, was acting in an “obviously political” manner and “should be ashamed of herself”. This caused speculation that Ms Yellen might resign after a Trump victory. That seems unlikely; Fed chairmen have withstood presidential criticism before. But Ms Yellen will surely depart when her term expires in February 2018. + +Who might Mr Trump nominate to replace her? In an interview before the election Stephen Moore, an economic adviser to Mr Trump, floated several names, including Larry Kudlow, a television pundit, Art Laffer, a private-sector economist, and Martin Feldstein, an academic, all of whom served in the Reagan administration. Most conservative economists like Mr Feldstein have been calling for tighter monetary policy for years; Mr Kudlow is an exception. If Mr Trump’s nominee is to reflect Republicans’ hawkishness, the expectation of higher interest rates will hang over the economy, though that may have bigger implications for economies outside America (see page 67). + +With a big fiscal stimulus, though, higher rates might be needed to keep inflation down. That would send the dollar higher, hurting American manufacturers and increasing the lure of protectionism. That is where the biggest threat to growth lies. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21710013-congress-can-constrain-only-parts-donald-trumps-economic-policy-strap-up/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Polling and prediction + +Epic fail + +How a mid-sized error led to a rash of bad forecasts + +Nov 12th 2016 | NEW YORK | From the print edition + + + +AS POLLING errors go, this year’s misfire was not particularly large—at least in the national surveys. Mrs Clinton is expected to win the popular vote by a bit over one percentage point once all the ballots are counted, two points short of her projection. That represents a better prediction than in 2012, when Barack Obama beat his polls by three. But America does not choose its president by popular vote, and three of Donald Trump’s bigger outperformances occurred in states around the Great Lakes that proved decisive. Mrs Clinton led the polls in Wisconsin by five points, and in Michigan and Pennsylvania by four; Mr Trump is projected to claim them all, albeit by narrow margins. He did even better in Ohio, where he turned a two-point poll lead into an 8.5-point romp, and Iowa, where a three-point edge became a 9.5-point blowout. + +While pollsters correctly gauged the sentiment of most slices of the electorate, they underestimated Mr Trump’s appeal to working-class whites. Although it was clear that he would run up the score with these voters, he managed to exceed even pollsters’ rosy expectations for him: projected to win them by 30 points, the national exit poll showed him winning by 39, a larger edge than Mrs Clinton’s among Latinos. The share of a state’s electorate represented by whites lacking a college degree was an almost perfect predictor of how he did relative to polling (see chart). + +It is possible that “shy Trump” voters didn’t want to admit their support to pollsters. However, there was no evidence of such a pattern during the Republican primaries, when Mr Trump did not generally beat his polls. And given his margin with working-class whites, it is hard to imagine that people whose friends and neighbours mainly backed him would be ashamed to say so themselves. A likelier cause is “non-response bias”—that working-class whites who backed Mr Trump were particularly reluctant to answer the phone. It is also possible that some decided to vote Republican after the last polls were completed. Lastly, Mr Trump’s blunt, targeted courtship of this demographic group, which historically has shown a fairly low propensity to vote, may have motivated them to turn out in greater numbers. Such enthusiasm is hard for pollsters to detect. + +Whatever the cause, this miss was within the range of reasonable expectations, given that the margin of error is magnified when dealing with demographic subgroups. The key question for forecasters was how a midsized polling mistake led them to get the election so wrong. For models based on state polls, the core issue was how well an error in one state was likely to foreshadow one in the same direction elsewhere—and if so, where. Mr Trump’s six-point outperformance in Wisconsin had little bearing on his performance in Colorado, but spelled doom for Mrs Clinton in nearby Michigan, Ohio and Pennsylvania. Prediction models that either used weaker or less precisely targeted correlations between states were more bullish on her odds, and performed worse. + +There is one family of forecasts that did better: those which ignore both polls and candidates and predict results based exclusively on structural factors like economic performance and incumbency. This approach suggested all along that the 2016 campaign was likely to be an extremely tight race. Yet because these models seemed unsophisticated, and because Mr Trump’s campaign was so unusual, they were largely overlooked. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21710024-how-mid-sized-error-led-rash-bad-forecasts-epic-fail/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The Democrats + +Destiny derailed + +Hillary Clinton’s demoralised party faces some hard choices + +Nov 12th 2016 | ATLANTA | From the print edition + +All hat and no president + +A WEEK ago, demography was destiny for the Democrats. Along with many Republicans, they assumed—perhaps complacently—that swelling minority populations and left-leaning younger voters would form a winning electoral block, soon even an indomitable one. Instead they lost not only the White House but several governorships, their gains in Congress only pifflingly compensating for the attrition they have suffered, from the Senate to state houses, during Barack Obama’s presidency. In Kentucky’s house of representatives they lost their last legislative chamber in the South, a region in which their demographic hopes were strongest, but which instead remains a Republican bulwark. + +The autopsy will be as rancorous as the fallout among Republicans would have been had Hillary Clinton won. For her party’s populist faction, the result confirms that she was a centrist throwback, a milksop out of touch with the public mood. For its centrists, some of the blame belongs to the left-wingers and their grouching. After the recriminations, this internecine row will focus on three linked issues. + +First, strategy. For some, the debacle proves that the coalition on which Mrs Clinton relied—built around college-educated liberals, millennials and minorities—was insufficient and will be for a while, not least since Republican legislatures will persist in their gerrymandering and voter-suppression efforts. Thus the party must reconvert some of the white, blue-collar voters in the Rust Belt who clinched the White House for Donald Trump. Another reading is that it must emulate Mr Trump’s approach, by maximising turnout in existing constituencies. The poor Democratic showing in multiracial Milwaukee and Detroit, which helps to explain Mrs Clinton’s defeats in Wisconsin and Michigan, supports that analysis. + +The corollary of this dispute is policy. Democrats, like other vanquished centre-left parties in the West, must decide if beating their opponents means joining them, or whether, morally and practically, they can’t. For some Mrs Clinton’s renunciation of the Trans-Pacific Partnership represented an insufficient disavowal of free-trade; they also regarded Mrs Clinton’s foreign-policy stance as too hawkish. The trouble is that Mr Trump has cornered the market in protectionism and isolationism. And even if the Democrats conclude that disenchanted voters want a more activist government—a dubious proposition—Mr Trump’s vows to protect Social-Security spending (public pensions) would complicate a bid to expand their base with more largesse. A tougher line on immigration, meanwhile, risks alienating the Hispanic voters they will continue to need. + +Add to this the conundrum of Mr Obama’s legacy. The oddity in this rout is that the president himself is still popular: his approval rating rivals Ronald Reagan’s at the end of his second term. Yet his main reforms, above all the health-care expansion that was a party priority for decades, are set to be dismantled. The fact that low-income white voters are, numerically, Obamacare’s principal beneficiaries has failed to offset its technical glitches, market frictions and Republican attacks. Likewise many of Mr Obama’s environmental directives, cherished by mainstream Democrats but loathed in Appalachia and elsewhere, now look doomed. + +Finally, there is the question of leadership. The deficit of options that, along with her heft and cash, helped to ensure Mrs Clinton’s nomination has not been rectified; on the contrary. Kamala Harris of California is a promising addition to the Senate, but otherwise the roster of senior talent is still thin. It includes Cory Booker, a senator from New Jersey, and Elizabeth Warren of Massachusetts, who stands to inherit the anti-establishment mantle from Bernie Sanders. Quite apart from her views, however—and shamingly tragic as it is to acknowledge—after the witch-burning atmosphere of Mr Trump’s rallies, it would be risky to adopt another female candidate in short order. The Democrats’ main talent reservoir is in big-city mayoralties, but those politicians often specialise in the sort of coalition of businessmen and minorities that flopped for Mrs Clinton. + +The leadership chatter seems premature, but isn’t. If he implements a fraction of his ideas, or governs as he campaigned, Mr Trump’s presidency will be a disaster. The Democrats would have a golden chance to oust him in four years—with a plausible figurehead. “This is painful,” Mrs Clinton said on the morning after, “and it will be for a long time.” How long depends on the response. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21710027-hillary-clintons-demoralised-party-faces-some-hard-choices-destiny-derailed/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Lexington + +The people v the people + +Setting Americans against each other paved Donald Trump’s path to power + +Nov 12th 2016 | From the print edition + + + +ON ELECTION day in America it is usually a comfort to spend hours talking to voters emerging from polling places. After months of interviews with partisans at campaign rallies, regular citizens are reassuringly unzealous, and willing to volunteer that neither party has a monopoly on wisdom. Not this year. In 2016 too many Americans sounded sour, unhappy and quick to dismiss as illegitimate or immoral those who disagree with them. + +Lexington spent November 8th in southern Wisconsin, talking to voters in small towns known for an unflashy, church-picnic and chambers-of-commerce sort of conservatism. This is Paul Ryan country—the home turf of the Republican Speaker of the House of Representatives, a beaky ideologue and devout Catholic who several times clashed with Donald Trump during his presidential campaign, publicly rebuking the businessman for his boorish ways (Mr Ryan called Trumpian slurs against a Mexican-American judge a “textbook case of racism”). + +Reporting from polling stations in Elkhorn and Janesville was dispiriting and revealing. Republicans who had just cast ballots for Mr Trump and Mr Ryan expressed contempt not just for Hillary Clinton—“She should be impeached,” said many—but for the sort of Americans liable to vote for her. As a rule, ventured Shane Price, a shipping manager in Janesville, Democrats put their own interests over those of the country, while a big majority of Republicans are “red, white and blue”, and put America first. Pondering those sections of the electorate immune to Mr Trump’s charms, Mark Schweiner, a financial adviser from Elkhorn, lamented that the country is changing, with a growing proportion of residents who lack a vested interest in America’s future and merely “want handouts”. To greatly broaden its attractiveness the Republican Party might have to appeal to such free-riders, he conceded, yet he would rather it did not, for that would mean compromising on its small government, low-tax principles. + +Trump voters encountered in Wisconsin were fully aware that their presidential pick is a polarising figure. Several said that he had not been their first choice to be the Republican nominee—and indeed back in April Mr Trump lost the Wisconsin presidential primary to Senator Ted Cruz of Texas, a social conservative. They called Mr Trump “blunt” and “very bold”. They cast his rudeness as a form of candour, and proof that he is not a career politician. Several chided Mr Ryan for rebuking Mr Trump, seeing their congressman’s criticisms as evidence that he is just another mealy-mouthed, calculating elitist, who has seemingly forgotten that in the real world “everybody makes mistakes”. Put another way, when the much-loathed press or Democrats attacked Mr Trump, that reassured his voters that they shared common foes. + +That points to another reason to fear Mr Trump’s populist victory. For populism involves more than policies that are at once simple and stirring enough to shout at a rally (“Build That Wall”) or print on a bumper sticker. Populism is also the politics of Them and Us, involving appeals to tribal identities, and zero-sum contests over hard-pressed resources. Populism is hardly new. What makes Mr Trump’s win different is that he so explicitly sought to cast his opponents as illegitimate, unfit, contemptible, un-American or (a favourite word) “disgusting”—and was confident that he would find an echo among his voters. + +Mr Trump was the nominee of a party which, after losing the presidential election of 2012, commissioned a post-mortem concluding that until Republicans built a new coalition, including more non-whites and other fast-growing demographic blocs, it would struggle to win national office again. Mr Trump’s gamble was to take an exactly opposite approach. He bet everything on a strategy of nostalgic nationalism, summed up in the slogan “Make America Great Again”, precisely because his hunch was that the country is home to an underestimated mass of voters who do not want to be part of any rainbow coalition, thank you—and certainly not if the price is granting amnesty to immigrants in the country without the right papers, or embracing gay marriage. + +Nasty, not nice + +Mr Trump was open about his plans, telling The Economist in interviews that he planned to appeal to a “silent majority” of “hard-working, great people in the United States that have been disenfranchised”. He ticked off areas in which he could beat Mrs Clinton: on border security and fears of crime caused by immigrants, on foreign trade and jobs and on Islamic terrorism (“She’s very, very weak”). Working Americans and their wives are “the biggest group of people in our society”, Mr Trump noted, explaining how he had learned to relate to such folk as a schoolboy spending summers on his father’s building sites, working with sheetrock fitters, carpenters and electricians. He boasted, correctly, that his focus on working-class voters would be rewarded with a “big crossover” from independents, Democrats and those who rarely vote. A pollster told him that his only weak point was when voters were asked about candidates being nice, Mr Trump confided in an interview in August 2015. “And I said, this is not going to be an election on niceness.” + +Mr Trump may be unique in embracing nastiness as a way to demonstrate sincerity. But it is also the case that Mrs Clinton rallied such voter blocs as Latinos, blacks, women or gay Americans by telling them not just that she was on their side, but that her coalition would not seek to win the votes of those Americans they dislike or distrust. That is what it meant when she declared half of Mr Trump’s supporters “deplorables”: Mrs Clinton was promising that she had no intention of trying to persuade the wrong sort of voters. That politics worked in 2016 because so many Americans have moved beyond distrusting politicians, parties or Washington. Talking to voters in this horrible election year, it has become clear that they dislike one another. Now that divided republic is Mr Trump’s—if he can keep it. + + + +Donald Trump wins the presidential election + +One of the most dramatic electoral upsets America, or anywhere, has ever seen + + + +How Donald Trump won the election + +It is the biggest political surprise in living memory + + + +The second big political shock for investors this year + +Markets may be volatile for a while after the latest upset + + + +Scenes from Donald Trump’s election night party + +Mr Trump’s do at the Hilton, a Manhattan hotel, was invite-only + + + +Commodities react to Donald Trump’s reflationary rhetoric + +Markets are unsure how president-elect’s support for fossil fuels will unfold + + + + + +Live election results + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21709919-setting-americans-against-each-other-paved-president-elects-path-power-people-v/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +The Americas + + + +Donald Trump and Mexico: The wall that appals [Thu, 10 Nov 22:25] + +Maple syrup crimes: Syrup and sin [Thu, 10 Nov 22:25] + +Property in Venezuela: Maduro’s boom [Thu, 10 Nov 22:25] + +Bello: The limits of technocratic government [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Donald Trump and Mexico + +The wall that appals + +Mexico must somehow learn to cope with its new neighbour + +Nov 12th 2016 | MEXICO CITY | From the print edition + + + +FROM the moment Donald Trump announced his candidacy for the presidency of the United States in June 2015, the possibility of his victory has been a Mexican nightmare. He made clear from the start that he was running against Mexico as much as against his political foes. He called Mexicans “rapists” and threatened to deport 11m illegal immigrants (half of them Mexicans) and to rip up the North American Free-Trade Agreement (NAFTA). He promised repeatedly to make Mexico pay for a border wall that he would build, perhaps by taxing the remittances Mexican migrants send home. + +When the nightmare unexpectedly came to pass on November 8th the mood on Mexico City’s streets was subdued rather than enraged. “Tremble”, advised the front page of Reforma, one of the leading broadsheets, but few Mexicans seemed to be doing that. Instead, some took refuge in gallows humour: think of the jobs Mr Trump’s wall will create, they joked. Others sounded hurt that their neighbours had chosen a leader who made such a point of slandering them. “I can’t believe that there’s racism in 2016,” said Andrew Abasolo, an events-company employee. + +For Mexico’s weak and unpopular president, Enrique Peña Nieto, who has two years left in office before he must step down, Mr Trump’s victory is a trauma and, conceivably, an opportunity. Mexico’s well-being depends largely on its relations with the United States, with which it is deeply integrated through family ties and through NAFTA. It now falls to Mr Peña to defend vigorously his country’s interests without provoking a rupture with the United States’ president-elect. After a post-election phone call the two leaders agreed to “outline a new work agenda” on security and prosperity. + +Whether that will be possible is unclear. No one yet knows how much of Mr Trump’s anti-Mexican rhetoric was campaign bluster and how much expressed his fixed intent. For the two months until inauguration day and beyond, every speech and appointment by the new administration will be obsessively scrutinised south of the border. Before the vote Mexico’s finance minister, José Antonio Meade, reassured Mexicans that the government had prepared for a Trump victory with contingency plans. + +So far, they have not been needed. The peso, which has been vulnerable to each improvement in the political fortunes of Mr Trump, duly slumped upon his election (see chart). But the sell-off was not as bad as many analysts had feared. Some thought it would fall as low as 25 to the dollar. As The Economist went to press it was trading at 19.9. The central bank did not immediately raise interest rates, as some observers had thought possible. + + + +The peril has not yet passed. Far from it. The weak peso has already pushed up the inflation rate (though it has also boosted the buying power of dollar remittances from Mexicans living in the United States). Next year inflation is expected to rise to the upper end of the central bank’s target range of 2-4%. To keep it from going beyond that, and to forestall a further devaluation, the central bank might raise interest rates when it next meets on November 17th. Both the peso’s weakness and higher rates threaten to depress consumer spending, the main factor sustaining Mexico’s modest growth rate. + +A bigger uncertainty looms over NAFTA, Mexico’s trade deal with the United States and Canada, which buy more than 80% of the country’s exports. Mr Trump has called the agreement “the worst trade deal in history” and promises either to renegotiate it or abrogate it. He has talked of slapping a tariff of 35% on Mexican exports to the United States. If he carries out this threat, “the Mexican economy would decelerate, possibly hard,” says Carlos Capistrán, an economist at Bank of America Merrill Lynch. + +He may not. The United States has not withdrawn from a trade agreement in 150 years. American businesses will lobby against pulling out of NAFTA, pointing out that 6m American jobs depend on trade with Mexico; to export to the United States, Mexican firms must import plenty of components from their neighbour. + +But until Mr Trump makes his intentions clear, warns Andrew Stanners of Aberdeen Asset Management in London, investors will be cautious. That is likely to depress foreign investment, which reached 2.6% of GDP in 2015. Mexican investors will be wary, too. An investment lull, coupled with higher inflation and interest rates, could cause a recession. + +The new American president has good reasons to avoid a complete breakdown in relations with Mexico. Its co-operation is vital in the fight against drug gangs and in controlling migration, two priorities of the immigrant-bashing, law-and-order-minded Mr Trump. Under the Mérida Initiative, American liaison officers, from the FBI, the Drug Enforcement Agency and other branches of government, enjoy extraordinary access to Mexican intelligence and security command centres, and operate with remarkable freedom and very little publicity across Mexico. If provoked or humiliated, the government could deport America’s drug warriors. + +Mr Peña will spend what had already promised to be a troubled final two years in office managing Mexico’s relationship with Mr Trump’s administration. Mr Peña was widely reviled when he invited Mr Trump to the presidential palace during the election campaign. He cannot now afford to appear submissive to the president-elect, but he cannot alienate him, either. + +Mr Trump, too, faces a difficult balancing act between pandering to his Mexico-phobic base and getting along with the United States’ most important neighbour. His election has ended a period of growing warmth between the two countries, but it may not open an era of naked hostility. “The sky won’t fall,” predicts David Shirk of the University of San Diego, “but it will be lower.” + +If relations with the United States go awry, anti-Trump feeling and economic damage could determine who will succeed Mr Peña in 2018. Polls had suggested that the National Action Party, a centre-right opposition party, had the best chance of nominating a successful candidate. But Mr Trump’s chauvinism could provoke a nationalist backlash among Mexican voters. If so, the probable beneficiary is Andrés Manuel López Obrador, runner-up in the last two presidential elections. His ideology is far left, but his blunderbuss manner and penchant for simplistic answers to complicated problems make him sound a lot like Mr Trump. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21710017-mexico-must-somehow-learn-cope-its-new-neighbour-wall-appals/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Maple syrup crimes + +Syrup and sin + +Mobsters take on Quebec’s maple monopoly + +Nov 12th 2016 | OTTAWA | From the print edition + + + +EVERY spring schoolchildren in Quebec flock to cabanes à sucre (sugar shacks) in the woods to watch “sugarmakers” boil down the sap of maple trees into syrup and to sample sticky confections. But this sugary pastime has a sinister side, as Quebeckers are now learning through a sensational criminal trial. The defendants are accused of stealing syrup worth C$18.7m ($14m) from the province’s “strategic reserve”, a caper that involved the use of throwaway “burner phones” and shoeboxes stuffed with cash. Maple syrup’s circuitous journey from shack to flapjack, the trial has revealed, offers many opportunities for skulduggery, and even for violence. + +Richard Vallières, one of the four defendants on trial in Trois-Rivières, admits that he acted as a “barrel roller”, someone who helps producers find customers who are willing to pay more than the only legal buyer in the province, the Federation of Quebec Maple Syrup Producers. In 2011, he says, he was approached to carry out a much riskier crime: stealing from the federation itself. Prosecutors say a lorry-driver transported blue barrels full of syrup from the federation warehouse in St-Louis-de-Blandford to Mr Vallières, who drained them and refilled them with water, to be returned to storage. The illicit syrup was then sold in Ontario, New Brunswick and the United States. The thefts during 2011 and 2012 brought Mr Vallières a profit of close to C$1m. + +He claims that he acted under duress. An unnamed defendant, who will be tried separately, threatened to kill him, his girlfriend and his daughter unless he stole from the federation, Mr Vallières told the court. “Anyone talks, he’ll get a bullet in the head,” warned his confederate when the two were held in the same cell after their arrests. Mr Vallières thinks he has connections with the Montreal mafia. + +That account clashes with statements by the lorry-driver, Sébastien Jutras, who was convicted in a separate trial for his part in the pilferage of 3,000 tonnes of maple syrup. He suggested that the thieves felt entirely justified in ripping off the federation. In testimony before the court, Mr Jutras said the view of Mr Vallières’s father (and co-defendant), Raymond, was that “stealing from thieves is not stealing.” (Raymond Vallières denies this.) + +The federation tries to smooth out the incomes of Quebec’s 7,500 or so sugarmakers, who account for nearly three-quarters of world output, by setting production quotas and paying them a fixed price. During gluts, as this year, when production hit a record high, excess supply goes into the strategic reserve. + +But some producers complain that the quotas are too low and that the cartel does not pay in full until stock is sold. Most of all, they resent the obligation to sell to the federation when producers in other provinces are free to market their maple syrup to anyone, often for higher prices. The federation now says it will raise quotas next year, but that is unlikely to satisfy disgruntled producers. They will continue to seek the services of barrel rollers. And criminals, as well as schoolchildren, will continue to frequent Quebec’s sugar shacks. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21710014-mobsters-take-quebecs-maple-monopoly-syrup-and-sin/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Property in Venezuela + +Maduro’s boom + +Companies are turning cash into concrete as fast as they can + +Nov 12th 2016 | CARACAS | From the print edition + + + +LOOK skywards in posh districts of Caracas, the capital of South America’s most economically troubled country, and you will see something surprising: construction cranes at work on rising office towers. Dozens are nearing completion during Venezuela’s most severe recession ever. In the trendy Las Mercedes area, the din of pneumatic drills starts shortly after 7am every weekday. + +About 400,000 square metres (4.3m square feet) of office and commercial space are under construction in the city. “That is a significant amount,” says Carlos Alberto González Contreras, president of Venezuela’s Real Estate Chamber. This is not a sign of optimism that Venezuela’s authoritarian government is anywhere close to solving the colossal economic problems it has created. On the contrary, it is a desperate stratagem for coping with them. + +Companies based in Caracas have bank accounts full of fast-devaluing bolívares and few good options for spending them. Under Venezuela’s convoluted system of currency controls, featuring two official exchange rates, it is nearly impossible to convert bolívares into dollars at an acceptable rate. Just using the cash to buy existing property usually won’t work: such transactions are denominated (illegally) in dollars and settled outside the country. So putting up new towers is the way to go. + +Labour is cheap. Venezuela’s president, Nicolás Maduro, trumpets repeated increases in the minimum wage (four so far this year) as evidence of the generosity of the “Bolivarian revolution”, begun by his late predecessor, Hugo Chávez. However, the rises do not make up for inflation, which is running at an annual rate of 700%, according to the IMF. At the black-market rate for the bolívar, which has dropped 40% in the past month, construction workers earn about $30 a month. + +Figuring out which companies are financing construction is fiendishly difficult in secretive Caracas. They are said to include operators of mobile-phone networks, banks and pharmaceutical firms. Pernod Ricard, a French drinks company, opened a swanky headquarters in Las Mercedes last August as a “reaffirmation of its commitment” to Venezuela, but it bought the building rather than constructing it. + +Though Venezuela’s nutty economy makes building projects rational, it does not make them easy. Materials are in short supply. Workplace theft is common. + +The building boom is confined to Caracas. Residential construction by the private sector is “practically paralysed”, Mr González Contreras says. In 2010, it built 90,000 homes in the country. He expects that to fall to just 5,000 this year. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21710011-companies-are-turning-cash-concrete-fast-they-can-maduros-boom/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Bello + +The limits of technocratic government + +Peru’s refreshing new president lacks political know-how + +Nov 12th 2016 | From the print edition + + + +THEY might not have realised it, but Peruvians got three presidents for the price of one when they narrowly voted for Pedro Pablo Kuczynski in an election in June. Over a long career, Mr Kuczynski has been an investment banker, a multinational business manager and a public servant. These identities have each been on display in his first 100 days in office. + +The investment banker is a libertarian who wants to cut taxes. The business manager has shown energy and drive in trying to cut through red tape holding up infrastructure projects worth some $19bn. The public servant has promised stronger democratic institutions and a “social revolution” in a country which, for all its recent progress, is still marked by poor public services that require higher tax revenues to fix. Seemingly missing in the new president is the political guile to reconcile these contradictions. + +Mr Kuczynski is still enjoying a honeymoon. Coming after a lacklustre predecessor, Ollanta Humala, he is a refreshing change. He cracks bad jokes, is transparently decent and well intentioned, and he often speaks his mind. While other Latin American presidents have been pusillanimous, he has publicly condemned the “interruption in the democratic and constitutional order” in Venezuela, for example. Later this month he will host a score of heads of state, from China’s Xi Jinping to Barack Obama, at an Asia-Pacific Economic Co-operation summit in Lima. Fluent in English, with a bulging international contacts book, Mr Kuczynski is likely to shine at the event. + +Peruvians will judge him on his promise, at his inauguration, to create “a modern, more just, more equitable” country in his five-year term. That will be hard work. The Peru he inherited features public concern about corruption and rising crime, and an economy whose slower underlying growth is flattered by two big new copper mines. Lacking a majority in congress, the government managed to extract from it power to issue laws by decree on these matters for three months. + +With the fiscal deficit at 3.4% of GDP, Mr Kuczynski has dropped earlier plans to slash value-added and corporate taxes. Instead he will shave one point from value-added tax and trust in raising revenues by pressing informal businesses to register and pay taxes. That looks optimistic. The government aims to get investment growing again by boosting business confidence with a simplification of taxes and a revival of big projects, such as a second runway at Lima’s congested airport, a metro line in the capital and a gas pipeline. + +But rather than taxes, it is red tape and a dysfunctional state that hold back growth. For example, there is no sign that the government has found the political operatives needed to rescue mining projects stalled by local opposition. A demonstrator was killed last month near Las Bambas, a Chinese-owned copper mine, during a protest against the trucking of ore through villages. + +The government has started to shake up the police force, and plans to create a new unit to tackle organised crime. Unexpectedly, Mr Kuczynski has been tripped up by scandal. Carlos Moreno, his former doctor, whom he appointed as a health-care adviser, was taped apparently encouraging the fraudulent diversion of patients from the public health service to a friend’s private clinic (he denies wrongdoing). In response, the president promised to bar corrupt officials from public service for life; days later, he revealed that the government had consulted one who had been convicted of fraud. + +These missteps have cut Mr Kuczynski’s approval rating from the mid-60s to the high-50s. That matters. He only won the election because two other candidates were disqualified and because the campaign of Keiko Fujimori, his defeated opponent, was hit by a last-minute scandal. Since his party holds just 18 of the 130 seats in congress, he is dependent on public support to get things done. + +Surprisingly, Mr Kuczynski chose a cabinet in his own image, with few experienced politicians. The result is that the government has wavered in its approach to Ms Fujimori’s party, which has a majority in congress. It broadly agrees with Mr Kuczynski on the economy, but not on creating the strong, independent institutions Peru needs. The president did little to prevent congress from making controversial appointments to the ombudsman’s office and the central bank board. + +“It’s a government with an identity crisis,” says Alberto Vergara, a Peruvian political scientist at Sciences Po, a university in Paris. “They are modernising technocrats who suspect that the country needs more than that, but don’t quite know what.” When the honeymoon ends, that is likely to be a problem. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21710016-perus-refreshing-new-president-lacks-political-know-how-limits-technocratic-government/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Asia + + + +Japanese politics: Abe ascendant [Thu, 10 Nov 22:25] + +Ferdinand Marcos: Hail to the thief [Thu, 10 Nov 22:25] + +Civilians v soldiers in Pakistan: General consternation [Thu, 10 Nov 22:25] + +Wildlife conservation: Grim pickings [Thu, 10 Nov 22:25] + +Pollution in India: Worse than Beijing [Thu, 10 Nov 22:25] + +Banyan: Prophets of piffle [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Japanese politics + +Abe ascendant + +Shinzo Abe has accumulated unprecedented power + +Nov 12th 2016 | TOKYO | From the print edition + + + +THE average tenure of Japanese prime ministers since the second world war has been just over two years. Before Shinzo Abe, the incumbent, took office in 2012, Japan ran through six prime ministers in as many years (including a prior, year-long stint by Mr Abe himself). So the fact that he is nearing four years in the job this time is remarkable in itself. But he seems to be just getting started. His Liberal Democratic Party (LDP) recently decided to extend its leader’s maximum term from six years to nine. That paves the way for Mr Abe to remain in office until 2021, which would make him Japan’s longest-serving post-war leader. + +Admittedly, Mr Abe would need to win both a party-leadership contest and a lower-house election to stay in power that long. But he is an extremely successful campaigner, having led the LDP to victory in two elections for the lower house and two for the upper. Mr Abe’s current coalition government holds a commanding majority in both houses of the Diet. Mustering the two-thirds majority in each house that is required to change the constitution seems within his grasp. “He is very powerful,” says an awed lawmaker. + +Mr Abe’s success does not come from playing it safe: he has pushed for a number of unpopular policies. The government’s plan to restart many of Japan’s nuclear-power plants, most of which were idled after the Fukushima Dai-ichi disaster in 2011, is anathema to many Japanese. In early November the LDP began pushing the Trans-Pacific Partnership, a trade deal about which Japanese feel distinctly lukewarm, through the Diet. Legislation passed last year, which lifted some of the restrictions on the Self-Defence Forces (SDF), as Japan’s army is called, was deeply unpopular. Should Mr Abe follow through on his desire to change the constitution to remove the pacifist language still hemming in the SDF, he would doubtless provoke even greater ire. + +Even where Mr Abe’s goals and those of voters are aligned, such as over the need to revive Japan’s economy, his government has disappointed. In a poll published in late October by the Pew Research Center, 68% of Japanese said they were unhappy with the state of the economy. Inflation remains far below the government’s 2% target. Wages have risen only slightly. + +Teflon Shinzo + +In spite of this, Mr Abe remains personally popular. A recent poll put his government’s approval rating at 60%. This is partly due to his adversaries’ weakness. He returned to power in 2012 promising national renewal after a disastrous three-year stint in government by the Democratic Party of Japan (DPJ, the main opposition party, now known as the Democratic Party, or DP). The DP’s image has still not recovered; the party is trailing far behind the LDP in the polls. It was recently trounced in two by-elections. “He was lucky in his timing,” says a DP lawmaker. “We had utterly failed, and he came up with a clear, concrete, alternative message.” + +Likewise, within the LDP, Mr Abe has few immediate rivals. Electoral reforms in the 1990s greatly reduced the clout of its once all-powerful factions. Mr Abe has empowered Yoshihide Suga, the intimidating chief cabinet secretary, to keep them in line. Colleagues with ambition—such as Fumio Kishida, the foreign minister—have been appointed to grand posts from which they cannot openly criticise him. At the last leadership election, in 2015, he ran unopposed after a would-be rival could not secure the necessary 20 nominations from LDP lawmakers. “As long as he keeps winning elections, we’re happy,” says Taro Kono, a legislator from the party. + +But Mr Abe learned much during his five years in the wilderness, too. Although he does not hide his ambition to change the constitution, he is careful to talk mainly about issues that Japanese people care more about, most notably the economy. “He came back as a product launch, a political slogan: Abenomics,” says Jeff Kingston of Temple University. He is a whirlwind of policies, initiatives, trips and summits. “He chases one issue after another, leaving no room for the country or press to get bored,” says someone close to him. “Or to notice things left undone,” adds Koichi Nakano of Sophia University. + +All this has had an important effect on the country’s psyche, says Natsuo Yamaguchi, the head of Komeito, the LDP’s coalition partner. “People are starting to regain the confidence that the past 20 years of political confusion, inward-looking foreign policy and economic stagnation led them to lose, in both Japan and themselves,” says Mr Yamaguchi. Mr Abe says that voters support him because they are looking for someone with a plan, even if they disagree with bits of it. + +In short, Mr Abe is in a uniquely powerful position for a Japanese prime minister. How he intends to use that power remains a bit of a mystery, however. He has been much bolder, politically, about pushing his ideas on security and international relations than he has about more urgent challenges such as Japan’s shrinking population and idling economy. His labour- market and immigration reforms have been timid. He recently abandoned a plan to remove a tax credit that discourages married women from working full-time, which pushes them into insecure part-time work. It would be a shame to accumulate so much authority, only to squander it on less-than-pressing causes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21710018-shinzo-abe-has-accumulated-unprecedented-power-abe-ascendant/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Ferdinand Marcos + +Hail to the thief + +The Philippine government offers a hero’s burial for a murderous kleptocrat + +Nov 12th 2016 | From the print edition + +Butcher in a box + +DURING the 20 years Ferdinand Marcos spent as president of the Philippines, his official salary never rose above $13,500 a year. Yet by 1986, when the “people power” revolution prompted him and his wife Imelda to flee into exile in Hawaii, they had amassed a fortune. Mrs Marcos left behind her shoe collection, but her husband brought with him jewellery, gold bricks and freshly printed Philippine currency, together worth around $15m. In all, he and his cronies are thought to have plundered perhaps $10 billion. What is more, during his time in office thousands of Filipinos were tortured, jailed without due process or murdered by the regime’s thugs. + +Marcos died in Hawaii; since 1993, his embalmed remains have been displayed in a glass box in his home province of Ilocos Norte. Rodrigo Duterte, the erratic strongman now running the Philippines, believes the dead dictator deserves better: he has approved the Marcos family’s long-standing request to bury their patriarch in Manila’s National Heroes’ Cemetery, with full military honours—an idea all Marcos’s other successors rejected. + +Mr Duterte insists that Marcos is entitled to such a burial not because he is a hero (“the issue about his heroism is political” is Mr Duterte’s baffling deflection) but because he was a soldier—never mind that Marcos’s claims to military valour during the second world war were largely fabricated. He says the battle over Marcos’s burial has divided the nation. Many older Filipinos do recall Marcos fondly: a petition supporting his reburial garnered 1.1m signatures. But that is small beer in a country of 100m where the median age is 23 or so: most Filipinos do not remember Marcos’s regime at all. + +Mr Duterte may spy a political opportunity. He comes from the southern island of Mindanao, and is the first president who is not part of the elite of Manila. His victory owes as much to voters’ disenchantment with the dozen or so families that dominate Philippine politics as it does to his tough-talking image. But winning as an outsider is a lot easier than governing as one, and the Marcos family remains powerful. Imelda serves in the House of Representatives; Imee, their daughter, is governor of the province of Ilocos Norte; her brother, Ferdinand junior, universally known as “Bongbong”, is a swaggering senator who came within a few thousand votes of the vice-presidency. Appeasing the family gives Mr Duterte a political boost in Ilocos and a favour to call in when he needs it. + +Mr Duterte’s plan is not universally popular. A coalition of Jesuit groups said that interring Marcos in the heroes’ cemetery “buries human dignity by legitimising the massive violations of human and civil rights…that took place under his regime”. Opponents tried to get the supreme court to block the burial, arguing that the law reserves the cemetery for those “worthy of admiration”. This week, however, the court approved the burial and urged the country to “move on”. But to many, as one strongman buries another, the Philippines appears to be moving backward, not forward. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21710015-philippine-government-offers-heros-burial-murderous-kleptocrat-hail-thief/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Civilians v soldiers in Pakistan + +General consternation + +Nawaz Sharif has clawed back precious little power from the army + +Nov 12th 2016 | ISLAMABAD | From the print edition + +No mere prime minister + +DIPLOMATS call it Pakistan’s forthcoming “transition of power”. They don’t mean a change of government, but rather the appointment of a new army chief. The incumbent, Raheel Sharif (pictured on the next page), is due to retire on November 29th. What would be a humdrum appointment in most other countries is a rare moment when the civilian government has the whip hand over Pakistan’s overbearing army. The institution that dictates the country’s policies on defence, foreign affairs and, to a large extent, internal security is not used to awaiting decisions by politicians. Yet the prime minister, Nawaz Sharif (no relation to Raheel) will have his pick, probably from one of four senior generals. + +For the army, the prime minister is a dubious figure. He swept into office in an electoral landslide in 2013, determined to reduce the army’s clout. His previous two stints in power had both been cut short by the army: in 1993, when it demanded new elections, and in 1999, when the army chief of the day, Pervez Musharraf, took power in a coup. Mr Sharif also wanted to befriend India, a country most military folk regard as Pakistan’s eternal enemy but which the businessman in Mr Sharif sees as an obvious trading partner. + +Mr Sharif has sparred with the army throughout his tenure. A month after his election he took the bold step of ordering Mr Musharraf to be tried for treason. In 2014, when GeoTV, part of a broadly pro-government media empire, accused a branch of the army of attempting to assassinate its most famous journalist, Mr Sharif rushed to the injured man’s bedside. For a year Mr Sharif resisted pressure from General Sharif to launch an operation to seize back control of North Waziristan, a tribal region completely overrun by gun-toting Islamists. + +Yet all these spats ended with a surrender from Mr Sharif. An excuse was eventually found to let Mr Musharraf skip the country; GeoTV was taken off air for a spell and the army went ahead with its North Waziristan campaign. Operation Zarb-e-Azb, as it was called, led to a fall in terrorism and helped turn General Sharif into the most popular army chief in history. + +The latest bust-up followed the leak of details of a meeting in October between the generals and the government, amid a flare-up on the Indian border following incursions by militants from Pakistan. The resulting front-page story claimed that the country’s spy chief, General Rizwan Akhtar, was told to stop protecting armed groups who use Pakistan as a base for assaults in Afghanistan and India. The longstanding policy was leading to Pakistan’s international isolation, said the civilians quoted in the report in the Dawn, the country’s most reputable paper. Mr Sharif’s staff was assumed to have leaked the story. + +The army denied the allegations but also declared the story a “breach of national security”. The generals have refused to attend further security meetings in the prime minister’s office until the matter is cleared up, officials say. In a panicked response, the government first banned the journalist responsible from leaving the country, only to backtrack amid an international outcry. On October 29th the information minister, Pervaiz Rasheed, resigned—although he denied being the source of the story. A leak inquiry continues, and most observers believe the army won’t be satisfied until more heads roll. + +Mr Sharif will continue to defy the army where he can. He has not yielded to its demand for formal powers to conduct counter-terrorist operations in Punjab, Mr Sharif’s home province and political base. The paramilitary Rangers, however, were unleashed on Karachi’s criminal gangs in 2013 and later started targeting corrupt politicians as well. + +The next army chief will probably stick to General Sharif’s policies of cracking down on domestic militants and seeking to constrain the civilian government’s room for manoeuvre. General Sharif has insisted that he does not want an extension of his term. Some of the prime minister’s allies doubt that. The last time an army chief retired after serving out the specified three-year term was two decades ago. The precedent set by making sure General Sharif steps down as scheduled would be a small step in the right direction. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21710020-nawaz-sharif-has-clawed-back-precious-little-power-army-general-consternation/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Wildlife conservation + +Grim pickings + +Vietnam’s crackdown on traffickers of endangered species is only superficial + +Nov 12th 2016 | HO CHI MINH CITY | From the print edition + +There’s a lot of demand for this in Vietnam + +AN ENORMOUS turtle hangs as a good-luck charm from the wall of a traditional medicine shop in a Chinese part of Ho Chi Minh City, Vietnam’s commercial hub. Traders who line both sides of the street, tending shops filled with fungi and fragrant bark, insist that they have no such ornaments for sale. One youth says he has heard a neighbour might have stocks of tiger glue, a tonic supposedly made from boiling up big cats. But he warns that the rancid gloop is very pricey—and also probably fake. + +Vietnam’s ruling Communist Party looks increasingly embarrassed by the country’s reputation as one of Asia’s worst wildlife-trafficking hubs. On November 17th and 18th it will advertise its efforts to quash the industry at an international wildlife conference in Hanoi, the capital, which will be attended by representatives from about 40 countries. But while the sale of exotic animal parts in Vietnam’s big cities is gradually growing less blatant, it may not be getting rarer: the trade still flourishes, online and underground. + +Vietnam’s unsavoury appetites include ivory, pangolin, bear bile and tiger parts. But it is its taste for rhino horn that has lately caused the most consternation abroad. Rising demand from Vietnamese traders is widely blamed for a vast increase in the number of rhinos killed annually in South Africa, which shot up from only about a dozen in 2007 to 1,175 last year. + +A lot of the horns entering Vietnam are sold to Chinese visitors, or smuggled into China in bulk (controls are looser at the land border than at Chinese air- and seaports). But they are also consumed by rich Vietnamese, at least some of whom believe that drinking powdered horn can help treat ailments including cancer. Rhino horns are often given to bosses and business partners. Hosts sometimes grind them up at parties to flaunt their wealth. + +Distributing grisly pictures of animal carcasses does not much dampen demand, reckons Madelon Willemsen of TRAFFIC, a charity. She thinks such images might even add to rhino horn’s exotic appeal. Wildlife campaigners have instead focused on convincing Vietnamese businessmen that brown-nosing peers with expensive gifts is unnecessary and unimpressive. One particularly effective message, notes a local activist, has been to remind Vietnamese that rhino horns are made of the same stuff as human nails and hair. + +The Vietnamese government promises action, on this and similar scourges. In October border guards seized at least four shipments of ivory, horn and other illicit wildlife products, an unusually large haul (cynics wonder whether their vigilance will cool after this month’s conference). A new penal code which is supposed to come into force next year could be a big step forward: it introduces criminal penalties for wildlife offences which until now have been punishable only with fines. + +Yet campaigners warn that tougher sentencing will make no difference if police keep failing to drag offenders before the courts. On November 14th the Wildlife Justice Commission, a charity, plans to release more details of an investigation into wildlife trafficking at a village not far from Hanoi. It says it saw more than $50m-worth of illegal products for sale there, including 579 rhino horns. The charity handed its findings to the Vietnamese government in January, but is still waiting to hear whether charges will be brought against the dealers involved. It is about time the state joined the hunt. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21710019-vietnams-crackdown-traffickers-endangered-species-only-superficial-grim-pickings/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Pollution in India + +Worse than Beijing + +Politicians bicker as the capital chokes + +Nov 12th 2016 | DELHI | From the print edition + +Not good for you + +DELHI-WALLAHS expect a spike in pollution during the autumn festival of Diwali, which is famed for its exuberant fireworks. This year the city’s bad-air index did indeed shoot up during the night-time revelry. But then, as winds died, the air chilled, smoke from the burning of rice stubble in surrounding farmland drifted in and the city’s thick traffic resumed, the index failed to go down again. + +Delhi’s annual average measure of PM2.5, a fine dust that is the most toxic component of its pollution, stands at 122 micrograms per cubic metre (µg/m³), about double Beijing’s annual average. On Diwali and ten succeeding days this year, Delhi’s air was clogged with averages of well over 500µg/m³, with peaks of up to 1,000µg/m³. The World Health Organisation (WHO) says the “safe” PM2.5 level is a mere 25µg/m³ over 24 hours. + +Like miners drilling underground + +With the city’s 20m sneezing inhabitants complaining of sore eyes, itchy throats, headaches and fatigue, one trade association estimated that 5-10% of employees across Delhi were calling in sick. Dense fog caused pile-ups on roads. A sudden surge in sales created queues outside shops selling face masks and air purifiers. Arvind Kejriwal, chief minister of the National Capital Territory, which contains most of the sprawling city, likened it to living in a gas chamber. Edward Avol, an American scientist who has studied the effects of vehicle exhaust on children, says that Delhi’s pollution is at “an occupational level of exposure”, meaning that it is as bad as that experienced by, say, miners using power tools in a closed space. + +On November 6th the national and local governments sprang into belated action, closing schools and construction sites, sprinkling water on the streets to dampen dust and tightening controls on vehicle emissions. Both India’s supreme court and a national green tribunal, created to address environmental issues, weighed in with orders for more government action, including the implementation of a staged plan to deal more promptly with such spikes in pollution. + +India’s capital is ostensibly run by Mr Kejriwal and his Aam Aadmi Party, a populist opposition group that trounced rivals in elections in 2015. But as Mr Kejriwal has discovered, his “government” exercises minimal clout. It does not have the same authority as those of India’s states and it is locked in a bitter test of wills with the national government, led by Narendra Modi, the prime minister. The national government in effect controls Delhi’s police and the municipal corporations that run city districts. It also appoints the city’s governor, who wields hefty powers of oversight over Mr Kejriwal’s administration. + + + +The city government’s attempt earlier this year to impose an odd-even scheme to curb traffic proved popular with commuters, but failed to reduce pollution much, leading Mr Kejriwal’s opponents to dismiss it as a stunt. The chief minister contends that most of Delhi’s smog comes from agricultural burn-off. The implication is that the governments of the surrounding states, one of which is run by Mr Modi’s Bharatiya Janata party, are to blame for failing to stop the fires. But one minister in Mr Modi’s government insists that 80% of Delhi’s smog is home-produced, and another has declared that the real problem is “political pollution”. + +For farmers in northern India there are few affordable alternatives to burning the prickly stubble left after harvesting rice. For decades, governments have shied away from stopping the annual burn-off for fear of alienating farmers. An outdated dread of food shortages also prompted them to encourage rice growing, by offering floor prices and subsidies, in preference to other crops. + +The nastiest part of Delhi’s toxic cocktail, however, is probably the particulate matter spewed out by diesel engines, which the WHO deems carcinogenic. Here again, successive Indian governments have made things worse. Keen to keep voters such as commercial drivers and tractor- and pump-addicted farmers happy, they instructed state-owned fuel companies to sell diesel more cheaply than gasoline. This promoted a massive switch to diesel engines. Indian carmakers, riding behind such European promoters of “clean diesel” as Volkswagen, ploughed millions into new diesel-engine factories. In 2013 more than half the new cars sold in India were diesel-powered. + +The authorities have not been entirely useless. A past government helpfully ordered that most of Delhi’s taxis and buses be converted to run on cleaner natural gas. Mr Modi’s government earlier this year announced a speeding-up of new emissions standards; by 2020 new cars must have much cleaner engines, and will be run on far cleaner fuel. And although diesel in India remains cheaper than petrol, the difference has narrowed enough to shrink diesel vehicles’ share of the market. But for the next few years, at least, residents of Delhi will be paying the price of previous policies with their health. + +Just how high that price is, no one really knows. A study published in Delhi in 2008 estimated that 40% of residents had damaged lungs. Along with a range of other ill effects from pollution, they were five times more likely to suffer from chronic lung disease than other Indians, and four times more likely to have hypertension. More rigorous studies in other countries have shown marked increases in respiratory problems, cardiovascular disease and cancer tied directly to pollution levels, as well as serious and permanent damage to the health of children. Frighteningly, notes Mr Avol, those results were based on levels of pollution that are only one-fifth to one-tenth of what Delhi lives with. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21710007-politicians-bicker-capital-chokes-worse-beijing/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Banyan + +Prophets of piffle + +Fortune-tellers are harmless, until politicians start listening to them + +Nov 12th 2016 | From the print edition + + + +AT A time of political crisis in South Korea, spare a thought for all the upstanding shamans, sorcerers, soothsayers, diviners, astrologers, numerologists, necromancers and fortune-tellers around Asia who risk being tarred by events. For years the president, Park Geun-hye, appears to have been in thrall to a family friend and informal adviser, Choi Soon-sil, in ways that have scandalised South Koreans and brought Ms Park’s presidency close to collapse. Ms Choi is said to have ruled on everything from Ms Park’s cabinet appointments, to policy towards North Korea, to the display of magic silk purses at her presidential inauguration. She is now under arrest on suspicion of influence-peddling and embezzlement. The South Korean press describes her as a shaman, a figure with Rasputin-like powers of control. + +The seeds of Ms Choi’s influence go back to 1974, when a North Korean sympathiser murdered Ms Park’s mother while trying to assassinate her father, the dictator Park Chung-hee. Soon afterwards Ms Choi’s father, Choi Tae-min, the founder of a cult called the Church of Eternal Life, convinced the young Ms Park that he could contact her dead mother. Later American diplomatic reports say the late Choi controlled Ms Park “body and soul” during her formative years. Some control seems to have passed to his daughter. Yet that is not what professional, modern shamanism is all about, insists the head of Shaman Korea, a trade body. “Calling Choi Soon-sil a shaman is a disgrace,” he thunders. + +The existence of such an outfit is a reminder of how pervasive soothsayers and their like are in Asia. True, those close to Western leaders have at times also turned to fortune-tellers—think of Nancy Reagan’s astrologer or Cherie Blair’s New-Age guru, who set great store by the healing power of crystals. Yet even for the West, the fount of astrology lies in the East. And in Asia the occult is not just the preserve of an Indian minister learning that she will be president one day, or a crown prince in Thailand keen to know the most auspicious date to succeed his late father as king: it is baked into daily life. + +On Seoul’s streets, soothsayers’ tents are everywhere, with fortunes told through face-reading, palm-reading, tarot cards and saju—predictions based on the “four pillars”: month, day, year and time of birth. Hyeon-seo Lee, a defector and author, describes how common fortune-tellers are in North Korea. Though the trade is supposedly illegal, and hiring a fortune-teller is punishable by three years’ re-education, senior officials send their Mercedes-Benzes to the back streets to pick favoured ones up for a consultation. Even while on the run in China, Ms Lee says, defectors consult fortune-tellers about when they should change their names to keep ahead of North Korean and Chinese goons. + +In Thailand it is often hard to separate state Buddhism from soothsaying. Astrologers determine the timing of many official actions, such as the unveiling of a draft constitution earlier this year. And in Hong Kong, the fortune-tellers at the Temple Street night market throw in for free whether it’s a good day for a flutter on the horses. A feng shui master recently visited the Hong Kong offices of The Economist (our mission: to take part in “a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress”). He left behind, in one corner, old coins for prosperity, a hidden mirror to ward off evil spirits and a picture of a dragon to enjoy the view of the harbour and invite good fortune in. + +There is as little harm in a flutter on the stars as there is on the horses. And, as the late Tiziano Terzani wrote in “A Fortune-Teller Told Me”, an account of a year spent with Asian clairvoyants: “Rain is a possibility, the umbrella a precaution. Why tempt fate if fate itself gives you a sign, a hint?” For many, prophecies are events in themselves, and shape subsequent developments. + +But the problems multiply when prophecy meets power. Zhou Yongkang was China’s hardline head of state security until 2012. He then became the most powerful Communist ever to be convicted of corruption. He had chosen the wrong soothsayer: his qigong teacher, known as the “Sage of Xinjiang”, not only failed to predict his impending downfall but testified against him. China’s elites are partial to qigong masters, even though the Communist Party is ever on the lookout for cults, such as Falun Gong, that might threaten it. It takes a cult to know one. + +In Sri Lanka, Mahinda Rajapaksa’s relationship with an astrologer soured when the astrologer failed to predict the strongman’s surprise defeat in a snap election last year—even Nostradamus made the odd error, he said later, in his defence. (The next president promised a much more reasoned rule than the grasping, capricious Rajapaksa years—and then promptly took his oath of office at the auspiciously ordained hour of 6.21pm.) + +A crack in the mirror + +No astrological obsession had a more baleful effect than that of Ne Win, the longtime dictator of Burma (now Myanmar). In 1985, on a numerological whim, he introduced 75-kyat notes, to mark his 75th birthday. Two years later he withdrew various high denomination notes and replaced them with 45- and 90-kyat ones. He chose those denominations because both numbers are divisible by nine, and their digits add up to nine—Ne Win’s lucky number. As his soothsayers should have told him, the huge currency confiscation impoverished millions, leading, in 1988, to an uprising against the brutal junta and his eventual ouster. When his soothsayer warned of an assassination attempt, he shot his image in the mirror. This, at least, seems to have worked: he eventually died in his sleep. + +Note the downfall of all these leaders. Perhaps a Gresham’s law of divination is at work, whereby the bad advice of soothsayers always chases out sounder counsel from more rational advisers. Indeed, the poor advice of soothsayers may chase Ms Park out of office. But that’s only a prophecy. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21709985-fortune-tellers-are-harmless-until-politicians-start-listening-them-prophets-piffle/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +China + + + +Democracy: China holds elections [Thu, 10 Nov 22:25] + +Separatism in Hong Kong: Umbrellas out [Thu, 10 Nov 22:25] + +Cyber-regulation: The noose tightens [Thu, 10 Nov 22:25] + +Lou Jiwei: A little local difficulty [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Democracy’s other version + +China holds elections + +But only the way it likes them + +Nov 12th 2016 | BEIJING | From the print edition + + + +THERE was a time when optimists saw a glimmer of a chance for the development of democracy under Communist Party rule in China. A good way forward, they suggested, would be a simple one requiring no change in the rules. All that would be needed to kick-start the process would be genuine competition in elections for local legislators. In 1980, at the start of Deng Xiaoping’s “reform and opening” campaign, it almost seemed possible: grassroots elections across China saw their first lively campaigning since the party came to power. University students openly challenged the party itself. China’s president, Xi Jinping, is determined not to let that happen again. + +This year 900m voters in China are being cajoled into voting in elections of the same type that (briefly) aroused such enthusiasm under Deng. By the end of the year they will have chosen 2.5m representatives to sit in local “people’s congresses”. These form the lowest rung of the country’s legislative ladder, and are the only ones that are filled through direct elections. Membership of higher-level congresses is decided by lower-level ones. On November 15th it will be the turn of the capital, Beijing, to go through the motions. How different the mood will be from those heady days 36 years ago. + +People’s congresses at all levels remain, as they were then, rubber stamps. Since 1980, however, the party has flirted on and off with the idea of tolerating more competition (normally, the only candidates are those chosen in secret by party officials). Those feisty students were quickly silenced, but in subsequent elections there were usually a few independent candidates who tried to get on the ballot; a handful got elected. A high point was in 2003 when more than 100 independents campaigned. Some official media reported on this approvingly. With the rapid growth of the middle class, democratic awareness appeared to be stirring. But the party was nervous. In elections in 2006 and 2011 it cracked down on such attempts. This year’s are the first of their kind since Mr Xi took over as China’s leader four years ago. The authorities are on their guard. + +Power to the party + +Wang Xiuzhen, a 72-year-old living in Xinyuanli, a neighbourhood in north-eastern Beijing, says officials admitted to her that, according to the rules, she is allowed to stand if she receives nominations from ten voters. But they refused to give her the forms she would need to prove such support. They urged her to drop her bid and avoid bringing trouble upon herself. + +Ms Wang, who also tried unsuccessfully to get on the ballot in 2011, says she wants to stand for election “to be a bridge between people like me, at the lowest levels of society who have no money and no power” and those who wield clout. “In China it is only powerful people like enterprise leaders or school directors who become representatives,” she laments. A retired factory worker, she is one of 18 people in Beijing who have publicly declared their intention to stand as independents. None is known to have got on the official lists. + +It is the same in other parts of China. Wu Lijuan, a laid-off bank worker in Qianjiang, a city in the central province of Hubei, says she spent more than six months studying election law. This year she is trying for the first time to register as a candidate, aiming to improve public awareness of the local-election system. A divorcee, she lives apart from her children. She hopes this will help protect them from the repercussions of her political activities. + +Hubei is also the home of Yao Lifa, one of China’s most outspoken advocates of grassroots democracy. Mr Yao managed not only to register but even to win a seat in 1998—only to lose it five years later in what he said was a rigged process. Since then he has continued to act as a gadfly, educating others and encouraging them to run, among them Ms Wu. For his efforts, Mr Yao was briefly detained last year. He guardedly tells a foreign reporter that he is “not free these days and can’t speak on the phone”. But recently he, along with 57 other would-be independents, issued a public declaration. Electing “wicked” people would lead to “wicked acts” by officials, they said. “We can no longer play dumb, and pretend to be naive.” + +Much of the government’s propaganda relating to this year’s polls focuses on the need to avoid corruption. A small number try to get seats to promote democracy, but far more attempt to buy them in order to rub shoulders and do deals with rich and powerful legislators. Graft permeates every tier of the people’s-congress system. In September 45 legislators were booted out of the national parliament (membership: roughly 3,000) for “vote-buying and bribery”. They had been chosen by the provincial congress of Liaoning in the north-east, from which 523 delegates—nearly 85% of the total—were disbarred for involvement in the fraud. Official media described its scale as “historically unprecedented”. + +Fighting corruption and crushing dissent have been hallmarks of Mr Xi’s rule. At the beginning of it, some had hoped that he might turn out to be a bit more liberal than his predecessor, Hu Jintao. It quickly became clear that political reform was not on his agenda. “Absolute power leads to absolute corruption, and thus unsupervised power is extremely dangerous,” said Mr Xi’s anti-graft chief, Wang Qishan, in an article published on November 8th in the party’s mouthpiece, People’s Daily. But neither he nor Mr Xi has shown any inclination to give people’s congresses more freedom to hold the party to account. + +The rhetoric was not always so grim. In 1987 Deng said direct elections could be introduced gradually at higher levels of the system, leading after “half a century” to general elections for the country’s leadership. Nearly thirty of those years have already passed, however. There is no sign that Deng’s vision has even begun to be implemented. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21709975-only-way-it-likes-them-china-holds-elections/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Umbrellas out + +China tries to snuff out separatism in Hong Kong + +It will do little to curb separatist demands + +Nov 12th 2016 | HONG KONG | From the print edition + +It’s raining pepper spray + +“IF YOU don’t deal with the two cancer cells, you will harm the entire body,” said Zhang Xiaoming, a Chinese official. He was justifying his government’s decision to block two lawmakers who support greater autonomy for Hong Kong from taking their seats in the territory’s Legislative Council, or Legco. The disease China fears is separatism; as if in confirmation of it, thousands of protesters took to the streets in Hong Kong just before the announcement, some shouting “Hong Kong independence!” Many in the territory resent the Communist Party’s supposed cure. + +The intervention by the National People’s Congress (NPC), as China’s parliament is known, is the first of its kind since Britain handed Hong Kong back to China in 1997. The NPC has ruled before on constitutional matters in Hong Kong, but never before has it done so while judicial proceedings are under way in the territory on the same issue. On November 3rd a court in Hong Kong began hearing a case filed by the local government aimed at barring the two, Sixtus Leung and Yau Wai-ching, from Legco. Rather than wait for a verdict, China decided to step in right away. + +Leaders in Beijing were enraged when the two referred to China in a derogatory way and displayed a banner saying “Hong Kong is not China” while they were being sworn in on October 12th. A commentary in the Communist Party’s mouthpiece, the People’s Daily, warned that the central government would “absolutely not take a laissez-faire attitude and cause calamity by letting the pustule fester”. The NPC’s ruling says that oaths must be taken “accurately, completely and solemnly” to be valid—no retakes allowed for violators. + +The ruling could affect several other lawmakers as well as Mr Leung and Ms Yau. A Chinese government lawyer in Hong Kong said 15 of them had used the same swearing-in ceremony for the 70-member body as an “opportunity for performance”. Pro-government legislators are demanding investigations. First in their sights is Lau Siu-lai, who paused for six seconds between each word while taking her oath and later explained that she had been trying to nullify its meaning (she passed muster with her second delivery). + +Hong Kong’s chief executive, Leung Chun-ying, caused yet more disquiet when he told reporters that the rise of pro-independence activism could require the enactment of a new law on internal security. Article 23 of Hong Kong’s post-colonial constitution, known as the Basic Law, says the government should pass such a bill. But huge protests broke out in 2003 when it tried to do so, prompting the authorities to shelve their plans. + +There could be more unrest if they try again. The demonstration just before the NPC’s announcement was a symptom of widespread public anger over perceived interference by the central government in Hong Kong’s affairs. Police used pepper spray to try to disperse the crowd (see picture). Demonstrators unfurled umbrellas to defend themselves, mimicking their use in 2014 during the “Umbrella Movement” when protesters paralysed commercial districts with weeks of sit-ins. It was that movement, and China’s refusal to grant its participants’ demands for full democracy, that led to the birth of independence-leaning groups such as Youngspiration, to which Mr Leung and Ms Yau belong. + +Many Hong Kongers have little sympathy with the pair’s behaviour during their oath-taking (their pronunciation of the word “China” in a way used by Japanese in imperial days caused much offence). But they worry about what they see as the NPC’s attack on Hong Kong’s judicial independence. On November 8th hundreds of lawyers dressed in black marched in silent protest from the High Court, where the government’s case against the two is being heard, to the Court of Final Appeal. Among them was Martin Lee, a former legislator and doyen of Hong Kong’s democrats. + +As a result of the NPC’s ruling, it is highly unlikely that the High Court will allow Mr Leung and Ms Yau to take their oaths again. Their attempts to do so have caused stormy scenes in Legco, where pro-establishment legislators have a (gerrymandered) majority. On November 2nd six security personnel were taken to hospital as a result of mêlées. Although the pair’s position is still ambiguous, Legco’s president has now barred them from entering the chamber. But that has not stopped the chaos: a session on November 9th was suspended after just four minutes when legislators tried to prevent security guards from evicting a colleague for trying to ask why Legco could not debate the NPC’s decision. + +It is hardly likely that barring the pair from the legislature will silence demands for greater autonomy for Hong Kong. Independence-leaning politicians like Mr Leung and Ms Yau won about 20% of the vote in Legco elections in September, a remarkable result for a cause that barely existed until 2014. Many people worry that China may use its campaign against them as a pretext to settle other scores, even with pro-democracy politicians who believe Hong Kong should be part of China. Some of the legislators accused of inadequate oath-taking are democrats of this kind. The more legislators who are ejected, the more by-elections will need to be held. There is a risk they may turn into referendums on Hong Kong’s relations with China. What China sees as Hong Kong’s disease is likely to get worse. + +This article appeared in the Print Edition with the headline: Umbrellas out + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21709801-it-will-do-little-curb-separatist-demands-china-intervenes-hong-kongs-oath-taking-row/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The noose tightens + +China adopts a tough cyber-security law + +Foreign firms are worried + +Nov 12th 2016 | SHANGHAI | From the print edition + + + +“THIS is a step backwards for innovation in China that won’t do much to improve security.” Those damning words from James Zimmerman, chairman of the American Chamber of Commerce in China, describe his view of a sweeping new cyber-security law adopted on November 7th. Many foreign businesspeople agree with his dim assessment. + +Though ostensibly designed to strengthen local networks against malicious hackers, in fact the bill looks very much like a techno-nationalist Trojan horse. The law affects both domestic and foreign firms operating on the Chinese mainland and covers a wide range of activity relating to use of the internet and information and communications technologies (ICT). It will not come into force until June next year, so it is not yet clear how the rules will be implemented. + +Even so, several of them seem problematic. First, the government wants firms operating in “critical” areas to store inside China any personal information or important data that they gather in-country. But the law’s definition of critical is absurdly expansive. It includes ICT services, energy, transport, water resources, finance and e-government. + +This is a headache for multinationals, which typically rely on cross-border flows of business data. Firms worry that the law will not only require expensive new investments but also increase the risk of data theft. Another thorny provision requires companies to get security certifications for important network equipment and software. Foreign firms fear this might be used to force them to turn over security keys and proprietary technologies, which could be passed on to state-owned rivals. + +Michael Clauss, Germany’s ambassador to China, worries that “security rules might be used to pursue other aims” such as industrial policy favouring Chinese companies. He is not the only one. Chinese media note with enthusiasm that provisions requiring the use of internet products and services that are “secure and trusted” (whatever that means) are likely to favour Chinese hardware firms like Lenovo and Huawei and local cloud-computing providers such as Alibaba and Tencent. + +Ironically, the overweening law may end up doing the opposite of what is intended. Because threats to networks are increasingly transnational, taking a bunker mentality could make it harder for China to prevent attacks. Mark Austen, head of the Asia Securities Industry and Financial Markets Association, believes the new rules are flawed because they do not encourage cross-border co-operation. + +If Chinese officials reject such talk as the mere bleating of foreigners, they should at least listen to Eric Xu. More than a year ago he warned: “If we’re not open, if we don’t bring in the world’s best technology, we’ll never have true information security.” That eloquent rejection of techno-nationalism came from a man who is co-chief executive of Huawei. + +This article appeared in the Print Edition with the headline: The noose tightens + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21710001-foreign-firms-are-worried-china-adopts-tough-cyber-security-law/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Lou blow + +An outspoken finance minister retires + +Too bad he was ignored + +Nov 12th 2016 | BEIJING | From the print edition + +If only they had listened to him + +IN MOST countries the finance minister is the second most important person in government. Not in China. Economic policy is set by the Communist Party’s leaders and does not change just because there is a new minister. Hence the retirement of one of China’s few remaining economic reformers, Lou Jiwei, caused barely a ripple on the currency markets. Nevertheless, his removal and track record say a lot about the real problems of governing China. + +Mr Lou is a protégé of Zhu Rongji, a reformist prime minister who stepped down in 2003. He is an unabashed free marketeer—a rare, even endangered species in China. His replacement has been widely interpreted as yet another example of infighting at the top, in which attempts to place loyal supporters of the president, Xi Jinping, in positions of authority risk sidelining reformers. + +But that seems unlikely. Mr Lou’s successor, Xiao Jie, comes out of the stable not of Mr Xi but of his prime minister, Li Keqiang (Mr Xiao held a senior post in Mr Li’s secretariat). So if any politicking is being done, it is by the prime minister. Moreover, Mr Xiao is no statist. He worked in the finance ministry for years and is reputed to be a reformer. So while there are plenty of signs of drift in economic policy, Mr Lou’s departure is not one of them. The most obvious explanation is that he has reached the mandatory retirement age for ministers of 65. + +That said, his record casts light on one of the most important reasons for politicking at the top: Mr Xi’s determination to impose his policies and priorities on thousands of nose-thumbing local officials. Over the past two decades, local governments have been responsible for more and more of China’s total government spending, but depend on transfers from the central government (not local taxes) to do it. This has led to local profligacy and lack of fiscal control. Mr Lou came to office in 2013 promising to change the system and restructure local government debt. He failed on both counts: local government spending as a share of the total has risen from about 65% in 2001 to about 85% in 2015, transfers from the centre have widened, and local governments’ borrowing has increased. + +Mr Xi recently had himself named “the core” by his party’s Central Committee, in part to signal to local officials that he has the weight of the whole party behind him. He is engaged in the same struggle that Mr Lou waged, against the vast inertia of local officialdom. + +This article appeared in the Print Edition with the headline: A little local difficulty + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21710000-too-bad-he-was-ignored-outspoken-finance-minister-retires/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Middle East and Africa + + + +Zimbabwe: Life after Bob [Thu, 10 Nov 22:25] + +Fighting fires in South Africa: Burning down the house [Thu, 10 Nov 22:25] + +South Africa’s courts: Judges v Jacob [Thu, 10 Nov 22:25] + +Egyptian politics: Sense and sensitivity [Thu, 10 Nov 22:25] + +Islamic State in Syria: Anyone for Raqqa? [Thu, 10 Nov 22:25] + +Tunisia’s tourism: The Russians are coming [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Zimbabwe + +Life after Bob + +Broke and divided, Zimbabwe’s government is preparing for Mugabexit + +Nov 12th 2016 | HARARE | From the print edition + + + +IN MANY of the poorest African dictatorships of recent decades, the best-paved road ran from the presidential palace to the airport, in case the Big Man and his entourage needed to escape in a hurry. That is still the case in Harare, Zimbabwe’s capital, where the president’s cronies know that they are not universally popular. + +Some leading figures in ZANU-PF, the ruling party, are said to have shipped belongings abroad already. Some apparently keep bags packed for the moment that Robert Mugabe, the 92-year-old president who has ruled for 36 years, keels over or is pushed aside in a palace coup. Others are said to be sleeping in different places every night, to confound potential assassins or soldiers who they think might be sent to kill or arrest them. + +They have reason to be nervous. The regime’s collapse has often been predicted before, and the pundits, including this newspaper, have always been proven wrong. Still, Mr Mugabe cannot live for ever, and the economy is in an even worse state than usual. + +Start with the doddering despot. Mr Mugabe has long kept his party in line by playing off one faction against another with Machiavellian skill and, in the words of a former cabinet minister, “charming you while preparing to stab you in the back”. Yet now he dozes off in meetings and suffers startling lapses in memory. Recently he is said to have delayed the start of a cabinet meeting because he was waiting for Joice Mujuru to arrive, forgetting that he had fired her as vice-president two years ago. To be fair, Mr Mugabe also has moments of lucidity. He may ramble, but his supporters note that few other men of his age can stand and deliver an hour-long speech. And he is adaptable in the face of infirmity: after reading the wrong speech at the opening of parliament last year he has taken to speaking off the cuff instead. + +Yet potential successors are beginning to circle. Chief among them is his vice-president, Emmerson Mnangagwa (pictured, left, with Mr Mugabe), who once led the security service. The goons may decide to back the man they know and trust. This matters in Zimbabwe, where several party figures have died in mysterious car accidents or house fires over the years. + +A faction in the party has pushed for Mr Mugabe to be succeeded by his wife, Grace, an avid shopper. But several of her leading supporters have been accused of corruption and their group, nicknamed the G40, is on the back foot. Moreover, her support in the party will probably count for little if Mr Mnangagwa has the army on his side. + +Elections are scheduled for 2018. Mr Mnangagwa, however, is so widely disliked that he would find it hard to win even a rigged ballot. (He denies allegations that he was a cheerleader for the massacre of 20,000 people in Matabeleland in the 1980s, when he was Mr Mugabe’s intelligence chief.) Searching for allies, he has even been talking to members of the hopelessly divided opposition. Once in power he will probably try to cajole them into joining a coalition rather than risk them uniting against him. In this Mr Mnangagwa may have the support of Western governments who hope he will establish order quickly and start fixing the economy, and may turn a blind eye to his thuggery. + +Mr Mugabe’s government has long tried to defy the laws of economics—one former governor of the central bank even insisted they did not “fully apply in this country”. But it takes real ingenuity to wreck the currency of a country that has adopted the American dollar. + +The government has already ruined its currency once. After spending more than it collected for so long that no sane person would willingly lend to it, the regime cranked up the printing presses. By 2008 it was printing 100-trillion Zimbabwe-dollar notes that were worth less than a bus ticket. The hyperinflationary madness only stopped when the government scrapped the Zim dollar and started using American greenbacks instead. + +Old habits die hard. Mr Mugabe’s government has again been spending too much. Despite solemn promises to the IMF to come close to balancing its budget, the deficit this year will be about $1bn, a massive 8% of GDP. It has been burning through its dollar reserves at such a clip that earlier this year it seemed unable to pay civil servants. + +But the Reserve Bank of Zimbabwe can still be creative. It came up with a ploy to “print” American dollars by filching them from accounts in Zimbabwean banks and replacing them with worthless IOUs. Thus it turned each dollar into two dollars: one in electronic form in a bank (one might call it the Electronic Zimbabwe Dollar, or EZD) and the second a normal dollar that the government gets to spend. + + + +Surprise, surprise, ordinary Zimbabweans now find it hard to withdraw their own money from their own accounts. Even the official statistics admit that there are not many real dollars left (see chart). Most banks have capped withdrawals at $40-$50 a day. People line up for hours to get their money. Cash is so hard to come by that almost everyone now pays electronically using bank cards or mobile money. In the Anglican Cathedral of St Mary and All Saints a sign displays a mobile-money number for donations. + +Although Zimbabwe does not officially have its own currency, its EZD is behaving a lot like one. It can be used at home (in electronic format) but not abroad. When banks ask the central bank for real dollars to pay for imports they wait months for the money, if they get it at all. Black-market dealers now convert electronic dollars into real ones at a premium of 10-15%. Many market traders now insist on being paid in cash. Airlines are doing the same. + +How long can all this last? The soldiers who prop up Mr Mugabe’s regime are said to have insisted on being paid in real cash, not funny electronic dollars. Imported goods are running out. Inflation will soon reflect the growing spread between real dollars and electronic ones. + +Zimbabweans have long yearned for the post-Mugabe era. Sadly, it will probably not mean a restoration of real democracy. And cleaning up the mess Mr Mugabe has made will take years. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21709954-broke-and-divided-zimbabwes-government-preparing-mugabexit-life-after-bob/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Fighting fires in South Africa + +Burning down the house + +Shack fires are a menace that simple fixes could help prevent + +Nov 12th 2016 | CAPE TOWN | From the print edition + +Easy to start, hard to stop + +IT CAN take less than two minutes for a shack to be engulfed by flames, from a fallen candle or a knocked-over paraffin lamp. Shack fires in densely-populated South African slums often spread quickly and can threaten whole neighbourhoods. In Cape Town alone there were 1,519 fires in jam-packed informal settlements in 2015. Over 5,000 homes were affected. Around 100 people a year die in such blazes. “We are generally desensitised to hearing of yet another fire. The cost of human lives has no bearing here,” says Ashley Stemmett, who is trying to get that number down. + +In May 2015 Mr Stemmett co-founded the Khusela Ikhaya Project, which is busy painting shacks with fire retardant paint. When exposed to heat, the paint chars and swells to form a shield that slows the fire’s spread. The project has already painted 2,000 homes, and ambitiously aims to cover 500,000 by the end of 2020. When a fire broke out at one of its pilot sites in May, residents who had lost their homes in previous fires testified to its worth. In an area containing some 400 dwellings, only 10 were burnt. No lives were lost. Without the paint, things would have been a lot worse. + +Other organisations are going more high-tech. Lumkani, a Cape Town startup that is also trying to tackle shack fires, has designed a cheap early-warning fire-detection system. When its battery-powered detector is triggered, it alerts neighbouring devices and sends an SMS with the fire’s location to community leaders and the local fire department. Its detectors are already in 8,000 homes across South Africa. According to the company’s co-founders, the devices should not just save lives, but will reduce the costs of firefighting and rebuilding. + +Meanwhile, local authorities are trying to teach people how to prevent fires. In Cape Town, the Fire and Rescue Service visits schools and runs campaigns on the dangers of open flames. Many slums are hard for the emergency services to enter, thanks to informal structures that block streets. To let the firefighters in, officials sometimes order these ill-placed shacks to be torn down. The owners are invariably furious. But their neighbourhoods end up safer. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21709956-shack-fires-are-menace-simple-fixes-could-help-prevent-burning-down/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +South Africa’s courts + +Judges v Jacob + +A South African institution that works + +Nov 12th 2016 | JOHANNESBURG | From the print edition + + + +WHEN Jacob Zuma’s lawyers raced to court recently to stop the release of a report finding evidence of “state capture” by the president’s wealthy cronies, the cameras were waiting. A live broadcast of proceedings dominated South Africa’s TV news. Viewers hung on hours of dry legal arguments, for all the world as if watching a juicy soap opera. + +An unexpected by-product of Mr Zuma’s scandal-plagued presidency has been a growing public interest in the justice system. Faced with politically sensitive cases, and under enormous scrutiny, South Africa’s courts have proven fair and effective. After hearing arguments, a panel of High Court judges ordered that the report by South Africa’s anti-graft ombudsman be released that very day. When the country’s highest court ruled in March that Mr Zuma had violated the constitution in a row over taxpayers’ cash spent on his private village estate, proceedings were similarly broadcast live to a rapt nation. + +The African National Congress (ANC) still dominates parliament, despite deepening rot under Mr Zuma and opposition gains in August’s local elections. But the courts are seen as an arena where opposition parties and all kinds of activists can challenge the ANC and win. The judiciary has also acted as a bulwark for South African democracy at a time when other institutions, including the police and state prosecutors, have been compromised. A court held the government to account during a visit last year by Sudan’s president Omar al-Bashir, ordering his arrest in accordance with an International Criminal Court warrant. Sadly, government lawyers appeared to drag their feet as Mr Bashir fled the country. + +Experts, however, fear an over-reliance on the courts, in particular when it comes to fighting political battles. Pierre de Vos, a constitutional law professor at the University of Cape Town, worries that such “lawfare” could place great strain on the judiciary, by leaving judges vulnerable to politicised attacks. Mr Zuma has tried this on, complaining at a weekend rally in rural KwaZulu-Natal that the space for democratic debate had been taken over by the courts. “If there are strong political forces aligned against the courts, it can in the long term be bad for the judicial system,” Mr de Vos says. + +Mr Zuma faces a stack of legal challenges. One of the most explosive is the potential reinstatement of 783 counts of fraud, corruption and racketeering related to an arms deal. He also may face a return to South Africa’s Constitutional Court over his failure to sign a bill intended to fight global money laundering. + +Meanwhile, he is no slouch at using the courts himself. He is expected to seek a review of the report by Thuli Madonsela, the former anti-corruption ombudsman, in which she called for a judicial commission of inquiry into high-level corruption. The opposition Democratic Alliance, for its part, is considering laying charges against Mr Zuma for lying under oath in relation to this report. + +Keeping up the pressure is South Africa’s fiercely combative civil society. Johann Kriegler, a retired Constitutional Court judge, leads an advocacy group called Freedom Under Law. His group, along with the Helen Suzman Foundation, a liberal think-tank, is seeking the removal of the chief prosecutor, Shaun Abrahams, who last month announced flimsy charges against the finance minister—a respected rival of Mr Zuma—before hastily withdrawing them due to lack of evidence. The foundation is also due in court next month over the removal of the head of the Hawks, an elite police unit that critics believe may have been misused for political gain. Mr Kriegler says the courts have shown themselves up to the challenge. “I think our judiciary has covered itself with considerable glory,” he says. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21709969-south-african-institution-works-judges-v-jacob/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Egyptian politics + +Sense and sensitivity + +Abdel-Fattah al-Sisi’s reforms will make him unpopular. Can he stand it? + +Nov 12th 2016 | CAIRO | From the print edition + + + +WHEN Abdel-Fattah al-Sisi, Egypt’s authoritarian president, called for change in September, it was sadly not an appeal for political reform. Rather, Mr Sisi was asking for his citizens’ spare piastres (each worth less than a cent) in order to fund development projects. Given the scale of Egypt’s economic problems, and the state of most peoples’ finances, the idea was widely mocked on social media. “It’s getting embarrassing,” went one tweet. + +Though he often paints himself as Egypt’s saviour, Mr Sisi, a former general, has struggled to come to grips with an economy buffeted by terrorism and political upheaval since the revolution of 2011. High unemployment (over 12%) and soaring inflation (over 14%) have eroded his popularity. Polls can be fuzzy in Egypt, but one conducted by Baseera, a local pollster, shows Mr Sisi’s approval rating dropping 14 points in the past two months. + +It is likely to slump further. After dithering for over two years, Mr Sisi is finally enacting painful but necessary economic reforms. In October the government instituted a value-added tax to raise revenue. This month it went even further, allowing the overvalued Egyptian pound to float. Cuts to expensive subsidies are also being introduced. It is all part of an effort to win over the IMF, which now seems likely to approve a $12 billion loan over three years. With a budget deficit likely to exceed 12% this year, the government desperately needs the cash. + +The moves come as high prices fuel discontent. While the government defended the Egyptian pound, its value plummeted on the black market. Untethered, it is trading around 50% below the old rate. This has caused prices to soar, since Egypt imports many staples. Products such as sugar and baby formula have at times been unavailable. Nearly three-quarters of those who disapprove of the president cite such hardships as the reason, according to Baseera—and more are speaking out. “I can’t afford to eat,” screamed a man in Alexandria, after he set himself on fire last month. + +The situation is likely to get worse before it gets better. Most analysts believe that by delaying the reforms, Mr Sisi has made them more painful. Planned cuts to subsidies on fuel and electricity will further stoke inflation, even as the value of Egyptians’ savings has collapsed. So the government has been cautious. Take fuel, which the state imports and sells below market price. After the devaluation, it let the price rise in local-currency terms, though not enough to offset the devaluation, so the cost of the subsidy rose. Real cuts are not expected until next year. + +The crisis evokes memories of 1977, writes Adel Abdel Ghafar of the Brookings Doha Center, a think-tank. Then Egypt was negotiating a loan from the World Bank, which demanded bold moves, such as devaluing the pound and reducing subsidies. When the government announced higher prices for everything from flour to rice, there were riots. Anwar Sadat, then president, labelled the unrest the “intifada of thieves”. But within days he backed down, cancelling the price hikes and ordering the army to restore order. Mr Sisi, for his part, has raised the price of sugar, but also increased subsidies on other basic foodstuffs. The IMF insists that the Egyptian government is calling the shots. Not everyone believes this. + +The president may still face unrest. Rumours abound of a protest over the economy on November 11th—though no one is sure who is behind it, or if it will happen. H.A. Hellyer of the Atlantic Council, an American think-tank, doubts that there will be big demonstrations. After years of tumult, including a revolution and a coup, Egyptians are tired. Moreover, the government has cracked down on those it sees as troublemakers. “I’m more concerned about impromptu riots, like those in response to the shortage of baby milk earlier in the year,” says Mr Hellyer. + +The success of Mr Sisi’s reforms may depend on whether he can stand being less popular. Notoriously touchy, he may be tempted to backtrack if his ratings continue to decline. In the past he has reneged on cuts to fuel subsidies. About 60% of Egyptians say they would re-elect Mr Sisi if the vote were held now. That number, down from 80% over the summer, may be inflated due to a lack of alternatives. But having bought off the military and security services with generous pay rises, and with much of the media behind him, the president ought to feel secure enough in his job to push on with needed reforms. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21709971-abdel-fattah-al-sisis-reforms-will-make-him-unpopular-can-he-stand-it-sense-and/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Islamic State in Syria + +Anyone for Raqqa? + +There is less to the offensive on Islamic State’s capital than meets the eye + +Nov 12th 2016 | From the print edition + + + +ON NOVEMBER 6th the Syrian Democratic Forces (SDF), a Kurdish-Arab militia, announced an offensive to eject Islamic State (IS) from its stronghold in the Syrian city of Raqqa. America’s outgoing defence secretary, Ash Carter, welcomed the news. He is keen to give an impression of gathering momentum in the campaign to destroy the “caliphate” in Syria as well as in Iraq. Mr Carter described the operation to isolate and liberate Raqqa as the next stage in the coalition’s campaign. + +However, the attempted encirclement of Raqqa is not like the battle raging on the other side of the border, to retake Mosul, Iraq’s second-biggest city. Now in its fourth week, that battle is hard-fought but going well. Clearing IS fighters from surrounding villages, stuffed with booby traps and linked by tunnels, is difficult, dangerous work. But Iraqi security forces, Kurdish Peshmerga and Shia militias, supported by coalition air strikes, are advancing on several axes. Some special force units have entered an eastern district of the city. + +Mosul will surely be liberated sooner rather than later, although the cost in military and civilian lives may be high. But there is far less certainty about Raqqa. The Americans say the operation there has been launched both to disrupt IS plots against the West and to cut off an escape route for jihadists fleeing Mosul. + +The American-backed SDF are a mainly Kurdish umbrella group that consists of about 20,000 YPG (People’s Protection Units) fighters and around 10,000 Sunni Arabs. It is thought that 300 American military advisers are working alongside them and helping to co-ordinate coalition air strikes on IS targets as the SDF advance from their base in Tal Abyad, some 100km (60 miles) north of Raqqa. + +However, while America considers the YPG its most capable ally on the ground in Syria, Turkey, a NATO member, sees it as being closely linked to the PKK (Kurdistan Workers’ Party), a Turkish separatist group. Turkey is conducting a vicious counter-insurgency campaign against the PKK. The Turkish government is determined to prevent the YPG and its political arm, the PYD, from carving out a contiguous Kurdish homeland across Turkey’s southern border with Syria. Consequently, Washington has reluctantly heeded Turkish demands not to provide the SDF with heavy weapons, such as artillery and anti-tank missiles, that would have boosted its firepower. The Turkish president, Recep Tayyip Erdogan, claims that his forces, not the SDF, will liberate Raqqa. + +The Americans are unconvinced. They are hoping to dissuade the Turks from sabotaging the SDF’s advance on Raqqa. The Turkish plan would be to march through Tal Abyad, a border town, in an attempt to split the territory in Syria that Kurds currently control (and which Kurds hope will one day become a Kurdish statelet called Rojava), says Fabrice Balanche of the Washington Institute, a think-tank. To that end, General Joe Dunford, chairman of the joint chiefs of staff, visited Ankara, the Turkish capital, on the day the SDF offensive began. + +In the unlikely event that the Turks can be kept on side, it still leaves the problem that there are not enough Arabs in the SDF to take and hold Raqqa, a mostly Arab city. But Mr Balanche believes that neither the Turks nor the SDF are primarily interested in taking Raqqa. Indeed, they are more likely to end up fighting each other. + +Despite substantial progress in Iraq, America is still flailing around in Syria. Meanwhile, Russia is readying a new onslaught on eastern Aleppo. It appears timed to coincide with the arrival off Syria’s coast of its elderly carrier, the Admiral Kuznetsov. And also to create facts on the ground that can sweeten any potential deal with Donald Trump. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21709967-there-less-offensive-islamic-states-capital-meets-eye-anyone/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Tunisia’s tourism + +The Russians are coming + +Relief from an unexpected source + +Nov 12th 2016 | TUNIS | From the print edition + + + +“LAST year was especially difficult,” says Sabri Belhaouane. The Russian-Tunisian tour guide is still reeling from two terrorist attacks in 2015. In March that year three gunmen murdered 22 people at a museum in Tunis; in June a lone shooter killed 38 people at a beach resort in Sousse. Most of the victims were tourists. A million people cancelled plans to visit Tunisia. Some 70 hotels closed and tourism revenues, which were 7% of GDP, dropped by almost half. + +Tunisia’s fledgling tourism industry seemed doomed. But then, the Russians showed up. By last month, just under 600,000 Russian tourists had visited Tunisia this year, mostly young families and retirees from outside Moscow and St Petersburg. That is a tenfold increase on last year. Historically, Tunisia has looked westward for its non-Arab tourists; first came the French, bolstered by a linguistic and cultural familiarity, then Brits, Spaniards, Italians, and Germans. But Western European travel warnings and cancellations by big tour operators have forced Tunisia to shift its orientation. + +Tunisian tourism has been boosted by the Kremlin’s decisions restricting travel to Egypt and Turkey, two destinations previously popular with sun-seeking Russians. In October 2015 a Russian passenger plane exploded over the Sinai Peninsula; Vladimir Putin issued an indefinite ban on all Russo-Egyptian air travel. A month later the Turkish Air Force shot down a Russian jet in Syria; charter flights and tour sales to Turkey were halted until this summer. + +Tunisia is adapting to the new Russians. It is now common to find menus in Cyrillic, and to see busloads of Russian tourists, sunburnt and in shorts, strolling up Avenue Bourguiba, the main thoroughfare in downtown Tunis. The National Office of Tunisian Tourism (ONTT) has a bureau in Moscow; they are thinking of expanding to St Petersburg. Language courses have begun for tourism workers in Djerba. Hotels, some accused of watering down beer, are learning to be less stingy with the drinks. + +Visa-free travel and low prices help too, thanks to a weak dinar. Cheap all-inclusive package deals banish any thought of terrorism: “I don’t know anything about that,” Ludmila, a 70-year-old teacher visiting Sousse from Perm Krai, near the Ural Mountains, says with a flick of her hand. Like many Russian tourists, her main complaint is the rubbish in the streets. Mohamed Ali Toumi, president of the Federation of Tunisian Travel Agents, has a simpler explanation: “Russians,” he says, “aren’t so easily scared.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21709970-relief-unexpected-source-russians-are-coming/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Europe + + + +Europe’s alt-right: Wolves in skinny jeans [Thu, 10 Nov 22:25] + +Germany’s loony right: The Reich lives on [Thu, 10 Nov 22:25] + +Polish paranoia: Tales from the crypt [Thu, 10 Nov 22:25] + +Russia’s Trump fans: Our American cousin [Thu, 10 Nov 22:25] + +While you were watching Trump…: Turkey locks up dissidents [Thu, 10 Nov 22:25] + +Charlemagne: When America sneezes… [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Racists in skinny jeans + +Meet the IB, Europe’s version of America’s alt-right + +From France to Austria, the “identitarian movement” gives xenophobia a youthful edge + +Nov 12th 2016 | BERLIN | From the print edition + + + +TURN off the sound and you might be watching a video blog by a fixie-bike riding, avocado-munching hipster—an environmental campaigner or a music journalist, perhaps. But Martin Sellner is no liberal. The Vienna-based 27-year-old uses social media sites—YouTube, Facebook, Twitter, Instagram—to promote the “identitarian” movement of which he is a leader. The identitarians are Europe’s answer to the American “alt-right”, which helped carry Donald Trump to the White House. + +What Germans call the Identitäre Bewegung (IB) first emerged in France in 2003. Boosted by the refugee crisis and Islamist terrorist attacks, it has spread across northern Europe in recent years. Its local groups all sport the same yellow-and-black websites and anti-migrant, anti-Muslim, anti-media messages. Like its transatlantic counterpart, the IB exercises an outsized influence in two ways. First, it connects the traditional far right to populist politicians on the national stage. Second, it helps both groups by repackaging their ideas for a younger audience. + +Its professed mission is to preserve national differences. “Human rights include the right to a homeland” is a typical mantra. Where others see European nations as the products of centuries of exchange and interaction, identitarians idealise a mythical past in which borders were absolute and clear (even in Germany, where they have historically shifted as often as the gears on a BMW). Clear borders allowed those inside them to establish religious and cultural norms, identitarians argue. They speak of a “great replacement” (of white Europeans by immigrants with higher birth rates), “ethno-pluralism” (which, confusingly, means something close to the opposite of “pluralism”) and the need for a “reconquista” (a reference to the Christian recapture of Spain from the Moors). + + + +Mr Sellner cites Greenpeace as a model. Like that outfit, the “IBsters” deal in stunts and direct action. They have hung a banner reading “secure borders, secure future” from the Brandenburg Gate in Berlin, blocked roads in Calais to oppose a migrant camp, disrupted theatre performances in Berlin and Vienna and occupied mosques in Leiden and Poitiers. They have smartphone-friendly websites and sell T-shirts and tote bags bearing their logo: the Greek letter lambda, which appeared on the shields of the Spartans who held off the Persians at the Battle of Thermopylae in 480BC. They also adore the local, rail against “McDonaldisation” and idealise the pastoral. A recent video by their Bavarian chapter shows rolling hills and sprightly young men boxing in woodland dells. + +The movement has a deft way of making xenophobic causes seem palatable to moderates. Mr Sellner uses the Twitter hashtag #remigration to “encourage” African and Asian immigrants to reverse the brain drain by returning to their homelands. He frames insinuations that Muslim immigrants are chauvinists and rapists as a defence of women’s rights. An IB group in Paderborn, near Hanover, recently distributed cans of tear gas to female pedestrians; in the current political context, the message was clear: German women need protecting from those beastly foreigners. + +This relative subtlety opens doors to respectable society that remain shut to the traditional skinhead right. The likes of Mr Sellner and Marion Maréchal-Le Pen, a leading French identitarian, are invited to speak by the mainstream media. They are thus useful to the anti-immigration parties advancing in much of the continent, like the Freedom Party of Austria (FPÖ) and the National Front (FN) in France. They promote (and sometimes provide) candidates for their parties and heckle their rivals. The politicians repay the favour. “I understand their concerns,” says Marine Le Pen, the FN leader (and Marion Maréchal’s aunt). Heinz-Christian Strache, the FPÖ leader, shares their videos and defended the Viennese theatre occupation. Local FN politicians have even hired identitarian activists as press advisers. + +Beyond all the mumbo-jumbo about “ethno-pluralism”, the old racist tropes and practices are still there. In Germany identitarians describe immigration as “nation death”; in France they speak of “pureblood Frenchmen”. They have marched alongside skinheads at anti-Islam rallies in Dresden and put a chain-lock on a Muslim school in Rotterdam. In August Germany’s constitutional watchdog put the IB under formal observation—hardly surprising, as the NPD, a German neo-Nazi party, has circulated the movement’s videos as examples of good technique. + +Pepe hops the pond + +Compared with America’s alt-right, identitarians are less web-centric—they tend to meet in person, in local groups—and less openly race-obsessed. But the affinities outnumber the differences. Breitbart, the American alt-right’s favourite website, covers the IB in gushing tones and is planning to launch its own European division. Mr Sellner hosted a pro-Trump party in Vienna on the night of the American election. + +This points to the movement’s most curious trait. Its activists may preach love for the homeland and its unique character, but in practice they are impeccable internationalists, mixing and exchanging ideas like other millennials. Austria’s identitarians borrowed their look wholesale from counterparts in France (as Mr Sellner, speaking good French, admits in one of his YouTube appearances). Alt-right activists on both sides of the Atlantic treat a cartoon frog, Pepe, as a sort of mascot. From Indianapolis to Innsbruck, they share the same open-source politics, fume over the same grievances and chortle over the same in-jokes. Their movement is a howl of anguish at the integration of different peoples. It also epitomises that process. + +This article appeared in the Print Edition with the headline: Wolves in skinny jeans + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21709986-france-austria-identitarian-movement-gives-xenophobia-youthful-edge-meet-ib/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Tinfoil hat department + +Hundreds of Germans are living as if the Reich never ended + +The “Reichsbürger” maintain the Federal Republic is a Jewish-controlled conspiracy + +Nov 12th 2016 | BERLIN | From the print edition + + + +MANY Germans assume that nowadays it is others, especially Americans, who are prone to conspiracy theories and the rantings of paranoid megalomaniacs. By contrast Germans, forever chastened by a Nazi past, are doomed to boring responsibility. This makes the exceptions all the more fascinating. One is the tiny but growing movement of “imperial citizens”. + +The so-called Reichsbürger are convinced that the Federal Republic of Germany (FRG) does not exist. In its place the old German Empire endures, which in their telling was never properly abolished and persists in the borders of either 1871 or 1937. There are nearly as many lines of pseudo-legal reasoning as adherents. One rests on the fact that the Allies never signed a peace treaty with Germany after the second world war. Another cites selectively from a decision by Germany’s supreme court in 1973 regarding an agreement between West and East Germany. The upshot, say Reichsbürger, is that the Federal Republic is really a limited-liability company based in Frankfurt and controlled by a Jewish world government based in America. + +To the Reichsbürger the FRG’s police, judges, laws and tax agencies thus have no authority, and its documents carry no weight. At a traffic stop, say, a Reichsbürger will overwhelm the (usually puzzled) police with references to phony legal paragraphs and treaties while producing a driver’s licence or other identification issued by the Empire. The insignia vary because it is not clear even to the Reichsbürger who the true imperial government-in-waiting is. There are about 30 rival imperial chancellors, several princes and at least one king. One of the chancellors, a man named Norbert Schittke, also claims the English throne. + +Though they draw ridicule even from neo-Nazis, the Reichsbürger are considered part of the extreme right. Many (though not all) are racist and anti-immigrant. Most are male and live in rural areas. Of the four regions that monitor their numbers, Brandenburg and Thuringia, both in eastern Germany, have the most, with several hundred identified in each. Worried about a rise in incidents, a think-tank in Brandenburg recently published a handbook for bureaucrats dealing with Reichsbürger. + +The best approach, it advises, is to avoid responding at all. Typically, a Reichsbürger will only deluge a bureaucracy with verbose letters studded with obscure citations. Others get aggressive. Some 20 interrupted a trial this year and tried to “arrest” the judge. The first case of armed violence occurred in October. Wolfgang P., a hunter in Bavaria, had outed himself as a Reichsbürger in the course of disobeying local authorities. When officers approached his house to confiscate his rifles, he opened fire from the upper floor, injuring several and killing one. Locals told the press that the 49-year-old was a loner raised by his grandmother, whose death had apparently unhinged him. + +This article appeared in the Print Edition with the headline: The Reich lives on + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21709989-reichsb-rger-maintain-federal-republic-jewish-controlled-conspiracy-hundreds/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The Smolensk disaster + +Poland plans to exhume plane-crash victims to prove a Russian conspiracy + +The far-right government thinks President Lech Kaczynski’s death was no accident + +Nov 12th 2016 | WARSAW | From the print edition + + + +EVER since a plane carrying then-president Lech Kaczynski crashed near the Russian city of Smolensk on April 10th, 2010, killing all 96 people on board, Poland’s Law and Justice party (PiS) has been consumed by conspiracy theories. Now in power, it is led by Jaroslaw Kaczynski, the late president’s twin brother, who believes that Russia brought the plane down—perhaps with the connivance of PiS’s Polish political enemies. So the government is having the bodies exhumed. An international team of experts will examine them for evidence of foul play. Many of the victims’ families do not want their relatives dug up, but they have been told the choice is not theirs to make. + +The move does not seem to be prompted by political need. PiS is very popular, largely because of its generous welfare policies, including a lavish monthly child benefit it introduced. According to the most recent poll, just 27% of Poles believe the conspiracy theories about the crash. But the Smolensk issue is important to PiS’s core electorate, mostly older people outside the big cities. + +Earlier this year Poland’s defence minister, Antoni Macierewicz, who claims that the plane disintegrated before crashing, announced that a new investigation was being launched. Mr Kaczynski has repeatedly insinuated that his nemesis Donald Tusk, the former leader of the centrist Civic Platform (PO) party who was prime minister at the time, was somehow involved in the crash or in a subsequent cover-up. Mr Tusk is now president of the European Council; last month Mr Kaczynski hinted that Warsaw may not back him for a second term in May. + +Advocates of the exhumation point out that a fresh autopsy of Poland’s wartime leader Wladyslaw Sikorski in 2008 debunked theories that he was assassinated. (One PiS MP noted that delayed autopsies are often useful, citing the archaeological examination of the Pharaoh Tutankhamun.) But just 10% of Poles support the exhumation. Relatives of some of the victims are aghast. Over 200 signed a letter opposing it. One widow expressed despair at having to see her husband’s corpse dug up to prove “the existence of an attack that I do not believe in”. + +The letter has had little effect. The sarcophagus of Lech Kaczynski and his wife Maria, buried in the crypt under the Wawel castle in Krakow, will probably be opened this month. More exhumations will follow. Meanwhile, a Polish feature film released this autumn, “Smolensk”, depicts a sceptical journalist becoming convinced that the rumours are true. It includes footage of Mr Tusk deep in conversation with Vladimir Putin. At the premiere, Mr Kaczynski said the film “simply depicts the truth”. It does not, but in a world where the boundaries between fact and fiction are increasingly ignored, that may not matter much. + +This article appeared in the Print Edition with the headline: Tales from the crypt + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21709992-far-right-government-thinks-president-lech-kaczynskis-death-was-no-accident-poland-plans/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Russia’s Trump fans + +Our American cousin + +Vladimir Putin welcomes Trump’s win. Strangely, so do some of his opponents + +Nov 12th 2016 | MOSCOW | From the print edition + +Matryoshka mates + +RUSSIAN lawmakers burst into applause when news of Donald Trump’s victory reached Moscow. The White House will be home to a candidate whose chumminess with Russia provoked one former CIA director to call him an “unwitting agent” of Vladimir Putin. Announcing Mr Trump’s victory in the Kremlin’s gilded ceremonial hall, Mr Putin said he welcomed the opportunity to “restore full-fledged relations with the United States”. Russia’s state-controlled media, which thrive on anti-American propaganda, could hardly hide their glee. “I want to ride around Moscow with an American flag in the window of the car,” wrote Margarita Simonyan, the head of RT, the state-backed network that actively promoted Mr Trump’s candidacy. + +Mr Trump’s victory has been portrayed both inside and outside Russia as another example of Mr Putin’s luck. The Russian leader views America’s liberal democratic order, which encourages political and economic openness around the world, as a threat to his own system of closed governing networks dominated by the security services. An isolationist America bogged down in political infighting is much less of a threat to Mr Putin. Russian liberals are in despair; hardliners are cheering. Russia’s neighbours are fretting about the withdrawal of Western backing to deter Russian aggression. Mr Putin is hoping for a deal with Mr Trump, similar to the 1945 Yalta agreement, to carve out a Russian sphere of influence. + +Yet Mr Trump’s victory may prove more problematic for the Kremlin than it seems. Mr Trump’s friendly campaign rhetoric about Russia is no guarantee of co-operation. (Barack Obama also launched a reset of relations with Russia when he came into office.) Whereas Hillary Clinton offered a predictable, albeit hostile, line on Russia, Mr Trump is shrouded in uncertainty. “If America is the devil, better the devil we know,” says Dmitri Trenin, director of the Moscow Carnegie Center, a think-tank. + +Anti-Americanism is one of the pillars of the Kremlin’s propaganda strategy, which portrays Russia as a besieged fortress. Mrs Clinton would have been an ideal enemy. With a friendlier President Trump in office, state television may have to fall back instead on lampooning American politics and Mr Trump himself. But while Mr Obama largely ignored Russia’s often racist attacks on him, insulting Mr Trump is riskier: he may take it personally. More importantly, Mr Trump’s victory—part of a global populist backlash against the political status quo—is an ominous sign for Mr Putin and his wealthy cronies, who have held power for more than 16 years. If Russians grow angry at their corrupt elite, there is only one target for their anger. + +This may explain why two of Mr Putin’s fiercest opponents are more sanguine about Mr Trump’s victory. One is Mikheil Saakashvili, a former president of Georgia who fought a short war with Russia in 2008. The other is Alexei Navalny, an opposition leader and anti-corruption blogger who galvanised anti-Putin protests in Moscow in 2011-2012. + +As political outsiders and proud nationalists who have campaigned against corruption and the political establishment, both Mr Saakashvili and Mr Navalny feel they have more in common with Mr Trump than Mr Putin does. “I don’t believe this is a crisis of America or of Europe. It is simply a swing of the political pendulum, which is what happens in a democracy,” says Mr Navalny. “I wish our politics could be as dynamic.” + +Mr Saakashvili was brought in by the new Ukrainian government as governor of Odessa in 2015, charged with stamping out corruption. He thinks Mr Trump’s predecessors failed to stand up to Mr Putin and were repeatedly outmanoeuvred. Hillary Clinton, he argues, pushed for a reset of Russian-American relations after the war in Georgia in 2008, and opposed the Magnitsky Act, which punishes Russian officials accused of involvement in the death of Sergei Magnitsky, a lawyer, in 2009. The Obama administration pressured Ukraine not to confront Russia militarily in Crimea and refused to provide it with lethal weapons, despite a 1994 pledge to uphold its territorial integrity. + +Worse, says Mr Saakashvili, America has propped up Ukraine’s oligarchic elite in the misplaced belief that they are necessary to block Russian interference. “[American officials] kept telling me, ‘don’t rock the boat’, but the boat was sinking,” says Mr Saakashvili. Earlier this week he resigned as governor, accusing his erstwhile ally, President Petro Poroshenko, of abetting corruption. He also believes America’s policy of encouraging Ukraine to reintegrate its separatist eastern provinces is ruinous. “The less America interferes in Ukraine at this point, the better,” he says. + +If Mr Saakashvili’s and Mr Navalny’s views of a Trump presidency seem overly optimistic, those of Russia’s establishment probably are, too. Many Russians have been hoping for an American leader more like their own. They may regret it. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21709987-vladimir-putin-welcomes-trumps-win-strangely-so-do-some-his-opponents-our-american-cousin/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +While you were watching Trump… + +Turkey locks up dissidents + +President Erdogan keeps on purging + +Nov 12th 2016 | ISTANBUL | From the print edition + + + +THE police in Diyarbakir came for Ziya Pir and his colleagues from Turkey’s pro-Kurdish Peoples’ Democratic Party (HDP) on November 4th, in the black of night. Detained on vague terrorism charges, they were taken to a police station; Mr Pir and several others were then transferred to a courthouse. As dawn broke, a car bomb went off outside the police station, killing 11 people, mostly civilians. An offshoot of the outlawed Kurdistan Workers’ Party (PKK) took credit. The attackers “must have known that there were people being detained inside the building,” says Mr Pir. He and his colleagues narrowly escaped death at the hands of a group they are accused of supporting. + +The HDP is the latest casualty of the snowballing purges ordered by Turkey’s president, Recep Tayyip Erdogan, in the aftermath of the failed coup on July 15th. Over 36,000 people have been arrested and 100,000 sacked, most of them from state jobs. Mr Erdogan has imposed emergency rule and put Turkish politics in a stranglehold. Ten HDP deputies, including its co-chairs Figen Yuksekdag and Selahattin Demirtas, a former candidate for president, have been arrested. Police have raided the party’s Ankara headquarters. The HDP responded with a partial boycott of parliament. + +Mr Erdogan is backed by a coalition of nationalists and Islamists, fired up by the summer’s violence and by his own rhetoric. (To him, this coalition is synonymous with “the national will”.) Politicians from the ruling Justice and Development (AK) party accuse Western critics of ignoring the trauma of the attempted coup on July 15th, which left some 270 people dead. They argue that if the junta, thought to answer to the widely reviled Gulenist sect, had wrested power from Mr Erdogan, it could have meant civil war. + +Yet the damage inflicted on Turkish democracy by the purges has been appalling. Having locked up the HDP leadership, as well as more than 100 journalists, the government has begun to turn up the heat on the main opposition, the secular Republican People’s Party (CHP). Earlier this week, the party denounced the arrests of the Kurdish lawmakers, calling on its own supporters to “resist democratically”. Mr Erdogan responded by lodging a criminal complaint against all of its MPs. Under emergency law, parliament has turned into a sideshow. To the dismay of AK’s own dwindling moderate faction, Mr Erdogan is once again musing about reinstating capital punishment. A nationalist party wants the death penalty, and analysts fear that Mr Erdogan may back it if the nationalists support a new constitution that would give him further executive powers. + +In theory, Turks will have their say on the constitutional changes in a referendum planned for the first half of 2017. Yet with the mainstream media cowed or co-opted, Kurdish politicians behind bars and dissent equated with treason, the prospect of a free and fair vote is abysmally low. A referendum held under the state of emergency, up for renewal in January, risks turning into a coronation. + +As models for his executive presidency, Mr Erdogan’s supporters cite France and America. Yet the more relevant models are Kazakhstan and Russia, with an added serving of political Islam. Mr Erdogan’s inner circle sees Turkey as “a more nonaligned country, with no dues to pay, no burden to carry, and no club membership,” says Yusuf Muftuoglu, a former presidential adviser. The question is how much further Turkey can go along the path to autocracy without provoking serious unrest. + +Mr Erdogan may be tempted to push ahead with a complete purge of the opposition, says Ali Bayramoglu, a veteran commentator. But even with the backing of the Islamist and nationalist camps, that would be no walk in the park. In a society as polarised and diverse as Turkey’s, the transition to absolute rule risks opening the door to social unrest. “Erdogan is a tactician; sometimes he knows very well when to stop,” says a former CHP politician. While there may be more episodes of repression, “this cannot go on indefinitely.” + +If fear of civil unrest does not keep Mr Erdogan up at night, the sagging economy may. The government recently revised its 2016 growth forecast down to 3.2% from 4.5%. The lira has fallen to its lowest level against the dollar in over three decades. Unlike the autocratic regimes to its east, Turkey relies on credit, not oil or gas, to generate growth. “This country needs to attract money from abroad, to continue giving the image that it knows where it’s going,” says an economist. Further repression, and the ensuing instability, “cannot be sustainable”. + +Yet governments often do things that are not economically sustainable. Turkey’s democracy is on life support. Mr Erdogan is holding the plug. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21709991-president-erdogan-keeps-purging-turkey-locks-up-dissidents/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Charlemagne + +When America sneezes… + +Donald Trump’s victory is more bad news for the European Union + +Nov 12th 2016 | From the print edition + + + +WHAT lessons should Europe draw from Donald Trump’s election victory? For those Europeans who believe in American exceptionalism, there may be little to learn. America’s circus-like primaries and gladiatorial presidential contests find few echoes in Europe, and Mr Trump, in all his preening, soufflé-haired glory, is surely a sui generis American phenomenon. Moreover, the electoral college is a peculiar institution. Hillary Clinton seems to have won the popular vote, after all. + +But for most European politicians the shock of the American election was compounded by the obvious parallels for their own democracies. Worried leaders tempered their letters of congratulation to Mr Trump with veiled reminders of the transatlantic values many of them believe his victory imperils. Meanwhile Europe’s army of little Trumps, from France to Italy to Hungary, took their own lessons from the result, showering laudatory missives upon the president-elect that had little to do with America and everything to do with the messengers’ own projects of political disruption: if it can happen there, why not here? The “aloof and sleazy establishment is being punished by voters step-by-step,” said Heinz-Christian Strache of Austria’s far-right Freedom Party (FPÖ) in his Facebook salute to Mr Trump. + +Europe’s ears have been ringing with wake-up calls for years. Like Tolstoy’s unhappy families, each disaster is different in its own way: the euro crisis set creditor against debtor and tore at the notion of solidarity; Brexit showed that the European Union could shrink as well as grow. After so many traumas in recent years plenty of Europeans were at least braced for this one, even if a Trump presidency is hardly the sort of eventuality one can plan for. Its effects on the EU could, in time, prove profound. + +The ascent to the White House of Mr Trump, an admirer of Vladimir Putin who hints that he may abandon America’s NATO allies, poses urgent questions for Europe’s security order. Weakening America’s commitment to NATO could undermine the guarantee of peace that has allowed the EU to pursue its project of integration. But if Mr Trump’s capriciousness makes the geopolitical effects of his presidency hard to predict, the hit to Europe’s self-confidence, already sagging after a string of crises, will be immediate. For the EU is rapidly losing faith in its ability to defend the liberal ideals that Mr Trump’s victory repudiates. So badly has the mood soured that minor successes are now held up as political marvels: Donald Tusk, head of the European Council, heralded a recent trade deal with Canada as a triumph for Western democracy, after last-minute talks barely saved it from death at the hands of a restive regional parliament in Belgium. + +But if Mr Trump’s win is a threat to the EU, it will arrive first via the tribunes of national politics. Mr Strache and his ilk will take heart from the poll-defying victory of a man who shares their distaste for elites and their devotion to nation-first tub-thumping. They may even reap electoral rewards, although a short-term flight to political safety is another possibility: support for EU membership has shot up in most countries since Britain voted to leave in June. An early test will come with Austria’s presidential run-off on December 4th, when the FPÖ’s Norbert Hofer squares off against a candidate backed by the Greens. + +Yet even outside government the populists can tug other politicians in their direction. By forcing centrists to tack towards the fringe, Mr Trump’s victory may strengthen the trend towards Euroscepticism in countries like France and the Netherlands, both of which hold elections next year. (In Germany Angela Merkel, mercifully, is likely to show more backbone.) That in turn could gum up the workings of the EU, where compromises are essential to oiling a complex piece of machinery with 28 moving parts. Inside the EU the alternative to fudge is not frictionless decision-making, but gridlock and inertia. Eurocrats in Brussels often complain that they are made the scapegoats for the failings of national politicians. They should brace for more of it. + +No appetite for destruction + +For now, Mr Trump’s win will merely deepen pro-Europeans’ commitment to maintaining unity at all costs. Since Britain’s referendum the remaining governments have been working on lowest-common-denominator projects like an EU border guard and military co-operation to show that they are still capable of getting things done. (Optimists hold that such efforts might actually be boosted by fears of a withdrawal of the American security umbrella.) Similarly, Mr Trump’s win will if anything strengthen Europeans’ resolve to take a tough line in the Brexit talks so that their own populists are not further emboldened. + +But there will be casualties, too. First among them will surely be the Transatlantic Trade and Investment Partnership (TTIP), a proposed EU-US deal that was already floundering in the face of opposition in Europe and differences between the two sides. The trade-bashing Mr Trump is hardly going to ride to its rescue; if it dies, or (more likely) enters deep-freeze, so do Europe’s hopes of directing global trade standards. Mr Trump has vowed to withdraw from the climate deal agreed last year in Paris, championed by the EU as a triumph of multilateral diplomacy. Forget about transatlantic co-operation on resettling Syrian refugees. + +Yet the deeper fear for many Europeans is that their own long journey of integration is finally running out of steam. The EU is not on the verge of falling apart, Brexit notwithstanding. But Mr Trump’s success shows the potential power of the backlash against the liberal norms the club is supposed to embody, from trade to migration to human rights. If it is replicated in Europe, the EU may eventually tilt towards a common assembly for mutually beneficial transactions rather than a club of like-minded countries with a sense of shared destiny. The tremors from America’s political earthquake were felt across the continent this week. But Europe’s edifice was already tottering. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21709990-donald-trumps-victory-more-bad-news-european-union-when-america-sneezes/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Britain + + + +Brexit and Parliament: Questions of sovereignty [Thu, 10 Nov 22:25] + +India and Britain: A cooler climate [Thu, 10 Nov 22:25] + +Marks and Spencer scales down: Pants on fire [Thu, 10 Nov 22:25] + +The benefit cap: Tightening the screw [Thu, 10 Nov 22:25] + +Brexit and politics: Election fever [Thu, 10 Nov 22:25] + +Marine energy: Ruling the waves [Thu, 10 Nov 22:25] + +Buried treasure: Hitting the jackpot [Thu, 10 Nov 22:25] + +Remembering war: Policing poppies [Thu, 10 Nov 22:25] + +Bagehot: The machine splutters [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Brexit and Parliament + +Questions of sovereignty + +Behind the legal rows over the procedure for leaving the European Union lie deep differences over the right form of Brexit + +Nov 12th 2016 | From the print edition + + + +JUDGES in Britain are not used to being pilloried. So the response to a High Court ruling on November 3rd that the government must have the approval of Parliament before initiating the Article 50 procedure for leaving the EU came as a shock. Several newspapers loudly denounced the judges for trying to subvert the referendum vote for Brexit on June 23rd. No matter that the judgment was not about whether Brexit should happen, but about the narrower question of whether the government could unilaterally invoke Article 50 using its prerogative powers to make and unmake treaties. + +On this issue the judges were emphatic. Because the 1972 European Communities Act that gives effect to Britain’s EU membership confers domestic rights on individuals, those rights can be removed only by Parliament. Yet the government still disputes this view. On November 7th David Davis, the Brexit secretary, confirmed in the House of Commons that the government would appeal to the Supreme Court. All 11 justices will hear the case in early December; they are expected to hand down their judgment only in January. + +Most lawyers who have studied the High Court judgment expect the Supreme Court to concur with it. The only thing that might change this is if the court questions whether triggering Article 50 irrevocably leads to Brexit. In the High Court case, both sides assumed it would. Yet in Brussels many lawyers believe that, even though Article 50 sets a two-year deadline for a country to leave, its invocation could in practice be withdrawn at any time. Such an argument could help the government to win in the Supreme Court. Yet it does not wish to use this line, because it dislikes any suggestion that Brexit could be reversible. Furthermore, were the case to turn on this issue it could lead to an embarrassing referral to the European Court of Justice. + +What will happen next? The most likely outcome is delay, which may threaten the government’s promise to trigger Article 50 by the end of March. If the government loses in the Supreme Court, it will surely have to introduce not a parliamentary resolution but a bill to be enacted by both houses of Parliament. + +Most MPs and Lords backed the Remain side in the referendum. Even so, they are unlikely to block the invocation of Article 50. But they may try to attach conditions that the government dislikes, such as demands for more clarity over negotiating goals, a commitment to stay in the EU’s single market, a special arrangement for devolved administrations (Scotland’s government, particularly unhappy about Brexit, has said it may file a brief in the Supreme Court case) or a demand that an eventual Brexit deal must be approved by a further referendum. + +Theresa May’s government has a working Commons majority of only 14 seats and no majority at all in the Lords. Yet it should eventually be able to secure a cleanish Article 50 act without many conditions. One tactic it is quietly using is to threaten its opponents that it might call an early general election, which opinion polls suggest could substantially increase its majority. Yet this would itself be a risky course—the pollsters can be wrong, as America found out this week—and would also delay the invoking of Article 50. + +The more important debate over Britain’s departure from the EU is about what sort of Brexit is most desirable and what is the best way to negotiate it. On both these questions Brexiteers are being deliberately—and perhaps dangerously—opaque. Thus many are claiming that Britons voted on June 23rd to leave the single market, to impose strict immigration controls and to stop sending any money to Brussels. Yet the question on the ballot paper was only about whether to leave the EU. A clear trade-off exists between the goals of maximising market access and adopting tougher controls on migration. Almost all economic analyses have found that the costs of Brexit to the economy will be far higher if unfettered access to the single market is lost. + +The man without a plan + +As for how to get the best deal, the government insists that to give more clarity over its objectives would be to tie its hands in Brussels. Mr Davis repeatedly told the Commons that, although he would be as open and transparent as he could be, he would reject demands to disclose the government’s negotiating position. The suspicion must be that the government, riven by internal arguments, has actually not got any such position. But Mr Davis’s argument is that, were it to set out minimum negotiating objectives, other EU governments would immediately make these the maximum that could be secured. One Tory MP likened demands for more parliamentary say to a poker game in which the government has to lay all its cards on the table. + +Such analogies betray a fundamental misunderstanding of how EU negotiations work. It is true that the final details are often settled in the small hours and behind the closed doors of a European summit. But almost everything said and done in Brussels is immediately leaked. Moreover, the best outcome to any EU negotiation is, rather like international trade talks, not a zero-sum one in which one side must win and others lose: it is one in which all can see benefits. + +In any case, before most crunch summits, national leaders (including British ones) have disclosed to their parliaments and their voters the broad outlines of what they hope to achieve. That is what Harold Wilson and David Cameron did in their attempted “renegotiations” of the terms of Britain’s membership. It is what Margaret Thatcher did in her battles over the EU budget in the 1980s. Other leaders act likewise. The Danish prime minister gets a mandate from the Folketing that he can depart from only by consulting it again. During the euro crisis, Germany’s Angela Merkel repeatedly had to secure the assent of the Bundestag for her decisions. + +Mr Davis and his colleagues insist that more parliamentary say over Brexit would reduce the chances of a good deal. But experience in Brussels suggests the opposite: greater transparency and parliamentary guidance would strengthen not weaken Mrs May’s hand. By bolstering Parliament’s role, the judges may have nudged Britain towards a better Brexit. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709962-behind-legal-rows-over-procedure-leaving-european-union-lie-deep-differences-over/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +India and Britain + +A cooler climate + +The prime minister returns empty handed from her first long-haul jaunt + +Nov 12th 2016 | DELHI | From the print edition + +Subcontinental drift + +IN THE 1950s nearly half of India’s imports and 80% of its foreign investment came from Britain. Today Britain ranks 13th among India’s trading partners, accounting for 2% of its trade. British firms still have big investments in India, but now such brands as Jaguar Land Rover, Tetley’s tea and even the East India Company are Indian-owned. And it is now Delhi, India’s capital, that cooks up the thickest and smokiest of those fogs that London once made. + +So Theresa May discovered as she arrived on November 6th, into a haze unusually acrid even for the world’s most polluted big city. The prime minister’s three-day visit, her first outside Europe, was meant to show that a post-Brexit Britain can prosper by reviving old friendships and cutting new deals. But even Delhi’s smog could not obscure some hard truths. + +Mrs May had hoped to focus on trade and investment. The Indian ministers and businesspeople she met with, however, were fully aware that Britain will be in no position to negotiate significant bilateral deals until it has sorted out its disentanglement from the European Union. + +India’s government, meanwhile, has shown scant interest in trade deals. Talks on a free-trade agreement with the EU that began in 2007 have been stalled since 2013. India last year shied away from joining the Trans-Pacific Partnership (which now itself looks doomed). And earlier this year Delhi told 57 countries that it wishes to scrap and renegotiate its bilateral investment-protection treaties with them. Its new “model” treaty would compel foreign investors to seek redress in India’s clogged courts before doing it via international arbitration. + +Rather than freer trade with Britain, what Indian officials pressed for was greater freedom of movement. Small wonder. During Mrs May’s six-year tenure as home secretary, the number of Indian students in British universities plummeted from 68,000 to 12,000, largely due to her tightening of visa rules. To Mrs May’s discomfort those rules tightened further a few days before her visit. Foreign companies will now find it harder to bring over staff for short-term postings in their British subsidiaries; Indian tech firms had accounted for 90% of migrants in one of the affected categories. + +“It seems that the UK is mainly interested in greater market access for its goods in India and in getting investments from India, but not in attracting talented Indian services professionals and students,” sniffed Nirmala Sitharaman, a minister with portfolios in trade and finance. Narendra Modi, India’s prime minister, was just as blunt. Education, he declared at a public meeting with Mrs May, would “define our engagement in a shared future.” + +Given Mrs May’s promise to curtail immigration even further, the British team could not offer much on this score. She did pledge shorter queues for Indian frequent flyers to Britain. They can now hope to join the “Great Club”, an invitation-only portal which, Mrs May said, will provide lucky executives and their families “a world-class visa service tailored to their needs”. Any further easing of visa rules, she warned, would hinge on India’s willingness to take in more of the people that Britain wants to expel from its shores. + +This prompted one Indian wit to tweet: “This is funny. Theresa May wants India to ‘take back’ Indians who overstayed but won’t extradite Vijay Mallya who has no passport.” The reference was to a prominent Indian businessman who took refuge in London earlier this year as Indian creditors demanded repayment of more than $1bn. Britain says India has yet to present extraditable charges against Mr Mallya. + +The air cleared as Mrs May headed to Bangalore, India’s tech capital, for visits to a factory and to a Hindu temple, clad in diaphanous Indian national dress. “She carried her sari remarkably well,” says one fashion critic in Delhi. Yet the promises of future co-operation were just as thin. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709964-prime-minister-returns-empty-handed-her-first-long-haul-jaunt-cooler-climate/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Marks and Spencer scales down + +Pants on fire + +The latest plan to save a venerable retailer will cut back its clothes business + +Nov 12th 2016 | From the print edition + + + +FOR decades Marks and Spencer was a high-street favourite. Selling food and sensible clothing, most famously underwear, at sensible prices to the middle-aged middle class, it seemed unstoppable, both in Britain and abroad. In 1998 it became the first British retailer to make a pre-tax profit of over £1bn ($1.2bn). Since then it has been all downhill. On November 8th the chain announced a new turnaround plan, the latest of several. The proposals were radical, but may still not be enough. + +The main problem is its clothes business, which has been draining market share. In Britain M&S has been undercut by shops such as Primark and Next, while young women, particularly, have deserted its dowdy interiors for the brighter lights of Zara and others. The store has also been hit by the trend for consumers to spend their money on entertainment rather than shopping. Its food business, however, does well. Market share is small, at less than 4%, but it has cornered the market in some areas: it sells 22% of all ready meals and 38% of party food bought in Britain, for instance. + +So the new strategy, unveiled against a familiar backdrop of flat revenues and shrinking profits, speeds up M&S’s transition from a clothing store with food attached to a food and clothing business, each on an equal footing. In Britain the company is closing 30 “full-line” stores (those selling clothes, food and homeware), about a tenth of the total, and converting a further 45 into food-only outlets. This will take five years. It is also junking fashion brands that have not sold well. At the same time M&S will be opening 200 new food-only shops by the end of 2018/19. + +Furthermore, the retailer is giving up its global ambitions. It is only eight years since the first M&S to open in Shanghai was mobbed by shoppers; at one point the doors had to be closed to avoid a crush. Last year a third of M&S’s Shanghai stores were shut down, and now the original one is to go too. Altogether the retailer is closing 53 loss-making shops in ten countries, at the cost of about 2,000 jobs. + +The seven to go in France include the flagship store on the Champs-Elysées in Paris. To critics this was the folie de grandeur in the company’s hasty expansion abroad; it never seemed likely that chic Parisiennes would flock to the M&S lingerie department. This leaves wholly-owned stores in only Ireland, Hong Kong and the Czech Republic. To cut management costs, 500-odd jobs are being cut at headquarters and another 400 moved out of London. + +The chief executive, Steve Rowe, says that these “tough decisions” will sustain the business into the future. Others are not so sure. The firm’s share price fell by about 6% after he announced his plan, reflecting some analysts’ complaints that he is not going far enough in giving up the clothing business. And it will take time for these changes to have an impact. + +On November 9th came another reminder of how competitive the high street has become. Sainsbury’s, Britain’s second-biggest supermarket, released its latest results, showing another decline in sales and a fall in pre-tax profits over the first half of the year, down by 10% compared with the same period a year earlier. The biggest supermarket chain, Tesco, has also struggled of late, announcing its own turnaround plan last year. It will be cold comfort to M&S to know that it is not the only high-street giant in trouble. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709978-latest-plan-save-venerable-retailer-will-cut-back-its-clothes-business-pants-fire/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The screw tightens + +Britain’s poor suffer another round of benefit cuts + +Some families outside the capital will see their incomes fall by nearly a quarter + +Nov 12th 2016 | From the print edition + +Taking candy from a baby + +AT A time when wage growth is measly, working Britons are more enraged than ever by stories about people living the high life on welfare payments. A supposedly disabled claimant caught taking part in a bodybuilding contest and an avowedly single mother rumbled by her Facebook relationship-status are among those to have been exposed by newspapers recently. With this in mind, and with a budget deficit to make up, the government is clamping down. In 2013 it instituted a “benefit cap”, limiting to £26,000 ($32,200)—roughly the average household income—the amount that a workless household could claim in benefits each year. On November 7th it lowered the ceiling much further, to £20,000, or £23,000 in London. + +Whatever the tabloid newspapers say, most out-of-work households in Britain have never had it all that easy. Workless households’ incomes are on average half those of working ones. But some have claimed a lot more than that, typically because they have a large number of children (which triggers more generous payments and larger homes) or they live in places where rents are high (which entitles them to higher housing benefits). + +The cap is one-size-fits-all, making no adjustments for family size. When it was introduced in 2013, some households saw massive reductions in payouts. More than 150 families saw their benefits cut by over £20,000 per year. None will see such spectacular falls this time. But about 90,000 households will be affected. An estimated 60% of them are led by single mothers. Those living outside London face a cut in their income of up to 23%. And, like several other benefits, the cap will be frozen in cash terms, meaning that it will get tighter as inflation rises. Iain Duncan Smith, a former welfare secretary (and no liberal), has called for the government to look again at the freeze on benefit payments, whose “purpose was not to have such a dramatic effect on incomes”. + +In the context of overall government cost-cutting, the policy is hardly significant. The £26,000 cap saved about £70m a year. The government estimates that the new, lower cap will save a further £100m. Last financial year the overall budget deficit was £76bn (or 4% of GDP); the government is aiming to shave £12bn from the working-age welfare bill by 2020. The latest squeeze represents less than 1% of that. + +Ministers hope that as well as saving the taxpayer money, the lower cap will push people into work. On paper, at least, the cap provides a clear incentive to find a job: it does not apply to people in receipt of in-work benefits. But so far it seems that benefit caps do not transform the workless into Stakhanovites. The Institute for Fiscal Studies, a think-tank, found that only about 5% of those affected by the previous cap responded by moving into work. Another response, it pointed out, is merely to start claiming disability benefits, which also results in exemption from the cap. Other families simply learn to live off less. The year after the first cap was introduced, poverty among workless households with children rose slightly. Lowering it again will tip more families into this situation. + +This article appeared in the Print Edition with the headline: Tightening the screw + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709895-some-families-outside-capital-will-see-their-incomes-fall-nearly-quarter-britains-poor/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Brexit and politics + +Election fever + +Why a new election is unlikely + +Nov 12th 2016 | From the print edition + + + +EVER since she became prime minister on July 13th, Theresa May has faced calls to hold an early general election. Some have pointed to the simple fact that she is an unelected prime minister, as Gordon Brown was in 2007. Others have focused on her Tory government’s tiny working majority in Parliament, down after the resignation on November 4th of Stephen Phillips to only 14 seats, and to opinion polls suggesting that she could increase it substantially. After the High Court ruling on November 3rd that Parliament must decide whether to invoke the Article 50 procedure that would initiate Britain’s exit from the European Union, a new argument has come to the fore: that calling an election would be a good way to defeat all those diehards who are still trying to delay or obstruct Brexit. + +One obstacle is the 2011 Fixed-term Parliaments Act, which specifies that the next election will be held on May 7th 2020. The act allows for an earlier election to be called, but makes it harder than in the past by requiring either the support of two-thirds of MPs or a (somewhat artificial) vote of no confidence in the government. If neither can be engineered, it would be possible simply to repeal the act, but that would take time. + +Most analysts believe that Mrs May could find a way to hold an early election if she chose to, via one of these routes. Yet she has stuck to the line that there is no case for one, insisting that her main task is to implement the mandate for Brexit given by the June 23rd referendum. She wants to avoid the fate of Mr Brown, who lost credibility by dithering over whether to go to the country. And although the polls are in her favour, any election is unpredictable (ask Hillary Clinton). Even so, Mrs May’s latest language has shifted towards the slightly less firm message that there is no requirement for an election before 2020. + +The Brexit process will affect the argument over an early election in another way. Mrs May’s declared aim is still to invoke Article 50 by the end of March. Catherine Haddon of the Institute for Government, a think-tank, notes that the tight two-year timetable this sets for negotiating Brexit would make it bizarre to call an election after the article has been invoked and negotiations have formally begun. So after March, at least, speculation about an early poll should die down. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709966-why-new-election-unlikely-election-fever/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Marine energy + +Ruling the waves + +Britain may become a pioneer in harvesting energy from the sea + +Nov 12th 2016 | From the print edition + +Mixing water with electricity + +COMPARED with, say, Hawaii or Bali, Cornwall hardly counts as a surfer’s paradise. Yet the waves off England’s craggy southwestern toe—one, the Cribbar, is nicknamed “the widow-maker”—have a gnarly quality all of their own. On November 7th an Australian firm, Carnegie Wave Energy, won EU backing to launch a £60m ($74m) project to harness the power of those waves to generate electricity. If successful, it could help make Britain, with its NIMBYish aversion to onshore wind and solar farms, a pioneer in harvesting energy from the sea. + +Wave power is not for the faint-hearted. It requires hefty subsidies. Bobbing power plants can be destroyed in an instant by freak waves. Two Scottish firms, Pelamis and Aquamarine Power, have gone bust in the past two years trying to commercialise it. Not for nothing is Carnegie’s technology named after Ceto, a Greek goddess who personified the perils of the sea. + +But Michael Ottaviano, Carnegie’s boss, says his power plant is different from the others because instead of floating on the sea’s surface, at the mercy of the waves, it is pushed underwater “like a big football” and tethered just below the surface by a thick cable attached to the seabed. As it moves up and down with the swell, the giant pod drives a hydraulic pump to generate electricity. + +The European Regional Development Fund has provided £9.6m towards producing the first megawatt of power; Carnegie still needs a further £5.2m. The submerged power plant will be tethered 16 miles (26km) off Cornwall’s Atlantic coast, feeding electricity back to the grid in Hayle via what looks like a 33,000-volt underwater extension lead. That has been in place since 2010 thanks to another EU-led development project, the so-called Wave Hub test site. The hub can handle up to 48MW of power, or the equivalent of 24 large offshore wind turbines. Carnegie hopes to attach 15 of its pods to the hub by 2018, creating Britain’s first grid-connected commercial wave farm. + +But is still needs massive financial support. Mr Ottaviano says he “just about had a heart attack” after Britons voted in their referendum in June to pull out of the EU. Since then, however, he says the Treasury has provided reassurances that funding will continue. + +On November 9th the government issued further good news for some developers of renewable energy. As well as confirming plans for a phasing-out of coal-fired power generation by 2025, ministers reaffirmed a budget of £290m a year for technologies such as offshore wind, wave and tidal energy. + +That long-awaited announcement will promote future marine-energy plans in Britain, says Jonathan Marshall of the Energy and Climate Intelligence Unit, a think-tank. Later this year Edinburgh-based Atlantis Resources hopes to connect the world’s largest tidal power scheme to the grid for the first time. Who says British sea power is in decline? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709968-britain-may-become-pioneer-harvesting-energy-sea-ruling-waves/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Hitting the jackpot + +Britain is in the middle of a treasure-hunting boom + +Looking for treasure? Go to Norfolk + +Nov 12th 2016 | From the print edition + + + +BRITAIN is turning into a nation of treasure hunters. In both 2014 and 2015 there were over 1,000 reported “treasure finds”, the most since records began. (The figures exclude Scotland, which keeps track of its own loot.) Two-thirds of the finds dated from before 1500, including a smattering from the Bronze Age. The rise in the number of discoveries reflects a growing interest in tramping around in muddy fields with metal detectors. But legal changes may also be playing a part. + +Not all regions of Britain are equally well endowed with treasure, whose complex legal definition refers to a find’s age, size and metallic composition. Norfolk has long been the place to look: in 2012-15 it accounted for a tenth of all English finds. There are rich pickings in other eastern counties, too (see map). Built-up areas are less bountiful: last year Greater Manchester saw just one discovery of treasure. + +It is not surprising that Norfolkians strike gold so often. The county’s proximity to Europe made it a centre of economic activity long ago. The Domesday Book, a survey of 11th-century England, suggests that south-east Norfolk was the most densely populated part of the country. And today, Norfolk is twice as dependent on agriculture as the average. As fields are regularly churned up by farmers, so the chance of a find rises. + +One reason for the increase in discoveries is a rise in the popularity of treasure hunting. A BBC comedy, “The Detectorists”, has helped to raise the profile of the hobby. Sales of metal detectors, which are responsible for most finds, are rising. Bill Wyman, a former member of the Rolling Stones and keen treasure-seeker, has launched his own brand of detector. + +But the law may be another factor. The 1996 Treasure Act codified the rules regarding who keeps the spoils when treasure is discovered. Previously, the Crown claimed finds of gold and silver that were presumed to have been deliberately buried (in ancient graves, for instance). Artefacts presumed lost by their previous owner, meanwhile, could escape the government’s clutches. The new law demands stricter reporting of discoveries. Roger Bland, formerly of the British Museum, has shown that following the introduction of the Treasure Act the number of recorded finds rose. + +“Nighthawkers”, who hunt treasure illegally on others’ land, face strict penalties. In 2010 a woman who had found a 14th-century coin in her own garden was prosecuted after failing to report her discovery to the authorities, though her conviction was later overturned. More treasure than ever is being unearthed, but finding it is no way to get rich. + +This article appeared in the Print Edition with the headline: Hitting the jackpot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709981-looking-treasure-go-norfolk-britain-middle-treasure-hunting-boom/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Remembering war + +Policing poppies + +A particularly shrill edition of an annual debate about remembrance + +Nov 12th 2016 | From the print edition + +The banned band + +ON THE evening of November 11th, England will play Scotland in a qualification match for the football World Cup. In advance, the countries’ football associations asked FIFA, the sport’s governing body, for permission for the players to wear armbands featuring poppies to commemorate fallen soldiers, since the 11th also marks Armistice Day, when Britain remembers its dead. FIFA refused, citing rules that ban political messages on football shirts. + +Cue fury. “Poppy war!” roared a tabloid headline, after the teams announced that they would defy the ban, at the risk of losing points. Even the prime minister weighed in. “The stance that has been taken by FIFA is utterly outrageous,” said Theresa May. “Before they start telling us what to do they jolly well ought to sort their own house out.” + +In truth, British folk hardly lack opportunities to show their respect for the fallen. Visitors to the country in November are often surprised by the number of poppies on show. Most common is the red paper variety, worn on the lapel. The Royal British Legion, an armed-forces charity, distributes them for a suggested donation of £2.50 ($3.10), which goes to support ex-servicemen. Some 300,000 volunteers shake boxes on streets around the country, raising about £50m. + +New varieties of poppy have bloomed in recent years, including a pin made from British shell fuses fired during the battle of the Somme (£39.99) and cufflinks incorporating earth from various first world war battlefields (£79.99 a pair). Municipal displays are increasingly elaborate, too. This year Glasgow has a statue surrounded by hundreds of “floating” poppies blown around by fans; 4,000 knitted poppies pour from a church in Warminster. + +Some wear a white poppy, first sold in 1933, to commemorate the victims of wars in all countries. Others dislike what can feel like an obligation to wear the traditional red one, which they say removes meaning from the gesture. Television guests have poppies thrust upon them, lest their absence offend viewers. Last year Downing Street aides felt compelled to Photoshop one onto a picture of David Cameron. A television presenter was even told off by the Daily Mail, a zealous enforcer of poppy-wearing, for sporting one that was deemed too big. + +Feelings did not always run so high. Last time the England football team played on November 11th, in 1987, poppies did not feature. Now, a national fuss about how to commemorate the war dead is as much an annual event as the commemoration itself. Armistice Day is in danger of becoming an excuse for furore, rather than reflection. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709510-particularly-shrill-edition-annual-debate-about-remembrance-policing-poppies/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Bagehot + +The machine splutters + +Unsexy as it may seem, Britain needs a big constitutional debate + +Nov 12th 2016 | From the print edition + + + +THE executioner’s axe sailed through the January chill, the pointy-bearded head thudded into the basket and the crowd let out a moan. Spectators in Whitehall rushed to dip their handkerchiefs in Charles I’s blood (in 2008 one would materialise at a genteel auction in Gloucestershire). On this final tableau of the English civil war, Parliament having vanquished the autocratic monarchy, were sketched the principles by which power in Britain is exercised today: Parliament is sovereign and the executive’s latitude—known as the “royal prerogative”—has limits. + +It was a struggle over where these limits lie that recently saw Theresa May improbably accused of a bid to “reverse the result of the English civil war”. The prime minister wields the royal prerogative in the monarch’s name and wants to invoke Article 50 of the EU treaty, the legal route to Brexit, without consulting Parliament. But the High Court ruled against her and she announced her intention to appeal. Geoffrey Robertson, a human-rights lawyer, accused her of “claiming the power of the Crown could override the will of Parliament”. “If the prime minister [is] so ignorant of the constitution’s obvious requirements then it’s certainly time to write it down,” he kvetched. + +Britons should get used to this sort of squabble. Instead of a codified constitution, the country has a series of laws and documents—the oldest being the Magna Carta of 1215—that together convey its traditions and conventions. This slowly evolving body of principles tends to mean good, flexible government. Yet the process of leaving the EU will put it under severe strain. + +Britain’s unwritten constitution requires three conditions that have broadly prevailed since the 17th century. First: a consensus among the country’s rulers about certain enduring traditions. Second: a population willing to defer to that elite’s application and interpretation of those traditions. Third: a steady, incremental evolution of those traditions rather than sudden, violent shocks (or as Vernon Bogdanor, a constitutional expert, describes them, constitutional moments). Each of these conditions was slipping even before the referendum. The past two decades have brought more constitutional changes—from devolution to human-rights laws—than the previous couple of centuries. Battles over conventions like the royal prerogative have raged. Voters have become less willing to give elites the benefit of the doubt. + +Brexit accelerates all of these trends, as the conflict over Article 50 illustrates. Witness Mrs May’s determination to take on the judges, the vitriol poured on them by newspapers, the battles over whether the House of Lords has a right to block the legislation, the McCarthyite menace looming over every MP tempted to vote against it and the Scottish government’s announcement, on November 8th, that it plans to intervene in the legal case. + +And this is just the start of it. Once Brexit negotiations begin, the cabinet, MPs, devolved legislatures, the House of Lords and sometimes the judiciary will find themselves in multi-dimensional tugs-of-war. Who, for example, should scrutinise all the legislation returning from Brussels to British statute books? Should those powers revert to the national level, or be devolved further down? Should Edinburgh, Cardiff and Belfast have the right to veto any final deal? Can MPs reasonably do so? What about the mayor of London, or the new regional city mayoralties? How can the competing interests and outlooks on Brexit of diverging regions be accommodated? + +Then there are the tensions generated by the very fact of the Brexit vote. Not unlike Donald Trump’s victory four months later, the result spoke of social disparities, of a powerlessness felt by many and a distain for aloof elites in a seemingly distant capital city. These pathologies militate for decentralisation, reforms to the cronyish House of Lords and a more responsive electoral system. Over half of voters live in safe seats and many are barely represented (under proportional representation the UK Independence Party would have won 83 seats in Parliament last year. Under first-past-the-post it won one). That Scotland and Northern Ireland voted to stay in the EU could bring further turmoil there as voters are dragged out of the club by their English and Welsh neighbours. Nicola Sturgeon, the Scottish first minister, has already published a draft bill for a new independence referendum. A move to a formal federal structure is probably the only long-term way to hold the United Kingdom together. + +There is little appetite for a disruptive spasm of constitutional perestroika during the current, volatile period. And there is much to admire in the organic, scruffy, reasonable character of British democracy, reliably bending to social and political gusts like a lithe sapling in a storm. Walter Bagehot, the Victorian editor of this newspaper after whom this column is named, mocked the American notion that “the limited clauses of an old state-paper can provide for all coming cases, and forever regulate the future.” Moreover, the constitutional convention advocated by the likes of Gordon Brown, a former prime minister, sounds suspiciously like a political nerd-fest impenetrable to normal voters. + +We the people + +Yet there may be no alternative. Britain’s unwritten constitution runs on deference to steadily accumulated precedent. Brexit will create rifts and ambiguities for which no clear precedent exists, and such a volume and tangle of them that attempting to “muddle through”—that is, botch together case-by-case settlements—could result in paralysis or disintegration. Better, surely, to confront all the interlocking quandaries in one big public discussion leading to reforms and perhaps a written constitution. They say Britain avoided the “constitutional moments” of continental Europe and America because it experienced no post-Enlightenment revolution (Charles I lost his head in 1649). But Britain may now be approaching such a moment whether it likes it or not. Brexit was that overdue revolution. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21709963-unsexy-it-may-seem-britain-needs-big-constitutional-debate-machine-splutters/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Special report: Espionage + + + +Espionage: Shaken and stirred [Thu, 10 Nov 22:25] + +Technology: Tinker, tailor, hacker, spy [Thu, 10 Nov 22:25] + +Governance: Standard operating procedure [Thu, 10 Nov 22:25] + +Edward Snowden: You’re US government property [Thu, 10 Nov 22:25] + +China and Russia: Happenstance and enemy action [Thu, 10 Nov 22:25] + +How to do better: The solace of the law [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Espionage + +Shaken and stirred + +Intelligence services on both sides of the Atlantic have struggled to come to terms with new technology and a new mission. They are not done yet, writes Edward Carr + +Nov 12th 2016 | From the print edition + + + +IN THE SPRING thaw of 1992 a KGB archivist called Vasili Mitrokhin walked into the British embassy in Riga. Stashed at the bottom of his bag, beneath some sausages, were copies of Soviet intelligence files that he had smuggled out of Russia. Before the year was out MI6, Britain’s foreign-intelligence service, had spirited away Mitrokhin, his family and six large cases packed with KGB records which he had kept hidden in a milk churn and some old trunks under the floor of his dacha. + +The pages of “The Mitrokhin Archive”, eventually published in 1999, are steeped in vodka and betrayal. They tell the stories of notorious spies like Kim Philby, a British intelligence officer who defected to Russia in 1963. And they exposed agents like Melita Norwood, who had quietly worked for the KGB for 40 years from her home in south-east London, then shot to fame as a great-granny. Her unrelenting Marxist refusal to shop at Britain’s capitalist supermarkets earned her the headline: “The Spy Who Came in from the Co-op”. + +Mitrokhin’s record for the largest-ever haul of intelligence was smashed in 2013 when an American contractor, Edward Snowden, fled from Hawaii to Hong Kong with a secret archive of his own that contained more than 1.5m classified files from America’s National Security Agency (NSA). Mr Snowden uncovered programmes with names like DISHFIRE and OPTIC NERVE under which the NSA and its British counterpart, GCHQ, were alleged to be monitoring phones and computers around the world. Mr Snowden’s accusation was not that foreign agents had infiltrated Western intelligence agencies but that Western agencies were spying on ordinary people, including their own citizens. + +To look at Mitrokhin’s meticulous typed-up transcriptions side by side with Mr Snowden’s capacious pen-drives conveys a sense of how deeply and rapidly the business of intelligence has changed. Western intelligence agencies used to inhabit a parallel world where spy battled spy. Their trade was stealing or guarding secrets. Their masters were the men and women in government. Today the intelligence services are part of everyone’s world. Their main task has been to protect society from terrorists and criminals. They are increasingly held to account in the press, parliaments and courts. This special report is about their struggle in the past 15 years to come to terms with this transition. They are not done yet. + +Who can spy on the spies? + +The intelligence revolution is partly the result of new technology. As recently as 1999, on becoming director of the NSA, Michael Hayden asked to send an e-mail to all staff. He was told: “We can’t actually do that.” The organisation used computers to break codes rather than to surf the web as everyone else did. The NSA’s new facility in Bluffdale, Utah, the first of several, now stores exabytes of data drawn from everyday communications. At Britain’s GCHQ, most code-breaking was done on paper until well into the 1980s. Today, inside its doughnut-shaped building in Cheltenham, south-west England, the hum from banks of computers that stretch away into the half-light is drowned out by the roar of air-conditioning. + +The revolution has brought spying closer to ordinary people. After the attacks on America on September 11th 2001, counter-terrorism and counter-insurgency became the focus for the American intelligence agencies, says John Parachini, who heads intelligence policy for RAND, a think-tank. Almost two-thirds of today’s intelligence personnel have been hired since 9/11. As the world has moved online, so the spooks have become involved in monitoring organised crime and paedophiles as well as terrorists. That might mean tracking a drugs syndicate from Latin America to Europe, or working out how criminal gangs launder their money, or following paedophiles on the web. + +In Mitrokhin’s days spies sent coded messages using short-wave radios and dead letter boxes. Now the communications of the spooks’ new targets are mixed in with everyone else’s, shuttling between computers and smartphones that are identical to those on your desk and in your pocket. Counter-terrorism, in particular, is pre-emptive. Hence the security services have had to act as hunters of conspiracies rather than gatherers of evidence. + +I don’t believe you any more + +And the revolution is taking place amid growing popular suspicion of everyone in charge. The days are gone when the word of Congress, the home secretary and the odd judge commanded enough public confidence to see off the accusations of a private individual such as Mr Snowden. Belated official acknowledgment of secret programmes has often been met by public dismay, even after assurances that they have been properly overseen. “It is not enough for the authorities just to say ‘trust us’,” writes Paul Bernal, of Britain’s University of East Anglia. “The public needs to know.” + +Privacy advocates complain that the spooks have unprecedented scope to pry into people’s lives. They warn of a burgeoning surveillance state. The spooks retort that, on the contrary, they cannot keep up with terrorists and criminals cloaked by encryption, the dark web and the fact that, as the world builds internet infrastructure, a smaller share of total traffic is routed through accessible Western networks. + + + +At the heart of the debate lies a conflict. The goal of a modern intelligence service, in the formulation of Sir David Omand, a former British intelligence chief, is for citizens to trust the state to manage the threats to their everyday lives. To maintain public safety, the intelligence services must be able to employ secret sources and methods that inevitably involve intrusion. Yet to command that public trust, they must also be transparent and prepared to live by rules that protect individual privacy. + +These contradictions cannot be wished away. Privacy is a precondition for intimacy, trust and individuality, says David Anderson, a senior lawyer asked by the British government to review intelligence legislation. It secures rights such as the freedom of assembly and fair trials. The knowledge that an all-seeing state is watching has a chilling effect even if you have done nothing wrong. Perhaps your words will be used against you later, under laws passed by a different government. Perhaps the state will try to crush the dissent that prefigures desirable social change—as America’s FBI tried to destroy Martin Luther King by sending a letter, supposedly from a disillusioned admirer, that accused him of being a “colossal fraud and an evil, vicious one at that”. + +But privacy is not an unalloyed good. A society that gives it primacy over security invites paralysing disorder and injustice that would inhibit the very intimacy and freedom of expression which privacy is supposed to promote. + +Likewise, although the public needs to know what is being done in its name, some spying techniques lose their potency if they are discovered. Early Enigma decrypts in 1940 from Bletchley Park, Britain’s code-breaking centre, were given the “CX” prefix of MI6 reports so that the Nazis would think they were based on standard human intelligence (known in the jargon as HUMINT). A former CIA employee who is now at RAND tells how, after a successful raid in 1998, journalists learned that the NSA was intercepting calls from the satellite phone of Osama bin Laden, the founder of al-Qaeda. Immediately after the news got out, the phone fell silent. + + + +Since the Snowden revelations, Western security services, and particularly those of America and Britain, have come in for savage criticism. Much of this has focused on the intense years immediately after 9/11. The CIA subjected prisoners to brutal interrogation techniques, including simulated drowning, or waterboarding. For some years the NSA operated a telephone-surveillance programme without judicial oversight. That programme was later judged to be illegal. + +This special report will look at those transgressions in greater detail. Yet, even taking them into account, the criticism of American and British intelligence is overblown. Rather than being James Bonds, real-life intelligence officers are bureaucrats. Rather than acting as freewheeling individualists, most set out to live by the rules. It is possible to argue about the merits of intercepting and warehousing data, about access to databases and large-scale hacking, but the idea that controlling masterminds at the NSA and GCHQ are plotting mass surveillance is a myth. + +Such criticism is especially unfair when it comes from outside the English-speaking intelligence alliance embracing America, Australia, Britain, Canada and New Zealand, known as the Five Eyes. Few countries say much about their intelligence services or have a clear framework for governing them. Britain’s operated almost entirely in the shadows until the 1990s and acknowledged some of its activities for the first time only in 2015. Yet by the end of this year it will have put its intelligence services under a system of oversight that is a model. And America is more open about its intelligence services than any other country. + +The stark contrast is with countries like China and Russia, where the security services answer to nobody except the men at the very top. Russian and Chinese citizens are subject to untrammelled surveillance by their own leaders. + +Before looking at Russia and China, and the growing awareness that they will become the Western agencies’ main antagonists again, start with the twin shocks of technology and terrorism. They have turned the world of intelligence on its head. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21709778-intelligence-services-both-sides-atlantic-have-struggled-come-terms/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Technology + +Tinker, tailor, hacker, spy + +Who is benefiting more from the cyberisation of intelligence, the spooks or their foes? + +Nov 12th 2016 | From the print edition + + + +“THE COMPUTER WAS born to spy,” says Gordon Corera, who covers intelligence for the BBC, Britain’s national broadcaster. The earliest computers, including Colossus and SEAC, were used by signals intelligence (known as SIGINT) in Britain and America to help break codes. But computers also happen to have become supremely good at storing information. Searching a database is a lot easier than searching shelves of files like those compiled by the East German secret police, the Stasi—which stretched for 100km. + +The job used to be to discover what a hostile country was up to by attaching crocodile clips to telephone lines emerging from its embassy, intercepting communications, collecting data and decrypting them. It was an industrial process. Breaking code was laborious, but once you had succeeded, the results endured. “Twenty years ago we had a stable target, a stately pace of new technology and point-to-point communications,” says a senior intelligence officer. Cryptography evolved slowly, so “when you cracked a code it could last from ten to 30 years.” + +The internet changed everything. Roughly $3.4trn a year is being invested in networked computers, phones, infrastructure and software. The pace is set by businesses, not spooks. Individual packets of data no longer travel on a dedicated phone line but take the route that is most convenient at that instant, blurring the distinction between foreign and domestic communications. Signal intelligence used to be hard to get hold of. Today it gushes in torrents. The trick is to make sense of it. + +Civil-liberties groups rightly claim that this new world presents untold opportunities for surveillance. This has been especially true for the NSA and GCHQ. Most of the traffic has passed through America, which contains much of the infrastructure of the internet, and much of the rest passed through Britain, even if it originated and terminated elsewhere. Everyone uses the same hardware and software, so if you can break one device, you can break similar devices anywhere. + +Knowing who communicates with whom is almost as revealing as what they say. In a technique called contact chaining, agencies use “seed” information—the telephone number or e-mail address of a known threat—as a “selector” to trace his contacts and his contacts’ contacts. A burst of activity may signal an attack. In 2015 contact chaining let GCHQ identify a new terrorist cell that the police broke up hours before it struck. + +You are never alone with a phone + +Mobile phones show where they are. According to Bruce Schneier, a cyber-security expert, the NSA uses this information to find out when people’s paths cross suspiciously often, which could indicate that they are meeting, even if they never speak on the line. The NSA traces American intelligence officers overseas and looks for phones that remain near them, possibly because they are being tailed. Location data can identify the owner of a disposable phone, known as a “burner”, because it travels around with a known phone. + + + +The technical possibilities for obtaining information are now endless. Because photographs embed location data, they provide a log of where people have been. Touch ID is proof that someone is in a particular place at a particular time. Software can recognise faces, gaits and vehicles’ number plates. Commercially available devices can mimic mobile-phone base stations and intercept calls; more advanced models can alter texts, block calls or insert malware. In 2014 researchers reconstructed an audio signal from behind glass by measuring how sound waves were bouncing off a crisp packet. The plethora of wired devices in offices and houses, from smart meters to voice-activated controllers to the yet-to-be-useful intelligent refrigerator, all provide an “attack surface” for hacking—including by intelligence agencies. Britain’s government has banned the Apple Watch from cabinet meetings, fearing that it might be vulnerable to Russian hackers. + +The agencies can also make use of the billows of “data exhaust” that people leave behind them as they go—including financial transactions, posts on social media and travel records. Some of this is open-source intelligence (known as OSINT), which the former head of the Bin Laden unit of the CIA has said provides “90% of what you need to know”. Private data can be obtained by warrant. Data sets are especially powerful in combination. Facial-recognition software linked to criminal records, say, could alert the authorities to a drug deal. + +The agencies not only do more, they also spend less. According to Mr Schneier, to deploy agents on a tail costs $175,000 a month because it takes a lot of manpower. To put a GPS receiver in someone’s car takes $150 a month. But to tag a target’s mobile phone, with the help of a phone company, costs only $30 a month. And whereas paper records soon become unmanageable, electronic storage is so cheap that the agencies can afford to hang on to a lot of data that may one day come in useful. + +Vague, very vague + +But not everything is going the agencies’ way. Indeed, many SIGINTers believe that their golden age is already behind them. As the network expands, more capacity is being added outside America. By 2014, according to Mr Corera, the proportion of international data passing through American and British fibres had nearly halved from its peak. And the agencies have the capacity to examine only a small fraction of what is available. The NSA touches 1.6% of data travelling over the internet and selects 0.025% for review. Its analysts see just 0.00004%. + +Data are also becoming harder to trace. Some protocols split a message in such a way that it passes over different networks—a phone connection and Wi-Fi, say. Others allocate IP addresses dynamically, so that they may change many times in a single session, or they share one between many users, which complicates identification. Still others take computing closer to the user, which means that messages bypass the core network. + +The internet has many channels and communications apps, each with its own protocol. Work on new tools is 20-30% of the spooks’ job. Even so, there are too many apps for the agencies to reverse-engineer, so they have to choose. An easy protocol might take a day to work around. A difficult one might take months. A routine upgrade of an app can mean having to start from scratch. And some means of communication are intrinsically hard to break. Messages worth collecting that are contained in apps like FaceTime and Skype are hard to tell apart from entertainment in Netflix and YouTube when they pass through networks. Jihadists can contact each other through online gaming chat rooms. Steganography hides messages inside images. + +Encryption is becoming standard. If a message is sent via an app provider like Telegram or WhatsApp, the identity of the receiver might be encrypted, too. In principle modern encryption is uncrackable. Unless someone can build a quantum computer, which could search for multiple solutions simultaneously, working through the permutations would take a chunk out of the rest of history. + +To get in, therefore, analysts often depend on human error. But the targets are becoming more sophisticated. The New York Times has reported that Abdelhamid Abaaoud, who directed a wave of bloody attacks in Paris in November last year, ordered a soldier to ring a mobile phone on Syria’s northern border so that his call would pass through a lightly monitored Turkish network. + +The result, case officers say, is that tracking jihadists takes increasing effort and skill. A few years ago one officer might watch several jihadist targets; today you need to throw a lot more manpower at the task. Too many jihadists have travelled to Syria for GCHQ to monitor them all. The intelligence services catch glimpses of what is going on, but not the full picture. “With encryption,” says a British officer, “maybe you see a bit of content, a bit of the puzzle.” + +Some Western intelligence chiefs have tried to curb encryption, or argued that at least they should be given a set of secret keys. That would be impractical and unwise. Impractical, because watertight encryption programmes will then be written outside America and Europe, and there is little the authorities can do to stop it. Unwise, because the intelligence services are not the only ones prowling the web. Organised criminals and fraudsters would like nothing better than weaker encryption. + +A better way to cope with the difficulties of intercepting traffic is to hack into machines sitting at the end of the communications chain. Once in, the agencies can look at a message before it has been encrypted, split into packets and scattered across the network. Again, though, that poses a dilemma, because governments are responsible for cyber defence as well as cyber offence. To gain entrance to a machine, hackers use flaws in software. The most prized of these are undisclosed and called zero-day vulnerabilities (because software engineers have zero days to write a patch). Stuxnet, a computer worm written by the Americans and the Israelis that attacked centrifuges in Iran’s uranium-enrichment programme, exploited five zero-day flaws. + +There is a market in such tools. When Hacking Team, an Italian cyber-company, was itself hacked in 2015, the world learnt that zero-day vulnerabilities were for sale. According to Wired, a magazine, the price started at hundreds of thousands of dollars. Among the buyers were governments and criminals. In their role as defenders, the NSA and GCHQ should be revealing software faults so that companies can write patches. In their role as attackers, they need some in reserve. + +When machines are so powerful, where do people fit in? Certainly, signal intelligence is relatively cheap, versatile and safer than running human agents. Yet human spies still play a vital complementary role. One task is to furnish seed information that can serve as selectors for tracing contacts. Another is to gain access to computers that are well-defended or “air-gapped” from the internet. Most valuable of all is the human ability to bring judgment and context. + +People also provide oversight. There was a time when the constraints on the agencies were technical and budgetary, because codes were hard to break and agents costly to deploy. In an era of cheap technology, it is difficult to know precisely what the technology will be able to accomplish. The constraints on the intelligence services’ conduct must therefore be legal—and robust. + +Edward Snowden and others have suggested that the agencies are unwilling to live within the rules. But is that criticism deserved? In the anxious times after the attack on America on September 11th 2001, how far did the CIA and the NSA really go? + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21709773-who-benefiting-more-cyberisation-intelligence-spooks-or-their/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Governance + +Standard operating procedure + +How the war on terror turned into a fight about intelligence + +Nov 12th 2016 | From the print edition + + + +AFTER THE COLLAPSE of the Soviet Union, intelligence was becalmed. Apartheid came to an end, the Palestine Liberation Organisation said that it was abandoning terror, and economies around the world embraced the Washington consensus. The NSA, isolated by its own secrecy, was out of touch with the burgeoning internet; it lost 30% of both its budget and its workforce. Budgets at the CIA and MI6 were cut by a quarter. John Deutch, then the CIA’s director, thought the future lay in signals intelligence and began to retire old hands in what became known as the “agent scrub”. At gatherings of senior mandarins in Whitehall, Sir Colin McColl, then head of MI6, was asked by colleagues: “Are you still here?” + +Everything changed on September 11th 2001. When al-Qaeda struck America, the recriminations flew. The CIA had been created after Pearl Harbour to guard against surprise attacks, yet in the 1990s the agency’s bin Laden hunters had been marginalised as eccentric and obsessive. The intelligence agencies scrambled to make up for what the 9/11 Commission later called their failure “to connect the dots”. + +At the time, amid fears of the next assault, the intelligence agencies were called on to make the homeland safe. But when their conduct came to light later, in a less fearful world, they were condemned for their methods. The story of this whipsaw is a case study in how democratic, law-abiding societies struggle to govern bureaucracies that act behind a veil of secrecy. America has found the ensuing debate messy and bitter. The thing to remember, however, is that in other countries the debate barely took place at all. + +One set of accusations was levelled at the “President’s Surveillance Programme”. Under this, the NSA intercepted international communications that it suspected had a bearing on al-Qaeda, even if one of the callers was in the United States and was thus protected by the Fourth Amendment, which guards Americans against searches or seizures without a warrant. The agency also collected “metadata” (the details but not the content) of calls to, from and within America, acting outside the usual legal machinery. Administration lawyers advised that, as commander-in-chief, George W. Bush had war powers that overrode other laws. + +A second set of accusations dealt with harsh treatment of prisoners by the CIA. In secret detention centres outside America it employed 13 techniques, including slapping, nudity and, notoriously, waterboarding. The aim was not to extract information directly but to break prisoners’ will, so that they tipped from a “zone of defiance” to a “zone of co-operation” in which they would talk freely. In “extraordinary renditions” some prisoners were handed over to other governments. Although these were supposed to give America assurances of fair treatment, critics said that in practice nothing could stop them from using torture. + +In all, the CIA dealt with fewer than 100 high-value prisoners, and half that number were rendered up. Bush administration lawyers advised that prisoners’ treatment at the hands of the CIA stopped short of torture, which is illegal. Common Article Three of the Geneva Convention, which applies the stricter standard of cruel, inhuman or degrading treatment, was irrelevant, they said, because it applies only to civil wars. + +Would you waterboard your daughter? + +Both the surveillance and the interrogation programmes were to be mauled in the press, in Congress and in the courts. The Detainee Treatment Act, passed in 2005, banned cruel, inhuman or degrading treatment for any American prisoner. The same year the Washington Post revealed the existence of secret prisons in eastern Europe and others hinted at the harsh techniques. General Hayden, by then head of the CIA, reports that sessions between the agency and the House Security and Intelligence Committee descended into shouting matches. During one, he was asked if he would be prepared to waterboard his daughter. In 2006 the Supreme Court found against Mr Bush’s legal team and ruled that Common Article Three did in fact protect al-Qaeda prisoners. Early in his presidency, Barack Obama restricted interrogators to mild techniques, such as exploiting the subject’s fears and resentments or offering small rewards like cigarettes, laid out in the revised Army Field Manual. In effect, the vestiges of the CIA interrogation programme were shut down. + +A chunk of the surveillance programme followed a similar trajectory. Reports about it surfaced in the New York Times in 2005 (though the paper had been sitting on the story for over a year), with an account of warrantless collection of information. The extent of the programmes became clear only in June 2013, when Edward Snowden released his trove of NSA files (see article). Immediately it became obvious that a few months earlier James Clapper, the Director of National Intelligence, had misled Congress. When asked whether the NSA collected “any type of data at all on millions or hundreds of millions of Americans” he had replied under oath, “No sir”, and given a chance to clarify his answer, he continued: “Not wittingly.” + +At the end of 2013 a presidential review panel and in early 2014 a government agency, the Privacy and Civil Liberties Oversight Board, both issued withering critiques of the metadata collection. The law says that the government can seize metadata if they are “relevant” to an FBI investigation. That language, the oversight board concluded, is not broad enough to allow the NSA to seize the whole lot before an investigation has begun. In May 2015 a federal appeals court in New York agreed. And a month later the USA Freedom Act gave the NSA six months to stop warehousing metadata—though it allowed the agency to go to telecoms companies with specific queries. + +Grey areas + +This saga raises two questions about America’s system for running the intelligence agencies. The first involves the role of the president. Both the surveillance and the interrogation programmes, as well as the legal opinions justifying them, were secret. In itself, that was legitimate and perfectly sensible, because otherwise the jihadists might have learnt about them and altered their behaviour accordingly. But the Bush legal team rested on maximalist interpretations of the president’s war powers, which the courts were later to strike down. + +At the same time the secrecy the administration insisted on was extreme. Even the chief counsel of the NSA was not allowed to read the basis for his own agency’s surveillance programme, and its inspector-general, in effect its regulator, was not told of the programme’s existence for several months. If—or more likely when—tight security fails, the combination of controversial legal opinion and general shock risks a humiliating climbdown. That does the agencies no good at all. + +Second are doubts about governance. Congress and the courts are supposed to check the executive, but questions hang over both. At the start Congress was pliant. “There was some oversight,” says Matthew Aid, a former intelligence officer who writes about the NSA, “but I have seen kittens protest more loudly.” Later, amid popular anger at the programmes, members queued up to chuck rotten tomatoes. Part of the problem is structural. The House and Senate Committees meet in camera and much of their debate is classified. One former official at America’s Defence Intelligence Agency points out that, since the members get no chance to grandstand to their voters back home, sitting on the committees offers little reward. + +The worries extend to the special intelligence court, created under the Foreign Intelligence Surveillance act. It was informed early on about the collection of metadata, and in 2006 was formally brought into the process and asked to issue general warrants. The court asked for changes to strengthen protections for Americans. However, compared with the New York appeals court and much other legal opinion, it leant heavily towards the administration. The suspicion is that, like any regulator, it had started to see the world through the eyes of its charge. + +Before you conclude that the system is broken, however, look for a moment at the other side of the coin. Intelligence law is complex and often secret. This has meant that reasonable complaints against the agencies have become mixed up with unreasonable ones and with outright errors to form one great hairball of moral outrage. + +For instance, there were reports that the NSA broke its own privacy rules thousands of times a year. That sounds alarming. In fact, two-thirds of these breaches involved calls between legitimate non-American targets who just happened to be in America at the time—and were thus temporarily protected by law. Most of the rest were selectors wrongly entered in the database because of poor typing or overly broad search criteria. Instances of genuine abuse tended to involve intelligence officers checking up on their partners (known, inevitably, as LOVEINT). Defending the programme, General Hayden points out that all but a handful of the NSA’s 61m inquiries were legitimate. The newspaper headlines, he says, should have said, “NSA damn near perfect”. + +From the press coverage you get the sense that the agencies were out of control. In reality they are highly bureaucratic. In the metadata programme each search of a seed had to be approved by one of 22 supervisors. The foreign programme established tests to ensure that targets are not American, likely to be outside the United States and likely to provide useful intelligence. The “audit trails are baked into the process”, says a former intelligence-oversight official at the Department of Defence. “There are triggers and warnings to managers of improper searches within the datasets.” + + + +Despite this, there is a persistent notion that the intelligence agencies undertake mass surveillance. That is partly because some critics elide foreigners, who are not protected, with citizens, who are. Although the Privacy and Civil Liberties Oversight Board condemned the metadata programme, it made clear that “compliance issues [did not] involve significant intentional misuse of the system. Neither has the board seen any evidence of bad faith or misconduct.” When a senior British judge was asked whether GCHQ engaged in random mass intrusion into citizens’ private affairs, he replied “emphatically no”. According to Sir Iain Lobban, a former head of GCHQ, “if they were asked to snoop, I wouldn’t have the workforce; they’d leave the building.” + +The idea has also got about that intelligence is ineffective against terrorists, and that its true purpose must therefore be to spy on ordinary people. That conclusion has arisen partly because the oversight board found that the metadata programme did not add anything to the NSA’s understanding of terrorism. Intelligence chiefs are to blame, too, for making claims about their achievements that they could not substantiate. + +However, the oversight board found that the other, foreign programme made “a substantial contribution to the government’s efforts to learn about the membership, goals and activities of international terrorist organisations, and to prevent acts of terrorism from coming to fruition.” For instance, it helped to identify the courier who led to Osama bin Laden. Between 2002 and 2013 the NSA helped foil 17 terrorist plots against New York. In Britain MI5, MI6 and GCHQ convinced David Anderson, an independent reviewer appointed by the government, that communications data has played a “significant” role in every counter-terrorism operation in the decade to 2015. + +The same is true for harsh interrogation. It would be convenient if inflicting pain on prisoners was pointless as well as wrong. However, many people in government and the intelligence services attest to how the three people who suffered waterboarding gave up a lot of information; the CIA’s former counter-terrorism chief, Jose Rodriguez, called them “walking libraries”. The decision to abstain from such techniques, just and wise though it was, came at a cost. + +The subtle point critics of American intelligence often miss is how the system, taken as a whole, has tended to right itself + +The subtle point critics of American intelligence often miss is how the system, taken as a whole, has tended to right itself. Ben Wittes, of the Brookings Institution and editor of the Lawfare blog, says that after the initial reaction to 9/11 there was a broad correction in the following years. The last waterboarding took place in 2003. When General Hayden became director of the CIA in 2006, he stopped the most extreme treatment. “Presidents—any president—get to do one-offs based on raw executive authority,” he has said, “but long-term programmes, like this one had become, needed broad political support.” + +Likewise, thanks to growing discomfort within the Justice Department, the FBI and the NSA—and a lot of courage from some officials—the metadata programme was brought under the control of the intelligence court. “When the terror threat receded a bit,” says the former intelligence-oversight official, “people stepped back and privacy and civil liberties came to the fore.” + +Some intelligence folk think that the clamour for action immediately after 9/11 and the condemnation of the intelligence services later, when the world no longer seemed so dangerous, is an example of double standards. There is something to that. But the whipsaw is also a consequence of secrecy. For the truth to emerge, as it inevitably will, takes time. And when it does, the intelligence services can seem sly and out of control. Mr Wittes believes they would do better to be open about what they do, and “to sacrifice some degree of effectiveness to win trust”. + +Counter-terrorism has left its mark on the intelligence services. The old guard had a variety of experience, say the experts at RAND, but the young tend to know only about Iraq or Afghanistan. That will remain useful: even if Islamic State fades, jihadists will continue to attack the West. But the old adversaries never went away. Indeed, the spy agencies of Russia and China have taken advantage of the terrorist distraction to hack American networks. That, says Seth Jones of RAND, is where the attention is shifting right now. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21709776-how-war-terror-turned-fight-about-intelligence-standard-operating-procedure/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Edward Snowden + +You’re US government property + +Is Edward Snowden a villain or a hero? + +Nov 12th 2016 | From the print edition + +EDWARD SNOWDEN HAS plenty of fans. A film about him by Oliver Stone describes how, as a contractor with Booz Allen Hamilton, Mr Snowden turned against the system and smuggled out files about its spying activities. To coincide with the release of the film in September, the fans have launched a campaign for his pardon. No one else has sparked such an intense debate on public policy, they say. He won a change in the law and shifted global attitudes to privacy. + +Having fled to Hong Kong, Mr Snowden later took refuge in Moscow, where he now lives under the protection of the Russian government. If he returned to face trial in America he would not be able to mount a full defence. The Espionage act, under which he would be tried, does not allow him to appeal to the public interest. Yet even if he could, he would probably be convicted. And rightly so. + +America’s House Permanent Select Committee on Intelligence recently published its own verdict on Mr Snowden, calling the leak “the largest and most damaging public release of classified information in US intelligence history”. It endangered troops and agents overseas and undermined defences against terrorism. The vast majority of the documents Mr Snowden stole did not touch on the privacy of American citizens. Instead, they revealed details of how the NSA spies on non-Americans, including foreign leaders, who do not enjoy constitutional protection. The committee says that America may have to spend hundreds of millions or even billions of dollars to mitigate the damage. + +Others point out the indirect costs. Private companies were embarrassed by being shown to co-operate with the American authorities. The very fact that the leak took place may lead people and companies to conclude that to work with America is not safe. That feeling will have been reinforced by the arrest last month of a second contractor, Hal Martin, on suspicion of having stolen classified material, though as yet there is no evidence that he passed it on. + +Mr Snowden’s supporters claim that he is a whistleblower. But the committee found that he made little or no attempt to raise his concerns with his superiors. If they had proved unsympathetic, he could have gone to the NSA’s inspector-general, or to the committee itself. + +Mr Snowden’s boss at the NSA in Hawaii, Steven Bay, also worked for Booz Allen Hamilton. He lost his job over the leak. Speaking in September to Cipher Brief, a newsletter, he attested to Mr Snowden’s intelligence and ability but questioned his qualifications for speaking out. “He never actually had access to any of that data,” Mr Bay said. “All of the ‘domestic-collection stuff’ that he revealed, he never had access to that. So he didn’t understand the oversight and compliance, he didn’t understand the rules for handling it, and he didn’t understand the processing of it…In my mind Ed’s not a hero.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21709772-edward-snowden-villain-or-hero-youre-us-government-property/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +China and Russia + +Happenstance and enemy action + +Western intelligence agencies are turning to the old rivalry with Russia and the new one with China + +Nov 12th 2016 | From the print edition + +MOST COUNTRIES HAVE spy agencies of one sort or another, and their efforts may well be directed chiefly against their own people. Many are a legacy of colonial rule. An agency’s clout is often at odds with its country’s place in the world. Brazil’s intelligence services are puny compared with those of Peru and Colombia, which fought off Marxist narco-guerrillas. India’s Research and Analysis Wing is a minnow next to Pakistan’s tentacular Inter Services Intelligence. Israel’s Shin Bet and Mossad are world-class. + +In an era dominated by terrorism, many of these services work with the big Western agencies such as the CIA or France’s Direction Générale de la Sécurité Extérieure. The locals are more successful at infiltrating their agents and have a better understanding of their own region. In return for collecting intelligence on the ground, the liaison services get help, often in the form of signal intelligence (SIGINT) or satellite imagery (IMINT). + +Sometimes, however, the story is all about rivalry, most of all between the West and Russia and China. Russia has the higher profile, probably intentionally. In 2015 James Clapper, America’s director of national intelligence, told Congress that Russia was America’s main cyber threat. In the past few months alone it is thought to have scored a number of points. + +One was to humiliate the NSA by putting a stolen suite of its hacking tools on sale under the cover name Shadow Brokers. Another was to hack the medical records of Simone Biles, an American gymnast who won four gold medals at the Rio Olympics. Russia also undermined the presidential campaign of Hillary Clinton by releasing e-mails from its hacks of the Democratic National Committee and Colin Powell, a former secretary of state. + +“Active measures” like this draw on techniques of manipulation, misinformation and infiltration that go back to the tsars. What is new, says Fiona Hill, a Russia expert at the Brookings Institution, is the lack of restraint. “Snowden blows everything open,” she says. Now that Russia can say America is up to the same tricks, there is no need for secrecy. + +Influence by insinuendo + + + +Russia’s foreign-language television station, RT, and news agency, Sputnik International, work by what might be called “insinuendo”—a slur on the integrity of an opponent, the false reporting of an anti-Russian war crime in Ukraine, a relentless focus on racial tensions in American cities. The idea is to fan the flames of fear, resentment and division. Russia is active across the West. A recent report by the Centre for European Policy Analysis in Washington and the Legatum Institute in London, written by Edward Lucas (a journalist on this paper) and Peter Pomerantsev, accuses it of “seeding fear of Western institutions and alliances (Lithuania); fomenting insurrection (eastern Ukraine); general denigration of a country’s international reputation (Latvia); the development of native pro-Kremlin media (the Czech Republic and Estonia); and support for far-right and ultra-nationalist movements and sentiments (Poland).” + +Having seen how effective Russian misinformation was in splitting off Crimea from Ukraine, some in Washington feared that Russia might try to swing the presidential election in favour of Donald Trump. By revealing that Bernie Sanders, a popular candidate on the left, was locked out by the powers in the Democratic Party, it made American politics look rigged. And by undermining Hillary Clinton and casting doubt on the result, it could weaken her. That would be a fine day’s work for Russia’s leader, a former KGB officer called Vladimir Putin. + +However, a recent paper from the Aleksanteri Institute in Finland points out that Ukraine was vulnerable because of its weak government and the presence of large numbers of Russians in Crimea, including soldiers, and goes on to question whether Russian tactics would work more generally. Another study, by the Finnish Institute of International Affairs, also concluded that Russian strategic deception has its limits. The authors did not find a single case of Russian misinformation bringing about meaningful change in the West. + +That leaves policymakers in a quandary. If governments complacently leave misinformation unanswered, they risk the spread of potentially harmful ideas. If, on the other hand, they build up Russia’s actions into a grave threat, they also build up Russia’s stature. That would be to do Mr Putin’s work for him. + +China has emerged only recently as a great power in intelligence. During the Cultural Revolution its security services persecuted the opponents of Mao Zedong. As part of the purge, the Central Investigation Department—which was to become the Ministry of State Security (MSS)—eliminated officers with foreign experience who, by definition, included those in its foreign-intelligence service. China had little expertise in SIGINT. + +Its chance to catch up came in the late 1990s, with the shift from breaking codes to hacking computers. Peter Mattis, a China expert at the Jamestown Foundation, compares the innovation to the launch of Britain’s Dreadnought battleship a century ago, which revolutionised naval warfare. China has used the communications revolution to become a world SIGINT power. + +Much of its effort is still focused inward. Nigel Inkster, a China expert who was a senior intelligence officer with MI6 and is now at the International Institute for Strategic Studies, reports how a defector defined the role of the security services as first of all to “control the Chinese people to maintain the power of the Chinese Communist Party”. Their task was to counter the “evil forces” of separatism, terrorism and religious extremism. They accomplished this partly through sheer manpower. In one district of 400,000 people, fully 4% of the population was on the payroll, outstripping the East German Stasi in its pomp. But they also make good use of technology. Mr Mattis explains how their Golden Shield project tags potential troublemakers. You never know who is under scrutiny. In 2015 Qiu Jin, an MSS vice-minister, was briefly arrested, possibly after requesting the bugging of senior leaders. + +In the 18th century Jeremy Bentham, a British philosopher, invented a prison in which a single watchman could observe all the prisoners all the time, calling it the Panopticon. Mr Mattis believes that Bentham’s idea is coming to life. “China’s goal”, he says, “is as close as you’re going to get to the real Panopticon.” + +As China’s interests have become more international, so have the intelligence services. For many years their specialism was industrial espionage. As early as 1987, Deng Xiaoping launched “Plan 863” to establish China’s independence in strategic industries. One of the first hacks to be detected was Titan Rain in 2003, in which terabytes of data were taken from Sandia National Laboratories, NASA and American defence contractors. + +Over the years, Chinese hackers are believed to have sucked out details of the B1 bomber, the B2 Stealth bomber, an advanced submarine-propulsion system and a miniaturised nuclear warhead, as well as countless industrial and scientific processes. China was also suspected of stealing the blueprint of Australia’s new intelligence headquarters. Even today, according to Matt Brazil, another fellow at the Jamestown Foundation, China’s five-year plans tell you what technologies the country will seek to obtain through research, deals or, if necessary, theft. + +By 2013 the Obama administration had had enough. With official blessing, a computer-security company called Mandiant released a report saying that one of the main hackers was Unit 61398 of the People’s Liberation Army, based in Shanghai. Mandiant claimed to have spotted the unit inside no fewer than 141 companies. Known as Comment Crew, it included hackers with aliases such as UglyGorilla, and had broken into companies linked to electric power, water and natural gas. Once in, the hackers typically stayed for almost a year. + + + +In 2014 the Department of Justice charged five members of Comment Crew with hacking into American steel, solar and nuclear firms, and published mugshots of the hackers, including UglyGorilla. Two of the men were in military uniform. America also threatened to bring suits against Chinese companies, including Chinalco, Boasteel and State Nuclear Power Technology Corporation. The threats seemed to work. Since Barack Obama and Xi Jinping agreed to curb cyber-espionage in September last year, far fewer Chinese hackers have been detected (see chart). + +China is less well known for its HUMINT, but it does pursue businesspeople with a background in Western governments. Since the mid-1980s it has often used sex as a lure. According to Mr Inkster, a Japanese diplomat committed suicide in Shanghai in 2005, supposedly after having got caught in a honey trap. + +China’s spying is a fundamental expression of its rise as a great power and its growing rivalry with America—just as the creation of modern espionage and counter-espionage dates back to Germany’s challenge to Britain at the start of the 20th century. No longer is China interested principally in looking after the Chinese diaspora. Today it cares about American policy in, say, Japan and South Korea, as well as Brazil, where it buys its food, and Saudi Arabia, where it buys its oil. + +This has a dark side. According to Mr Inkster, China is convinced that America is exploiting its hold over the internet to perpetuate its hegemony and to spread subversion. That was one reason why China helped Iran suppress the liberal Green Movement when it rose up against the mullahs in 2009. Both China and Russia suspect that America uses the internet to try to inject Western values into their countries. Mr Putin has described the internet as a “CIA project”. China sees American condemnation of hacking as hypocrisy. Last year the Xinhua news agency published an article entitled “The USA Talks of Cyber Security and the World Laughs”. + + + +This could have consequences. China has put forward a “new security concept” in which international law is subordinate to national interests. In June the Global Commission on Internet Governance warned that governments might further Balkanise the internet, at a cost to the global economy and to freedom of expression. + +Intelligence will partly define relations between China and America. It need not always lead to hostility. By helping each side understand the other better, intelligence can also lower tensions—much as in the late 1950s satellites and spy planes diffused American fears of a “missile gap” with the Soviet Union. But the stakes are high. General Hayden thinks that most intelligence domains can withstand some mistakes. With intelligence towards China, he says, there is no room for error. “No one else is in the same area code. It’s pass-fail.” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21709777-western-intelligence-agencies-are-turning-old-rivalry-russia-and-new-one/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +How to do better + +The solace of the law + +A blueprint for the intelligence services + +Nov 12th 2016 | From the print edition + + + +IN THE SPY MUSEUM in Washington, DC, a floor is given over to James Bond. Pay attention to the villains, says Vince Houghton, the museum’s historian: each tells you what the West was scared of when that particular film was made. Bond is sandwiched between the paraphernalia of real-life spying, including bugs, silk maps and cipher pads. But his wayward independence looms over the whole business. The thing about spies, says Kelley Ragland, who publishes modern spy novelists, including Olen Steinhauer, is that they are lone wolves who survive without help. “They are underdogs,” she says. “We root for them.” + +The intelligence officers featured in this special report break some rules, too. All nations make espionage against them a criminal offence. They consider foreign citizens fair game, on the ground that their duty is to maximise the well-being of their own people. But at home, too, they can intrude into lives, playing on people’s fears or vanities, issuing threats or offering money. The question is how an open, democratic society should govern their behaviour. Too much power and secrecy, and they will go astray. Too little, and they will fail. + +Sir David Omand, a former head of Britain’s GCHQ, says that lawful spying should be governed by ethics in the same way that a just war is. And David Anderson, in his review of the Investigatory Powers bill, which by the end of this year will for the first time put British intelligence on a unified statutory footing, offers a blueprint for what this might look like. + +Five principles + +In principle, the state needs to be able to bug bedrooms, read diaries and listen to privileged conversations + +Because of the need for security, he argues for minimal no-go areas. The state needs to be able in principle to bug bedrooms, read diaries and, if necessary, listen in to conversations between lawyers and clients or journalists and sources. “The issue is when it should be lawful to exercise such powers,” he says, “not whether they should exist at all”. Drawing on international human-rights law, he sets out five principles for their use: + +• The law must be accessible—easy to obtain and understand; and it must operate in a foreseeable way. + +•  Spying must be necessary, which means more than useful. On September 12th 2001 necessity was different from what it had been on September 10th. + +•  Measures must be proportionate. Squeezing privacy brings diminishing returns. + +• There must be effective monitoring and oversight. + +•  There must be redress by an independent tribunal for those who have been mistreated. + +This legal footing serves as a foundation. But the intelligence services also need to command public trust, says John Parachini of RAND. If you are seen to deviate from expectations, you run risks. Unless they explain why capabilities are needed, says Cortney Weinbaum, also of RAND, agencies cannot justify their budgets or programmes to voters and taxpayers. As director of the NSA, Michael Hayden used to map out what the agency did as a Venn diagram with three circles, labelled technologically feasible, operationally relevant and legal. After he became director of the CIA a few years later, he added a fourth: politically sustainable. + +The essential ingredient is transparency—or, rather, what Michael Leiter, head of the National Counterterrorism Centre under George W. Bush, has called “translucence”. The public needs to know the broad outline of what the security service is doing, but not the details. + +Reporting to Barack Obama, the presidential advisory group invoked what it termed the “front-page rule”: that the agencies should forsake any programme which could not command the consent of ordinary people if leaked to a newspaper. General Hayden thinks the intelligence services should be more willing to let retired officers write books and speak to journalists. “Too much is protected,” he says. “We need less secrecy. We need to be the teller of our story, not the keeper of secrets.” + +An effort to restrict classification is overdue, especially in America, where nearly 1.5m people have top-secret clearance. In 2012 the presidential libraries contained 5bn pages waiting to be reviewed for declassifying. Mr Parachini believes that a small amount of secret intelligence must be guarded with extreme care. Insights can come from publicly available sources at a small fraction of the cost and be widely shared to prevent terrorist attacks or prepare for political and military surprises. + +In terms of public relations, the West’s intelligence services have endured a difficult decade and a half. In terms of their operations, however, the years since 9/11 have seen extraordinary shifts in focus and capabilities. Increasingly, society is asking them for protection from criminals and paedophiles as well as terrorists and foreign powers. It is a vast agenda. + +The rules governing their actions have not always kept pace with the public mood. However, in fits and starts, the intelligence services have adapted. It is right that they should be held to high standards. But their critics should also remember that the world is dangerous and hostile, and that the intelligence services are often the best protection ordinary people can hope for. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21709775-blueprint-intelligence-services-solace-law/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Business + + + +American business: Meet the new boss [Thu, 10 Nov 22:25] + +Trump and tech: System crash [Thu, 10 Nov 22:25] + +Volkswagen: A long road to recovery [Thu, 10 Nov 22:25] + +BAE Systems: Fighting fit [Thu, 10 Nov 22:25] + +Taxis take on Uber: African potholes [Thu, 10 Nov 22:25] + +Courier firms: The big sort [Thu, 10 Nov 22:25] + +Schumpeter: The great divergence [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +American business + +Meet the new boss + +Businesses may come to love or to fear Donald Trump. Either way, they will have to make a deal + +Nov 12th 2016 | NEW YORK | From the print edition + + + +ALTHOUGH he styles himself as a chief executive who can turn the country around, Donald Trump is an outsider in the world of American business. His commercial operation is tiny by the standards of the country’s mega-firms and few of their bosses have ever viewed the president-elect as an equal or ally. He has “no friends” among the business elite, sniffed a private-equity baron a few weeks ago, who will doubtless now join a queue of executives waiting at Trump Tower to curry favour and to assess the new man’s priorities before he assumes office. + +Those supplicants will soon discover that Mr Trump’s attitude towards business has three contradictory strands. He is passionate about unleashing the might of the private sector in order to revive growth. There is certainly plenty of scope: last year listed American companies invested a mediocre 46% of their total cashflow. Yet he is also a populist who thinks the economy is rigged in favour of big business and crony capitalists, and he is a protectionist. In the coming months these three different strands will respectively excite, worry and scare the business world. + +Start, first, with the things firms will like. Mr Trump’s tax plans have been ridiculed by economists but their broad thrust will be wildly popular with companies. He has said he wants to slash the headline corporate-tax rate from about 40% to 15%, at the same time as removing a myriad of exemptions that allow businesses to dodge their bills. Mr Trump also wants to make it possible for companies to bring home the $2trn or so of accumulated profits they have stashed abroad, without triggering a huge tax bill in America. An amnesty, or a big reduction of the rate paid, will prompt companies to repatriate a wall of cash, although whether they will invest it or spend it on buying back shares remains to be seen. + +Mr Trump’s proposed war on red tape will also be popular. He was cheered by an audience of business bigwigs in New York when he spoke on the theme in September. By repealing Barack Obama’s Affordable Care Act, he may help small firms who complain they are swamped by bureaucratic requirements. And if he succeeds in kneecapping the country’s environmental regulators, that should mean more lenient treatment of carbon-intensive industries including oil, gas and coal. On November 9th the share price of Peabody Energy, a coal firm that is trying to emerge from Chapter 11 bankruptcy, surged by almost 50%. Mr Trump’s energy secretary could well be Harold Hamm, a pioneer of the hydraulic-fracking industry in North Dakota and elsewhere. + +An infrastructure-spending boom will go down well with business, too. All firms complain about America’s crumbling roads and late-Brezhnev-era airports. And the construction industry could earn windfall profits—one reason why an index of shares of companies in the sector rose by 9% the day after the election. + +Tax, lies and red tape + +If tax cuts, deregulation and new infrastructure are things that firms of all sizes will cheer about, big companies will worry about the second factor: Mr Trump’s populist suggestion that the economy is rigged against consumers and ordinary workers. Had she won, Hillary Clinton would have been widely expected to reinforce America’s antitrust apparatus in response to mounting evidence that competition has waned across the economy and incumbent firms have got too powerful. + +Mr Trump’s signals on this have been mixed. In October he objected to AT&T’s $109bn bid for Time Warner, a media firm, which he says will lead to a concentration of corporate power. But he has taken a softer line on the pharmaceutical industry’s high prices for drugs, and share prices in the sector rose on news of his victory, having been pummelled by expectations that Mrs Clinton would rein in pricing. + +Policies that boost competition and attack cronyism make sense, but the risk is that under Mr Trump they spiral into a nastier, populist confrontation with big business. That is a particular vulnerability for the two great power centres of the American economy, Wall Street and Silicon Valley. Mr Trump wants to repeal the Dodd-Frank Act, a clumsy law passed after the global financial crisis of 2008, aimed at re-regulating banks. Bankers despise it. But he has also proposed separating investment banking from commercial and retail banking, which would be a nightmare for universal banks such as JPMorgan Chase, which have spent miserable years adapting to today’s rules. + +Silicon Valley is also a potential flashpoint. Big platform companies such as Facebook and Google are powerful, verging on arrogant, and they have been openly hostile to Mr Trump. So far he has taken aim at what he called the “monopolistic tendencies” of Amazon, an e-commerce company. It is also easy to imagine him objecting to Uber’s treatment of its drivers, or forcing Apple to unlock customers’ iPhones on grounds of national security. Then the technology industry’s disruptive, liberal vision of America would be primed to clash with Mr Trump’s more nativist one (see article). + + + +However, it is the third strand of Mr Trump’s ideas on business, his protectionism, that is most clearly bad for business. Since Mr Trump struck his very first big deal in Manhattan back in the mid-1970s, building the Hyatt Hotel at Grand Central Terminal, corporate America has ventured ever farther afield: 44% of the sales of the S&P 500 index of big companies are now earned abroad (see chart). Global firms will come under pressure to locate more production at home. During the campaign Mr Trump lambasted Ford and Mondelez, a food firm, for employing too few people in America. Trade wars and rising tariffs could severely disrupt supply chains: the American car industry relies heavily on component suppliers in Mexico. And if America imposes tariffs on Chinese imports, as Mr Trump has said it will under his leadership, an obvious and logical response from China could be to clamp down on the activities of American multinationals in a country where they reap sales of $300bn a year. + +Plenty of American chief executives will tell themselves that Mr Trump, whatever his other manifest flaws, understands business. That is true: he has a far more instinctive feel for companies and capitalism than does Mr Obama, or Mrs Clinton. But partly as a result, he is also an interventionist. He believes that American business can be an instrument of his power, to be bought, bullied and remoulded in order to achieve a national revival. His first career, as a self-styled tycoon, made little mark on corporate America. In his second, as a politician, his impact could be profound. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21710005-businesses-may-come-love-or-fear-donald-trump-either-way-they-will-have-make/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Trump and tech + +System crash + +Silicon Valley is right to be worried about a Trump presidency, but it helped get him elected + +Nov 12th 2016 | From the print edition + +The world according to Thiel + +“I’D LIKE to wake up now please,” tweeted Sam Altman, who heads Y Combinator, Silicon Valley’s foremost startup school. The sentence neatly encapsulates the mood in the high-tech hub. To many in the technology industry, America under Donald Trump means dystopia. Perhaps no other sector regards his victory with less enthusiasm. + +The main reason is that his stated views are antithetical to the beliefs that most entrepreneurs and tech types hold on a range of topics from trade to offshoring to policy on immigration. By one estimate the tech industry gave nearly $8m to Hillary Clinton’s campaign. Silicon Valley also worries that it will lose its direct lines to the administration in Washington. According to the Campaign for Accountability, a transparency group, no fewer than 22 former White House officials have gone to work for Google since Barack Obama moved in. Under Mrs Clinton the door would have kept revolving. + +Only one noted Valleyite is likely to have the president’s ear: Peter Thiel, a venture capitalist. He alone supported Mr Trump, speaking at the Republican convention and donating $1.25m to his campaign. He will now be in high demand to help with damage control for the industry. + +Mr Trump may limit immigration of the skilled workers and assorted entrepreneurs upon which the tech business relies. He has criticised Apple for having its iPhones assembled in China. He has also lambasted the smartphone-maker for not helping the FBI to crack a device belonging to a terrorist, which suggests he may push for “backdoors” in encryption software for governments to access. And he may go after big tech firms on antitrust grounds (of Amazon, for example, he has said, “If I become president, oh do they have problems”). But if Mr Trump cuts the tax rate firms have to pay if they bring home earnings kept abroad, that would especially benefit tech giants, who sit on much of the more than $2.5trn stashed overseas. + +His victory also offers an opportunity for introspection. Silicon Valley treated Mr Thiel shabbily: some called on Facebook to eject him from its board. The industry also indirectly added to populist fury. Its own firms have not created enough well-paid jobs and its algorithms have ushered in an age of anxiety about many more being automated away. And it does nothing to ease resentment of elites. Last year tech firms handed out more stock-based compensation than Wall Street paid in bonuses, and the streets of San Francisco are a Trumpian brew of some of America’s most expensive property and soaring homelessness. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21710008-silicon-valley-right-be-worried-about-trump-presidency-it-helped-get-him/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Volkswagen + +A long road to recovery + +The carmaker’s efforts to move on from its emissions scandal are thwarted + +Nov 12th 2016 | From the print edition + + + +THERE are two ways of dealing with a worrying problem in a car engine. One is a complete overhaul; the other is to tinker under the bonnet and hope the trouble goes away. Volkswagen’s efforts to deal with an emissions-cheating scandal that emerged in September 2015 are of the tinkering type. The German carmaker is desperate to draw a line under its ill-fated decision to fit software to 11m diesel cars that detected emissions tests and artificially reduced the amount of nitrogen oxide pumped out. But the disconcerting rumbles continue. + +The latest setback came on November 6th, when VW said that a German investigation of market manipulation was examining the role of Hans Dieter Pötsch, chairman of its supervisory board. The probe, which began in June, is looking at whether Martin Winterkorn, VW’s former chief executive, and Herbert Diess, who oversees the core VW brand, should have disclosed the emissions cheating before the company publicly admitted wrongdoing. This is deeply uncomfortable for both VW and Mr Pötsch, who used to be the chief financial officer and was nominated to become chairman on the day the crisis began. It is also a reminder that questions linger about who at the firm knew what. + +Adding to VW’s woes, a German newspaper reported on the same day that American regulators had found that another variety of cheating software, which artificially lowered emissions of carbon dioxide, was still being fitted to several models of Audi luxury cars until May 2016. This may expose VW to further compensation, fines and legal entanglements. + +The share price has fallen by 24% since the scandal broke, and VW has had to set aside €18.2bn ($19.9bn) to cover the cost of compensating owners and fixing affected cars. Yet the damage is less than many people expected. The impact on the company’s reputation with car-buyers has been less severe than predicted: sales and profits have stayed strong. + +But VW now badly needs to put the diesel affair firmly behind it. Coping with the storm has claimed management resources that should have been dedicated to the urgent task of improving the performance of the mass-market VW brand, says Patrick Hummel of UBS, a bank. The costs of making cars bearing the core brand (as opposed to those at Skoda, SEAT and other marques) are sky-high, partly because VW makes so much in Germany, and profit margins are slender. + +Investors will surely look more kindly on VW when all the risks, including those at Audi, are plain, and they can better gauge the likely financial consequences. But that will take a while. Despite agreeing on fixes and compensation deals in America, and pledging to rectify vehicles in Europe, VW still has to satisfy American authorities that it will do the same for larger diesel engines that were also affected. It must also resolve the matter of criminal fines in America and fight a lawsuit brought by disgruntled shareholders in Germany. + +Meanwhile many in the car industry are questioning whether VW is letting its crisis go to waste by mostly carrying on as normal, without making radical changes to its culture. Matthias Müller, the current chief executive, is giving local managers more leeway to tweak car designs and other product features: that is a good thing, according to Citigroup, another bank. This sort of freedom would have been unthinkable under Mr Winterkorn but is essential in a business where tastes vary so widely in different markets. But Mr Müller’s commitment to making the savings that VW needs is unclear. Granted, in a few weeks he will conclude a “future pact” with workers at the carmaker’s core brand. It will govern cuts in costs, employees’ productivity and overall strategy. However, few expect it to go far enough. + +If it does fall short, that will be partly because Mr Müller is a long-serving insider picked by the Porsche and Piëch families, who control over half of VW’s voting shares. Even if the families had been bold enough to bring in someone from outside, minded to act more decisively, such a boss would have met resistance from trade unions and from the state of Lower Saxony, where VW is based and which has a 20% stake in the company. Both wield much influence on its powerful supervisory board. In time, the failure to rebuild thoroughly may come to be seen as a mistake. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21710009-carmakers-efforts-move-its-emissions-scandal-are-thwarted-long-road-recovery/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +BAE Systems + +Fighting fit + +Geopolitical tensions bode well for the defence firm’s profits under a new boss + +Nov 12th 2016 | From the print edition + + + +CONTROVERSY over the relationship between BAE Systems, Europe’s largest defence company, and one of its main customers, Saudi Arabia, was raging when Ian King, its chief executive, started his job in 2008. BAE’s link to Saudi Arabia was forged 30 years ago with the first “al-Yamamah” arms deal. It saved the firm amid a difficult business environment, but embroiled it in a long-running corruption scandal that even led to Mr King’s immediate predecessor, Mike Turner, being briefly detained by America’s Department of Justice just before he stepped down. + +The new boss’s mandate eight years ago was to banish BAE’s old, buccaneering ways and make it the acme of squeaky-clean corporate governance. Now, as Mr King prepares to leave and hand over to a successor, the firm is once again under fire for its ties to the house of Saud, this time for supplying its wares to support the kingdom’s war in neighbouring Yemen. A rising chorus accuses the Saudi-led coalition of using its Western-supplied and maintained air power indiscriminately in its campaign against Iranian-backed Houthi rebels. + +Human-rights activists are trying to use Britain’s ratification of the multilateral Arms Trade Treaty in 2014 as a legal tool against the government and BAE. They have won a High Court judicial review into the use of British-made weapons in the Yemen conflict, but since the coalition’s intervention has legal backing from the UN and is supported by the British government, the most the court can do is to order the government to look again at whether Britain is meeting its treaty obligations. Nevertheless, if it did, BAE would find itself in an uncomfortable spot. + + + +If any of this bothers Mr King, he is not letting on. He simply asks if there is any sign of the British government wanting to weaken a vital strategic and commercial partnership. The Saudis and their allies in the Gulf have been good customers even as Western defence spending has fallen in recent years, particularly in BAE’s core American and British markets. Mr King has had to keep tight discipline over costs and compete hard for sales elsewhere. + +Now the outlook is improving for defence companies. Not only is there turmoil in the Middle East: Russia and China are challenging the West, bolstering their military capabilities and bullying neighbours. Defence spending in America, where BAE is treated as an indigenous contractor, is about to enter a new growth cycle as budgetary caps are relaxed and old kit is replaced. Donald Trump has committed himself both to increasing the Pentagon’s budget and forcing allies to help pay for it. In Britain, the government has pledged to meet NATO’s target of spending 2% of GDP on defence. The government also plans a far-ranging re-equipment programme, and BAE is well placed to win a long-term support contract for the two aircraft-carriers it is building. The firm is also to supply the Royal Navy with a family of frigates. Other international customers, such as India, are also adding to sales. + +Yet there is little likelihood that Saudi Arabia and its Gulf allies will become any less important for BAE. Nearly 6,000 of its employees work in Saudi Arabia and the business contributes over a fifth of revenues. In the next few weeks, BAE and the Saudis are expected to sign a five-year extension of their long-term support and maintenance agreement. It will be worth about £7bn ($8.7bn) and is linked to a deal to sell another 48 Typhoon multi-role combat aircraft valued at over £4bn. The Saudis are also expanding their navy: orders for just the first phase are valued at around $25bn, and BAE is in a good position to win some of it. + +Mr King’s probable successor, Charles Woodburn, is a British oil executive brought in earlier this year as heir apparent. Thanks to the Saudi connection and recovering Western defence markets, he will inherit a bulging order book. But what has been missing for a while is growth. It will be Mr Woodburn’s task to change this by winning orders in new markets—particularly Asia, where BAE has sometimes struggled to compete in the face of American political clout. It will not be easy. Mr King may not be the most charismatic of leaders, but he knows the industry backwards and has shown a steely nerve at important moments. Mr Woodburn is very much the pick of the chairman, Sir Roger Carr, who seems keen on having a fresh pair of eyes to look at BAE’s business. That may be a good call, but in an industry is dominated by lifers it is also something of a gamble. + +Apart from Saudi Arabia, the twin jewels in BAE’s crown are a work-share agreement with America’s Lockheed Martin on its F-35 stealth fighter, and its own Electronic Systems unit, based in New Hampshire, which, among other things, will supply the F-35’s electronic-warfare suite. Under the Lockheed Martin deal, BAE is the only partner involved at “level one”, or the closest level of collaboration. The British firm has 15% of the airframe work and is responsible for making the aft fuselage and tail fins. The F-35 programme will be the cornerstone of Western air forces for at least the next 25 years. More than 3,000 F-35s, in three variants, are likely to be sold, which will add handsomely to BAE’s profits. + +The third offset + +But there are clouds on the horizon too. A lack of research-and-development funding from the British government—which devotes 4% of defence spending to R&D, compared with nearly 12% of the Pentagon’s (much bigger) budget—is a long-term problem for the company, says Ben Moores, an aerospace analyst with IHS Jane’s, a defence publication. That partly explains the lack of an unmanned combat aircraft platform in BAE’s portfolio. Although the British and French governments earlier this year committed about $2bn to get a programme going, little has been decided. + +For BAE the lack of government R&D could in the long run hinder its ability to supply programmes that are driven by America’s “third offset” strategy—an attempt to combine a mix of cutting-edge technologies as a way to counter the erosion of Western military superiority as China and other countries ramp up their military strength. BAE is also constrained by the need to maintain dividends and continue plugging holes in its pension fund to the tune of more than £300m a year. Britain’s Trident submarine-replacement programme is a big ticket contract, worth over £20bn, but margins are expected to be slim: the firm sees building the four new subs more as a patriotic duty than as profitable business. + +Finally, there is, as always with BAE, Saudi Arabia. The ambitious economic reform plans of the deputy crown prince, Mohammad bin Salman, laid out in detail in June, are designed to prepare the country for a post-oil future. The plan involves creating hundreds of thousands of new technology and engineering jobs for Saudi nationals. This so-called Saudisation will require BAE to replace many of its British expatriate workers with locals. It is a change that will be both tricky to manage and costly. Nor can political risk in the kingdom ever be ignored. BAE reaps a huge reward from operating in such an unstable region, but that instability could one day show itself to be a double-edged sword. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21710003-geopolitical-tensions-bode-well-defence-firms-profits-under-new-boss-fighting-fit/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Taxis take on Uber + +African potholes + +Uber’s African potholes + +Nov 12th 2016 | JOHANNESBURG | From the print edition + + + +“I WAS lucky my customers were three big white guys,” says Themba, an Uber driver in Johannesburg recounting a close call with taxi-drivers who tried to block him from collecting passengers at the airport that serves South Africa’s economic hub. “They pushed them out the way and we managed to drive off.” + +The ride-hailing app has made a splashy if slow start in Africa. Of the 529 cities in which Uber connects riders with drivers, just 14 are on the continent. Yet Africa is fertile ground for a firm offering cheap and safe transport. Most passengers have to spring for overpriced cabs or catch a white-knuckled ride on the back of a motorcycle taxi. + +In Abuja, locals have long used a low-tech version of ride-sharing. Many folk simply stick out a hand at the roadside to hail any passing car before negotiating a fare. Yet locals warn that fake taxis cruise the streets with robbers hiding in the boot, ready to jump out at a traffic light. In Lagos some taxi-drivers are even thought to be in cahoots with kidnappers. Not surprisingly, Uber seems to be growing quickly in the few cities where it has launched. In many places rides cost less than a quarter of the fare charged by taxis. And it is adapting to local markets too. In cities such as Nairobi, where few have credit cards, customers can choose to pay for rides using mobile money on their phones, or in cash. + +Yet the firm is also facing some potholes quite unlike the regulatory barriers erected elsewhere in the world (such as, in Paris and Frankfurt, rules that stop it using unlicensed drivers). Instead of lobbying the government or going to the courts, taxi-drivers in some African cities have taken matters into their own hands. + +At the airport and main railway stations in Johannesburg cabbies crowd around commuters, looking intently at their smartphones before trying to manhandle those who seem to be getting into Uber cars. Shots have been fired in some of these clashes. In Cape Town and Nairobi, Uber cars have been torched and their drivers attacked. The firm has responded by hiring burly security guards to watch over the main flashpoints in Johannesburg and is testing a panic button that calls armed guards. + +Yet Uber also seems to be having some success in winning over taxi-drivers, mainly by signing them up. In Accra many Uber drivers are also old-fashioned cabbies who have chosen to venture into online ride-hailing. Petrus, an Uber driver in Johannesburg, says he joined the firm three months ago after working for many years behind the wheel of a taxi. “Those who are remaining [as taxi-drivers] are losing hope,” he says. “Lots of their friends are joining Uber.” Having as many as possible in the drivers’ seats is certainly preferable to having them pelting stones from the side of the road. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21710010-ubers-african-potholes-african-potholes/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Courier firms + +The big sort + +China’s express-delivery sector needs consolidation and modernisation + +Nov 12th 2016 | SHENZHEN | From the print edition + + + +“THE vultures all start circling, they’re whispering, ‘You’re out of time’…but I still rise!” Those lyrics, from a song by Katy Perry, an American pop star, sounded often at Hillary Clinton’s campaign rallies but will shortly ring out over a less serious event: a late-night party in Shenzhen to kick off “Singles’ Day”, an online shopping extravaganza that takes place in China on November 11th every year. + +The event was not dreamt up by Alibaba, but the e-commerce giant dominates it. Shoppers spent $14.3bn through its portals during last year’s event. That figure, a rise of 60% on a year earlier, was over double the sales racked up on America’s two main retail dates, Black Friday and Cyber Monday, put together. Chinese consumers are still confident, so sales on this Singles’ Day should again break records. + +It points to an intriguing question: how will all of those purchases get to consumers? Around 540m delivery orders were generated during the 24-hour spree last year. That is nearly ten times the average daily volume, but even a slow shopping day in China generates an enormous number. By the reckoning of the State Post Bureau, 21bn parcels were delivered during the first three quarters of this year. + +The country’s express-delivery sector, accordingly, is doing well. In spite of a cooling economy, revenues rose by 43% year on year in the first eight months of 2016, to 234bn yuan ($36bn). And although the state’s grip on China’s economy is tightening, the private sector’s share of this market is actually growing. The state-run postal carrier once had a monopoly on all post and parcels. Now far more parcels are delivered than letters, and the share of the market that is commanded by the country’s private express-delivery firms far exceeds that of Express Mail Service, the state-owned courier. + +China’s very biggest couriers have been rushing to go public on the back of the strong growth. Most of them started life as scrappy startups, and are privately held. But because of regulatory delays, which mean a big backlog of initial public offerings, many companies have resorted to other means. Last month, two of them, YTO Express and STO Express, used “reverse mergers”, in which a private company goes public by combining with a listed shell company, to list on local exchanges. In what looks to be the largest public flotation in America so far this year, another, ZTO Express, raised $1.4bn in New York on October 27th. Yet another, SF Express, China’s biggest courier, recently won approval to use a reverse merger too. + +But investors could be in for a rocky ride. Shares in ZTO, for example, have plunged sharply since its flotation. That is because the breakneck growth of courier companies masks structural problems. For now, the industry is highly fragmented, with some 8,000 domestic competitors, and it is inefficient. + +One reason is that regulation, inspired by a sort of regional protectionism, obliges delivery firms to maintain multiple local licences and offices. Cargoes are unpacked and repacked numerous times as they cross the country to satisfy local regulations. Firms therefore find it hard to build up national networks with scale and pricing power. All the competition has led to prices falling by over a third since 2011. The average freight rate for two-day ground delivery between distant cities in America is roughly $15 per kg, whereas in China it is a measly 60 cents, according to research by Peter Fuhrman of China First Capital, an advisory firm. + +A handful of the biggest companies now aim to modernise the industry. Some are spending on advanced technology: SF Express’s new package-handling hub in Shanghai is thought to have greatly increased efficiency by replacing labour with expensive European sorting equipment. A semi-automated warehouse in nearby Suzhou run by Alog, a smaller courier in which Alibaba has a stake, seems behind by comparison but in fact Alog is a partner in Alibaba’s logistics coalition, which is known as Cainiao. The e-commerce firm has helped member companies to co-ordinate routes and to improve efficiency through big data. + +Other investments are also under way. Yu Weijiao, the chairman of YTO, recalls visiting FedEx, a giant American courier, in Memphis at its so-called “aerotropolis” (an urban centre around an airport) in 2007. He was awed by the firm’s embrace of advanced technology. He returned to China and sought advice from IBM on how his company could follow suit. YTO is using the proceeds of its recent reverse merger to expand its fleet of aircraft, buy automatic parcel-sorting kit and introduce heavy-logistics capabilities for packages over 50kg. + +There is as yet little sign that China’s regions will begin allowing packages to move freely, so regulation will remain a brake on the industry. More ominously, labour costs are rising. There are fewer migrant labourers today who are willing to work for a pittance delivering parcels. This week China Daily, a state-owned newspaper, reported that ahead of Singles’ Day, courier firms were offering salaries on the level of university graduates. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21710004-chinas-express-delivery-sector-needs-consolidation-and-modernisation-big-sort/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Schumpeter + +The great divergence + +A group of elite firms has established a sustained lead. This is not a good thing + +Nov 12th 2016 | From the print edition + + + +ONE of Joseph Schumpeter’s best-known observations was that successful businesses stand on ground that is “crumbling beneath their feet”. A danger is that standing still and resting on your laurels can precipitate a swift tumble. Rivals, meanwhile, can draw on the available stock of knowledge and technology to catch up with the leaders. To stay ahead, front-runners must keep inventing new things. This means that capitalism is inherently unforgiving: today’s leader is tomorrow’s failure. But it also means that it is inherently progressive, since clever ideas are quickly spread through the economy. + +Some striking new research suggests that this Schumpeterian mechanism may have broken down. The leaders are staying ahead much longer than is desirable. A group of researchers at the OECD, a club of mostly rich countries, examined the performance of a representative set of companies in 24 of its 35 member countries between 2001 and 2013. They discovered that the top 5% of them, dubbed “frontier firms”, have continued to increase their productivity while the other 95% (the laggards) have been stagnant in this regard. + +Plenty of economists have noted what they call a “great stagnation” in the global economy in recent times. The OECD researchers, Dan Andrews, Chiara Criscuolo and Peter Gal, show that beneath the stagnation lies a deeper pattern: rising productivity at the frontier and a widening gap between the leaders and the laggards. Three-quarters of the gap emerged before the global financial crisis of 2008. The divergence varies between sectors: in manufacturing, for example, top-tier firms saw their labour productivity increasing by 2.8% a year, against 0.6% a year for the rest. The gap was even bigger in services: 3.6% compared with 0.4%. + +The frontier firms appear to have certain things in common. Unsurprisingly, they are ahead of the pack in technological terms, and they make much more intensive use of patents. Perhaps the most striking difference is that frontier firms are always citizens of the world. They are frequently part of multinational groups and they constantly benchmark themselves against other frontier companies across the globe. So technological innovations from the frontier are spreading more rapidly across countries than they are within them. The gap between an elite British firm and an elite Chinese firm is narrowing even as the gap between an elite British firm and its laggardly compatriot is expanding. + +The emergence of frontier firms is in many ways surprising. Management gurus have been arguing for years that the balance of advantage is shifting from incumbents to challengers. Small firms can easily buy computing power that used to be reserved for corporate giants. Valuable MBA graduates are now being minted by the million and are waiting to be hired. If that is the case, why are the elite pulling ahead in so many different countries at the same time? + +An obvious explanation is that digital technology is unleashing a phenomenon of “winner-take-most” markets thanks to a combination of low marginal costs (which allow first movers to expand quickly) and network effects (which make popularity its own, profitable, reward). The OECD notes that the information-technology industry is producing a class of super-frontier firms: the productivity of the top 2% of IT companies has risen relative to that of other elite firms. Other studies show that this is not because the top tier are investing more in technology (everybody is throwing money at it) but because they are investing more intelligently to enable their workers to do new things and to reinvent their business models. + +A second explanation is that frontier firms (the 5%) have each discovered their own secret sauce. Some have learned how to foster management techniques that are largely inimitable. This seems to be so at 3G Capital, a Brazilian private-equity group, which takes over mature businesses and squeezes out costs that no one else can. Some are combining skills in unusual ways: Amazon mixes digital prowess with just-in-time logistics. Some have devised rare material inputs. BMW, a carmaker, is using a special carbon fibre, stronger and lighter than steel, for its i3 and i8 electric cars. The material starts life in a Japanese rayon factory, goes to America to be carbonised and is then sent to Germany, where the strands are woven into sheets. + +The chosen ones + +Third, technological diffusion has stalled: cutting-edge ideas are not spreading through the economy in the way that they used to, leaving productivity-improving ideas stuck at the frontier. Such diffusion may be harder in a knowledge-intensive economy because frontier firms can hire the most talented workers and cultivate relations with the best universities and consultancies. But it is also made worse by bad policy. The OECD notes that divergence in productivity is particularly marked in sectors which have been sheltered from competition and globalisation, most notably services. + +Can anything be done to fix the diffusion problem? One approach is to try to get frontier firms to spread their best practices to the laggards. In Britain, which is dogged by a long tail of poorly performing firms, a group of businesspeople, led by Charlie Mayfield, chairman of the John Lewis Partnership, a retail group, have formed an initiative to encourage them to improve their productivity. Another tack is for policymakers to try to open protected areas of the economy to more competition: the European Union has been eyeing the service sector for years. There are problems with both approaches. Frontier companies will certainly not share all their secrets with the laggards. The EU will become more unpopular than it already is if it tries to take on the continent’s coddled service firms. But policymakers nevertheless need to find a way of addressing this problem if the rich world is to stand any chance of getting out of its productivity funk. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21709976-group-elite-firms-has-established-sustained-lead-not-good-thing-great/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Finance and economics + + + +The world economy: Our election, your problem [Thu, 10 Nov 22:25] + +Buttonwood: Déjà vu all over again [Thu, 10 Nov 22:25] + +The world economy: Coming up Trumps [Thu, 10 Nov 22:25] + +Housing in America (1): The cost of poor lending [Thu, 10 Nov 22:25] + +Housing in America (2): To those that have [Thu, 10 Nov 22:25] + +Money in India: Taking notes [Thu, 10 Nov 22:25] + +Banks and cybercrime: Online checkout [Thu, 10 Nov 22:25] + +Banks and cybercrime: Internship [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +The world economy + +Our election, your problem + +A Trump presidency will be bad for the world economy and worse for places outside America + +Nov 12th 2016 | From the print edition + + + +IT IS not clear precisely how Donald Trump will govern, the extent to which he will carry out some of his scarier promises on trade and immigration, and who will be his economics top brass at the Treasury and in the White House. But a decent first guess is that President Trump will be bad for the world economy in aggregate; and a second is that his actions are likely to do more harm, in the short term at least, to economies outside America. + +When America has in the past stepped aside from its role at the centre of the global economic system, the damage has spread well beyond its borders. In 1971, when Richard Nixon ended the post-war system of fixed exchange-rates that had America at its centre, his Treasury secretary, John Connally, told European leaders, “The dollar is our currency, but your problem.” This election result, to paraphrase Connally, belongs to America but is potentially a bigger economic problem for everyone else. + +The scale and nature of that problem depend on the interplay of the two main elements of Mr Trump’s economic populism. The first is action to boost aggregate demand. Mr Trump favours tax cuts and extra public spending on infrastructure. The second element is trade protectionism. He has pledged to slap tariffs on Chinese imports and to renegotiate the North American Free-Trade Agreement (NAFTA) with Mexico and Canada. To the extent that he leans more on the first element and less on the second, the immediate damage to America’s economy will be limited. But even in that event, the net effect of a Trump presidency on economies outside America is still likely to be harmful. + +To understand why, go back to the subject of Connally’s gibe: the dollar. As it became clear that Mr Trump would win the election, the greenback fell against rich-country currencies, such as the euro, yen, Swiss franc and pound, as investors sought a haven from policy uncertainty in America. An index of its value against major currencies dropped by 2% in early trading on November 9th. Within hours it had regained almost all the lost ground, as investors pieced together a positive story for the dollar, based on the prospects of a boost to demand in America’s economy and an inflow of capital from abroad. + +Bringing it all back home + +A deal between Mr Trump and Congress to cut corporate taxes, goes the logic, would spur flush American companies to repatriate retained profits held offshore. It would also allow them to increase capital spending in America, because they would have more ready cash; and consequent profits would be taxed more lightly. The larger budget deficits entailed by tax reform, along with more public spending on infrastructure, would underpin yields on long-term Treasury bonds. Indeed, after falling in the initial aftermath of Mr Trump’s victory, yields on 10- and 30-year Treasuries are on the rise again (see chart). Add the potential for higher inflation from the stimulus and the likelier use of some protectionist tariffs, plus a Federal Reserve with a more hawkish tilt, as Mr Trump’s appointees alter the complexion of its interest-rate-setting committee, and you have the makings of a renewed dollar rally. + + + +A fiscal stimulus coupled with an investment splurge in the world’s largest economy should, all else equal, also be good for global aggregate demand. And if this kind of “reflation populism” improves the near-term prospects for America’s economy, it may dissuade Mr Trump from resorting to full-strength “anti-trade populism”. Well, perhaps. But given his leanings, it is easy to imagine him resorting to soft protectionism that keeps much of the additional demand within America’s borders. He might for instance lean on companies to favour domestic suppliers, or attach local-content conditions to publicly funded infrastructure projects. What is more, the repatriation of profits by American firms would draw resources away from their subsidiaries abroad. + +In 1971 the world feared dollar weakness. These days, dollar strength tends to have a tightening effect on global financial conditions. The waxing and waning of the dollar is strongly linked to the ups and downs of the credit cycle. When the dollar is weak and American interest rates are low, companies outside America are keen to borrow dollars. Often big firms, flush with such cheap loans, will further extend credit in local currencies to smaller ones. But when the dollar goes up, the cycle goes into reverse, as corporate borrowers outside America scramble to pay down their dollar debts. That causes a more general tightening of credit. + +Mexico has the most to lose from Mr Trump’s presidency, should he keep his campaign promises. So the peso plummeted in the wake of the result. But Mexico, along with Chile, Turkey, the Philippines and Russia, also has a large burden of dollar debts, which are becoming more expensive in local currency. Mr Trump’s protectionist bent may make it hard for emerging markets to trade their way out of trouble. Only a few are likely to be unharmed by his victory (see box on next page). + + + +Where does a Trump victory leave China, the world’s second-largest economy? China accounts for roughly a half of America’s net trade-deficit, so in Mr Trump’s zero-sum reckoning, it has a lot to lose should America launch an all-out trade war. In fact, the resulting disruption to global supply-chains would badly hurt American firms, and higher prices on imported goods would squeeze American consumers, especially poorer households, which spend proportionately more on them. + +Yet there are risks to China’s economy too, from even a milder form of Trumpian populism. The dollar’s weakness over the spring and summer helped stem the outflow of capital from China that had threatened to unmoor the yuan and so unsettled global financial markets at the turn of the year. A sustained dollar rally would thus mean a severe headache for China’s policymakers, as it would revive the pressure on its capital account. They might then face an unpalatable choice: let the yuan sink against the dollar or keep domestic monetary policy tighter to support it. + +China is safe from the biggest indirect effect of Mr Trump’s victory: the boost it gives other populist politicians. Europe is far more vulnerable. Britain’s vote in June to leave the European Union was one early ballot-box reflection of anti-establishment sentiment. Since then, insurgent political parties in France, Germany, Italy and elsewhere have called for referendums on membership. Such parties typically favour trade barriers and limits on immigration, and are gaining in popularity. + + + +The euro area’s economy has been faring better in recent years, but the single currency remains fragile. The kind of cross-border risk-sharing needed to put the euro on a sound footing is at odds with the rising tides of nationalism and populism. An immediate hurdle is Italy’s referendum on constitutional reform on December 4th. A defeat would weaken Matteo Renzi, the reformist prime minister, and embolden the populist Five Star Movement, which favours ditching the euro. Around 14% of the euro area’s goods exports go to America, quite a bit less than China’s 18%. But America accounts for about 40% of the currency zone’s recent export growth, according to economists at HSBC, a bank. So American protectionism is arguably a bigger threat to Europe than to China. + +The whole world has much to fear from Mr Trump’s threats to tear up trade agreements and impose punitive tariffs on imports. And even if he refrains from starting a trade war, the loose-tongued, fact-lite style he cultivated during the campaign could wreak serious damage when he is president. His hyperbolic threats now carry the weight of the American presidency. His victory was enough to chill some financial markets; what he might do with it could spark full-scale panic. Even short of that, like the Brexit vote, it marks an alarming step away from a liberal, open economic order towards more isolationism and less prosperity. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21709980-trump-presidency-will-be-bad-world-economy-and-worse-places-outside/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Buttonwood + +Déjà vu all over again + +Markets may be volatile for a while after the latest upset + +Nov 12th 2016 | From the print edition + + + +FOR the second time this year, investors have been hit by a political shock: first, the Brexit referendum; now, Donald Trump’s election victory. And the reaction has been very similar; a knee-jerk sell-off followed by a pause to consider whether there might be some profitable opportunities after all. + +As election night unfolded, markets moved pretty much as they had during the campaign when Mr Trump surged in the polls. Equities fell, Treasury bonds rose in price (causing yields to fall) and the Mexican peso took a battering. The futures contract on the Dow Jones Industrial Average dropped by more than 800 points at one stage. Asia followed suit with widespread declines: the Japanese stockmarket dropped by 4.6%. The Mexican peso dived to a new low of nearly 20.8 to the dollar. Gold gained ground, as if often does when investors are nervous. + +But the nature of the financial markets is that sharp moves bring out the bargain-hunters. In this respect, the optimists were helped by a fairly emollient acceptance speech from Mr Trump and the very vagueness of his policy proposals. As Fathom Consulting, an economic research group, put it, “Trump lite” could triumph over “Donald Dark”. + + + +Perhaps the more extreme measures on trade proposed by Mr Trump will be blocked by his colleagues or by Congress whereas his plans for tax cuts will be approved, goes the reasoning. This will act as a stimulus for the economy. And a proposed change in the tax rules on foreign profits may cause companies to repatriate cash, giving a short-term boost to the dollar. Shares in health-care firms and coal producers are also seen as beneficiaries of a Trump victory. All this allowed shares on Wall Street to climb on November 9th; that in turn allowed European (and, the next day, Asian) equity markets to recoup their losses. + +A focus on Mr Trump’s policy agenda also caused a change of heart in the Treasury-bond market. The prospects of bigger deficits and (possibly) higher inflation under Mr Trump drove yields higher than they were when the polls closed. + +This choppiness reflects the confusion of investors who are struggling to cope with the surprise. Similarly, the equity and bond markets were volatile after the Brexit vote before settling down; the one consistent theme was the decline in the pound. Perhaps the safest bet this time is that volatility, as measured by the VIX index (see chart), will pick up in the aftermath of the vote, at least until the direction of the new administration becomes clear. + +A lot may depend on the early actions, rather than rhetoric, of the president-elect. Investors will be looking to see some respected and experienced cabinet appointees. They will also be hoping that Mr Trump’s hostile comments about Janet Yellen, the head of the Federal Reserve, do not lead to a change of leadership, or a shift to a more hawkish policy, at the central bank. + +The irony is palpable. Markets are essentially being reassured by the idea that Mr Trump will not enact many of the policies that got him elected, but will instead focus on a traditional Republican approach of tax cuts for business and the rich. In time, that will make voters more angry and they will look for someone who really will implement the policies they want—and that person could just as easily be on the left as on the right. + +Indeed, there is plenty of potential risk ahead. It is not just America that is grappling with the issues of slow growth and immigration. Over the next 12 months, Europe faces a constitutional referendum in Italy, a general election in Germany and a presidential election in France. All three could lead to upsets: the departure of Matteo Renzi or Angela Merkel, or even the election of Marine Le Pen. A rapid change of leadership could plunge the EU back into crisis. + +Populism is on the march, and this seems likely to lead to less international co-operation and more restrictions on the free movement of goods and services, capital and people. Such policies may have electoral appeal in the short term; but they are a negative-sum game in aggregate, as the 1930s demonstrated. + +Investors may thus face a no-win situation. Unless the share of GDP in the developed world shifts in favour of labour and away from capital, populists will be elected. And if populists are elected, and enact the protectionist and anti-immigration policies voters appear to want, not only might capital’s share of GDP fall, but GDP might grow even more slowly. The reverberations from Mr Trump’s triumph will echo far longer than over the first few trading sessions. + +Economist.com/blogs/buttonwood + + + +Donald Trump wins the presidential election + +One of the most dramatic electoral upsets America, or anywhere, has ever seen + + + +How Donald Trump won the election + +It is the biggest political surprise in living memory + + + +Donald Trump inherits a divided republic + +Setting Americans against each other paved the president-elect’s path to power + + + +Scenes from Donald Trump’s election night party + +Mr Trump’s do at the Hilton, a Manhattan hotel, was invite-only + + + +Commodities react to Donald Trump’s reflationary rhetoric + +Markets are unsure how president-elect’s support for fossil fuels will unfold + + + + + +Live election results + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21709933-markets-may-be-volatile-while-after-latest-upset-trumps-victory/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The world economy + +Coming up Trumps + +Some unlikely economies are poised to do well + +Nov 12th 2016 | From the print edition + + + +THOUGH many outside America are dismayed at the prospect of Donald Trump as president, not everyone is despondent. When the news of Mr Trump’s victory reached the floor of the Duma, Russia’s lower house of parliament, the assembled politicians burst into applause. Such enthusiasm in Russia is in part a reflection of the bromance between Mr Trump and Vladimir Putin, Russia’s president. But it is also because Russia may be one of the few economies that might benefit from—or at least, be indifferent to—a Trump presidency. + +It helps that Russia’s economy has endured a rough time recently and that some kind of rebound is probably due. Its GDP fell by 3.7% last year and will shrink again this year, according to the IMF. Russia has one of the cheapest currencies in The Economist’s Big Mac Index, which compares the relative cost of burgers across the globe. By this measure, the rouble is around 60% undervalued against the dollar. Inflation, which rose to over 16% in early 2015 after a big fall in the rouble, has fallen to around 6%. That has allowed Russia’s central bank gradually to reduce interest rates from a peak of 17% to 10%. Mr Trump’s victory raises the chances that economic sanctions imposed by the West, following Russian interference in Ukraine, will be lifted. That will give the economy an extra fillip. + +Tellingly, other candidates for betterment in the early part of Mr Trump’s presidency are also beaten-down economies with the potential to rebound. Egypt has many problems but now it at least has one of the world’s cheapest currencies (by the Big Mac gauge), following its recent decision to let the pound float. Devaluation will further push up inflation but should in time relieve the shortage of foreign currency that has hampered Egyptian business. Argentina’s economy has gone through some of the pain that lies ahead for Egypt. If global markets do not go into a tailspin, it could bounce back in 2017, even if hopes of a trade deal with America now look forlorn. Pakistan’s economy has been quietly improving in recent years, helped by a lower price of oil, on which it is heavily reliant. It is perhaps too peripheral to America’s economy to be knocked off its present course. + +If pushed, a hopeless optimist might make a medium-term case for China, if it can avoid an all-out trade war with America in the meantime. It is unlikely to mourn the likely death of the Trans-Pacific Partnership, or TPP, a trade deal negotiated by Barack Obama but slammed by Mr Trump on the campaign trail. China was not a party to it and it posed a minor threat to its production networks in Asia. And if the wave of populism that spawned Brexit and now elected Mr Trump engulfs the euro area, China might even begin to look like a refuge for rich-world investors. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21709983-some-unlikely-economies-are-poised-do-well-coming-up-trumps/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Housing in America (1) + +The cost of poor lending + +A city seeks the right to sue banks for irresponsible mortgage-lending + +Nov 12th 2016 | NEW YORK | From the print edition + +The Miami blues + +“A TODDLER drowns in the swimming pool of his neighbour’s vacant house. A firefighter dies falling through the floor of a vacant building. A gang take over an empty house…to advertise prostitution.” Thus begins an incendiary supporting brief filed by a trade union for police officers and firefighters in a suit brought by the city of Miami against Wells Fargo and Bank of America. The suit argues that mortgages granted by the banks to black and Hispanic residents who later defaulted caused the city to lose tax revenue and forced it to fork out more for services. This, it contends, entitles Miami to damages. + +The case was largely dismissed in the trial court, reversed on appeal and then accepted by the Supreme Court, which heard oral arguments on November 8th. At issue is who can sue for alleged discrimination, and whether irresponsible loans can be blamed for broader economic damage. A separate court will consider whether the banks were actually guilty of discrimination (they deny it). + +Part of civil-rights legislation passed in 1968, the “Fair Housing Act”, the statute under which the case is being brought, granted the right to sue to “an aggrieved person”. In the past the aggrieved have been understood to be individuals who were directly harmed by discrimination and, in a subsequent interpretation, their neighbours. Miami’s suit would place the city in the position of an individual, with a financial stake in the outcome. Two departments of the federal government, Justice and Housing and Urban Development, which did not have a direct financial interest, could also bring cases. + +The stakes are enormous. In a hint of what is to come, Memphis and Baltimore have already settled similar cases for millions of dollars. John Roberts, the chief justice, noted that would be a fraction of what would ensue were the Supreme Court to uphold Miami’s position. At least a dozen other cases are percolating, including ones in Los Angeles and Cook County, Illinois (Chicago). Others would be encouraged by the prospect of a windfall. “There are 19,300 cities in America,” Neal Katyal, a lawyer for the banks, told the justices: if Miami prevails, all of them might bring similar suits. + +The case provoked such interest that queues formed at the courthouse hours ahead of the hearing. Eighteen groups submitted “amicus” briefs—arguments supporting one side or the other. They came from lobbies for trade unions, civil-rights groups and businesses. The union petition quoted above was particularly vivid (and came with pictures). But there was no shortage of expansive claims. + +Advocacy groups faulted banks for lending practices that they claimed blighted the city and contributed to substandard housing and segregation. Briefs backing the banks argued that a ruling in favour of Miami could transform cities into extortion rackets, able to gain large settlements from lenders worried about the cost of an investigation and the publicity accompanying even a spurious case. + +If Miami were able to seek financial redress, others might also qualify: property-owners, local merchants, school districts and on and on, creating, in Mr Katyal’s summary before the court, “an unlimited theory of liability”. Among the most striking contentions was one included in a submission by a chamber of commerce and an insurers’ association. It argued that, faced with the added risk, not only of losing money on mortgages but also of being sued, lenders would “make major, societally undesirable adjustments in their lending practices”. In other words, they would lend less in poor areas. + +That would be an ironic outcome, given the history of the underlying law. It was enacted to attack “redlining”, meaning restrictions on credit in black neighbourhoods. Miami’s case is premised on a later theory, “reverse redlining”. This contends that borrowers were discriminated against because they were given too much credit at too high a cost. It is a complex issue, supported by statistical analysis that the banks dispute. A verdict is expected early in 2017, probably from a divided court. That is unlikely to mark the end of what could be years of acrimonious legal skirmishes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21709977-city-seeks-right-sue-banks-irresponsible-mortgage-lending-cost/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Housing in America (2) + +To those that have + +Prices are diverging on geographic, social and ethnic lines + +Nov 12th 2016 | From the print edition + + + +PITTSFIELD, a city of 43,000 on the Housatonic River in western Massachusetts, is a quintessentially American place, but in many ways an unlikely spot for a housing boom. The 255-year-old former industrial hub boasts the country’s earliest written reference to baseball. Its economy was dominated by General Electric for much of the 20th century. But by 2000 it had experienced ten years in which hardly any new jobs had been created. Incomes were 12% below the national average. The city’s population had been shrinking for decades. And yet between 2000 and 2007, amid a nationwide, credit-fuelled property boom, house prices in Pittsfield jumped by 70%, or 8% per year. + +These days, such rapid growth in economically struggling cities is rare. Whereas local housing markets rose and fell together during the housing bubble and bust, the housing recovery which began in America in 2012 has been patchy. Cities and towns with growing economies have seen big gains; places like Pittsfield have stagnated (see chart 1). Such trends are contributing to a widening of America’s already unequal distribution of wealth. + +According to an annual survey of consumer expenditure from the Bureau of Labour Statistics (BLS), homeowners without a college degree have seen the value of their homes appreciate by less than 0.2% since 2012, whereas college graduates have enjoyed gains of 10.8%. Similar discrepancies are evident for black and white homeowners, whose properties have fallen in value by 1.5% and risen by 9.8% respectively (see chart 2). + + + +That local economic conditions should play an important role in housing markets seems obvious. The price of a home, like that of any other asset, is driven by supply and demand. Cities with rising wages and growing workforces will have higher housing demand. In recent decades, high-skilled workers have increasingly sorted themselves geographically, preferring to live in high-wage cities with desirable local amenities. This has led to the growth of places that some economists have dubbed “superstar cities”. + +Data from the BLS and Freddie Mac, a government-supported mortgage agency, suggest that the relationship between economic fundamentals and house prices across metropolitan areas is stronger today than in past cycles. During the two decades leading up to the housing crisis, employment and income growth could account for about 33% of the variation in house-price appreciation across the country’s 380-odd “metro” areas. Since 2012, when the American housing market’s recovery began, this figure has jumped to 48%. Before the crash, a percentage-point increase in employment growth was associated with a rise of 0.6-0.7 points in house-price growth. In the past four years, such a rise in employment growth has come with a two-point increase in house-price growth. + +A paper published in 2010 by Stijn Van Nieuwerburgh, of New York University, and Pierre-Olivier Weill, of the University of California, Los Angeles, found that the association between incomes and house prices had strengthened. Between 1975 and 2007 house prices became ten times more sensitive to wages. As productivity and wage gaps across metro areas widened, house prices also diverged. This trend has continued. + +Changes in lending practices have also contributed to the divergences. During the housing boom, prices rose in virtually every metropolitan area, regardless of employment or income growth. Joseph Gyourko, of the University of Pennsylvania, says that these economic fundamentals were largely ignored at the time because credit was so widely available. + +Since then, banks have tightened lending standards and shifted credit to better-off borrowers. According to data from the Federal Reserve Bank of New York, the credit score of a typical mortgage-borrower is now roughly 50 points above its pre-crash low (from about 700 to about 750). This has allowed the most creditworthy to bid up prices further in cities like San Francisco, while prices in places like Charleston, West Virginia, have sagged. + +Housing experts agree that a stronger link between local house prices and underlying economic fundamentals is a positive development. And yet diverging housing-market trends across high- and low-wage cities will inevitably contribute to growing wealth and racial inequality. “Superstar cities” will lose their lustre if they are affordable only to the richest. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21709974-prices-are-diverging-geographic-social-and-ethnic-lines-those-have/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Money in India + +Taking notes + +The government transforms base money into nothingness (and gold) + +Nov 12th 2016 | MUMBAI | From the print edition + + + +NOT much distinguishes a valuable banknote from any old piece of printed paper, as Indians discovered this week. In a surprise televised address on November 8th, Narendra Modi, the prime minister, announced that the country’s two highest-denomination notes, worth 500 and 1,000 rupees ($7.50 and $15), were to be legally worthless with near-immediate effect. This odd variant of alchemy is the latest in a series of moves to curb illicit income; economists hope long-term gains will justify a chaotic spell as India adapts. + +The idea is not as barmy as it might first appear. Mr Modi has implemented a flurry of schemes to flush out “black money”, the term Indians use for cash which is both unaccounted for and outside its formal financial system. Piles of ill-gotten income have long been easy to launder into gold or property, where using notes for at least part of a purchase is the norm. “Demonetising” high-value tender means existing notes must be traded in at banks and post offices before the end of the year. That will force those with suitcases of cash either to come clean or to renounce their loot. + +Still, it is dramatic: central banks usually balk at moves that call into question the legal worth of the notes they issue. The hastily discontinued tender represents 86% of all the currency in circulation (equivalent to 11% of GDP) in a country where cash remains king. Many Indian residents found themselves with little still-legal cash on hand ahead of a forcibly imposed bank holiday and a two-day shutdown of ATMs. A senior bank executive in Mumbai admitted to raiding his daughter’s piggy bank to pay for tolls on his way to work. + +The prospect of life with little or no cash, at least for a few days, cheered those who think Indians should be switching to smartphone apps and card-based payments, which are easier for the authorities to track and tax. That laudable aim will take time in a country where nine out of every ten workers still toil in the informal sector. Though the number of Indians with bank accounts has risen sharply thanks to a government financial-inclusion scheme, most savings are still held outside the banking system. One-fifth of total economic output is said to be informal. + +Banks are among those who should gain from the scheme: much cash now secreted under mattresses should make its way into their coffers or into the mutual funds they offer. Against that, the black-money crackdown will probably dent (or worse) already-fragile property prices, especially in big cities—and so the value of the collateral the banks lend against. + + + +Most economists expect the dislocation to dampen growth in the short-term. Households will probably put off big-ticket purchases such as motorbikes or white goods. Jewellers, doctors and others in professions where cash still rules will also be hard hit. Political parties hoarding cash for election-time handouts to voters will have to tidy up their finances. Even e-commerce sites like Amazon will be affected: over two-thirds of their sales are settled by the buyers in cash on delivery. + +A new, shady line of work is already emerging: opportunists are said to be snapping up 1,000-rupee notes at a deep discount from those with too much stashed cash to declare. They will profit handsomely if they can find smaller savers willing to swap the old notes for new ones on their behalf, for a fee. The government has indicated it is gunning for those with suitcases full of rupees rather than merely a few stapled or elastic-banded wads. + +Some aspects of the plan are difficult to fathom. Prominent economists, such as Kenneth Rogoff of Harvard University, are keen to scrap big-denomination notes altogether. But India will merely replace them. Worse, it will add a 2,000-rupee series—introducing a note that will have few conceivable uses other than mattress-stuffing, smuggling or gambling (getting change for even a 500-rupee note is already close to impossible). + +The timing is also odd. India has recently introduced a system that makes it easy for anybody to make or receive payments from their mobile phone, whether they be businesses or individuals. But the Unified Payments Interface, as it is known, is still in the early stages of implementation, so cannot really help overcome the current cash-crunch. Mr Modi also took the cash out of circulation just as polls opened in America, eventually roiling markets. + +Cancelling banknotes is usually the work of desperate or misguided regimes. This looks different. Indeed, the assault on black money is justified and overdue. But governments change the rules on the world’s simplest financial instrument—the humble banknote—at their peril. Gold is already favoured by those who want to keep their savings beyond the reach of government and taxman. Gold bugs may feel vindicated; others will have taken note. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21709988-government-transforms-base-money-nothingness-and-gold-taking-notes/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Banks and cybercrime + +Online checkout + +Theft strikes a British lender + +Nov 12th 2016 | From the print edition + + + +“EVERY little helps.” The thieves may have found Tesco’s advertising slogan only too apt. Over the weekend of November 5th and 6th, Tesco Bank, the financial arm of Britain’s biggest retailer, detected “suspicious transactions” on 40,000 current (ie, checking) accounts. Online raiders succeeded in stealing from 9,000: some customers spotted dodgy payments to companies in Brazil and Spain. On November 8th Tesco Bank said it had reimbursed all losses, to the tune of £2.5m ($3.1m). Online transactions from current accounts, which it had suspended, were up and running again. + +If the bank or other investigators have any idea who stole the money and how, they are not saying. Reports say that GCHQ, a spy agency, has been called in. All this has fed rather than starved speculation: an MP has said “state-sponsored” crime cannot be ruled out. There is little to go on, notes Alfredo Pironti of IOActive, a cyber-security company. One possibility is that the thieves found a weakness in the bank’s web application. Another is that they managed to filch lots of customers’ passwords over a period of time and exploited them in one go. Still another is that they duped staff into giving away information that eventually led them to the bank’s servers. Some have even mused about an inside job. + +“The number of compromised accounts is what jumps out as unusual,” says Tim Erlin of Tripwire, another online-security firm. Banks usually detect cyber-thieves in their systems before they can burgle at will. Skimming debit cards using devices or malware placed on automated teller machines—another method for stealing money from consumer accounts—is, says Mr Erlin, difficult to carry out at scale. + +Unlike its parent, Tesco Bank is a minnow: Britain’s 24th-biggest bank by assets, according to the Banker. It has just 136,000 current accounts—so the thieves dipped into one in 15. Begun as a joint venture with the Royal Bank of Scotland but wholly owned by Tesco since 2008, Tesco Bank has been growing nicely. Its balance-sheet expanded by 13% in the year to August, to £11.9bn; deposits jumped by 23%, to £8.1bn. It chipped in £89m to Tesco’s first-half operating profit of £596m—handy when supermarkets are under assault from discount chains. + +Tesco must now be worrying whether people attracted by generous interest rates—3% on its current account—and a cosier brand than Britain’s high-street banks will want to stay. That brand has already been tarnished by an accounting scandal in 2014: three former directors have been charged with fraud. Speedy recompense may not make up for those nervous weekend hours on hold to the call centre or the simple fact of the heist. Less fairly, Britons may now be more reluctant to trust other online upstarts wanting to take on the big lenders—and who aren’t running a bank as a sideline to flogging cornflakes. + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21709993-theft-strikes-british-lender-online-checkout/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Internship + +Nov 12th 2016 | From the print edition + +Internship: Applications are invited for a Marjorie Deane internship in The Economist’s New York bureau. The award is designed to provide work experience for a promising journalist or would-be journalist, who will spend three to six months at The Economist writing about economics and finance. Applicants are asked to write a covering letter and an article of no more than 500 words, suitable for publication in The Economist. Applications should be sent by December 14th to deaneinternny@economist.com. + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21709979-internship/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Science and technology + + + +Particle physics: So long, Susy? [Thu, 10 Nov 22:25] + +Palaeontology: Origin story [Thu, 10 Nov 22:25] + +Space exploration: Dusting yourself down [Thu, 10 Nov 22:25] + +Drug development: Pets on trial [Thu, 10 Nov 22:25] + +Naval warfare: Follow the trail [Thu, 10 Nov 22:25] + +Global warming: Days of the triffids [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Particle physics + +A bet about a cherished theory of physics may soon pay out + +The evidence is mounting that while supersymmetry may be a beautiful idea, it is also wrong + +Nov 12th 2016 | From the print edition + + + +IN 1994, on a warm summer’s evening in Erice, in Sicily, in the midst of a pleasantly well-lubricated dinner, two physicists made a wager on the laws of nature. The bet between Kenneth Lane and David Gross concerned supersymmetry, or “Susy” for short, a theory which stipulates that all known fundamental particles have heavier, supersymmetric counterparts called sparticles. + +When the bet was laid, no sparticles had been spotted. Yet plans for a powerful particle accelerator called the Large Hadron Collider (LHC) were being drawn up. Dr Lane proposed that if the new machine found evidence for the theory, he would buy the table dinner at Girardet’s, an expensive restaurant in Switzerland considered by some the best in the world. If not, then dinner would be on Dr Gross. The terms, scribbled on a napkin, stipulated that the bet would be payable once the LHC had produced enough data to be sure of the outcome. The chosen figure, in the obscure units used by physicists, was 50 inverse femtobarns, or roughly 5 quadrillion of the high-energy collisions between particles that the LHC is designed to produce. + +Two decades on, Girardet’s is no more. But the LHC is in rude health. It has, since 2010, collected about 60 inverse femtobarns of data. With no sightings of the particles that Susy predicts, Dr Lane says it is time for Dr Gross (who won the Nobel prize in 2004) to cough up—if not with dinner at Girardet’s then at another suitably ritzy venue. After receiving no response to several e-mail prompts, however, Dr Lane is growing impatient. “David appears to be welshing on our bet,” he says. + +One indication of the strength of feeling surrounding Susy is that the Erice bet is not unique. Another, wagering a bottle of cognac on the discovery of a sparticle by June 2016, was settled, in the sceptic’s favour, over the summer. + +Collision course + +Susy has many fans. That is because, if it is true, it could help solve many physical puzzles. Dark matter, for instance, is a mysterious substance known to make up about 27% of the total amount of stuff, both matter and energy, in the universe. The particles predicted by Susy are one plausible dark-matter candidate. A “grand unified theory”, for which physicists have been hunting for decades, would explain how fundamental forces such as gravity and electromagnetism merge into a single force at the very high temperatures thought to have existed shortly after the Big Bang. Susy can help build such theories. + +It could also make sense of a peculiarity of the Higgs boson, a long-sought particle discovered by the LHC in 2012. The Higgs interacts with many other particles. Summed together, these give it its mass. But trying to predict that mass by calculating it yields a number about 10 quadrillion times larger than its actual value. Fixing the maths requires a large and ugly fudge. Susy’s hypothesised sparticles cancel out the contributions from their “real” partners, meaning no fudge is needed. + +Strictly speaking, Susy can never be formally disproved. It can always be tweaked so that sparticles appear only at energies that are just out of reach of the best existing colliders. Yet the more such tweaks are applied, the more they erode the elegance for which the theory is admired. + +In light of the LHC’s failure to find evidence for Susy, more physicists are arguing that the field’s obsession with the theory is a waste of time and effort. Scientists at the LHC filter the data they record by looking first for particles predicted by favoured theories, including Susy. Less popular ideas get a smaller share of the resources. That could delay other discoveries. Dr Lane, for instance, thinks so-called composite-Higgs models, which assume the Higgs is made up of even smaller constituent particles, should get more attention. + +Sabine Hossenfelder, a theoretical physicist at the Frankfurt Institute for Advanced Studies, is one of many who think it is time for theorists to focus on other problems—how gravity behaves at the very small scales of quantum mechanics, for instance. If the LHC finds no trace of sparticles in this year’s data, she believes the last thing the field needs is another round of Susy model adjustments. “That’s not science,” she says. “That’s pathetic.” + +Dr Gross is not ready to concede quite yet. The data are in, but their analysis is not complete. “It looks like I will lose this bet by the end of the year,” he says, “but we should await the word from the experimenters themselves.” (Dr Lane says the original terms have been met and Dr Gross should throw in the towel.) + +In the longer term, there is more at stake than a fancy dinner and a firmer understanding of the nature of reality. Colliders are expensive—the LHC cost $5bn to build. It has many years still to run, and plenty of time to discover something new. But its apparent failure to find convincing evidence for Susy has some worried that, if the LHC fails to turn up much new physics of any sort, plans for yet bigger colliders will be harder to justify. + +Others are more sanguine: the history of science is, after all, littered with much-loved but wrong theories, from the idea that Earth is the centre of creation to the “luminiferous ether” that was thought, in the 19th century, to suffuse the universe. If Susy comes to nothing, Dr Gross hopes that will inspire new ideas from young theorists. “That”, he adds, “is a category that does not contain either Lane or me.” + +This article appeared in the Print Edition with the headline: So long, Susy? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21709946-supersymmetry-beautiful-idea-there-still-no-evidence-support-it/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The history of the dinosaurs + +A new fossil find in Brazil rewrites the history of the dinosaurs + +Dinosaurs coexisted with their reptilian forebears, rather than replacing them + +Nov 12th 2016 | From the print edition + +My, what sharp teeth you have + +HOW the dinosaurs died out after ruling the planet for over 150m years was a mystery that consumed palaeontologists throughout much of the 20th century. These days it is mostly accepted that they were done in by the climatic after-effects of the impact of a giant asteroid, specifically the one that carved a vast crater 180km across near the Yucatan Peninsula in Mexico. Now the focus has shifted from how they died out to where they came from in the first place. In a paper just published in Current Biology, a team led by Max Langer at the University of São Paulo reports the excavation of four fossils that shed some intriguing light on two different aspects of that question. + +The fossils, found by Sergio Cabreira at the Lutheran University of Brazil, come from the Santa Maria formation in the south of the country. One of them, at 230m years in age, is one of the oldest dinosaur fossils ever found. Typically, such ancient finds are nothing more than bone fragments, but this specimen, named Buriolestes schultzi, is in remarkably good shape. It is a distant ancestor of the long-necked sauropods such as Diplodocus and Brachiosaurus. Those giant animals, which stood up to 16 metres high and weighed 50 tonnes or more, were vegetarians. + +B. schultzi seems to have been both diminutive—about 1.5 metres long—and carnivorous. Its teeth are curved and have serrated edges, traits usually associated with meat-eating. That finding raises as many questions as it answers: palaeontologists must now ponder when and why sauropods made the switch from eating meat to eating plants. Size probably had something to do with it: it is difficult to see how an animal the size of Brachiosaurus could have hunted enough prey to support its enormous bulk. But were B. schultzi’s descendants forced to become herbivorous as they grew? Or did they switch to a vegetable diet first, then take advantage of the opportunities for growth that offered? + +The other fossils in the find address a different question. Palaeontologists have long thought that dinosaurs rose to dominance at the dawn of the Jurassic period, 201m years ago, by out-competing and rapidly replacing other land animals that emerged earlier. One such group was the lagerpetids, a group of reptiles with some dinosaurian characteristics that arose about 236m years ago, during the Triassic period. + +Yet evidence has been mounting that suggests this argument is wrong. Several dinosaur and lagerpetid bone fragments have been found alongside one another in Triassic rocks, hinting that, instead of outcompeting the lagerpetids, the dinosaurs coexisted alongside them for millions of years. The Brazilian discovery builds on these fragmentary finds to deal the rapid replacement argument a fatal blow, by clearly revealing a lagerpetid living alongside a dinosaur more than 30m years before the start of the Jurassic. The worlds’ museums of natural history will have to update their displays. + +This article appeared in the Print Edition with the headline: Origin story + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21709944-dinosaurs-coexisted-their-reptilian-forebears-rather-replacing-them/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Space exploration + +How to solve the lunar dust problem + +Sharp, jagged dust grains get everywhere and break things + +Nov 12th 2016 | From the print edition + + + +“PICKING up some dust.” So said Buzz Aldrin on July 20th 1969, as he and Neil Armstrong descended towards the lunar surface. It is not the most famous quote from that day. But the lunar dust kicked up by Aldrin’s and Armstrong’s descending spacecraft would go on to become a serious, if under-appreciated, problem for all of the Apollo astronauts. + +Lunar dust consists of rock pulverised to the consistency of talcum powder by micrometeoroid impacts. The fragments are sharp, and because there is no weather on the Moon, and therefore no erosion, they stay that way. At the same time, the solar wind bombards the dust with charged particles from the sun, giving it a static charge that makes it cling to anything it touches. + +The jagged dust fragments blackened spacesuits, causing them to absorb too much heat. They tore tiny leaks in joint seals, resulting in pressure leaks and risking total failure of the suits. They scratched visors, hindering visibility, and caked batteries, making them overheat. Tramped back into the spacecraft, they escaped into the air, from where the astronauts had little choice but to breathe them in and risk any potential health consequences. + +Half a century later NASA is pondering a return to the Moon, as a stepping stone for missions to Mars and the asteroids. At the same time a growing number of private firms have ambitions to mine precious metals from those celestial bodies, too. One of the (many) problems that NASA and the space-prospecting crowd will have to solve is what to do about the dust. Fortunately for them Kavya Manyapu, an engineer at Boeing who has been working with scientists from NASA’s Glenn Research Centre, may have a solution. + +Ms Manyapu has come up with a new kind of spacesuit material that neutralises the dust in two different ways, one passive and one active. The passive strategy is a novel polymer-based coating that is applied to the top of an ordinary fabric spacesuit. It is impregnated with tiny dust-like particles of its own, which makes it harder for the real thing to stick. + +To get rid of any dust that does nevertheless manage to accumulate, the material also has embedded within it a yarn made of conducting carbon-nanotube fibres. Connect those to a power source, and the fabric can create an electric field that repels the charged dust particles. In tests, the two systems managed to repel about 90% of the simulated lunar dust that the material was exposed to. + +That would be a useful trick for future lunar explorers. But as is traditional for technology developed for use in space, Boeing is keen on terrestrial applications, too. The firm reckons its dust-repellent fabric could find uses in medicine or clean-room manufacturing. But until it has patented the idea, the company is not going into specifics. + +This article appeared in the Print Edition with the headline: Dusting yourself down + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21709943-sharp-jagged-dust-grains-get-everywhere-and-break-things-how-solve-lunar/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Drug testing + +How to enrol your dog in a cancer-drug trial + +Why pets might make better research subjects than lab animals + +Nov 12th 2016 | From the print edition + +An idea with legs + +DRUG development is a risky—and costly—business. Many promising compounds fail to cut the mustard when put through clinical trials. One reason is that drugs which work on laboratory animals may not work quite so well in human tests. Being able to pick winners and losers as early as possible would save money, and the One Health Company, based in Philadelphia, thinks it may have found a way. It is offering to help pharmaceutical firms test their wares on sick pets. Its first guinea pigs, as it were, will be dogs suffering from cancer. + +There are several benefits, says the firm. By treating animals with existing cancers, it hopes to dodge a problem with modern animal research, which is that the “model” animals and diseases that are used to test drugs are not always good stand-ins for the natural illness. For example, mice used to test cancer drugs may have had their tumours grafted surgically into their bodies, and their immune systems knocked out with drugs or by genetic engineering. + +Another plus is that pet owners tend to be dedicated carers who are very knowledgeable about their four-legged companions and are likely to report even small changes in symptoms. Lab animals are checked far less frequently. Owners so far have been keen: the company claims that 64% of those told about the scheme sign up, a very high proportion. + +Perhaps the most useful aspect of pet clinical trials, however, is the lack of government regulations covering medical records. One Health has been able to get access to 98% of records on animals from hospitals—a number that is unheard for human medical records. That allows the firm to identify patients and tissue samples, and recruit participants. + +Over time, the firm hopes that pets will prove useful in diseases other than cancers. Horses, for instance, seem to be good proxies for humans when it comes to arthritis. Cats, meanwhile, may prove instructive in breast-cancer research. For now, those who enrol their pooches get a double benefit. Fido does his bit for science. And while doing so he gets access to what are, One Health hopes, cutting-edge cancer drugs. + +This article appeared in the Print Edition with the headline: Pets on trial + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21709945-why-pets-might-make-better-research-subjects-lab-animals-how-enrol-your/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Naval warfare + +Hunting submarines with magnets + +A new way to detect even the quietest boats + +Nov 12th 2016 | From the print edition + + + +SUBMARINES rely on stealth to do their jobs, whether that is sinking enemy ships or hiding nuclear-tipped missiles beneath the ocean. The traditional way of hunting them is with sonar. Modern sonar is extremely sensitive. But modern submarines are very quiet, and neither side has gained a definitive upper hand. + +There are other options. Submarine-spotting aircraft carry “magnetic anomaly detectors” (MAD) which pick up disturbances in the Earth’s magnetic field caused by a submarine’s metal hull. Those disturbances are tiny, which means MAD is only useful at ranges of a few hundred metres. + +There may, though, be a better way. Thanks to something called the Debye effect, it might be possible to hunt submarines using the magnetic signatures of their wakes. Seawater is salty, full of ions of sodium and chlorine. Because those ions have different masses, any nudge—such as a passing submarine—moves some farther than others. Each ion carries an electric charge, and the movement of those charges produces a magnetic field. + +The Debye effect has been known since 1933, but its effects were thought to be tiny. The American navy set out to explore it nonetheless in 2009, giving research grants to three firms to check whether it could be used for submarine detection. One, Cortana Corporation of Church Falls, Virginia, found a significant effect. Cortana was given a second grant in 2011 to continue the work, which was expected to produce a sensor which could be deployed from a ship. Since then the navy has continued to award Cortana grants for hush-hush jobs. + +Neither Cortana nor the navy will discuss exactly what they are up to. But it is likely that the technique can only detect certain submarine movements in some situations. Submarines produce many different types of wake. As well as the familiar V-shaped wake they leave underwater disturbances known as “internal waves”, flat swirls called “pancake eddies” and miniature vortices which spin off from fins and control surfaces. These all depend not only on speed and depth but also on the submarine’s hydrodynamics (the underwater version of aerodynamics). + +It is early days for the technology, at least in the West. But work done in Russia, whose navy has long been interested in alternatives to sonar, suggests the Debye effect can be turned into something quite potent. In 1990, two contributors to the Soviet military magazine Naval Collection wrote that “as a consequence of the great extent of the wake, it is easier to detect this anomaly than the magnetic anomaly due to the metallic hull of the submarine.” That suggests that a well-tuned Debye detector might be able to pick up a trail from several kilometres back and follow it to find the submarine. Russia’s claims in this area have long been regarded in the West as exaggerated. The new American interest suggests they might not have been. + +Things are likely to get easier, too: a new generation of high-tech magnetic sensors based on machines called SQUIDs—“superconducting quantum interference devices”—should be more sensitive than existing ones. Both America and Britain are in the midst of replacing their present generation of nuclear-armed submarines. The new boats will be some of the quietest ever built. But if their wakes give them away, that may not matter. + +This article appeared in the Print Edition with the headline: Follow the trail + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21709948-new-way-detect-even-quietest-boats-hunting-submarines-magnets/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Global warming + +Earth’s plants are countering some of the effects of climate change + +More photosynthesis means a slower rise in carbon dioxide levels—for now + +Nov 12th 2016 | From the print edition + +A feast in the air + +IN 1972, on their way to the Moon, the crew of Apollo 17 snapped what would become one of the most famous photographs ever taken. The “Blue Marble” shows Earth as it looks from space: a blue sphere overlaid by large brown swatches of land, with wisps of white cloud floating above. + +But times change, and modern pictures of Earth look different. A wash of greenery is spreading over the globe, from central Africa to Europe and South East Asia. One measurement found that between 1982 and 2009 about 18m square kilometres of new vegetation had sprouted on Earth’s surface, an area roughly twice the size of the United States. + +The growth in greenery is a consequence of climate change. As the planet heats up, places that were once too chilly for most plants to grow have become steadily more hospitable. That extra vegetation, in turn, exerts its own effects on the climate. According to a team led by Trevor Keenan of the Lawrence Berkeley National Laboratory, in California, who have just published their findings in Nature Communications, the plant growth caused by climate change may also be helping to slow it—at least for now. + +In 2014 humans pumped about 35.7bn tonnes of carbon dioxide into the air. That figure has been climbing sharply since the middle of the 20th century, when only about 6bn tonnes a year were emitted. As a consequence, the concentration of CO2 in the atmosphere has been rising too, from about 311 parts per million (ppm) in 1950 to just over 400 in 2015. Yet the rate at which it is rising seems to have slowed since the turn of the century. According to Dr Keenan, between 1959 and 1989 the rate at which CO2 levels were growing rose from 0.75ppm per year to 1.86. Since 2002, though, it has barely budged. In other words, although humans are pumping out more CO2 than ever, less of it than you might expect is lingering in the air. + +Filling the atmosphere with CO2 is a bit like filling a bath without a plug: the level will rise only if more water is coming out of the taps than is escaping down the drain. Climate scientists call the processes which remove CO2 from the air “sinks”. The oceans are one such sink. Photosynthesis by plants is another: carbon dioxide is converted, with the help of water and light energy from the sun, into sugars, which are used to make more plant matter, locking the carbon away in wood and leaves. Towards the end of the 20th century around 50% of the CO2 emitted by humans each year was removed from the atmosphere this way. Now that number seems closer to 60%. Earth’s carbon sinks seem to have become more effective, but the precise details are still unclear. + +Using a mix of ground and atmospheric observations, satellite measurements and computer modelling, Dr Keenan and his colleagues have concluded that faster-growing land plants are the chief reason. That makes sense: as CO2 concentrations rise, photosynthesis speeds up. Studies conducted in greenhouses have found that plants can photosynthesise up to 40% faster when concentrations of CO2 are between 475 and 600ppm. + +For delegates at the latest round of UN climate talks, in Marrakech, that sounds like good news. But more vigorous photosynthesis is only slowing climate change. The effect is too small to reverse it. And it will not last, says Dr Keenan. Besides, there is more to growing plants than carbon dioxide. Take water: in a changing climate, wet bits of the world will probably become wetter while drier parts become drier. Extreme events—droughts and deluges—will intensify. Rainfall patterns may change, which could make some places less friendly to plants that now thrive there. And although plants benefit in the short term from extra CO2, they suffer when temperatures get too high. + + + +There will be more complicated effects, too. Much of the greening has occurred in cold spots (see map). Yet while ice and snow reflect sunlight, vegetation soaks it up, so more greenery in the north will eventually lead to yet more warming. That, in turn, could release large quantities of methane—a potent but short-lived greenhouse gas—from thawing tundra. Elsewhere, higher temperatures could kill tropical forests. According to one estimate, for every degree of warming, tropical forests may release greenhouse gases equivalent to five years’ worth of human emissions. + +Indeed, some researchers think the effects of global greening may already be fizzling out. Every few years a climatic phenomenon called El Niño sees the tropical Pacific Ocean warm substantially, which tends to raise temperatures around the world. The most recent Niño, in 2015-16, was a whopper. Corinne Le Quéré, a climate researcher at the University of East Anglia in Britain says that means the world’s plants may have, therefore, become a less potent carbon sink than they were in the period studied by Dr Keenan’s team. Global greening, then, offers only a little breathing space. Kicking the fossil-fuel habit remains the only option. + +This article appeared in the Print Edition with the headline: Days of the triffids + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21709947-more-photosynthesis-means-slower-rise-carbon-dioxide-levelsfor-now-earths/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Books and arts + + + +Literary history: Refugee avant la lettre [Thu, 10 Nov 22:25] + +Turkey: Fault-lines upon fault-lines [Thu, 10 Nov 22:25] + +Natural history: Omnivore’s delight [Thu, 10 Nov 22:25] + +A literary life: Cartergraphy [Thu, 10 Nov 22:25] + +Glenda Jackson in “King Lear”: Wielding the matter [Thu, 10 Nov 22:25] + +Johnson: Doing by talking [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Literary history + +A closer look at the young Kafka + +A new biography takes readers past the misimpressions of the modernist’s life + +Nov 12th 2016 | From the print edition + + + +Kafka: The Early Years. By Reiner Stach. Translated by Shelley Frisch. Princeton University Press; 564 pages; $35. + +POOR Franz Kafka. His lifetime being misunderstood by his family has been followed by an even longer literary afterlife being misunderstood by the world. According to a new biography by Reiner Stach, Kafka was not the neurotic, world-removed writer of, say, Isaac Bashevis Singer’s 1960s story, “A Friend of Kafka”, in which a friend says Kafka’s inhibitions “impeded him in everything”. Nor was he scarred solely by a difficult relationship with his overbearing father, an idea that Alan Bennett’s play “Kafka’s Dick” toyed with in the 1980s. + +In “Kafka: The Early Years”, the last instalment of a mighty, three-volume biography, Mr Stach pursues close description of Kafka’s life and times rather than the “critical biography” approach combining biography and textual interpretation. What Mr Stach uncovers in this volume—written last because of a long struggle over access to documents—are the formative experiences of a Kafka who becomes new and surprisingly relevant. + +“Readers…will find myths about Kafka exploded,” writes Shelley Frisch in her translator’s preface. Mr Stach himself lauds “the many pieces of the mosaic discovered by others”, a half-century of academic discovery (about Kafka’s first-rate work as an insurance clerk, for example) that Mr Stach now brings to a wider audience. Yet even those immersed in the specialist work benefit from the illumination that Mr Stach’s detailed digging brings. + +Kafka wrote his famous “Letter to His Father” in 1919, in which he took his father, Hermann, to account for his boorish ways with his son, who became beset by guilt and fear of punishment. But, as Mr Stach vividly shows, loneliness, not humiliation, was Kafka’s first formative experience. Until he was four, his father and mother were busy in the family haberdashery shop 12 hours a day, six and a half days a week. Kafka learned that social relations were fraught and unstable—with great consequence for literature. + +In Mr Stach’s telling, this insecurity was compounded by threats that the observant and highly sensitive Kafka found in the world: an education system based on rigorous exams, and the risk of failing them; a society beset by tensions between Czechs and Germans, in which Jews were often the scapegoats; and new-fangled machines like aeroplanes, which both delighted and terrified the young author. + +According to Mr Stach, guilt and punishment preoccupied Kafka from 1912—the year he wrote “The Metamorphosis”, a groundbreaking story—until early 1915. But later works posed a new question: “What do people have to do to be accepted by a group—and why are some never accepted?” For the biographer, this is precisely the theme of “The Castle”, an unfinished novel that Mr Stach calls Kafka’s most brilliant work, written two years before he died of tuberculosis in 1924, aged 40. + +In today’s age of backlash against globalisation, the arc that Mr Stach draws between “The Early Years” and Kafka’s later life takes on a new significance. It traces the life of a misunderstood German-speaking Jew in a city run first by an Austrian emperor, then by assertively nationalist Czechs. “We move from guilt to the question of identity,” Mr Stach says. “The question, ‘Who am I?’ is, after all, closely linked to, ‘Where do I belong?’” + +The bloody climax of nationalism that followed makes Kafka’s story not a little poignant: he found a true home neither in life nor in death. The difficulty of writing “The Early Years” was a symptom of this. Mr Stach spent years trying to persuade the Israeli heirs of Max Brod, Kafka’s friend and literary executor, who left Prague for Palestine in the 1930s, to let him read Brod’s diaries. Though he will not say how, Mr Stach got hold of copies of three volumes, rendering new insights about Brod’s and Kafka’s world. + +The Israeli Supreme Court recently ruled that the Brod manuscripts should be placed in the National Library. This is good news for the public, but ensures that Kafka will remain rootless: his and Brod’s manuscripts will be scattered between Germany, Britain and Israel. And rootlessness breeds indifference. Vienna has neglected the sanatorium where Kafka died. Berlin has left commemoration of Kafka’s time there to private initiatives. And the Czech government sees Kafka more as a tourist magnet than as a cultural icon. Mr Stach concludes that “No state feels responsible for him. That’s absurd.” + +This article appeared in the Print Edition with the headline: Refugee avant la lettre + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21709936-new-biography-takes-readers-past-misimpressions-modernists-life-closer-look/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Divided land + +A novelist and a journalist come to terms with the new Turkey + +The country’s youth are divided in their politics but united in passion + +Nov 12th 2016 | From the print edition + +Erdogan, keeping up with the Kemalists + +Under the Shadow: Rage and Revolution in Modern Turkey. By Kaya Genc. I.B. Tauris; 230 pages; £12.99. To be published in America in December. + +Turkey: The Insane and the Melancholy. By Ece Temelkuran. Translated by Zeynep Beler. Zed Books; 296 pages; $19.95 and £12.99. + +ISTANBUL is an achingly beautiful city, bridging past and future, loss and longing. The Turkish word most closely associated with it is huzun, a melancholic and paralysing nostalgia. But more than nostalgia is needed to render the way both city and country have begun to come apart in recent years as the social fabric holding them together has frayed. + +In strikingly different ways, two books, one by Kaya Genc, a novelist and essayist, and the other by Ece Temelkuran, a journalist, rise to this challenge and chronicle the changes that have convulsed Turkey since the current president, Recep Tayyip Erdogan, came to power. + +Turkey has always been divided, frequently violently so. But under Mr Erdogan, the slide into angry polarisation has been especially traumatic. The president has set about rewriting the country’s foundation myths. For nearly a century, the national story has been that Mustafa Kemal Ataturk, in the wake of the first world war and the demise of the Ottoman empire, dragged a backwards Turkey towards Western-facing nationalism and secularism. Mr Erdogan begs to differ. He tells his countrymen that Turkey has always been a pious and conservative country, and that he intends to drag it back from the excesses of Kemalism. + +It is difficult to keep pace with Turkey these days. Both “Under the Shadow” and “Turkey: The Insane and the Melancholy” were written after the Gezi Park protests in 2013, when opposition to Mr Erdogan exploded onto the streets of Istanbul and other cities. The books were finished before the failed coup in July, although published afterwards. And it is striking that despite their otherwise astute analyses of Turkey’s divisions, both writers only hint at the fissure between religious conservatives that would play a role in the coup and its aftermath. Mr Erdogan blames Fethullah Gulen, a cleric based in America, for the coup, which Mr Erdogan has since used as an excuse for a wide-ranging crackdown. No one (the authors here are no exception) saw this coming. + +Ms Temelkuran, at times playful, but more often polemical, surveys the wasteland of the 1960s, 1970s and 1980s, when Turkey suffered three military coups, and she excoriates the current administration for dragging the country back to the brink of collapse. This is personal for her, having been fired as a journalist for her criticisms of the government. But anger at times blunts her analysis and it robs her of political traction. She misreads the reasons for the president’s success, suggesting that he had won on grandiose promises to mend Turkey’s view of its past, rather than on prosaic promises of stability and growth. And she hints obliquely at conspiracies (“the economy was flourishing with money suddenly pouring into the country from some obscure source”). She risks demonising as irrational or unethical all those who support the president. This is grist to Mr Erdogan’s cynical mill. He makes a lot of his electoral mileage championing ordinary people against urban elites. + +Whereas Ms Temelkuran seethes on the front line of Turkey’s culture war, Mr Genc is a cartographer of the battlefield. “Under the Shadow” is built around a series of interviews with youthful students, activists, businesspeople and artists, “divided in politics but united in their passion”. Mr Genc is refreshingly balanced; he gives as much attention to a man who came of political age listening to Mr Erdogan vow to vanquish the Gezi protests as he does to another who had helped spark the protests. If the book has a shortcoming it is that the author is too generous towards his subjects, allowing his own voice too little room. Mr Genc is a subtle guide to the wrenching changes Turkey is undergoing, and his personal testimony is rich in historical and cultural detail. More of his insights would have been welcome; he has announced himself here as a voice to be listened to as Turkey struggles to come to terms with itself. + +This article appeared in the Print Edition with the headline: Fault-lines upon fault-lines + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21709938-countrys-youth-are-divided-their-politics-united-passion-novelist-and/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Hunger games + +Frank Buckland, both intellectually and literally omnivorous + +The Victorian naturalist ate every animal he could find to seek plentiful protein for humanity + +Nov 12th 2016 | From the print edition + + + +The Man Who Ate the Zoo: Frank Buckland, Forgotten Hero of Natural History. By Richard Girling. Chatto & Windus; 392 pages; £17.99. + +ROAST giraffe, apparently, tastes a little like veal. A hedgehog, meanwhile, is “good and tender”. Exhumed panther, however, comes with a weaker recommendation. One such beast, having died in a London zoo, been buried for a couple of days then dug up, was pronounced “not very good”. + +Frank Buckland was a 19th-century scientist, surgeon and culinary buccaneer who, as the title of this biography declares, “ate the zoo”. That is to understate his achievements: Buckland ate much that no self-respecting zoo would consider for its cages, earwigs (“horribly bitter”) being a particular low point. + +The aim of this was not gastronomy but science. As a biologist and an optimist, Buckland wanted to find a new source of protein to help the world avoid the Malthusian doom that had been predicted a generation before. He had high hopes for horsemeat, but found quality control a problem. Having sampled a bad portion, he came to suggest it should be served in prisons as a deterrent to criminals. + +The Victorians were intellectually omnivorous. Buckland’s father was not only canon of Christ Church Cathedral in Oxford but also the university’s first professor of geology and a passionate amateur biologist. (The senior Buckland also, according to legend, visited a country house containing in a silver casket the heart of a French king, which he promptly gobbled up.) The younger Buckland grew up in a home resembling the Caucus Race in “Alice in Wonderland” more than a house in a college cloister: turtle, bear and mouse all appeared in the family home to be studied, dissected—and eaten. The big beasts of science, too, roamed through: Michael Faraday, Baron von Bunsen and Isambard Kingdom Brunel all visited. + +Buckland was as polymathic as any. When not dining he would work as a surgeon, advise Queen Victoria on how to rid herself of a plague of frogs and become one of the most popular science writers of his era. And what an era it was. When Buckland was born in 1826, the genesis of humanity was considered adequately explained in the Book of Genesis. By the time he died Darwin’s theory of evolution was spreading rapidly, and the long withdrawing roar of faith was audible. + +Buckland, however, continued to see the hand of Creation in every creature. Perhaps it was this that inspired him to defend them. The word “conservationist” didn’t exist yet, but Buckland relentlessly defended God’s creatures. Horrified by seal culls, he wrote a powerful account of one in which it was explained that the pup’s cry “is very like that of a human infant”. + +The state of Britain’s waterways appalled him. He found salmon rivers polluted by gasworks, lead, sewage and coal dust. As he wrote with disgust, manufacturers “seem to think that rivers are convenient channels kindly given them by nature to carry away…the refuse of their works”. This, a century before the modern environmental movement, was Buckland’s silent spring. + +He would revolutionise the way that Britain saw nature. When he died in 1880, national newspapers joined in a chorus of lamentations that would have “done justice to an emperor”. History, which prefers its scientists to be prophets rather than relics, has been less kind. Partly because of his creationism, Buckland has been forgotten. Today he does not even merit a mention in the “Encyclopaedia Britannica”. This brilliantly entertaining biography argues persuasively why his memory, too, is worthy of conservation. + +This article appeared in the Print Edition with the headline: Omnivore’s delight + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21709940-victorian-naturalist-ate-every-animal-he-could-find-seek-plentiful-protein/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +A literary life + +An overdue biography of Angela Carter + +The magical-realist novelist detested being pigeonholed, whether as a feminist or as a fairy godmother + +Nov 12th 2016 | From the print edition + +Not your Earth-mother type + +The Invention of Angela Carter: A Biography. By Edmund Gordon. Chatto & Windus; 525 pages; £25. To be published in America by Oxford University Press in March. + +READERS and critics have tended to pigeonhole Angela Carter, or reshape her in their own image. Undergraduates often reduce the British novelist, whose stories are known for their magical realism and striking female characters, to a mouthpiece of feminism. Tributes when she died in 1992, at just 51, cast her as a “fairy queen”, a “benevolent white witch” and a “fairy godmother”. The novelist loathed being appropriated or misinterpreted; when an editor, believing Carter to be “an Earth mother”, asked her to write about the summer solstice at Stonehenge, she said: “You just haven’t got me, have you dear?” + +The true Carter emerges from the pages of Edmund Gordon’s expansive new biography thanks to a huge body of journals and letters. Her mother was infantilising, prudish and smothering; her father was a loquacious and much-loved journalist who treated Angela to expensive gifts, dresses and “a succession of cats”. Putty in his daughter’s hands, her father, Carter complained in 1983, “did not prepare [her] well for patriarchy”. At 17, Angela rebelled by taking up smoking, wearing tight skirts and swearing “openly and elaborately” (a colleague at the Croydon Advertiser said that he had “never heard a woman use the f-word in [his] life, but Angie did it all the time”). This early life—particularly the claustrophobic relationship with her mother—left an imprint upon her writing. In “The Christchurch Murder”, based on a true story, she considered why a teenager might be driven to matricide. + +Carter felt that writing was a means to ask questions, “not to provide answers”. Her relationship with the feminist movement was one of “[sniping] from the sidelines” rather than active involvement. Her ego was stung by repeated snubs for the Booker prize, Britain’s biggest award for fiction. She hated being reduced to a “woman writer”, but felt deep down that men such as Salman Rushdie and Ian McEwan were “very much more famous and very much richer and also regarded as…the right stuff”. Carter was kind and thoughtful, often championing emerging writers, but also capable of incredible cruelty and ugliness. She wished that the wife of one of her lovers would “kill or try to kill herself”. + +Mr Gordon is especially strong on the myriad influences on Carter’s writing, all the while noting her uniqueness. “Shadow Dance” bears a “Nabokovian hue”, “The Magic Toyshop” grew out of a single line in André Breton’s “First Surrealist Manifesto”, and Manhattan in the time of the Black Panthers and the Stonewall riots offered the dystopian backdrop for “The Passion of New Eve”. Mr Gordon calls much of her work “symbolic autobiography”. She found it funny that no one thought to read her in the character of Lee in “Love”: “I even put in clues like knocking out his front tooth, dammit, and nobody guessed!” + +Yet there are some disappointing omissions. There is no explanation or suggestion as to why Carter returned again and again to certain images—the Greek myth of Leda and the swan, for example. Conversely, some of the detail can swerve into tedium; the reader is informed not only that Carter paid $300 a month in rent when living in Providence, Rhode Island, but that the figure included utilities. Mr Gordon makes a grating imaginative leap by suggesting that Carter’s support for four female writers aged between 60 and 80 is symbolic of a “new-found peace with the idea of motherhood”. + +These are momentary flaws. Mr Gordon’s elegant blending of research, analysis and Carter’s own testimony is all the more impressive given that this is his debut book. It is surprising, too, that Mr Gordon’s is the first full-length biography of Carter, whose novels continue to populate Vintage Classics’ bestseller list. She once wondered why “anyone [should] be interested in my boring, alienated, marginal, messy life”. Reading this book, it seems clear that more readers and biographers should devote their time to this complex, intelligent and thoroughly un-boring woman. + +This article appeared in the Print Edition with the headline: Cartergraphy + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21709939-magical-realist-novelist-detested-being-pigeonholed-whether-feminist-or/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +A stage queen becomes king + +Lear’s rage comes naturally to Glenda Jackson + +But the great actor also brings tenderness to one of drama’s most demanding roles + +Nov 12th 2016 | From the print edition + + + +GLENDA JACKSON was among the finest actors of her generation when, at 55, she left the stage and stood for parliament. Elected in 1992, she spent 23 mostly sterile years as a left-wing backbencher, best remembered for a bitter attack on Margaret Thatcher shortly after the former prime minister’s death. “A woman? Not on my terms,” Ms Jackson thundered. Watching her speech with hindsight, it is easy to detect a regal fury that could be an audition for Shakespeare’s “King Lear”. + +Good female actors, sometimes frustrated by the shortage of meaty parts for them, are moving into the great roles written for men. London’s Donmar Warehouse is currently staging three Shakespeare plays acted entirely by a company of women, led by Harriet Walter. In 2014, Maxine Peake was a well-regarded Hamlet in Manchester’s Royal Exchange Theatre. After Ms Jackson left the House of Commons, she was tempted back to the stage at the age of 80 by seeing Núria Espert, a celebrated Catalan actress, playing Lear. + +Every ambitious actor feels compelled to attempt this Everest of roles, a tragedy of old age and betrayal, and madness and cruelty. The part requires the widest range of emotions imaginable. Lear expects to have his own way, and his temper rages when he does not get it. (There may be an element of typecasting in Ms Jackson’s case.) Ms Jackson’s decision to tackle the part has been the talk of the London theatre: Did she still have the stamina? Would she look like a man, or a woman? + +She dresses in a woman’s cardigan and black trousers, and occasionally a fetching red coat. When, in Lear’s madness, she takes off her trousers, she reveals spindly thighs. But there is still strength in her unmistakable voice, and she has the energy to sustain the three-hour performance with power and precision. Lear’s rage comes naturally to her, but there is a moving softness and humour in her mad scenes. What is missing is the depth of emotion at Cordelia’s death, which ought to have the audience in tears. But critics have generally been impressed. + +Deborah Warner, the director, anchors the play in the present. Lear’s court sits on blue plastic chairs, and the background noises include a reversing lorry. The Duke of Albany carries the Spectator, a shopping trolley makes its now almost obligatory appearance, and Lear’s Fool is dressed in a ragged Superman outfit. When Gloucester’s eyes are gouged out (by an electric drill) one of the eyeballs is thrown into the audience, provoking nervous laughter at precisely the wrong time for a theatrical joke. Some of the verse is garbled, and the noisy storm made by billowing black refuse bags drowns Lear’s “Blow winds, and crack your cheeks.” Not all the performers rise to the occasion, but what really counts is Glenda Jackson’s compelling start to the last act of a dramatic life. In a memorable comeback, she commands the stage. + +This article appeared in the Print Edition with the headline: Wielding the matter + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21709941-great-actor-also-brings-tenderness-one-dramas-most-demanding-roles-lears/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +More than words + +“Mere” speech has powerful consequences + +Politicians’ words, in particular, change the world, and Donald Trump does not choose his carefully + +Nov 12th 2016 | From the print edition + + + +POLITICIANS like to promise action, not words. But this is odd: when was the last time a political leader did anything important with a physical action? Monarchs no longer lead armies into battle on horseback. Modern politicians stay safely at home. They give speeches, which they hope will make people vote for them. Once elected, their job is to give yet more speeches, have private meetings, engage in debates and maybe write the occasional opinion article. + +In other words, a lot of words. It is fair to say that pretty much the entire job of a politician, unlike that of a woodworker or surgeon, is to talk, not to perform what might traditionally be called “action”. But this does not mean that politicians do nothing. There is a particular kind of speech that philosophers and linguists call “speech acts”, described by J.L. Austin in his book “How to Do Things with Words”, published in 1962. + +Austin distinguished “locution”, the act of speaking itself, from “illocution”: the thing done in the world by that act. A classic distinction is a request phrased in the form of a question: “Can you shut the window?” It seems to be about the listener’s ability to shut the window, but the illocutionary act tells the listener to shut the window. Speech acts come stronger than that, too. People can commit themselves to a proposition, or promise a future action: “I promise I didn’t steal it” commits the speaker to being branded a liar if something else turns out to be the case. And “I swear to tell the truth, the whole truth and nothing but the truth” commits the speaker in court to accepting charges for perjury for doing otherwise. + +Some people are authorised to change the state of the world itself through speech. A minister can marry two people with the words, “I now pronounce you man and wife.” A judge can say, “I sentence you to three years in prison.” A traditional test is that if you can insert “hereby” into a sentence, you are performing a kind of direct-effect speech act. + +But one group of people can perform an especially powerful kind of speech act. Heads of government do so when they speak about the policies of their countries. Since they set those policies, everything out of their mouths can be taken as something between the promise of an ordinary person, and a speech act with direct effect. These are taken by listeners as “I hereby commit my country to the following course of action.” + +The world has been shaken by the election of Donald Trump to the American presidency because he has been saying things for a year and a half that seem to commit America to radical new policies: an abandonment of NATO allies who do not pay more for their protection, an end to free trade and the killing of terrorists’ family members. Many such things will be under his direct control as president. + +The more level-headed supporters of the president-elect like to defend him by saying that he often speaks with a hidden wink. In other words, don’t take these as literal promises—speech acts—at all. He was a successful reality-show entertainer, after all. Another philosopher has described what might be considered Mr Trump’s signature style: Harry Frankfurt’s book “On Bullshit” described speech that, distinct from lying, is a kind of performance in which the speaker isn’t even concerned about the truth of what he says. Mr Trump himself used this “locker-room talk” defence after a video showed him bragging about groping women. + +Now he is the president-elect. His first act was to give an unusually measured speech in which he promised reconciliation at home, and said that “we will get along with all other nations willing to get along with us.” As he assembles his administration, he needs to know that the world has already taken a lot of what he has said as terrifying promises. Which Donald Trump will take office in January? The one who continually went off on reckless and damaging tangents during campaign speeches? Or the one who gave his victory speech? + +It was reported that Mr Trump’s staff had taken control of his Twitter account from him late in the campaign. He also stopped committing major outrages in speeches and, probably not coincidentally, he soon began to close in the polls. His staff seems to have convinced him that his spontaneous speech was his own worst enemy. It is far from clear he will take that lesson to the White House, where the world will take his words as deeds, and respond accordingly. + +This article appeared in the Print Edition with the headline: Doing by talking + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21709937-politicians-words-particular-change-world-and-donald-trump-does-not-choose-his/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Obituary + + + +Raoul Wallenberg: The persistence of hope [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +The persistence of hope + +Raoul Wallenberg was, at last, declared dead on October 26th + +The saviour of the Jews of Budapest disappeared in 1945 at the age of 32 + +Nov 12th 2016 | From the print edition + + + +BRONZE replicas of his briefcase, stamped “RW”, are scattered across the world. One stands on Lidingö island near Stockholm, on the grassed-over foundations of the summer house where he was born. Others wait at the Holocaust memorial outside Nottingham, and by the United Nations in New York. In Budapest one has been left on a bench, as if at any moment Raoul Wallenberg, with his long coat, receding hairline and dark, burning eyes, will hurry past and retrieve it. + +With the blue-and-yellow “protection passes” he carried in that briefcase, a diplomat’s bluff made “authentic” with Swedish government stamps and decorative Swedish crowns, he saved the lives of thousands of Jews in Nazi-occupied Hungary in a mere five-month tour in 1944. In the 31 safe houses he set up round Budapest, decked with huge Swedish flags, he fed, clothed and cared for thousands more. As a result he was made a citizen of Canada, Israel, Australia and the United States; awards and institutes were set up in his honour, and streets and parks named after him. Yet the many memorials to him lack one thing, a date of death. In 1945, aged 32, he disappeared; and ever after the world refused to let him go. + +The last public sighting was with Russian soldiers round him and, in his hand, the briefcase, containing his plan to save more Jews. He was sent to prison in Russia, ending up in the Lubyanka in Moscow, where no file was kept on him, because (though he may have been a CIA asset) there was no case against him. The prison doctor claimed he died of a heart attack on July 17th 1947. But the doctor’s report had oddities about it, and was not believed. Another Russian officer said he had been shot. But a cleaning woman claimed to have seen him after that date; another prisoner said he had talked to a “Wallenberg” whose shadowy face he could not see; in 1951 an Italian reported that he had been in the next cell. In 1961 came a startling claim that he was alive, though weak, in a Soviet mental institution. + +Emptying the trucks + +Mystery was fortified by the cold war. The Russians would not co-operate to solve it until glasnost, in the 1990s, began to melt the ice. The Swedish government, too, was not keen to risk reviving scrutiny of its wartime behaviour, when the heroism of Wallenberg would be contrasted with pro-Nazi collaboration. Both countries would have preferred to let him lie. But without a date of death, that was impossible. + +Besides, to those he had saved and their families, he was still alive. There was no forgetting the charismatic young Swede who had climbed onto cattle trucks bound for Auschwitz, kicked the doors open and handed out his passes, under the rifle fire of the astonished guards, to anyone who could grab one. There was no forgetting his ferocious arguments with the soldiers who, beside the Danube, were preparing to kill Jews and dump them in the river; these, too, he saved. His motto, from a letter home, was “happy to fight”. + +To those who never saw him, he became a saviour angel and a legend; he was surely one of the 36 “hidden saints” who helped hard-pressed Jews in each generation. In Budapest several of his safe-houses survive on the streets where he walked, unsleeping, intent to save “as many as possible”. Well into this century, descendants of the saved still wanted to kiss his cheek, hug him and thank him. + +But the refusal to think him dead was mostly shouldered by his family. For 30 years his mother Maj and his stepfather, Fredrik von Dardel, harried the Russian and Swedish governments. They sent letters to their “dear, beloved Raoul”, via officials, assuring him that his room was ready for him. Fresh flowers were placed daily beside his photograph. When in 1979 yet another lead proved fruitless, they committed suicide, leaving the instruction that the search for news should last until 2000. For Raoul was still legally alive. + +Their son Guy and daughter Nina, Wallenberg’s step-siblings, took the task on, assembling a 50,000-page archive about Raoul. For Guy’s children, too, the lost man was a presence: a dark cloud over the family, even at mealtimes or on outings to the beach. Nina clung to the thought that one day, back home, Raoul would take his tin soldiers out of their boxes and enjoy arranging them again. Guy, hopeful in 1989 that he might find him on a visit to Moscow—even if mad or ill—practised singing “Baa Baa black sheep”, their childhood song, in case Raoul would recognise it. + +Only this year did the family end the search. Guy and Nina were both dead, and for the first time the name Raoul—always reserved for the man who would return—had been bestowed on a new child. In March the Swedish Tax Agency was asked, if Raoul had not appeared to register by October 14th, to announce a legal date of death for him. Calculating five years since the “heart attack” in Lubyanka, neatened to the end of the month, this was given as July 31st 1952. The fiction served. + +The family held their own memorial service at Lidingö, by the briefcase with his initials. No smiling figure came rushing through the birch trees, towards the lake, to pick it up. His work, though—the duty of each moral man to face down tyranny—would never be done. The briefcase waited, and its name was “Hope”. + + + +This article appeared in the Print Edition with the headline: The persistence of hope + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21709935-saviour-jews-budapest-disappeared-1945-age-32-raoul-wallenberg/print + + + + + +| Section Menu | Main Menu | + + + + + +| Main menu | Previous section | + + + + +* * * + + + +Economic and financial indicators + + + +Interactive indicators [Thu, 10 Nov 22:25] + +Output, prices and jobs [Thu, 10 Nov 22:25] + +Trade, exchange rates, budget balances and interest rates [Thu, 10 Nov 22:25] + +The Economist commodity-price index [Thu, 10 Nov 22:25] + +The Economist poll of forecasters, November 2016 [Thu, 10 Nov 22:25] + +Markets [Thu, 10 Nov 22:25] + + + + + +* * * + + + +| Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Interactive indicators + +Nov 12th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21709996-interactive-indicators/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Output, prices and jobs + +Nov 12th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21709960-output-prices-and-jobs/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Trade, exchange rates, budget balances and interest rates + +Nov 12th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21709957-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The Economist commodity-price index + +Nov 12th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21709958-economist-commodity-price-index/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The Economist poll of forecasters, November 2016 + +Nov 12th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21709959-economist-poll-forecasters-november-2016/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Markets + +Nov 12th 2016 | From the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21709961-markets/print + + + + + +| Section Menu | Main Menu | + + + +Table of Contents + +The world this week + +Politics this week + + + +Business this week + + + +KAL's cartoon + + + +Leaders + +America’s new president: The Trump era + + + +Negotiating Brexit: The way forward + + + +Hong Kong: China’s new Tibet + + + +Egypt’s reforms: Two cheers for the general + + + +Letters + +On central banks, Poland, Denmark, companies, Frida Kahlo, democracy: Letters to the editor + + + +Briefing + +America and the world: The piecemaker + + + +The world reacts: “Do nightmares come true?” + + + +Nuclear codes: A new finger on the button + + + +United States + +Election 2016: How it happened + + + +The Trump administration: What to expect + + + +Trump and the economy: Strap up + + + +Polling and prediction: Epic fail + + + +The Democrats: Destiny derailed + + + +Lexington: The people v the people + + + +The Americas + +Donald Trump and Mexico: The wall that appals + + + +Maple syrup crimes: Syrup and sin + + + +Property in Venezuela: Maduro’s boom + + + +Bello: The limits of technocratic government + + + +Asia + +Japanese politics: Abe ascendant + + + +Ferdinand Marcos: Hail to the thief + + + +Civilians v soldiers in Pakistan: General consternation + + + +Wildlife conservation: Grim pickings + + + +Pollution in India: Worse than Beijing + + + +Banyan: Prophets of piffle + + + +China + +Democracy: China holds elections + + + +Separatism in Hong Kong: Umbrellas out + + + +Cyber-regulation: The noose tightens + + + +Lou Jiwei: A little local difficulty + + + +Middle East and Africa + +Zimbabwe: Life after Bob + + + +Fighting fires in South Africa: Burning down the house + + + +South Africa’s courts: Judges v Jacob + + + +Egyptian politics: Sense and sensitivity + + + +Islamic State in Syria: Anyone for Raqqa? + + + +Tunisia’s tourism: The Russians are coming + + + +Europe + +Europe’s alt-right: Wolves in skinny jeans + + + +Germany’s loony right: The Reich lives on + + + +Polish paranoia: Tales from the crypt + + + +Russia’s Trump fans: Our American cousin + + + +While you were watching Trump...: Turkey locks up dissidents + + + +Charlemagne: When America sneezes… + + + +Britain + +Brexit and Parliament: Questions of sovereignty + + + +India and Britain: A cooler climate + + + +Marks and Spencer scales down: Pants on fire + + + +The benefit cap: Tightening the screw + + + +Brexit and politics: Election fever + + + +Marine energy: Ruling the waves + + + +Buried treasure: Hitting the jackpot + + + +Remembering war: Policing poppies + + + +Bagehot: The machine splutters + + + +Special report: Espionage + +Espionage: Shaken and stirred + + + +Technology: Tinker, tailor, hacker, spy + + + +Governance: Standard operating procedure + + + +Edward Snowden: You’re US government property + + + +China and Russia: Happenstance and enemy action + + + +How to do better: The solace of the law + + + +Business + +American business: Meet the new boss + + + +Trump and tech: System crash + + + +Volkswagen: A long road to recovery + + + +BAE Systems: Fighting fit + + + +Taxis take on Uber: African potholes + + + +Courier firms: The big sort + + + +Schumpeter: The great divergence + + + +Finance and economics + +The world economy: Our election, your problem + + + +Buttonwood: Déjà vu all over again + + + +The world economy: Coming up Trumps + + + +Housing in America (1): The cost of poor lending + + + +Housing in America (2): To those that have + + + +Money in India: Taking notes + + + +Banks and cybercrime: Online checkout + + + +Banks and cybercrime: Internship + + + +Science and technology + +Particle physics: So long, Susy? + + + +Palaeontology: Origin story + + + +Space exploration: Dusting yourself down + + + +Drug development: Pets on trial + + + +Naval warfare: Follow the trail + + + +Global warming: Days of the triffids + + + +Books and arts + +Literary history: Refugee avant la lettre + + + +Turkey: Fault-lines upon fault-lines + + + +Natural history: Omnivore’s delight + + + +A literary life: Cartergraphy + + + +Glenda Jackson in “King Lear”: Wielding the matter + + + +Johnson: Doing by talking + + + +Obituary + +Raoul Wallenberg: The persistence of hope + + + +Economic and financial indicators + +Interactive indicators + + + +Output, prices and jobs + + + +Trade, exchange rates, budget balances and interest rates + + + +The Economist commodity-price index + + + +The Economist poll of forecasters, November 2016 + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.11.19.TXT b/homeworks/B20769/homework1/data2/2016.11.19.TXT new file mode 100644 index 0000000..65b227f --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.11.19.TXT @@ -0,0 +1,4256 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Politics this week + +Nov 19th 2016 | From the print edition + + + +Emmanuel Macron, a former economy minister in France’s Socialist government, announced that he would run for the French presidency next year. Mr Macron has set up his own political party, En Marche! (“On the Move!”), and will run as an independent. This has riled many Socialists, who worry that by entering the race Mr Macron will hinder their chances of getting to the second round of the election. See article. + +Russia withdrew its signature from the founding statute of the International Criminal Court. Though Russia had never ratified the ICC treaty, the move by Vladimir Putin carried symbolic weight, and came a day after the court released a report describing the annexation of Crimea in Ukraine by Russia as an occupation and armed conflict. + +Bulgaria’s presidential election was won by Rumen Radev of the Socialist Party. He wants to boost ties with Russia, which he says is not incompatible with Bulgaria’s membership of the EU. Boyko Borisov, the centre-right prime minister, resigned; a general election will be held early next year. Moldova also held a presidential election which was won by Igor Dodon, another pro-Russian Socialist. + +After saying it did not recognise a leaked memo that claimed there was division in the cabinet over Brexit, the British government denied it had prepared a short “bomb-proof” piece of legislation for triggering Article 50, the formal process for leaving the EU. A bill just three lines long was apparently drafted in an effort to avoid any delay in the event that the Supreme Court decides that Parliament must be consulted to approve the start of the process. + +China is watching + +Hong Kong’s High Court barred two politicians from taking up their posts in the territory’s Legislative Council. A judge ruled that the pair had failed to take their oaths “faithfully and truthfully” during their swearing-in. They had displayed banners saying “Hong Kong is not China” and used derogatory language. + +A suicide-bomber killed 52 people at a Sufi shrine in the province of Balochistan in Pakistan. Islamic State claimed responsibility. + + + +Police investigating complaints of blasphemy against Basuki Tjahaja Purnama, the governor of Jakarta, formally declared him a suspect. Mr Basuki, a Christian, is the leading candidate in next year’s gubernatorial election in the Indonesian capital. See article. + +In South Korea perhaps 1m people protested in Seoul against Park Geun-hye, the president. Ms Park’s approval rating has fallen to 5% after a close friend was implicated in an influence-peddling scandal. See article. + +The American government abandoned its efforts to get Congress to ratify the Trans-Pacific Partnership, a trade deal among 12 countries in Asia and North and South America. Donald Trump had signalled strong opposition to the pact, which already faced an uphill battle in Congress. See here and here. + +Australia said it had struck a deal to send refugees held in detention centres in Nauru and Papua New Guinea to America. Many of the refugees are Muslims, and may therefore fall foul of Mr Trump’s proposal to curb Muslim migration to America. + +Peace on again + +Colombia’s president, Juan Manuel Santos, announced that the government had renegotiated its agreement with the FARC guerrilla army to end a 52-year war. Colombian voters had narrowly rejected an earlier version of the accord in a plebiscite in October. The new version requires the FARC to pay all their assets as reparations to victims of the group’s crimes. It defines more clearly restrictions on the freedom of guerrillas convicted of war crimes by a tribunal. See article. + +The three countries in Central America’s “northern triangle”—El Salvador, Guatemala and Honduras—launched a joint force to fight organised crime in the region. Gangs in the area operate across borders, committing crimes in one country and taking refuge in a neighbouring one. The new force brings together police, border guards, soldiers and intelligence officers. + +Measuring up the West Wing + +Donald Trump began naming his White House team, selecting Reince Priebus, the chairman of the Republican National Committee, as his chief of staff, a nod to the party’s establishment. But Mr Trump’s choice of Steve Bannon to be his main political strategist perturbed many. During the campaign Mr Bannon cultivated the support of the “alt-right”, a loose collection of far-right groups. See here and here. + +Republicans in the House of Representatives unanimously backed Paul Ryan to continue as Speaker. Mr Ryan has had a tetchy relationship with Mr Trump, which could be severely tested again if Mr Trump’s budget proposals swell the deficit. Meanwhile, Democrats in the House postponed a vote to choose their leader until the end of the month. Nancy Pelosi has led the party since 2003, but her colleagues want more time to reflect on what one of them described as their “shellacking” at the election. + +In the Senate Mitch McConnell was re-elected as the Republicans’ leader. Chuck Schumer replaced Harry Reid on the Democratic side. + +The FBI reported that hate crimes in America rose by 7% in 2015. The number of hate crimes targeting Muslims rose sharply, though more than half the total crimes that were of a religious nature were aimed at Jewish people and centres. + +The new world order + + + +The heavy bombardment of three rebel-held cities in Syria, Aleppo, Homs and Idlib, resumed, a day after a telephone call between Donald Trump and Vladimir Putin. For the first time ever, Russian planes flew combat sorties from an aircraft-carrier. See article. + +A court reversed the death sentence given to Egypt’s former president, Muhammad Morsi. He remains in prison on other charges. + +A militant group in southern Nigeria said it had blown up three oil pipelines. + +Send in the clowns + +Oxford Dictionaries selected “post-truth” as its word of the year. It was first used in 1992 by Steve Tesich in an essay, but has spiked this year in the context of Brexit and the American election. Other words that made the shortlist included “alt-right”, “Brexiteer” and “coulrophobia” (an extreme fear of clowns). + + + + + +Business this week + +Nov 19th 2016 | From the print edition + + + +Markets continued to readjust their bearings after the election of Donald Trump. America’s president-elect has promised to increase infrastructure spending and cut taxes, leading many investors to raise forecasts for growth and inflation and, subsequently, interest rates. The yields on ten-year US Treasury bonds and other government debt, especially in emerging markets and the euro-zone periphery, chalked up some of their biggest gains since the financial crisis. The share prices of American banks and health-care companies also jumped in anticipation that Mr Trump would loosen regulations introduced under the Obama administration. + +Surging exports in the third quarter boosted Japan’s economy, which grew by an annualised 2.2%. However, domestic consumption remained weak, a problem for a government that has been trying to rebalance the economy to become less reliant on foreign trade for growth and more on investment at home. + +Defying the consensus + +Britain’s annual inflation rate fell to 0.9% in October. That surprised many, since the depreciation of the pound following the vote in June on Brexit should make imported goods more expensive. Retailers may not be passing that cost on to consumers. But the figures indicated that manufacturers are having to pay more for imported raw materials, which should eventually drive up prices. Britain’s unemployment rate in the three months ending September 30th fell to 4.8%, the lowest for 11 years. October’s retail sales grew at the fastest pace in 14 years. + +Mark Carney, the governor of the Bank of England, was on the defensive again, criticising politicians who have implied that the policies of central banks, particularly low interest rates, are geared towards big investors and are thus to blame for rising inequality. Mr Carney said the causes of the economic malaise run much deeper and that central bankers are in fact “keeping the patient alive”. + +Google made a significant post-Brexit commitment to Britain, announcing that it will expand its technical hub in London, potentially creating thousands of jobs. Sundar Pichai, Google’s CEO, said he was optimistic about Britain’s future as an open and connected economy, but acknowledged that the vote to leave the EU was breeding uncertainty. + +Mistry theatre + +Frictions intensified at Tata Group over the removal of Cyrus Mistry as chairman. The Indian conglomerate has been rocked by the sudden move by Ratan Tata, the 78-year-old former chairman, to regain control. This week independent directors at Tata Motors, one of the group’s subsidiaries, reaffirmed their confidence in the company’s management under Mr Mistry (without naming him directly). The holding company has called a meeting to strip him of his remaining powers. See here and here. + +The Indian government urged people not to panic after the withdrawal of 500- and 1,000-rupee banknotes ($7.50 and $15) from circulation in an effort to clamp down on the black market. The bills accounted for 85% of the banknotes circulating in India. Cash machines have to be adjusted to dispense new notes, disrupting the flow of money into consumers’ pockets. + +With the global shipping industry facing its worst slump in three decades because of a glut in capacity and declining trade volumes, the government of Taiwan extended a $2bn rescue package to the country’s biggest container lines. Its support for the industry contrasts with South Korea’s decision to allow one of its biggest shipping companies to declare bankruptcy. + +Samsung Electronics accelerated its business in smartcar technology by agreeing to buy Harman, which supplies visual screen and navigation systems to carmakers. The $8bn deal is the biggest foreign acquisition by a South Korean company to date. See article. + +Verifying the facts + +Facebook followed Google in limiting advertisements on platforms that carry fake news, which has become a thorny issue in the aftermath of Donald Trump’s unexpected win. However, the social network is not changing the algorithms that have prompted criticism from some for promoting false articles on news-feed websites. Mark Zuckerberg has warned that Facebook should not become one of the “arbiters of truth”. + +After a legal fight that lasted a decade, the authorities in China suddenly approved a trademark for Donald Trump that will allow his business empire to trade officially under the Trump name. As with many other high-profile enterprises, the Trump brand has been widely used in China without permission. More than a dozen firms have applied for the Trump trademark over the past year. + + + + + +KAL's cartoon + +Nov 19th 2016 | From the print edition + + + +More KAL's cartoons + +This article appeared in the Print Edition with the headline: KAL's cartoon + + + +Leaders + + + + + +Trump’s world: The new nationalism + +Obamacare: And a pony for everyone + +The French presidential election: Europe’s biggest populist danger + +Pacific trade: Try, Persist, Persevere! + +Tata Group: Ratantrum + + + + + +Trump’s world + +The new nationalism + +With his call to put “America First”, Donald Trump is the latest recruit to a dangerous nationalism + +Nov 19th 2016 | From the print edition + + + +WHEN Donald Trump vowed to “Make America Great Again!” he was echoing the campaign of Ronald Reagan in 1980. Back then voters sought renewal after the failures of the Carter presidency. This month they elected Mr Trump because he, too, promised them a “historic once-in-a-lifetime” change. + +But there is a difference. On the eve of the vote, Reagan described America as a shining “city on a hill”. Listing all that America could contribute to keep the world safe, he dreamed of a country that “is not turned inward, but outward—toward others”. Mr Trump, by contrast, has sworn to put America First. Demanding respect from a freeloading world that takes leaders in Washington for fools, he says he will “no longer surrender this country or its people to the false song of globalism”. Reagan’s America was optimistic: Mr Trump’s is angry. + +Welcome to the new nationalism. For the first time since the second world war, the great and rising powers are simultaneously in thrall to various sorts of chauvinism. Like Mr Trump, leaders of countries such as Russia, China and Turkey embrace a pessimistic view that foreign affairs are often a zero-sum game in which global interests compete with national ones. It is a big change that makes for a more dangerous world. + +My country right or left + +Nationalism is a slippery concept, which is why politicians find it so easy to manipulate. At its best, it unites the country around common values to accomplish things that people could never manage alone. This “civic nationalism” is conciliatory and forward-looking—the nationalism of the Peace Corps, say, or Canada’s inclusive patriotism or German support for the home team as hosts of the 2006 World Cup. Civic nationalism appeals to universal values, such as freedom and equality. It contrasts with “ethnic nationalism”, which is zero-sum, aggressive and nostalgic and which draws on race or history to set the nation apart. In its darkest hour in the first half of the 20th century ethnic nationalism led to war. + +Mr Trump’s populism is a blow to civic nationalism (see article). Nobody could doubt the patriotism of his post-war predecessors, yet every one of them endorsed America’s universal values and promoted them abroad. Even if a sense of exceptionalism stopped presidents signing up to outfits like the International Criminal Court (ICC) and the UN Convention on the Law of the Sea (UNCLOS), America has supported the rules-based order. By backing global institutions that staved off a dog-eat-dog world, the United States has made itself and the world safer and more prosperous. + +Mr Trump threatens to weaken that commitment even as ethnic nationalism is strengthening elsewhere. In Russia Vladimir Putin has shunned cosmopolitan liberal values for a distinctly Russian mix of Slavic tradition and Orthodox Christianity. In Turkey Recep Tayyip Erdogan has turned away from the European Union and from peace talks with the Kurdish minority, in favour of a strident, Islamic nationalism that is quick to detect insults and threats from abroad. In India Narendra Modi remains outward-looking and modernising, but he has ties to radical ethnic-nationalist Hindu groups that preach chauvinism and intolerance. + +Meanwhile, Chinese nationalism has become so angry and vengeful that the party struggles to control it. True, the country depends upon open markets, embraces some global institutions and wants to be close to America (see Banyan). But from the 1990s onwards schoolchildren have received a daily dose of “patriotic” education setting out the mission to erase a century of humiliating occupation. And, to count as properly Chinese you have in practice to belong to the Han people: everyone else is a second-class citizen (see Briefing). + +Even as ethnic nationalism has prospered, the world’s greatest experiment in “post-nationalism” has foundered. The architects of what was to become the EU believed that nationalism, which had dragged Europe into two ruinous world wars, would wither and die. The EU would transcend national rivalries with a series of nested identities in which you could be Catholic, Alsatian, French and European all at once. + +However, in large parts of the EU this never happened. The British have voted to leave and in former communist countries, such as Poland and Hungary, power has passed to xenophobic ultranationalists. There is even a small but growing threat that France might quit—and so destroy—the EU. + +The last time America turned inward was after the first world war and the consequences were calamitous. You do not have to foresee anything so dire to fear Mr Trump’s new nationalism today. At home it tends to produce intolerance and to feed doubts about the virtue and loyalties of minorities. It is no accident that allegations of anti-Semitism have infected the bloodstream of American politics for the first time in decades. + +Abroad, as other countries take their cue from a more inward-looking United States, regional and global problems will become harder to solve. The ICC’s annual assembly this week was overshadowed by the departure of three African countries. China’s territorial claims in the South China Sea are incompatible with UNCLOS. If Mr Trump enacts even a fraction of his mercantilist rhetoric, he risks neutering the World Trade Organisation. If he thinks that America’s allies are failing to pay for the security they receive, he has threatened to walk away from them. The result—especially for small countries that today are protected by global rules—will be a harsher and more unstable world. + +Isolationists unite + +Mr Trump needs to realise that his policies will unfold in the context of other countries’ jealous nationalism. Disengaging will not cut America off from the world so much as leave it vulnerable to the turmoil and strife that the new nationalism engenders. As global politics is poisoned, America will be impoverished and its own anger will grow, which risks trapping Mr Trump in a vicious circle of reprisals and hostility. It is not too late for him to abandon his dark vision. For the sake of his country and the world he urgently needs to reclaim the enlightened patriotism of the presidents who went before him. + + + + + +Obamacare + +And a pony for everyone + +The president-elect has made a promise he cannot keep + +Nov 19th 2016 | From the print edition + + + +WHEN trying to answer a big question without much information, it is tempting to assign great significance to the few facts that can be found. So it is with Donald Trump and the Republican Congress that will be sworn in next year. Mr Trump’s proposed cabinet is being scrutinised for signs of how he will govern, but no one yet knows whether the president-elect will let his team run their fiefs or take all the decisions himself. No one knows what will be the balance of power between the White House, the vice-president, the Senate and the House. Nor does anyone know if Mr Trump will stick to the promises he made while campaigning or whether he will abandon them. It is probable that he himself does not know. + +One available fact is that Mr Trump has announced he would like to keep the parts of the Affordable Care Act, better known as Obamacare, that are popular and ditch the bits that are not (see article). This has been taken as evidence of a newfound moderation. It is not. Instead it is a sign that, faced with difficult trade-offs, the president-elect likes to ignore them and promise that, yes, everyone can indeed have a pony. + +Obamacare has become shorthand for how health care works for the minority of Americans who do not receive insurance through their employers. Parts of it are popular, such as the ban on insurers denying people coverage just because they are already ill. Other parts are not, such as the compulsion to buy insurance or face a fine. The popular and unpopular parts work together: forcing healthy people to buy insurance makes the business of insuring sick people profitable. The only way to get around this trade-off is with a bigger government subsidy. + +If what Mr Trump has promised is unfeasible, what is likely to happen to the outgoing president’s main domestic achievement? Beginning early next year, Republicans will chip away at the things that make Obamacare just about work now, by putting someone in charge of the relevant government department who will issue directives to undo it. One move would be to change the rules that say insurance must cover paediatrics, mental illness, prescription drugs and other things besides. Insurers are locked in until the end of 2017, but at that point, facing uncertainty, they would probably withdraw. + +By then there may already be a new health-care law passed by Congress. It will probably be based on a plan devised by the Speaker of the House, Paul Ryan, which eases rules on what health-insurers are allowed to charge and which conditions they must cover. This will make many insurance plans cheaper. But the sickest people will see their premiums soar and the cheapest plans will have such high out-of-pocket costs that they may not be of much practical value to their holders. Mr Ryan wants to replace Obamacare’s tax credits, which vary with income, with a universal tax credit linked to age. Such a system would redistribute less to poorer Americans. + +Kick the tough stuff to the states + +The most important change, though, may be to another part of the law. The expansion of Medicaid—the programme for those deemed too poor to afford insurance—is the biggest reason why the share of Americans without any health coverage dropped from 15% in 2008 to 9% in 2015. Republicans in Congress would like to let states devise their own schemes for these people and cut overall federal funding. Mr Trump has yet to say anything on the matter. + +Obamacare is far from perfect: premiums shot up last year because insurers lost money in the previous one. But it contains a sensible aspiration. In America, as in other rich countries, health care ought to cover the greatest number of people possible. That idea is once again now up for discussion. + + + + + +The French presidential election + +Europe’s biggest populist danger + +Who can beat Marine Le Pen? + +Nov 19th 2016 | From the print edition + + + +ONE by one, liberal democracies are waking up to find their certainties trampled by the march of close-the-borders populism. First came the vote for Brexit, then Donald Trump’s election as America’s next president. Now France is bracing itself for a momentous presidential vote in 2017 in which the stakes could not be higher—not just for the well-being of France, but for the future of Europe itself. + +Of the two spots in the run-off next May, one will almost certainly go to Marine Le Pen, leader of the National Front (FN). That is turning the French primaries campaign into a nerve-racking contest: a race for the candidate best placed to defeat Ms Le Pen (see article). She has vowed to pull France out of the euro and to hold a “Frexit” referendum on the country’s membership of the European Union. The EU can survive, however creakily, the loss of Britain. But were France to abandon the club, it would spell the chaotic end of a project that, with its single market and its day-to-day political engagement, has sustained prosperity and undergirded peace. It is essential that French voters have a decent alternative to Ms Le Pen. + +The good news is that several are on offer. On the left, Emmanuel Macron, the young former Socialist economy minister, said on November 16th that he is running for the presidency. He has thought harder than most about France’s need to adapt if it is to cope with technological disruption. His pitch is to voters on both the left and the right who share an unapologetically pro-European, liberal outlook. But his chances of getting to the second round are not great. He is standing as an independent, and thus will have to fight for the left’s vote against the official Socialist candidate: probably either François Hollande, if the spectacularly unpopular president decides to seek re-election, or Manuel Valls, his more centrist prime minister. + +The centre-right’s options are more plausible. Seven Republican candidates are standing in their party’s two-round primary on November 20th and 27th, among them a former president (Nicolas Sarkozy) and two former prime ministers (Alain Juppé and François Fillon). Astonishingly, the three leading candidates all agree with Mr Macron on the need for a liberalising fix to France’s struggling economy. They promise to loosen rules on working time, modernise the welfare system, raise the retirement age and curb public spending, which consumes 57% of GDP, second only to Finland among OECD countries. + +A reason such ideas are circulating is that, within Europe, France has consistently pursued statist and at times protectionist drawbridge-up policies—and has hence suffered low growth and high unemployment. But liberalisation is not popular. France’s Socialist government struggled to push through even a modest labour reform this year and was crippled in the process. For the leading Republicans to promise to keep people at their desks until the age of 65, give up the 35-hour week or abolish the wealth tax risks antagonising the very voters they will need to win over if they are to defeat the FN. + +This is why any candidate aspiring to beat Ms Le Pen must evince trustworthiness. That rules out Mr Sarkozy, with his record of a volatile presidency, troublesome cases of alleged corruption and opportunist moves to steal Ms Le Pen’s anti-immigration ideas. The front-runner, Mr Juppé, brings a more measured temperament and a greater appeal to voters on the left—polls suggest that both he and Mr Sarkozy could beat Ms Le Pen, but that his margin of victory would be ten points greater. Mr Fillon, whose economic programme is the most ambitious among Republicans, is making a late charge. + +The trouble is that none of them answers the country’s yearning for political renewal. Mr Sarkozy and Mr Fillon, who served for five years as his prime minister, are both open to the charge that they did not do last time what each promises to do next. Meanwhile, a Juppé-Le Pen run-off, pitting the establishment insider against the populist insurgent, would carry the haunting echo of the battle between Hillary Clinton and Mr Trump. The 71-year-old Mr Juppé first went into politics when the Oval Office belonged to Jimmy Carter. + +Le Penned-in + +In such a high-stakes race, the readiness of leading candidates to promote liberal policies is laudable. They are surely right in believing that the best antidote to populism is not to pander to it, but to offer an explicit and full-blooded defence of open trade, Europe and ethnic diversity. + +Who has the best chance of defeating Ms Le Pen will depend in large part on who can credibly offer rejuvenation—if not in person then at least in policies that harness globalisation as a force for prosperity while dealing with its problems. That mainstream parties have no space for the likes of Mr Macron says much about the ossification of French politics. It will be a tragedy if Ms Le Pen turns out to be the freshest candidate on offer. France, the country that gave birth to modern European integration, should not be the one to destroy it. + + + + + +Pacific trade + +Try, Persist, Persevere! + +America’s participation in TPP is over. But don’t give up efforts to free trade and harmonise standards in Asia + +Nov 19th 2016 | From the print edition + + + +ONE of the first casualties of Donald Trump’s victory on November 8th has been the Trans-Pacific Partnership (TPP), a free-trade deal with 11 Pacific Rim countries that Barack Obama saw as central to one of his defining foreign policies—the “pivot”, or “rebalance”, to Asia. White House officials this week made clear that they will now not try to push TPP through the lame-duck session of Congress before the inauguration of president-elect Trump in January. + +On the face of it, that also kills TPP for the 11 other Pacific Rim countries that signed it in February (see article). Yet, as the leaders of the TPP countries gather in Lima on November 19th to join their colleagues at the Asia-Pacific Economic Co-operation (APEC) chat-fest, instead of burying TPP, they should try to salvage what they can from the wreckage. One job is to pursue TPP even without American participation; the other, complementary, task is for seven of the TPP countries to conclude another trade agreement they are negotiating, the so-called Regional Comprehensive Economic Partnership (RCEP). + +With TPP, the temptation will be to junk it. Since improved access to the American market was its main attraction, few of the other countries will want to amend the deal so that it can proceed without America. In many places, powerful forces would celebrate its demise. In Malaysia Najib Razak, a prime minister treading water in a swamp of financial scandal, may be relieved if an unrelated but unpopular policy is magicked away (see article). In communist Vietnam conservatives would cheer the removal of a powerful external impetus for reform. In Japan the vested interests that resisted TPP would be comforted. Even in open countries such as Australia and Canada governments may welcome the death of a controversial scheme that voters have seen (when they have noticed it at all) as typical of the arrogance of the global elite, ploughing ahead with its secretive dealmaking. + +TPP, not RIP + +Yet the 11 should fight to keep TPP alive. Officials toiled for a decade to produce the 6,000-page agreement. That deal is worth retaining even if, without America, its economic impact is far more modest. One reason is that the signatories of TPP have won hard-fought political battles for reforms in their own countries that are beneficial in themselves, whether America joins in or not. Vietnam has reformed labour standards, for example; in Japan TPP promises to serve as a bowstring for what Shinzo Abe, the prime minister, calls the “third arrow” of reform—the structural sort (the others are fiscal and monetary). Now that he has won parliamentary ratification, it would be a tragedy to let TPP lapse. + +It is also worth keeping TPP alive in the hope that America will one day change its mind. The United States has even more reason to regret the pact’s failure than the other countries, and not just because it was designed to be the economic underpinning of America’s strategic role in Asia. Far more than other trade agreements, TPP’s focus is on removing “behind the border” barriers to trade, and harmonising standards—in intellectual-property protection, labour, the environment and so on. Since these are often the most pernicious barriers to commerce in 21st-century economies, enacting TPP will establish a healthy template for trade in Asia that could one day bind in China and America, too. + +As for RCEP, it encompasses even more of the world’s population: the ten South-East Asian countries, Australia, China, India, Japan, New Zealand and South Korea. It, too, faces big obstacles—notably deep Indian suspicion of Chinese mercantilism. But its immediate benefits are more obvious than TPP’s because it is a traditional agreement covering tariff reduction; and trade between RCEP countries is subject to higher tariffs. + +China’s involvement (and exclusion so far from TPP) means the two pacts are sometimes portrayed as a facet of its global competition with America. But RCEP’s limited ambitions mean it is neither an alternative nor, necessarily, a rival to TPP. Both should proceed—indeed, the plan has always been that they would one day merge into a vast Asia-Pacific free-trade area. TPP’s travails are no reason to abandon that dream, even if that day has just moved even further away. + + + + + +Tata Group + +Ratantrum + +One of Asia’s most important firms has descended into chaos. Its patriarch, Ratan Tata, is largely to blame + +Nov 19th 2016 | From the print edition + + + +WHEN the management of a giant company engages in a civil war, everyone gets hurt. That is the sorry situation at Tata Group. It is India’s most important firm, with $100bn of sales, tens of millions of customers and products that range from salt to software. Tata is also one of the emerging world’s largest multinationals, spanning technology services, steel in Europe and carmaking in China. And until a few months ago it was a rare beacon of good governance in Asia. + +That reputation has now been shredded owing to a brutal fight for control between Ratan Tata, the group’s 78-year-old patriarch, and Cyrus Mistry, his successor. The battle is bad for Tata, rotten for its outside investors who have tens of billions of dollars at risk, and damaging to India. Mr Tata needs to get a grip before his legacy and the company are destroyed. + +Origins of the Mistry + +The seeds of the crisis were sown in 2012 when Mr Tata, who has no children, stood down after decades at the helm and handed over to Mr Mistry, whose family has long-standing links to the Tatas and is also a big investor in the group. + +Since then Mr Mistry has been grappling with two problems (see article). One is that Tata Group is worryingly flabby. During Mr Tata’s reign it went on an expansion binge at home and abroad. Some projects, such as the acquisition of JLR, a British carmaker, have been roaring successes. But vast chunks of the group are not making enough money: 60% of its capital employed makes a return of less than 10%. Dealing with this requires closing, selling or restructuring loss-making businesses, including its European steel arm and its telecoms unit. Mr Mistry is keenly aware of what is wrong but has not dealt with it. + +That may have something to do with Tata’s other headache: its Byzantine structure. There are a dozen big operating companies, some of which are listed. These are controlled by a private holding company which owns stakes in them of 20-75%. That holding company is in turn controlled by murky and secretive charitable trusts set up in 1919 and 1932. Until recently they were widely viewed as benign and passive, but they now appear to be under Mr Tata’s sway. + +Mr Mistry may have thought he had a free hand. Far from it. Mr Tata was breathing down his neck from the start. On October 24th Mr Tata, through the trusts, orchestrated the firing of Mr Mistry from the holding company. But Mr Mistry has the support of some of the operating companies, so the supervision of this giant conglomerate is split. That is farcical and dangerous. The value of Tata’s listed firms has dropped by $17bn since September. As accusations fly over dodgy accounting and unethical deals, the odds are rising of an investigation by regulators. And if Tata drifts, its numerous weak and loss-making firms could eventually pull the entire group under. + +Mr Tata created the mess and it is up to him to resolve it, in four steps. First, he needs to assert outright control. Ideally he would make peace with Mr Mistry, but if this is not possible the younger man will need to be ejected from the operating companies. Mr Mistry has been treated shabbily but he no longer has the authority, nor the legal power, to run the group. + +Second, Mr Tata needs a plan to deal with Tata’s zombie businesses. When he was in power he shirked this task. Third, he needs to reform the group’s structure. He should list Tata’s main holding company, so that it is subject to outside scrutiny. The trusts at the top of the pyramid must then gradually sell down their stake in the holding company to below 50% and diversify their assets. The result would be a streamlined group that is accountable to investors, instead of a rickety legal pyramid designed before India won independence in 1947. + +Last, while Mr Tata says that his new stint at the firm will be brief, he must also put a time limit of, say, 12 months on his role at the trusts. After that he must renounce all control. Not long ago he was among the most revered figures in the past half century of Indian public life. Now he is flirting with disgrace. He has a year to put things right, for his own sake—and India’s. + + + +Letters + + + + + +On the American election: Letters to the editor + + + + + +On the American election, Chinese, photo-sharing, durian + +Letters to the editor + +Nov 19th 2016 | From the print edition + +Letters are welcome via e-mail to letters@economist.com + +Trump’s triumph + + + +“The Trump era” (November 12th) asserts that poor American consumers gain more from cheap imports than they would if competition in trade were suppressed and America produced the same goods. Being able to buy a Chinese-made 50-inch TV when you work by flipping hamburgers for the minimum wage may be more efficient than working in a factory on wages where you can only afford the 30-inch American-made model. But Donald Trump’s voters weighed up factors that many economists and your newspaper often downplay: the marginal utility of consumer goods in a rich society, the distribution of wealth and a sense of self-worth. + +The medium through which they channelled their anxiety may be flawed, but their message is clear. + +PROFESSOR DIOMIDIS SPINELLIS + +Athens University of Economics and Business + +Since the second world war America has occupied a leadership role in world affairs. We have been successful in large part because of the support of our friends and allies. The post-war network of bilateral and multilateral agreements has benefited both the United States and our partners. Some of Mr Trump’s statements imply a retreat from those proactive policies. + +If we move towards a more isolationist position we cast doubt on our commitment to lead the world on issues of mutual concern. Traditional allies may opt to act independently or look to alternative leadership. North Korea, Russia and China may be encouraged to take advantage. + +Although some of our international agreements may benefit from a review, the fundamental principle supported by every president since Harry Truman remains valid. The new administration should reaffirm our commitments to our allies quickly and without ambiguity. + +ROBERT MORLEY + +Former staff member on the National Security Council + +Loudon, Tennessee + + + + + +Your articles about Mr Trump were founded on baseless fears and disconnected from reality. Your leader endorsing Hillary Clinton (“America’s best hope”, November 5th) was full of this stock-in-trade derision, even though many see Mrs Clinton as the queen of a corrupt consortium of big government, unions, media, academic and Hollywood interests. It was Barack Obama and his radical disregard for American leadership that began the unravelling of the post-1989 liberal order that you rightly seek to defend. Mr Trump wants to reverse that erosion and get America back on track. A true liberal order is one in which the people, not governments, get to choose the direction of their lives. + +IAN HUME + +Millsboro, Delaware + +Your endorsement of Mrs Clinton was published on a day when 35% of voters had already cast their ballots. It is not Election Day in America anymore, it’s election season. If you want your endorsements to matter, you need to pick up the pace a little. + +LLOYD TAYLOR + +Portland, Oregon + +I belong to what George Wallace once described as the “exotic ultraliberal left” of the Democratic Party. I am not surprised by this election. For the past 30 years the Democratic establishment has pursued my agenda, but has gone the extra mile to scorn white, working-class Christians. Because it doesn’t take a professional pollster to recognise that this is the biggest group in the electorate, one must conclude that the Democrats alienated them on purpose. It was this strategic blunder, rather than a sinister nativist conspiracy, that handed the White House to Mr Trump. + +EMMETT GRINER + +Potomac, Maryland + + + +I have compulsively considered the dire consequences of America’s election, from the catastrophic to the apocalyptic. As a longtime reader, I’m glad that your rational, sober voice is intact, with a focus on the tangible consequences. I hope The Economist continues to bear the torch of integrity as we enter what may be a very dark period of history. + +OLIVIER SHERMAN + +Berlin + +Politics isn’t being dumbed down. Quite the opposite. Trump, Putin, Brexit: these are highly effective campaigns that are all built on the same fundamental truth. Pattern-match the audience and use psychology to get you over the winning line. Political strategists have worked out that little psychological nudges online and in headlines are all that is needed to secure victory. + +SARAH OWEN + +London + +This year’s electoral surprises show that we need to persuade people through proper arguments rather than shutting down debate and hurling labels. On the right, this means no longer screaming “lock her up”. On the left, this means recognising that simply shouting “racist!” at someone who supports Brexit/Trump prevents a productive exchange of often legitimate views. The worry is that reasoned fact-based debate is no longer trickling down from the top. + +CHRIS KENNEDY + +Munich + + + +Mr Trump may be all that you say, but until now our message wasn’t being heard. The timid messengers we sent to Washington before were often less than feckless. Now maybe we’ll get more than platitudes and incessant fund-raising calls. By the way I love The Economist. The quality of your elitism knocks the socks off your competitors. + +JEROME LIPPERT + +Marshfield, Wisconsin + +The idea seems to be that white Trump supporters are somehow victims who have been “left behind” by the system. The implication is that Mr Obama somehow engineered the economic recovery towards people of colour. I’m sure if you asked most African-Americans or Latinos they would say otherwise. + +DANIEL HART + +Boston + +This is the second time in the past five elections where the electoral college has ended up giving us a president who didn’t win the popular vote. In the “Federalist Papers” Alexander Hamilton wrote that “the process of election affords a moral certainty, that the office of president will never fall to the lot of any man who is not in an eminent degree endowed with the requisite qualifications.” The electoral college was designed precisely to ensure that people like Mr Trump do not get elected. + +ALEX BROLEY + +Berkeley, California + +Mr Trump’s election transfers joy, hope and optimism away from us coastal liberals to America’s geographic and economic middle. Therapists and serotonin boosts will flourish in this new depression. But we progressives pledge to rediscover the common man. We will buy at Walmart, not Amazon, get coffee at McDonald’s, not Starbucks, shop at Piggly Wiggly, not Whole Foods, listen to AM radio, not NPR. Soon we will become reacquainted with our fellow Americans. + +STEVE KROPPER + +Lexington, Massachusetts + + + +Chinese immigrants + +“Raise the red lantern” (November 5th) called for more engagement from the Chinese community in Britain. This will be difficult to achieve. Immigrant Chinese populations are not politically active anywhere in the West because the institutional framework already allows them to thrive, especially in the educated, professional and entrepreneurial classes. The only exception is when meritocracy is threatened. For example, the Chinese community in California vigorously opposed extending affirmative action in public universities. Chinese students are accepted on merit, and affirmative action means fewer admissions for students on that measure. + + + +However, that is probably the exception for Chinese engagement in politics. The Chinese Exclusion Act in America, the Canadian head tax and the expulsion of Chinese sailors from Britain in the late 1940s have taught recent generations of migrants to be thankful for today’s liberal and meritocratic societies. By and large the adage applies: if it ain’t broke, don’t fix it. + + + +XIUYUAN YU + +Sevenoaks, Kent + + + + + +Same same but different + +* Using social media to take the “pulse” of the city has appeal, but comparing the Rockefeller Centre and Alcatraz doesn’t make sense (“Listen to the music of the traffic in the city”, October 22nd). You cited Claudio Silva’s work comparing the two places using photo-sharing on Flickr, concluding that they “share a pulse” “when it comes to the daily ebb and flow of tourists.” + + + +Whatever the photos show, on the ground they are quite different. Visitors to Alcatraz arrive on scheduled boats, so tourist levels genuinely pulse with the clock. Nor do they linger to late hours: by 9:30pm, all are off the island on the last boat. Crowds cannot exceed a certain level, never approaching the Christmastime crush at Rockefeller Centre. + + + +Flickr might show similar patterns of posting photos at the two sites, but that shouldn’t be conflated with obtaining an accurate picture. + + + +DAN NEWMAN + +Seattle + + + +The world’s smelliest fruit + +* Rodrigo Duterte’s outbursts as president of the Philippines led you to observe that “America’s strongest ally in South-East Asia appears to be plopping like a ripe mango into China’s hands” (Banyan, October 22nd). The durian would have been a better metaphor. The prickly fruit is found throughout the region and is known for its overpoweringly putrid smell, though it is regarded as a delicacy by locals. + + + +SANJIV MEHTA + +Montreal + +* Letters appear online only + + + +Briefing + + + + + +Who is Chinese?: The upper Han + + + + + +Who is Chinese? + +The upper Han + +The world’s rising superpower has a particular vision of ethnicity and nationhood that has implications at home and abroad + +Nov 19th 2016 | QINGHAI, KASHGAR, HONG KONG | From the print edition + + + +FIVE men who ran a bookshop in Hong Kong disappeared in mysterious circumstances in late 2015. One was apparently spirited away from the territory by agents from the mainland; another was abducted from Thailand. All later turned up in Chinese jails, accused of selling salacious works about the country’s leaders. One bookseller had a British passport and another a Swedish one but the two suffered the same disregard for legal process as Chinese citizens who anger the regime. Their embassies were denied access for weeks. The government considered both these men as intrinsically “Chinese”. This is indicative of a far broader attitude. China lays claim not just to booksellers in Hong Kong but, to a degree, an entire diaspora. + +China’s foreign minister declared that Lee Bo, the British passport-holder, was “first and foremost a Chinese citizen”. The government may have reckoned that his “home-return permit”, issued to permanent residents of Hong Kong, trumped his foreign papers. Since the territory returned to mainland rule in 1997, China considers that Hong Kongers of Chinese descent are its nationals. Gui Minhai, the Swede taken from Thailand, said on Chinese television, in what was probably a forced confession: “I truly feel that I am Chinese.” + +China felt it could act this way because it does not accept dual nationality. The law is ambiguous, however. It stipulates first that a person taking a foreign passport “automatically” loses their Chinese nationality and then, contradictorily, that an individual has to “renounce” their nationality (hand in their household-registration documents and passport) and that the renunciation must be approved. According to Mr Gui’s daughter, he went through the process of relinquishing his citizenship. Yet the Chinese authorities considered that his foreign passport was superseded by birth and ethnicity: both Mr Gui and Mr Lee are Han, the ethnic group that makes up 92% of mainland China’s population. + +Ethnicity is central to China’s national identity. It is the Han, 1.2bn of them in mainland China alone, that most people refer to as “Chinese”, rather than the country’s minorities, numbering 110m people. Ethnicity and nationality have become almost interchangeable for China’s Han, says James Leibold of La Trobe University in Melbourne, Australia. That conflation is of fundamental importance. It defines the relations between the Han and other ethnic groups. By narrowing its legal labour market almost entirely to people of Han descent, ethnicity is shaping the country’s economy and development. And it strains foreign relations, too. Even ethnic Han whose families left for other countries generations ago are often regarded as part of a coherent national group, both by China’s government and people. + +The Han take their label from the dynasty of that name in the third century BC. Yet the people labelled Han today are a construct of the early 20th century, says Frank Dikötter of the University of Hong Kong. For well over half of the past 650 years, the bulk of territory now called China was occupied by foreign powers (by Mongols from the north, then Manchus from the north-east). Chinese history paints the (foreign) Manchus who ran China’s last dynasty, the Qing, as “Sinicised”, yet recent research suggests that they kept their own language and culture, and that Qing China was part of a larger, multi-ethnic empire. + +Great Wall + +Under Western imperialism race was often used to divide people. But after the Qing fell in 1911, the new elite sought to create an overarching rationale for the Chinese nation state—its subjects spoke mutually incomprehensible languages and had diverse traditions and beliefs. Patrilineage was already strong in much of China: clans believed they could trace their line to a group of common ancestors. That helped Chinese nationalists develop the idea that all Han were descended from Huangdi, the “Yellow Emperor”, 5,000 years ago. + +Race became a central organising principle in Republican China. Sun Yat-sen, who founded the Kuomintang, China’s nationalist party, and is widely seen as a “father” of the Chinese nation, promoted the idea of “common blood”. A century on President Xi Jinping continues to do so. One reason for his claim that Taiwan is part of China is that “blood is thicker than water”. In a speech in 2014 he set his sights even wider: “Generations of overseas Chinese never forget their home country, their origins or the blood of the Chinese nation flowing in their veins.” + +Many Chinese today share the idea that a Chinese person is instantly recognisable—and that an ethnic Han must, in essence, be one of them. A young child in Beijing will openly point at someone with white or black skin and declare them a foreigner (or “person from outside country”, to translate literally). Foreign-born Han living in China are routinely told that their Mandarin should be better (in contrast to non-Han, who are praised even if they only mangle an occasional pleasantry). + + + +China today is extraordinarily homogenous. It sustains that by remaining almost entirely closed to new entrants except by birth. Unless someone is the child of a Chinese national, no matter how long they live there, how much money they make or tax they pay, it is virtually impossible to become a citizen. Someone who marries a Chinese person can theoretically gain citizenship; in practice few do. As a result, the most populous nation on Earth has only 1,448 naturalised Chinese in total, according to the 2010 census. Even Japan, better known for hostility to immigration, naturalises around 10,000 new citizens each year; in America the figure is some 700,000 (see chart). + +The conflation of Han and national identity underlies the uneasy relationship between that majority and China’s ethnic-minority citizens. Officialdom theoretically treats minorities as equal and even grants them certain privileges. Yet in practice ethnic groups, particularly those from China’s borderlands, who are visually distinctive, are discriminated against and increasingly marginalised as ethnic Han have moved into their home regions. Through state-sponsored resettlement the Han population of Xinjiang rose from 4% in 1949 to 42% today; Mongols now make up only 17% of Inner Mongolia (see map). + + + +At best non-Han groups within China are patronised as “charming and colourful” curiosities. Yunnan province has built a thriving tourist industry around its minority cultures. Minorities are routinely presented as delighting in folkish customs in contrast with the technologically superior Han. In an exhibition of “Xinjiang’s nationalities” in a museum in Urumqi, the provincial capital, the only person in modern clothes is Han; signs note that Chinese Uzbeks “have a special liking for all kinds of little caps” and Chinese Kazakh life is “full of songs and rhythms”. + +China risks turning cultural insensitivity into ethnic clashes. Ordinary manifestations of local culture in border regions have been criminalised. In Xinjiang, Uighur men may not grow long beards and Muslims are sometimes prevented from fasting during Ramadan. Inner Mongolian and Tibetan nomads have been forcibly settled. In Tibet and Xinjiang, many schools teach mostly in Mandarin, even if they lack enough Mandarin-speakers. + +That legitimises prejudice in daily life. “They think of us as wild, as savage” says a Tibetan guide in Xining, the Han-dominated capital of Qinghai province on the Tibetan plateau; only one of his Han neighbours even says hello to him. Tibetans and Uighurs are routinely rejected from hotels elsewhere in China (Chinese ID cards state ethnicity). Reza Hasmath of the University of Alberta found that minority employees in Beijing were typically better educated but paid less than Han counterparts. The best jobs in minority areas go to Hans. + +Chinese are now organising in small ways to fight for labour rights, gay rights and environmental concerns but there is little indication that Han are gathering to defend their ethnic peers—perhaps unsurprisingly, given that to do so could be seen as supporting separatism. If anything, the opposite is true: the government’s rhetoric, particularly on the dangers of Islam, has exacerbated existing divisions. + +Hui Muslims have long been the successful face of Chinese multiculturalism: they are better integrated into Han culture and widely dispersed (importantly they speak Mandarin and often look less distinct). Yet Islamophobia is rising, particularly online; social-media posts call for Hui Muslims to “go back to the Middle East”. In July, Mr Xi used a trip to Ningxia province, the Hui heartland, to warn Chinese Muslims to resist “illegal religious infiltration activities” and “carry forward the patriotic tradition”, a sign that he views this group with suspicion, as well as those on China’s fringe with a history of separatism. + +Although many of China’s citizens are not treated as equals, Han Chinese with foreign passports are welcomed and accorded a special status. Anyone with Chinese ancestry has legal advantages in getting a work visa; foreign-born children of Chinese nationals get a leg-up in applying to universities. + +This attitude has helped the Chinese economy. Over the past decade much of the inward investment has come from overseas Chinese. Many second-generation Chinese-Americans have started up firms in China. Yet being a member of the “Chinese family”, as Mr Xi puts it, carries expectations too. At a reception in San Francisco last December for American families who had adopted Chinese children, China’s consul reminded them that “you are Chinese”, citing their “black eyes, black hair and dark skin”; he encouraged them to develop a “Chinese spirit”. + +In the eyes of the Chinese government, these responsibilities extend beyond cultural ties to a demand for loyalty, not just to China but to the Communist Party. Many foreign Han say they are made to feel it is their duty to speak up on China’s behalf. Earlier this year Chinese immigrants to Australia were urged to take “the correct attitude” to support “the motherland” in its claims to disputed rocks in the South China Sea. A former Australian ambassador to China recently wrote that China’s sway in the country extends to “surveillance, direction and at times coercion” of Chinese students and attempts to enlist Australian Han businessmen to causes serving China’s interests. Chinese-language media in Australia, which was almost universally critical of China in the early 1990s, is mostly positive today and eschews sensitive topics such as Tibet and Falun Gong. + +China struggles to accept that descendants of Chinese emigrants may feel no obligation to reflect China’s interests. Gary Locke, the first Chinese-American ambassador to Beijing in 2011-14, was repeatedly criticised by state media for doing his job—representing American interests, even if they conflicted with China’s. Foreign Han journalists in China report accusations of disloyalty by the Public Security Bureau and reminders of their “Chinese blood”. + +There is a strong ethnic component to China’s tense relationship with Hong Kong (which it rules) and Taiwan (which it claims). Each is dominated by Han, but increasingly they prize a local rather than “Chinese” identity. A poll by the Chinese University of Hong Kong found that 9% of respondents identified themselves solely as “Chinese”, down from 32% in 1997, when the territory returned to Chinese rule; the trend is similar in Taiwan. + +The Peking order + +The Chinese government even risks clashing with foreign governments by claiming some form of jurisdiction over their ethnic-Han citizens. Last year the government of Malaysia (where the Han population is 25%) censured the Chinese ambassador when he declared that China “would not sit idly by” if its “national interests” and the “interests of Chinese citizens” were violated. The threat he saw was a potentially violent pro-Malay rally, planned in an area where almost all traders were Han but few were Chinese nationals. In isolated cases it goes further. The arrest and detention of naturalised American citizens born in China has long been an irritant in relations between the countries. + +China’s Han-centred worldview extends to refugees. In a series of conflicts since 2009 between ethnic militias and government forces in Myanmar the Chinese government has consistently done more to help the thousands escaping into China from Kokang in Myanmar, where 90% of the population is Han, than it has to aid those leaving Kachin, who are not Han. Non-Chinese seem just as beguiled by the purity of Han China as the government in Beijing. Governments and NGOs never suggest that China take refugees from trouble spots elsewhere in the world. The only large influx China has accepted since 1949 were also Han: some 300,000 Vietnamese fled across the border in 1978-79, fearing persecution for being “Chinese”. China has almost completely closed its doors to any others. Aside from the group from Vietnam, China has only 583 refugees on its books. The country has more billionaires. + +China’s iron immigration and refugee policy attracts little attention probably because few have sought to immigrate. Victor Ochoa from Venezuela describes himself as “red-diaper baby”, the child of foreign experts who went to China in the 1960s to help build a Socialist Utopia. He studied architecture in Beijing and has remained in China. Yet he has had to apply for a work visa annually for 40 years to stay; now he wants to retire, he has no means to stay: “I’ve built hospitals here, now I just want to sit in my apartment and read. But I am not allowed,” he laments. + +Uighurs, keep your beards trimmed + +Many outsiders see China as a land of opportunity. Some seek to settle. Yet the government is becoming more draconian towards such groups. Tens of thousands of Chinese men have undocumented marriages with women from Vietnam, Myanmar and Laos, often of the same (non-Han) ethnic group. After years of officialdom turning a blind eye, many of these women are now being sent back and their ID cards confiscated. Guangzhou’s government has launched a three-year plan to tackle illegal immigration. It named no target but may have its eye on up to 500,000 Africans, many of them overstaying their visas, in part of Guangzhou known by locals as “Chocolate City”. + +Decades ago China’s government might have argued that the country was too populous or too poor to accept new entrants. Now Chinese women have fewer than 1.6 children on average, well below the replacement rate, and in 2012 the working-age population shrunk for the first time. Yet China is already succumbing to problems many countries face as they grow richer and their workforce better educated. It has a severe shortage of social workers, care staff and nurses, jobs that most Chinese are unwilling to fill. That deficit will grow over the next decade as China’s population ages. Most rich countries attract immigrants to perform such roles, yet in September China’s government reiterated that visas for unskilled or service-industry workers would be “strictly limited”. + +A closed China wilfully narrows its access to the global pool of professional talent. The government grants surprisingly few work visas. Foreigners made up 0.05% of the population in 2010, according to the World Bank, compared with 13% in America. A “green card” scheme was launched over a decade ago to attract overseas talent but only around 8,000 people qualified for one before 2013, the latest date for which figures exist. Many of these were former citizens with overseas passports, says Wang Huiyao of the Centre for China and Globalisation, a think-tank in Beijing. + +Land of silk and money + +At the same time its own citizens are heading overseas. Hundreds of thousands of Chinese leave every year to study or work abroad. Many have returned to China to work and are a driving force of innovation and high-tech development. Far more do not come back: of the 4m Chinese who have left to study abroad since 1978, half have not returned, according to the Ministry of Education. Yet because China bans dual nationality those who become eligible for a foreign passport, by birth, wealth or residency, face a choice. The result is that the brain-drain is mostly one-way. Thousands of Chinese renounce their citizenship every year, but because it is so difficult for foreigners to become Chinese, no counterbalancing group opts in. + +China’s Han-centred worldview is not just a historical curiosity. It is a decisive force in the way it wields its growing power in the world—a state that respects neither equality nor civil liberties at home and may ignore them abroad too. In economic terms, China will cut itself off from an important source of economic growth, waste resources in discriminating against ethnic minorities and fail to use its human talent to better effect. Exacerbating ethnic tensions may spur the separatism it fears. And by sorting citizens abroad by their ethnic identity rather than their national one—whether by claiming to defend “its own” or punish them for disloyalty—China risks clashing with other countries. Over the past century, China’s founding myth has been a source of strength. But as it looks forwards, China risks being borne back ceaselessly into its own past. + + + +United States + + + + + +The Trump administration: The tower of silence + +The Affordable Care Act: Obamasnare + +Donald Trump and the Supreme Court: Listing right + +Voter registration: Oregon lets it ride + +Capital punishment: Death has less dominion + +Conflicts of interest: Dynasty + +The presidential election: Illness as indicator + +Lexington: Democrats on the brink + + + + + +The Trump administration + +The tower of silence + +Donald Trump appears to be unsure whether or not to govern as he campaigned + +Nov 19th 2016 | WASHINGTON, DC | From the print edition + + + +AT THE close of “The Candidate”, an Oscar-winning movie released in 1972, the protagonist, played by Robert Redford, marks his surprise election to the Senate by turning to his campaign chief and asking: “What do we do now?” Donald Trump, the state of the president-elect’s transition effort suggests, has had a few such moments since his victory over Hillary Clinton on November 8th. + +To assume control of an administrative machine that employs 4m people, he and his advisers must select, vet and hire around 4,100 people, over 1,000 of whom require confirmation by the Senate, and several hundred of whom—including his White House staff and the heads of around 100 federal departments and agencies—must be in place by the time of his inauguration on January 20th. Mr Trump’s immediate predecessors set a high bar for readiness. Mitt Romney, the losing candidate in 2012, assembled around 700 people to work on his transition—including “agency-review teams”, snooper squads ready to be deployed across the government so that Mr Romney could hit the ground running. Mr Trump, despite public assistance for the transition afforded to him and Mrs Clinton by Congress, and counsel from Romney campaign veterans, is less ready. On election day he had assembled a transition team of around 100, whose leadership he has since purged, throwing many of its existing preparations into disarray. + +He replaced the former head of his transition team, Chris Christie, the governor of New Jersey, on November 11th with his vice-president elect, Governor Mike Pence. He also announced a new committee of senior transition advisers, including three of his adult children and his son-in-law, Jared Kushner. Further purges of people close to Mr Christie, including Mike Rogers, a former congressman, and Matthew Freedman, a lobbyist, both of whom were working on national security, have ensued. This is believed to be either because Mr Christie is dogged by an abuse-of-power scandal back home, or at the personal behest of Mr Kushner. One of Mr Trump’s closest advisers, the 35-year-old property heir is alleged to have an animus against Mr Christie who, as a federal prosecutor in New Jersey, was instrumental in sending his father, Charles Kushner, a property developer, to jail for making illegal campaign contributions and other crimes. Mr Pence has also launched a separate purge of some 20 corporate lobbyists assembled by Mr Christie, whose presence seemed at odds with Mr Trump’s pledge to “drain the swamp” of government corruption. + +Transitions are always chaotic; even Mr Romney’s would have been. And Mr Trump, who campaigned as an outsider with disdain for his fellow Republicans, started his with obvious disadvantages. Some are now being corrected; Mr Pence, for example, has the confidence of many of the mainstream Republican policy wonks Mr Trump will need to hire. Indeed, compared with many earlier transitions, his effort doesn’t look too bad. According to Max Stier of the Partnership for Public Service, a non-partisan NGO that advised the Trump and Clinton campaigns on their transition groundwork, both started it early and, by historical standards, made fair progress. So Mr Trump has time to get back on track. Yet his quirks, including a highly informal and personalised management style and seemingly little interest in the details of the vast, complicated system he has sworn to overhaul, are causing alarm. + +Foreign governments have been getting to the president-elect through the switchboard at Trump Tower in Manhattan, where Mr Trump (above, with Reince Priebus), holed up with his family and aides, has been chatting to them, seemingly in random order, without the customary benefit of a State Department briefing. During a meeting with Barack Obama to discuss the presidency, on November 10th, he was reported by the Wall Street Journal to have been surprised at the extent of its scope. The president-elect’s Twitter habit is also causing disquiet. “Very organised process taking place as I decide cabinet and many other positions. I am the only one who knows who the finalists are!” he tweeted on November 15th, which seemed to recall his former life as a reality-TV star. + +In the days after the election, some anti-Trump Republicans declared themselves willing to get off their high horse and serve. But some are already changing their mind. Eliot Cohen, a former national-security official for George W. Bush, tweeted on November 15th that he had “changed my recommendation” to muck in after being contacted by Trump transition officials, whom he called “angry, arrogant”. + +As The Economist went to press, Mr Trump had made only two senior hires: Steve Bannon, his former campaign chief executive, as chief strategist, and Reince Priebus, the chairman of the Republican National Committee, as his chief of staff. This seemed an obvious expression of Mr Trump’s Janus-faced political persona. Mr Bannon, a maverick, tear-up-the-system right-winger, and former boss of a news website, Breitbart News, known for its offensively chauvinistic headlines, reflects his bomb-throwing on the trail. Mr Priebus, a plain-vanilla conservative, whose embrace of Mr Trump arguably did more to get him elected, reflects the pragmatism of the successful businessman Mr Obama claimed to have encountered in his meeting with Mr Trump. + +Some of Mr Trump’s post-election pronouncements reinforce that impression. He no longer means to eject 11m illegal immigrants and their offspring, as he once promised to. He says he will merely deport two or three million criminals among them (it is not clear there are so many). He also says he no longer plans to wall off America’s southern border; some parts of it, he says, will be fenced. Yet even if Mr Trump were to drop all his outrageous promises, which his appointment of Mr Bannon does not augur, he must still run a competent administration. And the state of his additional hiring plans does not seem to promise that. + +Most of the people mooted for his main cabinet positions, including Rudy Giuliani and John Bolton as possibilities for secretary of state, Senator Jeff Sessions as a possible defence secretary and Myron Ebell as a possible Environmental Protection Agency boss, have in common loyalty to Mr Trump, reputations for being deeply divisive and little experience of running a federal agency. Since Senate confirmation can be obtained for cabinet posts by a simple majority, which the Republicans have, the Democrats could not block such appointments. But they might well try to delay them, which is within their power, and that would risk making a messy transition even worse. + +Paradoxically, this also casts doubt on the seriousness of Mr Trump’s ambition to bring the disruptive change he promises. Even with a willingness to rewrite Mr Obama’s executive orders and the powers of a unified government, he would still need to win the confidence of the bureaucracy and, to some degree, the forbearance of Democrats to pull that off. This argues for at least some degree of bipartisanship and institutional care. Stocking his cabinet with Mr Giuliani, who has no diplomatic experience, Mr Bolton, who failed to get confirmed as Mr Bush’s ambassador to the UN by a Republican-controlled Senate, and Mr Ebell, a climate-change denier with no scientific background, would not provide much of either. + + + + + +The Affordable Care Act + +Obamasnare + +The Republican Congress scrambles to find an alternative to Obamacare + +Nov 19th 2016 | NEW YORK AND WASHINGTON, DC | From the print edition + +Loved, soon to be lost + +THE last time President Barack Obama counted, congressional Republicans had tried to repeal parts of the Affordable Care Act (ACA), his health-care law, more than 60 times. Donald Trump’s election victory means their efforts will no longer be in vain. Yet despite Republicans’ confidence in Obamacare’s shortcomings, what exactly will happen to the law when Mr Trump takes office remains something of a mystery. + +Because Republicans lack the 60 votes necessary to overcome a filibuster in the Senate, they will be unable to pass a comprehensive health-care bill without Democratic votes. Instead, they must rely on a process dubbed “budget reconciliation”, which allows a simple majority to pass tax-and-spending measures. Republicans used this process to send a law repealing parts of Obamacare to the president’s desk. Mr Obama vetoed it early this year. Next year, President Trump will probably sign it. + +That will be the beginning, rather than the end, of the Republicans’ task. On its own, the reconciliation bill is best described as a wrecking effort. It would remove the subsidies currently available to poor buyers on the ACA’s insurance exchanges. It would nix the individual mandate, which fines Americans who can afford health insurance but go without it. Both moves would reduce the number of healthy people buying coverage. But a rule banning insurers from turning away those with pre-existing medical conditions would remain. As a result, premiums, already up by an average of 22% this year, would rise further, deterring yet more healthy customers. The “death spiral” that some say already afflicts the exchanges would thus accelerate. + +Eventually, there would be no market left to serve those who are not covered through their employers or by other government programmes. This includes 12m people who currently buy on the exchanges, and 9m who purchase directly from insurers. As well as killing the individual market, the bill would also undo the expansion of Medicaid, government-provided insurance for the poorest, which was largely responsible for the fall in the number of uninsured Americans after the ACA was passed. Such a painful death for Obamacare would not reflect well on the executioners. + +But congressional Republicans are betting that, with the individual market likely to crumble, Democrats would have no choice but to support a full replacement. The best guess as to what that might look like is a somewhat vague plan penned by Paul Ryan, Speaker of the House. This includes replacing Obamacare’s targeted subsidies for the poor with a universal tax credit increasing with age. + +You might think that replacing means-tested help for poor buyers with a universal benefit would raise costs for the government. But Republicans insist that with enough deregulation, premiums will fall dramatically. For instance, the ACA forces all plans to include certain benefits, such as preventive care, and limits the extent to which insurers can vary prices with risk. + +Freed from regulation, insurers are likely to design plans which appeal only to healthy buyers. Mr Ryan’s fix is to put unhealthy people into “high-risk pools” with higher premiums and big subsidies. States have tried high-risk pools in the past, notes Gary Claxton of the Kaiser Family Foundation, a think-tank. Typically, premiums were capped at 150-200% of standard rates. But because that was too expensive for many folk, only the very sickest people—say, those with HIV—bought coverage. This pushed up the average subsidy per enrollee. Mr Claxton says big subsidies concentrated on few people could sap the political will to support the pools. + +Whatever Congress decides to do, it must move quickly. Few insurers will want to remain in a wobbly market with an uncertain future. Mr Trump’s changeable views complicate matters. He now says that he wants to retain the rules on pre-existing conditions, which Mr Ryan would phase out. Having spent so long diagnosing the ills of the ACA, the Republicans must now agree on a cure. + + + + + +Donald Trump and the Supreme Court + +Listing right + +The president-elect looks set to extend the court’s conservative majority + +Nov 19th 2016 | NEW YORK | From the print edition + + + +WHEN Antonin Scalia, the intellectual anchor of the Supreme Court’s conservative wing, died in February, Senate Republicans rushed to declare, in defiance of centuries of precedent, that Barack Obama’s successor should choose his replacement. The risky and ungentlemanly gambit—stonewalling Merrick Garland, a moderate, highly respected appeals-court judge nominated by Mr Obama on March 16th—bordered on constitutional malfeasance. But politically it has paid off. Donald Trump, America’s president-elect, will have the opportunity to preserve and perhaps even expand the conservative majority that has reigned at the Supreme Court for five decades. + +On the campaign trail, under pressure to display conservative bona fides, Mr Trump shared more about his plans for the nation’s highest court than any presidential candidate has ever divulged: not one list of potential nominees, but two, totalling 21 people, who, he says, deserve a shot at one of the court’s nine seats. + +The first list, released in May, comprised 11 white judges: six sitting on federal circuit courts and five on state supreme courts. In keeping with his promise to “drain the swamp”, none came from inside the Beltway. That is a slight to the District of Columbia Circuit Court of Appeals, perhaps the country’s most important appellate court (save the Supreme Court itself), and an institution where many presidents have fished for nominees; three sitting justices once served there. Late in September, Mr Trump revealed another ten potential picks. They included another woman (taking the total to four) and three judges from minority groups. + +Mr Trump seems to have two priorities: protecting gun rights and curbing abortion. In a television interview aired on November 13th, he pledged that his court picks will be both “very pro-Second Amendment” and “pro-life”. In his third debate with Hillary Clinton he promised that Roe v Wade, the ruling of 1973 that established abortion rights on the contentious ground of privacy, would be overturned “automatically” once his justices are seated. But if the issue is handed back to the states, noted Lesley Stahl, Mr Trump’s interviewer, some women “won’t be able to get an abortion” anywhere near their homes. Mr Trump responded with a shrug: “Yeah, well, they’ll perhaps have to go…to another state.” Ms Stahl sounded sceptical: “And that’s OK?” “Well, we’ll see what happens,” he said. “It’s got a long way to go, just so you understand.” He repeated, for emphasis: “That has a long, long way to go.” + +Indeed, replacing Scalia with a justice who hates Roe will not immediately endanger abortion rights. In June the court’s four liberals and Anthony Kennedy ruled that Texan regulations, cynically designed to close down many of the state’s abortion clinics, were unconstitutional. But if Mr Trump gets the opportunity to replace not only Mr Scalia but Stephen Breyer (aged 78), Ruth Bader Ginsburg (83) or Mr Kennedy (80) over the next few years, abortion rights will probably be whittled down. Bills banning abortion at the point in pregnancy where fetuses purportedly feel pain will push the boundaries of Roe. Measures like the Texas regulations will get a friendlier reception. And bans on specific procedures will find stronger legal footing. + +With Republicans in control of Congress and the White House, there is only one barrier to Mr Trump seating a justice of his choice: the Senate filibuster, a manoeuvre that allows the minority party to prolong debate and block votes as long as the majority is weaker than 60 votes. But the filibuster’s days appear numbered. Triumphant Republicans will have no reason to bow to a Senate rule that hamstrings their new president. Expect the filibuster to disappear and Mr Trump to have his way with the Supreme Court’s empty chair—one way or another. + + + + + +Voter registration + +Oregon lets it ride + +The Beaver State bucks a trend + +Nov 19th 2016 | LOS ANGELES | From the print edition + +Driven to vote + +NOT since 2000 has a lower share of the American electorate turned out to vote in a presidential election. That may be because of voters’ lack of enthusiasm for either candidate. But many suspect restrictive laws also played a part. Since 2012 several states have passed laws requiring prospective voters to show state-issued identification at the polls—documents which poorer and minority voters, who mostly lean Democratic, are less likely to possess. + +Oregon bucks this trend. This year’s election was the first since its legislature passed the Oregon Motor Voter Act in March 2015. Federal law already allows citizens to register to vote at their local motor-vehicle department. Oregon’s law makes this process automatic: whenever eligible citizens apply for, renew, or replace an Oregon driving licence, permit or ID card, they are registered to vote. Those who do not choose a particular party are considered unaffiliated; Oregonians who do not wish to be registered at all are given 21 days to opt out of the programme. + +Oregon was one of just two states, along with Connecticut, that had such measures in place for the election (similar initiatives have been passed in four other states and Washington, DC). Results were mixed. About 230,000 new voters were registered thanks to the law—an impressive share of Oregon’s 2.5m registered voters. Those motor-voters who chose a party voted at similar rates to traditionally registered Oregonians. But most motor-voters did not choose a party, and only 35% of those voted. + +That partly explains why statewide voter turnout decreased to 77.8% (at the time The Economist went to press) from 83% in 2012. Although 180,000 more votes were cast in this election, the wider voter pool contained a larger share of registered non-voters. + +Jim Moore, a political scientist at Pacific University, says one way to boost engagement would be to ask motor voters to affirm that they wish to register. That would, he believes, make them take the process more seriously than the current default method does. + +Liz Kennedy, a voting-rights expert at the Centre for American Progress, a think-tank, says Oregon’s law has the potential to be “absolutely transformative”. She advocates expanding the programme, perhaps by automatically registering voters when they use social services. Such citizens tend to vote less often than wealthier ones. “We want people to feel invited into our democratic system of government,” Ms Kennedy says. + + + + + +Capital punishment + +Death has less dominion + +The death penalty is going, but not quite gone yet + +Nov 19th 2016 | LOS ANGELES | From the print edition + + + +FEW people have had a more tumultuous 18 months than Nebraska’s ten death-row inmates. In May 2015 the Nebraska legislature voted to abolish capital punishment, which would have converted their sentences to life imprisonment. The governor, Pete Ricketts, vetoed the legislation but was overridden. He then poured $400,000 of his family’s money into financing a referendum to reinstate the death penalty, which appeared on the ballot on November 8th and passed with 61% of Nebraskans’ support. + +The proposition was one of three pro-death-penalty measures on state ballots. Two passed with ample margins, and prospects for the third look promising. In Oklahoma, a state that attracted fierce criticism for botching a lethal injection in 2014, voters backed a measure to give capital punishment constitutional protection. Progressive California has more condemned inmates than any other state; voters there rejected a proposition to repeal capital punishment. Though it has yet to be certified, another measure that aims to speed up executions seems likely to triumph. According to Mike Ramos, the district attorney for San Bernardino County who championed that bill, “Even in a deep blue state like California, most people still feel the only justice for the worst of the worst is the death penalty.” + +Yet polls show that capital punishment currently enjoys its lowest levels of support in four decades. Actual executions have also declined nationally (see chart). In 1999, 98 convicted criminals were executed. Last year just 28 were. Nebraska has not actually executed anyone since 1997, while California last did so in 2006. + + + +Robert Dunham at the Death Penalty Information Centre, a non-profit organisation, does not interpret the success of pro-death penalty propositions as a sign that attitudes are hardening again. “During periods of climate change, there are extreme storms,” he points out. “But when you step back and look at general patterns—despite those isolated storms—the direction of change is clear.” + +Carol Steiker, a professor at Harvard Law School and co-author of a new book entitled “Courting Death: The Supreme Court and Capital Punishment”, says people rarely take the time to understand ballot initiatives (one voter in Palo Alto says it took him hours to educate himself about the 17 measures on California’s ballot). A better bellwether of what will happen to the death penalty, Ms Steiker says, is sentencing. In 1996, 315 convicts were given death sentences. In 2015 only 49 were. This suggests that prosecutors, jurors and judges have all grown warier of capital punishment. + +Beyond Nebraska, Oklahoma and California, local election results refute the idea that Americans are rediscovering their enthusiasm for capital punishment. Voters in Washington and Oregon stuck with governors who had enforced moratoriums on capital punishment. Jefferson County sentences more criminals to death than any other county in Alabama, but the incumbent Republican district attorney lost to Charles Todd Henderson, a Democrat who says he is “personally opposed” to executions. Similar upsets occurred in district-attorney races in Hillsborough County, Florida and Harris County, Texas—both among the most prolific death-sentencing counties in the country. Ms Steiker believes that if you ask people whether they support capital punishment in the abstract, they tend to say yes. But abstract approval does not always translate into concrete backing. Unless there is a sustained rise in violent crime, she believes support for capital punishment will continue to wane. + + + + + +Conflicts of interest + +Dynasty + +The incoming administration has an inbuilt problem + +Nov 19th 2016 | WASHINGTON, DC | From the print edition + + + +DURING the presidential campaign there was much discussion about how the norms that govern American democracy were being ignored or rewritten. Those discussions have not stopped since Donald Trump became president-elect. His decision to put three of his children and one of their spouses on his presidential transition team, and the story, later denied, that he sought top-secret security clearances for them, has provoked concerns about what the roles of the president’s children and their spouses will be once Mr Trump takes office. + +His mixing of public and private endeavours looks like a reversion to the way conflicts of interest worked at the presidential level before civil-service reform in the 20th century. Before then presidents frequently dabbled in business on the side. There are few laws governing what a president must do to manage such conflicts, but from the mid-century presidency of Dwight Eisenhower onwards most presidents have placed their assets in blind trusts. So far Mr Trump has declined to do any such thing. + +The worry is not so much that Mr Trump’s children will be running his businesses while he is in the White House, or that Trump companies will find ways to profit from their association with the president—though both of those things could well happen. Ivanka Trump gave a small demonstration of what this will look like when her jewellery company used her appearance in the first televised interview with her father after the election to sell copies of the bracelet she wore. + +Mr Trump’s companies do not have the market share or political importance that, say, Silvio Berlusconi’s television empire had when he came to power in Italy. Nor is America about to go the way of Ukraine, where oligarchs-turned-politicians manipulate laws to favour their companies. + +Instead, one concern should be that people will conclude that doing business with Trump companies is a good way to buy influence, or at least the appearance of it—exactly the problem that dogged the Clinton Foundation and which Mr Trump denounced as crooked. A second concern is that Mr Trump depends heavily on his children for advice. When it comes to running the country, as opposed to a presidential campaign, they are not well-qualified to give it. Americans should be more worried about competence than nepotism. + + + + + +The presidential election + +Illness as indicator + +Local health outcomes predict Trumpward swings + +Nov 19th 2016 | NEW YORK | From the print edition + + + +THE first piece of news Americans woke up to on November 9th was that Donald Trump had been elected president. The second was that he owed his victory to a massive swing towards Republicans by white voters without college degrees across the north of the country, who delivered him the rustbelt states of Michigan, Wisconsin and Pennsylvania—all by one percentage point or less. Pundits had scoffed at Mr Trump’s plan to transform the Wall Street-friendly Republicans into a “workers’ party”, and flip the long-Democratic industrial Midwest: Hillary Clinton had led virtually every poll in these states, mostly by comfortable margins. But it was the plutocratic Donald who enjoyed the last laugh. + +In the aftermath of the stunning result, statistical analysts homed in on blue-collar whites as never before. Although pre-election polls showed Mr Trump with a 30-percentage-point advantage among whites without a college degree, exit polls revealed he actually won them by almost 40 points. Unsurprisingly, the single best predictor identified so far of the change from 2012 to 2016 in the share of each county’s eligible voters that voted Republican—in other words, the swing from Mitt Romney to Mr Trump—is the percentage of potential voters who are non-college whites. The impact of this bloc was so large that on November 15th Patrick Ruffini, a well-known pollster, offered a “challenge for data nerds” on Twitter: “Find the variable that can beat % of non-college whites in the electorate as a predictor of county swing to Trump.” + +With no shortage of nerds, The Economist has taken Mr Ruffini up on his challenge. Although we could not find a single factor whose explanatory power was greater than that of non-college whites, we did identify a group of them that did so collectively: an index of public-health statistics. The Institute for Health Metrics and Evaluation at the University of Washington has compiled county-level data on life expectancy and the prevalence of obesity, diabetes, heavy drinking and regular physical activity (or lack thereof). Together, these variables explain 43% of Mr Trump’s gains over Mr Romney, just edging out the 41% accounted for by the share of non-college whites (see chart). + +The two categories significantly overlap: counties with a large proportion of whites without a degree also tend to fare poorly when it comes to public health. However, even after controlling for race, education, age, sex, income, marital status, immigration and employment, these figures remain highly statistically significant. Holding all other factors constant—including the share of non-college whites—the better physical shape a county’s residents are in, the worse Mr Trump did relative to Mr Romney. + +For example, in Knox County, Ohio, just north-east of Columbus, Mr Trump’s margin of victory was 14 percentage points greater than Mr Romney’s. One hundred miles (161 km) to the east, in Jefferson County, the Republican vote share climbed by 30 percentage points. The share of non-college whites in Knox is actually slightly higher than in Jefferson, 82% to 79%. But Knox residents are much healthier: they are 8% less likely to have diabetes, 30% less likely to be heavy drinkers and 21% more likely to be physically active. Holding all else equal, our model finds that those differences account for around a six-percentage-point difference in the change in Republican vote share from 2012. + +The data suggest that the ill may have been particularly susceptible to Mr Trump’s message. According to our model, if diabetes were just 7% less prevalent in Michigan, Mr Trump would have gained 0.3 fewer percentage points there, enough to swing the state back to the Democrats. Similarly, if an additional 8% of people in Pennsylvania engaged in regular physical activity, and heavy drinking in Wisconsin were 5% lower, Mrs Clinton would be set to enter the White House. But such counter-factual predictions are always impossible to test. There is no way to rerun the election with healthier voters and compare the results. + +The public-health crisis unfolding across white working-class America is hardly a secret. Last year Angus Deaton, a Nobel-prize-winning economist, found that the death rate among the country’s middle-aged, less-educated white citizens had climbed since the 1990s, even as the rate for Hispanics and blacks of the same age had fallen. Drinking, suicide and a burgeoning epidemic of opioid abuse are widely seen as the most likely causes. Some argue that deteriorating health outcomes are linked to deindustrialisation: higher unemployment rates predict both lower life expectancy and support for Mr Trump, even after controlling for a bevy of demographic variables. + +Polling data suggests that on the whole, Mr Trump’s supporters are not particularly down on their luck: within any given level of educational attainment, higher-income respondents are more likely to vote Republican. But what the geographic numbers do show is that the specific subset of Mr Trump’s voters that won him the election—those in counties where he outperformed Mr Romney by large margins—live in communities that are literally dying. Even if Mr Trump’s policies are unlikely to alleviate their plight, it is not hard to understand why they voted for change. + + + + + +Lexington + +Democrats on the brink + +The American left is in danger of learning precisely the wrong lesson from defeat + +Nov 19th 2016 | From the print edition + + + +AGHAST at the defection of millions who voted for Barack Obama in 2012 but for Donald Trump in 2016—notably working-class whites in the Midwest—the left wants the Democratic Party to snatch up the banner of economic populism and declare war on Wall Street, big business and other global elites. At post-election gatherings like the Democracy Alliance conference in Washington, DC, it is an article of faith that Senator Bernie Sanders of Vermont, the snowy-haired, finger-jabbing scold who lost the Democratic presidential primary to Hillary Clinton, would have trounced Mr Trump in the general election. + +Such Democrats are making a mistake. It is as if America’s political classes are bent on copying every part of Britain’s current flirtation with who-needs-experts populism. Not content with holding an election that saw voters sharply divided by education, age, geography and attitudes to social change—as happened with the Brexit referendum—American leftists seem ready to follow Britain’s Labour Party down the path of self-righteous irrelevance. On November 14th protesters were arrested after a sit-in in the office of the Democratic leader in the Senate, Charles Schumer of New York, blaming him and other “Wall Street Democrats” for Mr Trump’s victory and demanding that he step aside in favour of Mr Sanders or another leftist icon, Senator Elizabeth Warren of Massachusetts. + +Sanders-boosters point to polls, taken months ago, that showed him beating Mr Trump in a head-to-head contest. His “the system is rigged” rhetoric made him the Republican’s equal when it came to indignation, supporters note, while his rumpled asceticism (he is one of the poorest members of the Senate) and plain-spoken integrity made him a more convincing anti-establishment champion than Mrs Clinton. Because the election was so close, decided in just a few battleground states, Mr Sanders could have won by convincing a few hundred thousand workers angry about globalisation and free trade. + +The Democratic left is missing a crucial detail: those surveys were taken when most Americans knew little about Mr Sanders. When Lexington conducted an unscientific straw poll of prominent Democrats in Washington this week, they were strikingly cautious about declaring the Vermont senator a national champion. For every Trump vote that Bernie Sanders would have won, his positions could have cost Democrats support from other voter blocs, suggests Representative Steve Israel, a centrist from Long Island who is retiring this year. Mr Sanders never faced the “scouring light” of media scrutiny, notes Senator Cory Booker of New Jersey, delicately: “we don’t know” how he would have done. + +Had Democrats owned a crystal ball and known in advance that Mr Trump would be their opponent they might have beaten him by picking a different mainstream candidate, for instance Vice-President Joe Biden. But Mr Sanders would have faced months of attack ads, running something like this. “Radical Bernie Sanders doesn’t like America. That’s why he backs tyrants who hate our freedoms [the screen shows old quotes from Mr Sanders praising Fidel Castro of Cuba]. It’s why he wants to make us like bankrupt, failed Europe, with open borders and amnesty for illegal aliens [images of refugees in the Mediterranean, terror attacks in Belgium and France, then Sanders quotes comparing America unfavourably with Denmark]. He wants government-run health care [viewers see a shabby hospital], abortion on demand and welfare for all. Who’d pay for this? You would, with some of the biggest tax hikes in our history. Bernie Sanders, a danger to America.” A third senior Democrat succinctly calls talk of Mr Sanders winning a general election “insane”. + +Populist politicians are gaining ground across the democratic West. But in Britain, France, Germany, Poland, Hungary and the Nordic countries so admired by Mr Sanders, the most successful anti-elite movements are broadly of the right, not the left. Even in Greece, where radical leftists hold power, soak-the-rich populism is allied to nationalist resentment at foreigners causing austerity. + +This is no accident. To simplify, populists of the left talk about fairness: an abstract idea. They call for government to break up big banks, make sure the rich pay taxes or erect tariff or regulatory barriers to keep globalisation at bay. Populists of the right happily borrow leftish lines about putting domestic workers first, and curbing the might of international finance. But then instead of talking about fairness, they talk of safety and control, of defending precious values that are under assault, and of keeping The Other at bay. Rather than fixing the system, they talk of taking their country back. If it suits their needs, populists of the right will present government itself as an agent of tyranny. Those are potent slogans that appeal to the gut, not the head—and in America just helped Republicans to elect a billionaire who calls tax-avoidance “smart”. They are reasons why the centre-left should beware of choosing to fight the right on populist ground. + +If you can’t beat ’em, don’t join ’em + +The hard lesson of 2016 is that mainstream politicians do not yet have a perfect answer to the demagogues sweeping the West. Mrs Clinton was a clunking candidate who—disastrously—took the Midwest for granted. But her larger problem was that she could not match Mr Trump’s willingness to tell angry workers whatever they wanted to hear, as when he promised to bring back coal-mining jobs, or manufacturing from Asia. Every rich-world politician knows what voters want: to be shielded from competition that they feel is unfair or unbearable, whether from machines or foreigners. But no responsible leader knows how to do that without harming the economy. As Mr Booker says: “You can’t create policy against a microchip.” As they enter a spell in the wilderness, Democrats cannot out-promise Mr Trump. They need to out-think him, by finding policies that work in the real world, in ways that voters can touch and feel. They have four years. + + + +The Americas + + + + + +Latin America and China: A golden opportunity + +Haiti after the hurricane: Weaker than the storm + +Bello: If at first you don’t succeed... + + + + + +Latin America and China + +A golden opportunity + +China’s president ventures into Donald Trump’s backyard + +Nov 19th 2016 | BEIJING, BUENOS AIRES, SANTIAGO AND SÃO PAULO | From the print edition + + + +GEOPOLITICS waits for no man, not even the United States’ president-elect. Little more than a week after Donald Trump’s victory, Xi Jinping, president of the world’s second-largest economy, set off for Latin America—his third trip there since 2013—clutching a sheaf of trade deals. They were proposed long before the change of government in Washington. But at a time when the image of the big, bad yanqui seems to be making a comeback, Mr Xi may find himself with an opportunity to boost Chinese influence in the American backyard. + +China’s aims in the region are expansive. In 2015 it signed a slew of agreements with Latin American countries promising to double bilateral trade to $500bn within ten years and to increase the total stock of investment between them from $85bn-100bn to $250bn. China also wants good relations in order to diversify its sources of energy, to find new markets for its infrastructure companies and to project power, both soft and military, in the western hemisphere. + +But Mr Xi, whose itinerary takes him to Ecuador, Peru and Chile, will have to work hard for these gains. After a long period of rising trade and closer relations, many Latin American countries are having second thoughts about their embrace of China. Exports from the region (plus the Caribbean) shrank last year, largely because Chinese economic growth slowed. China’s exports fell by less, so Latin America’s trade deficit with the country increased (see chart). + + + +Four raw materials—copper, iron, oil and soyabeans—account for three-quarters of the region’s exports to China, a greater share than they do of trade with the rest of the world. But the impact on employment is slight. A study by Boston University found that trade with China generated 17% fewer jobs per dollar’s-worth of exports than did trade with other countries. + +Almost all imports from China are cheap manufactures. Some Latin American economists argue that Chinese subsidies to their producers undermine domestic industries. A new study published by the Atlantic Council, a think-tank in Washington, concludes that Chinese exports “have had an effect on the region’s deindustrialisation”. As for China’s push to invest in infrastructure and natural resources, “that won’t give us the quality jobs we need,” said Rebecca Grynspan, the secretary-general of the Ibero-American Community, which comprises Spain, Portugal and Latin America, at a seminar in Santiago last week. + +As Latin American expectations are changing, so too is the pattern of Chinese investment. In 2010-13, 90% of it went to natural resources. Recent investments have branched out. In September this year China’s State Grid bought a 23% stake in CPFL, a Brazilian energy utility, for $1.8bn. WTorre, a Brazilian construction company, signed a deal with China Communications and Construction Company International to build a port in Maranhão, a north-eastern state. Chinese financial firms are getting involved. Fosun, an investment company, recently bought a controlling stake in Rio Bravo, an asset manager in São Paulo. Last year Bank of Communications bought 80% of BBM, a Brazilian lender, for 525m reais ($174m). + +China has its own reasons for wanting change. Many of its biggest trade deals have been with left-wing governments, which initially saw China as an anti-imperialist sugar daddy. Chinese loans over the past decade have fed that expectation. They went mainly to four countries that had left-leaning governments for most of the period: Venezuela, Brazil, Argentina and Ecuador. Now China worries that bankrupt Venezuela, which hews doggedly to self-destructive populism, may not repay its debts. And it wants to improve its standing with new, business-friendly governments in Argentina and Brazil. + +To dispel the notion that it is mainly a friend of the left, China is offering free-trade agreements (FTAs) with more open economies. It already has such deals with Peru, Chile and Costa Rica. Last year China’s prime minister, Li Keqiang, went to Colombia to talk about one. On his trip this month Mr Xi wants to expand the FTA that China signed with Chile in 2005. In October Uruguay’s president, Tabaré Vázquez, went to China to talk about an FTA. That prompted the other members of Mercosur, a four-nation trading block led by Brazil, to consider joint efforts to reach a group-wide trade agreement with China. + +The death of the Trans-Pacific Partnership (TPP), from which Mr Trump has said he will withdraw, may also prove an opportunity. China is hoping to use a meeting in Peru of 21 Pacific Rim economies to boost the prospects of its TPP-alternative, the Regional Comprehensive Economic Partnership, which includes India and Japan, but not the United States. + +Luckily for China, Latin America’s recent turn to the political centre implies greater pragmatism rather than hostility to the People’s Republic. It has made Brazil and Argentina more open to trade and investment, reckons Alicia Bárcena, the head of the UN’s Economic Commission for Latin America. “So if the Chinese are ready to invest, it should be easier for them.” + +Mr Xi is not just interested in commerce. In his speech to Brazil’s congress in 2014 he talked about a new “strategic partnership”. This time, says Oliver Stuenkel of Fundação Getulio Vargas, a Brazilian university, Mr Xi “will project himself as a stabiliser”, which will do no harm when many leaders are fearful about what a Trump presidency might bring. + +Chinese experts on Latin America scoff at the notion that China has geopolitical interests there. But it is hard to believe that it does not welcome the idea of having friends in the United States’ historical sphere of influence to match America’s allies in East and South-East Asia. A bonus is that 12 of Taiwan’s 22 allies are in Latin America and the Caribbean. So good relations between China and the region could chip away at Taiwan’s claim to some form of independent status. + +In 2015, the government of Cristina Fernández de Kirchner, then president of Argentina, signed a $1bn agreement to buy Chinese fighter jets and ocean-going patrol vessels. The agreement took China’s arms sales on the continent into a new league (until then, except in Venezuela, they had been mostly small scale). She also approved a deal giving the Chinese the right to build a satellite-tracking station in Argentina. After criticising the arrangement before his election in November 2015, the new president, Mauricio Macri, has given it the go-ahead. + +The base is in Neuquén province in Patagonia. Yu Xueming, the project’s manager, says the site has no military purpose and is designed as part of a lunar mission to be launched in 2017. But satellite experts say its parabolic antennae could have military uses, too. The facility’s operator is a unit of the People’s Liberation Army, the name for all of China’s military services. The site is due to become operational next March. + +China, it seems, is in Latin America for the long haul. And while it is there, it can keep one eye on the neighbouring giant to the north. + + + + + +Haiti after the hurricane + +Weaker than the storm + +A ravaged land prepares for a long-delayed election + +Nov 19th 2016 | JÉRÉMIE | From the print edition + +They’d rather eat than vote + +ON A cloud-dampened morning in Jérémie, the capital of the department of Grand’Anse in south-west Haiti, André Tham walks along a muddy road with a loudhailer, urging passers-by to get vaccinations against cholera. Farther on, a colleague empties a small vial into the mouth of a motorcyclist. + +More than 3,700 people are thought to have contracted the waterborne disease since Hurricane Matthew washed over Haiti on October 4th, felling trees, destroying houses, schools and clinics, and polluting sources of clean water. More than 1,000 people died and 1.4m still need immediate assistance. Farms and fisheries, the main source of livelihood, were ruined. Some families remain in their derelict homes, trying to keep out the rain as best they can; about 140,000 are living in government-run shelters. Mr Tham and his wife, who has suffered a broken leg, are among them. “I lost everything,” he says. + +Recovery is slow. Aid agencies say it is difficult to deliver food to many of the hurricane’s victims, in part because roads remain impassable. Rebuilding has barely begun. Jobless refugees are crowding into Port-au-Prince, Haiti’s capital. + +The country’s presidential and legislative elections, scheduled for November 20th, are the last thing on the minds of the inhabitants of Grand’Anse, one of the worst-hit areas, on the tip of Haiti’s southern peninsula, where about 15% of voters live. Many of the 20-odd candidates running for president have visited the region, bringing aid (often in packages emblazoned with their names) and promises of reconstruction. But it is not clear that valid elections can be held, or that they will result in a government better able to cope with the hurricane’s aftermath. + +“You can’t speak of elections to people living in the open, who are hungry and protesting for food,” says Marie Roselore Aubourg, minister for commerce and industry in Grand’Anse. Many have lost their voting cards. As The Economist went to press, there was still a possibility that the election might be postponed. + +Haiti has not had a proper government since Michel Martelly, the last duly elected president, stepped down in February. Since then the country has been governed by a caretaker, Jocelerme Privert. Haiti held the first round of presidential elections and some legislative elections in October 2015, but the results were annulled after suspicions of fraud provoked widespread protests. Hurricane Matthew forced a postponement of the re-run, which had been scheduled for the weekend after it struck. Assuming the rescheduled votes go ahead this month, run-off elections, if necessary, will be held on January 29th. + +The misery in Grand’Anse shows why a stable and effective government is needed. Mr Privert contends it will do a better job of coping with the post-hurricane emergency. “It is not a provisional government in a few weeks that will bring the responses to all these evils,” he said in a statement. But his confidence that new leaders will do a better job may be misplaced. When Haiti was struck in 2010 by an earthquake, a much bigger disaster, its elected government was overwhelmed. + +A greater hope is that a new government will take steps to make Haiti more prosperous and resilient in the face of future disasters. The next president will be in a better position than Mr Privert to work with foreign donors, which provide aid worth more than 5% of GDP, and to drum up foreign investment. To promote growth in the long term, argues Gilles Damais of the Inter-American Development Bank, the next government should concentrate on three tasks: upgrading energy and transport infrastructure; creating a trustworthy registry of land ownership to encourage investment; and making dispute resolution more transparent and less corrupt by reforming the justice system. + +The conduct of the election campaign has not given voters much reason to expect such changes. Polls suggest that the re-run of the first round will produce the same two figures to go through to a second round: Jovenel Moïse, a protégé of Mr Martelly, and the left-leaning Jude Célestin. Other candidates with a chance are Moïse Jean-Charles, a populist ex-senator, and Maryse Narcisse of Fanmi Lavalas, the party of Jean-Bertrand Aristide, a popular two-time president. + +None of the possible winners has offered a credible programme of economic reforms. A low turnout in the south-west could give losing candidates an excuse to contest the result yet again, says Jake Johnston, of the Centre for Economic and Policy Research in Washington. That would only add to the wretchedness of Jérémie. + + + + + +Bello + +If at first you don’t succeed... + +Peace and political trench warfare in Colombia + +Nov 19th 2016 | From the print edition + + + +WHEN on October 2nd a narrow majority of Colombian voters rejected a peace agreement under which the FARC guerrillas were to disarm, it was not just a pollster-confounding shock. It was also a rebuke to the government of Juan Manuel Santos, to negotiators who spent four tough years working on the accord and to the international establishment, which had praised the accord. Thus stung, Mr Santos’s people and the FARC’s leaders went back to the table. On November 12th they came up with a revised agreement. Will it command wider public support? + +According to Mr Santos, the result is a “renovated, adjusted, more precise and clarified” accord that takes account of many of the objections of the critics, led by Álvaro Uribe, his predecessor and now his chief foe. It is even longer—310 pages instead of 297—but its essence remains the same. The FARC will disarm and become a civilian political party. FARC leaders found guilty of war crimes will not be sent to jail; instead, they will face alternative penalties involving “effective restrictions of liberty”, provided they confess their deeds before a special tribunal. + +The new agreement tidies up loose ends, and involves a few significant concessions from the FARC. Their new political party will get less public money. The tribunal will now be composed only of Colombian judges, with foreign magistrates reduced to the status of observers. The time limit for implementing the agreement has been extended from ten to 15 years, to lessen the fiscal strain caused by spending billions of dollars on rural development. Importantly, only the provisions regarding international humanitarian law, and not the whole agreement, will be written into Colombia’s constitution. That would have made the constitution unwieldy, and risked making policy choices, such as land reform, irrevocable. + +Many of the other changes spell out matters implied in the original accord. For example, the tribunal will define the place to which convicted FARC leaders will be confined, and this will be not much bigger than a village. The tribunal’s decisions will be subject to review by Colombia’s constitutional court. The FARC must declare their assets, and the details of their involvement in drug-trafficking—something prosecutors were likely to winkle out of them anyway. Land reform will not affect the right to private property. The government can use aerial spraying of coca crops if manual eradication fails. Another raft of changes, aimed at mollifying the churches, removes much of the original politically correct language concerning “gender equity” and the rights of gays and transsexuals. + +The FARC may have accepted such changes because they have at last understood that most Colombians abhor them and that political support for peace matters more than legal guarantees. They may fear that Donald Trump will look less kindly on the peace process than Barack Obama has. + +But the FARC have insisted that leaders guilty of war crimes be eligible for election to congress and as mayors. On that there is an unbridgeable divide. Mr Uribe sees the FARC as “narcoterrorists” deserving of jail. Many Colombians, who recall the FARC’s kidnappings and bombings, agree. For Mr Santos, the guerrillas have “a political origin” and the raison d’être of all peace processes is to facilitate a transition from armed rebellion to peaceful democratic politics. + +The president, rightly, insisted on a speedy renegotiation because the ceasefire between the FARC and the army is “fragile”. (The army killed two guerrillas this week, it said accidentally.) Even so, it was hard to see why Mr Santos rushed to announce the new accord on a Saturday night in the middle of a long holiday weekend. Perhaps the reason was that, as it now transpires, this week he faces tests to see whether the prostate cancer he suffered in 2012 has returned. + +Mr Santos has called the bluff of the No campaigners in the plebiscite who claimed they wanted peace, but not on the previous terms. He insists this is the last word. Mr Uribe, who wants further consultation, is taking his time before pronouncing on the new agreement. He must judge whether it is so unacceptable as to merit blocking peace altogether. + +Many outsiders will expect Mr Santos to call a fresh plebiscite. But he is unlikely to do so. A second loss would be definitive. Instead, he will seek approval in congress, where he has a solid majority. But that route may mean forgoing consensus and a fast track for legislative approval of the constitutional changes that the agreement requires. With a presidential election due in 2018 the risk is that peace will be subject to political trench warfare. That, Mr Santos has decided, will be better than the military kind. + + + +Asia + + + + + +The collapse of TPP: Trading down + +South Korean politics: The i-word + +Indonesian politics: Tolerance on trial + +Malaysia’s 1MDB scandal: Nothing to see here + +Islamic State in Pakistan: Lethal partners + +Australia and asylum-seekers: The American solution + + + + + +The collapse of TPP + +Trading down + +A big free-trade deal’s demise leaves a worrying void in Asia + +Nov 19th 2016 | SHANGHAI | From the print edition + + + +DEPENDING on who is talking, the Trans-Pacific Partnership (TPP) is either the world’s most ambitious trade deal or the most dangerous. But these days a simpler description suffices: it is dead. With Donald Trump’s victory, America has abandoned TPP, in effect killing the trade pact that was a decade in the works and nearly complete. Amid all the unknowns about what Mr Trump’s presidency might mean, this is one of the few certainties. + +The consequences are far-reaching. TPP’s collapse removes the main economic plank of Barack Obama’s much-hyped, largely abortive “pivot” to Asia. It leaves a gaping hole in the architecture of Asian commerce. And it adds to the strong headwinds that are buffeting global trade. + +The chances that America would ratify TPP had already been dwindling because of growing opposition. If Hillary Clinton had won the election, Mr Obama might have made a last-ditch push during the lame-duck session of the outgoing Congress, which started this week. With the triumph of Mr Trump, who has called TPP a “terrible deal”, even that faint hope has vanished. + +On the basis of size alone, TPP would have been important, the largest regional trade deal in history. It encompassed 12 Pacific countries, including America, Japan and Canada (see chart). Together, they account for two-fifths of the world economy. But what made it all the more significant was its strategic intent. Notably absent from the membership was China. Economically, this made little sense. Studies indicated that including China, the world’s biggest exporter, would have substantially expanded the benefits of TPP. But America wanted to show that it could set Asia’s economic agenda. China might eventually have been invited to join TPP, but only after America had written “the rules of the road”, as its negotiators liked to say. + + + +Rather than a conventional focus on cutting tariffs, TPP emphasised stronger safeguards for intellectual property, the environment and labour rights (detractors felt it went too far on the first and not far enough on the other two). Matthew Goodman of the Centre for Strategic and International Studies, a think-tank, considers its collapse a “body blow” to American economic policy in Asia. + +It is also a blow to the global economy. Over the years rich countries have cut tariffs to the point where the main obstacles to commerce now lie in regulations that discriminate against foreign companies. TPP took aim at barriers hidden in government-procurement guidelines and investment restrictions. It would have raised the bar for future trade deals, says Jayant Menon of the Asian Development Bank: “That’s where the biggest loss lies.” + +Global trade is on track to expand more slowly than world GDP this year for the first time in 15 years, according to the World Trade Organisation. In Asia exports are set to grow just 0.3% this year in volume terms, well below the 8% average of the past 20 years. For poorer countries, exports have long been the most reliable way to kick-start development. That route now looks less accessible. If Mr Trump keeps his threat to slap fearsome tariffs on Chinese goods, the fallout could easily tip global trade into outright contraction. + +There are a few candidates to fill the void left by TPP. One possibility is that the 11 remaining governments forge on, minus America. Having agreed to the deal in February, they were on the cusp of ratifying it (Japan did so this month). But the withdrawal of America is likely to prove fatal. When countries made difficult concessions—for instance, Japan’s opening to more foreign rice and beef—it was with a view to expanding their access to America’s vaunted consumer market. Take that out and the incentive to give ground in other areas quickly dissipates. + +The focus is shifting to whether China might step in with an alternative trade deal. Chinese officials have vowed to push for an even larger regional pact called the Free Trade Area of the Asia-Pacific (FTAAP), tying together 21 countries including America. It will, however, go nowhere. Opposition in America to an American-led deal was already fierce enough; it would be even fiercer to a China-led one. + +Optimists can at least point to one trade pact that is close to completion. The Regional Comprehensive Economic Partnership (RCEP) includes China, India, Japan and South-East Asian countries. It covers nearly a third of the world economy and a much bigger share of its population than TPP. But RCEP is far less ambitious, focusing on the basic business of cutting tariffs, rather than more complex regulations. Tariffs are still high in Asia, so lowering them would help. But He Ping of Fudan University in Shanghai, who has monitored the talks, expects few breakthroughs. India, a perennial sceptic on free trade, has been dragging its feet and others are wary of China’s export juggernaut. A weak RCEP will do little for Asia, even if China relishes the opportunity to show that, unlike America, it can bring deals to fruition. + +For Asia’s reformers, there is thus no getting around the disappointment of TPP’s demise. Vu Thanh Tu Anh, a Vietnamese economist, says that Vietnam had hoped to use the deal to pressure sluggish state-owned companies to shape up. Shinzo Abe, Japan’s prime minister, viewed it as part of his programme of structural reforms, since it would have exposed coddled Japanese industries such as health care and agriculture to more competition. Even in China, liberal officials thought TPP might prompt the government to loosen its grip on markets in order to join one day. + +Big regional trade deals are, mercifully, not the only show in town. There has been a bewildering array of smaller, often bilateral, pacts in recent years. Asia now has 147 free-trade agreements in force, up from 82 a decade ago. A further 68 are under negotiation. From the perspective of trade theory, these are suboptimal: a jumbled, overlapping mess. In practice, they may well be Asia’s best hope for getting more goods and services to flow across borders. + + + + + +South Korean politics + +The i-word + +Talk about impeaching the president grows louder + +Nov 19th 2016 | SEOUL | From the print edition + +Million-man sit-in + +THE numbers make for grim reading. For the past fortnight Park Geun-hye has been South Korea’s most unloved president ever. Her approval rating stands at 5%; among the young it is nil. As many as 1m people rallied for hours in Seoul, the capital, on November 12th to demand her resignation—the biggest demonstration since 1987, when mass protests against the military regime of the day led to the country’s first democratic elections. Ms Park acknowledged the “seriousness” of the situation, but said she would continue to “fulfil her duty as president”. + +For weeks Ms Park’s conservative administration has been besieged by accusations of influence-peddling involving Choi Soon-sil, a confidante. The president turned to her for advice on state affairs, although she held no official position. South Koreans are incensed by rumours that Ms Choi swayed policy and orchestrated cabinet reshuffles, exploiting her clout to win favours. She has been arrested on suspicion of manipulating conglomerates into funnelling 80bn won ($70m) to two foundations that she controls. Prosecutors have detained two former presidential aides who are thought to have relayed state secrets to her and helped her raise funds. + +Ms Park, who has 15 months remaining of her single five-year term, has apologised twice to the nation, and accepted an investigation into her actions, a first for a sitting South Korean president. Prosecutors want to question her as a witness this week. In other efforts to cool tempers, she fired aides and, in an overture to the opposition, nominated a new prime minister who used to work for Roh Moo-hyun, a liberal former president. But the opposition-dominated parliament refused to approve him. Ms Park was forced to drop him, and is now letting parliament pick a substitute. + +Calls for Ms Park’s departure have only grown. A day after the protest some MPs from her Saenuri party held an emergency meeting to discuss a presidential exit. On November 15th Moon Jae-in, former head of the main opposition Minju party and a presidential hopeful, vowed to run a “nationwide movement to drive Ms Park out”. The two parties, along with a minor opposition group called the People’s Party, this week agreed to set up an investigation by an independent counsel into the allegations of wrongdoing against Ms Choi, in parallel with that of the public prosecutor. + +Ms Park’s political opponents have reason to hesitate: if she quits, a successor must be elected within two months. But the president’s rock-bottom approval rating has not led to clear gains for Minju. It has no consensus candidate, and left-leaning voters might be split among several contenders. Saenuri, meanwhile, has no strong candidate at all, though it probably hopes to woo Ban Ki-moon, a soon-to-be-former UN secretary-general. + +Ms Park could instead defer to the prime minister that parliament picks, committing to sign off on all his decisions. But Ha Tae-kyung, a Saenuri MP, says popular anger is running too high for that. Even a stage-managed resignation, which both main parties would prefer—Ms Park would negotiate a date for her departure, perhaps months down the road—would be too little too late, he says. + +For a growing number of people, impeachment is the answer. Kim Moo-sung, a former leader of Saenuri, says it is “the only way”. Realmeter, a pollster, says popular support for her resignation or impeachment has risen from 42% to 74% in the past three weeks. Mr Ha, who says few think Ms Park will quit, began to call for impeachment last week. It has been tried only once before, in 2004, when two-thirds of MPs voted to impeach Roh for minor election-law breaches. Such a vote suspends the president from office (the prime minister takes over) and sends him or her for trial before the constitutional court (which dismissed the charges in Roh’s case). Some MPs think an impeachment vote could take place before the year is out. Shin Gi-wook of Stanford University says the option may be especially attractive to MPs because they would be seen to have acted decisively, but would have time to regroup during the six months the court would have to mull its decision. + + + + + +Indonesian politics + +Tolerance on trial + +An accusation of blasphemy upends an election campaign + +Nov 19th 2016 | Jakarta | From the print edition + + + +THE campaign to be Jakarta’s next governor was set to be a showcase of Indonesia’s vibrant democracy. Now it may become an affront to it. On November 16th police investigating complaints of blasphemy against the incumbent and front-runner, Basuki Tjahaja Purnama, known as Ahok, said they were formally declaring him a suspect. Ahok, a Christian, is said to have insulted the Koran—a grave charge in overwhelmingly Muslim Indonesia. Although Ahok insists he will remain a candidate and will not step down, the case is certain to dominate the rest of the campaign (the election is on February 15th) and could have far-reaching implications for Indonesian democracy beyond it. + +As vice-governor, Ahok became governor automatically when Joko Widodo, known as Jokowi, was elected president in 2014. His rise to one of the country’s most prominent political posts and his lead in voting polls had been touted as proof of Indonesia’s tolerance. But a speech he gave to fishermen in late September has set off a sectarian furore. Ahok appeared to suggest that any attempt to dissuade Muslims from voting for him by citing a verse in the Koran that warns Muslims against taking Christians and Jews as allies was deceitful. He has apologised for his comments, insisting—not unreasonably—that he was criticising not the verse itself, but the use to which it was being put. + +Muslim protest groups, however, accused him of denigrating the word of God. They stirred up outrage through social media and filed complaints with the police. The Islamic Defenders Front, or FPI, a Muslim vigilante outfit, organised an unusually large protest—of more than 100,000 people—in Jakarta on November 4th. Many carried placards calling for the governor to be jailed, or worse. + +Hitherto, Indonesian Muslims have not been easily swayed by sectarian arguments. Hardline groups such as FPI have staged rallies against Ahok for years, but they have rarely drawn much of a crowd or done much to reduce his popularity. Yet Ahok’s comments about the Koran seem to have offended many. The most recent opinion polls suggest that his lead in the race for governor may be slipping. + +The fuss is not all, or even mostly, about religion. Ahok’s political opponents have been eager to exploit mounting tensions. Moderate Muslim groups such as Nahdlatul Ulama told their supporters to stay away from the protest, but politicians associated with the campaigns of Ahok’s two rivals in the election attended, all the same, along with tens of thousands of people bused in from outside the capital. + +Being named a suspect need not lead to formal charges, but usually does. Indonesia’s blasphemy law is worryingly woolly, allowing courts to punish words or actions deemed “hostile” to religion by up to five years in prison. Andreas Harsono of Human Rights Watch reckons it is “very likely” that Ahok would be found guilty, based on precedent. In the dozens of blasphemy cases to go to trial since 2004 the defendant has always been convicted, Mr Harsono notes. Even if the courts were to clear Ahok, Indonesia’s reputation for successfully combining Islam and democracy is unlikely to escape unharmed. + + + + + +Malaysia’s 1MDB scandal + +Nothing to see here + +Billions are stolen; only a whistle-blower goes to jail + +Nov 19th 2016 | From the print edition + + + +IT IS more than two years since Malaysians began asking awkward questions about 1MDB, a state-owned investment firm from which billions of dollars are missing. But Malaysia has yet to prosecute anyone in connection with the scandal, perhaps the gravest in its history. Instead, on November 14th a local court handed a prison sentence to Rafizi Ramli, an outspoken opposition politician who has done much to educate the public about the affair. If Mr Rafizi’s appeal is rejected he will spend 18 months in jail. + +Mr Rafizi’s offence was to leak details from a report into 1MDB’s dealings which had been produced by Malaysia’s auditor-general, but which the government had declared classified. Mr Rafizi had publicised a brief passage from the report to support speculation that the state firm’s massive losses could have delayed certain payments to Malaysian veterans (the organisations involved reject this claim). The government had initially promised that the auditor-general’s report would be released to the public in full, as is the convention. Now it is using the Official Secrets Act to silence those who refer to it. + +Mr Rafizi’s conviction may prevent him from defending his parliamentary seat at the next general election. It adds to a string of legal battles hampering the opposition, which is readying for polls that may be called next year. Anwar Ibrahim, the opposition leader, has been imprisoned since 2015 on flimsy sodomy charges. A corruption case is presently being pressed against Lim Guan Eng, the chief minister of Penang (an opposition stronghold). + +The whitewash in Malaysia contrasts with dogged investigations continuing abroad. On November 11th a banker who had handled some of 1MDB’s money was convicted in Singapore of forgery and of failing to report suspicious transactions; he was sentenced to 18 weeks in jail. In July investigators from America’s Department of Justice alleged that more than $3.5bn had been “misappropriated” from 1MDB, and that hundreds of millions of dollars had been paid to Malaysia’s prime minister, Najib Razak. + +Mr Najib denies wrongdoing. Having last year purged critics from his party, his position looks secure; an aide boasts that the prime minister is matey with Donald Trump, America’s president-elect. In a typically brazen response to questions from the Nikkei Asian Review, published the day after Mr Rafizi’s sentencing, the prime minister said that Malaysian authorities had “led the way” in investigating allegations of wrongdoing linked to 1MDB. His answers were submitted in writing; Mr Najib might have struggled to say such things in person with a straight face. + + + + + +Islamic State in Pakistan + +Lethal partners + +A famous name joins the long list of militant groups creating havoc + +Nov 19th 2016 | Islamabad | From the print edition + +Murdered for dancing + +SECURITY officials in Pakistan used to insist the country was immune to the threat of Islamic State (IS). Doctrinal differences, they said, would stop Pakistanis falling under the sway of the Syria-based militant group, which has demanded the fealty of the world’s Muslims ever since its leader, Abu Bakr al-Baghdadi, declared himself “caliph” in 2014. But IS’s presence in Pakistan can no longer be denied. The group appears to be responsible for two atrocities in recent weeks. + +On November 12th IS dispatched a suicide-bomber to the Shah Noorani shrine in a remote area of Balochistan province. The blast took the lives of more than 50 people who had come from far and wide to watch its Sufi mystics dance. Just over two weeks earlier, three IS gunmen had stormed a police training centre on the outskirts of the provincial capital, Quetta, killing 61. IS’s media arm released photographs of the attackers in both incidents, giving credence to its claims of responsibility. + +IS considers Afghanistan and Pakistan to be part of its province of Khorasan—an ancient name for the region. It is thought to have some hideouts in eastern Afghanistan, beyond the control of the government in Kabul, and has mounted several bloodthirsty attacks on civilians in that country too. It seems to have managed to gain its presence in Pakistan by teaming up with long-established local militant groups. Branches of both Tehreek-e-Taliban Pakistan (TTP) and Lashkar-e-Jhangvi (LeJ) claimed to have been involved in providing men, logistics and safe houses for the attack on the police academy, for instance. The Pakistani army announced on September 1st that it had arrested 309 alleged IS operatives and sympathisers, but that does not seem to have reduced its capacity to wreak havoc. + +The TTP, LeJ and IS are united in their pathological loathing of Shias, who make up an estimated 20% of Pakistan’s population. They also regard the relatively gentle, folksy version of Islam practised by many Sunnis in Pakistan, with its Sufi shrines and saints, as blasphemous. + +The two local jihadist outfits are, in part, creatures of Pakistan’s disastrous policy of attempting to harness Sunni militancy to advance its own domestic and regional agenda. The TTP sees itself as a sister organisation of the Afghan Taliban, a group long patronised by Pakistan as a tool to influence the internal affairs of its neighbour. LeJ’s parent organisation, Sipah-e-Sahaba, was backed by the state in the 1980s as a counter to Pakistani Shias who sympathised with the Iranian revolution. More recently the state allied itself with Shafiq Mengal, among LeJ’s current crop of leaders, in an effort to suppress the 12-year-old separatist insurgency in Balochistan. + +LeJ was banned in 2002 and its upper ranks have been gutted over the past year in “police encounters”—scarcely concealed extra-judicial killings. But with chapters all over the country it remains one of the most dangerous of Pakistan’s many militant groups, particularly in Balochistan. The Ahle Sunnat-Wal-Jamaat, successor to Sipah-e-Sahaba, was supposedly banned in 2012 but remains influential and active. Its leader, Muhammad Ahmed Ludhianvi, was photographed meeting the interior minister on October 21st and was allowed to take part in a recent rally in the capital with other hardliners at which anti-Shia rhetoric flowed freely. + +It is unclear whether the new ties with IS bring local militants more resources and manpower, or simply more publicity and ambition. But unless Pakistan cracks down on home-grown terror, it will remain fertile ground for IS to launch more attacks. + + + + + +Australia and asylum-seekers + +The American solution + +A deal to relocate refugees may spare Australia further blushes + +Nov 19th 2016 | SYDNEY | From the print edition + + + +AT ITS inception in 2001, it was seen as a neat answer to a thorny question: how to screen asylum-seekers intercepted at sea on their way to Australia in a manner forbidding enough to deter more from coming? But over time the “Pacific solution”, of packing the would-be refugees off to camps in Nauru and Papua New Guinea (PNG) to await their fate, itself became a problem. + +Ever more unwelcoming Australian governments declared that even those found to be legitimate refugees would never be admitted to the country, yet few other states could be persuaded to take them, and few of the asylum-seekers could be persuaded to settle in the countries that would, such as Cambodia. Some 2,000 people have mouldered for years in the island camps, earning Australia rebukes from human-rights groups at home and abroad. This week, however, a solution to the solution may perhaps have been found. America has offered to take many of the stranded migrants. (Australia previously offered to admit some Central American refugees in what is being seen as a quid pro quo.) + +Many Australians have an atavistic fear of an uncontrolled flood of Asian migrants, and no government wants to look lax on “border security”. But keeping the camps running was becoming increasingly difficult. The supreme court in PNG recently declared the camp there illegal and ordered it closed. They are also expensive: UNICEF estimates a bill of A$3.6bn ($2.7bn) for the past three fiscal years alone. And then there was the international opprobrium: Amnesty International’s latest report says Australia is “brazenly flouting international law” and subjecting detainees to an “elaborate and cruel system of abuse”. + +The deal had taken “months and months of very careful planning”, says Malcolm Turnbull, Australia’s prime minister. But many Americans are as twitchy about immigration as their counterparts in Australia, as indicated by Donald Trump’s election victory. Mr Trump has pledged to bar Muslim migrants from America, and many of the refugees in Nauru and PNG are Muslim. Mr Turnbull seems not to have raised the resettlement plan with Mr Trump when they spoke soon after his election win. “We deal with one administration at a time,” he says breezily. After years of inaction, Australia had better move fast. + + + +China + + + + + +China and American democracy: Weighing up Telangpu + +Hong Kong’s legislature: Nipped in the bud + +Communists: Pride in the party + +Banyan: A China-America romance? + + + + + +Weighing up Telangpu + +A victory for China? + +Some Chinese see much to like in Mr Trump + +Nov 19th 2016 | BEIJING | From the print edition + + + +THE relationship between China and America, as diplomats often intone, is more important than any other between two countries. But that did not help China understand the election of Donald Trump any better than anyone else. The government’s initial reaction was one of confusion, verging on denial. Many ordinary citizens expressed horror, but even more voiced admiration. Mr Trump, it seems, has a remarkable following in a country he blames for America’s malaise. + +When news broke of Mr Trump’s victory, official media buried it. That evening, the flagship news programme on state television informed viewers of events in America in the final four minutes of a half-hour broadcast. While the rest of the world was glued to Mr Trump’s victory speech, Chinese viewers had to make do with Xi Jinping, China’s president, talking to Chinese astronauts orbiting the planet. + +Chinese officials pay obsessive attention to ensuring the Communist Party’s line is reflected accurately by the country’s main media. But Mr Trump’s victory caught them in a muddle. Several outlets said Mr Xi had telephoned his compliments to Mr Trump. But Mr Trump said he had spoken to or heard from most foreign leaders—except Mr Xi. The phone call did not take place until six days after the vote. In most countries such a mistake would be insignificant, the result of sloppy reporting or ambiguous phrasing (in Mandarin, the phrase “sent a congratulatory note” can also mean “congratulate by phone”). In China it suggested that media overlords were not sure what line to take. + +They had hoped the message from the election would be clear: that American democracy is in disarray and that “socialism with Chinese characteristics” is the best choice for China. For the first time, an American election was given extensive coverage (the third presidential debate was broadcast in its entirety). The authorities may have made the right call, as they would see it. “Thank God we don’t use this voting system,” said one blogger. + +Unlikely hero + +But if some netizens disliked what they saw of the process, many more were captivated by the electoral drama and, especially, by one of the candidates. Ordinary citizens followed the campaign with unprecedented interest. Online, 20 times more posts referred to Mr Trump in the past year than to Barack Obama in the past eight years. One blogger compared Telangpu, as Mr Trump’s name is commonly rendered in Chinese, to the late Deng Xiaoping. Both, apparently, are visionary dealmakers. In China’s online world, wrote another netizen, “Trump has this almost untouchable presence.” + +Having digested the news of the victory, Chinese officials have begun to see possible benefits in a Trump presidency (see Banyan). But Ma Tianjie, who runs a website called Chublic Opinion, argues that support for the president-elect is based on culture and values, not calculation. This suggests it has three significant things to say about Chinese society. + +First, younger Chinese are not so dissimilar to Mr Trump’s American supporters. As one user wrote on Zhihu, a question and answer site: “Most Chinese born after the 1980s are from a working-class background, who can still sympathise with the uneducated ignorance demonstrated by the less refined.” Anti-elitism retains a broad appeal. “Trump won because he truly spoke in the people’s voice,” wrote one microblogger. + +Next, decades of unbridled economic growth have created a Trump-like worship of money and winners. As Lao Lingmin argued on the Financial Times’s Chinese-language website, support for Mr Trump reflected China’s “law of the jungle”. Chinese society, he wrote, “does not exist for the protection of vulnerable groups”. + +Thirdly, says Mr Ma, pro-Trump sentiments in China show how far views can be swayed by zealotry, fanned by social media. On Zhihu, a supporter of Mr Trump repeated the president-elect’s falsehood that “there are towns in Britain that are completely under the control of Muslim extremists, who are openly using white girls as sex slaves.” The post got 18,000 likes. + +Yet online reactions also showed that Chinese opinions are sharply divided. A well-known blogger on Weibo called Chinese Trump supporters “spiritual rednecks”. Another pointed out that China may suffer: “Don’t they know his policies will give China a really hard time?” Intellectuals were aghast. + +A news website in Shanghai, however, published an article by an academic who said Mr Trump’s win revealed America’s “ever greater decline”. Official opinion is closer to this view than to Mr Trump’s Chinese cheerleaders. + +This article appeared in the Print Edition with the headline: Weighing up Telangpu + + + + + +Nipped in the bud + +A court in Hong Kong disbars two legislators + +Trouble could loom for more + +Nov 19th 2016 | HONG KONG | From the print edition + + + +IN THEIR brief time as lawmakers, Sixtus Leung and Yau Wai-ching have voted on no laws. Their careers as members of Hong Kong’s Legislative Council, or Legco, ended just 12 days after they began. Yet their impact was huge. In that short time they managed to stall the workings of government, inspire a riot and provoke the Communist Party in Beijing to meddle with the territory’s judiciary. Their legacy will be long-lasting and contentious. + +It was no surprise that the High Court ruled on November 15th that Mr Leung and Ms Yau, from a party called Youngspiration, were unfit to take up their posts in Legco. While taking their oaths last month the pair swore, referred to China in a derogatory way and displayed banners saying “Hong Kong is not China”. A judge declared they had not acted “faithfully and truthfully” and had forfeited their seats. + +Many people in Hong Kong say the two behaved offensively. But many are also upset by the response both of their own government and of the central one in Beijing. Legislators critical of the Communist Party’s influence in Hong Kong often use gestures or statements to undermine the impact of their mandatory oaths when being sworn in. Sometimes such antics are ignored; at other times legislators are allowed to try again. The local government gave Mr Leung and Ms Yau no second chance, turning to the High Court to get them disbarred. The central authorities, fearful that the pair’s admission to Legco might encourage the spread of pro-independence views, issued a directive through the national parliament that was clearly aimed at persuading the court to rule against them. The judge denied he had taken the instruction into account, but many lawyers saw it as a blow to the territory’s judicial independence. + +Within hours of the court’s verdict the nameplates of Ms Yau and Mr Leung had been removed from their offices. Legco’s president warned that they may be asked to return to Legco some of over HK$1.8m ($232,000) they spent on salaries and staff expenses. After a series of stormy meetings and disruptions as the pair attempted to retake their oaths and join the proceedings, a measure of calm now prevails. For the first time since the swearing-in ceremonies, a council session ran its course without fisticuffs. But the calm is superficial. The two are appealing against the ruling. And as many as ten other pro-democracy lawmakers now face similar cases in court. These have been filed by ordinary citizens, some with the backing of pro-Communist groups. In retaliation, a democrat even filed a case against the chief executive, Leung Chun-ying, who inadvertently fluffed his lines at his swearing-in in 2012. + +No date has yet been set for by-elections, but they will be fiercely contested. Two days before the court’s ruling, tens of thousands of people joined a protest against those who support Hong Kong’s independence from China (which Chinese officials say must be “nipped in the bud”). The battle lines are drawn. + +One beneficiary of Hong Kong’s growing tensions may be the chief executive. Mr Leung is not liked. His five-year term expires next year, and he has not said whether he wants to run again. Should he do so, the choice will be made by an electoral college packed with the Communist Party’s local supporters. Mr Leung’s tough stand against the recent rise of pro-independence sentiment has fuelled resentment of him among the government’s critics. Perhaps the central government likes him better for that. Xinhua, a central-government news agency, this week published an interview with him in which he expressed his wish to “rise to the challenges” his administration faces. It may mean he wants to stand again. Discontent in Hong Kong is likely only to grow. + +This article appeared in the Print Edition with the headline: Nipped in the bud + + + + + +Pride in the party + +China’s Communists say call us comrades + +But the term has taken a new meaning + +Nov 19th 2016 | BEIJING | From the print edition + + + +CHINA’S president, Xi Jinping, has a dream: that his country will experience a “great rejuvenation”, that its smoggy skies will clear, and that Communist Party members will call each other “comrade” once more. A recent directive said a revival of the form of address would promote “equality and democracy” among the party’s 88m members. This lofty ambition has drawn laughter and scorn online. In fact the word tongzhi, literally meaning “same aspirations”, is still in common use. These days, however, it is a synonym for gay. + +Mr Xi has already tried (and failed) to reclaim comrade for the party. Even when officials discarded many obsolete rules in 2014, they said comrade should still be used instead of popular terms like “boss” or “brother”. Comrade reflects a “virtuous tradition”, according to Study Times, a party journal. Mr Xi appears blind to the word’s more recently acquired sense. Gay people in Hong Kong claimed comrade for themselves in the 1980s (the first character in tongzhi is the same as the one used in tongxing lian, or homosexual). From there the new meaning spread to the mainland. + +Mr Xi’s campaign for comrade-use is part of a broader one to instil discipline among party members. This also involves more rigorous collection of membership fees (amounting to between 0.5% and 2% of annual salary). Payment of them is being described as a “concrete” means to “affirm loyalty”. Defaulters have been asked to cough up dues going as far back as 2008. + +In a similar vein, People’s Daily, a party newspaper, launched a campaign earlier this year encouraging people to write out the party’s 15,000-character constitution by hand (another publication said it would “awaken” them). A story about newly-weds who apparently took it seriously enough to spend their wedding night doing just that went viral (though it was probably faked). Mr Xi’s ideas are attracting jeers, not cheers. + +This article appeared in the Print Edition with the headline: Pride in the party + + + + + +Banyan + +A China-America romance? + +It is not as unlikely as many pundits think—but nor could it last + +Nov 19th 2016 | From the print edition + + + +AFTER the wildest political upsets this year, here’s a prediction for next: China will deem its relations with America to be entering something of a golden period. The prediction is no more outlandish than others that have recently come true. But is it madness? On the campaign trail, Donald Trump singled out China as the prime culprit ripping jobs and business out of the United States “like candy from a baby”. Mr Trump threatened a trade war. He promised that, on day one as president, he would label China a currency manipulator. He said he would slap a punitive tariff of 45% on Chinese imports. For good measure, he also promised to tear up the climate agreement that President Barack Obama signed with his counterpart, Xi Jinping, in September—a rare bright point in the bilateral relationship. + +Throw in, too, amid all the disarray inside Mr Trump’s transition team, the names being bandied about for those who will be in charge of dealings with China. They hardly reassure leaders in Beijing. Possibles for secretary of state, for instance, are Rudy Giuliani, New York’s former mayor, who has little experience of China, and John Bolton, a hawk who is actively hostile to it. + +And yet China is starting to look on the bright side. Driving the growing optimism in Beijing is a calculation that, if Mr Trump is serious about jobs and growth at home, he will end up in favour of engagement and trade. Put simply, protectionism is inconsistent with “Make America Great Again”. From that it flows, or so Chinese officials hope, that Mr Trump’s campaign threats are mainly bluster. Yes, he is likely formally to label China a currency manipulator. But that will trigger investigations that will not be published until a year later. Even after that, there may be few immediate practical consequences. + +What is more, China’s leaders may divine in Mr Trump someone in their mould—not delicate about democratic niceties and concerned above all about development and growth. Reporting on the first phone conversation earlier this week between Mr Xi and Mr Trump, the normally rabid Global Times, a newspaper in Beijing, was gushing. After Mr Xi urged co-operation, Mr Trump’s contribution to the phone call was “diplomatically impeccable”; it bolstered “optimism”, the paper said, in the two powers’ relationship over the next four years. Indeed, thanks to his “business and grass-roots angles”, and because he has not been “kidnapped by Washington’s political elites”, Mr Trump “is probably the very American leader who will make strides in reshaping major-power relations in a pragmatic manner.” + +No doubt optimism among more hawkish Chinese is based upon calculations that Mr Trump’s administration will prove chaotic and incompetent, harming America first and playing to China’s advantage in the long game of America’s decline and China’s rise. “We may as well...see what chaos he can create,” the same newspaper was saying only a week ago. And Chinese leaders are delighted to see the back of Barack Obama. They hate his “pivot” to Asia. They are bitter that Mr Obama’s “zero-sum mindset” never allowed him to accept Mr Xi’s brilliant proposal in 2013 for a “new type of great-power relations” involving “win-win” co-operation. How could Mr Obama possibly think that the doctrine boils down to ceding hegemony in East Asia to China? + +And so, it is not hard to imagine what gets discussed in the first meeting between the two leaders, after Mr Trump’s inauguration. In his victory speech, the builder-in-chief promised a lot of concrete-pouring: “highways, bridges, tunnels, airports, schools, hospitals”. Mr Xi will point out that he has a fair amount of expertise in construction, too. It comes from running a vast country with more than 12,000 miles (18,400km) of bullet-train track where America has none, and a dam at the Yangzi river’s Three Gorges which is nearly as tall as the Hoover Dam and six times its length. Mr Xi will offer money and expertise for the president-elect’s building efforts, emphasising that China’s help will generate American jobs. In return, it would be an easy goodwill gesture for Mr Trump to reverse Mr Obama’s opposition to American membership of the Chinese-led Asian Infrastructure Investment Bank, and to lend more support to Mr Xi’s “Belt and Road” plans for building infrastructure across Asia and Europe. Advisers to Mr Trump suggest that is already on the cards. + +The other leadership transition + +A honeymoon, then, that few predicted. China certainly wills it. A calm external environment is critical for Mr Xi right now. He is preparing to carry out a sweeping reshuffle of the party’s leadership in the coming year or so. His aim is to consolidate his own power and ensure that he will have control over the choice of his eventual successors. That will demand much of his attention. + +But don’t expect the honeymoon to last. For one, China may well have underestimated the strength of Mr Trump’s mercantilist instincts. It may also have second thoughts should a sustained dollar rally complicate management of its own currency. And even though America’s panicked friends have been this week, as the New York Times put it, “blindly dialling in to Trump Tower to try to reach the soon-to-be-leader of the free world”, Trumpian assurances of support have been growing for the alliances that China resents but that have reinforced American power in East Asia since the second world war. (As The Economist went to press, Japan’s prime minister, Shinzo Abe, was about to become the first national leader to meet the president-elect; he will reassure Mr Trump that Japan is taking on a bigger role in defending itself.) + +And then who knows what might roil the world’s most important relationship? No crisis has recently challenged the two countries’ leaders like the mid-air collision in 2001 of a Chinese fighter jet and an American spy plane. Yet some similar incident is all too thinkable in the crowded, and contested, South and East China Seas. Remember, it is not just Mr Trump who is wholly untested in a foreign-policy crisis of that scale. Mr Xi is, too. + + + +Middle East and Africa + + + + + +The nuclear deal with Iran: On borrowed time + +Iran: Theocratic troubles + +Syria: The next push + +Ghana: Nkrumah’s heirs + +Corruption in Sierra Leone: Call it in + + + + + +The nuclear deal with Iran + +On borrowed time + +The outgoing American president’s biggest foreign-policy achievement now looks unlikely to survive + +Nov 19th 2016 | From the print edition + + + +BARACK OBAMA is trying to console himself with the possibility that Donald Trump may not after all lay waste to every aspect of his legacy. Perhaps the president-elect’s suggestion that he might preserve some features of his predecessor’s health-care legislation offers a sliver of hope that what Mr Obama regards as his greatest foreign-policy achievement will not necessarily be thrown into the dustbin after January 20th. In reality, the likelihood that the deal with Iran to roll back and constrain its nuclear programme survives the first year of Mr Trump’s presidency now seems extremely small. But if Mr Trump does decide to abrogate it, or sabotage it in some other way, the diplomatic and strategic consequences will be dire. + +Guessing what Mr Trump will do is fraught with difficulty because his statements have been so inconsistent. Unlike some of his rivals for the Republican nomination, he did not (quite) promise to tear up the Joint Comprehensive Plan of Action (JCPOA), as the nuclear deal is formally known, on the first day of his presidency. But he has variously described it as “the worst deal ever negotiated” that he would regard as his “number-one priority” to “dismantle”; as something he might accept but police much more aggressively; or that he would renegotiate to make much tougher. He has even complained that one defect of the deal is that it gives other countries access to the Iranian market that American firms are denied (in fact, by Washington). + +Whether the Iran deal, which went into effect at the start of this year, will really be a priority when other more urgent and less technical issues are jostling for Mr Trump’s attention next year is also questionable. Those responsible for monitoring the JCPOA say that it is working well despite a couple of minor incidents coming to light of Iranian non-compliance (exceeding the cap on the production of heavy water, a material that can be used to make weapons-grade plutonium). + +Waiting for Team Trump + +Much will depend on Mr Trump’s choice for secretary of state, according to Robert Einhorn, a former State Department official who helped to shape the Obama administration’s strategy on Iran. Three of the four men who are thought to be in the frame, John Bolton, Newt Gingrich and Rudy Giuliani, have all said that they would simply scrap the deal; the fourth, Bob Corker, the chairman of the Senate Foreign Relations Committee, takes a more pragmatic view. Mr Bolton, in particular, believes that the only reliable way to stop Iran from getting a nuclear weapon is to bomb its nuclear infrastructure. + +What is not in doubt is that Mr Trump can easily wreck the deal if he is so minded. Although it is between Iran and seven other parties (the UN Security Council’s five permanent members plus Germany and the EU), it depends on all the signatories living up to their obligations. Mark Fitzpatrick, a nuclear-policy expert at the International Institute for Strategic Studies, says it can be killed by simple neglect. + +For example, the American sanctions reliefs agreed to by Mr Obama require renewal by presidential waiver every 120 or 180 days, depending on the statutes involved. Mr Trump could just sit on his hands. Or he could impose, by executive order or legislation, a new set of sanctions, perhaps relating to Iran’s provocative missile-development programme, which might be technically possible under the JCPOA but which would soon cause it to unravel. On the other hand, reckons Richard Nephew, a former adviser on sanctions policy at the State Department who served on the Iran negotiating team, if Mr Trump opts for renegotiation, he could set a time limit on his waivers of sanctions to force a harder bargain with the Iranians. + +What responsible advisers should be telling Mr Trump is that simply walking away from the JCPOA would lead to the worst of all worlds. There would be little chance of persuading the Europeans, let alone Russia or China, to reimpose their sanctions in the absence of any serious violation by Iran, and when they are happy with the way the deal is working out, both politically and commercially. In October the EU lifted its ban on Saderat, one of Iran’s largest banks. Online travel agents now list and accept payment for Iranian carriers. Last week, a consortium led by France’s Total signed a $4.8bn agreement with Iran to develop a big gasfield; and Russia is lining up lucrative arms deals. Mr Trump could threaten the Europeans with secondary sanctions, but the EU, says Mr Fitzpatrick, could use blocking legislation to thwart him. + +Walking away would also serve the interests of hardliners in Iran, who, like their counterparts in Washington, have always hated the deal. Iran could put all the blame on America for the collapse of the agreement and cautiously resume parts of its nuclear programme. It would not have to worry about sanctions, other than American ones, snapping back so long as it remained within the Treaty on the Non-Proliferation of Nuclear Weapons (NPT). + +Mr Einhorn thinks that Mr Trump is therefore more likely to try to win European support for a better deal, perhaps one that restricts research and development on new centrifuges until much later and lengthens expiry dates on centrifuge numbers. But he thinks the chances of success would be minimal because it would be seen as a wrecking manoeuvre by the other parties to the deal, and Iran would surely never agree. The only leverage that Mr Trump would then have left would be to threaten Iran with the military option. That might please the likes of Mr Bolton, and perhaps Israel’s prime minister, Binyamin Netanyahu, a vehement critic of the deal. But even the bullish Mr Bolton accepts that air strikes would only put Iran’s nuclear programme back by a few years. For their part, Iran’s most belligerent hardliners would be similarly delighted to test Mr Trump’s resolve. Iran could then quit the NPT and rebuild its nuclear infrastructure deep underground. Many experts believe that unilateral military action would indeed virtually guarantee Iran deciding, come what may, to become a nuclear-weapons state—with all that would mean for America’s interests and those of its allies in the region. + + + + + +Iran + +Theocratic troubles + +A Koranic reciter has threatened the clerics’ moral authority + +Nov 19th 2016 | From the print edition + + + +FOR years, the victims say, he touched boys memorising holy texts at the Supreme Koran Council in Tehran. On trips abroad, the Koranic reciter would allegedly lure Islam’s equivalent of choirboys, some as young as 12, to his hotel room. But Saeed Tousi had a mellifluous voice. Grand Ayatollah Ali Khamenei, Iran’s Supreme Leader, called him a “model to be followed”. His clerics knew of the complaints, but let him chant on. He continued to sing for the Supreme Leader, won a prize and opened a session of parliament. + +Convinced the clerics would never punish a favourite for a crime that in Iran carries a death sentence, last month his accusers spoke out on Voice of America. But the judiciary ruled out a public trial—except for those who dared speak to the Voice of the Great Satan. The chief justice, Sadegh Larijani, warned that anyone talking to a foreign news outlet “in opposition to the values of the Islamic Republic” could face charges for “abetting a crime”. Mr Tousi remains at liberty. + +Iran is a schizophrenic country. It has a rambunctious parliament and an elected president, but above that an unaccountable theocracy, led by Mr Khamenei. His clerics approve the candidates who stand for election, run the various security services and the judiciary, and control the media. For much of the 37 years of the Islamic Republic, the relationship between the representatives of heaven and earth has been troubled. If the latter hoped the abuse scandal might finally shatter the moral authority of the former, they have now been disabused. + +Still, in the perennial struggle between hardliners and reformists, the reformists seem in some ways to be gaining the upper hand. Buoyed by gains in the parliament elected in the spring, President Hassan Rouhani has emerged from the hardliners’ clutches. On November 4th he publicly denounced Mr Larijani’s muzzling measures, and called for greater press freedom. He defied powerful ayatollahs in Iran’s holy cities of Mashhad and Qom, insisting scheduled concerts (of traditional music) should go ahead despite their threats. “None of my ministers should give up in the face of pressure,” he said. + +Hardliners recently sought to arrest Abdol Rasul Dori Esfahani, an advisor to the team that negotiated last year’s nuclear deal, for spying, but were quickly over-ruled. And the economy is showing signs of improvment as (non-American) foreign companies start to invest. Oil exports in October were up almost threefold on the previous year. Iran needs to generate 1.2m jobs a year to employ the young who join the workforce and manages only half of that. But at least now there is some hope. + +The hardliners, by contrast, seem to be in disarray. Presidential elections are due in May, but they have yet to agree on a presidential candidate. Mr Khamenei has barred the former president, Mahmoud Ahmadinejad, from standing, knocking out Mr Rouhani’s strongest competitor. + + + + + +Syria + +The next push + +After a pause, battle resumes + +Nov 19th 2016 | BEIRUT | From the print edition + + + +FOR weeks, the Syrian regime has been sending text messages warning residents of the rebel-held eastern half of Aleppo that they face “annihilation” unless they leave the city. Sceptical, with ample reason, of the regime’s promise of safe passage, few have done so. Instead, they have been bracing themselves for the next wave of bombing. + +Their wait came to an end on November 15th as Syrian warplanes, attack helicopters and heavy artillery pounded neighbourhoods in the east of the city for the first time in weeks. The renewed onslaught on Aleppo came the day after a telephone conversation between Donald Trump, America’s president-elect, and Vladimir Putin, Russia’s president. Russia’s defence minister, Sergei Shoigu, announced the start of an operation to “deliver massive strikes” against terrorist targets in the provinces of Homs and Idlib. Activists in the city say that Russian warplanes are also now back in action over Aleppo, although the Russian government denies this. It is possible that the renewed assault on Aleppo is being conducted only by the Syrian regime’s planes. + +The resumption of bombing comes a week after Russia’s only aircraft-carrier, the Admiral Kuznetsov, arrived in the eastern Mediterranean as part of a flotilla that includes the country’s largest battle cruiser, several submarines and a frigate. Russia’s defence ministry said that its jets flew bombing runs from the ageing carrier as part of the opening salvo of the operation, marking the first carrier-based combat sorties in Russian military history. The frigate also launched Kalibr cruise missiles at targets inside Syria. “We carried out exhaustive advance research on all targets,” says Mr Shoigu. “We are talking about warehouses with ammunition, terrorist training centres…and factories.” + +The latest Russian offensive aims to break a grisly stalemate. Neither side has made significant territorial gains since regime forces cut off the rebels’ only supply route into Aleppo in July. The almost immediate collapse of a short-lived ceasefire, negotiated between the Russians and the Americans in September, unleashed one of the bloodiest phases of the conflict. Weeks of Russian and Syrian air strikes and artillery fire killed hundreds of civilians, and destroyed hospitals and schools. But they failed to dislodge the rebels from their last big urban stronghold. + +As Western leaders lined up to condemn Russian atrocities, Moscow again decided to pause its strikes on the city. The Syrian government offered rebels the chance to lay down their weapons. Instead, they seized on the relative calm to launch a counterattack at the end of October to break the siege. That assault fizzled out as Syrian forces, backed by Shia militias from Lebanon, Iran and Iraq, swiftly reclaimed their lost territory. + +Bashar al-Assad, Syria’s president, has long vowed to crush the opposing forces in Aleppo. With Syrian warplanes back in the skies above the city, troops allied to the regime have begun to mass along the front line in preparation for a ground offensive. The rebels, whom the UN says number about 8,000, are confident they have enough firepower to withstand a ground attack. Regardless, the fighting will unleash yet more death and destruction on a city that has already suffered some of the most intense violence of the war. + +The renewed aerial bombardment will make it even harder for the rebels to break a siege that has strangled life in the city. Residents are down to their last food rations, the UN says. Supplies of water, medicine and fuel are running dangerously low as winter approaches. Riots have already broken out over the distribution of what little aid is left. “They don’t fear the regime or the Russians,” says Dr Hatem, one of the few paediatricians left in eastern Aleppo. “The only thing that makes them scared is wondering where they will get the next meal from for their children. They don’t care about anything else.” In the absence of any pause in hostilities, no aid is getting into the eastern part of the city, where the UN estimates that 250,000-300,000 civilians still live. + +Siege warfare has become an essential part of Mr Assad’s approach. It has allowed him to isolate and then eliminate pockets of rebellion without using up too much manpower. For now, the rebels believe they can cling on militarily. Surviving the siege may prove a great deal harder. + + + + + +Ghana + +Nkrumah’s heirs + +A country that should be a beacon of African democracy is ailing + +Nov 19th 2016 | ACCRA | From the print edition + +More passion please + +FLAGS coloured with the red, black and green of Ghana’s ruling party flutter feebly in the still, hot air that barely stirs above Independence Avenue as it bends down towards the sea. There it ends abruptly before the sweeping curves of grey Italian marble meant to resemble, depending on whom one asks, the stump of a tree or the buried hilt of a sword. Beneath it lies the body of Kwame Nkrumah, the country’s first president and, for many millions of people, a man synonymous with Africa’s liberation from colonialism. Ghana, in 1957, was the first African country to win its independence. + +Yet here, at the birthplace of democracy in Africa, are portents of its fragility. On what was once the whites-only polo ground where Nkrumah declared the new state, his headless statue stands as a reminder of how a once-promising flame guttered. After declaring a one-party state and mismanaging the economy, Nkrumah was overthrown in a violent coup in 1966. It took more than a quarter of a century before the restoration of multiparty democracy in 1992 ushered in the start of what many now call Africa’s second liberation, and put an end to a cycle of military coups in Ghana interspersed only by brief periods of civilian government. + +More worrying than reminders of democracy’s past corruption are the whiffs of its current decay. A presidential election is to be held on December 7th. But apart from a few billboards, most of them hailing the accomplishments of the incumbent, John Mahama, there are few visible signs that either the ruling National Democratic Congress (NDC) or the opposition New Patriotic Party (NPP) are campaigning vigorously for the support of voters. + +The NPP’s muted campaign is easily explained: it last formed a government eight years ago and its coffers are almost empty. Without a victory this year it will struggle to finance another serious bid for the presidency in four years’ time. + +The NDC’s lackadaisical drive for votes, by contrast, reflects the insouciance of Mr Mahama. Instead of trying to win over voters through a battle of ideas, his party relies on patronage, and on spending money it does not have. Since the NDC came to power eight years ago, spending on civil servants has exploded (see chart), pushing Ghana precipitously close to a debt crisis so severe that it was forced to turn to the IMF for a bail-out last year. Under strict supervision the government has grudgingly brought its spending under control. However, with public debt hovering at about 70% of GDP (and debt repayments accounting for a third of government revenue), its finances are precarious. Worse, it has already squandered the windfalls it expects from the development of large offshore oilfields. The roads are full of potholes, there are regular power cuts and big companies talk openly about moving across the border into Ivory Coast. + + + +The opposition, led by Nana Akufo-Addo, a genteel lawyer and economist, would probably make a better fist of running the country with a mix of market- and investment-friendly policies. But it seems unlikely to be given the chance. “We have one party that is good at winning elections but can’t run the country and another that is good in government but not at winning elections,” laments one businessman. Although the NPP’s instincts are relatively liberal, it has tacked in a populist direction, with slogans such as “one district, one factory” and “one village, one dam”, in a bid to broaden its appeal. + +Polling data are scarce but few reckon the NPP stands much of a chance. It seems to be preparing for defeat by complaining that the election will be rigged. Charlotte Osei, the head of the electoral commission, insists that this will be the cleanest vote in Ghana’s history, but she will face a tough task convincing voters of that. Many complain that the electoral roll has been stuffed with supporters of the ruling party who are ineligible to vote, because they are too young or are not citizens. + +And politics in Ghana can be a grubby business at the best of times. “The 2012 election was won because of me,” boasted one government minister to your correspondent. “I’m the one who did the gerrymandering.” More recently a video has circulated showing Mr Mahama’s motorcade driving through a market with him leaning out of the sunroof of his car handing out wads of cash. At first his spokesman said he was handing out pamphlets, though he was at a loss to explain why they were palm-sized and tightly rolled. He later said the money was compensation for damage to some of the market stalls. + +Such antics might be brushed off as theatre, but elections in Ghana are usually closely fought affairs. The winning margin will probably not be more than a few percentage points, increasing the incentive to cheat or disrupt the vote. If the result is indeed that close it will probably be contested in the courts, making it harder for Ms Osei to convince the losing side that the vote and count were fair. Many in Ghana fret that violence could break out. + +Whichever party wins will have its work cut out, not only in trying to stabilise the economy, but also in tackling some of Ghana’s deeper problems. Foremost among these will be to unpick a highly centralised state in which the president wields almost untrammeled power to make appointments to thousands of important posts. These include municipal and district chief executives (the equivalent of mayors and governors) and heads of supposedly independent institutions, such as the electoral commission and the anti-corruption agency. If Ghana is to live up to its reputation as a beacon of democracy in Africa, it needs to clean itself up. + + + + + +Corruption in Sierra Leone + +Call it in + +Putting technology to work to root out graft + +Nov 19th 2016 | FREETOWN | From the print edition + + + +AT A busy intersection in downtown Freetown, motorbike-taxi drivers wait for customers. They pass the time telling tales of petty corruption. “Yesterday I was chased by two policemen,” says a young man, slouched forward on his bike seat. “They told me I was violating a law when I wasn’t, and confiscated my motorbike. I had to pay 100,000 leones ($18) to get it back.” Two other drivers butt in, eager to trump his story with their own. + +It is not hard to find a Sierra Leonean who has experienced corruption. A survey carried out in 2013 by Transparency International, an advocacy group, shows the country to have the highest rates of bribery in the world. Some 84% of respondents admitted to having paid a bribe. Corruption runs so deep that it is hard to eliminate. + +But at least some are trying. In September the country’s Anti-Corruption Commission (ACC) launched a scheme, in partnership with Britain’s overseas aid ministry, called “Pay No Bribe”. The project provides a hotline, a phone app and a web portal for citizens anonymously to report everyday corruption. The toll-free number goes through to a call centre staffed by two softly spoken young women, Lucy and Jeneba. They sit patiently in front of computers and listen to tinny jazz on their headsets while waiting for calls to come in. + +One afternoon, after 20 minutes of rusty clarinet sounds, Lucy receives a call. It is the piping voice of a ten-year-old girl saying “My teacher locked us in the classroom because we refused to buy soup from her.” When the call is over and the details have been logged, Lucy explains that this kind of complaint is not uncommon: “The teachers bring in foods to sell to the children at lunch and if they don’t have money to buy them then they are made to stay in the classroom and miss their breaks.” + +The girl calling in doesn’t have to give the name of her teacher, just the district in which her school is. This is because the scheme aims to identify areas of high corruption instead of individuals. At the end of each month, complaints go out to relevant ministries and agencies, who then have a further month to come back and describe what action they are taking to improve matters. In the first month 712 reports were filed, half relating to the police. Almost all demands were for cash, though 5% were for sex. + +Though it is encouraging to see that efforts are being made, it will take more than this scheme to have any real impact. Pay No Bribe has yet to create a culture of accountability: few policemen, for example, seem even to have heard of it so far. Sierra Leone looks likely to stay high in the corruption ratings for a while yet. + + + +Europe + + + + + +France’s Republican primary: The veterans + +The Balkans: Clinton-lands + +Russian intrigues: Arresting developments + +Procurement spending: Rigging the bids + +Charlemagne: Iron waffler + + + + + +France’s Republican primary + +The veterans + +The centre-right’s nominee will probably face Marine Le Pen for the presidency + +Nov 19th 2016 | PARIS | From the print edition + + + +WEDGED up against the capital’s ring road, the concert hall was packed, even on a weekday evening. As supporters waved French tricolore flags, a thumping bass beat accompanied their champion onto the stage. But the crowd was warm, rather than electrified. At the souvenir stands, there were few takers for the posters of the 71-year-old candidate. Alain Juppé, the front-runner in the centre-right Republican party’s presidential primary, is not a politician to set pulses racing. As France prepares for its toughest election in over a decade, voters crave something different—but wonder if he is it. + +“I’m here out of curiosity,” says Camille, an 18-year-old law student who will vote next spring for the first time. Mr Juppé seems “calm and reassuring”, she reflects, but she has not yet decided whether she will turn out to vote at the primary, held in two rounds on November 20th and 27th. Jean-Marie Campana, a retired civil servant, prefers Mr Juppé’s unifying message to the “excesses” of Nicolas Sarkozy, a former president and rival candidate. But he says he will probably vote for François Fillon, an ex-prime minister, at the first round. + +France’s Republican primary is unusually important, since the nominee could well end up facing Marine Le Pen, leader of the populist National Front (FN), in the presidential run-off next May. Polls consistently suggest that she will beat whomever the Socialists choose to field on the left. The Republican race is unusually close. Until recently, Mr Juppé was the clear favourite, marking an improbable political comeback. Mayor of Bordeaux, Mr Juppé has recovered from both a conviction for corruption, for which he was struck off the electoral register for a year, and a reputation for arrogance during his time as prime minister in 1995-97. Today, after a well-regarded spell as foreign minister, he fulfils a desire for competence in troubled times. + +Yet this is the first time the Republicans have held an “open” primary, in which any French citizen is allowed to vote. Nobody knows how many will, and pollsters are struggling to measure voting intentions. Mr Juppé’s lead over Mr Sarkozy has begun to narrow. And Mr Fillon has suddenly closed in on both of them; one poll suggests that he would beat either of the others in the second round. “It’s now impossible to say who the two second-round candidates will be,” says Bruno Jeanbart of OpinionWay, a polling group.The candidates are close on economic policy as well as in the polls. Each promises to curb public spending by about €100bn ($107bn) over five years, trim the civil service, end the 35-hour working week and abolish the wealth tax. Of the three leading candidates, Mr Fillon’s programme is the most economically liberal, according to a study by Génération Libre, a think-tank. Among other things, he wants to tear up the labour code—which at 3,280 pages is longer than the Bible. He wants to limit labour law to basic norms and protections, which could be covered in a mere 150 pages. + +The greatest divergence, though, is over how to face the threat from the anti-immigration FN. Mr Sarkozy’s tactic has been to try to chase FN voters onto their own territory. He has threatened to ban the “burkini”, outlaw the Muslim veil at universities and stop state schools serving special pork-free meals. Mr Juppé, by contrast, has struck a calmer, more inclusive note, vowing at his rally in Paris this week “to reconcile the French with the diversity of France”. He has explicitly called on voters disappointed with François Hollande’s Socialist presidency to turn out and back him at the Republican primary. + +The chase for votes on the centre ground, however, is looking increasingly crowded. On November 16th Emmanuel Macron, the 38-year-old former Socialist economy minister, declared that he, too, was running for the presidency. He will not contest the Socialist Party primary in January, but will stand as an independent, under the banner of En Marche! (“On the Move!”), the political movement he launched in April. A former adviser to Mr Hollande, Mr Macron became frustrated that his reform ideas, such as an overhaul of the labour market, were shelved by his own government. This week he promised to “unblock” a country paralysed by “obsolete rules”, and rally “not the left or the right, but the French”. + +Mr Macron’s decision, although expected, has unleashed fury and panic on the left. By dividing the left, said one Socialist deputy, he would bear the “historic responsibility” of preventing it from reaching the second round. His candidacy puts a particular squeeze on Mr Hollande, his former mentor. With an approval rating that has sunk to 4% in one poll, the president’s chances of seeking re-election are fading fast. It also makes things difficult for Manuel Valls, the centre-left prime minister once close to Mr Macron, who will run if Mr Hollande bows out. + +All of this raises the rather improbable prospect of a number of serious contenders campaigning for the French presidency on the centre ground, fighting over moderate voters disappointed by both Mr Hollande and Mr Sarkozy, but repelled by Ms Le Pen. In this space, each candidate is a threat to the other. Mr Juppé and Mr Fillon would each constrict Macron’s ability to draw votes from the centre-right. Both would doubtless dismiss him as an upstart lightweight. Yet Mr Macron, who was born in 1977—the year Mr Juppé first entered politics—could yet make him and Mr Fillon look like political relics. + + + + + +The Balkans + +Clinton-lands + +The end of an era in Kosovo, Bosnia, Serbia and beyond + +Nov 19th 2016 | From the print edition + + + +PRISTINA, the capital of Kosovo, is one of very few places that can boast a statue of Bill Clinton. The gold-painted monument depicts the former American president raising his arm in a gesture meant to evoke leadership, but which more closely resembles hailing a taxi. Ethnic-Albanian Kosovars venerate Mr Clinton for his role in the war that freed their country from Serbian rule and established a UN-administered protectorate in 1999, and led to independence in 2008. But the statue’s gleam has faded and its veneer is beginning to chip—much like the legacy of the Clinton era in the Balkans. + +Just as Mr Clinton shaped the western Balkans during the wars of the 1990s, those wars shaped his foreign-policy views—and those of his wife. The liberal interventionism espoused by Hillary Clinton was forged in the American efforts to bring peace to Bosnia and Kosovo. When backing military action in Libya in 2011, Mrs Clinton invoked the memory of the massacre at Srebrenica in 1995. Balkan countries expected Mrs Clinton to continue her muscular efforts to build an international liberal order if she were elected president. + +Mrs Clinton’s defeat and the victory of Donald Trump herald difficult times for Kosovo and uncertainty in the Balkans at large. Mr Trump’s win has emboldened Russia’s authoritarian president, Vladimir Putin, a friend to Serbia and Serb nationalists in neighbouring Bosnia, and an implacable enemy of Kosovo’s very existence. That in turn may encourage Turkey to wield its influence among Muslims in Bosnia, Kosovo and Albania. Balkan countries’ dreams of becoming fully fledged members of a prosperous and united European Union are beginning to fade. + +In Belgrade a candidate in Serbia’s presidential election celebrated Mr Trump’s victory in America by playing a song in parliament urging the president-elect to expel Muslims and join forces with Mr Putin. In Moldova, Igor Dodon won the presidency on November 13th by boasting of his closeness to Mr Putin and to the Orthodox church, defeating a pro-European, anti-corruption rival. A candidate campaigning on a Russia-friendly ticket won Bulgaria’s presidency on the same day. + + + +Montenegro’s government has accused Russian and Serbian nationalists of plotting to murder its outgoing prime minister, Milo Djukanovic, on October 16th, the day of its elections. The aim, says the government, was to stop Montenegro’s accession to NATO, which is nearly complete. (Some think Mr Djukanovic’s allies made up the story to win votes for his party.) + +Alarmed by Russian muscle-flexing, the region’s Muslims are looking to Turkey’s authoritarian leader, Recep Tayyip Erdogan. On November 14th the new Turkish ambassador to Bosnia delivered a speech emphasising the “common history of our peoples”, an appeal sure to conjure up historical memories of the Ottoman “yoke” among Serbs and Croats. + +Yet those hoping that America’s change of regime will allow them to upset the balance of power bloodily established in the break-up of Yugoslavia in the 1990s may be disappointed. Nationalist Serbs had hopes that George W. Bush, Mr Clinton’s successor, would help them reverse some of their losses in the Balkan wars. Instead, Kosovo declared independence with full American backing during his term. + +One diplomat in the region speculates that the effect of a Trump-Putin friendship will be the reverse of the one that Serbs hope for, causing Russia to lose interest in the region. Mr Putin’s main reason for meddling in the Balkans has been to strike back at Western countries for supporting sanctions against Russia and helping Ukraine. With Mr Trump in the White House, he may have much less cause to retaliate. + +Dimitar Bechev, a Bulgarian academic and author of a recent a book on Russian influence in the Balkans, warns against exaggerating the role of outsiders. Bulgarian and other Balkan politicians exploit networks extending into Russia as sources of influence and cash, especially in the energy business. But for the most part they make decisions based on their own interests, not those of outsiders. + +The problem is that playing pro-Russian cards—or pro-Turkish ones—is generally intended as a distraction from the failure to deal with the urgent tasks of boosting employment and improving schools and health care. It leads countries away from the efforts to build democracy that have been a priority of the EU and, until now, America. + +“From a governance point of view we are falling apart,” says Alida Vracic, a Bosnian analyst at SWP, a German think-tank. Balkan countries’ slow progress towards joining the EU has made matters worse. In their annual reports on western Balkan countries that have yet to join, published on November 9th, the European Commission said none had made much progress towards adhering to the EU’s membership standards. Macedonia is going backwards. + +Unsurprisingly, the populations of the Balkan countries are shrinking. Young people are migrating when they can to more prosperous European countries with brighter prospects. Those who remain are in danger of adopting Mr Putin, Mr Trump or Mr Erdogan as their role models. As Mr Clinton’s statue flakes, so does the allure of the EU and the Western example. + + + + + +Russian intrigues + +Arresting developments + +Corruption charges against a minister signal rising tensions in Russia’s elite + +Nov 19th 2016 | MOSCOW | From the print edition + + + +THEY came for him in the middle of the night. “He was caught red-handed,” said Svetlana Petrenko, deputy head of Russia’s federal anti-corruption agency, as she announced charges against the country’s economy minister. Alexey Ulyukaev is the highest-ranking sitting minister to have been arrested in Russia since Soviet times. Investigators claim he tried to extort a $2m bribe from Rosneft, the state oil company, in exchange for approving its purchase last month of the government’s controlling stake in Bashneft, a mid-sized oil producer. Mr Ulyukaev was placed under house arrest; he pleaded not guilty. + +The minister’s arrest on November 15th, evoking Stalin’s midnight purges, sent shockwaves through Russia’s ruling class. Although regional governors have been arrested in recent months senior federal officials caught in the purge have, so far, only been fired. “Ulyukaev’s arrest creates a new level of tension,” says Kirill Rogov, an independent political analyst. + +Mr Ulyukaev is a technocrat who once served as an aide to Yegor Gaidar, the architect of Russia’s transition to a market economy. He has occupied senior posts in the government and at the central bank since 2000. He was among several Russian officials who at first opposed the sale of Bashneft to Rosneft on the ground that it failed to reduce the share of the economy controlled by the state, which has reached 75%. After Mr Putin approved the sale, Mr Ulyukaev fell into line. + +Rosneft eventually purchased the state’s controlling stake in Bashneft for $5bn. Now the government is discussing plans to “privatise” 19.5% of its shares in Rosneft, which are owned by an umbrella holding company called Rosneftegaz. Rosneft is chaired by Igor Sechin, a confidant of Mr Putin and an influential figure among those in government who are former or present members of the security services, known as siloviki. The company hopes to acquire the shares itself. + +Mr Ulyukaev was arrested in the offices of Rosneft in what appears to have been a sting operation set up by the Federal Security Service (FSB), the secret police. State-run news agencies reported that the FSB had been watching Mr Ulyukaev for more than a year, tracking his electronic communications. In Russia’s centralised governing system, the arrest would almost certainly have needed Mr Putin’s approval. + +Allies and acquaintances were dumbfounded. “This is a complete shock,” wrote Anatoly Chubais, another economic reformer of the 1990s, on his Facebook page. On November 16th security services raided the offices of Rosnano, a state technology company headed by Mr Chubais. + +Vedomosti, a business daily, reports that the security services had also been spying on other liberal-leaning officials, including Andrei Belousov, a presidential economic adviser, and Arkady Dvorkovich, a deputy prime minister and close ally of Dmitry Medvedev, the prime minister. Like Mr Ulyukaev, they opposed selling the government’s stake in Bashneft to Rosneft. The FSB is increasingly becoming the main lever of economic and political power in the country. Oleg Feoktistov, a senior FSB officer known as “General Fix”, initially oversaw the investigation into Mr Ulyukaev. Earlier this year Mr Feoktistov was seconded to Rosneft to oversee its internal security service. Some see the operation as Mr Sechin’s revenge for Mr Ulyukaev’s resistance to the Bashneft takeover. When Vladimir Yevtushenkov, a former owner of Bashneft, refused to sell his firm to Rosneft in 2014, he was put under house arrest until he relented. + +Mr Sechin and the siloviki seem to have been emboldened by the victory of Donald Trump in America’s elections. Dmitry Kiselev, Russia’s propagandist-in-chief, cheered in his weekly news programme: “Words such as ‘democracy’ and ‘human rights’ are absent from Donald Trump’s lexicon.” He contrasted Mr Trump’s stance towards Russia with that of Hillary Clinton, who called some of Russia’s actions in Syria a war crime. Shortly after a telephone conversation between Mr Trump and Mr Putin, Russia relaunched its air strikes against Syria and rescinded its signature of the International Criminal Court’s founding treaty (which it had never ratified). + +Yet recent events in Russia suggest a lack of both strategy and co-ordination. While scorning international norms on the one hand, Russia’s Supreme Court obeyed the ruling of the European Court of Human Rights and dropped criminal charges against Alexei Navalny, Russia’s leading opposition politician and anti-corruption blogger. His case has been resubmitted to a lower court, but for now he is eligible to take part in the presidential elections in 2018. If the Kremlin allows Mr Navalny to run (and lose) against Mr Putin, it could boost the legitimacy of the president. + +Most clearly, Mr Ulyukaev’s arrest demonstrates how insecure even the most senior members of the Russian ruling class have become. Anyone, even a minister, can fall foul of the powers-that-be “at any moment”, says Mr Rogov. Mr Ulyukaev, who is also a prolific poet, may have put it best in one of his verses: “God is a long way off. The bosses are close.” + + + + + +Procurement spending + +Rigging the bids + +Government contracting is growing less competitive, and often more corrupt + +Nov 19th 2016 | From the print edition + + + +IT IS Spain’s biggest corruption case in decades. Last month 37 businessmen and former politicians, including members of the ruling Popular Party (PP), went on trial on charges of fixing the government procurement system to steer construction contracts to their buddies. Frances Correa, the prime suspect, went by the nickname Don Vito, a character in the “Godfather” films. His alleged partners in crime dubbed themselves El Bigotes (“The Moustache”) and El Albondiguilla (“The Little Meatball”). Caribbean holidays and call girls were used as kickbacks, prosecutors say. The PP even produced a PowerPoint presentation to help mayors channel their gains. The cost to the public is estimated at €120m ($130m). + +This kind of corruption is one reason Europeans are growing angry at governing elites. It is also a disturbing indicator of rot at the heart of European governance: all across the European Union, competition for government contracts is falling. According to the Tenders Electronic Daily (TED) database, an archive of 4m purchases by European governments during the past decade, 17% of calls for tender in 2006 received only one bid. By 2015 that figure had risen to 30%. The median number of offers per tender fell from five to three. + +Governments use competitive bidding in procurement both to obtain the best service for the lowest price, and to prevent cronyism and graft. The fewer the bids, the higher the risk of bid-rigging, says Mihaly Fazekas, a corruption expert at Cambridge University. Single-bid contracts are the worst, but even a drop from eight bidders to four increases the risk of collusion. Experts see the drop in the number of bidders per tender as a worrying sign. + + + +The risk is all the greater because of the vast size of Europe’s government procurement market. Overall, EU countries spent €1.9 trillion on procurement in 2015, around a fifth of their GDP. States have been farming out more of their functions to private contractors for decades, partly in hopes of greater efficiency. That imperative has grown stronger in the budget crunches that followed the financial crisis of 2008-2009. Almost all European countries now contract out more than they did in 2007—roughly 20% more in Britain, France and the Netherlands. Yet a bigger share of those contracts is being harvested by just a few companies. According to the Spend Network, a British non-profit group, the top 20 firms’ share of government contracts rose from 10% in 2012 to 14% last year. + +Some of the causes of dwindling competition are innocent. Governments happen to spend a lot on sectors that have been growing more concentrated, such as health care. The total value of health-care mergers and acquisitions in Europe was 60% higher in 2015 than in 2009. Little wonder that the share of single-bid health-care contracts in rich European countries jumped by seven percentage points. Transport and IT show the same pattern. + +Meanwhile, the European Commission has encouraged governments to have departments team up when buying similar goods. Italy is trying to slash the number of purchasing authorities from at least 8,000 to 35. But it takes a big company to fulfil a big contract. According to the TED, tenders worth less than €10m get an average of six bids in rich European countries, whereas those worth €40m-50m get only four. Governments are also giving bidders less time to respond to tenders, which cuts the number who participate. + +I scratch your back + +Other explanations for reduced competition are darker. Bid-rigging may be growing more common. Antonio Capobianco, a competition expert at the OECD, a club of mostly rich countries, thinks that with fewer legitimate opportunities for increasing revenues since the euro crisis, companies may be resorting to dodgy deals. Data compiled by John Connor of Purdue University show that the number of cartels detected in Europe rose from eight per year in the 1990s to 29 in the 2000s, a shift that can only partly be chalked up to better enforcement. Although many Europeans assume such problems are confined to eastern countries, some 60% of the price-fixing cartels discovered between 1990 and 2016 were in western Europe. + +Another theory is a spread of so-called “soft corruption”, where tenders are manipulated in order to award contracts to favoured bidders without technically breaking any laws. Governments may prefer a local firm to a foreign rival or set requirements so that only one supplier can meet them. This year Britain’s Nuclear Decommissioning Authority (NDA) was found to have fudged numbers and shredded vital documents to block an American contractor from winning a £7bn ($8.5bn) tender. + +Other strategies abound. Associates can be alerted to upcoming contracts before the official announcement, or a tender can be issued at an inconvenient time: 50% of Slovenian contracts announced in the week of Christmas received only one bid. Rejecting offers because of typos and charging thousands of euros to download crucial documents work well, too. + +To each according to his greed + +In one egregious case in 2007, Slovakia’s construction ministry issued a €120m tender to provide legal and advertising services, co-financed by EU funds. To ensure that a favoured company won, the ministry posted it only on a bulletin board in a corridor inside one of its own buildings. + +Procurement problems are worst in the EU’s newer members. In many ex-communist countries, single-bid contracts are not the exception, but the rule (see chart 2). In Transparency International’s corruption-perceptions index, where higher scores are better, eastern European countries average 55 out of 100; the rest of Europe rates a 72. Nine Romanian politicians are accused of accepting $50m in bribes for dishing out software contracts. Croatia’s former prime minister and other members of his party are on trial for allegedly taking donations in exchange for state contracts. Indeed, the worst offender on single-bid tenders is Croatia. In 2015 43% of government contracts went uncontested. + +Hungary is worrying, too. Istvan Janos Toth of Corruption Research Centre Budapest (CRCB) scrutinised more than 120,000 calls for tender from 2010 to 2015. He used Benford’s law, a mathematical rule that forensic accountants use to spot potentially suspicious patterns in large data sets. The patterns he found looked different from what would be expected if all was above-board. The effect has intensified since Viktor Orban, who proclaims himself a fan of “illiberal” governance, became Hungary’s prime minister in 2010. + +The overall impact of reduced competition in procurement is hard to calculate. One study by PwC, a consultancy, found that it increased costs by 2% to 15% depending on the sector. A study by Rand, another consultancy, calculated that the annual increase in contract costs due to corruption in the EU was $5 billion. + +Worse, the contracts most susceptible to corruption are those backed with EU funds, which make up about 15% of the total. A CRCB study in Hungary and Czech Republic found that they are significantly more likely to be abused. Governments seem less worried about misspending money from Brussels than that of their own taxpayers. European integration was intended to promote public integrity and competition. In some cases, it seems to be doing the opposite. + + + + + +Charlemagne + +Iron waffler + +Germany and its chancellor are still too hesitant to be able to lead the free world + +Nov 19th 2016 | From the print edition + + + +TO VISIT Berlin is to be confronted at every turn by reminders of the evils that Germans do. Memorials to the Holocaust and other wartime atrocities dot the city. In Kreuzberg, a scruffy-but-hip neighbourhood, posters and leaflets denounce milder German iniquities, from urban gentrification to the Transatlantic Trade and Investment Partnership (TTIP), a hated trade deal between the European Union and America that the election of Donald Trump may have killed for good. + +Outside Germany, though, Mr Trump’s victory has left disaffected liberals gasping for German benevolence. Brexit, the refugee crisis and the rise of drawbridge-up populists across Europe had already punctured the West’s self-confidence. Now, after an election campaign in which Mr Trump trashed immigrants, vowed to rewrite trade deals and threatened to withdraw America’s security guarantee, the West’s indispensable nation appears to have dispensed with itself. Desperate for a candidate to accept the mantle of leader of the free world, some alighted on Angela Merkel, Germany’s chancellor. + +It is easy to see why. Unflappable and patient, dedicated to the freedom she had thrust upon her as a young East German physicist in 1989, Mrs Merkel is a beacon to those who fear the flickering of the liberal flame. She likes markets, trade and good governance. Her commitment to helping refugees fleeing strife in Syria contrasts with the anti-migrant turn elsewhere in Europe. Mr Trump’s victory should extinguish any speculation that Mrs Merkel will not seek a fourth term as chancellor next year in Germany’s federal election; expect an announcement soon. + +Yet anyone expecting Germany to fill America’s shoes will be disappointed. Consider Mrs Merkel’s approach to crisis management, from the euro to Ukraine to refugees. Each played out differently, but Mrs Merkel’s prevarication was consistent: humming and hawing over bail-outs for indebted governments; taking Vladimir Putin at his word before realising he was a liar; reacting to the refugee surge rather than trying to prevent it. For those seeking stability, Mrs Merkel’s taste for hesitation may be a feature, not a bug, but it hardly makes for bold leadership. + +Nor does German assertiveness inside Europe run smoothly. Seventy years after the second world war, protestors in Greece and Spain who resent Germany’s strict approach to fiscal stewardship still resort to Nazi tropes. The occasional attempt to form “anti-austerity” (read: anti-German) axes inside the EU elicits terror in Berlin. The world’s progressives may have loved it, but some in Berlin were uneasy at the chiding tone of Mrs Merkel’s letter of congratulation to Mr Trump, which pledged co-operation on the basis of a commitment to liberal values. “We are protected by our terrible history,” says Joschka Fischer, a former foreign minister. “You cannot say, ‘Make Germany Great Again’.” + +More importantly, Pax Americana has always required American bite. Germany, with a defence budget one-fifteenth that of the United States, no nuclear deterrent and an instinct for pacifism, has neither the ability nor the aspiration to act as the world’s liberal hegemon. This is a country that went through agonies over whether to arm Iraqi Kurds battling Islamic State. Inside Europe, let alone elsewhere, only France and Britain have the ability to project power, and that suits Germans fine. Put bluntly, if Mr Putin’s tanks roll into the Baltics it will not be the Bundeswehr that takes the lead in rolling them back. + +Mrs Merkel’s ambitions are altogether smaller. First among them is to hold together the fracturing EU, via a blend of prayer and policy. Germany is pinning its hopes on France, its eternal partner inside the EU, electing a sane president next year—ideally Alain Juppé, the centre-right front-runner. Franco-German comity should help EU governments find common ground on defence co-operation, the focus of their efforts over the next few months. (Mr Trump’s questionable commitment to NATO should provide another spur.) Should the politics prove propitious, Germany may one day be open to more ambitious schemes, such as greater integration of the euro zone. But grand visions of EU institutional change, let alone a German-led reshaping of the world order, are off the menu in Berlin. The priority is stopping the rot. + +Meanwhile Mrs Merkel, her political capital depleted by the refugee crisis, must hold the line at home. Owing in part to the rise of the anti-immigration Alternative for Germany (AfD) party, the coalition that emerges from next year’s election will probably command a Bundestag majority far smaller than the one Mrs Merkel’s centrist grand coalition enjoys today. That will limit the chancellor’s room for manoeuvre, at home and in Europe. The political fragmentation is also disinterring old questions about Germany’s geopolitical allegiance. The Westbindung (Western integration), a staple of German foreign policy since Adenauer, is fraying as extremist parties on the left and right cosy up to Russia. + +Leading from the mittel + +And what about Mr Trump? For now, Germany retains a touching faith in America’s institutions to rein in the president-elect’s worst impulses. But from his vicious campaign to the chaotic management of his transition, there is every sign that Mr Trump will prove to be another of the erratic politicians, like Silvio Berlusconi and Nicolas Sarkozy, who have tested Mrs Merkel’s patience. Russia is a particular worry. If Mr Trump abandons Ukraine and allows America’s sanctions to wither, Mrs Merkel’s task of maintaining European unity will become almost impossible. + +Germany’s stake in the global liberal order is immense. Its export-led economic model relies on robust international trade; its political identity is inexorably linked to a strong EU; its westward orientation assumes a friendly and engaged America. All of these things may now be in jeopardy, and Germany would suffer more than most from their demise. But do not look to Mrs Merkel to save them, for she cannot do so alone. + + + +Britain + + + + + +Online shopping and business: All that is solid melts into air + +Brexit and public opinion: Fifty-fifty nation + +Prosecuting sex offences: The hardest cases + +Medical records: Patient revolution + +Animal rights: Hunted down + +Britain’s young: Generation Screwed or Generation Snowflake? + +Bagehot: The fourth pillar sways + + + + + +Online shopping and business + +All that is solid melts into air + +Britons do more of their shopping online than almost anyone else. The move to cyberspace is shaking up retail—and many other industries besides + +Nov 19th 2016 | From the print edition + + + +BRITAIN, Napoleon once supposedly scoffed, was “a nation of shopkeepers”. Nowadays it is a nation of online shoppers. The British do a greater share of their retail spending online than almost anyone (see chart). And, in spite of the prospect of Brexit, the industry has been growing fast this year. By 2020 online sales could rise by almost 50% to reach £63bn ($74bn), according to one recent forecast. The transformation in the way households do their shopping is squeezing some industries, while creating whole new ones. + + + +One reason for the take-off of e-commerce in Britain is its geography. Its 65m people are crammed into an area the size of Oregon. From warehouses in central England such as Amazon’s cavernous Peterborough site (pictured), lorries can deliver to almost any household within a day. Another is the penetration of smartphones, which account for a growing share of purchases. IMRG, an industry association for online retailers, reckons that sales through smartphones in Britain increased by 90% from January to September. “Black Friday”, an American pre-Christmas discounting frenzy which has crossed the Atlantic, is expected to see online orders reach new heights on November 25th. + +To succeed in this new game, retail companies have had to become logistics companies. E-commerce relies on parcel management. The number of packages dispatched around the country rose by 13% in just the first nine months of this year. IMRG says that this year British retailers will send out 1.2bn parcels; in 2014 the figure was 920m. The once-ailing Royal Mail, which delivers most of Britain’s post, has been saved largely by its parcel business. + +For years the standard internet model for bricks-and-mortar retailers such as John Lewis has been to set up a giant distribution warehouse (or “fulfilment centre”) in the Midlands, from which fleets of lorries deliver online purchases. The growth in e-commerce has contributed to a rise in the number of warehouses, which now cover 40m square metres (424m square feet) of the country. But the model is evolving. To stand out in a crowded market, e-retailers are competing aggressively on reducing delivery times and windows. On November 16th Morrisons announced that Amazon would begin delivering orders from its supermarkets to customers in and around London within the hour. The desire to provide rapid-delivery services like this is creating demand for warehouse space on the edges of big cities, to be nearer to customers. + +Online retailers have other reasons for wanting to be close to cities. Graze, a snack-delivery firm set up in 2008, bought a unit in Hayes, west London, in 2012. Two million little punnets of food are made up on-site every week from imported ingredients and then shipped to customers in Britain and America. “We are really a tech company,” says Tom Carroll, the chief operating officer, so the company has to be within reach of the tech community in east London. He employs about 30 people to devise the algorithms that track his customers online, to anticipate demand and to ship the punnets out in the most efficient way. + +One consequence of this, argues Kevin Mofid of Savills, an estate agent, is a mismatch between the supply of and demand for warehouses like Graze’s on the edge of London. The political priority is to build homes, which has limited the potential to increase warehouse capacity. Warehouse rents have risen by 17% over the past six years in London, and by 11% in the south-east more generally, squeezing the margins of e-retailers. One idea is to start building mixed developments of homes, industrial space and warehouses. Barratt, a housebuilder, and Segro, an industrial-property developer, have proposed such a plan for another site in Hayes. + +Margins are being pinched further by the legal requirement for online retailers to accept returns from customers within two weeks of sale (which high-street shops are under no obligation to observe, though many do anyway). Generally, about 6% of items are returned, but this can rise to as much as 40% in clothing. This adds further to firms’ costs. But returns now constitute a booming logistics business in their own right. Companies such as iForce now run specialist returns services for retailers such as Tesco and B&Q. Returns make up about a quarter of iForce’s overall logistics business (worth £60m a year), says Neil Weightman, a director. + +With most of the big supermarkets now running successful home-delivery services, the roads are ever more clogged with delivery vans. The number of miles travelled by such vehicles rose by 4% last year, while overall traffic increased by only 1%. Such is the demand for deliveries that there is now a shortage of 45,000 drivers, according to the Road Haulage Association, a lobby group. The work is arduous and poorly paid, with delivery companies competing fiercely on cost. Trucking has thus become another bottleneck. The industry hopes that driverless lorries will one day transform the business. The government announced earlier this year that trials would start on Britain’s roads in 2017. + +As more people shop from home, physical stores are being closed and shop assistants laid off. The retail industry could shed as many as a third of its 3m or so jobs by 2025, according to the British Retail Consortium, a lobby group. Some shops have been reborn as “brand experiences”, to excite people about a product rather than merely to sell it. M&M, a chocolatier, has opened a vast emporium in central London, for customers to sample the “world” of M&M. In a few cases, online retailers have set up bricks-and-mortar stores: last year Boden, a mainly online fashion brand, announced that it would open a string of new physical outlets in Britain and America. + +As Andrew Mulcahy of IMRG says, this is just the beginning of the online shopping revolution. There will be plenty more surprises, and many of them will come to Britain’s click-happy consumers first. + + + + + +Brexit and public opinion + +Fifty-fifty nation + +A new poll finds the public split over Brexit’s trade-offs + +Nov 19th 2016 | From the print edition + + + +THE government is accused of having no plan and of being divided over whether to go for a “hard” or a “soft” Brexit. Yet this may just reflect a division in public opinion. That is the conclusion of a new survey, “What Do Voters Want from Brexit?”, conducted by NatCen Social Research, drawing on a panel interviewed before and after the June 23rd referendum, which voted for Brexit by 52-48%. The panel itself was 51% for Leave and 49% for Remain. + +The panel likes to have its cake and eat it. Large majorities of Leavers and Remainers back policies that seem soft, such as letting EU migrants stay in Britain, allowing banks to sell services across Europe or maximising free trade. But large majorities also support things that look hard, like tougher migration controls, bringing back customs checks and ending free health care for EU visitors. As John Curtice of Strathclyde University, who ran the NatCen poll, puts it, voters want both a soft and a hard Brexit. + +Yet the EU is clear that there must be a trade-off between fuller access to the single market and greater control over EU migrants. Asked if they would accept free movement of people to secure freer trade, the panel was 51-49% against. Differences between Remainers and Leavers were large: Remainers preferred market access to migration controls by 70-29%, but Leavers chose the reverse by 70-30%. + +Other polls find enthusiasm for migration controls falls if it implies any financial loss. And the young are keener on market access and less opposed to migration than the old. Most crucially, Tory voters on the panel preferred migration controls to market access by 60-40%, whereas Labour voters chose the reverse by 65-35%. Since Theresa May is a Tory, this may explain why her government is leaning towards a hard Brexit. + + + + + +Prosecuting sex offences + +The hardest cases + +A report highlights the failings of the police at dealing with crimes such as rape, and proposes greater anonymity for suspects + +Nov 19th 2016 | From the print edition + +Beyond unreasonable doubt + +OVER the past four years Britain has grappled with growing evidence that some of its best-known public figures abused children and other vulnerable people for years with impunity. The police have the difficult job of investigating these decades-old crimes. A review last week of the Metropolitan Police’s work suggests that they have struggled. Its recommendations about how the justice system handles rape hint at the broader problems that make handling such crimes so hard. + +The report, conducted by Sir Richard Henriques, a retired judge, excoriated the capital’s coppers for their handling of Operation Midland, an investigation into the claims by one man that a paedophile ring in Westminster had been responsible for the murders and abuse of children decades ago. The operation lasted more than a year but no charges were brought. Sir Bernard Hogan-Howe, the head of the Met, has apologised for his force’s failings and the harm caused. + +Sir Richard condemned police guidelines instructing officers to “believe” all allegations. Officers should instead, he argued, treat complaints seriously and investigate them “without fear or favour”. He urged police not to disregard false accusations as a “remote” possibility, especially in cases of historic abuse concerning public figures. He also advocated anonymity for suspects until they are arrested, and usually until they are charged, enforced with criminal sanctions. + +Instructing police to “believe” complainants was intended to be an antidote to past problems, says Andy Higgins of the Police Foundation, a think-tank. Many victims are reluctant to report rapes, fearing they will not be believed, especially in the absence of physical injuries. Others dread the judgment of those around them or blame themselves. Officers have to encourage victims of such crimes to come forward while preserving the principle of “innocent until proven guilty”, says Mr Higgins. He fears that the “belief” principle dumbs down the role of the police. + +But eliminating such language may suggest to victims that they will not be taken seriously, says David Tucker of the state-funded College of Policing. The number of recorded rapes has risen in recent years: 36,438 were reported to the police in the year to June 2016, up from 14,443 in the year to March 2006. That has been welcomed as a sign of victims being more willing to report such crimes to the police. No one wishes to reverse that trend. + +Most controversial are Sir Richard’s recommendations about false allegations and anonymity. It is impossible to know how many accusations of rape are untrue. One review by the Ministry of Justice estimated that in 8-10% of instances it proves impossible to verify that a crime took place, but also suggested that the police have an inflated sense of the number of wrongful allegations. In 2013 the Crown Prosecution Service found that between January 2011 and May 2012 there were 5,651 prosecutions for rape and 111,891 for domestic violence; there were just 35 prosecutions for making up false complaints. Wrongful allegations are not all malicious. People may back away from charges for fear of proceeding. Victims may misidentify perpetrators, particularly in cases that date back years. The uncertainty about the extent of false accusations raises doubts about their usefulness as a basis for broader policies. + +Nonetheless, the damage they cause is the spur for calls for anonymity for suspects. Those in favour see an unfair imbalance between the anonymity granted to victims and the spotlight faced by those falsely accused. Harvey Proctor, a former Tory MP wrongly accused of rape and murder in Operation Midland, says he is now homeless and penniless. + +No country offers rape defendants anonymity except Ireland, where it is withdrawn upon conviction. In 2010 the British government mooted and then dropped it. In fact England and Wales has experimented with anonymity before. Between 1976 and 1988 those prosecuted for rape were not named. The policy was abolished after police said it hindered investigations: it hampers appeals for information and prevents police from issuing public warnings. + +The debate points to two underlying problems. The first is a failure to uphold the presumption of innocence. Those acquitted of rape or against whom charges are dropped are by definition innocent. Many are not treated as such. The second is that those who have been raped are seen as damaged or to blame. Without such attitudes, there would be no need for anonymity for victims, says Kate Cook, a law lecturer at Manchester Metropolitan University. Removing such stigmas should be the aim, she argues, rather than extending anonymity to defendants. + + + + + +Medical records + +Patient revolution + +The public get the chance to manage their own medical files + +Nov 19th 2016 | From the print edition + + + +THE news that someone in the National Health Service on November 14th had e-mailed all 1.2m employees, leading the entire system to crash as people clicked “reply all” to complain, will not have surprised those who have followed the woes of IT in the NHS. Efforts to reform the service’s technology, and to manage data generally, have proved as embarrassing as the system itself. “Connecting for Health”, an attempt to impose a national IT system, had to be scrapped in 2013, at a cost of £10bn ($12bn). Care.data, a recent initiative to copy records from local surgeries to a central database, has also been abandoned, wasting £8m. Although people shop and bank on the internet, most do not yet manage their health care online. + +Now, in search of efficiencies and realising its approach to IT is floundering, the government is trying to allow a more bottom-up approach. Since last year, all general practitioners (GPs, or family doctors) have been obliged to allow patients to view their medical records online. From 2018 the same will be true for hospital records. Some private software companies are also stepping in to push for change. + +There is no unified IT system across the NHS. Many hospitals do not even have a full electronic record of patients’ treatment. GPs all use one of four systems but they are not necessarily linked to hospitals. Basic details of each patient, known as a summary care record, are stored centrally. If a patient is brought to hospital unconscious, doctors can usually get access to it, but it is not always useful. + +Healthy folk do not notice this lack of co-ordination (only a tiny proportion of people have accessed their GP records online). But those with chronic conditions get frustrated that records of their multiple appointments with different health-care professionals are not accessible in one place. + +One company pushing to unify access to medical records is called Patients Know Best (PKB). It was founded in 2008 by Mohammad Al-Ubaydli, the son of Bahraini immigrants, who trained as a doctor at Cambridge University but was more interested in technology than in medical practice. His firm is not an electronic records service, but a tool that stitches such records together. Patients authorise their doctors to write in their PKB file, thus creating one centralised record. “We are the Facebook of patient medical records,” says Dr Al-Ubaydli, adding that PKB does not sell its customers’ data as Facebook does. + +He calls this the “Reformation moment” for the health-care industry, in which “the laity get access to their records and can interpret them for themselves”. He is not alone. “Why isn’t everyone doing this?” asks Sam Smith of medConfidential, a medical-data privacy group. Mr Smith is also excited about the way the new companies approach consent for data use. By 2020 the government will require that patients give consent for any use of their data. Rather than the NHS approach requiring patients to opt out if they do not want their data to be shared, in using PKB patients can explicitly opt in if they are happy to pass their data to researchers. + +The need to reduce costs, along with the legal requirements for access to records, has made hospitals pay attention to the idea of how to manage data. In countries with national health services, hospitals are glad to be linked up with primary-care services because it saves them money and improves safety. PKB is paid by each hospital that uses its services. But “If you offer that to an American hospital, they will ask: ‘Why should I give my customer data to a competitor?’” says Dr Al-Ubaydli. + +The software is being used at various sites, including by cancer patients in Sussex and children at Great Ormond Street hospital in London. Zoe Warwick, a sexual-health consultant based in Plymouth, uses it for 350 patients with HIV, to convey test results and co-ordinate their treatment. It has already saved her department time and money. “It could revolutionise the NHS,” she says. “If I could roll this out across the whole trust, I would.” + +The problem is that her NHS trust, like the majority, is constantly in the red. There is no space to stand back and look at what needs changing, she says, because managers are so busy fighting fires. “It needs a brave leader to stop the system, change it, then start it up again.” + + + + + +Animal rights + +Hunted down + +On the trail of an animal-welfare organisation + +Nov 19th 2016 | From the print edition + +Off the leash + +THERE are few more august charities than the Royal Society for the Prevention of Cruelty to Animals. Founded in 1824, the RSPCA claims to be the oldest animal-welfare charity in the world. In a country as sentimental about its pets as Britain is, that gives it clout. + +It is not used, therefore, to being attacked by equally august bodies. But on November 15th a House of Commons environment committee took a swipe at it. The cross-party body of MPs recommended that the RSPCA should stop conducting its own prosecutions in animal-welfare cases. + +By law any person, or any charity, has the right to bring a private prosecution. But in practice most comparable organisations have let the Crown Prosecution Service (CPS) take the lead since it was set up in 1985. Not the RSPCA. Considering itself to be uniquely qualified, and with enough money, to bring prosecutions in its field of expertise, it has continued to do so, and on a large scale. In 2015 it spent £5m ($7m), or about 3% of its budget, on legal fees to secure 1,781 convictions of animal abusers. + +But the RSPCA has made a few enemies along the way. Some, especially in the countryside, believe that its membership is too urban, left-wing and prejudiced against rural pursuits. In particular, the RSPCA has provoked resentment for prosecuting hunts that go after foxes (a pastime which was outlawed in most forms in 2005). In 2012 it secured convictions against two members of the Heythrop Hunt, in the Witney constituency then represented by David Cameron, the Tory prime minister of the day. + +The Countryside Alliance, which lobbied against the bitterly contested hunting ban, argues that the RSPCA faces “massive conflicts of interest”, a charge repeated by the Commons committee. The RSPCA prosecutes cases, but also investigates them, runs political campaigns and fundraises. Tim Bonner of the Countryside Alliance argues that in some cases the standard of the RSPCA’s prosecutions has been “appalling”. Its cases against the hunts were so controversial that last year it promised to hand all such future investigations to the police, who would decide whether to refer them to the CPS. + +Reflecting the political divisions over the hunting ban, the Commons committee divided over its recommendation. It was carried by the five Tories on the committee and one Scottish Nationalist, but opposed by the Labour members. In any case, the committee has no power to enforce its recommendation, and it is unlikely that the government would draft legislation just to prevent the RSPCA from launching prosecutions. So the status quo will probably prevail. If so, the RSPCA’s members will be relieved. So too might be the CPS, which already has plenty of human victims to be taking care of. + + + + + +Generation Screwed or Generation Snowflake? + +Britain’s young are doing better than many think + +Last year the average weekly wage of people aged 22 to 29 grew by 3.5% in real terms, much faster than any age group above them + +Nov 19th 2016 | MANCHESTER | From the print edition + +Looks like nothing’s going to come their way + +OLDIES and middle-aged folk look at “millennials” with pity. People aged 18-30 are stuck in precarious jobs with paltry salaries, goes the thinking, while middle-aged people hog the best jobs and nicest houses. Millennial moping reached new heights after the Brexit referendum in June, when youngsters voted heavily to remain in the European Union, only to be dragged out by their elders. “Generation Screwed” is how some youngsters describe their age-group. Sceptics retort that they are merely unusually prone to whining: “Generation Snowflake” is a better description for these sensitive souls, they say. + +Dig deeper into the data and a more complex picture of the state of Britain’s young emerges. Their incomes are not as bad as some suppose. But the dysfunctional housing market weighs heavily on their standard of living. + +The financial crisis of 2008-09 hit the young hard. Employers slashed recruitment and fired their most junior workers. Youth unemployment rose from a low of 12% in 2001 to a high of 23% in 2011. And as competition for jobs rose, the average weekly wage of a 22- to 29-year-old fell by more than 5% in 2008-12, a worse performance than that of any older age-group. Britons born in the 1980s earn no more than the previous generation did at the same age. + +Yet in Manchester, by some measures Britain’s youngest city (a quarter of the population are in their twenties), people are not so gloomy. “I’m not living off tins of beans,” protests Ben, a graduate student, over a cuppa at North Tea Power, a hipster café. Rent is cheap and finding a job is easy enough, report Dani, 18, and Salim, 21, smoking on the corner of Quay Street in the city centre. Their biggest complaint? “The price of cigarettes.” + +Though the recession hit young Britons particularly hard, they are bouncing back. Youth unemployment has tumbled; Britain’s rate is now among the lowest in Europe. Young folk are dislodging their elders from the juiciest jobs. Since 2011 the proportion of high-ranking occupations (professional jobs, management roles and so on) taken by twentysomethings has risen. + +All this means that in the past year the average pay of 22- to 29-year-olds has grown by 4%, more than that of any older age group. In real terms their pay is still lower than it was before the financial crisis, but other generations are in a similar position. People born in the 1960s and 1970s, for instance, are like millennials in that they too have incomes no higher than their predecessors did at the same age. + +Millennials have also done relatively well out of recent changes to tax and benefits. One paper suggests that welfare changes in 2010-15 boosted the incomes of twentysomethings by 2%, more than almost any other age group (including pensioners, who profited from an increasingly generous state pension). A rise in the personal allowance for income tax helped. And welfare cuts whacked parents and children hardest, leaving young singletons relatively unscathed. + +Over the past couple of decades, the big winners have been the over-60s, who thrive in Britain’s labour market, which favours workers with brains, not brawn (see chart). But compared with everyone else, youngsters’ income growth has been decent enough. So why the whining? + + + +Perhaps the single biggest complaint of young Britons concerns housing—and it is justified. In the past 25 years the rate of home-ownership has fallen among all people of working age. But it is down by a whopping 30 percentage points among 25- to 34-year-olds. Whereas in the early 1990s two-thirds of this age-group owned their own home, nowadays little more than one-third do. Eleanor, a young media worker in Manchester, sighs that unlike her parents she will not have a home of her own by the time she is 30. + +Some youngsters are delaying the purchase of a house out of choice. One reason is that they are more mobile than previous generations. And research shows that the desire to own a home is influenced by the decision to tie the knot. Britons marry eight years later than they did in the 1970s, which has pushed down homebuying among youngsters. + +But other factors keep would-be buyers out of the market. Britain’s housing stock is not keeping up with demand, pushing up prices. The average home now costs twice what it did in 2000. Oldies compound the problem, since they hog what is already built. The proportion of “under-occupied” households—with two or more spare bedrooms—in England increased from 6m to 8m in the two decades to 2015. + +This means that youngsters have to be rich or lucky to get on the housing ladder. The average first-time buyer now has an average household income of £40,000, or $50,000 (the average for the whole country is £25,000). The “Bank of Mum and Dad” is now involved in a quarter of all mortgage transactions. For well-off youngsters, there is little reason to moan. Among their peers, pricey housing may explain why so many feel gloomy in spite of improving job prospects. + +This article appeared in the Print Edition with the headline: Generation Screwed or Generation Snowflake? + + + + + +Bagehot + +The fourth pillar sways + +Donald Trump’s presidency will force Britain to grow up about the “special relationship” + +Nov 19th 2016 | From the print edition + + + +“MARGARET THATCHER here.” “If I were there, Margaret, I’d throw my hat in the door before I came in,” replied Ronald Reagan. It was October 26th 1983. The United States had just entered Grenada, a Commonwealth island-state in the Caribbean. The prime minister had opposed any action, but just woken to the news that American marines had invaded while London slept. In the now-public transcript of the ensuing call, the brutal architecture of what Britons like to call the “special relationship” is laid bare, Reagan’s polite superiority crackling and sparking on the phone line like a faraway thunder storm. + +For America, the alliance has long rested on three pillars. One: the historical links and shared values between the two countries. Two: the chemistry between their political and cultural elites. Three: the case-by-case alignment of their interests. All of which puts Britain in an inner circle of American allies, along with Canada, Israel, Germany, Japan and Australia. + +For some excitable politicians in London, however, that is not enough. For them, a fourth pillar exists: a common foreign-policy doctrine evolving in lockstep; a bubbling elixir of mutual admiration. This odd blend of chest-puffing arrogance and simpering insecurity is writ large in talk of Britain being “Greece to America’s Rome” (as a few old fossils still put it) and using its place in Washington to “punch above its weight”. Popular among those Eurosceptics who cherish an “Anglosphere” of like-minded English-speaking nations, it imagines a Britain not just whispering to America at the summit table, but staying up late with it afterwards, sipping scotch in wing-backed chairs and surveying the geopolitical horizon. + +The belief in this fourth pillar waxes and wanes, but is always present. It was there in Thatcher’s disappointment during her call with Reagan in 1983, in Tony Blair’s confidence in his ability to shape the Bush administration’s response to the September 11th attacks, in Gordon Brown’s humiliating dash through the basement kitchens of the UN in 2009 to buttonhole Barack Obama about the financial crisis. Yet every time the fourth pillar has crumbled before their eyes, British panjandrums have reacted with fresh shock. They did so when Bill Clinton granted a visa to Gerry Adams (a militant Irish Republican) in 1994, when George W. Bush ignored Mr Blair’s entreaties about Israel’s invasion of Lebanon in 2006 and when Mr Obama upbraided David Cameron about the BP oil spill in the Gulf of Mexico during a visit to Washington in 2013. + +Donald Trump’s election has exemplified this inability to learn lessons. Britain’s press responded with a symphony of British exceptionalism: Mr Trump would be sympathetic; Britain might even join NAFTA; the Trump administration would stand behind it in the coming Brexit talks. In a speech on November 14th Theresa May drew flattering comparisons between Britain’s vote to leave the EU and America’s election shock (both, she deduced, corroborated her argument that globalisation needs saving from itself). Meanwhile Boris Johnson skipped an emergency summit of EU foreign ministers to accuse them of a “whinge-o-rama” about a “liberal guy from New York”. When Nigel Farage, a prominent Brexiteer with close links to the American alt-right networks that helped propel Mr Trump to victory, met the president-elect on November 13th various mainstream British voices suggested that he might become a conduit between 10 Downing Street and the White House. American politics may have experienced its greatest earthquake in decades, but still Britain’s cocky-nervous delusions prevail. + +Soon, reality will dawn. For it seems that the Trump era will be dominated by brute national interests. And it is far from clear why that should mean America doing a trade deal with Britain ahead of other countries, why the incoming administration might rein in its otherwise protectionist impulses to help Britain forge other trade agreements, why a White House led by Mr Trump would help London apply pressure on the continental Europeans, or what leverage Mrs May has to curb Mr Trump’s pro-Russian instincts. Or why—when the incoming president has long railed against Europeans freeloading on his country’s armed forces—the transatlantic partnership can satisfactorily substitute for Britain’s nascent defence partnerships in the EU. + +All of which could shove Britain back into the arms of continental Europe. An impetuous, inward-focused Washington only makes Britain’s allies in Berlin, Brussels and Paris more important (witness the exaggerated horror in the press about a BBC television interview with Marine Le Pen, a far-right politician with a shot at becoming France’s next president). Mr Trump’s alarmingly conditional commitment to NATO makes the EU defence structures so maligned by Brexiteers look wiser. The flimsy talk of “Anglosphere” values will probably ebb away as the incoming American president makes Britain feel ever-more European. Brexit will come to look more, not less, short-sighted. + +Don ask, Don tell + +To be sure, Britain needs to do what it can to build links with the next White House. Britain’s military and intelligence complexes remain integrated with America’s. Pillar One of the alliance still matters—and is in jeopardy, Mr Trump having questioned the rules-based, institutional world order that has bound the two countries and their allies together for decades. So does Pillar Two: Mrs May, Mr Johnson and their advisers have all been rude about the president-elect and must now patch up the relationship. But the basic truth remains. Mr Trump will probably be an unabashed Pillar Three president, enraptured by the national interest and unmoved by transnational affinities. His presidency will thus expose Pillar Four as the sentimental chimera it has always been. If the next years do not teach Britons about the mercurial reality of the special relationship, it is hard to imagine what will. + +Economist.com/blogs/bagehot + + + +International + + + + + +Global politics: League of nationalists + + + + + +Global politics + +League of nationalists + +All around the world, nationalists are gaining ground. Why? + +Nov 19th 2016 | BEIJING, BUDAPEST, CAIRO, DELHI, ISTANBUL, MARGATE AND PARIS | From the print edition + + + +AFTER the sans culottes rose up against Louis XVI in 1789 they drew up a declaration of the universal rights of man and of the citizen. Napoleon’s Grande Armée marched not just for the glory of France but for liberty, equality and fraternity. By contrast, the nationalism born with the unification of Germany decades later harked back to Blut und Boden—blood and soil—a romantic and exclusive belief in race and tradition as the wellspring of national belonging. The German legions were fighting for their Volk and against the world. + +All societies draw on nationalism of one sort or another to define relations between the state, the citizen and the outside world. Craig Calhoun, an American sociologist, argues that cosmopolitan elites, who sometimes yearn for a post-nationalist order, underestimate “how central nationalist categories are to political and social theory—and to practical reasoning about democracy, political legitimacy and the nature of society itself.” + + + +It is troubling, then, how many countries are shifting from the universal, civic nationalism towards the blood-and-soil, ethnic sort. As positive patriotism warps into negative nationalism, solidarity is mutating into distrust of minorities, who are present in growing numbers (see chart 1). A benign love of one’s country—the spirit that impels Americans to salute the Stars and Stripes, Nigerians to cheer the Super Eagles and Britons to buy Duchess of Cambridge teacups—is being replaced by an urge to look on the world with mistrust. + +Some perspective is in order. Comparisons with the 1930s are fatuous. Totalitarian nationalism is extinct except in North Korea, where the ruling family preaches a weird mixture of Marxism and racial purity, enforced with slave-labour camps for dissidents. And perhaps you could add Eritrea, a hideous but tiny dictatorship. Nonetheless, it is clear that an exclusive, often ethnically based, form of nationalism is on the march. In rich democracies, it is a potent vote-winner. In autocracies, rulers espouse it to distract people from their lack of freedom and, sometimes, food. The question is: where is it surging, and why? + +The most recent example is Donald Trump, who persuaded 61m Americans to vote for him by promising to build a wall on the Mexican border, deport illegal immigrants and “make America great again”. Noxious appeals to ethnic or racial solidarity are hardly new in American politics, or restricted to one party. Joe Biden, the vice-president, once told a black audience that Mitt Romney, a decent if dull Republican, was “gonna put y’all back in chains”. But no modern American president has matched Mr Trump’s displays of chauvinism. That no one knows how much of it he believes is barely reassuring. + +His victory will embolden like-minded leaders around the world. Nigel Farage of the UK Independence Party (UKIP), the politician most responsible for Brexit, has already visited Mr Trump, greeting him with a grin wide enough to see off the Cheshire cat. Viktor Orban, Hungary’s immigrant-bashing prime minister, rejoiced: “We can return to real democracy... what a wonderful world.” + +The consequences for the European Union could be disastrous. In France pollsters no longer dismiss the possibility that Marine Le Pen, the charismatic leader of the National Front (FN), could be elected president next year. Compared with other Europeans, French voters are strikingly opposed to globalisation and international trade, and few think immigrants have had a positive effect on their country (see chart 2). Ms Le Pen promises that she would pull France out of the euro and hold a “Frexit” referendum on membership of the EU. The single currency might not survive a French withdrawal. And if French voters were to back Frexit, the EU would surely fall apart. + + + +The rush for the exit + +European elites once assumed that national identities would eventually blend into a continental bouillabaisse. But the momentum is now with parties like the FN, including Hungary’s Fidesz, Poland’s Law and Justice party and Austria’s Freedom Party (one of whose leaders, Norbert Hofer, could win Austria’s largely ceremonial presidency next month). Ms Le Pen’s language is typical. She caters to nostalgia, anxiety and antipathy to the liberal international order. (“No to Brussels, yes to France”, goes one slogan.) She laments the decline of a proud people and vows to make France great again. + +Unlike Mr Trump, Ms Le Pen has never called for a ban on Muslims entering the country; rather, she talks about curbing the “gigantic wave” of immigration. A lawyer by training, she defends her arguments with reference to France’s rules on keeping religion out of public life. Yet her voters are left in little doubt as to which sorts of immigrants she disapproves of, and whom she counts as French. An FN campaign poster for regional elections in 2015 showed two female faces: one with flowing hair and the French tricolour flag painted on her cheeks, the other wearing a burqa. “Choose your neighbourhood: vote for the Front”, ran the text. + +Ms Le Pen’s popularity has dragged other politicians onto similar territory. Nicolas Sarkozy, a centre-right former president, wants the job again. As soon as you become French, he declared at a recent campaign rally, “your ancestors are Gauls.” At another, Mr Sarkozy said that children who did not want to eat pork at school should “take a second helping of chips”—in other words, that it was up to non-Christians whose religions impose dietary restrictions to make do with the food on offer, not up to schools to accommodate them. France is witnessing a “defensive nationalism”, says Dominique Moïsi of the Institut Montaigne, a think-tank, “based on a lack of confidence and a negative jingoism: the idea that I have to defend myself against the threat of others.” + +Something similar is on the rise elsewhere in Europe, too. In 2010 the Sweden Democrats (SD), a nationalist party, put out a television ad that captured the popular fear that Sweden’s generous welfare system might not survive a big influx of poor, fertile Muslim asylum-seekers. An elderly white woman with a Zimmer frame hobbles down a dark corridor towards her pension pot, but is overtaken by a crowd of burqa-clad women with prams, who beat her to the money. At least one channel refused to air it, but it spread online. Polls suggest the SD is now one of Sweden’s most popular parties. + +In the Netherlands Geert Wilders, the leader of the anti-Muslim, anti-immigrant Party for Freedom, is on trial for “hate speech” for goading his audience to chant that it wanted “fewer Moroccans” in the country. Polls put his party in first or second place in the run-up to the national election in March; its popularity has risen since the start of the trial. + +Britain’s vote in June to leave the EU was also the result of a nationalist turn. Campaign posters for “Brexit” depicted hordes of Middle Eastern migrants clamouring to come in. Activists railed against bankers, migrants and rootless experts; one of their slogans was “We want our country back”. After the vote David Cameron, a cosmopolitan prime minister, resigned and was replaced by Theresa May, who says: “If you believe you’re a citizen of the world, you’re a citizen of nowhere. You don’t understand what the very word ‘citizenship’ means.” + +Even before Britain has left the EU, the mere prospect has made the country poorer: the currency is down 16% against the dollar. Still, few Brexiteers have regrets. In Margate, a seaside town full of pensioners, it is hard to find anyone who voted to remain. Tom Morrison, who runs a bookshop, says: “[We] should be allowed to make our own laws…At least our mistakes will be our own mistakes.” + +Clive, a taxi driver, is more trenchant. “All the Europeans do is leech off us. They can’t even win their own wars,” he says. He is glad that Mrs May has promised to reduce immigration: “We just physically haven’t enough room for them…The schools are overfilled with foreigners.” He adds that some of them are hard workers, but “in Cliftonville [next to Margate], you might as well be in Romania. A lot of them are gypsies.” Asked if being British is important to him, he declares a narrower identity: “It’s being English. English.” + +Vladimir Putin, Russia’s president, is not sure what to make of Mr Trump. Though he doubtless welcomes Mr Trump’s promise to reset relations with Russia, if America ceases to be the enemy, he will need another one. Mr Putin’s core belief is in a strong state led by himself, but since he first took power in 2000 he has harnessed ethnic nationalism to that end. In 2011 he faced huge protests from an urban middle class angry about both corruption and uncontrolled immigration by non-Slavic people. He responded by whipping up imperial fervour. When Ukraine sought to move closer to the West, he then annexed Crimea and invaded Eastern Ukraine. State media portrayed him as saving ethnic Russians from (historical) “Ukrainian fascists”. + +With oil prices low, and after a long spell in the economic doldrums, nationalism is Mr Putin’s way of remaining popular. His version involves rejecting the universal, liberal values that the West has long promoted. That is why he so eagerly supports illiberal nationalist parties in Western Europe, such as Ms Le Pen’s FN. “We see how many Euro-Atlantic countries are in effect turning away from their roots, including their Christian values,” he said in 2013. He contrasted this with an ethnically defined version of Russia as “a state civilisation held together by the Russian people, the Russian language, Russian culture and the Russian Orthodox Church”. + +In China a similarly ethnic, non-universalist nationalism is being pressed into service by the Communist Party (see Briefing). The party seeks to blur the distinction between itself and the nation, and to prop up its legitimacy now that economic growth, long the main basis of its claim to power, has slowed. Soon after becoming president in 2012, Xi Jinping launched the “Chinese Dream” as a slogan to promote the country’s “great revival”. A “patriotic education” campaign extends from primary school all the way up to doctoral students. + +The government often blames “hostile foreign forces” for things it does not like, including protests in Hong Kong or Xinjiang, a far-western province where Uighurs chafe against Han rule. State television tries to make other countries look stupid, dangerous or irrelevant. Anti-Western rhetoric has been stepped up. In 2015 China’s education minister called for a ban on “textbooks promoting Western values” in higher education. + +China’s glorious victory over Japan has become central to history lessons (though in fact it was the communists’ rivals, the Kuomintang, who did most of the fighting). In 2014 three new national holidays were introduced: a memorial day for the Nanjing massacre, commemorating the 300,000 or so people killed by the Japanese there in 1937; a “Victory Day” to mark Japan’s surrender at the end of the second world war; and “Martyrs’ Day” dedicated to those who died fighting Japan. + +My enemy’s enemy + +Perhaps unsurprisingly, given the jingoism, many Chinese now see international affairs as a zero-sum game, believing that for China to rise, others must fall. A recent poll by Pew found that more than half of those asked reckoned that America is trying to prevent China from becoming an equal power; some 45% see American power and influence as the greatest international threat facing the country. Chinese antipathy towards the Japanese has also increased considerably. + +The propaganda has been so effective that the government is no longer sure that it can control the passions it has stoked. In 2012 protests erupted across China against Japan’s claims to islands in the East China Sea: shops were looted, Japanese cars destroyed and riot police deployed to protect the Japanese embassy in Beijing. The government now censors the angriest online posts about nationalist topics. + + + +Abdel-Fattah al-Sisi, Egypt’s authoritarian president, uses all the resources of the state to promote the idea that he is the father of his country. His regime blames Islamists for everything: when heavy rains caused flooding in Alexandria last year, the interior ministry blamed the Muslim Brotherhood, a banned Islamist group, for blocking the drains. Last summer, after splurging $8bn on expanding the Suez Canal, he declared a public holiday and sailed up the waterway in full military regalia, as warplanes flew overhead. State television broadcast shots of the new canal to the bombastic theme tune of “Game of Thrones”, a television show. + +A similar story is playing out in Turkey, a country that only a few years ago appeared firmly on course to join the EU. Now its president, Recep Tayyip Erdogan, vows to build a “New Turkey”, bravely standing up to coup-plotters and their imaginary Western enablers. He recently attended a mass rally celebrating the conquest of Constantinople in 1453. He accuses Turkey’s duplicitous Western allies of trying to “pick up the slack of crusaders”. Such rhetoric is intended to justify the arrests of 36,000 people since a coup attempt in July. + +In India ethnic nationalism, never far beneath the surface, is worryingly resurgent. Since 2014 the country has been ruled by Narendra Modi of the Hindu-nationalist Bharatiya Janata Party (BJP). The party seeks to distance itself from radical Hindutva (Hindu nationalist) groups, which criticise it as “soft” on Pakistan, Muslims and those who harm cows (which are sacred to Hindus). And Mr Modi is urbane, pro-business and friendly towards the West. But he is also a lifelong member of the RSS (National Volunteer Organisation), a 5m-strong Hindu group founded in 1925 and modelled loosely on the Boy Scouts. + +Members of the RSS parade in khaki uniforms, do physical jerks in the morning, help old ladies cross the street, pick up litter—and are occasional recruits for extremist groups that beat up left-wing students. And last year Mr Modi’s minister of culture, Mahesh Sharma, said that a former president was a patriot “despite being a Muslim”. The minister remains in his job. + +Hindutva purports to represent all Hindus, who are four-fifths of India’s population. It promises a national rebirth, a return to an idealised past and the retrieval of an “authentic” native identity. Its adherents see themselves as honest folk fighting corrupt cosmopolitans. They have changed India’s political language, deriding “political correctness”, and calling critical journalists “presstitutes” and political opponents “anti-national”. The RSS also exerts huge sway over education and the media. Some states and schools have adopted textbooks written by RSS scholars that play up the role of Hindutva leaders and marginalise more secular ones. + +The BJP has made a big push to control the judiciary by changing rules for appointments, but has met strong resistance. It does not control most states in the east and south. Many of the educated elite despise it. And banging on too much about Hinduism and not enough about the economy is thought to have cost it a state election in Bihar last year. + +So India will not slide easily into Turkish-style autocracy—but plenty of secular, liberal Indians are nervous. The police, especially, are thought to favour the ruling party. A reporter nabbed by cops for the “crime” of filming angry crowds outside a bank in Delhi this week says they threatened him with a beating and said: “Who gave you permission to film? Our government has changed; you can’t just take pictures anywhere you like any more.” + +Nations once again + +Inquiring after the roots of nationalism is like asking what makes people love their families or fear strangers. Scholars have suggested that nations are built around language, history, culture, territory and politics without being able to settle on any single cause. A better question is: what turns civic nationalism into the exclusive sort? There are several theories. + +In rich countries, pessimism plays a role. As chart 3 shows, slower growth lowers support for globalisation. Inequality hurts, too. Educated people may be doing just fine, but blue-collar workers are often struggling. Mr Trump did remarkably well among blue-collar white voters. One of the best predictors of support for Brexit or Ms Le Pen is a belief that things were better in the past. + +In developing countries, growth is often faster and support for globalisation higher. But people still have woes, from rapacious officials to filthy air. For the new-nationalist strongmen such as Mr Sisi and Mr Putin, nationalism is a cheap and easy way to generate enthusiasm for the state, and to deflect blame for what is wrong. + +The new nationalism owes a lot to cultural factors, too. Many Westerners, particularly older ones, liked their countries as they were and never asked for the immigration that turned Europe more Muslim and America less white and Protestant. They object to their discomfort being dismissed as racism. + +Elite liberals stress two sources of identity: being a good global citizen (who cares about climate change and sweatshops in Bangladesh) and belonging to an identity group that has nothing to do with the nation (Hispanic, gay, Buddhist, etc). Membership of certain identity groups can carry material as well as psychological benefits. Affirmative action of the sort practised in America gives even the richer members of the racial groups it favours advantages that are unavailable to the poorer members of unfavoured groups. + +Nationalists dislike the balkanisation of their countries into identity groups, particularly when those groups are defined as virtuous only to the extent that they disagree with the nation’s previously dominant history. White Americans are starting to act as if they were themselves a minority pressure group. + + + +Lastly, communication tools have accelerated the spread of the new nationalism. Facebook and Twitter allow people to bypass the mainstream media’s cosmopolitan filter to talk to each other, swap news, meet and organise rallies. Mr Trump’s tweets reached millions. His chief strategist, Steve Bannon, made his name running a white-nationalist website. + +For Mrs May’s “citizens of nowhere”, all this is deeply worrying. But they should not despair. Liberals can use social media, too. Demagogues fall from favour when their policies fail to bring prosperity. And demographic trends favour pluralism. + +In many countries the university-educated population—typically cosmopolitan in instinct—is rising. In the post-war period about 5% of British adults had gone to university; today more than 40% of school-leavers are university-bound. In Germany 2m citizens were in tertiary education in 2005; a decade later that number had risen to 2.8m. The share of 18- to 24-year-old Americans in that category rose from 26% in 1970 to 40% in 2014. + + + +And immigration, which has done much to fuel ethnic nationalism, could, as generations are born into diverse societies, start to counter that nationalism. The foreign-born population of America rose by almost 10m, to 40m in the decade to 2010. In Britain it rose by 2.9m, to 7.5m, in the decade to 2011. Western voters aged 60 and over—the most nationalist cohort—have lived through a faster cultural and economic overhaul than any previous generation, and seem to have had enough. Few supporters of UKIP and the FN are young; the same is true for Alternative for Germany, another anti-immigrant party (see chart 4). + +But youngsters seem to find these changes less frightening. Although just 37% of French people believe that “globalisation is a force for good”, 77% of 18- to 24-year-olds do. The new nationalists are riding high on promises to close borders and restore societies to a past homogeneity. But if the next generation holds out, the future may once more be cosmopolitan. + + + +Business + + + + + +Tata Group: Clash of the Tatas + +Donald Trump and American energy: Polluting the outlook + +Mining: Vein hope + +Samsung buys Harman: Amp my ride + +Corporate Italy: Seize the day + +Consumer goods: Pot of gold + +Schumpeter: Uncertain business + + + + + +Tata Group + +Clash of the Tatas + +India’s biggest firm adds internal strife to its long list of problems + +Nov 19th 2016 | MUMBAI | From the print edition + + + +COMPANY bosses who get the sack react in different ways: some quietly leave, others graciously wish their successor luck, most try to nurse hurt pride as best they can. Not Cyrus Mistry, who on October 24th was ousted as chairman of the Tata Group, India’s biggest conglomerate. Bemused and angered at having his predecessor, Ratan Tata, suddenly seize back control, he has refused to go. The schism at the heart of Tata has drawn attention to what made it possible in the first place: an overly complex structure trying to oversee too many businesses, deficient corporate governance and a penchant for opacity. Whether these problems are addressed, and how, will shape the group and its reputation for decades to come. + +Tata’s reasons for sacking Mr Mistry are unclear. He is from a family that has had a nearly 20% shareholding in the group for decades (most of the other shares are controlled by charities that are chaired by Mr Tata). Allies say that after four years in the job, Mr Mistry had got to grips with the inner workings of the company. He was ready to start changing it. + +His critics, on the other hand, never believed that any executive could hope to turn around a conglomerate that has multiple misfiring subsidiaries in industries ranging from fertilisers to luxury hotels, cars and power generation. Mr Mistry had a team that many considered unimpressive. Few who know Tata were surprised that he made only plodding progress. + +Yet not even the firm itself seems to know exactly why it dumped him when it did. It has accused him of paying too little heed to Tata’s reputation for doing business in a socially responsible fashion, but also of doing too little to change things to boost profits. He also stands charged with being overly controlling; yet Tata Group has briefed that he gave its subsidiaries too much freedom. Most Tata companies are independent, listed firms in which Tata has only a 25-30% shareholding. All of these allegations of various kinds of incompetence on the part of Mr Mistry sit awkwardly with glowing performance reviews accepted by Tata Group’s board in June, according to minutes seen by The Economist. + + + +All sides now at least seem to agree about how the group is performing. Two businesses, Jaguar Land Rover (JLR), a maker of high-end cars, and Tata Consultancy Services (TCS), an IT services company, are generating enough profits and dividends to keep the group buoyant. But at least five businesses—steel, Tata’s Indian-made cars and trucks, power generation, an upscale hotel group and a smallish mobile-telephony arm—either lose money or soak up capital without producing good returns. + +Mr Mistry has a point when he says he inherited the problems from his expansion-minded predecessor. And some progress came on his watch. He sold part of the British steel business (to Tata old-timers’ deep chagrin, apparently, despite its steep losses). The telecoms operation was overhauled, ready for some form of industry consolidation, new bosses were brought in and so on. But he shied away from a radical redrawing of the boundaries of a sprawling group. Still, it is plausible that Mr Tata and his allies would in any case have stopped him. Mr Tata is now only an interim boss—he has promised to find a successor to take over the chairmanship of the holding company by the end of February—but he will continue to wield sway from atop the charities that control it. + +Regardless of the true reasons for his ousting, Mr Mistry has befuddled his adversaries. They had expected him to depart in “the Tata way”: quietly and without fuss. He had not granted a single interview to the media during his time as chairman. Instead he wrote to the board alleging several instances of improper conduct around accounting and other matters. Three weeks on, none of the substantive charges Mr Mistry laid out has been conclusively addressed. The securities regulator is reportedly taking an interest. Even though not formally announced, it is a humiliation for the company and for the business grandees on its various boards. + +Broad failures of corporate governance emerge from Mr Mistry’s claims. Mr Tata, who has no children and was the first Tata to have a non-family member succeed him, appears to have found a way to get more and more important decisions sent to the board. Here, his allies apparently agreed to do his bidding, including Mr Mistry’s sacking. A cheap-car project that Mr Tata had launched, for example, would have been ended had it not been for his intervention, and it continued making losses. Most seriously, Mr Mistry has suggested that the company has avoided taking write-downs required by accounting rules, of a whopping $18bn, notably in the steel business. The firms involved say that their numbers are correct. + +Mr Mistry is trying to stay on as chairman of the operating companies even after his removal from the group. The boards of some of the large subsidiaries, such as Tata Motors (owner of JLR) and the hotels division, have defied Tata and given their support to Mr Mistry. The parent firm did manage to evict him from TCS’s board, because it owns a majority of it, unlike most of its other big group companies. + +The accidental activist + +Some people would welcome his continued presence. “He’s like an activist shareholder in a group that badly needs it, good luck to him,” says a senior Mumbai banker. But he may not be able to hang on for much longer than a few weeks. Even if the various companies’ directors have so far let him stay on as chairman, Tata can use its stakes in the firms, with the help of its allies, to boot him off boards entirely. There are plans to do just that in a series of extraordinary general meetings. + +And Tata has plenty of levers to get its way. It could strip the subsidiaries of the right to use its valuable brand—it has done this at least once in the past. Although the group is loth to admit it, the central holding company implicitly guarantees the debts of the operating entities that are listed. The troubled ones, such as the telecoms or power-generation units, would pay far more to borrow without its support. In one of its letters, Tata alludes none too subtly to the extra creditworthiness it gives. But kicking out subsidiaries in a sort of break up would please no one but Tata’s rivals. + +A compromise is possible. Some businesspeople in Mumbai reckon that the government will not stand by idly for much longer, and that it could force a truce. Mr Mistry won’t get his job back, but the group might agree to ease out Mr Tata not only from the chairmanship of the holding company but also from his position on top of the charities through which he appears to control Tata Group. + +No less may be necessary to attract a successor to the top job. Few in Mumbai expect that Tata will bring in an outsider to grapple with its problems. Many reckon that Natarajan Chandrasekaran, who is thought to have done well running TCS since 2009, is a likely candidate. Then Mr Tata will have to decide how to treat his successor. The experience of Mr Mistry’s last weeks, during which the mild-mannered Indian executive turned into something like an American-style corporate raider, might just be enough to persuade him to let the new chairman lead. + + + + + +Donald Trump and American energy + +Polluting the outlook + +Mr Trump may slow but not derail America’s clean-energy transition + +Nov 19th 2016 | From the print edition + +So they hope + +IT WAS on November 16th that the International Energy Agency (IEA), an organisation that represents oil- and gas-consuming countries, announced its prediction that over the next quarter of a century renewable energy, such as wind and solar, and natural gas will hugely eclipse the traditional role that coal and oil have played in satisfying the world’s growing demand for energy (see chart). That is the base case for what it says is a powerful shift in the global energy landscape towards cleaner fuels. + + + +The trouble is that after the projections were calculated, Donald Trump, who is both a climate sceptic and a fossil-fuel fan, was elected as America’s next president. As Fatih Birol, the IEA’s executive director, pointed out this week, no one knows what his energy policies will be. Yet he will run the world’s biggest producer and consumer of oil and natural gas. + +Many green-energy enthusiasts are bracing for the worst. Mr Trump has chided Barack Obama’s administration for trying to “kill the coal industry” and tying up oil-and-gas companies with environmental red tape. Though he supports renewables, he insists it will not be at the exclusion of dirtier forms of energy. + +Whoever becomes his new secretary of the interior and his energy secretary, the incoming officials are expected to be strong advocates of further opening federal lands to oil, gas and coal production. Mr Trump has also suggested that TransCanada, an Alberta-based firm, renew an application to build the fourth phase of the Keystone XL pipeline project bringing Canadian crude across the border, which was blocked by Mr Obama last year. + +On the campaign trail, he said one of his first energy priorities would be to rescind the current president’s executive actions, such as the 2013 Climate Action Plan, which aims to regulate emissions from power plants. To cap it all, he wants to pull out of last year’s Paris agreement to tackle global warming. + +Though Mr Trump can unwind many domestic environmental regulations, analysts say he may find his hands tied by market forces, by the limits to federal power and by the fact that energy investments can take decades to pay, making it unwise for owners of power plants, oil-and-gas fields, and pipelines in America to dismiss the clean-energy revolution. First, his desire to open up what he says may be $50 trillion-worth of oil and gas reserves under federal lands will depend on oil prices. Even with lower regulatory costs, oil prices still need to rise well above $50 a barrel to make most drilling in America economic. Now, there is too much oil, not too little. + +Low oil prices may also make the Keystone pipeline a non-starter for commercial reasons, because crude from Canada’s tar sands is fiendishly expensive to extract. Moreover, were Mr Trump to succeed in stimulating shale-gas production, his task of rescuing the coal industry would become harder. Utilities may find it cheaper to burn gas rather than coal. + +Although Mr Trump can swiftly revoke Mr Obama’s executive orders, it will take him longer to tackle rules that have been laid down, such as the proposed Clean Power Plan, which is the president-elect’s main bugbear as an example of climate-related overreach. It is stuck under review in the Supreme Court, but owes its authority to the Clean Air Act, so environmental groups may sue over efforts fully to repeal it. Moreover, new rules will need to replace the old ones, which could take years. + +Third, Mr Trump is unlikely to seek to repeal tax credits for wind and solar energy, which were extended last year by Congress until 2020 and 2021, respectively. As it is, costs of renewable energy are plummeting, making them increasingly able to compete against gas and coal without subsidies in a few states. As a businessman, Mr Trump would surely see it as foolish to squander a part of America’s energy bounty, however clean, that may soon be able to cover its costs. As a politician, he might also note that renewable energy now employs more people than oil and gas. + + + + + +Mining + +Vein hope + +Even miners are pooh-poohing the post-election metals rally + +Nov 19th 2016 | From the print edition + + + +DONALD TRUMP’S grandfather, Fred, got his start in the hotel industry at the turn of the 20th century supplying rooms, food, booze and female company to prospectors flocking to north-western Canada in the so-called Klondike gold rush. It may be part of this legacy that gave America’s president-elect his taste for golden fixtures and fittings. But it may also make miners a bit wary of Mr Trump. After all, their pockets have been “mined” by a Trump once before. + +So the world’s biggest mining companies are downbeat about the rally in commodities prices that accompanied Mr Trump’s election victory, which briefly pushed up prices of copper at their fastest rate in five years and sent iron-ore prices to two-year highs close to $80 a tonne. On November 15th Rio Tinto, one of the world’s biggest mining companies, told 440 workers at an iron-ore mine in Western Australia to take two weeks off at Christmas, not as a celebration, but as a precautionary measure to reduce supply. It expects conditions to get much tougher in 2017. Its main rival, BHP Billiton, is also nonplussed. It predicts economic uncertainty, political instability and a continuation of oversupplied markets next year. + +Rio has internal reasons to be cautious. Last week, in the latest twist in a long-running saga, it fired Alan Davies, its head of energy and minerals, after alerting authorities to e-mails that disclosed a payment to an external consultant working on Rio’s operations at the Simandou iron-ore mine in Guinea. But broadly, the scepticism about the so-called reflation rally seems justified. Its main cause was probably rampant speculation in Chinese futures markets. Some think this reflects optimism about demand in China. More probably it is because China has curbed coal output, and the Philippines has throttled nickel exports, throwing the markets out of kilter. + +Second, Mr Trump has sent mixed messages. His plan to splurge on American infrastructure may boost demand for copper and steel. But his “America First” policy on trade could raise protectionist barriers against foreign goods. That would hit demand for metals in China, which consumes more than six times as much copper as America does. + +Many miners are now using their improved cash flows to strengthen balance-sheets that were badly overstretched earlier this year. In the longer term, their main source of optimism is copper. Juan Carlos Guajardo, of Plusmining, a Chilean consultancy, expects the copper market to remain in a state of oversupply for some years. But eventually a shortage of quality copper mines will curb supply as electrification of the world economy, from cars to heating and cooking, lifts demand. Mr Trump has provided only a temporary fillip. His plans for America’s infrastructure sound “more like steel and concrete than copper”, Mr Guajardo says. And gold for the White House taps, perhaps. + + + + + +Samsung buys Harman + +Amp my ride + +In its biggest deal yet, Samsung bets on connected cars as a driving force + +Nov 19th 2016 | SEOUL | From the print edition + + + +“THE car is the ultimate mobile device,” said Jeff Williams, an executive at Apple, last year. It was taken as another sign that the maker of iGadgets would be deepening its interest in the automotive sector (among other projects, it is developing an in-house smart car that is codenamed Project Titan). Now Samsung Electronics, its big rival in the smartphone world, is following. On November 14th the South Korean company said it would pay $8bn for Harman, a firm based in Stamford, Connecticut, that makes internet-connected audio, information and security systems for cars. The deal is Samsung’s largest ever, and the first big transaction for its vice-chairman and heir apparent, Lee Jae-yong, grandson of the firm’s founder. + +Though it is best known for its sound systems, Harman is one of the world’s largest supplier of smart parts for “connected cars” that help owners to drive by linking to the internet and to chip-enabled devices. It made $7bn in revenue in the year to September, two-thirds or so of it from the car sector, and has over three times that in new orders. Its products are the first step towards autonomous vehicles. Over 30m cars use Harman’s audio and other kit, in offerings from real-time traffic reports to augmented-reality alerts on braking distances. By 2022 revenue from this “connectivity” will rise to $155bn from $45bn now, according to Strategy&, a consultancy. + +The deal thus gives Samsung a firm foothold in the futuristic end of the automotive market. It had already edged into the sector with investments in Vinli and nuTonomy, two startups that make software for connected cars. Last year it set up a team to work on special parts for autonomous ones. Samsung SDI, a battery-making affiliate, already supplies lithium-ion batteries that power electric cars. + +Harman’s software skills and relationships with 30-odd global car brands opens doors for Samsung, says Kim Kyoung-you of the Korea Institute for Industrial Economics and Trade. It will be hoping to build a combined offering, of hardware parts and software know-how, that it will be able sell directly to automakers. + +But it joins some technology rivals that are already moving fast in an area where Samsung’s record is minimal. In the late 1990s Samsung Motors, a foray into carmaking, went bust (Renault of France bought it). Google has been testing self-driving cars since 2009. As well as Project Titan, Apple has CarPlay, a connected-car app that it started selling in 2013. Xiaomi, a Chinese smartphone maker that is a direct rival of Samsung, filed nine patents on internet-connected cars last year. + +For a firm that has resisted big acquisitions, the scale of the deal with Harman suggests Samsung is counting on it for its next growth spurt. The company’s smartphone division, the crown jewel of its empire, is suffering: last month it killed a new line of Galaxy Note phones after dozens exploded due to faulty batteries, incurring billions of dollars in losses. Under Mr Lee’s leadership, Samsung has been using part of its cash pile (around $70bn) to do overseas deals (though none as big as this one). + +Whether his tenure at the firm is seen as a success will largely depend on the outcome of this week’s deal. The car business may prove difficult to navigate once more. It is unclear which route to wholly connected vehicles the industry will take. Car firms may develop the technology alone (Ford, for example, has made purchases that suggest it is going down this road), in partnership with tech titans such as Google, or, as Samsung and Harman hope, they may buy it off-the-shelf. Mastery of one sort of mobile technology does not ensure success in others. + + + + + +Corporate Italy + +Seize the day + +Italy’s business leaders are clamouring for a “yes” vote in December’s constitutional referendum + +Nov 19th 2016 | MILAN | From the print edition + + + +“THE biggest risk in Europe is the Italian referendum,” said Gianfelice Rocca, head of Assolombarda, Milan’s chamber of commerce, this summer. For corporate Italy, much is at stake in the vote on constitutional reform, which will be held on December 4th. Victory for Matteo Renzi, the business-friendly prime minister, could mean a big fillip for firms of all sizes, whereas a loss would be “a shock in the system”, said Mr Rocca. + +The national employers’ federation, Confindustria, agrees with him. If those campaigning for a “yes” vote are to be believed, firmer government, easier conditions for investors and generally brighter economic prospects would follow. The two main issues to be decided are reform of the Senate’s powers—whether to let the lower chamber pass future laws, even when opposed by the Senate—and whether decision-making powers should be brought back from regional governments to the centre. + +Francesco Starace, the chief executive of Enel, a giant European electricity company that is one of Italy’s more successful firms, sets out a strong case that the proposed changes would bring important benefits to companies, especially if politicians took it as a signal to push for more reforms that would deregulate the economy and encourage competition. Last year labour laws were eased slightly, and a change this July made it easier and cheaper for startups to register with the authorities. Mr Starace hopes that the momentum will continue. “We have been waiting for these reforms for 25 years and it would be a pity to have to wait any longer,” he says. + +The public currently seems less convinced of the merits of constitutional change, and opinion polls suggest the outcome hangs in the balance. But the opportunity would be a shame to miss, businesses believe. A “yes” result would send an unambiguously positive signal to investors in Italy, says the boss of one of the country’s big industrial firms. It would show that “we can change laws that for decades held back productivity,” he adds. + +Bringing more powers to the central government would reduce costly complexity for firms. Today there are different rules in each region of Italy on water use, waste recycling, pollution control, how to run energy installations and other areas where the authorities require permits, points out Mr Starace. It is costly to manage, especially for smaller companies. + +A second gain would directly follow a shake-up in the Senate. Bosses reckon lawmakers would feel able to cut layers of bureaucracy and speed up judicial reforms, notably to improve legal administrative procedures. In the latest ease-of-doing-business rankings from the World Bank, Italy sits in 50th place, among the worst of any economy in the OECD club of rich countries (and six places worse than last year). Mostly that is the result of firms’ misery in dealing with the state, such as in paying tax or getting contracts enforced. + +An economist at Intesa Sanpaolo, a bank, estimates that foreclosures on assets take seven years on average to complete in Italy (and as many as ten in the south) compared with two years in Germany or France. The administrative process around construction permits takes an Italian firm an average of 227.5 days to navigate, according to the World Bank, compared with 86 for a British one. A better-run state could improve all this. + +If Mr Renzi and other politicians decided they had a mandate to confront incumbent lobbies, such as taxi drivers that have almost choked off Uber and other ride-hailing firms in big cities, including Milan, or which block new entrants to the pharmacy business, then the referendum would mean even greater improvements. The former boss of Uber in Italy, Benedetta Arese Lucini, received violent threats when she started rolling out its services. Without big changes to the status quo, says Ms Arese Lucini, “it would be stupid [for new firms] to be based” in Milan. But the day that Italy understands that competition is good “we can compete with the world,” she adds. + +If politicians really got the reform bit between their teeth, they might even address tax rules that, in effect, punish investors in companies. One reason why Italian firms have been starved of credit is that tax rates heavily favour buyers of government bonds over investors in private equity, for example. Italy attracts a strangely low share of the money going into private equity in Europe, or less than one-quarter of the funds that France attracts and one-fifth of funds into Britain (as a share of GDP). + +Nino Tronchetti Provera, head of Ambienta, a private-equity fund (and a cousin of Marco Tronchetti Provera, boss of Pirelli, a big tyre manufacturer), concurs that the vote matters greatly, chiefly because of the downside risk of a “no”. Rejection would mean a return to extreme political uncertainty, since Mr Renzi has talked of resigning if voters spurn him. Yet it is also possible to exaggerate the potential gains for business of a “yes” vote in the referendum, or, indeed, the cost if voters reject Mr Renzi’s plans. Corporate Italy is ailing for many reasons. One intractable problem is a consistently low level of domestic consumption thanks to a rapidly ageing population. A culture of risk aversion discourages entrepreneurs. “Failure means family shame, your mother will be disappointed in you,” says Ms Arese Lucini. + +Mamma mia + +The shortage of capital for business stems from a troubled banking system and also from a tradition of families funding their own, usually small, businesses. The Italian bourse remains a “stunted” thing, in comparison to markets in Paris or London, points out Claudio Costamagna, chairman of Cassa Depositi e Prestiti, a state-controlled bank that invests Italy’s postal savings. About 70% of Italy’s stockmarket capitalisation is made up of the shares of banks, insurance firms, utilities or energy companies such as ENI, a state-controlled oil-and-gas firm. Industrial and manufacturing firms, the backbone of the economy, make up a small part. The referendum will do little to channel more money to the latter kind of company. + +And although constitutional reform would help, it will take more to jump-start the economy, which is barely growing today and remains roughly the size it was over a decade ago. Successful Italian companies are those that export to more vibrant overseas markets, such as businesses selling car parts, food, fashion, pharmaceutical products, car parts or energy. + +Often, Italian firms do not help themselves, either. Few have followed the example of Enel and other leading companies, which have rapidly embraced digitisation to increase efficiency. Some lack basic habits of using computers. An investor describes a visit this year to a southern Italian firm with annual turnover of €50m that manages all of its inventory on a whiteboard in a storeroom. + +So the benefits of constitutional change, if it comes, could be unpredictable and felt unevenly. Big business has been most vocal about the desire for a “yes” vote, but large companies, with their channels to foreign markets, would cope pretty well with a rejection; they are accustomed to making do with the state of things now. It is small, nationally oriented businesses that are most at risk from backsliding on reforms. And as Mr Rocca admits, “The finale of the movie is highly uncertain.” + + + + + +Consumer goods + +Pot of gold + +America’s cannabis industry prepares for new highs + +Nov 19th 2016 | From the print edition + +Flat white joint to go + +IN THE 1990s Snoop Dogg, a rapper, called cannabis “chronic”. The drug was illicit and cool. In 2016 Mr Dogg is a cannabis investor, and the drug is poised to earn another title: consumer staple. On November 8th four states, including California, voted to approve recreational cannabis use. Four other states eased rules for medical marijuana. About three-fifths of America’s population lives in states that now allow cannabis use in some form. + +So pot entrepreneurs face the thrilling prospect of normality. This week industry leaders were meeting in Las Vegas to discuss how the sector might expand. They have in prospect a vast, partially established market. More than 32m Americans already use cannabis. As the business becomes more normalised, it is sure to attract new customers. “It’s not often that you see an industry and you know the inevitability of it,” says Brendan Kennedy of Privateer Holdings, a private-equity firm that specialises in cannabis. Last year legal sales reached $6bn, according to the Arcview Group, an investment and market-research firm. By 2020 Arcview expects legal sales to be more than three times higher. + +There remains the dispiriting fact that, on a national level, marijuana is still illegal. Federal agencies have generally respected states’ cannabis rules, but Donald Trump’s enforcers may be more aggressive. Even if they demur, the federal ban makes business difficult. Few banks are willing to lend to cannabis companies that handle the plant directly. Firms cannot operate across state lines, nor may they deduct common expenses from tax filings, which squeezes their profits. + +Nevertheless, startups are spreading like weeds. Many of them serve the cannabis industry without touching the plant itself—these firms benefit from the sector’s growth while avoiding its strictest rules. For example Kush Bottles, based in California, sells product packaging that complies with idiosyncratic state requirements. Older firms are eyeing the industry as well. Scotts Miracle-Gro, a publicly traded gardening company, reckons it can serve not just ageing green thumbs but young cannabis growers, too. + +Other companies deal with the plant directly, whether growing, processing or distributing it. Many early entrepreneurs have exited, unable to survive tight rules and falling cannabis prices brought about by legalisation. Bigger firms with strong management have, unsurprisingly, fared better. A company called LivWell now has 14 dispensaries across Colorado, which legalised recreational cannabis use in 2014. Its founder used to lead a firm that sold baby products to Walmart. + +Cannabis firms have much in common with traditional consumer businesses. To cope with bans on interstate commerce, for example, those backed by Privateer license their brands and production methods to third parties in particular states, in much the same way that Coca-Cola depends on licensees in markets around the world. And just as big food companies grew in the 20th century by processing basic ingredients into tasty, more profitable snacks, for example, lots are processing plants into biscuits, gummy candies, tinctures and oils. “There’s not a lot of money to be made in tomatoes,” points out Arcview’s Troy Dayton, “but there’s a lot of money to be made in sauce.” In Colorado, the market share of cannabis flower, such as that typically rolled into a joint, fell from 68% in 2014 to 57% in the first nine months of this year, according to BDS Analytics, a data firm, but the processed versions of cannabis are on the rise. + +Looming over the industry is the question of when tobacco companies might join the fray. Cigarette-makers certainly have the expertise to navigate complex rules for cannabis, points out Vivien Azer of Cowen, a financial-services firm. Their research on e-cigarettes could enhance vapour products for pot. If the federal government ever legalises the drug, tobacco firms would probably swoop in and snap up small, fast-growing firms. In the meantime, Colorado offers a tantalising glimpse of the future: there are now more cannabis dispensaries in the state than there are Starbucks coffee outlets. + + + + + +Schumpeter + +Uncertain business + +Business will pay a high price for soaring political risk + +Nov 19th 2016 | From the print edition + + + +AN AGE of uncertainty is upon us. For the past three decades or so, businesspeople have been able to steer by a few lodestars. Trade negotiators lowered and simplified trade barriers. Central bankers tried to keep inflation to a minimum. Policymakers around the world negotiated multilateral treaties on the environment. Global bodies such as NATO provided security in Europe. Today the lodestars are exploding, one after the other. + +Meanwhile, Donald Trump is making policy on the hoof. It turns out that the Affordable Care Act of 2010, or Obamacare, is not so bad after all. A big section of his planned wall on the border with Mexico will be a fence. In the past presidents have usually arrived in the White House with a detailed set of policies. Mr Trump arrives with a tatty envelope scrawled with a few jottings on the back. Across the Atlantic, Brexit has opened a Pandora’s box: nobody knows whether Britain will leave the European single market or negotiate the equivalent of an associate membership. The Supreme Court has yet to determine how much say Parliament will have in shaping the negotiations. + +One of the big promises from populists is to get economies moving again. Mr Trump has laid out a neo-Reaganite policy of cutting taxes and boosting spending, particularly on infrastructure. His European allies, such as Hungary’s prime minister, Viktor Orban, and would-be allies, such as France’s Marine Le Pen, leader of the National Front, have made similar noises. Another is to “drain the swamp” of their respective capital cities by subjecting self-serving elites to the wrathful scrutiny of the people. Yet economic uncertainty, which holds down growth, will reduce the populists’ ability to honour the first promise. And the fact that firms usually respond to uncertainty by splurging on political lobbying may mean reneging on the second. + +So far Mr Trump’s pledge to get the economy moving has received a surprisingly positive response from Wall Street—the stockmarket has surged since his victory. Economists polled by the Wall Street Journal slightly lifted their forecasts and are predicting that the economy may expand by 2.2% in 2017 and by 2.3% in 2018 as the expected fiscal stimulus kicks in. Optimism could easily pall. A fiscal stimulus could prove toxic if it leads to higher deficits, and thence to higher inflation and interest rates. Other signature Trump policies, such as restricting trade or legal immigration, would damage the economy if implemented. + +All the while, political uncertainty will pull companies in the opposite direction from the one in which the stimulus is supposed to push them. Businesses will refrain from making hard-to-reverse investments if they are unsure about the future. Helpfully, three economists—Scott Baker of Northwestern University’s Kellogg School of Management, Nick Bloom of Stanford University, and Steven Davis of the University of Chicago Booth School of Business—have developed an index of economic-policy uncertainty that monitors this. It goes back to the 1980s and shows that high levels of policy unpredictability go with lower business investment and weaker economic growth. Companies have an excuse to put off big decisions, particularly of the long-term kind, such as investing in machinery or hiring permanent as opposed to temporary workers. Policy unknowns raise the cost of capital, because they increase the likelihood of default. Consumer demand is weakened because households will build up their savings rather than, say, buy a new car or a washing machine. + +The effects could fall most heavily on companies in less competitive industries, and those in manufacturing especially. Firms in the fastest-moving fields, such as technology, have a strong incentive to go ahead and invest in spite of uncertainty rather than lose out to a rival, note Mihai Ion of the University of Arizona and Huseyin Gulen of Purdue University in a paper, “Policy uncertainty and corporate investment”. Old-economy companies that rely on big capital investments in machinery—the sort Mr Trump appears to prefer—are more likely to hold back, hastening decline. + +Swamp creatures + +Uncertainty also makes it likely that the swamp will get even swampier. A new paper, “Political uncertainty, political capital and firm risk taking”, by Pat Akey, of the University of Toronto, and Stefan Lewellen, of London Business School, underlines the tight link between political uncertainty and political influence-mongering. The more worried companies are about policy flux, the more money they invest in trying to bring about desirable outcomes. Then they are readier to make long-term investments. + +Members of Washington’s Republican establishment are particularly well placed to profit from political turmoil with the Republican Party soon to be in control of the White House and both houses of Congress. Trent Lott, a former leader of the party in the Senate who works for Squire Patton Boggs, a lobbying firm, told the New York Times, “he is going to need some people to help guide him through the swamp—how do you get in and how you get out?” “We are prepared to help do that,” he added. Such people are also well positioned to profit from the fact that Mr Trump has fewer seasoned Washington hands in his entourage than any recent president-elect. The lobbying shops are already promising to help the incoming neophytes draft regulations and laws. + +The populists will undoubtedly be able to claim some big victories in the coming years. In America Mr Trump could succeed in persuading companies to bring home billions of dollars that sit abroad by means of a tax holiday and a lower tax rate. In Britain one-off deals with multinationals on the model of the one recently struck with Japan’s Nissan will produce warm feelings on the part of business. A bonfire of regulations will delight small firms. But all the while, uncertainty will pull in the opposite direction. Cash piles will mount. Plant and equipment will age and ossify. The likes of Mr Lott will get richer and more self-satisfied. The age of uncertainty will also be an age of self-reinforcing evils. + + + +Finance and economics + + + + + +Emerging markets: Reversal of fortune + +Buttonwood: Save yourself + +Iceland’s post-crisis economy: It’s not up to you + +Agricultural Bank of China: Sanctions with Chinese characteristics + +Banks and “too big to fail”: Kash call + +China’s corporate debt: State of grace + +Credit in China: Just spend + +Free exchange: That Eighties show + + + + + +Emerging markets + +Reversal of fortune + +The American election has added a new source of uncertainty + +Nov 19th 2016 | From the print edition + + + +FOR MUCH of 2016, things seemed to be going well in emerging markets. A pickup in commodity prices signalled that the global economy (and China’s, in particular) was more robust than feared as the year began. In the manufacturing sector, the average level of the purchasing managers’ index in developing countries ticked up from 49 at the start of the year (indicating contraction) to 51 (expansion) by October, according to Goldman Sachs. + +Signs of stability could be identified even in the economies that most worried investors in recent years—the so-called “fragile five” of Brazil, India, Indonesia, South Africa and Turkey. All had seen their current-account deficits shrink in the past three years, making them less dependent on foreign inflows of capital. + +Confidence in emerging markets had also revived among international investors. Before the American presidential election both the MSCI emerging-stockmarket index and JP Morgan’s emerging-market bond index had outperformed their developed-world equivalents this year. + +But Donald Trump’s victory seems, at least temporarily, to have changed minds. On November 11th emerging-market currencies suffered their second-biggest daily sell-off in the past five years, dropping by 1.7% against the dollar. The dollar-denominated bonds of developing-country governments fell by more than 6% in the four trading days after the election, while their local-currency bonds (exposing foreign investors to the risk of depreciation) dropped by 7.4%, according to Bloomberg. And the MSCI emerging-market equity index fell by 7% in dollar terms. + +The Institute of International Finance, a trade group, reports that foreigners have pulled some $7bn out of emerging markets since the election (see chart). The episode has been dubbed the “Trump tantrum” in tribute to 2013’s similar “taper tantrum” when the Federal Reserve signalled it would reduce the pace of its bond-buying programme, known as quantitative easing. + + + +Some of the market movements say more about America than about emerging-market fundamentals. Mr Trump’s victory has led to expectations that the Republicans, who control both the executive and the legislature, will push through tax cuts, higher spending on infrastructure and defence, and rules designed to encourage multinationals to repatriate overseas profits (see Free exchange). + +That programme is likely to lead to bigger budget deficits, higher Treasury-bond yields and a stronger dollar, especially if the Federal Reserve responds to the fiscal stimulus by pushing up interest rates. These moves would have a knock-on effect in emerging markets; their currencies fall as the dollar rises, while their bond yields rise (and prices fall) in line with the Treasury-bond market. + +A new paper from Hyun Song Shin of the Bank for International Settlements suggests that a stronger dollar may have significant financial, as well as trade, effects in emerging markets. Many companies have borrowed in dollars, so the cost of repaying their debt rises when the greenback gains ground against their domestic currencies. Much of this borrowing is conducted through the banking system, leaving the banks exposed to the risk of a rising dollar. Accordingly Mr Shin finds that “dollar appreciation is associated with a slowing of cross-border dollar lending”—in other words, a tightening of credit conditions in emerging markets. The dollar may be a better indicator of risk appetite than the VIX index of equity volatility, the paper argues. + +But investors are also worried that the election of Mr Trump signals a turning-point in globalisation. On the campaign trail, he pledged to renegotiate the North American Free-Trade Agreement, NAFTA, to declare China a currency manipulator and to impose protectionist tariffs. + +It is not yet clear how many of these proposals Mr Trump will try (or be able) to implement. To use a Brexit analogy, the outlook for emerging markets may depend on whether the new regime represents “soft Trump” or “hard Trump”. If the main economic impact of Mr Trump comes in the form of a fiscal stimulus, the result could be a boost to global as well as American growth. That would be good for emerging-market exports, which have been sluggish. They fell by 3.5% in the year to September in dollar terms, according to Capital Economics, while in volume terms they were flat. Industrial-metal prices, which are especially sensitive to the economic outlook, have bounced since the election result. + +But if the main focus of the Trump presidency is on trade protectionism, then emerging markets are bound to suffer. The German IFO economic institute estimates that, in a trade war, Mexican GDP could shrink by between 3.7% and 5%, for example. That explains why the Mexican peso has been the currency hit hardest by Mr Trump’s election. + +It is possible that both elements of the Trump agenda might be pursued. A fiscal stimulus would suck in imports and thus cause the trade deficit to widen. A strong dollar would have the same effect, by making imports cheaper and American exporters less competitive. Since Mr Trump has vowed to eliminate the deficit, this might cause a lurch to protectionism at a later stage of his term of office. The other unknown is security policy; a retreat from America’s defence commitments would cause investors to take fright and reduce their exposure to emerging markets. + +Volatility is par for the course in emerging markets. Investors are attracted by the prospects of rapid economic growth and the possibilities of structural reform in the good times, but then take fright and withdraw their capital when the going gets rough. Mr Trump’s election just adds another dollop of uncertainty to the mix. + + + + + +Buttonwood + +Save yourself + +Workers are being deceived by past high returns + +Nov 19th 2016 | From the print edition + + + +IN A world of low investment returns, many a pension scheme is in trouble. In both Britain and America employers who have promised to pay workers a pension based on their final salary are struggling to cope with huge deficits. + +But the problem is not confined to those with so-called defined-benefit (DB) pensions. It also affects those saving for retirement via a defined-contribution (DC) scheme, where both employer and employee contribute, and the worker takes charge of the pot when his career ends. In America the most popular form of DC savings are called 401(k) schemes after a section of the tax code. + +In an article* in the Journal of Retirement, three authors from AQR Capital Management, an investment group, argue that workers in 401(k) schemes are simply not putting enough money aside. + +What you get out of a pension depends on what you put into it. One would expect a DC pension to deliver a smaller income than a DB scheme because less money tends to be put in the pot. Total DC contributions average around 9% of payroll (6% from employees; 3% from employers). But figures from the Centre for Retirement Research at Boston College show that public-sector employers pay an average of 18.6% to fund DB pensions (with employee contributions of 6.5% on top). + +So why don’t workers in DC schemes put more money aside? The paper suggests that savers may have been deceived by the robustness of past returns. The authors assume that workers would like to retire on 75% of their final salary and that 30 percentage points of that would come from other sources, including social security. Furthermore, they assume 2% annual real-wage growth during workers’ careers, and that, on retirement, savers buy a 25-year annuity with their pot. + +Based on historical real returns of 7.5% from equities and 2.5% from Treasury bonds (before charges), it turns out that, in the past, workers could have hit the income-replacement ratio target with only an 8% contribution rate. That may explain why they are not saving more today. + +But it is highly unlikely that future investment returns will be as high as they were in the past. Bond yields have fallen and equity valuations are high by historical standards. Investors have thus chalked up capital gains as bond and share prices have moved to these new, high levels. To replicate that performance, bond yields will have to fall even further and equities will have to be valued even more highly. This is not something that workers should be counting on. Real returns from equities are more likely to be 5% and from bonds 1%, the authors reckon. + +Combine those real returns into a portfolio of 60% American equities and 40% Treasury bonds (a standard asset allocation) and you get an overall return of 3.5% a year. That is two percentage points lower than the 5.5% achieved from the same combination in the past. And it means that a worker would have to save 15% a year, not the current 9%, to reach the target. + +Even that approach looks optimistic. With bond yields less than 2%, inflation will have to average under 1% to deliver the 1% real return assumed by the authors. And fund-management charges will eat into returns as well. On a 2.5% real-return assumption, contributions would need to hit 19% of payroll. + +What about a different asset allocation? Many advisers suggest that workers start off with a high allocation to equities and then switch to bonds as they approach retirement. Even that scheme would still require a 15% payroll contribution to meet the target rate. + +So why aren’t workers saving more? They may not be overestimating asset returns. Instead, they may be indulging in “hyperbolic discounting”—valuing the income they earn today far more highly than the income they will earn in old age. After all, employees in DC schemes tend to get lower retirement pay than those in DB plans (because employers are contributing less). Yet there is no evidence that workers in companies with DC plans demand more current pay to compensate. + +But the main reason workers don’t put more aside is probably that they can’t afford to; since 1980, median pay in America has grown very sluggishly in real terms. That means they will face a stark choice as they approach retirement age: take a big cut in their incomes or keep working. Most will be forced to toil longer. Whatever the official retirement age may be, many Americans will be working at 70. + +* “How much should DC savers worry about expected returns?” by Antti Ilmanen, Matthew Rauseo and Liza Truax, Journal of Retirement, Fall 2016 + +Economist.com/blogs/buttonwood + + + + + +It’s in our hands + +Iceland does not face another bust, but its economy looks lopsided + +The risk to Iceland is not a bust, but stagnation + +Nov 19th 2016 | REYKJAVIK | From the print edition + +No eruptions on the horizon + +GOOD times are rolling again in Iceland. In June it beat England in a football match. On The Economist’s “glass-ceiling index”, it is the world’s best country for working women. And the economy is purring. After a thumping crash in 2008-09, GDP is expected to grow by 5% this year, faster than any other rich economy. The ruling (conservative) Independence Party has been rewarded: it won 30% of the vote in the election in October, more than any other party. But some fret that Iceland’s economic stability is, again, built on molten lava. + +The biggest worry is over its treatment of foreign creditors. When the crisis hit, the country slapped on capital controls, protecting the krona by preventing investors from pulling capital from the country. Recently the government has been loosening restrictions. Icelanders may soon no longer have to present airline tickets in order to buy foreign currency for their holidays. + +One group of foreign investors, however, accuses Iceland of, in effect, defaulting on its debts. They own offshore, krona-denominated, assets worth about 10% of Icelandic GDP. They have been allowed to convert these into foreign currency, but only at a big loss. Meanwhile, the government has locked their assets in low-interest-bearing accounts. Disgruntled fund managers have submitted a complaint to the European Free-Trade Area Surveillance Authority (ESA), a trade court. An information war is also afoot. Mysterious advertisements have appeared in Reykjavik, accusing the central bank of corruption. + +Were Iceland again to alienate foreign investors, it would indeed be bad news. It is highly open to international financial flows, and is among the world’s smallest counties not to have a fixed exchange rate. A large proportion of corporate debt is denominated in foreign currency; devaluation would make repayment harder. + +But most investors seem relaxed. They accept that the government needs to ease controls slowly; Fridrik Mar Baldursson of Reykjavik University warns that the krona could come under great pressure if the funds could all pull out at once. So far the ESA appears to be taking Iceland’s side. This year rating agencies have upgraded Iceland’s public debt. + +Iceland is enjoying a tourist boom. In 2017, 2.25m visitors are expected—nearly seven times the native population. The influx has created plenty of jobs, and a building frenzy: Reykjavik has a crane on every corner. The tourism boom, however, has a downside. The sheer weight of foreign visitors has pushed up the krona. Against the dollar, it is the second-best-performing currency in the world in the past year. That already appears to be hurting long-standing export industries. So far this year, exports of marine products are down by more than 10% compared with last year. The Icelandic businesses at risk now are not in financial services but in its traditional industries. + +This article appeared in the Print Edition with the headline: It’s not up to you + + + + + +Agricultural Bank of China + +Sanctions with Chinese characteristics + +American regulators show a foreign bank uncharacteristic leniency + +Nov 19th 2016 | NEW YORK | From the print edition + + + +THE fines paid to America’s financial regulators by errant bankers vary enormously these days: from sky-high to stratospheric. Deutsche Bank is fighting a demand for $14bn. BNP Paribas paid $9bn last year for facilitating the evasion of American sanctions. So eyebrows were raised at the final settlement disclosed this month between the state-controlled Agricultural Bank of China (ABC) and New York’s Department of Financial Services (DFS). The fine imposed on the bank was a mere $215m. + +The comparative leniency towards ABC is probably a consequence of a failure to prove that many illegal transactions took place. But that by itself produced unresolved suspicions; compliance systems made transfers untraceable. In 2014 a new compliance officer at the two-year-old New York branch reported finding an “alarming” pattern of transactions; 20-30% were “virtually impervious to screening” for sanction violations. + +In the “alarming” category were large transfers between Chinese companies and companies in Russia and Yemen; dollar-denominated payments from the United Arab Emirates; and dollar transfers from a Turkish bank to an Afghan one with ties to drug-traffickers. Invoices were suspected of being counterfeit. Documents suggested dealings on behalf of “a sanctioned Iranian party”. + +Alerted by the compliance officer, the New York Fed sent a letter in February 2015 noting concerns about money-laundering and other related risks. ABC responded by curtailing the compliance officer’s independence. By June, he was gone; most of his department soon followed. DFS examiners, arriving in July, found an “unmanageable” backlog of alerts for suspicious transactions. In 2014 DFS had warned ABC not to increase the volume of transactions until it had tightened its compliance functions. But the volume had almost trebled to $72bn in the first half of 2015 compared with a year earlier, creating what DFS called “untenable risk”. (BNP Paribas’s troubles stemmed from the transfer of $9bn.) + +There may be many reasons why ABC seemed to get off lightly. But the sometimes chatty regulators are mum. One said it could not comment because the issues involve confidential supervisory information. The silence does nothing to quell doubtless unfounded gossip that ABC benefited from the fear of a diplomatic spat with its owner, the government of China. + + + + + +Banks and “too big to fail” + +Kash call + +A veteran of the financial crisis says banks need much more capital + +Nov 19th 2016 | NEW YORK | From the print edition + + + +SINCE Donald Trump won the election, American bank shares have surged on traders’ hopes of a bonfire of financial regulations. So a proposal from Neel Kashkari, head of the Minneapolis Federal Reserve, vastly to increase capital requirements looks ill-timed. On the other hand, the plan mimics the direction—if not the extent—of one backed by congressional Republicans. + +Mr Kashkari is an experienced financial firefighter. An alumnus of Goldman Sachs, best-connected of investment banks, he spent much of 2008 and 2009 in the Treasury department overseeing the Troubled Asset Relief Programme, under which the American government bought more than $400bn of toxic assets to prop up teetering financial institutions. In 2014 he ran to become governor of California as a Republican. He now says that, despite the efforts of regulators since the crisis, much more needs to be done to avoid future bail-outs of banks that are “too big to fail”. + +Using an IMF database, the Minneapolis Fed logged the levels of bank capital that would have been needed to avert 28 financial crises in rich countries between 1970 and 2011. Based on the historical relationship between capital levels and crises, Mr Kashkari says there is a 67% chance of a bank bail-out at some point in the next century. This is despite significant new capital requirements imposed since the financial crisis which have, he says, brought down the chance of a failure from 84%. + +His solution is to force banks to finance themselves with capital totalling 23.5% of their risk-weighted assets, or 15% of their balance-sheets without adjusting for risk (the “leverage ratio”). This, says Mr Kashkari, would be enough to guard the financial system against a shock striking many reasonably-sized banks at once. Any bank deemed too big to fail would need a still bigger buffer, eventually reaching an eye-watering 38% of risk-weighted assets. Such a high requirement would, in effect, force big banks to break themselves up. + +This is radical stuff. Under “Dodd-Frank”, the law that overhauled financial regulation after the crisis, the minimum leverage ratio for big banks is only 6%. But Mr Kashkari’s numbers should be treated with caution. For a start, he counts only common equity, the strictest possible definition of capital, and ignores everything else, such as debt that converts into equity in times of crisis. Recent new regulations aim to ensure that the “total loss-absorbing capacity” of the largest banks, which includes such instruments, reaches at least 18%. Mr Kashkari’s main complaint is that he does not think complex safety buffers will actually work in a crisis. + +Much higher capital requirements could put some banks, a few of which are already worth less than the book value of their assets, out of business. Not my problem, says Mr Kashkari, who argues that it is banks’ responsibility to find profitable and safe business models. + +The so-called “Minneapolis plan” is outlandish. But Mr Trump’s election has opened the door to changes to Dodd-Frank, which Republicans hate. A bill proposed by Jeb Hensarling, chair of the House Financial Services Committee, and one of the rumoured candidates to be Mr Trump’s treasury secretary, would let banks choose between a leverage ratio of 10% and today’s more complex rules. Mr Trump’s views are unclear, although he did add to the Republican platform a promise to reinstate the Glass-Steagall Act of 1933, which separated retail and investment banking. If Mr Kashkari can bend the ear of the new president, traders may need to look again at those bank shares. + + + + + +China’s corporate debt + +State of grace + +With the government on their side, China’s state firms borrow cheaply + +Nov 19th 2016 | SHANGHAI | From the print edition + + + +IN ITS never-ending quest to rein in profligate local officials, China this week ordered its indebted cities and provinces to draw up detailed repayment plans. But for these rules to work, the central government must prove that it is willing to let the miscreants default. Creditors doubt its resolve and expect it to go on bailing out the spendthrifts. As a result, they systematically give more generous lending terms to state-owned enterprises (SOEs) than to their private peers. + +The bias is not immediately obvious. Looking at interest costs, China seems to have a level playing field. A 2011 survey, for example, revealed that the median interest rate on bank loans to private firms was 7.8%, just above the 7.5% average at the time. Borrowing rates for both SOEs and private firms have remained in line with each other since then, declining in tandem. + +But this appearance of parity is superficial. Borrowing costs only tell half the story. The other half is the borrower’s quality. When investors assess the risk of lending to Chinese companies, they price in the assumption that the state will stand behind SOEs. How much is this assumption worth? One way to measure this is to compare credit ratings. Rating agencies grade SOEs according to two standards: a stand-alone rating (based on the company’s own balance-sheet) and a state-backed rating (factoring in government support). + +This chart illustrates the extent to which SOEs benefit. The horizontal axis shows their original rating (based on a blended average from Fitch, Moody’s and S&P, the three big international rating agencies). The vertical axis shows their final rating after state support is added to the equation. The size of the bubble indicates the size of the debt. When ratings are unchanged, as is the case for most private companies, the bubbles incline upwards along a 45-degree angle. But when ratings are boosted, the bubbles migrate above the 45-degree line: virtually all SOEs are in this category. + +Take, for instance, Beijing Infrastructure Investment Co Ltd, which operates the city’s urban rail system. With a hefty debt load, its initial credit rating would be BB-, a risky junk bond, according to S&P. But thanks to government support, S&P gives it a final rating of A+, eight notches higher, a solid investment-grade bond. By contrast, JD.com, a leading e-commerce company, earns a BBB-rating from S&P, just one notch above junk status. As a private company, it receives no ratings uplift. + +The impact of the rating changes is big. In the onshore Chinese bond market, if the stand-alone ratings applied, SOEs would face annual interest rates of more than 10% instead of the roughly 5% they are used to. Even in the Hong Kong bond market, average annual borrowing rates for SOEs should be 3.5%, based on their stand-alone profiles; that, however, falls to roughly 2% after state support is included. That amounts to a two-fifths discount on interest costs—quite the subsidy. + +Creditors are, of course, not doing this out of the goodness of their hearts, but rather in the belief that the state will prop up SOEs if necessary. This guarantee, though, is not ironclad. As the economy slows, the government has let a few smaller SOEs default this year. With the announcement this week, it seems to be setting the stage for more delinquency. The task for rating agencies and investors, then, is to try to gauge the extent of state backing for different SOEs. + +If an SOE is controlled by the central government, the presumption of support is still strong. But as Ivan Chung of Moody’s says, the calculations are more nuanced for SOEs controlled by provinces or cities. First, analysts examine company finances. Next, they look at the balance-sheet of the government that theoretically stands behind it. Finally, they consider the company’s strategic importance: a water utility fares better than a property developer. It is a lot to weigh—and as SOE debts pile up, these nuanced judgments will become only weightier. + + + + + +Credit in China + +Just spend + +China’s consumer credit-rating culture is evolving fast—and unconventionally + +Nov 19th 2016 | From the print edition + + + +ON NOVEMBER 11th, Alibaba, a Chinese e-commerce giant, posted nearly $18bn in sales for the day. This broke last year’s record for Singles’ Day, an anti-Valentine’s Day that has become a love affair with spending. The popularity of the company’s virtual credit-card, Huabei (roughly translating as “Just spend”), may have helped. Consumers who spend less than 1,000 yuan ($146) online a month spend 50% more once they get one, according to Ant Financial Services, an Alibaba affiliate. To older generations, taught to save, borrowing is shameful. But financial habits are changing: Chinese consumers are being encouraged to develop credit histories. + +Last year, the government awarded eight companies consumer credit-rating licences. Their pilot programmes are an attempt to flesh out thin financial records and get people thinking about their credit scores. This is new for most Chinese, who do not use credit cards and have never had credit scores. As of 2014, the People’s Bank of China maintained credit histories for around 350m citizens—less than one-third of the adult population. In America 89% of adults have credit scores. Without a credit history, consumers struggle to obtain loans. They tend to save rather than borrow or spend, stifling consumption. + +Many now want to prove their creditworthiness, with an eye to the spending possibilities it opens up. The most popular rating firms are Sesame Credit, run by Alibaba, and China Rapid Finance, which is in partnership with Tencent, a social-media and online-gaming firm. Alibaba sees over 400m active users a month and Tencent 800m. They also offer the rating firms a treasure trove of consumer data. + +Sesame Credit relies on users’ online-shopping habits to calculate their credit scores. Li Yingyun, a director, told Caixin, a magazine, that someone playing video games for ten hours a day might be rated a bad risk; a frequent buyer of nappies would be thought more responsible. Meanwhile, China Rapid Finance scours its users’ social networks. Thanks to its link with Tencent, which owns WeChat, one of the country’s leading messaging platform, it is able to examine data about their contacts and payments to judge creditworthiness. These are unorthodox methods by many standards. In 2014 Facebook began toying with using social media to gauge users’ credit. But it called the plan off in February 2016, citing regulatory concerns. Critics thought it creepy. + +Chinese consumers, however, don’t seem to mind the privacy invasion. Since it launched in January 2015, Sesame Credit has amassed 190m users. This may owe something to the perks bestowed on holders of high credit scores: express service at hotels; deposit-waivers on car rentals; even accelerated visas to Singapore. Their scores also rise if they use Alibaba’s payment service, Alipay, and if their friends sign up for credit scores. So the rating system is in part a loyalty-rewards programme. Having a credit score and showing it off to one’s friends is now something of a status marker for the affluent young. Sesame Credit has teamed up with Baihe, China’s largest dating service, to encourage users to flaunt their credit scores on their dating profiles. Ever more are doing so—and playing a mobile game, designed by Sesame, in which users guess how their score compares with their friends’. + +The pressure to announce one’s credit score is a response to the deficit of trust in the Chinese marketplace. Emerging from a planned economy, Chinese consumers have found themselves on unfamiliar ground, says Rogier Creemers, a China scholar at the University of Oxford. It takes time to build up a working economy of trust backed by verification systems, so they have tended to rely on face-to-face, cash transactions to protect against fraud. + +As more people sign up to be rated, the industry may help fuel consumption. Credit-card penetration is expected to grow from 16% in 2014 to 44% in 2025, according to the Demand Institute, a think-tank. But the government has reason to be cautious. China’s household debt as a proportion of GDP has more than doubled over the past decade, reaching 40.7%. Sheldon Garon, author of “Beyond Our Means”, a book on spending versus saving cultures, says China is still experimenting with consumer credit. Having noted the disastrous effects of America’s borrowing binge, its leaders are wary of bubbles and their social consequences. For the Communist Party, one goal is economic growth; but another is social stability. + + + + + +Free exchange + +That Eighties show + +Donald Trump’s attempt at Reaganomics will prove costlier than the original + +Nov 19th 2016 | From the print edition + + + + + +FOR the moment, the policy priorities of the Trump administration-in-waiting are a basket of unknowables. Plans to scrap Obamacare or re-deregulate America’s financial sector, though dear to Republican hearts, are easier to champion on the campaign stump than to implement. A step away from globalism—Donald Trump’s most consistent campaign theme—could make for an awkward opening gambit given pockets of Republican resistance to overt protectionism. Tax cuts and infrastructure spending, on the other hand, look like an easy and unifying win for the new administration. And indeed, market moves since Mr Trump’s victory seem to imply an expectation of a Ronald Reaganesque turn in American fiscal policy; government-bond yields have risen, seemingly in expectation of bigger deficits, faster growth and higher inflation. Yet any resemblance that Mr Trump’s plans may bear to Reaganomics is as much a cause for concern as for optimism. + +The president-elect’s tax proposals are easily the boldest since Reagan’s. Mr Trump’s plan would slash the highest marginal income-tax rates, cut rates of tax on corporate income and on capital gains, and eliminate federal inheritance and gift taxes entirely. According to an analysis by the Tax Policy Centre, a think-tank, the plan would reduce annual federal-tax revenue by about 4% of GDP. In contrast, in the first four years after its implementation the tax reform act of 1981 reduced annual revenue by almost 3% of GDP. At the same time, Mr Trump seems keen on new government spending; his transition-team website refers to $550bn in desired new infrastructure investment. Even if the legislation to emerge from Congress is more moderate, as seems likely, a big dose of tax cuts and new spending appears to be in the offing. + +Stimulus would have its benefits. Higher inflation would be a welcome change from the spectre of deflation that until recently stalked the rich world. Some economists reckon that running the economy “hot”, to the extent that demand outstrips its productive potential, could nurture growth in America’s economic capacity: by bringing workers on the margins of the labour force back into employment, for example. Yet a Reaganomics rerun would almost certainly do more harm than good. The experience of the 1980s suggests three big causes for concern. + +The first is financial instability. American interest rates in the 1980s were remarkably high: thanks initially to Paul Volcker’s efforts to bring down inflation, and later on to faster American growth and heavy government borrowing (see chart). High interest rates attracted money from abroad, pushing up the value of the dollar: it rose, on a trade-weighted basis, by roughly 40% from 1980 to 1985. As a result, developing economies, including many in Latin America, found themselves with unpayable dollar-denominated loans. Sovereign-debt woes crippled the affected countries’ economies; meanwhile, debt defaults and restructurings saddled big American banks with large losses, pushing some to the brink of insolvency. Today, most emerging economies hold far less dollar-denominated public debt. Yet vulnerabilities remain. The Federal Reserve has prepared markets for a gradual pace of monetary tightening. Should higher inflation convince the Fed that more interest-rate hikes are needed sooner, many investors in emerging markets could be caught off guard. A bout of chaotic capital flight could threaten shakier banks or induce governments to adopt capital controls. America, which eventually intervened to help manage the Latin American debt crisis, will probably be slower to lend a hand under Mr Trump. + +Trumped-up trickle-down economics + +American generosity might be in especially short supply as a result of a second side-effect of Trumpian Reaganomics. As the dollar soared in the early 1980s, America’s current account flipped from a small surplus into sizeable deficit. American firms howled. Efforts early in the 1980s to cajole trading partners into limiting exports gave way to more serious interventions later on. In 1985 James Baker, then treasury secretary, negotiated the Plaza accord with Britain, France, Japan and West Germany to bring down the value of the dollar. And in 1987 Reagan slapped economic sanctions on Japan for its failure to meet the terms of an agreement on trade in semiconductors. + +Mr Trump, no instinctive free-trader, might face a similar dynamic. Faster growth and higher interest rates might attract foreign capital and place upward pressure on the dollar, which has indeed been rising since the election. That will help exporters to America and hamper a manufacturing revival in the struggling towns that helped Mr Trump win. In fact, the Mexican peso has fallen by about 10% against the dollar since the election, boosting the competitiveness of Mexican firms relative to their American counterparts. Yet Mr Trump will find responding to these shifts to be trickier than did Reagan. Sprawling supply-chains mean that punitive tariffs are less obviously useful to domestic firms than they once were. A battle over exchange rates between America and China could prove far more dangerous, both economically and geopolitically, than Mr Baker’s negotiations. + +Perhaps most important is a third lesson: that the boost to growth provided by tax cuts and liberalisation need not be spread evenly across the economy. Prescriptions which made sense a generation ago look inappropriate now. Top marginal tax rates are far lower than they were then; further cuts may deliver a smaller boost to growth as a result. Meanwhile, inequality is far higher now than it was in the early 1980s; slashing tax rates on the rich while unravelling recent financial regulation could push economic divisions to unprecedented, politically toxic levels. The global economy could use more fiscal stimulus. A raft of regressive tax cuts from a protectionist-minded American administration is, to put it mildly, a risky way to provide it. + +Visit our Free exchange economics blog + + + +Science and technology + + + + + +Additive manufacturing: Magnetic moments + +Oceans in space: Not so lonely sea in the sky + +Malaria: The biter bit + +Censusing fisheries: Where’s the catch? + + + + + +Additive manufacturing + +Magnetic moments + +3D printers promise better, cheaper and more powerful magnets + +Nov 19th 2016 | From the print edition + + + +A CLASSIC experiment beloved of scientifically inclined children is to cover a magnet with a piece of paper and sprinkle iron filings onto the paper. This reveals the field lines that connect the magnet’s north and south poles. Try something similar with some of the new types of magnets now being made using additive manufacturing (3D printing), and a rather different image might appear. Unlike the simple bars and horseshoes of children’s magnets, the 3D-printed variety can be made in all manner of shapes. Their fields can thus be tailored into patterns far more complex than a simple north-south alignment. + +These unconventional magnets have huge value in the design and performance of many products that rely on magnetic components: from hospital body-scanners to audio speakers, and from hard disks to wind turbines. In particular, anything that involves an electric motor or a generator also uses magnets. A modern car, for instance, contains a hundred or more electric motors of various sorts, to open and close the windows, adjust the seats, run the heating and, increasingly, to turn the wheels. All require magnets to make them work. The unconventional shapes needed to generate the complex magnetic fields they need to do their jobs properly can, though, be difficult to make. + +The other difference between a modern magnet and a childhood one is its composition. Chances are, the magnet under the paper in the school-lab experiment is, like the filings on top, made of iron. The most powerful commercial magnets, by contrast, contain elements known as rare earths. These metals, particularly neodymium, samarium and dysprosium, are not actually all that rare. But they are rarely found in deposits rich enough to be worth mining, so their availability is limited and their prices can be high. Any process that is parsimonious in their use would thus be a boon to industry. + +Little by little + +At the moment, rare-earth magnets are made in one of two ways. The first is by sintering the required materials together using heat, pressure or both, to create a solid from a mass of powder. The resulting block is then cut and sliced into pieces of the required shape. The second method is to mix the magnetic materials with a polymer, and then shape the mixture by injection moulding to make what is known as a bonded magnet. + +In principle, either of these processes might be adapted to the methods of 3D printing. In practice, most such experiments at the moment make bonded magnets. Sintered 3D printing, an established technique, uses a laser or electron beam to heat and melt the powder to be sintered, but the different components of rare-earth-based magnetic materials (the most common is neodymium-iron-boron, or NdFeB) often have wildly different melting points, making sintered printing hard to pull off. + +Ways of printing bonded magnets are, however, evolving rapidly, as two recent papers show. Dieter Süss and his colleagues at the Vienna University of Technology, in Austria, have demonstrated a way of printing bonded magnets that resembles the plastic-filament printers many hobbyists use. In this case the filament contains 45-65% by volume of magnetic granules. As the filament is melted, it is extruded by the printer to build a shape up layer by layer. This permits the production of magnets far more complex than injection moulding can turn out, as the team report in Applied Physics Letters. In this case the granules start out in an unmagnetised state, but placing the printed object into a strong magnetic field of the required geometry converts it into a permanent magnet. + +Dr Süss’s process, the paper claims, allows new magnet designs to be created on a computer and produced rapidly, with a precision of well under one millimetre. That opens up new possibilities, such as using different materials within a single magnet to create areas of strong and weak magnetism. This could be useful in certain types of sensors. + +Parans Paranthaman and his colleagues at Oak Ridge National Laboratory, in Tennessee, meanwhile, have adopted a different technique. They start with pellets containing a blend of 65% NdFeB and 35% nylon. These are then melted and extruded by the laboratory’s Big Area Additive Manufacturing (BAAM) machine. Among other things, BAAM has been used in the past to print car bodies from a mixture of carbon fibre and plastic. In their analysis in Scientific Reports, Dr Paranthaman’s team report that 3D-printed magnets not only retained the magnetism of the materials they were made from, but performed better, in many ways, than those made by injection moulding from similar materials. + +Dr Paranthaman says that, with further work, the process should truly outperform injection moulding, especially for making prototypes and short-run customised designs. To change the configuration of a product being made by injection moulding requires expensive retooling. With a 3D printer a software tweak will suffice. 3D printing can be slow, it is true. Dr Paranthaman’s first set of magnets were made with the BAAM nozzle depositing material at a speed of 2½ cm (one inch) a second. But he expects that this could eventually be increased to a metre a second. + +Dr Paranthaman and his colleagues are also investigating how to print sintered magnets. In some cases these are more desirable than bonded magnets because they are more powerful (though they are also more brittle and prone to corrosion, and the process of slicing and dicing a sintered block into useful products can waste as much as half of the material in it). Though they are cagey about the details, the team aspire to get around the melting-points problem by spraying a jet of materials onto the surface being built up rather than melting layers of powder. And Dr Paranthaman certainly does not lack ambition. He hopes that, one day, his team will be able to print a steel stator (the stationary part of an electric motor) complete with its rare-earth permanent magnets all in one go. + + + + + +Oceans in space + +Not so lonely sea in the sky + +Pluto is the latest place thought to have subsurface waters + +Nov 19th 2016 | From the print edition + +A great hole in Pluto + +IS THE solar system about to get another ocean? So far, besides Earth, six bodies are known or suspected to harbour oceans. These are Europa, Callisto and Ganymede (all moons of Jupiter), Enceladus and Titan (both moons of Saturn) and Triton (a moon of Neptune). The latest candidate is Pluto, the most famous inhabitant of the Kuiper belt, a girdle of asteroids that orbit the sun beyond Neptune. + +Pluto’s claim to an ocean, argued this week in two papers published in Nature, is based on data collected in 2015 by New Horizons, a robotic spacecraft that zoomed past it in July of that year. The ocean in question, if it exists, is beneath Pluto’s surface. That makes it unlike Earth’s ocean, but like those of the other six bodies. To human sensibilities that is, perhaps, a funny sort of ocean. But add it to the other six and it is Earth’s surface ocean that looks anomalous, rather than Pluto’s buried one. + +The argument for a Plutonic ocean—advanced by teams led by Francis Nimmo of the University of California, Santa Cruz, and James Keane, of the University of Arizona, Tucson, centres on Sputnik Planitia, a basin 1,300km across (see picture) caused by a collision in Pluto’s distant past. Pluto and its largest moon, Charon, are tidally locked. As they orbit their common centre of gravity, they always show each other the same face and, relative to the horizon, the position in the sky of either observed from the other never changes. The curiosity is that Sputnik Planitia lies almost exactly on the opposite side of Pluto from Charon, on the “tidal axis”, a line that runs through the centre of both bodies. + +That is quite a coincidence—or, rather, in Dr Nimmo’s view it isn’t. He calculates the odds of it happening by chance as one in 20. He would therefore prefer to believe there is a physical explanation. And there might be. If Sputnik Planitia were an anomalously dense part of Pluto’s surface, and thus a concentration of mass, it would affect Pluto’s orientation with respect to its moon. That would cause Pluto to topple over until Sputnik Planitia lay at one of the two points at which the tidal axis intersects its surface. + +Unfortunately, basins are characterised by the absence of mass rather than its presence. But Dr Nimmo is unfazed. He suggests that the huge quantities of material blasted out by the impact which created Sputnik Planitia would have reduced the pressure on Pluto’s crust, letting the subterranean water of a hypothetical ocean bulge closer to the surface. Since water is denser than most of the stuff found at or near Pluto’s surface, that upwelling would have increased the relative mass of Sputnik Planitia rather than decreasing it. + +Though speculative, this idea is plausible. Water is common in the Kuiper belt, and Pluto in particular is thought to consist of a rocky core overlain by a thick mantle of ice. That rocky core will contain radioactive elements, the decay of which might provide enough heat to melt some of the mantle. Add a dash of ammonia, also common on Pluto, to lower the water’s freezing point, and Presto! you have an ocean. + + + + + +Malaria + +The biter bit + +A new drug dispenser may turn human beings into chemical weapons + +Nov 19th 2016 | From the print edition + + + +KILLING mosquitoes of the genus Anopheles, the sort that transmit malaria, is a serious business—so serious that some doctors would like to do it by using people as bait. Their idea is to dose those in malarious areas with a drug called ivermectin. This will not protect the dosees directly, for it does not act on the parasite that causes the disease. But it may protect them indirectly, by making their blood poisonous to Anopheles. Mosquitoes do not tend to fly far from the place they hatch, and experiments suggest that if most of a village’s inhabitants were to take ivermectin they could collectively do serious damage to the local Anopheles population. That would substantially reduce the number of cases of malaria in an area. + +Whether this is ethical is debated. Ivermectin is used routinely to treat filariasis, river blindness, scabies and several other diseases. But drugging healthy people is generally frowned on. At the moment, though, there is a more practical objection. Ivermectin does not hang around in the body long enough to make a concerted anti-mosquito campaign that relies on it look like a realistic proposition. And it is this that Robert Langer of the Massachusetts Institute of Technology and Giovanni Traverso at Brigham and Women’s Hospital, in Boston, hope to change. As they report in Science Translational Medicine, they think they have devised a means to keep ivermectin concentrations in the blood at mosquito-killing levels for far longer than has previously been possible. + +The starting point for their device is a material called poly E-caprolactone (PCL). They melted this and blended it with powdered ivermectin. Then they tested the resulting composite in an acidic solution intended to mimic conditions found in the human stomach, to see how well it protected the drug, and also the rate at which ivermectin migrated out of it. They found that the PCL did indeed protect the ivermectin from the acid. It also let the drug diffuse out steadily over the course of 14 days. + +Encouraged by this finding, the two researchers pondered how to arrange for a block of ivermectin-doped PCL to stay in the stomach that long, rather than passing through to the intestine and thence, ultimately, to the outside world. Their solution was a star-shaped structure 4cm across (see picture) with a flexible polyurethane core and arms made of ivermectin-laden PCL. + +For delivery, this is folded up inside a gelatine capsule, so that it can be swallowed. Once it arrives in the stomach, the gelatine is rapidly digested and the star unfolds into something large enough to avoid being expelled into the intestine, but insubstantial enough not to obstruct the passage of semi-digested food through the alimentary canal. After careful experiment, the researchers came up with an ivermectin-PCL mixture that disintegrates as it gives up its payload. Once the arms, which are made of this mixture, have dissolved, the core is small enough to pass to the intestine and out of the body. + +Laboratory tests suggested this arrangement would work, so the researchers tried it out on animals—specifically, a dozen Yorkshire pigs. These are a common breed, and the passages between their stomachs and their intestines are similar in size to those of people. + +Using X-rays, they monitored the stars’ movements through the pigs’ guts. They also sampled the animals’ blood, to work out how much ivermectin was getting into it. As they had hoped, the stars were able to release mosquito-killing doses of ivermectin for up to two weeks. And, as intended, when their payloads were expended they collapsed and passed safely through the remainder of the digestive system without causing any obvious ill effects. + +Dr Langer and Dr Traverso hope to start human trials next year. But they also wonder if they have come up with something that might be more widely deployed. Taking repeated doses of any drug to keep its level up is a faff. If the stars could be impregnated with other drugs, then things now requiring daily or more frequent doses might be delivered on a one-horse-pill-per-fortnight basis. That would almost certainly improve compliance. + +Which, if any, other drugs might be delivered in this way remains to be seen. But, even if the stars work only for ivermectin (assuming they do), they will still be a useful addition to the armoury being deployed against malaria. And that, alone, could save many lives a year. + + + + + +Censusing fisheries + +Where’s the catch? + +Counting sea creatures is hard. But there is now a new way to do it + +Nov 19th 2016 | From the print edition + +ABOUT 90% of the world’s fish stocks are being fished either to their limit or beyond it. Monitoring fish numbers reliably, though, is no easy matter. Official catch data are often incomplete and sometimes untrustworthy. Moreover, large tracts of the sea are not monitored at all. In order to know which species to conserve, and where, it would be handy to be able to establish fish numbers cheaply and reliably. Now, as they write in PLOS ONE, Philip Thomsen of the Natural History Museum of Denmark, in Copenhagen, and his colleagues think they have taken a step towards this goal. + +Scientific surveys of deepwater fish are often carried out by trawling the ocean bed. This means towing a net over a set distance and then hauling it up to count the catch within. That, when due allowance is made for the size of the net’s mouth, yields a figure for the number of each fish species per square kilometre. + +Every year a research vessel called Paamiut carries out surveys of this sort in the Davis Strait off south-west Greenland. This year it also had one of Dr Thomsen’s colleagues on board. At each of the 21 places Paamiut dropped her nets, he collected two litres of seawater from the bottom. The team’s aim was not to sample sea life directly, but rather to examine the fragments of floating DNA which fish slough off in slime or scales, or excrete into the water. They hoped they would be able to link the quantity of this “environmental” DNA to those species’ abundances, as measured by the trawl. + +This they more or less did. Given the fragmentary nature of environmental DNA, they found it easier to recognise families than species (a family, in this context, is the taxonomic level above a genus; herring, sardines and shad, for example, all belong to the family Clupeidae). The trawls picked up fish from 28 families. The team found DNA from members of 26 of these in their samples, and also detected three families that had no representatives entangled in Paamiut’s nets. + +You’ll never catch me! + +Both methods agreed that the most abundant individual species was the Greenland halibut (family Pleuronectidae, the “right-eye” flounders, which was also the most abundant family). Sebastidae, a group sometimes known vulgarly as “rockfish”, were the second most abundant family according to the trawl data, and were ranked third by DNA. By contrast, DNA from Greenland sharks (family Somniosidae, pictured) ranked second by the DNA analysis, yet only one such shark was caught by the trawls. In this case, the portrait painted by DNA is probably the more accurate one. Greenland sharks are thought to excel at escaping from nets and may be present in greater numbers than conventional surveys indicate. + +Taken together, these results suggest Dr Thomsen’s technique has great potential for keeping track of fish populations. Overall, the correlation between DNA concentrations and catch size was too weak to infer one from the other. But, as the Greenland-shark data hint, it is quite likely that it is the trawls, rather than the DNA, which are out of whack. Trawl nets cannot be dragged over ground that is too sandy or too rocky, so they may miss important habitats. And other fish than sharks may also be able to detect and evade them. + +Dr Thomsen acknowledges that there is some way to go before his technique would permit an accurate census of the world’s oceans. The temperature and salinity of seawater, which affect DNA’s stability, would have to be accounted for. And big fish may not, as might reasonably be expected, ooze proportionately more DNA into the water than small fish do. That could lead to underestimates in the population sizes of some whoppers. He would therefore like to conduct his experiment over a larger area and repeat the measurements several times over the course of a week or two. He would also like to sample the little-explored intermediate zones between the ocean’s bottom and its shallows. Sinking to new depths, then—but in the best possible way. + + + +Books and arts + + + + + +Globalisation: The third wave + +Somalia: Hope among the horror + +Campaign strategists: The art of political war + +New fiction: Rhythm of life + +Physics: Empty space, the final frontier + +Classical music: West meets East + + + + + +The past and future global economy + +The third wave of globalisation may be the hardest + +First free movement of goods, then ideas. But momentum may stop at the free exchange of people + +Nov 19th 2016 | From the print edition + + + +The Great Convergence: Information Technology and the New Globalization. By Richard Baldwin. Belknap; 329 pages; $29.95 and £22.95. + +BILL CLINTON once called globalisation “the economic equivalent of a force of nature, like wind or water”. It pushes countries to specialise and swap, making them richer, and the world smaller. In “The Great Convergence”, Richard Baldwin, a Geneva-based economist, adds an important detail: like wind and water, globalisation is powerful, but can be inconstant or even destructive. Unless beloved notions catch up with reality, politicians will be pushed to make grave mistakes. + +In an economist’s dream world, things, ideas and people would flow freely across borders. Reality is stickier, and stuff less mobile—so much so that it trapped humankind’s ancestors into village-level economies. Constraints on trade once bundled consumption and production together, limiting their growth. + +Mr Baldwin’s grand theory of globalisation is of a series of unbundlings, driven by sequential collapses in the cost of moving things and ideas across space. From the domestication of the camel around 1,000BC to the first commercial steam engine in 1712, the first great wave of globalisation unbundled production and consumption. From 1820, British prices were set by international demand, and café-goers could sip Chinese tea sweetened with Jamaican sugar. + +Though moving goods became cheap, until the very end of the 20th century moving ideas was expensive. Mr Baldwin invites readers over 50 to remember international calls costing $5 a minute, or the $50 price of sending a single document by an overnight courier. This encouraged industries to cluster. The hubs of economic activity emerged in the countries we now know as the G7. In this form of globalisation, national teams of ideas and workers battled for market share, and became richer in the process. Mr Baldwin uses the analogy of two sports teams swapping players to improve their performance. + +But since the 1990s globalisation has changed radically, as the internet has lifted the cost of moving ideas, and fuelled a second unbundling. Now that co-ordinating international production is cheaper, faster and safer, supply chains ignore borders to go sprawling across the world. A Canadian aeroplane-maker can direct a team of Mexican engineers. Apple can combine American design with Chinese assembly lines. With many products made everywhere, trade has been, in effect, denationalised. + +The pace of change and the new ease with which rich-world companies can outsource work have eliminated the old boundaries around knowledge and created a new, more unsettling trade landscape. Once, textile-mill workers in South Carolina had exclusive access to American technology. Although it might seem that they have lost out to competition from Mexican workers, more accurately they face an altogether more formidable competitor: Mexican workers made more productive by American know-how. + +Continuing the sports analogy, Mr Baldwin says that today’s trade is like the coach of a top team being allowed to offer his services to underdogs. The coach gets rich from the doubled market for his services, while the better team gets a sudden surprise from the newly skilled competition. Mr Baldwin says that discontent with globalisation stems in part from an “ill-defined sense that it is no longer a sport for national teams”. + +To placate voters by raising tariffs is to tackle 21st-century globalisation with tools better suited to the 20th (or even 19th) century. Given the new world of global supply chains, a tariff is like erecting a wall in the middle of a factory. Mr Baldwin’s 21st-century policies involve setting common rules and standards to make companies feel secure that their supply chains will work. These are the goals of trade deals like the Trans-Pacific Partnership, or Britain’s membership of the European Union’s customs union—both under threat. And he says little on how to win over disgruntled voters, save a few lines on support for workers rather than jobs, and a vague plea to share gains between winners and losers. + +Mr Baldwin is too sanguine about the politics of globalisation. His rosy vision of the future imagines globalisation unshackled from its third constraint, as labour is made mobile by robots allowing people to offer their services remotely. In a different world, perhaps. A quip from his conclusion, written before America’s presidential election, has unintended weight. “Not even the future is what it used to be.” + +This article appeared in the Print Edition with the headline: The third wave + + + + + +Hope for failing states + +A rare ray of light from Somalia + +Mohamud “Tarzan” Nur was a dynamic mayor of Mogadishu. He may run for president + +Nov 19th 2016 | From the print edition + +Seeing light through the cracks + +The Mayor of Mogadishu: A Story of Chaos and Redemption in the Ruins of Somalia. By Andrew Harding. St. Martin’s Press; 286 pages; $26.99. Hurst; £20. + +THE brutal term “failed state” was almost invented for Somalia. Since 1991, when its military dictator was overthrown, it has had no government that fully controls the country and no election worthy of the name. A fanatical jihadist movement known as al-Shabab (“the Youth”) still dominates much of the countryside and regularly murders bigwigs and blows up hotels and restaurants in Mogadishu, the seaside capital that was once an Italian colonial jewel. Famine, terrorism, corruption and clan factionalism have prevailed. A swathe of Somalia’s people—2m out of 12m, some say—has fled abroad. + +Amid this remorseless gloom, however, Andrew Harding, one of the BBC’s most intrepid and empathetic journalists, who has been visiting the country since 2000, has chronicled the extraordinarily uplifting life of one Somali, Mohamud Nur, nicknamed Tarzan. Dumped as a child in an orphanage in Mogadishu, he later made good in Saudi Arabia and then London, and returned to Somalia in 2010 to become the capital’s dynamic mayor. According to Mr Harding, Tarzan’s courage, inventiveness and resilience typify the finest qualities of the Somali people. It would be wrong, he insists, to give up hope. + +Yet it is hard, despite the best efforts of Tarzan and his BBC booster, to be optimistic. Perhaps the biggest reason for despair is the Somali clan imbroglio, which has long been a recipe for internecine division. Mr Harding quotes an old Somali proverb: + +Me and my clan against the world; + +Me and my family against my clan; + +Me and my brother against my family; + +Me against my brother. + + + +In Tarzan’s case, though he hails from a tiny sprig of one of the big four clans, he was endlessly tripped up by envious rivals, often stirred up by a sense of clannish competition. Somalis as a whole are homogenous, speaking the same language and sharing one religion and culture. Yet the extraordinarily intricate web of clans can lethally “divide and destroy”. + +Another source of division, documented by Mr Harding through the prism of Tarzan’s family, is the resentment felt towards the scattered Somali diaspora, especially when its members return home (even though remittances are crucial to the survival of many of those who have stayed behind). Tarzan’s wife and six children were by no means thrilled to come back after two decades in London. Mr Harding poignantly describes the churning of emotions that many migrants (not just Somalis) experience as they are tossed and tugged between competing cultures. Tarzan’s wife Shamis talks of “being marooned between two identities”. + +Though the violence that runs like a thread through every aspect of life in Mogadishu is usually attributed to al-Shabab, Mr Harding makes it clear that it is also endemic among those who are meant to be jointly opposed to the jihadists. Mogadishu, says Tarzan, is “a city of sharks”. Business rivals are liable to bump each other off—and blame al-Shabab. + +Another twist, in this tangle of suspicion, is that the differences between al-Shabab and the beleaguered new establishment to which Tarzan belongs are often quite narrow. People change sides. Cousins, even brothers, fight on opposing sides. A close friend of Tarzan’s was killed by a cousin’s suicide-bombing daughter. His own cousin returned from America to join al-Shabab—and then switched sides again. “If you see him, if he comes close to my house, shoot him,” Tarzan told his guards. They were later reconciled, more or less. + +After four topsy-turvy years Tarzan was bounced out of his job. His courage and dynamism were undisputed. But he also faced envy-driven charges of malfeasance and thuggishness, which the author, who clearly admires his subject, leaves studiously unanswered. Whereas Shamis apparently flits between a business in Dubai and her old home in north London, where most of the couple’s children still reside, Tarzan has hunkered down in Mogadishu, perhaps poised to bid for the presidency in the upcoming indirect election. + +“Somalia has slowly begun to make measurable progress,” writes Mr Harding in a final, doggedly optimistic passage. “Piracy has almost stopped. Al-Shabab controls much less territory, there is oil offshore, a flourishing livestock industry, and a talented and wealthy diaspora. And yet the politics are still dangerously messy, fuelled by the greed of unaccountable politicians. This may no longer be a ‘failed state’, but the jigsaw is still in pieces.” You can say that again. + +This article appeared in the Print Edition with the headline: Hope among the horror + + + + + +Electioneering + +The new new rules of political campaigning + +Donald Trump represents a radical break with some of the old rules, and the logical conclusion of others + +Nov 19th 2016 | From the print edition + + + +Democracy for Hire: A History of American Political Consulting. By Dennis Johnson. OUP; 591 pages; $39.95 and £25.99. + +HAS Donald Trump rewritten the rulebook on American electioneering? He rejected much of his party’s ideology. And for a man for whom size is often everything, he ran a small operation. Hillary Clinton had five times as many staff in Ohio and eight times as many in Pennsylvania. Yet Mr Trump won both states, which had voted for Barack Obama four years ago. + +Dennis Johnson’s “Democracy for Hire” describes the received wisdom that prevailed for decades before Mr Trump. Candidates pursued “a particular brand of polished authenticity…homespun and unfiltered”—but to achieve it, they turned to professionals. Warren Harding hired an advertising man to overhaul his public image as long ago as 1920. Harding’s successor, Calvin Coolidge, focused on swing states, not yet so named, at the urging of a bold strategist. Mr Trump, by contrast, was known for heaping scorn on Washington’s traditional political experts. + +But in other ways, Mr Trump does not represent a break with existing strategies as much as embody their logical conclusions. Already in the 1960s, Joseph Napolitan announced a “new politics” in which candidates would speak directly to voters, increasingly bypassing the parties that nominated them. Napolitan’s Democrats had found John Kennedy, a candidate with the presence to carry a campaign on his shoulders. Mr Trump’s campaign was the apotheosis of this personality-centred operation. His party trailed in his wake, unsure whether he was leading it to the White House or electoral oblivion. + +Mr Johnson also chronicles the rise of “slashing negative television advertisements, character assassination and partial truths” in winning elections. He argues that this crossed over from local campaigns to presidential politics in 1988, when George H.W. Bush’s team launched vicious attacks accusing his opponent, Michael Dukakis, of being soft on crime. Mr Trump’s attacks on “Crooked Hillary” Clinton as herself worthy of a prison cell were, seen in this light, another culmination, not a radical break. + +Finally, Mr Trump understood that just as television supplanted radio as the primary way to connect to voters, the internet is sidelining TV. In 2004 John Kerry’s election hopes were sunk by ads that questioned his Vietnam-war record. Mr Johnson cites a Gallup poll showing that 80% of voters were aware of them within three weeks of their airing, in part thanks to online distribution. Mr Trump broadcast just a third as many televised adverts as Mrs Clinton. But his real strength was in attention-grabbing attacks in tweets and speeches, amplified endlessly online by fans, foes and stunned journalists. + +“Democracy for Hire” ends with a warning. Mr Johnson describes how laws attempting to rein in the huge increase in campaign spending have been filleted by the Supreme Court. Companies and interest groups can now give virtually without limit, diminishing the influence of political parties. Mr Johnson is right to be concerned, but here Mr Trump did take a different strategy. Forever the businessman, he kept costs down and exploited one of the few financial restrictions still standing: that campaigns have to pay firms fair value for services rendered. Thus Mr Trump was able to allocate about $8m of his campaign funds to pay family members and his own businesses for services. Sometimes it pays to play by the rules. + +This article appeared in the Print Edition with the headline: The art of political war + + + + + +Swinging through it all + +Zadie Smith’s newest is in many ways her strongest novel + +The writer’s old themes in an ambitiously sprawling new setting + +Nov 19th 2016 | From the print edition + + + +Swing Time. By Zadie Smith. Penguin Press; 453 pages; $27. Hamish Hamilton; £18.99. + +AT A fateful ballet class on a Saturday in 1982, two little girls mark each other out for friendship, recognising their shared shade of brown, “as if one piece of tan material had been cut to make [them] both”. One is born to dance; the other has flat feet. One is her mother’s “aspiration and avatar”, dressed in “yellow bows, a frou-frou skirt of many ruffles and a crop top”; the other’s mother is a feminist who believes plainness “signifies admirable maternal restraint”, and that it is bad taste to dress your daughter “like a little whore”. “Swing Time” is about those two little girls, and who they become. + +Zadie Smith was recognised as a powerful and searing writer with her debut “White Teeth” at the age of 24. Sixteen years later, her most recent work is in many ways her strongest. It is the first of her books written in the first person, narrated by the unnamed, flat-footed of the two girls. The immediacy lends an edge of complicity; Ms Smith has said she thinks of it as telling “a true lie”. She revisits familiar themes from her previous books—multicultural society, family, race, identity—but her convictions are stronger and her scope wider, this time reaching well beyond her usual territory of Britain and America. But the seeds of the story are sown on a council estate in London. + +Having recognised at seven the “invisible band” connecting them, the narrator and Tracey become inseparable. But hints of darkness in Tracey’s life bubble up at playtime. Their make-believe stories end with ballerinas getting shot. Her salvation is her talent for dance, and when she gets into stage school, our narrator believes her life is set on a dream course. The girls fall out of touch, grow up, and the narrator, used to being a “shadow”, eventually drifts into a job as an assistant to a pop star called Aimee. Despite a globetrotting life, her initial admiration and wonder at this ethereal character turn to disillusionment and eventually resentment, sparking a destructive series of events. The tipping point is Aimee’s misguided venture to save Africa by building a school. + +“Swing Time” weaves together haves and have-nots in the past and present, from Kingston and Bendigo to New York and Paris. Her story has “rich birds with no kids, poor birds with plenty”, a racist Iranian restaurant-owner and his long-suffering Somali delivery-boy, sex tourists in west Africa and a mixed-race Anglo-American gay couple in Harlem. Dispossessed and disenfranchised characters, both in the West and in Africa, can only make sense of the world by believing that it is run by a powerful and distant elite—perhaps even lizard people or the Illuminati. + +Ms Smith’s strength is her capacity for linking the local, the global and the personal. She understands that people are products of history reaching back for hundreds of years. But she also recognises the impact of those immediately around her characters, imperfect people doing their best “within the limits of being themselves”. The narrator’s parents are a strident self-taught academic mother and an unambitious postal-worker father who could only offer “love and latitude” and the example of an “early stoned retirement”. Despite their flaws, they offer the kind of invisible support unavailable to Tracey, whose dreams unravel with a sad inevitability. All her ambition and promise are irrelevant when weighed against her experiences as a child. The narrator saddens at the thought of Tracey and all her talent joining the already overflowing “ranks of the unwitnessed ”. + +Ms Smith has written a powerful story of lives marred by secrets, unfulfilled potential and the unjustness of the world. But she has interwoven it with another beautiful story of the dances people do to rise above it all. + +This article appeared in the Print Edition with the headline: Rhythm of life + + + + + +A brief history of nothing + +The uncanny physics of empty space + +The apparent void contains a sea of particles popping in and out of existence + +Nov 19th 2016 | From the print edition + + + +Void: The Strange Physics of Nothing. By James Owen Weatherall. Yale University Press; 196 pages; $26. + +MOST of the universe is empty. So it is natural that a great deal of modern physics concerns nothing—or rather the precise nature of the nothing that permeates the cosmos. Work in the past century in particular has shaken up scientists’ understanding of emptiness. Ideas about gravity and motion put in place by Isaac Newton in the 17th century were overturned by the work of Albert Einstein. The dawn of quantum mechanics revolutionised physicists’ understanding of the very small, but the theory’s conclusions were so counterintuitive that Einstein was never able to reconcile himself with them. James Owen Weatherall, a philosopher, now examines how scientists’ conceptions of supposedly empty space have changed in the light of these convulsions in his latest book, “Void”. + +Many people today imagine that, on a molecular scale, the air around them resembles a tumultuous three-dimensional game of billiards. Yet this picture, of molecules of nitrogen, oxygen and other gasses ricocheting through emptiness, is a mere 300 or so years old and has its roots in Newton’s theories. His law of universal gravitation described the attractive force between two masses in a void. But that void is far from obvious. Before the publication of Newton’s “Principia Mathematica” in 1687, two of the most influential thinkers of the Western world, Aristotle and René Descartes, developed theories requiring space (for different reasons) to be filled with stuff of some sort. + +In the late 19th century, the work of James Clerk Maxwell also seemed to rule out the notion that a vacuum was truly empty. Maxwell discovered that electricity and magnetism were linked, but he erroneously believed light waves were vibrations in an invisible “aether”. Based on this premise, he and his contemporaries incorrectly reasoned that the speed of light measured in laboratories on Earth could not be its true value since the Earth was moving through space relative to this aether. + +Einstein’s work would sweep away this view less than 50 years later. First, in his special theory of relativity, he claimed that the speed of light was the same for all observers, dispensing with the need for the aether. Next, his general theory of relativity would show that space could be curved and textured, like a taut rubber sheet stretched and formed by the masses of planets and stars. Quantum mechanics and quantum electrodynamics (a theory that merges quantum theory with Maxwell’s electromagnetism) would later reveal that even an apparently empty vacuum resembles, at small enough scales, a boiling sea of particles that constantly pop in and out of existence. + +These are not easy concepts to describe, and sometimes Mr Weatherall is in danger of losing the uninitiated reader. A diagram or two would have helped. Nonetheless, sending the curious scrambling to Google is forgivable. + +More difficult to understand is the book’s failure to mention the work of any female physicists in its pages. The author mentions, for instance, Paul Ehrenfest’s parrot (which the physicist trained to say “But gentlemen, this is not physics!” during discussions of quantum mechanics) but not his wife and collaborator, Tatyana. Also missing from the account is Henrietta Swan Leavitt’s work on Cepheid variables, pulsating stars which would become a yardstick for the expansion of the universe. That means a chapter discussing the possible shapes of the universe consistent with the general theory of relativity ends without discussing what its actual shape might be in the light of such discoveries. These oversights mar an otherwise engaging and interesting account, but perhaps it is natural that a history of space should have a few gaping holes. + +This article appeared in the Print Edition with the headline: Empty space, the final frontier + + + + + +Red dawn for classical music + +China’s newest export hit is classical music + +Though not yet at Western levels of quality, Chinese ensembles are improving rapidly + +Nov 19th 2016 | From the print edition + + + +NEXT month New York’s David Geffen Hall will welcome a visiting orchestra, on a tour including other top venues in Los Angeles and San Francisco. But the guest orchestra is not the Berlin Philharmonic or one of Europe’s other esteemed ensembles. It is the China Philharmonic Orchestra (CPO), which was founded in Beijing a mere 16 years ago. + +The CPO is hardly the only Chinese ensemble touring the West. This year’s Budapest Spring Festival featured Puccini’s “Turandot”, about a cold-hearted Chinese princess, performed by musicians from the China National Opera House in Beijing. In August the Shanghai Opera performed “Thunderstorm”, a newly adapted Western-style Chinese work, at London’s Coliseum. Next year the Shanghai Symphony Orchestra will tour prestigious European festivals. Once, classical music generally travelled from the West to the rest. Now China is reversing the exchange, not merely performing Western classical music in China, but exporting it. + + + +“We have many good classical music groups in China, but people abroad don’t know about them,” says Jiatong Wu, who has organised many of these tours. “We’re trying to change that.” Mr Wu, who co-founded Wu Promotion in 1991, has become an accelerator of China’s growing classical-music exports. Last year he dispatched the Macao Orchestra on its first tour of Europe, and also organised a CPO tour ending in Greece. Under his auspices, the Beijing Symphony Orchestra has completed seven European tours. + +Fifty years after Mao’s Cultural Revolution in effect banned Western music, a real cultural revolution is taking place. The government is setting up opera houses, concert halls and symphony orchestras at speed. Some 40m children now play the piano—once dismissed by Mao as bourgeois—and additional millions play the violin. The “Lang Lang effect” helps too: the country’s most famous pianist has inspired millions of eager young musicians. + +But it is in bringing orchestras, opera performances and top individual performers to the West that China is showing its real clout. Jindong Cai of Stanford University, who conducts in both China and the United States, describes the push in soft-power terms: “A product manufactured in China is not as important for China’s international profile. Cultural power is much more important.” Next month Mr Wu is dispatching the CPO to Havana. Chinese orchestras and opera companies now tour the Far East, too—previously the domain of touring Western outfits. + +According to Mr Cai, the government operates a $300m art-export fund. (Mr Wu says the government doesn’t fund Wu Promotion, but does help pay for Chinese orchestras’ foreign tours.) Western governments, too, help underwrite ensembles’ foreign tours. + +Measured in musical quality, the CPO is not yet the Berlin Philharmonic. “No Chinese orchestra I have heard comes close to beginning to match the world’s best in power, beauty and precision,” says Norman Lebrecht, a British music critic. And though Mr Wu is said to treat his Chinese performers well, Western artists’ agents are concerned that Chinese performers undercut Westerners, because their employers don’t have to match the West’s wages or labour laws. That very setup has, of course, helped China become the world’s leading manufacturing power. + +Mr Wu acknowledges the quality gap. “We have a couple of good orchestras, but they’re not the Vienna Phil,” he admits. “But our tours are a way of showing our orchestras’ standards, to show our colleagues in Europe that we’re getting better and better.” Mr Lebrecht agrees: “Longer-established Chinese orchestras have improved beyond recognition.” + +The question is if the Chinese government and promoters like Mr Wu will manage in classical music what China’sfactories have accomplished in manufacturing: beat the West at its own game. Not surprisingly, Mr Wu plans to expand his company to Europe. The question, he says, is whether to start from scratch or buy an existing European company. Some European artists’ managers don’t like the sound of either option. + +This article appeared in the Print Edition with the headline: West meets East + + + +Obituary + + + + + +Leonard Cohen: Raising the song + + + + + +Raising the song + +Obituary: Leonard Cohen died on November 7th + +The novelist, poet and singer was 82 + +Nov 19th 2016 | From the print edition + + + +HE HAD little to bring, Leonard Cohen said. He worked with what he’d got. Simple chords on his guitar, which he wished he could play better. A finger or two on a keyboard. His “golden voice”, a wry joke (for yes, he often joked, when he could raise his brooding eyes out of his despair). He was a singer in the lesser choirs, ordained to raise his voice so high and no higher; though certainly low and, after decades of Marlboro Lights, yet lower. + +No ideas filled his songs either, in his view. All he had to offer was his own experience. Like Bob Dylan, Joan Baez and so many others in the age of protest, he sang about democracy, devastation, a future bleak as a blizzard and an unkind world in which, like a bird on the wire, he tried to be free. But the songs that welled up instinctively were about women: Suzanne, who took him down to her place by the river and fed him tea and oranges that came all the way from China, + +And you know that she’s half-crazy + +but that’s why you want to be there + + + +Or Marianne, his Norwegian muse, who lit up the island of Hydra for four years, + +I loved you in the morning + +our kisses deep and warm + +your hair upon the pillow + +like a sleepy golden storm + + + +but who tried with her fine spider-webs, grey clothespins and gardenias to fasten his ankles to a stone, so that he had to break away: + +Well so long, Marianne, + +It’s time that we began + +To laugh, and cry, and cry, and laugh, about it all again. + + + +With another Suzanne he had a son and a daughter, but domesticity repelled him; he always sang “kitchen” with a snarl. Like a gypsy-boy or a sailor, he preferred to roam among the world’s wealth of going-down women and unmade hotel beds. + +Singing came late. Words came first, the charged speech he heard in the synagogue his prosperous family had built in Montreal, sitting in the third row. The rhythms of the cantor, too, seemed full of light. Canada, by contrast, clung like a dying animal. He rejected its snow and provincialism though, from time to time, he drifted back to Montreal; and he was buried there. + +By his mid-30s he had published two novels and four books of poetry, and knew what it was to pace grey European streets in a raincoat with his head full of Lorca and Joyce. But he was also starving. Raising his voice brought fame and fortune. There was no hit record, but audiences in the tens of thousands, including 600,000 at a hippy festival in 1970 in the Isle of Wight where, like drunken fireflies in the pre-dawn dark, his listeners lit matches at his command. Destiny flared with them. He was paying his rent in the Tower of Song, where 27 angels had long ago tied him down. + +David with his harp + +Celebrity didn’t charm him, though. His tastes were modest: elegant, but worn, suits, sometimes a straw palliasse to sleep on. He would sing over café meals to soothe friends. Live performances brought stage-fright so severe that neither speed nor Chateau Latour, in large doses, could get him through it. The songs took months, years. And the outward show had less and less meaning. Since his youth he had been seeking a vision of God and a master who could take him there, out of the uselessness and ruins of himself. His “Book of Mercy” of 1984, heavily based on the Psalms, showed him trying to sing out of the wilderness. He wanted to raise up his song to the Lord as David did on the harp, though still damp from the body of Bathsheba, with nothing on his tongue but “Hallelujah!” And for that, the road lay inward. + +Judaism was his home, but he freely stole from others. He sought alternative cures. The tormented Catholic Christ hung in his songs and bled there, like himself. From 1993-98 his need for silence drew him to Zen, to a monk’s life in a shack (with essential espresso machine) 6,500 feet up a mountain in California. There he wrote, smoked, shovelled snow, romped in his dreams with an immense cloudy woman, and came down, back to Boogie Street, convinced he had no gift for spiritual matters. + +The songs, when he returned to them, said otherwise. His concerts became more like prayer gatherings: in 2013, when he went out on the stage of the world one last time, he was dropping to his knees to sing. He was still railing at God and growling at the apparent randomness of everything: if God was the dealer, he was out of the game. Yet he was also calm. He might be old, but he was still fine-looking, natty in his grey fedora. And he was not afraid of what was coming. This summer, he assured the far-away dying Marianne that if she stretched out her hand, she could reach his; he was just behind her on the road. He had learned, with Abraham, to sing “Here am I”; he had learned too to accept that his true song, his great song, could never be perfect, for there was a crack in everything; that’s how the light got in. + +May everyone live + +and may everyone die + +Hello my love, + +and my love, Goodbye. + + + + + +Our obituary of Raoul Wallenberg should have identified Ingrid Carlberg, Wallenberg’s biographer, as the source of the family anecdotes. We are sorry for this omission. + +This article appeared in the Print Edition with the headline: Raising the song + + + +Economic and financial indicators + + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Access to electricity + +Markets + + + + + +Interactive indicators + +Nov 19th 2016 | From the print edition + + + + + +Output, prices and jobs + +Nov 19th 2016 | From the print edition + + + + + +Trade, exchange rates, budget balances and interest rates + +Nov 19th 2016 | From the print edition + + + + + +The Economist commodity-price index + +Nov 19th 2016 | From the print edition + + + + + +Access to electricity + +Nov 19th 2016 | From the print edition + + + +The UN wants to ensure universal access to modern energy services by 2030. However, the International Energy Agency (IEA) reckons that 1.2bn people, or 16% of the world’s population, lacked access to electricity in 2014. By 2030, it predicts the tally will still be 784m. Sub-Saharan Africa has the highest level of energy poverty: 65% of the population is off the grid. India is a brighter spot: 81% of people are connected, almost double the rate in 2000, and the government has pledged power for all by 2022. The IEA is not quite so optimistic; it reckons that 56m Indians will still be without electricity in 2030. China boasts full power access: it has just wound up the largest electrification programme in history. + + + + + +Markets + +Nov 19th 2016 | From the print edition + + + + + +Table of Contents + +The Economist + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Trump’s world: The new nationalism + + + + + +Obamacare: And a pony for everyone + + + + + +The French presidential election: Europe’s biggest populist danger + + + + + +Pacific trade: Try, Persist, Persevere! + + + + + +Tata Group: Ratantrum + + + + + +Letters + + + +On the American election: Letters to the editor + + + + + +Briefing + + + +Who is Chinese?: The upper Han + + + + + +United States + + + +The Trump administration: The tower of silence + + + + + +The Affordable Care Act: Obamasnare + + + + + +Donald Trump and the Supreme Court: Listing right + + + + + +Voter registration: Oregon lets it ride + + + + + +Capital punishment: Death has less dominion + + + + + +Conflicts of interest: Dynasty + + + + + +The presidential election: Illness as indicator + + + + + +Lexington: Democrats on the brink + + + + + +The Americas + + + +Latin America and China: A golden opportunity + + + + + +Haiti after the hurricane: Weaker than the storm + + + + + +Bello: If at first you don’t succeed... + + + + + +Asia + + + +The collapse of TPP: Trading down + + + + + +South Korean politics: The i-word + + + + + +Indonesian politics: Tolerance on trial + + + + + +Malaysia’s 1MDB scandal: Nothing to see here + + + + + +Islamic State in Pakistan: Lethal partners + + + + + +Australia and asylum-seekers: The American solution + + + + + +China + + + +China and American democracy: Weighing up Telangpu + + + + + +Hong Kong’s legislature: Nipped in the bud + + + + + +Communists: Pride in the party + + + + + +Banyan: A China-America romance? + + + + + +Middle East and Africa + + + +The nuclear deal with Iran: On borrowed time + + + + + +Iran: Theocratic troubles + + + + + +Syria: The next push + + + + + +Ghana: Nkrumah’s heirs + + + + + +Corruption in Sierra Leone: Call it in + + + + + +Europe + + + +France’s Republican primary: The veterans + + + + + +The Balkans: Clinton-lands + + + + + +Russian intrigues: Arresting developments + + + + + +Procurement spending: Rigging the bids + + + + + +Charlemagne: Iron waffler + + + + + +Britain + + + +Online shopping and business: All that is solid melts into air + + + + + +Brexit and public opinion: Fifty-fifty nation + + + + + +Prosecuting sex offences: The hardest cases + + + + + +Medical records: Patient revolution + + + + + +Animal rights: Hunted down + + + + + +Britain’s young: Generation Screwed or Generation Snowflake? + + + + + +Bagehot: The fourth pillar sways + + + + + +International + + + +Global politics: League of nationalists + + + + + +Business + + + +Tata Group: Clash of the Tatas + + + + + +Donald Trump and American energy: Polluting the outlook + + + + + +Mining: Vein hope + + + + + +Samsung buys Harman: Amp my ride + + + + + +Corporate Italy: Seize the day + + + + + +Consumer goods: Pot of gold + + + + + +Schumpeter: Uncertain business + + + + + +Finance and economics + + + +Emerging markets: Reversal of fortune + + + + + +Buttonwood: Save yourself + + + + + +Iceland’s post-crisis economy: It’s not up to you + + + + + +Agricultural Bank of China: Sanctions with Chinese characteristics + + + + + +Banks and “too big to fail”: Kash call + + + + + +China’s corporate debt: State of grace + + + + + +Credit in China: Just spend + + + + + +Free exchange: That Eighties show + + + + + +Science and technology + + + +Additive manufacturing: Magnetic moments + + + + + +Oceans in space: Not so lonely sea in the sky + + + + + +Malaria: The biter bit + + + + + +Censusing fisheries: Where’s the catch? + + + + + +Books and arts + + + +Globalisation: The third wave + + + + + +Somalia: Hope among the horror + + + + + +Campaign strategists: The art of political war + + + + + +New fiction: Rhythm of life + + + + + +Physics: Empty space, the final frontier + + + + + +Classical music: West meets East + + + + + +Obituary + + + +Leonard Cohen: Raising the song + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Access to electricity + + + + + +Markets + + + + + +Table of Contents + +The Economist + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Trump’s world: The new nationalism + + + + + +Obamacare: And a pony for everyone + + + + + +The French presidential election: Europe’s biggest populist danger + + + + + +Pacific trade: Try, Persist, Persevere! + + + + + +Tata Group: Ratantrum + + + + + +Letters + + + +On the American election: Letters to the editor + + + + + +Briefing + + + +Who is Chinese?: The upper Han + + + + + +United States + + + +The Trump administration: The tower of silence + + + + + +The Affordable Care Act: Obamasnare + + + + + +Donald Trump and the Supreme Court: Listing right + + + + + +Voter registration: Oregon lets it ride + + + + + +Capital punishment: Death has less dominion + + + + + +Conflicts of interest: Dynasty + + + + + +The presidential election: Illness as indicator + + + + + +Lexington: Democrats on the brink + + + + + +The Americas + + + +Latin America and China: A golden opportunity + + + + + +Haiti after the hurricane: Weaker than the storm + + + + + +Bello: If at first you don’t succeed... + + + + + +Asia + + + +The collapse of TPP: Trading down + + + + + +South Korean politics: The i-word + + + + + +Indonesian politics: Tolerance on trial + + + + + +Malaysia’s 1MDB scandal: Nothing to see here + + + + + +Islamic State in Pakistan: Lethal partners + + + + + +Australia and asylum-seekers: The American solution + + + + + +China + + + +China and American democracy: Weighing up Telangpu + + + + + +Hong Kong’s legislature: Nipped in the bud + + + + + +Communists: Pride in the party + + + + + +Banyan: A China-America romance? + + + + + +Middle East and Africa + + + +The nuclear deal with Iran: On borrowed time + + + + + +Iran: Theocratic troubles + + + + + +Syria: The next push + + + + + +Ghana: Nkrumah’s heirs + + + + + +Corruption in Sierra Leone: Call it in + + + + + +Europe + + + +France’s Republican primary: The veterans + + + + + +The Balkans: Clinton-lands + + + + + +Russian intrigues: Arresting developments + + + + + +Procurement spending: Rigging the bids + + + + + +Charlemagne: Iron waffler + + + + + +Britain + + + +Online shopping and business: All that is solid melts into air + + + + + +Brexit and public opinion: Fifty-fifty nation + + + + + +Prosecuting sex offences: The hardest cases + + + + + +Medical records: Patient revolution + + + + + +Animal rights: Hunted down + + + + + +Britain’s young: Generation Screwed or Generation Snowflake? + + + + + +Bagehot: The fourth pillar sways + + + + + +International + + + +Global politics: League of nationalists + + + + + +Business + + + +Tata Group: Clash of the Tatas + + + + + +Donald Trump and American energy: Polluting the outlook + + + + + +Mining: Vein hope + + + + + +Samsung buys Harman: Amp my ride + + + + + +Corporate Italy: Seize the day + + + + + +Consumer goods: Pot of gold + + + + + +Schumpeter: Uncertain business + + + + + +Finance and economics + + + +Emerging markets: Reversal of fortune + + + + + +Buttonwood: Save yourself + + + + + +Iceland’s post-crisis economy: It’s not up to you + + + + + +Agricultural Bank of China: Sanctions with Chinese characteristics + + + + + +Banks and “too big to fail”: Kash call + + + + + +China’s corporate debt: State of grace + + + + + +Credit in China: Just spend + + + + + +Free exchange: That Eighties show + + + + + +Science and technology + + + +Additive manufacturing: Magnetic moments + + + + + +Oceans in space: Not so lonely sea in the sky + + + + + +Malaria: The biter bit + + + + + +Censusing fisheries: Where’s the catch? + + + + + +Books and arts + + + +Globalisation: The third wave + + + + + +Somalia: Hope among the horror + + + + + +Campaign strategists: The art of political war + + + + + +New fiction: Rhythm of life + + + + + +Physics: Empty space, the final frontier + + + + + +Classical music: West meets East + + + + + +Obituary + + + +Leonard Cohen: Raising the song + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Access to electricity + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.11.26.TXT b/homeworks/B20769/homework1/data2/2016.11.26.TXT new file mode 100644 index 0000000..59e0dae --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.11.26.TXT @@ -0,0 +1,6221 @@ +2016-11-26 + + + +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: Oil + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +| Next section | Main menu | + + + + +* * * + + + +The world this week + + + +Politics this week [Thu, 24 Nov 16:30] + +Business this week [Thu, 24 Nov 16:30] + +KAL’s cartoon [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Politics this week + +Nov 26th 2016 + + + +Angela Merkel announced that she will run for a fourth term as chancellor of Germany next year. Many liberals were delighted, especially foreign ones. Within Germany there was joy among right-wing populists, who relish the chance to run against the chancellor, whom they blame for allowing large numbers of refugees into the country. A possible challenger, Martin Schulz, decided to leave his job as president of the European Parliament. He may run against Mrs Merkel as the candidate of the opposition Social Democrats. See article. + +François Fillon, a former prime minister, unexpectedly won the first round of the Republican party primaries in France, with 44% of the vote. He is favoured to win the second round, and could claim the presidency next year if he is pitted against Marine Le Pen, the leader of the far-right National Front. Yet polls in France, as elsewhere, have been poor guides lately. See article. + +The chances that Matteo Renzi, Italy’s prime minister, will win the controversial referendum on constitutional reforms scheduled for December 4th look ever more shaky. Silvio Berlusconi, a former prime minister, and Beppe Grillo, a populist politician, have said they will vote No. See article. + +Turkey’s ruling Justice and Development party withdrew a bill that would have pardoned men for having sex with underage girls if they married them. The bill had sparked protests in Turkey and abroad. + +In Britain Philip Hammond, the chancellor of the exchequer, gave the government’s first detailed budget announcement since the Brexit vote in June. He confirmed forecasts of reduced GDP growth over the next two years. Net government borrowing, which in the March budget was expected to move into surplus in 2019, was projected to stay in deficit for at least the next five years. See here and here. + +Thomas Mair was given a life sentence for the murder of Jo Cox, a Labour MP, the first killing of an MP not carried out by Irish nationalists for two centuries. She was shot and stabbed a week before the Brexit vote in June. Mr Mair suffered from mental illness for years and had connections with British nationalist and neo-Nazi groups. + +Water pressure + + + +Bolivia declared a state of emergency to help fight the effects of its worst drought in 25 years. Eight of the country’s nine departments have water shortages. In La Paz, the seat of the national government, many houses have been cut off from water for days at a time and people are queuing to fill buckets from tankers that come sporadically. + +A court in New York convicted two nephews of Venezuela’s First Lady, Cilia Flores, of conspiring to bring cocaine into America. They were caught in Haiti in 2015 in a sting operation led by America’s Drug Enforcement Administration. + +The World Health Organisation’s decision to declare an end to the global health emergency over the Zika virus was criticised by some for sending the wrong signal. The WHO said the mosquito-borne disease is still a crisis, but efforts should now go into stopping its spread over the long-term. + +The danger line + +Indian and Pakistani forces exchanged fire along the Line of Control in the disputed state of Kashmir. India blamed Pakistan for the killing of three soldiers. Pakistan said retaliatory shelling by India had killed three of its soldiers and ten civilians. + +South Korea approved a controversial intelligence-sharing pact with Japan. Separately, prosecutors named Park Geun-hye, the president, as a suspect in an influence- peddling scandal. + +Rodrigo Duterte, the president of the Philippines, said he would declare a marine sanctuary within the lagoon of Scarborough Shoal, a disputed tidal atoll in the South China Sea, neatly sidestepping the question of whether China would allow access to Filipino fishermen. + +Promises on paper + +Zimbabwe’s central bank said it would soon start issuing “bond notes” to ease a shortage of currency. The notes will be the first printed by Zimbabwe since it abandoned its currency in 2009 for American dollars during a bout of hyperinflation. The new notes are ostensibly backed by $200m held by the central bank. + + + +A contingent of Japanese peacekeepers arrived in South Sudan. It is Japan’sfirst deployment of troops with a mandate allowing them to use deadly force for anything other than strict self-defence. The new rules allow the troops to come to the aid of UN staff and NGO workers. + +More than 100 people were arrested and one killed in Cameroon amid protests in English-speaking parts of the country against the use of French in courts and schools. + +The Syrian government rejected a UN proposal that would leave eastern Aleppo under the control of the opposition, if the opposition agreed to withdraw fighters from that part of the city. + +Shia militias in Iraq claimed to have taken control of a key road west of Mosul, Islamic State’s last redoubt. If true, that would mean the city is now encircled. + +All Trump, all the time + +Donald Trump made more appointments to his incoming administration. Mike Pompeo, a congressman on the House intelligence committee, was named director of the CIA. Mike Flynn, a retired general, becomes national security adviser. And Jeff Sessions, a senator, was picked for attorney-general. All three are on the hard right of the Republican Party. But Mr Trump surprised his critics by selecting Nikki Haley, a relatively moderate governor, as America’s ambassador to the UN. See article. + +Meanwhile, Mr Trump agreed to pay $25m to settle fraud allegations surrounding Trump University. The deal stops a trial from being held. + +The president-elect also gave an interview to the New York Times. Mr Trump deplored the rise of the “alt-right”, a loose collection of far-right groups that supported his campaign, acknowledged there was “some connectivity” for man’s role in climate change and said he would not prosecute Hillary Clinton over her e-mails. Some of his supporters were unhappy, displaying their resentment on placards with “Hillary’s lies matter”. + +This article appeared in the The world this week section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21710868-politics-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Business this week + +Nov 26th 2016 + +Stockmarkets in America remained buoyant as investors anticipated that Donald Trump’s presidency will reduce regulations and boost growth. The Dow Jones Industrial Average, S&P 500 and NASDAQ share indices rose to new record highs on the same day, with the Dow closing above the 19,000 mark for the first time. Investors also focused on whether OPEC members will agree to cut oil production, and thus lift oil prices (and oil-industry profits), at their forthcoming meeting. See article. + +Risk monitor + +An annual ranking of systemically important global banks was published by the Financial Stability Board, an international regulatory body. It ranks 30 banks based on the risk they would present to the world economy if they went bankrupt. JPMorgan Chase topped the list again and was joined by Citigroup, which moved up a notch in the rankings’ tier structure. Bank of America, Wells Fargo and Industrial and Commercial Bank of China were also deemed to pose a greater risk than they did last year; HSBC, Barclays and Morgan Stanley a smaller one. + +Fosun, a Chinese conglomerate, bought a 17% stake in Millennium BCP, making it the largest shareholder in Portugal’s biggest listed bank. Fosun already owns Portugal’s biggest insurance company. + +The board at TransAsia Airways, a Taiwanese airline, decided to shut down the business. Its passenger numbers have fallen over the past two years after two fatal crashes raised concerns about safety. Traffic from China has also waned following the victory of the pro-nationalist party in Taiwan’s presidential election, which has soured cross-strait relations. + +After more than a year of bad publicity following its admission that it cheated in emissions tests, Volkswagen produced a new strategic plan, which includes permanently withdrawing the diesel cars that were at the centre of the scandal from sale in the United States. The American market is central to VW’s strategy as it makes a big push into sports-utility vehicles and electric cars, which it will build in America from 2021. The carmaker recently reached an agreement with unions to shed 30,000 jobs worldwide. + + + +India’s central bank said that $80bn-worth of 500- and 1,000-rupee banknotes had been handed in to banks since the government’s decision to withdraw them from circulation in an effort to clamp down on tax evasion. The notes are no longer legal tender, but can be deposited in bank accounts until the end of the year. The move to take them out of circulation was unexpected. It is thought the disruption to the cash-based economy could knock up to one percentage point off India’s growth rate. See article. + +Brazil’s finance ministry lowered its forecast for growth next year to 1%, from the 1.6% it had previously projected. The economy is struggling to pull away from recession. The expanding budget deficit is also a concern. This week the president of the central bank, Ilan Goldfajn, said that trying to inflate the debt away is “no longer an option” and he called for “laws of fiscal adjustments” that would reduce public spending. + +A blow to sufferers + +Eli Lilly said that a clinical trial for a new drug to slow the onset of Alzheimer’s had failed. The drug, solanezumab, was tested on patients with mild cases of Alzheimer’s, who showed only a slight improvement after 18 months of treatment. The experiment had been closely watched by medical researchers and hopes were high that solanezumab would be the first drug approved to treat the disease. + +A judge in Texas issued a nationwide injunction stopping a measure that would have extended overtime pay to millions of lower-paid workers and that had been due to come into effect on December 1st. The measure was opposed by business groups, which argued it would increase costs and cause them to cut staff hours. The judge decided that the Obama administration had overstepped its authority. + +Sunoco Logistics and Energy Transfer Partners, two closely intertwined pipeline companies, agreed to merge in a $21bn deal. Energy Transfer built the Dakota Access oil pipeline, which will carry crude from the Bakken shale field in North Dakota to Illinois. The pipeline crosses Sioux tribal land and has sparked fierce protests (police recently used water cannon on hundreds of demonstrators). The election of Donald Trump is expected to smooth final consent for the project. + +Getting away from it all + +Around 48.7m Americans are expected to travel over Thanksgiving, the most since 2007, according to the AAA, a motoring organisation. With family get-togethers uppermost in the mind, the most popular destination for travellers is, naturally, Las Vegas. + +This article appeared in the The world this week section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21710863-business-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +KAL’s cartoon + +Nov 26th 2016 + + + +More KAL’s cartoons + +This article appeared in the The world this week section of the print edition under the headline KAL's cartoon + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21710864-kals-cartoon/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Leaders + + + +Climate change: The burning question [Thu, 24 Nov 16:30] + +1MDB: Falling down [Thu, 24 Nov 16:30] + +American politics: The hardest deal [Thu, 24 Nov 16:30] + +Italy’s constitutional reforms: A regretful No [Thu, 24 Nov 16:30] + +Britain’s economy: Limited ambition [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +The burning question + +Climate change in the era of Trump + +With or without America, self-interest will sustain the fight against global warming + +Nov 26th 2016 + + + +BLOWING hot and cold doesn’t begin to cover it. In 2009 Donald Trump signed a public letter calling for cuts to America’s greenhouse-gas emissions. In 2012 he dismissed climate change as a hoax cooked up by the Chinese. On the campaign trail he promised to withdraw from an international accord, struck last year in Paris, to fight global warming. This week, as president-elect, Mr Trump said he has an “open mind” on the Paris deal and that there is “some connectivity” between human activity and climate change. + +Such fickleness gives succour to pessimists and optimists alike. Those who are gloomy about the climate still expect America to ignore or withdraw from the Paris agreement, or to abandon the 1992 UN framework that underpins it. Sunnier folk hope that Mr Trump will govern differently from how he campaigned, enabling the fight against climate change to continue unabated. The reality is more complex. Mr Trump’s brand of “America First” populism will do nothing to help the planet, but neither need it be the catastrophe many fear. + +Hot air + +First, the bad news. Even if Mr Trump honours America’s commitment to the Paris accord, it is unlikely that his administration will galvanise action. Many in the Republican establishment think that climate deals are examples of global regulatory over-reach. Plenty of Mr Trump’s voters dismiss climate change itself as a phoney fad peddled by “bicoastal elites”. Fossil fuels stand for prosperity and freedom—from the romance of the roughneck to the lure of the road. Sure enough, on November 21st Mr Trump pledged that on day one of his administration he would scrap “job-killing restrictions” on the production of American fossil fuels, which account for 80% of America’s man-made greenhouse-gas emissions. + +The rhetoric is not the only thing that will be markedly different. The main practical way a Trump administration is likely to weaken the Paris agreement is by avoiding America’s commitments to pay large sums to help other countries cope with climate change. The burden of fighting global warming falls less on rich countries, where energy demand is stagnant and efficiency is rising, than on poor ones, where billions still lack the cheap energy fossil fuels can provide. Poor countries were won over partly by the $100bn a year that America and others promised to help them cope. Private investors were always going to have to stump up lots of cash to fund climate-change action; the onus on them will be heavier. + +This is worrying. But, on close inspection, the path to a greener future still remains open, both in America and abroad. At home there are limits to what Mr Trump’s embrace of fossil fuels can achieve. For all the trillions of dollars-worth of oil and gas that he hopes will be fracked on federal lands, no one will sink a well unless it is profitable to do so. That needs oil prices to be substantially higher than they are now. Coal, too, has been displaced by cheap shale gas rather than Barack Obama’s regulations. Even if the new administration abandons America’s Paris pledges, California has its own clean-energy mandate and will continue to set fuel-efficiency standards that other states and the car industry follow. Besides, energy investments last for decades—firms may well be loth to bet that future presidents will stick with Mr Trump’s policies. + +Nor need the fight against climate change elsewhere founder in the absence of American leadership. Self-interest will see to that (see article). China takes air pollution in its cities at least as seriously as it does climate change—a recent study found that air pollution contributed to the deaths of 1.6m people in China each year. Switching from burning coal to cleaner forms of energy thus makes sense twice over. India needs climate action as insurance against extreme weather: it spends a fortune in the wake of storms, floods and other events. + +Commercial self-interest will also keep other countries on the path towards decarbonisation. The costs of clean energy are tumbling. The cost of batteries in electric vehicles has fallen by 80% since 2008; the bill for offshore-wind energy has more than halved over the past three years in northern Europe. Solar power is closing in on gas and coal as an attractively cheap source of power. China plans to have nearly 150 gigawatts of installed solar capacity by the end of the decade, triple what it has today as the world’s biggest solar generator. + +As this week’s special report points out, such developments will curb demand for oil and coal in decades to come. Last year was the first in which renewable energy surpassed coal as the world’s biggest source of power-generating capacity (although natural gas will remain an important complement to renewables because of the vagaries of sun and wind). These are epochal changes, with moneymaking opportunities to match. China, for instance, hopes to become a clean-energy superpower by producing cheaper panels, turbines, batteries and electric cars, as well as the systems that link them all together. + +Don’t COP out + +To be clear, there is much to regret in the prospect of America relinquishing its leadership on fighting climate change. The idea of the world’s second-biggest polluter free-riding on the efforts of others has some countries mulling counter-attacks—one proposal, a carbon tariff on American exports, could lead to a damaging trade war. The Paris agreement was always likely to fall far short of its goal of limiting global warming to within 2°C of pre-industrial temperatures. A more recalcitrant America puts the prospect of deep decarbonisation even further off. And evidence that Mr Trump’s America is withdrawing from its global role is worrying. + +Yet with climate change, as with other areas that have come to depend on American leadership, the rest of the world can make the best of a bad situation by staying the course. China’s carbon emissions may already have peaked. Improvements in cars’ fuel efficiency cut oil consumption by 2.3m barrels a day in 2015, even when petrol was cheap. China, India, the European Union, Canada and others have strong incentives to embrace cleaner technologies. If they work together they can make a difference—with or without the United States. + +This article appeared in the Leaders section of the print edition under the headline The burning question + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21710807-or-without-america-self-interest-will-sustain-fight-against-global-warming-climate/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +1MDB + +Malaysians underestimate the damage caused by the 1MDB scandal + +But the opposition has to do more to win over urban Malays + +Nov 26th 2016 + + + +FORTY thousand people wearing yellow shirts gathered in Malaysia’s capital on November 19th, to protest against corruption and impunity in government. The rally was orderly and restrained; the response of the authorities was not. On the eve of the protest, police arrested Maria Chin Abdullah, leader of a coalition of human-rights groups that organised the event. She was placed in solitary confinement, and can be held there for 28 days. Even by Malaysia’s dismal recent standards this marked a fresh low. Ordinary Malaysians should not stand by while their leaders undermine the rule of law so casually. + +Ms Chin Abdullah’s detention was justified by an anti-terrorism law which the government had promised would never be used against political opponents. The true motivation was to stifle outrage over 1MDB, a state-owned investment firm from which billions have gone missing. In July American government investigators said they thought that $3.5bn had been taken from the firm and that hundreds of millions of dollars went to the prime minister, Najib Razak (who says he has never taken public funds for personal gain). The investigators’ findings corroborated exposés written by local and foreign journalists, who have been unravelling the saga for several years. + +Elsewhere the scandal would have sparked a swift change in government. But the United Malays National Organisation (UMNO) has held power for six decades and enjoys broad support from Malaysia’s ethnic-Malay majority, some of whom resent their ethnic-Chinese and Indian compatriots. The party has devised many ways to protect its leaders from internal revolts, so Mr Najib found it easy to purge critics, delay a parliamentary investigation and replace an attorney-general said to have been preparing charges against him. + +No one in Malaysia has been charged over 1MDB’s missing money. But a court has handed a prison sentence to an opposition politician who frustrated efforts to hush up the affair. The editor and publisher of one of Malaysia’s last independent news organisations face jail under a rule which forbids certain content published with “intent to annoy”. A competitor closed in March after authorities ordered its website blocked. + +Mr Najib’s party is carelessly widening Malaysia’s ethnic and religious splits. Seeking to bolster support among conservative Malay Muslims, it is toying with a proposal to intensify the whippings which may be meted out by sharia courts. It has failed properly to condemn pro-government gangs that last year menacingly gathered in a Chinese part of the capital. Their leaders paint ethnic Malays as victims of sinister conspiracies—dangerous rumour-mongering in a country where politics is still defined by the racial violence of the 1960s. + +Easily broken, hard to fix + +Until now foreign investors have been fairly sanguine about the economy. But they are growing rattled. The ringgit has depreciated faster than other emerging-market currencies (see article). Last week the authorities asked foreign banks to stop some ringgit trading abroad, raising fears of harsher controls. + +Rural ethnic Malays, a crucial constituency, feel that the scandal is a remote affair. Even some educated urbanites still favour Mr Najib’s government over the opposition, underestimating the damage being done by the scandal. If change is to come, the disparate opposition needs to do a better job of winning such people over; its fractious parties must overcome their divisions and present a plausible candidate to replace Mr Najib in a general election that could be held as soon as next year. Malaysia has always been an imperfect democracy, but the rot eating at its institutions is harming its international standing and its economic prospects alike. + +This article appeared in the Leaders section of the print edition under the headline Falling down + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21710820-opposition-has-do-more-win-over-urban-malays-malaysians-underestimate-damage/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The hardest deal + +How Donald Trump should handle conflicts of interest + +An arm’s-length arrangement is both principled and practical + +Nov 26th 2016 + + + +WHEN Americans elected a businessman as president they created a problem: the risk of conflicts between his business interests and his political role. Already, red lights are flashing. China has just resolved a long-standing legal dispute in Mr Trump’s favour. A developer in India has been marketing a new Trump-branded 75-storey skyscraper under the slogan: “Congratulations Mr President-Elect”. + +The danger of the White House becoming a subsidiary of the Trump Organisation is real. Some are demanding that Mr Trump liquidate his business. Mr Trump’s allies say he can do what he likes under the law. Both sides want to shred the conventions governing the Oval Office. Instead, Mr Trump should be treated like every American president. He must ring-fence his private interests and put them under independent supervision. It is the only fix that is both principled and practical. If Mr Trump wants to govern without being dogged by second-guessing about how his businesses are contaminating his policies, it is in his own interests, too. + +America is not about to become Ukraine or Russia, where politicians own the commanding heights of the economy. The Trump Organisation is too small and parochial for that (see article). About 70% of its value resides in ten domestic properties. Worth some $4bn, it would be America’s 833rd-largest firm if it was listed. But it is easy to see how abuses might occur given the slipperiness of Mr Trump and his attempts to franchise his brand abroad. He might take decisions about rules that help his firm, or give perks to those he wants to do deals with. Officials, rivals and foreign governments might treat the company differently so as to curry favour with the president. + +The law is frustratingly silent on how to avoid such dangers. The president and vice-president are exempt from laws stopping members of the executive from directly owning firms. Mr Trump’s proposed solution is to pass control to his three eldest children—Donald, Ivanka and Eric. But they do not enjoy separate business identities from their father, having always been subordinate to him. They have also been involved in his campaign and preparations for the White House. To pass them the keys to the organisation would not create sufficient distance between the president and his business affairs. + +An alternative is for Mr Trump to liquidate his assets. But that is impractical. His inauguration is less than 60 days away. To prepare an initial public offering for a well-run firm takes a year. Given its poor disclosure, obscure legal structure and lack of professional management, no reputable investor would buy the Trump Organisation outright. Some of its best properties could be sold quickly, but the dross might take years to offload. The precedent set by a liquidation would also be bad for America, because it would mean that anyone who had built a company would be less likely to run for high office. + +The best solution is for Mr Trump to follow precedent and put his assets at arm’s length. The business should also be transparent to Congress and the public. Three steps are required. First, the firm must aggregate its legal entities under one holding company and publish consolidated accounts that capture its entire scope of activity. Second, an independent board of directors must be appointed, and it must appoint an external chief executive. Lastly, this board must be given a mandate that allows it to sell, but not buy, assets; and that requires it to distribute all profits as dividends and to refrain from new foreign investments. The effect would be to turn the Trump Organisation into a mature portfolio of domestic property assets which generate rental payments for the Trumps. + +Don’t blemish the brand + +If ethical concerns do not persuade Mr Trump, commercial and political ones might. Already some worry that he may breach a clause in the constitution designed to prevent foreign countries from buying influence. If his conflicts led to disgrace, it would deter reputable firms from doing business with the Trump Organisation. High politics, hard cash and close families can be a toxic mix for voters, as the Clintons found after Bill Clinton made $49m from speeches while his wife was secretary of state. This week Mr Trump said he would “like to do something” to deal with conflicts of interest. Ring-fencing his business and ceding control to independent overseers would do the job. + +This article appeared in the Leaders section of the print edition under the headline The hardest deal + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21710815-arms-length-arrangement-both-principled-and-practical-how-donald-trump-should-handle/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Italy’s constitutional referendum + +Why Italy should vote no in its referendum + +The country needs far-reaching reforms, just not the ones on offer + +Nov 26th 2016 + + + +ITALY has long been the biggest threat to the survival of the euro, and the European Union. Its GDP per head is stuck at the level of the late 1990s. Its labour market is sclerotic. Its banks are stuffed with non-performing loans. The state is burdened with the second-highest debt load in the euro zone, at 133% of GDP. If Italy veers towards default, it will be too big to rescue. + +That is why so much hope has rested with Matteo Renzi, the young prime minister. He thinks Italy’s biggest underlying problem is institutional paralysis, and has called a referendum for December 4th on constitutional changes that would take back powers from the regions and make the Senate subordinate to parliament’s lower house, the Chamber of Deputies. This, together with a new electoral law that seeks to guarantee the biggest party a majority, will give him the power to pass the reforms Italy desperately needs, or so he claims. + +If the referendum fails, Mr Renzi says he will step down. Investors, and many European governments, fear a No vote will turn Italy into the “third domino” in a toppling international order, after Brexit and the election of Donald Trump. Yet this newspaper believes that No is how Italians should vote. + +Mr Renzi’s constitutional amendment fails to deal with the main problem, which is Italy’s unwillingness to reform. And any secondary benefits are outweighed by drawbacks—above all the risk that, in seeking to halt the instability that has given Italy 65 governments since 1945, it creates an elected strongman. This in the country that produced Benito Mussolini and Silvio Berlusconi and is worryingly vulnerable to populism. + +Granted, the peculiar Italian system of “perfect bicameralism”, in which both houses of parliament have the exact same powers, is a recipe for gridlock. Laws can bounce back and forth between the two for decades. The reforms would shrink the Senate, and reduce it to an advisory role on most laws, like upper houses in Germany, Spain and Britain. + +In itself, that sounds sensible. However, the details of Mr Renzi’s design offend against democratic principles. To begin with, the Senate would not be elected. Instead, most of its members would be picked from regional lawmakers and mayors by regional assemblies. Regions and municipalities are the most corrupt layers of government, and senators would enjoy immunity from prosecution. That could make the Senate a magnet for Italy’s seediest politicians. + +At the same time, Mr Renzi has passed an electoral law for the Chamber that gives immense power to whichever party wins a plurality in the lower house. Using various electoral gimmicks, it guarantees that the largest party will command 54% of the seats. The next prime minister would therefore have an almost guaranteed mandate for five years. + +That might make sense, except for the fact that the struggle to pass laws is not Italy’s biggest problem. Important measures, such as the electoral reform, for example, can be voted through today. Indeed, Italy’s legislature passes laws as much as those of other European countries do. If executive power were the answer, France would be thriving: it has a powerful presidential system, yet it, like Italy, is perennially resistant to reform. + +The risk of Mr Renzi’s scheme is that the main beneficiary will be Beppe Grillo, a former comedian and leader of the Five Star Movement (M5S), a discombobulated coalition that calls for a referendum on leaving the euro. It is running just a few points behind Mr Renzi’s Democrats in the polls and recently won control of Rome and Turin. The spectre of Mr Grillo as prime minister, elected by a minority and cemented into office by Mr Renzi’s reforms, is one many Italians—and much of Europe—will find troubling. + +One drawback of a No vote would be to reinforce the belief that Italy lacks the capacity ever to address its manifold, crippling problems. But it is Mr Renzi who has created the crisis by staking the future of his government on the wrong test (see article). Italians should not be blackmailed. Mr Renzi would have been better off arguing for more structural reforms on everything from reforming the slothful judiciary to improving the ponderous education system. Mr Renzi has already wasted nearly two years on constitutional tinkering. The sooner Italy gets back to real reform, the better for Europe. + +Weak foundations + +What, then, of the risk of disaster should the referendum fail? Mr Renzi’s resignation may not be the catastrophe many in Europe fear. Italy could cobble together a technocratic caretaker government, as it has many times in the past. If, though, a lost referendum really were to trigger the collapse of the euro, then it would be a sign that the single currency was so fragile that its destruction was only a matter of time. + +This article appeared in the Leaders section of the print edition under the headline A regretful No + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21710816-country-needs-far-reaching-reforms-just-not-ones-offer-why-italy-should-vote-no/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Britain’s economy + +Limited ambition + +The government’s muddled approach to Brexit ties the chancellor’s hands + +Nov 26th 2016 + + + +OVER the past five months Theresa May has shown a fondness for bold words and grand promises. On the steps of Downing Street on her first day in office, the prime minister promised to “make Britain a country that works for everyone”. At the Conservative Party conference in October she excoriated those who consider themselves “citizens of the world”, arguing that “a change has got to come”. Earlier this month she recast herself as a champion of globalisation, but pledged a “new approach” to managing its forces. + +November 23rd marked the first big opportunity to turn this fighting grandiloquence into action, as Philip Hammond, the chancellor of the exchequer, made his Autumn Statement, an annual mini-budget. Yet the first big fiscal event since the referendum was modest and boring, the mirror image of the prime minister’s fierce rhetoric. + +Some of that blandness was welcome. Mr Hammond sensibly steered clear of the fiscal gimmicks and surprises so beloved of his predecessor, George Osborne. He slowed the pace of fiscal tightening and said lots of reasonable things about boosting productivity by increasing public investment in infrastructure, encouraging innovation and building houses (see article). He offered some help for hard-up Britons by easing the pace of an excessively draconian squeeze of welfare. But in each case the scale of his ambition was resolutely small. + +To deal with the gulf between Britain and some other rich countries, Mr Hammond proposed a “National Productivity Investment Fund”—but with a budget of less than £5bn ($6.2bn) a year it is not a game-changer. Laudable promises to help households that are only “just about managing” amounted chiefly to a very slight easing in the rate at which benefits taper away as their income rises. He confirmed an increase in the tax-free threshold—but that will mainly help the better-off. An accompanying rise in the threshold for higher-rate taxpayers is also a giveaway to the relatively rich. + +In this epitome of cautious budgeting, “Spreadsheet Phil”, as the chancellor is known, lived up to his reputation. The problem lies in the size of the gap between his modest ambitions and his boss’s grand promises—and the reasons behind it. + +One cause is the sheer lack of spare money. The Autumn Statement produced the first official projections for the public finances since the referendum. The government’s independent forecaster now predicts that, over the five years from 2016 to 2021, the economy will grow by 2.4 percentage points less than had been expected before the Brexit vote. It sees the public finances deteriorating sharply, leaving the government borrowing £122bn more than planned. Bigger deficits and more debt limits the scope to rewrite Britain’s social contract. + +A second, related problem is that fiscal policy is constrained by the lack of clarity over what kind of Brexit Britain is heading for. The official forecasts assume that in 2019, the earliest that Britain will leave the EU, the economy will grow at the same rate as was predicted before the referendum. Yet if the country leaves the EU’s single market, which buys nearly half its exports, that seems optimistic. Until the government lays down the outlines of what Britain hopes to achieve from Brexit—and debates the strategy in Parliament—the chancellor’s fiscal plans cannot be anything other than limited and uncertain. + +Maybe there is no plan + +The third and most worrying explanation for the dissonance is the suspicion that Mrs May’s bold rhetoric masks her lack of a coherent policy. She champions free trade, while being non-commital about Britain’s membership of the world’s biggest market. She defends globalisation, while promising to cut migration to Britain by two-thirds. She acknowledges the importance of getting a transitional deal after Brexit, only for her spokesperson to deny that any such deal is a negotiating aim. + +The lack of clarity about the government’s thinking on Brexit is billed as a canny negotiating ploy. The growing fear is that it may in fact be a sign that the prime minister has no plans to match her words. If so, a bland budget filled with uncertainty was the best that Britain could have hoped for. + +This article appeared in the Leaders section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21710817-governments-muddled-approach-brexit-ties-chancellors-hands-limited-ambition/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Letters + + + +On Turkey, Brexit, GM crops, Airbnb, trade, cricket: On Turkey, Brexit, GM crops, Airbnb, trade, autism, cricket [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Letters to the editor + +On Turkey, Brexit, GM crops, Airbnb, trade, autism, cricket + +Nov 26th 2016 + +Letters are welcome via e-mail to letters@economist.com + + + +Turkish politics + +“Turkey locks up dissidents” (November 12th) seriously understates the extent of the problem Turkey faces from the Gulenist terror organisation, FETO. This has been a recurring theme in European media, which perhaps also reflects why Turkey’s NATO allies were so slow to show their support for us during this year’s attempted coup. + +Investigators have demonstrated that FETO’s political objective is to destabilise the Turkish republic and that it possesses the command structure, capacity and means to carry this out. Over the past 35 years it has established a network that has penetrated Turkish state institutions and civil society, by fair means and foul: indoctrinating recruits, stealing selection-exam papers for the civil service and armed forces, conspiring to stitch up key appointments, even framing their opponents with false evidence in court, such as in the Ergenekon and Sledgehammer cases. + +The malign reach and agenda of the organisation is common knowledge in Turkey; witness the brave and decisive opposition to the coup by Turkey’s citizens, by the parliament and all state institutions. Yet this is systematically overlooked by Western observers. Understanding how we feel about the Gulenist threat is vital for our future relations. + +NUMAN KURTULMUS + +Deputy prime minister of Turkey + +Ankara + + + + + +Rethinking Brexit + +I welcome your general stance on the Brexit referendum, but you go too far in saying it was a clear result to leave the European Union and that MPs therefore should not vote against the government triggering Article 50 (“The way forward”, November 12th). There is no established constitutional doctrine on referendums in Britain. In this case, the outcome was very close; the referendum was advisory, not mandatory; the campaign was full of misinformation and downright lies; and no indication was given (we still do not have it) of what trading and other relationships would follow with the EU and the wider world. + +Although the economy has in some respects survived the referendum shock better than some had predicted, nearly all the underlying economic indicators now suggest that there is a very difficult medium and longer-term period ahead, with disposable incomes falling as inflation rises. With the added horror of Donald Trump in the White House, surely it is more important than ever that Britain should remain working closely and constructively alongside its partners within the EU. + +It would be perfectly reasonable and democratic, and consistent with the practice in several other European countries, to offer the public an opportunity to think and vote again when the consequences of a Brexit become clearer. Please do not throw in the towel so easily. + +BRIAN UNWIN + +Former president of the European Investment Bank + +Dorking, Surrey + + + + + +GM crops preserve water + +You say that there are many tools that farmers can use to conserve and use water efficiently (“Liquidity crisis”, November 5th). However, interest groups are opposing some of those very same tools, namely genetically modified crops, which can be engineered to withstand drought conditions more effectively than their conventional peers. These modified plants are better at weathering the effects of global warming. + +If the world adopted the same rates of planting GM crops as the United States, the amount of carbon released into the atmosphere would fall by 200m tons and 2m acres of cropland would return to forest and pastureland, according to a recent study from Purdue University. + +In April Dannon, a French food company, announced that it is phasing out the GMO crops that feed its dairy cows. This removes one of the most effective methods for conserving water and helping Dannon reach its sustainability targets. As global warming increases, we cannot afford to let policies be built on beliefs instead of facts. + +EVAN HILLAN + +Ladysmith, Wisconsin + + + + + +Sharing homes in London + +“New York deflates Airbnb” (October 29th) reported that not all cities see the sharing-economy accommodation model as a curse, quoting London as an example. At Westminster City Council we do not have concerns about people letting their property on a short-term basis when they are away on holiday, nor if they are letting a room within their own property. + +However, commercial operators in London are letting properties on a short-term basis all year round, treating them as a business and undermining the “sharing economy” concept, as well as taking housing out of long-term use. The government has set a 90-night limit per year for lettings, but many landlords ignore this. This means that, in some cases, neighbours have to deal constantly with additional noise, scattered rubbish, loss of insurance cover and reduced security. + +The future could be bright for the sharing economy, but it should not enable commercial operators to see short-term letting as a means of making profits at the expense of others wanting to live in London. + +HEATHER ACTON + +Westminster City councillor + +London + + + + + +America’s record on trade + +“The United States has not withdrawn from a trade agreement in 150 years”, or so you claimed in “The wall that appals” (November 12th). I assume you are referring to the American abrogation in 1866 of the reciprocity agreement with the British North American colonies, which Lord Elgin had negotiated in 1854. + +But although literally true, that claim ignores the Fordney-McCumber Tariff of 1922 and, more importantly, the Smoot-Hawley Act of 1930, which raised tariffs on over 20,000 items and helped bring about the Depression. America may not have been withdrawing from trade agreements, but it was passing punitive tariffs which frustrated trade agreements until the return to sanity under Franklin D. Roosevelt. + +JOE MARTIN + +Rotman School of Management + +University of Toronto + + + + + +Therapy begins at home + +* It is wonderful that the PACT trial (“First, treat the parents”, October 29th) showed that parental intervention is the key to reducing the effects of autism. I have personal experience of this: in 1970 my son Robert, aged two, was diagnosed with early childhood autism and was the recipient of a then new approach being developed by neurologist Dr Geoffrey Waldon at the Manchester University Audiology Clinic. + +Dr Waldon’s method provides learning experiences by simulating the range of movements practiced by the typically developing child. These include the child’s parent spending one hour a day working with fundamental activities such as picking up and placing, banging and scraping which lead on to matching, sorting and sequencing. Continuous repetition of activities is believed to create new neural pathways and to strengthen existing ones thus stimulating behavior beyond mere movement of the body. The approach is simple and economical in both time and cost and results in measurable improvements in perceptual, cognitive and social development. Robert (now 48) is self-sufficient, married with two young children and has a good job as a web developer. + +The PACT researchers are on the right track but if parents were also encouraged to apply the Waldon Approach the statistics would likely be even more impressive. + + + +WALTER SOLOMON + +The Princess Basma Center for Disabled Children + +East Jerusalem + + + + + +Manufacturing-pipes dream + + + +Your report from Sialkot, a manufacturing hub in Pakistan, brought back memories of the second world war, when good cricket bats on the subcontinent were scarce and expensive (“If you want it done right”, October 29th). The talented craftsmen of Sialkot made bats from local birch. At first they were not sturdy and batsmen took unpleasant shocks to the elbow (causing one maker of bats in England to brand his as “Nonjar”), but gradually the quality improved and now cricket bats made in Sialkot are probably as good as those made elsewhere. + +Sialkot also diversified into manufacturing bagpipes, and is now the biggest centre in the world outside Scotland that produces the instrument. + +D.J. MADAN + +Mumbai + +* Letters appear online only + +This article appeared in the Letters section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21710786-turkey-brexit-gm-crops-airbnb-trade-autism-cricket/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Briefing + + + +Reforming Italy’s constitution: Renzi’s referendum [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Renzi-ferendum + +Italy votes on constitutional reform + +Will Italians accept the prime minister’s plans for reform? + +Nov 26th 2016 | Rome + + + +ITALIAN constitutional law does not usually hold much popular appeal. And yet, even with a storm fierce enough to rattle the windows, there was scarcely a spare seat in the council chamber of Vietri sul Mare, a town clinging to the rocky Italian coast south of Naples, when Giuseppe Foscari, a professor at the University of Salerno was invited recently to set out his view. Academics such as Mr Foscari are much in demand these days to give public talks, write newspaper columns and appear on television chat shows. Abstruse constitutional questions have taken centre stage for more than a year as the country prepares to vote in a referendum on constitutional reform on December 4th. + +In a country that has seen 65 governments since the end of the second world war, Matteo Renzi, the prime minister, says that changes are needed to make the country easier to govern. In his view, Italy’s problems are so deeply rooted in institutional paralysis that only a government with broad powers, a stable parliamentary majority and a reasonable expectation of lasting its five-year term can defy the vested interests that hold Italy back. + +Europe’s fourth-largest economy is one of its most feeble, weighed down by too much regulation and woefully low productivity growth. Its economy has grown more slowly than that of most others in Europe for years (see chart 1) and GDP per head is lower now than in 1997 at constant prices. Despite a reform of labour laws under Mr Renzi, Italy’s employment rate is one of the lowest in the EU. + + + +But the danger is that the referendum will mark the next populist upheaval, after Britain voted to leave the European Union in June and America elected Donald Trump as its next president. Mr Renzi is often seen as Italy’s last hope for reform, and best bulwark against the rise of anti-EU and anti-euro parties. He has staked his personal credibility on winning the referendum, saying he would resign if (as seems likely) he loses. + +In a sign of investors’ nervousness, yields on the debt of wobbly Italian banks and the overindebted Italian state have started to rise, reviving fears of a banking collapse and of a return of the euro-zone crisis of 2010-13. On the other hand, many Italians are reluctant to hand Mr Renzi victory because they worry about the prospect of giving much-enhanced powers to any prime minister, be it Mr Renzi or, worse, a populist leader. + +Italy’s constitution of 1948 was born of the desire to avoid a return to the Fascist dictatorship of Benito Mussolini. It sought to constrain governments by spreading power equally between the lower Chamber of Deputies and the Senate, the upper house. It also gave significant autonomy to four culturally distinct regions—Sicily, Sardinia, Valle d’Aosta, bordering France and the partly German-speaking region of Trentino-Alto Adige/Südtirol. Friuli-Venezia Giulia, adjoining Slovenia, was included in 1963. In 1970 more limited powers were extended to Italy’s other 15 regions. + +Regional government has not been a happy experiment. Adding more layers of bureaucracy to a country that already had provincial and municipal authorities has multiplied the opportunities for patronage and corruption. It has also allowed regional administrations to run up debts the authorities in Rome cannot control and has provided new ways in which the central government can be held to ransom. + +Who is responsible? + +Another shortcoming is the blurred lines between responsibilities. Take the management of Italy’s cultural riches. The tutela (protection) of cultural heritage is the responsibility of the state; its valorizzazione (adding value to, or drawing benefit from) falls to the regions. Sandro Gozi, a junior minister for Europe, says that 70% of the decisions of Italy’s Constitutional Court have been aimed at clarifying such distinctions. Yet grey areas persist. The transport minister, Graziano Delrio, notes that the Via Flaminia, a road running from Rome to Rimini, is a regional responsibility in the first region it crosses, a national one in the second and a provincial one in the third. + +Mr Renzi’s reform amounts to a comprehensive recentralisation of power together with a separate reworking of the balance of power between the two houses of parliament. The least controversial part of this is the reform of regional government. Mr Renzi’s plan would not affect the five original self-governing regions, but claw back to Rome several of the most important responsibilities of the others, notably infrastructure projects and energy networks. What is more, it puts regional governments, whose responsibilities include the provision of most health services, under pressure to keep their public accounts in order. + +It is the reform of the legislature, however, that is most contentious. Legislation can often be bounced back and forth between the two houses for years. Bills reported in the media as having been passed turn out never to have become law. In 1989, for example, the official gazette published a law ratifying the UN Convention against Torture. Yet the bill that makes torture an offence is still in parliament, 27 years later. It was last heard of in the Senate in July. + +The prospect of legislative deadlock is enhanced by the fact that members of the two chambers are currently chosen by different sets of voters under different rules. This carries the perpetual risk of different majorities in the Chamber and Senate brought about by those rules rather than the choice of voters. Italians over the age of 18 can vote for the Chamber, but only those aged 25 or more can vote for the Senate. + +Senate, done it + +Under the proposed reform, the 315-member upper house would be replaced by a smaller one, made up of five senators appointed by the president and 95 chosen from among the country’s regional councillors and mayors by regional assemblies. Ex-presidents would also sit in the upper house. The remodelled chamber could suggest changes to legislation approved in the lower house, but only block a small number of mostly constitutional bills. + +The impact of the referendum’s reforms will be magnified by changes to electoral law. The electoral system has been altered three times since 1993. Proportional-representation, though leading to endless changes of government, produced an underlying stability during the cold war, as successive administrations led by the Christian Democrats held the line against a powerful Communist Party. After the discrediting of the established parties in the “Tangentopoli” corruption scandals of the 1990s, Italy adopted a system more akin to a British-style first-past-the-post election in the hope of holding MPs more accountable to voters and creating stable majorities. + +This was changed in 2005 when Italy reverted to a system of proportional representation. The winning coalition was granted additional seats to ensure that it enjoyed a majority. The law was so flawed that its own author called it a porcata (rough translation: “a load of crap”), hence its nickname of the Porcellum. A new law is now in place. Mr Renzi changed it last year to one known as the Italicum, but kept many of its flaws. + +Voters for the lower house will have to choose, as they do now, between lists drawn up by party leaders in each multi-seat constituency. Choosing a particular slate will automatically give a vote to the candidate at the top of the list but at the same time voters will be able to express up to two preferences for other candidates, rather than accepting all of a party’s predetermined choices. Each party will be allocated seats according to its share of the national vote (above a 3% threshold) and these will be distributed among the constituencies, starting with the head of the list and then according to the number of preference votes for each of the others. This means that deputies will still be largely beholden to their party leaders. + +Under the Italicum, as under the Porcellum, one of the lists will be guaranteed the right to govern. The Italicum engineers an assured majority by instituting a two-round ballot, in which the winner is then guaranteed 340 of the 630 seats in the lower house. And in practice, it will have more, because the share-out applies only to 617 of the deputies. Of the remainder, 12 will be chosen by Italians abroad and one by voters in the Valle d’Aosta region. It would be unusual if none went to the winning list. + +The Italicum does not apply to the Senate. Mr Renzi tempted providence on an epic scale, assuming that the constitutional reform would be approved and no election would be needed, as the Senate’s members would either be elected indirectly or not at all. + +Italy’s odd arrangements have a nefarious logic. They supply what Italian politicians, and especially those in small parties, crave even more than sources of patronage: opportunities for ricatto (leverage or, less politely, extortion). Parties with just a tiny fraction of the national vote, or even individual lawmakers, can extract succulent favours from the government of the day. So there are plenty of politicians who regard the referendum’s proposed reforms as a threat to their influence and listen with dismay to Mr Renzi’s talk of making Italy a “simpler country”. That senators will be mostly part-timers, drawn from corruption-prone local and regional governments (and that they will enjoy parliamentary immunity) offers little reassurance of good government. + +Some opposed to Mr Renzi’s scheme are alarmed about the concentration of power: the combination of a weakened Senate, a guaranteed majority and a voting system that still gives party leaders much control over deputies is seen as a recipe for authoritarian democracy. Add to that list of worries the fact that the choice of president of the republic, a key figure at times of crisis, will be more easily determined by the prime minister of the day. + +The reforms might struggle for acceptance on their merits. But the vote has also become a referendum on Mr Renzi, which makes it harder for the Yes campaign to win. Ferruccio de Bortoli, a former editor of Corriere della Sera, was only half joking when he called the prime minister a “young Caudillo”. He accused Mr Renzi of “contempt for the institutions and difficulty accepting criticism”. Though he can be disarmingly self-deprecating, Mr Renzi is also a bruiser. He recently described himself to an interviewer as “nasty at times, arrogant and maybe impulsive”, before adding with a broad smile: “Otherwise, I wouldn’t have replied to you like that.” + +His rough-house style was at first the key to his popularity. He was the self-styled rottamatore (“demolition man”), who would smash Italy’s complacent political establishment, take on its vested interests, stand up to the faceless Eurocrats in Brussels and set the country back on the road to economic success. As prime minister, Mr Renzi has already concentrated decision-making in his own hands to a degree unprecedented in Italy’s recent history. Diplomats in Rome complain that they cannot get guidance from officials on Italian policy, even in low-priority areas, because the ruling must come from Palazzo Chigi, Mr Renzi’s official residence. + +Reformed, in parts + +The prime minister came into office claiming he would initiate constitutional reform by the end of his first month; bring in a new employment law the next; streamline the bureaucracy in the one after that; and then overhaul taxation. Mr Renzi has fallen well short of such improbable ambitions, although he has shown greater reformist zeal than most of his predecessors. His coalition rammed through parliament a bill to give legal status to civil partnerships and tackled Italy’s vulnerable co-operative banks. But his labour-market reform is not yielding the expected results: one reason Italy’s employment rate is so low. + +A shake-up of the public administration has only just begun. An overhaul of the judicial system is stuck in parliament. And the government’s educational reform has been widely criticised. Too many of his other reforms have yet to take effect, although in some cases that is because of the inertia Mr Renzi is trying to overcome. + +Mr Renzi’s biggest handicap as he goes into the referendum is the lacklustre performance of the economy. Soon after he took office, he declared that, “My ambition is not to do better than Greece, but to do better than Germany.” Yet since he came to office at the start of 2014 GDP has risen by less than 2%, compared with a euro-zone average of more than 4%. + +Nor can Mr Renzi claim to have been hamstrung by factors beyond his control. Since early 2014, oil prices have been low, the euro-dollar exchange rate has been beneficial for exports, the European Central Bank has been pumping liquidity into the euro zone and the EU has been gradually abandoning fiscal austerity. + +In no mood for constitutional reform + +Would Mr Renzi have done better with greater powers? He has been able to pass the Italicum, after all. And his controversial constitutional amendment won a majority in parliament (though not the two-thirds support needed to avoid a referendum). Luigi Di Maio, a deputy speaker of the lower house and a leading member of the Five Star Movement (M5S) argues that the premise of the referendum is mistaken: Italy’s legislative machinery is not blocked. “In the three-and-a-half years of this legislature, there has been a law passed every five days. If you introduce a reform, saying we must pass laws more quickly, you are just creating more bureaucracy,” he notes. Important legislation does get obstructed, as Mr Di Maio concedes. “But that is because there isn’t a majority in favour of that law,” he insists. “It’s a question of priorities, not of constitutional procedures.” + +The changes are opposed by all the main opposition parties, including the M5S, and by a sizeable minority in the prime minister’s own Democratic Party (PD). Though the Yes campaign once had a healthy lead, the last poll to be published gives Mr Renzi little comfort. It showed 55% against the reforms and 45% for them (see chart 2). However, 13% of those intending to vote were still undecided. In an attempt to assuage the doubters, Mr Renzi promised earlier this month to amend the Italicum after the referendum is passed. But would he do so? And if so, in what way? + + + +If he loses, it is unlikely that the hyperactive Mr Renzi would give up politics for good. But if he resigns, or is forced out, Italian—and European—politics will enter a period of uncertainty. It would also give a short-term boost to the M5S movement led by Beppe Grillo, a former comedian, and the right-wing populists of the Northern League. But after so many changes of government Italians know how to cope with power vacuums. A caretaker government might be installed with a limited mandate to draw up a new electoral law covering both houses of parliament. + +Mainstream parties may be tempted to frame one that stymied the M5S’s chances of gaining office. They are talking of a highly proportional system that would prevent Mr Grillo’s movement, which seems to have a ceiling at around 30% of the vote, from securing an overall majority. On the other hand, to win power for themselves, the parties of left and right would need to unite in the sort of coalition that is customarily hamstrung by policy differences. + +Polls apart + +The pollsters could, of course, be as wrong about the referendum as they were about the Brexit vote and America’s presidential election. In those cases, voters who favoured the anti-establishment options felt embarrassed to say so. In Italy, however, the anti-establishment choice is not necessarily to vote against the government. Mr Renzi claims the real act of political demolition would be to vote Yes and alter the constitution. Back in Vietri sul Mare Mr Foscari and the local councillor who had invited him both said they suspected that it was voters in favour of the changes to the constitution who were reluctant to tip their hands. Mr Gozi said the PD’s soundings gave the same indications. + +A victory would bring Mr Renzi cachet for turning the anti-globalisation tide and reassure investors in Italy and beyond. But he cannot take for granted that he would be the one to profit from the additional powers that the reforms would confer. + +Earlier this year local elections brought Rome and Turin to the M5S. This showed how a two-round ballot system is tailor-made for a movement that claims to be neither of the left or the right, and which can win in the closing round the votes of whichever side was eliminated. A vote in favour of Mr Renzi’s reforms might increase the chances of power going to a populist movement led by a Eurosceptic former funnyman. The joke would then be on Mr Renzi—and on Italy. + +This article appeared in the Briefing section of the print edition under the headline Renzi’s referendum + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21710809-will-italians-accept-prime-ministers-plans-reform-italy-votes-constitutional-reform/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +United States + + + +Reflating the economy: King of debt [Thu, 24 Nov 16:30] + +The big gaggle: Fifth Avenue frenzy [Thu, 24 Nov 16:30] + +North Carolina: Not going quietly [Thu, 24 Nov 16:30] + +The next administration: Opening the field [Thu, 24 Nov 16:30] + +Treasure-hunting: The box that launched 100,000 trips [Thu, 24 Nov 16:30] + +The national-security team: General direction [Thu, 24 Nov 16:30] + +Lexington: The dark side [Thu, 24 Nov 16:30] + +Meet the attorney-general: Evening Sessions [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Trumponomics + +King of debt + +Markets are betting that Donald Trump will keep abandoning his campaign promises + +Nov 26th 2016 | WASHINGTON, DC + + + +SINCE the financial crisis, many left-leaning American commentators have yearned for more deficit spending to reflate the economy. Few would have predicted that a Republican administration would be the one to heed their calls. Yet financial markets seem to be betting that President-elect Donald Trump, backed by Republican majorities in the House and Senate, will go on a budgetary binge that ignites economic growth. Since the election the S&P 500 index of shares has jumped 3%, led by stocks like banks and retailers that soar and sink with the economic cycle. + +Such expectations are not baseless. During the campaign Mr Trump called for tax cuts which, according to the Tax Policy Centre, a think-tank, would cost an eye-watering $7trn over a decade, raising the debt-to-GDP ratio by 26 percentage points (or, based on current projections, to 111% of GDP) by 2026. He promised new infrastructure spending worth $1trn, more money for defence and no cuts in spending on pensions and health care for the elderly (which is forecast to soar over the next decade). All else equal, such largesse should indeed give the economy some temporary vim. But there are three main reasons to doubt that a big boom will materialise. + +The first is that Republicans in Congress are much less keen on loosening the purse-strings. Paul Ryan, Speaker of the House, has proposed tax cuts only half as big as Mr Trump’s. Kevin Brady, chairman of the House Ways and Means Committee, said on November 16th that he expected any tax reform to pay for itself (even if that is partly by boosting growth). True, Mr Trump is likely to court Democratic votes for infrastructure spending. Still, market expectations “may be running ahead of political and legislative realities”, says Alec Phillips of Goldman Sachs, a bank forecasting that Mr Trump will wind up with enough new spending to boost growth by a modest 0.3 percentage points for two years. + +The second reason to be sceptical of a Trump boom is that a massive fiscal stimulus would be poorly timed. The chief argument for bigger deficits after the crisis was that unemployment was too high, and, with interest rates stuck near zero, there was little the Federal Reserve could do about it. But today, with unemployment below 5% and wage growth picking up, there is much less slack in the economy. And the Fed, which is worried about inflation round the corner, is expected to raise rates in December. + +A soaring deficit could make the central bank more hawkish. Quizzed about stimulus before a congressional committee on November 17th, Janet Yellen, the Fed’s chairman, questioned whether the economy needed much more spending. It is within the power of Ms Yellen and her colleagues to flatten Mr Trump’s stimulus by tightening monetary policy faster. + +Markets seem to be expecting higher interest rates, rather than an inflationary boom. The yield on ten-year government debt now hovers around 2.4%, up almost 0.5 percentage points from election day. But inflation expectations, measured as the gap between yields on inflation-indexed bonds and the normal sort, are up only half as much. That suggests an expectation of higher rates, as well as higher prices, is pushing yields up. In the week to November 16th the dollar, which tends to rise with interest rates, rose 2.3% in trade-weighted terms—its biggest weekly gain since October 2008. Compared with this, the rise in the stockmarket since the election has been unexceptional: on five other occasions during 2016 the S&P 500 has recorded a larger gain over two weeks. Stocks that do poorly when interest rates rise, such as utilities, have suffered since the election. + +The third reason for circumspection is uncertainty over the details of Mr Trump’s infrastructure spending. “With negative interest rates throughout the world, it’s the greatest opportunity to rebuild everything…we’re just going to throw it up against the wall and see if it sticks,” said Steve Bannon, Mr Trump’s incoming senior adviser, to the Hollywood Reporter on November 18th. But this carefree, spendthrift attitude does not chime with Mr Trump’s plan, which was penned by Wilbur Ross and Peter Navarro, two of his economic advisers, and released shortly before the election. + +Based on that document, of the $1trn in planned spending, perhaps $140bn comes from the government (which, despite Mr Trump’s bluster, is less than the combined $500bn Hillary Clinton wanted Congress to spend or lend to developers). The administration would not direct that money itself. Instead, the government would give firms who invest in private infrastructure projects a tax break worth 82 cents for every dollar of equity they stump up. + + + +It is not clear how much juice this private-sector money would add to the economy. Critics say that investors might just shift money towards subsidised projects, rather than spend afresh. Problematically, the plan could only fund profitmaking infrastructure projects, like toll bridges. Laws banning the government from retrospectively adding tolls to existing roads—which would be very unpopular even it were always legal—mean such a set up would not help much with the country’s backlog of maintenance. The scheme is more likely to subsidise “pointless” new projects, according to Randal O’Toole of the Cato Institute, a libertarian think-tank. + +Return of the supply-siders + +Boosting spending is not the only route to growth. Republicans have often called for tax cuts not as a fiscal stimulus, but as a way to encourage work and investment in the long run. Might Mr Trump’s boom come from greasing the wheels of the economy, rather than juicing its engine? + +There is certainly room for some gains on this front. Mr Trump wants to slash the corporation tax rate from 35%, the highest rate in the OECD, a club of mostly-rich countries, to 15% (Mr Ryan has proposed a rate of 20%). That should encourage investment. Mr Trump’s deregulatory agenda—he promised on November 21st that for every new regulation written, he would roll back two—should do the same, whatever its other costs. + +The problem is that two key planks of Mr Trump’s campaign, protectionism and an immigration crackdown, would pull in the other direction. Dan DiMicco, Mr Trump’s trade adviser who now leads the transition team for the Office of the United States Trade Representative, told The Economist before the election that “the era of trade deficits is over”. But funding bigger government deficits will require inflows of capital from abroad, the flipside of which is larger, not smaller, trade deficits. If protectionism stops foreigners stumping up the cash for Mr Trump’s spending binge, American savers will have to. That will reduce the funds available for private-sector investment, hampering growth. + + + +Cutting taxes might create enough growth to allow Mr Trump to quietly moderate his protectionism, or at least to offset it. In the 1980s Ronald Reagan sent deficits ballooning by cutting taxes for the rich, and oversaw fast growth in spite of modest protectionism. A second “Reagan revolution” would certainly please many Republicans. But the top rate of federal income tax today is 39.6%, compared with 70% in 1980. History also suggests this recipe would do little for the fortunes of those blue-collar workers whom Mr Trump pledged to shield from foreign competition. Gains in real income between 1980 and 1988 were heavily skewed towards the richest (see chart). Middle-earners, whose average tax rate fell by a percentage point, saw real pre-tax income gains of just 0.6% a year. By contrast, the top 1% of earners saw their average tax rate fall by four percentage points while their pre-tax real incomes surged by 7.7% a year. + +In short, Congress and the Fed are immediate obstacles to a debt-fuelled economic boom. Over a longer period, Mr Trump could be his own worst enemy. Markets are betting that he will abandon the issues that defined his candidacy and disappoint the voters who won him the election. They may turn out to be right. But if they are not then, like Clinton supporters, they are in for a painful realisation. + +This article appeared in the United States section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21710798-markets-are-betting-donald-trump-will-keep-abandoning-his-campaign-promises-king/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The big gaggle + +Donald Trump shuts down midtown Manhattan + +The president-elect has shut down midtown Manhattan + +Nov 26th 2016 | NEW YORK + +Welcome home + +CONCRETE barriers have been installed along the streets surrounding Trump Tower. Police have blanketed the area, setting up security checkpoints. Metal barricades corral pedestrians. The media are penned across the road from the tower, while their satellite trucks are parked round the corner on busy 57th Street. Two of Fifth Avenue’s five traffic lanes are closed. Part of East 56th Street (the main entrance to Mr Trump’s penthouse) is closed indefinitely to both vehicles and pedestrians. + +Traffic is nothing new to New Yorkers. Sam Schwartz, a transport engineer, likes to joke about the two New Yorkers who asked each other, “Should we walk or do we have time to take a cab?” He thinks the mess could hasten the introduction of congestion pricing. New Yorkers are also accustomed to high-profile visitors, like President Barack Obama, causing temporary chaos. The new gridlock may last much longer. Mr Trump’s wife and youngest son, who is still at primary school, may continue to live in their Trump Tower penthouse. Mr Trump likes to sleep in his own bed, which suggests he will often come back from Washington. The added security comes at a cost. CNN reports that New York city spends $1m a day to protect the Trumps. Bill de Blasio, the mayor, refused to confirm this figure, but has said that the city deserves “a substantial amount of reimbursement” from the federal government. + +Since the election, protesters, the press and gawkers flocking to the tower have made it difficult for local businesses to operate. Already crowded pavements are becoming clogged with selfie-takers. None of the high-end retailers along the avenue would comment on whether they are feeling a pinch, but they must be. + +People living and working in Trump Tower and the surrounding streets have to navigate checkpoints to get to work or home again. The tower’s atrium is still open to members of the public prepared to endure airport-style security. “In the long term, having Trump on Fifth Avenue will help retailers,” says Michael Shvo, owner of the Crown Building which sits across the street from the tower. He reasons that tourists will still flock there, wallets open, after the chief occupant leaves for the White House. Fifth Avenue is still open for business. But as Yogi Berra once said, “Nobody goes there any more. It’s too crowded.” + +This article appeared in the United States section of the print edition under the headline Fifth Avenue frenzy + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21710802-president-elect-has-shut-down-midtown-manhattan-donald-trump-shuts-down-midtown/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Sore losing in North Carolina + +In one state, the 2016 election is still not over + +A rare Democratic victory—and a sore Republican loser + +Nov 26th 2016 | RALEIGH + +Raleigh pushing it + +RUTHLESS politicians often try to pin their own vices on their critics: anti-corruption campaigners, for example, frequently find themselves accused of graft. So it has proved with North Carolina’s Republicans. A federal court recently found that voting restrictions they passed in the state legislature targeted African-Americans with “almost surgical precision”. Now, having botched the race for governor, some are baselessly alleging voter fraud among their opponent’s supporters. + +Before the election, several opinion polls in North Carolina suggested that both Hillary Clinton and Deborah Ross, the Democratic candidate for the Senate, would win. In the event, both lost soundly. But Roy Cooper, the Democratic contender for governor, narrowly held on to his lead over Pat McCrory, the incumbent. At the last official count, Mr Cooper was ahead by over 7,000 votes, though his team thinks the real figure is higher. He has duly declared himself the victor. But, facing the prospect of becoming the first governor of North Carolina to fail in a re-election bid, Mr McCrory has refused to accept defeat. + +His allies have launched protests in dozens of counties, complaining of illegal voting by felons or the dead. Many such appeals are frivolous: Democracy North Carolina, a watchdog, found that, among the tiny number of supposed felons, almost half were not felons at all. Even after the court squashed the most egregious restrictions imposed by the legislature, voting-rights activists had graver concerns: over the purging of rolls and limited opportunities for early voting, including in areas hit by flooding. (The state Republican Party unwisely put out a crowing statement that mentioned the decline in early voting among blacks.) “The very people who talk about the election being rigged, we know they’re the riggers,” says Reverend William Barber, a civil-rights leader. “We’re in a voting war in North Carolina.” + +Mr McCrory’s local challenges have been failing, even though Republicans control the county election boards. But the shenanigans are not over. A right-wing think-tank is suing to postpone the result, citing bogus concerns over voter-registration arrangements. Meanwhile Mr McCrory has requested a recount, to which he is entitled under state law if the margin is fewer than 10,000 votes. That may not be the end of it, either. If an election is contested, North Carolina’s legislature may order a rerun—or declare a winner. That proviso has been used once before, in 2005, when the then-Democratic majority decided a state superintendent’s race in the Democratic candidate’s favour. Even if that nuclear option is not invoked, Mr Cooper’s legitimacy will be sullied. + +Still, this farrago offers lessons for both parties in how to win, and lose, elections. Mr McCrory did worse than other Republicans in part because of a state law widely thought to discriminate against transgender people and others. After he signed it, some businesses reconsidered their investments, entertainers cancelled concerts and sports tournaments were moved. Mr Cooper resisted the measure; Mr McCrory banked on his supporters’ conservatism outweighing the fallout. Evidently he miscalculated: the economic costs, and the broad coalition that mobilised against him, seem to have convinced some Republican-leaning voters to ditch him, even as they plumped for Mr Trump. + +True, Republican legislators could have rammed through the law without him. The state is politically divided, but energetic gerrymandering—recently ruled unconstitutional by another federal court—has helped them to secure veto-proof supermajorities in both chambers. That means a Governor Cooper would struggle to restrain them (though, conversely, lawmakers might not be too perturbed by his inauguration). It also means Mr McCrory could not have derailed the transgender bill even if he had wanted to. Rashly, he chose to champion it. Not content with his role in that obloquy, he now seems determined to shame his state by clinging to office. + +This article appeared in the United States section of the print edition under the headline Not going quietly + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21710821-rare-democratic-victoryand-sore-republican-loser-one-state-2016-election/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The next administration + +Donald Trump has a team of rivals too + +Nov 26th 2016 | WASHINGTON, DC + + + +THE president-elect’s first administration hires had all been middle-aged white men who had backed him to the hilt when others wrinkled their noses. But with a pair of nominations announced on November 23rd he rang the changes. He named Nikki Haley, the Indian-American governor of South Carolina, to be his ambassador to the United Nations, and Betsy DeVos, a billionaire Republican benefactress, as his education secretary. As The Economist went to press, he was also reported to have invited Ben Carson, a retired neurosurgeon whom he defeated in the Republican primaries, and who is black, to be his secretary of housing and urban development. + +All three possible appointments are intriguing, perhaps Mrs Haley’s especially. She is a first-generation American—her parents migrated from the Indian state of Punjab in the 1960s—who converted from Sikhism to Christianity before her marriage, yet still occasionally attends gurdwara. Sparky, personable and, at the age of 44, an acknowledged Republican star, she could be the first Indian-American to hold a cabinet office. She is also a former opponent of Mr Trump’s. + +She criticised him implicitly last January, when giving the official Republican rebuttal to Barack Obama’s last state-of-the-union speech. “It can be tempting to follow the siren call of the angriest voices,” she warned: Americans “must resist.” She then criticised Mr Trump explicitly after he failed to disavow the support of a former Grand Wizard of the Ku Klux Klan. Having distinguished herself by the alacrity with which she had lobbied to remove the Confederate flag from government buildings the previous year, after a racist massacre of black churchgoers in Charleston, South Carolina, Mrs Haley’s condemnation carried moral weight. It is smart of Mr Trump, who once derided her for her criticisms, to try to harness that. Her nomination is evidence that he can in fact bury a grudge. There is speculation he might also be trying to head off a potential challenger in 2020; that would be smart, too. + +Mrs DeVos, an heir by marriage to the Amway direct marketing fortune, is another former critic of Mr Trump. She gave money to three of his rivals in the primaries—including Jeb Bush, an establishment figure Mr Trump humiliated—and said the reality television star did “not represent the Republican Party”. + +In some ways the epitome of the well-heeled Republican elite he railed against on the trail, Mrs DeVos is also a crusader for the pro-choice school reforms, including an expansion of charter schools and vouchers to make private education more widely accessible, he has called for. Amid uncertainty about what Mr Trump means to do with power, given the sketchiness of his platform and his apparent abandonment of a couple of big campaign promises, Mrs DeVos’s appointment is a rare clue to a Trump policy agenda. Teachers’ unions decried it; Mr Bush, one of Mr Trump’s most indefatigable Republican opponents, warmly applauded. + +Mr Carson’s nomination, if he agrees to it, would be rather odd, but that is now expected of the retired medical whizz. Backed by a devoted following of evangelical Christians, he briefly led the Republican primary field, yet seemed unaware of what the job of president entailed; his brilliant brain seemed resistant to remembering almost any detail of foreign policy. When reported to be in the reckoning for a cabinet role, his business manager said that was the “last thing he would want”, because he “feels he has no government experience.” This was not a great recommendation for a job that includes responsibility for the federal government’s efforts to alleviate urban poverty. + +This article appeared in the United States section of the print edition under the headline Opening the field + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21710819-donald-trump-has-team-rivals-too/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The box that launched 1,000 trips + +Treasure-hunting in the American West + +A valuable hidden treasure draws hopeful hunters out West + +Nov 26th 2016 | SANTA FE + +The voracity of hope + +IN THE mid-19th century, hundreds of thousands of Americans flocked west in search of gold. Today those with an appetite for treasure head to the Rocky Mountains, where Forrest Fenn, an octogenarian art collector, claims to have hidden a bronze box containing gold coins, Chinese jade, emerald jewellery and other riches, including two gold nuggets “as large as chicken eggs”. Mr Fenn first had the idea to stash away the treasure nearly 30 years ago, when he was diagnosed with aggressive kidney cancer and told his chances were slim. Over the decades he spent hawking art to the likes of Steve Martin, an actor, and former President Gerald Ford from his gallery in Santa Fe, New Mexico, Mr Fenn had built up an enviable personal collection of art and artefacts. He decided to pack as much as he could carry and hike to his favourite spot to die. The only way to track him—and his cache—would be to solve the riddle he would leave behind. + +Mr Fenn’s cancer later vanished, but the idea of hiding the treasure continued to grip him. “When I hid my treasure about six years ago, this country was in a deep recession…I wanted to give some hope to those who were willing to search for the treasure,” Mr Fenn explained, sitting in a study lined with shelves crammed with Kachina dolls, beaded moccasins and fore-edge painted books. In 2010, without alerting his wife or daughters, Mr Fenn slipped into the mountains north of Santa Fe, where he lives in an estate of adobe houses, and deposited the bronze box “where warm waters halt”. In his memoir “Thrill of the Chase”, which was published later that year, he wrote a six-paragraph poem said to contain nine clues indicating where the treasure lies. It concludes: “So hear me all and listen good, your effort will be worth the cold. If you are brave and in the wood I give you title to the gold.” + +Based on the number who have contacted him, Mr Fenn estimates that up to 100,000 people have thronged to the Rockies in search of his hidden cache over the past six years. Some “Fenn-atics” like Cynthia Meachum, a pensioner who lives in Albuquerque, search almost full-time. Others are more nonchalant about their questing, using Mr Fenn’s poem more as a way to give their outdoor exploits a sense of purpose. + +Eager to capitalise on interest in Mr Fenn’s hidden bounty, the state of New Mexico included the art dealer in one of its promotional videos (it has been viewed 400,000 times on YouTube). Last year the mayor of Santa Fe established a “Thrill of the Chase” day, and in June the city helped promote “Fenn-boree”, a weekend-long conference for treasure-seekers. In addition to a potluck dinner and Fenn trivia, the gathering featured something almost as exciting to hunters as ferreting out the coveted bronze box: a cameo appearance by Mr Fenn himself. + +This article appeared in the United States section of the print edition under the headline The box that launched 100,000 trips + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21710818-valuable-hidden-treasure-draws-hopeful-hunters-out-west-treasure-hunting-american/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +General direction + +Donald Trump’s national-security team takes shape + +Jim Mattis would be a reassuring choice; Mike Flynn is an alarming one + +Nov 26th 2016 + +No zdorovie + +WHAT can be deduced from Donald Trump’s confirmed and likely picks for key national security posts? The answer is not much, apart from an apparent enthusiasm for generals—which is slightly odd, given the way Mr Trump lambasted them during the campaign for their failure to win America’s wars. + +Mike Flynn, a retired military-intelligence general who guided Mr Trump’s views on national security throughout his campaign, and whose strident views on Islam were reflected in the candidate’s speeches, will be the national security adviser. General Flynn is a divisive figure, who spooks Republican foreign-policy thinkers as much as Mr Trump does. By contrast Jim Mattis, a former Marine general who is likely to be defence secretary, would reassure them; as would David Petraeus, another general, who has been mooted as a potential secretary of state if the job does not go to Mitt Romney. Despite General Mattis’s nickname, “Mad Dog” (earned for his aggression in combat and a talent for cheerfully menacing quotes), he is regarded as combining military dash with intellectual seriousness. + +Moreover his views, expressed during his time spent as a scholar at the Hoover Institution, a conservative think-tank, contrast with Mr Trump’s zero-sum, transactional concept of foreign policy. “Like it or not, today we are part of this larger world and must carry out our part,” he said in testimony to the Senate armed services committee in 2015. “We cannot wait for problems to arrive here, or it will be too late; rather we must remain strongly engaged in this complex world.” + +Generals Flynn and Mattis do have one other thing in common, in addition to their military service. Both were dumped before they were due to retire by the Obama administration. General Mattis was relieved of his command of CENTCOM (which covers an area from the Middle East to Pakistan) in early 2013 without so much as a telephone call from the president. The White House had become riled by his dogged questioning of its Iran policy. Even if the nuclear issue could be resolved, General Mattis argued, not nearly enough was being done to counter Iran’s threat to stability in the Middle East. + +General Mattis has continued to be a critic of Mr Obama’s foreign policy which, he believes, has emboldened Russia, China and Iran, who have exploited the president’s reluctance to apply America’s military power. If appointed, he would attempt to steer Mr Trump away from isolationism and deals with Vladimir Putin. + +Bear hug + +General Flynn is likely to push in the opposite direction. “We’re in a world war against a messianic mass-movement of evil people, most of them inspired by totalitarian ideology: radical Islam,” he wrote in a book published earlier this year. “But we are not permitted to speak or write those two words, which is potentially fatal to our culture.” In another passage, he asks: “Do you want to be ruled by men who eagerly drink the blood of their dying enemies?…There’s no doubt that they [Islamic State] are dead set on taking us over and drinking our blood.” He tweeted in February: “Fear of Muslims is RATIONAL.” The tweet included a link to a video claiming that the religion of Islam wants “80% of people enslaved or exterminated”. He holds that jihadism is an “existential” threat to America’s way of life. Defeating it should, in his view, be the overwhelming national priority, far ahead of meeting the challenge of a rising China or a resurgent, nuclear sabre-rattling Russia. + +There are other reasons to worry about the judgment of the man who will be the closest adviser on foreign policy to an inexperienced president, as well as the co-ordinator of the national-security machine. It is troubling that, as a retired senior officer, he joined the chants of “Lock her up, lock her up!” against Hillary Clinton at the Republican convention. He offered support at first for the attempted coup in Turkey, and then changed his mind when his lobbying firm was hired by an outfit linked to the government in Ankara. Last year he accepted payment for attending an event in Moscow to mark the anniversary of RT, a TV network funded by the Kremlin, that included a speech and a seat at Mr Putin’s elbow. + +General Flynn believes he was fired from his post as director of the Pentagon’s Defence Intelligence Agency (DIA) in 2014 because of pervasive political correctness within the Obama White House, which disliked his conflation of Islam with terrorism. It was also infuriated by his insistence that the war against jihadists was being lost, even as Mr Obama was trying to put it behind him. + +He was right that the White House claimed victory over al-Qaeda prematurely. And his reorganisation of the DIA, which encroached on the CIA’s turf and expensively duplicated its intelligence-gathering, contributed to his downfall. But it is also the case that, where once he had been respected by military contemporaries, such as Stanley McChrystal, General Petraeus and General Mattis, with whom he had helped to redefine counter-insurgency after the initial disasters of the Iraq war, concerns had grown about General Flynn’s obsessive behaviour and ill-concealed contempt for civilian control. Insiders claim that he peddled weird theories that came to be known as “Flynn facts”. + +Were General Flynn to be nominated for a cabinet post requiring congressional confirmation, he would probably struggle. But the job of national security adviser is in Mr Trump’s gift. As for General Mattis, under rules devised to ensure civilian authority over the armed forces, a retired military officer is required to be out of uniform for seven years before he could take charge of the Pentagon. However, under the law, Congress can grant a waiver. Widely esteemed and with the enthusiastic backing of the chairman of the Senate armed services committee, John McCain, General Mattis would be a shoo-in. + +This article appeared in the United States section of the print edition under the headline General direction + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21710812-jim-mattis-would-be-reassuring-choice-mike-flynn-alarming-one-donald-trumps/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Lexington + +Donald Trump and the dark side + +Barack Obama has bequeathed his successor fragile legal rules for fighting terrorism + +Nov 26th 2016 + + + +INTERVIEWED by German reporters this month, President Barack Obama was asked whether his failure to close the Guantánamo Bay prison camp, or his drone strikes against terror suspects, marked his presidency’s “darkest moment”. It was a very European question, of the sort that leaves many American politicians spluttering with impatience. Mr Obama offered a downbeat reply. He expressed pride at ending all use of torture and reducing Guantánamo’s population to 60 detainees. He boasted of creating terror-fighting rules that are “much more disciplined and consistent with the rule of law and international norms”—including the obligation to minimise casualties when using drones, while still allowing strikes in countries unable to capture terrorists. He did not boast of leaving Donald Trump a solid legal foundation for using force against Islamic State (IS), because he cannot. Pondering the dilemmas of terrorist-fighting, Mr Obama mused aloud: “How do we make sure that we don’t change, even as we protect our people?” He did not answer his own question. + +Such ambiguities alarm those who remember the last time America was accused of being a rogue superpower. John Bellinger was chief legal adviser to the State Department from 2005 to 2009 and before that a top lawyer at the National Security Council, putting him at the centre of the toughest Bush-era debates about the war on terror. In a lecture to a high-octane, bipartisan audience at the Supreme Court on November 20th, organised by the Salzburg Global Seminar, Mr Bellinger recalled sharp exchanges with Bush administration colleagues. Hawkish peers objected when he argued that America should not advocate policies that might provide cover for countries like Russia or China to flout international laws on the use of force. They scoffed when he told them that unilateralism risked inflaming public opinion in allied countries. Such colleagues told Mr Bellinger: “It doesn’t matter what other countries think; they don’t vote for us.” But foreigners do get a vote, Mr Bellinger noted: every time they decide whether to share intelligence, extradite suspects or fight alongside Americans. In the Bush era, he recalled, some European spy agencies moved from “co-operation plus”, meaning that they offered more information than the CIA requested, to more minimal help. Allies sought assurances that run-of-the-mill criminal extraditions would not see suspects sent to Guantánamo. + +In large part because of partisan gridlock on Capitol Hill, the Obama administration’s campaign against the fanatics of IS rests on what Mr Bellinger calls “a very strained legal interpretation” of an Authorisation for Use of Military Force (AUMF) from 2001 in which Congress approved military action against al-Qaeda, and a second from 2002 permitting combat in Iraq. Team Obama repeatedly urged Congress to pass a new AUMF, but Republicans called the White House draft too restrictive and Democrats found it too permissive. So Mr Obama’s lawyers fell back on arguing that America may fight IS because it is a descendant of al-Qaeda. It may be only a matter of time before an alleged terrorist challenges his detention on the ground that he has no link to al-Qaeda; and at that point lawyers may be left citing a president’s powers to defend America, a blunt legal instrument. + +Into this confusion marches President-elect Trump. To weigh the risks that he poses to global trust, recall the (unfair) caricature of Bush the Cowboy that stoked such enduring rage in Europe and beyond: namely that for all his talk of promoting democracy, the Texan really started wars to steal Middle Eastern oil, and ordered enemies tortured in a spirit of vengeance. Now consider that this caricature of Mr Bush was Candidate Trump’s campaign platform. Mr Trump declared that America should not have invaded Iraq, but once there should not have left without seizing Iraqi oilfields: “You know, it used to be to the victor belong the spoils,” he grumbled. At election rallies Mr Trump drew cheers by promising to bring back waterboarding, a mock execution by simulated drowning, and “a hell of a lot worse”. Torture works, he asserted, and “if it doesn’t work, they deserve it anyway for what they do to us.” Trump-defenders often counsel against taking him literally. Sure enough, at a meeting with the New York Times on November 22nd, Mr Trump abruptly announced that he now doubts that waterboarding is so useful, after hearing James Mattis, a retired Marine Corps general, say that torture wasn’t useful, during an interview for the post of defence secretary. + +Europe dusts off the “Wanted” posters + +Team Trump contains outspoken advocates of harsh interrogations. Mr Trump’s nominee for attorney-general, Senator Jeff Sessions of Alabama, is one of just five senators to oppose a pair of laws on interrogation and torture passed in 2005 and in 2015. With those laws Congress forbade cruel and degrading treatment of detainees, then banned American troops or spooks from using any technique not found in the Army Field Manual on Human Intelligence Collector Operations. Explaining his opposition, Mr Sessions said that sticking to methods in a manual allows the enemy to prepare. Mr Sessions has spoken against granting terrorist detainees the legal rights of criminal suspects, including access to a lawyer. In 2014 Representative Mike Pompeo of Kansas, a Republican named by Mr Trump to head the CIA, condemned a Senate report on CIA interrogations, saying it put “American lives at risk” by revealing techniques that he called “within the law”. + +Formidable legal and political barriers now exist to anything resembling torture by Americans. But no law stops detainees being sent overseas for questioning. President Trump can undo Mr Obama’s drone rules and his ban on the CIA from operating detention sites. Mr Trump has promised to fill Guantánamo with “bad dudes”, and seems tempted to let Russia commit war crimes in Syria, in pursuit of IS. If pious appeals do not move the next president, try this. America is a brand. Trash it, and the costs of every global transaction will rise. A dealmaker cannot want that. + +This article appeared in the United States section of the print edition under the headline The dark side + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21710804-barack-obama-has-bequeathed-his-successor-fragile-legal-rules-fighting-terrorism-donald/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Evening sessions + +The next attorney-general opposes immigration and has defended torture + +Campaigns have consequences + +Nov 26th 2016 | WASHINGTON, DC + + + +THE nomination of Jeff Sessions as attorney-general is a reminder that words spoken on the campaign trail have meaning, that politics is not show business, and that governments take decisions that make or break lives. The 69-year-old senator from Alabama, one of Mr Trump’s earliest supporters and closest adviser from the world of politics, will have sweeping powers over immigration enforcement. If confirmed by the Senate, he will hold in his hands the fate of the 740,000 migrants who arrived as children and were granted the right to stay and work by Barack Obama under the Deferred Action for Childhood Arrivals scheme (DACA). + +Mr Sessions has several times sought to pass laws abolishing DACA. He has spent the past decade leading opposition to bipartisan immigration reform bills. He is a sceptic of the H1-B visa scheme that helps companies recruit skilled foreigners, such as scientists or engineers. Mr Sessions has opposed curbs on harsh interrogations for terror suspects (see Lexington) and voted against an attempt to end mandatory minimum sentences for non-violent offences. + +As attorney-general Mr Sessions will oversee civil rights and voting rights. As a senator he has opposed calls to restore federal oversight over election laws after the Supreme Court ruled that special monitoring of once-racist states under the Voting Rights Act was no longer needed. The justification for oversight of some states and not others “no longer exists”, agreed Mr Sessions in 2014. + +Expect Democrats to highlight Mr Sessions’s humiliation when he was denied confirmation as a federal judge in 1986. Senators heard a Justice Department official testify that, as US attorney for the Southern District of Alabama, Mr Sessions had suggested that a white civil-rights lawyer might justly be called “a disgrace to his race”. Mr Sessions said that he did not recall making that comment, and could not understand why he would have made it, but did not deny his colleague’s account. Asked whether he had called the National Association for the Advancement of Coloured People, a civil-rights group, a “pinko” organisation that hates white people, Mr Sessions told his Senate inquisitors: “I am loose with my tongue on occasion, and I may have said something similar to that.” Thirty years later, Mr Sessions is in a position to avenge that humiliation. + +This article appeared in the United States section of the print edition under the headline Evening Sessions + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21710814-campaigns-have-consequences-next-attorney-general-opposes-immigration-and-has-defended/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +The Americas + + + +Brazil’s prosperous south: Not the country you know [Thu, 24 Nov 16:30] + +Bello: Piñata politics [Thu, 24 Nov 16:30] + +Polish-Brazilians: Black soup and pierogi [Thu, 24 Nov 16:30] + +Indigenous rights in Canada: Contested wilderness [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Not the country you know + +Brazil’s three southern states escape the worst ravages of recession + +The region’s luck starts with climate and geography + +Nov 26th 2016 | FLORIANÓPOLIS + + + +MAKESHIFT stalls appear on every country road in Brazil, usually laden with bananas and coconuts. On the back roads of Brazil’s three southern states—Paraná, Santa Catarina and Rio Grande do Sul—the staple is loops of smoked sausage. Like the garden gnomes that sometimes stand guard, the Wursts are a legacy of immigrants from Germany, Poland and other central European countries who, along with northern Italians, settled the region from the mid-19th century. + +Southern Brazil, an area the size of France with a population of 29m, feels like a region apart in other ways. Temperatures can drop below freezing on hilly terrain; shacks in poor neighbourhoods of coastal cities are topped with pitched roofs, as if built for snow. Southerners prefer yerba mate tea to cafezinhos, and look as much towards Uruguay and Argentina as to the rest of Brazil. Florianópolis, Santa Catarina’s capital, has flights to Buenos Aires but not to Belo Horizonte, the capital of Minas Gerais, Brazil’s second-biggest state. + +These days, the difference southerners most want to talk about is an economic one. Although the region has not been spared the worst recession in Brazil’s modern history, its effects have been milder. The south’s unemployment rate has doubled to 8% since the recession began in 2014 but remains well below the national average of 11.8%. Sales-tax receipts have kept pace with inflation, a sign of resilient consumption. In São Paulo, Brazil’s industrial powerhouse, they have dropped in real terms. This strength has its origins in industrial history, but the region has lessons to teach the rest of Brazil, too. + +Southern luck starts with climate and geology. The south is not hospitable to sugar cane and coffee, the commodities that drew Portuguese magnates to Brazil’s north-east, where they established an economy based on extraction and exploitation of slave labour. Mineral deposits encouraged concentrations of wealth and power in other regions. Southern farmland, good for such crops as wheat and maize, attracted destitute peasants who purchased smallholdings, which they tilled themselves. Even today, just one in seven farms in Rio Grande do Sul is larger than 80 hectares (198 acres). + +Early rigours created a culture of self-reliance. “You had to be entrepreneurial just to survive,” explains Santa Catarina’s governor, Raimundo Colombo. Traditions of independence and family ownership shape today’s business; the south is the centre of Brazil’s equivalent of the Mittelstand, Germany’s medium-sized firms. + + + +Habits of co-operation have been just as important. The south’s many credit co-operatives give firms better access to financing than is available in other parts of Brazil. Paraná’s Coamo, with 27,000 members, is Latin America’s largest agricultural co-operative. Southerners also banded together to educate their children, founding fee-paying “community universities” well beyond the main cities. Chapecó, a town of 180,000 in Santa Catarina’s interior, has two such schools. + +This history has bequeathed to the region a relatively large middle class and lower inequality than in the rest of Brazil. Its GDP per person is above average. The government’s main contribution has been not to squander those advantages. The region’s pupils outperform most other Brazilian schoolchildren in international tests. Its governments have imposed less of the enterprise-crushing bureaucracy for which Brazil is famous. Southern states are among Brazil’s most competitive. In a ranking by the Economist Intelligence Unit, a sister company of The Economist, Paraná and Santa Catarina came second and third after São Paulo; Rio Grande do Sul placed ninth among Brazil’s 27 states. + +This has helped give the south the sort of economy that Brazil would like to have, one that is diversified and largely independent of the commodity cycle. Extractive industries account for less than 1% of GDP, compared with an average of 4% in Brazil. Manufacturing produces 16-22% of output, compared with 12% nationally. + +Foreign investment is boosting the south’s manufacturing advantage. BMW, a German carmaker, opened its first Brazilian plant in Santa Catarina two years ago; Renault, a French rival, is spending 740m reais ($218m) to expand one in Paraná. + +The lively technology sector is largely home-grown. Florianópolis is one of Brazil’s main start-up hubs. Its tech firms pay more in taxes than does the city’s well-developed tourist sector. The capital cities of the other two states are close behind. + +Many of the region’s tech firms grow out of its vocation for farming, fulfilling a Brazilian ambition to build high-value industries on its strengths in natural resources. A start-up in Pato Branco, a tidy city of 80,000 in Paraná’s interior, enables drones to map farmland. In Florianópolis, Agriness writes software to monitor the health of 1.6m sows, which produce 80% of Brazil’s pork. + +Lower-tech firms are also moving up the value chain. In Concórdia, in Santa Catarina’s hilly interior, BRF, the world’s biggest exporter of chicken, has installed halal production for sales to the Middle East. It has set up a prosciutto smoker for a different clientele: foodies in São Paulo. A nearby unit of Embrapa, a federal agricultural-research institute, developed a breed of pig that produces low-fat meat for such folk. While agriculture accounts for a tenth of southern GDP, such ingenuity raises the share of farm-related industry to half. + +Southerners fret that Brazil-wide failings, some of which the region’s governments are also guilty of, hold them back. Santa Catarina and Paraná have stabilised their finances, as the federal government is now trying to do. But Rio Grande do Sul has one of the country’s biggest deficits. On November 22nd the state followed Rio de Janeiro in declaring a state of “financial calamity”, a prelude to seeking federal aid. It is to lay off 1,200 workers and cut salaries. + +Infrastructure is not as good as it should be. The 460km (286-mile) journey from Concórdia to Florianópolis can take 11 hours by lorry. The region’s governors admit they should work together more, especially on lobbying the federal government to improve roads and build railways. + +Employers in the countryside fear a “rural exodus” that could hurt agribusiness in the long run, says Rafael Menute, who runs BRF’s operation in Concórdia. The south’s rural population has dropped from 18% of the total to 14% over the past decade. To encourage people to stay, the company is paying its 1,200 suppliers more. Pato Branco’s mayor, Augustinho Zucchi, has paved rural roads to make it easier for farmers’ children to reach the town’s night spots. + +In the cities entrepreneurs worry about the costs of success. Everton Gupert, co-founder of Agriness, frets that rising property prices will drive graduates out of Florianópolis. Juliano Froehner, a serial entrepreneur whose latest venture is a service to remind parents to take their infants for health check-ups, spends ten days a month in the city of São Paulo. That is because it is still the biggest centre of finance and talent. But even self-satisfied paulistanos no longer ask him why he spends the rest of his time in the south. + +This article appeared in the The Americas section of the print edition under the headline Not the country you know + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21710848-regions-luck-starts-climate-and-geography-brazils-three-southern-states-escape/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Bello + +With an unfriendly neighbour, Mexico needs to strengthen itself + +Piñata politics + +Nov 26th 2016 + + + +ALMOST 25 years ago a Mexican president, Carlos Salinas, took a historic decision. He decreed that his country’s future lay in setting aside its fear and resentment of its mighty neighbour to the north and embracing economic integration with the United States through the North American Free-Trade Agreement (NAFTA). The agreement underpinned the modernisation of part of Mexico’s economy. So the imminent arrival in the White House of Donald Trump, a critic of NAFTA who threatens to build a migrant-blocking wall between the two countries, looks like a disaster for Mexico. + +It would be easy to say that Mr Salinas made the wrong bet, as his many critics charged at the time. He didn’t. For Mexico, geography is destiny. Anyway, with $1.4bn in goods crossing the border each day, the country’s economy is now inextricably bound to that of the United States. So what is Mexico to do? Today’s president, Enrique Peña Nieto, who was excoriated when he invited Candidate Trump to visit, trusts that he can interest President Trump in a “modernisation” of NAFTA. He has some leverage: Mexican non-co-operation on trade, drugs and migrants could hurt the United States. + +No democratic ally deserves the insults that Mr Trump directed at Mexico. But they have prompted introspection as well as anger. Mexico became “the easy piñata” of Mr Trump’s campaign because of its own failings, wrote Jesús Silva Herzog, a commentator, in Reforma, a newspaper. “The slamming of the door to the north leaves us, once again, face to face with ourselves.” + +Mr Peña is right when he insists that not everything in Mexico is going badly. But many big things are. NAFTA has functioned as a legal exoskeleton, offering certainty to foreign investors. Domestic investors have no such luck. That is a big reason why economic growth has averaged less than 3% since 1990. Mexicans are fed up with out-of-control crime and what Mr Silva Herzog calls the “the permanent scandal of our public life”. Eight former state governors, all but one from Mr Peña’s Institutional Revolutionary Party (PRI), face corruption charges, having left their states with debts totalling $9bn. Only one is in jail. + +The central problem that Mexico has evaded is that of governance. The country has only flourished when it has had a strong central government, albeit at the cost of liberty. That applied under Porfirio Díaz for more than 30 years until he was toppled by revolution in 1911. It applied again in the heyday of the PRI’s one-party system. With the defeat of the PRI in elections in 2000, Mexico gained political freedoms, but not the rule of law or accountable government, as Luis Rubio, a political scientist, explains in an essay for the Wilson Centre, a think-tank in Washington. + +The power once monopolised by the PRI presidents is now shared with state governors and with the two main opposition parties. But there are still no checks and balances on its exercise, as the larceny of governors illustrates. And government is ineffective: Mr Peña has been unable to implement fully some of the reforms he enacted at the start of his term. If he thought the PRI’s old method of central command would work in a more sophisticated country, he has been disabused. He is widely reviled: his approval rating is only 25%. + +If he wants to rescue his reputation he should use the remaining two years of his term to deal with the problem of governance, in two ways. First, he could appoint a genuinely independent attorney-general—an essential first step to establishing the rule of law. His government pushed through a law to grant autonomy to the office from 2018, but with the proviso that the incumbent would continue in the job for another nine years. His critics’ fears that the change will be merely cosmetic were raised when last month Mr Peña appointed Raúl Cervantes, a PRI senator and formerly the party’s lawyer, to the job. That is not good enough. + +Second, he needs to tackle the declining legitimacy of politics and the presidency. Mr Peña was elected with just 38% of the vote. Because of growing political fragmentation, his successor may need only 25% or so. Whoever it is will find governing hard, unless Mexico introduces a run-off vote between the two front-runners in the presidential election, as most Latin American countries have. + +Mr Peña has the negotiating skills to pull off these reforms. But does he have the will? Porfirio Díaz is once supposed to have exclaimed of his country: “Poor Mexico, so far from God and so close to the United States.” Today, its misfortune is that it is so close to Mr Trump and so far from good governance. + +This article appeared in the The Americas section of the print edition under the headline Piñata politics + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21710839-pi-ata-politics-unfriendly-neighbour-mexico-needs-strengthen-itself/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Black soup and pierogi + +Polish Brazilians remember their culture + +But many are forgetting their grandparents’ language + +Nov 26th 2016 | ÁUREA, RIO GRANDE DO SUL + +ÁUREA, a town in the northern part of Rio Grande do Sul, calls itself the “Polish capital of Brazilians”. To a visitor, it is the Slavic personality that comes through at first. The children tumbling out of school are mostly fair-haired. Wheat and thickets of pine cover the surrounding hills. An occasional palm tree is the only sub-tropical feature. + +Áurea makes the most of its Polishness. More than 90% of its 4,000-odd residents say their origins are in the central European country. It hosts an annual czernina festival; last year 1,000 people came to savour the black soup thickened with duck blood. + +But ties with the mother country are loosening. Although Polish can still be overheard on the street, mass was last celebrated in the language three years ago, reports Artêmio Modtkowski, in Portuguese-inflected Polish. His grandfather, Jan, was among the 12 founders of the settlement in 1906. Despite appearances, Áurea’s inhabitants are as Brazilian as members of the other groups that make up the country’s ethnic mishmash. + +Some 60,000 Poles, mostly impoverished peasants, landed in Brazil between 1869 and 1920. Nearly all went to Paraná, another southern state. Its capital, known to Poles as Kurytyba (and to everyone else as Curitiba), is the only city in South America that has a polonised name. From there the newcomers spread throughout Brazil’s south to raise crops and breed livestock. + +Perhaps 800,000 Brazilians, less than 0.5% of the population, are of Polish descent, though the number could be higher. They include Jews who fled Europe during and after the second world war and settled mainly in cities. In Higienópolis, an upper-middle-class neighbourhood in São Paulo, delis sell Polish pierogi (dumplings) and herring. + +Poles and their descendants have made less of a splash in politics than have other Brazilians with Slavic roots. Juscelino Kubitschek, who as president from 1956 to 1961 moved Brazil’s capital from Rio de Janeiro to Brasília, was of Czech origin. The father of Dilma Rousseff, Brazil’s leader from 2011 until she was impeached in August this year, was Bulgarian. Polish-Brazilians have been more prominent in culture. Zbigniew Ziembinski, who died in 1978, is regarded as the father of modern Brazilian theatre. + +But Polish-Brazilians are beginning to make a bigger mark in public life. Ricardo Lewandowski, the chief justice of Brazil’s supreme court, presided over Ms Rousseff’s impeachment trial. + +This article appeared in the The Americas section of the print edition under the headline Black soup and pierogi + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21710852-many-are-forgetting-their-grandparents-language-polish-brazilians-remember-their-culture/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Contested wilderness + +Skiers v the religious rights of Canada’s indigenous peoples + +A case in the Supreme Court will set a noteworthy precedent + +Nov 26th 2016 | OTTAWA + +The day the grizzlies have their protest + +THE Ktunaxa First Nation, an indigenous group in south-eastern British Columbia, believes that the grizzly-bear spirit resides in a sacred part of the Purcell mountains that they call Qat’muk. For 25 years they have resisted a scheme to build a ski resort in this wilderness. On December 1st the Ktunaxa will bring their fight to Canada’s Supreme Court. They will argue that their religious freedom takes precedence over the right of mountain-bombing masses to experience the deep powder for which the area is famed. + +The case will set a precedent in Canada and reverberate abroad. Sacred sites are an issue in protests against the Dakota oil pipeline in the United States. New Zealand’s government recently conferred the rights of a person on a national park sacred to the Maori people. Canada’s Supreme Court has ruled before on indigenous people’s rights over land use, but never on the basis of their religious beliefs. + +The nature of that faith, which assigns sacred value to features of the landscape, poses a puzzle for the courts. The Ktunaxa maintain that skiers will drive away the grizzly-bear spirit, making their rituals meaningless. Canada’s Supreme Court must now decide whether that danger represents an infringement of the religious freedom established by the constitution, and whether that infringement is justified. + +The Ktunaxa lost the first two rounds of legal tussling. Lawyers for Glacier Resorts, which is developing the project, say the Ktunaxa informed them only in 2009 that the site was sacred. They point out that the Shuswap First Nation, which settled near the sacred area in the 1850s, supports the resort, which will bring employment. British Columbia’s appeals court rejected the argument that the Ktunaxa do not hold their beliefs very strongly. But, it ruled, their faith may not restrict use of land by people who do not share it. + +The appeal to the Supreme Court has prompted 14 outside groups to file friend-of-the-court briefs. Religious organisations, such as the Muslim Lawyers Association, argue for a broad interpretation of religious rights. The Chamber of Commerce wants a narrow one. + +Such groups worry that a decision in favour of the Ktunaxa will set off an avalanche of similar claims. There might be thousands of sacred sites in Canada. These fears are exaggerated, says Michael Lee Ross, a lawyer in Vancouver who has written a book on sacred sites and the courts. The Supreme Court is accustomed to setting limits on the rights guaranteed by the constitution, he says. Whatever its decision on the grizzly-bear spirit, skiers will find new mountains to conquer. + +This article appeared in the The Americas section of the print edition under the headline Contested wilderness + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21710857-case-supreme-court-will-set-noteworthy-precedent-skiers-v-religious-rights/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Asia + + + +Deforestation in Indonesia: For peat’s sake [Thu, 24 Nov 16:30] + +Women and work in Japan: More glaring than shining [Thu, 24 Nov 16:30] + +Civil society in Vietnam: Ambiguity of assembly [Thu, 24 Nov 16:30] + +Australia’s natural gas: Poor credit [Thu, 24 Nov 16:30] + +Banyan: The other pivot [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +For peat’s sake + +Despite tough talk, Indonesia’s government is struggling to stem deforestation + +But the weather is helping a little + +Nov 26th 2016 | HENDA, BORNEO + + + +TEGUH, chief of the village of Henda, in the Indonesian portion of Borneo, enters his office brimming with apologies for being late. The acrid scent of smoke wafts from his clothes. He explains that he was guiding police and firefighters to a fire just outside the village. A farmer had decided to clear his land by burning it. Henda sits amid Borneo’s vast peatlands; the fire had set the fertile soil smouldering for nearly 24 hours. It was a small fire, he says—perhaps a couple of hectares—but Mr Teguh still struggled to contain his exasperation, given the destruction wrought by fires set for land-clearance just a year ago. + +Last year, in the autumn for the most part, at least 2.6m hectares of Indonesia’s forests burned—an area the size of Sicily. The fires blanketed much of South-East Asia in a noxious haze and released a vast plume of greenhouse gases. Much of the island’s interior was reduced to sickly scrub; along its roads stand skeletal trees, reproachful witnesses to the ravages they endured. Indonesia’s forest fires alone emitted more greenhouse gases in just three weeks last year than Germany did over the whole year. The World Bank estimates that they cost Indonesia $16bn in losses to forestry, agriculture, tourism and other industries. The haze sickened hundreds of thousands across the region, and according to one study, hastened over 100,000 deaths. + +This year, happily, has seen no repeat of last year’s conflagration. Indonesia’s government would say that is because it took resolute action. Having entered office seemingly indifferent to conservation, Joko Widodo, the president, universally known as Jokowi, created a government agency charged with restoring peatlands, the site of around half of last year’s devastation. He issued a presidential moratorium on new palm-oil plantations and ratified the Paris agreement on climate change, committing Indonesia to cut greenhouse-gas emissions by 29% by 2030. + +Downpours or directives? + +But many environmentalists attribute the diminished burning this year to steady autumn rain rather than official resolve. After all, Susilo Bambang Yudhoyono, Jokowi’s predecessor, also promised to halt deforestation, to little avail. He launched a showy crackdown on illegal logging when he took office in 2004. In 2009 he pledged to reduce Indonesia’s greenhouse-gas emissions by 26% below the level they were then expected to reach by 2020. A year later Norway promised Indonesia $1bn if it managed to stop cutting down its forests; Mr Yudhoyono declared a two-year moratorium on forest-clearing concessions and renewed it in 2013. But by March of this year Norway had delivered just $60m of the promised billion. “We haven’t seen actual progress in reducing deforestation” in Indonesia, Norway’s environment minister admitted. + +In recent years no country has lost forest at a faster rate than Indonesia (see chart). Between 2000 and 2012 around 6m hectares of primary (meaning virgin) forest disappeared, mainly on the islands of Borneo (Kalimantan to Indonesians) and Sumatra. Roughly 40% of the deforestation took place in nominally protected areas. First come the loggers; clear-cutting and burning follow, to make way for palm-oil or timber plantations. Kalimantan’s lowland forests are almost entirely gone, and as better roads make the highlands of the interior more accessible, forests there are vanishing too. Virtually all of the haze last year came from fires on those two islands. + + + +Indonesia contains around 14.9m hectares of peatland—most of the world’s tropical peat forests. Fires there are uniquely harmful, for several reasons. Peat is soggy and acidic, which prevents organic matter from decaying fully. That makes it a wonderful store of carbon—until it dries out, at which point it becomes flammable. Indonesia’s peat forests were unusually vulnerable last year, due both to efforts to drain peatlands to grow crops (in their natural state they are too waterlogged for agriculture) and to drought. The haze came not just from burning tree stumps, but from the smouldering soil, too. + +Peat forests can be as much as 200 times more damaging to the atmosphere when burnt than other types of vegetation, both because they store more carbon and because more of it is released as methane, an especially harmful greenhouse gas. The average incinerated hectare emits the equivalent of 55 metric tonnes of carbon. Peat forests also take far longer to regenerate than forests on mineral soils. The canals that now ribbon Kalimantan’s forests remove water from peatlands, impeding restoration and leaving them more fire-prone. Between 2000 and 2010, peatland cover declined by 41% on Sumatra, 25% on Borneo and 9% on Western New Guinea. + +Sinan Abood, a geospatial analyst with America’s Forest Service, calculates that more than one-quarter of pulpwood concessions and more than one-fifth of palm-oil concessions are located on peatland. Companies grab this land not for its productivity—mineral soil is far better suited to agriculture—but because locals own or work more productive land. Bribing an official and getting immediate access to thousands of hectares of nominally protected land is easier, quicker and cheaper than negotiating with those communities. + +But Indonesian politicians friendly to big palm-oil or pulp-and-paper companies like to pretend they have community interests at heart. They fret that conservation measures would harm smallholders—individual farmers with just a few acres. Faced with evidence of illegal deforestation, politicians shrug: Indonesia is a big country, they say, and policing every two-hectare plot across 13,000 islands is impossible. In fact, a paper published in 2013 found that almost 90% of deforestation in Sumatra between 2000 and 2010 was done by big palm-oil firms. Similarly, most of the deforestation in Kalimantan results from large-scale conversion to agriculture or timber plantations. + +Humala Pontas, the head of environmental rehabilitation for the provincial government of Central Kalimantan, works in the department that reviews applications for forest concessions. Almost all of them are approved. But it is nearly impossible to tell, he says, whether companies stick to the terms of their concessions. Central Kalimantan is immense, and its provincial government small and poor. “We have no monitoring system,” says Mr Humala. “Last year we gave 40,000 hectares for cutting—but we have no way of knowing if they used 40,000 or 400,000.” + + + +That is a familiar story across Indonesia, where decentralisation has saddled local governments with more responsibility than they can handle. Most are simply unable to stop powerful interests bent on deforestation. Many do not want to: the financial and political benefits from allowing business to proceed as usual often exceed those from following national policy decided thousands of miles away in Jakarta. Sometimes the incentives are terrifyingly blunt: activists tell tales of attempts to enforce forestry laws being met by men with machine-guns. + +Added to a lack of capacity is a woolly governmental structure that makes it difficult to know just where the buck stops, and easy for officials to pass it. WALHI, an environmental pressure group, has filed a lawsuit over deforestation in Central Kalimantan. Among the defendants are the provincial governor and parliament, as well as Jokowi and the national ministries of health, environment and agriculture—all of which have some role in forest policy. Mr Yudhoyono’s moratorium came from the forestry ministry (now merged with the environment ministry), but the agriculture ministry handles licensing for palm-oil concessions. Such divisions are replicated at the local level, and the various entities rarely co-ordinate with each other. + +This lack of enforcement makes it difficult for multinational firms that buy Indonesian paper and palm oil to adhere to their own policies against deforestation. A study published earlier this year by Greenpeace, another environmental pressure group, found that only one of 14 multinationals surveyed could trace its palm oil back to the plantation where it was grown. None could say with certainty that they did not use palm oil from recently deforested land; most could not say how much of their palm oil comes from suppliers that meet their standards and how much comes from third parties that do not. + +This is not entirely due to sloth or negligence. Although satellites now enable real-time monitoring of Indonesian forests, overlapping land claims make it impossible to use those data to determine responsibility for deforestation, according to a recent paper by David Gaveau, a remote- sensing specialist with the Centre for International Forestry Research, which is based near Jakarta. Farmers often plant on companies’ concessions, and firms often clear land outside their allocated areas. The satellites can detect forests going up in flames, but only observers on the ground can determine who set them alight. + +There are a few modest reasons for hope. The bureaucracy is showing marginally more resolve: arrests for starting fires are up, and several companies have been fined or otherwise sanctioned for their role in last year’s conflagration. Jokowi has continued to push Indonesia’s OneMap initiative, which would gather all land-use data in one place. Nazir Foead, the head of Indonesia’s new Peatland Restoration Agency, has a conservation rather than an industry background, and seems to have the president’s ear. Indonesia’s highest Muslim authority has issued a fatwa condemning intentional forest burning. + +Individual Indonesians are doing their part, too. In a churchyard near Henda, Mr Teguh pushes aside some plastic sheeting on a crude bamboo greenhouse, and proudly displays rows of native hardwood saplings. He grows hundreds of thousands each year to help reforest peatlands in Kalimantan and Sumatra. He plucks a wrapped sapling, twig-thin but crowned with a spray of healthy, spiky leaves. “This is the best we can do to help God,” he says. It will take far more than that, alas, to return Indonesia’s forests to health. + +This article appeared in the Asia section of the print edition under the headline For peat’s sake + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21710844-weather-helping-little-despite-tough-talk-indonesias-government-struggling-stem/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Shining or glaring? + +Japan’s efforts to make it easier for women to work are faltering + +Women’s participation in the workforce is high but their status is low + +Nov 26th 2016 | Tokyo + + + +SHINZO ABE, Japan’s prime minister, is an unlikely champion of women’s empowerment. A lifelong conservative and the leader of a party that for decades battled feminism, Mr Abe has undergone a conversion, prompted by Japan’s alarming demography: the workforce is projected to shrink by about 25m people—well over a third—by 2060. Meanwhile, millions of university-educated women sit at home, their talents squandered, says Kathy Matsui of Goldman Sachs. “Japan has more to gain than most countries from raising female labour participation.” + +Yet, four years into Mr Abe’s stint in office, and 17 years since Ms Matsui coined the term “womenomics”, the government is still struggling to make Japanese women “shine”, its clumsy rhetorical catchphrase for raising the standing of women at work. The latest gender-gap index published by the World Economic Forum (WEF) ranks Japan 111th out of 144 countries, a fall of ten places since 2015. Just 9.5% of the members of Japan’s lower house are women, putting the country 155th in the world by that measure. Under Mr Abe, the number of female directors at Japanese firms has inched up—to a paltry 2.7%. + +The government takes credit for adding about 1m women to the workforce since 2012. At 66%, the female participation rate is now among the highest in the world, says Masako Mori, a former minister of state for gender equality. That is largely the result, say critics, of Japan’s drum-tight labour market rather than of innovative policies. Mindful that most of these jobs are far down the corporate totem pole, the government has also revived a decade-old target of having women occupy 30% of “leadership positions” by 2020. But it admits that this goal is nowhere near being met. + +The government has done more to improve women’s lot than these statistics suggest, insists Haruko Arimura, a former minister in charge of women’s empowerment: “For the first time ever we are talking not about if women should be in charge, but how.” Ms Arimura helped pass a landmark law last year aimed at ending corporate sexism. Companies and bureaucracies with 300 or more employees must reveal how many female workers and managers they employ, and set targets for promoting them. The aim, she says, is to shame male bosses into doing better. + +Public opinion is clearly shifting. For the first time most Japanese people agree that mothers should be allowed to continue their careers, according to a new survey by the Cabinet Office. A string of stories has appeared in the media on the once-overlooked problem of matahara (a portmanteau of “maternity” and “harassment”). The fact that roughly 47% of women leave work after having children has occasioned much hand-wringing, too. It is especially unfortunate, the WEF notes, since Japanese women are healthier, better-educated and longer-lived than their peers almost anywhere else in the world. + +Ms Arimura, a mother of two, recalls the petty harassment she suffered when she opted for a political career: “People said they felt sorry for my children and husband.” She believes such attitudes can be fought with public leadership and greater state support. The government has promised to end a chronic shortage of child care by the end of next year. A trickier problem, she acknowledges, may be calcified working practices. + +Male workers still dominate the most important, full-time positions at Japanese companies. For most of them, long working hours make doing their share of child-rearing impossible. Labour reforms introduced a decade ago, meanwhile, have accelerated the growth in the number of temporary workers, of whom an outsize share are female. The trend towards a bifurcated workforce, largely divided by gender, continues under Mr Abe, says Ayaka Shiomura, a member of Tokyo’s metropolitan assembly. + +Companies and unions are loth to dismantle Japan’s employment system, but without more flexible labour practices, womenomics will fail, warns Nicholas Benes, the head of the Board Director Training Institute of Japan. He wants to see a new type of hybrid contract, with sabbaticals and alternative career paths for mothers, alongside the standard path for other employees. Parliamentary discussions on workplace reforms are under way, but the outcome remains uncertain. Some companies, desperate to keep workers, are already converting irregular positions to full-time ones, says Ms Matsui. Whatever happens, Mr Abe’s achievement, she says, has been to change female empowerment from a human-rights issue to an economic imperative. “That’s a big shift.” + +This article appeared in the Asia section of the print edition under the headline More glaring than shining + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21710849-womens-participation-workforce-high-their-status-low-japans-efforts-make-it/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Ambiguity of assembly + +A plan to legalise Vietnam’s private charities and clubs is shelved + +But the state does not have the capacity to do their work + +Nov 26th 2016 | HO CHI MINH CITY + +Fans, but no papers + +EVERY Sunday deaf children meet to learn sign language in a borrowed classroom in Ho Chi Minh city, Vietnam’s southern metropolis. Pham Cao Phuong Thao began organising the lessons after her own son was born with hearing difficulties; her students include street children whom disability has made hungry. But after years of effort Ms Thao has still not obtained the permits that would make her charity legal. She says the paperwork produced to support her applications forms a stack a metre high. + +Ms Thao’s small organisation is among more than 300,000 charities, clubs and associations operating in Vietnam, a single-party state with an increasingly vibrant civic life. Yet the country’s Byzantine bureaucracy—and the ruling Communist Party’s paranoia—leaves these outfits in a bind. For years campaigners had dared to hope that a proposed law, which was supposed to pass on November 18th, would help cement citizens’ right to associate. Instead lawmakers talked of tightening restrictions on civil society before shelving the bill altogether. + +In theory the needs of Vietnamese are met by a suite of state-approved professional clubs and community groups, which are sponsored and closely supervised by government agencies or by wings of the Communist Party. In practice many associations muddle along outside this structure. Groups promoting civil liberties, labour rights and other dangerous topics are resigned to operating informally. But some others—working in areas such as environmentalism, or in aiding the aged, addicted or orphaned—are locked out of the system by overcautious government gatekeepers who fear they might accidentally endorse troublemakers of some kind. Without proper paperwork, such groups battle to open bank accounts, hold events, rent venues or raise cash. The problem is particularly acute in the south, which the party still views as less ideologically sound—a legacy of the Vietnam war. + +No one expected the draft law on associations, which was dusted off in 2015 after several years in storage, to bring dramatic change. The hope was that it would clarify rights that currently exist in a patchwork of decrees—and are often disregarded by local bureaucrats—creating a firm legal footing from which to advance. But during revisions legislators peppered the text with new prohibitions, including a clause which would have banned even duly registered foundations from receiving money from abroad. Campaigners and foreign donors who had cautiously welcomed the draft law were relieved when the national assembly put it back on ice. + +Vietnam has good reason to ease up on civic-minded citizens. Government debt is reaching its legal limit of 65% of GDP—a reminder of the limits of what the state can afford. There is also a growing move to streamline government. The authorities are pressing ahead with the privatisation of bloated state-owned enterprises; by the same token, party bigwigs must surely question the utility of the big subsidies they pump into often sluggish state-sanctioned clubs and associations. Some cadres probably calculate that it would be easier to spot agitators if more groups were encouraged to operate openly rather than to organise clandestinely online. + +But these considerations do not yet outweigh the fear of acting as a midwife to movements that might threaten its control. It probably did not help that the debate on the law coincided with broad outrage over mass fish deaths caused by a polluting steel mill which, among other impacts, has pushed environmentalists higher up the government’s watch-lists. The death of the Trans-Pacific Partnership (TPP), a planned American-led trade deal, has also dampened Vietnam’s appetite for reform. Delay in passing a law on associations makes it less likely that Vietnam will fulfil a bold promise to begin tolerating independent trade unions, which it made during negotiations for TPP and towards which the legislation was supposed to be a small step. + +As for Ms Thao, she intends to keep badgering authorities to register her group. She wants to help create a dictionary of Vietnamese sign language, needed to unify divergent regional practices. That would be easier if she had the papers required to pester foreigners for donations. But they are still on hold—like the law. + +This article appeared in the Asia section of the print edition under the headline Ambiguity of assembly + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21710856-state-does-not-have-capacity-do-their-work-plan-legalise-vietnams-private/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Poor credit + +Is Australia letting firms pump natural gas too cheaply? + +A gas-extraction tax is bringing in less revenue than expected + +Nov 26th 2016 + + + +IN GREEK mythology, a gorgon was a creature so hideous that anyone who looked at one turned to stone. In contemporary Australia, Gorgon is an enormous liquefied natural gas (LNG) project which was supposed to pay huge economic dividends. It is the centrepiece of a decade-long, A$200bn ($148bn) construction boom in gas-export facilities. In 2019 Australia is likely to surpass Qatar to become the world’s biggest exporter of LNG. The benefits to the government, however, have not been as quite as entrancing as expected. + +At one point Chevron, the company running Gorgon, promised the government so much revenue that it would be able to lower personal income taxes. As recently as March the energy minister, Josh Frydenberg, hailed “the golden age of gas” and forecast that Gorgon alone would add a total of A$440bn to the economy. Yet the Treasury says that revenue from the petroleum resources rent tax (PRRT), through which energy firms pay the federal government for the right to extract oil and gas, is forecast to fall from A$1.2bn in the fiscal year that ended in mid-2015 to A$800m in 2020—even as the volume of exports soars. + +That is down to the remarkably generous design of the tax. Unlike most royalty regimes, it is not levied at a flat rate on the volume of gas extracted. Instead, it is linked to the project’s profits. Companies are allowed to recoup their exploration and construction costs, which tend to be huge for LNG projects, before any tax is payable. These deductions can be carried forward indefinitely, potentially delaying the Treasury’s payday for decades. According to the Australian Tax Office, the value of unused deductions rose from A$1.7bn in 2004-05 fiscal year to A$188bn in 2014-15—meaning that firms can rake in a further A$187bn before paying any tax. + +The generosity was at least partly deliberate, in order to stimulate economically beneficial investment. But a study by the International Transport Workers’ Federation suggests the PRRT may have gone too far. Governments of rival exporters, such as Qatar, Malaysia and Nigeria, received two or three times as much revenue as Australia’s in 2014 as a proportion of the value of the gas produced. A senator from the Australian Greens, Larissa Waters, has called for a parliamentary inquiry into the tax, describing it as a “rort” (Australian slang for scam). One of the original architects of the PRRT, a former trade minister, Craig Emerson, wants an investigation into subsequent government tax breaks that may have further reduced its take. + +There is also dismay at state level. The Liberal government in resource-rich Western Australia, which is behind in the polls for an election in March, has called for a review of government spending in support of LNG projects. But there is little chance of the federal government souring on the gas industry. The environment minister who gave Gorgon the green light in 2007 was none other than Malcolm Turnbull, now the prime minister. + +This article appeared in the Asia section of the print edition under the headline Poor credit + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21710851-gas-extraction-tax-bringing-less-revenue-expected-australia-letting-firms-pump/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Banyan + +Russia’s pivot to Asia + +Vladimir Putin is leaning east, but his engagement is superficial + +Nov 26th 2016 + + + +RUSSIA’S twin-headed eagle faces east towards Asia as well as west towards Europe. This far-sighted beast is near-as-dammit the heraldic coat-of-arms of Vladimir Putin, who revived the old imperial symbol. So why does the president of a country with half its vast lands lying east of Singapore need to make so much of his “pivot to Asia”, declared two years ago? That many readers familiar with the much-maligned Asia pivot of Barack Obama will not have heard of Mr Putin’s hints at a gap between rhetoric and substance. And yet the prevailing view among pundits is that Russia is indeed back in Asia. + +Once the Soviet Union and China were a hair-trigger away from war along their long border. Today many see a new strategic convergence or even an alliance in the making between Russia and China, the world’s second- and third-biggest military powers. The two states’ media paint Mr Putin and Xi Jinping, China’s president, as strongmen buddies. In 2014 they signed a huge deal to bring Russian gas to China. Recently, Russian sales to China of advanced weapons resumed after being halted a decade ago because of technology cloning. + +In September, China and Russia conducted joint naval exercises in the South China Sea, where China has grandiose territorial claims. Russia is officially agnostic about those, but the exercises gave support to China’s position. In short, the pair’s “strategic partnership” is receiving regular upgrades. This year Mr Putin described the love-in as “all-embracing”. + +Belatedly, Russia has realised that there is more to Asia policy than China. It wants influence elsewhere in the Indo-Pacific region. Ties with India have strengthened through civilian nuclear co-operation and weapons sales. Russian ships have returned to Cam Ranh Bay, a port in Vietnam once used by the Soviets. + +A first for Russia, Mr Putin hosted a lavish summit of the Asia-Pacific Economic Co-operation (APEC), a regional talkfest, in Vladivostok in 2012. Last year Russia launched its own annual powwow in the same Pacific port, the Eastern Economic Forum. In December comes a striking diplomatic gambit—a visit to Japan at the invitation of the prime minister, Shinzo Abe, to discuss not just economic co-operation but also a resolution to a territorial impasse over the four southernmost Kurile islands, which Japan calls its Northern Territories. Stalin grabbed the islands in the closing days of the second world war; seven decades on, the impasse precludes the signing of a peace treaty and has impeded the flow of Japanese money and expertise to the neglected Russian Far East. Mr Abe, though a nationalist, is not in the macho mould of the often bare-torsoed Mr Putin. Nevertheless, he hopes to get the islands back in a naked man-to-man session with the Russian president in a hot spring in his home prefecture. + +Mr Putin may relish the experience. He knows that Japan wants to pull Russia away from China, which Japan views as a grave threat. And Mr Abe has personal reasons to secure a coup over the Northern Territories: foreign policy is an inherited duty among Japan’s hereditary politicians, and the signing of a peace treaty was the fond wish of his late father, Shintaro Abe, a long-serving foreign minister. So Mr Putin will pocket Mr Abe’s financial inducements but make a derisory offer over the islands—perhaps the return of the two smallest, barely inhabited ones. + +Most of all, Mr Putin will chuckle at appearing to peel away America’s chief Asian ally from the united front of displeasure that Mr Obama assembled after Mr Putin’s annexation of Crimea and his invasion of eastern Ukraine. Indeed, look closely at the Russian pivot, and it has little to do with engagement in Asia for its own ends. Russia’s trade policy in the region boils down to selling weapons to anyone who will buy them (including most of the claimants in the South China Sea dispute, thereby fuelling an arms race). Russia’s trade with Asia accounts for a piddling 1% of the region’s total, and Asia’s economic miracle has scarcely touched the 6.4m Russians in the dilapidated cities of Russia’s Far East. Many seethe that sprucing up Vladivostok for the APEC summit cost $20bn, more than the London Olympics and more than Russia will spend developing the region in the years to 2025. + +Asia is almost incidental to the strategic imperative of the pivot, which is to bolster Russia’s standing in its all-consuming confrontation with America and the West. The gas deal with China occurred only after Western sanctions limited Russian options in Europe. Russia resents the terms on which it was struck, and suspects that China will seek to renegotiate if gas prices stay low. + +Bobo Lo, a Russia specialist, describes a “virtual reality” of propaganda which insists that Russia and China, both state-directed economies with concerns about American power, look at the world identically. But mutual distrust runs deep. Russia has been conditioned by its history of expansion into Asia to look down on China as the lesser power, so its current status as a source of commodities for China feels humiliating. Elsewhere, Russia wants to undermine the American-led world order of which it has been the biggest loser. By contrast, says Mr Lo, China has been the chief beneficiary of that order, having adopted wrenching economic reforms to capitalise on it. It knows that its most critical relationship is not with Russia but with America. + +Enraptored + +What, then, if Russia’s relations with America were to change? They have certainly been strained, over Crimea, Ukraine and Mr Putin’s part in the destruction of Syria. But just suppose that Mr Putin and Donald Trump, America’s president-elect, pursue the rapprochement that both men say they want. Suppose America cuts Mr Putin slack in Europe, the region of his real aspirations, and even the Middle East. What would happen to his Asian pivot? Pacific Russians have a sardonic take on Moscow’s imperial eagle. Its vision may take in both West and East, but “Stoit zadom k Azii”—it stands with its back to Asia. + +This article appeared in the Asia section of the print edition under the headline The other pivot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21710832-vladimir-putin-leaning-east-his-engagement-superficial-russias-pivot-asia/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +China + + + +Education: Patriotic energy v West-worshipping [Thu, 24 Nov 16:30] + +China’s national parks: A farewell to loudspeakers [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Patriotic energy v West-worshipping + +China battles foreign influence in education + +But the middle class can’t get enough of it + +Nov 26th 2016 | Beijing + + + +CHINA has long oscillated between the urge to equip its elite with foreign knowledge and skills, and an opposing instinct to turn inward and rebuff such influences. In the 1870s the Qing imperial court ended centuries of educational isolation by sending young men to America, only for the Communist regime to shut out the world again a few decades later. Today record numbers of Chinese study abroad: over half a million people left in 2015 alone, many for America (see chart). The Communist Party officially endorses international exchanges in education while at the same time preaching the dangers of Western ideas on Chinese campuses. A new front in this battlefield is emerging, as the government cracks down on international schools catering to Chinese citizens. + + + +Only holders of foreign passports used to be allowed to go to international schools in China: children of expat workers or the foreign-born offspring of Chinese returnees. Chinese citizens are still forbidden from attending such outfits, but more recently a new type of school has proliferated on the mainland, offering an international curriculum to Chinese nationals planning to study at foreign universities. Their number has more than doubled since 2011, to over 500. Many are clustered on the wealthy eastern seaboard, but even poor interior provinces such as Gansu, Guizhou and Yunnan have them. + +Some international schools are privately run, including offshoots of famous foreign institutions such as Dulwich College in Britain or Haileybury in Australia. Even wholly Chinese ventures often adopt foreign-sounding names to increase their appeal: witness “Etonkids”, a Beijing-based chain which has no link with the illustrious British boarding school. Since 2003 some 90 state schools have opened international programmes too, many of them at the top high schools in China, including those affiliated with Peking University and Renmin University in Beijing. + +New laws are making it harder for such schools to operate. In 2014 Beijing’s education authorities stopped approving new international programmes at public high schools. Several other cities, including Guangzhou, Shanghai, Shenzhen and Wuhan, have also tightened their policies on such institutions. Some have capped fees for international programmes. The Ministry of Education says it is pondering a law that would require public high schools to run their international programmes as private entities (fearing this event, a few schools have already begun doing so). + +Earlier this month a new law banned for-profit private schools from teaching the first nine years of compulsory education. That came only days after Shanghai started to enforce an existing ban on international schools using “foreign curriculums”. Some such institutions already offer a mixture: Wycombe Abbey International, which is based in Changzhou in eastern China and affiliated to a British girls’ boarding school, teaches “political education”, a form of government propaganda, and follows a Chinese curriculum for maths. But the new regulations threaten to nullify the very point of such institutions for most parents, which is to offer an alternative to the mainstream Chinese system, in which students spend years cramming for extremely competitive university-entrance exams that prize rote learning over critical or lateral thinking. + +Lawmakers say the rules are prompted by concerns about the quality of international schools. The expansion of international programmes within regular Chinese schools also spurred a popular backlash against the use of public facilities and funds to teach pupils who plan to leave China. Since the number of people attending public schools is fixed, the elite high schools are accused of squeezing out regular students to feed their lucrative international stream. Local governments often provide capital for private schools, too. + +The move to control international schools is “the next logical iteration” of a wider campaign against Western influences, reckons Carl Minzner of Fordham University in America. In 2015 China’s education minister called for a ban on “textbooks promoting Western values” in higher education. + +This mission extends far beyond the educational realm: the government has called for artists and architects to serve socialism, clamped down on video-streaming sites that carry lots of foreign content and even proposed renaming housing developments that carry “over-the-top, West-worshipping” names. Chinese organisations that receive foreign funding, particularly non-governmental ones, face increasing scrutiny. + +The Communist Party is instead seeking to inculcate young Chinese with its own ideological values: the new directive on for-profit schools calls on them to “strengthen Party-building”. After pro-democracy protests in Tiananmen Square in 1989, nationalistic “patriotic education” classes were stepped up in schools, a move that Xi Jinping, the president, has taken to new levels since 2012, seeking to infuse every possible field with “patriotic spirit”. “Morals, language, history, geography, sport and arts” are all part of the campaign now. Unusually, he also seeks to include students abroad in this “patriotic energy”. + +But lashing out against international schools could prove risky. Any attack aimed at them essentially targets China’s growing middle class, a group that the ruling Communist Party is keen to keep onside. Chinese have long seen education as a passport to success, and it is not just the super-rich who have the aspiration or means to send their offspring abroad to attend university. Some 57% of Chinese parents would like to do so if they could afford it, according to the Shanghai Academy of Social Sciences. Even Mr Xi sent his daughter to Harvard, where she studied under a pseudonym. + +Since school is optional after 15, and parents must pay for it, even at public institutions, the state will find it tricky to prevent high schools from teaching what they want. Moreover, constraints on international schooling in China are likely to swell the growing flow of Chinese students leaving to study abroad at ever younger ages. This trend is the theme of a 30-episode television series, “A love for separation”, about three families who send their children to private school in America. + +Restricting for-profit schooling also risks hitting another growing educational market: urban private schools that cater to migrant children who cannot get places in regular state schools because they do not have the required residence permits. A law that undermines educational opportunities for the privileged and the underprivileged at once could prove far more incendiary than a little foreign influence. + +This article appeared in the China section of the print edition under the headline Patriotic energy v West-worshipping + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21710841-middle-class-cant-get-enough-it-china-battles-foreign-influence-education/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +A farewell to loudspeakers + +China tries to build a coherent system of national parks + +The government looks to America for inspiration + +Nov 26th 2016 | NANJING + +An AAA-level touristic snap + +ONE need only drive 30km west from the bustling heart of downtown Nanjing—population about 7m—to reach the shady sanctuary of the Laoshan National Forest Park (pictured). But on a recent sparkling autumn afternoon only a trickle of visitors had come to enjoy the abundant birdsong, the scent of pines and the rustle of falling ginkgo leaves. Unlike many of China’s wilderness attractions, Laoshan has eschewed the hurly-burly of market stalls and other facilities intended to cater to a crush of tourists. There are simple wooden steps installed here and there, but no concrete staircases, iron railings or trails festooned with coloured pennants and loudspeakers playing soppy music. + +Roughly 18% of China is given over to national parks or protected areas of some sort. But there is no overarching system for managing or even designating such places; instead, they are subject to a complicated, overlapping and haphazard mix of local, provincial and national administration. Laoshan is a case in point. Since its establishment in 1991, its official status has changed multiple times, from a provincial scientific reserve to an environmental one to an “AAA-level touristic scenic spot”. Its current “national park” designation only appears on some signs. + +Happily, through all these incarnations, Laoshan has escaped the urge of many bureaucrats to manage scenic spots more for profit than for conservation. Provincial authorities often take it upon themselves to name places as national parks, with a view to selling overpriced tickets or fostering pell-mell development. Environmental protection, if considered at all, is typically an afterthought. Partly because of this uneven quality, a handful of sites attract the lion’s share of visitors. + +China’s increasingly urbanised and urbane population has a growing appreciation of the great outdoors. Nature-lovers are choosing to stop and smell the roses at national parks, rather than simply snapping a few photos. That means more overnight camping and hiking, rather than a brief shuffle past on a half-day bus tour. + +Yet there is no logic or consistency to the facilities on offer, the fees charged, the development permitted or the conservation work undertaken at China’s 8,000-odd parks, reserves and protected areas. They are run not just by different levels of government, but by different agencies at each level: some fall under the forestry administration, some under the ministry of environmental protection and others under the tourism-promotion agency. The authorities are trying to instil some order to this jumble—and in the process taking advice from an unlikely source: America’s National Park Service (NPS). + +For many Chinese visitors to America, the tourist itinerary has recently begun to include not only Disney World, Las Vegas and New York, but also national parks such as Yellowstone. In 2015 1.1m Chinese visited national parks and monuments in America, more than twice as many as three years earlier. Last year the national government began consulting the NPS and several NGOs with a view to creating a park system similar to America’s. + +Bureaucratic turf wars are the biggest obstacle to reform. In some cases, one agency is responsible for the trees, another for the rivers and lakes, a third for the wildlife and a fourth for the roads leading to it all. The natural bureaucratic reluctance to cede power is all the greater where profits from tourism fees or concessions are at stake. A provincial forestry official in south-western Yunnan province—the site of many protected areas—privately predicts that infighting will persist and that progress towards a more orderly system will be slow. + +Yet the rewards could be great. A more coherent system could not only improve conservation, but also raise revenue, by helping to promote less-visited sites. America’s national parks received some 307m visits last year; tourists spent almost $17bn in their vicinity. Rudy D’Alessandro of the NPS says Chinese officials have told him: “We don’t want you giving us your culture because we don’t always like your culture. But we admire your national parks and want to learn more about them.” + +This article appeared in the China section of the print edition under the headline A farewell to loudspeakers + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21710836-government-looks-america-inspiration-china-tries-build-coherent-system-national/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Middle East and Africa + + + +Counter-terrorism: The eyes in Africa’s skies [Thu, 24 Nov 16:30] + +East African camels: Speedy and tasty [Thu, 24 Nov 16:30] + +South Africa: Rainbow stagnation [Thu, 24 Nov 16:30] + +Dissent in the Gulf: Protest and lose your passport [Thu, 24 Nov 16:30] + +Libya: The unravelling [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +The eyes in Africa’s skies + +Taking on West Africa’s terrorists + +America has been revving up its efforts against a range of terrorist groups + +Nov 26th 2016 | NIAMEY + + + +THE capital of Niger is not known as a hotspot for planespotters. But passengers waiting to take off at Niamey’s airport are sometimes in for a treat: the sight of an American Predator drone elegantly gliding down ahead of them on its only runway. If they take off and look out of the window, they will see a generously sized base with new-looking hangars and several American transport aircraft. + +It is not the only sign of America’s presence in Niamey. The embassy is unusually large; the city’s best restaurants buzz with American accents. And now, at Agadez, an ancient desert city in the north of the country, that is a transit point on the route to Europe, mixed in with the smugglers and migrants are contractors from Europe and South Africa, quietly building another base for drones. Niger, a desperately poor country on the edge of the Sahara—in the semi-arid region known as the Sahel—with a population of some 20m, has become a key location for America’s expanding security presence in West Africa. It is a sign of growing worries about jihadism in the region and of America’s stepped-up efforts to contain it. But the local effects of importing Western might are not always benign. + +American involvement in the Sahel began in earnest in 2005 with the Trans Sahara Counter-Terrorism Initiative. In 2007 the Pentagon launched AFRICOM, its military command for Africa. Since then, the number of special forces operatives active in Africa has risen sharply; on average around 700 are deployed there. In the western Sahel region drones also fly from a base in Chad, while small surveillance planes operated by contractors have flown from Burkina Faso and Mauritania. America is not the only country with operations in Niger; France, the former colonial power, also has a base there and Germany is building one too (which it says will be for logistics only). + +The focus on Niger makes sense. The country is at the centre of several conflicts. In the north-west Mali’s Islamist insurgency has spilled over the border. On 14th October, an American aid worker was kidnapped; a week before that, 22 of Niger’s soldiers were killed in an attack on a refugee camp. In the south-east, near Lake Chad, over the past few months Boko Haram’s insurgency against the Nigerian government has pushed thousands of refugees into Niger’s Diffa region. And from the north and north-east, weapons and fighters from Libya threaten to destabilise a region already known for violent uprisings, particularly from the Toubou and Tuareg desert tribes. + + + +The worry is that these conflicts will link together, or already have. “There is a big split in American policy on understanding it as a globally connected jihadi group or not,” says Brandon Kendhammer, of Ohio University. In the Pentagon it is generally thought that it is, he says; but officials in the State Department often think the opposite. While a part of Boko Haram has claimed allegiance to Islamic State, the evidence of practical links to the jihadists’ operations in Libya is thin: a few Nigerian fighters (not necessarily from Boko Haram) have turned up in Libya, but that is about it. + +If there is more evidence to be collected, however, the Pentagon is sure to get it. The Predator and Reaper drones at the base in Niamey may look intimidating, but they are used for surveillance, not launching strikes. Though details about the new base at Agadez are scarce, it is thought that it will play a similar role. In recent years drones have replaced surveillance flights flown by civilian aircraft out of bases in places like Burkina Faso. But that they are not carrying missiles does not mean missiles are not being fired by others. And in 2013, for example, when France launched a military offensive to push back Islamist Tuareg fighters in Mali (some affiliated with al-Qaeda) they probably benefited from extensive American intelligence. + +So what is the effect of all this security co-operation? It seems to be helping to contain violent Islamism. Niger, unlike Mali, has not fallen victim to a major insurgency in the north since the early 1990s. A short rebellion in the late 2000s was quickly put down. In the Lake Chad region, while Boko Haram have launched attacks on Niger’s army, they do not control territory in the way they do in neighbouring Nigeria (where co-operation with Western forces is far more fraught). + +As a result, aid agencies are able to operate, which means that displaced people are not starving. In the Diffa region, the Red Cross distributes food and water to tens of thousands of refugees who have fled fighting from across the border in Nigeria and built shanty towns on the edges of the highway, guarded by soldiers in smart uniforms with American-style camouflage. + +Yet there are reasons to worry about America’s presence, too. Though a staunch ally of the West, Niger’s president, Mahamadou Issoufou, is no exemplary democrat. He was re-elected in February, but only after the opposition boycotted the second round of the vote. His main opponent was locked up and then fled the country for exile abroad. + +Ali Idrissa, a Nigerien journalist and political activist, says that Mr Issoufou has no legitimacy. “We have a super rich political class and a mass of people who have been abandoned.” He sees security co-operation with America as a way for the elite to hold on to power. “Why are the bases here? The sovereignty of Nigeriens has been sold. This is about the rich making more money and staying in power, not about protecting our territory.” On the streets of Agadez, it is not unusual to see “Dégage, la France!” (get out, France) scrawled on walls. Critics say the West is only interested in Niger’s uranium, whose proceeds accrue mainly to the well-connected. + +Political resentment helps fuel the Islamists—who also thrive on anger at the way war is conducted (it is suggested that a ban on motorbikes in Diffa has helped Boko Haram recruit, for example). Much of Niger’s territory is hot, dusty and infertile. Conditions are worsening because of climate change. Almost a third of its imports are covered by aid. Security co-operation is one of the few things its government can offer. Against an Islamist insurgency across West Africa, it is a useful ally. But government repression also helps fuel insurgency. And as long as the money keeps flowing, it has little reason to change its ways. + +This article appeared in the Middle East and Africa section of the print edition under the headline The eyes in Africa’s skies + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21710826-america-has-been-revving-up-its-efforts-against-range-terrorist-groups-taking/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Speedy and tasty + +East Africa’s booming camel trade + +Demand from the Gulf fuels a booming export market for the animals + +Nov 26th 2016 | KASSALA, SUDAN + +I’ve got a lovely one here + +“ALLAHU akbar!” the boys shout gleefully from atop their camels, the reins of others held in their raised fists, their backs to the setting sun. Beside them a metal-fenced racing track cuts through the pancake-flat desert. Every dawn and dusk the camels are trained to run on this plain outside Kassala, a city in eastern Sudan. Their owners hope they will catch the eye of the wealthy Emiratis who visit several times a year to buy the fastest mounts for multimillion-dollar prize races in Dubai. + +The Rashaida, a tribe that migrated to Sudan and Eritrea from Saudi Arabia in the mid-19th century, are renowned for breeding some of the world’s speediest racing camels. They are also infamous for trafficking Eritreans who cross the border, around 30km (20 miles) from Kassala, in the hope of eventually reaching Europe. Emiratis buy between 100 and 300 young camels a year from the village of Abu Talha, some for as much as $80,000, says Hamed Hamid, a mustachioed patriarch. There are around 800 racing beasts in a settlement of 1,200 people, he estimates, and many more are being raised for slaughter. “The camels are everything. They give us milk, meat and trade,” Mr Hamid says, as his wife brews tea and coffee over hot coals under a starry sky. + +Although the Rashaida are traditionally nomadic, many have settled in villages like Abu Talha, a jumble of earthen-walled or brightly painted concrete houses. They have also adapted to the United Arab Emirates’ ban on child jockeys, after the state was censured by the UN in 2005. Boys still train some camels, but others are whipped along by miniature robots dressed in jockey silks and given orders remotely from white Toyota pickup trucks. + +Each month the villagers sell around 200 baby camels to Saudi Arabia and 120 adult ones to Egypt for human consumption, says Mr Hamid, pointing out a large female that will fetch as much as 25,000 Sudanese pounds ($1,525 at the black-market exchange rate). Livestock is a big and growing business all over east Africa, in considerable part fuelled by the Gulf’s increasing appetite for meat. Live Sudanese animal exports more than trebled to $670m between 2010 and 2013 (the most recent years for which the World Bank has data). More than 70% were sheep, demand for which surges around the Muslim festival of Eid al-Adha, when they are ceremonially slaughtered. In 2015 Somalia sold 5.3m animals, worth $384m; livestock counts for 40% of that fractured country’s GDP. + +Other Sudanese may sneer that the Rashaida’s new cars and houses have been bought with the proceeds of people-smuggling. But there is plenty of money to be made in the legitimate business of exporting livestock. + +This article appeared in the Middle East and Africa section of the print edition under the headline Speedy and tasty + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21710691-demand-gulf-fuels-booming-export-market-animals/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Rainbow stagnation + +How corruption and bad policies are strangling South Africa + +Business and the government are pulling in opposite directions on growth + +Nov 26th 2016 | JOHANNESBURG + + + +THE sprawl of cranes around Sandton, South Africa’s swanky financial district, and a dearth of empty beds in Cape Town, its tourist Mecca, point to an economy that shows some signs of rebounding from a deep slump earlier this year. Taken individually many indicators are buoyant: good rains mean that farmers are likely to plant 35% more maize this year; a weak rand has encouraged a 20% jump in the number of international tourists. + +Yet add these numbers up and the equation still turns out badly: the economy will be lucky to limp in with growth about 0.5% this year and will not do very much more than 1.5-2% over the next few years. This is a percentage point or two below the long-run trend rate of 3%. + +So what explains this black hole in the economy? The answer is almost entirely poor governance by Jacob Zuma, a president who may soon face 783 charges of fraud, corruption and racketeering. + +Foolish policies play a part. Take tourism. Although the number of holiday-makers has soared, the government itself reckons that there ought to have been many more bottoms on South African beaches. Thousands have been turned away by absurdly strict rules requiring families to carry birth certificates for their children. But corruption is also hurting the economy. A recent report by an ombudsman revealed details of how the government and Eskom, the state-owned power monopoly, muscled an international mining company into selling a coal mine to friends of the president. + +The effect of mismanagement and corruption is best seen in measures of business confidence and the currency, both of which have plummeted since the start of Mr Zuma’s presidency in 2009 (see chart). Investment has fallen to 20% of GDP from 23% over the same period. + +With growth so slow, credit-rating agencies fret that the country may struggle to repay its debts. Moody’s, which in May said it was minded to cut its rating, was due to deliver a verdict on November 25th. Standard and Poor’s, which rates the country’s debt one notch above junk, will give its assessment a week later. Some 80% of economists polled by Bloomberg, a news agency, expect the ratings firms to downgrade South Africa in the next year. + +The threat of a rating cut is prompting feverish attempts to open up the economy by Pravin Gordhan, the respected finance minister. On November 20th the deputy president, Cyril Ramaphosa, announced a new national minimum wage of 3,500 rand ($247) a month in a bid to get unions to agree to labour-law reforms that would make it harder for them to call strikes of the sort that shut down the country’s platinum mines for almost half of 2014. The chief executives of major banks are also involved in efforts to liberalise the economy by, among other things, getting big firms to agree to hire hundreds of thousands of youngsters on one-year internships. “In the last year South Africa’s reformist voices have been ascendant,” says Goolam Ballim, an economist at Standard Bank. “After almost a decade of political and economic drift, 2016 may yet prove to be the inflection point…in confidence and investment.” But without better leadership, such optimism is likely to prove short-lived. + +This article appeared in the Middle East and Africa section of the print edition under the headline Rainbow stagnation + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21710824-business-and-government-are-pulling-opposite-directions-growth-how/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Protest and lose your passport + +To silence dissidents, Gulf states are revoking their citizenship + +Startling rises in the number of cases + +Nov 26th 2016 + +You can check out any time you like, but you can never leave + +SINCE the small Gulf states became independent from Britain in the latter half of the 20th century, their ruling families have sought fresh methods to keep their subjects in check. They might close a newspaper, confiscate passports or lock up the most troublesome. Now, increasingly, they are stripping dissidents, and their families, of citizenship, leaving them stateless. + +Bahrain is an energetic passport-stripper. Its Sunni royals have dangled the threat of statelessness over its Shia majority to suppress an uprising launched in 2011, during the Arab spring. In 2014 it deprived 21 people of their nationality. A year later the number was up tenfold. Last year the spiritual leader of Bahrain’s Shias, Isa Qassim (pictured) lost his. “Gulf rulers have turned people from citizens into subservient subjects,” says Abdulhadi Khalaf, a former Bahraini parliamentarian whose citizenship was revoked in 2012 and now lives in Sweden, as a citizen there. “Our passports are not a birthright. They are part of the ruler’s prerogative.” + +Neighbouring states are following suit. Kuwait’s ruling Al-Sabah family have deprived 120 of their people of their nationality in the past two years, says Nawaf al-Hendal, who runs Kuwait Watch, a local monitor. Whereas, in Bahrain, most of those targeted are Shia, Kuwait’s unwanted are largely Sunni. Ahmed al-Shammari, a newspaper publisher, lost his citizenship in 2014. + +In 2015 a Saudi jihadist blew himself up during Friday prayers in Kuwait, killing 27 Shias. A crackdown followed, targeting the many Saudi Salafists suspected of obtaining Kuwaiti nationality in the chaos after the ejection of Iraqi forces from Kuwait in 1991. “We’re looking for frauds,” says General Mazen al-Jarrah, a member of the ruling family responsible for the emirate’s Citizenship and Residency Affairs. + +The socially more liberal United Arab Emirates does it too. Fearful of unrest orchestrated by the Muslim Brotherhood, the UAE has revoked the citizenship of some 200 of its people since 2011, says Ahmed Mansoor, a human-rights activist now under a travel ban. + +The most enthusiastic stripper of all in the Gulf is Qatar. It revoked the citizenship of an entire clan—the Ghafrans—after ten clan leaders were accused of plotting a coup together with Saudi Arabia in 1996. Over 5,000 Ghafrans have lost their nationality since 2004. Many have since won a reprieve, but thousands remain in limbo, says Misfer al-Marri, a Ghafran who is now exiled in Scotland. + +The consequences can be severe. Summoned to hand over their ID cards and driving licences, individuals lose not just the perks that come with citizenship of an oil-rich state, such as cushy jobs, but the ability to own a house, a car, a phone or a bank account. Those abroad are barred from returning. Those inside the country cannot leave. The stateless cannot register the birth of a child or legally get married. They may find a sponsor and apply for residents’ permits as foreigners, but if refused they are liable to be arrested for overstaying. “It’s a legal execution,” says one Bahraini, who still has his citizenship. “They’re left without rights.” + +Rulers say they are waging war on terrorism. Among the 72 who lost their Bahraini citizenship in January 2015 were 22 alleged members of Islamic State. But by blurring the boundary between peaceful and violent dissidents, the authorities risk turning the former into the latter. Laws which once permitted the removal of citizenship only for treason (or if people acquired a second nationality) are now much broader. Defaming a brotherly country, for instance, can cost you your passport in Bahrain. The penalty also applies to “anyone whose acts contravene his duty of loyalty to the kingdom” or who travels abroad for five years or more without the interior ministry’s consent. Victims include academics, lawyers, former MPs, their wives and young children. + +Westerners are not in any position to lecture others, retort Gulf autocrats. Most EU states revoke citizenship for reasons other than fraudulent applications, in particular for involvement in terrorism. Britain, for instance, does it if it is conducive to the “public good”. Before becoming prime minister, the then-home secretary, Theresa May, did it 33 times. “Everyone has the right to a nationality,” says Article 15 of the Universal Declaration of Human Rights. Sadly, not everywhere. + +This article appeared in the Middle East and Africa section of the print edition under the headline Protest and lose your passport + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21710679-many-are-left-stateless-result-silence-dissidents-gulf-states-are/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The unravelling + +A Western-backed deal to salvage Libya is falling apart + +The latest peace accord has merely reconfigured the conflict, not solved it + +Nov 26th 2016 | CAIRO + +The worst job in the world? + +WHEN Fayez al-Serraj returned to Libya in March the situation looked unusually hopeful. For two years, rival governments in the east and west of the country had fought over a disputed election. In December representatives from both sides of the country (but not their leaders) agreed to a UN-backed peace proposal. Powerful players in the war withheld their support, but they could be brought in later, said advocates. The deal, known as the Skhirat agreement after the Moroccan town in which it was signed, empowered Mr Serraj (pictured), then a relatively unknown politician, to form a government of national accord (GNA). His smooth arrival in Tripoli, the capital, in March seemed to herald a brighter future. + +It has not turned out that way. The new government, though ostensibly backed by some powerful militias, has failed to gain broad support. The eastern parliament, called the House of Representatives (HOR), has refused to approve the body, as required under the Skhirat agreement. Remnants of the old government and legislature in the west, known as the General National Council (GNC), unsuccessfully attempted a coup in Tripoli last month. + +Far from ending the Libyan conflict, the Skhirat deal has reconfigured it, says a new report from the International Crisis Group, a think-tank in Brussels. “A year ago, the conflict was between rival parliaments and their associated governments; today it is mainly between accord supporters and opponents, each with defectors from the original camps and heavily armed.” + +Neither side is satisfied with the agreement, which left security questions unanswered. Indeed, the HOR’s position stems in large part from its fear that Khalifa Haftar, the commander of the Libyan National Army, the biggest armed group in the east, would be sidelined under the deal. + +The conflict looks likely to escalate. In September Mr Haftar captured several oil facilities along the coast. Now a hodgepodge of militias, most of them Islamist, are readying to fight him there and in cities such as Derna and Benghazi. + +The GNA’s defence ministry is said to be co-ordinating with the anti-Haftar forces, but most of the militias that support the government, many hailing from Misrata, do not plan to take part in the fight. They and others are still trying to push the jihadists of Islamic State (IS) out of Sirte, on the coast. + +The outside world had hoped the battle against IS would encourage unity. But even western Libya remains divided. A number of the groups fighting IS do not recognise the GNA, which many Libyans see as beholden to the Misratans, or as a puppet of the UN. The support the GNA does receive is fickle and based mainly on self-interest. It has only a tenuous grip on its own capital, where armed groups operate without control. Some changed sides last month and participated in the attempted coup. Mr Serraj still holds his meetings at a heavily-guarded naval base, not the prime minister’s office. + +Foreign countries, many of which pushed for the Skhirat agreement, have added to the discord. Libyans feel that the West, which supports the GNA, has neglected local concerns while fighting terrorists and trying to stem the flow of refugees across the Mediterranean Sea. Some in the West also appear to be working with Mr Haftar on these issues. The general receives weapons—and, perhaps, air support—from Egypt and the United Arab Emirates, and advice from Russia. His supporters hope Donald Trump, America’s president-elect, will also take their side, though he has not expressed much interest in Libya. + +The GNA, for its part, has done little to win over the public. Services are sporadic at best, while the economy is teetering. Under Mr Haftar, at least, more oil is flowing from the facilities along the coast, with revenues going to the central bank. But the government has feuded with the bank over funding and economic policy (there is none, says Saddek al-Kabir, the head of the bank). Under Western pressure, the government has promised to publish an economic plan by December 1st, and the bank will give $6bn to the government. + +Mr Haftar’s fate is perhaps the biggest question hanging over Libya. Popular in the east and parts of the west, he may seek to follow the path of Abdel-Fattah al-Sisi, who crushed Egypt’s Islamists as head of the army and then shed his uniform to run for president. Many supporters of the Skhirat agreement are convinced that Mr Haftar will never compromise or lay down his arms. But they still think it best to push on with the imperfect deal in hand. + +After five years of upheaval, most Libyans want the fighting to stop. The ICG and others have called for new talks, this time involving people, such as Mr Haftar, who can actually influence events on the ground. The West, though, is being stubborn. “The UN and international community continue to insist [the Skhirat agreement] is the only option, when everyone realises this is not going to work,” says Mohamed Eljarh of the Atlantic Council, a think-tank in Washington. “There is a lack of creativity in terms of solutions.” + +This article appeared in the Middle East and Africa section of the print edition under the headline The unravelling + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21710830-latest-peace-accord-has-merely-reconfigured-conflict-not-solved-it/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Europe + + + +Angela Merkel declares: Not running for world saviour [Thu, 24 Nov 16:30] + +German memes: Lügenpresse, a history [Thu, 24 Nov 16:30] + +France’s Republican primary: Dark horse [Thu, 24 Nov 16:30] + +The Baltic states and Donald Trump: Edgy allies [Thu, 24 Nov 16:30] + +Charlemagne: Running scared [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Dampening expectations + +By running for a fourth term, Angela Merkel is protecting her legacy + +Germany’s chancellor is not campaigning for leader of the global liberal order + +Nov 26th 2016 | BERLIN + + + +THE politician most thrilled by Angela Merkel’s announcement on November 20th that she will run for a fourth term as German chancellor next autumn was Frauke Petry. The leader of the populist, anti-immigrant Alternative for Germany (AfD) termed it the ultimate campaign gift: the chance to run against the very chancellor who caused the “migrant chaos”. + +In fact, Mrs Merkel remains the odds-on favourite. Her support sagged during last autumn’s refugee crisis but has recovered to 55%, up from 42% in August. Recent polls suggest that the only plausible coalition against her—a left-wing combination of the Social Democrats, the Greens and the ex-communist Left party—will not win a majority (see chart). Mrs Merkel, who took office in 2005, will probably stay through 2021, overtaking Helmut Kohl to become the longest-serving German chancellor (not counting Otto von Bismarck). + + + +Before she became chancellor, Mrs Merkel told a photographer that she wanted to make a timely exit from politics, to avoid becoming “a half-dead wreck” in office. Now she has decided she must run again. Lacking an obvious conservative successor, she may be the only one able to protect her legacy of centrist politics at a time of populist insurgencies. + +The election of Donald Trump as America’s next president may have made up her mind. America’s role as guarantor of the liberal post-war order is in doubt, and some see Mrs Merkel as the last leader of stature to defend the West’s values against the likes of Russia’s president, Vladimir Putin, and Turkey’s Recep Tayyip Erdogan. As though endorsing these hopes, Barack Obama, visiting Berlin two days before Mrs Merkel’s announcement, said that if he had a vote, he would cast it for her. + +The chancellor calls such perceptions “grotesque and almost absurd”. She is said to view exaggerated expectations as dangerous for her campaign. The AfD, polling at 13%, is still less popular than its counterparts in France or the Netherlands. But the mantle of defender of cosmopolitan globalism would make Mrs Merkel even more of a “lightning rod and provocation” for populists, says one insider. + +So her campaign will emphasise domestic issues: security, a harder line on cultural symbols (perhaps opposing the wearing of full-face veils) and tougher rules for migrants. On the economic front, she will promise tax cuts and more investment in digitalisation. She will also exploit ambivalence in the only party that could seize the chancellery from her: the Social Democrats (SPD), who have not yet decided on a candidate. Sigmar Gabriel, the SPD’s boss, has laid down a timetable according to which the party will first agree on its programme and then sort out “personnel” in late January. He is the default candidate, but less popular than Mrs Merkel, and his announcement last week that his wife is pregnant was taken as a sign that he may not run. + +Another Social Democrat, Martin Schulz, does slightly better. He is currently president of the European Parliament. But he plans to step down next year and run for the Bundestag. He might move to Berlin as early as February, to become foreign minister when Frank-Walter Steinmeier, who now runs that ministry, takes the presidency, a largely ceremonial office. From there Mr Schulz could launch his run against Mrs Merkel. Another potential candidate, Olaf Scholz, the mayor of Hamburg, is also waiting in the wings. + +Among those hoping that the Social Democrats pick Mr Schulz is, of course, Mrs Petry. “Like no other German,” she says, Mr Schulz “stands for the failure of the EU.” Together, she adds, Mrs Merkel and Mr Schulz “embody the decline of Germany.” Consider the campaign launched. + +This article appeared in the Europe section of the print edition under the headline Not running for world saviour + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21710847-germanys-chancellor-not-campaigning-leader-global-liberal-order-running/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The original German + +America’s alt-right learns to speak Nazi: “Lügenpresse” + +From 1848 to 1939, the history of a pernicious word + +Nov 26th 2016 | BERLIN + +A message strangely popular with Americans, too + +GERMANS are usually proud of their exports, including their words. What better term than Fahrvergnügen (“driving pleasure”) to sell cars? They are less pleased when foreigners import words that hark back to Germany’s darkest chapter. It was therefore horrifying to see white nationalists at a rally in Washington, shortly after Donald Trump’s victory, saluting with outstretched arms and shouting “Hail victory!”—a conscious echo of the Nazi greeting, Sieg Heil! It has also been disconcerting to hear Mr Trump’s supporters adopt the term Lügenpresse to refer to the mainstream media, or to any journalists who criticise the president-elect. For in America as in Germany, the term, which means “lying press”, is used not only as a cudgel against allegedly out-of-touch media elites but also to validate whatever conspiracy theory the shouter espouses. + +Lügenpresse has a long and ugly history in Germany. It was first used after the failed revolutions of 1848, mainly in Catholic polemics against the liberal press. From the start it implied that the media were controlled by Freemasons or Jews. After the Franco-Prussian war, the term was directed at the French press for its alleged lies. During the first world war, after Germany got a thrashing in foreign newspapers for what they called the “rape of Belgium”, Allied (and especially British) newspapers earned the moniker. That set a usage pattern that holds till today: Lügenpresse refers to any medium that does not reflect the user’s own worldview, and must therefore be propagated by a hated “Other”. + +In the interwar years the term was used both by communists against the “bourgeois Lügenpresse” and by the Nazis against—no surprise—the allegedly Jewish and Bolshevik media. Once the Nazis seized power and took control of the domestic press, they naturally stopped calling it a Lügenpresse. Instead Hitler and Goebbels once again applied it to the foreign press—for instance, for reporting the 1938 Kristallnacht. + +After 1945 West Germans wisely shunned the word. The East Germans were less inhibited: it was now the West German media that became the capitalist and fascist Lügenpresse. In the reunited Germany the term made a comeback among neo-Nazi and right-wing groups. Since 2014 it has been a favourite chant at demonstrations by PEGIDA, a xenophobic movement that is centred on the eastern city of Dresden. Some mobs have become physically aggressive against journalists—39 such attacks were counted last year. + +In 2014 a jury that chooses the worst German word of the year picked Lügenpresse, calling it “especially perfidious”. And yet a poll in 2015 found that 39% of Germans, and 44% of eastern Germans, found the word at least partly appropriate. This is dispiriting to critics of the Western media who do not ascribe its failings to malign conspiracies. Lügenpresse is one German export that the world would be better off without. + +This article appeared in the Europe section of the print edition under the headline Lügenpresse, a history + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21710866-1848-1939-history-pernicious-word-americas-alt-right-learns-speak-nazi/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The Sarkozy-killer + +François Fillon’s win in France’s Republican primaries upends the presidential race + +The former prime minister’s programme is economically liberal and culturally conservative + +Nov 26th 2016 | PARIS + + + +HE WAS mocked by advisers to his former boss, ex-president Nicolas Sarkozy, as “Mister Nobody”. A month before the vote, he languished in fourth place in the polls. But François Fillon, a former prime minister and amateur racing driver, surged from nowhere to take a stunning lead in the French centre-right Republican primary on November 20th. He took 44% of the vote, next to 29% for the other qualifier and fellow ex-prime minister, Alain Juppé. Mr Fillon is now favoured to win the run-off on November 27th, and possibly become French president next spring. + +Mr Fillon’s remarkable last-minute acceleration, which led to the eviction of Mr Sarkozy, was partly thanks to a convincing performance in the primary debates. He came across as measured, sharp and trustworthy—and, at the age of 62, a younger alternative to the disliked Mr Sarkozy than the 71-year-old Mr Juppé. The scale of Mr Fillon’s lead was not captured by polls, in part because many of the 4m voters made up their minds late: fully 53% of his supporters said they decided in the final days. + +French centre-right voters now have a choice between two candidates who broadly share a liberalising economic agenda, which breaks with the more statist centre-right programmes of the past. Each promises to back businesses and revive the economy by shrinking the state, cutting taxes (and abolishing the wealth tax) and increasing the retirement age. + +Yet they differ quite radically on how to do this. Mr Juppé wants to adjust existing rules: a slightly higher retirement age, a slightly lower level of public spending. Mr Fillon is more ambitious and, by his own admission, Thatcherite. He promises that he will curb the power of the unions and end the 35-hour working week rule to allow companies to negotiate working time within European legal limits. He vows to shrink France’s unique labour code from over 3,000 pages to just 150. The left caricatures this as “ultra-libéral”, the ultimate French political insult. + +The pair diverge over foreign policy too. A former foreign minister, Mr Juppé sticks more closely to the existing French line of talking tough with Russia and refusing any dialogue with Syria’s Bashar al-Assad. Mr Fillon, who is chums with Vladimir Putin, urges a rapprochement with Russia and a strategic alliance with Syria in order to defeat Islamic State. He also sounds readier to work with Donald Trump, America’s president-elect. “It wasn’t Mr Trump who installed…missiles on the frontier with Russia,” declared Mr Fillon during one debate. + + + +A final distinction is on social policy. Mr Fillon, the son of a provincial notary and a practising Catholic with five children, appeals to conservative traditionalists. He voted against legalising gay marriage in 2013, and personally opposes abortion (though he respects existing law). He sounds a tough note on “Islamic totalitarianism”, and promises to deport illegal immigrants. This appeals, says a Republican deputy, to “voters we have lost to the National Front”. Mr Fillon secured 43% of the first-round primary voters who had backed the FN’s Marine Le Pen at the presidential election of 2012. + +Mr Juppé’s more liberal approach to family policy and identity issues appeal more to the centre and the left, which made up 9%-15% of first-round voters. They could still turn out to block Mr Fillon. But it would require a massive mobilisation now to defeat him. When he appeared on the French version of “Top Gear”, a car show, Mr Fillon showed an uncommonly steady hand at the final bend. + +This article appeared in the Europe section of the print edition under the headline Dark horse + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21710867-former-prime-ministers-programme-economically-liberal-and-culturally-conservative-fran-ois/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The Russians are coming + +Estonia counts on NATO, but worries about Donald Trump + +Militia moms are practicing their marksmanship just in case + +Nov 26th 2016 | TALLINN + +Airiin, get your gun + +THE morning after celebrating her husband’s birthday earlier this month, Barbel Salumae rose at 6am, donned fatigues, and made for a compound outside Tallinn to practice her marksmanship. “I tell my children it’s my hobby,” says Ms Salumae, a member of Estonia’s volunteer Kaitseliit, or Defence League (EDL). “I can’t tell them I have to train because maybe there is war coming.” + +Such talk once struck many outside the three ex-Soviet Baltic states as hyperbolic. Then came Russia’s annexation of Crimea in 2014. Now, with American president-elect Donald Trump having questioned commitments to longtime allies, Estonia, Latvia and Lithuania have new reasons to worry. Issues that seemed settled after their ascension to NATO in 2004 have been reopened. “It’s living proof that history never ends,” says Juri Luik, a former Estonian foreign and defence minister.“We have to explain who we are all over again.” + +The Baltic states, with their bitter memories of Soviet occupation, have much to lose if America’s stance in Europe shifts. During the campaign Mr Trump called NATO “obsolete”. Newt Gingrich, a campaign surrogate, dismissed Estonia as “a suburb of St Petersburg”. Yet the president-elect’s true views are a mystery: after his victory, Mr Trump “underlined NATO’s enduring importance” on a call with its secretary-general. Barack Obama has assured allies that Mr Trump will respect America’s defence commitments. + +Estonians take solace in the guarantees of institutions, which they see as stronger than any one leader. NATO’s decision to station 4,000 troops in the Baltic states and Poland from next May has done much to calm nerves. Mr Trump’s demand that allies pay their share is welcomed in Tallinn: Estonia, whose soldiers served in Afghanistan and Iraq, is one of only five NATO members that meet the alliance’s defence-budget target of 2% of GDP. (Lithuania and Latvia plan to by 2018.) “We need to make sure that Trump and his administration know that Estonia has been an ally,” says Lt General Riho Terras, head of the Estonian Defence Forces. + +However friendly Mr Trump’s disposition towards Vladimir Putin may be, Estonian officials doubt that they can cut a deal. Early in his first term, George W Bush declared that he had got “a sense of [Putin’s] soul”; his second term ended with Russia’s invasion of Georgia. Barack Obama came to office pledging a “reset” with Russia, yet he leaves with relations at a post-cold war nadir. With Mr Trump, too, reality will constrain policy. “It’s hard for me to see what Russia could offer the US,” says one senior Estonian official. + +Estonia will enter the Trump era with new leadership of its own. A coalition government collapsed on November 9th. The long-dominant Reform Party will give way to the Centre Party, a bastion of Estonia’s Russian-speaking electorate, many of whom want closer ties with Russia. The Centre Party’s ascension became possible only after jettisoning its controversial leader Edgar Savisaar, who had signed a co-operation agreement with Mr Putin’s party. Juri Ratas, the Centre Party’s new head, pledges that Estonia’s foreign policy will not change. The first plank of the new coalition agreement promises to maintain sanctions against Russia and keep defence spending above the 2% threshold. + +In any case, Estonians are leaving little to chance. The citizen soldiers in the EDL will carry on preparing for armed resistance. Enrollment has risen to over 24,500. “The best victory is a victory without a battle,” says its head, Brigadier-General Meelis Kiilis. “But the best defence is a well-prepared citizenry.” + +This article appeared in the Europe section of the print edition under the headline Edgy allies + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21710862-militia-moms-are-practicing-their-marksmanship-just-case-estonia-counts-nato-worries/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Charlemagne + +Even without winning elections, populists are setting the European Union’s agenda + +Liberals are backing protectionism and border restrictions to avoid defeat + +Nov 26th 2016 + + + +WHERE next? After the one-two punch of Brexit and Trump, Europeans are watching every coming election, from Austria to the Netherlands to France, for fear it could become the next staging post in the long march to illiberalism. Europe’s centrists have begun to see themselves as modern-day defenders of the Alamo, desperately standing their ground as marauding populists advance on all sides. The siege of the Alamo ended when the Mexican army overran the fortress, slaughtering the doughty Texans inside. Today’s equivalent might be the elevation of Marine Le Pen, leader of France’s far-right National Front, to the Élysée in next year’s presidential election. Victory for Ms Le Pen, it is widely assumed, would herald a new age of anti-European nationalism. Quite possibly it could mean the disintegration of the European Union itself. + +Perhaps. But Ms Le Pen has amply demonstrated that she does not need electoral victory to bend French politics to her will. Indeed, the lesson from elsewhere in Europe is that the responsibilities of power can be poisonous for populists: support for the nationalist Finns Party has halved since it joined a coalition in Finland last year. They do better carping from the sidelines, tugging policy in their direction while reserving the right to lob political bombs when necessary. From trade to migration to budgets, Europe’s populists are already shaping policy to a degree that belies their limited success at the ballot box. Few may have yet penetrated the fortress keep. But they are hurling infected missiles over the walls, and the liberals inside are already succumbing to the virus. + +Take trade. For years European governments have fought among themselves over whether to raise tariffs on state-subsidised exports, such as Chinese steel. But the populist assault on globalisation has lent the discussion fresh urgency. In October Jean-Claude Juncker, president of the European Commission, said that the EU needed better trade defence instruments to take on “stupid populists”, and the issue is now Chefsache—so important that it must be negotiated among European leaders rather than their (often better-informed) ministers. Anti-trade agitators on the left, meanwhile, have forced governments advocating agreements with America and Canada on to the back foot. Officials now argue that left untackled, Chinese dumping will kill the public consent needed to strike trade deals. + +On migration, too, populist pressure has transformed a debate over how to manage refugee movements into an almost exclusive focus on keeping people away. And although for now the attention is on migrants from outside Europe, populists will readily exploit French fears of Polish plumbers, or German angst over Romanian welfare tourists, should it prove expedient. To stave off such anxiety, the EU will probably soon oblige firms employing workers temporarily posted from elsewhere in Europe to match local pay and conditions. The commission, backed strongly by France, says the measure is needed to tackle what it calls “social dumping”; eastern European governments consider this a scandalous breach of single-market rules. + +But the populist effect also shows up in what politicians choose not to do, notes Heather Grabbe, director of the Open Society European Policy Institute, a think-tank. Glancing fearfully over their shoulders at the populist menace, governments shy away from controversial decisions, or hedge their support for treaty commitments like helping refugees. The European Central Bank has warned that populism will curb governments’ enthusiasm for the fiscal and structural reforms needed to inject a bit of life into flagging economies (and to reduce the euro zone’s dependence on cheap money). Recent trade rows will give most leaders pause before declaring themselves in favour of the next deal. + +The populist threat also provides governments with a handy “Après nous, le déluge” excuse in their disputes with each other, or with Brussels. Both France and Italy have successfully pleaded for fiscal forbearance before the commission, which monitors the euro zone’s dreaded budget-deficit limit of 3% of GDP, to see off their domestic political insurgencies. (“I prefer to have a France with [a deficit of] 4.4% today than a France with Marine Le Pen tomorrow,” Matteo Renzi, Italy’s prime minister, once said.) The best explanation for the tough line the remaining 27 members will take in the coming Brexit negotiations is their fear that a good deal for Britain would leave their own Eurosceptics clamouring for so many carve-outs and exemptions that the EU would be left a hollow shell. + +Remember the Berlaymont + +The populist nudge need not always be dangerous. Mr Juncker may have a case that the EU needs to revisit its trade-defence policy; America allows itself to impose far higher tariffs on Chinese steel imports than Europe does. On migration, experts had long highlighted the dangers of eliminating most border checks inside the EU before strengthening its external frontiers. If it took a crisis to expose the folly—well, better late than never. + +The trouble is that in all these cases governments have lost control of the argument and ceded political ground to parties whose appeal they do not understand. Allowing populists to make the running while deploring their views presents voters with a confusing proposition. Observing the erection of trade barriers or border fences, some may wonder why they should fear the outfits that proposed such ideas in the first place. + +Europe has known little but crisis for years, and crises rarely make for smart policy. But when Europe’s fearful mood lifts, its leaders will need to find the courage to manage the populist threat rather than to be led by it. The Alamo may have ended in disaster, but the Texans regrouped and eventually battled their way to victory. Perhaps in time Europe’s beleaguered liberals can find the courage to do the same. + +This article appeared in the Europe section of the print edition under the headline Running scared + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21710858-liberals-are-backing-protectionism-and-border-restrictions-avoid-defeat-even-without-winning/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Britain + + + +The Autumn Statement: The Brexit budget [Thu, 24 Nov 16:30] + +Letting agencies: Rent extraction [Thu, 24 Nov 16:30] + +Brexit from abroad: The views of others [Thu, 24 Nov 16:30] + +Tech companies: Put out more deck chairs [Thu, 24 Nov 16:30] + +Troubled prisons: I predict a riot [Thu, 24 Nov 16:30] + +Land banking: Sitting on their hands [Thu, 24 Nov 16:30] + +Teacher recruitment: From the boardroom to the classroom [Thu, 24 Nov 16:30] + +Bagehot: Spreadsheet Phil, unlikely rebel [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +The Brexit budget + +Britain’s Autumn Statement hints at how painful Brexit is going to be + +By 2020 average real earnings will be £830 lower than previously forecast + +Nov 26th 2016 + + + +THIS year’s Autumn Statement, the first big event on the fiscal calendar since the EU referendum in June, was always going to be a strange exercise. Britain is in a state of unprecedented uncertainty. The government is unclear about what sort of Brexit it wants. Economic forecasting is, as a result, as good as guesswork. The outlook for the public finances is similarly uncertain. Still, as he rose to deliver his statement in the House of Commons on November 23rd, Philip Hammond, the newish chancellor, had to achieve two big objectives. + +First, he had to show willingness to help the economy were it to be blown off course by Brexit, all the while keeping the public finances on an even keel. Second, he had to live up to the rhetoric of Theresa May, the prime minister, who has repeatedly promised to help so-called “just-about-managing” families (JAMs), a vaguely defined bunch of 6m or so working-age households on low-to-medium incomes. + +Mr Hammond’s task is made harder by Brexit. The Office for Budget Responsibility (OBR), the fiscal watchdog, thinks that by 2020 the economy will have grown by 2.4 percentage points less than it predicted before the referendum. As a consequence, over the next five years the government is expected to borrow £122bn ($152bn) more. But the OBR did not model what Brexit could actually look like. And the risks to the economy—leaving the EU’s single market, say—are clearly to the downside, as the OBR’s documentation appears to show. + +With this in mind, Mr Hammond chose to keep things simple. The Autumn Statement contained just 18 new tax measures, roughly half the number that his meddlesome predecessor, George Osborne, was accustomed to making. The unflashy Mr Hammond kept the gimmickry to a minimum, relenting only to bung £7.6m towards the restoration of a stately home that he said had inspired the country estate of Pemberley in “Pride and Prejudice” (the small community of people who follow both Jane Austen and British fiscal policy immediately pointed out that Chatsworth House, 30 miles south, has a better claim). + +Mr Hammond’s main objective, though, is to be able to respond to whatever Brexit throws at him. Out went Mr Osborne’s ambitious target to reach a budget surplus by 2019-20 (see chart). Mr Hammond committed himself to three fiscal rules, but they are hardly savage. A cap on overall welfare spending will not come into force until 2021, when the worst of the Brexit-related uncertainty is over. He wants public-sector debt, relative to GDP, to be falling from 2020. + + + +His third rule is to reduce overall government borrowing, adjusted for the economic cycle, to below 2% of GDP by 2020-21. In effect this allows Mr Hammond to borrow more to cover higher welfare spending and lower tax receipts, which would result if the economy slows. The OBR reckons that by this measure, the deficit will be 0.8% of GDP in 2020. + +This approach thus gives him some fiscal room to offset a Brexit-related slowdown. Mr Hammond has put an extra £23bn towards infrastructure, including projects such as new railway signalling and upgraded “digital infrastructure”, including internet connections. In 2019-20 public-sector net investment, as a percentage of GDP, will be 0.4 points higher than was planned in March. This may not make much difference, however. The OBR, indeed, has revised down its expectations for productivity growth. + +And despite the extra money for infrastructure, overall the government’s spending plans will drag on growth in the coming years. Under Mr Osborne, policy called for a reduction in the budget deficit, adjusted for the economic cycle, of 0.8% of GDP in 2017-18. That is big by historical standards, and would be a tight squeeze even on a strong economy. Yet Mr Hammond did not loosen it. In 2019-20 an adjustment of 1.1% of GDP is called for, the biggest contraction since 2011-12. With an election soon after, only the bravest chancellor would follow through with such a plan. + +A raspberry for the JAMs + +Within the constraints of a poor fiscal outlook, this Autumn Statement was billed as being about the JAMs. Things got off to a slow start: in his speech to MPs, Mr Hammond did not once mention that ugly acronym. Still, he made much of bumping up the minimum wage for the over-25s, from £7.20 to £7.50 per hour. Proposed curbs on estate agents’ fees for renters are another headline-grabbing measure for this constituency (see box). He also reduced the “taper rate” on universal credit (a big working-age benefit, to be rolled out fully by 2022), meaning that as people earn more, their benefits are withdrawn at a slower rate. + +These changes are modest, however. The reduction in the taper rate is small, ultimately costing the Treasury just £700m a year. The government is still cutting other parts of universal credit by more than £3bn, points out Alfie Stirling of IPPR, a think-tank. Nearly all of the rise in the minimum wage will be taken away again from the lowest earners. The thrust of welfare policy remains extremely regressive. A cash-terms freeze on working-age benefits is in place until 2020. With inflation rising, partly due to the weaker pound, the real value of benefit payments is eroding fast. + +Mr Hammond focused much of his attention not on the JAMs, but the better off. A year-long freeze on fuel duty, at a cost of about £900m a year, predominantly helps richer people, who drive more. He is honouring the pledge of the previous government to raise the threshold of the higher rate of income tax to £50,000 by 2020. Even lifting the threshold of the basic rate, another promise, is not as progressive as it sounds: roughly 40% of adults don’t pay income tax at all. + +More than anything, though, the JAMs will lose out from Britain’s deteriorating economic outlook. The Resolution Foundation, a think-tank, reckons that relative to the March forecast, average real earnings will be £830 a year lower in 2020. This year’s Autumn Statement, in sum, hinted at how painful Brexit is going to be. + +This article appeared in the Britain section of the print edition under the headline The Brexit budget + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21710834-2020-average-real-earnings-will-be-830-lower-previously-forecast-britains-autumn/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Rent extraction + +The end of the £75 pet-licence + +The government bans property-letting agencies from hitting their tenants with fees + +Nov 26th 2016 + +Slumdog v millionaire + +PHILIP HAMMOND pulled no rabbits from his fiscal hat when he delivered his Autumn Statement on November 23rd. But he did offer up a carrot, when he recycled an old Labour proposal to ban the fees that property-letting agents can charge tenants. + +Such fees are often steep and hard to justify. Liz, a renter in London, describes forking out £400 ($500) in fees when she moved into her flat. It was supposedly to cover drafting the contract. But the document was hardly bespoke: one clause referred to a garden, which her flat doesn’t have. According to Generation Rent, a pressure group, average agency fees are £386 for a two-person household. It cites some of the vast menu of charges faced by renters: £113 to renew a tenancy, £360 to add a tenant, £26 for overpayment of rent and £75 for a “pet licence”. + +Administration costs money, the agencies argue. Fees discourage tenants from pestering agencies or making unnecessary changes to their contracts. David Cox, head of the Association of Residential Letting Agents, called the announcement “draconian”. “If fees are banned, these costs will be passed on to landlords, who will need to recoup the costs elsewhere, inevitably through higher rents,” he said. + +That might be better than the current arrangement. Agencies compete for the custom of landlords, not tenants. Once flathunters find their dream home, they are stuck with whichever agency the landlord has picked. And the landlord is unlikely to think much about the fees charged to tenants when choosing an agency. Furthermore, as long as letting agencies can charge high fees at either end of a contract, their incentive to foster long, stable relationships between landlords and renters is weak. And higher but more predictable expenses could be easier for tenants to manage. Liz says it would feel fairer: “Like part of the deal rather than a bolt-on extra.” + +Who will foot the bill? In Scotland, where the government implemented such a ban in November 2012, a survey by the Scottish Association of Landlords and the Council of Letting Agents of their members found that a third of agents started charging fees to landlords rather than tenants. A fifth reported that rents had increased. A report by Shelter, a homelessness charity, found that rents rose no more quickly than in other parts of the country. + +Both landlords and tenants hope that letting agencies will absorb the cost of the policy themselves. Investors appear to think there will be at least a bit of this. Between 4.30pm on the day before Mr Hammond delivered his blow and 24 hours later, shares in Foxtons, a large lettings agency, plunged by 14.4%. Many of its tenants will feel little sympathy. + +This article appeared in the Britain section of the print edition under the headline Rent extraction + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21710840-government-bans-property-letting-agencies-hitting-their-tenants-fees-end/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The views of others + +Britain’s European partners take a hard line on Brexit + +The European Union is preparing to give Britain a rougher ride than many Brexiteers realise + +Nov 26th 2016 | BERLIN + + + +THE debate over how to leave the European Union has been notably inward-looking: whether to go for hard or soft Brexit, when to start the Article 50 process that is the legal route to departure, how far Parliament should be involved. Yet all these pale into insignificance against the biggest issue of all: what sort of deal can Britain extract from its 27 EU partners? + +Brexiteers like to say that Theresa May merely has to agree something with Germany’s Angela Merkel, who listens to carmakers that sell heavily to Britain. They claim a big trade deficit makes Europe more dependent on Britain than the other way round. They reckon that, since everyone gains from free trade, it will be simple to negotiate full access to the single market. They suggest Britain’s outsized contribution to defence and security should win the country concessions. And since the voters have spoken, the others must just accept that Britain will take back control of its borders, laws and money. + +Would that things were so easy. In Berlin, officials point out that Brexit does not even feature high on Mrs Merkel’s agenda. Her first priority is to preserve the EU of 27, which is in a parlous condition. That points above all to ensuring that Britain is in a worse position post-Brexit than as a member. Nor can she deliver the agreement of other EU countries, many of which export little to Britain. German industry has already accepted that, when it comes to Brexit, politics takes priority over firms’ desire to maintain British sales. + +The Germans reject any idea of security as a bargaining chip. As for accepting British voters’ wishes and conceding barrier-free access to the single market, the 27 other leaders retort that they have voters too. Indeed, Mrs Merkel and her colleagues are maintaining a united front. Until Mrs May triggers Article 50, which sets a two-year deadline for Brexit, there can be no negotiations. When they start, the EU will be clear that being in the single market means accepting the four freedoms of movement of goods, services, capital and people. These are “indivisible”: if Britain rejects the fourth, it cannot keep its privileged access. + +Europeans’ reading of British politics reinforces their tough approach. Charles Grant of the Centre for European Reform, a think-tank, says Brussels officials are dismayed by the apparent influence of right-wing Eurosceptics on Mrs May. The EU has also long hated Britain’s pick ’n’ mix approach. One German official says flatly that there can be no cherry-picking and opting in or out: otherwise why should Germany not choose to opt out of its huge payments to the EU budget? The German finance minister insists that Britain will go on paying for many years, and in Brussels there is talk of an exit bill for Britain as big as €60bn ($63bn). + +Forging new trade relations will also be difficult. These days free-trade deals take years to negotiate and ratify in national parliaments. That timing is bad for Britain. In Brussels, officials say the two-year timetable means that an initial Article 50 deal must be wrapped up by the summer of 2018. Hence the business interest in an interim plan to avoid falling off a cliff in early 2019 without future trade terms being concluded. Mrs May nodded to this concern at this week’s conference of the Confederation of British Industry (CBI). Yet interim deals can be as hard to do as final ones. + +The broader ills of the EU and, especially, the euro, could also play badly for Mrs May. Some Brexiteers point gleefully to the rise of Eurosceptics like Marine Le Pen in France and Geert Wilders in the Netherlands, the troubles of Matteo Renzi in Italy and even Mrs Merkel’s loss of support at home. Yet as Mujtaba Rahman of the Eurasia Group, a consultancy, points out, if the 27 perceive an existential threat to their project, that will push them to be harder, not softer, on Britain. + +Of course it is not surprising that, in advance, both sides should take up hardline positions. And Brexiteers are right that everybody has an interest in some free-trade deal. At the CBI conference Mrs May talked of give and take in any negotiation, pointing to room for compromise. Germany and others have been imposing rules to limit welfare benefits paid to migrants; some countries support an emergency brake against sudden surges in numbers. That Mrs May has not explicitly ruled out paying into the EU budget could help. + +What is needed most in the months ahead is deft diplomacy. And here the Brexiteers are not doing well. Boris Johnson, the foreign secretary, has offended Italy by hinting that it relies on prosecco exports to Britain, and everybody else by calling the link between the single market and free movement of people “bollocks”. David Davis, the Brexit secretary, did not impress on his visit to the EU institutions this week. To get a better deal, Mrs May will have to work harder to improve relations with her European colleagues. + +This article appeared in the Britain section of the print edition under the headline The views of others + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21710837-european-union-preparing-give-britain-rougher-ride-many-brexiteers/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Put out more deck chairs + +America’s tech giants cautiously commit to Brexit-bound Britain + +Silicon Valley’s finest forge ahead with investments in the tech industry + +Nov 26th 2016 + + + +THE future does, after all, belong to barista stations, sun loungers and nap pods. Since the vote to leave the EU on June 23rd there have been fears that London’s position as Europe’s tech capital is under threat. But recent announcements by America’s biggest tech companies have offered some reassurance—as has, oddly, the election of Donald Trump. + +Apple kicked off on September 26th, confirming that it would consolidate eight sites in Britain into one new office in the redeveloped Battersea Power Station in south-west London (pictured). About 1,400 existing employees will move there; the half-million square feet of space could eventually absorb twice that number. On November 15th Google confirmed plans to build sprawling new headquarters alongside King’s Cross station and said it would create 3,000 new jobs in Britain by 2020. The next week Facebook announced that it would enlarge its British workforce by half, to 1,500, when it opens its new London office next year. Then IBM said it would unveil four new data centres in Britain, tripling its capacity for cloud services in the country and creating “hundreds” of jobs. + +These plans had been in the pipeline before the referendum, but were thrown into doubt by its result. Tech is one of Britain’s best-performing industries, having grown 32% faster than the wider economy from 2010 to 2014. But it is vulnerable to Brexit as it employs a lot of foreign workers, many from continental Europe. By one estimate a third of techies were born overseas, so any restrictions on the free movement of labour could hit the sector hard. Investments were put on hold following the referendum; some firms began looking towards Berlin and Paris. + +But most seem to have concluded that the advantages of staying in London outweigh the uncertainties of Brexit, at least for now. Google says the size of Britain’s domestic online market, the talent in the capital and the country’s “openness and connectedness” were good reasons to stick with its expansion plans. It still has “concerns” about the free movement of the highly prized software engineers and designers that it needs, and will be monitoring this closely. Apple says much the same. + +“Everyone is assuming that immigration is going to get sorted one way or another,” says Hussein Kanji, head of Hoxton Ventures, a tech venture-capital firm. Ministers and officials have been giving reassuring messages that the flow of well qualified, high-earning geeks will not be unduly restricted. Britain currently gives out 200 visas a year to non-EU tech workers under the “Exceptional Talent” scheme. This November has seen a record number of applications. It is a complex and expensive process, often costing upwards of £1,600 ($2,000) per person, and so easier for giants like Google and Facebook to negotiate than for startups. Some expect the scheme to expand; Gerard Grech, the head of Tech City, which operates the visa scheme together with the Home Office, says only that he is in “ongoing conversations” with the government on the matter. + +Matt Clifford of Entrepreneur First, the country’s largest tech incubator, argues that Mr Trump’s presidency could make a difference, too. Just as Brexiteers’ anti-immigration arguments spooked London’s techies, so Mr Trump’s rhetoric on immigration worries Silicon Valley. If Britain loses some post-Brexit business to Berlin and Paris, it might at least pick up a few refugees from California. + +This article appeared in the Britain section of the print edition under the headline Put out more deck chairs + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21710829-silicon-valleys-finest-forge-ahead-investments-tech-industry-americas-tech-giants/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +I predict a riot + +The parlous state of prisons in England and Wales has echoes of the past + +The government has proposed every solution except the obvious: locking fewer people up + +Nov 26th 2016 + + + +ANOTHER day, another disturbance. On the evening of November 20th the prison service riot squad was summoned to deal with what the authorities called “an isolated incident” at HMP Moorland, near Doncaster. Cells were damaged and two inmates were injured in a fracas involving around 40 prisoners. To describe this as isolated is disingenuous. It is just the latest in a litany of troubles afflicting prisons in England and Wales. + +The upheaval at Moorland came two weeks after over 200 prisoners had seized two wings at Bedford prison. Over the course of six hours they got out of their cells, broke into medicine stores and started fires. Officers were brought in from across the country to quell the unrest. In the same week two inmates escaped from Pentonville prison; one of them had been on remand for murder. Using diamond-tipped tools, they cut through their cell bars before scaling the perimeter wall. A prisoner was also stabbed to death in Pentonville last month. + +Violence against both officers and other inmates is soaring. Even as the proportion of young men, those most prone to violence, has dropped (see chart), prisoners are hurting themselves and others more often and more viciously. Rates of self-harm are up by a quarter year-on-year. Serious assaults on other prisoners have risen by 28%. Attacks on staff have increased by 43%. In the year to September 2016, 107 prisoners killed themselves, almost twice as many as five years ago. + + + +Two long-standing structural problems are largely to blame: understaffing and overcrowding. Between 2010 and 2015 the number of front-line officers was slashed (see chart). Realising the impact of these cuts, the government has been frantically trying to reverse course. Some 1,315 officers were hired in the year to this September. But so many are leaving that the total has in fact fallen by 154. On November 15th more than 10,000 prison officers stopped work, part of a “protest action” (stopped when it was judged an illegal strike). Meanwhile prisons are stuffed: by the government’s own standards, they hold 11% more people than they can decently accommodate. + +That is mainly down to longer sentences. At 16.4 months the average is now more than four months longer than it was ten years ago. That partly reflects increasingly tough punishments for those already locked up. Since 2010 over 1m more days of imprisonment—equivalent to 3,000 years—have been imposed on inmates for breaking prison rules, according to the Howard League for Penal Reform. + +Britain has seen crises in its prisons before. In 1990 inmates rioted at Strangeways for 25 days. One was killed and scores more injured, along with almost 150 officers. In the subsequent inquiry Lord Woolf, a judge, identified overcrowding, overstretched and oppressive staff and grim conditions such as “slopping out” as contributory factors. Today the problem is that officers are too few and too inexperienced. Most cells now have toilets. But the similarities are still worrying. + +More riots may erupt. Jason Warr, a criminologist at Lincoln University, worries that the murder of an officer is more likely. “And if you get one, in rapid succession you’ll get a couple of others,” he fears. His concerns do not seem so farfetched. Last June an officer was killed with a kick to the head while escorting a prisoner to a transport van. Earlier this month an inmate in the Isle of Wight tried to cut the throat of an officer with a razor. The mass riot at Strangeways was a “signal” event, says Mr Warr; it forced the Tory government of the day to acknowledge how badly it had neglected the prisons. + +Similar woes do not seem to be having the same effect now. Reforms announced this month by Liz Truss, the justice secretary, fail to get to the root of the problem. They include more autonomy for governors, prison league tables and investment of £1.3bn ($1.6bn) to fix the crumbling prison estate. No-fly zones may be introduced to stop drones dropping off mobile phones and drugs. This week’s Autumn Statement confirmed that 2,500 more front-line officers will be hired by 2018. + +No mention has been made of one obvious answer: to lock up fewer people. In the long term, that means shorter sentences for some crimes and greater use of measures such as community penalties, as recently suggested by the Lord Chief Justice. But such proposals will take years to take effect. Other options could bring numbers down more rapidly. Michael Gove, Ms Truss’s predecessor, suggested last month that at least 500 prisoners serving indefinite sentences for public protection could be released. + +Executive release is another option, says David Wilson, a former governor who is now a criminologist at Birmingham City University. Those locked up for less than six months could be let out. As home secretary in 1910, Winston Churchill used this power to cut the prison population. Reducing pre-trial detention would help, says Mr Warr. The share of the prison population awaiting trial or sentencing in England and Wales is not high by international standards—11%, compared with 20% in America and 29% in France—but finding alternatives would relieve the overcrowding. + +None of these options would be politically easy. The press has recently howled at pictures of inmates apparently living in luxury. But the government has accepted that prisons have big problems. The next step is fixing them. + +This article appeared in the Britain section of the print edition under the headline I predict a riot + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21710845-government-has-proposed-every-solution-except-obvious-locking-fewer-people-up/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Sitting on their hands + +Are British housebuilders hoarding land? + +Companies are accused of driving up house prices by “land banking” + +Nov 26th 2016 + + + +THE average price of a house in Britain has doubled since 2000, as supply has lagged behind demand. Successive governments have aimed to put up 250,000 dwellings a year, but none has done so since 1980. Some blame housebuilders for this sorry state of affairs. The firms are accused of “land banking”, hoarding undeveloped plots to push up prices. Last month Sajid Javid, the communities secretary, told builders to “stop sitting on land banks, delaying build-out: the homebuyers must come first.” + +There is plenty of unused land. The Local Government Association, which represents councils, recently identified sites for half a million homes in England which had been given planning permission but were yet to be built. Three of the largest builders, Persimmon, Taylor Wimpey and Barratt, have 200,000 plots of land that are “ready or close to ready” for development, according to an official report. Last year in England permission was granted for 250,000 housing units—enough to meet the target—but only 140,000 got under way. + +To some, all this looks like anti-competitive behaviour by the big developers, eight of which build over half of Britain’s houses. A report from Sheffield Hallam University found that in 2012-15 the biggest private housebuilders increased construction by a third, but their profits trebled. + +The builders protest that their critics misunderstand the economics of housing. Some land banking is inevitable: in order to show shareholders that their business has viable prospects, builders need a stock of land for future development. Builders’ profits have risen partly because they acquired land when it was cheaper than it is now, and the price of houses has increased. + +Furthermore, the builders say, they are victims of bureaucracy. Even after planning permission is granted, there are conditions to meet, such as outlining plans for flood defences. “Back in my day, you only had to tell the council the colour of the bricks you planned to use,” says Ian Burnett of United Living, a property firm. Planning departments have shed staff following deep cuts to councils’ budgets. The lag between receiving planning permission and building being completed has risen by 12 months since 2007. + +All this does not entirely exonerate the builders. Lately the government has become keener on large-scale housing developments. They tend to be farther from NIMBY-ish residents, and local authorities find it easier to manage one big project than lots of small ones. But they can give large builders local monopolies. To maximise profits on a plot, the builder may ration supply, putting up houses gradually rather than completing them all at once. + +There is circumstantial evidence of this process at work. One study in 2014 looked at sites in London where more than 500 homes were earmarked and found that it was rare to build more than 100 of them a year. Research by Nathaniel Lichfield and Partners (NLP), a consultancy, suggests that as the size of a plot goes up, the annual rate of building gets relatively smaller. One development of 3,000 homes near Winchester, managed by two firms, saw only 526 constructed in six years, according to NLP (the companies insist they are developing the sites without delay). + +These problems are not intractable. Councils could allocate smaller plots to a bigger range of builders, making the drip-drip style of construction more difficult. Andrew Lainton, a planning consultant, says that an obligation to build within a given deadline could be attached to planning permission. And ministers could get their own houses in order: one of the biggest hoarders of land suitable for residential development is government itself. + +This article appeared in the Britain section of the print edition under the headline Sitting on their hands + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21710853-companies-are-accused-driving-up-house-prices-land-banking-are-british-housebuilders/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +From the boardroom to the classroom + +A plan to turn high-flying oldies into teachers + +Greying executives may be one solution to a shortage of new recruits + +Nov 26th 2016 + +Your new co-worker + +IN HER role as agony aunt and columnist, Lucy Kellaway lectures fretful Financial Times readers on how to behave at work. Recently she told a 41-year-old stockbroker to “speak up” to colleagues who were annoying him by whistling. Soon, though, she will be dispensing advice to a younger audience. + +For on November 20th Ms Kellaway wrote that next year she would become a maths teacher in a London state secondary school, and encouraged greying professionals to join her in a new charity, Now Teach. The scheme is inspired by Teach First, a programme that lures bright graduates to tough schools with promises of networking, fast training and good jobs for those who choose to leave after a couple of years. + +Where Teach First injects youthful vitality into the teaching profession, Now Teach hopes to provide more experienced ballast. British teachers are the youngest in Europe, according to the OECD group of mostly rich countries. And British schools desperately need more of them, particularly in sciences, maths and modern languages, in which Now Teach will concentrate. Last year the number of recruits beginning secondary-school teacher training was 18% below the government’s target. + +The hope is that well paid office workers won’t be put off by puny salaries and will be attracted by the excitement of a fresh start. That is not as unlikely as it might sound. Some school chains already try to recruit disaffected members of other professions. In 2014-15 a fifth of Teach First’s intake were “experienced professionals”. As most people’s careers peak in their 40s, the idea that people should stick around doing the same thing for 50 years is “mad”, says Ms Kellaway. + +Now Teach will run a pilot this year in London, where heads complain that, though it is quite easy to attract young teachers, many leave when they want to buy a home. At first it will work with Ark, a high-performing chain of academies. But the plan is to become an independent national scheme, expanding first to areas where teacher shortages are most acute. + +Early signs suggest that Now Teach may be on to something. It has been inundated with applications; the pilot will be bigger than originally planned. Eventually, the idea is that when middle-aged executives say they want to become teachers, “everyone will nod as if that’s a jolly good and normal thing,” says Ms Kellaway. That a 50-something journalist quitting to become a maths teacher is front page news is not “an optimal state of affairs,” she adds. + +This article appeared in the Britain section of the print edition under the headline From the boardroom to the classroom + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21710854-greying-executives-may-be-one-solution-shortage-new-recruits-plan-turn-high-flying/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Bagehot + +Spreadsheet Phil, Britain’s surprisingly rebellious chancellor + +A naturally unpolitical chancellor of the exchequer must discover his political side + +Nov 26th 2016 + + + +PHILIP HAMMOND was elected to his Surrey seat in 1997 on, among other things, a pledge to bring back hanging. In his first speech to the Commons—usually a chance for new members to linger on their constituency’s history and character—the pinstriped MP for Runnymede and Weybridge made a few perfunctory remarks about the number of golf courses he represented before plunging into a lecture about aggregate supplementary credit approvals and cash-backed set-aside capital receipts. Later, as a quietly efficient transport secretary, defence secretary and foreign secretary under David Cameron, he voiced scepticism about gay marriage and in 2013 claimed that, given the chance, he would vote to leave the EU. When, as Britain’s top diplomat, he backed Remain in June, it was without much brio. Thus he acquired a reputation for being a fiscally hawkish, ideological right-winger: Spreadsheet Phil. “I believe he last told a joke in about 1978,” said a Westminster colleague when Theresa May made him her chancellor of the exchequer in July. + +It is thus curious that Mr Hammond has since emerged as a hero of the Tory left: a champion of a liberal, open Britain and looser public finances. In his speech to the Conservative conference last month he made waves by stressing the risks and costs of leaving the EU: “The British people did not vote on June 23rd to become poorer.” He further incensed Brexiteers when he suggested, pace the prime minister, that foreign students be removed from immigration quotas. All of which was crystallised in the Autumn Statement on November 23rd, when Mr Hammond ditched fiscal rules established by George Osborne, his predecessor, and spoke of the “uncertainty” and “slower growth” caused by Brexit. He further defied his reputation by cracking jokes that were (by the subterranean standards of such occasions) not bad: ribbing Boris Johnson for his failure to nab the premiership, for example. + +So is Britain’s new chancellor a bone-dry Thatcherite or a Europhile centrist? For the answer (neither) it helps to look at his background. Before 1997 Mr Hammond was not a banker or an accountant, but a scruffy entrepreneur. Growing up in semi-detached normality in Essex, he made money by staging discos for schoolmates. He graduated to trading cars, then to selling medical instruments, then to building houses. He made a small fortune in the process of all this hustling, risk-taking, succeeding, failing and starting over. From this experience comes his essential trait: a tight, pragmatic focus on the job before him at a given moment. He is less Colonel Blimp than Derek Trotter, the wheeling, dealing, infinitely versatile hero of “Only Fools And Horses”, a well-liked sitcom. When it suited Mr Hammond to be a right-wing parliamentary candidate, he played that role. When, as defence secretary, he had to bear down on costs, he did so. Now, as the guardian of the British economy, he militates for growth and jobs over immigration controls. + +From Mr Hammond’s unpolitical nature flowed the Autumn Statement’s essential modesty. In the narrow space granted by worsening fiscal forecasts, he did what he could to substantiate Mrs May’s grand talk of remaking globalisation to save it from itself, of helping the grumpy, “just about managing” voters (known in Whitehall as JAMs) who tilted the balance in the Brexit referendum. But it was not very much. + +Meanwhile, parts of his speech were pointed criticisms of Mr Osborne, who as chancellor had worked hand-in-glove with Mr Cameron and, in doing so, had used the Treasury to shape the government and the political landscape (his welfare cuts, for example, had been about shrinking Labour’s client electorate, as well as getting the public finances under control). “I have deliberately avoided making this statement into a long list of individual projects being supported,” Mr Hammond said, as his predecessor, now on the backbenches, hoisted his eyebrows. The chancellor continued: not only would he avoid gimmicks and leave it to ministers to decide what to do with their money, but he would even cut the number of annual “major fiscal events” by creating a single, autumn budget. + +All of which is welcome. Yet the depoliticisation of Whitehall’s imperial department comes at a strange time. The Treasury is too mighty. Yet now, more than before, there is a defence for such mightiness. Consider the bigger picture. The Brexiteers won the EU referendum without specifying how Brexit should look. Mrs May has centralised decisions but is struggling to take some of them: witness the recently leaked memo by a consultant fretting that “no common strategy has emerged” between departments and the prime minister’s cryptic warning against a “cliff edge” on leaving the EU (this apparent argument for an interim deal was soon disowned by Number 10). + +Friends reunited + +It is not as if Mrs May and Mr Hammond are at odds. Both grew up in middle-class, home-counties families, both studied at Oxford (they met there), both entered Parliament in 1997 as MPs for gin-and-Jag constituencies, both are proudly unflashy, detail-obsessed types. The tensions between them say more about their roles than about their styles or outlook. As chancellor Mr Hammond considers it his job to look after the finances. As prime minister Mrs May, like him a task-oriented sort of leader, considers it hers to enact Brexit to the satisfaction of the JAMs. + +The tragedy is that their tasks are more interdependent than they realise. To make Brexit a success Mrs May must bind in Mr Hammond. To do his job he must guide the prime minister and, through his media profile, shape voters’ expectations. The government can afford to be a little fragmented. But within a year Brexit talks will be under way and painful trade-offs will loom, demanding a tight May-Hammond nexus. In the long term, Bagehot would like to see a smaller, more modest Treasury. But for now: let it meddle. + +Economist.com/blogs/bagehot + +This article appeared in the Britain section of the print edition under the headline Spreadsheet Phil, unlikely rebel + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21710794-naturally-unpolitical-chancellor-exchequer-must-discover-his-political-side-spreadsheet/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +International + + + +Climate policy: Up in smoke? [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Up in smoke? + +What will happen if America’s president-elect follows through on pledges to tear up environmental laws + +The rest of the world will figure out a way to stay on course + +Nov 26th 2016 | MARRAKESH AND WASHINGTON, DC + + + +“LIKE ice water through the veins.” That is how a UN official, in Marrakesh for the UN climate summit that ended on November 18th, described the effect of Donald Trump’s electoral victory. Her trepidation was widely shared at the two-week event—and justified. In a tweet in 2012 Mr Trump called anthropogenic warming a “hoax”. On the campaign trail he said he would abolish America’s Environmental Protection Agency (EPA) and “cancel” the UN agreement to curb greenhouse-gas emissions adopted by 190-odd countries in Paris last year. But in an interview this week with the New York Times, he seemed to waver. Gathered in the ancient Berber city, representatives of those countries pondered whether America is about to forfeit the leadership on climate change it belatedly showed when Barack Obama helped bring about the Paris accord. + + + +That deal, which came into force earlier this month, includes a commitment to limit the increase in the global average temperature to “well below” 2°C above pre-industrial levels. Given that the world has already warmed by approximately 1.2°C, this is hugely ambitious (see chart 1). With just a few weeks to go, this year looks likely to be the hottest on record. + + + +Yet the measures the signatories vowed to adopt were comparatively modest. Most were self-proposed and voluntary cuts to their emissions of carbon dioxide, in particular those caused by deforestation and the burning of fossil fuels. Most developing countries, which produce around 65% of global carbon emissions, promised to restrict their emissions to levels that, assuming natural gas continues to substitute for coal and the cost of renewable energy continues to fall (see special report), may require no special efforts. India, the world’s third-biggest producer of greenhouse gases (see chart 2, pledged to increase its use of energy from renewable sources. Overall, though, its target is estimated to represent a rise of 90% compared with current emissions. + +By the summit’s close some of the Trump-fuelled anxiety had eased. That was in part because the talks demonstrated the value and durability of the Paris deal. As well as the overall target, it contains many useful provisions, on climate finance, technology sharing and the role of forests, for example. Over time, these could help countries make faster progress than now seems plausible. Past climate deals failed in part because they tried to impose mitigation targets on reluctant countries, rather than allowing each country to decide for itself what it thinks is achievable. The Paris agreement, by contrast, is sufficiently loose in its structure and modest in its aims to be able to withstand America, the world’s second-biggest carbon emitter, abandoning it. + +American and other officials in Morocco downplayed that possibility. In a striking reversal of the two countries’ recent positions, Liu Zhenmin, China’s vice-foreign minister, coaxingly invited America not to shirk its environmental responsibilities; the UN’s early climate negotiations, he noted, had been supported by two Republican presidents, Ronald Reagan and George H.W. Bush. John Kerry, America’s secretary of state, said that, though he could not second-guess Mr Trump (who had no representative in Marrakesh), he had “learned that some issues look a little bit different when you’re actually in office compared to [during a] campaign”. + +Mr Trump is indeed unpredictable. Since the election he has signalled a contempt for climate science by appointing a climate-change denier, Myron Ebell, to plan his takeover of the EPA, through which Mr Obama, in the absence of congressional support for environmental law-making, has issued much new green regulation. In the New York Times interview, however, Mr Trump suggested that he accepted the reality of anthropogenic warming and might not seek to withdraw from the Paris accord. He has now taken just about every position on climate change imaginable. As well as calling it a hoax—by the Chinese, with the aim of harming American manufacturing—he has said the world is warming but humans have nothing to do with it, that human activity plays a “minor” role in warming, donated money to a group lobbying for action to avert climate change and, in 2009, signed a public letter calling for cuts to America’s emissions, thereby creating “new energy jobs”. + +Mr Trump’s view on climate change, it seems, is chiefly governed by what he thinks each audience wants to hear. That may be good news for the world. Public concern about global warming is rising in America; 64% of Americans say they are worried “a great deal” or “a fair amount” about it, and 71% say America should not withdraw from the Paris accord—including a majority of Republicans. As for scrapping the EPA, the share of Americans who like the breathable air and drinkable water the agency helps to safeguard is no doubt even higher. Mr Trump acknowledged this, too, in his recent interview: “Clean water, crystal-clean water, is vitally important.” + +Abolishing the EPA, moreover, would require legislation that Democratic senators, though in the minority, could block. The main subsidies for wind- and solar-power generation, which made up two-thirds of new generating capacity last year, appear similarly beyond Mr Trump’s reach. They were extended last year by a Republican-controlled Congress; windy red states such as Kansas, Oklahoma and Texas are among their main beneficiaries. + +Mr Trump could try to remove greenhouse gases from the EPA’s remit, though this would require the Supreme Court to reverse itself on a ruling from 2007. Or he could rescind environmental regulations brought in by Mr Obama, even if this would often be difficult. Many of these were mandated by legislation and have been tested by litigation, thereby accruing a legal standing of their own. For example, in order to get rid of a rule that curbs the amount of mercury and other toxic emissions from power plants, Mr Trump’s EPA boss would have to issue, in effect, a less exacting alternative, then defend it against legal challenges from environmental campaigners. That could take years. + +But other rules are more vulnerable. They include a handful passed as executive orders—for example, one that mandates the energy-efficiency standards of federal agencies—which the new president could strike out. In addition, any regulation issued between Mr Trump’s election and his inauguration could be frozen, at least temporarily. Incoming administrations often threaten to revoke such “midnight regulations”, but rarely do so, to avoid the bother of having to replace them, as they must. But this could spell the end of Obama measures such as a rule issued on November 15th to control methane leakage from oil and gas operations on federal lands. + +Emboldened by the prospect of a unified Republican government, Republican congressmen could get in on the act. Under a rarely used law, the Congressional Review Act, Congress can revoke any rule, with a majority vote, within 60 congressional working-days of its issuance. As Congress has not been terribly active in recent months, it could in theory scrap all regulations issued since mid-May. + +Mr Obama’s most important environmental regulation is the Clean Power Plan, which seeks to limit carbon emissions from coal- and gas-fired power stations. It is considered crucial to America’s chances of fulfilling its commitment under the Paris accord to cut its emissions, by 2025, to 26-28% below their 2005 level. Mr Trump has promised to scrap the plan. It is currently stayed by the Supreme Court while a legal challenge by 27 states and some companies is mulled in the federal appeals court in Washington, DC. If that court rules against it, a Trump administration would not appeal. If it is upheld, its challengers would appeal to the Supreme Court, where the Trump administration might refuse to defend it. If it makes it through the Supreme Court, the Trump EPA could probably rescind and replace it. + +But even this would not persuade many electricity companies or states to reverse the shift they are already making towards renewables and away from coal. The growth of renewables has helped cut America’s emissions from power generation by around a quarter since 2005. The main reason for that progress, an abundance of cheap shale gas, gives the lie to another piece of Trumpian bluster: the tycoon’s promise to pep up the coal industry. + + + +America’s shale-gas revolution has made generating electricity from gas almost as cheap as generating it from coal (see chart 3). Once the costs of probable future environmental regulations are allowed for, new gas-fired power-stations look like better business than new coal-fired ones. This year is expected to be the first in which America generates more electricity from gas than from coal; 94 coal-fired power-stations closed last year and 41 more are expected to shut this year. Mr Trump has promised to make more public land available to miners; but access to coal reserves is not their problem. He probably could not intervene to reverse coal’s decline without actively handicapping renewables or natural gas. + +All in all, optimists think the environmental damage caused by a one-term Trump administration could be relatively limited. Whether they are right, however, will depend on how much he attempts. Perhaps the biggest risk is that, having already abandoned some more prominent campaign promises—for example to wall off Mexico and deport 11m undocumented migrants—he could view a bonfire of environmental regulation as a relatively low-cost way to placate his disappointed supporters. Slashing funding for “politicised” climate research, as one of his advisers has said is on the cards, might please them, too. + +Previous Republican presidents whose sympathies lay with the coal- and oil-men played by the rules, frets an environmental lawyer who fought them; perhaps Mr Trump will not. He could, for example, simply stop implementing environmental rules across the board, and let the legal battles rage. It seems unlikely. But so was his impending presidency. + +Easy free-rider + +The delegates in Marrakesh were comforted in part by a hope that Mr Trump would soon realise that withdrawing from the Paris deal would weaken his hand in every other international bargain he might wish to make. “If you renege on deals, you don’t get the one you want next time,” says James Cameron, the chairman of the Overseas Development Institute, a British think-tank. But if that calculation does not hold, progress under the Paris accord may not be as fast as it would otherwise have been. + +Countries have until 2018 to work out how to tot up the results of their environmental efforts; in 2020 they will set themselves new, hopefully tougher, targets. This process would probably be less robust and more secretive without America’s involvement. Developing countries, whose unmet energy needs are still substantial, might find it easier to fudge their figures. And persuading other countries to raise their ambitions in four years’ time would be difficult with America standing idly by. + +Not just leadership and motivation would be in shorter supply, but also money for green schemes. By 2020, $100bn a year is supposed to be available, most of it for cutting greenhouse-gas emissions and the rest for helping countries to adapt to climate change. Rich countries are supposed to pay almost all of it; the rest of them may balk if America fails to do its bit. + +But some think large transfers from rich countries to poor ones are in any case becoming less important to international environmental efforts. Droughts, heatwaves and other extreme events are already more likely because of global warming, and the link between climate change and such disasters is becoming more widely accepted. Negotiations about paying for mitigation and adaptation efforts used to resemble talks between hostage-takers and those trying to free them, says Hal Harvey, an energy consultant: poor countries would demand money from rich ones in return for not exploiting their own ecosystems. + +Now these countries are increasingly realising that they need to act to limit global warming for their own sakes, whether or not sweeteners are forthcoming. In Marrakesh 48 of the least-developed ones promised to supply their entire energy needs from renewable sources by 2050. Rachel Kyte, a UN energy official, says that many more are looking for help to set up energy-efficiency schemes and to work out how best to spend what money they have. + +Slowing economic growth and falling demand for coal in China mean that it may already have passed the high point of emissions, about 15 years ahead of the date it promised under the Paris deal. By 2020 it plans to have tripled its solar capacity—already greater than that of any other country—to 143 gigawatts (GW); two years ago the world’s entire installed solar capacity came to 181GW. If this enables China to burn less coal, it will help tackle air pollution, a huge problem in its cities. According to research published last year, spending a day in Beijing does about the same harm to a person’s health as smoking 40 cigarettes. + +Strenuous efforts by China to cut emissions would also mean vast domestic demand for clean-energy technology, which would help the country’s firms to consolidate their lead in supplying a fast-growing, and lucrative, global market. While Mr Trump occupied himself with a few unprofitable coal-mines, China could be taking a commanding lead in batteries, solar panels and wind turbines. + +The cost of renewable energy has already come down a great deal in the past couple of years, and with greater economies of scale, will fall further. Even though government subsidies in some places, including Britain, are being chopped, renewable sources are making more commercial sense. In some places offshore wind energy costs just half as much as it did three years ago. And solar installations in the world’s sunniest spots now offer power at less than 3 cents per kilowatt-hour (kWh)—cheaper than even the most economical gas plants. “With solar so cheap you might think it is a communist plot, but you’re still going to put up the panels,” says Mr Harvey. The volatile price of fossil fuels also makes them less attractive when planning new generating capacity. + +For India, too, cheaper renewable energy will be a boon. Around 300m of its people, mostly in rural areas, have no electricity supply; off-grid solar installations would be life-changing. India has pledged to install 175GW of renewable capacity by 2022, most of it solar. This would mean doubling solar capacity every 18 months or so; it is roughly on track to meet its goal. + +According to Arunabha Ghosh of the Council on Energy, Environment and Water, a think-tank in Delhi, India’s plans will not be affected if America pulls out of the Paris deal since they are in the country’s own interests. Extreme weather events linked to climate change already result in huge distress and enormous bills: in the 12 months to April 2014 central and state governments spent $92bn after floods, droughts and other disasters. + +Support for continued climate action has emerged from other surprising quarters. Saudi Arabia recently announced new efficiency schemes for energy and water, which will make it easier to cut huge subsidies to both and thereby put further downward pressure on demand. Indonesia is also cutting subsidies for fossil fuels; until recently these absorbed a bigger share of public spending than either health or education, says Erik Solheim, the head of the UN Environment Programme. + +The dawn of a communist plot + +The new climate crusader + +Seven years ago, when climate talks in Copenhagen crashed and burned, Chinese intransigence was widely blamed. Its officials have not forgotten the experience. A chance to play the hero and rescue global environmental efforts would be appealing—though China surely wants America to stay involved. American and Chinese leadership has achieved unprecedented levels of international co-operation on climate in the past year. Though the deal struck in Paris was too modest, the hope that countries would increase their efforts over time was realistic. + +That hope has been shaken by Mr Trump’s election, but not extinguished. The money governments and firms have already pumped into renewables and energy-efficiency programmes mean that progress will continue. Not everywhere will suffer the effects of climate change, from flooded streets and scorched fields to empty reservoirs and burning forests, equally. But even if Mr Trump reneges on America’s environmental promises, others will try to stop the worst of them. + +This article appeared in the International section of the print edition under the headline Up in smoke? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21710811-rest-world-will-figure-out-way-stay-course-what-will-happen-if-americas/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Special report: Oil + + + +Breaking the habit: The future of oil [Thu, 24 Nov 16:30] + +On the oil wagon: A tricky time for oil producers [Thu, 24 Nov 16:30] + +Taken to task: How to deal with worries about stranded assets [Thu, 24 Nov 16:30] + +From oiloholics to e-totallers: The coming revolution in transport [Thu, 24 Nov 16:30] + +Assault on batteries: The race to move beyond lithium-ion [Thu, 24 Nov 16:30] + +Doing it their way: Where India’s and China’s energy consumption is heading [Thu, 24 Nov 16:30] + +Heading for the twilight: When oil is no longer in demand [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Breaking the habit + +The future of oil + +The world’s use of oil is approaching a tipping-point, writes Henry Tricks. But don’t expect it to end imminently + +Nov 26th 2016 + + + +AT THE TURN of the 20th century, the most malodorous environmental challenge facing the world’s big cities was not slums, sewage or soot; it was horse dung. In London in 1900, an estimated 300,000 horses pulled cabs and omnibuses, as well as carts, drays and haywains, leaving a swamp of manure in their wake. The citizens of New York, which was home to 100,000 horses, suffered the same blight; they had to navigate rivers of muck when it rained, and fly-infested dungheaps when the sun shone. At the first international urban-planning conference, held in New York in 1898, manure was at the top of the agenda. No remedies could be found, and the disappointed delegates returned home a week early. + +Yet a decade later the dung problem was all but swept away by the invisible hand of the market. Henry Ford produced his first Model T, which was cheap, fast and clean. By 1912 cars in New York outnumbered horses, and in 1917 the last horse-drawn streetcar was retired in Manhattan. It marked the moment when oil came of age. + +That age has been one of speed and mostly accelerating progress. If coal drove the industrial revolution, oil fuelled the internal-combustion engine, aviation and the 20th-century notion that mankind’s possibilities are limitless; it flew people to the Moon and beyond. Products that have changed lives—from lipstick to CD players, from motorcycle helmets to aspirin—contain petrochemicals. The tractors and fertilisers that brought the world cheaper food, and the plastics used for wrapping, are the progeny of petroleum products. + +Oil has changed history. The past 100 years have been pockmarked with oil wars, oil shocks and oil spills. And even in the 21st century its dominance remains entrenched. It may have sped everything else up, but the rule of thumb in energy markets is that changing the fuel mix is a glacial process (see chart). Near its peak at the time of the Arab oil embargo in 1973, oil accounted for 46% of global energy supply. In 2014 it still had a share of 31%, compared with 29% for coal and 21% for natural gas. Fast-growing rivals to fossil fuels, such as wind, solar and geothermal energy, together amounted to little more than 1%. + + + +Horses for courses + +Yet the transition from horse power to horsepower, a term coined by Eric Morris of Clemson University, South Carolina, is a useful parable for our time. A hundred years ago oil was seen as an environmental saviour. Now its products are increasingly cast in the same light as horse manure was then: a menace to public health and the environment. + +For all its staying power, oil may be facing its Model T moment. The danger is not an imminent collapse in demand but the start of a shift in investment strategies away from finding new sources of oil to finding alternatives to it. The immediate catalyst is the global response to climate change. An agreement in Paris last year that offers a 50/50 chance of keeping global warming to less than 2ºC above pre-industrial levels, and perhaps limiting it to 1.5ºC, was seen by some as a declaration of war against fossil fuels. + +That agreement has been thrown into doubt by the election of Donald Trump, who has dismissed climate change as a “hoax”, as America’s next president. But if big energy consumers such as the EU, China and India remain committed to curbing global warming, all fossil fuels will be affected. The International Energy Agency (IEA), a global forecaster, says that to come close to a 2ºC target, oil demand would have to peak in 2020 at 93m barrels per day (b/d), just above current levels. Oil use in passenger transport and freight would plummet over the next 25 years, to be replaced by electricity, natural gas and biofuels. None of the signatories to the Paris accord has pledged such draconian action yet, but as the costs of renewable energy and batteries fall, such a transition appears ever more inevitable. “Whether or not you believe in climate change, an unstoppable shift away from coal and oil towards lower-carbon fuels is under way, which will ultimately bring about an end to the oil age,” says Bernstein, an investment-research firm. + +Few doubt that the fossil fuel which will suffer most from this transition is coal. In 2014 it generated 46% of the world’s fuel-based carbon-dioxide emissions, compared with 34% for oil and 20% for natural gas. Natural gas is likely to be the last fossil fuel to remain standing, because of its relative cleanliness. Many see electricity powered by gas and renewables as the first step in an overhaul of the global energy system. + +This special report will focus on oil because it is the biggest single component of the energy industry and the world’s most traded commodity, with about $1.5trn-worth exported each year. Half of the Global Fortune 500’s top ten listed companies produce oil, and unlisted Saudi Aramco dwarfs them all. Oil bankrolls countries that bring stability to global geopolitics as well as those in the grip of tyrants and terrorists. And its products fuel 93% of the world’s transport, so its price affects almost everyone. + +Since the price of crude started tumbling in 2014, the world has had a glimpse of the havoc a debilitated oil industry can cause. When oil fell below $30 a barrel in January this year, stockmarkets predictably plummeted, oil producers such as Venezuela and Nigeria suffered budget blowouts and social unrest, and some American shale companies were tipped into bankruptcy. But there have been positive effects as well. Saudi Arabia has begun to plan for an economy less dependent on oil, and announced it would partially privatise Aramco. Other Middle Eastern producers have enthusiastically embraced solar power. Some oil-consuming countries have taken advantage of low oil prices to slash fuel subsidies. + +Western oil companies have struggled through the crisis with a new cross to bear as concerns about global warming become mainstream. In America the Securities and Exchange Commission and the New York attorney-general’s office are investigating ExxonMobil, the world’s largest private oil company, over whether it has fully disclosed the risks that measures to mitigate climate change could pose to its vast reserves. Shareholders in both America and Europe are putting tremendous pressure on oil companies to explain how they would manage their businesses if climate-change regulation forced the world to wean itself off oil. Mark Carney, the governor of the Bank of England, has given warning that the energy transition could put severe strains on financial stability, and that up to 80% of fossil-fuel reserves could be stranded. The oil industry’s rallying cry, “Drill, baby, drill!” now meets a shrill response: “Keep it in the ground!” + +Which peak? + +This marks a huge shift. Throughout most of the oil era, the biggest concern has been about security of energy supplies. Colonial powers fought wars over access to oil. The Organisation of Petroleum Exporting Countries (OPEC) cartel was set up by oil producers to safeguard their oil heritage and push up prices. In the 20th century the nagging fear was “peak oil”, when supplies would start declining. But now, as Daniel Yergin, a Pulitzer-prizewinning oil historian, puts it: “There is a pivot away from asking ‘when are we going to run out of oil?’ to ‘how long will we continue to use it?’ ” For “peak oil”, now read “peak demand”. + +Oil to fuel heavy-goods vehicles, aeroplanes and ships, and to make plastics, will be needed for many years yet. But from America to China, vehicle-emissions standards have become tougher, squeezing more mileage out of less fuel. Air pollution and congestion in big cities are pushing countries like China and India to look for alternatives to petrol and diesel as transport fuels. Car firms like Tesla, Chevrolet and Nissan have announced plans for long-range electric vehicles selling, with subsidies, for around $30,000, making them more affordable. And across the world the role of energy in GDP growth is diminishing. + +Analysts who think that the Paris accords will mark a turning point in global efforts to reduce carbon-dioxide emissions say global oil consumption could start to wane as early as the 2020s. That would mean companies would have to focus exclusively on easy-to-access oil such as that in the Middle East and America’s shale-oil provinces, rather than expensive, complex projects with long payback periods, such as those in the Arctic, the Canadian oil sands or deep under the ocean. + +Yet many in the industry continue to dismiss talk of peak demand. They do not believe that governments have the political will to implement their climate goals at anything like the speed the Paris agreement envisages. In America they ridicule the idea that a nation built around the automobile can swiftly abandon petrol. And Khalid Al-Falih, Saudi Arabia’s energy minister, estimates that the world will still need to invest in oil to the tune of almost $1trn a year for the next 25 years. Oil veterans point out that even if global oil consumption were to peak, the world would still need to replace existing wells, which deplete every year at the rate of up to 5m b/d—roughly the amount added by America’s shale revolution in four years. Demand will not suddenly fall off a cliff. + + + +A number of big oil companies accept that in future they will probably invest less in oil and more in natural gas, as well as in renewable energy and batteries. Rabah Arezki, head of commodities at the IMF, says the world may be “at the onset of the biggest disruption in oil markets ever”. + +This report will argue that the world needs to face the prospect of an end to the oil era, even if for the moment it still seems relatively remote, and will ask three central questions. Will the industry as a whole deal with climate change by researching and investing in alternatives to fossil fuels, or will it fight with gritted teeth for an oil-based future? Will the vast array of investors in the oil industry be prepared to take climate change on board? And will consumers in both rich and poor countries be willing to forsake the roar of a petrol engine for the hum of a battery? + +This article appeared in the Special report section of the print edition under the headline Breaking the habit + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21710628-worlds-use-oil-approaching-tipping-point-writes-henry-tricks-dont-expect/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +On the oil wagon + +A tricky time for oil producers + + + +The industry is already suffering upheaval, but part of it is still in denial + +Nov 26th 2016 + +Putting the wind up oil + +SOME CALL IT “Texarabia”. In Midland, West Texas, every bare 40-acre plot of land appears to have a pumping unit on it, drawing oil from the shale beds of the Permian Basin up to 12,000 feet (3,700 metres) below. One is toiling away in the car park of the West Texas Drillers, the local football team. The Permian Basin Petroleum Museum, on the edge of town, has an exhibition of antique “nodding donkeys” dating back to the 1930s. In a lot behind them a working one is gently rising and falling. + +Drive 20 miles north, though, and the pumpjacks are overshadowed by hundreds of wind turbines whirring above them (see picture, next page). In fields of cotton, shimmering white in the early-autumn sun, it is a glimpse of the shifting contours of the energy landscape. + +You might think hardened oilmen would resent the turbines pointing the way to a future when the world no longer needs fossil fuels. But Joshua Johnson, who manages a string of oil leases in the area and proudly shows your correspondent the lustrous crude he stores in 500-barrel oil batteries, sees things differently, saying: “I think these new technologies are a wonderful thing.” In his view, renewable energy will be a vital complement to oil as the world’s demand for energy increases. But he dismisses global warming: “It’s always been hotter ’n hell here.” + +The Permian Basin is oil’s latest frontier, and it is in the throes of a mini-investment boom, despite the deepest downturn in the oil market since the 1990s. The number of rigs has increased by 60% since May, whereas in other shale basins in America it has crept up only slightly. The hydraulic fracturing, or fracking, from wells that are drilled is picking up; around Midland the sight of big red lorries gathered around a wellbore like circus wagons, pumping in fluid and sand at high pressure, has become more familiar again (though the amount of drilling is still less than half its level at the peak in 2014). + +So far this year Wall Street has provided funding of more than $20bn to American oil companies, mostly to acquire assets and frack them in the Permian. Some think that the prospects have been overhyped, but not Scott Sheffield, boss of Pioneer Natural Resources, one of the area’s largest producers. He reckons that the Permian, made up of many layers of oil-bearing rock 250m years old, may have as much recoverable oil as Saudi Arabia’s Ghawar field, source of more than half the kingdom’s oil riches. That is probably wishful thinking, but it suggests that morale in America’s oil industry is recovering after the price crash. + +The Permian’s story is an example of how a mixture of luck, geology, technology, law and true grit can keep on delivering oil in copious quantities. Such discoveries appear to settle the industry’s perennial question about how soon the stuff will run out. In his recent book, “Market Madness: A Century of Oil Panics, Crises and Crashes,” Blake Clayton catalogues four eras when the world panicked about “peak oil”. The first was the emergence of the motor car, when oil prices started to soar. The second coincided with the second world war. The third was in the 1970s, when OPEC drove up the price of oil. The fourth began in the mid-2000s as oil began its rise to $140 a barrel. Yet the Jeremiahs have always been proved wrong. M. King Hubbert, the doyen of peak-oilers, predicted back in 1956 that global oil supply would never exceed 33m b/d. It is currently 97m b/d. According to BP, a British oil company, proven global oil reserves have risen by 50% in the past 20 years, and at current rates of production would last about 50 years (see chart). + + + +Too much of a good thing + +As concerns about climate have risen, policymakers, regulators and investors have switched from worrying about a potential oil shortage to fretting about a possible glut. In the most extreme scenarios, experts say that if there is to be a 50/50 chance of keeping global warming below 2ºC, only 35% of proven fossil-fuel reserves (mostly coal and oil) can be burned. If the target limit is to be 1.5ºC, only 10% of the proven reserves can be used. As Mr Clayton writes: “Oil will be outmoded long before the world’s oil wells run dry.” + +Pioneer’s Mr Sheffield agrees, which makes him a heretic among his American peers. He reckons that global demand for oil may peak within the next 10-15 years because of slow global growth and the large-scale introduction of electric vehicles powered by renewable energy. To prepare for that day, he says, Pioneer is considering selling assets elsewhere in America to focus on the Permian, which he argues is cheap enough to compete in a world of dwindling oil demand. + +Like Pioneer, some larger, integrated oil companies, especially European ones, are changing their bets on oil’s future, mostly because of the recent collapse in the oil price. For instance, Royal Dutch Shell, the Anglo-Dutch supermajor, pulled out of the Arctic because drilling there would be too expensive. Its French counterpart, Total, is unwilling to invest more in Canada’s oil sands, for similar reasons. But they are also aware that if demand goes into long-term decline, those with the cheapest oil will survive longest. Simon Henry, Shell’s chief financial officer, says the company expects a peak in oil demand within the next 5-15 years. It intends to concentrate on what it sees as the cheapest deepwater reserves in places like Brazil where investments can be recouped within that time frame. It may also cut oil exploration. Total, too, is hoping to find low-cost oil. It has bought a small stake in a 40-year oil concession near Abu Dhabi, in the expectation that Gulf oil will always be cheap. + + + +Largely because the most prolific reserves are in the hands of OPEC countries, and hence difficult for Western firms to get hold of, some oil majors are turning to gas as a complement to oil (see chart). This year Shell completed a $54bn acquisition of BG, a British producer of natural gas and oil, bringing gas close to half its energy mix. Oilmen say the gas business is more complex than oil; it needs more upfront capital to develop, pipelines for transport and new systems of delivery, so returns can be lower. Yet even the most pessimistic scenarios for the future of fossil fuels suggest better growth prospects for gas than for oil. + +Belt and braces + +Some companies are also taking out options on renewable technologies, in case they grow very quickly. Total has bought battery and solar-power businesses, though its boss, Patrick Pouyanné, insists that without profits from oil and gas it would not have been able to do so. Shell’s Mr Henry says his company’s business model may increasingly resemble that of sovereign-wealth funds such as Norway’s, which redirect the substantial cashflows from oil into lower-carbon technologies. Britain’s BP, which pioneered the concept of “Beyond Petroleum”, only to rue it later because its solar-power investments failed to make money, is gingerly considering investing more in wind for the first time in five years. When the nature of the energy transition becomes clearer, these companies say they may have to invest tens of billions of dollars to develop new energy businesses. + +Philip Whittaker of the Boston Consulting Group (BCG)notes that in the past oil projects have been cash machines, because the value of an extra barrel of oil can vastly exceed the cost of production. The difference gets smaller as reserves become harder to find, but investors still like the industry’s relatively high risk-return profile. Once an oil firm has covered the costs of developing a field, it can sometimes generate cash for decades. + +He says it is not clear that investing in renewables could replicate oil’s risk-return profile. The oil companies have huge balance-sheets and make commensurately large capital investments, but in the short term it is hard to see renewables reaching sufficient scale to become important parts of their business. Perhaps installing large quantities of offshore wind turbines in deep and rough seas would be similar to deep-sea oil drilling. But the more that the oil companies come to resemble electricity companies, the more their risk profile looks like that of a dull utility. They would also have to get involved with their consumers, which is not something this engineering-minded industry could get excited about. + +On a much bigger scale, the Saudi government hopes to pursue a similar diversification strategy via an initial public offering of part of Saudi Aramco. Some of the proceeds, estimated at up to $150bn, will be put into a massive sovereign-wealth fund that will invest in technologies beyond oil. Some reckon that the kingdom has recently been producing oil at record levels because it is expecting an early end to the oil age. Others think it simply wants to recoup market share from other producers. + +In America, meanwhile, many oil companies seem to want to keep their heads down. Some argue that market forces are better at reducing emissions than co-ordinated action by governments. The displacement of coal by shale gas, they point out, has cut emissions to ten-year lows. Many hope that the recent investment drought in the industry will lead to shortages that will send the oil price rocketing before the end of this decade. But that, says BCG’s Mr Whittaker, could be the oil market’s “last hurrah”, giving a final push to electrification. + +This article appeared in the Special report section of the print edition under the headline On the oil wagon + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21710630-industry-already-suffering-upheaval-part-it-still-denial-tricky/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Taken to task + +How to deal with worries about stranded assets + +Oil companies need to heed investors’ concerns + +Nov 26th 2016 + + + +IN SEPTEMBER 2015, at a candlelit dinner at Lloyd’s of London, Mark Carney, the governor of the Bank of England, addressed the insurance industry on climate change. He gave warning in advance that there would be no jokes. Then he dropped a bombshell on the oil industry. + +His message was twofold. First, if the world seriously intended to limit global warming to 2ºC, most of the coal, oil and gas reserves in the ground would be left “stranded”, or unrecoverable. Such “transition risk” could jeopardise financial stability, he argued. Second, a task force would be set up to prompt companies to disclose how they planned to manage risks and prepare for a 2ºC world, similar to the one created to improve risk disclosure by banks after the financial crisis. + +Ever since that speech, oil companies have been incensed by the idea that they may be the next Lehman Brothers. Ben van Beurden, chief executive of Royal Dutch Shell, talks of financial regulators trying to “weaponise financial markets against oil and gas”. Patrick Pouyanné, the boss of Total, has urged Mr Carney to “take care of the pound, not the oil industry”. + +But Mr Carney’s remarks presaged a change in attitude towards oil companies by governments, financial regulators and investors that has become clearer since the Paris climate-change agreement last December. The Securities and Exchange Commission, America’s stockmarket regulator, is investigating whether ExxonMobil, the country’s biggest oil company, values its untapped reserves appropriately in light of the recent halving of oil prices and potential regulatory action on climate change. In October it said it might write down about one-fifth of its reserves. The company has faced related probes by New York’s attorney-general, Eric Schneiderman. + +Activist shareholders have had unprecedented support from mainstream investors for their efforts to force oil companies to explain how their businesses would be changed by full-scale decarbonisation. Total, Shell and BHP Billiton, a coal and oil company, were ahead of the field, issuing reports in the past 12 months that outlined scenarios for a move to 2ºC warming. + +American oil firms prefer to dig in their heels, arguing that market forces are a better way to reduce emissions than “international accords or government initiatives”. They note that thanks to the shale-gas revolution in America, emissions last year were 12% lower than a decade earlier. Such attitudes risk causing more of a backlash towards the most resistant companies. BlackRock, a big asset manager, estimates that more than 500 investment firms, with assets of $3.4trn under management, have pledged to divest from fossil-fuel companies. It says that when financial fiduciaries decide where to invest, they should now consider the climate impact as well as the likely returns. + +Bevis Longstreth, a former SEC commissioner (and climate activist), says such exhortations can have a ripple effect throughout the investment community. Local governments are beginning to unwind their oil and gas investments. It reminds him of the rush to disinvest from big companies that traded with South Africa under apartheid in the 1980s. “It’s like getting out of the theatre when you smell smoke.” + +Stranded by guesswork + +Yet the industry’s tetchy reaction to the questions raised over the value of its reserves is partly justified. Mr Schneiderman’s probe of ExxonMobil has cast this way and that, like a wildcatter desperately looking for oil. Because oil prices go up and down so much, estimating and valuing reserves is fiendishly hard. It is even harder to predict what regulators might do to counter climate change. + +As for Mr Carney’s worry about stranded assets, the industry argues that it is premature. Countries like Saudi Arabia may have reserves estimated to last 70 years, but oil companies’ proven reserves are much shorter-range, typically 10-15 years. IHS, a research firm, estimates that about 80% of the value of most listed oil companies is based on proven reserves that will be used within that time frame. Daniel Yergin, IHS’s vice-chairman, also points out that the recent collapse in oil prices posed no threat to the stability of the financial system, even though the shock was more abrupt than climate change is likely to turn out. He thinks Mr Carney has overstepped the mark. + +If measures to stop global warming are fully implemented, oil-company revenues could fall by more than $22trn over the next 25 years + +All the same, the industry may come under further pressure. Under the aegis of the Financial Stability Board (FSB), a body administered by the Group of 20 that monitors the global financial system (and is chaired by Mr Carney), the Task Force on Climate-related Financial Disclosures is drawing up global guidelines, due to be presented to the FSB in December, for voluntary disclosure on how to manage climate risks. Members of the task force acknowledge that these risks may be tricky to account for on the balance-sheet, especially as it is not clear what future regulations governments will impose. IHS argues that such rules could harm fossil-fuel companies by putting off lenders and giving an advantage to state-owned rivals that would not face the same pressures from investors. + +One of the advisers to the task force, Mark Lewis, of Barclays, says that if measures to stop global warming are fully implemented, oil-company revenues could fall by more than $22trn over the next 25 years, more than twice the predicted decline for the gas and coal industries combined. Mr Lewis sees a cautionary tale in the woes of European utilities, hit by government action to penalise coal and nuclear power. They have suffered such a devastating collapse in their share prices in recent years that some of the biggest, including Germany’s E.ON, have been forced to split off their fossil-fuel businesses. If the big oil companies are encouraged to discuss climate-change risks openly, they will have a better chance of avoiding such a fate. + + + +This article appeared in the Special report section of the print edition under the headline Taken to task + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21710632-oil-companies-need-heed-investors-concerns-how-deal-worries-about-stranded/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +From oiloholics to e-totallers + +The coming revolution in transport + +What changes in driving habits and improved batteries might do to oil demand + +Nov 26th 2016 + +Horseless evolution + +IT HAS BEEN a bad couple of years for those hoping for the death of driving. In America, where cars are an important part of the national psyche, a decade ago people had suddenly started to drive less, which had not happened since the oil shocks of the 1970s. Academics started to talk excitedly about “peak driving”, offering explanations such as urbanisation, ageing baby-boomers, car-shy millennials, ride-sharing apps such as Uber and even the distraction of Facebook. + +Yet the causes may have been more prosaic: a combination of higher petrol prices and lower incomes in the wake of the 2008-09 financial crisis. Since the drop in oil prices in 2014, and a recovery in employment, the number of vehicle-miles travelled has rebounded, and sales of trucks and SUVs, which are less fuel-efficient than cars, have hit record highs. + +This sensitivity to prices and incomes is important for global oil demand. More than half the world’s oil is used for transport, and of that, 46% goes into passenger cars. But the response to lower prices has been partially offset by dramatic improvements in fuel efficiency in America and elsewhere, thanks to standards like America’s Corporate Average Fuel Economy (CAFE), the EU’s rules on CO2 emissions and those in place in China since 2012. + +The IEA says that such measures cut oil consumption in 2015 by a whopping 2.3m b/d. This is particularly impressive because interest in fuel efficiency usually wanes when prices are low. If best practice were applied to all the world’s vehicles, the savings would be 4.3m b/d, roughly equivalent to the crude output of Canada. This helps explain why some forecasters think demand for petrol may peak within the next 10-15 years even if the world’s vehicle fleet keeps growing. + +Occo Roelofsen of McKinsey, a consultancy, goes further. He reckons that thanks to the decline in the use of oil in light vehicles, total consumption of liquid fuels will begin to fall within a decade, and that in the next few decades driving will be shaken up by electric vehicles (EVs), self-driving cars and car-sharing. America’s Department of Energy (DoE) officials underline the importance of such a shift, given the need for “deep decarbonisation” enshrined in the Paris climate agreement. “We can’t decarbonise by mid-century if we don’t electrify the transportation sector,” says a senior official in Washington, DC. It is still unclear what effect Donald Trump’s election will have on this transition. + +In a recent paper entitled “Will We Ever Stop Using Fossil Fuels?”, Thomas Covert and Michael Greenstone of the University of Chicago, and Christopher Knittel of the Massachusetts Institute of Technology, argue that several technological advances are needed to displace oil in the car industry. Even with oil at $100 a barrel, the price of batteries to power EVs would need to fall by a factor of three, and they would need to charge much faster. Moreover, the electricity used to power the cars would need to become far less carbon-intensive; for now, emissions from EVs powered by America’s electricity grid are higher than those from highly efficient petrol engines, say the authors. + +My kingdom for a cheap battery + +They calculate that at a battery’s current price of around $325 per kilowatt hour (kWh), oil prices would need to be above $350 a barrel for EVs to be cost-competitive in 2020. Even if they were to fall to the DoE’s target of $125 per kWh, they would still need an oil price of $115 a barrel to break even. But if battery prices fell that much, oil would probably become much cheaper, too, making petrol engines more attractive. Even with a carbon tax, the break-even oil price falls only to $90 a barrel. + +Those estimates may be too conservative, but the high cost of batteries and their short range help explain why EVs still make up only 0.1% of the global car fleet (though getting to 1m of them last year was a milestone). They are still mostly too expensive for all but wealthy clean-energy pioneers. Many experts dismiss the idea that EVs will soon be able seriously to disrupt oil demand. Yet they may be missing something. Battery costs have fallen by 80% since 2008, and though the rate of improvement may be slowing, EV sales last year rose by 70%, to 550,000. They actually fell in America, probably because of low petrol prices, but tripled in China, which became the world’s biggest EV market. + + + +Next year Tesla aims to bring out its more affordable Model 3. It hopes that the cost of the batteries mass-produced at its new Gigafactory in Nevada will come down to below $100 per kWh by 2020 (see chart), and that they will offer a range of 215 miles (350km) on a single charge. + +Countries that have offered strong incentives to switch to EVs have seen rapid growth in their use. Norway, for instance, offers lower taxes, free use of toll roads and access to bus lanes. Almost a quarter of the new cars sold there are now electric (ample hydroelectricity makes the grid unusually clean, too). + + + +This bodes well for future growth, especially if governments strengthen their commitment to electrification in the wake of the Paris accord. The Electric Vehicles Initiative (EVI), an umbrella group of 16 EV-using nations, has pledged to get to 20m by 2020. The IEA says that to stand a 50/50 chance of hitting the 2ºC global-warming target, there would need to be 700m EVs on the road by 2040. That seems hugely ambitious. It would put annual growth in EV sales on a par with Ford’s Model T—at a time when the car industry is also in a potentially epoch-making transition to self-driving vehicles. + +But imagine that the EVI’s forecast were achievable. By 2020 new EV sales would be running at around 7m a year, displacing the growth in sales of new petrol engines, says Kingsmill Bond of Trusted Sources, a research firm. Investors, focusing not just on total demand for oil but on the change in demand, might see that as something of a tipping point. As Mr Bond puts it: “Investors should not rely on the phlegmatic approach of historians who tell them not to worry about change.” + + + + + +This article appeared in the Special report section of the print edition under the headline From oiloholics to e-totallers + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21710635-what-changes-driving-habits-and-improved-batteries-might-do-oil-demand-coming/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Assault on batteries + +The race to move beyond lithium-ion + +The next generation of batteries needs to be three times cheaper + +Nov 26th 2016 + + + +DON HILLEBRAND, AN American motor-industry veteran, has an intriguing job. In a warehouse at the secure Argonne National Laboratory, which arose from the University of Chicago’s work on the Manhattan Project, he scrutinises foreign-made cars, trucks and lithium-ion batteries to discover their technological secrets and share them with his employer, the Department of Energy, and its friends in the Big Three car companies. + +His engineers have dismantled the engine of a new Honda model to lay bare its energy-saving technologies and then “reverse-engineered” it to make sure they have fully understood them. They do something similar with lithium-ion batteries, though they rarely dismantle them completely. When they do, it is in an explosion-proof room, Mr Hillebrand chuckles. + +Much of the science behind those batteries originally came from America (ironically, the labs of ExxonMobil, America’s biggest oil company), but it was Japan’s Sony that first commercialised them in 1991. America is now in a race to catch up with Japan and South Korea, the two front-runners, though China is also a strong competitor. “The Asians are ten years ahead of us,” says Mr Hillebrand. + +Steve LeVine, in his book “The Powerhouse”, describes the contest as “the great battery war”. Winning it could not only revolutionise transport, it could cause the biggest oil crisis of all time. America has emerged victorious from some skirmishes; for instance, Argonne scientists developed the nickel-cobalt-manganese cathode used in the plug-in hybrid Chevy Volt. But the DoE’s loyalties are split because, as well as wanting to develop batteries that could put the oil industry out of business, it also has other energy industries to nurture, notably oil and natural gas. + +Mr Hillebrand believes it may still be decades before batteries dislodge oil from the energy mix, especially if oil prices stay low. (One of his senior scientists, Amgad Elgowainy, drives a Volt, but says that with petrol at $2 a gallon, he prefers filling it up with fuel rather than charging it.) + +Yet in a different department at Argonne, known as JCESR (Joint Centre for Energy Storage Research), scientists are trying to go beyond lithium-ion to make batteries five times more energy-dense (meaning smaller and lighter) at one-fifth the cost. Scientists test different materials for anodes, cathodes and electrolytes and run their findings through numerous discharging and recharging cycles in an effort to produce safer and more efficient batteries. + +George Crabtree, JCESR’s director, says one of the current favourites is a lithium-sulphur battery, though more work is needed on the number of charging cycles it can endure. The aim is to come up with an EV battery, whether lithium-based or not, at a cost below $100 a kilowatt hour, which would power a car that sells for $20,000. Despite Tesla’s efforts, he doubts that lithium-ion can deliver the goods. “With the present low oil price you have to get to an even lower battery price to become transformative,” he says. Some also worry that production of lithium (pictured) in South America and elsewhere may be insufficient to support a transport revolution. But fears of peak lithium may be as premature as those of peak oil. + + + + + +This article appeared in the Special report section of the print edition under the headline Beyond lithium-ion + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21710631-next-generation-batteries-needs-be-three-times-cheaper-race-move-beyond/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Doing it their way + +Where India’s and China’s energy consumption is heading + +Consumption patterns in Asia will not replicate those in the West + +Nov 26th 2016 + +Better than cow dung + +HYDROCARBONS CAN STILL make the heart race—especially if you are short of them. That is evident under a sweltering midday sun on the outskirts of Noida, an Indian boomtown adjacent to New Delhi, where hundreds of poor women, clad in bright saris, recently gathered for a celebration. They were marking what Narendra Modi’s government hopes will be the beginning of the end for an age-old poverty trap: collecting firewood and cow dung for cooking. + +The women say they, and often their children too, spend hours every day hunting for firewood. They risk being troubled by snakes and predatory men and miss out on opportunities for more productive work. Studies cited by the government suggest that half a million Indian women die each year as a result of respiratory illnesses caused by inhaling noxious smoke. So the public has responded enthusiastically to a campaign this year to use $1.3bn, part of a windfall from the drop in the price of oil (of which India imports 81% of its needs), to provide it with cleaner-burning subsidised liquefied petroleum gas (LPG). + +Dharmendra Pradhan, the petroleum minister, says more than 10m middle-class Indians have responded to a “GiveItUp” campaign and volunteered to transfer their small LPG subsidy to a mother living below the poverty line. Within three years he aims to supply LPG to 50m poor households. He calls it “energy justice”, and it looks like a vote-winner, though delivering LPG reliably across India’s vast hinterland will be hard. + +The oil industry will lap up the story. After all, the IEA says that India, which currently consumes less energy per person than Africa, will become the engine of global growth in oil demand by the mid-2020s as its economy grows and its population becomes the biggest in the world. + +China, too, will keep rigs drilling across the globe. Over the past decade it has accounted for 60% of the world’s growth in oil consumption, helping to push up prices until they collapsed in 2014. Though Chinese growth will slow and the oil intensity of both China’s and India’s economy will decline, the IEA, in forecasts that assume the 2ºC global-warming target will not be met, reckons that by 2040 China will consume 4.1m b/d more than it does now, and India 6m b/d. + +Other emerging markets are also expected to consume more oil as economic growth boosts demand for mobility and petrochemicals. There is plenty of scope to reduce energy poverty. Bernstein, the research firm, says that rich countries, on average, consume 10-25 barrels per person per year, compared with 1-3 barrels per person in poorer countries. It predicts that the global vehicle fleet will double from 1bn to 2bn over the next 25 years, mostly thanks to rising income per person in developing countries, which is expected roughly to offset the drop in demand for petrol in the West. Demand for diesel to power trucks in emerging markets will continue to rise. So will the use of kerosene for aircraft: in both China and India the number of journeys by air is soaring. + + + +Yet the industry’s prospects in developing countries may not be as uniformly rosy as they appear. India’s early development was built on the railways. Its car fleet, at less than 20 vehicles per 1,000 inhabitants, is paltry—about the same as America’s at the time of the first world war. When asked if India’s energy consumption will follow the same pattern as in rich countries, Mr Pradhan bridles: “Why should we do things the same way as other countries? Why should we think the car is the only form of transportation? We want to develop our own model.” + +In both India and China, air pollution and congestion in the biggest cities are already appalling, which will limit the scope for a richer population to buy ever more cars. Moreover, China’s climate-change commitments, laid out in pledges in advance of the Paris summit last year, indicate a desire to lead efforts to reduce global warming. India has at least signalled that it will take part, though hesitantly. + +King Coal’s long arm + +India still relies on coal for 58% of its primary energy needs. It hopes to reduce its dependence on oil (28% of the mix) by 10% by 2022, and plans to double the share of natural gas from 7% to 15%. It intends to rely increasingly on liquefied natural gas (LNG) instead of oil. Within six years it aims to more than double its capacity to turn LNG back into piped gas, and has plans to lay 15,000km of new gas pipelines. Civil servants in the petroleum ministry (one of a handful of fuel ministries) talk of turning India into a gas-based economy. But that sounds futuristic, given that cheap coal underpins power generation in India, and its use is expected to keep on growing. + +The government hopes to deploy gas as an alternative to oil-based products in transport as well as for power generation, though this plan may suffer a knock if gas prices rise, which they eventually will. The change of direction is already visible on the streets of New Delhi. All public transport, taxis, rickshaws and many private cars have been converted to compressed natural gas (CNG), which is cheaper and cleaner than diesel or petrol. The drawback is long queues at petrol stations, because a tank of CNG takes a long time to fill and there are not enough pumps. + +The government is also developing LNG as an alternative to diesel in long-distance trucking, working with Tata, the country’s largest conglomerate, says Mr Pradhan. In the meantime it plans to use bamboo and other natural products to produce biofuels such as ethanol to blend with petrol. In recent years it has scrapped subsidies for petrol and diesel, and by 2020 it hopes to tighten up the fuel-efficiency standards for the country’s vehicle fleet. All this will be hard to pull off, but suggests that India’s demand for oil may be more constrained than the industry hopes. + +On your electric bikes + +It is a similar story in China. Though car sales rose by a whopping 24m in 2015, density, at about 120 vehicles per 1,000 people, is still up only to America’s in the 1920s. So the demand for oil is bound to rise, but the pattern of consumption will change. Wang Tao, of the Carnegie-Tsinghua Centre for Global Policy in Beijing, says sales of petrol will balloon even though new cars are becoming more efficient, vehicle-emissions standards are getting stricter and some cities are imposing tighter curbs on buying new cars to keep down pollution and congestion. At the same time diesel, used in industry and for road freight, is slumping as the economy moves towards services and light manufacturing. + +Like India, China is promoting LNG for long-distance buses and lorries and CNG for light vehicles. Growth in the use of both fuels suffered a sharp slowdown last year as oil prices fell, but is expected to recover. Mr Wang says the biggest problem in developing the gas market in China is that the pipelines are owned by state-owned monopolies, which bars private companies from moving in and offering more competitive prices. + +On the streets of big Chinese cities, the most eye-catching development is the surge in electric bikes, which cause far less congestion than cars and hardly any pollution, though their owners’ traffic etiquette is as poor as that of any car driver. (Delhi, not to be outdone, has acquired a new fleet of e-rickshaws). The IEA puts the number of electric bikes in China at 200m, nearly double the number of cars. They cater for workers who cannot afford cars, and overcome a problem that many public-transport users in big cities face: a long walk to and from the station. + +Mr Wang says one of their attractions is that, unlike electric cars, the government has not promoted them. They represent an innovative, free-market approach to a blue-collar problem. The downside is that city authorities in Beijing and elsewhere are cracking down on them and even considering bans, because they see them as a nuisance for cars and pedestrians. + +This article appeared in the Special report section of the print edition under the headline Different drinking habits + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21710633-consumption-patterns-asia-will-not-replicate-those-west-where-indias-and-chinas/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Heading for the twilight + +When oil is no longer in demand + +A glimpse of a post-oil era + +Nov 26th 2016 + + + +STEWART SPENCE WAS a young hotelier in Aberdeen in 1971 when he first realised what an oil rush meant. His hotel, the Commodore, was the only one in the Scottish city with en-suite bathrooms. One day an American oil executive strode in, wearing denims, cowboy boots and a stetson. Once assured that the bedrooms had private facilities, he booked 20 rooms for six months and paid upfront by banker’s draft. The American, boss of an oil-services company called Global Marine, was ferrying three oil rigs from the Gulf of Mexico to Aberdeen. Thus began Scotland’s North Sea oil boom. Steak houses, cigars and words like roughneck and roustabout took hold. Texans famously drank Dom Pérignon champagne out of pint mugs. They lived the high life until oil prices crashed in 1986. Then they disappeared almost as swiftly as they had come, says Mr Spence. + +Since those days oil has brought both boom and bust to Aberdeen, but never before the sense of despondency that grips the city today. In 2012 it had more multi-millionaires per 100,000 people than London and the world’s busiest heliport, taking workers to and from the rigs. But the oil-price crash in 2014 drove home the fact that after almost half a century of exploitation, many of Aberdeen’s offshore fields have become too expensive to be sustainable. The number of jobs has plummeted, and some oil producers are on the brink of bankruptcy. + +As the world enters what could be the twilight of the oil age, some wonder whether Aberdeen’s travails could be a harbinger of things to come in oil-producing regions across the world. Mr Spence thinks so. He still runs the smartest hotel in Aberdeen and is about to install a charging station for electric vehicles. + +Not so fast, say many oil-industry veterans. They accept that high-cost oil regions like Scotland’s North Sea, Canada’s oil sands and the Russian Arctic may be in trouble, but expect at least one more oil boom, born from the ashes of today’s bust, because there has been so little investment in the past two years to open up new sources of supply. Within the next couple of years, they think the market will once again swing from glut to shortage. The biggest beneficiaries will be producers in places with low-cost, abundant oil such as the Middle East, America’s Permian basin, Brazil’s pre-salt fields and parts of west Africa. But although those regions may see a boom in investment, it would be short-lived, because long-term demand is falling and the market could quickly become oversupplied. + +After dark + +When it comes, what might a terminal decline in the use of oil mean for the industry, governments and the world at large? The biggest turmoil would be felt in oil-dependent developing countries. As Jason Bordoff, of Columbia University’s Centre on Global Energy Policy, notes, the social stresses now evident in budget-strapped petrostates such as Venezuela and Nigeria are a hint of things to come. Gulf countries would accelerate their efforts to diversify their economies away from oil, as Saudi Arabia is already doing. America might rethink its “oil-for-security” geopolitical bargain with that country. Lower oil revenues could increase instability in places like Iraq. + + + +Oil companies, for their part, will have to explore new lines of business + +Oil companies, for their part, will have to explore new lines of business. The North Sea provides a glimpse of some of the opportunities that lie ahead. Near Aberdeen, firms such as Royal Dutch Shell are decommissioning parts of the spectacular network of rigs and pipelines installed in the 1970s. Andrew McCallum, an adviser to Britain’s regulator, the Oil and Gas Authority, says oil companies could deploy their decommissioning skills on projects around the world. + +Look to Norway + +Statoil, the Norwegian state oil company, has set an example of what oil companies might do in future. Earlier this year it acquired a lease to build the world’s largest floating wind farm 15 miles off the coast of Peterhead, north of Aberdeen. Each of its five 6MW turbines will be tethered to the seabed on a floating steel base, enabling it to operate in deeper water than a conventional turbine embedded into the sea floor. That will give it access to stronger winds farther offshore, making it cheaper to produce electricity. + +Back in Norway, Statoil also operates two projects to store carbon dioxide under water, in some of the most advanced examples of a technology seen as key to removing greenhouse gases from the atmosphere: carbon capture and storage (CCS). This is costly and still in its infancy, and governments have supported it only erratically. In 2015 a mere 28m tonnes of CO2 was stored that way. To help meet the 2ºC limit, the IEA says the world needs to store a whopping 4bn tonnes a year by 2040. + +Biofuels are another way to diversify. At the North Sea port of Rotterdam, Neste, a Finnish refiner, ships in waste fats from the world’s slaughterhouses and converts them into biodiesel for the haulage and aviation industry. It costs more than regular diesel, but under EU rules member countries’ fuel mix must include 10% biofuels by 2020. Neste’s boss, Matti Lievonen, recalls that in 2012 nine-tenths of his company’s operating profit came from refining fossil fuels, whereas now renewables account for 40%. + +Not all oil companies want to be innovators. Many plan to develop more gas, but also insist that the world’s demand for oil as feedstock for petrochemicals will keep them in business even if demand from cars wanes. The IEA predicts that petrochemicals will raise demand for oil by almost 6m b/d in the next 25 years. Oil companies are putting pressure on governments to impose carbon taxes, believing them to be the best way to kill off coal and boost natural gas, at least until renewable energy and batteries have come of age. So far governments have shown remarkably little appetite for such taxes. The IEA calculated that carbon markets covered only 11% of global energy-related emissions in 2014. In contrast, 13% of emissions were linked to fossil-fuel use supported by consumption subsidies. + +Transport fuels are more widely taxed, but at vastly different rates, ranging from high in Europe to low in America and China. Experts say that in America it is easier to regulate fuel consumption via vehicle-efficiency standards, which consumers notice much less than fuel taxes. + +The crucial, and underappreciated, players in the future of oil are consumers. Their choices, at least as much as those of producers and governments, will determine its ultimate fate, because oil fuels the industries that make goods for them, the trucks that deliver those goods, the cars they drive and the plastic objects that clutter their homes. + +This special report started by recalling how the horse was displaced by the car. Urban planners failed to find ways to reduce the horse-manure problem. Governments paved roads, put up traffic signs and introduced legislation that allowed the motor car to establish itself. Yet it was the allure of the Model T for millions of consumers that finally drove the horse off the road. + +Similarly, oil companies may turn their attention to alternative fuels, governments may tinker with fuel taxes and congestion charges, battery costs may come down with a bump and the electricity grid may be converted to run on sun and wind. But none of these developments alone will end the oil era. Only when entrepreneurs can capture the public’s imagination with new vehicles that transform the whole travel experience, rather than just change the fuel, will the petrol engine run out of road. + +This could happen with electric self-driving cars, which may eventually become not just four-wheeled travel pods but mobile offices, hotels and entertainment centres, running noiselessly through city streets day and night. Or it could be some other futuristic innovation. A new play in London, “Oil”, predicts that the hydrocarbon age will end with the Chinese mining helium-3 on the Moon to fuel nuclear-powered cars and homes on Earth. Whatever your particular fantasy, there are bound to be more oil wars and oil shocks. But it will be when the internal-combustion engine eventually loses its remarkable grip on the world’s roads that the age of oil will come to a screeching halt. + + + +This article appeared in the Special report section of the print edition under the headline Into the twilight zone + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/special-report/21710634-glimpse-post-oil-era-when-oil-no-longer-demand/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Business + + + +The Trump Organisation: Deconstructing Donald [Thu, 24 Nov 16:30] + +Samsung: Ponying up? [Thu, 24 Nov 16:30] + +Facebook’s woes: The Mark of the social beast [Thu, 24 Nov 16:30] + +Silicon Valley and food: Pie in the sky [Thu, 24 Nov 16:30] + +Consumer goods: The riches in returns [Thu, 24 Nov 16:30] + +Emirates and the A380: Flying low [Thu, 24 Nov 16:30] + +Schumpeter: Status contentment [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Deconstructing Donald + +Donald Trump’s conflicts of interest + +The weakness of Trump Inc may pose more of a problem than its sprawl + +Nov 26th 2016 | NEW YORK + + + +THE NEW Trump Tower in Worli, a buzzing district of Mumbai, looks like any building site but its marketing sells a dream. A golden structure soars to the sky alongside a picture of Donald Trump. He is—potential residents are assured—the gold standard around the globe, a dealmaker without peer who operates across the gateway cities of the world and the man who built the American dream. Until a few days ago the developer, Lodha, carried a message on its website: “Congratulations Mr President-elect”. But now that a storm has blown up over the possible conflicts of interest between the various operations of Mr Trump’s group and his new job, it has been deleted. + +The self-embellished legend is of a global tycoon. In a kind of mirror image, outraged suspicion is mounting that the Trump Organisation could morph into a vast global network of cronyism. America has been treated to reports of multi-billion dollar projects across the planet, to photos of Mr Trump glad-handing businessmen and to images of exotic, Trump-branded buildings standing like monuments to the decay of American ethics. Paul Krugman, a left-of-centre economist, has suggested that the Trump family could reap $10bn while its patriarch is in office. + +The president-elect’s unconventional methods mean it is too early to say if that will even begin to come to pass. But understanding the threat requires a sober view of his firm. Far from being a global branding goliath, it is a small, middle-aged and largely domestic property business. If Trump family members are to make a second fortune in the next four years, they will have to reinvent a mediocre firm. It could even be the weakness rather than the potential of their company that is most likely to motivate Mr Trump to blur the line between politics and business. + +Information on the Trump Organisation is mainly limited to Mr Trump’s filings with election monitors. The Economist has aggregated the financial data of 170-odd entities, which were filed in 2015. For some assets the filings only provide a range of values and revenues, so we have added our own estimates and those of third parties. + +Start with size. Trump Inc is worth perhaps $4bn, with $490m of annual revenue. Were it listed it would be the 833rd-largest firm in America by market value and 1,925th by sales. Other occupiers of, and contenders for, high political office—including Nelson Rockefeller, Ross Perot, Mitt Romney and Michael Bloomberg—have owned and run more powerful firms. + +About four-fifths of that value sits in residential and commercial properties, including golf courses, owned by the Trump Organisation. Half of the group’s entire worth consists of five buildings: Trump Tower and two other Manhattan buildings, and passive stakes in two offices in New York and San Francisco that are controlled by Vornado, a real-estate trust that is entirely separate. + +The group’s branding operation is puny, generating only 11-13% of its asset value and sales. Its largest individual source of fees is Panama, where there is a Trump-branded hotel. The Mumbai project has paid annual fees of about $550,000 for the Trump brand. Hotels in Toronto and Manila also paid modest sums. It is also a domestic affair: 66% of the Trump Organisation’s value is in New York and 93% is in America. Mr Trump created its best assets over a decade ago. His directorships inside the group rose from 235 in 2007 to almost 500 last year, as entities such as China Trademark LLC and Trump Marks Egypt LLC were formed. But few of these vehicles generate income; if anything, they are evidence of disorganisation and disappointed ambition. + +Second rate on Fifth Avenue + +The Trump Organisation could now profit from the presidency in two ways. First, the profits of existing assets could rise. The Economist has obtained data on hotel-room prices from an online travel agent. If the value of the Trump brand had risen during the election campaign you might expect a surge in prices. During 2016 the average room rate per night for a Trump-branded hotel in America fell by 1%, in line with other 4- to 5-star hotels. True, in November there has been a 12% spike in prices compared with a year earlier (see chart). But even if this is maintained it is unlikely to flow directly to the group’s bottom line. Most hotel-franchising fee deals are long term and insensitive to trading conditions. Likewise the tenants of commercial office properties that Mr Trump owns will have long-term leases. So even if the prestige of the brand rises, it may take many years—more than four—for that to translate into higher cashflow. + + + +What has risen fast is the volume of rooms sold in the group’s hotels, which is up by an average of 40% in 2016. That is due mainly to the opening of a hotel in Washington, DC which, unusually, Mr Trump owns. And that in turn illustrates a simple fact: to profit from Mr Trump’s stint in office, the Trump Organisation will have to rely on a second approach, creating new, majority-owned assets and projects. + +Negotiating a rash of new hotel, golf course and skyscraper deals would be hard. The commercial real-estate market in New York is soft: having risen by an average of 9% a year in the past half-decade, rents have been flat in 2016. The number of Americans playing golf has dropped by a fifth since 2005. The global hotel industry is saturated after a 20-year building boom. Trump Inc’s record of finishing projects and picking partners is patchy—a big development in Baku, the capital of Azerbaijan, has stalled, for example. + +A new problem may be bank finance. Big banks play a vital role in the industry: Lodha, the Indian developer, says JPMorganChase is an investor in its projects; Mr Trump owed over $120m to Deutsche Bank according to his 2015 filing. If new Trump projects are subject to claims of conflicts and cronyism, global banks that are exposed to litigation and congressional hearings in America may not stump up. Loans from state-owned banks in the emerging world may be prohibited by the constitution’s ban on payments to the president from foreign governments. + +Poor performance could prompt Trump Inc to try and diversify into less capital-and-debt intensive products sold directly to consumers. Mr Trump’s daughter, Ivanka, runs a fashion and jewellery brand. If Mr Trump’s children take over management of the firm, as he proposes, they may feel liberated to experiment. + +It seems likely that President Trump will inevitably blur the lines between business and politics in potentially disturbing ways—expect grubby deals and murky meetings. But it is less clear that his firm’s value will soar. With old assets in mature industries, a patchy record, disrupted management and controversies over conflicts of interest, Trump Inc’s value could stagnate or fall. And that, rather than the thrill of fresh billions, could be what really distracts America’s new leader. + +This article appeared in the Business section of the print edition under the headline Deconstructing Donald + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21710828-weakness-trump-inc-may-pose-more-problem-its-sprawl-donald-trumps-conflicts/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Ponying up? + +Samsung is sucked into South Korea’s political crisis + +South Korean prosecutors probe presidential bribery claims + +Nov 26th 2016 | SEOUL + + + +IT WAS the third raid on the Samsung group in as many weeks. On November 23rd state prosecutors combed more offices of the South Korean consumer-electronics firm, part of a probe into an influence-peddling case that could be the undoing of President Park Geun-hye’s administration. The deepening inquest compounds a miserable few months for Samsung, which recently recalled 3m faulty washing machines and killed a new line of Galaxy Note phones after dozens exploded due to flawed batteries. + +Last week prosecutors accused Ms Park of conspiring to coerce 50-odd companies to funnel 80bn won ($70m) to two foundations, Mir and K-Sports, controlled by Choi Soon-sil, a confidante indicted for abuse of power. The biggest grant, 20.4bn won, came from Samsung. Prosecutors suspect that it funnelled a further €2.8m ($3m) to Ms Choi through Widec Sports, a German company she used to buy horses and equestrian lessons for her daughter, a dressage athlete. + +Investigators had said that the firms, including many in the pantheon of South Korean business, such as Lotte, a retail giant, and SK Group, a conglomerate, both of whose offices were raided this week, paid up to avoid blowback like tax audits. Now prosecutors appear to be probing allegations of kickbacks. This week they also raided the offices of the state-run National Pension Service (NPS). According to Yonhap, a news agency, they suspect Ms Park’s office of pressuring the NPS to vote for a merger in July 2015 between Cheil Industries, a Samsung business, and Samsung C&T, its construction arm. As C&T’s biggest shareholder, the NPS’s vote was decisive. + +The merger was contentious because of a huge disparity in the two firms’ valuations. Through cross-shareholdings, it allowed Lee Jae-yong, son of Lee Kun-hee, Samsung’s chairman, to gain stakes in key affiliates at no extra cost. Advisory firms such as ISS pressed C&T shareholders to reject it; Elliott Management, an American hedge fund, fought it. + +The NPS this week defended its vote for the merger. Samsung only confirmed the raid had happened. The group has not been under such scrutiny since it was last raided, in 2008. That year the elder Mr Lee was indicted for tax evasion and breach of trust. He stepped down, spent no time in prison and returned to the helm within two years after a pardon from then-president Lee Myung-bak. + +This article appeared in the Business section of the print edition under the headline Ponying up? + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21710827-south-korean-prosecutors-probe-presidential-bribery-claims-samsung-sucked-south-koreas/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Fakebook + +False news items are not the only problem besetting Facebook + +A falling share price, privacy policy and advertising metrics also keep Mark Zuckerberg busy + +Nov 26th 2016 + + + +“MARK ZUCKERBERG, dead at 32, denies Facebook has problem with fake news.” The satirical headline, which made the rounds online this week, nicely encapsulates the most recent woes of the world’s largest social network: its algorithms, critics say, filled users’ newsfeeds with misinformation—and in the process influenced the American election result. But this is not the only problem the firm is grappling with. A volatile share price, privacy policies and advertising metrics have also kept Mr Zuckerberg (pictured) busy. + +“News” that the Pope had endorsed Donald Trump or that a pizzeria in Washington, DC, is the home base of a child-abuse ring led by Hillary Clinton, were not confined to Facebook (nor were fake stories only a right-wing phenomenon). They often originate elsewhere, for instance on fake-news websites in Macedonia, which make good money via online ads, and on Twitter. But Facebook’s algorithms give prominence to such misinformation. They are tuned to maximise “engagement”, meaning they present users with the type of content that has already piqued their interest, as outrageous headlines tend to do. + +Yet despite all the attention given to fake news, the other problems probably have Mr Zuckerberg just as worried. On November 18th, to the surprise of many, Facebook announced that it would buy back up to $6bn of its shares. That seemed to be in reaction to a 10% drop in its share price since it warned earlier this month that growth next year would be slower and margins lower, as ad space on its services gets tighter and it invests heavily in data centres. The buy-back signals that Facebook considers its shares undervalued, says Mark Mahaney of RBC Capital, an investment bank. + +A couple of days earlier, Facebook had to admit flaws in how it measures its traffic (for the second time in just a few weeks, after disclosing that it had overestimated the average viewing time for its video ads). This time it said that other numbers, including the quantity of clicks from Facebook posts to apps or websites, were smaller than previously stated. Although this did not lead advertisers to overpay, they are likely to make new demands of Facebook, for instance to provide more data about exactly how its ads are viewed. + +It has also emerged that Facebook has “paused” the ongoing process of merging its data with those of WhatsApp, the messaging app it bought in 2014 for $19bn in shares. When the takeover was announced, Jan Koum, WhatsApp’s founder, promised users their data would stay apart. In August Facebook reneged on the pledge, which upset various privacy watchdogs in Europe. In September the city of Hamburg’s data-protection commissioner issued an order that stops Facebook collecting data from German users of WhatsApp. + +Whether all this will have a discernible impact on Facebook’s finances is a matter of debate among analysts. If advertisers have extra money to spend they do it where they get most bang for their buck, which, Google aside, is Facebook, says Peter Stabler of Wells Fargo Securities. In contrast, Brian Wieser of Pivotal Research recently wrote that the focus on fake news and the concerns over the measurement of advertising could well cut revenue growth by a couple of percentage points. + +Whatever happens, Facebook’s heft ensures that it will remain in the firing-line. It has nearly 1.8bn monthly users, or about half of the internet population, and it serves up much of what people read online. Whereas Google dominates the market for ads related to online search, Facebook rules the one based on consumers’ online profiles. Together both firms accounted for all new online ad spending this year, according to Mr Wieser. + +With immense size comes intense scrutiny. Yet it is not clear whether Mr Zuckerberg fully grasps this. When first asked about the role of fake news in the American election campaign, he said it was a “pretty crazy idea” to think Facebook had an impact on voters. Only when Google said last week that it would bar fake-news sites from using its ad services, did it take the same step. + +In a blog post on November 19th Mr Zuckerberg both set out how the social network would deal with the problem and insisted that Facebook itself does not want to decide whether something is fake or not. But it emerged a few days later that Facebook has already developed a censorship tool, to be used in China should the firm be allowed back into the country, underlining that it knows precisely how to filter its content when it wants to. + +Some of these issues are easier to deal with than others. It should be straightforward enough to deal with any suggestion that Facebook is tricking advertisers. Answering the accusation that it is hurting democracy and violating people’s privacy raises far harder problems. In America almost half of adults now get their political news on Facebook. No other online firm, not even Google, has more data about consumers. More transparency would improve things across the board. So would an acceptance by Mr Zuckerberg of just what a heavy responsibility he now bears. + +This article appeared in the Business section of the print edition under the headline The Mark of the social beast + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21710835-falling-share-price-privacy-policy-and-advertising-metrics-also-keep-mark-zuckerberg/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Pie in the sky + +Technology firms may struggle to disrupt the food business + +Zume tries to reinvent America’s $34bn pizza business, one robot at a time + +Nov 26th 2016 | MOUNTAIN VIEW + + + +THE office parks of Silicon Valley boast many firms that are trying to change the world. But there are plenty with more modest goals. Zume Pizza, a tiny startup that is located a few miles from the sprawling headquarters of Google, wants to redesign the way pizzas are made. Zume has programmed robots to make pizzas that are then put into a van and baked as they hurtle towards customers. Ovens are timed to finish cooking in sync with the vehicles’ arrival at their destination, so the pies are always piping hot. + +In recent weeks spies from rival pizza companies and from food-delivery firms have been driving by in unmarked cars taking photographs of the office and the vans, says Julia Collins, one of Zume’s co-founders. To protect its business, the startup has patented the whole process of cooking food in ovens while a vehicle is moving (the patent probably gives Zume defensible intellectual property, says one patent lawyer). The company only operates in Mountain View, but has expansion plans. Since its founding last year it has reportedly raised $6m from investors, among them Jerry Yang, a co-founder and former boss of Yahoo, an early giant of the internet. + +Tech entrepreneurs have not spared the food industry, but their principal focus has been on delivery services. Actually making the food represents a fresher opportunity. Restaurant chains have been slow to invest in technology themselves because the cost of labour is usually fairly cheap, says John Glass, an analyst at Morgan Stanley, a bank. They have spent money on mobile payments and on online ordering, but there is scope for more innovation. + +Disrupting food is not easy, however. The Melt, a fast-food chain that specialises in grilled cheese sandwiches, has boasted about its proprietary technology, including a “smart box” that it developed with former engineers from NASA to keep sandwiches warm during deliveries. The chain has not been a great success and it has replaced its chief executive. Another startup, Hampton Creek, which has raised more than $120m from venture capitalists in order to create a vegan, environmentally-conscious version of mayonnaise and other kitchen staples, is now reportedly facing an inquiry into whether it bought its own products to inflate lacklustre sales figures (its CEO has denied any such purpose). + +It is entirely possible that Zume has anticipated the eventual, widespread adoption of robots in restaurants, together with new systems for cooking meals. But startups face several big hurdles to success. + +Scale is hard to achieve. Zume may not be able to afford many robots, which move the pizzas off a conveyor belt in its office-cum-factory after spraying them with tomato sauce. Humans still add the toppings before the pies go into the vans. The robots cost around $100,000 each, or the equivalent of hiring two experienced employees for a year, says Alex Garden, Zume’s other co-founder. He reckons that buying them will pay off rapidly. That may be true, but Zume’s strategy is a capital-intensive one by the standards of most digital companies; it also owns all of its vehicles. + +Competition is of course fierce. It will take a long time for Zume to make any dent in the share of big established brands. The largest firms—Domino’s, Pizza Hut and Papa John’s—have in recent years taken even bigger slices of the pizza market, which is worth an estimated $34bn in America. Such giants will surely start investing in technology properly in time. Tech-enabled delivery services also have lots of heft. One, Postmates, recently raised around $140m. + +And reinventing food can be fraught. Zume’s product has the familiar taste of average pizza. But technologists can get things badly wrong. Soylent, a startup that offers drinkable meals that are popular among engineers who are too busy coding to eat, has recently stumbled. The algae it included in some of its products turned out to cause stomach problems. Food may be one realm where people do not mind getting stuck with version 1.0. + +This article appeared in the Business section of the print edition under the headline Pie in the sky + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21710766-zume-tries-reinvent-americas-34bn-pizza-business-one-robot-time-technology-firms-may/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The riches in returns + +The business of reselling returned shop items + +What happens to all the goods shoppers don’t want + +Nov 26th 2016 | NEW YORK + +Can I send him back, too? + +IN STORES and warehouses across America, they wait: towers of toys, scarves piled on scarves, box upon box of shoes. The official start of holiday shopping in America begins on “Black Friday” on November 25th. Retailers hope to sell more than $650bn of goods this season, roughly the annual economic output of Switzerland. Ideally, companies’ supply of products would precisely match demand for them. In reality millions of items will stay on shelves or get sent back after purchase—in all of 2015 Americans returned goods worth $261bn, out of a total $3.3trn sold. What happens next? + +Some returned goods will be resold by the very same retailer, but many will not. By the time an item is returned it might be either damaged or stale, points out Steven Barr of PwC, an accounting firm and consultancy; shops might want to offer newer wares. And resale is not an option for the stacks of goods that are never sold at all. + +For retailers and manufacturers, this is a big headache. Dealing with unwanted goods can amount to a tenth of the cost of making and distributing them in the first place. But for a whole string of logistics firms, discount chains, brokers, dollar stores and more, they are a big earner. + +Logistics giants are vying with each other to make returns as speedy and simple as possible. Last year, for example, FedEx spent $1.4bn to buy GENCO, a specialist in so-called “reverse logistics”. The world’s top clothing retailer is now TJX, which snaps up surplus inventory and shifts it at a discount. Lots of smaller firms make money from returned goods, too: a motley collection of companies transport, evaluate, dispose of and resell goods that mainstream retail has snubbed. Some have big backers. Last year KKR, a well-known private-equity firm, invested in a company called Channel Control Merchants, which calls itself an “extreme-value” retailer and exporter of excess inventories. + +There are many paths for a rejected item to take. The most sophisticated firms plot possible routes in advance, before goods even go on sale, so that a product can be redirected quickly once it is rejected and sent to a warehouse. For example, GENCO and JDA Software, a company based in Arizona, each offer computer programs that ask questions of warehouse workers to help them decide where various products should go next. + +Many excess goods suffer an uglier fate. Valuable ones are often incinerated or ground up to preserve a brand’s aura of desirability. Neither retailers nor brands divulge which products are subjected to such treatment. Many goods will end up going into landfill. + +The most eventful second life for returned products occurs when they are sold by the pallet or truckload. They are often mined for parts or overhauled in various ways to be ready for resale at low prices. That can even involve defacing them. Inmar, which offers an array of reverse-logistics services, is often asked to cut labels from apparel, so someone can’t try to return items to a store. Such anonymisation also leaves a brand untarnished, as its clothes are then flogged on a global bazaar for unwanted items that is known as the secondary market. + +This market is vast and complex. Sales for the American part alone reached just over $486bn in 2014, according to research by Dale Rogers of Arizona State University and Zachary Rogers of Colorado State University. Their measure includes many types of sales. Some take place within retailers’ outlet stores. A section of Amazon’s website sells “gently used” items at low prices. Dozens of small third parties are keen to buy excess inventory, too: there is the giant TJX but also small dealers that resell goods to the Amish in rural communities, among others. + +One complication is that retailers and manufacturers, who are keen to exert at least some control, set rules for the types of buyers they will allow. Some want to sell only to exporters. GENCO has some customers that want sales within America, but only at stores more than 50 miles from their own shops. + +Mr Rogers reckons that sales for the secondary market rose by 31% from 2010 to 2014 and that they are set to rise much further. More e-commerce means more returns, as customers buy goods without seeing them, often in several sizes, then send back what they don’t need. American e-commerce sales are expected to be about 50% larger in 2020 than they were in 2015. What the secondary market lacks in glamour, it makes up for in growth. + +This article appeared in the Business section of the print edition under the headline The riches in returns + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21710855-what-happens-all-goods-shoppers-dont-want-business-reselling-returned-shop-items/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Flying low + +The future of the A380 + +Three years ago Emirates rescued the A380 aeroplane. Its own problems now cast doubt on the super-jumbo’s future + +Nov 26th 2016 + + + +AT THE world’s major airports, plane-spotters often spend days waiting for the world’s largest passenger plane, the Airbus A380, to make an appearance. The nerds at Dubai International Airport are spoilt for choice. It is home to Emirates, an airline that owns 86 of the monster aircraft, almost half of the global A380 fleet. These planes have propelled Emirates from insignificance a decade ago to its position as the world’s biggest carrier (measured by international passenger mileage in 2015). Now the airline has hit a rough patch. That is bad news for Airbus, the European aerospace and defence giant which makes the A380, and for the plane itself. + +Demand once seemed insatiable for flights through Emirates’ hub in Dubai, which is known in the industry as a “super-connector” airport. Now its location helps explain the airline’s difficulties as well as its spectacular past growth, says its president, Sir Tim Clark. When he helped set up the airline in 1985, he says, Dubai was “an enchanting Arab village” that generated little air traffic. Instead of filling up the planes with locals, his strategy was to use its position halfway between Asia and Europe to connect flights between cities that lacked obvious links, such as Cairo and Shanghai or Moscow and Cape Town. + +Connecting these “strange city pairs”, as he puts it, led to soaring passenger numbers. A string of purchases of A380s, starting in 2008, helped traffic to more than double to 51m in 2015. Good airport facilities and access to cheap labour (even expatriate pilots are inexpensive in Dubai because of low taxes) contributed to profits as well: the airline has the lowest costs of any long-haul carrier in the world. + +But over the past year or so problems have mounted. Low oil prices have hit the economies of many of Dubai’s neighbours, reducing regional passenger traffic. Terrorist attacks in cities and airports in Europe and the Middle East have dampened tourism activity generally. + +Although Dubai itself is safe, conflict in Iraq, Syria and Yemen, as well as Turkey’s attempted military coup in July, are prompting passengers to choose other connecting cities. Currency volatility has also meant abrupt drops in revenue on some routes. “We used to have one of these business-damaging events once a year but now we have them more than once a month,” groans Sir Tim. In the year to March, Emirates made a record $1.9bn in profits, but since April its earnings have tumbled by 75%. Weak demand has forced it to slash its fares to keep planes full. + +Emirates can take some solace from the fact that its super-connector rivals in the Middle East—Etihad of Abu Dhabi, Qatar Airways and Turkish Airlines—are also hurting. Turkish Airlines has had to suspend flights on 22 routes and mothball 30 planes. Industry analysts reckon the airline will this year suffer its first annual loss for a decade. Qatar and Etihad may also end up in the red. + + + +Tricky geopolitics is nothing new for Emirates, which was founded during the Iran-Iraq war, argues Sir Tim. Dubai is trying to boost its own tourism industry, which should help replace some of the connecting passengers the airline is losing. No one doubts that it will pull through. + +Emirates’ appetite for the A380 is a different story. That may dwindle more quickly than Airbus had anticipated. On December 2nd the first planes in a new batch of super-jumbos are due to arrive in Dubai. In total, Emirates has a further 56 A380s on order: 31 are to be delivered between now and 2019, with another 25 due to arrive in the 2020s to replace older ones nearing retirement. Emirates rescued the A380 programme with its last big order in 2013. The airline had wanted to buy another 200 A380s equipped with more fuel-efficient engines. But in current conditions Sir Tim says there is little chance of his airline making another large order anytime soon. + +Airbus has orders for only another 18 super-jumbos from other airlines that are likely to be delivered and paid for, according to Richard Aboulafia of the Teal Group, a consultancy in Virginia. The manufacturer has already cut planned production, but may still run out of customers for even this diminished number. + +So Airbus is on the hunt for new buyers in China and Japan, places where runways are most congested and the need for larger planes is most acute (the firm originally gave the A380 its name because eight is considered lucky in some Asian countries). Chinese airlines have only bought five so far but the hope is they might buy more now that the country’s aviation regulator, a noted super-jumbo sceptic, retired earlier this year. If they are not willing to step up, as Emirates once did, plane-spotters will have even more reason to cherish their sightings of the A380. + +This article appeared in the Business section of the print edition under the headline Flying low + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21710850-three-years-ago-emirates-rescued-a380-aeroplane-its-own-problems-now-cast-doubt/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Schumpeter + +The sharing economy brings tycoon lifestyles within reach of some + +Thanks to companies such as NetJets, GetMyBoat and ThirdHome.com, the merely rich can upgrade to the lifestyles of the ultra-wealthy + +Nov 26th 2016 + + + +LAMENTING the rise of inequality is one of the few growth industries in an age of stagnation. One authority on the American wealthy, Robert Frank of CNBC, a TV channel, worries that the rich are “floating off” into their own country. Chrystia Freeland, a journalist-turned-politician, frets about the rise of the “new global super-rich” and the fall of everyone else. Charles Murray, America’s gloomiest social scientist, warns that society is “coming apart” as the rich retreat into their gated communities. + +At the top of the income scale, however, a small counter-trend is observable. Never before have so many people been able to get access to the accoutrements of tycoonery—private planes, luxury yachts, fancy cars and interior-designed, exclusive homes. There is only so much comfort to be had from the fact that it is easier for the merely rich to lay claim to the lifestyle of the super-rich. But as a result of a combination of new technologies and businesses, that is nonetheless what is happening. + +Tycoon living begins with a private jet. Whereas yachts are dispensable (not everyone wants to float around for weeks with the same dinner companions) private jets are necessities for the aspiring billionaire. They save valuable time. Even first-class passengers have to wait an hour or so for their flights. Private-jet owners can turn up when they want and climb on board. The planes can double as flying offices, and you don’t have to worry about other passengers eavesdropping on your deals or objecting to your spreading papers. The flight is smoother (private jets typically fly at 45,000 feet), the seats are more throne-like, and you can bring your pets. + +No longer do you need a net worth in the hundreds of millions of dollars to have one. With 700 jets, NetJets is now the fifth-largest airline by number of planes, after Southwest Airlines, and it has access to thousands of private airports. Its main innovation was to apply the principle of fractional ownership, or time-sharing, to the ultimate executive tool. Customers buy a share in a jet which entitles them to, say, 200 hours of travel a year. + +NetJets is skilled at providing its rich clients with an entrée into the cultural world of the super-rich, with hard-to-get tickets to events such as Art Basel, a series of art fairs, and to private dinners with celebrities. The company is also finding ways to bring down the cost: one of its latest ideas is the private-jet equivalent of London Underground’s electronic ticket, the Oyster card. Rather than buying a share in a jet you can buy a pre-paid card that entitles you to a certain number of flying hours a year, with 25 hours’ worth of flights adding up to about €155,000 ($163,435). + +The sharing economy was hardly inspired by the needs of the rich. But in some ways it suits them perfectly. The whole idea depends on people having spare assets that they are willing to rent out to total strangers. Who has more idle assets than the super-rich? And who loves extra income more than people who have spent their lives accumulating money? On the other side of the market, bustling plutocrats are an ever-present source of demand for temporary accommodation and bursts of luxury. The system can even have a strange public-relations benefit. A wealthy boss who makes use of NetJets won’t need to explain to his shareholders why he bought a jet, even as he treats the one he flies on as though it were his own. + +Uber, a ride-hailing firm, and Airbnb, an accommodation-sharing service, are prominent in the luxury market as well as the mass market. Uber offers yacht trips in Dubai (UberYacht) and helicopter commutes in São Paulo (UberCopter). Airbnb does a booming trade in luxury apartments in London, Hong Kong and the Caribbean. There are providers in almost every cranny of the luxury landscape. GetMyBoat, a San Francisco-based company, gives customers access to motorboats, luxury houseboats, yachts and jet skis in 7,100 places around the world. Stratajet sells tickets on empty legs on private jets for the price of a business-class ticket or even less. Staller, which describes itself as the “Airbnb for horses”, helps horse-owners rent stalls near equestrian competitions. A home-sharing club called ThirdHome.com allows people with just a couple of homes to live as if they have a dozen. + +The same constraints that affect the wider sharing economy—NIMBY pressure groups who put their interests above the common good and regulators who fail to adapt to new technology—find echoes in the luxury market. With its helicopter service from Manhattan to the Hamptons, Blade has immeasurably improved the life of those New Yorkers who weekend on Long Island. That hasn’t prevented curmudgeons in Battery Park and Brooklyn Heights from complaining about the occasional whump-whump-whump over their heads. + +From merely rich to Uber rich + +Methods of managing wealth as well as consuming it are trickling down. Until recently only people called Rockefeller and Morgan could afford so-called “family offices” that manage their investments, taxes and charitable giving (and get entry into the best hedge funds). Now people with as little as $5m to invest can afford to do so thanks to a boom in so-called “multi-family” offices. Banks such as Citigroup have set up multi-family divisions. Even blue-blooded wealth advisers such as Rockefeller & Co, in Manhattan, are offering family-office services to the “merely” crowd. + +That things are getting better for more rich people does not contradict Mr Frank’s broader worry, but among the Art Basel class it is a notable shift. Once upon a time you had to be born rich to join the global elite. Then you had to make a hundred million dollars, and then the threshold rose to a billion. Now goods and services that used to be confined to a handful of tycoons are available to the millionaire or pretend-millionaire next door, thanks to the magic of the sharing economy. The super-rich may be floating off into their own country. But more people can join them, even if temporarily, than ever before. + +This article appeared in the Business section of the print edition under the headline Status contentment + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21710767-thanks-companies-such-netjets-getmyboat-and-thirdhomecom-merely-rich-can-upgrade/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Finance and economics + + + +Financial regulation (1): On fire [Thu, 24 Nov 16:30] + +Buttonwood: Charging the earth [Thu, 24 Nov 16:30] + +Financial regulation (2): Basel bust-up [Thu, 24 Nov 16:30] + +Japan’s bond market: Zero-sum game [Thu, 24 Nov 16:30] + +Global wealth: The one per center next door [Thu, 24 Nov 16:30] + +Currencies: Forward and backward [Thu, 24 Nov 16:30] + +India’s cash crunch: Short-changed [Thu, 24 Nov 16:30] + +Free exchange: Trend growth [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Bonfire of the rule books + +American bankers look forward to a bonfire of financial rules + +The presidential election may signal big changes to the way is finance is regulated + +Nov 26th 2016 | NEW YORK + + + +BEFORE the presidential election, Wall Street dreaded Donald Trump as a dangerous, unpredictable and disruptive, if improbable, president. Since his victory, fear has turned to hope. Stockmarkets are at record highs and shares in financial institutions have been among the best performers. Mr Trump, it turns out, looks to big finance like good news. + +Partly this reflects Mr Trump’s change of tack. He campaigned as the leader of a rustbelt revolt against the besuited, pampered elites. As president-elect, he seems less of an outsider. Among the rumoured names he has been mulling as his choice for treasury secretary are Jamie Dimon, boss of JPMorgan Chase, and Steven Mnuchin, a 17-year veteran of Goldman Sachs. Wall Street’s access to the corridors of power seems likely to be unimpaired. + +But the euphoria mostly reflects the finance industry’s excitement at one of the more achievable of Mr Trump’s campaign promises: to cut red tape. In a YouTube video this week outlining his priorities, he announced a new rule: for every new regulation, two old ones must be eliminated. No industry in America feels as browbeaten by regulators as does finance. It awaits the bonfire of the rule books with glee. + +In this context, a speech on November 18th by Mary Jo White, the outgoing chair of the Securities and Exchange Commission (SEC), amounted to a swansong for the Obama administration’s approach to finance. Clearing up the wreckage of the 2008 crisis, Barack Obama encouraged a punitive approach to the industry. (“You don’t want to mess with Mary Jo” was his character reference). In her speech she outlined a “new” and “unrelenting” model for combating white-collar crime. But she, and an entire layer of Obama-appointed regulators, are on their way out. + +By February, with the start of the Trump administration, their regulatory legacy may also be under threat—whether the celebration of large dollar settlements from errant institutions or the production of ever more rules. Defining this approach was the Dodd-Frank act, enacted in 2010, which Mr Trump has vowed to dismantle. The act is so sprawling that 30% of its 390 distinct rules have yet to be adopted, according to Davis Polk, a law firm. + +Even executed partially, Dodd-Frank had vast consequences. A study by George Mason University’s Mercatus Centre, using data up to 2014 (when only 59% of the rules had been adopted), showed that Dodd-Frank had already led to 27,669 new “regulatory restrictions”. This tally excluded components of Dodd-Frank too large to be quantified, such as Section 1502 which gave the SEC a role in monitoring corporate supply chains in the interest of blocking minerals from certain African countries. + +Dodd-Frank is so intricate that, like the institutions it is supposed to constrain, it seems too big to tame. In fact, it has three features that make it malleable—fragile, even. The first is that many of its rules must be implemented by agencies, which can thereby reshape them and pick and choose among them. The second is that the authority to do so is often protected from outside tampering. “The great irony of Dodd-Frank,” says J.W. Verret, a law professor at George Mason University, “is that all that discretion can be used to limit regulation.” + +This is particularly true because of a third characteristic. It funnels authority through a small number of crucial presidential appointments. Mr Trump will have the right to nominate a vice-chairman of the Federal Reserve in charge of regulation, displacing Daniel Tarullo, who is considered by many banks to be the single most important federal regulator. The new president will also be able to nominate every board member of the Financial Stability Oversight Council, a Dodd-Frank creation which determines which institutions are too big to fail. And he will be able to appoint the director of the Consumer Financial Protection Bureau, a controversial agency also spawned by Dodd-Frank. + +When the facts change + +A proposed rewrite of financial regulations by Jeb Hensarling, chairman of the important congressional committee on finance (and another candidate for treasury secretary), would rein in these entities. In the past, Democrats would have opposed this. They may think differently now that they will be controlled by Mr Trump. + +The new president will have opportunities, through appointments, to change more established departments, too. At the SEC Ms White’s departure will leave only two of five commissioners and deep divisions over big issues such as disclosure by companies and funds, the structure of equity markets and the lack of a coherent plan for “capital formation” (ie, matching capital with entrepreneurs). Mr Trump will be able to nominate commissioners at once, which would transform the SEC’s agenda. + +Unlike the SEC, both the justice and labour departments have been hyperactive over the past eight years. The Department of Justice played a central role in prosecuting financial offenders. Cases were often settled for large sums, but these left no enduring legal principle that the new attorney-general will have to follow. The Department of Labour aggressively expanded its remit, most notably because of the adoption of a simple-sounding but vastly complex new regulation, the Fiduciary Rule, which gave it a key supervisory role over $3trn (and counting) in retirement savings. Revoking that will not be easy. But the new labour secretary, again a Trump appointment, can delay implementation and otherwise temper adoption. + +Since the election, formal comments by the Trump transition team have been brief, largely calling for an end to bail-outs and red tape, and more capital for small businesses. A first phase of reform may be structured to capture Democratic support: a narrow bill offering regulatory relief for community banks and imposing restrictions on bail-outs. But more may follow. A new version of Mr Hensarling’s plan is believed to be in the works. Paul Atkins, a former SEC commissioner with libertarian leanings, is heading a transition team covering the regulatory agencies. + +The new administration has more pressing priorities than changing financial rules, notably trade, immigration, taxes and infrastructure spending. But Wall Street knows it is in Mr Trump’s sights. And it seems to relish the prospect. + +This article appeared in the Finance and economics section of the print edition under the headline On fire + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21710806-presidential-election-may-signal-big-changes-way-finance/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Buttonwood + +British mutual-fund fees are too high + +A new report indicates that investors’ interests are inadequately safeguarded + +Nov 26th 2016 + + + +BANKS tend to grab the headlines when it comes to financial scandals and systemic risk. But many people have a lot more money squirrelled away with the asset-management industry, in the form of pensions and lifetime savings, than they do in their bank accounts. A new report* from one of Britain’s regulators, the Financial Conduct Authority (FCA), suggests that the industry is not doing a great job at looking after investors’ interests. + +The British fund-management industry is huge, with some 1,840 firms managing around £6.9trn ($8.6trn) of assets. With the ten biggest fund managers representing only around 47% of the market, competition ought to be pretty intense. But the FCA report finds that fees in the actively managed sector (ie, funds that try to beat the market by picking the best stocks) have barely shifted in the past ten years. Operating margins across a sample of 16 fund-management firms have averaged 34-39% in recent years, one of the highest of any industry. Profits that heady smack more of an oligopoly than of a cut-throat battle for business. + +There is one part of the market where fees have come down—passive, or tracker, funds that try to match an index. Their fees have fallen by more than half since the turn of the decade. Passive funds are gaining market share but not as quickly as you might expect. One reason may be the reluctance of financial advisers to recommend them. The FCA found that passive funds did not feature at all on the main “best-buy lists” of advisers before January 2014 and still comprise fewer than 7% of the funds on such lists. + +The underlying problem, at least when it comes to retail clients, is that fund managers do not compete on price at all. Part of this is due to many investors’ ignorance. Remarkably, more than half of retail investors surveyed by the FCA did not know that they paid charges on investment products. Surveys show that many people are hazy about percentages or basic concepts such as compound interest. + +Instead, fund managers seem to compete on the basis of past performance, with some 44% of retail investors saying this was an influential factor in picking a fund. Advertisements for funds often highlight the stellar returns previously achieved. + +Launch enough funds (around 36,000 are available across Europe) and some are bound to be successful. Asset managers simply bury their failures. Of the equity funds available to British investors in 2006, only about half are still around in 2016; the others were merged or liquidated. As the report remarks: “This may give investors the false impression that there are few poorly performing funds on the market.” + +In chasing performance, investors are pursuing a chimera. The FCA finds, like others before it, that active managers underperform the index after costs (see chart). And it finds little evidence of persistence in outperformance. It looked at the best-performing quartile of funds over the 2006-10 period and examined how they performed in the next five years. Just under a quarter stayed in the highest quartile, exactly what chance would suggest. More than one-third of the stars of 2006-10 slipped to a bottom-quartile ranking—or were closed or merged. + +It is hardly surprising that, if investors seem unconcerned by cost, charges stay high. But it makes a big difference to their wealth. Over 20 years, the FCA calculates, an active manager’s charges can eat up a third of an investor’s return. + +Each investment company contains an “authorised fund manager” board whose aim is to ensure that the fund meets its regulatory and legal responsibilities. But board members are employees of the firms they are monitoring and, the FCA notes, “generally do not robustly consider value for money for fund investors.” + +It is in the interest of asset managers for funds to grow as large as possible, since they earn a fee based on the size of the fund. There are economies of scale associated with managing a large fund but the report found that these savings were not passed on to retail investors. That is just one example of how no one seems to be looking after the client’s interests. + +All in all, this interim report points to a litany of failings in the industry. Yet the FCA’s suggested reforms—strengthening the duty of managers to act in the interests of all investors, for example—may turn out to be quite modest in scale. If this were any other industry (electricity generation, say) the public would demand more robust action. The FCA should wield a bigger stick. + +* “Asset Management Market Study: Interim Report”, November 2016. https://www.fca.org.uk/publication/market-studies/ms15-2-2-interim-report.pdf + +Economist.com/blogs/buttonwood + +This article appeared in the Finance and economics section of the print edition under the headline Charging the earth + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21710810-new-report-indicates-investors-interests-are-inadequately/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Basel bust-up + +A showdown looms over bank-capital rules + +European banks fear that proposed revisions will penalise them unfairly + +Nov 26th 2016 + + + +THEY lack the magic of “Harry Potter” and provoke even less laughter than “Police Academy”, but the sequels keep coming. In Santiago on November 28th and 29th the committee of central bankers and supervisors from nearly 30 countries that draws up global bank-capital standards is due to thrash out revisions to Basel 3, the version agreed on after the financial crisis of 2008. European (and some Asian) bankers and officials fear additional capital requirements are coming; Americans are all for the changes. Stand by for a standoff in Chile. + +Spurred by Basel 3, banks have stuffed billions into capital cushions that the crisis showed to be woefully thin. Between mid-2011 and the end of last year, 91 leading lenders bolstered their common equity by €1.4trn ($1.5trn), or 65%, according to the Bank for International Settlements (BIS), which provides the Basel committee’s secretariat. The ratio of equity to risk-weighted assets, an important regulatory gauge, climbed from 7.1% to 11.8%. Although Basel 3 need not be fully honoured until 2019, most banks are far above the minimum of 4.5% (additional buffers, some at national level, raise the actual floor much higher). + +But the committee has been taking a closer look at banks’ calculations of risk-weighted assets. It has concluded that banks’ internal models vary too much: in an exercise in 2013, in which it asked 32 lenders to assess the required capital ratio for the same hypothetical credit portfolio, the highest answer was four percentage points above the lowest. Some banks, it believes, are too sanguine about credit risk. + +So the committee has suggested restricting the use of banks’ in-house models in assessing loans to large companies and other banks, and in specialised lending such as project finance. (Because defaults are rare, the reasoning goes, there are not enough data to model risks well.) Where banks’ own models are used, it wants minimum values for important parameters, such as the probability that loans go bad. And it is considering an “output floor”—a lower bound for the risk-weighted sum of their assets—of 60-90% of the figure calculated under a “standardised” method. + +Supervisors and ministers have said that the changes should not “significantly” raise “overall capital requirements”. But some lenders can expect an increase. The proposed standardised approach, for instance, weights residential mortgages worth 60-80% of the value of the property at 35%: in Denmark or Germany, say, where defaults have been rare, banks’ models imply little risk and lower weights. When loans of all sorts are totted up, several internal calculations of risk-weighted assets are likely to be below the output floor. Substituting the floor for the internal figure boosts risk-weighted assets, depressing the capital ratio. + +Analysts at Morgan Stanley estimate that global, non-American banks could see risk-weighted assets rise by an average of 18-30%, depending on the level of the output floor. Extra capital of €250bn-410bn could be needed, a tall order when earnings are thin and investors wary. The committee’s reviews of operational and market risks would add even more. + +European banks complain of being forced into an American-designed straitjacket. Higher capital requirements, they complain, will crimp lending and growth—although research by the BIS suggests that better-capitalised banks have lower funding costs and lend more, not less. American banks will be little affected by the credit-risk proposals. They sell most mortgages to Fannie Mae and Freddie Mac, two government-owned entities, whereas European lenders keep them on the books; American companies borrow from markets rather than banks. Americans retort that their post-crisis supervision has been stricter than in Europe and that they were quicker to knock themselves into shape. + +European officials are also speaking up. This month Andreas Dombret, a senior official at Germany’s Bundesbank, said that the restrictions on model parameters were too tight and that there was no need for an output floor. “The Bundesbank”, he warned, “is not prepared to reach an agreement at any price.” Valdis Dombrovskis, the European Union’s financial-services commissioner, who would have to put the changes into EU law, has said more work is needed. (Separately, on November 23rd Mr Dombrovskis set out legislation intended chiefly to put the current rules into effect.) + +There may be some wriggle room. Banks may be given more flexibility in using models for corporate and specialised lending. Rather than apply the same rules everywhere, Europe’s supervisors could adjust them for local conditions: Swedish banks must already weight mortgages at 25%. A long phasing-in period may also soften the impact. But a tricky two days lie ahead. No one dares mention Basel 5. + +This article appeared in the Finance and economics section of the print edition under the headline Basel bust-up + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21710808-european-banks-fear-proposed-revisions-will-penalise-them-unfairly-showdown/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Zero-sum game + +The global bond-market rally tests Japan’s ability to keep yields down + +The Bank of Japan hopes to buck the trend of global bond markets + +Nov 26th 2016 | TOKYO + + + +HARUHIKO KURODA is not a man to be put off by an unexpected setback. On November 17th the governor of the Bank of Japan (BoJ) gave his defiant take on the implications for Japanese monetary policy of the global market gyrations that have followed the surprise election of Donald Trump. Interest rates, he noted, have risen in America. “But that doesn’t mean that we have to automatically allow Japanese interest rates to increase in tandem.” + +A sell-off triggered by Mr Trump’s win wiped more than $1.2trn off the value of the world’s bond markets as investors bet that his administration will stoke America’s economic engines and drive up inflation. Bond yields rose sharply around the world as investors sold assets to buy dollar-denominated ones. In Japan the yen weakened and the yield on ten-year government bonds (JGBs) crept above zero for the first time in nearly two months. Since he was appointed by Shinzo Abe, the prime minister, in March 2013 as custodian of the monetary wing of “Abenomics”, Mr Kuroda has been fighting to end years of debilitating deflation. Keeping bond yields down is an important part of that struggle. + +Under his tenure, the BoJ has been printing money to buy government bonds. In 2014 it expanded this quantitative-easing programme from ¥50trn ($445bn) to ¥80trn a year. The BoJ now owns around 40% of the total JGB market. And in February this year it fired off one of its biggest bazookas yet, cutting its benchmark interest rate to -0.1%. Critics accused Mr Kuroda of intensifying a failing strategy. But in a bid to ward off speculation that the bank might retreat from its aggressive easing, Mr Kuroda gave a defiant speech in September, promising to keep ten-year JGB yields at around zero until inflation overshoots its target rate of 2% for an unspecified period. That now looks even harder than it did. + +For Mr Abe, the prime objective is to tackle deflation. Only if people believe prices are going to go up will they spend money now, he explained after taking office. If consumers don’t spend, and businesses don’t invest, the economy will be trapped in a doomed cycle. But despite moments of hope, nearly four years later the central bank is no closer to igniting inflation. Mr Kuroda blames falling oil prices and a slowdown in emerging markets. He is not helped by wages that have remained stagnant, despite Mr Abe’s repeated pleas to business to raise them, and despite the record hoard of ¥242trn in cash and deposits held by corporate Japan. Whatever the reasons, it is clear that the 2% target is not within reach, says Daiju Aoki, an economist in Tokyo for UBS, a Swiss bank. + +As commentators have noted, Mr Kuroda can print money, but not people. Overshadowing the economy is Japan’s ageing, shrinking population. With far more deaths than births, it has fallen by about 1m since 2010. Government projections say the labour force could collapse by 40% by 2060. Meanwhile, public debt has grown to 246% of gross domestic product, the highest such ratio in the world. + +Without the deep structural reforms long promised by the government, Mr Kuroda has been left with probing the boundaries of what monetary policy can achieve. The BoJ’s promise of “unlimited” purchases to maintain its yield-curve target tests its ability to control the bond market. “It is often argued that there is a limit to monetary easing but I do not share such a view,” Mr Kuroda said in September. He may soon find out if the markets agree. + +This article appeared in the Finance and economics section of the print edition under the headline Zero-sum game + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21710813-bank-japan-hopes-buck-trend-global-bond-markets-global/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The one per center next door + +You may be higher up the global wealth pyramid than you think + +A new analysis of how the world’s wealth is distributed + +Nov 26th 2016 + + + +IF YOU had only $2,222 to your name (adding together your bank deposits, financial investments and property holdings, and subtracting your debts) you might not think yourself terribly fortunate. But you would be wealthier than half the world’s population, according to this year’s Global Wealth Report by the Credit Suisse Research Institute. If you had $71,560 or more, you would be in the top tenth. If you were lucky enough to own over $744,400 you could count yourself a member of the global 1% that voters everywhere are rebelling against. + +Unlike many studies of prosperity and inequality, this one counts household assets rather than income. The data are patchy, particularly at the bottom and top of the scale. But with some assumptions, the institute calculates that the world’s households owned property and net financial assets worth almost $256trn in mid-2016. That is about 3.4 times the world’s annual GDP. If this wealth were divided equally it would come to $52,819 per adult. But in reality the top tenth own 89% of it. + + + +That lucky tenth now includes over 44m Chinese, about 4.4% of the country’s adult population. A far greater number (almost half of China’s adults) cluster in the next three deciles down. Closer to the bottom of the ladder, there is a similar bulge of Indians with wealth between $30 and $603. + +Below them, the bottom tenth is a peculiar mix. It is populated by poor countries, where many people have nothing, and rich ones, where people can own very much less than that. It includes a surprising number of Americans (over 21m), whose debts outweigh their assets. But most Americans are much better off. Over 40% belong to the top tenth of the global wealth distribution (and over 18m belong to the global 1%). Some of those railing against the global elite probably do not even know they belong to it. + +This article appeared in the Finance and economics section of the print edition under the headline The one per center next door + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21710822-new-analysis-how-worlds-wealth-distributed-you-may-be-higher-up/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Forward and backward + +Malaysia’s central bank tries to stem a slide in the ringgit + +The ringgit is underperforming other emerging-market currencies + +Nov 26th 2016 + + + +“THERE is no new policy on capital flows. There is no proxy capital control either,” insisted Muhammad Ibrahim, governor of Malaysia’s central bank, in a dinner speech on November 18th. This echoed a similar central-bank promise 15 months ago. For those hoping to bring money in and out of Malaysia, the commitments are reassuring. The frequency with which they need reiterating is less so. + +It is no secret that the central bank is worried about the sharp drop in Malaysia’s exchange rate. Like other emerging-market currencies, the ringgit has suffered from China’s slowdown in the past two years and Donald Trump’s upset victory on November 8th. But, like Malaysia’s politics, beset by lurid tales of financial malfeasance, the currency has been unusually skittish (see chart). + +Mr Muhammad blames what he calls “the arbitrary and unpredictable devices of the offshore markets”. Whereas China has been keen to “internationalise” the yuan, Malaysia’s central bank has an equally determined policy of “non-internationalisation”. It prohibits the trading of ringgit assets outside of its jurisdiction. + +International investors can nonetheless bet against the currency offshore, settling the bets in dollars rather than ringgit. These “non-deliverable forward” contracts (NDFs) allow foreign investors, who own over a third of Malaysia’s government bonds, to hedge their exposure to the currency. But the NDF market can also be turned to speculative ends. And this speculation, Mr Muhammad believes, is contaminating the onshore markets as well. + +If the offshore side-bets all point in one, bearish, direction, the onshore markets tend to follow their lead. And foreign banks that take the other, bullish, side of these offshore trades might try to hedge by selling ringgit in the onshore market. A 2013 study of nine NDF markets by the Bank for International Settlements found that the offshore and onshore markets both influenced each other, except in Malaysia, where onshore followed off. + +Malaysia’s central bank has instructed onshore institutions not to take part in the NDF market or help others to do so. Foreign banks with operations in Malaysia seem to be deferring to the central bank’s wishes, notes Stephen Innes of Oanda, a foreign-exchange broker, to preserve their good name in Malaysia. “They are not aggressively selling the ringgit right now.” + +But one reason the offshore market is so spiky is because trading is thin. That illiquidity may worsen if banks retreat. And if foreign investors cannot easily hedge their exposure to the ringgit, they will be less willing to buy ringgit assets. That might leave Malaysia with a weaker currency over the long term even if it is more stable from day to day. “No one from the banks is willing to discuss the ramifications,” Mr Innes says. “I find that quite unique.” Others may find it worrying. Silencing the markets is not the same as calming them. + +This article appeared in the Finance and economics section of the print edition under the headline Forward and backward + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21710833-ringgit-underperforming-other-emerging-market-currencies-malaysias-central/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Short-changed + +India grapples with the effects of withdrawing 86% of cash in circulation + +A crackdown on India’s black economy makes life harder for everyone + +Nov 26th 2016 + +A short, sharp liquidity shock + +A NEW strain of trickle-down economics has been spawned by the decision, on November 8th, to withdraw the bulk of India’s banknotes by the end of this year. As holders of now-useless 500-and 1,000-rupee ($15) notes rushed to deposit them or part-exchange them for new notes, an e-commerce site offered helpers, at 90 rupees an hour, to queue outside banks in order to save the well-off the bother. + +Elsewhere, a chronic shortage of banknotes in a cash-dominated economy has left most trades depressed. Seven out of ten kiranas (family-owned grocers) have suffered a decline in business, according to a survey by Nielsen, a consultancy. Supply chains, in which wholesalers and truckers deal mostly in cash, have fractured. Some 20-40% less farm produce reached markets in the days after the reform. City folk admit to hoarding the 100-rupee note, the largest of the old notes to remain legal tender. Taxi drivers refuse to break the new 2,000-rupee note. Road-tolls have been suspended until at least November 24th, to prevent queues. Beggars have disappeared from parts of Delhi; no one has spare change. + +India’s prime minister, Narendra Modi, is gambling that this temporary pain will be worth it. His goal is to flush out “black money”, stores of wealth that bypass the tax system, finance election campaigns and grease the wheels of high-level corruption. An enforced swap of high-value notes, say the reform’s boosters, acts as a tax on holders of illicit wealth. The element of surprise is disruptive but without it, there would be time for black-money holders to launder their funds by purchasing gold, foreign currency or property. A tight deadline makes it hard for holders of large stashes of notes to swap or deposit them without alerting the tax authorities. + +This swiftness comes with a cost. Aside from cases where hyperinflation has rendered a currency worthless, such swaps generally take place over long periods to avoid disrupting commerce. GDP growth might be as much as two percentage points lower this quarter and next before returning to normal as the money stock is replenished, reckons Pranjul Bhandari of HSBC, a bank. Much depends on how quickly new cash can be swapped for old. It has not been a smooth process so far. The Reserve Bank of India (RBI), which issues notes, waited for six days before setting up a task force to ensure ATMs could dispense the new 2,000-rupee note. Only a quarter of ATMs in four big cities were full on November 21st, according to Goldman Sachs. + +Yet there are signs that the reform is nudging Indians out of cash and into bank deposits and plastic, where money can be tracked. In the fortnight after the announcement, bank deposits were up by 5.1trn rupees, thanks to an influx of old notes and restrictions on withdrawals of new ones. PayTM, a provider of digital wallets, reported a surge in transactions. + +Despite the distress, and the raucous protests, the reform seems to have widespread support. Bashing the rich is popular even if the poor are inconvenienced. Some may also hope it will bring new state benefits for the poor and make housing more affordable. Indian real estate is so expensive in part because it is a store of illicit funds. In theory, whatever black money cannot be laundered will be worthless, yielding a gain for government’s finances and perhaps ultimately for poorer Indians. But such a boost cannot be relied upon. The RBI has not yet formally said that old notes will be cancelled for good, says Ashish Gupta of Credit Suisse, and it may be loth to do so. No central bank likes to say it no longer stands behind the paper it issues. + +This article appeared in the Finance and economics section of the print edition under the headline Short-changed + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21710838-crackdown-indias-black-economy-makes-life-harder-everyone-india-grapples/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Free exchange + +Economists are prone to fads, and the latest is machine learning + +Big data have led to the latest craze in economic research + +Nov 26th 2016 + + + +WHAT is the collective noun for a group of economists? Options include a gloom, a regression or even an assumption. In January, when PhD students jostle for jobs at the annual meeting of the American Economic Association, a “market” might seem the mot juste. Or perhaps, judging by the tendency of those writing economic papers to follow the latest fashion, a “herd” would be best. This year the hot technique is machine learning, using big data; Imran Rasul, an economics professor at University College, London, is expecting to read a pile of papers using this voguish technique. + +Economists are prone to methodological crazes. Mr Rasul recalls past paper-piles using the regression-discontinuity technique, which compared similar people either side of a sharp cut-off to gauge a policy’s effect. An analysis by The Economist of the key words in working-paper abstracts published by the National Bureau of Economic Research, a think-tank (see chart), shows tides of enthusiasm for laboratory experiments, randomised control trials (RCTs) and the difference-in-differences approach (ie, comparing trends over time between different groups). + +When a hot new tool arrives on the scene, it should extend the frontiers of economics and pull previously unanswerable questions within reach. What might seem faddish could in fact be economists piling in to help shed light on the discipline’s darkest corners. Some economists, however, argue that new methods also bring new dangers; rather than pushing economics forward, crazes can lead it astray, especially in their infancy. + +In 1976 James Heckman developed a simple way of correcting for the problem of a specific type of sample selection. For example, economists had difficulty estimating the effect of education on women’s wages, because the ones who chose to work (for whom pay could be measured) were particularly likely to enjoy high returns. When Mr Heckman offered economists a simple way of correcting this bias, which involved accounting for the choice to enter work, it took the social sciences by storm. But its seductive simplicity led to its misuse. + +A paper by Angus Deaton, a Nobel laureate and expert data digger, and Nancy Cartwright, an economist at Durham University, argues that randomised control trials, a current darling of the discipline, enjoy misplaced enthusiasm. RCTs involve randomly assigning a policy to some people and not to others, so that researchers can be sure that differences are caused by the policy. Analysis is a simple comparison of averages between the two. Mr Deaton and Ms Cartwright have a statistical gripe; they complain that researchers are not careful enough when calculating whether two results are significantly different from one another. As a consequence, they suspect that a sizeable portion of published results in development and health economics using RCTs are “unreliable”. + +With time, economists should learn when to use their shiny new tools. But there is a deeper concern: that fashions and fads are distorting economics, by nudging the profession towards asking particular questions, and hiding bigger ones from view. Mr Deaton’s and Ms Cartwright’s fear is that RCTs yield results while appearing to sidestep theory, and that “without knowing why things happen and why people do things, we run the risk of worthless causal (‘fairy story’) theorising, and we have given up on one of the central tasks of economics.” Another fundamental worry is that by offering alluringly simple ways of evaluating certain policies, economists lose sight of policy questions that are not easily testable using RCTs, such as the effects of institutions, monetary policy or social norms. + +Elsewhere in economics one methodology has on occasion crowded others out. An excess of consensus among macroeconomists in the run-up to the financial crisis has haunted them. In August, Olivier Blanchard, a heavyweight macroeconomist, wrote a plea to colleagues to be less “imperialistic” about their use of dynamic stochastic general equilibrium models, adding that, for forecasting, their theoretical purity might be “more of a hindrance than a strength”. He issued a reminder that “different model types are needed for different tasks.” + +Still crazy after all these years + +Machine learning is still new enough for the backlash to be largely restricted to academic eye-rolling. But some familiar themes are emerging in this latest craze. In principle, these new techniques should protect economists from their own sloppy theorising. Before, economists would try to predict things using only a few inputs. With machine learning, the data speak for themselves; the machine learns which inputs generate the most accurate predictions. + +This powerful method appears to have improved the accuracy of economists’ predictions. For example, researchers have started to use big data to predict whether a criminal suspect is likely to come back to court for a trial, influencing bail decisions. But, as with RCTs, a powerful algorithm might seduce its users into ignoring underlying causal factors. In her new book,“Weapons of Math Destruction”, Cathy O’Neil, a data scientist, points out that some factors, such as race or coming from a high-crime neighbourhood, might be excellent predictors of recidivism. But they could reflect racism in law enforcement or zero-tolerance “broken windows” policies that lead to high recorded crime rates in poor or minority neighbourhoods. If so, those predictions risk punishing people for factors beyond their control. + +Mr Rasul is not very worried by the “little bit of overshooting” that excitement at new methods engenders. Over time, their merits and limitations are better appreciated and they join the toolkit alongside older methods. But the critics of faddishness have one thing right. Good economics is about asking the right questions. Of all the tools at the discipline’s disposal, its practitioners’ scepticism is the most timeless. + +This article appeared in the Finance and economics section of the print edition under the headline Trend growth + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21710800-big-data-have-led-latest-craze-economic-research-economists-are-prone/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Science and technology + + + +Exoplanets: Portraits of worlds [Thu, 24 Nov 16:30] + +Reactionless motors: Ye cannae break the laws of physics [Thu, 24 Nov 16:30] + +Air pollution: Blown away [Thu, 24 Nov 16:30] + +Scientific publishing: All together now [Thu, 24 Nov 16:30] + +Scientific publishing: Award [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Portraits of worlds + +How to take pictures of exoplanets + +Finding exoplanets has become routine. The next step is to try to photograph them + +Nov 26th 2016 + + + +IN THE quarter of a century since the first extrasolar planets were discovered, astronomers have turned up more than 3,500 others. They are a diverse bunch. Some are baking-hot gas giants that zoom around their host stars in days. Some are entirely covered by oceans dozens of kilometres deep. Some would tax even a science-fiction writer’s imagination. One, 55 Cancri e, seems to have a graphite surface and a diamond mantle. At least, that is what astronomers think. They cannot be sure, because the two main ways exoplanets are detected—by measuring the wobble their gravity causes in their host stars, or by noting the slight decline in a star’s brightness as a planet passes in front of it—yield little detail. Using them, astronomers can infer such basics as a planet’s size, mass and orbit. Occasionally, they can interrogate starlight that has traversed a planet’s atmosphere about the chemistry of its air. All else is informed conjecture. + +What would help is the ability to take pictures of planets directly. Such images could let astronomers deduce a world’s surface temperature, analyse what that surface is made from and even—if the world were close enough and the telescope powerful enough—get a rough idea of its geography. Gathering the light needed to create such images is hard. The first picture of an extrasolar world, 2M1207b, 170 light-years away, was snapped in 2004, but the intervening dozen years have seen only a score or so of others join it in the album. That should soon change, though, as new instruments both on the ground and in space add to the tally. And a few of the targets of these telescopes may be the sorts of planets that have the best chance of supporting life, namely Earth-sized worlds at the right distance from sun-like stars, in what are known as those stars’ habitable zones—places where heat from the star might be expected to stop water freezing without actually boiling it. + +Smile, please + +Taking pictures of exoplanets is hard for two reasons. One is their distance. The other is that they are massively outshone by their host stars. + +Interstellar distances do not just make objects faint. They also reduce the apparent gap between a planet and its host, so that it is hard to separate the two in a photograph. Such apparent gaps are measured in units called arc-seconds (an arc-second is a 3,600th of a degree). This is about the size of an American dime seen from four kilometres away. The exoplanet closest to Earth orbits Proxima Centauri, the sun’s stellar neighbour. Yet despite its proximity (4.25 light-years) the angular gap between this planet and its star is a mere 0.38 arc-seconds, according to Beth Biller, an exoplanet specialist at the University of Edinburgh. Separating objects which appear this close together requires a pretty big telescope. + +The second problem, glare, is best dealt with by inserting an opaque disc called a coronagraph into a telescope’s optics. A coronagraph’s purpose is to block light coming directly from a star while permitting any that is reflected from planets orbiting that star to shine through. This palaver is necessary because, as a common analogy puts it, photographing an exoplanet is like trying to take a picture, from thousands of kilometres away, of a firefly buzzing around a lighthouse. Seen from outside the solar system, Earth would appear to be a ten-billionth as bright as the sun. + +Those exoplanets that have had their photographs taken so far are ones for which these problems are least troublesome—gigantic orbs (which thus reflect a lot of light) circling at great distances (maximising angular separation) from dim hosts (minimising glare). In addition, these early examples of planetary photography have usually involved young worlds that are still slightly aglow with the heat of their formation. Even then, serious hardware is required. For example, four giant planets circling a star called HR8799 were snapped between 2008 and 2010 by the Keck and Gemini telescopes on Hawaii (see picture). These instruments have primary mirrors that are, respectively, ten metres and 8.1 metres across. The good news for planet-snappers is that such giant telescopes are becoming more common, and that people are building special planet-photographing cameras to fit on them. + +Another solar system: HR8799 and three of its four planets + +At the moment, the three most capable are the Gemini Planet Imager, attached to the southern Gemini telescope, in Chile; the Spectro-Polarimetric High-Contrast Exoplanet Research Instrument on the Very Large Telescope, a European machine also in Chile; and the Subaru Coronagraphic Extreme Adaptive Optics Device on the Subaru telescope, a Japanese machine on Hawaii. All of those telescopes sport a mirror more than eight metres across, making them some of the biggest in the world, and their planet-photographing attachments are fitted with the most sophisticated coronagraphs available. The result is that the Subaru device, for example, can take pictures of giant planets that orbit their stars slightly closer in than Jupiter orbits the sun. + +This improved sensitivity will let astronomers take pictures of many more worlds. The Gemini Planet Imager, for instance, is looking for planets around 600 promising stars. (Its first discovery was announced in August 2015.) But even these behemoths will still be limited to photographing gas giants. To take snaps of the next-smallest class of planets (so-called “ice giants” like Neptune and Uranus), and the class after that (large, rocky planets called “super-Earths” that have no analogue in the solar system), will require even more potent instruments. + +These are coming. The European Extremely Large Telescope (ELT) is currently under construction in the Chilean mountains. Its 39.3 metre mirror will be nearly four times the diameter of the present record-holder, the Gran Telescopio Canarias, in the Canary Islands, which has a mirror 10.4 metres across. When it is finished, in 2024, the ELT should be sensitive enough to photograph Proxima Centauri’s planet, as well as other rocky ones around nearby stars. A smaller instrument, with a 24.5 metre mirror, the Giant Magellan Telescope, should be finished in 2021. The Thirty Metre Telescope, planned for Hawaii, will, as its name suggests, fall somewhere between those two—though its construction has been halted by legal arguments. + +For ground-based telescopes that may be the end of the line, says Matt Mountain, who is president of the Association of Universities for Research in Astronomy, and who oversaw the construction of the Gemini telescopes. The shifting currents of Earth’s atmosphere (the reason stars seem to twinkle even to the naked eye) impose limits on how good they can ever be as planetary cameras. To get around those limits means going into space. Although it is not specifically designed for the job, the James Webb space telescope, which is scheduled for launch in 2018 and which boasts both a mirror 6.5 metres across and a reasonably capable coronagraph, should be able to snap pictures of some large, nearby worlds. It will be able to sniff the atmospheres of many more, analysing starlight that has passed through those atmospheres on its way to Earth. WFIRST, a space telescope due to launch in the mid-2020s, will have picture-taking capabilities of its own, and will serve to test the latest generation of coronagraphs. + +After that, astronomers who want to picture truly Earth-like worlds are pinning their hopes on a set of ambitious missions which, for now, exist only as proposal documents in NASA’s in-tray. One of the most intriguing is the New Worlds Mission. This hopes to launch a giant occulter (in effect, an external coronagraph) that would fly in formation with an existing space telescope (probably the James Webb) to boost its exoplanet-imaging prowess. + +Small is beautiful + +There may, though, be an alternative to this big-machine approach. That is the belief of the members of a team of researchers led by Jon Morse, formerly director of astrophysics at NASA. Project Blue, as this team calls itself, hopes, using a mixture of private grants, taxpayers’ money and donations from the public, to pay for a space telescope costing $50m (as opposed, for example, to the $9 billion budgeted for the James Webb) that would try to take pictures of any Earth-like exoplanets orbiting in the habitable zone of Alpha Centauri A—the closest sun-like star to Earth, and a big brother to Proxima Centauri. + +Alpha Centauri is hotter than Proxima, which means its habitable zone is much further away. That, combined with its closeness, means Project Blue can get away with a mirror between 30 and 45cm across—the size of mirror an enthusiastic amateur might have in his telescope. What such an amateur would not have, though, is a computer-run “multi-star wavefront controlled” mirror. This will draw on a technology already fitted to ground-based telescopes, called adaptive optics, in which portions of the mirror are subtly deformed in order to sculpt incoming light. + +In combination with a coronagraph the wavefront controller will, according to Supriya Chakrabarti of the University of Massachusetts, Lowell, let the telescope blot out the light not only of Alpha Centauri A, but also of Alpha Centauri B, a companion even closer to it than Proxima Centauri is. Moreover, the plan is to take thousands of pictures over the course of several years. By combining these and looking for persistent signals—particularly ones that appear to follow plausible orbits—computers should be able to pluck any planets from the noise. + +If it works, Alpha Centauri A’s closeness means Project Blue’s telescope could reveal lots of information about any planets orbiting that star (and statistical analysis of known exoplanets suggests there will almost certainly be some). Examining the spectrum of light from them would reveal what their atmospheres and surfaces were made from, including any chemicals—such as oxygen and methane—that might suggest the presence of life. It might even be possible to detect vegetation, or its alien equivalent, directly. The length of a planet’s day could be inferred by watching for regular changes in light as its revolution about its axis caused continents and seas to become alternately visible and invisible. Longer-term variations might reveal planetary seasons; shorter-term, more chaotic ones might be evidence of weather. + +If they can raise the money in time, the Project Blue team hope to launch their telescope in 2019 or 2020. Being able to take a picture of a rocky planet around one of the sun’s nearest neighbours would be an enormous scientific prize. If a habitable planet were found, it would be one of the biggest scientific discoveries of the century. Donors may think that worth a punt. + +This article appeared in the Science and technology section of the print edition under the headline Portraits of worlds + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21710789-finding-exoplanets-has-become-routine-next-step-try-photograph/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Reactionless motors + +Has a British engineer broken the laws of physics? + +An “impossible” rocket engine is the subject of a peer-reviewed paper + +Nov 26th 2016 + +Any reaction? + +ROCKETS are spectacular examples of Isaac Newton’s third law of motion: that to every action there is an equal and opposite reaction. Throwing hot gas out of its engines at high speed (the action) thrusts a rocket off its launch pad and into space (the reaction). But having to carry the propellants needed to create the gas (the reaction mass) is a pain, for at any given moment during a flight the action has to propel not only the rocket itself, but also all of the remaining, unburnt propellant. Most of the effort expended in a rocket launch is therefore directed towards lifting propellant rather than payload. As a result, even the most modern rockets start off with a mass that is more than 90% propellant. + +The fantasy of rocket scientists is therefore an engine that needs no propellant. And that is what Roger Shawyer, a British aerospace engineer, claims to have invented. In his view, his EMDrive (the “EM” stands for “electromagnetic”) converts electrical energy straight into thrust, with no need for reaction mass. The only trouble is, that should be impossible. + +An EMDrive (see picture) is a conical metal cavity into which microwaves are fed, and inside of which they bounce around. Electromagnetic radiation has no mass, but it does carry momentum (this is the principle by which solar sails work, using the pressure of sunlight to produce thrust). Dr Shawyer argues that the EMDrive’s conical shape results in different levels of radiation pressure at each of the cavity’s ends, and therefore a net thrust in the direction of the thin end. Every physicist who has studied the idea says this is impossible. Because nothing is emitted from an EMDrive, it cannot generate thrust, any more than the crew of a spaceship could fly to Mars by pushing on the walls. Dr Shawyer nevertheless says he can measure this apparently impossible thrust. + +Exotic claims of antigravity devices, perpetual-motion machines and the like are hardly unusual (The Economist once received detailed plans for a faster-than-light spaceship in the post). But the EMDrive stands out, for it transpires that Dr Shawyer is not the only person who has detected thrust coming from it. Harold White and his team at the Eagleworks laboratory in Houston, Texas, have done so too—and they are scientists employed by NASA, America’s space agency. The Eagleworks, which is part of the Johnson Space Centre, is a place where the agency tests fringe ideas. And, as Dr White and his colleagues report in a paper just published in the Journal of Propulsion and Power, when they put an EMDrive that they had built themselves onto their test bench, they measured a small but persistent thrust. + +So what is going on? The romantic explanation is that the EMDrive is a technological breakthrough which works by harnessing exotic new physics, and that by scaling it up people will be able to conquer the solar system. More likely, it is experimental error. Much has been made, among EMDrive fans, of the fact that Dr White’s paper was peer-reviewed. Although that is important, peer review means only that the experiment was competently executed, not that its conclusions are true. Dr White and his team admit that they have not accounted for every possible source of error. The likeliest explanation is that some overlooked factor is producing the illusion of thrust when, in fact, there is none. + +Just occasionally, such mysteries do lead to a revolution. Astronomers in the 19th century had difficulty explaining details of the trajectory of Mercury. To do so, it turned out, you had to throw away classical physics and replace it with the theory of relativity. More often, though, the status quo holds. In 2011 a respected physics laboratory in Italy reported curious results that seemed to show subatomic particles travelling faster than light. They turned out to be caused by faulty wiring in the experiment. And physicists were puzzled for decades by the fate of the Pioneer space probes, whose trajectories through the solar system were not quite what they should have been. Radiation pressure from their internal heat was eventually fingered as the culprit. In physics as in the rest of life, if it sounds too good to be true, it almost always is. + +This article appeared in the Science and technology section of the print edition under the headline Ye cannae break the laws of physics + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21710790-impossible-rocket-engine-subject-peer-reviewed-paper-has-british/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Air pollution + +Retired jet engines could help clear smog + +A new idea to blow big-city peasoupers away + +Nov 26th 2016 + + + +TO LAND at Indira Gandhi Airport is to descend from clear skies to brown ones. Delhi’s air is toxic. According to the World Health Organisation, India’s capital has the most polluted atmosphere of all the world’s big cities. The government is trying to introduce rules that will curb emissions—allowing private cars to be driven only on alternate days, for example, and enforcing better emissions standards for all vehicles. But implementing these ideas, even if that can be done successfully, will change things only slowly. A quick fix would help. And Moshe Alamaro, a researcher at the Massachusetts Institute of Technology, thinks he has one. + +His idea is to take a jet engine, put it next to one of India’s dirty coal-fired power plants, point its exhaust nozzle at the sky and then switch it on. His hope is that the jet’s exhaust will disrupt a meteorological phenomenon known as “inversion”, in which a layer of warm air settles over cooler air, trapping it, and that the rising stream of exhaust will carry off the tiny particles of matter that smog is composed of. + +Inversion exacerbates air pollution in Delhi and in many other cities, from Los Angeles to Tehran. A particularly intense example caused the Great Smog of London in 1952, when four days of air pollution contributed to 12,000 deaths. Dr Alamaro thinks a jet engine could punch through the inversion layer to create a “virtual chimney” which would carry the trapped pollution above it, so that it could be dispersed in the wider atmosphere. He calculates that all the emissions from a gigawatt coal-fired power plant could be lifted away using a single engine with a nozzle speed of 460 metres a second. However, he has not calculated whether a jet engine could disrupt the inversion layer and allow the pollution to escape the city—so he is now going to test that hypothesis. + +Within eight months, Dr Alamaro plans to put one of his updrafters next to a coal-fired power plant and monitor what happens using a fleet of drones. He is in discussions with Tata Group, a conglomerate with an electricity-generating arm, to run it next to one of the firm’s power stations. Another good candidate would be a government-run plant at Badarpur, less than 50km from the middle of Delhi. According to the Centre for Science and the Environment, a research and lobbying group based in the Indian capital, Badarpur is one of the most polluting power plants in the country. Earlier this month the government shut it down for ten days as part of a set of emergency measures intended to curb a particularly intense bout of air pollution. + +Dr Alamaro has already found some of the decommissioned jet engines he needs to build his first updrafter. Both the Indian and the American air forces have been forthcoming. The Indians have offered six retired engines for nothing and the Americans are in the process of approving a further four engines from the Boneyard, an aircraft-storage facility located on Davis-Monthan Air Force Base in Arizona. They are asking for just $5,000 per jet to cover the labour needed to prepare the engines, plus shipping. + +Some meteorologists are sceptical. They suggest that the engines on offer will not have the oomph to push material through Delhi’s inversion layer, especially during daylight hours, when the boundary between warm and cool air sits at an altitude of around a kilometre. They also say that Dr Alamaro’s notion of a virtual chimney is too simple. Turbulence and friction will weaken the exhaust stream as it climbs. Moreover, even if the technique does work, using it to attack a citywide inversion layer would require so many jets and so much fuel as to be prohibitively expensive, says Alexander Baklanov, a researcher at the World Meteorological Organisation, in Geneva. + +Dr Alamaro, naturally, disagrees—and if he can keep to his timetable it will not be long before it is clear who is right. Even if his ambitions for citywide arrays of virtual chimneys prove too ambitious, they may still work in some of the worst cases of pollution. Andreas Christen, who studies urban meteorology at the University of British Columbia, in Vancouver, notes that the direst episodes of pollution happen when air is cold—at night, for example. This is because the air contracts into a smaller volume at low temperatures, giving warm air above it room to expand downwards. That concentrates airborne gunk, but it also brings the inversion layer within closer range of Dr Alamaro’s jets. As Dr Christen observes, some farmers in rich countries already use helicopters to disrupt inversion layers above their fields and thus protect their crops from frost. Dr Alamaro’s jets may offer an alternative. + +This article appeared in the Science and technology section of the print edition under the headline Blown away + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21710793-new-idea-blow-big-city-peasoupers-away-retired-jet-engines-could-help-clear/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +All together now + +Why research papers have so many authors + +Scientific publications are getting more and more names attached to them + +Nov 26th 2016 + +ONE thing that determines how quickly a researcher climbs the academic ladder is his publication record. The quality of this clearly matters—but so does its quantity. A long list of papers attached to a job application tends to impress appointment committees, and the resulting pressure to churn out a steady stream of articles in peer-reviewed journals often leads to the splitting of results from a single study into several “minimum publishable units”, to the unnecessary duplication of studies and to the favouring of work that is scientifically trivial but easy to publish. + +There is another way to pad publication lists: co-authoring. Say you write one paper a year. If you team up with a colleague doing similar work and write two half-papers instead, both parties end up with their names on twice as many papers, but with no increase in workload. Find a third researcher to join in and you can get your name on three papers a year. And so on. + +To investigate the matter, The Economist reviewed data on more than 34m research papers published between 1996 and 2015 in peer-reviewed journals and conference proceedings. These were drawn from Scopus, the world’s biggest catalogue of abstracts and citations of papers, which is owned by RELX Group, a publisher and information company. + + + +Over the period in question, the average number of authors per paper grew from 3.2 to 4.4. At the same time, the number of papers divided by the number of authors who published in a given year (essentially, the average author’s overall paper-writing contribution) fell from 0.64 to 0.51. The boom in co-authorship more than compensated for the drop in individual productivity, so that the average researcher notched up a slightly higher number of papers for his curriculum vitae: 2.3 a year compared to 2.1 two decades earlier. + +One particular trend behind these numbers is the rise of “guest authorship”, in which a luminary, such as the director of a research centre, is tagged on as an author simply as a nod to his position or in the hope that this signals a study of high quality. That can lead to some researchers becoming improbably prolific. For example, between 2013 and 2015 the 100 most published authors in physics and astronomy from American research centres had an average of 311 papers each to their names. The corresponding figure for medicine, though lower, was still 180. Figures for British universities are more modest but similarly striking. The top century of physicists and astronomers averaged 280 papers each; the top century of doctors, 139 papers. Indeed, it is so easy to add a co-author that some have honoured their pets. Sir Andre Geim, who won the 2010 Nobel Prize in physics, listed H.A.M.S. ter Tisha as co-author of a paper he published in 2001 in Physica B, a peer-reviewed journal. + +Another trend is that the meaning of authorship in massive science projects is getting fuzzier. Particle physics and genomics, both of which often involve huge transnational teams, are particularly guilty here. A paper on the Higgs boson published in 2015 in Physical Review Letters holds the record, with 5,154 co-authors (listed on 24 of the paper’s 33 pages). It reported on the mass of the boson, a fundamental particle studied in experiments conducted in the giant—and heavily staffed—Large Hadron Collider near Geneva. A genomics paper on Drosophila, a much-studied fruitfly, also published in 2015, has 1,014 authors, most of them students who helped with various coding tasks. Such studies are paragons of scientific collaboration and the exact opposite of creating minimum publishable units. But they list as authors people who have contributed only marginally to the success of the project—roles that, in the past, were simply acknowledged in a thanks-to-all sentence but are now the bricks from which careers may be built. + +This article appeared in the Science and technology section of the print edition under the headline All together now + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21710792-scientific-publications-are-getting-more-and-more-names-attached-them-why/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Award + +Nov 26th 2016 + +On October 23rd Natasha Loder, our health-care correspondent, was named Science Commentator of the Year in the 2016 Comment Awards, an annual set of prizes for British journalists. + +This article appeared in the Science and technology section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21710791-award/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Books and arts + + + +India’s diaspora: A model minority [Thu, 24 Nov 16:30] + +Publishing in India: Mythomania [Thu, 24 Nov 16:30] + +Contemporary art in China: City supreme [Thu, 24 Nov 16:30] + +Johnson: You tell me that it’s evolution? [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +A model minority + +How Indians triumphed in America + +America needs to consider what it might lose if it curbs the influx of clever, hard-working, entrepreneurial Indian immigrants + +Nov 26th 2016 + + + +The Other One Percent: Indians in America. By Sanjoy Chakravorty, Devesh Kapur and Nirvikar Singh. OUP USA; 355 pages; $34.95 and £22.99. + +IN THE early 20th century just a few hundred people emigrated from India to America each year and there were only about 5,000 folk of Indian heritage living in the United States. That was more than enough for some xenophobes. A government commission in 1910 concluded that Indians were “the most undesirable of all Asiatics” and that the citizens of America’s west coast were “unanimous in their desire for exclusion”. + +Today Indian-born Americans number 2m and they are probably the most successful minority group in the country. Compared with all other big foreign-born groups, they are younger, richer and more likely to be married and supremely well educated. On the west coast they are a mighty force in Silicon Valley; well-off Indians cluster around New York, too. “The Other One Percent” is the first major study of how this transformation happened. Filled with crunchy analysis, it exudes authority on a hugely neglected subject. + +India’s diaspora is vast, with 20m-30m people spread across the world from the Caribbean to Kenya. In colonial times many moved as labourers after Britain abolished slavery in 1833, to build the east African railway, for example. In the 1970s a second wave of workers went to the Gulf during the oil boom. Perhaps the least well known flow of Indians abroad is the one to America. It picked up after 1965, when American immigration rules were relaxed, and surged after 1990. Three-quarters of the Indian-born population in America today arrived in the last 25 years. + +Like all immigrant groups, Indians have found niches in America’s vast economy. Half of all motels are owned by Indians, mainly Gujaratis. Punjabis dominate the franchises for 7-Eleven stores and Subway sandwiches in Los Angeles. The surge in Indians moving to America is also intimately linked to the rise of the technology industry. In the 1980s India loosened its rules on private colleges, leading to a large expansion in the pool of engineering and science graduates. Fear of the “Y2K” bug in the late 1990s served as a catalyst for them to engage with the global economy, with armies of Indian engineers working remotely from the subcontinent, or travelling to America on workers’ visas, to make sure computers did not fail at the stroke of midnight on December 31st 1999. + +Today a quarter or more of the Indian-born workforce is employed in the tech industry. In Silicon Valley neighbourhoods such as Fremont and Cupertino, people of Indian origin make up a fifth of the population. Some 10-20% of all tech start-ups have Indian founders; Indians have ascended to the heights of the biggest firms, too. Satya Nadella, Microsoft’s boss, was born in Hyderabad. Sundar Pichai, who runs Google, the main division of the firm Alphabet, hails from Tamil Nadu. + +The authors of “The Other One Percent” have been careful to avoid the trap of explaining Indians’ success in America through their particular culture. Instead they argue it is “at its core a selection story”. Indians cannot walk across a border to America. Because of the filters of caste, class and a fiercely competitive education system, only those with above average financial and human capital get the chance to move to America. Most have travelled either as students or holders of H1-B working visas, which require a university degree, and then acquire residency. This visa system acts as a further filter. + +Despite the light that the authors’ data-driven approach casts on this little-known story, there are some disadvantages. One is that it leaves little scope for exploring the dark side of India’s diaspora. Readers keen to peek at the underbelly should buy “The Billionaire’s Apprentice”, by Anita Raghavan, which was published in 2013. It is a brilliant account of the insider-trading ring that led to the downfall of Rajat Gupta, the former boss of McKinsey, a consulting firm. Fittingly he was pursued by a much-admired prosecutor of Indian descent. + +But the authors do touch on the most fascinating question of all: how this gilded corner of the diaspora influences India itself. Diplomatic relations between the two giant democracies have long been testy. But in other realms the bond has grown closer. The stars at the pinnacle of American society are celebrated back in India alongside rather un-American figures such as spin-bowling masters and Bollywood maidens. The American-educated children of India’s governing elite probably helped push India to open up its economy in 1991. The tens of billions of dollars of income earned in America by India’s big technology firms is crucial for its balance of payments. And a new generation of entrepreneurs who have led a boom in e-commerce in India in the last five years are almost all American educated, or have worked for American technology firms. + +If, under its new president, America clamps down on immigration, the mutually beneficial movement of Indians will surely slow—they were the largest group of new immigrants in 2014, exceeding even arrivals from China and Mexico. That will be a loss, both to America and to India. In this new era of populism, “The Other One Percent” is a rigorous, fact-based analysis of how cross-border flows of brainy and ambitious people make the world a better place. Politicians and policymakers in both America and in India should make sure they read it. + +This article appeared in the Books and arts section of the print edition under the headline A model minority + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21710784-america-needs-consider-what-it-might-lose-if-it-curbs-influx-clever/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Mythomania + +The latest craze among Indian readers + +How Indian publishing discovered its “Game of Thrones” and created a literary phenomenon + +Nov 26th 2016 + +A never-ending procession of stories + +WHEN the world’s highest-earning novelist launches his new thriller in January, his co-author may not be familiar to Western fans. James Patterson, an American crime writer whose estimated annual revenues of $95m dwarf even those of Harry Potter’s creator, J.K. Rowling, sometimes joins forces with local writers when he sends his investigators abroad. “Private Delhi” will be his second murder mystery with Ashwin Sanghi, a novelist from Mumbai who is far better known among Indian readers for his contribution to popular mythological fiction—one of the most remarkable, but overlooked, publishing stories of the past decade. + +In the age of Patterson, Potter and “Game of Thrones”, Indian authors have brought their own special flavours to the table: mass-market fiction based on reinterpretations of the two great Hindu epic narratives, the Ramayana and the Mahabharata. Canny authors enlist ancient fables of gods and heroes, of rival clans, gigantic battles, perilous quests and fearsome ordeals as a way of unlocking the crowd-pleasing genres of mystery, fantasy and historical romance. + +These stories have helped transform publishing in a nation of 1.3bn people with improving literacy rates and—in contrast to long-term trends in the West—a growing appetite for the printed as well as the electronic book. Adult literacy rose from 65% to 74% between 2001 and 2011; the projection for 2020 is 90%. The annual value of the book market has swollen to an estimated $3.9bn, with 90,000 new titles added each year. Chiki Sarkar (who is married to a correspondent in our Delhi office) used to run Penguin Random House in India and has now founded her own company, Juggernaut Books. She believes that the establishment of book chains that emphasise promotions has meant big books are becoming bigger, just as they have in the West. “Into this landscape you’ve now got an old genre that has found new vitality,” she adds. + +The Ramayana and Mahabharata have long nourished Indian popular culture, whether through village storytelling, puppet-shows, television serials or Bollywood movies. Indian novelists writing in English used to be known abroad purely as a source of strenuous literary works; now they regularly produce gaudy blockbusters that marry these ancient tales with the latest trends in genre fiction. + +The man credited with inaugurating this mythological revival is Ashok Banker, once better known as a literary novelist but who turned to mythological stories in 2003 with an eight-volume Ramayana series that began with “Prince of Ayodhya”. Mr Banker is now writing a screenplay for Disney India, a two-part adaptation of a subsequent series, drawn from the Mahabharata. “Frankly, what is happening now is not something new. It is simply a continuation of an age-old tradition,” Mr Sanghi says. “What makes it new is the language of choice—English.” + +Mr Sanghi believes that the main reason why India lacked home-grown English-language bestsellers for so long was the condescending attitude of Indian publishers. Only after the spectacular success of young writers such as Chetan Bhagat, whose 2004 novel, “Five Point Someone: What Not to Do at IIT”, marked a turning-point, did things change. Dynamic Indian-based imprints began to exploit the newly discovered hunger for indigenous page-turners. The arrival of publishing multinationals, such as Random House and Hachette—which, from 2000, have been able to set up without an Indian partner—quickened the pace. + +Some observers link the chart-topping mythology to the new assertiveness about Indian tradition that characterises the so-called “Hindutva” politics associated with the ruling BJP party and its leader, Narendra Modi, the prime minister. Christoph Senft, a specialist in modern Indian literature who teaches at Pune University in Maharashtra state, argues that a “search for internal homogeneity” has become the flipside of India’s rapid push towards the global marketplace. “Mythological texts confirm the Hindu nationalists’ wish to tell India’s history as a history of Hinduism.” + +Some writers, however, mine the epics for stories and themes that have little to do with narrow chauvinism. Devdutt Pattanaik’s “The Pregnant King” hunts down gender-fluid elements in the Mahabharata cycle. Chitra Banerjee Divakaruni’s novel, “The Palace of Illusions”, tells that epic’s core plot of dynastic conflict from the feminist perspective of the resilient, much-married heroine, Draupadi. Mr Banker, the godfather of the mythological-literature boom, has always scorned the politics of caste or creed, and voices pride in his mixed, part-Christian background. Amish Tripathi, author of the “Shiva Trilogy” of racy potboilers, calls himself a “religious liberal” and uses only his first name on book jackets to avoid the upper-caste connotations of his surname. + +The vast bulk of readers turn to these pages packed with divinities and demons for excitement and distraction rather than religious instruction. As Mr Sanghi says: “I have always maintained that my primary goal is to entertain, not educate or enlighten. If the latter two objectives happen along the way, that’s a bonus.” + +Paradoxically, this reclaiming of traditional lore has also helped bring Indian publishing into line with international norms. For all their deep roots in native soil, myth-fuelled bestsellers fit snugly into a global entertainment market that is often driven by story-cycles such as “Lord of the Rings” or “Game of Thrones”. Ms Sarkar notes that the Indian bestseller list now looks more and more like mass-market fiction lists in Britain and America. + +In common with several of his peers, Mr Sanghi started out in business before switching to writing novels with titles like “The Krishna Key”. He holds an MBA from Yale, and initially joined his family firm in Mumbai. Mr Tripathi, whose reported million-dollar deal for South Asian rights to a series of Ramayana novels made global headlines in 2013, worked in banking and insurance before he became a writer. Mr Pattanaik qualified as a physician. One of the most successful women authors in a now-crowded field, Krishna Udayasankar, whose “Aryavarta Chronicles” refashion the Mahabharata, still lectures in management in Singapore. + +Why should India’s young professional dynamos turn with such relish to the distant storytelling past? Mr Sanghi argues that this group grasps the tools of “effective communication” but “does not carry the burden of a literary legacy”. Unlike literary-fiction writers, they feel “free to experiment”. Moreover, they know how to sell and are not afraid to involve themselves in marketing and distribution. Mr Tripathi’s “Shiva Trilogy” was initially published as a digital download by his literary agent after it received more than 20 rejections from publishers. He has promoted his books on a variety of platforms, including YouTube and even at cricket matches of the Indian Premier League; since 2010 “Shiva” has sold more than 2.5m copies. Each Indian generation folds myth into modernity. As Ms Sarkar observes: “The epics have always been in fashion.” + +This article appeared in the Books and arts section of the print edition under the headline Mythomania + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21710781-how-indian-publishing-discovered-its-game-thrones-and-created-literary-phenomenon/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Contemporary art in China + +Shanghai is racing to become China’s cultural capital + +But will expensive urban regeneration and rising rents push artists, small galleries and young would-be collectors out of the city? + +Nov 26th 2016 | SHANGHAI + + + +EARLIER this month, two influential art curators threw a memorable party in Shanghai. The hosts—Linyao Kiki Liu, director of Si Shang Art Museum in Beijing, and Klaus Biesenbach, head of MoMA PS1, a well-known space affiliated with the Museum of Modern Art in New York—picked an unusual venue for the revelries: a renovated underground bomb shelter. Dark and smoky, it is unapologetic in its cursory approach to decor. Though it is usually a sanctum for the kind of Shanghai clubber for whom expensive booths for playing dice are a waste of dance floor, that night it was filled mostly with an out-of-town crowd that had flown in to celebrate two concurrent art fairs, as well as the return of the city’s biennale. Shanghai, hip and hopping, seemed determined to present itself as a new centre of the art world. + +Chinese contemporary art was actually born in Beijing. In 1979, soon after the country began rolling out Deng Xiaoping’s economic reforms, a small group of artists mounted an unofficial exhibition on the park railings directly opposite the National Art Museum of China. The show lasted just two days before being shut down, but the seed for China’s grass roots arts movement and spirit of collectivism was sown. A decade later, a few collectors were buying Chinese art. By the early 2000s the 798 arts district in the north-east of the city was becoming a vital destination for international dealers and curators. Now Shanghai is competing with Beijing to become China’s cultural capital. + +Shanghai’s initial embrace of art was restrained. Beginning in the early 2000s, a few local galleries supported a scattering of artists. There were no more than a handful of museums. The prospect of hosting Expo 2010 helped motivate Shanghai’s local government to encourage property developers to launch an ambitious urban-regeneration programme that would reframe the city as a cultural hub. At the heart of this renewal was West Bund, a 9.4km tract of Shanghai riverside, whose old industrial buildings and former airport were to be repurposed under the manifesto “Culture First, Industry Oriented”. + +The same year that Expo 2010 opened, the central government announced that it would build 3,500 new museums across the country within five years. It exceeded that figure three years early, in 2012. The call to action stimulated property developers to tag museums on to many of their projects in return for tax benefits and to curry favour with local authorities. West Bund was one of the most important beneficiaries of this policy. + +In 2014 two landmark contemporary-art museums opened there. The Long Museum was the second outpost for the city’s most prominent collectors, Liu Yiqian and his wife, Wang Wei. (The couple recently turned heads when they spent $170.4m at auction for a famous nude by Amedeo Modigliani, an Italian modernist.) Later in 2014 Budi Tek, a Chinese-Indonesian collector, launched his similarly large-scale Yuz Museum farther along the river. The same year also saw the introduction of Le Freeport West Bund, a bonded warehouse built to help the tax-free import, export and storage of artworks. It allows collectors to sidestep the 17% value-added tax imposed on art and the customs duty on works brought into the country. A game-changer for freeing up the movement of artworks, it is a prime example of the city’s market-friendliness. Next year, two new museums will open in the district. + +Over the past fortnight, Shanghai has attracted international art enthusiasts as never before. The smaller and more refined of the two art fairs was West Bund Art & Design. Its larger and only slightly longer-standing counterpart, ART021, took place in the grand, neoclassical Shanghai Exhibition Centre. Dwarfing both fairs is the Shanghai Biennale. Now in its 11th incarnation, it comprises a five-month-long exhibition and programme of performances and lectures. + +The influx of collectors triggered by this triptych of events presented an important opportunity for galleries to hold exhibitions, unveil new spaces and host lavish soirées. Much of the activity took place in the newest art facilities—West Bund and the Power Station of Art (pictured). + +All the glamour, though, cannot mask the concern felt by some artists and gallerists in Shanghai. Does projecting the city as such a high-end, resolutely outward-looking hub risk endangering some of other important corners of the city? In contemporary China there is little room for sentiment. Rapid gentrification is already forcing many small businesses to pull down the shutters, especially the humbler ventures that have long lent the city its richness—the family-run noodle joints, the bicycle-repair shops, and indeed, the venue of this month’s big art party, Shelter, which is due to close at the end of this year after the Culture Bureau refused to renew its lease. + +This upgrading of the city is already affecting the arts sector. Rising rents—a direct outcome of urban redevelopment—have made the production of art in Shanghai difficult, forcing artists to the city’s fringes, and beyond. It risks crushing the kind of grass roots, artist-led initiatives on which so much of China’s contemporary art was founded. The shift also affects galleries. Three of the city’s most important names—MadeIn Gallery, Aike Dellarco and ShanghART—have relocated this year from Shanghai’s original art hub, M50, to West Bund. Their departure will mean fewer visitors to M50’s remaining lower-tier, entry-level galleries for whom a move to West Bund is out of the question. If M50 stumbles, that may affect new artists seeking representation in the city and younger, would-be collectors who want more affordable art than that shown at West Bund. + +The cultural transformation of Shanghai has been astonishing. But it risks threatening the kind of complex, nuanced and sustainable engagement that a lively arts sector needs. If local government can encourage affordable spaces for young artists and help promote a climate in which artists and art professionals can thrive, then this most dynamic of cities might truly have it all. + +This article appeared in the Books and arts section of the print edition under the headline City supreme + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21710782-will-expensive-urban-regeneration-and-rising-rents-push-artists-small-galleries-and/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Johnson + +You tell me that it’s evolution? + +Scientists have reached no consensus on the origins of language + +Nov 26th 2016 + + + +IN 1866, the founding statutes of the new Linguistic Society of Paris included this curious ban: “The Society will accept no communication concerning either the origin of language or the creation of a universal language.” Darwin had published “On the Origin of Species” just seven years earlier, and he was intrigued by the parallels between linguistic and physical evolution. The society, with Catholic leanings, wanted none of it. + +For more than a century afterwards, little was learned about the evolution of language—even though evolution had become the standard explanation for nearly all biological phenomena, whether physical or behavioural. + +Today, the debate is lively. But there is still no consensus on how, when or why language evolved. There is hardly even the barest agreement that it evolved at all, in the sense of having been the specific product of gradual natural selection. + +One figure who initially also kept mum on this subject was Noam Chomsky. For decades the towering figure of modern linguistics refused to be drawn into theorising about how language arose, arguing that although it must have arisen by evolution in some broad sense, it was impossible to know much in detail. + +Speech leaves no fossils. Palaeoanthropologists know when the human brain began to grow to its unusually large size, but not when or why homo sapiens started putting that big brain to linguistic use. Stephen Jay Gould, an evolutionary biologist who was much loved for his popular writings, stepped into the debate by calling language a “spandrel”. He borrowed the term from architecture, where a spandrel is the space between two arches which, over time, came to be decorated as features in their own right. In much the same way, Gould thought, big brains and increased intelligence were the original feature. The ability to turn that feature to complex and abstract communication was a spandrel. + +In 1990 Steven Pinker and Paul Bloom, both then at MIT, published an article making a surprisingly controversial case. In their view, language had of course evolved in a typically Darwinian fashion: slowly, first as a result of random genetic mutation, but gradually giving early humans a survival advantage. That advantage was that each new human need not learn valuable information by direct experience, but can learn it from those who had come before: eat this, not that; this animal is dangerous; here’s how to make an axe. While no one can say what the stages between basic cries and intricate modern syntax were, Messrs Pinker and Bloom were confident in positing a gradual unfolding. + +Mr Chomsky later came to an unusual and different solution: that a single mutation in a single human gave that human an ability called “Merge”. This ability was not for communication, but for thought: it allowed simpler thoughts to be combined into larger and more complex ones, and that this complex thought was the real survival advantage. The truly human bit of language—the ability to nest small units (words and phrases) inside larger ones (phrases and clauses and sentences) is, in this view, a useful by-product of “Merge”. Though they are not Mr Chomsky’s terms, you could call speech the spandrel, while thinking is the original arch. + +One fruitful avenue of research is what elements of language are shared by humankind’s animal cousins. Birds can use a small number of units to make an infinite series of different calls—as humans do with words. Chimps and other apes can learn hundreds of hand signs, and even combine them in crude but creative ways. Michael Corballis, a psychologist at the University of Auckland, thinks that gesture was crucial to the rise of complex language, a theory he expands in “The Truth about Language”, to be published next year. Sign languages have all of the complexity of spoken ones, and deaf children even “babble” with their hands just as hearing children do with their mouths. + +That so many great minds, including household names like Pinker, Chomsky and Gould, give such wildly different accounts, could be seen as a scientific failure. Or it can be taken as a charming reminder that even if science has left creation myths and just-so stories behind in the past, some problems—like consciousness, as well as language—remain hard to solve precisely because they are humankind’s most human traits. Nobody ever said that studying the fascinating but flawed human mind with that very same mind should be easy. + +This article appeared in the Books and arts section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21710783-scientists-have-reached-no-consensus-origins-language-you-tell-me-its/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + + + + +* * * + + + +Obituary + + + +Jia Jinglong: The wedding house [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +The wedding house + +Obituary: Jia Jinglong died on November 15th + +The Chinese protester against forced expropriation was 30 years old + +Nov 26th 2016 + + + +MAY 25th was an auspicious day for Jia Jinglong. It was his birthday by the lunar calendar, and in 2013 it was also the date of his forthcoming wedding to Li Lanlan. They had been going out for four years, a long time; but he was a shy boy, who had not wanted to go to college and didn’t read or write much, and who would blush whenever he spoke to a girl. + +The wedding was to happen in his family house in North Gaoying village in Hebei province, near Beijing. “Village” no longer seemed the right word; the small houses were being rapidly swallowed up by the city of Shijiangzhuang, whose towers rose up to the sky at the end of the village streets, while the thump of pile-driving drowned out the birds. Nonetheless Mr Jia loved his spacious house. He and his father had built it only six years before; it was full of windows, not all of which looked out on the encroaching cranes. It had three storeys. His parents lived on the ground floor; his two Tibetan mastiffs were on the top; and the second storey, his part, was the wedding house. It was already filled with more than 100 plants, as well as bundles of straw which kept him, and them, warm. Around the village he was the number-one guy for plants, he said. He grew begonias, aloe vera and every kind of cactus: ball cactus, crab cactus, lithops. Sometimes he gave them away to neighbours. “Anybody’s kid who has an itchy neck knows to come to me for cactus,” he told the court before his sentencing. By then, however, the judges had stopped listening. + +To make his house ready for the wedding, he went to endless trouble. He changed his job at the pharmaceutical factory from the day to the night shift, so that he could spend the days refurbishing. On his knees, with hands callused from hard work, he carefully wiped out dust with a damp rag from cracks in the floors. After repainting he bought new furniture and hung up red decorations, the colour of Chinese weddings. Most of them he had made himself (he liked to sew, especially cross-stitch). Pride of place went to a framed red-backed collage of 0.01yuan coins, collected for years, arranged to form the characters “I love my home.” + +Men in black sedans + +He knew that a shadow hung over it. In 2010 his father, Jia Tongqing, had signed a demolition order. It had been forced out of him by local party officials; if he didn’t sign, Tongqing was told, his aged mother’s request for a pension would be rejected. So it was done, and his parents had moved to the cramped high-rise flat they had been given by the government. No cash compensation came. The pattern of forced demolition and relocation, with developers and officials in corrupt cahoots together, is common all over booming China, and for the most part stoically accepted. But this particular doomed house was their only son’s home, too—his wedding house—and he did not agree, and would not move. + +So when the black sedans drew up outside, 18 days before the wedding, and thugs with axes and sticks got out and began to throw bricks at the windows, he furiously resisted. He climbed on the roof of the second storey, waving a big red national flag, but no one listened. He was dragged out and beaten up. The house was smashed to rubble, with everything in it, all the plants he loved; his mastiffs were taken away. He told the court later that the pain tore and pierced him like a knife. And the worst of it was that, in two months, Lanlan called off the wedding. After all, her prospective husband now had no house to give her. + +He wrote appeal after appeal for proper compensation, but got no answer. So in October 2014 he began to arm himself. Personal firearms being forbidden, he bought three nail-guns and began to fiddle with them. One did the job for him: in February 2015 he managed to shoot the local party chief, He Jianhua, in the back of the head at close range at a New Year party in the village. For this he was sentenced to death in the People’s Intermediate Court. His sentence was upheld this year in the Supreme People’s Court, China’s highest. + +Plenty of protests were made on his behalf. Two party newspapers came out for him, as well as 12 distinguished lawyers. Most netizens of Weibo supported him. There were extenuating circumstances for the murder, not least the collapse of the wedding. Besides, Mr Jia had come to symbolise the plight of the unheeded little man in China, powerless before high-ups and unable to get justice. (“If the people had any choice in life,” he said, “I would not have taken this dead-end path.”) The courts were implacable, however. This was a long-planned murder of an official not especially to blame for the demolition; and all that online pressure to soften the law simply set a dangerous precedent. + +His sentence might possibly have been commuted if he had turned himself in immediately after the murder, as he had meant to. But as he fled the scene in his car, he called Lanlan first to tell her what he had done. She was now married to another man and had a baby; but he still referred to her as his girlfriend, and had sent her 1,100 yuan in a red envelope for her wedding. While he talked to the woman who should have shared the house with him, He’s friends violently bumped his car; and it was in their custody that the nurseryman of North Gaoying village arrived at the police station, and sealed his fate. + +This article appeared in the Obituary section of the print edition under the headline The wedding house + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21710780-chinese-protester-against-forced-expropriation-was-30-years-old-obituary-jia-jinglong-died/print + + + + + +| Section Menu | Main Menu | + + + + + +| Main menu | Previous section | + + + + +* * * + + + +Economic and financial indicators + + + +Interactive indicators [Thu, 24 Nov 16:30] + +Output, prices and jobs [Thu, 24 Nov 16:30] + +Trade, exchange rates, budget balances and interest rates [Thu, 24 Nov 16:30] + +The Economist commodity-price index [Thu, 24 Nov 16:30] + +Stockmarkets [Thu, 24 Nov 16:30] + +Markets [Thu, 24 Nov 16:30] + + + + + +* * * + + + +| Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + + + + +* * * + + + +Interactive indicators + +Nov 26th 2016 + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21710801/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Output, prices and jobs + +Nov 26th 2016 + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21710797-output-prices-and-jobs/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Trade, exchange rates, budget balances and interest rates + +Nov 26th 2016 + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21710799-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +The Economist commodity-price index + +Nov 26th 2016 + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21710805-economist-commodity-price-index/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Stockmarkets after the American election + +Speculation that Donald Trump will cut taxes has buoyed shares + +Nov 26th 2016 + + + +American shares have enjoyed a post-election rally, buoyed by speculation that Donald Trump will cut taxes, increase infrastructure spending and reduce regulation. The Dow Jones Industrial Average has risen by 4% since November 8th; the Russell 2000, an index of American small-cap stocks, has soared by 12%. A strong dollar has also buoyed Japanese markets: a weaker yen improves the earnings outlook for exporters. Although emerging-market stocks have suffered since the election, Egypt has bucked the trend. Since the government floated the pound at the start of the month there has been a surge in foreign investment. Saudi Arabian stocks bounced after the government sold $17.5bn of bonds in October. + +This article appeared in the Economic and financial indicators section of the print edition under the headline Stockmarkets + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21710803-speculation-donald-trump-will-cut-taxes-has-buoyed/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + + + + +* * * + + + +Markets + +Nov 26th 2016 + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21710785-markets/print + + + + + +| Section Menu | Main Menu | + + + +Table of Contents + +The world this week + +Politics this week + + + +Business this week + + + +KAL's cartoon + + + +Leaders + +Climate change: The burning question + + + +1MDB: Falling down + + + +American politics: The hardest deal + + + +Italy’s constitutional reforms: A regretful No + + + +Britain’s economy: Limited ambition + + + +Letters + +On Turkey, Brexit, GM crops, Airbnb, trade, cricket: On Turkey, Brexit, GM crops, Airbnb, trade, autism, cricket + + + +Briefing + +Reforming Italy’s constitution: Renzi’s referendum + + + +United States + +Reflating the economy: King of debt + + + +The big gaggle: Fifth Avenue frenzy + + + +North Carolina: Not going quietly + + + +The next administration: Opening the field + + + +Treasure-hunting: The box that launched 100,000 trips + + + +The national-security team: General direction + + + +Lexington: The dark side + + + +Meet the attorney-general: Evening Sessions + + + +The Americas + +Brazil’s prosperous south: Not the country you know + + + +Bello: Piñata politics + + + +Polish-Brazilians: Black soup and pierogi + + + +Indigenous rights in Canada: Contested wilderness + + + +Asia + +Deforestation in Indonesia: For peat’s sake + + + +Women and work in Japan: More glaring than shining + + + +Civil society in Vietnam: Ambiguity of assembly + + + +Australia’s natural gas: Poor credit + + + +Banyan: The other pivot + + + +China + +Education: Patriotic energy v West-worshipping + + + +China’s national parks: A farewell to loudspeakers + + + +Middle East and Africa + +Counter-terrorism: The eyes in Africa’s skies + + + +East African camels: Speedy and tasty + + + +South Africa: Rainbow stagnation + + + +Dissent in the Gulf: Protest and lose your passport + + + +Libya: The unravelling + + + +Europe + +Angela Merkel declares: Not running for world saviour + + + +German memes: Lügenpresse, a history + + + +France’s Republican primary: Dark horse + + + +The Baltic states and Donald Trump: Edgy allies + + + +Charlemagne: Running scared + + + +Britain + +The Autumn Statement: The Brexit budget + + + +Letting agencies: Rent extraction + + + +Brexit from abroad: The views of others + + + +Tech companies: Put out more deck chairs + + + +Troubled prisons: I predict a riot + + + +Land banking: Sitting on their hands + + + +Teacher recruitment: From the boardroom to the classroom + + + +Bagehot: Spreadsheet Phil, unlikely rebel + + + +International + +Climate policy: Up in smoke? + + + +Special report: Oil + +Breaking the habit: The future of oil + + + +On the oil wagon: A tricky time for oil producers + + + +Taken to task: How to deal with worries about stranded assets + + + +From oiloholics to e-totallers: The coming revolution in transport + + + +Assault on batteries: The race to move beyond lithium-ion + + + +Doing it their way: Where India’s and China’s energy consumption is heading + + + +Heading for the twilight: When oil is no longer in demand + + + +Business + +The Trump Organisation: Deconstructing Donald + + + +Samsung: Ponying up? + + + +Facebook’s woes: The Mark of the social beast + + + +Silicon Valley and food: Pie in the sky + + + +Consumer goods: The riches in returns + + + +Emirates and the A380: Flying low + + + +Schumpeter: Status contentment + + + +Finance and economics + +Financial regulation (1): On fire + + + +Buttonwood: Charging the earth + + + +Financial regulation (2): Basel bust-up + + + +Japan’s bond market: Zero-sum game + + + +Global wealth: The one per center next door + + + +Currencies: Forward and backward + + + +India’s cash crunch: Short-changed + + + +Free exchange: Trend growth + + + +Science and technology + +Exoplanets: Portraits of worlds + + + +Reactionless motors: Ye cannae break the laws of physics + + + +Air pollution: Blown away + + + +Scientific publishing: All together now + + + +Scientific publishing: Award + + + +Books and arts + +India’s diaspora: A model minority + + + +Publishing in India: Mythomania + + + +Contemporary art in China: City supreme + + + +Johnson: You tell me that it’s evolution? + + + +Obituary + +Jia Jinglong: The wedding house + + + +Economic and financial indicators + +Interactive indicators + + + +Output, prices and jobs + + + +Trade, exchange rates, budget balances and interest rates + + + +The Economist commodity-price index + + + +Stockmarkets + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.12.03.TXT b/homeworks/B20769/homework1/data2/2016.12.03.TXT new file mode 100644 index 0000000..0c0c4f5 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.12.03.TXT @@ -0,0 +1,4380 @@ +The world this week + +Leaders + +Letters + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Briefing + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Politics this week + +Dec 3rd 2016 + + + +Fidel Castro, who led a revolution in Cuba and ruled as a communist dictator for 47 years, died at the age of 90. He was an unyielding antagonist of the United States, which tried many times to assassinate him. In 1962 Mr Castro helped bring the world to the brink of nuclear war by inviting the Soviet Union to station missiles in Cuba. His brother, Raúl, formally replaced him as president in 2008, but he was the symbolic leader of the Latin American far left until his death. See article. + +Colombia’s congress ratified a revised peace agreement with the FARC, an insurgent group with which the government has been at war for 52 years. Legislators opposed to the deal walked out before the vote. Colombians rejected the original agreement in a plebiscite in October. To avoid a second vote, President Juan Manuel Santos submitted the new deal to congress for ratification. + +A plane carrying 77 people, including members of a Brazilian football team, crashed near Medellín in Colombia. + +Jovenel Moïse won Haiti’s presidential election in the first round with 56% of the vote, according to preliminary results. Mr Moïse belongs to the Haitian Shaved-Head Party, with which the former president, Michel Martelly, is also linked. See article. + +Canada’s prime minister, Justin Trudeau, approved the expansion of the Kinder Morgan Trans Mountain pipeline, which carries oil for export from Alberta’s tar sands to the west coast. Green groups say the decision will encourage production of an especially dirty form of petroleum. + +On borrowed time + +Park Geun-hye, the embattled president of South Korea, suggested she was willing to leave office, saying that parliament should decide her fate. Her opponents have been clamouring to impeach her over her involvement in an alleged extortion scandal. See here and here. + +The UN Security Council imposed new sanctions on North Korea in an attempt to force it to abandon its nuclear weapons. The latest measure restricts its exports of coal, a big source of foreign currency. + +Thailand’s rubber-stamp parliament acclaimed Crown Prince Maha Vajiralongkorn as king, ending an unexpected interregnum following the death of his father, King Bhumibol Adulyadej, in October. See article. + +Nawaz Sharif, the prime minister of Pakistan, appointed a new army chief on the retirement of the incumbent. It was the first time an army chief in Pakistan has retired at the end of his allotted term in 20 years. + +Three human-rights advocates disappeared in China, apparently arrested by the authorities. Peng Ming, a veteran pro-democracy campaigner who was kidnapped by Chinese officials from Myanmar, was said to have died in jail. + +Living to fight another day + + + +South Africa’s president, Jacob Zuma, survived an attempt to remove him as leader of the ruling African National Congress by party dissidents amid an influence-peddling scandal. + +Scores of people were killed in Uganda in clashes between the army and supporters of a regional king, Charles Mumbere, who is accused of starting a secessionist movement. + +Syrian government forces, backed by Russian bombing, made large gains in rebel-held eastern Aleppo. The rebels’ last big redoubt has now been cut almost in half; many civilian casualties have been reported. See article. + +Israel fired two rockets towards Damascus, Syria’s capital, possibly in an operation designed to disrupt flows of weapons toward Hizbullah, which is operating there in support of the Assad regime. + +The could-be president + +In France François Fillon, a socially conservative former prime minister, won the nomination of the centre-right Republicans for next year’s presidential election. He wants to shrink the state, a radical stance in France. Polls suggest he would beat the National Front’s Marine Le Pen, but he will need to convince the left to vote for him. See article. + +An employee of Germany’s domestic intelligence agency was arrested on suspicion of passing information to Islamic fundamentalists. + +Theresa May, Britain’s prime minister, held talks with her opposite number from Poland, Beata Szydlo. The issue of allowing the hundreds of thousands of Polish people who live in Britain to stay after Brexit dominated the agenda. Negotiating the rights of EU migrants in the UK and British expats in the EU will be central to the Brexit talks. + +The UK Independence Party got its third leader of the year. Paul Nuttall wants UKIP to replace Labour as the voice of the working class. A swing of less than 15 percentage points would reward UKIP with nearly 20 seats that Labour won in the 2015 election. A similar swing against the government would see UKIP take nearly as many seats from the Tories. Even if it managed such a feat, that would not make for much of an opposition party. See article. + +Top Trumps + +Donald Trump chose Steven Mnuchin to be his treasury secretary. Mr Mnuchin is the founder of a film-financing firm that has helped fund dozens of Hollywood hits, including “Fantastic Beasts and Where to Find Them”. He will have to conjure up some magic at the Treasury if he is to accomplish Mr Trump’s agenda of tax cuts and big spending without blowing a hole in the budget deficit. See article. + +Mr Trump filled some other cabinet positions.Tom Price, a critic of Obamacare, was selected as health secretary. + +Nancy Pelosi was re-elected as the Democrats’ leader in the House, seeing off a challenge from a congressman who has said the party’s defeat at the election should set off a “fire alarm because the house is burning down”. + +Black and white + + + +Norway’s Magnus Carlsen defeated Sergey Karjakin of Russia in a tie-breaker match to retain his title as world chess champion. Mr Carlsen’s queen-sacrificing gambit stopped Mr Karjakin from becoming the first Russian world champion since 2007. The match had taken on geopolitical significance in part because Mr Karjakin was born in Crimea, which Russia annexed in 2014 + +This article appeared in the The world this week section of the print edition + + + + + +Business this week + +Dec 3rd 2016 + +After months of haggling OPEC members agreed to the first cut in oil production in eight years. Non-OPEC members are expected to chip in with a cut of their own. Iran, which had been reluctant to reduce output so soon after returning to international markets, agreed to a token increase. The deal will reduce global production by almost 2%. Oil prices jumped in response. See article. + +Property bubbling + + + +The Case-Shiller national index of home prices in America rose to a new peak in September, climbing 0.1% above the previous peak reached in July 2006, before the bust in the housing market (adjusted for inflation, the index is still 16% below that mark). The index increased by 5.5% in the 12 months to September, helped by buoyant markets in Dallas, Denver, Portland and Seattle. But house prices in cities in the forefront of the previous boom, such as Las Vegas, Miami and Phoenix, remain well below their all-time highs. + +The OECD gave the thumbs up to Donald Trump’s plan to boost infrastructure spending, saying it would boost America’s economy, which is projected to grow by 2.3% next year, well above the 1.5% forecast for this year. But the organisation also warned that “an increase in protectionism could risk impairing already weak growth in global trade”. + +Meanwhile, America’s economic growth rate in the third quarter was revised to an annualised 3.2%, up from an initial estimate of 2.9%. Consumer spending was stronger than had been thought. Rising workers’ incomes also helped. + +Mark Carney, the governor of the Bank of England, warned about the increasing level of household debt in Britain. The debt-to-income ratio is the highest since 2013. Unsecured debt accounts for a bigger chunk of this. The share of high loan-to-value mortgages (those greater than 90%) has nearly doubled since 2012. Over that same four-year period outstanding credit-card loans rose by £10bn ($15bn), hitting £66bn in October. + +A suspected cyber-attack caused almost 1m customers of Deutsche Telekom to lose their broadband connection. Hackers are thought to have targeted households’ internet routers with a software virus that disrupted their service. The code for the virus has been used before in other attacks on devices that retain the same passwords issued by their manufacturers. + +Split personalities + +The European Court of Justice began hearing legal arguments about whether Uber is a transportation firm or a digital service. The closely watched case has been taken to the EU’s highest court by Barcelona’s established taxi drivers, who, like taxi drivers the world over, complain that Uber has muscled into their market by circumventing local transport regulations. Uber says it is an “information-society services provider”. + +Pilots at Lufthansa went on strike again, causing the German airline to cancel thousands of flights. A dispute between management and cockpit and cabin crews over pay and conditions has dragged on for years. The strikes cost Lufthansa up to €15m ($16m) each day they are held. Siemens, an engineering company, this week called on both sides to reach an agreement because the strife was damaging Germany’s image. + +In a surprise move, India’s central bank ordered the country’s banks to transfer what amounts to half the cash deposited with them since the withdrawal of 500- and 1,000- rupee banknotes to its reserves. As people rush to beat a year-end deadline to deposit the notes in accounts, the banks have used their newfound wealth to buy bonds, unsettling the central bank’s inflation hawks. + +Banca Monte dei Paschi di Siena, a distressed Italian bank, took the first step in its recapitalisation plan by offering to swap €4.3bn ($4.6bn) in subordinated bonds for equity. The bank is trying to raise capital amid uncertainty about the outcome of Italy’s constitutional referendum on December 4th. If the government loses the vote, Italy’s banks are likely to be hit hard in the markets. + +Must do better + +The Bank of England’s latest stress tests for British banks found that Barclays, Royal Bank of Scotland and Standard Chartered had “some capital inadequacies”, but that all three now have “plans in place to build further resilience”. RBS’s new plan was submitted at the last minute and includes adding another £2bn ($2.5bn) to its capital cushion. The government still owns a majority stake in the bank eight years after bailing it out. The stress tests judged whether banks could withstand five years of financial turbulence. Conducted in March, they did not weigh up the scenario of Britain leaving the European Union. + +This article appeared in the The world this week section of the print edition + + + + + +KAL's cartoon + +Dec 3rd 2016 + + + +More KAL's cartoons + + + +This article appeared in the The world this week section of the print edition under the headline KAL's cartoon + + + +Leaders + + + + + +The dollar and the world economy: The mighty dollar + +India’s demonetisation: Modi’s bungle + +Education in America: DeVos woman + +South Korean politics: Park somewhere else + +Latin America: After Fidel + + + + + +The mighty dollar + +Why a strengthening dollar is bad for the world economy + +The rise of the greenback looks like something to welcome. That is to ignore the central role the dollar plays in global finance + +Dec 3rd 2016 + + + +THE world’s most important currency is flexing its muscles. In the three weeks following Donald Trump’s victory in America’s presidential elections, the dollar had one of its sharpest rises ever against a basket of rich-country peers. It is now 40% above its lows in 2011. It has strengthened relative to emerging-market currencies, too. The yuan has fallen to its lowest level against the dollar since 2008; anxious Chinese officials are said to be pondering tighter restrictions on foreign takeovers by domestic firms to stem the downward pressure. India, which has troubles of its own making (see article), has seen its currency reach an all-time low against the greenback. Other Asian currencies have plunged to depths not seen since the financial crisis of 1997-98. + +The dollar has been gradually gaining strength for years. But the prompt for this latest surge is the prospect of a shift in the economic-policy mix in America. The weight of investors’ money has bet that Mr Trump will cut taxes and spend more public funds on fixing America’s crumbling infrastructure. A big fiscal boost would lead the Federal Reserve to raise interest rates at a faster rate to check inflation. America’s ten-year bond yield has risen to 2.3%, from almost 1.7% on election night. Higher yields are a magnet for capital flows (see article). + +Zippier growth in the world’s largest economy sounds like something to welcome. A widely cited precedent is Ronald Reagan’s first term as president, a time of widening budget deficits and high interest rates, during which the dollar surged. That episode caused trouble abroad and this time could be more complicated still. Although America’s economy makes up a smaller share of the world economy, global financial and credit markets have exploded in size. The greenback has become more pivotal. That makes a stronger dollar more dangerous for the world and for America. + +Novus ordo seclorum + +America’s relative clout as a trading power has been in steady decline: the number of countries for which it is the biggest export market dropped from 44 in 1994 to 32 two decades later. But the dollar’s supremacy as a means of exchange and a store of value remains unchallenged. Some aspects of the greenback’s power are clear to see. By one estimate in 2014 a de facto dollar zone, comprising America and countries whose currencies move in line with the greenback, encompassed perhaps 60% of the world’s population and 60% of its GDP. + +Other elements are less visible. The amount of dollar financing that takes place beyond America’s shores has surged in recent years. As emerging markets grow richer and hungrier for finance, so does their demand for dollars. Since the financial crisis, low interest rates in America have led pension funds to look for decent yields elsewhere. They have rushed to buy dollar-denominated bonds issued in unlikely places, such as Mozambique and Zambia, as well as those issued by biggish emerging-market firms. These issuers were all too happy to borrow in dollars at lower rates than prevailed at home. By last year this kind of dollar debt amounted to almost $10trn, a third of it in emerging markets, according to the Bank for International Settlements, a forum for central bankers. + +When the dollar rises, so does the cost of servicing those debts. But the pain caused by a stronger greenback stretches well beyond its direct effect on dollar borrowers. That is because cheap offshore borrowing has in many cases caused an increased supply of local credit. Capital inflows push up local asset prices, encouraging further borrowing. Not every dollar borrowed by emerging-market firms has been used to invest; some of the money ended up in bank accounts (where it can be lent out again) or financed other firms. + +A strengthening dollar sends this cycle into reverse. As the greenback rises, borrowers husband cash to service the increasing cost of their own debts. As capital flows out, asset prices fall. The upshot is that credit conditions in lots of places outside America are bound ever more tightly to the fortunes of the dollar. It is no coincidence that some of the biggest losers against the dollar recently have been currencies in countries, such as Brazil, Chile and Turkey, with lots of dollar debts. + +The eye of providence + +There are lurking dangers in a stronger dollar for America, too. The trade deficit will widen as a strong currency squeezes exports and sucks in imports. In the Reagan era a soaring deficit stoked protectionism. This time America starts with a big deficit and one that has already been politicised, not least by Mr Trump, who sees it as evidence that the rules of international commerce are rigged in other countries’ favour. A bigger deficit raises the chances that he act on his threats to impose steep tariffs on imports from China and Mexico in an attempt to bring trade into balance. If Mr Trump succumbs to his protectionist instincts, the consequences would be disastrous for all. + +Much naturally depends on where the dollar goes from here. Many investors are sanguine. The greenback is starting to look dear against its peers. The Fed has a record of backing away from rate rises if there is trouble in emerging markets. Yet currencies often move far away from fundamental values for long periods. Nor is it obvious where investors fleeing America’s currency might run to. The euro and the yuan, the two pretenders to the dollar’s crown, have deep-seated problems of their own. The Fed, whose next rate-setting meeting comes this month, may find it harder than before to avoid tightening in an economy that is heating up. + +If the dollar stays strong, might protectionist pressure be defused by co-ordinated international action? Nascent talk of a new pact to rival the Plaza Accord, an agreement in 1985 between America, Japan, Britain, France and West Germany to push the dollar down again, looks misplaced. Japan and Europe are battling low inflation and are none too keen on stronger currencies, let alone on the tighter monetary policies that would be needed to secure them (see article). + +Stockmarkets in America have rallied on the prospect of stronger growth. They are being too cavalier. The global economy is weak and the dollar’s muscle will enfeeble it further. + +This article appeared in the Leaders section of the print edition under the headline The mighty dollar + + + + + +India’s policy + +India’s currency reform was botched in execution + +Narendra Modi needs to take measures to mitigate the damage his rupee reform has done + +Dec 3rd 2016 + + + +INDIA is not the first country to introduce abrupt, drastic reform of its currency. But the precedents—including Burma in 1987, the former Soviet Union in 1991 and North Korea in 2009—are not encouraging. Burma erupted in revolt, the Soviet Union disintegrated and North Koreans went hungry. All the more reason for Narendra Modi, India’s prime minister, to prepare the ground before the surprise announcement on November 8th that he would withdraw the two highest-denomination banknotes (the 500-rupee and 1,000-rupee, worth about $7.30 and $14.60). Yet he did not and the result is a bungle that, even if it does achieve its stated aims, will cause unnecessary harm. + + + +Shops stopped accepting the old notes at once. Holders have until the end of the year to deposit them in banks or swap them, either for smaller-denomination notes or for new 500- and 2,000-rupee ones. That 86.4% by value of the cash in circulation is suddenly no longer legal tender has already caused predictable and needless hardship. It is too late—and politically unthinkable—to start again (ses article), but Mr Modi should do more to limit the damage; and he should abandon the flawed leadership style that caused the mess. + +Not the way to do it + +The plan has laudable aims. Its initial popularity was based on the idea that the greedy rich, with their ill-gotten “black money” stored in stacks of banknotes, will get their comeuppance. Those who cannot justify the sources of their wealth will face punitive taxes. It also accords with Mr Modi’s manifesto pledge to normalise India’s black economy, estimated by the World Bank in 2010 to be worth about one-fifth of official GDP. The idea is that India will become more efficient, as more people and more money enter the banking system; counterfeit currency will become worthless; India’s woefully low tax base will expand; and government coffers will enjoy a windfall of cash expropriated from the corrupt. + +It is a pity, then, that Mr Modi’s scheme to achieve these aims is so flawed. Banknotes are not just a way for the rich to store their wealth; they are also how the unbanked survive. As so often, the burden of this reform has fallen most heavily on the poor (see article). Over four-fifths of India’s workers are in the “informal” sector, paid in cash. Untold numbers have been laid off because their employers cannot pay them. Tens of millions have queued for hours at cash machines and bank branches, to get rid of the useless notes and get hold of some spending money. A new business has sprung up in laundering cash for a fee for those without the time or inclination to queue, or with more notes than they can account for. + +Cash is used for 98% by volume of all consumer transactions in India. With factories idle, small shops struggling and a shortage of cash to pay farmers for their produce, the economy is stuttering. There are reports that sales of farm staples have fallen by half and those of consumer durables by 70%. Guesses at the effect on national output vary wildly, but the rupee withdrawal could shave two percentage points off annual GDP growth (running at 7.1% in the three months to September). + +With a bit of forethought, much of the mayhem could have been avoided. It turns out that the new notes are smaller and require all the country’s ATMs to be reconfigured, which takes 45 days. Some 22bn notes are affected, but printing capacity is said by the previous finance minister to amount to only 3bn a month. So even if fewer notes are needed, because more money will be in banks, printing them will take some time. The banks were ill-prepared to handle about 8.5trn rupees in new deposits in the three weeks after demonetisation. After they used the deposits to buy bonds, lowering interest rates, the central bank had to order them to park the new money with it, in zero-interest accounts. + +If Mr Modi’s plea for patience for a 50-day period until the end of the year looks optimistic, so does the promise of “the India of your dreams”, purged of the corrupt and their loot. In India’s black economy of undeclared, untaxed income, all sorts of transactions, from medical bills to house purchases, are sometimes settled with suitcase-loads of banknotes. Yet even if the hoarders will be wary of another confiscation in the future, they will be tempted to make use of the new 2,000-rupee note just as they used the old 1,000-rupee one. + +Moreover, Mr Modi was wrong when he said that the rich now need sleeping pills, while the poor sleep peacefully. In past seizures of illegal wealth, only between 3.75% and 7.3% was found to be kept in cash. The sleepless are those who need cash to get by; the truly rich are laughing all the way to their flats in London. The punitive taxes levied on black money that is deposited will feel like flea-bites. As for the counterfeiters, most estimates of the value of fake rupees are in the tens of millions of dollars, out of $250bn in circulation. + +Both for the sake of Indians and for his premiership, Mr Modi needs to mitigate some of the harm he has caused. He should find ways of printing the new money more quickly. More important, he should also lengthen the period over which notes may be exchanged or deposited and allow the old notes to remain valid as payments for a range of goods and services (tax payments, say, would seem logical). + +Somewhat too sensational + +Much in India needs reform—abolishing restrictive labour rules, for example. In the past such reform has often been stymied by a system that favours government by committee. Mr Modi has lurched to the other extreme. The perceived need for secrecy (to take cash-hoarders by surprise) fed into the innate sense he has of his own infallibility and his misplaced faith in his technocratic skills. By designing a scheme that was needlessly callous and which is becoming increasingly unpopular, he has squandered political capital. In future he needs to consult more widely, centralise less decision-making in his own hands and acknowledge that not all criticism is partisan or special pleading from the corrupt rich. India, fortunately, is not North Korea, and is aware that leaders are fallible. Its federal, democratic system will give voters plenty of chances to let it be known how badly Mr Modi has messed up his rupee rescue. + +This article appeared in the Leaders section of the print edition under the headline Modi’s bungle + + + + + +Education in America + +Donald Trump’s education secretary deserves a cautious welcome + +Betsy DeVos will promote the idea that parents should be able to choose where their children are educated—but the schemes should be done properly or not at all + +Dec 3rd 2016 + + + +FOR those looking for encouraging signs about what a Trump administration might accomplish, the nomination of Betsy DeVos as education secretary deserves a cautious welcome. The welcome is because giving parents choice over where their children are educated is a good thing. The caution because there have been enough failures in school reform to suggest that promising ideas can be discredited if done badly. + +Both Republicans and Democrats suffer from blind spots on education reform. On the left there is a tendency to ignore bad public schools, pander to unions and indulge underperforming teachers. On the right the assumption is often that private is always better and that, once a voucher scheme has been set up, the work of school reform is done. The evidence suggests that what happens in the classroom is at least as important as the structure of the school system. This means recruiting and training teachers who give rigorous lessons and have high expectations of their pupils (see article). + +Mrs DeVos has put money and effort behind vouchers, which parents can spend at private schools, and charter schools—public schools operating autonomously. In Michigan, her home state, the results have been poor. In a state where test scores have declined over the past decade, 80% of charters are below the state average in reading and maths. This is partly because Michigan ignored lessons from elsewhere. + +The first of these is to exercise oversight. Milwaukee, the city in Wisconsin where school-choice was pioneered, began by allowing virtually anyone to open a school. This invited chancers, including a convicted rapist and a man who used taxpayers’ money to buy himself a pair of Mercedes-Benz cars. As a result, Milwaukee is now more careful about who can start a school. So is Massachusetts, which has some of the best charters in the country. Michigan, in contrast, has favoured quantity over quality: the state is home to three of the ten school districts with the highest share of charter students in America. + +A second principle is that oversight remains necessary even when vouchers and charters are up and running. Although the absence of bureaucracy is one of the biggest advantages of such schools, light-touch regulation is not the same as no regulation. As Milton Friedman, patron saint of the school-choice movement, put it, schools must meet “certain minimum standards laid down by the appropriate governmental unit”. In New Orleans, which has a successful charter-school scheme, the school district is ruthless about weeding out poorly performing schools. Worryingly, Mrs DeVos led a campaign against preventing underperforming charters in Michigan from expanding. + +As Friedman also knew, markets work well only if buyers have the data with which to make an informed choice. That leads to the third principle: schools receiving public money should publish facts and figures about their performance. The best gauges are based on pupil improvement and other measures of value-added, rather than raw test scores. Alas, Michigan’s charters are among the country’s least transparent. + +Put your hands up for Detroit + +America’s education system is decentralised: federal money makes up just under 9% of funding for secondary schools. But Mrs DeVos can still make a big difference. Federal dollars change behaviour at the margins: witness the impact of the Obama administration’s Race to the Top programme, which gives extra money to successful states. If states take the encouragement offered by the Trump administration to expand school choice, they should thank Mrs DeVos—then study how her home state could have done better. + +This article appeared in the Leaders section of the print edition under the headline DeVos woman + + + + + +South Korean politics + +Why Park Geun-hye should resign + +The president has a duty to spare her country months of drift + +Dec 3rd 2016 + + + +MANY members of the party of South Korea’s president, Park Geun-hye, want it. So does the opposition, which controls South Korea’s parliament. So do most ordinary Koreans: they have been marching for it by the millions. Even Ms Park says she is ready to do it. So why has she not yet resigned? + +Ms Park is hopelessly mired in an ever-deepening influence-peddling scandal (see article). She admits that she shared too much information about affairs of state with a close confidante, Choi Soon-sil, including advance drafts of many of her speeches. Ms Choi, prosecutors say, went on to use her clout with the president to extort money and favours from big companies and other organisations. Ms Park, the prosecutors allege, was an active participant in this racket, ordering her aides to help Ms Choi extract her payouts. + +The response of Ms Park to the allegations has been muddled. She says the notion that she took part in influence-peddling is a politically motivated fabrication—even though the prosecutors behind the claim work for her administration. She has said that she will co-operate with the investigation into the scandal, but is refusing to speak to prosecutors. This week she said she had committed a “huge fault” and is willing to leave office, but that parliament should decide how and when. + +Just what she meant by this is anyone’s guess. Parliament had been about to impeach her, but Ms Park’s offer is prompting second thoughts. Impeachment is a long and cumbersome process in South Korea. Once parliament has approved a set of charges, the constitutional court reviews them. It has six months to decide whether to turf the president out, triggering a new election. While it reflects, and during any ensuing election campaign, the prime minister serves as acting president. + +Such protracted flux would do South Korea unnecessary harm. The economy is faltering because of a slowdown in China and feeble export growth in world markets. National security is parlous, with North Korea increasing the tempo of missile launches and nuclear tests just as Donald Trump, America’s president-elect, threatens vaguely that he will withdraw American troops from the South. A distracted leader with an evaporating mandate would struggle to navigate such daunting waters, as would a temporary stand-in. If Ms Park truly wants what is best for the country, she should resign immediately, without any more fuss. Asking parliament to set the terms of her departure looks suspiciously like a delaying tactic that will end up only prolonging the agony. + +South Koreans are fed up with Ms Park, guilty or not. Her approval rating is 4%—as bad as François Hollande’s in France. Protests against her have attracted 1m people or more. A provincial governor and a parliamentarian deserted her party this week; ministers are resigning. Even the man who managed her election campaign says she should go. + +Heir today, Geun tomorrow + +Ms Park, the daughter of a previous president, has always seemed out of touch. She has given only one press conference each year, and none since the allegations surfaced. She seems hapless in the face of the scandal, proposing a series of compromises that parliament has batted away. She has given no fewer than three televised speeches to apologise, each one suggesting new remedies. One of her contrite gestures was to sack most of her closest aides, leaving herself even more isolated. + +There can be no recovery from such a fiasco. But Ms Park could salvage a little dignity by ending the circus now. Her resignation would pave the way for an election within 60 days, drawing a line under the crisis. It would also help by putting paid to the idea that has so enraged her opponents: that the elites of South Korea can get away with anything, whereas ordinary people feel the system is stacked against them. + +This article appeared in the Leaders section of the print edition under the headline Park somewhere else + + + + + +After Fidel + +The transition to a better Cuba will not be easy + +And Donald Trump could make it harder + +Dec 3rd 2016 + + + +FIDEL CASTRO was many things to many people (see article). As Cuba mourns him, his fans offer praise for how he stood up to the United States in the name of Cuban independence and provided world-class health care and education to poorer Cubans. But his achievements were outweighed by his drab legacy. Much of that human capital was wasted by his one-party system, police state and the stagnant, centrally planned economy. Cubans say Mr Castro was “like a father “ to them. They are right: he infantilised a nation. Anyone with initiative found ways to leave for exile abroad. + +This is the baleful legacy that Raúl Castro, Fidel’s younger brother and successor as president since 2008, must deal with. He has been trying to reform the economy, allowing small businesses, promoting private farming and welcoming some foreign investment. But he has been as determined as his brother to keep Cuba’s one-party system intact. And his cautious economic progress has now almost ground to a halt. That coincided with the thawing of the cold war between Cuba and the United States, with the restoration of diplomatic ties after 54 years in 2015. The big question, then, is whether Fidel’s death means that reform in Cuba will resume. The answer is probably yes, but not immediately. And the fate of Cuba, as ever, will be shaped partly by what happens in Washington. + +The main reason for expecting economic reform to revive is necessity. Cuba has been propped up by petrodollars from Venezuela, another failed neo-Stalinist state in Latin America. But Venezuela is now almost broke, and aid has therefore been trimmed. Cuba’s economy grew by only 1% in the first half of this year. Unlike Fidel, Raúl is keen on the “market socialism” of Vietnam and China. He should allow more types of private enterprise (for example, in professional services) and free wholesale markets. A crucial reform is to unify the two forms of peso currency, and devalue, which would create incentives for exports and investment. Raúl has repeatedly postponed this, because he fears that it would create losers before it creates winners. That is especially so because the American economic embargo remains in place, despite Barack Obama’s removal of some curbs on tourism and business dealings with the island. + +Much therefore depends on Donald Trump. The president-elect hints that he may reverse Mr Obama’s opening. This would be a mistake on two counts. Renewed isolation would cut Cuba off from the trade and investment it needs to smooth the way for economic reforms. And history shows that isolation causes the regime to dig in, making political reform more difficult. If Mr Trump is wise, he will build on Mr Obama’s policy and support the further opening of Cuban society. + +A tale of Havana and have-nots + +Raúl, who is 85, plans to step down as president in 2018. He is less popular than Fidel; his successors are even less likely to be able to build a personality cult like that of El Commandante. The budding private sector means that fewer people depend on the state. Cubans, especially the young, yearn for change. + +The alternative is that a post-Castro Cuba would become more like Vladimir Putin’s Russia, with a few political and military bigwigs looting their way to untold riches. Throwing up walls around Cuba would prepare for that wretched outcome, by giving the regime an excuse for its failure to improve living standards. Long-suffering Cubans deserve better. + +This article appeared in the Leaders section of the print edition under the headline After Fidel + + + +Letters + + + + + +Letters to the editor: On Italy, procurements, the electoral college, millennials, Trump supporters + + + + + +Letters to the editor + +On Italy, procurements, the electoral college, millennials, Trump supporters + +Dec 3rd 2016 + +Letters are welcome via e-mail to letters@economist.com + +Italy’s referendum + + + +You criticised the proposed constitutional reform in Italy and urged voters to say No in the referendum on December 4th (“A regretful No”, November 26th). Part of your reasoning was that new members of the senate would be “picked from regional lawmakers and mayors by regional assemblies”, and as these regions and municipalities form “the most corrupt layers of government”, the consequence will be that the new senators “will enjoy immunity from prosecution”. That is not exactly true. Since 1993, members of parliament no longer enjoy immunity from prosecution, that is, a criminal investigation, but they cannot be put in jail without an authorisation from parliament. + +You also came out against the constitutional amendment because it “fails to deal with the main problem, which is Italy’s unwillingness to reform”. The Italian Constitutional Court recently rejected a central issue of reform, that of public administration. This decision was justified under the rules of the existing constitution that give large powers to the regions, which Matteo Renzi’s referendum would eliminate. Is The Economist really sure the prime minister is “pushing for the wrong sort” of reform? + +LUIGI CAPOGROSSI COLOGNESI + +Professor emeritus of law + +Sapienza University of Rome + +The electoral law, the Italicum, is an ordinary law, it is not part of the constitution and not on the ballot on December 4th. Indeed, pending a judgment from the constitutional court, Mr Renzi has already pledged to modify it in order to assuage concerns, from the opposition, but also his own party, about a supposed excessive concentration of power in the hands of the prime minister. + +Given the habit of Italian MPs to change party and often vote against their own leaders, a 54% majority is by no means a guarantee of a steady government, let alone a strongman. Mr Renzi is no Mussolini. He is just an embattled prime minister trying to survive the next government crisis. + +MARCO DEL CIELLO + +Vercelli, Italy + +Whatever way the referendum goes, Italy’s fundamental flaw is that the free market is restrained in too many ways, crowded out by an inefficient public sector, high taxes, protection of inefficient private industries and overregulation, not to mention corruption. Though they realise their public sector is inefficient, many Italians still believe it is the state’s job to carry out what should be the business of the private sector. Unfortunately, public management is often inefficient and unmanageable all over the world. Italy is no different. + +ROSS SHULMAN + +Ithaca, New York + +Coming from a publication based in a country that voted to leave one of the greatest geopolitical projects in history for no compelling rational reason, your advice that Italy is “worryingly vulnerable to populism” is a bit like Jamie Oliver telling my mother how to cook Ragù Bolognese. + +For the good of my country, let’s hope that your endorsement of the No vote will be paid as much heed as your backing of the Remain campaign before Brexit and your support for Hillary Clinton during America’s presidential election. + +OLIVER LARCHER + +Bolzano, Italy + +Mr Renzi once compared the Italian referendum to the pin code of a mobile phone, as a means to switch Italy on and unlock the path to more reforms. The metaphor is insipid, but the argument is not. + +FABRIZIO COLIMBERTI + +Brussels + +* A Yes to the Italian referendum is a necessary (albeit not sufficient) step in the long journey of reforming Italy. You argued that the new reforms could “create an elected strongman”, perniciously insinuating that Italians could still be prone to an anti-democratic drift, 70 years after Mussolini. + + + +The reforms do not alter any of the constitutional checks and balances typical of a mature democracy, whether it be the executive powers of government or the independence of the judicial system, unless you believe that having two chambers with perfectly equal powers and perfectly duplicated functions and costs is the hallmark of a true liberal democracy. + +The main thrust of the proposed change is to end a wasteful and litigious form of “regionalism” that Italians have endured since 2001, after a botched attempt at creating a federal state. Anyone doing business here knows only too well about the confusion caused by laws in the regions that conflict with the those from the central authorities, on such matters as infrastructure, the environment, energy, tourism and transport which duplicates administrative work and compliance at best, and helps the festering of local corruption at worst. + + + +Responsible and informed Italians should vote Si on December 4th. + + + +DANIELE FERRERO + +Milan + + + + + +State procurements + +“Rigging the bids” described how tendering for government contracts in Europe has become less competitive (November 19th). Governments often raise the selection criteria for inclusion in the bidding for contracts to unrealistic levels, for example requiring a minimum of 15 years, experience in providing a service, in order to receive only “qualified bids”. But this limits competition to a few big companies. A preference for “reliable” suppliers often makes it impossible for smaller companies to win contracts. + +Moreover, the specifications to submit a tender are often overloaded with detailed requirements instead of stating fundamental needs. Big tenders are often supposed to be fulfilled entirely by a single supplier, which locks the government into only one provider and makes comparisons impossible over the course of the contract. However, laws do allow tenders to be divided into lots that can be provided by several contractors. The benefits are increased competition over time and better quality evaluations. + +Governments could improve their practices, assuming that they can procure the right consultants to overhaul the tender process. But don’t keep your fingers crossed. + +TOMAS JONSSON + +Stockholm + + + + + +Proportional votes + +Charlemagne (November 12th) wrote that America’s electoral college “is a peculiar institution” because Hillary Clinton won the popular vote. Yet the electoral college is possibly a fairer method than the one used to select Europe’s commissioners. One commissioner is selected from each of the EU’s 28 countries, regardless of that state’s population. Lithuania gets equal representation with Germany. At least the electoral college is indirectly linked to each state’s population size. + +STEVE HATCH + +Albuquerque, New Mexico + + + + + +Millennials’ bugbear + +You claim that people between the ages of 18 and 30 in Britain “are doing better than most people think” (“Generation Screwed or Generation Snowflake?”, November 19th). Although we are on similar salaries to those of our parents when they were our age, we are paying in effect an extra tax of 9% on our earnings because of student-loan repayments. I was fortunate enough to graduate in 2012, so had a mere £20,000 in debt ($25,000), but anyone graduating now will have almost double that (taking into account both tuition fees and maintenance). + +As a higher-rate taxpayer, I can therefore expect to have what amounts to a 49% marginal tax rate until at least my 30s. That, combined with the rental market in London, makes me significantly worse off than my parents’ generation. They also will benefit from generous final-salary pension schemes that were available to them when they started work. + +This is not generation snowflake, but generation cold reality. + +DAVID LAMBERT + +London + + + + + +A political cocktail + +I was astonished to learn of a correlation between heavy drinkers and Donald Trump’s victory (“Illness as an indicator”, November 19th). To win future elections, Democrats must immediately propose a return to Prohibition (with an exception for wine, in consideration of the coastal elites). + +NEIL O’KEEFE + +Lowell, Indiana + +* Letters appear online only + +This article appeared in the Letters section of the print edition + + + +United States + + + + + +Education: Long-haul charters + +The next treasury secretary: You’re hired + +Capital punishment and intelligence: Novel justice + +Recounting Midwestern votes: Catharsis + +Divorce: Disruptive innovation + +Louisiana’s Senate race: Alamo on the bayou + +Lexington: The impresario-elect + + + + + +Education + +Long-haul charters + +Betsy DeVos’s appointment has given the school-reform movement a shot in the arm. Yet she may end up splitting it + +Dec 3rd 2016 + + + +IN 1983 the Reagan administration published “A Nation At Risk”, an apocalyptic report into the state of American schools. It ushered in 33 years of uneven yet enduring bipartisan support for presidents’ efforts to raise school standards. George W. Bush’s No Child Left Behind Act and its successor, the Every Student Succeeds Act (ESSA), share more than quixotic names. Both were backed by majorities of both parties in Congress. Unfamiliar with such harmony, Barack Obama called ESSA, signed into law last December, a “Christmas miracle”. + +That sort of collaboration could soon become a rarity. On November 23rd Donald Trump, the president-elect, nominated Betsy DeVos, a philanthropist, as the next secretary of education. For three decades Mrs DeVos has used her family foundation and her leadership of conservative groups to lobby for “school choice”, a broad term that can divide Republicans even from moderate Democrats. + +For Mrs DeVos this has meant support for two causes. The first is the rapid expansion of charter schools, fee-free schools that are publicly subsidised but independently run. Her activism is one reason why charters in Michigan, her home state, have less oversight than almost any of the 43 states that allow them. And about 80% of Michigan’s charters are run for profit, compared with 13% nationwide. The second cause is school-voucher schemes, which typically give public funds to poor parents to pay for the cost of places at private schools. Though Michigan voted against adopting vouchers in 2000, Mrs DeVos has helped to elect more than 120 Republicans across the country who are in favour. + +Education secretaries are among the least powerful cabinet members. The federal government spends only about ten cents of every dollar that goes toward public schools. States and the more than 13,500 school districts matter more, especially after ESSA, which loosened the regulations placed on local governments. + +Since that law passed just last year, Congress will be reluctant to consider a new bill on education reform. Mr Trump’s proposal that $20bn in federal education funding should be diverted towards voucher schemes would struggle to win enough support in the Senate, says Rick Hess of the American Enterprise Institute, a think-tank. Most Democrats would oppose it, he notes. So too might Republicans sceptical of another big federal programme. They would prefer states to make their own decisions about vouchers. + +But Mrs DeVos will still have clout. Her department can interpret federal rules in ways that make it easier for states to spend federal money as they like. She could also use the bully pulpit and her influence with conservative foundations to cajole governors to embrace vouchers. + +Here she may find a receptive audience. Roughly half of states and Washington, DC, have some form of school-choice scheme. And though less than 1% of all pupils in America attend school on state-funded vouchers, this number is growing rapidly: from 61,700 in 2008-09 to more than 153,000 in 2015-16, according to the American Federation for Children, a school-choice group whose outgoing chairman is, as it happens, Mrs DeVos. + +Would more vouchers help children? In theory they would, by more closely matching pupils to schools, encouraging new schools and fostering competition. But the evidence is mixed. A review last year led by Dennis Epple of Carnegie Mellon University concluded that vouchers are not “a systematically reliable way to improve their educational outcomes.” In cities such as Milwaukee, New York and Washington, pupils using vouchers tend to have higher graduation rates than peers at public schools. There is also evidence from these cities, and from Sweden and Chile, that the competition brought by vouchers makes other schools improve their performance. + +However, once at private school, there is little evidence that pupils using vouchers perform better in exams than if they had stayed put. They may in fact do worse. Studies published this year into schemes in Ohio and Indianapolis suggested vouchers reduced achievement among pupils who used them. Research published last year into vouchers in Louisiana was even more troubling. A study led by Atila Abdulkadiroglu of Duke University found that pupils who used vouchers to attend eligible private schools were 50% more likely to have “failing” grades than peers who stayed in public school. + +An “evidence-based policymaker” would conclude that there are more promising areas for reform, says Joshua Cowen of Michigan State University, who has studied the Milwaukee voucher programme. Charter schools, for example. He notes that charters in cities such as Boston, New Orleans and New York have brought more choice for poor parents, while pupils’ results are consistently higher than those of their peers in traditional schools. + +These charters have done this by focusing on ends rather than means. The best succeed because they are well-managed organisations with skilful teachers, high standards and high expectations. Areas with successful charters also tend to strike the right balance between autonomy for schools and accountability, says Susan Dynarski of the University of Michigan. In Massachusetts, for example, the state decides who can set up charters, which can be shut down if their intakes do not keep up decent grades. + +In contrast, partly as a result of Mrs DeVos’s lobbying, Michigan is the wild (Mid)west of charter schools. Dozens of different outfits, including public universities, can authorise charters in exchange for a cut of the revenue going to those schools. Operators can therefore shop around until someone lets them set up a school. There are few rigorous, transparent and standard measures that allow parents to play an easy part in this market. Some schools in Detroit compete for pupils by offering them raffle tickets for iPads, rather than impressing their parents with academic results. No one holds the authorisers accountable, though they oversee $1bn in taxpayers’ money every year. + + + +Disruption is a feature of the Michigan system, not a bug, argues Mr Hess. Results at Michigan’s charter schools improved faster than at traditional public schools between 2005-06 and 2010-11. But many are still awful. Most of their results remain below the state average—and overall, Michigan’s schools are woeful. Michigan is one of just five states whose reading results among nine- and ten-year-olds were worse in 2015 than in 2003. The Urban Institute, a think-tank, has analysed the National Assessment of Educational Progress, a nationwide test of maths and reading. After accounting for demographics, Michigan is 47th out of all the states (see chart). Massachusetts is top—and is the only state with maths results near those of high-performing East Asian countries. + +Sadly, in one of the less-noticed ballots on November 8th, Massachusetts voted against lifting its cap on charters—a victory for teachers’ unions and their sympathisers. After three decades of progress, pragmatic reformers are thus in a bind. Led by teaching unions, the left is out to curb some of the country’s best schools. Meanwhile, the risk of a Trump administration is that it is about to subsidise some of the worst. That would be some choice. + +This article appeared in the United States section of the print edition + + + + + +The next treasury secretary + +You’re hired + +Three main challenges await the next treasury secretary + +Dec 3rd 2016 | WASHINGTON, DC + +Steve Mnuchin: gold-man hired + +IN SOME respects, Steve Mnuchin is a typical nominee for the post of treasury secretary. Like two of his last seven predecessors—and his father and brother—he climbed the ranks at Goldman Sachs, a bank. In the 2000s he briefly worked for George Soros, an investor. (On the eve of the election, Mr Soros featured alongside Lloyd Blankfein, Goldman’s CEO, as a target of a Donald Trump attack on the “global power structure”.) As the news of Mr Mnuchin’s nomination broke, he spoke soberly on CNBC, a business news channel, of the need to reform the tax code. + +Yet in other ways Mr Mnuchin is a rather unconventional nominee. In recent years he has mostly swapped finance for films. His entertainment company, in partnership first with Fox and later with Warner Bros, has produced blockbusters including “Avatar” and “Gravity”. In his latest effort, a romantic drama about 1950s Hollywood, Mr Mnuchin even makes a cameo appearance—though that was not enough to stop it flopping over the Thanksgiving weekend. Earlier in 2016, Mr Mnuchin’s fiancée, a British actress, drew some notoriety for writing a book, now withdrawn from sale, about her gap year in Zambia. In it, she told tales of rebel conflicts, the monsoon season and 12-inch spiders. Zambia contains none of these things. + +Mr Mnuchin has made some time for finance on the west coast. In 2009 he and others bought IndyMac, a failed Californian bank. Renamed OneWest, the bank foreclosed on defaulting mortgage borrowers too zealously, according to its critics, leading to several lawsuits. + +If the Senate confirms his appointment, Mr Mnuchin will face three main challenges in office. The first will be to get Mr Trump’s fiscal policy straight. During the campaign Mr Trump proposed tax cuts that would, according to the Tax Foundation, a right-leaning think-tank, give the top 1% of earners a tax cut worth, on average, 12-20% of their incomes. But Mr Mnuchin told CNBC that there would be no net tax cut for the highest earners. Before the election Mr Trump criticised his opponent’s plan for an infrastructure bank “controlled by politicians and bureaucrats” and proposed using tax credits to encourage private investment instead. Yet Mr Mnuchin suggested in mid-November that the incoming administration is looking at starting an infrastructure bank after all. + +The second challenge will be to live up to Mr Trump’s promises on trade. Mr Mnuchin is thought to share his boss’s protectionist instincts. He will determine trade policy alongside Wilbur Ross, Mr Trump’s nominee for commerce secretary. Mr Ross, a billionaire investor in bankrupt firms, is a vocal critic of recent trade deals. At the commerce department, he will oversee trade enforcement, such as the imposition of tariffs. At the Treasury, Mr Mnuchin will have such responsibilities as declaring China a currency manipulator. + +The final, overarching challenge will be to champion Mr Trump’s growth agenda. Announcing the nominations, the transition team reiterated a promise to create more than 25m jobs over the next decade—18m more than is forecast today. Arithmetic suggests this pledge is fanciful: even if the labour-force participation of 25- to 54-year-olds returns to its record high, only 4.3m new workers will appear by 2024. To achieve consistently their economic growth target of 3.5-4%, Mr Trump’s new team must instead hope for an unprecedented surge in productivity, driven, perhaps, by deregulation. More sober voices say growth of 2.5%, or, at a stretch, 3%, should be the goal. Assuming Mr Mnuchin can achieve that, he will have to find a way to sell it as a promise fulfilled. + +This article appeared in the United States section of the print edition + + + + + +Capital punishment and intelligence + +Novel justice + +The Supreme Court considers the execution of prisoners with low IQs + +Dec 3rd 2016 | WASHINGTON, DC + +Smart enough to execute? + +FANS of “Of Mice and Men”, the 1937 novella by John Steinbeck, will recall the character of Lennie Small, an oafish, dim-witted man whose physical strength is ill-matched to his love of rabbits. On November 29th, in a remarkable example of law imitating art, a hearing at the Supreme Court put Lennie back in the spotlight. The question is whether the fictional man’s intellectual profile should help determine the fate of Bobby Moore, a real-life Texan awaiting execution. + +Mr Moore, a man with an IQ in the 70s, was sentenced to die 36 years ago for killing a store clerk during a robbery. In 2014 Mr Moore had his death sentence revoked after successfully making a claim under Atkins v Virginia, a ruling of 2002 banning the execution of intellectually disabled people. But a year later the Texas Court of Criminal Appeals (CCA) sent him back to death row. The quarrel in Moore v Texas is whether the CCA used the right standard when it decided that Mr Moore—who at 13 could name neither the days of the week nor the months of the year, nor distinguish between addition and subtraction—is too clever to qualify for an exemption. + +Clifford Sloan, Mr Moore’s lawyer, argued that Texas’s “unique approach” to measuring intellectual disability relies on “harmful and inappropriate lay stereotypes” which are “anti-clinical” and contradict the “core holding” in Atkins. In response, Scott Keller, the Texas solicitor-general, noted that the justices largely left it to the states to decide who qualifies as mentally retarded, or, in today’s parlance, “intellectually disabled”. The CCA, Mr Keller maintained, dutifully applied the three-part test endorsed in Atkins: low IQ, deficits in “adaptive functioning” and onset before the age of 18. The Texas court could not be faulted, he said, for turning to one psychological manual rather than another to flesh out the first two parts. + +Mr Sloan’s rejoinder to this claim was embraced by the four liberal justices and, it seems, by Justice Anthony Kennedy, the fifth vote Mr Moore needs to avoid execution. In Hall v Florida, a case from 2014, the Supreme Court ruled that standards for intellectual disability must be “informed by the medical community’s diagnostic framework”, and may not disregard established medical practice. But in evaluating Mr Moore’s case, Mr Sloan noted, the Texas appeals court bashed the district court for relying on the current manual of the American Association on Intellectual and Developmental Disabilities. Instead, the CCA flipped back to an old standard from 1992, plus a list of seven factors springing, apparently, from the minds of the judges. None of the factors (including whether the person “can lie effectively” or “formulate plans”) included a single citation. + +Justices Stephen Breyer, Elena Kagan and Sonia Sotomayor zeroed in on the CCA’s comment that as intellectual disability standards are “exceedingly subjective”, they should be geared not to clinical standards but to the “level and degree of mental retardation at which a consensus of Texas citizens would agree that a person should be exempted from the death penalty.” This idea alarmed Mr Breyer. The will of the people of Texas, he said, “has nothing to do with it.” Standards for intellectual disability should be fashioned from the views of medical professionals, he implied, even if a rule that works for all 50 states is hard to come by. + +Ms Sotomayor pressed Mr Keller to defend the CCA’s reliance on Steinbeck’s character to define who counts as intellectually disabled. One problem with fashioning standards after Lennie, Ms Sotomayor pointed out, is that the character seems just as capable as Mr Moore, who, as a teenager, made money cutting grass. “Lennie was working on a farm. How is that different from mowing a lawn?” And if Mr Moore’s ability to hide weapons and lie disqualifies him from being intellectually disabled, why should Lennie be included? He sought to “hide the death of the rabbit he killed”, Ms Sotomayor recalled, and yet he was held up by the Texas court as “not just mildly, but severely disabled”. + +Mr Keller tried to explain away the Lennie reference as a mere “aside” in a ruling that was otherwise consistent with both Atkins and Hall. But a majority of the justices seem sceptical that Texas’s standards for measuring intellectual disability jibe with their precedents. Word on Mr Moore’s fate should arrive in the spring. + +This article appeared in the United States section of the print edition + + + + + +Voting in the Midwest + +Could a recount overturn the election result? + +Recounting votes is tedious, expensive−and cathartic + +Dec 3rd 2016 | CHICAGO + + + +MOST voters yearn for closure after an unusually bitter election campaign, but three of the four candidates for the presidency now claim that the election may not have been free and fair. The loudest is Donald Trump. The president-elect frequently alleged that the election process was rigged and voter fraud common in the run-up to the election. On November 27th he tweeted that he had won the popular vote, “if you deduct the millions of people who voted illegally.” Jill Stein, the Green Party’s candidate, raised millions of dollars for a recount of votes in Wisconsin, Pennsylvania and Michigan, where Mr Trump’s margins of victory were thin. And after initial hesitations, Hillary Clinton’s campaign joined the drive for a recount in the three Midwestern states which, together, handed Mr Trump his victory. + +Ms Stein denies that she is pushing for a recount to overturn the election result. She says she is spurred by worries about the “hackability” of voting systems in the wake of the hacking of the Democratic National Committee’s network, voter-registration databases in Illinois and Arizona and the e-mail account of John Podesta, Mrs Clinton’s campaign manager. Some suspect that Ms Stein is partly driven by the publicity generated by her initiative and the inflow of funds (and donors’ contact details) to finance the recount. The initiative has given her more airtime than ever before and brought in about $7m, more than she received in the whole year for her presidential run. + +Recounts are unlikely to overturn the result. The election was decided, in effect, by slightly more than 100,000 people in three Midwestern states. Mr Trump won Wisconsin with a margin of 0.8% (or 22,000 votes), Michigan with a margin of 0.2% (11,000 votes) and Pennsylvania with 71,000 votes, a margin of 1.2%. But these margins are bigger than any overturned before in a recount. + +Merle King, of the Centre for Election Systems at Kennesaw State University, argues that the hacking incidents during the campaign do not mean that voting systems can easily be infiltrated. Voting technology differs between states and even county by county, with some counties using paper ballots, others paperless technology, making a large-scale hack very tricky. Around 75% of all votes are cast on paper, which is safer than those cast on electronic voting machines, some of which provide no paper trail as backup and can be hacked, as researchers have shown. Nearly all states use federally certified technologies, such as encrypting results several times before they are transmitted to a central repository. + +Philip Stark, a statistician at the University of California, Berkeley argues that elections never work perfectly because of human error. Recounts usually produce a different result. Ballots can be torn when they are put through a scanner and a sensitive scanner can count a mark where a pencil just rested as a vote. The goal, says Mr King, is to get a reasonable approximation of the result. + +The recounters are on a tight deadline: the electoral college must do its work by December 13th. However costly and tiresome, argue Mr Stark and Ronald Rivest of the Massachusetts Institute of Technology, elections should be audited regularly, not only when margins are slim. If the results are confirmed, they will bolster voters’ belief in the system. If the process goes badly, as was the case with the chaotic recount in Florida after the presidential election in 2000, it will trigger reforms, such as the famous banishment of hanging chads (partly-punched paper cards). Either way, voters will be able to move on. + +This article appeared in the United States section of the print edition under the headline Catharsis + + + + + +Divorce + +Disruptive innovation + +A spate of start-ups offer alternatives to traditional divorce + +Dec 3rd 2016 | DENVER + +It’s a bargain + +MOST of the employees at the Centre for Out-of-Court Divorce in Denver are trained in mediation or social work, but they also pay close attention to interior design. The centre, on the ground floor of a nondescript office block, is decorated with photos of smiling children and stocked with dolls’ houses, stuffed animals and board games. It has three exits in case tensions flare and the separating partners need personal space. They have been used a few times since 2013, when the centre began helping to dissolve marriages, says Susan Carparelli, the centre’s executive director; but not many. + +The centre is one of several new enterprises that seek to make divorce cheaper and more amicable. Another, Wevorce, uses mostly online methods to guide couples through the process. Based on their answers to a survey, potential divorcees are assigned one of 18 “archetypes” and walked through the legal, financial and emotional processes of ending a marriage. Its website promises to help couples divorce in less time, for less money, with less conflict. Separate.us, which began operations in 2015, offers online legal guidance for divorcing pairs from $99. + +Although parents who disapprove of their children’s partners may be quick to warn that half of all marriages end in divorce, that statistic no longer holds true. According to the National Centre for Family and Marriage Research (NCFMR), a think-tank, the divorce rate in America has fallen by 25% from 1980, reaching a 40-year low. In 2015 there were 16.9 divorces per 1,000 married women, down from 22.6 in 1980. This dip is in part because of America’s ageing population. Older couples are far less likely to divorce than younger ones. Another factor is that far fewer Americans are getting married in the first place, partly because not being married carries less stigma than before, says Susan Brown of the NCFMR. But divorce is still common—more than 800,000 marriages were annulled in 2014—and it is often costly and protracted. A survey by Nolo, a legal publisher, suggests the average American couple spends $15,000 and 10.7 months untying the knot. + +The legal system often adds insult to cost and time. Rebecca Love Kourlis, director of the Institute for the Advancement of the American Legal System, which helped create the Centre for Out-of-Court Divorce, explains that America’s adversarial approach to divorce “fans the flames of controversy”. Most divorces are handled through litigation. Even if the decision to part ways is mutual, that litigation always involves a plaintiff, or the person who proposed the divorce, and a defendant. Conflict-of-interest rules generally bar the same lawyer from representing both parties in a divorce proceeding. Only a handful of divorce cases are actually settled in court, but traditional litigation inherently promotes the idea that the couple’s interests are at odds. + +The Centre for Out-of-Court Divorce offers a more collaborative approach. For a flat fee of $4,500 partners who wish to uncouple are provided with a customised package of mediation, counselling, and assistance with financial planning and custody schedules. In a windowless conference room, aspiring divorcees sit at a table topped with multiple calculators and two separate boxes of tissues. On a whiteboard, they can work out school pick-up schedules and holiday budgets. Across the hall in the playroom, a therapist might watch how their child responds to various toys. Does he or she gravitate towards the miniature green bottles in the dolls’ house? That prompts the therapist to find out whether one of the parents has been drinking to dull their pain. Divorces at the centre normally take 40 hours spread over six months, but there is no set time cap if a split turns out to be particularly complex. + +Ms Carparelli recognises that the service will not be right for all couples. Where there is abuse or when the couple has a lot of trouble communicating, litigation may be more appropriate. But for a large share of separating couples it may well be the future, like “introducing a cell-phone into a world of landlines”. + +This article appeared in the United States section of the print edition + + + + + +Louisiana’s Senate race + +Alamo on the bayou + +Democrats struggle to salvage some honour in this year’s electoral finale + +Dec 3rd 2016 | BATON ROUGE AND METAIRIE + +John Kennedy, in pursuit of voters + +FOSTER CAMPBELL, the Democratic candidate in Louisiana’s unfinished Senate race, is thrilled by the influx of support from beyond the state. “Send it on!”, he says of the donations from Hollywood stars and others in the wake of Hillary Clinton’s defeat. For some, his campaign has become a last stand against Republican hegemony, a political Alamo on the bayou. “Hallelujah!”, he exclaimed at an event this week in Baton Rouge. + +In a parallel universe, the outcome of the run-off on December 10th might have determined control of the Senate. In that case, chuckles Senator Roger Wicker, chairman of the National Republican Senatorial Committee, “there would probably be $10bn” pouring in. Still, he says at a gathering of Republican volunteers in Metairie, on the outskirts of New Orleans, “a one-vote majority”, his party’s current advantage in the incoming Senate, “is pretty precarious.” Extending it is important enough for Mike Pence to visit on December 3rd. + +He may be too late—because, as Robert Mann of Louisiana State University says, the “real race” may have been among the Republican candidates in the primary on November 8th. The non-partisan, 24-strong field included David Duke, a former grand wizard of the Ku Klux Klan; in a televised debate he bickered with the moderator and said Mrs Clinton “should be getting the electric chair”. In an election format that encourages candidates to attack their party colleagues to solidify their vote, a fellow Democrat tried to tie Mr Campbell to Mr Duke. John Kennedy, the Republican front-runner, disavowed his side’s mudslinging in memorably expansive terms: “my campaign played absolutely no role in creating this story alleging…sexual relationships with prostitutes that were later murdered,” he insisted, adding that his family was praying for the traduced man. (His rival sued the author and publisher of a book in which the slurs originated.) + +The trouble, for Mr Campbell, is that precious little mud has stuck to Mr Kennedy, a long-term state treasurer who came first in the primary with 25% of the vote; Mr Campbell got 17%. And sleaze was vital to the long-shot Democratic victory in last year’s governor’s race: an infamous ad charged that the Republican contender, Senator David Vitter, “chose prostitutes over patriots” (Mr Vitter’s retirement from the Senate opened up the current contest). The upset allowed Louisiana’s Democrats to hope that, in the right circumstance, they could still compete in statewide elections. + +Mr Campbell’s team is striving to associate Mr Kennedy with both Mr Vitter and Bobby Jindal, an unpopular former governor. They also emphasise he used to be a Democrat. In a role-reversal that looks odd from a national perspective but makes sense in Louisiana, they say, in particular, that he formerly supported abortion. To the sound of a beating heart, a new ad from backers of Mr Campbell opens with the figure 22,581,040 emblazoned on screen, supposedly the tally of abortions during the years Mr Kennedy was pro-choice. + +Jambalaya politics + +He never was, Mr Kennedy maintains in Metairie. As for his defection, it was his old party that changed, not his convictions. “You can’t be a conservative Democrat any more,” he laments. After all, lots of Southern politicians have made the same switch, including Louisiana’s other Senator, Bill Cassidy. These days, says Mr Mann, “nobody doubts that [Mr Kennedy] is a conservative.” Disciplined if uninspiring—this John Kennedy is no Jack Kennedy—he hammers home the usual Tea Party demands for more freedom, fewer handouts and immigrants. He can do folksiness, too, backslapping and comparing Thanksgiving hunting hauls with his canvassers. + +He “wouldn’t know the difference between a bulldog and a billy goat,” grumbles Mr Campbell, who in some ways seems a better fit with the voters. A cattle farmer, self-declared populist, former state senator and now public service commissioner—Huey Long, the legendary governor, once held the same post—he has always opposed abortion and owns 37 guns. His go-to anecdote tells of an uncle who lost both hands in a dynamite accident; sifting through shotgun shells with his hook to buy them individually (he couldn’t afford a box), the uncle told young Foster, the son of a shopkeeper, that “Not everybody’s daddy owns a store.” “That changed my life,” he says, inspiring him to champion the little guy against payday loan and petrochemical firms. Poverty and environmental damage are among Louisiana’s main problems: he wants a higher minimum wage, more federal subsidies and corporate aid to fight coastal erosion. + +His team reckons he can snatch the third of white votes which, in the state’s stark electoral calculus, he needs to win, along with the Democrats’ reliable black constituency. It helps, they think, that Donald Trump, who thrashed Mrs Clinton in Louisiana, will no longer be on the ballot. Anyway, Mr Campbell’s populism overlaps with the president-elect’s more than does his opponent’s doctrinaire conservatism. “I don’t agree with everything Mr Trump said or did,” concedes Mr Kennedy, a fiscal hawk, of Mr Trump’s spending plans. Mr Campbell says he could co-operate with Mr Trump over trade deals, term limits and other shared bugbears: “There ain’t no wrong way to do the right thing.” + +The combined Republican vote in the primary was 61%. If Mr Campbell were running as one himself, he might well win. As it is, his chances are slim, which might explain why, despite the generosity of those far-flung sympathisers, the national Democratic Party is, as he puts it, “missing in action”. One local insider likens the contenders to a knife and a fork. “You need a fork more,” he says, “but in Louisiana, the knife is gonna win.” + +This article appeared in the United States section of the print edition + + + + + +Lexington + +The impresario-elect + +Washington is becoming more comfortable with Donald Trump + +Dec 3rd 2016 + + + +THE elites of Washington are starting to feel better about Donald Trump. A sense of relief is creeping over them after the president-elect ditched several impossible campaign promises and named conventional conservatives, including a former Goldman Sachs banker, for some big jobs, offsetting the hard-right nationalists and populists given posts in his inner circle. For a moment they thought America might have elected a true demagogue, beholden to a pitchfork-wielding mob. They wondered if the businessman meant it when he roared “Drain the swamp in Washington!” at pre-election rallies, and vowed to ban lobbyists from his government. Now they think they see a cynic like so many others in politics, who ran as an outsider but will govern as an insider. He seems more manageable than they had feared. + +Mr Trump is not an ideologue, the lobbying, business, diplomatic and political classes murmur approvingly. Just you wait, they predict, he will ditch his most crazily populist ideas, from starting a trade war with China to mass deportations, while allowing Republicans in Congress to cut taxes and slash business regulations. True, if he increases spending on infrastructure or defence then deficits might explode. But with luck the economy will boom, keeping Mr Trump’s fieriest supporters happy. + +They draw comfort from the array of conservative bigwigs, pillars of Congress and retired generals he has summoned for job interviews. Take foreign policy. Candidate Trump alarmed grandees from both parties with his cooing praise for President Vladimir Putin of Russia. Their fears ebbed once his search for a secretary of state led him to interview figures with more orthodox views, including Mitt Romney, who as the Republican nominee in 2012 called Russia America’s “No. 1 geopolitical foe”, and a former general, David Petraeus, who in 2015 claimed Mr Putin wanted to “resurrect the Russian empire”. The Mr Trump of TV debates appalled conservatives by praising government-run universal health care in places like Scotland. President-elect Trump soothed Republicans by naming as his health secretary Representative Tom Price of Georgia, a surgeon-congressman who seems to view government-run medicine as something like gangrene. Pondering so many mixed signals, Trump apologists cross their fingers, squint a bit, and declare that they see a political pragmatist who may yet preside over a rather normal administration. + +These folks are probably deluding themselves. All candidates worry about pleasing their supporters or building coalitions, even as they craft policies that reflect their core beliefs. But it is striking how often public acclaim is Mr Trump’s first and last concern. Explaining in an interview with the New York Times why it would be “nice” for America and Russia to fight Islamic State together, he imagined how, if his plan succeeded: “The people will stand up and give me a massive hand.” Over Thanksgiving weekend aides publicly questioned giving the State Department to Mr Romney—who had, after all, called Mr Trump a “fraud” during the election. The president-elect reportedly argued that Mr Romney “looks the part” of a world statesman—sounding more like a casting agent than a man assembling a government. + +Those parsing Mr Trump’s “Drain the Swamp” slogan for clues to his opinions about government reform should have been with Lexington at a rally in Kinston, North Carolina, on October 26th. Freshly disembarked from his Boeing 757, Mr Trump had just begun a thunderous attack on Hillary Clinton’s health policies when he was distracted by a “Drain the Swamp” sign. “Look at that,” he marvelled. When his team had coined the phrase three days earlier he had disliked it, he confided. But then he used it and “the place went crazy.” Now, he beamed, “It’s the hottest, it’s like, trending all over the world…So we like that expression.” + +Many note how Mr Trump was helped by reality television, which made him an icon of success. But his rise recalls an older American tradition: vaudeville shows. In their heyday, just over a century ago, chains of vaudeville theatres spanned the continent, with big impresarios claiming to entertain 5m patrons a year. Shows of a dozen or more acts would make audiences gasp, weep and laugh in rapid succession—speed was a vaudeville obsession, as it is with Mr Trump, who promises to bring change “so fast”. A history of the genre, “Vaudeville Wars” by Arthur Frank Wertheim, records how working men in cheap seats were wooed with turns like the “Two Skull-Crackers”, whose mock combat ended with an axe-blow to a performer’s head (beneath a cork- and steel-lined wig), or the “Diving Venus”, a beauty in a tight bathing-suit who plunged into a glass tank. Respectable matrons were lured with such “dignity acts” as opera singers from Europe. Theatre-managers were told to ignore their expert tastes when judging performers: what counted was audience reactions. + +The skull-crackers + +America has elected an impresario-president. Imagine him peering past theatre footlights through clouds of cigar smoke, checking that every row is full and each face rapt. There is no guarantee that will make him a pragmatist: indeed, perhaps because he has so few fixed beliefs (beyond protectionism), he has appointed ideologues to key positions, like a vaudeville boss crafting a playbill to sell every last seat. His team so far includes hardline nationalists alongside conservative technocrats like his chosen transport secretary, Elaine Chao, the wife of the Senate majority leader, Mitch McConnell of Kentucky. Nor are grassroots supporters forgotten. He has claimed credit for strong-arming Carrier, a maker of air-conditioners, into keeping 1,000 jobs in Indiana, rather than sending them to Mexico. He has fired off tweets proposing, in breach of the constitution, that those who burn American flags should lose citizenship. If Washington grandees are shocked, they misunderstand Mr Trump. He has a knack for sensation. Applause is his drug. Elites are naive to imagine that this will make him more manageable. It is his show now. + +This article appeared in the United States section of the print edition + + + +The Americas + + + + + +Haiti’s presidential election: The banana man cometh + +Brazil: Trouble for Temer + +A Brazilian tragedy: The crash in Medellín + + + + + +The banana man cometh + +Haiti’s probable new president + +Jovenel Moïse is a little-known businessman with unclear policies + +Dec 3rd 2016 + + + +FOLLOWING the example of the United States, Haiti has elected as its new president a businessman with no experience in government. Jovenel Moïse, the smooth-domed nominee of the Haitian Shaved-Head Party (this is where the parallel with the American election breaks down), won outright in the first round of voting, held on November 20th. His plans for governing his impoverished country are fuzzy. If Mr Moïse simply brings political stability, many Haitians will be grateful. + +That is no certainty. Last month’s election was a re-run of a vote in October 2015, the results of which were annulled after several candidates alleged electoral malpractice. They included Jude Célestin, a leftist, who had come second to Mr Moïse. He fared no better in the re-run. Mr Moïse beat the field decisively, taking 56% of the vote, according to preliminary results. Haitian and international observers said the election was conducted fairly. + +But there are problems. Turnout was a miserable 21%. It was held down by the devastation caused by Hurricane Matthew, which struck Haiti’s south-west in October, and by voters’ disillusionment with politics and elections. Around a tenth of the ballots were deemed invalid by vote-counters. Mr Moïse was elected with just 595,000 votes in a country of more than 10m people. + +Three of the nine members of the electoral council refused to approve the preliminary results. Mr Célestin and the two candidates who finished behind him say they will challenge them. Violence has broken out sporadically since the election. + +But Mr Moïse’s margin of victory is so massive—he polled 36 percentage points ahead of Mr Célestin—that his victory is likely to be confirmed when the final result is published in late December. He owes his triumph in part to the failure of politicians linked to Fanmi Lavalas, the party of Jean-Bertrand Aristide, a popular two-time former president, to unite around a single candidate. Mr Célestin had to share left-leaning voters with two rivals. + +Sweet Micky’s friend + +Mr Moïse was lucky in his mentor. He is a protégé of a former president, Michel Martelly, who sports an equally shiny pate (hence the name of the party that supports them). Mr Martelly governed without a functioning congress for nearly a year before stepping down last February. A caretaker has been in charge since. Mr Martelly is not loved, except as “Sweet Micky”, a singer of Haitian merengue, his profession before he became a politician. But he has the backing of businesses, which provided money for Mr Moïse’s presidential run. + +Mr Moïse advertised widely and campaigned across the country, looking presidential as he stepped out of his helicopter. The former boss of Agritrans, an organic-banana plantation, he styled himself Nèg Bannann nan (“the banana man”), giving his campaign an appealing folksiness. Though plugged into Haiti’s economic elite, he marketed himself as an outsider. Voters overlooked the millions of dollars in loans that Agritrans received from Mr Martelly’s government. + +What sort of president Mr Moïse will turn out to be is a mystery. Like his rivals, he talked a lot about boosting agriculture and manufacturing, and promised to clean up corruption, which was rife in Mr Martelly’s administration. He offered few serious policy proposals. He may follow Mr Martelly in welcoming foreign investment. Some analysts think Mr Moïse, who comes from northern Haiti, will try to rebalance the economy away from Port-au-Prince, which produces two-thirds of the country’s GDP. + +Economists hope that Mr Moïse will encourage investment in rural areas, where more than half of Haitians work, and fight deforestation, which exacerbates the effects of hurricanes and other natural disasters. Other priorities are improving infrastructure, strengthening land-ownership rights and reforming the judiciary. + +But the new president’s first job on taking office in February, assuming that his victory is confirmed, will be to bring back a semblance of political stability. The vote in November continued the process, which began in August 2015, of electing new deputies and senators to Haiti’s congress. Mr Moïse should appoint members of the opposition to his government, says Robert Fatton, a political scientist at the University of Virginia. A rapprochement with Mr Célestin would help soothe supporters of Lavalas, who are likely to continue their protests at least until the election results are made official. If Mr Moïse fails to win over some of his foes, warns Mr Fatton, “we’ll have a bumpy ride.” + +This article appeared in the The Americas section of the print edition under the headline The banana man cometh + + + + + +Trouble for Temer + +Brazil’s president weathers multiple storms + +A scandal and a further contraction of the economy make things difficult for the government + +Dec 3rd 2016 | SÃO PAULO + + + +MICHEL TEMER, Brazil’s president, was as shocked as all his countrymen by the crash of an aeroplane in Colombia in which 71 people died, including most members of a popular Brazilian football team (see article). The tragedy also had the effect of removing from the headlines other bad news that affects the president more directly. Data published on November 30th suggest that the economy will recover more slowly from a severe recession than many analysts had expected. A fresh scandal has forced yet another member of the cabinet to resign, the sixth in the six months since Mr Temer took charge. His efforts to reform Brazil’s economy are making progress, but his government is in turmoil. + +The latest scandal looks more like an embarrassment than a threat. Geddel Vieira Lima, who was in charge of the president’s relations with congress, quit after the former culture minister, Marcelo Calero, accused him of demanding that an arm of the ministry unblock construction of a high-rise building in Salvador, in which Mr Vieira Lima had bought a flat. Mr Calero, who had resigned earlier, claimed that Mr Temer had insisted that he patch things up with Mr Vieira Lima. + +To many Brazilians, already enraged by the massive corruption scandal surrounding Petrobras, the state-controlled oil company, that looked like Mr Temer pressuring Mr Calero to help his long-time friend. A tape of the conversation, which was leaked to the press, confirms that Mr Temer did ask Mr Calero to bring the solicitor-general into the dispute. The president says he was merely suggesting him as an arbiter. Many Brazilians do not believe him. Once again, Mr Temer took too long to get rid of an errant minister, they complain. + +The controversy suggests that scandal will continue to plague Mr Temer’s presidency, which began in May with the impeachment of his predecessor, Dilma Rousseff, for manipulating federal accounts. The Petrobras affair will continue to shorten political lives. A plea bargain between prosecutors and executives of Odebrecht, a construction firm at the centre of the Petrobras scandal, could lead to charges against 150-odd congressmen and several ministers, or so it is rumoured. “It would be disingenuous to say it doesn’t worry me,” Mr Temer admitted at a press conference on November 27th. Then there is the (slim) possibility that the electoral tribunal will annul the results of the presidential election in 2014, in which he was re-elected as vice-president, on the grounds that his campaign and that of Ms Rousseff were financed illegally. + +News that GDP shrank by 0.8% in the third quarter of this year confirms that the economy was still in deep trouble. Temporary factors caused some of the decline. A dispute between Volkswagen and a supplier halted car production at some factories, and a drought cut coffee and maize harvests. Consumption, under pressure from high unemployment and household debt, fell along with investment. GDP will probably grow next year, but not by much. + +Despite these storms, Mr Temer has kept Brazil heading in the right direction. His most important policy is a constitutional amendment to freeze federal spending in real terms for 20 years, which ought to reduce debt and interest rates and spur private investment. It passed the first of two tests in the senate on November 29th; a final vote is expected later this month. This week Mr Temer signed a law that gives foreign firms more access to deep-sea oilfields; and the federal government invited private firms to bid for the right to manage four airports. The central bank gave Mr Temer’s economic policy a vote of confidence on November 30th by cutting its benchmark interest rate by a quarter-point, to 13.75%. + +The prospect of much lower rates, and thus of a revival of business confidence, depends on a second big reform, to Brazil’s budget-busting pension system. That is needed to carry out the spending freeze. It will provoke opposition from Brazilians who will have to work longer and retire later. Mr Temer has promised to send a draft reform bill to congress this year. + +Ironically, the fuss over Mr Vieira Lima’s flat may help get it through, argues Ricardo Mendes of Prospectiva, a political consultancy. The minister’s departure opens up a job that Mr Temer can offer to a congressman who helps enact pension reform. Voters’ anti-corruption vigilance has killed at least one dubious law: an amnesty for politicians who had accepted illegal campaign contributions. Mr Temer threatened to veto it, and legislators backed off. The lower house of congress has passed a worse measure, to give the appeals courts greater power to discipline zealous judges and prosecutors for “abuse of authority”. If the senate approves it, voters will demand that Mr Temer veto that, too. + +The odds are that he will spend the rest of his presidency, which ends at the end of 2018, battling scandals and grinding out legislative victories. As long as the scandals do not prevent the victories, Brazil should slowly recover. + +This article appeared in the The Americas section of the print edition under the headline Trouble for Temer + + + + + +A Brazilian tragedy + +The crash in Medellín + +The death of 71 people, including most of the players on a popular football team, plunges Brazil into grief + +Dec 3rd 2016 + + + +Brazil’s wretched year got worse on November 28th when a chartered plane crashed into muddy slopes near Medellín, Colombia’s second-biggest city. Most of the 77 people on board were Brazilians; all but six were killed. Among the passengers were 22 players from Chapecoense, an unglamorous football team from southern Brazil. It had been enjoying a run of success that reminded people of Leicester City’s unlikely conquest of England’s Premier League last season. The team was on its way to play its biggest-ever game, the final of the Copa Sudamericana, a continental club competition, against Atlético Nacional, a team from Medellín. Investigators have not established the cause of the crash. A leaked audio tape captures a pilot telling air-traffic controllers that the plane was running out of fuel and suffering from electrical failure. Brazil’s president declared three days of national mourning. Several players from Atlético Nacional asked that the Copa Sudamericana be given to the grief-stricken Brazilian football club. + + + +This article appeared in the The Americas section of the print edition + + + +Asia + + + + + +South Korea’s political crisis: A long goodbye + +Royal politics in Thailand: Better late than never + +India’s demonetisation: The ropy rupee recall + +Politics in Afghanistan: Vice president + +Banyan: Asian values + + + + + +A long goodbye + +South Korea’s president half-offers to resign + +An impeachment motion is now likely to be delayed + +Dec 3rd 2016 | SEOUL + + + +IT WAS her reputation for integrity that helped bring Park Geun-hye to power. Unmarried, childless and estranged from her siblings, Ms Park said shortly before she was elected president in 2012 that the South Korean people were her family: not for her the household corruption scandals that had dogged every previous president. + +Yet four years on Ms Park’s image is in tatters. And it is a friendship that she formed as a result of her “lonely life”, as she put it, in the presidential Blue House that looks set to be her undoing. Choi Soon-sil, a confidante of Ms Park, was indicted on November 20th on charges of attempted fraud and abuse of power, and will face trial this month. Prosecutors say she used her connections to coerce 50-odd conglomerates to funnel 80bn won ($70m) to two cultural foundations, K-Sports and Mir, that she controlled. + +The prosecutors have accused Ms Park of ordering aides to assist Ms Choi in the alleged shakedowns. One aide, Ahn Chong-bum, has been indicted for abuse of power and coercion; another, Chung Ho-sung, for divulging state secrets. In documents regarding the arraignment of Cha Eun-taek, a pop-video director indicted on November 27th for using his ties to Ms Choi to secure favours, prosecutors allege that Ms Park instructed staff to contact the bosses of KT and POSCO, two conglomerates, on his behalf. In 2014, they say, she also instructed aides to press Hyundai, a South Korean carmaker, into hiring Ms Choi’s advertising agency and engaging a parts supplier owned by an associate of hers. + +The authorities have named Ms Park as a suspect—a first for a sitting South Korean president. Her office has rejected the charges as “fantasy”. Ms Park says she did nothing worse than let down her guard with people close to her. Yet in her third televised apology for the scandal, on November 29th, she seemed to accept the idea that she may not serve the remaining 15 months of her term, saying she would leave a decision on her fate to the National Assembly. + +Resign on the dotted line + +This woolly offer has created confusion among parliamentarians, who had looked almost certain to impeach her. Only 28 MPs from her conservative Saenuri party need to break ranks to reach the necessary two-thirds majority for an impeachment motion to pass, and considerably more than that had expressed their support for one. But Ms Park’s hint at resignation has strengthened the hand of Saenuri loyalists, who say that Ms Park should be persuaded to leave office voluntarily, and caused the rebels to vacillate: on December 1st the party proposed that she resign in April. + +Minju, the main opposition party, wants her to go much sooner, and says it is pressing ahead with impeachment. It has urged sympathisers in Saenuri not to backtrack. Yet a member of Minju says a vote is now “too risky given the cracks”, including in its own ranks. Those who saw impeachment as a protest against Ms Park’s stubborn refusal to step down find the possibility of a negotiated exit tantalising. + +The divisions and delays are likely to fuel the anger of the hundreds of thousands who have rallied for weeks in Seoul and other cities demanding that Ms Park quit. Four-fifths of South Koreans now support her impeachment, twice as many as a month ago. They are incensed by the idea that Ms Choi—who was privy to presidential files on ministerial appointments and state visits even though she held no official position—might have pulled the strings of Ms Park’s administration for her personal profit. Reports have surfaced of officials who were dismissed after raising concerns about Ms Choi’s behaviour and influence, including a police detective who spent more than a year in prison after he was accused of leaking documents. + +For years rumours had swirled about ties between Ms Park and Choi Tae-min, the father of Ms Choi and a six-times-married cult leader. He befriended her after her mother was killed in an assassination attempt on her father (a former military dictator). Ms Park’s predecessor, Lee Myung-bak, said while campaigning against her for the presidential nomination in 2007 that if she became president, “it is Choi Tae-min’s family who seize power.” Ms Choi’s then-husband was suspected of running Ms Park’s campaign behind the scenes. + +Many feel that Ms Park is incapable of reading the public mood. She said in her third address that she was “heartbroken” that her apologies had not eased resentment, yet she has refused to take questions from the press. Even her staunchest supporters have turned their backs on her: in Daegu, once her political stronghold, her approval rating, 3%, is even more minuscule than the 4% she polls nationwide. Her ineffectual leadership has been compounded by her scripted style; among her critics she was derided early on as “the notebook princess”. Many are concerned that she has relied for advice mainly on trusted allies of her father. Kim Ki-choon, her former chief of staff, helped to draft the martial law that kept her father in power. + +Ms Park’s government is in disarray. She has already lost eight close aides, and this week accepted the resignation of her justice minister. She bowed out of the Asia-Pacific Economic Co-operation summit last month; some reports say an imminent meeting of the leaders of China, Japan and South Korea may be postponed until next year. The budget for 2017 must be passed by December 2nd. But MPs are preoccupied with politicking. + +If Ms Park were to resign, an election for a successor would be held within 60 days, with the prime minister acting as president in the meantime. That would not leave parties much time to pick or prepare candidates. Impeachment takes much longer (one reason why it is favoured by some in Saenuri, which has no strong candidate yet). After the assembly passes an impeachment motion, the constitutional court has six months to review it. Six of the nine justices must approve it for the president to lose office. + +The court has a conservative bent: five justices were picked by either Ms Park or Mr Lee, or by supreme-court justices appointed by them. They would have far more to chew over than in the only previous impeachment, in 2004, against Roh Moo-hyun, the president of the day, which they rejected within two months. That was for minor violations of election laws, to which Roh had already admitted. The charges against Ms Park are far more serious, and the investigation into the scandal is not yet complete. Later this month the prosecution service will hand its findings to a special prosecutor chosen this week by Ms Park from two candidates nominated by the assembly. + +Ms Park’s unloved prime minister, Hwang Kyo-ahn, would take over for the duration of the court’s deliberation if MPs impeach her. That is awkward, given that Ms Park had moved to replace him in November, before retreating when MPs refused to consider the candidate she had nominated to succeed him. The head of the Justice Party, a minor opposition party, has said that the prime minister’s role must be kept to a minimum if he takes over, and all important decisions discussed with the assembly—“Otherwise he too will be impeached.” There are sure to be many more twists and turns, but Ms Park’s days in office are clearly numbered. + +This article appeared in the Asia section of the print edition under the headline A long goodbye + + + + + +Better late than never + +Thailand’s royal succession is finally complete + +Thailand has a new king + +Dec 3rd 2016 | BANGKOK + +A seven-week switcheroo + +FOR two centuries a hoary prophecy held that Thailand’s Chakri dynasty would produce no more than nine kings. That curse was lifted in Bangkok on December 1st, when authorities formally proclaimed that Crown Prince Maha Vajiralongkorn had become King Rama X. + +The televised announcement ended an odd interregnum following the death of King Bhumibol Adulyadej on October 13th. That evening the government reported that the prince had chosen to delay taking the throne, to allow more time to grieve. This breached the palace’s own rules and surprised the junta, igniting fears among outsiders that the succession was being contested behind the scenes. The high-living prince is unpopular among Thais and loathed by the elites, many of whom would have preferred his younger sister, Princess Sirindhorn, as monarch. + +As it turns out, the seven-week hiatus may have slightly improved King Vajiralongkorn’s standing among Thai royalists. At least some of them have accepted his foot-dragging as a mark of respect for his late father. He has managed to look regal at a series of processions and ceremonies (unlike in July, when paparazzi spotted him at a German airport sporting a too-small vest that revealed lurid temporary tattoos). Censors have embarked on a fresh effort to block local and foreign websites that carry criticism of him, a grave crime under Thailand’s lèse-majesté laws. + +The assumption for now is that the new king—whose powers are only loosely defined by law—will continue to spend much of his time in Germany, near Munich, where he maintains a court of around 200 people and to which he has retreated several times in the weeks since his father’s death. Such an arrangement might suit the junta, which would prefer him not to meddle bluntly in the country’s politics. At some point the appointment of a new Privy Council will give observers a better indication of how actively King Vajiralongkorn intends to reign. So might a soon-expected reshuffle at the Crown Property Bureau, an institution which manages the royal family’s investments and which is thought to command more than $50bn. + +Thailand is still only at the start of a long period of national mourning, which will continue until King Bhumibol’s cremation next October. Officials are planning an ornate pyre on a parade ground in the capital, topped by a 50-metre spire. King Vajiralongkorn’s coronation ceremony will follow, perhaps in 2018. Having insisted that all this will not impede a general election scheduled for the end of next year—the first since a coup two-and-a-half years ago—members of the junta are now hinting that the vote may get pushed back. + +The only certainty is that Thailand’s leaders will continue to rely heavily on the late king’s prestige. Since his death his portraits have multiplied around the capital. Officials say his birthday, December 5th, will remain a public holiday; this year’s celebrations will include the auspicious assembly of 999 monks. Glorifying King Bhumibol has helped Bangkok’s elites hang on to a dusty political culture which reveres rank, rewards status and devalues electoral democracy. They will not want to let the succession break the spell. + +This article appeared in the Asia section of the print edition under the headline Better late than never + + + + + +The ropy rupee recall + +Modi’s attempt to crush the black economy is hurting the poor + +Without cash, Indians are struggling + +Dec 3rd 2016 | DELHI + + + +FOR the Nuxalbari Estate in the lush hills of India’s north-east, relief came in the nick of time. With winter pruning of its tea plantations at hand, 600 workers were threatening to strike. They could scarcely be blamed: the estate had not paid them in mid-November and now owed another fortnight’s wages. This was not for lack of funds. Nuxalbari’s account showed a healthy balance. But day after day its bank repeated the same refrain: yes, the government says it has a plan to help tea estates, but our local branch has no rupees. At his wits’ end, the estate manager marched into the branch, along with bosses of trade unions and a tea planters’ group, even as Nuxalbari’s owners barraged the bank’s headquarters with pleas. The bank at last relented, dispatching a courier weighted with sacks of cash from its vault on a night flight from Kolkata. The workers got their money in the morning. + +Nuxalbari is lucky. Its owners enjoy sound finances and influence. As India enters its fourth week since Narendra Modi, the prime minister, abruptly voided 86% of the country’s paper currency, many of its 1.3bn people have had no such luck. The Reserve Bank of India (RBI), the central bank, has been unable to print money anywhere near fast enough to replace the $207bn in 500- and 1,000-rupee notes that were outlawed overnight on November 8th. Unless India’s four existing money presses can be speeded up, or bills quickly imported, experts reckon it could take five or six months before the money removed from circulation is fully replaced. + +According to J.P. Morgan, an investment bank, Indians were making do at the end of November with a little more than a quarter of the cash that had been in circulation at the beginning of the month—and this in a country where cash represented 98% of all transactions by volume and 68% by value. The RBI has in effect been forced to ration new cash, most in the form of 2,000-rupee notes that are, owing to the lack of 1,000s and 500s, exceedingly difficult to break for change. + +In such a vast country, the impact has naturally been variable. Employees of the finance ministry in Delhi, the capital, received a plump advance on their November salaries in crisp new bills, whereas the state governments of Kerala in the south and Bengal in the east say they have only a small fraction of the cash needed to pay bureaucrats’ wages. Cheques won’t do because banks do not have enough money either: reports in the Indian press reveal that whereas banks in the centre of Mumbai, the country’s financial capital, are getting as much as three-quarters of the cash they need to meet demand, branches in the city’s suburbs are getting less than half. Scroll, an online news site, reports that for one country branch in Bihar, a poor northern state, the ratio is more like a fifth. + +Such was the case with Nuxalbari’s local branch; it could meet some needs but not those of big planters. “Thanks to this so-called business-friendly government we are being made beggars for our own money,” storms one of the estate’s owners. “I feel like I’m in the middle of some Soviet-era nightmare.” + +The parched branches of big banks are still fortunate. For unexplained reasons the RBI has supplied almost no new cash at all to India’s hundreds of smaller rural co-operative banks or to its 93,000 agricultural credit unions, so keeping millions of farmers from deposits that total some $46bn. It has also banned these institutions from competing with “pukkah” banks in exchanging old bills for new. With no cash flowing, farmers cannot even seek help from informal networks that in normal times account for more credit in rural areas than formal institutions. And although India’s 641,000 villages house two-thirds of its people, they contain fewer than a fifth of its ATMs. These are being slowly modified to supply the new notes, which unhelpfully are smaller than old ones; for now most stand idle. + +Starved of cash, India’s rural economy is seizing up. A study by two economists at Delhi’s Indira Gandhi Institute of Development Research found that in the second week of the drought, deliveries of rice to rural wholesale markets were 61% below prior levels. Soyabeans were 77% down and maize 29%. Prices have also collapsed. In Bihar, Scroll’s reporters found desperate farmers selling cauliflower for 1 rupee ($0.01) a kilo, a twelfth of the prior price. + +It is not only farm incomes that are pinched. An investigation by Business Standard, a financial daily, found that virtually none of the estimated 8m piece workers who hand-roll bidis, a kind of cigarette, has been paid since the cash ban. Another Indian daily, the Hindu, reports that more than half of the 600-odd ceramics factories in the town of Morbi, a centre of the tile industry in the state of Gujarat, with a combined output worth some $3.5bn a year, have temporarily closed because they cannot pay workers. In Agra, the hub of Indian shoemaking, some firms are paying workers with supermarket coupons to keep them on the job. + +India’s wealthy few have servants to take their place in the still dismally long queues snaking outside banks, but the pain reaches even to the top. A dentist in a posh part of Delhi is shocked by a 70% fall in trade since the cash ban. “All my patients can pay with plastic so I assumed I was safe, but I guess people are just being careful about spending in general.” This does seem to be the case. A brokerage that surveys consumer-goods firms says November sales have fallen by 20-30% across the board. Property sales, which traditionally are made wholly or partly in cash, have plummeted even more. + +Small wonder that Fitch, a ratings agency, on November 29th cut its forecast for India’s GDP growth for the year to March 2017 from 7.4% to 6.9%. That is in line with most financial institutions’ trimmed estimates, although some economists think the damage could be even worse. “There will be no or negative growth for the next two quarters,” predicts one Delhi economist who prefers anonymity. “Consumer spending was the one thing really driving this economy, and now we are looking at a negative wealth-effect where people feel poorer and spend less.” + +Perhaps more embarrassingly for Mr Modi’s government, there are few signs that its harsh economic medicine is achieving the declared goal of flushing out vast hoards of undeclared wealth or “black” money. Officials had predicted that perhaps 20% of the pre-ban cash would not be deposited in banks, for fear of disclosure to the taxman. Yet within three weeks of the “demonetisation”—well before the deadline to dispose of old bills, December 30th—about two-thirds of the money had already found its way into “white” channels. Some of this is doubtless illicit: inspectors of Delhi’s bus system have found that the bulk of daily takings now mysteriously appears in the form of the banned bills, which public-sector firms can still deposit, rather than the usual small change. Reports from Maharashtra, in the centre of the country, suggest that brokers are offering to buy old notes with a face value of 10m rupees for 8.4m, suggesting that they have found ways of laundering them. + +India’s economy will eventually recover and may even gain strength: the forced priming of bank accounts and the switch to electronic payments will mobilise more money for lending and taxes. But there may be lasting damage to institutions, most notably the RBI itself. It failed, among other things, to warn the impatient Mr Modi that there were not enough new notes to replace old ones. It has issued a bewildering blitz of complex and sometimes contradictory instructions to banks. Its governor, Urjit Patel, has been perplexingly silent. Its reputation for probity, competence and independence is in tatters. + +In another country, such a fiasco would spell disaster for the government in power. Particularly so, one would think, for a party that sailed into office on promises to boost growth, provide jobs and encourage investment. Mr Modi’s opponents have blasted his policy as obtuse, destructive and downright criminal; some insinuate that his Bharatiya Janata Party (BJP) was tipped off about the ban. Opposition parties have held rallies and marches across the country and brought India’s parliament to a standstill with demands for a vote on the ban, and for Mr Modi himself to debate its merits, to no avail so far. + +Mr Modi has painted his critics as whiny profiteers who are running scared of his crusade. In stark contrast to the fissiparous opposition, which lacks any leader who combines charisma with national stature, the BJP has maintained rigid discipline. Mr Modi has also shifted the goalposts, notes Mihir Sharma, a writer and business columnist: “What started as a ‘surgical strike’ on black money is now called the dawn of a cashless society.” In local elections in two states at the end of November his party even gained ground. + +Some analysts in Delhi predict that once enough cash is printed to get the economy moving again, Mr Modi’s government may simply insert cash into some bank accounts, such as those created under a government programme to bring banking to the poor, and declare this to be revenue from the black-money sweep. After all, pivotal elections in India’s largest state, Uttar Pradesh, loom early next year. But if more cash does not soon appear, Mr Modi’s future may look very different. + +This article appeared in the Asia section of the print edition under the headline The ropy rupee recall + + + + + +Warlord first, politician second + +Afghanistan’s vice-president is accused of kidnapping a rival + +But many see impunity as a price worth paying for peace + +Dec 3rd 2016 | KABUL + +In his element + +THE vice-president of Afghanistan, Abdul Rashid Dostum, spent November 25th watching a game of buzkashi, a traditional version of polo in which the carcass of a goat serves as the ball. With his boss abroad, Mr Dostum was acting president. But his behaviour allegedly became downright unpresidential when he encountered Ahmad Ishchi, a political rival, amid the crowd. Mr Dostum is said to have punched Mr Ishchi in the face and then pinned him to the ground with his boot. His bodyguards administered a further beating before carting the injured Mr Ishchi away in an armoured vehicle. He has not been seen since. Protesters demanding his release were turned away when they visited Mr Dostum’s palace, a sprawling pink and baby blue compound plastered with large posters of its owner. + +Mr Dostum likes to talk about himself in the third person. He is a warlord first, politician second. He is known to Westerners chiefly for the time his henchmen packed hundreds of Taliban prisoners into shipping containers, leading to mass suffocation. It was startling, then, when Ashraf Ghani, a technocratic reformist, picked him as his running mate in 2014, probably to secure votes among Mr Dostum’s fellow Uzbeks. That plan succeeded, but Mr Ghani has had to put up with the erratic warlord ever since. He divides his time between Kabul, where he grumbles in public, tearfully, about being marginalised, and his home territory in the north, where he mobilises unauthorised militias to fight the Taliban. + +Mr Dostum (pictured) is perhaps the most glaring example of the immunity many Afghan warlords enjoy. Most recently, the Afghan government signed a peace agreement with Gulbuddin Hikmatyar, a blood-spattered Islamist, granting him immunity from prosecution for past war crimes. The UN hailed the deal as a necessary step towards national reconciliation, but Human Rights Watch complained that Mr Hikmatyar’s return to national politics “will compound the culture of impunity”. + +The dilemma divides Afghans, too. The Solidarity Party of Afghanistan, or Hambastagi, is one of the fiercest critics of the commanders who deal in both ballots and bullets. Its spokeswoman, Selay Ghaffar, regularly hectors warlords. Others in Kabul, however, accept grim compromises in the quest for peace. + +Hamidullah, a 19-year-old doing pull-ups in a public park, was appalled to watch the vice-president turn kidnapper. But he blamed all the leading politicians, including the president, for surrounding themselves with people of their own ethnicity, compounding decades of ethnic strife. “We need leaders who represent the whole country,” he says. + +This article appeared in the Asia section of the print edition under the headline Vice president + + + + + +Banyan + +Taiwan debates gay marriage + +It would be the first country in Asia to legalise it + +Dec 3rd 2016 + + + +ON THE eighth floor in a gritty suburb of the capital, Taipei, sits the ten-year-old Wei-ming temple, a Taoist house of worship—but an unusual one. Nearly all the visitors buying bundles of prayers or bringing handwritten ones of their own to be burnt by the priest at the altar are gay. The deity receiving the prayers, and to whom the shrine is dedicated, is the Rabbit Spirit, a 17th-century folk deity from Fujian province in mainland China who protects men who have sex with men. In late imperial China, “rabbit” became a derogatory term for homosexual. In this temple the rabbits are reclaiming the label. + +Warren peace + +Taiwan’s open tolerance of homosexuality and its liberal view of sexual minorities generally is unique within Asia. Taipei’s annual gay-pride parade is a lively celebration that draws 80,000 people or so a year, including gay people from all over Asia. Perhaps religion has something to do with it: Taoism and Buddhism, the country’s most widespread faiths, have less doctrinal objection to homosexuality than many religions. Some in Taiwan ascribe its tolerance to the island’s long history of influences from the outside—centuries of settlement by mainland Chinese; Dutch and Japanese colonial rule; American popular culture—mingling with the island’s aboriginal traditions to create a uniquely open, hybrid society. But that explanation only goes so far and, as elsewhere in Asia, older generations are much more conservative about gay issues than younger ones. + +So the chief factor has to be Taiwan’s modern political history, and in particular the struggle to throw off the thuggish dictatorship of Chiang Kai-shek’s Nationalist Party or Kuomintang (KMT). Gay rights, feminism, environmental awareness and demands for political freedom: all emerged in the grassroots protest movement that led to the end of martial law in 1987 and culminated in full democracy. + +Issues like gay rights thus became a badge of the island’s democratisation, championed by a rowdy media. Chiang had once ruled that people with “sexual-orientation impairments”—ie, homosexuals—were mentally unfit to serve in the armed forces. But in 2002 the army began admitting gay and bisexual recruits. Discrimination was outlawed in hiring and at work. And a landmark education act in 2004 opened the way for tolerance to be taught even in primary school. + +Around the same time a push was made to legalise gay marriage. That failed. But this year members from both the ruling Democratic Progressive Party of President Tsai Ing-wen (herself a longtime promoter of gay rights) and the more conservative KMT, now in opposition, have very similar gay-marriage bills before the national legislature. They would give same-sex couples the same rights as any others, including to adopt. + +That would make Taiwan the only country in Asia to permit gay marriage, unless you consider New Zealand part of the continent. In contrast, in 2014 Singapore’s Supreme Court upheld a law mandating a two-year jail term for men engaging in acts of “gross indecency”—ie, gay sex. Malaysia sends “effete” youths to boot camp. Aceh province in Indonesia punishes gay sex with 100 lashes. Thailand, one of Taiwan’s few rivals in tolerance, has decriminalised gay sex, opened the army to gay recruits and banned most forms of discrimination based on sexual orientation—but legalising gay marriage remains a distant prospect. Nepal is also unusually liberal. + +It is still possible that Taiwan’s gay-rights movement will be a victim of its own success. In mid-November, as the legislature was reviewing the draft gay-marriage laws, some 10,000 protesters converged outside; some broke through the gates to stage a sit-in in the courtyard. Mainly Christians, they knelt and prayed, warning that the proposed laws were not only an affront to religion but would also promote promiscuity. + +More Taiwanese support gay marriage than oppose it, according to polls. In response to the protests, Ms Tsai declared that “everyone is equal before love.” But the president has other priorities, not least the economic issues that are of greatest concern to ordinary Taiwanese. How much political capital her government will expend on gay marriage is unclear. The legislature has called public hearings on the subject—a concession to the protesters. + +Jason Hsu, a KMT politician who backs gay marriage, says pressure from constituents not to legalise it is growing fast. To drum up greater support, however, opponents are having to soften their tone. Many are suddenly calling for a law that would recognise gay partnerships but not marriages. “Protect homosexuals. Set up separate legislation,” run the new banners. + +Mr Hsu argues that that would be discriminatory, in that it would single out gay people for different treatment. Moreover, it is far from certain that adoption would be allowed under such a law. Even if, as elsewhere, such partnerships become a way-station on the road to gay marriage, Mr Hsu is against dawdling. “Taiwan”, he says, “is a decade behind…We have to show the world it is still a progressive country.” + +Huge rival demonstrations are promised for this weekend. Many Asians admire Taiwan’s lively popular democracy, in which spirited debates in parliament often reverberate in the streets. The young leaders of Hong Kong’s pro-democracy “umbrella” movement of 2014, which brought central Hong Kong to a standstill with mass protests, were following the lead of the environmental activists who brought Taiwan’s nuclear-power programme to a halt, and from the “sunflower” demonstrators who invaded Taiwan’s legislature to block a free-trade deal with China. The fact that Taiwan is debating same-sex nuptials is encouraging. It would be even better if the country that hardly any others recognise became the first in Asia to recognise that gay people deserve equality. + +This article appeared in the Asia section of the print edition under the headline Asian values + + + +China + + + + + +Internal migrants: More children, more grandparents + +Adultery: The divorce whisperer + + + + + +Reuniting the three-generation family + +The changing face of China’s migrant population + +More children, more grandparents + +Dec 3rd 2016 | BEIJING AND XIAMEN + + + +LIU HENGQING is 66. In 2007, after more than 30 years of marriage, she and her husband left Jian’ou, the town in Fujian province in southern China where they had lived until then, and followed in their children’s footsteps—she to the provincial capital, Fuzhou, to take care of a newborn grandson, he to Xiamen, 250km (150 miles) away, to look after a granddaughter. “It takes a toll on you,” she says, “especially being apart, but it’s worth it.” She launches into “The Pensioners’ Marching Song”, a popular parody of a classic military march: + +We are the kids’ logistics force, We are their quartermasters.Listen, the kids are calling,We run to the market.Stuck in the kitchen, we care for them. + +The march ends “Forwards! Forwards towards our last fight.” The fight on the horizon is over China’s social services and the hukou (household registration) system that restricts them. For Mrs Liu is part of a new wave of urban migration that is reuniting families, but putting extra strain on schools, hospitals and the government’s social controls. + +In the 1990s China saw the biggest mass migration in history. Hundreds of millions of underemployed peasants moved from the countryside to find work in cities. Economically, this was hugely beneficial. Socially, it was profoundly disruptive. + +“Previously,” says Wang Qian of the National Health and Family Planning Commission, part of the government, “migrants were mostly young workers.” In 2000 about two-thirds were in their 20s or 30s. The hukou system largely prevents their children from getting public education and health care in the cities where the parents work, so most migrants left their children behind with grandparents or other relatives. Families were broken up. Left-behind children did not see their parents for months or years on end. Cities were full of adult workers and villages were relinquished to the very young and very old. + +But the social strains were huge, and over the past few years migrant families have quietly started to put the three generations back together again. Helped by modest reforms to the hukou system (which have made it easier to change your status in some cities), the children and parents of migrants are leaving the villages to join the urban breadwinners. In 2000 there were 14m children of migrants living with their parents. By 2010 that number had more than doubled, to 29m (the total number of migrants was flat). More than half of all children of migrants are now living with their parents. + +In 2008, 35% of migrants were aged between 21 and 30; they were the young workers’ generation. By 2015, according to a new survey by the health and family-planning commission, the share had fallen to 29% (see chart). Over the same period, the proportion of migrants over 50 rose from 11% to 18%. To some extent this reflects the ageing of migrants who have lived in cities for years. But that cannot be the whole explanation. The number of migrants over 60 more than doubled, to 19m, in just seven years. Many, like Mrs Liu, have moved to cities after a lifetime in the countryside. + + + +These changes have benefited families. Mrs Liu says her son would struggle to look after her grandson without her: “I just feel I need to help out while I can.” But the shifts have happened so fast that government services are not keeping pace. Hukou restrictions mean that migrant children usually go to unofficial schools that are not registered with the municipal government and which frequently have low standards. In Beijing a study of 300 migrant schools found that only 63 were licensed. Some migrant children miss out on school entirely. The health and family-planning commission found that 4% of child migrants in Beijing and 5% in Shanghai were not enrolled in 2012. Another survey found that 86% of migrant children said they had no friends among the local children; 7% had no friends at all. As more left-behind children join their parents, such problems are likely to get worse and more schools will need to be built. + +At the other end of the age spectrum, elderly migrants face three main difficulties: inadequate pensions, tough working conditions and gaps in the medical-insurance system. Only a third of them have pensions and, of those, most have so-called “rural pensions”, which assume the recipient will be living in villages where the cost of living is low. At roughly 600 yuan ($90) a month, these stipends are not enough to live on in a city. Villagers with a rural hukou who have never been employed by a company often have no pension at all. The upshot is that more than half of elderly migrants either depend on their children for money, or must work. + +The survey by the health and family-planning commission found that 22% of migrants over 50 have jobs. Almost 60% of older migrants, and 70% of older migrant women, never went to school or only to primary school. They cannot do skilled jobs: 70% of those in employment work in services, often as cleaners, with long hours and low pay. The survey found that half work more than 56 hours a week, while average earnings for migrants over 50 are only 2,500 yuan a month—1,000 yuan less than the average for all migrants. One older migrant in the capital explains how she used to make window frames on construction sites in Shandong province. “It became harder to get jobs, so I went to Beijing and became an hourly cleaner. We were still able to work. There was no point just sitting at home,” she says. + +She counts herself lucky in being healthy. Medical care for China’s retired migrants is patchy to non-existent. Over 90% have some form of medical insurance. But those who are part of locally based plans can get medical attention only in the place where they joined—usually the village they left. Many therefore say they will have to leave the city when they can no longer look after themselves. A few local hospitals and clinics offer care to people from other areas. For example, the medical system in Sanya, a tourist resort in the far south, has an arrangement to treat people from the city of Harbin in the north-east. But such provisions are rare. + +Duan Chenrong of Renmin University in Beijing told China Daily, a state-run newspaper, that “society has not paid enough attention to this group and governments should do more to improve services for them.” As so often in China, social change is outstripping the government’s ability to respond. + +This article appeared in the China section of the print edition under the headline More children, more grandparents + + + + + +The divorce whisperer + +Divorce is on the rise in China + +And so are imaginative schemes to prevent it + +Dec 3rd 2016 | CHONGQING + + + +WITH his slick navy suit, silver watch and non-stop smoking, Yu Feng is an unlikely ambassador for Chinese family values. The office from which he operates, in Chongqing in western China, looks more like a sitting room, with grey sofas, cream curtains and large windows looking out on the city’s skyscrapers. Women visit him here and plead for help. They want him to persuade their husbands to dump their mistresses. + +Mr Yu worked in family law and then marriage counselling before starting his business in 2007. He charges scorned wives 100,000-500,000 yuan ($15,000-75,000); cases usually take 7-8 months. He befriends both the two-timing husband and the mistress, encouraging them to find fault with each other, and gradually reveals that he has messed up his own life by being unfaithful. Most clients are in their 30s and early 40s. “This is the want, buy, get generation,” he says; sex is a part of China’s new materialism. But changing sexual mores and a rocketing divorce rate have prompted soul-searching about the decline of family ties. Mr Yu claims a 90% success rate. + +The ernai, literally meaning “second wife”, is increasingly common. So many rich men indulge that Chinese media sometimes blame extramarital relationships for helping to inflate property prices: some city apartment complexes are notorious for housing clusters of mistresses, paid for by their lovers, who often provide a living allowance too. + +It is not just businessmen who keep mistresses: President Xi Jinping’s anti-corruption campaign has revealed that many government officials do too. According to news reports Zhou Yongkang, the most senior person toppled by the current anti-graft crusade, had multiple paramours; former railways minister Liu Zhijun is rumoured to have kept 18. + +China has a long history of adultery. In imperial times wealthy men kept multiple concubines as well as a wife; prostitution was mostly tolerated, both by the state and by wives (who had little choice). Married women, in contrast, were expected to be chaste. After 1950 concubines were outlawed and infidelity deemed a bourgeois vice. Even in the 1980s few people had sex with anyone other than their spouse or spouse-to-be. + +Over the past 30 years, however, sexual mores have loosened and more young Chinese are having sex with more partners and at a younger age. Some clearly continue to wander after marriage. Some 20% of married men and women are unfaithful, according to a survey of 80,000 people in 2015 by researchers at Peking University. + +In many respects growing infidelity is a predictable consequence of economic development. People are increasingly willing to put their own desires above familial obligations or reputation. Improved education and living standards mean they have more financial freedom to do so. Most Chinese couples previously had few chances to meet members of the opposite sex in social situations after marriage, but migration means that many couples live apart. Even if they live together, the pool of temptation has grown larger and easier to dip into, thanks partly to social media. + +Businesses like Mr Yu’s indicate that not all spouses see affairs as an unpardonable offence. But surveys also suggest that infidelity is the “number one marriage killer”. Last year 3.8m couples split, more than double the number a decade earlier. China’s annual divorce rate is 2.8 per 1,000 people (also double that a decade ago). That is not quite as high as America’s 3.2, but higher than in most of Europe. That may be partly because Chinese people are more likely to get hitched in the first place: the law strongly discourages people from having children outside marriage. Even so, Chinese families are fraying fast. + +This article appeared in the China section of the print edition under the headline The divorce whisperer + + + +Middle East and Africa + + + + + +Israel: Sitting pretty + +Kuwait: Bypassed by Dubai + +HIV in Africa: Many battles won, but not the war + +Syria: Aleppo falls apart + +Sudan: Tribulations, but no trial + + + + + +Sitting pretty + +Binyamin Netanyahu is in a commanding position + +Binyamin Netanyahu is in a commanding position + +Dec 3rd 2016 | JERUSALEM + + + +THESE should be the best of times for Binyamin Netanyahu. At no point in the Israeli prime minister’s almost 11 years in office has he enjoyed such supremacy at home, coupled with an absence of any serious difficulties or pressure from abroad. In the past few months he has expanded his coalition’s majority from only one to six; tamed his most ferocious critic, Avigdor Lieberman, by giving him responsibility for the defence ministry; and purged his own Likud party of several rivals. The Knesset (parliament) is about to pass a two-year budget which should ensure political stability until 2019. The economy is growing at a sprightly 3.2% a year. + +The opposition is in tatters. The main opposition grouping is the Zionist Union; its hapless leader, Yitzhak Herzog, has seen his credibility with his colleagues, and according to the polls with many of his voters, seep away towards Yair Lapid’s small Yesh Atid party. + +These are sunny days, too, for Israel’s foreign relations. Boosted by trade in technology and arms, ties with African and Asian nations are flourishing. Mr Netanyahu has met Russia’s president Vladimir Putin four times in the past 14 months, reaching quiet arrangements safeguarding Israel’s interests in Syria, while continuing to insulate it from the bloody war across its border. Beneath the radar, Israel is working closely with its neighbours Egypt and Jordan to counter Islamic State. Farther afield, there is barely concealed close co-operation with the Sunni Gulf states on resisting Iran’s influence in the region. In recent months a rapprochement has also been brokered with the prickly President Recep Tayyip Erdogan of Turkey. China is keen to do ever more business with Israel. + +No progress is being made on the peace process with the Palestinians, but no one seems to care very much. Israel’s relationship with Hamas, which rules the Gaza Strip, has shifted to one of cautious coexistence; the West Bank is mostly quiescent, with last year’s “knife intifada” having fizzled out. Not long ago, Mr Netanyahu’s critics were predicting a diplomatic assault if Israel didn’t start talking to the Palestinians. Instead, the supposedly furious Europeans seem consumed by their own problems and have little appetite for Middle Eastern diplomacy; the most they have been able to manage is a weedy insistence that products from Israeli settlements in the West Bank be labelled as such. And for the first time Mr Netanyahu is about to deal with a Republican in the White House. + + + +Throughout his time in office, Mr Netanyahu has had a difficult relationship with Washington—during his first term with Bill Clinton and over the past eight years with Barack Obama. Pro-Israel statements from Donald Trump and his advisers, who made sure to omit all mention of a Palestinian state from the Republican Party manifesto, raise the prospect of an administration which will no longer give him any grief over settlement-building in East Jerusalem and the West Bank. + +Happy times for Mr Netanyahu, then? Yes, but there are a few storm clouds. In the absence of a challenge from the feeble centre-left opposition, his troubles, such as they are, come from within his own coalition. The right wing is keen to pass a law legalising the status of Amona, a settler outpost of 42 families built 20 years ago in the West Bank on privately owned Palestinian land. Israel’s high court has ruled that the settlers must leave the outpost by December 25th. Defying the prime minister, his cabinet’s legislative committee voted on November 13th in favour of the law. Caught between the right wing and the court, Mr Netanyahu now faces open rebellion from some of his own ministers. + +Mr Netanyahu has been playing a double game. To the world he expresses willingness to negotiate with the Palestinians, if only they were prepared to do so without preconditions. Meanwhile, he assures his right-wing constituency that a strategy of neither moving towards a Palestinian state, nor annexing the West Bank outright, is the only way to withstand international pressure while keeping the settlements. Critics, at home and abroad, thought that ultimately the international community would call his bluff. Instead, the arrival of President Trump may bring about the opposite outcome—his bluff is being called by the hawks at home. + +But Iran these days looms much larger in Mr Netanyahu’s calculations than any of this. For the past year, since Mr Obama secured the necessary Senate votes to block a Republican veto of the nuclear agreement with Iran, the country has largely disappeared from the prime minister’s rhetoric. On November 13th it suddenly returned; in a speech Mr Netanyahu mentioned Iran no fewer than ten times. While his right-wing coalition colleagues want to use the new occupant of the White House to further their expansionist agenda in the West Bank, Mr Netanyahu is now much more hopeful that President Trump will make America Iran’s Great Satan again. + +There are other nuisances bothering the prime minister. Nearly every other week a new scandal erupts, often involving an aide or a family member. In the past few days it has been the case of his personal lawyer and adviser, who also works for the local representatives of the German shipyard building submarines for the Israeli navy. Mr Netanyahu has been fending off accusations that his support for buying more subs is connected to this link. Now the attorney-general has ordered a probe. + +Mr Netanyahu’s response has been to go on a bit of a crusade against the Israeli media. His office has begun issuing ferocious responses to exposés, attacking reporters for being “radical leftists”. Some see a plan behind this. Hoping to win a fifth election, Mr Netanyahu, like President-elect Trump, may feel that vilifying the media is the way to success. + +This article appeared in the Middle East and Africa section of the print edition under the headline Sitting pretty + + + + + +Bypassed by Dubai + +Kuwait fails to keep up with its neighbours + +Elections allow citizens to complain about welfare cuts, but little else + +Dec 3rd 2016 | KUWAIT CITY + +Trouble in the family business + +KUWAITIS often compare their country with the other states of the Gulf, leading to something of an inferiority complex. Yes, it has the second highest GDP per person in the region (and the fourth-highest in the world), thanks to its large oil reserves and small population. But it has fallen behind countries like Qatar and the United Arab Emirates (UAE) in terms of dynamism and international appeal. Nowadays even Saudi Arabia looks more freewheeling, economically speaking. + +Still, Kuwait distinguishes itself in one respect. It is the closest thing to a democracy in the Gulf. The ruling Al Sabah family is firmly in charge—it limits speech and appoints the most important figures in government, including the prime minister (who selects the rest). But a 50-member National Assembly is elected by the people (including women) and is often truculent. Indeed, in an election on November 26th voters kicked out over half the incumbents in favour of candidates who promised to confront the government over recent austerity measures. + +The emir, Sheikh Sabah al-Ahmad al-Sabah, cited “security challenges” as a reason for calling the snap election. But the public focused on decisions earlier this year to raise the price of petrol and other subsidised commodities. This was necessary, said ministers, to close a deficit that reached $15bn last year owing to the low price of oil, which supplies 90% of government revenues. Voters saw it as a harbinger of future cuts to Kuwait’s sumptuous welfare state. They want the assembly to put up more of a fight. + +Pro-government types argue that the assembly holds Kuwait back from developing as fast as other Gulf states, where ruling families need not gain approval for their plans. Indeed, the Kuwaiti assembly often blocks big projects. Voters are concerned with keeping their government jobs and cheap public services. + +But it is wrong to blame the assembly for Kuwait’s stagnation. For the past three-and-a-half years it has simply done the government’s bidding. Changes to the electoral law in 2012 led opposition groups to boycott two rounds of elections (but not the most recent one). In that time the government has made progress in building new houses and hospitals. But it has not put forward the type of broad economic vision that animates other Gulf states. + +Innovative Dubai is the comparison that most frustrates Kuwaitis. That is in part because Kuwait was once the Gulf’s trailblazer. It set up the world’s first sovereign-wealth fund in 1953 and was a leader in health care. It started one of the first airlines in the region. But the decline of Kuwait Airways is instructive. As its fleet aged and losses piled up, carriers from Qatar and the UAE began offering better service and more routes. Politicians have talked of privatisation. But parliament, reluctant to mess with one of the country’s biggest employers, has frustrated these efforts. + +Let Dubai keep its bikini-clad beachgoers and cocktail-sipping tourists, say most Kuwaitis, who view such things with pious distaste. What they envy is Dubai’s energy and efficiency. The UAE (of which Dubai is a part) ranks 26th in the World Bank’s ease-of-doing-business index; Kuwait is 102nd. The ruling Al-Maktoum family of Dubai encourages development through a suite of companies known as “Dubai Inc”. In Kuwait, the government owns most of the land and hampers its use by the private sector, says Michael Herb of Georgia State University. “There is no Kuwait Inc.” + +The government’s failings extend to public services. It has neglected public hospitals and schools. Low electricity prices and a sweltering climate make Kuwait one of the world’s biggest consumers of energy per person. But the government, which is the sole provider of electricity, has invested little in infrastructure. Parliament has delayed efforts to boost the supply. In 2014 a power outage shut down all three of the country’s oil refineries, crippling fuel production for a week. Endemic corruption completes the dismal picture. + +So Kuwaitis have responded to the government’s call for austerity by telling it to put its own house in order. But beyond opposing cuts, few of the new MPs have a vision for the country. More stagnation seems likely and perhaps more elections; there have been four in the past five years. Quasi-democracy is seldom satisfying. + +This article appeared in the Middle East and Africa section of the print edition under the headline Bypassed by Dubai + + + + + +The long war against AIDS + +A report shows HIV in retreat in many African countries + +But among the young, the numbers are still on the rise + +Dec 3rd 2016 | JOHANNESBURG + + + +FOOTPRINTS painted in bright colours on the floor pass through the bustle of the Themba Lethu clinic in Johannesburg. They lead to a room where every week dozens of men are circumcised. Heterosexual men who get the snip cut their chances of contracting HIV by more than half, since the foreskin is delicate and tears easily. In South Africa, the country that has the world’s largest number of HIV-infected people, such initiatives can save a lot of lives. + +Even more important has been a huge expansion in the number of infected people receiving antiretroviral drugs. These not only keep people alive but also suppress the virus, making its carriers less contagious. In September South Africa became one of the first African states to adopt a “test and treat” protocol whereby anyone infected with the virus can get the drugs immediately, instead of waiting until the immunological symptoms of full-blown AIDS appear. By this time the patient may have infected other people. + +Some researchers predict that several African countries will soon achieve “epidemic control”, meaning that fewer people are newly infected each year than die of the disease. New data from the American President’s Emergency Plan For AIDS Relief (PEPFAR), a programme launched by George W. Bush in 2003 under which more than 11m people now get treatment, suggests just how close that goal may be. In hard-hit countries, such as Zimbabwe and Zambia, the rate of new infections has more than halved. The prevalence of HIV (ie, the total proportion of the population who carry the virus) has also fallen sharply, though it remains horribly high. + +The number of infants infected by their mothers in the womb or via breastfeeding fell by half between 2010 and 2015. In South Africa infected mothers now pass on the virus in only 2% of cases, compared with 45% among infected mothers who don’t get the drugs. + +Yet far less progress has been made among the young—and half of sub-Saharan Africans are younger than 19. With such a large cohort of youths starting to have sex, the total number of people with HIV is likely to rise even if the rate of new infections falls. Worryingly, efforts to reduce the spread of HIV are failing among young people and, in particular, among young women. + +PEPFAR surveys show that, whereas three-quarters of Zimbabweans know whether or not they are infected (and almost 90% of those who know they are ill are being treated), only half of those under 24 know their HIV status. Girls and young women, many of whom have unsafe sex with richer, older men, are 14 times likelier to contract HIV than young men are. Girls who drop out of school are even more likely to become infected. + +The new data suggest that Africa is on the cusp of beating back HIV. But to do so it will have to redouble its efforts to educate, test and treat more people. It would also help if more girls stayed in school, and if faster economic growth gave more young women the jobs and independence that might make sugar daddies’ offers less tempting. + +This article appeared in the Middle East and Africa section of the print edition under the headline Many battles won, but not the war + + + + + +Aleppo falls apart + +Assad’s forces advance into eastern Aleppo + +The rebels face the collapse of their last big urban stronghold + +Dec 3rd 2016 | BEIRUT + + + +WHEN Russia dispatched its warplanes to prop up the dictatorship of Bashar al-Assad, Barack Obama warned Moscow that its Syrian adventure was doomed to fail. Russia will get “stuck in a quagmire and it won’t work”, Mr Obama confidently predicted in October 2015. Russia’s air force has since proven the American president profoundly wrong. + +On November 28th pro-government forces backed by Russian bombers finally punched through rebel lines in the east of Aleppo. The breakthrough came two weeks after pro-regime forces launched an operation to recapture the rebels’ last big urban stronghold. With the regime now in control of at least a third of the city’s east, the fall of Aleppo looks almost certain. + +For months the regime has sought to strangle the city’s rebel-held east into submission. A siege has slowly sapped the strength and morale of its defenders. As the blockade tightened, Russian and Syrian warplanes relentlessly bombed civilian infrastructure, destroying hospitals, schools and bakeries in a bid to drain support for opposition fighters by making life unbearable for the east’s 250,000 or so remaining civilians. These tactics, which have forced rebels to surrender in other parts of the country, have crippled eastern Aleppo. Food rations have almost run out and medical supplies are low. With the city’s hospitals destroyed, doctors now treat patients in the basements of homes. + +Spearheaded by thousands of Hizbullah and Iraqi militiamen, this week’s swift advance of pro-regime forces has driven thousands of terrified civilians from their homes. They face a grim choice: stay in the east and face the bombs, or flee into areas controlled by a government that has arrested and tortured its opponents since the start of the war in 2011. + + + +Most have chosen the former. As a result, residents in the east say apartment blocks that once housed five families now house as many as 20. So Russian and Syrian air strikes, which have killed hundreds of civilians in recent weeks, will prove even more lethal as the shrinking rebel enclave becomes more crowded. + +The regime’s advance elicited the usual flurry of empty statements from Western officials. Boris Johnson, Britain’s foreign secretary, tweeted: “Devastating assault on eastern Aleppo—immediate ceasefire needed. Russia & Iran must use influence on Assad regime to end violence now.” He appeared to have forgotten that both Russia and Iran are directly involved in the bombardment of Aleppo. + +America, its allies and the UN have all repeatedly failed to stop the slaughter or alleviate the suffering in Aleppo. Ceasefires have broken down and peace talks have collapsed. Russia and Syria continue to block UN requests to allow aid into the besieged east. Out-manoeuvred, Western diplomats have discussed lifting the siege by digging tunnels or sending drones to air-drop food and medical supplies. A lack of political will among their leaders makes both options improbable. + +Mr Assad’s government says it wants to take Aleppo, once Syria’s largest city, before Donald Trump takes office. Once it falls, Mr Assad will control all the country’s main urban centres. Pro-regime forces will then be able to turn their guns on the pockets of resistance around Damascus, the main highway from Homs to Aleppo and the rebel-held province of Idlib. With rebel forces in no shape to regroup, there is little to stop them. + +This article appeared in the Middle East and Africa section of the print edition under the headline Aleppo falls apart + + + + + +Tribulations, but no trial + +Sudan, a rump state run by an alleged war criminal + +Omar al-Bashir is taking his country nowhere + +Dec 3rd 2016 | KHARTOUM + + + +DR MUNA ABDU, an ophthalmologist, is worried. “I am afraid of leaving my country for a long time,” she says, her back to the Blue Nile, dark but for the lights of a few riverside restaurants as it flows towards its embrace with the White Nile in Khartoum. But she still plans to move to Saudi Arabia, where she will earn $6,000 a month—a sum that would take her three years to make in Sudan. + +On some measures Sudan’s economy is recovering, after the southern part of the country broke away to form South Sudan in 2011, taking with it 75% of the old nation’s oil revenues. GDP has grown at around 3% a year since 2013. Inflation is in double digits, but well below its level in 2012-14, when it averaged almost 40%. However, on the black market the Sudanese pound trades at only a third of its official value against the dollar. There are just $800m of foreign exchange reserves left in the central bank, according to the IMF—enough to cover only a month of imports. + +Businessmen are quick to blame American sanctions. These have been in place since 1997 (Khartoum harboured terrorists including Osama bin Laden in the mid-1990s) and were extended in 2007 because of the genocide in Darfur. But it is only in the past few years that international banks have started refusing to deal with Sudan, after America cracked down on sanctions-busters. One former chief executive tells of a $10m debt repayment for his company having to be made with a suitcase of cash. + +Nervous banks have not, however, made trading with Sudan impossible. Artisanal gold mining is booming and the country exports plenty of livestock to the Gulf. But these do not make up for the lost oil revenues. Meanwhile, sanctions mean Sudan is mostly ineligible for relief on its $48.2bn debt, 86% of which was in arrears at the end of 2015. One boost has come since September 2014, when Sudan expelled a number of Iranian diplomats and cosied up to Saudi Arabia. It has sent hundreds of soldiers to fight alongside the Saudis and against Iranian-backed Houthi rebels in Yemen. Since then, at least $2.1bn has been deposited in its central bank by Saudi Arabia and other friendly states. However, billions of dollars of Saudi investment and military aid that were reportedly promised have not materialised. + +Nonetheless, the switch into the Saudis’ orbit suggests that the Sudanese government wants to shed its pariah status. It is also co-operating with the EU to reduce illegal migration into Europe, cracking down on people-trafficking and improving its border security. + +But the sanctions were renewed again on October 31st and still have strong bipartisan support in America’s Congress. Walid Phares, an adviser to Donald Trump on the Middle East, says they should remain. America’s position is unlikely to change given the record of Sudan’s Arab-dominated Islamist government of slaughtering black African Muslims in Darfur, and Christians and animists in the south of the country (although most of these have now seceded). For nine months this year government forces attacked the Jebel Marra, a massif in central Darfur where the Sudan Liberation Army-Abdel Wahid (SLA-AW) are holed up. As many as 205,000 locals fled their homes; there are now perhaps 2.6m displaced people in Darfur, a region the size of Spain. Amnesty International claims to have evidence that the government used chemical weapons. It denies this, but restricts access to the area. + + + +The SLA-AW, whose eponymous leader directs proceedings from Paris, has been reduced to harrying the Sudanese army. The other two main rebel groups, the Justice and Equality Movement (JEM) and SLA-Minni Minnawi, are in peace talks with the government. This is a sign of weakness, says Magnus Taylor of the International Crisis Group, a Brussels-based think-tank. The government seems to think it is close to victory after 13 years. But elsewhere in Darfur violence flares sporadically, particularly between Arab groups that used to be part of the Janjaweed, a state-sponsored horseback militia responsible for much of the killing and raping during the genocide. “There are weapons everywhere and a limited capacity or willingness to do anything about it,” says Mr Taylor. + +Meanwhile, negotiations with the Sudan People’s Liberation Movement-North (SPLM-N), previously part of the South Sudanese rebel movement and now fighting in the border states of South Kordofan and Blue Nile, have broken down. Although Omar al-Bashir, Sudan’s president, has extended the traditional rainy-season ceasefire, neither side is budging. + +Back in Khartoum, the president was forced to start a “National Dialogue” after 170 people were killed in protests over fuel-subsidy cuts in September 2013. But the talks, which concluded in October, were largely cosmetic and left the powerful security forces under Mr Bashir’s thumb. Sudan Call, a coalition of political parties and rebels that refused to join in, has failed to create a coherent opposition. Demonstrations against more cuts to subsidies in November have so far been suppressed. + +So when middle-class Khartoumites gather to drink sugary coffee and sweet tea beside the Nile at night, they talk, not of replacing the president, but of leaving Sudan, like Dr Abdu. The remittances of the hundreds of thousands who have gone before them keep the economy alive. Meanwhile, Mr Bashir, whose arrest on charges of orchestrating the genocide was ordered by the International Criminal Court in 2009, looks unlikely to step down, let alone stand trial. + +This article appeared in the Middle East and Africa section of the print edition under the headline Tribulations, but no trial + + + +Briefing + + + + + +Fidel Castro: The will to power + + + + + +The will to power + +The life and times of Fidel Castro + +Cuba’s communist leader, who outlasted ten American presidents, has died at the age of 90 + +Dec 3rd 2016 + + + +TO MEET Fidel Castro was to notice, first of all, his sheer physical presence. He was tall, erect and had a high, domed forehead that made him look naturally imperious. He was strong: as a youth he was awarded a prize as the best all-round sportsman in Cuba. He was brave to the point of recklessness: as a boy, he once rode a bicycle straight into a wall to prove his mettle. And he was determined, convinced of his own rightness, intolerant of contradiction and immune to compromise. These characteristics he had inherited from his father, a Spanish migrant who brought with him to Cuba the innate stubbornness of the gallego and who became a prosperous landowner. + +The son, who was born illegitimate in Birán, in rural eastern Cuba, in 1926, added a prodigious ambition for power. Even the Jesuits who taught him saw danger coming in the big, headstrong boy, whose country slang from the cane fields of Oriente marked him out among his urban classmates. The Cuban revolution as it turned out—though not as many of its supporters had originally hoped—was above all an expression of Mr Castro’s will and the unbridled exercise of his massive ego. In his cold-war heyday, he turned his small island into a pocket superpower, fomenting revolution across Latin America, dispatching armies to Africa and brazenly sheltering fugitives, political and criminal, from the United States. + +Fidel—he was one of the few world leaders widely referred to by his first name—was lucky, too. He might have been killed many times: as an aspiring leader in the gangsterish ambience of Havana student politics; in his quixotic assault on the Moncada barracks in 1953, where some of his followers died; or in the desperate early weeks after the botched landing of the Granma, the overloaded pleasure boat that transported his tiny force of 82 rebels from Mexico three years later. Then there were the hundreds of attempts by the CIA to assassinate him, ranging from the farcical—an exploding cigar—to near-misses: a dose of botulism that burst before it could be added to a milkshake by a barman at the Habana Libre (ex-Hilton) hotel. + +Had it not been for a fortuitous amnesty for political prisoners decreed by Fulgencio Batista, the dictator he went on to overthrow, he might have rotted for decades in prison. Then there was Cuba’s island condition, protected from continental armies of liberation (except, as it turned out, Mr Castro’s own). This had allowed Spain to hang on to its “ever-faithful isle” for seven decades after it lost its mainland American empire. It would allow Mr Castro’s regime to survive the fall of the Berlin Wall despite the bankruptcy of his revolution. As it was, the most serious attempt to unseat him, the ill-fated Bay of Pigs expedition organised by the CIA in 1961, became his crowning triumph: submachinegun in hand, he directed the operation that saw his revolutionary forces kill or imprison the invaders, deprived of air support by the hesitation of President John F. Kennedy, before they could leave the beach. + +That was not the Americans’ only mistake. In 1952 Batista, a former army sergeant, staged a coup which ended Cuba’s sole experiment with democracy after just a dozen years. The Eisenhower administration, obsessed with an all but non-existent communist threat in the Caribbean, backed what would be a deeply corrupt and brutal regime. Batista’s coup thwarted Mr Castro’s certain election to Congress and a promising career in democratic politics. Instead, by skilled propaganda and force of will, he turned himself into the undisputed leader not just of a ragtag band of armed guerrillas in the Sierra Maestra but of a broad and politically variegated movement for the restoration of democracy and the 1940 constitution. + +A Marxist of convenience + +The guerrillas in the mountains, together with sabotage and strikes across the island, broke the spirit of Batista’s army and government. Batista himself fled, on New Year’s Eve 1958, taking most of the Central Bank’s reserves of dollars and gold. On arriving in Havana with his band of bearded revolutionaries in January 1959, Mr Castro installed a provisional government headed by a liberal judge. Its initial programme was populist: big wage increases, rent reductions and a radical land reform. But this was merely to buy time, while he built up the armed forces and security services—including the powerful political police, the G2—and cemented an alliance, begun in secret in the sierra, with the Cuban Communist Party. Before the revolution was even a year old, the “bourgeois elements” in the government were ousted, or resigned; over the next few months, critical media outlets were silenced one by one. Within six years, all private property, down to corner shops, was expropriated. By then, most of the middle class had been alienated and many of its members had fled to Miami. + +A caudillo by vocation + +Mr Castro did not always hate the United States. He had gone on honeymoon there, buying a white Lincoln Continental and feasting on T-bone steaks. A few weeks after coming to power he visited America again, this time in combat fatigues, but eating hot-dogs like a native and offering to be friends. President Eisenhower preferred to play golf, leaving his vice-president, Richard Nixon, to meet Mr Castro and to identify in him “those indefinable qualities that make him a leader of men”. + +By then neither side had illusions about the other. In 1958 in the sierra, having watched Batista’s air force drop American-supplied bombs, he wrote to Celia Sánchez, his closest companion, “I swore that the Americans are going to pay dearly for what they are doing. When this war is over, I’ll start a much longer and bigger war of my own: the war I’m going to fight against them.” For its part, the Eisenhower government was quick to set in train measures aimed at overthrowing him. Nixon thought Mr Castro “either incredibly naive” or “under communist discipline”. + + + +Fidel was a Marxist of convenience, a Cuban nationalist by conviction and a Latin American caudillo by vocation. His hero was José Martí, a Cuban patriot who fought against Spain but was wisely wary of American covetousness towards Cuba. In the Spanish-American war of 1898, the United States hijacked the independence rebellion Martí had started and turned Cuba into a neo-colony. Under the notorious Platt amendment, America reserved the right to intervene in the island at any time. That was revoked in the 1930s, but American domination of the economy and the vital sugar industry continued until the revolution. It brought development—a large middle class lived well—but also deep inequality. + +Fidel embraced Martí’s nationalism and anti-imperialism, but not his belief in social democracy. He turned to communism because it was a useful tool of absolute power of a kind enjoyed by no run-of-the-mill strongman, coming, as it did, with the shield of Soviet protection (plus Soviet weapons and oil) for the duration of the cold war. America’s trade embargo was almost as useful: it allowed him to blame the imperialist enemy for the woeful economic failures of his own central planning. + +It was his brother, Raúl (younger by five years), who was the orthodox communist, as well as the quiet organiser who turned a tiny rebel army into a disciplined force of 300,000 in the two years after the revolution. It was Ernesto “Che” Guevara, Mr Castro’s Argentine companion in arms, who was the Marxist theoretician. + +In the early days, at least 550 (and perhaps 2,000 or more) opponents of the revolution were executed. Many of them were Batista henchmen whose demise was popular. Once the revolution was secure, Mr Castro’s rule was repressive though not especially bloody. Nothing and nobody was allowed to diminish his power. “There are no neutrals,” he declared. “There are only partisans of the revolution or enemies of it.” The revolution, of course, was Fidel. + +Many believe that he allowed Guevara to perish in Bolivia, or could have done more to try to save him, turning an awkward and unbiddable subordinate into a useful myth. Mr Castro was a troublesome ally for the Soviets. He took their money but not always their advice. He first embraced crash industrialisation, then dropped it in favour of the drive for a 10m-tonne sugar harvest. Both failed. Though sometimes persuaded to decentralise economic decision-making (which usually boosted output) he always ended up concentrating power in his own hands again. + +He gave Cubans first-world education and health services, and did not care about the cost of these to the economy. But he offered neither opportunity nor prosperity, least of all freedom. Dissenters faced an awful choice: the risky crossing to Florida or the grim jails of Cuba’s gulag. Most chose silence. Eventually Mr Castro would open a safety valve, letting those who might stir up trouble go abroad. + +He never listened + +Fidel was the inspirational leader, the man of action, the master strategist, the obsessive control-freak who micromanaged everything from hurricane preparedness to the potato crop. He was, above all, tireless. In marathon sessions, often beginning after midnight and ending after dawn, he would interrogate visitors about every facet of the political situation in their country. He loved details—the statistics of food production in every Cuban province or the properties of Chinese electric rice-cookers. He kept them in his head and would recite them in those interminable speeches. + +He was careful to discourage an overt personality cult. He kept his private life—nine children and Dalia Soto del Valle, his second wife whom he married in 1980—largely hidden from public view. He promoted younger men only to discard them if they aspired openly to succeed him. His was the overwhelming presence, brooding like a weather system over Cuba’s dilapidated streets; and his was the voice, droning on in televised speeches for hour after hour, alternately rising to a peak of righteous indignation and falling to a whisper of injured innocence. He never listened, said his sister, Juanita, who left for Miami. + +Mr Castro operated on the world stage as no other Latin American leader had since the days of Francisco Miranda and Simón Bolívar, the South American independence heroes of two centuries before. He turned himself into an important player in the global conflict between the United States and the Soviet Union, between capitalist democracy and communist dictatorship. In seeking the protection of Soviet missiles he came closer than anyone else to turning that ideological confrontation into nuclear war. + +Under his leadership, Cuba, an island of just 11m people, became a “Latin American Sparta” (in the words of Jorge Castañeda, a Mexican critic of the revolution). In the 1960s he aided a generation of idealistic young Latin Americans who perished in doomed guerrilla ventures. Their main achievement was to help trigger takeovers by bloodstained anti-communist military dictatorships. A decade later Mr Castro dispatched his armies to Africa, to combat apartheid but also to prop up corrupt or repressive (but anti-American) regimes in places like Ethiopia and Angola. In the 1980s he armed and aided leftist revolutionaries in Central America. With the end of the cold war, over the past two decades, it has been Cuban doctors rather than soldiers that have been sent abroad, first as missionaries for Fidel’s revolution and then as earners of scarce foreign currency. + +Half-life in Havana + +The fall of the Berlin Wall and collapse of the Soviet Union brought great privation to Cuba. The economy contracted by a third. Many forecast the imminent demise of Mr Castro and his revolution. He responded by declaring a “Special Period in Peacetime”, cover for some limited and pragmatic reforms. He reluctantly allowed Cubans to set up small businesses, such as restaurants, repair shops and farmers’ markets. He also legalised the use of the dollar and sought foreign investment, especially in developing a mass tourism industry. Again, as under Batista, Havana’s hotels became a venue for sex tourism, as young black women sold their bodies to escape the revolution’s hardships. + +Remittances from Cuban-Americans, tourism and nickel mines, run by a Canadian firm, replaced sugar as the mainstay of the economy. The health-care and education systems were tapped for hard-currency earnings, too, with the development of biotechnology and medical tourism. State companies were given more autonomy to manage their budgets and to trade. All these measures helped Cubans to get by, but they introduced new inequalities and resentments, and loosened the regime’s control over daily life. + +Then, unexpectedly, new benefactors appeared, in the form of Venezuela’s Hugo Chávez and, to a lesser extent, a booming China. Venezuelan subsidies grew to match the old Soviet largesse. With the economy growing again, Mr Castro reversed or reined in many of the reforms and became far more selective about foreign investment. As he had several times since 1959, he veered back towards Jacobinism, recruiting lumpen youth as “social workers” to wage war against corruption. In 2003, with the world distracted by the American invasion of Iraq, he launched a new political crackdown, arresting and imposing long jail sentences on 78 democracy activists and executing three would-be migrants who hijacked a ferry in a desperate attempt to get to Florida. Two years later he declared the Special Period over. + +One evening in July 2006 Cuban state television broadcast a terse statement from Mr Castro saying that he had to undergo emergency abdominal surgery and was temporarily handing over his powers to a collective leadership headed by Raúl, his deputy. In 2008 Raúl formally replaced Fidel as Cuba’s president and three years later as first secretary of the Cuban Communist Party. He pushed out Fidel’s protégés and would-be successors, including Carlos Lage, the de facto prime minister. And he proceeded, quietly but methodically, to prepare Cuba for the time when a Castro would no longer be in charge. + +Either you were with Fidel or you rotted in jail + +Raúl is temperamentally Fidel’s opposite, a tidy, practical man, lacking his brother’s messianic streak. He is Sancho Panza to Fidel’s Don Quixote. They even looked the parts (Raúl is said to keep statues of Cervantes’s heroes at his house). There were no more late-night meetings. Raúl announced economic reforms that abolished many of the petty restrictions suffered by Cubans, who could once again buy and sell houses and cars, stay in tourist hotels and have access to mobile phones and the internet. He cautiously began to dismantle Fidel’s centrally planned economy: more than 500,000 Cubans now work in a budding private sector of small businesses and farms. The island began to move inexorably towards a mixed economy. Some of Raúl’s advisers talked enthusiastically of the Chinese and Vietnamese models. + +Fidel didn’t think much of that. China was a decadent consumerist society that had lost its values and its commitment to preserving equality, he thought. But he admitted to a foreign visitor, in an unguarded moment, “the Cuban model doesn’t even work for us any more”. Fidel kept his criticisms largely private. He wrote a column in Granma, the official organ, for a while, but its main subject matter was his increasingly incoherent ramblings about what he saw as the apocalyptic problems facing the world. He became a spectral presence in his compound in Siboney, a leafy enclave in the west of Havana of mansions built by the sugar barons he had expropriated. He was occasionally photographed with visiting leaders looking increasing frail and doddery. But he had outlasted ten American presidents and all his enemies. + +A despot departs + +True, he lived long enough to watch his revolution start to be dismantled. He even saw Cuba restore diplomatic relations with the United States in 2015 and an American president, Barack Obama, visit Havana and broadcast a call for the Cuban people “to choose their government in free elections”. Of course he did not approve. “Cuba’s president has taken steps in accordance with his prerogatives and powers,” he wrote stiffly in a letter published in 2015. But, he added, “I don’t trust the policy of the United States, nor have I exchanged any words with them,” he growled. + +No other man in the 20th century ruled as long while, through a mixture of charisma and tyranny, dominating his country so completely. On one hot summer night during the days of penury that followed the collapse of the Soviet Union, a crowd of disgruntled youngsters on Havana’s malecón, its seafront drive, threatened to overwhelm the police and start a riot. Fidel appeared out of the night, and talked them out of it. Even many of those Cubans who abhorred him were in awe of him. That will not apply to any of his successors, not even Raúl. + +This article appeared in the Briefing section of the print edition under the headline The will to power + + + +Europe + + + + + +The French presidential campaign: Liberté, autorité, dignité + +Greek politics: Orthodox measures + +Turkey and Europe: End of the affair + +Corruption in Slovakia: Tart response + +Italy’s referendum: Just trust me + +Charlemagne: Bear cave + + + + + +Liberté, autorité, dignité + +François Fillon mixes rural conservatism with Thatcherism to fend off the far right + +But is it enough to beat Marine Le Pen? + +Dec 3rd 2016 | LA FERTÉ-BERNARD + + + +GENTLY sloping hills and medieval churches: the charms of La Sarthe in rural western France are as discreet as its people. There is nothing quite grand enough to catch the eye, nor grimy enough to avoid. In the little town of La Ferté-Bernard, there is an active parish and scout group. Rabbit is on the menu du jour at Le Dauphin restaurant. Yet local talk is about the new discount grocer, Lidl. And 70 volunteers at Secours Catholique, a charity, help with warm clothes, tinned food and weekly homework for families in difficulty. “We ask for a small contribution to preserve people’s dignity,” explains Monique Bouché, who runs the charity in the town. + +Dignity and respect are words that recur often in La Ferté-Bernard. And they help explain why, in this provincial town, François Fillon secured a colossal 89% of the vote at the primary run-off to become the presidential candidate for the centre-right Republican party on November 27th. He beat Alain Juppé, his rival and fellow ex-prime minister. Mr Fillon, who comes from La Sarthe, is in tune with a conservative Catholic part of the electorate that feels that the French presidency has been damaged over the past decade, by Nicolas Sarkozy on the right and by François Hollande on the left. The question now is whether Mr Fillon can build on this mass support to head off the challenge by the far-right’s Marine Le Pen, leader of the National Front (FN), for the French presidency next spring. + +In some ways, Mr Fillon is a flawed candidate. Prime minister for five years under Mr Sarkozy, the 62-year-old can claim to represent neither novelty nor renewal, and is defenceless before Ms Le Pen’s charge that the same faces always govern France. The son of a notary, he has the tweedy look of a country squire, and a Catholic-hued social conservatism to match. Although Mr Fillon does not propose to change the law, he voted against gay marriage (and is privately against abortion). His family values chime with the country’s strong anti-gay marriage constituency, but make him toxic for the left. Were Mr Fillon to face Ms Le Pen in the second round next May, many on the left could abstain. + +Mr Fillon could provoke a similar revolt against his economic policy, too. In order to free the economy and encourage job creation, he has drawn up a liberal programme, vowing to curb the unions; shrink the labour code from over 3,000 pages to just 150; end the 35-hour week; and trim the public sector, which accounts for a hefty 57% of GDP, by cutting 500,000 civil-service jobs. “I like being compared to Madame Thatcher,” he declares. Thatcherism is usually a term of insult in France. + + + +This may be what the French economy needs. But it is not a clear vote-winner. It cuts against France’s lingering distrust of free markets and reverence for the state, as well as the tide of anti-globalisation sentiment. It will make Mr Fillon an easy target for irate trade unions and fearful civil servants. One Socialist deputy calls his policy “violent and dangerous”. It will also encourage Ms Le Pen to use her protectionist politics to court the working-class vote, particularly in the French rustbelt of the north and east. Already the preferred candidate among working-class voters, she has begun to warn that Mr Fillon is out to “destroy” the French social safety-net. + +Yet in deepest Fillon country the political dynamics look somewhat different. “People here say that they know things have to change, and that it will be difficult,” argues Jean-Carles Grelier, the centre-right mayor in La Ferté-Bernard: “They are fed up with being sold dreams, and then being disappointed.” Locals in the café talk about Mr Fillon’s “common sense” and “honesty”. They are readier to accept tough spending measures than politicians in Paris imagine, claims Mr Grelier, if it is part of a coherent plan to revive the economy—and a sense of pride in France. Mr Fillon, who warned back in 2007 that the French state was “bankrupt”, has long argued that the French “are ready to hear the truth”. Pretending that nothing needs to be done, just to win power, he argues, amounts to “a hypocrisy…at the heart of the political and moral crisis” in France. + +Mr Fillon’s social conservatism, mixed with his close ties to Russia’s Vladimir Putin (see article), makes liberals deeply uneasy. But itcould help to damage Ms Le Pen in conservative parts of rural France. In southern France, in particular, he could siphon away many of the voters who might otherwise be drawn to Marion Maréchal-Le Pen, an FN deputy (and Ms Le Pen’s niece) who promotes traditional family values and is close to the Catholic right. During his campaign, Mr Fillon declared that “the enemy is Islamic totalitarianism” and called for “strict” immigration controls. He secured 77% of the vote on the Côte d’Azur, home to Ms Maréchal-Le Pen’s constituency. + +Over the next six months Mr Fillon’s candidacy will be a test case for whether mainstream leaders can find an electable alternative to populism within the boundaries of liberal-democratic politics. In a book he wrote last year he arrives at a liberalising ideology through observation—statist policies have not worked in France—and from a belief that prosperity is a precondition for preserving national sovereignty. To do so, Mr Fillon is trying to incarnate the leader who restored France’s national pride, affirmed its independence, and earned its respect, and whose image he kept on his bedroom wall as a child: Charles de Gaulle. In La Ferté-Bernard, the reference resonates. The last French president to visit the town was de Gaulle in 1965; the only other political leader to do so since was Mr Fillon. Polls suggest it may be what the French want: he now tops voting in the first round, and beats Ms Le Pen in the second. Yet the FN leader is quietly waiting her turn, and has scarcely begun her campaign. She is not defeated yet. + +This article appeared in the Europe section of the print edition under the headline Liberté, autorité, dignité + + + + + +Orthodox measures + +Tired of Syriza, Greece embraces a mainstream party + +The centre-right New Democracy party is dull, technocratic and leading the polls + +Dec 3rd 2016 | ATHENS + + + +THE headquarters of New Democracy, a centre-right political party, is in an unexpected part of Athens. The building, surrounded by warehouses, housed a branch of a Japanese technology firm before standing derelict for years. Few other political types are nearby. The rent, at €9,800 ($10,400) a month, is a tenth of what the party’s old office used to cost. Yet the relocation, which happened in August, is also symbolic. As the opposition party has moved to a cheaper part of town, so too does it hope that it can present itself to the public as a new, improved alternative to the Greek government. With Alexis Tsipras, the prime minister (pictured, on the left), growing less popular, New Democracy may well have a chance. + +It has been a miserable year for Mr Tsipras and his left-wing Syriza government. A deal struck in March by the European Union and Turkey stemmed last year’s surge of migrants through Greece to northern Europe, but left 60,000 of them stuck in Greece in conditions that are often grim. Yet this is the least of the government’s problems. In May, after much squabbling, it pushed through €1.8bn of tax increases needed to qualify for the next chunk of cash in its current bail-out package from the EU, the third since the euro crisis began in 2010. In November Mr Tsipras reshuffled his cabinet, replacing hardline leftists with younger, pragmatic folk, seemingly in order to placate Greece’s creditors, who will meet on December 5th to tweak the latest bail-out programme. + +Many of the government’s reforms have been widely hated. Business owners grumble at Scandinavian-level VAT rates of 24% and a series of new taxes. From next year self-employed professionals, such as lawyers and doctors, earning over €40,000 a year are being asked to pay tax in advance for the coming year, while their average pension contributions have tripled, says Constantine Michalos, the head of the Athens Chamber of Commerce and Industry. Many will be unable to bear the burden, and some have already moved their businesses to Cyprus or Bulgaria, he adds. “Uncertainty about taxes is the worst thing,” says Tina, who owns a betting shop in central Athens. “You don’t know what they’ll hit you with next.” + +This is hardly what Mr Tsipras promised when he took power in 2015, vowing to end austerity and renegotiate Greece’s deal with its creditors. Syriza’s popularity has been sliding while that of New Democracy, which led a coalition government in 2012-15, has risen. It has led in the polls since December 2015, according to pollsters at the University of Macedonia. This month it was ahead of Syriza by a whopping 15 percentage points (see chart). Kyriakos Mitsotakis, who was elected head of New Democracy in January (pictured, on the right), now leads Mr Tsipras on the question of who would make a better prime minister. + + + +This is surprising. New Democracy is a long-established political party in Greece, rather than a rabble-rousing upstart. Mr Mitsotakis’s father Konstantinos was prime minister in 1990-1993, and the family name is a turn-off for voters on the left. The younger Mr Mitsotakis is hardly a rebel: before going into politics he worked for McKinsey, a consultancy, and Chase, a bank. “When you look at my résumé, [it is] as close to the establishment as you can get,” Mr Mitsotakis admits. Still, he argues that he is the “anti-establishment” candidate in his party. More convincingly, Mr Mitsotakis thinks that Greeks have had enough of chaos. If there were a snap election next year, a New Democracy offering realistic policy promises might persuade voters to abandon the hotheads of Syriza and embrace a more technocratic government. “Greece may be the first to beat populists at their own game,” he says. + +This article appeared in the Europe section of the print edition under the headline Orthodox measures + + + + + +End of the affair + +Turkey’s effort to join the EU is on life support + +As Europe condemns a crackdown, President Erdogan threatens to unleash migrants + +Dec 3rd 2016 | ISTANBUL + + + +JUST before the Gulf war in 1990 (which he backed despite popular opposition), Turgut Ozal, then president of Turkey, squeezed into an army tank, posed for the cameras and proclaimed: “I am taking the shortcut to the European Community.” A quarter-century later Turkey’s dream of joining the European Union is all but dead. Denouncing the purges that followed July’s brutal coup attempt, on November 24th the European Parliament called on EU leaders to freeze accession talks, which have been dragging on since 2005. + +Turkey’s current president, Recep Tayyip Erdogan, responded the next day by threatening to open the route to Europe to the 3m refugees living on his side of the Aegean. “You have betrayed your promises,” he said, referring to a deal with the EU that commits Turkey to harbouring the refugees in exchange for billions of euros in aid and a promise of visa-free travel to Europe for Turkish citizens. + +Leaders of EU states, who will discuss Turkey at a summit on December 15th, are unlikely to take the parliament’s advice. Mr Erdogan is very unpopular in Europe, and mainstream politicians in France, Germany and Holland, all facing elections next year, are wary of indulging him. Yet they fear another refugee crisis even more. Many are also reluctant to jeopardise investments in Turkey. “If you rock the boat too much,” says Marc Pierini, a former EU ambassador to Turkey, “you are putting your own economic interests at stake.” + + + +Yet the current relationship is not sustainable. European support for Turkey’s accession has plummeted. The membership talks are going nowhere. In over a decade, the two sides have opened only 16 out of 35 negotiating chapters. Eight chapters are blocked over Turkey’s refusal to recognise Cyprus, and are likely to remain so: reunification talks between the island’s Turkish-occupied north and its south broke down on November 22nd. + +Mr Erdogan views accession to the EU as Turkey’s right because of its strategic importance. If there were ever a shortcut to membership, however, he has not found it. Today his government is openly flouting the EU’s rules. Of the 37,000 people arrested since the July coup, including over 100 journalists and a dozen MPs from a pro-Kurdish party, only a handful have been formally charged. Some 120,000 others, including nearly 16,000 in the past week, have been sacked or suspended. Allegations of detainee torture are mounting, though Turkish officials deny them. + +Mr Erdogan has backed calls to reinstate the death penalty, a red line for both the EU and the Council of Europe. On November 20th he suggested that Turkey consider the Shanghai Co-operation Organisation, a group that includes Uzbekistan, Russia and China, as an alternative to the EU. He has also threatened to put the accession talks to a referendum in 2017. + +Turkish officials have been accusing the EU of double standards for years, with some reason. Many European leaders, from France’s ex-president, Nicolas Sarkozy, to Germany’s chancellor, Angela Merkel, saw no place in the EU for a Muslim country of 80m even when its democracy was in better shape. None rushed to Ankara to denounce the coup or offer support for civilian government. + +Yet the language coming out of Ankara has become gratuitously hostile. Mr Erdogan accuses the West of siding with the outlawed Kurdistan Workers’ Party (PKK)—and even with Islamic State. His foreign minister brags about refusing to take phone calls from his German counterpart. Pro-government newspapers claim, without evidence, that Western officials are plotting against Turkey. European diplomats warn that the damage may be hard to undo. “The longer this lasts, the more the EU will close itself off,” says one. “The only way Turkey can prevent this is to turn down the volume and put a stop to the crackdown.” Yet at this rate, an acrimonious break-up between Turkey and the EU appears to be just a matter of time. + +This article appeared in the Europe section of the print edition under the headline End of the affair + + + + + +Corruption in Slovakia + +Tart response + +A populist PM’s salty tongue + +Dec 3rd 2016 | BRATISLAVA + +No questions, you dirty anti-Slovak + +IN FEBRUARY Zuzana Hlavkova, then an employee at Slovakia’s foreign ministry, came to believe that inflated contracts tied to the country’s presidency of the European Council were being awarded to firms allied with the governing Smer party. The 26-year-old Ms Hlavkova did something unusual: she reported it to her bosses, including the foreign minister, Miroslav Lajcak. When nothing happened, she quit her job and took her evidence to the local branch of Transparency International, a watchdog, and at the end of November they went public. Local media picked up the allegations, forcing the prime minister, Robert Fico, to respond. In a press conference on November 23rd he called the reporters “dirty, anti-Slovak prostitutes”. + +The pugnacious Mr Fico, who has been in power for nine of the past eleven years, has a habit of insulting journalists. In August he compared one to a “toilet spider”. But if he seems nervous, one reason may be his sliding popularity. In 2014 he tried to move from prime minister to president, but lost in a landslide to Andrej Kiska, an entrepreneur. In parliamentary elections in March Smer bet that a xenophobic anti-refugee campaign would preserve its majority. Instead it lost 41% of its seats. + +Smer now governs as part of a three-party coalition. In the spring, Mr Fico had double bypass surgery. His heir apparent, Robert Kalinak, the interior minister (nicknamed “the Handsome Fixer”), has been hurt by bribery allegations, and Mr Lajcak, who recently was a candidate for UN Secretary-General, has been tainted by this latest incident. (Both Mr Kalinak and Mr Lajcak deny wrongdoing.) + +Mr Fico calls Ms Hlavkova’s charges “a targeted attack on the Slovak presidency” of the council. Though nominally leftist, Smer is drifting right to hold on to its socially conservative voters. One of its coalition partners, the nationalist Slovak National Party, has grown more popular since the elections. Further to the right, the People’s Party Our Slovakia openly defends the Nazi collaborationist regime that governed the country during the second world war. It won 8% of the vote in March under the slogan “With courage, against the system”. + +Having been in power so long, Smer can hardly claim to be against the system. Instead Mr Fico attacks the independent press and whistleblowers like Ms Hlavkova: “a new political culture where a young person spoke out”, says Beata Balogova, editor-in-chief of Sme, a liberal daily. They have angered Mr Fico not by selling their honour, but by refusing to. + +This article appeared in the Europe section of the print edition + + + + + +Just trust me + +Matteo Renzi wants more power to change Italy in a constitutional referendum + +But critics accuse him of trying to become “master of Italy” + +Dec 3rd 2016 | ROME + +Voting with his Fiat + +A TREMOR of magnitude 4.5 shook central Italy on November 29th, rattling areas that had been devastated by heavier quakes weeks earlier. It was a reminder that there is much to fear in the bel paese: seismic shocks, organised crime and, most urgently, the outcome of a constitutional referendum on December 4th. + +The referendum will endorse or reject changes that include drastically reducing the powers of the Senate. And future Italian governments would have a much firmer grip on parliament since a new electoral law engineers for the leading party—even one that secures only a modest plurality—an assured majority in the lower house (the Chamber of Deputies). The prime minister, Matteo Renzi, argues that this streamlined legislature is essential in order to pass the structural reforms that Italy’s sluggish economy needs. + +Many fear the changes remove needed checks and balances, granting the government too much power. They would make it easier for the prime minister to determine who becomes president, and thus influence who sits in the constitutional court. (Most of its judges are chosen by either the president or parliament.) In the days before the vote, campaigners for the No side concentrated on attacking Mr Renzi for demanding excessive authority. The leader of the centre-right Forza Italia party, Silvio Berlusconi, who initially backed the reform, warned it would make the prime minister “master of Italy and the Italians”. A subtler concern voiced by some constitutional lawyers was that, while Mr Renzi might be trusted with additional powers, they could one day be wielded by a leader with a shakier attachment to democracy. + +Polls conducted before a ban on publication took effect, two weeks before the end of the campaign, showed the No camp ahead by almost 4 percentage points. But they also showed that between 40% and 60% of voters were still undecided or planning to abstain. And they did not reflect the impact of an issue that surfaced fully only in the last days of the campaign: the fear that a No vote could unleash a devastating financial chain reaction. + +That risk centres on trouble at Italy’s third-biggest bank, Monte dei Paschi di Siena. The government is hoping investors will recapitalise it, but they are reluctant to commit their money unless the vote comes out Yes. Were the bank to collapse it could ignite a full-blown banking crisis. Under new EU rules, holders of failing banks’ bonds would have to absorb some of the losses. And there are a lot of them in Italy: households own about €170bn worth of bank bonds, or 49% of the total. A financial crisis would rapidly increase the borrowing costs of a country whose debt comes to 133% of GDP. The situation could look alarmingly reminiscent of 2011, when Italy’s soaring bond yields threatened to blow up the euro. + +Another worry is that Mr Renzi’s defeat would open the door to government by the maverick Five Star Movement (M5S), a populist group which, though less radical than France’s National Front or Spain’s Podemos, is woefully unprepared to govern. The M5S is close behind Mr Renzi’s Democratic Party in the polls. But the fall of an Italian government does not lead automatically to a general election. It hands the initiative to the president, who generally tries to avoid calling an election. The incumbent, Sergio Mattarella, could appoint a caretaker prime minister at the head of either a cross-party government or one made up of technocrats. Mr Renzi has ruled out staying in office, but some think it is possible he might be persuaded. + +That, however, points to a third anxiety underlying the markets’ nervousness: that a No vote would prolong Italy’s political and economic stagnation. Any new government would immediately have to revise the electoral law, which currently applies only to the lower chamber, not the Senate. That could take a year. In the meantime structural reforms would be put off while Italy’s lawmakers haggle over voting systems. Such government inertia is nothing new in Italy. But the country may no longer be able to afford it. + +This article appeared in the Europe section of the print edition under the headline Just trust me + + + + + +Charlemagne + +France’s election shows Europe’s line against Russia is fraying + +François Fillon’s win bodes ill for EU sanctions + +Dec 3rd 2016 + + + +VLADIMIR PUTIN must wonder what he did right. From the refugee crisis to Brexit, Europe’s troubles have allowed the Russian president to portray himself as a bulwark of stability in a region of chaos. America’s election brought an apparent Kremlin sympathiser to the White House. And now France is on the same track. François Fillon’s victory over Alain Juppé in the presidential primary of the centre-right Republican Party leaves an avowed friend of Mr Putin as the favourite to occupy the Élysée after next spring’s election. (Mr Fillon’s most serious rival, the nationalist Marine Le Pen, has a yet more marked Moscow tilt.) + +Mr Fillon’s Russophilia is born of conviction rather than expediency, and he does not hide his views. During last week’s debate with Mr Juppé he compared the Russian annexation of Crimea to Kosovo’s declaration of independence from Serbia, an argument he could have lifted directly from the Kremlin. The expansion of NATO to Russia’s borders in the 1990s, he muses, was a provocation bound to generate blowback. Little wonder Mr Putin singled out the “upstanding” Mr Fillon for praise before the vote. + +Historical revisionism is one thing. More worryingly for Germany, France’s partner in the four-party “Normandy format” set up to negotiate with Russia and Ukraine, Mr Fillon wants to scrap the economic sanctions that the European Union imposed on Russia over Crimea and its incursions in eastern Ukraine. Opinions in the EU are divided on Russia, from hawks like the Balts and Poland to doves like Italy and Hungary. So far Angela Merkel, Germany’s chancellor, has held the club together, ensuring a regular rollover of the toughest measures. But the consensus is slowly fraying; to lose the French would be a shock. + +Like other EU countries, France blows hot and cold on Russia. Few voters sympathise with Mr Putin. But energy firms and agricultural exporters chafe at the loss of business. The Kremlin’s military playgrounds, real and potential, feel a long way from Paris. And a nation savaged by attacks sponsored by Islamic State (IS) is open to the idea of working with Mr Putin in Syria, over the heads of anxious eastern Europeans if necessary. In 2014 François Hollande, France’s current president, hesitated for months before cancelling a €1.2bn ($1.3bn) warship deal with Russia, even as the EU’s sanctions started to bite. + +But France matters more than most. Leaders like Matteo Renzi, Italy’s prime minister, may earn points at home by railing against sanctions, but at EU summits in Brussels they listen to Mrs Merkel and Mr Hollande and fall into line. In October, immediately before the latest such gathering, the pair met Mr Putin in Berlin and were shocked to hear him threaten to visit upon Aleppo the fate of Grozny, the Chechen capital pulverised by Russian forces in the 1990s. Mr Hollande’s tough response impressed the Germans; and, in Brussels, Mr Renzi’s call for a “strategic discussion” on Russia policy backfired. It is hard to imagine Mr Fillon acting this way. + +The picture is further complicated by the election of Donald Trump. A German senior official says America’s president-elect appears to have a set of “emotions and reflexes” rather than a foreign policy. Yet admiration for Mr Putin has been a constant of his otherwise flip-flopping worldview. His calls for détente with the Kremlin in the name of tackling IS are enthusiastically endorsed by Mr Fillon. The EU has held together on Russia partly because of transatlantic unity, including the occasional prod from Barack Obama. Should Mr Trump quietly let America’s sanctions on Russia die, perhaps as part of a bigger deal on co-operation in Syria, Mrs Merkel’s job will become near-impossible. + +At first, this might not make much difference. Sanctions have failed to deter Mr Putin, who now relies on bellicose nationalism to drum up domestic support, since he no longer has an oil windfall to spend. Maintaining the EU’s unity is not much of a prize, say some, next to the costs of confrontation with a nuclear-armed neighbour with whom European firms seek to trade. Nor would a wink from the West as Mr Putin’s bombers raze Syrian cities differ much in practice from the current approach. + +Moreover, if his hand is forced, Mr Fillon is unlikely to place Moscow before Berlin. President Fillon would surely devote his energies to reforming the French state (see article), not shattering EU unity. On the traditional post-inauguration visit to Berlin he can expect to receive an earful from Mrs Merkel (as Mr Hollande did in 2012, over his campaign remarks on Greece’s bail-out). The Franco-German relationship remains at Europe’s heart; Mr Fillon is not the sort of loose cannon who might demolish it. + +Grin and bear it + +The problem is not that Mr Fillon will become a Kremlin stooge at the heart of the EU. It is that he may make it harder for Europe to manage Mr Putin’s caprices. What if one of the frequent incursions by Russian jets into NATO airspace triggers an incident? What if the Kremlin’s disinformation machine attempts to turn a European election, as German spooks fear? What if Mr Putin makes a play for Belarus? Not breaking ranks on sanctions merely means sticking to the status quo; a fresh crisis will require a fresh response, and Mrs Merkel will not want to act without France. + +Still, these are unpredictable times. Mr Fillon is not a shoo-in for election. The effects of Mr Trump’s victory are hard to divine. Officials in both Paris and Berlin wonder whether an American rapprochement with the Kremlin might encourage Mr Putin, free from fears of American-sponsored “colour” revolutions at home, to stand down abroad—and perhaps even to become a more constructive partner on multilateral issues such as arms control. + +And should Mr Putin not let up, Mr Fillon may undergo the same journey as Mrs Merkel, who turned decisively against the Russian president when he lied to her about his mischief-making in Crimea. (Such is the hope in Germany.) Mr Putin, as ever, is unpredictable and his plans unclear. The worry is that the election of Mr Fillon may render the EU unpredictable and unclear, too. + +This article appeared in the Europe section of the print edition under the headline Bear cave + + + +Britain + + + + + +The UK Independence Party: The battle for Brexit voters + +Trade with the European Union: Customs of the country + +Reforming corporate governance: A flagship policy takes on water + +Sexual abuse in football: A less beautiful game + +Cutting corporation tax: A costly distraction + +Batteries not included: Breggs-it + +Homelessness: Still not home + +Bagehot: Keir Starmer, noble Lilliputian + + + + + +The battle for Brexit voters + +UKIP looks for Labour voters + +Paul Nuttall, UKIP’s new leader, spots a political opening + +Dec 3rd 2016 + + + +“MY AMBITION is not insignificant,” grinned Paul Nuttall after taking over from Nigel Farage as leader of the UK Independence Party (UKIP) on November 28th (pictured above, left, with Mr Farage). “I want to replace the Labour Party and make UKIP the patriotic voice of working people.” For a man elected with just 9,622 votes it was a bold statement. Jeremy Corbyn was returned as Labour leader with 313,209 votes in September. Yet Corbynistas need only look to Scotland, where the Labour vote crumbled in the 2015 general election after decades of political dominance, as a warning of what could happen in northern England and Wales. + +UKIP seems an unlikely home for working-class voters. The party’s route to political influence began at the London School of Economics, where Alan Sked, a historian, established the Anti-Federalist League in 1991 (this week he called for UKIP to be dissolved after the referendum vote for Brexit). It then wound its way through the home counties, collecting support from disaffected middle-class Tories won over by Mr Farage, a pinstriped former City trader. Today, the party membership includes more free-market libertarians than trade unionists. + +Yet Mr Nuttall has spotted a political opening. His calculation is that white working-class voters in the old industrial heartlands no longer have much in common with Labour, the party they have traditionally backed. Mr Nuttall gave a taste of the attacks to come in his victory speech. “[Labour] have a leader that will not sing the national anthem. A shadow chancellor who seems to admire the IRA more than he does the British army. A shadow foreign secretary who sneers at the English flag. And a shadow home secretary who advocates unlimited immigration.” Evidence of a disconnect between Labour and its voters is not hard to find. Perhaps most revealing, two-thirds of the party’s MPs voted a different way from the majority of their constituents in the referendum. + +Can second- and third-generation Labour voters, who have a congenital dislike for the Tories, be persuaded to vote for UKIP? If it is possible, says Caitlin Milazzo of Nottingham University, Mr Nuttall is clearly the “man for the job”. The 40-year-old grew up in Bootle, a hardscrabble town just outside Liverpool. In his speech he combined emphasis on traditional UKIP causes like immigration and Brexit with talk of greater social mobility, English devolution and more cash for the National Health Service. He proposes a referendum on the return of capital punishment. + +That could prove an attractive combination, for these issues unite unhappy Labour voters and Kippers (just 9% of whom consider themselves left-wing, according to YouGov, a pollster). Indeed, some research suggests that there may be more appetite for populist causes than UKIP has been able to tap into. One analysis, by the British Election Study, found that 67% of Leave voters had “at least dabbled” with voting UKIP. YouGov calculates that 17% of Labour voters hold “authoritarian populist” views that chime with things that UKIP promotes. The party’s populist counterparts in France and the Netherlands poll considerably higher. Rancorous Brexit negotiations, stagnant real wages and cuts to public services could fuel public discontent with mainstream politics. + +Yet several barriers stand in Mr Nuttall’s way. First, his party. Since its referendum success UKIP has not just lost its main purpose but also descended into farce. Diane James, who was elected as Mr Farage’s successor on September 16th, resigned 18 days later, complaining that she lacked the support of her colleagues. She later left the party. Steven Woolfe, a member of the European Parliament who had long been talked of as a future leader, also quit, although only after being hospitalised following a fight with a fellow UKIP MEP. + +Mr Nuttall has been conciliatory. He has said he will lead neither a “Faragista UKIP” focused on immigration nor a “Carswellite UKIP” talking up the benefits of Brexit. He has appointed Suzanne Evans, his main rival for the leadership, as his deputy and policy chief. Yet to have any success, he will also have to improve the party’s organisation. Candidates for the 2015 election were selected late in the day, notes Ms Milazzo, which meant that most failed to build local reputations and there was no time to weed out cranks (one described Islam as an “evil cult”). + +A lack of money may hinder such efforts. With Brexit achieved, donors are less willing to open their chequebooks. According to the Electoral Commission, an official watchdog, UKIP raised just £43,000 ($53,000) between June and September. Even the British National Party, a racist far-right outfit, attracted more money. Arron Banks, a prominent donor, has said that he may now focus on a new movement seeking to oust career MPs. Leadership ballots were sent to just 32,757 Kippers, suggesting the party’s membership has fallen from around 46,000 at the 2015 election. Without Mr Farage’s pulling-power, UKIP may struggle to turn the situation around. + + + +Another barrier is the electoral system. UKIP’s vote is dispersed across the country, which makes winning seats tricky in Britain’s first-past-the-post elections. UKIP will have to challenge the Tories as well as Labour if it is to win more than a handful of seats (see chart). As it stands, that looks unlikely. With tough noises on Brexit and immigration, and support for selective grammar schools, Mrs May has made the Conservative Party more appealing to Kippers than it has been for a decade. “We have a watching-and-prodding brief on Europe at the moment,” admits a UKIP spokesman. Difficult negotiations or hints that there may be a soft Brexit could change that. + +Until then, Mr Nuttall’s focus on Labour makes sense. Nevertheless, the scale of the task should not be underestimated. Even a 10% swing from Labour to UKIP would see the party pick up just five seats. Yet, as other countries have found out, populist uprisings often come with little warning. UKIP may be in a terrible mess. But Mr Corbyn ought to be worried. + +This article appeared in the Britain section of the print edition under the headline The battle for Brexit voters + + + + + +Trade with the European Union post-Brexit + +There is a case for staying in the customs union + +Even if not as a permanent home, a transitional deal to remain in the customs union may make sense + +Dec 3rd 2016 + +Whose rules, what origin? + +ARGUMENTS rage over whether post-Brexit Britain should try to stay in the EU’s single market, perhaps by joining Norway in the European Economic Area (EEA). This week a report for Open Britain, a pro-EU lobby group, by the Centre for Economics and Business Research gave warning of the high costs of leaving the single market. Theresa May is keen not to rule anything out. But the prime minister also knows that EEA members have to accept free movement of people, rulings by the European Court of Justice (ECJ) and payments to the EU budget, all of which are anathema to Brexiteers. + +Boris Johnson, the foreign secretary, and Liam Fox, the international-trade secretary, have suggested that Britain must leave the customs union as well as the EEA. Turkey, Andorra, Monaco and San Marino are outside the EEA but in a customs union with the EU. The Turkish model has clear drawbacks. It is meant as a move towards EU membership, not away from it. It covers industrial goods only, not agriculture or, crucially, services, which account for almost 80% of Britain’s GDP. It has its own obstacles, such as testing and certification checks on exports. And, perhaps most upsetting to Brexiteers, it means applying the EU’s common external tariffs without having any say in them, and it precludes free-trade deals with third countries. + +Yet there may be political advantages to being in the customs union and not the single market. In particular, it does not require acceptance of free movement of people, budget contributions or being subject to the ECJ (though dispute settlement with Turkey is a controversial issue). It also avoids rules-of-origin checks on exports to ensure that they do not include parts from third countries. These impose heavy costs on Norway and other EEA members, which are not in the customs union. One trade lawyer says rules of origin can be so burdensome that sometimes companies prefer to pay export tariffs. + +The customs union offers trade benefits as well. Remaining in it might allow Britain to stay in the EU’s free-trade agreements with 53 third countries, which it will otherwise have to renegotiate. It would avoid the risk of a hard border and customs controls with Ireland, which Mrs May is keen not to impose. Blocking separate free-trade deals would certainly annoy Dr Fox, because it would largely do him out of a job. Yet in today’s political climate, free-trade deals are increasingly hard to strike and even harder to ratify. And Dr Fox is widely seen as the most dispensable of Mrs May’s Brexiteer ministers. + +Then there is the Nissan case. The government has given the carmaker unspecified assurances about keeping barrier-free access to the EU market. These may include a promise to stay in the customs union, at least for cars, which would explain why Mrs May said in Parliament recently that the customs union was not a “binary choice”. Yet the idea of sector-by-sector membership is problematic. The EU has made plain its dislike of cherry-picking. And Jim Rollo of the UK Trade Policy Observatory (UKTPO) at Sussex University notes that it may be against the rules of the World Trade Organisation (WTO), which requires free-trade deals or customs unions to cover “substantially all the trade” among contracting parties. + +Turkey would welcome Britain as a fellow member of its customs union, because, with its own hopes of joining the EU fast evaporating, it wants to renegotiate terms. The two countries could, for example, demand greater say in future EU trade negotiations that affect their interests. It might even be possible to add services trade in some form. + +The customs union may not be a suitable long-term home after Brexit. But it could offer a transitional one that minimises the risk of falling off a cliff into trading on WTO terms alone at the end of the two-year time limit for Brexit set by Article 50 of the EU treaty. The UKTPO reckons it would take at least five years to negotiate and ratify a comprehensive free-trade deal with the EU after Brexit. Staying in the customs union during that time might not be such a bad idea. + +This article appeared in the Britain section of the print edition under the headline Customs of the country + + + + + +Changing how business is run + +A soft green paper + +The government is backing away from earlier tough ideas to beef up corporate governance + +Dec 3rd 2016 + + + +THE “vision thing” can be tricky indeed. Helpful to get elected, it can come back to haunt you afterwards. When Theresa May was running to succeed David Cameron as leader of the Conservative Party in June she declared that her “mission” was to “make this a country that works for everyone”, not just for the privileged few. It was enough to swat her rivals. It may also have helped her into a near-record lead (according to one recent poll) over the opposition Labour Party, normally the more egalitarian of the two. But actually fulfilling her mission has proved harder, especially when it comes to her agenda of reforming business. + +In this Mrs May has been mindful of two specific public concerns: excessive pay and corporate misconduct. Pay for chief executives has dramatically outstripped average earnings over the past two decades. According to the government, in 1998 the ratio of average CEO pay at a large company to the average full-time employee’s pay was 47:1. Last year it stood at 128:1. Big pay awards at companies such as BP, even when the oil giant was losing money and sacking workers, have stuck in the public’s craw. Meanwhile companies such as Tesco, a supermarket, BHS, a retail chain previously owned by Sir Philip Green, and Sports Direct, another retailer, have been embroiled in accounting and other scandals. BHS was forced to close in August with the loss of 11,000 jobs, leaving behind a huge pension-fund deficit; Sir Philip has been vilified. + +Arguing that people have lost confidence in business, a sentiment that many businessmen agree with at least over pay, Mrs May has touted various remedies. But judging by a government green paper published on November 29th, her attempts to bend business to her will are increasingly forlorn. Her signature policy, to put workers and consumers on company boards, supported by both Labour and the trade unions, was ditched even before the green paper appeared, after opposition from business and some in her own party. Other proposals, often extremely mild, are still in the green paper, but even they have been watered down. + +Take the idea of binding shareholder votes on executive pay, intended to give shareholders more power to curb apparent excesses. Since 2013, listed companies have been required to put pay levels before shareholders at least every three years. The government had suggested making this an annual vote. Few would quibble with this, as since 2013 only six companies have lost advisory votes on pay and only once has a company lost a binding vote, forcing it to come back with new proposals. Yet the green paper suggests that not all “elements” of executive-pay packages should be subject to a vote and that votes need not be binding in every case. The paper also suggests that, instead of putting workers on boards, there should be something called “stakeholder advisory panels”. + +The green paper is more sceptical than encouraging about another headline idea, forcing companies to publish the ratio of CEO to average pay. This will be required for listed companies in America from next year. Stefan Stern of the High Pay Centre, a lobby group, argues that it would at least embarrass CEOs into making more modest claims. Yet as the green paper concedes, pay ratios are not necessarily a reliable guide to whether pay is out of line. Vince Cable, a former Liberal-Democrat business secretary, dropped the idea because of the “Goldman-Waitrose” effect, whereby Goldman Sachs would look vastly more equitable than the supermarket simply because its bankers are, on average, all so highly paid. + +Alex Edmans, professor of finance at the London Business School, warns of the perverse incentives and unintended consequences of publishing pay ratios. CEOs could gain a new tool to push for even higher pay to match their peers. The European Union dropped the idea after consultation on its own corporate-governance reforms, due to come into effect from next year. The EU also dropped a proposal to give employees more say on company pay policy. As the EU tends to be more dirigiste than Britain, this does not encourage hopes that much of the green paper will survive the consultation period. + +In a direct nod to BHS, the paper dwells on the idea of extending formal corporate governance and reporting standards from listed companies to 2,500-odd large private companies. But there is little on the problem of how BHS’s owners managed to run down its pension scheme with apparent impunity. Rhetorically, as on executive pay, Mrs May might appear to be doing something in response to public indignation. But it is unlikely that her actions will make much difference, let alone flesh out a distinctive brand of Mayism. + +This article appeared in the Britain section of the print edition under the headline A flagship policy takes on water + + + + + +A less beautiful game + +Evidence grows of child abuse in football + +Footballers’ accounts of historic sex abuse point to the sport’s vulnerabilities + +Dec 3rd 2016 + + + +WATCHING the man who abused him for years marry his sister was torture, said Andy Woodward, a former professional footballer. Mr Woodward recently revealed the abuse he suffered as a child at the hands of Barry Bennell, a youth coach, in the 1980s. Mr Bennell, who has served three prison sentences for child-sex offences, threatened him with violence if he told anyone. He now faces further charges of assault. As over 20 professional sportsmen have come forward to describe the sexual abuse they suffered as young players, football is the latest British institution forced to confront a history of child abuse. + +The enthusiasm of children for sport makes them especially vulnerable. Unlike those in care homes, they want to be there, so they are even more reluctant to report such crimes. Sports clubs provide myriad opportunities for sexual, physical and emotional abuse, argues Laura Hoyano, a lawyer at Oxford University. Checking for injuries can be a pretext for physical contact; trips away remove parents’ protection; praise and punishment can be a form of control. Coaches can make or break a young player’s career and use that power to facilitate abuse. Little research has been done on its prevalence, but a study published earlier this year of children in sport in Belgium and the Netherlands suggests that as many as 14% had been sexually assaulted. + +Football in Britain is notably prone to problems. The organisations that run it are rich, powerful and conscious of the sport’s reputation. That gives them the means and incentive to cover up abuse. The sport’s culture is also to blame. All children find it hard to disclose abuse. But boys are under added pressure if the perpetrator is a man in a sport known for machismo and homophobia. + +In the decades since the abuse of Mr Woodward steps have been taken to improve child protection. Those who work with them are vetted through criminal-background checks. Useful as these are, they work only if an abuser has a record. The Child Protection in Sport Unit was established in 2001 in partnership with the National Society for the Protection of Children, a charity, and the national sporting bodies in England, Wales and Northern Ireland (Scotland has a separate organisation) to introduce standards and checks in all sports. + +But those responsible worry that their work matters less than winning matches, says Mike Hartill, a sports sociologist at Edge Hill University. The Football Association, which is reviewing what officials knew about the abuse, withdrew funding from a study of its child-protection policies in 2003, three years before its completion. Britain has done more to combat abuse than some other countries, says Mr Hartill. But still more is needed. + +This article appeared in the Britain section of the print edition under the headline A less beautiful game + + + + + +A costly distraction + +A bad time to be cutting Britain’s corporate-tax rate + +A marginal decline in corporation tax pales in comparison with firms’ other worries + +Dec 3rd 2016 + + + +PHILIP HAMMOND, the chancellor, made a few tweaks in his Autumn Statement on November 23rd but otherwise stuck to the fiscal policy set by his predecessor, George Osborne. A central plank of this stance is to keep cutting corporation tax, which is levied on company profits. The government hopes that will persuade businesses to invest in Britain. It might, but on political grounds it still looks unwise. + +As firms have become more mobile, governments have had to work harder to keep them. The corporate-tax rate has tumbled across the OECD group of rich countries in recent years (see chart). Britain has led the way. Its rate was 52% in the 1970s. Between 2010 and 2015 it fell from 28% to 20%. Mr Hammond will bring it down to 17% by 2020. Theresa May, the prime minister, has reportedly told her EU counterparts that, unless she gets a good Brexit deal, she may slash the rate to 10%. + +On one level, this looks sensible. Well before Brexit, companies were complaining about a slew of extra charges from the government. A levy to finance apprenticeships comes into force in April 2017; it will cost firms about £3bn ($3.7bn) a year. A higher minimum wage for those aged 25 and over is now in force, ultimately raising wage bills by £4bn. Brexit itself has created the biggest headache. By following through with cuts in corporate tax, Mr Hammond hopes that he is “sending the message that Britain is open for business.” + +That message will be heard by only a small number of firms, however. In 2014 it was announced that Fiat Chrysler, a carmaker (whose chairman is a director of The Economist’s parent company), would set its residency for tax purposes in Britain. But only the biggest firms are likely to move in response to lower corporation tax. Within Britain itself, the tax burden falls heavily on a few payers. All limited companies are liable, but a recent Oxford University research paper found that just 1% of firms pay four-fifths of the total corporation-tax bill. + +For these firms, lower taxes would boost their expected future return on capital, thus encouraging investment. A report from HMRC, the tax-collecting agency, looked at corporate-tax changes between 2010 and 2016 and suggested that investment would be some £4bn-6bn a year higher as a result. + +But at what fiscal cost? Those changes also deprived the government of about £8bn a year in revenues. The planned cut to 17% will ultimately cost another £3bn or so a year. The HMRC report counters that higher investment leads to faster growth, and thus a higher tax take, so that within 20 years half the lost receipts could be recouped. But a paper from the Institute for Fiscal Studies, a think-tank, criticises the methodology behind this conclusion. Among many worries, its simplest was that the estimates were subject to “a high degree of uncertainty”. + +Uncertainty is especially high right now. British companies seem not to be in the mood to invest. The profitability of private-sector firms is at its highest level since 1998, yet capital spending is stagnant. A marginal decline in corporate tax pales in comparison with firms’ worries over workers’ measly productivity growth, Britain’s future relations with the EU or Mrs May’s failure so far to guarantee the rights of 3m-odd EU citizens living in Britain. + +One problem for Mr Hammond is that, even if the tax cuts do not blow a hole in the public finances in the long run, in the short term his fiscal needs are pressing. The budget deficit is 4% of GDP and he has set three fiscal rules, including a pledge that the ratio of public-sector debt to GDP must be falling by 2020. To this end, he has retained other parts of Mr Osborne’s legacy, including a cut of about £10bn from the working-age welfare bill by 2020, a move most analysts see as highly regressive. + +What is more, for Mrs May to threaten the EU with a race to the bottom in corporate tax is hardly likely to be conducive to harmonious Brexit negotiations. Even businesses recognise that, politically, there is something iffy about the government’s approach. A big majority surveyed by PwC, an accounting firm, believe that the tax rate should either stay at 20% or not go below the 17% fixed for 2020. In purely economic terms cutting corporation tax may do some good, but for post-Brexit Britain it is at best a distraction. + +This article appeared in the Britain section of the print edition under the headline A costly distraction + + + + + +Breaks-it + +The unstoppable rise of free-range eggs in Britain + +Since 2006 annual production of free-range eggs has doubled + +Dec 3rd 2016 + + + +IN THE past decade British chickens have laid about 100bn eggs, with most of them coming from caged hens. A change of EU regulations in 2012 banned the smallest battery cages, but chicken-lovers say this is not enough. Footage secretly obtained by Animal Aid, a campaign group, in Lincolnshire in 2013 showed caged chickens barely able to move. Now consumers’ changing tastes may do more than Eurocrats ever could. The latest edition of the government’s quarterly egg statistics suggests that in the third quarter farms produced about as many free-range eggs as caged-hen ones (see chart). These days, retailers crow about their pro-chicken credentials. Marks & Spencer, an upmarket chain, has a 100% free-range egg policy. The signs are that Britons will continue to shell out for free-range. Lidl, a discounter, told The Grocer, a magazine, that it would stop selling caged-hen eggs by 2025. Free-range eggs have become more expensive relative to other sorts, so more farmers will produce them. But concerns for animal welfare go only so far. Sales of organic eggs, which cost over twice as much as caged-hen ones, have come off the boil. + + + +This article appeared in the Britain section of the print edition under the headline Breggs-it + + + + + +The homelessness crisis + +An ever growing problem + +Even as the numbers sleeping rough rise, so does public spending on temporary accommodation + +Dec 3rd 2016 + +A step off the housing ladder + +EXACTLY 50 years ago, a drama aired on British television that changed the way the general public thought of homeless people. Entitled “Cathy Come Home”, it told the story of an ordinary couple who descend by accident into poverty and homelessness, and whose children are then taken into care. The film revealed to 1960s Britain that the social safety net was failing and that such trauma could happen to anyone. It played a big role in mobilising a fight against homelessness. The country’s two largest homeless charities, Crisis and Shelter, were set up around the same time, and the film slowly raised the issue’s profile within government as well. + +In recent years, the problem of homelessness has re-emerged with a vengeance, driven by a toxic combination of welfare cuts and soaring rents. Rough sleeping is at its highest in a decade and has doubled since 2010, with at least 3,500 people on the streets every night in England alone. But that is merely the most visible (and probably underestimated) sign of a much bigger problem. With thousands of families losing their homes because they cannot afford the rent, Shelter says 120,000 children—also the highest figure in a decade—will spend this Christmas in temporary accommodation. In response, a bill is going through Parliament that campaigners hope may improve the situation. + +It was 11 years after “Cathy Come Home” when the Housing (Homeless Persons) Act of 1977 set the parameters that broadly exist today. The government has a responsibility to house families with children and vulnerable individuals when they become homeless, but it does not have to house all homeless people. Many adults deemed not to be vulnerable are simply turned away without any assistance. “It’s only half a safety net,” says Matt Downie of Crisis. + +Over the past decade, the shortage of housing and the policy of giving people a right to buy their council houses but not building new ones has led to a breakdown in the affordable rental market. According to Crisis, the number of people made homeless following termination of a private rental contract quadrupled between 2010 and 2015. In London, homelessness after the ending of a private tenancy accounted for 39% of all cases last year. + +Cuts in housing benefits exacerbate matters. Nearly 1.5m people claim some kind of housing allowance for private renting (a further 3.1m claim for social housing). Half a million are in work, up from just 175,000 in 2009. Last year George Osborne, the chancellor, froze housing allowances for four years, hoping to encourage landlords to drop rents (they did not). Now housing benefit is static even as rents soar. According to Shelter, by 2020 in four-fifths of all local councils there will be a gap between the rent charged for one of the cheapest homes and the maximum support a family can receive. “What is most needed is to recreate the link between levels of housing benefit and what housing actually costs,” says Mr Downie. + +While Mr Osborne seemed obsessed with getting people onto the home-owning ladder, his successor as chancellor, Philip Hammond, hinted at a more sympathetic line in his Autumn Statement. He gave an extra £1.4bn for housing in England, which could lead to 40,000 affordable homes being built. He also announced that fees charged, often randomly, by letting agencies would be banned. + +Most importantly, a private member’s bill is going through Parliament that charities call significant. The homelessness reduction bill will, if passed, force local authorities to step in earlier to try to stop people from becoming homeless in the first place. It would involve councils negotiating with landlords, helping people to reorganise their finances and finding a way to keep them in their homes long before the bailiffs arrive. The bill’s supporters say any extra costs will still be much cheaper than providing temporary accommodation once a family is kicked out. + +The government has spent more than £3.5bn on temporary accommodation for homeless families in the past five years, with the annual cost rising by 43% in that time. Almost two-thirds of the total was in London. Homeless placements in temporary accommodation rose by 12% last year. But such housing is often in poor-quality hostels or bed-and-breakfasts, far away from a family’s jobs, schools and community. The bill’s backers point to Wales, where a similar measure reduced the numbers needing rehousing by 69% in the first year. Annual spending on temporary accommodation there has declined by 26% over the past five years. + +New legislation is important, says Mr Downie. But, he adds, its impact will be limited if government policy on housebuilding and welfare is working in the opposite direction. + +This article appeared in the Britain section of the print edition under the headline Still not home + + + + + +Bagehot + +Keir Starmer, a Lilliputian against a giant + +Labour’s forensic spokesman cannot tame the forces Brexit has unleashed + +Dec 3rd 2016 + + + +SIR KEIR STARMER draws a horizontal line. He labels its left end the World Trade Organisation and its right end the European Union’s single market. “We want to be as close to that as possible,” he says, circling the second. “Trade and services without impediment, common regulation.” Immediately to the left of the circle he draws a box with swift, straight strokes. “That’s where we want to be,” he says. But what does it mean? Three horizontal lines shoot across the page. He labels the top one “peace and security”, the next “jobs and growth” and the lowest “immigration controls”. “This is the public’s order of priorities”, he replies, squaring his notepad with the edge of table. Striking out the second two labels and reversing them, he adds: “but I worry the government thinks this.” + +Taking coffee with Sir Keir in the Berlin headquarters of the BDI, Germany’s main business association, Bagehot was impressed. Whatever the subject, Labour’s shadow Brexit secretary, opposing a cagey Tory government, will identify the factual bedrock, grind it into dust, shape it into bricks, enumerate them and carefully erect a neat, logical, impenetrable wall of argument. Little more than a month into the job, he has already put a list of 170 questions about Brexit to ministers. If the Supreme Court rejects the government’s Article 50 appeal and insists that Parliament must have a say before Britain’s two-year Brexit talks are triggered, he will become a big name in European politics. + +On paper Sir Keir is poorly suited to the job. He became MP for Holborn and St Pancras only in May 2015, at 52. His prospects looked bright. A good friend of Ed Miliband (the former Labour leader, who joined him in Berlin), he would now be foreign or justice secretary had his party won. But now he is on the wrong side of most prevailing trends. As a human-rights lawyer, he has defended alleged terrorists and David Shayler, a whistleblowing spook; advocated an easing of right-to-die laws; and spoken out for judges. As director of public prosecutions, he oversaw trials of journalists accused of bribing public officials for stories. As an MP he represents a metropolitan finger of London that begins in the West End, takes in Bloomsbury, King’s Cross and St Pancras and ends with Kentish Town and Highgate—a seat where council estates are interspersed with grand Victorian streets in which Labour posters dot the windows of houses worth millions of pounds. In an anti-expert, anti-liberal, anti-London age he is a red rag to populist bulls. + +Yet in practice he is an excellent choice for the job. Three decades at the Bar have made him a crisp communicator, free of the abstract nouns and management jargon that infect the speech of other Labour moderates. Asked about the meaning of Donald Trump he echoes Zhou Enlai’s supposed take on the French Revolution: “it’s too early to tell.” In an age of braggarts and posers, he is content to deal in modest thruths. Despite his name—his parents chose it in tribute to Keir Hardie, Labour’s founder—he eschews tribalism and is close to liberal Tories like Andrew Tyrie and Dominic Grieve. + +Moreover, where others would use the job as a platform for scoring points, Sir Keir considers himself a sort of national ombudsman. Brexit should not divide the 52% of Leavers from the 48% of Remainers, he says, but unite the 100% through a pragmatic deal in the middle of the spectrum. Hence his talk of using a parliamentary vote on Article 50 to “put grit in the machine” and his concern that the government’s Great Repeal Bill, which will transfer EU laws wholesale to the British statute book, may not be sufficiently scrutinised in Parliament. His one-nation instincts also explain his quest to calm expectations of Brexit—“the sovereignty that we gain will be for a millisecond between the signature that ends the major treaty and the signatures that enter the new treaties”—and to act as an interlocutor between London and other capitals (from Berlin, Sir Keir went on to Brussels). + +Brobdingnagian hopes, human reality + +Though impressed, your columnist has two concerns. The first is Sir Keir’s party politics. He may claim that Labour is “more united on Brexit than on any issue in recent history”, but its far-left leadership still sees the EU as a malign, capitalist plot. After their meeting in Berlin, Bagehot received a call from an aide to Sir Keir insisting that subsequent pro-Brexit comments by John McDonnell, the shadow chancellor, did not reflect his boss’s views. This gap between the shadow Brexit secretary and his front-bench colleagues surely hints at the tensions that will explode during next year’s negotiations. + +The second caveat is the sheer scale of Brexit. Many Remainers vest outsized hopes in Sir Keir. “He’s what stands between the government and a hard Brexit,” says one colleague. “Britain’s last Remaining hope”, bellows a headline on the Politico website. But that speaks to a delusion which should have died by now: that Brexit is a car with an accelerator, a brake and a steering wheel—a road-safe vehicle that individual politicians can control. + +In fact the vote on June 23rd produced an intemperate, untameable animal. That much is evident in Sir Keir’s haunted air. He sports the demeanour of a man who has looked the giant in the eye and seen its size. It is also evident in the jitters of Brexiteers, whose disgust at the slightest suggestion of parliamentary scrutiny and whose perma-fury at unconvinced Remainer commentators reveals more than they would care to admit. Deep down, such politicos know the truth. Brexit is not a machine but a voluble beast. It combines a vague mandate from voters, a furious purism among diehards, a mind-achingly complicated bureaucratic exercise and a volatile international political and trading environment. Anyone who claims to know how the coming years will turn out is therefore talking rubbish. Sir Keir’s greatest virtue is that he seems to understand this. His keenest acolytes should follow suit. + +Economist.com/blogs/bagehot + +This article appeared in the Britain section of the print edition under the headline Keir Starmer, noble Lilliputian + + + +International + + + + + +Abortion: How to make it rarer + +Abortion in El Salvador: Miscarriage of justice + + + + + +Birth control + +How to make abortion rarer + +Bans and restrictions do not work. Superior birth control does + +Dec 3rd 2016 | ATHENS AND SEOUL + + + +ABORTION, says Theodora, a Greek civil servant, was “an absolute necessity” when she became pregnant last year. Her husband had lost his job and money was too tight for a third child. The procedure, at a private clinic, was “efficient”; she was in and out in three hours. Hers was a typical experience for a middle-class Athenian woman. It is not uncommon for one to have four or five abortions, says a gynaecologist in Athens. In Greece abortion is seen as an ordinary form of birth control. + +Most modern contraceptives, however, are not viewed that way. More than half of married Greek women use none at all. Withdrawal and condoms are the methods of choice for most couples who are trying not to have a baby—even medical students, who should know that these fail about a fifth of couples who rely on them for a year. Greeks commonly believe that the pill and other hormonal contraceptives cause infertility and cancer. They also distrust intrauterine devices (IUDs), possibly because they have been taught that tampons are unhealthy. + +The same sort of nonsense keeps abortion rates high in many other countries. Statistics are patchy, especially in places where many abortions are done in private clinics or the procedure is illegal. But a recent study in the Lancet, a medical journal, estimated that 56m abortions are carried out each year worldwide, ending a quarter of all pregnancies. The annual rate, of 3.5 abortions per 100 women of childbearing age, is only slightly lower than it was in the early 1990s. + + + +Although the abortion rate is stable or falling in most rich countries, it is rising in Latin America and some parts of Africa and Asia (see chart 1). Former communist countries have some of the world’s highest rates. During Soviet times abortion was the only method of birth control, and in some countries the average woman would have five to eight abortions during her lifetime. By the time the Soviet Union fell apart it was spending about half of its reproductive-health budget on abortions and associated complications. + +Zero tolerance, zero result + +For many pro-life politicians, the answer to high abortion rates is to make abortion illegal or harder to get. Donald Trump, a recent convert to the pro-life cause, has vowed to appoint a conservative to America’s Supreme Court. Many religious leaders fulminate against abortion, although Pope Francis softened the Catholic church’s line slightly on November 20th. Abortion remains a grave sin, but penitent women can now be forgiven by parish priests and do not have to go to a bishop. + +International comparisons show that bans and restrictions do little to cut the number of abortions. Most women will do what it takes to end an unwanted pregnancy, even to the point of risking their lives. According to the Lancet study, abortion is as common in countries where it is illegal or allowed only to save a woman’s life as it is in those where it is provided on demand. + +In many countries the authorities turn a blind eye when the rules are broken. Most of Latin America has strict laws, but a woman able to afford high fees can get a safe illegal abortion in a private clinic. (Poor women go to backstreet abortionists, and are sometimes seriously injured or even killed.) In South Korea abortion is legal only in cases of rape, incest or severe fetal abnormalities, or to save a woman’s life. Still, a study for the government in 2005 estimated that 44% of pregnancies were aborted. A 35-year-old housewife in Seoul who had an abortion in 2011 says she simply went to the doctor who had delivered her two children and said she did not want the baby. Women who call clinics in Seoul to seek an abortion are told that the procedure is not provided but are often invited to come for a “consultation”. + +Where the authorities are more vigilant, women often go abroad or buy abortion pills on the black market. Women from Ireland, Poland and Malta can easily get abortions elsewhere in Europe. In 2015 nearly 3,500 women who gave Irish home addresses had abortions in public clinics in England. The internet has made it easier to arrange a safe abortion. Women on Web, a Dutch pro-choice group, offers online consultations on how to use misoprostol and mifepristone, a drug combination approved by the World Health Organisation for abortions during the first 12 weeks of pregnancy. It ships them all over the world. In many Latin American countries misoprostol is available as a treatment for stomach ulcers. To avoid suspicion, a woman might ask an elderly relative to buy the drugs for her. + +Anti-abortion groups have grown louder in many countries in recent years. But they struggle to enact bans. In October conservative politicians in Poland, where abortion is available only in rare circumstances, backed away from a plan to ban it entirely, following large street protests. Women marched waving coat-hangers, which are sometimes used in do-it-yourself abortions. + +When the patriarch of the Russian Orthodox Church called for a ban in Russia, the country’s minister of health explained that this had been tried for a time under Stalin. It resulted in many deaths from illegal abortions but no change in the birth rate. Mr Trump’s Supreme Court appointee will make little difference to America’s abortion law in the short term. The court has a solid majority for keeping it legal. + +Pro-life campaigners have succeeded in making abortions harder to get. In some American states a woman who seeks one must be told that it might cause cancer—a claim unsupported by scientific evidence. In recent years Russia and several other former communist countries have brought in mandatory counselling and “reflection periods” of several days before an abortion can be carried out. Russia’s guidelines describe abortion as the “murder of a living child” and instruct counsellors to “awaken maternal feelings”, convince the woman of “the immorality and cruelty” of abortion and lead her to conclude that the means to raise the baby can be found. Evidence of success is thin. Abortions declined slightly when the state of Mississippi insisted on counselling and a waiting period, but the proportion carried out after the first trimester rose and more women travelled to other states. + +Studies of Western countries suggest that few women who have had an abortion regret their choice. Although women with pre-existing mental-health problems can see them worsen following an abortion, such problems also tend to worsen if they carry an unwanted baby to term. But in poor countries, where sterile rooms and well-trained doctors are in short supply, even legal surgical abortions can be risky. In the West less than 1% of abortions carried out by manual vacuum aspiration are followed by complications. In Bangladesh the share is 12%. + +Much the best way to make abortion rarer is to prevent unwanted pregnancies. What works is well known: campaigns to educate couples about the various methods; training for doctors and nurses in birth-control counselling; and making contraceptives easy to get. Even in rich countries, however, some or all of these are missing. Bangladeshis and Malawians are keener users of contraceptives than Greeks or Italians (see chart 2). In plenty of countries, including Ireland and Russia, more than a third of married couples who use contraceptives rely on condoms. In Japan that share is an astonishing 90%. + + + +The Catholic church continues to frown on contraception. And many couples fear social stigma and mythical side effects. In South Korea fewer than 5% of women use the pill because they think it is harmful to ingest artificial hormones. Even so, unmarried couples often forgo condoms to signal commitment; men know that women can obtain the morning-after pill without much difficulty and that abortions are a possibility. Professional advice is scarce. A gynaecologist who gave a lecture about sex and contraception at a nursing college was told afterwards that it had made the students “feel uncomfortable”. + +A fetish for latex + +The head of one HIV clinic in Athens says Greek hospitals often recommend condoms as the most reliable method for avoiding pregnancy. In fact, of every 100 couples who rely on condoms for a year 18% will conceive, compared with 9% for the pill and under 1% for the IUD. Roula, a 30-year-old architect from Crete who studied in England, where four-fifths of women use contraceptives and hardly any rely on condoms to prevent pregnancy (as opposed to sexually transmitted diseases), describes the counselling on the range of contraceptives at her university’s clinic as “enlightening”. In Macedonia, where less than a fifth of women use contraceptives, some doctors view the IUD as a “foreign body” akin to a surgical tool accidentally left inside a patient. Others are averse to prescribing the pill to young women, believing that it will harm their physical development. (It won’t.) + +In former communist countries, few older doctors are trained to prescribe modern contraceptives. Luybov Erofeeva of the Russian Association of Population and Development, an advocacy group, says Russian women prefer condoms or withdrawal because they have heard from their mothers and aunts about the complications and side effects from contraceptive pills with high doses of hormones and primitive IUDs used in Soviet times. + +In many countries, sex education in schools is woeful. A review of 16 European countries by the International Planned Parenthood Federation (IPPF), a campaign group, found that the subject was compulsory in only half of them and rarely included scientific information about contraceptives. The main message of a recent pamphlet offering guidance to South Korean teachers is to make the case that students should not have sex. One of the suggestions is to ask pupils to write letters to their imaginary future spouses, to focus their minds on remaining chaste. + +Simply getting hold of contraceptives can be such a hassle that women give up. Russian women who want the pill often undergo an unnecessary pelvic exam by a gynaecologist. Some Greek doctors are unwilling to write a prescription for the pill that covers more than six months. Doctors in eastern Europe routinely order all sorts of unnecessary tests before prescribing contraceptives, contravening official medical guidelines. + +Cost is often an even bigger deterrent. A Russian woman who wants an IUD has to pay for the device and for the appointment to have it inserted. Abortions in state hospitals, by contrast, are free. Half of the 16 European countries in the IPPF review provide no reimbursement for contraceptives; none fully covers all methods. Even in some countries with generous social welfare systems, including Germany and Italy, women have to pay for contraceptives, no matter how low their income. + +This is despite contraception being cheap for governments to provide. England’s National Health Service (NHS) offers every type of contraceptive free to everyone (better-off people must pay part of the cost for other prescriptions). Its buying power means it can pay less than £10 ($12.50) for a year’s supply of the pill and just £18 for an IUD that prevents pregnancy for five years. England has one of the world’s highest rates of contraceptive use. + +Contraception also offers an excellent return on public investment. An abortion costs the NHS 13 times the amount it spends on the average contraceptive user per year. The Copenhagen Consensus, a think-tank, estimates that making contraception and sexual-health advice universally available would bring returns worth $120 for every $1 spent, mostly by reducing deaths in pregnancy and childbirth in poor countries. + +Many miles to go + +Even in England, with its well-run sexual-health clinics and policy of providing contraceptives free, about a fifth of pregnancies end in abortion. And a third of women who have abortions have had at least one before. It cannot be abolished, no matter how enlightened a government’s policy. But the English have more-or-less the right attitude. A high abortion rate is best viewed as a public-health problem that can be cheaply addressed—not through pointless bans or restrictions, but by providing the means to avoid unwanted pregnancies in the first place. + +This article appeared in the International section of the print edition under the headline How to make it rarer + + + + + +Abortion in El Salvador + +Miscarriage of justice + +Where miscarrying can mean a life in jail + +Dec 3rd 2016 | SAN SALVADOR + +Demanding mercy for the mothers of the stillborn + +ON AUGUST 11th Sandra, a 19-year-old Salvadorean, went to her school’s nurse with stomach pains and a fever. She dashed to the toilet. What happened next is disputed. Her lawyer, Bertha Deleon, says she felt a spasm, looked down to see a dead fetus, fainted and woke up in hospital. Police said she gave birth and murdered her baby. According to Ms Deleon, a doctor later concluded that Sandra had been at most five months pregnant and had an infection known to cause miscarriage. Yet she was charged with infanticide. + +In most countries where abortion is illegal, only doctors who carry it out are punished. But El Salvador is one of a handful of countries that prosecute women for having them. Between 2000 and 2014 at least 149 Salvadorean women faced related charges; 23 were convicted for abortion and 19 for aggravated homicide. In 2014 the Citizens’ Association for the Decriminalisation of Abortion, a campaign group, petitioned the Supreme Court to free 17 women jailed following reported stillbirths or other complications of pregnancy. (Protesters demanding their release are pictured here.) Three have been freed, though one faces an appeal that could return her to jail. + +In 1998 El Salvador banned abortion in all circumstances. On paper, Nicaragua’s law is as sweeping—but the authorities do not actually prosecute women. El Salvador’s greater zeal followed the campaign for the 1998 law and a subsequent constitutional amendment that defined life as beginning at conception, says Jocelyn Viterna, a sociologist at Harvard. Feminists decided not to fight the law, she says, but to focus on issues such as sex education and access to contraception. With no opposition, pro-life groups decided to continue campaigning, this time to see the new law enforced. + +Clandestine abortions are tricky to prosecute. Unless a woman becomes unwell afterwards, the procedure is easy to keep secret. So women arriving in hospital after obstetric emergencies have become the main targets. Doctors seeking to avoid charges of assisting a crime report them on suspicion of abortion. Prosecutors sometimes substitute charges of infanticide. “They arrive at the doors of the hospital bleeding and in pain,” says Sara García of the Citizens’ Association. “And instead of receiving medical attention they are handcuffed and accused of murder.” + +The campaign to free the 17 women—nearly all poor, uneducated and from rural areas—has sparked debate in a broadly anti-abortion country. Last month the governing left-wing FMLN party proposed decriminalising abortion in cases of rape and statutory rape, or when pregnancy threatens a woman’s life or the fetus has no chance of surviving outside the womb. But reform of the law looks unlikely. In July the conservative opposition ARENA party argued for increasing the minimum sentence for abortion to 30 years. + +The official autopsy of Sandra’s baby was released on September 23rd. Doctors determined that it had no brain. Prosecutors dismissed murder charges against the teenager, who was facing 40 years in jail. Nevertheless, says Ms Deleon, her school’s head teacher has refused to let her attend graduation because she “set a bad example”. + +This article appeared in the International section of the print edition + + + +Business + + + + + +Siemens and General Electric: Machines learning + +American business: The small fly + +The sharing economy (1): Four walls in China + +The sharing economy (2): Airbnb for canines + +French energy: Bad reactions + +Golf in Japan: Recovery shot + +Schumpeter: King customer + + + + + +Machines learning + +Siemens and General Electric gear up for the internet of things + +The American industrial giant is sprinting towards its goal. The German firm is taking a more deliberate approach + +Dec 3rd 2016 | MUNICH AND SAN RAMON + + + +IT DOESN’T take long to walk from Siemens’s old headquarters in Munich to its new one, inaugurated in June: the German industrial conglomerate has built it right next door. The design is cutting-edge, as are the building’s environmental features. It is packed with energy-saving sensors; channelled rainwater is used to flush the toilets. + +General Electric, Siemens’s big American rival, will soon have a new base, too. But it takes three hours to drive from the old site in Fairfield, a Connecticut suburb, to the new one in Boston. Its building will also boast plenty of green technology, such as a huge canopy made of solar panels, as well as spaces that the public can enter, including co-working areas and lounges. There will be laboratories both for internal startups and some from outside. + +The two industrial giants aren’t so much showing off as signalling transformation. Both firms are going through the most profound change in their corporate histories, attempting to switch from being makers of machines into fully digital businesses. GE’s chief executive, Jeff Immelt, says the plan is to join the world’s top ten software firms with sales of programs and services worth $15bn as early as 2020. + +It is tempting to bracket the firms together for other reasons, too. The basic numbers make them look alike. With annual revenues of around $100bn each, they are the world’s two largest diversified industrial conglomerates. About 70% of their markets overlap with each other, reckons J.P. Morgan, a bank. + +But the similarities only go so far. GE mostly sells big, stand-alone products, such as jet engines and locomotives. It may look like a collection of distinct divisions, but it has a strong centre and can move swiftly. It is also greatly influenced by America’s technology giants. + +Siemens, in contrast, excels in product design and factory automation. It already has experience in digitising the entire life cycle of an industrial product, from design to fabrication, so it is in some ways already more of an IT firm than GE (though it still has a very long way to go). The German firm is more decentralised, featuring competing centres of power. Its top managers prefer to weigh options carefully, not always with great results: Siemens is about half as profitable as the American firm. + +It is no surprise, then, that the two firms are also taking very different paths towards digitisation. GE is completely reinventing itself, whereas Siemens is staying close to its roots. What works best will be closely watched by other companies in all sorts of industries. They want to know what happens when operating technology, as represented by GE and Siemens, properly meets information technology. The first tends to be organised in vertical, industry-specific silos, such as machine tools and medical equipment. The second typically comes in horizontal, widely used layers, such as computer operating systems. Bringing it all together could go badly wrong. + +Data have long been crucial for manufacturing and industrial goods. Siemens digitises its customers’ factories; a typical GE jet engine contains hundreds of sensors. But now the data are no longer binned when the widget comes out of the factory or the plane has landed. Thanks to faster internet connections, cloud computing and clever algorithms, information can now be easily collected, stored in huge “data lakes” and sifted for insights. + +That technology allows manufacturers to create what David Gelernter, a pioneering computer scientist at Yale University, over two decades ago imagined as “mirror worlds”. GE wants to build a similar, “virtual twin” of every category of physical asset it sells, from locomotives to wind farms. This would allow engineers to test products before they are built and also let them feed the virtual model with real-world data to improve performance. “A digital twin is not just a generic model but based on the exact conditions in the real world,” explains Ganesh Bell, chief digital officer at GE Power. + +Not so byte-sized + +Although the efficiency gains for a single product may be relatively small, they can add up to billions of dollars in savings for customers over the lifetime of equipment. More broadly, linking the physical and the digital worlds via the “internet of things” (IoT) could create up to $11trn in economic value annually by 2025, estimates the McKinsey Global Institute, a think-tank. A third of that could be in manufacturing. + +It is not just the promise of such gains, however, that has prompted Siemens and GE to overhaul themselves. Digitisation is also a threat. If they do not satisfy customers’ demands to replace machines less often and to spend less money on maintenance, others will. Big IT firms such as Google and IBM might come to control the virtual part of manufacturing by developing software and services to optimise factories and supply chains. That would slice off a big chunk of manufacturers’ profits. + +GE’s answer has been to invest billions since 2011 in a data platform called Predix. It wants the system to become for machines what Android is for smartphones: the dominant host of industrial “apps” to manage, for example, clusters of wind turbines and fleets of locomotives. GE has set up Predix to be “open”, meaning that it doesn’t only work with its own machines or its own apps. For example, Pitney Bowes, a maker of heavy-duty mailing systems and products, uses the platform to analyse data from its machines in order to manage them better. + + + +GE is also using Predix as a way to shake up its internal organisation. It set up a separate software unit in San Ramon, near Silicon Valley, to develop it. “We incubated the unit separately because it would otherwise have been killed by the main organisation,” explains Bill Ruh, who heads GE Digital. Only in September last year did it merge the startup with the company’s other digital activities, including its entire IT department, to form Mr Ruh’s unit. It interacts with all other GE businesses, making sure that an algorithm to control electric motors in a locomotive, say, can also be used for similar devices in a wind turbine or a power plant. + +GE is changing its culture in other ways, too. As an industrial conglomerate, the firm was known for its near-obsession with the Six Sigma management method. This uses statistics and incremental improvements to drive everything a company does close to perfection. Now GE wants workers to take a leaf from the world of startups and start making mistakes—an approach it is calling “FastWorks”. The idea is to experiment more and to develop so-called minimum viable products that can be discarded quickly if they fail to take off. + +Change your Weltanschauung + +Siemens’s digital transformation appears to be going more slowly (although that may be partly because its managers are less vocal about the firm’s achievements). Its primary focus is still on software tailored to industry verticals, such as health care and manufacturing, rather than on a horizontal platform to fit all sectors. Only recently did it begin marketing MindSphere, its equivalent to Predix, more intensively. “Our customers live in worlds that are very different from each other,” explains Horst Kayser, the firm’s head of strategy. Siemens is also keen not to displease an important group of customers: machine-tool makers that use components from Siemens. They want to maintain direct relationships with their own industrial customers, not have them interacting through a platform like MindSphere. + +Because MindSphere is less important inside Siemens than Predix within GE, the German firm’s organisational changes have so far been less radical. But it is trying to open itself up to ideas from outside. Internal startups used to be at the mercy of its budgeting process, which often meant that they were the first to lose funding. In June the firm created a separate home for such projects, called next47 (Siemens was founded in 1847 in a Berlin courtyard), which is part-incubator, part-investment firm. It has hired an American to run it, but rather than basing it in the German capital, which boasts a thriving startup ecosystem, it will remain in Munich. + + + +Siemens has also started sending senior employees on so-called “learning expeditions” to startups to see how things can be done differently. Its employees are now encouraged to communicate across organisational boundaries and directly with bosses. The company would have to do much of this regardless of its priorities in the digital sphere; a reputation for being risk-averse and overly hierarchical is not the best way to attract young talent as Germany’s population ages. + +In other IT markets, one firm has quickly come to dominate, whether in online search (Google), computer operating systems (Microsoft) or corporate databases (Oracle). That seems to argue in favour of a gung-ho approach. GE is already well on its way to creating an “ecosystem” for Predix, says Nicholas Heymann of William Blair, an investment bank. It has agreed partnerships with big telecoms operators, consultancies and IT-services companies, not least to gain access to outside data sources. + +Yet the consumer world and that of business differ. Online search and social-networking services are easy to scale, because human beings’ needs are similar across the world. Particular industries and companies, on the other hand, often have specific requirements that call for customised products—not for a platform that is trying to be all things to all machines. That may help Siemens’s more tailored, customer-centric approach. + +Siemens’s attitude to its industrial customers’ data may also work better than GE’s. Whereas individual consumers are by and large willing to give up personal information to one platform, such as Google or Facebook, most companies try to avoid such lock-in. Whether they are makers of machine tools or operators of a factory, they jealously guard their data because they know how much they are worth. Both GE and Siemens say their customers will keep control of their data in the new digitised world, but the real question is who will own the algorithms that are generated using these data. GE claims ownership, Siemens is much less categorical. + +It is thus unlikely that a single platform will come to dominate the industrial internet. There will be plenty of room for Predix, MindSphere and other services, concludes Andreas Willi of J.P. Morgan. Nonetheless GE seems better prepared for a digital future. The firm now has a flexible organisation that can change course quickly. Siemens, by contrast, is still living in a more closed vertical world. Both new headquarters feature small museums displaying the firms’ roots. No prize for guessing which one you can visit strictly by appointment only. + +This article appeared in the Business section of the print edition under the headline Machines learning + + + + + +The small fly + +Donald Trump’s win has sent the shares of small American companies on a tear + +Slashing corporate tax and hacking away at regulation would help the tiddlers disproportionately + +Dec 3rd 2016 | NEW YORK + + + +THERE have been plenty of swings in financial markets since America’s election on November 8th. The Mexican peso has fallen against the dollar, reflecting worries about Donald Trump’s protectionist tendencies. Ten-year bond prices have tumbled as investors factor in the likelihood of much higher government borrowing. One particularly striking move has been a surge in the share prices of small firms. The Russell 2000 index of American midgets has leapt by 12%, compared with a 3% rise for the S&P 500 index of multinational leviathans (see chart). + +Small companies are the backbone of America’s economy, employing about half of the private-sector workforce. But they have had a rotten decade. The Russell index had lagged the stockmarket until the election. The country’s 28m small firms—most of them unlisted—have never fully recovered from the financial crisis of 2008. As of October, confidence had yet to rise back to the level of 2006, according to an index of optimism that is based on surveys by the National Federation of Independent Business, a lobbying group. Giant firms, meanwhile, have been playing a bigger role: two-thirds of all industries have become more concentrated since the 1990s. + +Mr Trump knows a thing or two about struggling small firms—he runs one. The Trump Organisation would rank about midway in the Russell 2000 for the size of its revenues if it were listed. But there are three more substantial reasons why his administration could help small companies. First, tax. Profitable firms in the Russell 2000 pay a rate of 28% on their aggregate income, according to Barclays, a bank. Large multinationals are skilled at paying lower rates, mainly by stashing their profits abroad. Mr Trump’s plan to cut the corporate rate from the current headline rate of 35% to 15% would help small firms disproportionately. (Big companies, meanwhile, may record lower foreign sales because of the strong dollar.) + +Second, the plan to abolish Barack Obama’s Affordable Care Act and to lighten regulation across the board is likely to please the owners of small firms. They rank health insurance and red tape as their two most pressing concerns. Last, the Trump administration is also likely to ease regulations on the local banks that typically supply credit to smaller firms. + +A revival of animal spirits among the millions of small companies that already exist would boost America greatly. But the real test is whether more new firms are started. The rate of net company creation has gradually slumped to its lowest level since the 1970s. Among the reasons are a mounting burden of regulation and the difficulty of matching the purchasing clout and pricing power of giants such as Walmart. If over the next four years the administration manages to reverse this trend, it will have made a big step towards restoring the dynamism that made America’s economy great. + +This article appeared in the Business section of the print edition under the headline The small fly + + + + + +A long way from home + +Airbnb belatedly knocks on the door in China + +Will the American firm do better in China than Uber? + +Dec 3rd 2016 | SHANGHAI + +Beware of the wolves + +“WE HAVE not focused on building our community in China,” reads a peculiar announcement posted recently by Airbnb on its official blog. Despite the firm’s apparent lack of enthusiasm for the Chinese, the world’s biggest group of travellers, intrepid locals have still discovered the American home-sharing site. Tourists from the mainland have used the platform more than 3.5m times; Airbnb members in China have hosted nearly 1m visitors. + +Perhaps abashed by this show of grassroots support, Airbnb is now making a big push in China. From December 7th a new legal entity (Airbnb China) will cater to all those neglected hosts and guests. To satisfy Chinese regulators the unit will store their data on local servers. The firm has also struck new agreements with the governments of Shanghai, Shenzhen, Chongqing and Guangzhou, which suggests that these big cities welcome its formal arrival. In addition to these developments, there are rumours that Airbnb is about to take over Xiaozhu, a mid-sized local rival that recently raised $65m of venture funding. + +The mainland is certainly an attractive prize, with a big sharing economy that is projected to grow by 40% a year for each of the next five years. Local travellers made four billion trips inside China last year. The market for individual leisure lodgings inside the country could reach 10.3bn yuan ($1.7bn) next year, up from 6.8bn yuan this year, reckons iResearch, a market-research firm. Airbnb sees its rivals in China as parochial outfits. None of them have a global network or the means to build one, says Nick Papas, the firm’s spokesman in Washington, DC. + +But the American firm is late to the party, and local rivals are by now established. The strongest is Tujia, a venture-backed firm that is valued at more than $1bn and offers some 440,000 homes in over 300 cities. Unlike Airbnb’s model, which connects homeowners with travellers, Tujia’s also helps developers let out vacant properties—taking advantage of China’s property glut—and also offers services to potential buyers of homes. + +Other foreign tech firms have stumbled in China in the recent past. “The past decade has shown that it’s very hard for American companies to use their own approach to do business in China,” says Chen Chi, Xiaozhu’s chief executive officer. He previously worked at the local divisions of Yahoo and TripAdvisor, two American internet firms which struggled to localise. This year Uber, a ride-hailing firm, had to retreat after spending a fortune trying to compete against Didi Chuxing, a well-funded and inventive local rival. + +Even if foreign firms manage to hire savvy mainlanders, they are held back by having to report to faraway bosses with patchy knowledge of the market. “They end up behaving like rabbits, while we are a pack of wolves,” says Mr Chen (in an interview before the news of Airbnb’s interest in Xiaozhu). One Xiaozhu customer says he far prefers its cheaper prices and greater array of listings to Airbnb’s offering. With over 100,000 listings in about 300 cities across the country (Airbnb has around 70,000 in fewer places), it would be a useful addition to Airbnb’s empire. + +A combined firm would still have to contend with regulatory confusion. Tujia’s boss, Luo Jun, laments that there is “no clear national law supervising this industry.” The requirements for special licences, police checks and identity verification vary widely by region. Doing business often means lengthy one-off negotiations. + +Airbnb may reckon it is in the clear with its deals with four cities, but Tujia has made over 200 agreements with local authorities across the country. One businesswoman who rents out eight grand flats in Shanghai’s old French Concession from landlords, and re-lets them on home-sharing sites, says that the police fine landlords as a matter of course every once in a while. A strong relationship with the government is a must for any sharing site, whether local or foreign, she says. It would also help to avoid being dismissive of local companies. Airbnb is still a long way off building its Chinese home from home. + +This article appeared in the Business section of the print edition under the headline Four walls in China + + + + + +Out of the doghouse + +The sharing economy’s latest trick is home-sharing for pooches + +Companies such as Rover and DogVacay are disrupting the kennel business + +Dec 3rd 2016 | SAN FRANCISCO + + + +THE majority of Americans see their pets as family members, surveys show. Those with dogs are more likely to call themselves pet “parents” than canine “owners”. There are more of these parents than ever. In big cities such as San Francisco and Seattle, (owned) dogs outnumber children. + +The ways in which companies are profiting from the trend are also multiplying. Not only is there organic dog food on offer, but packaged, raw food for dogs so they can follow a “paleo” diet reminiscent of what their ancestors ate in the wild. A different sort of indulgence is orthopaedic pet mattresses. This year Americans spent more than $400m on Halloween costumes for pets. + +Overall, annual spending on pet food and products in America has risen by around 40% over the past ten years, to $43bn—a remarkable rate of growth for an already large industry, says Jared Koerten of Euromonitor, a research firm. Now a pack of startups has sniffed a fresh opportunity. Much as Airbnb has offered travellers an alternative to staying in a hotel, two firms, Rover and DogVacay, want to give pet owners an alternative to kennels when away from home. + +Customers search for a nearby sitter and pay for their dog to stay in that person’s home. The cost is around $30 a night, with the majority of that going to the sitter and around a fifth to the company—much less than you would spend to check your dog into a kennel. + +The other big selling-point is that pets by and large receive better treatment. There are ways, apparently, to vet dog hosts to find the real pet lovers: only around 15% of those who apply to serve as sitters are approved. Besides offering pooches more attention and room to roam, the platforms try to offer extra add-ons that appeal to helicopter parents. Rover has launched a feature that enables customers to see how far their dog has been walked via the GPS in the host’s phone. Like Airbnb, both DogVacay and Rover insure stays against accidents. + +Another advantage of the model is that, unlike other platforms that match consumers with workers, like handymen or masseuses, for one-off visits, consumers often use dog-sitting services many times a year, and they tend to be loyal. That has helped DogVacay and Rover attract a lot of venture-capital money—around $140m between them. + +But firms that connect pets with hosts will face daunting competition as they try to go global. Companies offering home-stays for dogs are now cropping up in many different countries, including Australia, Brazil and Britain. And unlike Airbnb, which pulls in customers thanks to its presence in lots of markets that people want to travel to, the network effect for services like DogVacay is local. Despite having anticipated the trend early, such firms may never achieve the same scale as an Airbnb. But then no one ever said it was easy to be top dog. + +This article appeared in the Business section of the print edition under the headline Airbnb for canines + + + + + +Bad reactions + +France’s nuclear-energy champion is in turmoil + +Electricité de France has had to shut down 18 of its 58 nuclear reactors + +Dec 3rd 2016 | PARIS + +Under pressure + +THESE are difficult times for Electricité de France (EDF), the country’s quasi-monopolistic electricity provider, serving 88% of homes. Outages at no fewer than 18 of the 58 EDF-owned nuclear reactors that provide three-quarters of France’s electricity have meant a slump in production: the company says annual nuclear output could fall to 378 terawatt hours (TWH), from 417 TWH last year. Eight reactors are currently lying idle and several may not restart for weeks or months. Power stations are burning coal at a rate not seen since the 1980s. As electricity imports and prices soar, officials are having to deny that a cold snap could bring blackouts. + +The cause of the crisis—possibly faulty reactor parts throughout EDF’s fleet—suggests it may not be easily contained. France’s nuclear regulator, the Autorité de Sûreté Nucléaire (ASN), this summer ordered urgent tests of reactor parts, mostly bases of cylindrical steam generators. Inspectors are worried about high carbon levels found in steel forged by Creusot Forge, which is owned by Areva, another French firm, and by Japan Casting & Forging Corporation, a Japanese supplier. In some pieces carbon deposits are over 50% above permitted levels, risking fracture in case of a sudden change in the temperature of the steel. + +The extent of faulty forge work is as yet unknown, as is whether Areva employees falsified data. ASN is clearly surprised that Areva failed to spot the problem. It is now auditing thousands of files stretching back over decades. More faults are likely to emerge, the regulator reckons. + +The cost for EDF is rising. As well as lost earnings from shuttered plants, switching one generator (a reactor can have three) can take six months and cost €150m ($159m). And its decision in November finally to stump up €2.5bn for Areva Nuclear Power (most of Areva, including Creusot Forge) now seems rather like paying to swallow a highly radioactive dinner. + +The two firms have one important joint project: a new European Pressurised Reactor (EPR), built by Areva and mostly run by EDF. Here too, forging faults are a problem: they were first found last year on the installed reactor vessel at Flamanville 3, a new EPR near Cherbourg. Another serious source of concern is safety-valve design. + +The regulator will rule on Flamanville’s future in mid-2017. More tests or design changes may mean putting off its opening far beyond 2018.That would also deliver another blow to France’s reputation in nuclear power. The only other EPR in Europe, that at Olkiluoto, Finland, is years overdue and three times over budget. + +Delays might also hinder EDF in its plan to build two EPRs at Hinkley Point, in Britain, for £24.5bn ($30.7bn). British loan guarantees need certain conditions to be met, and these reportedly include seeing Flamanville operate by 2020. Steve Thomas, an energy expert in London, concurs with the opinion of many in the nuclear-power industry when he calls the EPR a dud. EDF is pushing on regardless, but the financial strain is mounting. In March, EDF’s then chief financial officer, Thomas Piquemal, quit, calling Hinkley Point unaffordable. + +The sense of crisis looks likely to grow. Yves Marignac, a nuclear-energy expert in Paris, calls EDF “already financially crippled”. Only state backing prevents EDF’s credit rating falling steeply, analysts say. And it is not only the ASN that has EDF in its sights. On November 22nd French competition officials raided its offices, seeking evidence that its dominant position is squeezing rivals and sending prices higher than they should be (even though lower electricity prices in recent years have sapped its revenues). Its share price has halved in two years. + +The future looks bleak. Some four-fifths of French nuclear plants were built in a decade from the late 1970s. The plants have a 40-year lifespan, meaning that several a year face retirement over the next decade. Energy planners have assumed there will be extensions to 50 years or more. But the ASN may hesitate after the forging problems, or impose higher costs. Cyrille Cormier, a nuclear engineer who is now at Greenpeace, a campaign group that opposes nuclear power, says a total refit could cost EDF an extra €60bn-200bn. + +Closing plants permanently would be extremely costly, too. France has never closed a large one. EDF may be under-provisioning the costs of decommissioning plants. It has set aside €36bn, less than the €45bn that Germany has allowed, even though France’s neighbour has a smaller nuclear fleet. Then there is nuclear waste. The five pools storing spent fuel at La Hague, Areva’s central reprocessing plant, are nearly full, says Mr Marignac. When sorrows come, they come in battalions. + +This article appeared in the Business section of the print edition under the headline Bad reactions + + + + + +Recovery shot + +Japanese golf courses hunt for a new driver + +Players over 60 account for half of Japan’s 9m golfers + +Dec 3rd 2016 | KANUMA, TOCHIGI PREFECTURE + +Slow fade + +THE gold-coloured golf club priced at $4,700 that Japan’s prime minister, Shinzo Abe, gave to Donald Trump, America’s president-elect, in their first meeting last month may have been a piece of polished diplomacy. But it is unlikely to revive its posh Japanese maker, Honma, which calls itself “golf’s aristocracy”, presumably because it crafts the world’s most expensive clubs. It went bankrupt after Japan’s bubble-era splurge on new golf courses. Seven years ago a businessman from China bought the firm, hoping for an upswing. + +Golf, long associated with extravagance in Japan, is flagging. Clubs have trimmed green fees as the level of golf-playing among Japanese has fallen by over 40% since a high in the early 1990s. As elsewhere, courses are in oversupply: Japan has over 2,300—half of Asia’s total. + +More than 120 have closed since 2010. Entrepreneurial types have converted about 70 into solar-panel plants, encouraged by state subsidies for alternative-energy production following the disaster in March 2011 at the Fukushima Dai-ichi nuclear-power plant. A few others have been turned back into farmland. Junichi Oishi of the Japan Golf Club Employers’ Association in Tokyo thinks at least 500 more will need to shut within the decade. + +The golf industry’s health has long mirrored that of the economy, says Yuki Morita of the Japan Golf Association, which supports players and clubs. That is because of the importance of settai, or business-invitation, golf. In the late 1980s golf-club memberships were so valuable that they were traded like securities through brokers, the most exclusive fetching up to $2m. Fresh corporate recruits were expected to take up the game. + +Many bubble-era players are by now in or nearing retirement. But in a way, Japan’s ageing population should be a boon for golf, as demand rises from pensioners with time on their hands (courses take a few hours to reach by train from Tokyo, and play tends to be slow even by the sport’s global standards, punctuated by lunches, beers and baths in onsen hot springs). Golfers in their 60s and 70s now account for half of all Japan’s players. Ohitorisama, or “one-person”, golf, where older players show up alone to meet other singletons for a round, is catching on. + +But declining demand from companies and disinterest from the next generation more than offsets all this. Seishiro Eto, an MP who chairs a golf group inside the ruling Liberal Democratic Party, says that young players can’t afford steep green fees of around ¥20,000 ($180) for an 18-hole round. A chunk of that is an entertainment tax that Mr Eto wants abolished (which the over-70s do not pay). In 1989 it was scrapped on most forms of fun, including billiards, mah-jong and pachinko, but not golf, considered a corporate luxury. + + + +Slow economic growth has also squeezed businesses’ entertainment budgets. At Kanuma Country Club in Tochigi prefecture, north of Tokyo, just a tenth of the golf played is the settai sort, down from over half in the early 2000s. Back then companies lavished expensive lunches and club souvenirs on their clients. Even today, big deals between executives regularly happen only after a round, says a public-relations manager at a large Japanese technology firm. But business relationships are struck up more easily now, and young employees tend to shun Saturdays spent small-talking on the greens. + +Satoshi Tomita, who used to be a banker but who now advises startups, says the mood turned on settai golf soon after the financial crisis of 2008 struck. As cash-strapped banks shed flashy golf-club memberships, other firms followed suit. (In neighbouring South Korea, where business and birdies also go hand-in-hand, a recent anti-corruption law that sets monetary limits on gift-giving has meant a similar decline in expensive golf outings.) + +Some clubs are trying to shed their stuffy image. Only 6% of Japanese men in their 20s play, and less than 1% of women. Last year Rakuten, an e-commerce giant, launched RakuGolf to pep up the market. The site offers discounts, lessons, free rentals and trials to players in their 20s at partner clubs, as well as short-course deals. A resort in Chiba prefecture, south-east of Tokyo, trialled a drone-delivery service by Rakuten in May and June, sending balls and snacks to golfers on the course. Kanuma Country Club wants to entice local youngsters with “The Land of the Wind”, a manga, or Japanese cartoon, about a young champion golfer set at the club. + +A few are relaxing stiff dress codes (one in Chiba bans shoes with more than three colours). A resort in the prefecture of Okinawa lets golfers play in swimsuits. Some hold “jeans days”. Others offer faster versions of the game, such as a “pay-by-hole” system, and even a new international variant: footgolf, played with a football and huge holes. Traditionalists everywhere will shudder. But the game is flagging. + +This article appeared in the Business section of the print edition under the headline Recovery shot + + + + + +Schumpeter + +How companies should treat their most enthusiastic customers + +Research shows that firms ignore passionate consumers at their peril + +Dec 3rd 2016 + + + +THE hero of Nick Hornby’s novel, “High Fidelity”, cannot get enough of vinyl records. By day Rob Fleming runs a record shop where he spends his time sampling the stock and constructing fantasy compilations with his equally obsessive assistants. By night he moons over his favourite songs. “Is it so wrong, wanting to be at home with your record collection?” he asks himself. “There’s a whole world in here, a nicer, dirtier, more violent, more peaceful, more colourful, sleazier, more dangerous, more loving world than the world I live in.” + +Rob is an example of what management gurus dub “super-consumers”, “lead consumers” or “high-passion fans”. Only a tenth of customers are super-consumers but they account for 30-70% of sales, an even greater share of profits and almost 100% of “customer insights”, says a new book, “Super-Consumers”, written by Eddie Yoon of the Cambridge Group, a consultancy. + +These people are not defined simply by the amount of stuff they buy (though they tend to be heavy users), but by their attitude to the product. Like Rob, they regard the things that they consume as answers to powerful emotional needs. Super-consumers exist in every imaginable consumer category, from the glamorous to the staggeringly mundane. There are people who wax lyrical about the serial numbers inside toilet rolls or who worship at the altar of Kraft’s Velveeta processed cheese, which they call “liquid gold”. + +Often, Mr Yoon points out, companies treat super-consumers as weird obsessives to be dismissed or ignored. That is a mistake, for they can, when treated well, propel growth. As well as buying large quantities themselves, they infect their social circle with enthusiasm. American Girl, a maker of upmarket dolls, discovered that typical consumers spend a fifth more in markets where super-consumers are clustered. + +High-passion fans often come up with ideas for improving products. They can also reveal interesting patterns in consumer markets: Generac, a producer of standby generators, discovered that people who buy lots of their generators are also more likely to be enthusiastic consumers of fridges (they often have several stocked up with food), multivitamins and life insurance. These are customers, in other words, who wish to be prepared for all eventualities. + +But the most important role of super-fans is to force companies to focus on their core business. Managers love to immerse themselves in the side-disciplines of business—analysing big data or re-engineering supply chains. Super-consumers remind them that these are just a means to an end. Executives need to make sure that they often spend time with them—sitting in on product tests, joining chat rooms and hanging out at customer conventions. Blockbuster kept its accountants happy but alienated its core customers by charging late fees. Netflix, by contrast, keeps its disciples on board with constant binge-watching fodder. + +How can companies strengthen their connection with super-consumers? The first thing to do is to discover them. Given all the data that companies are spewing out, they are not that hard to spot: they are the people who keep buying your stuff through thick and thin. The priority is to identify members of the all-important category of young, up-and-coming super-consumers. Companies can learn a lot about these people by studying their Twitter feeds or by reading those letters of complaint that show an emotional connection to the product. Some firms go further still: Nike and Adidas, for example, employ ethnographers to study their users “in the field”. + +The second task is to reward super-consumers for their loyalty. Fans adore being recognised by the objects of their affections. Airlines have excelled in this by creating a ladder of rewards for frequent flyers. Spotify identifies fans of particular musicians by studying their listening habits and then sends them offers for tickets when they are in town. Two American political magazines, The Nation on the left and the National Review on the right, both put on cruises that allow their most dedicated readers to hang out (for a price) with their star writers. + +The main danger with taking super-consumers seriously is that companies may get trapped in their existing business model. Clayton Christensen of Harvard Business School pointed out in his book “The Innovator’s Dilemma” that a big threat to established firms is that they focus obsessively on their most loyal customers at the same time as insurgents reinvent entire business categories. IBM, for example, was listening to people who wanted marginally better mainframe computers when Microsoft was pushing ahead into PCs. + +Super-customers are always right + +Yet the most successful interlocutors with super-fans are in fact the very high-tech companies that are most disruptive of old business models. The likes of Google and Facebook routinely provide their most passionate users with special access to their latest products and ask them to recommend improvements. The customers get the psychological satisfaction of being taken seriously by brand-name enterprises. The tech companies benefit from lots of free workers who debug their software and provide ideas for new products. + +There are, moreover, plenty of super-consumers who are as obsessed with solving problems as they are with the products themselves. Eric von Hippel of MIT’s Sloan School of Management has found that about 80% of breakthroughs in scientific instruments came from “lead-users” rather than the manufacturers. Even super-consumers who are fixated on old or existing products (such as fans of vinyl records in an age of digital music) can provide companies with lots of valuable advice and insights on stuff that makes money. Analysing big data is all very well. But nothing beats hanging out with your biggest fans. + +This article appeared in the Business section of the print edition under the headline King customer + + + +Finance and economics + + + + + +The world economy: The dollar squeeze + +Buttonwood: Exaggerated reports + +China’s falling currency: A harder call + +Oil prices: Viennese waltz + +African stockmarkets: Short of stock + +Cyber-insurance: Hack work + +Bank supervision: Small overdraft in Chile + +Analyst forecasts: Discounting the bull + +Free exchange: Paper pains + + + + + +The dollar squeeze + +The dollar’s strength is a problem for the world + +What the recent strength of the dollar means for the global economy + +Dec 3rd 2016 + + + +WHEN economic historians look back on the years following the global financial crisis, they might ponder the exact moment at which the boom in offshore dollar-lending reached its zenith. Was it September 2012, when Zambia issued its debut Eurobond (dollar-denominated bond), at a yield of 5.4%, and received $12bn of orders? Perhaps it was a year later, when investors gobbled up an $850m Eurobond issue by a state-backed tuna-fishing venture in Mozambique. In between Petrobras, Brazil’s state oil company, was able to issue $11bn of ten-year bonds in May 2013, a record for an emerging-market firm, at a generously low yield of 4.35%. + +Investors had reason to regret those purchases even before the dollar’s latest surge. Between November 9th, when Donald Trump won the presidential election in America, and the Thanksgiving holiday, the dollar rose by 3% against a basket of rich-world currencies. Such a jump in so short a time is rare. The dollar-borrowing binge during these years helps explain why the greenback bounced so sharply. + +By the end of last year, governments and businesses outside America had racked up $9.7trn of debts denominated in dollars, according to the Bank for International Settlements (BIS), a clearer for central banks. Of this, $3.3trn was owed by borrowers in emerging markets, much of it sitting on company balance-sheets. In countries with foreign-currency debts, the exchange rate acts as a financial amplifier. A stock of dollar debt is like a short position. When a shock hits, the scramble to short-cover drives up the dollar. + +The latest leg-up in the dollar has a proximate cause. Investors expect Mr Trump to find common ground with Congress on cuts to corporate taxes and increases in infrastructure spending. A fiscal splurge may push the Federal Reserve to raise interest rates more quickly, drawing capital back to America and lifting the dollar. If corporate-tax cuts spur multinational companies to repatriate the pile of earnings they have hitherto kept offshore, it will further buoy the greenback. + +Monetary policy in the euro zone will stay easy. The European Central Bank is expected to extend its bond-buying programme at its next big policy meeting, on December 8th. And Mr Trump’s election is a “present” to the Bank of Japan, says Paul Sheard of S&P Global. In September it committed to overshoot its 2% inflation target. A weaker yen helps; in the weeks after Mr Trump’s election, it fell by 7%. + +If a strong dollar is cheered in Tokyo and Frankfurt, it is rather less welcome in emerging markets—for three reasons. First, sharp falls in currencies put pressure on central banks to raise interest rates, both to prevent further depreciation and to contain the resulting inflation. Turkey’s central bank raised interest rates on November 24th in response to a fall in the lira to an all-time low against the dollar, for example. + +Second, a stronger dollar also has an indirect impact on credit conditions in emerging markets. A study by Valentina Bruno of the American University in Washington and Hyun Song Shin, of the BIS, found that those emerging-market companies able to borrow in dollars act like surrogate financial firms, lending on a chunk of borrowed funds at home. When the dollar was weak, such firms borrowed freely in global markets. A strengthening dollar, in contrast, causes a general tightening of credit in emerging markets. + +A third effect comes from the legacy of past dollar borrowing. As firms rush to pay off their dollar debts, which loom ever larger in home-currency terms, they are likely to cut back on investment and jobs. + + + +The impact of a stronger dollar is evident in rich-world finance, too. A shibboleth of finance is that foreign-exchange markets follow “covered-interest parity”, which says the forward rate should reflect the current (or “spot”) rate and the gap between interest rates on each currency. Otherwise an arbitrager could simply buy a currency today, lock in the forward price, pocket the interest and still take a profit when the forward contract is settled. The interest-rate gap implicit in forward markets should be zero. For dollar-yen contracts in three months’ time it has blown out to almost 0.9%. That means firms and banks are paying far more than is normal to buy dollars with the currency risk hedged (see charts). The cost of hedging seems to rise with the dollar’s ascent. + +Parallels have been drawn with an earlier period of sustained dollar strength. The dollar’s 50% increase between 1980 and 1985 was brutal for America’s exporters. The pressure for higher trade barriers was only defused by the Plaza Accord of 1985, a rich-country pact to weaken the dollar. The biggest concern about the latest dollar rally is that it will spur not agreement but conflict. Mr Trump seems all-too eager to resort to protectionism in a misguided attempt to balance America’s trade. A stronger dollar might be the trigger for such a disastrous move. + +This article appeared in the Finance and economics section of the print edition under the headline The dollar squeeze + + + + + +Exaggerated reports + +What Donald Trump’s election means for government-bond markets + +Recent falls in bond prices, and rises in yields, may not signal the end of low interest rates + +Dec 3rd 2016 + + + +THE death of the long bull market in bonds has been called many times in recent years. Such a consummation is devoutly wished for by those who think the global economy will never get back to health until short- and long-term interest rates return to more normal levels. + +Following the election of Donald Trump as American president, the funeral rites are being read again. The yield on the ten-year Treasury bond jumped from 1.73% (while the votes were being counted) to 2.36% at one stage; the yield on the two-year bond rose from 0.78% to 1.12%. (Bond prices fall as yields rise.) + +The rationale for the shift is the belief that Mr Trump will push through a fiscal stimulus, in the form of tax cuts and infrastructure spending. Not only will that boost the American economy but it will allow the Federal Reserve to return monetary policy to more “normal” levels by pushing up rates from the current 0.5%. It could also lead to higher inflation in the medium term. Forecasts for American inflation in the early 2020s can be derived from the bond market. In July, they pointed to 1.4%; now they imply 2.1%. All three factors—faster growth, rising short-term rates and higher inflation—are usually drivers of higher bond yields. + +In the course of 2016, moreover, fears of deflation and a sharp slowdown in the Chinese economy have steadily faded. As a result, it seems less and less likely that investors would want to own government bonds, especially as trillions of dollars-worth have been offering negative yields. + +Nevertheless, this bond-market sell-off needs to be set in context. During the “taper tantrum” of 2013, when the Fed signalled a slowing of its quantitative-easing programme, the ten-year yield reached 3%. It was as high as 2.47% in June last year. + +Moreover, other bond markets have not been as seriously affected by Mr Trump’s election (see chart). In Germany, ten-year yields may no longer be negative but they are still just 0.2%. Indeed, the gap between German and American ten-year yields is at its widest since the 1980s. British yields are around where they were at the time of the Brexit vote but well below their level in January. In Japan the yield on the ten-year bond is still close to the central bank’s target of zero. + +Continued bond purchases by central banks are one reason why yields may not rise that far in Europe and Japan. What is more, pension funds and insurance companies will continue to be ready bond buyers—at almost any yield level—as they seek to meet regulatory requirements or to match their long-term liabilities. + +Furthermore, it is not clear how much of Mr Trump’s programme will be implemented, nor indeed whether economic growth or inflation will actually rebound. “The factors affecting inflation are long-term: globalisation, deregulation and automation,” says David Lloyd of M&G, a fund-management group. + +In addition, a rise in bond yields may play a part in choking off economic growth. The ratio of total debt (governments and private sector combined) to GDP has risen in both developed and developing economies since the 2008 crisis. “A large stock of debt needs a low interest rate to make it tolerable,” says Mike Amey of PIMCO, a fund-management group. + +And if 2016 has taught investors anything, it is to take account of political risk. In the past, this was a factor that bond investors in developed countries rarely had to worry about. “For a long time, politicians in the Western world have been dancing round the same handbag,” says Mr Lloyd. “The policy differences have been largely rhetorical.” + +The rise of extremist politicians brings with it the risk of extreme outcomes. The problem for investors is that the implications of such shocks are not uniform. The Brexit vote was followed by a fall in bond yields (as cautious investors opted for the safety of bonds), but the election of Mr Trump caused yields to rise. Had the president-elect made a swift promise to pursue his protectionist agenda, however, bond yields might have fallen, since a tariff war would hurt economic growth. The election of Marine Le Pen as French president would probably cause European government bonds to sell off; yields in America and Japan might fall. + +The biggest problem for investors is that ultra-low yields leave so little margin for error—the likely annual return on most long-dated bonds can be wiped out in an afternoon’s trading. Government bonds may still find ready buyers, but they won’t sleep as soundly as they used to. + +Economist.com/blogs/buttonwood + +This article appeared in the Finance and economics section of the print edition under the headline Exaggerated reports + + + + + +How far to fall? + +The yuan’s weakness is a dilemma for China’s central bank + +China is among many countries to see its currency quail before the strengthening dollar + +Dec 3rd 2016 | Shanghai + + + +YUAN forecasters have had it easy for the past decade. But for a few isolated days, China’s currency has been a one-way bet for years on end, whether appreciating against the dollar, pegged to it or, more recently, depreciating. The pace at which it has risen and fallen has also been predictable: the central bank always made it gradual. So Guan Qingyou, of Minsheng Securities, thought himself on solid ground when he predicted in early November that the yuan would stay above 6.82 per dollar for the rest of the year. Less than a week later he was proved wrong: the yuan fell to an eight-year low. Mr Guan published an apology: the art of knowing the yuan’s future with any precision, he conceded, had become rather tricky. + +Most analysts, investors and companies believe that the Chinese currency has further to fall against the dollar, but can only guess as to how far and how quickly. Their uncertainty reflects a new reality. The government, long able to exercise tremendous control over the yuan, has started to lose its grip. A new exchange-rate mechanism, introduced last year, has made the currency more flexible but also more responsive to global market trends. Dollar strength over the past two months has meant that the yuan, like just about every other currency in the world, has steadily lost ground against the greenback. + +The central bank wants depreciation to be orderly. Indeed, compared with most other currencies, the yuan has outperformed since the start of October: it has stayed stable against a basket of currencies, which the central bank says is its primary target (see chart). But curbing declines against the dollar comes at a cost, eating into hard-earned foreign-exchange reserves. The yuan’s future pivots around this question: will China be able to restrain market forces and guide the currency to a soft landing, or will the dam break and mild depreciation turn into a rout? + +Investors are so far more cautious about betting against China than at the start of 2016, when some built up big yuan short positions in the offshore market. The government made life painful for them, raising the cost of borrowing yuan offshore and stepping up capital controls to support the currency onshore. A prominent hedge fund owned by Carlyle, a private-equity firm, was among those to suffer big losses. + +But if foreign investors are wary of another tilt at the yuan, sentiment inside China is turning more bearish. The currency has fallen 6% this year, and it will soon take more than seven yuan to buy a dollar, a psychologically important level. In real-effective terms (that is, against a trade-weighted set of currencies, controlling for inflation), the yuan is merely at a two-year low. But it is on the dollar exchange rate that most people still focus. Legions of entrepreneurs and ordinary households, who collectively have accumulated vast wealth, want to diversify their savings into other currencies. + +The government has been fighting on a number of fronts to slow the tide of cash outflows. It has ratcheted up capital controls to limit investments in financial markets abroad. This month it drafted rules to make it harder for companies to acquire entities abroad. Regulators have concluded that at least some foreign acquisitions are being used to mask capital outflows. The central bank has also dipped into its reserves of foreign exchange—still the world’s biggest at more than $3trn—to prop up the yuan. Officially, it has used up about $10bn a month since January. But Logan Wright of Rhodium, an advisory group, says a spike in trading volumes in the onshore market hints at much more aggressive, if concealed, intervention. + +None of China’s currency options is palatable. Faster depreciation would only spur greater outflows. A big one-off devaluation would be extremely risky, and threaten financial stability. Ever-stronger capital controls would hurt the economy, closing it off from the rest of the world. The one thing that would buy the yuan a bit of breathing-space would be a weaker dollar. But that is most definitely beyond China’s ability to control. + +This article appeared in the Finance and economics section of the print edition under the headline A harder call + + + + + +Oil prices + +OPEC reaches a deal to cut production + +Oil prices surge as Saudi Arabia and Iran sign on to a deal at OPEC’s meeting in Vienna + +Dec 3rd 2016 | VIENNA + + + +EXACTLY two years after Saudi Arabia coaxed its fellow OPEC members into letting market forces set the oil price, it has performed a nifty half-pirouette. On November 30th it led members of the oil producers’ cartel in a pledge to remove 1.2m barrels a day (b/d) from global oil production, if non-OPEC countries such as Russia chip in with a further 600,000 b/d. That would amount to almost 2% of global production, far more than markets expected. It showed that OPEC is not dead yet. + +The size of the proposed cut, the first since 2008, caused a surge in Brent oil prices to above $50 a barrel. Some speculators think it may mark the beginning of the end of a two-year glut in the world’s oil markets, during which prices have fallen by half and producers such as Venezuela have come close to collapse. As long as prices continue to recover, Saudi Arabia can probably shrug off the fact that its previous strategy damaged OPEC at least as badly as non-members, and that this week’s deal gave more breathing space to its arch-rival Iran than it would have liked. + +The rally’s continuation, however, depends on non-OPEC members such as Russia reliably committing to cut output at a meeting on December 9th. It also hinges on the speed at which American shale producers step up production, and on Donald Trump’s dream of oil self-reliance. + + + +Since the end of September, when OPEC sketched out a deal in Algiers to cut production, Saudi Arabia’s oil minister, Khalid al-Falih (pictured), and his Iranian counterpart, Bijan Zanganeh, had engaged in a game of brinkmanship that at times seemed likely to doom this meeting. Oil prices have staged frenetic swings since then (see chart). Days before the Vienna gathering, some analysts gave it a mere 30% chance of success. The betting was that failure would push prices well below $40 a barrel, and possibly bring about the collapse of OPEC. + +But Saudi Arabia, OPEC’s biggest producer, realised that pragmatism was its best option. Its promised 4.6% cut in production is mirrored by many other OPEC members, though Iran was permitted a token increase as it recovers from nuclear-related sanctions. That may be galling for Saudi Arabia, but it is likely to benefit far more than Iran from the rise in oil prices, if sustained, than it will lose from lopping 486,000 b/d off its total output. It promises to cut to 10.05m b/d, which is not far below its level in the first quarter of 2016. + +Moreover, the government’s plans to modernise the economy and partly privatise Saudi Aramco, the state oil company, depend to some extent on higher oil prices, says Bhushan Bahree of IHS Markit, a consultancy. Counter-intuitively, he says that the kingdom needs higher oil revenues as “a bridge” to becoming a less oil-dependent economy. OPEC argues that a modest cut now will spur investment in new sources of crude that will prevent harmful oil shortages in the future. + +The cuts take effect from January 1st and will last for six months. During that time, traders will monitor oil-tanker traffic to ascertain whether fewer are leaving port. They cannot monitor Russia’s pledge to cut 300,000 b/d of production, because much of its production moves by pipeline, says Abhishek Deshpande of Natixis, a bank. But he believes that even so the agreement will start to cut global oil inventories next year. Non-OPEC output has fallen this year, adding impetus to the cartel’s efforts. + +Some speculators were bullish even before the deal. Pierre Andurand of Andurand Capital, a hedge fund, says the OPEC agreement could push oil above $60 a barrel within weeks. He notes that speculators were mostly betting on an OPEC failure, and that big oil consumers may need swiftly to protect themselves against rising prices. Airlines, for example, could scramble to hedge against soaring fuel costs. + +If oil prices continue to rise, American shale producers will ramp up output, in effect capping the oil price. This may not happen as swiftly as some think. After all, there are suspicions that, to coax Wall Street investment, shale producers have exaggerated their ability to produce low-cost oil. But many of them are still standing, despite OPEC’s best efforts to kill them off. The cartel cannot declare even Pyrrhic victory from the past two years. + +This article appeared in the Finance and economics section of the print edition under the headline Viennese waltz + + + + + +Short of stock + +Africa’s stock exchanges meet but size holds them back + +Too few listings, too little liquidity: Africa’s stockmarkets struggle + +Dec 3rd 2016 | KIGALI + + + + + +AS THE trading bell rings, a handful of brokers, in crisp scarlet jackets, gather around a whiteboard at the Rwanda Stock Exchange in Kigali. There are only seven listed companies, and it takes just a couple of minutes to write up the day’s bids. But Celestin Rwabukumba, its chief executive, is excited for the future. “If it works elsewhere, then why not here?” he asks. + +Why not indeed? Johannesburg, with a market capitalisation of nearly $1trn, is in a league of its own. But sub-Saharan Africa has many small exchanges, lots of them created in the 1990s to help privatise state enterprises. Most struggle to attract new issues. Seven of the eight domestic listings on the Uganda Securities Exchange came from government divestments. Older exchanges, in Kenya and Nigeria, are dominated by big firms: a third of Nigeria’s market is the Dangote Group, a conglomerate with interests from cement to salt. + +Stock-exchange leaders were in Kigali this week for the annual conference of the African Securities Exchanges Association. Much of the talk was about coaxing smaller, family-owned businesses to list. But many owners are loth to cede control or open their books to scrutiny, not least from the taxman. An initiative by Nairobi’s bourse to ease listing requirements for small and medium-sized enterprises has attracted just five companies since it launched in 2013. + +So privatisation remains the staple. Botswana sold off its national telecoms company this year, the biggest-ever new offering there. Another source of listings is local units of multinationals. MTN, a South African telecoms giant, is preparing to list in Nigeria, part of a settlement with authorities after breaking SIM-card rules. Tanzania has ordered eight telecoms operators, including three with international backing, to float 25% of their shares in 2016. + +Liquidity is an even bigger challenge. Shares rarely change hands: outside South Africa, annual turnover is typically less than 10% of market capitalisation. In Nairobi, which relaxed rules on foreign ownership last year, foreign investors accounted for three-quarters of trading in the three months to September. + +Some hope to stir up interest with new products. Nigeria has eight exchange-traded funds (ETFs), which track market benchmarks. Nairobi will roll out a host of derivatives next year. Even little Swaziland has its eye on ETF trades. + +Regional integration can also help, pooling listings and liquidity into larger markets. Eight west African countries, which already share a common currency, list shares on the Bourse Régionale des Valeurs Mobilières (BRVM) in Ivory Coast. East African exchanges are working on a common trading platform. But governments view stockmarkets as national symbols. New regional exchanges are unlikely. “It’s like having an airline,” sighs Geoffrey Odundo, boss of the Nairobi exchange. + +Nigeria and Kenya have the heft to forge ahead, but smaller exchanges could struggle. In a new paper, economists from Erasmus University, Rotterdam, and City University, London, examine 59 nascent stock exchanges around the world. They find that those which start out small, with few listings and low turnover, tend to remain so. Strong banks and growing savings increase the chances of success. + +In short, exchanges must wait for economies developed enough to sustain them. In the meantime private equity, which between 2010 and June this year made deals worth $23bn in Africa, will offer an alternative to a public listing. Eventually investors may see the stockmarket as an exit strategy. Back at the Rwanda Stock Exchange, Mr Rwabukumba is playing the long game: “You have to start somewhere.” + +This article appeared in the Finance and economics section of the print edition under the headline Short of stock + + + + + +Hack work + +Insurers grapple with cyber-attacks that spill over into physical damage + +Only a cyber-calamity will reveal how ready the industry is + +Dec 3rd 2016 | NEW YORK + + + +AS HACKERS wreak havoc with depressing regularity, the insurance industry finds itself forced to contemplate a whole new set of risks. They range from the theft of millions of credit-card numbers from American retailers to the disabling of the power grid, as happened in Ukraine last December. The dedicated “cyber-insurance” policies that companies offer against data breaches have become relatively routine. But the risks they insure under other policies are also affected by cyber-risks—and they are still struggling to understand this so-called “silent” cyber-exposure. + +Insurance that protects firms who suffer data breaches has been on offer for around 15 years. It is much harder to put a precise value on, for example, stolen health records than on a property or car. Insurers sidestep the problem by covering only the direct costs that a company incurs from a hack. Typically, these include hiring a specialised forensics firm to work out exactly what was stolen, notifying affected customers (which 47 American states currently require), short-term business interruption and fines. + +The industry will be shaken up by new EU data-protection rules, which come into force in 2018 and will impose stricter notification requirements and stiffer fines for data breaches than firms have so far faced in America. Partly because of this, the market for cyber-insurance, which represented only $2.5bn in global premium revenue in 2014 (90% of which came from American companies), is expected to treble by 2020, according to PwC, a consultancy. That would still leave it tiny in comparison with, say, the $670bn global motor-insurance market. + +Data breaches are, however, for the most part a manageable nuisance rather than a disaster. Despite the hundreds that take place annually, only 90 since 2010 have been reported by American companies to regulators as having had a “material” impact on their business. + +The bigger concern is the “silent” exposure: cyber-attacks that cause physical damage or bodily injury and can end up triggering other policies, such as life, home or commercial-property insurance. Often, such policies, though not designed with cyber-risks in mind, do not specifically exclude them either. In some cases the difference may be minor; a burglar who enters a house by hacking a “smart” lock will not necessarily steal more than one who breaks a window. But cases such as the massive damage caused to a steelworks in Germany in 2014 by hackers who messed with a blast furnace, or the hacking of the Ukrainian power grid (blamed by many on Russia), give insurers pause. They have added urgency to efforts to understand, measure and calibrate their exposures to these new threats. + +With real-world precedents still too rare to form the basis of any reliable estimates, the industry has turned to using hypothetical scenarios. At the end of last year, for the first time, Lloyd’s of London, an insurance market that specialises in niche and emerging risks, asked its syndicates (groups of insurers and brokers) to come up with “plausible but extreme” cyber-attack scenarios, and report back their estimated total exposure, in what is to be an annual requirement. The exercise follows a cyber-scenario report in May 2015 from the management of Lloyd’s itself on a hypothetical hacker-caused blackout of the entire power grid of the American north-east. It estimated this would cause direct losses to business revenues of $222bn, and a total dent in GDP of over $1trn over five years. + +Many insurers are turning to outside expertise. Matt Webb of Hiscox, a specialist insurer, describes an “arms race” between analytics firms such as RMS and Symantec, offering their long-standing modelling prowess (RMS is already well-trusted on hurricane modelling, for example) to help insurers understand their cyber-liabilities. + +But even if exposures are better understood, limiting them may prove tricky. Kevin Kalinich of Aon, an insurance-broker, points to the near-impossibility of drawing a line, for example, between cyber-war or cyberterrorism and “normal” hacking. Cyber-crime knows no geographical bounds, unlike, say, a Florida hurricane. Mr Webb reckons that insurance policies will at a minimum need explicitly to recognise that cyber-risks are covered or to exclude them—just as many policies already include exemptions for terrorism or war. + +Although insurers are already helping companies with more humdrum data breaches, the industry still lacks a clearly formulated response to a larger-scale cyber-calamity. Inga Beale, CEO of Lloyd’s, is optimistic that the market, thanks to its exacting modelling exercises and its unique risk-sharing structure, is better equipped than most. But only a devastating, real-life cyber-attack would test how effective its preparations have been. + +This article appeared in the Finance and economics section of the print edition under the headline Hack work + + + + + +Small overdraft in Chile + +Revising bank-capital standards + +Changes to global rules on bank capital remain incomplete + +Dec 3rd 2016 + +A STEEP climb awaited the Basel Committee on Banking Supervision in Santiago on November 28th and 29th. The central bankers and regulators hoped to agree on revisions to Basel 3, the post-crisis version of bank-capital standards. On November 30th Stefan Ingves, the group’s chairman and head of Sweden’s central bank, said that “the contours of an agreement are now clear”. But the climbers are still short of the summit. + +The committee had proposed restricting the use of banks’ internal models for calculating risk-weighted assets—which in turn help determine how much capital banks must have at hand. Models varied too much, it said; low risk-weights were flattering some banks’ ratios. But European bankers and officials had complained for months that the proposals would penalise banks that have lots of (low-risk) corporate loans or mortgages (eg, in Germany or Sweden). They sniffed an American plot: American banks, holding fewer such assets, would be untouched. + +Mr Ingves gave few details, but said that the new set-up would “largely retain” internal models, though with minimum values for important parameters (such as the probability of default). A “standardised” approach will replace alternatives based on banks’ models for estimating operational risk (big fines, say, or cyber-security breaches). + +Not surprisingly, the thorniest topic remains open. The committee had proposed an “output floor”, a lower bound for the risk-weighted sum of a bank’s assets, of 60-90% of the answer yielded by a standardised method. Mr Ingves said that he “expected” a floor to be in the final deal. But there is still work to do, and what happens next isn’t yet clear. (The committee had set itself a deadline of the end of the year.) Central-bank governors and chief supervisors must endorse the new rules, once they are agreed on. + +Overall, capital requirements may not change much. But some banks will face extra demands, albeit with a long period of adjustment. Stragglers are still catching up with existing rules: this week the Bank of England said that the Royal Bank of Scotland had fallen short in a “stress test” and had put forward new plans for restuffing its capital cushion. More than eight years after the crisis, wrangling over how to make banks safe continues. It’ll last a little longer. + +This article appeared in the Finance and economics section of the print edition under the headline Small overdraft in Chile + + + + + +Discounting the bull + +Sell-side share analysis is wrong + +But in reassuringly predictable ways + +Dec 3rd 2016 + +“SELL-SIDE” analysts, whose firms make money from trading and investment banking, are notoriously bullish. As one joke goes, stock analysts rated Enron as a “can’t miss” until it got into trouble, at which point it was lowered to a “sure thing”. Only when the company filed for bankruptcy did a few bold analysts dare to downgrade it to a “hot buy”. + +Economic research shows that there is some truth to the ribbing. The latest figures from FactSet, a financial-data provider, show that 49% of firms in the S&P 500 index of leading companies are currently rated as “buy”, 45% are rated as “hold”, and just 6% are rated as “sell”. In the past year, 30% of S&P 500 companies yielded negative returns. + + + +Profits forecasts made more than a few months ahead have a dismal record of inaccuracy. According to Morgan Stanley, a bank, forecasts for American firms’ total annual earnings per share made in the first half of the year had to be revised down in 34 of the past 40 years. Studying their forecasts over time reveals a predictable pattern (see chart 1). + +In theory, a diligent share analyst should do his own analysis—that is, by projecting a firm’s future revenue and expenses, and discounting them to the present. Such models, however, are extremely sensitive to different assumptions of growth rates. Since no one can know the future, analysts cheat. + +Three statistical sins are common. Analysts can look at comparable companies to glean reasonable profits estimates, and then work backwards from their conclusions. Or they can simply echo what their peers are saying, and follow the herd. Or, most important, they can simply ask the companies they are following what their actual earnings numbers are. + +Surveys conducted by Lawrence Brown of Temple University found that two-thirds of sell-side analysts found private calls with company managements to be “very useful” in making their estimates. Analysts’ need to maintain relationships with the companies they cover must colour their projections. They are judged primarily on the accuracy of their short-term forecasts, so there is little risk in issuing flattering, if unrealistic, long-term projections. In the short run, however, they have an incentive to issue ever-so-slightly pessimistic forecasts, so companies can “beat” expectations. Since the financial crisis, company profits have exceeded short-term analyst forecasts around 70% of the time. + +So are forecasts are useless? Simply taking the market’s earnings figures from the previous year and multiplying by 1.07 (corresponding with the stockmarket’s long-run growth rate) can be expected to yield a more accurate forecast of profits more than a year in the future. + + + +Yet the very predictability of the errors in analysts’ forecasts suggests they could be informative, if they are properly interpreted. Taking forecasts of S&P 500 earnings from 1985-2015, The Economist has built a simple statistical model to try to take out the bias that taints Wall Street’s prognostications. After controlling for the forecasts’ lead time and whether or not they were made during a recession, we find that even our relatively crude model can improve upon the Wall Street consensus for forecasts made more than a quarter in advance (see chart 2). + +Adjusting for bias in short-term forecasts is harder. It is tempting simply to accept the errors—after all, they tend to be off by just a little. Data from Bloomberg show that the 320 S&P 500 companies that beat earnings expectations in 2015 did so only by a median of 1.4%. An alternative is to look at crowdsourcing websites such as Estimize. There punters—some amateur, and some professional—are shown Wall Street consensus estimates and asked to make their own forecasts. Estimize users beat Wall Street estimates two-thirds of time. + +To some extent, judging Wall Street by its ability to make accurate predictions is silly. Harrison Hong, an economist at Columbia University, reckons that stock analysts should be viewed “more like media”. The latest forecasts aggregated by Thomson Reuters suggest that the S&P 500 will yield earnings per share of $130.83 in 2017 and $146.33 in 2018. According to our model, that would imply that they believe the actual numbers will be closer to $127.85 and $134.30. Share analysts want to tell the truth. They just like making it difficult. + +This article appeared in the Finance and economics section of the print edition under the headline Discounting the bull + + + + + +Free exchange + +The dire consequences of India’s demonetisation initiative + +Withdrawing 86% by value of the cash in circulation in India was a bad idea, badly executed + +Dec 3rd 2016 + + + +SUPPOSE that one day the government of a large and fast-growing economy became convinced that its highest priority was to purge the country of black-economy millionaires hoarding piles of illicit cash. Seeking popular approval, it sent the printing presses into overdrive, hoping to inflate away the value of these secret piles of wealth. It worked: rising prices struck a blow against the undeserving rich, and by egging on others to deposit their money in banks (where it could at least earn interest), the shadow economy shrank. The government could plough the newly created money into tax breaks and public-works schemes. + +Critics, rightly, would stand aghast. Inflation would affect everyone who held cash, law-abiding or not. Much of the wealth of those enriched by the black economy would be insulated, because lots of their lucre is held not in cash but in property, gold or jewellery. Such heavy-handed measures could undermine the credibility of important government institutions. Fear that they might be used again in future could weaken confidence in the currency as a store of value—paving the way for some broader institutional failure, like hyperinflation. Long-run trust in the judgment of the state might be threatened. + +On November 8th India’s prime minister, Narendra Modi, announced a course of action just as radical as that described above, if the converse of it. He declared that all 500- and 1,000-rupee notes—making up 86% of the cash in circulation in India—could no longer be used in shops. More financially mature economies than India would struggle to cope with such a scheme, but this one floundered at once. Though Indians have until the end of the year to swap their defunct bills, the roll-out of new ones has been bungled. A broad cash crunch and broken supply chains threaten a sharp economic slowdown—albeit one that will abate, at least in part, as the cash squeeze is alleviated. India’s “demonetisation” is a cautionary tale of the reckless misuse of one of the most potent of policy tools: control over an economy’s money. + +Unlike most currency reforms, designed to boost confidence in the currency, Mr Modi’s motivation is different. The primary aim of demonetisation is reasonable enough: the government hopes to improve the functioning of the economy and boost its tax take by cracking down on the shadow economy. The vast majority of transactions in India take place in cash; many escape book-keepers’ notice. Economists reckon that India’s black economy accounts for at least 20% of GDP. Such off-the-books activity shields fortunes from taxation and allows corruption to flourish. Past efforts to attract black money into the light—using tax amnesties, for example—have had little effect. + +Demonetisation forces the issue. Indians can swap their hoards of useless bills for useful ones, but those that cannot present paperwork accounting for their cash piles will receive unwanted attention, and tax bills, from the government. Demonetisation also increases use of electronic and bank-based payment systems, which will make record-keeping easier and more common, allowing government better to track and tax the proceeds. + +Yet the government also reckons it can profit from bills that are not turned in. In economic textbooks, money is considered a liability of the central bank—a debt. In most modern economies that debt sits on its balance-sheet, and is offset, on the asset side, by holdings of securities like government bonds. The old and unreturned notes, if they are recognised as cancelled liabilities, would therefore create a huge positive asset position on the central bank’s balance-sheet. The Reserve Bank of India could, if it chose, create new currency liabilities (that is, print money) and transfer that money to the government to spend. Some economists hope the money will be recycled back into the economy through a fiscal stimulus, which might help soothe some of the pain caused by demonetisation. + +The status of this would-be windfall is uncertain. If the government allows Indians to redeem dead notes for live ones indefinitely, it is not clear when or if the RBI might recognise cancelled liabilities on its balance-sheet. So far, Indians are depositing their money in the banking system with impressive haste. Of the 14trn rupees ($207bn) invalidated by demonetisation, an estimated 8.5trn has already been deposited. Still, as much as 3trn rupees could remain in the wild as a potential government windfall, reckons a recent analysis by Credit Suisse, a bank. + +The other rupee drops + +However clever the plan looked on paper, it is both extraordinarily blunt and risky. Demonetisation will probably make only limited strides in shrinking the black economy while affecting all of India’s 1.3bn citizens, the poorest most of all. + +In much of the Indian economy, and especially outside big cities, where cash transactions are most common and financial infrastructure least developed, the sudden invalidation of a vast amount of outstanding currency represents a significant monetary shock. Not all of India’s shadow economy—which provides real employment and income, if not real tax revenues—can migrate quickly and easily above board. Whatever cannot easily be shifted represents a potential loss of economic activity, and a drag on broader Indian economic growth. Similarly, if a cash crunch forces small firms without access to credit to shut down, the eventual alleviation of the cash shortage might not lead to an immediate and complete revival of economic activity. + +Managing an economy’s money is among the most important tasks of the government. Clumsy use of monetary instruments comes with high risk. John Maynard Keynes, an economist, was echoing Lenin when he wrote in 1919: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.” Trust is fragile, and precious. + +Visit our Free exchange economics blog + +This article appeared in the Finance and economics section of the print edition under the headline Paper pains + + + +Science and technology + + + + + +Smart weapons: The vision thing + +Super-slippery surfaces: The last drop + +Ocean acidification: Unbalanced + +Liver cancer: Zoned out + +Artificial intelligence: Eyes at the border + + + + + +The vision thing + +Bombs that can recognise their targets are back in fashion + +A new generation of smart weapons is in development + +Dec 3rd 2016 + + + +IT IS easy to forget, given the ubiquity of satellite-navigation devices in cars and mobile phones, that the Global Positioning System (GPS) of orbiting satellites on which they rely was originally—and, indeed, remains—a military technology. The system is, for instance, relied upon by the JDAM (joint direct-attack munition) kits that America’s air force attaches to its free-fall bombs to turn them into smart weapons that can be guided with precision to their targets. + +But JDAM and similar systems work only when they can receive signals from GPS satellites. And such signals are weak—approximately as powerful as a standard television transmission would be if the transmitter were five times as far away as the Moon is. They are thus easily jammed. For obvious reasons, details of the capabilities of jammers are hard to come by, but a Russian system called Pole-21, for instance, may be able to suppress GPS signals as much as 80km (50 miles) away. + +One way to get around this—and to guide weapons automatically to their targets without relying on satellites—is to give weapons a map. That has been done in the past. The cruise-missile guidance systems which came to public attention in 1991, during the first Gulf war, worked in this way. But it was the Gulf war that also saw the first large-scale use of GPS by ground troops, and it is GPS, cheaper and simpler than map-based guidance, that has subsequently dominated the business of automatic navigation. Until now, that is. For the world’s armed forces are looking again at giving their bombs and missiles map-reading capabilities. + +Where the hell are we? + +America’s original map-based cruise-missile guidance system came in two parts. The first, Terrain Contour Matching or TERCOM, took a missile to the general area of its target using a radar altimeter and a series of digital maps that showed the elevation of the ground under sections of the planned route. By comparing the missile’s actual altitude above this terrain with its expected altitude, TERCOM could follow contours and find its way. Once it was close to the target, a second system, the Digital Scene Matching Area Correlator (DSMAC), compared the view from a video camera with a set of stored images, in order to locate the bullseye. + +Such a combined system was awkward and expensive, but at least it was the best available before GPS. Now, though, huge improvements in electronics have turned the tables. Israel is in the forefront, with a system which it calls Spice. Like JDAM, Spice is an add-on kit that turns unguided bombs into smart ones. It is designed and built by Rafael Advanced Defense Systems, an Israeli weapons company, and comes into service this month. + +Spice contains an “electro-optical scene matching system” that resembles DSMAC’s in as much as its memory is loaded with pictures of the target area, taken beforehand by aircraft (piloted or unpiloted) or by satellite. Spice’s pictures, though, are of much higher resolution than those of DSMAC. On top of this the cameras that generate the real-time images with which those pictures are compared as the bomb falls towards its target work both in the visible and the infra-red parts of the spectrum. That means Spice can operate in darkness, and can penetrate smoke and fog. Moreover, unlike DSMAC, Spice stores enough data to cover the entire route to a target. It has no need of an accompanying system similar to TERCOM. Instead, it picks out and compares, en route, features like roads and buildings to find its way. + +Spice’s claimed performance is impressive. Rafael says it can guide a bomb released 100km from a target to a strike point within two metres of that target. The firm says, too, that its device is not confused by minor changes in the scenery around a target, which it can find even if some nearby areas have been obscured—say, by camouflage. Spice also has the advantage over GPS-guided weapons of working when a target’s exact position is unknown, or if the co-ordinates have been misreported. All you need is a picture of what is to be hit, and an approximate location, for Spice to find and hit it. + +Other countries, in particular America, are following Israel’s lead. In January of this year, America’s air force signed a contract with Scientific Systems, a firm in Woburn, Massachusetts, to develop what that company calls its Image-Based Navigation and Precision Targeting (ImageNav) system. Like Spice, this is a bolt-on system that works by comparing images from a camera with those in a database on board. If all goes well, development and testing should be completed by January 2018 and the result will, its makers hope, be able to strike within three metres of its intended target. The initial plan is to fit ImageNav to the air force’s Small Diameter Bomb, a free-fall weapon at present guided by GPS. If this is successful, deployment on cruise missiles and drones will follow. + +Meanwhile Lockheed Martin, the world’s biggest aerospace firm, is working on an optical-navigation system called Northstar. This is based on a piece of non-military software called Hydra Fusion, which was developed by Lockheed Martin’s Canadian subsidiary. Hydra Fusion creates a high-resolution, three-dimensional terrain map from ordinary video, by comparing successive frames of that video in light of information about how fast the vehicle carrying the camera was travelling. Though this is a trick which has been managed in the past, Hydra can do it on the fly, on a laptop computer. Previous systems have required hours of processing on high-end machines. + +Once an area has been mapped, Northstar provides precise navigation information for bombs or missiles (or, indeed, for manned or unmanned aircraft). Crucially, the intelligence can be fresh because of the system’s rapid processing time. + +Fitting bombs and missiles with vision in this way thus looks like the future. That does not mean GPS will not be used as well—a belt-and-braces approach is often wise in war. But bombs that can see their targets, rather than blindly following their noses to a set of co-ordinates, are always likely to have the edge. + +This article appeared in the Science and technology section of the print edition under the headline The vision thing + + + + + +Super-slippery surfaces + +How to empty the ketchup bottle every time + +And improve power plants, too + +Dec 3rd 2016 + +FOR anyone (and that is almost everyone) who has shaken and thumped a bottle of ketchup to squeeze the last dollop out of it, or flattened and then rolled up a tube of toothpaste to eject one final squirt onto their brush, help may soon be at hand. For more than a decade Kripa Varanasi and his colleagues at the Massachusetts Institute of Technology (MIT) have been creating and studying slippery surfaces for use in industrial equipment such as steam turbines and desalination plants. + +More recently, they have found ways to apply their ideas to create internal coatings for containers so that their contents will flow out easily and completely, with no shaking, thumping or squeezing. And now they think they have discovered a way to adapt these super-slippery coatings to steer liquids across flat surfaces, opening up the possibility of pumping fluids around without the need for pipes. + +The lotus position + +Dr Varanasi’s work started with what are known as super-hydrophobic water-shedding surfaces, a classic natural example of which is a lotus leaf. It repels water so effectively that droplets simply tumble off. The reason is that the leaf’s surface is covered with microscopic structures which contain air pockets. This reduces the surface tension that would otherwise cause a water droplet to cling on. By coating the condensing areas used in steam turbines with similar surfaces his team believes it will be possible to speed up the shedding of water droplets. That would boost efficiency and, as most of the world’s electricity is still generated by coal, gas and nuclear plants that rely on steam turbines, it would also save an awful lot of money. + +The same idea has since been adapted to help move other substances, such as toothpaste, paint and ketchup. These have a gooeyness that means they can get into the air pockets and take a grip. To counter that, the researchers replace the air with liquids such as oils. The resulting surfaces are, in effect, self-lubricating—so that even the stickiest substances flow across them easily. The trick, says Dr Varanasi, is to have the right combination of surface structure and lubricating fluid, so that the oiling liquid does not get swept away by what is flowing over it. + +Open sauce operating system + +To create a completely emptyable container for a substance, be it ketchup, toothpaste, shampoo or face cream, means matching that substance to a specific surface structure and a bespoke lubrication fluid. The best way to do this, says Dr Varanasi, is to design the texture of the surface to trap a lubricant which is itself derived from the substance with which the container will be filled. That also has the benefit of not contaminating the product should some of the fluid escape. A lubricant for a food product, for instance, might be derived from a natural oil which it contains. + +Dr Varanasi’s team have developed a database of recipes that can be used to lubricate containers for a wide range of materials. In 2012 he and one of his students, Dave Smith, founded a company called LiquiGlide, which is working with a number of consumer-goods firms such as Elmer’s, an American gluemaker, to create easy-to-pour, squeeze and shake containers for their products. + +LiquiGlide has also devised a variant of the system that can be applied to the vast number of vessels and pipes in factories. This, the company claims, could reduce production losses considerably. At the moment, the tendency of things like paints to stick to piping, mixing tanks and so on means that as much as 30% of the material may be lost, especially during clean-ups in batch production, as when switching to a different colour of paint. + +One feature of Dr Varanasi’s liquid-impregnated surfaces is that droplets forming upon them tend to have a large area of contact. It increases the effects of the surface’s temperature on a droplet. And that got Dr Varanasi and David Quéré of ESPCI, a research university in Paris, and their colleagues thinking about how to exploit one of those effects, known as thermocapillary motion. A change in temperature can alter the surface tension of a droplet, causing it to move. Usually, very large temperature differences are needed even for a droplet to move slowly. Out of curiosity they devised an experiment using a surface texture impregnated with oil. As they report in Physical Review Fluids, the researchers applied a temperature gradient and recorded the movement of water droplets. Even with low changes in temperature the droplets skipped along their slippery surfaces. The group have subsequently upped the speed at which they can propel water droplets to a heady ten millimetres a second. That is ten times quicker than has been reported on conventional surfaces. + +Dr Varanasi and Dr Quéré have several ideas for making use of this discovery by selectively heating and cooling different areas of the surface to steer the droplets around. One is to create new types of microfluidic devices—or labs-on-a-chip, as they are known colloquially. These one-shot machines, about a centimetre across, are being increasingly used for things like analysing blood. To work, they have to be able to move reagents around inside themselves through tiny pipes and valves. This movement is hampered by surface tension, the effects of which increase as the dimensions of the pipework diminish. Dr Varanasi and Dr Quéré think that by selectively heating and cooling different areas of a liquid-impregnated surface, they could move and mix fluids without such intricate plumbing. + +Steering fluids around might also help with the group’s work in developing more powerful condensers. It may even solve one of the problems of space flight. Much conventional equipment depends on gravity to move liquids around inside it. That does not work in orbit. But thermocapillary motion would. + +Meanwhile, back on Earth, most people might settle for saving even a little of what every year amounts to a massive lake of wasted condiments, bathroom products, creams and just about anything else that comes in bottles, containers or tubes. If Dr Varanasi has his way the days of shake and thump are numbered. + +This article appeared in the Science and technology section of the print edition under the headline The last drop + + + + + +Unbalanced + +Ocean acidification: a natural experiment + +The effect of dissolved carbon dioxide on marine life + +Dec 3rd 2016 + +Tough but vulnerable + +GLOBAL warming is not the only environmental change that is being wrought by rising emissions of carbon dioxide. This gas, acidic when dissolved in water, is also lowering the pH of the world’s sea water—a phenomenon known as ocean acidification. + +How much to worry about this acidification (or, strictly, reduction in alkalinity, for there is no risk of the sea actually becoming acidic) is a matter of debate. The threat most talked of is to creatures that make shells out of calcium carbonate. As school chemistry experiments with chalk and vinegar demonstrate, calcium carbonate dissolves in acid, so an ocean less alkaline than it used to be might make life harder for shell-forming animals. Numerous laboratory experiments agree. There is also evidence that the shells of several widespread marine species are thinner and weaker now than they were a few decades ago. What there has not been, though, is a controlled study in the wild—at least, not until now. + +The gap has been plugged by Miles Lamare of the University of Otago, in New Zealand, and his colleagues, who have just published their study in the Proceedings of the Royal Society. Dr Lamare observed that there are several places in the sea where acidification is happening naturally, because low-level volcanic activity is releasing carbon dioxide from submarine vents. Two such vents are located off the coast of Papua New Guinea. These, he thought, would be a good place for an experiment. + +Marine biologists suspect that the threat of acidification is most serious to an animal when it is a small, planktonic larva. Dr Lamare and his colleagues therefore carried out their experiment on the larvae of Echinometra, a type of sea urchin. They hung cages containing these larvae, newly hatched from freshly collected adult urchins, in the water above the vents, and also in nearby water of normal pH, to act as a control. They then left the cages for a day or two, to let the larvae grow, before examining their charges under the microscope. + +At the first vent site, the differences were startling. In this case all of the larvae came from adults collected in the control area, ie, living in water of normal pH. Those raised in the cages over the vent grew much more slowly than those in the control area. They were also more prone to develop asymmetrically. + +At the second site, the picture was more complicated. In this case Dr Lamare carried out a more sophisticated experiment on larvae collected from adults that dwelled in the vents as well as from the control area. It tested both sorts of larvae in both locations, to see if the young of adults that had been living in the vent were inured to less alkaline water. Surprisingly, in light of the earlier result, pH made no difference to the growth rates of either sort of larva, though it still affected rates of asymmetry. + +And that was not the only surprise. Dr Lamare also found that larvae whose parents had come from the vent grew larger than those whose parents had not, regardless of the site where they were raised. That does hint at genetic differences between vent-dwelling and non-vent-dwelling Echinometra—just not the one, namely acid resistance, that might have been expected. + +As these somewhat confusing results show, a single experiment like this can yield only limited information. But what really counts is that scientists have now discovered an important natural laboratory in which to investigate the effects of ocean acidification further and, hopefully, find more definitive answers about what many see as a worrying problem. + +This article appeared in the Science and technology section of the print edition under the headline Unbalanced + + + + + +Oncology and circadian rhythms + +Why disrupted body clocks trigger liver cancer + +Shift work and jet lag can induce hepatic tumours. Here’s how + +Dec 3rd 2016 + + + +DRINKING too much and eating too much are both good ways of getting liver cancer. But there is a third. The disrupted circadian rhythms caused by working shifts or crossing time zones also seem to induce the disease. Precisely how and why meddling with day and night cycles has such a dire effect on the liver remains an enigma, but a study just published in Cancer Cell by Loning Fu and David Moore at the Baylor College of Medicine, in Texas, sheds some light on the matter. + +Among the liver’s many jobs is making bile, a substance secreted into the intestine to break down the fats and oils in food. One of bile’s main components is bile acid, a derivative of cholesterol. Dr Fu and Dr Moore knew from their previous research that disrupting the circadian rhythms of mice causes the rodents’ livers to overproduce this substance. They also knew that liver cancer commonly appears in mice engineered to lack certain genes required for the management of day-night cycles. This led them to suspect a link between liver cancer and too much bile acid. To take a closer look, they set up an experiment. + +Working with a team of colleagues, the two researchers studied mice that had had their day-night cycles disrupted. A group of 80 of the animals which had previously lived on a cycle of 12 hours in light and 12 hours in darkness had the lights kept on, on one occasion, for 20 hours, instead. Three days later they were again subjected to four hours of darkness rather than 12. This alternation, at three-day intervals, was then kept up for 30 weeks. A group of 110 mice, meanwhile, were maintained on a constant 12-hour cycle as a control. + +After 12 weeks, and again after 30 weeks, the team killed some of the rodents in order to look at their livers. They found that the livers of animals on the disrupted schedule had accumulated fat and showed evidence of damage. In particular, they overproduced bile acid. Eventually, after 90 weeks, they killed and examined the remaining animals. Just under 9% of the cycle-disrupted mice, they discovered, had developed liver cancer. None of the control mice had done so. + +In need of regeneration + +The probable cause of these differences emerged when the researchers ran two similar follow-up experiments using genetically engineered mice. Some of the mice lacked the gene needed to make the constitutive androstane receptor (CAR), a molecule involved in clearing away bile acid. This gene is activated when levels of bile acid get too high. CAR molecules help liver tissue to regenerate, since excess acid damages tissue, inhibiting regeneration. However, the cellular proliferation associated with regeneration is the sort of thing that can sometimes get out of hand and lead to cancer. + +Other mice Dr Fu and Dr Moore looked at lacked a different gene, for a receptor molecule called FXR. This keeps bile-acid production under control in the first place. + +In their experiment the researchers found that in mice lacking the gene for CAR, neither those with disrupted day-night cycles nor those used as controls developed liver cancer. In contrast, even if their day-night cycles were uninterrupted almost 30% of mice lacking FXR developed liver cancer. Among those with interrupted cycles the figure was above 60%. On the basis of these results Dr Fu and Dr Moore suggest that developing either a drug that blocks the activity of CAR, to stop cell proliferation, or one that activates FXR, to decrease bile-acid production, could save shift workers and frequent flyers from the threat of liver cancer. + +This article appeared in the Science and technology section of the print edition under the headline Zoned out + + + + + +Searching containers with AI + +Machines are learning to find concealed weapons in X-ray scans + +Artificial intelligence moves into security scanning + +Dec 3rd 2016 + +Prettier than an x-ray + +EVERY day more than 8,000 containers flow through the Port of Rotterdam. But only a fraction are selected to pass through a giant x-ray machine to check for illicit contents. The machine, made by Rapiscan, an American firm, can capture images as the containers move along a track at 15kph (9.3mph). But it takes time for a human to inspect each scan for anything suspicious—and in particular for small metallic objects that might be weapons. (Imagine searching an image of a room three metres by 14 metres crammed to the ceiling with goods.) To increase this inspection rate would require a small army of people. + +A group of computer scientists at University College London (UCL), led by Lewis Griffin, may soon speed up the process by employing artificial intelligence. Dr Griffin is being sponsored by Rapiscan to create software that uses machine-learning techniques to scan the x-ray images. Thomas Rogers, a member of the UCL team, estimates that it takes a human operator about ten minutes to examine each X-ray. The UCL system can do it in 3.5 seconds. + +Dr Griffin’s team trained its system on hundreds of thousands of container scans provided by Rapiscan. The scans were missing concealed metallic objects that might pose a threat, so the UCL team took a separate database of x-rayed weapons and hid them in the container images. A paper the group presented at the Imaging for Crime Detection and Prevention conference in Madrid last week showed that in tests, the system spotted nine out of ten hidden metallic objects. Only six in every hundred readings flagged a weapon when there was nothing. Dr Griffin says this false positive rate has been reduced to one in every 200 since the paper was written in August. The group’s software has also been trained to detect concealed cars. + +The UCL team hopes to test its software shortly on real containers, some with small weapons deliberately hidden inside. Assuming that works, Dr Griffin plans to integrate the artificial-intelligence system into Rapiscan’s scanning systems over the next few months. The team is also aiming to train the system to detect “anomalies”—the machine-learning equivalent of a human hunch that something is not quite right about a scan. That could, for instance, be something unusual in the way things are positioned inside the container. Given enough data, the scientists reckon computers can train themselves to identify discrepancies like this. + +It is not just in ports where machine learning could speed up scanning. Weary travellers dragging themselves through the slow crawl of airport security could also benefit. Suitcases are smaller than containers, and their contents are more predictable, so humans are able to inspect their X-rays quickly and thoroughly (although regular rest breaks are still needed). + +Toby Breckon of Durham University is working on automated x-ray analysis to detect small items of the sort that might be contained in passengers’ cabin and hold bags. He says his group has already had an algorithm installed in commercial scanning systems. Dr Breckon thinks intelligent scanning systems will at first operate in the background at airports, for instance rechecking bags in case human inspectors have missed something. They might also be used to flag bags that could be worth a manual inspection. + +In time, however, automated screening systems may go from being useful tools for human operators to outperforming them. If his team can get its hands on the large amounts of security imagery it needs to feed into its software, Dr Griffin thinks container scanning, at least, might be entirely automated. Perhaps bag-scanning at airports might go the same way. But there will still be a need for people. Someone has to be around to check inside containers and bags with suspicious contents. + +This article appeared in the Science and technology section of the print edition under the headline Eyes at the border + + + +Books and arts + + + + + +Political trends: They want their countries back + +Further reading: Popular works + +America’s relations with China: Careful what you wish for + +Why Europe became rich: Ideas matter + +Global education: The learning power of PISA + +New fiction: Bearing up under the spotlight + + + + + +Mad as hell + +A perfectly timed book on populism + +John Judis has written a powerful account of the forces shaking Europe and America + +Dec 3rd 2016 + + + +The Populist Explosion: How the Great Recession Transformed American and European Politics. By John Judis. Columbia Global Reports; 182 pages; $12.99 and £8.99. + +POPULISM has already upended the politics of the West. Americans have elected a president who has described NATO as “obsolete” and accused China of ripping off their country. Europe’s second-largest economy, Britain, is preparing to leave the European Union (EU). But the populist revolution still has a long way to go. The far-right Sweden Democrats have been near the top of polls in a country that is synonymous with bland consensus. Marine Le Pen, the leader of France’s National Front, a party that wants to take France out of the euro and hold a referendum on France’s membership of the EU, is a shoo-in for the final round of the presidential election. + +The Western intelligentsia, snug in its echo-chamber, has done a dismal job of understanding what is going on, either dismissing populists as cranks or demonising them as racists. John Judis, an American author and journalist, is an admirable exception. “The Populist Explosion” is an extended think-tank report rather than an airport bestseller. It’s also an excellent read: well-written and well-researched, powerfully argued and perfectly timed. + +Populism comes in a wide variety of flavours, left-wing as well as right-wing and smiley-faced as well as snarling. But populists are united in pitting the people against the powerful. Spain’s left-wing Podemos bashes “la casta”, Britain’s right-wing UK Independence Party (UKIP) demonises the liberal elite, and Italy’s impossible-to-classify Beppe Grillo rails against “three destroyers—journalists, industrialists and politicians”. Populists are united in suspicion of traditional institutions, on the grounds that they have been either corrupted by the elites or left behind by technological change. + +But they differ in all sorts of ways that make a populist front across political or national boundaries difficult. Right-wing populism is typically triadic, portraying the middle classes as squeezed between two outgroups, such as foreigners and welfare “spongers”. Left-wing populism is dyadic—it champions the masses against plutocratic elites or, as with Scottish nationalism, a foreign elite. + +Populism was born in the prairies of the American Midwest: farmers, hit by falling grain prices and exploited by local railway monopolists, raged against “the money power” and organised new parties such as the People’s Party. The rural populists forged alliances with urban workers and middle-class progressives. They found champions in mainstream politics such as Williams Jennings Bryan, who warned against crucifying the people on a “cross of gold”, and Teddy Roosevelt, who railed against “malefactors of great wealth”. + +Populism profoundly shaped the 1920s and 1930s: not just in Germany and Italy (where dictators ruled in the name of the people) but also in America (where Franklin Roosevelt moved decisively to the left to head off a challenge from Huey Long, a Louisiana populist who promised “every man a king” and “a chicken in every pot”). The tendency retreated to a few islands of rage during the long post-war prosperity: France’s National Front drew its support from marginalised groups such as the pieds-noirs forced from Algeria after decolonisation, and small shopkeepers who hated paying taxes. + +But populism began to revive during the stagnant 1970s: in 1976 Donald Warren, an American sociologist, announced his discovery of a group of Middle American Radicals (MARs) who believed that the American system was rigged in favour of the rich and the poor against the middle class. And it continued to grow during the long reign of pro-globalist orthodoxy: for example, Ross Perot doomed George Bush senior’s bid for a second term with a presidential campaign that prefigured many of the themes that Donald Trump has sounded more recently. + +Mr Judis argues that the populist explosion is unlikely to be a mere temporary aberration: particular parties such as UKIP may implode, but the tendency draws on a deep well of discontent with the status quo. Technocratic elites lost much of their credibility in the global financial crisis in 2008. The EU has damaged its claim to be a guardian of democracy against populist extremists by repeatedly ignoring referendums in which voters rejected new treaties. The populists have shown a genius for taking worries that contain a nugget of truth—such as that unrestricted immigration is destabilising—and turning them into vote-winning platforms. And they have relentlessly broadened and deepened their appeal as establishment politicians have marginalised the issues that give them life, for example treating worries about migration as nothing but racism. France’s National Front, the most mature of all the populist parties, has already extended its constituency from small businesses to blue-collar workers, pocketing districts that were once dominated by the left and now extending its appeal to public-sector workers. + +Some blinkered commentators still see populism as no more than a protest movement: dangerous and disruptive but ultimately doomed by the advance of globalisation and multiculturalism, which are in turn driven by irreversible technological and demographic forces. A glance at history suggests that this view is questionable. Globalisation went into rapid reverse in the 1920s and 1930s despite the spread of aeroplanes and telephones. The proportion of Americans born abroad was 13.4% in 1920, but after the Immigration Act of 1924 that fell, reaching 4.7% in 1970. The Western elite may be as wrong about the long-term impact of populism as it has been about its short-term prospects. + +This article appeared in the Books and arts section of the print edition under the headline They want their countries back + + + + + +Further reading + +Classic works on the rise of populism + +Five books chronicling the growth of anti-elitist sentiment in the West + +Dec 3rd 2016 + +The Managerial Revolution (1941) by James Burnham. Burnham, a Trotskyite turned conservative, identified a new group at the heart of Western society: a managerial elite that was engaged in a ruthless drive for dominance not only against the traditional business elite (which it accused of being selfish) but also against the unwashed masses (which it accused of being the slaves of atavistic emotions such as nationalism). + + + +The Rise of the Meritocracy (1958) by Michael Young. Written by the author of the 1945 Labour manifesto this idiosyncratic book—part sociology, part history, part science fiction—predicts that the masses will rise up in rage against the credentialled elite not just because the elite hogs all the top jobs but also because it can’t conceal its conviction that people who don’t make it into the elite are worthless. + + + +The Revolt of the Elites and the Betrayal of Democracy (1995) by Christopher Lasch argues that America’s elites have engaged in a concerted revolt against traditional American values such as patriotism and religion. But the more they have defined these values as barbaric the more they have given themselves permission to engage in a class war against people who embrace these values, either marginalising them or delegitimising them completely. + + + +Who We Are: A History of Popular Nationalism (2002) by Robert Wiebe. Wiebe, who was a historian at Northwestern University, tries to explain why educated Westerners have made an enemy of popular nationalism. In the 19th century educated liberals regarded nationalism as an expression of popular sovereignty against transnational aristocratic elites. Today they are more likely to identify nationalism with xenophobia and atavism—leaving this elemental force to be captured by right-wing populists. + + + +Who Are We? (2004) By Samuel Huntington. Huntington, who was a Harvard political scientist, argues that the defining division in American politics is not economic but cultural, between people who give different answers to the question of national identity: cosmopolitans who argue that America is defined by its universal values and middle-class nationalists who argue that it is defined by flag, family and American exceptionalism. + +This article appeared in the Books and arts section of the print edition under the headline Popular works + + + + + +Trans-Pacific frenemies + +America and China’s long embrace + +The two big countries share a sense of exceptionalism. They are both attracted to and wary of the other + +Dec 3rd 2016 + +Wang and Paulson: who’s teaching whom? + +The Beautiful Country and the Middle Kingdom: America and China, 1776 to the Present. By John Pomfret. Henry Holt; 693 pages; $40. + +IN 1943 Fei Xiaotong, China’s most famous anthropologist, visited America and proclaimed it “paradise”, arguing that his own country needed to embrace the American spirit. Americans created things, he said. They didn’t dwell in the past. They had Superman. America was a land “without ghosts”. Fei was typical of many Chinese before and since: an intellectual who loved the bottom-up, can-do character of America and wanted some of it for his own country, with its top-down traditions. + +China has long tried to work out how much of America it really wants. In 1881, the New York Times predicted that “China cannot borrow our learning, our science, and our material forms of industry without importing with them the virus of political rebellion.” Chinese leaders know the same is true today. + +The two huge nations, each with their own distinct sense of their exceptionalism, have long been locked in a love-hate embrace. Americans, mesmerised by China, have held the upper hand, obsessively trying to reshape China in their own image and draw it out into the world. They first came to China in the 18th century to trade. The tea that was thrown into Boston harbour in 1773 had come from Xiamen. Profits from the China trade bankrolled the American Industrial Revolution. Labour from China built the American West. Missionaries and businessmen poured the other way across the Pacific Ocean. + +The Chinese, for their part, once saw America as different from the European powers. “The Americans are pure-minded and honest,” said Prince Gong, a 19th-century leader. But China’s aim was always utilitarian. “The problem is how to control them to make them exploitable by us,”he added. + +This ebb and flow is the subject of John Pomfret’s absorbing new book, “The Beautiful Country and the Middle Kingdom”. The question woven throughout is what will happen now that China has adopted some American ways and is challenging America’s strength. It has received an injection of urgency from the election of Donald Trump, who, if he follows through on his anti-China rhetoric, threatens to throw relations into one of their periodic troughs. + +Mr Pomfret is a veteran China correspondent. Having first gone there as a student in 1980, he was expelled for his reporting during Tiananmen in 1989, before returning later for the Washington Post. He weaves a lively tale, peppered with a cast of adventurers, spies, preachers, communists and McCarthyites who have boosted and sabotaged the relationship in turn over the years. + +After Mao died, the dream of opening up China returned, and America poured in resources almost recklessly. “To do business [American companies] have been forced to hand their technology to the Chinese and essentially train Chinese companies to become their competitors,” writes Mr Pomfret. American officials believed that it was worth it because, in time, Chinese interests would align with America’s. + +That has not yet happened, says Mr Pomfret, and many experts fear it never will. Personal friendships have continued but America now understands Prince Gong’s words: that China may not be interested in the kind of partnership that America wants. Richard Nixon saw China’s potential in 1971 (“Put 800m Chinese to work under a decent system—and they will be the leaders of the world”). But, before he died in 1994, he came to fear that “we may have created a Frankenstein.” + +America has helped China change. But the change, so far, is superficial. Underneath, Mr Pomfret makes clear, Chinese leaders have not laid new foundations on which to build a modern country. Despite the efforts of its new strongman, Xi Jinping, China cannot develop fully without greater freedoms. The would-be “Beijing consensus”, the idea that economic reform can continue without political reform, is illusory. Yet China’s leaders persist, and with broadening ambitions, too. In 2014, Mr Xi said it was time for the people of Asia to run Asia, presaging a push to dominate the South China Sea. + +The financial crisis has shown up the incumbent superpower’s flaws. Mr Pomfret quotes Wang Qishan, a senior leader, talking to Hank Paulson, America’s treasury secretary, after the crash: “You were my teacher, but…we aren’t sure we should be learning from you any more.” Suddenly, it is China that is exorcising its ghosts, while America finds it has a few of its own, after all. + +Mr Pomfret is not a classic optimist. He has spent years as a war reporter and seen too much of China’s dark underbelly for that. He describes all the ways in which American engagement is failing: China refusing to shoulder more global responsibility; widespread Chinese cyber-espionage; a continued crackdown on intellectual freedoms at home. He quotes one senior academic saying that America’s fears are “nearer to outweighing our hopes” than at any time since 1979. + +Yet, in spite of all this, he does not foresee a confrontation, believing that a mixture of American engagement and containment will maintain stability. The relationship is not as dysfunctional as it seems, he says. And China is not as dangerous as it sometimes looks. The world must hope Mr Pomfret is right. + +This article appeared in the Books and arts section of the print edition under the headline Careful what you wish for + + + + + +Industrious and revolutionary + +The role of ideas in the “great divergence” + +A new history puts the “principle of contestability” at the heart of the story of the Industrial Revolution + +Dec 3rd 2016 + +You, sir, are quite wrong + +A Culture of Growth: The Origins of the Modern Economy. By Joel Mokyr. Princeton University Press; 403 pages; $35 and £24.95. + +IN THE year 1000 the average person in western Europe was slightly poorer than their counterparts in China or India. By 1900, things were very different. Western Europe was five times richer. Explaining the reasons behind this “great divergence” has occupied many an economic historian. In a new book, Joel Mokyr of Northwestern University offers his own take. + +It is not a conventional economic history. The book contains few numbers, let alone regressions. This is because Mr Mokyr focuses on culture—something not easily quantified. For Mr Mokyr, “culture” means beliefs, values and preferences. And he argues that all three changed fundamentally in Europe after 1500. + +To structure his argument, Mr Mokyr speaks of a “market for ideas”, a system in which people “try to persuade an audience of the correctness of their beliefs”. Like any market, it can “fail”—and, for most of history, it did. People in power stopped upstarts from challenging received wisdom. Manipulating nature was considered akin to defying God’s will. For potential intellectual innovators, the fear of being called a heretic (or worse) created a disincentive to think big. + +Then, almost by accident, Europe stumbled into an arrangement whereby the “market for ideas” flourished. The Royal Society, a club for scientific exchange founded in London in 1660, started a journal in which everyone from Christopher Wren to Robert Boyle battled over ideas. Its motto was “nullius in verba”—roughly, “take nobody’s word for it”. A transnational community known as the “Republic of Letters” sprang up. Many of its members never met in person, but with the printing press and improved postal networks, they could create knowledge more efficiently than ever before. + +There were no sacred cows. When Leonhard Euler, a mathematician, thought that Isaac Newton had erred, the Royal Society asked a self-taught optician to see who was right. The greatest mathematical mind of his age, challenged by a nobody: what better example of what Mr Mokyr calls the “principle of contestability”? + +This went along with a reassessment of what science was. Mr Mokyr sees the new approach encapsulated in the work of Francis Bacon (1561-1626). Bacon was a poor scientist and knew no mathematics, says Mr Mokyr. But he pushed scientific inquiry away from the mindless piling up of facts and towards making a difference to people’s lives. “The true and legitimate goal of the sciences is to endow human life with new discoveries and resources,” Bacon said. With this sort of science, useful, wealth-creating things were invented. + +Why Europe, and not anywhere else, developed in this way is tricky to answer. Luck is surely part of it. Another explanation concerns Europe’s geography. With Europe fragmented into lots of states, an intellectual who challenged received wisdom, and thus incurred the wrath of the authorities, could move elsewhere. Thomas Hobbes wrote “Leviathan” in Paris; for years René Descartes lived in the Netherlands. Rulers eventually came round to the idea that “progress” could not be stopped. By contrast, in China, says Mr Mokyr, free thinkers had few escape routes. + +This book is not for someone looking for a general introduction to the “great divergence”. Mr Mokyr barely considers other theories of why Europe grew first—that its people were relatively immune from disease; or that it was the first region systematically to colonise others. And his arguments are often highly abstract. + +Those familiar with the historiography will have their own grumbles. Mr Mokyr’s theory is, ironically, untestable. When he asserts that Bacon “was of unique importance to the development of the West”, it is impossible to prove otherwise. He assigns monumental importance to the “Republic of Letters” but offers frustratingly little detail on how it actually worked. + +The sheer elegance of Mr Mokyr’s theory, however, has much to commend it. And it is refreshing that an economist is taking seriously the idea that ideas and culture make a difference to economic growth. Mr Mokyr has not fully explained the “great divergence”, but he has offered some tantalising insights. + +This article appeared in the Books and arts section of the print edition under the headline Ideas matter + + + + + +E for effort + +Learning from the world’s swottiest countries + +On her “geeky gap year” a science teacher discovers a blueprint for education reform + +Dec 3rd 2016 + + + +Cleverlands: The Secrets Behind the Success of the World’s Education Superpowers. By Lucy Crehan. Unbound; 304 pages; £16.99. + +FROM 2000 to 2002, about a third of a million 15-year-olds from 43 countries took similar tests in maths, reading and science. The results of the first Programme for International Student Assessment (PISA) were a pleasant surprise in countries whose kids aced the exams—such as Canada, Finland and Japan. But for the laggards, the PISA results led to a sense of crisis. “Are German Students Stupid?” asked Der Spiegel, a magazine. + +The tests’ influence has since grown. Teenagers from 72 countries or regions are part of the latest triennial analysis, which will be published on December 6th. Michael Gove, a former British education secretary, is just one politician hoping to see the success of his reforms reflected in future PISA scores. + +PISA has its opponents. Some query the methodology. Others complain about reducing the purpose of school to passing exams. Still more critics add that policymakers who seek to ape high-achieving countries neglect the unique cultural reasons behind success. This debate forms the backdrop to what Lucy Crehan calls her “geeky gap year”. As a science teacher in London she had read about countries that scored higher in PISA than England, and wanted to see their schools up close. So she taught in Canada, Finland, Japan, Singapore and Shanghai. “Cleverlands”, her first book, is her account of that odyssey. + +At each stop Ms Crehan discovers idiosyncratic reasons for the area’s results. Finland’s schools were a storehouse of national pride during Swedish and Russian rule. Teaching remains a respected and sought-after job. In Helsinki ten times as many students apply for education degrees as there are places. + +Across East Asia she finds a culture that celebrates effort. In China graduation cards praise recipients’ hard work—not how clever they are, as in America. In Singapore, extra tuition is so common that parents hire tutors to help their kids pass entrance exams for the best tuition centres. In Japan, as a mark of shared sacrifice, some mothers give up their favourite food during their children’s punishing exam terms. + +But dismissing the success of top performers as a result of culture alone is a “grave mistake”, writes Ms Crehan. Policy matters, too, and laggards who change their ways can catch up. In top-performing countries, children do not start school until they are at least six or seven years old. Aside from Singapore, all the places she visits wait until children are in their mid-teens before diverting some to less academic tracks. Teachers are given time to practise and they receive feedback from peers. Pupils are expected to learn both facts and skills. + +Other authors have gone on peripatetic school tours. In “The Smartest Kids in the World” (2013) Amanda Ripley follows American exchange students in Finland, Poland and South Korea. Her book is an easier read, while covering some of the same ground that “Cleverlands” does. + +But Ms Crehan’s work has the edge in relating reporting to research. Studies show that academic work can wait, she explains, because otherwise it can go over the heads of kids while hindering social skills and a love of learning. She shows that schools can delay selection without harming brighter pupils. This is for two reasons. First, intelligence is not fixed: slow starters can catch up, at least a bit. Second, expectations matter: in delaying selection, top-performing countries suggest to all pupils that they can achieve high standards. Theresa May, Britain’s prime minister, who is intent on increasing the number of schools selecting the ablest pupils as early as age 11, should take note. + +Too much writing about education is polemical and ill-informed. “Cleverlands” is neither. Ms Crehan is refreshingly fair-minded, acknowledges the limits of research and does not idolise highly stressful school systems. And yet her book is a powerful defence of the idea that there is a lot to learn from how other countries learn. It is time to swot up. + +This article appeared in the Books and arts section of the print edition under the headline The learning power of PISA + + + + + +Bearing up + +Life as a superstar polar bear + +Yoko Tawada’s new novel owes a bit to Kafka but more to her own deadpan wit + +Dec 3rd 2016 + + + +Memoirs of a Polar Bear. By Yoko Tawada. Translated by Susan Bernofsky. New Directions; 288 pages; $16.95. Published in Britain by Portobello Books in March 2017. + +IN 2006, a baby polar bear named Knut was rejected by his mother, and raised by a keeper at the Berlin zoo in the spotlight of the global media. Knut’s besotted fans often asked how a parent could forsake such a cute cub. Yoko Tawada, a Japanese-born author who has lived in Germany since 1982, gives a startling answer in this funny, subtle and strangely moving fable about the bonds that unite, and the gulfs that divide, humans and other animals. Leaving her son “wasn’t an easy decision”, writes Knut’s mother Tosca, “but because of my literary work I didn’t have enough time for him.” Besides, “historical greatness” beckoned her little beast. Knut became a furry emblem of the dangers of global warming and the “struggle for conservation”. + +Ms Tawada gives three separate “memoirs” from a talented dynasty of bears. They perform first in the circus and then (a satirical point shrewdly made) amid the modern showbiz of environmental activism. Their Soviet-born matriarch masters the “spooky activity” of writing, and pens a famous memoir of stardom in the ring. Her daughter Tosca evokes the free-spirited “island” of circus life in post-war East Germany—by writing in the voice of her human trainer, Barbara. At last, sensitive Knut takes centre-stage. Poster-bear for climate change, he endures celebrity as the frail focus of “billions of worried eyes”. + +Ms Tawada respects the actual behaviour of bears even as her ursine authors inspect the vanity of humankind through an outsider’s—or a migrant’s—eyes. Although Barbara’s boyfriend thinks that “the circus is nothing more than a metaphor,” Ms Tawada brings her fine-nosed, soft-furred beasts credibly to life. The eerie tales told by Kafka’s animal narrators have left deep claw-marks on this book. Ms Tawada, though, has a deadpan wit and disorienting mischief all her own, nimbly translated from the German by Susan Bernofsky. At a party where he scorns the tiny canapés (“as puny as half a dead mouse”), Knut hears a guest lament that “so many people are blockheads, impervious to irony, humour and innuendo.” Those people may not enjoy this novel; everyone else should. + +This article appeared in the Books and arts section of the print edition under the headline Bearing up under the spotlight + + + +Obituary + + + + + +William Trevor: Mystery and mastery + + + + + +Mystery and mastery + +Obituary: William Trevor died on November 20th + +The Irish novelist and short-story writer was 88 + +Dec 3rd 2016 + + + +BETWEEN 1989 and 2009 only three journalists interviewed William Trevor at length. That was quite enough. He met them punctually, at Exeter station or in Dublin, his tall slim figure bulked out with a tweed coat and floppy tweed hat. In his half-thatched Devon farmhouse he would settle into cushions and ply his guest with sherry. In the craggy face, the eyes were kind. But they also queried, silently, why anyone should find him interesting. + +The interviewers came because he had written 19 novels and novellas and 13 collections of short stories, and had three times won the Whitbread prize. In literary circles, which he avoided, his exquisitely crafted stories were mentioned in the same breath as Maupassant, Chekhov and Joyce. Had he cared about the critics, which he did not, he would have been flattered by the comparison: especially with Joyce, whose “Dubliners” had done much to set him on his path. As it was, he preferred to keep the conversation well away from himself. + +It was other people he found interesting. He observed them with the unstinting curiosity of a man dropped in the world for the first time. That girl adjusting her hair in a shop window—for whom? That youth gobbling chips from a paper bag—where did he live? A farmer, seen from the car, taking string from his pocket—for what purpose? That couple on the table behind, arguing—were they married, or not? Thus he found his characters, and their encounters. To these he could add from his constant nibblings and gnawings of tiny details: a creaking iron bed, a Georgian decanter, mounds of autumn leaves, a plate of sardine-and-egg sandwiches, a window stuck with paint, one high-heeled shoe. Gradually the people formed, lodged in his head, acquired histories. He became acquainted with their schooling, their marriages, the day when they had done such and such a thing, their way of dreaming, their favourite drinks. Once there, they thronged round his writing desk and would not go away. + +They were full of secrets, disappointments and shame, these characters: withheld from each other, but not from him. He knew why Ariadne, the beautiful daughter of a Dublin landlady, with hands “as delicate as the porcelain she attended to”, could never love Barney Prenderville, who loved her. He knew why Kitty and Davy, on honeymoon, visited the back-street chemist’s in Tramore, and that Kitty would never after all go through with it. He knew more than either Roy or Henrietta, a middle-aged couple, when Roy half-explained and Henrietta half-grasped his affair with a mousy student; the tears oozed from beneath Roy’s spectacles. And when the vampish Mrs Faraday, between cigarettes and cocktails, tried to chat up a fellow guest in the Albergo San Lorenzo (“Did you mind my wondering if you were married?”), he alone could anticipate the horror-twist that followed. + +He did not analyse the mystery of these creations. Having invaded their lives as minutely as possible, he would dismiss them without a second thought or a second read. He had no ideas or philosophy to impart, he insisted. The people had come and gone, inexplicably. Their stories were sharp glimpses of a hidden truth, and he liked that; by contrast, a novel was a sprawling thing, full of byways and excrescences from which the exit was unclear. + +Stout and soft rain + +Interviewers did their best to find more in his art than that. His own history surely explained a lot. The fact that he had been brought up Protestant in the Catholic south of Ireland, had gone to 11 schools and had been forced to leave Ireland for England to make a living, must have endowed him with an outsider’s soul and eye. He confessed, as Joyce had, that exile was beneficial. His England was a drably post-war foreign land. Ireland he evoked from his study in Devon, a canvas of whitewashed houses, lilting brogues, stout and soft rain that seemed ancient, rather than modern. Mentions of the Troubles were rare; he wrote with the same intensity, he admitted, about a housewife’s feelings as she put on lipstick. For him, politics and heroics faded beside the simple struggles of ordinary people to come to terms with fate. + +The melancholy of his writing suggested a well of sadness in himself. It was not there. His marriage was long and happy and his life had been largely fun ever since, in 1964, “The Old Boys” had launched him as a writer. He wrote from minute observation but also from outside his experience, and thought it would be very dull to do otherwise. He was not what he wrote. + +Where then, he was asked, did his mastery come from? What was the secret of it? His disposition was to say nothing. But he would willingly describe the practicalities of writing: swift longhand on blue paper, then an Olympia typewriter, for five hours or so each morning, starting early. As the pages accumulated, so he cut and cut, often determinedly with scissors. The unnecessary sentence, the extraneous word, the repeated description, were pared to the thin bone. Before becoming a writer he had been a woodcarver, chipping and chiselling away to create forms. He might not have managed in wood the delicacy of Grinling Gibbons’s lace and leaves, but he could do it in prose. His secret lay in what he left out—particularly that least penetrable or important thing, himself. + +This article appeared in the Obituary section of the print edition under the headline Mystery and mastery + + + +Economic and financial indicators + + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Fiscal balances + +Markets + + + + + +Interactive indicators + +Dec 3rd 2016 + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Output, prices and jobs + +Dec 3rd 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Trade, exchange rates, budget balances and interest rates + +Dec 3rd 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +The Economist commodity-price index + +Dec 3rd 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Fiscal balances + +Dec 3rd 2016 + + + +Many countries will carry out fiscal easing over the next few years, according to the OECD, a think-tank. If the incoming American administration fulfils its promises to increase spending and cut taxes, the OECD reckons this alone could add 0.3 percentage points to global growth in 2018. In Britain there will be slower fiscal consolidation than before: the government has abandoned its target of a budget surplus by the end of the decade. Ireland has curtailed public spending in the years since the financial crisis, but austerity will ease off with a six-year plan for infrastructure spending and a 2017 tax cut for low-paid households. In Italy the 2017 budget aims to boost investment and lower corporate income tax. + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Markets + +Dec 3rd 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +Table of Contents + +The Economist + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +The dollar and the world economy: The mighty dollar + + + + + +India’s demonetisation: Modi’s bungle + + + + + +Education in America: DeVos woman + + + + + +South Korean politics: Park somewhere else + + + + + +Latin America: After Fidel + + + + + +Letters + + + +Letters to the editor: On Italy, procurements, the electoral college, millennials, Trump supporters + + + + + +United States + + + +Education: Long-haul charters + + + + + +The next treasury secretary: You’re hired + + + + + +Capital punishment and intelligence: Novel justice + + + + + +Recounting Midwestern votes: Catharsis + + + + + +Divorce: Disruptive innovation + + + + + +Louisiana’s Senate race: Alamo on the bayou + + + + + +Lexington: The impresario-elect + + + + + +The Americas + + + +Haiti’s presidential election: The banana man cometh + + + + + +Brazil: Trouble for Temer + + + + + +A Brazilian tragedy: The crash in Medellín + + + + + +Asia + + + +South Korea’s political crisis: A long goodbye + + + + + +Royal politics in Thailand: Better late than never + + + + + +India’s demonetisation: The ropy rupee recall + + + + + +Politics in Afghanistan: Vice president + + + + + +Banyan: Asian values + + + + + +China + + + +Internal migrants: More children, more grandparents + + + + + +Adultery: The divorce whisperer + + + + + +Middle East and Africa + + + +Israel: Sitting pretty + + + + + +Kuwait: Bypassed by Dubai + + + + + +HIV in Africa: Many battles won, but not the war + + + + + +Syria: Aleppo falls apart + + + + + +Sudan: Tribulations, but no trial + + + + + +Briefing + + + +Fidel Castro: The will to power + + + + + +Europe + + + +The French presidential campaign: Liberté, autorité, dignité + + + + + +Greek politics: Orthodox measures + + + + + +Turkey and Europe: End of the affair + + + + + +Corruption in Slovakia: Tart response + + + + + +Italy’s referendum: Just trust me + + + + + +Charlemagne: Bear cave + + + + + +Britain + + + +The UK Independence Party: The battle for Brexit voters + + + + + +Trade with the European Union: Customs of the country + + + + + +Reforming corporate governance: A flagship policy takes on water + + + + + +Sexual abuse in football: A less beautiful game + + + + + +Cutting corporation tax: A costly distraction + + + + + +Batteries not included: Breggs-it + + + + + +Homelessness: Still not home + + + + + +Bagehot: Keir Starmer, noble Lilliputian + + + + + +International + + + +Abortion: How to make it rarer + + + + + +Abortion in El Salvador: Miscarriage of justice + + + + + +Business + + + +Siemens and General Electric: Machines learning + + + + + +American business: The small fly + + + + + +The sharing economy (1): Four walls in China + + + + + +The sharing economy (2): Airbnb for canines + + + + + +French energy: Bad reactions + + + + + +Golf in Japan: Recovery shot + + + + + +Schumpeter: King customer + + + + + +Finance and economics + + + +The world economy: The dollar squeeze + + + + + +Buttonwood: Exaggerated reports + + + + + +China’s falling currency: A harder call + + + + + +Oil prices: Viennese waltz + + + + + +African stockmarkets: Short of stock + + + + + +Cyber-insurance: Hack work + + + + + +Bank supervision: Small overdraft in Chile + + + + + +Analyst forecasts: Discounting the bull + + + + + +Free exchange: Paper pains + + + + + +Science and technology + + + +Smart weapons: The vision thing + + + + + +Super-slippery surfaces: The last drop + + + + + +Ocean acidification: Unbalanced + + + + + +Liver cancer: Zoned out + + + + + +Artificial intelligence: Eyes at the border + + + + + +Books and arts + + + +Political trends: They want their countries back + + + + + +Further reading: Popular works + + + + + +America’s relations with China: Careful what you wish for + + + + + +Why Europe became rich: Ideas matter + + + + + +Global education: The learning power of PISA + + + + + +New fiction: Bearing up under the spotlight + + + + + +Obituary + + + +William Trevor: Mystery and mastery + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Fiscal balances + + + + + +Markets + + + + + +Table of Contents + +The Economist + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +The dollar and the world economy: The mighty dollar + + + + + +India’s demonetisation: Modi’s bungle + + + + + +Education in America: DeVos woman + + + + + +South Korean politics: Park somewhere else + + + + + +Latin America: After Fidel + + + + + +Letters + + + +Letters to the editor: On Italy, procurements, the electoral college, millennials, Trump supporters + + + + + +United States + + + +Education: Long-haul charters + + + + + +The next treasury secretary: You’re hired + + + + + +Capital punishment and intelligence: Novel justice + + + + + +Recounting Midwestern votes: Catharsis + + + + + +Divorce: Disruptive innovation + + + + + +Louisiana’s Senate race: Alamo on the bayou + + + + + +Lexington: The impresario-elect + + + + + +The Americas + + + +Haiti’s presidential election: The banana man cometh + + + + + +Brazil: Trouble for Temer + + + + + +A Brazilian tragedy: The crash in Medellín + + + + + +Asia + + + +South Korea’s political crisis: A long goodbye + + + + + +Royal politics in Thailand: Better late than never + + + + + +India’s demonetisation: The ropy rupee recall + + + + + +Politics in Afghanistan: Vice president + + + + + +Banyan: Asian values + + + + + +China + + + +Internal migrants: More children, more grandparents + + + + + +Adultery: The divorce whisperer + + + + + +Middle East and Africa + + + +Israel: Sitting pretty + + + + + +Kuwait: Bypassed by Dubai + + + + + +HIV in Africa: Many battles won, but not the war + + + + + +Syria: Aleppo falls apart + + + + + +Sudan: Tribulations, but no trial + + + + + +Briefing + + + +Fidel Castro: The will to power + + + + + +Europe + + + +The French presidential campaign: Liberté, autorité, dignité + + + + + +Greek politics: Orthodox measures + + + + + +Turkey and Europe: End of the affair + + + + + +Corruption in Slovakia: Tart response + + + + + +Italy’s referendum: Just trust me + + + + + +Charlemagne: Bear cave + + + + + +Britain + + + +The UK Independence Party: The battle for Brexit voters + + + + + +Trade with the European Union: Customs of the country + + + + + +Reforming corporate governance: A flagship policy takes on water + + + + + +Sexual abuse in football: A less beautiful game + + + + + +Cutting corporation tax: A costly distraction + + + + + +Batteries not included: Breggs-it + + + + + +Homelessness: Still not home + + + + + +Bagehot: Keir Starmer, noble Lilliputian + + + + + +International + + + +Abortion: How to make it rarer + + + + + +Abortion in El Salvador: Miscarriage of justice + + + + + +Business + + + +Siemens and General Electric: Machines learning + + + + + +American business: The small fly + + + + + +The sharing economy (1): Four walls in China + + + + + +The sharing economy (2): Airbnb for canines + + + + + +French energy: Bad reactions + + + + + +Golf in Japan: Recovery shot + + + + + +Schumpeter: King customer + + + + + +Finance and economics + + + +The world economy: The dollar squeeze + + + + + +Buttonwood: Exaggerated reports + + + + + +China’s falling currency: A harder call + + + + + +Oil prices: Viennese waltz + + + + + +African stockmarkets: Short of stock + + + + + +Cyber-insurance: Hack work + + + + + +Bank supervision: Small overdraft in Chile + + + + + +Analyst forecasts: Discounting the bull + + + + + +Free exchange: Paper pains + + + + + +Science and technology + + + +Smart weapons: The vision thing + + + + + +Super-slippery surfaces: The last drop + + + + + +Ocean acidification: Unbalanced + + + + + +Liver cancer: Zoned out + + + + + +Artificial intelligence: Eyes at the border + + + + + +Books and arts + + + +Political trends: They want their countries back + + + + + +Further reading: Popular works + + + + + +America’s relations with China: Careful what you wish for + + + + + +Why Europe became rich: Ideas matter + + + + + +Global education: The learning power of PISA + + + + + +New fiction: Bearing up under the spotlight + + + + + +Obituary + + + +William Trevor: Mystery and mastery + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Fiscal balances + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.12.10.TXT b/homeworks/B20769/homework1/data2/2016.12.10.TXT new file mode 100644 index 0000000..725d683 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.12.10.TXT @@ -0,0 +1,4392 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Politics this week + +Dec 10th 2016 + + + + + +In a referendum, Italian voters rejected constitutional reforms put forward by Matteo Renzi, the prime minister, which would have weakened the Senate in order to ease the passage of laws and given the federal government more power. “No” votes beat “Yes” by a decisive margin of 20 percentage points. Mr Renzi tendered his resignation. See here and here. + +Germany’s Angela Merkel called for a ban on the burqa “wherever legally possible”. Her statement was part of a speech on Western values in which the chancellor sought to address concerns about the influx of migrants as she prepares to run for re-election. She promised that sharia law would never supersede German principles of equality. See article. + +In Austria’s presidential election, Alexander Van der Bellen, a former leader of the Green party who ran as an independent, beat Norbert Hofer, a candidate from the far-right Freedom Party. Turnout was high as mainstream voters rallied to avoid electing the European Union’s first far-right head of state. See article. + +Britain’s Supreme Court heard the government’s appeal against a lower court’s judgment that it must obtain parliamentary approval before triggering Article 50, the legal means for leaving the EU. The Supreme Court’s verdict is due in January. Meanwhile, MPs voted to “respect” the government’s timetable for Brexit, but demanded details on its negotiating stance. Adding to the pressure on Theresa May, the prime minister, the EU’s Brexit negotiator said a deal should be completed by October 2018. See article. + +Zac Goldsmith, until recently a Conservative MP, was ousted from his Richmond constituency in London by the Liberal Democrats. The by-election had been forced by Mr Goldsmith as a protest against the government’s plan for a third runway at Heathrow, but it was Brexit that dominated. Richmond was the 39th-most pro-Remain of the 650 parliamentary constituencies. The Lib Dems’ 30.4 percentage-point increase in their share of the vote there has been surpassed only 31 times in 460 by-elections since 1945. + +The prime minister of France, Manuel Valls, resigned to run for the Socialist nomination in next year’s presidential election. A centrist reformer, he faces several rivals, mainly on the hard left. The current president, François Hollande, is not running for re-election. See article. + +A result + +A month after election day, Pat McCrory, the Republican governor of North Carolina, conceded defeat to Roy Cooper, his Democratic rival. The race had attracted national attention because of Mr McCrory’s support of a bill that forces transgender people to use public lavatories matching the sex noted on their birth certificates. Mr Cooper’s margin of victory was less than 1%. + +The trial got under way of Dylann Roof, the white supremacist accused of killing 15 parishioners at a black church in Charleston, South Carolina, in 2015. The prosecution is seeking the death penalty. + +A fire swept through a warehouse in Oakland, California, where a musical event was being staged, killing 36 people. It was the deadliest fire in a building in the state since 1906. + +Another crisis + +Brazil’s Supreme Court reversed a judge’s ruling requiring the leader of the Senate, who has been charged with embezzlement, to step down while he awaits trial. However, it did remove him from the line of succession for the presidency. + +Bolivian police arrested the head of the airline that operated an aeroplane which crashed in Colombia last month, killing 71 people, including most of the players of a Brazilian football club, Chapecoense. He has not been charged with a crime. + +Lucky number seven + + + +Voters in Ghana went to the polls in the country’s seventh election since the restoration of democracy in 1992. The result was expected to be close between the incumbent, President John Mahama, and leader of the main opposition party, Nana Akufo-Addo. + +The incoming government of Gambia said it may prosecute the outgoing president, Yahya Jammeh, for unspecified crimes and to have the country rejoin the International Criminal Court, just months after Mr Jammeh gave notice that he was withdrawing from the tribunal. Mr Jammeh, who has ruled the country for more than two decades, is soon to hand over power after losing an election. See article. + +The government in Libya said that it had completed the reconquest of Sirte, a town on the coast held by Islamic State since last year. + +Reports suggested that Syrian rebels in east Aleppo are trying to negotiate a withdrawal from the city. Government troops have further shrunk the enclave, taking parts of the Old City. Russia and China vetoed a UN Security Council resolution demanding a truce. + +China flexes its muscles + +Hong Kong’s government filed a case against four pro-democracy legislators who it said had improperly taken their oaths. If they are disbarred, it would bring to six the number of lawmakers who have been excluded from the recently elected Legislative Council on such grounds. The government in Beijing has objected to legislators who use the oath-taking as an opportunity to show their support for autonomy for Hong Kong. + +America’s president-elect, Donald Trump, angered China by accepting a congratulatory telephone call from Taiwan’s president, Tsai Ing-wen. It was the first known contact at such a level since the United States severed its diplomatic ties with Taiwan in 1979 and recognised the government in Beijing. + +John Key, the prime minister of New Zealand, resigned unexpectedly and endorsed Bill English, the finance minister, as his successor. See article. + +Voters in Uzbekistan elected Shavkat Mirziyoyev as president in an election dismissed by monitors as a sham. Mr Mirziyoyev served as prime minister to Islam Karimov, Uzbekistan’s recently deceased strongman of 25 years. See article. + + + +Jayaram Jayalalithaa, the long-serving chief minister of the Indian state of Tamil Nadu, died of a heart attack. She was known as Amma (“mother”) for the public subsidies dished out to the poor under her government. Crowds of mourners brought the state capital, Chennai, to a standstill. See article. + +This article appeared in the The world this week section of the print edition + + + + + +Business this week + +Dec 10th 2016 + +Donald Trump promised to clamp down on American companies that move jobs overseas, suggesting he would impose a 35% tariff on goods they imported back to America. It was the latest broadside from the president-elect against a global trade regime that, in his view, hurts American workers. In another portent of what could be a testy relationship with American business, Mr Trump denounced the cost of the presidential plane being built by Boeing, after its boss criticised his trade policies. + +Looking for a hand + +Italian banks had a mixed week in the aftermath of the rejection by Italian voters of political reforms. Share prices fell initially, but then rose amid speculation that the government would arrange a rescue package for the banking system. The political uncertainty following the referendum raises particular questions about the ability of Monte dei Paschi di Siena, the most troubled of Italy’s banks, to complete its capital-raising plan. See article. + +America’s Public Company Accounting Oversight Board slapped an $8m fine, its biggest ever, on a Brazilian affiliate of Deloitte for issuing false audit reports and attempting a cover-up during an investigation. The PCAOB has the power to inspect any foreign accounting firm that audits a company listed on an American exchange. At issue were the accounts of a Brazilian airline that is listed in New York. See article. + +In a unanimous decision, America’s Supreme Court upheld a broad definition of insider trading, finding that when prosecutors make their case they do not have to prove that someone benefited from the information. It was the court’s first deliberation on the issue in two decades. Its ruling overturns a stricter interpretation of insider trading made by the federal appeals court in New York two years ago. + +Oil prices surged following the deal announced by OPEC members to cut production, pushing Brent crude above $55 a barrel for the first time in more than a year. But prices pared some of their gains on reports that OPEC’s output reached a record high last month. Oil-producing countries that are not part of OPEC, notably Russia, are due to hold talks with the oil cartel about what reductions to output they can contribute. The Russian government sold a 19.5% stake in Rosneft, a state-owned oil firm, to a joint venture between Glencore, a commodities trader, and Qatar’s sovereign-wealth fund for $11.3bn. See article. + +Mexico conducted the first auction of rights to drill for oil and gas in its deepwater reserves in the Gulf of Mexico. Since opening up the domestic oil industry to competition in 2013 the government has sold off other assets, but this was the first auction to attract bids from big international energy companies. + +Rupee slippers + +India’s central bank unexpectedly left its main interest rate on hold at 6.25%. A cut had been expected after the government withdrew 86% of banknotes from circulation in the cash-rich economy. But the bank is on alert against other causes of volatility, such as the rupee’s recent low against the dollar and the prospect of monetary tightening in the US. + +A political scandal that has engulfed the president of South Korea caused more discomfort for the country’s biggest chaebol. Senior businessmen at Hyundai, Samsung and other firms, were hauled in front of a parliamentary committee to answer questions about donations to a foundation controlled by a friend of the president. Samsung’s offices were recently searched by prosecutors investigating the allegations. + +CRISPR crunch + +A packed audience listened to a hearing at America’s patent office about who owns the intellectual-property rights to the CRISPR/Cas9 gene-editing technology. The stakes are high, potentially worth billions of dollars. A team from the University of California, Berkeley, claims that work carried out at the Broad Institute in Cambridge, Massachusetts, relies heavily on its research. The patent court could give a decision next year, or listen to further oral arguments. + +A consortium of investors led by Macquarie, an Australian investment firm, Allianz, a German one, and including the sovereign-wealth funds of China and Qatar, agreed to buy a 61% stake in the gas-distribution network run by National Grid in Britain. The deal values the business at £13.8bn ($17.5bn). + + + +Britain’s oldest manufacturing firm put its business up for sale. Based in east London, Whitechapel Bell Foundry was established in 1570 and cast the original Liberty Bell in Philadelphia as well as Big Ben and bells for St Paul’s Cathedral. Fewer churches mean fewer orders for large bells. But the success of “Downton Abbey” has wrought a new market: for handbells to ring for tea. + +This article appeared in the The world this week section of the print edition + + + + + +KAL's cartoon + +Dec 10th 2016 + + + +More KAL's cartoons + + + +This article appeared in the The world this week section of the print edition under the headline “KAL's cartoon” + + + +Leaders + + + + + +The president and business: America’s new business model + +Burqa bans: The freedom to dress modestly + +The aftermath of Italy’s referendum: Salvaging the wreckage + +Global education: Homework for all + +Big oil: Shape up + + + + + +The president and corporations + +How Donald Trump is changing the rules for American business + +The president-elect has a new approach to dealing with corporate America. It is not all good news + +Dec 10th 2016 + + + +HIS inauguration is still six weeks away but Donald Trump has already sent shock waves through American business. Chief executives—and their companies’ shareholders—are giddy at the president-elect’s promises to slash burdensome regulation, cut taxes and boost the economy with infrastructure spending. Blue-collar workers are cock-a-hoop at his willingness to bully firms into saving their jobs. + +In the past few weeks, Mr Trump has lambasted Apple for not producing more bits of its iPhone in America; harangued Ford about plans to move production of its Lincoln sports-utility vehicles; and lashed out at Boeing, not long after the firm’s chief executive had mused publicly about the risks of a protectionist trade policy. Most dramatically, Mr Trump bribed and cajoled Carrier, a maker of air-conditioning units in Indiana, to change its plans and keep 800 jobs in the state rather than move them to Mexico. One poll suggests that six out of ten Americans view Mr Trump more favourably after the Carrier deal. This muscularity is proving popular. + +Popular but problematic. The emerging Trump strategy towards business has some promising elements, but others that are deeply worrying. The promise lies in Mr Trump’s enthusiasm for corporate-tax reform, his embrace of infrastructure investment and in some parts of his deregulatory agenda. The dangers stem, first, from the muddled mercantilism that lies behind his attitude to business, and, second, in the tactics—buying off and attacking individual companies—that he uses to achieve his goals. American capitalism has flourished thanks to the predictable application of rules. If, at the margin, that rules-based system is superseded by an ad hoc approach in which businessmen must take heed and pay homage to the whim of King Donald, the long-term damage to America’s economy will be grave. + +Helping the few at the expense of the many + +Start with the confusions in Mr Trump’s philosophy. The president-elect believes that America’s workers are harmed when firms move production to cheaper locations offshore. That is why he wants to impose a 35% tariff on the products of any company that moves its production abroad. Such tariffs would be hugely disruptive. They would make goods more expensive for American consumers. By preventing American firms from maximising their efficiency using complex supply chains, they would reduce their competitiveness, deter new investment and, eventually, hurt workers’ wages across the economy. They would also encourage a tit-for-tat response. + +Precisely because tariffs would be so costly, many businessmen discount Mr Trump’s protectionism as mere rhetoric. Plenty of them see the focus on individual firms as a politically canny (and thus sensible) substitute. If Mr Trump can convince American workers that he is on their side using only a barrage of tweets and a few back-room deals like the one with Carrier, there may be no need to resort to tariffs. To profit from a business-friendly bonanza, the logic goes, clever executives simply have to make sure they stay in the president’s good books. + +That looks like wishful thinking. Mr Trump’s mercantilism is long-held and could prove fierce, particularly if the strong dollar pushes America’s trade deficit higher (see article). Congress would have only limited powers to restrain the president’s urge to impose tariffs. More important, even if rash protectionism is avoided, a strategy based on bribing and bullying individual companies will itself be a problem. + +Mr Trump is not the first American politician to cajole firms. For all its reputation as the bastion of rule-based capitalism, America has a long history of ad hoc political interventions in business (see article). States routinely offer companies subsidies of the sort that Indiana gave to Carrier. From John Kennedy, who publicly shamed steel firms in the 1960s, to Barack Obama, who bailed out car companies in 2009, all presidents have meddled in markets. + +And Mr Trump’s actions so far are not exceptional relative to his predecessors or by international standards. Britain’s prime minister recently made undisclosed promises to Nissan, a Japanese carmaker, to persuade the firm to stay in Britain despite Brexit. The French government is notorious for brow-beating individual firms to keep jobs in France. The most egregious crony corporatists, from Russia to Venezuela, dish out favours to acolytes and punishments to opponents on a scale that would bring blushes even in Trump Tower. + +Courting the king and currying favour + +Nonetheless, Mr Trump’s approach is worrying. Unlike the Depression, when Hoover and then Roosevelt got companies to act in what they (often wrongly) saw as the national interest; or 2009, when Mr Obama corralled the banks and bailed out Detroit, America today is not in crisis. Mr Trump’s meddling is thus likely to be the new normal. Worse, his penchant for unpredictable and often vindictive bullying is likely to be more corrosive than the handouts most politicians favour. + +If this is the tone of the Trump presidency, prudent businesses will make it their priority to curry favour with the president and avoid actions that might irk him. Signs of this are already evident in the enthusiasm with which top CEOs—many of them critics of Mr Trump during the campaign—have rushed to join his new advisory board. Helping the Trump Organisation or the Trump family might not go amiss either. The role of lobbyists will grow—an irony given that Mr Trump promised to drain the Washington swamp of special interests. + +The costs from this shift may be imperceptible at first, exceeded by the boon from economic stimulus and regulatory reform. And as president of the world’s largest economy, Mr Trump will be able to ride roughshod over firms for longer with impunity than politicians in smaller places ever could. But over time the damage will accumulate: misallocated capital, lower competitiveness and reduced faith in America’s institutions. Those who will suffer most are the very workers Mr Trump is promising to help. That is why, if he really wants to make America great again, Mr Trump should lay off the protectionism and steer clear of the bullying right now. + +This article appeared in the Leaders section of the print edition under the headline “America’s new business model” + + + + + +Veil fail + +Angela Merkel’s promise to ban the niqab is a mistake + +With few exceptions, Muslim women should be allowed to dress as modestly as they like + +Dec 10th 2016 + + + +ANGELA MERKEL, Germany’s chancellor, is often seen as the West’s last best defender of the liberal order against a tide of populism. She is likely to win re-election next autumn, but faces a challenge from the anti-immigrant Alternative for Germany. So Mrs Merkel needs to buck up her own party, the centre-right Christian Democratic Union, which is disillusioned with the “welcome culture” for refugees that she has promoted. Speaking to party delegates on December 6th, Mrs Merkel promised that the events of 2015, when 890,000 refugees claimed asylum in Germany, “can, shall and must not be repeated”. She vaunted her government’s European values of sexual equality and religious tolerance. And, in a line that drew long applause, she added that “the full veil is not appropriate for us, and should be banned wherever legally possible.” + +There is a contradiction in Mrs Merkel’s embrace of liberal values and her vow to ban the full veil, known variously as the niqab or burqa. Wearing it is regarded by some Muslims as a religious duty for women when in public. A ban infringes the freedom of religion. It is also unenforceable, polarising and serves to pander to populists. + +When to lift the veil + +Like many other rights, religious freedom is not absolute. Sometimes the state has good reasons to require people to show their faces: at passport controls, for example, or if they are working as, say, social workers or teachers. For security reasons, Germany already bans ski masks and other facial coverings in public demonstrations. Yet Mrs Merkel did not speak in such limited terms. She proposed the ban as a means of preventing the development of “parallel societies” as Germany tries to assimilate its Muslim immigrants. Forbidding religious dress worn by only a tiny fraction of those immigrants is the wrong way to accomplish this. + +Some argue that the niqab (as well as less concealing forms of Islamic dress) is a form of oppression. Muslim women, they say, are forced to wear the veil by family members—typically their husbands, fathers or brothers. That may be true in some cases. Yet a ban might simply prevent those niqab-wearing women from leaving the house at all. Other women may choose to cover their hair or faces out of piety, or because they dislike being ogled, or to affirm their Muslim identity. Governments concerned about the subjugation of Muslim immigrant women would do better to concentrate on integration and education schemes. + +Europe’s fad for such bans is driven chiefly not by principles, but politics. France introduced a burqa ban in 2010; some municipalities even tried to prevent Muslim women from wearing the body-covering “burqini” at the beach last summer. Such measures only invite extremists to paint France as an enemy of Islam. Last month the Netherlands adopted a ban on face-covering garb in education and health-care establishments, government buildings and public transport. In both cases, the real motive was to fend off the rise of anti-immigrant parties, such as Marine Le Pen’s National Front in France and Geert Wilders’ Party for Freedom in the Netherlands. + +If centrists like Mrs Merkel now see burqa bans as minor concessions to hold off populists, they are fooling themselves. Those who want to ban veils are not worried about security but about immigration and integration. To them, limited bans confirm only that mainstream politicians are too timid to embrace the real thing. Some of them worry legitimately that Muslim immigrants do not share Europe’s liberal norms. But the best way to preserve those freedoms is to let women dress as modestly as they please. + +This article appeared in the Leaders section of the print edition under the headline “The freedom to dress modestly” + + + + + +After Renzi + +Italy must pick up the pieces after Matteo Renzi and his failed referendum + +The prime-minister who led Italy into a political crash has resigned. How to choose the next government + +Dec 10th 2016 + + + +ITALY’S outgoing prime minister goes by the name of Il Rottamatore, or “Demolition Man”. By gambling on a deeply flawed constitutional referendum, which he lost by a humiliating 20-point margin on December 4th, Matteo Renzi now risks wrecking Italy’s fragile politics and economy. + +Many see his defeat as yet another eruption of populism, after the Brexit vote and the election of Donald Trump. Granted, anti-establishment parties spearheaded the No camp. But many Italians rightly rejected Mr Renzi’s amendment to protect existing democratic norms, not to smash them. + +This newspaper supported a No vote. We thought Mr Renzi’s attempt to emasculate the powerful Senate, combined with a lopsided electoral law for the Chamber of Deputies, would have concentrated too much power in the hands of the prime minister—who, coincidentally, is one Matteo Renzi. Now that Italians have rejected this scheme, the Italian president and parliament need to set Italy on a course to tackle its underlying problem: the need for deep reform of the country’s long-stagnant economy. That, in turn, depends on two urgent tasks: maintaining economic stability in the aftermath of the No vote and rebuilding the legitimacy of Italian institutions. + +Italy’s finances are fragile. Public debt is above 130% of GDP and the banks are laden with festering loans. Whatever happens in politics over the coming months, Italy must above all avoid a financial crisis, which could spill over disastrously into the euro zone. This means that the government will have to keep its deficit under control even as it recapitalises Monte dei Paschi di Siena and other struggling banks—using the private sector if possible or with state funds if necessary (see article). + +Financial stability is a condition for work to begin on the second task: sorting out the mess in Italy’s politics (see article). The country has had 65 governments since the end of the second world war. It has had three prime ministers since Silvio Berlusconi’s government in 2011—Mario Monti (he served 17 months), Enrico Letta (ten months) and Mr Renzi (33 months). All were put into office through presidential crisis-management or by political intrigue, not by voters. + +Mr Renzi sold his reforms in the name of strong government. Before the referendum on the Senate, his government passed a separate electoral law for the lower chamber, called the “Italicum”. It concocts a guaranteed majority for whichever party nudges ahead after two rounds of voting. Strong majorities make it easier for governments to withstand votes of no confidence. But long tenure is no guarantee of good government, as Mr Berlusconi proved. Although the consitutional amendment was defeated, the electoral law remains in force. The constitutional court will rule on its validity next month. + +Mr Renzi could in theory stay on to manage the transition to fresh elections under the existing system. Sure enough, having firmly announced his resignation, he seems to be clinging on to the hope of running a caretaker government that would rush to elections in February under today’s rules (perhaps amended by the court) or a unity government. + +The president, Sergio Mattarella is wisely resisting a hasty election. The referendum was a stinging personal rebuke to Mr Renzi and, in effect, discredits the electoral law, too. If Mr Renzi thinks he can turn the 40% who voted Yes into a turbocharged parliamentary majority, it is just as likely that the 60% of No voters will instead propel the populist Five Star Movement to power. That is why its leader, Beppe Grillo, who once decried the electoral law, also wants early elections. Because Mr Renzi assumed the referendum would abolish Senate elections, right now the ballot for the upper chamber would have to be held under an old electoral law likely to produce a hung Senate, which would further hamper reform. + +Rather than forming a new government on the basis of dubious rules, it is essential that the Italian parliament revise the electoral law, so that a credible vote can be held as soon as possible—ideally by next summer. All voting methods have drawbacks, particularly in the fragmented politics of Italy. The best option would be to revive the law devised in 1993 by the man who is now president, Mr Mattarella. The “Mattarellum” was modelled on British-style first-past-the-post contests, creating a clearer connection between voters and their representatives than the existing party-list system. + +Basta casta + +Until then Italy needs a caretaker government led by the likes of Pietro Grasso, a respected former anti-mafia magistrate, or Pier Carlo Padoan, the finance minister (who, if not prime minister, should stay in office to deal with euro-zone partners on tricky fiscal and regulatory matters). The much-feared financial meltdown after the No vote has been averted, but Italy cannot afford to dawdle. In the long run the only route to solving its mess is a popular vote that serves as a mandate for the arduous task of reform. + +This article appeared in the Leaders section of the print edition under the headline “Salvaging the wreckage” + + + + + +Homework for all + +What countries can learn from PISA tests + +The latest survey of international education should spur politicians to reform their countries’ schools + +Dec 10th 2016 + + + +IT IS easy to be cynical about school-test results, particularly when you are grading the performance of something as complex as a country’s education system. Undaunted, every three years the Programme for International Student Assessment (PISA), which is run by the OECD club of mainly rich countries, tests more than half a million 15-year-olds in three subjects—maths, reading and science—to give a snapshot of national school-policies. + +The latest results were published on December 6th and again show stellar achievement in East Asia. Singaporean pupils are roughly three years ahead of American ones in maths (see article). Some argue that differences in national scores are a result of parenting and innate culture, and therefore that policymakers can do little to improve pupils’ performance. Last week one wag argued that the lesson from PISA is that the rest of the world should use chopsticks. In fact, PISA offers invaluable guidance on how to help children learn. + +Culture matters, but it is not as if success in PISA is the preserve of East Asia. Estonia, where chopping sticks is an outdoor pursuit, scores highly enough to beat the rest of Europe and achieves similar results to Japan. + +PISA teaches what does not work. Spending more money, for example, is associated with higher scores, but only in poorer countries. Among those that already spend more than $50,000 per pupil throughout their time in school, money alone brings no improvement. Private schools are no exception, at least when it comes to PISA. + +The exercise also tells you what does work, and its most important insight is that what matters most is what happens in the classroom. The successful children are those who are exposed to good teaching more often. Having pupils turn up is a start. In poor countries this often means expanding access for girls. In richer countries it means cutting dropout rates and truancy; Italian pupils do poorly partly because more than half of them skip school at least once a fortnight. Having teachers turn up also helps. One reason why Buenos Aires saw the biggest rise in PISA scores of any area is because the city curbed teachers’ strikes by offering them a deal: it would treat teachers as professionals if they behaved as such. The city improved training and pay. Teachers agreed that merit, not their unions, would determine promotion. Improving the quality of teaching is harder. Who becomes a teacher makes a difference. Australia’s decline in PISA coincides with a fall in the exam results of teacher-training applicants. And what teachers learn about the job is at least as important. Evidence-based methods of instruction, practice, coaching from experienced teachers and feedback are all part of making good teachers. + +Poor students tend to do less well in PISA. But the effects of poverty can be overcome. The influence of family background on test scores fell by more in America than in any other OECD country over the past decade. This partly reflects the growth of excellent autonomous but publicly funded charter schools in big cities. Successive presidents’ efforts to hold schools accountable have had some impact, too. In Estonia nearly half the poorest children achieve results that would place them in the top quarter across the OECD. A reason for this is a lack of selection by ability. Many of the top-performing school systems delay the start of formal education until the age of six or seven, focusing instead on play-based education. But they then make students learn academic subjects until about 16. Even in Singapore, where pupils can opt earlier for a vocational track, schools insist on academic rigour as well as practical work. + +Concentrate there at the back + +Like spoilt children who have failed an exam, some policymakers claim the PISA tests are unfair. Certainly, PISA does not capture all of what matters in education. It offers clues rather than guarantees of what works. It is the fair, rigorous and useful work of technocrats. Yet politicians who ignore it are turning their back on powerful truths. + +This article appeared in the Leaders section of the print edition under the headline “Homework for all” + + + + + +Beyond OPEC + +Big Oil should prepare for the lash of market forces + +Despite a recent deal, OPEC’s power is fraying + +Dec 10th 2016 + + + +A MOOD of excitement has gripped the oil industry since OPEC, a cartel of producers, resorted last month to its old trick of rigging the market to shore up prices. After two years of crisis, firms at last scent an end to cheap oil. Bankers are again throwing money at North American oil companies to drill in onshore shale beds, pushing junk-bond yields to their lowest levels since 2014. On December 5th and 7th respectively, Mexico and Iran struck potential deals with some of the world’s biggest oil firms to develop vast prospective oilfields. + +The animal spirits are understandable. During most of the industry’s history, from the days of the Rockefellers, to the post-war dominance of the Seven Sisters, to OPEC since the 1960s, cartel-like behaviour has always ended up underpinning oil prices. This has encouraged a flabby complacency that other industries cannot afford. Oil firms have routinely squandered returns in pursuit of big projects with distant payouts, in the expectation that sooner or later high prices would bail them out. OPEC’s intervention seems to hint at a return to this pampered normality. In fact, to control the oil market is harder than ever. And that means Big Oil must shape up to survive. + +For sure, OPEC is not dead yet. Its agreement on November 30th to lop 1.2m barrels a day (b/d), or over 1%, off global production, had a dizzying effect on oil prices, lifting them by about 15%. If it can secure from Russia and other non-OPEC producers a pledge to cut a further 600,000 b/d at a meeting scheduled for December 10th, OPEC will have more leeway to cope with the habitual cheating that undermines all such deals. Yet the cartel is riven with rivalries. Saudi Arabia was only able to rope its foes like Iran into a deal because the alternative—a further collapse in oil prices—was unpalatable. Even by OPEC standards, jealousies and suspicions are intense. That will make it harder to police the accord. + +In the meantime, the surge in oil prices has set off a game of chicken between the old guard, as represented by Saudi Arabia, Russia and the like, and American shale producers, who can swiftly ramp their activity up and down. Since the OPEC deal, shale firms have used liquid financial markets to lock in future oil sales at prices above $50 a barrel, giving them some scope to raise production and potentially offsetting the cartel’s cut. These firms are egged on by Wall Street, which sees shale as a growth industry—especially under a Trump presidency—even if only the best wells make a profit at $50 a barrel, and the rest barely break even. + +Bigger changes loom. Competition for hydrocarbons from wind and solar energy and batteries is intensifying. On December 6th Google, an internet firm, said its data centres and offices would become fully powered by renewable energy next year. Even without American leadership, measures to mitigate climate change will put extra pressure on oil demand. The prospect of “peak demand” means that decades-long projects such as those in the Gulf of Mexico or Iran have to be profitable even if oil prices stay low. Hence the industry must learn to prioritise higher returns over extra barrels of output. + +Refine your model + +The good news is that this can be done. The industry can raise profitability by drilling in areas it knows well, rather than remote provinces that lack infrastructure, and by drawing down existing reserves rather than constantly trying to replenish them. It can learn from lean manufacturing and logistics processes in other industries (see article). BP, which is trying to change its habits, admits to having $3bn of inventory, such as drillbits and steel pipes, in 270 warehouses; no automotive company would tolerate such waste. Oil firms can use even more data and technology to keep tabs on their wells, rather than high-priced engineers in hard hats. + +The bad news is that mindsets have yet to change, from the top of a hidebound industry to the bottom. The majors are not used to focusing on profitability. Even as oil prices soared in 2009-14, Big Oil’s returns trailed those of the broader stockmarket by an average of more than ten percentage points a year. Now firms must learn to thrive even when the backdrop is less favourable. OPEC can distort market forces, but it cannot hold them back. + +This article appeared in the Leaders section of the print edition under the headline “Shape up” + + + +Letters + + + + + +Letters to the editor: On Hong Kong, Peru, Indian-Americans, nationalism + + + + + +Letters to the editor + +On Hong Kong, Peru, savers, Indian-Americans, nationalism + +Dec 10th 2016 + +Letters are welcome via e-mail to letters@economist.com + + + +Hong Kong at a crossroads + +Make no mistake. The battle going on in Hong Kong’s courts is not a dry legal issue about whether two young lawmakers took their oaths properly and should therefore be permitted to take their seats in the Legislative Council (“Nipped in the bud”, November 19th). The opportunistic attempt to try to ban legislators by judicial means, supported by a lightning-quick interpretation of the Basic Law, was taken by Hong Kong’s chief executive and the people he answers to. + +We are at a dangerous moment. A drive may be on to rid Hong Kong of independence advocates. When that goal has been achieved, probably through more court judgments and interpretations, the focus will switch to other inconvenient viewpoints. Perhaps it will be issue-specific, such as opposition to national education, or resistance to security legislation, or maybe it will be a more general antipathy towards democratic and liberal ideas. + +Hong Kong could go down the authoritarian-lite route, with a democratic façade but where you risk being sued for expressing contrarian views, leading to self-censorship, or it may be headed towards full-blown suppression. Whichever route the government takes, polarisation has already set in, between those in Hong Kong who hold themselves out as loyalists, or think it is expedient to do so, and those who hold liberal, democratic values. It is as palpable as it is disturbing. People do not discuss this at home or with colleagues unless they know it is safe to do so. + +I wonder if peaceful street demonstrations would now be enough to stop a government which appears so determined to eliminate dissent. Perhaps the time has come to find out, so that people can make up their minds about whether they will continue to invest their lives in this wonderful place or head to sunnier or snowier climes elsewhere. + +CHARLES ALLEN + +Hong Kong + + + + + +Indians in America + +Your review of a book on how the Indian diaspora has thrived in America presented Indian immigration as a win-win for both countries (“A model minority”, November 26th). The vast majority of those who hold a H1-B visa in America come from India. For employers, it is a cheaper and easier alternative to hiring American workers. But although the H1-B category is often listed as being for speciality technology workers, most of the visaholders are ordinary people doing ordinary work. Any American high-school graduate with a few months of training could do the same work as those with a H1-B visa. + +This distorts the labour market because companies would have otherwise invested in American workers. The other distortion is in federal contracts earmarked for small businesses with ethnic-minority owners. The idea was to open contracts to groups who have been historically discriminated against, but Indian-Americans are also eligible. + +NIRAJ SHRESTHA + +Ashburn, Virginia + + + + + +Peru’s president + +Bello states that Carlos Moreno was my former doctor (November 12th). He was never my doctor. + +PEDRO PABLO KUCZYNSKI + +President of Peru + +Lima + + + + + +Save yourself + +* Buttonwood (November 19th) described research analysing the prospects for today’s 401,000 savers. The authors of that study argue that future asset returns are likely to be low, and therefore savings rates, as they stand today, are insufficient to meet the 75% income replacement goal that retirees need. They made two key assumptions that we believe materially understate the prospective rate of income replacement. + + + +They assume a constant real income growth rate of 2%. In reality, annualised real wage growth is closer to 1% and is characterised by rapid increases in the early years, followed by a flattening as a worker gets older. The difference in the final wage is significant. Reducing wage growth down to a more realistic level results in an increase in the typical worker’s income replacement rate of 17%. + + + +The study also expects that at retirement a worker “annuitises” his or her wealth over a 25-year period. However, according to the Social Security Administration, the life expectancy of a 65-year-old is 18 years for a male and 20 years for a female. As such, the authors’ calculation assumes that a typical worker needs five more years of income than they’re expected to actually require. Reducing the expected duration of retirement, by either using current mortality or delaying retirement as mortality improves, results in an additional increase in the income replacement rate by roughly 7%. Adding this to the 17% yields a 24% improvement in retirement income relative to the authors’ calculation. + + + +At PIMCO we agree that prospective returns are likely to be much lower than history would indicate, and that this implies higher necessary savings rates. However, we also believe that the future is not so dire. Using more accurate salary growth and life expectancy assumptions implies a materially higher quality of life for retirees than the authors’ research indicates. + + + +The clouds may be ominous and the sky grey, but it is not falling. + + + +JIM MOORE + +Managing director + +Head of Investment Solutions Group + + + +STEVE SAPRA + +Executive vice-president + +Client Analytics Group + +PIMCO + +Newport Beach, California + + + + + +A liberal nationalism + +The distinction you made between civic and ethnic nationalism was a bit simplistic (“The new nationalism”, November 19th). Proactive civic nationalism unfortunately shares some of the iniquitous elements traditionally associated with ethnic nationalism, namely the framing of something within society as malign and foreign, and then rallying patriots against that presence or influence. + +In the case of Scottish nationalism, Tories and Westminster serve as the existential threat. Similarly, many Brexiteer Conservatives would claim to be civic nationalists even as they go about manipulating patriotism to rally people against the European Union and immigration. Energetic civic nationalists also have a tendency to conflate an attack on their politics as an attack on the nation. + +A modern, liberal approach should be accepting of multilayered sovereignty, identity and nationhood, and should at most advance a type of soft cosmopolitan patriotism which never goes as far as nationalism. If we are to alter where the lines are drawn at all we should be looking to reach out instead of retreating in. For me that means I can identify as a Scottish Borderer, a Scot, a Brit and a European. Civic nationalism demands that I elevate only one of those in political and identity terms. + +JOHN FERRY + +Chair + +Midlothian South, Tweeddale and Lauderdale Liberal Democrats + +Scottish Borders + +I do not think that “German support for the home team as hosts of the 2006 World Cup” can be extended as an example of good nationalism. People generally do not support national teams because it “appeals to universal values, such as freedom and equality.” By definition, nationalism cannot appeal to anything universal. + +Nationalism appeals to our innate sense of being part of a group with shared values and shared culture. Nor can it be “forward-looking” in the way you describe it, as shared values and culture are necessarily largely based on the past. That culture can progress, but only with the consent of the group. Nor is nationalism new or been recently revived. Since the second world war, we have seen nationalism everywhere, in the dismemberment of colonial empires, the break-up of the Soviet Union and Yugoslavia and the continued pressure from Scottish, Basque, Catalan and other nationalists for independence. + +In addition, elites have embraced some nationalists while demonising others. A simple example is the derisory treatment meted out to the English “white-van man” bearing his flag of the cross of St George, compared with the encouragement given to aggressive Scottish nationalists flying the Saltire. It is this hypocrisy and moralising that drives so much division, not nationalism per se. + +TIM HAMMOND + +London + +* Arnold Toynbee once said that nationalism is “a sour ferment of the new wine of democracy in the old bottles of tribalism”. + +GEOFFREY SNOW + +Golden, Colorado + +In an essay published in 1939, “The Economic Conditions of Interstate Federalism”, Friedrich Hayek envisaged a European federation that looks remarkably like today’s EU, and warned that nationalism would be the force with the power to destroy it. + +HANNAH COPELAND + +London + + + +Regarding your cover on the new nationalism, any seasoned drummer over the age of 60 will tell you that Donald Trump and Nigel Farage are holding their drumsticks backwards; that is, each holds his right stick with a left-handed grip, and his left stick with the right-handed grip (please feel free to check with Charlie Watts for verification). + +Regardless of whether or not this juxtaposition was intentional, it does indicate the direction in which these politicians want to march their respective countries. + +DONALD FREY + +Omaha, Nebraska + +* Letters appear online only + +This article appeared in the Letters section of the print edition under the headline “On Hong Kong, Peru, Indian-Americans, nationalism” + + + +Briefing + + + + + +Business in America: Dealing with Donald + +American corporatism: Chairman president + + + + + +Dealing with Donald + +Donald Trump’s trade bluster + +Whatever he thinks, dealmaking won’t help Mr Trump’s trade negotiations + +Dec 10th 2016 + + + +IN A YouTube video released on November 22nd, Donald Trump—seated in front of an American flag and a leonine statue—confirmed his plan to put America first, “whether it’s producing steel, building cars or curing disease”. Mr Trump has already arm-twisted Carrier, a maker of airconditioning units in Indiana, to keep 800 jobs in the state rather than move them to Mexico. His transition team is preparing a list of “executive actions we can take on day one to restore our laws and bring back our jobs”. Implicit in the video was Mr Trump’s view of international trade: a patriotic contest in which countries strive to take each other’s jobs—or seize them back. + +In Mr Trump’s view of the world, trade deals are adversarial and zero-sum. Other countries are rivals competing for the same spoils, not trading partners enjoying mutually beneficial exchange. His plans to scupper the Trans-Pacific Partnership (TPP), a deal painstakingly negotiated over ten years with 11 other countries around the Pacific Rim, tally with Mr Trump’s reading of history. Too often, he thinks, bad deals, like the North American Free-Trade Agreement (NAFTA) and China’s accession to the World Trade Organisation (WTO), have destroyed American jobs and created American losers. + + + +For Mr Trump, evidence of this pilfering lies in America’s trade deficit, which is most dramatic for goods (see chart 1). “China is both the biggest trade cheater in the world and [the] country with which the US runs its largest trade deficit,” wrote Wilbur Ross, Mr Trump’s pick as commerce secretary, and Peter Navarro, a senior adviser to his campaign, in September in a description of the next president’s economic plan. Mr Ross has said he wants to “spread the trade-deficit issue around the globe”. + +The trade misery that Mr Trump laments is recognisable to Nate LaMar, a sales manager at Draper Inc, which makes window shades, projector screens and gym equipment. He remembers his home state of Indiana being hit hard by job losses as the car and steel industries collapsed 15-20 years ago. Even in his own company, it “felt like we were floating down a river towards a waterfall”. Chinese competition encroached on their export orders first, and then their domestic customers, flooding the bottom end of the market with cheap imports. + +No one knows exactly what President Trump’s trade policy will look like—perhaps not even Mr Trump himself. His alarm about foreign competition, and his suspicion of trade deals, runs deep in his rhetoric, permeating his stump speeches. But even many of his supporters hope that he will stop short of some of his more radical campaign pledges. Mr LaMar is one of them. “I’m hoping cooler heads will prevail,” he says, naming Mike Pence, the vice-president-elect and a free-trade advocate. + +Many of Mr Trump’s picks suggest radicalism, however. According to a transition-team press release, Mr Trump’s cabinet choices “signal a seismic and transformative shift in trade policy”. His personnel hint at an aggressive stance against Chinese steel in particular. The transition team includes Dan DiMicco, former boss of Nucor Steel, and Robert Lighthizer, a trade lawyer who has built a career arguing for higher steel tariffs, and is known in trade-policy circles as “the most protectionist guy in Washington”. + + + +If hotter heads do win out, how far might Mr Trump go? Protectionism around the world is creeping up (see chart 2 ). But if Mr Trump follows through on his promises, that trend will be turbocharged. He has threatened to withdraw from NAFTA (“the worst trade deal maybe ever signed anywhere”, he insists). On December 4th he tweeted that there would be a tax of 35% on firms that fired employees, built a factory in another country and then tried to sell their products back across the border. He plans to label China as a currency manipulator on his first day in office and has threatened tariffs of 45% on its products. + +Many foreigners blithely assume that America’s system of checks and balances will stymie Mr Trump’s more radical tendencies. But for trade, those checks and balances are weak. The president would have huge power to carry out his threats, at least in the short term. Under the Trade Act of 1974 he could impose quotas or a tariff of up to 15% for up to 150 days against countries with large balance-of-payments surpluses (which modern courts would probably interpret as the current-account surplus). And if Mr Trump were to declare a state of national emergency, the scope of his presidential power would extend to all forms of international trade. + +Never settle + +Mr Trump’s actions could eventually be challenged in American courts. Plaintiffs might claim that he was violating constitutional freedoms or defying the original intention of the laws he would invoke. But Mr Trump may have the legal upper hand. American courts may not intervene to stop a trade war. America’s multilateral trade agreements are also more fragile than they appear. To renegotiate NAFTA, Mr Trump would require approval from Congress. To withdraw from it altogether, he would simply have to give the other partners six months’ notice. + +After America’s formal departure, its NAFTA commitments would live on, enshrined in the domestic legislation that implemented them. But those commitments need not restrain a determined president. After merely “consulting” Congress, he could abandon NAFTA’s (mostly) zero duties and instead impose the WTO’s “most favoured nation” tariff rates on Mexican imports, according to Gary Hufbauer of the Peterson Institute for International Economics, a think-tank. For clothing and footwear, these tariffs are high. But on average, they are low: only 3.5%—not very satisfying for a budding trade warrior. He could avail himself of much tougher tariffs by accusing Mexico (or indeed China) of various kinds of cheating: such as subsidising their exports illegally or dumping products on the American markets below cost. Mexico or China could appeal to the WTO, but that would take time. The WTO’s dispute-settlement mechanism is weighed down by a backlog of cases. + +If Mr Trump did impose tariffs of 35-45%, the Mexican and Chinese governments would not wait for the WTO’s courts to intervene. They would retaliate. China could cancel contracts with the likes of Boeing, an American plane manufacturer, or disrupt Apple’s supply chain. China is a big customer for some American products. It accounted for roughly 60% of America’s soyabean exports between 2013 and 2015. In a trade war, it could cut these purchases. + +After economists at the Peterson Institute highlighted this possibility, team Trump dismissed the analysis as “project fear”. “If China cuts off American farmers, Chinese people will go hungry,” they scoffed. But other countries, such as Argentina or Brazil, produce soyabeans. Switching could be relatively straightforward. + +As well as blocking American goods at its borders, China could squeeze the many American firms operating within them. General Motors and its affiliates, for example, sold 372,000 cars in China in November, compared with just 253,000 in its domestic market. In Mr Trump’s own words: “leverage: don’t make deals without it.” + +Imposing a punitive tariff on American firms operating in Mexico would be even more disruptive. Under NAFTA, companies have sprawled across the border. “We make things together in North America,” says John Weekes, Canada’s original NAFTA negotiator. Every dollar of Mexican exports to America contains around 40 cents of American output embedded within it. Tariffs of the level that Mr Trump suggests would be so disruptive that Luis de la Calle, a Mexican economist, doubts that they are credible. When it comes to car production, “you cannot run a plant in Michigan without Mexican imports,” he says. + +If Mr Trump were to press ahead with his tariffs, the Mexican authorities would first try to find a smart response. They have had some practice. After years of the Americans failing to allow Mexican lorries to cross the border as easily as NAFTA stipulated, in 2009 the Mexicans imposed duties on, among other things, Christmas trees from Oregon. Not coincidentally, the state’s congressional delegation includes a member of the transportation committee. But in an escalating trade war it would be hard to pick a duty that would not backfire. If Mexico stopped importing American car parts, for example, it would hurt its own assembly lines. Retaliation might take unconventional forms. Turning a blind eye to outgoing migrants could rile Mr Trump more than duties on American goods. + +Most tariffs backfire, hurting the country that imposes them by raising prices, blunting competition and depriving consumers of choice. In September the Peterson Institute predicted that a symmetric trade war, in which Mexican and Chinese imposed equal tariffs on American exports as America did on their exports, would ripple through the American economy, lowering private-sector employment by nearly 4.8m, or more than 4% by 2019. + +Despite domestic and international restraints, Mr Trump would, then, be fully able to start a ruinous trade war. But would he be willing to do so? It could be that his threats to tear up trade agreements and raise tariffs are simply bargaining chips, designed to force governments to the negotiating table. In his book, “The Art of the Deal”, Mr Trump explained that his style of dealmaking is quite simple. “I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after.” + +Volunteer, or else + +What, then, is he after? In his approach to trade dealmaking, Mr Trump might take inspiration from history. When Ronald Reagan was faced with a big trade deficit with Japan, he browbeat Japan’s carmakers (among others) into restraining their exports “voluntarily” (see article). But life was simpler under Reagan. He could negotiate with a handful of Japanese firms that made their goods in Japan and sold them in America. Today, parts and components criss-cross borders and a great deal of trade happens within firms. “The information you need to have to be able to act strategically seems to me to be daunting,” says Chad Bown, a trade expert. Reagan’s tactics also had unintended consequences. With only a fixed number of cars to sell, Japanese producers innovated and moved into more profitable higher-end products. + +Mr Trump is keen to increase exports and not just block imports. Indeed, his team may see the threat of import tariffs as a means to prise open foreign markets. Mr Ross believes that China, Japan and Germany should import more liquefied natural gas from America, rather than the Gulf. He also believes that China should relax its import quotas for cotton (although why China would add more imports to its mountain of surplus cotton is not clear). + +The Trump team’s approach also seems distinctively granular, hands-on and micro-managerial. They are happy to pursue specific commercial outcomes, rather than creating fruitful commercial frameworks. Instead of writing the rules of the game, within which companies are free to make choices, they seem keen to negotiate the outcome of the game: additional cotton exports to China, greater LNG sales to Japan, more Carrier jobs in Indiana. + + + +In their view, the success of these deals is measured by the trade balance that results. Trade deficits are intrinsically bad, they seem to think—a sign the country is losing. Part of the issue is the way trade figures are calculated. Mr Trump is right to point out that Chinese exports account for a large and rising share of America’s total trade deficit in goods. But China’s status as the world’s factory means that much of the value embedded in those exports is in fact coming from America itself. An iPhone shipped from China to America contributes to the Chinese trade surplus, but also Apple shareholders’ bank balances. According to Deutsche Bank, on a value-added basis, China accounts for only around 16.4% of America’s trade deficit in goods (see chart 3). + +Whether trade deficits are good or bad, trade deals are best seen as a way of raising trade flows in both directions, rather than an instrument for turning deficits into surpluses. According to mainstream economics, a country’s overall balance of trade is more powerfully influenced by macroeconomic forces, such as the strength of demand and the currency. Targeting a bilateral deficit using bilateral tariffs is “a terrible idea”, says Douglas Irwin, author of “Free Trade Under Fire”. But more targeted options exist. A tough stance on Chinese steel is more justifiable than a general crackdown on imports, for example. “It’s crystal clear that China is subsidising their steel industry,” says Mr Irwin. + + + +The Obama administration has already been cracking down: between 2013 and 2015 it initiated 74 anti-dumping investigations into metal products from a variety of countries. On November 7th it found China guilty of dumping certain types of plate steel at more than 68% below cost. On December 11th tension could increase further, as on that day China will claim that their transition to a “market economy” will be complete under WTO rules, reducing their exposure to anti-dumping duties. These investigations are already having a chilling effect on steel imports from China (see chart 4), which fell by 70% in the first half of 2016, compared with a year earlier. Mr Trump may even find himself behind the curve—or claim the credit. + +There are some sensible things Mr Trump could do. If his team did want to boost American exports, he could lift some ideas from the US Trade Representative’s annual document outlining barriers around the world. He could focus on lowering barriers to American exports of raw milk to Mexico and chicken to China, both of which have imposed health-related import restrictions. On services, where America boasts a trade surplus, a deal to tackle burdensome licensing and discriminatory regulatory process could boost exports. + +In theory, renegotiating NAFTA would also be no bad thing. The Mexicans would welcome new rules on logistics and e-commerce, which did not exist when NAFTA was first negotiated. Although he cautions that any renegotiation would take time, Mr Weekes says that the evolution of global supply chains warrants an update to the agreement’s rules-of-origin regulations. + +Mr LaMar would certainly prefer a more constructive approach. His job, after all, is to sell his firm’s products around the world. Those small and medium-sized firms that survived the onslaught of Chinese competition did so by diversifying and expanding abroad. He can take comfort from the words of Robert Zoellick, an American trade negotiator under George W. Bush. “Unusually for a US president, Trump’s words may or may not convey policy. We’ll have to watch what he does, not what he says.” + +This article appeared in the Briefing section of the print edition under the headline “Dealing with Donald” + + + + + +Chairman president + +Corporatism’s long history in America + +The tradition of politicians intervening in business + +Dec 10th 2016 | New York + + + +A MAN with a background in business, running on a platform of lower taxes and protective tariffs, is elected president of America. He views this as a mandate to intervene in corporate affairs. Bosses are told what their priorities ought to be: more jobs and higher wages. This may sound like Donald Trump, already successful in persuading Ford, a carmaker, and Carrier, an air-conditioning company to keep jobs in America even before his inauguration. It also describes Herbert Hoover. In 1929, soon after he was sworn in, Hoover called executives to the White House for some “jawboning”. For intervening in business from a position of authority has a long tradition in American politics. + +The desire to meddle dates as far back as 1791. Alexander Hamilton then set out arguments for nurturing and protecting “infant industries”. Any restraint was in part because the federal government lacked the resources and authority to do so. Individual states, however, took on the role with gusto. By 1840 they had lent and invested themselves into the red, prompting laws preventing future intervention. Almost all, says Naomi Lamoreaux of Yale University, were rescinded in the 20th century as the memories of failures faded while the desire to intervene remained. + +States now compete furiously for business. Firms shop around for the most favourable subsidies when deciding where to locate headquarters, factories or sports teams. Carrier’s decision to stay in Indiana was assisted by the promise of hefty tax exemptions. New York has allocated billions of dollars to encourage tech firms to set up in depressed areas of the state. + +Presidents have also long attempted to shape corporate activity using any means at their disposal. Carrots are dangled and sticks wielded. Shame and praise, broad rules and one-off deals, startup funds and nationalisation have all played a part. The result has been an often-fractious relationship between business and government. Mr Trump’s interventionist instincts may differ only by degree. + +The federal government’s largesse towards business began in the latter half of the 19th century with the railways, which cut across state boundaries. Early intercontinental lines received federal loans and large land grants in the West. The irresistible urge to oversee parts of the economy meant that in the 20th century handouts turned to direct management. In part this was driven by national emergency. Woodrow Wilson, under laws passed to support involvement in the first world war, nationalised railways, canals, telegraph lines and arms production, and expropriated American subsidiaries of German firms. Franklin Roosevelt used the same law to shut banks briefly upon his assumption of the presidency in 1933. + +Roosevelt had previously observed Hoover’s hands-on approach to business with disdain but his reservations were transient. Intrusiveness is popular because it yields immediate results. Hoover’s jawboning had persuaded Henry Ford to raise salaries at his car plants, utilities to invest, and companies not to cut jobs. To boost wages, Hoover curtailed immigration. To protect businesses he signed the Smoot-Hawley Act, increasing duties on thousands of imports from beverages and wool to tungsten and clocks. + +Train of thought + +After unseating Hoover, Roosevelt busily issued regulations and told businessmen how to conduct their affairs, pausing only when the Supreme Court ruled that there were limits to federal power over intrastate commerce in a case that challenged the administrations’ power to block customers from buying the chicken of their choice. + +The enthusiasm for meddling survived other presidential transitions. Roosevelt’s successor, Harry Truman, seized 28 enterprises, including meat packing, railways and oil refiners, often in response to labour disputes. This behaviour only ended in 1952 when nationalisation of the steel industry to preclude a strike was blocked by the Supreme Court, which said Truman needed congressional support. + +Direct control is not the only way to use the power of the presidency. The bully pulpit can be even more effective. The era of explicit bullying began with Teddy Roosevelt, who lambasted the men behind large corporations as “malefactors of great wealth” and launched antitrust prosecutions. But the most famous use of the presidency to berate firms came in 1962. + +Stung by an announcement of steel-price increases, John Kennedy sermonised rather than nationalised. He blamed “a tiny handful of steel executives whose pursuit of private power and profit exceeds their sense of public responsibility…[and]…shows such utter contempt for the interests of 185m Americans”. Facing a public backlash and after visits from the FBI, to check of their expenses, the steel bosses caved in. A decade later Richard Nixon went further. In response to a “real and pressing problem of higher prices”, he froze all wages and prices. + +American presidents can hand out favours as well as harsh words. In 1962, when France and Germany imposed duties on American goods, including chickens, Lyndon Johnson responded by imposing a tax on imported pickup trucks. This resulted in a lucrative part of America’s vehicle market being produced almost entirely domestically. Carmakers sought favours again in the early 1980s, from Ronald Reagan. He imposed “voluntary” export restraints on Japanese carmakers. They responded by building factories in America. + +The arrangements between government and business have become more complex in recent years, as broader policy replaced specific interventions. Bill Clinton, for instance, was adept at using arcane incentives, often in the form of obscure tax benefits, or threats, such as restrictions on operations or acquisitions. Disastrously, banks were encouraged to issue more subprime loans to advance the administration’s interest in home ownership by poorer people. More recently Barack Obama has pursued this technocratic approach, issuing vast numbers of rules that give discretion to arms of the executive branch. The finance and energy sectors have been particularly affected. + +Is it working? + +As Mr Trump prepares to follow in, and perhaps embellish, this tradition of presidential activism, the most important question is whether it works. Mr Trump’s goal of boosting manufacturing employment would require reversing a 70-year trend (see chart). The consequences of presidential action, intended and unintended, can be hidden, indirect or long delayed. But there are many reasons to believe politicians would do better by focusing their attentions elsewhere. + + + +Direct investments seem particularly fraught. The Obama administration lost $535m in public guarantees for Solyndra, a manufacturer of solar panels that filed for bankruptcy in 2011. Johnson’s subsidy for pickup trucks provides an explanation for why America’s big carmakers were so uncompetitive that they came close to perishing in the financial crisis, surviving only after a bail-out by Mr Obama. It skewed production and left them unable to respond when high fuel prices shifted buyers towards more fuel-efficient cars. + +Similarly, enthusiasm for forcing down prices through persuasion or law has faded. Kennedy’s anger at the steel industry is now seen as rage misdirected at a symptom, inflation, rather than the problem itself—onerous labour contracts and a lack of investment. Nixon’s wage and price controls, initially greeted with applause, were disastrous. Production slowed and shop shelves emptied. Hoover’s jawboning to preserve wages and employment undermined firms’ ability to adjust to an economic slowdown and his endorsement of Smoot-Hawley partly caused a worldwide depression by undermining trade. + +However important those lessons may be, Mr Trump is likely to draw others, notably that there is plenty of precedent for presidents to meddle with business. If Mr Trump differs from his predecessors, it is in the pleasure he takes in doing deals. Many presidents were fond of the occasional anti-business rant but none has shown the same delight in one-off negotiations that produce winners (Mr Trump) and losers (anyone on the other side of the table). For that reason alone, his brand of interventionism may be more heavy-handed than any in the recent past. + +This article appeared in the Briefing section of the print edition under the headline “Chairman president” + + + +United States + + + + + +Deporting undocumented migrants: Hamilton’s heirs + +Standing Rock: Water, life and oil + +Hate crimes: By the numbers + +Health care: Drug money + +Lawyers: Libidos and don’ts + +Trump appointments: A fox for the henhouse + +Lexington: Farewell to all that + + + + + +Hamilton’s heirs + +Donald Trump’s administration could deport millions of undocumented immigrants, using a system perfected under Barack Obama + +If he wins a second term, the president-elect could realistically expel around 4m people in total + +Dec 10th 2016 + + + +WHEN she was seven Greisa Martinez moved illegally from Hidalgo, in Mexico, to Dallas with her parents. Now aged 28, Ms Martinez works for United We Dream, an immigration advocacy group. Following the election of Donald Trump she has been busy. In case of an immigration raid, she instructs her charges not to open their doors to immigration officials unless they have a court-ordered warrant, and to remain silent until speaking with a lawyer. Ms Martinez is one of around 740,000 beneficiaries of the Deferred Action for Childhood Arrivals (DACA) policy that Barack Obama implemented in 2012 by executive action. In his 100-day plan published in October, Mr Trump vowed to reverse every one of Mr Obama’s executive actions. He could kill DACA on his first day in the Oval Office. + +He could also opt to let it die a slower, gentler death by refusing to renew DACA permits, which expire every two years. Either way DACA’s beneficiaries would lose their right to work legally. DACA grants undocumented immigrants who arrived in America before the age of 16, and who meet several other requirements, temporary amnesty from deportation, and eligibility to work. Applicants must not have criminal histories and they must either be enrolled in or have finished high school or have been honourably discharged from the armed forces. + +In his earlier stump speeches, Mr Trump repeatedly pledged to rid the country of all 11m unauthorised undocumented migrants living within its borders, the bulk of whom arrived before 2004 (see chart). He has picked the Senate’s most enthusiastic deporter, Jeff Sessions, as his attorney-general. This has alarmed DACA recipients. “When we applied for DACA, we identified ourselves as undocumented. We gave our addresses. The government now has this information and can come after us or our families,” says Perla Salgado from Arizona, who arrived to America at age six and has not once returned to Mexico. + + + +Since winning the election, Mr Trump has said he will focus on illegal immigrants with criminal records—not unlike President Obama, whose administration has deported more people than any other president’s. He has also made some sympathetic noises about those who arrived in the country as children. In an interview on “60 Minutes”, a television programme, Mr Trump estimated the number of criminal immigrants to be between 2m and 3m. The Migration Policy Institute, a think-tank, says it is closer to 820,000. + +Even if Mr Trump’s administration aims for the top end of the range, it will be hard for him to keep all his campaign promises related to immigration. To gather funding for his proposed wall along America’s border with Mexico, for example, Mr Trump would need congressional approval. The president requires no such authorisation to change the Department of Homeland Security’s (DHS) deportation priorities, though. From his first day in the White House, Mr Trump will have discretion over what groups should be targeted for removal. “He could easily expand the definition for what constitutes criminality to meet the 2m to 3m goal he set,” says Ms Martinez, the activist. + +Two factors will limit the size of the deportation dragnet. The first is capacity. The federal government already spends more on enforcing immigration laws than on the FBI, Drug Enforcement Agency, US Marshals service and Bureau of Alcohol, Tobacco and Firearms combined. Finding people to deport is also getting ever harder. That is partly because the number of border apprehensions has declined markedly in recent years as the flow of Mexicans into the United States has also ebbed. Immigrants captured within two weeks and 100 miles of the border are the easiest to deport because they do not have to be granted a court hearing. Those further from the country’s edges do get a hearing and so are much harder to remove. Deportation hearings can take years to complete; in July, the backlog of cases in immigration court surpassed 500,000. + +The second variable is co-operation from cities and states. California has been the busiest state in preparing for the Trump administration’s immigration policies. Over 3m undocumented immigrants reside in the Golden State; Texas, the second most popular home for undocumented foreigners, hosts half that number. A 2014 study by the University of Southern California estimated that workers who are in the state illegally make up 10% of the workforce and contribute $130bn of California’s $2.5trn gross domestic product. + +On December 5th, California lawmakers introduced a package of bills to obstruct mass deportation. These measures include a state programme to fund legal representation for immigrants in deportation hearings; a ban on immigration enforcement in public schools, hospitals and on courthouse premises. “California will be your wall of justice,” declared the president of the state senate in a statement. “We will not stand by and let the federal government use our state and local agencies to separate mothers from their children.” According to a study by the University of Pennsylvania in 2015, only 37% of immigrants and 14% of detained immigrants in deportation proceedings secured lawyers to defend them in court. The same study found that immigrants with representation had five-and-a half times better odds of avoiding deportation than their peers who represented themselves. + +Some place to hide + +The policies of so-called “sanctuary cities” such as Los Angeles, New York, San Francisco and Chicago will further hinder any plans Mr Trump might have for a huge increase in the rate of deportation. There is no specific legal definition for what constitutes a sanctuary jurisdiction, but it is widely used to refer to areas that limit co-operation with federal immigration authorities. The Immigrant Legal Resource Centre counted four states, 39 cities and 364 counties that qualify as sanctuary jurisdictions. Some prohibit local police from asking people they arrest about their immigration status. Others refuse to obey immigration officers unless they have a warrant. Such policies can be mandated expressly by law or merely become customary. Supporters of these approaches say they help guarantee that fear of deportation does not dissuade undocumented immigrants from reporting crimes, visiting hospitals or enrolling in schools. + +Scrutiny of sanctuary cities ramped up in July this year after a young American woman was killed in a touristy area of San Francisco by a man who was in the country illegally, had seven previous felony convictions, and had already been deported five times. Mr Trump has since vowed to block federal funding to areas deemed unco-operative. Such cuts would be painful, but several mayors have cast doubt on whether they will actually happen, reasoning that it would be counterproductive to hurt the economies of America’s biggest cities. Jayashri Srikantiah of Stanford Law School argues that there is case law that validates sanctuary policies and there are constitutional problems with coercing states into action with financial threats. + +Even so, between 2009 and 2015 the Obama administration deported an average of about 360,000 people a year. Muzaffar Chishti, a lawyer at the Migration Policy Institute, believes that unless ample resources are poured into recruiting and training new immigration officers and expanding the pool of immigration courts, the Trump administration will struggle to remove more than half a million people a year. Over eight years that would still add up to 4m people. + +This article appeared in the United States section of the print edition under the headline “Hamilton’s heirs” + + + + + +Environmentalism and oil + +The Standing Rock pipeline protesters and their pyrrhic victory + +The decision to halt the construction of the Dakota Access pipeline is likely to be overturned + +Dec 10th 2016 | CHICAGO + +Still standing in North Dakota + +THE images of the protest camp at Standing Rock were reminiscent of scenes in the 19th century of proud native Americans wearing beautiful feathered headdresses opposing settlers on horseback. For months tribespeople, environmental activists and veterans endured often freezing temperatures at the Oceti Sakowin and two other camps around 40 miles south of Bismarck, North Dakota, to protest against the construction of the last part of the Dakota Access pipeline, which they say threatens the Standing Rock Sioux’s water supply and their sacred sites. On December 4th, they scored an unexpected victory when the Army Corps of Engineers, a federal agency, announced that it would deny Energy Transfer Partners (ETP), the developer of the pipeline, a permit to cross the Missouri river. Thousands of protesters cheered and chanted to cries of Mni Wiconi, or water is life. + +ETP is furious about the corps’s decision, which it claims was “just the latest in a series of overt and transparent political actions by an administration which has abandoned the rule of law in favour of currying favour with a narrow and extreme political constituency”. The construction of the pipeline aiming to transport around half a million barrels of oil each day from the Bakken formation in western North Dakota to a terminal in Illinois is around 90% complete. ETP and its three partners have already sunk $3 billion into the pipeline, which was supposed to be finished by January 1st next year. It mostly traverses privately owned land, but the government must sign off on permission to drill under Lake Oahe, which dams the Missouri river. Its refusal to do so requires a new environmental impact statement that looks at alternative routes. This will take months. + +Republicans attacked the Obama administration for blocking the pipeline construction. On December 4th Paul Ryan, the Speaker of the House, tweeted it was “big-government decision-making at its worst” and that he was looking forward “to putting this anti-energy presidency behind us”. Kevin Cramer, a congressman from North Dakota who is under consideration for the post of energy secretary in the incoming administration, called President Obama “lawless” and vowed to fight for the pipeline. Jack Dalrymple, the Republican governor of North Dakota, said the decision was a “serious mistake” that makes the life of the local police more difficult. A spokesman for Mr Trump said he supports construction of the pipeline but would review the situation once in the White House. The president-elect was an investor in ETP and has received campaign donations of more than $100,000 from the chief executive of ETP. + +Oil tanks + +The developers are rushing to finish the construction of the controversial pipeline because they are under financial pressure, not because of a need for increased local pipeline capacity, argues Clark Williams-Derry of the Sightline Institute, an environmental-research institution. According to court documents oil drillers have the right to void their contracts with ETP if the pipeline is not finished by January 1st, which could result in steep losses for the developers. The contracts were signed when the Bakken formation’s oil production was thriving, but in the autumn of 2014 the oil price collapsed and has not recovered since. Bakken oil production has fallen by more than 20% since its peak, according to the Energy Information Administration. + +Mr Williams-Derry argues that the pipeline is a superfluous project being built to preserve the favourable contract terms negotiated by its developers before the oil price tanked. He thinks existing infrastructure can easily handle the transport of Bakken oil. Vicki Granado, a spokesperson for ETP, says January 1st was the original in-service date and denies the company has any contractual obligation tied to the date. The company could sue the corps for violating due process, but it is likely to hold off until Mr Trump moves into the White House. + +Hardly anyone on either side of the political divide doubts that the president-elect will approve the easement. But it might take time to settle the matter, which means that ETP and its partners will take a painful financial hit. The delay will cost the company $83m a month, or $2.7m a day, according to court documents. That is a powerful financial incentive for protesters to stay put in the new year, as many have promised to do. + +This article appeared in the United States section of the print edition under the headline “Water, life and oil” + + + + + +Hate crime by the numbers + +The apparent rise in hate-crime since the election is likely to be short-lived + +If the past is any guide, that is + +Dec 10th 2016 | NEW YORK + + + +ON THE morning of November 18th, two swastikas and the words “Go Trump” were found daubed in a children’s playground in Brooklyn. This is one of 360 hate crimes being investigated by New York’s police department in 2016, an increase of 35% over 2015. Andrew Cuomo, the governor of New York, has set up a special unit to tackle the “explosion” of such crimes in the state. In the Senate last month, Harry Reid, the minority leader, said that Donald Trump’s election had “sparked a wave of hate crimes across America. This is a simple statement of fact.” But look more closely and the facts become more difficult to establish. + +Hate crime is defined by a 1990 law which classifies crimes against individuals or property that are in some part motivated by race, religion, ethnicity or sexuality. The law was tweaked in 2009 to include crimes against a person on account of their gender, gender identity or disability. While not all states recognise all these types of hate crime, in 2015 a total of 5,850 of them were recorded by the FBI. Hatred itself is not a crime, but crimes motivated by hate result in longer sentences. The vast majority of hate crime is comprised of racist intimidation and assaults, and vandalism of religious buildings (the Brooklyn playground was named after a Jewish rapper). Successful convictions are rare: just 26 individuals received stiffer sentences in 2015. + +The FBI probably undercounts this kind of crime, because police departments are only required to submit numbers on a voluntary basis. An alternative measure can be derived from an annual 250,000-sample survey administered by the Bureau of Justice Statistics. Only 43 respondents thought they had been the victim of a hate-related crime in 2015. Extrapolated to the nation as whole, though, that tallies to 210,000 hate crimes—40 times the rate reported by the FBI. + +The true number is likely to be somewhere between these two figures according to Jack Levin of the Brudnick Centre on Violence and Conflict at Northeastern University. Mr Levin distinguishes between hate crimes that are perpetrated by thrill-seekers and those committed by people who feel threatened by outsiders. The first sort tend to rise and fall with the violent crime rate among youngsters. In a 2015 study, Mr Levin calculated that since the terrorist attacks of September 11th, hate crimes motivated predominantly by fear of outsiders have predominated. + +Corroborating this theory, data released by the Southern Poverty Law Centre (SPLC), an advocacy group, recorded a total of 867 “hate incidents” in the ten days following Mr Trump’s election victory in what it called a “national outbreak of hate”. But it is unclear whether this tally is driven by increased awareness of hate crime at the time. In Phoenix, the police department reckoned that much of the uptick in hate crime in 2015 was because of better reporting by victims and investigators. Most hate crime will remain unreported: just 40% of respondents to the BJS survey reported their incident to police. + + + +Any official change will not be unearthed until 2016 statistics are released by the FBI and BJS in November 2017. Encouragingly, reports to the SPLC have declined recently. That may be because some people have heeded Mr Trump’s call to “stop it”. If so, that would follow a typical pattern. And if the past is any guide to the future, they should now fade. In the wake of the September 11th terrorist attacks, hate crimes surged but quickly fell back again (see chart 2). Perhaps this was thanks to George W. Bush’s fine speech at a mosque six days after. It is hard to imagine the next president making a similar gesture were Islamic terrorists to strike again. + +This article appeared in the United States section of the print edition under the headline “By the numbers” + + + + + +Drug money + +High price tags for new medicines are about to come under renewed pressure + +The president-elect, formerly pharma industry’s preferred candidate, has promised to bring prices down + +Dec 10th 2016 + +Yours for $9bn + +THE past year has brought a steady infusion of grim news about the price of drugs. Much outrage has been caused by a price-gouging scheme for an AIDS medicine. Other scandals have included the cost of the allergy medicine EpiPen, the excessive cost of insulin, an expensive cure for Hepatitis C and enormous price increases in the cost of two heart drugs. New data on federal spending on programmes for the poor and the elderly show that last year $9.2bn was spent on a single medicine—Harvoni, which cures Hepatitis C. More such tales can be expected from the ongoing antitrust investigation by the Department of Justice into possible price fixing in generic drugs. + +It is little wonder, then, that a new survey by Kaiser Family Foundation Health Tracking Polls says 77% of people think drug costs are unreasonable (a five percenntage-point increase on the previous year). Ron Cohen, boss of Acorda Therapeutics, a drug firm, and chairman of BIO, a trade group, says the sense of outrage among patients is “understandable”. Ever since the Affordable Care Act changed the way the health-insurance industry was regulated, many patients have been asked to stump up more of the cost of their medicines through cash payments and high deductibles. Equally, Mr Cohen says, it is “difficult to defend” the relentless double-digit price increases for drugs that some firms have charged. Broadly people want more transparency on pricing; more scope for the federal government to negotiate on prices; and a limit on the amount that drug companies can charge for high-cost drugs. + +All this is keeping the industry lobby group, PHRMA, very busy. It has done its best to distance itself from the worst corporate offenders, such as troubled Valeant Pharmaceuticals, a firm which PHRMA describes as having a strategy “more reflective of a hedge fund”. It is now gearing up to convince legislators that the drugs made by its members bring value to the health-care system and the economy more broadly. It will also fight attempts to control drug prices through legislation. Pharmaceutical firms spent heavily in order to defeat a ballot initiative, this November, to limit the amount that California’s state government pays for prescription drugs. + +The pharma industry was thrilled at first that Donald Trump, rather than Hillary Clinton, had been elected president. (Shares in biotech companies swooned every time she tweeted about the cost of medicines.) Firms hoped for beneficial changes to the tax code, the prospect of being able to bring offshore cash home at bargain tax rates and even regulatory changes to make it easier for drugs to get approval. Since his election victory, Mr Trump has told Time magazine that he too plans to bring down drug prices. And in recent years health insurers, their intermediaries, and hospitals have become increasingly combative about the price of drugs and the value they deliver. Nor will the clamour to appraise medicines more critically go away, which is good news for consumers. + +Added to this is the unexpected progress of the 21st Century Cures Act, a $6.3bn omnibus bill covering medical innovation and legislation, which has passed through Congress and which the president has said he will sign. The act allocates money for research spending on diseases such as cancer, and would give the Food and Drug Administration powers (and money) to approve drugs more quickly. More rapid approvals, though, will not necessarily translate into lower drug prices. Drugs that have already had approval fast-tracked continue to command high prices even when they are later shown to have no significant benefit, according to new research. + +Despite the cost of drugs, almost three-quarters of those taking medicines can afford to pay for their prescription. That still leaves millions struggling to afford them, and means that drug pricing will remain contested. The industry says its products save money for the health-care system, and that profits are the source of investment for creating the drugs of the future. Both points are sometimes true. But with many pharma firms buying in drugs, rather than developing them in-house, there is a strong case that drug prices currently have more to do with the cost of dealmaking than the cost of innovation. + +This article appeared in the United States section of the print edition under the headline “Drug money” + + + + + +Lawyers + +Libidos and don’ts + +California considers banning lawyer-client sex + +Dec 10th 2016 | LOS ANGELES + +Bill you later, honey + +THE misadventures of Arnie Becker, a slick-haired divorce lawyer with piercing blue eyes and a penchant for seducing his clients, kept viewers of “LA Law” entertained for nearly a decade. If Mr Becker were real, he would be nervous. California’s bar association, the largest in the country, is considering a crackdown on sexual relationships between lawyers and their clients. + +In 1992 California became the first state to implement a formal rule about client-lawyer sexual conduct. Rule 3-120 barred lawyers from using their position of power to coerce their clients into sleeping with them. At the time, recalls Larry Doyle, who served as chief legislative counsel for the State Bar of California when the rule was enacted, other states mocked California for creating what they saw as a superfluous guideline. Forcing anyone to have sex—client or otherwise—was already expressly illegal. “There was a fair amount of tittering and states saying, “This is so California,” Mr Doyle remembers. + +Today California has some of the laxest rules on the subject in the country. In 2000 the national American Bar Association updated its model rules to include a ban on lawyer-client sex, consensual or not. The only exception was in cases where the sexual relationship preceded the professional one. Most states now follow some version of this edict. + +The amendment under consideration would bring California’s rule up to speed with such states. It was proposed along with 68 other rule changes—the biggest overhaul to California’s bar-association ethics rules since 1987. Supporters of the new measure say the ban on sex with clients will make the rules enforceable. Daniel Eaton, a lawyer who serves on the rules revision commission, says the old dispensation was not working. Between 1992 and 2010 the state bar examined 205 reports of sexual misconduct, but imposed a penalty in only one case. Pressure, or lack thereof, is difficult to prove. “There are too many hurdles for state bar prosecutors,” Mr Eaton says. “It’s time for California, once the leader, now the laggard, to join the majority of jurisdictions in implementing a bright line rule,” he adds. + +Critics say the proposed change infringes on the right of free association, and that lawyers can make their own decisions about appropriate behaviour. It will be up to the California Supreme Court to judge what happens when the entire batch of new rules come before it in March. + +This article appeared in the United States section of the print edition + + + + + +Donald Trump’s latest appointments + +The president-elect’s EPA head may not believe in climate change + +And his cabinet looks set to be filled with retired generals + +Dec 10th 2016 | WASHINGTON, DC + +Scott Pruitt and James Kelly, body doubles + +IT BRIEFLY looked as if Donald Trump, having denounced global warming as a hoax and sworn to dismantle Barack Obama’s environmental legacy, might have had a rethink. Now it seems he has not. As The Economist went to press, Mr Trump was reported to be about to nominate Scott Pruitt, Oklahoma’s attorney-general, to head the Environmental Protection Agency. He would be hard-pushed to find anyone more hostile to that department or committed to tearing up the environmental rules that are perhaps the main achievement of Mr Obama’s second term. + +To get around an obstructive Republican-controlled Congress, Mr Obama’s environmental policies were almost all promulgated as regulations, mostly by the EPA. His marquee rule, issued last year, is a scheme known as the Clean Power Plan (CPP), designed to force the states to curb greenhouse-gas emissions from coal- and gas-fired power stations. On the trail, Mr Trump denounced the Plan as a “war on coal” and promised to scrap it. Mr Pruitt, who has sued the EPA unsuccessfully several times, is leading a legal challenge to the CPP by 27 states and some firms in the federal appeals court in Washington, DC. The challengers say it infringes states’ rights. + +Mr Pruitt, who has close ties to coal and gas companies and related lobbyists, some of whom have made donations to his political campaigns, is a climate change obfuscator, and perhaps an outright denier. In an interview with The Economist last year, he insisted his attack on the CPP had nothing to do with his views on global warming, which he would not divulge. But in a subsequent article for the National Review, co-authored with a fellow attorney-general of a coal-rich state, Luther Strange of Alabama, he seemed to present disagreement over the details of climate science as disagreement over the fundamentals in a way that climate-change deniers often do. “Scientists continue to disagree about the degree and extent of global warming and its connection to the actions of mankind,” he wrote. “That debate should be encouraged—in classrooms, public forums and the halls of Congress.” If Mr Pruitt has his way—and the Republican-controlled Senate would smile on his appointment—the EPA and much environmental regulation could be ravaged. + +Because the CPP is still locked in litigation, it should be fairly easy to kill. That would make it hard for America to meet the emissions-cutting targets it set for itself at the UN climate summit in Paris last year. (Mr Trump has vowed to “cancel” the Paris agreement.) But older regulations, for example, one to reduce mercury emissions from power plants, will be harder to scrap. Having been mandated by law, any withdrawn rule would need replacing with a new one. If Mr Pruitt offered a weaker alternative, he would be sued by environmental groups, as previous Republican EPAs were. Even before the news of his expected nomination, well-funded greens were consulting their lawyers; presented with Mr Pruitt as a probable adversary, their resistance to Mr Trump has been supercharged. “He could have done a lot more harm if he’d picked a more elegant thug than this cartoon villain,” said a leading environmental campaigner. + +It is also contrary to recent hints that Mr Trump might be taking a more serious view of the environment. In a meeting with the New York Times, he acknowledged some “connectivity” between human activity and climate change. On December 5th he discussed the issue with Al Gore, who was said to have been invited to Trump Tower, in Manhattan, by the president-elect’s daughter, Ivanka. One of Mr Trump’s most trusted advisers, she has let it be known that climate change is an issue she cares about. If that is really true, she cannot be thrilled by Mr Pruitt’s nomination: it is a reminder of how limited any adviser’s hold on Mr Trump is. He makes his own decisions, often unpredictably—even if his nominations appear more consistently conservative than some had expected. + +After much delay, he nominated a former rival, Ben Carson, on December 5th to head the department of housing and urban development—though Mr Carson, not unlike Mr Pruitt, is opposed to the schemes he would be tasked with administering. To his national security adviser, Michael Flynn, a retired lieutenant-general accused of harbouring anti-Muslim views, Mr Trump has added two more retired generals: James “Mad Dog” Mattis, as secretary of defence and, it was reported on December 8th, John Kelly, who is known for his tough views on immigration, to lead the department of homeland security. + +With Mr Trump believed to be considering two more servicemen—David Petraeus, a retired general, for secretary of state, and Michael Rogers, a retired admiral, for director of national intelligence—he could end up with quite a military cabinet. That is also a bit surprising, because Mr Trump disparaged America’s generals ahead of the election, suggesting he knew more about Islamic State than they did. Then again, if he really believes that, maybe it is why he keeps hiring them. + +This article appeared in the United States section of the print edition under the headline “A fox for the henhouse” + + + + + +Lexington + +Farewell to Asia + +Our columnist accompanies the outgoing defence secretary on his final world tour + +Dec 10th 2016 + + + +HIGH on the flight deck of a warship docked in Tokyo Bay, America’s outgoing defence secretary, Ashton Carter, offered a tribute to Asian allies on December 6th that was at once heartfelt and possibly redundant after Donald Trump takes office next month. For eight years an “Asia rebalance” has seen generals, diplomats and trade envoys commanded by Barack Obama, devote more energy and time to the Asia-Pacific. Bluntly, this pivot was intended to shift American attention away from thankless wars in the Middle East and from a moribund Europe, towards a region deemed likely to dominate the 21st century. + +With the great grey bulk of the USS Ronald Reagan, an aircraft-carrier, looming behind him, Mr Carter hailed the Asia rebalance as vital to both regional security and America’s national interests. Our military alliance with Japan is not only stronger than ever, he declared, but offers “equal benefits for both countries.” + +That is not likely to convince Mr Trump, who won office declaring that America is being robbed, cheated and taken for granted by foreigners. He grumbles that feckless allies should cover more of the costs of maintaining American bases overseas. He has sounded especially indignant about Japan, which is protected by a defence treaty with America but barred by its pacifist post-war constitution from joining conflicts sparked by a strike on American territory—or as Mr Trump put it, “If we’re attacked [the Japanese]…can sit at home and watch Sony television.” + +Mr Trump does not merely find foreigners ungrateful. He is scornful of multinational compacts and regional alliances, preferring bilateral negotiations and one-on-one tests of strength and guile. That is one reason why he has promised to pull out of the Trans-Pacific Partnership (TPP), a trade deal between 12 Pacific Rim nations, including Japan. + +Small wonder that Mr Carter began his 25,000-mile farewell trip with stops in Asia and repeated paeans to the rebalance. Back home in America conservatives wonder whether there is much rebalance to save. Such folk consider the “pivot to Asia” little more than a clever slogan, aimed at diverting attention from chaos in the Middle East and the spread of Islamist terrorism, which they blame on Mr Obama. + +The critics are being too glib. The ship aboard which Mr Carter spoke is proof that, when it comes to military power, the Asia rebalance had real-world effects. Commissioned in 2015 the Izumo is the largest warship launched by Japan since the second world war (also the cleanest ship that Lexington has ever visited, scrubbed and buffed to a near-hospital shine). In part its construction reflects the hawkishness of the prime minister, Shinzo Abe, who has challenged the post-war pacifist traditions that so provoke Mr Trump. Japan still has a “Maritime Self-Defence Force”, not a navy. Officers of the Izumo may insist that their ship is a destroyer that happens to carry helicopters, and talk of how handy it will be for humanitarian missions such as earthquake relief. But in truth Japan has built a lethally capable helicopter-carrier. + +The Izumo represents a 20,000-tonne bet on the Asia rebalance. Everything from its command-and-control systems to its helicopter fleet is designed for combat alongside allies, starting with the Americans. The US Marine Corps has already landed Ospreys, thunderous flying troop-carriers that would be vital in an amphibious war with China or North Korea, on the Izumo. The ship lies across an inlet at Yokosuka from some of the most advanced vessels in the American navy—part of a Pentagon push to send the newest ships and warplanes to Asia, alongside tens of thousands of extra troops. Mr Carter calls America a “catalyst” for co-operation in Asia. Officers note that South Korean, Japanese and American ships held anti-ballistic missile exercises in June 2016, as fears of North Korean aggression mounted—their first such trilateral exercise. Japan has also joined what were bilateral American exercises with India. Despite the election in the Philippines of a violently populist, often Yankee-bashing president, Rodrigo Duterte, his generals still support deeper co-operation with America, as set out in an agreement signed in 2014. + +Pivot, then pirouette + +Perhaps Mr Trump will be persuaded to keep advanced kit in Asia by his pick for defence secretary, James Mattis, a much-respected former marine general. Several realist arguments may be tried on the next president. American officers talk of the “tyranny of distance”, and the incalculable benefits of having bases in the region. They also note that Japan pays $4bn a year towards the direct and indirect costs of its American bases. Mr Obama left Mr Trump visibly shaken, shortly after his victory, with an Oval Office briefing about dangers he will face, starting with North Korea’s nuclear programme. Yet Mr Trump is hard to predict. He made a combative start to his Asia policy when he agreed to speak directly on the telephone to the Taiwanese president, Tsai Ing-wen, in defiance of decades of Chinese pressure to isolate Taiwan (see article). It remains unclear whether Mr Trump has a clear goal in mind, beyond showing China his toughness. + +In the end the Asia rebalance will not live or die because of where ships are moored. The larger threat involves Mr Trump’s “America First” mistrust of multilateral alliances and pacts, including TPP. Fitfully, and with many false starts, a greater American presence has prompted new co-operation between Asian nations united by fears of Chinese bullying and North Korean brinkmanship, and by a desire to build a more open and inclusive economic order. Trumpian appeals to nationalism could unravel fragile new alliances. If that happens, China would be the big winner: it has always loathed the Asia rebalance and prefers to pick off countries one by one. Admirals, officials and lines of Japanese sailors heard Mr Carter’s farewell argument on the deck of the Izumo. He is set to repeat it in India, his next stop. But the audience that counts is one man, high in Trump Tower. + +This article appeared in the United States section of the print edition under the headline “Farewell to all that” + + + +The Americas + + + + + +Colombia’s peace agreement: A tumultuous final chapter + +Bello: The power of the Andean sun + + + + + +A tumultuous final chapter + +Colombia’s peace deal has taken effect, but the country remains divided + +The government’s pragmatic decision not to call a second referendum comes at a cost + +Dec 10th 2016 | BOGOTÁ + + + +THE announcement that Juan Manuel Santos, Colombia’s president, had won the 2016 Nobel peace prize came just as his effort to end the country’s long-standing conflict faced an unexpected test. In a referendum five days earlier, voters had rejected—by a margin of just 0.4 percentage points—the peace accord he had signed with the Revolutionary Armed Forces of Colombia (FARC), the country’s strongest leftist guerrilla group. The surprise result caught both sides off guard, leaving them scrambling to salvage the agreement. + +Mr Santos and the FARC quickly hammered out a revised deal. On November 24th the president and the guerrillas’ leader, Rodrigo “Timochenko” Londoño, signed it in a sombre ceremony at a small theatre in Bogotá. Congress ratified the new terms six days later. On December 6th the FARC’s nearly 6,000 troops began moving from their jungle camps to demobilisation zones, where they will disarm and prepare for life as civilians (although some of the designated areas were not yet equipped to receive them). So when Mr Santos takes the stage in Oslo to receive the peace prize on December 10th, he will be feted for officially bringing the longest-lasting conflict in the Americas to an end. + +Nonetheless, the mood is likely to be far less festive than it was at the signing of the first settlement in September. The president had promised time and again that Colombian voters would have the last say in any agreement with the FARC. But after his defeat at the polls in October, Mr Santos was forced to choose between unpalatable options. Putting the updated terms to a new referendum risked a devastating second rejection. Instead, he settled for legislative passage. That eliminated the risk of a return to war, but also meant the pact will lack the democratic reinforcement of a formal seal of approval from voters. + +Mr Santos hoped to close the book for good on Colombia’s 52 years of strife. Mercifully, the fighting chapter now seems to be over. The denouement, however, may still prove long and contentious. + +The more things change + +Mr Santos and the FARC say they listened closely to the No campaign’s message, and made substantial alterations to over 50 points in response. No longer will the pact be incorporated into the constitution, which would have burdened that document with ephemeral policy choices. A tribunal dispensing “transitional justice” will not include foreign magistrates, as the earlier version permitted. And the new text clarifies that the agreement will not affect private-property rights. + +However, the FARC refused to accept the core demands of the No side, including stiffer penalties and a ban on political participation for guerrilla leaders responsible for war crimes. As a result, those deal-breaking proposals remain absent from the accord. Meanwhile, the government’s modest concessions on social legislation, such as a scheme to distribute and develop rural land, survived the revision. That rankles with voters who saw the FARC as a defeated terrorist group, with whom negotiations should have focused on the terms of surrender, not public policy. + +The accord’s most extreme opponents may be trying to undermine it by force. In a grim reprise of the terror wrought by right-wing paramilitary organisations in the 1980s and 1990s, 13 leaders of grassroots activist groups were killed between the day the first settlement was signed on September 26th and November 30th, according to the UN High Commissioner for Human Rights. However, this rate is only slightly higher than it was during the year’s first quarter, when the talks had still not produced an agreement. Nonetheless, the continuing murders demonstrate the limits of the peace deal. Far more victims have suffered injuries and death threats. + +Marcos Calarcá, a FARC spokesman, says that these reprisals aim to “derail the peace process”. So far, no evidence has emerged of any systematic plan to sink the accord through violence. However, José Félix Lafaurie, the head of Colombia’s association of cattle ranchers—many of whom financed reactionary paramilitaries in the past—has warned pointedly that his group will act as a “bulwark against the FARC’s aim of having territorial control”. + +In order to forestall any potential return to broader fighting, Mr Santos needs to show quickly that the pact will bring peace on the ground. The FARC are scheduled to hand over their last batch of arms to a UN commission by April 30th. But the state has to begin implementing the accord first, which requires Congress to pass dozens of bills and constitutional amendments. + +Opponents of the deal, who are outnumbered in the legislature, are now likely to focus on prolonging this process. Their leader, the senator Álvaro Uribe, was Mr Santos’s predecessor as president and former political patron, but split with him over the peace talks. His party walked out in protest when the pact came to a vote, letting it pass unanimously in both houses. + +Under normal legislative rules, it could take up to a year to approve an amnesty for rank-and-file guerrillas. That would push the debate into the campaign for the 2018 presidential election, in which parties will be tempted to pander to hardline voters and Mr Santos’s coalition could splinter. Already, members of the centrist Radical Change party, led by the vice-president, Germán Vargas Lleras, say that they may try to modify the necessary laws. + +However, the judiciary may come to Mr Santos’s aid. His allies in Congress hope to use a “fast-track” mechanism, which shortens the deliberation required before voting and would allow the majority to implement the settlement in short order. The constitutional court is expected to rule on this effort by December 12th. + +Even if the accord does get fast-tracked, there is a strong risk that the election becomes a de facto second referendum. Mr Santos and Mr Uribe have both served two terms and cannot run. Mr Londoño has called on parties who support the deal to rally around one candidate who would ensure its implementation. The most likely choice would be Humberto de la Calle, who negotiated the pact for the government. Conversely, Mr Uribe’s party will probably field a candidate promising to dismantle as much as possible. The more progress is made in the coming months to convert a paper agreement into facts on the ground, the harder it will be to reverse—and the likelier voters will be to choose a president who promises to preserve it. + +This article appeared in the The Americas section of the print edition under the headline “A tumultuous final chapter” + + + + + +Bello + +Latin America is set to become a leader in alternative energy + +The power of the Andean sun + +Dec 10th 2016 + + + +BESIDE the Pan-American Highway, almost 600km (375 miles) north of Santiago, Chile’s capital, lies El Romero, the largest solar-energy plant in Latin America and among the dozen biggest in the world. Its 775,000 grey solar panels spread out across the undulating plateau of the Atacama desert as if they were sheets of water. Built at a cost of $343m by Acciona Energía, a Spanish company, last month El Romero started to be hooked up to the national grid. By April it should reach full strength, generating 196MW of electricity—enough to power a city of a million people. A third of its output will be bought directly by Google’s Chilean subsidiary, and the rest fed into the grid. + +El Romero is evidence of an energy revolution that is spreading across Latin America. The region already leads the world in clean energy. For almost seven months this year, Costa Rica ran purely on renewable power. Uruguay has come close to that, too. In 2014, the latest year for which comparable data exist, Latin America as a whole produced 53% of its electricity from renewable sources, compared with a world average of 22%, according to the International Energy Agency. + +The region’s impressive clean-energy production is boosted by an abundance of hydropower. Big dams are increasingly controversial: in recent years, Brazil and Chile have blocked hydro-electric projects in environmentally sensitive areas. Alternative energy sources, such as wind, solar and geothermal, still only account for around 2% of Latin America’s output, compared with a world average of 6%. Nonetheless, there are several reasons to think this share will grow quickly. + +One is the region’s natural endowment. El Romero, for example, enjoys 320 days of sunshine a year. On the horizon, amid the Andean mountaintops, sit two astronomical observatories, testament to the clarity of the air. Much of Latin America is well suited to solar and wind power; volcanic Central America and the Caribbean have geothermal potential. + +Worldwide, technological progress and economies of scale have slashed the cost of green energy. Once built, solar plants are much cheaper than thermal power stations to operate. “El Romero is a symbol that alternative energy is no longer alternative. It’s the most commercial now,” says José Ignacio Escobar, Acciona Energía’s boss in Chile. + +Countries such as Chile, Brazil, Mexico and recently Argentina have tweaked their regulations to encourage alternative energy without having to offer subsidies. Some have held auctions for generation contracts purely for renewables, points out Lisa Viscidi, an energy specialist at the Inter-American Dialogue, a think-tank in Washington. Chile’s regulatory framework is trusted by investors; it has encouraged renewable generation by auctioning smaller contracts. It has set a target of producing 20% of its electricity from non-hydro renewable sources by 2025. Argentina and Mexico have similar goals. + +There are two pitfalls. In Chile, the penalty for failing to fulfil contracts is low, which means the winners of auctions may pull out later if they do not raise financing. Moreover, both solar and wind power are intermittent. That means they need to be paired with baseload generation. In many Latin American countries this tends to come from natural gas, which emits less carbon than oil, though in Chile it is coal. Greater efforts to connect grids between countries might reduce the need for fossil fuels as a backup. + +Renewable energy offers big benefits to the region. Chile is short of domestic fossil fuels. As a result of its latest auction of energy contracts, by 2025 prices should be a third lower than they are now, reckons Andrés Velasco, a former finance minister. By promoting renewables, Latin America is helping to curb carbon emissions globally—though it also needs to do more to stop deforestation and encourage public transport. + +That matters for political as well as altruistic reasons. Latin Americans worry more than anybody else about climate change, according to polling by the Pew Research Centre, a think-tank. They have good reason. The region is prone to natural disasters and extreme weather. To take one current example, Bolivia last month imposed water rationing in La Paz, the capital. The three reservoirs that serve the city are almost dry. Lake Poopó, once a large freshwater body in the altiplano, has all but dried up, seemingly permanently. + +Outside Chile and Colombia, coal deposits are scarce in Latin America. That is one reason why industrialisation came late to the region. In the 21st century, it may turn out to be an advantage in helping Latin America move swiftly to a post-carbon economy. + +This article appeared in the The Americas section of the print edition under the headline “The power of the Andean sun” + + + +Asia + + + + + +Japan and Russia: Two men in a tub + +An election in Uzbekistan: Cloning Karimov + +Politics in New Zealand: Lost Key + +Jayaram Jayalalithaa: After the storm + +Indonesia’s economy: Back in business + + + + + +Two men in a tub + +Japan’s prime minister plans a steamy tête-à-tête with Russia’s president + +But the chances of a breakthrough in the two countries’ territorial dispute are slim + +Dec 10th 2016 | Nemuro + + + +HIROSHI TOKUNO still remembers the stomp of army boots on the wooden floor of his classroom. When 600 Soviet troops arrived on the Japanese island of Shikotan on September 1st, 1945, he recalls, “We thought we’d be killed.” As the fear receded, he befriended the invaders and learned to speak Russian. Three years later, they herded him and his family onto a boat across choppy seas to mainland Japan. + +Mr Tokuno, now 82, is one of about 17,000 Japanese expelled from what Japan calls its Northern Territories, four islands at the bottom of the Kurile chain (Chishima in Japanese), between Japan’s northernmost island of Hokkaido and the snowy wastes of Kamchatka (see map). In the 19th century Russia recognised Japanese sovereignty over the four islands, and in 1875 it ceded all the Kuriles to Japan. But a few days before Japan’s surrender to the Allies in 1945, the Soviet Union, which had not been fighting Japan, abruptly declared war. Soviet troops swiftly occupied the entire chain, setting off a 70-year dispute. Japan demands the four southernmost islands back. The Soviet Union offered to hand over the two smallest of them, Habomai and Shikotan, if Japan gave up its claim to the others. But Japan refused to do so. The impasse endures to this day. + + + +On December 15th Vladimir Putin, Russia’s president, will make his first official visit to Japan in a decade. Shinzo Abe, Japan’s prime minister and grandson of a wartime minister and post-war prime minister, has made no secret of his personal interest in resolving the issue. He has invited Mr Putin to bathe with him in hot springs in his home town of Nagato, in southern Japan—an occasion for man-to-man negotiations. The time is right for a solution, says Muneo Suzuki, an unofficial adviser to the prime minister on Russian affairs. + +In Nemuro, the rusting Hokkaido port where many of the evacuees have been stranded since the 1940s, there is guarded hope for a breakthrough. It is unthinkable that Mr Putin would come empty-handed, says Shunsuke Hasegawa, the town’s mayor. The Russian president is a “strongman” who will face down opposition to a deal at home, he insists. + +Mr Hasegawa laments that just 6,641 former residents of the islands are still alive, all elderly. Moreover, the waters around the islands used to provide fishing grounds for boats from Nemuro. It has lost half its population since the war. “It’s our last chance to solve this problem,” he says. + +More is at stake than fishing rights. The row has prevented a formal end to hostilities between Russia and Japan. The continued standoff, Japanese diplomats fret, pushes Russia closer to China. + +Among the possible enticements for Russia is the revival of a mothballed proposal to build a $5.3bn gas pipeline between Russia’s Sakhalin Island and Tokyo. Japan is also dangling billions in soft loans for the development of Russia’s impoverished Far East, as well as a boost to private investment. Russia, meanwhile, is wary of becoming a junior partner to China in Asia. “We can’t put all our eggs in one basket,” says Alexander Panov, a former Russian ambassador to Japan. + +But the obstacles to a deal are forbidding. A recent poll found that 78% of Russians are opposed to ceding all four islands; 71% object to handing over Shikotan and Habomai. “In Russia, if any president, even Putin, gives away two of our islands to Japan, he’ll bring down his ratings catastrophically,” Dmitry Kiselev, Russia’s propagandist-in-chief, said last month. “The Japanese like to talk about saving face, but they forget that Russians have faces too,” says Anatoli Koshkin of the Oriental University in Moscow. The islands guard the passage from the Sea of Okhotsk to the Pacific, “a life or death issue” for the Russian navy, says Shigeru Ishiba, a former Japanese defence minister. + +Small wonder, then, that Mr Putin said flatly in September: “We do not trade territories.” Valentina Matvienko, speaker of the upper chamber of the Russian parliament, said on a visit to Tokyo in November: “Russia’s sovereignty over the Kuriles is indisputable and is not up for revision.” Further reinforcing the message, the Russian armed forces announced the placement of missile-defence systems on Etorofu and Kunashiri last month. + +“The Abe government has allowed expectations to get out of hand, even hinting at a snap election based on the success of the summit,” says James Brown of Temple University Japan. The fading prospects of a territorial deal may help explain Mr Abe’s surprise announcement on December 5th that he will visit Pearl Harbour, the site of the Japanese attack that dragged America into the second world war in 1941. The prime minister is looking for an event to boost his popularity and distract from the summit with Mr Putin, to preserve his hopes of a snap election in January, claims Nikkei, a Japanese newspaper. + +But Russia is unlikely to dash Japanese hopes altogether. “The Russian side does not want this to end,” Mr Brown says; instead, it will find ways to foster Japanese investment without ceding sovereignty, he predicts. One possible step forward at the summit might be a relaxation of visa rules and the creation of a special economic zone, allowing Japanese businesses easier access to the Kuriles. After all, Mr Putin himself has said it should be possible to find a solution whereby neither party “would feel like a loser”. + +Mr Tokuno’s hopes of returning home have been raised and dashed many times over the years. From the tip of the Shiretoko peninsula, a few miles from Nemuro, he can see Habomai, just offshore. A decade ago he was allowed to visit Shikotan for a pilgrimage to the graves of his ancestors. He could still remember the Russian he learned as a boy. His home was gone but he bears no bitterness. It was war, Mr Tokuno says; the best way to honour the suffering is to make sure it never happens again. A peace treaty would be a start. + +This article appeared in the Asia section of the print edition under the headline “Two men in a tub” + + + + + +Cloning Karimov + +Uzbekistan replaces one strongman with another + +Shavkat Mirziyoyev wins 88.6% of the vote in a sham election + +Dec 10th 2016 | SAMARKAND + +Hurrah for the green, white and blue + +NEAR the turquoise domes of Samarkand on the Silk Road, well-wishers stream past an elaborate grave covered in fresh flowers. They bow their heads reverently as a grey-bearded mullah dressed in a traditional Uzbek robe and skullcap intones a prayer, before placing chrysanthemums on the tomb and filing out solemnly. The person buried here is no holy man or khan (even if he sometimes behaved like one): it is Islam Karimov, the strongman who ran Uzbekistan for 27 years until his death from a stroke in September. + +To his numerous critics, Mr Karimov was a brutal despot who presided over rife human-rights abuses, including the slaughter of protesters by security forces in the city of Andijan in 2005. But for many of his 30m citizens, his death has left a gaping hole. “He was our grandfather,” sighs Abdumajit, a petrol-station attendant in the capital, Tashkent (nervous of speaking about politics, he gave only his first name). “Now he’s gone,” laments the young man who, at 25, is the same age as his country and has never known another leader. + +And yet the death of the 78-year-old president does not feel like the end of an era. This week voters elected a successor, Shavkat Mirziyoyev, who, though 20 years younger, is cut from the same cloth. He was Mr Karimov’s prime minister for the past 13 years, and is considered as repressive as his former boss, if not more so. Optimists had hoped that Mr Karimov’s death would bring change, but all the signs suggest the regime he built is as entrenched as ever. + +Mr Mirziyoyev romped home with 88.6% of the vote, not far off the 90% victories Mr Karimov used to enjoy. That was no great feat: with no genuine opposition permitted, he trounced the three stooges included on the ballot to put a democratic gloss on the vote. Far from promising a new start, Mr Mirziyoyev presented himself as the candidate of continuity—the rightful heir to Mr Karimov, who is now being touted to the public as the father of the nation. And far from wishing to vote for change, many Uzbeks were happy to vote for the status quo. Mr Karimov was a strongman, Abdumajit concedes, “but sometimes you have to be tough to hold it all together”. + +Uzbekistan has no free press, and the government’s propaganda machine cranks out the message that the only alternative to autocratic rule is political chaos or Islamic radicalism. Many voters accept this notion. “Opposition’s bad,” mutters Shodir, a middle-aged man from Samarkand, who dismisses the regime’s foes as “maniacs”. The government agrees: it has locked up thousands of critics on spurious charges. Last month the authorities freed Samandar Kukanov, a dissident who had spent 23 years behind bars—but it was his detention, rather than his release, that is typical. + +With so little at stake, the election had the air of a fair. Polling stations blared out Uzbek pop music and flew balloons in the blue, white and green of Uzbekistan’s flag. “Everyone to the polls!” proclaimed psychedelic billboards strung over Tashkent’s broad boulevards, but not everyone heeded the call. “They’ll vote him in without us,” grumbled one elderly man. The vote was marred by irregularities, including the stuffing of ballot boxes and suspect proxy voting, according to election monitors from the Organisation for Security and Cooperation in Europe. They stressed the absence of “a genuine choice”. + +Rumours provided the only excitement. One claimed that Mr Karimov’s disgraced daughter, Gulnara Karimova, had been poisoned and buried in a clandestine grave. Once a powerful politician and rich businesswoman, she has not been seen since 2014, when she was placed under house arrest after becoming enmeshed in international graft probes and a Shakespearean feud with her mother and sister. Her son, another Islam Karimov, who lives in Britain, says he does not think she is dead yet, but that he fears for her life. + +Mr Mirziyoyev has made noises about reforming Uzbekistan’s basket-case economy. He may loosen currency controls, thus undermining the black market in which the well-connected few make huge profits. But the rampant corruption, rent-seeking and asset-grabbing for which Uzbekistan is known are unlikely to disappear. Nor are the shortages of electricity, gas, petrol and jobs (some 2m Uzbeks have moved to Russia to find work) that blight the lives of ordinary people. It is not even clear how much power the new president has: the real clout may rest with the shadowy security chief, Rustam Inoyatov. + +This article appeared in the Asia section of the print edition under the headline “Cloning Karimov” + + + + + +Lost Key + +New Zealand’s popular leader bows out + +The country has been a haven of prosperity and stability under a remarkably successful prime minister + +Dec 10th 2016 | WELLINGTON + + + +THE shock announcement by New Zealand’s prime minister, John Key, that he will step down on December 12th has caught the country on the hop. First elected in 2008, he remained popular and was widely expected to win a rare fourth term in office in a general election next year. + +The 55-year-old Mr Key, who said he was standing down for the sake of his family, announced that he will back Bill English, the deputy prime minister and finance minister, when the MPs from his centre-right National Party pick a new leader next week. The opinion polls all say that Mr Key and his government are popular, with a wide lead over the opposition Labour Party. + +It is not hard to see why. On a long list of yardsticks his country of only 4.7m people—“the last bus stop on the planet”, as Mr Key puts it—has been a striking success. The World Bank recently rated it the easiest place on Earth to do business. The Legatum Insitute, a think-tank in London, judged it—by crunching nine different criteria—the world’s most prosperous spot. Transparency International, a Berlin-based anti-corruption monitor, reckons it to be the world’s fourth most honest. A clutch of other league tables puts it in the top ranks for happiness, health, democracy and freedom, among others. Bloomberg recently reported that a growing band of magnates from America, Russia and China (among them Jack Ma of Alibaba, reckoned to be China’s richest man) have bought, or want to buy, hideaway homes in safe and beautiful New Zealand. + + + +The figures testify to New Zealand’s perkiness. The city of Christchurch, near the epicentre of a devastating earthquake in 2011, in which 185 people perished, is bouncing back. The national economy grew by a healthy 3.6% in the year to July; unemployment is under 5%. The workforce-participation rate is one of the highest in the world. Wages have risen by 9% in real terms since 2008. All this is because the Kiwi economy has grown much faster over the past decade than those of most rich countries. Australia, its closest neighbour, is a galling exception (see chart). + +Even so, the once steady flow of New Zealanders seeking a better living in Australia, which is 28 times bigger in area and home to five times as many people, is now reversing. Newcomers are coming in thick and fast from elsewhere, including China, India and other parts of Asia. A quarter of the residents of Auckland, the commercial capital, where a third of New Zealanders live, were born abroad, mostly in Asia. Ethnic Chinese, a fast-growing group, make up 4% of the country’s population. + +A flexible visa regime brings in immigrants with desirable skills. The mega-rich can win residence double-quick by depositing a suitably large dollop of investment. While dairy products and meat are still the country’s main exports, tourism, especially from China, is booming, up 18% in the past year. Services are growing fast too. After Donald Trump’s election victory, New Zealand’s immigration department received a surge of inquiries from America. + +New Zealand’s economic upswing began in the mid-1980s under an audaciously reforming Labour government that was, in the words of Mr Key, “amazingly right-wing”. Subsidies that, among other things, fattened farmers were wiped out, tariffs dropped and investment opened up. + +Since then, New Zealand has eagerly fostered free-trade agreements around the world, most notably with China in 2008—the first among the rich countries of the OECD to do so. “If you can’t do a high-quality FTA with New Zealand quickly, you can’t do it with anyone,” says the trade minister, Todd McClay. The only recent hiccup on this drive to free trade is the rejection by Donald Trump of the 12-country Trans-Pacific Partnership, which New Zealand has keenly encouraged. Asked if China, which has hitherto not taken part, could replace America to rescue the agreement, Mr McClay says, “It’s certainly something America should be thinking about.” + +Mr Key, a former currency trader in Singapore and London whose own wealth has been reckoned at more than $35m, has applied what he calls a policy of “radical incrementalism”. He has lowered income-tax rates (to 33% at the top), trimmed the national debt to 25% of GDP and partially privatised a batch of state utilities. At the same time he has raised the goods and services tax from 12.5% to 15%, reformed health care and increased various benefits (for instance, by making prescriptions and visits to the doctor free for children under 13). + +The opposition Labour Party laments that house prices are rising fast (by 13% in the past year), as is homelessness, especially in Auckland, where the opposition recently won a parliamentary by-election handsomely. Mr Key has admitted that his biggest worry, apart from drought or a global crash, is a housing bubble, which is why he says house-building is a priority. + +Mr English, who is less chirpy than Mr Key and led his party to a resounding defeat in 2002, was briefly challenged for the ruling party’s leadership by two colleagues in the cabinet. But they have withdrawn, paving the way for his coronation. Labour, on its fourth leader since Helen Clark was beaten by Mr Key in 2008, has won a measure of stability since 2014 under Andrew Little, a steady former trade unionist who calls for greater fairness, focusing on the rise of homelessness. His lot has agreed to co-operate with the Green Party—a tactic that helped it to its by-election victory in Auckland. Meanwhile Winston Peters, who leads the populist New Zealand First party, is calling for curbs on immigration and the free market. Although his party only polls around 10%, it could end up holding the balance of power in a close election. + +Whether or not the National Party retains power next year, Mr Key must go down as one of New Zealand’s most successful leaders. Under his stewardship, the country can claim to be one of the world’s most successful, too. + +This article appeared in the Asia section of the print edition under the headline “Lost Key” + + + + + +After the storm + +The death of Jayaram Jayalalithaa leaves a vacuum in Tamil politics + +The long-serving chief minister was one of India’s most successful and controversial politicians + +Dec 10th 2016 + +Idol, criminal, mother, chief minister + +IN HER convent-school English, she described her life as “tempestuous”. The word was as precise as Jayaram Jayalalithaa’s stage-trained elocution. But it does not do justice to a woman who, as an actress, rivalled Elizabeth Taylor in looks and glamour and, as a politician, outshone a host of caudillos, dictators and presidents-for-life in grit, capriciousness, generosity, vindictiveness, charisma and greed. + +When she died of a heart attack on December 5th at the age of 68, Ms Jayalalithaa was in her 15th year as chief minister of the Indian state of Tamil Nadu. To supporters among its 78m people she was known simply as Amma, meaning “mother”. Many were beneficiaries of such schemes as Amma canteens and pharmacies, which sell subsidised meals and medicine, or of her government’s handouts of blenders, fans and other goodies, adorned with her picture. + +In one of her first lead roles, in 1965, she appeared in a pink sari that grew clingy under a waterfall. That earned it an adult rating, meaning that the 17-year-old starlet could not watch it. She went on to make 88 more films in Tamil, 28 in Telugu, five in Kannada and one in Malayalam—all South Indian languages. She was also fluent in Hindi, which proved useful when, after the death in 1987 of her favoured co-star, alleged lover and political mentor, M.G. Ramachandran, Ms Jayalalithaa took over his party, led it to victory in Tamil Nadu and made it a sought-after partner in national coalitions. + +India’s provincial politics are a bruising affair, and Ms Jayalalithaa took some knocks—once quite literally when she was manhandled on the floor of the state assembly. The courts jailed her twice for corruption; both times a placeholder, O. Panneerselvam, stood in until she could return. He is now chief minister again. + +Ms Jayalalithaa, in short, broke all the rules. A light-skinned, high-caste and religious woman, she ran a secular party championing lower-caste Tamils, whose mustachioed cadres fell to the floor in devotion when she passed. In May the party pulled off a rare feat, winning a second consecutive term in a state where voters tend to boot out incumbents. But it is now bereft of a strong leader and a winning story. Its rivals are circling. + +This article appeared in the Asia section of the print edition under the headline “After the storm” + + + + + +Back in business + +A reforming minister tries to spur Indonesia’s economy + +But the country’s growth remains disappointing + +Dec 10th 2016 | Jakarta + + + +WHEN campaigning for president in 2014, Joko Widodo said that he could make the Indonesian economy grow by 7% a year—a rate it regularly attained in the 1980s and 1990s but has not reached since (see chart). Alas, Mr Joko, known to all as Jokowi, has not met his target. This year the economy looks set to grow by about 5%, just as it did in 2014. + +There is no doubting the potential of Indonesia, an archipelago of 13,500 islands that stretches 3,330 miles (5,360km) along the equator—the distance from London to Afghanistan. Its economy is the biggest in South-East Asia by far, bigger than those of Britain or France on a purchasing-power-parity basis. It is home to 261m people, half of whom are younger than 30. Yet realising this potential has proved tricky of late. + +China’s hunger for Indonesian coal and other commodities has abated in recent years. But Indonesia has struggled to find alternative sources of growth. Thanks to its clogged roads, congested ports, greasy-palmed customs officers and onerous local-content rules, investments in manufacturing that might, in another era, have gone to Indonesia are instead being made in places like Vietnam. Tom Lembong, Indonesia’s investment chief, notes ruefully that Vietnam’s exports, excluding oil and gas, exceeded those of Indonesia for the first time last year—even though its economy is much smaller. + +Jokowi’s answer is to improve infrastructure and deregulate, in order to attract investment and speed job creation. Early last year he scrapped expensive petrol subsidies, to allow greater spending on health and education as well as big investments in infrastructure. He has also produced more than a dozen packages of reforms intended to trim red tape and raise competitiveness. Critics say they are too scattergun—street vendors, the postal service, customs procedures and the minimum wage are but a few of the topics dealt with—but there is a lot that needs fixing. Indonesia was among the world’s ten most-improved economies in the World Bank’s latest “Ease of doing business” rankings, released in October, rising 15 places in a year. That still left it 91st out of 190 economies. + +Jokowi’s reforms have not been as bold as many hoped. Earlier this year, while revising the “negative investment list” of 350 industries that are completely or partially closed to foreign investors, he eased limits on 35 but increased them on 20. Stiff tariffs imposed on imported consumer goods in 2015 remain in place, even though the minister responsible for them has been sacked. Non-tariff barriers to trade proliferate: the latest to have foreign firms fretting is a law requiring all food, beverages, cosmetics and medicines sold in the country, along with the machines used to make them, to satisfy stringent halal-certification rules set by the ministry of religious affairs. + +Optimists point to the appointment in July of Sri Mulyani Indrawati as finance minister. The 54-year-old economist earned a reputation as a committed reformer during a previous stint as finance minister under Susilo Bambang Yudhoyono, Jokowi’s predecessor, in 2005-10. She says she wants strong public finances to be the “backbone” of the president’s reform drive. The government had to announce $10bn in spending cuts in August to prevent the deficit from breaching the legal limit of 3% of GDP. Yet decreasing government spending is one of the reasons the economy is slowing. She has vowed to follow a tax amnesty, which has raised a useful $7.5bn so far, with a relentless campaign against tax evaders—a policy she pursued with gusto the last time she was in the job. + +Ms Mulyani’s previous tenure ended in defeat, however, when she appeared to be chased from office because of a feud with Aburizal Bakrie, a tycoon-turned-politician. She insists that Jokowi is determined to combat corruption, reduce poverty and spread prosperity beyond the main island of Java, but she says she is not “naive” about the political difficulties involved. That Jokowi appointed her, given the feathers she has ruffled, is heartening. But her return is also a reminder of how reform efforts in Indonesia sometimes end. + +This article appeared in the Asia section of the print edition under the headline “Back in business” + + + +China + + + + + +Popular discontent: In China, too + +Banyan: Calm before the storm? + + + + + +Serving the people + +China has gained hugely from globalisation + +So why are its workers unhappy? + +Dec 10th 2016 | HANGZHOU + + + +LI DONGSHENG, who is 35, says he is too old to learn new skills and too old to get married. Construction and factory work used to be plentiful, he says, as he eats his lunch from a yellow plastic container while sitting on a wall outside a job centre in Hangzhou, a city on China’s wealthy eastern seaboard. But these days he can rarely find even odd jobs. He sleeps rough and has not visited his parents, who live hundreds of kilometres inland, for two years. Millions of people like Mr Li have powered China’s rise over the past three decades, working in the boom-towns that have prospered thanks to China’s enthusiastic embrace of globalisation. Yet many are anxious and angry. + +Factory workers in America and Europe often blame China for stealing their jobs. There is no doubt that China has benefited enormously from its vast pool of people, like Mr Li, who are willing to work for a fraction of what Western counterparts might earn. Since 1979 China’s transformation into the workshop of the world has helped lift hundreds of millions of Chinese out of poverty. + +Yet many of the worries that have recently animated Western voters are common in China, too. Working-class Chinese, as well as members of the new middle class, fret about rising inequality, the impact of mass migration from the countryside into cities and job losses. “China will not shut the door to the outside world but open more,” said the president, Xi Jinping, in November. But even globalisation is occasionally attacked. On December 6th Global Times, a jingoistic newspaper published in Beijing, ran an opinion piece blaming globalisation for China’s income inequality, housing bubbles and the ravaging of its environment. + +China’s own policy failures are much to blame, too. But the government has sensed the danger of rising public anger created by the divide between rich and poor (in the 1980s China was among the most equal societies in the world; now it is one of the least so). A decade ago it switched its “chief task” from “economic construction” to establishing a “harmonious society”—ie, one with a more even distribution of wealth (as well as a beefed-up police force to keep malcontents in check). China is now becoming slightly fairer overall: thanks to a dwindling supply of cheap labour and government efforts to boost the minimum wage, blue-collar salaries are rising faster than white-collar ones. + +But many people feel that inequality and social mobility are getting worse in other respects. For example, members of the fast-growing middle class complain about the emergence of a new plutocracy. They say that the wealthiest owe their fortunes to corruption and personal relationships, not hard work. Mr Xi’s waging of the longest and most intense campaign against graft since the party came to power in 1949 is partly (as he admits) a sign of fear that anger over widespread and egregious corruption might imperil the party’s rule. + + + +Among blue-collar workers, a structural shift in China’s economy, from labour-intensive manufacturing to higher-tech industries and services, is fuelling job insecurity. In 2013, for the first time, the contribution to GDP from services, such as transport, shops, restaurants and finance, pulled ahead of industry, including manufacturing, mining and construction (see chart). In the past couple of years, jobs in manufacturing have been declining, partly because globalisation is beginning to play the same sort of role in China as it does in developed countries. Some factories have been moving to cheaper locations abroad. + +The impact is pronounced in many of the hundreds of towns that specialise in making certain products. Datang, China’s “sock city” near Hangzhou, is a good example: in 2014 it made 26bn pairs of socks, some 70% of China’s production, but many factories are closing as garment-making moves to cheaper countries in Asia. As a local boss explains, “People simply won’t pay more for a pair of socks.” + +Millions more jobs are threatened by efforts to reduce overcapacity in bloated and heavily indebted state-owned enterprises (SOEs), such as steelmakers and mining companies. Nervous officials often prefer to prop up such businesses rather than risk an explosion of unrest among laid-off urban-born workers. The government worries more about such people than it does about unemployed migrants from rural areas: they stay in the cities rather than return to the countryside. + +The official unemployment rate in urban areas has remained remarkably steady at around 4% for years, even during the worst of the global financial crisis. But those figures are highly misleading. For one thing they exclude migrants from the countryside, who often suffer the worst labour abuses, such as long periods of unpaid leave as well as of unpaid work: bosses often hold back wages for months. About 40 construction workers in Beijing protested last month to demand unpaid wages from a project three years ago (pictured above). + + + +Many of those who used to work in factories, such as Mr Li in Hangzhou, are ill-equipped to find new jobs in service industries. Official data show that more than two-thirds of workers laid off in recent years were poorly educated and around half were aged 40 or older. Those are big handicaps. The government has assigned 100bn yuan ($14.5bn) to pay for the resettling and retraining of workers laid off in the steel and coal industries. But the scheme’s details are unclear. Migrants, usually first out of the door, often cannot afford to stay in a city without a job. Those who do find work in service industries are not necessarily happier. In the third quarter of 2016, for the first time, labour unrest in such firms was more common than in manufacturing, according to China Labour Bulletin. The Hong Kong-based NGO recorded 2,271 protests by workers in all industries between January and November (see map). That is more than 14 times as many as in the same period of 2011. + +Drawbridge up + +As anxieties grow, migrants are likely to suffer. Like those in the West who resent foreign immigrants, Chinese urbanites often blame their cities’ problems on outsiders, albeit on people from other parts of the country (who often speak very different dialects and lack “civilised” city ways). The 280m such migrants in urban China feel marginalised and resented. Weibo, a microblogging site, has accounts dedicated to subjects such as “Beijingers safeguarding the city of Beijing”. In May, 12 city and provincial governments tried to broaden their pool of university entrants by reducing quotas for local students. Parents in three cities staged demonstrations, worried their children would lose a precious advantage (pictured is one such protest in the eastern city of Nanjing). + +More often, migrants are subjected to a kind of apartheid, in effect excluded from subsidised urban health care and other public services because they have no urban hukou, or residence permit. Urban schools commonly (and illegally) require that parents of migrant children pay extra fees and produce documents such as rental or job contracts that few of them can supply. Children who do get places are sometimes taught separately from those of urban-born parents. The central government is making it easier for migrants to obtain hukou in small towns and cities where apartment blocks often lie empty but jobs are scarce. But it is getting harder for people from the countryside to settle in megacities such as Beijing and Shanghai, owing to measures such as the demolition of ramshackle housing where many of them live and stricter qualifications for local hukou. + +The Communist Party has treated the presidential election in America and Britain’s vote to leave the European Union as propaganda victories. People’s Daily, the party’s mouthpiece, gleefully reported on the “dark, chaotic and negative” election campaign that had revealed the “ill” state of America’s “so-called democracy”. China Daily called the Brexit vote a “political earthquake”. Its message was clear: giving people the freedom to make such momentous decisions can have dangerous consequences. With the West plunged into uncertainty, China has seized the chance to present itself as a beacon of stability. + +Yet the party knows that in China, too, the rise of inequality and loss of manufacturing jobs present big challenges. Mr Xi may talk confidently of keeping China open, but the case for doing so is not clear to many of China’s citizens, nor even to the government (ask foreign businesses in China about the difficulties they face). Since the country first launched its “reform and opening” policy in the late 1970s, arguments have never ceased over how far to go. In the 1990s, when the party launched its first wave of SOE closures, resulting in millions of lay-offs, some angry workers even began to embrace a neo-Maoist movement that harked back to the days of guaranteed jobs (and far firmer controls on internal migration). As he prepared to take over in 2012, Mr Xi engaged in a fierce struggle with another leader, Bo Xilai, who had gained huge popularity partly thanks to his Maoist rhetoric. Mr Bo is now in jail, but Mr Xi has adopted his Mao-loving style and has lashed out at Mao’s critics. + +Parents want to take back control + +Anti-elite sentiment, such as Britain and America are experiencing, is the party’s worst fear. Mr Xi is a member of the party’s upper class: his father was Mao’s deputy prime minister until he was purged. Many of his closest allies are also “princelings”, as offspring of the party’s grandees are often called. That is why he has tried hard to portray himself as a “common man”, highlighting his experiences of living in a cave and working in the fields during Mao’s Cultural Revolution. He is appealing to popular nationalism, too, with talk of the country’s “great rejuvenation” and the “Chinese dream” (shades of Mr Trump’s “Make America Great Again”). + +China does not have the complication of free elections, much less referendums. But the party feels that it needs to appear responsive to popular opinion in order to stay in power. That is becoming more difficult as economic growth slows and the main public demand—for greater wealth—becomes harder to satisfy. Even with strong institutions, rule of law and freedom of the press, Britain and America are struggling to contain popular rage. China is dealing with many of these same forces with fewer outlets for discontent. Mr Xi is trying to keep anger from spilling over by locking up dissidents with greater resolve than any Chinese leader has shown in years. He knows that global elites are under attack. That is making him all the more determined to protect China’s. + +This article appeared in the China section of the print edition under the headline “In China, too” + + + + + +Calm before the storm? + +Mr Trump’s backing of an admirable but neglected country is worrisome + +China’s leadership is playing it cool, for now + +Dec 10th 2016 + + + +WHEN President-elect Donald Trump tweeted last week that he had spoken to Taiwan’s leader, Tsai Ing-wen—“The President of Taiwan CALLED ME”—almost all of Washington’s Asia hands suffered palpitations. It was the first presidential-level contact between America and Taiwan since “normalisation” in 1979, when Jimmy Carter broke off diplomatic relations with “Free China”, as Taiwan was then often known, and recognised the Communist government in Beijing instead. + +At the time Congress tried to reassure Taiwan by making provisions for continued weapons sales and hinting that America would step in should the island be attacked. But, under immense Chinese pressure, America has always kept Taiwan at diplomatic arm’s length. China regards Taiwan as one of its provinces, and refuses even to honour Ms Tsai with her title of president. It has long been assumed in Washington that any American move to alter the status quo would so infuriate China that it might wage war on the island, probably dragging in America. Didn’t Mr Trump know he was playing with fire? To Washington’s Asia experts neither possible answer to that question seemed encouraging. + +But then, something strange happened: nothing. No explosion of rage issued from Beijing, as many expected. The foreign minister, Wang Yi, dismissed Ms Tsai’s call as a “small step”, or “petty” as it might also be translated—a mild response by Chinese standards. In the lull, some Asia hands allowed themselves to breathe out. Perhaps, even, the breach was not wholly without precedent—Ronald Reagan had invited senior Taiwanese officials to his inauguration, after all, and got away with it. + +Perhaps, even, Mr Trump gets grudging admiration for reminding the world that Taiwan deserves more recognition as a peaceful, prosperous democracy. For too long China has controlled the narrative over the island. Far from being a renegade part of China, it has in its entire history been ruled directly from the Chinese capital for not much more than a decade: briefly in the second half of the 19th century, and from 1945-49. Never have the Communists ruled Taiwan, so shouldn’t their bullying be decried more often? As for the “one China” idea that the Communist Party insists upon, America has never agreed to it; formally, it merely “acknowledges” that both China and Taiwan hold to the principle that there is but one China. That acknowledgment was made in the 1970s, with dictatorships in Beijing and Taipei both claiming to rule all of China. Today, a democratic Taiwan has no such pretensions. Why should American policy be set in stone? + +For now, many Taiwanese are basking in Mr Trump’s attention. They hope for further gestures when he is president—a free-trade deal, perhaps, which Mr Trump’s advisers say they are keen on striking with Taiwan, and more American weapons. There have been rumours that Mr Trump is mulling another possible flourish before then: a meeting in New York in January with Ms Tsai, who will be travelling to Guatemala, one of a handful of countries that officially recognise Taiwan. Ms Tsai’s office dismisses talk of this as “excessive speculation”. But were such an encounter to happen, it would cause rapture in Taiwan. It would also trigger even greater palpitations in Washington. + +China would still play things cool. For a country that craves predictability in its external environment, a Trumpian America has suddenly become the wild card. But, Chinese officials remind themselves, using an old saying, the way to deal with 10,000 changes is not yourself to change. Some Chinese policymakers are pessimistic about relations with America under Mr Trump, noting his staunchly protectionist views and his inclination to improve ties with Russia in ways that might leave China isolated. (Anti-China tweets from Mr Trump reinforce the downbeat view.) Others are more hopeful, seeing a transactional president minded to cut deals with China, America’s essential counterpart on everything from trade to security. The appointment of the China-friendly governor of Iowa, Terry Branstad, as ambassador to Beijing is a fillip. For now, the regime will bide its time. + +Yet, far from diminishing, the risks will grow. One, in the near term, lies in the nature of Mr Trump’s team. Almost the entire Republican establishment of seasoned Asia experts has refused to serve under him. So those handling policy towards Asia are notable for their inexperience or for their ideological inclination to favour Taiwan over those once disparaged as “ChiComs”. + +For all Taiwan’s virtues, this should be a worry. America’s relationship with China is broader, more complex and far, far more vital than its one with Taiwan. Making the running on Taiwan implies disregard for the bigger relationship. China’s help on many global issues, including counter-terrorism, is essential. And there is an urgent need for agreement over North Korea’s nuclear-weapons programme, which is developing dangerously fast. Only China can make North Korea change course. Finding the means to cajole or coerce China to act should be an American priority, from which much of the rest of Asia policy should flow. Yet Mr Trump’s team appears to be giving little thought to this. + +Stop that tiger, I wanna get off + +And then comes the risk of increased Chinese neuralgia over Taiwan during a Trump presidency. Years of propaganda and “patriotic education” have fuelled an irrational nationalism over Taiwan among ordinary Chinese. President Xi Jinping himself has said that the Taiwan “problem” can no longer be left to future generations. For now, the nationalism is in check. After all, officials claim that, for all the mischief by Taiwan’s splittist politicians, ordinary folk are true Chinese patriots. But should Mr Trump stir things up, it may dawn on the Chinese that the claim is not true, and that Taiwanese politicians promote de facto independence because that is what people want. If public anger grows, Mr Xi will be riding a tiger from which he will struggle to dismount. By then, it will no longer be possible to wait and see. + +This article appeared in the China section of the print edition under the headline “Calm before the storm?” + + + +Middle East and Africa + + + + + +Gambia’s election: Strongman down + +South Sudan: Genocide or mere atrocity? + +Saudi Arabian diplomacy: Outpaced by Iran + +Israel’s army: Welcome to Tank Girl + + + + + +Strongman humbled + +A shock victory for the underdog in Gambia + +An old-style African despot does the right thing and goes + +Dec 10th 2016 + + + +ALTHOUGH widely believed to have consulted fortune-tellers, President Yahya Jammeh surely foresaw little chance of an upset in the elections in Gambia on December 1st. Ahead of the polls, the man who once vowed to rule for “a billion years” had already boasted that he was Allah’s preferred candidate. Just to make sure, he had the main opposition candidate arrested in April for the crime of holding an unauthorised protest. His new rival was an estate agent called Adama Barrow (pictured), whose less-than-glamorous biography included a stint as a security guard at Argos, a discount store, on London’s Holloway Road. On polling day Mr Jammeh cut off the internet. + +Yet despite government ministers poking fun at his modest past, Mr Barrow pulled off a big political upset in results announced on December 2nd, winning by 45.5% to Mr Jammeh’s 36.7%. Even more surprisingly—and to his great credit—Mr Jammeh quickly conceded defeat. By the evening, streets that many had feared could become a battleground were full of partying crowds tearing down posters of their outgoing president. + +The vote ends the rule of one of the last of Africa’s old-school strongmen. Mr Jammeh had clung to power since a coup in 1994 and often seemed to combine some of African leaders’ worst traits. From his dire human-rights record to his long personal title of “Excellency Sheikh Professor Doctor President”, Mr Jammeh was every inch the eccentric Big Man, even adding a few new quirks of his own to the genre. There was his huge six-wheeler Hummer, for example, that sped him along Gambia’s bush roads, and his practice of witchcraft, notably his claim to have invented a herbal cure for HIV. + +Against all this, Mr Barrow’s victory is all the more remarkable. A diffident figure, he lacks his predecessor’s showmanship, and indeed would not have been running at all had his United Democratic Party’s chosen candidate, Ousainou Darboe, not been jailed. But what Mr Jammeh intended as a pre-emptive strike against the opposition backfired spectacularly. For while Mr Darboe was in his late 60s and considered a little past his prime, his replacement, Mr Barrow, was only 51 years old and more of a consensus candidate. Though hardly a compelling orator, he speaks most of Gambia’s ethnic languages, which may help him heal the tensions that have simmered between Mr Jammeh’s minority Jola tribe and the bigger Mandinka group. + +Mr Barrow was very much the underdog. For a start, Mr Jammeh hogged most of the media airtime—many Gambian newspapers were wary of even covering opposition rallies. And as with most strongmen, he enjoyed a bedrock of support, thanks to the ease with which he could get things done. Under his stern stewardship, Gambia’s roads, electricity, schools and hospitals improved. The country also avoided the wars, plagues, famine and terrorism that have hit the rest of West Africa during his 22-year rule. + +But Mr Jammeh’s isolated progressive acts—like last year’s ban on female circumcision—were overshadowed by his feverish anti-Western posturing. In the past three years Mr Jammeh has withdrawn Gambia from the “colonialist” Commonwealth, scrapped English as an official language and, in October, quit the International Criminal Court (ICC), which he denounced as the “International Caucasian Court”. With the West threatening sanctions over his human rights record, many feared the country was becoming a pariah state. Emigration was increasingly attractive. According to the Migration Policy Institute, Gambia’s net migration rate in 2013 was 2.3 departures per 1,000 people, the tenth highest in Africa. UN figures show that Gambians make the sixth-most-common national group of migrants crossing the Mediterranean by boat this year—a remarkable number given that the country’s population is just 1.9m. + +A court has now freed Mr Darboe and other political prisoners, while Mr Barrow has said that among his first acts will be to rejoin both the Commonwealth and the ICC. There remains the question, though, of what to do with Mr Jammeh himself. One option is that he seeks exile in Saudi Arabia, already a sanctuary to other ousted strongmen like Tunisia’s Zine el-Abidine Ben Ali. But many in the opposition want Mr Jammeh prosecuted over hundreds of cases of “disappeared” comrades, a demand that might see him withdraw his offer to retire quietly, or even risk a coup. At a time when African democracy has often seemed to be in reverse, Gambia’s swift transfer of power is a sign of hope. However, Mr Barrow, who once watched out for miscreants at Argos, will need to keep his eyes peeled once again. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Strongman down” + + + + + +Genocide or mere atrocity? + +The chaos in South Sudan keeps getting worse + +The war in the world’s newest state is expanding + +Dec 10th 2016 | JUBA + + + +AT AN orphanage at the edge of Juba, South Sudan’s battered capital, there are no longer any children. Yellowing toothbrushes sit in a tin hanging in the sun; muddied exercise books litter the floor. The only occupants now are a few soldiers who lounge around in the shaded huts listening to the radio. The orphanage, which is run by an Austrian NGO, had to move to a more secure part of town after fighting broke out nearby in July. It is now considering moving back—but only if the security lasts, a tough call in a country beset by economic crisis and dire warnings of a possible impending genocide. + +The fighting in July was between the forces of Salva Kiir, the president, and Riek Machar, the former vice-president, after a peace deal, never properly respected in the first place, broke down. In the fighting, which lasted several days, Mr Machar’s forces were chased out of Juba. Since then the city has returned to an uneasy calm. But the rest of South Sudan has not. A war that had previously been concentrated in the swampy north of the country has spread to southern areas, which had been peaceful. Worse, the fighting has fomented violence between ethnic groups. Diplomats are proving slow to respond. + +The new battlefields are in the Equatoria region, along the borders with Uganda and the Democratic Republic of Congo. Equatorians have a reputation for being educated professionals, who have largely stayed out of politics. But the spread of Dinka cattle herders into their territory, together with a sense of exclusion from the Dinka-dominated government (Mr Kiir is a Dinka), has fuelled resentment. In July, when Mr Machar fled from Juba, walking to Congo over a period of 40 days, he exploited this effectively, militarising Equatorians as he went along, explains Alfred Taban, the editor of the Juba Monitor, a newspaper. + +In South Sudan, the violence typically follows a pattern, of attacks launched by Mr Machar’s opposition that are punished by government reprisals, which often target civilians. And indeed as the government has lost its grip in Equatoria, its soldiers—from the predominantly Dinka armed forces—have been harming civilians on ethnic lines. Entire towns, such as Yei, a city near the border once known for its cultural life, have reportedly been denuded of people. Since July the number of South Sudanese refugees in Uganda has increased from 250,000 to almost 600,000. New arrivals cross the border at a rate of 25,000 a week. + +This has sparked a furious debate about what to call the violence. On November 11th Adam Dieng, the UN’s special adviser on the prevention of genocide, said that there was a “strong risk of violence…with a potential for genocide”. In Juba, many analysts fiercely dispute the term—they say it is a desperate attempt to get attention for a conflict that has been largely ignored by the international community. But few deny that ethnic violence has spread. + +What happens now may depend on the world’s response. After Mr Dieng’s comments, America seems more likely to embrace a proposed UN arms embargo that it has hitherto been uncertain about (not least because Russia might veto it). + +The South Sudanese government, in an attempt to avert this pressure—and perhaps to attract aid that would slow an economic crisis that has produced an inflation rate of 830%—has embraced the idea of a “regional protection force” of soldiers from neighbouring countries. But whether it would actually let them stop the violence is uncertain. South Sudan already has 12,000 UN soldiers on its territory. Some 210,000 people languish in UN protection camps, unable to go home. And outside, the conflict goes on. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Genocide or mere atrocity?” + + + + + +Outpaced by Iran + +After a year of boldness, Saudi Arabia is in retreat + +The kingdom has experienced diplomatic reverses on all fronts + +Dec 10th 2016 | RIYADH + +Nothing but bad news + +IN JANUARY this year Muhammad bin Salman, the young deputy crown prince who in effect runs Saudi Arabia, declared an end to his country’s “comatose” foreign policy and a determination to push back against Iran. The Syrian rebels he supported looked unbeatable in Aleppo. His generals spoke of the imminent capture of Sana’a, Yemen’s capital, from the Houthi rebels who had seized it. He kept Iran and its client militia, Hizbullah, from imposing their choice of president in Lebanon. Officials spoke of bankrupting Iran by saturating the market with oil, regardless of the wishes of OPEC partners. A Saudi ambassador even went back to Baghdad, for the first time in 25 years. + +But at the end of the year the kingdom finds itself in retreat on all fronts. Its ambassador has pulled out of Iraq, fleeing a torrent of abuse from Shia politicians who look towards Iran. Pounded by Iranian, Russian and Syrian government forces, the rebels in Aleppo are on the verge of defeat. The Saudis have bowed to Iran’s preference for Lebanon’s president. And at an OPEC meeting on November 30th, they agreed to shoulder the largest share of a production cut in a bid to restore prices, while letting Iran raise its production to pre-sanctions levels. + +In Yemen, Saudi Arabia’s Houthi foes seem bent on denying Prince Muhammad a dignified exit, launching repeated cross-border raids and last week declaring their own new government, rather than agreeing to form one including the exiled president as the prince wants. “Yemen will be Saudi Arabia’s Vietnam,” says a contemptuous Iranian official. “It is bleeding the Saudis’ military and diplomatic prestige.” If Saudi Arabia agrees to leave the rest of the region, he says, Iran will let it keep Bahrain, the little island state linked by a causeway to Saudi’s eastern coast. + +This reversal of fortune owes much to the successes of Iran’s military support for the Arab world’s Shia and allied forces—Syria’s President Bashar al-Assad, Iraq’s army and paramilitary forces, and Lebanon’s militia-cum-political party, Hizbullah. “They are surrounding us with militias,” protests General Ahmad Asiri, who advises the deputy crown prince on the Yemen campaign. But Saudi Arabia is also losing soft power, cutting its funding to traditional Sunni allies, who have begun looking elsewhere. With his construction firm in Saudi Arabia in trouble because of government cuts, Saad Hariri, who heads Lebanon’s Sunni bloc, has accepted the post of prime minister under Hizbullah’s choice for president. Egypt’s President, Abdel-Fattah al-Sisi, is making overtures to Syria, Russia and even Iran after Saudi Arabia cut back shipments of free oil. + +As relations fray in the broader region, the prince is trying to strengthen ties with the principalities in his back yard. King Salman, his father, made a rare foreign trip to four Gulf states in early December. A summit in Bahrain’s capital, Manama, which ended on December 7th, aimed to advance plans to turn the Gulf Cooperation Council into a Gulf Union with tighter defence co-ordination. But there, too, not all are convinced. “There’s a latent fear of Saudi hegemony,” says Becca Wasser, who monitors the Gulf for RAND Corporation, an American think-tank. Oman, in particular, prefers to be semi-detached. + +Still, the OPEC agreement defied expectations, indicating that both Iran and Saudi Arabia can prioritise economics over regional confrontation. Both are failing to cover domestic spending, let alone foreign adventures. Iran’s government needs oil at $55 per barrel to break even, says the IMF; Saudi Arabia’s needs $80. “The oil producers can’t sustain the external and proxy wars they once could when oil was a $120 a barrel,” says a former World Bank economist in Beirut. “They realise they need to change.” Greater stability and more open borders, too, says an Iranian official, would help Iran find new markets for other exports, such as of cars and cement. + +The coming of Donald Trump in America is a further reason for restraint. “Both countries are playing a waiting game,” says Adnan Tabataei, the head of CARPO, a Bonn-based think-tank which is running “track 2” (non-official) talks between Saudis and Iranians. Both fear Mr Trump’s reputation for impulsive action—even a senior Saudi prince has urged him not to break off the global deal that has limited Iran’s nuclear programme. Both sides seem uncertain whether he will tighten sanctions on Iran or ratchet up JASTA, the new law that allows Americans to sue Saudi Arabia for losses on September 11th 2001. Above all, and despite the influence of hardliners in both camps, neither side wants anything resembling a direct war. + +But tensions are not abating; quite the reverse. Saudi Arabia severed diplomatic relations with Iran in January because of an attack on its embassy in Tehran that followed the execution of a prominent Shia cleric and three other Shias. This week came the news that 15 more Shias have been sentenced to death in Saudi Arabia on charges of spying for Iran. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Outpaced by Iran” + + + + + +Welcome to Tank Girl + +Plans to let women Israeli soldiers serve in tanks draw the wrath of rabbis + +They see it as a secularist step too far + +Dec 10th 2016 | JERUSALEM + + + +REPORTS that the Israeli army’s general staff is considering allowing women to serve in tank crews have caused shock waves to ripple through the ranks, and also within Israel’s religious establishment, which opposes mixed-gender service in combat units. + +Religious Israelis have been making up a growing number of the soldiers in the Israel Defence Forces’ (IDF) elite units for years now. But under the current chief of staff, Lieutenant-General Gadi Eizenkot, there has been a deliberate attempt to curb the rabbis’ power. + +Over the past year this has included transferring some of the roles of the Military Rabbinate to the largely secular IDF Education Corps, and enforcing various regulations on religious soldiers, such as forbidding them to grow beards without a senior officer’s approval. Many on the religious side see allowing more female combat troops as simply the latest attempt at secularising the IDF. + +The rabbis have been warning that if more combat units are mixed, their students who abide by strict Jewish-orthodox codes of gender segregation will refuse to serve in them. The official position is that religious soldiers can always serve in their own separate formations, and that decisions to allow women to serve in combat are made according to strictly operational considerations. However, both sides are fighting a wider battle for control of the army. + +Historically, the IDF was seen as a pioneer in women’s military service, enlisting them from 1948; it has always seen the need to draw from as wide a pool as possible. But even so, it limited women to non-combat roles. + +Only gradually over the past two decades, partly in response to legal and political pressure, has it opened up units such as the artillery corps, as well as pilots’ and naval officers’ courses, to female candidates. While a small number of light-infantry battalions now have men and women serving side-by-side, the armoured corps and the elite infantry brigades, which contain a high proportion of religious soldiers and officers, have remained closed to them. + +Many of the army’s field officers now feel that they are being used as political footballs. As one put it this week, “Our job is to be an efficient fighting force, not a lab for social experiments or a battleground in this country’s cultural wars.” + +This article appeared in the Middle East and Africa section of the print edition under the headline “Welcome to Tank Girl” + + + +Europe + + + + + +Post-referendum Italy: Grim non-resignation + +Russia’s active measures: The motherland calls + +Spain’s minority government: Short-handed + +Austria’s presidential election: Left hook + +Charlemagne: Unlikely candidates + + + + + +Grim non-resignation + +Matteo Renzi may not keep his pledge to step down + +Italys’ prime minister has lost his constitutional referendum but isn’t quite gone + +Dec 10th 2016 | ROME + + + +SHORTLY after midnight on December 5th, Matteo Renzi, Italy’s prime minister, faced the media for an emotional farewell strikingly reminiscent of that of David Cameron following the Brexit vote. It appeared that the anti-elite torrent sweeping the West had claimed yet another victim. The day before, Italians had resoundingly defeated Mr Renzi’s proposals for constitutional reform. Flanked by his wife, he announced he would resign: “My experience in government ends here.” + +Mr Renzi had always said he was different from other Italian politicians, who hang on to their posts and privileges with the tenacity of pit bulls. If he failed to convince voters to back his vision, he said, he would leave office, and maybe politics. During the referendum campaign, he said repeatedly that he did not intend just to “stay afloat” if defeated. Apparently true to his word, he later tendered his resignation to the president, Sergio Mattarella, who asked him to stay for long enough to secure the passage of next year’s budget. + +Yet even before the finance bill was approved in parliament on December 7th, it became clear that Mr Renzi had either changed his mind or had been play-acting. Despite his formal resignation he now seems determined to continue to play a decisive role in Italy’s affairs. At a meeting of the executive of his party, the centre-left Democratic Party (PD), at which no debate was allowed, he spelled out the options he was prepared to countenance: a broad-based government of national unity, led or dominated by his party; or an election as soon as possible after a Constitutional Court ruling on the electoral law on January 24th, in which he would be the PD’s candidate. “The Democratic Party is not afraid of democracy,” he said. + +But many PD lawmakers are. They would lose their parliamentary pensions if the session ends before September. Obliquely, Mr Mattarella signalled that he too was appalled by the idea of a snap election—though for different reasons. It would mean the two houses of parliament being elected under flawed and radically different rules, with the likelihood of one chamber lacking a clear majority, and the possibility of each being controlled by different parties or alliances. + +Electoral collage + +This mess stems from Mr Renzi’s botched constitutional reform. It envisaged turning the Senate into an indirectly elected revising chamber of regional officials. So last year an electoral law was passed that applied only to the lower house, the Chamber of Deputies. It is this law, known in Italian political jargon as the Italicum, that is being examined by the Constitutional Court. Elections for the upper house remain governed by an earlier law that the same court has modified into an extreme form of proportional representation. + +In the consultations the president began on December 8th, Mr Mattarella is expected to insist that the next government frame a new set of electoral rules that apply to both houses. But that could take a year or more, and Mr Mattarella faces a challenging task imposing his will. + +The prime minister, whose party and its allies have a majority in both houses, is not the only figure saying he would be happy with an early election. Italy’s second-largest party, the Five Star Movement (M5S), is pressing for one, as are two of the three parties on the right. The exception is Forza Italia, or rather its leader, Silvio Berlusconi. He needs time to heal splits in his movement and try to wrest back the leadership of the right from Matteo Salvini, the populist, Eurosceptic head of the Northern League. But the 80-year-old Mr Berlusconi, who had open-heart surgery earlier this year, may be struggling with the stress: shortly before Mr Renzi resigned he was taken to hospital, suffering from “slight palpitations”. + +Mr Renzi’s manoeuvring since the referendum helps explain why he is seen by much of the electorate as the epitome of a mainstream politician, and why the referendum, which he turned into a vote of confidence by threatening resignation if he lost, was such a fiasco. The 20-point margin of defeat—60% to 40%—was almost double what pollsters had foreseen. The highest No margins were among 30- to 40-year-olds and in Italy’s poorest regions, where dissatisfaction with the government’s disappointing economic record is strongest. + +Not only Mr Renzi’s opponents, but also some in his own party openly celebrated the outcome. “I didn’t know they hated me so much,” he was reported as telling an aide. That was disingenuous. Mr Renzi styled himself the “Demolition Man”; he took an axe to the PD’s old guard and then ousted his predecessor as prime minister, the gentlemanly Enrico Letta, after publicly assuring him he had no plan to do so. + +Right-wing populists such as Nigel Farage in Britain and Marine Le Pen in France hailed the referendum result as a victory for Euroscepticism. But though Mr Salvini is a shrill critic of the EU and the M5S wants a referendum on the euro, European issues played little part in the campaign. + +Even so, Italians may have unintentionally lit one, or perhaps two, fuses under Europe. One is financial. Political uncertainty has returned at a time when several Italian banks, laden with bad loans, are trying to strengthen their balance-sheets with injections of cash. The jitters have reportedly already threatened a private-sector recapitalisation of Italy’s third-largest and weakest lender, Monte dei Paschi di Siena (see article). If a government rescue proves necessary, the hope is that it will be enough to prevent a chain reaction that could spread to other cash-strapped lenders. + +The second fuse may lead through the early election that Mr Renzi backs. These could end in a victory for the M5S and its founder, Beppe Grillo, an anti-establishment political comedian in the mould of Michael Moore, an American film-maker. The mainstream parties will strive to keep his maverick movement out of power, but they may be forced to form unnatural and fractious coalitions of right and left that become paralysed by the incompatibility of their component parts. And with an economy that has scarcely grown since the turn of the century, paralysis is the last thing that Italy needs. + +This article appeared in the Europe section of the print edition under the headline “Grim non-resignation” + + + + + +The motherlands calls + +Russian propaganda is state-of-the-art again + +As in the 1930s, Moscow is a beacon for an international movement + +Dec 10th 2016 + + + +FOR much of post-Soviet history Russia was seen as an outlier whose politics would inevitably move towards those of the West. After the Brexit vote and the election of Donald Trump in America, it appears the opposite is taking place: the style of politics practised by Vladimir Putin’s regime is working its way westward. + +From the Mediterranean to the Pacific, Mr Putin is hailed as an example by nationalists, populists and dictators. “My favourite hero is Putin,” said Rodrigo Duterte, the brutal president of the Philippines. Mr Trump called Mr Putin “a leader far more than our president.” In Italy Beppe Grillo’s Five Star Movement took Mr Putin’s side against the West, and the anti-immigrant Northern League, led by Matteo Salvini, has enthused about his Russia. “No clandestine immigrants, no squeegee merchants and no Roma encampments [in Moscow],” tweeted Mr Salvini during a visit in 2014. + +In France Marine Le Pen, whose National Front received a loan from a Russian bank, attacks the European Union and America for being too aggressive towards Russia. In the words of Dimitar Bechev, the author of a forthcoming book on Russia in the Balkans, “Putin enjoys a cult status with all holding a grudge against the West.” Nowhere is that status greater than with the nationalists of America’s “alt-right”. Matthew Heimbach, the founder of the Traditionalist Worker Party and a crusader against “anti-Christian degeneracy”, told the New York Times he sees Mr Putin as “the leader of the free world.” He called for the creation of a “Traditionalist International”—a reference to the Communist International founded in 1919. + +The last time Russia had such a role in crystallising anti-establishment ideas was in the 1920s and 1930s, after the Bolshevik revolution. When Stalin wrote that the Soviet Union had become an “open centre of the world revolutionary movement”, it was not just propaganda. In her book, “Moscow, the Fourth Rome”, Katerina Clark, a historian, writes that Moscow aspired to form the centre of a new civilisation, attracting Western intellectuals and claiming to be the only legitimate heir to the world’s greatest artists. “Moscow as a concept is the concentration of the socialist future of the entire world,” wrote the Soviet film-maker Sergei Eisenstein in 1933. + +Today, 25 years after the Soviet collapse, Russia is again seen as an emblem—this time of a nationalist imperial order. And just as in the 1930s, its isolationism does not prevent it from being involved in the global populist, anti-establishment trend. The Kremlin’s bet on marginal right-wing parties has paid off as they have moved into the mainstream. It has pumped out disinformation and propaganda both through its official media channels, such as the RT and Sputnik news networks, and through thousands of paid internet trolls. Its cyber-attacks against Western countries produced troves of emails and documents which it dumped into the hands of foreign media, disrupting America’s presidential elections to the benefit of Mr Trump. + +According to Bruno Kahl, the boss of Germany’s internal intelligence agency, the BND, “Europe is the focus” of Russia’s cyberattacks and disinformation—especially Germany, which will hold a federal election next autumn. France’s spooks say Russian backers may interfere in its presidential elections, too. Such activity recalls the Soviet Union’s so-called “active measures”, which aimed to disrupt and discredit Western democracies. In West Germany, says Anton Shekhovtsov, an expert on European far-right movements, the KGB propped up not only Communist parties and militants such as the Red Brigades, but also extreme right-wing groups. + +Unlike the Socialists of the 1930s, the Kremlin and its friends today are driven not so much by ideology as by opportunism (and, in Russia’s case, corruption). Mr Putin’s primary goal is not to present an alternative political model but to undermine Western democracies whose models present an existential threat to his rule at home. Having lived through the Soviet collapse, he is well aware that the attraction of the prosperous, value-based West helped defeat communism. The retreat of that liberal democratic idea allows Russian propagandists to claim a victory. + +Mr Putin has been careful not to endorse his admirers, whether Ms Le Pen, Mr Trump or radical nationalist activists. The president proclaims himself “the biggest nationalist in Russia,” but the nationalism he propounds is imperial rather than ethnically-based. Russia has nearly 20m ethnic Muslims, which makes official expressions of religious or racial chauvinism dangerous. Alexander Verkhovsky, an expert on Russian nationalism, observes that while the Kremlin fans and manipulates anti-Western nationalism, it has put grass-roots ultra-nationalist groups within Russia under unprecedented pressure. In August a Russian court sentenced Alexander Belov, a leader of the banned Movement Against Illegal Immigrants (DPNI), to seven and a half years in jail. The DPNI’s slogan is “Russia for [ethnic] Russians”. Last month, a nationalist demonstration was confined to the far outskirts of Moscow. A dozen marchers were arrested. + +The Kremlin “counters ethnic nationalism with its own version of state nationalism,” Mr Verkhovsky writes—one based on wars and other state achievements, not on ethnic identity. In Mr Putin’s view the nation must consolidate around events, figures and ideas provided by the Kremlin. The regime was spooked by the violent, spontaneous rally staged by radicals and football hooligans in Moscow in 2010, and by long-running anti-Putin protests in 2011-2012 that brought liberals and nationalists together. In response, it came up with an imperial state nationalism that manifested itself in the annexation of Crimea and the war in Ukraine. + +By doing so it successfully split the nationalists. Many nationalist protesters rallied to the imperialist cause. Liberal protesters were demoralised. Some of the radicals went to fight in Donbass, and later resurfaced in Syria. Russia’s actions abroad allowed Mr Putin to channel nationalist protest of any kind away from his own corrupt elite. And yet, while Mr Putin recognises the potential of nationalist populism in America and Europe to discredit democracies, he knows that it is a dangerous substance. After all, Mr Trump’s victory could serve as an inspiration to Mr Putin’s opponents, who see him as the epitome of the corrupt establishment. + +This article appeared in the Europe section of the print edition under the headline “The motherland calls” + + + + + +Shorthanded in Madrid + +Spain’s uncertain experiment with minority government + +Mariano Rajoy is having to learn to negotiate with the opposition + +Dec 10th 2016 + + + +“AS BAD as having no government is having a government that can’t govern,” the Spanish prime minister, Mariano Rajoy, told parliament in October, just before the vote that gave him a mandate to form a new administration. Spain had grown rather used to the former situation: it spent ten months in a state of limbo, as two elections delivered parliaments so fragmented that no party could broker a coalition. It is a step forward that Mr Rajoy has been able to form a minority government. But as he foresaw, governing is not going to be easy. + +The parliamentary arithmetic is unforgiving. Mr Rajoy’s conservative People’s Party (PP) has 137 of the 350 seats in the Cortes (parliament). It has the support of the 32 legislators of Ciudadanos, a liberal party. To pass laws, it must either scrape together seven further votes from Basque nationalists and Canarian regionalists (who want more autonomy for the Canary Islands), or hope the opposition Socialists abstain. + +The first big test is next year’s budget. The government faces contrasting pressures. It has promised the European Commission that it will cut the fiscal deficit from 4.6% this year to 3.1% in 2017. But the PP agreed with Ciudadanos to increase spending on job training and reverse some cuts. It also faces pressure from cash-strapped (and often spendthrift) regional governments. The answer, in the draft budget approved by the cabinet, has been to close loopholes in corporate tax, which officials hope will provide most of the extra €4.8bn ($5.1bn) in needed revenue in 2017. To win the acquiescence of the Socialists, the government set a slightly less strict deficit target for the regions and approved a rise in the monthly minimum wage from €655 to €708, the biggest in 30 years. + +The underlying question is whether such a weak government can take the measures needed to sustain the country’s economic recovery. Political uncertainty has already damaged investment, business and consumer confidence, and growth, says Rafael Domenech, an economist at BBVA, a bank. He expects a tighter fiscal policy, Brexit and further uncertainty to trim growth from 3% this year to 2.5% next. With Spain’s public debt at 100% of GDP, he worries that the country will be hit by an increase in international interest rates before it has the deficit under control. + +Pablo Casado, a PP official, reels off a list of measures on the government’s agenda, including laws to boost competitiveness and to make all levels of the state more efficient, as well as seeking cross-party pacts on education and the financing of regional governments. But he admits that the government will have a fight on its hands just to prevent malcontents from repealing its past reforms of the labour market and education. Already it has been forced by the Cortes to drop new school tests that were part of its educational reform of 2013. + +For Mr Rajoy, who enjoyed an absolute majority in 2011-15, the need to negotiate with opponents is a big change. But he is not under threat of eviction from the Moncloa, the prime-ministerial compound. To topple a government, the constitution requires a majority vote for an alternative one, something a divided opposition is unlikely to muster. And many opposition motions will be deflected into the long grass of parliamentary subcommittees. + +Some in Madrid think the prime minister will be happy to trundle on like this through the remainder of this parliament’s term. “He is not a great reformist,” says Lorenzo Bernaldo de Quirós of Freemarket, a consultancy. “He is a conservative in the strict sense of the word, who favours the status quo.” Others think Mr Rajoy will seize the right moment in the next year or two to call a fresh election at which he can hope to come closer to a majority. Either way, the prime minister’s position is less weak than it looks. Indeed, compared to most countries in western Europe, Spain is starting to look like an island of relative political stability. + +This article appeared in the Europe section of the print edition under the headline “Short-handed” + + + + + +Out of left field + +Austria’s new president is the Green, not the populist + +Long ahead of the far-right curve, the Freedom Party misses a step + +Dec 10th 2016 | VIENNA + + + +AUSTRIA’S far-right Freedom Party (FPÖ) is finding it hard to come to terms with defeat. On December 4th its candidate, Norbert Hofer, lost to Alexander van der Bellen (pictured), an ex-leader of the Green party, in a rerun of the country’s presidential election. Two days later the FPÖ’s leader, Heinz-Christian Strache, blamed the loss on “overwhelming media power”, which painted Mr Hofer as “the devil incarnate”. On social media, Mr Hofer’s supporters alleged massive voter fraud. + +Their disappointment was understandable. Mr Hofer drew a respectable 46.7% of the votes, but he had expected to win, after falling just 31,000 votes short in the initial election in May. (That vote was annulled by the country’s constitutional court because of irregularities.) Instead, Mr Van der Bellen’s lead grew. Every other big party, as well as business leaders, artists, intellectuals and the mainstream media rallied behind him, hoping to avoid the embarrassment of being the first country in Western Europe to elect a far-right head of state since the second world war. The result suggested that most Austrians remain committed to European integration, the main theme of Mr Van der Bellen’s campaign. + + + +The demography of the vote resembled that of the Brexit ballot in Britain and Donald Trump’s election in America (see chart). The populist Mr Hofer won majorities among men, those with less education and residents of rural areas. Women, those with higher education and city-dwellers backed Mr Van der Bellen. + +The outcome is welcome news for Austria’s embattled coalition of Social Democrats and the conservative People’s Party, which had shown signs of falling apart. A day after the election the Social Democratic chancellor, Christian Kern, and Reinhold Mitterlehner, the People’s Party chief, vowed to stick it out until the end of the parliamentary term in 2018. Austria’s federal presidency is a mostly ceremonial post, but Mr Hofer could have used the office to put pressure on the government to step down. Poll after poll shows the FPÖ ahead of the two governing parties. But Mr Van der Bellen has said repeatedly that he would not appoint Mr Strache as chancellor, even if the FPÖ finishes first, because of its anti-European views. + +Before the run-off, several senior officials in the People’s Party defied Mr Mitterlehner by openly supporting Mr Hofer, a possible step toward forming a coalition with the FPÖ. The two parties governed together in the 2000s, when the FPÖ was led by Jörg Haider, a charismatic rabble-rouser. That government faced massive protests, and was briefly shunned by other European states. But with the rise of far-right parties in other European countries, a government that included the FPÖ would probably not face such ostracism. Even some regional Social Democratic leaders are calling for an end to the decade-old policy of ruling out coalitions with the FPÖ. This only forces the party into a permanent grand coalition with the People’s Party, they say, feeding voters’ frustration and strengthening the populists. + +If elections were held today, polls show that the coalition would fall short of a majority in parliament, giving Mr Strache a chance to become chancellor. But thanks to Mr Hofer’s defeat, the government has gained some time to improve its dismal popularity rating. The refugee crisis that began in 2015, in which Austria received over 100,000 asylum-seekers from Syria, Afghanistan and Iraq, stoked anti-Muslim sentiment and boosted the FPÖ. A mediocre economy has also hurt the government. GDP grew by less than 1% a year in 2014 and 2015, though it has picked up since. Unemployment was at 5.9% in October, a high rate for Austria, though few other European countries would complain. + +Most damaging to the government are the constant disputes between the two parties. If Mr Kern and Mr Mitterlehner cannot turn things around, the FPÖ will quickly recover from the latest setback. If it wins the next general election, even Mr Van der Bellen may not be able to stop Mr Strache. In the rise of Europe’s populist parties, Austria was once far ahead of the pack. It has fallen behind, but may not stay there for long. + +This article appeared in the Europe section of the print edition under the headline “Left hook” + + + + + +Where Thatcherism is not an insult + +France’s presidential election takes an unlikely liberal turn + +Challenged by the far right, mainstream Socialists and Republicans pick an unusual moment to embrace deregulation + +Dec 10th 2016 + + + +NO WESTERN democracy seems immune to today’s backlash against globalisation and economic liberalism. Since the financial crisis of 2008, distrust of markets and a renewed faith in the state has challenged the old orthodoxy and emerged as a resurgent political force. America has elected the protectionist Donald Trump. Britain entrusted leadership of the Labour Party to a far-left veteran, Jeremy Corbyn. Greece brought Syriza to power. Italy’s Five Star Movement helped to defeat Matteo Renzi. Yet, in one unlikely corner of Europe, mainstream politicians are defying the anti-market trend: France. + +France? At first glance, there could scarcely be a more improbable recruit for liberal economics. This is a country which romanticises a muscular anti-capitalist struggle, and whose people are more distrustful of globalisation than those anywhere else. Its public sector consumes 57% of GDP, six points above even that stripped-pine model of Scandinavian solidarity, Sweden. France teaches school pupils to answer such philosophy questions as “What do we owe the state?” One candidate for next spring’s presidential election uses the hammer and sickle as her logo—but is not even in the Communist Party, which she regards as too soft. + +And yet, while attention on France focuses on the protectionist populism of Marine Le Pen, something strange is taking hold in the political mainstream. The old guardians of statist intervention are packing their bags, by choice (the unpopular Socialist president, François Hollande, has decided not to seek re-election) or eviction (the veteran Alain Juppé lost the centre-right Republican primary). Into their place have stepped leading presidential aspirants who are remarkably liberal and reformist. + +Exhibit A is François Fillon, the Republican nominee. An unapologetic admirer of Margaret Thatcher, the ex-prime minister vows to shrink the state and cut the labour code to 150 crisp pages, from over 3,000 today. “If I had to sum up my project in one word,” wrote Mr Fillon in a book, “I would choose: liberty.” Exhibit B is Manuel Valls, who this week resigned as prime minister to run in the Socialist primary next month. He is a disciple of Michel Rocard, prime minister in 1988-91, whose moderate social democracy differed markedly from the orthodox socialism of his president, François Mitterrand. As Mr Valls seeks to broaden his vote, he may sound a less reformist note. Yet he shares more with Tony Blair (including a tough line on law-and-order) than with Mr Corbyn. He once accused the Socialists of being “haunted by a Marxist super-ego”, and wrote that there is “no longer a global alternative to the capitalist system and the market economy”. + +Then there is Emmanuel Macron, the young ex-economy minister, who is running for president as an independent. Operating out of offices strewn with take-away food boxes and filled with young people with laptops, he hopes to draw voters from both left and right with a cross-party pitch for a pro-European, innovation-friendly form of “progressive” politics, to take on conservative populist nationalism. + +Put these three rival candidates together in a Paris salon and they would vigorously deny common ground. Yet their thinking shares an underpinning: that France needs to tame the state and free the individual if its economy is to grow and create jobs. Polls suggest that, together, the trio enjoy majority support —51%—in French public opinion. In a country that dignifies l’État with a capital letter, this is quite breathtaking. + +This shift may hint at Gallic contrariness. The French like to take a hard look at global trends, then wilfully strike off in a different direction. In the 1980s, when Thatcher and Reagan preached laissez-faire economics, Mitterrand nationalised banks and factories, and shortened working hours. In the early 2000s, when Germany deregulated labour markets, France brought in the 35-hour week. But the underlying explanation is empirical observation. French politicians, raised on theoretical principles, are responding to evidence. Decades of above-average state spending have brought fast trains, well-stocked municipal flower beds and high-quality health care—but above-average unemployment and below-average growth. Facts are taking their revenge. + +Such a dose of realism does not mean, however, that the battle of ideas has been won. Au contraire. Mr Valls, who secured less than 6% of the vote when he ran in the Socialist primary in 2011, faces sundry far-left rivals at the primary (including Arnaud Montebourg, author of a book on “deglobalisation”), as well as Communist-backed left-wingers outside the party (among them a strong candidate, Jean-Luc Mélenchon). The Socialist Party could yet fluff this historic choice and condemn itself, Corbyn-style, to irrelevance or even extinction. + +What’s French for laissez-faire? + +The greatest risk of all, though, is not to the party, but the country. It is that these liberal-minded candidates, with all the right instincts, fail to find a way to speak to those left behind by the market forces they endorse. For there is one French political leader who does, and with chilling success: Ms Le Pen. As the Socialist Party retreats into its narrow world of public-sector employees and cosmopolitan parquet-floored folk, the French blue-collar vote has turned to her. Thanks in part to its protectionism, her National Front is now the favourite party of working-class voters. + +What lies ahead in France is not just a fight over identity and sovereignty. It is also about how the country can create and defend jobs, incomes, services and pensions. Unfashionable policy prescriptions will be up against populist sloganeering. Ms Le Pen will lose no time accusing her rivals of a plot to strip out the French social safety-net and demolish workers’ rights. She is well placed to beat Mr Valls into a run-off against Mr Fillon next May; her victory cannot be ruled out. France’s election will be a momentous test of the capacity of liberal-democratic candidates to fashion an alternative to populism. They can’t afford to fail. + +This article appeared in the Europe section of the print edition under the headline “Unlikely candidates” + + + +Britain + + + + + +University admissions: A foot in the door + +The Brexit process: Red, white, blue or grey? + +Railways: Changing track + +The property market: As safe as... + +The Liberal Democrats: The Olney way is up + +Business and productivity: Time to end the muppet show + +Steelmaking: Off the scrapheap + +Bagehot: Different votes for different folks + + + + + +University admissions + +Oxford University tries a new approach to recruiting poor students + +The rising share of pupils from state schools disguises the fact that many parts of the country send almost no one to the university + +Dec 10th 2016 | OXFORD + + + +WHILE at school, the idea of going to Oxford University “might as well have been like going to Mars,” says Varaidzo Kativhu, an 18-year-old from Brierley Hill, a town in the West Midlands. Yet now she is on a foundation year at Lady Margaret Hall, one of the university’s 38 colleges. The scheme, introduced this year, offers smart pupils from tough backgrounds who don’t have the requisite grades a free, year-long course before they go through the regular application process for entry the following year. After the political revolts of 2016, “I think all institutions have to ask what we’re doing to include black, Muslim and white working-class people,” says Alan Rusbridger, a former editor of the Guardian who became principal of Lady Margaret Hall last year. + +Access is a problem in nearly all good universities, but Oxford, which is the world’s best according to a recent ranking by Times Higher Education magazine, and the alma mater of seven of the past ten British prime ministers, gets criticised for it more often than most. Defenders of the university say the problem lies beyond its ramparts: schools do not send it enough poor, bright candidates. Its critics argue that the admissions process is prejudiced against such children. As a new round of interviews gets under way this month, fresh initiatives are aiming to bring some diversity to its quads. + +Around 59% of Oxford’s students arrived from state schools this year. That is much lower than the 93% of pupils who are educated by the state nationwide. Yet it is not so far below the 67% of students achieving three “A” grades in A-level exams, the minimum for entrance to Oxford, who come from state schools. And it is far more than in the past (see chart). + + + +But the increasing share of students from state schools disguises the fact that there are parts of the country from which almost no one gets into Oxford, despite having the grades required. Figures seen by The Economist show that between 2010 and 2015, 156 of the UK’s parliamentary constituencies—a quarter of the total—got on average less than one pupil a year into Oxford, despite being home to 12% of all those who got at least three “A” grades in their A-levels and supplying 7% of all applicants to the university. By contrast, the 20 top-performing constituencies accounted for 16% of all successful applicants, despite having just 9% of the students who got three “A” grades. + +Many poor, bright pupils choose not to apply. Doing so is needlessly tricky, particularly for those whose school sends few people to university, says Sir Peter Lampl of the Sutton Trust, an education charity. Whereas most universities accept applications until January, Oxford (like Cambridge and most medical schools) demands them by October. It sets extra tests, which schools must invigilate. Its interviews are a stomach-lurching prospect. + +Even those poor students who do apply have lower offer-rates than average. Last year one in six candidates from a poor locality was offered a place, compared with one in five of all applicants. That is partly because poor pupils are disproportionately likely to apply for the most sought-after courses, such as law and medicine. They are also less likely to get the top “A*” grades that a place may depend on. + +The university uses increasingly sophisticated data analysis to put applicants’ academic records into perspective, upgrading the results in GCSEs (the exams taken at 16) of candidates from bad schools. It has tried to make interviews as transparent as possible, publishing sample questions online (“Should interviews be used for selection?” is one). And it has pumped cash into sending outreach officers around the country in an attempt to change perceptions. Yet poorer children remain less likely to apply, slightly less likely to be made an offer and to get the necessary grades. “We haven’t been able to fix that with conventional forms of outreach,” says Andrew Bell, the senior tutor at University College. + +So some colleges are trying new approaches. One advantage of the college system, says Samina Khan, the university’s director of admissions, is that it encourages innovation. As one don puts it: “The only way to get Oxford colleges to change is to make them compete.” The Lady Margaret Hall foundation year was based on a scheme at Trinity College Dublin, which found that students from tough backgrounds with low grades did as well as their peers after a year’s catch-up. It is low-risk, says Mr Rusbridger, since the college is not accepting anyone it would not otherwise have let in. Participants are nervous about reapplying, but hopeful. “I’ve learnt more in the past seven weeks than I did in the previous two years,” says Ms Kativhu. + +University College will take a different approach. Next year it plans to add 10% more places, reserved for those who would previously have just missed out on a spot, and who come from a bad school in an area that sends few children to university. A one-month summer school will hone their skills. Tutors at other colleges are paying close attention. + +Meanwhile, outreach efforts are increasingly focused on raising attainment in school, rather than merely awareness of the university. Pembroke College has developed five specialist subject centres in sixth-form colleges in London and north-west England to familiarise pupils with the style of learning at university. Since 2009, Oxford has put on summer schools for sixth-formers. It works with Target Oxbridge, a charity which aims to get black pupils into Oxford and Cambridge, and Into University, which runs “learning centres” for 900 children from poor families. + +Critics say Oxford has been slow to put in place the long-term programmes working with young children which research suggests are the best way to increase participation. Several universities even run schools. But there are signs that Oxford appreciates the scale of the task. In a couple of decades, it may no longer be seen as symptomatic of social immobility if a prime minister passes through Oxford on her way to Westminster. + +This article appeared in the Britain section of the print edition under the headline “A foot in the door” + + + + + +Red, white, blue or grey? + +Britain softens its Brexit stance—just as the EU hardens its own + +Brexiteers often behave as if the terms of Britain’s departure will be decided at home. It is not so simple + +Dec 10th 2016 + + + +IT IS always hard to read runes. That applies especially to the daunting process of leaving the European Union. Yet some recent events point to a softer version of Brexit than some had predicted. + +The latest came after Theresa May had called patriotically for a “red, white and blue” Brexit on December 6th. The prime minister subsequently accepted the broad terms of an opposition motion calling on her government to publish its negotiating plans before invoking Article 50 of the EU treaty, the legal route to Brexit. Mrs May had previously resisted such demands, arguing that disclosing too much would weaken her bargaining position. But she gave way in the face of a rebellion by pro-EU Tory backbenchers. Even so, she is unlikely to publish much more than a broad outline of her goals. + +Also this week, the Supreme Court heard the government’s appeal against a High Court judgment that invoking Article 50 requires parliamentary approval. Brexiteers have complained loudly about Remainer judges opposing the voters who backed Leave in June. In fact the case is about a separate issue: can the government rely on prerogative powers to invoke Article 50 or, because that could in effect scrap the 1972 European Communities Act, does it need parliamentary authority? + +The justices’ questions revealed little, yet most observers think they are unlikely to overrule the High Court, because the arguments before them were largely the same. The government did not try to deploy the promising new line that, because Article 50 could be revoked at any time, its invocation might not automatically lead to Brexit, for fear that this would trigger a referral to the European Court of Justice. The Supreme Court is, however, likely to rule against Scottish demands for their own parliamentary vote on Article 50. + +Parliament will not block Article 50. But even a short act may be amended, possibly delaying the article’s invocation beyond Mrs May’s planned deadline of the end of March. MPs could demand not just a published plan but a greater say over Brexit. The Liberal Democrats’ victory in the Richmond by-election on December 1st has cheered up Remainers. + +There have been other signs of softening. David Davis, the Brexit secretary, has said Britain could keep paying into the EU budget to secure fuller access to the single market. Greg Hands, a trade minister, has mused about some industries staying in the customs union to minimise disruption. And, although news that net immigration in the year to June ran near record levels was greeted by some as justifying a hard Brexit, several ministers have promised businesses that new controls will not be so tight as to wreak serious damage. + +The main developments in the other direction have been in the EU. Brexiteers often behave as if the terms of Britain’s departure will be decided at home, when in fact they will be set by the other 27. And here there are signs of hardening. When Mrs May suggested a mutual agreement to let both EU citizens resident in Britain and Britons resident in the EU stay put, she was told firmly that nothing could be negotiated before Article 50 was invoked. And European leaders’ insistence that the four freedoms of the single market are indivisible, and that there can be no cherry-picking, are getting louder. + +On December 6th Michel Barnier, the European Commission’s point man on Brexit, said a deal for Britain would not be as good as membership. He added that the Article 50 talks must finish in the 18 months to October 2018, and that a final free-trade deal would accordingly have to be negotiated afterwards and not in parallel. That suggests a transition may be needed, but he said this could be useful only as a pathway to a final arrangement. The British may be softening their earlier hardness, but Brussels is going the other way. + +This article appeared in the Britain section of the print edition under the headline “Red, white, blue or grey?” + + + + + +Changing track + +Britain’s wheezing railways are set for a shake-up + +The government hopes that giving train companies a bigger role in maintaining track will make for a more efficient network + +Dec 10th 2016 + + + +THERE has long been a joke in political circles that Britain’s Department for Transport never produces any cheerful headlines. Its press office has in the past been caught using royal funerals and terrorist attacks to “bury bad news”. But its problems mostly stem from Britain’s rail network, the oldest in the world, which is increasingly crowded and unreliable. This week was no different. Commuters on Southern Rail were hit by a three-day strike by drivers, the latest in a dispute with trade unions that began in April. + +In an effort to banish such problems, Chris Grayling, the transport secretary, unveiled on December 6th what was billed as the biggest shake-up in rail policy for 20 years. When British Rail, a nationalised monopoly, was privatised in 1994 train operations were split off from the track, which is now owned and run by Network Rail, a public body. The aim was to boost competition by ensuring that different train operators could use the same stretches of rail. But Mr Grayling thinks the system is too fragmented. Train-operating companies (TOCs) should have a role in running the tracks they use, he says. + +Although by most measures things are better than when British Rail was around, delays and cancellations have been growing since 2012. Fares have risen as the public subsidy provided to operators has fallen. Overcrowding is increasing. Nearly a third of commuters into London and a fifth of those to Birmingham are forced to stand. + +The reforms are designed to reduce the disruption caused by track repairs and upgrades. At the moment, communication and planning are poor; Britain’s network is 40% less efficient than those in other European countries as a result. TOCs have no incentive to buy rolling stock that minimises damage to rails. And when work overruns and trains are delayed, firms sue each other rather than helping passengers. + +Growing disruption is partly the result of the industry falling victim to its own success. Since privatisation, the distance travelled by passengers has doubled, but the amount of track has remained the same (see chart). That means that builders updating Victorian tracks and stations to 21st-century standards have to do so alongside crowds of passengers. Doing essential work while the network continues in full operation is like performing “open heart surgery on a marathon runner”, as one rail minister put it. + + + +By working more closely together, the industry could save up to £1.5bn ($1.9bn) a year, says Richard Wellings of the Institute of Economic Affairs, a think-tank. A joint venture between Network Rail and Chiltern Railways to build a new link to Oxford shows how it can be done: it is due to open on December 12th on time and on budget. Other alliances, with South West Trains and in Scotland, have been less successful. + +Even so, Mr Grayling wants to press ahead with joint train-and-track operations teams on the Southeastern and East Midlands franchises, both up for renewal in 2018. Thereafter all franchisees will run formal joint-ventures with Network Rail; eventually some operators will take full control of the tracks. + +The government is moving slowly, wary of a repeat of the chaos that the rapid break-up of British Rail caused in 1990s. Integrating track and trains is no “silver bullet”, warns the report from which Mr Grayling took his idea. Electrification projects in the west of England and in Hull were cancelled last month due to cost overruns. More bad news on Network Rail’s other schemes is expected. With or without reform, delayed trains and irate passengers will remain a feature of the railways. + +This article appeared in the Britain section of the print edition under the headline “Changing track” + + + + + +As safe as… + +Why house prices haven’t fallen since the Brexit vote + +Why the vote for Brexit has not reduced house prices + +Dec 10th 2016 + + + +“HOUSE prices will be hit by at least 10% in the ‘profound economic shock’ that would result from a vote to Leave the EU,” the Treasury warned in May, a month before the referendum. A fall of nearly 20% in two years was quite possible, it added. The housing market certainly looked ready for a correction: in 2015 the ratio of house prices to median incomes in England was 7.6, probably the highest ever. + +Yet nearly six months on from the referendum, the forecasts look wide of the mark. Data from Zoopla, a property website, suggest that since June the value of the average house has actually risen a little, to over £300,000 ($383,000). In London it is also up and is now nearing £700,000. The Office for Budget Responsibility (OBR), the fiscal watchdog, recently revised down its forecast for house-price growth in the coming years—but only slightly. The share prices of big construction companies, which crashed the day after the vote, have recovered most of their losses. + +The housing market has held up partly because, so far at least, the broader economy has performed better than expected since the referendum. There is a fairly strong correlation between the unemployment rate and house prices, and a weaker one with income growth. When people are in work and earning well, they more easily keep up with their mortgage or decide to take out a fresh one. Since June, unemployment has remained steady (though job growth is stagnating) and earnings are still growing (though more slowly than before). This points towards slower house-price growth, but no slump. + +Demand has also been supported by looser credit. Following the referendum the Bank of England cut the base rate of interest from 0.5% to 0.25%, and devised tools to ensure that ultra-low rates were passed on to borrowers. The bank’s latest review of credit conditions suggests that quoted rates for new mortgages have fallen by 0.2-0.3 percentage points since May, saving the average new borrower a few hundred pounds a year. Foreign buyers are feeling flusher, too: the weak pound means they get about 15% more Mayfair mansion for their dollar than they did in June. + +Extra demand has run up against reduced supply as people have become more cautious about selling their home. Estate agents, fretting about lost business, offer steep discounts on selling fees. + +Inflation may be the weakest link in the chain. The OBR reckons that inflation will approach 3% in 2017 as the weak pound translates into higher import prices. If that happens then the Bank of England, whose inflation target is 2%, may at last raise interest rates. That in turn would raise the cost of mortgages. + +But the bank is circumspect. Just as it did not cut interest rates after inflation fell to -0.1% in October 2015, nor will it rush to raise them as inflation increases. In any case, Britons have locked in cheap borrowing for years: nine in ten mortgages issued since the referendum have been fixed-rate. And most homeowners could cope with higher rates: at no time since current records began, in 1974, have Britons devoted less of their income to mortgage-interest repayments than they do now. + +What if all the forecasters are wrong and the economy will soon be suffering from high inflation, tumbling earnings and soaring unemployment? Prices would certainly fall, but even then the Treasury’s blood-curdling predictions would probably not come to pass. + +This is, perversely, thanks in part to the sclerotic planning system, which means that Britain has under-built for decades, and especially since the financial crisis of 2008-09. Persistent undersupply means that even in recessions the country is rarely left with surplus houses. And Britain is unlike America, where mortgagors can simply hand the keys back to an estate agent and walk away from their debt (a process that can result in houses flooding the market). The peculiarities of Britain’s housing market, in sum, militate against big price declines: in 2007-11, house prices fell by two-thirds as much as in America. + +The biggest risk, rather, is that Brexit reinforces structural problems in the housing market. If fewer people buy and sell properties, greater numbers of rich pensioners will end up staying in houses too big for them after their children have flown the nest, in effect reducing the supply of housing for others. And if European workers are put off or prevented from coming to Britain, the country’s building capacity will shrink, making it even harder for the government to hit its target of building 250,000 homes a year. + +For young people, among whom the rate of home-ownership has halved in the past generation, all this is galling. Most of them voted to Remain; the prospect of a slump in property prices was one of Brexit’s few silver linings. + +This article appeared in the Britain section of the print edition under the headline “As safe as...” + + + + + +The Olney way is up + +The Liberal Democrats’ Brexit boost + +The Lib Dems’ victory in Richmond will shape their strategy in the next general election + +Dec 10th 2016 + + + +VOTERS in Richmond Park must be heaving sighs of relief. The triumph of Sarah Olney, the Liberal Democrat candidate, on December 1st brought to an end campaigning in the constituency’s by-election. No longer will Tim Farron, the party’s leader, and his amber army accost them on every street corner. + +Ms Olney seized almost half of the vote, a swing of 22 percentage points compared with the Lib Dems’ share there last year. Her dramatic unseating of Zac Goldsmith, who had resigned from the Conservative Party to recontest his seat as an independent in protest at the government’s plan to build a third runway at nearby Heathrow airport, owed much to Brexit. Mr Goldsmith had campaigned to Leave, whereas 70% of Richmond voters, like the Lib Dems, wanted to Remain. + +Ms Olney’s party is now positioning itself as the voice of Remainers. It is hoping that voters who deserted the party in droves in 2015, angered by its coalition with the Conservatives, will return, fired up by opposition to Brexit. The flipside may be unpopularity in places that voted to Leave. As The Economist went to press on December 8th, the Lib Dems were expected to fair less well in another by-election, in Sleaford and North Hykeham, where 62% of voters cast their ballots for Brexit. + +The focus on Europe may alter the party’s approach to targeting seats in the next general election. Usually parties focus on marginal seats where they need to boost their share of the vote only slightly to seize control. In Torbay, for example, the Lib Dems would need a swing of just 3.5% to take the seat from Conservatives. But with only 37% there having voted Remain, even such a small shift could be tough for a party beating the drum for Europe. They might have more luck in seats such as Hornsey and Wood Green, which would require a 10% swing, but where 76% of voters favoured staying in the EU. + +Worryingly for the Lib Dems, that type of seat is not so common. Although 48% of all voters opted to Remain, their concentration in cities (and in Scotland and Northern Ireland) meant that Remain won the day in only about 35% of parliamentary constituencies (see chart). In setting themselves up as the party of the Remainers, the Lib Dems may also be setting limits on their success. + +This article appeared in the Britain section of the print edition under the headline “The Olney way is up” + + + + + +Growing pains + +Why British businesses don’t scale up + +Britain has a great record with startups, but is less good at producing bigger, more productive companies + +Dec 10th 2016 | BATH + +A startup that scaled up + +OFF a posh square in the south-western city of Bath, Dominic and Ali Bevan are honing their assault on Britain’s lucrative wedding gift market. For now, it is dominated by high street behemoths such as John Lewis. The Bevans set up their company, Prezola, four years ago with £50,000 worth of savings, and by aggregating wedding gifts from over 300 brands onto one website have built a business with an annual turnover of £10m and a staff of 42. They hope to hit £16m next year. + +In some respects Prezola is typical: Britain has become a nation of startups. Last year 608,100 new companies were formed, a record. Ever more Britons are prepared, like the Bevans, literally to stake their house on an entrepreneurial hunch. + +Yet in another respect the Bath company is all too rare. Britain might be good at startups, but it remains poor at helping them grow. The country has about 5.5m businesses in total, of which 99% count as small or medium-sized enterprises (SMEs). Many of them remain very small indeed—about 4m are sole traders—and many barely grow at all. Those that do, the high-growth companies (HGCs), defined as businesses with more than ten employees that grow by at least 20% over three years in revenues or employees, remain a tiny minority: last year there were just 11,575. Fewer than 4% of startups have ten or more employees after their first decade. This is not too bad compared with much of Europe, but well behind America, where firms are more likely either to soar or crash, rather than plodding along as many British enterprises do. + +Many SMEs are quite happy not to grow. But the evidence shows that many others want to, but cannot. The continuing reluctance of banks to lend to firms in startup mode and beyond is one reason for this, but companies also struggle to attract the necessary skilled workers, and often lack the appropriate management skills. Having a biggish domestic market also means the many small firms don’t feel any need to try exporting. + +The long tail of underachieving, small companies might have been good at generating jobs after the post-2008 recession, and people are generally more happy working for themselves. But increasingly economists worry that it might be one explanation for Britain’s low productivity. This is notoriously hard to measure. But there is broad agreement that Britain’s is relatively low by rich country standards, and that the country’s large number of very small firms has something to do with it. Government data show that whereas firms with 10-49 employees have an average turnover per person of £134,000, that figure increases to £170,000 for firms with over 250 employees. + +These larger companies account for 0.7% of America’s firms, but only for 0.4% of Britain’s. Furthermore, those firms that do scale up generate a disproportionate amount of economic growth. An often-cited paper by Nesta, a think-tank, argues that between 2002 and 2008 the 6% of British businesses with the highest growth rates generated half of all the new jobs created by existing companies. + +The implication is clear, argues Paul Nightingale of the University of Sussex. Previous governments were good at encouraging what Mr Nightingale calls muppets, or “marginal undersized poor performance enterprises”. Now they should focus on “gazelles”, the HGCs. He says the government has yet to catch up on the academic research in this area. + +It’s time to play the music + +There are signs, however, that policy is shifting a little. In his Autumn Statement on November 23rd the chancellor of the exchequer, Philip Hammond, announced that he would give £400m to venture capital funds specifically to invest in startups that want to scale up. + +Yet this money, spread over the next four years, won’t do much. In Wiltshire, Robert Perks runs the country’s first local outfit dedicated to helping companies scale up. It is funded by businesses and government. He argues that what firms most need are management skills, and so he arranges mentoring for entrepreneurs who want their companies to grow. Management in Britain is distinctly average, and is most obviously improved by exposure to foreign markets and even takeovers. But, since most SMEs do not export, this remains a problem. + +In the absence of home-grown skills, argues Mr Perks, the government needs more immigrants. And to keep the increasing volumes of venture capitalists’ money coming into HGCs, investors must be able to exit easily when companies mature, for instance by selling to bigger foreign companies, so they can take their profits and pour them into new projects. Encouraging more immigration and foreign takeovers; just the ticket for the prime minister’s new brand of Conservatism. + +This article appeared in the Britain section of the print edition under the headline “Time to end the muppet show” + + + + + +Saving British steel + +Tata Steel forges a deal at Port Talbot + +Steel workers will have to take a cut in pension benefits to save their jobs + +Dec 10th 2016 + + + +IN MARCH Tata Steel announced that it was to sell its British steelmaking facilities, including the giant works at Port Talbot in Wales. The news caused consternation. Four thousand jobs were at stake at the loss-making plant, as well as several thousand more across England and Wales. If Tata failed to find a buyer, there were fears that this would cause almost the complete collapse of an industry that in the 1970s employed 300,000 workers. + +But on December 7th it was announced that the Indian-owned company would continue production in Britain, as long as the workforce accepted reductions in its pension benefits. The pension liabilities that Tata inherited from the previous owners of the business, Corus, and before that British Steel, are one of the main reasons why Tata put Port Talbot up for sale in the first place, and why it struggled to find a buyer. The scheme has about £15bn ($19bn) of assets invested on behalf of 130,000 people, of whom only around 10,000 are still working. Workers will be balloted on whether to agree to the pension changes. + +For its part, Tata is promising to keep the two blast furnaces at Port Talbot open for another five years and to seek to avoid any compulsory redundancies for the same period of time. This should ensure much the same levels of steel production for the moment. Tata has also pledged to invest £1bn over the next decade, and some of that money will probably be used to restructure the business at Port Talbot, perhaps to produce steel from scrap. + +The plunging price of steel on world markets in recent years was another reason why Tata wanted to sell up, but the company might have been encouraged in its efforts to save Port Talbot by a recent rebound in prices. The Welsh government has played a part too. As Tata spelled out this latest agreement, Carwyn Jones, the first minister, said the government would provide £4m to improve the skills of Tata workers. The Welsh government had previously offered £60m to support any takeover of the Port Talbot plant. + +Everything now depends on the negotiations over the terms of the new pension arrangements. These begin next week. Faced with the grim alternatives, the unions are likely to accept the company’s terms, although there is probably some hard bargaining still ahead. + +This article appeared in the Britain section of the print edition under the headline “Off the scrapheap” + + + + + +Bagehot + +Britain’s two-party system is heading for multiple splits + +The old left v right divide has been replaced with a more complex political geography + +Dec 10th 2016 + + + +BLAME George Dangerfield. It was the Anglo-American journalist who first pathologised the end of Britain’s two-party system in “The Strange Death of Liberal England”, a commanding tale of the Liberal Party’s fall in the early part of the 20th century. To future generations he bequeathed an establishment too ready to see each political twist as proof of a new realignment. In 1993 the opposition’s fourth successive defeat inspired a tome called “The Strange Death of Labour England?”. Twelve years and two Labour landslides later came “The Strange Death of Tory England”. The Conservative-Liberal Democrat coalition of 2010 brought a flurry of fresh predictions of an end to the two-party order, before the 2015 election went off-script and produced a Tory majority. Such times bring out an epochal chauvinism in commentators: a belief that this moment, the writer’s own era, is pivotal. Most “strange deaths” since Dangerfield have met a strange death of their own: fatal collision with the next big political event. + +So your columnist takes his credibility into his hands when he hereby declares the strange impending death of the two-party order. The pollsters at ICM now put Theresa May’s Conservative Party on 44%, one point below its highest-ever showing. Brexit has pushed the sort of red-trousered UK Independence Party (UKIP) supporters who quit the Tories under David Cameron back into the fold. And with the Lib Dems ejected from power, the governing party can now confidently span the spectrum from liberal conservatism to right-wing populism. On the right this feels like anything but a time of fragmentation. + +But on the left the story is different. Labour has not yet grasped the crushing electoral toxicity of Jeremy Corbyn. New debates over Brexit and immigration are scratching at scabs formed after last year’s election. The announcement on December 6th of an early re-election campaign by Len McCluskey, the Corbynite chief of Unite, Britain’s biggest union, could be the latest shot in a cold war that later turns hot and pulls Labour apart. Then there is the election, on November 28th, of Paul Nuttall as the new UKIP leader, on a platform to challenge Labour in its post-industrial heartlands. And lastly comes the resurgence of the Lib Dems in metro-liberal Britain; their new appeal was revealed at the Richmond Park by-election on December 1st, when Labour’s vote fell from 12.3% to 3.7%. All of which points towards a future in which the left-of-centre vote in England splits between Labour, UKIP and the Lib Dems, with each party taking some 15%. To the north, the Scottish National Party competes on similar leftish ground. + +The underlying trends are, however, not exclusive to the left. They transcend Labour’s suicidal enthusiasm for Mr Corbyn. The vote share of the two main parties has fallen from 96.8% in 1951 to 67.3% in 2015. Like electorates elsewhere, today’s Britons are less deferential and tribal than they once were. Meanwhile, where once class differences motivated a politics of left v right, now educational differences motivate a politics of open v closed. In the long term that will affect the Tories as much as Labour. For while Mrs May’s all-things-to-all-people stance on Brexit unites her coalition of London merchant bankers, Rutland farmers and Essex entrepreneurs, the details of the coming negotiation will drive wedges between them. Just as the initial vote to leave the EU has split Labour’s coalition of Manchester students, Teesside steel workers and Hackney nurses, the realities of Brexit politicise and prioritise the differences between various sorts of Conservatives. + +At this point people usually cite the reason why British politics is not an efficient market: the first-past-the-post electoral system by which the country trades responsiveness for stability. As Maurice Duverger, a French sociologist, first observed, such a plurality-based system tends to produce two monolithic parties through elimination (small parties with wide support cannot win individual constituencies) and fusion (they merge to obtain the critical mass needed). Yet “Duverger’s Law” is a product of the 1950s. Back then, seats were fairly uniform, their politics overwhelmingly a function of the ratio of white-collar workers to blue-collar ones. Britain was a country of many accents but was one political universe. + +Layered on top of this left-right politics, the new open-closed sort makes for a more complicated map: multiple political universes, each with its own law of physics. Wealthy university towns, fading big-city suburbs, poor working-class towns with good connections, decaying seaside resorts; each falls differently on a two-dimensional spectrum combining class (economics) and education (culture). For the Tories and Labour, used to the simple left-right spectrum, this makes life harder. It loosens voters’ allegiances. It creates openings for parties that can adapt to specific sorts of seat. In a system designed for generalists it encourages specialisation. Seen in this light, Richmond Park’s lurch into Lib Dem hands hints at how British politics will now evolve. + +Que PR será + +And the process could prove self-reinforcing. One critic of Duverger’s Law is Josep Colomer of Georgetown University. He argues that the causality runs in the opposite direction: party systems dictate electoral systems and thus, when two-party systems start to fragment, the pressure for proportional representation (PR) grows. Early signs of this may be visible in Britain: the Lib Dems and UKIP—both confident in a new period of open v closed—both campaign vocally for PR. If they succeed, the result will be a further explosion of political diversity and competition. + +Nothing in this unpredictable age is certain. Yet most fundamentals say Britain is shifting away from Duverger’s two-party world to the fragmenting landscape described by Mr Colomer. This may become clear in the time it takes Britain to quit the EU. Or the process may take longer, the big two parties losing their monolithic status only slowly and haltingly. Either way, Britain is set for the strange death of the strange deaths of strange deaths. + +Economist.com/blogs/bagehot + +This article appeared in the Britain section of the print edition under the headline “Different votes for different folks” + + + +International + + + + + +Education: Must try harder + +Educating migrants: Geography lessons + + + + + +Culture or policy? + +What the world can learn from the latest PISA test results + +Reforming education is slow and hard, but eminently possible + +Dec 10th 2016 + + + +FOOTBALL fans must wait four years between World Cups. Education nerds get their fill of global competition every three. The sixth Programme for International Student Assessment (PISA), a test of the science, maths and reading skills of 15-year-olds from across the world, was published by the OECD club of mainly rich countries on December 6th. Its results have telling lessons for policymakers worldwide. + +Some 540,000 pupils in 72 countries or regions—each of whom had finished at least six years of school—sat similar tests last year. The OECD then crunched the results into a standardised scale (see chart 1). In the OECD the average result for each subject is about 490 points. Scoring 30 points above that is roughly akin to completing an extra year of schooling. + + + +Singapore, the consistently high-achiever in PISA, does even better: it is now the top-performing country in each subject area. The average pupil’s maths score of 564 suggests Singaporean teens are roughly three years ahead of their American peers, with a tally of 470. + +Other East Asian countries also score highly across most domains, as they have done since PISA was launched 15 years ago. Japan and South Korea have above-average results in science and maths, as do cities such as Hong Kong and Macau, both autonomous territories of China, and Taipei, the capital of Taiwan. + +Elsewhere, Canada and Finland have reading scores as high as Hong Kong’s. Then there is Estonia: its science results are indistinguishable from Japan’s and its maths scores are akin to South Korea’s. It is now equal with Finland as the top performer in Europe. In turn Finland, which topped the first PISA, is still an above-average performer, but its scores have fallen since at least 2006. + + + +Opponents of PISA argue that trying to make sense of all this is like trying to hear oneself over the noise of an obstreperous classroom. They note that education is about more than doing well in tests. And besides, some critics add, there is little useful to learn from the results, since it is parents alone that encourage swots. John Jerrim of University College London suggests that the only way some countries could catch up with the East Asian powerhouses is through more “tiger mothers” and “widespread cultural change”. + +PISA has flaws. It is one of many standardised tests, and tests are not all there is to learning. But it matters. It is the most influential research report in education for good reason. It offers informed guidance on what policymakers should do to fix their school systems. Just as importantly, it tells them what not to do. + +It points out that among poorer countries the amount of public spending per pupil is associated with higher test scores. But in richer states that spend more than about $50,000 per pupil in total between 6 and 15 this link falls away (see chart 2). The pupils of Poland and Denmark have, in effect, the same average results in the science tests even though Denmark spends about 50% more per pupil. + + + +Another potential waste of money, if only from the perspective of PISA results, may be sending children to private school. Across the OECD pupils in public schools score lower in science than students in private schools do. But this is not the case once you account for the economic and social background of pupils. + +And while poverty is strongly associated with low scores, it is not destiny. In the OECD poor pupils are nearly three times more likely than their rich peers to have less than the basic level of proficiency in science. Those pupils with foreign-born parents tend to do even worse. Nevertheless, 29% of poor pupils score among the top quarter of children across the OECD. In Singapore, Japan and Estonia nearly half of the poorest pupils do. + +Money isn’t everything + +That hints at another finding: achievement and greater equality are not mutually exclusive. In Canada, Denmark, Estonia, Hong Kong and Macau pupils have high average scores, with only a weak link between results and children’s backgrounds. + +One reason for Estonia’s gain is demographic loss. Over the past 20 years the population of young people has declined faster than the number of teachers. There is now one teacher for every 12 pupils, down from closer to 20 two decades ago. Although in general reducing class sizes is not the most cost-effective response, Estonian pupils have benefited from the demographic shift, which has made it easier to give pupils, especially laggards, extra help. + +But Estonia has also taken a deliberately inclusive approach, argues Mart Laidmets, a senior official at its ministry of education. It tries to avoid at all costs having pupils repeat years of school. Holding pupils back can help. But too often it is used as an excuse not to teach difficult kids. It may also reflect bias or discrimination. In countries such as Russia, Slovakia and the Czech Republic, poor boys are especially prone to being kept back a year, despite decent academic achievements. + +Estonia, like Finland and Canada, also tries to keep selection by ability to a minimum. It delays “tracking” children into academic or vocational routes until they are 15 or 16 years old. Mr Laidmets argues that it helps pupils find jobs later in life, since better maths and literacy make it easier for them to adapt to changes in the labour market and to earn new skills. + +By contrast, where pupils are diverted from an academic track at an early age, whether towards a vocational school or a less rigorous class in the same school, the gap between rich and poor children tends to be wider. In the Netherlands pupils at vocational schools have results equivalent to about three years less of schooling than their peers at general schools. “The more academically selective you are the more socially selective you become”, says Andreas Schleicher, the head of education at the OECD. + +All of which suggests what countries should not do. But are there any sure-fire tips from the best performers? Or is their success just down to pushy parents and tuition after school? + +Culture matters but so, too, does policy, says Lucy Crehan, author of “Cleverlands”, a new book on PISA-besting countries. She points out that most of these states delay formal schooling until children are six or seven. Instead they use early-years education to prepare children for school through play-based learning and by focusing on social skills. Then they keep pupils in academic courses until the age of 16. Even Singapore, which does divert some pupils to a vocational track at the age of 13, ensures that pupils in those schools keep up high standards in reading and maths. + +Top performers also focus their time and effort on what goes on in the classroom, rather than the structure of the school system. For while test scores and pupils’ economic background are linked across the OECD, so too are specific things that the best schools and teachers do (see chart 3). + + + + + +The top performers treat teachers as professionals and teachers act that way as well. They have time to prepare lessons and learn from their peers. They tend to direct classroom instruction rather than be led by their pupils. Their advancement is determined by results, not by teachers’ unions. There are high expectations of nearly every student and high standards, too. + + + +A keener Argentina + +The teenagers who took the PISA tests in 2015 were influenced by many years’ worth of policies. And focusing on the consistently high performers means that lessons from those that have made recent improvements are neglected. + +The city of Buenos Aires had the largest jump in overall scores from three years ago. On average its pupils scored 475 in science (up 51 points), 475 in reading (46 points) and 456 points (38 points) in maths. + +For Esteban Bullrich, the minister in charge of education from 2010 to 2015, the initial aim was to make sure that pupils were being taught. Teachers were spending 12-15 days per year on strike, or about 7% of the time they should be in class, according to his calculations. To try to reduce those absences he first made his mobile-phone number public and began fielding calls directly from angry teachers. He extended the school day. + +Then he offered teachers something of a deal: higher salaries in exchange for taking their job more seriously. The grip of unions in deciding on promotions was loosened. And he made teacher training more rigorous and practical. + +Another impressive mover, albeit more of a tortoise than a hare, is Portugal. Since 2006 it has steadily improved its scores across each subject by about a year of schooling, overtaking the United States as it went from a middling to an above-average performer. + +There are three reasons for Portugal’s steady progress, says Nuno Crato, the country’s former education minister. First, it began to care about results, introducing new standardised tests. Second, a new curriculum with higher standards was introduced from 2011. Third, it has reduced the amount of streaming by ability, keeping its use “temporary and partial”. Struggling pupils may get extra tuition but teachers will try to keep them in the same classes as their peers. + +For Portugal to become an educational powerhouse, argues Mr Crato, it also needs “better-prepared teachers”. This is hard when some teaching unions oppose their members having to pass exams before they are allowed into classrooms. What better education does not necessarily need is bigger budgets, he says. Portugal’s improvements have come despite severe cuts to public spending. “Money matters but it is not decisive,” adds Mr Crato. + +Progress can also be spotted even among countries whose overall scores have remained flat. The economic background of the average American pupil matters much less to their overall test scores than in earlier editions of PISA. Mr Schleicher puts this down to reforms such as President George W. Bush’s No Child Left Behind Act, which made local governments more accountable for the results of poorer pupils. + +The PISA results are not all happy tales of plucky reform. Australia is one of several countries whose results have dipped. Its average score in maths has fallen from 524 to 494 since 2003, equivalent to a year of schooling. Australia is one of the few rich countries where pupils do not have to take maths in their leaving exams. (Malcolm Turnbull, the prime minister, is trying to make states change this.) It is also a result of a declining quality of teaching, suggests John Hattie of the University of Melbourne. Successful applicants to teacher-training courses have lower results in their school exams than in the 1980s and 1990s. + +Nevertheless, while some countries rise and others fall, many are just like England. Its results have barely budged since 2006. (Scotland’s have plummeted.) The average result for OECD countries has similarly hardly changed since the tests began. This may reflect well on the test-setters: it would be worrying if the results swung wildly from edition to edition. + +Yet it still reflects poorly on many policymakers. Mr Bullrich says PISA is like an X-ray of a country’s education policy. It is not a full picture of your health but it can help you spot where things are sickly. Sadly, too many countries are dodging essential therapy. + +This article appeared in the International section of the print edition under the headline “Must try harder” + + + + + +Geography lessons + +Where immigrants go to school is more important than where they came from + +Immigrant children’s performance varies widely + +Dec 10th 2016 + + + +IF YOU think starting a new school is scary stuff—try doing it in a new country. Migrants can face a twin disadvantage. They are often concentrated in struggling schools. And, at least at first, they may suffer from having to toggle between languages at home and in class. Two-thirds of pupils born outside their host country use another tongue at home. Nearly one in two second-generation immigrants does so. + +It is little wonder that many migrants struggle on the latest Programme for International Student Assessment (PISA) tests. The children of foreign-born parents are on average about a year behind their peers, even after accounting for parental income. + +This finding hides a lot of variation (see chart). In Australia and Canada pupils whose parents were born abroad do better on science tests than similar teenagers with native-born parents. + +Meanwhile immigrants in European countries are often far behind. In Germany first-generation and second-generation migrants are respectively about 2.5 and 1.5 years behind teenagers with German-born parents, even after accounting for their different economic backgrounds. There are similar results in Finland, a country often lauded for its record of equality in education. + +For sure, migrants’ origins matter a lot. Second-generation East Asian pupils in Australia are roughly 2.5 years ahead of those with native-born parents. They do even better than pupils in Singapore, the highest-performing country in PISA, even as results in Australia as a whole have fallen. + +Yet the country in which the immigrant attends school is more important than the one he comes from, says the OECD’s Andreas Schleicher. Turkish-born pupils in Germany are nearly two years behind in science tests compared with those in the Netherlands, after adjusting for different economic backgrounds. + +Policy makes a difference. Attending nursery or extra language tuition helps migrants catch up. Limiting selection by academic ability gives them more time to make up ground. Not making them repeat a year has the same effect. + +Admissions policies matter, too. Avoiding high concentrations of migrants in particular schools would help their academic achievement. It would probably also help poorer native children. + +The task of educating migrants better is urgent, especially in Europe. The share of children of foreign-born parents in the OECD that took PISA increased from 9.4% in 2006 to 12.5% in 2015. It could rise further in light of the numbers of migrants settling in Europe in 2015 and 2016. + +A survey last year by the OECD found that about 80% of second-generation immigrants feel at home at school. But outliers should cause concern. In France, for example, just 40% of second-generation immigrants say they feel as if they belong in school. That is a figure to make everyone in the country sit up straight. + +This article appeared in the International section of the print edition under the headline “Geography lessons” + + + +Business + + + + + +Oil companies: Fit at fifty—or less + +Privatising Rosneft: An Ivan for an Igor + +Auditors: Bother in Brazil + +Motorcycle manufacturing: Digital rider + +South Korea’s chaebol bosses face parliament: Before parliament + +Sika and Saint-Gobain: Swiss roiled + +Alt-right media: Looking on the Breitbart side + +Schumpeter: The tycoon as intellectual + + + + + +Fit at $50 + +The oil industry is bouncing back after OPEC’s meeting + +But it has many lessons to learn from Silicon Valley, other industries + +Dec 10th 2016 + + + +PROUDLY, they call themselves elephant hunters. They are the geologists who scour the treacherous depths of the Arctic, or Brazil’s Atlantic pre-salt fields, or offshore west Africa, or the deep waters of the Gulf of Mexico, hoping to bag giant oil discoveries that can generate billions of dollars of cash for their firms over a span of decades. In some cases, they get naming rights. The Gulf of Mexico is peppered with fields named after geologists’ wives (risky if they are duds), or their favourite albums, bands, stars and football chants. They are part of the industry’s folklore. The question is, are they a dying breed? + +Several prospective deals announced this month, from the deep waters of the Gulf of Mexico to onshore Iran, suggest that the industry may be shying away from expensive forays into uncharted territory, and taking a more cost-conscious approach to exploration and production. It remains to be seen whether they can maintain their discipline if oil prices recover. But, for now, “they’ve all gone back to the drawing boards,” says Andy Brogan, an oil-and-gas specialist at EY, a consultancy. + +On December 1st BP, a British oil major, approved a $9bn investment to install a second drilling platform in its Mad Dog field in American waters of the Gulf of Mexico (it put in the first in 2005). The field was discovered in 1998 and contains up to 4bn barrels of oil and gas. When BP first proposed the new project earlier this decade, the projected cost was $20bn. + +Days later some of the world’s largest oil companies, including BP, bid generously for exploration and production blocks in Mexican waters of the Gulf, which Mexico hopes could realise up to $40bn in deepwater investment from companies. Until 2014, private investment in Mexican oil had been banned since the 1930s, so there is a pioneer’s excitement about exploring for oil there. But it is also familiar territory, with some blocks lying just across the maritime border from America. + +Adding to the sense of action, on December 7th Royal Dutch Shell, an Anglo-Dutch firm, signed a preliminary memorandum of understanding to develop oil in Iran, despite Donald Trump’s hostility to Barack Obama’s nuclear deal and the possibility of renewed sanctions. It followed a similar deal between Iran and France’s Total last month. + +Such forays show that, for the first time since oil prices plunged in 2014, Big Oil is putting its head above the parapet to seek substantial new sources of crude that will tide it through the 2020s. It comes days after OPEC, a producers’ cartel, struck an agreement to rescue oil prices, which executives say has bolstered confidence that the market is stabilising. + + + +Yet these bullish signals have not brought cheer to the elephant hunters. For years the industry has struggled to cover its investment needs and dividend payments (see chart). It barely broke even in 2012-14, though oil prices at times exceeded $100 a barrel. Now, at half that price, it is having to scrape the barrel to satisfy shareholders who rely on its dividends. The result has been a historic plunge in oil-and-gas investment. It was a record $780bn in 2014. Since then it has fallen by about $340bn. + +Oil executives say they are trying to embark on a new investment cycle without squandering money. Tim Callahan of BHP Billiton, an Australian oil-and-mining firm that won the bidding on December 5th for an $11bn project to develop the Trion field in Mexico with Pemex, the state oil company, says the aim is to be “fit at 50”, ie, able to make plenty of money at $50 a barrel—or less. + +The 60% cut in the proposed cost of BP’s Mad Dog Two project suggests that there is plenty of fat to trim. Initially the company intended to install a state-of-the-art floating “spar” tailored, in the words of one official, like a “Savile Row suit”. That project was shelved in 2013. The alternative is a standard “off-the-peg” version, though BP promises not to have compromised on safety. It will be the company’s first new platform since its Deepwater Horizon oil spill, also in the Gulf, in 2010. Aware that OPEC’s control over the oil price may diminish, and that longer-term pressures on oil come from climate change and “peak demand”, BP is aiming to ensure that three-quarters of such cost-savings are structural, and that only a quarter of them are subject to cyclical upswings. + +There is scepticism about the industry’s ability to keep its belt tight. Share prices of oil-service companies, including offshore-focused ones like Schlumberger, have jumped since the OPEC deal, suggesting investors expect them to be able to raise the prices they charge their paymasters. + +BP executives discuss several ways of keeping costs under control, though they admit they are only “scratching the surface” on these. The firm has pulled out of potentially expensive greenfield projects, such as the Great Australian Bight, and opted for better-known territories instead. (Shell, meanwhile, has given up on the Arctic.) BP may not add to its 45bn barrel stock of resources, which at current rates of production could last 52 years. It may replace uneconomic barrels with cheaper ones, but will also draw 15bn of them by 2030. + +Executives have been scouring other industries—from Silicon Valley to carmakers—for examples of how to become leaner. That will involve streamlining inventories and manpower. For instance, in parts of America, BP has cut the number of people monitoring wells by three-quarters, using mobile apps instead. It plans to run fibre optics down its wells to “listen to” problems, such as the seepage of sand, far below the surface, thereby forestalling the need for expensive work. + +Andrew Latham of Wood Mackenzie, a consultancy, says that as well as cost-cutting, Big Oil’s best bet on a more economically-sustainable future is gas, which can be cheaper to produce and easier to find than oil. There may be still plenty more gas elephants to bag. They won’t, however, have quite the cachet of the oily ones. + +This article appeared in the Business section of the print edition under the headline “Fit at fifty—or less” + + + + + +An Ivan for an Igor + +Glencore stuns the oil-trading business with a deal to take a big stake in Rosneft + +Sanctions are not the impediment they were expected to be + +Dec 10th 2016 | MOSCOW + +Wild celebrations between Putin and Sechin + +GLENCORE, a Swiss-based commodities company, and its biggest shareholder, the Qatar Investment Authority, are set to take a €10.2bn ($11bn) stake in the Russian oil giant Rosneft, giving them 19.5% of a business targeted by Western sanctions since Russia fuelled a war in eastern Ukraine in 2014. The unexpected deal, the largest in an ambitious Russian privatisation plan, delivers Vladimir Putin and Igor Sechin, Rosneft’s boss, a victory. The Russian state will keep control of the company, while filling a gap in the 2016 budget. + +The transaction will also stir up old jealousies in the oil-trading business, which, as one industry participant puts it, is in “a pissing match to be top dog with Rosneft”, the world’s second-biggest crude producer. Last year Glencore was forced by the commodities slump to suspend its dividend, sell assets and issue $2.5bn of new shares. Its acquisitive boss, Ivan Glasenberg, had not been expected to make such an expansive move so soon. + +In a statement Glencore said it will put only €300m of its own equity into the deal. The rest of the funding will come from the Qatari sovereign-wealth fund and non-recourse bank lending, which Mr Sechin said was arranged through “one of the largest European banks”. Glencore did not mention the sanctions. The firm was founded by the late Marc Rich, a billionaire trader infamous for breaking American sanctions with Iran in the 1980s. But its lawyers are expected to have made sure there was no risk of sanction-busting penalties. BP, a British oil company, has had a 19.75% stake in Rosneft since 2013. + +The sanctions’ penumbra has made Western investors cautious about doing further business with targeted firms and individuals, and Rosneft had been expected to tap Chinese and Indian partners, if any. When Russia issued sovereign bonds earlier this year, Washington and Brussels recommended that American and European banks steer clear. Glencore’s willingness to sign on to the Rosneft deal suggests investors may reconsider Russia amid the prospect of a Trump-led rapprochement with Moscow. Some American officials were blindsided by the news. One said: “We’re looking at this now, on a fast track.” + +The deal will give Glencore a five-year contract to take an extra 220,000 barrels a day (b/d) of crude, which will significantly boost its business. But it will also have to take account of a tentative agreement between Russia and OPEC, the oil cartel, to cut Russia’s production by 300,000 b/d. + +Glencore’s investment in Rosneft will infuriate Geneva-based Trafigura, its arch-rival, founded by other former employees of Mr Rich. Trafigura had achieved the closest relationship with Rosneft in recent years, and this year joined it in buying Essar, a big Indian refinery. + +Mr Sechin can add the sale to a string of recent victories that include the purchase of Bashneft, a midsized Russian oil firm, from the government last month. Officials had indicated that Rosneft might buy the stake in itself back from Rosneftegaz, its parent firm, in order to meet a deadline to close the deal and transfer funds into the budget by year’s end. “They got it done to the surprise of all,” says Andrey Polischuk of Raiffeisen Bank in Moscow. + +This article appeared in the Business section of the print edition under the headline “An Ivan for an Igor” + + + + + +Bother in Brazil + +America’s audit watchdog uncovers serious misconduct at Deloitte Brazil + +The Brazilian unit of the world’s biggest accounting firm doctored paperwork, concealed evidence and withheld information from inspectors + +Dec 10th 2016 | SÃO PAULO + + + +ACCOUNTING scandals are nothing new in Brazil. Its former president, Dilma Rousseff, was impeached in August for cooking her government’s books. The bosses of its biggest building firms have landed behind bars for padding contracts with Petrobras, the state-run oil company. At least, governance gurus joke, all the imbroglios—and a three-year-old law against bribery—have prompted companies to replace what people used to call corruption departments with compliance offices. How ironic, then, that Brazil’s latest affair involves a firm that is meant to ensure that firms stay on the straight and narrow. + +On December 5th it emerged that America’s Public Company Accounting Oversight Board (PCAOB) fined the Brazilian arm of Deloitte, the biggest of the “Big Four” accounting networks, $8m, for what Claudius Modesti, the watchdog’s director of enforcement, called “the most serious misconduct we’ve uncovered”. Deloitte is the first of the Big Four to be accused of failing to co-operate with a probe by the PCAOB, created by the Sarbanes-Oxley act of 2002, itself a response to a massive accounting scandal at Enron, an energy giant. The firm will also have to pay 5.4m reais ($1.6m) to Brazil’s securities regulator. + +The bulk of the problems centre on Deloitte’s auditing of Gol, a troubled Brazilian low-cost airline with shares listed in New York. It was in 2012 that the PCAOB examined the firm’s audit papers during a routine review. Its inspectors found that a year before, Deloitte’s senior auditors had signed off on the carrier’s books despite knowing that its staff were still reviewing these for mis-statements, in particular related to reserves set aside to cover aircraft-maintenance costs. A subsequent probe unearthed systematic attempts by managers and partners to doctor paperwork, conceal evidence and withhold information from inspectors. Similar shenanigans apparently marred Deloitte’s audits of Oi, a Brazilian telecoms firm which filed for bankruptcy protection in June. + +Relative to the scale of fines that regulators have been doling out to banks in recent years, Deloitte’s bill looks tiny. But it is a record for the PCAOB. A dozen (now former) partners and auditors have been banned from working at any of the accounting firms the PCAOB oversees, all but one of them for life. As part of its settlement with the agency, Deloitte Brazil also faces the humiliating presence of an independent monitor until at least mid-2017. + +Critics of auditors will cite the Deloitte case as further evidence that the world is suffering from an outbreak of accounting fraud. The PCAOB has just fined Deloitte Mexico $750,000 for tampering with documents in an audit there. In August PwC settled a case in which a plaintiff was seeking $5.5bn after Colonial BancGroup, an American lender it audited, went bust. Last year EY, another Big Four firm, failed to flag problems at Toshiba that forced the Japanese firm to restate its accounts by $1.9bn. + +Still, the overall trend around the world has been for accounting to get cleaner. In America one good measure of this is the size of the biggest accounting restatement in a given year. It has plummeted over the past decade, from over $6bn to under $1bn. The scale of all restatements was only $2.7bn, or just 0.3% of all corporate profits, in 2015. Standards outside America have improved, too, partly because Europe and many emerging economies, including those of Latin America, have adopted common international accounting standards. Deloitte’s Brazilian fiasco is depressing, but at least skulduggery is being uncovered and punished. + + + +This article appeared in the Business section of the print edition under the headline “Bother in Brazil” + + + + + +Digital rider + +A new motorcycle brand springs from a computer + +A startup uses digital engineering to enter the market + +Dec 10th 2016 + +Engine of progress + +WHEN the covers come off the Vanguard Roadster at the New York Motorcycle show on December 9th the moment will mark the launch not only of a brawny new bike but also of a new brand with big ambitions. Vanguard is an audacious startup that reckons it can use the increasing digitisation of manufacturing to ride with the pack of long-established bike companies, such as Honda, Yamaha, Harley-Davidson, BMW and others, who are together set to sell some 500,000 motorcycles and scooters in America this year. + +That might sound laughable. So far, Vanguard has built a grand total of one machine. At around $30,000, complete with a thumping 1.9 litre V-twin engine, it is priced at the premium end of the market (though well below the price of some superbikes, which can cost three times as much). But if Vanguard has its way, within a few years it will be selling several thousand motorcycles annually from a range of several different models. + +What enables a startup to aim so high is the way digital technologies are lowering the cost of entry to manufacturing businesses that were once seen as the preserve of giants. That is especially so in the costly and long-drawn-out process of product development. From sketches, to clay models, component engineering and testing, it used to take a carmaker five years or more to bring a new vehicle to market. It is similarly slow going for bike manufacturers. + +Some carmakers can now do the job in just two, with the help of three-dimensional computer-aided design, engineering and simulation systems. In effect, the product—a car, motorcycle or even an aircraft—exists in a digital form where it can be sculpted and tested long before anything physical is built. It is also possible to simulate production methods. + +This is the approach taken by Vanguard, which was set up in 2013 by Francois-Xavier Terny, a former management consultant, and Edward Jacobs, a motorcycle designer. Despite lacking the resources of the big producers—for now, the firm has just a handful of employees—it used software (in this case Solidworks from Dassault Systèmes, a French company) to design a digital motorcycle before turning it into a real one. Such systems are benefiting from the falling price and increasing performance of computing power. “We now have the same level of design and engineering tools as the big boys, which would have been impossible ten years ago,” says Mr Terny. + +The digital designs also make it easier for the company to gain access to global suppliers who will quote the best prices for parts they need. Design files can simply be e-mailed to a vast network of engineering firms that offer their services online. + +Once road-testing and further development is complete, production of the Roadster is scheduled to begin at some point in 2018 at a refurbished industrial unit in the Brooklyn Navy Yard in New York, which is now home to a number of manufacturing companies. That is another feature of the way factories are quickly changing: with digital engineering, cheaper automation and new production techniques such as 3D printing, it may be possible to rev up inner-city manufacturing. + +This article appeared in the Business section of the print edition under the headline “Digital rider” + + + + + +Grilled in Seoul + +South Korea’s chaebol bosses face parliament + +Lee Jae-yong of Samsung was the most intensively interrogated + +Dec 10th 2016 + + + +FOR the South Korean public, the sight of nine of their most powerful business chiefs, who are rarely seen, submitting to a day-long grilling by South Korean MPs on December 6th was remarkable (eight of them are pictured). During the hearing, broadcast live on television, the heads of CJ, LG, Hanwha, SK, Samsung, Lotte, Hanjin, GS Group and Hyundai, all family-owned conglomerates, or chaebol, denied they had sought favours in return for the billions of won they paid into two foundations controlled by Choi Soon-sil, a former confidante of President Park Geun-hye. (As The Economist went to press, Ms Park faced an impeachment motion by parliament over her ties to Ms Choi.) Samsung’s Lee Jae-yong, whose 20.4bn won ($17.6m) grant was the biggest, was the most intensively interrogated. On many minds was the last time big bosses were thus summoned, during an inquiry in 1988 into the corporate funding of a foundation run by then-dictator Chun Doo-hwan. Six of those tycoons’ sons were among those testifying this week. + + + +This article appeared in the Business section of the print edition under the headline “Before parliament” + + + + + +Sika and you may not find + +Europe’s nastiest takeover battle reaches its second anniversary + +A French glassmaker’s attempt to buy a Swiss rival reflects badly on its own performance + +Dec 10th 2016 | PARIS + + + +THE life of a predator can be fraught. Expend too much energy on hunting your prey and even success can be costly. Saint-Gobain, a French maker of glass and other building materials, might be learning that lesson. It mostly grows by snapping up smaller fry, but an attempt to buy a midsized Swiss rival, Sika, has gone on for two years. It could take as long again for Swiss courts to resolve the most intractable corporate struggle in Europe. + +Pierre-André de Chalendar, Saint-Gobain’s CEO since 2007, was doubtless impressed by Sika’s high returns on its business selling industrial adhesives, mortar and construction chemicals. Its annual return on capital over the past decade has been an attractive 12.6%, more than double Saint-Gobain’s 5.1% (see chart). So when in 2014 the current, fourth generation of the Burkard family, which founded Sika in 1910, offered to sell 52.4% of the voting rights in their firm, Mr de Chalendar bit. + +The family investment is kept in a body called Schenker-Winkler Holding (SWH) which, following the death of the matriarch in 2013, the dynasty agreed to sell to the French firm for SFr2.75bn ($2.85bn). Although SWH accounted for a majority of the voting rights, it had only 16% of the economic-ownership rights. Sika’s top managers and its other investors came out against the deal and in October a Swiss court ruled that its rules of incorporation mean that board approval is required before the family’s stake can go to a new owner. The local press cheered—copies of the purchasing deal for SWH, leaked to newspapers, made no explicit mention of Mr de Chalendar’s public promises to protect jobs at Sika and to keep it listed in Switzerland, raising suspicions that the firm from over the Alps might behave ruthlessly if it got control. + +In strict financial terms, it is easy to see why the Swiss are underwhelmed by the French deal. Sika is an example of European industrial excellence. Factories adjust product design and output rapidly according to fluctuations in local demand. It is forward-looking and particularly focused on new materials, especially glue, which will increasingly replace welding in house-building. Its share price has roughly doubled in a decade, whereas that of Saint-Gobain has halved. + +The stately French firm, which is over 350 years old, still has a much bigger market capitalisation, of €23.6bn ($25.5bn), against Sika’s €9.8bn. But its own investors do not appear overly keen on its strategy: Wendel, a shareholder, cut its stake in the French firm in May, from 12% to just over 6%, accepting a €220m loss. + +As well as worrying that the two firms compete with each other in some markets, especially for sales of mortar, Sika’s other investors grumble that Mr de Chalendar should be looking much further afield. Saint-Gobain still earns two-thirds of sales in slow-growth Europe, and buying the zippier Sika would not really solve that problem. Its acquisition record is also questionable. Critics say it destroyed value after buying British Plaster Board, a FTSE 100 firm, for $6.7bn in 2005. + +Guillaume Texier, chief financial officer of Saint-Gobain, says bad market conditions after that acquisition were chiefly to blame. A combined firm would share savings worth €180m a year, he says, adding that they complement each other in most markets. He dismisses the idea that his firm would try to hobble or exploit a rival. + +The outcome now depends on a series of courts. The Burkard family has appealed against the October judgment. Saint-Gobain, although not a direct party in the case, says the ruling undermines property rights in Switzerland. It is likely to bide its time. The agreement with the Burkard family can be extended until late 2018, time enough for the matter to go before the very highest judges. + +The question is whether it is wise for Saint-Gobain to keep chasing Sika. Mr Texier denies the contest means Saint-Gobain is being distracted or risks having capital tied up. He says that other smallish acquisitions—some 20 this year, worth roughly €400m in all—are proof that life goes on. + +There are risks, however. If Saint-Gobain’s bid eventually succeeds but at the cost of bad blood, it might lose its target’s best managers. In the meantime, win or lose, it may be neglecting other paths to growth. The firm would be better off attending to two urgent priorities, analysts say: expansion in Asia and North America, and a round of cost-cutting in France, its largest market. If these tasks are put off for much longer, Saint-Gobain could even find itself prey instead of hunter. + +This article appeared in the Business section of the print edition under the headline “Swiss roiled” + + + + + +A Breitbart future + +Breitbart News pushes deeper into Europe + +Stephen Bannon’s alt-right news outfit is about to launch French and German websites + +Dec 10th 2016 + +He stoops to conquer + +A NOTABLE American commentator, Charles Krauthammer, once explained Rupert Murdoch’s success in founding Fox News, a cable channel, by pointing out that he had found a niche market—half the country. The same may be true of Breitbart News, a conservative website whose fortunes have risen with those of Donald Trump, and whose chairman, Stephen Bannon (pictured), is Mr Trump’s chief strategist. + +Milo Yiannopoulos, an editor at Breitbart, explained after Mr Trump’s victory that half of voters are “repulsed by the Lena Dunham, Black Lives Matter, third-wave feminist, communist, ‘kill-all-white-men’ politics of the progressive left.” Breitbart saw it coming a while ago, he added. The company’s expansion plans suggest it sees something coming in Europe, too. It already has a website in Britain and in January it will launch French and German sites. + +Founded by Andrew Breitbart, a conservative journalist who died in 2012, the site is just nine years old. Its formula—outraging and fascinating readers with “click bait”, occasional fake news, polemics and attacks on mainstream media—has taken off. Ten days after the election it said it had received 45m unique visitors in 31 days—modest compared with mainstream outlets. But its profile is rising rapidly. In some time periods—for example, between May 13th and June 13th this year—it has boasted the highest number of social-media interactions for political content in English, beating outlets like CNN, the Guardian and the Wall Street Journal. During that time its closest rival, the liberal Huffington Post, lagged by nearly 2m clicks and shares. + +So far the company’s political achievements have been more transparent than its commercial ones. Breitbart refuses to release revenue figures, although pundits suspect that its advertising streams are not big enough to sustain its current operations in America and Britain. It is financed by private backers, notably Robert Mercer, a hedge-fund billionaire and a big donor to Mr Trump’s campaign, who reportedly invested $10m in the site a few years ago. Yet compared with traditional media, its overheads are small: a few opinionated journalists, some interns and readers who fill up the comments page at no extra cost. + +Breitbart’s ad revenues, such as they are, could prove volatile. Its content is frequently toxic: its comment section is a platform for members of far-right hate groups to rail against immigration and Jews. On November 29th Kellogg’s, an American maker of breakfast cereal, announced it was pulling its ads from the site. Kellogg’s is not alone. Allstate, an insurer, Warby Parker, which sells spectacles, EarthLink, an internet provider, and SoFi, a fintech firm, have blacklisted Breitbart. This week, some German companies, including BMW, a carmaker, joined the boycott. + +As Breitbart’s reach climbs, however, many firms will feel torn. The site has said that the departure of Kellogg’s will not harm it financially. (Indeed, the cereal maker’s share price has fallen since the site began urging consumers to “#DumpKelloggs”.) Many advertisers, such as Nissan, a Japanese carmaker, have opted to stay. + +The push deeper into Europe may seem an oddly international approach for a brand that scorns the ideals of a global order. Yet Breitbart has a clear operational model: moving into markets where it can win an audience by appealing to anti-globalisation and anti-immigrant sentiment and by aligning itself with an existing opposition party. A connection to a political entity lends it credibility and also allows Breitbart to draw fragmented online communities together into an organised platform, says Angelo Carusone of Media Matters for America, which monitors conservative media in Washington, DC. + +In Britain, where it launched in 2014, Breitbart loudly promoted the campaign of the UK Independence Party (UKIP) to leave the European Union. The Leave team used its content, and UKIP’s Nigel Farage became a columnist. Raheem Kassam, an editor on the site, went to work as Mr Farage’s aide. He has since returned and is leading Breitbart’s push to expand further. + +Conditions are similarly ripe in France and Germany, media observers say. Elections are due in both countries next year and far-right candidates—Marine Le Pen of the National Front in France and Frauke Petry of Alternative for Germany—hope to do well. Breitbart will cheer on their respective parties. + +Incumbents do exist. In France, for example, conservative publications such as Valeurs actuelles have been flourishing as Ms Le Pen’s popularity has surged, notes Paul Ackermann, editor-in-chief of Huffington Post France. But they have no professional internet presence. Supporters of the National Front, many of whom are young, do not have a media outlet where they can meet and exchange ideas. “The door is wide open” for a site like Breitbart, Mr Ackermann says. François Godard, a media analyst, sees a gap between the country’s mainstream media and an increasingly populist readership. The online comments on the websites of Le Monde or Le Figaro are often more attuned to the Breitbart point of view than to the papers’ own content, he says. + +“America first”—European edition + +In Germany, where most outlets lean left, the right-wing media scene is particularly underdeveloped—a cultural aversion born of the country’s fascist past. Breitbart will have to contend with strict laws governing hate speech and anti-Semitism. Junge Freiheit is one of a tiny number of conservative papers. It has had a surge in readers since Angela Merkel, Germany’s chancellor, opened the country’s borders to migrants in 2015. But its circulation is still less than 30,000, perhaps due to a weak online presence. Breitbart could address that by bringing right-wing media consumers together on a single platform. + +If Breitbart recruits well-known figures in local markets, as the Huffington Post has done, its path may be smoother. In Britain, alongside Mr Kassam, it appointed James Delingpole, a conservative journalist who writes in the Spectator, a 180-year-old right-of-centre magazine. Things are going well: the site’s audience has grown by 135% year on year, to 15m monthly page views in July, meaning it has a bigger reach than the Spectator’s own site. Not bad for a firm recently called a “bunch of nuts” by a spokesman for Mitt Romney, a former presidential candidate. The business of outrage, led in the early days by Rush Limbaugh, a right-wing talk-show host, and then perfected by Fox News, may well become another ubiquitous American export. + +This article appeared in the Business section of the print edition under the headline “Looking on the Breitbart side” + + + + + +Schumpeter + +Charles Koch is a rare thing, a businessman besotted with ideas + +His theory of management, inspired by the Austrian school of economic thought, worked wonders at Koch Industries + +Dec 10th 2016 + + + +CHARLES KOCH may well be the most demonised businessman in America, with his younger brother, David, a close second. Journalists argue that he is the mastermind of the country’s vast right-wing conspiracy. Lunatics have made death threats. The ultra-rich, particularly those who made their original fortunes in oil and gas, are supposed to make amends by giving their money to liberal causes. The Kochs have instead spent hundreds of millions backing conservative political causes (though Charles Koch has no love for Donald Trump), lobbying for lower taxes and attacking the idea of man-made global warming. + +Mr Koch doesn’t come across as Dr Evil. True, the headquarters of Koch Industries is a collection of black boxes outside Wichita, Kansas; the security screening is rigorous. But its CEO has more of the air of a university professor. Despite his $40bn fortune, he lives in a nondescript neighbourhood in one of America’s most boring cities, puts in nine or more hours a day in the office and lunches in the company canteen. He doesn’t seem that interested in his surroundings: complimented on the firm’s art collection, he says his wife takes care of that sort of thing. What he is really interested in is books and ideas. + +It was as an engineering student at the Massachusetts Institute of Technology in the 1950s that he first fell in love with ideas. There he hit on the subject that has preoccupied him since: why some human organisations flourish while others stagnate. He gorged on the Austrian school of economics—F.A. Hayek, Joseph Schumpeter and, his personal favourite, Ludwig von Mises, Hayek’s mentor. He devoured American polemicists such as F.A. “Baldy” Harper, whose treatise of 1957, “Why Wages Rise” (because of productivity improvements by workers, not union action), he describes as “life-changing”. + +Since then his reading has taken him far and wide. The bookshelves in his office are stuffed with works of history, biographies and the latest titles with big ideas. He is surprisingly keen on Howard Gardner, a quintessential Harvard-Yard liberal, and his theory of multiple intelligences (linguistic, musical and interpersonal among them). But Mr Koch found the answer to his question about how organisations prosper by reading the classical liberals: he regards the “spontaneous order” of the free market—the notion that systems are best left to correct naturally, free of human intervention, with the price mechanism allocating resources to the most efficient use—with the same awe with which he regards the natural order of the universe. + +Mr Koch has used his reading to forge a theory of management which the Charles Koch Institute, his think-tank-cum-philanthropic outfit, has trademarked as market-based management or MBM. The main idea is that market signals should operate just as vigorously within organisations as between them. Workers should be paid according to the value they add rather than their position in the hierarchy. Koch Industries keeps base pay low (it is regarded as just a down-payment on the year’s value-added reward) and workers are often paid more than their bosses. Companies should grant “decision rights” to those employees who have records of making choices that boost profits. + +As Mr Koch’s philosophy took shape, so his company boomed. When he took over as chief executive from his father in the late 1960s Koch Industries was a small company centred on oil and gas with $200m in yearly sales and 650 employees. Today it is the second-largest private firm in America, with $100bn in annual revenues and more than 100,000 employees. It is one of the world’s largest commodities traders, operates three ranches covering more than 460,000 acres, processes some 600,000 barrels of crude oil a day and produces a wide range of materials such as paper towels, nylon and spandex. Koch Industries estimates that its value has increased over 4,500 times since 1960, outperforming the S&P 500 index by a factor of nearly 30. + +Yet MBM has attracted remarkably few imitators. Mr Koch says that Morning Star, a California-based tomato producer, has also experimented, independently, with an internal-market system, but that hardly suggests a fashion. One reason may be that Koch Industries is based in the Midwest, away from the great business-theory factories such as Harvard or Stanford. Another is that it is easy to imagine MBM degenerating into a time-consuming bureaucracy. In any case, the firm’s success probably owes as much to Mr Koch’s managerial drive as to MBM (insiders joke that Koch stands for “keep old Charlie happy)”, and to two big insights: that its core competence in processing, transporting and trading can be applied to a wide range of commodities; and that the Midwest is full of first-class engineers and technicians educated in places like Murray State University and the University of Tulsa. + +The wizard of Kansas + +Even if MBM is not quite the magic formula that Mr Koch claims, however, it serves two clear purposes. It provides a diverse and rapidly growing company with a glue. Koch employees speak of MBM with the same enthusiasm that General Electric’s employees once talked about Six Sigma. Unsurprisingly, many have read Mr Koch’s books on MBM, “The Science of Success” (2007) and “Good Profit” (2015). For the less scholarly, MBM is funnelled into ten “guiding principles” (such as “principled entrepreneurship”) printed on coffee cups and posters throughout the group. + +His philosophy also keeps the firm focused on Schumpeter’s idea of creative destruction. Mr Koch is good at spotting opportunities (buying Georgia Pacific, a pulp and paper firm, in 2005 for $21bn, produced a spell of fast growth). Less obviously, he is always pruning businesses that start to fade. Koch Industries could easily have been a low-growth energy company stuck in the middle of the Great Plains. That it has instead succeeded in doubling its earnings every six years or so since the 1960s is thanks in large part to Mr Koch’s unconventional and scholarly mind. + +This article appeared in the Business section of the print edition under the headline “The tycoon as intellectual” + + + +Finance and economics + + + + + +The American economy: Full speed a-Fed + +Buttonwood: First blast of the Trumpettes + +Italian banks: A monte to climb + +The euro zone: General anaesthetic + +Pensions in America: Stampede in Dallas + +Insurance litigation: Insurance’s Jarndyce v Jarndyce + +Free exchange: You had to be there + + + + + +Full speed a-Fed + +The Federal Reserve prepares to raise interest rates again + +For the first time in years, the central bank’s forecasts for monetary policy look believable + +Dec 10th 2016 | WASHINGTON, DC + + + +AMERICA’S central bank tries to be predictable. When in December 2015 it raised interest rates for the first time since 2006, nobody was much surprised. The central bank had telegraphed its intentions to a tee. Similarly, if the overwhelming consensus in financial markets is to be believed, on December 14th—almost exactly a year later—rates will rise again, to a target range of 0.5-0.75%. Donald Trump’s tweets and phone calls may upend trade, fiscal and foreign policy in a matter of minutes, but Janet Yellen, the Federal Reserve’s chairwoman (pictured), is tweaking monetary policy at only a cautious annual pace. + +Yet in another sense, the Fed has confounded predictions—at least, those it made itself. A year ago the median rate-setter foresaw four rate rises in 2016. None has happened yet. This might seem like a straightforward reaction to events. At the start of the year, stockmarkets sagged on worries about Chinese growth. Then, in June, Britain voted to leave the European Union, sending markets spinning again for a while. But the delay also resulted from a gradual acceptance by Fed officials that low rates have become a longer-lasting feature of the economy. In September most rate-setters expected rates eventually to settle below 3%. This is down from 3.5% at the time of “lift-off” a year ago. Since June Ms Yellen has been saying that low rates are only “modestly” juicing the economy. + +Now, though, the Fed is ready to move again. A look at the labour market reveals why. A year ago unemployment was already low at 5%. Since then the economy has created an average of 188,000 jobs per month. At first this helped the labour-force participation of prime-age workers, which fell worryingly after the crisis, to surge. It rose from a trough of 80.6% in September 2015 to 81.6% by October 2016, a spurt faster than any since 1985. Swelling numbers of jobseekers kept unemployment roughly steady despite robust job growth. + +In November, however, participation fell slightly. As a result, job creation is once again pushing unemployment down. It now stands at 4.6%, the lowest rate recorded since August 2007. That is below its long-run sustainable level, according to at least 13 of 16 Fed rate-setters who penned forecasts in September. + +Hawks argue that participation has reached its limit, so little slack remains in the labour market. Other thermometers are popping. It now takes 28 days to fill a vacancy, up from 23 days in 2006, notes Torsten Slok of Deutsche Bank. Firms small and large list hiring difficulties among their top concerns. For all the fanfare over Mr Trump’s agenda to protect jobs from outsourcing, fewer workers were laid off or fired in September than in any month since data started being collected in 2000. + +Doves reckon this is mostly a mirage. Prime-age participation has climbed only a third of the way back to its pre-recession level. Even among those in work, there are still an unusually high number of part-timers who want full-time work. + +The ultimate arbiter of this debate is wage and price inflation. If the economy is running hot, both should pick up. As it is, hourly wages are only about 2.5% higher than a year ago. But researchers at the San Francisco Fed have suggested that a slew of retirements by baby-boomers on fat salaries is dragging this average down. Measures purged of this problem show the median hourly pay rise running at fully 3.9%, almost as generous as in 2007 (see chart 1). + + + +As for inflation, it is not yet back at the Fed’s 2% target. But it is getting closer. Excluding food and energy, prices are 1.7% higher than a year ago, according to the Fed’s preferred measure, up from 1.4% at the end of last year. Doves console themselves that even after rates rise, monetary policy will remain unusually loose for this point in the economic cycle. That partly reflects the asymmetry of risks before the Fed. Should an some unforeseen shock rattle the economy, there will be little room to cut rates to offset it. This, as Ms Yellen often acknowledges, justifies keeping rates lower than they otherwise would be. + +Inflation risk, though, is starting to tilt upwards. Congress will probably cut taxes next year. Higher rates may be needed to stop any fiscal stimulus becoming inflationary. Since the election, markets’ inflation expectations have continued on an upward trend that began in September. But Treasury-bond yields, which in large part reflect traders’ expectations for Fed policy, have risen dramatically (see chart 2). Rising oil prices and the prospect of Mr Trump’s imposing import tariffs also play a role. Both would crimp growth, but would do so in part by pushing prices up. + + + +Surging bond yields and a stronger dollar are already squeezing the economy. So carefully has Ms Yellen managed expectations that a rate rise now will not exacerbate those trends. What would do so would be any hint that the Fed may bring subsequent rate rises forward, not push them back. For the first time in years, that does not look out of the question. + +This article appeared in the Finance and economics section of the print edition under the headline “Full speed a-Fed” + + + + + +Buttonwood + +Winners and losers from the Trump stockmarket rally + +Investors bet on tax cuts, repatriated profits and deregulation + +Dec 10th 2016 + + + +SELL on the rumour, buy on the news runs one version of a hoary stockmarket adage. And it certainly applied to last month’s presidential election. Before the poll, many investors were concerned about the risk that Donald Trump might become the 45th president. But as soon as the result was confirmed, they piled into shares. American equity mutual funds enjoyed four consecutive weeks of inflows, the longest streak since 2014, according to EPFR Global, a data provider. + +One driver of the rally was Mr Trump’s planned fiscal stimulus. Investors believe this will lead to bigger deficits; hence the rise in bond yields since the election. But they also hope it will boost the American economy. That may explain why the Russell 2000 index of smaller companies, which tend to have a domestic focus, has outperformed the S&P 500 since the election (see chart). If this goes on, such stocks may become known as the Trumpettes. + +Another factor was the planned cut in corporate-tax rates. The official American corporate income-tax rate is 35% (rising to 39% when state taxes are added). Standard & Poor’s, a ratings agency, reckons that the effective rate paid by companies is 29%—largely because profits earned abroad are not repatriated and so are not taxed. Tobias Levkovich of Citigroup reckons that a cut in corporation tax from 35% to 20% would boost earnings per share for S&P 500 companies by 7%, even allowing for the offsetting impact of a stronger dollar and higher interest rates (both of which seem likely in 2017). + +Investors may also be smacking their lips at the prospect of companies’ repatriating their overseas cash piles. A repatriation tax “holiday” in 2004 saw companies bring back around $600bn, much of which was used to buy back shares or pay dividends. Mr Levkovich estimates that investors may receive cash worth around 3% of the American stockmarket’s total current value. A lot of this money may be ploughed back into equities. + +But the effect on the American market has not been uniform. The best-performing bit of the stockmarket since the election has been financial firms. In terms of individual sectors, banks and life-insurance companies have both managed double-digit percentage gains. Investors clearly hope that the repeal of financial-services regulation, as well as a steepening of the yield curve, will boost Wall Street’s profits—something voters in the rustbelt might not have realised would be one striking consequence of a Trump victory. + +More broadly, the election has prompted a shift out of stocks such as power utilities and consumer-goods producers, which are less tightly linked to the overall strength of the economy, and into more cyclical shares such as miners and construction companies. The poor old utility stocks have suffered a double whammy since the election. Such firms pay high dividends and are often treated as alternatives to government bonds by income-seeking investors; as a result, they have been caught up in the bond sell-off since November 8th. + +All this has had some perverse effects. One popular investor strategy has been to buy shares with low volatility (those that tend to rise and fall less rapidly than the overall market); exchange-traded funds (ETFs) have been set up specifically to own low-vol shares. According to BNP Paribas, a French bank, low-vol ETFs outperformed the rest of the American market in the first seven months of the year. But in the aftermath of the election, low-vol ETFs fell in price and actually became more volatile than the overall market. + +The danger in all this is that the market gets ahead of itself. By the middle of 2017 investors expect the earnings of S&P 500 companies to have risen at an annual rate of 12.3%. Some of this reflects a recovery in the energy sector after last year’s falls in oil prices. But even if energy stocks are excluded, profits are expected to be 7.9% higher, according to Société Générale, another French bank. + +In recent years analysts have regularly forecast that companies would produce double-digit percentage growth in profits, only to be disappointed. It may well happen again. Even if Mr Trump’s proposals get through Congress unscathed, they may take time to have an impact on the economy, and thus on corporate profits. + +In the meantime, equities trade on a cyclically adjusted price-earnings ratio (which averages profits over the past ten years) of 27.3, according to Robert Shiller of Yale University. That valuation is 63% above the long-term average. And interest rates look poised to rise, a development that has in the past upset equity markets. The first blast of the Trumpettes may yet be followed by a loud raspberry. + +Economist.com/blogs/buttonwood + +This article appeared in the Finance and economics section of the print edition under the headline “First blast of the Trumpettes” + + + + + +A monte to climb + +Italian banks after the referendum + +A state rescue of Banca Monte dei Paschi di Siena, the world’s oldest bank, looks probable + +Dec 10th 2016 | MILAN + + + +THE first casualty was Matteo Renzi’s hold on office. As he had promised, Italy’s prime minister resigned on December 7th, three days after voters rejected his proposals to overhaul the constitution. The second is likely to be a planned private-sector recapitalisation of Banca Monte dei Paschi di Siena, the country’s third-biggest bank and the world’s oldest. As The Economist went to press, the scheme’s chances looked slim. A government rescue was reportedly being prepared. + +Monte dei Paschi has been in trouble for years. It has already had two state bail-outs and frittered away €8bn ($10bn) raised in share sales in 2014 and 2015. Its stockmarket value has dwindled to €600m, having fallen by 85% this year (see chart). Its non-performing loans (NPLs), even after provisions, are 21.5% of its total; the gross figure is 35.5%. In July it fell ignominiously short in European stress tests, ranking 51st of 51 lenders. The European Central Bank, its supervisor, asked it to raise more capital by the end of the year. This week the bank asked for more time. + +Pre-empting the test results, Monte dei Paschi devised a plan with two investment banks, J.P.Morgan and Mediobanca. It would dispose of €27.7bn-worth (gross) of bad loans. The beautified bank would be injected with €5bn of equity: some from a voluntary debt-for-shares swap which has already raised €1bn; the rest from a share issue, with an “anchor” investor, likely to be Qatar’s sovereign-wealth fund, providing the bulk. In October, Monte dei Paschi also unveiled a new business plan. + +Alas, investors’ interest may well have been contingent on political stability. The hope is that the swift nomination of a new government could yet persuade them to part with their cash. But if, as seems likely, they demur and the state steps in, how might it do so? + +Awkwardly, Italy is constrained by European Union “resolution” rules, which came fully into force this year, aimed at avoiding repeats of the bail-outs in several countries that followed the financial crisis of 2008. If banks receive state aid, they are in effect deemed bust; bondholders as well as shareholders must accept losses. In Italy, however, small investors—who are usually depositors, too—account for a large share of junior bonds. A “bail-in” of bondholders in four small banks late in 2015 caused uproar (at least one investor took his own life). The authorities have been desperate to ensure the same does not happen at Monte dei Paschi, where 40,000 households own €2bn-worth of its bonds. + +There may be room for manoeuvre. The rules allow the “precautionary and temporary” recapitalisation of a bank to “preserve financial stability”. The bank must be solvent; the injection must be on market terms; and the capital must be needed to make up a shortfall identified in a stress test, or similar exercise—like the one Monte dei Paschi failed in July. That may open the way for the Italian treasury—which, with 4% of Monte dei Paschi, is already the biggest shareholder—to supply equity, with a view to selling when all is calmer. + +Even with a precautionary recapitalisation, bondholders have to bear some of the burden. But with some nifty legal footwork they could be compensated without falling foul of state-aid rules. Many who bought bank bonds were under the false impression that they were as safe as deposits. Even so, sorting out compensation for mis-selling could be a messy affair. + +Although Monte dei Paschi is the biggest cloud over Italy’s banking system, other lenders are also seeking capital. UniCredit, the country’s biggest bank, intends to sell its asset-management arm to Amundi, a French firm, and this week agreed to sell its stake in a Polish bank. It is due to unveil a strategic review on December 13th and plans a share issue in 2017. + +Much-needed consolidation is also on the way. A merger agreed in October between Banco Popolare and Banca Popolare di Milano will create a lender bigger than Monte dei Paschi. Popolare di Vicenza and Veneto Banca, two banks held by Atlante, a private fund set up at the government’s behest, are also likely to unite. UBI Banca may acquire three of the four small banks put into resolution a year ago. + +In a country where bank branches outnumber pizzerias, that should help. Sales of NPLs have picked up in 2016. But in an economy that has scarcely grown since the birth of the euro, is likely to expand by just 0.8% this year and faces political limbo, nothing can be taken for granted. Least of all at Monte dei Paschi. + +This article appeared in the Finance and economics section of the print edition under the headline “A monte to climb” + + + + + +Running dry + +The European Central Bank’s quantitative-easing options + +The ECB’s willingness to do “whatever it takes” helps explain the markets’ uneasy calm + +Dec 10th 2016 + + + +THE response of bond, stock and currency markets to the result of Italy’s referendum, and the resignation of its prime minister, Matteo Renzi, was a jaw-breaking yawn. The euro fell a bit against the dollar, and then rallied. The yield on Italy’s ten-year bonds ticked up a few basis points and then fell to 1.89%. The markets had expected a No vote and priced it in, is one view. The calm probably also owed much to a belief that the European Central Bank (ECB) would act to stem any panic. + +As The Economist went to press, the ECB’s governing council was widely expected to extend its monthly purchases of government and other bonds (“quantitative easing”, or QE) beyond March 2017. These purchases (which began at a monthly rate of €60bn and then increased to €80bn), plus the ECB’s myriad schemes to provide long-term liquidity to banks, have worked like a charm. Financing costs in the euro zone’s periphery have converged on those of core countries (see chart). All governments, apart from Greece, can borrow in bond markets at tolerable rates. A nagging worry is that the ECB cannot keep up this support forever. Yet most observers think it can soldier on for a while yet. + +The ostensible reason for QE is not to calm markets but to meet the ECB’s inflation goal. The headline rate rose to 0.6% in November, up from 0.1% a year earlier, but it is still well below the ECB’s target of close to 2%. Strip out volatile prices of food, energy, booze and tobacco, and “core” inflation has been stuck at 0.8% for months. Yet the economy has been doing rather well by the shrunken expectations of euro land. GDP growth was steady at an annual rate of 1.7% in the first three quarters of 2016. A closely watched index of activity based on surveys of purchasing managers suggests that growth has picked up a bit more recently. + +Unemployment has fallen from 10.6% to 9.8% in the past year, with some of the biggest declines in the former crisis countries of Spain, Portugal and Ireland. Even Greece’s economy is improving. Still, the ECB cannot afford to rest on its laurels. Economic tailwinds, such as a weaker euro and cheaper bank credit, will not always have the same puff. + +The ECB does face some constraints. One is politics. It is more independent than its peer central banks, but even it requires political cover for contentious policies. That is why its president, Mario Draghi, got himself invited to the Bundestag in October 2012. He sought to defend from German criticism his famous pledge to do “whatever it takes”, including unlimited bond purchases, to save the euro. To some German ears, this sounded like the monetary financing of governments, which is barred by the treaty governing the EU. It helps that Angela Merkel, Germany’s chancellor, blessed the scheme, dubbed Outright Monetary Transactions, or OMTs, and that the ECB has not yet been called upon to use it. Germany still suffers frequent bouts of grumpiness at ECB policy. The finance minister, Wolfgang Schäuble, said in April that the ECB is half to blame for the rise of the populist Alternative for Germany (AfD) party. Yet if the ECB were forced to act in unorthodox ways to stem a financial crisis, leading German politicians would be unlikely to make a fuss. + +Some constraints are likely soon to be relaxed. To abide by the prohibition on monetary financing, the ECB has set a limit, of 33% of the total, on the purchase of any one country’s public debt, as well as on each individual bond issue, under its QE programme. It also tailors its purchases to the economic weight of each euro-zone country (the so-called “capital key”). If purchases continue at a monthly rate of €80bn, eventually the ECB will hit its self-imposed limits. Bonds will become particularly scarce in Germany, which is supposed to supply 26% of total purchases, but is running a budget surplus and so has a shrinking public-debt pile. + +Two ways out suggest themselves. First, the ECB could buy fewer bonds each month. But any hint that QE might taper off could cause bond yields in peripheral countries to jump. A likelier course, then, is to raise the limit to, say, 50% for each country and for most bond issues. + +Even a looser limit will pinch at some point. Economists at Goldman Sachs reckon the ECB will eventually have to ditch the capital key and buy proportionately more Italian bonds and fewer German ones. “Whatever it takes”, is the pledge. No one believes endless bond purchases will solve the euro zone’s deep-seated problems. But no one wants another crisis. + +This article appeared in the Finance and economics section of the print edition under the headline “General anaesthetic” + + + + + +A stampede for the exit + +A Dallas public pension fund suffers a run + +A pensions crisis has been brewing for decades and it is not confined to Dallas + +Dec 10th 2016 + +The mayor and Dallas’s finest + +BANK runs, with depositors queuing round the block to get their cash, are a familiar occurrence in history. A run on a pension fund is virtually unprecedented. But that is what is happening in Dallas, where policemen and firefighters are pulling money out of their city’s chronically underfunded plan, and Mike Rawlings, the mayor, is suing to stop them. + +At the start of the year the fire and police pension fund had $2.8bn in assets. Since then nearly $600m has been withdrawn from the plan, of which almost $500m has been taken out since August 13th. That is an alarming acceleration; in 2015 total withdrawals were just $81m. + +Even at the start of 2016, the plan was just 45% funded, and was expected to become insolvent within 15 years. When some workers take out their money, they get the full value of their benefits; leaving a smaller pot to be shared among the remaining members. (The city estimates that the funded ratio has fallen to 36% after the withdrawals.) As in a bank run, it seems rational to withdraw your money if you worry that all the benefits won’t be paid. + +The crisis is the result of three linked issues: overgenerous pension promises; the flawed nature of public-sector pension accounting in America; and some bad investment decisions. In order to pay the generous benefits, the scheme counted on an investment return of 8.5% a year, absurdly high in a world where the yield on ten-year Treasury bonds has been hovering in a range of 1.5-3%. So the scheme opted for riskier assets in private equity and property. But the strategy did not work; the value of its investments declined by $263m in 2014 and $396m in 2015, thanks largely to write-downs of those risky assets. + +It is not unusual for state and local-government pension schemes in America to be underfunded; the average scheme was 73.6% funded at the end of 2015, according to the Centre for Retirement Research at Boston College. A more conservative accounting approach, as is required of private-sector pension plans, would bring the ratio down further, to 45%. + +But the Dallas fund has a particularly big problem. It operates a deferred-retirement option plan (DROP) which allows police and firemen who have qualified for retirement to keep working, while their benefits are kept in a separate account earning an interest rate that has been 8-10% a year. More than 500 Dallas DROP accounts are worth more than $1m; the average account is worth nearly $600,000. + +In addition, since 1989, retirement benefits have been upgraded using an annual cost-of-living adjustment of 4%. The city estimates that benefits are now 15-20% higher than they would have been had they been upgraded in line with the consumer-price index. Together, the DROP plan and cost-of-living increases make up around half of the scheme’s total liabilities. + +There are only two possible solutions to the shortfall: put more money into the fund or cut the benefits. A 1984 referendum limits the maximum amount of city contributions—a limit that the city has reached this year. The 2015 scheme report suggested that total annual contributions to the pension fund would need nearly to double, from 37.6% to 72.7% of payroll, in order to close the deficit, and even that would take 40 years. The pension scheme has asked that the city make a one-off payment of $1.1bn in 2018, which the city says would require it to more than double property taxes. Both Fitch and Moody’s, two ratings agencies, downgraded Dallas bonds in October, citing the pension issue. + +Instead, the city has proposed a plan that involves rolling back some of the accrued cost-of-living increases and interest payments on the DROP accounts. But Sam Friar, the pension board’s chairman, has called the proposal a “non-starter”; any attempt to reduce past benefits will almost certainly end up in the courts. As The Economist went to press, Mr Rawlings’s suit was on hold while the pension fund’s board was to consider whether to block withdrawals itself. But that would be a short-term solution to a crisis that has been building for decades and that is not confined to Dallas alone. + +This article appeared in the Finance and economics section of the print edition under the headline “Stampede in Dallas” + + + + + +Insurance’s Jarndyce v Jarndyce + +An epic legal battle with big implications for litigation funding + +A quarter-century-old insurance claim approaches a legal milestone + +Dec 10th 2016 + + + +FOUNDED by former African American slaves, the west African country of Liberia has produced an insurance case that has bounced between the courts of several countries for a quarter of a century, condemning the claimants and their opponent to a generation of legal bondage. At long last, the saga might just be drawing towards a conclusion. It may also leave a legacy: to shift the calculus when third-party litigation funders assess the risks they face. + +In the early 1990s, Liberia’s biggest importer, Lebanese-owned AJA, sued Cigna, an American insurer, in the federal court in Philadelphia for refusing to pay out over property damage incurred during Liberia’s civil war. AJA won, but a district-court judge overturned the verdict with a “judgment notwithstanding the verdict”—a rare device that can be employed when a jury is deemed to have deviated far from the law (in this case by failing to acknowledge a war-risk exclusion). The judge’s move was upheld by a higher appeal court. + +Livid, AJA applied to Liberian courts and in 1998 won a judgment for $66.5m (now worth double that with interest). Cigna counter-sued, and in 2001 won an injunction in America barring any attempt to enforce that judgment anywhere in world. A Liberian judge later ruled that injunction itself to be unenforceable. + +The next twist was that AJA assigned its interest to Samuel Lohman, an American lawyer, and Martin Kenney, a Canadian fraud-hunter based in the British Virgin Islands. They secured $3m in funding from Garrett Kelleher, an Irish property developer. Third-party funding is increasingly popular in commercial cases, and particularly attractive to entrepreneurs looking to invest some of their wealth in speculative bets with potentially high returns. + +They then brought in 22 other Liberian firms with claims against Cigna. They also worked with Liberian officials, who appointed the country’s insurance commissioner as receiver, to go after Cigna’s former Liberian arm. In 2007 the receiver sued ACE, an offshore insurance giant that had bought and indemnified Cigna’s property-and-casualty business in the late 1990s, in the Cayman Islands. Plenty more tit-for-tat has ensued, involving arguments about jurisdiction, sovereign immunity and much else. But the most recent developments are the most intriguing. + +ACE (now trading as Chubb, following a subsequent merger) went back to the Philadelphia courts to enforce the 2001 injunction. In July Judge Paul Diamond obliged, calling the other side’s behaviour an “affront” to American courts, declaring Messrs Kelleher, Kenney and Lohman in civil contempt, and calling a hearing for December 14th to determine damages payable to Chubb (which is seeking $14m). If the trio fail to show up, he ruled, they could be prosecuted for criminal contempt. + +They say the court has overstepped its authority. “The long arm of American courts has been stretched to unprecedented lengths to throttle us,” says Mr Kenney. The judge, he argues, has become Chubb’s pawn in what is “essentially an offshore case”. The externally funded Cayman case was necessary to resolve a conflict between America’s legal system and Liberia’s, he says; American law is not inherently superior. As for the original war-risk exception, he notes that Cigna settled (for an undisclosed sum) with a much bigger claimant, Firestone, a rubber giant, over damage sustained in the same conflict. + +Mr Kenney and his colleagues are, however, loth to explain this to Judge Diamond in person. That, they say, could undermine their jurisdictional objections to his rulings. They have launched an emergency appeal against the order to appear. + +Evan Greenberg, Chubb’s boss (and son of “Hank”, a former CEO of AIG, once the world’s biggest insurer), says he is “incensed” by what he considers an attempt to wring “hold-up money” from his firm, and will spend whatever it takes to win. He sees evidence of a shakedown in the timing of the Cayman suit, which came just as the firm was dealing with regulators over the planned move of its headquarters to Switzerland—and therefore more likely to pay to make the suit go away. He rejects the idea that this is about a clash of legal systems that needs resolving in a neutral venue. “AJA yielded to American jurisdiction at the start and received full justice.” + +Chubb’s lawyers say the case is a milestone in litigation finance: it shows that third-party funders can be identified (determining Mr Kelleher’s involvement was a long slog) and, in frivolous cases, held liable for costs over and above their original investment. “Now, they can lose more than their bet,” says one. A recent case in Britain extended funders’ liability there. + +Mr Greenberg scents victory, and reckons the case is “near the end”. Don’t bet on it, says Mr Kenney, who vows to appeal against an unfavourable verdict all the way to the Supreme Court. Still, what’s another couple of years in a case this long? + +This article appeared in the Finance and economics section of the print edition under the headline “Insurance’s Jarndyce v Jarndyce” + + + + + +Free exchange + +Economic integration and the “four freedoms” + +Why the free movement of labour is essential to Europe’s economic project + +Dec 10th 2016 + + + +“WHAT’S the model? Have cake and eat it.” So read handwritten notes, snapped in the hands of an official of Britain’s ruling Conservative Party, as she left a meeting in Downing Street on Brexit strategy in late November. Britons seem keen to pick and choose from a menu of ties with Europe—in particular, to retain access to the single market while gaining more control over migration. Angela Merkel, the chancellor of Germany, is unwavering. In a speech in Berlin on December 6th she reiterated that Europe’s “four freedoms” are inseparable and inviolable. Countries hoping to share in the free movement of goods, services and capital must accept the free movement of labour as well. + +The European project was meant above all to be a process of economic integration (intended, in the words of the Schuman declaration in 1950, “to make war [within Europe] not merely unthinkable but materially impossible”). Dissatisfaction with the EU often boils down to the suspicion that its original mission of economic integration has morphed into a misguided push for political union. Which one of these agendas does the free movement of people advance? + +Some economists argue that though the free movement of people is essential to Europe’s political project, it is not necessary to accomplish the sort of deep economic integration that reduces wage inequality across countries. In the simplest trade models, such as the one developed by Bertil Ohlin and Eli Heckscher in the early 20th century, this is certainly true. Such models suppose that countries’ comparative advantages are determined by their relative abundance of resources. Countries with lots of low-wage labour, for instance, tend to export goods that use a lot of low-wage labour in production. Building on this theory, Paul Samuelson pointed out that opening trade between two countries ought to cause the price of traded goods to equalise across markets. That, in turn, should cause the return to the factors used in production, including the wages paid to labour, to converge, even if those factors could not move across borders. Free trade alone is enough to generate convergence. + +Yet this is an impoverished view of integration. New models of trade do not imply that close economic integration should cause incomes to converge. Firms and places are often subject to economies of scale: they become more productive as they grow larger. As freer trade expands the size of the market, producers with initial size advantages outcompete rivals. In an integrated market one country might specialise in a high-wage industry with increasing returns to scale (like skilled manufacturing or finance) and others in areas in which wages are lower. In fact, the conditions needed to bring about convergence go well beyond what free trade alone is likely to achieve. For incomes to equalise, different countries must use similar sorts of technology, for instance. Yet achieving comparable levels of technological capability across countries may require more than just free trade: supranational standards, for example, and the flow of knowledge in other ways—such as through the movement of individuals. + +In 1961, in his book, “The Theory of Economic Integration”, Bela Balassa, a Hungarian economist, offered a more satisfying definition of his subject. He suggested it was an “absence of various forms of discrimination” between economic units in different countries. A free-trade agreement, he noted, is a step towards economic integration, but just a step. Harmonising external tariffs is a further leap, and setting common internal standards and regulations is yet another move along the continuum. + +Using discrimination as a metric strongly implies that limits on movement of labour inhibit economic integration. Such limits directly prevent competition among providers of in-person services from different countries; Polish doctors cannot easily treat British patients from surgeries in Poland. And constraints on labour mobility undermine the formation of social ties across borders: relationships that play an important economic role. A paper published in 2013 examined the fortunes of different regions in West Germany after the fall of the Berlin Wall, and found that where households maintained close social ties to East Germany, the fall of the wall led to more cross-border investment and a higher return to entrepreneurial activity. It is costly to gain valuable economic information about unfamiliar places. Social ties reduce that cost. Borders, which frustrate the creation of those ties, necessarily mean that firms on one side of the line will be at a disadvantage when investing or operating on the other. + +Now you’re talking + +Indeed, it may be the very logic of economic integration, with its attendant erosion of discriminatory barriers, that truly irks Eurosceptics. Cultural differences of all sorts, from language barriers to tastes and habits, make it harder for people and firms from one country to do business in others: for French-language newspapers to sell in Frankfurt or for Spaniards to network with Czechs. Complete economic integration implies the smoothing away of these differences, and the formation of something closer to a European identity. Pro-Brexit voters were not wrong to fear that European economic integration threatened the primacy of their unique culture, or to worry that in the big, cosmopolitan cities—where people from many countries mix to build ties and share knowledge—a broader, post-national identity is being forged. + +The goal of ending war within Europe through deep economic integration is not so different from that of ending war by eliminating the pesky nationalism of individual states. As enthusiasts and critics of the European project should know, closer economic, political and cultural ties are indivisible. Putting up barriers to labour mobility is not just a political choice. It implies a halt to—and perhaps even the reversal of—economic integration. + +Visit our Free exchange economics blog + +This article appeared in the Finance and economics section of the print edition under the headline “You had to be there” + + + +Science and technology + + + + + +Palaeontology (1): Bridging the gap + +Palaeontology (2): Feathered find + +Solar energy: Shine on + +Molecular biology: Body of knowledge + +The Breakthrough prizes: Move over, Alfred + +Astronomy: The remains of the day + + + + + +Palaeontology + +New fossils illuminate the route that led ultimately to human beings + +A 25m-year dark age known as Romer’s gap is dark no longer + +Dec 10th 2016 + + + +ONE of the most important steps on the journey to Homo sapiens was that made by the first fish to crawl onto dry land. It was both a metaphorical and a literal step, but knowing exactly when it happened is tricky. It depends, for one thing, on the definition of “dry land”. Scrambling over the mud from one pool to another, assisted by fins that had evolved to walk along the seabed in the way modern coelacanths do, was probably going on by 385m years ago. + +By 375m years ago, the descendants of these first-footers had evolved four limbs clearly recognisable as legs. They were no longer fish, but “tetrapods”. Their legs, though, could have as many as eight digits each, and do not look capable of supporting an animal properly when it was out of the water. Some might thus argue that even by this stage, the step onto dry land had not been truly made. + +All of these events occurred during a period called the Devonian when, though the oceans teamed with organisms no less varied than today’s, life on the continents was just getting going. Vascular plants (those bigger than mosses and liverworts) had evolved only recently. Insects were evolving fast, too. But there were no large land animals. Occupying the new habitat thus looked like an evolutionary open goal for the tetrapods. But then, 359m years ago, in a mass extinction as big as that which did for the dinosaurs, the Devonian came crashing to an end. For 25m years after this the tetrapods more or less disappear from the fossil record. When they re-emerge, in what is called the Lower Carboniferous period, they do, indeed, live up to their potential. They are now proper terrestrial animals, possessing five-digit limbs powerful enough to support them without the assistance of water’s buoyancy. But how they got there has been a mystery. + +Walking and eggshells + +This 25m-year dark age is known as Romer’s gap, after Alfred Romer, an American paleontologist of the 20th century, who was the first to notice it. But it is dark no longer. A team of fossil hunters led by Jennifer Clack of Cambridge University has been collecting and analysing material from Lower Carboniferous outcrops in Scotland. As they report in Nature Ecology and Evolution, Dr Clack and her colleagues have identified and named five hitherto-unknown species of tetrapod from the gap, and gathered material from seven other, as-yet-unnamed ones. This suggests the gap is a product of incomplete collecting in the past rather than an actual hiatus in animal history brought about by the Devonian mass extinction. + +The team’s discoveries range from species the size of newts to ones the size of crocodiles (pictured in the artist’s impression above). Crucially, some were clearly adapted to be able to walk for long periods on land in a way their Devonian ancestors had not been. Romer’s gap thus seems to be the time when tetrapods became unequivocally terrestrial. + +But that is not all. One of the team’s most intriguing findings came as a result of an analysis of the fossils’ anatomies, to determine how they were related to each other and to earlier and later animals. This concluded that a great evolutionary split, between the amphibians and what are known as the amniotes, probably happened during the gap. The amniotes are those animals (including modern reptiles, birds and mammals) that have complex eggs surrounded by a membrane which cushions and protects the developing embryo. It was amniotes that evolved the eggshell, a development which let them sever all connection with the water by laying their eggs on land. + +Romer’s gap, in other words, now seems bridged—and this, in turn, bridges not only the gap in understanding of when tetrapods became terrestrial, but also that concerning when the amniotes evolved. And since, as mammals, human beings are also amniotes, that, from a human point of view, is an evolutionary twofer. + +This article appeared in the Science and technology section of the print edition under the headline “Bridging the gap” + + + + + +Feathered find + +A dinosaur’s tail preserved in amber + +The latest discovery from Myanmar’s amber mines + +Dec 10th 2016 + +Who was a pretty boy, then? + +TWO decades ago palaeontologists were astonished to discover impressions of feathers in rock around the petrified bones of dinosaurs that had clearly, from the anatomy those bones displayed, been unable to fly when they were alive. Astonishment turned to delight with the subsequent discovery of exquisitely preserved examples of these feathers in the petrified tree resin known as amber. Now, a team led by Xing Lida at the China University of Geosciences, in Beijing, and Ryan McKellar at the Royal Saskatchewan Museum, in Regina, has uncovered something even more impressive. As they report in Current Biology, they have found, again preserved in amber, part of a dinosaur’s feathered tail. + +Their fossil comes from the Hukawng valley amber mines in northern Myanmar, already famous for many spectacular specimens of life dating from 99m years ago, during the mid-Cretaceous period. The tail in question was once attached to a carnivorous dinosaur from a group known as the coelurosaurs, the most famous member of which is Tyrannosaurus. The coelurosaur here, though, was no tyrannical giant. Its tail bones are only two millimetres wide, suggesting it was not much larger than a modern sparrow. Whether it was fully grown or still a juvenile remains unknown. + +The animal’s feathers appear to have been darkish brown on the top. Underneath, they seem either to have lacked colour altogether or to have been coloured by bright pigments known as carotenoids that degrade quickly after death. As for their structure, their central shafts and the paired barbs branching from these shafts resemble those of ornamental feathers in many bird species alive today. In particular, the bending of some of the barbs within their amber matrix suggests they were flexible in life in a way that flight-feather barbs are not. + +Why feathers first evolved has been debated for years. Some suggest for insulation, rather like the hair of mammals. Some argue they were, from the beginning, a way of generating lift—perhaps helping the predatory dinosaurs that sported them to get a better kick with the razor-sharp claws on their hind legs. Others still theorise that they were evolutionary fashion statements, as many still are today. If the feathers on the newly reported specimen did sport carotenoids, it would suggest that the fashionistas are on to something. + +This article appeared in the Science and technology section of the print edition under the headline “Feathered find” + + + + + +Solar cells + +How clean is solar power? + +A new paper may have the answer + +Dec 10th 2016 + + + +THAT solar panels do not emit greenhouse gases such as carbon dioxide when they are generating electricity is without question. This is why they are beloved of many who worry about the climate-altering potential of such gases. Sceptics, though, observe that a lot of energy is needed to make a solar panel in the first place. In particular, melting and purifying the silicon that these panels employ to capture and transduce sunlight needs a lot of heat. Silicon’s melting point, 1,414°C, is only 124°C less than that of iron. + +Silicon is melted in electric furnaces and, at the moment, most electricity is produced by burning fossil fuels. That does emit carbon dioxide. So, when a new solar panel is put to work it starts with a “carbon debt” that, from a greenhouse-gas-saving point of view, has to be paid back before that panel becomes part of the solution, rather than part of the problem. Observing this, some sceptics have gone so far as to suggest that if the motive for installing solar panels is environmental (which is often, though not always, the case), they are pretty-much useless. + +Wilfried van Sark, of Utrecht University in the Netherlands, and his colleagues have therefore tried to put some numbers into the argument. As they report in Nature Communications, they have calculated the energy required to make all of the solar panels installed around the world between 1975 and 2015, and the carbon-dioxide emissions associated with producing that energy. They also looked at the energy these panels have produced since their installation and the corresponding amount of carbon dioxide they have prevented from being spewed into the atmosphere. Others have done life-cycle assessments for solar power in the past. None, though, has accounted for the fact that the process of making the panels has become more efficient over the course of time. Dr Van Sark’s study factors this in. + +Panel games + +To estimate the number of solar panels installed around the world, Dr Van Sark and his team used data from the International Energy Agency, an autonomous intergovernmental body. They gleaned information on the amount of energy required to make panels from dozens of published studies. Exactly how much carbon dioxide was emitted during the manufacture of a panel will depend on where it was made, as well as when. How much emitted gas it has saved will depend on where it is installed. A panel made in China, for example, costs nearly double the greenhouse-gas emissions of one made in Europe. That is because China relies more on fossil fuels for generating power. Conversely, the environmental benefits of installing solar panels will be greater in China than in Europe, as the clean power they produce replaces electricity that would otherwise be generated largely by burning coal or gas. + +Once the team accounted for all this, they found that solar panels made today are responsible, on average, for around 20 grams of carbon dioxide per kilowatt-hour of energy they produce over their lifetime (estimated as 30 years, regardless of when a panel was manufactured). That is down from 400-500 grams in 1975. Likewise, the amount of time needed for a solar panel to produce as much energy as was involved in its creation has fallen from about 20 years to two years or less. As more panels are made, the manufacturing process becomes more efficient. The team found that for every doubling of the world’s solar capacity, the energy required to make a panel fell by around 12% and associated carbon-dioxide emissions by 17-24%. + +The consequence of all this number-crunching is not as clear-cut as environmentalists might hope. Depending on the numbers fed into the model, global break-even could have come as early as 1997, or might still not have arrived. But if it has not, then under even the most pessimistic assumptions possible it will do so in 2018. After that, solar energy’s environmental credentials really will be spotless. + +This article appeared in the Science and technology section of the print edition under the headline “Shine on” + + + + + +Body of knowledge + +An atlas of where proteins are found in cells + +Knowing a protein’s whereabouts within a cell will help researchers to determine its job + +Dec 10th 2016 + + + +ONE of the most important concepts in biology is compartmentalisation. Different organs do different jobs within bodies. Different tissues do different jobs within organs. Different cells within tissues, likewise. And within cells, different organelles—as subcellular components such as nuclei, mitochondria and Golgi bodies are known—are also specialised for particular functions. Each of these levels of organisation has, over the years, been catalogued in what have come to be known as atlases, beginning in 1543 with Andreas Vesalius’s “De Humani Corporis Fabrica” (On the Fabric of the Human Body), the founding text of modern anatomy. + +The latest level of detail is to look at different proteins within organelles. Proteins are the molecules that do most of the work within a cell. They range from things like actin and myosin, which collaborate to flex muscle cells—and thus the muscles of which those cells are part—to the enzymes of the Krebs cycle, which disassemble glucose to release the energy therein. The Cell Atlas, a database launched on December 4th at a meeting of the American Society of Cell Biology, records which proteins are found in which organelles. The result, like “De Humani Corporis Fabrica”, is both pleasing to the eye and important to the field. Proteins located together are likely to work together, so knowing a protein’s whereabouts within a cell will help researchers to determine its job. + +The authors of the Cell Atlas, led by Mathias Uhlen of the Royal Institute of Technology, in Stockholm, have pinned 12,051 proteins down in this way using immunofluorescence. This technique employs specially created antibodies (protein molecules, produced by immune-system cells, that bind specifically to a particular target protein) to hunt down that target within a cell. The antibodies themselves have fluorescent tags attached to them, so that they will glow when exposed to ultraviolet light. By applying these tagged antibodies to cells from 22 human-cell lines derived from a range of original tissues, the atlas’s authors gave themselves the best possible chance of detecting a particular protein in cells of at least one line. That done, each sample was examined microscopically to determine which of the 13 generally recognised organelles each protein appeared in. This, being quite a task (and not one easily delegated to automatic optical-recognition systems), was carried out in part by a bunch of 120,000 enthusiastic amateurs. + +The example in the picture is of the distribution of a protein (tagged green) called ZNF554. This belongs to a group, the zinc-finger transcription factors, whose job is to activate and regulate genes. As the picture shows, ZNF554 is restricted to the cell’s nucleus. Within that nucleus there are several places which glow particularly brightly, and where it is therefore particularly abundant. These are the nucleoli—zones where genes are especially active. (The red areas are the cell’s microtubules. These act as its skeleton and are tagged in all Cell Atlas pictures, in order to outline a cell’s limits.) + +What fraction of human proteins the Cell Atlas currently covers is open to debate. The number of protein-coding genes in the human genome is currently reckoned at 19,628. Some genes, however, can yield more than one protein—either because they may be read in more than one way, or because their messages to the protein-manufacturing parts of a cell may end up edited in different ways. This means the actual number of proteins that can exist from time to time in the body exceeds the number of genes, probably by at least 50%. The Cell Atlas, then, is by no means the last word on the matter of where proteins are found. But it is a good start. + +This article appeared in the Science and technology section of the print edition under the headline “Body of knowledge” + + + + + +Move over, Alfred + +The Breakthrough prizes + +Yuri Milner, a technology billionaire, wants to upstage the Nobels + +Dec 10th 2016 + + + +IN 2012 science was stirred by an announcement that nine physicists would each receive the eye-popping sum of $3m for their work in such arcane fields as string theory and inflationary cosmology. They were the first winners of Breakthrough prizes—a set of now-annual awards to the brains behind important recent advances in basic research. The Breakthroughs are both inspired by, and intended to outdo, those willed into existence at the beginning of the 20th century by Alfred Nobel. + +Like Nobel, Yuri Milner, the prizes’ creator, is a scientist-turned-businessman (he is a former physicist who has made his fortune as a venture capitalist). Unlike Nobel, however, he has not created an exclusive brand. Anyone with a few million dollars to spare can join in. The initial awards for physics, for example, were followed by equally munificent prizes in life sciences and mathematics. These were paid for in part by Anne Wojcicki, the head of 23andMe, a personal genomics company, and Mark Zuckerberg, Facebook’s boss. On December 4th a fresh set of winners (see table), divided a further $25.4m. + +Dr Milner is open about his aim, which is to raise the profile of science and scientists. As he puts it, “for better or worse, we are living in a world of celebrity. Intellectual achievement gets less and less recognition in the eyes of the public.” He therefore intends to introduce this disrespectful world to the “Oscars of science”. + + + +He plans to grab the world’s attention in two ways. First, with the size of the prizes, which are worth three times as much as a Nobel. Second, with the way they are announced and awarded—at a glitzy, Oscar-like ceremony held at NASA’s Ames Research Centre, near Mountain View, California. That is a concept rather different from the formal congratulations of the King of Sweden in Stockholm’s concert hall followed by a white-tie dinner. This year’s Breakthrough festivities were hosted by Morgan Freeman, a film actor. Just as the Nobel ceremony (to be held on December 10th) will be, they were broadcast live on television. Who will get the larger audience remains to be seen. + +Whether all this razzamatazz will actually be enough to turn scientists into celebrities is moot. A crucial difference from the real Oscars is that most Oscar winners in the categories anybody cares about—actors, actresses, directors and so on—are celebrities already. This is hardly surprising. Their job descriptions require it. Miffing though it may be to the winners of Oscars for things like best engineering effects (which are, in many films, also the stars of the show), those people are rarely heard of again by the general public, and for the obverse reason, which is that their job descriptions do not require it. Sadly for Mr Milner’s quest, the job descriptions of most scientists do not require it either, and only a few researchers are natural showmen of the sort who can force their way into the headlines regardless. + +From the point of view of scientists, however, the Breakthrough prizes do offer a new route to recognition—and one that has, in an important way, caught up with changes since Nobel’s day in how science is practised. Though the subject has always required teamwork, that is far more true now than it was then. This year, therefore, the myriad researchers who collaborated with Ronald Drever, Kip Thorne and Rainer Weiss (the main prizewinners) to discover gravity waves are explicitly acknowledged. Drs Drever, Thorne and Weiss had to make do with sharing $1m. The remaining $2m was divided, 1,012 ways, among the little platoons. True, the resulting dividend is only the price of a nice holiday. But it is considerably more than many deserving understrappers of Nobel laureates have ever seen. + +This article appeared in the Science and technology section of the print edition under the headline “Move over, Alfred” + + + + + +The remains of the day + +Ancient eclipses show how days are getting shorter + +The value of ancient records + +Dec 10th 2016 + + + +AS THE well-known Australian philosopher, Kylie Minogue, once pointed out, it can be a source of comfort to remember that, no matter what else is happening, the world still turns. Unfortunately, things are not quite so simple. Thanks to the moon’s gravitational tug, the speed at which Earth spins has been slowing since the satellite’s birth about 4.5bn years ago. Physicists can calculate from first principles how big the effect should be. It turns out that the moon should be adding about 2.3 milliseconds to the length of the day with each century that passes. This means, for instance, that 100m years ago, when dinosaurs ruled Earth, a day was nearer 23 than 24 hours. + +But that 2.3 milliseconds is only an average. Geological events within Earth can speed the process up, or slow it down. Tracking changes in day length over time is thus of interest. And that requires data. Thanks to the development of super-accurate atomic clocks in the 1950s, and to laser range-finding equipment left on the moon by the Apollo astronauts, researchers have plenty of such data from the past half-century. But more information is always welcome. And extra data are exactly what a team led by Leslie Morrison, a retired professional astronomer, have just provided. In a study just published in the Proceedings of the Royal Society they use observations made by ancient Chinese, Babylonian, Greek and Arab astronomers to reconstruct the history of Earth’s rotation over the past two and a half millennia. + +Plenty of ancient cultures were keen on astronomy, for the patterns of the heavens were the basis of their calendars and timekeeping systems (not to mention their systems of astrology). But Dr Morrison and his colleagues were interested in two particular phenomena: eclipses of the sun and of the moon. A solar eclipse happens when the moon moves in front of the sun, as seen from a particular spot on Earth, and blocks out its light. A lunar eclipse happens when the moon moves behind Earth in such a way that Earth blocks the sunlight that, when reflected from the lunar surface, renders the moon visible. + +Eclipses were often viewed as portents (usually bad ones), or as battles between moon or sun gods and the forces that sought to overthrow them. For that reason, records of hundreds of historical eclipses survive to the present. Building on work begun in the 1990s, Dr Morrison and his colleagues collated 424 such observations of 250 eclipses that happened between 720BC and 1600AD. The records were scattered across Babylonian clay tablets preserved at the British Museum, translations of histories of Chinese dynasties and Japanese emperors, records from ancient Greece preserved in works like the “Almagest”, and observations made by Arab astronomers during what was, in Europe, the Dark Ages. (The researchers note that no record survives of an eclipse seen in Europe for almost a thousand years following one recorded in 364AD.) + +The idea was to combine those observations with modern computer models of the solar system. These are sophisticated enough to let researchers reconstruct the positions of Earth, moon and sun at any given date in the past, and therefore to work out when and from where any past eclipses should have been visible. That means such models can be used to confirm recorded sightings. But because ancient astronomers reckoned the passage of time by the motion of the heavens, and modern models are based on the unvarying output of atomic clocks, the gradual slowing of Earth’s rotation will produce a disagreement in timing between the two. + +Many a mickle makes a muckle + +Given the tiny differences in day length involved (a few dozen milliseconds at most) and the primitive equipment (such as water clocks) available to ancient researchers, it might be thought that any difference in timing would be too small to detect. But Dr Morrison points out that this is not actually a problem. The error introduced by Earth’s deceleration is cumulative. Today may be only fractionally shorter than a day was 2,700 years ago, when the earliest records that the team looked at were collected, but between then and now almost a million days have elapsed. Each passing day adds any daily discrepancy to the total discrepancy, and those repeated daily discrepancies add up to significant fractions of an hour—periods well within the accuracy available to ancient astronomers. + +After crunching the numbers, the team found that the actual rate at which days have been shortening over the past couple of millennia is 1.8 milliseconds per century, considerably slower than the 2.3 milliseconds predicted. The main reason for the difference, they reckon, is the lingering effect of the most recent ice age, during which the mass of ice at the planet’s poles was sufficient to deform its shape and thus alter its rate of spin. That is not, though, the only thing which is happening. The researchers also found small but cyclical patterns in the rate of change that repeat themselves over decades—as well as intriguing hints of longer cycles with time periods of thousands of years. Exactly what geophysical goings-on such cycles represent is one for the geologists to work out. + +This article appeared in the Science and technology section of the print edition under the headline “The remains of the day” + + + +Books and arts + + + + + +Books of the Year 2016: High fliers + +Books by Economist writers in 2016: What we wrote... + + + + + +Books of the Year 2016 + +High fliers + +The best books of 2016 are about China, language, microbes, hereditary power, inequality and medieval manuscripts + +Dec 10th 2016 + + + +Politics and current affairs + +China’s Future. By David Shambaugh. Polity; 195 pages; $19.95 and £14.99 + +No country has modernised its economy without also becoming a democracy. A respected American political scientist asks whether China can break the mould. + +Black Wind, White Snow: The Rise of Russia’s New Nationalism. By Charles Clover. Yale University Press; 360 pages; $35 and £25 + +A veteran Financial Times correspondent analyses what really motivates the regime in Moscow by tracing the rise of Eurasianism: the belief (crudely put) that Russia’s national identity is determined by ethnicity, geography and destiny. + +The Euro and the Battle of Ideas. By Markus Brunnermeier, Harold James and Jean-Pierre Landau. Princeton University Press; 440 pages; $35 and £24.95 + +Three authors focus on France and Germany to tease out the clashing economic ideas that make up the euro project. The Germans like rules and discipline, and fret about excessive debt and the moral hazard created by bail-outs. The French prefer flexibility and discretion, and worry about the lack of a mutualised debt instrument. German policymakers are often lawyers, French ones more frequently economists. Not a happy marriage. + +CEO, China: The Rise of Xi Jinping. By Kerry Brown. I.B. Tauris; 288 pages; $28 and £20 + +What sort of leader is Xi Jinping? There are few political questions to which the answer will have greater bearing on people as this. By an expert British China-watcher. + +China’s Crony Capitalism: The Dynamics of Regime Decay. By Minxin Pei. Harvard University Press; 365 pages; $35 and £25.95 + +How decentralising the rights of control over state property, without clarifying the rules of ownership, offered those who rule China the greatest chance in history to grow rich, by a professor of government now based in California. + +The Egyptians: A Radical Story. By Jack Shenker. Allen Lane; 528 pages; £15.99 + +A refreshing account, by a young reporter on the Guardian, of the movement that overthrew Hosni Mubarak in 2011. What distinguishes his writing from others’ is his presence in the slums, factories and homes where Egyptians first began questioning their relations with their rulers. Mr Shenker evokes despair at the economy of this badly run country, but also surprising hope for its future, thanks to a young generation that says it is “no longer prepared to put up with the old crap”. + +Trials: On Death Row in Pakistan. By Isabel Buchanan. Jonathan Cape; 264 pages; £16.99 + +Two young lawyers, one Pakistani and one British (the author), launch themselves into the dark world of Pakistan’s death row, where 8,000 people await execution. A remarkable first book written with verve and an eye for telling detail. + +Hillbilly Elegy: A Memoir of a Family and Culture in Crisis. By J.D. Vance. Harper; 264 pages; $27.99. William Collins; £14.99 + +Why so many people want to believe that Donald Trump will bring back manufacturing jobs and keep immigrants out. Possibly the most important recent book about America. + +The Art of Charlie Chan Hock Chye. By Sonny Liew. Pantheon; 320 pages; $30 and £25 + +A brilliantly inventive graphic novel, which took several years to complete, weighs up the costs and benefits of life in the small, authoritarian, model city-state that Lee Kwan Yu founded half a century ago. By a Malaysian-born comic artist and illustrator, now based in Singapore. + +The Way to the Spring: Life and Death in Palestine. By Ben Ehrenreich. Penguin Press; 428 pages; $28. Granta; £14.99 + +An elegant and moving account of the trials of one family, a tale that is symbolic of the daily lives of many Palestinians. + + + + + +Biography and memoir + +The Return: Fathers, Sons and the Land In Between. By Hisham Matar. Random House; 256 pages; $26. Viking; £14.99 + +A beautifully written memoir that deals with the nature of family, the emotions of exile and the ties that link the present with the past—in particular, the son with his father, Jaballa Matar, who disappeared in a notorious Libyan prison. + +Elizabeth: The Forgotten Years. By John Guy. Viking; 490 pages; $35 and £25 + +Most historians focus on the early decades, with Elizabeth’s last years acting as a postscript to the beheading of Mary Queen of Scots and the defeat of the Spanish Armada. An Australian-born historian, now a fellow at Cambridge, argues that this period is crucial to understanding a more human side of the smart redhead. + +Half-Lion: How P.V. Narasimha Rao Transformed India. By Vinay Sitapati. Penguin India; 391 pages; 699 rupees + +The real father of India’s economic reforms deserves a place alongside Nehru as India’s most important prime minister. Instead he was cast into ignominy and obscurity. An important book, by a young doctoral student at Princeton, that deserves wider circulation. + +When Breath Becomes Air. By Paul Kalanithi. Random House; 238 pages; $25. Bodley Head; £12.99 + +A young neurosurgeon, dying of cancer, examines his life, especially the gift of language, the parts of the brain that control it and its centrality to what makes us human. A powerful and compelling read. + +Karl Marx: Greatness and Illusion. By Gareth Stedman Jones. Belknap; 768 pages; $35. Allen Lane; £35 + +A British historian re-evaluates Marx in the 21st century. There is no better guide than this professor of the history of ideas at the University of London. + +Negroland: A Memoir. By Margo Jefferson. Vintage; 248 pages; $16. Granta; £12.99 + +Growing up an African-American of privilege and wealth might seem cushy. But this penetrating memoir shows how those who were spared the brutality of southern segregation nevertheless had to learn to navigate a much subtler set of tacit rules and assumptions: excel, but don’t show off; be comfortable anywhere, but be aware that prejudice can rear its ugly head at any moment. + +Kenneth Clark: Life, Art and “Civilisation”. By James Stourton. Knopf; 478 pages; $35. William Collins; £30 + +At once cold and grand, Kenneth Clark would be easy to mock. A carefully researched and thoughtful biography of a conflicted and curiously unknowable man who became the most brilliant cultural populist of the 20th century, by a former chairman of Sotheby’s. + +Born to Run. By Bruce Springsteen. Simon & Schuster; 528 pages; $32.50 and £20 + +The timely autobiography of the bard of American deindustrialisation, whose songs recognise and honour blue-collar woes. His stories have never aged; years after they were written they remain a lesson in empathy for the white-collar fans he has always attracted. + +But You Did Not Come Back. By Marceline Loridan-Ivens. Translated by Sandra Smith. Atlantic Monthly Press; 112 pages; $22. Faber; £12.99 + +In 1944, when she was 15, the author and her father were captured and deported; he to Auschwitz, she to Birkenau. She returned; he never did. It took her 70 years to write her story. In tight, unsparing prose, she confronts the delusions her father held, and the lies she told herself. A small book with a big voice. + +The Civil Wars of Julia Ward Howe. A Biography. By Elaine Showalter. Simon & Schuster; 243 pages; $28 + +A delightful life, by a spirited academic, of a 19th-century American woman who wrote poetry, plays and books, became a tireless speaker for feminist causes, notably women’s right to vote. Her life intersected with Longfellow, the Brownings, Louisa May Alcott and Henry James. But she is best known for writing the words to “The Battle Hymn of the Republic”. + +Outlandish Knight: The Byzantine Life of Steven Runciman. By Minoo Dinshaw. Allen Lane; 767 pages; £30 + +By the time he died, in 2000 at the age of 97, Sir Steven Runciman had become convinced that he was a relic of a past age and the embodiment of a nearly mythical era. A lively life of a colourful British historian who was best known for his work on the Crusades, by a promising young author. A debut to be proud of. + + + + + +History + +The Water Kingdom: A Secret History of China. By Philip Ball. Bodley Head; 316 pages; £25. To be published in America by University of Chicago Press in March 2017 + +How two great rivers—the Yellow river and the Yangzi—shaped China’s history. By a British science writer who for 20 years was an editor at Nature. + +The Romanovs: 1613-1918. By Simon Sebag Montefiore. Knopf; 784 pages; $35. Weidenfeld & Nicolson; £25 + +A cruel history of hereditary power, by a master storyteller who lifts this unfamiliar narrative with vivid, amusing and surprising details. + +The Pursuit of Power: Europe 1815-1914. By Richard Evans. Viking; 928 pages; $40. Allen Lane; £35 + +A distinguished scholar of Germany tots up the winners and losers in the century after the Battle of Waterloo, which could rightly be described as the first age of globalisation. + +Heart of Europe: A History of the Holy Roman Empire. By Peter Wilson. Belknap; 941 pages; $39.95. Allen Lane; £35 + +The Holy Roman Empire, on paper, looked more like a Jackson Pollock painting than a blueprint for modern Europe—and yet it worked well, nonetheless. A masterly retelling, by an Oxford historian. + +Lenin on the Train. By Catherine Merridale. Allen Lane; 353 pages; £25. To be published in America by Metropolitan in March 2017 + +How Vladimir Lenin’s railway journey from Switzerland to Russia led to the revolution and changed his country—and the world—for ever. An insightful and sympathetic account, by one of the foremost historians of Russia. + +East West Street: On the Origins of Genocide and Crimes Against Humanity. By Philippe Sands. Knopf; 448 pages; $32.50 Weidenfeld & Nicolson; £20 + +A distinguished Franco-British advocate traces how a single important word entered the legal canon, while examining the lives of those who brought it into being and the wartime experiences of his own Jewish relatives in Europe. An un-put-downable winner of the Baillie Gifford prize for non-fiction. + + + + + +Economics and business + +The Rise and Fall of American Growth: The US Standard of Living since the Civil War. By Robert Gordon. Princeton University Press; 762 pages; $39.95 and £29.95 + +Why economic growth soared in America in the early 20th century, and why it won’t be soaring again any time soon, by an outspoken economist who teaches at Northwestern University. + +Global Inequality: A New Approach for the Age of Globalisation. By Branko Milanovic. Belknap; 299 pages; $29.95. Harvard University Press; £23.95 + +Surprisingly little is known about what causes inequality. An economist at the Luxembourg Income Study Centre and the City University of New York proposes a bold and interesting new theory. + +The Great Convergence: Information Technology and the New Globalization. By Richard Baldwin. Belknap; 329 pages; $29.95 and £22.95 + +Globalisation has changed fundamentally since the internet revolution in the 1990s. Whereas 20th-century trade involved competition between countries, 21st-century trade is fuzzier, with supply chains crossing borders. An American academic, working in Geneva, argues that, while it might be difficult to help the losers, reversing the trend is even harder. + +The Man Who Knew: The Life and Times of Alan Greenspan.* By Sebastian Mallaby. Penguin Press; 781 pages; $40. Bloomsbury; £25 + +Once a hero, the former chairman of the Federal Reserve is now being called a villain. Sebastian Mallaby, who used to write for The Economist and is married to our editor-in-chief, Zanny Minton Beddoes, examines whether Alan Greenspan was to blame for the financial crisis. Winner of the Financial Times and McKinsey Business Book of the Year award 2016. + +Alibaba: The House That Jack Ma Built. By Duncan Clark. Ecco; 287 pages; $27.99 and £18.99 + +An intriguing insider’s account of how Jack Ma conquered China’s internet, by an early adviser to the company + +Eccentric Orbits: The Iridium Story. By John Bloom. Atlantic Monthly Press; 537 pages; $27.50. Grove Press; £16.99 + +The exhaustive (and exhausting) tale of the Iridium communications project and how it was brought back from the dead. + + + +Culture, society and travel + +Cleverlands: The Secrets Behind the Success of the World’s Education Superpowers. By Lucy Crehan. Unbound; 304 pages; £16.99 + +Too much writing about education is polemical and ill-informed. Lucy Crehan’s book is refreshingly fair-minded and makes a case that there is a lot to learn about how other countries learn. + +Free Speech: Ten Principles for a Connected World. By Timothy Garton Ash. Yale University Press; 491 pages; $30. Atlantic; £20 + +How urbanisation and the spread of the internet has increased the possibilities of freedom of expression, but also the consequences that stem from it. A distillation of a lifetime’s research and writing, by the Oxford academic who also created freespeechdebate.com. + +Another Day in the Death of America: A Chronicle of Ten Short Lives. By Gary Younge. Nation Books; 267 pages; $25.99. Guardian Faber; £16.99 + +The stories of ten young people who were shot and killed on the arbitrarily selected date of Saturday November 23rd 2013. A “long, doleful, piercing cry”, by a journalist on the Guardian, in a country so overwhelmed by gun violence that it has almost given up trying to stop it. + +The Life Project: The Extraordinary Story of Our Ordinary Lives. By Helen Pearson. Soft Skull; 256 pages; $17.95 Penguin; £9.99 + +How a random, nationwide sample of people linked only by their birth in 1946 has been followed by researchers and data-gatherers, and helped shape public policy across the country. A jewel in the crown of British social science. + +Meetings with Remarkable Manuscripts. By Christopher de Hamel. Allen Lane; 632 pages; £30 + +The politics and meaning of medieval manuscripts. A delightful and surprising book, by the man who has examined more manuscripts than anyone before him. + +Progress: Ten Reasons to Look Forward to the Future. By Johan Norberg. Oneworld; 246 pages; $24.99 and £16.99 + +A Swedish economic historian studies the many, and often surprising, ways in which human life has improved. + +The End of Karma: Hope and Fury Among India’s Young. By Somini Sengupta. Norton; 244 pages; $26.95 and £18.99 + +How India’s youth are trading fatalism and karma for free will and higher expectations, by a former New York Times New Delhi bureau chief who interweaves data, first-hand accounts and archival research to great effect. + +City of Thorns: Nine Lives in the World’s Largest Refugee Camp. By Ben Rawlence. Picador; 384 pages; $26. Portobello; £14.99 + +A chronicle of life in Dadaab refugee camp in northern Kenya, which was supposed to close in November, but hasn’t because its inhabitants have nowhere to go. + +Beethoven for a Later Age: Living with the String Quartets. By Edward Dusinberre. University of Chicago Press; 232 pages; $30. Faber & Faber; £18.99 + +The lead violinist of the Takacs Quartet recounts its members’ musical lives, interweaving into the group’s autobiography the story of Beethoven’s 16 string quartets, which are now regarded as the apogee of the chamber-music repertoire. + +How to Listen to Jazz. By Ted Gioia. Basic Books; 272 pages; $24.99 and £16.99 + +Why jazz is unique, and how to distinguish good jazz from bad. No author could have done a better job. + + + + + +Fiction + +The Vegetarian. By Han Kang. Translated by Deborah Smith. Hogarth; 192 pages; $21. Portobello; £8.99 + +This slim novella from South Korea is one of the most erotic literary novels of the season. Winner of the 2016 Man Booker International prize. + +War and Turpentine. By Stefan Hertmans. Translated by David McKay. Pantheon; 304 pages; $26.95. Harvill Secker; £16.99 + +A lovingly reimagined life of an ordinary man whose life was for ever marked by the first world war. Fine prose from a Flemish-Belgian poet and essayist. + +The Mandibles: A Family, 2029-2047. By Lionel Shriver. Harper; 400 pages; $27.99. Borough Press; £16.99 + +A hilarious, and often brutal, tale of how one family fares when America’s economy collapses. In God they trusted. By the irrepressible author of “We Need to Talk About Kevin”. + +Swing Time. By Zadie Smith. Penguin Press; 453 pages; $27. Hamish Hamilton; £18.99 + +A powerful story of lives marred by secrets, unfulfilled potential and the unjustness of the world. This may well be Zadie Smith’s finest novel. + + + + + +Science and technology + +I Contain Multitudes: The Microbes Within Us and a Grander View of Life. By Ed Yong. Ecco; 368 pages; $27.99. Bodley Head; £20 + +A science writer and blogger turns an enthusiastic naturalist’s eye on the bacteria, viruses and other minuscule organisms that cohabit the bodies of humans and other animals. Get to know some little-known villains—and many heroes. + +The Gene: An Intimate History. By Siddhartha Mukherjee. Scribner; 592 pages; $32. Bodley Head; £25 + +The world is wholly unprepared for the birth of the first human with a genome that has been permanently modified in a lab. By a Pulitzer-winning writer and physician. + +Patient HM: A Story of Memory, Madness, and Family Secrets. By Luke Dittrich. Random House; 440 pages; $28. Chatto & Windus; £18.99 + +Patient HM became famous in the history of science when a surgeon treated his epilepsy by removing the medial temporal lobes in his brain, causing him to lose most of his memory. A remarkable examination of how neuroscience works, by the surgeon’s grandson. + +Cure: A Journey into the Science of Mind over Body. By Jo Marchant. Crown; 320 pages; $26. Canongate; £16.99 + +A thought-provoking exploration of how the mind affects the body and can be harnessed to help treat physical illness, by an award-winning science journalist. + +The Glass Universe: How the Ladies of the Harvard Observatory Took the Measure of the Stars. By Dava Sobel. Viking; 336 pages; $30. To be published in Britain by Fourth Estate in January 2017 + +The hidden history of the remarkable women whose contribution to astronomy changed our understanding of the stars and man’s place in the universe, by the prize-winning author of “Longitude” and “Galileo’s Daughter”. + +*Our policy is to identify the reviewer of any book by or about someone closely connected with The Economist. Sebastian Mallaby is married to Zanny Minton Beddoes, our editor-in-chief. The review of his book in these pages (“Man in the Dock”, Oct 1st) was written by Martin Wolf, chief economics commentator of the Financial Times. It was edited for length only. + +This article appeared in the Books and arts section of the print edition + + + + + +Books by Economist writers in 2016 + +What we wrote... + +...when we weren’t in the office + +Dec 10th 2016 + + + +The Wealth of Humans: Work, Power and Status in the Twenty-First Century. By Ryan Avent. St Martin’s Press; 288 pages; $26.99. Allen Lane; £25 + +The world of work is changing fast and in unexpected ways, by our economics columnist. + +The Birthday Book. Edited by Malminderjit Singh. Ethos Books; 252 pages; S$25 + +Farah Cheah, one of our data analysts, contributes to a collection of essays celebrating Singapore’s 51st independence anniversary. + +The Poisoned Well: Empire and its Legacy in the Middle East. By Roger Hardy. Oxford University Press; 272 pages; $27.95. Hurst; £20 + +How the Middle East came to be the way it is, by a frequent reviewer of books on the Arab world. + +Pariah. By Donald Hounam. Corgi; 394 pages; £7.99 + +A 15-year-old forensic sorcerer, on the run from the Inquisition, tries to make sense of a dead body that refuses to act dead, by one of our visual-data developers. + +The Reykjavik Assignment. By Adam LeBor. Harper; 464 pages; $15.99. Head of Zeus; £7.99 + +The final thriller in a trilogy featuring Yael Azoulay, a covert negotiator for the United Nations, by a regular freelance contributor. + +The Earth and I. By James Lovelock et al. Taschen; 168 pages; $29.99 and £24.99 + +A compact illustrated guide to planet Earth and humankind’s relationship to it, with an essay on the “society of cells” by Oliver Morton, our briefings editor. + +The Invention of Russia: From Gorbachev’s Freedom to Putin’s War. By Arkady Ostrovsky. Viking; 374 pages; $30. Atlantic; £20 + +How Russia was made by its history, by our Russia and eastern Europe editor. Winner of the 2016 Orwell prize. + +Holy Lands: Reviving Pluralism in the Middle East. By Nicolas Pelham. Columbia Global Reports; 183 pages; $13.99 and £9.99 + +How one of the world’s most tolerant regions became the least harmonious place on the planet, by our Middle East correspondent. + +The Secret Lives of Colour. By Kassia St Clair. John Murray; 320 pages; £20. To be published in America by Penguin in October 2017 + +A biography of the 75 most fascinating shades, dyes and hues, by our former assistant books and arts editor. + +Go Figure: Things You Didn’t Know You Didn’t Know. Edited by Tom Standage. Economist Books; 256 pages; $17.99 and £8.99 + +A compendium of our explainers and daily charts, assembled by our deputy editor. + +Narconomics: How to Run a Drug Cartel. By Tom Wainwright. PublicAffairs; 278 pages; $26.99. Ebury Press; £20 + +Everything drug cartels do to survive and prosper they’ve learnt from big business, by our Britain editor and former Mexico City bureau chief. + +Six Facets of Light. By Ann Wroe. Jonathan Cape; 305 pages; £25 + +A meditation on the transitory and frustrating essence of light, as studied by poets, painters and scientists, by our obituaries editor. + +This article appeared in the Books and arts section of the print edition + + + +Obituary + + + + + +Whitney Smith: Half mast + + + + + +Flags down + +Obituary: Whitney Smith, vexillologist, died on November 17th + +The world’s greatest expert on flags was 76 + +Dec 10th 2016 + + + +PEOPLE die for flags and kill for them. But until Whitney Smith, nobody studied them properly. He coined (aged 17) the name for the discipline, from vexillum, Latin for a military standard, and it consumed, fired and shaped his life. Flags, he wrote in one of his 27 vexillological books, “are employed to honour and dishonour, warn and encourage, threaten and promise, exalt and condemn, commemorate and deny”. They “remind and incite and defy...the child in school, the soldier, the voter, the enemy, the ally and the stranger”. + +Flags of a kind date back at least 5,000 years—he liked to cite an ancient Iranian one, made from copper. But their modern significance, he argued (and who would contradict him?), started with the 16th-century Dutch revolt against Spain. For the first time it was not a state or monarch being symbolised, but a people, a language, a culture and a cause. + +They mark landings (the moon) and victories, too. The American conquest of the Japanese island of Iwo Jima was a fine example. As he explained to People magazine: “Six guys putting their lives on the line to put a stick in the ground with a piece of cloth on top. The president didn’t tell them to do that. They did it instinctively.” + +Dropping out of academic life at the age of 30 to become the world’s first and only full-time vexillologist, Mr Smith became, he happily admitted, a “monomaniac”. He took no holidays, worked seven days a week, eschewed television for a single radio, living alone after both his marriages ended in divorce. The Flag Research Centre, which he founded in 1962, was based in his 16-room house in Winchester, Massachusetts, crammed with 11,000 books on flags—more than in the Library of Congress, the New York Public Library, Harvard University and the British Museum combined, he reckoned. It also contained a huge card-catalogue and (in dehumidified storage), 4,000 flags. The Corpus Vexillorum Mundi, as he called it, involved the collection, presentation and description of every national flag that has ever flown. + +He could never recall a time when he was not interested in the subject. As a six-year-old, he fumed about haphazard and inaccurate information, such as flag books which ignored small countries. At 11, he was trying to find out why giant Greenland was seemingly flagless. Other kids thought he was weird. But who cared about that when, at 13, you could feel yourself to be “literally the only person in the Western world who knew what the flag of Bhutan looked like”. + +His aim, abundantly achieved, was to know everything there was to know about flags, from design to provenance, and the rules about where, how, when and why they should be hoisted. His grasp of history, geography and foreign languages helped. Fluent in Latin, Russian and French, he cracked multilingual jokes which hopped between those and other tongues. In English, he created and standardised specialist vocabulary—such as “civil ensign” for the flag flown by a privately owned vessel. His books, with titles such as “Flags Through the Ages and Across the World”, sold 300,000 copies. The hundreds of subscribers to his bimonthly Flag Bulletin (which he founded as a 21-year-old) ranged from protocol chiefs in foreign ministries to an international network of fellow-obsessives. + +Lore and law + +He preferred studying flags to waving them. Though he revered the Stars and Stripes—America’s “civil religion”, he called it—he abhorred sentiment and fanaticism alike. A circle of just 13 stars in the “canton” (top left-hand corner) would be more elegant, easier to manufacture, and fairer on unstarred territories such as the District of Columbia and Puerto Rico. He thought the Pledge of Allegiance could do with rephrasing, too. + +America’s repeated attempts to criminalise flag desecration appalled him; they were selective (nobody cared about the flag’s abuse for commercial purposes) and contradicted the freedom for which the star-spangled banner stood. Its significance was in Americans’ hearts and spirits, not the fabric. The people owned it, not the state; however deplorably, they could do what they wished with their own property. He gave evidence in defence of a teenager sentenced to six months hard labour for sewing the American flag to the seat of his trousers (the prosecution finally failed in 1974). + +From guardians of diplomatic protocol to citizens bemused by etiquette, people sought his expertise. Was it all right to embed the American flag in a cake of ice as a set-piece for a banquet? Not illegal, but also not really tasteful or proper, he replied. New flags, he said, were too often cliched, cluttered and meaningless. Americans, he complained, were literalists, who “don’t know how to communicate in symbols except in the baldest of ways”. Plain white designs, with a tiny, dull emblem like a town seal, aroused his particular ire. + +Instead, flags should be attractive, memorable and politically significant. He was particularly proud of his design for the former British colony of Guyana, with its red diamond (for steadfastness), gold arrowhead (Amerindians and mineral wealth) and green background (verdure). There was, he said proudly, “none other like it”. That was true of him, too. + +This article appeared in the Obituary section of the print edition under the headline “Half mast” + + + +Economic and financial indicators + + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +The Economist poll of forecasters, December averages + +Markets + + + + + +Interactive indicators + +Dec 10th 2016 + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Output, prices and jobs + +Dec 10th 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Trade, exchange rates, budget balances and interest rates + +Dec 10th 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +The Economist commodity-price index + +Dec 10th 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +The Economist poll of forecasters, December averages + +Dec 10th 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Markets + +Dec 10th 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +Table of Contents + +The Economist + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +The president and business: America’s new business model + + + + + +Burqa bans: The freedom to dress modestly + + + + + +The aftermath of Italy’s referendum: Salvaging the wreckage + + + + + +Global education: Homework for all + + + + + +Big oil: Shape up + + + + + +Letters + + + +Letters to the editor: On Hong Kong, Peru, Indian-Americans, nationalism + + + + + +Briefing + + + +Business in America: Dealing with Donald + + + + + +American corporatism: Chairman president + + + + + +United States + + + +Deporting undocumented migrants: Hamilton’s heirs + + + + + +Standing Rock: Water, life and oil + + + + + +Hate crimes: By the numbers + + + + + +Health care: Drug money + + + + + +Lawyers: Libidos and don’ts + + + + + +Trump appointments: A fox for the henhouse + + + + + +Lexington: Farewell to all that + + + + + +The Americas + + + +Colombia’s peace agreement: A tumultuous final chapter + + + + + +Bello: The power of the Andean sun + + + + + +Asia + + + +Japan and Russia: Two men in a tub + + + + + +An election in Uzbekistan: Cloning Karimov + + + + + +Politics in New Zealand: Lost Key + + + + + +Jayaram Jayalalithaa: After the storm + + + + + +Indonesia’s economy: Back in business + + + + + +China + + + +Popular discontent: In China, too + + + + + +Banyan: Calm before the storm? + + + + + +Middle East and Africa + + + +Gambia’s election: Strongman down + + + + + +South Sudan: Genocide or mere atrocity? + + + + + +Saudi Arabian diplomacy: Outpaced by Iran + + + + + +Israel’s army: Welcome to Tank Girl + + + + + +Europe + + + +Post-referendum Italy: Grim non-resignation + + + + + +Russia’s active measures: The motherland calls + + + + + +Spain’s minority government: Short-handed + + + + + +Austria’s presidential election: Left hook + + + + + +Charlemagne: Unlikely candidates + + + + + +Britain + + + +University admissions: A foot in the door + + + + + +The Brexit process: Red, white, blue or grey? + + + + + +Railways: Changing track + + + + + +The property market: As safe as... + + + + + +The Liberal Democrats: The Olney way is up + + + + + +Business and productivity: Time to end the muppet show + + + + + +Steelmaking: Off the scrapheap + + + + + +Bagehot: Different votes for different folks + + + + + +International + + + +Education: Must try harder + + + + + +Educating migrants: Geography lessons + + + + + +Business + + + +Oil companies: Fit at fifty—or less + + + + + +Privatising Rosneft: An Ivan for an Igor + + + + + +Auditors: Bother in Brazil + + + + + +Motorcycle manufacturing: Digital rider + + + + + +South Korea’s chaebol bosses face parliament: Before parliament + + + + + +Sika and Saint-Gobain: Swiss roiled + + + + + +Alt-right media: Looking on the Breitbart side + + + + + +Schumpeter: The tycoon as intellectual + + + + + +Finance and economics + + + +The American economy: Full speed a-Fed + + + + + +Buttonwood: First blast of the Trumpettes + + + + + +Italian banks: A monte to climb + + + + + +The euro zone: General anaesthetic + + + + + +Pensions in America: Stampede in Dallas + + + + + +Insurance litigation: Insurance’s Jarndyce v Jarndyce + + + + + +Free exchange: You had to be there + + + + + +Science and technology + + + +Palaeontology (1): Bridging the gap + + + + + +Palaeontology (2): Feathered find + + + + + +Solar energy: Shine on + + + + + +Molecular biology: Body of knowledge + + + + + +The Breakthrough prizes: Move over, Alfred + + + + + +Astronomy: The remains of the day + + + + + +Books and arts + + + +Books of the Year 2016: High fliers + + + + + +Books by Economist writers in 2016: What we wrote... + + + + + +Obituary + + + +Whitney Smith: Half mast + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +The Economist poll of forecasters, December averages + + + + + +Markets + + + + + +Table of Contents + +The Economist + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +The president and business: America’s new business model + + + + + +Burqa bans: The freedom to dress modestly + + + + + +The aftermath of Italy’s referendum: Salvaging the wreckage + + + + + +Global education: Homework for all + + + + + +Big oil: Shape up + + + + + +Letters + + + +Letters to the editor: On Hong Kong, Peru, Indian-Americans, nationalism + + + + + +Briefing + + + +Business in America: Dealing with Donald + + + + + +American corporatism: Chairman president + + + + + +United States + + + +Deporting undocumented migrants: Hamilton’s heirs + + + + + +Standing Rock: Water, life and oil + + + + + +Hate crimes: By the numbers + + + + + +Health care: Drug money + + + + + +Lawyers: Libidos and don’ts + + + + + +Trump appointments: A fox for the henhouse + + + + + +Lexington: Farewell to all that + + + + + +The Americas + + + +Colombia’s peace agreement: A tumultuous final chapter + + + + + +Bello: The power of the Andean sun + + + + + +Asia + + + +Japan and Russia: Two men in a tub + + + + + +An election in Uzbekistan: Cloning Karimov + + + + + +Politics in New Zealand: Lost Key + + + + + +Jayaram Jayalalithaa: After the storm + + + + + +Indonesia’s economy: Back in business + + + + + +China + + + +Popular discontent: In China, too + + + + + +Banyan: Calm before the storm? + + + + + +Middle East and Africa + + + +Gambia’s election: Strongman down + + + + + +South Sudan: Genocide or mere atrocity? + + + + + +Saudi Arabian diplomacy: Outpaced by Iran + + + + + +Israel’s army: Welcome to Tank Girl + + + + + +Europe + + + +Post-referendum Italy: Grim non-resignation + + + + + +Russia’s active measures: The motherland calls + + + + + +Spain’s minority government: Short-handed + + + + + +Austria’s presidential election: Left hook + + + + + +Charlemagne: Unlikely candidates + + + + + +Britain + + + +University admissions: A foot in the door + + + + + +The Brexit process: Red, white, blue or grey? + + + + + +Railways: Changing track + + + + + +The property market: As safe as... + + + + + +The Liberal Democrats: The Olney way is up + + + + + +Business and productivity: Time to end the muppet show + + + + + +Steelmaking: Off the scrapheap + + + + + +Bagehot: Different votes for different folks + + + + + +International + + + +Education: Must try harder + + + + + +Educating migrants: Geography lessons + + + + + +Business + + + +Oil companies: Fit at fifty—or less + + + + + +Privatising Rosneft: An Ivan for an Igor + + + + + +Auditors: Bother in Brazil + + + + + +Motorcycle manufacturing: Digital rider + + + + + +South Korea’s chaebol bosses face parliament: Before parliament + + + + + +Sika and Saint-Gobain: Swiss roiled + + + + + +Alt-right media: Looking on the Breitbart side + + + + + +Schumpeter: The tycoon as intellectual + + + + + +Finance and economics + + + +The American economy: Full speed a-Fed + + + + + +Buttonwood: First blast of the Trumpettes + + + + + +Italian banks: A monte to climb + + + + + +The euro zone: General anaesthetic + + + + + +Pensions in America: Stampede in Dallas + + + + + +Insurance litigation: Insurance’s Jarndyce v Jarndyce + + + + + +Free exchange: You had to be there + + + + + +Science and technology + + + +Palaeontology (1): Bridging the gap + + + + + +Palaeontology (2): Feathered find + + + + + +Solar energy: Shine on + + + + + +Molecular biology: Body of knowledge + + + + + +The Breakthrough prizes: Move over, Alfred + + + + + +Astronomy: The remains of the day + + + + + +Books and arts + + + +Books of the Year 2016: High fliers + + + + + +Books by Economist writers in 2016: What we wrote... + + + + + +Obituary + + + +Whitney Smith: Half mast + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +The Economist poll of forecasters, December averages + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.12.17.TXT b/homeworks/B20769/homework1/data2/2016.12.17.TXT new file mode 100644 index 0000000..dbccaf9 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.12.17.TXT @@ -0,0 +1,5116 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +文章 章节 下一项 + +Politics this week + +Dec 17th 2016 + + + +Syrian rebels inside Aleppo, who have been reduced to holding just a sliver of the city, were reported to have surrendered. But a deal under which they would be allowed to leave for the province of Idlib promptly ran into difficulties, and fighting resumed. Anywhere from 50,000 to 100,000 civilians are still trapped inside the tiny remaining enclave. See here and here. + +A bomb at a Coptic Christian church in Cairo killed at least 25 worshippers, two days after two bomb attacks targeted police in the Egyptian capital. See article. + +America said it would limit its arms sales to Saudi Arabia, following concerns about the high number of civilians being killed by Saudi air strikes in Yemen aimed at Houthi rebels. + +The president of Gambia, Yahya Jammeh, retracted his earlier concession of defeat and challenged the result of an election on December 1st, which he lost. Leaders of neighbouring states have been pressing him to stand down with threats of sanctions and the use of force against him. See article. + +Muhammadu Buhari, the president of Nigeria, proposed a budget that will increase government spending by 20% in a bid to restart growth in an economy that has slumped into recession. + +Nana Akufo-Addo, the leader of Ghana’s opposition New Patriotic Party, won the presidency. It was the country’s seventh more-or-less peaceful poll since the return of multiparty democracy in 1992. + +António Guterres was sworn in as UN secretary-general. The former Portuguese prime minister and head of the UN refugee agency is taking over from Ban Ki-moon. + +A Russian attack + + + +The CIA confirmed that Russia had tried to influence the result of the presidential election by hacking and leaking sensitive Democratic e-mails. The allegations were rubbished by Donald Trump’s team. America’s spooks are sure that Russia did try to intervene in the election; some are less certain than the CIA about the intent behind its actions. See article. + +Mr Trump nominated Rex Tillerson as secretary of state, a surprise choice given that the chief executive of ExxonMobil has no experience of formal diplomacy, though he does have friendly ties with Russia. Rick Perry, a former governor of oil-rich Texas, is to head the Department of Energy, which he once forgot he wanted to abolish. + +There have been so many + +Paolo Gentiloni was sworn in as Italy’s new prime minister following Matteo Renzi’s resignation after his defeat in a referendum on political reforms. Mr Gentiloni’s new cabinet got to work as Mr Renzi retreated to his home in Tuscany. He may not be gone for long. He signed off with: “Back in touch soon, friends.” + +In Turkey a bombing outside a football stadium in Istanbul killed at least 44 people and left scores wounded. The Kurdistan Freedom Falcons claimed responsibility, the second attack it has carried out in the city this year. + +A Dutch court convicted Geert Wilders, a populist politician, for inciting racial discrimination in a speech from 2014 in which he asked, “Do you want more or fewer Moroccans?” Mr Wilders described the decision as “a great loss for democracy and freedom of expression”. He leads the polls for next year’s election. See article. + +Park drive + +South Korea’s National Assembly voted to impeach Park Geun-hye, the president. The Constitutional Court now has six months to review the charges against her. See article. + +In Indonesia the governor of Jakarta, Basuki Tjahaja Purnama (known as Ahok), went on trial for insulting Islam. The case has thrown open the election for governor. + +Rodrigo Duterte, the president of the Philippines, told a group of businessmen that he had personally killed suspected criminals in an effort to encourage vigilantism while mayor of the city of Davao. See article. + +Japan’s parliament passed a bill to overturn a ban on casinos, taking a punt that rich gamblers can be lured away from Macau and Singapore. + +Donald Trump angered China by challenging the “one China” policy. Some Taiwanese are glad that the idea of “one China” has been questioned—they disagree with China’s assertion that Taiwan is part of it. Some also fear, however, that their island may become a bargaining chip. See article. + +A US think-tank reported that China appeared to have put anti-aircraft systems on the seven artificial islands it has built in the South China Sea. The Asia Maritime Transparency Initiative used satellite imagery to track their construction. China has always denied that the islands were built for military purposes. + +Hong Kong’s unpopular chief executive, Leung Chun-ying, said he would not run for a second term. His successor will be chosen in March by a 1,200-strong committee packed with loyalists of the Communist Party in Beijing. See article. + +Copying India + + + +Venezuela withdrew the 100-bolívar bill, its highest-valued banknote, from circulation. It represented 77% of the country’s cash. Savers formed hours-long queues to deposit the nearly worthless bills in banks. See article. + +Justin Trudeau, the prime minister of Canada, struck a deal with the leaders of 11 provinces and territories to start a carbon-pricing scheme nationwide. If implemented, it would put the country on track to meet its emissions targets under the Paris agreement. See article. + +Just in time for Christmas + +Consumer prices in Britain rose to 1.2% in November, a two-year high. The increase, driven mainly by the higher cost of petrol and clothing, puts inflation at more than twice the level it was at in June, when Britain voted to leave the EU. With pay stagnant, inflation is eating into real wages. Meanwhile, the government said that it would not publish its Brexit plan until February. + +A strike by train drivers on one of Britain’s busiest railway networks gave commuters the winter blues. Those trying to get away from it all will have to contend with industrial action called by British Airways’ cabin crews. But Post Office workers could deliver some festive cheer. They are also threatening to strike, so any future union ballots might get lost in the post before they do more damage to the economy. + +This article appeared in the The world this week section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21711962-politics-week/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Business this week + +Dec 17th 2016 + +The Federal Reserve lifted the range for its benchmark interest rate by a quarter of a percentage point to between 0.5% and 0.75%. It was the first rise in a year and only the second since June 2006, and comes as the short-term prospects improve for growth in the American economy. The Fed forecasts that it will increase rates three times over the course of next year. + +It has to end some time + +At its meeting on December 8th, the European Central Bank decided to extend quantitative easing for a further nine months to December 2017, but also to reduce the monthly pace of bond-buying from €80bn ($85bn) to €60bn beginning in April. Investors tried to figure out whether this marked the start of a tapering of its stimulus programme. + +With the clock ticking on an end-of-year deadline, Monte dei Paschi di Siena, Italy’s most-troubled bank, prepared a last-ditch attempt to raise the €5bn ($5.3bn) in new capital it needs to stay afloat. Italy’s government was on standby to intervene if the bank falls short of raising the cash on the markets. + +UniCredit, the only Italian bank deemed to be a risk to global markets if it goes bust, published its turnaround plan. It includes a €13bn ($14bn) share issue to begin next year; reworking almost €18bn-worth of bad loans and selling them to two investment firms; and more job cuts. See article. + +There was some good news for one European bank at least when shareholders in Bank of Cyprus approved its plan to list on the London Stock Exchange. During the euro crisis three years ago the bank was on its knees and was rescued through a contentious “bail-in”, converting savers’ deposits to equity. + +As a reminder that the euro crisis is not entirely over, the euro zone’s finance ministers cancelled short-term debt relief measures for Greece, after the government boosted pensions for the poor without consultation. The second review of the current Greek bail-out is stuck; the IMF recently ran a blog post criticising the European approach. + +Test flight + +In the first multibillion commercial contract since 1979 between Iran and an American company, Boeing signed an agreement to deliver 80 aircraft to Iran Air for $17bn. Airbus is close to securing a similar contract. The deals have been made possible by the lifting of sanctions since a nuclear deal was signed with Iran, but Republicans in Congress, and the incoming Trump administration, are opposed to that accord and could scrap the contracts. Speaking the Trump language, Boeing plugged the benefits of its deal for “tens of thousands” of American workers. + +Five years after a first takeover attempt failed amid public anger at the hacking scandal at his British newspapers, Rupert Murdoch launched another bid to buy Sky, Britain’s biggest pay-TV network. Mr Murdoch’s 21st Century Fox said it had reached an agreement to acquire the 61% of Sky it does not already own for around $14bn. But the offer is not yet formal. Making it official could trigger a referral by the government to the competition regulators, and some politicians remain opposed to Mr Murdoch’s ambitions. See article. + +Vivendi said it had bought a 12% stake in Mediaset, an Italian broadcaster controlled by Silvio Berlusconi, a colourful former prime minister, and that it intended to increase its holding to 20%. The purchase was unsolicited, prompting Mediaset to describe it as a hostile takeover attempt. See article. + +Yahoo discovered another breach of its security systems. A cyber-attack in 2013 accessed the passwords and other information of more than 1bn users, twice the number of a similar hack of Yahoo’s systems that took place in 2014. The revelation could affect Verizon’s planned takeover of the struggling internet company. + +Asahi, Japan’s biggest beermaker, will become Europe’s third-largest brewer following its acquisition of east European assets that SABMiller is selling as part of its amalgamation with Anheuser-Busch InBev. The deal, worth €7.3bn ($7.8bn), includes the Pilsner Urquell brand produced in the Czech Republic. Earlier this year Asahi bought the Grolsch and Peroni brews from SAB. + +Santa’s little helper + + + +Amazon made its first commercial delivery of goods to a customer by drone,transporting a TV device and popcorn to a farmhouse near the English town of Cambridge. Britain was the prime choice for Amazon to mark its achievement as regulators there have imposed fewer restrictions on drone tests than in America. The drone flew two miles over open country in 13 minutes carrying a package weighing less than 2.2kg (5lb). Sceptics think drones will be a niche service, at best, and won’t work in urban areas. + +This article appeared in the The world this week section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21711959-business-week/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +KAL's cartoon + +Dec 17th 2016 + + + +More KAL's cartoons + + + +This article appeared in the The world this week section of the print edition under the headline “KAL's cartoon” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21711961-kals-cartoon/print + + + + + +上一项 文章 章节 下一项 + + + + + +Leaders + + + + +War in Syria: The fall of Aleppo + +Big data and government: China’s digital dictatorship + +South Korean politics: Decide and rule + +The Federal Reserve: Janet’s job + +The trial of Geert Wilders: In defence of hate speech + + + + + +文章 章节 下一项 + +The war in Syria + +The lessons from Aleppo’s tragic fate + +When interests triumph over values terrible things can happen + +Dec 17th 2016 + + + +GROZNY, Dresden, Guernica: some cities have made history by being destroyed. Aleppo, once Syria’s largest metropolis, will soon join their ranks. Its 1,000-year-old Muslim heritage has turned to dust; Russian aircraft have targeted its hospitals and schools; its citizens have been shelled, bombed, starved and gassed (see article). Nobody knows how many of the tens of thousands who remain in the last Sunni Arab enclave will die crammed inside the ruins where they are sheltering. But even if they receive the safe passage they have been promised, their four-year ordeal in Aleppo has blown apart the principle that innocent people should be spared the worst ravages of war. Instead, a nasty, brutish reality has taken hold—and it threatens a more dangerous and unstable world. + +To gauge the depth of Aleppo’s tragedy, remember that the first protests against Syria’s president, Bashar al-Assad, in 2011 saw Sunnis marching cheerfully alongside Shias, Christians and Kurds. From the start, with extensive help from Iran, Mr Assad set out to destroy the scope for peaceful resistance by using violence to radicalise his people. Early on, his claim that all rebels were “terrorists” was outrageous. Today some are. There were turning-points when the West might have stepped in—by establishing a no-fly zone, say; or a haven where civilians could shelter; or even a full-scale programme of arming the rebels. But, paralysed by the legacy of Iraq and Afghanistan, the West held back. As the fighting became entrenched, the need to intervene grew, month by bloody month. But the risk and complexity of intervening grew faster. As Mr Assad was about to topple, Russia joined the fray, acting without conscience and to devastating effect. Aleppo’s fall is proof that Mr Assad has prevailed and of Iran’s influence. But the real victory belongs to Russia, which once again counts in the Middle East. + +Likewise, the defeat is not just a blow to Mr Assad’s opponents, but also to the Western conviction that, in foreign policy, values matter as well as interests. After the genocide in Rwanda in 1994, when Tutsis were slaughtered as the world turned its back, countries recognised that they have a duty to constrain brute force. When members of the UN accepted responsibility to protect the victims of war crimes, wherever they are, conventions against the use of chemical weapons and the reckless killing of civilians took on a new relevance. The desire to promote freedom and democracy was not far behind. + +Dust and ashes + +This ideal of liberal intervention has suffered grievously. The American-led campaigns in Afghanistan and Iraq demonstrated that even the most powerful country in history cannot impose democracy by force alone. The tragedy of Aleppo is less conspicuous, but just as significant. Confronted by Mr Assad’s atrocities, the West has done no more than rehearse diplomatic phrases. By failing to stand up for what it is supposed to believe in, it has shown that its values are just words—and that they can be ignored with impunity. + +Plenty of people share the blame. After Mr Assad drenched his people in nerve gas, crossing an American red line, Britain’s parliament voted against taking even limited military action. As millions of people fled to Syria’s neighbours, including Lebanon and Jordan, most European countries looked the other way—or put up barriers to keep refugees out. + +Particular blame falls on Barack Obama. America’s president has treated Syria as a trap to be avoided. His smug prediction that Russia would be bogged down in a “quagmire” there has proved a historic misjudgment. Throughout his presidency, Mr Obama has sought to move the world from a system where America often acted alone to defend its values, with a few countries like Britain riding shotgun, to one where the job of protecting international norms fell to all countries—because everyone benefited from the rules. Aleppo is a measure of how that policy has failed. As America has stepped back, the vacuum has been filled not by responsible countries that support the status quo, but by the likes of Russia and Iran which see the promotion of Western values as an insidious plot to bring about regime change in Moscow and Tehran. + +Welcome to the bazaar + +In theory, the next American president could seek to reverse this. However, Donald Trump embodies the idea that liberal intervention is for suckers. The nomination of his new secretary of state, Rex Tillerson, the boss of ExxonMobil (see article), only reinforces his campaign message: as president, Mr Trump wants to notch up deals, not to shore up values. + +Striking deals is an essential part of diplomacy—especially with adversaries like Russia and Iran and competitors like China. But a foreign policy that lurches from deal to deal without a strategy or being anchored in values poses grave risks. One is that allies become bargaining chips. Mr Trump has already dangled his support for democratic Taiwan, which China claims as a renegade province, as something to be traded in exchange for help cutting America’s trade deficit with China (see article). A grand bargain that Mr Tillerson brokers with his friends in Russia and which, for instance, pulls American troops back from NATO’s front-line states in exchange for concerted diplomatic action against Iran or China would leave the Baltic states exposed to Russian aggression. An unparalleled network of alliances is America’s great strength (see article). Mr Trump must care for his allies, not trade them away. + +An order based on deals also risks being unpredictable and unstable. If Mr Trump fails to strike his bargain with Russia, the two countries could rapidly fall out—and never would Mr Obama’s cool head be more missed. When might is right, small countries are locked out or forced to accept poor terms while the great powers strut their stuff. Without a framework to bind them in, deals require frequent renegotiation, with uncertain outcomes. Complex, transborder problems such as climate change are even harder to solve. + +The world has seen what happens when values cannot hold back the chaos and anarchy of geopolitics. In tragic, abandoned Aleppo the fighting has been merciless. The people who have suffered most are the poor and the innocent. + +This article appeared in the Leaders section of the print edition under the headline “The fall of Aleppo” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21711903-when-interests-triumph-over-values-terrible-things-can-happen-lessons-aleppos-tragic/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Big data and government + +China’s digital dictatorship + +Worrying experiments with a new form of social control + +Dec 17th 2016 + + + +WHEN communism crumbled in the Soviet Union, 25 years ago this week, the Chinese Communist Party seemed to many to be heading irreversibly downwards. Yes, the tanks had left Tiananmen Square after crushing a revolt in 1989, but the war appeared lost. Even China’s breakneck growth, which took off a year after the Soviet collapse, looked likely only to tear the party further from its ideological bedrock. In 1998 President Bill Clinton intimated that he foresaw an inevitable democratic trajectory. He told his Chinese counterpart, Jiang Zemin, that China was “on the wrong side of history”. + +Yet, while the West has suffered from the financial crisis and the fallout after a failed attempt to implant democracy in the Middle East, China’s Communist Party has clung on to its monopoly of power. Its leaders behave as if China will never have to undergo the democratic transformation that every rich country has passed through on the way to prosperity. Instead they seem to believe that the party can keep control—and some officials are betting that the way to do so lies in a new form of digital dictatorship. + +A party apart + +Under its leader, Xi Jinping, the party looks from the outside to be stronger than at any time in decades. Since Tiananmen, stale apparatchiks have been replaced by bright technocrats—and even entrepreneurs. Citizens enjoy freedoms unimaginable a generation ago—to do business, to travel abroad and to pursue freewheeling lives. Using Western techniques of public relations, the party reminds ordinary Chinese how everyone, thanks to mass consumerism, is having a jolly good time. + +And yet the party is still profoundly insecure. During the past few years it has felt the need to impose a fierce clampdown on dissidents and their lawyers. It is bullying activists in Hong Kong who challenge its authority and is terrorising restless minorities. Rapid economic growth has created a huge new middle class who relish the opportunity to get rich, but who are also distrustful of everything around them: of officials who ride roughshod over property rights, of a state health-care system riddled with corruption, of businesses that routinely peddle shoddy goods, of an education system in which cheating is the norm and of people whose criminal and financial backgrounds are impossible to assess. + +The party rightly worries that a society so lacking in trust is unstable. So it is experimenting with a striking remedy. It calls this a “social-credit system” (see article). It says the idea is to harness digitally stored information to chivvy everyone into behaving more honestly, whether fly-by-night companies or tax- and fine-dodging individuals. That sounds fair enough. But the government also talks about this as a tool of “social management”: ie, controlling individuals’ behaviour. This is a regime that already tries to police how often people visit their parents. How much further could it go? Citizens’ ratings are to be linked with their identity-card numbers. Many fear that bad scores might result in sanctions, such as being denied a bank loan or permission to buy a railway ticket, even for political reasons. They have reason to worry. The government decreed this year that the system should record such vaguely defined sins as “assembling to disrupt social order”. + +In the West, too, the puffs of data that people leave behind them as they go about their lives are being vacuumed up by companies such as Google and Facebook. Those with access to these data will know more about people than people know about themselves. But you can be fairly sure that the West will have rules—especially where the state is involved. In China, by contrast, the monitoring could result in a digital dystopia. Officials talk of creating a system that by 2020 will “allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step.” + +So far, the scheme is only experimental, in about 30 areas. The government itself seems unsure how far to take it. There has been much debate about how to ensure that citizens can challenge their ratings. Indeed, attempts to use the system to give the party more muscle are meeting opposition. Official media have reported misgivings about one experiment in which citizens visiting government offices to complain about miscarriages of justice were punished with poor scores. The media have even quoted critics comparing such tactics to the Japanese handing out “good citizen” certificates to trusted Chinese during the imperial army’s hated wartime occupation. + +That the party has given publicity to such concerns suggests it may heed some of them. But it is just as likely that the experiments mark the beginning of something bigger and more sinister. They are of a piece with China’s deep-seated bureaucratic traditions of coercion and paternalism. The government feels that it has a right to intrude on citizens’ lives. Public resentment has made no difference to brutal, ill-judged efforts to dictate how many children families can have. Whenever Mr Xi is challenged, his instinct always seems to be to crack down. The routine succession of threats any government faces is more likely to lead to oppression than to a free, informed debate or a decision that the state should forsake the digital tools available. + +Turn the spotlight on the rulers, not the ruled + +Instead of rating citizens, the government should be allowing them to assess the way it rules. Vast digital systems are not needed for that. For all democracy’s weaknesses, the ballot box can still work. Too much to ask for in China, perhaps? Not if the government is to be taken at its word. Its outline of the social-credit scheme grandly calls for “complete systems to constrain and supervise the use of power” and steps to “broaden channels for public participation in government policymaking”. That sounds a lot like democracy. + +Sadly, Mr Xi shows little interest in experiments of that kind. Witness the thugs who were recently deployed outside the home of a Beijing citizen who dared to try to stand in a local election without the party’s permission. Instead Mr Xi continues to develop digital tools and systems for controlling people. That will fuel anger and resentment towards the government. In the long run it will prove that Mr Clinton was right. + +This article appeared in the Leaders section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21711904-worrying-experiments-new-form-social-control-chinas-digital-dictatorship/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +South Korean politics + +The agenda after the impeachment + +Lawmakers have got rid of the president. They must now get down to policy, not politicking + +Dec 17th 2016 + + + +FOR South Korea, a democracy not yet three decades old, the impeachment on December 9th of its unloved president, Park Geun-hye, was the culmination of a remarkable few weeks of participatory politics. As Ms Park sank ever deeper into an influence-peddling scandal involving a former confidante, millions joined protests and called on their MPs to oust her. Four-fifths of South Koreans demanded her eviction; four-fifths of parliamentarians gave them what they wanted. + +The result suspends Ms Park’s powers, over a year before her term ends (see Banyan). But already the consensus that produced it is cracking. The verdict has riven Ms Park’s Saenuri party—half of whose MPs were among the 234 who voted to impeach her. Saenuri’s floor leader abruptly resigned this week; the party may split as it tries to reinvent itself. The opposition, which controls parliament, wants to ditch deals made by Ms Park’s conservative administration, and threatens to hobble the unpopular prime minister and acting president, Hwang Kyo-ahn. That would be a mistake. Instead, politicians need to put policy ahead of politicking. + +Unfit for a Kim + +Both parties are in turmoil as they gear up for a possible early presidential election, with no clear front-runner. But a decision on Ms Park’s permanent removal, which rests with the Constitutional Court, could take up to six months. A vote for her successor would take place within 60 days if six of the nine justices agree to impeach her. But they may not: two justices will soon retire, and Mr Hwang is unlikely to replace them. Five of the seven who would remain have a conservative bent. + +South Korea’s mess will only grow worse if impeachment is rejected. The country cannot afford to drift without a hand on the tiller. Ms Park should resign straight away, and fresh elections should be held. Even then, it will take time to form a new government, so parliament must step up. + +The priority is security. Donald Trump takes office in America in late January, when South Korea will almost certainly find itself without an elected president. He has made vague threats to withdraw troops from the South even as Kim Jong Un in North Korea tests missiles and bombs with new gusto. Mr Kim likes to test new leaders (the North’s third underground nuclear explosion came two weeks before Ms Park took office). So the South Korean opposition should not delay the deployment of an American-funded missile-defence system, called THAAD (Terminal High-Altitude Air Defence), as it is threatening to do. Nor should lawmakers scrap a vital military-intelligence-sharing deal with Japan, approved last month. This month’s three-way summit of leaders with China and Japan will now not take place; South Korean envoys should quickly reassure both that nothing fundamental has changed. + +The country’s lawmakers should also pass some of the many pending bills aimed at energising the sagging economy, which may barely grow by 2% next year. Three hitherto contentious ones deserve their attention: one to boost its unproductive service industry; another to cut regional red tape; plus a package of reforms to loosen the rigid labour market, including provisions for pay to be tied to merit rather than seniority. These would help create jobs—especially for the young, a fifth of whom are neither studying nor in work. + +The finance minister was among those whom Ms Park tried but failed to replace last month after the opposition refused to confirm her new appointee. Mr Hwang was another. For liberal MPs both are political adversaries, but if they help them govern, MPs would be making good on their pledge, when they impeached Ms Park, to be working for the people. + +This article appeared in the Leaders section of the print edition under the headline “Decide and rule” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21711916-lawmakers-have-got-rid-president-they-must-now-get-down-policy-not-politicking/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Janet Yellen’s job + +The Federal Reserve has economic and political headaches + +The Fed was right to raise rates this week. Life will get harder from here + +Dec 17th 2016 + + + +WHEN, a year ago, the Federal Reserve raised interest rates for the first time since the financial crisis, it did not intend to dilly-dally. Rate-setters pencilled in four more rises for 2016. In the end it took until this week for the Fed to lift rates again, to a target range of 0.5-0.75%. The delay reflected both a wobbly world economy and the Fed’s realisation that the structural forces keeping rates low, such as slow productivity growth, are more powerful than it had previously thought. + + + +The Fed was right to sit on its hands for a year. After a few soggy quarters of growth, America’s economy is now much the stronger for the pause. It grew at an annualised rate of 3.2% in the third quarter of the year. Unemployment has fallen to 4.6%, the lowest since August 2007. The labour-force participation rate for 25- to 54-year-olds, which tumbled after the recession, has recovered about a third of its decline, after its fastest growth spurt since 1985. Inflation, too, is slowly gathering speed. Core prices, which exclude food and energy, are 1.7% higher than a year ago, still below the Fed’s 2% target, but up from 1.4% when it first raised rates. In September markets’ inflation expectations began to pick up, too. All of this is welcome. Monetary policy is still relaxed, even if the Fed has withdrawn a quarter-point of stimulus. The issue is what happens next. + +The complexion of the central bank’s task has altered since the election of Donald Trump. Stockmarkets in America have rallied, the dollar has surged and Treasury yields have jumped in anticipation of fiscal stimulus. Such a stimulus would imply, all else being equal, that the Fed should now raise interest rates more quickly. The political backdrop is more complicated, too. + +Fed up. Now what? + +During his campaign, Mr Trump attacked Janet Yellen, the Fed’s chair, for keeping rates low. Her image was used in a TV advert in which he denounced “global special interests”. The incoming president will have opportunities to put his stamp on the central bank: two of seven Fed governorships are vacant. Ms Yellen’s term is up in 2018, as is that of her vice-chair, Stan Fischer. Daniel Tarullo, the de facto vice-chair for bank supervision and a vocal proponent of regulation, is unlikely to be confirmed in that position. If all three of these individuals were also to resign as governors, Mr Trump could pack the central bank’s board with his picks. + +The best way for the Fed to avoid interference is to stay out of political debates, whether over the right amount of fiscal stimulus or over its own mandate. And the best way for the Fed to set monetary policy is to stick with the cautious, datadependent approach of the past year. + +The Fed’s rate-setters know that they still face an asymmetry of risks: should they raise rates too quickly, they cannot cut them by a lot if the economy sours. By contrast, the Fed can always tighten policy as much as it likes. It would thus be unwise to react hastily to the mere prospect of fiscal easing. Nobody yet knows how soon, by how much and to what effect Mr Trump will cut taxes (see article), or how his trade policy will work. And if the dollar, up by nearly 5% since September, goes higher, emerging markets with dollar-denominated debts will look even more fragile than they do today. Weak growth abroad would wash back up on America’s shores. Financial conditions are already tighter, thanks to the dollar’s strength and higher bond yields. If after years of undershooting, inflation surpasses the Fed’s 2% target, that would not be a disaster. + +How many rate rises are needed in 2017 depends on the balance of risks. The Fed’s forecast of three is probably a maximum. Over the past year a strong dollar, fragile emerging markets and the risk of over-tightening have stood in the way of rapid rate rises. Today the economy is stronger and the labour market a bit tighter, but the case for caution is much the same. + +This article appeared in the Leaders section of the print edition under the headline “Janet’s job” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21711913-fed-was-right-raise-rates-week-life-will-get-harder-here-federal-reserve/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +The trial of Geert Wilders + +In defence of hate speech + +Criminalising offensive language only empowers bigots + +Dec 17th 2016 + + + +GEERT WILDERS, a Dutch politician, says some horrible, inflammatory things. He has called Islam a “fascist ideology” and referred to Muhammad, Islam’s prophet, as “a devil”. He is no friend of free speech, either: he wants to ban not only the Koran but also preaching in any language other than Dutch. The Economist deplores his views; but he should be allowed to express them. + +Wild thing, you make my heart sink + +Prosecutors in the Netherlands have reached a different conclusion. On December 9th a court found him guilty of insulting and inciting racial discrimination against Dutch Moroccans. At issue was a nasty line from a speech in 2014. “Do you want more or fewer Moroccans?” Mr Wilders asked supporters of his anti-immigrant Party for Freedom (PVV). The crowd replied: “Fewer! Fewer! Fewer! Fewer!” Mr Wilders smiled and said, softly: “We’ll take care of that.” The audience chuckled. + +The court decided not to impose a fine, arguing that the conviction itself was punishment enough. Some punishment. Three months before an election, Mr Wilders can pose as a victim of an illiberal law and a politically correct elite who, he claims, are letting Islam undermine Dutch civilisation. Mr Wilders’s image as a martyr is further enhanced by the fact that Islamist radicals have threatened to kill him for his words. + +All this makes him stronger. His party leads the polls, with the support of a third of voters. The PVV will probably not win control of the country—mainstream parties will club together to keep it out of office. But using the law to attempt to silence Mr Wilders enhances his malign influence over Dutch politics and makes it more likely that he will one day wield real power. + +The Netherlands is far from the only democracy to criminalise “hate speech” that denigrates racial, religious or other groups. Such laws have widespread support, but they are misguided. Free speech is the oxygen of democracy—without it, all other political freedoms are diminished. So the right to free expression should be almost absolute. Bans on child pornography and the leaking of military secrets are reasonable. So, too, are bans on the deliberate incitement of violence. But such prohibitions should be narrowly drawn. + +Standing outside a mosque shouting, “Let’s kill the Muslims!” qualifies. Complaining that your country has admitted too many migrants of a particular nationality does not. People should be free to debate immigration policy. Advocates of a liberal approach, such as this newspaper, should try to persuade those who disagree with them, not lock them up. + +Proponents of hate-speech laws argue that they foster social harmony by forcing people to be more polite to each other. The opposite is more likely to be true. Criminalising something as subjective as the giving of offence encourages more people to say they are offended, so they can use the law to suppress views they dislike. This enrages those who are silenced; hardly a recipe for social tranquillity. + +Such laws also provide an excuse for autocrats to censor their critics. China uses laws against inciting ethnic hatred to trample on Tibetans who demand autonomy. In Saudi Arabia and Pakistan anti-blasphemy laws are used to terrorise minorities and settle private scores. In all these cases censorious governments cite similarly worded Western laws as precedents. Enough. Governments should stop trying to police politeness. It stifles debate and helps bigots like Mr Wilders. + +This article appeared in the Leaders section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21711914-criminalising-offensive-language-only-empowers-bigots-defence-hate-speech/print + + + + + +上一项 文章 章节 下一项 + + + + + +Letters + + + + +Letters to the editor: On oil taxes, China, the rupee, renewables, refugees, trees, science, economists + + + + + +文章 章节 下一项 + +On oil taxes, China, the rupee, renewables, refugees, trees, science, economists + +Letters to the editor + +Dec 17th 2016 + +Letters are welcome via e-mail to letters@economist.com + + + +A tax on oil companies + +It was surprising to see The Economist repeat, uncritically, claims made by green activists and a trade union with an industrial axe to grind, that a “gas-extraction tax is bringing in less revenue than expected” (“Poor credit”, November 26th). The tax in question, the petroleum resource rent tax, is just one of many taxes paid by the oil and gas industry. For almost 30 years, Australia has used the PRRT as a super-profits tax. It encourages investment by only taxing projects when upfront costs have been recovered and profits exceed a modest benchmark rate. However, when these conditions are met, the PRRT, in conjunction with the company tax, applies an effective tax rate of 58 cents on every dollar of profit. When projects are not profitable, usually because prices are depressed or upfront costs have not been recovered, Australia still applies a 30% company tax to revenue. + +As indicated in your article, the profits-based PRRT has encouraged $200bn through investment which will deliver far more revenue, over the investment cycle, than would be likely to occur with a crude royalty. + +MALCOLM ROBERTS + +Chief executive + +Australian Petroleum Production and Exploration Association + +Canberra, Australia + + + + + +Immigrants in Hong Kong + +Your briefing on China’s view of ethnicity and nationhood painted a generally accurate picture of China’s Han-centred order (“The upper Han”, November 19th). That has been the case for thousands of years, mainly because the Han people are by far the majority and Han culture has proved to be resilient despite many challenges. But in decrying the low numbers of immigrants naturalised in China compared with other countries, you overlooked the important role that Hong Kong, under “One Country, Two Systems”, contributes to China’s ethnic diversity. + +In accordance with a rule adopted by the National People’s Congress Standing Committee in May 1996, Hong Kong’s Immigration Department is authorised to handle all nationality applications in accordance with China’s nationality law on behalf of the central government. From July 1997 to the end of December 2010, the Immigration Department approved 10,975 nationality applications from a wide diversity of potential entrants from different ethnic and national backgrounds. The number of nationality applications approved in Hong Kong continues to rise. + +This is another good example of how Hong Kong contributes to the diversity and modernisation of China. + +REGINA IP + +Member of Hong Kong’s Legislative Council + + + + + +Ropey rupee recall + +* You provided a balanced analysis of the decision by India to withdraw 86% of banknotes from circulation (“Short-changed”, November 26th). The government has failed properly to inform people what these changes mean and many of the poor who live in isolated areas away from the city are being heavily affected by this policy. + + + +Newspapers in India report that many poor Indians are afraid to go banks or cash dispensers because they think they will be asked to hand over all their savings. Money, whether illicit black money or not, has become unusable for these people. + + + +GUILLERMO GARCÍA MONTENEGRO + +Gambier, Ohio + + + + + +Why Trump should go green + +As you pointed out, many of the incentives to invest in low-carbon technologies in America are at the state or business level (“The burning question”, November 26th). Earlier this year, governors from 17 states, both Republicans and Democrats, agreed to co-operate on rolling out and cutting the cost of clean energy and transport technologies. Indeed, many renewable-energy federal incentives are backed by many Republicans. The solar- and wind-tax credits were recently renewed for five years by a Republican-led Congress. This isn’t just because renewables are fast coming down in cost, they have also become important industries in Republican strongholds such as North Carolina, which invested $7bn in the technology in 2015, and Texas, where over 100,000 people are employed in the renewables industry. + +As the cost of green technologies continues to come down, the size of the American clean-energy industry continues to grow and the export market for low-carbon goods and services becomes increasingly significant. “Making America great again” may require Team Trump to think twice before turning its back on the climate agenda. + +NICK MOLHO + +Executive director + +Aldersgate Group + +London + + + + + +Bold thinking on refugees + +Europe’s populists are obsessed with migration (Charlemagne, November 26th). But it is the UN convention on refugees that underpins Europe’s crisis. It was drafted in the aftermath of the second world war and is outdated. It should be scrapped and replaced with something better. No single country would risk being ostracised by abandoning the convention on its own, but the EU as a whole has the diplomatic and moral heft to succeed. Apart from taking back the initiative from the populists it would also be in the interest of refugees. Instead of granting asylum to anyone who reaches its shores, Europe could focus on those most in need of protection but lacking the means to make the journey. + +If one really wants to rub it in the face of Marine Le Pen et al, there should be a Europewide referendum on the issue. + +ANDERS LONNFALT + +Olofstrom, Sweden + + + + + +Trees a crowd + +The chart in “For peat’s sake”, (November 26th) suggests that tree-cover loss is the same as deforestation. It is not. Trees grow back when sustainably harvested or after forest fires. The tree-cover loss is only temporary. The chart indicates that Canada lost 7.3% of its tree cover between 2000 and 2014. But sites that were harvested and replanted in 2000 are now covered in trees that are four metres or taller. The Canadian Forest Service reports that the deforestation rate in Canada is 0.02% a year, or less than 0.3% between 2000 and 2014. + +PHILIP GREEN + +Chief executive + +First Resource Management Group + +New Liskeard, Canada + + + + + +Science trek + + + +The paradox in Roger Shawyer’s EMDrive is easily explained (“Ye cannae break the laws of physics”, November 26th). There would be an axial component of radiation pressure on the conical walls of the chamber, not just on the flat ends. This invention is a benign piece of whimsy. + +More worryingly in my own field, energy conservation, flawed science is routinely used to peddle bogus products. Vendors claim that combustion can be improved by passing fuel through magnetic fields, that refrigeration circuits can be made more efficient by injecting heat and that multiple layers of reflective foil enhance the effect of insulation quilt, to name but three spurious technologies. + +Sadly, as well as post-truth politics, we are entering an era of post-science engineering. + +VILNIS VESMA + +Director + +Vesma.com + +Newent, Gloucestershire + + + + + +Classifying economists + +You asked, what is the most appropriate collective noun for a group of economists (Free exchange, November 26th)? At least for those of us doughtily ploughing the rough terrain of macroeconomics, the answer is clear: an aggregate. + +PROFESSOR MICHAEL BEN-GAD + +Department of Economics + +City, University of London + +* Letters appear online only + +This article appeared in the Letters section of the print edition under the headline “On oil taxes, China, the rupee, renewables, refugees, trees, science, economists” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21711854-letters-editor/print + + + + + +文章 章节 下一项 + + + + + +Briefing + + + + +China’s social-credit system: Creating a digital totalitarian state + + + + + +文章 章节 下一项 + +Big data, meet Big Brother + +China invents the digital totalitarian state + +The worrying implications of its social-credit project + +Dec 17th 2016 | BEIJING + + + +GARY SHTEYNGART’S novel of 2010, “Super Sad True Love Story”, is set in a near future when the Chinese yuan is a global currency and people all wear an “apparat” around their neck with RateMe Plus technology. Personal details are displayed in public on ubiquitous Credit Poles, posts on street corners with “little LED counters at eye level that registered your Credit ranking as you walked by.” The protagonist’s are summed up thus: + +LENNY ABRAMOV. Income averaged over five-year span, $289,420 yuan-pegged…Current blood pressure: 120 over 70. O-type blood…Thirty-nine years of age, lifespan estimated at eighty-three…Ailments: high cholesterol, depression…Consumer profile: heterosexual, nonathletic, non-automotive, nonreligious…Sexual preferences: low-functioning Asian/Korean…Child abuse indicator: on…Last purchases: bound, printed, nonstreaming Media artifact” [ie, book]. + +The novel is a fictional dystopia about the destruction of privacy. China’s Communist Party may be on its way to inventing the real thing. It is planning what it calls a “social-credit system”. This aims to score not only the financial creditworthiness of citizens, as happens everywhere, but also their social and possibly political behaviour. It is not yet clear how extensive the system will be, nor whether it will work, nor how far it will withstand the criticism ranged against it in the state-controlled media. But an outline is complete and some of the building blocks are in place. The early signs are that China is starting on the most ambitious experiment in digital social control in the world. + +A pilot scheme in Suining county, in Jiangsu province north of Shanghai, gives clues about what such a system might mean in practice. Starting in 2010, the local government awarded people points for good behaviour (such as winning a national honour of some kind) and deducted points for everything from minor traffic offences to “illegally petitioning higher authorities for help”. Those who scored highest were eligible for rewards such as fast-track promotion at work or jumping the queue for public housing. + +The project was a failure. The data on which it was based were patchy. Amid a public backlash, a report in China Youth Daily, a state-owned newspaper, criticised the system. It said “political” data (such as petitions) should not have been included, declaring that “people should have rated government employees and instead the government has [rated] the people.” Another state-run newspaper, Beijing Times, even compared the scheme with the “good citizen” certificates issued by Japan during its wartime occupation of China. + +But the party and government seem undaunted, issuing outline plans for the social-credit system in 2014 and more detailed guidelines this year. About 30 local governments are collecting data that would support it. The plan appears hugely ambitious, aiming explicitly to influence the behaviour of a whole society. By 2020, Chinese officials say, it will “allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step.” + +The project is a response to the party’s biggest problems: the collapse of confidence in public institutions, and the need to keep track of the changing views and interests of China’s population (without letting them vote). It seeks to collect information on the honesty of ordinary citizens, public officials and companies alike. + +A question of trust + +Despite years of economic growth, popular discontent at widespread corruption has grown stronger. A series of scandals about everything from shoddy housing to out-of-date vaccines has led to public cynicism about companies and the government’s ability to enforce rules. Social-credit scoring aims to change that by cracking down on the corrupt officials and companies that plague Chinese life. And it aims to keep a closer track on public opinion. In a society with few outlets for free expression, big data might paradoxically help make institutions more accountable. + +But it could also vastly increase snooping and social control. In other countries there have been many scare stories about Big Data leading to Big Brother. Most have proven false. But China is different. It is a one-party state, with few checks on its power, a tradition of social control and, in President Xi Jinping, a leader even more prone to authoritarianism than his immediate predecessors. The extent of social-credit scoring will depend on what the government intends, whether the technology works and how the party responds to public concerns. + +Start with intent. The “planning outline” published in 2014 said the government “pays high regard to the construction of a social-credit system”—suggesting the project has the imprimatur of Mr Xi and Li Keqiang, the prime minister. Social credit, it declared, “is an important component …of the social-governance system”: in other words, it is part of governing the country. + +The paper did not set out how the system would work but was clear about its aims. They are to strengthen confidence in the government by improving its efficiency through big data; to crack down on companies that cheat and sell unsafe goods; and to “encourage keeping trust and punish breaking trust…throughout the entire society”. Social credit, it concluded, would be “an important basis for…building a harmonious socialist society”. + +Getting to know you + +Such thinking is in keeping with the party’s long record of using bureaucratic tools to restrict freedom and invade privacy in the name of public order. Almost everyone has a hukou (household registration) document that determines where citizens can get public services. Most people once had a dang’an (personal file) containing school and work reports, and salary details. Both controls have been relaxed, notably the dang’an. But both still exist. + +Increasing numbers of people in government, state-owned firms and universities are required to hand over their passports “for safe keeping”. Holders of passports in some parts of the restless regions of Xinjiang and Tibet have also been told to hand them over to the police. + +Punishments and rewards for behaviour are woven into the government’s activities. The one- (now two-) child policy remains the extreme example of a supposed greater good trampling over private interests. But it is not the only one. The Elder-care law of 2013 requires all adult children, on penalty of fines or jail, to visit parents over 60 “often” (the courts define what counts as often). A few people have been fined under the law and one official said their offences might be entered onto their dang’an, though there is no sign that this has been done. + +China has “an administrative rewards system” in which hundreds of thousands of people a year receive honours and titles, such as “outstanding cadre”, “spiritually advanced individual” and “civilised village”. Winners get money, a higher pension, better health insurance and the right to jump the queue for public housing. The honours system is valued by the leadership. Last year, all seven members of the country’s highest decision-making body, the Standing Committee of the Politburo, attended the awards ceremony of the National Model Worker programme. + +Wholesale surveillance, increasingly of the digital sort, is a central pillar of Chinese communist rule. A system of block-by-block surveillance called “grid management” is being set up in several parts of the country: police and volunteers keep tabs on groups of a few hundred people, supposedly to ensure the rubbish is collected and disputes resolved. It is part of a tradition of self-policing that stretches back to the Song dynasty in the 11th century. + +Newer forms of monitoring involve the ubiquitous use of closed-circuit television cameras. In 2009 China had 2.7m of them; now it may have overtaken America as the country with the largest number of CCTV devices. According to Jack Ma, head of Alibaba, China’s largest internet firm, the company’s home town of Hangzhou has more surveillance cameras than New York, a somewhat larger city. + +As internet use has grown (see chart), so have China’s comprehensive controls in cyberspace—from the Great Firewall, the system that blocks access to tens of thousands of websites (Economist.com among them); to the Golden Shield, an extensive online surveillance system; and the Great Cannon, a tool to attack hostile websites. China’s cyber-censors can suspend internet or social-media accounts if their users send messages containing sensitive terms such as “Tibetan independence” or “Tiananmen Square incident”. + + + +The scale of the data-collection effort suggests that the long-term aim is to keep track of the transactions made, websites visited and messages sent by all of China’s 700m internet users. That would be enormously ambitious but probably not impossible. According to leaked documents, America’s National Security Agency can collect 42bn internet records a month and 5bn mobile-phone location records a day. + +To make such surveillance work, the government has to match the owners of devices with the digital footprints they leave. So laws passed in 2012 and 2016 require internet firms to keep their customers’ real names and other personal information. But there are lots of fake registrations. And it is unclear how censors plan to tackle virtual private networks, which mask a user’s IP address. + +Who’s naughty and nice + +The emerging social-credit system builds on this history of monitoring and control of people’s private lives. Lists are central to the project: you need lists of identities to order the data you gather. And lists are a Chinese speciality. China’s tourist authority keeps a no-fly list for ill-mannered travellers, who can be banned from going abroad for up to ten years. The Cyberspace administration keeps a “white list” of favoured media firms that may sell their articles to other outlets. And so on. + +The list at the heart of the social-credit system is called the “judgment defaulter’s list”, composed of those who have defied a court order. If two people or companies have a contract dispute, or if couples are fighting over a divorce or child support, the parties can go to a civil court for judgment. If the losing party then defaults on payment, he, she or it is put on the list. Names of offenders are displayed on an electronic crawl outside court houses. According to the supreme court, there were 3.1m defaulters on the list at the end of 2015. + +All countries have problems enforcing civil judgments in financial cases, so the list may not look unusual. But it is. It is exceptionally long, and made available to dozens of government departments and party organisations, all of which can apply their own sanctions to defaulters. People on the list can be prevented from buying aeroplane, bullet-train or first- or business-class rail tickets; selling, buying or building a house; or enrolling their children in expensive fee-paying schools. There are restrictions on offenders joining or being promoted in the party and army, and on receiving honours and titles. If the defaulter is a company, it may not issue shares or bonds, accept foreign investment or work on government projects. By August 2016 defaulters had been stopped from buying airline tickets about 5m times. This goes far beyond normal legal enforcements. + +Sins with Chinese characteristics + +From blacklisting debt-defaulters the system could be expanded a bit, say, to keep track of companies that sell poisoned milk or build shoddy houses. Yet guidelines issued in May and September suggest it could go much further. They call the defaulters list “an important component of social-credit information”, implying that it is part of a larger system, and that financial offences are only one category of wrongdoing. Other sorts of “untrustworthy behaviour” meriting attention include: “conduct that seriously undermines…the normal social order…seriously undermines the order of cyberspace transmissions”, as well as “assembling to disrupt social order [and] endangering national defence interests”. Such broad categories imply the system could be used to rate and punish dissent, expressions of opinion and perceived threats to security. + +Although not spelled out clearly, the guidelines could, on the face of it, allow the state to integrate its many databases: everyone’s hukou and dang’an, information from electronic surveillance, the tourist blacklist, the national model-worker programme and more. Even regulations on video games published in December say that firms and gamers that violate the rules could be blacklisted and inscribed in the social-credit database. At worst, the social-credit project could become a 360-degree digital-surveillance panopticon. + +That may sound like scaremongering. After all, Google, Facebook, data-brokers and marketing companies in Western countries—even American presidential-election campaigns—all hold vast quantities of personal information without causing serious harm to civil liberties, at least not so far. + +But China treats personal information differently from the West. In democracies, laws limit what companies may do with it and the extent to which governments can get their hands on it. Such protections are imperfect everywhere. But in China they do not exist. The national-security law and the new cyber-security law give the government unrestricted access to almost all personal data. Civil-liberty advocates who might protest are increasingly in jail. And, according to America’s Congressional Research Service, companies that hold data, such as Alibaba, Baidu (China’s largest search engine) and Tencent (which runs a popular social-messaging app) routinely obey government demands for data. + +Big-data systems in democracies are not designed for social control. China’s explicitly would be. And because its leaders consider the interest of the party and society to be the same, instruments of social control can be used for political purposes. Earlier this year, for instance, the party asked China Electronics Technology Group, one of the country’s largest defence contractors, to develop software to predict terrorist risks on the basis of people’s job records, financial background, consumption habits, hobbies and data from surveillance cameras. Sifting data to seek terrorists can easily morph into looking for dissidents. It is telling that Western intelligence agencies have tried to use data-mining schemes to identify individual terrorists, but failed because of an excess of “false positives”. + +So can a vast social-credit system work? The Chinese face two big technical hurdles: the quality of the data and the sensitivity of the instruments to analyse it. Big-data projects everywhere—such as the attempt by Britain’s National Health Service to create a nationwide medical database—have stumbled over the problem of how to prevent incorrect information from fouling the system (this undermined the Suining experiment, too). Problems of bad data would be even more onerous in a country of 1.3bn people. Vast treasuries of data would also give big incentives for cyber-criminals to steal or change information. + + + +How to analyse the data would be equally problematic. The feature of the social-credit system that has attracted the most attention and alarm is the notion of ascribing “credit scores” (points) to social and political activity. Here, the model seems to be America’s marketing industry. Companies work out credit scores that predict people’s patterns of consumption based on things such as job security, health risks and youth delinquency. But errors abound. The World Privacy Forum, a non-profit organisation, says credit scores are based on hundreds of data points with no standards of accuracy, transparency or completeness. As the report concluded, “error rates and false readings become a big issue.” Garbage in, garbage out. + +What could go wrong? + +The government is well aware of these difficulties. It has allowed an unusual amount of discussion on them in state-run media, suggesting it may be testing the waters before deciding how far to plunge in. A recent high-level “social-credit summit” in Shanghai, for example, talked about how scores can be checked, and mistakes rectified; many argued that legal protections needed to be improved. Zhang Zheng, director of the China Credit Research Centre at Peking University, said multiple problems remain unsolved, and that the administration needed to be reined in. + +A commentary in Beijing Times complained about plans to punish people who do not pay their electricity bills by limiting foreign travel and bank borrowing. “I have never opposed the establishment and improvement of a credit-information system,” wrote the author, Yang Gengshen. “I am only against using credit to expand the power of the strong and further compress the space for civil rights.” + +Much about the social-credit system remains unclear. The government has not yet determined whether it wants the system mainly for cracking down on crooks or to go the full Big Brother. It is uncertain about how much of the information it holds should be incorporated into the system. The surveillance technology is largely untested at the vast scale of China. And the fragmentation of China’s intelligence agencies would have to be overcome. + +But the government is creating the capacity for a long-tentacled regime of social control. Many of the elements are ready: the databases; the digital surveillance; the system of reward and punishment; and the we-know-best paternalism. What remains is to join the pieces together. If and when that is done, China would have the world’s first digital totalitarian state. As another character in “Super Sad True Love Story” writes to a friend: “This is what happens when there’s only one party and we live in a police state.” + +This article appeared in the Briefing section of the print edition under the headline “Creating a digital totalitarian state” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21711902-worrying-implications-its-social-credit-project-china-invents-digital-totalitarian/print + + + + + +文章 章节 下一项 + + + + + +United States + + + + +Russian interference: The plot against America + +Interference past: Substandard subversion + +The next secretary of state: Oily diplomacy + +Tiny colleges: Small wonders + +Environmental policy: Fetch the chainsaws + +The trial of Dylann Roof: Mother courage + +Lexington: The Obama way of war + + + + + +文章 章节 下一项 + +The plot against America + +The election result was not decided in the Kremlin + +But the response to Russian hacking shows how partisan division has weakened the country + +Dec 17th 2016 + + + +WHY is it unsettling to see Republicans and Democrats squabbling afresh about Russian meddling in last month’s presidential election? After all, the allegation being debated has been known for months: namely, that in 2015 and again in 2016 at least two groups of hackers with known links to Russian intelligence broke into the computer systems of the Democratic National Committee, as that party’s national headquarters is known, and into the private e-mail system of such figures as John Podesta, the chairman of Hillary Clinton’s presidential campaign, then released a slew of embarrassing e-mails to WikiLeaks. Before the election a joint public statement by the director of national intelligence and secretary of homeland security said that intelligence agencies were “confident” that the Russian government directed the hacking. + +All that has changed is that—thanks to reporting by the Washington Post and New York Times—we now know that the CIA briefed senior members of Congress before and after the election that, in the consensus view of intelligence analysts, the Russians’ motive was not just to undermine confidence in American democracy, but to seek Mrs Clinton’s defeat. Outside Washington, Americans (who mostly dislike President Vladimir Putin according to polls) seem to have shrugged off the news. President-elect Trump was cheered by spectators when he turned up in Baltimore to watch the Army-Navy football game, an annual pageant of patriotism. + +And that is what is, or should be, so unsettling. Russian interference in elections across the Western world is a nasty virus (see article). Normally, America is protected by powerful, bipartisan immune responses against such a menace. It also boasts some of the world’s most sophisticated intelligence and cyber-defences, and when spooks tell the Republicans and Democrats who lead Congress and sit on the House and Senate intelligence committees of hostile acts by a foreign power, love of country generates a unified immune response. It is not kicking in this time. + +Active measures + +The problem is not that all Republicans dismiss the claim that Russia tried to meddle in the election. Committee chairmen have promised urgent hearings. “We cannot allow foreign governments to interfere in our democracy,” said Representative Michael McCaul, a Texas Republican and chairman of the Homeland Security Committee. Senator John McCain of Arizona, chairman of the Senate Armed Services Committee, told reporters: “Everybody that I know, unclassified, has said that the Russians interfered in this election. They hacked into my campaign in 2008; is it a surprise to anyone?” The chairman of the House Intelligence Committee, Representative Devin Nunes of California, said that he believes Russia is guilty, but then turned his fire on the Obama administration, blaming the president’s desire for a reset of relations with Moscow. + +Yet Republicans are not conceding a more incendiary idea: that, in what seems to be the CIA’s view, the authoritarian, anti-American government of Russia tried to help Mr Trump. Mr Nunes, a prominent Trump supporter, calls that “innuendo” based on “lots of circumstantial evidence, that’s it.” Others are taking the view that it is all very complicated and murky. “All this ‘news’ of Russian hacking: it has been going on for years,” Senator John Cornyn of Texas, a member of Republican leadership, tweeted. “Serious, but hardly news.” According to unnamed officials quoted in the Post, some Republican members agreed that Russia was a hostile actor, but then argued that logically this meant the government in Moscow would be more likely to want Mr Trump defeated. + +Democratic leaders, who are in the minority in both chambers of Congress, have responded by trying to embarrass Republicans into taking a bipartisan approach. The incoming Senate minority leader, Senator Charles Schumer of New York, called it “stunning and not surprising” that the CIA should charge Russia with trying to elect Mr Trump. “That any country could be meddling in our elections should shake both political parties to their core,” Mr Schumer said in a statement. Others have thanked Mr Obama for ordering an investigation into what is known about Russian meddling, and expressed hopes that as much as possible of the probe would be made public before the next president’s inauguration on January 20th. + +The reasons for this partisan stand-off are not mysterious. Mr Trump has declared that the allegations of Russian hacking are simply unproven, and launched an attack on the credibility of the intelligence agencies that he will soon command without obvious precedent. Interviewed recently by Time magazine, Mr Trump said of the hacking: “It could be Russia. And it could be China. And it could be some guy in his home in New Jersey.” Asked about his desire for a reset of relations with Mr Putin—precisely the strategy held against Mr Obama by Republicans—Mr Trump is unapologetic. “Why not get along with Russia?” he asked Time. The Russians are “effective” and “can help us fight ISIS.” Still more remarkably, a statement from the Trump transition office mocked American intelligence agencies. “These are the same people that said Saddam Hussein had weapons of mass destruction,” it read. John Bolton, auditioning for a job in the next administration, questioned whether the hacking was carried out by America’s government to smear Mr Trump. + +Many elements of Mr Trump’s policies make thoughtful Republicans queasy to the point of misery, from his fondness for Mr Putin to his willingness to pick up the telephone and bully company bosses, as if he were a Gaullist French president. But many of those Mr Trump brought into the party are Trump voters more than they are Republicans, and they frighten and cow members of the party that he now heads. + +Some grass-roots conservatives also see much to like in a Russian-style approach to fighting Islamic terrorism, if that means an unsqueamish willingness to back secular autocrats in the Middle East, and attack targets in Syria with indifference to who is underneath. Mr Trump is clearly tempted to do a deal with Mr Putin in which America applauds as Russian warplanes carry out a campaign promise to “bomb the shit out of ISIS”. The bet in Trump Tower is that the other side of any such deal, perhaps involving the lifting of sanctions on Russia, or a promise not to back any further enlargement of NATO, will be greeted by the American public with a yawn. + +There is of course no evidence of collusion between Mr Trump and Russia. Mr Putin’s fierce dislike of Mrs Clinton, who as secretary of state questioned the validity of the 2011 elections in Russia, is more than enough motive to want her defeated. It seems unlikely that last-minute leaks of Democratic e-mails changed the result. Most straightforwardly, a close election is over and Democratic leaders are not questioning the result. Does the squabble matter then? Yes. When the next president of America takes his oath of office in January, officers of Russian intelligence will think they pulled off a historic win. That this fact has divided rather than uniting the two parties that run the world’s great democracy should unsettle anyone. + +This article appeared in the United States section of the print edition under the headline “The plot against America” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21711912-response-russian-hacking-shows-how-partisan-division-has-weakened/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Substandard subversion + +Russia has often tried to influence elections, with little success + +The interference on behalf of Donald Trump probably didn’t change the result, but Russian intelligence officers will see it as a victory + +Dec 17th 2016 + +Laboratory of democracy + +IN January 1984, Soviet KGB spooks reaffirmed a priority that was set by the Kremlin after the second world war. “Our chief task is to help to frustrate the aggressive intentions of American imperialism…We must work unweariedly at exposing the adversary’s weak and vulnerable points.” As Vasili Mitrokhin, a KGB archivist who defected to the West with a large number of KGB files, explained, “exposure” in the parlance of the KGB meant disinformation fabricated by service A, the active-measures branch of the First Chief Directorate of the KGB. This unit was charged with foreign disinformation, which it spread through a network of officers outside Russia. + +At the height of the cold war, service A numbered some 15,000 officers who engaged in psychological warfare and disinformation. Their operations included planting stories about John F. Kennedy being killed in a secret CIA plot, AIDS being a virus developed by the Pentagon and sending fake letters from the Ku Klux Klan to the Olympic committees of African countries. “We are opposed by a monolithic and ruthless conspiracy that relies primarily on covert means for expanding its sphere of influence,” Kennedy warned in 1961, “on infiltration instead of invasion, on subversion instead of elections.” In 1968, in an attempt to head off the election of Richard Nixon, the Kremlin offered to subsidise the campaign of his Democratic rival, Hubert Humphrey. (Nixon’s impeachment over Watergate caused dismay in the Kremlin, which used dirty tricks and eavesdropped on journalists as a matter of routine). + +In November 1984 the Kremlin tried to stop Ronald Reagan from being re-elected. As part of its active-measures programme, Moscow promoted the slogan “Reagan Means War!” To discredit him, Russia propagated stories about Reagan’s militaristic adventurism, rising tensions among NATO allies, discrimination against ethnic minorities and corruption. In the end, Reagan won a landslide victory, exposing the limits of Soviet power. A student of the Andropov Academy, Vladimir Putin would almost certainly have undergone training in active measures. In a book of interviews, Mr Putin described how he used these techniques against dissidents at home, spoiling and hijacking their events. + +It is hardly surprising that Mr Putin—who used disinformation in his war against Ukraine, who has targeted European countries, including Germany, who uses cyberweapons against his enemies in Russia—should try backing Donald Trump, who ran against establishments of all stripes, by hacking into both parties’ computers but only leaking Democratic e-mails to the media. What is probably more surprising, to Mr Putin at least, is that Mr Trump actually won. Firmly convinced that all elections get rigged one way or another, he might also have been surprised by the government’s inability to fix the vote in Hillary Clinton’s favour. + +But if Russian interference to boost Mr Trump is now beyond doubt, this does not mean that Russia caused his victory. “While the correlation is clear, the causation is not,” says Peter Pomeranzev, an expert on Russia’s disinformation. Had Mr Trump lost the election, Russian active measures would have been deemed no more successful than those of the Soviet KGB in 1984. By blaming Mrs Clinton’s defeat on Russia, her allies risk echoing Mr Putin’s allegations that a wave of protests against his third presidential term in 2012 were the result of an American conspiracy. + +The main reason Mr Putin appears a victor in America as well as in Europe, where nationalism is on the rise, is that he identified right-wing populist movements as potential winners from the start. But it is Mr Trump’s affinity with Mr Putin, rather than Russia’s active measures, that helped him win. As George Kennan, a diplomat, observed in 1946, the ability to rebuff Russia’s disinformation, “depends on health and vigour of our own society. World communism is like a malignant parasite which feeds only on diseased tissue”. There were enough American voters who, like Mr Trump, believed that the country is a “hellhole, and we’re going down fast”. Mr Putin no doubt agrees. + + + +This article appeared in the United States section of the print edition under the headline “Substandard subversion” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21711908-interference-behalf-donald-trump-probably-didnt-change-result-russian/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Oily diplomacy + +Give Rex a chance + +Rex Tillerson, the probable next secretary of state, could be one of the more competent members of Donald Trump’s cabinet + +Dec 17th 2016 + + + +“A DIPLOMAT that happens to be able to drill oil.” That is how Reince Priebus, Donald Trump’s incoming chief of staff, described Rex Tillerson, the boss of ExxonMobil, who was nominated this week as America’s next secretary of state. In fact, Mr Tillerson, 64, is an oil driller through and through, has spent 41 years furthering the ambitions of one of the world’s largest companies, and has sometimes sidelined the American government because he felt ExxonMobil was better able to look after world affairs itself. + +Yet Mr Tillerson also has a reputation for dependability and small-town Texan values that has enabled him to stand up to, and win respect from, some notoriously slippery world leaders. Making someone with no experience of government service secretary of state is a risk. But unusual is better than incompetent. Depending on what his confirmation hearings reveal about his views on Russia when not serving Exxon’s shareholders, and assuming he severs his financial ties to the company, Mr Tillerson could be one of just two or three members of Mr Trump’s cabinet whom it is possible to see serving in a normal administration. + +For a leader of the world’s corporate elite, Mr Tillerson has parochial roots. Born in Wichita Falls, Texas, he grew up as a Boy Scout, went to the University of Texas, and rides horses in a cowboy hat in his spare time. He has worked at ExxonMobil since 1975, never lived for long outside America, and speaks with a drawl. Jack Randall, a friend from university who is also an oil-industry veteran, recounts how Mr Tillerson still spends time after work fixing up the decking on his lakeside home, despite having numerous employees who would do it for him. “He’s a regular guy who has lived the American dream,” he says. “He’s a Texan, an engineer and a Boy Scout. That is where his values come from.” + +Yet as an oilman and ExxonMobil’s chief executive since 2006, he has run operations in some of the most inhospitable parts of the world, from ice-encrusted Sakhalin in the Russian Far East, to poverty-stricken Chad. That has meant dealing with populist strongmen, from Vladimir Putin to Venezuela’s late leader Hugo Chávez, without bargaining away his principles on the importance of markets and the sanctity of oil contracts. + +In a book on ExxonMobil, “Private Empire”, Steve Coll recounts Mr Tillerson’s early dealings with Mr Putin during efforts to rein in an unruly Russian partner, Rosneft, on the Sakhalin development. When Mr Putin offered to write an executive order pushing ahead with the project, Mr Tillerson refused, saying that the Russian president lacked the legal authority to live up to his company’s standards. Though Mr Putin “blew his stack”, he gave in to Mr Tillerson’s demands. + +In a later oil era, in 2011, ExxonMobil and Rosneft struck a deal to develop oil in Russia’s Kara Sea, which Mr Putin said could lead to a whopping $500bn of Arctic co-developments. In 2013 Mr Putin awarded Mr Tillerson Russia’s Order of Friendship. The Arctic deal was scuppered because of American sanctions against Russia, following its annexation of Crimea in 2014, which were opposed by Mr Tillerson. James Henderson, an expert on Russian oil at the Oxford Institute for Energy Studies, says the Kremlin came to respect ExxonMobil under Mr Tillerson because, although it was uncompromising about ensuring all deals were above board, it was also “dependable”. + +Mr Tillerson’s ties to Mr Putin are likely to complicate his confirmation hearings, especially after Russian hackers interfered with America’s presidential election to help Mr Trump. But decades of business in the country mean he is almost bound to understand the way it works better than some of his predecessors at the State Department. Moreover, his defenders are adamant about his integrity. “The chances are better that Mother Teresa was stealing money from her charity than Rex Tillerson will do anything with Putin that is not in the best interests of the United States,” says Mr Randall, the friend from college. + +What is less clear is how he will deal with America’s traditional allies, such as Europe, who fear Russian meddling in Ukraine, for example. His appointment will rekindle suspicions that American diplomacy is about securing oil and other scarce resources. NGOs allege that ExxonMobil has a poor record of promoting human rights in countries where it operates, and has flip-flopped on climate change. + +Yet as well as having an oilman’s resource-hungry mindset, he could also bring useful industry traits to the State Department and to a Trump presidency. Finding and drilling oil requires elaborate modelling—both of underground geologies and messy aboveground geopolitics—to make money over the long-term. Reputedly his engineering background makes him a stickler for evidence-based decision-making. He is also considered “patient and unemotional” on ExxonMobil’s side of the negotiating table. + +Such traits would make him very different from Mr Trump, who lives by the gut. “Rex is not a guy who wets his finger and puts it up in the air to see which way the wind is blowing, and he’ll tell Mr Trump what he thinks,” Mr Randall says. In some respects his opinions differ from Mr Trump, too. Though once a climate-change denier, he now believes mankind has helped cause global warming. This year ExxonMobil applauded the Paris agreement on climate change. In the past he has strongly rebuffed calls (recently supported by Mr Trump) to make America energy independent. With luck, he will not only have the tactical skills to further America’s interests abroad. He will also have the integrity to talk sense into his boss. + +This article appeared in the United States section of the print edition under the headline “Oily diplomacy” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21711926-rex-tillerson-probable-next-secretary-state-could-be-one-more-competent/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Micro-universities + +Some small colleges are finding clever ways to stay open + +About 40% of college students are enrolled in places with fewer than 1,000 people + +Dec 17th 2016 | MARLBORO, VERMONT + + + +VISITORS stand out at Marlboro College’s bucolic campus in the woods of Vermont, but not because they are special or even unexpected. With 190 matriculated students and just a few dozen faculty and staff, everyone knows everyone. The student-faculty ratio is five to one, about the lowest in the country. The college administration has worked hard to stay small: the student population has rarely topped 350. But in the years since its founding after the second world war, Marlboro has often skirted financial ruin. In 1993 it had only a few payrolls left in the bank. It was rescued by a foundation. Today it is looking for ways to save itself and already seeing some success. + +Marlboro is not alone in facing revenue and enrolment pressures. Burlington College (70 students), also in Vermont, shut its doors over the summer. Sweet Briar, a well-regarded women’s college in Virginia, nearly closed to its 245 students last year. A last minute bout of fundraising by alumni saved it, for now. Moody’s, a credit-ratings agency, said in 2015 that the pace of closures and mergers will accelerate and could triple from an average of five per year over the next few years. Dennis Gephardt of Moody’s says closures and mergers will be concentrated among the smallest colleges. + +Part of the problem, at least for small liberal arts institutions, is that parents and would-be students are questioning the value of the liberal arts. They want a solid return, in the form of a well-paying job, for their four-year investment. There are still an awful lot of small places: about 40% of degree-granting colleges have fewer than 1,000 students. But enrolment at these institutions has fallen by more than 5% since 2010, while the student population has increased overall. + +To attract students, some colleges are reducing their sticker price, but this is not sustainable for colleges without healthy endowments. According to the National Association of College and University Business Officers (NACUBO), 49% of independent colleges and universities give discounts, up from 38% a decade ago. + +Alice Brown, a former head of the Appalachian College Association, a network of tiny colleges in the Appalachian Mountains, thinks more must merge or close. The Berklee College of Music (4,371 students) and the Boston Conservatory (730 students) merged in June. Small colleges often share accountants or laboratories already. + +Is there still a place for the tiddlers? “That’s an unequivocal yes,” says Bob Shea of NACUBO, “but do there need to be mergers and acquisitions? That’s an unequivocal yes as well.” Many small colleges serve niche markets, including a large faith-based one. “Many students wouldn’t go to college at all or would be lost in a large one,” says Ms Brown. + +Some tiny colleges rely on donations to save the day. Alumni are concerned about the value of their own degree if the college closes, but donors can grow weary. Marlboro, meanwhile, is using its endowment to offer scholarships to one student from each state in an effort to expand its usual pool from New England and to open up new student pipelines. It saw success straight away. It increased its student population by 6% this academic year, after years of falling enrolment. + +This article appeared in the United States section of the print edition under the headline “Small wonders” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21711929-about-40-college-students-are-enrolled-places-fewer-1000-people-some/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Loggers to the rescue + +In California’s forests, removing small trees leaves water for bigger ones and for dwindling reservoirs + +Cutting is often preferable to burning. The greater cost can be offset by payments from water and hydropower companies + +Dec 17th 2016 | SANTA BARBARA + + + +IN THE early 1900s, an average forested acre in California supported fewer than 50 or so trees. After a century of efforts to fight wildfires, the average has risen to more than 300 (albeit mostly smaller) trees. Some might reckon such growth wonderful, but it is a problem far more serious than, say, the fact that horses can no longer trot through areas where they once could. The extra fuel turns today’s wildfires into infernos hot enough to devastate the landscape, torching even the big older trees that typically survived fires in the old days. Beyond this, the extra trees are worsening California’s driest ever drought. + +“Like too many straws in a drink,” trees suck up groundwater before it can seep into streams that feed reservoirs, says David Edelson of The Nature Conservancy. The project director for the Sierra Nevada range, source of 60% of California’s consumed water, notes that as a warmer climate lengthens the growing season, trees’ thirst will only increase. This has led to a push for large numbers of trees to be cut or burned down. Overgrown forests catch more snow and rain on leaves and needles, where wind and sunlight increase the amount of moisture lost to evaporation. + +To reduce what Tim Murphy, a Forest Service ecologist, considers an excessive number of trees in forests, the service thinned 600 square miles of California’s watershed in the year to October, up from 367 the previous year. By burning or removing about 40% of tree and plant-life in these areas, the Forest Service wants to do more than put extra water in reservoirs. The goal is also to reduce the severity of wildfires and to get water into the bigger trees left standing—more than five years of drought have killed more than 66m trees in California, aerial surveys show. + +Thinning efforts are off to a great start but must accelerate, says Timothy Quinn, head of the Association of California Water Agencies. Five times as much forest should be thinned every year, estimates Roger Bales, a hydrologist at the University of California, Merced. To find out how much extra water a thinned watershed produces, the university has placed sensors in thinned and control plots in the Stanislaus-Tuolumne Experimental Forest north of Yosemite National Park. Depending on landscape and precipitation, thinned areas shed 10-40% more water into streams, Mr Bales estimates. + +More accurate numbers will be available next year. The hope, says Eric Knapp, a Forest Service ecologist in Redding, is that a new thinning technique will prove to produce even more water when flow volumes from next spring’s snowmelt are known. Some plots are not thinned evenly, but rather by clear-cutting gaps with a diameter one or two times the height of surrounding trees. The idea is to clear an area big enough for a good snowpack to form, but small enough for shade to reduce evaporation and extend the melting season. + +California’s governor recently signed a bill that facilitates thinning watersheds. But some environmentalists resist “cutting any tree for any reason”, as the Forest Service’s Mr Murphy puts it. And some think thinning doesn’t produce meaningfully more run-off. That’s the opinion of Chris Frissell of Frissell & Raven Hydrobiological and Landscape Sciences, a consultancy in Polson, Montana. Thinning has become popular in the state, but, he says, it disturbs soil, generating silt that harms aquatic life. + +Clearing trees with fire is cheap if all goes to plan but only makes sense in certain areas. Thinning with big chainsaws on wheels can cost up to $650,000 per square mile. This could be recouped with timber revenue if big trees are felled. But the chainsaws are usually only let loose on smaller trees, so taxpayers must cough up. + +One solution would be to get water utilities or hydropower producers to fund the thinning. AMP Insights, a consultancy which has estimated the value of water flowing out of the Sierra Nevada, reckons the extra flow would defray the cost of removing trees by 20% and, in wet years, by 60% or more. Denver Water agreed in 2010 to pay the Forest Service $16.5m for thinning and other watershed work in the Rocky Mountains. The Forest Service is checking to see where other such “Forests to Faucets” schemes might be set up. + +This article appeared in the United States section of the print edition under the headline “Fetch the chainsaws” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21711930-cutting-often-preferable-burning-greater-cost-can-be-offset-payments/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Crime + +The trial of Dylann Roof + +The perpetrator of a racist massacre faces the jury + +Dec 17th 2016 | CHARLESTON + +The accused + +SCRATCHING his ear, sipping water, sometimes chatting with his defence team, Dylann Roof looks for all the world like an ordinary human being, more sullen adolescent than monster. Yet, almost astonishingly, the slight, pockmarked figure who slouches into his chair in the federal courtroom in Charleston—his face averted from the relatives of his victims—is, by his own admission, the man who killed nine people at the Emanuel African Methodist Episcopal Church on June 17th last year. Mr Roof’s culpability is not in doubt; the harder question, as often with monsters, is how far he reflects broader pathologies in the society that spawned him. + +He has been tried on 33 federal charges because prosecutors rejected his offer to plead guilty in exchange for life imprisonment. Thus far the proceedings may not have bolstered his chances of avoiding a death sentence. The court has heard how, in a delinquent pattern that echoes the online radicalisation of would-be jihadists, his hateful white supremacism was fuelled by an internet search for “black on White crime”. He seems to have completed his own deranged manifesto, in which he described African-Americans as “stupid and violent”, on the afternoon of the atrocity. The jury watched the cold, even flippant confession he made the following day. “Well, I killed them, I guess,” he said. + +The absence of “regret or remorse”, says Andrew Savage, a lawyer for three survivors of the shooting and some of its victims’ relatives, has made some less assertive in their support for a life sentence. Initially, he says, Mr Roof’s age (he is now 22, but looks younger), plus a hunch that he could not have acted entirely alone (as he appears to have done) inclined them to mercy; so did their faith, which informed the superhuman forgiveness many extended in the crime’s immediate aftermath. Still, their stance has challenged advocates of capital punishment, just as Mr Roof’s savagery has challenged its critics. The federal government sought the death penalty, thinks Mr Savage, on the basis that, “If not in this case, when?” (Mr Roof is due to face a separate capital trial in state court, though the outcome of the federal one may obviate it.) + +The grace of the relatives after the tragedy, and subsequent shows of unity from the city at large, suggested that, far from igniting the race war about which Mr Roof fantasied, its effect would ultimately be therapeutic. Outside Mother Emanuel, as the church is known, beside the Christmas wreaths and lights that contrast starkly with its beautiful pale façade, a sign reads: “We thank you for your many acts of kindness”. Yet, in truth, tensions and grievances persist, not least because, on the eve of Mr Roof’s appearance, a deadlocked jury resulted in a mistrial in the case of a white police officer who, in an encounter caught on camera, fatally shot a black man as he ran away. Opinion polls indicate that, in the wake of the church massacre, white South Carolinians have a far rosier view of race relations in the state than do blacks. + +And, although the Confederate flag—with which Mr Roof liked to pose—was removed from the statehouse grounds, it still flies from porches and is emblazoned on pick-up trucks. It was on display, occasionally, at rallies held by the president elect; it is beloved by some members of the newly infamous alt-right movement. Meanwhile, although Mr Roof’s view of American history was morbidly extreme, his conviction that whites are the country’s real victims (“White people are being murdered daily in the streets”), and that black suffering is exaggerated, is hardly unique. As it happens, a planned African-American museum in Charleston aims to address such misconceptions. Perhaps, speculates Michael Moore, the project’s boss, Mr Roof might have acted differently, “if he had a broader sense of the humanity of the people in that room.” + +88 bullets + +The jury was set to consider its verdicts soon after The Economist went to press. The last witness to be called, Polly Sheppard, described how Mr Roof said he would let her live to tell her story. The first, Felicia Sanders, recalled the trickling of her son’s blood as she desperately shielded her granddaughter from the carnage. The second part of the trial, which will determine Mr Roof’s punishment, is expected to begin in January. He has opted to represent himself in that phase, which explains the repeated efforts of his distinguished lawyers to bring up his disrupted home life, and troubled state of mind, while they could. Mr Roof may yet retain them (he previously asked to dispense with his lawyers altogether); but if he sticks to his plan, Mr Savage says his clients will appreciate the chance to look Mr Roof in the eye. + +For their part, the prosecutors traced the steps that culminated in his driving into Charleston with a list of six black churches and magazines loaded with 88 bullets, a number that, to neo-Nazis, symbolises “Heil Hitler”. Intermittently they removed the pistol he used from its evidence bag in the centre of the courtroom. Because he had admitted possession of a narcotic earlier in the year, Mr Roof ought to have been disqualified from buying it. But, owing to a glitch in the FBI’s background-check system—now the subject of civil lawsuits by the survivors and relatives—he was able to. + +In dry testimony that was nevertheless heart-wrenching in its way, and which was central to another of the case’s broader lessons, the manager of the gun store he visited, in April 2015, outlined the process. Since the FBI did not respond within the allotted three-day period, he said, they went ahead with the sale. Most shops would have done the same, he reckoned. Eventually he did receive a call instructing him to turn Mr Roof away. That was on June 29th, 12 days after the slaughter. + +This article appeared in the United States section of the print edition under the headline “Mother courage” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21711910-perpetrator-racist-massacre-faces-jury-trial-dylann-roof/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Lexington + +The Obama way of war + +Our columnist travels with America’s outgoing defence secretary to Afghanistan and Iraq + +Dec 17th 2016 + + + +TO AMERICANS who despise Barack Obama—and even to some who admire him—it is jarring to hear the 44th president refer to himself as commander-in-chief. Mr Obama leaves office with critics convinced that he is a passive observer of a chaotic world. That notion is enthusiastically advanced by Donald Trump, who charges that a soft Obama administration has stupidly—and he has even hinted, treasonously—refused to keep the country safe, notably by attacking Islamic State (IS). + +Mr Trump promises to end nation-building overseas and start spending money on American roads, bridges and airports. He pledges to be more self-interested, obliging feckless allies to pay for their own security. Above all Mr Trump, a skilful storyteller, has a tale to tell patriotic Americans about why the country they love has been fighting terrorism worldwide for 15 years without winning. His story involves elites (and he includes President George W. Bush in this group) who naively toppled autocrats—“foreign regimes that we know nothing about, that we shouldn’t be involved with,” as he puts it—when they should have been hunting down terrorists with pitiless, single-minded violence. + +Mr Trump’s yarns about hand-wringing Mr Obama fire up his supporters, who long to hear that with a more ruthless president in the Oval Office America will instantly become safer. But his tales are a distortion of the real Obama military doctrine. If parts of the world are drenched in bloody, tragic chaos, as in Syria, the softness of the outgoing president is not the cause. + +Mr Obama is no nation-builder. As the years passed he became coldly pragmatic about working with far-from-democratic leaders. He is intently focused on American national interests. Mr Obama broods about possible unintended consequences when he hears calls to intervene. His focus on domestic politics makes him wary of putting American boots on the ground. He has issued strict executive orders about avoiding civilian casualties. But he is no pacifist. Mr Obama is willing to order enemies killed, whether by drone strikes, special forces, local allies or ideally a combination of all three. + +The Obama way of war can be seen with unusual clarity at Qayyarah West, a fortified air base newly risen from the Iraqi desert 35 miles south of Mosul, where as many as 5,000 IS fighters are engaged in brutal combat with Iraqi forces. Lexington visited this base on December 11th with the outgoing defence secretary, Ashton Carter, during a two-week, 25,000-mile farewell tour of the world. “Moon dust” is one American soldier’s description of the fine beige dirt on which the base is built. As a cold winter sun sets, the otherworldly atmosphere is enhanced by freshly installed concrete blast walls that block all views of the country beyond. “Q-West”, as the Pentagon calls it, was IS-held territory as recently as July. Back then it was a “dot on the map”, as Mr Carter reminds troops there, spotted as a potential base for co-ordinating the fight in Mosul. To repair a runway blown up by IS fighters American engineers trucked in 1.9m pounds of cement, welcoming their first fixed-wing aeroplane in late October. + +The base betrays the casualty aversion of the Obama doctrine. Mr Carter and his party are driven around within the base in mine-proof armoured vehicles. Just under 900 coalition troops, most of them American, sleep in two-man bunks made of thick concrete slabs, within tents made a bit less austere by sporting banners and children’s drawings and, outside, a Christmas tree made of green webbing round a pyramid of heavy chains. Behind another ring of blast walls an anonymous tent houses a Combined Joint Operations Centre, manned by Iraqi officers and earnest American troops with laptops at long plywood desks. When journalists are not present, large screens show live streaming video from unmanned aerial vehicles and other intelligence platforms. A whiteboard bears the label “Open Strike Requests”. + +A clinical calm conceals a machine for delivering violence from the sky. That involves some risks for American advisers near the front lines, who can call in air strikes and artillery fire and offer guidance on ground movements. It involves grave risks for Iraqis fighting block-by-block, who—according to American officers—have so far taken back between a quarter and a third of eastern Mosul and killed or seriously wounded 2,000 IS fighters. Pinning medals on soldiers and black-clad members of the Iraqi Counter-Terrorism Service, an elite unit, Mr Carter notes that they have braved snipers, mortar fire and car-borne improvised explosive devices. Asked when Mosul might fall, he hedges: “It’s a war: the answer is, as soon as possible.” + +No we can’t + +When Mr Trump denounces the waste of hundreds of billions of dollars in Iraq and Afghanistan on ambitious nation-building, he is both correct and out of date. Interviewed on December 9th, just before visiting Afghanistan, Mr Carter describes today’s narrow American objectives for that unhappy country: “To make sure that a 9/11 never emerges again from Afghanistan and to have a stable counter-terrorism platform there.” The Obama doctrine also includes pressure on others to take more of the burden. If Americans substitute for local forces, Mr Carter argues, that might cause local people to “sit on the sidelines or even fight the coalition”. Sending Americans as infantry among foreign populations squanders America’s advantages in air power, intelligence-gathering and special forces. Finally, he says, it invites the question of who will govern territory taken back from IS. + +President Trump may be less squeamish than his predecessor. Expect him to downplay the importance of civilian casualties, for instance. Mr Trump says he plans to work with Russia against IS, even though to date Russian talk of fighting terrorists is mostly cover for backing the Assad regime in the Syrian civil war. But Mr Obama’s military doctrine is already unsentimental. In that, the two men may be more similar than they care to admit. + +This article appeared in the United States section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21711884-our-columnist-travels-americas-outgoing-defence-secretary-afghanistan-and-iraq/print + + + + + +上一项 文章 章节 下一项 + + + + + +The Americas + + + + +Canada’s climate deal: Walking the walk + +Bello: Viva la ignorancia! + + + + + +文章 章节 下一项 + +Walking the walk + +Canada’s prime minister secures a deal for a national carbon price + +He may need more carrots to keep the provinces on his side + +Dec 17th 2016 | OTTAWA + + + +TALK is cheap. Since 1997 Canada has signed five global climate deals pledging to lower its greenhouse-gas emissions. However, it has never implemented a national climate plan. Instead, its ten provinces and three territories have mostly been free to do their own thing. + +Provinces rich in hydropower, such as Quebec and Ontario, made big strides, and British Columbia (BC) even introduced a carbon tax. However, big fossil-fuel producers such as Alberta sat on their hands. The results were predictably disappointing. In 1990, the base year for the Kyoto accord, national emissions were 613m tonnes. By 2014 they had risen to 732m tonnes, the world’s ninth-highest total. Canada withdrew from Kyoto in 2011 after deciding that its targets were unattainable. + +But following nearly two decades of inaction, Canada may have reached a turning point. On December 9th Justin Trudeau, the prime minister, and 11 of 13 provincial and territorial leaders announced that they had agreed on a national climate framework. The deal combines disparate provincial efforts, and overlays them with two federal imperatives: by 2018 each province must have in place either a carbon tax or a cap-and-trade scheme that puts a minimum price on carbon of C$10 ($7.63) a tonne, rising to C$50 a tonne by 2022; and by 2030 coal will no longer be used to generate electricity. If implemented, the plan would put the country on track to hit its 2030 target, set out in 2015 in the Paris accord, of 523m tonnes. + +The most immediate reason for Canada’s about-face was Mr Trudeau’s election. His Conservative predecessor, Stephen Harper, was a big fan of fossil fuels. By the 2015 election, his attitude proved out of step with public opinion. Mr Trudeau made tackling climate change a central plank of the Liberal Party’s platform, and was rewarded with a surge in turnout from young green voters. This October two out of three respondents told Abacus, a pollster, that Mr Trudeau was on the right track in promising a national carbon price. + +However, Canada is highly decentralised, and no national plan would be politically viable without the assent of the provinces—many of which rely on polluting industries. One stroke of luck for Mr Trudeau was that in 2015 Alberta, home of the carbon-belching tar-sands oil patch, elected a premier from the left-wing New Democratic Party, ending 44 years of unbroken rule by the centre-right Progressive Conservatives. That removed what was likely to be a strong source of opposition. + + + +Even then, it took Mr Trudeau a year to herd the fractious premiers towards the deal. Both BC and Alberta had longstanding requests for the federal government to approve oil and gas projects, including one to export liquefied natural gas from northern BC, and another to transport Albertan crude to a port near Vancouver. The public favours these initiatives: three out of four respondents to the Abacus poll said they would accept more approvals. However, environmentalists and indigenous groups threatened to block construction. + +Even though the new infrastructure would yield more fossil-fuel production and carbon emissions, Mr Trudeau has authorised three big projects. According to Paul Boothe, a former deputy environment minister, that decision may well have brought Alberta and BC on board. “They needed to be assured they can develop their resources,” he says. “It was a very important part of the political calculus.” Mr Trudeau also allowed Nova Scotia to continue burning coal for electricity after 2030, so long as it cuts other emissions by an offsetting amount. + +Two provinces are still holding out. Manitoba is expected to join, assuming it can extract a satisfactory increase in health-care funding. But even though provincial governments are free to spend the revenue raised by a carbon tax or emissions-credit sales however they wish, Brad Wall, the premier of Saskatchewan, remains unconvinced. He fears that a carbon price will hinder the energy, mining and agriculture industries, and particularly harm companies that compete with American firms that do not have to pay for their emissions. He is also concerned that Donald Trump may reverse Barack Obama’s environmental efforts, and argues that Canada’s climate policy should not get too far ahead of its largest trading partner’s. + +Mr Trudeau could probably trudge ahead without Saskatchewan, which generates just 4% of Canada’s GDP. However, other provinces would surely look askance if Saskatchewan were seen to be free-riding on their sacrifices. And any more defections might prove fatal. For now, the federal government has only secured handshake commitments from the premiers, leaving their successors free to reverse course. BC will hold an election in May. Ontario, Quebec, New Brunswick and Nova Scotia all follow in 2018. Although the federal government says it has the right to impose a carbon tax unilaterally on recalcitrant or backsliding provinces, that power has not been tested in court. + +For now, nothing besides the fear of a flip-flop binds the premiers to their word. So Mr Trudeau will have to work fast to fill in details that require provincial agreement, and to encourage the provinces to pass the necessary laws promptly. To grease the wheels, the federal government is offering at least C$49bn in green handouts, for everything from public transport to helping provinces link their electricity grids. It is also deciding how much money to give the provinces for their health-care systems, an unrelated issue that might sway wavering premiers. Mr Trudeau’s charm is formidable. But it could take some old-fashioned bribery to turn his vision of a green Canada into a reality. + +This article appeared in the The Americas section of the print edition under the headline “Walking the walk” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21711890-he-may-need-more-carrots-keep-provinces-his-side-canadas-prime-minister-secures-deal/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Bello + +A small act of national suicide in Peru + +Viva la ignorancia! + +Dec 17th 2016 + + + +FOR most of this century, Peru’s economy has shone: income per person has doubled in the past dozen years. But education failed to keep up. In 2012 Peru ranked last among the 65 countries that took part in the Programme for International Student Assessment (PISA), which tests the reading, maths and science proficiency of 15-year-olds. + +Fortunately, Peru then found an outstanding education minister. Jaime Saavedra, an economist whose mother was a teacher, spent ten years at the World Bank, rising to be vice-president for poverty reduction. Appointed three years ago to the education portfolio, he was the only minister to keep his job when Pedro Pablo Kuczynski replaced Ollanta Humala as Peru’s president in July. He has generalised a previous pilot plan to link teachers’ pay to performance, overhauled teacher training and school management and begun a crash programme of repairing dilapidated school buildings. He has also championed a law passed in 2014, which for the first time subjected universities to minimum standards for probity and educational outcomes. + +Mr Saavedra’s stewardship has brought results. Performance in national tests has risen sharply. The latest PISA figures, which were released on December 6th, confirmed this trend: Peru was the fastest improver in Latin America and the fourth-fastest in the world. Far from celebrating this achievement, the following day the opposition majority in Peru’s Congress subjected Mr Saavedra to an 11-hour interrogation, conducted with the manners of a playground bully. On December 15th it was due to vote to sack him. + +The ostensible reasons were a delay in preparations for the Pan-American games to be held in Lima in 2019 (the education ministry handles sport) and alleged corruption in the purchase of computers by the ministry. Mr Saavedra convincingly denied knowledge of these problems and responsibility for them. So why is Popular Force, the main opposition party, so hostile to him? Many commentators ascribe this to the links several of its legislators have to universities that are lucrative businesses but offer poor value to students and face new scrutiny under the law regulating them (though that also applies to some pro-government lawmakers). + +The congressional hearing was remarkable for its mixture of ignorance and bad faith. One legislator claimed that the PISA tests, which are organised by the OECD, a club of mainly rich countries, were a “smokescreen” and a “business” paid for by Mr Saavedra’s ministry. Others said the PISA tests were “adulterated” or an exercise in psychological warfare. This is bosh: even the harshest serious critics of PISA accept that it is properly conducted. + +The censure of his best minister on such spurious grounds is a frontal challenge to Mr Kuczynski, less than five months after he took office. It lays bare the weakness of his mandate. He beat Keiko Fujimori, Popular Force’s leader, by just 50,000 votes out of 18m, after her campaign was hit by a last-minute scandal. Her surprise defeat stung; she has not talked to Mr Kuczynski since the election. He only reached the run-off after two other candidates were disqualified on questionable grounds. His party has just 17 of the 130 seats in Congress, while Popular Force has 72. + +Mr Kuczynski could have turned Mr Saavedra’s future into an issue of confidence in the cabinet as a whole. Lose two such votes, and Peru’s constitution gives the president the right to dissolve Congress and call a fresh legislative election. But this has never been tested, and Popular Force hinted that it would hit back by declaring the presidency vacant. On December 13th Mr Kuczynski announced that he had rejected this course, calling for dialogue with the opposition. He could seek a coalition with Popular Force, inviting them to take cabinet posts. But that would appal many of his own supporters, who voted for him purely to stop Ms Fujimori, whose father controversially ruled Peru as an autocrat in the 1990s and is serving jail sentences for corruption. The alternative may be to submit to years of harassment from Congress by an opposition intent on showing its power. + +As for Mr Saavedra, his likely departure illustrates the vicious circle that makes sustaining good policies so difficult in Latin American democracies. Popular Force has too many chancers who see a state that long failed to provide proper public services as a vein to be mined for private profit. That the party represents so many Peruvians is in part an indictment of the country’s educational backwardness. Better education is no guarantee of a better-quality democracy, but it certainly helps. And it is essential if Peru is ever to grow truly prosperous. + +This article appeared in the The Americas section of the print edition under the headline “Viva la ignorancia!” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21711888-viva-la-ignorancia-small-act-national-suicide-peru/print + + + + + +上一项 文章 章节 下一项 + + + + + +Asia + + + + +Democracy in India: The do-nothing Lok Sabha + +Taiwanese politics: From riches to rags + +The economy of Turkmenistan: A stan, a plan, a cabal + +Race relations in Singapore: With reservations + +Rodrigo Duterte: A liar or a killer + +Banyan: The daughter in the Blue House + + + + + +文章 章节 下一项 + +The do-nothing Lok Sabha + +Everyone is talking about demonetisation in India—except parliament + +The prime minister has yet to answer questions about a huge policy bungle + +Dec 17th 2016 | DELHI + + + +EARLY in November India’s government took a momentous decision by abruptly voiding 86% of the cash in circulation. The effects have been painful: businesses cannot pay workers or suppliers; day-long queues stretch outside banks as citizens jostle for new notes that cannot be printed fast enough to meet demand. The government said the trouble would be over by year’s end. It is clear now that the hurt will last far longer. Few in India can talk about anything else—yet India’s parliament has barely managed to discuss it at all. + +In any other parliamentary democracy, such a glaring bungle would have prompted a strong legislative response. To cause a sharp slowdown in a perfectly healthy economy would invite fierce questions and perhaps a vote of no confidence. Governments have fallen for lesser goofs. + +But in the world’s biggest democracy, things are different. True, India’s bicameral parliament did convene in mid-November for its month-long winter session, and opposition MPs loudly attacked “demonetisation”. Yet nothing like a formal parliamentary debate has taken place. Narendra Modi, the prime minister, has neither explained his policy nor faced questions on it in either the 545-member Lok Sabha or in the 245-seat upper house, the Rajya Sabha. + +In fact, only two minor bills have been debated and passed in the parliamentary session that is due to conclude on December 16th. Instead, MPs spent much of their time shouting at each other about demonetisation, obliging the speakers of both houses to suspend proceedings repeatedly. Both Mr Modi and the most prominent opposition leader, Rahul Gandhi, who is vice-president of the Congress Party, comically chorused charges that neither one was allowing the other to speak, even as their parties traded blame over the legislative logjam. And to make matters even worse, both the government and its opponents took their fight outside parliament, mutually leaking news stories that appeared to implicate their opponents in corruption. + + + +Sadly, the parliament’s failure to address such a crucial issue is not unusual. In other years, entire month-long sessions have passed with no business getting done at all. Mr Modi’s Bharatiya Janata Party (BJP) blames its foes for resorting to “disruption”, but when in opposition it did exactly the same thing. And whereas rowdy parliaments are common enough, an additional problem with India’s is that its two houses meet only rarely. In the 1950s, soon after independence, their three annual sessions typically added up to 140 days a year, not unlike the parliaments of, say, Britain or Canada. The average is now closer to 60 (see chart). + +India’s many state legislatures are even lazier: most of them meet for fewer than 30 days a year. The assembly in one state, Haryana, met for just 12 days on average in 2011-2015, says M.R. Madhavan, the president of PRS Legislative Research, a privately funded watchdog in Delhi. Haryana’s debates are so perfunctory that its legislators managed to pass 14 bills in just 90 minutes at one point this year. + +There are many reasons for the creakiness of India’s democratic institutions. One of them is a constitution that puts more power in the hands of executive and judicial branches than in other democracies, where legislatures tend to be more powerful. It is no coincidence that whereas America’s Congress grandly occupies Capitol Hill, the palatial residence of India’s figurehead president, built for a British viceroy, looks down from the hill it shares with the main ministries upon the lowly houses of parliament (pictured). + +As in the days of the Raj, it is India’s government that summons parliament and determines how many days it will sit. When it is not in session, the government can pass ordinances that have the force of law, which provides an incentive to keep MPs idle. Parliament must approve ordinances within six months, but governments can sometimes get around this. Four times Mr Modi’s government has renewed an ordinance perpetuating the confiscation of “enemy property”, in spite of opposition from the Rajya Sabha and even though Indian citizens have won title to such inherited properties in court. Indian governments can also sign foreign treaties without parliamentary approval. + +The rules of the parliament itself diminish its democratic role. Prime ministers are under no obligation to answer questions themselves; they can delegate someone else. Unusually, too, a constitutional amendment from the 1980s gives immense power to party whips: it provides that MPs who vote against their own party may lose their seat. “Party leaders love the anti-defection rule,” says Mr Madhavan, “but it means MPs have no choice but to follow orders—they represent neither their own conscience nor constituents.” + +Shashi Tharoor, a Congress MP, says the rule makes sense when weak coalition governments are trying to hold together, but is counterproductive when, as now, the ruling party has a strong outright majority. “I have always argued the first priority is to represent voters,” says Mr Tharoor, “but there are many MPs who see their job as performers in a theatre, since the outcome of voting is anyway preordained.” + +In the rumpus over demonetisation, the BJP repeatedly rejected the opposition’s demand that a debate should be held with Mr Modi present and under rules that require a vote. That may have saved Mr Modi embarrassment, but it has pushed back a crowded legislative agenda, including debate over how to apply a unified sales tax whose passage the BJP had hailed as its biggest achievement of the previous parliamentary session. + +And how was that important bit of legislation passed? One jaded, neutral MP says it was a combination of two things. “We functioned well last session because Mr Modi got off his high horse, and also because some opposition people were persuaded it was in their interest to get on board.” The persuasion, it seems, was a whiff of scandal such as the tales of corruption that are now surfacing. + +This article appeared in the Asia section of the print edition under the headline “The do-nothing Lok Sabha” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21711932-prime-minister-has-yet-answer-questions-about-huge-policy-bungle-everyone-talking-about/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +From riches to rags + +Taiwan’s Kuomintang party is broke and adrift + +A new law has allowed the government to freeze its assets, leaving it unable to pay staff + +Dec 17th 2016 | TAIPEI + +Patrimony or party money? + +THE Kuomintang (KMT) was once reputed to be among the world’s richest political parties. Its leaders fled mainland China in 1949 with shiploads of loot, including an estimated 138 tonnes of gold and the finest treasures of Beijing’s Forbidden City (see picture). The party then absorbed state property and other government assets that had been handed over by Taiwan’s departing Japanese colonial administrators in 1945. During the Kuomintang’s long single-party rule, which lasted until 1987, it amassed a vast business empire, complete with banks and television stations. So the fact that it is laying off 428 of its 738 employees for lack of money to pay them is, to say the least, a reversal. + +At elections in January the independence-minded Democratic Progressive Party (DPP) won a majority in Taiwan’s parliament for the first time, as well as the presidency. The DPP, naturally, thinks the KMT’s wealth gives it an unfair advantage in elections. Its staff, before the lay-offs, was five times bigger than the DPP’s. Moreover, the DPP considers the KMT’s wealth illegitimate, in that it stems from the party’s unfettered authority and the blurring of state and party assets during Taiwan’s 40-year dictatorship. Most of the KMT’s assets, the DPP believes, should be returned to the state, or in some cases to people or companies from which they were expropriated. + +In July the DPP passed a law that assumes that all the KMT’s property is ill-gotten, bar membership fees, donations and the funding political parties receive from the government. The law allows the government to freeze the KMT’s assets while a committee assesses whether the party is the rightful owner, and to seize them if it judges otherwise. The KMT will only be able to reclaim assets it can prove it obtained legitimately. + +In late November the committee decided that the KMT should hand over two big holding companies, worth NT$15.6bn ($490m). One of them owns the party’s headquarters. In September, it had already frozen the party’s bank accounts, after KMT officials attempted to withdraw NT$520m. To pay staff in September and October, the KMT’s leader, Hung Hsiu-chu, was forced to take a personal loan of NT$90m. Half came from the ageing mother of Terry Gou, who heads Foxconn, the world’s largest contract manufacturer of electronic goods (it makes iPhones, among other things) and half from an anonymous donor. The KMT, which argues that the committee is unconstitutional, found itself in the humiliating position of begging it to release some funds so that the party could pay taxes, among other things. + +At the end of November the committee relinquished just enough money to allow the KMT to provide the severance pay required to lay off more than half its staff. The party has launched a frantic fund-raising drive among its 300,000-odd members. It says the DPP is on a politically motivated “witch hunt”; it is attempting to have the confiscations overturned in the courts. + +But even the KMT concedes that its wealth is doing it more harm than good and that it needs to make amends for the way it enriched itself. A spokesman says it would consider making donations to charity as a form of restitution. Polling suggests that a little over half of Taiwanese see the new law as justified; only a third see it as a political ploy. + +The KMT is out of step with voters in other respects, too. As part of its fund-raising drive, it is offering donors a copy of the original registration form of its forebear, the Chinese Revolutionary Party, founded by Sun Yat-sen in 1914. Such gestures do not resonate with most ordinary Taiwanese, particularly the young, who increasingly feel they have a unique Taiwanese identity that is distinct from the rest of China. For much the same reason, the KMT is struggling to attract young leaders, for whom its Chinese roots do not appeal. Ms Hung, during the presidential election campaign, had talked about eventual reunification with China. Her stance was so abhorrent to most voters that the KMT dumped her as its candidate. The KMT says its lack of funds is preventing it from acting as a proper opposition and monitoring the conduct of the government. But that may not be the only problem. + +This article appeared in the Asia section of the print edition under the headline “From riches to rags” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21711925-new-law-has-allowed-government-freeze-its-assets-leaving-it-unable-pay-staff-taiwans/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +A stan, a plan, a cabal + +Shrinking exports spell trouble for Turkmenistan + +But the authoritarian president pins his hopes on a “Turkmen Las Vegas” + +Dec 17th 2016 + + + +WHEN the price of natural gas was high, Turkmenistan raked in $10bn a year from exports—a tidy sum for a country of 5m people. Most of it went on the grandiose schemes of Gurbanguly Berdymukhammedov, the authoritarian president and self-proclaimed “Protector”, or was distributed to his cronies. But the economy nonetheless grew at an average annual rate of 11% between 2010 and 2014, according to official statistics. + +The price of natural gas has since halved, however, with dire consequences. Gas accounted for a quarter of GDP and half of all government revenue. The low price means the economy has slowed markedly (see chart), and the budget has swung from a surplus of nearly 10% of GDP in 2012 to a projected deficit of 3% this year. Dwindling foreign-exchange reserves equate to just nine months of imports. + +For ordinary people, life is getting tougher. The government has raised the prices of subsidised electricity, gas and water. The devaluation of the manat, the currency, has pushed up already-high inflation: food prices rose by 28% in 2015. There are shortages of basic goods, such as flour, in some provinces. Bosses at state-owned firms, which dominate the economy, have ordered mass lay-offs. Even farming is state-controlled. Foreign analysts estimate that as many as 60% of workers are in effect unemployed. For many of those who do still have jobs, wages are said to be months in arrears. + + + +Recent sackings of high-level government officials suggest that the president is trying to deflect growing public frustration over the deteriorating state of the economy. He also continues to foster a cult of personality: he has added books he claims to have written to the national curriculum, for example, and erected a gold statue of himself in the middle of the capital, Ashgabat, after dismantling one put up by his predecessor. Although widespread unrest is unlikely—Turkmenistan is a police state—Mr Berdymukhammedov doubtless wants to restore at least a semblance of economic stability before the next stage-managed election in February. (In the most recent election, in 2012, he ran against six other candidates, but still managed to attract 97% of the vote.) + + + +Stabilising the economy will be difficult. Russia, which once imported 40bn cubic metres of Turkmenistani gas a year, called off all purchases in January. The lifting of Western economic sanctions against Iran, another important buyer of the country’s gas, might allow it to develop more of its own vast gasfields, and thus import less. Unhelpful or unstable neighbours block most export routes (see map), leaving China as the only other customer for Turkmenistan’s gas. But it is uncertain how much cash it earns from those sales: much of the gas it sends to China serves as payment in kind for billions of dollars in loans it has received since 2009. + +Mr Berdymukhammedov’s answer is to develop a different industry: tourism. In September a new, falcon-shaped airport opened in Ashgabat. It reportedly cost $2.4bn to build and is the largest in Central Asia, with a capacity of 17m passengers a year. The government is also spending $5bn on a marble-clad sports complex that will host the Asian Indoor and Martial Arts Games next year. The Avaza region in the west is being transformed into a “Turkmen Las Vegas”, replete with big casino resorts, according to the foreign ministry. + +The Central Asian despotate makes an unlikely tourist magnet. It has one of the most restrictive visa policies in the world. Those who manage to obtain a tourist visa must still hire a guide, who doubles as a government minder. There is not much in the way of spectacular ruins, pristine beaches or pulsing nightlife. There is no shortage of spectacular white elephants, however. + +This article appeared in the Asia section of the print edition under the headline “A stan, a plan, a cabal” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21711943-authoritarian-president-pins-his-hopes-turkmen-las-vegas-shrinking-exports-spell/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +With reservations + +Singapore expands its paternalistic policy on race + +The president will now be chosen partly on racial criteria + +Dec 17th 2016 | SINGAPORE + +The old way of ensuring racial harmony + +ON A side street in the centre of Singapore, a Muslim-American lawyer beats his wife bloody, only to be treated to rapturous applause. The lawyer is Amir Kapoor, the central character in Ayad Akhtar’s play “Disgraced”, which recently completed a run at the Singapore Repertory Theatre (SRT). The play centres on a heated argument about identity, assimilation and stereotypes among Amir, his white wife and two friends, an African-American lawyer and a Jewish art dealer. + +Though Mr Akhtar’s play has been performed around the world, it was surprising to see it in Singapore, where the government has long been touchy about race and religion. Around 74% of Singaporeans are of Chinese ethnicity, 13% Malay, 9% Indian and the rest “other”. The government sees the country’s laudably harmonious multiculturalism as fragile, to be nurtured and guarded by policies such as ethnic quotas in housing, guaranteed minority-group representation in parliament and limits on free speech. + +“Wounding the religious or racial feelings of any person” and “promoting enmity between different groups on the ground of religion or race” are both punishable by up to three years’ imprisonment. On Racial Harmony Day, observed every July 21st since 1997 in commemoration of a deadly communal riot in 1964, students come to school in their traditional ethnic dress and try each other’s food. During this year’s celebration Lee Hsien Loong, the prime minister, cautioned Singaporeans against taking good race relations for granted. + +Gaurav Kripalani, who played Amir and is the SRT’s artistic director, believes that even five years ago Singapore’s Media Development Authority (MDA), which regulates theatres—the existence of such a government agency is telling—would not have allowed “Disgraced” to be performed. Its approval this year came with two conditions: only people over 18 could watch the play, and the actors had to host a discussion of its themes after the show. Although the discussion was voluntary, most people stayed, and the conversation was lively. On a recent night one audience member castigated the play for being racist, while another praised it for “talking about things most people don’t really say out loud”. Mr Kripalani, a native Singaporean, believes these discussions and the MDA’s approval of the play show that “we are growing up.” + +But Singapore’s paternalism has not gone away. In early November the government announced that only ethnic Malays would be permitted to run for president next year. The constitution will be amended to mandate that presidential elections be reserved for members of a certain ethnic group if nobody from that group has served as president for the past five terms. + +Until 1993 parliament chose the president—a largely ceremonial post. Since Singapore began electing its presidents directly, two Chinese-Singaporeans and one Indian-Singaporean have served. The last Malay president was Singapore’s first, Yusof Ishak, who held office from 1965 to 1970. Possible candidates in next year’s election, which must be held before August, include Halimah Yacob and Abdullah Tarmugi, the current and previous Speakers of Parliament. Mr Lee has said the move will ensure that every citizen will “know that someone of his community can become president and in fact, from time to time, does become president”. + +Yet some Malays have decried what they see as shallow tokenism. Others have noted that the rule bars Tan Cheng Bock, a former minister who is critical of the government and nearly won the previous presidential race, from running (he is Chinese). A spokesman for the government has dismissed the idea that such a base motive played any part in its decision as “factually false”. + +Kenneth Paul Tan of the National University of Singapore sees a simpler explanation: the bleak realism of Singapore’s government, which believes that “racial feelings are such that you have to design things around them, rather than trying to transform them.” Singapore’s government may trust its citizens to analyse racial stereotypes in the comfort of a theatre, but the ballot box is another story. + +Condemning such an approach as patronising or illiberal is easy. Condemning it as ineffective—particularly in comparison with Malaysia, Singapore’s neighbour, from which it split in 1965 and which is racked by toxic racial and religious politics—is much harder. + +This article appeared in the Asia section of the print edition under the headline “With reservations” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21711939-president-will-now-be-chosen-partly-racial-criteria-singapore-expands-its-paternalistic/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +A liar or a killer + +The president of the Philippines boasts about personally killing drug suspects + +And Rodrigo Duterte is in charge of the Philippine police + +Dec 17th 2016 | SINGAPORE + +The president wants the opposite + +THE tough-talking president of the Philippines, Rodrigo Duterte, boasts of killing people, ordering executions or wanting to kill someone about as often as Donald Trump boasts of being rich. But as with Mr Trump, it is hard to know how much to trust Mr Duterte’s boasts. At best, that makes the boss of the Philippines’ police and prosecutors not only a liar, but a cheerleader for extra-judicial killings. At worst, it makes him a criminal who should be in prison, not the presidential palace. + +During the many years Mr Duterte was mayor of Davao, the biggest city in the southern part of the country, a vigilante group known as the Davao Death Squad gunned down drug suspects and others whom the gunmen thought were criminals. Mr Duterte has at times seemed to admit involvement in the group and at others denied its existence. In September a former member of the outfit testified to a congressional committee that, as mayor of Davao, Mr Duterte had ordered him and others to kill. Mr Duterte, through a spokesman, denied the accusation. + +As a candidate, Mr Duterte promised to “end crime” within six months of taking office by tossing the bodies of criminals into Manila Bay to fatten the fish—a vow so swaggering that it seemed comical at the time. Yet since he became president in June, around 6,000 suspected drug dealers and users have in fact been killed without the benefit of a trial. He has also threatened to kill suspects’ lawyers and human-rights advocates who oppose his bloody but popular war on drugs. + +This week he crossed a new Rubicon: he admitted to having killed people himself. “In Davao I used to do it personally,” he told a group of businessmen, “just to show the guys if I can do it, why can’t you?...I was really looking for a confrontation so I could kill.” + +Did he really kill anyone? Who can say? Just a few hours before this admission, he protested, “I am not a killer.” Mr Duterte’s spokesman has grown adept at walking back or reinterpreting his Grand Guignol statements. + +Even if Mr Duterte has killed suspected criminals, would anyone dare bring charges against him? It is unlikely. No prosecutor wants to find himself suddenly out of office, missing or bobbing lifelessly in Manila Bay. + +This article appeared in the Asia section of the print edition under the headline “A liar or a killer” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21711935-and-rodrigo-duterte-charge-philippine-police-president-philippines-boasts/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Banyan + +South Korea’s president fights impeachment and other demons + +If she has to leave the presidential palace, it will not be the first time + +Dec 17th 2016 + + + +OVER the past two months, as the weekly candlelit protests along Sejongno, Seoul’s main boulevard, swelled from a few thousand participants to 2m, the calls bouncing off the high-rises for Park Geun-hye to step down are said to have become audible even in the Blue House, the president’s official residence and office, a short distance to the north, where Ms Park had cloistered herself away. The protests look set to continue, despite Ms Park’s impeachment by the National Assembly on December 9th. The Constitutional Court has six months to rule on her fate. While she waits, Ms Park has been stripped of her powers. But the protesters will not be satisfied until she is gone for good. + +Aspects of Ms Park’s downfall verge on soap opera. The president, by her own admission, has long been close to a woman, Choi Soon-sil, who seems to have dictated or at the least influenced her decisions on everything from handbags to affairs of state. Ms Choi has been indicted on charges of extortion, abuse of power and possession of classified documents. Of particular outrage to ordinary Koreans are accusations that she secured educational preferment for her daughter and that she held an almost Rasputin-like power over the president. + +Perhaps none of this would have come into the open had not Ms Choi fallen out with a toyboy over his inattentiveness to her daughter’s puppy. Ms Choi, he claims, arrogantly upbraided him for heading off to play golf, leaving the puppy alone. Embittered, he began collecting evidence against her. + +The president’s downfall has been swift and spectacular. But for all the jubilation on Seoul’s streets—the protests, after all, brought on the impeachment—there is something sobering in Ms Park’s predicament. Her story encompasses all the elements of Greek tragedy, including the downfall and suffering of a flawed but in many ways admirable person. The only element that is missing is the pity of the audience. + +It is no coincidence that the Blue House, whose walls are now witness to Ms Park’s despair, was also her childhood home. In 1961, when she was nine, her father, Park Chung-hee, an officer trained in the Imperial Japanese Army, seized power in a coup, ending a short-lived period of democratic rule. His strongman presidency ushered in a period of breakneck growth and development, but also harsh working conditions in South Korean sweatshops and increasing repression by the state. + +In 1974 a North Korean sympathiser failed to assassinate the dictator but shot and killed his wife, Yuk Young-soo. Motherless, Ms Park became the Blue House’s first lady, accompanying her father during official engagements. Five years later he too was assassinated, over a meal of whisky, sliced beef and kimchi, by his intelligence chief, Kim Jae-gyu. That was when she first left the Blue House, which she will have to do again, perhaps sooner than she expected. + +Blue period + +It was after Yuk’s death that a vulnerable Ms Park fell under the sway of a cult leader—part shaman, part pseudo-evangelist—called Choi Tae-min. He seems to have convinced Ms Park that he could contact her late mother. Kim Jae-gyu claimed at his trial that one of his motives for killing the president was concern about Choi’s hold over Ms Park. Choi Soon-sil, now in jail awaiting trial, is Choi Tae-min’s daughter, and has retained his influence. + +Loneliness opens up chasms. At 64, Ms Park has never married. She is estranged from her younger sister and brother—so as to be immune to nepotism, she has said. She long relied on courtiers, mainly yes-men who had advised her father, but they are now trickling away—and three of her close aides have been indicted for corruption and related offences. She last met a foreign dignitary more than a month ago. She is said to eat dinner alone, a dish of self-pity and despair. “In my life’s scale,” she wrote in her autobiography in 1993, “the worthwhile times have never outweighed painful ones.” + +Duty more than desire seems to have propelled her bid for the Blue House. In the words of a former aide, “South Korea was her country, built by her father. The Blue House was her home. And the presidency was her family job.” To Ms Park’s critics, it is all of a piece: she is imperial, aloof and out of touch. This first hit a public nerve more than two years ago, when the president disappeared from view for seven hours on the day of a national disaster, the sinking of a ferry, the Sewol, in which 300 people died, many of them schoolchildren. One of the theories aired in recent days—and only partially denied by the Blue House—was that she spent an hour and a half of that period getting her hair done. + +South Koreans have fought hard and spilled much blood for their democracy. There have been several spells of tumult since the second world war. This one, admirably, is ending without violence. Many, perhaps most, of Seoul’s protesters sense a system, of education and employment, unfairly rigged against them, and of a ruler who has only reinforced the inequities. Those are sentiments that Western fans of individualism and freedom would easily recognise. + +Harder to grasp, but nonetheless essential, is the disappointment that many other, particularly older, South Koreans feel. They voted for Ms Park because her presidency to them offered to reinstate an older and more certain Korean hierarchy, emblematic of her father’s rule, in which everyone had their place in an organic whole—a hierarchy without shame. In this Korean imagining, which the government avidly propagates in North Korea, the leader is the parent-in-chief, whose virtues define the nation. Ms Park never became that parent-in-chief—a matter of glee in the North’s propaganda and a source of great shame to South Koreans who backed her. It was always a tall order. Surrounded by the photographs and relics of her parents, she never could grow out of the predicament of being the lonely child. + +This article appeared in the Asia section of the print edition under the headline “The daughter in the Blue House” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21711889-if-she-has-leave-presidential-palace-it-will-not-be-first-time-south-koreas-president/print + + + + + +上一项 文章 章节 下一项 + + + + + +China + + + + +The one-China policy: Caught in the middle + +Hong Kong’s leadership: Any colour, as long as it’s red + + + + + +文章 章节 下一项 + +Caught in the middle + +Taiwan fears becoming Donald Trump’s bargaining chip + +China worries about the president-elect, too + +Dec 17th 2016 | BEIJING AND TAIPEI + + + +BY THE end of this month, say Chinese officials, work will be completed on a big upgrade of facilities at a monument to one of the scariest moments in the recent history of relations between China and the United States: an upsurge of tensions in the Taiwan Strait in the mid-1990s that saw the two nuclear powers inching towards the brink of war. The structure is a concrete tower on an island in the strait, just off the Chinese coast. Atop it more than 100 generals watched a mock invasion of Taiwan by China’s army on a beach below. “Unite the motherland, invigorate China”, says a slogan in gold characters down the side of the building. The meaning of these words at a place where tanks and troops once stormed ashore with warplanes streaking overhead is: we want Taiwan back, by force if necessary. + +The building work involves an expansion of the tower’s car park, improvements to the road up to it and other changes to make the place on Pingtan Island in Fujian province more tourist-friendly. The timing may be fortuitous. On December 11th America’s president-elect, Donald Trump, in an interview with Fox News, questioned what China regards as a sacred underpinning of its relationship with America: the principle that there is but “one China” (which, decoded, means that the government of Taiwan is illegitimate). China, bristling with rage, may well seek to remind its citizens, as well as America, of what happened when that principle was last challenged by the United States with a decision in 1995 by its then president, Bill Clinton, to allow his Taiwanese counterpart, Lee Teng-hui, to pay a private visit to America. Handy, then, that Pingtan will be able to handle extra busloads of visitors to that hilltop where China’s brass surveyed the pretend assault. + +Relations between China and America are far less precarious than they were during those tense months, when China fired dummy missiles near Taiwan and America sent two aircraft-carrier battle groups close to the island to warn China not to attack it. China, though enraged by Mr Trump’s remarks (and a congratulatory call he took from Taiwan’s president, Tsai Ing-wen, on December 2nd), is unlikely to take retaliatory action unless Mr Trump continues to challenge the notion of one China after his inauguration on January 20th. + +The chip is down + +Taiwan has been in the doghouse anyway since Ms Tsai took office in May. China has cut off channels of communication with the island to show its displeasure with her own refusal to embrace the one-China idea. But Ms Tsai may have reservations herself about the way Mr Trump phrased his one-China scepticism. “I don’t know why we have to be bound by a one-China policy unless we make a deal with China having to do with other things, including trade,” he said. Mr Trump listed ways in which America was being “badly hurt” by China, such as by the fall in the value of its currency and its island-building in the South China Sea. He accused China of “not helping us at all with North Korea”. + +Many Taiwanese worry that this could mean their island will be treated by Mr Trump as a bargaining-chip. Memories are still fresh in Taiwan of secretive dealings between America and China during the cold war, which resulted in America severing diplomatic ties with the island in 1979. Ms Tsai’s government has avoided direct comment on Mr Trump’s remarks. Apparently to avoid raising tensions with China, she has also avoided public crowing over her phone call with Mr Trump. + +Mr Trump’s remarks would have riled the Chinese leadership at any time. But they are particularly unwelcome at this juncture for China’s leader, Xi Jinping. He is absorbed by preparations for crucial meetings due to be held late in 2017 at which sweeping reshuffles of the Politburo and other Communist Party bodies will be announced. Those trying to block his appointments would be quick to seize on any sign that he is being soft on America over such a sensitive matter as Taiwan. Should Mr Trump persist in challenging the one-China idea, the risk of escalation will be even greater than usual in the build-up to the conclaves—all the more so, perhaps, given Mr Xi’s insistence that differences between China and Taiwan “cannot be passed on from generation to generation”. Hawkish colleagues may say that it is time to settle the issue by force. + +Street protests in China against America or Taiwan would also make it more difficult for Mr Xi to compromise: he would fear becoming a target himself of Chinese nationalists’ wrath. But the risk of this may be low. Since Mr Xi took over in 2012 there have been no major outbreaks of nationalist unrest, partly thanks to his tightening of social and political controls (including locking up ever more dissidents). Sun Zhe of Tsinghua University says people are unlikely to demonstrate over Taiwan “because they understand the new rules, the new emphasis on political discipline in the last few years.” He says a lot of people in China still admire Mr Trump for his wealth and his unexpected political success. They think that “he wants to make a deal with China.” + +In Taiwan, some take comfort in the difficulty Mr Trump would face in changing the terms of America’s relations with Taiwan, such as by announcing a permanent end to arms sales. These are guaranteed by the Taiwan Relations Act, which was passed by Congress in 1979 to reassure Taiwan that America still had an interest in the island’s defence, despite the severance of official ties. Many Republicans sympathise with Taiwan and would be reluctant to support any change to that law (itself a challenge to the one-China idea with which China has—very grudgingly—learned to live). + +They might also take solace in what appears to be a change in the Chinese government’s tone since the war games 20 years ago. In April Global Times, a newspaper in Beijing, published a poll showing that 85% of respondents supported unifying China with Taiwan by force, and that 58% agreed the best time would be within the next five years. It was reportedly chastised by China’s internet regulator for “hyping sensitive events” by running such a survey. + +This article appeared in the China section of the print edition under the headline “Caught in the middle” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21711955-china-worries-about-president-elect-too-taiwan-fears-becoming-donald-trumps-bargaining-chip/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +A party with musical chairs + +Hong Kong is preparing to choose a new leader + +Only loyalists need apply + +Dec 17th 2016 | HONG KONG + +No crying for the wolf + +CHIEF executives of Hong Kong have never basked in public adoration. The first one under Chinese rule, Tung Chee-hwa, resigned after a massive public outcry against his policies. The second, Donald Tsang, ended his term with allegations swirling around him of improper conduct (he denies them). Now the third, Leung Chun-ying, has said he will not stand for another five-year term. Though he cites family reasons, his rock-bottom popularity may well have been a factor. Nearly 20 years after taking back Hong Kong, the Communist Party in Beijing may be wondering whether it can ever pick a winner to lead the former colony. + +It had been widely assumed that, despite Mr Leung’s low opinion-poll ratings, the party would give him tacit backing in a race getting underway for the post of chief executive. The choice will be made in March by the 1,200 members of an election committee stuffed with the party’s supporters in Hong Kong. It only takes a nod from leaders in Beijing to swing votes in favour of the party’s preferred candidate. + +But on December 9th Mr Leung told reporters at a hastily arranged press conference that he would not join the race in order to protect his family from the “intolerable stress” of it. It is likely that officials in Beijing had cold feet because of public contempt for him. He is often called “the wolf”—a reference to his aloof and cunning demeanour and a play on his surname, which sounds like the Chinese word for the animal. During the “Umbrella Movement” of 2014, when busy commercial areas were disrupted by weeks of sit-ins, protesters demanded his resignation, as well as free elections. The party was doubtless pleased by his resolute refusal, in line with its own, to countenance such concessions. But it must also have worried that keeping Mr Leung in place for another term would goad demonstrators back onto the streets and risk plunging Hong Kong into yet more unrest. A day after Mr Leung’s announcement, hundreds of his opponents joined a demonstration in central Hong Kong. Some held up placards attacking him (see picture). + +The party, however, is doing a good job itself of riling Hong Kongers. Its opposition to full democracy, which many thought they had been promised when China took over, has fuelled a small but growing pro-independence movement which worries the party even more. With the help of a constitutional ruling by China’s national parliament, it has supported recent efforts by Hong Kong’s government to get several independence-leaning and other pro-democracy lawmakers disbarred from the Legislative Council, or Legco, on the grounds that they took their oaths improperly. Two have been excluded and cases involving another four are being considered by Hong Kong’s High Court. + +Officials in Beijing will now be wondering who best can pursue the seemingly impossible task of containing pro-independence and pro-democracy sentiment, while at the same time winning the support of Hong Kongers. So far only two people have declared their intention to stand. One is Woo Kwok-hing, a retired judge who has little hope of gaining the party’s backing. The other is Regina Ip, a former security minister who is now a member of Legco. She threw her hat in the ring on December 15th. Mrs Ip is best known for helping with a failed attempt to push through a security law in 2003. Public opposition to it dealt a huge blow to the popularity of Mr Tung, the first chief executive, and led to Mrs Ip’s resignation. She says she would “definitely go ahead” with efforts to revive the bill should she win. + +Another possible is John Tsang, Mr Leung’s former finance minister. Mr Tsang resigned from that post on December 12th, fuelling speculation that he wants to stand. Some analysts believe that a job he once held as private secretary to Hong Kong’s last British governor, Chris Patten, may rule him out: the party regards Mr Patten as the font of Hong Kong’s post-colonial ills. + +The party may prefer Carrie Lam, who has served as head of the civil service under Mr Leung. Mrs Lam had said she would retire next year, but now says she has had “no choice” but to reconsider following Mr Leung’s announcement. There is unlikely to be a pro-democracy candidate. The election committee is mostly made up of representatives of businesses and occupations that tend to be pro-government. In polls held by such groups on December 11th to fill election-committee seats, supporters of greater democracy took more than 320, up from around 200 in 2011. But the pro-democracy camp does not want to appear to legitimise the gerrymandered election process by proffering a candidate. Mr Leung’s critics are resigned to a successor who is all but certain to be as faithful to the party as he has been. + +This article appeared in the China section of the print edition under the headline “Any colour, as long as it’s red” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21711954-only-loyalists-need-apply-hong-kong-preparing-choose-new-leader/print + + + + + +上一项 文章 章节 下一项 + + + + + +Middle East and Africa + + + + +Syria: Last rites for Aleppo + +Israel’s settlers: The Amona remainers + +Mayhem in Egypt: Murder in the cathedral + +Saudi Arabia’s calendar: The prince’s time machine + +Gambia and Ghana: You say goodbye and I say hello + + + + + +文章 章节 下一项 + +Last rites for Aleppo + +Bashar al-Assad’s forces crush the resistance + +The fate of up to 100,000 civilians is terrifyingly unclear + +Dec 17th 2016 + + + +WHEN members of the Muslim Brotherhood rose up against the Syrian government in 1982, killing hundreds of soldiers in the city of Hama, the regime’s response was swift and brutal. Under orders from President Hafez al-Assad, government warplanes and artillery pounded the city for weeks. By the time the army’s bulldozers had finished flattening entire districts, the regime had killed as many as 25,000 people. + +In 2011, almost 30 years after the Hama massacre, Hafez’s son, Bashar, faced his own revolt when peaceful protests against his rule erupted across Syria. Some believed that the soft-spoken ophthalmologist would show more restraint than his blood-drenched father. But after more than five years of war no one thinks that any more. Mr Assad junior has systematically starved, bombed and shot his own people, laying siege to civilians in rebel-held areas while bombing their hospitals, markets and schools. His scorched-earth tactics have killed the vast majority of the war’s 400,000-plus dead and driven millions of Syrians abroad as refugees. The massacre his father oversaw in Hama seems small and local in comparison. + +These tactics, along with Russian air power and Iranian military expertise, now appear to have propelled Mr Assad to his greatest victory so far. Pro-regime forces, spearheaded by Iranian-backed Shia militias from Iraq and Lebanon, have cornered rebel forces in a tiny sliver of territory in the east of Aleppo, the country’s largest city before the war. + + + +On December 13th, as part of a deal brokered by Russia and Turkey, the rebels agreed to surrender. A ceasefire followed as buses prepared to evacuate rebel fighters and civilians to opposition-controlled territory west of the city. Residents gathered in the bitter cold and driving rain as they prepared to leave. Some burned possessions they could not carry, rather than see them fall into the regime’s hands. + +But the evacuation, which was scheduled to begin at 5am on December 14th, failed to happen. By midday, warplanes were back in the skies above Aleppo, bombarding neighbourhoods in the tiny rebel pocket as tanks and artillery guns shelled the area once again. Russia announced that the regime had captured yet another district. Terrified residents desperately sought shelter. Some described seeing bodies lying in the streets as they ran. Others said the bombardment was too intense to rescue the wounded. In one field clinic bodies lay in rows on the floor where they had been left for days, their relatives too scared to collect the corpses. + +The deal broke down mainly because Iran, which supports a number of Shia militias fighting alongside Mr Assad’s troops, imposed new conditions, including an evacuation of Shias from two rebel-besieged villages. As The Economist went to press on December 15th, there was renewed hope that the evacuation might soon begin; but local disagreements could all too easily delay or scupper it. + +The failure of the world to act means that what happens next to the remaining population of east Aleppo, numbering anywhere between 50,000 and 100,000 people, could be atrocious. In recently captured neighbourhoods, pro-regime troops have begun to slaughter civilians inside their homes, according to reports received by the UN and sources inside the city. + +In what it described as a “complete meltdown of humanity” inside Aleppo, the UN said reports suggested that at least 82 civilians, including 11 women and 13 children, have been murdered in recent days. Government forces have also detained hundreds of men, the UN said; others have been conscripted into the Syrian army. + +The remaining trapped civilians are petrified. “Some are hiding, waiting to know their fate. Others are fleeing to the regime’s part of the city. Imagine a family fleeing to its killers. That’s the only option now: to flee to their killers,” said Ammar al-Selmo, the head of the city’s White Helmets, a volunteer rescue service. Evacuation, if it happens, will take many days. + +After the fall + +Terrible though the situation in Aleppo now is, the city’s fall will not end the war. Mr Assad has repeatedly vowed to reclaim the entire country. Though the capture of Aleppo will leave the government in control of all Syria’s main population centres, including its four largest cities, large swathes of territory remain beyond the regime’s authority. + +Islamic State (IS), which retook the ancient city of Palmyra on December 11th, still rules wide tracts of (sparsely populated) land in the east. Rebel forces control the province of Idlib, parts of Deraa in the south, a large chunk of the border with Jordan and a few pockets of territory around the capital, Damascus. Turkish and Kurdish rebels have also carved out enclaves in the north of the country. + +Once Aleppo is secured, Mr Assad will probably turn his attention to those pockets of rebellion that remain around the capital, while securing the main highway that leads from Homs to Aleppo. He will then want to go after rebel forces in Idlib, where he has corralled much of Syria’s insurgency. The province is dominated by a hardline Islamist group, Ahrar al-Sham, as well as militants from Jabhat Fatah al-Sham, a jihadist group with ties to al-Qaeda. The regime is calculating that their presence will dampen any Western support for the rebels holding out in Idlib, allowing it a free hand. + +It is difficult to see how the opposition can bounce back. America’s president-elect, Donald Trump, has threatened to withdraw already limited support for Syria’s moderate opposition and concentrate instead on defeating IS. This would suit both Mr Assad and his Russian backers, swinging the course of the war even further in the dictator’s favour. + +“The crushing of Aleppo, the immeasurably terrifying toll on its people, the bloodshed, the wanton slaughter of men, women and children, the destruction—and we are nowhere near the end of this cruel conflict,” the UN’s High Commissioner for Human Rights, Zeid Ra’ad al-Hussein, said on December 13th. “What is happening with Aleppo could repeat itself in Douma, in Raqqa, in Idlib. We cannot let this continue.” For now, though, there seems little to prevent further tragedies unfolding. + +Yet Mr Assad’s ambition to reassert his control over the entire country is unrealistic. The recapture of Palmyra by IS is an indication of the difficulties Mr Assad still faces. His priority over the next few months is therefore likely to be to consolidate his recent gains in what he calls “essential Syria”, the urbanised spine of the country between Aleppo and Damascus. + +He should also not assume that the Trump administration will be unalloyed good news for him. Andrew Tabler of the Washington Institute for Near East Policy reckons that “big changes are coming.” What most distinguishes Trump appointments, such as retired Marine General Jim Mattis as defence secretary and retired General Mike Flynn as national security adviser, is their conviction that Iranian influence in the region must be confronted and rolled back. Handing victory to Mr Assad also means handing victory to the mullahs in Iran, something they will be loth to do. The one country that has real influence over Iran, especially in Syria, is Russia. + +The overarching question about Syria’s future could therefore hinge on America’s relations with Russia, which Mr Trump has said he wants to put on a more co-operative footing. It also depends on the extent to which Russia’s and Iran’s goals in Syria may differ. Russia says it is committed to UN Security Council resolution 2254, which is designed to reunify the country following an 18-month transition period after which democratic elections would be held under a new constitution. Iran, by contrast, wants above all to preserve the Assad regime. Its aim is a rump Syria as a client state, and an arc of Shia dominance running through it from Iraq to Lebanon. + +Given Mr Trump’s transactional approach to international relations, Russia’s president, Vladimir Putin, will want to know what kind of deal the new administration will offer him to part company with his Iranian ally. After the fall of Aleppo, he will surely demand a high price. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Last rites for Aleppo” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21711738-fate-100000-civilians-terrifyingly-unclear/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +The Amona remainers + +Netanyahu moves to appease the settlers + +Unauthorised “outposts” will get some protection + +Dec 17th 2016 | AMONA + +We’re here because we’re here + +THE fate of 42 Israeli families, living on a windswept hilltop in the West Bank half an hour’s drive north of Jerusalem, could change the rules of Israel’s 49-year-old occupation of the area. The settlement was built in 1995 on what was in fact privately owned Palestinian land. The settlers claim they were not aware of this—which may be true, as land records in the West Bank are not always clear or complete, dating as many of them do back to Ottoman times. Despite a High Court order to evict them by December 25th, and repeated government offers of alternative housing nearby, the settlers are refusing to budge from what they see as their homes in historically Jewish territory. They have promised not to use violence when the security forces come to remove them, but large signs like “On Amona we will go to war”, and the dozens of young settlers who have already arrived as reinforcements, suggest the opposite. + +This puts Prime Minister Binyamin Netanyahu’s coalition in a bind. Members of the hard-right Jewish Home party are threatening to leave the coalition if Amona is forcibly cleared, which could cost Mr Netanyahu his slender Knesset majority. (Jewish Home has eight members; the prime minister’s majority is only six.) The government is struggling to make a deal with the settlers as the clock ticks down. + +But even if the Amona row is defused, to get this far Mr Netanyahu has been forced to placate his hardliners by endorsing a proposed “Regulation Law” for settlements built under similar circumstances. Its purpose is to legalise retroactively the supposedly inadvertent expropriation of privately owned land in the West Bank, on which some Jewish settlements have already been built, and oblige the legal owners to accept either financial compensation or alternative land. The law will not affect Amona, which is specifically excluded, but it could affect more than 2,000 buildings, some in tiny “outposts” and others in larger urban settlements. It is seen by settlers as a big achievement. + +Naftali Bennett, the leader of Jewish Home and a supporter of the settlers, made his motives clear last week, when he said the law is a step towards formally annexing parts of the West Bank, a long-term goal of many hardliners. This contradicts Mr Netanyahu’s stated position of favouring a deal to recognise two separate states for Israelis and Palestinians. Israel applies its laws to the eastern part of Jerusalem, captured from Jordan in the Six Day War of 1967; but it has so far refrained from annexing other parts of the West Bank. + +The Geneva Convention says that an “Occupying Power shall not deport or transfer parts of its own civilian population into the territory it occupies.” Israel says this does not apply to the West Bank, which did not belong to a sovereign state as the territory was not officially part of Jordan. It also says the convention doesn’t apply to Jewish settlers who are there voluntarily, rather than having been deported or transferred. Most international lawyers reject this interpretation. Even Israel’s closest allies, including America and Britain, regard the settlements as illegal. + +Some see the Regulation Law as marking the first time that Israel is openly exercising sovereignty over the West Bank. “The law is effectively a measure of annexation of the West Bank, contrary to Israel’s long-held claim that it’s not engaged in annexation,” explains Professor Yael Ronen of the Sha’arei Mishpat Centre for Law and Science. “It is a law that expressly states its aim is to develop the settlements in Judea and Samaria.” Others disagree. They insist that regularising settlements does not imply annexing the land they are built on; it merely lets the settlers live without fear of eviction—for now. If ever a peace deal is reached between Israel and Palestine, many of the isolated settlements would doubtless have to be abandoned, with or without forcible eviction. + +Mr Netanyahu, although forced by political constraints to tell his whole coalition to vote for the law, is clearly concerned about its legal and diplomatic ripples. Governments around the world have condemned it in advance. So far, it has passed only its first reading. Even if it passes the remaining two votes, as yet unscheduled, it could well be struck down as unconstitutional by the High Court. The attorney-general says he will refuse to defend it in court. Mr Netanyahu is trying to avoid fights with the settlers, his coalition, the court and his foreign allies. But right now he is on a collision course with all of them. + +This article appeared in the Middle East and Africa section of the print edition under the headline “The Amona remainers” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21711940-unauthorised-outposts-will-get-some-protection-netanyahu-moves-appease/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +A massacre of Coptic Christians + +Egypt is hit by terror attacks + +Terrorism in Egypt compounds the president’s problems + +Dec 17th 2016 | CAIRO + + + +SECURITY and order have always been the priority for Abdel-Fattah al-Sisi, Egypt’s president and self-proclaimed protector. Since toppling a democratically elected but unpopular Islamist government in 2013, Mr Sisi, a former general, has attempted to stabilise the country with draconian laws and a crackdown on dissent. Without his firm hand, Egypt would look like its blood-soaked neighbours, say his supporters. + +One problem with this argument is that Egypt itself looks increasingly volatile. On December 9th a bomb targeting a police vehicle in the city of Kafr al-Sheikh killed a civilian and injured three policemen. On the same day another bomb killed six policemen on the road to the pyramids in Cairo, breaking months of relative calm in the capital. Two days later, yet another tore through Cairo’s Coptic cathedral during Sunday mass, killing at least 25 worshippers, mostly women and children. + +Disgruntled Islamists have been blamed for the violence—and have taken some credit for it. A shadowy group called the Hasm (decisiveness) movement claimed responsibility for the bomb near the pyramids. It has staged several attacks in revenge for Mr Sisi’s bloody suppression of the Muslim Brotherhood, the Islamist group that led the ousted government (and which claims to be peaceful). Islamic State (IS) has claimed responsibility for the cathedral attack. But the interior ministry says exiled Brotherhood leaders directed it, sending the bomber to train with jihadists linked to IS in the northern part of the Sinai peninsula. + +It is not clear how much co-ordination there is between the Sinai-based militants, mostly drawn from among the local Bedouins, and groups like the Hasm movement, which are active in Egypt proper. For several years the army has tried to beat back an insurgency in Sinai, adopting scorched-earth tactics. But this has not deterred the rebels, who have carried out several hundred attacks in the area since 2012. Last month they killed eight soldiers with a car bomb; in October they claimed the assassination of an Egyptian general. The most active insurgents have pledged their loyalty to IS and declared their region to be a “province” of the so-called caliphate. + +In claiming the Coptic bombing, IS vowed to continue its “war against apostates”. Egypt’s Christian Copts, who make up about 10% of the country’s population, are a common target. They have long faced persecution by the Muslim majority. Many have supported Mr Sisi, believing he would protect them—even when Islamists attacked dozens of Coptic churches and homes after his coup. But his gestures, such as briefly attending Christmas mass, have done little to ease the tension. And there are signs that Coptic support for the president is fading. “The people demand the downfall of the regime,” shouted those gathered outside the cathedral after the bombing. Television presenters seen as supportive of the president were pushed away by the crowd. + +These are difficult times for Mr Sisi, who is also dealing with a moribund economy. Egypt has struggled to lure back investors and tourists who fled after the revolution of 2011. The plummeting value of the Egyptian pound and inflation, which is at an eight-year high, have caused the public much pain. After years of delaying, the government has finally begun to implement some economic reforms, thereby securing a $12bn loan from the IMF. But these reforms, which include floating the currency and cutting subsidies, are likely to compound Egyptians’ pain in the short term. + +The risk is that Mr Sisi will respond to the pressure in all the wrong ways—for example, by cracking down harder on dissent and delaying or rescinding economic reforms. The parliament, which supports the president, has already called for changes to the penal code that would curtail civil liberties. The foreign ministry has used the violence as an excuse to attack NGOs. The government seems intent on storing up yet more trouble for the future. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Murder in the cathedral” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21711734-terrorism-egypt-compounds-presidents-problems-egypt-hit-terror/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +The prince’s time machine + +Saudi Arabia adopts the Gregorian calendar + +Hauling Saudi Arabia into the 21st century + +Dec 17th 2016 | RIYADH + + + +THE kingdom presented its shift from the Islamic to the Gregorian calendar as a leap into modernity. In April the dynamic deputy crown prince of Saudi Arabia, Muhammad bin Salman, chose to call his transformation plan Vision 2030, not Vision 1451 after the corresponding Islamic year as traditionalists might have preferred. Recently his cabinet declared that the administration is adopting a solar calendar in place of the old lunar one. Henceforth they will run the state according to a reckoning based on Jesus Christ’s birth, not on the Prophet Muhammad’s religious mission. + +But puritans in Islam’s birthplace are wincing at their eviction from control first over public space, and now of time. Guardians of the Wahhabi rite, who seek to be guided by Muhammad’s every act, ask whether they are now being required to follow Jesus. A slippery slope, the clergy warn, to forgetting the fasting month of Ramadan altogether; the authorities are rewinding the clock to the jahiliyyah, or pre-Islamic age of ignorance. The judiciary, a clerical bastion, still defiantly insists on sentencing miscreants according to the old calendar. + +The clerical unease has been matched by that of government employees. Under his transformation plan, the prince has already docked their perks and slashed pay. To add to their misery, they now complain they will have to work an extra 11 days each year. Yet another example, they gripe, of globalisation favouring rulers at the expense of the ruled. + +A lunar calendar made sense when the moon was the simplest way of counting passing days. But for measuring years it is a poor approximation. It loses some 11 days a year, ensuring that Islamic holy days rotate round the seasons every 32 years. The Saudi administration, hopes one official, should now be more orderly and in step with the rest of the world. But having spent a lifetime learning dates from the year Muhammad fled from Mecca to establish the first Islamic state in Medina (622 in the Gregorian calendar), counting from Jesus’s birth is likely to leave many scratching their headscarves. + +Still, Saudi Arabia is not alone in wrestling with ancient calendars. It is 1395 in Iran, 2628 in Kurdistan, and 5776 in Israel’s Knesset. Nor is it just the Middle East that is out of sync with the times. It is 2559 in Thailand, though only year 28 (of the Heisei era) in Japan. + +This article appeared in the Middle East and Africa section of the print edition under the headline “The prince’s time machine” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21711938-hauling-saudi-arabia-21st-century-saudi-arabia-adopts-gregorian/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +The man who would rule for a billion years + +Gambia’s ruler rejects the election that ejected him + +Will diplomacy and the threat of force remove him? + +Dec 17th 2016 + +The quickest billion years ever + +MOTORCADES are not an unusual feature of African political life. But a hush fell in Serekunda, Gambia’s largest town, as the presidents of Ghana, Liberia, Nigeria and Sierra Leone sped by in black Rolls-Royces. Gambians hoped the region’s other heads of state would persuade their own erratic president to step down. Yahya Jammeh, who has ruled the tiny West African nation for 22 years (and once said that, if Allah decreed it, he would continue for a billion), decided that, in fact, he wanted to remain in power despite unexpectedly losing an election two weeks ago. + +Having gracefully conceded defeat and promised to step down after the votes were counted, he changed his mind and challenged the result, encouraged perhaps by the foolhardy pledges of some of the opposition to arrest him for his many abuses of human rights. The president-elect, Adama Barrow, refuses to say whether his government would prosecute Mr Jammeh. + +The delegation of regional leaders, acting unusually firmly against a despot, nonetheless went home empty-handed. A deal “is not something that will happen in one day”, said Liberia’s weary-looking president, Ellen Johnson Sirleaf. + +The inclusion of Ghana’s outgoing leader on the trip was no accident: John Mahama had conceded electoral defeat just three days earlier. There are no signs of him changing his mind, either—even after the victorious Nana Akufo-Addo promised a corruption probe. + +Ghana’s peaceful vote was its seventh since the return of multiparty elections in 1992. Although the country’s democracy is far from perfect—politicians are wont to hand out rolls of banknotes hidden inside T-shirts at rallies and much of the country still votes along tribal lines—it is streets ahead of many others on the continent. Despite all the advantages of incumbency, Mr Mahama was ejected after just one term by voters fed up with how he had squandered Ghana’s new oil wealth and allowed the country to be blighted by double-digit inflation and a youth unemployment rate of almost 50%. And if Mr Akufo-Addo fails to deliver on promises like “one district, one factory”, voters are likely to punish him too. + +In Gambia the vote was less about economics (although it too suffers from joblessness that prompts thousands of young people to take “the back way” to Europe) than it was a revolt against Mr Jammeh’s brutality. And fear of the mercurial dictator has yet to abate as he plots ways of clinging to the throne. Mr Jammeh has filed a petition with the Supreme Court, but it is not clear that it is even able to hear the case given that it has just one justice. + +West African leaders still hope to hammer out a deal. But if diplomacy does not succeed by Gambia’s inauguration day on January 18th, military force is an option, an official of the Economic Community of West African States (ECOWAS) said. It is not clear that Gambia’s neighbours would, in fact, be willing to take tough action. But Gambia is casting a shadow over a region moving towards democracy: Senegal and Nigeria have experienced successful democratic transitions in recent years and Burkina Faso’s dictator was ousted after street protests in 2014. Asked whether he would return to Gambia again to mediate, Mr Mahama smiled: “I have my own transition to handle.” + +This article appeared in the Middle East and Africa section of the print edition under the headline “You say goodbye and I say hello” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21711936-will-diplomacy-and-threat-force-remove-him-gambias-ruler-rejects/print + + + + + +上一项 文章 章节 下一项 + + + + + +Europe + + + + +Terror in Turkey: Semtex pretext + +A landslide election in Romania: Conviction politics + +Italy’s new prime minister: A new man in the ejector seat + +Russia’s Igor Sechin: The oil boyar + +Charlemagne: The sexiest job in Brussels + + + + + +文章 章节 下一项 + +Semtex pretext + +Turkey’s latest bombing will help its president amass more power + +Recep Tayyip Erdogan wants to change the constitution to enshrine one-man rule + +Dec 17th 2016 | ISTANBUL + + + +THE first attacker, driving a car packed with up to 400kg (880lb) of explosives, struck near an Istanbul stadium after pulling up next to a riot-police vehicle. The second detonated his suicide vest less than a minute later, after a group of policemen surrounded him in a neighbouring park. The December 10th bombings, the latest in a wave of terror attacks that began in the summer of 2015 (see chart), killed at least 44 people, including civilians heading downtown on a Saturday night. The first blast was so powerful that firefighters were seen collecting body parts from the stadium’s roof. A group called the Kurdistan Freedom Falcons, widely considered a front for the outlawed Kurdistan Workers’ Party (PKK), claimed responsibility. + + + +As enraged demonstrators took to the streets, Turkey’s government pledged to destroy the PKK once and for all, something its predecessors have promised but failed to do since 1984, when the group launched an insurgency in the Kurdish southeast. Turkish jets struck PKK bases in northern Iraq. Police have detained over 500 people, some for sharing allegedly pro-PKK content on social media, as well as two parliamentarians from the pro-Kurdish Peoples’ Democratic Party (HDP). Ten other HDP deputies, including Selahattin Demirtas, a former presidential candidate, have been in prison since early November. + +Recep Tayyip Erdogan, Turkey’s president, argues that the only way to solve Turkey’s turmoil is to place all executive power in his hands. Hours before the bombing, the prime minister, Binali Yildirim, unveiled a raft of constitutional amendments to do just that. The changes would do away with the office of prime minister, enshrine the presidency as the seat of executive power, and give Mr Erdogan the authority to appoint senior civil servants, declare a state of emergency, and issue decrees. They must clear parliament before being put to a popular referendum next spring. + +Officials from the ruling Justice and Development (AK) party argue that the provisions would preclude turf battles between presidents and prime ministers. Critics say it is hard to imagine what such turf battles might be: Mr Erdogan already governs without many checks. The purpose of the constitutional changes, they say, is to formalise one-man rule. They would take effect in 2019 and could let Mr Erdogan rule for two more five-year terms, to 2029. + +In theory, the executive presidency should be within Mr Erdogan’s reach. His alliance of Islamists and nationalists has become a magnet for those galvanised by the coup attempt in July. Mr Erdogan has fanned outrage over the failed coup and stoked fears of another to intimidate opponents and justify the arrests of up 40,000 people, including about 100 journalists. Outside observers and the political opposition have recoiled at the scale of the crackdown. But nationalists and conservatives have embraced it, persuaded that Turkey faces an existential threat from plotters beholden to foreign powers. Some blame only the Gulen movement, an Islamic sect believed to have been involved in the coup; others add conspiracy theories involving Germany, America and Britain. + +Yet Mr Erdogan is starting to face headwinds. The economy contracted by 1.8% in the third quarter, its worst performance since a recession in 2009. The lira is testing new depths; the government has asked people to defend it by selling dollars and euros. Support for the executive presidency hovers below 50%. + +Mr Erdogan likes to cast himself as a cure for the chaos spreading across Turkey. Yet he is also one of its causes. Courting the nationalist vote, Mr Erdogan has ruled out peace talks with the PKK. Responding to PKK attacks against security targets in 2015, he inflamed the conflict by arresting Kurdish politicians, pulverising towns in the southeast, and displacing some 500,000 people. The offensive has dealt the PKK a hefty blow, but it has also pushed droves of desperate young Kurds into its arms. + +Earlier this year, a PKK leader boasted that his group sought to topple Mr Erdogan’s government. The threat now sounds hollow. Experience shows that Mr Erdogan’s main enemies often turn out to be his most effective enablers. Turks and Kurds are left mourning their dead. + +This article appeared in the Europe section of the print edition under the headline “Semtex pretext” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21711883-recep-tayyip-erdogan-wants-change-constitution-enshrine-one-man-rule-turkeys-latest/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Conviction politics + +Romania elects a party led by a vote-rigger + +Despite its leader’s voting-fraud conviction, the Social Democratic Party wins in a landslide + +Dec 17th 2016 + + + +THE centre-left Social Democratic Party (PSD) entered Romania’s parliamentary election on December 11th with what, in most countries, would be considered a handicap. Its leader, Liviu Dragnea, was convicted in 2015 of attempting electoral fraud three years earlier. But many see Mr Dragnea’s conviction as politically motivated, and in Romania many parties are tainted by corruption. The PSD came first by a wide margin, winning 46% of the vote, well ahead of the centre-right National Liberal Party (PNL), which took just 20%. + +The PSD’s victory has led to worries that Romania’s anti-corruption drive, a model for the region, may slow down. The country’s independent National Anticorruption Directorate (DNA) prosecutes more than 1,000 people a year, and convicts most of them. Mr Dragnea is not the only PSD leader to fall foul of the DNA: a year ago Victor Ponta, then the prime minister, was forced to resign amid mass demonstrations. The DNA had charged him with forgery and conflicts of interest, and anger peaked after a blaze killed 64 people at a nightclub in Bucharest where inadequate fire-safety measures were blamed on graft. + +Romania’s president, Klaus Iohannis, has vowed not to appoint anyone convicted of corruption as prime minister. That could rule out Mr Dragnea, but several other PSD figures have been mooted. Any of them would probably form a coalition with the Liberal Democratic Alliance (ALDE), a small party that has attacked the anti-corruption agency and called for the resignation of its straight-arrow director, Laura Codruta Kovesi. And some see the victory of the PSD, which promised to raise the minimum wage and increase pension payments, as a sign that anger at cronyism is giving way to economic concerns. “It’s a real test” of Romania’s legislation, institutions and political parties, said Laura Stefan, an analyst at the Expert Forum, a think-tank in Bucharest. + +Anti-corruption efforts have earned Romania praise from the European Commission, which reviews the country’s governance each year as a condition of its accession to the European Union in 2007. On the corruption-perceptions index compiled by Transparency International, a watchdog, Romania improved its rank from 69th in the world in 2014 to 58th in 2015. Several other countries in the region have been getting dirtier. According to the World Bank, Hungary has grown more corrupt under its prime minister, Viktor Orban, who has used cronyism to entrench his Fidesz party. Bosnia, Moldova and Serbia have stagnated or worsened. And there are worries about Poland, where the Law and Justice government embraces Mr Orban’s populist model. + +In Bulgaria, which joined the EU at the same time as Romania, the percentage of people who payed bribes doubled in the past five years, according to the Centre for the Study of Democracy, a think-tank in Sofia. After limited changes to the country’s judiciary were passed by parliament in 2015, the justice minister, Hristo Ivanov, resigned in protest over their inadequacy. Judges marched in the streets in solidarity, some dressed in their court robes. + +The European Commission’s most recent review of Bulgaria urges the country to establish an independent anti-corruption body like Romania’s. The president-elect, Rumen Radev, hinted during his campaign this summer that he might support such a move. That is unlikely to happen. The lesson many politicians have taken from Romania is that the more independent the prosecutor, the greater the likelihood they will land in jail. + +This article appeared in the Europe section of the print edition under the headline “Conviction politics” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21711729-despite-its-leaders-voting-fraud-conviction-democratic-party-wins-landslide-romania/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Spot the difference + +Paolo Gentiloni, Italy’s gentleman prime minister + +Matteo Renzi’s successor may only be keeping the seat warm for his return + +Dec 17th 2016 | ROME + +Two Italians walk into a palazzo + +ITALY’S new prime minister, Paolo Gentiloni, could scarcely be less like his frenetic forerunner, Matteo Renzi. In place of a provincial toughie known as “The Demolition Man”, Italy has acquired an affable Roman aristocrat with a preference for compromise. His inaugural speech to parliament on December 13th was memorable largely for its dullness. + +Mr Gentiloni’s cabinet, however, will be almost identical to that of his predecessor, who resigned after his plan to reform the constitution was rejected in a referendum. The composition of the new team suggested that the handover of power is more apparent than real, and that Mr Gentiloni is expected to keep the former prime minister’s seat warm as Mr Renzi plots his return. Only one minister from the previous cabinet was dropped. Another, Maria Elena Boschi, who steered the reform bill through parliament, becomes Mr Gentiloni’s under-secretary. That will give her control of the cabinet’s agenda—and Mr Renzi a trusted associate at the centre of power. Angelino Alfano, the former interior minister, took Mr Gentiloni’s place as foreign minister. + +The new cabinet includes a minister for the south, which voted solidly against Mr Renzi in the referendum. Mr Gentiloni also refused a cabinet post to a band of conservative lawmakers who provided Mr Renzi with external support. That will make the new government a less easy target for critics (the right-wing group’s leader has a conviction for aiding and abetting corruption). But it will be more vulnerable to parliamentary ambush. The government and its remaining allies have an assured majority in the lower house. But in the 320-member Senate they will be living from vote to vote. + +Mr Gentiloni said his priorities would be creating jobs and tackling the damage wrought by the earthquakes that have struck central Italy this year. Just as urgent are the problems of Italy’s banks (see article), including the teetering Monte dei Paschi di Siena. But another immediate task is to pass a new electoral law. + +Most of the opposition wanted a snap election after the referendum, as did Mr Renzi. But Sergio Mattarella, the president, who alone has the power to dissolve parliament, refused to call an election until the rules for the two houses were harmonised. The current law, passed in 2015 on the assumption the constitutional reform would succeed, only applies to the lower house. (The reform would have turned the Senate into an indirectly elected chamber.) + +Mr Renzi needs an election before his momentum ebbs entirely. But electoral laws are incredibly difficult to agree on. It will take all Mr Gentiloni’s conciliatory skills to frame a new one. + +This article appeared in the Europe section of the print edition under the headline “A new man in the ejector seat” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21711933-matteo-renzis-successor-may-only-be-keeping-seat-warm-his-return-paolo-gentiloni-italys/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +The oil boyar + +Igor Sechin, head of Rosneft, is powerful as never before + +Russian oil king, former aide to Vladimir Putin, and friend of Rex Tillerson + +Dec 17th 2016 | MOSCOW + +Burning bright + +“HELLO, you’ve called Rosneft,” goes a joke making the rounds in Moscow. “If you have an oil asset and you don’t plan to sell, press the hash key.” The Russian word for hash key, reshetka, also means “bars”, as in jail—where those who cross Rosneft’s head, Igor Sechin, tend to land. + +Mr Sechin is one of the most feared men in Russia and an essential instrument of Vladimir Putin’s power. A major player among the siloviki (former and current members of the security services), he epitomises Russia’s nexus between political power and property. Despite being a target of American sanctions, earlier this month he succeeded in selling a 19.5% stake in Rosneft to Glencore, a commodities firm, and the Qatar Investment Fund, raising $11bn. The deal, the biggest foreign investment in Russia since the start of the Ukraine crisis in 2014, pleased the Kremlin no end. “Putin needs that like he needs air,” says Olga Kryshtanovskaya, a sociologist who studies the Russian elite. + +Another boost to Mr Sechin’s prestige came with the nomination of Rex Tillerson, the boss of ExxonMobil, as America’s secretary of state. The two men’s long relationship was consummated by the deal they struck in 2011 for their firms to work jointly in the Arctic. Mr Sechin is now poised to become an intermediary between Moscow and Washington. + +Mr Sechin has come a long way since the early 1990s, when he was the office co-ordinator for Mr Putin, then deputy mayor of St Petersburg. He owes his rise to his dogged work ethic, his loyalty to the president and his willingness to inflict pain on opponents. “When he first arrived in Moscow no one took him seriously,” says Stanislav Belkovsky, a pundit. “He showed everyone they were wrong.” + +Trusty sidekick + +A native of Leningrad like Mr Putin, Mr Sechin studied at Leningrad University’s prestigious philology department. As a working-class child, he was “an outsider”, says a classmate. In the 1980s he went to Angola and Mozambique as a military translator (a common cover for intelligence agents, though Mr Sechin has never confirmed being one). He was “upset” when the Soviet Union collapsed, says Nikolai Konyushkov, a college friend. + +After Mr Putin became deputy mayor in 1991, Mr Sechin ran his office, keeping a diary where he meticulously recorded the contact details of visitors. “Igor is like that, he loves military discipline and subordination,” says Mr Konyushkov. When Mr Putin moved to Moscow, Mr Sechin trailed behind him at the airport, carrying a duffel bag. “He treated Putin as a god before Putin was a god,” says Konstantin Simonov, head of the National Energy Security Fund, a consultancy in Moscow. + +Mr Sechin served as deputy head of Mr Putin’s presidential administration. “To see Putin, you had to go through Sechin,” says a former senior official. In 2004 Mr Putin appointed him head of Rosneft’s board. That is where Mr Tillerson, then an ExxonMobil executive, would first have seen him in operation. In 2003 ExxonMobil had been negotiating with Mikhail Khodorkovsky, the head of Yukos, Russia’s largest oil firm at the time, to buy 40% of the company. Instead Mr Khodorkovsky was arrested and jailed for ten years, and in 2004 Yukos was dismembered by the state, its assets swallowed by Rosneft. Mr Khodorkovsky claimed Mr Sechin was the driving force behind the attack. + +The Yukos affair empowered the siloviki in the Kremlin. Unlike the oligarchs of the 1990s, who aimed to maximise their profits, the siloviki simply wanted control. And whereas Mr Sechin’s conflict with Mr Khodorkovsky was partly personal, Rosneft’s later takeover of Bashneft, a mid-sized oil producer, was pure business. + +In 2014 Bashneft’s owner, Vladimir Yevtushenkov, was arrested after reportedly rebuffing Mr Sechin’s offer for the company. (Rosneft denies making any offers or having any involvement in the arrest.) Mr Yevtushenkov was released after he agreed to give up control. Initially Lukoil, Russia’s largest private oil firm, was seen as the most likely buyer; Alexei Ulyukaev, the economy minister, called Rosneft “unsuitable”. But Mr Sechin got Mr Putin’s support and paid $5.3bn for the state’s stake in October. “The strongest one won,” says Leonid Fedun, Lukoil’s vice-president. The following month Mr Ulyukaev was arrested while allegedly accepting a bribe during a sting operation in Rosneft’s offices. + +Rosneft’s links to Russia’s secret police, the FSB, work through “secondment”, a Soviet-era tradition restored by Mr Putin. Officers work undercover at important institutions, state or private. The operation against Mr Ulyukaev, for example, was led by Oleg Feoktistov, a senior FSB officer who became head of security at Rosneft. + +Oil spillover + +Mr Sechin has been equally active abroad, where he sees Rosneft as a vehicle of geopolitical influence. “They’re trying to create a strong foundation, hence the consolidation inside Russia, from which to expand,” says James Henderson of the Oxford Institute for Energy Studies. Rosneft has signed partnerships with ExxonMobil, Eni, and Statoil. A $270bn supply deal with China’s CNPC has helped resolve Rosneft’s cash-flow problem. More recently, Rosneft has invested in refineries in India; in natural gas in Egypt; and in a joint crude-processing venture in Venezuela. “He is looking at ExxonMobil and BP and Shell [as a model],” says a former Rosneft executive. + +What matters to Mr Sechin is size, not value. His doctoral dissertation in 1998 on oil transport networks drips with contempt for market forces. Whereas market economies evaluate projects based on expected returns on investment, Mr Sechin praised the Soviet nuclear-weapons and space programmes, which he said operated on a different principle: “at any price necessary”. + +Running Rosneft has made Mr Sechin a very rich man. His salary, including bonuses, ran to as much as $11.8m in 2015. As stories about his allegedly lavish lifestyle have appeared in the Russian press, he has struck back. So far this year, Mr Sechin has won libel cases against the Russian publications Vedomosti, Novaya Gazeta, and RBC, a leading business publication. Mr Sechin is seeking to “become an untouchable topic, like the president’s family”, says Derk Sauer, a vice-president at Onexim, which owns RBC. “He feels himself to be a very important guy, a representative of the state, and anything you write can be perceived as an attack on the state.” + +This article appeared in the Europe section of the print edition under the headline “The oil boyar” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21711921-russian-oil-king-former-aide-vladimir-putin-and-friend-rex-tillerson-igor-sechin-head/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Charlemagne + +The EU’s Brexit negotiators prepare for disaster + +Still, it’s the sexiest job in Brussels + +Dec 17th 2016 + + + +“BREXIT is so fascinating!” exclaims a French official. Few Europeans wanted Britain to quit the European Union. But now that it is happening, foreign ministries and policy units across the EU are relishing the task ahead. As an intellectual exercise, managing the multifaceted complexities of Britain’s departure from the EU offers the kind of satisfaction rarely found in policy work. As a historic negotiation without precedent—no country has left the EU before, let alone one of Britain’s size and stature—it is a wonderful CV-builder. In Brussels, where the talks will take place, officials are scrambling to involve themselves with what one calls “the sexiest file in town”. + +The preparations for Brexit on either side of the English Channel offer a Homeric parable of chaos and order. In Britain Theresa May, the prime minister, exudes swanlike calm, restricting her utterances on Brexit to warm banalities. But below the surface her government is paddling furiously to avoid being submerged by the awesome bureaucratic task bequeathed to it by Britain’s voters. One leaked note from a consultancy portrays a flailing government that needs up to 30,000 more civil servants to manage Brexit. Mrs May says she will notify the EU of Britain’s intention to leave under Article 50 of the EU treaty by the end of March 2017. That leaves barely three months to settle basic questions such as whether Britain should aim to stay in the EU’s customs union. + +The contrast with the EU’s institutions, and the larger capitals, is striking. The 27 remaining EU countries quickly established a common line towards Britain on matters like the indivisibility of the EU’s single market. At a summit on December 15th, as The Economist went to press, they were due to issue a formal declaration outlining the format for the talks to come. The Brussels institutions have largely established their respective roles, bar a wobble from the European Parliament, and now spend their days in quasi-academic contemplation of trade models or security co-operation protocols as they wait for the games to begin. Officials everywhere insist that their priority will be preserving the interests of the EU, not keeping Britain happy. “This is a negotiation where we have to defend Europe, not undo it,” says Guy Verhofstadt, the European Parliament’s Brexit point-man. + +European officials have refused to engage with Britain until Mrs May triggers Article 50. But they observe goggle-eyed the spectacle unfolding across the Channel. Some British ministers appear to believe that the entire relationship can be recast, rather than merely the divorce settlement finalised, in the two-year period Article 50 allows. European negotiators who think it is essential to act as one are staggered to hear some ministers cling to the delusion that Germany’s need to sell cars to British motorists will ensure that Mrs May secures a good deal. + +Gloom is thus descending on the European side. The EU will probably insist on settling the terms of Britain’s withdrawal before discussing future arrangements, and each is ripe for the fiercest of rows. Top of the list is the departure bill that the European Commission, which will lead the talks on behalf of the EU, will place before Britain. The commission puts the sum at up to €60bn ($64bn), roughly equivalent to three-quarters of Britain’s projected budget deficit for 2016-17. Brexiteer diehards, and their allies in the pit-bull press, will transfer their fury from the domestic “Remoaners” they accuse of holding up Brexit to perfidious Europeans making outrageous demands. One EU official puts the chances of Britain walking out of the talks next year at 50%. + +Even if catastrophe can be averted, the negotiations will offer endless opportunities for rancour. Take the question of what to do with the 2.8m EU citizens living in Britain and the 1.2m Britons in the rest of the EU. At first blush it seems simple: both sides agree to guarantee the ongoing rights of citizens who arrived before a given date—perhaps the notification of Article 50. Indeed, Mrs May has sought to strike such a deal before beginning the formal withdrawal talks (concerned that she was seeking to play divide-and-rule, her European counterparts rebuffed her). + +But closer inspection reveals a never-ending string of complexities. Do governments have the administrative wherewithal to process applications for permanent residence? Will the children of EU citizens have the right to cheap university tuition? What about accrued pensions or other benefits? None of these questions is intractable. But each requires detailed negotiations and technical work. The same goes for other matters to be tackled in the withdrawal talks, from the pensions of British Eurocrats to the management of safety at Britain’s nuclear plants. Untangling a 43-year-old relationship, it turns out, is devilishly complicated. + +Triumph of the won’t? + +This in turn explains why concluding a separation deal within two years will not be easy. (In fact the months needed for procedural matters and ratification will cut the negotiation time to around 15 months.) The scale of the task, and the economic thump many Europeans think is heading Britain’s way—inflation, diverted investment and swooning public finances—mean some still harbour a hope Brexit may be averted. But that misreads the British mood. If things turn sour the blame will be heaped not on Brexit, but on the obstructionist EU. + +The ingredients for Brexit—a departing country confused about its leverage, a club distracted by other problems and determined to avoid more fractures, a procedure without precedent, a tight deadline—make a combustible mix. Yet both sides should feel the historic weight of these talks. Although Britain will be the first victim if things go wrong, a club assailed by crisis on all sides knows it cannot afford to oversee a Brexit debacle, however fascinating the exercise. For the EU, at least, that means placing hope in a British government that it fears may not warrant it. “From a rational point of view, we can’t fail,” says an official in Brussels. “But I’m not sure the rationality is there in the UK.” + +This article appeared in the Europe section of the print edition under the headline “The sexiest job in Brussels” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21711886-still-its-sexiest-job-brussels-eus-brexit-negotiators-prepare-disaster/print + + + + + +上一项 文章 章节 下一项 + + + + + +Britain + + + + +Business and Brexit: When the red tape unravels + +Police for hire: BOGOF bobbies + +Care for the elderly: Too little, too late + +Volunteering: Time is money + +The Labour Party: Brexit’s biggest loser + +Hate speech on Twitter: False echoes + +The 90-plus population: Measuring Methuselah + +Bagehot: The breaking of Boris Johnson + + + + + +文章 章节 下一项 + +Brexit and business + +British companies may find it harder than they expect to unravel the EU’s red tape + +If it wants to carry on doing business with Europe, Britain will have to keep following its rules + +Dec 17th 2016 + + + +ANOTHER week, another EU regulation: number 1169/2011, to be exact, concerning “food information for consumers”. Like much that comes out of Brussels, it sounds innocuous, but has already had far-reaching and costly consequences. The new rules, which came into force on December 13th, specify font sizes on food labels, require details on allergens in prepared food and a lot more. They may improve safety, but they have forced producers to rejig their manufacturing processes once again. + +The breadth of EU regulation in the food industry is extraordinary, covering everything from hygiene to storage, says Helen Munday, the chief scientific officer at the Food and Drink Federation, a lobby group. Conforming to these rules over the past four decades has shaped an industry that now employs 400,000 people in Britain. The Europe-wide regulations are a faff, but they allow British firms to trade on equal terms with other companies in the EU’s single market and maintain seamless supply chains across the continent, without lengthy inspections of imported Italian mushrooms at national borders. + +Executives and lawyers are now scrambling to understand how Brexit, and the likely withdrawal of much EU regulatory oversight, will reshape British business. As the government prepares for divorce negotiations, firms must identify the pitfalls and opportunities presented by the coming new regulatory order. + +Those expecting a post-Brexit bonfire of paperwork may be disappointed. The government sensibly plans to import all existing EU rules into British law via a (misleadingly named) Great Repeal Bill; any unwanted regulations will be abolished only gradually. And if Britain wants to go on trading with its neighbours, its exporters will have to keep following their rules. Nearly half of Britain’s exports go to the EU. European countries will still demand compliance with their environmental, safety and other standards, so Britain may decide to keep many of these on the statute books. + +Those industries that depend on complex supply chains and “just-in-time” deliveries will be most affected, says John Fingleton, a former competition regulator. British carmakers dread the bottlenecks at ports that could be caused by customs inspections and paperwork, holding up the imported parts that keep their factories going. “Lean manufacturing” requires them to hold little stock; a couple of days’ delay of one part could have greater knock-on effects. Remaining a member of the EU’s customs union would avoid this problem—though it would also prevent Britain from signing free-trade deals with third countries, a key aim of Brexiteers. + +The EU’s environmental regulations are among those most complained about by Brexiteers. Take the End of Life Vehicles Directive. As of last year, 95% of every new car sold in the EU has to be reusable or recyclable. In theory, Britain could opt out of such rules after Brexit, reducing carmakers’ costs. Yet it is unlikely to. One reason is to maintain the ability to export to Europe. The other is that Britain itself has been one of the strongest advocates in Brussels of stricter environmental laws. + +Something similar is true in competition policy, where free-market Britain has been a big force behind beefing up EU law. Decisions on mergers and takeovers in telecoms are referred to the European Commission by Britain’s domestic regulator, Ofcom; on leaving the EU these powers will be repatriated. In practice, it may make little difference. In May, for example, the commission blocked the proposed takeover of O2, a mobile-phone operator, by Three, a rival—but this had already been recommended by Ofcom itself. “We wouldn’t see very different outcomes,” believes Andrew Griffith, an executive at Sky, a broadcaster and mobile operator which is the target of a takeover bid by 21st Century Fox (see article). He points to other transnational regulations—co-ordinating radio frequencies, for instance—which Britain will remain within. + +There is more concern regarding the replacement of regulatory bodies. Britain’s life-sciences firms, which do nearly half their business with the EU, worry that if the European Medicines Agency ups sticks from London they will lose influence. Similarly, food companies fret that after Brexit they will lose access to the pooled expertise of the European Food Safety Authority. Setting up new domestic regulators will take time and money. + +Public procurement, worth about £240bn ($300bn) a year in Britain, has also been shaped by European regulations. Central governments have to put out to competitive tender any contract worth over €135,000 ($143,000). According to Ali Nikpay, a partner at lawyers Gibson Dunn, this obligation could be abandoned on Brexit, so contracts for supplying police cars, for example, could be awarded to domestic carmakers instead of foreign ones. + +This could tempt the government into industrial policy by stealth, especially as the prime minister, Theresa May, has announced her interest in promoting an as yet ill-defined “industrial strategy”. State aid is subject to the World Trade Organisation’s anti-subsidy rules, but the government could choose to interpret those rules more loosely than Brussels has done. + +Yet anti-competitive tendering would rip off taxpayers. Serco runs prisons, and much else, for Britain’s government, but its boss, Rupert Soames, says that EU rules work in the public interest. It would be “utterly wrong in principle” to encourage monopolies at home, he says. Britain might have to set up its own body to monitor state aid, if it is to convince the EU that its firms are competing fairly for public authorities’ business in the EU, which is worth about 14% of the union’s GDP. And if Britain favoured its own firms at home, that could invite a tit-for-tat response from European governments, warns Mr Nikpay. + +Britain’s business landscape has indeed been shaped by EU regulations. Yet it will find that leaving the union does not mean it can ignore them. The main difference after Brexit will be that Britain no longer has a say in how those rules are written. + +This article appeared in the Britain section of the print edition under the headline “When the red tape unravels” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21711920-if-it-wants-carry-doing-business-europe-britain-will-have-keep-following-its/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +BOGOF bobbies + +How to hire your own London policeman + +The capital is offering a buy-one-get-one-free deal on officers + +Dec 17th 2016 + +Call 999 while stocks last + +FROM the platform outside his office, high in a building made of chilly shipping containers, Michael Smith can gaze down upon the bright lights of Brixton. He is the director of the Brixton Business Improvement District, a group of local businesses keen on improving the area. In this part of south London, which has seen an extravagance of bars, clubs and restaurants appear in recent years, that includes making the streets safe. To do so, since August the organisation has been paying for two extra police officers through MetPatrol Plus, a scheme run through the London mayor’s office. As the police are squeezed, such ideas have growing appeal. + +MetPatrol Plus has been in place since 2008 (a variation of it existed before then). It is dubbed “buy-one-get-one-free”, or BOGOF, policing; local authorities, business improvement districts and parish councils pay for police officers and the Met then matches their funding, meaning areas get two cops for the price of one. Prices range from £66,000 ($84,000) a year for a constable to £95,000 for an inspector. Across 24 of London’s 32 boroughs 348 officers are currently funded in this way. + +The extra coppers can be used to tackle particular local concerns. In Newham they accompany council officers to deal with dodgy landlords. Brent wants them to focus on dealing with gangs and violence against women and girls. In Brixton they work with nightclubs to crack down on drug-dealers and pickpockets. Mr Smith’s business organisation has provided its two officers with mobile phones so companies can contact them directly. + +Boosting police numbers might lessen Britons’ long-standing anxiety about their visibility. Changes in crime trends and policing methods, as well as budget cuts, mean fewer officers walk the streets. In June the head of the National Police Chiefs’ Council said the era of bobbies on the beat was ending. According to a poll in August by Ipsos MORI, a third of people said they had not seen a uniformed police officer in their local area in the past year. + +The capital has lost fewer officers than other forces—just 4% between March 2010 and March 2016, compared with a fall of 17% across the rest of England and Wales. But in London the number of community-support officers, civilian staff used to bolster the police who are often the ones seen in the streets, has plunged from 3,832 in October 2011 to 1,480 today. Mr Smith is keen to make sure his BOGOF officers are out in Brixton. After dealing with an aggressive beggar in a Brixton coffee shop recently, they handed the case over to the local police to avoid being tied up in court for days. + +With money for policing in short supply (the Met’s budget has been cut by almost a fifth since 2011), those paying for extra officers want to make sure they are exactly that—extra. Mr Smith checked Brixton’s policing numbers and rotas carefully before his officers started work. The Met is allowed to recall BOGOF officers in emergencies, such as riots, but they are not meant to replace normally funded police. + +Such schemes raise some uncomfortable questions. What happens if the priorities of those paying for the officers do not align with those of the Met? Councils insist that no conflict has arisen so far, but the potential surely exists. Increasing the number of police in one area might result in crimes being displaced elsewhere. Gavin Hales of the Police Foundation, a think-tank, wonders if such schemes risk creating a two-tier police economy, with rich areas able to afford more officers, even if they need fewer. + +Residents and community groups can theoretically hire their own BOGOF officers, though none has to date. In Hampstead, a posh bit of London, residents last year stumped up £210,000 in four weeks to pay for officers through the scheme. They were unable to get the idea off the ground after meeting some institutional resistance; Jessica Learmond-Criqui, one of those involved, reckons they were seen by some as wealthy types trying to get more protection. Expect more such arguments if the ranks of BOGOF bobbies grow. + +This article appeared in the Britain section of the print edition under the headline “BOGOF bobbies” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21711917-capital-offering-buy-one-get-one-free-deal-officers-how-hire-your-own-london/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +The social-care crisis + +Taxes will rise to fund care for Britain’s elderly + +A “sticking plaster” solution for a system that “needs a quadruple bypass” + +Dec 17th 2016 + + + +THE crisis in care for the elderly has at last caused the government to act. On December 15th Sajid Javid, the secretary of state for local government, announced that local authorities would be given greater flexibility to increase council tax, a levy on property, so that more money could be allocated to adult social care. Rising demand and falling budgets for social care—which includes old-folks’ homes and other help for the infirm—have led to thousands of pensioners ending up in hospital because there are not sufficient resources to look after them in the community. Many then get stuck there, for the same reason. Delayed transfer of elderly people from hospital beds costs the taxpayer around £820m ($1bn) a year. + +The prospect of a bit more money was welcomed by health and social workers. But with the number of elderly people rising, tinkering with council tax is “wholly inadequate”, says Richard Humphries of the King’s Fund, a health think-tank. There is an emergency in social care, he says. Austerity has squeezed government grants to local authorities, which provide it. Council spending on caring for the elderly fell by 9% in real terms in 2010-15. The number of pensioners receiving care from their local authority declined by 26% over that period. Social care faces a funding gap of £2.3bn next year, the King’s Fund says. + +Councils are allowed to raise their taxes by a maximum of 2% a year. Last year the government allowed them to levy an additional 2% “precept”, hypothecated to social care, every year for four years, a move that 95% of councils adopted in the first year. The government’s new announcement means that councils will be allowed to raise the remaining 6% over two years rather than three. + +The 2% increase in the first year has allowed councils to bring in an extra £382m. However, this is less than 3% of the total they have budgeted to spend on social care this year. A rise in the minimum wage will increase councils’ social-care costs by an estimated £612m. Those costs will grow as the minimum wage rises to £9 per hour for over-25s by 2020. The organisations to which councils subcontract 90% of social care nationally are already struggling to provide services for the price being offered by local authorities. Two large at-home care providers have recently withdrawn from the market. + +Councils are trapped. They are reluctant to raise council tax, whose regressive nature means that the poor would end up paying relatively more. But they have no other way of raising large amounts of money. Their alternative is cutting non-essential services, which would also hit the vulnerable hardest. “If social care is part of the prime minister’s promise of a more equal country that works for everyone, then the precept is a poor policy instrument to achieve it,” says Mr Humphries. It also exacerbates geographical disparities, since those areas with the greatest need for publicly funded social care are often those with the lowest council-tax base. + +Mr Humphries says the government will need to bring forward some of the £1.5bn it has promised for social care by 2019 just to “steady the ship”, before eventually reforming the way in which social care is funded. In Germany and Japan, for example, there are compulsory social-insurance payments for all citizens, which provide funding that is ring-fenced for social care. That could provide a model for Britain, he believes. Joe Anderson, the mayor of Liverpool, describes the government’s measures as a mere sticking plaster. It is not enough, he says: “What the system needs is a quadruple bypass.” + +This article appeared in the Britain section of the print edition under the headline “Too little, too late” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21711928-sticking-plaster-solution-system-needs-quadruple-bypass-taxes-will-rise-fund/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Social care + +A time-banking scheme aims to overcome Britain’s crisis in care for the elderly + +Young people who volunteer now could bank hours of credit to be redeemed in kind on their own retirement + +Dec 17th 2016 + +Enlightened self-interest + +THE system that provides social care to the elderly is chronically short of cash. Now one organisation is touting a new approach that runs on time, not money. Give & Take Care, a company founded by academics at Brunel University, is poised to launch a social-care scheme in which volunteers can log the hours of care that they provide to elderly people and exchange them for care for themselves later in life. + +The organisation has been awarded £1m ($1.3m) by Innovate UK, a government agency dedicated to supporting science and technology. It plans to launch in January in Twyford, in southern England, in partnership with a local branch of Age Concern, a charity for the elderly, which will match the skills of caregivers with the needs of elderly care-receivers. It hopes to have 100 members at the time of its launch, and bills itself as an idea that could serve hundreds of thousands of people in future. The banked time-credits will be managed by the East of England Co-operative Society. + +The scheme hopes to attract some of the millions of people who provide unpaid care to loved ones. By registering, they can build up a care “pension” which they can theoretically claim back in the form of care during their own retirement. The banked time is immune to inflation or stockmarket crashes, points out Gabriella Spinelli, one of Give & Take’s co-directors. “An hour today is an hour tomorrow, and it’s still an hour in 20 years’ time,” she says. + +Against this is the risk that the pyramid will collapse: a twenty-something volunteer may think twice before investing hours of time with a startup that may not be around in 50 years’ time. Give & Take proposes to charge an administrative fee of £1 per hour (initially to be paid by the care-receiver, though it says caregivers could also contribute). Elderly folk may wonder why they should pay anything for care that they are currently receiving free of charge from their children. And people’s input will not necessarily be rewarded on a like-for-like basis: a nurse who volunteers today might not get help in future from somebody equally qualified, for instance. + +Heinz Wolff, a popular scientist who is the scheme’s other co-director, believes that if it can get enough people on board, Give & Take “will give everyone the confidence that [it] is a real alternative to current social-care models.” The idea might at least get young people thinking about their own future needs. Given the creaking state of the existing care system, they should probably start banking either money or time soon. + +This article appeared in the Britain section of the print edition under the headline “Time is money” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21711844-young-people-who-volunteer-now-could-bank-hours-credit-be-redeemed-kind-their-own/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Britain’s opposition + +Labour: the biggest loser from the Brexit referendum? + +Having almost disappeared in Scotland, the party is in danger of losing touch with its Leave-supporting grass roots in the midlands and northern England + +Dec 17th 2016 + + + +BY-ELECTIONS are usually good for opposition parties, as they give voters a risk-free hit at governments. That seems still to work for small parties: on December 8th the Liberal Democrats raised their vote share in Sleaford and North Hykeham, a week after they had overturned a huge Tory majority in Richmond Park. The UK Independence Party (UKIP) jumped from third to second in Sleaford. But for Labour, the official opposition, the results were dismal: it lost its deposit in Richmond and its vote share fell from 17% to 10% in Sleaford, pushing it into fourth place. + +A big reason is the party’s muddle over Brexit. The Lib Dems under Tim Farron have chosen to speak for the 48% who backed Remain in June, arguing for a soft Brexit or even a second referendum. That resonates in big cities, particularly London, and some home counties. In contrast UKIP, under its new leader Paul Nuttall, is insisting that the 52% who voted Leave want a complete break with the European Union. That may win it support in the midlands and north, home to many long-standing Labour voters. As Emma Reynolds, a Labour MP, puts it, her party sometimes seems instead to be chasing the 0%. + +Part of Labour’s problem over Brexit is arithmetical. Nine out of ten Labour MPs backed Remain in June. Yet in over two-thirds of Labour seats, Leave won a majority. True, Parliament overall has a similar division: three-quarters of MPs voted to Remain. The Tories are also divided over Europe too (see Bagehot). Yet the divergence of views between MPs and constituents is most striking for Labour. + +What compounds this is that Jeremy Corbyn, the party’s leader, was so lukewarm for Remain. He voted out in the 1975 referendum and for most of his career has been fiercely critical of the EU as a free-market, pro-capitalist club. He backed Remain this time to preserve shadow cabinet unity, though he also talked of preserving EU employment rights from rapacious Tories. His ambivalence caused confusion: in some polls before the referendum, almost half of Labour voters said they did not know the party’s view. + +As leader, Mr Corbyn has said next to nothing about the three main selling points of the Leave campaign: an end to unrestricted migration from the EU, taking back jurisdiction from the European court and stopping payments into the EU budget. He has resisted suggestions by many Labour MPs that the party should modify its pro-immigration stance. He has not joined the arguments over whether to press for a hard or soft Brexit, or a transitional deal, which the chancellor, Philip Hammond, called for this week. Since before the referendum, he has seldom raised Brexit in his weekly questions to the prime minister. + +That has left Labour on the sidelines of the debate over the terms of Brexit, which often seems to be taking place chiefly inside the Tory party. Sir Keir Starmer, Labour’s Brexit spokesman, has been more effective in demanding information from the government and a greater role for Parliament than in saying just what he wants. This week he pledged to fight against a hard break and to work instead for a “strong relationship” with the rest of the EU—but also said that “the rules will have to change” on free movement of people. + +Labour’s muddle on Brexit and Mr Corbyn’s far-left metropolitan roots could cost it more votes in the midlands and north, where UKIP is now focusing. In May 2015, before Mr Corbyn took over, Labour fell from 41 seats to just one in Scotland. If anything similar happened in its English strongholds, the party could face terminal decline. That would be bad for the country. David Cameron lost the referendum, yet his successor, Theresa May, has a large poll lead. Her government needs tougher scrutiny, not least regarding Brexit. + +This article appeared in the Britain section of the print edition under the headline “Brexit’s biggest loser” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21711934-having-almost-disappeared-scotland-party-danger-losing-touch-its/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Hate-speech on Twitter + +A supposed outpouring of online hatred against Jo Cox, a murdered MP, was exaggerated + +The trolls of Twitter seem to be less numerous than feared + +Dec 17th 2016 + +Jo Cox, who inspired more hope than hate + +HOPE NOT HATE, a charity that combats extremism, published a report on November 28th purportedly revealing a mass outbreak of online hate-speech after the murder of Jo Cox, a Labour MP, a week before the Brexit referendum in June. In the month after the killing at least 25,000 people sent more than 50,000 tweets celebrating her death or praising her murderer, Thomas Mair, Hope Not Hate said. + +Britain’s largest newspapers leapt to publish the shocking findings. The story was shared far and wide. Angela Eagle, a Labour MP, cast its conclusions as “staggering and appalling”. The news struck as Britain was coming to terms with an increase in hate crimes. (This week a man stabbed a passenger on a London train reportedly while shouting anti-Muslim slogans.) The discovery that such hateful attitudes were not isolated, and that tens of thousands of members of the public were willing to voice them openly, was deeply troubling. + +Yet the story was wrong. An investigation by The Economist has found that Hope Not Hate misrepresented the findings of its own report when first releasing it to the press. The report itself gave a confusing impression of the number of tweets that celebrated Ms Cox’s murder. We estimate that, in reality, of hundreds of thousands of tweets mentioning the MP by name, the number that celebrated her death was at most 1,500, and probably much lower. + +Although press coverage of the story appeared to misread the report, that is not entirely the fault of journalists. The claim that 50,000 tweets celebrated Ms Cox’s death or praised her killer comes from the first paragraph of a press release sent out by Hope Not Hate ahead of the report’s publication. It does not appear in the study itself, which found only that a “majority” of the tweets, which related to both Ms Cox’s murder and the Brexit referendum more broadly, “related to specific calls for violence” (a term that is not defined). + +Hope Not Hate admitted that its initial press release was incorrect and said that it was later changed. The charity referred us to the study’s authors, Imran Awan of Birmingham City University and Irene Zempi of Nottingham Trent University. Mr Awan agreed that newspaper headlines had oversimplified the study’s findings. Even so both authors retweeted articles repeating the press release’s false claim. + +In their study, entitled “Jo Cox ‘deserved to die’”, Mr Awan and Ms Zempi examine a sample of 53,000 tweets with hashtags related to both Ms Cox’s murder and the Brexit referendum. The total number of tweets on these subjects during the period was significantly more than 53,000; the authors appear to have selected their sample by narrowing their search using hashtags including #refugeesnotwelcome and #DeportallMuslims. + +The report does not say what proportion of the 53,000 sample tweets related to Ms Cox’s murder, and what share concerned Brexit more generally. When The Economist asked the authors for help, they declined to share their data with us, citing death threats they said they had received since the report’s release. So we undertook our own analysis, examining tweets from June and July that included the terms “Jo Cox” or “#JoCox”—some 341,000 unique messages. Of a random sample of 800 of these, none was celebratory, and just four seemed to be derogatory toward Ms Cox, criticising her support for Syrian refugees, for instance. From this, simple statistics suggest that the true number of tweets cheering the politician’s murder would lie between 0 and 1,500. (The Hope Not Hate report reproduces about 30.) Mr Awan notes that our sample did not include tweets that mentioned only the killer, Mr Mair; it is also likely that some tweets were deleted before our collection. + +The archive of tweets was gathered by Martin Goodson and Rafal Kwasny, data scientists at Evolution AI, a London-based startup. They found the Hope Not Hate report had other claims that seemed overdone. For example, it said a “key theme” on Twitter was the description of Mr Mair as a “hero”. In fact, many tweets containing the word “hero” were referring either to Ms Cox herself or to a pensioner who was injured while intervening to save her. + +The authors point out that their search terms were broader than those used in our analysis, including terms related to Brexit and immigration. So for good measure, we also studied a random sample of 1,000 Brexit-related tweets collected by scientists at the University of Sheffield. Of these, we judged less than 1% to be xenophobic or worse. Multiplied by the millions of tweets about Brexit, this would add up to plenty of bile—even if you narrowed the sample down using the most inflammatory search terms you could still probably generate a sample of 53,000. + +Hope Not Hate’s mistake is to take xenophobic Brexit-related tweets (which are plentiful, though a tiny fraction of the whole) and add them to tweets celebrating the murder of an MP (which as far as we can establish were very rare) to make a single tally of hatred. It then compounds the error by focusing on Ms Cox in the report’s headline and the initial press release. + +The authors write that Twitter “acts as an echo chamber, where hateful comments are reinforced and can impact upon wider community cohesion.” Here they are right—which is why it is important to debunk claims which are not properly supported, including their own. That a single person would celebrate an MP’s murder is terrible. Yet the public was led to think that such a reaction was widespread online. We do not believe that it was. + +This article appeared in the Britain section of the print edition under the headline “False echoes” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21711931-trolls-twitter-seem-be-less-numerous-feared-supposed-outpouring-online-hatred/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Measuring Methuselah + +The curious case of Britain’s missing nonagenarians + +The queen may have been hoodwinked into sending out 100th-birthday cards to sprightly ninety-somethings + +Dec 17th 2016 + + + +ANYONE who comes across 50,000 missing nonagenarians should notify the Office for National Statistics (ONS) at once. “There is no definitive count of the population aged 90 and over in England and Wales,” the statisticians acknowledged in a little-noticed report on December 12th. The ONS compared three estimates, which varied by more than 46,000, or nearly a tenth of the official total. Why is it so hard to measure the number of oldies? + +The official count of the population is the census, taken every ten years. On an annual basis, estimates are produced by rolling forward the census figures and allowing for deaths and migration. By this measure, in 2015 there were 504,030 people aged 90 or over. + +But the census is not wholly reliable, especially when it comes to old folk. Those aged 85 or over had lower response rates to the 2011 census than did middle-aged people (though higher than twenty-somethings, the least responsive bunch). Some very old people forget their date of birth. Others deliberately exaggerate their age, perhaps to appear even wiser. Some who had declared themselves in the 1971 census to be centenarians were later discovered to be 20 or even 30 years younger when their records were compared with those held by the National Health Service (NHS). Suspiciously, the number of 100th-birthday cards that the queen has sent out in the past few years has been slightly higher than what the ONS thinks should be the true number. + +The 2011 census found 30,000 fewer people aged 90 and over than had been estimated by rolling forward the 2001 census data to 2011. Other estimates of the elderly population give wildly different results. One cited by the ONS in its report combines various administrative data sets, such as NHS and national-insurance records. This gives a total of 477,126 over-90s in 2015. Another, known as the Kannisto-Thatcher method, tots up how many people of each age die each year and, from that, estimate the living population of a given age group. This derives a total of just 457,792 in 2015. + +Statisticians cannot be sure where within this range the true figure lies. Given that such numbers are used to plan things like health and social care, it is awkward that the size of Britain’s greying population is such a grey area. + +This article appeared in the Britain section of the print edition under the headline “Measuring Methuselah” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21711710-queen-may-have-been-hoodwinked-sending-out-100th-birthday-cards-sprightly/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Bagehot + +Theresa May and the breaking of Boris Johnson + +The prime minister is transforming the role of the cabinet + +Dec 17th 2016 + + + +EVERYTHING in politics comes back to Machiavelli in the end. That much Friedrich Schiller understood. From the 18th century dramatist’s pen flowed imperfect, squishily human characters who have read “The Prince” and know that to exert their will in the world they must become iron. Take “Mary Stuart”, his play about the Queen of Scots, now on at the Almeida Theatre in London. Elizabeth I is loth to sign her cousin and rival’s death warrant until, in a sylvan encounter, Mary fails to show due humility. Schiller depicts a side of Gloriana that England opts to forget: even dear Old Bess had to be cynical, sly and brutal to keep power in her society. She had to break people. + +Bagehot would not reach for the comparison if Theresa May did not do so herself. The prime minister has named Elizabeth the historical figure with whom she most identifies: “She stood up for Britain…had a very clear vision about what she wanted to do.” And there is something there: images of the munificent, nation-uniting leader (the prime minister’s party is close to its highest poll numbers in decades) up against perfidious continentals mingle awkwardly with the brutality she patently feels she has to mete out to stay on top. + +Consider Boris Johnson. The foreign secretary is no Queen of Scots. Mrs May would lose little sleep over finishing him off (politically, at least). Yet like Schiller’s Elizabeth, she is intensely suspicious of prospective rivals, especially ones who do not defer to her authority and threaten to upset her plans. Mr Johnson ticks those boxes: routinely veering off message, issuing freelance policy announcements and flashing Eurosceptic ankle at Tory MPs who are destined to be disappointed by Mrs May’s efforts in Brussels next year. + +The prime minister has responded with jaw-dropping ferocity. When the man she made foreign secretary only five months ago (correctly) accused Saudi Arabia of conducting proxy wars in the Middle East he was publicly disowned: the comments were “not the government’s position”. This, after a torrent of prime ministerial mockery: “I seem to remember the last time he did a deal with the Germans he came back with three nearly new water cannon,” she tweaked in the summer, when the two were rivals for the top job; in her October conference speech she feigned shock that he had stayed “on message for a full four days”; in Parliament on December 14th she allowed that her acronym for him was FFS (“Fine Foreign Secretary”, she explained, though the hint was something else). Most striking was a joke last month in which—referring to an account of Michael Heseltine, a former deputy prime minister, strangling his mother’s dog—she looked her foreign secretary in the eye and boomed: “Boris, the dog was put down...when its master decided it wasn’t needed any more.” + +Notwithstanding a dry private wit, Mrs May is not the sort who takes humour lightly. Her mockery of Mr Johnson serves a purpose: control. This speaks to her statecraft, which differs substantially from that of David Cameron. Her predecessor ran what might be described as a liberal dictatorship. The major decisions were reached in a tight cabal containing the prime minister, George Osborne and their advisers. The cabinet made relatively few big, meaningful decisions. Yet day to day, individual ministers were mostly free to run their fiefs as they saw fit: Michael Gove to enact his education revolution, Iain Duncan Smith to try (and broadly fail) to overhaul the welfare system, Mrs May to run the Home Office as a sort of private fortress. + +Under her premiership things could hardly be more different. The cabinet makes real decisions. Its subcommittees plunge into the details. Ministers are expected to know each other’s patches. To rub it all in, the prime minister gave them a bound collection of past cabinet transcripts for Christmas: the cabinet is back, is the message. Individually, however, ministers are weak. David Davis, the Brexit secretary, has received the “not speaking for the government” treatment. Justine Greening, the education secretary, must bang the drum for new grammar schools despite her own doubts. Philip Hammond, though friendly with Mrs May and outspoken on Brexit, eschews the imperial ostentations of most of his recent predecessors. The prime minister has appointed her own economic adviser. She has also ordered the seizure of the phone and e-mail records of ministers suspected of leaking news to the press. The braver in their midst, and top civil servants, whisper of the U-turns and bottlenecks caused by the requirement that policies go through Nick Timothy and Fiona Hill, Mrs May’s granitic chiefs of staff, and by the verbal invigilations the prime minister puts them through before approving things. + +Full throttle + +This Sturm und Drang extends beyond the cabinet. Mrs May did not just dismiss Mr Osborne and Mr Gove when she took office; she gave each a dressing down in the process. Gavin Williamson, her parliamentary enforcer, lets a tarantula named Cronus (after the castrator of Greek myth) scuttle about his desk during meetings—supposedly to intimidate MPs. When Nicky Morgan, the former education secretary, made a snippy remark about a pair of leather trousers worn by the prime minister, Downing Street blew a gasket: “Don’t bring that woman to No 10 again,” stormed a text from Ms Hill to another former minister. + +It pays to mark the limits of what one might call Mrs May’s autocratic democracy. Mr Timothy is not, as some accounts put it, a “Rasputin”. Ms Hill is neither truly “terrifying” nor “paranoid”. And the prime minister did not “threaten to exterminate” Mr Johnson. Yet there is something of Elizabeth about Britain’s still new and little-understood prime minister. She is severe and pugilistic, more so than her predecessor. Done right—as Schiller implied in “Mary Stuart”—this mastery of the will is the essence of power. Done wrong, Machiavelli warned, it leads to enemies, resentment and downfall. It’s all in the execution. + +Economist.com/blogs/bagehot + +This article appeared in the Britain section of the print edition under the headline “The breaking of Boris Johnson” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21711918-prime-minister-transforming-role-cabinet-theresa-may-and-breaking-boris/print + + + + + +上一项 文章 章节 下一项 + + + + + +International + + + + +Pax Trumpiana: Allies and interests + + + + + +文章 章节 下一项 + +Pax Trumpiana + +America’s allies are preparing for a bumpy ride + +Donald Trump’s victory has shaken countries that depend on America for security and prosperity + +Dec 17th 2016 + + + +SURPRISED and shaken by Donald Trump’s victory, America’s allies are hoping for the best while desperately seeking guidance on what his presidency might mean for them. Mr Trump’s statements on the campaign trail were contradictory and often disturbing. Many countries see the 70-year-old Pax Americana as a source of security and prosperity. That the president-elect might place little value on this system of alliances and rules is as incredible to many as it is alarming. + +Since the election, Mr Trump has made some moves to calm such fears. Foreign leaders who have spoken with him report that he was friendly and largely reassuring. Before the election he had suggested that Japan, for example, should either pay America a lot more for its defence or build its own nuclear forces. But after meeting him on November 17th Shinzo Abe, Japan’s prime minister, declared himself “convinced that Mr Trump is a leader in whom I can have confidence”. Katsuyuki Kawai, a senior aide to Mr Abe, said that members of Mr Trump’s transition team had told him that not all of the president-elect’s pre-election remarks should be taken literally. + +South Korea, too, was identified during the campaign as a free rider that could be left to defend itself from its nuclear-armed neighbour, north of the 38th parallel. But in a telephone call with its (soon-to-be-ousted) president, Park Geun-hye, Mr Trump said that he would uphold America’s security alliance with South Korea and maintain a “strong, firm” defence posture in the region. + +Mr Trump had also described NATO as “obsolete” and suggested that America would come to the aid of a threatened member only if it had paid its dues. But in a call with the security alliance’s secretary-general, Jens Stoltenberg (who diplomatically thanked him for having raised the issue of inadequate European defence spending), Mr Trump spoke of NATO’s “enduring importance” and discussed how the alliance was adapting to new threats, in particular, countering terrorism. + +The only one of America’s big allies publicly to hint at disquiet has been Germany’s chancellor, Angela Merkel. Before speaking to Mr Trump, she said that Germany and America were “bound by common values” such as democracy, freedom and respect for the rule of law. It was on that basis that the two countries, and leaders, could co-operate, she said. Her statement was interpreted by some as a willingness to champion those values, should Mr Trump fail to. + +Amid all the mixed signals, the truth is that America’s allies have no real idea what they are dealing with. What, for example, is India’s prime minister, Narendra Modi, to make of the call between Mr Trump and Pakistan’s prime minister, Nawaz Sharif? America’s relationship with Pakistan is severely strained by its security service’s covert support for the Afghan Taliban and other jihadist groups. But according to the transcript published by the astonished Pakistanis, Mr Trump called Mr Sharif “a terrific guy”, offered to come to his “fantastic country, fantastic place of fantastic people” and declared himself willing “to play any role you want me to play to address and find solutions to the outstanding problems”. To Indian ears that sounded like a highly unwelcome proposal to mediate in the two countries’ territorial dispute over Kashmir. + +The view from Trump Tower + +Mr Trump’s world view is shaped by a set of beliefs that he has held since the 1980s, argues Thomas Wright of the Brookings Institution, a think-tank in Washington. These are quite unlike those held by any American president since the second world war. “He believes that the US has been taken for a sucker by other countries because of trade deals and security commitments,” says Mr Wright. By studying Mr Trump’s public statements over the past 30 years, he concludes that the president-elect thinks that America has no strategic interest in military engagement in Asia or maintaining troops in Europe. In the Middle East, he has talked about forcing Kuwait to hand over a quarter of its oil revenues as payment for its security and said that Saudi Arabia “would not be around” were it not for “the cloak of American protection”. + +Presidents from Jimmy Carter to Barack Obama have lamented the failure of America’s allies to pull their weight. But there is a big difference between Mr Trump’s views on burden-sharing and those of his predecessors. Mr Obama would have been delighted if every other NATO member honoured its obligation to spend at least 2% of GDP on defence (only Britain, Estonia, Greece and Poland now do; see chart). But what Mr Trump seems to want is that America’s allies in the western Pacific and Europe write a cheque to cover the entire cost of keeping American forces on their territory, which he says amounts to “trillions of dollars” over the years. + + + +Realistically, there is little likelihood of a Trump administration turning these ideas into policies. But a peculiarity of his campaign is causing great uncertainty for America’s allies, says Mike Green, a foreign-policy adviser to Mitt Romney during his presidential run who now works at the Centre for Strategic and International Studies (CSIS) in Washington. Usually, the transition from campaign to administration involves the candidate’s policy wonks working from his speeches to produce a coherent platform. But Mr Trump had no serious policy advisers before his election, and most of his instincts about foreign policy are “unexecutable”. + +Mr Green thinks that the president-elect’s inner circle will strive to get as close to his “original intent” as possible, but the bureaucracy will push back. In past administrations, the ideologues whom presidents have brought into office with them have tended to disappear over time as their policy preferences collide with reality: Ronald Reagan got through six national-security advisers in eight years. And comfortingly for worried allies, Mr Trump’s pick for defence secretary, retired Marine General Jim Mattis, is a soldier-scholar with long experience of fighting alongside partners. He is utterly committed to America’s forceful engagement in upholding the liberal international order. + +Against that, Mr Trump is showing no sign of being weighed down by the dignity of office. His appointment as national-security adviser, retired General Mike Flynn, is a prickly character given to conspiracy theories and Islamophobic rhetoric. And his choice of Rex Tillerson to be secretary of state, announced on December 13th, is disconcerting. The chief executive of ExxonMobil is well-travelled and a consummate dealmaker. But his personal ties with Vladimir Putin, long business relationship with Rosneft (Russia’s state-owned oil firm) and opposition to the sanctions imposed on Russia after its invasion of Ukraine are ringing alarm bells in the capitals of NATO members. + +“Mr Trump’s approach will be ‘transactional’,” says Andrew Shearer, a recent Australian national-security adviser now at CSIS. “His narrative is very much about the cost of alliances. He will want to know how allies are helping US interests.” The biggest unknown, Mr Shearer thinks, is Mr Trump’s attitude to China. He clearly wants to go on the offensive on economic issues, but does he see a link between geopolitical assertiveness and the value of allies in helping America achieve its aims? + +Will Mr Trump’s phone call with Taiwan’s president, Tsai Ing-wen, on December 2nd create trouble for allies in the region? Mr Trump appeared to question the “One China” policy (whereby America has long acknowledged that the governments in Taipei and Beijing both agree that there is only one China, even though neither recognises the other as ruler of it). China reacted furiously. + +Will China now stop co-operating with America over sanctions relating to North Korea’s nuclear programme? And will Mr Trump proceed with his predecessor’s plans to base rotational forces in Vietnam and the Philippines as a deterrent to Chinese bullying in the South China Sea? Those were in jeopardy after Mr Obama criticised the murderous anti-drug campaign of Rodrigo Duterte, the Philippines’ president. But in a phone call, Mr Trump reportedly had only praise for Mr Duterte, whose utterances are even less restrained than his own. (Mr Duterte has called the pope a “son of a whore” and this week boasted of having personally killed suspected drug-dealers, though no one knows if he is bluffing.) + +America’s allies can make some educated guesses about Mr Trump’s administration. Curbing jihadist terrorism will be a priority. With General Mattis at the Pentagon and General Flynn urging him on, a more muscular approach to destroying Islamic State (IS) in Syria and Iraq is probable, although what will follow is a mystery. More troops are likely to be sent to Afghanistan to contain the Taliban, though no one knows how many or for how long. Afghans fret that Mr Trump’s views on their country have been wildly inconsistent. He once tweeted: “It is time to get out of Afghanistan. We are building roads and schools for people that hate us.” Later he said that American troops should “probably” stay because the state would “collapse about two seconds after they leave”. “No one can tell you [what’s going to happen],” says an Afghan official. “We’re very worried,” says another. + +Mr Obama’s attempt to improve relations with Iran by encouraging would-be reformers is likely to be shelved. Although General Mattis thinks the nuclear deal struck in 2015 worth preserving, he was sacked by Mr Obama from running Central Command (which covers an area from Egypt to Pakistan) because he continued to see Iran as an unrelenting threat that had to be countered. + +Shouldering the burden + +Mr Trump will surely insist that America’s allies spend more on defence and more towards the cost of maintaining its forces in their countries. The Pentagon will get extra cash, which will go towards a bigger navy and modernised nuclear forces. Both are potentially positive for allies, says Mr Shearer, because they boost deterrence. + +Despite Mr Trump’s remarks during the campaign, the allies who may have least to fear are Japan and South Korea. That is partly because they have a good story to tell, argues Mr Green: “Their defence budgets are growing and they want to do more.” Japan has loosened the restrictions that had been imposed by its pacifist constitution on contributing to missions that go beyond self-defence. It is playing a bigger role in regional maritime security. South Korea’s military spending is rising by 7% a year; it fields half a million well-equipped troops and is investing in a new missile-defence system. Both countries pay around 40% of the cost of hosting American forces (54,000 in the former and 28,500 in the latter). They are also hoping that their commitment to the alliance will be measured not just in dollars but by their willingness to take more risk and responsibility and to build military forces that can operate well with their American allies. + +According to a South Korean official who has experience of negotiating with the Americans, when the current five-year financial-support agreement comes up for renegotiation in 2018, Mr Trump’s concerns about burden-sharing will be taken into account. However, by then North Korea’s vile regime may be just a couple of years away from being able to launch a nuclear strike, not only on South Korea but also on Washington. He notes that South Korea is very close to a resurgent Russia, and to an increasingly assertive China. The implication is clear: America’s own security interests are more entwined than ever with those of the region, making it a peculiar time to consider scaling back its military presence. + +Opinion polls suggest that Americans’ support for defending South Korea and Japan remains solid, at around 70%. Many Trump voters will also be well aware of the hundreds of thousands of well-paid American jobs in manufacturing created by Japanese and South Korean firms. Backing for NATO, however, is softer. The latest poll by the Pew Research Centre found that just 53% of American voters—and just 43% of Republicans—support the alliance. + +Since the 1970s, American presidents have periodically inveighed against the “free riding” of European allies. The problem became worse in the 1990s in the rush to claim a peace dividend after the end of the cold war, and worse still because of budget-tightening after the 2008 financial crisis. But the oft-quoted number that America’s defence budget accounts for 72% of NATO spending is somewhat misleading. It reflects America’s global reach, not just what it spends on defending the North Atlantic. Even so, says Mr Stoltenberg, the imbalance is untenable. Germany, which has more budgetary room for manoeuvre than any other NATO country, spends a paltry 1.2% of its GDP on defence. + +But European complacency has been jolted by Russia’s annexation of Crimea, frequent large-scale military exercises by Russian forces close to NATO’s border, constant probing of NATO’s air defences and Mr Putin’s thinly veiled nuclear threats. Last year its defence spending stopped falling; this year it will increase by 3%. Mr Trump’s strictures may provide further impetus, says Sandy Vershbow, a former deputy secretary-general of NATO. Next year’s NATO summit could provide an opportunity for every member to make a firm commitment to reach the 2% target within five years, with more money being made available to “project stability” outside Europe. + +Transactions cost + +In his telephone call with Mr Trump, Mr Stoltenberg outlined the ways in which the alliance is adapting to meet new threats, including transnational terrorism, cyber warfare and mass migration, which even a fortress America cannot tackle alone. Sir Nigel Sheinwald, a former British ambassador in Washington, reckons that European allies should frame their arguments to appeal to the new president by pointing out the commercial interest America has in European security and the extent to which the economies of the European Union and America are integrated. + +If Mr Trump listens to General Mattis, he will be reminded of how America’s NATO allies both answered the call and stayed the course in Afghanistan. But the idea of NATO as a “community of destiny”—an alliance of like-minded people with shared values who stand by each other through thick and thin—is “unlikely to cut it with Mr Trump”, says Mr Vershbow. He fears that Mr Trump will quickly strike a deal with Mr Putin over Ukraine, which would be “very divisive”. Some NATO members might go along with it; others would be appalled. + +America’s allies in the Middle East have more to ponder on than they may yet realise. Ken Pollack, a former CIA analyst now at the Brookings Institution, says that they appear “very confident” that Mr Trump will be an improvement on Mr Obama: “He hates Iran; we hate Iran.” The hawkish Israeli prime minister, Binyamin Netanyahu, will applaud any attempt to put Iran back in its box. At least in the short term, America’s relationship with Israel will be under less stress: Mr Trump has shown little interest in reviving the moribund peace process with the Palestinians. Egypt and most of the Gulf states will be thrilled if Mr Trump follows through on a promise to designate the Muslim Brotherhood as a terrorist organisation, which would make it easier to justify repressing them. + +But there should be uneasiness, too, says Jon Alterman, a Middle East analyst at CSIS. Many in the region are uncomfortable about the way Mr Trump and General Flynn characterise Islam. Mr Trump has said that “Islam hates us”; General Flynn once tweeted that “Fear of Muslims is RATIONAL…”. Much though the Saudis would welcome a tougher stance towards Iran, their widely criticised and inconclusive military intervention in Yemen has given them reason to doubt their ability to manage the consequences of a forceful Iranian pushback. Mr Pollack predicts that if Mr Trump does indeed team up with Russia to destroy IS in Syria, as he has suggested he will, the result would be to hand victory in Syria’s civil war to its president, Bashar al-Assad, and his main backer, Iran. + +And what of Iraq, where any prospect of creating order from chaos will depend on America thwarting Iran’s strategy of turning it into a Shia fief? Jordan, too, will require support to survive the destabilising consequences of the war in Syria. The idea of just “taking swings” at jihadists will not work, says Mr Pollack. Mr Trump may dislike the region even more than Mr Obama, “but it sucks you back in”. + +Mr Trump has indicated that with America no longer needing Middle East oil it can leave the Saudis to look after themselves. At the very least, he will demand they stump up even more if American military support is to continue. But if Mr Trump’s carbon-friendly energy policies keep oil prices low, they may struggle to find the money. To preserve at least the notion of a strategic alliance, Mr Alterman thinks the Saudis’ best bet will be to point out what their unique intelligence networks bring to the fight against terrorism. + +Buckle up! + +Soon America’s allies will be able to stop guessing about the effects of Mr Trump’s presidency and start to deal with the reality. They will be able to gauge much from his words and behaviour at the next NATO summit, which may be as early as spring, and the G7 meeting in the summer—assuming, that is, that he shows up. + +One possibility is that, after all the campaign bluster, Mr Trump turns out not to be particularly interested in foreign policy. Much of the responsibility for managing America’s alliances would then fall to General Mattis, Mr Tillerson and congressional leaders of a more traditional conservative bent. The other is that some kind of Trump doctrine emerges—and that it throws America’s alliances into turmoil. It is a measure of just how much Mr Trump differs from his predecessors that nobody, perhaps not even the president-elect himself, knows which of the two it will be. + +This article appeared in the International section of the print edition under the headline “Allies and interests” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21711881-donald-trumps-victory-has-shaken-countries-depend-america-security-and/print + + + + + +文章 章节 下一项 + + + + + +Business + + + + +Artificial intelligence: Google’s hippocampus + +The future of Alphabet: Still searching + +Fox’s pursuit of Sky: Skyfall + +Vivendi and Mediaset: Bolloré v Berlusconi + +Retailing and the environment: Wrap stars + +Older workers in Germany: Elders not betters + +Amancio Ortega: Behind the mask of Zara + +Schumpeter: Out with the old + + + + + +文章 章节 下一项 + +Google’s hippocampus + +What DeepMind brings to Alphabet + +The AI firm’s main value to Alphabet is as a new kind of algorithm factory + +Dec 17th 2016 + + + +DEEPMIND’S office is tucked away in a nondescript building next to London’s Kings Cross train station. From the outside, it doesn’t look like something that two of the world’s most powerful technology companies, Facebook and Google, would have fought to acquire. Google won, buying DeepMind for £400m ($660m) in January 2014. But why did it want to own a British artificial-intelligence (AI) company in the first place? Google was already on the cutting edge of machine learning and AI, its newly trendy cousin. What value could DeepMind provide? + +That question has become a little more pressing. Before October 2015 Google’s gigantic advertising revenues had cast a comfortable shade in which ambitious, zero-revenue projects like DeepMind could shelter. Then Google conjured up a corporate superstructure called Alphabet, slotting itself in as the only profitable firm. For the first time, other businesses had their combined revenues broken out from Google’s on the balance-sheet, placing them under more scrutiny (see article). But understanding DeepMind’s worth is not a simple financial question. Its value is deeper than that. + + + +DeepMind’s most immediate benefit to Google and Alphabet is the advantage it gives in the strategic battle that technology companies are waging over AI (see chart). It hoovers up talent, keeping researchers away from competitors like Facebook, Microsoft and Amazon. The Kings Cross office already houses about 400 computer scientists and neuroscientists, and there is talk of expanding that to 1,000. + +Another boost to the mother ship comes in the form of prestige. DeepMind has reached the cover of Nature, a highly regarded academic journal, twice since it was acquired. Gigantic copies of the relevant covers adorn the walls of the office lobby. The first was for a video-game-playing AI programme the second for one that learned to play the ancient Asian board game of Go. Named AlphaGo for its parent, that software went on to make headlines around the world when it beat Lee Sedol, a South Korean champion, in March 2016 (the match is pictured above). + +DeepMind’s horizons stretch far beyond talent capture and public attention, however. Demis Hassabis, its CEO and one of its co-founders, describes the company as a new kind of research organisation, combining the long-term outlook of academia with “the energy and focus of a technology startup”—to say nothing of Alphabet’s cash. He founded it in 2010, along with Mustafa Suleyman and Shane Legg. Mr Legg and Mr Hassabis met as neuroscience researchers at University College, London; Mr Suleyman is a childhood friend of Mr Hassabis’s. + +The firm’s overall mission, as Mr Hassabis puts it, is to “solve intelligence”. This would allow the firm to create multifunctional, “general” artificial intelligence that can think as broadly and effectively as a human. Being bought by Google had several attractions. One was access to the technology firm’s computing power. Another was Google’s profitability; a weaker buyer would have been more likely to require DeepMind to make money. This way Mr Hassabis can focus on research rather than the detail of running a firm. And by keeping DeepMind in London, at a safe distance from Google’s Silicon Valley base in Mountain View, he can retain more control over the operation. + +Were he to succeed in creating a general-purpose AI, that would obviously be enormously valuable to Alphabet. It would in effect give the firm a digital employee that could be copied over and over again in service of multiple problems. Yet DeepMind’s research agenda is not—or not yet—the same thing as a business model. And its time frames are extremely long. Mr Hassabis says the company is following a 20-year road map. DeepMind aims to invent new kinds of AI algorithms, he adds, that are inspired by the way the human brain works. This explains the firm’s large number of neuroscientists. Mr Hassabis claims that seeking inspiration from the brain sets his firm far apart from other machine-learning research units and in particular from “deep learning”, the powerful branch of machine-learning that is being used by the Google Brain unit. + +Even if DeepMind never achieves human-level (or indeed, superhuman) artificial intelligence, however, the learning software that it creates along the way can still benefit other Alphabet businesses. This has already happened. In July the company announced that its learning software had found a way to reduce the quantity of electricity that is needed to cool Google data centres, by two-fifths. The software learned about the task by crunching data-centre operation logs, and then optimised the process by running it over and over again in a simulation. + +DeepMind is also applying its AI research to solve problems in its own right. Mr Suleyman, who leads these efforts, has expressed an ambition for DeepMind to help manage energy infrastructure, hone health-care systems and improve access to clean water, in return for revenue streams. The company has already started on health care. Its first paid work came in November in the form of a five-year deal with the Royal Free London, an NHS Foundation Trust, to process 1.7m patient records. Earlier this year it gained access to two data sets from other London hospitals: one million retina scans that it can mine and thereby identify early signs of degenerative eye conditions, and head and neck cancer imagery which, fed into its models, will allow DeepMind’s AI to distinguish between healthy and cancerous tissues. + +Da Neu Ron Ron + +Skilful programmers and powerful computers are crucial to this applied AI business. But access to data about the real-world environment is also vital. When systems like hospitals, electricity grids and factories are targeted for improvement using AI and machine learning, data about their specific operations are needed. + +Alphabet, of course, holds huge volumes of data that can be mined for these purposes. But DeepMind will have to acquire lots more in each of the fields it aims to examine. In the case of a recent project it was involved in on lip-reading, for example, it was the acquisition of an unprecedentedly large data set that made it a success. A group of researchers at the University of Oxford, headed by Andrew Zisserman, a computer-vision researcher, led the work. The BBC gave the researchers hundreds of thousands of hours of newscaster footage, in the absence of which they would not have been able to train their AI systems. + +Mr Hassabis downplays the importance of data acquisition to DeepMind’s future. He claims that it is enough for human engineers to build simulations of the problem to be solved; then DeepMind unleashes learning agents within them. But that is not how most machine-learning systems that are currently in operation work. AlphaGo itself first learned on a database of millions of individual moves from 160,000 human-played Go games, before iteratively training against itself and improving. But if DeepMind does need to hoover up lots of personal information, it will have to deal with consumer concerns about corporate access to data. + +If it can solve these problems, however, DeepMind will hold immense value as something entirely new for Alphabet: an algorithm factory. That would go far beyond simply being the technology giant’s long-term AI research outfit and talent-holding pool. The data that DeepMind processes can remain the property of the organisations they come from (which should help to allay concerns about privacy), but the software that learns from that data will belong to Alphabet. DeepMind may not ever make significant revenue of its own by applying AI programmes to complex problems. But the knowledge it sends into learning software from those same sets of data may justify the bidding war that brought it into Alphabet’s compass. + +This article appeared in the Business section of the print edition under the headline “Google’s hippocampus” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21711946-ai-firms-main-value-alphabet-new-kind-algorithm-factory-what-deepmind-brings/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Harder than ABC + +Alphabet’s Google is searching for its next hit + +The rise of voice computing may threaten its lucrative search business + +Dec 17th 2016 | SAN FRANCISCO + +Deflated hopes + +“JUDGE a man by his questions, rather than his answers,” Voltaire advised. Google has become one of the most successful firms in history by heeding that advice. It evaluates the intention of web-surfers’ queries and returns relevant advertising alongside search results. But for years there has been a lingering question about Google: can it create a new, highly profitable unit to rival its search business? + +Not yet. In the past five years, Alphabet, formed as a holding company for Google and other disparate projects in October 2015, has spent $46bn on research and development (see chart). Much has gone to so-called “moonshot” projects, such as self-driving cars, smart contact lenses and internet delivered via balloons. Its British artificial-intelligence unit, DeepMind, also falls into the category of other projects. Since the start of 2015, these bets have together recorded a loss of $6bn. + + + +Advertising still accounts for nearly 90% of Alphabet’s revenues and almost all of its profits, according to Brian Wieser of Pivotal Research Group in New York. Search advertising in particular makes up around three-quarters of Alphabet’s total ad revenues. (YouTube, a video site, and a business that places ads on non-Google-owned sites are other contributors.) + +On December 12th Alphabet put its self-driving car project into a separate unit called Waymo so staff can better focus on achieving commercial viability. In truth it is not much of a separation, as the firm will still be inside Alphabet and will not disclose more financial details. Other splits have been more drastic. In the past six months executives overseeing several initiatives, including those focused on venture capital, drones, self-driving cars, high-speed internet and smart thermostats, have left. Alphabet has also been trying to sell its malfunctioning robotics business, Boston Dynamics. + +The reason for these departures is Alphabet’s ambivalence about how tightly it should manage costs, say people close to the firm. When Nest, the thermostats maker, was acquired for $3.2bn in 2014, its executives were promised they could invest and expand their business for years. But when the Alphabet structure was suddenly adopted, the message changed. Overnight, units were expected to pay for their share of overhead, which irked some executives who remembered how the parent company had itself doled out big salaries and other luxuries (like free food). Few at the firm are optimistic that Alphabet is closer to devising a business as lucrative and large as search continues to be. As one former executive says, “You’re unlikely to win the lottery twice.” + +Meanwhile, the way that people navigate their way around the internet is also changing, which could eventually pose a threat to Google’s search-advertising business. There are two big impending shifts. One is the use of voice as a way to get information, and the other is the rise of virtual assistants. Already, around a fifth of searches on Android devices are done by voice (as opposed to text), and that share will grow as speech recognition improves. Voice will also become more important with the spread of stand-alone devices that answer questions, such as Amazon’s Echo and Google’s own new product, Google Home, which do not support advertising. + +As interactions with devices like these become more complex, people will be able to rely on them to complete tasks they might have done online, such as ordering gifts, booking flights and locating nearby stores. Although Google has helped bring about this future with its Home device, its snazzy virtual assistant that predicts users’ needs and its messaging app, called Allo, it is unclear that these offerings will be healthy for its bottom line. In future, “searches” will be more focused on completing tasks and fetching information in environments where it will feel dissonant for ads to appear, such as in messaging apps or on smart-home devices. “As Google shifts more away from being a search engine to an answer service, its utility will go up. But the business model will fall apart,” argues Ben Thompson, who writes Stratechery, a blog on technology. + +As well as the fact that Amazon delivers ad-free information via the Echo, the retail giant poses a direct threat to Google because more people are starting searches for electronics and other kit directly on its site, rather than through a general search engine. By one estimate, 55% of internet users now begin researching products on Amazon, depriving Google of the opportunity to deliver an ad. + +Alphabet has confronted worrisome transitions before, such as the shift from desktop PCs to mobile. Its ad business is still booming, because it devised a way to deliver ads on small screens. It is possible that Google’s ad model could in future shift to taking a fee for each transaction it facilitates. This is already the case in air travel: people searching for flights scan options via one of Google’s tools, and airlines pay if a person books a ticket. Google could do the same if someone said to their phone, “order me a pizza”. But how it would choose which firm to place the order with, and whether consumers would be happy with that order being routed to the firm that paid most, are tricky questions, to which it is unlikely that even Google knows the answer. + +This article appeared in the Business section of the print edition under the headline “Still searching” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21711949-rise-voice-computing-may-threaten-its-lucrative-search-business-alphabets-google/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Skyfall + +Behind the bid for Sky is a less powerful Murdoch empire + +Sky is losing viewers and Rupert Murdoch’s newspapers have shed readers + +Dec 17th 2016 | NEW YORK + + + +IT WOULD seem to be a stunning comeback for Rupert Murdoch and his clan. Five years ago News Corporation was engulfed by scandal. One of its British papers, the News of the World, had routinely hacked private phones. In the aftermath the company gave up a bid it had made for BSkyB (now simply called Sky), a satellite broadcaster in which it had a stake. A parliamentary report declared Mr Murdoch unfit to lead a large company. James Murdoch, his son, resigned as chair of BSkyB and chief of the newspaper division. Ofcom, Britain’s media regulator, eviscerated his leadership as “difficult to comprehend and ill-judged”. + + + +Now the Murdoch empire appears to be striking back. On December 9th, 21st Century Fox, the Murdochs’ entertainment business, had announced a preliminary deal to buy the 61% of Sky it does not already own, and this week it made a formal offer, of £11.7bn ($14.8bn). James Murdoch is ascending once more: indeed, this deal is chiefly his doing. Last year he succeeded his father as boss of 21st Century Fox, and in January he reclaimed his Sky chairmanship. But the show of strength comes with new weaknesses. + +Much has changed in five years. In 2012 Rupert Murdoch moved to quarantine his scandal-wracked newspaper business. 21st Century Fox would henceforth house the company’s entertainment companies, including dozens of cable television networks, Fox Broadcasting and a film studio; News Corporation would keep the company’s newspapers. Investors cheered the split. Even before the hacking scandal, many had urged Mr Murdoch to divide his ageing print assets from his faster-growing entertainment business. + +Now the entertainment business has woes of its own. Consumers spend less time watching television, choosing streaming video on their phones and tablets instead. If they do watch TV, they are inclined to record shows and fast-forward through ads. It is not a problem that is unique to Fox. The firm has the benefit of a strong brand, a lucrative conservative news network, and the leadership of James Murdoch, who is seen as a strong manager. Even so, Fox’s television business has disappointed investors. + +Sky has recently struggled, too. Between 2015 and 2016 the share of customers dropping their subscriptions ticked up in each of its markets—Britain, Ireland, Italy, Germany and Austria. Investors fret over the rising cost of buying the rights to broadcast sport in Britain, Sky’s biggest market. And fewer people are watching its best-known football programmes in Britain (see chart), which suggests that more subscribers might leave. + +Whether 21st Century Fox’s purchase of Sky—if it comes off—would do much to change all of this is a matter of debate. Sky is cheaper than it would have been not long ago, thanks to a falling share price and the weak pound. Having all of it could be better than owning just 39%. In narrow financial terms, Fox is currently taxed twice on Sky’s earnings, and that would end. + +Others see far less benefit. Marci Ryvicker, an analyst at Wells Fargo, a bank, had thought that, given the choice of buying all of Sky or selling its stake, Fox might actually choose the latter. The two businesses are largely complementary, so a deal is unlikely to bring big savings beyond the tax advantage. And it is unclear if Sky will be of much help with Fox’s biggest headaches—its battle against Netflix, for example, and Amazon’s many video offerings. Sky does have a streaming service, Now TV, but it may be small: it does not disclose its number of subscribers. + +It is also an open question if the deal will actually close, and by the end of 2017, the timeframe set by James Murdoch. Now that the formal offer is in, the government will have to decide whether to refer the bid to Ofcom to investigate whether there would be a reduction in media “plurality”. The Murdochs can argue that the deal will not stifle competition: 21st Century Fox does not own British papers. They can also point out that the share of news consumption accounted for by News Corporation and Sky is about half what it was in 2010, thanks to dwindling newspaper circulation and the end of the News of the World, as well as Sky News’s lower share of total news viewing as people switch to online information. That will help the case for a merger. But it points to ebbing power, too. + +Update (December 16th): This piece has been amended to include mention of the formal offer from 21st Century Fox. + +This article appeared in the Business section of the print edition under the headline “Skyfall” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21711958-sky-losing-viewers-and-rupert-murdochs-newspapers-have-shed-readers-behind-bid-sky/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Bolloré v Berlusconi + +France’s corporate raider, Vincent Bolloré, makes a bid for Italy’s biggest broadcaster + +In doing so he is taking on Silvio Berlusconi, a former Italian prime minister + +Dec 17th 2016 | PARIS + + + +NO BOSS in French business can match Vincent Bolloré for swagger and aggression. Variously described by the press in France as a stubborn Breton, a ruthless profiteer and a smiling killer, the 64-year-old corporate raider has acquired interests in media, transport, advertising, telecoms and more, scattered across Europe and Africa. Opinion at home is divided between those who say his methods are too brutal and others who welcome his effect on an often dozy business world. + +This week it was the turn of Italian newspapers to rant against the French “pirate” and “mercenary”. On December 13th the news came that France’s Vivendi, a media firm in which Mr Bolloré’s company, Bolloré Group, owns 20% (he effectively controls it) was racing to buy up shares in Mediaset, Italy’s biggest TV-broadcaster. Things moved swiftly. By the next day Vivendi had a 20% stake in Mediaset, up from 3% two days earlier. The Italian firm claims a hostile takeover attempt—the smiling killer’s speciality—is under way. + +Mr Bolloré has long aimed at winning a share of Mediaset. Earlier this year, Vivendi had agreed a plan with Mediaset in which each would swap small stakes in the other’s firm, and Vivendi would take control of Mediaset Premium—an unprofitable pay-TV arm in Italy. After the deal fell apart in the summer, followed by legal threats against Mr Bolloré, Mediaset’s share price tumbled, so Vivendi bought its new holding in Mediaset relatively cheaply. He covets its channels’ combined 58% slice of Italy’s terrestrial television market (and, through an offshoot, some 43% of the Spanish market). If the Italian economy perks up, these would profit handsomely. + +He also wants to match those firms’ activities with his own media interests in France, notably Canal Plus, to form a big “Mediterranean” broadcaster. In the Anglo-Saxon media world, notes a person close to Vivendi’s board, grand alliances are common. Many European TV types reckon it is about time that the region had a conglomerate on the scale of America’s Time Warner or Disney. (The last time Vivendi tried to fulfil such ambitions, however, under its former CEO Jean-Marie Messier, the result was a gigantic mess that brought the firm close to bankruptcy.) + +A more distant goal could be to unite Italian content with distribution. This year Vivendi bought a quarter of Telecom Italia. Mr Bolloré may plan to combine media and telecoms operations in the country. + +In the short term, he will try to weaken the grip of Mediaset’s largest shareholder, Fininvest, the family holding company of Silvio Berlusconi, a former prime minister. On December 14th Mr Berlusconi called Vivendi’s actions hostile and vowed to defend his interests. Fininvest slightly raised its own stake in Mediaset to nearly 40%, and it may find ways to get more shares. + +Mr Bolloré may see an opening in reports of divisions in the Berlusconi clan, says François Godard of Enders Analysis in Paris. Mr Berlusconi’s son, Pier Silvio Berlusconi, runs Mediaset, but his siblings may worry more about a battle against cash-rich Vivendi. A face-off between the elder Mr Berlusconi, now aged 80, against Mr Bolloré, a former friend, looks set to enthrall audiences in several Mediterranean markets and beyond. + +This article appeared in the Business section of the print edition under the headline “Bolloré v Berlusconi” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21711957-doing-so-he-taking-silvio-berlusconi-former-italian-prime-minister-frances-corporate/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Wrap stars + +Food packaging is not the enemy of the environment that it is assumed to be + +Vacuum packs mean meat can stay on shelves for between five and eight days + +Dec 17th 2016 + + + +ROUGHLY a third of food produced—1.3bn tonnes of the stuff—never makes it from farm to fork, according to the UN’s Food and Agriculture Organisation. In the poor world much of this waste occurs before consumers even set eyes on items. Pests feast on badly stored produce; potholed roads mean victuals rot on slow journeys to market. In the rich world, waste takes different forms: items that never get picked off supermarket shelves; food that is bought but then goes out of date. + +Such prodigious waste exacts multiple costs, from hunger to misspent cash. Few producers and processors record accurately what they throw away, and supermarkets resist sharing such information. But some estimates exist: retailers are reckoned to mark down or throw out about 2-4% of meat, for example. Even a tiny reduction in that amount can mean millions of dollars in savings for large chains. + +Waste also damages the environment. The amounts of water, fertiliser, fuel and other resources used to produce never-consumed food are vast. The emissions generated during the process of making wasted food exceeds those of Brazil in total. Squandering meat is particularly damaging: livestock account for more emissions than the world’s vehicle fleet. Consumption of the red stuff is also set to increase by three-quarters by the middle of the century as newly-rich diners in China, India and elsewhere develop a taste for it. The UN wants to halve food waste per person in shops and in households by 2030 under its Sustainable Development Goals. + +Help is at hand in the sometimes squishy, see-through shape of packaging. Far from being the blight that green critics claim it is, food wrappings can in fact be an environmental boon. By more than doubling the time that some meat items can stay on shelves, for example, better packaging ensures that precious resources are used more efficiently. Planet and profits both benefit. + +Vacuum packaging helps enormously here (even though shoppers tend to prefer their cuts draped behind glass counters, or nestled on slabs of black polystyrene). The plastic packs, which prevent oxidation, mean meat can stay on shelves for between five and eight days, rather than two to four. It also makes it more tender. The equipment to vacuum-pack meat costs a few hundred thousand dollars, and its flimsier nature requires different methods of stacking. British retailers are pioneers when it comes to reducing waste through clever wrappings, says Ron Cotterman of Sealed Air, an American packaging giant that works in more than 160 countries and whose clients include huge chains such as America’s Walmart and Kroger. + +J. Sainsbury, a British grocer which also works with Sealed Air, is already benefiting from a new approach. Jane Skelton, its head of packaging, says that in the last financial year the store reduced waste by more than half after moving more beefsteak lines into vacuum packing. Kroger now ensures that cheeses arrive at its deli counters in vacuum-packaged bags ready for slicing; Walmart is searching for better ways to wrap meats. + +Packaging works wonders for customers, too. The resealable kind keeps certain dairy products fresher for far longer in customers’ fridges. The practice of packaging a lump of produce in portions allows the growing number of singletons to prepare exactly what they need and freeze the rest. Tesco, a British grocer, now offers chicken in pre-portioned packaging, for example. In 2016 the chain said it aimed to reach a point where no edible food would be binned from its stores by the end of 2017—down from 59,400 tonnes a year now—with a little help from apps that allow charities to collect unwanted items. + +Longer-lasting products ought to mean fewer trips to the shops. But according to Liz Goodwin, a food-waste expert at the World Resources Institute, a think-tank, half of the money shoppers save through better-lasting products winds up in retailers’ tills anyway. Aspiring cooks are more likely to buy premium items if they know they will use them before they spoil. + +The wages of bin + +Vacuum packs and other kinds of wrapping do themselves consume energy and resources in their manufacture. But they make more sense than letting food go to waste. Mark Little, who is in charge of reducing food waste at Tesco, points out that every tonne of waste means the equivalent of 3.5 tonnes of carbon dioxide are released without purpose. In contrast, a tonne of packaging causes emissions of 1-2 tonnes. + +This fact is insufficiently recognised by many rich-world retailers. Some supermarkets are trying to cut down on packaging because the common perception is that it is wasteful. But cutting the amount of plastic covering food makes no sense if products then spoil faster, says Simon Oxley of Marks and Spencer (another British retailer, which was among the first to start adopting vacuum-packaging a decade ago). The next frontier for the world of packaging, he says, is ensuring that as much of it can be reused as possible. That will be a challenge, however, given the hard-to-recycle layers of plastics that go into most vacuum packs. + +The hope is that rich-world adoption of more efficient packaging could encourage supermarkets in places such as China and Brazil, where retail chains are growing apace, to follow suit (even if issues of hygiene and refrigeration are more pressing concerns at the moment). By the middle of the century, when the UN projects the world’s population to be almost 9.7bn people, nutrition needs mean that farms, food processors, shops and homes will need to use resources far more efficiently. Unpack the numbers, and it is clear that wrapping up well will help. + +This article appeared in the Business section of the print edition under the headline “Wrap stars” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21711846-vacuum-packs-mean-meat-can-stay-shelves-between-five-and-eight-days-food-packaging/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Elders not betters + +In Germany mature workers are answering to young supervisors + +A shortage of skilled labour means managers are being promoted far earlier + +Dec 17th 2016 + +Who’s the daddy? + +“IF THEY resented me they didn’t talk to me about it,” says a young German manager at a media firm in Frankfurt. Still, he says it was noticeable that when a subordinate 20 years older than him thanked him for buying lunch he had to swallow twice before adding the word “boss”. + +Older workers sometimes begrudge being managed by a callow colleague. Precocious youngsters, too, can feel awkward about bossing their elders around. But in Germany a shortage of skilled workers means that such situations are becoming ever more common. + +The country’s population is projected to shrink. Among rich-world countries, only in six nations including Japan and Greece are populations expected to decrease faster. As more Germans retire, fewer youngsters are entering the workforce to replace them. As a share of the working population the number of 15-to-24-year-olds has fallen by ten percentage points since the 1980s, says the German Federal Employment Agency. Firms competing to retain young talent are tempted to promote them earlier as a result. A paper by professors at the University of Cambridge and WHU, a German business school, to be published in the Journal of Organizational Behaviour, suggests this could be a problem. + +As in many countries, German workplaces are legally obliged to overlook age when deciding whom to promote. Yet according to Jochen Menges, one of the authors, when a whippersnapper leapfrogs a more experienced worker it can leave the latter with feelings of “anger, fear and disgust”. People tend to judge their own standing by the success of their peers, and to see failure in being bossed about by someone younger. The relationship between feelings of angst and the age of the boss is linear, according to Mr Menges. A manager who is younger by one year is somewhat unsettling; a gap of 20 years is far more demoralising. + +All of this may be affecting the bottom line. In a study of 61 German firms the researchers found that for every two-year increase in the age between subordinates and supervisors, a basket of performance measures declines by 5% (after taking into account other variables such as company size and the industry involved). That is not because older managers are better at their jobs: the study found that it was not the absolute age of the supervisor that mattered, only the age gap. + +German firms certainly should not revert to a system in which age equates to rank, reckons Gerhard Rübling, labour director of TRUMPF, a midsized engineering outfit; meritocracy must prevail. But young people need to be sensitive about managing upwards. And older workers should be encouraged to see the bright side of learning new skills from tech-savvy up-and-comers. Daimler, a big German car firm, says it promotes age-mixed teams, so that knowledge can be transferred between generations. It also supports young managers by asking retired employees to provide temporary support. After all, you are never too old to learn. Or too young to manage. + +This article appeared in the Business section of the print edition under the headline “Elders not betters” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21711960-shortage-skilled-labour-means-managers-are-being-promoted-far-earlier-germany-mature/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Behind the mask of Zara + +The management style of Amancio Ortega + +The founder of Inditex has become the world’s second-richest man + +Dec 17th 2016 | LA CORUÑA + + + +IT IS a short walk from a tiny shop with peeling yellow paint in downtown La Coruña, in northern Spain, to a dazzling five-storey store, opened in September by Zara, by far the world’s most successful purveyor of “fast fashion”. In this stroll across three city blocks, the career of Amancio Ortega unfolds: from teenaged apprentice in the corner shop, Gala, a men’s clothing business, to Europe’s richest entrepreneur, the majority owner of one of its best-performing firms. + +According to one employee of Zara who works with him, “the true story of Amancio Ortega has not been told.” Mr Ortega, the son of an itinerant railway worker, who started at the corner shop aged 13, had a basic upbringing: an ex-colleague says he talks of meals of “only potatoes”. He has lived mainly in Galicia, a relatively poor region with no history in textiles. Yet there, in 1975, he founded Zara—a manufacturer-cum-retailer that, along with its sister brands, has over 7,000 shops globally. + +Mr Ortega (pictured) is now 80 but he remains energetic and involved in the business (if uninterested in wearing trendy clothes). He owns nearly 60% of Inditex, the holding company of Zara and the other chains, which is worth some €100bn ($106bn). According to Forbes magazine, in September his total assets, of nearly $80bn including his properties and other holdings, briefly surpassed those of Bill Gates. + +The manner in which he rose does not fit the usual template. His lack of formal education has profoundly affected his management style. Those close to him confirm that he does read—novels and newspapers—but he is reportedly ill-at-ease with writing at length. He has never had his own office, desk or desktop computer, preferring to direct his firm while standing with colleagues in a design room of Zara Woman, the flagship line. One former long-term CEO of Inditex, and Mr Ortega’s business partner for 31 years, José María Castellano, says that his ex-boss’s working method is to discuss things intensely with small groups, delegate paperwork, listen hard to others and prefer oral over written communication. + + + +This preference for close personal interaction may even have helped him concoct the formula behind Zara’s success. At a time when the fashion industry mostly outsourced production to China and other low-wage countries (as it still does), Mr Ortega decided to keep most manufacturing close to home. Some 55% happens in Spain, Portugal and Morocco—near the firm’s main markets. That in turn allows twice-weekly deliveries of small but up-to-the-minute fashion collections to every store. Inditex’s share price has soared tenfold since its flotation in 2001, outstripping rivals such as Gap and H&M (see chart). + +His leadership style appears to favour extreme introversion. A video from a surprise 80th birthday party in March shows him tearful and backing off from assembled staff. He almost never speaks in public nor accepts national honours—aside from a “workers’ medal” in 2002. Colleagues say he resented a rare biography of him, from 2008, by a fashion journalist, Covadonga O’Shea. So few photos existed of him pre-flotation that investors who visited awkwardly confused him with other staff. But that low profile means there is room for other top executives to shine. Inditex’s chairman and CEO, Pablo Isla, has run things since 2011, yet Mr Ortega shows up to work every day. In many firms a professional manager might chafe against the presence of a revered founder, but there are no such reports at Inditex. + +In one respect at least, Mr Ortega is more typical of European billionaires. Like other rich recluses—such as Ingvar Kamprad, the Swedish founder of the IKEA furniture chain—he goes in for only limited philanthropy. He pays for 500 annual scholarships for Spanish students in America and Canada and gives to Catholic charities and for emergency relief. Larger-scale philanthropy would bring unwanted publicity. Like others in southern Europe, he may also be wary of inviting political attacks, such as when Pablo Iglesias, of the left-leaning Podemos party, insinuated during a lament about inequality that Mr Ortega was a “terrorist”. + +The managers of his wealth, which grows by some €1bn a year, say they are now scrambling to have slightly less dependence on Inditex, in line with normal investing principles—a difficult task because Mr Ortega only wants property, an investment “he can touch” but which is time-consuming to buy and manage. This month he spent $517m on Florida’s largest office tower, the Southeast Financial Centre in Miami. + +Most of his income is still from Inditex dividends. On December 14th the firm reported results that, once again, met high expectations in financial markets. The numbers will have doubtless gratified the limelight-loathing Mr Ortega, who is said in private to chide others to admire his company, not himself. + +This article appeared in the Business section of the print edition under the headline “Behind the mask of Zara” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21711948-founder-inditex-has-become-worlds-second-richest-man-management-style-amancio/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Schumpeter + +Management theory is becoming a compendium of dead ideas + +What Martin Luther did to the Catholic church needs to be done to business gurus + +Dec 17th 2016 + + + +NEXT year marks the 500th anniversary of the event which, more than any other, gave birth to the modern world: Martin Luther promulgated his 95 theses and called the Catholic church to account for its numerous theological errors and institutional sins. Revisionist historians have inevitably complicated the story (including questioning whether he did actually nail his proposals to the door of All Saints’ Church in Wittenberg) but the narrative remains clear. The church was ripe for change. It was sunk in corruption and divorced from the wider life of society. And by unleashing that change, Luther brought the Christian faith, including Roman Catholicism itself, a new lease of life. + +The similarities between medieval Christianity and the world of management theory may not be obvious, but seek and ye shall find. Management theorists sanctify capitalism in much the same way that clergymen of yore sanctified feudalism. Business schools are the cathedrals of capitalism. Consultants are its travelling friars. Just as the clergy in the Middle Ages spoke in Latin to give their words an air of authority, management theorists speak in mumbo-jumbo. The medieval clergy’s sale of indulgences, by which believers could effectively buy forgiveness of their sins, is echoed by management theorists selling fads that will solve all your business problems. Lately, another similarity has emerged. The gurus have lost touch with the world they seek to rule. Management theory is ripe for a Reformation of its own. + +Management theories are organised around four basic ideas, repeated ad nauseam in every business book you read or business conference you attend, that bear almost no relation to reality. The first idea is that business is more competitive than ever. Skim popular titles such as “The End of Competitive Advantage” (by Rita Gunther McGrath) or “The Attacker’s Advantage” (by Ram Charan) and you will be left with the impression of a hyper-competitive world in which established giants are constantly being felled by the forces of disruption. + +A glance at the numbers (or indeed a trip on America’s increasingly oligopolistic airlines) should be enough to expose this as fiction. The most striking business trend today is not competition but consolidation. The years since 2008 have seen one of the biggest-ever bull markets in mergers and acquisitions, with an average of 30,000 deals a year worth 3% of GDP. Consolidation is particularly advanced in America, says a report in 2016 by the Council of Economic Advisers, which also showed how companies engaged in consolidation are enjoying record profits. Technology is high on the list of industries that are concentrating. In the 1990s Silicon Valley was a playground for startups. It is now the fief of a handful of behemoths. + +A second, and related, dead idea is that we live in an age of entrepreneurialism. Gurus including Peter Drucker and Tom Peters have long preached the virtues of enterprise. Governments have tried to encourage it as an offset to the anticipated decline of big companies. The evidence tells a different story. In America the rate of business creation has declined since the late 1970s. In some recent years more companies died than were born. In Europe high-growth ones are still rare and most startups stay small, in part because tax systems punish outfits that employ above a certain number of workers, and also because entrepreneurs care more about work-life balance than growth for its own sake. A large number of businesspeople who were drawn in by the cult of entrepreneurship encountered only failure and now eke out marginal existences with little provision for their old age. + +The theorists’ third ruling idea is that business is getting faster. There is some truth in this. Internet firms can acquire hundreds of millions of customers in a few years. But in some ways this is less impressive than earlier roll-outs: well over half of American households had motor cars just two decades after Henry Ford introduced the first moving assembly line in 1913. And in many respects business is slowing down. Firms often waste months or years checking decisions with various departments (audit, legal, compliance, privacy and so on) or dealing with governments’ ever-expanding bureaucracies. The internet takes away with one hand what it gives with the other. Now that it is so easy to acquire information and consult with everybody (including suppliers and customers), organisations frequently dither endlessly. + +Flat Earth society + +A fourth wrong notion is that globalisation is both inevitable and irreversible—the product of technological forces that mere human decisions cannot reverse. This has been repeated in a succession of bestselling books—most notably Thomas Friedman’s “The World is Flat” of 2005—and propagated in corporate advertising such as HSBC’s “The World’s Local Bank” campaign. But a look at history shows that it is nonsense. In 1880-1914 the world was in many ways just as globalised as it is today; it still fell victim to war and autarky. Today globalisation shows signs of going into reverse. Donald Trump preaches muscular American nationalism and threatens China with tariffs. Britain is disentangling itself from the European Union. The more far-sighted multinationals are preparing for an increasingly nationalist future. + +The backlash against globalisation points to a glaring underlying weakness of management theory: its naivety about politics. Modern management orthodoxies were forged in the era from 1980 to 2008, when liberalism was in the ascendant and middle-of-the-road politicians were willing to sign up to global rules. But today’s world is very different. Productivity growth is dismal in the West, companies are fusing at a furious rate, entrepreneurialism is stuttering, populism is on the rise and the old rules of business are being torn up. Management theorists need to examine their church with the same clear-eyed iconoclasm with which Luther examined his. Otherwise they risk being exposed as just so many overpaid peddlers of dead ideas. + +This article appeared in the Business section of the print edition under the headline “Out with the old” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21711909-what-martin-luther-did-catholic-church-needs-be-done-business-gurus-management/print + + + + + +上一项 文章 章节 下一项 + + + + + +Finance and economics + + + + +American corporate tax: Gain and pain + +Buttonwood: Not passing the buck + +China and trade: Call of duties + +UniCredit: Passing Mustier + +The Asian Development Bank: The incumbent + +Foreign exchange: A losing battle + +European insurers: Feeling squeezed + +Fiscal rules: Fiscal cryogenics + +Venezuela’s monetary madness: Cash and grab + +Free exchange: Rage against the dying of the light + + + + + +文章 章节 下一项 + +Gain and pain + +Republican plans to cut corporate taxes may have unpleasant side-effects + +Paul Ryan’s tax overhaul would send the dollar soaring + +Dec 17th 2016 | WASHINGTON, DC + + + +SINCE Donald Trump won America’s presidential election investors have salivated over the prospect of lower taxes. Mr Trump has promised to cut corporation tax, a levy on firms’ profits, from 35% to 15%. Republicans remain in charge of both houses of Congress; Paul Ryan, the speaker of the House of Representatives, wants to cut the levy to 20%. The coming reforms, though, are about more than just lower rates. Republicans want to overhaul business taxes completely. Unfortunately, this task is far from straightforward. + +America’s corporate-tax rate, which reaches 39.6% once state and local levies are included, is the highest in the rich world. But a panoply of deductions and credits keeps firms’ bills down. These include huge distortions, such as a deduction for debt-interest payments, as well as smaller scratchings of pork like special treatment for NASCAR racetracks. After all the deductions are doled out, corporate-tax revenues are roughly in line with the average in the rest of the G7, according to economists at Goldman Sachs. + +Still, a high tax rate and a narrow tax base is a glaringly inefficient combination. Politicians of all stripes have sought to improve things. For instance, since 2012 Barack Obama has proposed cutting the rate to 28%, while doing away with (mostly unspecified) tax breaks. That idea never got a look in. But analysts are poring excitedly over Mr Ryan’s plan, which is for now the most detailed Republican offering. It proposes to expand the tax base in two main ways. The first is to kill off the deduction for debt interest, putting a welcome end to the incentive for companies to binge on debt. The savings from this would be spent on letting businesses deduct the full cost of their investments when they make them, however they are financed. + +The second concerns geography. Uniquely in the G7, America taxes firms’ global profits (net of any payments to foreign taxmen). But companies need pay only when they bring profits home, so they keep cash overseas—some $2.6trn-worth, by one estimate. Some escape Uncle Sam’s clutches altogether by merging with a foreign company and moving to its tax jurisdiction (although the Obama administration has penned rules making such “inversions” harder). + +Mr Trump wants to offer a one-time tax rate of 10% to firms that repatriate their cash. To put an end to the barmy incentives, Mr Ryan, adopting a pet cause of Kevin Brady, chairman of the influential House Ways and Means Committee, would stop taxing foreign profits. In fact, he wants to ignore foreign activity altogether, including profits made selling American goods abroad. Meanwhile, firms would no longer be able to knock off the cost of imported goods when adding up their profits. In combination, these two changes are dubbed “border adjustment”. + + + +This would make America’s corporate tax very similar to a value-added tax (VAT), a kind of border-adjusted sales tax, says Kyle Pomerleau of the Tax Foundation, a think-tank. Most rich countries have both a VAT and a corporate tax (see table). When, say, Rolls-Royce exports a jet engine from Britain to France, it pays French VAT on the sale and British corporate tax on its profits. But while America levies the corporate tax on exporters’ profits, it imposes no VAT on imported goods (except for state and local sales taxes). Mr Ryan’s proposal would more or less reverse this. + +Border adjustment penalises imports and subsidises exports. So some hope it would help to close the trade deficit. Mr Trump has often complained about the VAT Mexico imposes on American goods, when Mexican exports flowing north incur no such levy. America is “the only major country that taxes its own exports,” lamented Mr Brady in June. + +Economists are suspicious of these complaints. In theory, border adjustments do not affect trade, because export subsidies and import taxes both push up the dollar. So imports are taxed more, but get cheaper. Exports escape tax, but get pricier. In combination, the currency and tax effects should balance exactly. + +In reality, it might take time for the dollar to rise. If so, American exporters would benefit in the interim. But big importers would take a hit. The Retail Industry Leaders Association, a trade group, is already campaigning against the change. + +However long the dollar took to appreciate, it would be no small adjustment. To offset a border-adjusted tax of 20%, the greenback would have to rise by a staggering 25%, according to Goldman. It is already up by 24% on a trade-weighted basis since mid-2014; repeating that appreciation would hammer those emerging markets with sizeable dollar-denominated debts and threaten the health of the world economy. It would also reduce the dollar value of American investments abroad. + +Despite the plan’s appealing simplicity, it seems unlikely that Congress will pass a proposal that would cause such volatility in currency markets. Senate Republicans have been largely mum on the House plan. And unless America switches to a full-fledged VAT, border adjustability may also be judged to breach World Trade Organisation rules. + +That bodes ill for the size of the overall corporate-tax cut. Since America imports much more than it exports, border adjustability would raise fully $1.2trn over a decade, covering almost two-thirds of the cost of cutting the tax rate to 20%, according to the Tax Policy Centre, a think-tank. Without that money, Republicans would have to scale back their plans, disappointing investors. And it might force the government to borrow more, widening the budget deficit, and putting short-term upward pressure on the dollar. Either way, markets could be in for a few surprises yet. + +This article appeared in the Finance and economics section of the print edition under the headline “Gain and pain” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21711885-paul-ryans-tax-overhaul-would-send-dollar-soaring-republican-plans-cut/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Buttonwood + +The financial markets in an era of deglobalisation + +Why the global volume of foreign-exchange trading is shrinking + +Dec 17th 2016 + + + +FOR more than two decades after the early 1980s, it seemed as if the financial markets were moving in only one direction. More and more money was flowing across borders; capital markets were becoming increasingly integrated. + +Since the 2008 financial crisis this particular aspect of globalisation has stalled, and even partly retreated. The reversal is illustrated by the triennial survey of foreign-exchange markets, conducted by the Bank for International Settlements (BIS). Daily turnover in April was $5.1trn, down from $5.4trn in April 2013. + +That is still a huge number compared with the turn of the century, when daily turnover was around the $1trn mark. But it is a sign that markets are getting a little less frenetic; spot (or instant) currency trading has fallen by 19% in three years. + +Other data from the BIS confirm the trend. Cross-border banking claims peaked in the first quarter of 2008 at $34.6trn. By the second quarter of 2010, they had dropped to $27.9trn, and they have never recovered their pre-crisis levels. In the second quarter of this year (the most recent data), claims were $28.3trn. Part of this may be a consequence of events in the euro zone, where the sovereign-debt crisis caused banks to cut back their lending to weaker economies. Add up all financial flows, including direct investment, and in 2015 cross-border volumes were only half 2007’s level, according to McKinsey, a consultancy (see chart). + +This is not necessarily bad news. After all, as Asian countries found out in the 1990s, too much “hot money” flowing into an economy can be destabilising. It can drive exchange rates out of line with economic fundamentals, making a country’s exporters less competitive. A rising currency may also tempt domestic companies to borrow abroad. Then, when the hot money flows out and the exchange rate collapses, those borrowers will struggle to repay their debts. The result can be a financial crisis. + +The implications of deglobalisation depend on why the slowdown is happening. There may be a link to economic fundamentals. World trade volumes were regularly growing at an annual rate of 5-10% in the run-up to the crisis; in recent years they have managed only 2% or so. In 2015 exports were a smaller proportion of global GDP than they were in 2008. If trade is growing less rapidly, so is the demand for credit to finance it. + +However, as the BIS points out, trade accounts for only a small proportion of capital flows. The downturn is mainly because of events within the financial sector itself. + +Before the crisis, cross-border banking activity was closely correlated with measures of risk appetites. When the economic outlook was good, banks were happy to lend abroad; in the face of shocks, they retreated back to their home base. Research by the Bank of England shows that the picture changed after the crisis; there was simply a more general retreat by the banking sector from foreign commitments. + +Part of this may reflect a lack of demand for loans from companies and individuals that had overstretched during the boom years. But the biggest reason is probably the weakness of the banking sector. It has been deprived of some sources of funding (money-market mutual funds, for example) and has been forced by the regulators to rebuild its balance-sheet. + +In the currency markets, the BIS says, there has been a shift in the type of people that are participating. Institutional investors such as pension funds and insurance companies are being more active. They may decide to buy, say, Japanese equities without wanting to be exposed to fluctuations in the yen, so they will hedge this exposure in the currency markets. In contrast, there has been a reduction in risk-taking activity by hedge funds and bank trading desks, which suffered a big shock in January 2015 when the Swiss National Bank suddenly abandoned its policy of capping the franc’s exchange rate. The sharp jump in the value of the franc that followed caused turmoil for some brokers, forcing them to raise their fees and cut their client lists. + +A market less in thrall to speculators might seem like an unalloyed boon. But the retreat of banks from currency trading (and from market-making in other instruments such as corporate bonds) may not be quite such good news. In a crisis, the banks may not be around to trade with investors seeking to offload their positions; the BIS notes signs of “volatility outbursts and flash events”. Lots of investors and companies want to hedge their currency exposure. They need an institution to take the other side of the trade. + +Economist.com/blogs/buttonwood + +This article appeared in the Finance and economics section of the print edition under the headline “Not passing the buck” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21711887-why-global-volume-foreign-exchange-trading-shrinking-financial/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Chinese dumpings + +An early salvo in a trade war between America and China? + +Donald Trump might get a trade war without even trying + +Dec 17th 2016 + + + +ANNIVERSARIES should be happier than that on December 11th, marking China’s 15 years as a member of the World Trade Organisation (WTO). On that day, China expected to be unshackled from its legal label as a “non-market economy” and attain “market-economy status”. In the event, America and the European Union refused to give it the nod. On December 12th the Chinese reacted: see you in court. + +The fight will focus on the wording in the original accession agreement. The Americans and the Chinese are both confident of winning. Legal experts are divided. The WTO does not provide a clear definition of a “market economy”. And clumsy legal drafting does not help. + +The meat of the row is over the method WTO members use to protect their industries against cheap Chinese imports. Alleging that Chinese companies enjoy subsidised credit, energy and raw materials, America and the EU slap anti-dumping duties on 7% (see chart) and 5% respectively of their Chinese imports. The agreement welcoming China into the WTO explicitly gave other members licence to treat it as a non-market economy until December 11th 2016. This meant they could ignore domestic Chinese prices when working out the appropriate value of Chinese imports. Mexican prices, for example, help set the 48.5% duty on EU imports of Chinese bicycles. + +As China interprets the original accession agreement, it was promised that, after 15 years, it would be treated like any other market economy in the WTO: it would be guilty of dumping only if the export price was lower than the price in China. America’s reading is that after December 11th, China is no longer automatically a non-market economy. But WTO members can use their discretion as to whether it is a market economy. Since, according to America’s own criteria (and any simple smell test), China is not, it can keep using third-country prices in anti-dumping cases. + +The European Commission is convinced it has found a better way. In November it offered proposals that would rip up the list of market and non-market economies, and use a “country-neutral” method for calculating anti-dumping duties. But this is unlikely to placate the Chinese: it would still give plenty of discretion to refer to third-country prices when setting duties. Tu Xinquan, of the China Institute for WTO Studies in Beijing, concedes it is an improvement, but “we want full implementation of WTO rules, not half.” + +A long legal slog lies ahead. Officially, China will wait for the WTO court decision—probably at least two years away—before applying retaliatory duties. Unofficially, the Chinese may start poking their trading partners sooner. + +A defeat for China would represent humiliation, and a broken promise. An all-out trade war would also be disastrous for the Chinese economy. But some sort of descent into tit-for-tat protectionism seems highly likely, against the background of Donald Trump’s “America First” tough talk on trade. Even if China wins the initial set of cases, WTO law does not force other countries always to use exact Chinese prices in their anti-dumping measures. The full scope of what they can do is still legally uncertain. Mark Wu, an assistant professor at Harvard Law School, thinks that “what we’re seeing now is the opening salvo of a long series of litigations.” + +The underlying difficulty is that China’s particular type of capitalism makes it difficult to fit into a binary view of a market, or non-market, economy. “That makes it really hard for the WTO to adjudicate this type of issue,” says Mr Wu. Ultimately, these heavyweights of the world economy will have to reach a political settlement if they want to avoid years of destructive, competitive protectionism. For now, such a settlement seems improbable. A highly technical issue has been simplified into a crude nationalistic argument. In America and the EU it may seem obvious that hopes in 2001 that China was on the road to becoming a market economy have been dashed. For China, this is beside the point: the West should keep its promise. Mr Trump may get a trade war without even trying. + +This article appeared in the Finance and economics section of the print edition under the headline “Call of duties” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21711911-donald-trump-might-get-trade-war-without-even-trying-early-salvo-trade/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +UniCredit sets out its stall + +Italy’s biggest bank unveils a recapitalisation plan + +The new chief executive sheds bad loans, cuts costs—and asks shareholders for €13bn + +Dec 17th 2016 + + + +THIS is no time to be timid. Or so Jean-Pierre Mustier seems to think. On December 13th, after five months in the job, the chief executive of UniCredit presented his plan for Italy’s biggest bank. He didn’t hold back. UniCredit is shedding €17.7bn worth ($18.8bn) of bad loans, taking a one-off provision of €8.1bn. It will save €1.7bn a year by 2019, cutting 6,500 jobs on top of 7,500 previously announced to shrink its workforce by 14%. And in a rights issue next year it will raise €13bn—just €2bn less than its market value before the announcement. The markets lapped it up: the shares gained 16%, before retreating the next day. + +Mr Mustier had already been busy. The previous day UniCredit sold Pioneer, its asset-management arm, to France’s Amundi (though it will still distribute Pioneer’s products). It recently unloaded its stake in Bank Pekao, in Poland, as well as 30% of Fineco, an Italian online bank of which it will retain control. The bad-debt write-down, restructuring costs and other bits and bobs will partially offset the gains from these sales and the rights issue. But the boss expects UniCredit’s ratio of equity to risk-weighted assets—a gauge of capital strength—to rise from 10.8%, second-weakest among the euro zone’s most important banks (see chart), to at least 12.5% by 2019. + +UniCredit has already tapped shareholders twice since the financial crisis, for €4bn in 2010 and €7.5bn in 2012. Not long ago analysts thought it might have to beg for another €4bn-9bn. Asking for €13bn may therefore appear unduly bold. + +Perhaps boldness is in order. The bank has been in a rut for years. Although less than half its revenue comes from Italy, it has been weighed down by its homeland’s woeful economic performance and a heavy burden of dud loans. Of its €49.7bn (gross) of non-performing Italian debt marked “non-core”—for eventual disposal—€43.2bn-worth dates from 2010 or earlier: high time to clear it out. In April Atlante, a new bank-rescue fund, took over UniCredit’s guarantee of a €1.5bn share sale by an ailing smaller lender. That embarrassment helped to seal the fate of Mr Mustier’s predecessor, Federico Ghizzoni. + +Even after this week’s leap, UniCredit’s shares were trading at below one-third of net book value. They are down by about half this year. Mr Mustier is scarcely promising the moon: just a “simple, pan-European commercial bank” with a return on tangible equity of 9% within three years, more than double 2015’s figure but still less than the estimated cost of equity. He is budgeting for revenue to grow by just 0.6% a year, as low interest rates drag down income from lending. Better asset quality will help: default rates are falling. So will cuts, both at head office and in the field: 944 branches will go in Italy, Germany (where UniCredit owns HypoVereinsbank, ranked fourth by assets) and Austria (Bank Austria, second). + +Italy’s biggest bank may at last perk up. Its third-largest and the world’s oldest, alas, is tottering. The European Central Bank is insisting that Monte dei Paschi di Siena raise €5bn in equity by the end of the year. Although bankers are persevering with a private-sector plan, a state rescue looks likely. Under European rules, that means pain for retail bondholders. Italy’s banking woes are far from over. + +This article appeared in the Finance and economics section of the print edition under the headline “Passing Mustier” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21711915-new-chief-executive-sheds-bad-loans-cuts-costsand-asks-shareholders/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +The incumbent + +The Asian Development Bank tries to evolve + +Fifty years old and under pressure from China + +Dec 17th 2016 | MANILA + + + +JUST outside the Asian Development Bank (ADB) headquarters, a barefoot girl in a tattered yellow shirt stretches out her hand as a few of its employees walk past. One gives her change—not exactly a textbook approach to development lending but a natural-enough impulse. “It reminds you of what you’re doing every day,” he says as he reaches into his wallet. + +It is also a small reminder of what sets the ADB apart from its China-led challenger, the Asian Infrastructure Investment Bank (AIIB). Since its formal launch in 2015, the AIIB has garnered much more attention than the ADB. But the ADB is still much bigger, with a presence throughout Asia’s poorest areas and a focus on all aspects of development, from education to anti-corruption projects, not just infrastructure. + +It also has an impressive track record. December 19th will mark the ADB’s 50th anniversary. It funds projects and provides policy advice from Georgia in the west to the Cook Islands in the east. It had a hand, albeit a small one, in the economic miracle Asia has witnessed in its lifetime. It has never suffered a default on the $250bn that it has doled out over the years “We have been very prudent,” says Takehiko Nakao, ADB president and master of understatement (pictured). + +Yet the ADB has also had an awkward couple of years. When China in 2013 proposed a new development bank in Asia focused on infrastructure, it seemed aimed, at least in part, at dethroning the ADB. Much as the Chinese economy has leapfrogged the Japanese economy in size, the assumption of many was that it would only be a matter of time before the Chinese bank would eclipse the ADB, which was initiated by Japan in the 1960s and has always been led by a Japanese president. This impression was only reinforced when China overcame American opposition to the AIIB, signing up even staunch American allies in Asia and Europe as members (it now has 57 in all). + +Despite the hoo-ha about the AIIB, also known as “China’s own World Bank”, however, it remains a fledgling. The ADB has 3,100 permanent staff; the AIIB just 80 or so. The ADB has missions in 28 countries; the AIIB only its base in Beijing. Most crucially, the ADB lends about $16bn a year; the AIIB is aiming for $2bn next year. In fact, some of the AIIB’s initial loans have been co-financings with the ADB, in effect piggybacking on its projects in Pakistan and Bangladesh. + +But the ADB knows it cannot be complacent. Mr Nakao is pushing what he calls a “stronger, better and faster” strategy. Thanks to its nearly impeccable lending history, it is expanding. The target is to increase its annual loans by more than 50% from a figure of $13bn in 2014, to $20bn in 2020. Second, it is widening the scope of its lending. About 70% of its loans still finance infrastructure development. It is now aiming to raise the portion that goes to education, health care and the environment. Finally, it wants to speed up the way it works, giving resident missions in countries more authority over managing projects. + +Still, there are speed limits. Mr Nakao says it is in the ADB’s fibre to tread carefully in dispensing advice: “We try not to tell countries to do something.” It also has no intention of lessening oversight of its lending operations. The ADB relies on a permanent board of directors in Manila, even though that can delay approvals. The AIIB has no such board, allowing much quicker decisions and lower costs. + +If the ADB’s reluctance to water down risk controls is admirable, organisational rigidity is less so. Just as no rule stipulates that an American must lead the World Bank or a European the IMF, nothing decrees that the ADB’s president must be Japanese. Yet it has always been Japanese officials, often from the finance ministry, who have taken the ADB’s helm. Mr Nakao was recently re-elected for a five-year term. But it is not too early to start drumming up candidates for 2021 from elsewhere in Asia. That would go a long way to proving that the ADB truly is Asia’s development bank, and not just a Japanese-led incumbent facing a Chinese upstart. + +This article appeared in the Finance and economics section of the print edition under the headline “The incumbent” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21711922-fifty-years-old-and-under-pressure-china-asian-development-bank-tries/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +A losing battle + +A cheaper currency does not always boost economic growth + +The strong dollar can mean trouble for emerging markets + +Dec 17th 2016 + +IN SEPTEMBER 2010 Brazil’s then-finance minister, Guido Mantega, gave warning that an “international currency war” had broken out. His beef was that in places where it was difficult to drum up domestic spending, the authorities had instead sought to weaken their currencies to make their exports cheaper and imports dearer. The dollar had recently fallen, for instance, because the Federal Reserve was expected to begin a second round of quantitative easing. The losers in this battle were those emerging markets, like Brazil, whose currencies had soared. Its currency, the real, was then trading at around 1.7 to the dollar. + +These days a dollar buys 3.4 reais, but no one in Brazil or in other emerging markets with devalued currencies is declaring a belated victory. A cheap currency has not proved to be much of a boon. Indeed new research from Jonathan Kearns and Nikhil Patel, of the Bank for International Settlements (BIS), a forum for central banks, finds that at times a rising currency can be a stimulant and a falling currency a depressant. They looked at a sample of 44 economies, half of them emerging markets, to gauge the effect of changes in the exchange rate on exports and imports (the trade channel) and also on the price and availability of credit (the financial channel). + +They found a negative relationship between changes in GDP and currency shifts via the trade channel. In other words, net trade adds to economic growth when the currency weakens and detracts from growth when it strengthens, as the textbooks would have it. But they also found an offsetting effect of currencies on financial conditions. For rich countries, the trade-channel effect is bigger than the financial-channel effect. But for 13 of the 22 emerging markets in the study, the financial effect dominates: a stronger exchange rate on balance speeds up the economy and a weaker one slows it down. + +This attests to the growing influence of a “global financial cycle” that responds to shifts in investors’ appetite for risk. Prices of risky assets, such as shares or emerging-market bonds, tend to move in lockstep with the weight of global capital flows from rich to poor countries. These flows in turn respond to changes in the monetary policy of rich-country central banks, notably the Federal Reserve, which influences the scale of borrowing in dollars by governments and businesses outside America. Global financial conditions are thus responsive to attitudes to risk. When the Fed lowers its interest rate, it not only makes it cheaper to borrow in dollars but also drives up asset prices worldwide, boosting the value of collateral and making it easier to raise capital in all its forms. A few days before Mr Mantega declared a currency war, Brazil’s government was celebrating a bumper $67bn sale of shares in Petrobras, its state-backed oil company, for instance. + +The BIS researchers find the financial channel works mainly through investment, which relies more on foreign-currency borrowing than does consumer spending. Their results are sobering for emerging-market economies. They suggest that a cheap currency cannot be relied on to give a boost to a sagging economy. More worrying still, the exchange rate might not always act as a shock absorber; rather it may, through the financial channel, work to amplify booms and busts. + +This article appeared in the Finance and economics section of the print edition under the headline “A losing battle” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21711950-strong-dollar-can-mean-trouble-emerging-markets-cheaper-currency-does-not/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Feeling squeezed + +European insurers and the curse of low interest rates + +An ever-greater share of insurers’ assets is in the form of low-yielding bonds + +Dec 17th 2016 + + + +INSURANCE is banking’s boring cousin: it lacks the glamour, the sky-high bonuses and the ever-present whiff of danger. So European stress tests for insurers, whose results were due to be published on December 15th after The Economist went to press, have attracted far less attention than those for banks in July. Yet insurance also faces a grave threat, from prolonged low interest rates. + +Insurers invest overwhelmingly in bonds, so low interest rates make their lives difficult. The last time the European Insurance and Occupational Pensions Authority (EIOPA) conducted an insurance stress test, in 2014, a quarter of participants scored poorly: they would not have met their capital requirements in the test’s long low-interest-rate scenario. The proportion jumped to 44% in an alternative scenario involving an asset-price shock. The new results are unlikely to be better. Each year of low interest rates worsens the problem. Higher-yielding bonds mature and insurers end up with ever more newer ones with low, or even negative, interest rates. + +Insurers are focused on the problem. One strategy is to outsource more to external asset managers, who are often cheaper because of their greater scale. Another is to buy new types of assets. According to Robert Goodman of Goldman Sachs, insurers want to allocate more to better-yielding, but more illiquid, asset classes like infrastructure, private debt and private equity. Access is hampered not only by a limited supply but also by regulatory capital requirements. So European insurers are looking at proxy investments, such as American municipal bonds (whose proceeds are often spent on infrastructure). + +A shortage of capital is an especially acute problem for life insurers in northern Europe. Many, in better times, sold annuities with guaranteed annual returns of 3-4%. Analysts expect German life insurers to be able to meet their promises for a while yet without going under. But profits will be hit badly. Stringent EU capital requirements, known as Solvency 2, introduced this year, have helped. But interpreting and policing the rules varies. Insurers are regulated only at the national level, even though insurance is as much a cross-border business as banking: the leading 30 insurers derive 31% of income from the rest of the EU, and only 41% at home (compared with 23% and 54% for the largest 30 banks). + +Dirk Schoenmaker of Bruegel, a think-tank, proposes giving EIOPA greater supervisory powers over larger insurers as part of an “insurance union”, analogous to the EU’s banking union. But further regulatory centralisation may be a hard sell in today’s EU. + +The best hope for Europe’s insurers would be an improved macroeconomic outlook. Long-term dollar and euro bond yields have perked up a bit in recent weeks. But the European Central Bank, by extending its quantitative-easing programme until the end of 2017, has pushed interest-rate rises far into the future. Europe’s insurers still have a long hard slog ahead. + +This article appeared in the Finance and economics section of the print edition under the headline “Feeling squeezed” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21711951-ever-greater-share-insurers-assets-form-low-yielding/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Fiscal cryogenics + +Do fiscal rules work in emerging markets? + +Why so many emerging-market governments set spending rules for the future + +Dec 17th 2016 | HONG KONG AND SÃO PAULO + + + +FROM its headquarters in Brasília, a sterile, technocratic city, Brazil’s federal government doles out money for health, education, generous pensions and artistic awards, among other things. Over the past two decades, this spending has grown by more than 185% in real terms. Over the next 20 years, its growth will be zero. + +That, at least, is the intention of a constitutional amendment passed this week by Brazil’s Senate. The measure, which allows federal spending (excluding interest payments and transfers to states and municipalities) to grow no faster than inflation, is an unusually ambitious example of a fiscal rule: a quantitative limit on budget-making, which lasts beyond a single year and perhaps beyond a single government. + +The best known, and least loved, fiscal rule is the euro area’s stability and growth pact. But such rules are also now common among emerging economies. According to the IMF’s latest count, 56 developing countries in 2014 had rules of some kind, including 15, like Brazil, that impose limits on the growth of public spending. + +The reasons so many emerging-market governments choose to limit their fiscal choices vary. Some recognise that it is better to abide by their own limits than test the markets’. By cutting the scope for fiscal mischief in the future, a credible fiscal rule can make a government’s bonds more appealing today. The risk of profligacy goes hand-in-hand with the danger of “pro-cyclicality”. Governments in emerging economies tend to overspend in good times and cut back in bad times, adding to economic instability rather than dampening it. + +Do fiscal rules help? A famous example is Chile’s 15-year-old rule, which requires fiscal tightening when economic growth, copper prices and the price of molybdenum (a metal used in steel alloys) rise above their long-term trends, and permits fiscal easing in the opposite case. Several numbers—such as the trend rate of growth or long-term copper price—can only be guessed, not observed. But the guesses are made by an independent expert committee, so the government cannot make its own fiscally convenient estimates. + +Other countries, including Peru and Colombia, have tried to implement similarly sophisticated rules. But it is not easy. They work best in countries with a reasonably stable tax base and a well understood macroeconomic rhythm. Elsewhere, simpler rules can be easier to monitor and enforce. One simplification is to set rules for spending alone, rather than the overall budget balance, thus escaping the need to project revenues. Emerging economies comply with their spending rules about two-thirds of the time, according to a 2015 IMF working paper, whereas their compliance rate for budget-balance rules is less than 40%. Despite their simplicity, spending rules can make fiscal policy more countercyclical. In upswings, they deter overspending; in downturns, they permit government revenues to fall of their own accord, without requiring demand-sapping tax hikes. + +Spending rules do, however, pose a philosophical riddle: they require policymakers to settle the age-old question of the proper size of government. Georgia’s rule-makers, for example, think government should not exceed 30% of GDP. Brazil’s think it should not exceed 1.24trn reais ($373bn) in today’s money. Rules on deficits or debt, in contrast, are compatible with government of all sizes, provided that taxes are kept in line with spending. + +The appropriate size of fiscal deficits, given the stage of the business cycle, is a technocratic question, which can yield a bipartisan answer, as Chile shows. Such a consensus can be formalised in a politically robust fiscal rule, capable of surviving a change of government, as Chile’s has also done. It is harder to imagine all parties agreeing on the appropriate size of government. Debate on that question is, after all, one reason why multiple parties exist. + +This article appeared in the Finance and economics section of the print edition under the headline “Fiscal cryogenics” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21711942-why-so-many-emerging-market-governments-set-spending-rules-future-do-fiscal/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Cash and grab + +Venezuela’s lunatic experiment in demonetisation + +Nicolás Maduro’s latest act of economic sabotage: cancelling the 100-bolívar note + +Dec 17th 2016 | CARACAS + +Bum notes + +ANYTHING India does, Venezuela can do worse. Last month, in a dramatic effort to curb corruption, India’s government cancelled all its high-denomination banknotes without warning. Since 98% of transactions in India are done in cash, commerce seized up. It is a huge mess, but India will after a while print enough replacement notes. And it has a plausible plan to help its many poor people join the cashless digital economy. + +Not so Venezuela. President Nicolás Maduro says that the constant shortages of more or less everything in Venezuela are caused by evil speculators. (They are actually caused by his price controls.) Mr Maduro claims that “mafias” in Colombia are stockpiling lorryloads of bolívars, the Venezuelan currency, and sneaking across the border to buy up price-controlled goods. Given Venezuela’s soaring inflation, this seems improbable. “The idea that anybody would want to hoard a currency that has lost 60% of its value in the past two months is absurd,” says David Smilde of the Washington Office on Latin America, a think-tank. + +Nonetheless, on December 11th Mr Maduro announced that the 100-bolívar note would cease to be legal tender within 72 hours. It is the most valuable note in circulation, accounting for 77% of the nation’s cash. (On the black market, it is worth three American cents.) The government says people can deposit the old notes in banks and they will be replaced with new ones in denominations as high as 20,000 bolívars. Eventually. + +Massive queues—of ordinary people who use cash to survive—quickly formed outside banks. They brought boxes of old banknotes and waited hours to deposit them. Venezuela is one of the most crime-ridden countries on Earth but few muggers bothered to rob people of their soon-to-be-worthless cash. Tempers frayed, however, and fights broke out. “It’s an abuse,” says one disgruntled queuer after standing two hours in a line at a Caracas shopping mall to pay in the equivalent of less than $20. “The government deliberately wastes our time,” grumbles Bianca Manrique, a doctor. + +This month Mr Maduro’s regime also seized millions of toys from a toymaker that, it said, was charging too much. The government will distribute them to children and try to take the credit. Mr Maduro may see himself as Saint Nick, but few Venezuelans are convinced. + + + +This article appeared in the Finance and economics section of the print edition under the headline “Cash and grab” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21711937-nicol-s-maduros-latest-act-economic-sabotage-cancelling-100-bol-var/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Free exchange + +Place-based economic policies as a response to populism + +Orthodox economics is distressingly unhelpful in solving the problem of regional inequality + +Dec 17th 2016 + + + +HOW do you solve a problem like Ohio? Over the course of a generation America’s once-thriving industrial heartland has withered. Economic stress has contributed to rising rates of drug addiction and falling life-expectancy. Frustrated, Ohioans and other Midwesterners pushed Donald Trump to victory in November. That has focused attention on the plight of declining industrial areas in the rich world. Yet orthodox economics has few answers to the problem of regional inequality. + +Economists used to think the best policy was often merely to wait. From 1880 to 1980 the incomes of poorer and richer American states tended to converge, at a rate of nearly 2% per year, according to research by Peter Ganong and Daniel Shoag of Harvard University. That pattern has since broken down (see chart). Yet the shift of resources and the movement of people from declining places toward thriving ones remains an important part of the process of economic growth. In theory, the gains should be big enough to compensate those harmed by the shift, leaving everyone better off. “Governments should not try to rescue failing towns,” The Economist wrote in 2013. “Instead, they should support the people who live in them.” + +This position never lacked for critics. Declining places can become poverty traps. A shrinking tax base means a deterioration in local services (including the public education that might provide young people with the skills to succeed elsewhere). Low and falling housing costs disproportionately attract people on fixed government incomes, like pensioners, who tend to take more in government services than they add to the local economy. What’s more, people resent as elitist the notion that the decay of beloved cities is an acceptable part of the rough-and-tumble of a dynamic economy. That resentment can motivate votes against the institutions of globalisation. Just as America’s Midwest helped carry Mr Trump to power, Brexit triumphed thanks to support from deindustrialising places like Middlesbrough and Wolverhampton. The liberal-minded are learning that they ignore regional disparities at their peril. + +Economists are woefully short of compelling solutions, however. Some reckon the main problem is that the process of reallocating resources has occurred too slowly. Constraints on growth in thriving cities, from strict zoning regulation to inadequate infrastructure investment, mean that they have become pricier rather than much larger. Mr Ganong and Mr Shoag suggest that these constraints make Americans less likely to move; those who do are less likely to head for richer places. Enrico Moretti of the University of California, Berkeley and Chang-tai Hsieh of the University of Chicago argue that American GDP might now be as much as 13.5% lower than it ought to be as a result. But although a speedier and more complete reallocation would boost GDP and the economic fortunes of those who choose to migrate, it would hardly improve the outlook for those who remain behind—and many inevitably would. + +More generous transfers from “winners” to “losers” might help. In many rich economies prosperous areas already support poor ones. Subsidies—health and pension payments, as well as industrial and agricultural protections—provide a cushion against regional decline. But they are not a basis for long-run economic recovery, and have not been enough to stem the growth of populist political movements. Many people want it both ways: not only redistribution but also good jobs, without having to move too far to get them. + +Attempts to jump-start local economies are another obvious response. Governments have a long record of experimentation with such “place-based” policies: from the massive infrastructure investments of the Tennessee Valley Authority (TVA) to EU structural funds and “enterprise zone” programmes, providing incentives for hiring and investment in struggling areas. These efforts do boast a certain economic logic. Modern cities thrive because of the benefits to firms and workers of crowding together. Clustering speeds the flow of ideas, cuts the cost of dealing with clients and enriches social lives. + +Wise men at their end + +Yet studies of place-based policies offer something less than a ringing endorsement. Though some programmes appear to boost employment or the number of firms, others fail to have any significant effect or bring local benefits only at the expense of others. Research suggests that the TVA, for instance, fostered a manufacturing cluster in its own area but to the detriment of other regions. It is hard to help one place without harming another. + +Indeed, more immigration would in many ways be an elegant solution to regional decline. By putting together underused infrastructure and rich-world institutions with foreign labour, immigration would be good for migrants, while also bringing new spending and entrepreneurial activity to struggling places. Some leaders, like Rick Snyder, the governor of Michigan, have expressed interest in place-based visa programmes which would allow struggling areas to recruit immigrants from abroad, so long as they remain in the place issuing the visa for a set amount of time. An intriguing idea: but now is not the moment when governments are likely to promote the potential of immigration. + +So more creative solutions may be needed. In the late 19th century America’s federal government gave land to states, which they could sell to raise proceeds for “land-grant universities”. Those universities (today including many of the country’s finest) were given a practical task: to develop and disseminate new techniques in agriculture and engineering. They have become centres of advanced research and, in some cases, the hub of local economic clusters. Mainstream academic economists might tut at a modern-day version of the programme, meant to foster new ideas, train workers and strengthen regional economies. But if economists cannot provide answers, populist insurgents will. + +Visit our Free exchange economics blog + +This article appeared in the Finance and economics section of the print edition under the headline “Rage against the dying of the light” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21711882-orthodox-economics-distressingly-unhelpful-solving-problem-regional/print + + + + + +上一项 文章 章节 下一项 + + + + + +Science and technology + + + + +Oncology: Cancer’s master criminals + +Planetary science: Stardust memories + +Drug addiction: Souring the poppy’s milk + +Climate science: How hot is the sea? + +Sexual selection: Boning up + + + + + +文章 章节 下一项 + +Cancer’s master criminals + +A new type of molecular medicine may be needed to halt cancers + +Doctors must look to proteins rather than genes to tackle tumours + +Dec 17th 2016 + + + +ONE of the most important medical insights of recent decades is that cancers are triggered by genetic mutations. Cashing that insight in clinically, to improve treatments, has, however, been hard. A recent study of 2,600 patients at the M.D. Anderson Cancer Centre in Houston, Texas, showed that genetic analysis permitted only 6.4% of those suffering to be paired with a drug aimed specifically at the mutation deemed responsible. The reason is that there are only a few common cancer-triggering mutations, and drugs to deal with them. Other triggering mutations are numerous, but rare—so rare that no treatment is known nor, given the economics of drug discovery, is one likely to be sought. + +Facts such as these have led many cancer biologists to question how useful the gene-led approach to understanding and treating cancer actually is. And some have gone further than mere questioning. One such is Andrea Califano of Columbia University, in New York. He observes that, regardless of the triggering mutation, the pattern of gene expression—and associated protein activity—that sustains a tumour is, for a given type of cancer, almost identical from patient to patient. That insight provides the starting-point for a different approach to looking for targets for drug development. In principle, it should be simpler to interfere with the small number of proteins that direct a cancer cell’s behaviour than with the myriad ways in which that cancer can be triggered in the first place. + +This week, therefore, in a paper in Nature Reviews Cancer, he and Mariano Alvarez, a colleague at Columbia, pull together over a decade of work in an effort to understand how the proteins that regulate cancer are organised. Dr Califano and Dr Alvarez call this organisation “oncotecture”. + +The 300 club + +Creating the oncotectural blueprint for a cancer starts by analysing the gene-expression profiles of cells from samples of that cancer. A gene-expression profile describes which genes are active in a cell’s DNA, and how active they are. Because genes encode proteins it gives a sense of which proteins, and how much of them, a cell is making. Many of these proteins are involved in regulating cellular activity, including growth and cell division (the things that go wrong in cancer), via signalling pathways in which one protein changes the behaviour of others (sometimes hundreds or thousands of others), each of which then changes the behaviour of others still—and so on. Applying a branch of mathematics called information theory to these data, to make them manageable, Dr Califano then maps the connections inside a cell. + +One of his most important discoveries is that the resulting networks have a few “master regulator” proteins, which control the largest numbers of other proteins. Dr Califano, whose father-in-law was a Mafia prosecutor in Italy, likens these to the bosses of a network of organised criminals. He sees his job as working out the links between them, in the same way that a detective might study a gang in order to find out who is in charge. + +So far, he has analysed data from 20,000 tumour samples and generated maps for 36 types of tumour. All told, he has identified about 300 proteins that are probably master regulators in at least one sort of cancer. These are organised into groups of ten to 30 in each tumour type, and are probably, collectively, responsible for controlling most human cancers. + +The master regulators, it turns out, are mostly proteins that affect transcription—the process that copies information in DNA into messenger molecules that carry it to a cell’s protein factories. In Dr Califano’s view, it is these master regulators that drugmakers should concentrate on, since drugs that modify such proteins’ activities are likely to be widely applicable, in contrast to those focused on genetic mutations. + +Indeed, the choice of best targets may be even narrower than this, he says—for among his master regulators lurk a few capi di tutti capi. In the view of Gordon Mills, of M.D. Anderson, one example of such a capo is an oestrogen-receptor that is involved in breast cancer. This is a transcription factor that controls the expression of many genes. Disabling it with a drug such as tamoxifen, so that it can no longer run its part of the network, is thus particularly effective. Dr Mills says it gives an “incredible outcome”, regardless of the mutations that triggered the cancer in the first place. A second example he cites is Bruton’s tyrosine kinase, which regulates various malignancies of white blood cells. + +On top of these specific actions master regulators, like pieces of badly written software, can also set up loops that feed back on themselves and so, once activated, do not shut down. In aggressive prostate cancer, Dr Califano observes, two proteins called FOXM1 and CENPF act together in this way to promote a tumour’s growth. In glioblastoma, a cancer of the brain, three proteins collaborate to start and maintain the cancer. And, according to John Minna of the University of Texas Southwestern Medical Centre, in Dallas, two master-regulator proteins in particular govern the malignancy of small-cell lung cancer. + +Dr Minna does, though, argue caution in the master-regulator approach. First he observes, lots of known and suspected master regulators are in classes of protein that have proved difficult to affect with drugs. Second, not all of the master regulators suggested by Dr Califano’s modelling work have been shown to act as such in a laboratory. More experiments are needed to see which of his candidates really are proteinaceous mafiosi and which mere stool pigeons that have had the finger pointed at them incorrectly. + +To that end, several studies are under way. One, at Columbia itself, is recruiting volunteers with cancer to see if attacking putative master regulators in their tumours works in cell cultures or when parts of the tumours in question are grafted into mice. If this approach yields dividends, that will suggest that attacking master regulators could be an effective way to treat cancer. Along with existing drugs tied to particular mutations, and a newly emerging class of pharmaceuticals that mobilise the immune system against tumours, master-regulator blasters could provide a third form of precise molecular attack upon this most feared of diseases. + +This article appeared in the Science and technology section of the print edition under the headline “Cancer’s master criminals” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21711867-doctors-must-look-proteins-rather-genes-tackle-tumours-new-type/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Stardust memories + +Finding micrometeorites in city gutters + +An amateur enthusiast advances planetary science + +Dec 17th 2016 + + + +ABOUT 4.6bn years ago, a spinning disc of gas and dust began to coalesce into balls of matter. The largest sphere, at the disc’s centre, collapsed under its own gravity to form the sun. Other clumps of dust, scattered around its periphery, became planets and asteroids. In planets this dust has long since metamorphosed into rock. But in many asteroids it is still more or less intact. As a consequence, when asteroids collide, some of it is liberated—and a small fraction of that material eventually falls to Earth as micrometeorites. This micrometeoritic dust arrives at a rate of around six tonnes a day. Spread over Earth’s surface, that amounts to just one particle per square metre each year. + +Researchers go to great lengths to gather these grains, because they can reveal details of the solar system’s composition and history. They normally collect them by dredging up ooze from the ocean bed, then sifting and filtering it to find a few precious particles, or by melting tonnes of ice from the Antarctic to see what precipitates. Those two locations have the advantage of being isolated and reasonably free of dust from industrial sources. Now, in a study just published in Geology, a group of researchers have identified about 500 micrometeorites from an unlikely source: gutter sediment from the roofs of buildings in two of Europe’s capital cities. + +Enthusiastic amateur astronomers have claimed to have found cosmic dust in such urban slurry before. Professional scientists, however, tend to be sceptical of such claims, and none has been verified. Jon Larsen, a Norwegian musician, refused to be discouraged. He collected detritus from gutters in his hometown, Oslo, and also from rooftops in several cities that he visited to play jazz or to attend conferences. + +Micrometeorites contain magnetite, a naturally magnetic form of iron oxide, commonly known as lodestone. Mr Larsen’s first step was therefore to pass his slurry, about 300kg of it, past a magnet and keep anything that stuck. He then examined the 30kg or so of debris that resulted under a microscope, to hunt for cosmic dust. Micrometeorites melt as they zip through Earth’s atmosphere at speeds of around 12km a second. The globules then cool into spherical grains, and the minerals of which these are composed take on a distinctive stripy appearance (see picture). An experienced eye, such as Mr Larsen’s, can thus pick them out from other particles, which tend to be jagged and lack these markings. Altogether, he found about 500 of these “spherules”, each around 300-400 microns in diameter (a few times the width of a human hair). + +To confirm that the spherules were indeed micrometeorites Mr Larsen needed both expertise and more heavyweight equipment than he had at home. He therefore turned to Matthew Genge of Imperial College, London and his colleagues. They analysed 48 items from Mr Larsen’s Oslo and Paris collections under a scanning electron microscope. They were able to confirm that the composition of these matched that of micrometeorites, which tend to be rich in olivine, a greenish semi-precious gemstone. Most tellingly, Mr Larsen’s samples contained iron and nickel alloys common in micrometeorites, but rare in Earth-bound rocks because these metals oxidise rapidly. + +Micrometeorites dredged from the sea may have fallen to Earth any time within the past 50,000 years or so, depending on the depth of sediment recovered. Likewise, those found in Antarctic ice may have arrived up to a million years ago. In both instances the recovery technique mixes old and new, so it is impossible to identify specimens that have arrived in the past few decades. Some of the micrometeorites Mr Larsen has collected, on the other hand, must have touched down less than six years ago, because the gutters they came from were cleaned then. + +Intriguingly, these recent arrivals are more densely striped than an average specimen plucked from Antarctica or the ocean floor. That, Dr Genge says, suggests that they arrived at particularly high velocity. The speed with which they hit the atmosphere is dictated by the combined gravitational forces on them of the solar system’s planets. That they are apparently arriving faster now than in the past may be because the planets’ orbits are in slightly different positions relative to each other than they were a million years ago. + +This is to be expected. Planetary orbits are elliptical, rather than circular, and their gravitational interactions with one another may cause the shapes of these ellipses to change over the years. On Earth, such changes are believed to contribute to the waxing and waning of ice ages. If micrometeorites could be collected from conventional sources in ways that recorded when they had arrived, that might aid understanding of similar changes in the orbits of other planets. + +Even if this proves difficult, Dr Genge and Mr Larsen hope the guttering of the world’s roofs will prove a useful third source of micrometeorites for general study. Oscar Wilde once wrote, “We are all in the gutter, but some of us are looking at the stars.” Little did he suspect that looking in the gutter itself would also yield a little of the stuff from which stars are made. + +This article appeared in the Science and technology section of the print edition under the headline “Stardust memories” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21711633-amateur-enthusiast-advances-planetary-science-finding-micrometeorites-city/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Souring the poppy’s milk + +A long-sought vaccine against opioid drugs may now be on the cards + +Tweaking opioids to provoke the attention of the immune system + +Dec 17th 2016 + + + +ANCIENT Egyptians, Sumerians, Greeks and many others knew the powers of opium poppies and employed them extensively. So, too, do modern doctors. Drugs derived from poppy juice, such as morphine, codeine, oxycodone and hydrocodone, known collectively as opioids, form the very foundation of pain management and are used in hospitals the world over. + +Unfortunately, opioids are also highly addictive. Illicit consumption of them is reaching epidemic proportions—and not just among those who have wilfully chosen from the beginning to take such drugs recreationally. Many addicts were once prescribed an opioid legitimately, by a doctor, and then found that they could not stop. The upshot is a lot of premature deaths (see chart). Many researchers have therefore tried to find a way to deter those who have been given a brief taste of opioids from continuing to take them. Now one group, led by Kim Janda at the Scripps Research Institute in La Jolla, California, reports in ACS Chemical Biology that it has developed an anti-opioid vaccine. + +Vaccines work by teaching the immune system to recognise a molecule as a threat, and to respond by making antibodies to that molecule. Antibodies are special immune-system proteins which are customised to recognise and lock onto specific molecules, thus stopping those molecules reacting normally. The threatening molecule employed to make a vaccine is usually part of a pathogen, such as a virus or bacterium (or, often, simply a neutralised version of the pathogen itself). But it does not have to be. And, though opioids themselves do not provoke the attention of the immune system, they can be made to do so if they are chemically tweaked and attached to an appropriate carrier protein. That lures the immune system into making anti-opioid antibodies. + +This approach has not, to date, resulted in an effective vaccine. The anti-opioid antibodies it produces do not glom on to their targets strongly enough to make the drug ineffective. Dr Janda thinks he knows why this is. In his view, the tweaked versions of the drugs, known as haptens, do not sufficiently resemble the originals. In particular, in order to ease the attachment of a hapten to its carrier protein, previous researchers have replaced one of its methyl groups (a carbon atom attached to three hydrogens) with an amide group (a nitrogen attached to two hydrogens). Dr Janda’s experiments, using haptens derived from oxycodone and hydrocodone, two of the most commonly prescribed opioids, did not do this. Instead, they linked haptens to proteins using methylene groups (a carbon atom attached to two, rather than three, hydrogens, and connected to its parent molecule by a double bond, not a single one). That closely replicates the methyl structure found on opioids and allows tight connections with antibodies to form. + +Once the new vaccines were ready, Dr Janda injected mice either with one of them or with a saline solution to act as a control. When he subsequently gave these animals the relevant opioid and then exposed their tails or feet to heat, in order to induce pain, those vaccinated for real responded to the heat far faster than did those that had been given the saline. Vaccination was, in other words, successfully blocking a drug’s effect. Moreover, repeated trials showed that this blockage remained effective for between two and four months. If something similar were the case in people, that period should be long enough to help break any addiction, but short enough to allow the opioid in question to be used clinically on that patient again in the future. + +Dr Janda’s vaccines also seemed to protect animals receiving them from the risk of dying from an overdose. When he injected unvaccinated mice with dangerously high levels of hydrocodone, only 25% of them survived for even a day. In contrast, 62.5% of the vaccinated animals were still alive a day later. For oxycodone, the corresponding figures were 14.2% and 37.5%. + +Dr Janda suggests that all of these results are a consequence of the antibodies elicited by his new vaccines binding more tightly than their predecessors could to circulating drug molecules. If he is right, and if a similar response can be generated in people, then his approach may prove an important step towards rescuing opioid addicts from their addiction, no matter how it started. + +This article appeared in the Science and technology section of the print edition under the headline “Souring the poppy’s milk” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21711869-tweaking-opioids-provoke-attention-immune-system-long-sought/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Climate science + +Using magnetism to take the sea’s temperature + +How hot are the oceans? + +Dec 17th 2016 | San Francisco + + + +“NOBODY really knows” was Donald Trump’s assessment of man-made global warming, in an interview on December 11th. As far as the atmosphere is concerned, that puts him at odds with most scientists who have studied the matter. They do know that the atmosphere is warming, and they also know by how much. But turn to the sea and Mr Trump has a point. Though the oceans are warming too, climatologists readily admit that they have only a rough idea how much heat is going into them, and how much is already there. + +Many suspect that the heat capacity of seawater explains the climate pause of recent years, in which the rate of atmospheric warming has slowed. But without decent data, it is hard to be sure to what extent the oceans are acting as a heat sink that damps the temperature rise humanity is visiting upon the planet—and, equally important, how long they can keep that up. + +This state of affairs will change, though, if a project described by Robert Tyler and Terence Sabaka to a meeting of the American Geophysical Union, held in San Francisco this week, is successful. Dr Tyler and Dr Sabaka, who work at the Goddard Space Flight Centre, in Maryland, observe that satellites can detect small changes in Earth’s magnetic field induced by the movement of water. They also observe that the magnitude of such changes depends on the water’s temperature all the way down to the ocean floor. That, they think, opens a window into the oceans which has, until now, been lacking. To measure things in the deep sea almost always requires placing instruments there—either by lowering them from a ship or by putting them on board submarine devices. The supply of oceanographic research vessels, though, is limited, and even the addition in recent years of several thousand “Argo” probes (floating robots that roam the oceans and are capable of diving to a depth of 2,000 metres) still leaves ocean temperatures severely under-sampled. + +Satellites, however, can look at the whole ocean—and, if they are properly equipped, can plot ways in which Earth’s magnetic field is deflected by seawater. This deflection happens because seawater is both electrically conductive and always on the move. Such a moving conductor will deflect any magnetic field that passes through it. Crucially, saltwater’s conductivity increases with its temperature. This means the deflection increases, too. And since the magnetic field originates from within Earth, it penetrates the whole ocean, from bottom to top. So any heat, whether in the deepest troughs or near the surface, contributes to the deflection. + +All this means that, if you know where and how ocean water is displaced, the changes in the magnetic field, as seen from a satellite, will tell you the heat content of that water. Dr Tyler and Dr Sabaka therefore built a computer model which tried this approach on one reasonably well-understood form of oceanic displacement, the twice-daily tidal movement caused by the gravitational attraction of the moon. + +Sadly, when they had crunched all the numbers, they found that with the available magnetic data, understanding the tides alone is not enough to calculate the oceans’ heat content. That requires one or both of two things to happen: adding the effects of other water movements, such as ocean currents and solar (as opposed to lunar) tides to the calculation, and collecting better magnetic data. The second approach, at least, is already in hand. Three recently launched European satellites, known collectively as Swarm, are busy gathering just the sort of data required. So if Dr Tyler and Dr Sabaka can upgrade their model of ocean movement appropriately to receive Swarm’s data, they may yet answer the questions of how much heat there is in the sea, and how much more it might reasonably be expected to absorb. + +This article appeared in the Science and technology section of the print edition under the headline “How hot is the sea?” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21711872-how-hot-are-oceans-using-magnetism-take-seas-temperature/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Sexual selection + +Why do some mammals have a bone in their penises? + +Everything you ever wanted to know about mammalian bacula + +Dec 17th 2016 + +Mine’s bigger than yours + +PENILE stiffness is the stuff of smutty jokes. In Darwinian terms, though, it is no laughing matter. Intromission, the meeting of penis and vagina, is crucial to reproduction. With insufficient stiffness, intromission will not happen and the genes of the male will fail to make it into the next generation. + +It is no surprise, therefore, that many male mammals have a bone, known as a baculum, in their penises to add to stiffness. What is surprising is that many others—men included—do not. What causes a baculum to evolve is not clear. But a study just published in the Proceedings of the Royal Society, by Matilda Brindle and Christopher Opie of University College, London, has shed some light on the matter. + +Ms Brindle and Dr Opie have reviewed what data exist about mammalian bacula, especially those of primates and carnivores, and compared these with what is known about different species’ sex lives. They picked primates and carnivores because both groups contain some species whose males have a baculum and others whose males do not. (The picture is of a skeleton of an extinct wolf species, in which the bone is particularly prominent.) + +The researchers predicted that species with a baculum would be those in which male-male competition is worked out more at the level of the sperm, in the female’s reproductive tract, than it is at the level of the individual, by fighting and fancy display. There is a precedent here. In primates, testis size is inversely correlated with harem formation. If you, as a male, have fought off the competition and established reasonably exclusive access to a group of females, then your sperm are unlikely to be competing directly with those of other males. You therefore need to generate fewer sperm, and so can get away with smaller testes. This, the story goes, is why gorillas, which form harems, have much smaller testes, relative to their body sizes, than do chimpanzees, which are promiscuous. (Men’s testis size lies between these two extremes.) + +It might therefore be expected that baculum size correlates with testis size. Surprisingly, Ms Brindle and Dr Opie found that it does not. They did, however, find three different but pertinent correlations. First, despite the lack of a relationship between baculum size and testis size, there was a clear one between the bone’s length (scaled for the size of the animal in question) and a species’ promiscuity: more promiscuous species had longer bacula. Second, species with specific mating seasons, rather than all-year-round mating, had longer bacula. Third, there was a strong correlation between the length of the bone in a species, and the average length of time intromission lasted in that species. + +All of these observations make sense if the baculum’s purpose is to compete with the mating efforts of other males. Promiscuity increases the risk that a female will be inseminated by another male before the first male’s spermatozoa have had a chance to fertilise the female’s eggs. Seasonal breeding similarly piles on the pressure, by concentrating mating attempts into a small period of time. And increasing the length of coitus, which a baculum’s stiffening presence permits, reduces the time available for competitors to engage in a successful mating of their own. + +Ms Brindle’s and Dr Opie’s prediction thus turns out to be correct—and it applies to people, too. The lack of a baculum in humans is of a piece with the lack of a mating season and with the existence of a pair-bonded mating system that has, by comparison with many other species, only limited levels of promiscuity. As for the length of time that sexual congress lasts in Homo sapiens, the adequacy of that is, perhaps, not a matter into which science should dare to trespass. + +This article appeared in the Science and technology section of the print edition under the headline “Boning up” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21711731-everything-you-ever-wanted-know-about-mammalian-bacula-why-do-some-mammals-have/print + + + + + +上一项 文章 章节 下一项 + + + + + +Books and arts + + + + +Nutrition: Bittersweet + +Humans and decision-making: Thinking about thinking + +Animals and intelligence: Smart arms + +Johnson: Off with their heads + +Fiction: Managing the traffic + +New York theatre: Bard off-Broadway + + + + + +文章 章节 下一项 + +The bittersweet story of sugar + +Why sugar is bad for you + +And why its dangers are still being ignored in too many countries + +Dec 17th 2016 + + + +The Case Against Sugar. By Gary Taubes. Knopf; 368 pages; $26.95. To be published in Britain by Portobello in January. + +CHRISTMAS is the most fattening time of the year. There are claims that the average Westerner will consume 6,000 calories on December 25th, well over twice the recommended daily intake for men and more than that for women. He or she could put on nearly two kilos in the last week of the year. Short winter days and too much slouching in front of the television accounts for some of that. But the main cause of festive obesity may well be sugar, an essential ingredient in Christmas pudding, brandy butter, chocolate, marzipan, mince pies and alcohol. + +“Sugar spoils no dish,” averred a 16th-century German saying. But it certainly spoils and savages people’s health, says Gary Taubes, an American science writer who has focused heavily on the ills of sugar over the past decade and is the co-founder of an initiative to fund research into the underlying causes of obesity. In “The Case Against Sugar” he argues that dietary fat was fingered for decades as the perpetrator of obesity, diabetes and heart disease. Abetted by an industry that funded scientific research linking fat with coronary disease, sugar, the real culprit according to Mr Taubes, was allowed to slip off the hook. + +The author sets out to prove that because of its unique metabolic, physiological and hormonal effects, sugar is the new tobacco. It is detrimental to health, yet also defended by powerful lobbies. If, as he contends in one example, the most significant change in diets as populations become Westernised, urbanised and affluent is the amount of sugar consumed, then the conventional wisdom linking fat with chronic disease does not square up. Cultures with diets that contain considerable fat, like the Inuit and the Maasai, experienced obesity, hypertension and coronary disease only when they began to eat profuse amounts of sugar. Likewise, diabetes—virtually unknown in China at the turn of the 20th century, but now endemic in 11.6% of the adult population, 110m in total. + +Sugar is intoxicating in the same way that drugs can be, writes Mr Taubes. Was it not Niall Ferguson, a British historian, who once described sugar as the “uppers” of the 18th century? A medieval recipe even suggests sprinkling sugar on oysters. The craving seems to be hard-wired: babies instinctively prefer sugar water to plain. + + + +As sugar shifted from being a “precious product” in the 11th century to a cheap staple in the 19th century, the food industry proceeded to binge on it, with unheeded consequences. The biggest consumers today are Chilean (see chart). The Dutch, Hungarians, Belgians and Israelis are not far behind. Saudi Arabians also have a sweet tooth. In only ten countries do people eat fewer than 25 grams of sugar a day. + +Sugar lurks in peanut butter, sauces, ketchup, salad dressings, breads and more. Breakfast cereal, originally a wholegrain health food, evolved into “breakfast candy”—sugar-coated flakes and puffs hawked to children by cartoon pitchmen like Tony the Tiger and Sugar Bear. A 340ml (12-ounce) fizzy drink contains about ten teaspoons of sugar. Even cigarettes are laced with it. Bathing tobacco leaves in a sugar solution produces less irritating smoke; it is easier and more pleasant to inhale. + +Woe, however, to the scientist incautious enough to challenge the party line exonerating sugar. Mr Taubes tells the story of John Yudkin, a nutritionist at the University of London. In the 1960s, Yudkin proposed that obesity, diabetes and heart disease were linked with sugar consumption. Though he acknowledged that existing research, his own included, was incomplete, he became embroiled in a scientific spitting match with Ancel Keys, a well-known American researcher. Keys, whose work on dietary fat as the prime cause of coronary disease had been supported by the Sugar Association for years, ridiculed Yudkin, calling his evidence a “mountain of nonsense.” The clash—Mr Taubes calls it a “takedown” of Yudkin—is a sad chapter in what Robert Lustig, a paediatric endocrinologist at the University of California, San Francisco, calls “a long and sordid history of dietary professionals in the U.S. who have been paid off by industry”. When Yudkin retired as chair of his department in 1971, the university replaced him with an adherent of the dietary-fat theory. + +Because research specific to sugar’s deleterious effects is wanting, the science, Mr Taubes concedes, is not definitive. But it is compelling. The case against sugar is gaining traction. In October the World Health Organisation urged all countries to impose a tax on sugary drinks. Mexico had already done so in 2013. In America cities including Chicago, Philadelphia and San Francisco are following suit. Britain will implement a soft-drink levy in 2018. South Africa and the Philippines have measures under consideration. Perhaps at long last, sugar is getting its just desserts. + +This article appeared in the Books and arts section of the print edition under the headline “Bittersweet” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21711861-and-why-its-dangers-are-still-being-ignored-too-many-countries-why-sugar-bad-you/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Decision-making + +Thinking about thinking + +Michael Lewis dissects the enduring friendship between Daniel Kahneman and Amos Tversky + +Dec 17th 2016 + +The original fast and slow thinker + +The Undoing Project: A Friendship that Changed Our Minds. By Michael Lewis. W.W. Norton; 362 pages; $28.95. Allen Lane; £25. + +DURING the second world war a young Jewish boy was caught after curfew on the streets of Nazi-occupied Paris by an SS soldier. The soldier picked him up, hugged him, showed him a photograph of another boy and gave him money. The young Daniel Kahneman left more certain than ever that his mother was right: “People were endlessly complicated and interesting.” His curiosity about human thinking would lead him to a pioneering career in psychology, exploring the systematic flaws of decision-making, in a remarkable partnership with his collaborator, Amos Tversky. In 2002 Mr Kahneman (pictured) won a Nobel prize in economics, for work on how people overvalue losses relative to gains. Tversky would have shared it had he not died in 1996. + +This is the terrain of Michael Lewis’s new book, “The Undoing Project: A Friendship that Changed our Minds”. It is part biography of a friendship and part account of psychology’s impact, while also taking in much of modern Israel’s history. It is a fine showcase of Mr Lewis’s range. + +Mr Kahneman was introverted, formal and pessimistic, and worked conventional hours; Tversky was extroverted, informal and incorrigibly optimistic, keeping the hours of a bat. But the two shared a fascination with how people repeatedly make the same kinds of irrational mistakes. “We study natural stupidity,” Tversky quipped. At times, the two were “sharing a mind”, Mr Kahneman said, sitting at the typewriter together and blissfully unaware of who had contributed what to their work. They also had their tensions: Mr Kahneman was, for example, envious of Tversky, who attracted far more attention. But they remained so close that when Tversky was diagnosed with cancer, Mr Kahneman was the second person he told. + +Academic work can be intellectual navel-gazing. But the Kahneman-Tversky partnership was always engaged in the real world, thanks to both men’s early experiences in Israel. At 21 Mr Kahneman was assigned to the army’s psychology unit. He overhauled the assessment of recruits, improving judgments by reducing the weight given to gut feelings; the methods have barely been tweaked since. During the Yom Kippur war in 1973, the two psychologists told the army to see what food soldiers threw into the rubbish in order to give them food they really wanted, and persuaded the air force to scrap investigations into a squadron suffering terrible losses: with a small sample size, the extra deaths were probably random. As their work on irrational decision-making has made its way into the wider world, it has also irritated incumbent pundits. When Daryl Morey, the general manager of the Houston Rockets basketball team, used behavioural economics to influence his choice of players, Charles Barkley, a commentator and former NBA star, denounced him and those like him: “They never got the girls in high school and they just want to get in the game.” In decision-making certain flaws are much easier to identify than amend, it seems. + +Some governments have tried to act on these insights. Barack Obama hired Cass Sunstein, a scholar heavily influenced by Mr Kahneman and Tversky, to design behavioural “nudges” that encourage people to do the right thing without forcing them. Britain created its own “nudge unit”, which for example reworded a request for organ donation by first asking people if they would want to receive an organ if they needed one. Positive response rates jumped by enough to increase the donor rolls by 100,000 per year. + +Like Mr Lewis’s 13 previous books, “The Undoing Project” is a story of remarkable individuals succeeding through innovative ideas. Here, the balance is geared more towards the ideas, and the pace is slower than, say, “Liar’s Poker”, his first book. Yet, with his characteristic style, Mr Lewis has managed the unusual feat of interweaving psychology and the friendship between the two men. Two decades after he died, Tversky’s partnership with Mr Kahneman is still changing the world. + + + +This article appeared in the Books and arts section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21711860-michael-lewis-dissects-enduring-friendship-between-daniel-kahneman-and-amos/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Animals and intelligence + +The smart arms of the octopus + +Why cephalopods may be far more intelligent than we think + +Dec 17th 2016 + + + +Other Minds: The Octopus, the Sea, and the Deep Origins of Consciousness. By Peter Godfrey-Smith. Farrar, Straus and Giroux; 255 pages; $27. To be published in Britain by William Collins in March 2017; £20. + +LIKE life itself, the mind first emerged in Earth’s oceans. What is less well appreciated is that it evolved there in at least two distinct ways. One sentient branch of the tree of life is descended from the animals that crawled onto dry land hundreds of millions of years ago. It comprises humans and other mammals, and birds. The other branch remained water-bound and eventually produced another collection of creatures possessing higher intelligence: the cephalopods, a class of animals that includes squid, cuttlefish and octopus, probably the smartest of them all. In “Other Minds”, Peter Godfrey-Smith, a philosopher, skilfully combines science, philosophy and his experiences of swimming among these tentacled beasts to illuminate the origin and nature of consciousness. + +An octopus’s body contains 500m neurons, roughly the same as a dog’s, but most of these reside in the cephalopod’s arms and allow the tentacles to act independently from the brain (their arms literally have a life of their own). The type of consciousness experienced by an octopus, then, is wholly alien to humans. + +Early experiments assumed that the intelligence of animals could be estimated by their ability to carry out tasks, such as learning to pull a lever in exchange for food. Octopuses perform quite well in such tests but not as well as rats. Yet it is the anecdotes buried in research papers or related to him by scientists who work with animals that Mr Godfrey-Smith contends are often more revealing than the experiments themselves. One researcher told him of an octopus that expressed its displeasure with the lab food by waiting until she was looking before stuffing the unwanted scrap of squid down the drain. + +According to the author, such behaviour shows octopuses are more intelligent than the scientific literature suggests. Despite these displays of chutzpah, however, they have failed to become as smart as mammals or birds because, as a short-lived and solitary species, they have not had to contend with the many challenges of social living that seem to drive the evolution of complex brains. + +“Other Minds” presents an intriguing possibility in the form of Octopolis, off the east coast of Australia. A patch of sand a few metres in diameter covered in thousands of empty scallop shells, Octopolis appears to host up to a dozen or so octopuses at any one time and presents them with an opportunity to meet. “Some will pass by others without incident, but an octopus might also send out an arm to poke or probe at another,” Mr Godfrey-Smith writes. “An arm, or two, might come back in response, and this leads sometimes to a settling-down, with each octopus going on its way, but in other cases it prompts a wrestling match.” Could interactions like these lead, over many thousands of years, to the octopus becoming a brainier species? It might if there were thousands of such sites in the world’s oceans. Sadly, Octopolis is the only known example. If only, if only. + +This article appeared in the Books and arts section of the print edition under the headline “Smart arms” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21711857-why-cephalopods-may-be-far-more-intelligent-we-think-smart-arms-octopus/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Johnson: the meaning of “elites” + +The world has become obsessed with elites + +The obsession is meaningless without a proper focus + +Dec 17th 2016 + + + +AN ACADEMIC, a politician, a journalist, a film star, a nobleman and a banker walk into a bar. They order different drinks, and sit at separate tables each doing their own thing. There is no punch line; these people do not belong together in any sensible way. Yet members of these groups and others are regularly given the same label: “elites”. Careful writers should avoid this word; it is becoming a junk-bin concept used by different people to mean wildly different things. + +It is easy to understand why people reach for “elites”. If pundits can agree on anything about 2016, it is surely that it has been bad for elites. Populist wave after populist wave has broken over Western politics, with a vote for Brexit, the election of Donald Trump and Italy’s loss of a popular young prime minister over a constitutional referendum that he called—and lost. The masses are out for blood, and the elites are quaking. + +But if you can picture those masses in your mind—pitchforks, torches, perhaps overalls—what do the elites look like? For Mr Trump, the hated elites comprise the Washington political establishment and the press. But for his own opponents, the very idea of a billionaire who lives in a golden tower swanning in and winning himself the presidency just goes to show what elite status can get you. + +Campaigners for Brexit railed against liberal elites—the economists, academics and journalists who warned of its consequences. But the face of the Leave campaign was Boris Johnson, an Eton- and Oxford-educated toff. Michael Gove, another Leaver, said that folks were tired of “experts”. But Mr Gove, like Mr Johnson, is a former president of Oxford’s leading debating society, the Oxford Union, and one of politics’ pointier heads. In other words, no matter who you are or what you’re campaigning for, bashing elites seems a safe bet, while admitting to being a member of an elite is an absolute no-go. + +The obsession with elites is relatively recent: the oldest citation in the Oxford English Dictionary (OED) dates back to 1823. It was only a singular noun, from a past participle in French, meaning “chosen”; from the same root as “to elect”. (Its very Frenchness may make elite such a delicious word for some Anglophones to hurl as an insult.) The OED says the English noun is “The choice part or flower (of society, or of any body or class of persons)”. + +This entry has not yet been updated to include its more recent sense, the pejorative version, often plural, which can be glossed as “people with unearned privileges who keep honest folks from getting a fair shake”. Data from Google Books show the plural word “elites” beginning to be used in about 1940, with the obviously pejorative “elitist” rising from about 1960. The anti-authority cultural changes of the 1960s, it seems, brought with them a rising concern with elites and their apologists. + +Data from the New York Times show an even sharper spike in mentions of elites since about 2010, as article after article has tried to diagnose anger at elites. Populist anger is hardly surprising: elite financiers tanked the global economy, elite economists failed to foresee it and political elites failed to respond effectively enough. Those elites in the crosshairs had to find other elites to blame, and they did so. Elite scientists and Hollywood liberals whining about climate change cost coalminers their jobs. Elite London journalists noshing on sushi ignore the problems that hard-working northern Brits suffer as a result of immigration. Cultural elites police what can be said about minorities. And so on. + +But the rush to blame elites has nearly everyone in the crosshairs: Sketch Engine, a digital tool for lexicographers, finds among the common modifiers for elite not just obvious ones like “ruling”, “wealthy”, “monied”, but also “secular”, “cultural”, “educated”, “metropolitan” and “bureaucratic”. Elites are no longer “the choice part or flower” of a group, but merely anyone in a position of influence someone else thinks they do not deserve. + +Words aimed more precisely serve their purpose better. Elites are an abstraction. If people are angry at bankers or at climate scientists, they should say so specifically. Those seeking to diagnose the causes of the current wave of populism need to understand what populist voters are truly angry about. Those who are angry at elites generally, but can’t say more specifically who they are angry at or why, should think twice before voting for a populist who promises to find and punish those elites, whoever they are. + +This article appeared in the Books and arts section of the print edition under the headline “Off with their heads” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21711859-obsession-meaningless-without-proper-focus-world-has-become-obsessed/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Hakan Gunday’s fiction + +People-smugglers + +A prescient novel about a pressing problem + +Dec 17th 2016 + + + +More. By Hakan Gunday. Translated by Zeynep Beler. Arcade Publishing; 398 pages; $25.99. + +STILL in his mid-teens, the precocious but disturbed narrator of “More”, a novel about people-smugglers in Turkey, takes charge of a group of 33 Afghan refugees locked in a covered reservoir. As the “deity” of a “small country”, he watches how authority and control evolve amid this microcosm of desperate humankind. Effective leadership, he observes, rests on a ruler’s ability to foment a mood of “sustainable crisis”: a never-ending blend of hope and dread that tightens his grip on power. + +Ambitious, compelling, but relentlessly bleak, “More” suggests that the influx of migrants into Europe from war-ravaged regions of Asia and the Middle East has itself become a sustainable crisis. Though published in Turkey in 2013, Hakan Gunday’s first-person story of a tormented trafficker is set in the past: after his liberation from the trade, the narrator hears news of the Taliban’s demolition of the Bamiyan Buddha statues in March 2001. + +Gaza, the wounded anti-hero, joins his father’s business, aged nine, as a transporter of human souls in 18-wheeler lorries across Turkey to the Aegean. Historical fiction rather than a tale wrenched from recent headlines, his desolate testimony hints that the flow of the dispossessed has, like the perpetual chaos of Afghanistan, become a fixed feature of the world. In this emergency without end, figures such as Gaza and his demonic dad will always offer to carry into paradise “those who’d escaped from hell”. + +Through the voice of this damaged youngster, a “child pharaoh” whose ordeals drive him into a post-traumatic breakdown, Mr Gunday measures the harm inflicted on a bright boy “raised by wolves to become one myself”. Zeynep Beler, the translator, lends the voice of this damaged lad a scorching intensity. The catalogue of violence and abuse, and the insistence that the refugee cargo contains its share of “thieves, murderers, rapists and child-molesters”, means “More” finds no sentimental uplift in its theme. The visceral punch and drive of its prose in many bravura passages—notably, the lorry crash that buries Gaza in a tide of corpses—evokes Irvine Welsh or William Burroughs more than “Oliver Twist”. Gaza is no angel, but as much a victim as the “meat” he helps shift: a hapless child soldier in our “omnipresent state of war”. + +This article appeared in the Books and arts section of the print edition under the headline “Managing the traffic” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21711858-prescient-novel-about-pressing-problem-people-smugglers/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +New York theatre + +Bard off-Broadway + +The stars align for a memorable production of “Othello” + +Dec 17th 2016 + +IF YOU see only one production of “Othello” in your lifetime, make it the one which is on at the New York Theatre Workshop (NYTW) until January 18th. Tickets sold out ages ago, but a cluster of hopefuls stand shivering outside before shows in case of returns. They are right to try. + + + +From the start, it is clear something is going on. The entire auditorium is plastered in plywood, with stadium seating arranged in the round. The set evokes an army barracks, with mattresses arranged in rows. Two men are already onstage before the play even starts, dressed like soldiers on break (camo shorts, chiselled muscles, shaved heads) and engrossed in the video-game “Guitar Hero”. If most productions of Shakespeare heighten how remote these works can feel by setting the action at a distant time in a distant land (a place where even American actors mysteriously sound English), this one, directed by Sam Gold, capitalises on the ways “Othello” is not just timeless but also timely. A tragedy about love, jealousy, war, ambition, race and rage, it feels startlingly appropriate in the world of today. + +This is Mr Gold’s first Shakespeare play. For a director who tends to collaborate with living playwrights on new work, this marks a departure. Mr Gold was eager for the challenge of a more formally rhetorical play, particularly if his experiment could be off-Broadway. “The smaller the audience, the easier it is for me to deliver the kind of performance that interests me,” he explains. Tackling the bard is “scary stuff”, he admits, but he has tried to treat “Othello” as if it were “a new play, without the burden of Shakespeare’s importance and the rules that come along with it”. + +The 220-seat theatre’s small size means that too few people will see this production, but it also means the actors can afford to be subtle. Because they know everything they do can be seen and heard, their performances often sound more like talking than orating. Nearly everyone wrings out as much authenticity as possible from their lines. At times the actors are so at ease in their roles that it seems like they are departing from the original script. This is an illusion. The play has been trimmed slightly, but the text is unchanged (except that a rousing rendition of “Hotline Bling” replaces the original drinking song). The production runs for more than three hours, but it races by like a train hurtling towards its inevitable crash. + + + +The ensemble includes a few standouts. In yoga leggings and a cardigan, Rachel Brosnahan is a sweet and perceptive Desdemona; Finn Wittrock is a fine, strong-jawed Cassio; and Matthew Maher nearly steals all of his scenes as the otherwise marginal dupe, Roderigo. But the show of course belongs to the two stars: David Oyelowo as Othello and Daniel Craig as Iago (pictured). It is a marvel to see the raw talent of these masters up close, without the smoke and mirrors of the cinema. + +Mr Craig is a magnetic Iago, a thuggish weasel in a T-shirt and shorts who delivers his lines as comfortably as he breathes. Perhaps to subdue the glimmer of his celebrity (and evade the annoying habit of entrance applause), his first scenes take place in total darkness. This is an intriguing choice, which helps introduce the patter of Shakespeare’s poetry to the ear without the distraction of Mr Craig’s impossibly blue eyes. As for Mr Oyelowo, his transformation from a regal, self-assured soldier into a bloodthirsty creature undone by jealousy must be seen to be believed. + +Mr Oyelowo says he had long avoided playing Othello, deeming it a bit “too obvious” a role. But he was won over by Mr Gold’s plans to stage the play “in a world of now”. He adds that after a ten-year hiatus, it also felt like it was time to return to the stage. “Nothing gets you closer to the truth of storytelling than live theatre,” he says. “There’s nowhere to hide. If you’re not telling the audience the truth, you feel it. But when it works, it’s magical.” + +This article appeared in the Books and arts section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21711856-stars-align-memorable-production-othello-bard-broadway/print + + + + + +上一项 文章 章节 下一项 + + + + + +Obituary + + + + +John Glenn: Right up there + + + + + +文章 章节 下一项 + +Right up there + +Obituary: John Glenn died on December 8th + +John Glenn, astronaut and politician, died on December 8th, aged 95 + +Dec 17th 2016 + + + +TOO big, too unschooled, too old—only narrowly did John Glenn gain entry to the training programme which made him America’s space hero. To meet NASA’s size requirements, he briskly lost 28lb (nearly 13kg), even putting books on his head to try to squeeze a little off his height. + +Nothing could be done about his age (pushing 40), nor his lack of scientific qualifications—he had dropped out of his engineering course in 1941 after learning to fly. But what flying it was: 149 combat missions, first against Japan in the Pacific, then in the Korean war; one of them left more than 200 bullet-holes in his plane’s fuselage. They earned him the nickname “The MiG-mad Marine”, six Distinguished Flying Crosses and 18 clusters on his Air Medal. And he was a celebrity already, having just made America’s first transcontinental supersonic flight, in a record three hours 23 minutes, testing a new fighter aircraft. + +His country’s spirits needed lifting in 1959. The Soviet space programme seemed unbeatable. Communist scientists had put the first satellite, dog and man into orbit, while America’s efforts flared and fizzled on the launch pad. Despite the mishaps, there was intense rivalry for the privilege of perching in a flimsy metal capsule on top of 100-plus tonnes of rocket fuel. It was another contest just made for the clean-cut mid-Westerner. His austere approach grated on some colleagues—though Mr Glenn insisted he was not the “pious saint”, nor the other guys the “hellions” depicted in the film version of Tom Wolfe’s “The Right Stuff”. + +Gloom and ire alike ended on February 20th 1962. To the words “Godspeed, John Glenn” from Mission Control he and America’s hearts soared to the heavens in the Friendship 7. In the space of four hours and 55 minutes he saw three sunrises, circling the Earth at more than 17,000mph (27,000kph). Puzzlingly, he also saw what looked like fireflies, resting on the window. A malfunction on the spacecraft? A sign of failing eyesight? A celestial mirage, or even (some wondered) a miracle? Later it turned out that they were frozen crystals of condensation, catching the sunlight. + +The run-up had been testing, with ten delays stretching over two months. But once in orbit, a more serious worry dawned. Some controls in the capsule had apparently failed, meaning that the astronaut himself would have to work out the angle of his re-entry to the Earth’s atmosphere. Worse (but also wrongly) NASA had received a signal suggesting that the capsule’s heat shield had, lethally, broken loose. In the nerve-racking final minutes of the flight, his pulse raced from 87 to 132. The important thing, he mused later, was not fear, but what you can do to control it. + +The splashdown proved flawless. At Cape Canaveral he was greeted and decorated on the spot by President John Kennedy. In New York, 4m people turned out for a ticker-tape parade. Mr Glenn ranked with the greatest aviators, the Wright Brothers and Charles Lindbergh, in the American pantheon. A joint session of Congress gave him a standing ovation. He was so popular, the BBC’s Alastair Cooke said only half-jokingly, that he could have “abolished the Constitution and been proclaimed president overnight”. + +What on earth did he do? + +His success had opened the way for the moon landings, yet his popularity kept him grounded. Without the astronaut’s knowledge, JFK ruled out any more space flights. America’s idol was too precious to lose—and perhaps more useful elsewhere. The Kennedys urged him to enter politics. His early steps were faltering, and a frailer soul might have been daunted by his mentors’ fate; in 1968 it was Mr Glenn who had to tell Bobby Kennedy’s children of their father’s assassination. + +But in 1974 he stormed through the Democratic primary in his home state of Ohio after the incumbent senator, a tax-dodging tycoon, implied that the challenger lacked real-world experience. With cosmic scorn, Mr Glenn suggested that his opponent visit a veterans’ hospital and “look those men with mangled bodies in the eyes and tell them they didn’t hold a job”. + +In many ways he was a model lawmaker, diligent and moderate. There was just one whiff of scandal in 24 years, when he unwisely associated with Charles Keating, a fraudster in search of a bail-out. He promoted environmentalism, nuclear non-proliferation and (of course) space travel: it wasn’t whether America could afford the programme, but whether it could afford not to. He strongly defended evolution, too. Science and religious belief did not clash: they reinforced each other. He had seen more of God’s creation than most people, he would note. + +He was bad at delegating and a dull speaker: his fireside chats would put out the fire, people said unkindly. His sole bid for the Democratic nomination, in 1984, crashed amid humiliation and debts. His legislative achievements were modest. + +But in 1998, in his final year in the Senate, he became, aged 77, the oldest person to go into space. In theory, the mission was to study the ageing process. But in truth, most reckoned, it was a favour from his friend President Bill Clinton. Few begrudged him his last hurrah. Not until the age of 90 did he give up flying: old people, he insisted, should not let the calendar dictate their lives. + +This article appeared in the Obituary section of the print edition under the headline “Right up there” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21711604-astronaut-and-politician-was-95-obituary-john-glenn-died-december-8th/print + + + + + +文章 章节 下一项 + + + + + +Economic and financial indicators + + + + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +World GDP + +The Economist commodity-price index + +Markets + + + + + +文章 章节 下一项 + +Output, prices and jobs + +Dec 17th 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21711905-output-prices-and-jobs/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Trade, exchange rates, budget balances and interest rates + +Dec 17th 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21711868-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +World GDP + +Dec 17th 2016 + + + +The world economy grew by 2.7% in the third quarter of 2016 compared with a year earlier, down from 2.8% the previous quarter. Growth remains steady in India and China: together they accounted for 65% of world growth. Other emerging markets struggled: they contributed 16%, down from 21% in the previous quarter, their lowest share since 2008. In particular, falling smartphone exports took a heavy toll on South Korea. Norway was the only rich country in our sample whose economy contracted, partly because of a decline in oil-related activities. The United States was a bright spot: the economy expanded faster than it did in the second quarter, boosted by exports and federal government spending. + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21711870-world-gdp/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +The Economist commodity-price index + +Dec 17th 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21711871-economist-commodity-price-index/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Markets + +Dec 17th 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21711875-markets/print + + + + + +上一项 文章 章节 下一项 + + + +Table of Contents + +The Economist [周六, 17 12月 2016] + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +War in Syria: The fall of Aleppo + + + + + +Big data and government: China’s digital dictatorship + + + + + +South Korean politics: Decide and rule + + + + + +The Federal Reserve: Janet’s job + + + + + +The trial of Geert Wilders: In defence of hate speech + + + + + +Letters + + + +Letters to the editor: On oil taxes, China, the rupee, renewables, refugees, trees, science, economists + + + + + +Briefing + + + +China’s social-credit system: Creating a digital totalitarian state + + + + + +United States + + + +Russian interference: The plot against America + + + + + +Interference past: Substandard subversion + + + + + +The next secretary of state: Oily diplomacy + + + + + +Tiny colleges: Small wonders + + + + + +Environmental policy: Fetch the chainsaws + + + + + +The trial of Dylann Roof: Mother courage + + + + + +Lexington: The Obama way of war + + + + + +The Americas + + + +Canada’s climate deal: Walking the walk + + + + + +Bello: Viva la ignorancia! + + + + + +Asia + + + +Democracy in India: The do-nothing Lok Sabha + + + + + +Taiwanese politics: From riches to rags + + + + + +The economy of Turkmenistan: A stan, a plan, a cabal + + + + + +Race relations in Singapore: With reservations + + + + + +Rodrigo Duterte: A liar or a killer + + + + + +Banyan: The daughter in the Blue House + + + + + +China + + + +The one-China policy: Caught in the middle + + + + + +Hong Kong’s leadership: Any colour, as long as it’s red + + + + + +Middle East and Africa + + + +Syria: Last rites for Aleppo + + + + + +Israel’s settlers: The Amona remainers + + + + + +Mayhem in Egypt: Murder in the cathedral + + + + + +Saudi Arabia’s calendar: The prince’s time machine + + + + + +Gambia and Ghana: You say goodbye and I say hello + + + + + +Europe + + + +Terror in Turkey: Semtex pretext + + + + + +A landslide election in Romania: Conviction politics + + + + + +Italy’s new prime minister: A new man in the ejector seat + + + + + +Russia’s Igor Sechin: The oil boyar + + + + + +Charlemagne: The sexiest job in Brussels + + + + + +Britain + + + +Business and Brexit: When the red tape unravels + + + + + +Police for hire: BOGOF bobbies + + + + + +Care for the elderly: Too little, too late + + + + + +Volunteering: Time is money + + + + + +The Labour Party: Brexit’s biggest loser + + + + + +Hate speech on Twitter: False echoes + + + + + +The 90-plus population: Measuring Methuselah + + + + + +Bagehot: The breaking of Boris Johnson + + + + + +International + + + +Pax Trumpiana: Allies and interests + + + + + +Business + + + +Artificial intelligence: Google’s hippocampus + + + + + +The future of Alphabet: Still searching + + + + + +Fox’s pursuit of Sky: Skyfall + + + + + +Vivendi and Mediaset: Bolloré v Berlusconi + + + + + +Retailing and the environment: Wrap stars + + + + + +Older workers in Germany: Elders not betters + + + + + +Amancio Ortega: Behind the mask of Zara + + + + + +Schumpeter: Out with the old + + + + + +Finance and economics + + + +American corporate tax: Gain and pain + + + + + +Buttonwood: Not passing the buck + + + + + +China and trade: Call of duties + + + + + +UniCredit: Passing Mustier + + + + + +The Asian Development Bank: The incumbent + + + + + +Foreign exchange: A losing battle + + + + + +European insurers: Feeling squeezed + + + + + +Fiscal rules: Fiscal cryogenics + + + + + +Venezuela’s monetary madness: Cash and grab + + + + + +Free exchange: Rage against the dying of the light + + + + + +Science and technology + + + +Oncology: Cancer’s master criminals + + + + + +Planetary science: Stardust memories + + + + + +Drug addiction: Souring the poppy’s milk + + + + + +Climate science: How hot is the sea? + + + + + +Sexual selection: Boning up + + + + + +Books and arts + + + +Nutrition: Bittersweet + + + + + +Humans and decision-making: Thinking about thinking + + + + + +Animals and intelligence: Smart arms + + + + + +Johnson: Off with their heads + + + + + +Fiction: Managing the traffic + + + + + +New York theatre: Bard off-Broadway + + + + + +Obituary + + + +John Glenn: Right up there + + + + + +Economic and financial indicators + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +World GDP + + + + + +The Economist commodity-price index + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2016.12.24.TXT b/homeworks/B20769/homework1/data2/2016.12.24.TXT new file mode 100644 index 0000000..f5e1ea2 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2016.12.24.TXT @@ -0,0 +1,5484 @@ +The world this week + +Leaders + +Letters + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Christmas Specials + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +The world this year + +KAL's cartoon + + + + + +文章 章节 下一项 + +The world this year + +Dec 24th 2016 + + + +The poll-defying election of Donald Trump as America’s president capped a year of triumph for populists in many places. Mr Trump’s rancorous campaign tore up every rule in the political handbook. He won in part by railing against the establishment and vowing to protect American jobs, which went down well in rustbelt states that had not voted Republican in decades. The world is waiting to find out just how many of Mr Trump’s bombastic promises will actually become American policy. He will be inaugurated on January 20th. + +Let’s go crazy + +Britain faced an uncertain future because of another populist upset: Brexit. The government lost a referendum on whether to stay in the European Union by 52-48%. David Cameron promptly resigned as prime minister without invoking Article 50, the legal means of departure, despite saying it would be the first thing he would do if the country voted to leave. Theresa May, his successor, was left to clean up the mess. Article 50 is due to be triggered in March. Even though they won, Leavers still talk of the establishment looking to stitch them up. + +The immediate reaction of investors to Brexit was to push the pound to a 31-year low against the dollar. The Bank of England cut interest rates for the first time in seven years as Britain’s economic outlook darkened. + +MPs in Britain’s opposition Labour Party used Brexit to try to oust Jeremy Corbyn as leader. He survived thanks to the party’s leftist grassroots membership. The UK Independence Party, the catalyst for the Brexit referendum, imploded after its leader, Nigel Farage, stepped down. + +Jo Cox, a Labour member of Parliament, was murdered by a British nationalist. It was the first killing of an MP not carried out by Irish nationalists for two centuries. + +Free trade retreated. The proposed TTIP and TPP trade deals, respectively between America and Europe, and America and Asia-Pacific countries, were declared dead in their current form. Mr Trump’s incoming cabinet has a strong protectionist flavour. Europeans also showed little taste for trade deals, especially in France and Germany. + + + +The populist surge hit other countries, too. Rodrigo Duterte was elected president of the Philippines after promising to kill criminals and urging people to attack suspected drug dealers. Close to 6,000 people have been lynched since he took office. In France François Hollande decided not to run for a second term as president; polling showed that the National Front’s Marine Le Pen would beat him to the run-off. François Fillon won the centre-right’s primary and leads the race. Populist governments in Hungary and Poland continued thumbing their noses at the EU. + +When doves cry + + + +With Russian help, the regime of Bashar al-Assad in Syria made big inroads into rebel-held territory, killing civilians indiscriminately, bombing hospitals and torturing suspected rebel sympathisers. As the year ended, the main rebel stronghold in Aleppo looked set to fall. Islamic State (IS) lost ground in Syria, and also in Iraq, where government troops launched an offensive to retake Mosul, the jihadist group’s last redoubt. + +Despite its loss of territory, IS’s reign of terror continued. As well as slaughtering Iraqis and Syrians, IS claimed responsibility for a co-ordinated attack on Brussels airport and the city’s metro, which killed 32 people. In Nice a jihadist drove a lorry through crowds celebrating Bastille Day, leaving 86 people dead. In Orlando an IS-inspired gunman killed 49 people at a gay nightclub, America’s worst attack since 9/11. IS terrorists went on a rampage in Jakarta, killing four people before they were shot dead by police. + +Germany’s “refugees welcome” policy was mostly unwelcomed by Germans. It was the main factor behind a drop in Angela Merkel’s approval ratings. Anti-immigrant groups took advantage of a string of murders committed by lone-wolf jihadists, including an attack on a Christmas market in Berlin that killed at least a dozen people. + +France got hot under the collar about the burkini, a full-length beach suit worn by some Muslim women. The prime minister thought the garment was such an affront to French values that “the Republic must defend itself.” Dozens of seaside towns banned it, prompting a steaming debate about women’s rights. + +Italians voted against constitutional reforms backed by Matteo Renzi, the prime minister, who promptly resigned. + +New power generation + +Oil prices sank to their lowest level in 12 years in January. As oil-exporting economies started to feel the pain (Saudi Arabia turned to international bond markets for the first time) OPEC eventually agreed to cut output in order to ease the worldwide glut and lift prices. + +The first death involving a self-driving vehicle occurred when the driver of a Tesla car was involved in a crash. Despite a few non-fatal accidents Google’s autonomous-car project clocked up 2m miles. Uber piloted a fleet of self-driving cars in Pittsburgh (albeit with an engineer and driver along for the ride in case something went wrong). + +Barack Obama became the first American president since 1928 to visit Cuba. Fidel Castro, who outlasted ten American presidents and locked up thousands of Cubans, died, aged 90. + +Hurricane Matthew, the deadliest Atlantic storm since 2005, caused 1,600 deaths in Haiti and was one of the year’s worst natural disasters. Earthquakes in Ecuador and Italy killed hundreds. + +Sign of the times + + + +A coup attempt by factions of the army in Turkey was defeated when people took to the streets to show their support for the government. President Recep Tayyip Erdogan blamed the uprising on a “parallel structure” loyal to Fethullah Gulen, an imam and former ally. He took the opportunity to have more than 150,000 suspected Gulenists and others arrested or purged from their jobs. + +The world’s longest-serving monarch, King Bhumibol Adulyadej of Thailand, died at the age of 88. A year of mourning was declared; his body will be cremated towards the end of 2017. Britain’s Queen Elizabeth is now the world’s longest-serving monarch; she turned 90 this year. + +America’s Supreme Court worked for most of the year with just eight justices because the Republican-dominated Congress refused to confirm Barack Obama’s nominee to replace Justice Antonin Scalia, who died in February. + +Diamonds and pearls + +Some of the year’s biggest takeover offers were in agribusiness, led by Bayer’s $66bn approach to Monsanto. ChemChina’s $43bn proposal for Syngenta was the biggest overseas bid yet by a Chinese firm. The line between telecoms and media became ever more blurred with AT&T’s $85bn bid for Time Warner. All of those deals are awaiting regulatory approval. But Pfizer called off its $160bn takeover of Allergan, blaming US Treasury rules that curb the deal’s tax-reducing benefits. + +A few internet high-fliers were brought down to earth. Twitter was frequently rumoured to be the target of a takeover. Yahoo ended up selling its core business to Verizon. And Gawker went bust after a jury awarded $140m to a celebrity wrestler because it had published a sex tape of him grappling with the wife of a friend. + +Central banks kept interest rates at ultra-low and even negative levels, which their detractors say are hampering growth. That said, the Federal Reserve raised rates for only the second time since 2006. + +In Taiwan Tsai Ing-wen became the first female president in the Chinese-speaking world. Within weeks of her inauguration China announced that it had cut off important channels of communication with her government because she refuses to accept the idea of “one China”. + +Democracy activists in Hong Kong had their own problems with “one China”. A legislative election was preceded by months of wrangling about whether independence-minded candidates could stand. Lawmakers who used their swearing-in oaths to criticise China were suspended. Many Hongkongers worry about a crackdown from Beijing. + +In another first for artificial intelligence, a computer beat a world champion at the Asian board game of Go. + +The Colombian government signed a historic peace deal with the FARC rebels, twice. After an initial agreement was rejected in a referendum, the government pushed a tweaked deal through congress, ending a 52-year war. + +Controversy + + + +Rio de Janeiro hosted the Olympics, but Brazil was mostly in the headlines because of a different kind of sport: impeaching the president. Dilma Rousseff was eventually tossed from office, but that didn’t stop corruption scandals from swirling. The economy was stuck in recession. The year was summed up by images of police firing tear- gas at protesters obstructing the route of the Olympic torch. + +Activists in Venezuela trying to oust the president, Nicolás Maduro, were thwarted at every turn by the authorities. Tens of thousands of Venezuelans queued to cross the border into Colombia to shop for essentials. The IMF predicted that Venezuela’s inflation rate in 2017 will reach 1,600%. + +Another beleaguered president, South Africa’s Jacob Zuma, narrowly survived an attempt to remove him as party leader of the African National Congress, after a court found that 783 fraud, racketeering and corruption charges could be reinstated against him. Mr Zuma has said that when he eventually retires he would like to be mayor of a small rural town. + +India’s sudden cancellation of 500- and 1,000-rupee banknotes in an effort to deter tax evasion led to a scramble to deposit the notes in banks before a year-end deadline. Venezuela is also pulling six billion banknotes from circulation to thwart “criminals” who, the government claims, were hoarding the hyperinflating currency. The poor in both countries suddenly found it harder to buy food. + +Pop life + + + +“Pokémon Go” literally hit the streets. The augmented-reality game for smartphones guides players around cities to “capture” figures that pop up on the screen. Tales abounded of players falling off cliffs and running over pedestrians in pursuit of the characters. + +North Korea found time between its missile-tests to claim to have invented an alcoholic drink that does not cause hangovers. Made from a ginseng extract, the liquor is unlikely to be found on supermarket shelves in time for Christmas. + +This article appeared in the The world this week section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21712174-world-year/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +KAL's cartoon + +Dec 24th 2016 + + + +More KAL's cartoons + + + +This article appeared in the The world this week section of the print edition under the headline “KAL's cartoon” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21712175-kals-cartoon/print + + + + + +上一项 文章 章节 下一项 + + + + + +Leaders + + + + +Liberalism’s future: The year of living dangerously + +Developing-country migration: The hypocrites’ club + +Internet security: Breaching-point + +The Chinese economy: Smooth sailing, until it’s not + +The state of states: Our country of the year + + + + + +文章 章节 下一项 + +The future of liberalism + +How to make sense of 2016 + +Liberals lost most of the arguments this year. They should not feel defeated so much as invigorated + +Dec 24th 2016 + + + +FOR a certain kind of liberal, 2016 stands as a rebuke. If you believe, as The Economist does, in open economies and open societies, where the free exchange of goods, capital, people and ideas is encouraged and where universal freedoms are protected from state abuse by the rule of law, then this has been a year of setbacks. Not just over Brexit and the election of Donald Trump, but also the tragedy of Syria, abandoned to its suffering, and widespread support—in Hungary, Poland and beyond—for “illiberal democracy”. As globalisation has become a slur, nationalism, and even authoritarianism, have flourished. In Turkey relief at the failure of a coup was overtaken by savage (and popular) reprisals. In the Philippines voters chose a president who not only deployed death squads but bragged about pulling the trigger. All the while Russia, which hacked Western democracy, and China, which just last week set out to taunt America by seizing one of its maritime drones, insist liberalism is merely a cover for Western expansion. + +Faced with this litany, many liberals (of the free-market sort) have lost their nerve. Some have written epitaphs for the liberal order and issued warnings about the threat to democracy. Others argue that, with a timid tweak to immigration law or an extra tariff, life will simply return to normal. That is not good enough. The bitter harvest of 2016 has not suddenly destroyed liberalism’s claim to be the best way to confer dignity and bring about prosperity and equity. Rather than ducking the struggle of ideas, liberals should relish it. + +Mill wheels + +In the past quarter-century liberalism has had it too easy. Its dominance following Soviet communism’s collapse decayed into laziness and complacency. Amid growing inequality, society’s winners told themselves that they lived in a meritocracy—and that their success was therefore deserved. The experts recruited to help run large parts of the economy marvelled at their own brilliance. But ordinary people often saw wealth as a cover for privilege and expertise as disguised self-interest. + +After so long in charge, liberals, of all people, should have seen the backlash coming. As a set of beliefs that emerged at the start of the 19th century to oppose both the despotism of absolute monarchy and the terror of revolution, liberalism warns that uninterrupted power corrupts. Privilege becomes self-perpetuating. Consensus stifles creativity and initiative. In an ever-shifting world, dispute and argument are not just inevitable; they are welcome because they lead to renewal. + +What is more, liberals have something to offer societies struggling with change. In the 19th century, as today, old ways were being upended by relentless technological, economic, social and political forces. People yearned for order. The illiberal solution was to install someone with sufficient power to dictate what was best—by slowing change if they were conservative, or smashing authority if they were revolutionary. You can hear echoes of that in calls to “take back control”, as well as in the mouths of autocrats who, summoning an angry nationalism, promise to hold back the cosmopolitan tide. + +Liberals came up with a different answer. Rather than being concentrated, power should be dispersed, using the rule of law, political parties and competitive markets. Rather than putting citizens at the service of a mighty, protecting state, liberalism sees individuals as uniquely able to choose what is best for themselves. Rather than running the world through warfare and strife, countries should embrace trade and treaties. + +Such ideas have imprinted themselves on the West—and, despite Mr Trump’s flirtation with protectionism, they will probably endure. But only if liberalism can deal with its other problem: the loss of faith in progress. Liberals believe that change is welcome because, on the whole, it is for the better. Sure enough, they can point to how global poverty, life expectancy, opportunity and peace are all improving, even allowing for strife in the Middle East. Indeed, for most people on Earth there has never been a better time to be alive. + +Large parts of the West, however, do not see it that way. For them, progress happens mainly to other people. Wealth does not spread itself, new technologies destroy jobs that never come back, an underclass is beyond help or redemption, and other cultures pose a threat—sometimes a violent one. + +If it is to thrive, liberalism must have an answer for the pessimists, too. Yet, during those decades in power, liberals’ solutions have been underwhelming. In the 19th century liberal reformers met change with universal education, a vast programme of public works and the first employment rights. Later, citizens got the vote, health care and a safety net. After the second world war, America built a global liberal order, using bodies such as the UN and the IMF to give form to its vision. + +Nothing half so ambitious is coming from the West today. That must change. Liberals must explore the avenues that technology and social needs will open up. Power could be devolved from the state to cities, which act as laboratories for fresh policies. Politics might escape sterile partisanship using new forms of local democracy. The labyrinth of taxation and regulation could be rebuilt rationally. Society could transform education and work so that “college” is something you return to over several careers in brand new industries. The possibilities are as yet unimagined, but a liberal system, in which individual creativity, preferences and enterprise have full expression, is more likely to seize them than any other. + +The dream of reason + +After 2016, is that dream still possible? Some perspective is in order. This newspaper believes that Brexit and a Trump presidency are likely to prove costly and harmful. We are worried about today’s mix of nationalism, corporatism and popular discontent. However, 2016 also represented a demand for change. Never forget liberals’ capacity for reinvention. Do not underestimate the scope for people, including even a Trump administration and post-Brexit Britain, to think and innovate their way out of trouble. The task is to harness that restless urge, while defending the tolerance and open-mindedness that are the foundation stones of a decent, liberal world. + +This article appeared in the Leaders section of the print edition under the headline “The year of living dangerously” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21712128-liberals-lost-most-arguments-year-they-should-not-feel-defeated-so-much/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +The hypocrites’ club + +Poor countries need to allow more immigration, too + +The governments of poor countries are right to complain about the West’s restrictive immigration policies. But they are often guilty of the same + +Dec 24th 2016 + + + +A POLITICAL brain teaser: which party in which country has promised “punitive measures” against illegal immigration, has threatened to disenfranchise people who arrived half a century ago and has told migrants to “be prepared with their bags packed”? + +The answer is not the National Front of France, the United Kingdom Independence Party, Jobbik of Hungary or indeed any other insurgent political party in the West. It is the ruling Bharatiya Janata Party of India. The BJP and its leader, Narendra Modi, rail against immigrants from Bangladesh, of whom there might well be more in India than there are Mexicans in America (see article). This nativist ranting is evidence of a nasty strain of developing-world demagoguery. + +Pakistan is currently trying to evict hundreds of thousands of Afghan immigrants, some of whom have lived in the country for decades. Gabon and Equatorial Guinea are expelling migrants from central Africa. Mexico, which complains bitterly (and rightly) about the treatment of its people in America, does far too little to prevent the mass kidnapping and murder of immigrants from Central America. + +All political leaders, even dictators, must take some note of how their people feel, and the citizens of poor and middle-income countries are often no better disposed to immigrants than are voters in the rich world. Besides, a government that threatens to shut its refugee camps or uproot millions of migrant workers from their homes might be able to extort some money out of Western donors. But the treatment meted out to immigrants in developing countries is nonetheless dismal—futile, illiberal and economically ruinous. + +Even in rich countries, where most workers have formal jobs and are known to the authorities, illegal immigrants are hard to catch. In poorer countries, where the state is weak and almost everybody works informally, it is close to impossible. National boundaries tend to be porous. At about 4,100km (2,500 miles), the border between Bangladesh and India is longer than the border between Mexico and the United States. It is so thinly policed that cattle can be trafficked across it. + +Like migrants everywhere, the people who cross into developing countries are nearly always trying to better themselves and their families. Unlike the migrants who make it to the West and the Gulf states, they are frequently very poor indeed. When America and Europe tighten their borders, middle-class Indians and Nigerians lose out; when India and Nigeria crack down, some of the world’s most desperate people suffer. + +A populist boomerang + +The astounding success of the south Asians who were booted out of Kenya and Uganda in the 1970s and ended up in Britain suggests that Africa would have done well to keep them. Migrants bring dynamism and fresh ideas to poor and middle-income countries as well as rich ones; the lump-of-labour fallacy is just as fallacious in the developing world. Sometimes governments realise this and pull back. In 2014 South Sudan unveiled a mad plan to force companies to sack their foreign workers within a month. It backtracked when firms and charities pointed out that they could not function without Kenyans and other immigrants. South Sudan is not exactly overflowing with skilled graduates who can keep the lights on. + +It would be far better for the immigrants and for the countries where they fetch up if governments widened the legal routes for settlement. At present some of the world’s least appealing places have the toughest visa requirements and expect economic migrants to jump through the tiniest hoops. You would think their streets were paved with gold. + +This article appeared in the Leaders section of the print edition under the headline “The hypocrites’ club” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21712141-governments-poor-countries-are-right-complain-about-wests-restrictive-immigration/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Breaching-point + +Incentives need to change for firms to take cyber-security more seriously + +Software developers and computer-makers do not necessarily suffer when their products go wrong + +Dec 24th 2016 + + + +IT HAS been a cracking year for hacking. Barack Obama and the CIA accused Russia of electronic meddling in an attempt to help Donald Trump win the presidency. Details emerged of two enormous data breaches at Yahoo, one of the world’s biggest internet companies; one, in 2013, affected more than a billion people. Other highlights include the hack of the World Anti-Doping Agency; the theft of $81m from the central bank of Bangladesh (only a typo prevented the hackers from making off with much more); and the release of personal details of around 20,000 employees of the FBI. The more closely you look at the darker corners of the internet, the more the phrase “computer security” looks like a contradiction in terms. + +Why, two decades after the internet began to move out of universities and into people’s homes, are things still so bad? History is one reason: the internet started life as a network for the convenient sharing of academic data. Security was an afterthought. Economics matters, too. Software developers and computer-makers do not necessarily suffer when their products go wrong or are subverted. That weakens the incentives to get security right. + +Unfortunately, things are likely to get worse before they get better. The next phase of the computing revolution is the “internet of things” (IoT), in which all manner of everyday objects, from light bulbs to cars, incorporate computers connected permanently to the internet. Most of these gizmos are as insecure as any other computer, if not more so. And many of those making IoT products are not computer firms. IT companies have accumulated decades of hard-won wisdom about cyber-security; toaster-makers have rather more to learn. + +In November cyber-security researchers revealed a malicious program that could take control of any smart light bulbs within 400 metres. A hacked light bulb does not sound too dangerous. But such unobtrusive computers can be recruited into remotely controlled “botnets” that can be used to flood websites with bogus traffic, knocking them offline. Routers, the small electronic boxes that connect most households to the internet, are already a popular target of bot-herders. Other targets are more worrying. At a computer-security conference in 2015, researchers demonstrated how wirelessly to hack a car made by Jeep, spinning its steering wheel or slamming on its brakes. As the era of self-driving cars approaches (see article), the time to fix such problems is now. + +One option is to leave the market to work its magic. Given the damage that cybercrime can do to companies, they have good commercial reasons to take it seriously. If firms are careless about security, they risk tarnished reputations and lost customers. A planned buy-out of Yahoo by Verizon, an American telecoms firm, may be rethought after its hacks. But these incentives are blunted when consumers cannot make informed choices. Most customers (and often, it seems, executives) are in no position to evaluate firms’ cyber-security standards. What is more, the epidemic of cybercrime is best tackled by sharing information. A successful cyber-attack on one company can be used against another. Yet it is tempting for firms to keep quiet about security breaches. + +That suggests a role for government. Researchers draw an analogy with public health, where one person’s negligence can harm everyone else—which is why governments regulate everything from food hygiene to waste disposal. Some places are planning minimum computer-security standards, and will fine firms that fail to comply. The IoT has also revived the debate about ending the software industry’s long-standing exemption from legal liability for defects in its products. + +Neither relax nor chill + +The problem is that regulation is often fragmented. America has a proliferation of state-level rules, for example, when a single, federal regime would be better. Regulation can also go too far. From January financial institutions in New York must comply with a new cyber-security law that many think sets the bar for breach notifications too low. Changing the liability regime for software could chill innovation by discouraging coders from trying anything new. + +Rule-makers can, however, set reasonable minimum expectations. Many IoT devices cannot have their software updated, which means that security flaws can never be fixed. Products should not be able to operate with factory usernames and passwords. No software program can be made impregnable, but liability regimes can reflect firms’ efforts to rectify flaws once they become apparent. Firms need to be encouraged to take internet security more seriously. But overly detailed prescriptions will just hack everyone off. + +This article appeared in the Leaders section of the print edition under the headline “Breaching-point” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21712138-software-developers-and-computer-makers-do-not-necessarily-suffer-when-their-products-go/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Smooth sailing, until it’s not + +An obsession with stable growth leads to vulnerabilities in China + +Risks lurk outside China’s borders and within it + +Dec 24th 2016 + + + +WHEN 2016 dawned the economy that investors fretted about most was China’s. Memories of a huge stockmarket crash were still fresh. Capital was pouring out of the country as savers anticipated a devaluation of the yuan. In the event, other countries provided the year’s big upsets. And in some respects, the Chinese economy is stronger today than it has been for a couple of years. Producer prices, mired in deflation for 54 straight months, are rising at last. Corporate profits are turning up. Promises to cut overcapacity in coal and steel, and to reduce the overhang of unsold housing, have borne fruit. After three straight quarters of 6.7% annual growth, economists are converging around—you guessed it—6.7% in their forecasts for the final quarter of 2016. + +However, this outward stability is misleading. Risks lurk both outside China’s borders and within them. If it does not change its attitude to reform, the Middle Kingdom could soon be atop investors’ minds once again. + +One obvious source of anxiety is the potential for a trade war. Much depends on what Donald Trump does when he takes office in January. But tensions are already rising. China had expected to win the status of a market economy in December, 15 years after its accession to the World Trade Organisation, but the West refused. Because China sees this as a broken promise, a game of tit-for-tat protectionism may well ensue. + +Another flashpoint is the currency. Expectations of higher interest rates in America have strengthened the dollar, to which the yuan is partly linked. Meanwhile, Chinese companies and people want more foreign assets, pushing the yuan down. One way the government tries to make the decline gradual is with capital controls. Yet that only adds to the perception that depreciation is a one-way bet, which fuels more outflows. In addition, these controls, if persistent, will undermine confidence in the economy, a deterrent to future investment. Add in Mr Trump’s outdated assertion that China is weakening the yuan so as to help its exporters, and the government is in a bind: the right macroeconomic recipe risks a trade war. + +Locking the stable door + +Even if China’s trading relations remain calm, the domestic economy suffers from enormous unresolved problems. Despite a government pledge, the country has failed to make a start on deleveraging. A mix of policies (notably, letting local governments swap loans for bonds) has made debts more sustainable. But they are still growing twice as fast as nominal GDP. Total debt should hit nearly 300% of GDP in 2017, an unprecedented figure for a country at China’s income level. Concerned about frothiness in the bond market, the central bank recently tightened short-term liquidity. When smaller firms started to suffer, it quietly ordered big banks to lend to them. + +Last, property is a source of recurring concern. China imposes a bewildering array of restrictions that determine who can buy homes where and with what kind of mortgage. The country’s leaders put their aim succinctly when they outlined their plans for 2017: there shall be “no big ups and downs” in the housing market. But micromanagement has led to a chronic undersupply of homes and thus to bubbly prices in big cities, where growth is strongest, and to a glut in smaller, weaker cities. Were China to heed the price signals, it would let the property market adjust to fit the population. Instead, it wants to adjust the population to fit the property market, driving people—typically, low-income earners—out of big cities. + +These trade-offs are devilishly hard to manage. And the government is even less willing to take risks than usual. In autumn 2017 the Communist Party will gather for a big quinquennial conference, where President Xi Jinping is expected to consolidate his grip on power. Before then, no one in Beijing wants to risk reforms that would spoil the occasion if they failed. + +However, the pursuit of economic stability often sows the seeds of its own demise. In the case of dealing with America, incrementalism has stored up trouble: giving in to the market and letting the yuan fall may now hasten a trade war. And if officials really were to slow credit growth, the economy would soon feel it. Who would dare risk that when Mr Xi wants growth to stay at around 6.5%? Investors may like the appearance of stability. But to avoid a crash tomorrow, China must accept more bumps today. + +This article appeared in the Leaders section of the print edition under the headline “Smooth sailing, until it’s not” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21712139-risks-lurk-outside-chinas-borders-and-within-it-obsession-stable-growth-leads/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +The state of states + +Our country of the year + +Which country improved the most in 2016? + +Dec 24th 2016 + + + +TO WIN The Economist’s country of the year award, it is not enough to be peaceful and rich. We aim to reward improvement. Previous winners include Myanmar and Tunisia, for escaping tyranny and building something resembling democracy. Switzerland, Japan and New Zealand, which were just as lovely a decade ago, need not apply. + +This year’s contenders include plucky Estonia. Threatened by Vladimir Putin, it is one of the few NATO members to meet its obligation to spend 2% of GDP on defence. One of the poorer countries in Europe, its schoolchildren were nonetheless the continent’s star performers in the most recent PISA science tests. Estonian head teachers have the autonomy to hire and fire and are held accountable for results. It is only a single generation since Estonia was a wretched colony of the Soviet Union; now it looks almost Nordic. Another small country on the shortlist is Iceland (population: 330,000), which was the fastest-growing rich country in 2016. Also, its footballers knocked England (population: 53m) out of a European tournament. Wags noted that the English coach was paid £3.5m a year, whereas Iceland’s was a part-time dentist. + +China may be a dictatorship with foul air, but it excels on two measures that matter a lot. A report in March concluded that its greenhouse-gas emissions may already have peaked, or will most probably do so within the next decade. And, despite slowing growth, a hefty 14m rural Chinese lifted themselves out of poverty in the most recent year for which data are available (2015), more than anywhere else. But don’t forget the other, richer, democratic Republic of China, which held another free election in 2016. Voters picked a moderate, Tsai Ing-wen, as Taiwan’s first female president. She has so far dealt well with Beijing’s bullying; though she is horribly vulnerable to being let down by Donald Trump if he strikes a grand bargain with the mainland. It is tempting to offer Beijing and Taipei joint first place and call it a “One-China” award. Would they stand on the same podium to accept it? + +Canada has stayed sober and liberal even as other rich countries have been intoxicated by illiberal populism. It remains open to trade and immigrants—a fifth of its population is now foreign-born, twice the proportion in the United States. Its prime minister, Justin Trudeau, has negotiated a carbon-pricing deal with nearly all Canadian provinces and vows to legalise pot, too. Just what we would have asked of a former snowboarding coach. + +The dove of peace + +However, our pick is Colombia, for making peace in 2016. This was a colossal achievement. The conflict between Colombia’s government and the Marxist insurgents of the FARC lasted for half a century and claimed perhaps 220,000 lives. At one point the country was on the brink of becoming a failed state—something that is now inconceivable. FARC guerrillas murdered with abandon, recruited children and occasionally forced girl soldiers who became pregnant to have abortions. They also ran drug, kidnapping and extortion rackets to finance their war. Government troops were brutal, too. Some of them used fake job advertisements to lure innocent men to remote places. They then killed them and claimed the corpses were rebels, making themselves seem more heroic and increasing their odds of promotion. + +The nightmare ended in 2016—touch wood. President Juan Manuel Santos thrashed out a peace deal with the FARC and submitted it to a referendum. When voters narrowly rejected it, because the FARC leaders were not being punished severely enough, the two sides sat down again and answered some of the objections. The new deal is being pushed through parliament. It would have been preferable to hold another referendum. But if voters want to risk a return to war, they can vote in 2018 for a presidential candidate who promises stiffer penalties for FARC bosses. Meanwhile, rebels are poised to hand in their arms. Like most negotiated peace deals, Colombia’s is incomplete and involves ugly compromises. But the alternative is worse. Colombia is a worthy winner. + +This article appeared in the Leaders section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21712136-which-country-improved-most-2016-our-country-year/print + + + + + +上一项 文章 章节 下一项 + + + + + +Letters + + + + +On populism, flags, corporation tax, freedom of press, ketchup, super-consumers: Letters to the editor + + + + + +文章 章节 下一项 + +Letters to the Editor + +On populism, flags, corporation tax, freedom of press, ketchup, super-consumers + +Dec 24th 2016 + +Letters are welcome via e-mail to letters@economist.com + + + +This year’s political flavour + +“Popular works” (December 3rd) identified some classic books on the rise of anger at the elites. But the man who opened up this field was Vilfredo Pareto, who placed the concept of the elite at the centre of his “Treatise on General Sociology” in 1916. James Burnham followed “The Managerial Revolution” (mentioned in your selection) with “The Machiavellians”, a study of Pareto and other elite theorists. George Orwell’s friend, Franz Borkenau, devoted a whole book to Pareto. The influence is evident in “Animal Farm” and “1984”. + +Briefly, Pareto argued that history was marked by the rise and fall, or circulation, of governing elites. Taking his cue from Machiavelli’s “The Prince”, Pareto contended that established elites tend over time to degenerate into “spineless humanitarians”, unable to respond forcefully to challenges. They thus lose the respect of tougher-minded conservative elements in society. A mix of feebleness and detachment undermines the elite in the face of rivals who are better-attuned to the conservative masses and prepared to behave brutally. + +Vladimir Putin has been the pioneering exponent of this style of politics. The leaders of the current “revolt against the elites” in the West have signalled their tough-minded approach by proclaiming their admiration for him. + +MICHAEL WILLIAMS + +Letchworth, Hertfordshire + +I was pleased to see that Christopher Lasch’s “The Revolt of the Elites” made your list. The section of the book most relevant to our present post-Brexit, post-Trump, post-truth situation is on the decline in democratic discourse: + +“Increasingly information is generated by those who wish to promote something or someone—a product, a cause, a political candidate or officeholder—without arguing their case on its merits or explicitly advertising it as self-interested material either. Much of the press, in its eagerness to inform the public, has become a conduit for the equivalent of junk mail.” + +GRANVILLE WILLIAMS + +Upton, West Yorkshire + +Populism in the United States, particularly the agrarian movement of the late 1800s, was not a nationalistic or nativist movement (though there were exceptions). At the height of the populist movement in the South, freed blacks worked with white farmers to develop a political programme that would benefit both races and farmers in general. Labelling what Donald Trump espouses as populism is a misreading of the roots of a movement that was progressive. Mr Trump’s rhetoric is steeped in nationalism and nativism, but it is not populism. + +ALLAN MCBRIDE + +Director of Political Science Undergraduate Programme + +University of Southern Mississippi + +Hattiesburg, Mississippi + + + + + +Flying the flag + +Your fabulous obituary of Whitney Smith (December 10th) mentioned that the modern messaging power of flags was born in the Dutch revolt against Spain in the 16th century. The National Gallery in Washington, DC, displays a Dutch painting of someone who looks like a real popinjay, dressed in mauve silks and ostrich feathers, hand on hip, pouting for the painter. But no, this foppish fellow was in fact the bravest man in his resistance regiment, as he was the one who waved a big Dutch flag in battle against the Spaniards, taunting the enemy and stiffening the resolve of the Dutch freedom fighters. + +Flag-bearers were chosen for their mad courage and were tasked with being as conspicuous as possible. As a result they were often wounded or slain as the enemy’s targets of choice. Indeed, in their outrageous colours, they were human flags. + +STEVE FRANCE + +Cabin John, Maryland + + + + + +Corporation tax should go + +“A costly distraction” (December 3rd) did not acknowledge the many flaws of Britain’s corporation tax. Only people pay taxes, and in the case of corporation tax its burden falls on shareholders, workers and consumers in varying proportions. The economic literature suggests that about half of the cost of the tax is borne by employees, in the form of lower wages because of reduced invested capital. You say the chancellor of the exchequer should focus, among other things, on increasing labour productivity. But a reduction in the rate, and the eventual elimination, of corporation tax must be part and parcel of this effort. + +DIEGO ZULUAGA + +Financial-services research fellow + +Institute of Economic Affairs + +London + + + + + +Press freedoms + +Unfortunately, it was not the case that “after 1945 West Germans wisely shunned the word” Lügenpresse, which means “lying press” (“German memes”, November 26th). After the Nazis used the term in their propaganda against the Jewish, communist and foreign press, left-wing students during the protests of 1968 recycled that exact term to disparage the liberal-conservative Axel Springer publishing company. First as tragedy then as farce. + +HANS RUSINEK + +Editor + +Transform Magazin + +Hamburg + + + + + +Sauce control + +In order to get ketchup out of a bottle (“The last drop”, December 3rd) I used to add a small amount of ginger ale. A little shake did the trick and the rest of the ketchup poured out. Just as air pockets on the surface of a lotus leaf prevent water droplets from adhering, carbon-dioxide bubbles have the same effect in ketchup bottles. + +ARNOLD HOLTZMAN + +Wilmington, Delaware + +I read with interest your article on using super-slippery surfaces in bottles to get the last drop of ketchup out. The “Faber Book of Useful Verse” also gives some advice: + +“When you shake a ketchup bottle, + +None will come then, quite a lottle.” + + + +This has been modified to account for changes in packaging technology: + + + +“But when you squeeze the Squeezy Bottle, + +Out it comes with a big splottle.” + +BOB ROBINSON + +Preston, Lancashire + + + + + +Holiday fun (for some) + +I enjoyed Schumpeter’s column on super-consumers, and his conclusion that firms “ignore passionate consumers at their peril” (December 3rd). I am a super-consumer of The Economist, and I like the idea pioneered by the Nation and the National Review of offering cruises so that dedicated readers can hang out with their writers. You should do the same so that we can hang out with other Economist nerds. + +TARA YOUNG + +Las Vegas + + + +Writing a piece on hyper-consumers during the Christmas period brought to mind this great insight from Victor Borge: Santa Claus has the right idea; visit people only once a year. + +DONALD KING + +London + +This article appeared in the Letters section of the print edition under the headline “Letters to the editor” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21712105-populism-flags-corporation-tax-freedom-press-ketchup-super-consumers/print + + + + + +文章 章节 下一项 + + + + + +United States + + + + +Disney’s Utopia on the I-4: Yesterdayland + +Theme parks and technology: Tomorrowland + +Politics in North Carolina: Ungovernable + +Lexington: Winning by breaking + + + + + +文章 章节 下一项 + +Celebration, Florida + +What Disney’s city of the future, built to look like the past, says about the present + +Utopia on the I-4 + +Dec 24th 2016 | CELEBRATION, FLORIDA + + + +OUTSIDE the white fence is all strip malls, motels and resort villages. Come off the six-lane highway at the spaghetti junction where Interstate 4 meets Highway 192, go past the ornamental water tower, and you are in Celebration, a town of the sort that America stopped building in the 1950s. Most of its 4,000 homes are small by suburban standards, jutting up against narrow streets. Children walk to school. The small downtown has no chains, apart from an obligatory Starbucks. Its 10,000-odd residents are mostly white, white-collar and Republican. In some ways it is a vision of America’s past. Yet Celebration is only 20 years old. + +The town was developed by Disney as an antidote to the isolation of the suburbs. By the 1970s more Americans lived in suburbs than either in cities or in rural areas. Two decades later there were more cars than drivers in America. By the turn of the century, SUV-driving suburbanites became the majority, outnumbering rural and city folk combined. The wholesale shift to the suburbs, ever-longer commutes and the rise of shopping malls and big-box stores fractured community life, as downtowns emptied and commerce shifted to the edges of highways. + +Disney offered Celebration as an antidote to all this, selling the development on nostalgia for an old-timey America where, as its adverts read, “neighbours greeted neighbours in the quiet of summer twilight”. It would be built around five cornerstones: in addition to “a sense of place” and “a sense of community”, the small town, which was planned to grow to 20,000 residents, would also offer progressive education, world-class health facilities and cutting-edge technology. Michael Eisner, who ran Disney at the time, believed it would be a “community of tomorrow”. + +House mouse + +Disney’s interest in town development started with its founder. In a filmed appearance on October 27th 1966, Walt Disney laid out his vision for the 27,400 acres of land he had secretly acquired in central Florida. It would include a theme park, an industrial park and an airport. At its heart would be an “experimental prototype community of tomorrow”, or EPCOT (see article). This community would have 20,000 residents, a central business district and futuristic public transport. Cars and lorries would be hidden away underground. It was planned as a showcase of modern technology and “the ingenuity and imagination of American free enterprise”. Two months later Disney died of lung cancer. The plan was shelved. + + + +In 1971 Walt Disney World opened on the land. By 1985 it was home to two theme parks with a third under construction (a fourth was added later), hundreds of hotel rooms and plenty of land to spare. But changes in Florida’s environmental laws had Disney executives worried that the state would reclaim some of their property unless it was put to use. The contentious land was an alligator-infested swamp, cut off from Disney World by a highway and unsuitable for another theme park. It seemed a shame to waste it. Executives approached Mr Eisner, who was keen on urban planning, with the idea of building a town. He agreed—but only once he was convinced that it would not be yet another suburban tract of homes attached to a golf course, with the Disney logo slapped on it. + +Around the time that Disney started working on its town-building project, a movement called new urbanism was taking off. Its big success came with the development of Seaside, Florida, a picturesque resort village which many years later became the setting for “The Truman Show”, a dystopian film set in a perfect town. New urbanism advocated building on a human scale, planning for walking and mixing residential and commercial zoning. Celebration’s developers set out to adapt that ethos to their town. Though brand new, the town would look like a charming mid-Atlantic city, such as Savannah, Georgia or Charleston, South Carolina. + +Judged as an investment, Celebration was a blockbuster. Demand for the first set of lots was so high that Disney had to hold a lottery. Prices started at $120,000 for the smallest homes and at $300,000 for bigger ones; the median house price in the surrounding area was $80,000. Disney invested $100m in the project but it had bought the land for next to nothing. Construction was left to contractors, and money for roads and lighting came from municipal bonds that were paid back by residents. + +Judged as an attempt to recreate a quasi-mythical past, things did not go so smoothly. Part of Celebration’s appeal was that it would offer a public school with a private education. “What was promised was a revolution in education,” says Lawrence Haber, whose family was the first to move into Celebration, on June 18th 1996. Disney gathered experts from Harvard and Johns Hopkins universities, among others, to design the curriculum. There would be no grades. Classes would be mixed, with children of different age groups studying together. It proved a disaster. Kids slacked off. Without test scores, parents were unable to track their children’s progress. Arguments and fist-fights broke out between parents. The school eventually separated into two more conventional public schools. Mr Haber says he might not have moved to Celebration were it not for the school. Many early settlers felt the same way. Some left. + +Town cat + +The promises of high technology fared little better. The original vision involved fibre-optic cables to every home. It never happened. Neither did elaborate plans that resembled an ambitious early Netflix or those for community services online. A scheme in which residents got free computers in exchange for allowing their browsing activities to be tracked fizzled out once AT&T, Disney’s corporate partner for technology in the town, realised it had no use for the data, write Douglas Frantz and Catherine Collins in “Celebration, USA”, an account of their first year living in the town in the late 1990s. Only the health centre was an unequivocal hit. The hospital, run as a non-profit by the Seventh-Day Adventist church, feels like a resort hotel. It includes a gym and a spa. + +Some of the early shortcomings could be put down to teething troubles. But at Celebration’s core was nostalgia, making the last two cornerstones, “sense of place” and “sense of community”, the most important. Celebration certainly feels different from the rest of American suburbia. Disney invested in building the downtown area so it would be open the day the first families moved in. It commissioned famous architects to build the town hall, the post office, the cinema and other communal buildings. It invited doctors to live in the town so there would be, for example, an optometrist. It located the town centre, quaintly, in the centre of town even though putting it by the highway would have made more economic sense. + +Yet the cinema, a towering faux-art-deco edifice designed by César Pelli has been closed for several years. Locals complained that the downtown lacked basic necessities such as a hardware store or a hairdresser. The small town-centre grocery store shut too, replaced by a big-box supermarket by the highway. The downtown area, which was sold by Disney in 2004, is in poor repair. One block of flats is being entirely renovated, another is held up by wooden support columns, a third is covered with tarpaulin to prevent leaks. Residents of the downtown condominiums complain that they face huge extra fees for repairs despite having paid for maintenance. A lawsuit is in the works. + +To the extent that Celebration can boast of a sense of place, it is opposition to Osceola county, of which it forms a part, where median incomes are about half as big. Celebration voted for Donald Trump; both the district and county it is in voted Democrat. Celebration is cute and orderly; the surrounding areas are covered in strip malls and fast-food chains. The median house price in Celebration is $345,700, more than twice that of the nearest town and far higher than any other settlement in the county, according to Zillow, a real-estate company. + +The disparity has tugged away at the communal ethos Disney hoped to foster. Old-timers talk up shared experiences, the town foundation that helps out the poor, the many community groups. Newer residents are less enthused. Many parents send their children to private schools elsewhere, blaming an influx of kids from outside Celebration. A quarter of pupils at Celebration School and two-thirds at Celebration High School qualify for free or subsidised lunches, a proxy for poverty. Many of them come from the nearby Highway 192, where motels have turned into rent-by-the-week homes for transient minimum-wage workers. + +The well-intentioned hope to recreate some version of America’s past has been defeated by the country’s present. The parks, pools and playgrounds in Celebration belong to the residents’ association and are off-limits to non-residents. Sitting on a park bench is considered trespassing. Residents complain about tourists peeking over their fences or the thousands of children from neighbouring areas who descend on them at Halloween. Celebration was founded by Disney on the principle of openness—the school and utilities are public, and the county sheriff’s office provides police patrols. Yet it has become a gated community, just without the gates. + +In Disneyworld + +Yet for all its failings, Celebration has changed America. It provided a prototype for mixed-use development that encouraged more permissive zoning laws, says Robert Steuteville of the Congress for the New Urbanism. Baldwin Park, a successful residential development with a commercial heart, in nearby Orlando, was a refinement of the idea. Celebration demonstrated that suburban cities could market themselves to house-buyers by evoking urbanity. These days almost all suburban developers talk about “place-making” and “urban-style” living, and fostering a sense of community. Celebration got them talking that way. + +A big part of Celebration’s success came from its association with Disney. “People had an impression that if they moved their kids to a Disney town, their lawns would never get any weeds and their children would never get anything but ‘A’s,” says Peter Rummell, who led the development for Disney. Mike Harford, until November’s election the county commissioner for the district that includes Celebration, grew up in Osceola county when “there was nothing but cows.” “If it had stayed that way, I would have had to go somewhere else,” he says. In the land of fresh starts, nostalgia can be the most effective marketing pitch for a new future, in property development as in politics. + +This article appeared in the United States section of the print edition under the headline “Yesterdayland” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21712156-utopia-i-4-what-disneys-city-future-built-look-past-says-about/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Tomorrowland + +At Disney World, the future is already here + +The theme parks are a proving ground for new technology—but not in the way Walt Disney imagined + +Dec 24th 2016 | EPCOT, DISNEY WORLD + +Park life + +WHEN the EPCOT Centre opened in 1982 it could not have been farther removed from Walt Disney’s original vision. Disney had wanted to build an “experimental prototype community of tomorrow”, or EPCOT, a Utopian town of 20,000 where a towering city centre would be covered by a dome, where there would be full employment and where new ideas and technologies were always being tested. When Disney died in 1966 that dream died with him. His successors turned EPCOT into a theme park that resembled a permanent world’s fair. Half of it was given over to visions of the future sponsored by corporations. The other half was a “world showcase” containing national pavilions with reproduction architecture—a faux-English pub in Britain, a miniature Piazza San Marco in Italy. + +More than three decades after it opened, EPCOT remains hugely popular. It is the sixth-most-visited theme park in the world. It caters mostly to adults: bachelor parties and 21st-birthday drinking binges come for the “drink around the world” challenge, which involves drinking at each nation’s pavilion (avoid the Norwegian aquavit). The technological showcases have withered. The town became Celebration, an idyllic old-timey town a few miles south (see article). + +Yet EPCOT, along with the rest of Disney World, has quietly become a proving ground for the future. In place of tickets, most families receive a rubber wristband when they book their holidays to Disney World. The device, which is smaller and lighter than a fitness tracker, contains a radio chip that unlocks hotel rooms, serves as an entry ticket to the parks, lets people onto rides and allows them to buy food and drinks. Disney photographers stationed around the park will tap the wristband and later send the images to a connected mobile app. It is so seamless as to be barely noticeable. It is the sort of technology that Apple and Google have been striving to bring to the wider world. More than 10m of the things have been given out. + +Like much modern technology, it is also creepy. Sensors scattered around Disney theme parks allow its computers to keep track of everyone in the park. Each band is personalised. At the main gates, visitors submit fingerprints that are tied to the bands. Yet the families and children at the happiest place on earth barely seem to notice. The bands ease movement and transactions—it is easier to spend money when all it requires is a wave of the wrist. It isn’t quite what Walt had in mind. But with its blend of technology, commerce and entertainment, he would approve. + +This article appeared in the United States section of the print edition under the headline “Tomorrowland” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21712151-theme-parks-are-proving-ground-new-technologybut-not-way-walt-disney/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Ungovernable + +Shenanigans in North Carolina set a lousy example for America’s broader politics + +If you can’t beat ’em, take away their power + +Dec 24th 2016 + +Power from the people + +WHEN, almost a month after the vote, Pat McCrory admitted defeat in North Carolina’s governor’s contest, abandoning his graceless demand for a recount, it looked as if Republican efforts to sway the state’s elections were finally exhausted. A voter-ID rule, and other restrictions passed by Republican legislators, had been scotched by a federal court that found they targeted black voters “with almost surgical precision”; but, say voting-rights activists, limits on early voting opportunities still suppressed black turnout. Gerrymandering had already helped to assure Republican supermajorities in the state legislature. That means lawmakers will be able to override the veto of Roy Cooper, the incoming Democratic governor—a reason, some observers thought, that they might not be too concerned by his victory. + +That overestimated their maturity. Instead they called a special session of the General Assembly, in which they summarily diluted the power of the governorship before Mr Cooper assumes it in January. Mr McCrory, the defeated incumbent, has begun to sign the measures into law in the dying days of his tenure. + +The changes include a requirement for the governor’s cabinet picks to be approved by the state Senate (hitherto they have been made at his discretion), plus a cut in the overall number of officials he appoints by around two-thirds. The clout of the incoming superintendent of education (unsurprisingly, a Republican) would be augmented at the governor’s expense. Mr Cooper will lose control of the state election board, which will nominally become bipartisan, its chairmanship alternating between the parties—but serendipitously falling to Republicans in the years most elections are held. The court system has been rejigged. All this will hamper Mr Cooper’s efforts to pursue his agenda, while boosting statehouse Republicans’ ability to advance theirs without his consent. + +In some young democracies, it is normal for politicians’ views of the proper power of any given office to depend on their chances of occupying it. But, in Raleigh, this constitutional sabotage caused outrage. It has re-energised protesters who for years have objected to reactionary initiatives on voting rights, abortion, health care and other neuralgic policies. Dozens have been arrested (including one in a Santa costume). As Mr Cooper said, the sneak attack on his authority recalls the most scandalous of those moves: when, in another hastily scheduled session, lawmakers rushed through the so-called “bathroom bill”, which meddled with transgender restroom use and municipal anti-discrimination rules. + +A backlash against that law cost the state investment, jobs and beloved sporting events—and helped Mr Cooper narrowly see off Mr McCrory, in a state Donald Trump won soundly. As The Economist went to press, legislators at last seemed set to repeal it. But they seem not to have been chastened by the fiasco, nor by the federal-court judgments against both their voting machinations and gerrymandering, which was recently ruled unconstitutional, too. When voters demur, evidently their strategy is retain power by fixing the system: a terrible harbinger for America’s broader, dismally partisan politics. + +This article appeared in the United States section of the print edition under the headline “Ungovernable” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21712158-if-you-cant-beat-em-take-away-their-power-shenanigans-north-carolina-set-lousy/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Lexington: Winning by breaking + +Donald Trump’s most damaging legacy may be a lower-trust America + +Fomenting cynicism and partisan divisions is his best chance of surviving his term + +Dec 24th 2016 + + + +AT THE height of Silvio Berlusconi’s power, as the billionaire-politician brushed scandals and lawsuits aside with the ease of a crocodile gliding through duckweed, a professor at an Italian university described to Lexington how the terms furbo and fesso helped explain the then-prime minister’s survival. In those bits of Italian society from which Mr Berlusconi drew his strongest support, it is a high compliment to be deemed a furbo, or a sly, worldly wise-guy. The furbo knows how to jump queues, dodge taxes and play systems of nepotism and patronage like a Stradivarius. In contrast the fesso is the chump who waits his turn and fails to grasp how badly the system is rigged, or how much of his taxes will be stolen. The fesso might cheer a new clean-air law in his city, naively taking an announcement by the elites at face value. The furbo wonders who in the environment department may have a brother-in-law with a fat contract to supply chimney scrubbers. Mr Berlusconi’s fans saw him as the furbo to end all furbi. He showed that he heard them, offering them crude appeals to wise-guy cynicism, as when he asserted that any Italians who backed his centre-left opponents were not just mistaken, but were coglioni or, to translate loosely, “dickheads”, who would be voting “against their own interests”. + +Living in that sort of society comes with costs. For decades anthropologists and political scientists have weighed the advantages of living in a high-trust, highly transparent country like Sweden, and measured how corruption and squandered human capital harm places like Sicily. “Trust”, a book published by Francis Fukuyama 20 years ago and now sadly topical again, suggested that America and its distinctive model of capitalism flourished because strangers learned to trust one another when signing contracts, allowing them to do deals outside the circles of family, tribal or in-group kinship relied upon in low-trust societies. + +As the Trump era dawns in America, the composition of the cabinet and inner circle taking shape around Donald Trump is too ideologically incoherent to define the next president’s policy agenda. There are bomb-throwers and hardliners in Team Trump, including cabinet secretaries who have called for the federal agencies they will run to be hobbled or abolished, and an alarming number of men who see no harm in threatening a trade war or two. But it also has figures from the oak-panelled, marble-pillared heart of the Republican establishment. + +When it comes to national security, Mr Trump’s nominee to run the Pentagon is a retired general, James Mattis, who has called Russia’s annexation of Crimea a “severe” threat and accused President Vladimir Putin of wanting to “break NATO apart”. His pick to run the State Department, Rex Tillerson, is CEO of an oil firm, ExxonMobil, that argued against sanctions imposed on Russia after the Crimean invasion. Mr Trump’s Office of Management and Budget is to be run by a shrink-the-government fiscal conservative, Representative Mick Mulvaney of South Carolina, while his chief strategist, Stephen Bannon, has called for a trillion-dollar infrastructure plan that will drive conservatives “crazy”. It is equally easy to imagine headlines, years from now, that call President Trump a revolutionary who took America down the path to hard-edged nationalism, as it is to imagine a hapless incompetent paralysed by factional in-fighting and plunging poll ratings. + +If Mr Trump’s policies are a mystery, his approach to politics is not. The Republican won office by systematically undermining trust in any figure or institution that seemed to stand in his way, from Republican rivals to his Democratic opponent, leaders of Congress, business bosses, the news media, fact-checkers or simply those fessi who believe in paying taxes. Accused of avoiding federal income taxes during a debate with Hillary Clinton, he growled: “That makes me smart.” + +Mr Trump will not be able to stop that destructive mission to make America less like Sweden and more like Sicily. He has too many promises that he cannot keep. He must betray those supporters whom he wooed with a conspiracy theory dressed up as an economic policy, backed with crude invective worthy of an American Berlusconi. He spotted a market opportunity: millions of Americans with conservative instincts, notably working-class whites in the Midwest, who felt ill-served by both major parties and could conceive of no benign explanation for social and economic changes that angered and dismayed them. Mr Trump ignored transformational forces, such as automation or global competition. He dismissed the notion that foreign policy is filled with complex trade-offs. Instead Mr Trump told voters a story about “stupid” and feckless elites who had given away what was rightfully theirs: from manufacturing jobs to traditional values or a border secure against illegal immigrants and Muslim terrorists. Just give him power, and all would be well. + +Get smart + +Fomenting cynicism and partisan divisions is not a flaw in Mr Trump’s approach to politics: it is his best chance of surviving the next four or eight years, as reality bites. That is why he has told his supporters not to believe the CIA, when American spy chiefs accuse Russia of working to disrupt the election by hacking e-mails sent by bosses at the Democratic National Committee and the Clinton campaign. It is why Mr Trump has recently held rallies in states that he won, telling supporters, “We are really the people that love this country” and breezily saying of crowd chants to lock Mrs Clinton up: “That plays great before the election, now we don’t care.” As a man about to break his word, Mr Trump needs an America in which all morals are relative, facts are written by winners and principles count for less than winking appeals to partisan loyalty. Most of the Trump legacy is still unknowable. Some of what he does will be reversed by the next president when the electoral pendulum swings the other way, as it usually does. A lower-trust America will be harder to fix. + +This article appeared in the United States section of the print edition under the headline “Winning by breaking” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21712157-fomenting-cynicism-and-partisan-divisions-his-best-chance-surviving-his-term-donald/print + + + + + +上一项 文章 章节 下一项 + + + + + +The Americas + + + + +Marijuana in Mexico: Northern lights + +Argentina’s economy: No growth, no votes + +Paraguay’s waterways: Ply me a river + + + + + +文章 章节 下一项 + +Northern lights + +Mexican attitudes to marijuana mellow + +Drug liberalisation north of the border may speed up the process + +Dec 24th 2016 | MEXICO CITY + + + +IN NOVEMBER 57% of Californians voted to legalise the growing and use of marijuana for recreational purposes. Americans in seven other states and Washington, DC, are now, or soon expect to be, free to puff away at leisure, but liberalisation in the most populous border state will be felt acutely down south. Mexico has just marked the tenth anniversary of a war on drugs. It has spent millions of dollars on eradicating cannabis. Now it will abut a huge regulated market for the stuff—and one where 30% of the population is Mexican or Mexican-American. Changes in the United States may be prompting a rethink in Mexico, too—among ordinary people, policymakers and purveyors of pot alike. + +Start with the citizens. Nearly a third of voters in Mexico currently support legalising marijuana for recreational use. Attitudes are mellowing: in 2008 only 7% approved of legal pot (see chart). Many Mexicans associate the herb with the horrors of the drug war, estimated to have cost more than 80,000 lives. For some this is a reason to crack down harder on it; for others, to take it out of the hands of criminals. + + + +Mexico’s president, Enrique Peña Nieto, has proposed decriminalising the possession of 28 grams or less of pot for recreational purposes (the current limit is five grams). On December 13th, in an important step towards detoxifying the drug, the senate voted to legalise medical marijuana. This partial liberalisation is popular: 98 out of 127 senators backed it, with just seven votes against. Newspapers are filled with stories of cannabis’s potential in the treatment of a host of conditions. Even the Catholic Archbishop of Mexico City gave his imprimatur to the bill. The lower house is expected to approve it in early 2017. + +Like a pothead’s bedroom, though, the path to full legalisation is strewn with obstacles. Mr Peña’s Institutional Revolutionary Party (PRI) is torn between pandering to its traditional base and appealing to younger Mexicans who, like their peers elsewhere, are more relaxed about cannabis. The PRI’s poor performance in June’s governors’ elections was partly blamed on Mr Peña’s proposed reforms of marijuana and gay-marriage laws, which may have alienated social conservatives. Since then decriminalisation has been delayed. + +Then there is Donald Trump. Possession of marijuana is still illegal under federal law in the United States. The teetotal president-elect’s views are unclear: he has said that pot policy should be left to the states and legalisation “should be studied”, but also that the drug should not be legalised now. His nominee for attorney-general, Jeff Sessions, is an old-fashioned drug warrior, who has railed against Barack Obama’s “lax treatment” of marijuana. He may enforce federal rules more eagerly in California and elsewhere. Or not. + +Nothing is likely to reverse the trend towards liberalisation, which reflects a secular shift in American attitudes. But Mr Sessions could slow its progress, and perhaps discourage it south of the border. + +Smoking and the bandits + +For the time being, the Mexicans perhaps most affected by changes up north belong to the country’s notorious drug gangs. Seizures of marijuana on the United States’ south-western frontier by its Border Patrol, a useful proxy for the activity of Mexican gangs, suggest traffickers are being squeezed by legally grown American crops. In the three years after Colorado became the first American state to legalise recreational pot in 2012, seizures dropped from 1,000 tonnes to 700 tonnes. + +Criminals have responded in two ways. They are selling more spliffs to their compatriots, who light up relatively little and so present an alluring growth market. Gangs are also switching to harder drugs. “Drug-trafficking is about managing routes,” observes Antonio Mazzitelli, the regional head of the UN Office on Drugs and Crime. As demand for illegal marijuana dwindles, Mr Mazzitelli says, traffickers will move to methamphetamine, cocaine or opiates. The fight to control new lines of business may be one reason for the renewed violence in Mexico’s border areas. + +Further loosening of American drug laws, to allow regulated sales of hard drugs, too, would hurt illegal suppliers by providing lawful alternatives. Sadly, it is not on the cards. Eventual legalisation in Mexico—starting with marijuana—would in time have a similar effect. But regulation is hard. Tax pot too heavily and the gangs will dominate the bootleg trade, just as they do around one-sixth of Mexico’s tobacco market. Tax it too lightly and many more Mexicans will get stoned. + +Politicians are unlikely to race far ahead of public opinion. But California may hint at things to come: 46% of Latinos there voted in favour of legalisation in 2010. This time exit polls put the figure at 57%. + +This article appeared in the The Americas section of the print edition under the headline “Northern lights” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21712131-drug-liberalisation-north-border-may-speed-up-process-mexican-attitudes-marijuana/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +No growth, no votes + +Recession emboldens Argentina’s opposition + +An end to a reformist president’s long honeymoon + +Dec 24th 2016 | BUENOS AIRES + + + +ASKED recently to rate his first year as Argentina’s president, Mauricio Macri gave himself eight out of ten. Some immodesty is justified. Almost overnight after taking office Mr Macri dismantled the populist policies of his predecessor, Cristina Fernández de Kirchner. He eased currency controls; had the national statistics institute stop massaging inflation figures; and resolved a dispute with holders of overdue government debt, restoring Argentina’s access to capital markets. + +Argentines have been less generous with praise. Mr Macri promised that by now confidence would be back and healthy growth would ease the pain of his reforms. Instead the economy remains sickly: GDP will shrink by 1.8% in 2016, says the IMF. In October industrial production fell by 8%, year on year; construction collapsed by 19%. One in 12 Argentines is out of work. Inflation may no longer be misreported, but looks stuck at 35%. With incomes crimped, households are spending 7.5% less on basic goods than in 2015, estimates CCR, a consultancy. + +Lacking a majority in congress, until recently the president could at least count on disarray among rivals. The dominant Peronist movement once held together by Ms Fernández fractured after her candidate’s defeat by Mr Macri: moderates backed some of his ideas; hardliners refused to. With growth prospects receding, the two camps have put their differences aside. + +In November Sergio Massa, a moderate Peronist, proposed raising the amount of income exempt from tax by 60%. This would please cash-strapped voters, but stretch the budget by 0.6% of GDP, equivalent to a year’s spending on public works. The opposition pushed the measure through the lower house on December 6th. The senate may do so on December 21st. + +That would leave Mr Macri in a bind: signing the bill would scotch his plans to trim the deficit in 2017 from 7.2% to 6.8% of GDP; a veto may fuel a public backlash. He has been courting the country’s governors, hoping they talk sense to senators. Provinces stand to lose out if Mr Massa gets his way: income taxes are shared between the federal and regional governments. + +A compromise, perhaps involving a lower threshold, is not out of reach. But the episode has already cast doubt over Mr Macri’s ability to complete the reforms—to rigid labour rules or bloated bureaucracy—that Argentina still needs. Observers see it as a portent that his Cambiemos (Let’s Change) coalition cannot live up to its name, says Jimena Blanco of Verisk Maplecroft, a consultancy. + +Mr Macri may be hoping that opponents will find it harder to obstruct his proposals once economic revival proves these are working. The government forecasts growth of 3.5% in 2017, helped by farm exports and an end to a wrenching recession in Brazil, Argentina’s biggest trading partner. But neither looks assured. Brazil’s recovery has disappointed. And trade may suffer as more countries turn protectionist. Mr Macri’s second year may be more testing than his first. + +This article appeared in the The Americas section of the print edition under the headline “No growth, no votes” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21712129-end-reformist-presidents-long-honeymoon-recession-emboldens-argentinas-opposition/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Ply me a river + +Ebbs and flows in an unlikely marine superpower + +Paraguay’s economy would wilt without its waterways + +Dec 24th 2016 | Puerto Fénix + +Tugging at South America’s heart + +LANDLOCKED Paraguay is sometimes called the “heart of South America”. If so, two great rivers are its arteries. Besides abundant hydropower, the Paraná and the Paraguay provide the lifeblood of the small, open economy—trade. In the absence of railways or good roads, it would seize up without the waterways. Improbably, Paraguay (population: 7m) boasts the world’s third-biggest fleet of tug-propelled barges, behind the United States (319m) and China (1.4bn). + +On the outskirts of the capital, Asunción, a mountain of soyabean flour in a massive silo awaits loading. On the dock outside, a crane busily unpacks Japanese Isuzu lorries from a container vessel. In Puerto Fénix, business is up 75% in the past eight years, says Pablino Gómez, its operations manager. + +Puerto Fénix is private, like most Paraguayan ports. In contrast to many countries, liberal Paraguay lets anyone purchase riparian property to set one up. Many have, so competition is fierce. Across the fence, Mr Gómez’s enterprise is flanked by two rivals. Margins have been squeezed, Mr Gómez admits, but larger volumes have made up for it. + +Thank the landlubbers on Paraguay’s booming farms. Twenty years ago 15-odd convoys of 20-30 barges each plied the route from Brazil through Paraguay, to the sea in Uruguay and Argentina, recalls Fernando González of Naviship, a shipper. Today, 200 tugboats push round 2,200 barges, mostly brimming with soyabeans and other crops. Many are owned by foreign firms, including some from Argentina, domiciled in Paraguay to take advantage of its low taxes. It isn’t all plain sailing. Rock-bottom tax bills also mean fewer resources for public services. When local authorities left a dirt road linking Puerto Fénix to a motorway untended, the port paid to have it paved. Barges sometimes run aground, causing days of congestion, when the government fails to dredge some critical bend. + +Waters have grown choppier, too. Since the Brazilian economy started sinking in 2014, upstream merchandise trade has foundered, even as farm exports downriver have held up. Convoys must typically sail full both was to turn a profit. Some now struggle to stay afloat. In March and April Naviship had so few manufactures to tug back to Asunción, where most would be loaded onto lorries headed for Brazil, that it had to anchor two of its three container vessels. + +This article appeared in the The Americas section of the print edition under the headline “Ply me a river” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21712130-paraguays-economy-would-wilt-without-its-waterways-ebbs-and-flows-unlikely-marine/print + + + + + +上一项 文章 章节 下一项 + + + + + +Asia + + + + +Conflict in Myanmar: The Lady fails to speak out + +Banyan: The politics of taking offence + + + + + +文章 章节 下一项 + +A peace prize, but no peace + +Aung San Suu Kyi fails to calm Myanmar’s ethnic violence + +Ending it will need far more courage + +Dec 24th 2016 | COX’S BAZAR, NAMTU AND SITTWE + + + +SYED, a 33-year-old Muslim religious teacher, feared the worst. On October 9th Rohingya militants attacked border posts near Maungdaw, a township in the north of Rakhine state in western Myanmar, killing nine Burmese border guards. Syed, himself a Rohingya from Rakhine, was sure that a vicious crackdown by Myanmar’s army would follow. So he put on non-religious clothes and shaved his beard. Along with 16 others he left his home village. For days the group hid in a forest. Eventually they crossed the Naf River, which separates Myanmar from Bangladesh, and found their way to the sprawling, ramshackle Kutupalong camp near the coastal town of Cox’s Bazar. + +Syed’s fears were justified. Myanmar’s army has blocked access to much of Maungdaw, keeping away journalists, aid workers and international monitors (troops claim to be searching for stolen guns and ammunition). But reports have emerged of mass arrests, torture, the burning of villages, killings of civilians and the systematic rape of Rohingya women by Burmese soldiers. At least 86 people have been killed. Satellite imagery analysed by Human Rights Watch suggests that soldiers have burned at least 1,500 buildings—including homes, food shops, markets and mosques (one devastated area is pictured). The organisation says this could be a conservative estimate; it includes only buildings not obscured by trees. Amnesty International says the army’s “callous and systematic campaign of violence” may be a crime against humanity. Myanmar’s government denies all such allegations, dismissing many of them as fabrications. + +Around 27,000 Rohingyas—members of a Muslim ethnic group native to Rakhine—have recently, like Syed, fled to Bangladesh. But about 1m of them remain. Before the recent turmoil, tens of thousands of Rohingyas in northern Rakhine relied on aid for food, water and health care. The blockade has severed that lifeline. + + + +Such brutality does not reflect well on Aung San Suu Kyi, a winner of the Nobel peace prize who has led Myanmar since her party’s resounding electoral victory in 2015. Neither does ethnic conflict, which has been intensifying on the other side of the country, speak well of her skills as a peacemaker. She entered office saying her priority was to resolve Myanmar’s decades-long civil wars. Recently, however, a long-running insurgency in Shan and Kachin states has spilled into the area’s towns for the first time in years (see map). It involves the Northern Alliance, a group comprising the Kachin Independence Army (KIA), the Arakan Army, the Ta’ang National Liberation Army and the Myanmar National Democratic Alliance Army. The alliance accuses the national army of detaining, torturing and killing locals, despite the government’s pledge to “resolve [problems] through a peace dialogue.” + +This is par for Myanmar’s post-independence course: the country has long been racked by civil conflicts fuelled by an army operating without any civilian constraint. But Miss Suu Kyi was supposed to change this grim status quo. The recent violence shows how far she has to go. A solution will require Miss Suu Kyi to rethink the country’s ethnic policies and restrain an army that is still reluctant to accept civilian command. It is far from clear how committed she is to trying. + +Hopes were high when Miss Suu Kyi convened four days of peace talks in Naypyidaw, Myanmar’s capital, beginning in late August, with representatives of 17 of the country’s 20 insurgent ethnic groups. The event was described as the “21st Century Panglong Conference”—a reference to one held in 1947 at which Miss Suu Kyi’s late father, General Aung San, a hero of the country’s fight for independence from Britain, agreed to give the minority Shan, Kachin and Chin populations “full autonomy in internal administration”. (Miss Suu Kyi, like nearly 70% of Myanmar’s population, is ethnic Bamar—the group from which the country’s old name, Burma, is derived.) + +This year’s gathering achieved nothing so momentous. Miss Suu Kyi made grandiose statements, the army chief made vague promises, the ethnic-army leaders stated their positions and everyone promised to meet again early in 2017. Encouragingly, the ethnic armies reassured the government that they wanted not secession, but more freedom within a federal state. Miss Suu Kyi and the Burmese army also voiced support for federalism. But what that might mean in practice, and what the army is willing to cede, remain unclear. The army has enriched itself by grabbing land and resources in ethnic regions; it shows little sign of wanting to give them back. The military-devised constitution, imposed on the country after a sham referendum in 2008, gives Miss Suu Kyi’s civilian government no real power to compel the army to do so. + +No wonder, then, that disenchantment with state-led peace efforts is growing among minorities. Although the KIA attended Miss Suu Kyi’s Panglong gathering, the Burmese army has been pounding it for months, reportedly seizing the Kachins’ mountain outpost of Gidon this month. The Northern Alliance has recently attacked Burmese army and police forces along the Chinese border. At times it has claimed to hold various border towns. The fighting has driven thousands of people to seek refuge in China, which has reportedly beefed up its military presence along the frontier. The alliance may hope that a riled China will put pressure on Myanmar to make concessions to the ethnic groups (the Kokangs are ethnic Chinese). So far, however, China has not risen to the bait. + +Those caught up in the conflict feel let down by all sides. Miss Suu Kyi’s party, the National League for Democracy (NLD), “made a big noise but now, where are they? We cannot see them,” says an ethnic-Shan resident of one strife-torn town, Namtu. Sai Philip, a Catholic of Indian descent, says tactics used by ethnic groups to sustain the fight, such as the occupation of villages, forced recruitment and heavy taxation, have alienated many people. + +But, to the ethnic armies, popular support matters less than it once did. The Northern Alliance groups—three of which did not attend the Panglong talks and have signed no ceasefire agreements—are not really fighting for a cause. Instead, they and the army are trying to maximise their gains on the ground in readiness for eventual negotiations to end the fighting. That is driving them further apart. The Burmese-army-dominated Shan state parliament has labelled the Northern Alliance “terrorists”. In response, a broad coalition of ethnic groups has blamed the army for the current hostilities, and Miss Suu Kyi for failing to live up to her own rhetoric. + +In Bangladesh, unwanted by Myanmar + +In Rakhine state, the Rohingyas have not even received a rhetorical acknowledgment from Miss Suu Kyi of their plight. She has kept shamefully silent about it, fearful, perhaps, of upsetting ethnic Bamar, who are mainly Buddhists and many of whom look down on the Muslim Rohingyas. They see them as outsiders, culturally linked more to Bangladesh. Even though Rohingyas have been living in Rakhine for well over a millennium, most are denied citizenship. Miss Suu Kyi is sensitive to international criticism of her government’s stance: on December 19th she convened a meeting in Yangon of foreign ministers from the Association of South-East Asian Nations in an attempt to assuage their concerns. She has also appointed two commissions to investigate abuses in Rakhine state. But she avoids using the word “Rohingya”, calling it “controversial”. The minority is not one of Myanmar’s officially recognised ethnic groups. + +This matters because some of the rights guaranteed by Myanmar’s constitution, such as to health care and education, are only conferred on citizens. When the government insists that soldiers in Rakhine are acting in accordance with the “rule of law”, it may be telling the truth: the constitution does not protect non-citizens from arbitrary detention, so mass arrests of Rohingyas may not violate the law. Neither, the government would say, does keeping them in camps, where around 120,000 Rohingyas in central Rakhine have been held since communal riots four years ago. Last year thousands of them took to the sea in rickety boats, but that escape route has been disrupted by Thailand’s crackdown on people-smuggling networks. + +The country’s ethnic policies are a relic of the colonial era. They accord each of eight “major national ethnic races” a designated statelet. The rest of the 135 officially recognised groups are classified as subcategories of these. Many ethnic Rakhines worry that if Rohingyas are recognised as such a group and granted citizenship, they will start agitating for their own homeland—which would come out of Rakhine state. As U Thein Maung, an NLD member of Rakhine’s parliament, puts it: “I have nothing against any religion or any kind of people. But I will not accept a single inch of my fatherland becoming Rohingya land.” Such fears—and Myanmar’s preference for talking about the rights of ethnic groups rather than of individuals—make the conflict even more intractable, as they do in other border areas. + +Yet talk of recognising the Rohingyas is rare. Mr Thein Maung seems moderate compared with some other ethnic Rakhines. A woman who works in a tea-shop on the outskirts of Sittwe, the state’s capital, says that Muslims and Buddhists could never live together because “Muslims do not know what goodness is.” Maung Hla Kyaw, an older man, says that because “Muslims slaughter their chickens by themselves, that means they will not hesitate to kill us fiercely.” U Pinya Tha Myint, the head monk of a monastery in Sittwe, wants foreign powers to “help the Bengali non-citizens to leave for abroad to any Islamic country that wants to take them.” + +The danger of inaction + +Myanmar’s ethnic crises may demand more political capital than Miss Suu Kyi is willing to spend. But if left unresolved they risk creating huge problems for her country. One is the possible growth of jihadism. So far the Rohingyas have shown little interest in Islamist extremism. But many of them see a bleak, hopeless future in Myanmar. The International Crisis Group, a think-tank, reckons the attacks in October by Rohingya militants were planned by a well-funded insurgent group whose leaders had been trained in guerrilla-war tactics. Defending Rohingyas from persecution could become a tempting new cause for disaffected young Muslims around the world. Miss Suu Kyi fears paying a political price for speaking out, but silence carries costs. + +Another danger is that an upsurge of fighting will impede Myanmar’s economic development, not least by rendering large, resource-rich chunks of the country off-limits or unappealing to investors. The ceasefires that the previous government signed with many, but not all, ethnic armies, look hollower by the day—as does Miss Suu Kyi’s ability to achieve peace and tame the army. The fewer good jobs are available to young men, the more tempting it will be for them to take up arms. + +This article appeared in the Asia section of the print edition under the headline “The Lady fails to speak out” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21712162-ending-it-will-need-far-more-courage-aung-san-suu-kyi-fails-calm-myanmars-ethnic-violence/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Crying blasphemy in Jakarta + +The persecution of a Christian mayor in Indonesia + +The country’s reputation for tolerance is now in doubt + +Dec 24th 2016 + + + +WHEN the citizens of Jakarta, Indonesia’s capital, voted for Basuki Tjahaja Purnama as their vice-governor in 2012, it seemed a hopeful moment. He and his popular boss, Joko Widodo, had promised a bold programme of urban renewal to save the creaky, sinking and car-clogged metropolis. What’s more, the world’s largest Muslim-majority democracy seemed to enhance its reputation for tolerance. Mr Basuki,known as Ahok, is ethnic Chinese and a Christian: rarely before had an Indonesian from a minority community and religion risen so high. + +Suddenly, Indonesia’s reputation for tolerance is in question. After Mr Joko, or Jokowi, ran for president and won by a landslide two years ago, Ahok assumed the Jakarta governorship. Just three months ago, Ahok still looked to be a shoo-in for the gubernatorial race next February. Since then, however, huge rallies organised by hardline Islamist groups have brought hundreds of thousands of anti-Ahok protesters to central Jakarta. Because of those protests, he himself is in court on blasphemy charges. + +Ahok is arrogant, impatient and coarse—offending courteous Javanese manners. But he is effective: Jakartans credit him with improving congestion, flood control and health care. In September he told some fishermen that he understood why some would not vote for him, because they were deceived by those claiming that the Koran forbids Muslims to be governed by a kafir. Islamists promptly accused Ahok of insulting the Koran. The rallies they organised around the National Monument were huge. One on November 4th, with about 200,000 protesters, turned violent. The most recent, a rally and mass prayer meeting on December 2nd, was twice as big, but ended peacefully after Jokowi came to address it. By then it was clear that the protesters had got their way and that Ahok would be prosecuted and probably jailed. + +It is all regrettable. Ahok was extremely tactless. But if he is guilty of a crime, it is hard to see who the victim is. Jokowi was reluctant to see his former sidekick prosecuted, but ultimately seems to have relented. The police were sharply divided, too, over whether to prosecute. The country’s biggest mainstream Muslim organisation, Nahdlatul Ulama, made itself scarce. The bookish leader of the next biggest complained that it was easier to get people to go to a demonstration than to a library. + +This left the hardliners to make the running, led by the thuggish, hypocritical Islamic Defenders’ Front (FPI) (who do not hassle police-run brothels). Through social media, they stirred up vitriol aimed at ethnic Chinese. The FPI’s footsoldiers have fanned out into Jakarta’s kampung (village-like settlements). One of the places to which they took money and aid is Pasar Ikan, a flood-prone area near the old port that Ahok cleared of tenants in April with little warning or compensation. Some of the families have since returned to adjacent land and, with FPI help, rebuilt their mosque. Only its name has changed: from al-Ikhlas—“sincerity”—to al-Jihad. + +None of this means that Indonesia is lurching in a violently Islamist direction. For instance, although the jihadists of Islamic State have claimed a handful of adherents among young Indonesians, the organisation and its methods are condemned even by FPI hardliners. Yes, the aims of those hardliners include changing the constitution to force Muslims to follow Islamic law and curbing minorities’ rights. But little suggests that most recent protesters cared about such things. Many attended the gathering on December 2nd out of pride at taking part in such a vast communal prayer meeting. And in Pasar Ikan residents who attended the protests claim that their problem with Ahok is certainly not that he is ethnic Chinese; nor, really, because of his perceived blasphemy; but simply because of his callous treatment of them. If the FPI hoped for fertile ground, they will have to look elsewhere. + +Yet, for two reasons, the implications of the Ahok saga will be long-lasting. First, however much they deny it, Ahok’s rivals in the governor’s race gain from his travails. And that race is fast becoming a proxy for the next presidential one, in 2019. At the moment Jokowi’s popularity is sky-high. The only way for presidential hopefuls to dent him is to link him to his former vice-governor. As it is, the governor’s race was transformed in September when Agus Harimurti Yudhoyono resigned his army commission to run for the job. The telegenic, Harvard-educated 38-year-old is the elder son of the previous president, Susilo Bambang Yudhoyono. His family has national aspirations for him. + +Who are the real fifth columnists? + +Second, and of much more concern than the likelihood of politicians using Ahok’s predicament for political gain, are machinations by army generals. The FPI itself is a creation of the security forces, after the dictatorship of the late Suharto, to counter leftist students. Today, it remains useful for the army to back the FPI as a way of reasserting the domestic influence it lost after democratisation in the late 1990s. Many generals, like the FPI, see enemies everywhere, including ethnic Chinese Indonesians who control successful businesses, some of them close to Ahok. Meanwhile, the ambitious if somewhat eccentric army chief, Gatot Nurmantyo, sees China as a hostile power waging a “proxy war” aimed at corrupting Indonesia’s youth. He also accuses China of seizing the economy’s commanding heights (Jokowi has encouraged a lot of mainland Chinese investment in infrastructure). + +In this context, the growing insinuation that Ahok is in some sense a Chinese fifth columnist is disturbing. Parts of the army were behind bloody riots aimed at ethnic-Chinese Indonesians in 1998, and the army was central to the vast anti-Chinese pogroms of 1965. At best, Ahok’s persecution represents a blow to the rights of all Indonesian minorities—Ahmadiyah, Christians and indeed gay people. At worst, the risk of communal bloodshed like that of two decades ago is closer. Indonesians should jealously guard their hard-earned reputation for tolerance. + +This article appeared in the Asia section of the print edition under the headline “The politics of taking offence” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21712161-countrys-reputation-tolerance-now-doubt-persecution-christian-mayor/print + + + + + +上一项 文章 章节 下一项 + + + + + +China + + + + +China and America: Warning shot + +History: The mother of invention + + + + + +文章 章节 下一项 + +Warning shot + +China seizes an underwater drone and sends a signal to Donald Trump + +Tough times loom for America in the South China Sea + +Dec 24th 2016 | BEIJING + + + +IT WAS an operation carried out with remarkable cool. On December 15th, less than 500 metres away from an American navy ship, a Chinese one deployed a smaller boat to grab an underwater American drone. The object was then taken to the Chinese ship, which sailed off with it. Point deftly made. The incident occurred in the South China Sea, in which China says the Americans have no business snooping around. By seizing the drone, it has made clear that two can play at being annoying. + +Mercifully no shots were fired. After remonstrations by the Americans, China agreed to give the drone back “in an appropriate manner”. It chose its moment five days later, handing the device over in the same area where it had snatched it. The Pentagon, though clearly irritated, has downplayed the drone’s importance, saying it cost (a mere) $150,000 and that most of its technology was commercially available. The drone was reportedly carrying out tests of the water’s properties, including salinity and temperature. + +But it may turn into less of a game. Relations between the two nuclear powers, never easy at the best of times, are under extra strain as Donald Trump prepares to take over as president on January 20th. Mr Trump has already angered China by talking on the phone to Taiwan’s president, Tsai Ing-wen, and challenging China’s cherished “one-China” policy, crucial to which is the idea that Taiwan is part of it. + + + +The capture of the drone took place on the outer perimeter of China’s expansive claim to the sea, about 50 miles (80km) from the Philippine port of Subic Bay, which was once home to a large American naval base (see map). It appeared calculated to show China’s naval reach, with only minimal risk of any conflict—the American ship that was operating the drone, the Bowditch, is a not a combat vessel. Once in office, however, Mr Trump could face tougher challenges, exacerbated by China’s growing presence in the South China Sea: it appears to be installing weapons on islands it has been building there. + +His two predecessors were each tested by a dangerous military standoff with China in their first months in office. With George Bush it involved a mid-air collision in April 2001 between an American spy-plane and a Chinese fighter-jet off China’s southern coast. The Chinese pilot was killed and the disabled American plane made an emergency landing at a Chinese airfield. There the crew of 24 was released after 11 days of painstaking diplomacy. The aircraft, full of advanced technology, was returned—in pieces—months later. + +In March 2009 it was Barack Obama’s turn. According to the Pentagon, an American surveillance ship, the Impeccable, was sailing 75 miles from China’s coast when it was buzzed by Chinese aircraft and then confronted by five Chinese ships. First the Chinese forced it to make an emergency stop, then they scattered debris in front of the American ship as it tried to sail away. They also attempted to snatch sonar equipment it was towing. The Impeccable soon returned—this time in the reassuring company of an American destroyer. + +For now, feuding between Mr Trump and China is less nail-biting. In Twitter messages, Mr Trump bashed China for taking the drone and later said China should keep it. Chinese media have in turn bashed Mr Trump. One newspaper said he had “no sense of how to lead a superpower”. Global Times, a nationalist newspaper in Beijing, said that China would “not exercise restraint” should Mr Trump fail to change his ways once in the White House. He would be wise to study the form. + +This article appeared in the China section of the print edition under the headline “Warning shot” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21712159-tough-times-loom-america-south-china-sea-china-seizes-underwater-drone-and-sends/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Those who control the past... + +What China claims to have invented + +Golf, football—you name it + +Dec 24th 2016 | XI’AN + +China 1, Britain 0 + +EIGHT is a lucky number in China. How fortunate it was, then, that a team of more than 100 scientists was able, after three years of research, to declare that ancient Chinese had achieved no fewer than 88 scientific breakthroughs and engineering feats of global significance. Their catalogue of more than 200 pages, released in June, was hailed as a major publishing achievement. + +All Chinese schoolchildren can name their country’s “four great inventions”: paper, printing, the compass and gunpowder. Now it appears they have a lot more homework to do. The study purports to prove that China was first with many other marvels, including the decimal system, rockets, pinhole imaging, rice and wheat cultivation, the crossbow and the stirrup. + +It is no coincidence that the project, led by the prestigious Chinese Academy of Sciences, got under way a few months after Xi Jinping took over as China’s leader in 2012. Mr Xi has been trying to focus public attention on the glories of China’s past as a way to instil patriotism and provide a suitable historical backdrop for his campaign to fulfil “the Chinese dream of the great rejuvenation of the Chinese nation”. + +Mr Xi is building on a long tradition among the Communist Party’s propagandists of claiming world firsts. “China invented Lassie,” ran a headline in Global Times, a party-controlled newspaper, about dogs being domesticated in China 16,000 years ago (another group of scientists reckon China first did this 33,000 years ago). In 2006 official media shocked the Scots with an assertion that China invented golf a millennium ago, hundreds of years before the game took off in Scotland. + +As a lover of football, Mr Xi likes drawing attention to China’s pioneering of that sport, too. On a visit to Britain in 2015 he stopped at one of the country’s most famous football clubs, Manchester City. There he was presented with a copy of the first rules for the modern game (drawn up by an Englishman in 1863). In return, he handed over a copper representation of a figure playing cuju, a sport similar to football invented by China 2,000 years ago (see picture, from a football museum in Shandong province). It was apparently popular both among urban youths and as a form of military fitness training. Mr Xi would like a great rejuvenation of this, too. In 2014 he announced plans to put football on the national curriculum. The aim is to make China a “first-class power” in football by 2050 (it has a long way to go). + +The growing attention that China pays to its ancient achievements, real and exaggerated, contrasts with the almost total rejection of them by Mao Zedong after he seized power in 1949. In Mao’s China history was not something to celebrate. A central aim of his Cultural Revolution was to attack the “four olds”: customs, culture, habits and ideas. Many Chinese dynasties destroyed some glories of the previous one, but the Communists took this to new extremes. Across the country state-sponsored vandals destroyed temples, mansions, city walls, scenic sites, paintings, calligraphy and other artefacts. + +That began to change after Mao died in 1976. Now Mr Xi claims that Chinese civilisation “has developed in an unbroken line from ancient to modern times”. He glosses over not just the chaos and destruction of the Mao era but the long centuries when the geographical area now called China was divided into many parts, and even run by foreign powers (Manchu and Mongol). + +The party also wants to use ancient prowess to boost China’s image abroad and to counter widespread (and often unfair) impressions in the West that the country is better at copying others’ ideas than coming up with its own. The four great inventions were one of the main themes at the opening ceremony of the Olympic Games in Beijing in 2008, an event that China saw as its global coming-out party after decades of being treated with suspicion and contempt by foreign powers. + +Envy of the West’s rapid gains in technology since the 19th century has been a catalyst of Chinese nationalism for over 100 years. It fuels a cultural competitiveness in China that turns ancient history into a battleground. This was evident in China’s prickly response to a recent documentary made by the BBC and National Geographic, which suggested that China’s famous terracotta warriors in Xi’an showed Greek influence. Some people interpreted this as a slight. One Chinese archaeologist dismissed the theory as “dishonest” and having “no basis”; another said that foreign hands could not have sculpted the figures because “no Greek names” were inscribed on their backs. Likewise in 2008 Boris Johnson, then mayor of London, was derided for saying that table tennis originated not in China but on Victorian dining tables and was known as whiff-whaff. + +Just a slight inconsistency + +The publication of the 88 achievements, however, has drawn attention again to an enduring mystery: why, after a long record of remarkable attainment in technology, did Chinese innovations largely cease for the 500 years or so leading up to the collapse of the last imperial dynasty in 1911? As state media observed, few of the inventions on the new list belong to this period. This puzzle is often referred to as the “Needham question”, after a British scientist and Sinologist, Joseph Needham. (It was he, in his study of China’s ancient science in the 1950s, who first identified the four great inventions—before then most people thought they had emerged in the West.) A member of the team that produced the list said the question deserved “deep reflection” and would be a topic of future research. + +Mr Xi skates over this. He lauds Zheng He, a eunuch who launched maritime voyages from China across the Indian Ocean from 1405, as one of China’s great innovators—an early proponent of a vision of China that Mr Xi would like to recreate: prosperous, outward-looking and technologically advanced (the admiral’s massive boat is number 88 on the list). Yet he fails to point out that soon after Zheng He’s explorations China turned inward, beginning its half-millennium of stagnation. + +In this 15th-century turning point, reformists in China see an obvious answer to Needham’s question: isolation from the rest of the world is bad for innovation. They take heart in China’s efforts since the 1970s to re-engage with the West, but lament the barriers that remain. With luck, it will not take 100 state-sponsored Chinese scientists another three years to reach the same conclusion. + +This article appeared in the China section of the print edition under the headline “The mother of invention” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21712173-golf-footballyou-name-it-what-china-claims-have-invented/print + + + + + +上一项 文章 章节 下一项 + + + + + +Middle East and Africa + + + + +The Democratic Republic of Congo: There will be trouble + +“Jungle justice”: Trial by fire + +Donald Trump and Israel: An American embassy in Jerusalem? + +Silencing dissent in Syria: Assad’s torture dungeons + + + + + +文章 章节 下一项 + +If he stays there will be trouble + +Congo’s president refuses to go + +The constitution says Joseph Kabila is no longer president. He begs to differ + +Dec 24th 2016 | KINSHASA + + + +CAN a thin blue line stop a revolution? In Kinshasa, the capital of the Democratic Republic of Congo, police are doing their best. On December 19th, the last day of Joseph Kabila’s final presidential term, they stood on street corners and at petrol stations, wrapped in body armour and clutching rifles. They arrested dozens of political activists and surrounded the houses of opposition politicians. The message was clear: stay at home, or risk being shot. Three cops took a short break to rob your correspondent, but most concentrated on suppressing dissent. + +For now Mr Kabila, who has ruled Congo since inheriting the job from his dad in 2001, has the upper hand. But Congo, an unstable country of 80m, is plunging into a political no-man’s-land. No head of state since independence has left office peacefully after an election. The war that followed the overthrow in 1997 of Mobutu Sese Seko, a tyrant who had ruled for three decades, led to the deaths of hundreds of thousands or possibly millions, mostly from hunger and disease. One victim was Mr Kabila’s father, who was assassinated. + +Tension has been building since it became clear that Mr Kabila would neither hold elections in November nor step down. By law presidents are limited to two terms of five years each. Mr Kabila says that since elections have not been held—a failure for which he is largely to blame—he should stay in power until they are. Indeed, for him to leave “would be a violation of the constitution”, said Kikaya Bin Karubi, an ally of Mr Kabila’s, at a press conference on the 19th. + +In the days before the deadline flights out of Kinshasa were packed with wealthy Congolese and foreign workers. At the ferry port where rusting speedboats cross the river to neighbouring Congo-Brazzaville, an expensively dressed family clambered out of a blacked-out SUV, their luggage carried by six porters. “We are leaving because of the 19th,” said a small boy clutching an iPhone. + +Parts of Kinshasa had seemed primed for revolution. “They will put police there to shoot us, but we won’t be afraid,” said a 32-year-old man called Jean-Claude, on a street corner in Limete, an opposition district. Another man, Malu, wearing a necklace emblazoned with UDPS, the initials of an opposition party, thrust a leg out to show a bayonet scar. “What Mr Kabila’s police did to us, we will do to him. Even if it takes days, at the end, the police will be running from us.” + + + +Yet on the day itself the opposition, which had promised to rally against Mr Kabila’s refusal to quit, was largely mute. Étienne Tshisekedi, an elderly but influential politician who returned from exile in July to be greeted by adoring crowds, did not say a word. Moïse Katumbi, a wealthy former ally of Mr Kabila who fled into exile in May, sent a dull video message from Brussels. “We do not have the power to tell the people of Congo what to do,” complained Martin Fayulu, an opposition leader who, in September, personally organised and led protests. + +Having faced down the Kinshasa street, Mr Kabila may be even less willing to compromise. Certainly he will continue his “glissement”, or slippage. He has promised to organise elections by April 2018. That gives him time to find a way to change the constitution to stay in power, or else to line up a replacement who can be trusted to protect his health and his family’s wealth. + +Jason Stearns, an analyst at the Congo Research Group, a watchdog in New York, reckons that the next year will be punctuated by protests. With so many people unhappy, riots could start over almost anything, from a wrongful arrest to the price of sweet potatoes. Already, the economy is weakening, and with it the patronage that Mr Kabila can dispense. Congo makes most of its hard currency from copper and other minerals, so it has been clobbered by the commodities slump. Over the past year the black-market exchange rate of the Congolese franc has fallen from around 900 per dollar to 1,250. Civil servants are not being paid. Traders grumble. “Nobody has any money”, says Jean Kaninda, who sells toothpaste and detergent. “I have to pay for my stock in dollars but I cannot raise my prices in francs.” + +If protests erupt and are bloodily put down, international isolation may follow. On December 12th America imposed financial sanctions on Kalev Mutondo, Mr Kabila’s chief spy. The EU has placed travel bans on seven other bigwigs. Angola, Congo’s neighbour, has suggested that the president should find a way to step down. + +The question now is how long the peace can hold. In Limete a man calling himself Jerry predicts that an opposition victory will not come quickly—but it will surely come. “We are tired of Kabila...He kills us every day. But Kabila will die, day-by-day, week-by-week, but he will die.” + +This article appeared in the Middle East and Africa section of the print edition under the headline “There will be trouble” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21712132-constitution-says-joseph-kabila-no-longer-president-he-begs/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Trial by fire in Nigeria + +Suspects are beaten and burned by “jungle justice” vigilantes + +Why criminals prefer the cops to the mob + +Dec 24th 2016 + + + +IN A sweaty restaurant in Lagos, Ajayi Oluwatosin David, a member of a government-affiliated paramilitary group, displays a picture on his cell phone of three alleged kidnappers lying naked before the feet of a crowd. + +A day earlier, security guards had caught the trio, stripped them, taken photographs and turned them over to the police. Had Mr David’s colleagues not been on the scene, the mob might have beaten the suspects, wrapped them in petrol-soaked car tyres and set them ablaze. That is what happened in April to a robber caught stealing a television in a slum in Nigeria’s commercial capital. + +Vigilante killings of suspected criminals happen often enough in Nigeria that they have their own moniker: jungle justice. Some are the result of hasty verdicts and mistaken identities: in 2012 four college students were wrongly accused of theft and killed by riled-up neighbours near the southern city of Port Harcourt. + +Police and politicians condemn these and other killings, and the Nigerian senate is considering a bill aimed at cracking down on mob justice. But experts say they go on because crime is rampant and many people do not trust the law. Security firms say Nigeria is Africa’s kidnap capital and that policemen are often involved. + +“The feeling is that by handing this suspect over to the police, the police will release them and collect money from them,” says Innocent Chukwuma, a public-safety and security expert. There is some truth to this: Nigerian law does allow certain criminal suspects to post bail, and the police are staggeringly corrupt. Many officers spend their days mounting roadblocks to extort cash from drivers. People who report a crime are often told to pay up or the cops won’t investigate it. + +Aware of its poor reputation, in 2015 Nigeria’s constabulary put together a unit to probe complaints against officers. Thus far none of the grievances reported to it has been resolved, says Okey Nwanguma of the Network on Police Reform in Nigeria, a pressure group. “People don’t have confidence in the police so they prefer to take laws into their own hands and dispense mob justice,” says Mr Nwanguma. + +When they do, there is usually someone nearby with a camera to record the macabre episode. In October, for instance, horrific photographs circulated on social media showing a beaten and bloody suspect hogtied and suspended from a beam in Benin City, east of Lagos. Other photographs doing the rounds in recent months show people being burned alive after being accused of crimes ranging from rape to the theft of a television. + +Mr David’s security organisation, called Man O’War, patrols markets and neighbourhoods in Nigeria and detains suspected criminals before handing them over to the police. He says it is essential to strip and photograph suspects so that people will recognise them if they return. Beatings by bystanders are also justified, in his view. “The civilians have the right to beat a criminal if they caught [him], because he’ll be struggling,” Mr David says. But the public has no right to kill suspects, he says. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Trial by fire” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21712099-why-criminals-prefer-cops-mob-suspects-are-beaten-and-burned-jungle/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Donald’s daring diplomacy + +Moving the US embassy to Jerusalem + +Death-knell or defibrillator for the peace process? + +Dec 24th 2016 | JERUSALEM + +A Zionist plot + +A PINE grove in south Jerusalem has remained untouched for decades. This is the site reserved for America’s embassy in Israel (pictured). But like every other country that recognises the Jewish state, America has its embassy in Tel Aviv rather than the holy city. Donald Trump may change that. + +He was not the first American presidential candidate to promise to move the embassy to Jerusalem in line with the Jerusalem Embassy Act, which was passed by Congress in 1995. But every president since has signed a national-security waiver suspending the act, arguing that Jerusalem’s status will be determined only after a peace agreement between Israel and the Palestinians. Although Israel has considered Jerusalem to be its capital since December 1949, most other countries cling to the UN resolution from 1947 that divided Palestine to create the Jewish state. It said that Jerusalem should remain a corpus separatum, or separate entity belonging to no country. + +Mr Trump’s representatives have, however, said that he intends to move the embassy. Last week he named David Friedman as ambassador to Israel. A bankruptcy lawyer, Mr Friedman is an outspoken supporter of the Israeli far right, has donated money to Jewish settlements in occupied territories and says that members of J Street, a liberal Jewish organisation, are “far worse than Kapos” referring to Jewish collaborators in Nazi concentration camps. On October 27th Mr Friedman told a gathering in Jerusalem that the State Department “has been anti-Semitic and anti-Israel for the past 70 years”. If its staff were to oppose moving the embassy, they would be fired by Mr Trump, he said. + +The prospect of the embassy’s move has been greeted with jubilation by members of Binyamin Netanyahu’s cabinet and by dire warnings from the Palestinians. Saeb Erekat, a Palestinian Authority official, said it would “destroy the peace process” and launch the region on a “path of chaos”. + +Yet it may also revive moribund talks. “Trump has already shown he is prepared to shake things up,” says a veteran Israeli diplomat. “Maybe moving the embassy could actually be shock therapy to the peace process and bring the sides back to the table.” + +This article appeared in the Middle East and Africa section of the print edition under the headline “An American embassy in Jerusalem?” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21712098-death-knell-or-defibrillator-peace-process-moving-us-embassy/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Pits of hell + +Assad’s torture dungeons + +Dissidents are being exterminated in Syrian jails + +Dec 24th 2016 | GAZIANTEP + +No justice, no peace + +IT WAS clear that Hamza Ali al-Khateeb had been tortured before he died. Returned to his family a month after he was arrested at a peaceful protest in April 2011, the 13-year-old boy’s dead body was covered with cigarette burns and lacerations. His jaw and both kneecaps had been smashed and his penis had been cut off. + +As demonstrations against the regime’s rule spread across the country, the boy’s death at the hands of the regime’s security forces became a powerful symbol of its brutality. “I can only hope that this child did not die in vain but that the Syrian government will end the brutality and begin a transition to real democracy,” said Hillary Clinton, who was America’s secretary of state at the time. During the early days of the uprising many shared her hope. + +Almost six years on that hope has been crushed. The scale of the killing carried out inside Syria’s torture dungeons is difficult to gauge: human-rights groups say the regime has tortured to death or executed between 17,500 and 60,000 men, women and children since March 2011. The dead, often buried in mass graves or incinerated, are rarely returned to their relatives. The official death certificates that are sometimes handed to relatives typically say that the victims died from natural causes. + +Tracking the number of people in detention is also difficult. Mr Assad’s security forces have converted sports stadiums, abandoned homes, hospitals and schools into jails. Loyalist militias from Iraq, Lebanon and Iran also operate their own secret sites. At least 200,000 people are thought to remain in detention, most of them in government facilities that are closed to the International Committee of the Red Cross. + +What little is known about Mr Assad’s torture machine comes from survivors swapped in prisoner exchanges or released after bribing officials. Relatives of the dead, defectors and hundreds of thousands of government files smuggled out of the country by activists add to their accounts. Together, they paint a picture of a regime that has tortured and murdered on an industrial scale to silence dissent. + +Take the case of Muhannad, a 28-year-old university student who organised some of the first peaceful protests in Aleppo. He was arrested in 2011 by agents from air-force intelligence, blindfolded and taken to a cell where he was strung from the ceiling by his wrists. He was tortured for eight days until he signed a false confession that he had killed regime soldiers with the help of his mother. + +After that he was moved to an air-force intelligence base near the presidential palace in Damascus, where he underwent two years of almost daily interrogation and torture. Sometimes, for amusement, the prison guards would force the inmates to strip naked and play at being dogs. As they drank alcohol and smoked water pipes, the guards stubbed out cigarettes and tipped hot coals over the prisoners’ backs. “You have to work hard to amuse them or you get beaten,” he says. + +Murder for fun + +Death at the al-Mezzeh Air Force Intelligence prison was routine. Muhannad remembers how, during the month of Ramadan in 2012, the guards killed 19 prisoners in a single night. “They had brain seizures, severe bleeding from the torture,” he says. + +On another occasion, a teenage boy returned to his prison cell in tears. “They’d executed his brother in front of him. Then they’d bent him over a table and raped him with a stick. They were laughing and saying ‘a new woman has been opened.’” Two other cellmates were beaten to death by guards as they waited to have their hair cut. + +When the infection from an open wound in his leg spread, the guards took Muhannad to a nearby military hospital. Patients were forced to sleep with shoes in their mouths. If the shoe fell, nurses beat them with stiff plastic pipes. Muhannad says he saw a nurse club a patient to death in his bed after he asked for medicine. + +It was here, at Hospital 601, that a forensic photographer working for Syria’s military police force photographed the bodies of more than 6,000 people killed in government detention facilities between 2011 and 2013. The images show rows of naked, emaciated corpses with numbers written on their foreheads. Most bear signs of torture. Smuggled out of the country on flash drives, these images provide some of the most damning evidence of the regime’s systematic use of torture. + +There is little that can be done to bring Mr Assad and his thugs to justice. The UN says the regime’s use of torture and the “mass death of detainees” inside its prisons amount to crimes against humanity. Yet rights groups say that the UN, in its drive to negotiate an end to the conflict, has largely ignored the regime’s atrocities. The Security Council’s last attempt to refer Syria to the International Criminal Court failed when Russia and China objected. + +“For nearly six years the Syrian people have watched Mr Assad butcher his own people. They look at him and think, ‘This person took away my son.’ How do you expect them to accept any deal that keeps the regime in power?” says Saeed Eido, who chronicles atrocities for the Syrian Institute for Justice, set up in Aleppo in 2011. + +On December 2nd Syrian intelligence officials returned the dead body of Ibrahim al-Ahmed to his family. They were told that the 25-year-old, who had been missing for four years, had died of a heart attack. Yet his emaciated body, which the family barely recognised, was disfigured by missing teeth, a leg broken by a blunt tool, deep lacerations across his back, bruises and cuts. “There was no funeral. We took him straight from the fridge to the grave,” says Ibrahim’s brother. “When people in Syria know their relative has been killed in prison, they don’t make any noise about it, but it is impossible to forget.” + +This article appeared in the Middle East and Africa section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21712142-dissidents-are-being-exterminated-syrian-jails-assads-torture-dungeons/print + + + + + +上一项 文章 章节 下一项 + + + + + +Europe + + + + +Attack in Berlin: The spectre of terror + +Terrorism in Ankara: Overspill from Syria + +Christine Lagarde: Grace under pressure + +Polish politics: Winter of discontent + +Charlemagne: A warning from the past + + + + + +文章 章节 下一项 + +Attacks in Berlin + +Killings at a Berlin Christmas market test Germany’s nerve + +At least 12 people are dead and 50 have been wounded, many seriously + +Dec 24th 2016 | BERLIN + + + + + +IN THE aftermath, police officers with automatic weapons guarded a cordon 300 metres around the Breitschiedplatz, a busy junction in the middle of Berlin’s shopping district. Beyond the barricades twinkled the sparkly lights on the roofs of little wooden chalets offering Glühwein. A screen normally used for adverts urged people to go home and ignore rumours. Other Christmas markets and some bars had emptied as the news filtered through. In train stations, armed police officers outnumbered passers-by. By late in the evening of December 19th the streets in the normally restless, insomniac German capital were eerily quiet. + +All of which contrasted starkly with the carnage and chaos of a couple of hours previously when, at 8.15pm, a lorry had sped into the throng of the Christmas market at Breitscheidplatz. Jan Hollitzer, the deputy editor of Berliner Morgenpost, whose offices are nearby, told Canada’s CBC television that he heard noise and screaming from a group of destroyed huts. “Then I saw lights, many Christmas lights, that were shaking. Then the truck came out of the Christmas market again, destroyed some small houses and came out on the street.” By the morning 12 people had died and about 50 were wounded, many seriously. The lorry carried a dead Polish citizen in the passenger seat, perhaps its original driver, who had been shot. A man suspected of being the perpetrator was later arrested nearby. As The Economist went to press German media reported that he was a Pakistani asylum-seeker who had arrived in Germany in the past year. + +Angela Merkel, the chancellor, said: “We have to assume we are dealing with a terrorist attack. I know that it would be particularly hard to bear for all of us if it was confirmed that the person who committed this crime had asked for protection and asylum in Germany.” + +The attack resembled one in Nice on July 14th, when 86 people were murdered at Bastille Day celebrations by a Tunisian, inspired by Islamic State, who drove a heavy lorry through the crowds. The location of the Berlin killings was significant: the market is in the shadow of the Kaiser-Wilhelm Memorial Church, preserved in its bombed-out state since 1945 as a symbol of Germany’s yearning for peace. + +It comes amid fears about jihadist extremists slipping into the country with the influx of refugees admitted under the “welcome culture” of Mrs Merkel. Unlike other European countries, Germany had not in recent years seen an attack on the scale of these killings. But for months evidence had been mounting about potential jihadist plots. In the autumn several men were arrested on suspicion of planning violence. In November America’s State Department warned travellers in Europe about plans to attack Christmas markets (such threats go back at least to 2000, when a plot to bomb the market in Strasbourg was foiled). Hence the impression in Berlin on December 19th of an establishment that had long readied itself for this moment. + +The incident highlights the tensions within Germany. Markus Pretzell, a member of the European Parliament for the right-wing Alternative for Germany (AfD) party, tweeted that the victims were “Merkel’s dead”. Rumours rippled across the web suggesting that the perpetrator might be Chechen or even Kurdish, and circulating photos of unconnected men. All of which comes near the start of a German election year made unusually unpredictable by the rise of the AfD. + +No longer the exception + +In recent months Mrs Merkel has stabilised her position following the peak of the refugee crisis: pleasing her party’s base by flirting with a burqa ban and talking tough on the numbers of failed asylum-seekers deported. Before December 19th her approval ratings were rising again and her party’s rift with the Christian Social Union, its more conservative Bavarian sibling, was closing. But this progress is unsteady, and vulnerable to events. + +To be sure, for now Germany’s authorities feel in charge of things. “Berliners, like Londoners, are pretty resilient. I expect they will take this on the chin,” says Constanze Stelzenmüller of the Brookings Institution, a think-tank. But if the attack in Berlin marks the start of a French-style jihadist campaign in Germany, it could herald a turning point in the country’s politics. Conscious of its historical burden and bound by its political system to put moderate, consensus-oriented coalitions into power, Germany is unusually immune to populist sensationalism compared with many of its neighbours. But that may not last if the killing goes on. + +This article appeared in the Europe section of the print edition under the headline “The spectre of terror” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21712171-least-12-people-are-dead-and-50-have-been-wounded-many-seriously-killings-berlin/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Assassination in an art gallery + +An ambassador’s murder may push Russia and Turkey together + +The apparent killer was a Turkish policeman angry about Russian atrocities in Syria + +Dec 24th 2016 + +Outraged by Aleppo + +ANDREI KARLOV, the Russian ambassador to Turkey, was only moments into his speech at an art gallery in Ankara, Turkey’s capital, on December 19th when the man standing behind him, disguised as a member of his security team, fired the first bullet into his back. His assassin, identified as an off-duty Turkish police officer, claimed to be retaliating for Russian war crimes in Syria. “We die in Aleppo, you die here,” he shouted. He also repeatedly invoked the Prophet Muhammad, before dying in a shoot-out with other policemen. + +The attack came amid largely peaceful protests in Turkish cities against Russian military intervention to prop up President Bashar al-Assad in Syria. + +Recep Tayyip Erdogan, Turkey’s president, and his Russian counterpart, Vladimir Putin, both referred to the shooting as “a provocation” and pledged to strengthen co-operation against terrorism. The Turkish foreign ministry said it “would not allow” the assassination to damage relations, while officials also confirmed that a meeting between the Turkish, Russian and Iranian foreign ministers to discuss the situation in Syria, scheduled to take place on December 20th in Moscow, would go ahead. + +Mr Karlov was posted to Ankara in 2013 and remained there even after Turkey’s air force shot down a Russian fighter-jet near the Syrian border in November 2015. Mr Erdogan apologised for the incident and met Mr Putin in St Petersburg over the summer. The two sides have since initiated a rapid detente, signing a pipeline deal and pledging to upgrade economic relations. + +They have also found some common ground in Syria. That has been no easy task. Turkey has backed Islamist rebels against the Assad regime since the start of the war. Russia has bombed them for over a year. Yet it was with Russia’s blessing that Mr Erdogan’s troops were able to enter northern Syria in August, pushing Islamic State (IS) jihadists—and Kurdish fighters—from the border area. More recently they negotiated a ceasefire and an evacuation from east Aleppo, besieged for months by Syrian and allied forces. + +As The Economist went to press, it remained unclear whether Mr Karlov’s killer had been out to avenge Russia’s actions in Syria, as he proclaimed, or to subvert ties between Turkey and Russia, as officials on both sides suggested, and whether he had acted alone. Some Turkish officials immediately pointed a finger at the Gulen movement, a sect accused of spearheading a failed coup attempt that killed 270 people in July. + +Turkey has been reeling from terrorist violence since 2015, when an IS suicide-bomber helped bring down a fragile ceasefire between security forces and Kurdish insurgents. Mr Karlov’s murder, the first of a foreign envoy on Turkish soil, may have wider ramifications. Western countries are right to worry about the extent of Turkey’s rapprochement with Russia, yet they have even more reason to hope that Mr Erdogan and Mr Putin do not come to blows. The two strongmen appear to be doing the their best to contain tensions. Their relationship may emerge from the ambassador’s death stronger than ever. + +This article appeared in the Europe section of the print edition under the headline “Overspill from Syria” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21712117-apparent-killer-was-turkish-policeman-angry-about-russian-atrocities-syria-ambassadors/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +French politics + +A court in France finds Christine Lagarde guilty of negligence + +Any fallout will be at the IMF + +Dec 24th 2016 | PARIS + + + +AS A teenager, Christine Lagarde represented France as a synchronised swimmer, a sport that demands endurance and flexibility. She may need those skills again. Ms Lagarde, who has been the boss of the International Monetary Fund (IMF) since 2011, was convicted on December 19th by a court in Paris in a case related to her spell as French finance minister nearly a decade ago. But because its ruling looks half-hearted—it imposed no fine or prison term—she may keep her post at the fund. + +Few expected a guilty verdict. Ms Lagarde’s supporters say it is a political vendetta: even the prosecutor had tried to withdraw the case after more serious charges were dropped. But the Court of Justice of the Republic, which is made up of more politicians than judges and tries only senior political figures, ruled it should proceed. It found that she had been negligent in the use of public money over her decision, in 2008, to allow an out-of-court settlement in a legal dispute between the government and a businessman, Bernard Tapie. That settlement appeared questionable because Mr Tapie had backed Nicolas Sarkozy, then president of France and Ms Lagarde’s boss, in his election campaign. Arbitrators initially awarded Mr Tapie €403m ($626m) in compensation. + +No one suggests Ms Lagarde sought or gained any personal benefit from the episode—and she maintains she acted in good faith. Within hours of the verdict, France’s government said it had full confidence in her ability to lead the fund. Inside the organisation support for Ms Lagarde is strong—staff see her as popular, professional and reliable, and she is said to be well-liked by representatives from Europe, America and emerging markets. In the aftermath of a much more unsettling scandal involving her predecessor, Dominique Strauss-Kahn, who stood down after he was accused (but never convicted) of sexual assault in 2011, she has been seen as competent and calm. + +The fund’s board met on December 19th, confirming that it backed her. It had confirmed her for a second five-year term earlier this year, when the prospect of her trial in Paris was already understood. The fund wants to avoid upheaval: this would be an awkward moment to cast around for a new boss. At both the fund and the World Bank there is anxiety about China’s ambition to promote alternative international financial bodies, such as the Asian Infrastructure Investment Bank. A search for a new IMF boss would inevitably rekindle old debates about the over-representation of European and other rich countries in global bodies. Ms Lagarde is the 11th European in a row to run the fund. + +Such a debate might be manageable in normal times. But insiders have little idea what role Donald Trump might play in choosing a new IMF chief. His views on the global financial architecture are hard to discern. Under Ms Lagarde the fund has taken strong stances on matters such as climate change, expressing views that Mr Trump may not share. Ms Lagarde herself has assailed Mr Trump’s trade policies, without naming him. The IMF board is probably anxious to keep a low profile until the fuss over Ms Lagarde’s conviction passes. This may be the moment for Ms Lagarde to hold her breath and hope. + +This article appeared in the Europe section of the print edition under the headline “Grace under pressure” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21712101-any-fallout-will-be-imf-court-france-finds-christine-lagarde-guilty-negligence/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Winter of discontent + +Protests grow against Poland’s nationalist government + +The Law and Justice party restricts freedom of assembly and the movement of journalists in parliament + +Dec 24th 2016 | WARSAW + +More hacks please, we’re Polish + +POLAND’S populist government, led by the Law and Justice (PiS) party, has seen its fair share of protests since coming to power in late 2015. Demonstrators gathered on the streets of Warsaw when the government sought to weaken the constitutional tribunal and pack it with loyalists. They did so again when it purged more than 130 journalists from the state media. Thousands of black-clad women took to the streets against a plan to make it even harder to get an abortion. But the wave of protests since December 13th, including a parliamentary sit-in by opposition MPs, suggests that discontent is still growing. + +The latest discord started on December 13th, the 35th anniversary of martial law in communist Poland. That day the government passed a law restricting freedom of assembly. Sites for demonstrations can be reserved for up to three years, it says, but preference will be given to “cyclical” rallies marking “especially…important events for Poland’s history” (rather than, say, protests against the actions of the government). Any counter-protests have to be at least 100 metres away. Thousands marched in the freezing cold to denounce the reform. + +Discontent spread more spontaneously a few days later when the government proposed restricting the movement of journalists in parliament. Rather than mingle with MPs in the corridors, reporters would be confined to a separate media centre. Only the government media, now stuffed full of PiS supporters, would be allowed to record inside the parliamentary chamber. + +In protest, Michal Szczerba, an MP from Civic Platform (PO), one of the two main opposition parties, stood up to speak with a note emblazoned “free media in the Sejm [parliament]”. He was reprimanded by the speaker of the house and barred from the debate. Dozens of other politicians joined him on the podium, where they then sat for several days (see picture). + +This caused the parliamentary session to be moved to another room, where PiS politicians pushed through a budget. Other MPs say there were no opposition members present; some claim that they were not allowed into the room. “We do not know who voted, whether they really had a quorum,” says Rafal Trzaskowski, a PO politician. The vote was illegal, he thinks. + +The turning point + +The kerfuffle in the Sejm marks a new stage in Polish politics. It follows months of growing dismay at the increasingly cranky government. In July the European Commission declared that the changes made to the constitutional tribunal endangered the rule of law. PiS had three months to respond, but merely shrugged. + +Well-known politicians, including Lech Walesa, a former president whose Solidarity movement brought down communism, complain that Poland is reversing two decades of democratic progress. In an interview with Politico Mr Walesa said the EU should eject Poland. In a speech on December 17th Donald Tusk, the president of the European Council and former Polish prime minister, warned about the dangers to democracy. + +PiS’s tentacles are spreading from the government and media to civil society. In a recent interview Beata Szydlo, the prime minister, claimed that “billions” of zlotys of public funds are going to NGOs loyal to opposition politicians. To correct this, Ms Szydlo wants to set up a National Centre for the Development of Civil Society that will take over the management of funds for NGOs. Adam Bodnar, Poland’s national human-rights defender, finds this alarming. Liberal NGOs are terrified of being frozen out. In November a series of animated diagrams on state television’s evening news portrayed NGOs as a crony network that grew rich on taxpayers’ money. Arrows linked these allegations to George Soros, a Jewish philanthropist and supporter of many left-liberal organisations. + +Recent events seem to have galvanised both PO and Nowoczesna (“Modern”), two centrist parties. If they could work together, they might be able to hold the ruling party to account. Recent polls suggest that their combined support is bigger than PiS’s. And the economy faces headwinds. It grew at an annualised rate of 2.5% in the third quarter, the slowest since 2013. Foreign investors are wary. EU bodies are still mulling over how to deal with the changes to the constitutional tribunal. + +PiS supporters argue that the reactions to recent events have been overdone. The party, which leads in the polls, still has the support of many voters, particularly outside Warsaw, thanks to popular policies such as a cash hand-out for parents and slashing the retirement age. But it is skating on thin ice. + +This article appeared in the Europe section of the print edition under the headline “Winter of discontent” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21712168-law-and-justice-party-restricts-freedom-assembly-and-movement-journalists/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Charlemagne + +Why Europeans are reading Stefan Zweig again + +The writer, wildly popular in his time, now seems more apt than ever + +Dec 24th 2016 + + + +AFTER this bleakest of years for Europe, glib talk of the 1930s is in the air. The bonds of trust between nations are fraying, and the old saw that the European Union advances only in times of crisis is being tested to destruction. Populists are on the march. Britain is on the way out. And Europe’s neighbours are either menacing it (Russia) or threatening to flood it with refugees. One hyperventilating Eurocrat recently confided to your columnist that he feared another Franco-German war. + +Small wonder that gloomy Europeans are starting to dust off their Stefan Zweig. A prolific and, in his time, wildly popular author of novels, biographies and political tracts, Zweig incarnated the interwar ideal of the cultivated European. A Jew who saw his books burned by the Nazis, he was exiled first from his Austrian home, in 1934, and then from Europe. Zweig’s literary star was eclipsed by contemporaries such as Thomas Mann and Joseph Roth. But his witness to Europe’s catastrophe, and his dedication to the cause of its union, have helped restore him to popular affection. (“The Grand Budapest Hotel”, a 2014 film inspired by Zweig’s writing, may also have had a hand.) + +Zweig held the aesthete’s distaste for the grub and grind of politics, but his calls for European unity grew more urgent throughout the 1930s as the continent stumbled towards war. When it finally came, Zweig could not muster the hope he had encouraged in others. In “The World of Yesterday”, a lament composed towards the end of his life for the cosmopolitan fin-de-siècle Vienna of his childhood, Zweig declares Europe “lost” to him as it tears itself apart for the second time in living memory. In 1942 Zweig and his young wife committed suicide in their adopted home of Petrópolis, nestled in the hills above Rio de Janeiro. + +In the harsh assessment of John Gray, a critic, Zweig showed too little courage in life for his death to be considered tragic. But there is no hiding the irony in what was to follow. Less than a decade after his suicide six European countries agreed to unify their steel and coal production, establishing a club that was to evolve into the European project which Zweig had for so long urged into being. An organisation built on such prosaic foundations would doubtless not have excited the high-minded scribbler’s imagination (and for all its pan-European commingling, Brussels will never match Zweig’s Vienna). But it sought to achieve via bureaucratic means what Zweig had hoped to attain through education and culture: to make war between France and Germany not just unthinkable but impossible. + +That founding myth of what was to become the EU still animates its leaders today. In a recent speech Donald Tusk, the president of the European Council, nodded to Zweig’s warning that those caught up in historical change never notice its beginnings. Mr Tusk deplored the “trap of fatalism” that, he argued, had ensnared today’s moderate politicians facing the threat of populism. In Zweig’s time, he added, liberals gave up “virtually without a fight, even though they had all the cards”. + +Old-timers in Brussels lament the lack of vision among today’s crop of leaders, as if a transplanted Kohl, Mitterrand or Delors would be enough to restore Europe to health. But it is not only politicians whose memories of the 1940s are fading. By rendering war among its members unimaginable, the EU has undercut its own support. Without such an animating mission, some question the sacrifices of sovereignty that EU membership demands. + +The crises of recent years provide one answer. Although some of the EU’s woes can be traced to mistakes of its own making—the integration by stealth that sometimes treated voters as inconvenient, or the design flaws of the single currency—others came from outside and called for a co-ordinated reaction. Without the EU, the Russian threat would loom much larger and squabbling governments would have struggled even more to respond to the migration crisis. Problems like climate change and terrorism demand joint management. For all the EU’s missteps, Europe’s problems would be harder to solve in its absence. + +Beware of pity + +Zweig’s message is doubly seductive. His insistence on the pendulum-like nature of European history, swinging back and forth over centuries between prickly tribalism and the craving for co-operation, reassures the fearful that today’s disunity may prove temporary. His attacks on the small-minded politicians of his age satisfies the disdain in which contemporary pro-Europeans hold their leaders. “The European idea”, Zweig wrote, is “the slow-ripened fruit of a more elevated way of thinking.” Plenty in Brussels find this supercilious thought admirable. + +But as Zweig acknowledged, a supranational club can never command the affection of citizens as a nation can. His own remedy—a rotating European capital with events and festivities to ape national spectacles—eventually came to pass, albeit in diluted form. But the European Capital of Culture, alas, has not yet lifted Europeans to the state of elevated consciousness Zweig hoped for. The enduring tug of national allegiance still provides the best means to mobilise Europeans to action. If those who dream of a federal European superstate, as Zweig did, have lost the argument, better to work with the grain of national politics than to rue the idiocy of those who won. + +Ten years ago the danger for Europe was of courtly decline into irrelevance. Since then the tempo of events has quickened and the risk of disintegration deepened. The EU, that most peculiar of institutions, has not yet worked out how to leaven the need for a central authority with the democratic energy of nation-states. Today’s emergencies make the task more pressing. But the challenges in today’s rich, free, democratic and largely peaceful Europe are not those of the 1930s. Zweig began “The World of Yesterday” with a suggestion from Shakespeare: “Meet the time as it seeks us.” On that, at least, he had a point. + +This article appeared in the Europe section of the print edition under the headline “A warning from the past” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21712169-writer-wildly-popular-his-time-now-seems-more-apt-ever-why-europeans-are-reading/print + + + + + +上一项 文章 章节 下一项 + + + + + +Britain + + + + +Britain and Europe: Six months on + +The Christmas strikes: Planes, trains and political deals + +Jailhouse rocked: A prison riot + +Bagehot: The parable of Spoon’s + + + + + +文章 章节 下一项 + +Britain and the European Union + +Six months after the Brexit referendum, where does Britain stand? + +The debate over Brexit has so far been more about process than about substance. In 2017 that will change—and the going may get tougher + +Dec 24th 2016 + + + +ON ONE level, much has happened since June 23rd, when Britain voted by 51.9% to 48.1% to leave the European Union. The country has a new government led by Theresa May. She has set up two new Departments, for Exiting the EU (under David Davis) and for International Trade (under Liam Fox). After years of cuts, the civil service is growing again, to tackle the challenge of disentangling Britain from Brussels. And in his Autumn Statement Philip Hammond, the chancellor, softened previous plans to cut the budget deficit by 2020. + +On Brexit itself, however, Mrs May has done little beyond repeating her catchphrase that “Brexit means Brexit and we’re going to make a success of it.” She has promised a Great Repeal Bill to enshrine most existing EU rules into British law for continuity. And she has said she will invoke Article 50 of the EU treaty, the legal clause that sets a two-year time limit for Brexit, by the end of March 2017. + +Indeed, most public discussion on Brexit has been procedural, not substantive. Parliamentary debates have revolved around how much information MPs will be given. The courts have become involved: in January the Supreme Court will decide whether triggering Article 50 necessitates prior authority through an act of Parliament, as the High Court has already ruled. There have been disputes over how much Mrs May should reveal of her negotiating objectives. And all this before there is internal agreement within the government over what form of Brexit to aim for when negotiations begin. + +Neil Carmichael, a pro-EU Tory MP, is hoping to see a government white paper on Brexit before Article 50 is triggered. Indeed, just after the referendum such a paper was proposed by none other than Mr Davis himself. He recently said the government would not publish anything before February, but that would still leave time for a white paper and a short parliamentary act before Article 50 is invoked. + +The substance of Brexit is likely to prove more difficult than the procedure, for two reasons. One is that it will involve trade-offs the government has so far avoided debating. Most obviously, maximising barrier-free access to the EU’s single market will make it hard to take back full control of migration and laws and to cease contributions to the EU’s budget. Many more dilemmas await: for instance, the desire to maintain security and intelligence co-operation with the EU may be hard to achieve if Mrs May sticks to her insistence on escaping completely from the jurisdiction of the European Court of Justice. + +The second reason is that Britain’s 27 EU partners are likely to put a premium on unity. Mrs May was excluded from an EU summit dinner in Brussels on December 15th. There was talk of an exit bill for Britain as large as 60bn ($63bn), and of making clear that negotiation of future trade relations would follow, and not run in parallel with, the two-year Article 50 divorce settlement. Other EU leaders face political pressures at home: France, Germany, the Netherlands and possibly Italy will all have elections in 2017. + +Yet if the general gloom points to a harder version of Brexit, some signs point in the other direction. Mr Davis and Mr Hammond seem to be working together to minimise the shock of departure. Mr Davis has not ruled out making payments into the EU budget after Brexit. Several ministers have floated the possibility of continuing partial membership of the single market, the customs union or both. This week the Scottish government said it wanted to stay in the single market regardless of what happens to Britain. + +And there is a growing recognition of the economic risks of Brexit. Brexiteers have long claimed that forecasts by Mr Hammond’s predecessor, George Osborne, were too gloomy. But the Autumn Statement made clear that Brexit has a cost. Consumption has held up but investment is being cut. Banks and others in financial services are talking of job losses as positions are transferred to continental Europe. How the economy performs matters: one recent poll for Open Britain, a pro-EU lobby group, found that half of Leave voters are not ready to be made worse off as a result of Brexit. That could prod ministers towards a softer version. + +So might more realism about immigration. Thus far, this has been presented in terms of the relationship between the single market and the four freedoms of movement of capital, goods, services and people. The implication has been that to keep the first may require concessions on the second. But a number of companies in industries ranging from financial services to agriculture are making clear that migration is crucial in its own right. Indeed, some are more concerned about migration controls than they are about barrier-free access to the EU’s single market. + +Lastly, more politicians see the need for a transitional deal with the EU to avert a hard landing in March 2019. A string of recent reports from the House of Lords EU committee say this matters, especially for financial services. Mr Davis and Mr Hammond have talked up the case for transition. As Nick Clegg, a former leader of the Liberal Democrats, puts it, the fact that transition was ever controversial is “symptomatic of a strategyless approach to Brexit”. That it is now widely accepted may be a sign of growing common sense. + +This article appeared in the Britain section of the print edition under the headline “Six months on” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21712149-debate-over-brexit-has-so-far-been-more-about-process-about-substance-2017-will/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Planes, trains and political deals + +A series of planned strikes over Christmas puts Britain’s trade unions back on the agenda + +Though their economic clout has fallen, their political importance has soared + +Dec 24th 2016 + + + +CRAMMED trains, cancelled flights, late postal deliveries: the prospect of widespread strikes threatens to give many Britons a distinctly un-merry Christmas. Drivers and conductors on Southern Rail are expected to down tools on several occasions in protest at their conditions. British Airways flight attendants may ground themselves on Christmas and Boxing Day over “poverty pay”. Post Office workers are also walking out. + +Those stuck in departure lounges or with presents in the post may doubt it, but Britain’s trade unions are a dwindling force. Since peaking in 1979 their membership has fallen by nearly half, from 13m to 7m (even as the workforce has grown). Members are older: between 1995 and 2014 the proportion over the age of 50 rose from 22% to 38%. The average member strikes about a tenth as often as in the 1970s. We estimate that December will see fewer than 100,000 working days lost to strikes. That is many more than the monthly average for 2016, yet very few compared with November 2011, for instance, when more than 1m public-sector workers went on strike over austerity. Comparisons to the “winter of discontent” in 1978-79, when rubbish piled up in Leicester Square, are wide of the mark: in the worst month of 1979 nearly 12m working days were lost. + +So why the fuss? Despite general decline, certain industries have managed to maintain 1970s-style levels of unionisation. Many of them, including transport, are those whose workers run a service that no one else can offer (walkouts by train drivers or flight attendants cause unavoidable chaos in a way that those by waiters, say, don’t). The most militant unions have fared especially well. The National Union of Rail, Maritime and Transport Workers, which is involved in the Southern Rail strike, has seen its membership increase by almost a fifth since 2004. + +Today’s strikes have added political significance. Theresa May’s spokesperson accused the strikers of showing “contempt for ordinary people”. Chris Philp, a Tory backbencher, has called for strikes in industries such as transport to be legal only if at least 50% of services are maintained. Grandees from Lord Heseltine, on the party’s pro-European left, to Lord Tebbit, on its Brexiteer right, have spoken out for a crackdown. Some 20 MPs have reportedly endorsed these calls in private meetings with the pugnacious transport secretary, Chris Grayling. + +The preternaturally cautious prime minister is allergic to anything that might weaken her focus on the impending Brexit talks, as a war with the unions surely would. Moreover, the rules are already being tightened: next year ballot thresholds for strikes will rise under legislation enacted by David Cameron, her predecessor. + +Yet the temptation to pick a fight is great. Labour’s far-left leader, Jeremy Corbyn, is close to the most militant unions. At a Christmas party of Momentum, his cheerleading faction in Labour, guests toasted “so many strikes coming up right now” with bottles of beer bearing Mr Corbyn’s face. The man himself appeared on stage at the Christmas bash of ASLEF, one of the unions behind the Southern Rail interruptions. His front-bench allies refuse to condemn the strikes. Labour moderates, who grasp the toxicity of this comradeship among voters shivering on packed station platforms, privately despair. + +By taking on the unions and raising the salience of these matters, Mrs May would thus further divide Labour. She also would lower the chance of its unpopular leader being dislodged. Len McCluskey of Unite, Britain’s biggest union, which is at the centre of the threatened British Airways strike, is Mr Corbyn’s most powerful supporter. On December 6th Mr McCluskey resigned as Unite’s leader to trigger a fresh election within the union, with the aim of securing his own job until 2022. That would enable him to help keep Mr Corbyn at Labour’s helm until the next general election (due in 2020) and influence any succession battle afterwards. Any move by Mrs May to restrict strikes in “critical” sectors could hand Mr McCluskey, whose calling card is windy talk of fighting the government, victory on a plate. + +Such is the prime minister’s calculus. A war with the angry rump of the union movement could jam up Britain’s infrastructure at a time when its governmental capacity and economic competitiveness are under strain as rarely before. But it could prove a political manoeuvre of exquisite effectiveness: rallying her party, energising her leadership, dividing Labour and shoring up its unpopular leader. Even the cautious Mrs May must be considering the gamble. + +This article appeared in the Britain section of the print edition under the headline “Planes, trains and political deals” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21712150-though-their-economic-clout-has-fallen-their-political-importance-has-soared-series-planned/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Jailhouse rocked + +Britain’s prison-riot squad is being called out more often than ever + +In the first eight months of 2016 it was used four times more often than in the same period four years ago + +Dec 24th 2016 + + + + + +In November Liz Truss, the justice secretary, promised the greatest overhaul of prisons in a generation. Reform looks increasingly pressing. On December 16th more than 600 inmates at HMP Birmingham rioted for over 12 hours, some taking “cellfies” of their antics. Around 240 of those involved have since been moved elsewhere. But trouble has already broken out at the prison in Hull where 15 were sent. Such disturbances are increasingly common, judged by call-outs of the prisons’ riot squad. Falling officer numbers may mean the teams are in greater demand when cons rise up. + + + +This article appeared in the Britain section of the print edition under the headline “A prison riot” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21712148-first-eight-months-2016-it-was-used-four-times-more-often-same-period-four/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Bagehot + +The parable of JD Wetherspoon + +How the chain pub became an essential British institution + +Dec 24th 2016 + + + +HOW easy it is to dislike chain pubs: those samey, cheap, airless booze hangars that uglify the High Streets of the nation like a slick of vomit up the side of a taxi. A Telegraph columnist describes one specimen as “horrific”; a writer in the Spectator calls its kind “grim”; Will Self, an author, terms them “shit, brown dollops of establishments smeared incontinently across our cities.” Such places are murdering good old-fashioned boozers with their discounts on bulk-bought fizzy slop. And as if these were not sins enough, Tim Martin, the mulleted owner of JD Wetherspoon, used his most prominent of pub corps to shunt the nation towards the chaos and impoverishment of Brexit. He advocated it in the chain’s magazine and slathered the tables of his almost 1,000 branches with beer mats reviling Europhile elites (“Why should we trust the IMF?” bellowed one). It was with glee that liberals observed that the vote on June 23rd had wiped millions off the value of his company. Chain pubs: just too ghastly. + +Bagehot begs to differ. Join him, if you will, in Ebbw Vale at 11 o’clock on a weekday morning. In this depressed former steel town in the Welsh valleys the local Wetherspoon branch—named the Picture House after the cinema that once occupied it, but known as “Spoon’s”—hums with life. A pleasant light, both dusky and hourless, filters through stained-glass windows. Young mothers huddle around a table looking at holiday snaps. An elderly couple nurse cups of tea. In the gallery teenagers flirt, one table of boys and one of girls. The old codgers sit by the window, working on the first pints of the day. Those who enter process up the central aisle between the tables towards the bar, waving at familiar faces. Backs are slapped and babies cooed over; a civilised babble fills the space. On the walls are displays featuring Nye Bevan (the Welsh father of the National Health Service), old photos of the town and histories of its long-gone industry. + +The tableau is sociable and cross-class in a lonely and fragmenting society. It is unfussy in a country whose metropolitan food culture increasingly involves infantile gimmicks: dishes served on bricks, in jam-jars and the like. It is authentically inauthentic, sporting the same menus and wall-mounted bric-a-brac as hundreds of other outposts of Mr Martin’s empire, yet curiously honest about the fact. + +In your columnist’s travels about Britain he has often encountered the same scene. Visit an old mill town, a tired seaside resort or fishing port, a former coal-mining village, a faded dormitory settlement. Typically the working men’s club, the library and the church will be closed, or open only sporadically. But there will probably be a chain pub in a converted theatre, music hall, bank, church or post office. Often it will be architecturally captivating. Almost always it will be busy. + +Even the complaints about such places contain arguments in their favour. On Friday and Saturday nights, it is true, the conviviality your columnist encountered in Ebbw Vale gives way to that other British crowd scene: underdressed youngsters staggering onto the streets as early as 8pm and redistributing the contents of their stomachs onto pavements, walls and hedgerows; “Gin Lane” with alcopops. Meanwhile small, independent pubs struggle to compete with the chains. By lunchtime the Picture House is packed but its rival, the Bridge, is still shut and its curtains are closed. Yet both of these objections are really tales of displacement. Cheap chain-pubs socialise private drinking (supermarkets can undercut the cheapest of them). And the good old-fashioned boozers are often grim places—sticky carpets, expensive drinks, naff music—that are unable to compete in an age when people’s homes are nicer than in the past and alternative leisure pursuits more plentiful. They would fail anyway. + +To dig below the snobbery about pub chains is to witness a clever business at work. Mr Martin opened his first branch in London in 1979 and named it after a teacher, Mr Wetherspoon, who had told him he would never amount to anything. That it grew into a national institution, he says, comes down to three points. + +A very British brew + +First, stay close to the ground. Mr Martin spends two days a week visiting his pubs. There he interrogates landlords and mingles with punters, doing so alone to ensure he is “exposed to what people really think”. To such conversations he attributes innovations like the absence of music, the mellow lighting and the early opening hours in his chain (the cooked breakfast is the best-selling dish). “When things go wrong at big retailers it’s usually because they’ve lost that connection” with customers, he says. Second, keep things simple: “The commercial world is full of daft ideas”. Years ago, he explains, he was mocked for eschewing market-segmentation studies. But today pubs aimed specifically at women, old people and other groups are failing while his everyman pubs are booming: “A pub is best when it’s a melting pot.” + +Third, bear down on prices. Many small businesses in Britain fail because they charge too much in the country’s wage-stagnant economy. But Mr Martin treats “Made In America” by Sam Walton (the founder of Walmart) as a sort of Bible, revering cost control. He reckons his use of grand old civic buildings makes the difference. These combine a stay-and-linger atmosphere (“the X-factor”, he calls it) with huge spaces, producing the self-reinforcing cycle that lies at the heart of his business: large sales begetting the decent profits that make possible low margins that further drive sales. + +There is a parable in all this. Capitalism in Britain today is like Mr Martin’s pubs: often seen as soulless, homogenising and exploitative. Wetherspoon and other chains like it tell the other side of that story. Unfashionable they may be, but their vocation is also noble: they give people what they want. They lower prices and in the process beget life, buzz and, to use the politician’s cliché, a sense of community. + +Economist.com/blogs/bagehot + +This article appeared in the Britain section of the print edition under the headline “The parable of Spoon’s” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21712146-how-chain-pub-became-essential-british-institution-parable-jd-wetherspoon/print + + + + + +上一项 文章 章节 下一项 + + + + + +International + + + + +Poor-world migration: The beautiful south + +Local heroes: Where Malians move + + + + + +文章 章节 下一项 + +From south to south + +The other kind of immigration + +The flow of people from poor countries to other poor countries is little-noticed but vital + +Dec 24th 2016 | ABIDJAN AND MUMBAI + + + +IN MOST ways, it is a typical immigrant success story. Ouesseni Kaboréq was once a butcher in Burkina Faso, a poor, landlocked west African country. Encouraged by an uncle who was flourishing abroad, he left his country in search of better-paying work. He has done so well that he now employs 41 people. All but two are immigrants like him. The natives cannot bear to get their hands dirty, he says. + +But Mr Kaboréq did not migrate to Paris or New Jersey. Instead he crossed just one land border, into neighbouring Ivory Coast. He works in the large meat market in Port Bouët, on the outskirts of Abidjan, near a store that demonstrates its classiness with a picture of Barack Obama on the awning. Mr Kaboréq is not the kind of immigrant whom economists obsess over, nor the kind who irks voters and brings populists to power in the West. But his kind is already extremely common, and is set to become more so. + +International migration can be divided into four types. The most important is the familiar one, from developing countries to developed ones. About 120m people alive today have made such a move, calculates the McKinsey Global Institute, an arm of the consultancy—from Mexican grape-pickers in California to Senegalese street vendors in France. But the second-largest flow is between developing countries (see chart). Between 2000 and 2015 Asia, including the Middle East, added more immigrants than Europe or North America. + + + +Some are war refugees, like the Syrians who live in Jordan and the Somalis in Ethiopia and Kenya. But many developing-world migrants are like Mr Kaboréq: people who leave a poor country for a somewhat less poor neighbouring one in search of higher wages. The World Bank estimates that 1.5m migrants from Burkina Faso alone live in Ivory Coast. Relative to Ivory Coast’s population of 23m, Burkinabé immigrants are more numerous than Indians in Britain, Turks in Germany or Mexicans in America. + +Ivory Coast is still very poor—about as poor as Bangladesh. It is, however, better off than Burkina Faso. Batien Mamadou, a farm labourer who works 120km north-west of Abidjan, says wages are at least twice as high. And Ivory Coast is a much better place to start a business. The contrast between the two countries is like the difference between a grand African home and the White House, says Bernard Bonane, who fled Burkina Faso following a coup in 1987 and now runs a security firm. + +Mr Bonane, who lives in a stylish house in a street crawling with guards, says that few of his neighbours are immigrants. That, he thinks, is because most new arrivals send money home rather than splashing out on property. The World Bank estimates that $343m in remittances flowed from Ivory Coast to Burkina Faso in 2015. The exact amount is unknowable, not least because the two countries share a currency, meaning money can easily be moved across the border in ways that officials do not notice. But the importance of these short-range remittances is plain. Ivory Coast is thought to account for fully 87% of all remittances to Burkina Faso. + +Rather little of the cash that flows out of the world’s richest countries ends up in the poorest ones. Gulf states such as Dubai and Saudi Arabia take in millions of remittance workers from lower-middle-income countries such as India, but hardly any from really poor ones such as Chad and Malawi. The world’s poorest people cannot afford to travel to the West or the Gulf. + +They can, however, hop on buses bound for nearby countries. “The poorer the people, the shorter the distance they want to travel,” says Dilip Ratha of the World Bank. Such migrants might not be able to send much money home, but what they do send is badly needed. Whereas fairly poor countries like Nigeria can send many people to the West, households in very poor countries like Mali depend on workers who have migrated within west Africa (see chart in this article). + +Neighbouring countries often share a language and sometimes a currency. Tribes often span borders, too: national boundaries in Africa were drawn to suit colonial powers, not to accord with cultural and ethnic divisions. All that smooths the migrant’s path. And although south-south migrants tend to have informal jobs, as farm labourers, builders, market traders and so forth, this is no special hardship. In rich countries, where most workers have above-board jobs, informal work is precarious and exploitative. In poor and middle-income ones it is the norm. + +Widespread though migration is in west Africa, it cannot match the mighty human rivers of Asia. In November India’s home-affairs minister, Kiren Rijiju, declared that about 20m people from Bangladesh were living illegally in India. Sanjeev Tripathi, the former head of India’s Research and Analysis Wing, thinks that an overstatement. His estimate, based on census data, is that more than 15m Bangladeshis are living in India. If either is right, the Bangladesh-to-India migration corridor is the largest in the world. + +It is also one of the most fraught. Immigration from Bangladesh not only raises anxieties about national security; it also suggests to those who worry about such things that a predominantly Hindu society is being diluted. In the 1980s students in Assam, a state that touches Bangladesh, led a revolt against mass migration and forced the national government to introduce tougher laws. Nationalist politicians still make hay out of the issue. Narendra Modi, India’s prime minister, has accused Bangladeshis of “destroying” Assam and has insinuated that rhinos are being killed to make space for immigrants. + +In fact Bangladeshis are spread across India. One of them is Salma, a young woman living in Navi Mumbai, a suburb of India’s commercial capital. She was brought to India as a child by her parents, who later returned to their farm in Bangladesh. She is married to an Indian man and has children, who go to school in India. She even has Indian identity papers, which say, falsely, that she was born in Kolkata. Sometimes she is turned down for jobs when she tells people her name. But many Mumbai employers are too hungry for workers to care. Salma was recently hired to work in one house on the condition that she stay out of the kitchen. + +Sometimes Indian police officers round up Bangladeshi immigrants and push them over the border. “But they often come back,” says a cop in Mumbai. “They have to earn a living.” Even in Assam, where feelings run high, just 2,442 illegal immigrants were deported between 1985 and 2012, according to a report by the state government. Asked for their papers, suspected illegal immigrants say they will fetch them, then disappear. Or they produce false documents. “If you pay money, you’ll get any papers you want,” says Mr Tripathi. + +The World Bank estimates that more money is remitted to Bangladesh from India—$4.5bn in 2015—than from any other country. As in west Africa, this is an economic lifeline. Remittance workers tend to respond quickly to economic shocks in their home countries: the flow of money to Nepal jumped after the Gorkha earthquake in April 2015, for example. And studies of other countries show that remittances are commonly invested, especially in children’s education. + +Following footsteps + +It is likely that developing-world migration will become even more important. In the 1970s the world looked fairly simple, point out Gordon Hanson and Craig McIntosh, both academics at the University of California, San Diego, in a new working paper. The global south was poor and had lots of children; the global north was rich and had few. People tend to move not just from poorer countries to richer ones but also from countries with high birth rates to those with low ones. The imbalance between North America and Latin America fuelled the northward migration that so distresses some American voters. + +By mid-century China, India and almost all of Latin America, including Mexico, will be members of the low-fertility club. Only sub-Saharan Africa will still be having a baby boom. If UN projections are right, in 2040 more than a third of all children under the age of 14 will be living in Africa. Mr Hanson and Mr McIntosh predict huge pressure for migration from Africa to Europe, making the Mediterranean into a new (somewhat wider) Rio Grande. + +Yet that pressure will not necessarily find an outlet, says Michael Clemens of the Centre for Global Development, a think-tank. European voters are not keen even on current levels of immigration and will be still less enthused by a doubling or even a tripling of their immigrant populations. So there will be an enormous number of potential African migrants and not enough places for them in the West. They are highly likely to head for other African countries, for the Middle East and perhaps even for Asia. Countries such as China and South Korea have resisted mass immigration, but they badly need more young people. In short, says Mr Clemens, south-south migration is likely to grow a lot. + +Many poor countries are unprepared for an influx, and unwilling too. Purges of migrants are already common. Pakistan is trying to evict hundreds of thousands of Afghan migrants; Gabon is kicking out immigrants from central Africa; Thailand has expelled Cambodians. But many slip the net. Many Burkinabé migrants were pushed out of Ivory Coast during the civil war that erupted in 2002, only to return. Burkina Faso is too poor, too politically unstable and, for people who have lived in Ivory Coast for years, too foreign. + +“They will never go back,” says Moumouni Pograwa, who runs a mining and construction company in Abidjan and is an unofficial spokesman for Burkinabé. Recently Mr Pograwa offered to help immigrants whose homes had been demolished in a slum clearance. Would any of them perhaps like a bus ticket to go back to Burkina Faso? Of perhaps 4,500 people who had been evicted, just two took him up on the offer. + +This article appeared in the International section of the print edition under the headline “The beautiful south” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21712137-flow-people-poor-countries-other-poor-countries-little-noticed/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Local heroes + +Where Malians move + +Dec 24th 2016 + + + +Viewed from the West, Mali and Nigeria are both poor. In fact Mali is much poorer: its gross national income per head is barely one-quarter as high as Nigeria’s. The people who leave Mali in search of work seldom make it far. Most of the remittances sent to the country come from elsewhere in west Africa, although some come from France—the former colonial power. By contrast, wealthier Nigeria has a large diaspora that is spread across the rich world. They send the big bucks. + + + +This article appeared in the International section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21712143-where-malians-move/print + + + + + +上一项 文章 章节 下一项 + + + + + +Christmas Specials + + + + +Our tower: 25 St James’s Street + +Reindeer: Talo on the range + +Vienna: City of the century + +Domesday economics: Brentry + +Prison tattoos: Crime, ink + +Postcard from Dandong: Bright lights, big pity + +Barack Obama: The agony of hope + +IPA: Beer of the world + +Cambridge economists: Exams and expectations + +Mario: It’s-a me! + +Flashman: The cad as correspondent + +Adult colouring books: Supercolour factual pictures, stress-free artful process + +Adult colouring books: Crossword + +Clothespegs: Mankind in miniature + +Foreign fighters: Somebody else’s war + +Sequoias: On a giant’s shoulders + +Gay bars: Lights out + +Laboratory mice: Animal factory + +Silence: The rest is... + + + + + +文章 章节 下一项 + +Our tower + +The Economist bids farewell to a formative home + +Goodbye 25 St James’s Street + +Dec 24th 2016 + + + +IN THE technology editor’s office: two stickers depicting passenger jets, attached lopsidedly to the window by a previous inhabitant of the room about 20 years ago, perhaps while tipsy. In the business editor’s office: a heap of notebooks on the floor. In the corridors: modern art bought long ago, some of it good, all of it ignored. In your correspondent’s office: two out-of-date posters about African politics, blu-tacked to a seven-foot-tall cupboard that he has never opened. + +You can work in a building for years without really seeing it. And journalists, who pride themselves on their acuity, can be especially oblivious to their surroundings. We are a cynical bunch, who refuse to be impressed by the grand offices of company bosses and politicians—so why should we pay attention to our own? Perhaps, too, Economist writers are particularly susceptible to the delusion that their business runs on pure brain power. In 1965 an architect and a psychologist came to admire our offices. They were breezily informed that most of the journalists could work just as well in a barn. + +Yet we do notice some things about the building where we have worked for the past 52 years: 25 St James’s Street, just south of Piccadilly in the West End of London. Most obviously, we have a fine view. From the upper floors of the Economist tower, we are surrounded by buildings only half as high. Looking north, we can see the hills of Hampstead and Highgate. To the east are the City and the Shard. Those of us who look out to the south can use Big Ben as an office clock. Particularly spectacular sunsets trigger mass e-mails enjoining everyone to head for a west-facing window. + +Walking to the entrance of our building, across a rather austere plaza, we sometimes pass groups of architecture students in drab, well-cut clothes and interesting glasses. More rarely, geologists appear to scrutinise the slabs of shell-pitted dirty-white stone in which the Economist tower and two smaller neighbouring buildings are clad. The stone’s strange texture tells of an ancient seabed—and also of a trade-off between a weekly newspaper that had improbably decided to become a property developer and two bold young people who were in the process of creating a soon-to-be notorious architectural style. + +If we notice our surroundings rather more in the next few months, it is because they will soon change. This is our last Christmas in a tower that was created for us. Next summer we will move into the Adelphi building, a renovated 1930s hulk near the Strand. The change is exciting and disorienting. The modern, global version of The Economist was created in the tower, and has been shaped by it. This sublime slab of the 1960s is the only home it has ever known. + +But for two German bombs, everything might have worked out differently. The first, which fell in 1941, destroyed The Economist’s offices in Bouverie Street, near Fleet Street—the old heart of British journalism. The newspaper fled to offices near Waterloo Bridge. In 1947 it moved to St James’s, into a building that was vacant because it, too, had been bombed. Number 22 Ryder Street was not London’s smartest address. It had been an upmarket brothel before the war; Nancy Balfour, the United States editor, shocked a taxi driver by asking to be taken there. It was, say the few who remember it, a pleasant jumble of offices and corridors. But by the late 1950s it had started to pinch, and The Economist decided to do something radical. + +It was a propitious time for architectural ambition. In 1956 the London County Council relaxed its restrictions on the heights of buildings and began to grant permission for well-designed towers that were not too close to other towers. Eight years later the national government banned most office construction in central London, in an economically illiterate effort to spread wealth around. By the time that law was unpicked, Westminster was patrolled by conservationists. The Economist squeezed through the only gap available. + +The council nonetheless imposed a severe restriction. The development was not to exceed a plot-area ratio of five to one; that is, for every square metre of land, it could build five square metres of offices and flats. So it was vital to grab as much ground as possible. That task fell to Peter Dallas-Smith, a former navy lieutenant with an injured leg who had (to his own surprise) charmed his way to the position of managing director of The Economist. He expertly schmoozed the paper’s neighbours, including Boodle’s gentlemen’s club, a bootmaker, a chemist and a bank. Some he bought out; to others he promised space in a new building. He ended up with a gently sloping site of 1,820 square metres with Ryder Street to the south and St James’s Street to the west. + + + +The obvious way of dealing with a tight plot-area ratio is to maximise two valuable things: street-front property and views. The Economist could have erected a two- or three-storey building hard up against St James’s Street, a grand thoroughfare, and popped a tower out of the top. A template for this “podium-and-tower” approach existed: Lever House in New York, built in 1952 by the firm of Skidmore, Owings & Merrill and already much copied. One architecture firm that Dallas-Smith invited to bid for the job proposed something like it. + +Alison and Peter Smithson, a married couple who ran a small architecture practice from their home in Chelsea, had a drastically different idea. Instead of maximising street frontage, they proposed abolishing it. They would knock down a tall Victorian building on St James’s Street and replace it with stairs and a ramp, leading to a plaza. A car park, a restaurant and shops would be swept underneath it, visible only from the back streets. From the plaza three separate buildings would rise, like the pins in a British electrical plug. The Economist and the Economist Intelligence Unit, a research firm, would occupy the tallest one. A smaller tower would contain rooms for Boodle’s club and flats. The third building, shorter still, but broader and with grand windows, was intended for Martin’s Bank. + +After only a limited competition, the paper plumped for the Smithsons’ plan. That decision was “an incredible act of bravery”, says their son Simon Smithson, an architect at Rogers, Stirk and Harbour. It was also a puzzle, including to the architects themselves. When The Economist hired them, Peter and Alison Smithson had built a suburban house in Watford and a school in Norfolk, but nothing to indicate that they could handle a complicated project in one of London’s most precious districts. And Peter Smithson rather doubted that their clients read the sort of Continental architecture journals that had reviewed their work. + +It probably helped that an architecture critic at the Observer newspaper and a Cambridge University professor sang the Smithsons’ praises. And it was reassuring that the building contractors, Sir Robert McAlpine, had an experienced in-house architect named Maurice Bebb, who could steer the young couple. Perhaps, too, a weekly newspaper saw something in the Smithsons that it admired. Although the couple were never prolific builders, they were prolific writers. Words poured out of them—not always intelligible words, to those outside the charmed circle of modernist architecture, but plentiful, punchy words. One word in particular would have delighted an Economist headline-writer. + +In 1953 Alison Smithson had got hold of a novel Swedish term, nybrutalism, and applied it to a house that she had designed in west London. “New brutalism” soon became simply “brutalism”. It was a clever word, evoking béton brut (raw concrete) and art brut, the untutored art of the mentally ill. To the Smithsons and their acolytes, it meant material frankness and clarity. In a brutalist building, steel looks like steel and concrete, of which there is often a lot, looks like concrete. A water tower looks just like a water tower. + +In some ways, the Economist development is brutalist. Its buildings are massive and intelligible: the Economist tower is plainly an office block. But it does not belong to what Elain Harwood, an expert on post-war architecture, calls “high brutalism”. Canonical brutalist buildings like Preston’s bus depot and the National Theatre in London feature large blocks of exposed concrete. The Economist tower does not. When the Smithsons proposed raw concrete their clients had retorted that they preferred a building faced with Portland stone—the Establishment rock, which adorns buildings such as Buckingham Palace, St Paul’s Cathedral and the Treasury. In the end, architects and client reached a wonderful compromise. + +The roach not passed over + +Most Portland stone comes from deep in the limestone beds that form the Isle of Portland, in Dorset. It is creamy, smooth and excellent for carving. But towards the top of the beds lies a metre-thick layer of messy rock known as roach. In places, roach contains fragments of oyster shells; in others, the stone is pitted with screw-shaped holes, formed when other shells dissolved in situ. Roach had been used as a building material since the 18th century. But it was considered more appropriate for workaday structures such as breakwaters than for fine buildings. + +The Smithsons thought it just the thing. And the contrast between the rough, shelly roach and the clear glass windows of the three modern buildings in the Economist plaza is stark and beautiful. The buildings relate cleverly to each other, too. Although they differ greatly in size and shape, with floors of varying heights, they appear as a harmonious group—siblings who politely downplay their differences. On a side wall of Boodle’s club, the fourth building on the site, the Smithsons added a bay window that almost seems to have been chipped off one of the towers. That pulled an older building into the modern family. + + + +Although they adored Dallas-Smith, the Smithsons did not warm to The Economist’s staff. Alison Smithson later remembered the editors as “very pretentious, as though they were the intellectual cream” and described some as the kind of people who become hysterical when they have to wait for the lifts in department stores. Yet the architects listened to their clients. Tim Tinker, who worked in the Smithsons’ practice, went to see the paper’s journalists and Economist Intelligence Unit researchers in their existing offices and noted how they worked. He remembers being struck by two things: their desire for quietness and their habit of filling their working spaces with piles of paper and other “clobber”. Two-person offices were especially good, the workers told him, because if one person was out when his or her phone rang, the other could take a message. Two-person offices is what they got—and, decades later, what many of the journalists still have. + +The tower opened in 1964. Geoffrey Crowther, The Economist’s chairman, who had championed the Smithsons, said generously that it would be the architects’ ornament. In the future, he predicted, few would remember that The Economist had commissioned the buildings, just as nobody remembers who asked Christopher Wren to build St Paul’s Cathedral. Architecture critics praised the towers—and the plaza between them even more. This was large and light, partly because of the buildings’ chamfered edges. The main tower and the smaller residential tower were given modest glass-walled lobbies, paved with the same stone as the plaza, that covered only a fraction of the buildings’ footprints; the plaza seemed to extend into them. Pillars for the upper stories rose straight and unencumbered from the stone below. Their stone cladding started just above the ground, revealing their concrete core—the brutalists getting the final word in. + +At that heady time, it seemed possible to think that Britain’s capital might be refashioned in the style of the Economist buildings. The plaza was just a beginning, Peter Smithson had written in 1960: “The first part of a more general system of pedestrian ways at various levels which should be an essential part of London.” George Kasabov, an assistant in his office, created a photomontage in which he repeatedly superimposed the Economist development across Westminster. “Ego, I suspect,” he says now, by way of explanation. + +Some things did not work. The car park leaked. The Economist Intelligence Unit, which was (and is) independent of the newspaper, did not move in after all, thinking the building too expensive. The company scrambled to find tenants for the lower floors. The plaza disappointed, too. The architects had imagined it thick with people, even claiming it would become a tourist attraction. But few Londoners used it to cut through St James’s—hardly surprising, as the district already has lots of pleasant streets. What the Smithsons had really created, wrote Reyner Banham, an architecture critic who nonetheless admired the achievement, was just “a stretch of inviolate pavement, free from the swinging doors of Bentleys and the insolence of commissionaires”. + +Still, The Economist was happy in its new home, and protective of it. In the early years the journalists feared to make even small changes, lest the Smithsons disapprove. In 1972 an interior designer made some unannounced alterations to the tower, plastering some walls with blue leatherette. The staff fired off a mass letter to the chairman, declaring that they “liked it just the way it was”. The leatherette came down. + +Saved by St John-Stevas + +It was a former inhabitant of the tower who saw off a bold attempt to change it. In the late 1980s The Economist drew up plans with Skidmore, Owings & Merrill to add two stories to the top of the building. Norman St John-Stevas, once a writer on the paper and then head of the Royal Fine Art Commission, dug in against the change, as did the Smithsons. The buildings were quickly awarded a grade II* listing—one of the first post-war British buildings to be so protected—and the company retreated. The Economist was, however, allowed to make some changes to the plaza and to clad its lobby in travertine. This was ill-advised. Although travertine is a pitted limestone, like Portland roach, combining the two is rather like putting patent leather shoes on a bricklayer. Yet the splash of luxury probably helped keep rents up. + +The same desire to maximise returns from an increasingly valuable building lay behind an attempt to winkle the editorial offices out. Even as the journalists were enduring messy renovations to their offices, some members of the board argued that they should go somewhere cheaper. They knew it would be a tough sell. “Sentiment should not be allowed to cloud decisions”, pleaded one, fearing the “deep emotional attachment” that the staff had formed with the building. Emotion prevailed. Still, over time more of the newspaper’s non-journalistic functions were moved to offices elsewhere, and hedge funds happy to pay a hefty rent rose up the tower like a tide. + +All the while, the building was working on its tenants. Just as the design of prisons can make rehabilitation easier or harder, and as school buildings influence how children learn, so offices mould the people who work in them. They make some kinds of interaction easy and others hard, which shapes the way of working. Over the years the building has shaped The Economist in several ways, some good, some less so. + +Our height gives us greater confidence in handing down Olympian judgments + +Those spectacular views from the upper floors are not just a pretty sight. Out of our windows we see a vibrant metropolis, full of cranes, which reassures us (as, in a nostalgic, populist era, we need reassuring) that the free flow of capital and people are wonderful, enriching things. Perhaps our height also gives us greater confidence in handing down Olympian judgments on world affairs. And whereas other buildings treat views as status symbols, in the tower everybody gets one, be she editor or assistant. This is deliberate; the Smithsons built as egalitarians. After finishing the Economist buildings they built a housing estate in the East End of London, Robin Hood Gardens, which was supposed to dignify working-class people. It was a disaster, and will be demolished. But they did achieve a kind of social levelling in St James’s. + +The views are always accessible because the distance between the windows and the large service core is only a bit under 6 metres—room just for a corridor and a single row of offices. Such small strips of floor space make open-plan offices hard. So does the tower’s odd system for moving air. Most office buildings have false ceilings and a void above, through which air ducts run. The Economist tower has no false ceilings and no void: the company decided on an extra floor of offices instead. So air runs through light boxes that drop from the ceiling. These seem fine when they sit above the dividers between corridor and offices; remove the dividers, though, and they look very odd. + +Everybody at The Economist can tell stories about the people they have shared offices with over the years—their kindness, their messiness, their noisy apple-eating. From office dialogues, stories emerge. A conversation between the energy editor and the economics editor, who share an office, turned into a cover story on the economics of cheap oil. The building makes it hard to hold larger conversations, which means less useful group thinking but also fewer unproductive mass meetings. + +More troubling than the partitions between offices are the divisions between floors. We are spread over four. The 11th floor is for art, fact-checking, IT and production, the 12th is for business, finance and science reporting as well as data, online news and, now, social media, the 13th houses the editor and the British and foreign news reporters and the 14th is a hotch-potch of video production, 1843 magazine, meeting rooms and the books section. An architecture critic who visited the tower in the late 1960s noticed a worrying lack of traffic between floors, and that has persisted. The division most gossipped and kvetched about is the one between the business and finance reporters of the 12th floor and the foreign news reporters of the 13th—two tribes characterised by one long-departed editor as Roundheads and Cavaliers. But all are unfortunate. + +Almost no protests were raised when we were told in 2015 that the building would be sold and that we would leave. The sale was linked to a share buy-back as Pearson, an education publisher that had lost interest in newspapers, sold the Financial Times, which had a 50% stake in The Economist. Moreover, the offices suit us less and less well. As The Economist has launched new multimedia products, numbers of staff have risen. New sorts of teamwork can make our two-person cells a bit more of a restraint than they used to be. + +We do, however, want to bring something of the Economist tower to our new home in the Adelphi—a modernised Art Deco building that, by coincidence, is close to the offices our bombed-out forebears occupied. A questionnaire sent to the staff asking what they wanted in a new building turned up assorted requests for better bike sheds and yoga facilities. Above all, though, people said they wanted offices much like the ones many have occupied for the past 50 years. + +“People always want what they have,” says Mr Kasabov. Yet that is to sell short his work, and the work of the other people who created the buildings. The architects and their clients succeeded in creating offices that seem intuitive. For five decades they have mostly just worked, without drawing attention to themselves. The buildings, too, fit into St James’s despite being far more rigorous and modern than their neighbours. Even their stone has spread. Portland roach now appears on a building on King Street, a block away, and at the entrance to Green Park, the local tube station. Recently it has been used on extensions to the British Museum and BBC Broadcasting House, suggesting it has itself become unimpeachably Establishment. + +As The Economist moves on, so will our tower. The new owners, Tishman Speyer, want to bring more life to the plaza, fulfilling the Smithsons’ vision. If Westminster Council and others assent, a shop or a café could be tucked in to the ground floor of the tower. Despite their narrowness, our floors will probably become open-plan—few clients want cellular offices these days. And the buildings will get a badly needed scrub. As we without them, so they will thrive without us. At some point Crowther’s prediction will presumably come true, and they will stop being called the Economist buildings. But always, the tower and the newspaper will carry traces of each other. + +Watch a film about our tower here, and take a look at the 360 degree view from the rooftop here + +This article appeared in the Christmas Specials section of the print edition under the headline “25 St James’s Street” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712028-goodbye-25-st-jamess-street-economist-bids-farewell-formative-home/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Talo on the range + +Finland’s reindeer herders get a lot more than meat from their work + +Rounding up the reindeer feels like coming home + +Dec 24th 2016 | SALLA + + + +DAYBREAK on the outskirts of Salla, a town in Lapland, north of the Arctic Circle in Finland, so remote that its slogan is “Salla: In the Middle of Nowhere”. The last lambent wisps of the northern lights have vanished. Outside all is quiet. + +Inside, Raisa Korpela has been up for a while. As her three daughters yawn into the kitchen she grabs hats and gloves from the detritus of childhood strewn across the room. She checks homework, brews coffee, and slips wedges of cheese between slices of rye bread for breakfast. And then her partner Aarne Aatsinki walks in, clutching a bag of organs from one of his recently slaughtered reindeer: a tongue, heart and intestines floating in bright red blood. + +“I don’t know where the reindeer end and he begins,” Ms Korpela says of the man she has spent 23 years with. Mr Aatsinki’s family has been herding reindeer for centuries, part of the long almost symbiotic relationship between humans and Rangifer tarandus. Some of the earliest images carved on stone in Europe are of reindeer. In 1751 the “Magna Carta of the Sami”, named for the indigenous people of Arctic Europe and negotiated by the Nordic countries, gave the Sami the right to follow their reindeer across borders. Only in the 19th century, after Russia hived off Finland from Sweden, was the Swedish-Finnish border closed for the Sami. By then Finns had adopted Sami practices, using reindeer for milk, meat, transport and as decoys for hunting other animals. + +But this long relationship may be drawing to a close. Mr Aatsinki is finding it harder to make ends meet. The average herder has lost money for more than a decade and earns less than one-third of a Finnish farmer’s average wage. Mr Aatsinki and Ms Korpela both have second jobs. They worry that their children may not continue in the millennia-old tradition. + +Today most of Europe’s 2m reindeer live in Russia, with another 600,000 split almost evenly across Finland, Norway and Sweden. In Finland both Sami and ethnic Finns, like Mr Aatsinki and Ms Korpela, herd reindeer. Nomadic herding is no more. Since 1898 Finland has divided the area in which herding is permitted into paliskunta, or co-operatives, which today number 54 (see map). At an annual “reindeer parliament” their representatives discuss how to meet Finland’s annual reindeer quota, which is meant to avoid overgrazing. + + + +A herder can have no more than 500 reindeer. How many any particular herder has, though, is hard to say. Asking is considered rude, says Ms Korpela—like asking a city-dweller how much he earns. Faced with such affrontery, a herder will be resolutely non-quantitative: “I have reindeer on both sides of the tree,” is the most you are likely to get. + +The reindeer industry comprises less than 1% of all Finnish meat production. But swish Helsinki restaurants have embraced the lean meat. Michelin-starred Chef & Sommelier has offered dehydrated reindeer heart atop a Jerusalem artichoke. Ari Ruoho, head chef at Nokka, says that his reindeer tartare tastes like tuna sashimi and goes well with a fruity Italian red. He adds that meat butchered in autumn carries the flavour of mushrooms, on which reindeer graze to build up fat for the winter. + +But overall meat production is falling. Across Finland, 71,580 reindeer were slaughtered in 2013-14, versus 127,999 in 1994-95. Herders say this is because they are not the only ones after the reindeer. Their biggest worry is wolverines, which since 1995 have been protected by Finnish hunting regulations; almost as if they know this, more and more have come over the border from Russia. A family group of wolverines can get through 90-odd reindeer a year. They, like the herders, favour the calves, so to keep the herd size stable, the herders have to take less. + +More predators mean more money spent protecting herds. To be fair, it also means more compensation for reindeer killed by carnivores. There were 344 reindeer claims in 1986, 4,126 in 2013-14. But to claim the compensation the herders have to find their ravaged reindeer—no easy task in dark, frozen forests. + +Predators also have a social effect on herders. When some lose animals but others do not, this creates tensions within the collective. And in a communal activity like reindeer herding such tensions could threaten some co-operatives’ future. + +All of which led your correspondent to wonder, after two days spent mostly among dead or soon-to-be dead reindeer, hearing stories about vicious wolverines and poor herders, about the practice’s enduring appeal. Why were these Finns working so hard to preserve a loss-making business? A day in the company of Lauri Aatsinki, Aarne’s father, Ms Korpela and other Salla herders as they searched for still-breathing reindeer provided something of an answer. + +Like many Finns, the elder Mr Aatsinki, who has been herding for 70 years, is not terribly loquacious. Asked why he still goes out, at the age of 80, in sub-zero temperatures, he replies, “I just do it. This is a normal day.” Questions about why he just does it provoke befuddlement, as if a swallow were asked why he heads south for the winter. “I just do it,” he says. “It’s not a miracle.” + +The other herders are similarly laconic. Stepping out of the van, the elder Mr Aatsinki and Ms Korpela greet a dozen or so of their friends heating kettles and sausages on a campfire. Lauri sits next to Mauri, an old friend whose first round-up took place in 1961, after his father had told him and his two brothers that at least one of them had to carry on his legacy. + +A natural struggle + +Mauri, now retired from his other job in forestry, rarely misses a day of herding. “I don’t know why I still come,” he says. Ms Korpela says that for these men “it’s a way of life.” The younger Mr Aatsinki agrees, adding that one can only be born a herder. + +At first the idea that this is simply done because it is done seems unsatisfying. Surely the opportunity to be at one with nature offers something inspiring, something sublime. But if it does, the taciturn Finns are not saying. Herders rarely mention their love of nature, says Ms Korpela. “It’s obvious so we forget,” adds Rainer Hourula, another herder, looking up at the cobalt sky. + +Tim Ingold, a British anthropologist, has noted that the Sami and the Finns both find their identity in nature, but in different ways. The Sami derive meaning from the forest. Their landscape is benign. In Sami communities “one works with the world, not against it.” But for Finns the forest is something to exploit, whether for lumber (the “green gold”) or reindeer. “Life for [the Finns] is regarded as a struggle,” Mr Ingold has written, “in which people pit their energies against nature.” Through such struggles a “fiercely” Finnish form of rugged individualism emerges, something “as much emotional as rational”. + +And for many of the Salla herders, this struggle brings with it something special; they never feel alone. Mr Hourula, now 54 years old, took over his father’s herd when he was just 15. “I am an only child,” he says. “This is my extended family”. Noora Kotala, the partner of Mauri’s nephew, voices a similar sentiment. She shows the pendant her partner gave her, a replica of her bespoke calf marking. For a herder this is a sure sign of commitment. Paliskunta issue every reindeer owner a pattern that they cut into the ears of newborn calves. Today there are about 12,000 unique marks. Looking at hers, Ms Kotala says: “Once you start with reindeer then you can’t give it up.” + +Mr Ingold wrote about the importance of the word talo. Roughly translated, it means house. But it also has a deeper meaning. When Finnish herders are raised in a talo, it is not simply that they grow up in one place. “A house,” explains Mr Ingold, “is a total establishment, an organic unity of place and people, cumulatively built up through the work of generations.” It is not something that can be shaken off. When Aarne says that herders are “born” to do it he is not being flippant. Like his father, he feels he had little choice. Nor does he regret that. Raisa explains that “this is what we want to do. There’s a richness to this wild way of life.” + +That remains true even as threats from climate change, logging and other signs of expanding human footprints impinge on their vast emptiness. But throughout the centuries herders have adapted to changes wrought from outside. They have embraced GPS tracking, all-terrain vehicles (ATVs) and drones. + +After five chilly hours, the herders finally receive the call: the reindeer have been spotted. Some spring into their ATVs and drive off in clouds of dust, while others prepare to marshal the animals into the corral when they return. + +Suddenly Ms Korpela leaps off the rock. “Let’s go,” she shouts. Approaching is a blur of brown and white, like an avalanche of dirty snow pouring through the trees. Not far behind are the cowboys driving in semicircle formation, herding hundreds upon hundreds of reindeer. Though the forest stretches as far as the eye can see, they have managed to nudge the animals into a queue no more than 30 meters wide. Within seconds the reindeer funnel into a wooden corral the size and shape of a velodrome. The cowboys jump off their vehicles and the herders jog inside after the reindeer, shutting the fence behind them. + +To the untutored observer it is all a blur. But Ms Korpela has spotted something. In the throng are familiar calf marks. They belong to a reindeer that goes by the name of Kepo (pictured, with Ms Korpela, on the previous page). She had thought this member of her herd to be lost for good. “Kepo has found her home!” she says with delight. + +As friends gather around to stroke Kepo’s furry antlers, it seems she is not the only one. + +This article appeared in the Christmas Specials section of the print edition under the headline “Talo on the range” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712045-rounding-up-reindeer-feels-coming-home-finlands-reindeer-herders-get-lot/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Vienna + +How Vienna produced ideas that shaped the West + +The city of the century + +Dec 24th 2016 | VIENNA + + + +ACROSS the cobbles of Vienna’s Michaelerplatz the world of empires, waltzes and mutton-chop whiskers glowers at the modern age of psychoanalysis, atonal music and clean shaves. In one corner, the monumental, neo-baroque entrance to the Hofburg palace, seat of the Habsburgs; in the other, the Looshaus, all straight lines and smooth façades, one of the first buildings in the international style. This outcrop of modernism, designed by Adolf Loos, was completed in 1911, less than 20 years after the dome-topped palace entrance it faces. But the building embodied such a different aesthetic, such a contrary world view, that some wondered whether a society that produced such opposites in quick succession could survive. The emperor Franz Joseph is said to have kept the curtains drawn so he would not have to look at the new world across the square. + +The sceptics were right. Imperial Viennese society could not survive. But the ideas and art brought forth during the fecund period of Viennese history from the late 1880s to the 1920s endured—from Loos’s modernist architecture to Gustav Klimt’s symbolist canvasses, from Schoenberg’s atonal music and Mahler’s Sturm und Drang to Ludwig Wittgenstein’s philosophy. Those Viennese who escaped Nazism went on to sustain the West during the cold war, and to restore the traditions of empiricism and liberal democracy. + +This ferment was part of a generational revolution that swept Europe at the end of the 19th century, from Berlin to London. But the Viennese rebellion was more intense, and more wide-ranging. And it provoked a more extreme reaction. Hitler arrived in Vienna from the Austrian provinces in 1908 and developed his theories of race and power there. Vienna was thus the cradle of modernism and fascism, liberalism and totalitarianism: the currents that have shaped much of Western thought and politics since Vienna itself started to implode in 1916 until the present day. It has been the Viennese century. + +What distinguished pre-1914 Vienna from most other European capitals, and what gave the Viennese school its particular intellectual tang, was that it was an imperial city rather than a national capital. Vienna was the heart of an Austro-Hungarian empire of about 53m people that stretched from Innsbruck in the west almost as far as the Black Sea in the east. After 1867 the empire was divided into two: a Magyar-dominated Hungary, ruled from Budapest, and a heterogeneous, multi-ethnic, multilingual other half, ruled from Vienna. In deference to its multinational character, this half was not called Austria but was often referred to as Cisleithania, named after a tributary of the Danube. + +In the second half of the 19th century Franz Joseph’s subjects poured into the city: Italians, Slovaks, Poles, Slovenians, Moravians, Germans and, especially, Czechs. By 1910 Vienna had a population of 2m, the sixth-biggest city in the world. Fortunes made in the fast-industrialising empire, many by Jewish and assimilated Jewish families such as the Wittgensteins and Ephrussi, changed the urban landscape. Their enormous palaces adorned the Ringstrasse, the city’s most elegant boulevard. By 1914 Jews made up about 5% of Cisleithania’s population. They did not enjoy rights as a nationality or language group, but benefited from full civil rights as individuals. As Carl Schorske, the greatest historian of the period has written, they “became the supranational people of the multinational state, the one folk which, in effect, stepped into the shoes of the earlier aristocracy. Their fortunes rose and fell with those of the liberal, cosmopolitan state.” + +Vienna was a mixture of classes and nationalities, faiths and worldviews. Order a Wiener melange in a Viennese coffee-house today, suggests Steven Beller, a historian of Austria, stir the hot milk into your bitter coffee, and imperial Viennese culture emerges, a dissolving of differences to produce something fresh. The Viennese cultural elite encouraged intellectual collisions to give birth to the new. “There was sperm in the air,” as the writer Stefan Zweig somewhat off-puttingly put it. + +Amid a babble of peoples and languages—one in which, as elsewhere at the time, gender roles were being redefined—Viennese thinking was driven by an urge to find universal forms of communication. It aimed to discover what people had in common behind the façade of social convention, “to show modern man his true face”, in the words of Otto Wagner, an architect. Out of this came some of the most important intellectual schools of the 20th century, as well as the influential, and often highly eccentric, characters who went with it. These included one Sigmund Freud, who developed psychoanalysis in Vienna, in order to expose the common archetypes of the unconscious. + +Ludwig Wittgenstein’s “Tractatus Logico-Philosophicus” remains the most famous text of Viennese philosophy. The pioneering logical positivism of the Vienna Circle, dominated by Moritz Schlick and Rudolf Carnap (both originally from Germany) was probably of greater influence, setting the scene for modern analytical philosophy with its strong affinity for the sciences. The most accomplished of the circle was Otto Neurath. On top of his philosophy, he revolutionised the transmission of knowledge with new ways of translating complex information into simple, graphic pictograms: to make knowledge accessible was to make it democratic. All sorts of formats for data visualisation in use today can be traced back to these “Isotypes” (example on next page). + +The Viennese school also pushed into new fields, such as, famously, sex. Before Freud, there was Richard Krafft-Ebbing, who studied in Graz before coming to Vienna and in 1886 published “Psychopathia Sexualis,” the first attempt to apply some rigorous methodology to the study of sexuality. He drew on court cases to analyse homosexuality and bisexuality (albeit often in Latin). His work popularised the terms sadism and masochism. (Leopold von Sacher-Masoch, eponym to the latter and author of “Venus in Furs,” though a subject of the emperor, was not Viennese.) + +It was partly the emperor himself who opened the way to modern sensibilities. Ultra-conservative in taste he may have been, but Franz Joseph’s duty was to all the peoples of his empire, and he tried to guarantee the freedoms—of movement, of religion, of the press and of equal rights—that the liberal constitution of 1867 enshrined. So Europe’s crustiest old monarchy often supported some of the most avant-garde artistic projects of the day, such as the Vienna Secession movement of 1897, in the interests of strengthening the universal language of art and architecture that might unite the empire. Secession artists were engaged to design the empire’s postage stamps and currency. The emperor might have drawn his curtains against the Looshaus, but he let it be built. + +Anschluss and after + +The tensions and collisions so fruitful to the cultural life of its capital were less salutary for the empire as a whole. Assailed by the rising forces of nationalism, particularly pan-Germanism, the cosmopolitan state began to crumble. The influx of peoples to Vienna provoked increasing resentment among the German working class; immigrant Czechs in particular proved willing to work for less money in worse conditions. At the same time Czech, Serbian and other nationalists increasingly agitated for independence. + +Jews, as the supranational people of the multi-ethnic state, readily became the target of every nationalist enemy of the empire. Georg Schoenerer, son of a successful Viennese industrialist, was the first to turn anti-Semitism into a political programme, denouncing the “sucking vampires” who knocked at the “narrow-windowed house of the German farmer and craftsmen”. Unemployment, rising prices and a lack of housing in Vienna fuelled the anger of many Germans after 1900, leading to frequent riots and violent attacks on other nationalities. Karl Lueger channelled Schoenerer’s anti-Semitism into a political movement, campaigning to be mayor on the slogan “Vienna is German and must remain German”. His explicit rejection of the multi-ethnic character of Vienna brought him into direct conflict with the emperor. Lueger won a majority on the city council to elect him mayor in 1895, but for two years Franz Joseph nobly refused to appoint him because of his anti-Semitism. Eventually, in 1897, Franz Joseph bowed to popular pressure, and Lueger ruled the city until 1910. + +Portrait of Adele Bloch-Bauer I: Gustav Klimt + +That, essentially, was the beginning of the end of liberal Vienna. After the war and the end of the monarchy there was a brief flourishing of progressive social democracy in the city, the era of “Red Vienna”. But all the time, in the new, truncated republic of Austria the more conservative provinces slowly tightened their grip on the country. In 1933 Engelbert Dolfuss seized power in the name of Austrofascism, which gave way to Nazi fascism in 1938 with the Anschluss. Hitler, who moved to Vienna from Linz in upper Austria, had been transfixed by Schoenerer and, particularly, Lueger. He hungrily absorbed all his hero’s complaints about the Jews and the mixing of “races”; he called the Viennese a “repulsive bunch”. Thus liberal Vienna had produced its exact opposite: militant nationalism and anti-Semitism. During the interwar years these forces gradually took hold of the new Austria and from the 1920s onwards many began to flee abroad. One of the last out, in 1938, was Freud. + +Most of the exiles went to Britain and America, where they were often gratefully received. The most valuable aspect of Viennese thinking for the West at the time was the application of up-to-date “scientific” methods to fields that had previously been left to amateur theorising, or that had been altogether neglected. This transformed many aspects of life. + +The Viennese tended to be more persuasive than the intellectual competition + +Take the work of Charlotte Buehler, a pioneer in child psychology. She was born in Berlin to Jewish parents, but moved to Vienna, together with her husband Karl, in 1922. At the University of Vienna, through painstaking direct observation, the Buehlers worked out their influential response-testing techniques: ways to calibrate a child’s development, through the accomplishment of gradually more complex tasks. These tests are, in effect, still in use today. By six months, an infant should be able to distinguish between a bottle and a rubber doll. At 18 months, he or she was expected to respond to the order “No”. + +Often the Viennese intellectuals leapt ahead by transferring knowledge gained in one discipline to others, gloriously indifferent to the mind-forged manacles that have come to stifle modern academia and research. In America, several Viennese-trained devotees of Freud used the tools of psychoanalysis to revolutionise business. Ernest Dichter, author of “The Strategy of Desire,” transformed the fortunes of companies through marketing that purposely tapped into consumers’ subliminal desires. + +Another example was Paul Lazarsfeld, the founder of modern American sociology. Born of Jewish parents, he studied maths in Vienna, completing his doctorate on Einstein’s gravitational theory, and thereafter applied his expertise in data and quantitative methods to what became known as opinion, or market research—finding out what people really feel about anything from television programmes to presidential candidates. In Vienna in 1931 he conducted the first scientific survey of radio listeners, and also co-wrote a revolutionary study of the devastating social and psychological impacts of unemployment. His team of investigators conducted what is now called “field research”, meticulously recording the results of face-to-face interviews with laid-off factory workers in the town of Marienthal. + +Moving to America in 1933, Lazarsfeld went on to found the Columbia University Bureau for Social Research. His team was the first to use focus groups, developed with Dichter, his one-time student, and statistical analysis to delve into the mysteries of voter and consumer preferences or the impact of the emerging mass media. Lazarsfeld and others thus helped revivify moribund, antiquarian modes of inquiry, and re-equip them with the latest Viennese techniques, often saving entire Western intellectual traditions from decrepitude, or possibly extinction. + +Pilgrims on the mountain + +Of no field was this truer than political economy, where the “Austrian school” of men like Joseph Schumpeter, Ludwig von Mises and Friedrich Hayek strongly influenced the revival of liberalism and conservatism in the West after the second world war. These three were all quintessential products of late Habsburg Vienna. They were born in very different parts of the empire: von Mises of Jewish parents in Galicia (now Ukraine); Schumpeter of Catholic German-speaking parents in Moravia, now part of the Czech Republic; and Hayek in Vienna itself. Yet they were all schooled in the same liberal intellectual discipline. + +Von Mises and Hayek, one of his students, saw earlier than most that by the interwar years the liberal era in Europe was being overwhelmed by the collectivism and totalitarianism of the right and the left. They subsequently devoted their lives to reversing the tide. Hayek, like the best of Vienna’s intellectuals, combined technical expertise in economics with a wide breadth of inquiry; as well as economics, he published on law, sociology and more. His greatest contribution was to restore intellectual rigour to the free-market school, expositing in detail the “price mechanism” to show that socialist economics could not possibly work in theory, let alone practice. + +But Hayek was not just a dry theorist. He was also a relentless circus-master for the liberal cause. Emigrating to Britain in 1931, he was the author of the first call to arms for the liberal fightback, “The Road to Serfdom,” published in 1944. This was provocatively dedicated to the “Socialists of all Parties”, implying that at the end of the second world war all Britain’s political parties, including Winston Churchill’s Conservatives, had drifted into collectivism by advocating the welfare state. + +To organise the fightback he founded the Mont Pelerin Society (MPS) in 1947. Named after the Swiss mountain where the first meeting was held (simply because the founding members couldn’t agree on a more appropriate alternative), the MPS was Hayek’s own Circle for liberalism. It fused the Viennese liberals in exile, including Karl Popper, who had just published The Open Society and its Enemies, with their embattled fellow-travellers from Germany, France, Britain and America, most notably Milton Friedman. Over the next decades the MPS spawned scores of think-tanks around the world dedicated to spreading the word of the Austrian school. Politicians often attended their meetings. The “Chicago school” of economists was made up largely of MPS members. After decades of quiet campaigning, Hayek’s ideas were taken up again by a subsequent generation of politicians in the mid-1970s, including Margaret Thatcher and Ronald Reagan. + +The consensus on free markets and democracy won in the 1980s remained intact for decades—a tribute, in part, to the intellectual efforts of Franz Joseph’s Viennese. It also provides a clue as to why they have been so influential in the West. The Viennese school placed the lived experience of individuals—rather than the abstractions of class, race and nationalism favoured by their opponents—at the heart of their intellectual enterprises. Thus the empirical research of a Buehler or a Lazarsfeld tended to work with the “the crooked timber of humanity”, as Immanuel Kant put it, rather than trying to straighten it out, as Marxists, fascists and all systematisers try to do. After a lecture by John Maynard Keynes, always the systematiser, Vienna-born Peter Drucker, the founder of modern management theory, saw the distinction in clear relief: “I suddenly realised that Keynes and all the brilliant economic students in the room were interested in the behaviour of commodities, while I was interested in the behaviour of people.” + + + +For this reason alone, the Viennese tended to be more persuasive than their competitors. Furthermore, the stress on the individual also chimed with the exigencies of an exhausted West taking on the Soviet Union in the cold war after 1947. The Viennese émigrés were vital in sharpening the intellectual and cultural claims of liberal democracy at a time when many young people in the West had deserted to more fashionable leftist causes. They were swiftly promoted to university posts and other influential positions by their Anglo-Saxon admirers. The Viennese could articulate a more convincing defence of freedom because they had direct personal experience of the totalitarian enemy. + +However, the freedom that the Viennese espoused came at a price; self-expression could be accomplished only by intellectual rigour and self-discipline. Even at the time this was too much to bear for many of Vienna’s young, several of whom committed suicide as they fell short of their own high standards—three of Ludwig Wittgenstein’s brothers took their own lives. Today, if this year’s elections are any guide, politicians and demagogues seem content to wrap themselves in the language of freedom while abandoning any obligations to intellectual rigour or self-discipline. The Viennese century has ended. Its legacy is fraying. + +This article appeared in the Christmas Specials section of the print edition under the headline “City of the century” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712044-city-century-how-vienna-produced-ideas-shaped-west/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Brentry + +How Norman rule reshaped England + +England is indelibly European + +Dec 24th 2016 | BAYEUX + + + +THE Norman conquest of England, led exactly 950 years ago by William, Duke of Normandy (“the Conqueror”), was the single greatest political change England has ever seen. It was also very brutal. The Anglo-Saxon aristocracy was stripped of its assets, and many of its members suffered the humiliation of being forced to work on land they had once owned. Even today, conquest by the French is still a touchy subject in some circles. + +Nigel Farage, the on-and-off leader of the UK Independence Party, is known to wear a tie depicting the Bayeux tapestry, a 70-metre long piece of embroidery depicting the event, to remind Britons of “the last time we were invaded and taken over”. The tapestry is peppered with severed limbs and heads of vanquished Englishmen. Other supporters of Brexit—Britain’s exit from the European Union—use the language of the conquest to describe the nation’s “domination” by faceless EU institutions. Academics have held similar opinions. “[F]rom the Englishman’s point of view, the Norman conquest was a catastrophe,” argued Rex Welldon Finn of Cambridge University in 1971. + +But, while the blood and guts were horrifying, the conquest also did a lot of good. It transformed the English economy. Institutions, trade patterns and investment all improved. It brought some of the British Isles into European circles of trade (“Brentry”, if you will) and sparked a long economic boom in England which made the country comparatively rich. The conquest and its aftermath also set a wealthy south apart from a poor north, a geographical divide that continues to this day. From those tumultuous decades on, England was indelibly European—and a lot stronger for it. The Norman conquest made England. + +The reasons for the invasion were complex. Early in 1066 Edward the Confessor, then king of England, had died heirless, sparking a crisis of succession. His brother-in-law, Harold Godwinson, took over. But Harold’s claim to the throne was weak and he faced resistance, especially in the north of the country. William, Duke of Normandy, just across the English Channel, reckoned that he was the rightful heir: according to William of Poitiers, a chronicler, Edward had said that he wanted the young William to succeed him. + +The Bayeux tapestry shows what happened next. In September William invaded from France with an enormous army. At the Battle of Hastings, on the southern coast of England, Harold was killed and his body mutilated (one account describes how a Norman knight “liquefied his entrails with a spear”). William went on to be crowned on Christmas Day, 1066. + +He celebrated his coronation by going hunting and hawking, but then got down to business. The Anglo-Saxon system of government and economy was razed to the ground. The lands of over 4,000 English lords passed to fewer than 200 Norman and French barons. The English were removed from high governmental and ecclesiastical office. By 1073 only two English bishops were left, according to Hugh Thomas of the University of Miami. + +The best source for assessing the impact of the Norman conquest is the Domesday Book, a survey of English wealth commissioned by William in 1085. For 13,418 places under William’s rule, Domesday Book contains data both on who the owner of the estate was and how valuable it was as measured by how much “geld”, or land tax, it could yield in a year. For some counties, it also tallied the population, the amount of livestock and even the ploughs. Its thoroughness suggested it could have been used for a final reckoning on the day of judgment—hence the name. Its 2m words of Latin, originally inscribed on sheepskin parchment in black and red ink, were recently digitised by researchers at the University of Hull. + + + +Respondents to the survey were generally asked to give answers corresponding to three time periods: 1066, 1086 and an intermediate period shortly after 1066, which reflects when the manor was first granted to its existing owner. This makes it possible to perform a before-and-after analysis of the conquest. + +The invasion certainly caused damage in the short term. In Sussex, where William’s army landed, wealth fell by 40% as the Normans sought to assert control by destroying capital. From Hastings to London, estates fell in value wherever the Normans marched. One academic paper from 1898 suggested that certain manors in the counties around London were much less valuable by 1070 than they had been in 1066. Despite this initial damage, however, the conquest ended up helping the English economy. Wonks have long supposed that immigration tends to boost trade: newcomers are familiar with their home markets and like to export there. The Normans were invaders, not immigrants, but Edward Miller and John Hatcher of Cambridge University conclude that the “generations after 1066 saw a progressive expansion both of the scale and the value of...external commerce.” English wool, in particular, was popular on the continent. + + + +Brentry also helped the financial system develop. Jews arrived at William’s invitation, if not command, and introduced a network of credit links between his new English lands and his French ones. Unhindered by Christian usury laws, Jews were the predominant lenders in England by the 13th century. The discovery of precious metals from central European mines also helped get credit going. Jews settled in towns where there was a significant mint. England was still a violently anti-Semitic place, though, and its Jews were expelled by the 14th century. + +The Normans took some policy decisions that would meet with the approval of modern economists: at a time of radical uncertainty, they ramped up infrastructure spending. Within 50 years every English cathedral church and most big abbeys had been razed to the ground, and rebuilt in a new continental style, says George Garnett of Oxford University. He points out that no English cathedral retains any masonry above ground which dates from before the conquest. + +New castles and palaces came too. A book on churchbuilding published in 1979 documents a sharp increase in new projects in the 12th century, leading to an eventual peak of new starts around 1280. All these changes helped the economy along. Domesday Book suggests that, contrary to popular belief, the English economy had fully recovered by 1086. Data for some estates can be spotty: but a conservative reading of the book shows that the aggregate wealth of England barely changed in the two decades following Brentry. Taken at face value, total wealth actually increased. Of the 26 counties for which there are decent data, half actually rose in value. + +Things only got better. Real GDP growth in 1086-1300 was probably two to three times what it was in the pre-conquest period. GDP per person grew strongly, too, perhaps from £1.70 in 1086 (in 1688 prices) to £3.30 by 1300. Mr Thomas suggests that productivity may have improved. To fund the infrastructure heavier taxes had to be levied on peasants, which “forced them to work harder”. + +“In mad fury I descended on the English of the north like a raging lion” + +People had more money, and they wanted to spend it. According to a paper by John Langdon and James Masschaele, prior to the 12th century only a very small number of fairs and markets can be documented. About 60 markets are mentioned in Domesday Book. But traders and suppliers bloomed as the economy expanded: around 350 markets existed by the end of the 12th century. + +The rapid commercialisation of the English economy had profound effects on workers. Slaves, a significant minority of the population before the invasion, were freed: in Essex, their number fell by a quarter in 1066-86. Lanfranc of Pavia, William’s appointee as archbishop of Canterbury, opposed the export of slaves, finds Mr Thomas; Christian thinkers tended to have “mild qualms” about slavery. By the 12th century, it had almost completely ended. + +Labour became more specialised, and more people became self-employed or worked for wages. The share of the population living in towns rose from 10% in 1086 to 15-20% by the turn of the 14th century (London’s population soared). Over 100 new towns were founded in 1100-1300; the population of England jumped from 2.25m to 6m. + +Though the country as a whole fared well, not every part of it did. The conquest was longer-lasting and more brutal in the north. People in places like Northumbria and York did not consider themselves English, let alone French (their allegiances were more with the Scots and Scandinavians). So they launched a series of rebellions shortly after the Normans took power. + +William showed no mercy in crushing them. His campaigns came to be known as the “harrying of the north”. According to Orderic Vitalis, another chronicler, on his deathbed William recalled what he had done. “In mad fury I descended on the English of the north like a raging lion...Herds of sheep and cattle [were] slaughtered [and] I chastised a great multitude of men and women with the lash of starvation.” + +According to Domesday Book, in 1066 estates in southern England were somewhat richer than northern ones. But with Brentry, the gap jumped: by 1086 southern estates were four times as wealthy. The scale of the destruction was astonishing. A third of manors in northern counties were marked as “waste”. In Yorkshire, the county hardest hit, 60% of manors were considered to be at least “partially waste”, while total wealth fell by 68%. The population of York, the city at the centre of the harrying, probably halved. In 1086, no part of the country north of present-day Birmingham had an income per household higher than the national average. The country grew more unequal: the Gini coefficient of English manors rose from 64 before the invasion to 71 after (a Gini coefficient of 100 would mark perfect inequality). In terms of average estate wealth, the richest county was seven times richer than the poorest in 1066, but 18 times richer in 1086. + +The north may always have been destined for relative poverty: it has poorer land and a worse climate; it is farther from markets. But economic history shows that long-ago events can leave lasting scars. William’s depradations could well explain, in part, the northern poverty that gives modern Britain Europe’s highest regional inequality. And, almost a millennium later, descendants of the conquerors still enjoy disproportionate privilege; Gregory Clark, an economist at the University of California, Davis, finds that students with Norman surnames from Domesday are still over-represented at the universities of Oxford and Cambridge. So it may not be surprising that the regions which suffered worst in the conquest were more likely to have voted to throw off the modern Norman yoke in the Brexit referendum. But expect no economic good to come from it. + +This article appeared in the Christmas Specials section of the print edition under the headline “Brentry” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712047-england-indelibly-european-how-norman-rule-reshaped-england/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Prison tattoos + +A statistical analysis of the art on convicts’ bodies + +What can be learned from a prisoner’s tattoos + +Dec 24th 2016 | LOS ANGELES + + + +IN THE mid-1990s a man named Frank, recently released from prison, came to Gregory Boyle, a Jesuit priest in Los Angeles, for help. Frank was having a difficult time finding a job, in part because of his chequered past. It probably wasn’t helping that he had the words “FUCK THE WORLD” inked across his forehead. + +Father Boyle hired Frank to work at a bakery he had set up to provide jobs to people trying to go straight. He also found a doctor to help remove his act of nihilistic rebellion from his face. The bakery was the first business in what is now Homeboy Industries, a non-profit which has since grown to be America’s largest gang-rehabilitation centre, offering employment and other services to hundreds of former gang members. Its free tattoo-removal service has become the organisation’s biggest claim to fame. + +Such programmes are spreading all across America. Half a mile from Homeboy, at the Twin Towers correctional facility, a Los Angeles County jail, inmates on good behaviour are eligible to have their tattoos removed free of charge while still incarcerated. The process is painful—one ex-convict describes it as being hit by a rubber band that’s on fire—and can take multiple sessions stretching over months. But many decide that changing the personal yet public messages written on their skin makes the pain worth facing. + +Talking to the prisoners reveals that sometimes it is the personal that matters most. When asked what suddenly spurred him to want to erase the name of an ex-girlfriend, Edward Marron at Twin Towers responded matter-of-factly that his “baby’s mom didn’t like it”. (On his left arm the name of another ex-girlfriend is almost but not entirely obscured by a cover-up tattoo of a tree.) Some just resent the shoddy craftsmanship of their prison ink—one inmate wants to have his Pittsburgh Steelers tattoo removed so it could be redrawn by a professional. + +However, tattoo removal can be a more meaningful endeavour: zapping away an old tattoo can change how others see you. When those others are judges, or prospective employers, that can be good; when they are erstwhile gang-mates, it can carry risks. Perhaps most important, removing your tattoos can also change how you see yourself. + +The personal is statistical + +Individuals choose to write stuff on their bodies—or erase it—because of what that specific tattoo means to them. But the prevalence of tattooing in America’s prison population means that, in principle, it should be possible to formulate general rules about what people say on their bodies, too—to add a statistical meaning to the tattoo’s biographical, or simply graphical, one. The Economist decided to investigate what inferences about a life of crime it might be possible to draw from different types, and numbers, of tattoos. + +The websites of many state prisons feature public, searchable databases of their inmates. The data usually include their names, height, weight, demographics, criminal histories, and, sometimes, whether or not they have any distinguishing marks, including tattoos. The most impressive of these, for our purposes, was that of the Florida Department of Corrections (FDOC): a downloadable database featuring records for all the 100,000 inmates currently incarcerated in the Florida state prison system. It provides a great deal of detail on their markings as well as their ethnicity, age and crimes. With a few lines of code it is possible to discover what tattoos a particular Florida inmate has, and where on their body they are located. + +The most obvious thing these data show is just how common tattoos are. Our tabulations of the data show that three-quarters of the Florida prison population has at least one tattoo; the median inmate has three. The data also confirm how generational criminal tattoos are: a whopping 85% of prisoners under 35 have tattoos compared with 43% for prisoners aged 55 and over. In the public at large the rate is 23%. The majority of these tattoos have no explicit associations with the criminal world. The most popular designs and motifs include names, animals, mythical creatures (dragons and unicorns are especially voguish) and Christian symbols such as crosses, rosary beads and scrolls with verses from scripture. + +The database shows relatively few inmates with overtly criminal tattoos. For example, 15% of white inmates had heart tattoos, while just 3% had tattoos relating to the white-supremacist movement. Some tattoos reflect remorse: at least 117 inmates have tattoos with variations of the phrase “Mother tried”. Thirty-one Florida inmates appear to be big fans of the hip-hop group NWA, sporting “Fuck the police” tattoos. Some tattoos are humorous: at least seven inmates have the words “Your name” tattooed on their penises. + +Different demographic groups opt for very different tattoos. Unsurprisingly, white inmates are more likely to feature images associated with the white-supremacist movement: swastikas, Iron Crosses and the like. Hispanic inmates, often raised in Catholic households, favour Christian imagery: the Virgin Mary is a common subject. Black inmates prefer words, eg “Precious”, and often carry slogans relating to gang life. Female inmates are more likely to carry tattoos of butterflies, hearts and the reminder that “This too shall pass” (“Boss bitch” isn’t often seen on men, either). Male inmates are more likely to have tattoos of images directly relating to incarceration such as prison bars and guard towers. + +If people’s ethnicity and sex determines their tattoos, can the same be said of their types of crime? Using data from the FDOC, The Economist built a series of statistical models to predict the likelihood criminals had committed particular crimes based on their demographic traits and choices of tattoos (see table). + + + +Our analysis finds that inmates convicted of property crimes and weapons-possession offences have the most tattoos, while sex offenders, particularly those convicted of paedophilia, tend to have the fewest. Inmates with at least one tattoo were actually 9% less likely to have been incarcerated for murder than those without. The effect is even more pronounced for those with tattoos on the head or face, who are around 30% less likely to be murderers. Similar associations can be found for perpetrators of domestic crimes. Those relationships hold even after controlling for age, race and sex. + +Some prison-specific motifs are also more common among the less violent. These include tattoos of clocks without hands, prison walls and spider webs, all reflecting the tedium of incarceration, and a popular tattoo depicting the thespian masks of comedy and tragedy along with the slogan “Laugh now, cry later”. Such tattoos are positively associated with low-level offences, but negatively associated with homicide. + +Inmates with Christian tattoos—that is, those inked with images or passages from scripture—do seem to be slightly more virtuous. They are 10% less likely to be murderers than those without (this result holds regardless of any difference in types of crime committed between Hispanic and other prisoners). But though the godly may be slightly more good, the devilish are not obviously more evil; tattoos featuring pentagrams or images of Satan are not statistically significant predictors of homicidal tendencies. + +Kevin Waters, a criminologist at Northern Michigan University and former Drug Enforcement Administration agent, notes that understanding which tattoos are purely aesthetic and which are signals can be a lot of help to law enforcement, distinguishing truly hardened criminals from posers—gang members do not take kindly to outsiders adopting their imagery. What can tattoos more directly associated with criminality tell us about an inmate? + +A common Florida prison tattoo, predominantly seen on Hispanics, features three dots between the thumb and index finger. The tattoo is shorthand for mi vida loca, or “my crazy life”, and its wearers are 45% more likely to have been jailed for murder. Members of the Latin Kings, the largest gang in Florida, often sport tattoos of a five-pointed crown or the letters “ALKN”, which stands for “Almighty Latin King Nation”. Our analysis shows that inmates bearing such tattoos are especially dangerous—they are 89% more likely to be killers. + +The truth in black and grey + +Nazi imagery is the most obvious characteristic of white prison gangs, but they also favour classically European images ranging from four-leafed clovers to the Valknut, a Viking symbol comprised of three interlocking triangles. Perhaps because of their ubiquity, white-supremacist imagery is not as predictive of murder charges as some other tattoos—still, we find that inmates bearing such symbols were 19% more likely to be murderers. + +Picking up on your cellmate’s record from his skin is doubtless a useful skill for those inside. Policymakers, though, may care more about what tattoos say about the future than what they reveal about the past. Nearly half of inmates released from federal prisons and placed under supervision, and three-quarters of those from state prisons, are rearrested within five years of release. Demographics serve as depressingly effective predictors of recidivism. At the federal level, eight years after release, men are 43% more likely to be taken back under arrest than women; African-Americans are 42% more likely than whites, and high-school dropouts are three times more likely to be rearrested than college graduates. + + + +How do tattoos fit in the picture? In a study published in 2013 Mr Waters, along with fellow researchers William Bales and Thomas Blomberg, looked at the link between recidivism and the presence of tattoos in Florida prisoners. They found that after controlling for demographics and crimes committed, inmates with tattoos were 42% more likely to be re-incarcerated for committing a violent crime. A subsequent study by Kaitlyn Harger, now of Florida Gulf Coast University, found that upon release, ex-cons with tattoos could be expected to last just 2.4 years outside prison before being re-incarcerated, compared with 5.8 years for those without. The effect was especially pronounced for those with tattoos on the hands and face. + +Our own analysis of Florida prison data corroborates previous research. We find that of the 60,000 first-term prisoners released between 1998 and 2002, 45% have since landed themselves back in prison. Tattoos are unreasonably effective predictors of recidivism: we find that of the inmates who have been re-incarcerated, 75% percent had tattoos. Just 30% of the former convicts who have managed to stay out of prison were noted as having tattoos. Gang life looks notably hard to escape. Eighty-one per cent of those recorded with Latin Kings tattoos were rearrested at least once after their initial release. + +Predictive as they may be, it would be hard and probably foolish to argue that the tattoos cause the recidivism; far more likely that both reflect something else about character and circumstance. Similarly, tattoo-removal programmes seem unlikely in and of themselves to make anyone an intrinsically better person. But they can reflect a genuine investment in change (remember those burning rubber bands) and they may also help reduce the amount of discrimination reformed ex-cons face. + +As tattoos permeate the mainstream, though, being ink-free may mean less and less. Attitudes towards tattoos are liberalising: in a study that the Pew Research Centre, a think-tank, released in 2010 38% of Americans aged 18-29 had tattoos, compared with 15% for those aged 46-64. Indeed, an intriguing example of their mainstreaming can be seen in the influence of Californian prison gangs on tattoo culture at large. + +Tattooing behind bars is prohibited. This does not come close to stopping it; but it does mean inmates must be creative when it comes to art supplies. One constraint is ink, which often has to be improvised from materials like boot polish or the soot from burned textiles—say, cotton. Such sources limit artists to monochromatic tattoos. + +Finding the right tools can be challenging too, as hand-poking a tattoo on one point at a time can be both laborious and painful. A breakthrough came in the 1970s when inmates in California discovered how to create improvised tattoo guns using the motors from cassette players. The new gadgets made tattooing behind bars quicker, but featured only a single needle, which made drawing thick lines more difficult. + +These constraints, along with the aesthetic sensibilities of Hispanic prison gangs, led to an entirely new style of tattoo—the “black and grey”. The style’s thin lines and colourless palette was put to the service of more realistic imagery than Americans had previously been accustomed to. The style quickly spread to prisons in other states—and then to the outside world. + +Freddy Negrete, one of the original pioneers of the black and grey when an inmate (and the originator of the “Laugh now, cry later” motif), notes that initially, people on the outside got the tattoos so as to look as if they had been in prison. But he suspects that the hipsters and celebrities he now tattoos in the same style at his parlour on Sunset Boulevard know nothing of the style’s origin. + +Nor, it seems likely, would most of them feel comfortable around the gang members from whom their style of tattoo is derived. Walking through the doors of Homeboy Industries is a jarring experience for those who have no previous experience of a life of crime beyond the occasional speeding violation: the dozens of former convicts decorated with images of skulls and Aztec warriors in the lobby look pretty forbidding. Some are inked from head to toe. Very few are keen on eye contact. + +But walking through those doors for job advice, for a tattoo removal, or for any sort of help can be just as difficult. The staff, many of them former convicts themselves, are eager to help, but the criminal life is not one which fosters trust in others. Many former convicts have too much pride to ask for help. Others are convinced that they can never reform themselves. But for those who can muster up the courage, removing the marks of a prison tattoo can be the ultimate act of rebellion. + +This article appeared in the Christmas Specials section of the print edition under the headline “Crime, ink” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712032-what-can-be-learned-prisoners-tattoos-statistical-analysis-art/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Postcard from Dandong + +Politics and pity on the border of China and North Korea + +The border between the two countries shows how they have grown apart + +Dec 24th 2016 | DANDONG + + + +“LOOK! There’s one!” shouts a member of the tour party as 40 people raise their phones to take a picture: “Three of them, up there on the mountain!” Commentary from another tour-boat blares out over the Yalu river: “There are two North Korean farmers. They are using their hands!” Moments later all eyes turn to watch a man sifting for shells, and then a soldier emerge from his turquoise sentry post. The Koreans are clearly used to the gawping hordes: few glance up at the boatloads of laughing, chattering Chinese. + +Mao Zedong said that China and North Korea were as close as lips and teeth. Here, near the border town of Dandong, they are separated by just a few hundred metres of murky water. But the gulf between them is decades deep. + +Most of the world thinks about this 1,400km-long border in terms of economic sanctions. The international community has been trying for years to constrain North Korea’s nuclear-weapons development with trade restrictions, and China is its biggest trading partner (Congo comes a distant second). In March 2016 the United Nations imposed its most severe sanctions yet after the pariah state staged a fourth nuclear test, apparently aimed at making its bombs small enough to sit on missiles. These sanctions were further stiffened in November. + +Dandong, an urban backwater in the armpit of Manchuria (see map), is at the sharp end of this sanctions regime. It is just one kilometre from North Korea’s sixth biggest city, Sinuiju, and it is far closer to Pyongyang, the North Korean capital, than it is to Beijing. More than two-thirds of Chinese trade with North Korea flows through it. In September America filed criminal charges against a Dandong company and several of its citizens, accusing them of sanction-busting. + + + +Ever stronger restrictions on the lorries carrying goods across the rickety single carriageway of Dandong’s “Friendship Bridge” might seem a worrying prospect for the city of 800,000 people. But Dandong has found another way to profit from its propinquity to North Korea. All told, trade accounts for less than a third of the city’s GDP. Tourism, on the other hand, provides half of its GDP. And as trade falls, tourism grows. + +Dandong has various modest attractions. Locals boast of its sweet peaches, plentiful blueberries and wild silkworm pupae; the Qianlong emperor is said to have enjoyed its hot springs in the 18th century. Yet the vast majority of people who visit the city these days come because of what is across the river. Even the easternmost part of the Great Wall, a few kilometres to the north, is appealing mainly as a vantage point to spy on the hermit kingdom. + +Just as Hong Kongers used to peek into China in the 1970s to see hard-core socialism in action, so today’s Chinese tourists troop to Dandong. Many come to gawp as at a zoo: the Chinese authorities have put up signs urging tourists not to throw objects to people on the North Korean side or “provoke” them, not to climb any fences and not to “fly sky lanterns, drones or small aircraft” near the border. Some treat it as any other outing, paying more attention to their selfie sticks and shopping than to life on the other shore. Korea (many tourists neither know nor care that there is a difference between the north and south) is just a largely unexamined backdrop against which to hang out with their friends. + +For others the politics and the poverty are part of the point. They see in North Korea a reminder of their own sad past. Many look at it with a tinge of nostalgia: the uncluttered shore across the water reminds them of the Mao era, which they think of as a simpler, more equal time in China. “It’s the only true Socialist country left,” says the owner of an old military telescope who charges tourists 10 yuan ($1.50) to look out at “beautiful North Korea” from the summit of the Great Wall, before returning to the war film he is watching on his phone. + +C*A*S*H + +The two People’s Republics were born just over a year apart, that of Korea in 1948, that of China in 1949. After North Korea invaded the South in 1950 China’s support was instrumental in repelling the American-led response and producing a peninsula divided into two countries. To this day, North Korea’s main importance to the Chinese is as a buffer against American-backed South Korea. + +The role it played in the Korean war is part of the Chinese Communist Party’s sustaining mythology, a symbol of bold China going toe-to-toe with America. That, perhaps, explains why military fatigues, or rather their modern fashion incarnation, are the clothing of choice for many tourists. Sui Liufeng, from Fuxin in northern China, is finding it hard to hold her selfie stick still on a moving boat. A badge on her zip-up camouflage tracksuit reads “Hot Field Army” and an American flag is patched on to her left arm; her camouflage shoes have blue laces but the rose in her hair is regulation khaki. + +It is Ms Sui’s first visit. Another member of her tour group, Lu Zhufeng, wearing matching camouflage top, trousers and hat, has been to Dandong three times in two years. “Red tourism” that celebrates revolutionary history is now a huge industry in China: millions of tourists each year pay homage at sites such as Mao’s birthplace or Yan’an, the Communist Party’s early base. Many are pensioners who remember life under Mao. Ms Sui is typical: she retired at 50 and she has the time and money to explore. + +This fast-expanding cohort is one reason China’s domestic tourism has increased at 10-15% a year for much of the past decade. Only 5% of Chinese people hold a passport; Dandong gives the other 95% a chance to experience the abroad at home. A decade ago, the city had almost no tourist infrastructure. Now it is a holiday town, with a promenade, seafood restaurants and shops full of tourist tat. Touts hawk tours beside the giant Mao statue at the railway station. Visitors rent Korean dresses for photos. A “pleasure island” has a food court and performance area with a view of North Korea. The local government is building a new museum to join China’s only memorial to the Korean war. Visits to the “Broken Bridge”, which the Americans destroyed during the war, generate far more traffic than the Friendship Bridge just beside it. + +Appealing to the better nature of Chinese tourists is good business: the skipper of a speedboat sells cigarettes to visitors who want to throw them to North Koreans. (Soldiers on the Korean shore openly beg for smokes and food.) A North Korean in khaki clothes and a blue flat cap brings his small vessel alongside a Chinese speedboat to offer ginseng, salted duck eggs and kimchi. Another trader pokes his suntanned face out from under a tarpaulin, wearing a wool coat with a resplendent white fur collar. Tourists gave them their clothes, explains the Chinese speedboat driver, who says the fur-collared man is disabled. Later that day the trader reappears by a larger tour boat: the “disabled” man is visible in the distance, standing up in a second boat and stretching his arms to the sky. + +Unlike most poor countries, North Korea is cursed neither by geography nor climate: its underdevelopment is instead a choice of its youthful dictator, Kim Jong Un, and his father and grandfather before him. Until the mid-1990s North Korea’s GDP per person was higher than China’s. Chinese growth took off just as the Soviet Union collapsed, dragging the North Korean economy down with it. Power cuts became widespread; the regime subjected an already calorie-poor North Korea to famine. Today, incomes in North Korea are an eighth of those in China. + +The shores of the Yalu testify to the contrast. Dandong’s skyscrapers are typical of any modern Chinese city. Until recently the North Korean riverfront was bare apart from a lone Ferris wheel. Now there appears to be a flashy conference centre, a water slide and a few tall buildings. That might suggest change. But the stylish blue and white tower block is in fact a facade stuck on to a much shabbier building. The Ferris wheel does not budge. The water slide has no water. + +The game of life is hard to play + +After dark, Dandong’s buildings and pleasure boats drip with neon. A single tacky gift shop claiming to sell North Korean souvenirs (some have “made in China” labels) shines brighter than the entire Korean shore. There, the lights are few but constant; never dimming, never changing, night after night. The message is more truthful than Mr Kim’s Potemkin posturing would have it: the lights are on but no one’s home. + +In the early years of Kim Jong Un’s rule, half a decade ago, cheap Chinese goods flooded across the border. The two sides agreed China would build a new bridge and high-speed rail links. But Mr Kim, whom the Chinese call “Kim Fatty the Third”, went on to sabotage the plans. First he staged a nuclear test to coincide with Xi Jinping’s accession as China’s president in 2013. Then he executed his uncle, Jang Sung Taek, a powerful official who had been the main conduit between the two regimes. + +Dandong New City, a few kilometres down the shore, is a monument to a trade hub that never was. Rice paddies were paved over for apartment complexes such as “Left Bank of Uptown” and “Singapore City”, but only 15,000 people live in the new city, which has a capacity of 400,000. A four-lane suspension bridge straddling the Yalu was completed in 2014, but the North Koreans never built a road to meet it. A customs building with an empty rectangular space in the middle, intended to represent the Chinese character for “gateway”, instead acts as a monumental metaphor for a grand plan with a hole in it. + +Trade between the two had dropped sharply from its high in the early 2010s even before the sanctions of 2016; but China is too wary of a North Korean collapse to cut its old ally off completely. Every evening lorries waiting to enter a goods yard for inspection block traffic opposite Dandong’s branches of Gucci and Max Mara. Customs officials are supposed to look for sanctioned goods, but it is hard to discern how rigorous they are. The yard is not guarded; anyone can wander in off the street. One former lorry driver says customs officers know many drivers well, so may not check every load. + +Elsewhere on China’s fringe, at the borders with Laos and Myanmar in the south and Pakistan in the west, the People’s Liberation Army (PLA) has a heavy presence. Yet there appear to be few soldiers in Dandong. At a narrow point in the river known as “One Step Across” a work team of 12 North Koreans is clearly visible. But China’s fences are just six feet high, with a small roll of barbed wire above. For long stretches there are only a few metres of open water between the two countries, not even a fence. At Hwanggumpyong, where the border between the countries is on dry land, there is just a gate with a single padlock; the guard on the North Korean side has no Chinese counterpart. More surveillance cameras watch an average street in any Chinese city than survey the border in Dandong. + +You might expect a constant flow of defectors from a country as unpleasant as North Korea. At times there have been. Local lore has it that in the 1990s, during the famine, a Chinese farmer could buy a Korean wife for just a sack of rice. Today, though, it seems that surprisingly few people cross over. The brokers who arrange such things are prohibitively expensive; refugees who flee to China are labelled “illegal economic refugees” or “criminals” and sent back if they are caught. + +There are still some illegal Koreans in Dandong—and legal ones, too. Locals claim to be able to spot them at a glance: they have old, drab clothes, says one man; many wear a small lapel pin bearing the image of Kim Il Sung, grandfather of the current dictator. Most of those walking the streets openly are truckers, a privileged job. Local Chinese garment factories also hire teams of Koreans sent by their government to earn cash. They are cheap, stable employees. “North Korean street”, close to the goods yard, serves all these groups: it has a dog meat restaurant and a North Korean bakery with pretty but tasteless treats made of black rice, sesame and pumpkin. One block south are more prosperous shops selling products from South Korea. Even here the two Koreas are divided. + + + +For many Chinese tourists, the crowning glory of the Dandong experience is North Korean cabaret. The government owns several restaurants in Dandong, and many more across China. They are a useful source of hard currency. Each has similar decor, pricey but mediocre food and identikit Korean waitresses in red collarless suits, all from well-connected families in Pyongyang. Most do a three-year stint: one 24-year- old says she misses her parents after two years away; she last called them in January. + +Performances begin at 6.30 each evening. Two women with painted smiles wearing short, sparkly mustard dresses and five-inch platform heels slap at acoustic guitars; another lifts her saxophone high in a way only possible when the instrument is made of plastic, not brass. All look as though they have learnt how to perform by watching lip-synched 1980s pop videos. Waitresses clap and persuade middle-aged Chinese men to join them on stage. The set finishes with an anthem to the PLA. Across the river the unchanging night lights burn on. + +This article appeared in the Christmas Specials section of the print edition under the headline “Bright lights, big pity” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712060-border-between-two-countries-shows-how-they-have-grown-apart-politics-and-pity/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Barack Obama + +A reflection on Barack Obama’s presidency + +Barack Obama’s presidency lurched between idealism and acrimony but some of his accomplishments will endure + +Dec 24th 2016 | CHICAGO, HONOLULU AND WASHINGTON, DC + + + +1 “A skinny kid with a funny name” + +Watch it again. He is unusually stilted at the beginning, as you might expect of a debutant on the autocue and the national stage. But soon he finds his rhythm, those crescendos alternating with electric pauses, ecclesiastical notes chiming with his scholarly charisma in a musical voice. Grippingly, he recounts the story of his life, in his telling a parable of unity in diversity—a moral he was still pushing 12 hard, disillusioning years later. “We are Americans first,” he urged in the Rose Garden on the day after Donald Trump was elected. + +In fact, by the standards Barack Obama subsequently set—in a presidency defined by its speeches, and perhaps to be best remembered for them—his turn at the Democratic convention in 2004 was mundane. But his ascent will still be dated from the moment he loped onto that stage in Boston, with the rangy gait that became as familiar as his smile: an unknown politician from Illinois, soon to be the country’s only African-American senator, before, in short order, becoming its first black president. The paean he offered to America, a country that had embraced him as “a skinny kid with a funny name”, was also a kind of dare; the self-deprecation camouflaged a boast, since many in his audience saw the obstacles he faced as clearly as he did. “I’m the African-American son of a single mother,” Mr Obama reportedly told Binyamin Netanyahu when, years later, Israel’s prime minister lectured him on the world’s hazards, “and I live here, in this house. I live in the White House.” + +His presidency will be counted in speeches because its trials proved harder to overcome than the barriers he scaled to attain it. Often he spoke as no other president could, becoming, through his identity and eloquence, a receptacle for the hopes of Americans and of—and for—the world. Think of his speech in Berlin in 2008, when he extolled multilateralism and the rule of law, or his now-defunct conciliation in Cairo the following year. Think of his eulogy after the Charleston killings. Yet posterity might score him higher on a broader metric had he been as effective in the more intimate persuasions of Congress, as consistent in projecting empathy as at exhortation, or more resolute abroad; had he been as adept at championing legislation or facing down tyrants as he could be at stirring hearts. + +He proposed bold reforms, but some were never enacted, while others seem set to be undone; his flickering diplomatic bravery was offset by a sort of rash timidity. He was an incarnation of racial healing, yet at the end of his tenure the civil-rights triumphs of the 1960s seem more remote, to some African-Americans, than the civil war of the 1860s. Preternaturally though typically calm (too calm, for some tastes), the ratiocination almost visible in his composed features, he was obliged to welcome into the Oval Office a successor who, by spearheading the “birther” movement, had contested his right to occupy it. His critics called his an imperial presidency, and he did indeed govern more by executive authority than he would have liked and than others have before. But in truth his presidency demonstrated the erosion of that office’s power, and maybe of the power of America itself. + +2 “Inaction tears at our conscience” + +Barry Obama, as he was then known, practised relentlessly on the outdoor basketball courts at Punahou, the idyllic private school he attended in Honolulu. “He loved the game of basketball as much as any player I’ve ever had,” says Chris McLachlin, his coach. He made the all-conquering team less than he hoped, but when he played, says Alan Lum, a team-mate and now a teacher at the school, he was “a fighter”. Arne Duncan, his longtime education secretary and a regular in White House games, agrees. “He plays to win,” Mr Duncan says. “He might have a nice smile, but he’s a killer at heart.” The court is “one of the few places he could be Barack Obama, and not be the president.” + +The escapism of basketball, and the tenacity he brought to it, are not the only continuity between his presidency and his old Honolulu neighbourhood, where the modest apartment he shared with grandparents, his school, the Baskin Robbins in which he once worked and the hospital of his birth are bounded by a few blocks, but the views sweep out over the city below and the mountains beyond. His Kenyan father’s absconsion, and the extended absences of his adored Kansan mother, left him prematurely self-reliant. He developed, says Maya Soetoro-Ng, his half-sister, “an air of independence which is misinterpreted as aloofness,” a strength and liability which was another of the traits that he carried on to the mainland and into office. As one former White House official observes, he “doesn’t need or show a lot of love”. + +As unlikely an origin as any modern president’s, this was an upbringing at once blissful and claustrophobic, privileged and marginalised. It was worldly in its Asian components yet sheltered from the harshest aspects of America, including, for the most part, its racism—even if, in Mr Obama’s recollections, Hawaii’s live-and-let-live multiculturalism was less accommodating of his blackness than his peers assumed. As with many driven outsiders, this alienation supercharged his ambitions. His background also shaped the internationalist world view that guided him after those ambitions were realised. + + + +By virtue of his age, Mr Obama was less influenced by the second world war and the cold war, and less devoted to the alliances they nurtured, than were his immediate predecessors. His sense of the wideness of the world was extended by a childhood spell in Indonesia. Both time and place, then, made him a man of the Pacific. That orientation was manifest, in office, in the pivot towards Asia that he hoped would be a centrepiece of his foreign policy—though he failed to deliver its central element, America’s participation in the Trans-Pacific Partnership. An ingrained sympathy for imperilled, maritime places was manifest in his concern for climate change—though the international deal on carbon emissions that he finalised in Paris is in jeopardy too. + +Any president elected in 2008 would have been subject to certain inexorable forces: a shift in global heft to China; a popular demand for retrenchment after George W. Bush’s adventurism. But, more than others, Mr Obama looked aslant at American power, seeing a need, as he put it in his first inaugural address, “for the tempering qualities of humility and restraint”. “If you are willing to unclench your fist,” he told America’s foes, “we will extend a hand.” And he did. He shook Raúl Castro’s hand at Nelson Mandela’s funeral, and restored relations with Cuba. He patiently negotiated sanctions on Iran, then courageously closed a deal to constrain its nuclear programme—a pact that could, at a minimum, delay a military confrontation and may stand as his biggest achievement. These moves helped to revive the world’s opinion of America, which the Pew Research Centre’s surveys suggest is warmer in many countries than when Mr Obama came in. + +What is it good for? + +What will survive of him otherwise, though, are the wars that he reluctantly fought, and the wars that he declined to. He was awarded the Nobel peace prize in the first year of his administration; in his second inaugural address he declared to applause that “A decade of war is now ending.” But on his watch his country has fought ceaselessly. + +The great unknown unknown of his presidency was the Arab Spring, which helped ensure that the wars were inescapable. He had opposed the invasion of Iraq, and as he had promised he brought the troops home from there, perhaps prematurely, in 2011. But the subsequent inferno has sucked them back in. As Islamic State metastasised, he tried—and failed—to make his countrymen see it in a long perspective which, to many of them, seemed naively otherworldly. The “just” war in Afghanistan also proved interminable. In 2016 America has bombed seven countries, often from unmanned drones, his preferred instrument of destruction. + +“Inaction tears at our conscience,” he said in his Nobel acceptance speech, “and can lead to more costly interventions later.” Yet, over Syria, that is what Mr Obama chose. The crunch point came in 2013, when he decided not to enforce the “red line” he drew the previous year to deter Bashar al-Assad’s use of chemical weapons. + +Mr Obama didn’t miss his chances in Syria, his admirers say; he didn’t dither. Rather he turned them down. This, after all, is the man who approved the raid on Abbottabad that killed Osama bin Laden—a gamble that might have ended his presidency, as the botched rescue of the Iranian hostages holed Jimmy Carter’s. (As Leon Panetta, a former director of the CIA and defence secretary, says of Abbottabad, “there was a certain attraction to just blowing the hell out of the place.”) Mr Obama believed that bombing Syria for the sake of credibility was dangerous and “dumb”, and that further involvement would enmesh America without saving civilians. He still thinks that. One former adviser predicts he will regret what he did in Libya—helping to overthrow Muammar Qaddafi, but replacing him with chaos—more than what he refused to do in Syria. + +No one knows what might have been. What is clear is that the Middle East, convulsed by Mr Obama’s blundering predecessor, is even more wretched after his tumultuous reticence. A terrible war, millions of refugees: Admiral Michael Mullen, a former chairman of the joint chiefs of staff, describes Syria as “Obama’s Rwanda”. And into the Syrian void stepped Vladimir Putin, the anti-Obama who has shadowed his presidency, profane, unrestrained by scruple and supremely unilateral. Some trace a direct line from that unenforced red one over chemical weapons to Russia’s seizure of Crimea and to China’s island-building in the South China Sea. As Mr Panetta says, the episode “raised questions about whether or not the United States would stand by its word.” + +Martin Indyk, a former ambassador and envoy for Mr Obama now at the Brookings Institution, sees, as an underlying rationale, a switch in emphasis from traditional geopolitical rivalries to global concerns such as climate change and nuclear proliferation—which require co-operation with the likes of Mr Putin or China’s Xi Jinping. Mr Obama’s successful, and thus overlooked, handling of the Ebola outbreak in West Africa fits into this category. He beseeched other nations to jointly address these borderless issues, by agreeing and observing enlightened worldwide rules. + +But his allies wavered, while his adversaries saw in his yen for collective action an admission of American retreat. And perhaps, in a way, they were right. His record does indeed imply a humble view of both America’s interests and its influence: a fatalistic accommodation with what he sees as a tragically intractable world. A more introverted (if snarling) America, and a more uncertain, leaderless global order, may be part of his legacy, too. + +The simplest explanation of his wariness abroad is that he wanted to concentrate on his domestic policies and the change they could bring. “The problem”, says Mr Panetta, “was the world wouldn’t allow him to do that”. As it turned out, his opponents at home showed just as much reluctance. + +3 “Sing it, Mr President” + +“He fought for that,” says Cheryl Johnson, pointing to the bigger library that in the 1980s replaced the titchy one in Altgeld Gardens—a low-rise housing project on Chicago’s far South Side, polluted then and still by landfills, industrial sites and shoddy construction. Barack Obama is remembered as a young organiser whose grit overcame the wariness caused by his Olympian bearing, the air of a person born to more privilege than he was. He helped to get rid of the noxious fibreglass insulation in the project’s attics, Ms Johnson recalls, collaborating with her mother Hazel Johnson, founder of a pioneering community group, People for Community Recovery. + +In Chicago, thinks Reverend Alvin Love, pastor of Lilydale First Baptist Church and an old friend and ally of Mr Obama, he “became the person he was meant to be.” Landing there after student stints in California and New York, he met and married his wife and, later, cut his teeth in politics, including an improvingly failed run for Congress. He found his faith and joined a congregation, immersing himself in the black church and the civil-rights tradition it incubated, such that the cadences and motifs of both thereafter suffused his rhetoric. In Chicago he faced doubts over whether he was “black enough”, a question that overlapped, in a complicated way, with the poisonous and more enduring allegation that he wasn’t truly American. “Chicago is his real birth place,” Mr Love says. + +Some Obamaphiles bristle at the idea that he should be thought of principally as a black president—assessed in a segregated category of one. Yet race has been essential to his career, as well as to his finest oratory. The emergency remarks he made, in 2008, after the circulation of radical comments by his pastor, Jeremiah Wright, anticipated his address on the 50th anniversary of the Selma march. In both he advanced a dialectical view of history that transmuted racial traumas into occasions for collective progress, the landmarks of black liberation into milestones in America’s pursuit of perfection. If the story of race is America’s story, his trailblazing role in it must rank among his most lasting contributions. + + + +In “Dreams from my Father”, his memoir, Mr Obama wrote that on leaving Chicago for Harvard Law School he planned to bring the power he would acquire “back like Promethean fire” to communities like Altgeld. And he has—too much for some tastes, not enough for others. His Justice Department strove to protect voting rights (with no help from the Supreme Court). Punishments for cocaine and crack offences were made more proportionate. He pushed for policing reforms. Well before he took office, however, he had eschewed most explicitly race-based policies. “White guilt has largely exhausted itself in America,” he wrote in his second book, “The Audacity of Hope,” an insight amply corroborated by recent events. He believed the best way to help struggling African-Americans was to help strugglers everywhere. + +He helped them, vitally but to little recognition, in his handling of the crisis he inherited. The bail-outs and stimulus implemented in his first, fraught months in office not only averted economic catastrophe, saving the banks (eventually at a profit) and the car industry: the slant towards tax credits and welfare spending arrested what might have been a gruesome rise in poverty. David Axelrod, Mr Obama’s long-term adviser, laments a “collective amnesia about just how perilous these times were”: the most dangerous circumstances for an incoming president, he thinks, since Franklin Roosevelt’s in 1933. The changes Mr Obama oversaw, says the White House, will by 2017 have boosted the after-tax income of the bottom 20% of Americans by around 18%, relative to the policies that obtained at the start of his presidency. + +The Affordable Care Act helped, too. Without it, says Ms Johnson in Chicago, “I wouldn’t be able to afford my blood-pressure medicine.” Before, she didn’t have health insurance; many people in the neighbourhood used the emergency services as their basic care. “It was a blessing.” + +Nonetheless a visit to Altgeld suggests the Promethean fire sputtered. Not far from that library, etched into the crumbling wall of a shopping precinct, is a long list of locals who, Ms Johnson explains, have died at police hands or of environment-related illnesses. “There goes another black brother,” concludes the inscription. All the shops bar the liquor store have closed. “Don’t nobody have nothing to do,” says a reformed troublemaker from elsewhere on the South Side, except “standing on the corner selling drugs, or gangbanging.” Those careers end two ways: “You either gonna get caught, or you gonna get killed.” “Hopelessness,” thinks Ms Johnson, “is a mental illness.” + + + +The black experience in America is as multifarious as the white one, and there is no racial monopoly on poverty; most poor Americans are white. Nevertheless, African-American communities continue to suffer disproportionately from the sort of problems that afflict parts of the South Side. For all the improvements in America’s schools, they are still one of the places the trouble starts. + +After knowing the president in Chicago, says Mr Duncan, “if he would have asked me to come and take out the garbage at the White House, I’d have said, ‘I’m in’.” As it was, his long spell as education secretary saw many more minority students go to college, more generous student aid and improved early-childhood provision. The gulf between black and white high-school drop-out rates narrowed (from 5.1 percentage points in 2008 to 2.2 in 2014). But, as Mr Duncan acknowledges, “the achievement gap is still unacceptably large,” not least because, under the prevalent localised funding model, “the kids who need the most, get the least.” Among hard-pressed families, de facto school segregation is rising: the number of students attending schools in which over 90% of students are Latino or black, and over 90% are poor, doubled between 2001 and 2014. + +The disparities widen in adulthood. Blacks still earn less than whites, even in similar jobs and with comparable qualifications. They are around twice as likely to be poor or unemployed. The net wealth of a median white household is 13 times higher than a black one, reflecting the particular havoc wreaked by the housing crunch on black families, who tended to have lower home equity. Black men remain wildly over-represented in prison. + +Many African-Americans expected faster progress. Some folks, says Mr Love—whose church is in a Chicago neighbourhood where 54% live below the poverty line—thought Mr Obama would ensure their economic rights, as Martin Luther King secured their civil rights. The disenchanted anger has been fiercest over police shootings of young black men in dubious circumstances: an old outrage, but now widely publicised by cell-phone footage, and denounced by a generation of black activists who grew up with the seeming reassurance of a black man in the White House. Michael Brown, Tamir Rice, Alton Sterling—their names form a litany which, along with the protests their deaths inspired, has been part of the soundtrack of the Obama years. + +“None of us can or should expect a transformation in race relations overnight,” Mr Obama said at the funeral of Clementa Pinckney, a victim of the racist massacre in Charleston in 2015, before unforgettably leading the mourners in “Amazing Grace.” (A microphone captured the moving entreaty, “Sing it, Mr President.”) To some activists, he seemed to have swallowed what MLK called “the tranquillising drug of gradualism”. As a result, the kind of implacability Reverend Wright once espoused is more widespread now than when Mr Obama was elected. + +Elation deflated + +Some white Americans, meanwhile, are irked by the persistent talk of discrimination, believing, as Carol Anderson of Emory University paraphrases, that “You got a black president, there is no racism,” and that African-Americans’ misfortunes stem from their own failings. Thus for all the elation about race relations that Mr Obama initially encouraged, the share of Americans who worry about them “a great deal” has almost doubled since 2008. Surveys by Pew record the bleakest outlook among blacks; whites, conversely, are far likelier to think race receives too much attention. In Dallas this July, in what may have been the last great display, in office, of his amphibious rhetorical power, Mr Obama grieved the murder of five policemen in terms that resonated more widely. It felt, he said, as if “the deepest fault-lines of our democracy have suddenly been exposed, perhaps even widened.” + +Amid the gloom, though, are reasons for optimism; because it bespeaks high expectations, the disappointment may even be one of them. One view, advanced by Mr Love, is that race relations are “not worse but more visible,” Mr Obama’s presidency forcing Americans to grapple cathartically with their prejudices. And, from a historical perspective, change of the kind he represented was always liable to rile those who, as Ms Anderson puts it, “see American society and its rights as a zero-sum game.” Mr Obama, remember, was a symbol of change as well as its agent: not just a black president but the harbinger of a demographic shift that will relegate non-Hispanic whites to a minority in the country by the middle of the century. In 2009 talk-show hosts ranted about black retribution. Many people told pollsters they were afraid—a fear which, in a generous interpretation, has always been an inverted form of guilt. + +The bloodshed that followed emancipation in the 19th century, and that accompanied the civil-rights movement of the 20th, suggests a backlash was unavoidable. That halting pattern, which retards but does not cancel progress, may have been on Mr Obama’s mind when he spoke, after November’s election, of the zig and zag of American history. As Reverend William Barber, a latter-day civil-rights leader in North Carolina, says of reactionary schemes to rig his state’s voting rules: “A dying mule kicks the hardest.” Sometimes it kicks very hard indeed. + +4 “A hard particle of reality” + +As a teenager, says Eric Kusunoki, one of Barry Obama’s teachers, “he was a very good listener,” skilled at negotiating the schoolyard cliques. From there, to Harvard Law School, to the Illinois state senate, his polymathic intelligence and flexible, Hawaiian charm neutralised adversaries and forged alliances. Literary critics admire his summer reading selections, musicians his playlists, scientists and tech entrepreneurs his acumen and curiosity. He is a talented wrangler of small children. Yet despite that wide-ranging appeal, his presidency has been among the most divisive in American history. “We cannot mistake absolutism for principle,” he said in his second inaugural, “or treat name-calling as reasoned debate.” He was already too late. + +Listening to politicians in Washington account for the rancour of the past eight years is like documenting irreconcilable sides of a terrible war. “I don’t wake up in the morning, ever,” insists Bob Corker, a Republican senator, “thinking that my goal that day is to stick it in their eye.” The trouble, he reckons, was that the Democratic majorities Mr Obama initially enjoyed in Congress bequeathed a “tremendous laziness” over bipartisan outreach (though he stresses that when the president did dabble in persuasion, he did an “exemplary job”). “It was, ‘Here’s the cake, eat it’,” complains Charlie Dent, a moderate Republican congressman. “It wasn’t, ‘will you help me bake the cake.’” Mr Obama, he thinks, “holds Congress in contempt.” + +Some Democrats, disappointed with Mr Obama’s communication with them, too, admit he could have been more affable. But others echo Steve Israel, a now-retiring Democratic congressman, who cites “the poison the Republicans injected into the atmosphere on day one.” In this telling, Mr Obama solicited Republican input on his fiscal stimulus, but they rejected his plan out of hand. The president “extended an olive branch,” says Mr Israel, and they responded “with a baseball bat.” + + + +This is the more convincing version. After all, Mitch McConnell, now the majority leader in the Senate, said in 2010 that his party’s top priority ought to be seeing that Mr Obama served only a single term. Some Republicans came to believe that defaulting on the country’s debts was a legitimate tool in their campaign against him, kamikaze tactics that presaged the wrecking ball of Trumpism. One speech of Mr Obama’s will be remembered less for what he said than what a listener did: the time, in 2009, when a congressman yelled “You lie!” during a presidential address. “No other president in history has given a speech to Congress and engendered that kind of reaction,” says Mr Axelrod. + +Republicans didn’t like the Dodd-Frank financial-regulation bill. They thought Mr Obama antagonistic to business. (Noting record-high share prices and strong corporate earnings, one official jokes wryly that “In our efforts to destroy the stockmarket, we failed miserably.”) Above all, they loathed Obamacare. They loathed it so much that, in 2010, not a single Republican voted for the Affordable Care Act; so much that they have tried more than 60 times to repeal all or some of it; so viscerally that, in 2013, some engineered a partial shutdown of the federal government in a quixotic bid to undo it. Some Republican governors turned down the federal money it made available to expand Medicaid in their states. + +Again, accounts of this reaction diverge. Senator Corker criticises Mr Obama’s timing. The early months of his presidency were, he says, “a hair on fire moment”, at which health reform was a mistaken priority. Mr Obama, he says, brought the Tea Party insurgency in the mid-term election of 2010, and the implacable mood of Congress thereafter, on himself. (Mr Axelrod says waiting would have meant Obamacare never happened: “If it didn’t get done in the first two years, it wouldn’t get done.”) Then there are the flaws and frictions intrinsic to a mash-up of a private health-care market with state subsidies and mandates. In a mildly redistributive system, some premiums are rising; adverse selection has led some insurers to withdraw. + +Most of these glitches are fixable. None makes Obamacare the un-American, socialist anathema of Republican imaginings. Meanwhile, as Mr Obama often points out, the law provided health insurance for around 20m people who, like Ms Johnson in Chicago, didn’t have it. The proportion of Americans without coverage is now the lowest in history—though many seem fated to lose it again. The ferocious antagonism was less a reasonable critique of an imperfect scheme than a self-interested bid to squish his presidency, gratifying the incandescent Republican base even if doing so harmed the nation. + +The limits to power + +Many democratic leaders leak political capital as they govern, their clout declining in office even as their proficiency improves. Republican election victories and recalcitrance meant that, in Mr Obama’s case, that process was rapid and costly, for him and for the country. America’s finances were patched rather than mended. Immigration remains unreformed. Gun regulations were not tightened, even after the slaughter of children at Newtown, Connecticut, in 2012—for Mr Obama the worst day of his presidency. Each new, avoidable massacre elicited condolences from him that escalated in tearful fury before towards the end subsiding into despair. (“He has to make the speech,” says Reverend Love, “but he can’t make the law.”) The oubliette at Guantánamo Bay remains in operation, despite the closure order he signed on his second day in the job and a last-ditch rush to depopulate it. On Mr Trump’s watch it may fill up again, just as the torture Mr Obama repudiated may be revived. + +Unable to pass laws, Mr Obama turned to executive decrees and regulations much more frequently, notes one old acquaintance, than he would have countenanced in his days as a constitutional-law professor. He used them to advance transgender rights and gay rights: after it was legalised, his support of same-sex marriage was emblazoned in rainbow lights on the White House façade. He used them to improve the lot of federal workers, protect consumers and shield some undocumented immigrants from deportation. He needed them to implement America’s commitments under the Paris climate-change deal, limiting emissions from power plants and cars. Benign as these edicts often were, this path was doubly risky. Many will be undone (some have stalled in court); and they set a precedent for President Trump. + +Did the colour of Mr Obama’s skin sharpen Republican resistance? Race has infected discussions of public expenditure in America so insidiously and for so long that it is fair to wonder whether Obamacare would have aroused the same passions had its progenitor been white. Mr Obama was not really an American, a few Republicans maintained, so never really the president. + +Nonsense, insist most of his opponents, in what, without prying into their hearts, must be an insoluble debate. In any case, wider factors contributed to the bitterness. Every statesman’s record is a compound of leadership and events, his own decisions and external trends he strives to harness. Mr Obama identified one that would define his own presidency a decade ago, in “The Audacity of Hope”: the way a canard “hurled through cyberspace at the speed of light, eventually becomes a hard particle of reality.” He was the first president of the Twitter age, in which the bully pulpit shrank, partisanship intensified and Americans settled into separate intellectual universes, immured in adamant opinions and, ultimately, discretionary facts. + +At the same time he governed through the fallout of the financial crash and the ongoing derangements of globalisation, with the rising feeling it induces, as he put it in the same book, “that America seems unable to control its own destiny”. Those forces have unbalanced economies and polarised politics across the world. He met them with the same analytic reasonableness which helped him navigate many crises soundly. That was not always the demeanour the country looked for in its therapist. + +5 “That was me” + +Like all presidents, Barack Obama has aged in public. Americans have measured his years in the White House, and perhaps the passage of their own lives, in the greying of his hair. Still, at 55, he leaves office 15 years younger than his arriving successor. He has plans. He will continue to be involved with My Brother’s Keeper, a public-private initiative that aims to steer disadvantaged youngsters away from trouble and into work. (“Guess what?”, Mr Duncan recalls him saying, on school visits, to pupils from broken homes. “That was me.”) He is writing another book. His family will stay in Washington until his younger daughter finishes high school in 2019; his library and foundation will be in Chicago. But according to the capital’s scuttlebutt he longs to spend more time in Hawaii—eating the icky shave ice which is a local delicacy, bodysurfing with the daredevils on Sandy Beach. “He didn’t want the job to be his whole self,” says his half-sister, Ms Soetoro-Ng, who still lives there. He is, she says, “remarkably unchanged.” + +Given the Democratic Party’s denuded leadership and Mr Trump’s agenda, he might feel obliged to intervene in politics more than he intended. The startling trajectory of his approval ratings suggests that many Americans will listen. He and the obstructionism he endured disappointed some, others never embraced him; plainly the affection he commands was not transferable to Hillary Clinton. For all that, and notwithstanding the anti-incumbency mood, he is twice as popular as George W. Bush was at the end of his second term, and roughly as well-liked as Ronald Reagan; the only two-term president in recent history to leave office more popular was Bill Clinton. “The last time I was this high,” Mr Obama joked at his last White House correspondents’ dinner, another forum in which his versatility shone, “I was trying to decide on my major.” + + + +The uptick in the economy doubtless helps: median incomes are finally rising; the unemployment rate is below 5%. But so must the absence of scandal in his White House, an exemplary probity that may seem even more of a recommendation in the years ahead. So does his unfeigned devotion to his wife and children, a commitment by no means universal among politicians, and which, say those who know him well, is a reaction to that childhood loneliness. Then there is his civility, even when insulted or traduced—another virtue burnished by comparison—plus his generosity. In 2008 he told Coach McLachlin, who he thought left him out of the basketball team too much, to look him up if he came to Washington. Mr McLachlin assumed he would be too busy; the president saw him five times. He wrote to Mr Kusunoki when he retired, and when he lost his wife. Unpublicised loyalty to old acquaintances is a fair indicator of character. + +And maybe the standards applied to him have, as Mr Axelrod puts it, been “rightsized”. He tells a story of the campaign of 2008, in which, arriving at a rally, Mr Obama worried that he could not bear the weight of expectation he had inspired. There is wisdom in the adjustment from hero-worship to realism, but there is also sadness. On the night of his first victory he spoke of “unyielding hope” in “a place where all things are possible.” Yet for all his achievements, his intellect and his grace, his eight years in office imply that even the most powerful leader in the world—a leader of rare talents, anointed with a nation’s dreams—can seem powerless to direct it. + +From the ruins of Syria to the barricades in Congress and America’s oldest wounds, sometimes nothing has been the best he could do. Sometimes it was all he could do. The possibilities seem shrunken. After its collision with history, so might hope itself. + +This article appeared in the Christmas Specials section of the print edition under the headline “The agony of hope” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712062-barack-obamas-presidency-lurched-between-idealism-and-acrimony-some-his/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +India Pale Ales + +A history of the authentically global beer + +Lagers may be ubiquitous but India Pale Ales are beers with a backstory + +Dec 24th 2016 | BURTON-ON-TRENT + + + +BEER is for drinking. But beer is also an occasion for conversation—and, if good enough, a subject for it, too. That is where India Pale Ales, or IPAs, come into their own. Few beers incite and enrich conversation as much. Their distinctive character—the “firm bitterness [that] lingers long and clean” in one, the “complex aromatic notes of citrus, berry, tropical fruit and pine” in another—spur discussions that spill over from tap rooms to websites with ease. The plethora of craft brewers that has sprung up over the past few decades provides ample scope for arguments about the relative merits of local brews and far-flung ones—with far-flung, these days, meaning from more or less anywhere on Earth. + +And then there is the beer itself. A child of Britain’s industrial revolution and imperial expansion that rose to world-straddling greatness, IPA went on to be humbled by its upstart rival, lager. It had all but vanished when plucky supporters restored it to life and once more put the world at its feet. Here is a beer with a back story. + +In the 18th century the British East India Company, originally set up to trade spices, turned its attention increasingly to importing fine cotton and silk from India. Its East Indiamen, “lords of the ocean” bigger than any other sailing vessels at the time, brought holds full of fabric back to London from Bengal, Bombay and Madras. But on the outward journey the holds were largely empty. A generous outbound allowance of cargo, eventually up to 50 tonnes each, was offered to officers and crew as a perk. + +Boredom between the comings and goings of the ships led company men in India to make an “art-form of feasting and boozing”, according to Pete Brown, whose book “Hops and Glory” tells the story of IPA. To help this art-form along, wily entrepreneur-seamen packed the holds with hams and cheeses, crockery and glassware and good supplies of drink, mainly beer and wine, sometimes madeira picked up en route. The Company encouraged the imports, even taking an interest in guaranteeing their quality. After all, if the men’s carousing was not supported by wholesome supplies from home they might turn to local alternatives such as arak, which would surely send them mad. + +By the late 18th century George Hodgson’s Bow Brewery had become the main supplier to this trade. The brewery was close to the East India Company’s headquarters at the confluence of the Lea and the Thames in east London, so Hodgson could schmooze captains and crew in local taverns. He offered them beer on generous credit terms—necessary given that the round trip could put off payment for a year or more. + +The troops in India may have preferred darker, sweeter porter, but the wealthier traders hankered after more refinement. Hodgson’s version of pale ale—a lighter-coloured bitter that was a recent innovation—gave them what they wanted. Its (relative) pallor came from its malt, which is a grain, usually barley, which has been heated and dried. Sometimes called the “soul of beer”, malt imparts sweetness, colour and the starch that is broken down into alcohol. + +Until the 17th century the kilns used for malting were fired with wood or straw, which gave beers a smoky flavour, a deep brown colour, and a devilish lack of consistency. The development of coke, a coal from which impurities have been baked out, changed all that. Histories of the Industrial Revolution rightly point to coke’s importance in ironmaking. But as coke-fired blast furnaces began to produce cast iron in the early 18th century coke also found its way into maltings. Its clean burning produced a paler, subtler and more consistent product, and though darker, sweeter styles still predominated, brewers started to aim those pale ales at the palates of wealthier drinkers. + +Pales into significance + +Hodgson’s pale ale was strong and heavily dosed with hops, which are a preservative as well as a bitter counterpoint to the sweetness of the malt. Its strength and savour allowed it to withstand a long voyage in the bowels of a ship. Indeed its drinkers believed the beer got better and better as it withstood the buffeting of the waves and the wild swings in temperature on a journey around the Cape of Good Hope and up to the Bay of Bengal. On those occasions when the beer fell foul of bacterial infection—plenty of ales turned up “sour” in India—the pungent hoppiness went some way to disguising the problem. + +The generous credit Hodgson offered, along with his willingness to flood the market with cheap booze when competitors tried to gain a foothold, gave him something close to a monopoly. Then he overreached. First he tightened the credit terms offered to his ad hoc salesforce of seafarers. Second, he started to export the beer in his own ships to exert more control over the trade and expand his business. Setting up as a rival trader, albeit in the opposite direction, changed the light in which the East India Company saw him. + +The red triangle logo appeared round the world—the first global brand + +In 1822 Campbell Marjoribanks, one of the Company’s directors, sat down to dinner with Samuel Allsop, a brewer from Burton-on-Trent, hoping to clip Hodgson’s wings. Burton, in England’s Midlands, was already an important centre for beer. Its waters contained minerals so amenable to brewing that to this day beermakers the world over “Burtonise” their water by adding salts to ensure that it mimics that which is drawn from the town’s wells. + +In the 18th century Burton had set up a valuable bilateral trade with Russia, which provided the wood in which Burton’s beer was barrelled; Catherine the Great was said to be “immoderately fond” of its strong, sweet, dark-brown beers. But exports to the Baltic came to a sudden end with the Napoleonic wars, and when trade was set to recommence the Russian court decided to encourage a home-grown brewing industry by slapping prohibitive duties on imported beer. + + + +Allsop needed a new export market; Marjoribanks needed beer. However he also knew that Burton’s sweet ale was unlikely to find favour in India. So after the pudding had been cleared the Company man poured the brewer a glass of Hodgson’s ale, promising him a fortune if he could brew something similar. Even if he could, he faced problems. Getting the beer from Burton to London added to the costs. Hodgson, who had a well-established brand, would probably swamp the market when he got wind of the plan. All this, though, was overcome. The beer from Burton proved excellent and arrived in tip-top condition. Burton’s other brewers, jealous of Allsop’s success, joined the party and the Burton-brewed beer drove Hodgson’s out of favour. + +As British interests in India grew so did the market, and more brewers started to make “East India ales” or “Ales for the Indian Market”. From Burton there was Bass, the town’s biggest brewer, and Worthington, another name still familiar to older British drinkers. Charrington of London (which later opened a brewery in Burton) and Tennents of Glasgow joined in, too. By the 1830s IPA began to supplant madeira and claret. + +As IPA conquered taste buds in India it spread around the world, turning up in America, Australia and South-East Asia. Its popularity spread in Britain as empire-builders returning from India wanted to keep drinking it. Bass’s pale ale (in style, an IPA) made it Britain’s biggest brewery and its red triangle logo appeared round the world—some call it the first global brand. Its bottles were to pop up in Manet’s “A Bar at the Folies-Bergère” and many pictures by Picasso. + +Ice and a slice + +Burton’s global dominance was short-lived. Other drinks came along to challenge its hot-climate stronghold. Tonic water, which became available in 1858, went nicely with gin and the quinine it contained warded off malaria. The growing availability of ice made brandy and soda a more acceptable drink for the tropics. Most damagingly, in the late 19th century industrial refrigeration made it possible to brew beers year round (it had previously been a seasonal business unsuited to summers) and to make more beers of the crisp, light lager style popular in Germany and Bohemia. In the tropics, a beer that was refreshing when cold and could be brewed nearby had a lot going for it. In America, European immigrants brought a taste for such things with them. The brewers of Burton remained committed to IPA, and missed the boat. + +Even at home IPA fell from favour. In 1870 William Gladstone, the prime minister, introduced the first excise duties to tax beer on its strength, penalising heady IPAs. Further tightening of taxation encouraged ever weaker beer that required no ageing and brought bigger profits. During the first world war grain was commandeered for food, and beers became weaker still. Beer with less alcohol did not require ageing so needed less hopping, saving brewers money. Burton’s brewers fell into the arms of larger competitors, later to close down altogether. The immense brick shells of the great Victorian breweries still dominate the town; but only Coors, an American interloper, still makes beer there at scale. + +The rout of IPA was not complete. Deuchars, in Edinburgh, and Greene King, in Suffolk, continued to make authentic IPAs, though the beers lacked the kick of hops and alcohol that their forerunners boasted. Ballantine, founded in New Jersey in 1840 and modelled on the breweries of Burton, survived America’s turn to lager and, worse, prohibition, which did for many other American brewers. According to Mitch Steele, former brewmaster at Stone Brewery and author of another book on IPA, Ballantine’s was the single most important influence on the craft-beer movement that grew up after America’s prohibition-era restrictions on home brewing were relaxed in the 1970s, allowing a new generation to embrace beer first as hobby, then as trade. + +The movement’s subsequent rise was driven by a fascination with history, with taste and with authenticity—that proved easily marketed to people who wanted beers they could talk about and savour. Many of its early beers were influenced by IPAs; the first to embrace the name was Grant’s IPA, in 1983. The new brewers relished the opportunity the style presented for showing off their skills, running wild with new varieties of hops—which turned out to grow very well in the Pacific Northwest—in search of distinctive personality. And IPA had the added attraction of being a forgiving beer. In weaker brews imperfections are shown up in sharp relief. Just as in Hodgson’s day, heavy hopping—adding different hops to the beer at various stages of brewing—can cover flaws. + +As the craft-beer boom gathered pace, some sought to differentiate their brews by adding ever more hops. In 1994, Blind Pig Inaugural Ale marked the birth of the double IPA (with double the hops). Stone and Ballast Point in San Diego saw this hop-head market emerging and triple IPAs were born. West Coast IPA, fresh and fruity, has become a distinct style of beer. + +Not all beer aficionados are pleased. Big, brash American hops like Cascade, Centennial, Columbus and Chinook lack the subtlety of their British cousins. Some IPAs are now almost undrinkably bitter. And the name is now applied willy-nilly. Red IPAs, wheat IPAs and black IPAs are really other styles of beer but with the hop count turned up. + +Such are the bandwagon-jumping burdens of success. The flagship beers of small brewers are, more often than not, IPAs; almost every brewery makes one. They account for one in three craft beers sold in American bars; for many tipplers they are synonymous with craft beer itself. And as the movement has spread abroad, so has the inclination to make the heady, hoppy IPAs. It is the “global craft brew”, says Mr Brown. + +Born in monopoly, IPA is triumphing through diversity. Everyone can have a home-town brew and an opinion. That is bad news for the vast brewers that dominate the large but shrinking global lager market. The competition flourishes at a local level and on a modest scale that the big brewers hardly know how to understand. The beer giants can, and do, buy up smaller “craft brew” IPA-makers; but there is always the risk that discerning drinkers could switch allegiance from their mass-produced lagers. The tipple that helped create the world’s first brewing giants could yet undermine the beermaking behemoths of today. + +This article appeared in the Christmas Specials section of the print edition under the headline “Beer of the world” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712029-lagers-may-be-ubiquitous-india-pale-ales-are-beers-backstory-history/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Cambridge economists + +The art and science of economics at Cambridge + +The history of a famous faculty shows that the way economics is taught depends on what you think economists are for + +Dec 24th 2016 + + + +IN 1924 John Maynard Keynes, who invented macroeconomics, used a biographical essay about his mentor Alfred Marshall to muse on the qualities of a good economist. + +He must be mathematician, historian, statesman, philosopher—in some degree. He must understand symbols and speak in words. He must contemplate the particular in terms of the general, and touch abstract and concrete in the same flight of thought…No part of man’s nature or his institutions must lie entirely outside his regard. He must be purposeful and disinterested in a simultaneous mood; as aloof and incorruptible as an artist, yet sometimes as near the earth as a politician. + +Such paragons were hard to come by, Keynes sighed: “Good, or even competent, economists are the rarest of birds.” But there can have been no doubt in his mind that the likeliest place to find them roosting was among the sandstone crenellations of Cambridge colleges. The Cambridge economics department, founded by Marshall and home to Keynes, was at that time the world’s leading school of economics. It not only taught bright young people from around the empire. It also made them into what its faculty thought economists should be: technically accomplished purveyors of policy advice, dispassionate but engaged. + +The goal can be seen in the exam questions of the time. Students were expected to combine economic principles with a strong grasp of current affairs. In 1927, for example, one paper on public finance asked students to explain the size and reasons for the main areas of British government spending. They were expected to have the skills of an essayist, spending one three-hour exam on a single question such as the future of gold, the rights and duties of shareholders, or alternatives to democracy. Cambridge economics considered itself to be an analytical science but calculation was not of the essence. A module in statistics produced a page-long test for final-year students; all the other papers were bare of mathematical symbols. + +Compare this with the exams of today. Charlotte Grace, a student in the third year of the economics tripos (as undergraduate degrees are known in Cambridge), says she could have passed all the questions she faced in her first year without reading a newspaper. And though the five-page final-year macroeconomics exam that was set in 2015 asked about some contemporary policy conundrums, like which features of the euro zone may have contributed to its sovereign debt crisis, most of the paper sought to test students’ knowledge of tricky, algebra-heavy models. Three-hour pontifications on a single topic have been ditched in favour of a compulsory dissertation in which original empirical analysis is encouraged. + +These tests reflect changes in the discipline. Students must master the technical apparatus of a highly specialised field. The maths they need to know and apply is sufficiently taxing as to barely leave time for history. Evidence-based conclusions are preferred to arms-length analysis; economists should know the limits of their expertise, and shy away from political judgments as they think through the effects of whatever policy tweaks providence might throw at them. + +The mathematical precision and rigour is appealing to some. On a bright day in October, the first day of lectures this academic year, Angus Groom, a fresh-faced 18-year-old, comments that his first lecture, on macroeconomics, was “the kind of stuff I’ve read about before, but really coming at it from a rigorous perspective.” He is grateful to get beyond the wishy-washy stuff he studied at school. + +The structured discipline Mr Groom is studying is a long way from the messy stew Mr Marshall faced when he first conceived of the economics tripos. When he was appointed to the university’s chair of political economy in 1885 economics was nestled in the “moral sciences” tripos along with psychology, logic, ethics and other fields. Marshall argued that “a lad, coming from school to this large and heterogeneous mass of difficult notions entirely strange to him, is bewildered”, and would be left “unripe”. + +“The status of economics...appears to have been at a rather low point,” Neil Hart writes in the forthcoming “Palgrave Companion to Cambridge Economics”. It was looked on as “a minor and disputed area of study, with many of its lecturers and professors recruited or ‘borrowed’ from other established disciplines.” Exam questions reflected the fuzziness of the field’s boundaries. One paper in 1871 asked students to consider whether political economy had more to learn from ethics or vice versa. As was the way of the times, economic issues were seen through the lenses of personal, national and, particularly, class advantage. For example: “If any one had private information that war was about to break out between England and America, what sort of changes in his investments might it be prudent for him to make?” And: “Examine the probable results, to the different classes of English society, if the anticipated decline and ultimate exhaustion of our coalfields were to commence at once.” + +Not good enough, Marshall thought. The complexities of the first globalised economy and the accompanying intensification of social problems meant the empire needed more and better economists. Cambridge, he argued, should meet that need by producing professionals with “three years’ scientific training of the same character and on the same general lines as that given to physicists, to physiologists or engineers.” His textbook of 1890, “Principles of Economics,” offered a tidy blueprint. + +The Principled stand + +Marshall’s book established the use of diagrams to illustrate economic phenomena, inventing the demand and supply curves familiar to fledgling economists ever since. And it provided a view of the economy as a dynamic system akin to a physical one, so complicated that it was best broken into parts. Its partial equilibrium analysis, which held some bits of the economy constant to clarify movements in the others, gave economists a way to carve smaller questions from the complex whole. Along with David Ricardo’s “On the Principles of Political Economy and Taxation” and Karl Marx’s “Capital” it was one of the three most influential economics books of the 19th century. + +Marshall was horrified to see Pigou in a Norfolk jacket with holes in both elbows: “So bad for the economics tripos!” + +The independent tripos Marshall wanted finally got off the ground in 1903. Its courses were not all curves and equations. His first syllabus expected students to know about the British constitution and to opine on topics like “the use of the term ‘natural’ in economic writings” or “economic aims as a factor in international politics”. But it was already more practical. In a module from 1907 called “Advanced economics: mainly realistic” students were asked to “give some account of industrial arbitration in New Zealand.” The overall idea was to cultivate economics as no more, or less, than “a study of mankind in the ordinary business of life.” + +In 1908 Marshall handed over the reins to Arthur Pigou. A shy 30-year-old and keen mountaineer, Pigou had something of the 19th-century polymath about him. He had started off studying history and had won the university’s poetry prize for his ode to Alfred the Great before switching to the moral-sciences tripos in 1899 to study economics and ethics. Known around Cambridge—unoriginally and, one imagines, rather unhelpfully—as “The Prof”, he had a reputation as one of the city’s worst-dressed men. Marshall was once horrified to see him in a Norfolk jacket with holes in both elbows: “So bad for the economics tripos!” + +Whatever his sartorial shortcomings, Pigou’s academic brilliance made him an obvious heir to Marshall. And as the author of “The Economics of Welfare”, he furthered Marshall’s cause by helping economists turn nettlesome political controversies into technical problems. Before he came along, decisions to meddle in markets were seen as helping one constituency over another, at the cost of inefficiency. He himself railed against the protectionism and imperial preference of the time, worrying that they were bungs to a small segment of the population. + + + +In other cases, though, he showed that when there are external costs to someone’s actions, a bit of meddling might improve on the market outcome. For example, those who ignore the effects of their pollution on others will pollute too much. A nifty tax to align the individual’s incentives with those of society can mean better outcomes for everyone. Armed with this idea, economists could argue for intervention on technical grounds of efficiency. + +Marshall championed Pigou; but his favourite student was Keynes, who came to one of Marshall’s courses after taking his mathematics degree in 1905. In 1909 Keynes returned to lecture on monetary economics. When he spoke in his essay on Marshall of a master economist as “mathematician, historian, statesman, philosopher” Keynes could have been describing himself (and perhaps he was: modesty was certainly not part of the recipe). Hopping between roles as an academic, civil servant, government adviser and journalist, he took vigorous part on the biggest topics of the day; his pamphlet arguing against self-defeating economic reparations on Germany, “The Economic Consequences of the Peace”, made him rich and famous. + +Like Pigou, Keynes emphasised that individually sensible decisions might be disastrous for society. He did not have the troves of data that economists have today, but could see that the mass unemployment of the 1930s was the result of a deep market failure: the queues of people on the dole were unwillingly unemployed. In defiance of the consensus that overall the economy would right itself, he thought that economies could end up trapped in deep and nasty slumps simply because of self-fulfilling losses of confidence. The solution was government intervention, in the form of an injection of public spending and confidence. His work justified policy intervention as an antidote to capitalism’s imperfections, to save it rather than to replace it; and it did so, as Pigou’s had, with the help of apparently dispassionate technical argument. + +Technical fixers + +Keynes and Pigou established economics as a toolkit to be used by policymakers, and pioneered the role of government economic advisers. Keynes famously remarked that “practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist”; his policy activism was designed to replace that unexamined received opinion from the past with explicitly stated apposite analysis from the present. When the British government created a Committee of Economists to advise it in 1930, Keynes and Pigou were both appointed to it. Meanwhile Cambridge strove to produce more of their ilk. Through the 1920s and 1930s Keynes delivered eight lectures a year on his work in progress, “The General Theory of Employment, Interest and Money”, and created an intellectual hub of economic disciples, known as the “Cambridge circus”. A group of younger members of the faculty began meeting in 1930 to discuss Keynes’s “A Treatise on Money,” published that same year. Specially selected undergraduates could go along too. + +Students were by this time expected to take on board a lot more mathematics and theory than they had before. When he visited Cambridge in the 1940s, shortly before Keynes’s death, Harry Johnson, a Canadian economist, was struck by how much more demanding the tripos had become. Once, he wrote, all you had to do to pass the exams was read Marshall’s “Principles” over the course of the year and the Times at breakfast every morning; the rest of the day was free for being “out on the river with God”. By the time he arrived, finalists had to read Keynes’s “General Theory” from cover to cover, and digest intellectual debates such as those between Keynes and D.H. Robertson, a close collaborator who became an intellectual rival, on the “liquidity preference” and “loanable funds” theories of interest. (The heat of debate spilled over into exams: a student of 1947 asked to consider the criticism that “Lord Keynes’ doctrine of liquidity preference ‘seems to leave interest hanging by its own bootstraps’” might reasonably have wanted to know who the examiner would be before answering.) + +The flatter world + +The Cambridge faculty, though still impressive, has inevitably fallen back from the dizzy heights it occupied from the 1920s to the 1940s. Keynes shook up the settled consensus, codifiable in the textbooks of Marshall and Pigou. The next time a consensus settled within economics, it was forged in a different Cambridge, that of Massachusetts. A post-war intellectual backlash against Keynesianism relegated the original Cambridge to a dissident backwater, condemned to critique the mainstream from outside. + +Today the faculty no longer nurtures its own school of thought, but it still suffers from the post-imperial shift towards America’s high-paying universities. Yet even among them, none towers as the Cambridge of Pigou and Keynes once did. The general success of the profession, and the institutional growth that has gone along with it, have made it hard for any single school to achieve true pre-eminence. Nor are battle lines drawn as once they were. Economists have largely fulfilled Marshall’s aim of rising from muddy ideological debates; the biggest fights today are between methodologies, not ideologies. + +Keynes and Pigou transformed the discipline with new grand theories of how the economic system works while taking an active part in policy and encouraging others to do the same. The role for economic advice thus created has remained. But in Britain, in particular, the settled opinions of the broad church mean that such advice has been to some extent commoditised. Philosophers and grand debaters have been replaced with specialists building ever more intricate models and finding increasingly sophisticated ways of drawing lessons from data. + +Hamish Low, a Cambridge professor who works in applied economics, does not mourn the loss of philosopher kings’ grand intellectual debates. “Now we need to be much more evidence based”, he says. But the discipline’s development has come with a cost. The specialisation associated with expertise can encourage narrow thinking. “Disciplines are now defined too much by methods rather than by questions”, Low says. This narrowness feeds through to policy advice, which too often applies established models to current circumstances, rather than considering fundamental reinterpretions of the issues. Economists can give you an estimate of how much revenue a tax increase will raise, the income loss associated with Brexit, or the employment effects of a minimum wage rise. It calls to mind another aphorism from Keynes about economists being at their best as “humble, competent people on a level with dentists”, using their technical skill to solve pressing problems within a limited area of expertise. + + + +Underlying this intellectual timidity is a bigger failing. After his enjoyably rigorous lecture on macroeconomics, Mr Groom’s second taste of his department comes from Ha-Joon Chang, author of popular books such as “23 Things They Don’t Tell You About Capitalism”. At the heart of Marshall’s desire to separate economics from politics, Mr Chang explains to his rapt audience, lay a contradiction: “Economics is about economic policy, whose making is political.” The new space Marshall carved out for economics, and his new way of teaching it, left the discipline better equipped to inform politics disinterestedly. But the politics were always already there. As the discipline focused more and more on technicalities and models this persistent presence slipped from view. But though it was hidden, its power remained—all the more pernicious for being unseen and thus unquestioned. + +As Mr Chang explains to his students, seeing politics as an external factor affecting how economic theory translates into policy can be a useful approximation. But that approximation ignores the rest of the system—the part where economic theory and politics influence each other’s evolution. So, for example, economists have busied themselves constructing models of preference without asking through what exercise of power those preferences were formed. While some spotted the colossal rise in income inequality that took place in Britain and America from the 1980s, they have, until quite recently, tended to dismiss it as primarily a political issue. They are all too often silent on just the sort of questions the tripos used to see as crucial: the rights and duties of shareholders; alternatives to democracy; the effect of the exhaustion of fossil fuels; the meaning, if any, of the word “natural”. + +If economists really were dentists, this might be fine; no one needs a political ideology of cavities to perform a root canal. And living without dentistry is a dreadful thing. But Keynes at best only half believed his dentist conceit. He also wanted the “mathematician, historian, statesman, philosopher”: aloof; earthy; purposeful. Not every economist can be all those things, nor could they ever. But if the old aspiration to try and be so is lost, so is part of Marshall’s original dream of economists seeking not merely to apply their ideas in a worldly way, but to produce both better ideas and, in the end, a better world. + +This article appeared in the Christmas Specials section of the print edition under the headline “Exams and expectations” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712057-history-famous-faculty-shows-way-economics-taught-depends-what/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +It’s a-me! + +How Super Mario became a global cultural icon + +A pudgy Italian plumber who lives in America, was conceived in Japan and is loved throughout the world + +Dec 24th 2016 | TOKYO + + + +THE izakaya has a name, but it cannot be published. Its location is a closely guarded secret. Entry is restricted to members—celebrities, media types and otaku, a particularly devoted kind of pop-culture geek. They do not come for the food, though it is excellent, nor for the drinks, which are well mixed. They come for Toru “Chokan” Hashimoto, the Nintendo alumnus who runs the place, and for his friends and their memories. On one wall is a sketch of Pikachu, a popular character in Pokémon games, drawn by its creators when they dropped by. On another is the original sheet music from a classic Nintendo game, a gift from the composer. Front and centre is a drawing of Mario signed by Shigeru Miyamoto. + +Mario, an extravagantly mustachioed Italian-American plumber from Brooklyn, is Mr Miyamoto’s most famous creation. He is also the foundation of Nintendo’s fortunes; David Gibson, an analyst at Macquarie Securities, a broker, reckons that his antics account for a third of the company’s software sales over the past ten years. Games in which he features have sold over 500m copies worldwide. His image appears on everything: not just T-shirts and mugs, but solid gold pendants. + +At the closing ceremony of the Rio Olympic games, Shinzo Abe, the prime minister of Japan, made his grand entrance dressed as the chubby plumber. Some of the worldwide audience was doubtless bemused. But most, surely, smiled the way that one must when something is both unexpected and utterly fitting. In what better guise could Japan have welcomed the world to Tokyo, venue of the next summer games, than as the world’s most recognised everyman? Eating at a Singapore restaurant soon after, Mr Abe was recognised by fellow diners. Look, they whispered to each other, it’s Mario. + +“Donkey Kong”, the game in which Mario first appeared, was born of failure. In 1980 Nintendo, a toy company, was trying to break into America’s $8bn arcade-game market. But “Radar Scope”, the “Space Invaders” knock-off on which the company had pinned its hopes, was a flop. Hiroshi Yamauchi, Nintendo’s patriarch, gave Mr Miyamoto the job of making it into something better. + +Yamauchi had hired Mr Miyamoto as the company’s first staff artist three years before. Mr Miyamoto had not been terribly keen on a corporate job. Nintendo had had no need for a staff artist. But Mr Miyamoto’s father arranged a meeting between them, and Yamauchi took a liking to the shaggy-haired young man with a taste for cartoons and bluegrass music. + +The first idea for the “Radar Scope” makeover was to draw in the audience by licensing Popeye, a sailor man, to act as the game’s main character. But the licensing deal fell through, and Mr Miyamoto had to invent a new character from scratch. In doing so he had a pretty free rein. The game’s plot—hero rescues girl from gorilla—did not require back story or motivation from its protagonist. Mostly, he just jumped. + +Mr Miyamoto wanted his character to be a regular guy in a regular job, so he made him a chubby, middle-aged manual worker—originally, a carpenter. Some design decisions were dictated by the technical limitations of low-resolution displays: the hero got a bushy moustache so that there would be something separating his nose from his chin; he got a hat because hair presents problems when your character has to fit in a grid just 16 pixels on a side; he got bright clothes so they would stand out against the black background. + +His name was an afterthought. Top billing on the game was always going to go to the gorilla. (“Kong”, in the context, was more or less a given; “Donkey” was found by consulting a Japanese-English dictionary for a word meaning silly or stupid.) The protagonist was simply called “Jumpman” for the one thing he was good at. But Minoru Arakawa, the boss of Nintendo in America, wanted a more marketable name. Around that time, writes David Sheff in “Game Over”, an authoritative account of Nintendo’s rise, Mr Arakawa was visited at Nintendo’s warehouse outside Seattle by an irate landlord demanding prompt payment. He was called Mario Segale, and he had a moustache. Thus does destiny call. + +“Donkey Kong” was a colossal hit. Nintendo had shifted just 1,000 “Radar Scope” arcade cabinets in America; in its first two years “Donkey Kong” sold more than 60,000. Sequels followed, including, in 1983, “Mario Bros.”, in which the game moved to the sewers of New York. Mario traded in his notional hammer for a figurative wrench and became a plumber; he also gained a brother, Luigi. + +Let’s-a go! + +In the same year Nintendo released the Family Computer, or Famicom, in Japan. The maroon-and-white console, which allowed gamers to play arcade titles in their own homes, was a massive hit. Mr Hashimoto, who joined the company in 1984 (and now runs that secret Tokyo bar) says demand was so intense that engineers from Nintendo’s Kyoto headquarters were sent to stores to help with sales. By 1985 two in every five households in Japan had one. + +“He doesn’t do much plumbing, or talk about his heritage” + +In 1985 Famicom was released in America as the Nintendo Entertainment System, with “Super Mario Bros.” included in the price. The new game revolved around Mario’s quest to rescue Princess Peach from Bowser, a giant evil turtle. But if the set-up of damsel distressed by unfeasibly large animal seemed familiar, very little else did. The game took place under a clear blue sky at a time when most games were played on a space-y black background. Mario ate magic mushrooms that made him bigger, or “Super”, and jaunted from place to place through green pipes. “Super Mario Bros.” offered an entire world to explore, replete with mushroom traitors (“Goombas”), turtle soldiers (“Koopa Troopas”) and man-eating flora (“Piranha Plants”). It was full of hidden tricks and levels. It was like nothing anybody had ever seen. + +Mr Miyamoto called it “a grand culmination”, taking the best elements of gameplay from Nintendo’s other titles to produce something that invited hours of immersion and lots of return visits. Children—and their parents—lost days of their lives inside Mr Miyamoto’s kingdom. “Super Mario Bros.” sold 40m copies and the Mario franchise never looked back; it went on to produce more than 200 games, several television shows and one memorably lousy movie. By 1990 American children were more familiar with Mario than with Mickey Mouse. + +In the 1990s and 2000s Nintendo continued to be a profitable maker of games, home consoles and hand-held gaming systems. To begin with, it was highly admired as such. In 1991, the president of Apple Computer, when asked which computer company he feared the most, replied “Nintendo”. + +The two companies were in some ways similar. Just as Apple’s operating systems are made available only on phones and laptops that it designs and sells, Mario and his extended family could be found only on Nintendo’s hardware. That strategy, combined with the company’s policy of appealing to the mass market of families and casual gamers—rather than the smaller niche of “hard-core” gamers targeted by its rivals—made Nintendo a big success through the 2000s. But where Apple kept innovating, creating whole new categories of product, Nintendo brought out only one big innovation; its Wii console, released in 2006, which liberated living-room game players from the couch and let them use more than just their thumbs. + + + +The original Wii was a hit. But soon one of Apple’s new categories of product cut the Japanese company’s world out from under it. The iPhone and its successors saw casual gamers abandon dedicated devices for mobile phones. By 2012—five years after the launch of the iPhone and, not coincidentally, the first year in its history as a public company that Nintendo posted a loss—the market for games on mobiles was already worth $13.3bn, about half as much as the market for home consoles and hand-held gaming systems. By 2018, reckons Macquarie’s Mr Gibson, it could be worth half as much again as the market for dedicated gaming consoles. + +Nintendo has released only one new console in the iPhone era, the Wii U. It flopped. It has made some wonderful new games, such as “Splatoon”, a critical and commercial success, which came out in 2015. But with console sales sluggish, few new gamers ever encounter them. “Switch”, a hardware offering Nintendo will release in spring 2017, does double duty as a home console and a hand-held device, letting gamers take their games with them on the go. But a glance around the Tokyo metro confirms that the Switch is solving a problem that does not exist: carriages are crammed with men and women staring into their phones, playing “Candy Crush” or “Puzzles and Dragons”. + +So Nintendo is changing its strategy. Under Satoru Iwata, who took over from Yamauchi in 2002, the company avoided mobile games on the basis that they were low-quality and their pay-as-you-go model was exploitative of children. But in the summer of 2016 the surprise success of “Pokémon Go”, a mobile game developed by Niantic, an American company spun off from Google, confirmed Nintendo’s previously rather tentative decision to change tack. In a PR master stroke Nintendo sent Mr Miyamoto to Apple’s annual autumn press event to announce “Super Mario Run”, a new game for the iPhone. + +This is not the only way that Nintendo is exploiting the value its intellectual property can realise when allowed off the company’s own hardware. Universal will invest $350m in a Nintendo-themed attraction at its amusement park in Japan. Nintendo is once again considering Mario movies. + +Not before time. Recognisable characters are one of the most sought-after resources in the entertainment industry: from Hollywood’s superhero franchises to theme parks to video games, a name the public knows is perceived as the best way to reduce the risk of expensive failure. This is especially true of smartphone games. Early on it was possible to introduce novelties, such as “Angry Birds”, an early runaway hit. But competition has got very intense. In 2008, a year before those Angry Birds were hatched, some 250 games were submitted to Apple’s app store every month. Now more than 700 games are submitted every day. + +Today the business thinks that success is contingent on familiarity. “Pokémon Go” was a moderately successful game, called “Ingress”, before its creators rebranded it with Pokémon, cute little monsters part-owned by Nintendo. It was subsequently downloaded onto half a billion devices. “Stardom: Hollywood” was a mediocre game about going from wannabe to celebrity until it signed on Kim Kardashian and morphed into “Kim Kardashian: Hollywood”, an instant blockbuster. + +Okey Dokey! + +In this climate the success of “Super Mario Run” is hardly up for debate. But will it introduce a new generation to the Mario franchise, or simply delight those already familiar with it? Early indications suggest the latter. The game, released on December 15th, is a delightful rendering of the essence of Mario—which is to say, jumping—tailored to the small screen. But at $10, it is comparatively expensive (though there are no hidden extras in the form of in-game purchases). And for now it is also available only on iPhones. Both decisions rule out big emerging markets. + +In the 1990s Nintendo’s nugatory presence outside developed countries was no obstacle to Mario’s global charm offensive. Cheap knock-offs of Nintendo consoles made in Hong Kong and Taiwan flooded poor countries, and Mario went with them—often quite literally the only game in town. Now no one with a phone who wants games lacks them; and those who have only ever gamed on phones feel no burning need for Mario. In China, the world’s biggest gaming market, Mario is practically unheard of, says Serkan Toto, a Tokyo-based games consultant. + +Phone-based follow-ups to “Super Mario Run” may yet take off; Mario’s charm is not to be sniffed at. But it is of a peculiar sort. “On one level he is very specific: an Italian-American plumber from Brooklyn, America”, says Jeff Ryan, the author of “Super Mario”, a history of the character. “On the other hand he doesn’t do much plumbing or talk about his heritage. He’s just an avatar.” That does not mean you can replace him with any other avatar. He is particular, and distinct. It’s just that there’s nothing to being Mario other than being Mario. + + + +Ray Hatoyama, who led the global expansion of Hello Kitty, a cute, mute cat-like character whose image rakes in several billion yen every year, likens the global success of characters such as Mario and Hello Kitty to the export of rice. It is easier to sell an ingredient to a foreign culture; they can add the spices and herbs to their taste, he says. By contrast fully cooked stories with a specific setting, such as “Doraemon”, set in a Japanese school, are a harder sell abroad. The contexts are too different. If Mario’s plumbing and heritage mattered, he would be a lot less successful. + +There is one aspect of his context, though, that matters: fun. Mr Abe turned up in Rio dressed as Mario not just because Mario is instantly recognisable around the world. He embodies the delight of play. Talking to the New York Times in 2008 the reclusive Mr Miyamoto explained that people like Mario and his ilk “not for the characters themselves, but because the games they appear in are fun. And because people enjoy playing those games first, they come to love the characters as well.” When “Super Mario Bros.” came out, it was the game that children and adults fell in love with. Mario’s cheerful face on the packaging of its sequels and spin-offs guaranteed further high-quality fun. His success became self-reinforcing. If “Super Mario Run” takes off among phone gamers for whom Mario is a vaguely recognised but arbitrary pop-culture emblem, it will be because it is a really good game. + + + +According to Mr Hashimoto, who worked with Mr Miyamoto, Nintendo’s characters are always at the service of the game, rather than vice versa: “Whatever fits better.” Splatoon is a case in point: it features an all-new cast of humanoids and squids. “We weren’t invested in creating a new character. We just set out to create a game with a new structure,” Hisashi Nogami, Splatoon’s producer said in a company chat. Before they settled on squids, Splatoon’s creators considered making the characters rabbits or blocks of tofu. But they decided that squids worked best. + +Good gameplay is not enough. Strange though the world is, it is hard to imagine tourists in Tokyo dressing up as tofu to drive around in go-karts, as those entranced by the “Mario Kart” driving games do. The middle-aged men who put on blue dungarees and fake moustaches to watch India beat the English at cricket would probably not dress up as squids to the same end, whatever video games they might remember from their youth. Star Club, a Mario-themed bar in Tokyo’s Shinjuku nightlife district (and the retro-gaming themed 8-bit Cafe, around the corner), would do less business with foreign fans and Japanese otaku alike were it not for the cheery moustachioed presence. The Mario-ness of Mario does matter. + +But at Mr Hashimoto’s place, among the true cognoscenti, for all the affection in which the characters and their creators are held, the game’s the thing. + +This article appeared in the Christmas Specials section of the print edition under the headline “It’s-a me!” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712064-pudgy-italian-plumber-who-lives-america-was-conceived-japan-and-loved/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +The cad as correspondent + +Flashman, the foreign correspondent’s role model + +Victorian England’s foremost rotter would have made a great journalist + +Dec 24th 2016 + + + +REBELS had captured the dam that supplied electricity to Kinshasa and turned off the lights in the Congolese capital. Now they were marching on the city. Panic reigned. Pro-government thugs were going around lynching suspected rebel spies. Some they hacked to death. One they tossed off a bridge and shot as he bobbed in the river. A city under siege, full of power-drunk kids with Kalashnikovs, is no place to be. Your correspondent was there, and feeling frightened. Which reminded him of one of the great cowards of English literature. He asked himself: in this situation, what would Flashman do? + +For readers who have not yet met him, Flashman was the villain of “Tom Brown’s Schooldays”, a pious novel about life at a British boarding school published in 1857. The author, Thomas Hughes, portrayed him as a bully who roasted small boys over open fires but ran away snivelling from anyone bigger than him. + +A century later, a Scottish journalist called George MacDonald Fraser wondered what happened to Flashman after he was expelled from school. He answered his own question with a series of wickedly comical historical novels. In Fraser’s telling, the adult Flashman was every bit as horrible as the schoolboy, but through sheer luck and sleazy charm became one of the most decorated heroes of the Victorian era: Brigadier-General Sir Harry Flashman, VC, KCB, Legion of Honour, San Serafino Order of Purity and Truth (4th class), etc. + +His career took off when, having joined the army because the uniform attracted women, Flashman found himself besieged in a fort in Afghanistan. He feigned sickness to avoid fighting. When all the other defenders were killed or wounded, he grabbed the British flag and, pleading for mercy, offered it to the Afghan warriors surging over the walls. Just then a big explosion marked the arrival of a British relief force. Flashman was found unconscious, draped in the flag and surrounded by dead Afghans. Everyone assumed he was defending the colours, not surrendering them, and he won the first of many medals. + +Morally, it would be hard to find a worse role model. Over the course of 12 books Flashman bullied underlings, betrayed friends, cheated on his wife Elspeth and stabbed in the back anyone who blocked his escape route. Yet there is much that this fictional Victorian rotter can teach modern reporters. Though he was leery of journalists (“[t]ricky villains, especially if they work for the Times”), he would have made an outstanding one. + +Flashman’s first instinct was for self-preservation. This is a useful (and underrated) trait for journalists. Had he been stuck in Kinshasa in August 1998, Flashman would have headed for the best-guarded hotel and hung out in the bar by the swimming pool. That is what your correspondent did, and it proved an excellent policy. The beer was refreshing, the brochettes de boeuf delicious and the conversation highly informative. All the powerbrokers, spies, moneymen and diplomats passed through. By listening to them, your correspondent gleaned a fuller picture of what was going on than if he had ventured out to the front line, which would have involved a lot of hiding in ditches and trying unsuccessfully to figure out who was shooting at whom. + +Hang back from the shooting and you often get a better view. During the Crimean war of 1853-6 Flashman used all his wiles to hang back, describing the campaign with colour and precision from safe hilltops. Unfortunately for him, he was then caught up in the most foolhardy manoeuvre of the entire war. His horse bolted towards the Russian cannons, causing Flashman unwillingly to race out ahead of the Charge of the Light Brigade. British newspapers interpreted this as “Flash Harry” up to his usual heroics. + +Your correspondent has never galloped into a Valley of Death, but he has occasionally blundered into sticky situations. Once during the civil war in the Ivory Coast he ran into a rebel roadblock—a heap of branches and a broken fridge with a cow’s skull on top. The youngsters manning it were stripped to the waist, armed with rocket-propelled grenade-launchers and drunk at 10.30 in the morning. + +Flashman, faced with superior firepower in unsteady hands, would have smiled, made himself pleasant to his captors and tried to buy time. That is what your correspondent did, swigging koutoukou (a fiery spirit distilled from palm wine) out of a shared plastic jerrycan. Eventually he was rescued by a French army officer, who persuaded the rebels that journalists are not spies. + +Modern reporters use all sorts of methods to stay safe. They hire fixers. They go on “hostile environments” courses. They send back a barrage of WhatsApp messages describing where they are. None of this is as effective as Flashman’s nose for danger and intense desire to avoid it. Nor can any course teach his genius for getting out of it. Which is probably just as well: throwing one’s lover off the back of a sled to lighten its load and escape pursuing Cossacks is hardly cricket. + +Flashman also immersed himself in the local culture. He picked up foreign languages absurdly quickly. By the end of a long career, he was fluent in nine and could rub along in another dozen. He never learned much in a classroom—Latin and Greek bored him senseless. Rather, he learned by listening to native speakers and catching the rhythm and feel of their dialect. + +Usually he did this in bed. Tall, handsome and effusively whiskered, Flashman was successful with women from a wide variety of cultures. Not all ended up hating him. On one occasion, to pass the time in a dungeon in Gwalior in India, he tried to count his conquests and arrived at a figure of 478. That was in 1857, when he was only 35; he lived to 93. + +Speaking multiple languages often saved his skin. Locked up during the Second Opium War, he was the only British prisoner who understood that their Chinese jailer planned to execute one of them. Asked to translate, he lied that the jailer planned to send one of them with a message to the British and French forces besieging the town. Eager for freedom, a soldier who was blackmailing Flashman pushed to the front—and was conveniently beheaded. + +In some ways being a scoundrel made Flashman a better reporter + +A good foreign correspondent networks with powerful people, the better to understand the motives behind important policies. Flashman rubbed shoulders with Wellington, Lincoln and Bismarck (though Bismarck loathed him and tried to have him killed). His accounts add fistfuls of spice to the historical record. + +Indeed, the Flashman Papers can be useful background reading during reporting trips. It was thanks to Flashman that your correspondent understood, when visiting the Summer Palace in Beijing, the scale and scandal of its destruction by British troops in 1860. When covering a flood in Madagascar, he could find no better short history of the island than Flashman’s Malagasy adventures. And Flashman would have chuckled to learn that lotharios are now known there as bananes flambés, after a popular dessert. + +The Flashman Papers purport to be written by Flashman himself—the secret, honest memoir of a garlanded rogue, discovered in a Leicestershire saleroom in 1965 and “edited” by Fraser, with helpful historical footnotes. The books are so well researched that, to naïve readers, they can appear genuine. When “Flashman” was first published in America, about a third of the 40-odd reviewers took it at face value. One called it “the most important discovery since the Boswell papers”. Fraser laughed till it hurt. + +Strenuous research (Fraser was a keen amateur historian) and dollops of first-hand observation (he was an energetic traveller, too) are the raw materials of great journalism. To this Fraser added a crackling prose style and a gift for storytelling. As an observer, Flashman was often caustic but never blinded by the pieties of his age. He believed neither in the civilising mission of the British empire, nor in the myth of the noble savage. So whether he was observing Englishmen, Sikhs or Zulus, he recognised fools, heroes and charlatans for what they were. + + + +In some ways being a scoundrel made Flashman a better reporter. Many modern correspondents tend to preach. This quickly becomes tedious. Journalists who profess outrage at every minor politician’s off-colour remark soon run out of words to describe real outrages. Flashman did not have this problem. He was callous and made no effort to pretend otherwise. This made his prose more convincing, for he let the facts speak for themselves. On the rare occasions when he was moved to make a moral judgment, the effect is electrifying. One such instance occurred when he was press-ganged onto a slave ship, where he saw Africans branded, chained and crammed below decks. + +“The crying and moaning and whimpering blended into a miserable anthem that I’ll never forget, with the clanking of the chains and the rustle of hundreds of incessantly stirring bodies, and the horrible smell of musk and foulness and burned flesh. My stomach doesn’t turn easy, but I was sickened…when you’ve looked into the hold of a new-laden slaver for the first time, you know what hell is like.” + +He admitted that, if someone had approached him in his London club and offered him £20,000 to authorise a shipment of slaves, he would have taken the money. Out of sight, out of mind: this was also the attitude of many of his respectable contemporaries to buying slave-made sugar or cotton. Fraser did not need to remind readers that Flashman—a sociopath—was in this respect little worse than millions of 19th-century British tea-drinkers. + +Laptop, flak jacket, condoms + +Being a foreign correspondent is the most enjoyable job there is. The men and women who are lucky enough to do it today travel the world, meet new people, sample exotic new dishes and grapple with new ideas. Even when it is uncomfortable it can be exciting. To make the most of a posting, journalists must be open to new experiences and skilled at seeking them out. It helps to have a fat expense account. + +Flashman sometimes had no money at all, but made up for it with resourcefulness. When fleeing from angry gun-toting slave-owners in New Orleans, he crept into the French Quarter and inveigled his way into a luxurious brothel by seducing the madam, who fell in love with him and asked her butler to ply him with fine wine and Cajun delicacies. + +Your correspondent had a more austere time in the Big Easy in 2005, after Hurricane Katrina. At one point he too had to beat a tactical retreat from an angry gun-toting homeowner. Alas, with all the hotels in town closed by floodwater, the only place to sleep was in a cramped, sweaty caravan with half a dozen other hacks, some of whom snored. + +Whenever your correspondent visits a place where the ultimate cad once trod—Harper’s Ferry, Isandlwana, even west London—the relevant passage from the Flashman Papers comes easily to mind. Such memorability sets a standard that journalists rarely match. Most of his own work, he knows, is written in haste and soon forgotten. + +As he writes this, he is about to head for Afghanistan, where Flashman earned his first laurels. In his luggage will be the first “Flashman” on his iPad. And at the first whiff of danger, he will bolt. + +This article appeared in the Christmas Specials section of the print edition under the headline “The cad as correspondent” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712052-victorian-englands-foremost-rotter-would-have-made-great-journalist-flashman/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Black and white and read all over + +The remarkable return of adult colouring books + +Millions of adults are seeking stress-relieving solace in the pages of colouring books + +Dec 24th 2016 + +“THIS is my suit. Colour it grey or I will lose my job.” The “Executive Coloring Book”, published in 1961, was full of such sardonic comments about corporate life. The following year, the “JFK Coloring Book”—supposedly authored by the four-year-old Caroline Kennedy—was at the top of the New York Times Bestsellers list (“This is my daddy…Colour him red, white and blue”). Other targets, from Khrushchev to hipsters, received the same subversive treatment. + +The adult colouring books of the 1960s owed their popularity to their counter-cultural captions rather than anyone’s artistic aspirations. In the genre’s recent, remarkable comeback, the mocking tone of their predecessors has largely gone. The emphasis now is on actually colouring in the elaborate designs, and on the therapeutic benefits that come with it. Johanna Basford, an “ink evangelist” from Scotland, led the charge in 2013 with “Secret Garden” and has sold more than 20m copies of her nature-themed books worldwide, including nearly 3m in Britain (see map). The world’s biggest wooden-pencil manufacturer, Faber-Castell, had to add extra shifts at its Bavarian factory to keep up with global demand for colouring pencils. + +Not every author is playing it straight. Titles like “Dinosaurs With Jobs” and “Unicorns Are Jerks” retain some of the spirit of the 1960s, and a crowded sub-genre of books containing nothing but intricately designed swear words combines the stress-relieving joys of cursing and colouring. And although some still attack their subjects—hipsters (again) and Donald Trump, for example—there’s affection too: David Bowie has several books dedicated to him. And an upcoming celebration of the life of Muhammad Ali promises to be The Greatest Colouring Book Of All Time. + + + +Print out and colour this map here + +This article appeared in the Christmas Specials section of the print edition under the headline “Supercolour factual pictures, stress-free artful process” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712050-millions-adults-are-seeking-stress-relieving-solace-pages-colouring/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Crossword + +Dec 24th 2016 + + + + + +This article appeared in the Christmas Specials section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21712048/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Clothespegs + +A celebration of the oddly modern, oddly mystical clothespeg + +Mankind in minature + +Dec 24th 2016 + + + +THE clothespeg has an ancient look. The simplest sort, with rounded head and body carved from a single piece of wood, might have come from an Egyptian tomb or a Mesoamerican midden. Their shape is vaguely anthropomorphic, like a forked mandrake root (“dolly peg” is the name in commerce), suggesting an offering to the gods of fertility, or of nature. It would be no surprise to find one in an Iron Age settlement, still attached to an Iron Age loincloth. + +Odd, then, that the first such peg is not recorded until the early 19th century. The Roman soldiers at Vindolanda, on Hadrian’s Wall, did not peg up the thick socks for which they wrote desperate letters home; Lady Macbeth’s maid did not peg up the damp, still-spotted gown. Even Samuel Pepys did not expect to see his shirt, soused after a session at the Cock in Fleet Street, tethered with small wooden clips to a line. Instead, the clothespeg came only just in time to pinion Shelley’s tear-stained handkerchiefs from the wild west wind. + +Before this, it appears, drying garments were simply hung over a line (as painted on a wall in Pompeii), or spread out on grass, as shown in illuminated manuscripts of surprisingly tranquil and unsteady laundry days. For John Clare, the peasant-poet of industrialising England, hedges were as likely to be blowing with underwear as with the blossoms of the sloe or the wild cherry. The fierce spines of the blackthorn or hawthorn held a petticoat as well as anything. + +Some say fishermen first thought up pegs, to clip their nets to the rigging. But only one name emerges from the sea-fog, that of Jérémie Victor Opdebec, who took out a patent for the dolly peg in 1809, and of whom nothing else is known. He sounds Belgian. According to a charming fake biography by a mid-20th-century French cabaret group, Les Quatre Barbus, he had a scientific bent from boyhood, inventing devices to de-pip currants and to muzzle ants, but it was the desperate sight (and the faint song) of too-light lingerie fluttering perilously on the line that inspired his biggest brainwave. + +Time, and the market, were just about ripe for him. People were cramming into cities, the drying grounds and hedges were receding, and clotheslines criss-crossed like cats’ cradles between slum windows. Besides, once the nifty little device became common, uses far removed from laundry could be found. When Charles Dickens suffered a seizure, a clothespeg was thrust between his teeth to stop him biting his tongue. In Louisa May Alcott’s “Little Women”, Meg slept nightly with a peg on her nose to try to make it thinner (a method tried, too, by Diane Keaton). Cartoon characters found them a hands-free way of keeping nasty smells at bay. They are now used to keep food fresh and tablecloths flat, clip gels or diffusers to film lights, correct the hang of curtains, hold lit matches longer, squeeze out the last bit of toothpaste from a tube; in short, for so many essential tasks that humans may well wonder how they ever managed without them. + +Practical and relatively newfangled they may be; but pegs also carry overtones of ancient mystery. In Britain they were made from two woods, willow and hazel, with magical associations. (Americans prefer ash and beech.) Willow is therapeutic, and soothes pain. In many cultures it is a tree of conversation and communion, of secret answers shrouded by leaves beside singing rivers. Its wood has something of the spring of water in it: that same elasticity that allows it to be woven into fences, baskets and traps, and can be sensed when a cricket bat, the finest use of willow, shivers under the ball. Hazel is watery, too: the favourite wood for dousing. The dowser’s forked stick is like nothing so much as a larger-scale peg, with the legs pulled outward. + +Britain’s early pegmakers were woodland bodgers in open-sided shacks, farmers keeping idle hands busy in winter, and, especially, gypsies. Like the other items in the gypsy’s basket—lucky charms made of recycled tin, bunches of white heather tied with a ribbon and artificial orange flowers, somewhat like chrysanthemums, created by whittling slivers from an elder branch—pegs carried a hint of ancient magic. Gypsy pegs had a streaked, rough-hewn look, as if brushed with ash from the open fire, and a little ring of reclaimed tin near the top to hold the wood together. In other ages and places gypsies had been smiths and metalworkers, implying brief spells of settlement; the tin ring was a relic of old trade. In modernising Britain, where they were continually moved on by the police, they relied for their livelihood on roadside, riverbank or passing woods: itinerant production from whatever grew wherever they chanced to be. + +In this uneasy coexistence between Travellers and settled society, pegs became the currency of choice. It was an odd exchange. Consumers did not ask for them, and those who produced them barely used them themselves. They were things the gorgios, or non-gypsies, were thought to want, like fortune-tellings and palm-readings, which after a while became a habit. They were cheap as words. + +Pegs were also seasonal; almost as much so as primroses or acorns. They underpinned the gypsy economy in months when they could not pitch their caravans at the edge of fields or orchards, tying wheat or picking hops. In the 1870s it was reckoned gypsy women could make 12-18 shillings a week hawking pegs in cities and towns, more than enough to live on. By the 1930s the going rate for pegs was tuppence a dozen, and shopkeepers would sometimes order them by the gross, exchanging them for goods rather than cash. In the 1950s the author of this piece—with the pram in which she was sleeping—was wheeled off by a gypsy in exchange for a wand of pegs in Maidstone High Street. Their value was clearly judged equivalent. Perhaps sadly (for a gypsy upbringing was still judged romantic then), both items were swiftly handed back again. + +The currency of wanderers + +The author’s uncle, a sheep-farmer on Romney Marsh (which, like Maidstone, is in Kent), makes pegs any time he spots a good side-branch, though it’s best in spring when the sap is up and the bark falls off almost by itself. The only wood for him is grey willow, common round the ditches of the marsh. You never get a splinter, he says, out of a good grey-willow peg; with use, his grandmother’s became as smooth as silk. Farmers who disliked gypsies (sadly, an undying breed) used to root out grey willow deliberately to thwart them. + +Pegs take no time to make once he gets going. The side-branch naturally provides a knob at the top to stop the splitting; he uses a pair of pliers to pinch under the knob, then splits up with a sharp knife until the two sides start, just, to spring apart. Then he prises the sappy centre out. His preferred tool is an ivory-handled Victorian penknife with a large blade and, inevitably, a gadget for getting stones out of horses’ hooves. The cleaned-up pegs, still damp, are pushed on a thin stick. They will be dry by morning, and an evening will provide a bucketful. + +Men being what they are, though, they could not leave the clothespeg alone. Simplicity, surely, could be improved on with artful complication. The first American patent, dating from 1832, articulated a bent hickory stick with a wooden screw, which didn’t work. As the century passed, American inventors added extra legs or bits of metal to a device which, in the right hands, was just natural wood doing its own thing. By 1887, 146 peg-patents had been applied for. A display in the Smithsonian Museum in Washington shows several of the patentees, tied to labels as large as themselves, with their designer’s names and dates in proud copperplate. + +“Nothing grows in our garden, only washing. And babies” + +It could be argued—and still is—that a metal adjunct is not an invention, merely a modification. Nonetheless David M. Smith’s “new and useful or improved...spring clamp for clothes lines” (1853) made him the inventor of the modern articulated peg. His design, as he described it in almost erotic detail, featured two levers conjoined with a spring so that “the two longer legs may be moved toward each other and at the same time move the shorter ones apart”, in harmonious opposition. His last diagram showed Opdebec’s design, “the common wooden clothes pin in common use”, as he scornfully described it. It was inferior because it had to be pushed on garments like a prong. By contrast, his own peg delicately clipped them to the line. + +Inevitably that too was improved, by Solon E. Moore in 1887, with a “coiled fulcrum” of wire. Both inventors were Vermonters, and their brainwaves fired up industrialisation in the state: Montpelier versus Waterbury, the United States Clothespin Company versus the National Clothespin Company, with both vying (given the latitude) to produce pins that “cannot freeze or lock on the line, as they will open at the top and let the snow and ice out”. By the early 20th century the equivalent of 500,000 board-feet of lumber (perhaps 700 tonnes) a year, in the form of sawmill waste, were being pulled from the Green Mountains to make pegs at a rate of more than 20,000 a day. + +The Smith-Moore peg is a triumph of design, equally pleasing when mini (to clip a sprig of lavender to a martini glass, or a favour to a wedding menu) or when maxi, as in Claes Oldenburg’s 14-metre-high steel “Clothespin” in Philadelphia. In 150 years, this item has not been improved on. Scott Boocock of Alice Springs has just invented the Heg, a plastic peg with hooks, inspired by his struggles to pin out his wife’s cocktail dress; but something much like it, in dark Victorian wood, sits in the Smithsonian. + +The motive behind all this is control: to win man’s, or usually woman’s, eternal contest with the wind. Smith’s patent claimed to offer protection against the “evil” of things blowing off the line: not merely inconvenience, but existential disorder and wrong. Wind would now be put in its place. Although pegs might suggest domestic servitude and toil, they also asserted possession, tidiness and small, quick triumphs: a full, billowing clothesline is a victory of sorts. Hence the hymn of praise to Opdebec set by Les Quatre Barbus, its French original vaguely fitting the main theme of Beethoven’s Fifth Symphony: for though hurricanes might thunder and storms might rage, the humble peg was a beacon of hope, holding everything together. It might be the saviour not merely of a row of shirts, but of human civilisation. + +True, the sheer joy of seeing laundry blow safe-anchored on a line is regularly dashed by having to run outside, when the clouds mass, and grab tumultuous armfuls as the first drops fall. But even that loss of command can now be remedied: the Omo laundry company has devised a smartpeg called Peggy, of red plastic, which can send messages from your washing line to your smartphone informing you when the sheets are dry, and when it is going to rain. + +Balancing this conquest of the elements, however, came loss of social control. In cities and, especially, suburbs, a clothesline is a semaphore of gossip and the pegs little telltales, wagging their knowing heads. A sudden parade of nappies, a startling array of saucy smalls (impossible without pegs), the vanishing of a man’s overalls, even the sad listing of sparse pegs on a line that was full before, may all announce what has not been publicly admitted. “Nothing grows in our garden, only washing. And babies,” sighs the simple but luscious Polly Garter in “Under Milk Wood”. The voice of the First Drowned faintly asks whether washing is still on the line in the world above, as though with his own death it must have disappeared. + +Flapping in the trade winds + +Through this cosy domesticity, as the years ran on, the winds of globalisation and technological change blew as coldly as elsewhere. In sunny cities such as Naples and Valencia, the clothesline still reigned supreme; but by 1920 America’s wooden-clothespin-makers were struggling, crying fruitlessly for protective tariffs against the Swedes and the Chinese. Flat-dwelling, and the sighing boom of the tumble-drier, gradually cut deep into demand. In 2009 the last domestic peg clittered off the production line, and the last owner of the National Clothespin Company was buried under a five-foot reclining version, in grey granite, that looked as dead as he was. + +Clothespin: Claes Oldenburg + +Odd then, but true, that at the same moment, in various places, sales of pegs began to soar. In 2007 Asda, a supermarket chain, reported that British sales had risen by 1,400% in the first four months of the year compared with the year before. Such a spike was mystifying, and a shock. Moreover, plastic pegs (which degraded in sunlight) were losing out to traditional wooden ones. The switch to wood was a by-product of nascent hipster culture, with its love of beards, craft beer, bicycles-with-baskets, milk-rounds and all things retro; the return to pegs, though, seemed part-caused by guilt at the amount of carbon dioxide, 1.5kg, emitted by each cycle of a tumble-drier. The two trends together resulted in a renaissance. Along the back-roads of both New and Old England, smaller companies sprang up again to make thousands of wooden artisan pegs of good hazel and ash. Modern craft fairs now seem to be held together by them. + +Much comes down, again, to their anthropomorphic charm. Along with pegs has come a revival of peg dolls, dressed up, with scraps of cloth, into the tiny forked humans they so strongly resemble. One of the few things that could be said of their mysterious and possibly fictitious creator, Opdebec, was that his name rhymed most usefully with mec (roughly “bloke”), a hard little word somehow apt, too, for his hard little wooden inventions. For all their mass-production and plastic incarnation, pegs may also be a charm or totem after all. Even those massed plastic Chinese legions lie in their packs like tomb soldiers, ready to be deployed. + +The claims made for Oldenburg’s “Clothespin”, however, show that their significance can go way beyond that. This apotheosis of the peg began in a fittingly ordinary way. In 1967, as he left one day for the airport, Oldenburg slipped a clothespeg into his pocket. As his flight approached Chicago shortly afterwards, he held up the pin against the skyscrapers below and thought it could vie with them. Sketches followed, in which colossal pegs of “a certain Gothic character” stood with their heads in windblown clouds. Yet the more he considered the two leaning parts, joined by metal rings, the more Oldenburg compared them to Brancusi’s cubist stone lovers in the Philadelphia Art Museum. (“Cpin=kiss”, he scribbled on the print.) From this thought, sown in the public consciousness, flowed a dozen others. The immense clothespin, according to the city’s boosters, links Philadelphia’s colonial heritage to its difficult present; it reflects the city’s efforts to close the gap between rich and poor; and in its evocation of simple, domestic things it brings all men and women together. + +Chief in the mind of the sculptor remained the simple thought of two lovers embracing. The same idea seems to have drifted through Smith’s mind as he wrote his patent proposal, and through the minds of many pegmakers, dealing with the simple spring and return of a piece of cloven wood. From this elemental urge to get together sprang all humankind—with its triumphs, its failures, its endeavours and its ingenuity. + +This article appeared in the Christmas Specials section of the print edition under the headline “Mankind in miniature” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712030-mankind-minature-celebration-oddly-modern-oddly-mystical-clothespeg/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Foreign fighters + +Why an ordinary man went to fight Islamic State + +When Islamic State looked unbeatable, ordinary men and women went to fight them + +Dec 24th 2016 | ERBIL + + + +“ANOTHER Christmas out there, another bowl of soup, that’s the plan,” declares Tim Locks, a former nightclub bouncer and a self-styled warrior. “Out there” is the unrealised state of Kurdistan. + +The Kurdish Regional Government (KRG) does not know precisely how many foreign fighters have joined its ranks. There are certainly fewer than have joined Islamic State (IS)—the force that men like Mr Locks yearn to fight. More than 3,000 people have joined IS from Europe, according to estimates from the Soufan Group, a consultancy, and around 150 from America. The people from beyond the region who have joined the Kurds, on the other hand, probably number in the hundreds: perhaps 1,000 all told. + +In February 2015 Mr Locks became one of them. A rough childhood left him with a loathing for bullies, and, he says, “there’s no bigger bully in the world than Daesh” (a term for IS much disliked by the group, and so used by those who fight them). He regrets not having joined the British Army, but at the age when he might have done, as he explains, “suddenly you get a driving licence and there’s girls and clubs and things to go and do”. If he had joined up, he might not have felt something was missing as he neared 40. + +In August 2014 IS captured Sinjar, a town in northern Iraq. They drove its Yazidi population on to a nearby hill; they massacred thousands. Like most people, Mr Locks had never heard of the Yazidi, ethnic Kurds persecuted by some Muslims as devil-worshippers for revering an angel who takes the form of a blue peacock. But he had followed the rise of IS with bewildered anger. The slaughter on Mount Sinjar proved more than he could bear. “I just thought right, that’s enough, I don’t know what I can do, but unless I’m there I can’t do anything.” He rang an estate agent and put his house on the market. + +He found a Facebook page for the “Lions of Rojava” (Rojava being the part of northern Syria the Kurds claim as their own). An American who fought with the Kurds created the page to let others follow him. It had information on how to join the fight and gave Mr Locks, and anyone else who was interested, a chance to chat with fighters in the field. + +Online to front line + +There were many such sites on various social networks, some just offering information and contacts, some looking for money. To help defray costs, foreign fighters had learned to crowdfund their war using Instagram, Facebook and YouTube. In exchange for a sense of what the war was really like, the fighters asked for donations via PayPal. In effect, they sold their war. + +The accounts the fighters used were sometimes blocked: Instagram and PayPal won’t let their platforms be used to buy weapons. But funds reached them anyway, to be spent not just on weapons, but also on food, water, cigarettes and energy drinks. In return the accounts provided a window on war in its entirety: loafing; feeding rations to stray dogs; mocking the enemy. But the images that got the most response show blood. In one photo on Instagram an IS fighter lay twisted and dead, his bullets near him, blood flowing through the long hair typical of jihadists. It was liked by over 16,000 people. A video of an IS fighter who had been shot by a foreign fighter getting medical care received over 300,000 views. + +Mr Locks had no idea how to shoot someone, but he reckoned that any skill could be learned. Online he discovered a firearms course in Poland. Out in the forests no law prevented him from training with pistols and rifles loaded with live ammunition. It was expensive, but he felt it was money well spent. + +Reaching Iraqi Kurdistan proved surprisingly easy: flights went from London, with a visa available on arrival. The hard part was getting out of Britain, where the authorities tend to take a dim view of people leaving to fight in Iraq. Mr Locks booked a business-class flight to allay suspicions. At the airport in Sulaymaniyah, near Iraq’s border with Iran, he called contacts he had made online. A driver picked him up and delivered him to his unit, called Dwekh Nawsha (“the self-sacrificers”, in Aramaic). + +At first he froze. Then he ran from the roof and tried to bury himself in the ground. + +There were former American soldiers who felt that the war in Iraq had not ended, there were others like him, there were outright fantasists. One of his more striking comrades was Gill Rosenberg, a former soldier from the Israeli Defence Forces who had come looking for redemption after she had served a prison sentence in America for fraud. + +The volunteers had to pay their own way. There were plentiful AK47s for just $300 each, but they weren’t accurate at long distances. M16s, the American army’s standard rifle, were better but more expensive—up to $2,500 each—and harder to find; most of those available had been abandoned by Iraqi troops. Some of the fighters also carried pistols so that, if they thought they were about to be captured by IS, they could take their own lives first. A reliable Austrian Glock purchased to this end would cost $3,000. + +After helping the team buy weapons, Mr Locks was still far from the front. That was no accident. The Kurdish forces were keen to avoid the public-relations nightmare of western volunteers getting killed, and so did their best to keep foreigners behind the lines. But after weeks of negotiations he got himself sent forward. + +He did not get to Syria; few of the volunteers do. Instead, he ended up in a patch of rough desert near an Assyrian Christian village called Baqofa. Telegraph poles ran into the distance on one side; on the other was a water tower flying the black flag of IS. That was the village of Batanya, once also the home of Assyrian Christians. His mission was to hold the line. On his first day, he narrowly missed getting killed by a mortar. From a rooftop perch he saw sand rising in ominous clouds as the shells dropped closer and closer. At first he froze. Then he ran from the roof and tried to bury himself in the ground. It made him smile. He was an ordinary man who had decided that he would not sit in comfort while people were being slaughtered. Sand in his face, he realised, was what he had come for. + +He scrapped with other soldiers whose motives he disliked. One self-proclaimed “Soldier of Christ” had a tattoo on his back of the archangel Michael, a Bible full of notes and highlighter marks; he saw the war as the latest Crusade. Some fighters were taking the opportunity to set up security companies. Others played music or used their mobile phones when they were supposed to be watching for the enemy. + +Not all phone use was frowned on. Officers who grumbled if anybody spent too much time on YouTube made an exception for instructional videos; Mr Locks learnt how to use a mortar from them. But the professionals worried about how much of the war appeared on social media. Some heard that IS used Kurdish soldiers’ posts to gather intelligence. Others worried about reliability. How could a soldier know, for instance, that the “weapons expert” telling him how to use a rocket launcher was not an IS intelligence cell providing dangerous misinformation? + +Missing Mosul + +Western and other intelligence services were certainly paying attention in the online world. Several volunteers had agreed to provide intelligence to their home countries and stayed in touch with law enforcement using secret WhatsApp groups to relay troop movements and enemy positions, including the locations of foreign fighters on the IS side. + +Mr Locks left after five months. He had come under mortar fire, been shot at and shot back. He had not paddled an inflatable across the Tigris to get into Syria like Mark Ayres, a Londoner of more or less the same age who had spent four and a half years as an infantryman with the Royal Green Jackets in his teens and had felt himself called to the fighting. He had not stripped copper from electrical transformers under IS fire to sell so the Kurds could buy armaments, as one Norwegian volunteer did. But he felt he had helped. And unlike Reece Harding, an Australian who left the Gold Coast to fight without telling his parents, he was still in a position to go home. Harding was just 23 when he was killed after stepping on a landmine. + +Mr Locks always thought he’d return to the battlefield, though; maybe not, next time, as a volunteer, but as a bodyguard. He particularly wanted to be part of the force that took the Iraqi city of Mosul back from IS. + +In November the battle started without him. But it started without all the people like him who had stayed in the country, too. Days before the attack the KRG announced that, though Kurdish forces would be taking and holding surrounding villages, none would enter Mosul. Foreign fighters were almost all to be kept back. Some foreigners who had been fighting in Kurdish units for nearly two years managed to get close to the action, but still had to stand by and watch the Iraqi army take over what they wanted to be their operation. + +The dispirited foreigners trickled back from the front lines to Erbil, the capital city of Iraqi Kurdistan in taxis playing Dabke music. They returned to the down-at-heel Christian district of Ainkawa—in particular to the hidden German beer gardens near a statue of the Virgin Mary, where there were pitchers of lager and bottles of Lebanese wine. As they drank they heard Chinook helicopters clatter overhead carrying special forces west for the fight. As they passed, they threw chaff into the night. + +Mr Locks still wants to go back. He wants to see IS fall. He wants the dull desert, the searing heat, the smiles of the Kurds, the stock of the AK47, the sound of a bullet loading more than he wants a house. He wants the nights lying on a rooftop watching for the enemy across a strip of no-man’s-land, feeling that this was all bigger than him, but that he could squeeze a trigger and send a bullet into the quiet. + +The experience changed him and tired him. It did not satisfy him. He had come home. But he wants to go back: perhaps for others; perhaps for himself. + +This article appeared in the Christmas Specials section of the print edition under the headline “Somebody else’s war” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712055-when-islamic-state-looked-unbeatable-ordinary-men-and-women-went-fight-them-why/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Seqouiadendron Giganteum + +Climbing the world’s biggest tree + +The sequoia’s outsized role in America’s environmental history + +Dec 24th 2016 | SIERRA NEVADA, CALIFORNIA + + + +HIGH in the Sierra Nevada, in Calaveras Big Trees State Park, the last rays of the day are turning the topmost branches of a giant sequoia golden brown. The bark, much thinner up here than it is lower down the trunk, appears to be flowing around the massive boughs in liquid whorls of pink, brown and cream. It is rough to the touch and exquisite, especially viewed with the sniper-like focus that comes with bright sunlight, high adrenalin and the extreme exposure of the perch. + +Swaying just perceptibly in a light breeze, the sequoia is over 83 metres high, about the height of a 27-storey building. Anthony Ambrose, a tree-climbing botanist from the University of California, Berkeley, estimates the tree—which he has named Munz, after a celebrated 20th-century botanist—is around 1,500 years old. That is middle-aged for a sequoia. The oldest known specimen, measured by the rings in its stump, was more than 3,200 years old when it fell—so already 700 when work was begun on the Parthenon. The surrounding pines, which appeared vast from the ground, are mere weeds by comparison. Looking straight down in the fading light, through a murk of green needles and hulking boughs, the forest floor is too distant to make out. + +The massiveness of the sequoia, a species of cypress which is endemic to just 75 groves in the Sierra Nevada, is not easy to comprehend. That is in part because it is rather hard to observe. Up close, the viewer gawps at the vastness of the trunk, a great pillar rising into the sky, typically branchless for almost half the tree’s length. The bole of the biggest living sequoia, the General Sherman tree, is over 30 metres (100 feet) in circumference; it takes 17 adults with their arms outstretched to encircle it. Yet to see the tree’s distant crown, a mass of huge and shaggy boughs, curling downwards under their own weight, it is necessary to stand much further back. Excluding some subterranean fungi, the sequoia is the biggest organism ever known to have existed. + +Twizzling in mid-air + +Mr Ambrose, a 47-year-old scientist with a watchful manner and diamond stud glinting in one ear, is one of a tiny cabal of botanists whose research mingles science with extreme sports. He has climbed several hundred giant sequoias (Sequoiadendron giganteum) and coastal redwoods (Sequoia sempervirens)—another California species, slightly taller than the giant sequoia but usually more slender—over the past decade. Yet his wonder is undimmed. “God, I love these trees!” he exclaimed periodically, on a field-trip in November, while unpacking climbing gear, fiddling with solar panels and trying to take his mind off the wreckage some curious bears had made of some of his humidity sensors. + +He and his colleague, Wendy Baxter, had come to Calaveras to take down some instruments they had installed in a pair of trees, part of a six-year study into the microclimates of sequoia groves. It was a fine autumn day. A pale blue sky showed through the forest’s old-growth conifers—sugar and ponderosa pines, Douglas firs and incense cedars—as the researchers tramped over dry ground, carpeted with dead needles and cones. At the study site they set to work with quiet efficiency, sorting out ropes and carabiners. Mr Ambrose and Ms Baxter are partners as well as colleagues, which is not uncommon among tree-climbing scientists. The most celebrated, Steve Sillett, who pioneered canopy research in giant trees, also met his wife clambering aloft. Mr Sillett is known among his peers for opening a new realm of tree science. But he is perhaps most famous, thanks to “The Wild Trees”, a book about redwoods by Richard Preston, for having got married and had sex in a tree. It was a perilous undertaking. + +For those without amorous intent, the most dangerous part of climbing a giant tree is the first ascent, which is carried out, Swiss-Family-Robinson-style, by first shooting a crossbow bolt with fishing-line attached to it over the highest possible branch. Once the bolt is retrieved, a length of yarn is run up after the line. A rope is then run up after the yarn. + +One end of the rope is made fast to a nearby tree. The other hangs free to the ground, where it can be clipped onto and climbed up, using grips that can be slid up the rope but not down it. One grip is attached to a climbing harness, another to a pair of foot slings. By sliding one up after the other, first the foot grip, then, after lurching to full height in the slings, the hand grip, the climber rises up the rope. + +As the lowest branch of the Munz tree is 35 metres off the ground, this at first involves a lot of twizzling in mid-air, a metre or two from the tree, as the forest floor falls sickeningly away. At around 10 metres, or the height of a three-storey building, the vastness of the trunk, with its massive bark flutes, runnels and crevasses, the skinniness of the rope, and the extreme exposure of the climb become powerfully evident. There are 73 metres to go. + +Mammoths and mothers + +The first reports of monster trees out West, sent by the European trappers and gold prospectors who flocked to California in the mid-19th century, carried a familiar ring of dragons and sea monsters. They sounded incredible. Then, between 1853 and 1855, sections of bark were cut from two colossi in Calaveras, the Mammoth Tree and the Mother of the Forest, and exhibited in San Francisco, New York and London. The husk of the Mother was celebrated as the “eighth wonder of the world”; over 7,000 New Yorkers went to see it on the first day of its display. Even then the New York Times was doubtful: “We have no assurance, from seeing this clothed skeleton, that the tree was actually so large,” it opined. + + + +Felling the Mammoth had taken five men working with drills and wedges almost a month. The tree’s stump was used as a dance-floor, big enough to accommodate 40 people. The biggest part of its fractured bole was used as a bowling alley. Thus did the sequoia enter American culture, as a tall story, a popular attraction and, in due course, a source of intense national pride. + +At a time of territorial expansion, America’s natural bounty struck some as a God-given substitute for the ancient culture which was the only thing the country seemed to lack (if, that is, you ignored its native American heritage, as most Americans did). For John Muir, a Scottish-American naturalist who lived in the Sierra Nevada and introduced it to the world in his florid writings, the sequoias were “nature’s masterpiece”. Indeed, they were like the Parthenon, with “massive columns from the swelling instep to the lofty summit dissolving into a dome of verdure”. + +This exalted status, unusual for a plant, would ensure for the sequoia an important role in two historic debates that began around this time, in both of which Muir had a hand. One was over the competing claims of development and conservation, especially in the West. The other concerned the acceptance by American scientists of Darwinism. + +By the time the Mother was shown to New York the rate at which America’s forests were being cleared for fuel and timber was already worrying some people. The sequoia exhibits added a less utilitarian concern. Cutting down such giants was wrong in itself, an act of national self-harm, sacrilegious even, and must be stopped. “Unless the Goths and Vandals are arrested in their work, the destruction of the incomparable forest will probably go on till the last vestige of it is destroyed”, the New York Herald railed in December 1855. “The state of California and the Congress of the Union should interpose to preserve these trees, as the living proofs that the boasted monarchs of the wood of the Old World are but stunted shrubbery compared with the forest giants of our own country.” + +“I wish I were so drunk and Sequoical that I could preach the green brown woods to all the juiceless world” + +It would be long before this notion seriously threatened Americans’ sense of manifest destiny. In the second half of the 19th century loggers felled around a quarter of the sequoias. It was rarely worth the effort involved. Unlike fine redwood timber, sequoia wood is too fibrous and brittle to be much use for anything except matchsticks and fence-posts. Partly for the same reason, the trees also tended to shatter when felled; it was reckoned that half of any felled giant was thus wasted. + +Not until 1909, after nearly 1.5m people signed a petition beseeching President Theodore Roosevelt to intervene, was the Calaveras grove purchased by the federal government to prevent it being logged. Yet slow though it may have been to grow, the conservation movement behind that petition was nonetheless rooted in the husk of the Mother. John Conness, a senator from California, referred to that very tree when urging his fellow senators to pass a bill to protect the nearby Yosemite Valley in a speech now considered a milestone in American conservation. The bill in question, he argued, would at least “preserve one of these groves from devastation and injury”, which, again, national pride demanded. Even more than the painful felling of the Mother, Conness seemed motivated by his sense of pique at “the English who saw it [and] declared it to be a Yankee invention”, not, as the good senator understood the fallen tree, a “specimen of American growth”. + + + +Muir, one of the most celebrated Americans of his time, added impetus to the conservationist movement. The son of a Presbyterian preacher, who, at the age of 11, could recite most of the Bible by heart, he became an evangelist for nature. He believed that wilderness, uncorrupted by civilisation, revealed God. “Do behold the King in his glory, King Sequoia!” he wrote, “Some time ago I left all for Sequoia and have been and am at his feet; fasting and praying for light, for is he not the greatest light in the woods, in the world?” By soaking sequoia cones in water, Muir brewed for himself an arboreal communion wine: “I wish I were so drunk and Sequoical that I could preach the green brown woods to all the juiceless world, descending from this divine wilderness like a John the Baptist…crying, Repent, for the Kingdom of Sequoia is at hand!” + +He got his wish. In 1903 Roosevelt spent three days with him in Yosemite, staring at its sequoias, and the preacher convinced the president of the need for preservation. Roosevelt signed into existence five national parks, 18 national monuments, 55 national bird sanctuaries and wildlife refuges and 150 national forests. Muir’s vision of wilderness preservation was not unchallenged; a rival “conservation” movement, led by Gifford Pinchot, the first boss of the United States Forest Service, argued for America’s natural resources to be protected for sustainable exploitation, rather than for their own sublime sake. But when it came to the “gigantically wasteful lumbering of the great Sequoias” Pinchot was with Muir: “I still resent the practice of making vine stakes hardly bigger than walking-sticks out of these greatest of living things.” + +An earlier trip to the sequoias with Muir, undertaken in 1872 by Asa Gray, a celebrated botanist, was influential in a different way. A friend and advocate of Darwin, Gray argued that natural selection was consistent with a divine creator. Having rehearsed his views with Muir, who, with some quirks, broadly accepted them, Gray outlined them in an influential speech he delivered soon after on the distribution of trees in the present and the past, making the sequoia his prime example. As the world changed, Gray argued, so its flora did, with species sometimes adapting well and sometimes being out-competed by others. The sequoia had not fared well since the most recent ice age. Having once been widespread, changes in its range had left it only restricted areas to grow in, and in these territories lesser species that reproduced faster, such as sugar pines and incense cedars, could “overpower” it. “Certain if not speedy”, Gray expounded, “is the decline of a race in which a high death rate afflicts the young.” + +A tree for all seasons? + +Mr Ambrose’s climate study is in a way testing Gray’s hypothesis—but in the more recent context of anthropogenic warming. The work received particular attention (and a dollop of needed funding) in 2014, near the height of California’s now five-year drought, after half the foliage on some sequoias suddenly died. Mr Ambrose found that the affected trees were in fact no worse off than apparently healthy ones. Though water-stressed, all the sequoias were to some degree mitigating the effects of the drought by shedding foliage and shutting off some of their stomata to conserve water. It is a trick sequoias turn out to be especially good at, which illustrates a paradoxical truth about the giants. Coeval with dinosaurs, once widespread across the northern hemisphere, but now reduced to refugia that cover a total range of just 150 square kilometres (38,000 acres), they are plainly sensitive to climate change. Yet they are also extremely resilient. + +Some of their defences against the buffeting of geological time were revealed during your correspondent’s ascent of the Munz tree. The shaggy thickness of its bark, up to a metre deep, and, as the rope angled in towards the trunk, not uncomfortable to bounce off, protects it against the fiercest wildfires. This was especially apparent in the crown, where a fold of pinkish new growth was slowly overlapping a branch killed by fire. The damage had been done, Mr Ambrose estimated, 200 years ago; the heat of the blaze, raging at the height of a modest skyscraper, must have killed most of the trees in the forest at the time. + +Besides a few ants and spiders, the tree was also surprisingly devoid of creepy-crawlies. The sequoia’s tannin-rich wood is unappetising, which has spared it from another warming-related blight, the bark beetles and other pests currently ravaging America’s West. In the Sierra Nevada, more than 66m trees are estimated to have been killed by bugs and drought since 2010. + +Sequoia wood resists rot; scratch away the muck and charcoal from a stump which took root three millennia ago and the wood beneath is intact. As a result the trees are not particularly welcoming to other plants, either. In their more humid, coastal conditions, redwood canopies tend to be thick with epiphytic lichens, bryophytes and even small trees, growing in pockets of rotted wood. The Munz tree was barren by comparison: a stunted sugar pine, sprouting from a fire scar about 50 metres up, was its only large epiphyte. + +With such advantages, the sequoias are playing only a minor role in a third great public debate, over climate change. Even as the pines succumb to beetles and the firs go up in smoke, the giants look able to endure—at least for a while. Yet there will be a limit to that. Sequoias need vast quantities of water; Mr Ambrose and Ms Baxter calculate they use more than two tonnes a day in summertime. And there are multiple indicators, including drought, dieback, shrinkage of the Sierra Nevada’s snowpack and a slight retreat of the sequoia’s southern range, to suggest such volumes could soon be unavailable to them. “I worry about them. I worry about them a lot,” said Mr Ambrose, working deftly to dismantle his scientific rig from the very top of Munz, while being peppered with journalistic questions from a neighbouring branch. + +At that highest point on the tree, illuminated in crystalline detail by the explosive last rays of the dying sun, I noticed a single thread of spider’s silk. It was snagged on a piece of bark, and trembling in the delicate breeze. It was powerfully beautiful. It also seemed for all the world like a sign. + +This article appeared in the Christmas Specials section of the print edition under the headline “On a giant’s shoulders” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712066-sequoias-outsized-role-americas-environmental-history-climbing-worlds/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Gay bars + +Gay bars are under threat but not from the obvious attackers + +The disappearance of gay bars and clubs is an unhappy side-effect of a far more cheering trend + +Dec 24th 2016 | LONDON, NEW YORK and WASHINGTON, DC + + + +DAPHNE SUMTIMEZ, a drag queen, dances so vigorously that it looks as if she might bring the low-slung ceiling down. It is the last Friday night of This N That, a gay dive in Brooklyn, New York. Essentially a long brick tunnel, the venue has a bar running down one side and disintegrating leather banquettes along the other. Covered in sparkle, Daphne gyrates and does the splits; her diamante belt flies off, to the delight of her audience. A young man in a black skirt and cracked leather boots pounds the stage with appreciation. “We’re here, we’re queer and that’s what makes us family,” she sings in elegy for This N That over music from “Beauty and the Beast”. A fairy tale is ending. + +Punters take their final photos of the wall beside the stage, where a mural depicts skyscrapers, warehouses, robots, a rainbow, a walking pizza slice and a joyful unicorn. “It’s gonna be turned into stores,” says one regular, in the smelly toilets where all genders pee together. “I heard a sports bar,” sighs another. + +For its regulars This N That was its own particular place; one in which to dance, hook up and be as outrageously camp as possible. But the experience of going out to a gay bar is an almost universal one for homosexual men and lesbians in the rich world. They are places that contain memories of first kisses or heart break; they are where people, often persecuted or misunderstood by others, made friends and felt accepted at last. As such, they became central points for gay people. This is why, when 49 people were killed by a homophobic shooter at the Pulse gay nightclub in Orlando in June 2016, it carried such an emotional burden. Thousands of people conducted vigils in their local gay bars in America, Britain and elsewhere. Outside the Admiral Duncan pub in London’s Soho, where a nail bomb killed three people in 1999, hundreds of people came together as they had that night, waving rainbow flags and holding one another in grief. + +And yet despite their importance, gay bars are vanishing. A month before Daphne wiggled her hips at This N That the aptly-named One Last Shag, also in Brooklyn, shut down. Dozens of others have disappeared from cities over the past decade. At least 16 bars closed in London between 2014 and 2015, though the number is likely to be higher. The disappearance of these bars and clubs is upsetting to some past and present patrons. But their decline also points to a larger, and overwhelmingly positive, trend. + +Places in which gay men and women can gather have long existed in different shapes and forms over the centuries. In 18th-century London taverns known as “molly houses” were places in which men could meet, dress in women’s clothes and conduct “marriage ceremonies” (although they were not technically brothels, sex often took place in them too). In the Weimar Berlin of the 1920s freewheeling transvestite shows, colourful drag revues and bars for men and women all jostled for attention, buoyed by a steady influx of foreigners escaping persecution elsewhere. In Paris gay life flourished in the decadence of Montmartre, with its Moulin Rouge cabaret and rows of smoky cafés and bars. + +In America these bars popped up more and more after the second world war, during which millions of people, many of whom were from small towns or suburbs, were posted in big cities such as New York and San Francisco. When the war ended many gay people wanted to stay together. This is partly how homosexual districts, such as the Castro in San Francisco and Greenwich Village in New York, developed. In these neighbourhoods gays and lesbians had their own restaurants, book shops, church groups and newspapers. + +Along with being places to hook up, the bars in these districts also let gay people try on new identities, says Jim Downs, a historian at Connecticut College who has written about the gay-liberation movement. Some men went to bars dressed as police officers or leather-clad motor bikers. Others preferred the “ballroom scene”, in which they wore extravagant dresses and competed to throw the wittiest put-downs at each other. Lesbians could be “butch dykes” or “femmes”. Hairy, burly men called themselves “bears”. Such subcultures still exist (“for bears and their admirers”, reads the slogan for XXL, a London nightclub). + +More important, these bars were where many gay people finally felt they belonged. Andrew Solomon, a writer and psychology lecturer, writes about “vertical” and “horizontal” identities in his book, “Far From the Tree”. Vertical identities are those that come directly from one’s parents, such as ethnicity and nationality. Horizontal ones—such as sexuality—may put a child at odds with his family. For many homosexuals, the experience of going to a gay bar for the first time was a nerve-racking one, but also one in which they finally felt accepted, finding those with the same horizontal identity. + +“This place got me through the most difficult part of the past eight years,” says Leigh Gregory, a patron of London’s Queen’s Head pub, which closed in September 2016. In Washington, DC, Judy Stevens, who has worked in gay bars for 50 years, “sits with the drinker when business is slow and you become friends,” says Victor Hicks, a long-time patron of bars in the city. “My partner and I actually went to her for her blessing when we first started dating. There was no one else’s approval we cared about above hers.” + +Radical drinking + +It is this sense of community that drew members of the gay-friendly Metropolitan Community Church together for their weekly worship, held at the Upstairs Lounge, a gay bar, in New Orleans every Sunday in the early 1970s. They gathered there to pray and sing together. On June 24th 1973, an arson attack on their congregation consumed 32 lives, including those of the assistant pastor and his boyfriend. Their death pose, frozen by the flames, showed them cradling each other. + +From the start, the existence of these bars was precarious. Police raids were common: in Paris in 1967 412 men were arrested in one month. But rather than stop patronising them, many gay people used these bars as a space for resistance. “NOW is the time to fight. The issue is CIVIL RIGHTS”, shouted the text on a flyer that was distributed in bars in Los Angeles in 1952, to drum up support for Dale Jennings, a 35-year-old man who had been charged with soliciting sex from a plain-clothed police officer in a toilet. In 1966 a “sip-in” took place at Julius, a bar in New York’s West Village, in protest at a rule prohibiting bartenders from serving so-called “disorderly” clients. The most famous incident took place at the Stonewall Inn in New York in 1969, when its patrons (including Stormé DeLavarie, a butch lesbian from New Orleans who performed as a drag king) fought back against a police raid. The protest lasted for six days and sparked the start of the modern gay-liberation movement in America, which led to the repealing of homophobic laws and, eventually, to same-sex marriage. + + + +In the rich world it is no longer raids that threaten gay bars; the biggest problem facing most is rent. These places are often in scruffier parts of cities. As cities become wealthier, and as pressure on space intensifies, they are squeezed out. In Brooklyn the Starlite Lounge, which had been open since the 1950s, faced a rent rise in 2010. The managers were forced to close despite a campaign to save it. Today the building is occupied by a local deli, the owner of which also says that his rent has become too steep. In London the Candy Bar, a lesbian venue, closed in 2014 after two decades of serving drinks to women in a dark, rather dingy space when its landlord increased the rent. In an ironic twist, the bar is now a lap-dancing club. + +Another pressure is increased competition in the hook-up trade. Technology means like-minded people are just a tap away more or less wherever you are: mobile-phone apps such as Grindr for men and Her for women have eliminated much of the need to lock eyes across a crowded room. Instead potential partners can be found while at home or in the lunch-break at work by “swiping” to find people nearby. Some 2m men use Grindr globally. The app allows them to see and talk to other men who are online nearby, to either forge relationships or have casual sex. Other apps allow people to search for people in other countries, suddenly making the gay bar global. “The efficiency is unparalleled,” boasts Robyn Exton, the founder of Her, which has 1.5m users. + +“We’re here, we’re queer and that’s what makes us family.” + +But perhaps the biggest reason gay bars are disappearing is because of increased acceptance of homosexuality in the rich world. According to a study in September from Pew Research Centre, an American think-tank, 87% of those asked knew someone who was gay or a lesbian. One in five American adults say their views on homosexuality have changed over the past five years (most have become more accepting). Similarly in Britain, views on homosexuality have become markedly more tolerant. This means that many gay men and women, particularly youngsters, do not feel the need to congregate in one spot. In big cities such as London or New York they can display affection in many bars and pubs, while they frequently live in areas of cities that are more diverse. According to research by Amy Spring, a sociologist at Georgia State University, who looked at 100 American towns between 2000 and 2010, the vast majority of gay men (87%) and lesbians (93%) living with partners now live in neighbourhoods where gay and straight people increasingly live side by side. + +This does not make the disappearance of gay bars in the West any less painful. Indeed, many gay people are trying to fight the trend. In 2015 campaigners managed to save the Royal Vauxhall Tavern, a former Victorian music hall in London which hosts drag shows and cabaret nights, from demolition by getting the building listed as a heritage site. Similarly in San Francisco patrons of The Stud Bar formed a co-operative to raise money to secure the lease, after its rent increased 150% earlier this year. Many European cities are now appointing “night mayors” to try to prevent music venues, clubs and bars (both gay and straight) from closing in cities such as London and Amsterdam. + +And while these places close down in the rich world, they remain as important as ever in the developing world. In Kampala, the capital of Uganda, where homosexuality is illegal, a gay club night takes place at a particular restaurant every Sunday evening. “We dress up, cross dress, dance, dance, dance,” says Frank Mugisha, a gay-rights activist. “But you wouldn’t know about it unless you knew someone who goes,” he adds. These places are facing many of the problems that gay bars in New York or London experienced four decades ago. In August the Ugandan police stormed a gay and transgender fashion show, beating the participants and locking them up in jail for a night. Similarly in Yaoundé in Cameroon, where homosexuality is also illegal, police officers surrounded Mistral Bar in October, holding the patrons inside for some time before arresting all of them. + +That such seemingly ordinary bars—often rather scruffy, with peeling leather seats and the sodden smell of stale alcohol—can offer so much to their patrons is perhaps remarkable. But it is the other people in the room who make them special. Many remember their first experience of going into a gay bar with affection: “I was…visiting my [gay] uncle in New York,” says Stavros, a 24-year-old from London. “It got to 1am one night and he said, ‘Let’s go out’. It just blew my mind. It was the first time I saw guys kissing. It was more than I dreamed of.” Generations to come may not experience the same sense of release when they enter a gay bar, if they go into them at all. But, in the rich world, they are also less likely to feel alone. + +See medium.com/the-economist for more on this story + +Correction: A previous version of this piece said that Daphne Sumtimez, in the opening paragraph, sang to backing music from "The Lion King". The tune in fact came from “Beauty and the Beast”. Hakuna matata. + +This article appeared in the Christmas Specials section of the print edition under the headline “Lights out” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712031-disappearance-gay-bars-and-clubs-unhappy-side-effect-far-more/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +The mischief of mice + +The world’s favourite lab animal has been found wanting, but there are new twists in the mouse’s tale + +The evolution of a scientific mainstay + +Dec 24th 2016 | BAR HARBOR, MAINE + + + +A NARROW conveyor belt runs between a lorry and a set of pallets stacked ten-high with shoebox-sized containers. Inside each of them is a clutch of mice ready for dispatch to some distant laboratory, along with enough food and water-laden gel to sustain them on their journey. Most of the containers have five occupants; some special bloodlines, for example those that have been bred to be diabetic, and thus pee more, travel in smaller numbers. “Feels like the first time”, by Foreigner, may be playing unobtrusively in the background, but the loading of the lorry is utterly routine. All told, 3m mice a year ride this conveyor belt. + +Plenty of other creatures do their bit for science, from yeast to flatworms to zebra fish to marmosets and, unhappily, chimpanzees. But mice and rats make up the overwhelming majority of the vertebrates used in research. And they cannot be just any old rodents. Lab mice mostly come from specific strains that have been deliberately inbred, with siblings mated to each other generation after generation until the whole bloodline is genetically very much of a muchness. Once your lab is used to working with a particular strain, you will tend to keep coming back to it—or, perhaps, to variants of it that have a specific set of genes “knocked out” or rewritten. When you need more mice, you will send off for some as similar as possible to the ones you already have. And for a great many labs, the rodents that they get delivered will have passed through this loading bay. The Jackson Laboratory, in Bar Harbor, Maine, is one of the world’s biggest suppliers of laboratory mice. + +Both in academia and among pharma companies life without mice from JAX, as everyone here calls it, or one of its competitors is inconceivable. But the mouse’s position as the researcher’s best friend is not without problems. More than 80% of the candidate drugs that make it into clinical trials because they worked in mice do not go on to work well in humans. What’s worse, it has recently become clear that attempts by one lab to go back and replicate mouse studies carried out by another fail much more often than one would wish. Despite the best efforts of JAX and its ilk, the world’s lab mice are both mimicking the biology of sick humans with insufficient fidelity and responding to experiments with insufficient uniformity. + +A lot of the poor reproducibility—and thus, presumably, many of the unhelpful results—rests on details of the way that researchers keep their animals, or run their experiments. However reliably uniform the mice are when they are shipped off from JAX, if they do not get handled in the same ways later on they will not produce the same results. Aspects of the care and feeding of mice that were previously seen as insignificant are turning out to matter a lot. + +But there is a deeper problem, too. The mice used to model a particular human disease often offer only the roughest sketch of the malady the researchers are trying to address. And in many cases the inbred nature of lab mice makes them a poor guide to what will go on in a broader, more genetically diverse population. The underpinnings of life have complexities that the sought-after simplicities of the laboratory mouse have not come close to cracking. So JAX is using new genetic technologies, cunning statistics and mouse-breeding projects of unprecedented ambition to crack further. + +Earth-born companions + +Mice are small, cheap to rear and don’t mind living crammed together, whether in a lab enclosure or under a barn floor. They’re quick: quick to reach sexual maturity and quick to gestate (you can get a new generation every three weeks). Quick to die, as well; a lifespan of two years or so makes studies of a whole life, or of multiple generations, quite easy. + +On top of all these natural advantages, when modern biology laboratories started looking for a workhorse in the early 20th century the mouse had something extra going for it. For decades European and Japanese mouse “fanciers” had been breeding animals with interesting behaviours or particular coat colours. Mouse genetics was not a science, but it was a well-practised art. When Clarence Cook Little, who founded the Jackson Laboratory, started looking into the causes of cancer in humans in the 1900s, appropriately-bred mice were the obvious way forward. + +Once scientists took their murine turn, the benefits of continuing down that road were self-reinforcing; the more they learned to do with mice, the more they wanted to do. At JAX and elsewhere mice were used to study cancer, immunology, diet, neuropathology and more. In the 1970s biotechnology opened up new possibilities—putting in specific human genes to make them better models for specific diseases, knocking out particular genes to try and work out what purpose they serve. JAX was at the forefront of the technology, doing on a large scale what individual labs would struggle to do on their own. + +Lab mice became a commodity, one that scientists ordered in from afar and that they defined by their bloodlines and genes. But not all mice are equal, even if their genomes are. If you do an experiment on a set of mice that are littermates and on another set raised apart, they will respond differently. If, as some labs do, you use only males for experiments, you may get different results from those in co-ed labs. + + + +Trouble with reproducing laboratory results is not confined to mouse studies, or even to biology. Journals are, in general, not interested in negative results, so the scientific literature lacks mention of failure. Scientists are unwittingly biased toward results consistent with their hopes and expectations, and may suffer from perverse incentives. Take those failed clinical trials: testing a drug on humans and finding out it doesn’t work costs a lot of money. But being the person who kills a promising drug that colleagues have been working on for years, on the basis of some borderline results in mice, takes a lot of character. + +A fundamental problem in irreproducible research is that crucial details about how experiments are done are often omitted from published papers. Sometimes this is sloppiness—not noting down things that are known to make a difference. But sometimes it is nescience—not noting down things that everyone has assumed will not make a difference but which, in fact, do. Mouse studies are currently confronting a number of areas where such unknowns have been rife. + +Nature’s social union + +A study published in 2014 showed that mice in pain studies experienced extreme levels of stress if the researchers handling them were men, but not if they were women—a difference no one had thought to look for, or report. In 2016 a furious debate erupted about how studies might be affected by the lab mouse’s microbiome, the bacteria that live in and on it. These microscopic fellow travellers differ among strains of mice, or among otherwise identical mice bred in different places, or even in the same mouse from one season to the next. Science is just now figuring out how much difference these bugs make to human health; it should come as no surprise that microbiomes influence mouse studies as well. + +At JAX they take bacteria seriously. Near the lorry in the loading bay sit racks of mouse chow waiting to be sterilised in a nearby autoclave—in essence, an oven big enough for a couple of cars. Everything the mice will be exposed to from the moment they are born until a researcher pops open the box they travel in will be similarly sterilised. + +Bacteria are not the only intruders the lab wants kept out. The mousetraps in the hallway are there to forestall incomers, not escapees; the joke goes that local mice have heard how cushy things are inside. The air that flushes through the little transparent apartments housing one male and two females in rigidly controlled polygamy is impeccably filtered. + +The technicians who wander around removing newly weaned pups and replenishing food and water are dressed head to toe in cleanroom suits, hands gloved and feet bootied, peering out through visors. Tubes coming from their headgear reveal that their air supply is filtered, too. Music—at the moment, the breathy intro to Jethro Tull’s “Cross-Eyed Mary”—is piped in constantly to stop the mice from being spooked by any loud noises. The soft-rock playlist balances what is perceived to be calming to the mice and what the technicians can bear to hear all day long. Think dentist’s office. + +Some of the mice being so carefully and protectively raised are good for a range of work. The lab’s biggest seller is C57BL/6, or “Black Six”, a long-established inbred strain also available elsewhere, which is by far the world’s most popular lab mouse. Others are bred, or engineered, to show specific symptoms or syndromes. You can buy a mouse that is given to something like depression, or to something like Alzheimer’s disease, or that just sits around like a couch potato, growing unhealthier by the day. Some mice can model more than one thing. A red-eyed albino called SJL has a susceptibility to nervous-system inflammation which makes it a good model for multiple-sclerosis research; it has also been used as a model for calming down violence, because males are particularly aggressive. Some mice—unsurprisingly, given the in-breeding—have weak spots. Black Six is a poor tool for studying hearing because it tends to grow deaf. + +Some of the less-used strains are stored not in cages but as frozen sperm and eggs. This genetic back-up system also keeps the bestselling strains straight. Inbred strains are subject to “genetic drift” as fluctuations build up in the gene pool. To ensure that every shipment of Black Six and SJL does exactly what the customers expect the lab back-crosses its strains with ancestral sperm every five generations. + +And then there is the creation of new mice—mice with particular genes added, or removed, to order. There are lots of such mice already; soon there will be many, many more. In August 2016 JAX received a $28m grant for the latest part of a grand international project to produce some 20,000 new strains of Black Six, each with one of the 20,000 genes in the mouse genome removed, and see what ails them. It seemed a gargantuan project ten years ago; now, thanks to new genome-editing techniques, especially one called CRISPR-Cas9, its later stages border on the routine. + +Indeed, CRISPR may usher in the era of true designer mice. If you want a beastie that’s particularly wee, sleekit, cowering and timorous, for example, you could ask for mutations in the Ghrhr gene, which can govern size; Foxq1, which makes coats shiny; and Lypd1 and Atcay—mutations that provide, respectively, a fearful nature and general skittishness. + +Poetically satisfying though such polygenic high-jinks might be, in general mouse research has tended to go a gene at a time: “That’s what we can do easily,” says Nadia Rosenthal, JAX’s scientific director. And for some diseases, such as muscular dystrophy or cystic fibrosis, a single gene is all it takes to capture pretty much everything, since the disease is caused by a single-gene mutation in humans. But the role genes play in most diseases is a lot more complex. Trying to understand them, and thus model them, on a gene-by-gene basis quickly gets researchers into what Dr Rosenthal calls “unfeasibly tricky genetics”. + +Tricky as it may be, though, somehow this work has to get done if the research is to provide both an understanding of the underlying mechanisms and new ways of intervening. And getting that sort of understanding means embracing what labs like JAX have largely tried to dispose of: genetic diversity. Only with diverse populations can you pick up the subtle relations between genes which influence the most common and debilitating conditions. + +This was the idea behind Collaborative Cross, an effort begun at JAX in 2004 and since developed by a community of researchers spread all around the world. (The outcomes of research carried out at JAX are not patented: every new model or bloodline created here is open-source.) The ambitious project started with a “founding population” of five standard laboratory strains and three more-or-less wild ones that, between them, contained all the genetic diversity that the mice known to science have to offer. From these the researchers produced hundreds of new inbred lines. Within each line diversity is very low, but between them it is high. “Outcrossing” these lines with each other produces more diverse populations in a controlled way, with detailed knowledge of the progenitor lines allowing the new combinations of genes to be tracked. Lots of diversity, lots of replicability: the best of both worlds. + +Working with mice that differ, albeit in very well understood ways, allows you to see which of the differences matter, and thus trace the complex ways that different genes work together—or fail to. “You can come to profound insights about genetic interactions, which is very hard to do if you put one mutation in one mouse, and another, and a third, and look at three mice to try to figure out if those things are related,” says Dr Rosenthal. “This way you let the genetics tell you how things are related by simply allowing the population to reveal the important genetic components.” + +Man’s dominion + +“Simply” may not strike all researchers as the right word. The power of this new technique comes with significant costs: you have to do more experiments and master more demanding statistics. To help other researchers make the leap to the new techniques, researchers at JAX and elsewhere are working on new software to do the statistical heavy lifting. This has its risks. Researchers relying on computer programs to do statistical tests they do not fully understand has proved to be a problem in a wide range of recent research. + +If the research is harder, though, the results may be correspondingly more rewarding. And CRISPR makes them easy to build on. Sarah Stephenson came to JAX from Australia to use its Collaborative Cross mice in research on Parkinson’s. Having traced the network of genes involved she might go on to use CRISPR to see what actually happens when some or all of those genes are changed or deleted. There is a good chance that some of them will model particular aspects of Parkinson’s better than anything available now. Other researchers will then be able to use those mice to look for therapies and drugs. + +The sound of “Start me up” now echoes around the loading bay; the lorry has departed. Soon this production facility will move 32km away from JAX proper, establishing itself in a recently vacated Lowe’s hardware store (the staff refer to the new digs as “J-Lowe’s”). The care and feeding of the mice there will be more automated, which will reduce their stress levels. Their exposure to bacteria and pathogens will fall yet further. + + + +For research to get better will not just require ever-better mice from JAX. Various efforts are under way to make sure that researchers design their mouse experiments better. The National Institutes of Health, America’s biggest funder of health research, is developing an experimental-design checklist to make sure that lab animals are properly randomised, the researchers properly blinded to the results and the methodology of the whole operation reported in more detail. Assiduous book-keeping needs to become the norm, recording not just an experiment’s particulars but also, for example, who has handled the mice, details of their microbiome, where precisely their cage was—not just everything that is already known to have a potential confounding effect but also factors that have yet to emerge as significant. Computers will keep track of it all, as they do of the genetics; one way or another, unexpected effects and influences will have fewer places to hide. + +While time-honoured approaches to the mouse are diligently improved, new ones may come into their own, especially in drug development. For decades mice have been one link in a chain, the last thing to test before an idea that started out in studies of single molecules or cell cultures finally becomes a clinical study carried out on humans. But with more powerful genetic tools it may be possible to look for drug targets in the mice directly, following up hopeful leads with tools like CRISPR. One enticing possibility is that such studies may show why some plausible-looking drugs have not worked in the past—and what can be done to improve them. With this in mind, a few pharmaceutical companies have set up camp at JAX to make use of the new, diversified mice and the lab’s expertise. + +Science always rocks between the too complicated and the too simple. Real world too complex to understand? Make a simple model. Model doesn’t capture the details that turn out to be most salient? Let the complexity back in. Bank some progress and repeat. This process can, at times, get ugly. As oversimplifications from the past are unmasked there is bewilderment and recrimination. So there will be as studies that use mice evolve, and some accepted wisdom is undermined. But Dr Rosenthal is sure that progress will win out. “I think we’re going to be unpleasantly surprised, but I don’t think that all of biology is hopelessly variable”, she says. “There will be some things that stand the test of time, simply because the tests we were doing were so crude that you get a black and white answer anyway.” + +See medium.com/the-economist for more on this story + +This article appeared in the Christmas Specials section of the print edition under the headline “Animal factory” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712058-evolution-scientific-mainstay-worlds-favourite-lab-animal-has-been-found/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Silence + +The power and meaning of silence + +Where, how and why to be quiet + +Dec 24th 2016 | MINGALADON TOWNSHIP + +Green, Blue, Green on Blue: Mark Rothko + +IF YOU had heard it on one of Yangon’s chaotic streets you would have paid it little mind. It would have been a euphonious whisper swiftly lost in a cacophonous torrent. But in the pre-dawn quiet of the monastery it was as piercing as an air-raid siren. Shortly before 4am a monk struck two gongs, one about a second after the other. They sounded two different notes, the second just short of a fourth higher than the first. Then, pausing for a few seconds, the monk struck the gongs again. He did this several times. + +The monastery began to stir: soft footsteps and the rustling of clothes—no voices. Most of the monks, nuns and lay worshippers filed out of their cells and into the dhamma halls—one for men and one for women—for an hour of seated meditation before the first of the day’s two meals. Some instead did an hour of walking meditation: slow, deliberate, measured steps forward, hands clasped either in front or behind. After the morning meal the day’s meditation, eating, sweeping, cleaning were done slowly, deliberately, and, for most lay worshippers, in complete silence. + +The silence of this monastery, like most silence outside the fanciest anechoic chambers, is an aspiration rather than a fact. Not that long ago the chanting of the monks of Mingaladon would have carried over nothing but the fields and farms of what was then a rural township of Yangon, with little more than the crowing of cocks and lowing of cattle flowing back the other way. No longer. Though there are still farms in Mingaladon, it is also home to Myanmar’s biggest and busiest airport, which is set to get even busier as the ever-less-secluded country assumes its place on the trails of backpackers and adventurous investors. Highway Number 3, a tributary to the busy Yangon-Mandalay Highway, bisects the township; in the monastery monks and laypeople alike meditate to the constant thrum of passing traffic. + +But the silence of not speaking, as opposed to that of not hearing, persists. And, if anything, it gets more attractive as the noises outside the walls mount up. For someone whose working days are relentless blizzards of phone calls, e-mails, tweets and deadlines, and whose home life is filled with the constant screeching and breaking that only children at the demon-puppy stage can provide, a week spent in silent meditation within the monastery’s walls sounded heavenly. No demands, an inward focus, time to breathe and reflect. + +In fact, the plunge into silence proved powerfully disconcerting: like a cartoon character shoved over a cliff, running fruitlessly in mid-air. Your correspondent’s modern mind craved stimulation; the sought-after silence brought only soured boredom. This, say meditation enthusiasts, is just the first stage: you have to push through it to reach something worthwhile on the other side. It turned out to be easier said—or easier to recall, in silence, someone else once saying—than done. + +The quiet, once you are in it, is difficult. Saying you want it is easy, and commonplace. After the age of 30, if you tell any friend that you are in need of peace and quiet he is likely to nod in recognition. The demand is high enough that silence of all sorts is for sale. Noise-cancelling electronics, first discussed in public as a throwaway joke by the science-fiction author Arthur C. Clarke, now sit in hundreds of millions of dollars-worth of high-end world-excluding headphones. The intrepid, tight-lipped tourist can choose from silent retreats on six continents; many of the growing number headed for the seventh, Antarctica, probably do so in part out of yearning for a great white silence. Smaller doses of silent meditation, in the guise of mindfulness, are cropping up in secular school curricula across the Western world. + +Finland boasts of its rural wooded silence as other countries sing the praises of their beaches or mountains: it markets itself as a silent tourist destination. Gordon Hempton, an “acoustic ecologist” (he records natural sounds) has designated a small chunk of territory deep in Olympic National Park in Washington state, far from roads and flight paths, “One Square Inch of Silence”. He believes it is the quietest place in America’s lower 48 states, and wants to keep it that way. He monitors the area for noise pollution, and tries to track down the offenders and ask them to quieten down. + +Obviously, the inch is far from silent. The forest is alive with the whispers of nature: frogs and crickets, distant streams, squirrels and deer running over fallen leaves. This is the contradiction built into the pursuit of silence; the more sources of noise are stilled, the more the previously imperceptible rises to the level of perception. This was the essence of the silence that John Cage, a composer, used in several of his works, most famously “4’33”, a composition for piano that consists of three movements. At the beginning of each the pianist opens the instrument’s lid, and at the end of each he closes it. No notes are played. The piece allows an audience to attend to the sounds around them and the questions within. + +What the silence reveals can be grim. Samuel Beckett’s mimed plays “Act Without Words I” and “Act Without Words II” use silence to draw out the frustration, pointlessness and endured unendurability of life. His novel “The Unnamable” ends on a similar note (or absence of note): “I’ll never know, in the silence you don’t know, you must go on, I can’t go on, I’ll go on.” Beckett believed that “every word is like an unnecessary stain on silence and nothingness”; and yet he went on writing them. + +Fundamental though it is to some finished art, silence may matter even more as a circumstance for art’s creation. “The impulse to create begins—often terribly and fearfully—in a tunnel of silence,” wrote the American poet Adrienne Rich. In “The Aesthetics of Silence”, the writer and critic Susan Sontag urged artists to maintain a silent “zone of meditation” in order to protect their creative impulses from a world that wants to stifle them. + +That said, stifling can be a silence of its own—one imposed through convention or power. In the censor’s hands silence can be a brutal intervention. Part of the strength of Harold Pinter’s plays, in which characters taunt, worry, threaten and displace each other with unnervingly long pauses, is their ability to dramatise in domestic form the silence imposed by states on many other political artists. + +But although silence can be a necessary beginning, a tool of oppression and, properly deployed, a cutting critique of power, it is comparatively rare that it is the essence of an artist’s work. Few have trusted their audience to create the art without them, as Cage did; most feel a need to say something. For the deepest human relationships with silence—and also those most widely incorporated into the mundane life—turn not to art, but to religion + +Through the earthquake, wind and fire + +Some Christians, Buddhists and, to a lesser extent, Muslims have chosen silence for centuries, and there are rooms like those available in the Mingaladon monastery set aside for those who wish to explore its potential in Buddhist and Christian monasteries around the world. For the religious, silence offers a way to ponder and listen for the divine, the unsayable and inexplicable. Christians commonly choose silence because they believe in a god who speaks. They need to be silent to create a space for him—always at the risk, as in Shûsaku Endô’s novel, recently filmed by Martin Scorsese, that the silence remains unfulfilled, an abyss. Silence is also, the religions teach, personally improving. The Prophet Muhammad told Muslims that, “One can greatly beautify himself with two habits: good manners and lengthy silence.” For Buddhists, silence teaches devotees to master their passions. + +Silence is often a retreat from worldliness, and the inauthentic. Ignatius of Antioch, an early Church father, advised Christians at Ephesus: “It is better to be silent and be real than to talk and not be real”–foreshadowing by around 1,800 years Mark Twain’s advice that it is better to keep one’s mouth shut and be thought a fool than to open it and remove all doubt. It is also a way to avoid doing ill. One of the admonitions that comprise Buddhism’s eightfold patch is to practise samma vaca, or “right speech”, which scriptures define as abstaining from false, slanderous, harsh and idle speech; all major religions counsel their adherents to choose their words carefully and use them sparingly. Religions can supplement the self control required for such abstinence in ways that may be helpful or oppressive; if the faithful cannot speak, they can ask no questions, preserving the authority of their superiors. + +The Knife Grinder: Kazimir Malevich + +Many forms of religious practice make use of silence; some, such as that of Quakers, may consist of little else. But there are particular places where it really lives and breathes: in wildernesses like Mr Hempton’s; in some monasteries. Benedict, the sixth-century monk seen as the father of Christian monasticism, did not explicitly include silence in his rule, but in the cloistered life speech is widely seen as something requiring permission or exigency. Today monks who live by the Rule of St Benedict in hundreds of (normally small) Trappist monasteries speak only sparingly. + +Thomas Merton, an influential American Trappist who was ordained in 1949, held that the only words required of a priest were those of the Mass. This disdain for speech (which caused him to agonise about his own copious writings) stemmed in part from his belief that God’s words were beyond the scope of “human argument”. Some things are mysterious, and not subject to analysis. One must be silent to understand them, and it is better to say nothing than to try to explain them. As Ludwig Wittgenstein, an Austrian philosopher, put it in his “Tractatus Logico-philosophicus”: “Whereof one cannot speak, thereof one must remain silent.” It is not power that compels silence here, but the inadequacy of any attempt at communication. + +The Buddha would have called this practice “Noble Silence”. When asked a question the answer to which he believed the questioner incapable of understanding, he said nothing. Usually these questions concerned the world’s fundamental nature; perhaps more than any other of the world’s great religions, Buddhism prizes the observable, and does not much concern itself trying to define the undefinable. When a disciple asked Buddha whether the universe was infinite or finite; or whether there is a self; or the more plaintive, “Will you tell me the truth?”: silence. Better no speech than speech that misleads, or answers that limit. + +Buddha himself became liberated through silent meditation. Though Buddhism varies markedly with geography, from the wry, austere Japanese practice of Zen to the rigorous, state-entwined Theravada Buddhism practised in Myanmar and Thailand, silent meditation is generally the central practice of faithful Buddhists, whether monks, students, housewives or fishermen. When Mr Hempton says, of his square-inch of silence deep in the piney wilderness, that its silence “is not the absence of something. Silence is the presence of everything,” he is expressing a thought Buddhists would understand perfectly. + +But the presence of everything—and of all of one’s self—is not always a release. It can be a burden. Around sunset on the second day of his seclusion in speechlessness, your correspondent realised that for all the equanimity offered by Buddhism, the psychological acuity of its founder’s teachings and the hospitality of the Mingaladon monks, he would rather be in one of the cars he could hear passing by on Highway Number 3, wherever it was going, than inside the dhamma hall, where he was supposed to be meditating. Having booked a seven-day retreat, he lasted a bit less than 70 hours. His still, small voice within, he decided on listening to it, was insufferable. + +Untitled 1: Willem de Kooning + +It is possible that pushing further would have brought a breakthrough, not a breakdown. It is also possible that, for many people, 15 minutes of silent meditation each morning and afternoon can be wonderful while 15 hours of it each day is both a waste of time and a greased slide into insanity. + +Discovering the limit to the silence you can bear has its advantages. To some extent it can teach you to appreciate the irksome chaos and noise that led to the original yearning for silence—to realise that just as there can be inner tumult in silence, so there can be tranquillity in the thrum of activity. For all that, in English, the words are so often neighbours, “peace” and “quiet” are not necessarily conducive to each other. The Hebrew word “shalom” is reasonably translated as “peace”, but it has other shades of meaning too: completeness, prosperity, wholeness. These are things that need not be silent. As Diarmuid MacCulloch writes in his quirky, insightful book “Silence: A Christian History”, in Old Testament scripture “peace and rest are associated with busy, regulated activity”. The preacher in “Ecclesiastes” tells his listener that “Whatsoever thy hand findeth to do, do it with thy might, for there is no work, nor device, nor knowledge, nor wisdom, in the grave, whither thou goest.” In its permanence and completeness, the grave is silent. But its peace is not one to seek out too soon. + +There is a tradition of silence in those scriptures, too. “Be still before the Lord and wait patiently for Him,” the Psalmist says. But it is pulled at by the possibility of worldly, noisy peace, and the tension matters. Rescued from the austerity of the Mingaladon monastery and plunked down in hectic central Yangon, a refugee from silence may jostle less and smile more at the whorling sea of humanity that surrounds and presses in upon him. He may sit down for a steaming bowl of noodles at a packed stall on a narrow patch of pavement and see the customary elbows in the ribs from the diners on either side not as an annoyance to be endured but as signs of brotherhood, community and fellowship, to be received with love. He may even make a joyful noise unto whomever is listening. + +Credits: © 1998 Kate Rothko Prizel & Christopher Rothko; © The Willem de Kooning Foundation + +This article appeared in the Christmas Specials section of the print edition under the headline “The rest is...” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/christmas-specials/21712059-where-how-and-why-be-quiet-power-and-meaning-silence/print + + + + + +上一项 文章 章节 下一项 + + + + + +Business + + + + +Indian business: The digit era + +Work in Japan: White-collar blues + +Tisn’t the season: The Christmas spending bump flattens + +Retailing: Following the fashion + +Schumpeter: Capitalism and democracy + + + + + +文章 章节 下一项 + +The digit era + +Indian business prepares to tap into Aadhaar, a state-owned fingerprint-identification system + +Nearly all of India’s 1.3bn citizens are now enrolled + +Dec 24th 2016 | BANGALORE + + + +THERE are two ways to sign up to Jio, a new and irresistibly priced mobile-telephony service which Mukesh Ambani, the boss of Reliance Industries, a conglomerate, launched in September 2016 and which is luring tens of millions of new customers each month. One way requires a wad of documents, multiple signatures and plenty of patience, since Jio takes days or weeks to go through “know-your-customer” procedures. The second way is magically simple: the person rests a finger on an inch-wide scanner, and if the print matches the identity the customer is claiming, Jio downloads the information it needs from the Indian authorities and activates the phone line within minutes. + +Jio is tapping a database called Aadhaar, after the Hindi word for “foundation”. It is a cloud-based ID system that holds the details of over a billion Indians. The government’s purpose in setting it up in 2009 was to help the state correctly direct welfare payments to those entitled to them. By early 2017 all Indian adults should have provided their fingerprints, iris scans, name, birth date, address and gender in return for a single, crucial, 12-digit number. + +In the public sphere Aadhaar helps to distribute subsidies worth about $40bn a year. Around 300m biometric entries are linked to citizens’ bank accounts, so that money can be paid to them direct. Billions of rupees used to be lost each year through “leakage” of benefits—a euphemism for fraud in India’s often corrupt bureaucracy. Aadhaar has already saved perhaps $5bn, says the government. + + + +But the system was designed with more than just the needs of the state in mind. The team of techies behind the project, led by Nandan Nilekani, a founder of Infosys, a champion of Indian IT, from the outset understood the importance of making Aadhaar available to all who might be able to use it, not just official departments. Aadhaar is open-access and can be used by third parties free of charge. By now, fingerprint readers are a common sight in phone shops, insurance offices, banks and other sellers of regulated products. + +Some firms, such as Jio, will use Aadhaar to save huge amounts of time for their customers—not to mention a small forest’s worth of paper. The architects of Aadhaar reckon that is just the beginning. On the top of it, India is building a complex public digital infrastructure, called “India Stack”: a series of connected systems that allow people to store and share their data. These could include bank statements, medical records, birth certificates or tax filings. When connected up to a new payments system called the Unified Payments Interface (UPI), the potential is huge. + +Already, businesses ranging from Bangalore startups to international banks operating in India are looking to build new businesses on the capabilities of Aadhaar and the coming India Stack. Venture-capital firms are funding hackathons to encourage software developers to come up with new ways to use the technology. + +Any firm can “ping” Aadhaar to see, for example, if a job applicant is who he claims to be. One Bangalore startup, Babajob, does this for the service staff it connects to employers. It can instantly verify if a potential employee’s name and age matches that attached to the phone number he is calling from, that is in the Aadhaar database (or he must supply a code number received by text). It can be done remotely, an advance over card-based ID schemes. A similar, more secure check, using iris scans or fingerprints, can be done with mobile phones or tablets with Aadhaar-compatible iris scanners (at under $200). + +This is no small feat: merely establishing someone’s identity is grit in the wheels of commerce. A typical firm in India spends some 1,500 rupees ($22) obtaining and validating client data, be it to bring a taxi driver onto a ride-hailing platform or to accept a new mutual-fund customer. Bringing down the cost can vastly expand a firm’s target market. If a lending outfit, for example, can afford to spend only 0.5% of the value of a loan on such tasks, its smallest credit will be 300,000 rupees, an amount which will limit it to the richest 15m Indians, says Sahil Kini of Aspada, a venture-capital firm. Reduce the validation cost to 10 rupees—the figure many in Aadhaar circles use—and you can viably lend to over 500m people. + +The benefits of cheap, secure ID could go further. Mr Nilekani argues that verifying identity, and in turn reputation, is ever more important in business: consider star-rating systems devised by firms such as eBay, an auction giant, or Uber, a ride-hailing firm. Web users now often establish their identity using logins for Facebook, Google or WeChat to access third-party services such as newspaper websites. But none can claim to rest on a person’s real, verified legal identity in the way Aadhaar-accessed services can. + +It all stacks up + +For now, the Aadhaar system is used chiefly to confirm identity (which has been done 3bn times since 2010) and to share know-your-customer information such as someone’s address (300m times in the past year). But since any information can be linked to a sort of digital “locker” tied to each Aadhaar ID, there are more possibilities. A file of past digital interactions—a sort of eBay star system accumulated over different services—could also be attached. This would most obviously be useful in financial services, particularly among those who have little or no access to them now. + +A potential borrower could allow a lender to have access to anything linked to his Aadhaar number: his bank statement, utility-bill payments, life-insurance policy, university diplomas and much else besides. “It increases trust,” says Mr Nilekani. “You can combine proven legal identity with lots of data. You become trustable.” Sean Blagsvedt, the founder of Babajob, compares India Stack to the advent of the social-security number system in America, which paved the way for credit bureaus, credit cards, mail-order services and, later on, e-commerce. + +The economic consequences are sizeable. Instead of borrowing against assets, as is currently the norm in India, people could borrow against projected cashflows proven by past tax returns, for example. Better yet, “digitally driven” credit would shift people into the formal economy and away from the informal realm where nine in ten Indians currently work. + +Another element of India Stack, the UPI, a payments system, was launched in August. Under pressure from regulators, banks have agreed to let their customers send or receive money not just through their banks’ apps but through third-party ones as well. A client of State Bank of India, for example, can just as easily make payments from his account through PhonePe, a subsidiary of Flipkart, an e-commerce website, or any other of about two dozen UPI-based apps. Mr Nilekani speaks of a “WhatsApp moment” for Indian banking, in which newcomers usurp sleepy banking incumbents, much as the American messaging app deprived telecoms operators of revenues from text messages. + +Techno-optimism always warrants some caution. Just because Aadhaar has succeeded in slashing subsidies fraud does not mean the products built atop it will catch on. The UPI apps received a one-off boost from the government’s push forcibly to “demonetise” the economy (it cancelled banknotes representing 86% of all cash on November 8th), but other, private PayPal-like services did much better. + +Still, other public technologies have prompted big leaps when opened to private enterprise. Once available to the general public from 2000, the GPS location system (previously reserved for the American military that developed it) did more than merely disrupt map-making firms. In time, GPS spawned Google Maps, which in turn facilitated Uber. Backers of Aadhaar argue that no one can imagine what will be built around the platform in years to come any more than the internet’s pioneers three decades ago could foresee social media or bitcoin, a digital currency. + +Privacy campaigners worry that it has Orwellian overtones. In theory it remains voluntary to enroll in Aadhaar. In practice it is compulsory, since it is becoming the only way to gain access to important social services. Wary of relying on a state-backed scheme, American tech giants have treated it cautiously. Google has expressed enthusiasm for its potential, but it and Apple have yet to agree to install Aadhaar-compatible scanners on their phones. + +For India’s citizens, who can use Aadhaar and India Stack to mobilise their data for their own benefit, the advantages are clearer, starting with access to cheaper credit. Some of the system’s teething problems—one hurdle has been that the hands of many manual labourers are so worn that Aadhaar cannot register their fingerprints—show just what an advance the technology could be. Indian businesses will have the chance to serve and make sense of legions of new customers. Like the scanners it utilises, the scheme’s potential is not hard to put your finger on. + +This article appeared in the Business section of the print edition under the headline “The digit era” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21712160-nearly-all-indias-13bn-citizens-are-now-enrolled-indian-business-prepares-tap/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +White-collar blues + +In Japan, a new kind of business school is retraining jaded salarymen + +Increased longevity means that lifetime employment isn’t lasting the distance + +Dec 24th 2016 | TOKYO + + + +THE Institute of Social Human Capital in Tokyo is an unusual sort of business-training school. Those who attend it (two-thirds are men) have mostly quit or taken redundancy packages from big Japanese firms, and are trying to start again. Shedding the habits of a lifetime begins by breaking down barriers: former salarymen laugh nervously as they share a bento-box lunch with strangers, blindfolded (the idea is that they must use their other four senses to communicate). + +The way to prepare them for a second career is to get them interacting as individuals, not as corporate workers or business partners, says Matsuhiko Ozawa, a director of the Institute, which specialises in this sort of course. In a country that sets great store by formal introductions, the students have not even exchanged business cards. Names, titles and personal information are banned (the ex-salarymen use made-up names) to avoid reproducing the old office hierarchies that exist outside the classroom. “We start from scratch and help these people find themselves again,” says Mr Ozawa. + +For years, the salarymen rode a career escalator that rewarded them less for skills than for loyalty and doggedly hard work. Though often attributed to centuries-old Japanese traditions of duty, the salaryman system was a post-1945 creation, says Naohiro Yashiro, a former adviser on economic policy to Shinzo Abe, the prime minister. During the post-war boom years, firms took on workforces of permanent employees, who were hired for life. All that was needed to get paid more was to grow older. + +In return, the employers’ extravagant demands had to be met. Salarymen could not refuse a transfer—often at a few days’ notice—to a subsidiary hundreds of miles from home. Children grew up largely without fathers. Work, rather than family, was the main supplier of emotional support. Full-time Japanese employees still clock 400 more hours per year than their counterparts in Germany or France, according to Kazuya Ogura, a labour specialist at Waseda University in Tokyo. + +The salaryman remains stubbornly dug in across most industries. Mr Abe has promised as part of his growth-boosting reforms to give more rights to those at the bottom of the hierarchy—part-time and temporary workers with much lower pay—but has stopped short of radical steps, such as legislation to make firms give equal pay for equal work. Even so, for many, lifetime employment is ending earlier than it used to, because lots of companies cannot afford such workers all the way to retirement. Many are surplus to requirements in declining industries such as consumer electronics, and can be hard to retrain. The system worked well when people lived until around 70, says Mr Ozawa, but many firms are now offering permanent employees generous packages to leave early. + +Many more leave voluntarily. Hiroyuki Ito, a student at the Institute, stepped off the salaryman escalator at the age of 45, after 23 years at his firm. He quit because the work was boring. “You don’t get to take risk or have adventure,” he says. He now attends the Tokyo school—there are several like it in Japan—and hopes for a second career as a teacher. The retraining takes time. Ex-salarymen usually come twice a week for five months to shed their old mindset. After decades of monotonous overwork, that must seem like the twinkling of an eye. + +This article appeared in the Business section of the print edition under the headline “White-collar blues” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21712164-increased-longevity-means-lifetime-employment-isnt-lasting-distance-japan-new/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Tisn’t the season + +The Christmas spending bump flattens + +Dec 24th 2016 + + + +The holiday season’s hold on Americans is getting weaker. In 1994, according to the Census Bureau, retailers earned $82bn (in 2015 dollars) more in sales during November and December than they would have without the seasonal effect of the holidays. That worked out at $310 per person. In 2015 seasonal sales during these months were just $76bn, or $240 per person. The decline in seasonal shopping is steepest in December. For that, blame three things. The growth of e-commerce has made it easier for people to shop for seasonal gifts whenever they want. Gift cards under the Christmas tree push purchases into January. And millennial shoppers are having an impact on sales: they tend to prefer experiences to yet more stuff. + + + +This article appeared in the Business section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21712166-christmas-spending-bump-flattens/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +In-store detecting + +A new industry has sprung up selling “indoor-location” services to retailers + +There is money to be made in tracking shoppers’ paths inside stores + +Dec 24th 2016 + + + +“LOOK up there,” says Edward Armishaw of Walkbase, a Finnish retail-analytics firm, as he points to a small white box above a column clad in mirrors. The sensor—and over a hundred others like it hidden around this department store in London’s Oxford Street—tracks the footsteps of customers through the pings their smartphones emit in search of a Wi-Fi network. Quite unaware, a shopper in a silver puffa jacket ambles past and over to the fitting room. Whether she moves to the till will be logged by Walkbase and its client. + +Think of it as footfall 2.0. For many years shops used rudimentary “break-beam” systems—lasers stretched across their entrances—to count people in and out. Only recently have they begun to follow customers inside their buildings, says Nick Pompa of ShopperTrak, an American firm whose work with 2,100 clients worldwide, including malls in Las Vegas and in Liverpool, makes it a giant in the area. + +Tracking technologies are ingenious. Some flash out a code to smartphone cameras by means of LED lighting; others, such as IndoorAtlas, a startup with headquarters in California and Finland, monitor how devices disrupt a store’s geomagnetic field. With smartphone ownership rising, the market for tracking phones indoors could grow fivefold between now and 2021, to a total of $23bn, says Research and Markets, a market-research firm. + +What do retailers hope to gain? The answer depends on how far they push the technology. On the most basic level, a store might notice that people often walk from “frozen goods” to “alcohol”, and then bring the two closer together. A retailer could also gain more insight into which departments are best at promoting goods—all without knowing anything about shoppers beyond where their legs take them. + +If stores can persuade clients to reveal personal information, too, they stand to profit more. Some 200,000 shops around the world now have systems to track phones, including free Wi-Fi, according to ABI Research. The often-overlooked terms and conditions for Wi-Fi typically allow stores to see a shopper’s online search history as well as track their location. This can open up a “gold mine” of data, points out Dan Thornton of Hughes Europe, a network provider. Daring retailers already use it to target extremely personal, location-based advertisements to customers’ phones. If someone googles a rival while in a suit shop in one of Australia’s Westfield shopping malls, for example, Skyfii, the startup that provides their internet service, is ready to send a wavering client a discount on the spot. + +But the speed of travel towards a world in which Gap, a retailer, can greet each customer individually, as in the 2002 film “Minority Report”, has been much slower than expected, says Tim Denison of Ipsos Retail Performance, a British firm. That is partly because most shops are wary of tracking people quite so closely. European ones are particularly worried that they could spark a backlash over privacy. + +Soon, though, such concerns may be swept away. Apple and Google have built up their own expertise in indoor location, and to Patrick Connolly of ABI Research, it is clear that they plan to drop a “bombshell” on the retail industry. Currently an iPhone or Android handset can direct its owner to the shops, but not inside them, let alone to the nearest pair of blue underpants. That is because GPS satellite signals bounce off walls, depriving a smartphone of what it needs to locate itself. + +Now both firms are beginning to offer indoor-location services to retailers that use the motion sensors already in handsets. These can see where their owners are, and where they are moving to, using a map of existing Wi-Fi or radio-frequency signals. Shops would not need to set up systems to follow their customers’ phones. Around a third of the 100 biggest American stores are experimenting with some mapping technology from either Google or Apple, says Nathan Pettyjohn of Aisle411, another indoor-positioning firm. So the world of physical shopping may come to resemble that online. At the centre of it will be your phone, knowing exactly what you want, and able to lead you to within 30cm of it. Try that on for size. + +This article appeared in the Business section of the print edition under the headline “Following the fashion” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21712163-there-money-be-made-tracking-shoppers-paths-inside-stores-new-industry-has-sprung-up/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Schumpeter + +Our Schumpeter columnist pens a dark farewell + +In 1942 Joseph Schumpeter warned that capitalism might not survive. A surge of populism means it is once more in danger + +Dec 24th 2016 + + + +IT WAS in 1942 that Joseph Schumpeter published his only bestseller, “Capitalism, Socialism and Democracy”. The book was popular for good reason. It was a tour de force of economics, history and sociology. It coined memorable phrases such as “creative destruction”. But it was a notably dark book. At a time when people were looking for hope during the life-and-death struggle with Nazism, Schumpeter offered only gloom. “Can capitalism survive?” he asked. “No, I do not think it can.” + +This column was inspired by the young Schumpeter’s vision of the businessperson as hero—the Übermensch who dreams up a new world and brings it into being through force of intellect and will. On its debut in September 2009, we argued that Schumpeter was a perfect icon for a business column because, unlike other economists, he focused on business leaders rather than abstract forces and factors. But as Schumpeter grew older, his vision darkened. He became increasingly preoccupied not with heroism but with bureaucratisation, and not with change but with decay. The same is true of the outgoing author of this column. + +It would be going too far to echo the master and warn that capitalism cannot survive. The socialist alternative that loomed large back in 1942 has imploded. The emerging world has capitalism to thank for its escape from millennia of poverty. But in the West the problems that led Schumpeter to worry have grown. And to them are appended new difficulties that he never foresaw. + +His biggest worry was that capitalism was producing its own gravediggers in the form of an anti-capitalist intelligentsia. Today that very elite, snug in Los Angeles canyons and university departments, has expanded. Hollywood studios denounce the wolves of Wall Street and the environmental vandals at large in the oil industry. The liberal sort of academic (meaning the type that favours big government) far outnumbers the conservative kind, by five to one, according to one recent study. + +Another of Schumpeter’s concerns was that the state activism of Roosevelt’s New Deal was undermining the market. But in 1938 the American government was spending only a fifth of GDP. Today it is spending 38%—and that constitutes neoliberalism of the most laissez-faire kind compared with Italy (51% of GDP) or France (57%). Big regulation has advanced more rapidly than big government. Business is getting visibly flabbier, too. European industry has been old and unfit for years and now stodge is spreading to America. The largest firms are expanding and smaller ones are withering on the vine. The share of American companies that are 11 years old or over rose from a third in 1987 to almost half in 2012. + +There is nothing necessarily bad about this. One of Schumpeter’s great insights, from his later years, was that big firms can be more innovative than startups if given the right incentives. But today’s incentives favour stasis. Many big firms thrive because of government and regulation. The cost per employee of red tape—endless form-filling and dealing with health-and-safety rules—is multiples higher for companies that have a few dozen staff than for those with hundreds or thousands. Schumpeter called for owner-entrepreneurs to lend dynamism to economies. Today capitalism exists without capitalists—companies are “owned” by millions of shareholders who act through institutions that employ professional managers whose chief aim is to search for safe returns, not risky opportunities. + +Some light flickers on the horizon. America’s economy is beginning to stretch its limbs. High-tech companies are overhauling an ever wider slice of the economy, including shopping and transport, which should be good for growth (though it also means power is being concentrated in the hands of fewer big firms). But these are mere flashes in the advancing darkness. The rate of productivity growth across the rich world has been disappointing since the early 1970s, with only a brief respite in 1996-2004 in the case of America. There, and in other rich countries, populations are ageing fast. Meanwhile, the fruits of what growth there is get captured by an ever narrower section of society. And those who succeed on the basis of merit are marrying other winners and hoarding the best educational opportunities. + +At the same time democracy is becoming more dysfunctional. Plato’s great worry about representative government was that citizens would “live from day to day, indulging the pleasure of the moment”. He was right: most democracies overspend to give citizens what they want in the short run (whether tax cuts or enhanced entitlements) and neglect long-term investments. On top of that, lobbyists and other vested interests have by now made a science of gaming the system to produce private benefits. + +Storm clouds gather + +The result of this toxic brew is a wave of populism that is rapidly destroying the foundations of the post-war international order and producing a far more unstable world. One of its many dangers is that it is self-reinforcing. It contains just enough truth to be plausible. It may be nonsense that “the people” are infallible repositories of common sense, but there is no doubt that liberal elites have been smug and self-serving. And populism feeds on its own failures. The more that business copes with uncertainty by delaying investment or moving money abroad, the more politicians will bully or bribe them into doing “the right thing”. As economic stagnation breeds populism, so excessive regard for the popular will reinforces stagnation. + +These comforting thoughts are the last that this columnist will offer you as Schumpeter, though not his last as a scribe for The Economist. From April he will write the Bagehot column on Britain and its politics. One of the many extraordinary things about joint-stock firms is that they are potentially immortal: the people who run them come and go but the company itself keeps going. The same is true of our columns. The Schumpeter column will return in 2017 with a new (and possibly more optimistic) author. + +This article appeared in the Business section of the print edition under the headline “Capitalism and democracy” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21712165-1942-joseph-schumpeter-warned-capitalism-might-not-survive-surge-populism-means-it/print + + + + + +上一项 文章 章节 下一项 + + + + + +Finance and economics + + + + +Japanese banks: Low and lower + +Buttonwood: Seeing through a glass darkly + +2016 in charts: The year of Brexit and Trump + +Free exchange: A cooler head + + + + + +文章 章节 下一项 + +Low and lower + +Japanese banks grapple with ultra-low interest rates + +The biggest lenders can largely shrug off negative rates. For many smaller ones, it’s not so easy + +Dec 24th 2016 | TOKYO + + + +BANKS the world over are wrestling with low interest rates. Nowhere have they grappled for longer than in Japan. Although the Bank of Japan (BoJ) introduced negative rates only in January, almost 20 months after the European Central Bank, its rates have been ultra-low for years: they first hit zero in 1999. In its long battle against deflation, it pioneered “quantitative easing”—buying vast amounts of government bonds—which depresses longer-term rates and thus banks’ lending margins. Since September the BoJ has also aimed to keep the ten-year bond yield at around nought, while holding its deposit rate at -0.1%. + +Banks have had some relief lately: since Donald Trump’s election in November, the yield curve has steepened slightly—and share prices have leapt—as American interest rates have risen and the yen has tumbled. But on December 20th the BoJ kept policy on hold. + +For Japan’s biggest lenders, negative rates are “an irritant, not a catastrophe”, says Brian Waterhouse of CLSA, a broker. Every tenth of a percentage point below zero, he estimates, shaves 5% from the earnings of the three “megabanks”: Mitsubishi UFJ Financial Group (MUFG), Mizuho Financial Group and Sumitomo Mitsui Financial Group. For smaller fry, sub-zero rates are more painful. + +With rates ultra-low and the economy becalmed, pickings from lending to Japanese companies have been thin. The three megabanks reported spreads from domestic lending to corporate customers of only around 0.5 percentage points in the six months to September. Cheap money has not stirred up demand for credit: Ryoji Yoshizawa of S&P Global Ratings notes that Japanese companies have been net savers since the late 1990s. + +However, domestic lending accounts for only one-sixth of the megabanks’ profits, against more than three-fifths at the 100-odd regional banks, calculates Katsunori Tanaka of Goldman Sachs. Some regionals have moved into consumer lending, a field that was dominated by (at times shady) specialists until caps on interest rates and the size of loans got in the way. + +Home and away + +Big lenders are chasing non-interest income, too. Mizuho, for one, styles itself as a “financial-services consulting group”, cross-selling investment products to bank customers. “The quantity of the Japanese market is shrinking. However, the quality is changing positively,” says Koji Fujiwara, the chief strategy officer. He expects, for example, that to pay for care in old age people will shift money from deposits—over half of households’ financial assets—into higher-yielding investment funds. Through tax breaks, the government is trying to give share-buying a shove. If a falling yen helps keep inflation above nil, real interest rates will be negative, sharpening the incentive. + +The megabanks have also made a determined push abroad. Since 2012 the share of foreign loans has risen from 19% to 33%, according to Moody’s. This brings higher returns but has also meant more risk, for instance from lending to American oil producers. And although they have foreign-currency deposits—notably, in America MUFG owns Union Bank, which has around $80bn in the vaults—their stable funding does not match their lending. + +True, the gap has narrowed as the pace of foreign lending has slowed and the banks have built up deposits. But it remains; and the cost of bridging it with short-term borrowing has climbed. This reflects both tighter American money markets and a breakdown of “covered interest parity”, the principle that the difference between spot and forward exchange rates should mirror the interest-rate differential between the currencies. “If shocks happen in the financial markets,” says Shinobu Nakagawa, a BoJ official, “they may face difficulty in funding.” + +Regionals’ prospects are bleaker. Under the BoJ’s policy banks are sure to be less profitable, says Isao Kubota, chairman of Nishi-Nippon Financial Holdings, in Fukuoka on the south-western island of Kyushu. But he avers that close ties to corporate clients remain a big advantage. He adds that life is harder for the smaller co-operative banks, and insurers and pension funds, with lots of long-term liabilities. + +Mr Kubota spies danger in the government’s encouragement of savers to switch to shares: if it succeeds, banks’ funding will become “much more unpredictable”. Hence Nishi-Nippon’s enthusiasm for its own securities arm, set up in 2010; it is now involved in an asset-management venture with six of its peers. Through another subsidiary, Kyushu Card, it has branched into credit cards and consumer loans, too. + +Combined with declining rural populations, digital technology and encouragement from bank supervisors, negative rates may force long-overdue consolidation on regional lenders. Matt Sweeny and his colleagues at Bain, a firm of consultants, reckon that by 2025 their number may dwindle by half, to 50 or so. The buyers likeliest to do well, Mr Sweeny believes, will be acquirers that cut their teeth on smaller deals before taking on larger ones. Those with foreign shareholders, who tend to be less patient than domestic investors, will be under more pressure to act. + +Lately there has been a rash of deals: in 2016 in Kyushu alone Nishi-Nippon joined forces with Bank of Nagasaki and Fukuoka Financial, a bigger neighbour, agreed to buy Eighteenth Bank. Yet there is less to some of this than meets the eye: a popular device is to create a holding company, under which banks operate independently, alongside subsidiaries selling other services. That can limit potential gains. + +Perhaps more should imitate one thriving regional. A quarter of a century ago Suruga Bank, from Shizuoka, 180km south-west of Tokyo, moved from corporate lending to higher-yielding mortgages and later to personal loans: the two categories make up 89% of its book. The share of company loans has shrunk to 10%, from 80%-odd in the 1980s. + +Suruga was thus well equipped for Japan’s long sojourn in the low-rate realm. Its loans on cash-advance cards, the juiciest category, yield 11.1%. The gap between its average loan and deposit rates is 3.49% and rising; regionals average 1.25% and falling. “Other banks have been trying to copy us,” says Akihiro Yoneyama, Suruga’s president, “but unsuccessfully.” + +This article appeared in the Finance and economics section of the print edition under the headline “Low and lower” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21712134-biggest-lenders-can-largely-shrug-negative-rates-many-smaller-ones/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Buttonwood + +What not to expect in 2017 + +How the markets may take investors by surprise + +Dec 24th 2016 + + + +IF 2016 was a year of shocks, what will the next 12 months bring? It is time for the annual tradition (dating all the way back to 2015) when this column tries to predict the surprises of the coming year. + +By definition, a surprise is something the consensus does not expect. A regular survey of global fund managers by Bank of America Merrill Lynch (BAML) points to what most people believe. Following the election of Donald Trump, investors are expecting above-trend economic growth, higher inflation and stronger profits. They have invested heavily in equities and have a much lower-than-normal exposure to bonds. + +So it is not too difficult to see how the first surprise might play out. Expectations for the effectiveness of Mr Trump’s fiscal policies are extraordinarily high. But it takes time for such policies to be implemented, and they may be diluted by Congress along the way (especially on public spending). Indeed, it may well be that demography and sluggish productivity make it very hard to push economic growth up to the 3-4% hoped for by the new administration. Neither fiscal nor monetary stimulus has done much to lift Japan out of its torpor, after all. + +American profits, which were falling in early 2016, seem certain to rebound, particularly if the new administration pushes through corporate-tax cuts. But with the market priced on a cyclically adjusted price-earnings ratio of 28.3, according to Robert Shiller of Yale, a lot of good news is priced in. The ratio, which averages profits over the past ten years, is 70% above its long-term average. + +Meanwhile, the Federal Reserve is pencilling in three rate increases in 2017, something that will probably push the greenback higher (and reduce the dollar value of foreign profits for American multinationals). So the surprise might be that Wall Street will not be that great a performer in 2017. + +By extension, the second surprise may be that government bonds do not do that badly. The yield on ten-year Treasury bonds is already approaching the top of the 1.5%-3% range in which it has been trading in recent years. Private-sector borrowing costs, including corporate bonds and fixed-rate mortgages, tend to move in line with Treasury yields. Increased borrowing costs would have an adverse effect on economic activity. As a result, sharp rises in bond yields are often self-correcting, since weaker economic data tend to drive yields back down. + +The third potential surprise of the year might be a dog that doesn’t bark. The biggest worry of the fund managers polled by BAML is that of EU disintegration. As a result they have a lower-than-normal holding in European shares. But the EU might get through the year unscathed if Marine Le Pen is defeated in France’s presidential vote and Angela Merkel is re-elected in Germany. Populism does not win every time, as the recent Austrian presidential poll demonstrated. Indeed, the euro-zone economies could grow at a respectable 1.6% next year, the OECD forecasts. The continent might even seem a safe haven, given events elsewhere. + +Another potential surprise in 2017 could come from a big market disruption. There have been a few of these events in the past—from flash crashes to sudden leaps in bond yields. They seem to be the result of computer programs that trigger sales when specific price points are reached and a retreat by banks from trading, which has made markets less liquid. The trillions that flow through financial markets every day are also a tempting target for cyberwarfare and cybercrime. The big story of 2017 could be an inexplicable (if temporary) crash in a vulnerable market, such as high-yielding corporate bonds. + +The final surprise may be served up by that most enigmatic of metals—gold. Working out a target price for gold is a mug’s game. You can understand why investors bought gold when central banks started expanding their balance-sheets after 2008. But it is harder to explain why the price more than doubled in less than three years before falling back since 2011. + +As investors’ inflation expectations have risen since the American elections, gold might have been expected to rally. Instead, it has fallen sharply—perhaps because investors see the metal as an inferior alternative to the surging dollar. But gold is not just a hedge against inflation, it is also sought out in periods of political risk. And with the Trump administration apparently poised to pursue a more aggressive approach towards China and Iran, it is hard to believe that gold won’t find a few moments to shine in 2017. + +Economist.com/blogs/buttonwood + +This article appeared in the Finance and economics section of the print edition under the headline “Seeing through a glass darkly” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21712144-how-markets-may-take-investors-surprise-what-not-expect-2017/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +The year of Brexit and Trump + +2016 in charts + +The world economy in 2016 in nine charts + +Dec 24th 2016 + + + + + +This article appeared in the Finance and economics section of the print edition under the headline “The year of Brexit and Trump” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21712135-world-economy-2016-nine-charts-2016-charts/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Free exchange + +Thomas Schelling, economist and nuclear strategist, died on December 13th, aged 95 + +“Any time somebody talks about deterrence, they’re influenced by Schelling” + +Dec 24th 2016 + + + +WITHIN half an hour of waking up on October 10th 2005, Thomas Schelling received four phone calls. The first was from the secretary of the Nobel Committee, with news that he and Robert Aumann had jointly won that year’s prize for economics. During the fourth call, when asked how winning felt, he answered: “Well, it feels busy.” He was nothing if not truthful. He also confessed to feeling confused about which bit of his work had won the prize. + +It might have been his work on addiction—flicked off like ash from his own struggles with smoking. Economists must understand, he wrote, the man who swears “never again to risk orphaning his children with lung cancer”, yet is scouring the streets three hours later for an open shop selling cigarettes. Mr Schelling’s work laid (largely unacknowledged) foundations for future behavioural economists. In his thinking, addicts have two selves, one keen for healthy lungs and another craving a smoke. Self-control strategies involve drawing battle lines between them. + +The prize could also have been for his work on segregation, showing how mild individual preferences could lead to extreme group outcomes. Even if people do not mind living in a mixed community but have just a slight inclination to live near others like themselves, that could lead to deep racial segregation. + +By the time Mr Schelling arrived in Sweden in December 2005, he had worked out what the prize was for. His acceptance speech observed that “the most spectacular event of the past half century is one that did not occur. We have enjoyed 60 years without nuclear weapons exploded in anger…what a stunning achievement—or, if not achievement, what stunning good fortune!” If achievement was the word, the credit was partly his. + +Like so many of his generation, Mr Schelling was drawn to economics by the horrors of the Depression in the 1930s. By the time he had finished his PhD in 1948, the agenda had changed. With the wounds of the second world war still fresh, the priority was to prevent a third. He dipped into government, gaining first-hand experience of negotiations, such as those that established NATO. Then in the 1950s he began publishing academic work on bargaining, using his crystal-clear prose to formalise concepts that gifted negotiators knew instinctively, and shunning what Richard Zeckhauser, a colleague, called the “Journal of Advanced Economic Gobbledygook”. + +The conflicts Mr Schelling considered transcended the case of two parties scrapping for a bigger slice of a fixed pie. The richness of his subject lay in the truth that “in international affairs, there is mutual dependence as well as opposition.” As neither America nor the Soviet Union wanted to be engulfed in a nuclear mushroom cloud, there was scope for military strategy involving wit, not weaponry. In 1960 he set out his ideas in a book, “The Strategy of Conflict”, which showed how the advantages of co-operation could overcome antagonism, even without a formal bargain. + +“Any time somebody talks about deterrence, they’re influenced by Schelling,” says Lawrence Freedman, author of “Strategy: A History”. This deterrence could take several forms. Counter-intuitively, limiting your options can strengthen your hand, by convincing the enemy of your seriousness. Applied to nuclear strategy, Mr Schelling saw that it was important to persuade the opposition that in the event of a nuclear attack, there would be a counter-strike. Weapons that would retaliate automatically if the country was attacked could deter nuclear aggression in the first place, so defending such weapons was the best way of defending civilian lives. The important thing was to avoid a situation in which one side attacked so as to offset the other’s perceived first-mover advantage. + +Mr Schelling also promoted the importance of reputation as a useful deterrent. Richard Nixon understood this with what he called his “madman theory”: the idea of making the North Vietnamese enemy believe he was capable of anything, including pressing the nuclear button. But consistent behaviour can have as deterrent an effect as erratic unpredictability: if your adversaries believe that you will keep your word, then your word can shape their actions. The danger of this approach, however, is that it could lead to perseverance with a stupid strategy, just to save face. + +United we stand + +Mr Schelling was often referred to as a game theorist, despite not calling himself one. His methods marked him apart. Mathematical minds had proven elegantly that Mr Schelling’s games would always have solutions. There would always be at least one set of strategies where each side was playing its best possible response to the other. When whittling down the number of options, however, the mathematical approach was to chuck more assumptions and equations at the problem. Mr Schelling, in contrast, thought that just as one could not deduce logically whether any given joke will make people laugh, so it was ludicrous to deduce what people might think in a nuclear war from logic alone. + +Mr Schelling looked to the real world for help, and argued that shared norms were the answer. When he asked his students to pick a meeting place in New York, unco-ordinated, most would settle on the clock at Grand Central station. In his prize lecture, Mr Schelling used this idea to help explain why nuclear weapons had not been used on the battlefield for so long: their use was a taboo, so the world could settle on a focal point. + +On that busy morning of October 10th, when pressed by the third journalist of the morning, Mr Schelling refrained from advising young people. “I wouldn’t necessarily try to talk somebody into…becoming an economist.” Instead of being confined by any academic discipline, he led by example, tackling some of the world’s most worrying—and most intractable—problems. + +Visit our Free exchange economics blog + +This article appeared in the Finance and economics section of the print edition under the headline “A cooler head” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21712133-any-time-somebody-talks-about-deterrence-theyre-influenced-schelling-thomas/print + + + + + +上一项 文章 章节 下一项 + + + + + +Science and technology + + + + +Driverless cars: Eyes on the road + +Particle accelerators: Open, Sesame + +Neuroscience: Grey mater + + + + + +文章 章节 下一项 + +Eyes on the road + +A breakthrough in miniaturising lidars for autonomous driving + +New chips will cut the cost of laser-scanning + +Dec 24th 2016 | MUNICH + + + +EXPERIMENTAL self-driving cars continue to make regular forays onto the roads. After a trial in Pittsburgh, Uber, a taxi-hailing-app company, launched several of its “autonomous” vehicles onto the streets of San Francisco on December 14th—and promptly ran into a row with officials for not obtaining an operating permit, which Uber insists is unnecessary as the vehicles have a backup driver to take over if something goes wrong. General Motors said it would begin testing self-driving cars in Michigan. For these and other trials one thing is essential: providing the vehicles with a reliable form of vision. + +As no man-made system can yet match a pair of human eyes and the image-processing power of a brain, compromises have to be made. This is why engineers use a belt-and-braces approach in equipping vehicles with sensors that can scan the road ahead. That way, just as your trousers will stay up if one or other of belt and braces fails, if one system misses a potential hazard, such as an oncoming car or a pedestrian, the others might spot it and direct the car to take evasive action. + +Three of the sensory systems currently in use in autonomous vehicles—cameras, ultrasonic detectors and radar—are reasonably cheap and easy to deploy. A fourth, lidar, is not. Lidar employs laser scanning and ranging to build up a detailed three-dimensional image of a vehicle’s surroundings. That is useful stuff as the lidar image can be compared with the data being captured by the other sensors. The problems are that lidar is bulky (it hides in the roof domes of Google’s self-driving cars and, as pictured above, in the revolving beacons that adorn Uber’s vehicles), mechanically complicated and can cost as much as the unadorned car itself. + +Smaller, cheaper lidars are being developed. One of the most promising comes in the minuscule form of a silicon chip. Prototypes have been delivered to several big automotive-component suppliers, including Delphi and ZF. If all goes well, within three years or so lidar chips should start popping up in vehicles. + +A chip off the old block + +The company bringing these miniature lidars to market is Infineon, a German chipmaker. This firm is one of the biggest producers of the chips used in radar detectors. Radar works by sending out radio pulses and detecting the reflected signals that have bounced off objects. The time delay between emitting a pulse and noting its reflection is used to calculate how far away the reflecting object is. If that object is moving, then its speed can also be determined. This determination comes from a slight shift in the frequency of the reflected signal, caused by the Doppler effect (the phenomenon that also causes a passing fire-engine’s siren to change pitch). + +Around 15 years ago radar sensors were specialised pieces of kit and cost around $3,000. Infineon found a way to make them using a standard silicon-based manufacturing process and, by integrating many of the functions of a radar onto a single chip, boost performance. That has brought the price down to a few hundred dollars. As a result, radar chips have become an essential part of an autonomous car and are increasingly used in conventional vehicles too, to provide safety features such as automatic emergency braking. + +The race is now on to shrink lidar in a similar way. Lidar was developed as a surveying method following the invention of the laser in the 1960s. It employs a laser beam to scan an area and then analyses the reflections that bounce back. As light has a much shorter wavelength than radio waves do, it is more readily reflected from small objects that radar might miss. Lidar is used to make maps, measure atmospheric conditions and by police forces to scan accident and crime scenes. + +Typically, a lidar employs revolving mirrors to direct its laser beam, which is usually in the invisible near-infrared part of the spectrum, rather than the visible part. Commercial lidar can cost $50,000 or so a pop, but smaller, lower-powered versions are now available for $10,000 or less. A number of lidar makers, such as Velodyne, a Californian firm, are trying to develop what they call “solid-state” lidars, which are miniaturised versions with no moving parts. Some researchers are using a flash of laser light instead of a beam, and capturing the reflections with an array of tiny sensors on a chip. + +Infineon, however, has taken a different tack and is using a micro-electro-mechanical system (MEMS). This particular MEMS was invented by Innoluce, a Dutch firm which Infineon bought in October 2016. The device consists of an oval-shaped mirror, just 3mm by 4mm, contained on a bed of silicon. The mirror is connected to actuators that use electrical resonance to make it oscillate from side to side, changing the direction of the laser beam it is reflecting. This, says Infineon, permits the full power of the laser to be used for scanning instead of its light being dispersed, as it would be in a flash-based system. + +The MEMS lidar can scan up to 5,000 data points from a scene every second, and has a range of 250 metres, says Ralf Bornefeld, Infineon’s head of automotive sense and control. Despite its moving mirror, he thinks it should prove as robust and reliable as any other silicon chip. In mass production and attached to, say, a windscreen, the MEMS lidar is expected to cost a carmaker less than $250. These tiny lidars would have other applications, too—in robots and drones, for example. + +Many engineers, Mr Bornefeld included, reckon autonomous cars of the future will use multiple miniature lidars, radars, ultrasonic sensors and digital cameras. Each system of sensors has advantages and disadvantages, he says. Combining them will provide a “safety cocoon” around an autonomous vehicle. + +Radar measures distance and speed precisely, and works in the dark and in fog—conditions in which cameras might struggle—but the images it yields can be difficult to classify. Moreover, some materials (rubber, for example) do not reflect radar waves well, so radar could have difficulty noticing, say, a dangerous chunk of tyre from a blowout lying in the road. With good visibility, the car’s cameras should spot the bits of tyre. The cameras capture high-resolution pictures, use artificial-intelligence software to analyse them, and then apply image-recognition techniques to identify objects that need to be avoided. Lidar, with its ability to build detailed images of even small objects and operate in the dark, should spot the tyre, though it, too, might struggle to do so in dense fog. Ultrasonic detectors, meanwhile, will continue to play a part. They have been around for a while and work in a similar way to radar, but instead use high-frequency sound inaudible to humans. They would not see the tyre chunk—at least, not until too late—for they usually lack the range. But they are cheap and make excellent parking sensors. + +Google, Uber and most carmakers who aspire to make autonomous vehicles already use lidar. They ought, therefore, to welcome its miniaturisation with open arms. But not everyone is convinced of lidar’s worth. Elon Musk, the boss of Tesla, a firm that makes electric cars, has spurned the technology. He has said the camera, radar and ultrasonic systems that provide the Autopilot autonomous-driving mode in Tesla’s vehicles are improving rapidly and will be all that is necessary. + +The more eyes, the better + +Mr Musk may, though, change his mind. In Florida, in May 2016, the driver of a Tesla using Autopilot at high speed was killed in a collision with a lorry turning across the road in front of him. Although Autopilot users are supposed to keep their hands on the wheel and their eyes on the road (just as, for now, the backup drivers in Google and Uber cars do), it appears the Tesla’s cameras and radar either failed to spot the lorry—which was painted white and set against a brightly lit sky—or thought it was something else, such as an overhead sign. Whether lidar would have made the correct call, as some think it would, no one will ever know. But when more driverless cars venture onto the roads in earnest, having plenty of belts and braces might help reassure their passengers. + +This article appeared in the Science and technology section of the print edition under the headline “Eyes on the road” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21712103-new-chips-will-cut-cost-laser-scanning-breakthrough-miniaturising/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Open, Sesame + +A particle accelerator in the Middle East + + + +A new synchrotron is about to start up in a surprising part of the world + +Dec 24th 2016 + + + +THE hills 30km north-west of Amman, Jordan’s capital, are home to a miracle of scientific diplomacy called Sesame. Proposals to build this device, the world’s most politically fraught particle accelerator, date back nearly 20 years. The delay is understandable. Israel, Iran and the Palestinian Authority, three of the project’s nine members, are better known for conflict than collaboration. Turkey does not recognise the Republic of Cyprus, but both have worked together on the accelerator. As well as Jordan, the other members are Bahrain, Egypt and Pakistan. Nonetheless, Sesame, a type of machine called an electron synchrotron, is about to open for business. The first electrons are expected to complete their initial laps around its 133 metre circumference ring this month. + +Electron synchrotrons are smaller cousins of proton synchrotrons such as the Large Hadron Collider (LHC), near Geneva. Instead of probing the frontiers of physics, they probe the structure of materials. Corralled by giant magnets, the electrons travelling around them emit radiation ranging in frequency from the infrared to X-rays. This can be used to look at anything from metals to biological tissues. Synchrotron radiation is more intense than other available sources, letting researchers collect data faster and from smaller samples. It can also penetrate matter more deeply, and resolve smaller features. + +There are around 60 electron synchrotrons in the world, but none before Sesame has been in the Middle East. They are expensive beasts, but Sesame is cheaper than most. The Diamond Light Source, in Britain, which opened nearly a decade ago, cost £260m ($330m) to build. The cost of building Sesame has been just $79m. This is, in part, because of Jordan’s low labour costs. It is also a consequence of Sesame’s less ambitious specifications. But the resourcefulness of Sesame’s architects has played an important part as well. + +The project has a long history. More than 25 years ago Abdus Salam, a Nobel-prizewinning physicist, called for a synchrotron to be built in the Middle East. In 1997 two other physicists, Herman Winick and Gustav-Adolf Voss, suggested moving one intact from Berlin. BESSY I, the machine they had in mind, was to be decommissioned and replaced. It would thus become redundant and available for dispatch elsewhere. In 2002 the Winick-Voss idea was scrapped in favour of building a more powerful Middle Eastern facility from scratch. Yet BESSY I lives on in Sesame. It serves as a booster, giving the electrons an initial kick before they are accelerated to their full energy in the main ring. That, reckons Sir Christopher Llewellyn Smith, Sesame’s president, saved the project about $4m. America, Britain, France, Italy and Switzerland have also donated components from decommissioned synchrotrons. + +Cheap though Sesame may be, scraping the necessary money together in a region enmeshed in conflict has been no mean feat. All nine project members agreed to make annual contributions of different levels. Banks refused to handle those from Iran, for fear of American sanctions. Nonetheless, $48m of the total has come from the project’s members. The European Union has provided more than $10m, some of which has been used by CERN, the organisation that runs the LHC, to design and oversee the construction of Sesame’s corralling magnets. And, in an effort to rein in running costs, the project’s bosses hope to build a solar-power plant to supply the synchrotron’s electricity. That would make it the first accelerator to be powered solely by renewable energy. + +Researchers with expertise in synchrotron engineering have pitched in. Sir Christopher, who was CERN’s director-general between 1994 and 1998, knows a thing or two about particle accelerators. And next year one of his successors at CERN, Rolf-Dieter Heuer (D-G from 2009 to 2015), will also succeed him as Sesame’s president. + +Sesame’s electrons will have energies of 2.5bn electronvolts, the units usually used to describe such things. That is a lot. Applying Einstein’s famous equation, e=mc2, where e is energy, m is mass and c is the speed of light, it means that an electron circulating around Sesame’s ring will weigh 5,000 times more than one which is at rest. The radiation they generate is tapped at various points , to create “beam lines” for things like X-ray crystallography. Sesame will open with two beam lines. One will pipe infrared light to a microscope, and the other will pass X-rays through both organic and inorganic samples. Two more beam lines are planned for the next three years, at a cost of $15m. Sesame can, in theory, host more than 20 of them. One use to which they may be put is the analysis of antiquities. Synchrotron radiation has, for example, been employed to read scrolls too delicate to unfurl. + +But beam lines are not Sesame’s only draw. The project has involved a huge amount of work from groups within the region. It also acts as neutral ground, on which the Middle East’s scientists can meet. As Roy Beck of Tel Aviv University, who sits on the Sesame users’ committee, puts it, “We all talk the same language. We all talk science.” + +Researchers prize the radiation produced by synchrotrons so highly that they will cross the world to clinch some precious time on one. For scientists travelling to such facilities from the Middle East, though, snarl-ups with visas have in the past made such trips difficult or impossible. Now that they have a synchrotron on their doorstep, the inconveniences of Western immigration controls may affect these researchers somewhat less. + +This article appeared in the Science and technology section of the print edition under the headline “Open, Sesame” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21712104-new-synchrotron-about-start-up-surprising-part-world/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Neuroscience + +Scanning reveals what pregnancy does to a mother’s brain + +New mothers experience reductions in the volume of grey matter in their brains + +Dec 24th 2016 + + + +AS ANY parent will tell you, once you have had children nothing is ever quite the same. Including, it seems, their mothers’ brains. In a paper just published in Nature Neuroscience, a team led by Elseline Hoekzema of the Universitat Autònoma de Barcelona, in Spain, describe for the first time how pregnancy alters women’s brains, rewiring them in ways that persist long after a child has been born. + +Dr Hoekzema and her colleagues performed detailed brain scans on 65 female volunteers, none of whom had been pregnant before, but hoped to be in the near future, and a further 20 who had no such desire. About 15 months later, by which time 25 of their volunteers had carried babies to term, they repeated the process. + +Comparing the scans showed significant reductions in the volume of grey matter in the brains of the new mothers. (Grey matter contains the main bodies of nerve cells; white matter, the brain’s other component, consists mostly of the nerve fibres that link those cells together.) The effect was reliable enough that it could be used by itself to predict, with perfect accuracy, which of the women had been pregnant and which had not. And it was persistent, too. When the researchers retested the mothers two years later, most of the alterations were still present. + +Dr Hoekzema and her colleagues suspected that something in the biological process of pregnancy itself was causing the changes. To double-check, and to make sure that the experience of preparing for parenthood was not the true culprit, they also compared their women’s brains with those of some men—both fathers and those without children. The men’s brains, like those of the childless women, showed no such pattern of changes. And the results fit with studies on animals. Rats that have had pups, for instance, show notable and lasting changes in brain structure. They also tend to be less anxious, better able to cope with stress, and to have better memory than their pupless contemporaries. + +Pregnancy, then, does indeed do things to a woman’s brain. But what exactly those things mean is hard to tease out. Neuroscientists do not really understand how the brain works. That makes it difficult to predict how a change in the organ’s structure will alter the way it functions. + +Some of the changes took place in the hippocampi. These are a pair of small, banana-shaped structures buried deep in the brain, one in each hemisphere, that are known to be important for forming memories. Administering a few simple cognitive tests to the new mothers—including tests of memory—revealed no obvious changes in performance. And the hippocampi had partially regrown within two years. But Dr Hoekzema and her colleagues point out that most of the more permanent reductions in grey matter happened across several parts of the brain that, in other experiments, have been found to be associated with the processing of social information, and with reasoning about other people’s states of mind. + +That would make sense from an evolutionary point of view. Human babies are helpless, and, in order to care for one, a mother must be good at inferring what it needs. The rewiring may also affect how well women bond with their infants. After the women in Dr Hoekzema’s study had given birth, the research team administered a standard psychological test designed to measure how attached those women had become to their babies. The ones with the greatest reductions in grey-matter volume were, on the whole, the most strongly bonded. + +Efficient wiring + +Ascribing all this to a reduction in grey-matter volume, rather than an increase, sounds counter-intuitive. But Dr Hoekzema reckons it is probably evidence of a process called synaptic pruning, in which little-used connections between neurons are allowed to wither away, while the most-used become stronger. That is thought to make neural circuitry more efficient, not less so. She points out that the surge of sex hormones people experience during adolescence is thought to cause a great deal of synaptic pruning, moulding a child’s brain into an adult one. So it is reasonable to assume that the even greater hormonal surge experienced during pregnancy might have a similar effect. When it comes to the brain, after all, bigger is not necessarily better. + +This article appeared in the Science and technology section of the print edition under the headline “Grey mater” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21712093-new-mothers-experience-reductions-volume-grey-matter-their/print + + + + + +上一项 文章 章节 下一项 + + + + + +Books and arts + + + + +Astronomy: A secret history + +Cheese, glorious cheese: Many incarnations + +Rasputin’s assassination: Foul play + +Tehran’s Museum of Contemporary Art: Treasure chest + + + + + +文章 章节 下一项 + +How women rose to the top of American astronomy + +Looking at the stars + +The work of the ladies team of the Harvard Observatory + +Dec 24th 2016 + + + +The Glass Universe: How the Ladies of the Harvard Observatory Took the Measure of the Stars. By Dava Sobel. Viking; 324 pages; $30. To be published in Britain by 4th Estate in January. + +IN THE late 19th century an extraordinary group of women worked at the Harvard College Observatory. Known as “computers”, they charted the position and brightness of stars on a daily basis by applying mathematical formulae to the observations of their male colleagues who watched the sky. Harvard was unique in taking advantage of the burgeoning numbers of educated women in this way. When the observatory’s research was redirected towards photographing the heavens rather than observing them merely by eye, the duties of the “computers” expanded apace. Many of them would go on to extraordinary achievements in astronomy. + +The work of Harvard’s female staff was paid for largely by two other women, Anna Palmer Draper and Catherine Wolfe Bruce, heiresses with an enduring interest in astronomy. Dava Sobel, a former science writer for the New York Times who made her name with her bestselling first book, “Longitude” (1995), has spent several years poring over letters and studying archives in order to tell the story of the women-astronomers and their benefactors. + +The introduction of photography at the Harvard Ovservatory allowed the firmament to be captured on an unprecedented scale on eight by ten-inch glass plates. These plates, about half a million in all by 1992, when the observatory switched to digital storage methods, comprise the “glass universe” of her book’s title. They allowed the course of stars to be followed not just for a few nights, but for decades. Discoveries made by astronomers on other continents could be cross-checked with Harvard’s library. Perhaps more important, when starlight was split with the aid of a prism its spectrum could likewise be recorded. + +These spectra resemble long rainbow-coloured strips (rendered in black and white on the plates’ photographic emulsion) interspersed with numerous dark lines. Scientists would come to understand that the gaps in a spectrum are due to the absorption of light by the atoms of chemical elements that compose a star’s outer layers. As one astronomer triumphantly declared, the ability to divine a star’s constituents from its spectrum “made the chemist’s arms millions of miles long”. Stellar spectroscopy would also reveal other physical attributes of stars such as their temperature, eventually giving rise to the new field of astrophysics. + +This extraordinary photographic record offered the Harvard Observatory team the chance to learn a great deal more about the stars. During routine studies of the plates in 1893, for example, Williamina Fleming found a nova, only the tenth to have been observed by astronomers in the West. She would go on to discover nine more. Annie Cannon catalogued hundreds of thousands of stars, in the process inventing a stellar classification system that is still in use by astronomers today. The cyclical dimming and brightening of variable stars fascinated Henrietta Leavitt, who became the first person to realise that the frequency of their pulsation was directly related to their brightness. This allowed astronomers to reliably measure how far away they were, to establish the gargantuan dimensions of the Milky Way, and the even greater distances between this galaxy and others. Perhaps most remarkable of all was Cecilia Payne, the first Harvard student (man or woman) to be awarded a PhD in astronomy. Her thesis in 1925 ascertained that, relative to the proportions of other elements, hydrogen is vastly more abundant in stars than it is on Earth. + +On seeing her thesis, Henry Norris Russell, an expert on the chemical composition of stars, told her that the result was “clearly impossible”. Four years later, Russell’s own calculations would lead him to admit that Payne had been right after all. The prevalence of hydrogen, he wrote at the end of his paper, “can hardly be doubted”. Unjustly, it was Russell at the time, not Payne, who was frequently credited with the discovery. + +The few grumbles expressed by the “computers” of Harvard Observatory will be familiar to many women (and, to be fair, some men) within the academy today. “Sometimes I feel tempted to give up and let him find out what he is getting for $1,500 a year from me,” Fleming wrote in her journal after unfruitful salary negotiations with the director, “compared with $2,500 from some of the other [male] assistants.” Indeed, the directors seemed at times to have something of a sweatshop mentality towards their diligent assistants. Another boss measured computing tasks in units of “girl-hours” and “kilo-girl hours”. + +Ms Sobel is keen to absolve the directors of this charge. But there is no getting away from the fact that had they been occupied with fewer humdrum labours, the brilliant women whom she portrays in her book might well have achieved even more than they did. Afficionados of astronomy may be familiar with their names; now it is time they were known to a wider audience. Ms Sobel has drawn deeply from her sources, knitting together the lives and work of the women of Harvard Observatory into a peerless intellectual biography. “The Glass Universe” shines and twinkles as brightly as the stars themselves. + +This article appeared in the Books and arts section of the print edition under the headline “A secret history” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21712107-work-ladies-team-harvard-observatory-looking-stars/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +The many incarnations of cheese + +Why humans love cheese + +Who makes it, where and why + +Dec 24th 2016 + + + +The Oxford Companion to Cheese. Edited by Catherine Donnelly. OUP; 849 pages; $65 and £40. + +OXFORD UNIVERSITY PRESS has an impressive record producing culinary reference books, with their “Companion” food and wine volumes having already come out in several editions. Now it is the turn of cheese to get the same treatment. About 1,500 different varieties of cheese are made around the world, of which 244 are described here. The editor is right to emphasise that anything much more comprehensive than this would be overwhelming, though the book would have benefited from more illustrations. If the reader simply requires a directory of cheese, nothing comes close to Dorling Kindersley’s “World Cheese Book” (2015), with its 750 colourfully presented cheeses from around the globe. + +But this is still a delightfully discursive volume for the armchair reader. If you would like to know more about the East Friesian cow (or sheep for that matter); or Sister Noella Marcellino (“the cheese nun”), a world expert on fungal surface-ripened cheese; or Epoisses (a very stinky cheese), this is the book for you. + +Where else could you find an entry for the Monty Python television sketch, “Cheese Shop”, in which an aggrieved John Cleese eventually shoots a cheesemonger after failing to find a single piece of cheese in his shop? Non-specialist references extend into the modern era with a scholarly entry on two children’s television characters, Wallace and Gromit, and how their programme caused sales of Wensleydale to surge. Another entry is on the moon and green cheese, with a string of references to fables about the moon and cheese, from Serbia, France and contemporary America. + +France dominated the cheese world for centuries, but is now merely the third largest producer after America and Germany, with other countries such as Australia and Britain diversifying their production in recent years. Curiously, there was no strong tradition of cheese-making or consumption in most of Asia. One Chinese farmer described cheese as “the mucous discharge of some old cow’s guts, allowed to putrefy”. Cheese accounts for a tiny part of the Indian diet, even though India is the world’s largest dairy producer. For centuries Japan never consumed dairy products of any kind; in 1940, individual cheese consumption was estimated to be four grams a year. That has now increased to 2.5kg. + +The bias in “The Oxford Companion Companion to Cheese” is definitely towards non-European cheese history, with the entries for Vermont and its cheese rivalling those for Austria or Spain, perhaps because the editor of the book, Catherine Donnelly, is a professor of nutrition at the University of Vermont. She includes an interesting tale about the marketing muscle of cheese-makers in America compared with those in Britain. Cheez Whiz, a post-war cheese dip created by Kraft, has seen better days, though it still generates revenues of $100m a year. Ever willing to move with the times, it has just been released in spray cans with both Sharp Cheddar and Buffalo Cheddar flavours. Compare this to the fate of Lymeswold, which was created in the 1980s and touted as the first new English cheese in 200 years. It was initially highly successful, but when demand outstripped supply, the manufacturers cut corners and released stocks before they had matured, resulting in its demise less than a decade after its birth. + +This article appeared in the Books and arts section of the print edition under the headline “Many incarnations” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21712106-who-makes-it-where-and-why-why-humans-love-cheese/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Assassinating the mad monk + +How Rasputin was killed + +A dubious account of the gruesome murder of Grigory Rasputin + +Dec 24th 2016 + + + +Lost Splendour and the Death of Rasputin. By Felix Yusupov. Adelphi; 304 pages; 288 pages; £12.99. + +FEW murderers boast about their crimes. But Prince Felix Yusupov was no ordinary killer, and his prey—the “mad monk” Grigory Rasputin—no ordinary victim. On the centenary of the assassination of the Romanovs’ Svengali on December 30th, the republication of Yusupov’s memoir provides a timely glimpse into the charmed, doomed world of the Russian aristocracy, and its hectic collapse amid the Bolshevik revolution. + +His grasp of facts is shaky and his motives self-serving. But the princely capers make a gripping, if sometimes repellent, read. Yusupov’s penchants for transvestite dressing and wild evenings with gypsies show an interestingly unconventional side. His childish pranks (such as letting rabbits and chickens loose in the Carlton Club in London) were much funnier for the perpetrator than the hard-pressed servants who had to clear them up. + +The most important part of the book is the description of Rasputin’s assassination. The humble Siberian peasant bewitched Tsar Nicholas II and his wife, the Tsarina, with his apparently miraculous powers. His aristocratic assassins, recruited by Yusupov, believed Russia, misruled to the point of collapse, could be saved only if the royal family could be freed of the faith-healer’s malign influence. + +They cast lots, obtained some cyanide, added it to cakes and wine, and tricked Rasputin, whom Yusupov had befriended earlier, into joining them for dinner. The trusting, unarmed guest consumed the poison, but it had no effect. Yusupov, having first advised him to pray, then shot him in the chest at point-blank range. Yet a few minutes later he rose, foaming at the mouth, “raised from the dead by the powers of evil...I realised now who Rasputin really was...the reincarnation of Satan himself.” After several more shots were fired, the assassins dumped the body in a river. + +Much of this account, like the prince’s motives, is questionable, The lurid tone may have been useful: the Yusupovs lost most of their vast fortune in the revolution. Other sources suggest that the poison was fake; Rasputin was killed by three shots, but the tale of his satanic resurrection is wholly uncorroborated. Rasputin’s real story is painstakingly told in a compendious new book by Douglas Smith, an American scholar of Russian history. But Prince Yusupov’s account is gripping. + +This article appeared in the Books and arts section of the print edition under the headline “Foul play” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21712108-dubious-account-gruesome-murder-grigory-rasputin-how-rasputin-was-killed/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Tehran’s Museum of Contemporary Art + +Sending its fabulous collection of Western modernism abroad + +The nail-biting international diplomacy behind putting on a blockbuster exhibition + +Dec 24th 2016 + +Reading Warhol in Tehran + +THE late 1970s were marked by high oil prices and faltering Western economies. For the empress of Iran, though, it was a time of opportunity; she went shopping for art, and in 1977 founded the Tehran Museum of Contemporary Art (TMoCA). + +The Islamic Republic of Iran now owns this trove of Western modernism, which is widely held to be the best collection outside Europe and North America. The most important work is Pablo Picasso’s masterpiece of 1927, “The Painter and his Model”, which one academic calls the missing link between his two greatest paintings, “Les Demoiselles d’Avignon” (1907) and “Guernica” (1937). It also includes Jackson Pollock’s “Mural on Indian Red Ground” (1950), as well as works by Mark Rothko, Francis Bacon, Andy Warhol (pictured) and Iranian masters such as Mohsen Vaziri Moghaddam and Faramarz Pilaram. + +Spirited away into TMoCA’s vaults at the start of the Iranian revolution in 1979, the hoard remained unseen until the first signs of postrevolutionary openness, in 1999, slowly revived the museum’s willingness to display its Western art. With the election of the moderate president, Hassan Rohani, in 2013 TMoCA’s trustees began discussing a foreign tour, in part to help raise much-needed funds. + +European and American museums responded with enthusiasm, enticed by the appeal of a blockbuster show of art unseen in the West for four decades. The Hirshhorn Museum in Washington, DC, tipped its hand, but eventually dropped out. Another early front-runner was the Städel Museum in Frankfurt, which in 2014 offered to put on a show in Germany and in two other countries. But the director, Max Hollein, who now runs the Fine Arts Museums of San Francisco, balked at the asking price of €1m ($1.04m) per venue. + +By this time Joachim Jäger, of the National Gallery in Berlin, was in Tehran curating an exhibition of work by Otto Piene, a German kinetic artist who had recently died. Mr Jäger liked what he saw on TMoCA’s walls, in its sculpture garden and in its vaults. He took the idea of mounting an exhibition back to the Prussian Cultural Heritage Foundation, the overseer of his museum, and it, in turn, asked the foreign minister, Frank-Walter Steinmeier, for help. + +The Germans were soon joined by the Italians; the museum of 21st-century art, known as the MAXXI in Rome had worked with TMoCA on a show of Iranian art in Italy in 2014. As the nuclear deal between Iran and the West was falling into place, Italy’s then foreign minister, Paolo Gentiloni, visited Tehran. Afterwards, he put the idea of a show to Giovanna Melandri, president of the Fondazione MAXXI. With Iran interested in several venues for financial as much as symbolic reasons, Germany and Italy quickly joined forces. + +The German government pledged €2.8m to be the first to show Iran’s artworks; Italy would pay €1.5m. Thirty Western and 31 Iranian works, including the Picasso and the Pollock, would go to Berlin for three months, starting in December 2016. Rome would get the show for five months from late March. Announcing the exhibition in early October, Ms Melandri called it “tangible evidence of the new and constructive diplomatic and cultural relations”. But history shows that exhibition diplomacy can be fraught; in 2012 a show at the British Museum (BM) about the haj almost fell apart when the Turkish government refused at the last moment to allow loans from the Topkapi Palace in Istanbul, forcing the BM to scrabble around elsewhere to fill the gaps. + +For officials and curators in Berlin and Rome, trouble started in May, when TMoCA’s director, Majid Mollanoroozi, handed out awards to the winners of a Holocaust cartoon competition organised in Tehran by two officially supported cultural organisations. It provoked complaints from the Israeli government. According to diplomats, the TMoCA project was saved only when the Iranian government agreed to replace Mr Mollanoroozi as the tour’s chief negotiating partner, while keeping him in his museum post. + +Since then, though, the German government has been split. Mr Steinmeier’s foreign ministry thinks Iran’s reaction was sufficient to save a project that he feels would help foster a vital rapprochement. But Angela Merkel’s chancellery, through Monika Grütters, the commissioner for culture and media, distanced itself from the project because it felt Iran had crossed a red line. “The exhibition is being supervised and planned by the foreign ministry,” Ms Grütters’s spokesman said. The chancellery is also blocking a foreign ministry push for Mr Rohani to visit Germany. + +In October, the Iranian culture minister, Ali Jannati, who had backed the exhibition, was forced out of office by hardliners over another issue. At the same time, influential voices in Iran’s art world warned that there might be legal claims against the collection and that it risked being seized. Iranian fears were heightened by a German legal quirk which made the city of Berlin, not the federal government, the guarantor of the works’ safe return. The show’s opening was postponed. + +The guarantee issue has now been resolved and the new Iranian culture minister, Reza Salehi Amiri, has approved the tour. But the final decision, diplomats say, lies with President Rohani. Internal politics in Iran in 2017 will focus on the presidential election, due to be held in May. So the window for approving the show, now pencilled in for late January, is narrow. If there are no positive signs from Tehran before Christmas, the National Gallery will cancel the exhibition, leading to the cancellation of the Rome leg, too. Curators in Berlin and Rome are praying for a Christmas miracle. + +This article appeared in the Books and arts section of the print edition under the headline “Treasure chest” + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21712147-nail-biting-international-diplomacy-behind-putting-blockbuster-exhibition-sending/print + + + + + +上一项 文章 章节 下一项 + + + + + +Obituary + + + + +The Whitechapel Bell Foundry: A curfew tolls... + + + + + +文章 章节 下一项 + +The Whitechapel Bell Foundry + +A curfew tolls... + +Britain’s oldest manufacturing firm, the Whitechapel Bell Foundry, announced its closure on December 2nd + +Dec 24th 2016 + + + +THE sound of bells weaves through the British landscape as sinuously and naturally as rivers do. Morning bells, smothered by mist and birdsong; evening bells, mellow as the low light that caresses hills, cattle and trees; giddy carillons of change-ringing that mark victories, coronations and weddings, and the slow boom of majestic timekeepers and signallers of death. “The curfew tolls the knell of passing day” begins Thomas Gray’s “Elegy”, which every schoolchild once learned by heart. + +Hundreds of those bells had something to do with the Whitechapel Bell Foundry, which was set up in 1570—possibly as early as 1420—specifically to make and mend them. Their bodies were recast, their clappers remodelled or their frames rebuilt by men working in the once-industrial, then desolate, now gentrified East End of London. From Whitechapel, in 2014, workmen came out to rescue the bells of St Mary Balcombe, in the wooded Weald of Sussex, and those of Holy Trinity Duncton, near the great house at Petworth. That was simply in one county; they would travel the length of the land. + +The foundry itself, since 1738, was set in a complex of 17th- and 18th-century brick buildings grouped around a coaching inn called the Artichoke, just off the Whitechapel Road. The founder’s house and shop, in the same old brick, was attached to the place of work; the last founder, Alan Hughes, still lives there, as did his father, grandfather and great-grandfather. Bells were like family: individuals and their moulds, new and old, almost human with their bodies, ears, shoulders and tongues, would stand around the workshop floor in various states of readiness or undress. + +The foundry’s long role in the making of bells can be hard to detect. Its “three bells” stamp was used early and revived in the 1900s, but in the 18th and 19th centuries Whitechapel bells were marked with the name of the founder, not the company. This was an old tradition anyway; medieval bells often sing out “John made me” or “Peter made me”; so the names Robertus Mot, Jos. Carter, Thos. Lester or Richard Phelps on bells are those of Whitechapel founders, immortalised on their work. + +Pealing for liberty + +There was nothing parochial about the business. It shipped bells to Auckland, Sydney, St Petersburg and Montreal. As early as the mid-18th century it was sending peals of bells, or great single bells, to the American colonies. If the antipodean bells stirred sentimental memories of the old country, the American bells, as if galvanised by sharper air, became symbols of freedom and revolution. The Whitechapel church-and-lookout bells of St Michael’s in Charleston, South Carolina were captured by the British in the revolutionary war and seized back again. In Philadelphia in 1776 citizens gathered to the cry of the Liberty Bell, made in Whitechapel, to hear for the first time the Declaration of Independence. + +The foundry always insisted that the famously cracked bell came ashore in good order, and was damaged later by incorrect hanging. For bells, despite their solid look, are delicate. A piece one inch thick will break in a man’s palm if struck with a two-pound hammer; and it is the very brittleness of their metal that allows them to ring freely, as well as for freedom’s sake. + +The foundry made other bells: musical handbells, table bells to summon servants or tea (fashionable in the wake of “Downton Abbey”), doorbells and chimes for household clocks. But four-fifths of its business was the casting or repair of big tower bells. Rather than presaging buttered scones or announcing the Amazon man with a parcel, Whitechapel’s bells were in the business of summoning souls to prayer, alerting loiterers to curfew and marking the passage of time. The heaviest bell ever made at the foundry was Big Ben, for the Houses of Parliament, in 1858; it weighed over 13 tonnes, and its moulding gauge hung ever after, like the remnant of a dinosaur, on the end wall above the furnaces. Big Ben was intended to be so exact that the whole country would set its watches by the first sonorous stroke of every quarter, and passers-by still instinctively do so. + +Time itself moved glacially in the foundry, where the usual gap between order and delivery was around 11 years. The lag was so great, as the present founder, Mr Hughes, told Spitalfields Life, that the business almost ran in counterpoint to the economy. In good times, churches ordered bells; when the inevitable downturn arrived they were stuck with the contracts, on which the foundry thrived. War, too, brought compensations. In the 1950s the foundry worked day in, day out to replace bells lost to fires and enemy raids, including the “Oranges and Lemons” peal at St Clement Danes and the great bell at Bow. + +By the late 20th century, however, the business was struggling. Church-building had become rare. It was hard to keep up with changing ways, despite the opening of a chime-bell music room and an online shop. The patient art of melting metal, pouring it in moulds, waiting for it to set, hammering, polishing, tuning and inscribing, had never been a craft many learned. Even Mr Hughes’s great-grandfather had feared the foundry would go under. + +The buildings, being listed, will remain. But their old bricks will no longer carry the echo, heard or imagined, of the history and settlement of England—and beyond. + +This article appeared in the Obituary section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21712109-britains-oldest-manufacturing-firm-whitechapel-bell-foundry-announced-its-closure/print + + + + + +文章 章节 下一项 + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Global investment-banking revenue + +Markets + + + + + +文章 章节 下一项 + +Interactive indicators + +Dec 24th 2016 + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21712127/print + + + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Output, prices and jobs + +Dec 24th 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21712112-output-prices-and-jobs/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Trade, exchange rates, budget balances and interest rates + +Dec 24th 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21712113-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +The Economist commodity-price index + +Dec 24th 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21712114-economist-commodity-price-index/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Global investment-banking revenue + +Dec 24th 2016 + + + +Worldwide year-to-date revenues from investment banking were $71bn, down by 7% on the same period a year earlier, according to Dealogic, a data provider. American clients accounted for almost half the total, Europeans for another fifth. Industry revenues from mergers and acquisitions dropped by 3% to $22.9bn, though this remained the most lucrative area. Fixed income was the only activity to see earnings increase. JPMorgan Chase remains first in the revenue league table; it has taken in $5.7bn this year. Deutsche Bank has struggled: it has slipped two places in the rankings and revenues are down by $800m. Equity markets have also been hit: revenues from IPOs have dropped by 29% this year. + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21712115-global-investment-banking-revenue/print + + + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + +Markets + +Dec 24th 2016 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21712111-markets/print + + + + + +上一项 文章 章节 下一项 + + + +Table of Contents + +The Economist [周六, 24 12月 2016] + +The world this week + + + +The world this year + + + + + +KAL's cartoon + + + + + +Leaders + + + +Liberalism’s future: The year of living dangerously + + + + + +Developing-country migration: The hypocrites’ club + + + + + +Internet security: Breaching-point + + + + + +The Chinese economy: Smooth sailing, until it’s not + + + + + +The state of states: Our country of the year + + + + + +Letters + + + +On populism, flags, corporation tax, freedom of press, ketchup, super-consumers: Letters to the editor + + + + + +United States + + + +Disney’s Utopia on the I-4: Yesterdayland + + + + + +Theme parks and technology: Tomorrowland + + + + + +Politics in North Carolina: Ungovernable + + + + + +Lexington: Winning by breaking + + + + + +The Americas + + + +Marijuana in Mexico: Northern lights + + + + + +Argentina’s economy: No growth, no votes + + + + + +Paraguay’s waterways: Ply me a river + + + + + +Asia + + + +Conflict in Myanmar: The Lady fails to speak out + + + + + +Banyan: The politics of taking offence + + + + + +China + + + +China and America: Warning shot + + + + + +History: The mother of invention + + + + + +Middle East and Africa + + + +The Democratic Republic of Congo: There will be trouble + + + + + +“Jungle justice”: Trial by fire + + + + + +Donald Trump and Israel: An American embassy in Jerusalem? + + + + + +Silencing dissent in Syria: Assad’s torture dungeons + + + + + +Europe + + + +Attack in Berlin: The spectre of terror + + + + + +Terrorism in Ankara: Overspill from Syria + + + + + +Christine Lagarde: Grace under pressure + + + + + +Polish politics: Winter of discontent + + + + + +Charlemagne: A warning from the past + + + + + +Britain + + + +Britain and Europe: Six months on + + + + + +The Christmas strikes: Planes, trains and political deals + + + + + +Jailhouse rocked: A prison riot + + + + + +Bagehot: The parable of Spoon’s + + + + + +International + + + +Poor-world migration: The beautiful south + + + + + +Local heroes: Where Malians move + + + + + +Christmas Specials + + + +Our tower: 25 St James’s Street + + + + + +Reindeer: Talo on the range + + + + + +Vienna: City of the century + + + + + +Domesday economics: Brentry + + + + + +Prison tattoos: Crime, ink + + + + + +Postcard from Dandong: Bright lights, big pity + + + + + +Barack Obama: The agony of hope + + + + + +IPA: Beer of the world + + + + + +Cambridge economists: Exams and expectations + + + + + +Mario: It’s-a me! + + + + + +Flashman: The cad as correspondent + + + + + +Adult colouring books: Supercolour factual pictures, stress-free artful process + + + + + +Adult colouring books: Crossword + + + + + +Clothespegs: Mankind in miniature + + + + + +Foreign fighters: Somebody else’s war + + + + + +Sequoias: On a giant’s shoulders + + + + + +Gay bars: Lights out + + + + + +Laboratory mice: Animal factory + + + + + +Silence: The rest is... + + + + + +Business + + + +Indian business: The digit era + + + + + +Work in Japan: White-collar blues + + + + + +Tisn’t the season: The Christmas spending bump flattens + + + + + +Retailing: Following the fashion + + + + + +Schumpeter: Capitalism and democracy + + + + + +Finance and economics + + + +Japanese banks: Low and lower + + + + + +Buttonwood: Seeing through a glass darkly + + + + + +2016 in charts: The year of Brexit and Trump + + + + + +Free exchange: A cooler head + + + + + +Science and technology + + + +Driverless cars: Eyes on the road + + + + + +Particle accelerators: Open, Sesame + + + + + +Neuroscience: Grey mater + + + + + +Books and arts + + + +Astronomy: A secret history + + + + + +Cheese, glorious cheese: Many incarnations + + + + + +Rasputin’s assassination: Foul play + + + + + +Tehran’s Museum of Contemporary Art: Treasure chest + + + + + +Obituary + + + +The Whitechapel Bell Foundry: A curfew tolls... + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Global investment-banking revenue + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.01.07.txt b/homeworks/B20769/homework1/data2/2017.01.07.txt new file mode 100644 index 0000000..67de912 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.01.07.txt @@ -0,0 +1,3741 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Technology Quarterly + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +The world this week + +KAL's cartoon + + + + + +The world this week + +Jan 7th 2017 + +Barack Obama expelled 35 Russian diplomats and imposed new economic sanctions in retaliation against Russian hackers’ interference in America’s election. American intelligence agencies say that Russia released stolen e-mails of Democratic Party officers in order to aid the campaign of Donald Trump. Vladimir Putin declined to strike back, winning praise from Mr Trump. See article. + +A gunman attacked a nightclub in Istanbul during New Year’s Day festivities, killing at least 39 people. Islamic State claimed responsibility. Turkish religious authorities who had criticised new year’s celebrations as un-Islamic condemned the attack. It came two weeks after a policeman shouting “Don’t forget Aleppo!” fatally shot the Russian ambassador to Turkey. See article. + +Relations between Israel and America became strained when John Kerry, the soon-to-retire secretary of state, said that the Israeli government was undermining the prospects for a “two-state solution” with the Palestinians. His comments came soon after America abstained in the UN Security Council vote that criticised Israel’s construction of settlements. See article. + +Politicians in the Democratic Republic of Congo struck a deal in which elections will be organised in 2017 and President Joseph Kabila will step down by the end of the year. Mr Kabila himself has not signed the deal, however. + +Argentina’s president, Mauricio Macri, dismissed the finance and treasury minister, Alfonso Prat-Gay. He left apparently because of disagreements over the structure of the economic team. Mr Macri split the finance ministry into two. Luis Caputo, the new finance minister, will be responsible for borrowing. A new treasury minister, Nicolás Dujovne, will oversee tax and spending. + +A battle between gangs at a prison in the Brazilian state of Amazonas left 56 inmates dead. Some were decapitated; severed limbs were stacked by the entrance. See article. + +Odebrecht, a Brazilian construction company, and Braskem, a petrochemical firm in which it owns a stake, pleaded guilty to bribing officials and political parties to win contracts in Latin American and African countries. The companies agreed to pay a penalty of at least $3.5bn, the largest settlement ever in a global bribery case. + +Stockmarkets had a good 2016. The S&P 500 rose by 10% over the 12 months and the Dow Jones by 13%. The FTSE 100 recovered from its Brexit wobbles to end 14% up; Russia’s RTS index soared after the election of Mr Trump to finish 52% higher; and Brazil’s Bovespa rose by 39%, despite, or because of, the defenestration of the president. But Italy’s main index fell by 10%, and China’s Shanghai Composite never fully recovered from its turbulent start to 2016, ending the year 12% lower. See indicator. + +Donald Trump picked Jay Clayton, a legal expert on mergers and acquisitions, to be the next head of the Securities and Exchange Commission. + +The European Central Bank raised its estimate of the capital shortfall at Monte dei Paschi di Siena to €8.8bn ($9.1bn). The troubled Italian bank has requested a bail-out from the government after running out of time to raise new capital privately. + +Shortly before Christmas, Deutsche Bank agreed to pay $7.2bn to settle with America’s Department of Justice for mis-selling subprime mortgage securities, about half the amount the regulator had initially sought. Credit Suisse agreed to pay $5.2bn to resolve claims. But Barclays rejected a settlement, prompting the department to file a lawsuit. See article. + +Ford made a U-turn when it scrapped plans for a new factory in Mexico to build compact cars, and diverted some of the investment to a plant near Detroit to produce electric vehicles. Ford stressed that this was a commercial decision. Donald Trump had criticised the proposed Mexican factory when he campaigned on the theme of saving American jobs. + +Meanwhile, Paul Ryan, the most senior Republican in the House of Representatives, said that Congress was not going to raise tariffs, portending what may be one of his biggest fights with Mr Trump. + +Luis Videgaray was rehabilitated in Mexico’s government by being appointed foreign minister. Mr Videgaray resigned as finance minister after suggesting that Donald Trump visit Mexico last year, a hugely unpopular move at the time. + +Japan’s prime minister, Shinzo Abe, paid his first visit to the American naval base at Pearl Harbour. He expressed “sincere and everlasting condolences” to those who died in Japan’s attack on it 75 years ago. Soon after, however, his defence minister, Tomomi Inada, paid a visit to Yasukuni Shrine in Tokyo where Japanese war criminals are honoured among the war dead. + +The British government appointed Sir Tim Barrow, a former ambassador to Russia, as its new ambassador to the EU, three months before it is due to trigger negotiations over Brexit. This followed the early exit of Sir Ivan Rogers from the job. His resignation note decried “muddled thinking” by ministers. See article. + +This article appeared in the The world this week section of the print edition + + + + + +KAL's cartoon + +Jan 7th 2017 + + + +More KAL's cartoons + + + +This article appeared in the The world this week section of the print edition under the headline “KAL's cartoon” + + + + + +Leaders + + + + +British politics: Theresa Maybe + +Japan’s economy: The second divine wind + +Trumponomics: Men of steel, houses of cards + +Fixing failed states: First peace, then law + +Conversational computing: Now we’re talking + + + + + +British politics + +Theresa Maybe, Britain’s indecisive premier + +After six months, what the new prime minister stands for is still unclear—perhaps even to her + +Jan 7th 2017 + + + +WITHIN hours of the Brexit referendum last summer David Cameron had resigned, and within three weeks Theresa May had succeeded him as prime minister. The speed of her ascent to power, on July 13th 2016, without a general election or a full-blown Tory leadership contest, meant that Mayism was never spelt out in any manifesto or endorsed by the electorate. Yet the new prime minister soon made clear the scale of her ambitions for Britain. Not only would she make a success of Brexit, she would also set in motion a sea-change in social mobility to correct the “burning injustices” faced by the downtrodden, and reshape “the forces of liberalism and globalisation which have held sway...across the Western world.” Her allies talked of an epochal moment, comparable to Margaret Thatcher’s break with the past in 1979. The feeble condition of the Labour opposition gave Mrs May control of a one-party state. As for her mandate, she cited the referendum: a “quiet revolution” by people “not prepared to be ignored any more”. + +Yet after half a year in office there is strikingly little to show for this May revolution (see Briefing). The strategy for Brexit, which is due to be triggered in less than three months, remains undefined in any but the vaguest terms, and seems increasingly chaotic. At home, the grand talk about transforming society and taming capitalism has yielded only timid proposals, many of which have already been scaled down or withdrawn. The growing suspicion is that the Sphinx-like prime minister is guarded about her plans chiefly because she is still struggling to draw them up. + +The emperor’s new trousers + +Mrs May built a reputation for dogged competence during six years at the Home Office, a tricky beat that has wrecked many political careers. She skilfully survived the Brexit referendum despite backing the losing side. In the abbreviated Conservative leadership race she stood out as the only grown-up; few Tories regret plumping for her over the unprepared and unserious other contenders. In negotiating Brexit, the hardest task for any prime minister since the second world war, she faces a powerful drain on political capital and governmental capacity. Half the country is against the idea and the rest may sour once its drawbacks materialise. Most of the civil servants implementing Brexit think it a mistake. If Britain’s next few years will be about avoiding traps, then the wary tenacity of Mrs May could be just what the country needs. + +Yet caution has started to look like indecision. Her most senior official in Brussels has just resigned, saying that the government does not have a clear Brexit plan (see article). After six months it is hard to name a single signature policy, and easy to cite U-turns. Some are welcome: a silly promise to put workers on company boards, for instance, was abandoned; a dreadful plan to make firms list their foreign employees lasted less than a week; and hints at curbing the Bank of England’s independence were quietly forgotten. Selective “grammar” schools will be resurrected—but only on a small scale, and perhaps not at all, given how many Tory MPs oppose the idea. Other reversals smack of dithering. The construction of a new nuclear plant at Hinkley Point was put in doubt, then given the go-ahead; a new runway at Heathrow airport was all but agreed on, then deferred until a parliamentary vote next year. “Just-about-managing” households were the prime minister’s lodestar for a week or so, then dropped. So were suggestions that Britain would seek a transitional deal with the EU after Brexit—until they were recirculated a few weeks later when Mrs May apparently changed her mind once again. + +The cause of this disarray could be that Mayism itself is muddled. While vowing to make Britain “the strongest global advocate for free markets”, the prime minister has also talked of reviving a “proper industrial strategy”. This is not about “propping up failing industries or picking winners”, she insists. Yet unspecified “support and assurances” to Nissan to persuade the carmaker to stay in Sunderland after Brexit amount to more or less that. Her enthusiasm for trade often sits uncomfortably with her scepticism of migration. Consider the recent trip to India, where her unwillingness to give way on immigration blocked progress on a free-trade agreement. + +A citizen of nowhere + +There is one lesson in the overdone comparison of Mrs May to Thatcher. The woman who really did transform Britain had a shambolic first term; privatisation and union reform, with which she is now associated, did not really get going until after 1983. Angela Merkel also made a shaky start as Germany’s chancellor. Mrs May could yet find her feet—and given the state of Labour, she will have time to do so, if Brexit does not provide her own party with a reason to oust her. + +Yet Mrs May could turn out to resemble another, less obvious predecessor: Gordon Brown. He, too, was thin-skinned. Like her, he moved into Downing Street without an election, in 2007. He also started with a fearsome reputation and big promises. And when it became clear he had little idea what to do with the job he had so coveted, he flopped. The financial crisis paralysed his government because of his desire to micromanage every decision. + +There is more than a little of this in Mrs May. One person can just about run the Home Office single-handed. But being prime minister requires delegation—especially when Brexit looms so large. Care for the elderly is fraying. The National Health Service is running out of money. A housing shortage is worsening. Scotland and Northern Ireland are raising awkward constitutional questions. As long as every proposal has to be pored over by the prime minister, radical decisions of the sort needed to solve these problems will not be taken. To get a grip on Britain, Mrs May must learn to loosen hers. + +For this, she must decide what the grand promises of her government actually amount to. The need for every policy to be agonised over in Downing Street, the secrecy over Brexit and the silence on the government’s broader plans for Britain all point to the same problem: Theresa Maybe does not really know what she wants. + +This article appeared in the Leaders section of the print edition under the headline “Theresa Maybe” + + + + + +The second wind + +The strong dollar has given Abenomics another chance + +But a bottleneck of corporate timidity remains a big problem + +Jan 7th 2017 + + + +JAPAN’S prime minister, Shinzo Abe, was the first foreign leader to meet Donald Trump after his improbable election victory. The photographs show him smiling almost as broadly as the new president-elect. But not even Mr Abe could have guessed how much he would have to smile about. + +The prospect of stronger spending in America, which has raised bond yields and strengthened the dollar against the yen, has rekindled some optimism about Abenomics, Mr Abe’s campaign to lift the economy out of its decades-long stagnation. At the Bank of Japan’s most recent meeting, one policymaker said that the prospects for growth and reflation stand at a “critical juncture”. They likened conditions to those of 2013 and early 2014, when the currency was cheap, the stockmarket was buoyant and inflation was rising. That momentum was not sustained. On its fourth anniversary, Abenomics has found a second wind. But this time Mr Abe must tackle the weak link in his programme: corporate Japan. + +The golden hoard + +The ability of Abenomics to lower borrowing costs, weaken the yen and lift share prices was never much in doubt. The problem is that these gifts to Japanese industry have generated disappointingly meagre increases in domestic investment, wages and consumption. Many firms would rather hold cash or securities than make big capital outlays (although counting R&D as investment, as Japan’s new statistics do, improves the picture). They have also been happier paying one-off bonuses or hiring temporary workers than increasing the base pay of core workers, which would be harder to reverse. Abenomics has run into a bottleneck of corporate timidity. + +Business leaders argue that Japan is an uninviting place to invest, not least because it already has a large stock of capital, paired with a dwindling population (see article). But if the Japanese are an increasingly scarce and precious commodity, corporate Japan has a funny way of showing it. Despite low unemployment, real wages have declined under Abenomics. Last month the boss of Dentsu, Japan’s biggest advertising agency, said he would resign after an investigation concluded that overwork drove an employee to suicide. Japan’s core workers cannot easily be fired, but nor can they easily quit, because their skills and status in a firm are not seamlessly transferable elsewhere. That limits their bargaining power. + +There are signs of change. The investigation and resignation at Dentsu—like the huge losses unveiled by Toshiba, a troubled conglomerate (see article)—may be a paradoxical sign of progress, of problems long hidden now coming to light. The composition of Japan’s workforce is slowly changing, with greater numbers of workers, especially women, on more flexible contracts that are more exposed to market forces, for better or worse. The government’s next budget will help by raising the amount that second earners, usually women, can make before their spouses lose a generous tax exemption. + +But a bigger shove is needed. The government ought to retain a tax exemption for all couples, regardless of how much the second earner makes. It should redesign corporate taxes to discourage the hoarding of profits. If annual wage negotiations in the spring yield disappointing results, blunter options, like big rises in the minimum wage, exist. + +Abenomics has succeeded in stemming deflation during a difficult few years when many other big economies looked in danger of succumbing to it. If the reflationary trend of recent months persists, the global economy may become more supportive of Abenomics. But for Japan to prosper, Japan’s firms must swap caution for courage. + +This article appeared in the Leaders section of the print edition under the headline “The second divine wind” + + + + + +Trumponomics + +The president-elect’s perilous trade policy + +Trump may simply be looking for good headlines. If he is after more, he is likely to suffer an expensive failure. + +Jan 7th 2017 + + + +IT MUST seem to Donald Trump that reversing globalisation is easy-peasy. With a couple of weeks still to go before he is even inaugurated, contrite firms are queuing up to invest in America. This week Ford cancelled a $1.6 billion new plant for small cars in Mexico and pledged to create 700 new jobs building electric and hybrid cars at Flat Rock in Michigan—while praising Mr Trump for improving the business climate in America. Other manufacturers, such as Carrier, have changed their plans, too. All it has taken is some harsh words, the odd tax handout and a few casual threats. + +Mr Trump has consistently argued that globalisation gives America a poor deal. He reportedly wants to impose a tariff of 5% or more on all imports. To help him, he has assembled advisers with experience in the steel industry, which has a rich history of trade battles. Robert Lighthizer, his proposed trade negotiator, has spent much of his career as a lawyer protecting American steelmakers from foreign competition. Wilbur Ross, would-be commerce secretary, bought loss-making American steel mills just before George W. Bush increased tariffs on imported steel. Daniel DiMicco, an adviser, used to run Nucor, America’s biggest steel firm. Peter Navarro, an economist, author of books such as “Death by China” and now an adviser on trade, sees the decline of America’s steel industry as emblematic of how unfair competition from China has hurt America. + +But the steel business is not a model for trade policy in general and companies are capable of being tricksy, too. Mr Trump may simply be looking for good headlines, but if he wants more, his plans threaten to be an expensive failure. + +The miller’s tale + +One reason is that Paul Ryan, the Speaker of the House of Representatives, said this week that Congress would not be raising tariffs. Executive orders are bad politics and can get Mr Trump only so far. Another is that Ford’s plans are not as simple as they look. It will still build its new small car in Mexico—at an existing plant (see article). But above all, Mr Trump gravely underestimates the complexity of messing with tariffs. + +The men of steel are right to complain about China. Its government has indeed subsidised its steelmakers, leading to a glut that was dumped on the world market. Successive American governments have put up tariffs to protect domestic producers (in 2016 the Obama administration placed a tariff of 522% on cold-rolled Chinese steel), as has the European Union. + +Yet this way of thinking fails to deal with the question of whether an ample supply of cheap steel courtesy of a foreign government is really so terrible: it benefits American firms that consume steel—and they earn bigger profits and employ more people as a result. Moreover, trade in most goods and services is not like steel. America’s biggest import from China is electrical machinery. China’s government does not subsidise the overproduction of iPhones which are then dumped on the market, causing iPhone-makers in America to be laid-off. Instead, a smartphone might be designed and engineered in California and assembled in China, using components made or designed in half a dozen Asian and European countries, using metals from Africa. Likewise, every dollar of Mexican exports contains around 40 cents of American output embedded within it. For producers of such goods, tariffs would be a costly disaster. American steelmakers might seek out government protection. Apple and its kind will not. + +This article appeared in the Leaders section of the print edition under the headline “Men of steel, houses of cards” + + + + + +First peace, then law + +How to fix failed states + +Donald Trump should not abandon Afghanistan + +Jan 7th 2017 + + + +EIGHT years ago Ashraf Ghani and Clare Lockhart wrote a book called “Fixing Failed States”. Now Mr Ghani is in a position to follow his own advice. He is the president of Afghanistan, a state that failed in the 1990s and could fail again. + +State failure causes untold misery (see article). Broadly defined, it is the main reason poor countries are poor. Its chief cause is not geography, climate or culture, but politics. Some countries build benign, efficient institutions that foster economic growth; others build predatory ones that retard it. South Sudan is an extreme example of predation. Its politics consist of warlords fighting over oil money. The warlords also stir up tribal animosity as a tool to recruit more militiamen. The state makes Big Men rich while ordinary folk subsist on food aid. + +Ashes to assets + +Afghanistan must overcome several hurdles to avoid the same fate. Since Barack Obama pulled out most of the NATO troops supporting the government, the Taliban, an Islamist militia, has recaptured parts of the country. In the past year it has been fought to a stalemate. But were Donald Trump to withdraw the remaining American forces, the jihadists would probably take over again. The last time they were in power they banned female education, crushed gay people with bulldozers and hosted Osama bin Laden, so the stakes are high. + +As a first step, Mr Trump should maintain at least the current level of air support, training and funding for the Afghan army. He should also ramp up pressure on Pakistan to stop letting the Taliban use its territory as a rear base. (Pakistan insists it is doing all it can; no one believes it.) + +Foreign military support can buy time for a fragile state to build the right kind of institutions. This worked in Sierra Leone and Liberia, two war-scorched African nations where UN peacekeepers gave new governments breathing-space to start afresh. It worked in Colombia, too, where American support helped the government drive back the drug-dealing leftist insurgents of the FARC and force them to the negotiating table, producing a historic peace deal in 2016. However—and this is the lesson of Iraq—good government cannot be imposed from outside. National leaders have to want it and work for it, overcoming stiff resistance from the militia bosses and budget-burgling ministers who benefit from its absence. + +Mr Ghani has the right priorities. First, establish a degree of physical security. Next, try to entrench the rule of law. Both are hard in a nation where suicide-bombers kill judges and warlords grow rich from the poppy trade. Yet he has made progress. The Afghan army is becoming more capable. Tax collection has improved, despite the economic shock of the American troop drawdown. Corruption, though still vast, is being curbed in some areas. + +This is not a side issue. If ordinary Afghans see the state as predatory, they will not defend it against the Taliban. Right now the jury is out: most Afghans are terrified of the Taliban, but trust in the government is low, too. Mr Ghani needs time to implement his reforms; donors must be patient. + +After a civil war ends somewhere, Western donors often pour in more money than the damaged state can absorb, and pull back when results disappoint. NGOs parachute in, poach the best staff with higher wages and form a costly parallel state that will one day pack up and go. This undermines national institutions. It would be better if donors scaled up their largesse gradually, channelled it through national coffers where possible and stuck around for the long run. + +None of this will succeed if a country’s leaders do not want it to. In South Sudan neither of the two main warlords is interested in nation-building, so donors have no one to work with. But in Kabul they do. They should not cut and run. + +This article appeared in the Leaders section of the print edition under the headline “First peace, then law” + + + + + +Now we’re talking + +How voice technology is transforming computing + +Like casting a magic spell, it lets people control the world through words alone + +Jan 7th 2017 + + + +ANY sufficiently advanced technology, noted Arthur C. Clarke, a British science-fiction writer, is indistinguishable from magic. The fast-emerging technology of voice computing proves his point. Using it is just like casting a spell: say a few words into the air, and a nearby device can grant your wish. + +The Amazon Echo, a voice-driven cylindrical computer that sits on a table top and answers to the name Alexa, can call up music tracks and radio stations, tell jokes, answer trivia questions and control smart appliances; even before Christmas it was already resident in about 4% of American households. Voice assistants are proliferating in smartphones, too: Apple’s Siri handles over 2bn commands a week, and 20% of Google searches on Android-powered handsets in America are input by voice. Dictating e-mails and text messages now works reliably enough to be useful. Why type when you can talk? + +This is a huge shift. Simple though it may seem, voice has the power to transform computing, by providing a natural means of interaction. Windows, icons and menus, and then touchscreens, were welcomed as more intuitive ways to deal with computers than entering complex keyboard commands. But being able to talk to computers abolishes the need for the abstraction of a “user interface” at all. Just as mobile phones were more than existing phones without wires, and cars were more than carriages without horses, so computers without screens and keyboards have the potential to be more useful, powerful and ubiquitous than people can imagine today. + +Voice will not wholly replace other forms of input and output. Sometimes it will remain more convenient to converse with a machine by typing rather than talking (Amazon is said to be working on an Echo device with a built-in screen). But voice is destined to account for a growing share of people’s interactions with the technology around them, from washing machines that tell you how much of the cycle they have left to virtual assistants in corporate call-centres. However, to reach its full potential, the technology requires further breakthroughs—and a resolution of the tricky questions it raises around the trade-off between convenience and privacy. + +Alexa, what is deep learning? + +Computer-dictation systems have been around for years. But they were unreliable and required lengthy training to learn a specific user’s voice. Computers’ new ability to recognise almost anyone’s speech dependably without training is the latest manifestation of the power of “deep learning”, an artificial-intelligence technique in which a software system is trained using millions of examples, usually culled from the internet. Thanks to deep learning, machines now nearly equal humans in transcription accuracy, computerised translation systems are improving rapidly and text-to-speech systems are becoming less robotic and more natural-sounding. Computers are, in short, getting much better at handling natural language in all its forms (see Technology Quarterly). + +Although deep learning means that machines can recognise speech more reliably and talk in a less stilted manner, they still don’t understand the meaning of language. That is the most difficult aspect of the problem and, if voice-driven computing is truly to flourish, one that must be overcome. Computers must be able to understand context in order to maintain a coherent conversation about something, rather than just responding to simple, one-off voice commands, as they mostly do today (“Hey, Siri, set a timer for ten minutes”). Researchers in universities and at companies large and small are working on this very problem, building “bots” that can hold more elaborate conversations about more complex tasks, from retrieving information to advising on mortgages to making travel arrangements. (Amazon is offering a $1m prize for a bot that can converse “coherently and engagingly” for 20 minutes.) + +When spells replace spelling + +Consumers and regulators also have a role to play in determining how voice computing develops. Even in its current, relatively primitive form, the technology poses a dilemma: voice-driven systems are most useful when they are personalised, and are granted wide access to sources of data such as calendars, e-mails and other sensitive information. That raises privacy and security concerns. + +To further complicate matters, many voice-driven devices are always listening, waiting to be activated. Some people are already concerned about the implications of internet-connected microphones listening in every room and from every smartphone. Not all audio is sent to the cloud—devices wait for a trigger phrase (“Alexa”, “OK, Google”, “Hey, Cortana”, or “Hey, Siri”) before they start relaying the user’s voice to the servers that actually handle the requests—but when it comes to storing audio, it is unclear who keeps what and when. + +Police investigating a murder in Arkansas, which may have been overheard by an Amazon Echo, have asked the company for access to any audio that might have been captured. Amazon has refused to co-operate, arguing (with the backing of privacy advocates) that the legal status of such requests is unclear. The situation is analogous to Apple’s refusal in 2016 to help FBI investigators unlock a terrorist’s iPhone; both cases highlight the need for rules that specify when and what intrusions into personal privacy are justified in the interests of security. + +Consumers will adopt voice computing even if such issues remain unresolved. In many situations voice is far more convenient and natural than any other means of communication. Uniquely, it can also be used while doing something else (driving, working out or walking down the street). It can extend the power of computing to people unable, for one reason or another, to use screens and keyboards. And it could have a dramatic impact not just on computing, but on the use of language itself. Computerised simultaneous translation could render the need to speak a foreign language irrelevant for many people; and in a world where machines can talk, minor languages may be more likely to survive. The arrival of the touchscreen was the last big shift in the way humans interact with computers. The leap to speech matters more. + +This article appeared in the Leaders section of the print edition under the headline “Now we’re talking” + + + + + +Letters + + + + +Letters to the editor: On China, drugs, management, elections, nuclear power, Japan, the elderly, economists + + + + + +Letters to the editor + +On China, drugs, management, elections, nuclear power, Japan, the elderly, economists + +Jan 7th 2017 + +Letters are welcome via e-mail to letters@economist.com + + + +Snooping on shoppers + +You shone a light on the harrowing implications of the Chinese Communist Party’s “social-credit system” (“Creating a digital totalitarian state”, December 17th). But private industries, too, have implemented a social-credit system. Through Alibaba’s finance arm, for example, Sesame Credit scores people based on their consumption habits and digital behaviour. The score can affect one’s ability to take out a loan, buy movie tickets or even find a significant other (dating firms often require courters to display their credit scores). + +The technology powering such systems has significant benefits for Chinese consumers and the businesses serving them. Alibaba and other Chinese firms make this technology available to market researchers, who use it to assess where a likely customer lives, where they typically shop and how much it costs to get them to a store. This has spurred significant investment in China from multinationals that want a slice of its retail pie, and has also helped China become the largest retail e-commerce market in the world. + +JOE NORA + +Marketing director + +Export Now Digital Solutions + +Shanghai + + + + + +High times + +* Your article on the high price of medicines focused primarily on products that aren’t new (“Drug money”, December 10th). There is a fundamental difference between a company such as Valeant, which slashed R&D while raising prices on old, generic drugs, and true innovators like Gilead, which has provided major advances in HIV therapy and cures for Hepatitis C as a result of its costly, painstaking commitment to bringing medical breakthroughs to patients. + + + +According to IMS, a health-care consultancy, the net growth in prices of branded drugs in the United States was only 2.8% in 2015. The share of spending on retail medicines remains the same as it was a half century ago: about 10-15%. Indeed, spending on all American health care, not just drugs, is around three times that of other developed countries. Yet unlike other components of the health-care system, the biopharmaceutical industry invests a sizeable share of its revenue in developing the next generations of innovative products, which can reduce other health-care costs. + + + +High initial prices for innovative drugs, over a temporary period of exclusivity, are not the problem; they are a prerequisite for encouraging the enormous, high-risk investments needed to cure diseases. Constructive approaches to addressing access to medications include policies that promote the rapid approval of generics, value-based reimbursement, the elimination of excessive drug-price rises and insurance reform that prevents exploitively high deductibles and patient co-pays. + + + +RON COHEN + +Chair + +Biotechnology Innovation Organisation + +Ardsley, New York + + + + + +Ideas management + +One may easily take issue with Schumpeter, who believes that management theorists have gone astray by subscribing to the dead ideas of increasing competition, widespread enterprise, the growing speed of business operations and globalisation (December 17th). For anecdotal evidence disproving Schumpeter, just glance at the article that preceded his column. It was about the competitive success of Zara, a highly entrepreneurial company with a global footprint, and the edge it has attained by adjusting its clothing lines in lightning speed to the most current fashion (“Behind the mask of Zara”, December 17th). + +Ranging more widely, the bone-breaking changes in such industries as retail and media are now reaching finance, with fintech. Ford will become an information-technology company competing at that industry’s speed, using its autonomous cars and the services enabled by the internet of things. The cheap global connectivity of the internet, combined with the large and increasing share of information and knowledge in products, will obviate any political moves towards autarky. + +VLADIMIR ZWASS + +Editor-in-chief + +Journal of Management Information Systems + +Saddle River, New Jersey + + + + + +Election advice for Italy + +Why do you recommend first-past-the-post elections in Italy (“Salvaging the wreckage”, December 10th)? It is an inherently undemocratic voting system. Take the most recent British general election. In 2015 the Conservative Party won 330 seats with only 37% of the total vote, giving it a majority government without an actual electoral majority. The UK Independence Party got just one seat with 13% of the vote, whereas the Scottish Nationalists secured 56 seats with 5% of the vote. + +The single-transferable vote, used in Ireland and Malta, is a better system, because it reflects the will of the electorate and keeps politicians more in tune with their constituents. + +MICHAEL RYAN + +Dublin + + + + + +Nuclear v solar + +I doubt that the El Romero Solar Plant in the Chilean desert would power a city of a million people (Bello, December 10th). In fact, it would power 120,000 Chilean households today, and far fewer in the future, if the forecasts of rapid growth in demand materialise. Globally, electricity consumption far outpaces new solar and wind power. Carbon-free electricity generation as a percentage of overall generation has fallen. This is explained by both the decline of nuclear power and the failure of renewables to make up the difference. + +In the United States alone, five nuclear plants have closed over the past several years. Together they generated as much electricity as all of America’s solar plants and residential installations put together. Many more nuclear plants are at risk of closing in the Western hemisphere without any replacement in sight. + +Clean electricity is likely to continue declining for years to come. Policymakers have been slow to realise that the mandated purchases of heavily subsidised renewables have depressed electricity prices. Even with very low fossil-fuel prices, ageing nuclear plants, which often have remaining lifetimes longer than new solar and wind facilities, are at a disadvantage. Yet they also do not pollute. + +CESAR PENAFIEL + +New York + + + + + +Japan’s broadside + + + +Lexington mentioned that Japan’s new destroyer is named the Izumo (December 10th). The original Izumo was an armoured cruiser that served as the Japanese navy’s flagship in China in the 1930s and 1940s. She saw battle in both the 1932 and 1937 Sino-Japanese wars, shelling Chinese positions from the middle of the Huangpu river in Shanghai. She also sank the last British gunboat and captured the last American gunboat in Shanghai in 1941. + +By giving the new Izumo her name, and, indeed, naming the entire class of ships the Izumo class, Japan is sending a clear message to China. + +DOUG CLARK + +Hong Kong + + + + + +With winter here… + +The British government’s response to the crisis in care for the elderly is, as you say, “Too little, too late” (December 17th). You are also right that funding services for old people through local-government taxes often leaves the councils that need it the most with the least cash. But there is an even greater defect in the system. + +Responsibility for care of the elderly is divided between the National Health Service and local councils, and their interests are usually diametrically opposed. Every elderly person who has to remain in hospital because there is no space in a care home is a financial gain for the council but a considerable cost for the hospital (as well as denying a bed to someone who needs it). The only way to resolve this conflict of interest is to put social care in the community under the control of the NHS. This is perfectly logical as it is a national “health” service not a national “hospital” service. + +DAVID TERRY + +Droitwich, Worcestershire + + + + + +Grouping economists + +Professor Ben-Gad answered your call for a collective noun for economists with the admirable suggestion of “aggregate” (Letters, December 17th). But given the befuddling diversity of economic mantras and economists, that suggestion risks mixing apples and oranges. + +There must be at least two other collective nouns for economists: an inefficiency and a disutility. + +DONALD NORBERG + +Sturminster Newton, Dorset + +* Letters appear online only + +This article appeared in the Letters section of the print edition + + + + + +Briefing + + + + +Theresa May: Steering the course + + + + + +Navigating the landscape of Brexit + +Assessing the first six months of Theresa May + +Understanding Britain’s unelected prime minister and her prospects means grasping her background and character + +Jan 7th 2017 | CHURCH ENSTONE AND MAIDENHEAD + + + +AS A student at Oxford, Theresa May looked like a typical ambitious young Tory. The daughter of a vicar, she had been stuffing envelopes for her local Conservative association for years. She was a member of the Oxford University Conservative Association; it was at one of its discos that Benazir Bhutto, later the prime minister of Pakistan, introduced her to the man she would marry. She also joined the Oxford Union, a debating society where politicians in embryo learn to speechify, ingratiate themselves and stab each other in the back. She told a tutorial partner that she wanted to be prime minister. + +Yet various things distinguished her from the classic Tory hack. For one, she did not read philosophy, politics and economics (PPE), the course designed to train future elites. She read geography. For David Willetts, who was minister for universities in the 2010-15 coalition government in which Mrs May was home secretary, this distinction is more than incidental. + +He notes that PPEists (like David Cameron, Mrs May’s predecessor, and indeed Lord Willetts) tend to concentrate on Britain’s sectoral strengths—its booming service industries, its great universities, the City—whose success might trickle down to poorer areas, or into whose orbit residents of poorer areas might be persuaded to move. By contrast Mrs May cares about places, their preservation and people’s attachment to them, an attitude which makes her particularly concerned with down-and-out areas that need help picking themselves up. + +In this she is well-suited to her times. Britain’s vote for Brexit (the responsibility for whose realisation she inherited from Mr Cameron) was partly a cry of protest by parts of the country that felt left behind, excluded from its successes, or overwhelmed by rapid change. It showed how much people’s sense of belonging in the place where they live mattered to them, and the value they placed on stability and order. The prime minister’s talk of reviving manufacturing, reducing immigration and tackling corporate excess plays well to such feelings. The public likes her considerably better than it did Mr Cameron two years into the previous parliament, and much better than the lamentably led Labour Party (see chart). In a YouGov poll published on January 3rd, every region, every social class and every age group said she would be a better prime minister than Jeremy Corbyn, the Labour leader. + + + +The outlook, education and character of a leader always matter; but with Mrs May they matter more than usual. Most prime ministers travel on tracks of tradition, convention and precedent. The legal, political, economic and diplomatic complexities of Brexit have put paid to that. A costly and possibly bitter divorce must be negotiated. Trade deals with the remainder of the EU, and possibly the rest of the world, must be struck. A new immigration regime must be established, economic shocks contained, partners reassured, Scotland held in the union, peace in Northern Ireland preserved and painful fractures in British society closed. There are no precedents. It is for Mrs May to create her own; to make choices that dwarf most of those that confronted her predecessors. + +A prime minister who had won a general election, or even a contested party leadership campaign, would have had to give some sense of how she would make such choices. But Mrs May has done neither of those things. Thus for an idea of how she reads the lay of the unknown land ahead, and how adept she will prove at navigating it, it pays to look closely at who she is and where she came from. + +Onward Christian soldiers + +Mrs May was born in 1956 to the Reverend Hubert Brasier and his wife Zaidee. When she was a girl her father became vicar of St Kenelm’s in Church Enstone, a cinematically idyllic huddle of golden stone houses amid the drystone walls and rolling fields of the Cotswolds. Her ecclesiastical upbringing has prompted comparisons to Angela Merkel (whose father was a Lutheran pastor in East Germany) and Gordon Brown, Tony Blair’s successor as Labour prime minister (whose father was a Presbyterian minister in Fife, near Edinburgh). All three grew up in households dominated by the moral and practical duties imposed by the life of the church; all were thereby furnished with an unflashy, serious and cautious character. + +Her vicarage childhood lives on in Mrs May’s very English traits. She drinks Earl Grey tea, reads Jane Austen, watches James Bond films, regularly attends church in her constituency (Maidenhead, a posh town in the Thames valley) and adores cricket. Echoes of this can be seen in her leadership. Anglicanism often combines stormy, kingdom-of-God language with a restrained conservative culture: hymns about crusaders and the devil belted out before tea and biscuits. In her first months as prime minister Mrs May, too, has been bolder in her rhetoric than in her actions—big ideas have received little follow-through, or been dropped altogether. There is a touch of her cricketing hero, Geoffrey Boycott, about her too. It is hard not to detect her admiration for the stolid style of the Yorkshire batsman in her matter-of-fact demeanour. When her aides say “She just gets on with the job” it is the sort of praise their boss would like. + +A social reformism rooted in her Anglican upbringing and practice (“part of who I am and therefore how I approach things”, she has said) has been a constant of her career. When the voters of Maidenhead first sent her to Westminster in 1997 she was, in this respect, to the left of her party. In 2002 she warned her colleagues and their supporters that they had become known as “the nasty party”. The following year, as shadow transport minister, she argued for more state intervention in the economy, a more nuanced relationship with trade unions and limits on fat-cat excesses. + +All of this lives on in her premiership. When, having lost the Brexit referendum, Mr Cameron resigned, Mrs May enumerated the inequities of modern Britain as she launched her campaign to succeed him: boys born poor die nine years earlier than others; children educated in state schools are less likely to reach the top professions than those educated privately; many women earn less than men. + +When she became prime minister she repeated some of these “burning injustices” on the steps of Downing Street. She has talked up a new generation of state-run grammar schools (schools, like the one she attended, that are allowed to select their pupils through competitive exams) to give clever children from poor backgrounds a leg up. She has hinted at worker representation on company boards; she has lamented the effect of the Bank of England’s low interest rates on savers. + +Mrs May patently stands apart from many of her colleagues in ways that go beyond this reformism; there is a social distance, too. Some say it has to do with the isolating shock of losing both of her parents when she was relatively young. Others cite her experience of diabetes—the prime minister must inject herself with insulin several times a day. But the best explanation is her career as a woman educated at a provincial grammar-school (the granddaughter of domestic servants, no less) in a party dominated by public-school boys given to cavalier confidence and clever-clever plans. When her allies praise Mrs May’s methodical style and her disdain for chummy, informal “sofa government”, they are channelling her long-held exasperation with the know-it-all posh boys—particularly Mr Cameron and George Osborne, his chancellor. + +The prime minister has little time for the parliamentary village, avoiding its bars and tea rooms, declining dinner-party invitations in London—let alone in Brussels, or Washington, DC. She is the opposite of cosmopolitan. “If you believe you’re a citizen of the world, you’re a citizen of nowhere,” she told her party conference in October. She struggles with the small talk that oils diplomatic (and cabinet) wheels. The European Council summit on December 16th saw the prime minister fiddling awkwardly with her cuffs as fellow leaders air-kissed behind her. She is far more at home in her constituency on the banks of the Thames. Her house in the village of Sonning sits by what Jerome K. Jerome, a Victorian humorist, described as “the most fairy-like little nook on the whole river”. Here, in her natural habitat, she is by all accounts witty, relaxed and gregarious. + +Ordering their estate + +Mrs May’s time running the Home Office, a department institutionally obsessed with order and control, earned her a reputation for inscrutability, formality and obsession with detail (“she was always asking for more papers in her red box,” says one lieutenant). She worked well with people with whom she had things in common, like Lynne Featherstone, the Liberal Democrat minister whose commitment to introducing gay marriage she shared. But she excluded and ignored those—like Jeremy Browne and Norman Baker, Ms Featherstone’s two successors in the department—with whom she did not. + +She clashed with Michael Gove, then the education secretary, over measures to deal with extremism in schools and with Mr Osborne over immigration—she wanted to tighten up Britain’s student visa regime. She was typically one of the last ministers to agree on her department’s budget in the annual financial round. She also had a run-in with Boris Johnson, then mayor of London, over three water cannon he bought without seeking the Home Office’s necessary—and, in the event, withheld—approval. The incident serves her inner circle as a house parable showing the perfidy of civil servants (who talked Mr Johnson into the idea), the folly of ill-scrutinised decisions, the danger of informal structures and the comeuppance of those who do not do things Mrs May’s way. + +In Downing Street Mrs May has imposed the centralised, formal working practices that she honed at the Home Office. The day is governed by the 8.30am meeting, a shoeless free-for-all under Mr Cameron that now has a strict invitation list. Blue-sky thinking and speculation about the headlines that evening are out; firm instructions to staffers are in. In the prime minister’s office a table and chairs (and vases of hydrangeas) have replaced the sofa. Ministers and staffers must submit papers earlier than under Mr Cameron, to allow her to work through them late in the evening (he would do them the next day). The whole machine is run by a small, powerful team centred on her two chiefs-of-staff, Fiona Hill and Nick Timothy. + +Cabinet and sub-cabinet meetings are venues for serious discussion, not Potemkin forums with pre-decided outcomes. Having for the most part distributed ministerial portfolios evenly between Leavers and Remainers, Mrs May appointed three people who, unlike her, campaigned for Brexit to the departments most concerned with bringing it about—Mr Johnson to the Foreign Office, Liam Fox to a new Department for International Trade and David Davis to a new Department for Exiting the EU. Giving the Brexit-related jobs to paid-up Brexiteers insulates her from criticisms of not supporting the policy. It also cannily reduces the chance of a single Brexiteer emerging as a rival if the process’s outcome disappoints the diehard Leavers. + +One minister says that, whereas the cabinets of Mr Blair and Mr Brown were furious power struggles, and Mr Cameron’s cabinets mostly shams, Mrs May’s cabinet features open discussions in which the prime minister really listens. Another claims that she is more interested in evidence than her predecessor was and praises the fluency with which she shifts between subjects. Acolytes insist that the mighty chiefs-of-staff produce decisions that have been properly tested (not so under Mr Cameron) without prime ministerial overload (not so under Mr Brown). + +Most of all, though, these arrangements give the prime minister what she most covets: control. Even close allies call Mrs May a control freak—and as is often the case, the freakery comes at the expense of trust and efficiency. The “Nick and Fi” filter on policies creates a bottleneck delaying urgent measures (new funding to soothe the social-care crisis was unveiled almost a month later than planned). Apparent priorities—like those grammar schools—have failed to turn into flagship policies. The suggestions of workers on boards, government meddling in monetary policy and obligations on firms to list their foreign workers have all come to nothing. More regrettably, so have hints of big new infrastructure investments and house-building schemes. Westminster feels dead. + +Comments by ministers have been disowned, the Treasury feels sidelined, diplomats believe they are ignored. When a consultant’s memo to the Cabinet Office criticising Mrs May’s leadership style leaked, the prime minister reportedly demanded that Deloitte, the firm in question, be “punished”. It has since withdraw from a series of bids for government contracts, and ministers’ e-mails and phone records are to be seized to prevent further leaks. Even the queen has reportedly grumbled about Mrs May’s slogan-heavy furtiveness about how Britain will leave the EU. + +Indeed, six months after coming to power all the prime minister can say on that subject is that “Brexit means Brexit” and that it will be “red, white and blue” (ie patriotic, rather than Caucasian, bloodied and bruised). Her fear of losing control explains why, instead of holding a simple parliamentary vote on triggering Article 50 of the EU Treaty (the process by which Britain will leave the union), she stubbornly plunged into a legal bunfight to prevent it. As the Deloitte memo put it, she seems to have no coherent plan for Brexit, her government is “struggling” and still she is prone to “drawing in decisions and details to settle matters herself”. + +Some confirmation of this came on January 3rd when Sir Ivan Rogers, Britain’s ambassador to the EU, left his job ten months early. In a leaked e-mail he took aim at “muddled thinking” on Brexit (see article). He is not the first senior civil servant to leave early; Helen Bower, the respected chief spokeswoman at 10 Downing Street, went first. A senior minister in the upper house, Jim O’Neill, has also walked out. + +All of which is a reminder that, although the Labour Party’s disarray makes Mrs May look unassailable, her position is not entirely safe. She has a very small parliamentary majority and the Conservative Party has a knack for regicide. It looks quite likely that the Brexit talks will founder; Mrs May insists that she wants to maintain certain economic benefits of EU membership but end free movement of labour, a deal deemed unthinkable in Brussels. That could lead to economic chaos and expose her to a challenge from Mr Osborne, who is remaking himself as the backbench standard-bearer for liberal Toryism. Alternatively, a final deal could involve trade-offs unpalatable to her most keenly Brexiteer MPs, who would then cut up rough. + +When things start to go south the defensive and needlessly belligerent tone shown in her tenure to date will serve her ill. For most of her end-of-term grilling by the liaison committee—a panel of MPs which scrutinises the government—she wore an aquiline scowl, quibbling with the questions and, when pushed, cleaving to evasive platitudes: “I gave the answer I gave.” Mr Boycott, one feels, might approve such dogged defensiveness; but few would look to him for lessons on team building. + +Very well, alone + +On coming to power it was not enough for Mrs May to fire Mr Osborne and Mr Gove: she capriciously gave each a dressing down in the process. Close observers say she is allergic to cutting deals and that in cabinet she sees eye-to-eye only with ministers who, like Philip Hammond, her chancellor, and Damian Green, her welfare secretary (and the husband of her Oxford tutorial partner), she has known for decades. Her sporadic attempts to lighten up are hit-and-miss: her frequent public mockery of Mr Johnson is making an enemy of him—and feels weird coming from the woman who gave him his powerful job in the first place. + +Many a conflict, many a doubt + +There may be lessons as to Mrs May’s possible longevity and success from her fellow children of the cloth, Mr Brown and Mrs Merkel. Mr Brown, whose brief premiership was dominated by the global financial crisis, never unified his party and was up against a strong opposition led by Mr Cameron. Mrs Merkel has faced crises, too—but for more than a decade has grown through them, outwitting or co-opting her opposition, maintaining unquestioned supremacy in her party. + +Like Mrs Merkel, Mrs May has seen off rivals through canny manoeuvring; she bides her time, knowing when to speak up and when (as in the referendum campaign) to stay quiet. Like Mr Brown, she is prone to overblown rhetoric, irritability and indecisiveness. The biggest worry, though, is that she may also share his inability to adapt—the key difference between Mr Brown and Mrs Merkel. + +Mrs May shows few signs of the ability to assimilate the new that has made Mrs Merkel so successful. Her vision of leadership, it seems, is focused on giving statements, installing processes, gathering up information and control—and little else. This makes it worryingly easy to imagine the Britain of 2018 or 2019 in disarray: her party in revolt, her ministers and partners alienated, her government sclerotic, Brexit talks breaking down, the economy tanking and Number 10 in bunker mode. + +For there is more to leadership than Mrs May’s procedures. There is also what Peter Hennessy, a contemporary historian, calls “the emotional geography” of power. This means adapting to events and institutions, building networks and—yes—being judiciously informal sometimes: a dose of instinct, a snap decision, a deal cut, a risk taken on a wing and a prayer. It means sharing information, accepting dissent, seeking alternative opinions, staking out a position and persuading people of it. It is this emotional landscape that Britain’s geographer prime minister must master, if she can. + +This article appeared in the Briefing section of the print edition under the headline “Steering the course” + + + + + +United States + + + + +Inequality: Fat tails + +Congressional ethics: Old bog, new tricks + +Recruiting police officers: The force is weak + +Gun laws: Still standing + +Charleston’s new museum: Cobblestones and bones + +Markets for tickets: Battling bots + +Lexington: Learning to love Trumpism + + + + + +Fat tails + +Inequality or middle incomes: which matters more? + +Far from ignoring middle-earners, America’s government spends freely on them + +Jan 7th 2017 | WASHINGTON, DC + + + +A PUZZLE exists where America’s economics meet its politics. Income inequality is higher than in other rich countries, and the recent election was interpreted by many as the revenge of the left-behind, who found their champion in Donald Trump. Yet the candidate who made income inequality a campaign theme, wanted higher taxes on the rich and promised more financial regulation lost. Since the election, Mr Trump has nominated a cabinet with a combined net worth of over $6bn, by one estimate. He has invited the bosses of big corporations to advise him on economic policy. And he has filled key White House posts with Goldman Sachs alumni. The riches of top earners do not seem to bother voters nearly as much as many on the left would like them to. + + + +In fact, some argue that a focus on inequality actually harmed Democrats’ chances. Most of the rise in inequality happened over a decade ago (see chart 1). Polls usually suggest that Americans care less about inequality than they do about economic opportunity. And voters have reason to worry about stagnation in the middle-classes. Median weekly earnings, adjusted for inflation, were the same in 2014 as they were in 2000. Health-insurance premiums have soared. A recent paper by Raj Chetty of Stanford University and colleagues documents the “fading American dream”. In 1970 more than nine in ten 30-year-olds earned more, in inflation-adjusted terms, than their parents did at the same age. In 2014 only half did. + +Democrats, the logic goes, focus too much on helping the poor and taxing the rich, ignoring justified feelings of abandonment in the middle. But there is another half to the political argument: the potent charge that government redistribution also picks the pockets of the hard-working middle, offering welfare to the feckless poor. This suspicion of redistribution explains how Mr Trump could run simultaneously as populist insurgent and as champion of huge tax-cuts for the highest earners. + + + +The idea that government has exploited the middle may seem to explain a lot politically, but it is not true. Much federal policy benefits middle earners more than the poor. One example is the tax-deduction for mortgage-interest payments. This handout currently costs slightly more than the earned income tax-credit (EITC), the flagship anti-poverty programme that tops up poor workers’ earnings. Yet it benefits only those who can afford to own their home (the bigger the mortgage, the more generous the deduction). Another example is the tax exemption for employer-provided health insurance. Unlike the mortgage-interest deduction, this does help many poor workers. But it benefits the middle more, and this disparity has become sharper in recent decades as insurance has become more expensive (see chart 2). + +Handouts to the relatively well-off do not end with tax exemptions. Ignoring public pensions, America’s biggest federal redistribution programme is Medicare, which offers free health insurance to over-65s of any income. Much Medicare spending, which totalled $589bn (around 3% of GDP) in 2016, benefits the middle class, notes Gabriel Zucman of the University of California, Berkeley. With Thomas Piketty and Emmanuel Saez, two other economists, Mr Zucman recently produced new estimates which harness GDP data to improve the familiar figures from surveys and tax returns. They find that the incomes of those in the 50th to 90th income percentiles have grown by 40% since 1980, more than previously thought, thanks to growing tax exemptions. The poorer half of Americans pay roughly as much in taxes as they receive in cash redistribution, in spite of the EITC. + + + +Before the financial crisis, government redistribution kept median incomes rising even as wages stagnated (see chart 3). Since then it has kept incomes flat as wages have fallen. By 2013 median household income before taxes was 1.6% lower than it was in 1999. But after taking off taxes and adding in government transfers, it was fully 13.7% higher. More recent data suggest that even pre-tax incomes are now growing again: they were up by 5.2% in 2015. + +The economic safety net for the poorest, however, remains perilously thin by international standards. A typical jobless married couple with two children can expect a welfare income, including the value of food stamps, worth 23% of median pay. The average in the OECD, a club of mostly rich countries, is 40%. Partly as a result, relative poverty is higher than every other member of the club bar Israel. This looks even worse as the lower-paid have borne the brunt of rising inequality. Messrs Piketty, Saez and Zucman find that the trend since 1980 can be summarised as a shift of 8% of national income from the bottom half of earners to the top 1%, with no effect on those in between. + +That all still leaves those whose earnings place them between the middle and the poor. Median household income in 2015 was nearly $57,000. Exit polls suggest that Mr Trump lost among voters with incomes beneath $50,000, as a Republican presidential candidate would be expected to. But he did much better with such voters than Mitt Romney did in 2012. The positive swing might be thought of as a revolt of the lower middle. However, it was largest among those with incomes beneath $30,000. Most of these voters are probably in the poorest fifth of households, though some may previously have held more lucrative jobs. The Pew Research Centre estimates that the middle class, defined as those with incomes between two-thirds and twice the median, shrank from 55% of the population in 2000 to 51% by 2014. + +Reaganite or kryptonite? + +Inequality will rise if Mr Trump succeeds in slashing taxes for the highest earners, as it did after Ronald Reagan’s tax cuts in the 1980s. Then, the labour market was about to bifurcate into winners and losers from globalisation and technological change. Today, rising inequality in wealth, rather than in wages, might be a bigger concern. Mr Zucman and his co-authors find that a boom in investment income at the top has driven inequality since 2000. A recent compendium published by the Russell Sage Foundation warns of growing differences in wealth even among those who are not rich. Mr Trump’s plan to reduce taxes on capital returns and abolish them on inheritance could exacerbate these trends, much as the Reagan income-tax cuts coincided with growing disparity in wages. + +The effect of Mr Trump’s economic policies on median incomes will depend on whether they encourage firms to invest, boosting workers’ productivity. Historical evidence is not encouraging: median earnings barely grew in the 1980s. But if wages continue their recent recovery, Mr Trump is sure to claim the credit. And, unlike his party, Mr Trump has shown little appetite to curb spending on the middle class. A very rich elite, high poverty and plentiful government spending on the middle could make Mr Trump look like a continuity candidate after all. + +This article appeared in the United States section of the print edition under the headline “Fat tails” + + + + + +Swamp news + +Republican congressmen retreat from an attempt to gut the Office of Congressional Ethics + +Or, how to lose votes and irritate people + +Jan 7th 2017 | WASHINGTON, DC + + + +AS THEIR first major initiative of the new year, Republican congressmen announced a scheme so crassly self-interested as to suggest they had learned nothing from the old one. Denizens of a reviled institution, and a party railroaded by Donald Trump’s populist insurgency, they planned to gut the Office of Congressional Ethics (OCE), an independent investigative body designed to root out corruption. Less than 24 hours later, after a hail of condemnation, they turned tail; even so their bungling was damning. + +The OCE was founded by the Democrats in 2008 after a run of scandals—including a big one concerning the Republican lobbyist Jack Abramoff—highlighted the impunity with which some lawmakers were abusing their office in exchange for campaign contributions. The office is empowered and equipped to investigate allegations of impropriety. It may then report its findings to the House Ethics Committee and, even if that body decides to take no further action, publicise them. Anti-corruption campaigners consider it a bulwark against official corruption. Many congressmen consider it unjust and wasteful. + +Several who have been subject to the office’s inquiries were involved in the effort, at a closed-door meeting of Republican congressmen, to nobble it. They included Blake Farenthold of Texas, who was investigated and exonerated by the office over an allegation of sexual harassment. The plan was to put the OCE under congressional control and limit the scope of its investigations and its ability to publicise its work. Paul Ryan, the Republican Speaker of the House of Representatives, warned against this; the plan was nonetheless approved, by a vote of 119 Republican congressmen to 74. + +Mr Trump, no doubt aware of how badly this was playing, offered a measured criticism of the congressmen’s initiative. In a tweet, he called the OCE “unfair” but suggested his Republican colleagues had bigger things to be getting on with. A deluge of negative comments received at their district offices made that point more forcefully. So did Senator Lindsey Graham of South Carolina, who called the attempted takedown of the OCE “the dumbest frickin thing I’ve ever heard”. On January 3rd, the opening day of the new Congress, the plotters hastily agreed to leave the OCE alone after all. + +This delivered an easy triumph to Mr Trump, whose tweet was credited by many headline writers with having persuaded the congressmen to change course, albeit without much evidence. It also showed those lawmakers to lack self-awareness to an amazing degree. If the OCE is not working well, they should start a debate—in and with the public—about how better to investigate and prevent their abuses. To avoid an unnecessary partisan fight, they also plainly need Democratic support. This is basic politics. Republican congressmen should really learn how to do it. + +This article appeared in the United States section of the print edition under the headline “Old bog, new tricks” + + + + + +The force is weak + +Police departments struggle to recruit enough officers + +A stronger economy is partly to blame + +Jan 7th 2017 | LOS ANGELES + +No college required + +STAR WARS can be used to sell almost anything, from Lego to a career in policing. Fort Worth’s police department released a recruitment video on its Facebook page in December featuring an officer at target practice with a stormtrooper. The white-clad soldiers are notoriously poor shots, and the video shows the galactic GI missing every attempt he makes until he creeps so far forward that his goggles are very nearly touching his target. When the exasperated officer asks “who referred you to us?” Darth Vader peeks out from the back of the room, shaking his helmeted head in disgust. The scrolling text at the end of the video, which has garnered 17m views thus far, urges: “Join our Force! If you have what it takes to be a Fort Worth Police Officer and are a better aim than a Stormtrooper.” The advert underscores a serious problem affecting police forces nationwide. Economic and social changes have made it harder for police departments to keep their forces fully staffed, and lead to increasingly desperate recruitment. + +The Los Angeles Police Department was short of nearly 100 officers as of mid-December—only 1% of its total workforce, but still enough to be felt on the ground, says Captain Alan Hamilton, who runs recruitment for the department. Philadelphia had 350 vacancies, largely due to a spate of retirements. Last spring, Dallas cancelled two academy classes for lack of applicants; its preliminary applications dropped by over 30% between 2010 and 2015. In 2012, the ratio of police officers to population hit its lowest level since 1997, according to Uniform Crime Reporting Programme data published by the FBI. + +The dynamics underpinning the shortages vary by department, but there are national trends making it harder for police forces to attract applicants. The first is a strong economy. Nelson Lim, a researcher at the RAND Corporation, a think-tank, says this is nothing new. When plenty of jobs are available, people are usually less motivated to enter dangerous professions. Police forces as well as the armed forces tend to field less interest in boom times. + +The second is the perception of increased danger associated with policing: 135 officers were killed in the line of duty between January 1st 2016 and December 28th 2016—a 10% increase from 2015 but fewer than the 192 killed in 2007. Shooting deaths increased from 41 to 64. Several of them were high profile and gruesome, such as the assassination of five Dallas police officers in July 2016. “When you look around the nation and you see the acts of violence directed at police officers—it makes people reluctant to join. Many people join the profession when they’re 22 or 23 when parents still have a heavy influence,” says Scott Walton, deputy chief in Dallas, though sympathy can also boost recruitment. Dallas has seen an uptick in applications since its officers were attacked. + +The last is the image of policing. The deaths of several unarmed black men at the hands of police officers and the ensuing backlash seem to have made police work less appealing. “We have a situation where law enforcement is being scrutinised more heavily,” says Mr Hamilton of the LAPD. According to Gallup, a polling organisation, trust in law enforcement generally has remained fairly stable since it began surveying the topic in 1993. But according to data collected by Harris, another polling group, the share of both whites and blacks who believe that African Americans are discriminated against by the police has risen markedly between 1969 and 2014. + +Baltimore Police Department’s officer shortage led it to Puerto Rico in search of fresh faces. The department also mulled relaxing its stance on past marijuana use. Chicago has cut its minimum age requirement for its police academy from 25 to 21. Several departments have lowered educational requirements for recruits. If President-elect Trump follows through on his promises to beef up military and infrastructure spending, the plight of police departments might worsen, worries Mr Lim. The armed and police forces tend to compete for applicants. If more jobs become available in industry and construction, putting on a badge might become even less appealing to young workers. + +This article appeared in the United States section of the print edition under the headline “The force is weak” + + + + + +Gun laws + +A study by the Journal of American Medicine suggests stand-your-ground laws result in more fatal shootings + +Florida saw a sudden and sustained rise in the homicide rate of 24% after introducing one + +Jan 7th 2017 + + + +With the stroke of his pen in 2005, Jeb Bush, then governor of Florida, ignited enthusiasm for “stand-your-ground” laws. Citizens who “reasonably believed” their lives to be threatened were given the right to “meet force with force, including deadly force”— even in public places and, critically, without the duty to try and retreat first. More than 20 states have passed similar laws since then. Critics warned that, rather than protecting self-defence rights as intended, the bill would result in unnecessary deaths. Research published in the Journal of the American Medical Association appears to vindicate those fears. Soon after the law took effect in Florida, there was a sudden and sustained 24% jump in the monthly homicide rate. The rate of homicides involving firearms increased by 32%. The authors found that in states without a stand-your-ground law over the same time period those rates remained flat, suggesting that a nationwide crime wave was not to blame for the abrupt increase. + + + +This article appeared in the United States section of the print edition under the headline “Still standing” + + + + + +Remembering the slave trade + +Charleston’s planned International African American Museum will fill in a gap in American history + +Perhaps 40% of the slaves brought to America came through Gadsen’s Wharf in Charleston + +Jan 7th 2017 | CHARLESTON + +Smalls by name, big in daring + +JUST inside the gates of the Unitarian Church in Charleston sits a slab of salvaged bricks. Affixed to the front is a metal bird looking backwards—a West African symbol, a plaque explains, which means “learning from the past in order to move forward”. An inscription dedicates the monument to “the enslaved workers who made these bricks and helped build our church.” The church is off most tourists’ trails, so many miss the memorial. But an overdue museum aims to spread its frank message more widely. + +Like much of the South, for a long time the city glossed or downplayed the abomination that made it rich and left it beautiful. Visitors to its grand townhouses, or to the sumptuous plantation mansions nearby, might be shown suspiciously well-appointed “servants’ quarters”. The conflict known as the “war between the states” was not, repeat not, fought over slavery. There is more honesty these days; the trade in human beings is documented in a small exhibition in an old slave mart. But such acknowledgments are not commensurate with the role the institution once played in Charleston, and Charleston in it. Rose-tinting continues. As Michael Boulware Moore, boss of the planned International African American Museum (IAAM), says, for many the plantations are less “places of horrific inhumanity” than picturesque backdrops for weddings. + +The IAAM’s progenitor was Joseph Riley, Charleston’s mayor for four decades until last year. He announced the idea in 2000, aiming to remedy an amnesia he describes as “a societal defect in America”. (In the 1970s his outreach to the black community earned him the sobriquet L’il Black Joe: “an honour”, he now says.) Serendipitously, he recalls, the city was able to acquire “one of the most sacred sites of African-American history in the Western hemisphere”, the location of Gadsden’s Wharf, where perhaps 40% of the slaves imported to America first set foot on the mainland. Overall Charleston’s wharfs accounted for around half of those arrivals. As Mr Riley says, nowhere else in the country was as important to slavery, and “no place has more of a duty” to remember it. He is helping to raise the $20m needed for the project to meet its target of $75m. + +When the museum opens in 2019—the 400th anniversary of the first slave ship to land in the colonies—its “greatest artefact”, says Mr Moore, “will be the ground.” The building will duly be raised on pedestals, the waterfront windows affording views of the Cooper River and out towards Fort Sumter, where the civil war began in 1861. That setting is one of the features Mr Moore says will differentiate it from the new African-American museum in Washington (the two share an exhibit designer). So, he hopes, will its emphasis on genealogical research, a bid to fill some of the gaps scoured by enslavement, plus its interest in Africa itself. Some locals, he says, fear that, in a rapidly gentrifying environment, the IAAM might “pimp black history”. On the contrary, says Mr Riley, it will tell the “unvarnished, harsh story” of the country’s “original sin”, including the roughly 700 people who froze to death in a warehouse near the wharf in the winter of 1807-08. + +Yet along with the horror, promises Mr Moore, the museum will commemorate the skills and accomplishments of slaves and their descendants, reassuring black youngsters that “there are heroes who look just like them”. One such is his own great-great-grandfather, Robert Smalls (pictured), who in 1862 won his freedom by commandeering a Confederate steamship and delivering it to the federal fleet. Later he was elected to Congress and bought his former master’s house. A century and a half after his escapade, two markers were erected in Charleston in his honour. One was promptly vandalised. + +This article appeared in the United States section of the print edition under the headline “Cobblestones and bones” + + + + + +Why you can’t get a ticket for “Hamilton” + +The war on ticket bots is unlikely to be won + +In 2016, bots tried to buy 5bn tickets, or 10,000 a minute, on Ticketmaster’s website + +Jan 7th 2017 | NEW YORK + + + +“HAMILTON”, the hip-hop Broadway musical about one of America’s founding fathers, has broken all sorts of box-office records. Demand is high because it is exceptionally good. But this is not the only reason tickets are so scare. Every time the show’s producers release a new block to sell, they immediately get snapped up by “ticket bots”, high-speed ticket-buying software. The bots cut the virtual queue, manipulating and paralysing sites like Ticketmaster before real people can get a look-see. Jeffrey Seller, “Hamilton’s” producer, has called bots “computerised cheaters”. + +Despite Mr Seller working with Ticketmaster—which runs software in an effort to stop bots—to get tickets into the hands of real fans, too many tickets end up on secondary market websites for substantially inflated prices. According to Ticketmaster, about 60% of the hottest tickets are bought by bots. A single broker, using a bot, purchased 1,012 to a 2014 U2 concert in under a minute, despite the venue limiting sales to four tickets per customer. By the end of the day, that same broker had purchased 15,000 tickets. Even tickets for free events, like Pope Francis’s visit to New York in 2015, were gobbled up by bots and sold for thousands of dollars on secondary sites. + +Last month President Obama signed legislation which aims to eliminate bots and intends to slap hackers with hefty fines. Under the new law, the Better Online Ticket Sales Act, the federal government can also intervene and file suit on behalf of people shut out of buying tickets because of bots. The law has support from across the industry, including Stubhub, a secondary marketplace. Stubhub does not sell anything directly, but takes a transaction fee. Jeremy Liegl, a lawyer at Ticketfly, which sells and promotes music events, said during a congressional hearing that bots harm everyone in the music industry except for the bots’ operators. The ticket markups end up in the pockets of the bot operator, not the promoter, not the venue and not the performers. + +But the secondary market, worth as much as $8bn worldwide, may be too valuable for virtual scalpers to give up. Federal law enforcement may be unable to hunt down bot-operators based outside America. And the scale of the racket is daunting. Last year bots made 5bn attempts to buy tickets on Ticketmaster, at a rate of roughly 10,000 a minute. A cold-hearted economist would propose a simple solution: make the tickets much more expensive in the first place. + +This article appeared in the United States section of the print edition under the headline “Battling bots” + + + + + +Lexington + +Learning to love Trumpism + +Conservatives are working hard to reconcile their beliefs with the next president’s agenda + +Jan 7th 2017 + + + +A TRUE politician is someone who, upon spying a torch-wielding mob marching on his legislature, declares: “Oh good, a parade—I must lead it.” A striking number of conservatives are taking that approach ahead of Donald Trump’s inauguration on January 20th. The president-elect’s followers include many who distrust both main parties and, if handed a pitchfork, might skewer half the Republicans in Congress. Undaunted, party bigwigs and intellectuals have begun making the case that, for all its rough edges, “Trumpism” is a recognisably conservative way of viewing the world, with the potential to rescue swathes of America from feelings of abandonment and despair, securing majorities for Republicans for years to come. + +Republican leaders who clashed with Mr Trump during the election campaign now urge colleagues to see his victory as a lesson in humility. After the new Congress was sworn in on January 3rd Paul Ryan, the Speaker of the House of Representatives, told members that for too long leaders in Washington had treated complaints about closed factories with “condescension”. Now Americans had let out a “great roar”, Mr Ryan continued: they have given Republicans control of Congress and the White House not as an act of generosity but as a demand for “results”. + +Embracing the results sought by Trumpism will not be easy for convinced free-marketeers such as Mr Ryan. On the day that Congress returned to work, Ford announced that it is cancelling plans for a $1.6bn plant in Mexico and will create 700 jobs in Michigan building electric vehicles. This follows months of public browbeating by Mr Trump, including threats of punitive tariffs on firms making things abroad—though Ford’s chief executive cast the decision to invest in America as a vote of confidence in “pro-growth” policies outlined by the president-elect. Ford joins Carrier, Lockheed Martin and Boeing as companies that have changed investment or pricing decisions after Trumpian arm-twisting (hailing Carrier’s climb-down, eased by tax breaks from the state of Indiana, Mr Trump declared that the free market had failed American workers “every time”). As Mitt Romney’s vice-presidential running-mate in 2012, Mr Ryan scorned the idea of governments picking “winners and losers”. Today the Speaker talks up the prospects of tax reforms and deregulation giving all companies good cause to stay in America. + +Other conservative grandees wonder if a dose of economic nationalism is the price of solidifying the coalition that carried Mr Trump to power, including blue-collar voters in the Midwest who abandoned the Democrats in droves. They praise Mr Trump as a patriot-pragmatist in the spirit of Lincoln or Theodore Roosevelt. They are slower to note more recent models for Trumpism, starting with populist-nationalist movements sweeping Europe. Parallels with Nicolas Sarkozy, France’s centre-right president from 2007-12 and a hyperactive corporatist, are startling. Mr Sarkozy denounced French carmakers for producing cars in eastern Europe (“not justifiable”, he growled), and rushed to a steelworks to promise workers he would save their jobs (a pledge he could not keep). + +Hugh Hewitt, a conservative talk-radio host, this month will publish “The Fourth Way”, a book-length guide to how Trumpism might advance bits of the Reagan agenda, by promoting conservative judges, stronger armed forces (Mr Hewitt likes Mr Trump’s talk of a 350-ship navy) and free enterprise (above all rolling back “the vast and growing regulatory state”). To that he would add a “repatriation window” for corporate profits held abroad, and a new, voter-pleasing wave of infrastructure projects, including reopened shipyards, modernised airports, local sports facilities and other visible signs of Trumpian largesse. Billions would be disbursed by temporary, county-level commissions appointed by Congress and the White House (“the patronage!” sighs Mr Hewitt) and as classic pork-barrel spending by members of Congress. To break the partisan stalemate over immigration Mr Hewitt would have Mr Trump lay out detailed plans for a double-row border fence along the southern border, which when half- or three-quarters built would trigger a legalisation programme for most of the 11m immigrants in America without the right papers. Get all this right, Mr Hewitt says, and Mr Trump can realign national politics. Get it wrong and Mr Trump could face “catastrophic” midterm elections in 2018, a primary challenger in 2020 or, if embroiled in scandals, impeachment. + +Seeking Mr Trump’s inner Reagan + +In the spring Newt Gingrich, a former Speaker and adviser to Mr Trump, will publish “Understanding Trump.” He calls the president-elect the third attempt, after Reagan’s election in 1980 and his own Contract with America in 1994, to break free from the big-government mindset of Franklin Roosevelt’s New Deal. To square that claim with Mr Trump’s free-spending, distinctly statist campaign promises, Mr Gingrich portrays the businessman as a disruptive innovator, using social media and a genius for publicity to win a presidential election on the cheap. That thriftiness, also displayed in Mr Trump’s business life, tells Mr Gingrich that President Trump will run a lean federal bureaucracy, root out waste and generally “kick over the table”. Pondering Mr Trump’s desire for better relations with Russia, Mr Gingrich has called its president, Vladimir Putin, “a thug” but at the same time scolded Republicans who treat Russia as if it were still the Soviet Union, rather than a competitor that needs dealing with “as it is”. + +Some conservative enthusiasm for Trumpism reflects a sincere desire to grapple with voter angst. Some is born of opportunism and fear that the next president will set his voters on Republicans who defy him. Yet Mr Trump will need allies in Congress, too, if he is to rack up achievements to impress supporters. Trumpism, born as a populist revolt, must become a programme for government. That’s harder than leading a parade. + +This article appeared in the United States section of the print edition + + + + + +The Americas + + + + +Brazil’s prisons: Horror in the jungle + +Bolivia: For Evo, for ever + + + + + +Horror in the jungle + +Carnage at a prison in the Amazon + +A massacre in Manaus shows that competition among gangs is increasing + +Jan 7th 2017 | SÃO PAULO + + + +THE rampage lasted 17 hours. By the end of it, 56 inmates of the Anísio Jobim prison complex in Manaus, a city set amid the Amazon rainforest, were dead. Many had been decapitated; severed arms and legs were stacked by the entrance to the jail, known to most as Compaj, a contraction of its full name. Luís Carlos Valois, a judge who negotiated an end to the violence on January 2nd, called the hellish scene “Dantesque”. It was Brazil’s bloodiest prison riot in a quarter-century. + +Only the death toll makes the carnage at Compaj stand out. Brazil’s prisons erupt often. Last year 18 inmates died in clashes between gangs at prisons in the northern states of Roraima and Rondônia. In Pernambuco, a north-eastern state whose prisons are overstuffed even by Brazilian standards, violent deaths are a frequent occurrence. In January 2016, 93 prisoners broke out of two of the state’s jails. + +Prisons are both hellholes and headquarters for Brazil’s most powerful criminal gangs. The country’s prison population of 622,000, the world’s fourth-largest, is crammed into jails built to hold 372,000 inmates. Compaj houses 2,200, nearly four times its capacity. Guards often do little more than patrol the perimeters, leaving gangs free to manage far-flung criminal operations via mobile phones. + +The riot at Compaj suggests that prison violence—and the behaviour of the gangs behind it—is entering a new phase. Officials in the state of Amazonas say members of Família do Norte (Family of the North, or FDN), which controls drug trafficking in the Amazon region, organised the Compaj massacre. Having gained control over much of the prison, the gang sought to wipe out opposition from Primeiro Comando da Capital (First Command of the Capital, or PCC), a larger rival based in São Paulo, a south-eastern state. + +The assault on the PCC seems to be a reaction to its growing strength. Formed in 1993 by inmates in São Paulo after police massacred more than 100 prisoners at the notorious Carandiru jail, it has branched out into drug running, extortion and prostitution, often with the tacit consent of prison authorities. The PCC killed the last big rival drug trafficker in Paraguay in 2016. That gave it dominance over smuggling along the borders with Paraguay and Bolivia, and thus over the supply of cocaine and marijuana to the south-east, Brazil’s richest region. It used that advantage to become the country’s biggest and most profitable organised-crime group. Exploiting its growing control of the main entry points for drugs, the PCC moved beyond its home region and now has a nationwide presence. The battle at Compaj is “principally a reaction to the growing power of the PCC across Brazil in the distribution of drugs”, says Bruno Paes Manso, a criminologist at the University of São Paulo. + +At first, the PCC co-operated with the dominant forces in other states. In Rio de Janeiro it formed a narcotics-distribution alliance with the Comando Vermelho (Red Command, or CV). But the paulistas used their growing might to force their partner into a subordinate position, which provoked a rupture. The PCC has since teamed up with the CV’s main rival, the Amigos dos Amigos (Friends of Friends). Prosecutors say the arrangement has allowed the São Paulo group to take control of Rocinha, a favela in Rio de Janeiro, thought to be the city’s most profitable drug market. + +The CV has responded by forming alliances with other crime groups threatened by the PCC’s expansion. Among them are the FDN, Brazil’s third-biggest gang, which controls drug-smuggling routes in the Amazon. The clashes in Roraima and Rondônia were a harbinger of the Compaj massacre. Most of the dead were members of the FDN and the CV, targeted by the PCC in revenge for attacks mounted by the FDN the year before. + +Payback time + +Officials now wonder where and when the PCC will retaliate. The retribution will come from calculation, not rage, says Guaracy Mingardi, a criminologist. But come it will. The PCC “cannot remain quiet, as they will lose prestige, and prestige in the long term represents money”. + +There is little prospect that governments will do much to end the cycle of violence. Alexandre de Moraes, Brazil’s justice minister, said the ringleaders of the Compaj massacre will be transferred to federal prisons. The federal government promised at the end of 2016 to spend an extra 1.2bn reais ($370m) quickly to build and modernise state prisons. But that will not be enough to improve conditions that a previous justice minister described as “medieval”. The cash-strapped federal government will have a hard time finding more. Historically, it has preferred to let state governments, which house nearly all of Brazil’s prisoners, bear the burden of managing and paying for the system. + +They, in turn, have neither the money nor the ideas needed to improve conditions. Politicians and judges are more eager to lock up criminals, especially if they are poor and black, than they are to reduce overcrowding. About two-fifths of Brazil’s prisoners are awaiting trial rather than serving sentences; university graduates, priests and others are entitled to wait in comfier conditions. + +Governments also fear that a crackdown on violence in prisons will cause trouble outside them. An attempt by São Paulo’s government in 2006 to curb the prison-based operations of the PCC set off a campaign of violence by the gang’s confederates across the state. Hundreds died over ten days in attacks on policemen and the reprisals they provoked. Politicians prefer to keep the violence within prison walls. + +This article appeared in the The Americas section of the print edition under the headline “Horror in the jungle” + + + + + +More and more Morales + +Bolivia’s president chafes against term limits + +Despite water shortages and a slowing economy, his supporters want to keep him in office indefinitely + +Jan 7th 2017 | LA PAZ + +Why stop in 2025? + +AS 2016 drew to a close, a resignation letter from Bolivia’s president, Evo Morales, lit up social media. It was a hoax, perpetrated on día de los inocentes (“day of the innocents”), the Latin American version of April Fools’ Day, which falls on December 28th. The unamused communications minister, Marianela Paco, denounced it as an “attack on the people’s right to reliable and truthful news”. + +In fact, Mr Morales’s allies are scheming to keep him in office indefinitely, even though, in a referendum last February, Bolivians voted to deny him the right to run for a fourth term in 2019. On December 17th his party, the Movement to Socialism (MAS), named him as its presidential candidate for the next election. “If the people decide it, Evo will continue,” Mr Morales promised his supporters. + +The clamour to keep him is not a sign of recent success. Bolivia is suffering from a severe drought, whose effects are made worse by the government’s failure to plan and invest. Economic growth, which sustained Mr Morales’s popularity for most of his 11 years in office, has lost momentum. Scandals, strikes and clashes between protesters and police have turned some Bolivians against the government. Yet Mr Morales, Bolivia’s first president of indigenous origin, dwarfs his rivals. Nearly half of voters still approve of his performance. No one in the MAS has the stature to succeed him. The opposition is fragmented. + +Bolivia’s woes may cut Mr Morales down to size. Despite the onset of the rainy season in December, many districts are still rationing water. The state-owned water company that supplies La Paz, the seat of government, and El Alto, a populous city perched on a cliff above it, ran out of water in November. The water level in the Incachaca reservoir, which serves parts of La Paz, was far below normal in early January. Residents of the city queue for hours to get deliveries by lorry. Farmers and ranchers are reporting large and growing losses. + +This is contributing to the slowdown of the economy, which depends largely on gas exports. Their price is linked to the price of oil, which has halved since 2014. In 2017 Bolivia is expected to earn $2.1bn from gas sales, just a third of what it made when prices were high. + + + +As a result, GDP will grow 3.9% in 2017, a bit more than this year but far below the peak of 6.8% in 2013, forecasts the IMF (see chart). Bolivia’s overvalued currency is hurting producers of goods besides raw materials, warned the IMF last month. Alarmingly, the current-account and budget deficits were around 8% of GDP in 2016. + +By the profligate standards of Latin America’s left-wing leaders, Mr Morales has been a fairly responsible economic manager. He invested Bolivia’s gas windfall in roads, bridges, hospitals and schools. Until 2014 he kept a lid on budget deficits. But the oil-price slump and wacky weather are exposing the government’s failures. High taxes on the production of oil and gas and the absence of an independent regulator have discouraged investors from prospecting for new reserves, says Hugo del Granado, a former energy official. Just two foreign energy companies, Russia’s Gazprom and Venezuela’s PDVSA, have come to Bolivia in the past decade. Debt-ridden PDVSA has only a token presence; Gazprom spent years battling bureaucracy and ended up scaling back its ambitions. Rather than invest on its own, it formed a partnership with France’s Total, which already had operations in Bolivia. + +The government’s infrastructure-spending binge did not extend to water. It nationalised utilities, put party hacks in charge and failed to invest in them. La Paz’s water reserves reached dangerously low levels even before the drought took hold. + +Such setbacks have damaged the government’s prestige. In October it had to cancel a popular bonus of an extra month’s wages paid to all workers in the formal sector, but only in years when GDP growth is more than 4.5%. Mr Morales’s relations with trade unions and social movements, which once gave him unstinting support, have been hurt by disputes over infrastructure projects and benefits for disabled people. A conflict over regulation of mining by co-operatives led to the deaths of four miners and the murder of a vice-minister. The Central Obrera Boliviana, the main trade-union federation, has fallen out with the government. The MAS lost control of El Alto, Mr Morales’s political stronghold, in regional elections in 2015. + +None of that deters his allies from plotting to keep him in power. Many look to the example of the late Hugo Chávez, Venezuela’s left-wing leader, who lost a referendum to end term limits in 2007 only to hold another one 14 months later, which he won. Under Bolivia’s constitution, a petition signed by a fifth of the electorate could trigger a re-run of the referendum to lift the term limit facing Mr Morales. + +Another option, suggested by the vice-president, Álvaro García, is that Mr Morales resign for real, turning the hoax into reality. If this were coupled with a reform of the constitution, Mr Morales could argue that his current mandate, served under an outdated constitution, should not count towards one of the two terms he is allowed. He used this manoeuvre once before, in 2014, to run for re-election. + +The president says that what he really wants is to return to his career as a grower of coca, a traditional stimulant that is also the raw material for cocaine. In fact, he was more an organiser of farmers than a cultivator himself. Only inocentes believe it is his ambition to become one. + +This article appeared in the The Americas section of the print edition under the headline “For Evo, for ever” + + + + + +Asia + + + + +Demography in Japan: A negative-sum game + +Japan’s elderly workers: Silver lining + +Alcohol in Indonesia: Dry talk + +New Zealand’s national parks: Lord of the ker-chings + +Banyan: Selling Malaysians down the river + + + + + +Japanese demography + +Desperately seeking young people + +There aren’t many, and cities are growing desperate + +Jan 7th 2017 | TAMA + + + +MIEKO TERADA moved to Tama in 1976, at about the same time as everyone else there. Back then, the fast-growing city in Tokyo’s suburban fringe was busy with young married couples and children. These days, however, the strip of shops where Ms Terada runs a café is deathly quiet, her clientele elderly. The people of Tama and their apartments are all growing old and decrepit at the same time, she says. + +In the mid-1990s Japan had a smaller proportion of over-65s than Britain or Germany. Thanks to an ultra-low birth rate, admirable longevity and a stingy immigration policy, it is now by far the oldest country in the OECD. And senescence is spreading to new areas. Many rural Japanese villages have been old for years, because young people have left them for cities. Now the suburbs are greying, too. + +Between 2010 and 2040 the number of people aged 65 or over in metropolitan Tokyo, of which Tama is part, is expected to rise from 2.7m to 4.1m, at which point one-third of Tokyo residents will be old. In Tama, ageing will be even swifter. The number of children has already dropped sharply: its city hall occupies a former school. Statisticians think the share of people over 65 in Tama will rise from 21% to 38% in the three decades to 2040. The number of over-75s will more than double. + +The city’s inhabitants have already been spooked by an increasing number of confused old people wandering around. By 2025, officials in Tama predict, almost one in four elderly residents will be bedridden and one in seven will suffer from dementia. And the city is hardly ideal for old people. It is built on steep hills, and the five-storey apartment blocks where many of the residents live do not have lifts. + +For Tama, though, the most worrying effects of ageing are fiscal. Two-thirds of the city’s budget goes on social welfare, which old people require lots of. They do not contribute much to the city’s coffers in return. Although Japan’s central government redistributes money between municipalities, much of what local governments spend comes from local residency taxes, which fall only lightly on pensioners. In short, says Shigeo Ito, the head of community health in Tama, it pays for a place to avoid growing too old. + +Tama’s enticements + +So, as well as providing more in-home care and laying on aerobics classes to keep people fit enough to climb all those stairs, Tama is once again trying to lure young families. With a developer, Brillia, it has already razed 23 five-storey apartment blocks and put up seven towers in their place. The number of flats in the redeveloped area has almost doubled, and many are larger than before. That has attracted new residents: although the poky 40-square-metre apartments in the old blocks were sufficient for the post-war generation, modern Japanese families demand more space. Tama’s authorities intend to transform other districts in a similar way. + +This is smart policy, but there is a problem with it. The number of 20- to 29-year-olds in Japan has crashed from 18.3m to 12.8m since 2000, according to the World Bank. By 2040 there might be only 10.5m of them. Cities like Tama are therefore playing not a zero-sum game but a negative-sum game, frantically chasing an ever-diminishing number of young adults and children. And some of their rivals have extremely sharp elbows. + +Follow the Tama river upstream, into the mountains, and you eventually reach a tiny town called Okutama. What Tama is trying to avoid has already happened there. Okutama’s population peaked in the 1950s, as construction workers flocked to the town to build a large reservoir that supplies water to Tokyo in emergencies. It has grown smaller and older ever since. + +Today 47% of people in the Okutama administrative area—the town and surrounding villages—are 65 or older, and 26% are at least 75. Children have become so scarce that the large primary school is only about one-quarter full. Residents in their 70s outnumber children under ten by more than five to one (see chart). + + + +And Okutama’s residents are as stubborn as they are long-lived. Some of its outlying villages have become so minuscule that providing them with services is difficult, says Hiroki Morita, head of the planning and finance department. It would be better for their residents, and certainly better for the local government, if they consolidated into larger villages. But old people refuse to leave their shrunken hamlets even during heavy snowstorms, and are unlikely to move permanently just to make a bureaucrat’s life easier. The internet and home delivery help them cling on, points out Mr Morita. + +Okutama has tried to promote agriculture: wasabi, a spicy vegetable that is ground up and eaten with sushi, grows well there. It hopes to appeal to families by offering free vaccinations, free school lunches and free transport. None of that has staved off ageing and decline. So now it is touting free housing. Mr Morita estimates that the town has about 450 empty homes. He wants the owners to give their homes to the town government, which they might do in order to avoid property taxes. The government will then rent the homes to young couples, the more fecund the better. If they stay for 15 years their rent will be refunded. + +Although its setting, amid steep hills, is spectacular, Okutama is not a pretty town. Its houses are neither old enough to be considered beautiful nor modern enough to be comfortable. Some feature post-war wheezes like plastic siding. Still, the prospect of free accommodation some two hours’ journey from central Tokyo might tempt some young families. And in the meantime, Okutama has another plan. + +A building once occupied by a junior high school, which closed for lack of pupils, is becoming a language college. Jellyfish, an education firm with tentacles in several countries, will use it to teach Japanese to young graduates from East and South-East Asia. It hopes to enroll 120 students, plus staff, which ought to make a notable difference in a district where there are now fewer than 350 people in their 20s. Some of those students might even decide they like the place, and settle down. Whisper it, but this sounds a little like a more liberal immigration policy. + +This article appeared in the Asia section of the print edition under the headline “A negative-sum game” + + + + + +Silver lining + +As Japan ages, so too does its workforce + +The elderly keep on toiling + +Jan 7th 2017 | TOKYO + + + +LIKE many firms in Aichi prefecture, Japan’s manufacturing heartland, Nishijimax, a maker of machine tools for the car industry, is struggling to find workers. Its solution in a country with a drum-tight labour market is one that is increasingly common in Japan: raising the age of retirement. More than 30 of the company’s 140 employees are over 60; the oldest is 82. Putting qualified people out to pasture early is a waste, says Hiroshi Nishijima, a manager; “If they want to work, they should.” + +Since peaking at over 67m in the late 1990s, Japan’s workforce has shrunk by about 2m. The government says it could collapse to 42m by mid-century as the population ages and shrinks. The number of foreigners inched up in 2015 to a record high of 2.2m, but that is far from enough to fill the labour gap. Instead of opening its doors wider to immigrants, Japan is trying to make more use of its own people who are capable of working. + +Large companies in Japan mostly set a mandatory retirement age of 60—mainly as a way of reducing payroll costs in a system that rewards seniority. But other businesses are less stringent. About 12.6m Japanese aged 60 or older now opt to keep working, up from 8.7m in 2000. Two-thirds of Japan’s over-65s say they want to stay gainfully employed, according to a government survey. The age of actual retirement for men in Japan is now close to 70, says the OECD, a rich-country think-tank. In most countries people typically stop working before the age at which they qualify for a state pension. Japan, where the state pension kicks in at 61 (it is due to rise to 65 by 2025), is a rare exception. + +The greying of Japan’s workforce is clearly visible. Elderly people are increasingly seen driving taxis, serving in supermarkets and even guarding banks. Bosses are getting older, too. Mikio Sasaki, the chairman of Mitsubishi Corporation, a trading company, is 79. Masamoto Yashiro, the chairman and CEO of Shinsei Bank, is 87. Tsuneo Watanabe, editor-in-chief of the world’s biggest-circulation newspaper, the Yomiuri Shimbun, is a sprightly 90. + +It is inevitable that people will stay in the workforce longer, says Ken Ogata, the president of Koreisha, an agency that provides temporary jobs exclusively to people over 60. He notes that the country has little appetite for importing workers, so it will have to make more use of pensioners, women and robots. Many of those who find work through Koreisha were once employees of Tokyo Gas, Japan’s largest supplier of natural gas to homes. They do the same kind of work now—reading meters and explaining the use of appliances to homeowners. “They have so much experience and knowledge that can be put to good use,” says Mr Ogata. + +They can also be cheaper. Companies often hire back retirees on non-permanent contracts offering poorer terms than their previous ones. Takashimaya, a department-store chain, has introduced a performance-based system for such employees aged 60-65 (at no extra cost to the company, it says). + +Japan’s labour crunch has created a chronic shortage of nursing care for elderly people who are no longer fit enough to work. McKinsey, a consultancy, says Japan should encourage able-bodied elderly people to help. If 10% of them were to take up such work, the country would have an additional 700,000 carers by 2025, it reckons. One way of encouraging this would be to give priority to those who have worked as carers when allocating places in nursing homes, says McKinsey. It does not help, however, that the state pension system discourages some elderly people from working by cutting their benefits if they earn more than a certain amount. + +At Nishijimax, managers clearly want elderly workers to stay. The company’s work routine is tailored to their needs. So, too, are the canteen’s offerings—right down to the reduced-salt miso soup. + +This article appeared in the Asia section of the print edition under the headline “Silver lining” + + + + + +Dry talk + +Some Muslim politicians in Indonesia want a total ban on booze + +A huge new beer factory is betting they won’t get their way + +Jan 7th 2017 | SEMARANG + + + +ONE of Indonesia’s newest brands of beer, Prost, traces its ancestry back to 1948 when Chandra Djojonegoro, a businessman, started selling a “health tonic”, known as Anggur Orang Tua, from the back of a bright-blue lorry at night markets in the coastal city of Semarang. A troupe of dancing dwarves would pull in the punters, while Djojonegoro peddled shots of what was, in essence, a fortified herbal wine to fishermen. It kept them warm during the chilly nights in the Java Sea. + +The tonic is still sold in bottles with distinctive labels depicting an old Chinese man with a thick white beard. The company that makes it now produces a vast range of consumer goods, and Prost beer is the latest addition to its range. It is made in a $50m brewery that opened in August 2015, filled with shiny stainless-steel machinery from Germany. Thomas Dosy, chief executive of the subsidiary that produces Prost, says that given Orang Tua’s history in the booze business it was natural for the company to move into Indonesia’s $1bn-a-year beer market. + +It will not be straightforward. Conservative Muslim groups have become more assertive. Only months before the brewery opened, the government slapped a ban on the sale of beer at the small shops where most people buy their groceries. It led to a 13% slump in sales, according to Euromonitor, a research firm. The government minister who issued the decree has since been sacked, but his ban remains in place. And Muslim parties in parliament are still not satisfied. They are pushing legislation that would ban the production, distribution and consumption of all alcoholic beverages. Drinkers could face two years in jail. + +The law is unlikely to pass. Muslim parties control less than one-third of the legislature’s seats. The government is proposing a far more limited law aimed at curbing the production of toxic home-brews, known as oplosan, which are responsible for nearly all alcohol-related deaths in Indonesia. Turning Indonesia dry would be seen by many people as an affront to the cultural diversity of the sprawling archipelago, which has large Buddhist, Christian and Hindu minorities, as well as many Muslims who are partial to a cool one. + +Brewers argue that alcohol is not an import from the decadent West, as the puritans often claim, but has been produced and consumed in Indonesia for at least 700 years. “It is part of the culture of Indonesia,” says Michael Chin, chief executive of Multi Bintang, the country’s biggest brewer. Indonesians consume less than one litre of alcohol per head a year, belying Muslim groups’ claims that booze is creating a health crisis. Still, even without a national prohibition, Islamists will push for local bans—such as the one in force in Aceh since 2005 and adopted elsewhere. + +Beyond booze, the state-backed council of clerics, the Indonesian Ulema Council (MUI), has in recent years passed edicts condemning everything from homosexual partnerships to the wearing of Santa hats. Although these have no legal force under Indonesia’s secular constitution, vigilantes have sometimes used the edicts to target revellers as well as religious and sexual minorities. Partly at the MUI’s urging, parliament has passed sweeping anti-pornography laws, which some Indonesians see as a threat to artistic and cultural liberties. Muslim groups are petitioning the courts to interpret the law in a way that would criminalise extramarital sex. They are also making more use of laws against blasphemy—notably in the trial against the governor of Jakarta, Basuki Tjahaja Purnama, a Christian of Chinese descent. + +Still, for a country with the world’s largest Muslim population, Indonesia is remarkably permissive. Night spots in Jakarta, the capital, and tourist magnets such as the island of Bali have their raunchy sides. In Semarang, Mr Dosy predicts steady growth in domestic sales of 8-9% per year, buoyed by a growing number of middle-class tipplers. Most Indonesians, proud of their tradition of tolerance, will be hoping that he is right. + +This article appeared in the Asia section of the print edition under the headline “Dry talk” + + + + + +Lord of the ker-chings + +New Zealand debates a hiking fee + +The country is torn + +Jan 7th 2017 | QUEENSTOWN + +Welcome to Orcland + +NEW ZEALAND’S chief conservation officer, Lou Sanson, caused a stir in October by suggesting that it might be time to start charging tourists for using the country’s wilderness trails. New Zealanders are keen fans of their national parks. Many would be outraged at having to pay. But many also worry about a huge influx of foreigners who have been seeking the same delights. + +In 2016 New Zealand hosted 3.5m tourists from overseas; by 2022 more than 4.5m are expected every year—about the same as the country’s resident population. Tourism has overtaken dairy produce as the biggest export, helped by a surge in the number of visitors from China. The national parks, which make up about one-third of the territory, are a huge draw. About half of the foreign tourists visit one. They are keen to experience the natural beauty promised by the country’s “100% Pure New Zealand” advertising campaign (and shown off in the film adaptations of “The Lord of the Rings” and “The Hobbit”, which were shot in New Zealand’s breathtaking wilderness). + +But for every happy Chinese couple snuggling up for a selfie next to a tuatara there is a grumpy New Zealander who remembers the way things used to be—when you could walk the tracks without running into crowds at every clearing. Many locals now wonder why their taxes, as they see it, are paying for someone else’s holiday. Mr Sanson would seem to agree. Entry fees could be used to upgrade facilities such as cabins, car parks and trails. A varying levy could also help reduce numbers at some of the popular locations by making it cheaper to use lesser-known, but no less beautiful, trails farther afield. + +Some are not so sure it would work. Hugh Logan, a former chief of conservation for the government who now runs a mountaineering club, worries it would cost too much to employ staff to take money from hikers at entrances. It would also be difficult to prevent tourists from sneaking around the toll booths. + +Some argue that it would be easier to charge visitors a “conservation tax” when they enter the country. The Green Party, the third-largest in parliament, says that adding around NZ$18 ($12.50) to existing border taxes would still make the total amount levied less than visitors to arch-rival Australia have to pay. But some travel companies oppose the idea. They note that tourists already contribute around NZ$1.1bn through the country’s 15% sales tax. Better, such firms say, to use foreign tourists’ contribution to this tax for the maintenance of the parks. + +Among the fiercest critics of a charge are those who point out that unfettered access to wilderness areas is an important principle for New Zealanders. It is enshrined in a National Parks Act which inspires almost constitution-like devotion among the country’s nature-lovers. Mr Sanson has a rocky path ahead. + +This article appeared in the Asia section of the print edition under the headline “Lord of the ker-chings” + + + + + +Banyan + +Najib Razak appears secure, but looks can deceive + +The opposition has a chance to strike + +Jan 7th 2017 + + + +A ROUND of applause, ladies and gentlemen. Any typical leader of a typical democracy, when found with nearly $700m of ill-explained money from an unnamed foreign donor in his accounts, would experience a swift and fatal fall. Yet, nearly two years after news first broke that Najib Razak’s bank balance had been thus plumped up, his high-wire act continues. + +You could even argue that the Malaysian prime minister, who denies any wrongdoing, is at the top of his game. Mr Najib appears to command the unstinting loyalty of the party, the United Malays National Organisation (UMNO), which leads the coalition that has ruled the country since independence in 1957. He has undermined a fractious opposition, not least by peeling an Islamist party away from it. And as investigations proceed in several other countries into the alleged bilking of colossal sums from 1MDB, an indebted state investment-fund whose advisory board Mr Najib once chaired, the prime minister himself remains untouched. Staying in power helps stave off any risk he might face of international prosecution. A general election is due by late August 2018, but perhaps Mr Najib will call a snap poll in the next few months to give himself several more years’ rule. + +The question is how, despite the mysteries surrounding 1MDB and his personal accounts, the prime minister appears to be consolidating his power. Patronage is a big part of it. Though his wife has a lusty appetite for Hermès Birkin bags, and the wedding of his daughter to a nephew of the Kazakhstani president was an occasion of such bling that the Malaysian media were discouraged from publishing photographs, Mr Najib may be essentially right when he says the cash in his accounts was not for personal gain. An UMNO leader needs money to buy loyalty from powerful politicians. It is also handy for spreading largesse among ordinary Malays—including helping devout Muslims make the haj. + +Threats are as important as money. Anwar Ibrahim, the charismatic leader of the informal opposition coalition which won the popular vote in an election in 2013 (though not, thanks to gerrymandering, a majority of seats), has been in prison since 2015 on trumped-up charges of sodomy. In November the leader of an anti-corruption rally in Kuala Lumpur was arrested and held under tough new security laws. Newspapers and bloggers have been hounded. The number of activists and politicians charged with sedition has shot up. As for 1MDB, the only conviction in Malaysia related to it has been of a whistle-blowing legislator who highlighted alleged wrongdoing by the fund’s managers. + +Now perhaps Mr Najib feels that the chief risks from 1MDB are behind him. Bear in mind that among the most assiduous investigations to date have been those by America’s Department of Justice, which claims $3.5bn is missing from the fund. Yet the next American president, Donald Trump, speaks admiringly of Mr Najib, a golfing buddy. It might be hard for the department to pursue a full-throttle investigation if Mr Trump expressed displeasure. + +At any rate, the prime minister is at work covering his domestic bases, including wooing the Islamist party, the Pan-Malaysian Islamic Party (PAS). Some analysts mock the PAS leader, Abdul Hadi Awang, as having ayatollah-like aspirations: the party has long urged for sharia punishments to apply much more widely to the Malay Muslims who make up nearly two-thirds of the population. Such a proposal is not only morally but also constitutionally iffy. Undaunted, Mr Najib took the extraordinary step last year of backing Mr Hadi’s private member’s bill, which aims to increase the power of Islamic courts. With little discussion in cabinet or with the other 12 coalition members, the government submitted it to Parliament. + +Mr Najib’s strategy is clear. Although his image has not hitherto been one of ostentatious piety, he is rebranding himself as a Muslim devout. And the message to Malays is also clear: either you are with him, or, as Jayum Anak Jawan of Ohio University puts it in New Mandala, a website on South-East Asia, “your Malay-ness or Muslim-ness are brought into question.” + +If that seems a masterstroke, looks may deceive. Mr Najib’s people insist that the issue is no business of the (non-Muslim) ethnic Chinese, who make up a quarter of the population, or with ethnic Indians, who make up a tenth. Yet these largely urban and prosperous groups worry that Mr Najib is playing a potentially explosive game of racial politics, targeted at them. That could galvanise the opposition. + +Friendless in high places + +As it is, Mr Najib is counting on the squabbling opposition not to get its act together—in particular, on its failing to acknowledge the futility of Mr Anwar leading the opposition from jail. Yet there is ample scope for surprises. A growing number of opposition sympathisers say that a heavyweight with political experience is needed to take on UMNO. The obvious candidate is Muhyiddin Yassin, a former UMNO deputy prime minister who fell out with Mr Najib over 1MDB. Last year he and Mahathir Mohamad, who ran the country for 22 years, founded an ethnic-Malay party opposed to Mr Najib. The opposition would need to swallow a lot of pride and some principles to ask Mr Muhyiddin to be its leader. But he shares some of its reformist agenda, and it would transform the opposition’s chances of victory. + +Lastly, Mr Najib is running not only against the opposition, but against the economy. Since April the currency has fallen by nearly a quarter, reflecting the weak price of oil, a crucial export, and concern about cronyism under Mr Najib (Malaysia ranks second, after Russia, in The Economist’s crony-capitalism index). China’s help in bailing out 1MDB may have bought Mr Najib time, but budgets are strapped as economic growth starts to slow. If he can’t keep the money flowing, his seemingly loyal allies would abandon him in a jiffy. So if anything keeps the prime minister awake at night, it may well be a future without friends. + +This article appeared in the Asia section of the print edition under the headline “Selling Malaysians down the river” + + + + + +China + + + + +The party congress: Selection year + +Literature: There is flattery in friendship + + + + + +China’s political year + +Xi Jinping is busy arranging a huge reshuffle + +Reading the runes will be even more difficult than usual + +Jan 7th 2017 | BEIJING + + + +EVERY four years the United States holds an election that can change national policy and unseat many decision-makers. Every five years China holds a selection process that can do the same thing. Communist Party officials tout it as evidence of a well-ordered rhythm in their country’s politics. This year it may turn out as unpredictable as America’s election in 2016. + +The people up for re-selection are the 350-odd members of the party’s Central Committee, the political elite, along with its decision-taking subsets: the Politburo, the Politburo’s Standing Committee (a sort of inner cabinet) and the army’s ruling council. The choice of new leaders will be made at a party congress—the 19th since the founding one in 1921—which is expected to be held in Beijing in October or November, and at a meeting of the newly selected Central Committee which will be held directly afterwards. + +Party congresses, which are attended by more than 2,000 hand-picked delegates, and the Central Committee meetings that follow them, are little more than rubber-stamp affairs. But they are of huge symbolic importance to Chinese leaders. They matter for three reasons. First, they endorse a sweeping reshuffle of the leadership that is decided in advance during secretive horsetrading among the elite. The coming congress will be Mr Xi’s first opportunity to pack the Central Committee with his own allies; the outgoing one was picked in 2012, when he took over, not by him but by the people then running the country, including his two predecessors. After previous congresses held five years into a leader’s normally ten-year term—that is, those convened in 2007 and 1997—it became clear who that leader’s successor was likely to be. If the coming meetings are like those earlier ones—a big if—they will give a strong clue to Mr Xi’s choice of successor and start the transition from one generation of leaders to another. + +Second, congresses can amend the party’s constitution. China’s leaders like the document to give credit to their favourite ideological themes (and Mr Xi is particularly keen on ideology). When Jiang Zemin stepped down as party chief in 2002 his buzzwords were duly incorporated; so too were those of his successor, Hu Jintao, five years later. Mr Xi’s contribution to party-thought—such as on the need to purge it of corruption while strengthening its grip—is likely to gain similar recognition. + +Third, congresses are the setting for a kind of state-of-the-union speech by the party leader, reflecting an elite consensus hammered out during the circulation of numerous drafts. In the coming months, Mr Xi will be devoting most of his political energy to ensuring that his will prevails in all three of these aspects. His authority in the coming years will hugely depend on the degree to which he succeeds. + +Preparations for the gatherings are under way. They involve a massive operation for the selection of congress delegates. On paper, this is a bottom-up exercise. Party committees down to village level are choosing people who will then choose other representatives who, by mid-summer, will make the final pick. Thousands of party members are also scrutinising the party’s charter, looking for bits that might need changing. + +It may sound like a vast exercise in democratic consultation, but Mr Xi is leaving little to chance. Provincial party bosses are required to make sure that all goes to (his) plan. Over the past year, Mr Xi has appointed several new provincial leaders, all allies, who will doubtless comply. + +Hands up who likes Xi + +Those chosen to attend the congress will follow orders, too, especially when it comes to casting their votes for members of the new Central Committee. And the newly selected committee will stick even closer to script. The processes that lead to its selection of the party’s and army’s most senior leaders are obscure—a bit like the picking of cardinals in the Vatican. But an account in the official media of what happened in 2007 suggests that at some point in the summer, Mr Xi will convene a secret meeting of the current Central Committee and other grandees for a straw poll to rank about 200 potential members of the new Politburo (which now has 25 members). This is called “democratic recommendation”, although those taking part will be mindful of who Mr Xi’s favourites are. + +Candidates for the Politburo must fulfil certain criteria, such as holding ministerial rank. For the coming reshuffle, Mr Xi has added a new stipulation: faithful implementation of his policies. For all his power, Mr Xi has struggled with widespread passive resistance to his economic reforms. To ram home the importance of obedience, Mr Xi recently held what he called a “democratic life session” at which Politburo members read out Mao-era-style self-criticisms as well as professions of loyalty to Mr Xi as the “core” leader (as the party decided last October to call him). + +By August, when Mr Xi and his colleagues hold an annual retreat at a beach resort near Beijing, the initial lists of leaders will be ready. Probably in October, the Central Committee will hold its last meeting before the congress to approve its documents. The “19th Big” will start soon after, and will last for about a week. The first meeting of the new Central Committee will take place the next day, followed immediately by the unveiling before the press of Mr Xi’s new lineup (no questions allowed, if officials stick to precedent). + +The process is cumbersome and elaborate, but over the past 20 years it has produced remarkably stable transfers of power for a party previously prone to turbulent ones. This has been helped by the introduction of unwritten rules: a limit of two terms for the post of general secretary, and compulsory retirement for Politburo members if they are 68 or over at the time of a congress. Mr Xi, however, is widely believed to be impatient with these restrictions. He has ignored the party’s hallowed notion of “collective leadership”, by accruing more power to himself than his post-Mao predecessors did. + +If precedent is adhered to, five of the seven members of the Politburo’s Standing Committee, six of its other members and four of the 11 members of the party’s Central Military Commission (as the army council is known) will all start drawing their pensions. In addition, roughly half the 200-odd full members of the Central Committee (its other members, known as alternates, do not have voting rights) will retire, or will have been arrested during Mr Xi’s anti-corruption campaign. This would make the political turnover at this year’s gatherings the biggest for decades, akin to changing half the members of the House of Representatives and three-quarters of the cabinet. + +Until late in 2016 there was little to suggest any deviation from the informal rules. But in October Deng Maosheng, a director of the party’s Central Policy Research Office, dropped a bombshell by calling the party’s system of retirement ages “folklore”—a custom, not a regulation. + +The deliberate raising of doubts about retirement ages has triggered a round of rumour and concern in Beijing that Mr Xi may be considering going further. The main focus is his own role. Mr Xi is in the middle of his assumed-to-be ten-year term. By institutional tradition, any party leader must have served at least five years in the Standing Committee before getting the top job. So if Mr Xi is to abide by the ten-year rule, his successor will be someone who joins the Standing Committee right after the coming congress. + +But there is widespread speculation that Mr Xi might seek to stay on in some capacity when his term ends in 2022. He might, for instance, retire as state president (for which post there is a clear two-term limit) but continue as party general-secretary. He faces a trade-off. The more he breaks with precedent, the longer he will retain power—but the more personalised and therefore more unstable the political system itself may become. Trying to square that circle will be Mr Xi’s biggest challenge in the politicking of the year ahead. + +This article appeared in the China section of the print edition under the headline “Selection year” + + + + + +Shashibiya, meet Tang Xianzu + +How China uses Shakespeare to promote its own bard + +There is flattery in friendship + +Jan 7th 2017 | SHANGHAI + +The balcony scene of the East + +LIKE many countries, China had a busy schedule of Shakespeare-themed celebrations in 2016, 400 years after his death. There were plays, lectures and even plans announced for the rebuilding of his hometown, Stratford-upon-Avon, at Sanweng-upon-Min in Jiangxi province. But as many organisers saw it, Shakespeare was just an excuse. Their main aim was to use the English bard to promote one of their own: Tang Xianzu. Whatever the West can do, their message was, China can do at least as well. + +Tang is well known in China, though even in his home country he does not enjoy anything like the literary status of his English counterpart—he wrote far fewer works (four plays, compared with Shakespeare’s 37), and is not as quotable. But no matter. The timing was perfect. Tang died in 1616, the same year as Shashibiya, as Shakespeare is called in Chinese. President Xi Jinping described Tang as the “Shakespeare of the East” during a state visit to Britain in 2015. The Ministry of Culture later organised a Tang-themed exhibition, comparing his life and works to those of Shakespeare. It has shown this in more than 20 countries, from Mexico to France. + +The two playwrights would not have heard of each other: contacts between China and Europe were rare at the time. But that has not deterred China’s cultural commissars from trying to weave a common narrative. A Chinese opera company created “Coriolanus and Du Liniang”, in which Shakespeare’s Roman general encounters an aristocratic lady from Tang’s best-known play, “The Peony Pavilion”. The musical debuted in London, then travelled to Paris and Frankfurt. Last month Xinhua, an official news agency, released an animated music-video, “When Shakespeare meets Tang Xianzu”. Its lines, set bizarrely to a rap tune, include: “You tell love with English letters, I use Chinese ink to depict Eastern romance.” + +The anniversary of Shakespeare’s death is now over, but officially inspired adulation of Tang carries on (a musical about him premiered in September in Fuzhou, his birthplace—see picture). Chinese media say that a recent hit song, “The New Peony Pavilion”, is likely to be performed at the end of this month on state television’s annual gala which is broadcast on the eve of the lunar new year. It is often described as the world’s most-watched television programme. Officials want to cultivate pride in Chinese literature, and boost foreign awareness of it. It is part of what they like to call China’s “soft power”. + +Shakespeare’s works only began to take root in China after Britain defeated the Qing empire in the first Opium War of 1839-42. They were slow to spread. After the dynasty’s collapse in the early 20th century, Chinese reformers viewed the lack of a complete translation of his works as humiliating. Mao was less keen on him. During his rule, Shakespeare’s works were banned as “capitalist poisonous weeds”. Since then, however, his popularity has surged in tandem with the country’s growing engagement with the West. + +Cong Cong, co-director of a recently opened Shakespeare Centre at Nanjing University, worries that without a push by the government, Tang might slip back into relative obscurity. But Ms Cong says the “Shakespeare of the East” label does Tang a disservice by implying that Shakespeare is the gold standard for literature. Tang worked in a very different cultural environment. That makes it difficult to compare the two directly, she says. Officials, however, will surely keep trying. + +This article appeared in the China section of the print edition under the headline “There is flattery in friendship” + + + + + +Middle East and Africa + + + + +South Africa’s schools: Bottom of the class + +Astronomers v sheep farmers in South Africa: Stars and baas + +Decriminalising Zimbabwe’s sex trade: Less stigma, more competition + +Iraq’s long war: A goody and Abadi + +America and Israel: Unsettled + +Israel’s divisions: Uniform justice + + + + + +South Africa’s schools + +South Africa has one of the world’s worst education systems + +Why it is bottom of the class + +Jan 7th 2017 | CAPE TOWN + + + +AFTER half an hour of pencil-chewing Lizeka Rantsan’s class lines up at her desk to hand in its maths tests. The teacher at Oranjekloof primary school in Cape Town thanks the 11- and 12-year-olds and flicks through the papers. Ms Rantsan sighs, unimpressed. Pulling one sheet of errant scribbles from the pile she asks: “How are we supposed to help these children?” + +It is a question that South Africa is failing to answer. In a league table of education systems drawn up in 2015 by the OECD club of mainly rich countries, South Africa ranks 75th out of 76. In November the latest Trends in International Mathematics and Science Study (TIMSS), a quadrennial test sat by 580,000 pupils in 57 countries, had South Africa at or near the bottom of its various rankings (see chart), though its scores had improved since 2011. Its children are behind those in poorer parts of the continent. A shocking 27% of pupils who have attended school for six years cannot read, compared with 4% in Tanzania and 19% in Zimbabwe. After five years of school about half cannot work out that 24 divided by three is eight. Only 37% of children starting school go on to pass the matriculation exam; just 4% earn a degree. + + + +South Africa has the most unequal school system in the world, says Nic Spaull of the University of Stellenbosch. The gap in test scores between the top 20% of schools and the rest is wider than in almost every other country. Of 200 black pupils who start school just one can expect to do well enough to study engineering. Ten white kids can expect the same result. + +Many of the problems have their roots in apartheid. The Bantu Education Act of 1953 set out to ensure that whites received a better education than blacks, who were, according to Hendrik Verwoerd, the future prime minister then in charge of education, to be educated only enough to be “hewers of wood and drawers of water”. Black pupils received about a fifth of the funding of white peers. They were taught almost no maths or science. Most independent church-run schools that provided a good education in black areas were shut. + +After Nelson Mandela became president in 1994 his government expanded access to schooling. It also replaced a school system segregated by race with one divided by wealth. Schools in poorer areas receive more state funding. But schools in richer areas can charge fees on top. + +In theory these schools must admit pupils even if their parents cannot afford the fees. In practice they are fortresses of privilege. There are still about 500 schools built from mud, mainly in the Eastern Cape. The Western Cape has some of the largest campuses in the southern hemisphere, with cricket pitches as smooth as croquet lawns. + +And yet money is not the reason for the malaise. Few countries spend as much to so little effect. In South Africa public spending on education is 6.4% of GDP; the average share in EU countries is 4.8%. More important than money are a lack of accountability and the abysmal quality of most teachers. Central to both failures is the South African Democratic Teachers Union (SADTU), which is allied to the ruling African National Congress (ANC). + +The role of SADTU was laid bare in a report published in May 2016 by a team led by John Volmink, an academic. It found “widespread” corruption and abuse. This included teachers paying union officials for plum jobs, and female teachers being told they would be given jobs only in exchange for sex. The government has done little in response. Perhaps this is unsurprising; all six of the senior civil servants running education are SADTU members. + +The union’s influence within government belies its claim that officials are to blame for woeful schools. Last year it successfully lobbied for the cancellation of standardised tests. It has ensured that inspectors must give schools a year’s notice before showing up (less than 24 hours is the norm in England). And although parent-led school governing bodies are meant to hold teachers to account, they are more often controlled by the union, or in some cases by gangs. + +But even if there were better oversight most teachers would struggle to shape up. In one study in 2007 maths teachers of 11- and 12-year-olds sat tests similar to those taken by their class; questions included simple calculations of fractions and ratios. A scandalous 79% of teachers scored below the level expected of the pupils. The average 14-year-old in Singapore and South Korea performs much better. + +It does not have to be this way. Spark School Bramley in Johannesburg is a low-cost private school, spending roughly as much per pupil as the average state school. And it is everything state schools are not. Its 360 pupils begin learning at 7.30am and end around 3pm-4pm; most state schools close at 1.30pm. At the start of the day pupils gather for mindfulness exercises, maths questions, pledges to work hard—and a blood-pumping rendition of Katy Perry’s “Firework”. “We have an emotional curriculum as well as an academic one,” says Bailey Thomson, a Spark director. + +Pupils attend maths lessons based on Singapore’s curriculum; literacy classes draw on how England teaches phonics. Crucially, teachers are not members of SADTU. But they receive 250 hours of professional development per year, about as much as the average state-school teacher gets in a decade. + +Early results show that its pupils are on average a year ahead of their peers. Spark runs eight schools and plans to have 20 by 2019. Other operators, such as Future Nation, co-founded by Sizwe Nxasana, a former banker, are also expanding. “We are never going to have a larger footprint than [the] government but we can influence it,” hopes Stacey Brewer, Spark’s founder. + +Another promising scheme is the “collaboration schools” pilot in the Western Cape, based on academies in England and charter schools in America. The five collaboration schools are funded by the state but run by independent operators. In what Helen Zille, the premier of the Western Cape, calls “a seminal moment”, the parents of Oranjekloof pupils petitioned to keep the school in the collaboration programme when unions tried to oppose it. Ms Zille wants to open a “critical mass” of collaboration schools to inject competition into the public system. + +Spark and the collaboration schools suggest that South African education need not be doomed. But together they account for a tiny fraction of the country’s more than 25,000 schools. Widespread improvement will require loosening the grip of SADTU. In local polls in August the ruling party saw its worst results since the end of apartheid. This may force it to review vested interests. More likely it will continue to fail children. “The desire to learn has been eroded,” says Angus Duffett, the head of Silikamva High, a collaboration school. “That is the deeper sickness.” + +This article appeared in the Middle East and Africa section of the print edition under the headline “Bottom of the class” + + + + + +Of deserts and stardust + +Astronomers and sheep farmers butt heads over the Square Kilometer Array + +A radio telescope project encounters NIMBYism in a remote part of South Africa + +Jan 7th 2017 | THE KAROO + +Where lambs once frolicked + +THERE is a haunting beauty to the Karoo, a vast swathe of semi-desert that seems empty save for the stars overhead and sheep grazing below. Economic opportunities here are few. Scrubby, sprawling farms support sheep, ostrich, springbok and little else. (To be fair, Karoo lamb is delicious.) + +But the Karoo’s clear skies also draw some of the world’s best scientists. A radio telescope project called the Square Kilometre Array (SKA) is under construction, with the latest cluster of 64 giant antennae due to be completed late next year. South Africa won the right to host half of the $2bn international project in 2012. When finished it will be the biggest radio telescope in the world and should allow scientists to peer into the origins of the universe. + +Still, some sheep farmers are grumbling. Because of the sensitivity of the telescope, the surrounding area must be kept free from radio interference caused by everything from mobile phones to microwave ovens and some car engines. The SKA is buying up more farms than originally expected to ensure radio silence over an area of some 130,000 hectares. There will be no mobile phone signals allowed, except in the few towns in the area. Residents will instead be given an alternative radio communication system. Save the Karoo, an advocacy group, isn’t swayed by the prospect of groundbreaking astronomical discoveries. Its members fear the restrictions will make the Karoo “a cut-off and backward region”, and warn that abattoirs and windmill repairmen serving farms near the SKA site could face financial ruin. “I couldn’t give a damn about a black hole sitting somewhere out in space,” says Eric Torr, an organiser with the group. “It does not put food on the table.” + +Sky-high expectations in this down-at-heel area are also a problem. An SKA official grumbles that the locals expect the telescope to solve all their woes. Some jobs have been created, but few locals have the skills to decipher the secrets of distant galaxies. Until recently the high school in Carnarvon, a nearby town, didn’t even have a maths and science teacher. The SKA organisation hired one, and is also offering bursaries to college students. Perhaps if the next generation’s horizons are raised, they will be able to take advantage of the radio telescopes in their own backyard. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Stars and baas” + + + + + +Why some prostitutes would rather their jobs were illegal + +Decriminalising the sex trade in Zimbabwe + +Less stigma, more competition + +Jan 7th 2017 | HARARE + +Supply and demeaned + +IT IS midnight at a shopping centre in Hopley, a poor suburb east of Harare. Masceline, an orphaned 15-year-old, stands in the darkness. Her aim is to find a client. But she also wants to avoid getting beaten up by older prostitutes who resent the competition she represents. + +Zimbabwe’s Constitutional Court ruled in 2015 that the police could not arrest women for prostitution. At first, sex workers cheered. No more would they be dragged to police stations and shaken down for bribes to avoid six-month jail terms. It was a relief, too, for the many other women whom the cops used to arrest just for walking alone at night or drinking in a pub. + +Yet there was a catch. Tambudzai Mikorasi, a 40-year-old sex worker, says she may have celebrated too early. Now that the oldest profession has been decriminalised, a flood of young women and girls are joining it and driving down prices. (Jobs of any kind are scarce thanks to Robert Mugabe’s disastrous management of the economy.) + +Some veterans have responded by hiring thugs to protect their turf. In return, the men can have sex whenever they want. “We have no option,” says Ms Mikorasi, her muscles flexing as she pulls down her miniskirt. “It has never been this bad. These little girls are pushing us out of business.” Malaika Chatyoka, a 37-year-old, complains that the fee she can charge has slumped from $10 for 30 minutes to as little as $2 on some nights. The price for a full night is down to $10, one fifth of what she used to charge. + +Police raids used to scare away competitors. “Only the brave remained on the streets. Now it’s free-for-all,” says 25-year-old Sazini Ngwenya from Bulawayo. She adds that without the police paying attention there has been an increase in robberies and rape. + +Faced with a slumping economy Zimbabweans are so desperate that, for many, even cut-price sex work seems like the least-bad option. “With no education, faced with the responsibility to fend for their siblings and/or their own children, many girls and young women are being forced to sell sex for survival,” laments Talent Jumo, a director of the Katswe Sistahood, a charity. With no sign of an economic recovery, many more girls could be forced onto the streets, she says. + +For Masceline, the need to put food on the table for her family means she will continue renting out her body. “Everything I face here is better than going hungry or watching my baby sister drop out of school,” she says hurriedly, as a potential client approaches. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Less stigma, more competition” + + + + + +Iraq’s long war + +A goody and Abadi + +Behind the battle for Mosul lies a struggle for power in Baghdad + +Jan 7th 2017 | BAGHDAD + + + +THEY said it would be over by Christmas. Now Haider al-Abadi, Iraq’s prime minister, is suggesting that the battle for Mosul could last until Easter. For almost a month his forces had stalled on what was supposed to be the easier eastern bank of Iraq’s second city. And the costs have been gruelling. A fifth of Iraq’s elite force has reportedly fallen in the assault. With the support of more American special forces, Mr Abadi has launched a second phase, taking the city’s industrial zone. Progress is being made. But what Iraqi soldiers clear by day, Islamic State (IS) fighters often regain by night, thanks to a warren of tunnels under the front lines. + +Not only are IS fighters holding the line against Iraqi soldiers and their American backers after ten weeks of fighting in Mosul, but they are also fending off Turkish troops 515km (320 miles) to the west, around the town of al-Bab in northern Syria. They have also recaptured Palmyra from the Syrian regime. + +Across Iraq the insurgency has a new lease of life. The sickening rhythm of suicide bombs in Shia suburbs of Baghdad and southern Iraq is quickening again. In Anbar and Salahuddin, provinces long since reclaimed by the government, IS is also flexing its muscles. On January 2nd it won control of a police station in Samarra for several hours and it cut briefly the Baghdad to Mosul road. It is putting out lights in Diyala. “It is not an organisation that is close to collapse,” says an analyst in touch with people in Mosul. + +The prolonged campaign carries political costs for Mr Abadi, who had sought to turn himself from a bumbling office-holder into a victorious commander by donning military fatigues. Should there be further mishaps, Mr Abadi’s rivals in Baghdad will be waiting to pounce. Among them is his predecessor, Nouri al-Maliki, and his cohorts in Iraq’s assortment of predominantly Shia militias, which are collectively known as the Hashd al-Shaabi, or popular mobilisation forces (PMF). As the government-led advance on Mosul slows, they are calling for the deployment of Iranian-backed brigades. So short of men are Iraq’s army and police that even some American commanders now welcome the use of these auxiliaries. + +To date the Iraqi government’s assault (with air support from the American-led coalition) has managed to minimise civilian casualties in Mosul. But if Shia militias are unleashed another bout of sectarian killings might ensue. It could push the city’s remaining 900,000 Sunnis towards IS. Moreover an enhanced role for the militias would weaken the state by boosting the PMF. Its brigades already display factional flags, run several secret prisons and raise money by extorting bribes at gunpoint at checkpoints. + +Mr Maliki, for his part, seems to be intent on building a sectarian pasdaran, or revolutionary guard, much like the one that wields real power in neighbouring Iran. As prime minister from 2006 to 2014 Mr Maliki built up networks that still give him influence. From the judiciary to the civil service to parliament, many in Iraq’s upper echelons owe him their positions. One of his last acts as prime minister was to form the PMF. Having tried for months to chip away at Mr Abadi’s authority by impeaching his senior ministers, Mr Maliki has recently switched tack in favour of bolstering the PMF. On November 26th MPs voted to create an autonomous force comprising 110,000 PMF militiamen paid by the government and overseen by parliament. + +In response Mr Abadi is using the new PMF law to woo the Sunni militias that Mr Maliki had ostracised when he was prime minister. He has brought thousands of Sunni officers and soldiers from Saddam Hussein’s former army onto the government payroll under the command of a former governor of Mosul, Atheel al-Nujaifi. Charges of terrorism against Khamis al-Khanjar, a Sunni politician financed by the Gulf, have been quietly dropped. And with Mr Abadi’s blessing, Ammar al-Hakim, who heads the largest Shia parliamentary bloc, has gone to Amman and Beirut to negotiate terms for a national reconciliation, including an amnesty, with Sunni exiles who had long since despaired of a deal with Baghdad’s Shia masters. + +The hope is that if they are promised a future inside Iraq, former Baathists and other Sunni Islamists might join forces to rid Iraq of IS. “Some Shia are starting to realise that if they can’t absorb Sunnis and Kurds, what remains of Iraq risks becoming another wilaya [province]of Iran,” says a diplomat in Baghdad. + +Mr Abadi’s main failure has been political: he has not broken the hold that sectarian parties, including his own, have on Iraq’s coffers. Political parties in his cabinet continue to take handsome cuts from government contracts and collect the pay of ghost workers in defunct factories. Rather than tackling political corruption, he has squandered the backing of protesters and Iraq’s leading ayatollahs by slashing the pay of civil servants and raising taxes. + +Yet for all his setbacks, Mr Abadi has regained most of the territory that Mr Maliki had lost. He has secured renewed American military support and overseen a four-fold increase in America’s troop deployment over the past year. With American help, the panic-stricken army that fled Mosul in June 2014 has been rearmed and now sports an air force and a division of special-forces soldiers who are proving capable fighters. His men are also operating alongside Kurdish fighters for the first time in a decade. + +Socially, too, Baghdad is regaining a semblance of normality. The concrete barricades encasing public buildings like lugubrious tombstones have slowly come down, and checkpoints have thinned. Iraq’s economy is now weathering a crisis caused by a slump in the oil price and a surge in war-related spending. Oil production reached record levels in 2016 and the IMF has extended a $5.3bn loan, which promises to attract an additional $11bn in international credit and export guarantees. The bits of the economy not related to oil, which slumped 5% in 2016 and 14% the year before, will probably expand by 5% this year, the IMF reckons. American companies that had previously fled as Iraq slipped into mayhem, such as General Electric, are now tiptoeing back. + +Even in parliament unusual alliances are forming across sectarian lines. Kurds, Sunni Arabs and Shias no longer vote as united blocs. Selim Jabbouri, the Sunni parliamentary speaker who hails from the Muslim Brotherhood, speaks of establishing a cross-confessional party in the 2018 elections and canvasses in Shia as well as Sunni parts of Iraq. For all its faults, Iraq is still the Arab world’s most boisterous multiparty democracy. Perhaps it may after all convince a majority of its people that they have a future together. + +This article appeared in the Middle East and Africa section of the print edition + + + + + +America and Israel + +President Trump may not be all good news for Binyamin Netanyahu + +Mr Netanyahu’s tactics of delay and ambiguity may not survive a new president + +Jan 7th 2017 | MAALE ADUMIM + + + +WITH its shopping malls, sports centres and new residential blocks, Maale Adumim (pictured above) looks and feels like any other Israeli dormitory suburb. Less than ten minutes’ drive eastward from Jerusalem, the town on the edge of the Judaean Desert, which is also the third-largest Jewish settlement in the West Bank, may be about to become the first test case of America’s Middle East policy under Donald Trump. + +Elements of Binyamin Netanyahu’s right-wing coalition are agitating to annex parts of the West Bank, starting with Maale Adumim, in the belief that the Trump administration will reverse a long-standing American policy opposing Israeli settlements in territory it occupied in 1967. + +The mayor, Benny Kashriel, says that he is not concerned about international politics so much as local laws: “I want my town to have the same rights as any other town in Israel.” He complains that, because the West Bank (called Judea and Samaria by the Israeli government) is under military rule, Maale Adumim’s residents need to apply to the army if they wish, for instance, to close a veranda: “There is no reason that the Israeli law shouldn’t apply here. Netanyahu tells us he is in favour but that we have to wait for better timing.” Emphasising that the time may indeed be approaching, this week Maale Adumim welcomed the former presidential candidate and governor of Arkansas, Mike Huckabee, to inaugurate a new building. + +Naftali Bennett, the leader of the hard-right Jewish Home party, says he will propose a bill to extend Israeli sovereignty to Maale Adumim, arguing that the new American administration offers “a unique window of opportunity” to redraw the map. “For the first time in 50 years we Israelis have to decide what we want—a Palestinian state in Judea and Samaria, or Israeli law replacing military law where Israeli citizens live.” Mr Bennett believes that he and his colleagues must press the prime minister to persuade Mr Trump to recognise the settlements as permanent at his first meeting. + +After eight years of friction with Barack Obama’s administration, Mr Netanyahu has good reason to feel optimistic. He is expected to be the first foreign leader to meet the new president after his inauguration on January 20th. Although Mr Netanyahu may not get a promise to scrap the Iran nuclear deal, in every other way he will be pushing on an open door when it comes to enlisting Mr Trump’s help to counter Iranian influence in the region. + +Then there is the pre-election promise by Mr Trump to relocate the American embassy from Tel Aviv to Jerusalem, with all the symbolism that would involve. Mr Trump’s pick of David Friedman to be America’s ambassador to Israel has also sent a strong message. A bankruptcy lawyer without diplomatic experience, Mr Friedman believes that Israel is legally entitled to annex the West Bank and supports the building of new settlements there—steps that would rule out any possibility of a peace deal based on the establishment of a Palestinian state next to Israel. + +The gulf between the outgoing and incoming administrations was laid bare on December 23rd. Mr Obama’s decision not to veto UN Security Council Resolution 2334 (reiterating that the settlements are illegal and expressing concern that prospects for the two-state solution were being sabotaged by both sides) was a well-aimed parting shot. Mr Trump’s administration will not be able to overturn a resolution that may embolden the International Criminal Court to take action over settlements; Israeli officials will have to consider the risks of building more. + +Mr Netanyahu’s fury must at least have been soothed by Mr Trump’s response on Twitter: “Stay strong Israel, January 20th is fast approaching!” The Israeli prime minister tweeted back: “President-elect Trump, thank you for your warm friendship and your clear-cut support for Israel!” + +A few hours later America’s secretary of state, John Kerry, in a speech highly critical of Israel’s government, explained the context of the UN abstention. He warned that right-wing ideologues within Mr Netanyahu’s coalition were leading Israel inexorably towards abandoning even the pretence of interest in a two-state solution, with profound consequences for both the country’s future security and its status as a democratic Jewish state. There was little in Mr Kerry’s speech, which also forthrightly condemned Palestinian glorification of terrorism, that deviated from American policy towards Israel that goes back more than 40 years. But his disappointment and frustration were clear. + +In practice, Mr Netanyahu may not find Mr Trump’s uncritical friendship an unalloyed blessing. It has often suited him to play off hardliners, such as Mr Bennett, against Washington. It has served his purpose to keep the idea of the two-state solution alive while doing nothing to help make it a reality. Typically, he has yet to respond to the latest demands for annexing Maale Adumim. One of Mr Netanyahu’s allies, the regional co-operation minister, Tzachi Hanegbi, warned this week that “it would be bad for Israel to unilaterally annex Judea and Samaria.” However, many members of the ruling Likud party also favour the Maale Adumim law. + +The right wing has scented an opportunity in legal problems facing Mr Netanyahu. The prime minister was questioned this week by police over fraud and graft allegations. This is one of a number of corruption probes into his financial affairs and the prime minister is suddenly vulnerable. Although he insists that there is nothing of substance in the allegations, he will not have forgotten how his predecessor, Ehud Olmert, was forced by his cabinet colleagues eight years ago to resign over allegations of bribe-taking, and was later jailed. Mr Netanyahu may have to concede something to the hardliners to keep his own job. + +“The Maale Adumim law is the first sign that the Netanyahu government is using its newfound power in the Trump era to make unilateral moves,” says Danny Seidemann, a director of Terrestrial Jerusalem, an NGO that monitors building works in and around Jerusalem. “Annexing Maale Adumim would virtually cut the West Bank in two, making it almost impossible to establish in the future a viable Palestinian state.” He doubts that Mr Netanyahu wants to go that far, which means he may have to throw his right-wingers other meat, such as more settlement-building in east Jerusalem and the West Bank. Delaying tactics and ambiguity have been the twin hallmarks of Mr Netanyahu’s premiership. Both may become harder with the advent of Mr Trump. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Unsettled” + + + + + +Israel and the Palestinians + +The conviction of an IDF soldier divides Israel + +Military judges try to set Israel’s moral compass + +Jan 7th 2017 | TEL AVIV + +Rallying for the right to shoot prisoners + +ONE of the most contentious cases in Israel’s military history reached its verdict on January 4th when three military judges found a serving soldier, Sergeant Elor Azaria, guilty of manslaughter for killing a Palestinian. + +The public controversy was not over the facts. Both the prosecution and defence agreed that on March 24th 2016, in the West Bank city of Hebron, Mr Azaria had fired point-blank at Abdel-Fattah al-Sharif, a Palestinian man lying grievously wounded after he had been shot while stabbing an Israeli soldier. + +Nor was it over the court’s dismissal of Mr Azaria’s claim to have been acting in self-defence; the judges reached a unanimous decision that he had acted “calmly, without urgency and in a calculated manner” and that, as he said on the scene to a comrade, he thought Mr al-Sharif “deserve[d] to die”. + +Instead the controversy relates to the fact that a large section of the Israeli public seems to believe that Mr Azaria was right to have shot a wounded prisoner who no longer posed a danger. A poll last August by the Israeli Democracy Institute and Tel Aviv University indicated that 65% of Israel’s Jewish majority supported his actions. A seemingly contradictory finding in the same poll put public support of the Israel Defence Forces (IDF), the same organisation that put Sergeant Azaria on trial, at 87%. + +One explanation for this discrepancy is that anger is high over the sporadic campaign of stabbings by Palestinians since 2015. Another is that admiration for the army does not necessarily extend to the generals, who rushed to condemn him when video of the shooting emerged. This mixed message is coming from the politicians, too. The prime minister, Binyamin Netanyahu, called Mr Azaria’s parents to express solidarity shortly after his arrest. Since the conviction he joined several ministers in calling for Mr Azaria to be pardoned by the president, Reuven Rivlin. The only senior member of the ruling Likud party to condemn the shooting unequivocally was Moshe Yaalon, then the defence minister. Shortly afterwards he was pushed out of office and replaced by Avigdor Lieberman, a hardliner. + +Manslaughter convictions of IDF soldiers on duty are very rare. The last was 11 years ago when one was found guilty of killing Tom Hurndall, a British pro-Palestinian activist. Human-rights organisations say other similar shootings have gone unpunished. + +Still, the generals can take comfort from the judges’ firm line: the IDF’s claim to be a highly moral army requires it to act against cases of blatant indiscipline. And Mr Netanyahu, though bending to populist sentiment at home, will doubtless hold out the verdict as proof to the world that his country is a democracy where the rule of law prevails, in a region where such virtues are rare. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Uniform justice” + + + + + +Europe + + + + +Terror in Turkey: From celebration to carnage + +America’s new Russia sanctions: Feint praise + +Motorway charges: Another European crisis + +Spain and Catalonia: Catalexit? + +Charlemagne: Nailed it + + + + + +Soft target + +An attack on an Istanbul nightclub widens the secular-religious divide + +Islamic State is exploiting tensions in Turkish society + +Jan 7th 2017 | ISTANBUL + + + +AFTER a year of terrorist attacks and a violent coup attempt, Istanbul residents are getting used to the sound of explosions. When blasts rang out near the city’s best-known nightclub just after 1am on January 1st, some thought they were new-year pyrotechnics. Yet the skies above them were empty. A massacre was unfolding below. By the time it was over at least 39 people, mostly foreigners, were dead, and dozens more wounded. Autopsies suggested that many had been shot at close range. Some saved themselves by leaping into the Bosporus. As The Economist went to press the attacker, a suspected follower of Islamic State (IS), had not been caught. + +IS has carried out at least eight big attacks in Turkey, including the deadliest in the country’s history, a suicide-bombing that killed more than 100 people in October 2015. The nightclub attack is the first it has undisputedly claimed. In an online statement the group praised the shooting as an attack on an “apostate” celebration and revenge for a Turkish offensive against it in Syria. Turkey’s army cleared IS from strongholds overlooking the border in early September, and fighting continues near al-Bab, a town north-east of Aleppo. + +Under pressure in Syria, IS has struck back by destabilising Turkey. The group’s earliest attacks in 2015 helped to reignite a war between Kurdish militants and Turkey’s armed forces. A second wave scared away tourists and fanned resentment of the 2.8m Syrian refugees living in Turkey. The latest, which hit a venue where celebrities dance and drink alongside foreigners and the monied elite, threatens to inflame tensions between Islamists and secular Turks, many of whom blame the pro-Islamist government for the spread of extremism. “Islamic State reads Turkish society very well and it knows to strike at the key pressure points,” says Hilmi Demir, an expert on Muslim sects and radicalisation. + +Those pressure points are multiplying. Instead of healing his divided country after the coup in July, Turkey’s president, Recep Tayyip Erdogan, cracked down on his opponents, including Kurdish activists, leftists and secularists. Official discourse is increasingly conservative. In December the country’s religious-affairs directorate, the Diyanet, joined Islamist groups in proclaiming that new-year festivities were “alien” to Turkish values. Meanwhile, a group of young ultranationalists staged a protest at which they pretended to hold Santa Claus—that unwelcome Western intruder—at gunpoint. + +Losing the plot + +Many Turkish conservatives refuse to admit that innocents, including Muslims, are being murdered by a group acting in the name of Islam. They prefer conspiracy theories. A pro-government newspaper claimed the attack on New Year’s Day was the work of a “mastermind”, shorthand for an alliance of Western powers. An MP from the governing party blamed—who else?—the CIA. + +The shooting also raised questions of accountability. More than 400 lives have been lost in big terrorist attacks since the summer of 2015, yet not one minister has resigned. Just over a week before the nightclub attack, Russia’s ambassador was fatally shot by an off-duty Turkish policeman. The government says it foiled 339 attacks last year. But it has also used the war on terrorism as an excuse to silence critics. In December authorities detained a Wall Street Journal reporter for three nights, allegedly for retweeting an image from an IS murder video. Days later they arrested an investigative reporter, Ahmet Sik, on farcical terrorism charges. Since the coup, more than 100 journalists have been locked up. + +Largely because of the state’s control over religious debate, support for IS among Turks is minimal. Yet the group is determined to pit Turkey’s traditionally tolerant brand of Islam against an emboldened fundamentalist fringe. IS wants to galvanise those Islamists who condemn secular ways of life, says Rusen Cakir, a journalist. “They want to transform Turkey into a battlefield,” he says. + +The New Year’s Day attack could serve as a wake-up call. The ruling Justice and Development party is realising that polarisation can win elections “but that it makes the country ungovernable,” says Ozgur Hisarcikli, head of the Ankara office of the German Marshall Fund, a think-tank. The Diyanet has declared that an attack on a nightclub is as reprehensible as an attack on a mosque. Mr Erdogan himself has warned against allowing the fault lines in Turkish society to widen, which is exactly what IS wants. Alas, Mr Erdogan’s populist authoritarianism, jingoism and repression are only wedging them further apart. + +This article appeared in the Europe section of the print edition under the headline “From celebration to carnage” + + + + + +Feint praise + +Vladimir Putin wins his last round against Barack Obama + +Russia shrugs off American sanctions, and Donald Trump applauds + +Jan 7th 2017 | MOSCOW + + + +IT WAS Vladimir Putin as we have come to know him: unpredictable, cynical and skilful at trumping real events with propaganda. On December 29th Barack Obama expelled 35 Russian diplomats involved in intelligence work (along with their families), ordered two Russian diplomatic compounds in America closed, and imposed fresh sanctions against Russian security agencies and a list of individuals. Mr Obama was retaliating for Russian interference in America’s elections, which included hacking the computers of high-level Democratic Party officials and leaking the embarrassing contents to the press. The White House expected Russia to eject an equal number of American diplomats. Instead, Mr Putin responded asymmetrically, parrying the American action and mocking Mr Obama as a bitter loser. + +Mr Putin’s performance was carefully choreographed. In the first move Sergei Lavrov, the foreign minister, appeared on state television to declare that Russia would respond to America’s actions in kind. The foreign ministry and other agencies, he said, had proposed to Mr Putin that 31 diplomats from the American embassy and four diplomats from the consulate in St Petersburg be declared personae non gratae. Mr Lavrov also recommended shutting down the American embassy’s dacha in a wooded Moscow park. + +In the second move, Mr Putin publicly overruled his foreign minister. While America’s actions were “unfriendly” and “provocative”, and merited the toughest response, Mr Putin said, he would not “resort to irresponsible ‘kitchen’ diplomacy” but would instead plan steps for improved relations with the incoming president, Donald Trump. Moreover, he would not punish the children of American diplomats for the tensions between the two countries. Instead, he invited them to a Christmas and New Year’s Day show at the Kremlin. He then wished Mr Obama and Mr Trump a happy new year. + +Russian state television, which has been pumping out anti-American propaganda for years, quickly seized on a new narrative. “The provocation has failed,” announced a news anchor on Channel One. Mr Obama had found himself “in a puddle”, while Mr Putin had displayed diplomatic “mastery at the world level”. The invocation of Christmas and family seemed a backhanded jab at Mr Obama’s pacific reputation and his public displays of affection for children. The media stunt earned an unctuous tweet from Mr Trump: “Great move on delay (by V. Putin)—I always knew he was very smart!” + +Mr Trump’s tweet added to the mystery of his apparent infatuation with Mr Putin and fuelled anxiety about Russia’s ability to undermine American democracy. Yet for pro-Western Russian liberals, the panicked attitude of some of America’s mainstream media was equally discomfiting. It seemed a mirror image of Russia’s own hysteria about the role of America in sowing chaos and staging colour revolutions in Russia’s back yard. + +“In the eyes of the West, Russia appears to be the source of most uncomfortable social changes,” wrote Maxim Trudolyubov in a column in Vedomosti, an independent daily. “As a Russian, it is amusing to watch this. The West now identifies all its problems with ‘Russia’, just as Russia identifies all its problems with ‘the West’.” + +Americans’ treatment of Russia as a bogeyman fills Mr Putin’s supporters with pride. They see it at a sign of Russia’s renewed great-power status. But while the Kremlin may be benefiting from fears of its influence in the short term, it is unclear how it plans to turn those fears to its longer-term advantage. Mr Putin has long depended on fear of America as a mighty enemy to reinforce his hold on power. Kicking the outgoing Mr Obama may be a poor substitute. Paradoxically, Mr Trump’s dismissal of Russian influence could be more harmful to the Kremlin’s narrative than fears of its interference. + +This article appeared in the Europe section of the print edition under the headline “Feint praise” + + + + + +Political road rage + +Motorway tolls are hurting German-Austrian relations + +Snow-lovers are the cause of a new European crisis + +Jan 7th 2017 | KIEFERSFELDEN + + + +EVERY winter, northern Europeans bound for ski holidays zip insouciantly through the Netherlands, Belgium and Germany on motorways that are free of charge. But near the borders of Austria or Switzerland they must pull over to buy stickers so that they can drive on the Alpine motorways—even as Austrian and Swiss cars zoom in the opposite direction onto Germany’s free Autobahn. To the perceived injustices in the European Union (EU), add another: the nuisances of a quilt of road-tolls. + +Bavarians are particularly cranky. If you live in Munich, say, work and play extend naturally across the border. Hence the grousing about paying on Austrian roads while Austrians “free-ride” on Bavarian ones. In 2013 the CSU, a regional party that governs Bavaria, made fixing “this unfair situation” a condition for joining the coalition of the chancellor, Angela Merkel. The CSU’s Alexander Dobrindt, who became transport minister, got to work. + + + +He knew that his biggest hurdle would be the EU, which forbids discriminating against the citizens of other member states. So he came up with two nominally separate laws. In one, everyone, German or foreign, would be charged a new road toll, like Austria’s. In the other, Germans would get a cut in their vehicle tax that miraculously equals the price of the new toll. In effect, only foreigners would have paid more to use the Autobahn. That was a bit too cheeky for the European Commission, which in 2015 flashed a stop sign in front of Mr Dobrindt. But now he has struck a compromise with Brussels. The proposed toll will be cheaper, and the tax relief for Germans better disguised. + +That still has other Europeans fuming about Bavarian harassment aimed at them. Austria and the Netherlands, possibly joined by Denmark and Belgium, may sue Germany before the European Court of Justice. A Bavarian pet peeve has thus escalated to crisis diplomacy. “We in Austria are very unhappy about this,” Christian Kern, the Austrian chancellor, said in December. “This is a stress test for good German-Austrian relations.” Mr Dobrindt retorted: “I have little sympathy for this toll-whingeing, especially when it comes from Austria.” It seems that the EU will always find new ways to puncture its own tyres. + +This article appeared in the Europe section of the print edition under the headline “Another European crisis” + + + + + +Spain and Catalonia + +In their search for independence, Catalans can resemble Brexiteers + +But in a region plagued by corruption and unemployment, the nationalists may not win + +Jan 7th 2017 | BARCELONA + + + +IF YOU look up from the bustle of the winter tourists thronging the streets of Barcelona, you will see some balconies draped with the estelada, a blend of the Catalan and Cuban flags that has become the banner of those who want their land to become independent. There are fewer than there once were, but still enough to inspire the Catalan regional government’s pledge to hold a binding referendum on independence in 2017. Since the Spanish government refuses to contemplate such a vote, a confrontation seems inevitable. + +Indeed, it has already begun. Some 300 Catalan officials face court cases for flouting the law, in acts ranging from a previous unilateral effort in 2014 to organise an independence vote to petty protests, such as flying the estelada from town halls. Carles Puigdemont, the president of the Generalitat (the Catalan government), promises to push through “laws of disconnection” this summer, such as one setting up its own tax agency, prior to holding a referendum, probably in September. His pro-independence coalition has a majority in the Catalan parliament. On December 14th Spain’s Constitutional Tribunal warned the Generalitat that the referendum would be illegal. Spain could face unprecedented defiance of its democratic constitution. + +How has it come to this? Spain’s constitution of 1978 gave Catalonia, one of the country’s most prosperous regions, more self-government than almost any other part of Europe. The Generalitat controls not just schools and hospitals but police and prisons. It has made Catalan the main language of teaching. Under Jordi Pujol, the skilful moderate nationalist cacique (political boss) who headed the Generalitat from 1980 to 2003, Catalonia was content with this settlement, using its votes in the Madrid parliament to extract increments to it powers and revenues. + +Two things upset matters. The first was when the Constitutional Tribunal in 2010 watered down a new autonomy statute, which recognised Catalonia’s sense of nationhood and granted additional legal powers to the Generalitat. It had been approved by referendum in Catalonia and by the Spanish parliament. The second factor was the economic crisis after the bursting of Spain’s property bubble in 2008. + +In 2012 demonstrators against austerity began to put the blame on Madrid, rather than Artur Mas, Mr Pujol’s heir. Support for independence surged from less than 25% to more than 45%. “Society moved towards more radical positions,” thinks Joan Culla, a historian. Others see this as at least in part induced by the Generalitat, with its money and powerful communications machine. It allowed the nationalists to keep power, despite budget cuts and revelations that for decades they had taken rake-offs on public contracts. + +Catalan society remains split. “There aren’t the numbers to advance [to independence] but there’s enough to make a lot of noise,” says Jordi Alberich of the Cercle d’Economia, a business group. + +Best of enemies + +This stand-off has been politically profitable not just for the Catalan nationalists but also for Mariano Rajoy, Spain’s prime minister, and his conservative People’s Party. His staunch defence of his country’s territorial unity is popular in most places outside Catalonia. For years Mr Rajoy did nothing to respond to Catalan grievances, some of which are justified. Catalonia pays more into the central kitty than it gets back, but its transport systems have been neglected while Madrid has spiffy metro lines and a surfeit of motorways. + +Yet weariness with the deadlock has taken hold, in both Barcelona and Madrid. Last month Mr Rajoy put his deputy, Soraya Sáenz de Santamaría, in charge of the Catalan question. She is putting feelers out to the Generalitat. Mr Puigdemont has published a list of 46 points to negotiate. It starts with the “binding referendum”. + +It is not hard to divine the contours of a deal. Mr Rajoy could offer concessions on financing and infrastructure. More controversially, he could propose recognising the Catalan language or that Catalonia is a nation within Spain. + +The toughest issue is the referendum. This is no moment to contemplate any sort of plebiscite with equanimity. Catalan nationalists claim to be exemplary pro-Europeans. But there are many echoes of Brexit in Catalonia. Instead of Brussels, it is Madrid the nationalists accuse of stealing Catalans’ money. They argue that independence would be quick and easy. “The great growth in support for independence from 2012 was the first manifestation of populism in Spain,” says Javier Cercas, a writer who lives in Barcelona. + +Mr Puigdemont insists that blocking the referendum “would be bad news for democracy”. He is prepared to negotiate its timing. But he adds: “We won’t easily renounce it. I think we’ve earned the right to be heard.” Some in Barcelona believe the Generalitat’s leaders are searching for a dignified way to back down. Mr Puigdemont talks also of “constituent” elections to found a new state. But his party, clouded by corruption, may suffer. The Catalan variant of Spain’s left-wing Podemos, which already runs Barcelona’s city government and which is forming a new, broader, party, is likely to gain ground. It wants Catalonia to form part of a “plurinational” Spain, a cleverly vague formula. + +“Is being part of Spain a problem in the daily life of Catalans?” asks Inés Arrimadas of Ciudadanos, an anti-nationalist party that leads the opposition in the Catalan parliament. “For us the problems of Catalonia are unemployment, poverty and corruption.” The longer the deadlock lasts, the harder Mr Puigdemont may find it to persuade Catalans otherwise. + +This article appeared in the Europe section of the print edition under the headline “Catalexit?” + + + + + +Nailed it + +How Martin Luther has shaped Germany for half a millennium + +The 500th anniversary of the 95 theses finds a country as moralistic as ever + +Jan 7th 2017 + + + +SET foot in Germany this year and you are likely to encounter the jowly, dour portrait of Martin Luther. With more than 1,000 events in 100 locations, the whole nation is celebrating the 500th anniversary of the monk issuing his 95 theses and (perhaps apocryphally) pinning them to the church door at Wittenberg. He set in motion a split in Christianity that would forever change not just Germany, but the world. + +At home, Luther’s significance is no longer primarily theological. After generations of secularisation, not to mention decades of official atheism in the formerly communist east (which includes Wittenberg), Germans are not particularly religious. But the Reformation was not just about God. It shaped the German language, mentality and way of life. For centuries the country was riven by bloody confessional strife; today Protestants and Catholics are each about 30% of the population. But after German unification in the 19th century, Lutheranism won the culture wars. “Much of what used to be typically Protestant we today perceive as typically German,” says Christine Eichel, author of “Deutschland, Lutherland”, a book about Luther’s influence. + +Start with aesthetics. For Luther this was, like everything else, a serious matter. He believed that Christians were guaranteed salvation through Jesus but had a duty to live in such a way as to deserve it. Ostentation was thus a disgraceful distraction from the asceticism required to examine one’s own conscience. The traces of this severity live on in Germany’s early 20th-century Bauhaus architecture, and even in the furniture styles at IKEA (from Lutheran Sweden). They can be seen in the modest dress, office decor and eating habits of Angela Merkel, the daughter of a Lutheran pastor, and of Joachim Gauck, Germany’s president and a former pastor himself. Both may partake of the glitz of the French presidency while visiting Paris, but it would never pass in Berlin. + +Luther shared his distaste for visual ornament with other Protestant reformers. But he differed in the role he saw for music. The Swiss Protestants John Calvin and Huldrych Zwingli viewed music as sensual temptation and frowned on it. But to Luther music was a divinely inspired weapon against the devil. He wanted believers to sing together—in German, in church and at home, and with instruments accompanying them. Today Germany has 130 publicly financed orchestras, more than any other country. And concerts are still attended like sermons, sombrely and seriously. + +Luther’s inheritance can also be seen in the fact that Germany, the world’s 17th-most populous country, has the second-largest book market after America’s. After he translated the Bible into German, Luther wanted everyone, male or female, rich or poor, to read it. At first Protestants became more literate than Catholics; ultimately all Germans became bookish. + +Finally, a familiar thesis links Luther to German attitudes towards money. In this view Catholics, used to confessing and being absolved after each round of sins, tend to run up debts (Schulden, from the same root as Schuld, or “guilt”), whereas Protestants see saving as a moral imperative. This argument, valid or not, has a familiar ring in southern Europe’s mainly Catholic and Orthodox countries, which have spent the euro crisis enduring lectures on austerity from Wolfgang Schäuble, Germany’s devoutly Lutheran finance minister. + +Yet on money, too, Luther differed from other reformers. When Max Weber wrote of the Protestant work ethic in 1904, he had in mind Calvinism and its relatives, such as American Puritanism. Calvin viewed an individual’s ability to get rich as a sign that God had predestined him to be saved. To Luther, Christians were already saved, so wealth was suspect. Instead of amassing it, Christians should work for their community, not themselves. Work (Beruf) thus became a calling (Berufung). Not profit but redistribution was the goal. According to Gerhard Wegner, a professor of theology, this “Lutheran socialism” finds secular expression in the welfare states of Scandinavia and Germany. + +Luther’s “subcutaneous” legacy keeps popping up in surprising places, says Mrs Eichel. Germans, and especially Lutherans, buy more life insurance but fewer shares than others (Luther didn’t believe in making money without working for it). And everywhere they insist on conscientious observance of principle and order. They religiously separate their rubbish by the colour of glass and are world champions at recycling (65% of all waste), easily beating the second-place South Koreans. + +Holier than thou + +Luther also shares blame for some negative qualities ascribed to Germans. He was deeply anti-Semitic, a prejudice his countrymen have shed at great cost (he blamed evil stares from Jews for the illness that eventually killed him). Germans’ legendary obedience to authority is attributed to Luther’s insistence on separating spiritual and worldly authorities (which princes in his day found useful in suppressing a peasants’ revolt). And although personally fond of boisterous jokes, he was among the founding figures of Germany’s rather humourless and preachy tradition of public discourse. Germans today are the first to bemoan their national habit of delivering finger-wagging lectures. + +Such rigid moralism can make Germans hard to deal with, especially in Brussels, where the EU’s problems demand a willingness to let misdemeanours slide. But there are worse traits than excessive morality. Besides, 500 years on, Lutheran Germany is being transformed by globalisation. Germany today has not only devout ascetics but everything from consumerist hipsters to Om-chanting yogis. A growing Muslim population is pushing the country towards a new kind of religious pluralism. Mrs Eichel herself finds German churches “too serious”; she attends one headed by an African-American gospel preacher. If the downside of Germans’ Lutheran heritage is a difficulty in lightening up or accepting alternative lifestyles, they seem to be getting over it. + +This article appeared in the Europe section of the print edition under the headline “Nailed it” + + + + + +Britain + + + + +Crime: How low can it go? + +Brexit preparations: Rogers and out + +International development: A stingy new year + +Bagehot: Pierogi and the British genius + + + + + +Law and order + +On Britain’s safe streets, how low can crime go? + +A decades-long fall in offending seems to be tapering off. Yet crime rates could drop even further in future + +Jan 7th 2017 + + + +MARY ANN COTTON was one of the great Victorian poisoners. She probably killed three of her four husbands, a lover, her mother and 11 of her 13 children. Arsenic was her weapon of choice. As the deaths mounted, the authorities became suspicious. Only when they tested the empty medicine bottles that littered her house and found evidence of arsenic was Cotton caught. She was tried and hanged in 1873. Today murder by poison is rare—dangerous substances are more tightly controlled and the accuracy of autopsies makes the crime harder to pull off. In the year to March 2015 only 11 people were killed in this way. + +Poisoning is not the only offence almost to have disappeared. Since the mid-1990s Britain has seen a steady and dramatic decline in lawbreaking: the number of crimes has more than halved, according to the official Crime Survey for England and Wales. Vehicle theft has fallen by 86% and burglary by 71% since 1995. Violent crime has dropped by two-thirds and robberies by more than half. Even with the onset of the financial crisis in 2007 and the ensuing cuts to welfare and public services, including the police, Britain has grown ever safer. + +The explanations range from the falling value of items once stolen, such as televisions, to clever policing and improved security. Ram-raiding, a once-common crime in which criminals crash cars or vans through the front of shops or banks in order to loot them, is largely a thing of the past, says Nick Tilley, a criminologist at University College London, because of innovations such as the introduction of bollards in front of such premises and security shutters to protect shopfronts. + +Other criminal enterprises have become less rewarding. Phone theft increased as smartphones took off, says Graham Farrell, a criminologist at the University of Leeds, but it has since ebbed as owners have gained the power to track and disable their stolen devices. The proportion of owners reporting their phone nicked fell by half between 2009 and 2016. Nor is it any longer worth robbing bus drivers, because card payments and cash-drop boxes mean they no longer carry much money. Data from Transport for London show a fall of 56% in bus robberies between 2013 and 2015, which coincides with a reduction in the number of cash payments for fares. + +In some cases, the harm has been reduced even as the crime has persisted. Ensuring that pubs and clubs give drinkers venturing outside receptacles made of plastic or toughened glass, which breaks into blunt little cubes rather than jagged shards, has cut the number of severe injuries, particularly to the face, incurred by drunken brawlers. Before the drinks industry switched to toughened glass in 1997, 13% of violence between strangers involved the use of glasses or bottles. The year after the switch it dropped to 4%. + +Yet the fall in crime seems to have slowed. The overall number of offences dropped by just 1% in the year to June 2016, according to the Crime Survey. Compare that with the decline of 13% over the previous two years. And a few crimes are rising again. Car theft edged up by 1%. The kinds of violent crimes that do not cause physical injury (such as stalking, harassment and death threats) climbed by 18%. Pickpocketing, which had been going up even while instances of other offences fell, continued to rise. Have Britain’s crime rates reached their nadir? + +The recent levelling off may be the long-expected impact of the financial crisis, suggests Tim Newburn, a criminologist at the London School of Economics. In times of hardship people steal more. Attempts to break into homes have risen by 5% over the past year. Domestic violence goes up with the anxiety of poverty and appears to be increasing. The Crime Survey stops counting offences after five incidents involving the same victim. But remove that cap and violence against women has been rising since 2008. That suggests that even if the number of women being abused at home has not risen, victims are being attacked more often. + +Still, further declines in crime are possible. Pinching cars is one example of a “gateway crime”—the first rung on the ladder to more serious lawbreaking. The drastic reduction in car theft in the past couple of decades has thus meant fewer entrants into the pool of criminals. Young people make up a shrinking share of the prison population. In June 2011, men aged 18-24 accounted for 26% of those locked up. They now represent just 17%. And whereas youths are growing less likely to reoffend, among older cons recidivism is on the increase. + +Older, experienced crooks lie behind the recent rises in certain crimes. Although car theft in general has been falling, sophisticated thefts of expensive cars by skilled criminals have increased. Swiping posh vehicles for resale and export is more difficult than nicking them off the street for joyriding. Thieves are pinching car keys rather than simply breaking into vehicles, or unlocking them remotely by hacking into their security systems. + +That such professionals are responsible hints at why crime rates may have further to fall. Studies in America, where crime has also been declining for a long time, suggest that men over 40 today offend at a much higher rate than men of that age did a couple of decades ago. Today’s middle-aged crooks learned their trade in the 1980s when crime was relatively easy, and have carried on offending, says Mr Farrell. In time this light-fingered generation will “retire”, or die. With fewer novices taking their place, crime may dip lower still. + +This article appeared in the Britain section of the print edition under the headline “How low can it go?” + + + + + +Britain and the European Union + +Britain’s man in Brussels resigns less than three months before Brexit negotiations begin + +The angry resignation of Sir Ivan Rogers lays bare the government’s unreadiness for the bargaining ahead + +Jan 7th 2017 + +Ivan to break free + +CIVIL servants mostly operate behind the scenes and off camera. Sir Ivan Rogers, Britain’s permanent representative to the European Union since November 2013, fits the bill nicely. Yet his announcement on January 3rd that he was leaving early became big news because of what it showed about the government’s unreadiness for Brexit negotiations. + +Sir Ivan, a former Treasury and EU official, knows everything there is to know about how Brussels works. He was David Cameron’s chief adviser on Europe. He got to know Theresa May when, as home secretary, she engaged in tortuous talks over Britain’s opt-out from EU policies on justice and home affairs. But he has long been faulted by Eurosceptics as too gloomy over Brexit. In December he was pilloried for reporting that it could take ten years to negotiate and ratify a trade deal with the EU. Yet as Sir Ivan put it this week, free trade “does not just happen when it is not thwarted by authorities.” Experience shows that such deals can indeed take years to agree. + +His other purported sin came during Mr Cameron’s attempted renegotiation of Britain’s membership terms before the referendum. At one point the prime minister wanted to demand a unilateral emergency brake on free movement of EU citizens to Britain. Sir Ivan advised him that other EU leaders, including Germany’s Angela Merkel, would reject this out of hand. So Mr Cameron settled instead for a four-year freeze on in-work benefits for EU migrants. Brexiteers claim that, without Sir Ivan’s excessive caution, Britain could have got a lot more. Yet the EU’s attachment to free movement is genuine and deep—even the benefits change that Mr Cameron won took 48 hours of hard pounding to secure. + +Uncertainty clouds Brexit, even after the speedy replacement of Sir Ivan by Sir Tim Barrow, previously ambassador to Russia. Sir Ivan’s letter makes clear that the government has no detailed exit strategy and that its negotiating team is not even fully in place. Mrs May insists she will trigger Article 50, the legal way to leave the EU, by the end of March, earlier than Sir Ivan advised. That will set a two-year deadline for Brexit. A chunk of 2017 will be taken up by Dutch, French, German and probably Italian elections. Sir Ivan pointedly notes that serious multilateral negotiating experience is in short supply in Whitehall. In the EU institutions in Brussels, it is not. + +His resignation supports the idea that Mrs May and her ministers mistrust advisers tainted by time in Europe. Lord Macpherson, a former permanent secretary to the Treasury, tweeted that, with other departures, it was a “wilful & total destruction of EU expertise”. Anyone with experience of Brussels knows it is a place in which knowledge of EU customs, laws and procedures is valuable, especially after midnight. Mrs May could be repeatedly ambushed if she is bereft of advisers ready, as Sir Ivan puts it, to “challenge ill-founded arguments and muddled thinking.” + +Other EU countries have long been frustrated by the British, who favour a transactional approach to the project over dreams of ever closer union. But they have also come to admire the talent and dedication of British diplomats and officials. It would be gravely damaging to Mrs May if she were to lose those advantages at a time when they are needed more than ever. + +This article appeared in the Britain section of the print edition under the headline “Rogers and out” + + + + + +The season of goodwill + +Grumbles grow over Britain’s generous foreign aid budget + +Cuts at home and spending abroad provoke calls for a rethink + +Jan 7th 2017 + + + +IN 2015 Britain gave away £12.1bn ($18.5bn) in foreign aid, more than any country bar America. It was one of just six countries to meet the UN’s target of spending 0.7% of GDP on international assistance. Yet although the leaders of all Britain’s main political parties support this generosity, grumbles that the money should stay at home are growing louder. + +For the past few months newspapers have been digging up examples of exorbitant aid-industry salaries and alleged mis-spending. According to the Daily Mail, £5.2m of British cash went to an Ethiopian pop group (defenders point out that the band was part of a project to change attitudes about women’s roles). Some backbench Conservatives have called for aid to be redirected to pay for social care for elderly Britons. The UK Independence Party wants to spend it on homeless veterans instead. + +The appointment of Priti Patel as head of the Department for International Development in July raised hawks’ hopes, since she had previously called for the department to be abolished. So far, though, Ms Patel has done little to live up to her ferocious reputation besides talking tough to international agencies. Few aid-watchers expect big changes to government policy. The 0.7% target was enshrined in law by the Conservative-Liberal Democrat coalition in 2015; maintaining it is a Tory manifesto commitment. + +Some charity bosses whisper that the fuss is not all bad. A few executives are indeed paid too much, and consultancies sometimes overcharge, they say. Pointing this out is worthwhile, especially since the industry can be too defensive about instances of genuine incompetence. Yet much of the criticism is hollow. Some newspapers complained about bureaucracy, then whinged about programmes in which cash handouts were given directly to the poor. + +The government could tweak aid policy to use more of the funds to promote British commercial interests, or hand out more money bilaterally rather than through intermediaries. Neither would make aid spending more effective, says Owen Barder of the Centre for Global Development, a think-tank. Nor would they insulate the government from criticism. With public services facing cuts, the generous aid budget will come under continued fire however well it is spent. + +This article appeared in the Britain section of the print edition under the headline “A stingy new year” + + + + + +Bagehot + +Britain’s genius is its ability to integrate newcomers + +Beyond the headlines, Poles in Britain are quietly melding their cultural traditions with the native ones + +Jan 7th 2017 + + + +THE new year finds Britain tense. Brexit looms: Theresa May will soon start the two-year countdown. There is still the tangle of divisions that contributed to last June’s referendum vote. The gaps between liberal, Remain-voting places and conservative, Leave-voting ones will widen as the trade-offs of Brexit become clear. Cultural grievances concerning rapid inflows of foreigners, and of existing immigrants perceived to have integrated poorly, remain unresolved. Racist slogans have appeared on walls and hate crimes are up. Still Mrs May refuses to guarantee European Union citizens the right to stay put. “A disunited Kingdom”, bellow headlines. + +How to reunite it? Debates rage over Louise Casey’s review into integration, published last month. Commissioned by David Cameron, the civil servant’s report paints a grim picture of a land cleft by segregation, where citizens live parallel lives. It recommends that schools teach British values and that immigrants take an oath of loyalty (an idea endorsed by Sajid Javid, the communities secretary). Much of the opposition agrees, Stephen Kinnock urging his fellow Labour MPs to “move away from multiculturalism and towards assimilation”. On January 5th a new Parliamentary group on integration advocated a middle way between the two approaches. Expect more in this vein as the year unfolds. + +Much of it will be warranted. Segregation scars parts of Britain, some immigrant groups remain poorly integrated and minorities within them are hostile to liberal values. But the gloom lacks a sense of the bigger picture. Accompany Bagehot to Ely, a cathedral city sprouting from the prairies of eastern England, where thousands of central and eastern Europeans have moved to pick vegetables for low wages—and where many have settled. Your columnist visited on December 23rd to witness the segregation. What better litmus test than Christmas, with its many national variations? + +Sure enough, the local Poles’ traditions were widely evident. In a shop named “White & Red”, green-grey carp glistened in ice boxes; shelves groaned with pierogi (dumplings) and bottles of bison-grass vodka; piles of sachets variously containing hay and communion wafers teetered by the till. Gosia Bates and Joanna Bialas, two locals, explained that each ingredient features in the Wigilia, or Christmas Eve, meal. This involves hay scattered on the floor (to evoke the nativity), wafers broken before the meal and 12 dishes including carp, herring, pierogi, mushrooms, beetroot soup and poppy-seed cake. No meat or alcohol is taken, so the vodka comes out at midnight. The steady traffic of local Poles in the shop spoke to the strength of this foreign culture. “Every year my uncle sends me this from Silesia, for good financial luck,” said Mrs Bates, producing a shiny carp scale from her purse. + +Below the surface, however, something else is happening. Britons also shop at “White & Red”, lured by the garlicky sausage and crusty bread. And Poles are picking up British habits like eating turkey and watching the queen’s Christmas speech. Those who, like Mrs Bates, have British partners are leading the fusion: her Anglo-Polish son receives British chocolate from the Polish St Nicholas on December 6th; her Christmas tree is decorated towards the start of the month (the British way) but will stay up well into January (the Polish way); her son receives half of his presents on December 24th (Polish) and half on the 25th (British). She serves turkey on Christmas Day, as is typical in Britain, but also leaves a chair empty—a Polish tradition respecting strangers. When relatives visit she cooks an English breakfast, which they love (apart from the baked beans). She enjoys crackers but feels “a bit silly with a paper hat on my head”. Ms Bialas plans to create a similar mix of cultures for her baby, due in 2017. + +Without oaths, integration classes or other forms of state do-goodery, central European cultures in Britain are melding with local ones. Children are leading the way. Right after the Brexit vote teachers in Ely had to sooth not just upset Polish pupils but also British ones who fretted about losing their pals. Ms Bialas describes school pick-up time, when Polish and British parents tend to stick to their own, but children pour out in a multinational muddle. Ask the Polish ones which football teams they support, she says, and they often name two: one Polish and one British. Some have become so British that they now struggle in their native tongue, getting A* grades in maths but Ds in Polish written exams. This even extends to the liturgy. Mariusz Urbanowski, a local Polish priest, says he mixes the two languages in his festive services, to cater for different generations of Anglo-Poles. + +Szczesliwego New Year! + +Such is the Britain forgotten by the gloomsters. Fully 82% of its citizens socialise at least monthly with people from different ethnic or religious backgrounds; from 2003 to 2016 the proportion calling their vicinity “cohesive” rose from 80% to 89%; over half of first-generation migrants have friends of a different ethnicity (among their kids the proportion is nearer three-quarters); numbers of inter-ethnic marriages and households are rising; educational and employment gaps are shrinking. The proportion of British-Pakistani households using English as their main language rose from 15% to 45% in the 13 years to 2010. + +The story of British life in 2017 is that new immigrants are enriching and combining with this mongrel culture as loyally as their predecessors once did. In pubs and churches, gyms and schools, Britishness is being made and remade not by political diktat but by an organic process of mixing and mingling. Britain contains few French-style banlieues or American-style ghettos. London’s mayor is a liberal Muslim. Sikhs in turbans protect Buckingham Palace. Tikka masala (Indian-ish) and fish and chips (Jewish-ish) are the country’s national dishes. Polish-ish pierogi will surely join them soon. In a troubled age, let this diverse country take more pride in all that. + +Economist.com/blogs/bagehot + +This article appeared in the Britain section of the print edition under the headline “Pierogi and the British genius” + + + + + +International + + + + +Fixing fragile nations: Conquering chaos + + + + + +Conquering chaos + +Why states fail and how to rebuild them + +Fixing fragile nations: lessons from Afghanistan and South Sudan + +Jan 7th 2017 | JUBA AND KABUL + + + +IN THE middle of 2016 a suicide-bomber blew up a minibus full of judicial staff in Kabul. The injured were rushed to the Emergency Hospital in the Afghan capital. One was married to a nurse there, who was on duty when he arrived. He is now paraplegic. She is “coping”, says a colleague: “She’s one tough woman.” + +It is striking how many of the hospital’s patients were targeted for upholding the law. Amir Muhammad, a policeman with shrapnel wounds, says the Taliban attacked his post and killed seven of his 14 fellow officers. “They had heavier weapons than us,” he explains. + +The Taliban are as shrewd as they are brutal. Afghanistan is close to becoming a failed state again. To avert that catastrophe, the government must provide adequate security and establish something resembling the rule of law. But it is tricky to set up a functioning legal system when judges and police officers keep getting murdered. Moreover, the government can hardly claim to be keeping people safe when they fear being blown up on their way to work. + +Since Barack Obama drastically reduced the number of American troops in Afghanistan, the Taliban have made alarming gains. NATO forces there fell from a peak of 132,000 in 2011 to around 13,000 today. Only about 60% of Afghans live in areas controlled by the government. Others live under Taliban control (about 10%) or in areas that are violently disputed. + +Wherever they can, the Taliban replace the government’s justice with their own swifter, harsher (and, some say, less corrupt) variety. If two peasants quarrel over a piece of land, a Taliban official will hear both sides and make a ruling. Such rulings often stick, for no one doubts that the Taliban will enforce them. + +The pull-out of foreign troops has made Afghanistan not only more dangerous, but poorer, too. By one estimate, the NATO mission cost almost $1trn between 2001 and 2014—more than six times as much as Afghanistan’s GDP over that period. Many Afghans sold stuff to and built things for the foreigners. Now that boom is over. Economic growth plunged from 14% in 2012 to 0.8% in 2015. + +“Day by day we are losing our business,” says Ashad Wali Safi, who runs an electronics store in Kabul. The aid agencies that used to buy printers from him are gone. Security is “very bad”. (The previous day, a suicide-bomb had killed at least 30 people in a nearby mosque.) “Even in daytime, we don’t feel safe. At night? Forget it.” + +Adding to the uncertainty, no one knows what Donald Trump’s Afghan policy will be. In the past he has said both that American troops should leave Afghanistan, and that they should “probably” stay. Afghans are nervous. “We hope this new American administration will be supportive too,” says Ashraf Ghani, the president. + + + +Few things matter more than fixing failed states. Broadly defined, state failure provides “a general explanation for why poor countries are poor”, argue Daron Acemoglu of the Massachusetts Institute of Technology and James Robinson of the University of Chicago in “Why Nations Fail”. Life in a failed or failing state is short and harsh. Life expectancy in the bottom 16 countries on the Fragile States Index compiled by the Fund for Peace, a think-tank (see map), is 85% of the global average. Measured at purchasing-power parity, income per head is a miserable 21%. + +There goes the neighbourhood + +Lawless regions, such as the badlands of Pakistan and Yemen, act as havens for terrorists. And civil wars tend to spill across borders. The Rwandan genocide of 1994, for example, sparked an even deadlier conflagration in Congo. + +In the most extreme form of state failure, in places like Somalia, the central government does not even control the capital city. In milder forms, as in Nigeria, the state is far from collapse but highly dysfunctional and unable to control all of its territory. Or, as in North Korea today or China under Mao Zedong, it controls all of its territory but governs in a way that makes everyone but a tiny elite much worse off. + +This article will look at two main examples: an unambiguously failed state, South Sudan, and a state tottering on the brink, Afghanistan. It will argue that, as Mr Acemoglu and Mr Robinson put it, the key to understanding state failure is “institutions, institutions, institutions”. The world’s newest country, South Sudan has received billions of dollars of aid and the advice of swarms of consultants since seceding from Sudan in 2011, but has failed to build any institutions worthy of the name. Afghanistan faces a terrifying insurgency but has a president doing his best to restore order. + +States are not wretched and unstable because of geography—if so, how to explain the success of landlocked Botswana? Nor is culture the main culprit: if so, South Koreans would not be more than 20 times richer than North Koreans. Some societies have “inclusive institutions that foster economic growth”; others have “extractive institutions that hamper [it]”. South Sudan is an extreme example of the latter. + +Never look back + +“Everybody I know is getting out,” says Joyce Mandi, as she mixes maize porridge for her six children at a bus stop in South Sudan. Around her, young men heave bags and mattresses onto the roof of a minibus. Ms Mandi is fleeing her village and heading for Kakuma, a refugee camp in neighbouring Kenya. Her husband has gone into the bush, she says, to fight the government. + +The South Sudanese, who are mostly black African and non-Muslim, fought for half a century to secede from Sudan. Arab Muslims from the north used to oppress and enslave them. Perhaps 2m southerners died in the war of secession. But few think life has got better since then. + +Those now in charge are former guerrillas from the Sudan People’s Liberation Army (SPLA), a group of tribal militias united only by hatred of the north. The first president, Salva Kiir, tried to hold the SPLA’s factions together by paying them off with petrodollars (oil is almost the only thing South Sudan exports). Alex de Waal of Tufts University estimates that in 2013 the government paid salaries for 320,000 soldiers, police and militiamen—more than a tenth of all men aged 15-54. Many of these soldiers did not exist: their pay was pocketed by the warlords supposedly commanding them. + +But the state’s largesse did not buy loyalty. Instead, it encouraged the men with guns to demand more. Then the money ran out, thanks to collapsing oil prices and a suicidal game of chicken, in which the government stopped production to try to squeeze better terms from Sudan (which controls the pipeline through which South Sudanese oil is exported). + +As his coffers emptied, Mr Kiir started flagrantly to favour his own Dinka tribe, South Sudan’s biggest, to stay in power. His vice-president, Riek Machar, who is from the Nuer tribe, the second-biggest, was forced out of government in July 2013 and went back to war later that year. A peace deal in 2015 quickly broke down. Some 3m South Sudanese—a quarter of the population—have fled their homes. Were it not for food aid, often dropped out of planes onto remote villages, hundreds of thousands would starve. + +South Sudan failed to build institutions that transcended tribal loyalties or curbed the power of warlords. Torit, where Ms Mandi boarded that minibus to Kenya, is a good place to observe the hollowness of the country’s government. Though it is capital of one of South Sudan’s 28 states, it feels like a military outpost. Troops in “technicals”—pick-up trucks with mounted machine-guns—patrol the streets. + +There are plenty of government buildings, including state ministries of education, culture and health. But none of them does much. Teachers were last paid in September, says Jacob Atari, the local education minister. Inflation of over 800% means their monthly salary of around 300 South Sudanese pounds is now worth less than $4. Over 70% of children are out of school, says Mr Atari. + +Nowhere in South Sudan does the state do what it is supposed to. Only 27% of adults can read, according to the UN. Preventable diseases such as cholera, measles and malaria are rampant. The rule of law is a distant dream. + +The country’s political system is in theory decentralised, but in reality the money flows through Juba, the national capital. And instead of being distributed to states, it is typically stolen or spent on weapons. Politics is a euphemism for armed battles over plunder. The warlord who wins can steal the oil and pay his troops. (Or, he can simply let them rob civilians.) + +The fighting becomes tribal because warlords recruit by stirring up ethnic tension so that their kinsmen will rally to them. This creates a vicious circle. Lacking protection from other institutions, people seek it from their own tribe. Rather than demand evenhanded government, they back tribal leaders, knowing that they will steal and hoping they will share the spoils with their kin. + +The splintering of South Sudan can be glimpsed in the “protection of civilians” camps maintained by the UN. One in Juba holds almost 40,000 people. At night, gunshots are common and aid workers refuse to venture inside. Most of the residents are Nuers, like Mr Machar, who have been stranded here since the civil war began. They are sure who is to blame. “Our tribe was killed by the government and so we came here,” says Kikany Kuol Wuol, a community chairman in the camp. “We cannot leave, we have nowhere to go. If our women just go outside to look for firewood they are raped.” When fighting broke out in Juba in July between Mr Machar’s forces and the government, it spread into the camp as UN peacekeepers withdrew. The problem, says Mr Kuol, is that: “This is a government only for Dinkas. The rest of us they want to starve to death.” Everyone in the camp supports Mr Machar, he says. + +Mr Acemoglu and Mr Robinson are pessimistic about failed nations’ chances of turning around. Extractive institutions typically have historical roots. For example, the authors trace the failure of today’s Democratic Republic of Congo partly to the pre-colonial Kingdom of Kongo, where taxes were arbitrary (one was levied whenever the king’s beret fell off) and the elite sold their subjects to European slavers. Peasants therefore lived deep in the forest, to hide from slavers and tax-collectors. They did not adopt new technology, such as the plough, even when they heard of it. Why bother, when any surplus was subject to seizure? Modern Congolese farmers make similar complaints. + +“Why Nations Fail” argues that “the politics of the vast majority of societies throughout history has led, and still leads today, to extractive institutions.” These tend to last because they give rulers the resources to pay armies, bribe judges and rig elections to stay in power. These rulers adopt bad policies not because they are ignorant of good ones but on purpose. Letting your relatives embezzle is bad for the nation but great for your family finances. + +But failed states are not doomed to stay that way. Between 2007 and 2016, according to the Fragile States Index, 91 countries grew more stable and 70 grew shakier. Among those improving were giants such as China, Indonesia, Mexico and Brazil. The worst performers were mostly smaller, such as Libya and Syria. + +Even states that have collapsed completely can be rebuilt. Liberia and Sierra Leone were stalked by drug-addled child soldiers a decade and a half ago; now both are reasonably calm. The key is nearly always better leadership: think of how China changed after Mao died. Many bad rulers continue deliberately to adopt bad policies, but they can be—and often are—replaced with better ones. + +Instructions included + +Afghanistan’s president since 2014, Mr Ghani is a former academic and author of a book called “Fixing Failed States”. His TED talk on fixing broken states has been viewed 750,000 times. Now he is trying to put his own theories into practice. + +Yet he admits that rebuilding Afghanistan is more complex than he expected. The insurgents draw support from several sources: local grievances, tribal animosities, global Islamist networks, organised crime (Afghanistan is the world’s largest producer of opium) and the Pakistani security services. In 2015 Mr Ghani accused Pakistan of being in an “undeclared state of hostility” towards his country. Now he goes further. “In October it was almost a declared state of hostility,” he says. The Taliban enjoy havens in Pakistan’s lawless areas and, analysts suspect, direct help from Pakistani spooks, some of whom would rather have Afghanistan in chaos than see India gain a foothold there. Recent suicide-bombs in Kabul appear to have contained military-grade explosives, which Afghans assume came from over the border. + +Mr Ghani has a clear idea of the state’s basic functions. First, it must uphold the rule of law. Second, it must secure a monopoly on the use of violence. The two are linked. As Sarah Chayes points out in “Thieves of State”, when people see the state as predatory, they are more likely to support insurgents. She cites the example of an Afghan who was shaken down nine times by police on a single journey, and vowed not to warn them if he saw the Taliban planting a bomb to kill them. + +Mr Ghani justly takes credit for the fact that the Taliban did not overthrow the state after Mr Obama’s pull-out. “In 2015 we were in danger, because the global and regional consensus was that we would not be able to hold,” he says. Now, says General John Nicholson, the commander of the NATO forces in Afghanistan, the Taliban have been fought to a stalemate. They seized a big city, Kunduz, in 2015, but were driven out and have taken no more since. NATO air power combined with American-trained Afghan special forces pack “an offensive punch”, says General Nicholson. The Taliban cannot mass troops for fear of NATO bombs. However, they have “safety outside the country”. + +Mr Ghani is less tolerant of corruption than was his predecessor, Hamid Karzai, and appears to have cleaned up customs and government procurement a fair bit. He has improved tax collection and promoted infrastructure projects, such as rail links and power plants, in the hope that Afghanistan will become a central Asian hub. (He notes with satisfaction that the Taliban have said they will not attack such schemes.) He promotes education for women, which was banned when the Taliban ruled Afghanistan in 1996-2001. To conservative Afghans who think this would lead to illicit mixing with men, he has a convincing response. “In the remote provinces, they are asking for women doctors,” he points out. How can they have female doctors if they do not allow their daughters to go to school? + +Politics by other means in South Sudan + +Nonetheless, a survey by the Asia Foundation finds that only 29% of Afghans believe the country is moving in the right direction. This is largely because 70% fear for their safety—the highest level in over a decade. However, a slim majority (54%) say the army is getting better at providing security, while only 20% say it is getting worse. + +Public perceptions of corruption have barely budged since Mr Ghani came to power, with 89% of Afghans saying it is a problem in their daily life. More encouragingly, the share of those who had dealt with police and reported sometimes having to pay bribes is falling somewhat: from 53% in 2015 to 48% in 2016. + +Foreign donors warm to Mr Ghani. In October he convinced them to pledge $15bn over the next four years. Yet he is leery of how aid is dispensed. The flood of foreign cash that followed the American-led toppling of the Taliban government in 2001 often undermined the state or was wasted. Aid agencies paid salaries 20 times higher than the Afghan civil service, prompting the best officials to quit to work as drivers and interpreters. Mr Ghani has long argued that aid should flow through the national government, rather than support a parallel state that can pack up and go when donor fashions change. He may be getting his way: roughly half of aid now passes through the national budget, a share that is expected to rise. + +Even with a leader determined to make good choices, building an honest state is hard. Mr Ghani complains of inaccurate information. “There were three databases in the Ministry of Education: one for teachers, one for salaries, one for schools…they weren’t talking to each other.” Faulty records make it easier for money to vanish. Digital payments should help, he says—the police thought they had received a pay rise when the first experiments with mobile payments began, because commanders could no longer skim their wages. But there is a long way to go. + +“A decade ago, if you went into a minister’s office, you’d see dust on the desk, no computer and the minister picking his toenails,” says a Western official in Kabul. “Now you have competent ministers and lots of young professional staff who keep in touch via WhatsApp and speak English. The bad news is that Ghani is still learning how to be a politician. Karzai would get on the phone with tribal leaders and chat about their fathers’ health [before talking business]. Ghani tries to book them for a ten-minute meeting, and hustles them out of the door before the tea is cold.” + +This is a common criticism. Mr Ghani is good at retail politics (he won the disputed election in 2014 partly because he had spent so much time sitting in villages asking ordinary Afghans what they wanted). But he is a technocrat among warlords, some of whom have been made billionaires by the drugs trade. He rules in uneasy coalition with a “chief executive” with ill-defined powers: Abdullah Abdullah, the man he beat in 2014. His vice-president is a blood-spattered warlord. The president will struggle to build a clean state when so many bigwigs prefer it dirty, critics say. + +Mr Ghani dismisses the charge. “If politics becomes all tactics, where would you produce change?” he asks. He insists that he bends over backwards to be respectful of tribal leaders, “but it cannot be at the expense of building institutions.” This is a crucial point. Countries whose stability depends on an individual strongman are brittle. Those that create inclusive institutions need never fail again. + +This article appeared in the International section of the print edition under the headline “Conquering chaos” + + + + + +Technology Quarterly + + + + +Finding a voice: What language technology can and can’t do + +I hear you: Speech recognition + +Hasta la vista, robot voice: Speech synthesis + +Beyond Babel: The limits of computer translations + +What are you talking about?: The meaning of speech still eludes machines + +Where humans still beat computers: Brain scan: Terry Winograd + +For my next trick: Coming to grips with voice technology + + + + + +Finding a voice + +What language technology can and can’t do + +Computers have got much better at translation, voice recognition and speech synthesis, says Lane Greene. But they still don’t understand the meaning of language + +Jan 7th 2017 + + + +I’M SORRY, Dave. I’m afraid I can’t do that.” With chilling calm, HAL 9000, the on-board computer in “2001: A Space Odyssey”, refuses to open the doors to Dave Bowman, an astronaut who had ventured outside the ship. HAL’s decision to turn on his human companion reflected a wave of fear about intelligent computers. + +When the film came out in 1968, computers that could have proper conversations with humans seemed nearly as far away as manned flight to Jupiter. Since then, humankind has progressed quite a lot farther with building machines that it can talk to, and that can respond with something resembling natural speech. Even so, communication remains difficult. If “2001” had been made to reflect the state of today’s language technology, the conversation might have gone something like this: “Open the pod bay doors, Hal.” “I’m sorry, Dave. I didn’t understand the question.” “Open the pod bay doors, Hal.” “I have a list of eBay results about pod doors, Dave.” + +Creative and truly conversational computers able to handle the unexpected are still far off. Artificial-intelligence (AI) researchers can only laugh when asked about the prospect of an intelligent HAL, Terminator or Rosie (the sassy robot housekeeper in “The Jetsons”). Yet although language technologies are nowhere near ready to replace human beings, except in a few highly routine tasks, they are at last about to become good enough to be taken seriously. They can help people spend more time doing interesting things that only humans can do. After six decades of work, much of it with disappointing outcomes, the past few years have produced results much closer to what early pioneers had hoped for. + +Speech recognition has made remarkable advances. Machine translation, too, has gone from terrible to usable for getting the gist of a text, and may soon be good enough to require only modest editing by humans. Computerised personal assistants, such as Apple’s Siri, Amazon’s Alexa, Google Now and Microsoft’s Cortana, can now take a wide variety of questions, structured in many different ways, and return accurate and useful answers in a natural-sounding voice. Alexa can even respond to a request to “tell me a joke”, but only by calling upon a database of corny quips. Computers lack a sense of humour. + +When Apple introduced Siri in 2011 it was frustrating to use, so many people gave up. Only around a third of smartphone owners use their personal assistants regularly, even though 95% have tried them at some point, according to Creative Strategies, a consultancy. Many of those discouraged users may not realise how much they have improved. + +In 1966 John Pierce was working at Bell Labs, the research arm of America’s telephone monopoly. Having overseen the team that had built the first transistor and the first communications satellite, he enjoyed a sterling reputation, so he was asked to take charge of a report on the state of automatic language processing for the National Academy of Sciences. In the period leading up to this, scholars had been promising automatic translation between languages within a few years. + +But the report was scathing. Reviewing almost a decade of work on machine translation and automatic speech recognition, it concluded that the time had come to spend money “hard-headedly toward important, realistic and relatively short-range goals”—another way of saying that language-technology research had overpromised and underdelivered. In 1969 Pierce wrote that both the funders and eager researchers had often fooled themselves, and that “no simple, clear, sure knowledge is gained.” After that, America’s government largely closed the money tap, and research on language technology went into hibernation for two decades. + +The story of how it emerged from that hibernation is both salutary and surprisingly workaday, says Mark Liberman. As professor of linguistics at the University of Pennsylvania and head of the Linguistic Data Consortium, a huge trove of texts and recordings of human language, he knows a thing or two about the history of language technology. In the bad old days researchers kept their methods in the dark and described their results in ways that were hard to evaluate. But beginning in the 1980s, Charles Wayne, then at America’s Defence Advanced Research Projects Agency, encouraged them to try another approach: the “common task”. + +Step by step + +Researchers would agree on a common set of practices, whether they were trying to teach computers speech recognition, speaker identification, sentiment analysis of texts, grammatical breakdown, language identification, handwriting recognition or anything else. They would set out the metrics they were aiming to improve on, share the data sets used to train their software and allow their results to be tested by neutral outsiders. That made the process far more transparent. Funding started up again and language technologies began to improve, though very slowly. + + + +Many early approaches to language technology—and particularly translation—got stuck in a conceptual cul-de-sac: the rules-based approach. In translation, this meant trying to write rules to analyse the text of a sentence in the language of origin, breaking it down into a sort of abstract “interlanguage” and rebuilding it according to the rules of the target language. These approaches showed early promise. But language is riddled with ambiguities and exceptions, so such systems were hugely complicated and easily broke down when tested on sentences beyond the simple set they had been designed for. + +Nearly all language technologies began to get a lot better with the application of statistical methods, often called a “brute force” approach. This relies on software scouring vast amounts of data, looking for patterns and learning from precedent. For example, in parsing language (breaking it down into its grammatical components), the software learns from large bodies of text that have already been parsed by humans. It uses what it has learned to make its best guess about a previously unseen text. In machine translation, the software scans millions of words already translated by humans, again looking for patterns. In speech recognition, the software learns from a body of recordings and the transcriptions made by humans. + +Thanks to the growing power of processors, falling prices for data storage and, most crucially, the explosion in available data, this approach eventually bore fruit. Mathematical techniques that had been known for decades came into their own, and big companies with access to enormous amounts of data were poised to benefit. People who had been put off by the hilariously inappropriate translations offered by online tools like BabelFish began to have more faith in Google Translate. Apple persuaded millions of iPhone users to talk not only on their phones but to them. + +The final advance, which began only about five years ago, came with the advent of deep learning through digital neural networks (DNNs). These are often touted as having qualities similar to those of the human brain: “neurons” are connected in software, and connections can become stronger or weaker in the process of learning. But Nils Lenke, head of research for Nuance, a language-technology company, explains matter-of-factly that “DNNs are just another kind of mathematical model,” the basis of which had been well understood for decades. What changed was the hardware being used. + +Almost by chance, DNN researchers discovered that the graphical processing units (GPUs) used to render graphics fluidly in applications like video games were also brilliant at handling neural networks. In computer graphics, basic small shapes move according to fairly simple rules, but there are lots of shapes and many rules, requiring vast numbers of simple calculations. The same GPUs are used to fine-tune the weights assigned to “neurons” in DNNs as they scour data to learn. The technique has already produced big leaps in quality for all kinds of deep learning, including deciphering handwriting, recognising faces and classifying images. Now they are helping to improve all manner of language technologies, often bringing enhancements of up to 30%. That has shifted language technology from usable at a pinch to really rather good. But so far no one has quite worked out what will move it on from merely good to reliably great. + +“ + +“ + +Many early approaches to language technology got stuck in a conceptual cul-de-sac + +Many early approaches to language technology got stuck in a conceptual cul-de-sac + +This article appeared in the Technology Quarterly section of the print edition under the headline “Finding a voice” + + + + + +I hear you + +Speech recognition + +Computers have made huge strides in understanding human speech + +Jan 7th 2017 + + + +WHEN a person speaks, air is forced out through the lungs, making the vocal chords vibrate, which sends out characteristic wave patterns through the air. The features of the sounds depend on the arrangement of the vocal organs, especially the tongue and the lips, and the characteristic nature of the sounds comes from peaks of energy in certain frequencies. The vowels have frequencies called “formants”, two of which are usually enough to differentiate one vowel from another. For example, the vowel in the English word “fleece” has its first two formants at around 300Hz and 3,000Hz. Consonants have their own characteristic features. + +In principle, it should be easy to turn this stream of sound into transcribed speech. As in other language technologies, machines that recognise speech are trained on data gathered earlier. In this instance, the training data are sound recordings transcribed to text by humans, so that the software has both a sound and a text input. All it has to do is match the two. It gets better and better at working out how to transcribe a given chunk of sound in the same way as humans did in the training data. The traditional matching approach was a statistical technique called a hidden Markov model (HMM), making guesses based on what was done before. More recently speech recognition has also gained from deep learning. + +English has about 44 “phonemes”, the units that make up the sound system of a language. P and b are different phonemes, because they distinguish words like pat and bat. But in English p with a puff of air, as in “party”, and p without a puff of air, as in “spin”, are not different phonemes, though they are in other languages. If a computer hears the phonemes s, p, i and n back to back, it should be able to recognise the word “spin”. + +But the nature of live speech makes this difficult for machines. Sounds are not pronounced individually, one phoneme after the other; they mostly come in a constant stream, and finding the boundaries is not easy. Phonemes also differ according to the context. (Compare the l sound at the beginning of “light” with that at the end of “full”.) Speakers differ in timbre and pitch of voice, and in accent. Conversation is far less clear than careful dictation. People stop and restart much more often than they realise. + +All the same, technology has gradually mitigated many of these problems, so error rates in speech-recognition software have fallen steadily over the years—and then sharply with the introduction of deep learning. Microphones have got better and cheaper. With ubiquitous wireless internet, speech recordings can easily be beamed to computers in the cloud for analysis, and even smartphones now often have computers powerful enough to carry out this task. + +Bear arms or bare arms? + +Perhaps the most important feature of a speech-recognition system is its set of expectations about what someone is likely to say, or its “language model”. Like other training data, the language models are based on large amounts of real human speech, transcribed into text. When a speech-recognition system “hears” a stream of sound, it makes a number of guesses about what has been said, then calculates the odds that it has found the right one, based on the kinds of words, phrases and clauses it has seen earlier in the training text. + +At the level of phonemes, each language has strings that are permitted (in English, a word may begin with str-, for example) or banned (an English word cannot start with tsr-). The same goes for words. Some strings of words are more common than others. For example, “the” is far more likely to be followed by a noun or an adjective than by a verb or an adverb. In making guesses about homophones, the computer will have remembered that in its training data the phrase “the right to bear arms” came up much more often than “the right to bare arms”, and will thus have made the right guess. + +Training on a specific speaker greatly cuts down on the software’s guesswork. Just a few minutes of reading training text into software like Dragon Dictate, made by Nuance, produces a big jump in accuracy. For those willing to train the software for longer, the improvement continues to something close to 99% accuracy (meaning that of each hundred words of text, not more than one is wrongly added, omitted or changed). A good microphone and a quiet room help. + +Advance knowledge of what kinds of things the speaker might be talking about also increases accuracy. Words like “phlebitis” and “gastrointestinal” are not common in general discourse, and uncommon words are ranked lower in the probability tables the software uses to guess what it has heard. But these words are common in medicine, so creating software trained to look out for such words considerably improves the result. This can be done by feeding the system a large number of documents written by the speaker whose voice is to be recognised; common words and phrases can be extracted to improve the system’s guesses. + +As with all other areas of language technology, deep learning has sharply brought down error rates. In October Microsoft announced that its latest speech-recognition system had achieved parity with human transcribers in recognising the speech in the Switchboard Corpus, a collection of thousands of recorded conversations in which participants are talking with a stranger about a randomly chosen subject. + +Error rates on the Switchboard Corpus are a widely used benchmark, so claims of quality improvements can be easily compared. Fifteen years ago quality had stalled, with word-error rates of 20-30%. Microsoft’s latest system, which has six neural networks running in parallel, has reached 5.9% (see chart), the same as a human transcriber’s. Xuedong Huang, Microsoft’s chief speech scientist, says that he expected it to take two or three years to reach parity with humans. It got there in less than one. + + + +The improvements in the lab are now being applied to products in the real world. More and more cars are being fitted with voice-activated controls of various kinds; the vocabulary involved is limited (there are only so many things you might want to say to your car), which ensures high accuracy. Microphones—or often arrays of microphones with narrow fields of pick-up—are getting better at identifying the relevant speaker among a group. + +Some problems remain. Children and elderly speakers, as well as people moving around in a room, are harder to understand. Background noise remains a big concern; if it is different from that in the training data, the software finds it harder to generalise from what it has learned. So Microsoft, for example, offers businesses a product called CRIS that lets users customise speech-recognition systems for the background noise, special vocabulary and other idiosyncrasies they will encounter in that particular environment. That could be useful anywhere from a noisy factory floor to a care home for the elderly. + +But for a computer to know what a human has said is only a beginning. Proper interaction between the two, of the kind that comes up in almost every science-fiction story, calls for machines that can speak back (article). + + + +This article appeared in the Technology Quarterly section of the print edition under the headline “I hear you” + + + + + +Hasta la vista, robot voice + +Speech synthesis + +Machines are starting to sound more like humans + +Jan 7th 2017 + +“I’LL be back.” “Hasta la vista, baby.” Arnold Schwarzenegger’s Teutonic drone in the “Terminator” films is world-famous. But in this instance film-makers looking into the future were overly pessimistic. Some applications do still feature a monotonous “robot voice”, but that is changing fast. + +Creating speech is roughly the inverse of understanding it. Again, it requires a basic model of the structure of speech. What are the sounds in a language, and how do they combine? What words does it have, and how do they combine in sentences? These are well-understood questions, and most systems can now generate sound waves that are a fair approximation of human speech, at least in short bursts. + +Heteronyms require special care. How should a computer pronounce a word like “lead”, which can be a present-tense verb or a noun for a heavy metal, pronounced quite differently? Once again a language model can make accurate guesses: “Lead us not into temptation” can be parsed for its syntax, and once the software has worked out that the first word is almost certainly a verb, it can cause it to be pronounced to rhyme with “reed”, not “red”. + +Traditionally, text-to-speech models have been “concatenative”, consisting of very short segments recorded by a human and then strung together as in the acoustic model described above. More recently, “parametric” models have been generating raw audio without the need to record a human voice, which makes these systems more flexible but less natural-sounding. + +DeepMind, an artificial-intelligence company bought by Google in 2014, has announced a new way of synthesising speech, again using deep neural networks. The network is trained on recordings of people talking, and on the texts that match what they say. Given a text to reproduce as speech, it churns out a far more fluent and natural-sounding voice than the best concatenative and parametric approaches. + +The last step in generating speech is giving it prosody—generally, the modulation of speed, pitch and volume to convey an extra (and critical) channel of meaning. In English, “a German teacher”, with the stress on “teacher”, can teach anything but must be German. But “a German teacher” with the emphasis on “German” is usually a teacher of German (and need not be German). Words like prepositions and conjunctions are not usually stressed. Getting machines to put the stresses in the correct places is about 50% solved, says Mark Liberman of the University of Pennsylvania. + +Many applications do not require perfect prosody. A satellite-navigation system giving instructions on where to turn uses just a small number of sentence patterns, and prosody is not important. The same goes for most single-sentence responses given by a virtual assistant on a smartphone. + +But prosody matters when someone is telling a story. Pitch, speed and volume can be used to pass quickly over things that are already known, or to build interest and tension for new information. Myriad tiny clues communicate the speaker’s attitude to his subject. The phrase “a German teacher”, with stress on the word “German”, may, in the context of a story, not be a teacher of German, but a teacher being explicitly contrasted with a teacher who happens to be French or British. + +Text-to-speech engines are not much good at using context to provide such accentuation, and where they do, it rarely extends beyond a single sentence. When Alexa, the assistant in Amazon’s Echo device, reads a news story, her prosody is jarringly un-humanlike. Talking computers have yet to learn how to make humans want to listen. + +This article appeared in the Technology Quarterly section of the print edition under the headline “Hasta la vista, robot voice” + + + + + +Beyond Babel + +The limits of computer translations + +Machine translations have got strikingly better, but still need human input + +Jan 7th 2017 + + + +IN “STAR TREK” it was a hand-held Universal Translator; in “The Hitchhiker’s Guide to the Galaxy” it was the Babel Fish popped conveniently into the ear. In science fiction, the meeting of distant civilisations generally requires some kind of device to allow them to talk. High-quality automated translation seems even more magical than other kinds of language technology because many humans struggle to speak more than one language, let alone translate from one to another. + +The idea has been around since the 1950s, and computerised translation is still known by the quaint moniker “machine translation” (MT). It goes back to the early days of the cold war, when American scientists were trying to get computers to translate from Russian. They were inspired by the code-breaking successes of the second world war, which had led to the development of computers in the first place. To them, a scramble of Cyrillic letters on a page of Russian text was just a coded version of English, and turning it into English was just a question of breaking the code. + +Scientists at IBM and Georgetown University were among those who thought that the problem would be cracked quickly. Having programmed just six rules and a vocabulary of 250 words into a computer, they gave a demonstration in New York on January 7th 1954 and proudly produced 60 automated translations, including that of “Mi pyeryedayem mislyi posryedstvom ryechyi,” which came out correctly as “We transmit thoughts by means of speech.” Leon Dostert of Georgetown, the lead scientist, breezily predicted that fully realised MT would be “an accomplished fact” in three to five years. + + + +Instead, after more than a decade of work, the report in 1966 by a committee chaired by John Pierce, mentioned in the introduction to this report, recorded bitter disappointment with the results and urged researchers to focus on narrow, achievable goals such as automated dictionaries. Government-sponsored work on MT went into near-hibernation for two decades. What little was done was carried out by private companies. The most notable of them was Systran, which provided rough translations, mostly to America’s armed forces. + +La plume de mon ordinateur + +The scientists got bogged down by their rules-based approach. Having done relatively well with their six-rule system, they came to believe that if they programmed in more rules, the system would become more sophisticated and subtle. Instead, it became more likely to produce nonsense. Adding extra rules, in the modern parlance of software developers, did not “scale”. + +Computer translation is still known as “machine translation” + +Besides the difficulty of programming grammar’s many rules and exceptions, some early observers noted a conceptual problem. The meaning of a word often depends not just on its dictionary definition and the grammatical context but the meaning of the rest of the sentence. Yehoshua Bar-Hillel, an Israeli MT pioneer, realised that “the pen is in the box” and “the box is in the pen” would require different translations for “pen”: any pen big enough to hold a box would have to be an animal enclosure, not a writing instrument. + +How could machines be taught enough rules to make this kind of distinction? They would have to be provided with some knowledge of the real world, a task far beyond the machines or their programmers at the time. Two decades later, IBM stumbled on an approach that would revive optimism about MT. Its Candide system was the first serious attempt to use statistical probabilities rather than rules devised by humans for translation. Statistical, “phrase-based” machine translation, like speech recognition, needed training data to learn from. Candide used Canada’s Hansard, which publishes that country’s parliamentary debates in French and English, providing a huge amount of data for that time. The phrase-based approach would ensure that the translation of a word would take the surrounding words properly into account. + +But quality did not take a leap until Google, which had set itself the goal of indexing the entire internet, decided to use those data to train its translation engines; in 2007 it switched from a rules-based engine (provided by Systran) to its own statistics-based system. To build it, Google trawled about a trillion web pages, looking for any text that seemed to be a translation of another—for example, pages designed identically but with different words, and perhaps a hint such as the address of one page ending in /en and the other ending in /fr. According to Macduff Hughes, chief engineer on Google Translate, a simple approach using vast amounts of data seemed more promising than a clever one with fewer data. + +Training on parallel texts (which linguists call corpora, the plural of corpus) creates a “translation model” that generates not one but a series of possible translations in the target language. The next step is running these possibilities through a monolingual language model in the target language. This is, in effect, a set of expectations about what a well-formed and typical sentence in the target language is likely to be. Single-language models are not too hard to build. (Parallel human-translated corpora are hard to come by; large amounts of monolingual training data are not.) As with the translation model, the language model uses a brute-force statistical approach to learn from the training data, then ranks the outputs from the translation model in order of plausibility. + +Statistical machine translation rekindled optimism in the field. Internet users quickly discovered that Google Translate was far better than the rules-based online engines they had used before, such as BabelFish. Such systems still make mistakes—sometimes minor, sometimes hilarious, sometimes so serious or so many as to make nonsense of the result. And language pairs like Chinese-English, which are unrelated and structurally quite different, make accurate translation harder than pairs of related languages like English and German. But more often than not, Google Translate and its free online competitors, such as Microsoft’s Bing Translator, offer a usable approximation. + +Such systems are set to get better, again with the help of deep learning from digital neural networks. The Association for Computational Linguistics has been holding workshops on MT every summer since 2006. One of the events is a competition between MT engines turned loose on a collection of news text. In August 2016, in Berlin, neural-net-based MT systems were the top performers (out of 102), a first. + +Now Google has released its own neural-net-based engine for eight language pairs, closing much of the quality gap between its old system and a human translator. This is especially true for closely related languages (like the big European ones) with lots of available training data. The results are still distinctly imperfect, but far smoother and more accurate than before. Translations between English and (say) Chinese and Korean are not as good yet, but the neural system has brought a clear improvement here too. + +The Coca-Cola factor + +Neural-network-based translation actually uses two networks. One is an encoder. Each word of an input sentence is converted into a multidimensional vector (a series of numerical values), and the encoding of each new word takes into account what has happened earlier in the sentence. Marcello Federico of Italy’s Fondazione Bruno Kessler, a private research organisation, uses an intriguing analogy to compare neural-net translation with the phrase-based kind. The latter, he says, is like describing Coca-Cola in terms of sugar, water, caffeine and other ingredients. By contrast, the former encodes features such as liquidness, darkness, sweetness and fizziness. + +Once the source sentence is encoded, a decoder network generates a word-for-word translation, once again taking account of the immediately preceding word. This can cause problems when the meaning of words such as pronouns depends on words mentioned much earlier in a long sentence. This problem is mitigated by an “attention model”, which helps maintain focus on other words in the sentence outside the immediate context. + +Neural-network translation requires heavy-duty computing power, both for the original training of the system and in use. The heart of such a system can be the GPUs that made the deep-learning revolution possible, or specialised hardware like Google’s Tensor Processing Units (TPUs). Smaller translation companies and researchers usually rent this kind of processing power in the cloud. But the data sets used in neural-network training do not need to be as extensive as those for phrase-based systems, which should give smaller outfits a chance to compete with giants like Google. + +Fully automated, high-quality machine translation is still a long way off. For now, several problems remain. All current machine translations proceed sentence by sentence. If the translation of such a sentence depends on the meaning of earlier ones, automated systems will make mistakes. Long sentences, despite tricks like the attention model, can be hard to translate. And neural-net-based systems in particular struggle with rare words. + +Training data, too, are scarce for many language pairs. They are plentiful between European languages, since the European Union’s institutions churn out vast amounts of material translated by humans between the EU’s 24 official languages. But for smaller languages such resources are thin on the ground. For example, there are few Greek-Urdu parallel texts available on which to train a translation engine. So a system that claims to offer such translation is in fact usually running it through a bridging language, nearly always English. That involves two translations rather than one, multiplying the chance of errors. + +Even if machine translation is not yet perfect, technology can already help humans translate much more quickly and accurately. “Translation memories”, software that stores already translated words and segments, first came into use as early as the 1980s. For someone who frequently translates the same kind of material (such as instruction manuals), they serve up the bits that have already been translated, saving lots of duplication and time. + +A similar trick is to train MT engines on text dealing with a narrow real-world domain, such as medicine or the law. As software techniques are refined and computers get faster, training becomes easier and quicker. Free software such as Moses, developed with the support of the EU and used by some of its in-house translators, can be trained by anyone with parallel corpora to hand. A specialist in medical translation, for instance, can train the system on medical translations only, which makes them far more accurate. + +At the other end of linguistic sophistication, an MT engine can be optimised for the shorter and simpler language people use in speech to spew out rough but near-instantaneous speech-to-speech translations. This is what Microsoft’s Skype Translator does. Its quality is improved by being trained on speech (things like film subtitles and common spoken phrases) rather than the kind of parallel text produced by the European Parliament. + +Translation management has also benefited from innovation, with clever software allowing companies quickly to combine the best of MT, translation memory, customisation by the individual translator and so on. Translation-management software aims to cut out the agencies that have been acting as middlemen between clients and an army of freelance translators. Jack Welde, the founder of Smartling, an industry favourite, says that in future translation customers will choose how much human intervention is needed for a translation. A quick automated one will do for low-stakes content with a short life, but the most important content will still require a fully hand-crafted and edited version. Noting that MT has both determined boosters and committed detractors, Mr Welde says he is neither: “If you take a dogmatic stance, you’re not optimised for the needs of the customer.” + +Translation software will go on getting better. Not only will engineers keep tweaking their statistical models and neural networks, but users themselves will make improvements to their own systems. For example, a small but much-admired startup, Lilt, uses phrase-based MT as the basis for a translation, but an easy-to-use interface allows the translator to correct and improve the MT system’s output. Every time this is done, the corrections are fed back into the translation engine, which learns and improves in real time. Users can build several different memories—a medical one, a financial one and so on—which will help with future translations in that specialist field. + +TAUS, an industry group, recently issued a report on the state of the translation industry saying that “in the past few years the translation industry has burst with new tools, platforms and solutions.” Earlier this year Jaap van der Meer, TAUS’s founder and director, wrote a provocative blogpost entitled “The Future Does Not Need Translators”, arguing that the quality of MT will keep improving, and that for many applications less-than-perfect translation will be good enough. + +The “translator” of the future is likely to be more like a quality-control expert, deciding which texts need the most attention to detail and editing the output of MT software. That may be necessary because computers, no matter how sophisticated they have become, cannot yet truly grasp what a text means. + +This article appeared in the Technology Quarterly section of the print edition under the headline “Beyond Babel” + + + + + +What are you talking about? + +The meaning of speech still eludes machines + +Machines cannot conduct proper conversations with humans because they do not understand the world + +Jan 7th 2017 + + + +IN “BLACK MIRROR”, a British science-fiction satire series set in a dystopian near future, a young woman loses her boyfriend in a car accident. A friend offers to help her deal with her grief. The dead man was a keen social-media user, and his archived accounts can be used to recreate his personality. Before long she is messaging with a facsimile, then speaking to one. As the system learns to mimic him ever better, he becomes increasingly real. + +This is not quite as bizarre as it sounds. Computers today can already produce an eerie echo of human language if fed with the appropriate material. What they cannot yet do is have true conversations. Truly robust interaction between man and machine would require a broad understanding of the world. In the absence of that, computers are not able to talk about a wide range of topics, follow long conversations or handle surprises. + +Machines trained to do a narrow range of tasks, though, can perform surprisingly well. The most obvious examples are the digital assistants created by the technology giants. Users can ask them questions in a variety of natural ways: “What’s the temperature in London?” “How’s the weather outside?” “Is it going to be cold today?” The assistants know a few things about users, such as where they live and who their family are, so they can be personal, too: “How’s my commute looking?” “Text my wife I’ll be home in 15 minutes.” + +What machines cannot yet do is have true conversations + +And they get better with time. Apple’s Siri receives 2bn requests per week, which (after being anonymised) are used for further teaching. For example, Apple says Siri knows every possible way that users ask about a sports score. She also has a delightful answer for children who ask about Father Christmas. Microsoft learned from some of its previous natural-language platforms that about 10% of human interactions were “chitchat”, from “tell me a joke” to “who’s your daddy?”, and used such chat to teach its digital assistant, Cortana. + +The writing team for Cortana includes two playwrights, a poet, a screenwriter and a novelist. Google hired writers from Pixar, an animated-film studio, and The Onion, a satirical newspaper, to make its new Google Assistant funnier. No wonder people often thank their digital helpers for a job well done. The assistants’ replies range from “My pleasure, as always” to “You don’t need to thank me.” + +Good at grammar + +How do natural-language platforms know what people want? They not only recognise the words a person uses, but break down speech for both grammar and meaning. Grammar parsing is relatively advanced; it is the domain of the well-established field of “natural-language processing”. But meaning comes under the heading of “natural-language understanding”, which is far harder. + +First, parsing. Most people are not very good at analysing the syntax of sentences, but computers have become quite adept at it, even though most sentences are ambiguous in ways humans are rarely aware of. Take a sign on a public fountain that says, “This is not drinking water.” Humans understand it to mean that the water (“this”) is not a certain kind of water (“drinking water”). But a computer might just as easily parse it to say that “this” (the fountain) is not at present doing something (“drinking water”). + +As sentences get longer, the number of grammatically possible but nonsensical options multiplies exponentially. How can a machine parser know which is the right one? It helps for it to know that some combinations of words are more common than others: the phrase “drinking water” is widely used, so parsers trained on large volumes of English will rate those two words as likely to be joined in a noun phrase. And some structures are more common than others: “noun verb noun noun” may be much more common than “noun noun verb noun”. A machine parser can compute the overall probability of all combinations and pick the likeliest. + +A “lexicalised” parser might do even better. Take the Groucho Marx joke, “One morning I shot an elephant in my pyjamas. How he got in my pyjamas, I’ll never know.” The first sentence is ambiguous (which makes the joke)—grammatically both “I” and “an elephant” can attach to the prepositional phrase “in my pyjamas”. But a lexicalised parser would recognise that “I [verb phrase] in my pyjamas” is far more common than “elephant in my pyjamas”, and so assign that parse a higher probability. + +But meaning is harder to pin down than syntax. “The boy kicked the ball” and “The ball was kicked by the boy” have the same meaning but a different structure. “Time flies like an arrow” can mean either that time flies in the way that an arrow flies, or that insects called “time flies” are fond of an arrow. + +“Who plays Thor in ‘Thor’?” Your correspondent could not remember the beefy Australian who played the eponymous Norse god in the Marvel superhero film. But when he asked his iPhone, Siri came up with an unexpected reply: “I don’t see any movies matching ‘Thor’ playing in Thor, IA, US, today.” Thor, Iowa, with a population of 184, was thousands of miles away, and “Thor”, the film, has been out of cinemas for years. Siri parsed the question perfectly properly, but the reply was absurd, violating the rules of what linguists call pragmatics: the shared knowledge and understanding that people use to make sense of the often messy human language they hear. “Can you reach the salt?” is not a request for information but for salt. Natural-language systems have to be manually programmed to handle such requests as humans expect them, and not literally. + +Multiple choice + +Shared information is also built up over the course of a conversation, which is why digital assistants can struggle with twists and turns in conversations. Tell an assistant, “I’d like to go to an Italian restaurant with my wife,” and it might suggest a restaurant. But then ask, “is it close to her office?”, and the assistant must grasp the meanings of “it” (the restaurant) and “her” (the wife), which it will find surprisingly tricky. Nuance, the language-technology firm, which provides natural-language platforms to many other companies, is working on a “concierge” that can handle this type of challenge, but it is still a prototype. + +Such a concierge must also offer only restaurants that are open. Linking requests to common sense (knowing that no one wants to be sent to a closed restaurant), as well as a knowledge of the real world (knowing which restaurants are closed), is one of the most difficult challenges for language technologies. + +Common sense, an old observation goes, is uncommon enough in humans. Programming it into computers is harder still. Fernando Pereira of Google points out why. Automated speech recognition and machine translation have something in common: there are huge stores of data (recordings and transcripts for speech recognition, parallel corpora for translation) that can be used to train machines. But there are no training data for common sense. + +Knowledge of the real world is another matter. AI has helped data-rich companies such as America’s West-Coast tech giants organise much of the world’s information into interactive databases such as Google’s Knowledge Graph. Some of the content of that appears in a box to the right of a Google page of search results for a famous figure or thing. It knows that Jacob Bernoulli studied at the University of Basel (as did other people, linked to Bernoulli through this node in the Graph) and wrote “On the Law of Large Numbers” (which it knows is a book). + +Organising information this way is not difficult for a company with lots of data and good AI capabilities, but linking information to language is hard. Google touts its assistant’s ability to answer questions like “Who was president when the Rangers won the World Series?” But Mr Pereira concedes that this was the result of explicit training. Another such complex query—“What was the population of London when Samuel Johnson wrote his dictionary?”—would flummox the assistant, even though the Graph knows about things like the historical population of London and the date of Johnson’s dictionary. IBM’s Watson system, which in 2011 beat two human champions at the quiz show “Jeopardy!”, succeeded mainly by calculating huge numbers of potential answers based on key words by probability, not by a human-like understanding of the question. + +Making real-world information computable is challenging, but it has inspired some creative approaches. Cortical.io, a Vienna-based startup, took hundreds of Wikipedia articles, cut them into thousands of small snippets of information and ran an “unsupervised” machine-learning algorithm over it that required the computer not to look for anything in particular but to find patterns. These patterns were then represented as a visual “semantic fingerprint” on a grid of 128x128 pixels. Clumps of pixels in similar places represented semantic similarity. This method can be used to disambiguate words with multiple meanings: the fingerprint of “organ” shares features with both “liver” and “piano” (because the word occurs with both in different parts of the training data). This might allow a natural-language system to distinguish between pianos and church organs on one hand, and livers and other internal organs on the other. + +Proper conversation between humans and machines can be seen as a series of linked challenges: speech recognition, speech synthesis, syntactic analysis, semantic analysis, pragmatic understanding, dialogue, common sense and real-world knowledge. Because all the technologies have to work together, the chain as a whole is only as strong as its weakest link, and the first few of these are far better developed than the last few. + +The hardest part is linking them together. Scientists do not know how the human brain draws on so many different kinds of knowledge at the same time. Programming a machine to replicate that feat is very much a work in progress. + +This article appeared in the Technology Quarterly section of the print edition under the headline “What are you talking about?” + + + + + +Where humans still beat computers + +Brain scan: Terry Winograd + +The Winograd Schema tests computers’ “understanding” of the real world + +Jan 7th 2017 + + + +THE Turing Test was conceived as a way to judge whether true artificial intelligence has been achieved. If a computer can fool humans into thinking it is human, there is no reason, say its fans, to say the machine is not truly intelligent. + +Few giants in computing stand with Turing in fame, but one has given his name to a similar challenge: Terry Winograd, a computer scientist at Stanford. In his doctoral dissertation Mr Winograd posed a riddle for computers: “The city councilmen refused the demonstrators a permit because they feared violence. Who feared violence?” + +It is a perfect illustration of a well-recognised point: many things that are easy for humans are crushingly difficult for computers. Mr Winograd went into AI research in the 1960s and 1970s and developed an early natural-language program called SHRDLU that could take commands and answer questions about a group of shapes it could manipulate: “Find a block which is taller than the one you are holding and put it into the box.” This work brought a jolt of optimism to the AI crowd, but Mr Winograd later fell out with them, devoting himself not to making machines intelligent but to making them better at helping human beings. (These camps are sharply divided by philosophy and academic pride.) He taught Larry Page at Stanford, and after Mr Page went on to co-found Google, Mr Winograd became a guest researcher at the company, helping to build Gmail. + +In 2011 Hector Levesque of the University of Toronto became annoyed by systems that “passed” the Turing Test by joking and avoiding direct answers. He later asked to borrow Mr Winograd’s name and the format of his dissertation’s puzzle to pose a more genuine test of machine “understanding”: the Winograd Schema. The answers to its battery of questions were obvious to humans but would require computers to have some reasoning ability and some knowledge of the real world. The first official Winograd Schema Challenge was held this year, with a $25,000 prize offered by Nuance, the language-software company, for a program that could answer more than 90% of the questions correctly. The best of them got just 58% right. + +Though officially retired, Mr Winograd continues writing and researching. One of his students is working on an application for Google Glass, a computer with a display mounted on eyeglasses. The app would help people with autism by reading the facial expressions of conversation partners and giving the wearer information about their emotional state. It would allow him to integrate linguistic and non-linguistic information in a way that people with autism find difficult, as do computers. + +Asked to trick some of the latest digital assistants, like Siri and Alexa, he asks them things like “Where can I find a nightclub my Methodist uncle would like?”, which requires knowledge about both nightclubs (which such systems have) and Methodist uncles (which they don’t). When he tried “Where did I leave my glasses?”, one of them came up with a link to a book of that name. None offered the obvious answer: “How would I know?” + +This article appeared in the Technology Quarterly section of the print edition under the headline “Terry Winograd” + + + + + +For my next trick + +Coming to grips with voice technology + +Talking machines are the new must-haves + +Jan 7th 2017 + + + +IN “WALL-E”, an animated children’s film set in the future, all humankind lives on a spaceship after the Earth’s environment has been trashed. The humans are whisked around in intelligent hovering chairs; machines take care of their every need, so they are all morbidly obese. Even the ship’s captain is not really in charge; the actual pilot is an intelligent and malevolent talking robot, Auto, and like so many talking machines in science fiction, he eventually makes a grab for power. + +Speech is quintessentially human, so it is hard to imagine machines that can truly speak conversationally as humans do without also imagining them to be superintelligent. And if they are superintelligent, with none of humans’ flaws, it is hard to imagine them not wanting to take over, not only for their good but for that of humanity. Even in a fairly benevolent future like “WALL-E’s”, where the machines are doing all the work, it is easy to see that the lack of anything challenging to do would be harmful to people. + +Fortunately, the tasks that talking machines can take off humans’ to-do lists are the sort that many would happily give up. Machines are increasingly able to handle difficult but well-defined jobs. Soon all that their users will have to do is pipe up and ask them, using a naturally phrased voice command. Once upon a time, just one tinkerer in a given family knew how to work the computer or the video recorder. Then graphical interfaces (icons and a mouse) and touchscreens made such technology accessible to everyone. Frank Chen of Andreessen Horowitz, a venture-capital firm, sees natural-language interfaces between humans and machines as just another step in making information and services available to all. Silicon Valley, he says, is enjoying a golden age of AI technologies. Just as in the early 1990s companies were piling online and building websites without quite knowing why, now everyone is going for natural language. Yet, he adds, “we’re in 1994 for voice.” + +1995 will soon come. This does not mean that people will communicate with their computers exclusively by talking to them. Websites did not make the telephone obsolete, and mobile devices did not make desktop computers obsolete. In the same way, people will continue to have a choice between voice and text when interacting with their machines. + +Not all will choose voice. For example, in Japan yammering into a phone is not done in public, whether the interlocutor is a human or a digital assistant, so usage of Siri is low during business hours but high in the evening and at the weekend. For others, voice-enabled technology is an obvious boon. It allows dyslexic people to write without typing, and the very elderly may find it easier to talk than to type on a tiny keyboard. The very young, some of whom today learn to type before they can write, may soon learn to talk to machines before they can type. + +Those with injuries or disabilities that make it hard for them to write will also benefit. Microsoft is justifiably proud of a new device that will allow people with amyotrophic lateral sclerosis (ALS), which immobilises nearly all of the body but leaves the mind working, to speak by using their eyes to pick letters on a screen. The critical part is predictive text, which improves as it gets used to a particular individual. An experienced user will be able to “speak” at around 15 words per minute. + +People may even turn to machines for company. Microsoft’s Xiaoice, a chatbot launched in China, learns to come up with the responses that will keep a conversation going longest. Nobody would think it was human, but it does make users open up in surprising ways. Jibo, a new “social robot”, is intended to tell children stories, help far-flung relatives stay in touch and the like. + +Another group that may benefit from technology is smaller language communities. Networked computers can encourage a winner-take-all effect: if there is a lot of good software and content in English and Chinese, smaller languages become less valuable online. If they are really tiny, their very survival may be at stake. But Ross Perlin of the Endangered Languages Alliance notes that new software allows researchers to document small languages more quickly than ever. With enough data comes the possibility of developing resources—from speech recognition to interfaces with software—for smaller and smaller languages. The Silicon Valley giants already localise their services in dozens of languages; neural networks and other software allow new versions to be generated faster and more efficiently than ever. + +There are two big downsides to the rise in natural-language technologies: the implications for privacy, and the disruption it will bring to many jobs. + +Increasingly, devices are always listening. Digital assistants like Alexa, Cortana, Siri and Google Assistant are programmed to wait for a prompt, such as “Hey, Siri” or “OK, Google”, to activate them. But allowing always-on microphones into people’s pockets and homes amounts to a further erosion of traditional expectations of privacy. The same might be said for all the ways in which language software improves by training on a single user’s voice, vocabulary, written documents and habits. + +All the big companies’ location-based services—even the accelerometers in phones that detect small movements—are making ever-improving guesses about users’ wants and needs. The moment when a digital assistant surprises a user with “The chemist is nearby—do you want to buy more haemorrhoid cream, Steve?” could be when many may choose to reassess the trade-off between amazing new services and old-fashioned privacy. The tech companies can help by giving users more choice; the latest iPhone will not be activated when it is laid face down on a table. But hackers will inevitably find ways to get at some of these data. + +Hey, Siri, find me a job + +The other big concern is for jobs. To the extent that they are routine, they face being automated away. A good example is customer support. When people contact a company for help, the initial encounter is usually highly scripted. A company employee will verify a customer’s identity and follow a decision-tree. Language technology is now mature enough to take on many of these tasks. + +For a long transition period humans will still be needed, but the work they do will become less routine. Nuance, which sells lots of automated online and phone-based help systems, is bullish on voice biometrics (customers identifying themselves by saying “my voice is my password”). Using around 200 parameters for identifying a speaker, it is probably more secure than a fingerprint, says Brett Beranek, a senior manager at the company. It will also eliminate the tedium, for both customers and support workers, of going through multi-step identification procedures with PINs, passwords and security questions. When Barclays, a British bank, offered it to frequent users of customer-support services, 84% signed up within five months. + +Digital assistants on personal smartphones can get away with mistakes, but for some business applications the tolerance for error is close to zero, notes Nikita Ivanov. His company, Datalingvo, a Silicon Valley startup, answers questions phrased in natural language about a company’s business data. If a user wants to know which online ads resulted in the most sales in California last month, the software automatically translates his typed question into a database query. But behind the scenes a human working for Datalingvo vets the queryto make sure it is correct. This is because the stakes are high: the technology is bound to make mistakes in its early days, and users could make decisions based on bad data. + +This process can work the other way round, too: rather than natural-language input producing data, data can produce language. Arria, a company based in London, makes software into which a spreadsheet full of data can be dragged and dropped, to be turned automatically into a written description of the contents, complete with trends. Matt Gould, the company’s chief strategy officer, likes to think that this will free chief financial officers from having to write up the same old routine analyses for the board, giving them time to develop more creative approaches. + +Carl Benedikt Frey, an economist at Oxford University, has researched the likely effect of artificial intelligence on the labour market and concluded that the jobs most likely to remain immune include those requiring creativity and skill at complex social interactions. But not every human has those traits. Call centres may need fewer people as more routine work is handled by automated systems, but the trickier inquiries will still go to humans. + +Much of this seems familiar. When Google search first became available, it turned up documents in seconds that would have taken a human operator hours, days or years to find. This removed much of the drudgery from being a researcher, librarian or journalist. More recently, young lawyers and paralegals have taken to using e-discovery. These innovations have not destroyed the professions concerned but merely reshaped them. + +Machines that relieve drudgery and allow people to do more interesting jobs are a fine thing. In net terms they may even create extra jobs. But any big adjustment is most painful for those least able to adapt. Upheavals brought about by social changes—like the emancipation of women or the globalisation of labour markets—are already hard for some people to bear. When those changes are wrought by machines, they become even harder, and all the more so when those machines seem to behave more and more like humans. People already treat inanimate objects as if they were alive: who has never shouted at a computer in frustration? The more that machines talk, and the more that they seem to understand people, the more their users will be tempted to attribute human traits to them. + +That raises questions about what it means to be human. Language is widely seen as humankind’s most distinguishing trait. AI researchers insist that their machines do not think like people, but if they can listen and talk like humans, what does that make them? As humans teach ever more capable machines to use language, the once-obvious line between them will blur. + +This article appeared in the Technology Quarterly section of the print edition under the headline “For my next trick” + + + + + +Business + + + + +Nestlé: A life less sweet + +Toshiba: Losing count + +Donald Trump and business: Wheel spin + +Schumpeter: The fat-cow years + + + + + +A life less sweet + +Nestlé looks for ways to boost stale growth as consumers snub unhealthy food + +Its fightback includes chocolate with lower-calorie “hollow” sugar crystals, and healthier frozen food + +Jan 7th 2017 | VEVEY + + + +LARGE food companies have long been among the world’s most solid, with reassuringly consistent returns even in hard times. None would seem steadier than Nestlé, based in the Swiss town of Vevey, on a lake near snowy peaks. For its 150th anniversary in 2016 it opened a new museum filled with corporate heirlooms: the first written notes about a new product called milk chocolate, laid out in black cursive; an old tin of Nescafé, used by soldiers as a stimulant in the second world war; and an early can of Henri Nestlé’s infant formula, which in 1867 saved the life of a premature baby. + +It has come a long way since then. It sold goods worth nearly $90bn in 189 countries in 2015. Of the 30,000 cups of coffee sipped around the world each second, Nestlé estimates, one-fifth are cups of Nescafé. But the industry it presides over is in upheaval. On January 1st a new chief executive, Ulf Mark Schneider (pictured), took over. He is the first outsider to get the top job since 1922, and his background—running a health-care firm, not selling chocolate bars or frozen pizza—suggests the main source of worry for the business. + +More and more consumers are snubbing packaged food’s sugar, salt and unpronounceable preservatives. Meanwhile, swarms of smaller firms, emboldened by the ease of peddling goods online, are touting supposedly healthier options. From 2011 to 2015 big sellers of consumer-packaged goods, mainly food and drink companies, lost three percentage points of market share in America—a lot in the industry’s context—according to a study by the Boston Consulting Group, a consultancy, and IRI, a data provider. + +As super-sized companies swat at such tiny attackers, another foe is gaining ground. 3G, a Brazilian private-equity firm, likes to buy big, slow-growing food and drinks companies and slash their costs. Targets have included Kraft and Heinz, two giants which 3G helped merge into one group in 2015, as well as several of the world’s biggest brewers. Other food companies are scrambling to make cuts of their own, lest they become 3G’s next meal. That has prompted a debate over whether such cuts wreck firms’ growth prospects even further, or whether, in fact, they are best off wringing out profits and accepting that robust expansion is a thing of the past. + +Nestlé is not immune to such pressures. In recent years it has often missed its goal of 5-6% sales growth. Excluding acquisitions, its numbers have not met investors’ expectations for 11 of the past 17 quarters. In the most recent quarter, the firm registered organic sales growth of 3.2%. + +Changing consumer tastes explain some of these shortfalls. So does a shifting retail landscape. Managing a giant portfolio of brands, from KitKat and Nespresso to DiGiorno pizza and Purina dog food, has become harder. Mr Schneider will have to master online ways to market and deliver its well-known brands. The firm needs to coax customers to pay more for premium products as ordinary ones get commoditised, and discounted by firms such as Germany’s Lidl and Aldi. + +The firm can still boast impressive staying power—its global market share across its entire range of products has remained near 20% for the past decade. François-Xavier Roger, Nestlé’s chief financial officer, points out that the group’s sales growth in the first nine months of 2016 was among the fastest of the top ten biggest food and drink companies. Yet a detailed examination of its position by Sanford C. Bernstein, a research firm, shows that when growth from acquisitions is excluded, it lost share in all but three of its top 20 product categories between 2007 and 2015. Some of its core offerings, such as bottled water and single-serve coffee, fared the worst. (Keurig, Nestlé’s arch-rival in coffee pods, slurped share in America.) + +Such results are likely to attract particular censure from investors because of Nestlé’s past heavy emphasis on growth and market share which sometimes came at the expense of lower profits. In 2015 its operating-profit margin was 15%, better than the 13% at Danone, a French competitor, but far below the 21% at Kraft-Heinz. Shareholders in the firm are waiting to see whether Mr Schneider will shake things up. Some want him to sell off businesses that seem most at risk of long-term decline, such as frozen food, as shoppers look for fresher fare. + +Food for life? + +For now, Nestlé is defiant. “We started 150 years ago having a product that actually—there’s symbolism there—saved the life of a child,” says Paul Bulcke, the outgoing chief executive and likely new chairman. He and his colleagues say that investment in health and related innovation will produce strong growth for years to come. Mr Schneider, who used to run Fresenius, a German firm that offers kidney-dialysis products and services, will certainly emphasise that message. Nestlé differentiates itself from 3G, with its keen focus on cuts. Mr Roger says he respects what 3G does, but that “they have a strategy which is very different from ours.” + +Still, few observers would call Nestlé a health company. Many of its products are perfectly healthy, including bottled water and coffee. Many are not—milk chocolate and ice cream, to name but two. And for now, the purest forms of Nestlé’s focus on health contribute relatively little to its sales. A business unit called Nestlé Health Science, for example, sells nutritional products for medical needs, such as vitamin-packed drinks for the elderly and for cancer patients. It contributes less than 5% of revenue. + +The firm has a research institute devoted to studying food’s role in the management and prevention of disease—for example, better understanding nutrition’s ability to promote brain health. It may deliver growth but probably only in the long term. Nestlé has also invested in young drugs firms, including one that is testing a treatment for ulcerative colitis. + +More immediately rewarding may be its efforts to make best-selling but unhealthy foods a bit more wholesome. In November the company said it had created hollow sugar crystals that taste sweet but contain fewer calories than the usual stuff. It will begin to put the new ingredient in its chocolate in 2018. + +It is also proud of changes to the millions of frozen dinners it sells every week in America. Shoppers had been avoiding the frozen-food aisle. Nestlé first tried discounts, and then in 2015 introduced new versions of its Lean Cuisine products, stripping out unpalatable ingredients and replacing them with organic ones. At Stouffer’s, another frozen brand, Nestlé decided to target men with easy, protein-packed meals that are more nutritionally valuable. It worked—its frozen-food sales in America grew faster. In November 2015, they were 6% above what they had been a year earlier. But Bernstein’s Andrew Wood points out that the revival of frozen food now looks wobbly again. + +Nor is Nestlé ignoring 3G’s strategy entirely: it is trying to trim expenses. “We are very much in an investment position, not in a cost-cutting exercise,” says Mr Roger, “but that doesn’t mean that we don’t want to be cost-efficient in what we do.” One effort, which includes trimming waste at factories, is credited with saving about SFr1.5bn ($1.5bn) a year. Last year Nestlé announced organisational changes, such as consolidating procurement, which will save about SFr2bn each year from 2020. + +Whatever else Mr Schneider has on the menu for Nestlé, radical changes may be somewhat limited by the fact that so many of those who built it into what it is now are sticking around. Mr Bulcke is expected to become the firm’s chairman. The outgoing chairman, Peter Brabeck-Letmathe, a former Nestlé chief executive, may become honorary chairman. Mr Bulcke, for one, seems sure that the company should maintain its emphasis on the long term. He taps his hand on the table, rattling some Nespresso cups, as he insists that growth is still the key. + +This article appeared in the Business section of the print edition under the headline “A life less sweet” + + + + + +Losing count + +Toshiba admits to a ruinous overpayment for an American nuclear firm + +Its share price plunged by 40% in three days as investors worried about its financial viability + +Jan 7th 2017 | TOKYO + +Ritual contrition + +THE probe in 2015 into one of Japan’s largest-ever accounting scandals, at Toshiba, an electronics and nuclear-power conglomerate that has been the epitome of the country’s engineering prowess, concluded that number-fiddling at the firm was “systemic”. It was found to have padded profits by ¥152bn ($1.3bn) between 2008 and 2014. Its boss, and half of the board’s 16 members, resigned; regulators imposed upon it a record fine of $60m. + +Now its deal-making nous is in doubt too. In December 2015—the very same month that it forecast hundreds of billions of yen in losses for the financial year then under way, as it struggled to recover from the scandal—Toshiba’s American arm, Westinghouse Electric, bought a nuclear-construction firm, CB&I Stone & Webster. One year on, on December 27th, Toshiba announced that cost overruns at that new unit could lead to several billions of dollars in charges against profits. + +Its shares fell by 42% in a three-day stretch as investors dumped them, fearing a write-down that could wipe out its shareholders’ equity, which in late September stood at $3.1bn. Moody’s and S&P, two ratings agencies, announced credit downgrades and threatened more. Toshiba’s explanation for how it got the numbers so wrong on a smallish purchase is woolly. But it is clear that missing construction deadlines on nuclear-power plants can send costs skyrocketing. Its projects in America, and in China, are years behind schedule. Mycle Schneider, a nuclear expert, says that in America, as elsewhere, engineering problems are compounded by a shortage of skilled manpower. Few plants have been built there recently. + +Part of the $229m that Westinghouse paid for CB&I Stone & Webster included $87m of goodwill (a premium over the firm’s book value based on its physical assets). It is that initial estimate that is now being recalculated. + +Toshiba had looked to be bouncing back from its accounting nightmare. Before the latest plunge it had made the second-biggest gains on the Nikkei 225 index in 2016, where its shares were up by 77%. In April it wrote off $2.3bn on the goodwill value of Westinghouse, purchased for $5.4bn in 2006—a write-down that it had long avoided. In August it announced its first profit in six quarters. It forecast a net profit of ¥145bn for the financial year of 2016-17, a clear reversal from its ¥460bn loss of the previous year. Part of that was thanks to a bold turnaround plan: firing 14,000 staff, as well as selling lossmaking parts of its manufacturing empire, like TVs, and one of its star units, a medical-equipment maker, for $6bn. + + + +That left it free to focus on its semiconductor arm, which has been buoyed by demand from Chinese smartphone makers, and its nuclear unit, which accounts for a third of its revenue. The latest write-down could dampen future investment in both. Toshiba has limited ways left to raise cash. It has been barred from doing so on the stockmarket ever since it was put on alert after the accounting fiasco—one step short of a delisting. + +Observers reckon that Toshiba has some room to manoeuvre, and that it will not ditch its nuclear business. It could raise as much as $4bn from the sale of some part-owned subsidiaries, including NuFlare, a spinoff of its semiconductor unit, says Seth Fischer of Oasis Management in Hong Kong, a hedge fund, and a shareholder in Toshiba’s power-station affiliate. It could even choose to sell its lucrative chip business altogether (Toshiba is the world’s second-biggest maker of NAND chips after Samsung Electronics of South Korea), as well as some of its remaining consumer-electronics ones. + +Toshiba’s central part in a plan by the government of Shinzo Abe, the prime minister, to pep up growth by exporting nuclear-power technology to emerging countries may help. In June Westinghouse clinched a deal in India to build six new-generation AP1000 reactors, Toshiba’s first order since the triple meltdown at the Fukushima Dai-ichi nuclear plant in 2011. Toshiba is also involved in that site’s costly and complex clean-up. Some think that Japanese banks, known for keeping zombie firms on life support, will stand behind it, come what may. Shares in Toshiba’s two main lenders, Sumitomo and Mizuho, slid last week after the profit warning. Investors expect more big bank loans or a debt-for-equity swap, which allows a bank to turn bad loans into shares. + +The consensus on Toshiba’s latest screw-up is that a long-standing culture of poor management is to blame. Toshiba’s audit committee, for example, was until 2015 headed by its former chief financial officer; such bodies should be fully independent, says Nicholas Benes of the Board Director Training Institute of Japan. It is not clear whether or not the firm has fully overhauled its culture as part of its response to the scandal laid bare in 2015. Satoshi Tsunakawa, who was installed as the company’s new boss in June 2016, said last week that he had only become aware of the problem with CB&I Stone & Webster in December. It was in 2015 that Mr Abe introduced Japan’s first detailed rules on how companies should run themselves. The spectacle of Toshiba’s apparently endless crisis suggests more needs to be done. + +This article appeared in the Business section of the print edition under the headline “Losing count” + + + + + +Wheel spin + +Ford Motors courts Donald Trump by scrapping a planned plant in Mexico + +Instead it emphasised new investment and jobs in Michigan + +Jan 7th 2017 + + + +IT WAS in the spring of 2016 that Donald Trump singled out Ford Motors, calling its plans to build a plant in Mexico an “absolute disgrace” and promising it would not happen on his watch. Back then, it seemed remarkable that the candidate thought he could boss around a firm of Ford’s stature. On January 3rd Ford cancelled its $1.6bn project in the Mexican state of San Luis Potosí and said it would instead invest $700m into an existing plant in Flat Rock, Michigan, to build electric and autonomous cars. + +Ford’s manoeuvre seems more wheel-spin than U-turn. Mr Trump’s strong-arming of corporate America is real enough, and the carmaker will have gained much favour with the president-elect. But its decision can be explained largely in operational terms. The original plan was for the new Mexican plant to build chiefly Focus cars—small passenger vehicles for which demand has fallen, thanks to America’s love affair with SUVs, crossovers and pick-up trucks and to low petrol prices. The decision to scrap the new plant looks far more like Ford reducing its exposure to the small-car game in North America than reducing its footprint in Mexico, says George Galliers at Evercore, an investment bank. + +The firm will still move production of the Focus away from its plant in Wayne, Michigan to an existing plant in Hermosillo, Mexico. As for the upgrade of the Flat Rock facility, where Ford this week trumpeted 700 new jobs to come, the firm had already announced back in December 2015 that it would invest in electrification and in 13 new electric vehicles. Linking one location for that (Flat Rock) with the Mexican plant cancellation looked like yet more accomplished spin. + +Things would undoubtedly be difficult for global carmakers if Mr Trump tried to follow through on a campaign promise to slap a 35% tariff on cars exported from Mexico to America. In 2015 the country exported 2.7m vehicles, over four-fifths of which went to North America. By appearing to kowtow to the new boss-in-chief, Ford’s chief executive, Mark Fields, may hope to keep this threat at bay—and to extract other favourable concessions, such as softer rules on emissions standards. “We have a president-elect who has said very clearly that one of his first priorities is to grow the economy,” enthused Mr Fields. “That should be music to our ears.” + +Next in the line of fire is General Motors, America’s biggest carmaker, which said in 2013 that it would invest $5bn in Mexico over six years. This week Mr Trump admonished it for making its Chevy Cruze, another compact car, mostly over the border. “Make in U.S.A. or pay big border tax!” he tweeted. The company may find it hard to match Ford’s skilful road-handling. + +This article appeared in the Business section of the print edition under the headline “Wheel spin” + + + + + +Schumpeter + +The three Rs behind global banks’ recovery + +Soaring share prices suggest the end of the tunnel for big banks + +Jan 7th 2017 + + + +IN THE Bible, seven years of feast were followed by seven years of famine. For banks there have been ten lean years. Subprime-loan defaults started to rise in February 2007, causing a near-collapse of the industry in America and Europe. Next came bail-outs from governments, then years of grovelling before regulators, mass firings of staff and quarter after quarter of poor results that left banks’ shareholders disappointed. Now, a decade later, the moneylenders are quietly wondering if 2017 is the year in which their industry turns a corner. + +Over the past six months the FTSE index of global bank shares has leapt by 24%. American banks have led the way, with the value of Bank of America rising by 67%, and that of JPMorgan Chase by 39%. In Europe BNP Paribas’ market value has risen by 52%. In Japan shares in the lumbering Mitsubishi UFJ Financial Group—the rich world’s biggest bank by assets—have behaved like those of a frisky internet startup; they are up by 57%. Predictions about global banks’ future returns on equity have stopped falling, note analysts at UBS, a Swiss bank. Some of the biggest casualties of the financial crisis are even expanding. On December 20th Lloyds, bailed out by British taxpayers in 2009 at a cost of $33bn, said it would buy MBNA, a credit-card firm, for $2bn. + +The excitement can be explained by three Rs: rates, regulation and returns. Consider interest rates first. The slump in rates has been terrible for banks. Between 2010 and 2015, the net interest income of the rich world’s 100 biggest banks fell by $100bn, or about half of 2010 profits. When rates across the economy rise, by contrast, banks can expand margins by charging borrowers more, while passing on only some of the benefit of higher rates to depositors. So bankers have been watching the bond market with barely concealed joy. Ten-year government yields have risen by one percentage point in America, and by 0.30-0.64 points in the big euro-zone economies and Japan over the last six months. Investors are talking about a Trump-inspired “reflation”: the president-elect promises to embark on a public-spending boom. In Germany inflation is at a three-year high of 1.7%. + +Banks’ CEOs are also chipper because they think that regulation has peaked. In America the new administration is likely either to repeal the Dodd-Frank act, an 848-page law from 2010, or to prod regulators to enforce it less zealously. Bank-bashing fatigue seems to have set in among the public. True, when firms misbehave, there is still a firestorm of outrage. John Stumpf, the boss of Wells Fargo, quit in October after his bank admitted creating fake accounts. But many people can see that power has migrated from banking to the technology elite in California. The brew of high pay, monopolistic tendencies and huge profits that attracts populist resentment is now more to be found in Silicon Valley than in Wall Street or the City of London. + +Global supervisors are still cooking up new rules, known as “Basel 4” (see article), but are unlikely to demand a big rise in the safety buffer the industry holds in the form of capital. The strongest banks are signalling that they will lay out more in dividends and buy-backs, rather than hoard even more capital (today, the top 100 rich-world banks pay out about 40% of their profits). + +A third reason for optimism in bank boardrooms is returns. Global banking’s return on equity (ROE) has crept back towards a respectable 10%. The worst of the fines imposed by American regulators are over. So far, “fintech” startups that use technology to compete with rich-world banks have not won much market share; banks have used technology to boost efficiency. They have also got better at working out which of their activities create value after adjusting for risk and the capital they tie up. Barclays, once known for cutting corners, says it can calculate the ROE generated by each of its trading clients. It is ditching 7,000 of them. + +Given the giddy mood, the big danger starts with a C, for complacency. Regulators believe that banks now pose less of a threat to taxpayers. American lenders have $1.2trn of core capital, more than twice what they held in 2007. Citigroup, the most systemically important bank to be bailed out, now has three times more capital than its cumulative losses in 2008-10. European banks’ capital buffers have risen by 50% since 2007, to $1.5trn. + +Yet there are still plenty of weak firms that could cause mayhem. Deutsche Bank, several Italian lenders and America’s two state-run mortgage monsters, Fannie Mae and Freddie Mac, are examples. Mega-banks may simply be too big for any mortal to control. For every dollar of assets that General Electric’s Jeff Immelt manages, Jamie Dimon at JPMorgan Chase looks after $5. + +Once bitten + +And banks still lack a post-crisis plan beyond cost-cutting. Despite their surging shares, most are valued at around the level they would fetch if their assets were liquidated, which hardly indicates optimism about their prospects. Before the crisis, they inflated their profits by expanding in unhealthy ways. They captured rents from state guarantees, created ever more layers of debt relative to GDP, and grew their balance-sheets by means of heavy over-borrowing. They have reversed much of this expansion over the past decade but that strategy cannot go on for ever. + +In 2017 banks will need to articulate a new growth mission and show that they can expand profits without prompting public outrage or a regulatory backlash. One area of promise is the drive to raise rich-world productivity. That would boost economies broadly, and their own profits. There is plenty that banks could do: get more credit to young firms, improve payments systems so that a higher proportion of midsized firms can engage in cross-border e-commerce, and harness technology to make banking as cheap and easy to use as a smartphone app. Forward-thinking bank bosses are already emphasising such goals. If they could achieve them over the next decade, they might even realise a fourth R—redemption. + +This article appeared in the Business section of the print edition under the headline “The fat-cow years” + + + + + +Finance and economics + + + + +Indian economics: Many rupee returns + +Impact investing: Coming of age + +Bank capital: Polishing the floor + +Buttonwood: The third regime + +Sub-national currencies: Local difficulties + +Futures and options trading: Out of the pits + +Anthony Atkinson: For poorer, for richer + +Insuring talent: Death Star + +Free exchange: The fallacy of the fallback + + + + + +Many rupee returns + +The high economic costs of India’s demonetisation + +The benefits of withdrawing 86% of the rupees in circulation remain elusive + +Jan 7th 2017 | MUMBAI + + + +MOST economists might hazard a guess that voiding the bulk of a country’s currency overnight would dent its immediate growth prospects. On November 8th India took this abstruse thought experiment into the real world, scrapping two banknotes which made up 86% of all rupees in circulation. Predictably, the economy appears indeed to have been hobbled by the sudden “demonetisation”. Evidence of the measure’s costs is mounting, while the benefits look ever more uncertain. + +At least the new year has brought a semblance of monetary normality. For seven weeks queues had snaked around banks, the main way for Indians to exchange their old notes for new ones or deposit them in their accounts. That is over, largely because the window to exchange money closed on December 30th. The number of fresh notes that can be withdrawn from ATMs or bank counters is still curtailed, but the acute cash shortage is abating, at least in big cities. + +As data trickle through, so is evidence of the economic price paid for demonetisation. Consumers, companies and investors all wobbled in late 2016. Fast-moving consumer goods, usually a reliable growth sector, retrenched by 1-1.5% in November, according to Nielsen, a research group. Bigger-ticket items seem to have been hit harder. Year-on-year sales at Hero Motocorp, the biggest purveyor of two-wheelers, slid by more than a third in December. + + + +A survey of purchasing managers in manufacturing plunged from relative optimism throughout 2016 to the expectation of mild contraction. Firms’ investment proposals fell from an average of 2.4trn rupees ($35bn) a quarter to just 1.25trn rupees in the one just ended, according to Centre for Monitoring Indian Economy, a data provider. As a result, corporate-credit growth, already anaemic, has reached its lowest rate in at least 30 years (see chart). + +All this amounts to “a significant but not catastrophic” impact, says Shilan Shah of Capital Economics, a consultancy. Annual GDP growth forecasts for the fiscal year ending in March have slipped by around half a percentage point, to under 7%, from an actual rate of 7.3% in the last full quarter before demonetisation. Other factors, such as the rise in the oil price and the surge in the value of the dollar after the election of Donald Trump, are also at play. + +Whether the costs of the exercise justify the benefits depends, of course, on what those benefits are. In his speech announcing the measure, Narendra Modi, the prime minister, highlighted combating corruption and untaxed wealth. Gangsters and profiteers with suitcases full of money would be left stranded. But reports suggest that nearly 15trn rupees of the 15.4trn rupees taken out of circulation are now accounted for. So either the rich weren’t hoarding as much “black money” as was supposed, or they have proved adept at laundering it. The Indian press is full of tales of household staff paid months in advance in old notes, or of bankers agreeing to exchange vast sums illegally. + +Fans of demonetisation point to three beneficial outcomes. First, banks, laden with fresh deposits, will lend this money out and so boost the economy. Big banks cut lending rates this week (quite possibly nudged by government, the largest shareholder of most of them). But their lending recently has not been constrained by a lack of deposits, so much as by insufficient shareholder capital to absorb potential losses, and by the over-borrowed balance-sheets of many industrial customers. + +Second, Indians will move from living cash in hand into the taxed formal economy. Mr Modi has recently promoted the idea of a cashless, or “less-cash”, India (not something mentioned at the outset), as one reason for demonetisation. Progress towards getting Indians to pay for things electronically is indeed being made, but from an abysmally low base. + +The third upshot is the most controversial. Now that the demonetised bank notes are worthless, the government is intent on in effect appropriating the proceeds. The procedure requires trampling on the credibility of the Reserve Bank of India (RBI), the central bank, which must first agree to dishonour the promise, on all banknotes, to “pay the bearer” the value. If it does so, “extinguishing” the notes and its liability for them, it can transfer an equivalent amount to the government budget. + +With so much cash handed in at banks, the amount remitted to government by the RBI might amount to perhaps 0.2-0.3% of GDP. Proceeds from a tax-amnesty scheme for cash-hoarders may swell the figure. Even so, it will not be enough to justify the costs of demonetisation—or even, perhaps, the damage to the reputation of the RBI, which is already facing questions about its independence. But having imposed the costs, Mr Modi will be keen to trumpet whatever benefits he can find. + +This article appeared in the Finance and economics section of the print edition under the headline “Many rupee returns” + + + + + +Impacted wisdom + +“Impact investing” inches from niche to mainstream + +More and more investors are looking beyond just financial returns + +Jan 7th 2017 + + + +WHEN investors gathered in Amsterdam in late 2016 for perhaps the largest annual conference on “impact investing”, the mood was upbeat. The concept of investing in assets that offer measurable social or environmental benefits as well as financial returns has come a long way from its modest roots in the early 2000s. Panellists at the conference included, among others, representatives of two of the world’s largest pension funds, TIAA of America and PGGM of the Netherlands, and of the asset-management arm of AXA, a French insurance behemoth. A niche product is inching into the mainstream. + +In the past two years BlackRock, the world’s biggest asset manager, launched a new division called “Impact”; Goldman Sachs, an investment bank, acquired an impact-investment firm, Imprint Capital; and two American private-equity firms, Bain Capital and TPG, launched impact funds. The main driver of all this activity is investor demand. Deborah Winshel, boss of BlackRock Impact, points to the transfer of wealth to women and the young, whose investment goals, she says, transcend mere financial returns. Among institutions, sources of demand have moved beyond charitable foundations to hard-bitten pension funds and insurers. + +The sector has also been boosted by increased attention from policymakers and the development of industry standards. International organisations—such as the UN, and a global task force founded under the aegis of the G8—have promoted impact investment. Bodies such as the council of investors and borrowers that sets the Green Bond Principles, guidelines for bonds earmarked for environmental projects, have helped set common standards. + +Definitional squabbles still plague the impact community. For sticklers, investment only deserves “impact” status if it delivers both near-market level returns and strict measurement of the non-financial impact: eg, of the carbon emissions saved by a renewable-energy project; or of the number of poor people who borrow from a microcredit institution. Others, however, include philanthropic investment, where financial returns are sacrificed for greater social benefits; or less rigorous types of do-good investments. + +Such disagreements make it hard to gauge the true extent of impact investment. For instance, BlackRock Impact and Goldman both also offer two looser investment categories: “negative screening” (ie, not investing in “bad” sectors—say, tobacco or oil); and “integrated” investments that take environmental, social or governance (ESG) considerations into account (eg, by selecting for firms with, say, good working conditions). Neither firm, however, provides a complete breakdown of these categories by assets under management. + +The industry is also held back by a restricted choice of asset classes, and by the limited scale of investment opportunities. According to a survey by the Global Impact Investing Network, which organised the conference in Amsterdam, investors were managing $36bn in impact investments in 2015. But the median size of investment remained just $12m. Urban Angehrn, chief investment officer of Zurich Insurance, says the Swiss firm has had trouble fulfilling its pledge to commit 10% of its private-equity allocation to impact investments. + +Cynics may still dismiss impact investing as faddish window-dressing. Of Zurich’s $250bn-plus in assets under management, only $7bn-worth are classified as impact investments. At Goldman’s asset-management arm, impact and ESG-integrated investments combined only make up $6.7bn out of a total $1.35trn in assets under management. + +But that is to ignore the scale and progress that large institutional investors have brought to impact investing. Although $7bn is a tiny slice of Goldman’s portfolio, it is huge compared with the investments of even well-established impact specialists, such as LeapFrog, whose commitments total around $1bn. And the entry of hard-nosed financial giants sends an important message about impact investing: that they see it as profitable for themselves and their clients. It is not enough to make investors feel good about themselves; they also want to make money. + +This article appeared in the Finance and economics section of the print edition under the headline “Coming of age” + + + + + +Polishing the floor + +Supervisors put off finalising reforms to bank-capital rules + +Disagreement over revisions to Basel 3 cause delay + +Jan 7th 2017 + + + +SOME banks find existing capital requirements too taxing. To no one’s surprise, on December 23rd Monte dei Paschi di Siena, at present Italy’s fourth-biggest bank, asked the Italian state for help, having failed to raise from the private sector €5bn ($5.2bn) in capital demanded by the European Central Bank before the year’s end. Three days later Monte dei Paschi said that the ECB had redone its sums—and concluded that the stricken lender faced an even bigger shortfall, of €8.8bn. + +Plenty of other European banks—in far better nick than poor old Monte dei Paschi, which is overloaded with bad loans—are grumbling that they too may eventually have to find more capital. They have spent years plumping up cushions that the financial crisis showed to be worryingly thin, but fear that proposed adjustments to Basel 3, the latest global standards, will require more. The Basel Committee on Banking Supervision, which draws up the standards, had hoped to agree on the revisions by the end of 2016. It’s not there yet: on January 3rd an imminent meeting of central-bank governors and supervisors, to approve the changes, was postponed. + +The amendments are intended to reduce the variation in banks’ own calculations of risk-weighted assets (RWAs), largely by restricting their use of in-house models. Under Basel rules, the ratio of a bank’s equity to its RWAs are a key gauge of its strength: if lenders are too sanguine about risk, their estimated RWAs will be too low and their reported capital ratios misleadingly high. + +The main obstacle to an agreement is the committee’s proposal of an “output floor”—a lower bound for banks’ RWAs—calculated as a percentage of the figure churned out by a “standardised” method. The higher the percentage, the tighter the standard: a first version of the proposals suggested 60-90%; a failed compromise last month proposed gradually raising it to 75% over four years, starting in 2021. + +American officials like the floor, believing that it limits banks’ ability to play games with the rules. European banks and officials don’t. Both the Association of German Banks and the Bundesbank, for example, want no floor at all. They argue that internal models make capital calculations more, not less, sensitive to risk. + +America’s banks would be little affected; several European lenders could be stung. That is partly because America has already installed floors in its domestic rules—and, Americans would add, its banks shaped up faster after the crisis. Europeans retort that it also reflects transatlantic differences in business models. European lenders tend to keep more residential mortgages on their books than American banks, which often sell them on; they also lend more to companies and for project finance. All this may carry heavier risk-weights under the revised rules. + +Officials are still aiming for agreement in the first quarter of 2017. That probably means fixing a floor, but how high? Omar Keenan and Kinner Lakhani, of Deutsche Bank, estimate that a 75% floor would increase the RWAs (and hence reduce the capital ratios) of 26 of the 34 listed European banks they cover; at 60%, the number drops to ten, mainly in the Netherlands and Nordic countries. + +Phasing in the rules would give banks time to adapt. Under the timetable envisaged by the committee, they would have until 2025—almost two decades after the world’s financial system started to crack. If the stand-off continues, the repairs will take even longer to complete. + +This article appeared in the Finance and economics section of the print edition under the headline “Polishing the floor” + + + + + +Buttonwood + +2016 may have been an economic as well as political turning-point + +Investors may be too optimistic about the direction in which the world is changing + +Jan 7th 2017 + + + +THANKS to Brexit and the election of Donald Trump, 2016 is widely viewed as a political turning-point. But it may also come to be seen as an economic turning-point, marking the third big change of direction since the second world war. + +The post-war period from 1945 to 1973 was the era of the Bretton Woods system of fixed exchange rates and capital controls. It was a time of rapid economic growth in the rich world as countries rebuilt themselves after the war and as the technological innovations of the first half of the 20th century—cars, televisions, and so on—came into widespread use. High taxes reduced inequality; fiscal policy was used to control the economic cycle. It all came crashing down in the early 1970s as the fixed-currency system collapsed, and an oil embargo imposed by Arab producers ushered in stagflation (ie, high unemployment combined with inflation). + +By the early 1980s, a new system had emerged. Currencies floated, capital controls were abolished, the financial sector was liberalised, industry was privatised and tax rates on higher incomes were cut. In this system inequality widened again (although economists still debate how to parcel out the blame between technological change and globalisation, as China and other countries took a full part in trade). Growth was slower than in the Bretton Woods era but inflation was reined in. Monetary measures replaced fiscal ones as the main policy tool. This era suffered its defining crisis in 2007-08 and has come to an end. + +The final years of both periods were marked by a degree of monetary experimentation. In the late 1970s many policymakers were converted to the doctrine of monetarism—the idea that by setting a target for the growth of the money supply governments could control inflation (and that controlling inflation should be the main aim of their policies). But monetarism proved harder to implement than its proponents thought; the monetary targets behaved unpredictably. By the mid-1980s, monetarism had been quietly dropped. + +Since the 2008 crisis, monetary policy has had to be rethought again, with central banks grappling with the “zero bound” for interest rates. Their first move was to adopt quantitative easing, the purchase of assets to drive down longer-term borrowing costs. Some have since followed this up with negative rates on bank reserves. + +Financial-market trends have played out against the backdrop of these two policy eras. Equities did very well for 20 years under the Bretton Woods regime, but started to falter in the mid-1960s, well before the system’s collapse. Perhaps investors already took fright at signs of inflation; bond yields had been trending upwards since the end of the second world war. + +In the era of globalisation a great equity bull market began in 1982 but declined in 2000-02 with the bursting of the dotcom bubble. That was a portent of the bigger crisis of 2007-08. Both showed how investors could be prey to “irrational exuberance” and push asset prices to absurd levels. Just as rising bond yields in the 1960s presaged the inflationary battles of the 1970s, so falling bond yields in the 1990s and 2000s foreshadowed today’s struggles with deflation and slow growth. + +Financial markets seem to expect that political turmoil will indeed lead to another change of economic regime. Since the American election the MSCI World equity index has rallied and the Dow Jones Industrial Average has hit record highs. Valuations reflect this optimism. In the early 1980s price-earnings ratios were in single digits. In contrast, the S&P 500 now trades on an historic price-earnings ratio of 25. Another contrast with the 1980s is that, back then, short-term interest rates were at double-digit levels and equity valuations were able to climb as rates fell. That cannot happen now. + +So what kind of economic regime are investors expecting? They seem to be cherry-picking the best bits from the previous two regimes—the tax cuts and deregulation of the 1980s with an expectation that (as under Bretton Woods) fiscal, rather than monetary, policy will be used to smooth the ups and downs of the cycle. + +But the populist revolt is, in large part, a reaction against the free movement of capital and labour that has made so many financiers rich. A much bleaker outcome is possible, whereby rising nationalism leads to trade wars and an ageing workforce makes it impossible for the rich world to regain the growth rates of past decades. Change is coming. But rather than resembling the 1980s, the new regime could look more like the 1930s. + +Economist.com/blogs/buttonwood + +This article appeared in the Finance and economics section of the print edition under the headline “The third regime” + + + + + +Local difficulties + +Sub-national currencies struggle to survive + +From Brixton to New York, local-currency initiatives suffer from a lack of liquidity and trust + +Jan 7th 2017 + +Five Bowies make a Winston + +TUCKED away in a corner of Brixton, in south London, a rainbow-coloured ATM dispenses cash, looking for all the world like any other. But the notes it spews out are not pounds sterling. They are Brixton pounds (B£). Not to be mistaken for silly Monopoly money, the Brixton pound can actually be spent, legally: the currency, which has a fixed one-for-one exchange rate with sterling, is accepted at over 150 local shops and businesses. It can even be used to pay local taxes. + +Launched in 2009, this is one of many such initiatives. Local currencies have been adopted in other towns and cities in Britain, such as Bristol, Exeter and Totnes. Elsewhere, examples include the eusko, used in the French Basques; BerkShares, used in western Massachusetts; and the Ithaca Hour, in Ithaca, New York. Barcelona plans an experiment in 2017. + +Such schemes aim to boost spending at local retailers and suppliers, by encouraging the recirculation of money within a community. Because the currency is worthless outside its defined geographic area, holders spend it in the neighbourhood, thus creating a “local multiplier effect”. Backers of the schemes also claim environmental benefits: stronger local businesses cut transport distances and carbon emissions. + +But local currencies have a poor record. Of over 80 launched in America since 1991, only a handful survive. Elsewhere, the Guardiagrele simec in Italy, the Toronto dollar, the Stroud pound and others are languishing or are already defunct. Even the Ithaca Hour, the most hyped “success”, has seen its circulation fall precipitously from two decades ago, says its founder, Paul Glover. + +Local currencies face three hurdles. First, they are relatively illiquid, being accepted only at willing local businesses. They are, in effect, a form of self-imposed economic sanction, narrowing the range of choice for consumers and businesses. Second, local-currency schemes suffer from a trust deficit: they are not backed by the central bank, so holders do not want to risk having too much. Finally, having to deal with two parallel currencies imposes transaction costs—and those wanting to back local businesses can easily use the national currency. + +All of which helps explain why local-currency circulation in most of these places is very low. Just B£100,000 ($123,000) circulates, for example, in an area of 300,000 people. That is too little to have much of an economic impact one way or another. The odd-looking notes, however, do make good souvenirs. + +This article appeared in the Finance and economics section of the print edition under the headline “Local difficulties” + + + + + +Out of the pits + +“Open outcry” is in retreat but futures and options trading-volumes surge + +The market is now mainly electronic—but is still booming + +Jan 7th 2017 | CHICAGO + +Nothing to outcry about + +AS A new trading year began this week in the art-deco tower that houses the Chicago Board of Trade, big men were clustered around pits dealing in futures and options tied to various commodities. Their approach dates back to the building’s opening in 1930, and was once familiar in cities throughout America. But after decades of attrition, on December 30th the CME Group (named after the Chicago Mercantile Exchange) closed the “open outcry” trading pits that it operated in New York. In America, Chicago’s hue and cry has become unique. + +Even this exchange is a shadow of its former self. There are now nine pits, down from 32 in 2007. A once teeming trading floor was closed in 2015. Most activity in the contracts still traded in the pits is electronic. No one in the surviving CME pits in Chicago seems worried by the New York closures. But they have a symbolic impact. The markets have long been a colourful, fractious component of America’s financial architecture. + +They have always lured the ambitious. Two alumni of New York’s commodity markets have joined the Trump administration. Gary Cohn parlayed a cab ride into a job as a silver trader, into a position at Goldman Sachs, and, eventually, that bank’s presidency. His new post is as Mr Trump’s chief economic adviser. Vincent Viola swapped a job at an exchange for Virtu Financial, the electronic-trading firm he founded that made him a fortune. He will be nominated as army secretary. + +Tales of failure as well as of success abound. A scandalous default in the potato market in the 1970s wiped out several firms. A failure to corner the silver market in the 1980s led to the spectacular bankruptcy of one of America’s richest families. The destruction of the World Trade Centre in 2001 obliterated the floor used by four of New York’s commodity exchanges but even before the flames were extinguished they were back to business, some in small temporary facilities like technological junk shops, knit together by familiar cries. + +In the end it was not scandal or terrorism that undermined open outcry; it was efficiency. Computers turned out to be quicker, cheaper and more precise than humans. Almost all the important contracts ended up in the hands of the CME Group, which was first to realise that the most dynamic business was not in traditional commodities but in interest rates, stock indices and currencies. The strong volume these products provided enabled the CME to create economies of scale in clearing and trading systems, and to scoop up other exchanges as they faltered. + +Bit by bit, the exchange has shed its real-estate assets. The Board of Trade building was sold in 2012 and the equivalent New York facility in 2013. This contraction, however, is far from reflecting the health of overall business—which is booming. In 2016 Brexit, the American election and India’s monetary experimentation, to cite just three examples, each created demand for futures and options tied to interest rates, precious metals and currency. Transaction volume on the CME grew by 12% to reach a new record. The markets are more important than ever, even if, increasingly, they can be neither seen nor heard. + +This article appeared in the Finance and economics section of the print edition under the headline “Out of the pits” + + + + + +For poorer, for richer + +Anthony Atkinson, a British economist and expert on inequality, died on January 1st + +An intellectual warrior in the fight against poverty + +Jan 7th 2017 + + + +“TIME is of the essence,” wrote Sir Anthony Atkinson, a British economist, in a report on measuring global poverty, published in July 2016. His sense of urgency may have been influenced by another constraint. In 2014 Sir Anthony had been diagnosed with incurable cancer. Some might have paused; he sped up. He chaired the World Bank commission that produced the poverty report, and wrote a book, “Inequality: What Can Be Done?”, in just three months. On January 1st, his time ran out. + +In his lifetime, he was tipped for a Nobel prize. On his death, fellow economists rushed to describe him as “one of the all-time greats” and emphasised his extraordinary “decency, humanity and integrity”. The two were linked. For him, economics was about improving people’s lives. + +A six-month stint volunteering as a nurse in a hospital in deprived inner-city Hamburg was an early influence. He saw poverty, and went on to spend his life combating it. He fought his battles gently—shying away from the adversarial style he experienced as a student at Cambridge—but with rigorous precision and an unfailing sense of social justice. + +As economists fell in love with markets in the 1980s and 1990s, he wrote the best textbook on their failures, with Joseph Stiglitz, another economist. (Mr Stiglitz’s scrawl was some comfort to Sir Anthony, as evidence of handwriting even worse than his own.) Faced with an imperfect world, he showed how to achieve a second-best compromise. + +The theoretical pontificating of 18th- and 19th-century political economists on welfare and inequality had rather fallen out of fashion. Sir Anthony quickly identified a big obstacle to getting the message across: a lack of good data. He pored through historical sources to unearth past trends in income inequality. He created data sets on the highest incomes, findings from which would support the slogans on protesters’ placards. Sir Anthony was a mentor and collaborator of Thomas Piketty, famous for his book, “Capital in the Twenty-First Century”. Mr Piketty says that all work on trends in income and wealth inequality stems from Sir Anthony’s. + +In the course of his career, Sir Anthony contributed to an average of nearly a book a year and sat on numerous government commissions. The legacy of his most cited paper, published in 1970, is an inequality index that bears his name. Existing measures, he showed, might seem like neutral indicators of the spread of incomes in a country. In fact they contained implicit value judgments. Some were more sensitive to sagging incomes for the poorest; others would respond more to soaring incomes at the top. Always constructive, he then created a new class of inequality measures, making explicit what had been implicit. Today they are used by the US Census Bureau. + +He went beyond analysing the world to trying to fix it—in ways that many rejected. His faith in the power of government to right the world’s ills led to radical proposals. His final book on inequality argued for a participation income (a payment for all who contribute to society) and a tax on wealth to finance an inheritance for everyone on reaching the age of 18. He pushed back against pressure to cut taxes and prioritise containing inflation over reducing unemployment. To the end, he was battling lifelong challenges: inadequate data; how to harness government for good; and closed minds. + +This article appeared in the Finance and economics section of the print edition under the headline “For poorer, for richer” + + + + + +A star is dead + +When stars die, insurers count the cost + +The business of insuring talent is lucrative but high-risk + +Jan 7th 2017 + +Carrie trade + +THE death of Carrie Fisher, a much-loved actor in the “Star Wars” movies, left a hole in the force for fans. It may also burn a hole in the pockets of underwriters, syndicated under Lloyds of London. They may have to fork out as much as $50m to meet Disney’s claim for its loss. The studio, which owns the sci-fi saga, had wisely taken out so-called contractual-protection insurance (CPI) in case death thwarted a contractual obligation: in Ms Fisher’s case to film and promote future “Star Wars” episodes. + +Contrary to the headlines, 2016 was not an especially lethal year to be a celebrity. Like the rest of us, they do die. But unlike most of us, their employers can be left with astronomic bills. When Paul Walker, an actor in “The Fast and the Furious”, a series of action movies, died in 2013 while filming the seventh instalment, Universal Pictures had to spend considerable effort (and dollars) to make his on-screen persona live on. This included hiring body-doubles and digitally inserting Mr Walker into the movie with hundreds of computer-generated images. + +Most workers are easier to replace. Employers can take out simple life insurance that pays a fixed lump sum. But the value of a film star to a studio, or a striker to a football club, is harder to calculate in advance. It depends on all sorts of things, especially timing. This is where contingency insurance, such as CPI, comes in. Unlike a life policy, how much of the $50m Disney receives depends on how it now calculates and justifies the losses caused by Ms Fisher’s death. This could include, for example, her role in boosting sales of storm-trooper figurines. + +Insuring talent is becoming popular outside Hollywood. The aptly named Exceptional Risk Advisors, a company based in New Jersey that reportedly brokered the Fisher policy, also helps insure against the deaths of hedge-fund managers, company executives and sports teams’ star players. Publishers have taken out CPI in case bestselling authors die with books half-written. + +Jonathan Thomas, from Munich Re, who has written contingency policies for over 30 years, says they are “exactly what Lloyd’s is good at”. The greatest change he has seen is in the sums involved. But some worry that underwriters are dropping their standards and taking on too much risk. This could well become a problem if contingency insurance grows much larger. But today it is still tiny compared with life insurance. + +With rock stars remaining on stage into their dotage and long-running sequels one of the surest ways to make money in Tinseltown, the risks of losing a “key human” (or on occasion animal) are growing. That creates business opportunities for insurers, so long as they remain prudent and don’t become star-struck. + +This article appeared in the Finance and economics section of the print edition under the headline “Death Star” + + + + + +Free exchange + +The “WTO option” for Brexit is far from straightforward + +Becoming an independent member of the WTO could be a difficult process + +Jan 7th 2017 + + + +THE two sides of the Brexit debate do not agree on much, but they agree on this: if Britain fails to reach a trade deal with the EU it will have to revert to the “WTO option”. This involves trading only under rules set by the World Trade Organisation. The Leave camp is happy with this idea; Remainers less so. But the awkward truth is that the WTO option is not much of a fallback. Becoming an independent WTO member will be tortuous. + +It is puzzling that Brexiteers, whose campaign was summed up as “Vote Leave, take back control”, seem happy with the WTO option. The WTO is truly global, with only a handful of countries outside it (zealous as they are about sovereignty, Brexiteers do not want to join the ranks of Turkmenistan and Nauru). But forsaking one unelected, unaccountable bureaucracy in Brussels for another housed in a leafy district of Geneva seems perverse. WTO members are at the mercy of its “dispute-settlement” regime, which allows other countries to enforce penalties. + +Inconsistency has its upside. Membership of the WTO appears to be good for trade. Most economists believe Britain’s overall trade will suffer if Britain leaves the single market. But Brexiteers argue that, out of the EU’s clutches, Britain will be the WTO’s star pupil, striking trade deals across the world. China’s explosive export growth after joining in 2001 testifies to its potency. + +However, there is a snag. Britain is already a member of the WTO, but operates through the EU. To become a fully independent member, Britain needs to have its own “schedules”, WTO-speak for the lists of tariffs and quotas that it would apply to other countries’ products. Alan Winters, of the UK Trade Policy Observatory at the University of Sussex, says that, in theory, it would not be too hard for Britain to acquire its own schedules. Any change would require the acquiescence of other members. But, using a “rectification” procedure, the government would simply cut “EU” at the top of the page and paste in “UK” instead. Bigger changes—say, raising tariffs on certain goods—might require a more ambitious “modification” and more thorough negotiations. + +The most simple course, then, would seem to be for Britain to keep its schedules as they are under the EU, including the “common external tariff”, applied uniformly by EU members to imports from third countries. The government has recently hinted as much. This avoids diplomatic wrangling. But simply to readopt EU-approved commitments hardly looks like “taking back control”. It would also lead to other problems. + +WTO trade agreements assume that the EU as it currently stands is a coherent economic bloc. Trade in goods between the 28 member states is pretty free. Multinationals, which need to move components back and forth frequently between different member states, have set up supply chains accordingly. Brexit complicates this arrangement. If Britain kept the common external tariff in place, then it might also apply to a company moving components between the EU and Britain. Such a firm could incur tariff charges each time a border is crossed. A WTO member might kick up a fuss if, say, one of its car companies with production facilities in both Britain and the EU suddenly found it more expensive to assemble a model. + +A related problem concerns the WTO’s “tariff-rate quotas” (TRQs). These allow a certain amount of a good to enter at a cheaper tariff rate. The EU has almost 100 of them. Peter Ungphakorn, formerly of the WTO secretariat, uses the example of the “Hilton” beef quota (named after a hotel where the agreement was reached) to illustrate how gnarly Brexit could be. + +The EU’s current official quota on beef imports is about 40,000 tonnes, charged 20% import duty, he reckons. Above the quota, the duty is much higher. Britain and the EU will need to divide those 40,000 tonnes. The EU might push Britain to take a big share, appeasing European beef producers. British farmers would howl as low-tariff beef flooded in. The quotas might need to be increased because Britain-EU trade would now come under them. Expect to hear more about TRQs in 2017. According to Luis González García of Matrix Chambers, a legal-services firm, they are likely to become “the most contentious issue” in Britain’s re-establishment of its status as an independent WTO member. + +Least-favoured nation + +The WTO will even shape the Brexit negotiations themselves. In recent weeks, the government has appeared keen to ensure that, even after Brexit, Britain’s big exporters will be able to sell freely to the single market. It has mooted paying into the EU budget to guarantee access for the City of London’s financiers. It has assured Nissan, a carmaker, that it will not lose from Brexit. It has studiously refused to spell out the terms of this guarantee, rumoured to entail as-yet-unspent regional-development funds. + +WTO rules, however, make such industry-specific deals hard. If Britain were to agree bilaterally with the EU not to apply tariffs on cars, the WTO’s “most-favoured nation” principle would force it to offer tariff-free access to other countries’ too, says Mr Ungphakorn. And free-trade deals are not supposed to cover just one or two goods, but “substantially all the trade” between the countries involved. Meanwhile, channelling government money to boost exports is frowned on in Geneva. + +Some of these problems are surmountable. The WTO is not as legalistic as you might think, says Mr Winters; countries that stay in others’ good books find things easier. But so far, British politicians are also struggling on that front. Boris Johnson, the foreign secretary, has irritated his counterparts with clownish comments. “We are pro-secco but by no means anti-pasto,” he recently told The Sun, a newspaper, alluding to food imports from the EU. When the reality of Brexit dawns, Mr Johnson and his fellow Brexiteers will find no trade deal to be especially appetising. + +Visit our Free exchange economics blog + +This article appeared in the Finance and economics section of the print edition under the headline “The fallacy of the fallback” + + + + + +Science and technology + + + + +Medicine and computing: The shoulders of gAInts + +Olfactory medicine: Whiff of danger + +Atmospheric physics: The storm before the calm + +Palaeontology: Cracking a puzzle + +Palaeontology: The Richard Casement internship + + + + + +Health care + +Will artificial intelligence help to crack biology? + +Silicon Valley has the squidgy worlds of biology and disease in its sights + +Jan 7th 2017 + + + +IN A former leatherworks just off Euston Road in London, a hopeful firm is starting up. BenevolentAI’s main room is large and open-plan. In it, scientists and coders sit busily on benches, plying their various trades. The firm’s star, though, has a private, temperature-controlled office. That star is a powerful computer that runs the software which sits at the heart of BenevolentAI’s business. This software is an artificial-intelligence system. + +AI, as it is known for short, comes in several guises. But BenevolentAI’s version of it is a form of machine learning that can draw inferences about what it has learned. In particular, it can process natural language and formulate new ideas from what it reads. Its job is to sift through vast chemical libraries, medical databases and conventionally presented scientific papers, looking for potential drug molecules. + +Nor is BenevolentAI a one-off. More and more people and firms believe that AI is well placed to help unpick biology and advance human health. Indeed, as Chris Bishop of Microsoft Research, in Cambridge, England, observes, one way of thinking about living organisms is to recognise that they are, in essence, complex systems which process information using a combination of hardware and software. + +That thought has consequences. Whether it is the new Chan Zuckerberg Initiative (CZI), from the founder of Facebook and his wife, or the biological subsidiaries being set up by firms such as Alphabet (Google’s parent company), IBM and Microsoft, the new Big Idea in Silicon Valley is that in the squidgy worlds of biology and disease there are problems its software engineers can solve. + +Drug money + +The discovery of new drugs is an early test of the belief that AI has much to offer biology and medicine. Pharmaceutical companies are finding it increasingly difficult to make headway in their search for novel products. The conventional approach is to screen large numbers of molecules for signs of pertinent biological effect, and then winnow away the dross in a series of more and more expensive tests and trials, in the hope of coming up with a golden nugget at the end. This way of doing things is, however, declining in productivity and rising in cost. + +One explanation suggested for why drug discovery has become so hard is that most of the obvious useful molecules have been found. That leaves the obscure ones, which leads to long development periods and high failure rates. In theory, growing knowledge of the basic science involved ought to help. The trouble is that too much new information is being produced to be turned quickly into understanding. + +Scientific output doubles every nine years. And data are, increasingly, salami-sliced for publication, to lengthen researchers’ personal bibliographies. That makes information hard to synthesise. A century ago someone could still, with effort, be an expert in most fields of medicine. Today, as Niven Narain of BERG Health, an AI and biotechnology firm in Framingham, Massachusetts, points out, it is not humanly possible to comprehend all the various types of data. + +This is where AI comes in. Not only can it “ingest” everything from papers to molecular structures to genomic sequences to images, it can also learn, make connections and form hypotheses. It can, in weeks, elucidate salient links and offer new ideas that would take lifetimes of human endeavour to come up with. It can also weigh up the evidence for its hypotheses in an even-handed manner. In this it is unlike human beings, who become unreasonably attached to their own theories and pursue them doggedly. Such wasted effort besets the best of pharmaceutical firms. + +For example, Richard Mead, a neuroscientist at the University of Sheffield, in England, says BenevolentAI has given him two ideas for drugs for ALS, a neurodegenerative disease that he works on. Both molecules remain confidential while their utility is being assessed. One is bang in the middle of what he and his team are doing already. To him, this confirms that the artificial intelligence in question is generating good ideas. The other, though, is complicated and not obvious, but mechanistically interesting. Without the AI to prompt them, it is something his team might have ignored—and that, he admits, might in turn be a result of their bias. + +For now, BenevolentAI is a small actor in the theatre of biology and artificial intelligence. But much larger firms are also involved. Watson, a computer system built by IBM, is being applied in similar ways. In particular, IBM has gone into partnership with Pfizer, an American pharma company, with the intention of accelerating drug discovery in immuno-oncology—a promising area of cancer therapy that encourages the body’s own immune system to fight tumours. + +Artificial intelligence will also move into clinical care. Antonio Criminsi, who, like Dr Bishop, works at Microsoft Research in Cambridge, observes that today the process of delineating the edges of tumours in images generated by MRI machines and CT scans is done by hand. This is tedious and long-winded (it can take up to four hours). AI can reduce the time taken to minutes, or even seconds—and the results are completely consistent, unlike those arrived at by human doctors. + +Another example of AI’s move into the clinic is described in a recent paper in JAMA , an American medical journal. This paper showed that it is possible to use AI to detect diabetic retinopathy and macular oedema, two causes of blindness, in pictures of the retina. Enlitic, a new firm based in San Francisco, is using AI to make commercial software that can assist clinical decisions, including a system that will screen chest X-rays for signs of disease. Your.MD, a firm based in London, is using AI, via an app, to offer diagnoses based on patients’ queries about symptoms. IBM is also, via Watson, involved in clinical work. It is able to suggest treatment plans for a number of different cancers. All this has the potential to transform doctors’ abilities to screen for and diagnose disease. + +The power of networking + +Another important biological hurdle that AI can help people surmount is complexity. Experimental science progresses by holding steady one variable at a time, an approach that is not always easy when dealing with networks of genes, proteins or other molecules. AI can handle this more easily than human beings. + +At BERG Health, the firm’s AI system starts by analysing tissue samples, genomics and other clinical data relevant to a particular disease. It then tries to model from this information the network of protein interactions that underlie that disease. At that point human researchers intervene to test the model’s predictions in a real biological system. One of the potential drugs BERG Health has discovered this way—for topical squamous-cell carcinoma, a form of skin cancer—passed early trials for safety and efficacy, and now awaits full-scale testing. The company says it has others in development. + +For all the grand aspirations of the AI folk, though, there are reasons for caution. Dr Mead warns: “I don’t think we are in a state to model even a single cell. The model we have is incomplete.” Actually, that incompleteness applies even to models of single proteins, meaning that science is not yet good at predicting whether a particular modification will make a molecule intended to interact with a given protein a better drug or not. Most known protein structures have been worked out from crystallised versions of the molecule, held tight by networks of chemical bonds. In reality, proteins are flexible, but that is much harder to deal with. + +More work at the molecular level is therefore needed before AI will be able to crack open the inner workings of a cell. One of CZI’s first projects is generating just such basic data. That, in itself, is a massive undertaking—but it is one which collaboration with artificial intelligence will also speed up. AI will nudge people to generate new data and run particular experiments. Those people will then ask the AI to sift the results and make connections. As Isaac Newton put it, “If I have seen further, it is by standing on the shoulders of giants.” If the brains of those giants happen to be made of silicon chips, so be it. + +This article appeared in the Science and technology section of the print edition under the headline “The shoulders of gAInts” + + + + + +Olfactory medicine + +Diagnosing illness by smell + +A prototype device to detect the scent of disease + +Jan 7th 2017 + +The nose knows + +ONE of a doctor’s most valuable tools is his nose. Since ancient times, medics have relied on their sense of smell to help them work out what is wrong with their patients. Fruity odours on the breath, for example, let them monitor the condition of diabetics. Foul ones assist the diagnosis of respiratory-tract infections. + +But doctors can, as it were, smell only what they can smell—and many compounds characteristic of disease are odourless. To deal with this limitation Hossam Haick, a chemical engineer at the Technion Israel Institute of Technology, in Haifa, has developed a device which, he claims, can do work that the human nose cannot. + +The idea behind Dr Haick’s invention is not new. Many diagnostic “breathalysers” already exist, and sniffer dogs, too, can be trained to detect illnesses such as cancer. Most of these approaches, though, are disease-specific. Dr Haick wanted to generalise the process. + +As he describes in ACS Nano, he and his colleagues created an array of electrodes made of carbon nanotubes (hollow, cylindrical sheets of carbon atoms) and tiny particles of gold. Each of these had one of 20 organic films laid over it. Each film was sensitive to one of a score of compounds known to be found on the breath of patients suffering from a range of 17 illnesses, including Parkinson’s disease, multiple sclerosis, bladder cancer, pulmonary hypertension and Crohn’s disease. When a film reacted, its electrical resistance changed in a predictable manner. The combined changes generated an electrical fingerprint that, the researchers hoped, would be diagnostic of the disease a patient was suffering from. + +To test their invention, Dr Haick and his colleagues collected 2,808 breath samples from 1,404 patients who were suffering from at least one of the diseases they were looking at. Its success varied. It could distinguish between samples from patients suffering from gastric cancer and bladder cancer only 64% of the time. At distinguishing lung cancer from head and neck cancer it was, though, 100% successful. Overall, it got things right 86% of the time. Not perfect, then, but a useful aid to a doctor planning to conduct further investigations. And this is only a prototype. Tweaked, its success rate would be expected to improve. + +This article appeared in the Science and technology section of the print edition under the headline “Whiff of danger” + + + + + +The storm before the calm + +Why big hurricanes weaken before they hit America’s coast + +A buffer zone lowers the intensity of incoming storms before they make landfall + +Jan 7th 2017 + + + +IN 2015, a bit over two years after Hurricane Sandy hit his city, Bill de Blasio, New York’s mayor, announced the creation of a $3 billion restoration fund. Part of the money is intended to pay for sea walls that will help protect the place from future storms. + +Building such walls may be an even more timely move than Mr de Blasio thought when he made his announcement. As a paper just published in Nature explains, for the past two decades a natural form of protection may have been shielding America’s Atlantic coast, stopping big storms arriving. Such protection, though, is unlikely to last forever. Mr de Blasio is thus taking the prudent course of mending the roof while the sun is shining. + +The study in question was conducted by James Kossin of America’s National Oceanic and Atmospheric Administration, using wind and ocean-temperature data collected since 1947. In it, Dr Kossin shows that the intensity of hurricanes which make landfall in the United States tends to be lowest when the Atlantic’s storm-generation system is at its most active. + +In Dr Kossin’s view, the cause of this apparent paradox is that, when conditions in the deep Atlantic conspire to produce the most hurricanes, precisely the opposite conditions obtain along the American coast. That creates a buffer zone which lowers the intensity of incoming storms before they make landfall. The agent responsible for this lowering of intensity is vertical wind shear—in other words, wind speeds and directions that vary greatly with altitude. Vertical wind shear removes energy from hurricanes by pulling heat and moisture out of a storm’s centre. When the Atlantic is in its hurricane-producing phase, with low wind shear and high surface temperatures in its central region, the part along the American coast behaves in the opposite manner, with high wind shear and low surface temperatures that sap storms’ energy. + +The obverse is also true. When wind shear and sea-surface temperatures keep the Atlantic’s hurricane-generating region quiet, as they did between 1970 and 1992, those storms which do appear are two to three times more likely to intensify rapidly (defined as gaining 15 knots of wind speed in six hours) when they are near the coast than is the case during active periods. + +Not everyone agrees with Dr Kossin’s proposed mechanism. James Elsner, a geographer at Florida State University, suggests that the correlations between storm generation and storm strength at landfall which Dr Kossin observes could be explained another way. The biggest storms tend to start out far from land rather than near it, and during periods of high activity hurricanes are generated farther out in the Atlantic than happens during lulls. These distant storms thus have more time to veer north—pushed that way by the interaction between Earth’s rotation and their own, a phenomenon called the Coriolis effect—and therefore avoid landfall altogether. + +Whatever its physical explanation, though, the correlation looks secure. And, with the current period of active hurricane formation now 24 years old, a lull, with accompanying superstorms, may not be long in coming. Time, perhaps, for other mayors along America’s Atlantic coast to follow Mr de Blasio’s example. + +This article appeared in the Science and technology section of the print edition under the headline “The storm before the calm” + + + + + +Palaeontology + +How reptilian were dinosaur eggs? + +Cracking a palaeontological puzzle + +Jan 7th 2017 + +A dinosaur’s nest + +DID dinosaur eggs hatch quickly, like those of birds (which are dinosaurs’ direct descendants), or slowly, like those of modern reptiles (which are dinosaurs’ collateral cousins)? That is the question addressed by Gregory Erickson of Florida State University and his colleagues in a paper just published in the Proceedings of the National Academy of Sciences. It is pertinent because it touches on the wider matter of just how “reptilian” the dinosaurs actually were. Researchers already know that many were warm-blooded, and that some had insulation in the form of feathers, even though they could not fly. Fast-developing embryos would drive a further wedge between them and their truly reptilian kin. + +To investigate, Dr Erickson looked at two sets of fossilised dinosaur eggs. The first, from a Mongolian nest (pictured), was laid by Protoceratops andrewsi, a sheep-sized creature that lived 70m years ago. The second, from Canada, was laid by Hypacrosaurus stebingeri—a species contemporary with P. andrewsi that grew to something between the weights of a rhinoceros and an elephant. + +In each case the researchers used an X-ray scanner to examine the teeth of embryos found inside the eggs. In cross-section, dinosaur teeth display growth rings, called von Ebner lines, that are reminiscent of the annual growth rings of a tree trunk. In all living species which have von Ebner lines those lines represent a day’s growth. It therefore seems reasonable to believe that this was true for dinosaurs as well. + +Assuming also, as Dr Erickson and his colleagues did, that dinosaurs’ teeth began to grow about halfway through embryonic development (which is when a crocodile’s embryonic teeth first appear), they conclude that the P. andrewsi eggs they looked at were about 83 days old, making that the lower bound of their incubation period. This compares with the 42 days an ostrich egg takes to incubate and the 200-plus days required by a Komodo dragon egg—both of these animals being, when adult, of comparable size to P. andrewsi. + +The bigger eggs of H. stebingeri needed, according to Dr Erickson’s calculations, a minimum of 171 days incubation. Sadly, no egg-laying animal of its size is around today for comparison. But projections based on size and incubation-period data from modern birds and reptiles suggest 171 days is substantially more than would be expected if the eggs of H. stebingeri were developing in a birdlike way. + +The truth, then, is that in this as in other matters, dinosaurs are less reptilian than was once thought, but not as avian as some revisionists would like to believe. A messy answer, perhaps. But, in nature, things are not always clear-cut. + +This article appeared in the Science and technology section of the print edition under the headline “Cracking a puzzle” + + + + + +The Richard Casement internship + +Jan 7th 2017 + +We invite applications for the 2017 Richard Casement internship. We are looking for a would-be journalist to spend three months of the summer working on the newspaper in London, writing about science and technology. Applicants should write a letter introducing themselves and an article of about 600 words that they think would be suitable for publication in the Science and Technology section. They should be prepared to come for an interview in London or New York. A stipend of £2,000 a month will be paid to the successful candidate. Applications must reach us by January 27th. These should be sent to: casement2017@economist.com + + + +This article appeared in the Science and technology section of the print edition + + + + + +Books and arts + + + + +Britain and the European Union: Why Brexit won + +Johnson: Word of the year + +Chinese economics: Western takeaway + +Fiction: Crazy city + +Architecture: Pile ‘em in style + + + + + +Wot won it + +How and why Brexit triumphed + +The first books to try to explain the shock of the referendum last June + +Jan 7th 2017 + + + +What Next: How to Get the Best from Brexit. By Daniel Hannan. Head of Zeus; 298 pages; £9.99. To be published in America in February. + +The Brexit Club. By Owen Bennett. Biteback; 340 pages; £12.99. + +The Bad Boys of Brexit. By Arron Banks. Biteback; 338 pages; £18.99. + +All Out War. By Tim Shipman. William Collins; 630 pages; £25. + +ONE explanation of Britain’s vote to quit the European Union last June is that Eurosceptics worked towards it for decades. A young Daniel Hannan joined their number in the early 1990s, first as a student, later as a journalist and Tory MEP. In his new book Mr Hannan duly slams the EU’s erosion of national sovereignty and supposed antipathy to free markets. His vision is of a more liberal, open and less regulated Britain, trading freely around the globe and no longer held back by a bureaucratic and stagnant EU. + +Yet this differs sharply from the ideas of other Brexiteers, such as Nigel Farage, the former leader of the UK Independence Party. Because Mr Hannan has economic nous, he likes a Norwegian-style “soft Brexit”, at least as a transition. Norway is outside the EU but in its single market, so it accepts most of its rules, freely admits EU migrants and pays into its budget. Mr Farage will have none of this: anything less than a “hard Brexit” that takes Britain out of the single market would betray voters. + +This tension between hard and soft Brexit is one reason why Theresa May’s Tory government has remained so opaque about its goals. It was also evident during the campaign, as Owen Bennett’s book shows. Indeed, the rival Brexiteers hated each other even more than they did their opponents—or the EU. On one side stood Mr Farage and his millionaire backer, Arron Banks (whose diary of the campaign is tellingly called “The Bad Boys of Brexit”), bent on talking about immigration and little else. On the other, with Mr Hannan, were leading Tory MPs like Michael Gove and Boris Johnson, backed by UKIP’s only MP, Douglas Carswell, who played down immigration and talked up global trade liberalisation instead. + +Mr Bennett is good on the internecine warfare among Brexiteers, but his book lacks the detailed reporting that is in Tim Shipman’s “All Out War”. Mr Shipman, political editor of the Sunday Times, has interviewed almost everyone involved in the referendum (though apparently not Mrs May’s predecessor, David Cameron, who is writing his own memoir). He has in a remarkably short time produced a story that is thorough, comprehensive and utterly gripping. It is hard to imagine a better first draft of history. It will not give Mr Cameron much satisfaction. + +Partly because they expected to win easily, as Harold Wilson did in 1975, Mr Cameron and the Remainers made tactical mistakes. These included accepting a pre-vote period of official government “purdah”, constraining what it could publish; allowing cabinet ministers to back Leave without resigning; and avoiding direct “blue-on-blue” attacks on fellow Tories. Mr Cameron’s renegotiation of Britain’s membership in February was also successfully portrayed by Leavers as trivial. + +In the campaign itself, Mr Cameron’s team relied heavily on what became tarred as “Project Fear”. Modelled on the defeat of the Scottish independence referendum in September 2014, it stressed Brexit’s risks to the economy. George Osborne, the chancellor, issued gloomy forecasts of lost income, output and jobs. Many domestic and international bodies were wheeled out to support such warnings, culminating with Barack Obama saying that Britain would be at “the back of the queue” for trade deals. There was little effort to put out a positive message about the EU or to defend immigration, Leavers’ key weapon. + +The main Vote Leave campaign led by Matthew Elliott and Dominic Cummings was more vigorous and more aggressive than the Stronger In team led by Will Straw and Craig Oliver from 10 Downing Street. Downing Street also misjudged the mood of Tory MPs. It hoped gratitude for the 2015 Tory election victory and respect for Mr Cameron’s leadership would reduce rebel numbers to 50-60. But careful canvassing by Steve Baker, a Eurosceptic backbencher, pushed them up to over 140, including the critical duo of Mr Gove and Mr Johnson. Letting the Remain campaign seem largely Tory-run was another error. + +The Leavers made mistakes, too. They failed to answer the economic argument, being reduced to Mr Gove’s notorious attack on “experts”. They did not set out clear alternatives to membership. Their internal splits and focus on immigration often made them seem nasty, a big worry when a Labour MP, Jo Cox, was brutally murdered in mid-June, just before the vote, by a man linked to the far right. By then many Leavers thought they would lose. + +That they won is down to three causes deeper than Remainers’ tactical errors. One was the Labour Party leadership. The arrival of Jeremy Corbyn, a far-left anti-EU figure, in late 2015 made winning the referendum harder. Although he nominally backed Remain, he and his team often sabotaged the Labour In campaign, for example refusing to use the word “united” to describe Labour’s position or to share a platform with former party leaders. + +A second was the rising anti-elite, anti-London and anti-globalisation mood of many voters, especially in the Midlands and north. Those who feel they were left behind after the financial crisis have turned to populists in many countries (including to Donald Trump in America). In the Brexit referendum they voted in unexpectedly large numbers, a big reason why many pollsters got the result wrong. + +The third goes back to Mr Hannan and his friends. For three decades British governments of both parties, egged on by a shrilly Eurosceptic press, did little but carp at Brussels. Mr Cameron’s delusion was that, having himself hinted that he might campaign to Leave, he could turn sentiment round completely in just three months. Instead, his past stance made him seem unconvincing when he portrayed EU membership as vital for Britain’s economy and security. This same legacy could now make it trickier for Mrs May to persuade voters to accept a soft Brexit. + +This article appeared in the Books and arts section of the print edition under the headline “Why Brexit won” + + + + + +Johnson + +2016’s grim words of the year + +The year had not enough “hygge”, and much too much of “Brexit”, “Remoaners”, “alt-right” and “fake news” + +Jan 7th 2017 + + + +CHOOSING the “word of the year” can be an unenlightening exercise. The last several years have seen language mavens and dictionary publishers pick an emoji (the one meaning “crying with joy”), “because” as a preposition (because teenagers), and “hashtag” (as in “I’m so happy, hashtag irony,” to signal a hashtag in speech). Most are probably passing fads; a “word of the year” should ideally both summarise the feel of the 12 months and have a chance of surviving. + +If recent years have offered slim pickings, that is certainly not the case of 2016. Last year gave the English language an unusually big crop. Take “adulting”, an unlikely verb used by younger millennials to describe the joys of paying rent and making it to work on time and sober. Memes circulate online with the likes of a picture of a puppy lying passed out on the floor under the text “I Can’t Adult Today. Please Don’t Make Me Adult”. With slang rising and falling faster than ever before, though, it is anyone’s guess whether adulting will survive as long as it takes for its users to become seasoned grown-ups. + +The same short shelf-life might be reserved for “hygge”, a venerable Danish word for a kind of relaxed happiness, and a phenomenon that hit Britain’s publishing industry like the hammer of Thor in 2016. No fewer than nine books on hygge were released or planned. Danes are amused that Britons think its joys can be found in a book, as it has a lot more to do with good company than things like the socks and mulled wine touted on these books’ covers. It is hard to imagine non-Danes still going on about hygge in 2026. + +Many words do look more likely to survive. The Chinese do not actually curse you with “may you live in interesting times,” but 2016 certainly has been a bit too interesting, its politics making a mark on the lexicon. + +First came “Brexit”, a strong runner for word of the year. It isn’t the first portmanteau word with a country name and “-exit”—that was Greece’s possible exit from the euro, or “Grexit”—but it’s the one that has actually happened, and its consequences will be around for a long time. Britain’s vote to leave the European Union has others talking of a potential “Frexit”, should Marine Le Pen become president of France, or “Italeave”, if Italy should be forced out of the euro. The portmanteau that spawned a thousand others, Brexit has also resulted in “Remoaners”, those who voted for Britain to remain in the EU, and who are still grousing about the result. + +It was America’s turn to embrace leap-into-the-unknown populism with the election of Donald Trump in November. The “alt-right”, another newly prominent group, played a role in Mr Trump’s victory. After firing two more conventional campaign managers, the candidate hired Steve Bannon to run his election bid. Mr Bannon had been the chairman of Breitbart, a website devoted to the worldview of maverick conservatives who sometimes call themselves “race realists”, while others call them “white nationalists”. Most reject labels like “white supremacist” or the dreaded “racist”: white nationalists merely say that whites, like other peoples, should have their own countries, for everyone’s good. + +Many people voted for Mr Trump not because they thought he was a racist, but because they could believe anything they liked about him and his opponent, Hillary Clinton. It was the year of “fake news”, “viral” stories in that word’s original infectious-plague sense, convincing many voters that Mrs Clinton had sold weapons to Islamic State, or that Pope Francis had endorsed Donald Trump. + +Truly fake stories were relatively rare, though. The more worrying phenomenon was a general disappearance of the expectation that politicians should even be expected to stick to the facts. So Johnson’s word of the year is “post-truth”. Politicians have always strayed from the truth, but shame kept them in the general postcode. But in 2016 Pro-Brexit campaigners said falsely that Britain sent the EU £350m a week, successfully goading the Remain camp into debating the figure endlessly—and so keeping the topic in the public’s mind. Mr Trump, after a series of misogynist comments, said that nobody in the world respected women more than he does. In 2016 the only rule was “anything goes, so long as it gets attention,” and the most audacious at following it were the winners. Other campaigners have been watching and taking note, a frightening sign that “post-truth” may be around for some time to come. + +This article appeared in the Books and arts section of the print edition under the headline “Word of the year” + + + + + +Outsiders and the Middle Kingdom + +Western economists and China’s rise + +China’s reformers took the lead, but with plenty of intellectual input from former ideological foes + +Jan 7th 2017 + + + +Unlikely Partners: Chinese Reformers, Western Economists, and the Making of Global China. By Julian Gewirtz. Harvard University Press; 389 pages; $39.95. To be published in Britain on January 31st. + +IN 1985 James Tobin, a Nobel laureate in economics, delivered a talk at a conference in China. Mao had died less than a decade earlier and modern economic concepts, shorn of socialism, were still unfamiliar to many in the country, including the interpreter on this occasion. Struggling to find the right words, she burst into tears. Two conference participants stepped aside after Tobin spoke and, on the spot, devised the Chinese term for “macroeconomic management”. Future interpreters would have it easier. + +Chinese officials and academics, especially those with a reformist bent, were acutely aware of their tenuous grasp on economics at the time. Five years earlier, Deng Xiaoping, the country’s paramount leader, had put it bluntly when meeting Robert McNamara, president of the World Bank: “We have lost touch with the world.” + +With China’s economic rise now into its fourth decade, it is easy to forget how shaky its footing was at the start of its ascent. It began not just in poverty, but beset by basic uncertainty about how to develop. There was even disagreement over whether development, in so far as it entailed market forces, was the right goal. + +The oft-told story is that the Communist Party forged ahead with policy experiments—“crossing the river by feeling for the stones”, as the Chinese reformers’ saying goes—and, little by little, found the ingredients for growth. There is much truth to this. But the role of Western economists in helping shape that journey is missing. “Unlikely Partners” by Julian Gewirtz, a doctoral candidate in Chinese history at Oxford (and an occasional reviewer for these pages), fills that gap. It vividly brings to life China’s economic debates from Mao’s death in 1976 until 1993, by which time the country’s direction was clearer. + +The claim is not that Westerners were responsible for China’s development. A large constellation of Chinese reformers deserves the credit for that. Indeed, one of the book’s virtues is that it puts the spotlight on Zhao Ziyang, the Communist Party chief who wound up under house arrest after the 1989 Tiananmen protests. Mr Zhao has been written out of official histories, but his consistent support for bold thinking was critical to China’s success. + +Nevertheless, to understand how China found its way, it is also necessary to recognise the influence of foreign ideas. In some cases the impact was immediate. The concept of special economic zones, which enabled coastal regions to flourish, began with a Chinese vice-premier’s trip to western Europe in 1978, where he saw export-processing zones. + +More often, the impact was diffuse. Academics trained in Marxist economics lapped up translated versions of Western textbooks. American professors came for weeks at a time to teach econometrics. Chinese institutions invited a succession of Western economists to give talks and then sifted through their ideas for those that were actually relevant to China. + +The Chinese were most receptive to economists who themselves hailed from planned economies and understood their flaws but also knew that sudden changes were impractical. Ota Sik, from Czechoslovakia, inspired a phased-in pricing strategy in the early 1980s, whereby China gave enterprises ever more control over setting prices. The biggest star was Janos Kornai, a Hungarian economist who moved to Harvard after writing a seminal book in which he identified shortage as the chronic problem of socialism. What came to be called “Kornai fever” gripped the study of economics in China in the late 1980s, and his book sold more than 100,000 copies. + +The World Bank also had a big hand in China’s take-off. The bank has a tainted reputation from that era, when it was seen as pushing a “Washington consensus” agenda of liberalisation that harmed Latin America. Much less attention is paid to its subtler positions in China in the 1980s. It carried out two major studies of the economy (the first of their kind), became China’s largest source of foreign capital and, responding to Chinese requests, provided reams of useful policy advice. + +Mr Gewirtz’s book does not attempt to provide a definitive account of China’s economic rise. It dwells in the world of ideas, tracing the arc of debates. Little attention is paid to what was actually happening on factory floors or in farm fields. But it is still a gripping read, highlighting what was little short of a revolution in China’s economic thought. + +Reading the book today, it is tempting to conclude that China is ignoring a basic lesson from its success: that being open to foreign ideas served it so well. Under Xi Jinping, officials rail against “Western values”. Yet there is also a less gloomy conclusion. China’s path has never been linear: reformists and conservatives have constantly jostled for the upper hand. But voices for openness have ultimately prevailed. And the gains that China has made in its understanding of economics and, more fundamentally, in the lives of its people will not be easily undone. + +This article appeared in the Books and arts section of the print edition under the headline “Western takeaway” + + + + + +Megacity meetings + +Lagos, where anything can happen + +Chibundu Onuzo’s fine novel of Nigeria has an internationalist heart + +Jan 7th 2017 + +Where paths cross + +Welcome to Lagos. By Chibundu Onuzo. Faber and Faber; 358 pages; £12.99. + +AT LEAST in their conception of the world, there are two broad categories of Nigerians—or for that matter Kenyans, Pakistanis, Chinese or anyone from the poor world. The vast majority are those for whom national boundaries represent insurmountable barriers, for whom even a bus ride to the city seems an otherworldly journey. And then there are those who flit between African and European cities as easily as if they were riding the Victoria line from Brixton to Green Park. They are the lucky ones with connections at embassies or stores of capital certified and triple-stamped by bank officials, or, best of all, the burgundy passports of the European Union. + +Lagos, a sprawling shambles of some 21m souls, has its fair share of both categories, and they come crashing together in Chibundu Onuzo’s second novel, “Welcome to Lagos”. + +Some welcome. It is hard to imagine a megacity less hospitable to newcomers. At every turn lurk scammers, thieves, crooked cops and rent-extracting gang-lords. Into this metropolis come Chike and Yemi, two soldiers deserting their posts in the Niger Delta after one too many orders to shoot civilians and burn down villages. Along the way they meet, and become fellow travellers with, a motley crew of runaways: Fineboy, a militant fleeing from the very same army; Isoken, a young girl near-raped by those militants; and Oma, a housewife escaping her abusive husband. Clueless, practically penniless and unaccustomed to the nasty ways of the big city, they find refuge under a bridge until, one day, Fineboy finds an abandoned flat to squat in. + +From another world come Ahmed, the pampered, British-passport-holding crusader who returns to Lagos to start a muckraking newspaper after a decade as a banker in London, and Chief Sandayo, the minister of education, on the run from Abuja with $10m in his suitcase. These worlds—rich and poor, urban and rural, privileged and powerless, Muslim and Christian, Igbo and Yoruba—collide to spectacular effect as their paths cross and power shifts hands in surprising and unexpected ways, and then does so again, and again. It is an unlikely plot, but Ms Onuzo pulls it off, revealing the fault lines in her country’s society—or indeed those of any half-formed democracy. Though drenched in Lagosian atmosphere, the book wears its Nigerian setting lightly: it is clearly the work of a pan-African and an internationalist—and is all the better for it. + +This article appeared in the Books and arts section of the print edition under the headline “Crazy city” + + + + + +Designing car parks + +Miami Beach, the world’s best parking spot + +Why developers are making a statement out of a boring building + +Jan 7th 2017 + +Starchitects and their car parkitecture + +CAR parks are rarely well-designed. Even more rarely do they amount to “design”: something to enjoy on a purely aesthetic level. However, in Miami Beach, Florida, the car park has become not just a building type that is visually pleasing, but something else entirely: a set piece that offers architects the chance to show off. + +Perhaps because the city has expanded rapidly as a travel destination, its new hotels are invariably disappointing dumb citadels of glass and steel that dominate the city’s charming old art-deco look apparently on purpose. Most galleries and museums are soulless, too, the glamorous veranda of the Pérez Art Museum notwithstanding. Miami is largely built on sand or swamp and has a high water-table, making subterranean parking expensive; building above ground is a better option. + +The first building to turn this inconvenience into a design opportunity was the evocatively titled Ballet Valet. Arquitectonica, a local firm, had established itself in the 1980s with a series of brash, colourful apartment blocks that were immediately snapped up as sets for “Miami Vice”, a television series, and “Scarface”, a Cuban gangster epic. Asked in the following decade to create a car park that would add something to a block of boutique shops, Arquitectonica adapted its garish palate to the more sensitive 1990s by wrapping the building in a fibreglass mesh with an irrigation system, and filling it with indigenous clusias and sea lettuce, which ran riot. + +Ballet Valet might have remained a one-off were it not for the arrival of Art Basel in Miami Beach. When one of the largest art fairs in Europe was seeking to expand into America it made an inspired choice. Art was popular there, both among the American celebrity set, who had taken to Miami Beach as a place to party, and among the wealthy Latin Americans who saw the city as both their home and their financial base in America. There were only a handful of galleries, however. Entering into the art-led regeneration of Miami Beach, the car parks are in many ways monuments to the success of that relationship, creating spaces that enable commerce and art to exist side by side. + +Car parks put developers at the centre of upcoming areas. Herzog and de Meuron, a Basel firm that also specialises in museums, completed 1111 Lincoln Road in 2010. A ziggurat of bare concrete linked by precipitous ramps, it provides accommodation for a series of art-crowd-friendly shops on the ground floor and a home for the developer, Robert Wennett, on the roof. This giddy stack of concrete cards set a benchmark for audacity, its upper deck providing stunning views and one of the most sought-after party spaces during Art Basel Miami Beach. From this example, the high-end car park became firmly established. + +In November, as part of a new six-block development in the mid-Beach area, Alan Faena, an Argentine developer, revealed his parking garage (pictured). It boasts a glazed side elevation that exposes the robotic car elevator, which installs and retrieves cars from closely stacked shelves: a preparation for the dance performances in the Faena Forum arts centre to which it is appended. The car park actually only provides room for around 100 cars (though there are 300 subterranean parking places beneath the development). Yet still Mr Faena felt that the development needed an above-ground car park, to be “a statement”. He had his designed, like the adjacent arts centre, by OMA, the fashionable firm founded by Rem Koolhaas. + +Soon the designer car park will breach the borders of the Beach into the wider metropolitan area. Later this year in downtown Miami, Terence Riley, a former curator at New York’s Museum of Modern Art, will open an 800-car garage that will be clad in a crazy collage of different façades designed by five of the world’s trendiest practices. Although Miami has no more cars per person than the rest of America, it is still hugely car-dependent. The competition among developers to build the most extravagant or most striking take on an otherwise dull building is typical of Miami’s peculiarly intimate glamour. + +This article appeared in the Books and arts section of the print edition under the headline “Pile ‘em in style” + + + + + +Obituary + + + + +Vera Rubin: Dark star + + + + + +Dark star + +Obituary: Vera Rubin died on December 25th + +The American astronomer who established the existence of dark matter was 88 + +Jan 7th 2017 + + + +WHEN in 1965 Vera Rubin arrived for a four-day stint at “the monastery”, as the Palomar Observatory, home of the world’s largest telescope, was dubbed, there were no women’s lavatories. No female astronomer had ever worked there before. How could they, when it would mean walking home late at night? + +It had been the same thinking at high school. When she told her revered science teacher of her scholarship to Vassar he said: “You should do OK as long as you stay away from science.” She was the only astronomy major to graduate there in her year. When in 1947 she requested a graduate-school catalogue from Princeton, the dean told her not to bother: women were not accepted for physics and astronomy. George Gamow, later her doctoral adviser, said she could not attend his lecture at the Johns Hopkins Applied Physics Lab “because wives were not allowed”. + +She was indeed a wife. She married—aged 19—Robert Rubin, a physicist whom she followed to Cornell, sacrificing her place at Harvard. He was, she said, her greatest ally. Later, when she attended night classes at Georgetown University, he drove her there, eating his dinner in the car until he could drive her home, while her parents baby-sat. Still, she found raising four children “almost overwhelming”. When she halted her academic career—the worst six months of her life—she wept every time the Astrophysical Journal arrived in the house. But, working part-time, she made sure to be home when the kids returned from school. She never inspected their rooms, she said, and they grew up fine, all with PhDs in science or maths. + +Her master’s thesis was, her Cornell supervisor said, worthy of being presented to the American Astronomical Society. But she was about to give birth, so, he suggested, he would present it—but in his name. + +She refused. Her parents drove up from Washington and took their 22-year-old daughter, nursing her newborn, on a gruelling snowy trip from upstate New York to Philadelphia . She addressed the roomful of strangers for ten minutes about galaxy rotation, soaked up some patronising criticism and a smidgen of praise—and left. + +Though rows were unpleasant, defeat was worse. “Protest every all-male meeting, every all-male department, every all-male platform,” she advised. At Palomar, she made a ladies’ room by sticking a handmade skirt sign on a men’s room door (she returned a year later: it was gone). + +She’d never anticipated such problems. Her father encouraged her childhood habit of watching meteor showers, leaning out of her bedroom window and memorising their geometry in order to look them up later. He even helped her make her first telescope, from a cardboard tube; she had already made her own kaleidoscope. She hadn’t ever met an astronomer, but it never occurred to her that she couldn’t be one. + +But her early research was largely ignored. In other work, male astronomers elbowed her aside. Fed up, she looked for a problem “that people would be interested in, but not so interested in that anyone would bother me before I was done.” + +She found it. In the 1930s Fritz Zwicky, an idiosyncratic Swiss astrophysicist, had suggested that the brightly shining stars represented only a part of the cosmic whole. There must also be “dark matter”, unseen but revealed indirectly by the effects of its gravity. That conjecture languished on the margins until Ms Rubin, working with her colleague Kent Ford, examined the puzzle of galactic rotation. Spiral galaxies such as Andromeda, she proved, were spinning so fast that their outer stars should be flying away into the never-never. They weren’t. So either Einstein was wrong about gravity, or gravitational pull from vast amounts of something invisible—dark matter—was holding the stars together. + +The discovery reshaped cosmology, though initially her colleagues embraced it unenthusiastically. Astronomers had thought they were studying the whole universe, not just a small luminous fraction of it. New theories developed on what the matter might be—but its fugitive particles escaped all direct detection. + +Some are worried by the absence. Ms Rubin was unbothered. Astronomy, she reckoned, was “out of kindergarten, but only in about the third grade”. Many of the universe’s deep mysteries remained to be discovered by eye and brain, with all the joy that involved. + +Shining a light + +There were other scientific feats, too: in 1992 she discovered NGC 4550, a galaxy in which half the stars orbit in one direction, mingled with half that head the other way. She won medals aplenty: the Gold Medal of Britain’s Royal Astronomical Society (last awarded to a woman in 1828) and America’s National Medal of Science. Princeton, which had once shunned her, was among the many universities to award her an honorary doctorate. She gave notable commencement speeches. + +The plaudits were pleasant, but numbers mattered more: the greatest compliment would be if astronomers years hence still used her data, she insisted. She was a perennial favourite for a Nobel prize in physics—only ever awarded to two women. That call never came: like dark matter, her fans lamented, she was vitally important, but easy to overlook. + +This article appeared in the Obituary section of the print edition under the headline “Dark star” + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +GDP forecasts + +Markets + + + + + +Interactive indicators + +Jan 7th 2017 + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Output, prices and jobs + +Jan 7th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Trade, exchange rates, budget balances and interest rates + +Jan 7th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +The Economist commodity-price index + +Jan 7th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +GDP forecasts + +Jan 7th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Markets + +Jan 7th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Table of Contents + +The Economist + +The world this week + +The world this week + + + + + +KAL's cartoon + + + + + +Leaders + +British politics: Theresa Maybe + + + + + +Japan’s economy: The second divine wind + + + + + +Trumponomics: Men of steel, houses of cards + + + + + +Fixing failed states: First peace, then law + + + + + +Conversational computing: Now we’re talking + + + + + +Letters + +Letters to the editor: On China, drugs, management, elections, nuclear power, Japan, the elderly, economists + + + + + +Briefing + +Theresa May: Steering the course + + + + + +United States + +Inequality: Fat tails + + + + + +Congressional ethics: Old bog, new tricks + + + + + +Recruiting police officers: The force is weak + + + + + +Gun laws: Still standing + + + + + +Charleston’s new museum: Cobblestones and bones + + + + + +Markets for tickets: Battling bots + + + + + +Lexington: Learning to love Trumpism + + + + + +The Americas + +Brazil’s prisons: Horror in the jungle + + + + + +Bolivia: For Evo, for ever + + + + + +Asia + +Demography in Japan: A negative-sum game + + + + + +Japan’s elderly workers: Silver lining + + + + + +Alcohol in Indonesia: Dry talk + + + + + +New Zealand’s national parks: Lord of the ker-chings + + + + + +Banyan: Selling Malaysians down the river + + + + + +China + +The party congress: Selection year + + + + + +Literature: There is flattery in friendship + + + + + +Middle East and Africa + +South Africa’s schools: Bottom of the class + + + + + +Astronomers v sheep farmers in South Africa: Stars and baas + + + + + +Decriminalising Zimbabwe’s sex trade: Less stigma, more competition + + + + + +Iraq’s long war: A goody and Abadi + + + + + +America and Israel: Unsettled + + + + + +Israel’s divisions: Uniform justice + + + + + +Europe + +Terror in Turkey: From celebration to carnage + + + + + +America’s new Russia sanctions: Feint praise + + + + + +Motorway charges: Another European crisis + + + + + +Spain and Catalonia: Catalexit? + + + + + +Charlemagne: Nailed it + + + + + +Britain + +Crime: How low can it go? + + + + + +Brexit preparations: Rogers and out + + + + + +International development: A stingy new year + + + + + +Bagehot: Pierogi and the British genius + + + + + +International + +Fixing fragile nations: Conquering chaos + + + + + +Technology Quarterly + +Finding a voice: What language technology can and can’t do + + + + + +I hear you: Speech recognition + + + + + +Hasta la vista, robot voice: Speech synthesis + + + + + +Beyond Babel: The limits of computer translations + + + + + +What are you talking about?: The meaning of speech still eludes machines + + + + + +Where humans still beat computers: Brain scan: Terry Winograd + + + + + +For my next trick: Coming to grips with voice technology + + + + + +Business + +Nestlé: A life less sweet + + + + + +Toshiba: Losing count + + + + + +Donald Trump and business: Wheel spin + + + + + +Schumpeter: The fat-cow years + + + + + +Finance and economics + +Indian economics: Many rupee returns + + + + + +Impact investing: Coming of age + + + + + +Bank capital: Polishing the floor + + + + + +Buttonwood: The third regime + + + + + +Sub-national currencies: Local difficulties + + + + + +Futures and options trading: Out of the pits + + + + + +Anthony Atkinson: For poorer, for richer + + + + + +Insuring talent: Death Star + + + + + +Free exchange: The fallacy of the fallback + + + + + +Science and technology + +Medicine and computing: The shoulders of gAInts + + + + + +Olfactory medicine: Whiff of danger + + + + + +Atmospheric physics: The storm before the calm + + + + + +Palaeontology: Cracking a puzzle + + + + + +Palaeontology: The Richard Casement internship + + + + + +Books and arts + +Britain and the European Union: Why Brexit won + + + + + +Johnson: Word of the year + + + + + +Chinese economics: Western takeaway + + + + + +Fiction: Crazy city + + + + + +Architecture: Pile ‘em in style + + + + + +Obituary + +Vera Rubin: Dark star + + + + + +Economic and financial indicators + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +GDP forecasts + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.01.14.txt b/homeworks/B20769/homework1/data2/2017.01.14.txt new file mode 100644 index 0000000..035137f --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.01.14.txt @@ -0,0 +1,4584 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: Lifelong education + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Politics this week + +Jan 14th 2017 + + + +A dossier compiled about alleged links between Donald Trump’s campaign and Russia, and containing lurid tittle-tattle about the president-elect, was published on BuzzFeed. The dossier was based on unverified material prepared by an investigative firm for Mr Trump’s opponents. America’s intelligence agencies included a classified summary of its findings in its assessment of alleged Russian interference in the election. A spokesman for the Kremlin said it had no compromising documents on Mr Trump and called the allegations “absolute fantasy”. See article. + +The Senate started the process to vet Mr Trump’s nominees to key posts. Democrats, pointing to a letter to them from the head of the Office of Government Ethics, said the confirmation hearings were being rushed and the vetting was far from complete. Rex Tillerson, Mr Trump’s pick for secretary of state, responded to concerns about his close business ties to Russia by saying the country’s actions were a danger and NATO was right to be worried. + +A jury sentenced Dylann Roof, a white nationalist, to death for murdering nine black people at a church in Charleston, South Carolina, in 2015. + +Barack Obama gave his farewell speech as president. Just as Washington warned about factional parties and Eisenhower fretted about the rise of the military-industrial complex, Mr Obama cautioned his fellow Americans not to take democracy for granted. + +A founder of Iran’s revolution + +Ayatollah Akbar Hashemi Rafsanjani, a former president of Iran and hugely influential since the 1979 revolution, died. He was 82. See here and here. + +A Palestinian attacker killed four Israeli soldiers by driving a lorry into them near the Old City in Jerusalem. + +Yoweri Museveni, who has ruled Uganda for 31 years, named his eldest son as a special adviser in a move interpreted as preparing him to become president. His son, Muhoozi Kainerugaba, used to lead a special-forces unit tasked with protecting him. + + + +Mutinous soldiers in Ivory Coast seized the city of Bouaké and kidnapped the defence minister in a dispute over pay. They returned to barracks after promises of more cash. But the country, which fought a civil war in the early 2000s, remains riven by ethnic tensions. See article. + +No let-up + +Afghanistan suffered a series of terrorist attacks. A bomb near the parliament in Kabul claimed over 30 lives; another in the southern city of Kandahar killed 11 people, including five diplomats from the United Arab Emirates. Another attack, in the nearby city of Lashkar Gah, killed several pro-government militia leaders. + +Chinese military aircraft flew close to Japan and South Korea, and its sole aircraft-carrier sailed close to Taiwan, prompting all three countries to scramble forces in response. + +King Vajiralongkorn withheld his assent for the draft constitution championed by Thailand’s military junta, asking for changes that would make him more powerful. Elections scheduled for this year may be delayed. See article. + +Tsai Ing-wen, the president of Taiwan, visited Texas and met Ted Cruz, a senator, and Greg Abbott, the governor. China said the meetings would harm relations with America. + +Hong Kong’s most senior civil servant, Carrie Lam, submitted her resignation. She said she had done so in order to run for the post of chief executive, as the territory’s leader is known. The choice will be made in March by a committee stacked with the Communist Party’s supporters in Hong Kong. + +China said its president, Xi Jinping, would attend the annual World Economic Forum in Davos. Mr Xi will be the first Chinese president to attend and he is expected to stress China’s openness to international trade. + +Murder most foul + +Members of a criminal gang at a prison in Brazil killed 31 inmates, decapitating most of their victims. This came a week after gang fights at another jail left 56 prisoners dead, most of whom had their limbs chopped off. Another prison riot left four dead. + + + +In Mexico, rioting sparked by the government’s withdrawal of petrol subsidies as part of its liberalisation of the energy industry left at least six people dead. Petrol prices increased by up to 20% at the start of the year, leading to many knock- on price rises in goods and services. Roads have been blocked and shops looted. + +Winning the pools + +Switzerland won a lawsuit in the European Court of Human Rights over requiring mixed-sex swimming classes. A Muslim couple sued the state for insisting that their daughters swim with boys as part of the school curriculum. The court found that concerns about integration outweighed the parents’ demand for a religious exemption. + +The Greek-Cypriot and Turkish-Cypriot leaders opened talks in Geneva to discuss conditions for the reunification of Cyprus, such as the division of power and territory. Other European leaders are participating on security issues. + +Germany said that 280,000 people seeking asylum arrived in the country last year, a sharp drop from the 890,000 in 2015. The government thinks migrant numbers have fallen because of the closure of a route through the Balkans and the EU’s deal with Turkey. + +Arlene Foster, Northern Ireland’s first minister, came under pressure to quit because of a scandal involving subsidies for renewable energy which could cost taxpayers £490m ($600m). Martin McGuinness, the deputy first minister from the opposition Sinn Fein party, resigned, which may force an election. The crisis could affect Brexit. The Supreme Court will soon decide whether approval is needed from the UK’s devolved assemblies before starting the process of leaving the EU. The deputy leader of the Scottish nationalists called for the postponement of Brexit negotiations. + +Clare Hollingworth, a journalist who reported the “scoop of the century” predicting the outbreak of the second world war, died at the age of 105. Ms Hollingworth spotted German tanks massing on the border with Poland in late August 1939. A long career saw her report from Jerusalem, Cairo, Paris, Beirut and Hong Kong. She was the last person to interview the Shah of Iran. + +This article appeared in the The world this week section of the print edition + + + + + +Business this week + +Jan 14th 2017 + +The pound fell sharply after Theresa May reiterated her position that Britain’s exit from the EU would be a clean break, frightening investors who want the government to pursue a more nuanced negotiating strategy that prioritises trade deals with Europe. The prime minister has said that she will not provide a running commentary on Brexit; her remarks helped push sterling to a three-month low against the dollar at $1.21. + + + +A limited intervention by Turkey’s central bank to halt the slide of the lira did little to stop the currency from plunging further. The lira has declined by almost 10% since the start of the year, partly because the political crackdown that followed an attempted coup last July shows little sign of abating amid a wave of violence. This week the central bank increased the supply of dollars to Turkey’s financial system and said it would take the “necessary measures” to curb “unhealthy” currency speculation. + +The Trump effect + +The Mexican peso fell to a new low against the dollar after Fiat Chrysler warned it might have to shut factories in Mexico if the new American government imposes tariffs on imported cars. Meanwhile, the share prices of drug companies plunged following Donald Trump’s comment that they “are getting away with murder” in what they charge the government for medicine. The industry has taken a political battering for what some claim are exorbitant price increases for certain drugs. + +Mark Carney told Parliament that Brexit is no longer the biggest risk to Britain’s financial stability. The governor of the Bank of England said greater risks were posed by high consumer credit and the weak pound, among other things, which a messy Brexit could magnify. + +Slowly getting there + +The British government reduced its stake in Lloyds Banking Group to below 6%, meaning that it is no longer the bank’s largest shareholder (that is now BlackRock, a titan in asset management, which holds 6.3% of the shares). The Treasury bailed out Lloyds during the financial crisis in 2008 along with Royal Bank of Scotland, in which it still holds a majority stake. The public’s remaining stake in Lloyds is expected to be sold this year. + +Volkswagen pleaded guilty to criminal charges in America related to its cheating in emissions tests on diesel cars and a subsequent cover-up, and will pay penalties amounting to $4.3bn. Reinforcing the government’s tough stance against VW, six of its executives were charged for their role in the scandal, including the person responsible for the carmaker’s compliance with emissions standards in America. He was arrested trying to catch a flight to Germany. + +In South Korea, Lee Jae-yong, the vice-chairman of Samsung Electronics and heir apparent for the top job, was questioned as a suspect in an influence-peddling scandal that has led to the impeachment of the country’s president. Investigators are looking at ties between Korea’s chaebol and politicians, and at claims that the president ordered the state’s pension fund to vote for the merger of two Samsung businesses in which it held shares. + +The annual battle for orders between the world’s biggest aircraft-makers was won by Airbus last year. It chalked up 731 net orders, including 320 in December alone, compared with Boeing’s 668. The American company bested its European arch-rival in supplying jets to airlines however, delivering 748 aeroplanes to Airbus’s 688. + +Takeda, a Japanese drugs company, said it was ready to make further global acquisitions, following its $5.2bn agreement to buy Ariad, which is based in Massachusetts and specialises in treatments for cancer. Takeda was founded in 1781 selling traditional Japanese and Chinese remedies. It entered the American market in the 1970s and has situated some of its research in Boston’s meditech hub. + +Publishers can legally use software to detect if an online reader is using an adblocker and can ask them to switch it off, according to a proposed rule in the European Union. Privacy groups have argued that the detection software is illegal and requires readers’ consent before being enabled. + +Alexa takes the biscuit + +The default setting on Amazon’s Echo, a voice-driven internet-connected device, caused the company some embarrassment. An American news channel reported that a girl had asked Alexa, the device’s voice-operated system, to order a doll’s house and biscuits. That caused Alexa to go rogue in other households and order the same goods, apparently prompted by the TV presenter repeating the instruction. Amazon has added voice-ordering from restaurants to the Echo’s skills, so this might not be the only Alexa incident to make a meal of. + +This article appeared in the The world this week section of the print edition + + + + + +KAL's cartoon + +Jan 14th 2017 + + + +More KAL's cartoons + + + +This article appeared in the The world this week section of the print edition under the headline “KAL's cartoon” + + + + + +Leaders + + + + + +Technology and education: Lifelong learning + +Trump and the intelligence agencies: Speaking post-truth to power + +Trump and Mexico: Handling a bully + +Renewable energy: A greener grid + +Proliferating parties: Splitters + + + + + +Learning and earning + +Equipping people to stay ahead of technological change + +It is easy to say that people need to keep learning throughout their careers. The practicalities are daunting + +Jan 14th 2017 + + + +WHEN education fails to keep pace with technology, the result is inequality. Without the skills to stay useful as innovations arrive, workers suffer—and if enough of them fall behind, society starts to fall apart. That fundamental insight seized reformers in the Industrial Revolution, heralding state-funded universal schooling. Later, automation in factories and offices called forth a surge in college graduates. The combination of education and innovation, spread over decades, led to a remarkable flowering of prosperity. + +Today robotics and artificial intelligence call for another education revolution. This time, however, working lives are so lengthy and so fast-changing that simply cramming more schooling in at the start is not enough. People must also be able to acquire new skills throughout their careers. + +Unfortunately, as our special report in this issue sets out, the lifelong learning that exists today mainly benefits high achievers—and is therefore more likely to exacerbate inequality than diminish it. If 21st-century economies are not to create a massive underclass, policymakers urgently need to work out how to help all their citizens learn while they earn. So far, their ambition has fallen pitifully short. + +Machines or learning + +The classic model of education—a burst at the start and top-ups through company training—is breaking down. One reason is the need for new, and constantly updated, skills. Manufacturing increasingly calls for brain work rather than metal-bashing (see Briefing). The share of the American workforce employed in routine office jobs declined from 25.5% to 21% between 1996 and 2015. The single, stable career has gone the way of the Rolodex. + +Pushing people into ever-higher levels of formal education at the start of their lives is not the way to cope. Just 16% of Americans think that a four-year college degree prepares students very well for a good job. Although a vocational education promises that vital first hire, those with specialised training tend to withdraw from the labour force earlier than those with general education—perhaps because they are less adaptable. + +At the same time on-the-job training is shrinking. In America and Britain it has fallen by roughly half in the past two decades. Self-employment is spreading, leaving more people to take responsibility for their own skills. Taking time out later in life to pursue a formal qualification is an option, but it costs money and most colleges are geared towards youngsters. + +The market is innovating to enable workers to learn and earn in new ways. Providers from General Assembly to Pluralsight are building businesses on the promise of boosting and rebooting careers. Massive open online courses (MOOCs) have veered away from lectures on Plato or black holes in favour of courses that make their students more employable. At Udacity and Coursera self-improvers pay for cheap, short programmes that bestow “microcredentials” and “nanodegrees” in, say, self-driving cars or the Android operating system. By offering degrees online, universities are making it easier for professionals to burnish their skills. A single master’s programme from Georgia Tech could expand the annual output of computer-science master’s degrees in America by close to 10%. + +Such efforts demonstrate how to interleave careers and learning. But left to its own devices, this nascent market will mainly serve those who already have advantages. It is easier to learn later in life if you enjoyed the classroom first time around: about 80% of the learners on Coursera already have degrees. Online learning requires some IT literacy, yet one in four adults in the OECD has no or limited experience of computers. Skills atrophy unless they are used, but many low-end jobs give workers little chance to practise them. + +Shampoo technician wanted + +If new ways of learning are to help those who need them most, policymakers should be aiming for something far more radical. Because education is a public good whose benefits spill over to all of society, governments have a vital role to play—not just by spending more, but also by spending wisely. + +Lifelong learning starts at school. As a rule, education should not be narrowly vocational. The curriculum needs to teach children how to study and think. A focus on “metacognition” will make them better at picking up skills later in life. + +But the biggest change is to make adult learning routinely accessible to all. One way is for citizens to receive vouchers that they can use to pay for training. Singapore has such “individual learning accounts”; it has given money to everyone over 25 to spend on any of 500 approved courses. So far each citizen has only a few hundred dollars, but it is early days. + +Courses paid for by taxpayers risk being wasteful. But industry can help by steering people towards the skills it wants and by working with MOOCs and colleges to design courses that are relevant. Companies can also encourage their staff to learn. AT&T, a telecoms firm which wants to equip its workforce with digital skills, spends $30m a year on reimbursing employees’ tuition costs. Trade unions can play a useful role as organisers of lifelong learning, particularly for those—workers in small firms or the self-employed—for whom company-provided training is unlikely. A union-run training programme in Britain has support from political parties on the right and left. + +To make all this training worthwhile, governments need to slash the licensing requirements and other barriers that make it hard for newcomers to enter occupations. Rather than asking for 300 hours’ practice to qualify to wash hair, for instance, the state of Tennessee should let hairdressers decide for themselves who is the best person to hire. + +Not everyone will successfully navigate the shifting jobs market. Those most at risk of technological disruption are men in blue-collar jobs, many of whom reject taking less “masculine” roles in fast-growing areas such as health care. But to keep the numbers of those left behind to a minimum, all adults must have access to flexible, affordable training. The 19th and 20th centuries saw stunning advances in education. That should be the scale of the ambition today. + +This article appeared in the Leaders section of the print edition under the headline “Lifelong learning” + + + + + +Spying and politics in America + +Trump bashes the spooks + +With his relentless criticism, Donald Trump is destroying trust in the intelligence agencies + +Jan 14th 2017 + + + +DONALD TRUMP doesn’t give many press conferences. But when he does, as on January 11th—for the first time since July—they are utterly unlike the press conferences of any other American president-to-be. Speaking without notes, Mr Trump threatened and cajoled Mexico and the pharma industry (its shares tumbled). He boasted about his genius for business (and went some way to reduce his own conflicts of interest—see article). He poured scorn on a shocking report that Russian intelligence had dirt on him and had worked with his people during the election (he shouted down a reporter from the news channel that revealed the report’s existence). And that was just the highlights. It was such a spectacle (see article) and pointed in so many directions at once that you could fail to catch a drumbeat which, for the safety and security of the United States, Mr Trump needs to silence immediately: his continuing hostility towards America’s intelligence agencies. + +Intel outside + +Relations were already rocky. Before the election the agencies let it be known that they had concluded Russia hacked, stole and leaked documents which damaged Hillary Clinton, Mr Trump’s opponent. Most of the agencies (but not all) think that Russia’s intention was to help Mr Trump win. He responded by mocking them for being wrong before the invasion of Iraq in 2003 about weapons of mass destruction. This week things got uglier, when it was leaked that the agencies had supplied Mr Trump with a summary of the report, whose claims remain unverified, despite plenty of effort by plenty of people. In a tweet, Mr Trump complained that enduring such leaks was like “living in Nazi Germany”. And in his press conference he repeatedly suggested that the agencies had done the leaking, casting doubt on their conduct and loyalty. + +Mr Trump would hardly be the first president to have scratchy relations with the intelligence services (see article). Career officers mutter about Barack Obama’s reluctance to stand up to China and Russia and what they saw as his soft line on spy-catching. However, Mr Trump’s disputes are in a different class, because they eat away at trust. + +The agencies’ job is to tell the president about threats and opportunities facing the United States. Even though America’s intelligence machine is the world’s most formidable, it deals mostly in judgments and informed speculation, not certainties. In speaking truth to power, intelligence officers will sometimes have to bear bad news. They take that risk and the president listens to what they have to say because it makes the United States better prepared for whatever is coming its way. + +By ridiculing the agencies for their findings, Mr Trump has signalled that he does not want to hear their bad news. By saying he cannot be bothered with the president’s daily briefing, he suggests their work is of little value. By claiming that the agencies have a political agenda, his people are themselves politicising intelligence work. By impugning their motives, he is undermining public confidence, which was already damaged by Edward Snowden (see article), and which, as with any institution, is essential if they are to go about their duties. + +If he wants America to be safe, Mr Trump must make amends. He took a first step by criticising Russia for the Democratic hack (albeit reluctantly and mildly). Unlike his national security adviser, his nominees as directors of the CIA and of national intelligence enjoy support among spooks. In 90 days, he has said, they will produce a report on hacking: he should follow its advice. As president, he needs to stop criticising the agencies and demonstrate they have his backing. None of that is hard. Except that it is a test of Mr Trump’s self-control. + +This article appeared in the Leaders section of the print edition under the headline “Speaking post-truth to power” + + + + + +Dealing with Donald + +How Mexico should handle Trump + +America’s new president could be a disaster for its southern neighbour + +Jan 14th 2017 + + + +AMERICA’S allies and trading partners await Donald Trump’s arrival in the White House on January 20th with trepidation. None is more anxious than Mexico. Mr Trump began his election campaign by damning Mexicans as rapists and killers of American jobs. He has repeatedly threatened carmakers that invest in Mexico with import tariffs. Ford cancelled plans to build a $1.6bn plant there. He renewed his vow to make Mexico pay for his border wall at a press conference on January 11th. “Mexico has taken advantage of the United States,” he declared. + +If Mr Trump matches his aggressive words with actions, the consequences will be grave. Mexico’s economy is closely entwined with that of the United States and Canada under the North American Free-Trade Agreement (NAFTA). The value of bilateral trade with its northern neighbour is equivalent to nearly half of its GDP. America buys three-quarters of Mexico’s exports. The 35m people of Mexican origin living in the United States send back $25bn a year in remittances. Mr Trump puts all that in jeopardy. + +Already, Mexico is feeling the effects (see article). The peso has dropped to a record low against the dollar, weakening Mexico’s wan economy. If Mr Trump, who has called NAFTA “the worst trade deal maybe ever signed anywhere”, launches a trade war, Mexico will probably fall into a recession. That would worsen a political environment that is already poisonous. Mexico’s president, Enrique Peña Nieto, has the lowest approval ratings of any recent leader. He is reviled for failing to control corruption and for allowing crime to surge. On January 1st the government raised petrol prices by up to 20%. Enraged drivers blocked roads, looted shops and occupied petrol stations; six people died in the unrest. + +Mexico is due to hold its next presidential election in 2018. The nationalism and misery provoked by Mr Trump could bring to power Andrés Manuel López Obrador, a left-wing populist. Mr Peña’s weakness threatens to discredit vital reforms he enacted early in his tenure, including liberalisation of energy and telecoms. A dismantling of NAFTA, which helped create the right conditions for reforms, would doom them. + +America would suffer, too. Its trade with Mexico is worth just 3% of its GDP, but some 5m American jobs depend on it. The design, manufacture and servicing of everything from appliances to medical equipment is spread across both borders. Cars made in Mexico are stuffed with parts manufactured in America; some 40% of the value of Mexican exports consists of inputs bought from the United States. If Mexico is not allowed to sell cars, aerospace equipment and fruit to America, it is likely to send more immigrants and drugs. + +Accentuate the positive + +How should Mexico respond to Mr Trump? First of all, by reminding his administration that the relationship is mutually beneficial. Alongside trade, Mexico has been a partner in controlling illegal immigration. It stops many of the 200,000-300,000 Central Americans and others who try every year to sneak across Mexico into the United States. And Mexico has paid a price to keep relations warm: some 100,000 Mexicans have died since Mexico joined America’s war on drugs. + +Mexico should also seize on Mr Trump’s occasional hints that he is open to renegotiating NAFTA rather than ripping it up. The 23-year-old agreement could usefully be updated to cover new sectors, such as digital commerce and energy. + +If Mr Trump is really determined to start a trade war, Mexico has few good options. A broad strategy of fighting tariffs with tariffs will hurt its own consumers most, while inflicting only modest damage on America’s vast economy. There is scope for artful use of targeted measures within the rules of NAFTA and the World Trade Organisation, an approach that Mexico has wielded adroitly before. In 2009, after America blocked Mexican lorries from operating north of the border—to protect the jobs of American drivers—Mexico imposed tariffs on nearly 100 American products, from Christmas trees to felt-tipped pens, choosing industries with clout in congressional districts whose representatives had a say in the dispute. The American block was eventually lifted. + +Mexico’s best defence against a bullying neighbour, however, will be to seek freer trade elsewhere and to strengthen its own economy. It needs to build more infrastructure: whereas northern Mexico has good transport links to America and the coasts, the poor south is largely cut off. Most Mexican workers have unproductive informal jobs. Shifting firms into the formal economy will be hard so long as the government fails to curb corruption; many Mexicans are loth to pay taxes they assume will be stolen. Mr Trump’s anti-Mexican populism threatens to help usher in a leftist government that will abandon reforms. But it makes those modernising policies more necessary than ever. + +This article appeared in the Leaders section of the print edition under the headline “Handling a bully” + + + + + +A greener grid + +China’s embrace of a new electricity-transmission technology holds lessons for others + +The case for high-voltage direct-current connectors + +Jan 14th 2017 + + + +YOU cannot negotiate with nature. From the offshore wind farms of the North Sea to the solar panels glittering in the Atacama desert, renewable energy is often generated in places far from the cities and industrial centres that consume it. To boost renewables and drive down carbon-dioxide emissions, a way must be found to send energy over long distances efficiently. + +The technology already exists (see article). Most electricity is transmitted today as alternating current (AC), which works well over short and medium distances. But transmission over long distances requires very high voltages, which can be tricky for AC systems. Ultra-high-voltage direct-current (UHVDC) connectors are better suited to such spans. These high-capacity links not only make the grid greener, but also make it more stable by balancing supply. The same UHVDC links that send power from distant hydroelectric plants, say, can be run in reverse when their output is not needed, pumping water back above the turbines. + +Boosters of UHVDC lines envisage a supergrid capable of moving energy around the planet. That is wildly premature. But one country has grasped the potential of these high-capacity links. State Grid, China’s state-owned electricity utility, is halfway through a plan to spend $88bn on UHVDC lines between 2009 and 2020. It wants 23 lines in operation by 2030. + +That China has gone furthest in this direction is no surprise. From railways to cities, China’s appetite for big infrastructure projects is legendary (see article). China’s deepest wells of renewable energy are remote—think of the sun-baked Gobi desert, the windswept plains of Xinjiang and the mountain ranges of Tibet where rivers drop precipitously. Concerns over pollution give the government an additional incentive to locate coal-fired plants away from population centres. But its embrace of the technology holds two big lessons for others. The first is a demonstration effect. China shows that UHVDC lines can be built on a massive scale. The largest, already under construction, will have the capacity to power Greater London almost three times over, and will span more than 3,000km. + +The second lesson concerns the co-ordination problems that come with long-distance transmission. UHVDCs are as much about balancing interests as grids. The costs of construction are hefty. Utilities that already sell electricity at high prices are unlikely to welcome competition from suppliers of renewable energy; consumers in renewables-rich areas who buy electricity at low prices may balk at the idea of paying more because power is being exported elsewhere. Reconciling such interests is easier the fewer the utilities involved—and in China, State Grid has a monopoly. + +That suggests it will be simpler for some countries than others to follow China’s lead. Developing economies that lack an established electricity infrastructure have an advantage. Solar farms on Africa’s plains and hydroplants on its powerful rivers can use UHVDC lines to get energy to growing cities. India has two lines on the drawing-board, and should have more. + +Things are more complicated in the rich world. Europe’s utilities work pretty well together but a cross-border UHVDC grid will require a harmonised regulatory framework. America is the biggest anomaly. It is a continental-sized economy with the wherewithal to finance UHVDCs. It is also horribly fragmented. There are 3,000 utilities, each focused on supplying power to its own customers. Consumers a few states away are not a priority, no matter how much sense it might make to send them electricity. A scheme to connect the three regional grids in America is stuck. The only way that America will create a green national grid will be if the federal government throws its weight behind it. + +Live wire + +Building a UHVDC network does not solve every energy problem. Security of supply remains an issue, even within national borders: any attacker who wants to disrupt the electricity supply to China’s east coast will soon have a 3,000km-long cable to strike. Other routes to a cleaner grid are possible, such as distributed solar power and battery storage. But to bring about a zero-carbon grid, UHVDC lines will play a role. China has its foot on the gas. Others should follow. + +This article appeared in the Leaders section of the print edition under the headline “A greener grid” + + + + + +Splitters + +Too many parties can spoil politics + +More choice is a good thing, but within limits + +Jan 14th 2017 + + + +TO ENTER parliament, a Dutch political party need only win enough votes for one seat. With no minimum threshold, there are lots of parties. Eleven succeeded in 2012, including two liberal parties, three Christian ones and one that cares about animal rights. In the next election, this March, polls suggest the total could rise to 13, with the addition of a pro-immigrant party and an anti-immigrant one (the country’s second). As small parties multiply, the large ones are shrinking. In the 1980s governing parties often held 50 seats in the 150-seat parliament; today they are lucky to reach 40. + +As with the Netherlands, so with Europe. The ideologies that held together the big political groupings of the 20th century are fraying, and the internet has lowered the barriers to forming new groups. So parties are multiplying (see article). Some see this as cause for celebration. A longer menu means that citizens can vote for parties that more closely match their beliefs. This is good in itself and also increases political engagement. Countries with proportional-representation systems, which tend to have more parties, have higher voter turnout than first-past-the-post countries like America and Britain. + +Yet excessive fragmentation has drawbacks. As parties subdivide, countries become harder to govern. A coalition of small parties is not obviously more representative than one big-tent party. Big parties are also coalitions of interests and ideologies, but they are usually more disciplined than looser groups, and so more likely to get things done. + +Having too many parties is often unwieldy. Coalitions become harder to form and often include strange bedfellows. In Greece the far-left Syriza party governs with the far-right Independent Greeks; in Denmark the centre-right government needs the support of the Liberal Alliance, which wants to cut social spending, and the Danish People’s Party, which wants to raise it. Such oddball pairings rarely act decisively and fall apart easily. They also take longer to form, distracting politicians from the business of governing. Spain’s recent shift from two major parties to four produced a stand-off that left it without a government for most of last year. Its citizens had more choices when they voted, but then spent ten months under the rule of unelected caretakers—not a clear gain in democracy. + +Small parties may render government incoherent by seizing control of the policy areas they care about. In Israel tiny right-wing parties in effect write the rules for West Bank settlements. Splintering can also foster graft. In Brazil politicians form new parties to get public subsidies and then demand more goodies to join coalitions. Far from increasing real choice, multiplying parties can allow politicians to hide the fact that what matters is patronage. Voters may be bewildered when confronted with the People’s Front of Judea and the Judean People’s Front—or with National Liberals, Democratic Liberals and Liberal Reformists, as they were in Romania in 2014. + +What have the Romanians ever done for us? + +Sometimes, new policies need new parties to champion them. For all their flaws, the left-wing Podemos party in Spain and the populist, anti-immigrant Sweden Democrats represent voters whose voices were not being heard. But some politicians form new parties for selfish reasons. Candidates who receive a low spot on their party’s list may decide to start their own. Others hunger for the subsidies and free broadcasting time that many countries grant to each party. + +For all these reasons, thresholds are a good idea. Germany’s requirement that parties win 5% of the vote to enter parliament keeps cranks and extremists out without disenfranchising parties that poll strongly, like the new Alternative for Germany. The 5% rule also keeps German coalitions from growing unwieldy. Parties are middlemen between government and voters, organising a multiplicity of policies into a simpler menu of options. That menu can be too short (as in China). But it can also be so long and confusing that voters can’t tell what they are ordering—and probably won’t get it. + +This article appeared in the Leaders section of the print edition under the headline “Splitters” + + + + + +Letters + + + + + +Letters to the editor: On liberalism, Brexit, Asian banks, Syria, the European Union, data, economists + + + + + +Letters to the Editor + +On liberalism, Brexit, Asian banks, Syria, the European Union, data, economists + +Jan 14th 2017 + +Letters are welcome via e-mail to letters@economist.com + +The liberal disorder + + + +You stressed one aspect of liberalism’s attitude to power and neglected the other two (“The year of living dangerously”, December 24th). Liberals believe in protection from undue power, whether the coercive power of the state, the economic power of concentrated wealth or the unfiltered power of popular majorities. By focusing too long on undue state power, free-market liberalism contributed to the political difficulties liberal democracy now faces with the second and third aspects of undue power: an over-concentration of wealth and unanchored popular distrust. + +To take only Britain, the liberal founders—Mill, Gladstone, Hobhouse—grasped that what was needed was not less government but better government; not less politics, but better politics. The great liberal achievements of state schools, public works, health and welfare and a world trading order all came about thanks to ambitious thinkers, ambitious politicians and ambitious states. + +To liberalism’s present travails, your suggested solutions of new gadgets, devolution and deregulation sound by contrast almost magical. + +EDMUND FAWCETT + +London + +The rise of universal free education in the 19th century was, as you note, essential for the growth of commerce and democracy. The decline of the quality and increasingly unequal distribution of that required education is at the source of the challenge faced by democratic societies, from voters unequipped and unable to seek the truth. Thomas Jefferson’s counsel that “eternal vigilance is the price of liberty” requires citizens, not just the elite, to desire to seek the truth to be free. + +BERTRAND HORWITZ + +Asheville, North Carolina + +* Your leader makes a persuasive argument that liberal politics must offer grander visions than it has done of late, and contrasts with those of earlier times, such as universal free education, free healthcare and the welfare state. I found the suggestion of devolving more democratic powers to cities almost laughably lame in comparison; and further it is difficult to imagine how a local administration could enact any truly grand vision. The idea of a Universal Basic Income (UBI) is closer in scale. It is dismissed by many, including sometimes by The Economist. I can’t help suspect that had those who dismiss UBI today lived 100 years earlier they would have been similarly dismissive of ideas so utopian, impractical and unaffordable as free universal education and the welfare state. + +GREG LAW + +Cambridge + + + +* Liberalism has always been the ideology of a broad, upwardly-mobile middle class. When upward mobility has faltered, as it has recently, so has liberalism. A ballyhooed elite of high-tech wunderkinder, and cheap imported consumer goods for the rest, are no substitute for general economic security. If capitalism can’t reinvent its ability to supply that for a critical mass of the populace, maybe we have to reinvent socialism instead. + +CHRIS NIELSEN + +Seattle + + + + + +What’s on the Brexit table? + +It was good to see The Economist discuss the options for trade under WTO rules when Britain becomes once again a sovereign customs authority (Free exchange, January 7th). But it was disappointing that you chose to discuss mainly procedural matters and ignored the economic options this gives us. As we have repeatedly emphasised during the referendum campaign and since, the best economic option is for us to open up our markets in food and manufacturing to the world by scrapping the EU’s protectionist tariffs and non-tariff barriers on these goods, just as we have always had open markets in services. The gains from this will be much lower prices for our consumers and the reallocation of our resources according to comparative advantage. This prescribed course is entirely consistent with WTO rules, and far from being as complicated as you suggest, reverting to a zero tariff would be straightforward and not subject to anyone else’s say-so. + +We can follow this up with free-trade agreements around the world on broader issues of investment and property rights. We hope that the EU will follow our lead in this policy of free trade, but if they do not, that is a problem for their consumers and their economies, not ours. If they are stupid enough to impose tariffs on our manufacturers, which average only around 3.5% in any case, we should not be distracted by this from opening up our own markets to free trade. Our manufacturers can easily take these tariffs in their stride, given our highly competitive exchange rate and pro-business policies. + +PROFESSOR PATRICK MINFORD + +Co-chair + +Economists for Brexit + +Cardiff + + + + + +The time is now + +* Observers, even The Economist, continue to fail to note the apparent lack of corruption controls at the Asian Infrastructure Investment Bank (“The Incumbent”, December 17th). Comparing the Asian Development Bank with it’s new rival provided an opportunity to note that ADB is one of the world’s five major development banks, lead by the World Bank, which controls and enforces controls on corruption. The World Bank developed its now shared sanctions system over more than 20 years. It is an effective model, available for the AIIB to join or to replicate. The timing is ripe as it is now recognised at the highest political levels in China that corruption is endemic there. + + + +All 57 AIIB country minority shareholders must now use their combined voting power to demand action. + + + +MICHAEL ROBINSON + +(former board member, Transparency International Canada) + +Toronto + + + + + +Out with regime change + +You pointed out that after the genocide in Rwanda, many countries agreed that they have a responsibility to intervene if a government fails to protect its own people (“The fall of Aleppo”, December 17th). But you then said that “The desire to promote freedom and democracy was not far behind.” Conflating “the responsibility to protect” with regime change is, in effect, one reason the tragic civil war in Syria is continuing. + +Although almost 200 countries have committed to the UN’s Responsibility to Protect, which entails the right to use force to intervene in the internal affairs of others, many of them strongly oppose coercive regime change. So when America made it a precondition for negotiating a settlement in Syria that Bashar al-Assad must go, Russia correctly viewed this condition as a threat to the survival of its last ally in the Middle East. + +The same issue arose in Libya, where the West first intervened because it held there was a genocide in the making. However, when Muammar Qaddafi offered to negotiate a settlement, the West forcefully insisted on regime change. What followed is another civil war. Since then Russia, China and others have soured on the responsibility to protect. A better policy would be to decouple armed humanitarian intervention from coercive regime change, and promote democracy only by non-lethal means. + +AMITAI ETZIONI + +Institute for Communitarian Policy Studies + +Washington, DC + + + + + +One for all, all for one + +* In the light of Charlemagne’s wise reflections on the need for an “animating mission” in order to keep the European Union alive (December 24th) we should remember that Europe does indeed have its own cultural identity, embedded in at least 1,500 years of shared perceptions. Until around 1500, this resided primarily in the values, theology, institutions and rituals of Latin Christianity. Unity was given concrete expression in the papacy and church hierarchy. Since then, amazing bursts of creative rationality, political reform and artistic self-expression have originated in different places but been absorbed by most of Europe, to create what is now called “the West”. This can indeed be an object of patriotic feeling. + + + +This does not mean one needs to abandon the distinct nationhoods which make up this unique family of nations, any more than by being English one ceases to be a Yorkshireman. But building a European Union cannot be the task of just one or two generations; we have to be in it for the long haul. We need to recall the centuries it took to form what is today Switzerland, surely the obvious prototype for a political union between people with their own traditions and languages. + + + +ANTONY BLACK + +Dundee + + + + + +Store detection + +“Following the fashion” (December 24th) looked at what retailers might gain from collecting detailed data on customers’ in-store movements. In fact, the competitive advantages (and privacy concerns) for such tracking within physical stores are very similar to those from tracking online browsing behaviour on websites. Such Big Data insights are much richer than those which can be gathered from simply analysing sale data. + +Adding concealed cameras and microphones in shops, coupled with machine-learning algorithms, allows retailers to link foot traffic with details of age, gender, ethnicity and the dialect of both the shopper and any shopping companions, including children. All of this will soon be more tightly controlled in the European Union by the General Data Privacy Regulation, which comes into effect in May 2018. From that date, companies with EU customers will be more restricted in their collection and use of personal data, including data that can be linked to a smartphone. + +There will still be a rich analysis of foot-traffic statistics, ideally benefiting the customer as well as the retailer, but it will become increasingly imperative that such data are dealt with in ways that both respect the customers’ privacy and that shield the retailer from legal and reputational risks. + +DAVID STEPHENSON + +Chief data scientist + +DSI Analytics + +Amsterdam + + + + + +A pack of economists + +Further to the letter of Michael Ben-Gad (December 17th) I think the appropriate collective noun for economists should be “a quandary”. + +COLIN MCALLISTER + +St Andrews, Fife + +Given the conflicting opinions between economists, I propose “a befuddlement”. + +DARREN GALPIN + +Bristol + +The optimum choice must surely be “a surplus of economists”. + +J. BROOKS SPECTOR + +Johannesburg + +* Letters appear online only + +This article appeared in the Letters section of the print edition + + + + + +Briefing + + + + + +Manufacturing: They don’t make ’em like that any more + + + + + +Manufacturing industry + +Politicians cannot bring back old-fashioned factory jobs + +They don’t make ‘em like that any more + +Jan 14th 2017 + + + +THE vices are what strike you. The Mercedes AMG factory in Brixworth, a town in England’s midlands, is a different world from that of the production line of yore. Engine making was once accompanied by loud noises and the smoke and smells of men and machinery wrestling lumps of metal. Here things are quiet and calm. Skilled mechanics wield high-tech tools amid operating-theatre cleanliness as they work on some of the best racing-car engines in the world. Banks of designers and engineers sit in front of computers nearby. The only vestige of the old world are the vices. There is one on every work bench. At some point, making things of metal requires holding parts still, and nothing better than the vice has come along. + +Manufacturing exerts a powerful grip on politicians and policymakers in the rich world. It is central to what they want for their countries, they say; it needs to be brought home from abroad; it must be given renewed primacy at home. This is because it used to provide good jobs of a particular sort—jobs that offered decent and dependable wages for people, particularly men, with modest skills, and would do so throughout their working lives. Such jobs are much more scarce than once they were, and people suffer from the lack of them. In their suffering, they turn to politicians—and can also turn against them. + +Hence Donald Trump’s promise to create “millions of manufacturing jobs”. Hence the vision articulated by George Osborne, Britain’s finance minister from 2010 to 2016, of “a Britain carried aloft by the march of the makers”, and the central role of making things in the “comprehensive industrial strategy” promised by the current prime minister, Theresa May. Hence calls from the EU for a European industrial revolution and the need for things to be “Made in France” identified by Marine le Pen, leader of the country’s National Front. + +The problem with such rhetoric is that manufacturing has not really gone away. But nor has it held still. The vice has gone unreplaced, but in almost everything else there has been change aplenty. Some processes that used to be tightly held together are now strung out across the world; some processes that used to be quite separate are now as close as the workers and designers who share the shop floor in Brixworth. Assembling parts into cars, washing machines or aircraft adds less value than once it did; design, supply-chain management, aftercare, servicing and the like add much more. + +Ride the carousel + +Once you understand what manufacturing now looks like, you come to see that the way it is represented in official statistics understates its health, and that the sector’s apparent decline in the rich world is overstated. But that does not solve the politicians’ problem. The innovations behind the sector’s resilience have changed the number, nature and location of the jobs that it offers. There are still a lot of them; but many of the good jobs for the less skilled are never to return. + +Both in terms of employment and innovation manufacturing is worthy of political attention. Manufacturers are more likely to be exporters than businesses in other parts of the economy and, as you would expect given the demands of competing in a broader market, exporting firms tend to be more productive than non-exporting firms. Such firms also tend to be more capital-intensive, because selling into those broader markets allows firms to reduce capital costs per unit sold. And a sector that has higher-than-average productivity and high capital intensity will, other things being equal, be able to offer better wages. + +The structure of 20th-century manufacturing helped ensure that those better wages were indeed offered. Factories brought lots of modestly skilled people together with massive capital equipment that cost owners dearly when idled by strikes. Unionisation helped those workers win a large share of the value generated by industry. + +In the latter part of the century, though, this system came undone. Better shipping and information technology allowed firms to unbundle the different tasks—from design to assembly to sales—that made up the business of manufacturing. It became possible to co-ordinate longer and more complicated supply chains, and thus for various activities to be moved to other countries, or to other companies, or both. At the same time computers and computer-aided design made automation more capable. High wages gave owners the incentive they needed to take advantage of those opportunities. And while politicians now like the good jobs unionised factories provided, at the time when those unions were flexing their muscles many were happy to see them reined in. + + + +As a result many manufacturing jobs vanished from the rich world (see chart 1). In Britain manufacturing’s share of employment had hovered at around a third from the 1840s to the 1960s. Today official data show that around one in ten workers is involved in manufacturing. In the late 1940s manufacturing accounted for one in three non-farm jobs in America. Today’s figure is just one in eleven. Even in Germany, the rich country where making things has clung on tightest, only one in five workers is in manufacturing. + +The way official figures are put together means that these declines are exaggerated. But tens of millions of jobs did vanish, and as manufacturing became more productive, and prices dropped, its share of GDP fell, too. At the same time the number of people in manufacturing in developing countries exploded, with many of them working, directly or indirectly, for the same firms that were employing fewer people in rich countries. But the jobs that appeared were not, for the most part, simply the old jobs relocated. + +Companies were using technology and new practices in ways that made it easier to separate straightforward, well-delineated work from the more complicated bits of the enterprise. The routine work, which was not particularly valuable, was easily moved to poor countries where labour was cheap. (If poor places had had the capacity to take the high-value bits, they would not have been poor.) + +This is why promises to bring jobs back ring hollow. Valuable semi-skilled manufacturing jobs are not, for the most part, going to return to America, or anywhere else, because they were not simply shipped abroad. They were destroyed by new ways of boosting productivity and reducing costs which heightened the distinction between routine labour and the rest of manufacturing. There is no vice that can squeeze those genies back into their bottles. + +The UN Industrial Development Organisation (UNIDO) reckons that, in 1991, 234m people in developing countries worked in manufacturing. By 2014 the number was 304m—and there were just 63m manufacturing jobs in the rich world. But the sixth of the workers in the rich world added two-thirds of the final value. + +In terms of the perception that manufacturing moved to poor countries lock stock and barrel, it hasn’t helped that the low-value work which did go overseas often involved the final stages of assembly. Putting the components that make up a product together looks like the essence of the manufacturing process. But it often adds little to the finished product’s value. + +Even for as complex and pricey a machine as a passenger jet, assembly is a low-value proposition compared with making the parts that go into it. By some estimates, putting together Airbus airliners in Toulouse accounts for just 5% of the added value of their manufacture—even if ensuring the aircraft were put together in France has been a non-negotiable point of national pride for the French government. Similarly, assembly in China accounted for just 1.6% of the retail cost of early Apple iPads. + +Changing corporation names + +Most pre-production value added comes from R&D and the design of both the product and the industrial processes required to make it. More is provided by the expert management of the complex supply chains that provide the components for final assembly. After production, taking products to market and after-sales repair and service and, in some cases, disposal all add more value—while stretching the idea of what it is to manufacture something ever further from the factory floor. + +Dismantling, for example, is becoming an important part of the manufacturing process. Environmental legislation is forcing companies to take responsibility for their products after they have served their purpose by recycling components or disposing of them. Carmakers have to make sure that the batteries that power electric cars are not thrown away. In some countries white-goods firms are required to pay for recycling fridges, washing machines and other appliances. + +At the same time as the value chain has been stretched, other changes have led official statistics to exaggerate the loss of jobs in the sector. In the past, some jobs that would not today be seen as manufacturing were counted as such, inflating the total; today some jobs that seem obviously part of manufacturing are not counted as such, reducing it. + +Manufacturing companies increasingly bring in other firms to take care of things like marketing or accounting. Because statisticians generally categorise firms according to what their largest block of employees does this looks like the loss of manufacturing jobs. The replacement of a tea lady with a canteen run by a contractor is statistically indistinguishable from the loss of a factory-floor metal basher (even if the tea lady is still there in the canteen). + +But some outsourcing cuts the other way. Jaguar Land Rover (JLR), a British carmaker owned by India’s Tata Group, handed over much of the management of its supply-chain logistics to DHL, a delivery giant, in 2009. Not only does DHL deliver parts from suppliers to JLR’s factories, it gets them to the exact bit of the assembly line where they are needed; its employees whizz around the shop floor in forklift trucks. It is hard not to see the service they are offering as an integral part of the manufacturing process. + +Many aspects of R&D, product design and technical testing are now sometimes looked after by service companies, along with lots of accounting, logistics, cleaning, personnel management and IT services. Production itself can be outsourced, too. Apple and ARM, a British chip company recently acquired by SoftBank of Japan, own no factories of their own. They make all their money from design, distribution and services associated with their products. An OECD committee is currently mulling whether these sorts of firms should still be classified as manufacturers. + +A study published in 2015 by the Brookings Institute, an American think-tank, reckoned that the 11.5m American jobs counted as manufacturing work in 2010 were outnumbered almost two to one by jobs in manufacturing-related services, bringing the total to 32.9m. A British study conducted by the Manufacturing Metrics Experts Group in 2016 came to a similar conclusion: that 2.6m production jobs supported another 1m in pre-production activities and 1.3m in post-production jobs. + +Pinning down the number of manufacturing jobs is sure to get harder. Not only will service providers penetrate ever deeper into manufacturers; some manufacturers also see themselves increasingly as sellers of services. + +In the 1980s Rolls-Royce, an engineering giant that makes jet engines, started to push “power by the hour”, providing an engine, servicing and maintenance at a fixed cost per hour of flying time. As Andy Neely of the Institute for Manufacturing at Cambridge University points out, this way of turning manufacturing into a service of sorts provides more stable revenues by locking in customers rather than selling them one-off items. Moreover, margins tend to be higher for such services than for the goods themselves. + +Industrial machines and the goods they turn out are increasingly packed with internet-connected sensors. Manufacturers are thus able to gather data on how their machines perform out in the world. Their intimacy with the product and the amount of data they accumulate gives them a base from which to sell services which no third party can match. A maker of cars, or wind turbines, or earth movers can use data from every product it has made to work out what is going on with any one of them, and thus increase the value to the user—who is increasingly likely to pay for the service that the manufactured object offers, rather than the object itself. The car industry, for most of the 20th century the archetype of metal bashing, increasingly sees its future in the provision of “mobility services” rather than as a seller of boxes with wheels at the corners. Running their own fleets of cars with which to offer autonomous or shared rides looks to many like the wave of the future—and possibly a very profitable one. + +The enthusiasm for moving into services extends well beyond the makers of high-end machinery with whom the trend started. Henrik Adam at Tata Steel in Europe says he has a team of experts able to intervene in a customer’s production line and “improve their manufacturing performance and yield by specifying the best type of steel to match processing capability and market ambitions.” LafargeHolcim, a cement-maker, says its product can be delivered as a service. Increasingly complicated cement structures require experts to advise on design, use of specialist products and the logistics of pouring a continual stream of the stuff. + +This should be comforting to politicians on the lookout for manufacturing jobs. Well-paid tasks could increase in number as services related to manufacturing grow. There are other encouraging trends, too. In some fields innovation and production are increasingly interwoven. Capital-intensive high-tech manufacturing is often better done amid the designers and engineers who thought up the product. Linking the design of both the product and its manufacturing process more closely to production can help improve all three. At the Mercedes AMG engine plant in Brixworth designers are deliberately placed in the middle of production engineers so that they cannot avoid meeting and talking. + +The golden future + +If being in the same place really helps, technology and redesigned production methods might be used to bring assembly and some other forms of production back to rich countries. 3D printing, though more expensive than traditional mass manufacturing, is being used to make more luxurious and pricier wares, such as motorbikes, in the heart of cities like London and New York, close both to designers and consumers. Using new technologies to keep design and manufacturing tightly coupled can shorten lead times in industries driven by fad and fashion (see article). + +Some firms recognise that outsourcing production to cheaper locations has eroded innovation, says Ludovico Alcorta at UNIDO. When production is moved elsewhere, opportunities to learn how to do it better are often lost. The development of new products and processes can suffer, as can interactions with research organisations and universities. + + + +As that suggests, though, the potential for new jobs in manufacturing is not quite the boon politicians would like. Advanced manufacturing provides very good jobs (see chart 2) but they are the jobs of the future, not the past; they need skill and adaptability. They will change a lot over the lifetimes of those who hold them, and they will never provide anything quite like the mass employment of the past. + +Governments should “start with modest expectations” for manufacturing, says James Manyika of the McKinsey Global Institute, a think-tank. The policies that might help are mostly fairly obvious. Improve education to ensure that engineers and techies are in good supply. Provide more vocational training, along the lines that Germany uses to support its Mittelstand. And develop retraining programmes to refurbish the skills of current or former workers (see this week’s special report). + +What next? + +If manufacturing cannot be counted on to bring back good jobs for semi-skilled workers, its history nonetheless suggests a route to providing good work in other sectors. First, workers still tend to do better when they are able to work within profitable companies, rather than as employees of service firms which contract with those companies. Second, workers do better when they are able to improve their bargaining power by means of a union. But neither is easy to implement, or popular across the political board. + +A real commitment to helping people find work in and around manufacturing could undoubtedly do good. Simply threatening companies that seek to move jobs overseas and the countries keen to host them, as Mr Trump has, will not. Disrupting the complex cross-border supply chains on which manufacturers rely with tariffs would damage the very sector he purports to champion. Clamping down on migrants with skills that manufacturers cannot find at home will do harm, not good. Policies that favour production-line workers over investment in automation will end up making American industry less competitive. + +Industrial manufacturing was never as simple as those far from the shop floor imagined it to be. Today it has become more complex still. There are reasons to help manufacturing; it tends to be more productive, and by some measures more innovative, than the rest of the economy. But doing so requires careful thought, a light touch and managed expectations. The application of brute force will not turn the clock back. It is more likely to break it. + +This article appeared in the Briefing section of the print edition under the headline “They don’t make ’em like that any more” + + + + + +United States + + + + + +Donald Trump and his critics: Where there’s brass + +Intelligence agencies and the presidency: Burn before reading + +Conflicts of interest: Two out of four + +Shakers: Not too shaken + +Jeff Sessions: Past and prologue + +National parks: An Ear-full + +Lexington: How to use superpowers + + + + + +Donald Trump + +Still campaigning + +Winning the election has not made the president-elect any more magnanimous + +Jan 14th 2017 | WASHINGTON, DC + + + +NINE days before Donald Trump’s inauguration as the 45th president, it was as if he was still fighting for election. In a press conference on January 11th, his first for six months, Mr Trump was as thin-skinned, loose-lipped and scrappy as he has ever been. He taunted his rivals and critics, real and suspected; he compared America’s intelligence agencies to Germany’s Nazi regime. He bragged continually (“Nobody has ever had crowds like Trump has had”), scrambling the fact-checkers of media outlets, some of whom he also decried. He called CNN a pedlar of “fake news”. Mr Trump’s fans said they wanted a different kind of leader. America is about to get one. + +That Mr Trump seemed exercised was understandable. The previous day CNN reported that the agencies had attached a summary of some unsubstantiated allegations about the president-elect to an intelligence briefing on Russian hacking, which they delivered to Barack Obama and him. Among the allegations, which were reportedly furnished by a British intelligence company working for opponents of Mr Trump, were claims that the Russians held compromising financial and personal information about him, and that members of his campaign team had been in contact with Russian officials. + +Mr Trump denounced the claims. Unable to refrain from addressing some of their spicier details, which were published separately online, he claimed that he was too canny to misbehave, as had been luridly alleged, in a foreign hotel room. “In those rooms, you have cameras in the strangest places, cameras that are so small with modern technology.” Anyway, he added, “I’m also very much a germaphobe.” Whether the allegations, which had been circulating among journalists, should have been attached to the intelligence briefing is hard to say. The agencies apparently considered the British source credible; though one or two of its milder claims were swiftly disproved. + +Mr Trump’s fulminating against CNN was part of a pattern. Journalists can expect to be lambasted by the next president whenever their reports displease him. In the past few weeks, he has gone after America’s spies, rubbishing the agencies’ conclusion that Russian hackers worked to hurt Hillary Clinton’s chances and boost his, during the election. He also questioned the spooks’ credibility: “These are the same people who said Saddam Hussein had weapons of mass destruction”. + +It never looked wise for Mr Trump to lambast proud institutions he will soon preside over. The same could be said of his attacks on judges, generals and environmental regulators. It is tempting to see CNN’s leaked story as an early sign of the backlash such attacks have invited. In his press conference, he was more conciliatory. He said for the first time that he believed Russia was behind the hacking—but, he added, “it could have been others also”. + +Mr Trump has made his reputation by stirring conflict. It was his damn-your-eyes style, as much as any policy proposal, that chimed with the anti-establishment sentiment of his keenest supporters. This was not only posturing; he appears to view life, whether in business, politics or trade negotiations, as a series of fights from which only the winner emerges with credit. His victory, naturally, has not changed that. Asked to justify his claim that Americans are not bothered by his, highly irregular, refusal to release his tax returns, despite polling to suggest that they are bothered, Mr Trump replied simply: “I won.” Beneath the bluster, however, he has offered hints of greater pragmatism. + +For example, he maintains that he will honour his signature campaign promise, to build a wall along America’s southern border, and make Mexico carry the cost. But he suggests that will not be in terms of “payment”. Perhaps he has in mind the proceeds of another campaign promise, to levy a “major border tax on these companies that are leaving”. In the absence of further details, Republican congressmen will hope this turns out to be less protectionist than it sounds. Some are lobbying Mr Trump’s team to consider a possible alternative arrangement to tariffs, known as border adjustment, designed to incentivise exports. It would involve firms losing the right to deduct the cost of imports from their taxable profits; at the same time, they would no longer be taxed on foreign earnings. It is possible to imagine Mr Trump earmarking Mexico-related revenues from border adjustment to pay for whatever wall, or fence, he ended up building. + +To the consternation of some Republican hardliners, he has also weighed in on their efforts to scrap Mr Obama’s health-care reform. As The Economist went to press, Republicans in the Senate were expected to pass a budget plan that would allow them to evade the filibuster and start dismantling Obamacare. Mr Trump says he wants it repealed pronto. But to minimise the disruption this would cause, he also says the reform must be replaced by an alternative arrangement “essentially simultaneously”. That is sensible, even if the time-frame is unrealistic; neither Mr Trump nor his party has settled on an alternative to Obamacare. The issue may prove to be the first test of the accommodation Republican congressmen have made with a leader few supported in the primary. + +There was also potential for discord over the Senate confirmation hearings that took place this week for several of Mr Trump’s cabinet picks. One of the most eagerly-awaited, for Senator Jeff Sessions, in fact passed off fairly smoothly. A hardliner on criminal justice and immigration, dogged by historic allegations of racism, Mr Sessions was treated pretty gently by his fellow senators. The putative next secretary of state, Rex Tillerson, former boss of Exxon Mobil, got tougher questions, especially over his former closeness to the Russian government. Mr Tillerson appeared to struggle over Exxon’s past lobbying against possible sanctions on Russia and when asked to condemn President Vladimir Putin as a war criminal. + +This was a reminder that concerns about Mr Trump’s strange fondness for Mr Putin go beyond salacious, unverified allegations. It is not clear why the next president seems reluctant to condemn Mr Putin’s excesses or fully accept the conclusion on Russian hacking reached by America’s own spy agencies. That is troubling. + +This article appeared in the United States section of the print edition under the headline “Where there’s brass” + + + + + +Spies and their masters + +How America’s intelligence agencies are preparing to serve Donald Trump + +A former head of the CIA predicts the president-elect won’t bother with their reports + +Jan 14th 2017 + +Circle of trust + +THE meeting on January 6th between Donald Trump and America’s four most senior intelligence officials was never going to be easy. For months, Mr Trump had poured scorn on the conclusion of America’s intelligence agencies that Russia had launched a hacking operation aimed at subverting the presidential election. Mr Trump was even more miffed by the recent allegation that the hacking had been intended to secure his victory. Although no view had been expressed by the intelligence agencies as to whether the Kremlin’s efforts had affected the outcome of the election, Mr Trump suspected a ploy to undermine his legitimacy. Worse still, the agency heads had also decided to apprise Mr Trump of serious but unsubstantiated allegations that Russia had compromising material on the president-elect and on Russian contacts with his campaign team. + +Unhelpfully, Mr Trump’s choice of national security adviser (NSA), Lieutenant-General Mike Flynn, was fired from his job as head of the Pentagon’s Defence Intelligence Agency (DIA) by one of the spy chiefs in the room, Lieutenant-General James Clapper, the director of national intelligence, and had entered into a losing turf war with another, John Brennan, the director of the CIA. Mr Flynn had been a respected intelligence officer, helping special forces in Iraq and Afghanistan. But once picked by Mr Clapper to gee up the 16,000-strong DIA bureaucracy, he struggled as a manager and clashed with other intelligence agencies, particularly over Islamist extremism, which he felt they were underplaying. He had a point, but in the two years after leaving the DIA his views have become stridently Islamophobic. Another hobby horse, not shared by many other intelligence officers, is that Russia can be an ally in restraining Iran and fighting jihadists. Given this history, Mr Flynn is not the person to ease his master’s suspicions of America’s spooks. + +Since the time of John F. Kennedy, presidents and their closest defence and foreign-policy advisers have received a six- to-eight-page daily brief (known as the PDB or “the daily book of secrets”), now put together by the director of national intelligence’s office but drawing on all America’s vast intelligence resources. According to David Priess, a former senior CIA presidential briefer who has written a history of the PDB, at its best it provides presidents with unique insights into foreign leaders’ thinking and emerging threats. + +The only president who declined to receive the PDB was Richard Nixon, who believed (without any evidence) that the supposedly liberal-leaning CIA had sabotaged his 1960 election campaign by providing exaggerated estimates of a “missile gap” with the Soviet Union that Kennedy was able to exploit. But unlike Mr Trump, after eight years as vice-president Nixon was a genuine foreign-policy expert. As Mr Priess points out, he also had the formidable Henry Kissinger as his NSA. Mr Trump has already suggested that he will not want to see the PDB every day. + +General Michael Hayden, a former director of the National Security Agency and George W. Bush’s last director of the CIA, says that intelligence briefers have the same challenge with any new president: “There’s the fact [intel] guy and the vision guy; one’s a pessimist, the other’s an optimist. The intel guy has to find a way to get into the head of the president while not forgetting what got him into office.” However, Mr Hayden admits that Mr Trump represents that challenge in a particularly extreme form. + +Mr Hayden wonders whether someone who has so much confidence in his instincts and doesn’t read much will take on board what the spies are telling him. His advice for the new head of the CIA, Mike Pompeo, is that his people cannot allow this to affect their work. He believes that the way to “break in” will be through the vice-president-elect, Mike Pence. The PDB will also go to Generals Jim Mattis at the Pentagon and John Kelly at Homeland Security, both of whom know how to absorb intelligence (he thinks the same should be true of Rex Tillerson, the former boss of Exxon Mobil, who has been nominated to be secretary of state). + +The intelligence agencies will do their best to adapt to a Trump presidency. But the chances of finding a workable compromise with the new president are not helped by the presence of Mr Flynn, who sees himself as a provocateur rather than someone like Brent Scowcroft or Stephen Hadley (two NSAs under Republican presidents) who viewed their job as making every element of the foreign policy and national security machine hum on behalf of the president. As one person who knows and used to admire Mr Flynn puts it: “You might not want him to be the one shooting pool with this president.” + +This article appeared in the United States section of the print edition under the headline “Burn before reading” + + + + + +Presidential ethics + +Donald Trump’s plan to deal with his conflicts of interest + +The plan to put the Trump Organisation at arm’s length doesn’t go far enough + +Jan 14th 2017 | NEW YORK + + + +THE president-elect’s press conference on January 11th touched on fake news, the F-35 combat jet, beautiful military bands, the incredible smallness of hidden cameras in hotel rooms, Jack Ma, a Chinese tycoon, the Miss Universe contest, a very, very, very amazing property developer in Dubai, and Rhona, his personal assistant, among other things. Buried in there was also Donald Trump’s proposal to deal with a problem that could ruin his presidency: the potential for conflicts of interest between his business interests and his public office. Unfortunately, Mr Trump’s new plan only gets half marks. + +Under a quirk in American law the president is exempt from the normal rules that police politicians’ conflicts. Mr Trump’s sternest critics argue that the only remedy is for him to sell the Trump Organisation, a mediocre, medium-sized property firm whose commercial clout is exaggerated by both Mr Trump and his enemies. But that is both impractical and unfair. A full disposal or initial public offering of a portfolio worth some $4bn could take a year or more. And it does not seem reasonable that entrepreneurs involved in public life should have to liquidate their business. Instead, Mr Trump needs to show that he has put his firm at arms length. + +To be convincing there are four tests that any plan has to meet. First, Mr Trump’s business interests need to be gathered into one holding company. At the moment the Trump Disorganisation would be an accurate name for his activities, which sprawl over about 500 legal entities, most of them zombies and most held by him directly. The proposal passes this first test: by January 20th, his lawyers promise, all his assets will be folded into a single trust. + +The second test is that the Trump Organisation should stop seeking out new investments and instead run its existing operations as cash cows and distribute any profits. Here the plan only gets half-marks. Mr Trump has ruled out new foreign investments. New deals at home will be subject to “severe restrictions” and vetted by ethics experts, but not banned. + +Third, the business must be transparent to the public. It should publish consolidated accounts that reveal its operations and finances in detail. Again, the plan scores only half marks, here. Mr Trump’s lawyers say it will publish only simplified financial statements. Their logic is that this will prevent Mr Trump from having detailed knowledge of what is happening and thus make conflicts less likely. It’s a silly argument: Mr Trump is already intimately familiar with his own firm. Much better to put everything out in the open. + +Lastly, to be at arms length from the presidency, the business would need to be run by an independent board and management. Under the proposals Mr Trump’s eldest sons, Donald junior and Eric, will run the firm, along with Allen Weisselberg, a long-standing Trump executive. There are circumstances in which relatives of politicians can run companies without raising ethical problems. But Mr Trump’s two sons were closely involved in his political campaign and have established no separate business identities or serious credentials of their own. They aren’t independent of him. So the plan fails the fourth test. + +Perhaps Mr Trump and his lawyers will further improve the plan. If they don’t Mr Trump may find that his presidency is dogged by allegations of corruption. They have until January 20th to come up with something a bit better. + +This article appeared in the United States section of the print edition under the headline “Two out of four” + + + + + +Shakers and movers + +The dying out of the sect’s last members may not mean the end for the Shakers + +Frances Carr, the last person to be raised as a Shaker, died on January 2nd + +Jan 14th 2017 | SABBATHDAY LAKE, MAINE + +Frances Carr, last in a long line + +“I’M GLAD I am a Shaker”, sang some 300 people in the chapel of the dwelling house of the last active Shaker settlement in the world. They clapped and stamped their feet on the wooden floors during the hymn’s chorus. “O Brethren Ain’t Ye Happy?” is an old Shaker song and one of the few “motion songs” still in the Shakers’ repertoire. But only two people in the packed chapel were actual Shakers. The rest had come to the Sabbathday Lake, a Shaker village about 25 miles from Portland, Maine, to say goodbye to Sister Frances Carr (pictured), the last lifelong Shaker, who died on January 2nd. But since the two remaining Shakers, Brother Arnold Hadd and Sister June Carpenter, are aged 60 and 78 respectively, some wondered aloud whether this was a prelude to a funeral for the entire sect. + +At their height in the mid-19th century, Shakers numbered about 6,000, with 19 settlements, mainly in New England, New York and Kentucky. An offshoot of Quakers, the Shakers began in England in the 1740s. Seeking religious freedom, they left for the colonies on the eve of the American Revolution. Their rise coincided with a religious fervour sweeping the frontier. Decades before emancipation and 150 years before women had the vote, Shakers practised social, gender and racial equality for all members. + +Shakers believe in the three “C’s”, celibacy, communal living and confession. They do not marry, so must rely on conversion to fill their ranks. Men and women live as brothers and sisters. Recruits must give up their families, property and worldly ties. Stephen Stein, author of “The Shaker Experience in America” compares them to a monastic group. In many ways theirs is an American creed. Shakers value hard work, seeing labour as a form of prayer. They strive for perfection, which earned them a reputation for well-made simple furniture. Shakers dress plainly and might be mistaken for Amish, but they do not shun society. Since the sect’s earliest days, members sold goods to outsiders and shared oxen and other equipment. They also like technology: the Sabbathday Lake Shakers are on Facebook. + +In Sabbathday Lake as in other former Shaker villages, Friends of the Shakers raise money to preserve archives and buildings. Many Friends attend Sunday services, but few opt to join the faith. Presumably they will want to continue worshipping even after the last Shaker is gone. In the meantime, the Shakers continue to look for recruits. Over the past 40 years, a few dozen have joined, but only a handful stayed. A decade ago there was a fourth Shaker at Sabbathday Lake, but he left when he fell in love with a visiting journalist. More recently, a young man joined, but left after a year. The Shakers pray for new movers. + +This article appeared in the United States section of the print edition under the headline “Not too shaken” + + + + + +Doanld Trump’s cabinet + +Jeff Sessions has some troubling ideas about justice + +How the next attorney-general is likely to change the Justice Department’s priorities + +Jan 14th 2017 | ATLANTA + +A change is going to come + +SOME were on the right side from the beginning. Other white southern gentlemen of Jeff Sessions’s vintage—the incoming attorney-general is 70—changed their views on race and society after moments of epiphany. Still others made crab-like accommodations with reality, considering themselves free from prejudice on the grounds that they opposed its violent manifestations. Where Mr Sessions belongs on this spectrum of conscience was an implicit theme of his confirmation hearing this week before the Senate Judiciary Committee. Given the powers of his new office, it is more than an arcane question. + +His career in public service began in Mobile, Alabama—as, in a sense, did Donald Trump’s campaign, at an encouragingly big rally that Mr Sessions attended. His long spell as a federal attorney there, before a short one as the state’s attorney-general, also gave rise to allegations that derailed his nomination to a federal judgeship in 1986. Then the judiciary committee—on which, as senator, he later sat—heard accounts of racially insensitive comments, such as a disparaging reference to the NAACP, a joke about the Ku Klux Klan and an accusation that he addressed a black underling as “boy”. A crux then, revisited this week, was a trial in 1985 in which Mr Sessions oversaw the prosecution for vote-tampering of three civil-rights activists, one a former associate of Martin Luther King, a case seen by some as a selective bid to intimidate black voters. + +“Damnably false charges,” Mr Sessions insisted. “I abhor the Klan,” he protested, invoking his role in the capital conviction of a Klansman for a murder in 1981. In a submission to the committee he also highlighted cases he pursued involving voting rights and school desegregation. (In a tetchy exchange, Senator Al Franken quoted lawyers who say Mr Sessions exaggerated his part in some of those.) Old friends in Mobile, where he still lives, vouch for his fair-mindedness. Charles Hale, his pastor, has “never seen one iota of racial prejudice”, adding that Mr Sessions and his wife have “humble hearts” and modest tastes: “they live by their faith”. “I don’t believe anything they have accused him of,” says Billy Bedsole, in whose law practice Mr Sessions worked for two stints. + +Wayne Flynt, a historian, suggests Mr Sessions’s outlook on race should be judged less on contested remarks than by his actions, or lack of them. By his own admission, as a young man at a segregated school and then a Methodist college, he was no civil-rights hero; rather, as Mr Flynt puts it, he “moved with the culture”, in which overt racism was declining. How to judge this history, and the statute of limitations on old mistakes, might seem moot debates—except, say Mr Sessions’s critics, these episodes are connected to his latter-day policy views, together casting doubt on his ability to do his new job fairly. + +Take voting rights. He spoke this week of upholding the “integrity of the electoral process,” again raising wildly overblown fears of fraudulent voting and justifying voter-ID laws, some of which federal judges have found discriminatory. Under Barack Obama, the Department of Justice has helped to bring complaints against such laws, in particular after the Supreme Court neutralised the bit of the Voting Rights Act that required some states (including Alabama) to clear new voting rules in advance. Mr Sessions applauded that damaging judgment; how keenly he will defend voting rights is unclear. So is the strength of his commitment to gay rights, given his opposition to extending various legal protections on the basis of sexuality. + +Next, policing. The outgoing administration has investigated and enforced reform in police departments such as Ferguson, Missouri’s, which have forfeited the trust of their communities. Mr Sessions has voiced scepticism about that process and might curtail it; he worried this week that police officers have been “unfairly maligned”. Inimai Chettiar of the Brennan Centre for Justice predicts that a hands-off approach could create a perception among police that there is “no oversight”, emboldening miscreants and in turn heightening tensions between officers and minorities. + +A long career can be hard to assess definitively not only because norms evolve and memories fade, but since it is liable to be complex, even contradictory. On the racially charged question of criminal justice, for example, Mr Sessions’s record has wrinkles. He pushed to reduce the disparity in punishments for crack and powder cocaine offences. On the other hand, he resisted reforms embraced by most Republicans, cleaving to mandatory minimum sentences. His views on drugs are ominously antiquated. “Good people don’t smoke marijuana,” he said last year. + +Throw away the key + +At the committee he tweaked his prior stance on waterboarding, which he now accepts is illegal. In the classic manner of those who prefer a small state except when they like it big, he had previously rebutted criticism of interrogation techniques, as well as favouring broad powers of electronic surveillance. (Likewise he approves of civil asset forfeiture, whereby property allegedly linked to crime can be seized.) At least on immigration, the issue that brought him and Mr Trump together, he is consistent. He has opposed reform, as well as executive actions that forestalled some deportations. Now, after his confirmation, he is set to oversee the immigration courts. + +Mr Sessions’s mantra was that the law was sacrosanct even if he disagreed with it, as he does on issues such as abortion and same-sex marriage. In that vein he repudiated not only waterboarding but an outright ban on Muslim immigration, another of the president-elect’s erstwhile notions. He also said he would recuse himself from any decisions on investigating Hillary Clinton. “This country does not punish its political enemies,” he averred. Those who think him a threat to America’s rights and freedoms may not be entirely reassured. + +This article appeared in the United States section of the print edition under the headline “Past and prologue” + + + + + +Barack Obama’s monumental legacy + +Bears Ears and Gold Butte are the latest battlegrounds in a long-running debate about federal land in the West + +Conservationists are delighted the “midnight” monuments, conservatives less so + +Jan 14th 2017 | BEARS EARS, UTAH, AND GOLD BUTTE, NEVADA + + + +ETCHED into the sandstone of “Newspaper Rock” in Gold Butte, Nevada—an area of vividly coloured desert punctuated by Joshua trees and sublime rock formations—are more than 650 depictions of tortoises, feet and cradleboards chiselled by native Americans as long as 2,000 years ago. On December 28th, Barack Obama designated Gold Butte as a national monument, using the Antiquities Act of 1906. The same day he also granted the same status to Bears Ears in south-eastern Utah. During his eight years as president, Mr Obama has designated 553m acres as national monuments—more than twice as much as any other president. + +Gold Butte, where he set aside 300,000 acres of Nevada desert, and Bears Ears, where he protected 1.35m acres surrounding twin buttes that jut upwards from the landscape like ears from a bear’s head, are the final additions. The celebrations and uproar sparked by the new monument designations are a proxy for a long-running debate over federal land, which makes up more than half the territory of the 13 states west of Texas. During the 1970s and 1980s, Sagebrush Rebels, named after the sagebrush steppe that covers much of the rural West, fought for increased local control of public lands, if not the outright transfer of them to states. The fracking booms enjoyed by other states rich in wide-open spaces have given fresh impetus to those who dream that the desert West might be a gold mine, if only the feds would get out of the way. + + + +The recognition of Bears Ears as a national monument is particularly controversial. The most strident calls for its protection came from a coalition of five native American tribes for whom the area is sacred. The tribes have occupied the land for centuries—many Navajos sought refuge there to avoid the guns of Kit Carson, an American soldier and frontiersman, and forced relocation by federal government in the 1860s. The area remains rich in stone carvings and ruins of Navajo dwellings. “The way that we live is finally being acknowledged,” says Jonah Yellowman, a Navajo spiritual leader, at his home overlooking the buttes of Monument Valley. + +Other Utahns are less excited. Tim Young, a pharmacist and the mayor of Monticello, a town of 2,000 that abuts Bears Ears, has adorned his pharmacy’s windows with stickers that read “NO MONUMENT” inside the outline of a black bear. He is not against a monument in general but he says that the size—nearly twice that of Utah’s five national parks combined—is a prime example of federal overreach. He has explored the area at length on his dirt bike and says that while there are certainly bits worthy of protection, some of the new national monument land is “just sand and rock”. He adds: “Whoever says otherwise hasn’t visited.” + +The designations might not stick. A president has not rescinded a previous president’s monument designation since the Antiquities Act was introduced. An attorney-general’s opinion from 1938 suggests doing so might be legally thorny. But no law clearly prohibits such an action. Mr Trump has vowed to reverse all of his predecessor’s executive orders on his first day in office; Jason Chaffetz and Rob Bishop, two of Utah’s congressmen, hope that includes Mr Obama’s “midnight” monument proclamations. + +The two collaborated on legislation last year that aimed to balance conservation and development in the Bears Ears area. (The bill failed to pass before Congress adjourned for the winter holidays.) “The president elected to do what the radical environmentalists wanted him to do without taking into consideration economic development, energy development and all the things that should have been taken into consideration,” Mr Chaffetz complains. If Mr Trump does not reverse it, he and Mr Bishop plan to push for a legislative reversal. The transfer of federal lands to state hands was included in the Republican Party’s platform at last July’s convention. Congressional rules passed on January 3rd, the first day of the House’s new session, included a provision drawn up by Mr Bishop that will make such transfers easier by assuming they would have no impact on the federal budget. + +Those who think the federal government should remain in charge fear state ownership would result in reduced public access for activities such as hiking, hunting and fishing, or that land would be flogged to private buyers. It is expensive and complicated to manage; federal-land advocates worry that states might acquire land only to be forced to sell it to balance their budgets. A report by the Wilderness Society, an advocacy group, reveals that Idaho has sold 40% of its land since statehood. A poll by the Colorado College State of the Rockies Project suggests most westerners oppose transferring control of public lands to the states. + +Mr Trump’s past statements and cabinet selections suggest that even if he sides with Mr Bishop when it comes to Bears Ears, he might resist a push to give states control of public lands. His pick for interior secretary, Ryan Zinke, stepped down from his position as a Republican convention delegate last year because he disagreed with the position on federal-land transfers. In a conversation with Field & Stream magazine last January, Mr Trump said: “I don’t like the idea because I want to keep the lands great, and you don’t know what the state is going to do…Are they going to sell if they get into a little bit of trouble? And I don’t think it’s something that should be sold. We have to be great stewards of this land. This is magnificent land.” + +This article appeared in the United States section of the print edition under the headline “An Ear-full” + + + + + +Lexington + +How to use superpowers + +The incoming foreign-policy team has in mind a revolution in great-power relations + +Jan 14th 2017 + + + +“THE world is a mess,” observed Madeleine Albright this week at a gathering of men and women who have, between them, witnessed every crisis to buffet American national security for 40 years. That crisp summary by the former secretary of state prompted bipartisan agreement at a “Passing the Baton” conference organised by the United States Institute of Peace (USIP) in Washington, DC, on January 9th and 10th. + +The meeting featured future leaders of Donald Trump’s national security team, their predecessors from the Obama government and—gamely emerging from post-election seclusion—folk who would have filled some of the same posts under Hillary Clinton. However, once participants began to ponder the ways in which the world is messy, agreement gave way to revealing divisions. On one side stood Republican and Democratic ex-ambassadors, officials, generals and academics who do not cheer a world in disarray. They see the rise of iron-fisted nationalists in China, Russia and Turkey, and fear that democracy’s post-cold-war march is over. They contemplate the fragility of international pacts, organisations and alliances and wonder if the rules-based order founded by America after the second world war will survive. On the other stand leading members of Team Trump, who call today’s global turbulence an exciting chance to reshape international relations to suit America. + +The first group make the American-led, rules-based order sound precious but brittle. Susan Rice, the national security adviser to Barack Obama, called the global security landscape “as unsettled as any in recent memory”. She listed some threats that worry Mr Trump as much as her boss, from North Korea’s nuclear ambitions to attacks by transnational terrorist groups. But then she ran through more divisive problems—areas of vulnerability which, in her telling, cry out for patient American attention. Ms Rice would have America lead global action on climate change, and prop up a Europe that feels buffeted by refugee flows from the Middle East, by the Brexit vote and by “Russian aggression”, including deliberate campaigns by Russia to meddle in elections across the West. Ms Rice lamented her boss’s fruitless efforts to ratify a trade pact with Asia-Pacific nations, the Trans-Pacific Partnership (TPP). “If we don’t define these rules of the road, others will,” she declared. “Failure to move forward on TPP is eroding American regional leadership and credibility, with China standing to gain strategically and economically.” + +Jacob Sullivan, a close adviser to Mrs Clinton, cited the deal to curb Iran’s nuclear ambitions and the Paris agreement on climate change as examples of imperilled co-operation. Stephen Hadley, who held Ms Rice’s job under President George W. Bush, expressed concerns that the American-led international order itself is “under assault”. He imagined a conversation in which President Vladimir Putin of Russia and President Xi Jinping of China agree that America is a menace peddling hostile ideas of democracy from Ukraine to Hong Kong. + +Trump aides, by contrast, are impatient with talk of fragility and complexity. Though they worry about terrorism and rogue states with nukes, they also see a world in a thrillingly plastic state. It is anyone’s guess where Mr Trump’s foreign policies will end up—he shunned details on the campaign trail and has appointed figures with clashing views to some top jobs. But supporters of Team Trump express confidence that curbing the menace of Iran, for instance, requires more pressure and sanctions, not concessions to strengthen pragmatists within the regime. They scoff at the idea that the natural environment is fragile enough to need a climate-change pact—and indeed hail cheap American oil and gas as a source of global leverage. + +As for nationalism and populism, they are not a menace: they are how Mr Trump won. Stephen Bannon, Mr Trump’s chief strategist, has told visitors to Trump Tower, with relish, that he thinks an anti-establishment revolt will sweep the far right to power in France and topple Chancellor Angela Merkel in Germany. Mr Bannon would like America to unwind sanctions against Russia, imposed after the annexation of Crimea, in order to secure Russian help in constraining Iran, Islamic terrorism and even China. + +Other people’s nationalists + +A retired general, Mike Flynn, chosen as Mr Trump’s national security adviser, spoke freely in 2016 about his hopes that Russia and America could join forces against their “common enemy”, Islamist extremism. Now, amid a furore about Russian meddling in the American presidential election, as detailed in a report issued by Mr Obama’s spy chiefs, Mr Flynn contented himself with discreet hints that Mr Trump would “examine and potentially re-baseline our relationships around the globe”. + +Mr Flynn’s deputy in the NSC will be K.T. McFarland, a veteran Republican hawk. She described a world where tectonic plates are moving, offering once-in-a-generation opportunities to exert leverage and realign policies. Where once Ronald Reagan promoted human rights in the Soviet Union, Ms McFarland chides America for “constantly” telling other countries “how they should think”. She sees Mr Trump gaining global strength, above all, from the breadth and intensity of his domestic support, after he drew in voters who had tuned out of politics. Such disaffected citizens feel “back in the game”, she says. That makes their country not just indispensable—the old claim made for America by Bill Clinton—but “unstoppable”. + +Team Trump is making a bet on assertive nationalism as a way of imposing America’s will on a world that can stand a bit of arm-twisting. Peace through strength, they call it, reviving a Reagan-era slogan. But other countries have assertive populations, too. In the absence of clear global rules, Mr Trump may find himself pitting his populist mandate to “make America great again” against Chinese nationalism, say. Could get messy. + +This article appeared in the United States section of the print edition + + + + + +The Americas + + + + + +Mexico and the United States: Bracing for impact + +Transport in Toronto: Laggard on the lake + + + + + +Bracing for impact + +Donald Trump’s presidency is about to hit Mexico + +With a protectionist entering the White House, Mexico ponders its options + +Jan 14th 2017 | PUEBLA + + + +WHEN an asteroid hit Earth 66m years ago, wiping out the dinosaurs and 75% of plant and animal species, it hurt Mexico first. Donald Trump’s inauguration is far less frightening, but Mexicans can talk of little else. + +Outside a massive Volkswagen (VW) factory in Puebla, two hours’ drive from Mexico City, workers fret about Mr Trump’s threats to whack big tariffs on cars made in Mexico. One American carmaker—Ford—cancelled plans to build a $1.6bn plant in San Luis Potosí, some five hours farther north. It may have had other reasons for doing so, but workers in Puebla are not reassured. + +“We’re frustrated,” says Ricardo Méndez, an equipment repairman who works for one of VW’s suppliers. He had expected his employer to send him to work at the new Ford plant. Between bites of spicy chicken taco, Santiago Nuñez, who works for another VW supplier, vows to boycott the American carmaker. + +The anger and bewilderment in Puebla is felt across Mexico. Mr Trump’s promises to make Mexico pay for a border wall, deport millions of illegal immigrants and rip up the North American Free-Trade Agreement (NAFTA) were among the few consistent policies in his largely substance-free election campaign. He has not lost his taste for Mexico-bashing. In a press conference on January 11th, his first since July, Mr Trump repeated his claim that Mexico is “taking advantage” of the United States. Mexicans can only wait and wonder how he intends to act on that misguided notion. + +The Trump presidency streaking toward Mexico is already causing problems. Inflation has started rising in response to the devaluation of the peso caused by his election. The central bank raised interest rates five times in 2016; it will probably have to continue tightening. After a sharp rise in public debt as a share of GDP over the past several years, the government must curb spending. + +Over the past few months economists have lowered their forecasts for GDP growth in 2017, from an average of 2.3% to 1.4%. On January 1st the government cut a popular subsidy by raising petrol prices by up to 20%. Six people died in the ensuing protests. + +If Mr Trump declares economic war, things could get much worse. The economy could stumble into recession, just as Mexico is preparing for a presidential election in 2018. Mr Trump’s pugilism increases the chances that Andrés Manuel López Obrador, a left-wing populist, will win. He would probably counter American protectionism with the sort of self-destructive economic nationalism to which Mexico has disastrously resorted in the past. Vital reforms of energy, telecoms and education, enacted under Mexico’s current president, Enrique Peña Nieto, might be reversed. + +Mexican officials think the Trump presidency poses two main dangers. The first is that the United States will renounce NAFTA, which it can do after six months’ notice, or simply shred it by putting up trade barriers. The second is that, as a way of forcing Mexico to pay for the wall, Mr Trump will carry out his threat to block remittances from immigrants in the United States. These inject some $25bn a year into Mexico’s economy. + +The president-elect’s other big anti-Mexican idea, to dump millions of illegal immigrants on Mexico’s northern border, is seen as a lesser threat. Under Barack Obama, the United States deported some 175,000 Mexicans a year; Mr Trump will find it hard to increase that number. Republican plans to tax imports as part of a reform of corporate income tax would hit Mexico hard. The government sees that as a problem to be addressed by the United States’ trading partners in concert, rather than by Mexico alone. + +It’s Donald. Duck! + +Mr Peña’s instinct is to act as if Mr Trump is more reasonable than he seems. He showed his conciliatory side when he invited Mr Trump to Mexico City in August during the election campaign. The ersatz summit, at which Mr Peña failed to tell Mr Trump publicly that Mexico would not pay for his wall, so enraged Mexicans that Luis Videgaray, the finance minister who had suggested the meeting, was forced to quit. Now Mr Peña has brought him back, as foreign minister. But his tone has become tougher. Mr Peña now rejects Mr Trump’s attempts to influence investment “on the basis of fear or threats”. + +To some, the rehiring of Mr Videgaray looks like a smart move. He is thought to be friendly with Jared Kushner, Mr Trump’s son-in-law, who is to become an adviser in the White House (on trade, among other things). Mr Trump himself praised Mr Videgaray after his sacking as a “brilliant finance minister and wonderful man”. + +But Mexicans regard him with disdain. In turning to a member of his inner circle to manage Mexico’s relationship with the United States, Mr Peña missed a chance to hire someone with fresh ideas. Mr Videgaray “can have lunch at the White House”, notes Shannon O’Neil of the Council on Foreign Relations in New York, but she worries that his focus “will just be on the Oval Office”. To press its case that the United States has more to gain from working with Mexico than from walloping it, the government must talk to congressmen, state politicians and business leaders. It should also mobilise the 35m people of Mexican origin living in the United States. + +Mexico thinks it has killer arguments for building on the partnership rather than destroying it. Some 5m American jobs depend on trade with Mexico; when Mexico ships goods north, 40% of their value comes from inputs bought from the United States. Officials hope that the new administration will opt for the fluffiest versions of Trumpism. Instead of repealing NAFTA, perhaps Mr Trump will renegotiate it, incorporating new standards for protecting intellectual property and the environment. Another tactic under consideration is to boost imports from Mexico’s NAFTA partners. The thinking is that reducing Mexico’s trade surplus with the United States, about $59bn last year, would give Mr Trump a victory he could sell to his protectionist supporters. + +If conciliation fails, Mexico has few attractive options. In a trade war, it would suffer horribly. Raising its own tariffs would hurt its own consumers. Yet that does not mean that Mexico is defenceless. In 2009 it imposed tariffs on nearly 100 American products, including strawberries and Christmas trees, after the United States barred Mexican lorries from its roads to protect the jobs of American drivers. That got the attention of American politicians: the pro-trade lobby prevailed. + +Mexican analysts are thinking about how the country might fight the next skirmish. Maize, grown mainly in states that voted for Mr Trump, will be a tempting target. The United States sold about $2.5bn-worth to Mexico in 2016. Faced with the loss of their biggest market, American maize farmers might press the White House to relent. On January 6th 16 American farming groups warned in a letter to Mr Trump and Mike Pence, the vice-president-elect, that disrupting trade with Mexico and other countries would have “devastating consequences” for farmers, who are already suffering from low prices. + +For now, Mexicans are praying that Mr Trump will prove more temperate in office than during his meteoric rise. There is little evidence that will happen. + +This article appeared in the The Americas section of the print edition under the headline “Bracing for impact” + + + + + +Laggard on the lake + +Toronto’s mayor tries to improve transport + +But he may encounter roadblocks + +Jan 14th 2017 | TORONTO + +Joining an underground movement + +FEW cities these days have the cachet of Toronto. It ranks high on lists of the world’s most “liveable” cities (the Economist Intelligence Unit, a sister company of The Economist, put it fourth last year). Drake, a popular rapper, is an enthusiast for his home town. Lovers of diversity are attracted to Canada’s biggest metropolis. Yet native Torontonians who have moved away are strangely resistant to returning home. John Tory, the city’s mayor, who tries to lure them back, says they give two main reasons for saying no. The first is that the jobs are better in places like London and Hong Kong. The second is that Toronto’s public transport is much worse. + +Toronto’s subway system has changed little since 1966, the year an east-west line was added to a U-shaped north-south track. In a ranking of subway systems in 46 cities by the OECD, a club of mostly rich countries, Toronto placed 43rd, with just 19km (12 miles) of track per square km of territory in 2003. The situation has not improved since then, while the population has grown. The last big extension of the network of buses, streetcars and surface rail opened more than a decade ago. + +The city has been no more successful at building roads. Ambitious plans to build expressways into the city centre were cancelled or only partially realised, because they either went over budget or faced public opposition. Jane Jacobs, an urbanist, and Marshall McLuhan, a media theorist, led a protest against the Spadina Expressway, which was cancelled in 1971. The result is more traffic jams. According to the TomTom traffic index, Toronto was among the ten most congested cities in North America in 2015. + +Mr Tory is the latest in a long line of mayors who has promised to get the city moving again. His plan, dubbed SmartTrack, calls for building a new light-rail line (modelled on London’s Crossrail) and adding six stations to existing commuter rail lines. He wants to help pay for that (and other transport projects) by charging tolls on two highways that funnel traffic downtown. That would raise C$200m ($152m) a year. The federal and provincial governments would put up most of the money. + +The toll proposal is bold. Earlier mayors have refused to put forward plans to finance transport schemes. None has dared take on suburban car owners so directly. Rob Ford, a crack-smoking mayor who died in 2016, was a fierce foe of any measure that could be construed as waging “war on the car”. The city council backed Mr Tory’s toll scheme on December 13th. He now awaits approval from Ontario, Toronto’s province. + +But history suggests that SmartTrack and the toll could falter. Earlier schemes failed when provinces refused to pay for them or newly elected city councils tossed them out. In 1995 a new provincial government abruptly stopped construction of a subway line and filled in the hole. Kathleen Wynne, Ontario’s premier, may be reluctant to approve a charge on drivers. She faces a tough re-election fight next year. + +Transport infrastructure is plagued by three problems of governance. The first is that the municipality of Toronto does not have a party system. In the 45-member city council the mayor is merely first among equals. His proposals must muster a majority from his council colleagues, each fighting for the interests of his or her ward. Without party discipline, support for projects can expire with each election. + +The second problem is that responsibility for transit is shared among the city, the province and a provincial agency called Metrolinx, which runs commuter trains. They do not co-ordinate enough with one another, says Matti Siemiatycki of the University of Toronto. Finally, there is the role of the federal government, whose offers of money tempt cities to embark on silly projects. Critics point to federal backing for a proposed 6km subway extension that will cost C$3.2bn and have just one station. + +Mr Tory cannot solve these problems himself. His ambition is more modest: a second term as mayor starting next year that would allow him to see through SmartTrack and his proposed road toll. That will not solve Toronto’s transport problems, but it might persuade ex-Torontonians to give their city a second chance. + +This article appeared in the The Americas section of the print edition under the headline “Laggard on the lake” + + + + + +Asia + + + + + +Indian politics: Non-stick PM + +Royal politics in Thailand: Return to sender + +South Korea and Japan: Future tense + +Anti-Chinese protests: Deep water + +Banyan: Still just saying no + + + + + +Non-stick Narendra + +India’s prime minister has a knack for shrugging off embarrassment + +His party is poised to prosper in state elections despite its ill-judged “demonetisation” scheme + +Jan 14th 2017 | DELHI + + + +ADDRESSING a conference in his home state of Gujarat on January 10th, Narendra Modi, India’s prime minister, exuded confidence. India’s economy is the fastest-growing and one of the most open in the world, he declared, reaffirming his government’s commitment to reform. The 5,000-strong audience, sprinkled with foreign heads of state and corporate bigwigs, applauded warmly. One multinational’s boss drew cheers with a sycophantic call for India to “export” Mr Modi to run his home country, America, too. + +The optimism and praise, however, contrasted with sobering economic news. Since November rating agencies have sharply lowered their growth forecasts. Small and medium-sized firms report big lay-offs. Vehicle sales fell in December by 19% compared with the previous December, their steepest drop in 16 years, says a car-industry lobby group. Housing sales in India’s eight biggest cities slid by 44% in the last quarter of 2016 compared with the year before, reckons Knight Frank, a global property firm, in a report. “The Indian government’s demonetisation move on November 8th brought the market to a complete standstill,” it says, alluding to Mr Modi’s surprise order to withdraw 86% of the notes used in daily transactions. + +There is little doubt that Mr Modi’s assault on cash has caused ordinary Indians disruption, annoyance and, particularly for the poorest, severe distress—though the pain is easing now as the government prints more money to replace the scrapped notes. Yet just as would-be foreign investors seem happy to continue boosting Mr Modi, many Indians also still trust and admire the prime minister. Like America’s president-elect, Donald Trump, who once claimed he could “shoot somebody” and not lose votes, Mr Modi’s support seems oddly unaffected by his flaws. Anecdotal evidence, online polling and informal surveys all suggest that the prime minister’s misstep has scarcely dented his standing. + +Opinion polls in India have a poor record, and none published since the demonetisation drive has specifically measured Mr Modi’s popularity. However, two surveys carried out in December in the state of Uttar Pradesh, India’s most populous, suggest that his Bharatiya Janata Party (BJP) remains poised to perform well in imminent state elections. When the results from several rounds of voting are tallied in March, the BJP could be basking in its biggest triumph since Mr Modi won national elections in 2014. The party has not suffered in municipal votes in several states since November and is well positioned in several other looming state polls. + +Prior to the demonetisation drive, Mr Modi had handily weathered other storms. Murderous communal riots tarnished his long term as chief minister of Gujarat, for instance. Yet according to Pew, a research firm, the prime minister’s popularity in mid-2016, at an enviable 81%, had declined only marginally from a stunning 87% the year before. The liking is personal: Mr Modi regularly scores higher in such polls than either his party or his policies. + +Some pundits speak of “Modi magic” to explain his immunity from criticism, but there are more straightforward reasons. One is the prime minister’s talent as a politician. Although often dour in countenance, Mr Modi is a pithy speaker in Hindi, with an unerring nose for the class-driven grudges that often guide voter sentiment. In debates over demonetisation, he successfully projected himself as a champion of the common man against currency hoarders and tax evaders. He is also extremely protective of his own image as a man above the fray. Mr Modi’s dress, gestures and public appearances are theatrically staid and uniform, punctuated by meaningful looks and silences. He does not hold press conferences, preferring to retain control of his narrative via carefully rehearsed interviews and his monthly “From the Heart” radio address. + +Pygmy-slayer + +Mr Modi is also lucky. His well-funded, highly disciplined and pan-Indian party faces an unusually divided and uninspiring opposition. Congress, a party that ran India for decades and still commands a nationwide base, is burdened by squabbling and corrupt local branches and a lack of clarity over ideology and the role of the Gandhi dynasty. India’s many other parties are all parochial, tied to the interests of one state, caste or other group, and so with little hope of playing a national role. Handed the golden opportunity of Mr Modi’s demonetisation fumble, the opposition has failed to mount a united charge. + +Other institutions that might check Mr Modi’s ambitions, such as the press and the judiciary, are also not as vigilant as in other democracies. Some parts of the media are owned by Mr Modi’s friends and supporters; others by business groups with interests that are vulnerable to retribution. Journalists, whistle-blowers and activists are keenly aware that critics of the government often pay a price, whether in the form of “trolling” on the internet, harassment by officials or spurious lawsuits. India’s courts, meanwhile, do often clash with the government but are cautious in picking fights: on January 11th India’s supreme court airily dismissed a public-interest lawsuit demanding investigation of documents that appear to implicate dozens of officials in bribe-taking. + +Even Mr Modi’s foes believe his administration is less corrupt than previous ones have been. However, as the banknote debacle revealed, it is not necessarily much more competent. The most iron-clad rule of Indian politics is anti-incumbency. Even the investors vying for Mr Modi’s attention may take note that, for all the talk of openness, India still has some of the world’s most tangled rules, highest corporate tax rates and most capricious officials. + +This article appeared in the Asia section of the print edition under the headline “Non-stick PM” + + + + + +Return to sender + +Thailand’s new king rejects the army’s proposed constitution + +But for all the wrong reasons + +Jan 14th 2017 | BANGKOK + + + +FOR more than two years Thailand’s ruling junta, which seized power in a coup in 2014, has been cooking up a constitution which it hopes will keep military men in control even after elections take place. In August the generals won approval for the document in a referendum made farcical by a law which forbade campaigners from criticising the text. Yet on January 10th, only weeks before the charter was due to come into force, the prime minister said his government was tweaking the draft. Prayuth Chan-ocha said changes were necessary because King Vajiralongkorn, the country’s constitutional monarch, had declined to give the document royal assent. + +There is much to dislike about the proposed constitution, which will keep elected governments beholden to a senate nominated by the junta and to a suite of meddling committees. But Mr Prayuth says the king’s objections relate only to “three or four” articles—all of which appear to limit the sovereign’s power slightly. The generals say the palace has asked them to amend a rule which requires the monarch to nominate a regent when he leaves the kingdom (probably because King Vajiralongkorn plans to spend much of the year reigning from his residences in Germany). They also say they will revise an article which makes the constitutional court the final arbiter at times of political crisis—a role which had traditionally fallen to the king—as well as an article which introduced a requirement for some royal proclamations to be countersigned by a minister. + +Thais have been watching for signs of friction between the armed forces and the monarchy—the country’s two biggest sources of political power—since the death in October of Bhumibol Adulyadej, King Vajiralongkorn’s long-reigning father. The new king is viewed warily by Bangkok’s elites, who have sometimes worried that he sympathises with populist politicians whom the army has twice kicked from power. On the whole relations have looked cordial. King Vajiralongkorn has stacked his privy council with generals plucked straight from the junta’s cabinet; the junta has looked to the palace to help adjudicate in a long-running and volatile dispute over who should fill a vacant post at the head of Thai Buddhism, which the military government had appeared ill-equipped to handle alone. + +But although the king’s right to reject the draft constitution is enshrined in an interim charter which the generals themselves wrote, his decision to interfere remains a surprise. Under King Vajiralongkorn’s father the palace preferred to maintain the fiction that Thailand’s monarchy holds a symbolic role which is “above politics”, even while it meddled energetically behind the scenes. The bluntness of King Vajiralongkorn’s intervention—and the determination it reveals to resist relatively small checks on royal power—is both a snub to the junta and a worry for democrats, some of whom had dared hope that the new king might be happy to take a back seat in public life. + +The junta says it will make all the requested changes within a few months, and that the new text will not need to be put to a second referendum. But it has clearly been caught by surprise. It says it will first have to revise the interim charter which has been in force since the coup. This document allowed for the king to reject the draft constitution in its entirety but appeared not to provide for the possibility that he might ask to strike out lines he did not like. + +Some Thais worry that a lasting power struggle is brewing. Others see a minor spat over language, which will quickly be forgotten. Since the 1930s Thailand has written and torn up 19 constitutions; hardly anyone expects this effort to be the last. The one certainty is that the redrafting will delay by several months the general election that was supposed to be held at the end of this year. Mr Prayuth has implied that elections cannot now be held until after King Vajiralongkorn’s coronation, which itself cannot take place until after his father’s elaborate cremation, scheduled for October. All this boots the long-promised polls well into 2018. + +This article appeared in the Asia section of the print edition under the headline “Return to sender” + + + + + +Not cast in iron + +A spat over a statue puts South Korea and Japan at odds + +Japan frets that a deal over wartime sex slaves may crumble + +Jan 14th 2017 | SEOUL AND TOKYO + +Bronze of contention + +THE sudden deal struck in late 2015 by the leaders of South Korea and Japan to settle their dispute over “comfort women” was supposed to be “final and irrevocable”. But South Korean groups representing the former sex slaves—tens of thousands of whom were pressed into prostitution by Japan’s imperial army during the second world war—had fiercely opposed the deal as a sell-out. One year on, a bronze statue of a teenage sex slave (pictured), set up by one of the civic groups last month outside Japan’s consulate in Busan, South Korea’s second-largest city, threatens to undermine the agreement. The row, in turn, has upset a short-lived detente between neighbours at a treacherous time. + +Koreans have long felt that Japan has not properly atoned for its wartime atrocities. Activists have erected 30-odd statues to lament the suffering of the comfort women, including one near the Japanese embassy in Seoul, South Korea’s capital. + +As part of the deal Shinzo Abe, Japan’s prime minister, apologised for the women’s ordeal. Japan pledged to pay ¥1bn (just over $8m) into a new South Korean fund to care for the surviving comfort women (there were 46 at the time, but seven have since died). That was something of an about-turn for Mr Abe, who had previously said he doubted the women had been coerced—a view that his many ultranationalist supporters espouse. Japan maintains that the relocation of the statue outside its embassy was part of the deal, and that the erection of the new statue in Busan violates its “spirit”. South Korea says that it only agreed to ask civic groups to relocate the statue in Seoul. + +Japan has recalled its consul-general in Busan, as well as its ambassador to Seoul, and suspended negotiations over a planned currency-swap agreement. Such huffiness is not unusual: Japan also recalled its ambassador in 2012 after Lee Myung-bak, the South Korean president of the day, visited an islet claimed by both countries. Yet Japan, too, can be accused of violating the spirit of the deal. On December 29th Tomomi Inada, its defence minister, visited the Yasukuni shrine in Tokyo, which commemorates the spirits of 2.5m Japanese war dead, including 14 high-ranking war criminals. The bronze statue in Busan, which local authorities had removed two days before for obstructing a pavement, was allowed to be replaced the day after Ms Inada’s visit. + +Mr Abe doubtless worries that the deal will collapse: its other signatory, Park Geun-hye, South Korea’s deeply unpopular president, was impeached by parliament last month. The constitutional court has yet to rule on her permanent removal. But already presidential hopefuls are vying for votes before an expected early election—and the main opposition party, whose likely candidate is in the lead, last year threatened to ditch the sex-slave deal. + +South Korea’s acting president, Hwang Kyo-ahn, sensibly said this week that the settlement should be respected by all (34 of the 46 surviving comfort women had given their approval). But he has scant political capital. A professor at Seoul National University who advises the foreign ministry says that no resolution will be found until a new South Korean government is in place. South Korean diplomats are hobbled by the lack of strong leadership; a meeting between the leaders of South Korea, Japan and China was postponed last month. Unlike Mr Abe, the besieged Ms Park was unable to meet Donald Trump before he takes office this month. + +The strain on the ties between the two neighbours is all the more alarming at a time when China is increasing pressure on South Korea. It is miffed about the planned deployment this year on South Korean soil of an American anti-missile system called THAAD (Terminal High-Altitude Area Defence). THAAD is intended to repel North Korean attacks, but China says it could be used against it too. It appears to have blocked imports of South Korean cosmetics, barred Korean dramas and pop stars from its screens and turned down a recent request by South Korean airlines for additional flights to China. Joint military events have also been cancelled. Even more worryingly, North Korea’s nuclear programme appears to be accelerating. Some now believe it may manage to build a nuclear-tipped missile that can reach America during Mr Trump’s presidency. + +Barack Obama, America’s outgoing president, put a lot of effort into getting South Korea and Japan to make up, in the hope of balancing China’s rise and presenting a united front to North Korea. Yet, on the campaign trail at least, Mr Trump has been a destabilising influence, says Scott Snyder of the Council on Foreign Relations, a think-tank. Mr Trump said South Korea should contribute more towards the cost of keeping some 28,500 American troops stationed there (it currently pays about 40% of the total), or he would withdraw them; he also suggested that South Korea and Japan could develop their own nuclear weapons instead of relying on America’s nuclear umbrella (he now denies having said that). + +An American retrenchment, if it materialises, would add to the unease the two countries feel at China’s rise and North Korea’s belligerence. In such fraught times, rekindling historic wrangles looks uncommonly unwise. + +This article appeared in the Asia section of the print edition under the headline “Future tense” + + + + + +Deep water + +Sri Lankans protest against Chinese investment + +But it’s one way to pay off debts to China + +Jan 14th 2017 | COLOMBO + +Sri Lankan water torture + +FOR generations, Priyantha Ananda’s family sold kalu dodol—a sticky sweet made of coconut milk and rice flour—on the old Tangalle road in Hambantota. The government moved his wayside shop in 2008 to build a sprawling commercial port, financed by Chinese loans. He was one of around 40 street vendors forced to relocate to another neighbourhood, far from their homes, where business is slow. Most distressing of all, the authorities have told them not to erect any permanent buildings. That suggests they might be displaced again, this time for an industrial zone being developed by Chinese investors. + +Resentment at such schemes boiled over this week, when thousands demonstrated at the inauguration of the industrial zone. As Ranil Wickremesinghe, the prime minister, and Yi Xianliang, China’s ambassador, grinned for the cameras, police beat back stone-throwing protesters with tear gas and water cannons. The Chinese must not have any more land in Hambantota, insists Mr Ananda. The sweet-seller says he will not move again. But some in the area have already received notices of acquisition. + +The size of the industrial zone is not yet known. A government minister said the Chinese investors have requested 15,000 acres. The prime minister says it will be 1,235. But even the smaller area has not yet been demarcated: the government’s chief surveyor says public anger forced his staff to stop work. + +The government accuses the opposition, and in particular supporters of Mahinda Rajapaksa, a former president, of stoking discontent in Hambantota with talk of “Chinese colonisation”. That is especially ironic, since the development of the port was begun under Mr Rajapaksa, who was criticised at the time for signing uncompetitive contracts for its construction that lumbered Sri Lanka with heavy debts to the Chinese government. The new government plans to grant a state-controlled Chinese firm called CMPort an 80% stake in a 99-year lease of the port, for $1.2bn—a step it says is necessary to defray some of the debt. It also maintains that the industrial park will attract $5bn in investment and create 100,000 jobs. + +The signing of the lease on the port has been postponed, however, after Arjuna Ranatunga, the ports and shipping minister, complained to Maithripala Sirisena, the current president, about some of its clauses. One grants CMPort control over internal security; another allows it to claim fees for navigation. Mr Rajapaksa, who used to be the member of parliament for Hambantota and still wields considerable political influence, is railing “against giving the rights of the landlord over the industrial zone to a foreign private company” and raising concerns about “control and sovereignty”. That is the height of hypocrisy—but it has clearly struck a nerve. + +This article appeared in the Asia section of the print edition under the headline “Deep water” + + + + + +Banyan + +Asia is still just saying no to drugs + +Prohibition may be falling out of fashion in the West, but Singapore and its neighbours remain fierce advocates + +Jan 14th 2017 + + + +“FOR the first few days,” explains Aki, a young man who helps run a drug rehabilitation centre on the outskirts of Myitkyina, the capital of Kachin State, in northern Myanmar, “some of them try to run away. So we have to keep them like this.” A young man, naked except for a tattered pair of shorts, lies prone on a filthy mattress, one leg locked in a wooden device resembling medieval stocks. He sweats and shakes, like many suffering heroin withdrawal. Dozens of other men mill around the clinic: a dimly lit, mattress-lined, hangar-like building reeking of sweat and foul breath. Beyond the back door is a much smaller, concrete-floored room with a wooden bath, a squat toilet and, next to it, a tiny padlocked cell crammed with four painfully skinny men: they, too, had tried to escape. + +The men receive no medication; treatment consists solely of herbal baths and Bible study (many Kachin are Baptist). For the first 15 days of their three-month stay, they receive no counselling because, as Aki explains: “They never tell the truth, because they are addicts.” Aki’s boss, the Reverend Hsaw Lang Kaw Ye, takes an equally dim view of his region’s many opium farmers: he is part of a citizens’ group that cuts down their crop. Asked if he provides the farmers with any compensation, he scoffs: “We don’t give them anything. We just destroy opium fields.” + +This attitude is typical of drug policy in much of Asia: needlessly severe and probably ineffective. According to Harm Reduction International, a pressure group, at least 33 countries have capital punishment on the books for drug offences, but only seven are known to have executed drug dealers since 2010. Five are in Asia (the other two are Iran and Saudi Arabia). + +Off with their heads + +In Singapore, capital punishment is mandatory for people caught with as little as 15 grams of pure heroin. The arrival cards foreign visitors must fill in at Singaporean immigration posts warn, in red block capitals: “DEATH FOR DRUG TRAFFICKERS UNDER SINGAPORE LAW”. Singapore may kill fewer people than it used to—between 1994 and 1999 no country executed more people relative to its population—but its executioners are not idle: less than two months ago a Nigerian and a Malaysian were hanged for trafficking cannabis and heroin respectively. + +Singapore’s neighbours, Malaysia and Indonesia, also execute drug offenders. Indonesia’s previous president, Susilo Bambang Yudhoyono, reportedly disliked the death penalty, and imposed an unofficial moratorium on executions from 2008 to 2013. Joko Widodo, his successor, has no such qualms: since taking office in 2014 he has approved the execution of 18 drug traffickers, and has pledged to show “no mercy” to anyone in the business. + +The Philippines ended capital punishment in 2006, but its new president, Rodrigo Duterte, has found a workaround: killing people without the bother of a trial. Since taking office six months ago, more than 6,200 suspected drug dealers or users have been killed in his anti-drug campaign. While his bloody drug war has drawn criticism from human-rights activists in the Philippines and abroad, it remains wildly popular among ordinary Filipinos. The ten-member Association of South-East Asian Nations is committed to eradicating drug use, processing and trafficking by 2020—an implausible goal, especially since the Golden Triangle, the region where Laos, Myanmar and Thailand meet, produces a hefty share of the world’s opium. + +Harsh penalties for drug offences are common across Asia. The sorts of alternatives now favoured in the West, such as diverting addicts to effective treatment programmes instead of trying them and saddling them with criminal records, are virtually non-existent. Several countries require drug offenders to enter rehabilitation programmes, but these are often like prison. Staff at rehab centres in Vietnam have reportedly beaten inmates and forced them to toil in the fields; guards in Cambodia have reportedly raped female inmates. + +Asia’s harsh anti-drug policies are falling out of step with the rest of the world. Marijuana for recreational use is now legal in eight American states; 28 have legalised it for medical use. Dozens of countries have decriminalised marijuana consumption. Heroin is available on prescription in several European countries. The rich world increasingly treats addiction as an illness rather than a crime. + +These trends have Asia’s drug warriors worried. Last April the UN General Assembly convened a special session on drugs. The previous time it did so, in 1998, it vowed to make the world drug-free by 2008. It later moved the target date back to 2019—the year by which Canada now wants to set up a legal market for cannabis for recreational use. At the UN meeting Mexico’s president, Enrique Peña Nieto, urged the world to “move beyond prohibition”. Kasiviswanathan Shanmugam, Singapore’s fearsome law and home-affairs minister, was unmoved: “Show us a model that works better,” he told the general assembly, “that delivers a better outcome for citizens, and we will consider changing. If that cannot be done, then don’t ask us to change.” + +Mr Shanmugam has a point: in Singapore, drug consumption is admirably low. But Singapore is small, with secure borders, little corruption, effective anti-drug education and laws that allow warrantless searches and detention without trial. In poorer and less well-run countries the consequences of prohibition have been depressingly predictable: prisons packed with low-level offenders, corruption and thriving black markets. Demand remains strong: between 2008 and 2013 the amount of methamphetamine seized in East Asia, South-East Asia and Oceania quadrupled. Eventually, Asia may reach the same conclusion as much of America, Europe and Latin America: that the costs of prohibition outweigh the benefits. But for now, as Mr Duterte’s popularity attests, drug wars are good politics. + +This article appeared in the Asia section of the print edition under the headline “Still just saying no” + + + + + +China + + + + + +Railways: The lure of speed + +Infrastructure: Hunting white elephants + + + + + +The lure of speed + +China has built the world’s largest bullet-train network + +And there’s a lot more to come. But is it a waste of money? + +Jan 14th 2017 | SUZHOU, ANHUI PROVINCE + + + +“THESE are fields of hope,” says Gu Zhen’an, gesturing at a barren scene. A burly chain-smoker, he spent 25 years overseeing road-building crews in central China. But three years ago, when he finished paving a highway to a new high-speed railway station in this quiet corner of Anhui province, he decided it was time to switch industries. The land still looks empty, served by first-rate infrastructure but home to few people and fewer businesses. Mr Gu, however, sees things differently: he expects a city to sprout up around the train station. In anticipation, he has built an old-age home, with plans to expand it into a complex for 5,000 people. + +To appreciate the extent of China’s high-speed rail ambitions, take Mr Gu’s dreams and multiply them many times over. Less than a decade ago China had yet to connect any of its cities by bullet train. Today, it has 20,000km (12,500 miles) of high-speed rail lines, more than the rest of the world combined. It is planning to lay another 15,000km by 2025 (see map). Just as astonishing is urban growth alongside the tracks. At regular intervals—almost wherever there are stations, even if seemingly in the middle of nowhere—thickets of newly built offices and residential blocks rise from the ground. + + + +China’s planners hope these will be like the railway towns that sprouted (at a slower pace) in America and Britain in the 19th century. In their rush to build, waste is inevitable. The question is whether gains will outweigh losses. Five years after the busiest bullet trains started running (the Beijing-Shanghai line opened in 2011), a tentative verdict is possible. In the densest parts of China, high-speed rail has been a boon: it is helping to create a deeply connected economy. But further inland, risks are mounting of excessive investment. + +In China’s three big population centres—the areas around Beijing in the north, Shanghai in the east and Guangzhou, the capital of Guangdong province, in the south—life and work have started to follow the sinews of the high-speed rail system. Trains were previously too infrequent, too slow and too crowded to allow for daily commutes. Now, each of these three mega-cities is developing commuter corridors. Little wonder: house prices in satellite towns and cities tend to be much cheaper. In Kunshan, for example, homes cost about 70% less than in nearby Shanghai. But the bullet train between the two cities takes just 19 minutes and costs a mere 25 yuan ($3.60). And Kunshan is just one of many options for those seeking to escape Shanghai’s high costs. There are now about 75m people living within an hour of the city by high-speed rail. + +Surveys show that more than half of passengers on the busiest lines are “generated traffic”—that is, people making trips that they would not have made before. This is unquestionably good for the economy. It means the trains are expanding the pool of labour and consumers around China’s most productive cities, while pushing investment and technology to poorer ones. Xu Xiangshang, a dapper businessman, oversees sales of apartments built next to high-speed railway stations in less well-off parts of Anhui. These are less than half an hour from Nanjing, a prosperous city of 8m that is the capital of Jiangsu province. “Bullet trains are becoming just like buses,” he says. + +The economic benefits are hard to measure precisely. Traditional analyses focus on the financial performance of high-speed rail lines, plus indirect results such as reduced road congestion (see next story). But bullet trains are more than just a mode of transport. China wants to build a “high-speed rail economy”. It is a twist on the theory of urban agglomeration—the idea that the bigger the city, the wealthier and more productive its people tend to be. The idea is to cap the size of mega-cities, but achieve the agglomeration effect with the help of bullet trains. China reckons that the resulting network of large, but not oversize, cities will be easier to manage. The World Bank, for one, is optimistic. In a report published in 2014 it said the benefits of high-speed rail would be “very substantial”, potentially boosting the productivity of businesses in China’s coastal regions by 10%. + +Not all are aboard + +But might regular, reliable, fast-enough trains around big cities have been almost as good as high-speed rail, at a fraction of the price? The OECD, a rich-country think-tank, reckons it costs 90% more to build lines for trains that reach 350kph than it does to lay ones that allow speeds of 250kph. For longer lines with more than 100m passengers a year and travel times of five hours or less—such as the one between Beijing and Shanghai—the more expensive type may be justifiable. + +It is less so for journeys between commuter towns, during which trains only briefly accelerate to top speeds. For longer journeys serving sparse populations—a description that fits many of the lines in western and northern China—high-speed rail is prohibitively expensive. + +The overall bill is already high. China Railway Corporation, the state-owned operator of the train system, has debts of more than 4trn yuan, equal to about 6% of GDP. Strains were evident last year when China Railway Materials, an equipment-maker, was forced to restructure part of its debts. Six lines have started to make operating profits (ie, not counting construction costs), with the Beijing-Shanghai link the world’s most profitable bullet train, pulling in 6.6bn yuan last year. But in less populated areas, they are making big losses. A state-run magazine said the line between Guangzhou and the province of Guizhou owes 3bn yuan per year in interest payments—three times more than it makes from ticket sales. + +Xi makes the trains run on time + +Many had thought China would rein in its ambitions after the fall of Liu Zhijun, a railway minister who was once revered as the father of the bullet-train system. In 2011 he was removed for corruption. Shortly after, a high-speed rail crash caused by a signalling failure killed 40 people. The mighty railway ministry was disbanded and folded into the transport ministry. China slowed its fastest trains down from a world-beating 350kph to a safer 300kph. The bullet trains have run with few glitches since the tragic crash. + +But the network expansion now under way is even bolder than Mr Liu had envisaged. China has a four-by-four grid at present: four big north-south and east-west lines. Its new plan is to construct an eight-by-eight grid by 2035. The ultimate goal is to have 45,000km of high-speed track. Zhao Jian of Beijing Jiaotong University, who has long criticised the high-speed push, reckons that only 5,000km of this will be in areas with enough people to justify the cost. “With each new line, the losses will get bigger,” he says. + +Making matters worse, China has often placed railway stations far from city centres. Bigger cities should eventually grow around their stations, but suburban locations will not produce the same economic dividends as central locations. In smaller cities, prospects are even bleaker. In Xiaogan in Hubei province, the station was built 100km from the city. The decision to base stations so far away reflects the realities of high-speed rail: for trains to run fast, tracks need to be straight. But that limits potential gains from lines as they traverse China. Wang Lan of Tongji University in Shanghai says the government should turn isolated stations into transportation hubs by adding new rail connections to other nearby places. That, though, would be another big expense. + +Dangers are all too visible in the city of Suzhou in Anhui province (not to be confused with the successful example of Suzhou in Jiangsu). Its station is 45km from the city centre in the barren landscape where Mr Gu lives in hope. The government thought it would spark development. It paved eight-lane roads to serve a vast industrial park on one side of the station. Investors built clothing, food and pharmaceutical factories. But all are closed, except for a paper mill. Undeterred, the government is building a commercial district on the other side of the station. + +Nearby, Mr Gu’s old-age home is off to a good start, with help from a local hospital. Down the road there is a drab collection of stores, restaurants and houses. This was meant to be the kernel of the new railway town: people were resettled here to make way for the tracks. Two older residents say they are sure that better days are just around the corner. They have heard that the government will move in 100,000 people from a part of western China plagued by landslides. Suzhou will provide the new arrivals with a place to live and they, in turn, will provide the town with the population it needs to thrive. But it is impossible to confirm the rumour—one more article of hope in what China likes to call its “high-speed rail dream”. + +This article appeared in the China section of the print edition under the headline “The lure of speed” + + + + + +Hunting white elephants + +Opinion is divided on China’s massive infrastructure projects + +Some critics may be wrong + +Jan 14th 2017 | HONG KONG + + + +CHINA is proud of its infrastructure: its cavernous airports, snaking bridges, wide roads, speedy railways and great wall. This national backbone (minus the wall) bears the weight of the world’s second-largest economy and its biggest human migration, as hundreds of millions of people move around the country during the lunar new-year holidays—the rush officially begins on January 13th. + +Western leaders often shake their heads in disbelief at the sums China spends on its huge projects. And some analysts question how much of it has been wisely spent. In a widely circulated study published last autumn, Atif Ansar of Oxford University’s Saïd Business School and his co-authors say the world’s “awe and envy” is misplaced. More than half of China’s infrastructure projects have “destroyed economic value”, they reckon. Their verdict is based on 65 road and rail projects backed by the Asian Development Bank (ADB) or the World Bank since the mid-1980s. Thanks to the banks’ involvement, these projects are well documented. + +One example is a 147-km, four-lane toll road in southern Yunnan province, which was built with the help of an ADB loan approved in 1999. The ADB expected the Yuanjiang-Mohei highway (Yuan-Mo for short) to cut travel times, reduce traffic accidents and lower the costs of fuelling and repairing vehicles, adding up to a compelling economic return of 17.4% a year. By 2004, however, traffic was 49% below projections and costs were more than 20% over budget, thanks to unforgiving terrain prone to landslides. + +Were such setbacks enough to damn over half of the projects they examined? As a rule, the ADB and World Bank will approve an undertaking only if they expect its broad benefits (the economic gains from reduced travel times, fewer accidents, etc) to exceed its costs by a large margin, leaving ample room for error. Mr Ansar and his co-authors assume this margin is 40%: they posit a ratio of expected benefits to costs of 1.4 for every project. They scoured the banks’ review documents for examples of cost overruns and traffic shortfalls. Given these assumptions, a project becomes unviable if costs overrun by more than 40%, traffic undershoots by 29%, or some combination of the two. Of the 65 projects, 55% fell into this category. Yuan-Mo was one. + +These projects may not be representative of China’s infrastructure-building as a whole. But there is little reason to think they are unusually bad. They are often managed with greater rigour, thanks to the involvement of outside lenders. + +The authors’ conclusion, however, rests on their assumption about the margin for error built into the projects they looked at. Take Yuan-Mo, for example. Its projected benefits, over its first 20 years of operation, were several times greater than its costs. But as often with roads, the costs arrive early; the benefits are spread thinly over many years. In the time it takes for an investment to pay off, the resources used could have been earning a return elsewhere. So it is necessary to reduce the future payoffs by some annual percentage, known as a “discount rate”. The higher this is, the lower the value placed today on tomorrow’s gains. + +So a lot turns on what rate is chosen. For historical reasons, the ADB adopts a high one of 12%. At that rate, Yuan-Mo’s ratio of expected benefits to costs equals 1.5, roughly in line with the authors’ assumptions. But at a gentler rate of 9%, the ratio improves to about 2. At a rate of 5.3% (more in line with government borrowing costs) the ratio rises to 3. With these higher margins for error, many fewer elephants turn white. At a ratio of 2, the share falls to 28%. If the ratio is assumed to be 3, the proportion of duds falls to just 8%. + +The authors also assume that any traffic shortfall persists throughout its life. That is not always the case. Traffic on Yuan-Mo, for example, has rebounded, according to the road’s operator. By 2015 it was 31% higher than the ADB projected back in 1999. Around last year’s lunar new-year holiday the road handled record numbers. Some white elephants turn grey with age. + +This article appeared in the China section of the print edition under the headline “Hunting white elephants” + + + + + +Middle East and Africa + + + + + +Startups in the Arab world: Set them free + +The death of Akbar Hashemi Rafsanjani: The ayatollah’s long shadow + +Botswana: Between rocks and hard places + +Ivory Coast: Mutiny for a bounty + +Congo: The sound of politics + + + + + +Set them free + +Startups in the Arab world + +Arab entrepreneurs could help with many of the region’s problems, but too many obstacles still stand in their way + +Jan 14th 2017 | CAIRO + + + +“COULD Beirut become the Silicon Valley of the Middle East?” So asked a Lebanese news website in 2015. With an educated population, relatively liberal culture and large banking system, Beirut, the capital of Lebanon, seemed well-placed to become a hub for internet startups in the region. But there was at least one glaring problem. “Let’s face it—the internet in Lebanon [is] abysmally bad!” wrote Tony Fadell, the Lebanese-American co-creator of the iPod, in November. Due to government mismanagement, the country has some of the slowest download speeds in the world. + +Across the Middle East in recent years, young men and women have created new products, started new companies and inspired hopeful talk of replicating the startup scenes in America and Europe. These entrepreneurs are a potential boon to the region’s economies, which suffer from slow growth and high unemployment, especially among the young. A pity, then, that so many obstacles stand in their way—and that so many are put there by governments. No place in the Arab world comes close to Silicon Valley in terms of dynamism. But, slowly, progress is being made, say entrepreneurs. + +To understand what startups in the region are up against, consider that most of them will fail. That is true throughout the world, but in a country like Egypt, with no bankruptcy law, failure can mean a prison term if debts are not paid on time. Closing a company can take five to ten years and reams of paperwork. Those that stay in business must navigate outdated legal and regulatory systems that make it difficult to do things that are routine for startups elsewhere, such as paying employees with stock options. This is on top of the challenges that affect all Egyptian firms, such as rising prices and predatory officials. + +Elsewhere the story is much the same. In countries such as Jordan and Lebanon, which claim to be startup-friendly, it is actually quite difficult to start up (see chart). Across the region, labour laws tend to make it hard to hire and fire workers, especially foreigners, even though schools fail to equip many locals with desirable skills, such as coding. Tax authorities are often confounded by startups, says Con O’Donnell, who started Sarmady, an Egyptian online-media company, which he sold to Vodafone in 2008. “They don’t understand the Amazon model,” says Mr O’Donnell, referring to the e-commerce giant, which lost money but grew quickly during its first two decades. + + + +Amazon is thought to be in talks to buy Souq, a large online retailer based in the United Arab Emirates (UAE). Founded in 2005, Souq is often touted as a success story by investors in the region. But Souq apart, high barriers to trade have prevented e-commerce more generally from taking off. Getting goods through customs can be a bureaucratic nightmare, made worse by high tariffs, varying regulations and fluctuating currencies. “People talk about the region as if it is 200m people, but try to ship to these people,” says Louis Lebbos, the founder of AstroLabs, a hub for tech startups in Dubai. Several well-funded ventures have tried—and failed. Souq, which anyway ships mostly to the six countries in the Gulf Co-operation Council, a customs union, is the rare exception. + +E-commerce is one of several industries in which startups could do much more to fill market needs. Others include financial technology, as most Arabs do not have bank accounts or credit cards; and health care, with rates of obesity and other diseases rising across the region. But firms in these industries often have to seek approval from slow-moving government agencies. This can add years to a business plan. “In more developed systems, startups are more willing to jump ahead of regulation and the regulation catches up,” says Mr Lebbos. “But here the axe falls on those who jump ahead.” + +For decades, the region’s socialist-minded governments showed little interest in encouraging private enterprise. Many leaders are wary of empowering young people, who may also seek more political freedom. But as the region’s economies struggle, there is pressure on governments to improve their handling of startups—and to keep up with each other. In November, when Mr Fadell tweeted about Lebanon’s slow internet, Saad Hariri, the prime minister, quickly responded: “I am listening Tony, it’s on top of our future government agenda.” In Egypt the cabinet has just approved the country’s first bankruptcy law, one of several economic reforms aimed at encouraging investment. + +Several governments have also injected money into the system and guaranteed some of the risk involved in backing startups. Most notably, Lebanon launched a $400m package four years ago to encourage lending from banks. Such outlays, paired with the relatively small number of worthy startups in the region, have led to fears of a bubble. But more recent investments have been smaller and more organic. Last year, for example, Morocco received some $50m from the World Bank to create two new venture-capital funds, part of a plan to cultivate its growing startup scene, while international investors poured $275m into Souq and $350m into Careem, a ride-hailing app based in the UAE. + +In most countries there are now clusters of startups, brought together by co-working spaces like Astrolabs in Dubai or Cogite in Tunisia, which have connections to accelerators, incubators and investors. Collaboration is common. Last month the Greek Campus, a hub for startups in downtown Cairo, hosted the Rise-Up summit, one of the largest gatherings of entrepreneurs in the region. Many young geeks aim to do good as well as make money. Abdelhameed Sharara, who started the event in 2013, says he was motivated by the failures of the Arab spring. “I felt there was another way to make it happen.” Many in attendance share his sense of purpose. “We are figuring out how to feed people better, how to empower women, how to educate children,” says Waleed Abd El Rahman, the founder of Mumm, a home-cooking delivery service in Cairo. + +Unfortunately, the difficulty of doing business in the region, and the repressive nature of most governments, have caused many of the brightest minds to move abroad. But these challenges also force those who remain to think creatively about how to work around the system. And this makes for better companies, say many entrepreneurs. “If you can succeed in a country like Egypt, everywhere else is easy,” says Mr Sharara. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Set them free” + + + + + +A moderate, by Iranian standards + +After Rafsanjani + +How the death of an ex-president will affect Iran + +Jan 14th 2017 + +After the tears, the protests? + +THEY came to praise him and to bury him. The eminent former butts of his criticism filled the front rows of his funeral and showered him with accolades. Ayatollah Akbar Hashemi Rafsanjani was the architect of Iran’s revolution, they said, who protected it during the Iran-Iraq war, and rescued it from economic siege afterwards. Ayatollah Ali Khamenei, Iran’s supreme leader, with whom he spent two decades sparring, tweeted that he was “his old friend and comrade”, and read the last rites. Fellow clerics organised the biggest funeral since Ayatollah Khomeini’s, assigned him a golden tomb next to the revolution’s founder, and promised to name a street after him. They closed schools and broadcast the ceremony live. Over 2m Iranians attended, said the authorities. + +The hardliners now hope that at last Mr Khamenei can be truly supreme. Already rejoicing in friendly Russia’s growing presence in the region, and the prospect of victory in Syria, the hardliners will finally also gain control of the powerful Expediency Council that Mr Rafsanjani led for 28 years, a recurrent thorn in their sides. Helpfully, the security forces have ensured that the late Mr Rafsanjani had no one to pass his mantle to. Mir Hossein Mousavi and Mehdi Karroubi, the two presidential candidates he backed against the anti-Westernising Mahmoud Ahmadinejad, are safely under house arrest. + +They have also silenced Muhammad Khatami, his reformist successor as president, banned his name from the media, and barred him from attending the funeral. Hassan Rouhani, though the current president and also a protégé, is too cautious and, as a former intelligence officer, too much a plodding functionary, to defy the establishment alone. Under Mr Khamenei’s watchful eye, he will now be a safe bet for re-election in May. + +Still, Mr Rafsanjani’s appearances always had an uncomfortable habit of veering off-message. From the covered courtyard of Tehran University in 2009, he challenged the authorities to heed the people’s voice, when they massaged the vote to award Mr Ahmadinejad a second term and opened fire on protesters. “We need an open society in which people can say what they want,” he preached. “We should not imprison people.” + +Eight years later, even though he now lay in a casket, his supporters took up the refrain. From the back of the same courtyard came the cries of dissent. Some donned green wristbands and T-shirts, sporting the colour of the protest movement, and chanted “Hail, Khatami”. Others replaced the hardliners’ mantra of “Death to America” with “Death to Russia”, just as they had in 2009 when Russia’s president had been the first foreign leader to congratulate Mr Ahmadinejad on his re-election. Eventually the sound technicians drowned out the dissenters with mourning music. + +In a sense both requiems were right. Ayatollah Rafsanjani was both a pillar of Iran’s theocratic establishment and its prime critic. He both fuelled criticism and harnessed it within acceptable parameters. But for his manoeuvring, many more disgruntled Iranians might have abandoned the doctored electoral process and sought other means to voice dissent. The merchant classes would have despaired of the possibility of normal trade with the West. And the clerics in the holy city of Qom, who shy from mixing Islam and politics, would more vociferously have questioned the legitimacy of the Islamic Republic. “We thought that he would be the one who could secure the transition to a more moderate pro-Western regime,” says a young mourner in shock at his passing. + +For a moment this week, Mr Rafsanjani brought Iran’s contradictory forces together. All thronged to his funeral, and—remarkably in the Middle East—kept it peaceful. But maintaining that common ground without the centrist may be harder. Rulers and ruled will have fewer restraints. Protesters could increase their demands for the release of opposition leaders; hardliners might sense a freer hand to suppress them. The wounds that Mr Rafsanjani helped bind while alive risk being reopened. + +This article appeared in the Middle East and Africa section of the print edition under the headline “The ayatollah’s long shadow” + + + + + +Between rocks and hard places + +Botswana feels the South African pinch + +A sparkling success falls on rough times + +Jan 14th 2017 | GABORONE + + + +IN PHAKALANE, an affluent suburb of Botswana’s sleepy capital Gaborone, a modern assembly line spits out thousands of batteries destined for southern African cars. Whether in glitzy Bentleys beloved of the South African elite or the beaten-up Toyotas swerving to avoid Harare’s potholes, the devices made by employees of Chloride Exide keep the region moving. + +Yet trouble is brewing just beyond the factory gates. Less than 25 miles (40km) away in South Africa, the company’s largest export market, a slowdown has crippled demand. In the past year some 30,000 fewer batteries than usual were shipped across the border. To make things worse, sales to Zimbabwe, once a big buyer, have been hit by import restrictions. + +In September Botswana exported just $54m to South Africa, according to government figures, and imported $371m worth of goods from its big neighbour. Local businessmen grumble that South African firms with operations in Botswana do not spend enough locally. Business Botswana, a lobby group, is calling on South African supermarket chains to boost local procurement above 10%. + +Ian Khama, Botswana’s president, has repeatedly criticised his neighbours. In September he renewed a feud with Robert Mugabe, the ailing autocrat who has impoverished Zimbabwe, again urging him to step down. He has also chided Jacob Zuma, South Africa’s beleaguered president. In June Mr Khama accused South Africa of stifling industrialisation in the region by branding itself as a “regional gateway” for investment, and argued that it was treating its neighbours as little more than a marketplace for exports. + +Mr Khama is undiplomatic perhaps because he is anxious. The diamonds that propelled Botswana’s exceptional growth and paid for impressive infrastructure could be exhausted before 2050. In 2014 Russia overtook Botswana as the world’s biggest producer. Global rough-diamond sales to cutters fell by some 30% between 2014 and 2015, leaving Botswana with its first budget deficit in four years. + +The government is taking note. In February it launched a fiscal stimulus programme to tackle unemployment, estimated at around 19% in a population of 2m. Government investment promoters in swanky premises in downtown Gaborone talk up Botswana’s potential as a hub for tech firms or green energy. But it ranks 108th in the International Telecommunication Union’s ICT Development Index, with only 27.5% of its people online. + +A more realistic strategy to diversify away from diamonds is to attract more tourists. But instead much of the government’s focus has been on deepening its dependence on the shiny stones by trying to become a global centre for cutting and polishing them. Its flagship policy involved strong-arming De Beers, the world’s biggest diamond firm (of which it owns 15%), to bring its sales and sorting operations over from London. + +For Mr Khama, the diversification plans have gained renewed urgency. His Botswana Democratic Party (BDP), which has held power since independence in 1966, is facing its first real challenge at the ballot box. The BDP’s share of the vote dipped below 50% for the first time in the 2014 general election, amid frustration with unemployment and with water and power shortages. Like South Africa’s African National Congress, the BDP is nervously looking ahead to an election in 2019. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Between rocks and hard places” + + + + + +Ivory Coast + +A mutiny in Ivory Coast + +Political instability at the heart of one of Africa’s best-performing economies + +Jan 14th 2017 + +Barrack o’ drama + +WAR, said Carl von Clausewitz, is politics by other means. In Ivory Coast, the country at the heart of Francophone West Africa, so too is mutiny. On January 6th soldiers seized Bouaké, the second-largest city in the country. Over the weekend they briefly kidnapped the country’s defence minister and shooting was heard in Abidjan, the commercial capital. + +Purportedly, the dispute was about soldiers’ pay. On January 8th, having been promised generous bonuses, the soldiers returned to their barracks. Alassane Ouattara, the president, sacked the army and police chiefs. However, many Ivorians found the timing of the mutiny suspicious. It came a few days before Mr Ouattara dissolved his government in anticipation of implementing a new constitution. + +In economic terms, Ivory Coast has in recent years been one of Africa’s star performers. Between 2012 and 2015 its GDP grew at an average rate of 8.5% per year. Abidjan’s crumbling 1970s brutalist skyline has been transformed by a wave of foreign projects. New offices, malls, a Heineken brewery and various factories have sprouted. This is largely thanks to the policies of Mr Ouattara, an American-educated economist who came to power in 2011. He has prioritised infrastructure investment and attracting money into the country. + + + +Yet while Mr Ouattara’s economic record is commendable, his political one is less so. Most of the soldiers leaving their barracks were former rebels, integrated into the national army after the end of the short war which brought Mr Ouattara to power. Their demands, apparently including a call for $8,000 each (five times annual GDP per head), date back to promises allegedly made during that conflict, which started when Laurent Gbagbo, the previous president, refused to leave office after losing an election in 2010. For most of the decade before then, Ivory Coast was embroiled in a longer civil war and divided into two parts: a rebel-held, mostly Muslim north, and the government-held more Christian coast. Much of the country’s recent rapid growth has involved catching up after that lost decade of strife. + +Soldiers are not the only people to feel aggrieved: teachers and civil servants have also gone on strike recently, notes Mamadou Diallo, a consultant in Abidjan. Plenty of Ivorians feel left out of the economic boom, he says. The army, which also mutinied in 2014, remains an unruly alternative source of power in a country with weak institutions. Many Ivorians suspect that the mutineers were actually incited into action by politicians who want to make sure that they are included in the new government that Mr Ouattara was expected to announce as The Economist went to press. This is part of a process of implementing a new constitution, which passed in a referendum in October. + +Ivory Coast’s recent relative stability should not be taken for granted. So far, foreign investors have remained calm. An al-Qaeda attack that killed 19 people in March last year at Grand Bassam, a pretty resort town that was once the French colonial capital, did little to ruffle them. A return to full-blown war is extremely unlikely. But if investors suspect it is even possible, they may close their wallets. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Mutiny for a bounty” + + + + + +The sound of politics + +Congolese pop music + +An oddly symbiotic relationship between some of Africa’s best singers and worst politicians + +Jan 14th 2017 | KINSHASA + +Beggars with attitude + +IN THE Democratic Republic of Congo there are three ways to make it big, says Lexxus Legal, a rapper (pictured). Standing in his house in Kinshasa, the capital, underneath a mural of Congo’s first prime minister, Patrice Lumumba, he lists them. First, you can become a politician. Second, you can join the army (“but you need to be at the top: a general, not a footsoldier”). Finally, you can set up a church. “That is what you call having power,” he says. Noticeably, he rules out his own profession. “The musicians in this country are beggars,” he says. “They are obliged to sing and dance to please politicians and businessmen. If you sing as I do, controversially, you really have no chance.” + +Music is probably Congo’s most influential export, though nowhere near as lucrative as copper or gold. Whereas in the West the country’s name inspires pictures of child soldiers fighting bloody battles, in most of Africa it is associated with “rumba Lingala” (Lingala is the language of the Kinshasa street). This upbeat music has become genuinely pan-African in the 60 years since Congolese musicians were first inspired by Cubans. It can now be heard from Abidjan to Dar es Salaam; in Congo, its home, it is practically a religion. + +Alas, like the country itself, Congolese music is blighted by corruption. Since Congo has few producers or studios, only a tiny market for sales and a population who almost all live on a few dollars a day, Congolese musicians have to survive from patronage, like Mozart in 18th-century Vienna but with even more flamboyant clothes. + +The politicians are happy with this arrangement. In a country where almost nobody reads newspapers and everyone has a radio, music is the easiest way for them to reach potential supporters. Music and politics in Congo are thus entwined. And with an election looming in 2017, the relationship will only grow closer. + +On a plump sofa, Tshala Muana, a singer, explains how she began as a dancer in the 1970s. Under Congo’s then dictator, Mobutu Sese Seko, she wasn’t allowed to sing. As part of his effort to create a single national identity (a policy he called authenticité), songs in Lingala were favoured and those in other local languages—such as Tshiluba, in which Ms Muana sings—were discouraged. Her luck turned in 1997, when Mobutu fell and was replaced by Laurent Kabila. He invited Ms Muana, who had moved to West Africa, back to Kinshasa. “Musicians should live in their own country,” she recounts him telling her. “So he became my sponsor.” + +Now, Ms Muana sings for his son, Joseph Kabila, who became president in 2001 when his father was assassinated. Her songs in Lingala and French include such hits as “Votez Joseph Kabila” and “Kabila tres fort”. When she met your correspondent, a few days before the end of Mr Kabila’s second (and supposedly final) term in office, many wealthy residents had fled, fearing riots. Ms Muana says she isn’t worried by her association with the president. “I may sing for the president, but even the opposition listen to my songs at their rallies,” she says, nonchalantly. + +And indeed, the expectation that musicians will be mercenary is universal. On radio stations across Congo, it is common to hear the names of politicians punctuating songs. This is known as “Libanga” (literally, “small stone”, of the sort that a child might throw to attract attention). It is not done out of ideological conviction. Werrason, one of Congo’s most famous musicians, once produced a song in which he named 110 different people, many of whom would have paid for the privilege. Only breweries and mobile-phone companies, with their big marketing budgets, can match politicians’ largesse. + +Does it matter that Congo’s music, its biggest cultural export, is polluted by politics? David Van Reybrouck, the author of an excellent history of Congo, says close ties have “always existed between music and politics”. The country’s first hit was the song “Independence Cha-Cha”, which was first performed in January 1960, a few months before Congo won independence from Belgium. + +Independence cha-cha declared + +Oh Freedom cha-cha we’ve conquered + +At the Round Table they won + +Oh Liberty cha-cha we’ve conquered! + + + +Mobutuism was supported by Franco Luambo, one of the original rumba stars. Even the launch of the Congolese franc, which replaced the hyperinflated zaire in 1997, was supported by a musical propaganda campaign. + +Yet Mr Legal, who raps in French about war and corruption, thinks it is a problem. “Everything that we Congolese do is driven by music,” he says. “But in music it is difficult to explain 10,000 dead people. We keep dancing instead of answering the real questions.” Congolese living abroad tend to agree. Before the elections of 2006 and 2011, musicians associated with the government were boycotted by Congolese in Europe. Werrason was assaulted twice in restaurants in Brussels and Paris because of his support for Mr Kabila. + +This year, Congo is meant to hold elections to replace Mr Kabila, under a deal struck with the opposition on New Year’s Eve. Already, music naming politicians is filling the airwaves on Kinshasa’s Lingala radio stations. “It is nothing but politics now,” says Ms Muana. If Mr Kabila does indeed step down, the ensuing rush for jobs will spark a festival of patronage. Sadly, few think Mr Kabila, who has already overstayed his mandate, plans to give up the job. And after 16 years in which their lives have not improved much, few people support him. If he does intend to stay in power, he will need more than a few songs. + + + +Links to artists mentioned in the article: + +Independence Cha Cha + +Chante Kabila, Werrason + +Lexxus Legal, the art of war + +more Lexxus Legal + + + +This article appeared in the Middle East and Africa section of the print edition under the headline “The sound of politics” + + + + + +Europe + + + + + +The French left: Battling for survival + +The European Parliament: Opposites attract + +Italy’s populists: Five Star mystery + +The Yugoslavia and Kosovo tribunals: Better than nothing + +Political fragmentation: Going to bits + +Charlemagne: The cruel sea + + + + + +Battling for survival + +The French left faces a grim election year + +The Socialist nomination for president is up for grabs + +Jan 14th 2017 | EVRY + + + +STROLL through Evry, a suburb south of Paris crammed with tower blocks and fresh construction, and you will find Manuel Valls a popular man. Mr Valls was mayor here for 11 years, before he became interior minister and then prime minister, and did much to improve a run-down neighbourhood. On his way to the mosque, Abdoulaye Sambe, an immigrant from Senegal, calls Mr Valls a “good leader”; he credits him for the neighbourhood’s congenial inter-ethnic relations. The proprietor of a juice stand in a shopping centre praises him for getting more surveillance cameras installed. Students lounging in the foyer of a university laud him for sprucing up the area. + +But as Mr Valls competes for the Socialist nomination in this year’s presidential election, he faces a problem: none of these denizens of Evry plans to vote for him. A series of televised debates between the seven candidates in the Socialist primary began on January 12th, to be followed by the primary’s first round on January 22nd and a run-off on the 29th. The polls show Mr Valls in the lead, but in fact the race is wide open. As in the Republican primary in November, when the candidate in third place, François Fillon, stormed to a win, there is every likelihood of an upset. + +One of Mr Valls’s disadvantages is incumbency. Before resigning in December to campaign for the presidency, he was the prime minister of François Hollande, a president whose popularity has sunk to historic lows and who last month became the first French president not to seek re-election since the founding of the Fifth Republic in 1958. His leading role in an unpopular government will force him to squirm in debates, deciding how much of his record to disavow. Rivals such as Vincent Peillon, a former education minister, will relish the chance to skewer him. + +A related problem is ideology. Mr Valls, a Blairite who once called for his party to drop the name “socialist”, has pushed for looser labour laws and takes a hard line on security and integration. But many Socialist primary voters want a French version of Bernie Sanders or Jeremy Corbyn. Mr Valls is trying to recast himself as acceptable to radicals. He spoke this month of creating more government jobs, new welfare for the poor and young, and opposing rule by executive decrees (which he routinely used in office). Few are convinced. + +One serious rival is Arnaud Montebourg, a statist who was forced to resign as industry minister in 2014 after opposing Mr Hollande’s increasingly liberal policies. In the Socialists’ first primary in 2011, he won 17.2% support to Mr Valls’s 5.6%. Perhaps a bigger threat is the populist Benoît Hamon, another ex-minister who resigned in 2014. Voters like his proposal for a universal basic income. Whoever reaches the second round has a good chance of toppling Mr Valls, especially if turnout is high. + +No matter whom the Socialists nominate, their chances of winning the presidential election in May are slim. But the Socialist nominee will influence the chances of other candidates on the left. Two other figures on the left have already declared that they are running as independents. One is Jean-Luc Mélenchon, a hard-left member of the European Parliament. Another is Emmanuel Macron, an economic and social liberal and former economy minister. Many bigwigs and financiers are quietly backing him. He will siphon away many of the young, educated, internationally minded voters on whom the Socialists would normally depend (see chart). + + + +“The left is a mess,” says Laurent Bouvet of Versailles University. He thinks only 40% of voters would consider backing any left-leaning candidate. If the leftist contenders split their share of the vote close to evenly, none has a chance of winning 20-25%, which is probably the minimum to make the run-off in May. But if the Socialists pick a hard-left candidate this month, it could leave the way open for a centrist like Mr Macron. Bookmakers give him the best odds of any on the left. Yet he is still a long shot, says Philippe Marlière, a political scientist at University College London. + +The longer-term future of the Socialists looks precarious. Marine Le Pen of the National Front is appealing to blue-collar voters worried by globalisation and immigration. On the centre-right Mr Fillon, who trumpets his Catholic identity, is winning over small-town voters who might once have voted Socialist but are uneasy about liberal moves such as France’s legalisation of gay marriage. Muslim voters, meanwhile, mistrust the left’s dedication to the strict French secularism known as laïcité. + +After the presidential election, the Socialists risk a mauling in legislative elections in June. They have been here before: in 1993 they won just 57 of the 577 seats in the National Assembly. But the months ahead are set to be the gloomiest they have seen in many years. + +This article appeared in the Europe section of the print edition under the headline “Battling for survival” + + + + + +Opposites attract + +Guy Verhofstadt’s strange, doomed flirtation with Beppe Grillo + +European meets Eurosceptic, and comes away feeling cheap + +Jan 14th 2017 + +A liberal interpretation + +GUY VERHOFSTADT, leader of the liberal ALDE grouping in the European Parliament, once dismissed Italy’s upstart Five Star Movement (M5S) as “incompatible” with his pro-Europeanism. Beppe Grillo, its leader, called Mr Verhofstadt “unpresentable”. Since then Mr Verhofstadt, a former Belgian prime minister whose answer to every problem is a rousing cry of “More Europe!”, has positioned himself as a bulwark against the anti-European populism ravaging the EU—precisely the sort of thing Mr Grillo has made his stock-in-trade. So when plans for a parliamentary alliance between the two men emerged on January 9th, pundits scratched their heads. ALDE and M5S vote against each other as often as not (see chart). Most of ALDE’s 69 MEPs were horrified at the prospect of joining forces with a party that stood for everything they detested. Before the day was out they had squashed the plan. + + + +Mr Grillo’s excuse was that Brexit was going to make his existing partnership with UKIP, an anti-EU British party, defunct. Mr Verhofstadt’s motives are harder to divine. One explanation might be the fact that he is running for the presidency of the European Parliament (the incumbent, Martin Schulz, is leaving to rejoin German politics). The chamber votes on January 17th, and M5S’s 17 MEPs would have helped the ALDE leader in his bid. But his candidacy was always a long shot. ALDE is dwarfed by the parliament’s centre-left and centre-right groupings, one of which will almost certainly provide the next president. + +An expanded group would also have been eligible for more funding. But whatever the reason for Mr Verhofstadt’s gambit, it backfired spectacularly. His tactics compounded the sin. Many of his MEPs heard about the proposal in the press, fuelling their fury. Some gave him an earful at a closed-door party meeting. One suggests his “idiotic hubris” means his days as ALDE leader are now numbered. So in short order Mr Verhofstadt infuriated his allies, destroyed his bid for the presidency and exhibited precisely the sort of political cynicism he claims to stand against. Not a bad day’s work. + +This article appeared in the Europe section of the print edition under the headline “Opposites attract” + + + + + +Five Star mystery + +It is harder than ever to understand Italy’s Five Star Movement + +At the European Parliament, Beppe Grillo seems ready to abandon his movement’s principles + +Jan 14th 2017 | ROME + +A man of many principles + +IF AN election were held in Italy today, according to the latest polls, the winner would be Beppe Grillo’s Five Star Movement (M5S). Termometro Politico, a website that averages poll results, currently puts it fractionally ahead of the governing Democratic Party (PD). But what—if anything—does the M5S stand for? The movement claims to be neither right nor left; its positions on issues are often contradictory. And after the most humiliating setback in the M5S’s brief history, the answer is less clear than ever. + +M5S’s activists argue for a revolutionary, internet-based form of direct democracy. They despise mainstream parties. They inveigh against the Transatlantic Trade and Investment Partnership (TTIP). They dislike the European Union’s sanctions against Russia. And while many of Mr Grillo’s followers are less hostile than he is to the EU itself, the Movement’s demands include a consultative referendum on leaving the euro. + +Yet on January 8th Mr Grillo proposed on his blog that M5S’s representatives in the European Parliament should leave Europe of Freedom and Direct Democracy (EFDD), the Eurosceptic parliamentary group to which they have belonged since first winning seats in 2014, and join the Alliance of Liberals and Democrats for Europe (ALDE), a centrist group that disagrees with the M5S on all of the points above—and many besides. + +Some analysts speculated that Mr Grillo was trying to woo moderate, pro-European voters. Others plumped for cynical opportunism. The EFDD’s biggest member is the UK Independence Party (UKIP), which will depart when Britain leaves the EU. That will leave the EFDD with fewer members than it needs to form a parliamentary group and strip its remaining constituent parties of funding and administrative support. The M5S stands to lose an estimated €340,000 ($362,000) a year. + +The morning after Mr Grillo’s unexpected announcement, an online poll of the Movement’s registered members was held. His plan for the most unlikely marriage since Kermit the Frog and Miss Piggy won a 79% endorsement. Soon afterwards, Mr Grillo published a farewell letter to Nigel Farage, the EFDD president. But by then (see box) a revolt was brewing in the ALDE and the plans were cancelled. + +Mr Grillo’s mishandling of the affair led to scathing criticism from rank-and-file members on his blog. But the effect on the broader electorate could prove more damaging. The M5S has always insisted that, by ignoring ideology, it can cherry-pick policies that work. The European Parliament fiasco suggests that it simply lacks principles. It also sheds a disturbing light on the ability of Mr Grillo (pictured) to mesmerise his acolytes into backing contradictory positions. The percentage voting for an alliance with ALDE was almost identical to that three years earlier for cosying up to the radicals of the EFDD. + +The M5S has nevertheless shown a remarkable capacity for survival. And because of a Constitutional Court decision on January 11th, it is unlikely to face the electorate soon. The judges stymied a referendum aimed at nullifying the centrepiece of a 2014 employment law—the main structural reform of the previous government, led by Matteo Renzi. Mr Renzi, who resigned after losing an earlier referendum on constitutional reform, continues to head the PD. The government of his successor, Paolo Gentiloni (also of the PD), had indicated that, rather than face a vote that might have nullified Mr Renzi’s proudest achievement, the government would join calls to dissolve parliament and hold elections, which would have postponed the referendum for a year. + +Two other labour issues will be put to a national vote in the spring, but ministers are expected to deal with both of them before then. Sergio Mattarella, Italy’s president, is reluctant to call an election before the country has a new election law. Since such laws are notoriously hard to agree on, Mr Gentiloni could be prime minister for longer than either he or Mr Renzi expected. If, that is, his health holds. He underwent heart surgery after feeling unwell on his return from Paris on January 10th. + +This article appeared in the Europe section of the print edition under the headline “Five Star mystery” + + + + + +Better than nothing + +The Yugoslav tribunal shuts down, a Kosovo tribunal starts up + +Today’s war-crimes tribunals have more modest aims than in the past + +Jan 14th 2017 | THE HAGUE + + + +IT WAS a historic day for international justice, but it did not look like it. On December 15th Ratko Mladic sat in the dock at the UN’s Yugoslavia war-crimes tribunal in The Hague, grumbling and reading a newspaper. When the prosecutor accused him of organising the massacre of more than 7,000 Bosniak Muslim men and boys after the town of Srebrenica fell to his Bosnian Serb forces in 1995, he wagged his finger in denial. It was the last day of his trial, though the verdict could be a year in coming. Verdicts about the court itself, meanwhile, are already being handed down. + +The case against Mr Mladic brings to an end the trials of the important figures indicted by the tribunal. (Appeals are being dealt with by another body.) In the Balkans, there is widespread disappointment at the role it has played. Meanwhile, as one tribunal shuts down, a new one for Kosovo was launched in the Netherlands on January 1st. Later this year it should begin issuing indictments for Kosovars accused of crimes committed between 1998 and 2000. + +Created in 1993 by the UN Security Council, the Yugoslavia tribunal ultimately indicted 161 people and sentenced 83 of them. “Its greatest success,” says Eric Gordy, the author of a book on war crimes in the Balkans, “is that it did anything at all.” Judge Carmel Agius, the president of the tribunal, admits it has been “a troubled journey” but is proud of its achievements. + +The tribunal’s biggest failure was its inability to convince people in the former Yugoslavia that it was impartial. Many in the region saw it as a foreign imposition. It was created by outsiders at a moment when the world had the will to demand justice for war crimes wherever they were committed. But trials have dragged on for years, and judges and lawyers are paid handsomely. People in the former Yugoslavia, Mr Agius says, suffer from a habit of “blaming foreigners or someone else” for their disappointments. But, he says, “not a single mass grave would have been excavated” if the tribunal had not existed. + +Mirko Klarin, a journalist who urged the court’s creation in an article in 1991, says one success was expanding the definition of war crimes. Yet this, he thinks, may have been the court’s downfall. Starting in 2012, several acquittals called into question the court’s “command responsibility” precedents, which held leaders culpable for war crimes committed in operations they had ordered but not directly led. Many observers believed that powerful Western countries worried that such standards might be applied to their own armed forces or politicians, and used their influence to turn the tide. + +The suspicion that war-crimes tribunals are an alien imposition also afflicts the new Kosovo court. In fact the court is not a UN body. It is a tribunal set up under Kosovo law, with foreign judges, funded mostly by the EU and in response to allegations made in a Council of Europe report in 2011. (One was that several prisoners held by what was then the Kosovo Liberation Army were murdered for their organs.) Florina Duli, who runs the Kosovar Stability Initiative, a think-tank, says many of her compatriots are convinced that the new tribunal is a tool of “big countries and the European Union”. They think the threat of indictments will be used to blackmail Kosovar leaders to do what the Europeans want, such as keeping the EU-sponsored dialogue with Serbia going. + +David Schwendiman, the prosecutor, concedes that the aims of the new tribunal are more modest than in decades past. His work may not deter fighters from committing crimes in Syria. Still, he sees a duty to build a body of law with which to try such criminals when the political will to do so returns. In the meantime, the tribunals “[help] people learn what happened, but not be consumed by it.” As an effort to record history, the Yugoslavia tribunal with its archive of millions of pages is an undisputed success. That, and the convictions it has achieved, says Mr Gordy, are “definitely better than nothing—and most conflicts get nothing.” + +This article appeared in the Europe section of the print edition under the headline “Better than nothing” + + + + + +Going to bits + +Europeans are splitting their votes among ever more parties + +That means better representation but clunkier governance + +Jan 14th 2017 + + + +AFTER two months and three failed rounds of negotiations, Iceland has a government at last. On January 10th Bjarni Benediktsson, leader of the Independence Party, announced that he had struck a deal with two other centre-right groups. Yet his tenure as prime minister may be short. Opposition politicians are already calling for a vote of no confidence and fresh elections. And even if the coalition survives for the moment, with a measly one-seat majority, it is unlikely to last long. + + + +Iceland is not alone in its coalition-building woes. Across Europe politics is becoming more fragmented and governments harder to form. Smaller parties, among them populists and single-issue outfits, are popping up and stealing support from the traditional powers. In the early 1980s the average number of parties winning more than 1% of the vote at each election was seven. Now it is nine. Meanwhile the share of the electorate that the winner claims has fallen from 37% to 31%, on average (see chart). + +Party up + +In many ways, a greater diversity of parties is a good thing. It allows more voices to be heard, and can increase citizens’ engagement with politics. But it also has drawbacks. The most obvious is time-consuming coalition wrangling. Irish lawmakers took 63 days to strike a deal after an election last March. In October Spain’s Popular Party cobbled together a minority government following ten months of political deadlock and two elections. After a 2010 ballot Belgians went a record 589 days without a government. + +Such awkward coalition governments tend to be shorter-lived than those with fewer parties and clearer mandates. Since 1970 single-party majority governments in rich European countries have lasted around 1,100 days. Minority coalitions made it less than half that time. + +In addition, coalitions made up of widely disparate parties struggle to pass laws. Finland’s current government, made up of two centre-right parties and the True Finns, a populist, nationalist outfit, came to blows in 2015 over a proposed health-care reform. After more than a year of negotiations and the prime minister threatening to dissolve the parliament, a deal was finally struck in December 2016. Studies suggest that this fits a pattern: the more parties there are in a coalition or the farther apart they sit on the political spectrum, the fewer laws they will pass. + +Because coalition governments have more mouths to feed, they can be expensive. One paper by Kathleen Bawn and Frances Rosenbluth, both political scientists, looked at public-sector expenditure across 17 European countries from 1970 to 1998. It found that adding a party to a coalition increased spending by 0.5% of GDP. For countries with strong economies and low debt, such as the Netherlands, this may not be a problem; for countries like Greece and Italy it is. + +One reason for rising fragmentation is growing inequality, explains Simon Hix of the London School of Economics. Between the mid-1980s and 2008 the disposable income of Europe’s richest 10% grew almost three times faster than that of the poorest 10%, according to the OECD, a club of mostly rich countries. As wages became more dispersed, voters’ preferences grew more polarised, with the rich supporting the status quo and the poor opposing it. Polarisation among the public begets fragmentation in parliament. At the same time the values of urbanites increasingly diverged from those of rural folk. Such splintering creates distinct pockets of voters to which smaller parties can appeal. + +Another factor is plummeting party loyalty. In the 1960s roughly 10% of Britons were members of a political party. Today a mere 1% are. A similar pattern holds across Europe. Mainstream media organs once tended to support one of the two main political powers and cover only a handful of curated topics. Today politics can be more personal. An ardent green voter might read only environmental news, sharing it with like-minded souls on social media. + +Some electoral systems are designed to keep smaller parties out of power, thus discouraging fragmentation. But these mechanisms are less effective than they used to be. Greece awards a 50-seat bonus to the winning party. Yet Syriza, the ruling left-wing outfit, still failed to secure a parliamentary majority after the latest election in 2015. Even Britain, which has a first-past-the-post system, was forced into coalition government after the 2010 election. + +One strategy for coping with fragmentation is to form so-called “grand coalitions” of parties across the left-right divide. Such coalitions currently govern in Germany, Austria and the Netherlands. Yet this often reinforces the dynamic: voters become frustrated by the colourless centrism of such governments, and drift further to the extremes. On the bright side, this brings even more political diversity. As for the dark side of political fragmentation, Europe may simply have to live with it. + +This article appeared in the Europe section of the print edition under the headline “Going to bits” + + + + + +Charlemagne + +The cruel sea + +The Mediterranean will be at the heart of Malta’s EU presidency—for all the wrong reasons + +Jan 14th 2017 + + + +“ALL that concerns the Mediterranean is of the deepest interest to civilised man,” wrote Edward Forbes, a 19th-century naturalist. Europe’s great sea will loom large as Malta, the European Union’s smallest member, takes up the rotating presidency of its Council of Ministers for the first half of 2017. That is fitting, for the Mediterranean has defined the destiny of this speck south of Sicily. The Great Siege Road, which runs along the northern edge of Valletta, Malta’s handsome capital, recalls the island’s repulsion of Ottoman invaders in 1565, an act of defiance that resonated across Christian Europe. A covetous Napoleon said conquering the strategically located island was “worth any price”. Centuries later a bull-headed Maltese prime minister shoehorned a chapter on Mediterranean security into the Helsinki Accords, a cold-war compact between the West and the Soviet bloc. + +Yet Malta’s fellow Europeans have not always been so interested in the Mediterranean. The accession of Malta and Cyprus to the EU in 2004 marked the end of the club’s expansion in the region. An ill-fated “European Neighbourhood Policy” failed to draw the littoral states to the east and the south closer to the EU. In 2008 Nicolas Sarkozy, then France’s president, launched a 43-country “Union for the Mediterranean” to much fanfare but zero effect. Since then the menace of Russia and the plight of Ukraine have drawn European attention eastwards. To the south, the EU has merely watched helplessly as the promises of the 2011 Arab uprisings were swallowed by counter-revolution and civil war. + +Today the Mediterranean may be back, but not for happy reasons. If, in the words of David Abulafia, a historian, the sea was once “the most vigorous place of interaction between different societies on the face of the planet”, for Europe it now represents only danger and instability. Malta’s presidency plan draws attention to the Mediterranean’s “ongoing conflict, socioeconomic challenges, terrorism, radicalisation and human-rights violations”. Analysts warn of a “wall of poverty” to Europe’s south. + +Chief among the concerns, of course, is migration. This is nothing new for Malta; between 2002 and 2012 thousands of refugees fleeing war-torn African states like Somalia and Eritrea threatened to overwhelm the tiny island. Utterly unprepared for the arrivals, the Maltese shoved them into grim detention centres, which remain open today. Malta’s bid for solidarity from its EU partners went nowhere. Its relationship with Italy soured in rows over responsibility for migrants picked up at sea. + +How things have changed. Thanks, say some, to a mysterious deal between Italy and Malta not acknowledged by either side, few irregular migrants now disembark in Malta; the Central Mediterranean route runs almost exclusively between Libya and Italy. More importantly, a separate crisis in the Eastern Mediterranean jerked migration to the top of Europeans’ concerns. The refugee crisis of 2015-16, when over 1m migrants hopped from Turkey to Greece and thence towards Europe’s heart, so traumatised Europe’s leaders that they have turned to the Central Mediterranean route with renewed vigour. Here the numbers have edged rather than rocketed up: 181,000 reached Italy in 2016. The difference is that they now have Europe’s attention. + +Perhaps the trickiest task of Malta’s presidency will be an internal one: brokering agreement among the EU’s governments on how to share the burden of irregular migration. But Joseph Muscat, the prime minister, has bigger ideas. He wants the EU to strike deals with African countries similar to that agreed with Turkey in March 2016, which drastically slowed the flow of migrants to Greece. Details are unclear, but Mr Muscat mentions joint naval patrols of North African waters. Others have revived an old notion of offshore asylum-processing centres in Egypt and Tunisia. “I’m aware these are controversial ideas,” says Mr Muscat. “But there is no other option.” He will advance his arguments at an EU summit in Malta next month. + +The prime minister says most EU leaders agree with him. But the Turkey deal offers few lessons for Africa. Almost half of the migrants in Greece last year fled the civil war in Syria. But most of the migrants in the Central Mediterranean are seeking better wages, not fleeing war, which means their asylum bids are likely to fail. Failed asylum-seekers are devilishly difficult to deport, as countries like Germany have been learning. And where Turkey is well governed (if increasingly despotic), Libya is in chaos. This week Italy reopened its embassy in Tripoli and signed a migration and security agreement with one of Libya’s two governments. But such is the volatility in Libya, says Mark Micallef, a Maltese Libya-watcher, that there is no guarantee Italy will have any partner at all in a few months. + +The thick blue line + +The Mediterranean is not without hope. Against the odds Tunisia, just 300 miles from Malta, is consolidating its post-revolutionary democracy. The EU seems determined to buttress Libya’s notional government, if only to have a partner to help it stem the migrant flows. To Malta’s east, hopes are high that 2017 may finally bring an end to the decades-long division of Cyprus (reunification talks were being held as The Economist went to press). A Cypriot deal could improve the EU’s relations with Turkey, unlock oil and gas supplies in the eastern Mediterranean and smooth the burgeoning relationship between the EU and NATO. + +But the EU has cleaved the sea in two. “Club Med” may have struggled inside the euro, but EU membership has consolidated democracy in Portugal, Spain and Greece. Malta itself is economically thriving and a far more relaxed place than the hidebound country that joined the EU in 2004. Outside the union, to the south and east, the Mediterranean is a sea of troubles. Malta’s politicians have often warned that if the EU fails to export stability to its southern neighbourhood it will find itself importing instability instead. So far, they have been proved right. + +This article appeared in the Europe section of the print edition + + + + + +Britain + + + + + +Northern Ireland: Into the unknown + +European migrants and business: Labour pains + +Cricket and Brexit: Beyond the boundary + +Mental health: Out of the shadows + +University reform: An academic dispute + +Devolution to Wales: Making hungry where they satisfy + +Assisted suicide: A matter of life or death + +Bagehot: Staying airborne + + + + + +Into the unknown + +Northern Ireland is pitched into crisis by the resignation of Martin McGuinness + +The deputy first minister’s departure comes as the region faces simmering frustration with the political settlement, and a looming shock from Brexit + +Jan 14th 2017 | BELFAST + + + +HOARSE of voice and frail in demeanour, the Martin McGuinness who announced his resignation from Northern Ireland’s government on January 9th was a different figure to the strapping Irish Republican Army (IRA) commander that the public once knew. Mr McGuinness’s transformation over the past few decades, from a member of a terrorist organisation to the region’s second-most senior politician, exemplifies the change that Northern Ireland has undergone. Now his resignation from office—and, perhaps, permanent withdrawal from politics—has created a crisis in the region at a time when it already faces grave threats to its stability. + +The departure of Mr McGuinness, a member of Sinn Fein, was provoked by what he called “the most crude and crass bigotry” of the Democratic Unionist Party (DUP), with which Sinn Fein shares power. In one year as first minister the DUP’s leader, Arlene Foster, has proved to be a flinty head of government who, nationalists complain, shows little flexibility in her dealings with Mr McGuinness and others. + +The final straw came when it emerged that a green-energy initiative she organised as enterprise minister in 2012 would cost breathtaking sums of money. Businesses received large subsidies to keep wood-fired boilers going—even to heat empty sheds—in what has been dubbed the “cash for ash” or “burn to earn” affair. The scheme could eventually cost the region £490m ($600m). Mrs Foster initially said she could not be expected to scrutinise “every single jot and tittle” in her department. But later she admitted there had been “a catalogue of mistakes”. She has accepted that an investigation should go ahead, but maintains she did no wrong and thus need not stand aside. Facing a barrage of criticism, she declared: “There’s a lot of it personal…a lot of it, sadly, misogynistic as well.” + +Voters may soon get the chance to deliver their own verdict. Mr McGuinness’s resignation as deputy first minister has brought the operation of Belfast’s devolved administration to a shuddering halt, since its rules demand that it be jointly headed by a unionist and a republican. The British government is holding talks to patch things up between Sinn Fein and the DUP. If those efforts fail—as most believe they will—a new election is on the cards. + +Such a contest would be “brutal”, Mrs Foster has said. Both the DUP and Sinn Fein would face challenges from smaller opposition parties. But in Northern Ireland, where old voting habits die hard, the DUP and Sinn Fein would be favourites to emerge again as the main forces. The number of seats in the Assembly at Stormont is due to fall from 108 to 90 in a cost-saving exercise. Small parties are likely to lose out. + +Whatever the outcome of any election or inquiry, republicans are already insisting that they will not agree to a return to the politics of the past year, which they say exposed Mrs Foster’s opposition to the principle of “parity of esteem” in which the parties are supposed to hold each other. In recent years there have been signs of deepening disillusion with the Assembly in the republican strongholds of Belfast and south Armagh. Although Sinn Fein leaders, among them Mr McGuinness, have been willing to keep trying in the Assembly, many at the grassroots have concluded that Stormont is a waste of time. + +A key moment came in December when one of Mrs Foster’s ministers cut £50,000 in funding for teaching the Irish language, which republicans regard as a touchstone issue. A curt e-mail to teachers announced: “Because of efficiency savings, the department will not be providing the Liofa bursary scheme in 2017. Happy Christmas and Happy New Year.” On January 12th the move was reversed, but by then the damage had been done. + +As the government in London works to steady Northern Ireland’s political settlement with one hand, it is rocking it with the other. The vote last year to leave the European Union—in which the Northern Irish voted to remain—presents several problems. The Good Friday Agreement of 1998, which established Northern Ireland’s devolved government, was signed on the assumption of Britain and Ireland’s shared EU membership. The Supreme Court is currently considering whether Northern Ireland’s Assembly should therefore be consulted before the government can trigger Article 50, the legal route to Brexit. If the court rules in favour, elections in Northern Ireland could delay the process. + +Nor does anyone in London yet have a good answer to the question of what will happen to the open border with Ireland in the event that the United Kingdom opts out of the free movement of people to and from the EU (see article). A harder border, including checks on people and goods, could rattle both Northern Ireland’s economy and its political settlement. + +It would be a bad time to lose Mr McGuinness from politics. He will not say what explains his sudden poor health, nor whether he will fight the next election. During ten years as deputy first minister his authority and charisma have been valuable in assuring republicans that it is worth keeping Stormont going. And he has built bridges with unionists, too. Talking to the queen last year he asked about her health and she was overheard replying: “Well, I’m still alive anyway.” His friendly relationship with the queen, a second cousin of whom was murdered four decades ago by the IRA, shows how far things have come—and how much is at stake. + +This article appeared in the Britain section of the print edition under the headline “Into the unknown” + + + + + +Brexit’s labour pains + +British firms prepare for a future with fewer European migrant workers + +Some will hire more Britons or robots. Others may up sticks + +Jan 14th 2017 + + + +BY RIGHTS, the general manager of the Royal Lancaster shouldn’t have much to worry about. With sweeping views over Hyde Park and a glitzy history of hosting footballers and pop stars, the posh central London hotel has ticked along nicely since it opened in 1967. Now, however, Sally Beck has a headache: Brexit. And, specifically, how she will keep going if that means losing unfettered access to workers from the European Union. + +Like many hotels and restaurants, the Royal Lancaster depends on migrants. About half its staff, including a third of its managers, were born in continental Europe. These proportions are common in the capital, and even in the regions can be as high as 40%, says Ufi Ibrahim, the head of the British Hospitality Association, a lobby group. Overall, the hospitality industry—the country’s fourth-largest by income—employs 4.5m people, of whom at least 700,000 are from the EU. + +Other industries are similarly reliant on EU workers (see chart). Jack Semple of the Road Haulage Association, an industry group, estimates that Britain has 600,000 licensed lorry drivers, of whom at least 10% are from the EU, mostly the eastern part. In agriculture the proportion of EU workers rises in the summer, to pick fruit and vegetables. There are also large numbers working in health and social care. Overall the total of EU citizens in Britain more than trebled, from 0.9m in 1995 to 3.3m in 2015, following the accession of 13 new countries to the EU after 2004. + +For some industries it is thus the free movement of labour that is the most prized advantage of being in the EU—more even than membership of the single market. Yet Theresa May, the prime minister, has indicated that controlling immigration from Europe will be central to her approach to Brexit. And on January 10th Jeremy Corbyn, Labour’s leader, said he was no longer “wedded” to the free movement of EU workers. Even if those Europeans already employed in Britain are granted the right to stay after Brexit, as seems likely, the flow of new migrants could reduce to a trickle in just a couple of years. Bosses are therefore being compelled to rethink their employment practices. The options before them are not enticing, but they could change the way that Britain does business. + +The employers’ main problem is a tight labour market. Employment is at a record high. Most studies agree that, in general, EU migrants have not displaced many British workers, nor put much downward pressure on wages. Rather, Britain’s relatively fast-growing economy has created millions of jobs. Equally, argues Jonathan Wadsworth of the London School of Economics, immigrants’ need for housing, food and transport has created more opportunities. So it is idle to presume that there is an army of frustrated, unemployed British workers ready to pick up the spanners of departing Polish plumbers. + +Still, this does not mean that businesses cannot do more to recruit in Britain. Take road haulage. Hauliers already face a shortage of drivers. With the 13% fall in the value of the pound since the referendum, a good number of Polish drivers have not bothered to return to Britain after the Christmas break. In this sense, argues Mr Semple, Brexit has come early. So his organisation is trying to rebrand the industry to attract school-leavers. Driving a lorry was seen as dull, smelly and underpaid; now, apparently, it’s an IT-driven essential service. + +Another option is to widen Britons’ participation in the labour market. The Resolution Foundation, a think-tank, estimates that a further 2.6m people, including the elderly and disabled, could join the workforce by 2020. The question is how to tempt them in. Higher pay could help: the minimum wage is due to rise to £9 per hour by 2020. Yet businesses may struggle to foot these extra costs. From April any firm with an annual wage bill of more than £3m will face a new “apprenticeship levy”. Businesses are also grappling with a new requirement automatically to enroll employees in pension schemes. An idea floated by the immigration minister on January 11th, to charge businesses £1,000 a year for every skilled EU worker that they employ post-Brexit, got a cool reception and was hastily withdrawn. + +An alternative would be to invest in labour-saving technology. Some Brexiteers see this as a bonus of leaving the EU: deprived of cheap labour, companies would be forced to become more efficient, and Britain’s low rates of productivity would improve. Ms Beck, for example, says that Brexit is speeding up her plans to phase in automated minibars at the Royal Lancaster. The ordinary sort take many man-hours to check and restock, whereas automated ones have sensors that tell reception when a guest is raiding the brandy. The Agriculture and Horticulture Development Board, a quango helping farmers to modernise, is funding experiments in automated broccoli-harvesting. Brexit has given such tests an added urgency. + +Yet there are limits to how easily manpower can be replaced by machines. Broccoli is pretty robust, but picking soft fruit like raspberries will probably have to be done by hand for the foreseeable future. So farmers are hoping that, if free movement does come to an end, the government will reinstitute the Seasonal Agricultural Workers Scheme, abolished in 2013. Ministers have dropped hints that such visa schemes could be established in farming and other industries. At least, maybe. + +If they are not, and if recruiting Britons or robots to do the work turns out to be too difficult or expensive, firms have another option: to up sticks and move to another country with a good supply of labour. The hotel business, by its nature, can’t do this. But industries such as food manufacturing could. If Britain’s firms cannot import enough workers, the country may simply export their jobs. + +This article appeared in the Britain section of the print edition under the headline “Labour pains” + + + + + +Beyond the boundary + +Brexit’s unexpected consequence for cricket + +A legal loophole allowing foreign players to join English clubs may close + +Jan 14th 2017 + +Batting for another side + +IF LAST year’s Brexit vote was many things, it was assuredly not an endorsement of a surge in economic migration from South Africa. Yet in cricket, that is what has transpired. This winter six South African players have used a European Union law to join English county cricket teams, a case study of Brexit’s impact in unforeseen areas. + +In 2000 Maros Kolpak, a Slovakian handball player, was released from his German club because of a limit on non-EU players. (Slovakia had not yet joined the union.) Mr Kolpak complained and, in 2003, won a case at the European Court of Justice. This granted immunity from such quotas to anyone from a country with an EU association agreement that included non-discrimination clauses. Among these is South Africa. + +In sports with limits on foreign players, the Kolpak law provides a handy loophole. Only two foreigners per team are allowed in English rugby’s top flight, for instance, yet 72 Kolpak players appeared over the last rugby season. + +In County Championship cricket, which has a limit of one foreigner per team, there are far fewer Kolpaks—only 12 last season. But there has been an upswing since the vote to leave the EU. “Players are taking the opportunity because they think that Brexit may close it down,” says Tony Irish, chief executive of the South Africa Cricketers’ Association. Whereas rugby has numerous professional leagues in Europe, England has the only lucrative cricket competition. South African players have also been nudged to move by the long-term slide of the rand, as well as by racial quotas at home (the latest Kolpak migrants are all white). + +Players are able to sign multi-year contracts that will last beyond Brexit. Yet they may still have to leave after Britain departs the EU, says Borja García of Loughborough University. He foresees conflicts between players, clubs, governing bodies and the Home Office. It is a corridor of uncertainty. + +The debate about the merits of Kolpaks in cricket resembles that about migrant workers more generally. Some think that the influx of foreigners deprives young English players of opportunities. But there is also recognition that they raise standards. + +In South Africa, feelings are less ambiguous. Fury about the exodus is compounded by the clandestine nature of departures. Rilee Rossouw, a batsman in the national squad, informed the team by e-mail while misspelling the coach’s name. Kolpaks must renounce the right to play for their country, so South Africa faces touring England next summer shorn of several important players—and worried that others could use the trip to secure a Kolpak contract of their own. + +This article appeared in the Britain section of the print edition under the headline “Beyond the boundary” + + + + + +Britain’s mental health check-up + +Mental illness is at last getting the attention, if not the money, it needs + +The prime minister makes a big speech but signs a small cheque + +Jan 14th 2017 + + + +MENTAL health care has long been the poor relation of its physical counterpart. The stigma of mental illness remains heavy. One in six adults in England has been diagnosed with a common mental disorder such as depression or anxiety. Yet at least two-thirds of people diagnosed receive no treatment for their condition. In 2012 the Health and Social Care Act created a legal responsibility for the government to give the same priority to mental health as it gives to physical health. Now the prime minister, Theresa May, has added her voice. + +In a speech on January 9th Mrs May warned that mental health had been “dangerously disregarded”. She promised to transform attitudes to mental illness, including a special focus on children and young people. (Government figures show that three-quarters of mental-health problems start before the age of 18.) This will include teachers in every school being offered mental health first-aid training, and better support in the workplace. + +According to the Centre for Mental Health, a think-tank, the consequences of mental illness cost the British economy more than £100bn ($120bn) a year in health care and lost economic output from sickness or unemployment. But the system is structured badly, with physical and mental care run and funded separately. This means treatment is not integrated and money wasted. + +Funding is a problem, too. Though mental illness represents 28% of the national disease burden in Britain, it accounts for only 13% of spending by the National Health Service (NHS). In 2011-12, for the first time in a decade, funding for mental health fell, says the King’s Fund, another think-tank. Even though the NHS mandated that such funding should increase in 2015-16 alongside increases for acute care, about 40% of mental-health trusts continue to experience year-on-year cuts to their budgets. Since government money for mental illness is not ring-fenced, it is often used to plug gaps in funding for emergency hospital care or other areas. Mrs May spoke of the need for better accountability. But “investment in mental health has been difficult to maintain when pressures on acute hospital care are so great,” says Helen Gilburt of the King’s Fund. + +Those pressures have become even more evident in recent days. On January 7th the Red Cross claimed there was a “humanitarian crisis” in Britain’s hospitals. The NHS’s medical director for acute care denied this but admitted that staff were under “a level of pressure we haven’t seen before”. According to leaked documents seen by the BBC, nearly a quarter of patients waited longer than four hours in accident and emergency (A&E) rooms in the first week of this year. One in five patients admitted for further treatment endured a long wait on a trolley or in a hospital corridor—twice the rate normally seen. With not enough mental-health care provided in the community, recent research has found that the number of people with mental illness coming to A&E doubled between 2011-12 and 2015-16. + +The fact that the prime minister herself has chosen to highlight the issue marks an important step, says Graham Thornicroft of King’s College London. Talking about mental health used to be seen as a vote loser. Now, he says, not only are more celebrities unafraid to talk openly about their mental illness, but it appears to have entered the mainstream as a political issue. “We now need to see if this policy priority is backed up by substantial extra resources to make sure these aspirations become reality,” he adds. + +On that front, Mrs May is implementing a pledge made last year by her predecessor, David Cameron, to spend £1bn on adult mental health and £1.4bn on youth mental health during this parliament. That money is being spent on both acute mental health care, such as specialists at every A&E unit, and on community care. New rules limit how long a patient with acute mental illness should wait, just like the four-hour limits for physical maladies in A&E. But this week’s announcements added up to additional funding of only £15m for community care, and £67m for digital services like online therapy—small beer considering the scale of the problems and of the prime minister’s avowed ambitions. + +Demand is growing. The NHS found that the proportion of people with anxiety and depression receiving treatment increased from 24% in 2007 to 37% in 2014. This may show that people are feeling confident enough to seek help as the stigma of mental illness decreases, says Mr Thornicroft. But the NHS also found that the proportion of the population reporting self-harm trebled between 2000 and 2014, to 6%, including one in five 16- to 24-year-old women. With such a tide, money to match the great promises for mental health cannot come soon enough. + +This article appeared in the Britain section of the print edition under the headline “Out of the shadows” + + + + + +An academic dispute + +A plan to shake up British universities meets opposition in the House of Lords + +Critics fear the plans will mean an overmighty bureaucracy and lower academic standards + +Jan 14th 2017 + + + +WHEN it was announced in 2010 that university tuition fees were to treble, to a maximum of £9,000 ($14,000) a year, 50,000 students took to the streets in protest. Now, as a new shake-up of higher education gets under way, the opposition comes from the dons. Chris Patten, Oxford University’s chancellor, has described the government’s higher-education bill as being worthy of Thomas Cromwell for its centralising of power in the hands of the state, and of Sir Philip Green, a tycoon best known for his role in the collapse of a chain of department stores, for its embrace of entrepreneurialism. + +The bill, currently before the House of Lords, is vast in its scope. Jo Johnson, the universities minister, aims to improve teaching quality, streamline funding and tidy haphazard regulation. Much of the controversy arises from plans to make life easier for new higher-education institutions, which include colleges providing vocational education for everyone from lawyers to chefs. The bill would speed up their access to degree-awarding powers and government funding, and align their regulation with that of universities. + +That worries Lady Wolf, a professor of education at King’s College London, who says that looser rules could see poor-quality institutions gain government approval, undermining the value of a degree from a British university. These fears are not unfounded: when the tuition-fee loan available to students at private institutions was increased in 2012, student numbers grew rapidly despite concerns about the quality of education at some establishments. Others spy different threats to universities’ reputations. Rumours abound that the government hopes some top universities will score poorly on a new teaching assessment (the Teaching Excellence Framework, or TEF) so as to shock them into turning their attention away from research. + +The government argues that upstarts will develop innovative forms of education and push existing universities to do likewise. And there is a whiff of anticompetitive sentiment in some of the universities’ complaints. Mr Johnson has compared the current system, in which new institutions must be validated by existing ones, to Tesla needing the approval of Mercedes-Benz before it can launch a new car. + +A beefed-up regulator, the Office for Students (OFS), will be created to deal with institutions that don’t cut the mustard. Its powers will apply to existing universities, too. One Tory peer has complained that the OFS is “a centralised behemoth” in “a juggernaut of a bill”. It would have the power to search premises and revoke universities’ titles and their right to grant degrees. The heads of the OFS and a new research council to disburse funds would be appointed by the government. In theory they could act “in a fairly heavy-handed manner from day one,” says Andy Westwood, a higher-education expert at Manchester University. Critics, including some on the Tory benches, worry that future governments could exploit this power. + +An amendment passed on January 9th may make life tougher for new institutions. More changes are likely, including ones to declaw the OFS. Yet, although “there will be embarrassing headlines about U-turns,” the government will get most of what it wants, including the TEF, a new regulator and an easier path into higher education for new institutions, predicts Nick Hillman of the Higher Education Policy Institute, a think-tank. That would be no bad result. Reasonable concerns about an overmighty bureaucracy would have been allayed. Regulation of higher education would be more coherent. And universities would have more incentives to focus on their students. + +This article appeared in the Britain section of the print edition under the headline “An academic dispute” + + + + + +Making hungry where they satisfy + +Wales is the latest devolved government to assume big fiscal responsibility + +From 2019 it is likely to assume partial responsibility for income tax + +Jan 14th 2017 | CARDIFF + + + +BIT by bit, Britain is more closely resembling a federal state. Scotland is enjoying ever more economic autonomy: from April it will take full control over income tax, the latest in a series of new powers that includes the right to issue bonds. Across the North Channel, Northern Ireland will soon set its own rate of corporation tax, which it may slash in order to match the one offered south of the border. + +Where others have blazed a trail, Wales will shortly follow. From 2018 the Labour-led Welsh government will take full control of stamp duty (a property-transaction levy), which it is replacing with a near-identical “land-transaction tax”. And following a little-noticed announcement just before Christmas, it is expected that from 2019 the Welsh government will take partial control of setting and collecting income tax. Wales is likely to end up collecting a fifth of what it spends, up from next to nothing a few years ago, say Guto Ifan and Ed Poole of the Wales Governance Centre at Cardiff University. + +The Welsh can now look forward to fierce debates over such questions as whether the new income-tax code should start with a “W” for Wales or a “C” for Cymru. Yet autonomy has never set Welsh hearts beating as it does those of many Scots and Northern Irish. In the 2015 Conservative manifesto Welsh voters were promised a referendum on tax devolution, but this was subsequently dropped. Lord Kinnock, a former Labour leader who hails from Tredegar, reckons that the Welsh public would have rejected the tax proposal, given the chance. Many suspect that voters would have seen it as a wheeze to jack up income tax. So the governments in Cardiff and Westminster have agreed to go ahead without a referendum. + +Most Welsh politicians think tax devolution will be a boon. Wales has long been poorer than Scotland, Northern Ireland and all nine English regions, with output per person less than half that of London. Some parts are prospering—leave Cardiff’s railway station and you are soon confronted with evidence of a recent building boom. Across Wales as a whole, however, in the past decade economic growth has been far slower than the British average. The argument runs that by allowing local politicians to spend the taxes they raise, they will work harder to promote economic development. Without those powers there has been “no real incentive” for the Welsh government “to bring forward the kinds of innovative ideas Wales needs,” says Rhun ap Iorwerth, a Welsh Assembly member who belongs to Plaid Cymru, a nationalist opposition party. + +But any hopes that Wales will strike out on its own may be disappointed. Welsh Conservatives have floated the idea of cutting income tax to lure English entrepreneurs across the border. But Labour and Plaid both seem inclined to keep rates unchanged. Cutting taxes is not a very attractive option: even if it delivered an economic boom, the Welsh government would miss out on many of the gains because levies such as VAT and corporation tax will continue to flow to the Treasury in London. Raising taxes, meanwhile, could prompt people to up sticks and move across the border. (Scotland’s leftish Nationalist government has shied away from hitting high earners for this reason.) Add in the extra administration involved in setting a different tax rate, and it is small wonder that few politicians talk seriously about shaking things up. + +Wales must nonetheless deal with the risks associated with tax devolution. In recent years income-tax receipts have grown more slowly there than in the rest of Britain. The Welsh property market is less bubbly than England’s, pressing down on the stamp-duty take. In an era of tight budgets, tax devolution could see Welsh public services losing out on funding relative to those elsewhere. + +Despite these pitfalls, Richard Wyn Jones of Cardiff University thinks that further financial devolution to Wales is inevitable. Scotland sets a precedent: the structure of Welsh tax devolution, indeed, was based on recommendations originally made for Holyrood. And unless the Welsh government is given greater tax powers, the British government’s talk about giving it fiscal responsibility will sound hollow. Once federalisation has started, it is difficult to stop. + +This article appeared in the Britain section of the print edition under the headline “Making hungry where they satisfy” + + + + + +A matter of life or death + +Police in Britain increasingly turn a blind eye to assisted suicide + +As the number of reported cases increases, that of arrests is falling + +Jan 14th 2017 + +Noel Conway, fighting for dignity + +THE “right to die” has long preoccupied politicians and judges. In 2014 the Supreme Court rejected a challenge by the widow of Tony Nicklinson, who had suffered from a condition known as locked-in syndrome and had wanted to end his life with the help of a physician. The following year MPs voted down a bill to allow doctor-assisted dying for the terminally ill. On January 6th the argument was rekindled when Noel Conway, a 67-year-old with motor neurone disease, challenged the law on suicide in the High Court. + +The present “outdated, unpopular” law serves to “prevent people like Noel from dying in a time, manner and place of their choosing,” says Thomas Davies of Dignity in Dying, a campaign group that has helped Mr Conway with his case. The law in question is the 1961 Suicide Act, which decrees that any action that helps another person to end his life is illegal, including arranging travel to assisted-dying clinics in more liberal jurisdictions (the best-known is Dignitas, in Switzerland, where 47 Britons ended their life in 2016). In asking the court to review the act, Mr Conway reflects the public mood: seven in ten people polled by this newspaper in June 2015 said they supported the right for the terminally ill to end their life when they chose. + +Although aiding a suicide remains illegal, updated guidance from the Crown Prosecution Service (CPS), which decides when it is in the public interest to proceed with charges, has narrowed the circumstances in which a prosecution will go ahead. Its guidelines, issued in 2010 and updated in 2014, state that a prosecution is less likely to be in the public interest if, for example, “the victim had reached a voluntary, clear, settled and informed decision” and the suspect’s actions “were of only minor encouragement or assistance”. + +To gauge the impact of these rules, The Economist asked all police forces and the CPS for the number of recorded offences of aiding and abetting suicide they held from the start of 2010 to the end of September 2016. We also asked how many people had been arrested and charged. The results suggest that institutional attitudes, as well as public ones, are changing. + +The data, which cover England, Wales and Northern Ireland (Scotland lacks a statutory offence of assisting suicide; individuals can be prosecuted under other crimes, such as murder), show a small but rising number of people coming to the authorities’ attention for trying to help friends or relatives to end their lives. In all, 83 separate offences were recorded across 43 police forces (six did not reply) during the period. From single digits between 2010 and 2013, the number of offences rose to 17 in 2014 and 23 in 2015. In the first nine months of last year 12 offences were recorded. + +Even as the number of offences coming to their attention has increased, the police have laid fewer charges. Seventeen arrests were made in 2010, and just 13 in 2015, though the number of recorded offences nearly trebled. There were only four arrests in the first nine months of 2016. During the period of nearly seven years, four people were charged with crimes; none has been since 2014. + +This tallies with figures published by the CPS. Four-fifths of the cases referred to it by the police between April 2009 and April 2016 were withdrawn or not taken on, suggesting that only rarely is a prosecution deemed to be in the public interest. + +Since January 2010 more than 200 Britons have died at Dignitas, says Mr Davies of Dignity in Dying. The group says it has evidence suggesting that hundreds more terminally ill Britons kill themselves each year at home; the fact that only 83 offences have been recorded by the police shows that the law on assisted dying is not being fully enforced, Mr Davies believes. “If police and prosecutors feel the law is ethically and practically near-impossible to implement then MPs should sit up, listen and change it,” he says. + +Before that, the matter will fall to the courts. After a fruitless campaign to be allowed to end his life with the help of a doctor, Mr Nicklinson died in 2012 after refusing food. Now, in considering Mr Conway’s case, judges must again decide whether to grant a terminally ill man the right to end his suffering. + +This article appeared in the Britain section of the print edition under the headline “A matter of life or death” + + + + + +Bagehot + +Philip Hammond discusses Britain’s economic future + +The chancellor is convinced that its liberal model can survive Brexit + +Jan 14th 2017 + + + +TO FLY in one of the Royal Air Force planes that ferry ministers about the world is to experience a corner of old, imperial Britain. Under a framed black-and-white picture of Balmoral Castle, uniformed pursers serve afternoon tea. A neat pile of tweed blankets sits in a basket, the seats and carpet are a faded royal blue and the wooden trim bears the queen’s cipher (“EIIR”) in swirly letters. A photo of the plane somewhere in the Middle East illustrates the safety leaflets. Like the inside of Downing Street, it has the grand-shabby air of a posh hotel that has seen better days. The jet shudders and creaks through the air: Downton Abbey with jet engines attached. + +Such were Bagehot’s impressions on January 9th when he accompanied Philip Hammond, the chancellor of the exchequer, back from a visit to Dublin. Another was the plane’s symbolism of Britain’s reinvention over the past four decades; its shaping of the remnants of empire into a new economic role. Remnants like its merchant banks and insurance houses, universities, language, vast soft power and trusted legal system, which it successfully parlayed into specialisations in services and high-end manufacturing. From Margaret Thatcher onwards, governments of left and right strived for the right conditions: an open and flexible labour market, low inflation, a liberal regulatory regime, modest taxes and tariffs. Britain’s prosperity was built on imperial traces, memories and networks that live on, and span the globe. + +Of that Mr Hammond has more experience than most. Before entering politics he exported medical equipment and consulting services to Asia, Latin America and Africa. He has been foreign secretary. As chancellor he is travelling the world proclaiming that Britain’s liberal business model can survive Brexit. Visiting Kuwait, Qatar and the United Arab Emirates recently, he says he found investors still enticed by its legal, financial, business and professional services, as well as plain familiarity: “They know the UK, they’ve got homes here, they feel comfortable.” + +Brexit, he says, demands two main things from policymakers. First: limit the damage. In a rebuke to his more gung-ho cabinet colleagues he warns: “If our businesses are cut off from those [European] supply chains, it isn’t necessarily the case that tomorrow they’ll stop producing axle parts and start making, I don’t know, high-end suitcases for the Korean market.” Building new markets is slow, hard work. “You don’t just wake up one morning and say: ‘I think I’ll take the Chinese market today.’ You build. You build your product’s presence, your business presence, your networks, your distribution capability, confidence in your brand. It all takes time.” Hence the urgent need for clarity about Brexit. He compares British firms to patients in hospital: whether the news is good or bad, they want to know it. Hence, too, his fiscal policy. In November he ditched a plan to reach a surplus by 2020, giving himself room to cushion any shocks (though not this year, he says, if GDP growth hits the projected 1.4%). + +Fasten your seat belts + +So far, so “Spreadsheet Phil” (the chancellor has a reputation for dour competence). But he becomes exuberant on turning to the government’s second Brexit-related job: building new sources of growth. He says Britain is better than Germany at moving fast to grab new opportunities—“We accept that things can change quickly”—citing London’s success since 2002 at luring international firms put off New York by the Sarbanes-Oxley Act, which tightened America’s corporate governance rules. What would a similar British coup look like now? Here he waxes optimistic about biotechnology, synthetic technology (creating new industrial materials) and “fintech” (where Britain’s deep capital markets give it an edge even over Silicon Valley, he argues). He is sceptical about the claim by Andy Haldane, the Bank of England’s chief economist, that 15m British jobs could be lost to robots. The costs of capital may rise, making human labour more competitive; firms and individuals adapt and find new work (“Didn’t we have this discussion…20 years ago about shorthand typists?”). In any case, “If anywhere in Europe is going to get [a Google-type technology giant], culturally the UK is in the best position.” + +Your columnist was struck by the contrast with Theresa May. Ask the prime minister to name the country’s economic strengths and she will probably mention the same things as her chancellor. But the two differ drastically on the costs they attach to them. For Mrs May, the dislocation caused by a freewheeling labour market, the excesses associated with deregulation, the rift between services-rich boomtowns and forgotten, post-industrial regions put their very legitimacy and sustainability in question. In a speech on January 8th she argued that the Brexit vote was about much more than EU membership: it was a rejection of “laissez-faire liberalism”. Mr Hammond recognises no such crux: “Where’s the evidence for the assertion that the Brexit vote was saying something about this or that or the other? It was saying something about Britain’s membership of the European Union.” For him, those costs can be fixed with the right policies, like better skills provision and the economic integration of two London-sized agglomerations: the English north and the Midlands. + +This gap is about more than the differences between the job of chancellor and that of prime minister. It is part of a grand debate that Britain is having, without noticing, on the basic transaction at the heart of its post-imperial business model: more disruption (industrial, cultural, social) in return for more prosperity. Current arguments over immigration, integration, student visas, industrial policy, high pay (the Labour Party is flirting with the idea of a maximum wage) and, of course, Brexit are all ways of probing this. Perhaps it would help to acknowledge this fact more openly. Because one day, in spring 2019, Britain is due formally to leave the EU. It will have Brexited. The question, about which Mr Hammond has clearly thought more than most, will be: what now? + +This article appeared in the Britain section of the print edition under the headline “Staying airborne” + + + + + +International + + + + + +The Guantánamo conundrum: A legal quagmire that still stinks + +A military trial: Through a glass, silently + + + + + +A legal quagmire + +Guantánamo remains a stain on America’s reputation + +Barack Obama wanted to close the offshore prison; Donald Trump says he will fill it up + +Jan 14th 2017 | GUANTÁNAMO + + + +IT IS always twilight in the circular passage where the guards keep watch around the clock through wide windows, eyeing the “forever detainees” in Camp Six at America’s naval base at Guantánamo. These are the men who are deemed too dangerous ever to be set free but whose jihadist activities were apparently too shadowy to provide enough evidence to secure convictions in court. The passage is murkily lit so that the guards—and the rare visiting journalist—can peer through one-way glass unobserved by the detainees. + +The official mantra is that the detainees’ treatment must be “safe, humane, legal, transparent”. But to anyone who believes in innocence until proof of guilt, visiting is a discomfiting experience. These men, however heinous their alleged crimes, have been detained without trial, most of them for more than a decade. They have had little prospect of freedom, or even of facing trial in America. Though the Caribbean laps against the shore nearby, none of them ever sees it. + +In each walled-off section, ten prisoners or so mill around in a communal area with steel tables bolted down. Some lounge in chairs or on a sofa. A few read. Five times a day they line up and prostrate themselves in prayer, with arrows painted on the floor helpfully pointing towards Mecca. Air-conditioning keeps the place cool, even cold, inside; some of the detainees prefer to loaf outside, where noon-day temperatures nudge 38°C. Occasionally a prisoner gesticulates towards the window. A guard puts on a plastic visor against what the authorities call “splashing”, meaning spitting at a jailer or, in past years when prisoners were sometimes “non-compliant”, throwing excrement or vomit. The guard opens a door, exposing a narrow chain-linked limbo between the guards’ and prisoners’ sections, and asks in sign language what is wanted. Usually it is a request, readily met, for toilet paper or soap. + +When your correspondent visited, one prisoner, somehow sensing the journalists peering through the one-way window, had propped up a painting of a white question-mark on a grey background, with a padlock at the bottom instead of a dot. The most plausible interpretation was that it expressed uncertainty about the inmates’ future after January 20th, when Donald Trump assumes the American presidency. + +By January 11th 55 prisoners remained in Guantánamo, all but one said to be “highly compliant”. Yemen had the most citizens still detained (23), followed by Pakistan and Saudi Arabia (six each) and Afghanistan (five). Apart from 22 in Camp Six, another 15 (including the five accused of orchestrating the attack on the World Trade Centre on September 11th 2001) are held in Camp Seven, the most hidden and highly guarded block. The remaining 18 have been cleared for transfer to third countries. According to the New York Times on December 19th, the governments of Italy, Oman, Saudi Arabia and the United Arab Emirates were willing immediately to accept 17 or 18 of those cleared to go; four had gone by January 11th. So 41 or 42 may be left in Guantánamo by the time Mr Trump moves into the White House. + +Lock up some more + +Whereas Barack Obama had promised to empty the place and close it down, during the election campaign Mr Trump said the opposite. “We’re gonna load it up with some bad dudes, believe me, we’re gonna load it up,” he said in February. If he keeps his word, the remaining prisoners are likely to stay there, perhaps for life. Conceivably they could be joined by Islamic State fighters captured in Iraq and Syria. The camp commanders say they can close the prison forthwith if so instructed, or conversely make room for another 70-100 detainees. A cell block being renovated could soon cater for 200 more. At its zenith Guantánamo held around 684; up to 780 have passed through it. At least seven are known to have committed suicide. + +When the first al-Qaeda suspects were flown to the naval base in 2002, members of George Bush’s administration advanced several reasons for holding them there. If they were jihadists determined to wage war on Americans and other Westerners, they should be held for the duration of hostilities to prevent them from returning to the battlefield, like prisoners-of-war in any conflict. While incarcerated, they might provide useful intelligence, helping to prevent further terrorist atrocities. + +However, as “unlawful enemy combatants” who followed none of the laws of war, Mr Bush’s lawyers reasoned, they were not entitled to all the protections of the Geneva Conventions, such as the rights not to be interrogated, and to correspond with families. And since they were being held outside America, they fell outside the jurisdiction of American courts. Moreover, so the argument ran, since al-Qaeda views its war against the West as eternal, it may never formally end, so its captured adherents could be held indefinitely. + +Starting with Camp X-Ray, where the spectacle of shackled and blindfolded detainees in cages appalled people worldwide, including many who had sympathised with America after September 11th, the camps rapidly filled up. Nearly all the prisoners had been handed to the Americans by allies in Pakistan, Afghanistan and elsewhere, often with the lure of bounties. Many turned out to be marginal figures who had tenuous, if any, links to al-Qaeda. + +For the first few years the camps were ill-run and the inmates mistreated. According to Clive Stafford Smith, a British lawyer who has defended a clutch of prisoners from the beginning, for four years all were held incommunicado; no one even knew their names. After 2006 a new batch of supposedly high-value prisoners, including the alleged planners of September 11th, arrived, having been tortured by CIA agents, among others, in secret “black sites”, in contempt of international law and America’s own values of justice. + +As unease mounted at home and especially abroad, Mr Bush sought to create the semblance of a judicial system by getting Congress to pass a law creating “military commissions” where some of the prisoners could be tried. The Supreme Court began to nudge the camps towards at least partially deferring to American law, declaring that detainees had the right to petition for habeas corpus to challenge the reasons for their confinement. Later Mr Bush himself began to call for the camps’ closure. By the time Mr Obama took office, saying that he would close them within a year, the tally of detainees had fallen to around 242. Since March 2008 no more have arrived. + + + +Virtually all human-rights lawyers consider the commissions, in the recent words of Human Rights Watch, a New York-based monitor, to have been “an absolute disaster”. Defence lawyers describe them as a “legal black hole”. A senior man in the International Committee of the Red Cross describes Guantánamo as “a Kafkaesque legal conundrum”. + +The accused have much weaker rights than in a federal court. Instead of a randomly selected jury of civilians, the “convening authority” in the person of the presiding military judge chooses fellow officers. “Many of the protections in normal courts are stripped away,” says David Nevin, defence lawyer for Khalid Shaikh Mohammad, the alleged chief planner of the September 11th attacks, known widely as KSM. “There is no requirement for the accused to be brought speedily to trial [as under the constitution’s sixth amendment]. He was taken into custody in 2003 and held incommunicado for three-and-a-half years. He had no lawyer until 2008. The prosecution did not start until 2012. There is no right to exclude coerced statements; no exclusion of evidence derived from torture; no ban on hearsay evidence.” The list of shortcomings could go on. + +The trial proper has yet to begin. The irony, as another lawyer puts it, is that “if KSM had been tried before a grand jury in New York the trial would have been over years ago”—and would probably have led to a conviction. He was recorded on Al Jazeera, a Qatar-owned television channel, boasting of masterminding the September 11th attack. His lawyers’ best approach is probably to stress the CIA’s admission that it had tortured him for several years. + +A further indictment of the commissions is that, ten years after they were set up, they have achieved only eight convictions, of which four have been wholly or partly overturned. Only ten detainees in Guantánamo are currently facing trial or awaiting sentencing. The rest are simply detained without trial. + +But the prosecutor in the two biggest cases, Brigadier-General Mark Martins, a former Rhodes Scholar with a stellar academic record at Oxford and Harvard, says you cannot compare the commissions with a federal court. The commission oversees a “sharply adversarial process” where, since the reforming act of 2009, “much greater weight is given to the defence.” The accused, he insists, are given a fair trial. Court-martials, he avers, have a higher acquittal rate than civilian courts. The accused in Guantánamo, he claims, have sturdier legal defences than those at Nuremberg after the second world war. + +Looking for the key + +Perhaps the biggest puzzle is why Mr Obama has failed to fulfil his promise to close the place down. Plainly he found it much harder than he had expected. At first, according to some in his inner circle, he was persuaded to keep it open temporarily as a bargaining chip with Congress in his quest to enact contentious domestic reforms, for instance in health care. Soon after he came to office, he did manage to improve the commissions, getting Congress to pass an act that gave detainees a wider scope for defence and brought in review boards that allowed prisoners every six months to argue for release. He also appointed “special envoys for Guantánamo closure”. These speeded up transfers of detainees to third countries, more than 40 of which (including such strange bedfellows as Albania, Cape Verde, Estonia, Kazakhstan, Palau and Uruguay) have agreed to receive some of those set free. Recently Oman, Saudi Arabia and the United Arab Emirates have been the most willing. + +But as relations with Congress worsened and he lost control to the Republicans after 2010, Mr Obama found himself blocked on virtually every front. Even though a number of leading Republicans, such as Senator John McCain, had called for Guantánamo to be closed, it became an article of faith for most of Mr Obama’s opponents and many Democrats that it should stay open. Hillary Clinton, among others, began to wobble, though she had previously declared that Guantánamo recruited more terrorists than it kept off the battlefield and had suggested holding trials, perhaps including military commissions, in mainland America. + +Mr Obama, too, had at first hoped to bring the alleged planners of September 11th to trial before a federal court in New York. But when a wave of emotion was stirred up by the president’s foes against the idea that the mass-murderers could ever set foot on American soil, he quailed. And when he campaigned for re-election in 2012, some of his most influential advisers were adamant that if detainees were brought to the mainland and tried in federal courts or even before the new military commissions, he would lose his job. + +The Department of Justice and the Pentagon encouraged Congress to be obstructive, citing, among other things, an analysis of the freed detainees. A report from the director of National Intelligence concluded that of 647 former detainees under scrutiny, 18% have definitely reverted to jihad and 11% are suspected of doing so. But of those released since Mr Obama came to office, the recidivism rate has dropped sharply; only nine, according to the National Security Council, have definitely “re-engaged” with jihad. Yet, says Brigadier-General Martins, “By letting them go you could be sentencing someone else to death.” Among Mr Trump’s picks, General James Mattis as secretary for defence and General John Kelly at homeland security are said strongly to support keeping Guantánamo open. Mr Trump, by the by, has said torture is sometimes necessary. + +Missing the early boat + +Yet Mr Obama repeatedly declared his intention to close the place—and admitted last year that he should have done so on his first day. “He had absolute executive authority to do so,” says Mr Nevin. So why didn’t he? “He could’ve done it before the politics metastasised,” says Richard Kammen, who is defending another of the prisoners facing the death penalty (see article). “He made great speeches but not much else,” he adds, lamenting Mr Obama’s inability to persuade the agencies that have been supposedly under his control to do his bidding. “If Bush had been president and had wanted to close Guantánamo, it would have been closed, because he knew how to deal with the agencies,” surmises Mr Kammen. + +Whatever the reason, not closing Guantánamo is one of Mr Obama’s most painful failures, putting an enduring stain on America’s human-rights record. Mr Obama sounds ashamed as well as frustrated. Asked in 2015 what he wished he had done differently as president, he cited Guantánamo. “It’s not who we are.” + +This article appeared in the International section of the print edition under the headline “A legal quagmire that still stinks” + + + + + +Through a glass, silently + +In Guantánamo, an alleged al-Qaeda killer awaits trial + +Abd al-Rahim al-Nashiri was tortured by the CIA in secret “black sites” + +Jan 14th 2017 | GUANTÁNAMO MILITARY COMMISSION + + + +THE accused, Abd al-Rahim al-Nashiri, a diminutive, clean-shaven Saudi aged 52, looks innocuous as he shuffles into court between two burly guards, a blue-gloved hand on each of his shoulders. A young paralegal in his defence team embraces him. If found guilty by a jury of handpicked uniformed officers, he faces the death penalty. + +Mr Nashiri is one of Guantánamo’s 15 most “high-value” prisoners, kept in a special jail known as Camp Seven whose location has never been made public. He is charged with masterminding an attack by two suicide-bombers who steered an explosives-laden skiff into the side of an American naval destroyer, the USS Cole, in Aden harbour in 2000, killing 17 American sailors and wounding many more. + +Nowadays he is what officials at Guantánamo call “highly compliant”. He politely declines an offer made by the judge, an air-force colonel, of prayer-breaks. He sits patiently, often looking bored, sometimes quizzical, occasionally adjusting the headphones through which he listens to simultaneous translation into Arabic, as arguments are batted laboriously back and forth between prosecution and defence. What evidence may be admissible when the trial proper begins? How much secret intelligence may be divulged? What medical details may be aired? Who may be called as witnesses, seeing that most of the key ones were interviewed about 15 years ago in Yemen by the FBI, under a brutal government long since overthrown? + +Was he truly the mastermind or just a foot soldier within al-Qaeda? Above all, may the fact that he was tortured, admitted by the CIA, be used in his defence? What about the videos of his interrogation, which may have been destroyed? “You need to hear from the torturers themselves,” says Richard Kammen, Mr Nashiri’s chief lawyer, who for decades has defended, with notable success, Americans facing the death penalty. + +The court feels not at all martial, more like a conference room in a dreary hotel. The six rows of desks allocated to the accused are furnished with computer screens; the five defendants in the September 11th case are being charged together in the same room. The only clue that this is no ordinary forum are the shackles, unused in Mr Nashiri’s case, screwed into the grey carpet beside each of the defendants’ seats. Behind a window is a soundproofed gallery for 50-odd visitors, including family members of the victims of the accused. There are curtains they may draw, should they wish to weep. The audio transmission has a 40-second lag so that the judge can switch off any mention of classified information. Mr Nashiri’s lawyers repeatedly ask for information to be aired that the prosecution claims would jeopardise national security. + +It is more than a decade since Mr Nashiri, having been nabbed in Dubai in 2002, was waterboarded in one of the CIA’s “black sites” (secret interrogation cells in places such as Poland or Thailand). He was probably first held in Afghanistan. A recent memoir by a CIA interrogator (“Enhanced Interrogation” by James E. Mitchell) describes how Mr Nashiri kept slipping off the contraption he was tied to, because he was too slight for the straps holding him down when he was immersed in water. + +It is public knowledge that, over the course of several years, he was subjected to a string of other mistreatments by the CIA, including force-feeding through the rectum, sleep deprivation, extremes of temperature, screeching noises and being jammed for long periods in stress positions. All this is admitted in a report of the American Senate’s Select Committee on Intelligence controversially released in 2014, widely known as “the torture report”. Mr Kammen says that Sondra Crosby, an American psychiatric expert on the after-effects of torture, reckons he is “one of the most damaged victims of torture” she has ever examined. + +It was at least four years after his capture that Mr Nashiri first saw a lawyer and nine before pre-trial hearings began. It may be another two before his trial proper begins. In a federal court in the United States, his long wait behind bars and his acknowledged torture would probably mean the case being thrown out. But not in the legal penumbra of Guantánamo. + +This article appeared in the International section of the print edition under the headline “Through a glass, silently” + + + + + +Special report: Lifelong education + + + + + +Learning and earning: Lifelong learning is becoming an economic imperative + +Cognition switch: What employers can do to encourage their workers to retrain + +Old dogs, new tricks: How older employees perform in the workplace + +The return of the MOOC: Established education providers v new contenders + +Pathway dependency: Turning qualifications into jobs + +The elephant in the truck: Retraining low-skilled workers + + + + + +Learning and earning + +Lifelong learning is becoming an economic imperative + +Technological change demands stronger and more continuous connections between education and employment, says Andrew Palmer. The faint outlines of such a system are now emerging + +Jan 14th 2017 + + + +THE RECEPTION AREA contains a segment of a decommissioned Underground train carriage, where visitors wait to be collected. The surfaces are wood and glass. In each room the talk is of code, web development and data science. At first sight the London office of General Assembly looks like that of any other tech startup. But there is one big difference: whereas most firms use technology to sell their products online, General Assembly uses the physical world to teach technology. Its office is also a campus. The rooms are full of students learning and practising code, many of whom have quit their jobs to come here. Full-time participants have paid between £8,000 and £10,000 ($9,900-12,400) to learn the lingua franca of the digital economy in a programme lasting 10-12 weeks. + +General Assembly, with campuses in 20 cities from Seattle to Sydney, has an alumni body of around 35,000 graduates. Most of those who enroll for full-time courses expect them to lead to new careers. The company’s curriculum is based on conversations with employers about the skills they are critically short of. It holds “meet and hire” events where firms can see the coding work done by its students. Career advisers help students with their presentation and interview techniques. General Assembly measures its success by how many of its graduates get a paid, permanent, full-time job in their desired field. Of its 2014-15 crop, three-quarters used the firm’s career-advisory services, and 99% of those were hired within 180 days of beginning their job hunt. + +The company’s founder, Jake Schwartz, was inspired to start the company by two personal experiences: a spell of drifting after he realised that his degree from Yale conferred no practical skills, and a two-year MBA that he felt had cost too much time and money: “I wanted to change the return-on-investment equation in education by bringing down the costs and providing the skills that employers were desperate for.” + +In rich countries the link between learning and earning has tended to follow a simple rule: get as much formal education as you can early in life, and reap corresponding rewards for the rest of your career. The literature suggests that each additional year of schooling is associated with an 8-13% rise in hourly earnings. In the period since the financial crisis, the costs of leaving school early have become even clearer. In America, the unemployment rate steadily drops as you go up the educational ladder. + +Many believe that technological change only strengthens the case for more formal education. Jobs made up of routine tasks that are easy to automate or offshore have been in decline. The usual flipside of that observation is that the number of jobs requiring greater cognitive skill has been growing. The labour market is forking, and those with college degrees will naturally shift into the lane that leads to higher-paying jobs. + +The reality seems to be more complex. The returns to education, even for the high-skilled, have become less clear-cut. Between 1982 and 2001 the average wages earned by American workers with a bachelor’s degree rose by 31%, whereas those of high-school graduates did not budge, according to the New York Federal Reserve. But in the following 12 years the wages of college graduates fell by more than those of their less educated peers. Meanwhile, tuition costs at universities have been rising. + +A question of degree, and then some + +The decision to go to college still makes sense for most, but the idea of a mechanistic relationship between education and wages has taken a knock. A recent survey conducted by the Pew Research Centre showed that a mere 16% of Americans think that a four-year degree course prepares students very well for a high-paying job in the modern economy. Some of this may be a cyclical effect of the financial crisis and its economic aftermath. Some of it may be simply a matter of supply: as more people hold college degrees, the associated premium goes down. But technology also seems to be complicating the picture. + + + +A paper published in 2013 by a trio of Canadian economists, Paul Beaudry, David Green and Benjamin Sand, questions optimistic assumptions about demand for non-routine work. In the two decades prior to 2000, demand for cognitive skills soared as the basic infrastructure of the IT age (computers, servers, base stations and fibre-optic cables) was being built; now that the technology is largely in place, this demand has waned, say the authors. They show that since 2000 the share of employment accounted for by high-skilled jobs in America has been falling. As a result, college-educated workers are taking on jobs that are cognitively less demanding (see chart), displacing less educated workers. + +This analysis buttresses the view that technology is already playing havoc with employment. Skilled and unskilled workers alike are in trouble. Those with a better education are still more likely to find work, but there is now a fair chance that it will be unenjoyable. Those who never made it to college face being squeezed out of the workforce altogether. This is the argument of the techno-pessimists, exemplified by the projections of Carl-Benedikt Frey and Michael Osborne, of Oxford University, who in 2013 famously calculated that 47% of existing jobs in America are susceptible to automation. + +There is another, less apocalyptic possibility. James Bessen, an economist at Boston University, has worked out the effects of automation on specific professions and finds that since 1980 employment has been growing faster in occupations that use computers than in those that do not. That is because automation tends to affect tasks within an occupation rather than wiping out jobs in their entirety. Partial automation can actually increase demand by reducing costs: despite the introduction of the barcode scanner in supermarkets and the ATM in banks, for example, the number of cashiers and bank tellers has grown. + +But even though technology may not destroy jobs in aggregate, it does force change upon many people. Between 1996 and 2015 the share of the American workforce employed in routine office jobs declined from 25.5% to 21%, eliminating 7m jobs. According to research by Pascual Restrepo of the Massachusetts Institute of Technology (MIT), the 2007-08 financial crisis made things worse: between 2007 and 2015 job openings for unskilled routine work suffered a 55% decline relative to other jobs. + + + +In many occupations it has become essential to acquire new skills as established ones become obsolete. Burning Glass Technologies, a Boston-based startup that analyses labour markets by scraping data from online job advertisements, finds that the biggest demand is for new combinations of skills—what its boss, Matt Sigelman, calls “hybrid jobs”. Coding skills, for example, are now being required well beyond the technology sector. In America, 49% of postings in the quartile of occupations with the highest pay are for jobs that frequently ask for coding skills (see chart). The composition of new jobs is also changing rapidly. Over the past five years, demand for data analysts has grown by 372%; within that segment, demand for data-visualisation skills has shot up by 2,574%. + +A college degree at the start of a working career does not answer the need for the continuous acquisition of new skills, especially as career spans are lengthening. Vocational training is good at giving people job-specific skills, but those, too, will need to be updated over and over again during a career lasting decades. “Germany is often lauded for its apprenticeships, but the economy has failed to adapt to the knowledge economy,” says Andreas Schleicher, head of the education directorate of the OECD, a club of mostly rich countries. “Vocational training has a role, but training someone early to do one thing all their lives is not the answer to lifelong learning.” + +Such specific expertise is meant to be acquired on the job, but employers seem to have become less willing to invest in training their workforces. In its 2015 Economic Report of the President, America’s Council of Economic Advisers found that the share of the country’s workers receiving either paid-for or on-the-job training had fallen steadily between 1996 and 2008. In Britain the average amount of training received by workers almost halved between 1997 and 2009, to just 0.69 hours a week. + +Perhaps employers themselves are not sure what kind of expertise they need. But it could also be that training budgets are particularly vulnerable to cuts when the pressure is on. Changes in labour-market patterns may play a part too: companies now have a broader range of options for getting the job done, from automation and offshoring to using self-employed workers and crowdsourcing. “Organisations have moved from creating talent to consuming work,” says Jonas Prising, the boss of Manpower, an employment consultancy. + +Add all of this up, and it becomes clear that times have got tougher for workers of all kinds. A college degree is still a prerequisite for many jobs, but employers often do not trust it enough to hire workers just on the strength of that, without experience. In many occupations workers on company payrolls face the prospect that their existing skills will become obsolete, yet it is often not obvious how they can gain new ones. “It is now reasonable to ask a marketing professional to be able to develop algorithms,” says Mr Sigelman, “but a linear career in marketing doesn’t offer an opportunity to acquire those skills.” And a growing number of people are self-employed. In America the share of temporary workers, contractors and freelancers in the workforce rose from 10.1% in 2005 to 15.8% in 2015. + +Reboot camp + +The answer seems obvious. To remain competitive, and to give low- and high-skilled workers alike the best chance of success, economies need to offer training and career-focused education throughout people’s working lives. This special report will chart some of the efforts being made to connect education and employment in new ways, both by smoothing entry into the labour force and by enabling people to learn new skills throughout their careers. Many of these initiatives are still embryonic, but they offer a glimpse into the future and a guide to the problems raised by lifelong reskilling. + +Quite a lot is already happening on the ground. General Assembly, for example, is just one of a number of coding-bootcamp providers. Massive open online courses (MOOCs) offered by companies such as Coursera and Udacity, feted at the start of this decade and then dismissed as hype within a couple of years, have embraced new employment-focused business models. LinkedIn, a professional-networking site, bought an online training business, Lynda, in 2015 and is now offering courses through a service called LinkedIn Learning. Pluralsight has a library of on-demand training videos and a valuation in unicorn territory. Amazon’s cloud-computing division also has an education arm. + +Universities are embracing online and modular learning more vigorously. Places like Singapore are investing heavily in providing their citizens with learning credits that they can draw on throughout their working lives. Individuals, too, increasingly seem to accept the need for continuous rebooting. According to the Pew survey, 54% of all working Americans think it will be essential to develop new skills throughout their working lives; among adults under 30 the number goes up to 61%. Another survey, conducted by Manpower in 2016, found that 93% of millennials were willing to spend their own money on further training. Meanwhile, employers are putting increasing emphasis on learning as a skill in its own right. + +This article appeared in the Special report section of the print edition under the headline “Learning and earning” + + + + + +Cognition switch + +What employers can do to encourage their workers to retrain + +Companies are embracing learning as a core skill + +Jan 14th 2017 + +A STRANGE-LOOKING SMALL room full of vintage furniture—an armchair, a chest of drawers, a table—was being built in the middle of Infosys’s Palo Alto offices when your correspondent visited in November. Tweed jackets hung from a clothes rack; a piano was due to be delivered shortly. The structure was rough and unfinished. And that, according to Sanjay Rajagopalan, was largely the point. + +Mr Rajagopalan is head of research and design at the Indian business-services firm. He is a disciple of “design thinking”, a problem-solving methodology rooted in observation of successful innovators. His goal is an ambitious one: to turn a firm that built a global offshoring business by following client specifications into one that can set the terms of its projects for itself. + +Design thinking emphasises action over planning and encourages its followers to look at problems through the eyes of the people affected. Around 100,000 Infosys employees have gone through a series of workshops on it. The first such workshop sets the participants a task: for example, to improve the experience of digital photography. That involves moving from the idea of making a better camera to considering why people value photographs in the first place, as a way of capturing memories. As ideas flow, people taking part in the workshops immediately start producing prototypes with simple materials like cardboard and paper. “The tendency is to plan at length before building,” says Mr Rajagopalan. “Our approach is to build, build, build, test and then plan.” + +That baffling structure in Palo Alto was another teaching tool. Mr Rajagopalan had charged a small team with reimagining the digital retail experience. Instead of coming up with yet another e-commerce site, they were experimenting with technologies to liven up a physical space. (If a weary shopper sat in the chair, say, a pot of tea on an adjacent table would automatically brew up.) The construction of the shop prototype in Infosys’s offices was being documented so that employees could see design thinking in action. + +Infosys is grappling with a vital question: what do people need to be good at to succeed in their work? Whatever the job, the answer is always going to involve some technical and specific skills, based on knowledge and experience of a particular industry. But with design thinking, Infosys is focusing on “foundational skills” like creativity, problem-solving and empathy. When machines can put humans to shame in performing the routine job-specific tasks that Infosys once took offshore, it makes sense to think about the skills that computers find harder to learn. + + + +David Deming of Harvard University has shown that the labour market is already rewarding people in occupations that require social skills. Since 1980 growth in employment and pay has been fastest in professions across the income scale that put a high premium on social skills (see chart). + +Social skills are important for a wide range of jobs, not just for health-care workers, therapists and others who are close to their customers. Mr Deming thinks their main value lies in the relationship between colleagues: people who can divide up tasks quickly and effectively between them form more productive teams. If work in future will increasingly be done by contractors and freelancers, that capacity for co-operation will become even more important. Even geeks have to learn these skills. Ryan Roslansky, who oversees LinkedIn’s push into online education, notes that many software engineers are taking management and communications courses on the site in order to round themselves out. + +Building a better learner + +Another skill that increasingly matters in finding and keeping a job is the ability to keep learning. When technology is changing in unpredictable ways, and jobs are hybridising, humans need to be able to pick up new skills. At Infosys, Mr Rajagopalan emphasises “learning velocity”—the process of going from a question to a good idea in a matter of days or weeks. Eric Schmidt, now executive chairman of Alphabet, a tech holding company in which Google is the biggest component, has talked of Google’s recruitment focus on “learning animals”. Mark Zuckerberg, one of Facebook’s founders, sets himself new personal learning goals each year. + +An emphasis on learning has long been a hallmark of United Technologies (UTC), a conglomerate whose businesses include Pratt & Whitney, a maker of aircraft engines, and Otis, a lift manufacturer. Since 1996 UTC has been running a programme under which its employees can take part-time degrees and have tuition fees of up to $12,000 a year paid for them, no strings attached. Employers often balk at training staff because they might leave for rivals, taking their expensively gained skills with them. But Gail Jackson, the firm’s vice-president of human resources, takes a different view. “We want people who are intellectually curious,” she says. “It is better to train and have them leave than not to train and have them stay.” + + + +Such attitudes are becoming more common. When Satya Nadella took over as boss of Microsoft in 2014, he drew on the work of Carol Dweck, a psychology professor at Stanford University, to push the firm’s culture in a new direction. Ms Dweck divides students into two camps: those who think that ability is innate and fixed (dampening motivation to learn) and those who believe that abilities can be improved through learning. This “growth mindset” is what the firm is trying to encourage. It has amended its performance-review criteria to include an appraisal of how employees have learned from others and then applied that knowledge. It has also set up an internal portal that integrates Lynda, the training provider bought by LinkedIn (which Microsoft itself is now buying). + +AT&T, a telecoms and media firm with around 300,000 employees, faces two big workforce problems: rapidly changing skills requirements in an era of big data and cloud computing, and constant employee churn that leaves the company having to fill 50,000 jobs a year. Recruiting from outside is difficult, expensive and liable to cause ill-feeling among existing staff. The firm’s answer is an ambitious plan to reskill its own people. + +Employees each have a career profile that they maintain themselves, which contains a record of their skills and training. They also have access to a database called “career intelligence”, which shows them the jobs on offer within the company, what skills they require and how much demand there is for them. The firm has developed short courses called nanodegrees with Udacity, the MOOC provider, and is also working with universities on developing course curriculums. Employees work in their own time to build their skills. But AT&T applies both carrot and stick to encourage them, by way of generous help with tuition fees (totalling $30m in 2015) for those who take courses and negative appraisal ratings for those who show no interest. + +As continued learning becomes a corporate priority, two questions arise. First, is it possible for firms to screen candidates and employees on the basis of curiosity, or what psychologists call “need for cognition”? Getting through university is one very rough proxy for this sort of foundational skill, which helps explain why so many employers stipulate degrees for jobs which on the face of it do not require them. + +Curiouser and curiouser + +More data-driven approaches are also being tried. Manpower, a human-resources consultancy, is currently running trials on an app that will score individuals on their “learnability”. Knack, a startup, offers a series of apps that are, in effect, gamified psychological tests. In Dashi Dash, for example, participants play the part of waiters and are asked to take the orders of customers on the basis of (often hard to read) expressions. As more and more customers arrive, the job of managing the workflow gets tougher. Every decision and every minute change in strategy is captured as a data point and sent to the cloud, where machine-learning algorithms analyse players’ aptitudes against a reference population of 25,000 people. An ability to read expressions wins points for empathy; a decision always to serve customers in the order in which they arrive in the game, for example, might serve as an indicator of integrity. Intellectual curiosity is one of the traits that Knack tests for. + +The second question is whether it is possible to train people to learn. Imaging techniques are helping unlock what goes on in the mind of someone who is curious. In a study published in 2014 in Neuron, a neuroscience journal, participants were first asked to rate their curiosity to learn the answers to various questions. Later they were shown answers to those questions, as well as a picture of a stranger’s face; finally, they were tested on their recall of the answers and given a face-recognition test. Greater curiosity led to better retention on both tests; brain scans showed increased activity in the mesolimbic dopamine system, a reward pathway, and in the hippocampus, a region that matters for forming new memories. + +It is too early to know whether traits such as curiosity can be taught. But it is becoming easier to turn individuals into more effective learners by making them more aware of their own thought processes. Hypotheses about what works in education and learning have become easier to test because of the rise of online learning. MIT has launched an initiative to conduct interdisciplinary research into the mechanics of learning and to apply the conclusions to its own teaching, both online and offline. It uses its own online platforms, including a MOOC co-founded with Harvard University called edX, to test ideas. When MOOC participants were required to write down their plans for undertaking a course, for example, they were 29% more likely to complete the course than a control group who did not have to do so. + +Information about effective learning strategies can be personalised, too. The Open University, a British distance-learning institution, already uses dashboards to monitor individual students’ online behaviour and performance. Knewton, whose platform captures data on 10m current American students, recommends personalised content to them. Helping people to be more aware of their own thought processes when they learn makes it more likely they can acquire new skills later in life. + +This article appeared in the Special report section of the print edition under the headline “Cognition switch” + + + + + +Old dogs, new tricks + +How older employees perform in the workplace + +As people age, the brain changes in both good ways and bad + +Jan 14th 2017 + +IF YOU ARE over 20, look away now. Your cognitive performance is probably already on the wane. The speed with which people can process information declines at a steady rate from as early as their 20s. + + + +A common test of processing speed is the “digit symbol substitution test”, in which a range of symbols are paired with a set of numbers in a code. Participants are shown the code, given a row of symbols and then asked to write down the corresponding number in the box below within a set period. There is nothing cognitively challenging about the task; levels of education make no difference to performance. But age does. Speed consistently declines as people get older. + +Why this should be is still a matter of hypothesis, but a range of tentative explanations has been put forward. One points the finger at myelin, a white, fatty substance that coats axons, the tendrils that carry signals from one neuron to another. Steady reductions in myelin as people age may be slowing down these connections. Another possibility, says Timothy Salthouse, director of the Cognitive Ageing Laboratory at the University of Virginia, is depletion of a chemical called dopamine, receptor sites for which decline in number with advancing age. + +Fortunately, there is some good news to go with the bad. Psychologists distinguish between “fluid intelligence”, which is the ability to solve new problems, and “crystallised intelligence”, which roughly equates to an individual’s stock of accumulated knowledge. These reserves of knowledge continue to increase with age: people’s performance on vocabulary and general-knowledge tests keeps improving into their 70s. And experience can often compensate for cognitive decline. In an old but instructive study of typists ranging in age from 19 to 72, older workers typed just as fast as younger ones, even though their tapping speed was slower. They achieved this by looking further ahead in the text, which allowed them to keep going more smoothly. + +What does all this mean for a lifetime of continuous learning? It is encouraging so long as people are learning new tricks in familiar fields. “If learning can be assimilated into an existing knowledge base, advantage tilts to the old,” says Mr Salthouse. But moving older workers into an entirely new area of knowledge is less likely to go well. + +This article appeared in the Special report section of the print edition under the headline “Old dogs, new tricks” + + + + + +The return of the MOOC + +Established education providers v new contenders + +Alternative providers of education must solve the problems of cost and credentials + +Jan 14th 2017 + +THE HYPE OVER MOOCs peaked in 2012. Salman Khan, an investment analyst who had begun teaching bite-sized lessons to his cousin in New Orleans over the internet and turned that activity into a wildly popular educational resource called the Khan Academy, was splashed on the cover of Forbes. Sebastian Thrun, the founder of another MOOC called Udacity, predicted in an interview in Wired magazine that within 50 years the number of universities would collapse to just ten worldwide. The New York Times declared it the year of the MOOC. + +The sheer numbers of people flocking to some of the initial courses seemed to suggest that an entirely new model of open-access, free university education was within reach. Now MOOC sceptics are more numerous than believers. Although lots of people still sign up, drop-out rates are sky-high. + + + +Nonetheless, the MOOCs are on to something. Education, like health care, is a complex and fragmented industry, which makes it hard to gain scale. Despite those drop-out rates, the MOOCs have shown it can be done quickly and comparatively cheaply. The Khan Academy has 14m-15m users who conduct at least one learning activity with it each month; Coursera has 22m registered learners. Those numbers are only going to grow. FutureLearn, a MOOC owned by Britain’s Open University, has big plans. Oxford University announced in November that it would be producing its first MOOC on the edX platform. + +In their search for a business model, some platforms are now focusing much more squarely on employment (though others, like the Khan Academy, are not for profit). Udacity has launched a series of nanodegrees in tech-focused courses that range from the basic to the cutting-edge. It has done so, moreover, in partnership with employers. A course on Android was developed with Google; a nanodegree in self-driving cars uses instructors from Mercedes-Benz, Nvidia and others. Students pay $199-299 a month for as long as it takes them to finish the course (typically six to nine months) and get a 50% rebate if they complete it within a year. Udacity also offers a souped-up version of its nanodegree for an extra $100 a month, along with a money-back guarantee if graduates do not find a job within six months. + +Coursera’s content comes largely from universities, not specialist instructors; its range is much broader; and it is offering full degrees (one in computer science, the other an MBA) as well as shorter courses. But it, too, has shifted its emphasis to employability. Its boss, Rick Levin, a former president of Yale University, cites research showing that half of its learners took courses in order to advance their careers. Although its materials are available without charge, learners pay for assessment and accreditation at the end of the course ($300-400 for a four-course sequence that Coursera calls a “specialisation”). It has found that when money is changing hands, completion rates rise from 10% to 60% . It is increasingly working with companies, too. Firms can now integrate Coursera into their own learning portals, track employees’ participation and provide their desired menu of courses. + +These are still early days. Coursera does not give out figures on its paying learners; Udacity says it has 13,000 people doing its nanodegrees. Whatever the arithmetic, the reinvented MOOCs matter because they are solving two problems they share with every provider of later-life education. + +The first of these is the cost of learning, not just in money but also in time. Formal education rests on the idea of qualifications that take a set period to complete. In America the entrenched notion of “seat time”, the amount of time that students spend with school teachers or university professors, dates back to Andrew Carnegie. It was originally intended as an eligibility requirement for teachers to draw a pension from the industrialist’s nascent pension scheme for college faculty. Students in their early 20s can more easily afford a lengthy time commitment because they are less likely to have other responsibilities. Although millions of people do manage part-time or distance learning in later life—one-third of all working students currently enrolled in America are 30-54 years old, according to the Georgetown University Centre on Education and the Workforce—balancing learning, working and family life can cause enormous pressures. + +Moreover, the world of work increasingly demands a quick response from the education system to provide people with the desired qualifications. To take one example from Burning Glass, in 2014 just under 50,000 American job-vacancy ads asked for a CISSP cyber-security certificate. Since only 65,000 people in America hold such a certificate and it takes five years of experience to earn one, that requirement will be hard to meet. Less demanding professions also put up huge barriers to entry. If you want to become a licensed cosmetologist in New Hampshire, you will need to have racked up 1,500 hours of training. + +In response, the MOOCs have tried to make their content as digestible and flexible as possible. Degrees are broken into modules; modules into courses; courses into short segments. The MOOCs test for optimal length to ensure people complete the course; six minutes is thought to be the sweet spot for online video and four weeks for a course. + +Scott DeRue, the dean of the Ross School of Business at the University of Michigan, says the unbundling of educational content into smaller components reminds him of another industry: music. Songs used to be bundled into albums before being disaggregated by iTunes and streaming services such as Spotify. In Mr DeRue’s analogy, the degree is the album, the course content that is freely available on MOOCs is the free streaming radio service, and a “microcredential” like the nanodegree or the specialisation is paid-for iTunes. + +How should universities respond to that kind of disruption? For his answer, Mr DeRue again draws on the lessons of the music industry. Faced with the disruption caused by the internet, it turned to live concerts, which provided a premium experience that cannot be replicated online. The on-campus degree also needs to mark itself out as a premium experience, he says. + +Another answer is for universities to make their own products more accessible by doing more teaching online. This is beginning to happen. When Georgia Tech decided to offer an online version of its masters in computer science at low cost, many were shocked: it seemed to risk cannibalising its campus degree. But according to Joshua Goodman of Harvard University, who has studied the programme, the decision was proved right. The campus degree continued to recruit students in their early 20s whereas the online degree attracted people with a median age of 34 who did not want to leave their jobs. Mr Goodman reckons this one programme could boost the numbers of computer-science masters produced in America each year by 7-8%. Chip Paucek, the boss of 2U, a firm that creates online degree programmes for conventional universities, reports that additional marketing efforts to lure online students also boost on-campus enrolments. + +Educational Lego + +Universities can become more modular, too. EdX has a micromasters in supply-chain management that can either be taken on its own or count towards a full masters at MIT. The University of Wisconsin-Extension has set up a site called the University Learning Store, which offers slivers of online content on practical subjects such as project management and business writing. Enthusiasts talk of a world of “stackable credentials” in which qualifications can be fitted together like bits of Lego. + +Just how far and fast universities will go in this direction is unclear, however. Degrees are still highly regarded, and increased emphasis on critical thinking and social skills raises their value in many ways. “The model of campuses, tenured faculty and so on does not work that well for short courses,” adds Jake Schwartz, General Assembly’s boss. “The economics of covering fixed costs forces them to go longer.” + +Academic institutions also struggle to deliver really fast-moving content. Pluralsight uses a model similar to that of book publishing by employing a network of 1,000 experts to produce and refresh its library of videos on IT and creative skills. These experts get royalties based on how often their content is viewed; its highest earner pulled in $2m last year, according to Aaron Skonnard, the firm’s boss. Such rewards provide an incentive for authors to keep updating their content. University faculty have other priorities. + + + +People are more likely to invest in training if it confers a qualification that others will recognise. But they also need to know which skills are useful in the first place + +Beside costs, the second problem for MOOCs to solve is credentials. Close colleagues know each other’s abilities, but modern labour markets do not work on the basis of such relationships. They need widely understood signals of experience and expertise, like a university degree or a baccalaureate, however imperfect they may be. In their own fields, vocational qualifications do the same job. The MOOCs’ answer is to offer microcredentials like nanodegrees and specialisations. + +But employers still need to be confident that the skills these credentials vouchsafe are for real. LinkedIn’s “endorsements” feature, for example, was routinely used by members to hand out compliments to people they did not know for skills they did not possess, in the hope of a reciprocal recommendation. In 2016 the firm tightened things up, but getting the balance right is hard. Credentials require just the right amount of friction: enough to be trusted, not so much as to block career transitions. + +Universities have no trouble winning trust: many of them can call on centuries of experience and name recognition. Coursera relies on universities and business schools for most of its content; their names sit proudly on the certificates that the firm issues. Some employers, too, may have enough kudos to play a role in authenticating credentials. The involvement of Google in the Android nanodegree has helped persuade Flipkart, an Indian e-commerce platform, to hire Udacity graduates sight unseen. + +Wherever the content comes from, students’ work usually needs to be validated properly for a credential to be trusted. When student numbers are limited, the marking can be done by the teacher. But in the world of MOOCs those numbers can spiral, making it impractical for the instructors to do all the assessments. Automation can help, but does not work for complex assignments and subjects. Udacity gets its students to submit their coding projects via GitHub, a hosting site, to a network of machine-learning graduates who give feedback within hours. + +Even if these problems can be overcome, however, there is something faintly regressive about the world of microcredentials. Like a university degree, it still involves a stamp of approval from a recognised provider after a proprietary process. Yet lots of learning happens in informal and experiential settings, and lots of workplace skills cannot be acquired in a course. + +Gold stars for good behaviour + +One way of dealing with that is to divide the currency of knowledge into smaller denominations by issuing “digital badges” to recognise less formal achievements. RMIT University, Australia’s largest tertiary-education institution, is working with Credly, a credentialling platform, to issue badges for the skills that are not tested in exams but that firms nevertheless value. Belinda Tynan, RMIT’s vice-president, cites a project carried out by engineering students to build an electric car, enter it into races and win sponsors as an example. + +The trouble with digital badges is that they tend to proliferate. Illinois State University alone created 110 badges when it launched a programme with Credly in 2016. Add in MOOC certificates, LinkedIn Learning courses, competency-based education, General Assembly and the like, and the idea of creating new currencies of knowledge starts to look more like a recipe for hyperinflation. + +David Blake, the founder of Degreed, a startup, aspires to resolve that problem by acting as the central bank of credentials. He wants to issue a standardised assessment of skill levels, irrespective of how people got there. The plan is to create a network of subject-matter experts to assess employees’ skills (copy-editing, say, or credit analysis), and a standardised grading language that means the same thing to everyone, everywhere. + +Pluralsight is heading in a similar direction in its field. A diagnostic tool uses a technique called item response theory to work out users’ skill levels in areas such as coding, giving them a rating. The system helps determine what individuals should learn next, but also gives companies a standardised way to evaluate people’s skills. + +A system of standardised skills measures has its own problems, however. Using experts to grade ability raises recursive questions about the credentials of those experts. And it is hard for item response theory to assess subjective skills, such as an ability to construct an argument. Specific, measurable skills in areas such as IT are more amenable to this approach. + +So amenable, indeed, that they can be tested directly. As an adolescent in Armenia, Tigran Sloyan used to compete in mathematical Olympiads. That experience helped him win a place at MIT and also inspired him to found a startup called CodeFights in San Francisco. The site offers free gamified challenges to 500,000 users as a way of helping programmers learn. When they know enough, they are funnelled towards employers, which pay the firm 15% of a successful candidate’s starting salary. Sqore, a startup in Stockholm, also uses competitions to screen job applicants on behalf of its clients. + +However it is done, the credentialling problem has to be solved. People are much more likely to invest in training if it confers a qualification that others will recognise. But they also need to know which skills are useful in the first place. + + + +This article appeared in the Special report section of the print edition under the headline “The return of the MOOC” + + + + + +Pathway dependency + +Turning qualifications into jobs + +How technology can help in myriad ways + +Jan 14th 2017 + +UNIVERSITY EDUCATION IS designed to act as a slipway, launching students into the wider world in the expectation that the currents will guide them into a job. In practice, many people get stuck in the doldrums because employers demand evidence of specific experience even from entry-level candidates. Whether this counts as a skills gap is a matter of debate. “If I cannot find a powerful, fuel-efficient, easy-to-park car for $15,000, that doesn’t mean there is a car shortage,” says Peter Cappelli of the Wharton School of the University of Pennsylvania. But whether the fault lies with the educators or the employers, there is a need for pathways that lead individuals into jobs. + + + +Sometimes those pathways are clearly defined, as in medicine and the law. Vocational education combines classroom and work-based learning to prepare young people for specific trades. In many European countries, one-third to half of later-stage secondary schoolgoers are on a vocational path (see chart). Britain is due to introduce an apprenticeship levy in April. + +But pathways are needed to smooth transitions in other countries (America, for example, lacks a tradition of vocational education); in less structured occupations; and when formal education has come to an end. The nanodegree is an example of such a pathway, as is General Assembly’s bootcamp model. Both rely heavily on input from employers to create content; both use jobs rather than credentials as a measure of success. + +That is particularly important in the early stages of people’s careers, which is not just when they lack experience but also when earnings grow fastest. An analysis of American wage growth by economists at the New York Federal Reserve showed that the bulk of earnings growth took place between the ages of 25 and 35; on average, after the age of 45 only the top 2% of lifetime earners see any earnings growth. So it is vital for people to move quickly into work once qualified, and to hold on to jobs once they get them. + +That is the insight behind LearnUp, a startup that works with applicants without college degrees for entry-level positions. Users applying for a job online can click on a link and take a one-hour online training session on how to be a cashier, sales clerk or whatever they are after. Employers pay LearnUp a fixed fee to improve the pool of candidates. Recruitment and retention rates have risen. + +Generation, a philanthropically funded programme run by the McKinsey Social Initiative, a not-for-profit arm of the consultancy, uses a bootcamp approach and some typically McKinsey-esque thinking to train people from difficult backgrounds for middle-skilled positions in industries like retailing and health care. The programme starts by going into workplaces and identifying key events (how an IT helpdesk handles a call from an irate customer, for example) that distinguish high performers from the rest. + +Curriculum designers then use that analysis to create a full-time training programme lasting between four and 12 weeks that covers both technical knowledge and behavioural skills. The programme has gone live in America, Spain, India, Kenya and Mexico. By the end of 2016 it had 10,000 graduates, for whom it claims an employment rate of 90% and much higher retention rates than usual. The trainees pay nothing; the hope is that employers will fund the programme, or embed it in their own training programmes, when they see how useful it is. + +A little help from your friends + +Such experiments use training to take people into specific jobs. In the past, an initial shove might have been all the help they needed. But as middle-skilled roles disappear, some rungs on the job ladder have gone missing. And in a world of continuous reskilling and greater self-employment, people may need help with repeatedly moving from one type of job to another. Vocational education is good at getting school-leavers into work, but does nothing to help people adapt to changes in the world of work. Indeed, a cross-country study in 2015 by researchers at the Hoover Institution suggests that people with a vocational education are more likely than those with a general education to withdraw from the labour force as they age. The pattern is particularly marked in countries that rely heavily on apprenticeships, such as Denmark, Germany and Switzerland. + +Large companies may have the scale to offer their employees internal pathways to improve their skills, as companies like AT&T do. But many workers will need outside help in deciding which routes to take. That suggests a big opportunity for firms that can act, in effect, as careers advisers. Some are better placed than others to see where the jobs market is going. Manpower, which supplies temporary workers to many industries, last year launched a programme called MyPath that is based on the idea of an iterative process of learning and working. It allows Manpower’s army of temporary workers in America to earn a degree from Western International University at no financial cost to them. The degree is structured as a series of three or four episodes of education followed by periods in work, in the expectation that Manpower has a good overview of the skills leading to well-paid jobs. + +LinkedIn is another organisation with a decent understanding of wider trends. The professional-networking site likes to call the data it sits on “the economic graph”, a digital map of the global economy. Its candidate data, and its recruitment platform, give it information on where demand from employers is greatest and what skills jobseekers need. And with LinkedIn Learning it can now also deliver training itself. + +The firm can already tell candidates how well their qualifications for any advertised job stack up against those of other applicants. In time, its data might be used to give “investment advice”, counselling its members on the financial return to specific skills and on how long they are likely to be useful; or to show members how other people have got into desirable positions. + +The difficulty with offering mass-market careers advice is finding a business model that will pay for it. LinkedIn solves this problem by aiming itself primarily at professionals who either pay for services themselves or who are of interest to recruiters. But that raises a much bigger question. “There is no shortage of options for folks of means,” says Adam Newman of Tyton Partners, an education consultancy. “But what about LinkedIn for the linked-out?” + +This article appeared in the Special report section of the print edition under the headline “Pathway dependency” + + + + + +The elephant in the truck + +Retraining low-skilled workers + +Systems for continuous reskilling threaten to buttress inequality + +Jan 14th 2017 + + + +IMAGINE YOU ARE a 45-year-old long-distance lorry driver. You never enjoyed school and left as soon as you could, with a smattering of qualifications and no great love of learning. The job is tiring and solitary, but it does at least seem to offer decent job security: driver shortages are a perennial complaint in the industry, and the average age of the workforce is high (48 in Britain), so the shortfalls are likely to get worse. America’s Bureau of Labour Statistics (BLS) says there were 1.8m truckers in 2014 and expects a 5% rise in their number by 2024. “As the economy grows, the demand for goods will increase and more truck drivers will be needed to keep supply chains moving,” predicts the BLS website, chirpily. + +But the future might unfold very differently. For all the excitement over self-driving passenger cars, the freight industry is likely to adopt autonomous vehicles even faster. And according to a report in 2014 by Morgan Stanley, a bank, full automation might reduce the pool of American truck drivers by two-thirds. Those projections came hedged with caveats, and rightly so. The pace of adoption may be slowed by regulation. Drivers may still be needed to deal with unforeseen problems; if such jobs require more technical knowledge, they may even pay better. Employment in other sectors may grow as freight costs come down. But there is a chance that in the not too distant future a very large number of truckers will find themselves redundant. The implications are immense. + + + +Knowing when to jump is one problem. For people with decades of working life still ahead of them, it is too early to quit but it is also risky to assume that nothing will change. Matthew Robb of Parthenon-EY, a consultancy, thinks that governments should be talking to industry bodies about the potential for mass redundancies and identifying trigger points, such as the installation of sensors on motorways, that might prompt retraining. “This is a boiling-frog problem,” he says. “It is not thought about.” + +For lower-skilled workers of this sort the world of MOOCs, General Assembly and LinkedIn is a million miles away. Around 80% of Coursera’s learners have university degrees. The costs of reskilling, in terms of time and money, are easiest to bear for people who have savings, can control their working hours or work for companies that are committed to upgrading their workforce. And motivation is an issue: the tremendous learning opportunities offered by the internet simply do not appeal to everyone. + +Whosoever hath not + + + +The rewards of retraining are highest for computing skills, but there is no natural pathway from trucker to coder. And even if there were, many of those already in the workforce lack both the confidence and the capability to make the switch. In its Programme for the International Assessment of Adult Competencies, the OECD presents a bleak picture of skills levels in 33 member countries (see chart). One in five adults, on average, has poor reading and numeracy skills. One in four has little or no experience of computers. On a measure of problem-solving ability using technology, most adults are at or below the lowest level of proficiency. + +Moreover, learning is most effective when people are able to practise their new skills. Yet many jobs, including lorry-driving, afford little such opportunity, and some of them are being deskilled further. Research by Tom Higgins of Cardiff University suggests that the numeracy requirements for retail assistants and care-home workers in Britain went down between 1997 and 2012. The head of one of the world’s biggest banks worries that a back-office operation in India has disaggregated its work into separate tasks so effectively that employees are no longer able to understand the processes as a whole, let alone make useful suggestions for improving them. + +So the truckers’ dilemma will be very hard to solve. “It’s difficult when you don’t have a good answer even in an ideal world,” says Jesper Roine, an economist who sat on a Swedish commission to examine the future of work. But as a thought experiment it highlights some of the problems involved in upgrading the stock of low-skilled and mid-skilled workers. Any decent answer will need a co-ordinated effort to bring together individuals, employers and providers of education. That suggests a role for two entities in particular. + +One is trade unions. They have an industry-wide view of trends that may not be available to smaller employers. They can also accompany people throughout their working lives, which may become increasingly important in a world of rising self-employment. Denmark’s tripartite system, for example, binds together employers, government and unions. Firms and unions get together to identify skills needs; collective-bargaining agreements enshrine rights to paid leave for training. The country’s famed “flexicurity” system offers unemployed workers a list of 258 vocational-training programmes. + +In Britain a well-regarded programme called UnionLearn uses union representatives both to inform workers about training options and to liaise with employers on workers’ requests for training. Employees seem more likely to discuss shortfalls in basic skills with union representatives than with managers. An analysis by academics at Leeds University Business School shows that between 2001 and 2013 union members in Britain were a third more likely to have received training than non-unionised workers. + +The second entity is government. There is much talk about lifelong learning, though few countries are doing much about it. The Nordics fall into this less populated camp. But it is Singapore that can lay claim to the most joined-up approach with its SkillsFuture initiative. Employers in the city-state are asked to spell out the changes, industry by industry, that they expect to happen over the next three to five years, and to identify the skills they will need. Their answers are used to create “industry transformation maps” designed to guide individuals on where to head. + +Since January 2016 every Singaporean above the age of 25 has been given a S$500 ($345) credit that can be freely used to pay for any training courses provided by 500 approved providers, including universities and MOOCs. Generous subsidies, of up to 90% for Singaporeans aged 40 and over, are available on top of this credit. The programme currently has a budget of S$600m a year, which is due to rise to S$1 billion within three years. According to Ng Cher Pong, SkillsFuture’s chief executive, the returns on that spending matter less than changing the mindset around continuous reskilling. + +Some programmes cater to the needs of those who lack basic skills. Tripartite agreements between unions, employers and government lay out career and skills ladders for those who are trapped in low-wage occupations. Professional-conversion programmes offer subsidised training to people switching to new careers in areas such as health care. + +Given Singapore’s size and political system, this approach is not easily replicated in many other countries, but lessons can still be drawn. It makes sense for employers, particularly smaller ones, to club together to signal their skills needs to the workforce at large. Individual learning accounts have a somewhat chequered history—fraudulent training providers helped scupper a British experiment in the early 2000s—but if well designed, they can offer workers educational opportunities without being overly prescriptive. + +Any fool can know + +In June 2016, this newspaper surveyed the realm of artificial intelligence and the adjustments it would require workers to make as jobs changed. “That will mean making education and training flexible enough to teach new skills quickly and efficiently,” we concluded. “It will require a greater emphasis on lifelong learning and on-the-job training, and wider use of online learning and video-game-style simulation.” + +The uncertainties around the pace and extent of technological change are enormous. Some fear a future of mass unemployment. Others are sanguine that people will have time to adapt. Companies have to want to adopt new technologies, after all, and regulators may impede their take-up. What is not in doubt is the need for new and more efficient ways to develop and add workplace skills. + +The outlines of a new ecosystem for connecting employment and education are becoming discernible + +The faint outlines of a new ecosystem for connecting employment and education are becoming discernible. Employers are putting greater emphasis on adaptability, curiosity and learning as desirable attributes for employees. They are working with universities and alternative providers to create and improve their own supply of talent. Shorter courses, lower costs and online delivery are making it easier for people to combine work and training. New credentials are being created to signal skills. + +At the same time, new technologies should make learning more effective as well as more necessary. Virtual and augmented reality could radically improve professional training. Big data offer the chance for more personalised education. Platforms make it easier to connect people of differing levels of knowledge, allowing peer-to-peer teaching and mentoring. “Education is becoming flexible, modular, accessible and affordable,” says Simon Nelson, the boss of FutureLearn, the Open University MOOC. + +But for now this nascent ecosystem is disproportionately likely to benefit those who least need help. It concentrates on advanced technological skills, which offer the clearest returns and are relatively easy to measure. And it assumes that people have the money, time, motivation and basic skills to retrain. + +Thanks to examples like Singapore’s, it is possible to imagine ways in which continuous education can be made more accessible and affordable for the mass of citizens. But it is as easy—indeed, easier—to imagine a future in which the emerging infrastructure of lifelong learning reinforces existing advantages. Far from alleviating the impact of technological upheaval, that would risk exacerbating inequality and the social and economic tensions it brings in its wake. + +This article appeared in the Special report section of the print edition under the headline “The elephant in the truck” + + + + + +Business + + + + + +Formula One: Nifty manoeuvres + +Intellectual property: Blockchain of command + +Uber for kids: Baby, you can drive in my car + +Iron ore in Guinea: A pig of a project + +Advanced manufacturing: The new manufacturing footprint + +Schumpeter: They’ve lost that loving feeling + + + + + +Nifty manoeuvres + +A controversial transaction sits at the heart of Liberty Media’s takeover of Formula One + +Questions over a conflict of interest may give Liberty Media a headache + +Jan 14th 2017 + + + +ON JANUARY 17th shareholders of Liberty Media Corporation, an American firm controlled by John Malone, a billionaire, are expected to approve a transaction that many hail as the sports deal of the decade. In September 2016 Liberty agreed to buy the Formula One (F1) motor-racing franchise from CVC, a private-equity group, for $8bn. F1, which generates annual revenue of $1.8bn, is now central to Liberty’s global plans: in a sign of the importance he attaches to the deal, Mr Malone has installed Chase Carey, a former president of Rupert Murdoch’s 21st Century Fox, as F1 chairman. The main Liberty subsidiary is to be renamed Formula One Group. + +The deal has lots of attractions. For F1 it offers a potential solution to the problem of who will take over from Bernie Ecclestone, its 86-year-old impresario. There was no credible succession plan for the man whose wheeling and dealing has long held together the sport and its fractious collection of racing teams. With Mr Carey leading the search, there could be. + +As for Liberty, F1 offers the sort of live, exclusive content it needs to lock in audiences that are peeling off to on-demand streaming services such as Amazon and Netflix. The American firm has big plans for F1, including selling race-naming rights, turning each event into “the equivalent of the Super Bowl” and helping F1 overcome its two big challenges: its weak presence in America and its lack of almost any online presence. Liberty will use digital platforms to deepen viewers’ engagement with the sport. The virtual-reality possibilities look particularly enticing. + +But F1 may bring Liberty grief as well as glamour. The day after its own shareholders’ vote, the Fédération Internationale de l’Automobile (FIA), the racing sport’s governing body, is expected to give its approval to the deal. That is perhaps unsurprising: Liberty is a reputable buyer. But even if it were not, the FIA has an incentive to give the transaction the green light because of a cut-price share transfer signed in 2013, which gave it a 1% stake in F1 that can only be monetised if F1 is sold. + +The transfer all but guaranteed the governing body a big payout in the event of a sale of F1. It puts the FIA at risk of a conflict of interest. And its timing raises questions about whether it was used by F1’s owners as an inducement for the governing body to approve a change of ownership, regardless of who emerged as a buyer. Formula One Management (FOM), F1’s commercial-rights holder, denies any impropriety. The FIA denies any conflict of interest. Liberty refused to comment. + +The stake appears to breach an agreement with Brussels that was struck in 2001 when the European Commission closed a two-year antitrust probe into F1. In return for the file being closed, the FIA, whose grand headquarters are on Paris’s Place de la Concorde, undertook to “modify its rules to bring them into line with EU law”. These changes included limiting its role to that of a regulator, “with no commercial conflicts of interest”. To prevent such conflicts, the FIA sold all its rights in the Formula One world championship. + +Max Mosley, who ran the FIA from 1993 to 2009, said last year he had queried its purchase of the 1% stake, which he described as “problematic” and “arguably contrary” to the 2001 undertaking. He said the FIA argued the stake was in keeping with the agreement because it was too small to be considered material. He said he was surprised by that argument, because the stake’s value was equivalent to a year’s turnover when he ran the FIA, “and I didn’t see that as ‘de minimis’.” + +The transaction is already attracting official attention. Anneliese Dodds, a member of the European Parliament for south-east England (home to several F1-related businesses) has written to the commission several times to air concerns about the sport’s structure and arrangements. Her latest letter, sent last September, called for closer scrutiny of the sale to Liberty in light of the FIA’s stake. + +In the rear-view mirror + +Some insiders reckon that Liberty has paid a lot for F1 without really understanding it. Greg Maffei, Liberty’s CEO, has admitted he didn’t know F1’s business at all until they started negotiating. The acquisition could cause legal headaches down the road. “They definitely don’t understand the legal and reputational risks,” says one seasoned observer. + +CVC—which had itself taken over F1 in 2006—had originally wanted to exit via a stockmarket flotation of Delta Topco, F1’s Jersey-based parent company. But that plan came unstuck thanks to market turmoil following the global financial crisis. The final nail in the coffin was the disclosure in July 2013 that Mr Ecclestone had been indicted by a German court on charges of paying part of a bribe to steer the sale of a 47% stake in F1 to CVC. (Mr Ecclestone settled the case in 2014 for $100m, with no ruling on guilt or innocence.) + +It is hard to imagine a successful flotation of a company whose boss faces possible imprisonment. The indictment therefore left CVC with the prospect of having to divest F1 through a sale. This, unlike a flotation, would have required the FIA’s consent. The approval process involves, among other things, performing “fit-and-proper” tests on the suitor. + +A document seen by The Economist shows that on July 22nd 2013—just a few days after the IPO-killing indictment of Mr Ecclestone was announced—F1 signed a deal to grant the FIA options on a 1% stake in Delta Topco. These were duly exercised towards the end of that year. A striking feature of this transaction—apart from the timing—was its price. The FIA was being offered a stake with a value of $72m for a mere $458,197. + +Crucially, this attractive offer came with a catch: the FIA could only monetise its stake in the event of CVC selling its controlling stake. For the governing body to get its money, a buyer would have to be found, and the FIA would have to approve it. (Liberty plans to buy out all existing shareholders.) This gave the FIA a clear financial incentive to wave through any takeover it was tasked with vetting—and in the process also unlock $3bn for CVC through the sale of its controlling stake. The FIA’s own code of ethics requires all of its “Parties” (including the FIA itself) to “endeavour to avoid any conflict of interest”. + +The combination of the timing of the 1% sale and the stipulation that the FIA can only cash out in the event of a takeover requiring its approval also raises questions for CVC and Delta Topco. To some it could look like inducement. Liberty, as a reputable international media firm, was always likely to pass a fit-and-proper test with flying colours. But it wasn’t in the picture in July 2013; it didn’t contact the sellers until later that year. At the time, it wasn’t clear who would emerge as a possible buyer. What if it was a borderline case when it came to vetting—say, an oligarch with a chequered past? Might F1’s owners have seen giving away a 1% option grant for just $458,197 as a price worth paying to increase the odds of approval? + + + +They deny this. In response to questions sent to CVC, FOM confirmed that the share transfer was completed on the terms stated in the document we have seen. However, it says the transfer was “not a deal to ‘sell’ a stake to the FIA at market value, but rather part of a wider deal to obtain the FIA’s commitment to deliver and implement its Concorde obligations through to 2030 in return for a package of financial measures to help the FIA with its overheads, which had increased significantly. The shares awarded to it were from a pool of unissued shares that had been reserved for this kind of transaction, and they were issued to the FIA at the same price as had been paid by other parties awarded shares from this pool, including the executives that are members of Delta Topco’s management equity plan.” (“Concorde” refers to a tripartite agreement—between the FIA, F1 and the teams—setting out the basis for participation in the championship.) + +As for the suggestion that the transfer was an inducement to the FIA to approve a sale to a corporate buyer, FOM says “there can be no inference” that this was the case; “no such transaction was contemplated” at the time because Delta Topco was still “contemplating and preparing for an IPO”. It says that the timing of the July 2013 options grant was unconnected to the indictment of Mr Ecclestone. Rather, the deal was “the result of a 12-month negotiation” over renewing the Concorde Agreement. + +The FIA said in a statement that there is no conflict of interest on its part with regard to the potential change of control at F1, that it “would naturally be happy to demonstrate this to any competent authority that may so request”, and that its sole concern is the “best interests” of the sport. + +Nonetheless, the risk of a conflict of interest at the FIA is something that might concern competition authorities and other regulators. The Liberty takeover was reviewed by a number of national authorities, but was not notified to the European Commission, apparently because it fell below EU merger-review thresholds. + +The commission says it is assessing a complaint about alleged breaches of competition law brought by two F1 teams, though this is not specifically related to the takeover. It won’t comment on the undertakings made in 2001 by F1 and the FIA, but it is believed to consider them “unilateral” and the agreement not legally binding—even though it had earlier identified practices it believed to be out of line with EU law. It has noted that a number of sports governing bodies hold stakes in competitions or manage them and that this is not necessarily “problematic from a competition point of view”. + +Tussles with Brussels + +But there are differences between the typical sport and governing body set-up and the FIA’s relationship with F1. For one thing, the combination of the FIA’s required consent and its potential payoff leave it particularly at risk of bias. Furthermore, it oversees not only F1 but other motorsport competitions too—and it is supposed to treat them neutrally. A commercial interest in F1 gives it an incentive to favour the sport over rival race series, including proposed new competitions that could take business away from F1. This was one of the issues the agreement with Brussels was supposed to deal with. + +The commission’s shrugging of shoulders over the FIA’s apparent flouting of its rules stands in contrast to its generally tough stance on such agreements. One possible explanation is that its earlier tangles with F1 in the late 1990s were scarring, evolving into the sort of bruising encounter it may be loth to repeat. At one point the commission was forced to apologise publicly after the FIA’s indefatigable lawyers exposed it as having leaked warning letters to the press. The commission now argues that “governance issues” involving the FIA are best delegated to arbitration bodies and national courts—which have no reason to care about breaches of EU law. + +It remains to be seen how much any of this will trouble Liberty, which is zooming ahead with its takeover of a sports franchise it calls “iconic” and “unique”. The media firm has repeatedly disclosed that its takeover needs FIA approval, but has not highlighted the fact that the FIA has a stake in the sport it regulates. An investor presentation listing F1’s shareholders lumps all those holding less than management, with 6.1%, in the “Other” category. It is unclear whether the Nasdaq-listed firm had an obligation to disclose this. (Liberty declined to comment.) Its shareholders will have no reason to kick up a fuss if the takeover goes well. But they will surely start asking more questions if it spins off the track. + +This article appeared in the Business section of the print edition under the headline “Nifty manoeuvres” + + + + + +Who owns the blockchain? + +A rush to patent the blockchain is a sign of the technology’s promise + +Financial firms and assorted startups are rushing to patent the technology that underlies bitcoin + +Jan 14th 2017 + +FOR fans of bitcoin, a digital currency, the year got off to a volatile start. On January 5th one bitcoin changed hands for nearly $1,150—almost as much as the record set three years ago. It has since dropped by 33%. Elsewhere in the land of monetary bits, things move more slowly but trouble is brewing: a potential patent war looms over the blockchain, a distributed ledger that authenticates and records every bitcoin transaction. + +Heated fights over intellectual property are nothing new in promising technology markets. But given that the blockchain is expected to shake up everything from the way precious diamonds are safeguarded to the way shares are traded, the legal fights could be especially fierce. + +On the face of it, the blockchain does not lend itself easily to staking out intellectual-property claims. Bitcoin’s creator, known only by his pseudonym, Satoshi Nakamoto, published a paper about his invention, coded the first implementation and then disappeared—meaning that the core of the technology is now part of the public domain and only important additions and variations could be patented. And the blockchain’s components are widely known. In America court decisions as well as a new law on the granting of patents make it difficult to claim ownership for such financial innovations. + +This hasn’t stopped firms from trying to get patent protection on meaningful improvements to the blockchain, including security and encryption techniques, says Colette Reiner Mayer of Morrison & Foerster, a law firm. Applications are now becoming public, because America’s patent office must release them 18 months after they are filed. A search of Espacenet, a global database, yields 36 hits; hundreds more are said to be in the pipeline. + +Financial firms are among the most assiduous filers: MasterCard, for instance, is seeking four payment-related patents; Goldman Sachs has put in for one outlining a distributed ledger that can process foreign-exchange transactions. Startups, including Coinbase, Chain and 21 Inc, have been busy, too. And then there is Craig Wright, an Australian who claims to be Mr Nakamoto but has failed to provide conclusive proof. He has filed, via an Antigua-registered entity called EITC Holdings, for 73 patents in Britain. + +Only a very few patents have been issued so far. And known applicants all say that they intend to use patents only “defensively”, meaning to protect themselves against lawsuits. Still, legal battles look likely: incumbent banks may go after newcomers, and “non-practising entities” (also known as “patent trolls”) may attempt to shake down other firms. It could slow the pace of innovation, warns Brian Behlendorf of Hyperledger, an umbrella group for several blockchain-related projects. + +To limit such fights, several startups are opening up their IP. Chain, Digital Asset Holdings and Hyperledger have made their software open-source, so that the underlying recipe is freely available, which also makes it more attractive to users and developers. Some programs even come with a licence that makes it impossible to enforce patents against those who use the organisation’s code. Blockstream, another startup, has signed a “patent pledge”, vowing not to sue others—as long as they don’t use their own patents offensively. + +There are also discussions over forming a patent pool, much like the Open Invention Network, created in 2005 to protect member firms against suits for using Linux, the popular open-source operating system. The OIN acquires patents and then licenses them freely to members, which agree not to assert their own patents. + +Whether this strategy of mutual disarmament is sufficient to avoid another patent war will be clear only when and if blockchains have become a multi-billion dollar business. This week DTCC, a provider of clearing and settlement services, announced that it will base the next generation of its trade-information system on a blockchain, and SWIFT, a payments network, said it was exploring the technology. That might prompt more applications. + +This article appeared in the Business section of the print edition under the headline “Blockchain of command” + + + + + +Training wheels + +A handful of startups are launching ride-hailing for children + +But Silicon Valley is unusually sceptical about the idea + +Jan 14th 2017 | SAN FRANCISCO + + + +“HELICOPTER parent” may sound like an insult, but given the chance, most parents would probably opt for the help of a chopper to zoom little ones between school, football practice and piano lessons. Getting children where they need to go is a huge hassle and expense, especially in homes where both parents work. Hailing rides through firms like Uber and Lyft has made life more convenient for adults. But drivers are not supposed to pick up unaccompanied minors (although some are known to bend the rules). + +Youngsters represent a fresh-faced opportunity. Ride-hailing for kids could be a market worth at least $50bn in America, hopes Ritu Narayan, the founder of Zum, one of the startups pursuing the prize. These services are similar to Uber’s, except they allow parents to schedule rides for their children in advance. Children are given a code word to ensure they find the right driver, and parents receive alerts about the pick-up and ride, including the car’s speed. These services promise more rigorous background checks, fingerprinting and training than typical ride-hailing companies. + +Annette Yolas, who works in sales at AT&T, a wireless and pay-TV giant, reckons she spends around $200 a month on HopSkipDrive, a service that operates in several markets in California, for her three kids to get to the school bus on time and to ballet practice, and says it has been a “life-saver” by allowing her to work longer hours. Meanwhile, kids avoid the embarrassment of a relative pulling up at school blaring mom rock. + +But ride-hailing firms for kids may end up like the children in Neverland, and never mature. They face several challenges. One is finding enough drivers. All users need rides during the same limited set of hours: before and after school, which makes it hard to offer drivers enough work. It can also be challenging to lure parents, who have drilled it into children never to get in a stranger’s car. + +And while ride-sharing companies can irk adult passengers by cancelling or being late, when children are involved such behaviour can be disastrous. Shuddle, an early entrant in the taxis-for-kids business, which shut down in 2016, had only two out of five stars on Yelp for that reason, and reams of negative reviews from parents. It had made money on rides mainly by raising prices ever higher. + +Its demise has not deterred Uber itself, which is expected soon to launch a pilot programme for teenagers under 18. Parents may be happier to use services they are familiar with. But Uber’s entrance is likely further to dim the prospects of child-focused ride-hailing businesses as they compete for customers and new funds. Already, the mood in Silicon Valley has soured against tiny startups that provide services on demand, such as taxis, massage therapy and meals. According to Sean Behr, an entrepreneur who runs an on-demand parking startup named Stratim, “saying you’re the Uber of X category is not a pitch that will get you funded by venture capitalists today.” Grown-ups can be so boring. + +This article appeared in the Business section of the print edition under the headline “Baby, you can drive in my car” + + + + + +A pig of a project + +Africa’s largest iron-ore deposit has tainted all who have touched it + +Billionaires and big companies have come a cropper in one of the world’s poorest countries + +Jan 14th 2017 + +Now everyone sees red + +ON THE flanks of the Simandou mountains in south-eastern Guinea live remote colonies of West African chimpanzees. They alone should be grinning over the fate of those who have sought to turn their tropical habitat into Africa’s biggest iron-ore mine. No one else is laughing. Rarely has such a group of billionaires, hedge-fund barons, mining firms, government officials and go-betweens been snagged in such a woeful saga. + +In theory, the prospect of digging up 2bn tonnes of ore from a country that is among the poorest on Earth should be encouraging, if corruption is kept in check. The government of Alpha Condé promised to do so upon taking office in 2010. But in reality the line between paying go-betweens to help win concessions and lining officials’ pockets is so blurry that it can cause mining firms endless trouble. + +In recent months the plotline has shifted. During the past half-decade the businessman painted as the saga’s pantomime villain has been Beny Steinmetz, a globe-trotting Israeli diamond merchant, worth billions, whose lurid battles over Simandou with Rio Tinto, one of the world’s biggest mining companies, have involved volleys of accusations about bribery. + +Mr Steinmetz was briefly put under house arrest in Israel on December 19th last year in connection with the Guinea case. He denies wrongdoing. His backers allege that a “conspiracy” robbed him of his rights to Simandou. His office in London, as well as having a picture of Simandou’s red-streaked mountain top in the lobby, has a sign saying “All bullshit stories” that is lit up when a journalist visits. + +But now Rio Tinto is also on the back foot. In November it sacked two of its top executives upon discovering a payment to a go-between in Guinea from 2011 that it says failed to meet its code-of-conduct standards. Jean-Sébastien Jacques, the firm’s new chief executive, appears to be in a hurry to draw a line under the whole affair, which is proving difficult. + +It was two decades ago that Rio Tinto won a concession to explore the world’s largest untapped iron-ore deposit in Simandou. At the time, Guinea was ruled by a dictatorship that, in 2008, suddenly stripped Rio of half its blocks and transferred them to the Guinean arm of BSGR, a foundation whose main beneficiary is Mr Steinmetz. BSGR then sold a 51% stake in the blocks to Vale, Rio’s Brazilian rival, which incensed Rio. + +Then Rio recovered its footing somewhat. In 2011, after Guinea’s first democratic elections, the new Condé government granted it the right to develop its remaining blocks in partnership with Chinalco, China’s state-owned aluminium firm, in return for a (disclosed) $700m payment. Even sweeter for Rio, in 2014 the Condé government stripped BSGR/Vale of their Simandou assets, alleging they had been obtained through bribery. Rio then sought (unsuccessfully) to sue BSGR and Vale in America on racketeering charges. + +The backdrop for this battle was the high price of iron ore as China hungered for steel. The irrational exuberance of the times helps explain why Rio incorporated into the $20bn development plan for its blocks the construction of a trans-Guinean railway to ship the ore, as well as Guinea’s first deepwater port. These ideas came a cropper once the price of iron ore crashed. + +As a result, the allure of the project for Mr Jacques has waned. He had sought to wash his hands of it by agreeing to transfer Rio’s Simandou stake to Chinalco last October for a song. But it was the following month that the board sacked its two officials, including Alan Davies, its minerals chief, after leaked e-mails revealed a $10.5m payment to a French consultant who was close to President Condé and helped guarantee Rio’s mineral rights at Simandou. Rio also handed over a trove of related e-mails and other data to authorities in America, Britain and Australia. + +Rio pointed out that the sackings did not prejudge the results of any investigation, but they jolted many employees, some of whom thought them overhasty. Mr Davies said his dismissal lacked due process and vowed to fight it. Some suspected the draconian measures reflected Mr Jacques’s impatience to put Simandou quickly behind him and move on. + +But that has proved tough. Mr Steinmetz has seized on the dismissals to make two accusations: that Rio paid a “facilitation fee/bribe” which contributed to the withdrawal of BSGR’s mining rights in Guinea; and that it launched a public-relations campaign that criticised the firm. Last month BSGR threatened legal action unless Rio settles a damages claim first. Both sides expect Rio to respond in the coming weeks. For all except the Chinese (and the chimps), the fallout from Simandou persists. And it has yet to produce an ounce of commercial iron ore for any of them. + +This article appeared in the Business section of the print edition under the headline “A pig of a project” + + + + + +Advanced manufacturing + +Adidas’s high-tech factory brings production back to Germany + +Making trainers with robots and 3D printers + +Jan 14th 2017 + +Impossible is nothing + +BEHIND closed doors in the Bavarian town of Ansbach a new factory is taking shape. That it will use robots and novel production techniques such as additive manufacturing (known as 3D printing) is not surprising for Germany, which has maintained its manufacturing base through innovative engineering. What is unique about this factory is that it will not be making cars, aircraft or electronics but trainers and other sports shoes—an $80bn-a-year industry that has been offshored largely to China, Indonesia and Vietnam. By bringing production home, this factory is out to reinvent an industry. + +The Speedfactory, as the Ansbach plant is called, belongs to Adidas, a giant German sports-goods firm, and is being built with Oechsler Motion, a local firm that makes manufacturing equipment. Production is due to begin in mid-2017, slowly at first and then ramping up to 500,000 pairs of trainers a year. Adidas is constructing a second Speedfactory near Atlanta for the American market. If all goes well, they will spring up elsewhere, too. + +The numbers are tiny for a company that makes some 300m pairs of sports shoes each year. Yet Adidas is convinced the Speedfactory will help it to transform the way trainers are created. The techniques it picks up from the project can then be rolled out to other new factories as well as to existing ones, including in Asia—where demand for sports and casual wear is rising along with consumer wealth. + +Currently, trainers are made mostly by hand in giant factories, often in Asian countries, with people assembling components or shaping, bonding and sewing materials. Rising prosperity in the region means the cost of manual work outsourced to the region is rising. Labour shortages loom. Certain jobs require craft skills which are becoming rarer; many people now have the wherewithal to avoid tasks that can be dirty or monotonous. + +Adidas’s motivation for its Speedfactories, however, goes well beyond labour cost. People want fashionable shoes immediately, but the supply chain struggles to keep up. “The way our business operates is probably the opposite of what consumers desire,” says Gerd Manz, the company’s head of technology innovation. + +From the first sketch of a completely new pair of trainers to making and testing prototypes, ordering materials, sending samples back and forth, retooling a factory, working up production and eventually shipping the finished goods to the shops can take the industry as long as 18 months. Yet some three-quarters of new trainers are now on sale for less than a year. An order to replenish an existing, in-demand design—the latest edition of the NMD R1, say, a popular trainer in 2015-16—can take two or three months to reach the shelves, unless the shoes travel not in a shipping container but at huge cost in the hold of an aircraft. + +On your marks... + +The Speedfactory’s main strength is to shorten the supply chain, and so the time to shops, to less than a week, perhaps even to a day, once the trainer design is complete. The design process itself is increasingly done digitally. The trainers are not just styled on a computer screen but can also be tested by the computer for things like fit and performance. To enhance the process, the Speedfactory will also have a digital twin: a virtual computer model in which production of the new trainers can be simulated. Once all is well, the digital product will then move to the physical production system. + +Adidas claims its new production system is extremely fast and highly flexible. The details are being kept secret for now. What is known, however, is that instead of ordering components that will be assembled into a new pair of trainers, the Speedfactory will instead make most of the parts itself from raw materials, such as plastics, fibres and other basic substances. + +The machines carrying out this work will be highly automated and use processes such as computerised knitting, robotic cutting and additive manufacturing, which involves building up shapes layer by layer. Industrial 3D printing machines are appearing in many different forms and are capable of handling an increasing variety of materials. Driven by software, the robots, knitting machines and 3D printers take their instructions directly from the computer-design program, so they can switch from making one thing to another quickly, without having to stop production for what can amount to several days in order to retool conventional machines and instruct manual workers. + +Not every job in the Speedfactory will be automated. Robots can be slower and less precise at some tasks, such as the final shaping of a shoe. So each Speedfactory will create 160 production jobs, compared with a thousand or more in a typical factory in Asia. The new functions will also be more highly skilled. Adidas wants the new plants to complement the Asian operations, not to compete with them. But as advanced manufacturing expands, the need for armies of manual workers in Asian factories will surely diminish. + +Sneakerheads are likely to approve. “This will lead to products that will look and perform differently,” says Mr Manz. Leaving behind manual production methods will allow Adidas to come up with novel shapes and finishes. One new material the firm has already experimented with is Biosteel, a synthetic silk made by AMSilk, a German biotech company. Production will also become more customised, perhaps even with bespoke trainers fashioned from a computer scan of how a person walks or runs. + +In such a competitive and trend-driven market, one thing is certain: Adidas’s arch-rival Nike will not just sit on the touchline. The American company faces similar cost increases in Asia and is equally keen to shorten the time it takes to get new products to market. + +One of its initiatives is a form of computerised knitting to make the upper parts of a range of trainers it calls Flyknit, much like the way a sock is knitted. Nike has also set up what it calls an Advanced Product Creation Centre at its headquarters in Beaverton, Oregon, to explore other automated production methods, including 3D printing. The company has already employed these techniques to produce customised shoes for some top athletes. The race between the world’s biggest sports-shoe makers is about to become much more fleet of foot. + +This article appeared in the Business section of the print edition under the headline “The new manufacturing footprint” + + + + + +Schumpeter + +America leaves foreign firms out in the cold + +Populism, economic concentration and regulation are some of the reasons foreign bosses are souring on the land of the free + +Jan 14th 2017 + + + +WHICH is it? The home of free speech, the rule of law and the rich world’s most dynamic economy? Or a land of social decay, septic politics and the rich world’s worst roads and schools? America divides foreign observers. It divides foreign firms, too. Some bosses fall head over heels for its insatiable consumers and dazzling technology. Other executives are put off by its insufferable lawyers and hypocritical protectionism. Donald Trump promises to give foreign firms a rude awakening when he reaches the White House: this month he beat up Toyota for making cars in Mexico and selling them north of the border. But in truth many foreign firms fell out of love with America years ago. + +The conventional view is that foreign companies are irresistibly attracted to the place. If one affair ends in tears, there is always a new paramour in the wings. In the 1970s British buccaneers, led by Sir James Goldsmith, picked up neglected firms. In the 1980s Japanese firms lost their financial virginity by paying too much for Hollywood studios and Californian skyscrapers. A decade later continental European firms rushed across the pond, culminating in Daimler’s doomed tryst with Chrysler, a rival carmaker. By this account, Chinese firms are the latest to get the love bug, with China’s richest man, Wang Jianlin, in the role of the besotted tycoon, having paid a blockbuster $4bn to assemble a chain of mature American cinemas since 2012. + +But this narrative is hopelessly out of date. The most accurate metaphor for foreign firms in America today is of disappointed hopes. Their share of private output has been flat at about 6% since 2000. The share of sales that European firms make in America has declined from 20% in 2003 to 17% now, according to Morgan Stanley, a bank. Foreign firms’ profits in America fell from $134bn in 2006 to $123bn in 2014, the latest year for which figures are available. Their return on equity fell to 6%, compared with 11% in 2006. American multinationals make 12% on their home turf. + +This souring romance reflects three deep shifts in America’s economy. First, technology has a greater importance than it used to. At the same time the gap between Silicon Valley’s giants and their peers abroad has grown wider. A generation ago Europe and Japan had real contenders in the technology industry, such as Nokia and Sony. Now they have no answer to the likes of Apple, Google and Uber. + +Second, waves of mergers and acquisitions have made the economy more concentrated. That has raised the barriers to entry for outsiders. If you split the world’s companies into 68 industries, American firms are the largest in two-thirds of them. Foreign companies in America are often subscale and too small to buy the leading firms in their sector. So they try to grow organically or buy weaklings instead. In 2013 SoftBank, a Japanese technology group, paid $22bn to buy a struggling mobile-phone operator, Sprint, which is now losing a billion dollars a year. The most profitable investment in living memory by a foreign firm in America was not a gutsy triumph but a passive stake in a domestic oligopoly: Vodafone’s 45% share of Verizon Wireless, which it sold for $130bn in 2014. + +The third reason for foreign firms’ discontent is the growth in lobbying, litigation and regulatory action in America. Foreign companies feel they are at a competitive disadvantage. In the most regulated sector of all—banks—their market share has fallen to 14% from 18% in the past 24 months, partly, they argue, owing to onerous new rules. Most fines involve lots of official discretion. In carmaking and energy, Volkswagen and BP have admitted their respective responsibilities for fake emissions tests and the Deepwater Horizon oil spill. But many European bosses believe that the cumulative $70bn of legal costs and penalties they have paid or currently face far exceed those that General Motors and ExxonMobil paid for similarly grave mistakes. In December Barclays vowed to fight a $5bn-odd fine for mortgage mis-selling, which it argues is harsher than those faced by American banks. + +The Trump administration could well awaken a protectionist impulse at big domestic firms that lies not far beneath the surface, reckon the most pessimistic of all. Jamie Dimon’s latest letter to the shareholders of JPMorgan Chase warns that American banks’ dominance could be threatened by Chinese rivals. A report on semiconductors for the White House this month, written by a body that includes the bosses of Google, Qualcomm and Northrop Grumman, recommends protecting the chip industry from Chinese competition. America’s airlines constantly complain about unfair competition from Emirates and other rivals. + +Takeovers or makeovers + +A more populist America may require fresh tactics from foreigners. Some are working on their connections. Masayoshi Son, boss of SoftBank, pledged to invest $50bn in America after meeting Mr Trump in December. The head of Anbang Insurance, a Chinese firm that is no stranger to relationship-based capitalism at home, dined with Mr Trump’s son-in-law, Jared Kushner, in November. Anbang owns the Waldorf Astoria, among other American assets. Another approach is to buy a well-placed oligopoly. InBev’s purchase in 2008 of Anheuser-Busch, maker of Budweiser Beer, has become a model for winning in America. Other deals in 2016 echoed it. Bayer agreed to buy Monsanto, which dominates the agricultural-seed business, and BAT is bidding for Reynolds American, which has a big share of the tobacco market. + +A last option is for foreign firms to assume a more American identity. In sensitive sectors, they already try to take on a local character. BAE Systems, a defence concern, has a separate American board stacked with former brass hats. After the trade spats of the 1980s, Asian car firms localised their production and management. Rupert Murdoch shifted his media empire’s domicile from Australia to America in 2004. As any dating-website veteran will tell you, if you can’t find love, change your appearance. + +This article appeared in the Business section of the print edition under the headline “They’ve lost that loving feeling” + + + + + +Finance and economics + + + + + +Inflation: A welcome revival + +Buttonwood: Franc discussions + +Emerging markets: Back from the frontier + +Supply-chain finance: Every little helps + +The Big Mac index: The all-meaty dollar + +Fintech in Singapore: Out of the box + +Japanese tuna: Bluefinger + +China’s currency: Squeezed to life + +Chinese tax: Making China great again + +Free exchange: Get off of my cloud + +Free exchange: Awards + + + + + +A welcome revival + +Inflation is on the way back in the rich world, and that is good news + +Deflationary fears are at last on the point of being banished + +Jan 14th 2017 + + + +IT WAS telling that Germany, a country with a phobia of rising prices, in the first week of 2017 reported a jump in inflation. Its headline rate rose from 0.8% to 1.7% in December. After two years of unusually low price pressures, inflation across the rich world is set to revive this year. Much of this is because of the oil price, which fell below $30 a barrel in the early months of 2016 but has recently risen above $50 (see chart). Underlying inflation, too, seems poised to drift up. That is good news. The story for 2017 is not of inflation running too hot but rather of a welcome easing of fears of deflation. + +To understand why, consider the three big drivers of inflation in the rich world: the price of imports, capacity pressures in the domestic economy and the public’s expectations. Start with imported inflation. A year ago, global goods prices were falling because of a slide in aggregate demand and a seemingly endless glut of basic commodities and manufactures. China’s economy wobbled. Emerging markets in general were in a funk; two of the largest, Brazil and Russia, were deep in recession. + +Things look perkier now. Emerging markets still have plenty of trouble spots, but the bigger economies are stabilising. After falling for 54 months, producer prices in China are climbing at last. Prices at the factory gate rose by 5.5% in the year to December. China’s supply glut, though still vast, is shrinking. An improving demand climate is reflected in upbeat surveys of manufacturing purchasing managers across Asia and in the rich world. It is also visible in a revival in commodity prices. + +So rich countries are importing a bit more globally made inflation. How big an impact that has depends on the exchange rate. And in much of the rich world, currency markets are proving helpful. In America, where underlying inflation is close to 2%, the Federal Reserve’s goal, the dollar has risen. In Japan and the euro area, where underlying inflation is lower (see chart), the yen and euro have weakened. + + + +The second big influence on inflation is the amount of slack (or spare capacity) in the domestic economy. The unemployment rate, measuring labour-market slack, is often a convenient gauge. On that basis, America’s economy, with unemployment at 4.7%, is close to full capacity. Average wages rose by 2.9% in the year to December, the highest rate since 2009. Assuming that trend productivity growth is around 1%, then wage growth of around 3% is consistent with a 2% rise in unit-wage costs, in line with the Fed’s inflation target. + +The picture is cloudier in other parts of the rich world. Euro-area jobs markets are more rigid and run into bottlenecks more readily than America’s. Even so, the euro-area economy has far greater slack. The unemployment rate is 9.8%. The big southern euro-zone economies, such as Italy and Spain, have ample spare capacity. So if inflation is to get back to the European Central Bank’s target of close to 2%, it will require other economies, notably Germany, to generate inflation rates well above 2%. + +That is not as implausible as the form book suggests. Germany has a tight labour market. The unemployment rate is just 4.1% and the workforce has shrunk as the population ages. And after a decade or more of restraint, wages have picked up a bit. Compensation per employee has risen at an average annual rate of 2.5% since 2010, according to the OECD, a rich-country think-tank. That is faster than in any other G7 country, but still not enough to drive German inflation up to the sorts of levels needed to push euro-zone inflation close to 2%. Faster wage growth has not fed through to higher consumer-price inflation, notes Ralf Preusser of Bank of America Merrill Lynch. Average core inflation has been around 1.1% since 2010. German firms have absorbed rising wage costs without increasing prices. In Japan, where the jobs market is even tighter, wage growth has struggled to reach even 1%. + +That wages have not risen faster owes much to the third big determinant of inflation—expectations. Firms will feel freer to push up prices, and employees to bargain for bigger wage rises, if they expect higher inflation. In theory expectations are in the gift of central banks. If they can convince the public that they have the tools to regulate aggregate demand, and thus the level of slack, expectations should converge on the central bank’s inflation target, usually 2% in rich countries. But expectations are also influenced by what inflation has been recently. In rich countries, it has fallen short. Inflation expectations in financial markets have recently perked up, but in the euro area are still well shy of the target (see chart). In Japan, two decades of deflation have taught firms and wage-earners to expect a lot less than 2%. + +Put the pieces of the jigsaw together and the following picture emerges. Headline inflation in the rich world is likely to rise quickly in early 2017, thanks largely to rising oil prices and a generally firmer global backdrop. Underlying inflation will grind up more slowly as above-trend growth eats away at available slack. A burst of stronger headline inflation this year might drive up inflation expectations and set the stage for bolder wage claims in northern Europe and Japan in 2018. + +Analysts at JPMorgan Chase expect higher inflation to add one percentage point to global nominal GDP in 2017, spurring a revival in profits and setting the scene for a recovery in capital spending (even without tax cuts in America). Forecasters often now look for extreme outcomes, but rich-world inflation this year may turn out to be a tale of moderation: enough to grease the wheels, but not enough to upset the cart. + +This article appeared in the Finance and economics section of the print edition under the headline “A welcome revival” + + + + + +Buttonwood + +Marine Le Pen’s nerve-jangling plans to revive the French franc + +If the National Front leader’s chances of becoming France’s president rise, markets will take fright + +Jan 14th 2017 + + + +HOW do you solve a problem like Marine? Ms Le Pen, leader of France’s far-right National Front, has indicated that she hopes to reintroduce a national currency if she is elected president in May. In a recent speech, she suggested that government bonds would be redenominated in francs instead of euros. + +The proposal was dressed up in technicalities. The franc would be revived as a “parallel” currency for official transactions and used alongside the euro in a version of the systems (the snake and the exchange-rate mechanism) that existed in the 1970s and 1980s. Such schemes tied European currencies together but were subject to regular crises, with France periodically devaluing the franc. + +Investors would pretty quickly see through the façade. There is not much point in bringing back a national currency unless you want the right to devalue it. And there is not much point in redenominating government bonds in francs unless you want to pay creditors back less than they expected. (This might technically count as a default, according to Moody’s, a rating agency; it depends on the exact circumstances.) If that happened, it could trigger an enormous financial crisis in Europe. After all, if France were to devalue, what would stop the Italians or the Greeks from following suit? + +It all makes for a tricky calculation for investors, multiplying the probability of a Le Pen victory against the potential decline in the value of French bonds if it occurs. The consensus is that, even if Ms Le Pen makes it through to the second round of the presidential election, she will be defeated easily. That is what happened to her father in 2002, when voters united around the conservative Jacques Chirac. Gamblers put the odds of a Le Pen victory at around 30%. + +Even if she wins, she might not be able to implement the policy she favours. Reintroducing a national currency could involve leaving the EU. That would be a huge step; only a fifth of French people think it will happen in the next ten years. + +Still, in the wake of the Brexit and Trump votes last year, some investors will be nervous about another surprise. “I’m not certain that we should be quite as comfortable as the polls suggest given the history of the past four to five years,” says Simon Derrick, a strategist at BNY Mellon, a bank. If Ms Le Pen is pitted against François Fillon, a Thatcherite conservative, in the second round, left-wing voters might stay at home. + +To understand the scale of the potential decline, think back to the late 1990s and the era of the “convergence trade”. As the introduction of the euro approached, investors realised that the currency risk of owning European bonds would disappear. So it became much cheaper for many European countries to borrow. In the early 1990s Italy often had to pay four percentage points more than Germany to borrow, and France more than one percentage point. + +Were currency risk to return, then spreads would widen again. That happened during the euro crisis of 2011 and 2012 and it took determined action by the European Central Bank (ECB) to bring them back down. There are already some signs of French yields edging up, relative to those in Germany, with the spread at a three-year high because of political risk. + +If currencies were to float again after such a long period, a big adjustment would be needed. Since 1999, unit labour costs have risen by 32% in France but by just 15% in Germany (see chart). Making French workers competitive again could require a 12% devaluation. + +Even if that figure is too large, imagine what would happen if the Le Pen plan were implemented. Investors would flock to the safety of German government bonds. They would be happy to accept negative yields of 1-2%, given the scope for much larger losses from holding French assets. The revived franc would come under immediate selling pressure as investors hedged their risk. + +Countering that selling pressure would involve one of three things. First, the French government could sell euro assets and buy its own bonds. But it doesn’t have enough reserves to sustain that policy. Second, the French could raise interest rates to attract capital. But that would damage the economy, hardly the outcome Ms Le Pen is seeking. Or, third, the ECB could step in to buy French bonds. But it wouldn’t do so if France seemed to be heading out of the euro. + +It would all be an enormous mess. So long as the probability of a Le Pen victory is still low, markets won’t shift much. But if her victory chances rise to 40% or so, prepare for a turbulent spring. + +Economist.com/blogs/buttonwood + +This article appeared in the Finance and economics section of the print edition under the headline “Franc discussions” + + + + + +Back to the fold + +Argentina is admitted to a widely tracked bond index + +Fifteen years after a spectacular default, Argentine regains respectability + +Jan 14th 2017 + + + +EMERGING markets have not been the same without Argentina, a country that embodies the promise and peril, the romance and the rockiness of the asset class. In 1988 it was one of the ten original members of the most popular emerging-market equity index, introduced by MSCI. In the late 1990s it was also the biggest member of the benchmark-bond indices compiled by JPMorgan Chase. But once it defaulted at the end of 2001, Argentina was exiled from global debt markets. And after it subsequently imposed capital controls on “hot money”, its shares suffered a similar banishment, ejected from MSCI’s index in 2009. It became a remote “frontier market”, like countries such as Bangladesh. + +Since Mauricio Macri succeeded Cristina Fernández de Kirchner as president at the end of 2015, Argentina has been finding its way back from the financial periphery. It has floated its currency and lifted capital controls, recently abolishing a remaining requirement that foreign investors keep their money in the country for at least 120 days. In April the government sold $16.5bn of dollar bonds to international investors in a single day (a record for an emerging market). Later this year, MSCI will decide whether to welcome Argentina’s shares back into its emerging-market index, starting with companies with an overseas listing, such as Adecoagro, which farms sugar and soyabeans, among other things. And on January 5th, JPMorgan Chase said it would admit Argentina’s peso bonds into its widely tracked benchmark indices, probably from February. + +The emerging-market asset class has not lacked drama in Argentina’s absence. The introduction of quantitative easing (QE) after the financial crisis inspired a rush into higher-yielding emerging-market bonds. Talk of “tapering” QE in 2013 prompted a partial reversal. As a borrowing currency, the dollar has waned in significance relative to local currencies such as the rupiah or real. Dollar-denominated bonds have been a better buy for investors in recent years, but less popular among government issuers. The share of hard-currency debt declined from roughly half on average in 2000 to about a quarter in 2014, according to Moody’s, a rating agency. + +Much of this evolution has passed Argentina by. Until 2016 its government had to sell most of its bonds to fellow Argentines, including the country’s banks and its public-pension reserve fund. But although it was mostly sold to locals, the debt was chiefly denominated in dollars. Over 70% of the government’s debt is still denominated in foreign currencies, according to the ministry of finance. The high inflation and capricious currency policies of the post-default years meant Argentines did not trust the peso to hold its value. So for all of the nationalist fire of Ms Kirchner and her husband, her predecessor as president, their policies left them heavily reliant on the greenback to attract creditors. + +Argentina’s expulsion from global debt markets came within days of China’s entry into the World Trade Organisation. Asia now accounts for about 70% of emerging-market GDP and a similar share of MSCI’s emerging-market equity benchmark (see chart). The bond indices, in contrast, remain far more evenly balanced between the regions. JPMorgan Chase’s most popular local-currency version still excludes China’s vast market altogether. + +That may not last. In the past year China, too, has eased the capital controls that fenced off its debt markets. China may thus follow Argentina into the benchmark indices in due course. Emerging markets have not been the same without Argentina. But nor have they stayed the same. + +This article appeared in the Finance and economics section of the print edition under the headline “Back from the frontier” + + + + + +Every little helps + +How fintech firms are helping to revolutionise supply-chain finance + +Factoring invoices has become cheaper and faster for hard-pressed suppliers + +Jan 14th 2017 + +Still waiting for the invoice approval + +GROWING up on a sugar-cane farm in Australia, Lex Greensill had a front-seat view of the strains suppliers suffer as they wait to be paid. After harvesting his crops, Mr Greensill’s father had to wait a year or more to receive payment. Across industries, buyers are eager to conserve their cash. Delaying payment is one way to do it: among the most important for some, such as big retailers, says Mr Greensill. Many buyers expect their suppliers to accept payment months after delivery. Even so, many still pay late—47% of suppliers surveyed by Taulia, a fintech firm, said they had this problem. In 2011 Mr Greensill founded Greensill Capital, one of a cluster of new fintech firms overhauling how supply chains are financed. + +The details vary but their basic approach is to take advantage of buyers’ low credit risk to pay suppliers’ invoices promptly. The buyer—a large supermarket chain, say—approves a supplier’s invoice and transmits it to the fintech lender. (The lender can raise money in different ways: Greensill raises funds in the capital markets.) The lender pays the supplier on the agreed date or, if requested, earlier, less a small discount. With interest rates at present low, the period of finance short and the credit risk that of the supermarket chain rather than the supplier itself, the discount may be so low as to be almost unnoticeable. The lender later collects the full value of the invoice from the buyer. This improves the cashflow for suppliers without shortening payment terms for buyers, freeing up working capital for both parties and creating a healthier, more secure supply chain. + +In America and Britain, government initiatives have encouraged supply-chain financing as a means for corporations to support small businesses and meet social-responsibility goals. The more integrated approach also means buyer and supplier are not pitted against each other, squabbling over when the cash will be forthcoming. According to Mr Greensill, his clients have enjoyed improved relationships with their suppliers. + +Though banks have offered this form of financing since the 1990s, it remained a bit of a backwater until the financial crisis. As revenues fell stagnant, companies tried to squeeze the most from their internal resources by improving the management of their working capital and extending payment terms, says Richard Hite, director of supply-chain finance at Barclays, a big British bank. This further compounded the plight of suppliers, many of them small and medium-sized enterprises already struggling to stay afloat. The crisis created an acute need for a better system to strengthen supply chains. It helped galvanise an inchoate industry. + +Mr Hite sees the market for supply-chain finance expanding as more companies start to understand its benefits. It has tended to cater to manufacturing and retail businesses; now it is taking off in other industries such as oil and gas, where lower oil prices prompted companies to cut costs. In 2004 no one knew what supply-chain finance was, says John Monaghan, who runs Citigroup’s programme. Now companies come to the bank asking for it. + +Best factor award + +But much of the growth is being driven not by banks but by fintech firms. Old-fashioned “factoring” to turn invoices into cash was time-consuming, laden with paperwork and an expensive form of credit—the resort to which was sometimes seen as a sign of financial stress. Fintech firms offer new technologies that make early payments possible at the click of a button. They can quickly set suppliers up on their platform. Banks’ early-payment programmes have also typically been reserved for the largest suppliers. But fintechs have made supply-chain finance available to the tiddlers, too. + +The market was also ripe for innovation in other ways. Globalisation has made supply chains longer and more complex. For every buyer there are an increasing number of suppliers, many of them now in Asia, which lags behind other regions in working-capital efficiency. A survey by KPMG, a consultancy, suggested that more than 70% of businesses worldwide still lack a supply-chain financing programme. A report by McKinsey, a consultancy, shows market penetration has remained very low: only about one-tenth of the potential global market for supply-chain finance has been captured, it reckons. + +Fintech firms are not taking business from banks so much as expanding the market, says Prabhat Vira of Tungsten, a supply-chain financier. Of the suppliers Tungsten serves, 80% are small or medium-sized enterprises. Fintech firms may be more nimble, but banks have greater resources. Both sides talk up the benefits of working in partnership. As they gather more data, it may become possible to start paying suppliers even before invoices are approved. That, says Ganaka Herath, a partner at McKinsey, “is the holy grail”. + +This article appeared in the Finance and economics section of the print edition under the headline “Every little helps” + + + + + +The meaty dollar + +Our Big Mac index of global currencies reflects the dollar’s strength + +Emerging-market currencies and the euro look undervalued against the dollar + +Jan 14th 2017 + + + +IT IS perhaps not surprising that the worst-performing major currency in the world this year is the Turkish lira. Many emerging-market currencies have taken a battering since the election in November of Donald Trump raised expectations of faster monetary tightening in America and sent the dollar soaring. But the lira has many other troubles to contend with, too: terrorist bombings, an economic slowdown, alarm over plans by the president, Recep Tayyip Erdogan, to strengthen his powers, and a central bank reluctant to raise interest rates to defend the currency. It has plunged to record lows. According to the Big Mac index, our patty-powered currency guide, it is now undervalued by 45.7% against the dollar. + +The Big Mac index is built on the idea of purchasing-power parity, the theory that in the long run currencies will converge until the same amount of money buys the same amount of goods and services in every country. A Big Mac currently costs $5.06 in America but just 10.75 lira ($2.75) in Turkey, implying that the lira is undervalued. + +However, other currencies are even cheaper. In Big Mac terms, the Mexican peso is undervalued by a whacking 55.9% against the greenback. This week it also plumbed a record low as Mr Trump reiterated some of his campaign threats against Mexico. The peso has lost a tenth of its value against the dollar since November. Of big countries, only Russia offers a cheaper Big Mac, in dollar terms, even though the rouble has strengthened over the past year. + +The euro zone is also prey to political uncertainty. Elections are scheduled this year in the Netherlands, France and Germany, and possible in Italy. The euro recently fell to its lowest level since 2003. Britain’s Brexit vote has had an even bigger effect on the pound, which has fallen to $1.21, a 31-year low. According to the Big Mac index, the euro and the pound are undervalued against the dollar by 19.7% and 26.3%, respectively. + +One of the drawbacks of the Big Mac index is that it takes no account of labour costs. It should surprise no one that a Big Mac costs less in Shanghai than it does in San Francisco, since Chinese workers earn far less than their American counterparts. So in a slightly more sophisticated version of the Big Mac index, we take account of a country’s average income. + +Historically, this adjustment has tended to raise currencies’ valuations against the dollar, so emerging-market currencies tend to look more reasonably priced. The Chinese yuan, for example, is 44% undervalued against the dollar according to our baseline Big Mac index, but only 7% according to the adjusted one. The deluxe Big Mac index has typically made rich-world currencies look more expensive. Because western Europeans have higher costs of living and lower incomes than Americans, the euro has traded at around a 25% premium against the dollar in income-adjusted burger terms since the euro’s inception. + +But what once seemed to be an immutable axiom of burgernomics is true no longer. So strong is the dollar that even the adjusted Big Mac index finds the euro undervalued. The dollar is now trading at a 14-year high in trade-weighted terms. Emerging-world economies may struggle to pay off dollar-denominated debts. American firms may find themselves at a disadvantage against foreign competition. And American tourists will get more burgers for their buck in Europe. + +Access the interactive Big Mac index here + +This article appeared in the Finance and economics section of the print edition under the headline “The all-meaty dollar” + + + + + +Out of the box + +Singapore tries to become a fintech hub + +The city-state wants fintech that bolsters, not disrupts, mainstream banks + +Jan 14th 2017 | SINGAPORE + + + +IN AN era when architectural masterpieces curve and bloom (Zaha Hadid), or shimmy and fold (Frank Gehry), designers of central-bank buildings remain reassuringly fond of right angles. The Monetary Authority of Singapore (MAS), the city-state’s central bank and financial regulator, is housed in a boxy tower just south of the central business district. But tucked into one corner is a room called “LookingGlass@MAS” that desperately wants to be Silicon Valley: witness the scruffily dressed young men, whiteboards on wheels covered in buzzwords and the kitchen along one wall. + +This is the MAS’s fintech lab, where Singapore is trying to put its own twist on the technologies disrupting the financial sector. A report from Citigroup published in 2016 warned that as fintech lets customers do more online and cuts into banks’ lending and payments activities, European and American banks could lose almost 2m jobs in the next ten years. Similar fears stalk Singapore, home to more than 200 banks, and dependent on finance for 12.6% of GDP. + +In London, Berlin and San Francisco, many fintech innovators are betting against the big banks. Singapore, typically, is trying to play both sides of that bet. It wants a thriving fintech industry that supports, rather than undermines, incumbent big banks. The MAS has vowed to invest S$225m ($158m) in fintech by the end of 2020. Sopnendu Mohanty, its fintech guru, says he wants to attract fewer “disrupters” than “enablers”. He hopes fintech can help banks by cutting expenses and opening up new sources of revenue, through products that can slot into banks’ front- or back-office systems. The idea is to combine the cost-effective nimbleness of fintech with the trust, solidity and customer base of mainstream banks. Translation: even if you can beat them, join them. + +One attraction of Singapore for fintech entrepreneurs is what Mr Mohanty calls the “sandbox”: a relaxation of some regulatory requirements to allow small-scale experiments. This lets firms test ideas in secure, rich, low-risk Singapore before exporting them to bigger markets. Singapore also makes much of its efforts in “regtech”—software helping banks comply with increasingly complex regulations. + +But Mr Mohanty stresses that, although the MAS has eased regulation for small fintech experiments, “there is no compromise on principles” : ie, cyber-security must be flawless. Having been caught up in Malaysia’s sprawling 1MDB scandal, Singapore has also been ranked by Oxfam, a charity, as the world’s fifth-biggest corporate-tax haven (“inaccurate”, said the government). So the employment-destroying peril of fintech is not the only threat to the health of its financial sector: Singapore may also be worried about its reputation. + +This article appeared in the Finance and economics section of the print edition under the headline “Out of the box” + + + + + +A red herring + +Tokyo’s showy tuna auctions do not augur economic growth + +The alleged correlation between tuna prices and Japan’s economic fortunes does not stand up to scrutiny + +Jan 14th 2017 + + + +KIYOSHI KIMURA does not like to lose. For the past six years he has outbid all comers for the first bluefin tuna of the year sold by Tokyo’s famed Tsukiji fish market. Last week Mr Kimura, who owns a chain of sushi shops, paid ¥74.2m ($642,000) to win the first fish. That nets out to some $3,000 per kilogram. + +Folk wisdom has it that high tuna-auction prices signal future economic buoyancy. Mr Kimura has said that he pays the exorbitant prices to “encourage Japan”. But that rationale seems fishy. + +After a rival Hong Kong bidder baited him, Mr Kimura paid three times as much for the Tsukiji tuna in 2013 as in the previous year—a record-high ¥155.4m. GDP growth did not replicate that rise, however, sinking from 1.7% to 1.4%. In fact, Japan’s economic fortunes and Tokyo’s season-opening tuna prices seem to float rather erratically (see chart). A deep dive by The Economist suggests that tuna prices explain only 6% of the fluctuation in GDP. The correlation is a red herring. + +Environmentalists, meanwhile, are gutted. Bluefin tuna are endangered; stocks have plunged by 97% from their peak, according to one estimate. The annual Tsukiji auction always spawns protest, even if sushi lovers remain hooked. Roughly 80% of all bluefin fished is eaten in Japan. A single piece of o-toro, the fattiest of bluefin slices, can be sold to finicky buyers for as much as $24. To break even, Mr Kimura would need to bring in $85 a piece; they go for $3.40 in his shops. A raw deal. + +This article appeared in the Finance and economics section of the print edition under the headline “Bluefinger” + + + + + +Squeezed to life + +China’s currency upsets forecasts by beginning the new year stronger + +A liquidity squeeze thwarts investors hoping to profit from a falling yuan + +Jan 14th 2017 + + + +THE omens for the Chinese yuan seemed bad heading into 2017. The capital account looked as porous as ever, making a mockery of the government’s attempts to fix the leaks. The new year, when residents received fresh allowances for buying foreign currency, was due to bring even more pressure. Analysts braced for a stampede for the exits from China. The yuan had fallen sharply at the beginning of 2016, catching them by surprise. This time, they were ready. + +Instead, the yuan began the year as one of the world’s star performers. This was particularly so in the offshore market, where foreigners trade it most freely. It gained 2.5% against the dollar over two days in the first week of 2017, its biggest two-day increase since 2010, when trading began in Hong Kong, its main offshore hub. Within China itself, price increases were more subdued, but the yuan still climbed to a one-month high. + +Currency markets are notoriously fickle, so it is dangerous to read too much into a few days of price swings. But in China the government has always had a tight grip on the yuan. So the currency’s strength raised the question of whether it was simply being propped up—or whether the yuan’s prospects were in fact improving. + +The Hong Kong rally has the Chinese central bank’s fingerprints all over it. The proximate cause was a shortage of yuan in Hong Kong. As its residents have turned away from the Chinese currency, deposits there have fallen to just over 600bn yuan ($86.7bn), their lowest level since early 2013. That has led to periodic liquidity squeezes, making the cost of borrowing yuan in Hong Kong prohibitive: the overnight rate soared to 61% at the start of 2017. + +In normal circumstances, central banks would be expected to inject money to ease such shortages. But the Chinese authorities did little to stem the cash crunch, pleased to see it hurt those betting against the yuan. To make money by “shorting” a currency, investors borrow it, sell it and then hope to buy it back after its value has fallen. With borrowing rates so high, this becomes all but untenable. As the liquidity squeeze has abated in recent days, the offshore yuan has pared its earlier gains. + +China’s success in defending the yuan suggests that, as the government tightens capital controls, they are having more effect. In the past two months it has started reviewing all transfers abroad by companies worth $5m or more. Transfers by individuals will also soon face more scrutiny. The controls should slow the erosion of China’s foreign-exchange reserves, which are down to $3trn from $4trn in 2014. + +Most important, the Chinese economy is sounder than it was two years ago, when the yuan’s gradual descent began. A property boom has breathed life into heavy industry. Producer-price inflation is running at its fastest in more than half a decade. The central bank is tightening monetary conditions, however gingerly. As China’s economic and policy cycles more closely track those in America, there is less scope for runaway strength in the dollar, which in turn takes pressure off the yuan. + +Even so, many of the factors remain that led the yuan to drop by 7% last year, its steepest fall on record. The broad money supply is still growing at a double-digit rate. Chinese companies and households still have a ravenous appetite for foreign assets. Most analysts expect the yuan soon to start falling again, though that consensus is no longer rock-solid. China’s central bank has long said that it wants to make the yuan more volatile and less predictable. On that score, it has surely succeeded. + +This article appeared in the Finance and economics section of the print edition under the headline “Squeezed to life” + + + + + +Through the glass, darkly + +China’s reputation for low-cost manufacturing under attack + +A creaky tax system can make China an expensive place to produce things + +Jan 14th 2017 + + + +WHEN China was gripped by political turmoil in the 1960s and 1970s, Cao Dewang cut his teeth as an entrepreneur. Mao’s chaotic rule forced him out of school and he took to the street, a scrappy teenager selling fruit and cigarettes. Looking back, Mr Cao has said that it was actually a good time to do business: the government was too busy waging ideological campaigns to enforce its regulations. Mr Cao went on to become a billionaire, as China’s biggest manufacturer of automotive glass. Last month he sparked controversy by complaining that life was tough for businesses in China. There are, he said, far too many regulations—especially taxes and fees. These days the government is much more effective in enforcing them. + +Mr Cao hit a nerve with his claim that it was more costly to run a business in China than in America. He should know. His company, Fuyao Glass, bought an old General Motors factory in Ohio in 2014 and announced plans to invest $200m there. Mr Cao claimed that the overall tax on manufacturers is 35% higher in China than in America. Once China’s higher land and energy costs are factored in, the advantages of its lower labour costs disappear, he said. + +The State Administration of Taxation tried to refute the claims. It noted that overall tax revenues as a percentage of GDP are just 30% in China, lower than the average of 42.8% in developed countries and 33.4% in developing ones. But Mr Cao’s complaints do have some merit. In its annual “Doing Business” rankings, the World Bank estimates that China’s total tax rate as a percentage of profits is 68%, roughly two-thirds more than in high-income countries. + +This points to bigger flaws in China’s taxation system: an overreliance on indirect taxes and poor design of direct taxes. According to a 2015 analysis by W. Raphael Lam and Philippe Wingender of the IMF, taxes on corporate and personal incomes account for just a small fraction of China’s tax revenues. Instead, more than half of revenues come from indirect taxes on goods and services. As for direct taxes, they are deeply regressive: social-security contributions account for 90% of tax liabilities for most households. + +China is slowly tackling some of these issues. Reform of the value-added tax system (which has replaced a cruder tax on revenues) will lower the government’s take of indirect taxes. It has eased the burden of social-security payments for its poorest citizens. Richard Bao, a partner with Grant Thornton, an accounting firm, says that China is making the tax-filing process simpler for companies, at the same time as it is tightening the net around those who dodge it. And Mr Cao’s criticism suggests that China might also be making progress in another respect. Like all rich countries, it, too, now has tycoons who threaten to invest abroad if the government does not cut their tax bills. + +This article appeared in the Finance and economics section of the print edition under the headline “Making China great again” + + + + + +Free exchange + +To be relevant, economists need to take politics into account + +The advent of the Trump administration finds the economics profession in crisis + +Jan 14th 2017 + + + +EVERY January more than 10,000 economists meet for the annual conference of the American Economic Association (AEA). This year, the shindig was in balmy Chicago, a stone’s throw from its second-tallest building, the name TRUMP stamped in extra-large letters across its base. Most papers had been written months in advance; few sessions tackled the electoral earthquake in November. Yet there was no mistaking the renewed sense, following its failure to foresee the 2007-08 financial crisis, of an academic field in a crisis of its own. The election was seen as a defeat for liberalisation and globalisation, and hence for an economics profession that had championed them. If economists wish to remain relevant and useful, the modest hand-wringing at this year’s meetings will need to yield to much deeper self-reflection. + +Their theories had always shown that globalisation would produce losers as well as winners. But too many economists worried that emphasising these costs might undermine support for liberal policies. A “circle the wagons” approach to criticism of globalisation weakened the case for mitigating policies that might have protected it from a Trumpian backlash. Perhaps the greatest omissions were the questions not asked at all. Most dismal scientists exclude politics from their models altogether. As Joseph Stiglitz, a Nobel laureate, put it on one star-studded AEA panel, economists need to pay attention not just to what is theoretically feasible but also to “what is likely to happen given how the political system works”. + +Researchers on topics of political relevance—from the global effects of dollar appreciation to the economics of the production of fake news—promised in Chicago to produce more timely research. One recent example: just after the election, David Autor, of the Massachusetts Institute for Technology, and others published a short paper comparing congressional-district election results against data they had previously gathered assessing local-area exposure to Chinese imports. Similarly, Anne Case and Angus Deaton of Princeton University were able to compare their results on recent increases in mortality rates in parts of America with voting patterns. + +In a keynote address, Robert Shiller—a Nobel prizewinner, habitual freethinker and outgoing AEA president—suggested that economists should think more broadly about the factors that affect human behaviour. Narratives matter, he argued. Powerful ideas, captured in memorable stories, can spread like epidemics, wreaking economic havoc as they go. + +Views such as these, however, are notable for their rarity. Economists in Chicago debated the likely effect of the fiscal expansion expected under the Trump presidency, just as they had in past years debated the need for more of a fiscal boost during the outgoing Obama administration. Hardly discussed at all, however, was why deficit spending that seemed politically impossible then is on the political agenda now. A few years ago it might have boosted an American economy struggling to overcome weak growth and near-zero inflation; now the unemployment rate is just 4.7% and both growth and inflation are accelerating. + +Economists seem to feel that such political questions are outside their area of concern. Yet politics helps determine the value of economic-policy recommendations. Many aspects of the stimulus plan passed early in Barack Obama’s tenure, such as the money provided to states to plug budget holes and protect public services from large spending cuts, were chosen because they were judged to have a high multiplier effect—ie, each dollar in new government debt generated a more-than-equivalent rise in output. But the spending remained largely invisible to voters, who had little idea as a result whether (or how) they had benefited from it. That, in turn, made stimulus easy to demonise, hindering subsequent attempts to boost fiscal spending and harming labour markets. Policies that look effective in the absence of political constraints can prove anything but in the real world. + +Similarly, economists are rightly beginning to wrestle with the threat artificial intelligence could pose to jobs. But they are doing so in almost purely economic terms, when it is the political impact that may prove most interesting and important. Besides modelling an economy where machines do 100% of the work, it might be worth thinking through the potential political effects of a world in which, say, 20% of working-class adults are deprived of good, meaningful work. Long before the last human worker clears his desk, protectionist or Luddite reactions might anyway have destroyed the path to this brave new world. + +It’s the politics, stupid + +Many economists shy away from such questions, happy to treat politics, like physics, as something that is economically important but fundamentally the business of other fields. But when ignoring those fields makes economic-policy recommendations irrelevant, broadening the scope of inquiry within the profession becomes essential. Some justifiably worry that taking more account of politics could destroy what credibility economists have left as impartial, apolitical experts. Yet politics-free models are no insulation from political pressures—just ask a climate scientist—and nothing would boost economists’ reputations more than results which match, and even predict, critical outcomes. + +Political and social institutions are much harder to model and quantify than commodity or labour markets. But a qualitative approach might actually be far more scientific than equations offering little guide to how the future will unfold. Donald Trump campaigned (and may well govern) by castigating the uselessness of experts. To prepare for a time when expertise comes back into fashion, economists should renew their commitment to generating knowledge that matters. + +Visit our Free exchange economics blog + +This article appeared in the Finance and economics section of the print edition under the headline “Get off of my cloud” + + + + + +Awards + +Jan 14th 2017 + +Awards: Tom Easton, our American finance editor, was named journalist of the year by the CFA Society of the UK in a ceremony on January 11th. The Economist was named publication of the year. + + + +This article appeared in the Finance and economics section of the print edition + + + + + +Science and technology + + + + + +Power transmission: Rise of the supergrid + +Astronomy: De Nova Stella + +Medical diagnostics: String-driven thing + +Underwater drones: One that didn’t get away + +The evolution of the menopause: A whale of a tale + + + + + +Rise of the supergrid + +Electricity now flows across continents, courtesy of direct current + +Transmitting power over thousands of kilometres requires a new electricity infrastructure + +Jan 14th 2017 + + + +THE winds of the Oklahoma panhandle have a bad reputation. In the 1930s they whipped its over-tilled topsoil up into the billowing black blizzards of the Dust Bowl. The winds drove people, Steinbeck’s dispossessed, away from their livelihoods and west, to California. + +Today, the panhandle’s steady winds are a force for creation, not destruction. Wind turbines can generate electricity from them at rock-bottom prices. Unfortunately, the local electrical grid does not serve enough people to match this potential supply. The towns and cities which could use it are far away. + +So Oklahoma’s wind electricity is to be exported. Later this year, lawsuits permitting, work will begin on a special cable, 1,100km (700 miles) long, between the panhandle and the western tip of Tennessee. There, it will connect with the Tennessee Valley Authority and its 9m electricity customers. The Plains and Eastern Line, as it is to be known, will carry 4,000MW. That is almost enough electricity to power Greater London. It will do so using direct current (DC), rather than the alternating current (AC) that electricity grids usually employ. And it will run at a higher voltage than such grids use—600,000 volts, rather than 400,000. + +This long-distance ultra-high-voltage direct-current (UHVDC) connector will be the first of its kind in America. But the problem it helps with is pressing everywhere. Fossil fuels can be carried to power stations far from mines and wells, if necessary, but where wind, solar and hydroelectric power are generated is not negotiable. And even though fossil fuels can be moved, doing so is not desirable. Coal, in particular, is costly to transport. It is better to burn it at the pithead and transport the electricity thus generated instead. + +Transmitting power over thousands of kilometres, though, requires a different sort of technology from the AC now used to transmit it tens or hundreds of kilometres through local grids. And in China, Europe and Brazil, as well as in Oklahoma, a new kind of electrical infrastructure is being built to do this. Some refer to the results as DC “supergrids”. + +Higher voltage + +AC’s ubiquity dates from the so-called “war of the currents” that accompanied electrification in the 1880s and 1890s. When electricity flows down a line as AC, energy travels as a wave. When it flows as direct current, there is no oscillation. Both work well, but the deciding factor in AC’s favour in the 19th century was the transformer. This allows AC voltages to be increased after generation, for more efficient transmission over longish distances, and then decreased again at the other end of the line, to supply customers’ homes and businesses. At the time, direct current had had no such breakthrough. + +When one eventually came, in the 1920s, in the form of the mercury arc valve, AC was entrenched. Even the solid-state thyristor, a cousin of the transistor invented in the 1950s, offered no great advantages over the tens or hundreds of kilometres that power grids tended to span. Some high-voltage DC lines were built, such as that under the English Channel, linking Britain and France. But these were justified by special circumstances. In the case of the Channel link, for example, running an AC line through water creates electromagnetic interactions that dissipate a lot of power. + +Over transcontinental distances the balance of advantage shifts. As voltages go up, to push the current farther, AC employs (and thus wastes) an ever-increasing amount of energy in the task of squeezing its alternations through the line. Direct current does not have this problem. Long-distance DC electrical lines are also cheaper to build. In particular, the footprint of their pylons is smaller, because each DC cable can carry far more power than an equivalent AC cable. Admittedly, thyristors are expensive—the thyristor-packed converter stations that raise and lower the voltage of the Plains and Eastern line will cost about $1bn, which is two-fifths of the project’s total bill. But the ultra-high voltages required for transcontinental transmission are still best achieved with direct current. + +For all the excitement surrounding the Plains and Eastern Line, however, America is a Johnny-come-lately to the world of UHVDC. Asian countries are way ahead—China in particular. As the map on the previous page shows, the construction of UHVDC lines is booming there. That boom is driven by geography. Three-quarters of China’s coal is in the far north and north-west of the country. Four-fifths of its hydroelectric power is in the south-west. Most of the country’s people, though, are in the east, 2,000km or more from these sources of energy. + +China’s use of UHVDC began in 2010, with the completion of an 800,000-volt line from Xiangjiaba dam, in Yunnan province, to Shanghai. This has a capacity of 6,400MW (equivalent to the average power consumption of Romania). The Jinping-Sunan line, completed in 2013, carries 7,200MW from hydroelectric plants on the Yalong river in Sichuan province to Jiangsu province on the coast. The largest connector under construction, the Changji-Guquan link, will carry 12,000MW (half the average power use of Spain) over 3,400km, from the coal- and wind-rich region of Xinjiang, in the far north-west, to Anhui province in the east. This journey is so long that it requires 1.1m volts to push the current to its destination. + +China’s UHVDC boom has been so successful that State Grid, the country’s monopolistic electricity utility, which is behind it, has started building elsewhere. In 2015 State Grid won a contract to build a 2,500km line in Brazil, from the Belo Monte hydropower plant on the Xingu River, a tributary of the Amazon, to Rio de Janeiro. + +China’s neighbour India is following suit—though its lines are being built by European and American companies, namely ABB, Siemens and General Electric. The 1,700km North-East Agra link carries hydroelectric power from Assam to Uttar Pradesh, one of the country’s most densely populated areas. When finished, and operating at peak capacity, it will transmit 6,000MW. At existing levels of demand, that is enough for 90m Indians. The country’s other line, also 6,000MW, carries electricity 1,400km from coal-fired power stations near Champa, in Chhattisgarh, to Kurukshetra, in Haryana, passing Delhi on the way. + +Overdose + +Valuable though they are, transcontinental links like those in China, Brazil and India are not the only use for UHVDC. Electricity is not described as a “current” for nothing. It does behave quite a lot like a fluid—including fanning out through multiple channels if given the chance. This tendency to fan out is another reason it is hard to corral power over long distances through AC grids—for, being grids, they are made of multiple, interconnected lines. Despite UHVDC connectors being referred to as supergrids, they are rarely actual networks. Rather, they tend to be point-to-point links, from which fanning out is impossible. Some utilities are therefore looking at them to move power over relatively short distances, as well as longer ones. + +One such is 50Hertz, which operates the grid in north-east Germany. Almost half the power it ships comes from renewable sources, particularly wind. The firm would like to send much of this to Germany’s populous south, and on into Austria, but any extra power it puts into its own grid ends up spreading into the neighbouring Polish and Czech grids—to the annoyance of everyone. + +50Hertz is getting around this with a new UHVDC line, commissioned in partnership with Germany’s other grid operators. This line, SuedOstLink, will plug into the Meitingen substation in Bavaria, replacing the power from decommissioned south-German nuclear plants. And Boris Schucht, 50Hertz’s boss, has bigger plans than that. He says that within ten years UHVDC will stretch from the north of Sweden down to Bavaria. After this, he foresees the development of a true UHVDC grid in Europe—one in which the lines actually interconnect with each other. + +That will require new technology—special circuit-breakers to isolate faulty cables, and new switch gear—to manage flows of current that are not simply running from A to B. But, if it can be achieved, it would make the use of renewable-energy sources much easier. When the wind blows strongly in Germany, but there is little demand for the electricity thus produced (at night, for instance), UHVDC lines could send it to Scandinavian hydroelectric plants, to pump water uphill above the turbines. That will store the electricity as potential energy, ready to be released when needed. Just as sources of renewable energy are often inconveniently located, so, too are the best energy-storage facilities. UHVDC permits generators and stores to be wired together, creating a network of renewable resources and hydroelectric “batteries”. + +In Asia, something similar may emerge on a grander scale. State Grid plans to have 23 point-to-point UHVDC links operating by 2030. But it wants to go bigger. In March 2016 it signed a memorandum of understanding with a Russian firm, Rosseti, a Japanese one, SoftBank, and a Korean one, KEPCO, agreeing to the long-term development of an Asian supergrid designed to move electricity from windswept Siberia to the megalopolis of Seoul. + +This project is reminiscent of a failed European one, Desertec, that had similar goals. But Desertec started from the top down, with the grand vision of exporting the Sahara’s near-limitless solar-power supply to Europe. Today’s ideas for Asian and European supergrids are driven by the real needs of grid operators. + +Such projects—which are transnational as well as transcontinental—carry risks beyond the merely technological. To outsource a significant proportion of your electricity generation to a neighbour is to invest huge trust in that neighbour’s political stability and good faith. The lack of such trust was, indeed, one reason Desertec failed. But if trust can be established, the benefits would be great. Earth’s wind-blasted and sun-scorched deserts can, if suitably wired up, provide humanity with a lot of clean, cheap power. The technology to do so is there. Whether the political will exists is the question. + +This article appeared in the Science and technology section of the print edition under the headline “Rise of the supergrid” + + + + + +De Nova Stella + +A “new” star should appear in 2022 + +A tale of scientific serendipity + +Jan 14th 2017 + +X marks the spot + +AMATEUR astronomers have a new date for their diaries. In 2022, in the constellation of Cygnus, they will be treated to the sight of a nova, or “new star”. By themselves, novas are not particularly noteworthy. Several dozen a year happen in Earth’s home galaxy, the Milky Way, alone. But this one will be special for two reasons. + +One is its intensity: provided you are somewhere reasonably dark (in the countryside, in other words, rather than a big city) it will be bright enough to be seen by the naked eye. The second is that it will be the first nova whose existence was predicted before the fact. Assuming everything goes according to schedule, the credit for that will belong to Lawrence Molnar, an astronomer at Calvin College, in Michigan, and his team, who have set out their predictions in a paper to be published soon in the Astrophysical Journal. + +It is a tale of scientific serendipity. “Nova”, which is Latin for “new”, comes from the title of a book (also the title of this article) published in 1573 by Tycho Brahe, a Danish astronomer. This recorded what would now be called a supernova that had happened the year before. By proving that the “new star” in question was a very great distance away—at the least, further than the Moon—Brahe dealt a mortal blow to the Aristotelian belief, widespread in Europe at the time, that the heavens were perfect and unchanging. + +But the name is a misnomer. Novas are not new stars. Rather, they are explosions that take place on existing ones, drastically but temporarily increasing their brightness. There are several kinds, but Dr Molnar’s nova will be caused when one member of a two-star system collides with the other, causing an enormous and violent outpouring of energy. + +Dr Molnar’s interest was piqued at a conference in 2013, when Karen Kinemuchi, another astronomer, presented some puzzling findings on a particular star seen by Kepler, a space telescope designed chiefly to hunt for exoplanets. When Dr Molnar and his team observed the star—named KIC9832227—they discovered that it was a “contact binary”, a pair of stars so close together that the smaller orbits within the atmosphere of the larger. + +They also found that the smaller star was orbiting more quickly—and thus closer to its bigger companion—than it had been when Dr Kinemuchi made her measurements. Further observations confirmed that the smaller star was indeed spiralling towards its companion. Based on observations of another contact binary, V1309 Scorpii, which became a nova in 2008, the researchers were able to offer a prediction of the time of impact that, they hope, should be accurate to within about seven months. (The most likely date is a fifth of the way through 2022—ie, mid-March.) + +Successfully predicting a nova will be of interest to more than just amateur skywatchers. Astronomers have built mathematical models to describe what happens during such events, but testing them against reality is hard. All previous novas have been detected after the fact. Anyone wanting to study what happens before the explosion must therefore sift back through old observations, hoping that some information about the pre-nova star will have been recorded by chance. Armed with Dr Molnar’s prediction, though, astronomers will be able to watch the build-up as well as the denouement. + +This article appeared in the Science and technology section of the print edition under the headline “De Nova Stella” + + + + + +Medical diagnostics + +A cardboard centrifuge separates blood cells from plasma + +String-driven thing + +Jan 14th 2017 + + + +TAKE a cardboard disc and punch two holes in it, on either side of its centre. Thread a piece of string through each hole. Now, pull on each end of the strings and the disc will spin frenetically in one direction as the strings wind around each other, and then in the other, as they unwind. + +Versions of this children’s whirligig have been found in archaeological digs across the world, from the Indus Valley to the Americas, with the oldest dating back to 3,300BC. Now Manu Prakash and his colleagues at Stanford University have, with a few nifty modifications, turned the toy into a cheap, lightweight medical centrifuge. They report their work this week in Nature Biomedical Engineering. + +What goes around... + +Centrifuges’ many uses include the separation of medical samples (of blood, urine, sputum and stool) for analysis. Tests to spot HIV, malaria and tuberculosis, in particular, require samples to be spun to clear them of cellular debris. Commercial centrifuges, however, are heavy and require power to run. That makes them impractical for general use by health-care workers in poor countries, who may need to carry out diagnostic tests in the field without access to electricity. They also cost hundreds—often thousands—of dollars. + +Dr Prakash’s device, which he calls a “paperfuge”, costs 20 cents and weighs just two grams. The standard version (pictured) consists of two cardboard discs, each 10cm across. One of the discs has two 4cm-long pieces of drinking straw glued to it, along opposing radii. These straws, which have had their outer ends sealed with glue, act as receptacles for small tubes that contain the blood to be centrifuged. + +Once the straws have been loaded, the two discs are attached face to face with Velcro, sandwiching the tubes between them. For string, Dr Prakash uses lengths of fishing line, tied at each end around wooden or plastic handles that the spinner holds. + +The result, which spins at over 300 revolutions per second (rps) and generates a centrifugal force 10,000 times that of gravity, is able to separate blood into corpuscles and plasma in less than two minutes. This is a rate comparable to that of electrical centrifuges. Spinning samples for longer (about 15 minutes is ideal, though that is a lot of effort for a single spinner) can even separate red corpuscles, which may be infected by malarial parasites, from white ones, which cannot be so infected. The team is now trying the system out for real, to find out what works best, by conducting blood tests for malaria in Madagascar. + +Once samples have been separated, they still need to be analysed. Fortunately, the paperfuge is not the first cheap laboratory instrument Dr Prakash has invented. In 2014 he unveiled the “foldscope”, a microscope made from a sheet of paper and a small spherical lens. The foldscope goes on sale this year, but his laboratory has already distributed more than 50,000 of them to people in 135 countries, courtesy of a charitable donation that paid for them. He plans to ship a million more by the end of 2017. Putting this together with a paperfuge means it is now possible to separate biological samples and analyse them under a microscope using equipment that costs less than a couple of dollars. + +This article appeared in the Science and technology section of the print edition under the headline “String-driven thing” + + + + + +Underwater drones + +The ultimate angling aid: a fishing drone + +A new gadget to go after the one that got away + +Jan 14th 2017 + + + +MOST pastimes nowadays involve lots of high-tech gadgets. For fishermen these range from electronic bite alarms to carbon-fibre rods, specialised clothing and tackle boxes stuffed with various odd and ends. There is so much clobber that some anglers use trolleys to lug around their gear. Now the ultimate piece of kit has arrived: a fishing drone. + +The device, called PowerRay, comes from PowerVision, a dronemaker in Beijing. It is a submersible that carries a video camera to send images of Neptune’s kingdom back to the angler on the bank or boat above. These pictures, either still or video, can be viewed on the screen of the hand-held unit that controls the drone, or on a smartphone. Those who really want to get into the swim can don a pair of virtual-reality goggles to watch them. + +PowerRay is equipped with a fish detector. This uses sonar, sending out sound waves and picking up the reflections that bounce off nearby objects. PowerVision claims that the system can distinguish between species, permitting the angler to identify the target he wants. The drone can then be used to carry a baited hook to the spot, and let it go. Just for good measure, it can also emit an alluring hue of blue light which is supposed to attract fish. + +The PowerRay caused something of a buzz among excitable geeks at CES, a consumer-electronics show held in Las Vegas, where it was unveiled this week. But most failed to spot something. Flying drones communicate using radio waves, but, whereas sound travels well in water, radio waves do not—especially through seawater, which is highly conductive and thus readily absorbs radio signals. This is why submarines usually need to surface to use their radios. The clue to how PowerRay gets around this problem can be found in a suspicious-looking plug socket amidships. + +The drone has, in fact, to be tethered to its operator by plugging in a 30-metre-long umbilical cord. PowerVision explains that this cord serves two purposes. One is to cope with the “challenging transmission environment”, by relaying commands and video data through the cable. The other is rescue, for if a big fish came along and snatched the bait the drone was carrying, the device might be dragged down to Davy Jones’s locker. The cord lets the angler haul the drone in manually, with or without the offending whopper still holding on. + +The company hopes to offer future versions of the PowerRay without a cord, probably using low-frequency systems which could provide limited range in fresh water. These would be intended for underwater photography. For the fishermen, it is also looking at how to deliver a baited hook directly to a specific destination on the river bed or sea floor, and then settle down to keep a watch over it. Anglers will thus have direct video evidence of the one that got away. + +This article appeared in the Science and technology section of the print edition under the headline “One that didn’t get away” + + + + + +A whale of a tale + +Intergenerational conflict may explain the menopause + +Why do women, unlike most female mammals, stop reproducing decades before they die? + +Jan 14th 2017 + +Hurry up, Grandma + +THE menopause is a puzzle. Why do women, unlike most female mammals, stop reproducing decades before they die? Analysing birth and death records shows that the assistance they give in bringing up grandchildren does have a measurable effect on those grandchildren’s survival. But that does not prove such assistance is more valuable in evolutionary terms than continued fertility would be. + +Two other mammals undergo a menopause, however. These are killer whales and short-finned pilot whales. And a long-term analysis of killer-whale populations, by Darren Croft of the University of Exeter, in England, and his colleagues, just published in Current Biology, suggests the missing part of the explanation may be that the menopause not only frees a female to help raise the grandoffspring, but also reduces competition between her and her gravid and nursing daughters. + +Dr Croft’s killer whales swim off the coasts of British Columbia, in Canada, and its southern neighbour, the American state of Washington. They have been monitored by marine biologists every year since 1973. They live in pods of 20-40 animals and are now so well known that individual animals can be identified by the shapes of their fins, the patterns of their saddle patches and from scratches that they have picked up in the rough and tumble of oceanic life. Their sexes are known, too. Though killer whales’ genitalia are not visible from the outside, distinctive pigmentation patterns around their genital slits distinguish males from females. And which calves belong to which mothers can be deduced by seeing who spends most time with whom. + +The data thus collected let Dr Croft analyse the lives of 525 calves born into three of the pods. He found that if an elderly female gave birth at around the same time as a youngster, her calf was, on average, 1.7 times more likely to die before the age of 15 than the youngster’s was. This was not caused directly by the mother’s age. In the absence of such coincidence of birth, the calves of elderly mothers were just as likely to live to 15 as those of young mothers. But when it came to head-to-head arrogation of resources for offspring, the youngsters outcompeted their elders, and their offspring reaped the benefits. + +Plugging these numbers into his model, Dr Croft showed that the diminution of fecundity in elderly females that this intergenerational competition creates, combined with the fact that the youngsters an elderly female is competing with are often her own daughters (so it is her grandoffspring that are benefiting), means it is better for her posterity if she gives up breeding altogether, and concentrates her efforts on helping those daughters. Whether women once gained the same sorts of benefits from the menopause as killer whales do remains to be determined. But it is surely a reasonable hypothesis. + +This article appeared in the Science and technology section of the print edition under the headline “A whale of a tale” + + + + + +Books and arts + + + + + +A walk across Washington: District line + +Spying in America: The Snowden operation + + + + + +A walk across Washington + +A tour of a changing capital + +A day’s stroll from one end of America’s federal capital to the other is a good way of exploring how the culture and topography of the city are evolving + +Jan 14th 2017 | WASHINGTON, DC + + + +“WELCOME to Washington, DC”, says the solid, red, white and blue sign on the corner of Branch and Southern Avenues, in this leafy entry to the nation’s capital. A stream of traffic is carrying in mostly African-American commuters from Maryland’s Prince George’s County. It is eight o’clock on a clear blue morning: a perfect day for a walk across Washington. + +The distance from one end of the District of Columbia to the other is only about 11 miles (18km). Today’s zigzag route (see map) is perhaps 17 miles. The eyes of the world will be on Washington on January 20th, the day of Donald Trump’s inauguration as America’s 45th president. The idea of walking across it is to do a double dissection of the city: a geographical one (a leisurely look at its contrasts, from the poorer south-east to the prosperous north-west, where your correspondent lived in the mid-1990s); and a historical and cultural one (a sense of how the place has changed). On both dimensions, big surprises lay ahead. + + + +A tale of two cities + +Washington is known to be deeply divided—not just between warring Democrats and Republicans but also between the relatively affluent and diverse city west of the Anacostia river and the largely black and long-neglected one east of it. A recent study of the census tracts within a mile’s radius of one of the bridges across the river gives an idea of the gulf: unemployment of 6.6% and child poverty of 20% on the western side; 20.7% jobless and 53% child poverty to the east. The median value of an owner-occupied home in the west was two-and-a-half times that in the east. + +A quarter of a century ago Washington was known as the “murder capital” of America, a result of a crack-cocaine epidemic (and the illicit market it gave rise to) from the mid-1980s. The number of murders peaked at 482 in 1991, falling to below 100 in 2012. Despite the dip, crime remains uncomfortably common: Washington ranks only just outside the ten worst large cities in the country for violent crime, and in 2015 it experienced a nasty uptick in murders. In 2016 it had 135 homicides. + +A disproportionate share of the killing happens east of the river. The typical victim is “a 24-year-old black man in the south-east, who most likely knew their killer,” says Jennifer Swift, the editor of D.C. Witness, which monitors every murder. People who live on the other side of town tend to venture east of the Anacostia with a degree of wariness, if at all. + +So the first surprise along gently undulating Branch Avenue is how pleasant and peaceful it is—all wood-clad and brick colonial homes with their porches, set back amid trees and lawns: the suburban American dream. A short detour leads to the Francis A. Gregory Library, built in 2012 by David Adjaye, the Ghanaian-British architect who has just been knighted by the queen and who made his name in America designing the newly opened National Museum of African-American History & Culture, the latest addition to the Smithsonian. If anything, the local library, an elegant mix of glass and diamond-shaped plywood, is the more pleasing of the two. + +On the morning stretch your correspondent is accompanied by a friend from his time as The Economist’s Washington bureau chief in the 1990s, and by Mark Puryear, an ethnomusicologist and native Washingtonian. An hour into the walk the friend, Alissa Stern from Bethesda, Maryland, confesses to being “shocked” by how nice this area is. + +True, Mr Puryear has planned our route into Anacostia with care. It meanders past civil-war defences with commanding views over the city and across the Potomac river into Virginia. It includes the Anacostia Community Museum, a branch of the Smithsonian where a recent exhibition, “Twelve Years that Shook and Shaped Washington: 1963-1975”, covered an earlier period of dramatic change for the city, including the riots that erupted after the assassination of Martin Luther King in 1968 and the redevelopment that pushed many African-American families into public housing in Anacostia. Farther down, we reach the Anacostia home of Frederick Douglass, a 19th-century abolitionist and orator. The site is now run by the National Park Service; the visitors there are among the few white faces we see this morning. + +Mr Puryear notes an abundance of one thing and a scarcity of another. The abundance is of churches. In front of the modest Kingdom Hall of Jehovah’s Witnesses, a smartly dressed Mary Ushbry is picking bits of litter off the street in preparation for a service this morning which, she says, is going to “bring some good news”. The grander Our Lady of Perpetual Help enjoys a stunning view over the city. + +The scarcity is of shops. Only three supermarkets serve all of Wards 7 and 8, the administrative districts east of the river that, together, are home to about 140,000 people. “It’s a classic food desert,” says Mr Puryear. Nam’s Market, a small blue-fronted store near the Frederick Douglass house, keeps most of its wares—including cup noodles, tinned stew, Frooties—securely behind a glass partition and a bolted door. There is nothing fresh in sight. + +Yet vegetables are sprouting a couple of blocks away on spare land between buildings in the centre of Anacostia, in 80 raised beds, thanks to volunteers from Union Temple Baptist Church. And Martha’s Table, a 37-year-old charity supporting access to healthy food, is moving its headquarters from the west of town to the east, where the need is greatest. Its “Joyful Food Markets” distribute fruit and vegetables to schools; by 2018 it aims to have such monthly markets in every elementary school in Wards 7 and 8. + +A river runs through it + +Such projects are part of this morning’s second surprise: the energy and imagination of the efforts under way to improve lives east of the river. Existing initiatives are being expanded: THEARC, a large centre for arts, recreation and education, opened in 2005 and is now planning to add a third building. The Department for Homeland Security is consolidating its headquarters in the Anacostia area. The District has thrown its support behind a $65m project for a practice facility for the Washington Wizards basketball team and an arena for the women’s team, the Mystics. + +In a former Woolworths building on Good Hope Road, the Anacostia Arts Centre houses exhibitions, a restaurant, a small theatre and a few boutiques. Downstairs, it provides a home for (mainly African-American) start-ups and charities. Its head, Duane Gautier, says the area lacks the disposable income to attract the amenities that regeneration needs; his idea is to bring visitors from outside, using the arts to revitalise Anacostia’s historic district. + +The centre, which opened in 2013, seems to be having some modest success. It is drawing in people: some 26,000 visitors in 2015. A juice bar has opened around the corner on Martin Luther King Jr Avenue, as have a couple of sit-down restaurants and a radio station. A trendy Busboys and Poets restaurant—in Washington, a leading indicator of a community on the up—is coming soon. + +But the idea that could have the most dramatic impact on Anacostia is the 11th Street Bridge Park. This aims to use the pillars from a disused road bridge across the river to create a recreation space that would help to unite the two sides of the city. About the length of three American-football fields, the bridge would have lawns, waterfalls, an amphitheatre and a picnic garden. + +The concept has something of New York’s High Line about it. “It will be a destination—more a place than a path,” says Scott Kratz, the project’s director, over a freshly made sandwich at the Anacostia Arts Centre’s café. The river has divided Washington for generations, he says; now it can bring together “people who wouldn’t normally cross paths”. Pre-construction work has started, and he hopes the park will open in late 2019. + +Mr Kratz is busy not just raising the $45m needed for the bridge, but working on ways to avoid its most feared side-effect: gentrification. His “Equitable Development Plan” includes leveraging the project to encourage small businesses, and a homebuyers’ club so locals can capture some of the rising equity that is coming their way. + +Boomtown, USA + +To see what gentrification looks like, you have only to cross the river. Already from the bridge, massive building development starts to come into view. The third surprise of the walk is the scale of the boom that is under way in many parts of the city. + +Yards Park, next to the Navy Yards, is a good example. Washington was founded on the confluence of the Anacostia and Potomac rivers, but it had largely turned its back on the Anacostia, heavily polluted and lined with industrial buildings and parking lots. Now it is clearing these away; a boardwalk, jetties, park facilities and apartment blocks with river views are coming. A sign by a building site even announces an imminent “District Winery”. + +“People forget, we’re a water city,” says Charles Allen, the council member for Ward 6, which straddles all four quadrants of the city. The river is not only becoming more accessible again, it is gradually being cleaned up. Mr Allen points across to a pontoon where ospreys have been nesting. Bald-eagle chicks have been spotted, too. It still would not be wise to eat fish caught in the Anacostia, but a group is out on a boat fishing this afternoon. + +Two decades ago the District was a potholed basket-case that was losing people to the suburbs. Now its finances are healthy and it is gaining about 1,100 newcomers a month. Being home to the federal government helped Washington weather the financial crisis with relative ease. More remarkably, what was once just a staid federal city is attracting young entrepreneurs and becoming hip—a place of cycle lanes, fancy coffee shops, communal library boxes and yoga mats. + +The population has grown by some 100,000 over the past 15 years, to 670,000. The ethnic mix is changing, too. In 1980, 70% of the population was black; this has dipped below 50%. + +“There’s no question, the city is going through a complete reshaping,” says Mr Allen. “We are in the middle of that.” Two groups in particular are moving in, he explains. One are 25- to 35-year-olds, starting out on their careers. The other are 55- to 65-year-olds, empty-nesters from the baby-boom generation, who want arts, culture and restaurants within walkable reach. The worry in many parts of town has switched from coping with crime to coping with the soaring house prices that come with gentrification. + +Shaw, once down-at-heel, is very trendy. NoMa, as the area “North of Massachusetts Avenue” is now branded, has similar aspirations. The “H Street corridor” boasts cool restaurants and a lively theatre: “It’s not up and coming, it’s come,” marvels a visitor from another part of town. It is the same story around Union Market (“This was a war zone,” says another visitor). Streets near Eastern Market are lined with restaurants; a nearby resident has counted 45 of them within a short walk from his home. Eateries and bars have moved into parts of town, like 14th Street, where you used to trip over needles and condoms. + +In 1994 your correspondent reported on a twice-weekly evening “orange hat” patrol around the Lincoln Park area east of the Capitol that sought to keep the neighbourhood safe. One of those orange-hatters, who moved out when his wife had their first child as this seemed no place to raise a family, is stunned by the change he sees when he returns. As we revisit the area the day before the walk across the city, we come across a young couple with their three-year-old daughter from northern Virginia. They are here to view a house. They are drawn by the free pre-school—and it’s two blocks from Lincoln Park, “and you can’t get much better than that.” + +Centre of attention + +The next part of the walk—skirting by the Capitol Building, down the National Mall towards the Washington Monument—is a reminder of Pierre L’Enfant’s vision in designing America’s capital on such a grand scale in the 1790s. Hence the majestic vista across the crowds and flags to the Lincoln memorial two miles away that will greet President Trump on his inauguration. No one could invent a better backdrop for “making America great again”. + +Yet, until recently, America’s “front yard” was in danger of becoming a symbol of national decline. Its lawns, a much-trodden carpet for 24m visitors a year, were looking the worse for wear, and the Mall and its monuments were badly in need of maintenance after decades of neglect. The Washington Monument, an emblem of American aspiration, reopened in 2014 after $15m of repairs for damage it suffered in an earthquake in 2011, but its lift broke down last August and it will remain closed to visitors until 2019. Still, fresh investment has been coming in, along with new attractions. + +So much on offer + +Two recent additions in the heart of the capital are drawing attention. The first is the National Museum of African-American History & Culture, approved in 2003 by President George W. Bush and opened, fittingly, by President Barack Obama on September 24th. It is intended to be the last of the buildings on the Mall. When tickets were released for the three months to the end of the year, they were snapped up in 42 minutes. The place is packed. The visitors, mostly African-Americans, seem totally absorbed: quietly contemplative or softly sharing their responses (“They wouldn’t serve me at the counter”). Starting in subterranean exhibits on the slave trade, the civil war, segregation and civil rights, the crowd moves up into the light towards floors devoted to communities and culture. This would justify a full day’s walk of its own. + +The second is the five-star Trump International Hotel, which opened on September 12th in the Old Post Office building. Today there is even a glimpse of the Donald himself—though only on the four large television screens behind the bar. The staff are friendly, but the central court feels cavernous and lacks atmosphere, a missed opportunity to do something more imaginative with a grand space. Already the hotel, with its “Presidential Ballroom”, has proved to be a magnet for receptions and (thanks to its name and ownership) for controversy. + +From here it is a short walk to the White House. The ability to drive past it along Pennsylvania Avenue ended, for security reasons, in 1995. Walking by it is still a thrill. But Washingtonians now shudder at the thought of its next occupant: 90% of their votes in November were for Hillary Clinton, just 4% for Mr Trump. + +A block away, on 17th Street, are the offices of Holland and Knight, a law firm with another superb view across town. Whayne Quin, a lawyer with long experience of development in the District, spreads out a giant, multicoloured map of Washington’s “Comprehensive Plan”, which shows the city’s ambitions for the use of its 61 square miles of land and seven square miles of water. The green areas of the extensive park system at its core stand out amid ample amounts of yellow (“low-density residential”) and pockets of red (“high-density commercial”). Mr Quin points out that the development across the city has happened despite significant constraints, notably on building height (skyscrapers are conspicuous by their absence here). The planners have been flexible, though, allowing taller buildings provided certain obligations are met, for example on mixed use and social housing. + +A pragmatic approach to planning is one of several factors that have combined to change Washington’s fortunes, in Mr Quin’s view. Sensible financial management is another: the city has balanced its budget since Congress imposed a Financial Control Board from 1995 to 2001 to stop the rot. A third is diversification beyond the core industry of government. The Washington area has become a hub for technology, and for the services that techies demand. Young newcomers are putting down roots, reinforcing a cultural change, especially on race. “It’s now a very diversified, progressive and forward-thinking city,” says Mr Quin, “but that wasn’t so when I came here in 1964.” + +Half an hour’s walk beyond, across Rock Creek, the loveliest of all the many green spaces in Washington, lies Georgetown, which has long been upscale, but if anything now seems more so. There’s time for a quick peek at an addition to the capital’s embassy scene—the world’s youngest country, South Sudan, flies its flag in an alleyway down from the Chesapeake and Ohio Canal—then it’s a long uphill march along Wisconsin Avenue towards the final destination. + +The home stretch + +Across the city, posters calling for statehood for the District have been a reminder that its lack of full representation in Congress remains an issue. In a telephone conversation at the start of the day, Anthony Williams, the former mayor who oversaw the recovery from Washington’s nadir in the 1990s, says that one strategy for the future is to keep drawing attention to Washington the city rather than Washington the federal capital. The District has leveraged the presence of the national government well, he says, but since federal spending is likely to remain flat further diversification will be essential. He describes the state of the city succinctly: “It’s improved, but there’s still a very great divide.” + +Indeed, in some respects, the contrast between the morning walk and the last stretch couldn’t be greater. Most of the faces are now white. Instead of a food desert, there is a cornucopia of Safeways, Giants and Whole Foods Markets. Recreational spaces abound: boys are playing after-school softball and a group of girls are starting rugby practice. + +Moreover, unlike Anacostia, where change is in the air, this part of north-west Washington seems almost exactly as your correspondent left it 20 years ago. The flower store is still there. Our old house on Van Ness Street, a picture-book redbrick colonial, is just the same as ever—except, of course, for its value, which according to Zillow, an online property database, has risen more than threefold since we left it. + +And yet in another respect these two ends of town are remarkably similar—and that is the final surprise of this walk across Washington. The houses in the two neighbourhoods look interchangeable. The landscaping is the same. The evening tranquillity in the north-west, amid the greenery and the birdsong, feels much like the morning peace in the south-east. It’s seven o’clock and getting dark at the yellow-bordered sign on Massachusetts Avenue saying “Maryland welcomes you”, and it feels almost as if the walk has come full circle. + +This article appeared in the Books and arts section of the print edition under the headline “District line” + + + + + +Spying in America + +How Edward Snowden changed history + +A damning account of a devastating intelligence breach + +Jan 14th 2017 + + + +How America Lost Its Secrets: Edward Snowden, the Man and the Theft. By Edward Jay Epstein. Knopf; 350 pages; $27.95. + +THE effects of Edward Snowden’s heist of secrets from America’s National Security Agency (NSA) in 2013 can be divided into the good, the bad and the ugly, writes Edward Jay Epstein in a meticulous and devastating account of the worst intelligence disaster in the country’s history, “How America Lost Its Secrets”. + +Even that categorisation is contentious. Mr Snowden’s fans do not believe he did anything wrong at all: he simply lifted the lid on a rogue agency, risking his liberty on behalf of privacy everywhere. For their part, his foes believe his actions lack any justification: he is a traitor masquerading as a whistle-blower, who exposed no wrongdoing but did colossal damage. + +These stances rest more on faith than facts. Their adherents regard as secondary the details of Mr Snowden’s career, and the means by which he took millions of pieces of top-secret information from the NSA’s computers. More important for such people is whether you trust American and other Western institutions, or regard them as inherently corrupt and oppressive. + +Mr Snowden’s fans believe that the authorities, especially intelligence agencies, lie about everything. Nothing they say about the case can be believed. Any peculiarities—such as inconsistencies in Mr Snowden’s public statements, or the fact that he now lives in Moscow as a guest of Russia’s security service, the FSB, are mere side-issues, easily explicable by exigency and urgency. For his foes, nothing Mr Snowden says is trustworthy, whereas statements made by officials are true. + +Mr Epstein is a formidable investigative journalist and his quarry is worthy of his talents. He has unearthed many new details and assembles them, with the publicly known information, into a coherent and largely damning account. + +The first part of the book examines Mr Snowden’s rather patchy professional career. He was neither (as many believe, and he has claimed) a successful and senior intelligence officer, nor was he a computer wizard. Mysteriously, possibly through his family’s extensive connections with the spy world, he joined the CIA, but proved untrustworthy and incompetent. On leaving, he kept his security clearance, making him eligible for a good job in the private sector, where computer-literate ex-spooks are at a premium. But secrecy rules meant that nobody could check on his past. + +The author agrees that Mr Snowden performed a “salutary service in alerting both the public and the government to the potential danger of a surveillance leviathan”. The “bureaucratic mission creep”, he argues, “badly needed to be brought under closer oversight by Congress”. He also notes that Mr Snowden inadvertently highlighted the security consequences of “contractorisation”—outsourcing spook work to the private sector. + +But he also shows that the vast majority of stolen documents had nothing to do with Mr Snowden’s purported concerns about privacy and government surveillance. He switched jobs in order to have access to much bigger secrets. He gave away American technical capabilities—such as the ability to snoop on computers that are not connected to the internet—which are of real value in tracking criminals, terrorists and enemies. To believe that was justified, you have to regard America as being no better than Russia, China or al-Qaeda. He also stoked an ugly, misplaced cynicism about the trustworthiness of government. + +Mr Epstein is cautious on the biggest question: whether Mr Snowden was acting alone, or under the control of Russian intelligence. The crucial evidence, he says, is Mr Snowden’s contact with digital-privacy activists such as Glenn Greenwald. No Russian handler would allow a well-placed and valuable spy to make such a risky move, Mr Epstein argues. Better to keep him in place, to steal yet more secrets. + +That may be too categorical. The intelligence world is full of bluffs and double-bluffs—and errors. Agents misbehave. Aims change over time. But certainly nobody reading this book will easily retain faith in the Hollywood fable of Mr Snowden’s bravery and brilliance. + +This article appeared in the Books and arts section of the print edition under the headline “The Snowden operation” + + + + + +Obituary + + + + + +Akbar Hashemi Rafsanjani: Shark of Persia + + + + + +Shark of Persia + +Obituary: Akbar Hashemi Rafsanjani died on January 8th + +The Iranian politician was 82 + +Jan 14th 2017 + + + +IN DEATH as in life, Akbar Hashemi Rafsanjani defied categorisation. He was a stalwart of a regime dubbed an exporter of terror and heresy. Yet regional arch-foes such as Bahrain and Saudi Arabia mourned his passing, as did the Great Satan itself, via a State Department press briefing. At home, embattled reformists felt they had lost their prime protector. + +Ruthless guile was his hallmark. During his early years in power, the death penalty was applied freely to dissidents, communists, Kurds and Bahais. Foreign countries blamed Mr Rafsanjani for ordering murders of émigrés in Paris, Berlin and Geneva, and terrorist attacks on a Jewish cultural centre in Buenos Aires in 1994 and on American forces in Saudi Arabia in 1996. + +Though a pragmatist to the point of cynicism, his career was rooted in zealotry. His greatest political asset was his friendship with Ayatollah Khomeini, the instigator of the Islamic revolution of 1979. As memories of that upheaval faded, his ability to assert confidently what the great man would have thought became ever-handier. + +Other credentials were shakier. He had studied at the great seminary in Qom, but he was no theologian; nor was he able to wear the black turban reserved for the Prophet’s direct descendants. His family were prosperous pistachio farmers, and his power base was as much the bazaar as the mosque. He was dubbed kooseh, the shark, partly for hidden menace, but also mockingly: his smooth skin sprouted only a wispy beard, rather than the monumental growths of the heavyweight theocrats. + +Arrested ten times under the shah’s American-backed regime, jailed for a total of more than four years (and on one winter’s day, he said, tortured from dusk to dawn) he was not anti-Western on principle. Indeed, he sniped at those who were: “if people believe we can live behind a closed door, they are mistaken. We are in need of friends and allies around the world.” Unlike his colleagues, he had travelled widely in America and elsewhere and spoke, in private, excellent English. + +Those colleagues were often fuelled by rage. He was driven by frustration: with Iran’s backwardness, isolation and outsiders’ bullying. His aim was to fortify the regime, not consume its strength in pointless fights at home and abroad. + +As the first speaker of the Majlis (parliament), he shaped the Islamic Republic’s constitution, reconciling limited electoral mandates with divine inspiration: a balancing act which few Muslim countries manage. He helped make his old ally, Ayatollah Ali Khamenei, Supreme Leader. It was a rare mistake: the two men spent the next 30 years tussling for power. + +He ended the war with Iraq, first gaining the military advantage, and then arm-twisting his colleagues to accept a UN-brokered ceasefire. He restored diplomatic ties with most Sunni Muslim countries: notably, he was the only senior Iranian figure on cordial terms with the Saudi leadership. + +He decisively backed Iran’s nuclear agreement with the West—outfacing those who thought that any dealing with the enemy was weakness or treason. The “world of tomorrow is one of negotiations, not the world of missiles”, he tweeted in March. + +Interests of state + +Earlier, he was embroiled in the Iran-Contra affair, in which Ronald Reagan’s administration illegally sold Iran American weapons, in exchange for help in freeing hostages and financing (also illegally) Nicaraguan anti-communist insurgents. When his role was revealed, he had the source, Mehdi Hashemi, jailed, while, characteristically, escaping opprobrium himself. + +At home he eschewed sloganeering (he pressed for “Death to America” chants to be dropped from Friday prayers) and decried fanaticism, calling it “Islamic fascism”. Instead, he promoted economic change: liberalisation, privatisation, cutting subsidies and building infrastructure. + +His political hero was Amir Kabir, a 19th-century reformist chief, of whom he wrote an appreciative biography. He was also a leading critic of the austere sexual and social mores of the Islamic Republic. It was wrong, he said, to criminalise youngsters for following their God-given and natural instincts. + +His own instincts were finely tuned. As the occasion required, he could be steely, charming, witty or lachrymose (especially in response to his own rhetoric). He held court in lavish public buildings, while living in the same house as before the revolution. His family thrived: a business empire reputedly included the second-biggest airline, a near-monopoly on the pistachio trade and the largest private university. In 2003 Forbes magazine put his personal wealth at over $1 billion. Lies, said his fans. An underestimate, said his foes. + +His biggest political setback was in 2005, when he failed to win a third presidential term: hard-up Iranians voted crossly for the puritanical, doctrinaire Mahmoud Ahmadinajad. Yet Mr Rasfanjani held on to power as head of the Expediency Council, a previously obscure power-broking body which links Iran’s theocratic and civil institutions. Lately, he tacked towards reformism, backing political and media freedoms in a speech in 2009, and supporting President Hassan Rouhani’s campaign for re-election. Was it sincere? Anyone who knew him, or Iranian politics, knew better than to ask. + +This article appeared in the Obituary section of the print edition under the headline “Shark of Persia” + + + + + +Economic and financial indicators + + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +The Economist poll of forecasters, January averages + +Markets + + + + + +Interactive indicators + +Jan 14th 2017 + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Output, prices and jobs + +Jan 14th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Trade, exchange rates, budget balances and interest rates + +Jan 14th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +The Economist commodity-price index + +Jan 14th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +The Economist poll of forecasters, January averages + +Jan 14th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Markets + +Jan 14th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Table of Contents + +The Economist + +The world this week + + + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + + + +Technology and education: Lifelong learning + + + + + +Trump and the intelligence agencies: Speaking post-truth to power + + + + + +Trump and Mexico: Handling a bully + + + + + +Renewable energy: A greener grid + + + + + +Proliferating parties: Splitters + + + + + +Letters + + + +Letters to the editor: On liberalism, Brexit, Asian banks, Syria, the European Union, data, economists + + + + + +Briefing + + + +Manufacturing: They don’t make ’em like that any more + + + + + +United States + + + +Donald Trump and his critics: Where there’s brass + + + + + +Intelligence agencies and the presidency: Burn before reading + + + + + +Conflicts of interest: Two out of four + + + + + +Shakers: Not too shaken + + + + + +Jeff Sessions: Past and prologue + + + + + +National parks: An Ear-full + + + + + +Lexington: How to use superpowers + + + + + +The Americas + + + +Mexico and the United States: Bracing for impact + + + + + +Transport in Toronto: Laggard on the lake + + + + + +Asia + + + +Indian politics: Non-stick PM + + + + + +Royal politics in Thailand: Return to sender + + + + + +South Korea and Japan: Future tense + + + + + +Anti-Chinese protests: Deep water + + + + + +Banyan: Still just saying no + + + + + +China + + + +Railways: The lure of speed + + + + + +Infrastructure: Hunting white elephants + + + + + +Middle East and Africa + + + +Startups in the Arab world: Set them free + + + + + +The death of Akbar Hashemi Rafsanjani: The ayatollah’s long shadow + + + + + +Botswana: Between rocks and hard places + + + + + +Ivory Coast: Mutiny for a bounty + + + + + +Congo: The sound of politics + + + + + +Europe + + + +The French left: Battling for survival + + + + + +The European Parliament: Opposites attract + + + + + +Italy’s populists: Five Star mystery + + + + + +The Yugoslavia and Kosovo tribunals: Better than nothing + + + + + +Political fragmentation: Going to bits + + + + + +Charlemagne: The cruel sea + + + + + +Britain + + + +Northern Ireland: Into the unknown + + + + + +European migrants and business: Labour pains + + + + + +Cricket and Brexit: Beyond the boundary + + + + + +Mental health: Out of the shadows + + + + + +University reform: An academic dispute + + + + + +Devolution to Wales: Making hungry where they satisfy + + + + + +Assisted suicide: A matter of life or death + + + + + +Bagehot: Staying airborne + + + + + +International + + + +The Guantánamo conundrum: A legal quagmire that still stinks + + + + + +A military trial: Through a glass, silently + + + + + +Special report: Lifelong education + + + +Learning and earning: Lifelong learning is becoming an economic imperative + + + + + +Cognition switch: What employers can do to encourage their workers to retrain + + + + + +Old dogs, new tricks: How older employees perform in the workplace + + + + + +The return of the MOOC: Established education providers v new contenders + + + + + +Pathway dependency: Turning qualifications into jobs + + + + + +The elephant in the truck: Retraining low-skilled workers + + + + + +Business + + + +Formula One: Nifty manoeuvres + + + + + +Intellectual property: Blockchain of command + + + + + +Uber for kids: Baby, you can drive in my car + + + + + +Iron ore in Guinea: A pig of a project + + + + + +Advanced manufacturing: The new manufacturing footprint + + + + + +Schumpeter: They’ve lost that loving feeling + + + + + +Finance and economics + + + +Inflation: A welcome revival + + + + + +Buttonwood: Franc discussions + + + + + +Emerging markets: Back from the frontier + + + + + +Supply-chain finance: Every little helps + + + + + +The Big Mac index: The all-meaty dollar + + + + + +Fintech in Singapore: Out of the box + + + + + +Japanese tuna: Bluefinger + + + + + +China’s currency: Squeezed to life + + + + + +Chinese tax: Making China great again + + + + + +Free exchange: Get off of my cloud + + + + + +Free exchange: Awards + + + + + +Science and technology + + + +Power transmission: Rise of the supergrid + + + + + +Astronomy: De Nova Stella + + + + + +Medical diagnostics: String-driven thing + + + + + +Underwater drones: One that didn’t get away + + + + + +The evolution of the menopause: A whale of a tale + + + + + +Books and arts + + + +A walk across Washington: District line + + + + + +Spying in America: The Snowden operation + + + + + +Obituary + + + +Akbar Hashemi Rafsanjani: Shark of Persia + + + + + +Economic and financial indicators + + + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +The Economist poll of forecasters, January averages + + + + + +Markets + + + + + +Table of Contents + +The Economist + +The world this week + +Politics this week + + + +Business this week + + + +KAL's cartoon + + + +Leaders + +Technology and education: Lifelong learning + + + +Trump and the intelligence agencies: Speaking post-truth to power + + + +Trump and Mexico: Handling a bully + + + +Renewable energy: A greener grid + + + +Proliferating parties: Splitters + + + +Letters + +Letters to the editor: On liberalism, Brexit, Asian banks, Syria, the European Union, data, economists + + + +Briefing + +Manufacturing: They don’t make ’em like that any more + + + +United States + +Donald Trump and his critics: Where there’s brass + + + +Intelligence agencies and the presidency: Burn before reading + + + +Conflicts of interest: Two out of four + + + +Shakers: Not too shaken + + + +Jeff Sessions: Past and prologue + + + +National parks: An Ear-full + + + +Lexington: How to use superpowers + + + +The Americas + +Mexico and the United States: Bracing for impact + + + +Transport in Toronto: Laggard on the lake + + + +Asia + +Indian politics: Non-stick PM + + + +Royal politics in Thailand: Return to sender + + + +South Korea and Japan: Future tense + + + +Anti-Chinese protests: Deep water + + + +Banyan: Still just saying no + + + +China + +Railways: The lure of speed + + + +Infrastructure: Hunting white elephants + + + +Middle East and Africa + +Startups in the Arab world: Set them free + + + +The death of Akbar Hashemi Rafsanjani: The ayatollah’s long shadow + + + +Botswana: Between rocks and hard places + + + +Ivory Coast: Mutiny for a bounty + + + +Congo: The sound of politics + + + +Europe + +The French left: Battling for survival + + + +The European Parliament: Opposites attract + + + +Italy’s populists: Five Star mystery + + + +The Yugoslavia and Kosovo tribunals: Better than nothing + + + +Political fragmentation: Going to bits + + + +Charlemagne: The cruel sea + + + +Britain + +Northern Ireland: Into the unknown + + + +European migrants and business: Labour pains + + + +Cricket and Brexit: Beyond the boundary + + + +Mental health: Out of the shadows + + + +University reform: An academic dispute + + + +Devolution to Wales: Making hungry where they satisfy + + + +Assisted suicide: A matter of life or death + + + +Bagehot: Staying airborne + + + +International + +The Guantánamo conundrum: A legal quagmire that still stinks + + + +A military trial: Through a glass, silently + + + +Special report: Lifelong education + +Learning and earning: Lifelong learning is becoming an economic imperative + + + +Cognition switch: What employers can do to encourage their workers to retrain + + + +Old dogs, new tricks: How older employees perform in the workplace + + + +The return of the MOOC: Established education providers v new contenders + + + +Pathway dependency: Turning qualifications into jobs + + + +The elephant in the truck: Retraining low-skilled workers + + + +Business + +Formula One: Nifty manoeuvres + + + +Intellectual property: Blockchain of command + + + +Uber for kids: Baby, you can drive in my car + + + +Iron ore in Guinea: A pig of a project + + + +Advanced manufacturing: The new manufacturing footprint + + + +Schumpeter: They’ve lost that loving feeling + + + +Finance and economics + +Inflation: A welcome revival + + + +Buttonwood: Franc discussions + + + +Emerging markets: Back from the frontier + + + +Supply-chain finance: Every little helps + + + +The Big Mac index: The all-meaty dollar + + + +Fintech in Singapore: Out of the box + + + +Japanese tuna: Bluefinger + + + +China’s currency: Squeezed to life + + + +Chinese tax: Making China great again + + + +Free exchange: Get off of my cloud + + + +Free exchange: Awards + + + +Science and technology + +Power transmission: Rise of the supergrid + + + +Astronomy: De Nova Stella + + + +Medical diagnostics: String-driven thing + + + +Underwater drones: One that didn’t get away + + + +The evolution of the menopause: A whale of a tale + + + +Books and arts + +A walk across Washington: District line + + + +Spying in America: The Snowden operation + + + +Obituary + +Akbar Hashemi Rafsanjani: Shark of Persia + + + +Economic and financial indicators + +Interactive indicators + + + +Output, prices and jobs + + + +Trade, exchange rates, budget balances and interest rates + + + +The Economist commodity-price index + + + +The Economist poll of forecasters, January averages + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.01.21.txt b/homeworks/B20769/homework1/data2/2017.01.21.txt new file mode 100644 index 0000000..da724cb --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.01.21.txt @@ -0,0 +1,6350 @@ +2017-01-21 + +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +| Next section | Main menu | + +* * * + + + + + +The world this week + + +Politics this week [Fri, 20 Jan 04:41] + +Business this week [Fri, 20 Jan 04:41] + +KAL’s cartoon [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Politics this week + + +Jan 21st 2017 + + + + + +After hard, soft and then red, white and blue, Theresa May announced a “clean” Brexit. In her most important speech yet on the issue, Britain’s prime minister set out a position for quitting the EU that includes leaving the single market and customs union. Mrs May said she would seek the best possible trade terms with Europe and be a “good neighbour”, but that no deal would be better than a bad deal for Britain. Donald Trump held out the promise of a trade agreement with America after praising Britain’s Brexit choice. See article. + +Germany’s chancellor, Angela Merkel, responded to Mrs May’s Brexit speech with vows to hold the EU together and block any British “cherry-picking” in the negotiations. Jean-Claude Juncker, the president of the European Commission, promised to work for a fair deal for both sides, saying: “We are not in a hostile mood.” + + + +Northern Ireland’s Assembly collapsed amid a scandal involving the first minister’s handling of a renewable-heating programme that could cost taxpayers £490m ($600m). Elections for a new Assembly on March 2nd might come to be used as a proxy poll on Brexit: the province voted to remain in the EU. + +The European Parliament elected a new president. Antonio Tajani, an Italian conservative from the European People’s Party, will replace Germany’s Martin Schulz. Under his leadership, the parliament will have the final say on approving Brexit. See article. + +An avalanche hit a hotel in the Abruzzo region of central Italy. Around 30 people were inside. The avalanche was apparently triggered by one of three earthquakes that struck the region this week. Earthquakes in the same area last year killed more than 300 people. + +Germany’s federal court rejected an attempt to ban the neo-Nazi National Democratic Party. German states submitted a petition to ban it in 2013, citing its racist, anti-Semitic platform. The court found that although the party “pursues aims contrary to the constitution”, it does not pose a threat to democracy. + +Davos man + + + + + +In a speech at the World Economic Forum in Davos, China’s leader, Xi Jinping, defended globalisation and said trade wars produced no winners. His remarks appeared to be aimed at Donald Trump, who has threatened to impose huge tariffs on Chinese products. Mr Xi was the first Chinese president to attend the event. See article. + +Australia, China and Malaysia abandoned the search for MH370, a Malaysian airliner that disappeared in the southern Indian Ocean in 2014 with 239 people on board. Debris from the plane has washed up in Africa, but the crash site has never been located. + +Hun Sen, the prime minister of Cambodia, launched a lawsuit against Sam Rainsy, an exiled opposition leader, for defamation. Mr Sam Rainsy claims that Mr Hun Sen is trying to destroy his party to prevent it winning elections scheduled for next year. + +Rodrigo Duterte, the president of the Philippines, mulled imposing martial law if necessary to advance his homicidal campaign against drugs. + +No preferential treatment + +Barack Obama ended the 22-year-old “wet foot, dry foot” policy, under which Cubans who landed on American soil were permitted to stay. Cubans who try to get into the United States will now be treated like other migrants. Mr Obama’s decision is in keeping with his policy of normalising relations with the communist government of Cuba. + +The wave of violence in Brazil’s prisons continued with the deaths of at least 30 people at a jail. Some of the inmates were decapitated in a fight between gangs. About 140 people have died in prison violence so far this year. + +Colombia will begin peace negotiations in February with the ELN, the country’s second-largest guerrilla group. It made peace with the largest, the FARC, last year. + +An Italian court sentenced in absentia eight former officials of South American military regimes to life in prison for their role in the disappearance of 23 Italians during the 1970s and 1980s. The officials participated in Operation Condor, a campaign of persecution and murder by half a dozen governments against their leftist opponents. + +Crisis action + +Having lost an election, Yahya Jammeh missed a deadline to step down as president of the Gambia to make way for his successor, Adama Barrow. Neighbouring west African countries have called on Mr Jammeh to go. Senegal moved troops towards its border in preparation for a possible intervention. + +In Nigeria an air-force jet operating against Boko Haram, a jihadist group, mistakenly bombed a refugee camp killing at least 76 people. Aid workers were among the dead. + +Two people were killed in Israel in clashes between police and residents of a Bedouin village that the authorities are trying to demolish. + + + + + +A high court in Egypt upheld a ruling that prevented the government from handing sovereignty of two islands in the Red Sea to Saudi Arabia. The government’s proposal to hand the uninhabited islands to the Saudis, who had asked Egypt to protect them in the 1950s, sparked street protests last year. + +Clemency for Chelsea + +In one of his final actions as president, Barack Obama commuted the sentence handed down to Chelsea Manning, a former intelligence analyst, for passing secret documents to WikiLeaks. In 2013 Ms Manning (Bradley Manning as she was known then) was sentenced to 35 years. As a convict she began her transition from a male to a female. Supporters praise her as a whistle-blower, but her critics insist she put American and allied lives at risk. + +Last year was the hottest since data started to be collected in 1880 and the third consecutive year of record global warming, according to America’s National Oceanic and Atmospheric Administration. The average temperature over land and sea was 58.69ºF (14.8ºC), 0.07ºF (0.04ºC) above 2015’s average. + +Donald Trump prepared for his inauguration on January 20th as America’s 45th president. Mr Trump told a newspaper that because of the celebrations he would take the weekend off and Day One of his administration would start on Monday January 23rd. See article. + + + +This article appeared in the The world this week section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21715071-politics-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Business this week + + +Jan 21st 2017 + +Having sweetened its offer, British American Tobacco secured a deal to gain full control of Reynolds for $49bn, creating the world’s biggest listed cigarette company. Reynolds is based in the American market, which is again looking alluring after years of costly litigation and falling demand. The volume of cigarettes sold in America has fallen sharply in the past decade, but overall retail sales in the industry have risen thanks to population growth and new products, such as e-cigarettes. See article. + +That vision thing + + + +Luxottica, an Italian maker of fashionable eyeware, agreed to merge with Essilor, a French company that produces lenses. The €46bn ($49bn) transaction is one of the biggest cross-border deals in the EU to date. The merger had long been resisted by Luxottica’s founder, Leonardo Del Vecchio, who built his firm up into a global behemoth that owns the Oakley and Ray-Ban brands and supplies designer frames for Chanel, Prada and others. See article. + +In a vindication of the strategy pursued by Britain’s Serious Fraud Office, Rolls-Royce settled claims dating from 1989 to 2013 that it had bribed officials in various countries in order to win contracts. The engineering company will pay penalties totalling £671m ($809m) to regulators in America, Brazil and Britain. Most of that goes to the SFO, which pushed for a deferred prosecution agreement, still a novel concept under British law. See article. + +Fiat Chrysler Automobiles’ share price was left bruised by an allegation from America’s Environmental Protection Agency that it had used software in 104,000 diesel cars to let them exceed legal limits on nitrogen-oxide emissions. The EPA did not go as far as to say that FCA had cheated in emissions tests; that transgression has cost Volkswagen billions in fines. FCA strongly denied the claim; its boss, Sergio Marchionne, said “We don’t belong to a class of criminals.” + +Consumer prices in Britain rose by 1.6% in December, a big bounce from 1.2% in November and the highest figure for two years. Costlier transport contributed to the spike. Rising inflation is an unwelcome conundrum for the Bank of England. Its governor, Mark Carney, noted that higher prices could dampen consumer spending and slow economic growth, meaning future interest-rate decisions might move “in either direction”. + +In South Korea a court rejected prosecutors’ request to arrest Lee Jae-yong, the vice-chairman of Samsung Electronics, on allegations of bribery related to an influence-peddling scandal that has rocked the country. Prosecutors allege that money paid by Mr Lee to a friend of South Korea’s president was intended as a bribe to help win a merger of two Samsung affiliates. Mr Lee denies that. The prosecutors are still pressing their case. See article. + +America’s Federal Trade Commission lodged an antitrust lawsuit against Qualcomm, accusing it of abusing its commanding position in the semiconductor market to impose stringent licensing terms on patents for chips in mobile phones. + +Another profit warning from Pearson caused itsshare price to plunge by 30%. The academic publisher is facing a decline in demand for its textbooks in America, partly because of the rise of services that let students rent the books. + + + + + +A surge in trading after the election of Donald Trump helped America’s big banks reap big profits in the fourth quarter. Many investors adjusted their portfolios when Mr Trump’s victory heightened expectations of interest-rate rise and of cuts in regulations and taxes. + +SpaceX sent its first rocket into orbit since an explosion on a launch pad last September grounded its fleet. The government has accepted the company’s report on the accident, allowing it to start clearing its backlog of satellite launches for fee-paying customers and cargo missions to the International Space Station. + +Reversal of fortunes + +ExxonMobil agreed to pay $6.6bn for several oil firms owned by the Bass family in Fort Worth, the latest in a flurry of deals to snap up energy assets in Texas as oil prices rebound. Meanwhile, Saudi Arabia said it would soon start accepting tenders for an expansion of solar and wind power in the country that will cost up to $50bn. The collapse of the oil price two years ago tore a hole in the kingdom’s finances. It now hopes to get 30% of its power from renewables by 2030. + +China’s footballing authorities capped the number of foreign players that clubs can field in a match to three per team, down from five, as part of a series of measures to foster the development of local Chinese talent. The news came as Xi Jinping, China’s president, extolled the virtues of globalisation at the annual gabfest at Davos. + + + +This article appeared in the The world this week section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21715074-business-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +KAL’s cartoon + + +Jan 21st 2017 + + + + + +More KAL’s cartoons + + + + + +This article appeared in the The world this week section of the print edition under the headline “KAL’s cartoon” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/world-week/21715073-kals-cartoon/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Leaders + + +A Trump White House: The 45th president [Fri, 20 Jan 04:41] + +African politics: A dismal dynast [Fri, 20 Jan 04:41] + +Britain and the European Union: A hard road [Fri, 20 Jan 04:41] + +Regulating car emissions: Road outrage [Fri, 20 Jan 04:41] + +The legacy of gendercide: Too many single men [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +A Trump White House + + +The 45th president + + +What is Donald Trump likely to achieve in power? + + +Jan 21st 2017 + + + + + +MUCH of the time, argues David Runciman, a British academic, politics matters little to most people. Then, suddenly, it matters all too much. Donald Trump’s term as America’s 45th president, which is due to begin with the inauguration on January 20th, stands to be one of those moments. + +It is extraordinary how little American voters and the world at large feel they know about what Mr Trump intends. Those who back him are awaiting the biggest shake-up in Washington, DC, in half a century—though their optimism is an act of faith. Those who oppose him are convinced there will be chaos and ruin on an epoch-changing scale—though their despair is guesswork. All that just about everyone can agree on is that Mr Trump promises to be an entirely new sort of American president. The question is, what sort? + + + +Inside the West Wig + +You may be tempted to conclude that it is simply too soon to tell. But there is enough information—from the campaign, the months since his victory and his life as a property developer and entertainer—to take a view of what kind of person Mr Trump is and how he means to fill the office first occupied by George Washington. There is also evidence from the team he has picked, which includes a mix of wealthy businessmen, generals and Republican activists (see Briefing). + +For sure, Mr Trump is changeable. He will tell the New York Times that climate change is man-made in one breath and promise coal country that he will reopen its mines in the next. But that does not mean, as some suggest, that you must always shut out what the president says and wait to see what he does. + +When a president speaks, no easy distinction is to be made between word and deed. When Mr Trump says that NATO is obsolete, as he did to two European journalists last week, he makes its obsolescence more likely, even if he takes no action. Moreover, Mr Trump has long held certain beliefs and attitudes that sketch out the lines of a possible presidency. They suggest that the almost boundless Trumpian optimism on display among American businesspeople deserves to be tempered by fears about trade protection and geopolitics, as well as questions about how Mr Trump will run his administration. + +Start with the optimism. Since November’s election the S&P500 index is up by 6%, to reach record highs. Surveys show that business confidence has soared. Both reflect hopes that Mr Trump will cut corporate taxes, leading companies to bring foreign profits back home. A boom in domestic spending should follow which, combined with investment in infrastructure and a programme of deregulation, will lift the economy and boost wages. + +Done well, tax reform would confer lasting benefits (see Free exchange), as would a thoughtful and carefully designed programme of infrastructure investment and deregulation. But if such programmes are poorly executed, there is the risk of a sugar-rush as capital chases opportunities that do little to enhance the productive potential of the economy. + +That is not the only danger. If prices start to rise faster, pressure will mount on the Federal Reserve to increase interest rates. The dollar will soar and countries that have amassed large dollar debts, many of them emerging markets, may well buckle. One way or another, any resulting instability will blow back into America. If the Trump administration reacts to widening trade deficits with extra tariffs and non-tariff barriers, then the instability will only be exacerbated. Should Mr Trump right from the start set out to engage foreign exporters from countries such as China, Germany and Mexico in a conflict over trade, he would do grave harm to the global regime that America itself created after the second world war. + +Just as Mr Trump underestimates the fragility of the global economic system, so too does he misread geopolitics. Even before taking office, Mr Trump has hacked away at the decades-old, largely bipartisan cloth of American foreign policy. He has casually disparaged the value of the European Union, which his predecessors always nurtured as a source of stability. He has compared Angela Merkel, Germany’s chancellor and the closest of allies, unfavourably to Vladimir Putin, Russia’s president and an old foe. He has savaged Mexico, whose prosperity and goodwill matter greatly to America’s southern states. And, most recklessly, he has begun to pull apart America’s carefully stitched dealings with the rising superpower, China—imperilling the most important bilateral relationship of all. + +The idea running through Mr Trump’s diplomacy is that relations between states follow the art of the deal. Mr Trump acts as if he can get what he wants from sovereign states by picking fights that he is then willing to settle—at a price, naturally. His mistake is to think that countries are like businesses. In fact, America cannot walk away from China in search of another superpower to deal with over the South China Sea. Doubts that have been sown cannot be uprooted, as if the game had all along been a harmless exercise in price discovery. Alliances that take decades to build can be weakened in months. + +Dealings between sovereign states tend towards anarchy—because, ultimately, there is no global government to impose order and no means of coercion but war. For as long as Mr Trump is unravelling the order that America created, and from which it gains so much, he is getting his country a terrible deal. + +Hair Force One + + + +INFOGRAPHIC: “Trump’s troops” - familiarise yourself with all the new president’s cabinet and top associates here + + + + + +So troubling is this prospect that it raises one further question. How will Mr Trump’s White House work? On the one hand you have party stalwarts, including the vice-president, Mike Pence; the chief of staff, Reince Priebus; and congressional Republicans, led by Paul Ryan and Mitch McConnell. On the other are the agitators—particularly Steve Bannon, Peter Navarro and Michael Flynn. The titanic struggle between normal politics and insurgency, mediated by Mr Trump’s daughter, Ivanka, and son-in-law, Jared Kushner, will determine just how revolutionary this presidency is. + + + +As Mr Trump assumes power, the world is on edge. From the Oval Office, presidents can do a modest amount of good. Sadly, they can also do immense harm. + + + +This article appeared in the Leaders section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21714990-what-donald-trump-likely-achieve-power-45th-president/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Nkosazana Dlamini-Zuma, dismal dynast + + +Africa’s top bureaucrat wants to be South Africa’s next president + + +The rainbow nation can do better + + +Jan 21st 2017 + + + + + +IN MANY ways the African Union (AU) is outdoing its European counterpart. It has never presided over a continental currency crisis. No member state is threatening to quit. And you could walk from Cairo to Cape Town without meeting anyone who complains about the overweening bossiness of the African superstate. But this is largely because the AU, unlike the EU, is irrelevant to most people’s lives. That is a pity. + +Before 2002, when it was called the Organisation of African Unity, it was dismissed as a talking-shop for dictators. For the next decade, it was led by diplomats from small countries, picked by member states precisely because they had so little clout. But then, in 2012, a heavyweight stepped in to run the AU commission. Nkosazana Dlamini-Zuma, a veteran of the anti-apartheid struggle and a woman who had held three important cabinet posts in South Africa, was expected to inject more vigour and ambition into the AU. As she prepares to hand over to an as-yet unnamed successor this month, it is worth assessing her record (see article). + + + +This matters for two reasons. First, because Africa’s forum for tackling regional problems needs to work better. Second, because Ms Dlamini-Zuma apparently wants to be the next president of South Africa. Her experience at the AU, supporters claim, makes her the best-qualified successor to President Jacob Zuma, who happens to be her ex-husband. + +Running the ill-funded AU is hard, but even so, nothing she has achieved there suggests that she deserves to run her country. Her flagship policy, Agenda 2063, is like a balloon ride over the Serengeti, offering pleasant views of a distant horizon and powered by hot air. By 2063, when none of its boosters will still be in power, it hopes that Africa will be rich, peaceful, corruption-free and enjoying the benefits of “transformative leadership in all fields”. In the shorter term, Ms Dlamini-Zuma has called for a shared currency, a central bank and a “continental government” to tie together states that barely trade with one another. None of this is happening. She also wants to introduce a single African passport letting citizens move freely across the continent by 2018. A splendid idea, but for now the AU issues them only to heads of state and senior AU officials. + +Ms Dlamini-Zuma has also failed to grapple with Africa’s conflicts. AU troops have done a creditable job in Somalia, but promises from AU members to send troops to quell fighting or repression in Burundi and South Sudan remain unkept. Under Ms Dlamini-Zuma, the AU has condemned blatant coups, but its monitors have approved elections that were far from free and fair. Knowing that African leaders find the International Criminal Court too muscular, she backs an African alternative that explicitly grants immunity to incumbent rulers. + +From the Union to the Union Buildings + +This is the opposite of what South Africa needs. Under Mr Zuma, corruption has metastasised. Ruling-party bigwigs dole out contracts to each other and demand slices of businesses built by others. Investors are scared, growth is slow and public services, especially schools, are woeful. South Africa needs a graft-busting president: someone to break the networks of patronage that stretch to the top. Instead, Mr Zuma, who is accused of 783 counts of corruption, is paving the way for his ex-wife, whom he expects to protect him. Her family ties and time at the AU suggest that Ms Dlamini-Zuma is the last person to help Africa’s most advanced economy fulfil its potential. + + + +This article appeared in the Leaders section of the print edition under the headline “A dismal dynast” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21714987-rainbow-nation-can-do-better-africas-top-bureaucrat-wants-be-south-africas-next-president/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Britain and the European Union + + +Theresa May opts for a hard Brexit + + +The government promises a “truly global Britain” after Brexit. Is that plausible? + + +Jan 21st 2017 + + + + + +HALF a year after choosing Brexit, Britons have learned what they voted for. The single-word result of June’s referendum—“Leave”—followed a campaign boasting copious (incompatible) benefits: taking back control of immigration, ending payments into the European Union budget, rolling back foreign courts’ jurisdiction and trading with the continent as freely as ever. On January 17th Theresa May at last acknowledged that leaving the EU would involve trade-offs, and indicated some of the choices she would make. She will pursue a “hard Brexit” (rebranded “clean” by its advocates), taking Britain out of the EU’s single market in order to reclaim control of immigration and shake off the authority of the EU’s judges. + + + + + +Mrs May declared that this course represents no retreat, but rather that it will be the making of a “truly global Britain”. Escaping the shackles of the EU will leave the country “more outward-looking than ever before”. Her rhetoric was rousing. But as the negotiations drag on, it will become clear that her vision is riven with tensions and unresolved choices. + + + +Definitely maybe + +Mrs May’s speech was substantial and direct—welcome after months in which her statements on Brexit had been Delphic to the point of evasion. Although she plans to leave the single market, Mrs May wants “the freest possible” trade deal with the EU, including privileged access for industries such as cars and finance (see article). In order to be able to strike its own trade deals outside Europe, Britain will also leave the EU’s customs union (freeing itself from the common external tariff), but will aim to keep its benefits in some areas. The government will consider making some payments into the EU budget, but the “vast” contributions of the past will end. Mrs May would like a trade agreement with the EU to be wrapped up within two years, meaning that there is no need for a formal transition arrangement; she suggests a phasing-in period, whose length could vary by sector. Parliament will get a vote on the final deal, though by then it will be too late for it to change much. + +The pound rose on the discovery that Mrs Maybe had a plan after all. Sympathetic newspapers compared her steel to that of Margaret Thatcher (perhaps forgetting that the single market was one of the Iron Lady’s proudest achievements). Yet, for her plan to succeed, Mrs May must overcome several obstacles—not least her own contradictory impulses. + +The essential task will be to get the EU to agree to the sort of deal she set out this week. When it comes to the single market and customs union, European leaders have made clear their opposition to “cherry-picking”. A tailored transition plan may get the same bleak response. And the EU has never concluded a trade agreement in two years, let alone a deep one. + +Mrs May would retort that Britain will get a good deal because its negotiating position is strong. In her speech, after distancing herself from Donald Trump’s Eurobashing, she warned that the EU would be committing “an act of calamitous self-harm” if it tried to punish Britain with a bad deal. Europeans would miss London’s financial markets; they might also lose access to British intelligence, which has “already saved countless lives” across the continent. + +Her undiplomatic threats ring hollow. Everyone will lose if there is no agreement, but nobody will lose as much as Britain. The country is in no position to bully its way to a cushy deal and EU leaders in no mood to offer one. + +Mrs May’s way for Britain to come out on top, even if it loses access to markets in Europe, is for the country to open itself up to the world. In rediscovering its past as a trading nation, Britain can become a sort of Singapore-on-Thames, free of the dead hand of an over-regulated EU. Long touted by some liberal Brexiteers, the idea has a certain devil-may-care appeal. + +Yet if Mrs May is to turn Britain into a freewheeling, laissez-faire economy, she will have to sacrifice some of her own convictions. She has interpreted the Brexit vote as a roar by those left behind by globalisation. On their behalf, she has railed against employers who break the “social contract” by hiring foreigners rather than training locals. Under Mrs May, Britain, a beacon for investment, risks becoming less attractive to foreigners, not more. The minimum wage is rising. She wants to vet foreign takeovers of British firms. Above all, the promise to “control” immigration looks like a euphemism for reducing it (see Bagehot). Forced to choose on a visit to India, Mrs May put continued restrictions on student visas before a trade deal. + +The Economist opposed Brexit. If Britain has to leave the single market and the customs union, we would urge the globalising side of Mrs May to prevail over the side that would put up barriers. But for this, Mrs May will have to abandon views to which, as home secretary, she has long held firm. Britain is heading out of the EU, and it will survive. But the chances are that it will be a poorer, more inward-looking place—its drawbridge up, its influence diminished. + + + +This article appeared in the Leaders section of the print edition under the headline “A hard road” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21714986-government-promises-truly-global-britain-after-brexit-plausible-theresa-may-opts/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Road outrage + + +To stop carmakers bending the rules on emissions, Europe must get much tougher + + +To stop carmakers bending the rules, Europe must get much tougher + + +Jan 21st 2017 + + + + + +AMERICA’S system of corporate justice has many flaws. The size of the fines it slaps on firms is arbitrary. Its habitual use of deferred-prosecution agreements (a practice that is spreading to Britain; this week Rolls-Royce, an engineering firm, was fined for bribery—see article) means that too many cases are settled rather than thrashed out in court. But even crude justice can be better than none. To see why, look at Europe’s flaccid approach to the emissions scandal that engulfed Volkswagen (VW) in 2015 and now threatens others. + +Diesel-engined vehicles belch out poisonous nitrogen-oxide (NOx) gases. Limits have been imposed around the world on these toxic fumes. But the extra cost of making engines compliant, and the adverse impact that this has on performance and fuel efficiency, tempt carmakers to flout the rules. That is easier to get away with in Europe than in America, where the regulations are tighter and enforcement is more rigorous. + + + +American agencies were the ones to uncover VW’s use of a “defeat device”, a bit of software that reduced NOx emissions when its cars were being officially tested, and turned itself off on the roads. The German carmaker faces a bill of over $20bn in penalties and costs; six of its executives were indicted by the Department of Justice this month. Fiat Chrysler Automobiles (FCA) is the latest carmaker to fall foul of American enforcers. On January 12th the Environmental Protection Agency (EPA) accused the firm, whose chairman is a director of The Economist’s parent company, of using software to manipulate measured NOx emissions on 104,000 vehicles. The agency stopped short of calling the software a “defeat device”, but FCA, which denies any wrongdoing, must convince the EPA that it is acting within the rules (see article). + +A gargantuan grey area + +Life is much easier in Europe, where the regulations are pliable to the point of meaninglessness. The gentle motoring required in official emissions tests is far removed from the revving and braking of real driving. Tests are also conducted at high temperatures, at which cars perform better. On the road, emission controls in some cars turn off at temperatures of 17°C and below, ostensibly to protect the engine from the chill. (In America there is also a recognition that there should be a cold-start exemption, but it kicks in below 3°C.) Some cars spew up to 15 times more noxious gases on the road than under test conditions. Damningly, VW felt able to conclude that, under the European emissions regime, it had done nothing wrong. + +Even if the rules were tighter, enforcement would be a problem. Diesel-engined vehicles, which make up around half the traffic on the continent’s roads, are central to the financial health of many European carmakers. That gives the national agencies which conduct tests a reason to look the other way. Another incentive lies in the battle against climate change, because complying with NOx emissions regulation adds to costs. In the hugely competitive market for small cars, a higher price can steer consumers towards petrol cars, which are less efficient than diesel engines and hence produce more carbon dioxide, the main greenhouse gas. + +Neither is a good reason to avoid getting much tougher. It is true that Europe’s carmakers have more at stake than America’s. But so do Europe’s citizens. NOx emissions cause the premature deaths of an estimated 72,000 Europeans a year. And one way or another, Europe’s love affair with diesel is souring. This week the city of Oslo used new powers to ban diesel cars temporarily in order to improve air quality. Paris, Madrid and Athens are set to ban diesels altogether by 2025. The falling cost of battery-powered cars may offer a greener alternative. + +Europe is getting stricter. A new test that better mirrors driving conditions on real roads will start to be rolled out later this year. To reduce the risk of manipulated results, regulators will examine vehicles on the road as well as under test conditions. But EU member states have already won an exemption, meaning that NOx emissions will be allowed to exceed the official test limit for years. And the tests will still be conducted by national agencies. The exemption should go. To beef up enforcement, Europe should hand more oversight to the EU. For the sake of Europeans’ lungs, it is past time to get tough. + + + +This article appeared in the Leaders section of the print edition under the headline “Road outrage” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21714991-stop-carmakers-bending-rules-europe-must-get-much-tougher-stop-carmakers-bending/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Sex selection in Asia + + +From too few girls to too many men + + +The long, ugly legacy of gendercide + + +Jan 21st 2017 + + + + + +A FEW years ago it looked like the curse that would never lift. In China, north India and other parts of Asia, ever more girls were being destroyed by their parents. Many were detected in utero by ultrasound scans and aborted; others died young as a result of neglect; some were murdered. In 2010 this newspaper put a pair of empty pink shoes on the cover and called it gendercide. In retrospect, we were too pessimistic. Today more girls are quietly being allowed to survive. + +Gendercide happens where families are small and the desire for sons is overwhelming. In places where women are expected to move out of their parents’ homes upon marriage and into their husbands’ households, raising a girl can seem like an act of pure charity. So many parents have avoided it that, by one careful estimate, at least 130m girls and women are missing worldwide. It is as if the entire female population of Britain, France, Germany and Spain had been wiped out. + + + +Fortunately, pro-girl evangelising and economic growth have at last begun to reverse this terrible trend (see article). Now that women are more likely than before to earn good money, parents see girls as more valuable. And the craving for boys has diminished as parents realise that they will be hard to marry off (since there are too few brides to go around). So the imbalance between girls and boys at birth is diminishing in several countries, including China and India. In South Korea, where a highly unnatural 115 boys were being born for every 100 girls two decades ago, there is no longer any evidence of sex selection—and some that parents prefer girls. + +This is wonderful news, and it will be still more wonderful if the progress continues. Ending the war on baby girls would not only cut abortions, which are controversial in themselves and can entail medical complications, especially in poor countries. It would also show that girls and women are valued. Yet gendercide will leave an awful legacy. Today’s problem is a shortage of girls; tomorrow’s will be an excess of young men. + +As cohort after cohort of young Asians reach marriageable age, all of them containing too few women, a huge number of men will struggle to find partners. Some will import foreign brides, thereby unbalancing the sex ratio in other, poorer countries. A great many will remain single. Some women will benefit from being more in demand. But the consequences are bad for societies as a whole, because young, single, sex-starved men are dangerous. Stable relationships calm them down. Some studies (though not all) suggest that more unattached men means more crime, more rape and more chance of political violence. The worst-affected districts will be poor, rural ones, because eligible women will leave them to find husbands in the cities. Parts of Asia could come to resemble America’s Wild West. (Many polygamous societies already do: think of Sudan or northern Nigeria, where rich men marry several women and leave poor men with none.) + +There are no easy answers. Historians note that rulers used to deal with surpluses of young men by sending them off to war, but such a cure would obviously be worse than the disease. Some say governments should tolerate a larger sex industry. Prostitution is often lawless and exploitative, but it would be less so if governments legalised and regulated it. One Chinese academic has suggested allowing polyandry (ie, letting women take more than one husband). In the most unbalanced areas something like this may happen, regardless of the law. + +Don’t just do something + +Above all, governments should be cautious and humble. When trying to strong-arm demography, they have an awful record. China’s one-child policy, though recently relaxed, has aggravated the national sex imbalance—and been coercive, brutal and less effective than its admirers claim. Without it, the birth rate in China would have fallen too—perhaps just as fast. Bad policies often outlast the ills they are supposed to remedy. + +It will be for Asian societies to deal with the excess male lump they have created. It would help if they did not look down on bachelors: some make it hard for unmarried people to get hold of contraceptives. But whatever policymakers do now, the sex imbalance will cause trouble for decades. The old preference for boys will hurt men and women alike. + + + +This article appeared in the Leaders section of the print edition under the headline “Too many single men” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/leaders/21714992-long-ugly-legacy-gendercide-too-few-girls-too-many-men/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Letters + + +Letters to the Editor: On Theresa May, the split infinitive, Disney, missiles, tax, steel, India’s demonetisation, Flashman [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +On Theresa May, the split infinitive, Disney, missiles, tax, steel, India’s demonetisation, Flashman + + +Letters to the Editor + + +Jan 21st 2017 + +Letters are welcome via e-mail to letters@economist.com + + + + + +Conservative thought + +Your leader on a “dithering” Theresa May recognised that comparisons of the current British prime minister with Margaret Thatcher are difficult because Thatcher only came into her own in her second term (“Theresa Maybe”, January 7th). If so much of our political horizon looks unfamiliar it is because we are reluctant to recognise all those second-term Thatcherite chickens that have come home to roost. The shift from manufacturing to services; the indifference of central government towards the regions; the transfer of wealth from poor to rich; the creation of an unemployable underclass that generates demand for a resented migrant workforce to fill the skills gap; the failure of education to consider how knowledge advances in the wider world; the neglect of obvious housing needs; the unaddressed problem of low productivity and the accompanying tendency of Britain to become an ancien régime rentier economy. + + + +Thoughtful Conservatives know that the seeds of these malaises were sown by their party 30 years ago. They know that not one of these issues has a root cause in Britain’s membership of the EU. Perhaps “Theresa Maybe” is a thoughtful Conservative. Maybe that is why she is dithering. + +PETER HAYDON + +London + +The best comparison of Mrs May would be to Harold Wilson, a consummate politician who was brilliant at manipulating his rivals and manoeuvring them into impotence, usually by appointing them to jobs beyond their abilities. The unfortunate consequence of this was that many of the most important jobs in the land were put into the hands of total incompetents. Wilson was so occupied with clever party politics that he had little time to govern the country. Mrs May appears to be purposefully striding down the same blind alley. + +CHRIS WRIGHT + +Dieburg, Germany + + + + + +* You describe our prime minister as indecisive. Would you rather she tweeted everything out to the whole world like Donald Trump? She’ll come good. Just be patient. + + + +JOHN TILSITER + +Radlett, Hertfordshire + + + + + +Defending the split infinitive + +“Researchers demonstrated how wirelessly to hack a car” is absurdly unnatural syntax (“Breaching-point”, December 24th). It encourages a misreading where “wirelessly” goes with “how” (as in “how frequently”). “Demonstrated how to wirelessly hack a car” expresses what was meant. The Economist has advocated evidence-based inquiry and intellectual freedom since 1843. Why submit to an adverb-positioning policy founded on dogmatism? The need for clarity should overrule superstitious dread of the split infinitive. + +GEOFFREY PULLUM + +Professor of general linguistics + +University of Edinburgh + + + + + +The Magic Kingdom + +Walt Disney World makes the inauthentic believable (“Yesterdayland”, December 24th). In just one day you can stroll through an idyllic time that really never was (Main Street, USA), casually explore Mars (Mission Space) and go on safari for white rhinos (Kilimanjaro Safaris). The experience is so accomplished that the visitor has no time for reflection, or to consider the remarkable infrastructure underground where employees change into their costumes. The seamless gradient change in music and aesthetics make the transition from Tomorrowland to Mickey’s Toontown Fair not just easy, but almost natural. Perhaps there is hope, as the quote from Jean-Jacques Rousseau displayed inside the Land Pavilion at EPCOT suggests: “Nature never deceives us; it is always we who deceive ourselves.” + +BRENT WARSHAW + +Fairfield, Connecticut + + + + + +North Korea’s reach + +America’s defence budget represents 72% of total NATO spending, but this is misleading, you say, because the figure “reflects America’s global reach” as well as protecting the North Atlantic (“Allies and interests”, December 17th). Fair enough. But as the missile flies, Pyongyang is closer to Berlin than San Francisco. + +ANDY LADICK + +Washougal, Washington + + + + + +Church tax + +* Germany may not be particularly religious any more (Charlemagne, January 7th). But Germans still provide a hefty 8% of their income taxes to the churches, unless they opt to cancel their membership, as many do. + + + +EDD DOERR + +Silver Spring, Maryland + + + + + +Dumping grounds + +“Men of steel, house of cards” (January 7th) wondered whether cheap Chinese steel imports into America are “really so terrible” if they benefit American firms that consume steel. The problem is this: it is market forces that generate the new technologies, products and improvements in efficiency that bring benefits to consumers; but when governments decide production and capacity levels, profits suffer and innovation is stymied. + +In recent years China, faced with chronic overcapacity in steel because of stagnating demand at home, pushed steel exports to around 120m tonnes. These exports were sold at a significant loss, of $25bn on an annualised basis, according to data from the China Iron and Steel Association. This prompted the collapse in the price of steel, causing American steelmakers to curb their capacity to produce it. In this context the industry rightly sought trade actions to protect itself from unfair trade practices. + +So, yes to global trade and the benefits it brings. But exporting unsustainable domestic losses to harm the sustainability of the same industry in another country is not free or fair trade. For example, were China to start dumping millions of smartphones into the American market at a price below cost I would be surprised if Apple sat idly by. + +NICOLA DAVIDSON + +Vice-president + +ArcelorMittal + +London + + + + + +The gender gap + +* As you argued in “The ropy rupee recall” (December 3rd), India’s sudden demonetisation was poorly executed and has dealt an unnecessary shock to India’s financial system and the economy as a whole. As an advocate for women’s financial inclusion it is clear that India’s demonetisation has set Indian women’s financial inclusion further back than it already was. + + + +Prior to demonetisation, Indian women were already operating at a financial inclusion deficit. While account penetration increased from 35% in 2011 to 53% in 2014 according to the World Bank’s Global Findex, the financial inclusion gender gap actually increased from 17% to 20% during that same time period. Further, much of the increase in India’s overall financial inclusion was driven by mobile technology: rather than serving as a fast track to financial inclusion for everybody, digital actually widened the divide between men and women. This abrupt move away from cash has been felt disproportionately by women operating in the informal sector. + + + +It is not too late to turn India’s sudden move to a cashless society into an opportunity to level the playing field and bring low-income Indians—both men and women—into the digital economy, but it will require leadership by both the government and the private sector. The eight microfinance institutions that recently won licenses to become small finance banks have mostly women customers and can lead in bringing low-income Indian women into the digital economy. For its part, the government can continue to build on important regulatory changes it has already made such as paperless account opening and the Aadhaar universal identification system. + + + +MARY ELLEN ISKENDERIAN + +President and CEO + +Women’s World Banking + +New York + + + + + +A rake and a scoundrel + +I liked your piece about how Harry Flashman, a fictional globetrotter, would have made a great journalist (“The cad as correspondent”, December 24th). When I stayed at the Gandamack Lodge in Kabul, Flashman was a looming presence among the old British muskets, swords and maps. On the wall outside was a plaque with a quote from Flash: “Kabul might not be Hyde Park but at least it was safe for the present.” Well, not anymore. The Afghan government closed this haunt for journalists, diplomats, fixers and shady characters a few years ago after an increase in attacks on foreigners. I’m sure Flash found another appropriate watering hole. + +TOM BOWMAN + +National Public Radio’s Pentagon correspondent + +Alexandria, Virginia + + + + + +William Boot, the brilliant creation of Evelyn Waugh in “Scoop”, his satire on newspapers and British imperial politics during the grubby 1930s, was an amiable eccentric who succeeded in spite of himself. Flashman may have been closer to the reality of the empire than Boot, but Boot is more endearing, and successfully ran a counter-revolution. + +ANDERS OUROM + +Vancouver + +As the late, great, Christopher Hitchens once said on discovering a friend of his had also fallen for that arch-cad Harry Flashman, one can recognise a confirmed addict and fellow-sufferer. As someone who also likes to re-read Flashmans in the places they are set, it is my belief that your correspondent is a terminal case. Huzzah! + +RICHARD CARTER + +London + +* Letters appear online only + + + +This article appeared in the Letters section of the print edition under the headline “On Theresa May, the split infinitive, Disney, missiles, tax, steel, India’s demonetisation, Flashman” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/letters/21714965-letters-editor/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Briefing + + +The Trump administration: A helluva handover [Fri, 20 Jan 04:41] + +Peter Navarro: Free-trader turned game-changer [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +A helluva handover + + +What Donald Trump’s appointments reveal about his incoming administration + + +The drama of the transition is over. Now for the drama of government + + +Jan 21st 2017 | WASHINGTON, DC + + + + + +HOLED up in Trump Tower, the New York citadel he seems reluctant to leave, Donald Trump detected a tsunami of excitement in the national capital before his inauguration on January 20th. “People are pouring into Washington in record numbers,” he tweeted. In fact the mood in Washington, DC, where Mr Trump won 4% of the vote on November 8th, was more obviously one of apathy and disdain for his upcoming jamboree. Even the scalpers were unhappy, having reportedly overestimated people’s willingness to shell out to see Mr Trump sworn in as the 45th president. Some 200,000 protesters are expected to attend an anti-Trump march the day after the inauguration (see article). + +Mr Trump’s post-election behaviour has been every bit as belligerent as it was during the campaign. In his victory speech he said it was time to “bind the wounds of division”; he has ever since been insulting and threatening people on Twitter, at a rate of roughly one attack every two days. His targets have included Meryl Streep, Boeing, a union boss in Indiana, “so-called A-list celebrities” who refused to perform at his inauguration, Toyota and the “distorted and inaccurate” media, whose job it will be to hold his administration to account. + + + +He enters the White House as by far the most unpopular new president of recent times. It does not help that America’s intelligence agencies believe Russian hackers sought to bring about his victory over Hillary Clinton (though she won the popular vote by almost 3m ballots). + +Yet amid the protests, the launch of a Senate investigation into Russia’s hacking and nerves jangling in the United States and elsewhere at the prospect of President Trump, the transition has been chugging along fairly smoothly. The markets have responded with a “Trump bump”, exploring record highs in expectation of tax cuts and deregulation. + +Mr Trump has named most of his senior team, including cabinet secretaries and top White House aides, and their Senate confirmation hearings are well under way. These are even more of a formality than usual, thanks to a recent change to the Senate’s rules, instigated by a former Democratic senator, Harry Reid, which allows cabinet appointments to be approved by a simple majority. As the Republicans control both congressional houses, even Mr Trump’s most divisive nominees—such as Senator Jeff Sessions from Alabama, his choice for attorney-general, an immigration hawk dogged by historical allegations of racism—appear to be breezing through. + +Tom Price, a doctor and congressman from Georgia who is Mr Trump’s pick for health secretary, is touted by Democrats as the likeliest faller; he is in trouble over legislation he proposed that would have benefited a medical-kit firm in which he owned shares. But as the Democrats mainly dislike Dr Price because he is the putative assassin of Barack Obama’s health-care reform, and Republicans like him for the same reason, he will probably get a pass. “There are two people responsible for the direction we are heading in,” says Senator John Barrasso, a Republican from Wyoming, approvingly. “Donald Trump, who won the election, and Harry Reid, for changing the Senate rule. This has allowed the president-elect to nominate patriots, not parrots.” + +Indeed, Mr Trump’s cabinet picks have been solidly conservative, with a strong strain of small-governmentism. At least three of his nominees appear to have mixed feelings about whether their future departments should even exist. + +Rick Perry, Mr Trump’s choice to lead the Department of Energy, pledged to abolish that agency when campaigning for the presidency in 2011. Ben Carson, a right-winger with little management experience, whom Mr Trump has chosen to head his Department of Housing and Urban Development, once wrote that “entrusting the government” to look after housing policy was “downright dangerous”. As attorney-general of Oklahoma Scott Pruitt, picked to lead the Environmental Protection Agency, has sued the EPA 14 times, partly in an attempt to foil the Clean Power Plan, Mr Obama’s main effort to cut America’s greenhouse-gas emissions. + +Climate of opinion + +That all three are climate-change sceptics is no coincidence. So, to varying degrees, are almost all the politicians in Mr Trump’s administration (see graphic). Reince Priebus, his chief of staff, recently summarised his boss’s view of climate science as mostly “a bunch of bunk”. Mr Trump’s dishevelled chief strategist, Steve Bannon, a self-described nationalist populist, has similar views, with a twist. Mr Trump has described climate change as a hoax perpetrated by the Chinese; Mr Bannon blames a conspiracy of shadowy “globalists” for the UN’s Paris Agreement on climate, which Mr Trump has vowed to “cancel”. Plainly, Mr Pruitt’s brief will be to carry on doing what he was doing—with the power of the federal government behind him. + + + +INFOGRAPHIC: “Trump’s troops” - familiarise yourself with all the new president’s cabinet and top associates here + + + + + +The disavowal of climate science reflects a wider disdain for expert opinion. A small illustration of this, with potentially large consequences for American children, is that Mr Trump has discussed appointing Robert F. Kennedy junior, a lawyer and proponent of a bogus theory linking vaccines and autism, to chair a vaccine-safety commission. A bigger illustration is that the one academic economist on Mr Trump’s senior economic team, Peter Navarro, is a protectionist with a maverick aversion to trade deficits (see article). + +The team is dominated by bankers and businessmen, including two Goldman Sachs alumni, Steven Mnuchin, Mr Trump’s choice for treasury secretary, and Gary Cohn, the head of his National Economic Council. For his commerce secretary, Mr Trump has picked Wilbur Ross, a billionaire businessman who is also a protectionist, having made a fortune by buying and turning around stricken American steel and textiles mills, which he argues require stiffer protective tariffs. + +Reflecting Mr Trump’s outsider status, around half his appointees are non-politicians, including perhaps the most important, Mr Bannon and Mr Trump’s other main adviser, Jared Kushner, his 36-year-old son-in-law. A scion of a billionaire New York property developer, and a reformed metropolitan liberal, Mr Kushner is in some ways similar to Mr Trump. He is married to Mr Trump’s daughter, Ivanka, who is expected to take on many of the usual duties of a White House consort, and is as ruthless as he is influential. Governor Chris Christie of New Jersey, whom Mr Kushner axed as head of the transition, can attest to that. + +The fact that many of Mr Trump’s picks are plutocrats reflects his preference for pragmatists over pointy-heads, as well as his belief that moneymaking is a transferable skill. That was the underlying logic of his own candidacy. He also likes tough guys, ideally in uniform, hence his selection of three former generals: James Mattis and John Kelly, both former marines, at, respectively, the Pentagon and the Department of Homeland Security, and Michael Flynn, his national-security adviser. Mr Trump assured a crowd in Ohio that his cabinet would include the “greatest killers you’ve ever seen”. + +His nominees’ ability to look the part, Hollywood-style, is indeed said to be an important consideration for Mr Trump. “He’s very aesthetic,” one of his advisers told the Washington Post. “You can come with somebody who is very qualified for the job, but if they don’t look the part, they’re not going anywhere.” In the case of the stern Mr Kelly and craggy-faced Mr Mattis—whose nickname, “Mad Dog”, Mr Trump enunciates with relish—this appears to have worked out well. + +Divided and ruling + +Mr Mattis owes his moniker to his combat record and fondness for scandalising civilians; it’s “fun to shoot some people”, he told a crowd in San Diego. Yet he owes his reputation as a commander to his thoughtfulness, interest in history and concern for his soldiers. “He’s perfect for Trump,” says Michael O’Hanlon of the Brookings Institution, who has worked closely with the general. “His toughness gets him through the door. But he’s actually an intellectual in Genghis Khan clothing.” Mr Kelly is also respected, including for the understanding of America’s southern neighbours he developed while heading the US Southern Command. That was apparent in his Senate hearing, in which he said the border wall that is Mr Trump’s signature promise would not alone be sufficient to block illegal immigration: a “physical barrier, in and of itself, will not do the job.” + +In another transition, such an array of military men would have sparked concerns for the civil-military balance; Mr Mattis had to obtain a waiver of a rule restricting former soldiers from becoming defence secretary. That Messrs Mattis and Kelly have nonetheless been welcomed on Capitol Hill reflects a fear, among Republicans and Democrats, that it will take a tough guy to stand up to Mr Trump. “I firmly believe that those in power deserve full candour,” said Mr Kelly when asked for his assurance on this. The highest-ranking officer to have lost a child fighting in Iraq or Afghanistan, he is unlikely to be bullied. + + + + + +This also seems to be true of Mr Trump’s most intriguing cabinet appointment: Rex Tillerson, the former boss of Exxon Mobil, whom he has tapped to be secretary of state. This was at first denounced as further evidence of Mr Trump’s strange crush on Vladimir Putin’s regime, with which Mr Tillerson has done a lot of business, as well as his climate-change scepticism. That may be right on both counts. In his confirmation hearing, Mr Tillerson called for better relations with Russia and was, at best, vague about what steps he would take to counter global warming. Yet he appeared more measured in his view of the world than some of Mr Trump’s other advisers, including Mr Bannon and Mr Flynn, who want to forge an alliance with Russia to fight Islamist militancy. + +Mr Tillerson denounced Russia’s invasion of Ukraine as an “illegal action”, spoke up for NATO and said he looked forward to working with the Senate “particularly on the construct of new sanctions” against Russian aggression. He even offered a dash of Wilsonian warmth: “We are the only global superpower with the means and moral compass capable of shaping the world for good.” Mr Tillerson appears to have the authority and judgment necessary to steer Mr Trump’s belligerent instincts into the realm of realism. + +In short, this looks like a curate’s egg of an administration. In Messrs Cohn, Kelly, Mattis, Mnuchin, Perry and Tillerson, Mr Trump has assembled a group of successful people who appear to have at least some of the requisite qualities to run the government. That could also turn out to be true of Mr Trump’s choice for education secretary, Betsy DeVos, a billionaire Republican benefactor and advocate for school choice—though the results of her experiments in her native Michigan are not all that impressive. Mr Carson, Mr Pruitt and Mr Sessions look like awful appointments. + +Mr Flynn may be worse. A gifted intelligence officer, with a flair for institutional reform, he was sacked as head of the Defence Intelligence Agency in 2014, allegedly for poor management skills. Already critical of the president’s approach to fighting Islamist militancy, Mr Flynn proceeded to get mad. He horrified former comrades last year by launching several eye-poppingly partisan and Islamophobic—or as Colin Powell put it, “right-wing nutty”—attacks on Mr Obama, Mrs Clinton and Muslims. Even if paired with a more emotionally stable commander-in-chief, Mr Flynn would be a concern. + +Yet the biggest uncertainty surrounding Mr Trump’s cabinet concerns less the calibre of its members than the agenda they will pursue. It is hard to exaggerate how divided his team is on the big policy questions. Some members of the economic team, including Mr Mnuchin, who will be primarily busy with Mr Trump’s promised tax cuts, and Mr Cohn, who will play a co-ordinating and shaping role, are broadly in favour of free trade. Yet the likeliest architects of Mr Trump’s trade policy, Mr Ross, Mr Bannon and Mr Navarro, are economic nationalists. + +Similarly, Mr Mattis and Mr Tillerson appear to hold mainstream conservative views; both say it behoves the United States to uphold international rules, ideally by working through traditional alliances such as NATO. Mr Trump, however, has suggested that NATO could be “obsolete”. Mr Tillerson also said that America should not quit the UN’s Paris accord on climate change; Mr Trump has both vowed to “cancel” the agreement and said that he was “open-minded” about whether to honour it or not. + +Mr Trump acknowledged the conflict in a tweet: “All my cabinet nominee[s] are looking good…I want them to be themselves and express their own thoughts, not mine!” Was he suggesting his nominees’ views matter more than his own? Does he envisage them capably governing while he, Mr Kushner and Mr Bannon set about making the great changes Mr Trump has promised? Or will this be a squabbling talking-shop of a government, over which Mr Trump will preside watchfully, before swooping down on one side of an argument or another? That is how he has managed his business; it is also the role he played in “The Apprentice”. + +Even those familiar with Mr Trump’s thinking cannot say how he means to govern. “Trump is a wildcard, a political black swan, we don’t know how pragmatic he’ll be or how dogmatic,” says Stephen Moore, who helped write his economic policy. Yet some of his team’s current preoccupations offer early clues. + +Deciphering Donald + +One is a House Republican tax proposal that could indicate how protectionist Mr Trump is. Known as “border adjustability”, it is central to an ambitious House Republican tax plan and is intended to boost exports by scrapping tax on foreign sales, even as firms would lose the right to deduct the cost of imports from their profits. An additional advantage, some of its proponents suggest, is that border adjustability could look sufficiently like an import tariff for Mr Trump to claim that he had executed his threat to slap a tariff on American outsourcers, without causing anything like the same economic damage. Yet it seems Mr Trump’s protectionist rhetoric is in earnest. “Anytime I hear border adjustment, I don’t love it,” Mr Trump told the Wall Street Journal on January 13th. + +After tax cuts and new trade terms, Mr Trump’s biggest economic promise is deregulation. He should find quick wins in finance and energy. But his pledge to scrap and replace Obamacare, with the many rules attached to it, will be a more daunting test of his political skills. Because Democratic senators could filibuster away any bill to repeal the health-care programme, the Republicans plan to starve it of money until the insurance markets that underpin it collapse. Many think that, presented with a fait accompli, the Democrats would grudgingly support whatever alternative scheme they are offered. But Mr Trump appears unconvinced by this, and he is probably right to be. + +Slow starvation of Obamacare would ensure many hard-luck stories, for which the Republicans would be blamed. An alternative ploy would be to make relatively footling changes to Obamacare and declare victory. It would be hard to persuade the Republicans in Congress to swallow that. But as Mr Trump claimed on January 14th to be putting the final touches to a plan that would involve “insurance for everybody”, somewhat like Obamacare, and unlike any Republican proposal, perhaps this is what he has in mind. + +Deal or no deal? + +Besides the small matter of whether Mr Trump means to launch a trade war, a pressing foreign-policy question concerns Russia. Mr Trump, Mr Bannon and Mr Flynn want a better relationship with Mr Putin. “But what will they give up for it?” asks Nicholas Burns, a former American ambassador to NATO. Mr Trump has signalled that he might drop some of the sanctions Mr Obama placed on Russia after its intervention in Ukraine. Perhaps he would also consider scrapping American troop deployments to Poland and the Baltic states. Either step would be viewed by NATO’s European members as evidence that Mr Trump’s apparent disdain for the alliance is for real. + +This need not go badly. Mr Trump could back-pedal on protectionism, ignore or somehow improve Obamacare and maintain America’s watchfully adversarial footing with Russia. His administration could turn out as well as the markets seem to expect. But that would be largely down to Mr Trump himself; it will not be, as some have fancifully hoped, because his administration has been saved by the better angels in his cabinet. + + + +This article appeared in the Briefing section of the print edition under the headline “A helluva handover” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21715018-drama-transition-over-now-drama-government-what-donald-trumps/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Free-trader turned game-changer + + +Peter Navarro is about to become one of the world’s most powerful economists + + +There are reasons to be worried about the head of Donald Trump’s new National Trade Council + + +Jan 21st 2017 | Washington, DC + +Ready to rock + + + +THE day after Ronald Reagan won his second term as president in 1984, a doctoral student at Harvard University published his second book. “The Policy Game: How Special Interests and Ideologues are Stealing America” complained that greedy interest groups and misguided ideologues had led America to “a point in its history where it cannot grow and prosper”. The solution: increase political participation and swap ideology for pragmatism. + +On January 20th that student, now a professor, will enter the White House as part of a populist insurgency. Peter Navarro, a China-bashing eccentric who will lead the new National Trade Council, has emerged as the brains behind Donald Trump’s brawn on trade. Lauded as a “visionary” by Mr Trump, Mr Navarro may soon be the world’s most powerful economist working outside a central bank. + + + +He once supported free trade. An entire chapter of “The Policy Game” extols its virtues, labelling the protectionism of Reagan, who coerced the Japanese into reducing their car exports in 1981, as “dangerous and virulent”. There was a hint of his later scepticism: he called for more compensation for workers who lose their jobs to foreign competition, and stricter trade rules at the supranational level. But one benefit of such rules, he wrote, would be to provide presidents with an “escape from domestic protectionist pressures…the issue would be out of their hands.” + +It seems that Mr Navarro’s change of heart came decades later, after he took an interest in China. (Like other members of the incoming administration, he has been unavailable for interview in advance of the inauguration.) His road to China was a long and winding one: his research interests are broader than the average economist’s. His doctoral thesis studied the reasons firms give to charity; his paper on this remains his most cited work. He has worked extensively on energy policy. In 2000 or so he began studying online education, and was an early adopter of technological aids in his own teaching, says Frank Harris, one of his former students. + +Two themes emerge from Mr Navarro’s zigzagging research, which, since 1989, he has pursued at the University of California, Irvine. The first is a preference for real-world issues over abstraction. In 2000 he wrote two papers with Mr Harris on the best way to develop wind energy. Just months after the attacks of September 11th 2001 he tried to calculate their economic costs. He has written a popular book about investing, “If It’s Raining in Brazil, Buy Starbucks”. He is a prolific writer, but has no publications in top-tier academic journals. + +The second theme is his interest in the distribution of income. But whereas the fortunes of rich and poor have gripped other economists, Mr Navarro has “always been focused on a broad swathe of the middle”, says Richard Carson, a co-author. (Mr Carson worked with Mr Navarro on a paper arguing that the growth of cities should be tied to quality-of-life measures, such as traffic levels and school overcrowding.) Such concerns helped to draw Mr Navarro into politics. In the 1990s he ran for office several times as a Democrat, losing every race. He seems to be enjoying his political comeback: his television appearances can deteriorate into rumbustious shouting matches. He is fond of hyperbole. When he sends e-mails, his screen name appears as “ComingChinaWars”. + +It is his recent work on China that led to his unlikely hiring by Mr Trump. In the past decade or so Mr Navarro has penned three books warning darkly of the dangers posed by China’s economic and military rise. The second, “Death by China”, became a documentary in 2012. Narrated by Martin Sheen, an actor and left-wing icon, the film tours communities that have suffered from competition with Chinese imports, juxtaposing shuttered American factories with shots of Chinese sweatshops. + +The core allegations Mr Navarro makes against China are not all that controversial. He accuses China of keeping its currency cheap, a common charge until 2015, when China began intervening in currency markets in the opposite direction. He deplores China’s practice of forcing American firms to hand over intellectual property as a condition of access to its market. He notes, correctly, that Chinese firms pollute the environment more freely and employ workers in far worse conditions than American rules allow, and produce exports which often benefit from government subsidies. + +Trading positions + +A charitable interpretation of his views is therefore that he is not a protectionist at all. Rather, he simply objects to mercantilism on the part of the Chinese. In 2006 he estimated that 41% of China’s competitive advantage over America in manufacturing stemmed from unfair trade practices. In interviews he has noted the similarity between this figure and the 45% tariff Mr Trump threatens to levy on Chinese goods. + + + + + +But this interpretation does not explain Mr Navarro’s oddest views, like his opinion of the trade deficit. After China joined the World Trade Organisation in 2001, the trade deficit exploded at the same time as millions of manufacturing jobs vanished (see chart 1). Mr Navarro claims that, as a matter of arithmetic, unbalanced trade is responsible for a slowdown in growth since 2000. Mr Trump spouts similar lines, talking about the trade deficit as if it were simply lost American wealth. + +This is dodgy economics. A deconstruction of spending in the economy shows exports as a positive and imports as a negative. But the same accounting exercise also shows government spending as a component of GDP. Few economists—and certainly few Republicans—would say that the bigger the government, the richer the economy in the long-term. The equation shows how resources are used, not produced. + + + + + +Were Americans unable to buy cheap imports, they would be poorer, with less to spend on other things. They would also be less specialised, and hence less productive, at work. Lawrence Edwards and Robert Lawrence, two economists, estimate that, under certain assumptions, by 2008 trade in manufactured goods put $1,000 in the pockets of every American. China accounted for about a quarter of that amount. Recent work by the Council of Economic Advisers has shown that trade barriers, by raising the price of goods, tend to hurt the poorest most (see chart 2). If China exploits its workers and pollutes its rivers so that poor Americans can enjoy cheaper goods, it is not obvious that America is getting a raw deal. + +Trade balances result primarily from saving-and-investment patterns. When capital flows in one direction, goods and services flow in the other. China’s trade surplus with America during the 2000s was a consequence mainly of the Chinese buying Treasury bills, says Gordon Hanson, a trade specialist at the University of California, San Diego. This was not necessarily benign. Ben Bernanke, a former chairman of the Federal Reserve, suggested in 2005 that it contributed to a “global saving glut”. Mr Navarro sometimes hints at this more nuanced view. A book he wrote in 2010 with Glenn Hubbard, a more mainstream Republican economist, argued that “Asia saves too much and the United States consumes too much.” Yet Mr Trump’s plan for tax cuts and infrastructure spending, by pushing up government deficits, would make this problem worse. + +What might Mr Navarro recommend in office? He and Mr Hubbard say that China should be subject to “appropriate defensive measures”. That probably means more than the retaliatory duties already imposed on some Chinese goods. Mr Navarro says that Mr Trump is merely threatening an across-the-board tariff, in order to exact concessions from the Chinese. He seems to think that once they comply with global trade rules, the trade deficit will close and manufacturing jobs will return to America’s shores: “The best jobs programme…is trade reform with China.” + +This is a fantasy. When manufacturing production moves overseas and then returns, productivity has usually risen in the interim; so far fewer jobs come back than left. Messrs Edwards and Lawrence find that even though the trade deficit in manufactured goods in 2010 was about two-and-a-half times what it was in 1998, the number of lost manufacturing jobs the deficit represented rose only very slightly, from 2.5m to 2.7m. In any case, if China lost low-skilled jobs, manufacturers would relocate to other low-cost emerging economies, not America, says Eswar Prasad of the Brookings Institution, a think-tank. + +That means neither fairer play by China nor tariffs could help many American workers. More productive strategies are available. David Dollar, also of Brookings, has set out how a country could play “responsible hardball” with China. He recommends restricting the acquisition of American firms by China’s state-owned enterprises, something the Obama administration cautiously started doing. Such investment flows represent artificially high Chinese savings rather than the invisible hand of the market. Until now China has invested mainly in Treasury bonds. But it is increasingly interested in buying American technology firms. With restrictions imposed, America could demand that China open up more of its services market. + +What about environmental and labour standards? The best way to improve those, argues Mr Prasad, would be to write trade deals including rules which China will eventually have to follow. This was one aim of the doomed Trans-Pacific Partnership. It is a more realistic goal than returning low-skilled work to America en masse. + +It is possible that, in office, Mr Navarro will lean towards these kinds of ideas. But there is no sign of it yet: he recently promised “a seismic and transformative shift in trade policy”. Another change of opinion on trade might be too much to hope for. A man who has waited 32 years for a revolution has probably made up his mind. + + + +This article appeared in the Briefing section of the print edition under the headline “Free-trader turned game-changer” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/briefing/21715017-there-are-reasons-be-worried-about-head-donald-trumps-new-national-trade-council-peter/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +United States + + +Emboldened states: California steaming [Fri, 20 Jan 04:41] + +Women’s rights: March nemesis [Fri, 20 Jan 04:41] + +Asian-American voters: Bull in a China shop [Fri, 20 Jan 04:41] + +Chelsea Manning: The long commute [Fri, 20 Jan 04:41] + +Lexington: History lessons [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +California steaming + + +Democrats are learning to invoke states’ rights + + +America’s most progressive state is set to lead the new fight against federal power + + +Jan 21st 2017 | LOS ANGELES + + + + + +ON NOVEMBER 9th, as it started to sink in that Donald Trump would be their president too, Californians expressed their anger and disappointment in different and creative ways. Some took to the streets and burnt papier-mâché effigies of Mr Trump’s bronzed face. Others chanted “not my president” and waved signs that read “Immigrants Make America Great” and “Deport Trump”. Kevin de León and Anthony Rendon, the leaders of the California Senate and Assembly, respectively, released a statement. + +“Today, we woke up feeling like strangers in a foreign land, because yesterday Americans expressed their views on a pluralistic and democratic society that are clearly inconsistent with the values of the people of California,” it read. “We will lead the resistance to any effort that would shred our social fabric or our constitution.” As Mr Trump takes residence in the White House, California’s lawmakers are putting their words into action. + + + +They will have plenty of examples to follow. During the Obama administration, Texas and Oklahoma were strident advocates for state sovereignty. Several other states also challenged the federal government in court and by making their own laws. Indeed calls for states’ rights and limited federal power have been a defining feature of American conservatism since the New Deal, says Ilya Somin, a federalism expert at George Mason University. But with the election of Mr Trump, whose party controls both houses of Congress and who plans to appoint conservatives to the Supreme Court, it is Democrats who find themselves turning to the states as bulwarks of resistance. California, America’s most populous and progressive state, will lead the blue-state opposition. + +California has plumped for Democrats since the early 1990s—Hillary Clinton won by a margin of 30 percentage points. It is one of six states where Democrats hold the governor’s mansion and both houses of the state legislature. But Californians’ opposition to Mr Trump goes beyond partisanship. If America’s new president honours his promises to deport illegal immigrants, repeal the Affordable Care Act (better known as Obamacare) and relax environmental protections, California—America’s largest economy—stands to lose more than any other state. + +More than 3m undocumented immigrants call the Golden State home, reckons the Migration Policy Institute, a think-tank. (Texas, the second most popular state for undocumented foreigners, has less than half as many.) These workers make up nearly 10% of the workforce and contribute $130bn—or about 5%—of the state’s annual output, according to a 2014 study. Health Access California, a consumer advocacy group, estimates that the state government could lose $22bn in federal funding annually if Obamacare is gutted; some 5m Californians could find themselves without health coverage. And even though Mr Trump has vowed to axe Barack Obama’s Clean Power Plan, which would have regulated carbon emissions from power plants, California is likely to continue complying with—or even exceed—the requirements laid out in the framework. But its companies might find themselves at a competitive disadvantage if other states do not. + +Politicians from California and other blue states plan to resist Mr Trump using three main tools: legislation, litigation and circumvention. + +Start with legislation. On December 5th California’s lawmakers introduced a package of laws to impede mass deportation. One bill would create a programme to fund legal representation for immigrants in deportation hearings. Andrew Cuomo, the governor of New York, announced earlier this month that he would launch a similar fund. A recent national study found that immigrants with legal counsel were five-and-a-half times more likely to avoid deportation than if they represented themselves. Yet only 14% of detained immigrants in deportation proceedings had lawyers. Gun control, health care and environmental policy are other areas where Democrat-dominated states might focus in the coming years, says John Hudak, a fellow at the Brookings Institution. + +The leaves are brown + +Several states are also getting ready to challenge the Trump administration in court. Maura Healey, the attorney-general of Massachusetts, which has a Republican governor, and Eric Schneiderman, the attorney-general of New York, have both expressed their willingness to square off against the federal government. Earlier this month the California State Legislature announced that it had retained Eric Holder, who served as Mr Obama’s attorney-general, as outside counsel. He will work with the state’s next attorney-general to bring suits against the federal government. California’s decision to hire outside counsel is distinctive, but litigation as a means of stalling the federal government is hardly new. In 2010 a group of mostly Republican attorneys-general filed a lawsuit to block Obamacare. According to analysis by the Texas Tribune, the Lone Star State sued the Obama administration at least 48 times during Mr Obama’s term. Hiring Mr Holder “sends a message to the administration about the state’s resolve to defend our people, our diversity, and economic output,” says Mr de León. + +Some potential suits are starting to take shape. Gavin Newsom, California’s lieutenant-governor who will run for governor in 2018, has said that the state could sue under the California Environmental Quality Act or its federal equivalent to quash Mr Trump’s plans for a wall along the border with Mexico. The argument would rest on the claim that construction of the wall could upset water flows and quality as well as wildlife. Richard Revesz, an environmental-policy expert at New York University’s School of Law, says Democratic states could also sue to slow the repeal of the Clean Power Plan. + +The final way in which blue states can resist Mr Trump’s policy agenda is by trying to get around federal policy. California already has cap-and-trade agreements with foreign jurisdictions such as Québec. Mr de León says that, under the Trump administration the state will work to expand such programmes. Since 2009 nine states in the north-east have participated in the Regional Greenhouse Gas Initiative, a cap-and-trade programme. Even if climate protections are relaxed under Mr Trump, such an alliance could continue. + +On immigration, California has legislation preventing local jails from holding people for extra time just so that federal immigration enforcement officers can deport them. So-called “sanctuary cities” in other states, including Chicago, New York, Seattle and others, have pledged to protect their undocumented residents in similar ways. Such policies are likely to be effective at obstructing a massive dragnet; there are 5,800 federal deportation agents compared with more than 750,000 state and local police officers. Deporting undocumented immigrants without local co-operation is much more difficult. + +Mr Trump has threatened to cut federal funding for jurisdictions that insist on adhering to “sanctuary” policies, but Mr Somin suggests that courts may not look kindly on such an action. In 2012 the Supreme Court ruled that the federal government cannot force states to bend to its wishes with a financial “gun to the head”. Although much about the next four years is unpredictable, one thing seems clear: the courts will be busy. + + + +This article appeared in the United States section of the print edition under the headline “California steaming” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21715039-americas-most-progressive-state-set-lead-new-fight-against-federal/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +March nemesis + + +Donald Trump may unwittingly be a revitalising force for American feminism + + +A broad coalition of activists and protesters come together to demand women’s rights + + +Jan 21st 2017 + +Still suffering + + + +OF ALL the things uttered by Donald Trump during the election campaign, none seemed to threaten his chances of victory more than his admission, on tape, that he had grabbed women “by the pussy” without their consent. Yet Republicans—and voters—eventually looked past his attitude towards women. Many Americans, however, remain worried that a Trump presidency heralds a new age of sexism and misogyny. In the days after the election, donations to women’s non-profit groups surged. So did demand for contraception, as women worried that access to birth-control would be curtailed. On January 21st, the day after the inauguration, some 200,000 American men and women are expected to turn up at a march in Washington to protest against regressive policies and demand equal treatment for women—and a lot more besides. + +The march grew from two unrelated Facebook posts into the “Women’s March on Washington”, which promises to be the biggest single anti-Trump demonstration yet. It has also spawned sister marches in New York, San Francisco, London and dozens of other cities. But arranging it has proved thorny. It was originally called the “Million Women March”, until organisers were admonished for appropriating the name of the 1997 “Million Woman March”, which focused on African-American women. Others claimed that it too closely resembled the 1963 “March on Washington” led by Martin Luther King Jr. The event’s Facebook page is rife with comments advising white women to “check their privilege”. Some women, put off by all the bickering, decided not to attend. + + + +It is the kind of semantic nitpicking that has made progressive movements unappealing to many Americans. Yet it may have done some good: the march has brought together a broad coalition. Nearly 450 organisations, from the Council on American Islamic Relations to Greenpeace and the Coalition Against Gun Violence, have signed on as official partners. In addition to well-trodden feminist concerns like the wage gap and paid parental leave, the protest platform embraces other causes—immigrant rights, ending police brutality, climate protection—as integral to women’s progress. The organisers argue that matters of social justice and women’s rights go hand in hand. In the comfortable Obama years, many liberal Americans believed feminism’s work was mostly finished. Mr Trump’s ascent banished such complacency. He may be the unifying enemy they need. + + + +This article appeared in the United States section of the print edition under the headline “March nemesis” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21715044-broad-coalition-activists-and-protesters-come-together-demand-womens-rights-donald/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bull in a China shop + + +Chinese-Americans are becoming politically active + + +A long-slumbering voter block awakes + + +Jan 21st 2017 | DIAMOND BAR, CALIFORNIA + + + + + +THE 2016 election marked a coming-out party for conservative Chinese-Americans, who offered Donald Trump some of his most passionate support among non-whites. Now some are feeling the first twinges of a hangover, as their hero threatens a trade war with China and hints that he might upgrade ties with Taiwan, the island that Chinese leaders call no more than a breakaway province. + +“My members worshipped Trump religiously for a whole year,” says David Tian Wang, a 33-year-old businessman originally from Beijing, who founded “Chinese Americans for Trump”, a group which paid for Trump billboards in more than a dozen states and flew aerial banners over 32 cities. Perhaps most importantly, Mr Wang’s members rallied supporters on Chinese-language internet forums and messaging apps including WeChat, attracting outsized attention from media outlets and elected officials in places where Asian voters can swing elections, such as southern California. Interviewed in Diamond Bar, an affluent, majority-Asian city east of Los Angeles, Mr Wang remains a true believer. But perhaps half of his members are anxiously “waiting for Trump’s next move”. + + + +There are about 4m Chinese-Americans. Typically, most combined a mild preference for Democrats with a general wariness of party politics. Early immigrants from southern China, Hong Kong and Taiwan lacked education, clustered in inner cities and “worked in bad jobs”, making them prey for Democratic politicians offering welfare, sniffs Mr Wang. Recent immigrants from mainland China often attended good universities, work in the professions and “want to mingle with white people”, he says. A big political moment came in 2014, when Chinese-Americans mobilised against SCA5, a proposed amendment to California’s constitution that would have opened the door to race-based affirmative action. Many Chinese-Americans charge that race-conscious school admissions hurt high-achieving Asian youngsters and favour black and Hispanic candidates. + +Asian votes helped Phillip Chen, a young Republican of Taiwanese descent, win a seat in the California state Assembly in November, representing Diamond Bar and a swathe of nearby suburbs. For years Asian-Americans, who make up about a third of his district’s registered voters, shunned politics, though they longed to assimilate and fit in in other ways. At the recent election his own mother’s friends wondered aloud why her son, “a nice young man” with a graduate degree, was running for office. His Chinese-American constituents admire Mr Trump’s business acumen and worry about taxes, regulation and law and order, including a clampdown on illegal immigration. But they also want peace between Taiwan and China, Mr Chen says, and so will be watching the new president with a wary eye. + +At an Asian shopping centre in Rowland Heights the most worried are those, such as Mike Lee, a sales director from Taiwan, who backed Hillary Clinton. He fears that Mr Trump will use the island as a “bargaining chip” with China. In contrast John Lin, a businessman from southern China, does not regret his Trump vote, cast because he thinks that “generally speaking a man has more control than a woman”. He scoffs at talk of a trade war: “Walmart can’t survive without Chinese products.” As for rows over Taiwan, Mr Trump just needs time to become “more familiar with the world”. Mr Lin has strong nerves, a helpful asset for Trump fans everywhere. + + + +This article appeared in the United States section of the print edition under the headline “Bull in a China shop” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21715066-long-slumbering-voter-block-awakes-chinese-americans-are-becoming-politically-active/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The long commute + + +Barack Obama cuts short Chelsea Manning’s sentence + + +The whistle-blower will have served nearly seven years of a 35-year prison term + + +Jan 21st 2017 + + + + + +SLOPPY security at an American military base in Iraq in 2009 allowed a lowly soldier to set off a diplomatic thunderstorm. Bradley Manning, a junior intelligence analyst, downloaded a database of American government files onto a CD (labelled “Lady Gaga” to avoid suspicion) and uploaded them to WikiLeaks, a website devoted to exposing official wrongdoing. + +The results were explosive and the price was heavy. The hundreds of thousands of leaked documents included a video of a shocking American airstrike on innocent Iraqis, carelessly mistaken for terrorists. A caustic ambassadorial cable describing the sybaritic lifestyle of the Tunisian presidential family may have sparked the Arab Spring. + + + +In truth, though, the leaked cables mostly exposed nothing more than mild hypocrisy and buried literary talents. But they also endangered diplomats’ sources. In some countries—China and Zimbabwe, for example—candid discussions with American officials are regarded as tantamount to treason; there and elsewhere retribution duly followed. So too did costly and secret State Department efforts to protect, where possible, people who had mistakenly trusted America’s ability to keep a conversation private. + +Speedily arrested after leaving clues in an online conversation, the soldier was jailed for 35 years on 22 charges, including espionage. Fans decried persecution of a brave whistle-blower, and what seemed vindictively harsh treatment, including nearly a year of solitary confinement. + + + + + +The cause gained added weight when, the day after being sentenced, the convict switched name and sex: something that would have led to an immediate discharge from the army in any other circumstances. The authorities allowed her to take hormone-replacement therapy, but not to grow her hair. + +Chelsea Manning, now aged 29, was the most prominent name on a list of presidential pardons and commutations, most of which involved those serving long terms for drug offences, issued by Barack Obama in the final hours of his presidency. Her sentence will now end in May, after almost seven years behind bars. + +Others are furious. Senator Tom Cotton, a former army officer, said “We ought not treat a traitor like a martyr.” His colleague Lindsey Graham, an air-force veteran, tweeted that Ms Manning had “stabbed fellow service members in the back”. John McCain said the decision “devalues the courage of real whistle-blowers”. Such critics argue that Ms Manning ignored whistle-blowing criteria, such as trying internal channels first, and matching leaks with the purported wrongdoing. + +The move also casts a spotlight on two other cases. One is WikiLeaks’ founder, Julian Assange, holed up since 2012 in the Ecuadorean embassy in London to avoid questioning in a Swedish sexual-assault case. WikiLeaks had said he would be willing to face trial in America for leaking secrets if Ms Manning was pardoned. Mr Assange says he will stand by that position. + +The other is Edward Snowden, an intelligence contractor who fled to Russia in 2013. Officials dismissed any talk of forgiveness for him, saying that the damage he had done was far graver, and that Ms Manning had already served a sufficient sentence. Mr Obama said that “justice had been served”. + +Despite his clemency splurge, Mr Obama has been mostly regarded as rather harsh on whistle-blowers. Few expect Mr Trump to be lenient either. + + + +This article appeared in the United States section of the print edition under the headline “The long commute” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21715063-whistle-blower-will-have-served-nearly-seven-years-35-year-prison-term-barack/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Lexington + + +Remembering an accomplished but fatally flawed president + + +History lessons from Richard Nixon’s presidential library + + +Jan 21st 2017 + + + + + +CAN a bad man be a good president? The potential urgency of this question took Lexington on a cross-country pilgrimage to the Richard Nixon Presidential Library and Museum in Yorba Linda, California. The museum, which reopened in October after an expensive overhaul, attempts to weigh the flaws of the 37th president against his undoubted merits, starting with his intelligence, daunting capacity for work and a poker-player’s willingness to take calculated risks in geopolitics. + +Much thought has gone into burnishing the reputation of the only president to resign the office. A new display for the selfie generation allows visitors to photograph themselves on the Great Wall of China next to a life-size Nixon cut-out, recalling his history-making visit in 1972. Little-known moments of physical courage are remembered. Carefully preserved bullets and glass fragments testify to a nearly fatal mob attack on his car while visiting Venezuela in 1958 as Dwight Eisenhower’s vice-president—the display explains how Nixon prevented a bloodbath by ordering his Secret Service agent to hold fire. + + + +The museum hails Nixon for rallying a “silent majority” of Americans who felt ignored and disdained by bossy, self-dealing elites. Captions suggest that Nixon balanced a conservative’s wariness of big government with a pragmatist’s willingness to wield federal authority to heal chronic ills, whether that involved desegregating schools in the South to an extent that had eluded his Democratic predecessors or creating the Environmental Protection Agency to clean up rivers so polluted that they caught fire. This empathy for America’s forgotten, damaged places was all the more remarkable because—as the museum admits via filmed interviews with aides and family members—Nixon was a brooding introvert, “suspicious” to the point of paranoia. + +The Watergate scandal that felled Nixon is presented in a side-gallery filled with sombre black, red and grey panels bearing labels like “Dirty Tricks and Political Espionage” and “Obstruction of Justice”. In the brightly lit main halls an elegant display explains how Nixon recorded White House conversations with hidden microphones, to preserve his presidency for posterity. An old-fashioned telephone plays such recordings as “Daddy, Do You Want to Go Out to Dinner?” a 1973 call from Nixon’s daughter, Julie. Walk a few yards into the Watergate gallery and the taped recordings are of the president growling about Jews in his government, snarling, “Generally speaking, you can’t trust the bastards.” Blazered volunteers earnestly describe Nixon’s strong and weak points. They work hard, with one guide spending long minutes explaining Maoist China to two youngsters perched on the canary-yellow sofas in a replica of his Oval Office from around 1969. + +Alas for keepers of the Nixon flame, the museum—whose historical displays have become more candid over the years, notably when the complex became part of the official presidential library system in 2007—is too honest for its own good. The museum would like visitors to judge Nixon the man, which is why it includes a sculpture of a favourite dog curled up in an armchair and tours of the modest cottage where he was born, back when Yorba Linda was a rural backwater. But it ends up telling a story larger than any one individual. It reveals how close America’s ship of state came to being wrecked by a particularly lethal sort of bad leader: one guided by a broken moral compass. + +The museum quotes one eyewitness to Watergate saying of Nixon’s resignation: “The system worked.” It nearly didn’t, though. A pilgrimage to Yorba Linda offers several troubling lessons. First, Nixon employed in his cabinet and White House many clever men with brilliant CVs. They did little to rein in the thugs and glinty-eyed loyalists infesting his inner circle, though some grandees did resign out of principle—notably the attorney-general and deputy attorney-general, who both quit rather than obey Nixon’s orders to fire a special prosecutor closing in on him (in the end the solicitor-general did the deed). Second, and perhaps unintentionally, the museum suggests that if the Supreme Court had not forced Nixon to release White House tapes of his ordering illegal acts, many partisans might have continued to look the other way. A striking interview, filmed in 2008, shows Bob Dole, a young senator back in 1973 who later became a party leader and presidential candidate, conceding that he tried to convince himself that sinister aides were behind every misdeed. “I didn’t want to make myself believe Nixon did this, that he actually participated,” he explains in a telling tangle of words. + +A piece of cake, until you get to the top + +Next, the museum records Nixon fulminating against perceived tormentors in the press. But photographs also show him acknowledging its reach by speaking in a newly opened West Wing briefing room—a facility whose future is currently in doubt. Today, amid confected rows about “fake news”, reporters who unearthed a new Watergate would start with roughly half the country ready to disbelieve them. Finally, the Nixon museum shows how the symbolic power of the presidency can cow dissent, even in this sceptical age. Tours end with a peek into a lovingly restored Sea King helicopter used by four presidents. A reverential guide points out a chic white racing stripe along the dark green fuselage, painted at Jacqueline Kennedy’s suggestion. He adds, lightly, that the aircraft is the one that carried Nixon into enforced retirement, and museum-goers look no less impressed. + +Indoors, a diorama recreates that departure from the South Lawn of the White House, portraying the former presidential couple in their helicopter seats and quoting Pat Nixon’s lament to her husband: “It’s so sad, it’s so sad.” The staging lends the scene dignity and pathos. But the moment was not sad, it was a merited disgrace. No political leader is an angel. Good men have been bad presidents (cf, Jimmy Carter). But the presidency is the wrong job for an amoral man. + + + +This article appeared in the United States section of the print edition under the headline “History lessons” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/united-states/21715068-history-lessons-richard-nixons-presidential-library-remembering-accomplished/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +The Americas + + +El Salvador: Unhappy anniversary [Fri, 20 Jan 04:41] + +Argentina: Tango in trouble [Fri, 20 Jan 04:41] + +Cuban migrants: Special no more [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Unhappy anniversary + + +El Salvador commemorates 25 years of peace + + +But the country needs a new peace accord + + +Jan 21st 2017 | SAN SALVADOR + + + + + +EL SALVADOR was reborn 25 years ago. On January 16th 1992 the government signed a peace accord with left-wing guerrillas at Chapultepec castle in Mexico City, ending a 12-year civil war in which 75,000 people died. The agreement, followed by a truth commission that laid bare the war’s atrocities and by an amnesty, was a model for reconciliation in other countries. It underpins El Salvador’s political order today. + +Stirring as that achievement was, the festivities held to commemorate it this week fell flat. The convention centre in San Salvador’s Zona Rosa, not far from where guerrillas invaded the capital in 1989, prompting the first peace talks, was emptier than normal for big events. A small exhibition, displaying military uniforms, guerrillas’ weapons and quotes about peace from the likes of Confucius and John Lennon, lined the walkway to the stage. The crowd, clad in white, seemed more interested in free pupusas (bean-and-cheese filled tortillas) than in the speeches. The event ended with a confetti drop, listless applause and a return to the food queues. + + + +The mood was downbeat because El Salvador’s 6m people have little to celebrate. The dominant feeling these days is “fear, not peace”, says Alejandro Marroquín, a member of a breakdancing group that was invited to the commemoration. Having fled gang violence in greater San Salvador four years ago, he thinks that “the war has continued. The only difference is that now it’s between the gangs and the government.” El Salvador is the most violent country in the Americas, with a murder rate of 80 per 100,000 people—more than 15 times that of the United States. + +That is not the only disappointment. After an initial spurt, economic growth has dropped to a torpid 2% or so, less than half the Central American average (see chart). Corruption is rife. Two post-war presidents face charges; another one died last January before he could be tried. Many Salvadoreans have given up on their country. More than 40% want to leave within the next year, says a new poll by the Central American University. That is the highest level since the university started asking the question a decade ago. + + + + + +A big factor behind these let-downs is the flaws of the main political parties, heirs to the combatants of the civil war. Since the peace accord, the right-wing Nationalist Republican Alliance (Arena) and the leftist Farabundo Martí National Liberation Front (FMLN) have had turns in power. (The current president, Salvador Sánchez Cerén, a former guerrilla commander, belongs to the FMLN.) They renounced war, but failed to learn statesmanship. + +The antagonism between them is abnormal for rivals in a democratic system. The FMLN still yearns for socialism, though it has reconciled itself to the market economy for now. Arena’s party song proposes a different goal. “El Salvador will be the tomb where the reds end up,” it prophesies. The clash “doesn’t allow for a vision of the country”, says Luis Mario Rodríguez of Fusades, a pro-business think-tank. About the only thing the parties agree on is that the real point of wielding power is to enjoy the spoils. The result is what Salvadoreans call a “patrimonial state”, which justifies itself through patronage and stifles any institution that stands up to it. + +El Salvador’s leaders now finally realise that a new peace agreement of sorts is needed. Mr Sánchez Cerén used the commemoration ceremony to present a special envoy from the UN, Benito Andión, to “facilitate dialogue”. Just how Mr Andión, a Mexican diplomat, will interpret that is unclear. Some suggest that his job will be to help broker a peace between the government and the two main gangs, Barrio 18 and Mara Salvatrucha. But the UN statement on Mr Andión’s appointment says his job is to “address the key challenges” affecting El Salvador, which sounds like a broader brief. Just as in 1992, “we need dialogue that matches today’s historical moment,” declared Mr Sánchez Cerén. + +Budget brinkmanship + +Gridlock has brought El Salvador to the brink of economic catastrophe. After years of slow growth and overspending, in part to prop up a state pension scheme, the central government nearly ran out of cash late last year. Blocked from long-term borrowing by the opposition, which has more seats in congress, it stopped making monthly payments to municipalities. Health workers went on strike after the government reneged on wage agreements. It came close to a default on its debt. + +A deal in November between the government and Arena averted disaster by allowing the government to issue $550m of new debt in exchange for agreeing to a “fiscal-responsibility law”, which would cap borrowing and spending. But that is just a stopgap. The opposition, doubting that the government will keep its fiscal promises, has refused to approve the budget for 2017. Another crisis looms. “We are playing with fire,” says Alex Segovia, an economist. + +The quarrel is partly about how to reduce the budget deficit, which was an estimated 4% of GDP last year. The FMLN wants to lift the government’s low revenue by raising income tax and levying one on property. Arena pushes mainly for spending cuts. The parties have yet to agree on a needed reform of pensions. A “negotiating table” set up last April has so far failed to come up with a solution. The government has called in the IMF, which may now broker a resolution to the crisis. + +A budget deal, if it happens, would unlock just one of the many manacles on the economy. El Salvador’s use of the strong dollar as its currency keeps prices stable but holds back exports. A lethargic bureaucracy is another obstacle: shipping goods from El Salvador to the United States is no faster than from Vietnam, says an observer in San Salvador. With a trade deficit of nearly 20% of GDP, El Salvador depends on remittances from 2m Salvadoreans living in the United States. Its biggest firms are consumer-oriented conglomerates that mainly live off the American bounty. + +Nothing constrains the economy more than crime, which deters investment and drives young workers out of the country. The cost of violence and insecurity is 16% of GDP, by one estimate. Gangs extort vast sums from businesses, equivalent to 3% of GDP. Recently, the threat of gang violence has emptied entire villages. In September one local government in western El Salvador set up a camp on a basketball court for dozens of families that had been ordered to leave by gangs, the first settlement for internally displaced people since the civil war. + +The FMLN government, which tries to seem as tough on criminals as is the opposition, claims that its recent crackdown is working. Security forces have killed 900 gang members over the past two years. The government has largely cut off mobile-phone contact between imprisoned gangsters and their confederates on the outside, who operate the extortion business and carry out murders. The number of murders dropped by 20% last year to 5,278. + +Mara Salvatrucha and a faction of Barrio 18, perhaps weakened by the government’s offensive, have recently proposed a dialogue with the government and offered to lay down their arms. Barrio 18 even offered to give up extortion. The FMLN has so far rejected negotiation. + +Critics contend that the government’s mano dura (iron-fist) policies have worsened conditions in prisons, which were already appalling. They say that the killing of gangsters by police amounts to state-sponsored murder. Such brutality will provoke more violence, believes José Luis Sanz, director of El Faro, a digital newspaper. + +The accidental attorney-general + +When the state does something right, it is usually in spite of the main parties rather than because of them. The process of appointing people to such sensitive jobs as prosecutor and high-court judge is designed to ensure that only creatures of the political parties get them. On occasion, though, less pliant candidates slip through. Such is the case with Douglas Meléndez, attorney-general since 2016, who startled Salvadoreans by pursuing corruption cases against figures of both parties. One FMLN ex-president, Mauricio Funes, has taken refuge in Nicaragua. Antonio Saca, who governed until 2009 as a member of Arena, is in jail awaiting trial on charges that he helped embezzle $246m of public money, roughly 1% of GDP. “To see a president in handcuffs was like something out of a film,” says Roberto Burgos of DTJ, an NGO that promotes good government. The constitutional court has also shown an independent streak by challenging political parties’ abuses. Such checks on power are El Salvador’s best hope for cleaning up government and modernising politics. + +But the ruling party has responded to defiance with threats and abuse. Demonstrators encouraged by the FMLN have been issuing death threats against constitutional judges, says Sidney Blanco, who sits on the court. + +Independent-minded officials survive in office thanks largely to backing from outside powers such as the United States. Photos of Mr Meléndez in the company of foreign ambassadors send the message that he is not alone, notes Mr Burgos. American support for the attorney-general is part of a broader programme to improve governance, investment conditions and law enforcement in El Salvador, to weaken the lure of emigration to the United States. El Salvador is a beneficiary of the Alliance for Prosperity, which provides it and the two other countries in Central America’s “northern triangle”, Guatemala and Honduras, with nearly $750m a year. Authorisation to spend that money in El Salvador probably would have been withheld had the government shut Mr Meléndez down. + +Salvadoreans expect that assistance to continue under the Trump presidency. Its aim, after all, is to slow down immigration. That is encouraging. But something is wrong when outsiders show more of the political will needed to reform El Salvador than do the country’s own politicians. + + + +This article appeared in the The Americas section of the print edition under the headline “Unhappy anniversary” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21715065-country-needs-new-peace-accord-el-salvador-commemorates-25-years-peace/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Argentina + + +Tango in trouble + + +Milongas, where Argentines go to tango, are a casualty of the weak economy + + +Jan 21st 2017 | BUENOS AIRES + + + + + +WHEN couples tango outdoors in Buenos Aires, it is usually to cadge coins from tourists. A recent display, outside the city hall, had a new purpose: to draw attention to the plight of the city’s milongas, tango events where the dancers’ only audience is other dancers. + +Perhaps 150 milongas take place weekly in dance halls and community centres across the capital, either in the afternoons or after midnight. “They are the heart of the tango,” says Julio Bassan, president of the Association of Milonga Organisers (AOM). And they are in trouble. + + + +With a weak economy and high inflation cutting into incomes, attendance fell by as much as half last year, Mr Bassan reckons; 17 milongas closed. “When there’s so much uncertainty, the first thing that people cut back on is recreation,” says Jimena Salzman, who runs the Milonga de las Morochas (“Milonga of the Dark-Haired Women”). She charges an entrance fee of 100 pesos ($6.25), the cost of a cinema ticket. That puts some people off. “I love to dance, but I need to eat,” says Augustín Rodrigo, a teacher, who has reduced his daily tangoing to twice a week. + +A milonga is a dance as well as an event, a forerunner to the tango that mixes Cuban, African and European influences. In tango’s heyday, some 70 years ago, milongas attracted thousands of dancers. Club Huracán in the city’s south had seven dance floors. Some cling to tradition. A man must invite a woman to dance with a cabeceo (nod). If she accepts, the pair will dance anti-clockwise to a tanda, or set of three or four songs. A cortina, a few seconds of music, signals the end of a set, during which the man escorts his partner back to her seat. + +Few milongas are so conservative now. Young milongueros prefer modern tango, which mixes the music of classical composers like Carlos Gardel, who died in 1935, with electronic beats. But the young come less often. In an age of dating apps, fewer find mates in milongas. + +Tango itself is in no danger. Glitzy shows are a daily event in Buenos Aires. But campaigners say neighbourhood milongas are tango’s spiritual home. On December 7th the city council passed a “milonga promotion law”. It sets up a registry and offers tax exemptions and 9m pesos a year of financial aid from the budget. Like it or not, taxpayers will help keep milongas alive. + + + +This article appeared in the The Americas section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21715070-milongas-where-argentines-go-tango-are-casualty-weak-economy-tango-trouble/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Special no more + + +An end to wet foot, dry foot + + +The outgoing American president makes it harder for Donald Trump to undo the rapprochement with Cuba + + +Jan 21st 2017 | HAVANA and MEXICO CITY + +Floating to Florida is now futile + + + +AMONG a group of young men gathered in a tin-roofed telephone-repair shop in Havana, the topic of conversation is how to leave Cuba. The easiest way, they now reckon, is to marry a European. That is because on January 12th, in one of his final acts as president, Barack Obama ended the 22-year-old “wet foot, dry foot” policy, which allowed Cubans who land on American soil to stay in the country; those caught at sea were sent home. That shuts off the main escape route for Cubans in search of a better life. + +Mr Obama’s decision looks like an attempt to protect one of his few foreign-policy successes: his agreement with Cuba’s president, Raúl Castro, in December 2014 to restore diplomatic relations and loosen an economic embargo imposed on the island by the United States in 1960. Donald Trump, who will become the American president on January 20th, has said contradictory things about the rapprochement with Cuba, but his more recent comments have been negative. Some members of his transition team are fierce opponents of the normalisation policy. + + + +Mr Trump’s administration may thus try to undo the rapprochement with Cuba, which includes freer travel and better telecoms links with the island. The wet foot, dry foot decision makes that harder. Mr Trump does not like immigration; he will find it awkward to reverse a decision that makes it more difficult. It will also be tricky to justify reopening automatic asylum for Cubans but not for citizens of countries that are even more repressive. + +Fearing that the United States would shut its Cubans-only entrance, many Cubans rushed to its borders. In fiscal year 2016, which ended in September, 56,000 arrived, more than double the number of two years before. Many paid thousands of dollars for tickets and in bribes and fees to people-smugglers to reach the United States’ southern border. One popular route started with a flight to Ecuador, followed by a perilous land journey through Central America. Some Cubans still venture into leaky boats to cross the Florida Strait. + +Mr Obama’s abrupt decision to end the wet foot, dry foot policy leaves some—no one is sure how many—stranded en route to the United States. More than 500 are in southern Mexico, waiting for documentation from the Mexican government that would allow them to journey to the American border. They will now be treated just like others clamouring for admission, though the United States says it will try to give them humanitarian assistance. + +Nearly half a million people were caught trying to enter the United States illegally in fiscal 2015 (down from 1.8m in 2000). They face detention until they are sent back. About a third were from Central America’s “northern triangle”, where governments are less repressive than in Cuba but violence is far worse. Cubans who face political persecution will still have a right to asylum. Others can apply for the 20,000 migrant visas available to the country’s citizens each year. + +American conservatives have slammed Mr Obama’s wet foot, dry foot reversal, and his simultaneous decision to stop giving Cuban doctors who defect from a third country fast-track entry to the United States, as his final betrayal of the Cuban people. The regime has become more repressive since he unfroze relations, they maintain. Arrests of dissidents, for example, have increased. + +Defenders of Mr Obama’s thaw point out that the government now uses short-term detention rather than long jail sentences to discourage its opponents. The number of political prisoners has fallen sharply. Although Mr Trump has complained that the United States gets “nothing” from its new relationship with Cuba, it has led to co-operation in such areas as drug-trafficking and cyber-crime. + +In Havana, the reaction to Mr Obama’s gambit is mixed. Cuba’s government, which saw the wet foot, dry foot policy as an insult and a cause of a damaging brain drain, is pleased. Some ordinary folk think the change is justified. Wet foot, dry foot was just “another way to implement the blockade”, said a well-dressed woman who would not give her name. Barbara Izquierdo, a housewife whose brother went to the United States 15 years ago, admits that most Cubans leave for financial reasons, not political ones. + +But many Cubans, living on monthly incomes of $50-200, are crestfallen. “We don’t live, we survive,” says a young man who works in property. He had hoped to leave and then to return to “build something for myself”. He must now wait for the government to allow greater economic and political freedom. The death last November of Fidel Castro, the leader of the Cuban revolution, and Raúl Castro’s plan to step down as president next year, may help bring change. Ambitious Cubans, denied the prospect of escaping to the United States, may now push harder for that. + + + +This article appeared in the The Americas section of the print edition under the headline “Special no more” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/americas/21714600-outgoing-american-president-makes-it-harder-donald-trump-undo-rapprochement/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Asia + + +Chinese influence in South-East Asia: The giant’s client [Fri, 20 Jan 04:41] + +Education in Thailand: Not rocket science [Fri, 20 Jan 04:41] + +Street vendors in Mumbai: Stabbed in the snack [Fri, 20 Jan 04:41] + +Politics in Australia: Going for gold [Fri, 20 Jan 04:41] + +Pakistan’s economy: Roads to nowhere [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The giant’s client + + +Why Cambodia has cosied up to China + + +And why it worries Cambodia’s neighbours + + +Jan 21st 2017 | PHNOM PENH + + + + + +“CAMBODIA is a thin piece of ham between two fat pieces of bread,” says a former Cambodian minister, as he stirs a glass of iced coffee. To Cambodia’s west is Thailand, which has more than four times as many people; the two countries have a dormant but unsettled border dispute. To the east is Vietnam, nearly six times as populous, which invaded Cambodia in 1979 and occupied it for ten years. So Cambodia has done what small countries always do: it has found a protector. + +As long ago as 2006 Hun Sen, Cambodia’s prime minister, declared China his country’s “most trustworthy friend”. China’s past three presidents have all visited Cambodia, offering lavish aid and investment. The current one, Xi Jinping, declared Mr Hun Sen “an ironclad friend”. China is Cambodia’s biggest source of foreign direct investment by far: in 2015 it contributed a greater share to the total than all other countries combined (see chart). Cambodia has continued to accept Chinese largesse with glee, even as most of the rest of South-East Asia grows ever warier of its giant neighbour to the north (Laos, an even thinner slice of ham just north of Cambodia, is an exception). The ramifications of the strengthening relationship extend well beyond Cambodia’s borders. + + + + + +China has long taken an interest in Cambodia. When America backed Lon Nol, a strongman who seized power in 1970, China supported his opponents: Norodom Sihanouk, the deposed king; and the Khmers Rouges, who displaced Lon Nol in 1975 and then murdered around 2m of their countrymen. China continued to support the Khmers Rouges even after the Vietnamese invasion pushed them out. But once Mr Hun Sen, a defector from the Khmers Rouges sheltered by Vietnam, fully consolidated power in the 1990s, China began assiduously courting him. + + + +China provides military aid: uniforms, vehicles, loans to buy helicopters and a training facility in southern Cambodia. Between 2011 and 2015 Chinese firms funnelled nearly $5bn in loans and investment to Cambodia, accounting for around 70% of the total industrial investment in the country. Chinese firms run garment and food-processing factories and are also heavily involved in construction, mining, infrastructure and hydropower. Others hold at least 369,000 hectares of land concessions on which they grow sugar, rubber, paper and other crops. + +The government is often willing to bend the rules for Chinese firms. One is developing a luxury resort inside a national park on the edges of Sihanoukville, the country’s main port. Another has won development rights over some 20% of Cambodia’s coastline. Human-rights groups allege that fishermen who had lived in the area for generations were summarily evicted, taken inland and told that they were now farmers. + +Each side gets something out of the relationship. For Cambodia, the most obvious benefit is economic: it is poor and aiddependent; Chinese money lets it buy and build things it could not otherwise afford. Phay Siphan, a government spokesman, said last year: “Without Chinese aid, we go nowhere.” + +But there are also two strategic benefits. First, Cambodia uses China as a counterweight to Vietnam. Among ordinary Cambodians, anti-Vietnamese sentiment runs deep. Many bitterly recall the Vietnamese occupation and some demand the return of “Kampuchea Krom”—the delta of the Mekong river, which today is part of Vietnam, but is home to many ethnic Cambodians and was for centuries part of the Khmer Empire. Since Vietnam harboured Mr Hun Sen, the opposition depicts him as a Vietnamese puppet. Closeness to China helps to defuse such claims. + +Cambodia also uses China as a hedge against the West. Chinese money comes with no strings attached, unlike most Western donations, which are often linked to the government’s conduct. When Mr Hun Sen mounted a putsch against his coalition partners in the 1990s, Western donors suspended aid. China boosted it. Westerners may threaten to cut funding again if, as is likely, the government rigs elections next year (this week Mr Hun Sen again sued Sam Rainsy, the exiled leader of the main opposition party, for defamation, one of many steps seemingly intended to neuter his opponents). Chinese money will make it much easier for Mr Hun Sen to shrug off Western protests. + +As for China, it gets a proxy within the ten-country Association of South-East Asian Nations (ASEAN). Cambodia has repeatedly blocked ASEAN from making statements that criticise China’s expansive territorial claims in the South China Sea, even though they conflict with those of several other ASEAN members. Last year, less than a week after Cambodia endorsed China’s stance that competing maritime claims should be solved bilaterally, China gave Cambodia an aid package worth around $600m. (Mr Hun Sen insists the two were not related.) + +China also seems to be eroding America’s clout in the region. For the past eight years Cambodia has held joint military exercises with America, but this week it announced that it would not do so this year or next. Cambodia and China, meanwhile, staged an eight-day joint exercise in November. The two countries also held their first joint naval exercises last year. + +ASEAN’s long-standing complaint, that Chinese influence on Cambodia hinders regional unity, is growing moot: over the South China Sea, at least, that unity appears to have disintegrated anyway. The Philippines, which took China to an international tribunal over its maritime claims, has reversed course. Its new president, Rodrigo Duterte, expresses contempt for America and affection for China. Vietnam, China’s other main adversary in the sea, recently pledged to resolve its maritime dispute bilaterally. Nobody yet knows what America’s policy on the South China Sea will be under Donald Trump, but increasingly it looks as if Cambodia has picked the winning side. + + + +This article appeared in the Asia section of the print edition under the headline “The giant’s client” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21715010-and-why-it-worries-cambodias-neighbours-why-cambodia-has-cosied-up-china/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Not rocket science + + +Poor schools are at the heart of Thailand’s political malaise + + +The country’s class war has its roots in the classroom + + +Jan 21st 2017 + +I must not oppose military coups + + + +EVERYONE knows that nurturing brainboxes is good for an economy. In Thailand, school reformers have an extra incentive: to narrow differences between rich people in cities and their poorer rural cousins, which have led to a decade of political tension and occasional eruptions of violence. For years shoddy teaching has favoured urban children whose parents can afford to send them to cramming schools or to study abroad. Dismal instruction in the countryside has made it easier for city slickers from posh colleges to paint their political opponents as pliable bumpkins. + +The dangerous social divide is all the more reason to worry about Thailand’s poor rating in an educational league table published in December. Thailand limped into the bottom quarter of 70 countries whose pupils participated in the maths, reading and science tests organised under the Programme for International Student Assessment (PISA). Its scores have deteriorated since a previous assessment in 2012, when researchers found that almost one-third of the country’s 15-year-olds were “functionally illiterate”, including almost half of those studying in rural schools. + + + +Thailand’s dismal performance is not dramatically out of step with countries of similar incomes. But it is strange given its unusually generous spending on education, which in some years has hoovered up more than a quarter of the budget. Rote learning is common. There is a shortage of maths and science teachers, but a surfeit of physical-education instructors. Many head teachers lack the authority to hire or fire their own staff. Classrooms are stern and bullying teachers numerous: in one incident that caused uproar in the media last year, a PE instructor was alleged to have struck a schoolgirl in the face with a mug. + +A big problem, argues Dilaka Lathapipat of the World Bank, is that Thailand spends too much money propping up small schools, where teaching is poorest. Almost half of Thai schools have fewer than 120 students, and most of those have less than one teacher per class. Opening lots of village schools once helped Thailand achieve impressive attendance rates, but road-building and other improvements in infrastructure mean most schools are now within 20 minutes of another. Over the next ten years falling birth rates will reduce school rolls by more than 1m, making it ever more difficult for tiny institutions to provide adequate instruction at a reasonable cost. + +Prayuth Chan-ocha, Thailand’s prime minister and the leader of its junta, says school reform is urgently needed. But some of his goals are aimed more at boosting his and the monarchy’s prestige than making children smarter. Soon after taking power in a coup in 2014 Mr Prayuth grumbled that few Thai children could cite the achievements of long-dead kings. He ordered schools to display a list he drew up of 12 “Thai” values, including obedience to elders, “correctly” understanding democracy and loyalty to the monarch. + +Insiders say that some officials are working on better approaches. In June the government restarted a long-stalled plan to merge small schools; authorities say they hope to subsume more than 10,000 schools over four years. Analysts worry that the junta’s effort to re-centralise government will deprive good schools of independence. But they also hope it will eventually allow reformers to force an ossified education system to adopt the best of international practice. There is talk of education reform in a vague 20-year plan which the junta has promised to bequeath to the nation, and which future elected governments will be constitutionally bound to follow. Better hope that the army sets only its sanest policies in stone. + + + +This article appeared in the Asia section of the print edition under the headline “Not rocket science” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21715011-countrys-class-war-has-its-roots-classroom-poor-schools-are-heart-thailands/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Stabbed in the snack + + +Indian politicians hit voters where it hurts: at the street stall + + + + + +The state of Maharashtra considers barring hawkers from other parts of India + + +Jan 21st 2017 | MUMBAI + +Can I see your licence? + + + +A GOOD street-food stall is the one place in Mumbai where the posh and the poor might rub shoulders, if only for the few seconds it takes to gobble down a savoury snack. You can be sure the vendor himself will have come from the latter category: hawking, as it is known, rivals taxi-driving as a time-tested route from rural poverty to something a little less wretched. But nativist politicians may change that: in the name of helping hawkers, they are trying to impose new rules that would bar most of them from the trade. + +Life was supposed to be getting easier for Mumbai’s 150,000-odd hawkers. In 2014 the national parliament passed a law that required states to formalise the practice, for instance by issuing licences and designating areas where it was expressly permitted. States have been slow to comply. The government of Maharashtra, of which Mumbai is the capital, had been sitting on its hands for three years. It only decided to act in the run-up to municipal elections in February. + + + +The draft rules, however, include a requirement that would-be hawkers be domiciled in Maharashtra. Under local law, domicile comes only after 15 years of residence. Few hawkers are likely to be eligible: most are immigrants from poorer northern states. Even those who have been living in the city for decades would have trouble proving their status, since they tend to live in informal dwellings and so cannot prove an address. + +The proposed rule is the work of the Shiv Sena, a party that blends Maharashtrian chauvinism with Hindu nationalism. (Its previous triumphs include renaming Bombay as Mumbai in 1995, in a bid to cleanse the city of any vestige of colonialism.) Elections to the city council are pitting it against the Bharatiya Janata Party of India’s prime minister, Narendra Modi, with which it rules both the city and the state in uneasy coalitions. + +The proposal may not be legal. Although India is a federal country, states do not have the right to bar other Indians from settling or working. The national government is trying to pull down internal economic barriers: it has fought hard to replace local levies with a pan-Indian goods and services tax. + +Many of Mumbai’s hawkers may not bother with the new system. Only 14,000 of them make use of the existing one, although at least ten times that number operate, according to unions that represent them. Those who obtain a licence, however, ought to find it easier to stand up to bribe-demanding cops and bureaucrats. A politician for the opposition Congress party claims the current system allows officials to squeeze some 3bn rupees ($44m) a month from hawkers. If such bounty is indeed to be had, expect the new rules to keep hawkers on the fringes of legality. + + + +This article appeared in the Asia section of the print edition under the headline “Stabbed in the snack” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21715014-state-maharashtra-considers-barring-hawkers-other-parts-india-indian-politicians-hit/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Going for gold + + +An expenses scandal claims an Australian minister + + +The government is setting up a new independent watchdog + + +Jan 21st 2017 | SYDNEY + + + + + +HAVING scraped back to power with a one-seat majority last year, Malcolm Turnbull always expected “plenty of surprises and challenges in 2017”. He did not expect them to start so soon. On January 13th the prime minister accepted the resignation of Sussan Ley, his health minister, after claims that she had misused taxpayers’ money. As the scandal erupted, the government was pursuing spending cuts and clamping down on some welfare recipients in a bid to balance the budget. That made it all the more embarrassing that Ms Ley had bought an investment property worth almost A$800,000 ($600,000) in 2015, while on a government-paid visit to the Gold Coast in Queensland. + +Ms Ley tried to explain the apparent blurring of public and private business by suggesting, to widespread derision, that she had bought the flat on impulse. A string of revelations followed: she had charged taxpayers for several other Gold Coast trips; two were to New Year’s Eve parties hosted by a businesswoman who had donated money to the ruling Liberal Party; she had chartered planes to fly to official engagements instead of taking commercial flights at a fraction of the cost (she is a pilot) and so on. Ms Ley called the furore a “distraction” but has agreed to repay some of the money she claimed. + + + +Ms Ley has been one of the more talented and colourful members of Mr Turnbull’s cabinet. Born in Nigeria, she has been a cattle farmer, a cook for sheep shearers and an official in the Australian Taxation Office. Yet she failed to heed the lessons of “Choppergate”, an expenses scandal that rocked the government 17 months ago. Bronwyn Bishop, then speaker of the lower house, quit after the disclosure that she had spent more than $5,000 chartering a helicopter to attend a Liberal fundraising event. Politicians from both sides have charged taxpayers thousands to fly their families with them to events in the farthest corners of the country. Australians have paid for Julie Bishop, the foreign minister, to attend a polo match. Steve Ciobo, the trade minister, says taxpayers “expect” to pay for politicians to go to sporting events. + +Perhaps. But opaque rules have given politicians leeway in judging how much they can get away with. An inquiry after Choppergate called the laws on parliamentary expenses a “complex patchwork” that was “close to impossible” to understand and administer. In the wake of the latest scandal, Mr Turnbull has promised to shift responsibility for overseeing MPs’ claims to a new independent agency run by auditing experts, a former judge and a former MP. Politicians will also have to disclose expenses monthly instead of twice a year. Mr Turnbull reckons the new system’s independence and openness will “make a very big change”. This year will be all the trickier for him if it does not. + + + +This article appeared in the Asia section of the print edition under the headline “Going for gold” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21715013-government-setting-up-new-independent-watchdog-expenses-scandal-claims-australian/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Roads to nowhere + + +Pakistan’s misguided obsession with infrastructure + + +The government is building more airports, roads and railways, even though the existing ones are underused + + +Jan 21st 2017 | ISLAMABAD + +Jam tomorrow? + + + +NEARLY 20 years after it opened, Pakistan’s first motorway still has a desolate feel. There is scant traffic along the 375km link between Islamabad and Lahore (pictured). Motorists can drive for miles without seeing another vehicle, save perhaps for traffic cops manning speed traps. As the two cities are already connected by the Grand Trunk Road, which is 90km shorter and toll-free, there is simply not much demand for a motorway. + +Yet this $1.2bn white elephant is one of the proudest achievements of Nawaz Sharif, who was prime minister when it opened in 1997 and is once again running Pakistan. Mr Sharif, who enjoys comparisons to Sher Shah Suri, a 16th-century ruler who renovated the Grand Trunk Road, never tires of talking about it. He regained power in 2013 with a campaign which both harked back to his famous road and promised more infrastructure to come. He even pledged bullet trains that would enable pious passengers to leave Karachi after dawn prayers and arrive in Peshawar, more than 1,000km to the north, in time for evening worship. + + + +It is an article of faith for Mr Sharif and his party, the Pakistan Muslim League Nawaz (PML-N), that investment in infrastructure is a foolproof way of boosting the economy. His government is racing to finish umpteen projects before the next election, due by mid-2018, including a metro line in Lahore and a new airport for Islamabad. The likelihood is that the new airport (which has been plagued with problems, including runways that have been built too close together) will be as underused as most of the country’s other airports, many of which are modern and spacious. + +Pakistan’s infrastructure is underused because the economic boom it was meant to trigger has never arrived. Over the past three years the government has successfully staved off a balance-of-payments crisis, achieving some measure of macroeconomic stability. It has trimmed the budget deficit, partly by broadening the tax take and partly by cutting energy subsidies. That, along with lower oil prices, has narrowed Pakistan’s trade deficit and allowed it to begin rebuilding its foreign-exchange reserves. The stockmarket has risen by 50% since the end of 2015. + +But terrorism and insurgency have put off investors, both foreign and domestic. The country is also held back by inefficient and often cartelised industries, which have fallen behind rivals in India and Bangladesh. Exports, 60% of which are textiles, have been shrinking for years. Much more needs to be done to create an educated workforce. Almost half of all those aged five to 16 are out of school—25m children. Health, like education, is woefully underfunded, in part because successive governments shy away from taxing the wealthy. Only 0.6% of the population pays income tax. As the World Bank puts it, Pakistan’s long-term development depends on “better nutrition, health and education”. + +Cement to be + +But Mr Sharif’s government is pinning its hopes on yet more infrastructure to fix the country’s economic problems, in the form of a $46bn investment scheme known as the China-Pakistan Economic Corridor (CPEC). Much of it is being financed on commercial terms, including several power plants. Pakistan undoubtedly needs to relieve a chronic shortage of electricity. But critics fear the country will struggle to pay back the debt, especially if foreign-exchange earnings from exports continue to dwindle. At the very least, the government will need to continue chasing deadbeat customers to pay their bills and cutting expensive subsidies—steps that are deeply unpopular. + +In addition to boosting Pakistan’s power supply, CPEC is supposed to link China by land to Gwadar, a deep-water port on the Arabian Sea, in the hope of creating a lucrative new trade route. New or upgraded roads will stretch the length of the country. The Karakoram Highway between the two countries, which was built in the 1960s at vast expense over a high and crumbly mountain range, is being upgraded as part of the trade corridor. But it forever needs patching up and is little used. Sceptics say Xinjiang, China’s westernmost region, is still too poor for better transport links to make much difference to Pakistan’s economy. Securing isolated stretches of road from separatist rebels in Balochistan is also gobbling up large amounts of cash. + +Lijian Zhao, a Chinese diplomat, says China is all too aware that Pakistan needs more than just big-ticket infrastructure if it is to flourish. Disarmingly, he praises the efforts of Britain and other countries to improve Pakistan’s “software”, such as education and the rule of law. “But China’s expertise is hardware,” says Mr Zhao. + +It may not concern Mr Sharif unduly if the next generation of roads is as deserted as the last. Civilian governments have often struggled to get much done in between military coups, but voters are impressed by gleaming new projects, even if they never use them. It’s an approach that has worked for Mr Sharif’s brother, Shehbaz, the popular chief minister of Punjab province. He has lavished resources on endless sequences of over- and underpasses to create “signal-free” traffic corridors in Lahore, the provincial capital, that are of most benefit to the rich minority who can afford cars. + +There are limits, however. Khawaja Saad Rafique, the railways minister, recently admitted to parliament that the country would not be getting a bullet train after all. “When we asked the Chinese about it, they laughed at us,” he said. + + + +This article appeared in the Asia section of the print edition under the headline “Roads to nowhere” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/asia/21715032-government-building-more-airports-roads-and-railways-even-though-existing-ones-are/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +China + + +China and the world: The new Davos man [Fri, 20 Jan 04:41] + +The navy: Deep blue ambition [Fri, 20 Jan 04:41] + +Banyan: Dangling forbidden pleasures [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The new Davos man + + +Xi Jinping portrays China as a rock of stability + + +But does he really want to be a global leader? + + +Jan 21st 2017 | BEIJING AND DAVOS + + + + + +DELEGATES at the World Economic Forum in the Swiss resort of Davos often treat politicians as rock stars. But the fawning reception given to China’s leader, Xi Jinping, on January 17th was extraordinary. He was the first Chinese president to attend the annual gathering of the world’s business and political elite. Even an overflow room was packed when he delivered, in his usual dour manner, a speech laced with literary references—rendered through bulky headsets into equally monotone translations. Mr Xi said little that was new, but the audience lapped it up anyway. Here, at a time of global uncertainty and anxiety for capitalists, was the world’s most powerful communist presenting himself as a champion of globalisation and open markets. + +Mr Xi (pictured, next to a panda ice-sculpture) did not mention Donald Trump by name, nor even America, but his message was clear. “No one will emerge as a winner in a trade war,” he said, in a swipe at Mr Trump who has threatened, among other mercantilist acts, to slap heavy tariffs on Chinese goods. Mr Xi likened protectionism to “locking oneself in a dark room”, a phrase that delegates repeated with delight. His words seemed comforting to many of them after a year of political surprises, not least in America and Britain. Mr Xi quoted from Dickens to describe a “world of contradictions”, as he put it. “It was the best of times, it was the worst of times,” he said. Many foreign businesses complain about what they regard as a rise of protectionism in China, too—but no one could accuse Mr Xi of being out of tune with the Davos mood. China, Mr Xi assured delegates, “will keep its door wide open and not close it”. + + + +The Chinese president also portrayed his country as a staunch defender of the environment. He said that sticking to the Paris agreement on climate change, which came into effect last year, was “a responsibility we must assume for future generations”. These, too, were welcome words to many listening: Mr Trump’s threat to reject the pact will make China’s commitment to it all the more crucial. + +The week of whose inauguration? + +The timing of Mr Xi’s trip was fortuitous—according to the Financial Times his aides were working on it before Britain voted to leave the European Union and well before Mr Trump’s election victory. But he must have relished the points that those events enabled him to score at Davos. Mr Xi faces political battles of his own as he prepares for a five-yearly Communist Party congress in the autumn and a reshuffle right after it. He wants to install more of his allies in key positions. Standing tall on the world stage could help (and attending Davos will have reinforced the point to his colleagues that he is in charge of China’s economy, as he clearly is of every other main portfolio). + +Mr Xi would have relished the occasion even had the predictions of many in the global elite a year ago proved accurate—that Britain would vote to stay in the EU and that Mr Trump would not win. The forum is one where embarrassing questions about China’s politics are seldom raised openly. Mr Xi could talk airily of China’s openness, with little fear of being asked why he is clamping down on dissent and tightening controls on the internet (last year this newspaper’s website joined the many foreign ones that are blocked). On January 14th China’s most senior judge condemned judicial independence as a “false Western ideal”. + +Previously, the highest-ranking Chinese attendees had been prime ministers. In 2016 the vice-president, Li Yuanchao, who ranks lower than the prime minister in the party hierarchy, led the team. So why has Mr Xi waited until his fifth year as president to turn up? He may well have winced at the thought of doing so last year, when discussions were dominated by questions about China’s management of its slowing economy in the wake of a stockmarket crash and a sudden devaluation of the yuan. Many analysts still worry about China’s economy (not least its growing debt), but the West’s problems have loomed larger over the Swiss Alps this week. + +And for all his uplifting talk, Mr Xi shows no signs of wanting to take over as the world’s chief troubleshooter, even if Mr Trump shuns that role. Mr Xi is preoccupied with managing affairs at home and asserting control in seas nearby (see article). “Nothing is perfect in the world,” the new Davos man sagely informed the delegates. But he is unlikely to take the lead in making the world a better place. + + + +This article appeared in the China section of the print edition under the headline “The new Davos man” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21715035-does-he-really-want-be-global-leader-xi-jinping-portrays-china-rock-stability/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Showing off the hardware + + +China’s first aircraft-carrier bares its teeth + + +Should anyone be scared? + + +Jan 21st 2017 + + + + + +FOR Admiral Wu Shengli, the commander of China’s navy since 2006, it must have been a sweet swansong to mark his imminent retirement. In November China announced that its first and only aircraft-carrier, the Liaoning, was combat ready. On December 24th its navy duly dispatched an impressive-looking carrier battle-group with three escorting destroyers, a couple of frigates, a corvette and a refuelling ship. It sailed from the northern port of Qingdao down through the Miyako Strait, past Taiwan and into the South China Sea. + +Three weeks later the Liaoning (pictured) was back in port having sailed home via the Taiwan Strait, thus completing a loop around the island. The point was not lost on the Taiwanese, who scrambled fighter jets and sent naval ships to monitor the group’s progress. The Chinese ships showed off their firepower, with Shenyang J-15 fighters staging a series of take-off and landing drills. That everything went smoothly was evidence of the navy’s transformation under Admiral Wu (his career perhaps destined by his forename, which means victory). He had meticulously prepared for this moment, which came just four years after the carrier, acquired as a partially built hulk from Ukraine in 1998, formally entered naval service. + + + +China’s deployment of an aircraft-carrier is not a military game-changer. But it is a conspicuous symbol of the country’s ambitions as a maritime and global power. The Liaoning has been a crucial building block for the navy in its evolution from a coastal defence force into what is now a modern navy that China uses to assert its (contested) maritime claims in the East and South China Seas. Within the next 25 years China expects its navy to become a powerful blue-water fleet that can guard China’s sea lanes of communication against any aggressor, push the US Navy beyond the “second island chain” far out into the Pacific (see map) and protect the country’s far-flung commercial interests. + +Scary, perhaps, but also easy to sink + + + +To that end, probably around 2004, China made up its mind that it must have aircraft-carriers. A second, indigenously designed one, based on the Liaoning but with the latest radar and space for more aircraft, is nearing completion at the northern port of Dalian. Many analysts believe that a third such vessel, larger and more complex, is under construction in Shanghai. Andrew Erickson of the US Naval War College says Admiral Wu adopted a “crawl, walk, run” approach to developing a carrier capability, recognising the difficulties involved. Carrier operations are inherently dangerous—America lost 8,500 aircrew in the 40 years to 1988 on its way to reaching what Mr Erickson calls its current “gold standard” of carrier expertise. + +Commissioning the Liaoning was a good way to start. Much modified and fettled by the Chinese, the ship is based on the Soviet Kuznetsov-class design. It is big, with a displacement of about 60,000 tons, but nowhere near the size of America’s super-carriers such as the USS Ronald Reagan, which is based in Japan. That Nimitz-class ship displaces around 100,000 tons. + +In other ways, too, the Liaoning pales in comparison with America’s 10 Nimitz-class carriers. They can carry more than 55 fixed-wing aircraft. The Liaoning can only handle 24 J-15s (based on the Russian Sukhoi SU-33) and a handful of helicopters. Unlike the American carriers, itlacks a catapult to propel aircraft from its deck. Instead it relies on a “ski-jump” prow to provide extra lift. As a result, the J-15s have to carry a lighter load of weapons and fuel. Heavier, slower airborne early-warning and anti-submarine aircraft cannot take off from the Liaoning at all. That limits the type of missions the ship can perform and makes the vessel vulnerable when operating beyond the range of shore-based aircraft. The Liaoning also depends on a notoriously unreliable Soviet-era design for its steam turbines, which cuts its range and speed compared with the nuclear-powered Nimitz-class carriers. + +The US Office of Naval Intelligence has dismissed the Liaoning’s ability to project naval power over a long distance. But the ship does have military value. It can provide air-protection for China’s fleet, and would be a major asset in disaster-relief or evacuation missions. Peter Singer of the New America Foundation, a think-tank, says that a Liaoning-led battle group would also seem pretty formidable to neighbours, such as Vietnam or the Philippines, should China feel like bullying them. + +But the main value of the Liaoning is the experience that it is giving the navy in the complex choreography of carrier operations. Those skills will help in the eventual deployment of indigenously designed carriers. The Chinese have been training with catapult-launch systems on land. This has fuelled speculation that the carrier thought to be under construction in Shanghai will be a genuine flat-top. It is possible that the ship will also be nuclear-powered, which could give it the range and speed of American carriers. + +It is not clear how many carriers China plans to build. As a rule of thumb, you need three to be certain of having one at sea all the time. Mr Erickson says that some analysts in China have been suggesting a fleet as large as six. Mr Singer thinks it is possible that China’s carriers will one day match the capability of American ones. Mr Erickson says that while China can copy a lot, without combat experience and “tribal knowledge” passed from one crew to another, it will find it hard to attain that level. + +China, ironically, has done more than any other country to sow doubts about whether carriers are worth all the effort and expense, by developing shore-based anti-ship ballistic missiles, such as the DF-21D and DF-26, known as “carrier killers”. Submarines are less vulnerable, but highly visible ships bristling with weaponry are still badges of pride for aspiring great powers like China. As in America, the view in China that carriers and status go together will be hard to change. + + + +This article appeared in the China section of the print edition under the headline “Deep blue ambition” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21715036-should-anyone-be-scared-chinas-first-aircraft-carrier-bares-its-teeth/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Banyan + + +Hong Kong’s democrats say no to China’s treasures + + +The world’s most popular museum is political, too + + +Jan 21st 2017 + + + + + +IF THE world’s most popular museum, drawing over 15m visitors a year, suddenly offered a distant city a priceless haul of artefacts—on permanent loan and absolutely free—you would expect that city’s residents to jump for joy. Not so, when the city is Hong Kong, and when the Palace Museum, which occupies most of Beijing’s vast Forbidden City, is doing the offering. In December Hong Kong’s chief secretary, Carrie Lam, announced surprise plans to build a branch of the Palace Museum in a showcase cultural district going up on reclaimed land in Hong Kong’s harbour. Many of the territory’s residents erupted in anger. + +The cultural and commercial benefits for Hong Kong are unarguable, says Mark O’Neill, who has written a book on the Forbidden City’s treasures. The complex was the seat of China’s emperors from the 15th century until Pu Yi, the last emperor, resigned in 1912. It houses such an array of imperial Chinese pieces that the Palace Museum is able to display less than 1% of the collection at any time. A trove on show in Hong Kong would draw in millions of visitors a year. As well as ticket sales, think of all the merchandising possibilities, from catalogues to replicas of jewellery and furniture. Not just the museum but the whole city would profit from increased visitors. And then there is the intangible aspect: a boost for a young city with a relatively sparse cultural hinterland. + + + +One country, two Hong Kongs + +So great is the furore, however, that it may even scupper the plans. The problem is that Hong Kong these days is a divided place. On one side are those who favour smooth relations with mainland China and who would do the bidding of China’s Communist masters in Beijing. On the other are Hong Kongers who resent the central government’s growing influence and heavy hand, and who aim zealously to guard Hong Kong’s freedoms. With an eye for the telegenic gesture, pro-democracy politicians staged a protest in the subway system in front of a huge display promoting the museum project. Their leaders said they were not opposed to the idea of a museum, but to the murky way in which the decision in favour of it was reached. They also made clear that they associated the Forbidden City mostly with the bloody crackdown on students who in 1989 protested in Tiananmen Square just in front of it. Under pressure, Ms Lam has agreed to a period of consultation. + +Yet at the same time the Hong Kong administration has called for politics not to be dragged into the debate. The call is absurd. For a start, Ms Lam wants to be Hong Kong’s next chief executive, who will be chosen in March; her museum enthusiasm will surely help to reinforce the Communist Party’s faith in her. Moreover, China’s rulers want a museum in Hong Kong precisely to make a political point. As local obstreperousness has grown in recent years, they have lamented that brattish Hong Kongers lack patriotism and appreciation for China’s greatness. The museum is intended to teach them a lesson. + +Moreover, the Forbidden City has always been about politics and power. The Yongle emperor, or rather thousands of forced labourers, built it as an expression of Ming-dynasty might. From it radiated the emperors’ cosmic as well as terrestrial power. That is why, at the height of the Cultural Revolution, Mao Zedong stood before the Forbidden City to call for the destruction of all traits carried over from old, imperial China—though not the palace itself. Zhou Enlai is said to have closed it to save it from rampaging mobs of Red Guards. It was reopened in 1971 when Henry Kissinger, Richard Nixon’s national-security adviser, visited Beijing as part of America’s effort to forge ties with the Communist regime. At a time when Beijing itself was looking miserable and drab, Mr O’Neill points out, there was no better way to impress on Mr Kissinger a sense of China’s power and sophistication. (He has been in awe of China ever since.) The palace still serves this purpose. Thousands of tourists gather every morning to watch paramilitary troops march out of the Forbidden City, goose-step across the road and raise the national flag on Tiananmen Square. + +Lastly, remember the rivalry with Taiwan. It, too, has a Palace Museum—with a far finer display than the one in Beijing and the word “National” at the beginning of its name. It is filled with hundreds of thousands of artefacts, mostly from the Forbidden City, that were carried to the island by Chiang Kai-shek and his Kuomintang (KMT) forces when they retreated to Taiwan in 1949. They took the best ones, though beauty is sometimes in the eye of the beholder: the “Meat-shaped Stone”—a hideous carving in the shape of a piece of braised pork—is, perversely, the biggest draw today. For Chiang, the treasures boosted the KMT’s claim to be the sole and rightful ruler of China. + +When ties across the Taiwan Strait improved under the then KMT president, Ma Ying-jeou, who stepped down last year, Beijing’s Palace Museum lent pieces to its Taiwanese counterpart as a mark of goodwill. Since President Tsai Ing-wen took over, China has been far frostier. Her Democratic Progressive Party inclines towards independence and downplays historical links with China. Yet even the KMT used Taiwan’s Palace Museum to make a point about the island’s distinct identity. A branch of the collection opened two years ago near Chiayi, a city in southern Taiwan. It emphasises a history of Taiwan not as an adjunct to China but as an island nation steeped in Asian influences. And even as China has sought to enforce Taiwan’s diplomatic isolation, the treasures remain a source of soft power, with Taiwan lending them to the world’s top museums—but not to Beijing’s Palace Museum, for fear (implausibly) that China might not return the pieces. + +As for Hong Kong, China’s leaders will be peeved at the ingratitude of many residents over the museum offer. But Hong Kongers’ refusal to be awed by a supposedly glorious past is hardly surprising. Their problem is an inglorious present, with China denying them full democracy. And China’s problem is that it is still scrabbling for a source of soft power with which to appeal. + + + +This article appeared in the China section of the print edition under the headline “Dangling forbidden pleasures” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/china/21715042-worlds-most-popular-museum-political-too-hong-kongs-democrats-say-no-chinas-treasures/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Middle East and Africa + + +The African Union: Ex factor [Fri, 20 Jan 04:41] + +Farming in Ethiopia and Kenya: Qatnip [Fri, 20 Jan 04:41] + +Default in paradise: Boats and a scandal [Fri, 20 Jan 04:41] + +Bahrain: An unhappy isle [Fri, 20 Jan 04:41] + +Terrorism in Tunisia: Jihadis come home [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +African leaders + + +One Zuma to another Zuma? + + +Nkosazana Dlamini-Zuma ran the African Union for four years. Now she wants to succeed her ex-husband as president of South Africa + + +Jan 21st 2017 | JOHANNESBURG + + + + + +ALTHOUGH a jolly spot for surf and sun, Durban is hardly a centre of African diplomacy. So it was a surprise when Nkosazana Dlamini-Zuma, the outgoing head of the African Union (AU), chose to deliver the first-ever “State of the Continent” speech there last month instead of at the AU’s grand headquarters in Addis Ababa. + +Ms Dlamini-Zuma’s speech focused on high-minded plans for education and agriculture. She acknowledged “pockets of problems” in war-ravaged Burundi, Libya, Somalia and South Sudan, but only in passing. Journalists fought to stay awake. The thin crowd had to be cajoled into applause. South African cabinet ministers due to attend sent lackeys instead. Back in Addis, the event fed the widely held view that Ms Dlamini-Zuma spent her term at the AU with one foot in South Africa, where she is jockeying to succeed her ex-husband, Jacob Zuma, as president in 2019. + + + +Ms Dlamini-Zuma’s four-year term as head of the AU’s executive arm should have ended six months ago but was extended when its members could not agree on a successor. They will gather again from January 22nd and vote for her replacement. Among the contenders are a veteran diplomat from Senegal and the foreign ministers of Kenya and Chad. The selection process is less about the candidate’s talents than about governments and regional blocs vying for influence. For the second consecutive summit, representatives of civil society will be barred; some AU leaders apparently don’t like scrutiny. + +As the first woman to head the AU’s executive arm, Ms Dlamini-Zuma came into the role in 2012 buoyed by high hopes and promises to reform a moribund institution. A medical doctor and veteran of the anti-apartheid struggle, she had served as a cabinet minister under four South African presidents, including Nelson Mandela. + + + + + +Her record in government was controversial: as health minister she promoted the use of a toxic industrial solvent as a miracle cure for AIDS, and then purged regulators when they told her that human trials would be unethical. However, as home-affairs minister, she was credited with making her ministry less corrupt and inept. So many thought she would get things done at the AU. For the most part, they were disappointed. “Her heart isn’t in it,” says one observer. “Someone who was more invested might have done more.” + +Her flagship policy, known as Agenda 2063, is a mishmash of proposals. Some are unambitious; others, implausible. Within 50 years, the document declares, Africans will grow more, earn more and eat more. (This is a safe bet, but in the unlikely event that it does not come to pass, Ms Dlamini-Zuma will not be around to take the blame.) A few paragraphs later it promises African passports and visa-free travel for all Africans by 2018. Governments will have to hurry to meet this goal. So far, only presidents and officials can get pan-African passports. They are so rare that even Ms Dlamini-Zuma struggles to convince border guards that hers is real. The document also aims to end all wars in Africa by 2020. How, it does not say. + +It is by no means all Ms Dlamini-Zuma’s fault that the AU is so ineffective. It is a club that welcomes autocrats and democrats alike. The only leaders it ostracises are those who seize power in a coup or who ignore the results of an election too blatantly, as recently happened in Gambia. Those who merely rig the polls are welcomed. The AU’s current chairman, a ceremonial but symbolically important figure chosen by the body’s assembly, is Idriss Déby, the oil-fuelled strongman of Chad. The previous one was Robert Mugabe, who has misruled Zimbabwe since 1980. + +Yet even given these constraints, Ms Dlamini-Zuma has been a let-down. She has campaigned against sex discrimination, violence against women and for an end to child marriages. Yet for all her rhetoric, the AU has failed to grapple seriously with the crisis in South Sudan, where women and girls are gang-raped by soldiers. She seldom visits countries riven by conflict; for instance, she has yet to visit Somalia. When put to the test the AU has repeatedly failed to deploy peacekeepers to crisis zones. The notable exceptions are Darfur, where it was the first outfit to send peacekeepers, and Somalia, where an AU force has helped to push jihadists from the capital. A crisis in Burundi offered a chance for the AU to show its mettle. President Pierre Nkurunziza’s decision to seek an illicit third term ignited mass protests followed by a brutal, ethnically charged crackdown. The AU said it would send peacekeepers to protect civilians. But when Mr Nkurunziza objected, it decided not to. A modest plan to send 100 observers is still on the starting blocks. The AU also promised, in July 2016, to send a force to South Sudan. It is nowhere to be seen. + +The AU struggles to persuade member states to bankroll it. Some 70% of its budget comes from non-African donors such as the European Union. Ms Dlamini-Zuma tried to reduce the AU’s reliance on the West, appointing Donald Kaberuka, a former head of the African Development Bank, to find new sources of cash. His plan, to finance the organisation through a 0.2% levy on imports into African countries, is meant to start this month. + +Ms Dlamini-Zuma is wary of foreigners who scold Africans about human rights. During her tenure the AU has considered a mass pullout from the International Criminal Court, which some members deem prejudiced because most of its targets have been African. Her alternative is the African Court of Justice and Human Rights, which the AU has barred from hearing cases against incumbent government heads and their senior officials. + +Such deference to high office would doubtless please her ex-husband, who has been charged with 783 counts of corruption and fraud by South African prosecutors. (He denies wrongdoing.) Mr Zuma is expected to stand down as head of South Africa’s ruling party, the African National Congress, in December. Whoever succeeds him as party chief is likely to win the presidency at the next general election. Mr Zuma has used all his presidential powers to avoid standing trial and is no doubt keen to anoint a sympathetic successor. + +On an unrelated subject he argues that it is time for the ANC to have a female president and that his ex-wife is the most qualified candidate. Ms Dlamini-Zuma has said little about her plans beyond blandly indicating that she would never refuse a request from the ANC to serve the party. Judging by her Durban speech, she would welcome such an opportunity. + + + +This article appeared in the Middle East and Africa section of the print edition under the headline “Ex factor” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21715029-nkosazana-dlamini-zuma-ran-african-union-four-years-now-she-wants/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bags of qat + + +A boom in qat in Ethiopia and Kenya + + +Will this burgeoning green business turn to bust? + + +Jan 21st 2017 | CHUKO AND MAUA + +Qat, a tonic? + + + +“THIS is qat,” explains Teklu Kaimo, gesturing to the wooded field behind him. He started growing it in 1976, and over the years its soft, green leaves have brought him a measure of prosperity. He has a modest plot of land, 11 children and money to pay their way through school. + +A short walk down the hill, the central marketplace of this part of southern Ethiopia comes alive with farmers, merchants and salesmen as the sun sets. Young men sprint down streets with bundles of fresh qat leaves on their shoulders, as traders call out prices and haul the bags aboard lorries. They are bound for Addis Ababa, the capital, where the following morning they will be sold to qat-chewers in the city, or packed onto planes bound for neighbouring Djibouti and Somaliland. + + + +Ethiopia’s trade in qat, a mild stimulant native to this part of Africa, is booming. Where once cultivation and consumption were restricted to the Muslim lowlands towards the country’s east, today it is grown and masticated throughout the country. Nearly half a million hectares of land are thought to be devoted to it, some two-and-half times more than was grown 15 years ago. Many of those cultivating it have switched from coffee, Ethiopia’s biggest export, to one that offers juicier and more stable returns. Qat is now the country’s second-largest source of foreign currency, and, with prices rising, a handy source of government revenue. + +The industry’s growth is partly due to increased consumption. Qat kiosks are dotted around all main towns; young men chewing on street corners or in university libraries have become a ubiquitous feature of Ethiopian life. For many, its spread is a symbol of national decline. “It is getting worse by the day,” says Fitsum Zeab, a businessman in Addis Ababa. + +Much the same is true in neighbouring Kenya, the region’s second-largest qat producer. Here, too, demand is growing, thanks to a large diaspora of Somalis (the plant’s long-standing international missionaries) and better roads that allow farmers to get perishable qat to market while it is still fresh. And economic importance is translating into political heft: last year Kenya declared it an officially sanctioned cash crop. + +But the plight of Maua, a small town considered the Kenyan trade’s epicentre, gives pause for thought. Britain’s decision in 2014 to ban the substance (against the advice of its drugs advisory council, which thought it harmless) slammed the qat economy. In 2013, before the prohibition, Britain imported some £15m-worth ($25m) worth of the stuff. Prices have since fallen by half and unemployment has risen sharply. “Everyone is feeling the pinch now,” says Lenana Mbiti, a former trader. + +That gives pause to Ethiopian farmers too. Although they have been less affected by bans in Europe because they sell most of their crop close to home, they fret that their market will shrink. + +Experts doubt that qat will ever become a mass-marketed global commodity like coffee, tea or sugar. Instead, small towns in places such as Wondo-Genet are becoming dependent upon the production and trade of a substance that will probably be outlawed in yet more countries. + +Even so, qat’s popularity among farmers persists because it is perhaps the only crop that can provide sufficient income from a small plot of land to support a family. “There is simply nothing else,” says Birhanu Kiamo, Mr Kaimo’s brother, neighbour and fellow qat farmer. + + + +This article appeared in the Middle East and Africa section of the print edition under the headline “Qatnip” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21715028-will-burgeoning-green-business-turn-bust-boom-qat-ethiopia-and/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Boats and a scandal + + +Mozambique’s default + + +Mozambique fails to pay its debts + + +Jan 21st 2017 | KAMPALA + + + + + +IN 2014 Mozambique seemed a good place to host the IMF’s “Africa Rising” conference. The economy was buoyant, having grown by about 7% a year for a decade. Offshore gas promised riches. Investors were optimistic, so much so that, in 2013, they snapped up $850m of bonds issued by a state-owned tuna-fishing company, with temptingly high yields. + +But Mozambique’s rise has halted. Those “tuna bonds” were the first mis-step in a widening scandal that led the government to say on January 16th that it would default on its debt. + + + +The government’s financial difficulties arise partly from a downturn in commodity prices that caused economic growth to slump to 3.4% in 2016 (though it should improve this year). Yet the main reason the government is in a pickle is its own fecklessness. The state-owned tuna company that issued the bonds never caught many fish. That is scarcely surprising since much of the money it raised went toward buying gunboats instead of the fishing sort. When it became clear that the company could not honour its debts, bondholders agreed to swap the bonds it had issued for government ones. Yet before the ink was dry on that debt-swap the government admitted it had also guaranteed $1.4bn in secret loans, worth 11% of GDP. The revelation shocked the IMF and donors into freezing support to a country that still relies on international aid to balance its books. + +The government, now weighed down by debt equalling some 112% of GDP, may be trying to use the default as a tactic to force bondholders into “restructuring” the debt, which is a polite way of saying that it wants them to give it a handout. + +This week’s missed payment will irk bondholders but may not be enough to force them to the table, says Stuart Culverhouse of Exotix, a brokerage. Having been hooked once, few trust the government. They have refused to negotiate until it signs up to an IMF programme and allows a full (and independent) audit of its indebtedness. The IMF, for its part, also wants an investigation into where the money went and who authorised the borrowing before it will lend more. Kroll, a firm of investigators hired by the government, is expected to release a report next month. + +Instead of squeezing bondholders the government may do better by trying to restructure, or even repudiate, its secret loans (one of which is already in arrears and all of which may be unconstitutional since they were not approved by parliament). + +Few members of the ruling party, Frelimo, want to shine too much light on those loans since bigwigs may be implicated. Yet imposing IMF-mandated spending cuts also carries risks. With less bounty to spread around Frelimo may struggle to buy support in local elections next year and in a presidential contest in 2019, says Alex Vines of Chatham House, a think-tank. Its best hope may be to hold out for the bountiful gas revenues expected in the middle of the next decade. Regulators, meanwhile, are probing the banks that arranged both the bonds and the secret loans, Credit Suisse and VTB. More may yet be revealed about Mozambique’s fishy finances. + + + +This article appeared in the Middle East and Africa section of the print edition under the headline “Boats and a scandal” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21715030-mozambique-fails-pay-its-debts-mozambiques-default/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +An unhappy isle + + +Bahrain is still hounding its Shia + + +Protesters are cowed, but the repression carries on + + +Jan 21st 2017 | MANAMA + +Protesters may topple bins but they can’t bin Hamad + + + +A SAGGING rope, haphazard barricades—and fear. That is all it has taken to keep Diraz, Bahrain’s largest Shia village, under siege for the past seven months. Two checkpoints bar access to all but residents. Friends and family members are kept out. Grocers offload their wares at the perimeter wall. And the protesters who once thronged to hear the island’s leading Shia cleric, Isa Qassim, deliver his Friday sermon now stay at home. “Forget the thousands who used to join rallies,” says a cleric in a neighbouring village, recalling the protests which erupted after tanks crushed the mass demonstrations for democracy in 2011. “Today we can’t even find ten. Who wants to risk five years of prison and torture for ten minutes of glory?” + +Though small, running out of oil and dependent on larger Gulf neighbours, Bahrain typifies how Arab autocrats have crushed the Arab Awakening’s demands for greater representation. After six years of suppression, the Shia opposition is disheartened. Maligned as the cat’s paw of Iran and a threat to Sunni rule in Bahrain, their movement is battered and broken. More than 2,600 political prisoners are in jail, a large number in a kingdom of just 650,000 people. Many of the detainees are children, says a former member of parliament from Wefaq, the Shia party the government banned last year. Hundreds have been exiled, scores barred from travel, and over 300 stripped of their nationality, including Sheikh Qassim. Even the execution on January 15th of three Bahrainis—the first for two decades—roused only sporadic unrest by the island’s opposition. + + + +The “national dialogue” that was espoused during more turbulent times by the king’s son and crown prince, Salman bin Hamad, is on hold. Many of his erstwhile interlocutors are in jail on implausible terrorist charges. The online edition of the last independent daily newspaper was banned on January 16th. Although the graffiti on village walls declare “Death to [King] Hamad”, few youngsters risk more than a token rally before police start firing birdshot. “We had a revolution and we lost,” says a female protest leader now in exile. + +Shia and Sunni subjects should share many grievances. Both resent a ruling family that hoards ministerial posts. The king’s uncle, Khalifa bin Salman, is the world’s longest serving prime minister, having been in place for 46 years. The king himself has ruled since the death of his father in 1999. Although the Al Khalifas monopolise power, they spread the pain of austerity. In line with Vision 2030, an economic programme devised for Bahrain by McKinsey, a consultancy, they have cut subsidies on such basics as meat. Even this is not enough. The oil price would have to double to balance the budget. Last year Standard and Poor’s, a ratings agency, judged the country’s debt to be junk. + +The government’s fiscal measures have fallen most harshly on Shias. Fellow Gulf states have given billions in aid to prop up the kingdom, but much has been channelled into building housing for Sunnis and foreigners. New mansions, compounds and high-rise blocks screen rundown Shia villages. Undulating parks along the corniche beautify Sunni parts. The authorities have also chipped away at the demographic majority of the Shias, who once made up 60% of the population. A rash of new Hindu temples, churches and Sunni mosques testifies to an influx of non-Shia foreigners. Unusually for the Gulf, Bahrain has opened its doors to Syrian Sunnis from Jordan’s refugee camps. An acrid xenophobia peppers Shia discourse. Shias gibe that even the ruling Al Khalifas, who came from the Arabian hinterland over the water in 1783, are foreigners. + +Communal tension is less fierce in the few places where Sunnis and Shias live together. But sects that once shared the same streets in new towns built in the 1980s are now moving apart. Flags of Shia saints hang from the homes on one side of the main road through Hamad Town; Bahraini flags of loyalist Sunnis fly from the other. Intermarriage, too, is getting rarer, says Suhail Algosaibi, who runs an interfaith group. Alone of the Gulf states, Bahrain still marks Ashoura, the holiest day in the Shia calendar, as a public holiday, but divisions are widening. Though some Sunni grandmothers still bake pomegranate cakes for Ashoura, their husbands who once joined the chest-beating rites now furtively watch from afar. For many Sunnis, Shia villages are no-go areas. + +Last month Islamic State put out an hour-long video of a Bahraini ideologue from the same tribe as the royal family appealing for Sunni suicide bombers to attack the island’s Shias. And on New Year’s Day militant Shias broke into a high-security jail, freeing ten dissidents and prompting the opposition to ask if it might be more effective underground. “We desperately need a political process,” says Jasim Hussain, a former Wefaq MP. “The country can’t afford anything less.” + + + +This article appeared in the Middle East and Africa section of the print edition under the headline “An unhappy isle” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21715023-protesters-are-cowed-repression-carries-bahrain-still-hounding-its/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Terrorism in Tunisia + + +Terrorists returning home to Tunisia + + +An unwelcome homecoming + + +Jan 21st 2017 | CAIRO + + + + + +“IF BEN GUERDANE had been located next to Falluja, we would have liberated Iraq.” So (reportedly) said Abu Musab al-Zarqawi, the leader of al-Qaeda in Iraq, before he was killed a decade ago. He was referring reverentially to a town in south-eastern Tunisia that is one of the world’s biggest exporters of jihadists. No place better epitomises the challenges facing Tunisia’s government as it tries to consolidate a wobbly democracy six years after the revolution that toppled the old dictatorship. + +Hundreds of Tunisians marked the anniversary of the revolution on January 14th by taking to the streets to demand jobs. The protests began in Ben Guerdane before spreading to other poor places, such as Sidi Bouzid, Meknassi and Gafsa, where locals blocked the route of Beji Caid Essebsi, the president, who was in town to mark the anniversary. “Work is our right,” yelled the protesters, using the slogans of 2011. + + + +Work is indeed a right enshrined in the constitution, adopted in 2014. But the unemployment rate of 16% is higher than it was before the revolution. The rate for youngsters and those in the countryside is higher still. This is partly because a series of terrorist attacks has driven away tourists and foreign investors. Unemployed protesters have blocked roads leading from phosphate mines, further harming export earnings. Past governments have responded by promising to create public-sector jobs. The result is a bloated, unaffordable bureaucracy. A hiring freeze is now in effect. + +Disillusioned and aimless, youngsters in rural areas are prime targets of jihadist recruiters. Some 6,000 Tunisians have joined armed groups abroad, with most going to fight in Iraq, Syria and Libya, and some farther afield (see chart). One was Anis Amri, a 24-year-old follower of Islamic State (IS) who drove a lorry into a Christmas market in Berlin, killing 12 people. He was later killed by Italian police. + +The government is trying to stem the flow of people joining jihadists abroad. It has closed mosques led by radical preachers and keeps an eye on thousands of young suspects. Tunisians under the age of 35 are not allowed to travel to Libya, Turkey or Serbia, the main transit routes to Iraq and Syria. The borders with Algeria and Libya have been tightened. Parliament has passed an anti-terrorism law, criticised by human-rights groups, that gives the government more power to detain suspects and tap phones, among other things. + +In any case, the flow is reversing, with fighters making their way home as the groups they had joined are pushed back. The interior ministry says 800 have already returned. Many fear that some will carry out attacks once back. Indeed, IS has told them to do so and has claimed responsibility for several atrocities in the country. Last March a large group of Tunisian IS members crossed the border from Libya to stage an assault on Ben Guerdane that left dozens dead. Tunisian security forces fear a possible Somalification of the country. + +Last month Mr Essebsi played down the threat. But after much criticism, and calls to strip the militants of their citizenship, the government braced up. Youssef Chahed, the prime minister, who belongs to Nidaa Tounes, the main secular political party, has said that returning militants will immediately be arrested. Ennahda, the moderate Islamist party that shares power with Nidaa Tounes, backs this approach, though some blame it for having exacerbated the problem by previously indulging radical preachers. “We have all the details on [the returnees],” says Mr Chahed. “We know them one by one.” But many probably left the country and came back without passing through customs. Moreover, the grievances that prompted so many to become jihadists have not yet been dealt with. In places like Ben Guerdane locals still feel that the government does not care very much about them. + + + +This article appeared in the Middle East and Africa section of the print edition under the headline “Jihadis come home” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/middle-east-and-africa/21715033-unwelcome-homecoming-terrorists-returning-home-tunisia/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Europe + + +Turkey’s all-powerful president: Iron constitution [Fri, 20 Jan 04:41] + +Emigration in eastern Europe: The old countries [Fri, 20 Jan 04:41] + +The European Parliament: A shift to the right [Fri, 20 Jan 04:41] + +Reform in Russia: Listen, liberal [Fri, 20 Jan 04:41] + +Russian propaganda: Putin’s prevaricating puppets [Fri, 20 Jan 04:41] + +Charlemagne: Looking hairy [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Iron constitution + + +Turkey’s President Erdogan is grabbing yet more power + + +An alliance with nationalists brings the Islamist leader closer to one-man rule + + +Jan 21st 2017 | ISTANBUL + + + + + +IT HAS been a U-turn to make a stunt driver proud. For the past couple of years, Devlet Bahceli, the head of the Nationalist Movement Party (MHP), the fourth-largest in parliament, had been considered one of President Recep Tayyip Erdogan’s most vicious critics. Mr Erdogan’s plan to replace the country’s parliamentary system with an executive presidency, he once warned, was a recipe for a “sultanate without a throne” and a system with “no balances, no checks, and no brakes”. Mr Bahceli opposed the constitutional overhaul as recently as October. + +Today, the raspy-voiced nationalist is suddenly rolling out the red carpet for Mr Erdogan’s pet project. As The Economist went to press, Turkey’s parliament was poised to adopt a package of 18 amendments that would place all executive power in Mr Erdogan’s hands. In the first round of voting, concluded on January 15th, each of the amendments passed with a majority of at least 330 votes. Of these, no more than 316 came from the ruling Justice and Development (AK) party. Mr Bahceli and his whips, undeterred by a mutiny that has been swelling inside their party for months, provided the remaining votes. Barring a new wave of defections, the new constitution will be put to a referendum in early April or late March. + + + +At present Turkey’s presidency is largely ceremonial—in theory. In fact, Mr Erdogan, who spent a decade as prime minister before being elected president in 2014, has continued to rule almost uncontested. Emergency law, adopted in the wake of a violent coup attempt in July, has removed most remaining checks on his power. + +The proposed changes would make this situation permanent. The office of prime minister would cease to exist. Mr Erdogan would manage his own cabinet, appointing senior officials without needing approval from parliament. He could issue decrees and declare a state of emergency. His term in office would last five years, renewable once. Since the changes would kick in after the 2019 presidential elections, Mr Erdogan could remain in power until 2029. AK officials say the set-up would preclude unwieldy coalitions. Critics call it a blueprint for an elected dictatorship. + +Analysts—and the handful of MHP members willing to speak to the press—are at a loss to explain what Mr Bahceli gains by backing constitutional amendments that his own voters seem to oppose. (Popular support for the changes has long languished below 50%.) Umit Ozdag, a one-time MHP deputy chairman, suggests that his former boss may have been offered cabinet posts. Others say he is paying back Mr Erdogan for a court verdict that helped him stave off a leadership challenge over the summer. Though he has never won an election, Mr Bahceli has not relinquished control over his party for two decades. + +He may be pleased, however, with the direction which Turkey is taking. The government has disowned peace talks with Kurdish insurgents, opting instead for a ruthless military offensive, a solution Mr Bahceli has favoured for years. Since the failed coup, Mr Erdogan and his ministers have revved up nationalist rhetoric to justify a mounting crackdown against Kurdish politicians, socialists and the press. Islamists and nationalists have closed ranks. “Bahceli might be in opposition, but his ideas are in power,” says Asli Aydintasbas, a fellow at the European Council on Foreign Relations. “These might be the happiest days of his life.” + +Wham, bam, Erdogan + +The vote on the constitutional changes has been a pathetic spectacle. Ruling-party lawmakers openly flouted a rule on secret balloting, then assaulted an opposition MP who used her phone to film them. Punches, notebooks and at least one flower pot flew across the parliamentary floor during the brawls. One AK member displayed a gash on his shin, claiming to have been bitten during the melee. + +The referendum, if it goes ahead, risks becoming an even worse travesty. Under the state of emergency, the government has arrested, sacked or suspended over 130,000 people, only some of them linked to July’s coup. Over 100 journalists are in prison. Mainstream media outlets are increasingly wary of airing dissenting opinions. Mr Erdogan, meanwhile, retains the right to close newspapers and NGOs with a stroke of his pen. In late 2016 his own prime minister, Binali Yildirim, opined that the referendum should not take place under such conditions. Yet that is what is set to happen. On January 19th, just as parliament began voting on the amendments, emergency rule went into effect for another three months. + + + +This article appeared in the Europe section of the print edition under the headline “Iron constitution” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21715004-alliance-nationalists-brings-islamist-leader-closer-one-man-rule-turkeys-president/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The old countries + + +Eastern Europe’s workers are emigrating, but its pensioners are staying + + +The EU’s newest members face economic decline unless they woo back workers, or recruit immigrants of their own + + +Jan 21st 2017 | VILNIUS AND RIGA + + + + + +IN THE Lithuanian town of Panevezys, a shiny new factory built by Devold, a Norwegian clothing manufacturer, sits alone in the local free economic zone. The factory is unable to fill 40 of its jobs, an eighth of the total. That is not because workers in Panevezys are too picky, but because there are fewer and fewer of them. There are about half as many students in the municipality’s schools as there were a decade ago, says the mayor. + +Such worries are increasingly common across central and eastern Europe, where birth rates are low and emigration rates high. The ex-communist countries that joined the European Union from 2004 on dreamed of quickly transforming themselves into Germany or Britain. Instead, many of their workers transported themselves to Germany or Britain. Latvia’s working-age population has fallen by a quarter since 2000; a third of those who graduated from university between 2002 and 2009 had emigrated by 2014. Polls of Bulgarian medical students show that 80-90% plan to emigrate after graduating. + + + +Lithuania’s loss of workers is costly, says Stasys Jakeliunas, an economist. Remittances and EU money for infrastructure upgrades have helped, but labour shortages discourage foreign investment and hurt economic growth. According to the IMF, in some countries in eastern Europe emigration shaved 0.6-0.9 percentage points from annual GDP growth in 1999-2014. By 2030 GDP per person in Bulgaria, Romania and some of the Baltic countries may be 3-4% lower than it would have been without emigration. + +All of this imperils public finances. Pensions, which take up about half of social spending in eastern Europe, are the biggest worry. In 2013 Latvia had 3.3 working-age adults for each person older than 65, about the same as Britain and France; by 2030 that is projected to fall to just over two, a level Britain and France will not reach until 2060. Countries are raising the retirement age (apart from Poland, which is recklessly lowering it). Benefits are already meagre, leaving little room for cuts. As a share of GDP, social spending in Bulgaria, Romania and the Baltic states is roughly half of that in many richer European countries. + +Unable to dissuade people from leaving, governments are trying instead to lure them back, inspired by successful efforts in Ireland and South Korea. Daumantas Simenas, project manager of the Panevezys free economic zone, credits his return from Britain to the country’s “Create for Lithuania” programme, which matches educated professionals from the diaspora with government jobs. Having a job already lined up made the decision to return easier, he says. Plus, he adds, “home is home.” + +Whether such efforts can turn the tide seems doubtful. “Create for Lithuania” has brought back more than 100 people since its launch five years ago, says Milda Darguzaite, who started the programme after leaving an investment-banking career in America for a government post in Vilnius. Returnees include an MP, a deputy mayor and several advisers to the prime minister. Bringing back doctors and engineers, however, is trickier. Studies show that skilled workers from eastern Europe are attracted abroad primarily by the quality of institutions such as good schools; better social benefits matter more for unskilled migrants. Data on return migration are scanty, but a recent report by the IMF suggests it has been “modest”, in some countries as low as 5% of those who left. + +Firms are adapting to labour shortages. At a recent business conference in Bulgaria, employers said they are having to raise wages to entice workers from farther and farther away. In Bulgaria and the Baltic states wages have grown faster than productivity for the past five years—a trend that makes exports less competitive. + +That may change. Higher labour costs are pressing firms to automate, says Rokas Grajauskas, an economist at Danske Bank. On the factory floor at Devold many tasks once done by hand, such as cutting cloth into shapes for winter pullovers, are now executed by robots. + + + + + +Some countries are warming to another solution: immigrants from poorer neighbours. Estonia’s population increased in 2016 for the second year in a row thanks to incomers from Ukraine, Belarus and Russia, after falling steadily since the 1990s. But immigration may not plug the brain drain. Almost all of the 400,000 Ukrainians who obtained residency permits in Poland in 2015 work in agriculture, construction or as household help. By contrast, about 30% of Polish émigrés have higher education—roughly twice the share in Poland’s general population (see chart). + +For those who leave eastern Europe, the freedom to live and work where one chooses is an immense boon. But the countries where they were raised face a difficult challenge. They must learn how to attract and retain new workers, or decline. + + + +This article appeared in the Europe section of the print edition under the headline “The old countries” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21714999-eus-newest-members-face-economic-decline-unless-they-woo-back-workers-or-recruit-immigrants/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +A shift to the right + + +The European Parliament’s new president represents a shift to the right + + +AntonioTajani has a shaky coalition and a daunting agenda + + +Jan 21st 2017 | BRUSSELS + +Wiles over charisma + + + +AT FIRST glance the European Parliament might look invulnerable to the populist wave sweeping across Europe. Antonio Tajani, a centre-right Italian who won the presidency of the chamber on January 17th, is the sort of bland functionary the European Union specialises in. Little on Mr Tajani’s CV grabs the eye, bar an affection for Italy’s long-defunct monarchy and a spell as spokesman for Silvio Berlusconi, the bunga-bungatastic former prime minister. His victory was engineered in classic EU fashion, after four rounds of voting and endless dealmaking between the parliament’s sundry political groupings. + +Yet Mr Tajani’s win can be traced to those same disruptive forces. At the last election, in 2014, nearly one-third of the parliament’s 751 seats went to anti-EU or anti-establishment outfits. That forced its two biggest groupings, the centre-right European People’s Party (EPP) and the Socialists & Democrats (S&D), into a “pro-European” grand coalition. Under their deal Martin Schulz, a German Social Democrat, was to serve a two-and-a-half-year term as president before giving way to an EPP candidate. + + + +That pact collapsed in a style that is vintage Brussels. After the deal was struck the other two top EU jobs went to EPP figures: Jean-Claude Juncker secured the presidency of the European Commission, the EU’s version of an executive arm, and Donald Tusk was appointed president of the European Council, the forum for the EU’s heads of government. Furious at being shut out, last year the S&D reneged on the agreement. After Mr Schulz said, last November, that he would return to German politics, the S&D’s parliamentary leader, Gianni Pittella, declared he would run. + +The upshot was virtually unheard-of in the parliament’s history: a genuine contest. Seven candidates, many of them from fringe outfits, threw their hats into the ring. Mr Tajani defeated Mr Pittella only after the EPP struck deals with the Euro-federalist ALDE grouping, led by Guy Verhofstadt, and with the European Conservatives and Reformists, a Eurosceptic outfit dominated by Britain’s Conservatives. This odd threesome leaves plenty of questions. + +The job of the president sits somewhere between parliamentary speaker and institutional cheerleader. After his win Mr Tajani suggested he would lean towards the former, vowing not to “push a political agenda”. On his watch the parliament will not enjoy the stature it did under the bruising Mr Schulz, but after the collapse of the grand coalition, wiliness may be more important than charisma. + +And there is plenty to do. The parliament is often mocked, but it plays a crucial role in EU policymaking. This year it must work on tricky reforms to Europe’s migration and asylum systems, as well as ratifying a controversial trade deal with Canada. The EPP-ALDE agreement calls for action when “European principles” are breached, which could mean steps against Poland’s populist government. The deal also seeks a bigger role for the parliament in Brexit talks. MEPs must approve the final settlement; their vote may take place in early 2019, just as they gear up for re-election. + +One relationship to watch will be that between Messrs Tajani and Juncker. The commission president and Mr Schulz got on famously, despite hailing from different political families. That helped smooth the process of passing legislation (under EU rules the commission proposes laws, and the parliament and representatives from national governments pass them). Meanwhile, the S&D is left licking its wounds. Another European trend, then, for the parliament to follow: the collapse of the mainstream left. + + + +This article appeared in the Europe section of the print edition under the headline “A shift to the right” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21715024-antonio-tajani-has-shaky-coalition-and-daunting-agenda-european-parliaments-new-president/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Listen, liberal + + +Alexei Kudrin wants to liberalise Russia’s economy to save it + + +But with Donald Trump’s election, many Russians think Putin’s model is winning + + +Jan 21st 2017 | MOSCOW + + + + + +EXPECTATIONS were high last week as Alexei Kudrin, a former finance minister and the informal leader of a moderate liberal camp in the Russian establishment, outlined his proposed economic programme in a packed Moscow auditorium. Russia’s top economic officials occupied the front row. Foreign ambassadors sat behind. Journalists stood in the aisles. The setting was the Gaidar Forum, a symposium named after the architect of Russia’s market reforms in the 1990s. The date, Friday the 13th, was perhaps unfortunate. + +Nine months ago, as Russia’s recession deepened, Vladimir Putin drafted Mr Kudrin to come up with a new economic strategy. The former minister, who oversaw strong economic growth in the early 2000s, resigned in 2011 in protest against a massive increase in military spending. Since then he has acquired cult-like status among Russian liberals. A personal friend of Mr Putin, he is a counterweight to the hardliners of Russia’s security services, and has stayed inside the system rather than becoming a dissident. Although he holds no formal position, he is seen as the most senior liberal courtier in the Byzantine world of the Kremlin. + + + +Mr Kudrin’s verdict was grim. Russia, he said, is at a low pace of economic growth even compared with the period of stagnation in the 1970s and 1980s that led to the Soviet collapse. The reasons go well beyond low oil prices and Western sanctions: “The main problems lie within Russia and they are structural and institutional.” Russia lags far behind in technology and innovation, and faces a severe demographic slump. The key problem is not a lack of intellect or business talent, but state inefficiency and dysfunctional institutions. “In our country the state dominates everything, so you have to start with reforming the state,” Mr Kudrin said. + +Mr Kudrin made it clear that the technical tinkering favoured by the Kremlin cannot pull Russia out of its economic trough. Reforms must involve fundamental changes to the system, particularly to the judiciary. Courts must provide justice even when that requires ruling against the state or security services. To convince his boss, Mr Kudrin framed his strategy in terms of national security and global prestige—one of the few subjects Mr Putin seems to care about. “Unless we become a technologically advanced country we face a problem of diminishing defence potential and a threat to sovereignty,” he said. + +Mr Kudrin presented Mr Putin with a choice. If the government does nothing, and provided oil prices do not fall, he estimates Russia’s growth rate between now and 2035 will hover in the vicinity of 2% (see chart). If it implements Mr Kudrin’s reforms, growth rates will top 4%—enough gradually to close the income gap with Western economies. Yet from the Kremlin’s point of view Mr Kudrin’s reforms are risky: they threaten to destabilise Russia’s centralised, cronyistic political system. + +The government is already trying to cut public spending from 37% of GDP down to 32%, creating a fight for shrinking resources that was evident at the forum. A day before his speech, Mr Kudrin moderated a panel composed of Russia’s most successful and powerful regional governors. The president of the Muslim republic of Tatarstan complained of excessive centralisation and a lack of trust from Moscow. “To rule any territory, you need money and cadres,” he said. Last year Moscow cut 8bn roubles ($134m) from his budget, about 5% of his annual spending. + +Instead of granting economic freedom and rewarding regional initiative, Moscow, fearful of separatism, keeps the regions dependent on hand-outs from the centre. “God forbid if your budget revenues are growing: you will immediately lose subsidies and be forced to finance other federal projects,” said Anatoly Artamonov, the governor of the car-making region of Kaluga. “Transferring most executive powers to the regions is long overdue,” said Sergei Morozov, the governor of the Ulianovsk region. + +For Mr Putin, however, the risks of comprehensive reforms, such as decentralisation, could be greater than the benefits—especially when he faces no immediate pressure, at home or abroad. A source close to the Kremlin says the president is confident that he has earned the unwavering support of his people and no longer needs to reinforce his standing through stellar economic performance. Despite two years of recession, Russians have adjusted to falling incomes without much protest. Meanwhile, Donald Trump’s election in America and the growing wave of nationalism in Europe have convinced many in the Kremlin that things are going their way. + + + + + +State television channels ignored Mr Kudrin’s speech, concentrating instead on Mr Trump’s upcoming inauguration. On the largest, Channel One, announcers relished America’s humiliating obsession with claims that Russia had interfered in its elections and that Mr Trump employed prostitutes while visiting Moscow. (Mr Putin discounted the allegations but noted that Russian prostitutes were “the best in the world”.) The reason for America’s hysteria over Russia’s relationship to the president-elect, explained Valery Fadeev, the anchor of Channel One’s weekly analytical programme, is that the era of Western liberal interventionism is coming to an end. Those who attack Mr Trump’s admiration of Mr Putin can see the commonalities between their approaches: “The world order can be renewed on the basis of our principles.” + +The popularity of this view bodes ill for Mr Kudrin’s programme. Russia’s long-term economic prospects may be as dire as he says. But it is unlikely to adopt liberal reforms when its elite believes that liberalism is on the retreat and a new Russian model is on the rise. + + + +This article appeared in the Europe section of the print edition under the headline “Listen, liberal” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21715022-donald-trumps-election-many-russians-think-putins-model-winning-alexei-kudrin-wants/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Putin’s prevaricating puppets + + +RT’s propaganda is far less influential than Westerners fear + + +The Kremlin-backed network inflates its viewership with YouTube disaster videos + + +Jan 21st 2017 + + + + + +PRODUCERS at RT, the Kremlin-financed media weapon formerly known as “Russia Today”, must have been glowing. More than half of the report on Russian electoral interference which America’s intelligence agencies released on January 6th was devoted to warning of the network’s growing influence. The report noted the “rapid expansion” of RT’s operations and budget—now $300m a year—and cited impressive audience numbers listed on the RT website. The channel, whose professed mission is to present the Russian point of view to foreign audiences, claims to reach 550m people worldwide, with America and Britain as its most successful markets. Conclusion: RT is part of a “Kremlin-directed campaign to undermine faith in the US Government”. + +That is no doubt true, but whether it is succeeding is a different question. RT has a clever way with numbers. Its “audience” of 550m refers to the number of people who can access its channel, not those who actually watch it. RT has never released the latter figure, but a 2015 survey of the top 94 cable channels in America by Nielsen, a research firm, found that RT did not even make it into the rankings. In Britain last month, it captured just 0.04% of viewers, according to the Broadcast Audience Research Board. + + + +On Twitter and Facebook, RT’s reach is narrower than that of other news networks (see chart). Its biggest claim to dominance is on YouTube, where it bills itself as the “most watched news network” on the platform. As the intelligence report fretfully notes, RT videos get 1m views a day, far surpassing other outlets. But this is mostly down to the network’s practice of buying the rights to sensational footage, for instance of Japan’s 2011 tsunami, and repackaging it with the company logo. RT hopes that the authenticity of such raw content will draw viewers to its political stories too, explains Ellen Mickiewicz of Duke University. This sounds like a canny strategy, but it does not work. RT’s most popular videos are of earthquakes and grisly accidents. Among the top 15, the closest to a political clip is one of Vladimir Putin singing “Blueberry Hill”. + +RT is not all strongman serenades. It broadcasts loopy conspiracy theories and fake news stories that encourage distrust of Western governments (the CIA created Ebola; the 9/11 attacks were an inside job; Ukraine crucifies babies). Ofcom, Britain’s media regulator, has rebuked the network, and NATO has called for counter-messaging to combat its propaganda. But the conflation of RT with Russian hacking and espionage has made it out to be a 10-foot monster, says Samuel Charap, a Russia analyst. In fact the Kremlin cut its funds by 10% last year as it struggled to balance the federal budget. With awestruck reviews from American spooks, however, money may flow more freely in the future. + + + +This article appeared in the Europe section of the print edition under the headline “Putin’s prevaricating puppets” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21715031-kremlin-backed-network-inflates-its-viewership-youtube-disaster-videos-rts-propaganda/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Charlemagne + + +Europe gets ready for Donald Trump + + +The next American president seems to view the EU with indifference or contempt + + +Jan 21st 2017 + + + + + +JUST over a year ago Barack Obama decided that the European Union needed his help. His advisers devised a strategy to bolster America’s European allies, incorporating transatlantic visits, political theatre and pep talks. Mr Obama talked of the dangers of Brexit in London and invited Matteo Renzi, Italy’s ill-starred prime minister, to Washington to back his constitutional referendum. Last April Mr Obama’s visit to Hanover, ostensibly to encourage a floundering transatlantic trade pact, occasioned a stirring defence of European unity, the memory of which still turns beleaguered Brussels bureaucrats misty-eyed. + +Sharp-eyed readers will have noticed that each of these gambits failed. Britons ignored Mr Obama’s warning that a post-EU Britain would be at the “back of the queue” for any new trade deals; Italians spurned Mr Renzi’s constitutional changes (and forced him from office); and Donald Trump’s victory, in the words of the EU’s trade commissioner, put multilateral trade talks into the “freezer”. All of these outcomes revealed voters’ discontent with their political masters, a mood that found its fullest expression in the election of Mr Trump. + + + +If Europeans seek change, they will receive it good and hard from America’s new president. This week Mr Trump told British and German newspapers that he expected other countries to follow Britain out of the EU, which he termed “basically a vehicle for Germany”. Slamming America’s allies for miserly defence spending, he declared NATO “obsolete”. He said he was as likely to fall out with Germany’s chancellor, Angela Merkel, as with Vladimir Putin, the Russian president. These remarks hardly represented an about-face: Mr Trump has lamented security free-riding for decades, for example. But coming four days before his inauguration, they delivered a hefty payload. + +Mr Trump appears to promise the biggest rupture in transatlantic relations since 1945. Should he be taken at his word? On a recent visit to Washington your columnist was urged by Atlanticists to pin his hopes on appointments like that of James Mattis, Mr Trump’s pick for defence secretary. During last week’s confirmation hearings General Mattis, a conventional Republican hawk, hammered Russia and declared NATO vital to American interests. What to make of such apparent conflict inside Mr Trump’s cabinet? Perhaps it is a calculated strategy to confound America’s foes. More likely it reveals Mr Trump’s slapdash approach to policy, and promises bureaucratic chaos those adversaries will be delighted to exploit. + +Mr Trump shows little affection for Germany, despite his Bavarian grandfather. Yet if this has caused panic in Germany, it is well concealed. Charlemagne has heard an official in Berlin suggest, with a straight face, that Mr Trump would surely change his mind on Mr Putin once the intricacies of the 1994 Budapest Memorandum, under which Ukraine agreed to give up its legacy nuclear arsenal in exchange for guarantees of territorial integrity, were explained to him. Other German officials place their faith in America’s institutions—Congress, the civil service, the military—to restrain the new commander-in-chief. + +Very well: hope for the best. Bien-pensant Europeans were terrified of Ronald Reagan when he took office in 1981; less than a decade later they watched the Berlin Wall tumble. Mr Trump has no track record in government on which to base forecasts, and his habit of self-contradiction renders prediction impossible. Some even spy opportunity. Perhaps a Putin-friendly president could ease tensions with Russia, at least in the short term. Mr Trump’s threat to withdraw America’s security umbrella provides a useful argument to those Europeans pressing for more defence spending at home. Maybe the uncertainty Mr Trump has injected into global politics will galvanise Europeans into resolving their petty differences and forging a genuine common foreign policy. + +Be afraid + +But the risks to Europe of a Trump presidency outweigh any possible benefits. First, a fraying EU may be susceptible to the president’s brand of bilateralism. Watch Britain, seeking fresh partners as it Brexits (Mr Trump pledges a trade deal “very quickly”, though Brussels rules make that impossible). Poland’s nationalist government, a pariah in the EU for its unconstitutional power grabs at home, is a prime candidate for Trumpian deal-making, says Jan Techau of the American Academy in Berlin, a think-tank. Watch, too, Mr Trump’s choice of European friends. The roll call of visitors to his gold-plated tower since the election includes the leaders of populist outfits from Britain, Austria and France, who see in Mr Trump’s victory a validation of their own assaults on the established order. + +The principal victims may be outside the EU. Europe’s fate lies in its own hands, Mrs Merkel said this week. But the EU struggles to extend its sway to weak countries on its fringes. Take Mr Trump’s hint that he might ease sanctions on Russia, imposed in 2014 over its aggression in Ukraine. The offer carries a cost even if it comes to nothing. Without American backing the EU’s consensus on Russian sanctions will evaporate (especially if François Fillon, a Putin-friendly Gaullist, wins France’s presidential election in May). As the West loses its attraction Ukraine may be sucked into Russia’s orbit. Atlanticists in post-Soviet states like Moldova and Georgia will be left in the cold. Tensions in the Balkans may bubble over, especially if Mr Putin steps up his meddling. + +American support, both hard and soft, has always undergirded European unity, and its absence will be keenly felt. The condition may not be permanent: American presidential terms last only four years. But that is plenty of time to inflict immense harm. During his last visit to Europe, in November, Mr Obama sought to reassure his allies that the transatlantic bond would survive the Trump era. Europeans must hope that on this trip, unlike the earlier ones, the president got it right. + + + +This article appeared in the Europe section of the print edition under the headline “Looking hairy” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/europe/21714998-next-american-president-seems-view-eu-indifference-or-contempt-europe-gets-ready/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Britain + + +Brexit: Doing it the hard way [Fri, 20 Jan 04:41] + +Trade with America: The art of the deal [Fri, 20 Jan 04:41] + +Northern Ireland: Polls apart [Fri, 20 Jan 04:41] + +The National Health Service: Don’t carry on, doctor [Fri, 20 Jan 04:41] + +Museums: Changing the guard [Fri, 20 Jan 04:41] + +Regeneration through culture: Larkin around [Fri, 20 Jan 04:41] + +Ill-gotten gains: Scrounging for coppers [Fri, 20 Jan 04:41] + +Bagehot: Let the work permits flow [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Talk global, act local + + +Doing Brexit the hard way + + +Theresa May opts for a clean break with Europe. Negotiations will still be tricky + + +Jan 21st 2017 + + + + + +IT MIGHT be called May’s paradox. Since she became prime minister last July, Mrs May has been urged by businesses to clarify her Brexit goals. Yet every time she has tried, investors have reacted by selling sterling, because she has shown a preference for a “hard” (or, as her advisers prefer, “clean”) Brexit that takes Britain out of the EU’s single market and customs union. + +In fact the pound rose on January 17th when she gave a speech that set out her most detailed thinking so far about Brexit. That was partly because her decision to leave the single market and customs union had been widely trailed, causing the pound to fall in the run-up to her speech. But it may also have been because markets were pleasantly surprised by her language in setting out a dream of a liberal, open future for the country—she spoke behind the slogan “A Global Britain”—and her expressed wish for continuing friendly relations with Europe. + + + +There is a liberal vision of a post-Brexit future in which Britain escapes the most protectionist features of the EU and opens its economy to the rest of the world. It is one that includes lower taxes, less pettifogging regulation and freer trade. During the referendum campaign it was sometimes talked of as “Singapore on steroids”: a dynamic, open Britain capable of competing not just with other EU countries but with the whole world. + +The trouble is that, for all her pleasing rhetoric, Mrs May is not really pursuing this vision. She has set immigration control as her priority (see Bagehot), even though today’s service businesses depend on being able to move people around at short notice, as does high-tech industry. A similar drawback attaches to her insistence on escaping the jurisdiction of the European Court of Justice (ECJ). Free-trade deals require a neutral umpire. So would any effort, hinted at again by Mrs May, to secure post-Brexit barrier-free access to the EU’s single market for such key industries as cars and financial services (see article). + +Such a sectoral approach is anyway unlikely to work, for two reasons. One is that the EU will not offer favoured access to its market only for certain industries. The second is that the World Trade Organisation does not allow it. The WTO accepts free-trade deals and customs unions, but only if they embrace “substantially all the trade”. Were the EU to single out cars, say, for barrier-free trade with Britain, the EU would be obliged by the WTO’s non-discrimination rules to offer the same deal to all WTO members, including China and India. + +Mrs May was frank about the trade-off between being in the single market and taking back control of borders and laws. She even declared that to stay in the single market would mean “to all intents and purposes” not leaving the EU at all. But she was less honest in not admitting that Brexit will impose costs, and that a hard Brexit will make them heavier. A YouGov poll for Open Britain, a pro-EU group, finds that even a majority of Leave voters are not prepared to be made worse off in order to control immigration. + +Mrs May’s response that the economy has done better since the referendum than economists forecast is disingenuous. Not only have easier monetary and fiscal policy and the fall in sterling cushioned the impact but Brexit has not yet happened—and until recently many firms hoped to stay in the single market. Nor did Mrs May offer any solution to the problems that leaving the single market and customs union will cause for the border with Ireland, where there are currently no customs checks. + +Negotiating free-trade agreements will be harder and more time-consuming than Mrs May suggests. She expressed hope that a comprehensive deal with the EU could be done in two years. But experience suggests this is highly unlikely. Many EU countries say they need to settle divorce terms (dividing up property, pensions and so on) before even talking about trade. Canada’s free-trade deal with the EU has taken seven years and is not yet in force. For Britain to replicate the EU’s trade deals with 53 third countries will be more testing than today’s enthusiastic talk of an early agreement with America suggests (see next story). And ratification is always tricky: a recent ECJ ruling makes a free-trade deal with Britain a “mixed” agreement that must be approved by every parliament in the EU, including regional ones. + +The truth is that when Mrs May formally triggers Brexit she will find the cards stacked against her. Subject to an imminent Supreme Court ruling on needing parliamentary approval, she plans to initiate the process in March. The divorce proceedings then have an extremely tight two-year deadline. Mrs May acknowledged the need for transition, but only as an implementation process towards a final deal. As she conceded, the other 27 EU countries have been impressively united over Brexit. They may welcome her new clarity, but for them the preservation of the union is more pressing than all else. As several leaders have said, Britain cannot have a better deal outside than inside the club. + +Mrs May made helpful noises about not wishing to see the EU unravel, unlike Donald Trump. She stressed the need to retain co-operation on foreign policy and security. And she said Britain might pay modestly into the EU budget (though no longer “vast contributions”, so talk in Brussels of an initial Brexit bill of upwards of €50bn, or $53bn, may not go down well). But she also threatened her partners, calling it an act of “calamitous self-harm” if they pushed for a punitive settlement; Britain could retaliate by slashing taxes, she said. She believes her predecessor, David Cameron, made a mistake by not being ready to walk out rather than accept inadequate new membership terms. In her speech, indeed, she insisted that no deal was better than a bad deal. + +As Malcolm Barr of J.P. Morgan points out, this is a dangerous line. No deal would mean falling back on WTO terms, implying not just non-tariff barriers and lost access to the single market but actual tariffs on exports of cars, pharmaceuticals, processed foods and much else. The EU would suffer too, but its goods exports to Britain are worth only 3% of its GDP; Britain’s to the EU are worth 12% of its own GDP. Mrs May has made a powerful case for her version of a hard Brexit. But it is Britain, not the 27, that is the demandeur in these negotiations. And that will make securing a good outcome hard in every sense. + + + +This article appeared in the Britain section of the print edition under the headline “Doing it the hard way” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21714960-theresa-may-opts-clean-break-europe-negotiations-will-still-be-tricky-doing-brexit/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The art of the deal + + +Britain shouldn’t get too excited by the prospect of a trade agreement with Donald Trump + + +Haggis aside, the benefits would be limited + + +Jan 21st 2017 + + + + + +IT WAS music to Brexiteers’ ears. In an interview with the Times and Germany’s Bild, Donald Trump revealed that he wanted a trade agreement between America and Britain “very quickly”. Less widely reported was Mr Trump’s refusal to specify how far up his list of priorities Britain would be after he took office on January 20th. Trade deals have assumed fresh importance since Theresa May confirmed this week that Britain would leave the EU’s single market and customs union, allowing it to sign trade agreements of its own. Unfortunately the probable benefits of a deal with the Donald are underwhelming—especially for Britain. + +In 2015 Britain sent exports worth about £100bn ($121bn) to America, making it Britain’s biggest export destination after the EU, to which it sold goods and services worth over £200bn. Americans are heavy users of British financiers’ expertise. In insurance Britain probably has a larger trade surplus with America than it does with the EU. An index of “trade complementarity” produced by the World Bank suggests that the British and American economies would be highly suitable trade partners. + + + +However, gummy regulations hold back commerce. Britain sends relatively few cars to America, for instance, partly because America and the EU use different safety standards. America has turned its nose up at British meat since a food-safety crisis in the 1980s. Haggis, a Scottish delicacy containing sheep heart, liver and lungs, is in effect banned. + +A bonfire of rules and tariffs could help certain industries. Haggis makers are delighted by rumours that Mr Trump, whose mother was born in Scotland, wants to lift the ban. (“Consider it done,” he supposedly told one hotelier following his election.) Alan Winters of the UK Trade Policy Observatory at Sussex University says that British consumers could benefit if the home market were opened to cheap American food. Britain might allow in genetically modified crops, which are regulated more heavily in the EU, or buy from America’s highly competitive beef farmers. + +But as the car industry shows, it is not tariffs but non-tariff barriers, such as differing regulations, that most impede British-American trade. One research paper finds that in the chemicals industry, EU exports to America face non-tariff barriers equivalent to a tariff of about 20%. + +Agreements to scrap non-tariff barriers would help trade along. Caroline Freund of the Peterson Institute, a think-tank based in Washington, DC, reckons that Britain and America could make progress on “digital trade”, something on which negotiations between the EU and America have stalled. This could include, for instance, agreements on data sharing and copyright. + +It would not all be plain sailing, however. British firms, especially small ones, would struggle to comply with American and EU standards simultaneously (a paper from 2015 noted that the area of the windscreen cleaned by wipers must in certain cases be larger for American-compliant cars than EU ones, for instance). And although Mr Trump might swallow sheep’s lungs, he may play hardball with more lucrative industries. Britain, whose economy is one-sixth the size of America’s, would have little bargaining power. + +American negotiators could, for instance, target Britain’s insurance market, extracting an agreement to lower non-tariff barriers and in so doing cutting that prized trade surplus. Britain’s public-procurement market might also be of interest, in which case expect headlines about American health-care firms snapping up National Health Service contracts. British carmakers may be disappointed: Mr Trump makes political capital from protecting America’s auto industry, not throwing it open to foreign competition. + +Even if these bumps can be smoothed over, geography will also limit the impact of a British-American trade deal. So-called gravity models of trade reveal something very simple: nearby countries trade more with each other. It is hard for a London-based lawyer to provide services to a Californian client when their working days barely overlap. + +Other countries “are already queuing up” for a trade deal with Britain, according to Boris Johnson, the foreign secretary. But there is a mountain to climb. One estimate suggested that quitting the EU and falling back on World Trade Organisation rules would be associated with a decline of about a fifth in Britain’s total trade volumes. Mr Trump’s proclamations, if of any substance, are encouraging. But Britain is not about to enter a golden era of trade. + + + +This article appeared in the Britain section of the print edition under the headline “The art of the deal” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21715025-haggis-aside-benefits-would-be-limited-britain-shouldnt-get-too-excited-prospect/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Polls apart + + +A bitter election looms in Northern Ireland + + +But despite a war of words, neither side wants to scrap the troubled Assembly + + +Jan 21st 2017 | BELFAST + + + + + +AFTER a decade of relative stability, this week Northern Ireland witnessed a familiar scene from the past: a frustrated British minister announcing the dissolution of the Stormont Assembly and calling fresh elections, to be held on March 2nd. + +The collapse of the devolved government, for the first time since it was restored in 2007, was caused by the resignation a week earlier of the deputy first minister, Martin McGuinness of Sinn Fein, after a row with the Democratic Unionist Party (DUP), his coalition partner. Under Stormont’s rules, power is shared by a republican and a unionist. So when Sinn Fein refused to appoint a replacement for Mr McGuinness, the Assembly was dissolved. + + + +Tensions had been simmering for a year. They boiled over when the DUP’s leader and first minister, Arlene Foster, became embroiled in a bungled green-energy initiative that will cost taxpayers hundreds of millions of pounds. + +The last Assembly election, in May, continued the concentration of power in the two main parties (see chart). The number of seats has since been cut to 90, which may squeeze small parties further. The balance of power is unlikely to change, though most expect the DUP to lose some seats and Sinn Fein to gain, after the green-energy affair. An inquiry into that will go on until after the election, so allegations will swirl throughout the campaign. + +Mrs Foster did well last time by claiming the republicans posed a risk to stability. She seems to be repeating the tactic, making ten references to Sinn Fein in a recent broadcast of less than two-and-a-half minutes. Almost literally pinning her colours to the mast, she has taken to wearing a long scarf resembling the union jack. + +Most voters are sick of politics. Lord Empey, a former unionist leader, captured the mood when he said: “I fear that support for [the Assembly] has never been lower. It has been dragged through the gutter with one scandal after another.” Turnout in Assembly elections has dropped, from 70% in 1998 to 55% last year. A key question is how many will come out in March to vote in anger, and how many will abstain in despair. + +For now, Sinn Fein has the wind in its sails. Its supporters had long complained that its leaders were “roll-over republicans”, letting the DUP get away with too much. The dramatic resignation of Mr McGuinness has changed that. Yet he is clearly unwell. A number of possible successors include Conor Murphy, a south Armagh man who has served time both as a Westminster MP and as an IRA prisoner. + +Whatever the result of the election, Sinn Fein insists it will not return to the Assembly unless it is given a complete overhaul. The party complains about the DUP’s conservative attitude towards women’s rights, gay marriage, its obstruction of “legacy issues” (ie examining the past actions of the security forces) and much else. Experience has shown that Sinn Fein loves lists and lengthy negotiations. (Tony Blair was criticised for making “side deals” in efforts to keep the party on board in the peace process.) The Assembly is already heaving with safeguards. It is hard to see the DUP agreeing to more limits on its clout. + +So the expectation is of election, then negotiation. Months of wrangling, and much brinkmanship, lie ahead. But the governments in London and Dublin, as well as all the major Belfast parties, want the Assembly back—including Sinn Fein, though it is better than most at concealing it. The alternative is a political desert. + + + +This article appeared in the Britain section of the print edition under the headline “Polls apart” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21715034-despite-war-words-neither-side-wants-scrap-troubled-assembly-bitter-election/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Carry on, doctor + + +Britain’s doctors revolt against plans for a seven-day service + + +General practitioners say more money is needed. The government says there is none + + +Jan 21st 2017 + + + + + +GENERAL practitioners, pillars of British communities and the first points of contact for primary care, are mostly a mild-mannered bunch. But such has been the turmoil in the National Health Service recently—and such the government’s response—that even they are up in arms. Last year they nearly went on strike. Now some have threatened to disaffiliate from the NHS. Their complaints go to the heart of Britain’s health-care problems. + +GPs’ anger has been directed at the prime minister, Theresa May, whose office on January 13th suggested that they were partly to blame for the crisis which has seen more than 20 hospitals declare they are so overcrowded they can no longer guarantee patient safety. The statement criticised GPs for sometimes “not providing access that patients need”, adding that if doctors refused to move to 8am-8pm opening, seven days a week, they would lose funding. The Royal College of GPs denounced the plans and the comments in unusually strong terms. + + + +GP practices insist that they cannot open at weekends if they do not have more doctors, and that to hire them they would need more money. But that has not been forthcoming. On January 9th the chancellor, Philip Hammond said in an interview with The Economist: “We don’t have any spare cash” for the NHS. “Additional public spending has to be financed by additional taxation and I don’t personally think there’s going to be a great appetite for that,” he added. + +Analysis by the King’s Fund, a think-tank, found that face-to-face consultations in general practice grew in 2011-2015 by 13% and phone consultations grew by 63%. Meanwhile, funding for primary care as a share of the NHS overall budget fell from 8.3% to 7.9% (though spending in real terms has risen slightly since 2013). Many GPs are demoralised and retiring early, so there is a shortage of doctors. Immigration controls imposed after Brexit may worsen it. + +The government is pushing seven-day surgeries in the belief that they will help unclog accident and emergency (A&E) wards. But much of the strain on A&E is caused by people with conditions too serious to be treated at a GP surgery. Keeping people out of hospital also requires social care and community health services, both of which are also under pressure. + +An ageing population means chronic conditions are becoming more common, so it is even more important for GPs to integrate with other local health services. There are signs that the government is getting the message. The head of the NHS’s acute care, Keith Willett, has admitted that 30% of patients over 75 coming to A&E could be better looked after by other parts of the health system. + +GPs like Jonathan Cope are trying to make that happen. Changes he has introduced at the Beacon Medical Group near Plymouth in south-western England give him hope that the crisis of general practice can be turned around. He is part of a project called Primary Care Home, one of several pilot schemes being introduced to promote greater integration. + +Rather than taking on an extra doctor, Beacon hired a nurse practitioner, a paramedic and a pharmacist. All three are on call on weekdays and help to screen patients. They handle many themselves, saving the doctors’ time. Beacon’s GPs specialise, for instance, in dermatology and orthopaedics. A hospital referral can take 18 weeks to come through, whereas a GP can often treat the same patient within a week, if not on the spot. This has reduced the number of referrals by 85% for dermatology and 75% for orthopaedics, lightening the burden on the local hospital. + +The pharmacist also goes into care homes to review pensioners’ medicine and reduce waste from unnecessarily prescribed drugs. A resident psychiatrist starts at the practice in March. + +Such experiments need to be scaled up faster, says Beccy Baird of the King’s Fund. “It’s a complete reimagining of how health care is done.” In the absence of more money, the NHS will need more imagination. + + + +This article appeared in the Britain section of the print edition under the headline “Don’t carry on, doctor” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21715040-general-practitioners-say-more-money-needed-government-says-there-none-britains/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Changing the guard + + +Two new museum heads herald a generational shift in advocates for the arts in Britain + + +Maria Balshaw and Tristram Hunt must find a way to reach beyond London + + +Jan 21st 2017 + +Balshaw and Hunt, new captains of culture + + + +IT HAS long been a badge of honour for London’s fashionable museums to be led by an exotic foreign director. Tate Modern, the Victoria & Albert Museum (V&A), the British Museum, the National Gallery and the Wallace Collection have all flirted with natty continental leaders, with varying degrees of success. British curators can be a bloody-minded lot and the wily ways of civil servants in Whitehall are hard for a foreigner to fathom. Now, after two decades, the idea seems to have had its day. Museum trustees are opting for homegrown leadership. + +The new director of the V&A, succeeding Martin Roth, who moved from Dresden, will be Tristram Hunt, a Labour MP and historian of the Victorian period, who is vacating his Stoke-on-Trent seat to take up the job. On January 17th, after the prime minister gave her approval, Tate—four museums of mostly British art across the country—announced that its new head will be Maria Balshaw, director of the Whitworth Gallery and the Manchester City Gallery. Ms Balshaw succeeds Sir Nicholas Serota, who over 29 years has made Tate into a global brand. She is the first woman to head Tate, which had nearly 8m visitors in 2015, making her the most influential figure in British arts. + + + +Ms Balshaw has been a popular and outspoken museum director who transformed the Whitworth into one of Britain’s most popular galleries. In 2015, following a £15m ($22m) redevelopment which injected new life into the collections and produced a dramatic increase in visitors, it was named the Art Fund’s museum of the year. The judges (who included the culture editor of The Economist) were struck by the confidence with which the renovated gallery integrated with the park beyond, once mostly a source of switchblades and used condoms; how its programming included tours for the elderly, the infirm and those with dementia (something Ms Balshaw had learned from visiting museums in Japan); and how black Mancunian teenagers elbowed visitors out of the way in the rush to see what they regarded as their museum. “It truly feels like a museum of the future,” said Stephen Deuchar, director of the Art Fund. + +The first problem faced by Ms Balshaw and Mr Hunt in their new roles is financial. For every £1 the V&A receives in public subsidy it generates a further £1.39 through fundraising, ticket sales and other commercial ventures. Tate is even more energetic, bringing in £1.93 for every £1 of subsidy. As public funding for the arts is squeezed, both will have to put even greater energy and creativity into raising money elsewhere. In the past Mr Hunt has suggested that free museums such as the V&A should charge for entry; the V&A says that is no longer his view. + +But their biggest challenge may lie in healing the rift that has grown between London and the rest of the country, which feels the capital benefits unfairly from funding. Almost half of Britain’s free “national” museums are in Greater London. Some initiatives, such as the “City of Culture” competition, are spreading the attention around a bit (see article). But there is plenty more to do. + +So the V&A is expanding—to Dundee, as well as the Olympic Park in east London and even Shenzhen, China, where a new design museum will have a V&A gallery. In addition to its galleries in London, Tate has outlets in Liverpool and St Ives. As advocates for the arts, Ms Balshaw and Mr Hunt can help Britain become, as Theresa May said in her speech on Brexit, “respected around the world and strong, confident and united at home”. + + + + + +This article appeared in the Britain section of the print edition under the headline “Changing the guard” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21714890-maria-balshaw-and-tristram-hunt-must-find-way-reach-beyond-london/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Larkin around + + +Hull hopes to revive its fortunes as Britain’s latest “City of Culture” + + +Locals past and present, from William Wilberforce to the Spiders from Mars, will help to put the city on the map + + +Jan 21st 2017 | HULL + + + + + +JUST half an hour after opening time, it is already back-of-the-head viewing only at the Ferens art gallery in Hull. That must be rare for a smallish regional museum on a drizzly weekday morning. But then a whopping 10,000 people crammed into it over the previous weekend. Welcome to Britain’s City of Culture, 2017. + +The Ferens reopened on January 13th after a £5.2m ($6.4m) facelift, so many came to inspect the new rooms. They were drawn also by the first showing of a 14th-century Siennese masterpiece, Pietro Lorenzetti’s panel painting “Christ between Saints Paul and Peter”, bought by the Ferens in 2013. Both events were timed to kick-start Hull’s year of culture, as was the installation of a gargantuan 75m-long wind-turbine blade in city’s main square. + + + +It is just as well that “Blade” and the Ferens have created a buzz. To justify the £32.5m (60% of it public money) that is being spent around the port city of 256,000 souls, the organisers have promised to bring in £60m-worth of jobs and investment, as well as 1m visitors. These are big numbers but, argues Martin Green, the director of the year’s events, they have been carefully calibrated, learning the lessons of previous such festivals. + +The UK City of Culture programme is a recent spin-off from its European predecessor. Glasgow was the first British city to win the European version, in 1990, followed by Liverpool in 2008. The first winner of the domestic competition was Derry, in Northern Ireland, in 2013. + +The motivating idea is to regenerate rundown cities through culture and arts. Glasgow and Liverpool were badly scarred by the collapse of shipbuilding and other maritime industries in the 1980s, as was Hull. The latter had a fishing fleet of 600 vessels as recently as the 1970s. Now there is just one Hull-registered trawler, and that is Icelandic-owned, points out Mark Jones, head of regeneration at the city council. The result was unemployment and an exodus of the city’s young and talented. + +Liverpool can point to some impressive results from its own year in the cultural spotlight: 15m visitors and an economic boost worth £800m. Yet critics argue that it did little to change the city’s basic problems and that little of the money trickled down to the poorest areas. Derry had its problems, too. Oonagh McGillion of the Derry bid acknowledges that the economic regeneration targets in the city’s original plan were too ambitious. Fewer jobs were created during the year than had been hoped for; hotels that were promised never materialised. Culture, it seems, can only take a city so far. + +Hull, therefore, has more modest aims. It is a city that feels it has long been overlooked by the political and cultural elite, argues Madeleine O’Reilly, a local theatre director. This feeling of being ignored contributed to one of the highest Brexit votes in the country last June, of 68%. So this is the city’s chance to blow its own trumpet and put itself on the map. + +Larger-scale economic regeneration is sensibly being left to companies like Siemens, manufacturer of the “Blade”, which was towed into the city centre from its recently opened local factory. There, Siemens will employ about 1,000 people making hundreds of such blades a year for North Sea wind farms. It is part of a “green energy” strategy that the city council has identified to bring back jobs. But to hang on to its young locals, its university graduates and to attract new talent, Hull will also need fun. That is why Siemens, among others, supports the city of culture year. + +And Hull has a rich cultural heritage to draw on. The 17th-century poet (and MP) Andrew Marvell grew up nearby; perhaps Britain’s most-loved 20th-century poet, Philip Larkin, came to live and work in the city. The year’s cultural festival will weave them in, along with other locals from William Wilberforce to David Bowie’s Spiders from Mars. And so Larkin’s “pastoral of ships up streets…tattoo-shops, consulates, grim head-scarfed wives” will recede a little farther into the distance. + + + +This article appeared in the Britain section of the print edition under the headline “Larkin around” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21715064-locals-past-and-present-william-wilberforce-spiders-mars-will-help-put/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Scrounging for coppers + + +Police in Britain want to keep more of the loot they confiscate + + +Others worry that it would tempt them to pursue rich crooks, not harmful ones + + +Jan 21st 2017 + + + + + +FEW opportunities exist for interested buyers to lay their hands in a single evening on a string of racehorses, a pair of slightly worn Louis Vuitton trainers, four gold Krugerrand, a Rolex or five, a Mercedes and a couple of yachts, at knock-down prices. But all are up for grabs later this month at an auction house in Belfast. They are lots in a sale of assets seized, for the most part, from criminals. + +Sports memorabilia seems to be a favourite investment for crooks. Recent items sold include boxers’ belts, going for up to £650 ($800), and footballers’ framed boots; patriots will be disappointed to see that at £550, Cristiano Ronaldo’s footwear outperformed that of David Beckham (£300). Jewellery and fast cars are predictably popular. Wilsons, an auctioneer that regularly disposes of criminals’ assets, recently sold a Rolex watch for £13,000 and a BMW for £20,500. Boats—both pleasure cruisers and those used for more businesslike purposes—bob up regularly. In August the Golem, a 57-foot yacht used to smuggle cocaine, went for £95,000. + + + +More mundane products, including lost-and-found items, are sold by the police, often through websites such as eBay. Cheshire police’s offerings include a box of 25 suspension files (starting price £0.99, no bids) and a printer cartridge (highest bid currently £2.40). + +Increasingly such sales are a means of disposing of pricey assets bought legally by crooks using ill-gotten gains and seized by the authorities under the Proceeds of Crime Act (POCA). Such assets may go for less than their market price (the Golem had sold for three times as much previously). But they provide police forces with useful extra income, especially in these straitened times. Money recovered from criminals’ assets is divided between the Home Office (which gets half) and the relevant investigation agencies, the prosecution service and the courts under what is known as the “Asset Recovery Incentivisation Scheme”. + +Such incentives can prove useful. Without them, efforts to recover criminal assets might fall by the wayside, since the work is difficult and complicated, suggests Kennedy Talbot, a barrister and member of the Proceeds of Crime Lawyers’ Association. Forces are already struggling to retain financial investigators, who are lured away by juicier jobs in the private sector. + +Now, with budgets being slashed, Mark Burns-Williamson, the police and crime commissioner (PCC) for West Yorkshire, is campaigning for all money raised by seizing assets to go directly to the police. It is not clear how the half that goes to the Home Office is spent, he says. It should go back to the police to be invested in the local force, and in the PCC’s Safer Communities Fund for local worthy groups. + +But allowing the police to keep everything they seized would raise concerns, says Colin King, head of the Crime Research Group at the University of Sussex. It could encourage police to go after criminals whose assets are easiest to capture, rather than those who do most harm. In some areas police are already more likely to raid brothels run by sex workers than those run by organised criminals, because the former seem easier targets, says Alex Feis-Bryce of Ugly Mugs, which encourages prostitutes to report violence. Some might prefer the approach of Matthew Ellis, Staffordshire’s PCC, who gives all recovered money to groups that offset the impact of crime, and allocates £250,000 to the force in lieu of their income from POCA. + +Forces in America have long been criticised for “policing for profit” by overenthusiastically seizing assets alleged to be connected to crimes under civil-forfeiture rules. Better that all the money goes back to the Home Office or some central fund, reckons Mr King. (In Ireland, it all goes to the finance ministry.) Crime pays, but who should benefit remains unclear. + + + +This article appeared in the Britain section of the print edition under the headline “Scrounging for coppers” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21715069-others-worry-it-would-tempt-them-pursue-rich-crooks-not-harmful-ones-police-britain/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bagehot + + +Cutting immigration will not placate British voters + + +Worries about migrants relate only indirectly to their numbers. There are easier ways to allay voters’ fears + + +Jan 21st 2017 + + + + + +THERESA MAY’S speech on Brexit lasted almost an hour, but five seconds would have sufficed. She could just have said: “Immigration controls will be imposed at any cost.” As home secretary, she tried and failed to implement David Cameron’s pledge to drive net immigration below 100,000 (it was 335,000 in the year to June 2016). After she replaced him she could easily have dumped the target, but instead cleaved to it. When Amber Rudd, her liberal-minded home secretary, suggested it be softened, Number 10 promptly overruled her. Clearly the prime minister believes it worth pulling Britain out of the European single market and the customs union to achieve this elusive goal. So expect drastic immigration cuts when, in 2019, free movement is replaced by a system of work permits. + +The prime minister’s thinking is not hard to fathom. Immigration was integral to the anti-EU campaign in the Brexit referendum. A poll of Leave voters’ motivations commissioned by Lord Ashcroft, a Tory peer, after the vote found that regaining control of borders had been second only to casting off rules from Brussels. Dominic Cummings, the mastermind of the Brexit victory, says: “All focus groups now start with immigration and tend to revert to it within two minutes unless you stop them.” One only has to join an MP on a canvassing round to see what he means: door after door, residents raise it when asked what bothers them. + + + +Yet such sessions also make clear that immigration is no monolithic political issue. It contains multitudes. And picking these apart suggests Mrs May should think twice about slamming the door. + +That starts with being frank about something politicians use patronisingly tortuous insincerities to describe: some voters just don’t like immigrants. These voters are not bad people—they may be pillars of their communities, compassionate and generous to their fellow citizens—but they dislike hearing foreign languages, mistrust cultures other than the native one and assume foreigners are scoundrels and malingerers. This group is a small minority: in 2015 YouGov, a pollster, found that 10% of respondents would mind if someone of a different ethnicity moved next door; 16% if he or she married one of their children. In general, Britons like immigrants even if they dislike immigration. British Future, a think-tank, found that 84% (and 77% of Leave voters) favoured allowing European residents in Britain to stay after Brexit. + +Which is not to say that culture is irrelevant. Listen to voters discuss their worries about immigration and it becomes clear that these are part of a broader sense that society is unstable and unjust; that the system does not work properly. This encompasses concerns about the integrity of borders; crime and terrorism; social atomisation; the speed at which society is changing; the waning of deference. One study last year showed that people who do not feel in control of their lives are more likely to oppose immigration. Voters need have no specific quarrel with immigrants to see them as part of this phenomenon. Reducing numbers is therefore unlikely to get to the heart of their complaints. + +Most of all, however, objections to immigration are material. According to polls by Ipsos MORI, the five most-cited reasons people give when asked why they consider immigration too high are: job shortages, overcrowding, pressures on the state, welfare strains and housing shortages. (Cultural factors—crime, loss of national identity and failure to integrate—are far behind, on low single digits.) In other words, though immigrants make Britain richer, locals correctly believe that the prosperity they generate is unevenly spread. Yet only a fraction of the political energy and capital invested in cutting immigration goes into thinking up and implementing ways of relieving its pressures. + +Even if all this were wrong, and Britons really disliked the people who moved to join them on their islands, would shutting the borders cheer them up? Views about immigration bear only an imprecise relationship to the number of immigrants. In the Brexit referendum, the parts of the country with the most foreign-born residents voted most heavily to remain; it was those areas that had seen the fastest increase in foreigners that were among the keenest to leave. Britons guess 31% of the population is foreign-born, when the true figure is 13%—and when confronted with the disparity they tend to question the figures rather than their assumptions. Whether voters would acknowledge, let alone notice, a large fall in immigration is therefore open to question. + +Mrs May’s door-slam, then, threatens to represent the worst of all worlds: creating unmeetable expectations among voters, while the fall in immigration damages the British economy, lowering tax receipts, putting services under even more strain and thus compounding the immigration “problem”. As such, the coming crackdown could alienate not just cosmopolitans—a group likely to grow, given young Britons’ relaxed stance on immigration—but also those nativists it is meant to placate. + +Don’t cut. Build + +To politicians struggling with the subject: there are alternatives. Ditch the constipated talk of “concerns about immigration” (which only looks evasive) and make the honest case for the current, controlled levels. Propagate accurate facts about the numbers of immigrants, their impact and the process by which work permits are to be issued. Revive and expand the Migration Impacts Fund, a foolishly mothballed programme that channelled government resources to places experiencing fast population change. Embrace the proposals by Sajid Javid, the communities secretary, to relax the green belt to accelerate housebuilding. Have a proper debate about health-care funding, make the welfare system more contributory, put more police officers on the beat, make a period of national service compulsory for youngsters. Before reaching for reckless immigration cuts, pick the low-hanging fruit. It is plentiful. + +Economist.com/blogs/bagehot + + + +This article appeared in the Britain section of the print edition under the headline “Let the work permits flow” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/britain/21715027-worries-about-migrants-relate-only-indirectly-their-numbers-there-are-easier-ways-allay/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +International + + +Sex selection: Boy trouble [Fri, 20 Jan 04:41] + +Prizing girls: Like father, like daughter [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Gendercide + + +The war on baby girls winds down + + +How one of the world’s great social problems is solving itself + + +Jan 21st 2017 + + + + + +FOR something so private and covert, the selective abortion of female fetuses is an oddly common topic of conversation in India. Narendra Modi, the prime minister, exhorts his countrymen to save girls and send them to school. When Sakshi Malik won India’s first medal at the Rio Olympics, in wrestling, it was an occasion for regret as well as national chest-beating. Such victories are only possible when girls are not killed, commented Virender Sehwag, a dashing cricketer turned Twitter star. + +India has cause to fret. According to two demographers, John Bongaarts and Christophe Guilmoto, a staggering 45m girls and women are missing from the country. Some were never born, having been detected by ultrasound scans and aborted. Others died young as a result of being neglected more than boys. Some villages in the north have an alarming surplus of boys and young men. Yet attitudes and behaviour are changing. In India, and in the world as a whole, the war on baby girls seems to be winding down. + + + +Even without human meddling, the sex ratio is skewed. Asians and Europeans tend to have about 105 boys for every 100 girls, whereas Africans have closer to 103 boys. That seems to be nature’s way of compensating for the higher death rate of boys and men; by the time men and women are ready to have children, the numbers ought to be roughly balanced. But in a few countries the ratio is unnaturally high. At the last census, in 2011, India had 109 boys aged 0-6 for every 100 girls; in Punjab, a wealthy northern state, the ratio was 118 to 100. China had 119 boys aged 0-4 for every 100 girls in 2010. + +Sex ratios go out of whack when three things occur at once. First, a large proportion of couples must fervently desire boys. That happens mostly in “patrilocal” societies, where a woman moves out of her parents’ home upon marriage and into her husband’s home, to dote on his parents and harvest his family’s crops. Second, birth rates must be low. A couple who intend to have five or six children (as Nigerians do today, for example) will almost certainly get a boy just by the law of averages, whereas a couple who would like one or two children are more likely to try to tip the odds. Third, there must be an accessible, tolerated way of getting rid of superfluous girls. Today, that is usually abortion. + +All three things used to be true of South Korea (see article) and they are true today of China, India, Pakistan, Vietnam and the south Caucasus. They hold in parts of Indonesia but not the whole country. Indeed, Indonesia has an unusual group that proves the rule. The Minangkabau, from West Sumatra, practice matrilocality—that is, newly married couples move into the wife’s household. They have a normal sex ratio. But birth data suggest that they are hungry for daughters. A Minangkabau who gives birth to a boy will, on average, have a second child more quickly than one who gives birth to a girl. + +Uptown girl + +The first signs that sex ratios might be returning to normal appeared after the last round of censuses. The sex ratio among China’s children, which had risen steadily for decades, did not budge between 2000 and 2010. In India, the excess of boys over girls worsened slightly between 2001 and 2011. But more girls were counted in the states where sex selection had been most common, such as Haryana and Punjab. + +Annual data on births, which are less authoritative than census figures on children but more up-to-date, suggest the tide has turned. India’s sex ratio at birth has become more normal over the past decade, especially in cities (see chart). In China—where, admittedly, official figures of all kinds are fishy—the sex ratio at birth has fallen from a peak of 121 boys per 100 girls in 2004 to 114 in 2015. + + + + + +Vietnam still has too many male births, but the situation has not worsened since about 2010. Armenia and Azerbaijan are also holding steady; sex ratios had become unbalanced in both countries in the 1990s. Sex selection is disappearing in Georgia and Taiwan. Then there is South Korea, the country that most cheers demographers. In 1990 it had a sex ratio at birth of 116 to 100. For the past three years the figure has been 105—precisely what it should be. Something is driving sex ratios back to normal levels. But what? + +Not, probably, the efforts that some countries have made to crack down on sex-selective abortion. Indian couples find it easy to circumvent an official ban by booking their ultrasound scans at one clinic and their abortions at another. The Chinese authorities have cracked down harder, scrutinising couples who already have a girl and are thus highly likely to abort another female fetus. The sex ratio for second births in China duly became more normal. But, as Monica Das Gupta of the University of Maryland, an expert on the subject, points out, some Chinese couples simply moved to sex-selecting in the first pregnancy. + +Ms Das Gupta thinks that urbanisation is a more powerful force for change. A city-dwelling couple might be teased by neighbours for having only girls, but that is nothing compared with the pressure heaped on villagers by clan patriarchs and matriarchs. And young city-dwellers tend to live apart from their parents, which removes one reason for preferring sons. Now that children tend to support their parents by sending money, daughters are just as good. Urbanites have access to the latest medical technology, but they seem less keen on using it. + +As urban women grow more independent and more valuable to their parents, rural men are struggling. Years of skewed sex ratios mean there are already too many would-be grooms for every village bride. Worse, the women they might marry often head for cities, where they can find better husbands. “There’s an awareness that life is not great for males,” says Therese Hesketh of University College London, who follows sex ratios in China. + +Indeed, rural Chinese men increasingly look like burdens on their parents. A remarkable paper by Shang-Jin Wei and Xiaobo Zhang shows that parents of sons in districts with high sex imbalances tend to save large amounts of money, fearing that they will have to splash out on houses, consumer goods and weddings if they are to snag a local girl. This effect is so strong, the authors calculate, that it explains about half the increase in China’s household savings rate between 1990 and 2007. + +Spying a coming social catastrophe, governments have tried to cajole citizens into prizing girls by putting up posters or even offering them money. They might have changed a few minds. But officials have often muddled their message. Under China’s one-child policy, for example, couples who gave birth to a girl were often allowed to have a second child, implying that the state felt sorry for those who had failed to produce a boy. But where governments have been confused and half-hearted about the worth of girls, popular culture has been loud and insistent. + +TV is good for you + +For sheer attention-grabbing power, nothing beats TV in India. One study found that 51% of women in Kurukshetra, a district in the state of Haryana, had seen a soap opera called “Na Aana Is Des Laado” (Don’t Come To This Country, Beloved Daughter). That soap revolves around female infanticide: in one episode, a father murders his baby daughter by drowning her in milk. By contrast, just 5% of women in the district had seen a film produced by the government about the equality of boys and girls, and less than 1% had heard about the subject from religious leaders. + +“TV is not just entertainment—it is a big source of education,” says Purnendu Shekhar, a writer of soap operas. One of his soaps, “Balika Vadhu” (Child Bride), is about the evil of child marriage. Mr Shekhar thinks the show changed attitudes, and it certainly entertained the country. “Balika Vadhu” ran daily for eight years, ending last July, and has also been popular in Vietnam. He believes even conventional soaps, which tend to hinge on conflicts between women and their mothers-in-law and dial all emotions up to 11, get viewers used to the idea of powerful women. “Stories with strong male protagonists do not work in India,” he says. + +Studies of India have shown that TV-watching is associated with reduced preference for sons, even after controlling for wealth and other factors. That might seem implausible. But remember that Indians often distrust politicians and public officials, says Shoma Munshi, an expert on Indian soap operas. They are at least as willing to listen to actors. That is why TV and film stars often become politicians, or are used to front public-health campaigns. + +Sex ratios remain highly unbalanced in many countries. But there is an important difference between a giant social problem and an endless one, and gendercide now looks like an example of the former. Mr Guilmoto believes that sex ratios will continue to normalise until they return to natural levels. Asia has engaged in a demographic experiment with disastrous consequences. It will surely not repeat it. + + + +This article appeared in the International section of the print edition under the headline “Boy trouble” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21714981-how-one-worlds-great-social-problems-solving-itself-war-baby-girls-winds/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Prizing daughters + + +How South Korea learned to love baby girls + + +Aborting girls simply because they are girls has become unthinkable + + +Jan 21st 2017 | SEOUL + + + + + +“I CRIED when I heard,” writes one blogger, recalling the moment she learned that her baby was a boy. Those were bitter tears. The woman was “so envious” of a mother who had just given birth to a daughter. She was not at all unusual. South Koreans of reproductive age now prefer girls to boys (see chart). They have created a new term, “ddalbabo”—“daughter crazy”—for men who go loopy over their female offspring. + +Until the early 20th century failure to bear a son was grounds for divorce. Koreans greatly preferred boys, who could not only support their parents financially but also carry out ancestral rites. When ultrasound technology became widespread in the 1980s, many South Koreans used it to detect female fetuses and then have them aborted. Sex ratios became skewed. In 1992 twice as many fourth babies were boys as were girls. + + + +In response to these trends the South Korean government made it illegal for doctors to reveal the sex of a fetus. It produced pro-girl slogans: “There is no envy for ten sons when you have one well-raised daughter.” + +That may have helped, but not as much as economic change. Following the Asian financial crisis of 1997, many women took part-time jobs to supplement the family income. Parents noticed, and began to invest more heavily in educating girls. In 2015 three-quarters of South Korean female secondary-schoolers went to university, compared with two-thirds of their male peers. + +Aborting girls simply because they are girls has become so unthinkable that the law has been relaxed. Since 2009 expectant parents have been allowed to know the sex of their baby after 32 weeks’ gestation. Many will have found out before, from doctors who trust that parents’ attitudes have changed. + + + +This article appeared in the International section of the print edition under the headline “Like father, like daughter” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/international/21714982-aborting-girls-simply-because-they-are-girls-has-become-unthinkable-how-south-korea-learned/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Business + + +Cigarette companies: Plucky strike [Fri, 20 Jan 04:41] + +Fiat Chrysler: Gas puzzlers [Fri, 20 Jan 04:41] + +Samsung: Heir of disapproval [Fri, 20 Jan 04:41] + +French and Italian firms: Into the frame [Fri, 20 Jan 04:41] + +Rolls-Royce: Weathering the storm [Fri, 20 Jan 04:41] + +Information technology: Reboot [Fri, 20 Jan 04:41] + +Tata Sons: Chandra’s challenge [Fri, 20 Jan 04:41] + +Schumpeter: Six sects of shareholder value [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Plucky strike + + +A merger is the latest sign of Big Tobacco’s resilience + + +BAT already owns 42% of Reynolds. Now it is buying the rest + + +Jan 21st 2017 | NEW YORK + + + + + +BRITISH AMERICAN TOBACCO (BAT) announced on January 17th a final deal to buy Reynolds American for $49bn. BAT already owns 42% of Reynolds; buying the rest of it will create the world’s largest listed tobacco company by sales and profits. It will peddle brands such as Dunhill, Camel and Newport. The casual observer might imagine the deal to be a frantic bid to revive an ailing industry. On the contrary. Cigarettes may kill you, but the big companies that make them are rather healthy. + +That is despite a decline in smoking rates. In 2015 just over a fifth of adults smoked, estimates the World Health Organisation, down from almost a quarter ten years earlier. This drop hardly helps companies, but it isn’t ruinous either. + + + + + +Smoking is still popular in certain spots. More than three-quarters of men light up in Indonesia, for example. The habit is becoming more common among men in Africa and the eastern Mediterranean (see chart). And though global smoking rates have fallen, population growth means that about 1.1bn people still smoke, roughly as many as did in 2005. This, combined with rising prices, means that the value of retail sales jumped by 29% in the decade to 2015, according to Euromonitor, a data firm. + +The gravest threat to big cigarette makers comes from rivals. Indeed, this week’s deal increases the chance that Altria, which sells Marlboro in America, will be bought by Philip Morris International, which sells Marlboro elsewhere and is the industry’s leader to date—a scary prospect even for a merged BAT and Reynolds. + +Regardless of whether their rivals’ deal proceeds, the merger of BAT and Reynolds has clear logic. The firms claim it could save at least $400m each year. Reynolds will also give BAT access to America, a market that once looked repulsively litigious but now seems stable. Companies still operate under a vast settlement reached with American states in 1998, but separate class-action suits have turned out to be less costly than feared. + + + +New regulations have not snuffed out tobacco firms, either. Countries have passed a battery of laws to fight smoking, including taxes and bans on advertising and on smoking in pubs. Tobacco companies have fought these ferociously, suing countries such as Australia for prohibiting logos on cigarette packs, for example. But some rules had hidden benefits. Bans on advertising lower marketing costs and make it harder for young upstarts to challenge established brands. + +Electronic cigarettes would seem another existential threat. But they increasingly appear to be an opportunity. Large tobacco firms are investing in such “reduced-risk” products, as they term them. New requirements for e-cigarettes in Europe and America, finalised last year, may also hinder smaller companies’ ability to innovate. That could help Big Tobacco gain even greater market share: large firms may be the only ones with resources to navigate complex rules. + +Companies are particularly bullish on new products that heat tobacco, without burning it. These gadgets are more satisfying to smokers than e-cigarettes, which contain nicotine but no tobacco, so may encourage more smokers to switch. Cigarette executives claim that would be a health boon: just heating tobacco avoids much of the nasty stuff that comes with combustion. + +Less encouraging for health is the prospect that some smokers might switch to the new products rather than give up tobacco completely. For years companies have sold to a shrinking share of the population. If enough would-be quitters switch to “safer” cigarettes instead, firms could slow or even reverse what had seemed a permanent downward trend. Far from fading away, Big Tobacco might be on the verge of a new boom. + +If so, the company formed by BAT and Reynolds stands to gain, as it will combine the two firms’ research into reduced-risk products. That will help it compete against Philip Morris, which has spent nearly twice as much on research as BAT. Philip Morris is now seeking approval in America to market its heated tobacco product as safer than traditional cigarettes; it submitted its application to American regulators in December. The firm already reckons the product might add $1bn in profit by 2020. André Calantzopoulos, Philip Morris’s chief executive, describes a possible future in which his giant cigarette company phases out cigarette sales. + +Many health advocates view such declarations sceptically. For now, combustible products still account for almost all of cigarette firms’ revenue. And tobacco remains responsible for more than one in nine of all adult deaths. + + + + + +This article appeared in the Business section of the print edition under the headline “Plucky strike” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21714979-bat-already-owns-42-reynolds-now-it-buying-rest/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Gas puzzlers + + +American regulators investigate Fiat Chrysler for emissions cheating + + +The Italian-American carmaker is in regulators’ headlights + + +Jan 21st 2017 + +An exhausting process + + + +THE priorities of America’s Environmental Protection Agency (EPA) will doubtless change under Donald Trump. Mr Trump may well relax emissions rules for carmakers in return for concessions, such as keeping production in America rather than relocating to Mexico or other lower-cost countries. So it is perhaps no coincidence that on January 12th, before conditions change, the agency took action against Fiat Chrysler Automobile. It accused FCA (whose chairman, John Elkann, sits on the board of The Economist’s parent company) of using software in 104,000 Dodge pickups and Jeeps that allowed them to exceed legal limits on toxic emissions of nitrogen-oxide (NOx) gases from their diesel engines. + +Nervous investors feared a repeat of the huge penalty imposed on Germany’s Volkswagen (VW) for cheating American emissions laws. FCA’s shares plummeted by 16%, though they have since recovered slightly. A day earlier VW had agreed to pay a criminal fine of $4.3bn for selling around 500,000 cars in America fitted with so-called “defeat devices” designed to reduce NOx emissions under test conditions. That pushes its total bill for the scandal above $20bn. If FCA were fined on the same basis it would have to pay over $4bn. + + + +Yet the Italian-American carmaker may not suffer so severely. VW admitted that it had employed an illegal defeat device. FCA’s engines used undisclosed software that, under some circumstances, alters the characteristics of emissions controls to exceed NOx limits. Crucially, however, the EPA has not determined whether these bits of software constitute a defeat device. Failure to disclose this type of software also breaks the rules, however. The firm must now demonstrate that it is not illegal. Important to its argument will be the fact that excessive emissions are permitted for limited periods, in circumstances where the engine may be damaged without allowing them, such as cold-weather starts. + +Any wrongdoing is strongly denied by the company. Its chief executive, Sergio Marchionne, suggested that anyone drawing parallels with the VW scandal was “smoking something illegal”. He called the dispute a “difference of opinion” over whether the engine’s “calibrations met the regulations”, insisting that FCA “may be technically deficient but not immoral”. The complexities mean it will be hard to prosecute. If FCA is right it can expect a fine but nothing as severe as VW’s punishment. + +The Italian-American carmaker is also in the firing line in Europe. A spat with Germany’s regulators has intensified. In April German authorities concluded that emissions controls were timed to turn down after 22 minutes of the engine starting in some of FCA’s cars. Europe’s test cycle lasts around 20 minutes. Italy’s testing agency, which certifies the cars for the European market, dismissed the complaints, saying it was part of a “modulation” of the controls designed to protect the engine. Yet on January 15th Germany’s transport minister insisted that it amounted to an “illegal shut-off device” and said the cars should be withdrawn for sale. + +FCA is not alone. A day after the EPA announced its investigation of FCA, French prosecutors said that they were probing Renault over abnormally high emissions from some of its diesel engines. The French carmaker’s shares also dipped, but by only 6% and have since rebounded slightly too. Europe’s watchdogs are much less of a threat than the EPA, largely because the continent’s emissions rules are open to rather wide interpretation. Indeed, VW has reached the conclusion that its “defeat device” does not actually contravene European regulations. + +Many diesels emit far more noxious gases than under test conditions. Transport & Environment, an NGO based in Brussels, reckons that new models from the worst offenders produce on average 15 times more NOx on the road than when tested. Enforcement, however, is almost non-existent in Europe and no penalties have ever been issued for carmakers contravening emissions rules. The EU is beefing up its testing system but there will still be lots of grey areas for carmakers to exploit. + +FCA’s biggest worry, therefore, remains the EPA. Even in the worst case—ie, its software is deemed a defeat device—a fine exceeding $4 billion would not “break its neck in the current environment”, explains Patrick Hummel of UBS, a bank. But it would scupper Mr Marchionne’s target of shedding debt and having cash in the bank by 2018 in order to weather any downturn in the global car market, now widely assumed to be at a peak. It would also complicate any attempts to merge with a big carmaker, another of his ambitions, even if he can find a willing partner. Emissions can have far-reaching consequences. + + + +This article appeared in the Business section of the print edition under the headline “Gas puzzlers” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21714989-italian-american-carmaker-regulators-headlights-american-regulators-investigate-fiat/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Heir of disapproval + + +Lee Jae-yong dodges arrest on charges of bribery + + +Investors have stayed cool despite the probe into Samsung + + +Jan 21st 2017 | SEOUL + + + + + +THE deal which did most to secure Lee Jae-yong’s control over South Korea’s biggest conglomerate threatened this week to ruin him. On January 16th special prosecutors accused Mr Lee, the only son of Samsung’s chairman, Lee Kun-hee, of bribery, embezzlement and perjury. But three days later a court rejected a request to arrest him, as a suspect in an investigation into a vast influence-peddling case that led last month to the South Korean president’s impeachment. It saw “no reasonable grounds” to detain him while prosecutors pursue their probe. + +For now, the result is a victory for Samsung. Prosecutors had accused Mr Lee of paying 43bn won ($36m) into sports and cultural organisations controlled by Choi Soon-sil, a former confidante of Park Geun-hye, the president: the biggest-ever sum in a South Korean bribery charge. In return for that grant, they allege, Samsung secured government support for a controversial $8bn merger of two affiliates—Cheil Industries, the group’s de facto holding company, and Samsung C&T, its construction arm—in July 2015. That support, they say, came from a vote cast by the state-run National Pension Service (NPS), the single biggest shareholder in C&T. (The head of the NPS, who has admitted to pushing the fund into backing the merger when he was health minister, was recently indicted.) + + + +During intense questioning by MPs and prosecutors—including one 22-hour stretch—Mr Lee has said he provided the funds, but denies any bribery. At the time of the merger, advisory firms such as ISS urged shareholders to reject the deal because of a big discrepancy in the two firms’ valuations. Because it went ahead, Mr Lee was able to gain large stakes in key affiliates at no extra cost through the group’s complex web of cross-shareholdings—smoothing an eventual takeover from his father, who has been in hospital for nearly three years since a heart attack. + +Legal experts say that the decision by the court, which deemed that the evidence for bribery was not persuasive enough to detain Mr Lee before any official charge was made, may yet propel prosecutors to strengthen their case. The charge, linking a corporate “princeling” to the president, is unprecedented, says Chung Sun-sup of Chaebul.com, a corporate watchdog based in Seoul, the capital. It came despite the fact that collusion between the state and its chaebol, the large conglomerates behind South Korea’s economic boom, has long been tolerated. + +Nowhere has that collusion been clearer than in the circus of corporate pardons: the elder Mr Lee was convicted of bribing politicians in 1996, and of tax evasion in 2008, but spent no time in prison. The miscreant bosses of CJ, Hanhwa, Hyundai and SK, other chaebol, have all been sentenced to prison in the past decade. Each has also been pardoned, supposedly because of the importance of their firms to the economy. (Samsung alone accounts for one-fifth of South Korean exports and is the country’s biggest employer.) + +Research by Sustinvest, a proxy advisory firm, suggests that argument is dud: the performance of chaebol whose owner-families have done stints in prison is usually unharmed. Lawyers for a Democratic Society, an activist group in Seoul, says that “the law has once again knelt before the wealthy”. Lee Sung-bo, formerly head of Korea’s anti-corruption and civil-rights agency, says citizens often misunderstand pre-charge arrests as a punishment. + + + + + +The prosecution says that it will carry on its investigation “unshaken” by the court’s decision. Investors seem unruffled too: they are happy with the recent stellar performance of Samsung Electronics, the crown jewel of the group (see chart), whose share price has stayed steady throughout the twists and turns of the probe. Despite quarterly losses estimated at over 2trn won after a recall last year of faulty devices, Samsung Electronics expects fourth-quarter profit, out on January 24th, to be 9.2trn won: its best performance in three years. Revived global demand for chips and screens that use OLED (organic light-emitting diode), of which Samsung Electronics produces more than any other firm, are buoying up the firm. + +When the division announced in November that it would boost dividends and consider moving to a holding-company structure, its shares rose to a 40-year high on the expectation of more transparency in its Byzantine workings. A watcher at a foreign bank in Seoul says that the corruption probe, whatever its outcome, will help to speed up governance reform at the group: in a televised hearing last month, Mr Lee said Samsung should have set a better example. + +The firm’s image is at stake. South Koreans are fed up with the culture of impunity at its chaebol; many will see the court’s decision as leniency towards them. In a recent poll, 70% thought their third-generation heirs were unfit to lead firms run to global standards. Mr Lee is trying to burnish his credentials to be the face of Samsung for the next three decades, says Mr Chung. At the moment, his image is too often used for the wrong reasons. + + + +This article appeared in the Business section of the print edition under the headline “Heir of disapproval” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21715037-investors-have-stayed-cool-despite-probe-samsung-lee-jae-yong-dodges-arrest-charges/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Into the frame + + +A continental merger between Luxottica and Essilor fits a pattern + + +Italian business leaders fret about French firms plucking control of local firms + + +Jan 21st 2017 | PARIS + +An eye-catching opportunity + + + +IT MAY be an exaggeration to talk of French firms “colonising” corporate Italy. Some Italian business leaders nonetheless fret about expansionists from across the northern border plucking control of some of their most celebrated local firms. Family-run companies, especially, can make tempting prospects: ones that make excellent products but struggle to grow, or that face agonising succession problems, are notably juicy targets. + +The latest example, announced this week, is the merger between Luxottica, an Italian maker of fancy specs, and Essilor, a spiffy French producer of lenses. Together they will produce an entity with a market value of at least €46bn ($49bn), 140,000 staff and annual revenues of €15bn. The deal, one of the largest cross-border tie-ups attempted by European firms, had long been expected by industry watchers. The idea is to produce an entity that combines Italian style and skills in marketing with deft French engineering. + + + +The new firm will be listed on the Paris bourse (as probably its eighth-largest firm) later this year. That will mark the culmination of a long campaign by Essilor to arrange a merger. The founder and owner of Luxottica, Leonardo Del Vecchio, now 81 years old, had long resisted. But he now gushes that “two products which are naturally complementary, namely frames and lenses, will be designed, manufactured and distributed under the same roof.” + +His change of heart may stem from the problem of arranging for a successor. The company he founded in 1961 is widely lauded and owns global brands such as Ray Ban, Oakley and Sunglass Hut. Mr Del Vecchio himself rose from poverty (he spent some of his childhood in an orphanage) to become Italy’s second-richest man, worth some €20bn. Yet for all his strengths, he could not foster a strong alternative leader and would not let any of his children (from various marriages) become managers. Colleagues felt squeezed out, seeing the boss as reluctant to delegate. One ex-employee says “90% of top management” abandoned the company in recent years. + +The deal with Essilor is thus a way out, even if Mr Del Vecchio is not stepping down yet. Through his family trust, Delfin, he will be the largest shareholder in the merged entity (potentially with 38% of it) and its “executive chairman and chief executive” for the next few years. But Essilor’s boss, Hubert Sagnières, who is 61 and will share equal managerial duties of the new entity, looks well placed to take charge once Mr Del Vecchio retires. + +Building a bigger company looks possible. Some savings will come from knitting two teams of managers together. The global eyewear market, already worth some €90bn, is alluring. It is expected to grow as cohorts of middle-class consumers in Asia, especially, find they need eyesight correction and develop a liking for specs as accessories or protection against ultraviolet rays. + +An amicable merger hardly ranks as a French assault on Italy. But it does come in the context of other Franco-Italian tie-ups. In luxury goods, for example, French conglomerates with deep pockets, notably LVMH and Kering, have been acquiring smaller Italian rivals for years. French firms first grew faster by attending to flourishing markets for accessories such as handbags. Then they paid handsomely to take over prominent Italian brands, including Gucci, Bulgari and Fendi. + +The French are active in other sectors, too. Vincent Bolloré, a swaggering billionaire who is determined to grow in Italy, last year led his firm, Vivendi, to buy nearly a quarter of Telecom Italia. (Unconfirmed rumours say he might sell to another French operator, Orange.) The daring Frenchman is also pushing Vivendi in a second bold bid, for Mediaset, a company in which Silvio Berlusconi, a former Italian prime minister, and his family are the biggest owners. Vivendi now owns nearly 29% of Mediaset. + +In retailing, too, a pair of French supermarket chains, Auchan and Carrefour, together operate more than 2,000 supermarkets in Italy’s unusually fragmented industry. Given that many businesses in Italy are run by ageing, first-generation founders with no clear plan for succession, more targets are bound to attract buyers from its neighbour to the north. + + + +This article appeared in the Business section of the print edition under the headline “Into the frame” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21714731-luxottica-and-essilor-will-create-firm-worth-50bn-two-big-european-makers-eyewear/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Weathering the storm + + +A big fine for Rolls-Royce is not its only worry + + +Turbulence at the world’s second-largest engine-maker + + +Jan 21st 2017 | DERBY + + + + + +FOR those who still associate Rolls-Royce with its past as a posh carmaker, its home on a scruffy industrial estate comes as a shock. Yet it is there the engine-maker assembles the Trent XWB, the second-biggest commercial jet engine in the world. Some components are made to a tolerance of 50 microns—the width of a human hair. The job of running the firm is a bit messier. + +On January 16th, in a deal with American, British and Brazilian regulators, Rolls agreed to cough up £671m ($809m) to settle allegations that it had in the past secured sales with bribery. The fine is the largest-ever imposed by Britain on a firm for criminal conduct. But given the wrongdoing the deferred prosecution agreement outlines, the firm got off lightly (the co-operation of the company’s more recent management helped). It admitted a dozen counts of corruption and bribery in seven countries, spanning decades. This included giving officials money, hotel stays and even a luxury Rolls-Royce car to secure engine sales. Rolls has since cut its use of the freewheeling third-party consultants who got the company in trouble, and promises better oversight of all staff. If it errs again, the firm will be prosecuted for the original charges. + + + +The settlement puts one source of concern to bed: shares in Rolls surged the following day. But investors have other, less tractable worries. Despite bulging order-books the engine-maker has been struggling to make any money. + +The last three years have been fraught financially. In 2014 and 2015 Rolls issued five profit warnings in quick succession, halving the firm’s share price. Last February it was humiliatingly forced to cut its dividend in two—the first such paring for more than 24 years. Next month, it is expected to reveal that profits fell from £1.6bn in 2014 to just £680m in 2016. The fine—of which £293m will be paid this year—may prevent Rolls from meeting financial targets in 2017. + +By rights, Rolls should be raking it in. The market for passenger jets, the engines for which make up more than half of the company’s revenues, is flying at full throttle. On January 11th Airbus revealed it had built a record 688 planes last year; Boeing a whopping 748. Orders are also solid. As engines represent a third of the price tag of a new jet, some analysts reckon that engine-makers will sell more than $1 trillion over the next two decades. + +But Rolls has been badly buffeted by simultaneous downturns in many of its other businesses. Both its main engine-making rivals, GE and UTC, are huge conglomerates, and churn out other products that can make up the shortfall; Rolls is more exposed. Defence cuts have hit demand for its military-jet engines. Low oil prices hurt sales of its power-generation turbines and marine engines. As a result, several investors have said it should sell off its non-aerospace divisions and focus on jet engines, which are largely responsible for the thickness of its £80bn order-book. + +To tackle its problems, the engine-maker lured Warren East out of retirement in 2015 to turn the firm around. A former boss of ARM, a British chipmaker, he transformed the middling startup into a world-beating tech giant. It was sold last year to SoftBank of Japan for £24bn. The new boss reckons that selling off Rolls’s non-aerospace businesses is unwise. In November he revealed that the firm’s accounting practices had been flattering the performance of its civil-aerospace engines for many years. Instead of the £800m in profit declared for 2015, that division probably made a small loss. + +Engine revamp + +Rolls wants growth to fill that hole. It plans to double production to 600 engines a year by 2020—the fastest increase to date in its history. The boost will increase the firm’s economies of scale in its factories. And the more of its engines that are installed, the more in profit that can come from servicing them over the next decade, explains Eric Schulz, the boss of Rolls’s civil-aerospace business. Each engine brings in four times as much revenue from maintenance over its lifetime as from its original sale. Cost-cutting is under way to try and pay for the production boost. The firm currently makes an initial loss of up to £2m on each and every engine it sells. More than 4,000 jobs have been culled (nearly a tenth of its workforce) and a third of cost centres have been eliminated. + +Mr East says the cuts are ahead of schedule. But other challenges lie ahead. Brexit is one. The falling value of the pound since June has reduced its assembly costs in Britain, but leaving Europe’s single market will disrupt its international supply chain. Many analysts also question the firm’s decision in 2011 to exit the faster-growing engine market for short-haul planes. Mr East hopes Rolls can consider re-entering this segment in the 2020s with the cash generated by servicing the engines it is currently building. + +Although reliance on investment today for profits tomorrow has been compared to a startup’s business plan, investors seem to believe in Mr East’s strategy, says Sandy Morris at Jefferies, a bank. But if Rolls fails to generate the cash for Mr East’s visions, recovery will be hard to engineer. + + + +This article appeared in the Business section of the print edition under the headline “Weathering the storm” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21715001-turbulence-worlds-second-largest-engine-maker-big-fine-rolls-royce-not-its-only/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Reboot + + +Indian outsourcing specialists must reboot their strategies + + +IT firms need an upgrade in the face of technological and political shifts + + +Jan 21st 2017 | Mumbai + + + + + +COMPUTERS slow as they age, and before long must be replaced by newer models. Something similar is true of the business models of Indian IT firms. Specialised in running global companies’ outsourced back-offices, the likes of Infosys, Wipro and Tata Consultancy Services (TCS) used to be national champions growing at double-digit rates. Their prospects have dimmed of late; an entire industry built on the back of globalisation is fretting about the incoming American president. But Donald Trump is merely the latest threat to their operating systems. + +Over three decades, Indian IT has become a $140bn industry built on a simple proposition: rich-country companies could trim costs by getting tedious behind-the-scenes IT work done by cheap engineers in India. The Indian firms hoovered up bright graduates—the big three have over 700,000 employees in total—paying them starting salaries of $5,000 or so, a decent local wage. After gaining some experience, tens of thousands were dispatched to client sites in Europe or America, along with a few expensive local staff. The rest ensured their clients’ computer systems kept ticking over from cosy cubicles in Bangalore, Hyderabad and elsewhere. + + + +Growth spurts and stalls are nothing new for the trio, the most international of dozens of Indian IT firms (American and European companies such as IBM, Accenture and Capgemini have large Indian presences, too). Their prospects are ultimately tied to the sluggish rich-world economies of their clients: America makes up over half of Indian IT sales, Europe a quarter. Banks and insurance companies, the biggest customers, have been in penny-pinching mode of late; ditto energy companies struck by falling oil prices. + +But what felt like cyclical softness looks increasingly like it is being compounded by structural decline. Dollar-denominated growth rates have oscillated but clearly trended downwards and are now firmly in the single digits (see chart). Margins of over 20% are coming under pressure, even after a sustained fall in the rupee against the dollar increased the cost advantage of earning in America and paying staff in India. + + + + + +There is still plenty of the $900bn global IT services budget for them to capture. But some headwinds now look like they will endure. Mr Trump’s swearing-in is the most immediate concern. The incoming president has railed against certain visas for skilled workers, many of which are gobbled up by Indian IT firms to send staff on stints to America. A proposal to hike the minimum salaries to qualify for such schemes from $60,000 to $100,000 would make many postings uneconomical. + +That would mean replacing Indian expats to America with locals, especially if the cap for the number of new visas is lowered from the existing 65,000 a year. Add in higher visa-application fees for large-scale labour importers, and that might trim up to five percentage points from IT companies’ margins, analysts think. Fuzzy talk of an “outsourcing tax” will in any case hardly encourage IT procurement managers to look overseas. + +Changes in how clients think about technology is a bigger worry for Indian IT firms. Budgets globally are growing steadily, at about 3% a year reckons Gartner, a research outfit. But an increasing amount of the money is spent on trendy stuff like analytics or the internet of things. Such new “digital” services will rise from a tenth of total IT spending in 2014 to over a third in 2020 according to McKinsey, a consultancy. + +IT managers at big firms think they can finance the development of snazzy big-data projects and mobile apps by trimming spending in their existing IT infrastructure, for example by replacing their own data centres (which they pay Indian firms to maintain) with cloud storage (which they do not). And some of the tasks which engineers used to do, such as tailoring software for a client, can now be done by machines. It seems that workers in India’s vast code-writing centres are as much at risk of being made obsolescent by automation as those in factories making cars or shoes. + +Indian firms want to get in on the new digital action, which they think is less likely to be commoditised. But they specialise in fixing problems cheaply, not driving innovation. Devising a mobile-banking app for millennials, say, is a far cry from parsing lines of code for bugs. + +The IT firms know they need to adapt. “We will not survive if we remain in the constricted space of doing as we are told, depending solely on cost arbitrage,” Vishal Sikka, the boss at Infosys, wrote in a recent letter urging staff to shape up. “If we don’t we will be made obsolete by the tidal wave of automation and technology-fuelled transformation that is almost upon us.” + +Please wait, update in progress + +Others have a head start in the race to the sunlit digital uplands. Accenture has digital-services revenue per employee around four times its Indian rivals, points out Vaibhav Dhasmana of Jefferies, a bank. It derives more than a fifth of its revenues from such work. Most Indian firms don’t break out this figure, somewhat tellingly, but it is thought to be in the 10-17% range. + +European and American rivals have heftier consulting arms that can shape companies’ spending. They are eager acquirers of companies, often boutiques that give them skills they cannot develop internally. They spend more on research and development, too: 2% of revenues for Accenture, compared with a mere 0.5-1% of revenues at Indian firms. All this reduces profits: Accenture has margins on earnings before interest and tax of around 15%, not much more than half what Indian firms have traditionally secured. + + + + + +The Indian firms are moving in this direction. All have invested in “platforms” they can sell to more than one client—for example, to analyse social media. But by their own admission progress has been limited. Pivoting towards higher-value offerings requires an overhaul of Indian companies’ past models, not a tweak. The focus must now be on the quality, not the quantity, of employees. Hiring has slowed: in the nine months to end-December 2016, Infosys added 5,700 new staff, compared with 17,000 in the same period a year ago. There are fewer junior engineers—able only to carry out the most routine tasks—and more relatively senior staff as a result (see chart). This middle-age bulge in staffers increases staff costs by 5-7%, says Anantha Narayan of Credit Suisse, a bank. + +All this is happening as Infosys and Wipro are still adapting to a newish generation of professional managers who took over from the entrepreneurs that founded these firms. On January 12th, meanwhile, TCS lost its respected boss, Natarajan Chandrasekaran, who has been tapped to take over the reins at the firm’s parent company (see article). The economics that made Indian IT such a compelling proposition are fading rather than disappearing altogether. But as with computers, it is best to replace an ageing model before it unexpectedly crashes. + + + +This article appeared in the Business section of the print edition under the headline “Reboot” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21714994-it-firms-need-upgrade-face-technological-and-political-shifts-indian-outsourcing/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Chandra’s challenge + + +Old problems await a new boss at Tata + + +The head of Tata Consultancy Services becomes the boss of its parent firm + + +Jan 21st 2017 | Mumbai + + + + + +IT WAS a predictable end to a corporate saga which has been anything but prosaic. On January 12th Natarajan Chandrasekaran, the head of Tata Consultancy Services (TCS), became the boss of Tata Sons, its parent and India’s largest company. Universally known as Chandra, and just as universally respected for helping build up the IT services firm that delivers much of the salt-to-steel conglomerate’s profitability, he now takes on India’s toughest corporate job. + +An internal appointment seemed inevitable. Few expected an outsider after the botched defenestration of Tata’s last boss, Cyrus Mistry, on October 24th. Slighted, and emboldened by his family’s 18% stake, Mr Mistry has had to be eased off the boards of firms operating under the Tata aegis, but of which it is often only a minority shareholder (for now he still sits on the board of Tata Sons). As well as hiring a battalion of lawyers, Mr Mistry has thrown heaps of mud at the group, and particularly at Ratan Tata, the 79-year-old patriarch who seized back the reins from him. Some of it has stuck. + + + +Chandra’s appointment should bring a modicum of peace. As boss of TCS since 2009, he has overseen steady progress, even if the company now faces headwinds. He is a rare boss in India who started off on the shop floor, as a TCS intern three decades ago, rather than being handed the family kingdom. + +But nothing will have prepared Chandra for his new job. From running a single company, he will now have to oversee around 100 businesses that make up the Tata group. Many are faring poorly, notably its European steel unit, an undersized mobile-telephony arm in India, a stalled domestic carmaker, and the struggling global chain of Taj hotels. Chandra has no experience in turning around failing businesses, let alone in any industry outside IT. Worse, he must ensure his old TCS fiefdom, whose day-to-day management he will now give up, continues to generate enough profits to prop up the duds as they are dealt with. + +Mr Mistry complained he was never truly at the helm, and that all his decisions were second-guessed by Mr Tata in his role as chairman of charitable trusts that own two-thirds of the group. He is now contesting the legality of Chandra’s appointment, to boot. The byzantine structure that frustrated him remains in place. Chandra will need the right ideas to get Tata back on an even keel—and the authority to put them into action. + + + +This article appeared in the Business section of the print edition under the headline “Chandra’s challenge” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business/21715000-head-tata-consultancy-services-becomes-boss-its-parent-firm-old-problems-await/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Schumpeter + + +Businesses can and will adapt to the age of populism + + +How executives balance shareholder expectations and social pressures + + +Jan 21st 2017 + + + + + +AS THEY slid down the streets of Davos this week, many executives will have felt a question gnawing in their guts. Who matters most: shareholders or the people? Around the world a revolt seems under way. A growing cohort—perhaps a majority—of citizens want corporations to be cuddlier, invest more at home, pay higher taxes and wages and employ more people, and are voting for politicians who say they will make all that happen. Yet according to law and convention in most rich countries, firms are run in the interest of shareholders, who usually want companies to use every legal means to maximise their profits. + +Naive executives fear that they cannot reconcile these two impulses. Should they fire staff, trim costs and expand abroad—and face the wrath of Donald Trump’s Twitter feed, the disgust of their children and the risk that they’ll be the first against the wall when the revolution comes? Or do they bend to popular opinion and allow profits to fall, inviting the danger that, in the run up to their 2018 annual general meeting, a fund manager from, say, Fidelity or Capital will topple them for underperformance? + + + +Wiser executives know that shareholder value comes in shades of grey. It has been a century since the idea was baked into American law. In 1919 a court ruled that “a business corporation is organised and carried on primarily for the profit of the stockholders.” In the 1990s this view spread to Europe, Asia and Latin America because of reforms to governance laws and the rising clout of institutional investors. But the doctrine is not monolithic. Schumpeter reckons there are six distinct corporate tribes, each with its own interpretation of what shareholder value means. Firms have some flexibility to choose which one they belong to. + +Start at the far right of the spectrum, with the corporate fundamentalists. Boosting their profits and share price—immediately—is their goal. Firms built on these objectives rarely do well for long. Valeant, a Canadian pharmaceutical concern, is an example. In 2011-15 it raised prices, slashed investment, paid little tax and fired staff. By 2016 it faced scandals and its shares fell by 85%. Occasionally firms become so weak that they use fundamentalist tactics, temporarily, to try to restore confidence. IBM is shoring up its stock price with savage cost cuts and share buy-backs. + +Shift a little to the left and there are the corporate toilers. Most Western firms place themselves in this group. They believe in the primacy of shareholder value but are prepared to be more patient. At their best these firms are consistently successful—think of Shell or Intel investing on a ten-year time horizon. + +Corporate oracles, the third group, want to maximise profits within the law, but with a twist. They think the law will evolve with public opinion and so they voluntarily do things today that they may be required to do tomorrow. Most energy firms have become greener to anticipate changing public expectations on pollution and safety. Laggards discover it can be devastating when the rules of capitalism change. Shares of coal and nuclear-energy firms in the rich world have collapsed. Soft-drinks firms may be next, as attitudes and laws about sugar and obesity change. + +Corporate kings are in a luxurious position. They are so successful at creating shareholder value that they have a licence to ignore it periodically. In July Jamie Dimon, the boss of JPMorgan Chase, now the world’s most valuable bank, gave its lowest-paid staff a pay rise, “because it enables more people to begin to share in the rewards of economic growth”. Paul Polman describes Unilever, the consumer-goods firm he runs, as a non-governmental organisation committed to cutting poverty. He can do so only because Unilever makes a stonking return on equity (ROE) of 34%. + +Outside Western boardrooms, the most common sect is the fifth, corporate socialists. These firms are controlled by the state, families or dominant managers. They think that shareholder value is not as important as social objectives such as employment, high pay or cheap products. But they recognise that institutional investors have some legal powers. So profits are set according to an informal quota system—outside shareholders should get the minimum required to avoid a revolt, but no more. China’s state firms together book an ROE of 6-8%. Goldman Sachs is a corporate champagne socialist. It pays its shareholders the least it can get away with and allocates what is left as bonuses for its staff. + +On the far left are the corporate apostates. They are organised in a corporate form but don’t care about shareholders at all. Usually this is a result of political dysfunction. PDVSA, Venezuela’s state oil firm, pays for much of the country’s welfare state and cronyism. Fannie Mae and Freddie Mac, two state-owned American mortgage firms, are run to make cheap loans, not profits. + +Sects change + +Between 1990 and 2007 companies around the world drifted right, towards shareholders. Now in response to populism they may drift back. But don’t expect a governance crisis. The system is adaptable. Carmakers are shifting factories to America; drugs and defence firms may slash prices. All have become oracles. They anticipate that the Trump administration will change rules on tariffs and government procurement that govern their businesses. Shareholders can object only so much. Firms become corporate socialists if they have controlling owners who demand they prioritise social objectives. There is no sign of this yet. + +Many individual firms will still move the other way, towards shareholders. Google is becoming a corporate toiler, not a king, as its growth slows. After its emissions scandal, Volkswagen is dropping its extravagant ways and firing staff. Under its new boss, Tata Group in India will now start to worry about profits as much as nation-building. And in order to revive the economy, Japan’s firms will need to drive their ROE above the present, sluggish 8%. In the contest between shareholders and the people, companies and bosses are caught in the middle. But there are no final victories. Just constant, pragmatic accommodations. + + + +This article appeared in the Business section of the print edition under the headline “Six sects of shareholder value” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21714935-how-executives-balance-shareholder-expectations-and-social-pressures-businesses-can/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Finance and economics + + +Italy’s bank rescue: Saving Siena [Fri, 20 Jan 04:41] + +Finance in Cyprus: Bank from the brink [Fri, 20 Jan 04:41] + +Ukraine’s economy: The other war [Fri, 20 Jan 04:41] + +Buttonwood: Zombies ate our growth [Fri, 20 Jan 04:41] + +Indonesian capital flows: Heavy baggage [Fri, 20 Jan 04:41] + +American financial regulation: Not with a bang [Fri, 20 Jan 04:41] + +Brexit and financial regulation: Lost passports [Fri, 20 Jan 04:41] + +Inequality: A minivan of Mammon [Fri, 20 Jan 04:41] + +Free exchange: Tariff-eyeing policy [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Saving Siena + + +Italy presents the European Union’s new bank-rescue rules with their first big test + + +For Italian banks to turn a page, Monte dei Paschi di Siena must be sorted out + + +Jan 21st 2017 | MILAN + + + + + +ANOTHER blow to national pride: on January 13th DBRS, a Canadian rating agency, downgraded Italy’s sovereign debt, stripping the country of its last A rating. Government bond-yields rose; so will the cost of funding for Italian banks. Erik Nielsen, chief economist of UniCredit, Italy’s biggest lender, calls the extra €5bn ($5.3bn) or so banks will have to put up as collateral for their loans from the European Central Bank (ECB) “immaterial”. Still, it is a burden they could do without. + +Weighing heaviest on bankers’ minds is a planned state rescue of Monte dei Paschi di Siena, now Italy’s fourth-largest lender. A private recapitalisation scheme collapsed in December, prompting it to seek government help. Days earlier, anticipating the plan’s demise, the state had created a €20bn fund to support ailing banks. + + + +Next month Monte dei Paschi’s chief executive, Marco Morelli, will present a new business plan. On January 18th he confirmed to a Senate committee that 500 branches and 2,450 jobs will go within three years. Soon the bank is expected to issue a state-backed bond, for perhaps €1.5bn, to shore up liquidity; it hopes eventually to raise €15bn to replace deposits that bled away last year. Once the plan is out, negotiations between Italy and the European Commission will ensue, over the first state rescue of a big bank since the commission tightened state-aid rules. + +Between 2007 and 2014 the commission approved €5trn-worth of state aid, including guarantees, for banks. Italy’s share was a piffling €130bn. But “bail-in” has since replaced “bail-out”. The Bank Recovery and Resolution Directive, which came fully into force last year, demands that banks receiving state help be put into “resolution”—in effect, bankruptcy. Shareholders and junior creditors cop it, for at least 8% of liabilities, if the state steps in. + +For investors in Monte dei Paschi, the outlook may not be so bleak. The government plans a “precautionary recapitalisation”—allowed by the directive. To qualify, a bank must be solvent; the injection must be on market terms; and the capital must be needed to make up a shortfall identified in a stress test—such as one Monte dei Paschi failed last summer. That would imply “burden-sharing”, converting junior debt to equity, rather than a bail-in. Separately, retail investors who were “mis-sold” subordinated bonds may be compensated. + + + + + +The world’s oldest bank, Monte dei Paschi was founded in 1472 by Sienese magistrates. Its recent history has been an ignoble shambles. With exquisite timing, in 2007 it bought Antonveneta, another Italian bank, from Spain’s Santander for €9bn in cash. Further blunders followed. It has had two capital increases since 2014. In the year to December 23rd, when the private rescue failed and trading was suspended, its share price fell by 88%. + +How much help it needs now remains unclear. The private plan, devised in July, would have stripped out and securitised €27.6bn-worth (gross) of non-performing loans and recapitalised the bank with €5bn. After it failed, the ECB told the bank that its capital shortfall, under an “adverse scenario” in the summer’s stress test, had widened to €8.8bn. But the capital required will depend on Mr Morelli’s revised plan, and in particular on what will be done to clean up bad loans. The conversion of bonds to equity could raise €4bn, but retail investors, who have around €2bn-worth of bonds and are in line for the same value in shares, may then be eligible for compensation. The government’s total bill could amount to around €6bn. + +Pier Carlo Padoan, the finance minister, says the banking system is turning a page. If he is to be proved right, Monte dei Paschi must be sorted out. Yet other signs are encouraging. On January 12th UniCredit’s shareholders approved a €13bn share issue, part of an overdue overhaul. Last year was the first since 2008 in which banks’ total non-performing exposures declined, according to PwC, an accounting firm. ABI, the national banking association, and Cerved, a ratings agency, predict that by 2018 bad loans will almost be back to their pre-crisis level—although that may depend on what happens to Monte dei Paschi. The plan to securitise its portfolio was intended to kick-start a market in duff debt. + +Italy’s fragmented banking industry is also consolidating. The resolution in November 2015 of four tiny banks, in which bondholders were bailed in, caused uproar. Now UBI Banca, the fifth-largest lender, hopes to buy three of the four “good” residual banks for €1. A merger finalised on January 1st created Banco BPM, now Italy’s third-biggest bank. Another is on the horizon, of two Venetian banks. Analysts at Credit Suisse suggest that the government’s €20bn fund should suffice to plug any remaining capital gaps. + +All this is necessary—but not sufficient. Most banks need to slash costs and get rid of dud loans. With interest rates in the cellar, revenue is hard to find. And without stronger growth than Italy’s recent pitiful record, many lenders will find life a grind. Forecasters say GDP will expand by just 0.7% this year and 0.8% next. The vicious cycle will be hard to break. + + + +This article appeared in the Finance and economics section of the print edition under the headline “Saving Siena” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21715008-italian-banks-turn-page-monte-dei-paschi-di-siena-must-be-sorted/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bank of Cyprus + + +The repair job at Cyprus’s biggest lender + + +A bank claws itself back from the brink + + +Jan 21st 2017 + + + + + +THE banking woes of Italy, the euro area’s third-biggest member, pale next to those that, four years ago, plagued Cyprus, its second-smallest. Now there is cause for cautious optimism. This month Bank of Cyprus, the biggest local lender, finished repaying €11.4bn ($12.2bn) of emergency liquidity assistance from the country’s central bank. It followed that by returning to the bond markets, raising €250m in a sale of unsecured notes, albeit with a stiff 9.25% coupon. + +Even better, on January 19th Bank of Cyprus listed on the London Stock Exchange. This, says John Hourican, the chief executive, fulfils a promise to investors in 2014, when the bank raised €1bn of equity, to list on “a liquid, index-driven European exchange”. It is quitting the Athens bourse, now that it “no longer has any business of significance in Greece.” (Its listing in Nicosia remains.) It has also rid itself of operations in Romania, Russia, Serbia and Ukraine. Although its return on equity is still meagre, just 2.7% in the third quarter, its ratio of equity to risk-weighted assets, a key gauge of strength, is respectable enough, at 14.6%. + + + +All this marks a big improvement since 2013, when Cyprus seemed in grave danger of tumbling out of the euro area. Banks closed their doors and capital controls were imposed for the first time in the zone’s existence. The price of a rescue by the IMF and the rest of the currency club was steep. Owners of bonds and uninsured deposits in Bank of Cyprus and its closest rival, Laiki, were “bailed in” (the losers included many Russians). Laiki was wound up, its bad loans were put into a “bad bank” and its good ones and deposits were transferred to Bank of Cyprus. + +The last of the capital controls were lifted in 2015. The economy returned to growth the same year. It managed 2.9% in 2016; Moody’s, a rating agency, expects 2.7% in 2017. But it is still smaller than before the bust. Sustained growth will be needed to grind down Cypriot banks’ worryingly large heap of non-performing loans—which as a share of the total is second only to that of Greek lenders, according to the European Banking Authority (see chart). Progress in recent talks on reunifying the Greek-Cypriot south of the island and the Turkish-Cypriot north, which is recognised only by Turkey, would surely be a boon. + +The bad-loan pile has, however, been shrinking for almost two years. A new foreclosure law, says Mr Hourican, has helped to hasten restructuring, by creating a “credible foreclosure threat”. In the first nine months of 2016 Bank of Cyprus took €900m-worth of property onto its books, at a “sensible” discount, in swaps for defaulted debt; around €170m-worth has been sold. With a bad-loan ratio still over 40%, it has a long way to go. But 2017, at any rate, has begun well. + + + +This article appeared in the Finance and economics section of the print edition under the headline “Bank from the brink” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21715007-bank-claws-itself-back-brink-repair-job-cypruss-biggest-lender/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The other war + + +Ukraine’s conflict with Russia is also financial + + +Russia may extract $3bn from Ukraine + + +Jan 21st 2017 + + + + + +IN THE tense, uncertain days of late 2013, when Ukrainians filled Kyiv’s Independence Square in protest at their government’s turn towards Russia, the then president, Viktor Yanukovych, grabbed a lifeline. To bolster his resolve in resisting the demands of pro-EU protesters, Russia lent Ukraine $3bn in the form of a bond. Mr Yanukovych was subsequently ousted anyway. Russia and Ukraine went to war. The money was never paid back. + +So Russia took legal action against Ukraine. The bond was issued under English law, and a hearing began this week in London. Those on the Ukrainian side say the country has no case to answer. In 2015 a group of creditors agreed to a debt restructuring on favourable terms: Russia refused to take part. And Russia made it harder for Ukraine to repay the bond by annexing Crimea and stoking war in the Donbass region. Moreover, it has fiddled with gas supplies to the country and slapped on trade sanctions. In 2013-15 Ukraine’s GDP dropped by 15%. The purchasing power of ordinary folk has fallen far more. In 2013 eight hryvnias bought one American dollar; it now takes more than 25. + + + +It is not clear, however, that English courts, which pride themselves on their political impartiality, would wish to rule definitively that Russia was responsible for Ukraine’s economic woes. Awkwardly, Ukraine continued to pay interest on the bond in part of 2015, when it was in the depths of recession. And Crimea was reliant on subsidies from the Ukrainian government. So Russia’s annexation, perversely, may have made it easier in some respects for Ukraine to repay the bond. + +The legal spat comes as the Ukrainian economy is looking stronger. The weak hryvnia is helping to lift exports; in October the IMF predicted 2.5% growth in GDP for 2017. A building boom is under way in Kyiv and the shopping malls off Independence Square are now filled with people eating noodles and hamburgers. A few months ago Uber, a car-hailing app, launched in Kyiv. Markets do not seem overly concerned by the prospect of a pro-Russian Donald Trump becoming American president: the hryvnia has weakened only slightly since November. + +Were $3bn eventually extracted from Ukraine as a result of the Russian lawsuit, however, the hryvnia would come under renewed pressure. Repaying Russia would also infuriate ordinary Ukrainians. Already, the next few years look tough. To service other dollar debts Ukraine will have to fork out about $15bn in 2017-20—an amount roughly equivalent to its current reserves of foreign exchange. Should those reserves fall below about $10bn, investors will start to worry about the country’s financial health. Ukraine’s bail-out programme with the IMF, agreed in 2015, should soften the blow, but it is behind schedule. Last year Ukraine received just $1bn in disbursements from the fund. + +Bond repayment or no bond repayment, Ukraine’s economic to-do list is daunting. Far-reaching reforms are needed to stamp out corruption and improve the rule of law. Some progress has been made. The recent nationalisation of the nation’s biggest lender, the struggling PrivatBank, has maintained financial stability, says Tomas Fiala of Dragon Capital, an investment bank based in Kyiv. Raising heavily subsidised gas prices has improved the finances of the state monopoly, Naftogaz. + +These positives aside, however, reform momentum has slowed recently. Hopes that Ukraine’s market for agricultural land would be thrown open to foreign investors have been dashed. Ukraine’s sprawling pension system needs change: spending on public pensions is worth 13% of GDP, extremely high by international standards. + +Popular disillusionment has set in about the government’s reformist zeal. Elena Besedina of the Kyiv School of Economics points out that no big names from the old regime have been thrown in jail for their wrongdoing. GDP per person is less than a tenth of America’s, yet luxury-car dealers and fashion boutiques still do a surprisingly brisk trade. With elections scheduled for 2019, populist vote-winning measures will doubtless be wheeled out. And this time, Russia will not be financing any part of the bill. + + + +This article appeared in the Finance and economics section of the print edition under the headline “The other war” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/business-and-finance/21714931-russia-may-extract-3bn-ukraine-ukraines-conflict-russia-also/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Buttonwood + + +Industrial policies mean cosseting losers as well as picking winners + + +Dawn of the living dead: zombie companies get a new lease on life + + +Jan 21st 2017 + + + + + +EQUITY markets have shrugged off the Brexit and Trump votes. Indices in London and New York have reached new highs. But individual stocks and industries have had the odd wobble, not least when they have been the subject of a hostile tweet from the incoming president. “You’ve been fired at” may turn out to be a dominant meme of the next four years. + +Indeed, what seems to be emerging on both sides of the Atlantic is a new version of industrial policy, in which Brexit negotiations, tax laws and trade talks are used as a way to favour some industries and punish others. And that ought to be cause for real investor concern. + + + +The standard criticism of industrial policy is that it is all about “picking winners”. But the real problem is that it is more about protecting the position of established corporations—cosseting losers, in other words. + +Which companies are most likely to get protected? The obvious answer is incumbent groups that possess lobbying clout. Many companies have expressed concern about Brexit, but it is to Nissan, a Japanese car giant, that the British government has made an undisclosed commitment. Startups are unlikely to be afforded the same courtesy. The danger is that this cements in place the existing structure of the corporate sector and prevents the emergence of more efficient firms that can drive forward productivity improvements. This has been called the “zombie company” phenomenon. + +A new paper* from the OECD finds a link between the proportion of zombie firms surviving in an economy and declining productivity. Specifically, a 3.5% increase in the zombie share is associated with a 1.2% decline in labour productivity across industries. + +The paper defines zombie firms as those aged ten years or older with an interest-coverage ratio (the ratio of operating income to interest expenses) of less than one in each of the preceding three years. In a harsher age, their creditors might have finished them off. But today the zombies shuffle on, discouraging more efficient firms from investing and making it harder for rivals to earn increased profits and gain market share. Worse still, the decline in new business formation may be partly caused by the suffocating impact of zombies. + +Europe, for example, often gets criticised for its economic inflexibility—particularly in the labour market, where the difficulty of firing workers makes companies reluctant to hire them in the first place. But the OECD study suggests that the problem of corporate ossification may be even more widespread. + +The issue may also help to explain why the productivity performance of the global economy has been so disappointing. Figures released by the US Conference Board, a research group, earlier this month showed that total factor productivity (TFP) globally fell in 2015 and had been flat in the previous two years. (TFP is that element of growth that cannot be explained by the use of increased labour or capital.) + +The new versions of industrial policy are likely only to exacerbate this problem. They look worryingly like the “Latin American” model of the 1960s and 1970s (ie, an import-substitution policy). If a company makes an investment decision on the back of a tax break or a threatening presidential tweet, then it is probably not making the most efficient use of its capital. It may seem like good news in the short term for the workers who keep their jobs. But it is not good in the long run. The companies they work for will be less competitive in international markets; and, as consumers, workers will either pay higher prices or buy inferior goods. Instead of an inflexible labour market, you get an inflexible corporate market. + +It all adds up to a double problem for equity investors. For now the market may be benefiting from a couple of sugar highs: in Britain, the impact of a falling pound on the overseas earnings of multinationals; and in America, the hopes for fiscal stimulus and lower corporate taxes. But in the long run, a more interventionist government policy is likely both to weigh on economic growth and to make equities riskier. Who knows, after all, which sectors will fall out of favour? + +Imagine the reaction of investors if left-wing leaders were in charge. If President Bernie Sanders were berating American companies on Twitter, or Jeremy Corbyn was pledging unquantified British government support to manufacturers, markets would be plunging. + +* “The Walking Dead: Zombie Firms and Productivity Performance in OECD Countries” by Mûge Adalet McGowan, Dan Andrews and Valentine Millot + +Economist.com/blogs/buttonwood + + + +This article appeared in the Finance and economics section of the print edition under the headline “Zombies ate our growth” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21714996-dawn-living-dead-zombie-companies-get-new-lease-life-industrial/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Heavy baggage + + +Indonesia, one of five “fragile” emerging markets, looks stronger now + + +Official nervousness is sending the wrong signals + + +Jan 21st 2017 | JAKARTA + + + + + +IN RECENT weeks signs have appeared in the poky arrivals hall at Soekarno-Hatta airport in Jakarta, Indonesia’s capital, exhorting visitors to shun the dollar in the name of national sovereignty. “Use rupiah for all transactions in Indonesia!” travellers are told, as they wait, interminably, at the luggage carousels. That reflects old suspicions of foreign interference in the economy, South-East Asia’s largest, coupled with newer concerns about the currency’s vulnerability to capital flight. + +In 2013, when the Federal Reserve’s “tapering” of its asset purchases led to a 21% slide in the rupiah against the dollar, Indonesia was seen as one of the “fragile five” emerging markets. Of late, anxieties have resurfaced. On December 14th the Fed raised interest rates for the first time in a year. More rises are expected this year. Higher yields in advanced economies draw capital from emerging markets, putting pressure on their currencies. The rupiah fell by 3.7% against the dollar in November, the steepest monthly decline for more than a year, as part of a wider sell-off of emerging-market currencies. + + + +This partly explains why Indonesian officials are so prickly. On January 3rd the finance ministry severed all business ties with J.P. Morgan, after the American investment bank downgraded its view of Indonesian equities to “underweight” following Donald Trump’s election victory. Sri Mulyani Indrawati, the finance minister, said that financial institutions have a responsibility to create positive sentiment. On January 16th J.P. Morgan partially backtracked, shifting to a “neutral” stance and saying the post-election volatility it had feared had “played out”. + +It is not the first time Indonesian officials have penalised banks for their research. In 2015 Bambang Brodjonegoro, Ms Mulyani’s predecessor, memorably told J.P. Morgan analysts responsible for a similarly critical note to do 100 press-ups. Ms Mulyani, however, is widely regarded as the cabinet’s most pro-market member, following a previous, reformist stint as finance minister in 2005-10. Markets rallied when the president, Joko Widodo, brought her back in a reshuffle last July. So her actions took observers aback. + +Indonesia relies on foreign capital to finance a current-account deficit (see chart). Foreign reserves amount to a hefty $116bn, but are among the lowest in Asia relative to the economy’s overall financing needs. Foreigners hold nearly 40% of Indonesia’s local-currency bonds. So it is vulnerable to souring sentiment. + +Still, the economy seems better placed to withstand shocks than a few years ago. The trade surplus rose to $8.8bn last year, the highest level since 2011. Exports are recovering rapidly, boosted by higher prices for coal and other commodities. At 1.8% of GDP, in the most recent quarter the current-account deficit is less than half what it was in 2013. External debt is relatively low. + +Alarmist signs at the airport and lashing out at banks for their research tend to bury rather than highlight such positive indicators. Not for the first time, Indonesian nervousness risks making the country appear weaker than it actually is. + + + +This article appeared in the Finance and economics section of the print edition under the headline “Heavy baggage” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21715015-official-nervousness-sending-wrong-signals-indonesia-one-five-fragile/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Not with a bang + + +Regulatory settlements raise questions about America’s financial markets + + +A series of worrying cases receive worryingly little attention + + +Jan 21st 2017 | NEW YORK + + + + + +THIS week, Credit Suisse and Deutsche Bank became the latest banking giants to finalise multi-billion dollar settlements with American authorities over misdeeds in the mortgage market in the run-up to the financial crisis. But other, less publicised settlements have hissed out of the waning Obama administration like a series of slow punctures: with Moody’s, a leading credit-rating agency; with Citadel Securities, a critical component of America’s equity-trading system; and with the Port Authority of New York and New Jersey. High-profile defendants all, but the most striking characteristic of the deals is how gently their tyres were let down. + +The Moody’s deal, about high ratings accorded securities that crashed during the crisis, was announced late on January 13th, the Friday before a holiday weekend. The other cases were resolved almost as discreetly. Admittedly the amounts involved were comparatively small (Moody’s will pay $864m, Citadel $23m, and the Port Authority a mere $400,000). But the cases were bigger than the numbers suggest. + + + +The Moody’s settlement will inflame suspicions that Wall Street is infested with conflicts of interest. As part of it, the firm admitted that it vitiated its stated standards for evaluating securities in an area where those standards put in question its ability to win business. It could still assert, however, that the “settlement contains no finding of any violation of law.” + +The case involving the Port Authority stems from its failure to provide investors with critical information on the risks of a $2.3bn bond offering. Disclosure violations are not particularly unusual. The penalty, however, surely is. The cost will be levied on the Port Authority itself, which is financed by local taxpayers. No individuals were punished. This, says the Securities and Exchange Commission (SEC), is the first time a municipality admitted wrongdoing in an enforcement action. So it opens the door to further actions against municipalities ever keener to raise debt. + +The Citadel settlement, which was revealed on January 13th, revolved around charges that unfavourable prices were used to consummate trades from retail customers on orders routed from other brokers. Clients, the SEC concludes, were misled. That is a particularly jarring revelation: investors have little or no control over where their trades are filled and little ability to detect such problems on their own. Citadel neither admitted nor denied guilt. + +The business prospects of none of the defendants seem to have suffered much harm from these investigations. Citadel remains a huge factor in its business. The Port Authority keeps borrowing. Moody’s, along with S&P Global Ratings, still dominate their industry, accounting for 84% of all ratings issued in 2015, according to a report issued by the SEC in December. Revenues have kept rising for years. The large agencies have had the heft to comply with a costly regulatory framework imposed after the crisis. Smaller ones struggle. + +It is worth wondering whether these three entities would fare worse if their legal travails were better known. The Port Authority, for example, might be required to disclose its failure prominently on its website, for local residents to see. Similarly, Citadel could be required to note its settlement on trade confirmations sent to clients. And Moody’s could add a footnote to ratings citing its admission. That would be consistent with the original mission of the SEC: to provide relevant, timely information to the market. + + + +This article appeared in the Finance and economics section of the print edition under the headline “Not with a bang” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21715016-series-worrying-cases-receive-worryingly-little-attention-regulatory/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Lost passports + + +How the City of London hopes to navigate a hard Brexit + + +Negotiating a bespoke deal for the City after Brexit will not be easy + + +Jan 21st 2017 + + + + + +THERESA MAY’S speech on January 17th set Britain definitively on a path to a “hard” Brexit, in which it will leave not just the EU but the European single market. This was not what the City of London wanted to hear. The prime minister did at least pick out finance, along with carmaking, as an industry for which “elements of current single-market arrangements” might remain in place as part of a future trade deal. The City is holding out hope that a bespoke deal built on the existing legal concept of “equivalence” could still accord it a fair degree of access to Europe. + +“Passporting”, which allows financial firms in one EU member state automatically to serve customers in the other 27 without setting up local operations, was always going to be difficult after Brexit. Outside the single market, says Damian Carolan of Allen & Overy, a law firm, the “passport as we know it is dead.” Already, two big banks, HSBC and UBS, this week each confirmed plans to move 1,000 jobs from London. + + + +Financial companies all have to firm up their contingency plans. For the City, these focus on so-called “equivalence” provisions, allowing third-country financial firms access to the EU if their home country’s regulatory regime is deemed equivalent. Currently only some regulations, such as those governing clearing houses and securities trading, contain the provisions. Much of finance, notably bank lending and insurance, is not covered. And even where the provisions exist, applying them will, in effect, be a political decision. + +Optimists hope equivalence could not just form the basis of a feasible deal, but might even allow Britain to remove some onerous regulations. Jonathan Herbst of Norton Rose Fulbright, another law firm, notes that precedents exist for “variable geometry” in regulation. For instance, to gain access to American clients, some British clearing houses already submit to partial American regulatory oversight. If they deal in euro-denominated trades, nothing seems to stop them from submitting to, say, direct oversight by the European Central Bank without leaving London. + +Such proposals may be stymied by cold political considerations. Equivalence determinations are at the full discretion of EU regulators, and the status can be withdrawn at short notice. Britain, as a current EU member, starts with identical rules. In a charged political environment, even a small future divergence could be construed as moving away from equivalence. For all the creative solutions proposed by lawyers in London, Europeans are not minded to let Britain off the hook by allowing it easily to “cherry-pick” sectoral carve-outs. Even before the Brexit referendum in June the ECB had sought to move euro clearing into the euro area. + +Yet that is not a reason to dismiss equivalence altogether. It would seem strange, as Mr Herbst points out, to admit Canadian banks into the EU on the back of the recent EU-Canada free-trade deal under better terms than British banks. (Indeed, many Canadian banks have their main European presence in London.) + +Even on clearing, it is more likely that euro-denominated derivatives would move to New York rather than continental Europe. According to Mr Carolan, it would be tricky for the ECB to stop this unless it were to forbid European banks from using non-European clearing houses, which would deprive them of access to liquidity. It might be in the ECB’s interest, then, to agree on a bespoke arrangement on clearing. Other financial-market activities may prove harder nuts to crack—especially if, as seems possible, broader Brexit negotiations descend into acrimony. + + + +This article appeared in the Finance and economics section of the print edition under the headline “Lost passports” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21715038-negotiating-bespoke-deal-city-after-brexit-will-not-be-easy-how-city/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +A minivan of Mammon + + +Are eight men as wealthy as half the world’s population? + + +Oxfam’s headline-grabbing comparison has some flaws + + +Jan 21st 2017 | DAVOS + + + + + +EVERY ten minutes, black Volkswagen shuttle vans ferry delegates from their hotels in Davos, Switzerland, to this year’s World Economic Forum, held from January 17th to 20th. If you could squeeze the world’s eight richest men into one of these vans, they might feel cramped. But they could comfort themselves with an extraordinary statistic: according to Oxfam, a charity, they own as much wealth ($426bn) as half the world’s population combined ($409bn). + +To make this striking calculation, the charity draws on data from Forbes magazine, which lists the wealth of the billionaires, and Credit Suisse, which estimates the smaller holdings of everyone else, thanks to painstaking work by three scholars of wealth, Anthony Shorrocks, Jim Davies and Rodrigo Lluberas. + + + +Pedants can nonetheless criticise Oxfam’s headline-grabbing comparison for its handling of debt, the dollar, labour and data. The world’s least wealthy include over 420m adults whose debts exceed their assets, leaving them with negative net worth. Most of this net debt is owed by people in high-income countries. There are, for example, over 21m Americans with a combined wealth of minus $357bn. Only people with relatively good prospects, by global standards, can be so poor; the wretched of the earth could never borrow so much. If all of the people with sub-zero wealth are excluded from the comparison, the poorest half of the remaining population would have a combined wealth equivalent to the richest 98 billionaires. + +The Credit Suisse team converts the world’s wealth into dollars at market rates. But the dollar stretches further in poor countries. So studies of global poverty typically make currency conversions at “purchasing-power parity” (PPP) instead. Wealth data also exclude the poor’s biggest asset: their labour or “human capital”. The returns on that asset—such as wages—do however appear in income statistics. So whereas the bottom half of the global population have a negligible share of global wealth (only 0.15% at market exchange rates, according to Credit Suisse), they have a bigger share of global income (10.6% at PPP in 2013, the latest number available, according to Christoph Lakner of the World Bank). + +In valuing the poor’s wealth at $409bn, Oxfam also seems to have committed a rounding error. The figure should be just $384bn, according to Mr Shorrocks (although the data are too patchy to allow much precision). For what it’s worth, $384bn is less than the wealth of the world’s seven richest men. There would be no need to squeeze Michael Bloomberg, the world’s eighth-richest person, into the minivan. That would leave room for the magnificent seven to stretch their legs. + + + +This article appeared in the Finance and economics section of the print edition under the headline “A minivan of Mammon” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21715043-oxfams-headline-grabbing-comparison-has-some-flaws-are-eight-men-wealthy-half/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Free exchange + + +Republican tax-reform plans face many hurdles, including Donald Trump + + +Mr Trump will soon have to confront his economic policies’ internal contradictions + + +Jan 21st 2017 + + + + + +AMONG other things, the start of Donald Trump’s presidency this week heralds a collision between campaigning rhetoric and legislative and economic reality. What follows will be a learning experience for all, it is fair to say. Though not perhaps the most consequential of the looming reality checks, the outcome of a brewing debate over a proposed border-adjusted tax plan could prove a taste of things to come. As Mr Trump and his Congress work to make policy, there are many ways for things to go awry. + +Both Mr Trump and congressional Republicans are keen to cut taxes on corporations. America’s inefficient corporate-tax system has remarkably high rates but leaks like a sieve, yielding a pitiful tax take (see chart). As a solution, Mr Trump favours a large cut in the corporate-tax rate, from 35% to 15%, and a chance for companies to repatriate foreign profits at a tax rate of 10%. Paul Ryan, Speaker of the House of Representatives and chief Republican policy wonk, has something very different in mind. + + + +At present American firms are assessed for tax on their global income. This encourages multinationals either to use clever accounting to book profits in foreign subsidiaries, or to “invert”: to relocate their headquarters, at least on paper, to countries with more favourable tax regimes. Mr Ryan’s radical solution is to scrap the tax on corporate income and replace it with a modified value-added tax (VAT). The new tax, assessed at a rate of 20%, would apply to all domestic sales while exempting foreign ones. This “destination-based” system would reduce the incentive to move profits or operations abroad. As is common in VAT systems, the plan includes a border adjustment: imports would be subject to the tax while firms would receive a credit for their exports. And that is where things get tricky. + +Many suppose that a VAT, because of the adjustment, provides the countries which use it with an export advantage. Some Republicans have argued in favour of their reform plan on just those grounds. Imposing a 20% VAT means adding 20% to the price of imports while rebating domestic firms 20% of the value of their exports. The combination of import tax and export subsidy certainly sounds like a boon to exporting firms. Yet economists are practically unanimous in their view that it is not. + +To see why, imagine that Congress were to impose a universal sales tax on all coffee mugs sold in America, regardless of origin. The tax would have no effect on the price of American coffee mugs sold abroad and therefore would not give a boost to exporting American mugmakers. Suppose the tax were then extended to include foreign sales of American mugs. The American tax would then come on top of whatever sales taxes were in place in foreign markets, leaving the American mugs at a significant disadvantage relative to competitors. The rebate paid to exporters is the way the government prevents what is essentially a national sales tax from penalising domestic firms seeking to compete in foreign markets. A value-added tax with border adjustments has no effect on export competitiveness whatsoever. Sad! + +That is not quite the end of the story. Republican leaders do not consider their plan to be a VAT. That is partly because labelling it as such might discomfit rank-and-file Republicans accustomed to seeing VAT as a money-generating machine, fit to support a European-style welfare state. More substantively, Mr Ryan’s reform also exempts labour costs: a practice common in corporate income-tax regimes but not VATs. + +Exempting firms’ wage bills would add an additional subsidy to exporters’ rebates, which might cause the plan to run afoul of the rules of the World Trade Organisation (or at least to attract a challenge from other countries). Still, the effect of the wage exemption is similar to that of a cut in payroll tax. It can hardly be taken as a ham-fisted attempt to sock it to foreign competitors. Perhaps this should come as no surprise. Mr Ryan unveiled his plan in June of last year, long before election day, in a distant past when Republicans were less supportive of trade restrictions. It is tempting to suspect congressional leaders of trying to slip a non-protectionist tax plan past Mr Trump under the cover of “border adjustment” language. + +If so, Mr Trump is on to them. In a recent interview with the Wall Street Journal he criticised the complexity of the plan, adding: “Anytime I hear ‘border adjustment’, I don’t love it.” A more straightforwardly mercantilist policy such as import tariffs might not please him any better, even if he could wring one out of Congress. In a world of flexible exchange rates, policies which reduce demand for foreign goods—and, correspondingly, for foreign currency—generate exchange-rate shifts which offset much of the competitiveness effect. + +We’ve had enough of exports + +Indeed, plans for tariffs could generate a speedy rise in the dollar, squeezing goods exporters before tariffs take effect (and hurting exporters of services who could not expect much help from tariffs in the first place). American exporters would suffer in the short run, and a rising dollar could exacerbate global financial stress. Mr Trump seems to be aware of that threat as well. In the same interview he suggested the time was right for a dollar decline, as the currency’s strength, as he put it, is “killing us”. In this area, as in others, the need to make real-world policy decisions will reveal to Mr Trump previously unappreciated inconsistencies in his policy preferences. + +In practice, the impact that competing Republican tax plans have on exports will be a sideshow. Centre stage will be occupied by other issues: the impact of tax changes on inequality, for example; and separate policy debates such as over the repeal of Obamacare. Overshadowing it all will be the unceasing, stomach-churning drama to be expected in the presidency of Mr Trump. But the tax-policy battle will reveal how well he and Congress can manipulate each other. And it will give a taste of how the president reacts when economies fail to do as they are told. + +Visit our Free exchange economics blog + + + +This article appeared in the Finance and economics section of the print edition under the headline “Tariff-eyeing policy” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/finance-and-economics/21715002-mr-trump-will-soon-have-confront-his-economic-policies-internal/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Science and technology + + +Modelling brains: Does not compute [Fri, 20 Jan 04:41] + +Panda genetics: Hey, dude. Give me six! [Fri, 20 Jan 04:41] + +Solar physics and palaeontology: Set in stone [Fri, 20 Jan 04:41] + +Submarine warfare: Torpedo junction [Fri, 20 Jan 04:41] + +Submarine warfare: The Richard Casement internship [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Through a glass, darkly + + +Testing the methods of neuroscience on computer chips suggests they are wanting + + +A cautionary tale about the promises of modern brain science + + +Jan 21st 2017 + + + + + +NEUROSCIENCE, like many other sciences, has a bottomless appetite for data. Flashy enterprises such as the BRAIN Initiative, announced by Barack Obama in 2013, or the Human Brain Project, approved by the European Union in the same year, aim to analyse the way that thousands or even millions of nerve cells interact in a real brain. The hope is that the torrents of data these schemes generate will contain some crucial nuggets that let neuroscientists get closer to understanding how exactly the brain does what it does. + +But a paper just published in PLOS Computational Biology questions whether more information is the same thing as more understanding. It does so by way of neuroscience’s favourite analogy: comparing the brain to a computer. Like brains, computers process information by shuffling electricity around complicated circuits. Unlike the workings of brains, though, those of computers are understood on every level. + + + +Eric Jonas of the University of California, Berkeley, and Konrad Kording of Northwestern University, in Chicago, who both have backgrounds in neuroscience and electronic engineering, reasoned that a computer was therefore a good way to test the analytical toolkit used by modern neuroscience. Their idea was to see whether applying those techniques to a microprocessor produced information that matched what they already knew to be true about how the chip works. + +Their test subject was the MOS Technology 6502, first produced in 1975 and famous for powering, among other things, early Atari, Apple and Commodore computers. With just 3,510 transistors, the 6502 is simple enough for enthusiasts to have created a simulation that can model the electrical state of every transistor, and the voltage on every one of the thousands of wires connecting those transistors to each other, as the virtual chip runs a particular program. That simulation produces about 1.5 gigabytes of data a second—a large amount, but well within the capabilities of the algorithms currently employed to probe the mysteries of biological brains. + +The chips are down + +One common tactic in brain science is to compare damaged brains with healthy ones. If damage to part of the brain causes predictable changes in behaviour, then researchers can infer what that part of the brain does. In rats, for instance, damaging the hippocampuses—two small, banana-shaped structures buried towards the bottom of the brain—reliably interferes with the creatures’ ability to recognise objects. + +When applied to the chip, though, that method turned up some interesting false positives. The researchers found, for instance, that disabling one particular group of transistors prevented the chip from running the boot-up sequence of “Donkey Kong”—the Nintendo game that introduced Mario the plumber to the world—while preserving its ability to run other games. But it would be a mistake, Dr Jonas points out, to conclude that those transistors were thus uniquely responsible for “Donkey Kong”. The truth is more subtle. They are instead part of a circuit which implements a much more basic computing function that is crucial for loading one piece of software, but not some others. + +Another neuroscientific approach is to look for correlations between the activity of groups of nerve cells and a particular behaviour. Applied to the chip, the researchers’ algorithms found five transistors whose activity was strongly correlated with the brightness of the most recently displayed pixel on the screen. Again, though, that seemingly significant finding was mostly an illusion. Drs Jonas and Kording know that these transistors are not directly involved in drawing pictures on the screen. (In the Atari, that was the job of an entirely different chip, the Television Interface Adaptor.) They are only involved in the trivial sense that they are used by some part of the program which is ultimately deciding what goes on the screen. + +The researchers also analysed the chip’s wiring diagram, something biologists would call its connectome. Feeding this into analytical algorithms yielded lots of superficially impressive data that hinted at the presence of some of the structures which the researchers knew were present within the chip. On closer inspection, though, little of it turned out to be useful. The patterns were a mishmash of unrelated structures that were as misleading as they were illuminating. This fits with the frustrating experience of real neuroscience. Researchers have had a complete connectome of a tiny worm, Caenorhabditis elegans, which has just 302 nerve cells, since 1986. Yet they understand much less about how the creature’s “brain” works than they do about computer chips with millions of times as many components. + +The essential problem, says Dr Jonas, is that the neuroscience techniques failed to find many chip structures that the researchers knew were there, and which are vital for comprehending what is actually going on in it. Chips are made from transistors, which are tiny electronic switches. These are organised into logic gates, which implement simple logical operations. Those gates, in turn, are organised into structures such as adders (which do exactly what their name suggests). An arithmetic logic unit might contain several adders. And so on. + +But inferring the existence of such high-level structures—working out exactly how the mess of electrical currents within the chip gives rise to a cartoon ape throwing barrels at a plumber—is difficult. That is not a problem unique to neuroscience. Dr Jonas draws a comparison with the Human Genome Project, the heroic effort to sequence a complete human genome that finished in 2003. The hope was that this would provide insights into everything from cancer to ageing. But it has proved much more difficult than expected to extract those sorts of revelations from what is, ultimately, just a long string of text written in the four letters of the genetic code. + +Things were not entirely hopeless. The researchers’ algorithms did, for instance, detect the master clock signal, which co-ordinates the operations of different parts of the chip. And some neuroscientists have criticised the paper, arguing that the analogy between chips and brains is not so close that techniques for analysing one should automatically work on the other. + +Gaël Varoquaux, a machine-learning specialist at the Institute for Research in Computer Science and Automation, in France, says that the 6502 in particular is about as different from a brain as it could be. Such primitive chips process information sequentially. Brains (and modern microprocessors) juggle many computations at once. And he points out that, for all its limitations, neuroscience has made real progress. The ins-and-outs of parts of the visual system, for instance, such as how it categorises features like lines and shapes, are reasonably well understood. + +Dr Jonas acknowledges both points. “I don’t want to claim that neuroscience has accomplished nothing!” he says. Instead, he goes back to the analogy with the Human Genome Project. The data it generated, and the reams of extra information churned out by modern, far more capable gene-sequencers, have certainly been useful. But hype-fuelled hopes of an immediate leap in understanding were dashed. Obtaining data is one thing. Working out what they are saying is another. + + + +This article appeared in the Science and technology section of the print edition under the headline “Does not compute” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21714978-cautionary-tale-about-promises-modern-brain-science-testing-methods/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Panda genetics + + +Two strange mammals illuminate the process of natural selection + + +Hey dude. Give me six! + + +Jan 21st 2017 + + + + + +CONVERGENT evolution—the arrival, independently, by different species at the same answer to a question posed by nature—is a topic of great interest to biologists. One aspect of the phenomenon which has not yet been much looked at, however, is its underlying genetics. In particular, an issue not previously addressed is how often such changes arise from similar mutations in the two convergent lines, and how often they have different genetic causes that happen to have similar effects on the organisms’ forms and functions. That has now been rectified by an examination of two creatures which, though only distantly related, share an unusual feeding habit, an unusual anatomical feature and an unusual name: panda. + +The giant panda is a black and white bear. The red panda (pictured above) is related to weasels, raccoons and skunks. Their habitats—mountainous areas of southern China and its neighbours—overlap, but their last common ancestor lived 43m years ago. They do, though, share a limited kinship, for both are members (along with dogs, cats, hyenas, mongooses, seals and so on) of the mammalian order Carnivora. Which is curious, because both are vegetarian. + + + +More intriguing still, both subsist almost entirely on bamboo (some etymologists think their mutual name is derived from the Nepali phrase nigalya ponya, meaning “bamboo-eater”). And most curiously of all, both have a sixth digit on their forepaws—a kind of ancillary thumb derived from one of the bones of the wrist that helps them hold bamboo stalks for consumption. These common features led Hu Yibo of the Institute of Zoology, in Beijing, and his colleagues, to wonder if the two vegetarian carnivores also shared genetic modifications that might explain those features. And, as Dr Hu observes in a paper just published in the Proceedings of the National Academy of Sciences, they do. + +To search for such genetic commonalities, Dr Hu and his colleagues compared the DNA of the two pandas with that of four other members of the Carnivora: polar bears (close relatives of giant pandas), ferrets (close relatives of red pandas), and tigers and dogs (close relatives of neither). If pandas share features of their DNA with each other, but not with the four comparison species, he reasoned, then it is likely that those features encode recent adaptations common to the two of them. + +Altogether, the team identified 70 genes (out of the 20,000 or so that mammals have) which sport bits of DNA that seemed to be shared. They also found ten genes which have been disabled by crippling mutations in both of the pandas, but not in the other four species. Not all of the shared genetic features obviously tied in with the shared peculiarities of pandas, but some did. These fell into three categories: genes affecting anatomy, genes affecting appetite and genes affecting the digestion and metabolism of nutrients. + +The anatomy-related adaptations were those that seemed to control the development of the pandas’ second thumbs. Two genes in particular, DYNC2H1 and pericentrin, have mutations that cause identical changes in each type of panda in the proteins encoded by these genes. In mice, mutations in these genes are known to encourage extra digits to grow, so it is not unreasonable to suspect that they are also the cause of this in pandas. + +The appetite-modifying change involved one of the disabled genes. When working, this gene encodes a protein which forms part of the tongue’s taste buds for umami, a savoury “meatiness” separate from the other four tastes of sweetness, sourness, bitterness and saltiness. Umami perception is stimulated by glutamic acid, one of the 20 amino acids that make up proteins—but one that is more characteristic of animal proteins than plant ones. Sensitivity to umami is valuable to a carnivore but unnecessary (and possibly harmful) to a herbivore. + +The other genetic convergences Dr Hu recorded were related to the digestion and metabolism of substances scarce in, or absent from, bamboo. He and his colleagues noted parallel changes in the genes for three digestive enzymes whose job is to liberate two particular amino acids, lysine and arginine, from proteins. Both lysine and arginine are abundant in meat, but in short supply in bamboo. The team also noted parallel changes in four genes that encode proteins involved in the metabolism of two vitamins, A and B12, and of arachidonic acid, a lipid essential for bodily function. All of these are scarce or non-existent in bamboo as well. Exactly how the genetic changes seen alter the effectiveness of the proteins involved remains to be determined. But the prediction would be that they enhance the availability of the nutrients in question. + +The upshot is that the two pandas do indeed seem to have similar genetics underlying their similar peculiarities. Such similarities are, admittedly, easier to find than different genetic routes to the same outcome would be. But Dr Hu has established that, at least in the case of pandas, natural selection has often taken the same paths to arrive at the same outcomes. + + + +This article appeared in the Science and technology section of the print edition under the headline “Hey, dude. Give me six!” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21714777-what-distantly-related-pandas-reveal-about-genetics-two-strange-mammals-illuminate/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Set in stone + + +An ancient forest reveals the sun’s behaviour 290m years ago + + +The sunspot cycle was little different then from what it is now + + +Jan 21st 2017 + +Down in the forest, something stirred + + + +EVERY 11 years or so, a new sunspot cycle begins. Sunspots are apparent blemishes in the sun’s photosphere, the layer which emits its light. Though still hot (about 3,500°C), they are cooler than their surroundings (about 5,500°C) and thus appear dark by contrast. A cycle starts with spots appearing at mid-latitudes in both northern and southern hemispheres. Over time, the spot-generating areas migrate towards the equator. As they do so, the amount of light and other radiation the sun emits first increases to a maximum and then decreases to a minimum, until the spots vanish and the cycle renews. + +On Earth, the increased illumination of solar maxima drives photosynthesis, and thus plant growth. That permits botanists to use trees’ annual growth rings to work out what sunspot activity was like hundreds, and occasionally thousands, of years ago. Determining solar activity millions of years ago, though, has not been so easy. But it is of interest to solar physicists, who wonder how far back into the past the oscillations of the sun’s magnetic field that drive the cycle go, and how they might have changed over the course of time. + + + +Now, Ludwig Luthardt and Ronny Rössler of the Natural History Museum of Chemnitz, in Germany, have cracked the problem. They have been able to apply the tree-ring method to petrified trunks from a nearby fossil forest. This forest (imagined in an artist’s impression above) was buried by a volcanic eruption 290m years ago, during the Permian period. And, as they report in Geology, Mr Luthardt and Dr Rössler have found that the sunspot cycle was little different then from what it is now. + +The Chemnitz fossil trees, mostly conifers and ferns, are particularly well preserved. Volcanic minerals seeped into them soon after the eruption and petrified them before bacteria and fungi could rot their tissues away. Mr Luthardt and Dr Rössler selected 43 of the largest specimens and looked at their growth rings. + +They found 1,917 rings which were in a good enough state to be measured under a microscope. They knew that the trees had died simultaneously, giving them a baseline to work from, and so were able to compare the rings from different plants. They were stunned by how clearly they could see the cycles. + +About three-quarters of their specimens showed synchronous growth peaks like those caused by modern sunspot activity. In total, the rings they measured let them study 79 years of forest growth before the eruption. During this period, the solar cycle averaged 10.6 years. That compares with 11.2 years in the modern era, although this figure conceals wide variation in the lengths of individual cycles. Within statistical limits, then, it seems that the sunspot cycle was the same in the early Permian as it is now, suggesting that the sun’s magnetic oscillations were the same then as they are at present. Whether that is a coincidence has yet to be determined, but there is no reason why the method Mr Luthardt and Dr Rössler have developed should not be applied to other petrified forests, from different periods, to find out. + + + +This article appeared in the Science and technology section of the print edition under the headline “Set in stone” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21714975-sunspot-cycle-was-little-different-then-what-it-now-ancient-forest/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Torpedo junction + + +A new Russian weapon may give it an underwater advantage + + +The principle of supercavitation continues to intrigue torpedo designers + + +Jan 21st 2017 + + + + + +WHEN introduced 40 years ago, the Soviet Shkval (“Squall”) torpedo was hailed as an “aircraft-carrier killer” because its speed, more than 370kph (200 knots), was four times that of any American rival. The claim was premature. Problems with its design meant Shkval turned out to be less threatening than hoped (or, from a NATO point of view, less dangerous than feared), even though it is still made and deployed. But supercavitation, the principle upon which its speed depends, has continued to intrigue torpedo designers. Now, noises coming out of the Soviet Union’s successor, Russia, are leading some in the West to worry that the country’s engineers have cracked it. + +Life in a bubble + + + +Bubbles of vapour (ie, cavities) form in water wherever there is low pressure, such as on the trailing edges of propeller blades. For engineers, this is usually a problem. In the case of propellers, the cavities erode the blades’ substance. Shkval’s designers, however, sought, by amplifying the phenomenon, to make use of it. They gave their weapon a blunt nose fitted with a flat disc (pictured above) that creates a circular trailing edge as the torpedo moves forward. They also gave it a rocket motor to accelerate it to a speed fast enough for that edge to create a cavity consisting of a single, giant bubble which envelopes the entire torpedo except for the steering fins. + +The result is that most of the torpedo experiences no hydrodynamic drag, greatly enhancing its potential velocity. To take advantage of this it is propelled, when the booster rocket runs out of oomph, by a hydrojet—a motor fuelled by a material, such as magnesium, that will burn in water. + +Shkval’s problems are threefold. First, it has a short range—around 15km compared with around 50km for America’s principal submarine-launched torpedo, the Mk 48. Second, the hydrojet is noisy, so opponents can hear the weapon coming. Third, it cannot track its target. Most torpedoes use sonar to home in on the ship they are intended to sink. Because Shkval travels inside a bubble, any sonar needs to be mounted on the cavitation disc, which is too small for the purpose. In addition, returning sonar pings would be drowned out by the hydrojet’s noise. As a consequence, Shkval’s only guidance is an autopilot which steers it towards the place where its target was located at the moment of launch, in the hope that the target has not moved. + +These deficiencies have not stopped Western countries trying to build supercavitating torpedoes of their own. Diehl, a German firm, announced a programme for such a weapon, Barracuda, in 2004. In 2006 General Dynamics, a big American firm, was commissioned to look into the matter (though its brief did not include the word “torpedo”, referring only to an “undersea transport”) by the country’s Defence Advanced Research Projects Agency. + +The firms’ engineers tried to overcome the guidance problem by developing a new type of cavitator. Rather than a flat disc, General Dynamics’ design had a curved surface, increasing the area available for sonar reception. In addition the sonar’s transmitters, mounted on the torpedo’s steering fins, were separate from the receiver, and the interference caused by engine noise was reduced by special filters. In the end, though, these efforts ran into the sand. Barracuda was never completed. General Dynamics’ project was shelved after a year. American naval research into supercavitation in general ended in 2012, though which particular problems proved insurmountable has never been revealed. + +Russia, though, has not given up on the idea. In October 2016 plans emerged for a new supercavitating torpedo, Khishchnik (“Predator”). Few details have been released, except that the work is being carried out by Elektropribor, a design bureau specialising in high-precision systems for submarines. Combining a General Dynamics-style sonar with a better motor could, however, result in a weapon that the world’s navies would truly have to fear. + +Such a motor is possible, according to Georgiy Savchenko of the Institute of Hydromechanics at Ukraine’s National Academy of Sciences. His supercavitation-research group estimates that with the right fuel (perhaps lithium, which packs more energy per kilogram than magnesium) a new torpedo could have ten times the range of Shkval. It would still be noisy, but, added to its speed, such a combination of range and tracking ability would make it hard to evade. Moreover, there is no theoretical reason why Khishchnik should not travel quite a lot faster than Shkval does. In laboratory tests, supercavitating projectiles have clocked more than 5,000kph. + +Kanyon diabolo + +The supercavitating design being developed for Khishchnik might also feed into the Kanyon project, a giant nuclear-powered torpedo with a nuclear warhead that is intended to attack coastal targets. In what was either a deliberate leak or a piece of disinformation, this project was revealed to the world in 2015 during a televised meeting between Vladimir Putin, Russia’s president, and senior officers of the country’s armed forces. The camera, looking over one of these officers’ shoulders, gave a picture of plans for the putative device, annotated with helpful information such as “speed of travel—185kph”. + +The leaked design did not appear to use supercavitation—but if Kanyon is genuine, then thoughts of adding it cannot have escaped its designers. Even if Kanyon is smoke and mirrors, though, Khishchnik seems real enough. Perhaps, this time, aircraft-carrier skippers should be worried. + + + +This article appeared in the Science and technology section of the print edition under the headline “Torpedo junction” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21714976-principle-supercavitation-continues-intrigue-torpedo-designers-new/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Richard Casement internship + + +Jan 21st 2017 + +We invite applications for the 2017 Richard Casement internship. We are looking for a would-be journalist to spend three months of the summer working on the newspaper in London, writing about science and technology. Applicants should write a letter introducing themselves and an article of about 600 words that they think would be suitable for publication in the Science and Technology section. They should be prepared to come for an interview in London or New York. A stipend of £2,000 a month will be paid to the successful candidate. Applications must reach us by January 27th. These should be sent to: casement2017@economist.com + + + + + +This article appeared in the Science and technology section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/science-and-technology/21714974-richard-casement-internship/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Books and arts + + +America’s secret war: They just kept coming [Fri, 20 Jan 04:41] + +19th-century French literary history: When Emile Zola fled Paris [Fri, 20 Jan 04:41] + +The joys of smoking: Naughty, but nice [Fri, 20 Jan 04:41] + +The AIDS crisis in America: Chronicles of death foretold [Fri, 20 Jan 04:41] + +The Elbphilharmonie: Worth the wait, and the cost [Fri, 20 Jan 04:41] + +Johnson: One country, two systems [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Laos + + +America’s secret war in Laos + + +How an unremitting, decade-long bombing campaign affected a small southeast Asian nation + + +Jan 21st 2017 + + + + + +A Great Place to Have a War: America in Laos and the Birth of a Military CIA. By Joshua Kurlantzick. Simon & Schuster, 320 pages; $28. + +THE bombing of Laos in the 1960s and early 1970s always used to be referred to as America’s “secret war”. This was not just a mistake or even a misunderstanding: it was a terrible misnomer. For the Laotians who cowered in caves to escape what is considered the heaviest bombardment in history, the campaign was certainly not a secret. America’s involvement was well known in the capital, Vientiane, and covered in the international press. Eventually it became well publicised and was even investigated by Congress. But the “secret” label stuck to America’s war in Laos, in part because of official denials and in part because of public indifference. + + + +At last the secret is out in full. This was brought home during President Barack Obama’s visit to the tiny South-East Asian nation in September, when he pledged more money to remove unexploded American bombs, though without offering any formal apology. For those looking for more, the war’s entire compelling tale can be found in the lucid prose and revelatory reporting of Joshua Kurlantzick’s new book, “A Great Place to Have a War”. Fresh interviews and newly declassified records document how American involvement escalated and then swiftly ended, leaving America’s Laotian partners holding the bag. But Mr Kurlantzick, a senior fellow at the Council on Foreign Relations and a former contributor to this newspaper, enriches his study even further by connecting the CIA’s unprecedented paramilitary activities in Laos to the secret wars of today in Yemen, Somalia and elsewhere. + +In 1961 Laos was the focal point of America’s containment strategy against communism in South-East Asia, with President Dwight Eisenhower giving it priority in a pre-inauguration briefing to his successor, John Kennedy. A CIA operation then began to train and fight alongside an army taken mostly from the Hmong ethnic minority against the Pathet Lao—translated as “Lao Nation”—who were backed by North Vietnam. Hitting the Pathet Lao in the north and on the Ho Chi Minh trail in the south, the American air force unleashed an average of one attack every eight minutes for nearly ten years. By 1970 tens of thousands of American-backed fighters were involved, at an annual cost of $3.1bn in today’s dollars. By the time the campaign ended in 1973, a tenth of Laos’s population had been killed. Thousands more accidental deaths would follow from unexploded bombs left in the soil. + +In his book Mr Kurlantzick paints a vivid picture of protagonists like Vang Pao, a military leader who emigrated to America, where he was arrested in 2007 for plotting a coup against the Laotian government, and Tony Poe, a hard-drinking CIA operative who lived in the jungle and collected severed enemy ears. Mr Kurlantzick concludes that, in the future, “the CIA would not lock up men like Poe; instead, it would find many more Tony Poes.” But the book is not just a polemic against the agency. Mr Kurlantzick looks into allegations that the CIA sold heroin and opium. He finds no evidence of this, although the agency was happy to look the other way when the Hmong sold drugs. + +One question is why the CIA’s conduct did not spark outrage, or even much interest, among the American public. More Americans died in Laos than in Cambodia, but it was the bombing of Cambodia that sparked protests including at Kent State University in Ohio in May 1970, where four students were killed by the national guard. Even a high-profile hearing, when Senator Ted Kennedy challenged the war, provoked little public reaction. Heavier media coverage of the bombing in Cambodia may have contributed, as did the CIA’s attempts at a cover-up in Laos and the fact that the American dead were clandestine advisers rather than young draftees. + +Laos was a model. Successive American administrations went on to wage “secret” wars in Central America and the Middle East with minimal American casualties and without congressional interference. The CIA viewed its Laotian operation as a success, even though the Pathet Lao took over after America’s withdrawal, and are still in power. In Laos, however, the wounds have yet to heal. + + + +This article appeared in the Books and arts section of the print edition under the headline “They just kept coming” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21714972-how-unremitting-decade-long-bombing-campaign-affected-small-southeast-asian/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Emile Zola and the Dreyfus case + + +Giant of France + + +The Frenchman who changed literature + + +Jan 21st 2017 + +Accuser-in-chief + + + +The Disappearance of Emile Zola: Love, Literature and the Dreyfus Case. By Michael Rosen. Faber & Faber; 302 pages; £16.99. + +EMILE ZOLA came to London in 1893 and was “received like a prince”. Some disapproving bishops and headmasters thought his novels, particularly “La Terre” (“The Earth”), to be corrupting. But with his wife, Alexandrine, he stayed in the Savoy Hotel, met leading literary figures and addressed thousands at banquets at Crystal Palace and the Guildhall. By contrast, when he arrived at Victoria Station in July 1898 he was alone, a fugitive, carrying a nightshirt wrapped in newspaper. In “J’accuse”, his open letter in L’Aurore, a French newspaper, he had attacked the authorities for their shameful anti-Semitic conduct in the political scandal that came to be known as the Dreyfus affair. Found guilty of libel and sentenced to prison, Zola fled to England with no idea of when it might be safe to return. + + + +He was to stay for almost a year, and it is the story of this little-known episode that Michael Rosen tells in characteristically engaging style. Assisted by one of his English translators, Ernest Vizetelly, Zola moved from one safe-house to another before taking refuge “in a suburban hotel in Norwood”. There he established his routine: writing “Fécondité” (“Fruitfulness”), cycling, taking photographs, communicating with his friends and family in France, pondering “the effect of the capital ‘I’ on English character”, complaining about the tasteless food and bemoaning the fact that British journalists wrote anonymously—still the practice in The Economist. + +Zola’s wife joined him from time to time, and so, for idyllic weeks and with her permission, did Jeanne, his other, younger, chère femme, and the children he had had with her, whom he adored. Their hopes for his swift return from exile were continually disappointed, as was his desire that his son, Jacques, should work hard and come top of the class. Eventually the French government relented, the innocent Dreyfus’s case was reopened, though he was not yet pardoned, and Zola could return to France. However, there was no happy ending: in 1902 Zola died, possibly murdered, of carbon-monoxide poisoning. + +Some of the book’s charm lies in its snippets of information: in France children are happy as chaffinches, rather than larks; “a big snooze” is un gros dodo. A chillier note appears towards the end. Forty years after Zola’s death “a tragic rerun” of anti-Semitism saw Mr Rosen’s great-uncles deported to Auschwitz, along with 76,000 other French Jews. Religious divisions in France have a doleful way of enduring. + + + +This article appeared in the Books and arts section of the print edition under the headline “When Emile Zola fled Paris” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21714971-frenchman-who-changed-literature-giant-france/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The joys of smoking + + +Cigarettes are bad for you + + +But that doesn’t mean smoking can’t be fun + + +Jan 21st 2017 + + + + + +Nicotine. By Gregor Hens. Translated by Jen Calleja. Other Press; 176 pages; $16.95. Fitzcarraldo Editions; £12.99. + +“I REALLY shouldn’t be writing this book. It’s too much of a risk,” notes Gregor Hens, a German author and an accomplished translator, at the start of his memoir about smoking. Yet write it he does, disguised as a quest to understand why: why did he do it? And, though this is a modest book concerned only with the memories and motivations of its author, why, by extension, does anyone? + + + +The fact is, as every smoker knows but few admit, nicotine is easy enough to kick. The physiological addiction can be overcome with patches, with hypnosis, with self-help books, with good old-fashioned will power. Nicotine is the least of any smoker’s problems. The truth is that every ex-smoker is and always will be a smoker. This book is, he admits, “a continuation of my addiction via other means.” + +Why do smokers do it? Because, as Mr Hens writes, “every cigarette that I’ve ever smoked served a purpose—they were a signal, medication, a stimulant or a sedative, they were a plaything, an accessory, a fetish object, something to help pass the time, a memory aid, a communication tool or an object of meditation. Sometimes…all at once.” Cigarettes represent youth, rebellion, wilful disregard for sensible advice. + +They function as punctuation for life. They make it coherent and add drama, inserting commas and semi-colons and ellipses (and, in the end, an inarguable and often premature full stop). “Whether I actually smoke or not, my personality is a smoker’s personality,” Mr Hens writes. To stop smoking isn’t just to give up the intake of that toxic, redeeming air into your lungs. It is to cease being yourself. That is why quitting is so hard. + +Readers and smokers and especially readers who smoke will be grateful that Mr Hens wrote “Nicotine” despite the risk of relapse. It is that rare book on addiction: neither preaching nor self-loathing, lapsing only occasionally into romanticism. And like the best cigarettes, it is over too soon. Though any more would probably be too much. + + + +This article appeared in the Books and arts section of the print edition under the headline “Naughty, but nice” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21714968-doesnt-mean-smoking-cant-be-fun-cigarettes-are-bad-you/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Chronicles of death foretold + + +The AIDS crisis in America… + + +…and why it took so long to solve + + +Jan 21st 2017 + + + + + +How to Survive a Plague: The Inside Story of How Citizens and Science Tamed AIDS. By David France. Knopf; 640 pages; $30. Picador; £25. + +NEWS of a fatal new disease affecting gay men first broke in 1981. But it took many years and very many deaths before the public noticed. In New York, the plague’s epicentre, a new case of AIDS was soon being diagnosed every day, yet Ed Koch, the mayor, did next to nothing to prevent its spread. According to a new book, “How to Survive a Plague”, the virus had infected 7,700 people in America by 1984 and killed 3,600, yet a question about it at a White House press conference aroused laughter. It was only in 1985, after Rock Hudson, a Hollywood star, was hospitalised with AIDS, that President Ronald Reagan publicly acknowledged the virus. But he did little to help the epidemic’s largely gay victims. In 1987, after nearly 20,000 Americans had died, he quipped: “When it comes to preventing AIDS, don’t medicine and morality teach the same lessons?” + + + +David France’s masterful account of the epidemic offers plenty of opportunity for outrage. America’s response to this public-health crisis was one of federal neglect, bureaucratic incompetence, corporate greed and brazen prejudice. AIDS would claim over 300,000 Americans—a third of them in New York—before a pharmaceutical breakthrough in 1996 enabled the infected to lead ordinary lives. For those who have survived, Mr France writes that the betrayal of so many politicians, doctors, clergymen and family members remains “impossible to forget”. + +At a time when several states still banned gay sex, many Americans saw AIDS as a punishment for sinful behaviour. Early patients were thrown out of hospitals, ignored by ambulances and locked out of their homes. Nearly every New York undertaker refused to handle the corpses. The popular press initially avoided the story; it took two years and 600 dead before the New York Times covered it on the front page. When reports became inevitable, editorials frequently castigated gay men as public-health menaces. Anti-gay hate crimes surged, rarely resulting in arrests. Gay foreigners entering the country were often quarantined and deported. + +HIV, which causes AIDS, was a tenacious foe, genetically far more complex than other known retroviruses. AIDS suppressed the immune system and by 1990 one American was dying from the disease every 12 minutes, often after succumbing to a preventable infection. But even as hospitals overflowed with AIDS patients, the federal government failed to help states treat and prevent the disease, and federal research remained sluggish and disorganised. Drugs that officials called promising in 1985 had still not been tested five years later. Others that were transforming lives in off-market experiments, such as an anti-blindness drug called DHPG, still awaited clinical trials, ensuring that many AIDS patients would go blind unnecessarily. Federal officials dithered for years before issuing guidelines on treatable infections. Nine years of the country’s war on AIDS had extended the average 18-month lifespan of patients by a mere three months. + +Public indifference and political ineptitude drove activists to take matters into their own hands. Gay men began circulating materials promoting “safe sex” in 1983. Condoms became popular, bath houses closed and transmission rates for all sex-related diseases slowed dramatically. Yet it would take over a decade for Washington to fund a safe-sex campaign nationally. The government’s flat-footed strategy for researching and testing new drugs and the cripplingly high costs of developing therapies spurred black-market clubs that peddled unapproved drugs by the truckload. Activists staged protests to highlight the cost of federally approved drugs, and they learned enough about virology, chemistry and immunology to propose essential drug-trial innovations. Federal and private researchers eventually took note of what they were saying. Never before had a group of patients done so much to guide the agenda of so-called experts. + +As a gay man in New York during this time, Mr France buried many friends and lovers. His own story is one of those he knits together in this riveting account of the men and women who refused to surrender in the face of AIDS. Despite its grim subject, this is an inspiring book. At a time when many Americans are worried once again about the wisdom and compassion of their elected leaders, “How to Survive a Plague” offers a salient reminder of what can be achieved by citizens who remain unbowed and unbroken. + + + +This article appeared in the Books and arts section of the print edition under the headline “Chronicles of death foretold” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21714969-and-why-it-took-so-long-solve-aids-crisis-america/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Elbphilharmonie + + +A new concert hall is worth the wait, and the cost + + +Seven years late and built at ten times its proposed cost, it is also a stunning achievement that will make the Hanseatic city a must-see cultural destination + + +Jan 21st 2017 | HAMBURG + +Making waves + + + +ON OCTOBER 31st, the lights on the new concert hall in Hamburg spelled out fertig—“finished”, and the city heaved a sigh of relief. The history of the crazily ambitious project known as the Elbphilharmonie had been chequered. Conceived in 2003 at a projected cost of €77m ($82.3m), it ended up costing ten times that and was completed seven years late. It survived disputes, lawsuits and a parliamentary inquiry. No wonder its architects, Jacques Herzog and Pierre de Meuron—creators of Tate Modern and, along with Ai Weiwei and others, of the “bird’s nest” Olympic Stadium in Beijing—feared at one point that the job would destroy their Basel-based firm. In 2011 Barbara Kisseler, Hamburg’s outspoken culture senator, neatly summed up her fellow-citizens’ ambivalence: “The Elbphilharmonie is very dear to us, in both senses of the word.” + +The tallest building in town, its roof covered in giant sequins, it sits on the end of a busy wharf and has been likened to a crystal on a rock, a bubble-wrapped ice-cube and a ship under sail. The hull has been constructed from a converted cocoa warehouse. The sails are a technical marvel: 1,000 plate-glass panels, heated to 600°C to curve, bulge or pucker, each imprinted with a seemingly random pattern of metal dots that change colour in response to the shifting light. This is kinetic art on a gargantuan scale. + + + +The hall had to fit into a very small footprint, so the architects had to think vertically. Their acoustics expert was the celebrated and demanding Yasuhisa Toyota. His 30-year-old Suntory Hall in Tokyo is still a benchmark for acoustic refinement and visual elegance. His customary terraced “vineyard” seating design—pioneered at the Berlin Philharmonie in the 1960s—is now widely adopted. The traditional “shoebox” design has good seats and bad seats, but the more democratic “vineyard” has no “best” seats. At the Elbphilharmonie in Hamburg no one is more than 30 metres from the stage. + +Achieving the sound that Mr Toyota wanted meant hanging the hall like a cocoon from the roof and surrounding it with feather pillows to isolate the building from external industrial noise. The interior is clad with 10,000 distressed gypsum panels, each individually computer-designed both to diffuse the sound and to keep it rich. Hollowed-out like a cave, and conceived in curves and swirls with not a straight line in sight, the space feels as if it has been crafted entirely by hand. + +The inaugural concert on January 11th, programmed to show off the acoustic flexibility, was a triumph. Whether for a small period-instrument ensemble or a massive Wagner orchestra, for Sir Bryn Terfel’s clarion baritone or Philippe Jaroussky’s ethereal falsetto, the sound was balanced and warm with absolute clarity of detail. The bare oak foyers, with their vast flights of stairs, are spartan, reflecting the tastes of a city that is elegant yet restrained. + +The main hall is only part of the project. There is also a smaller chamber hall and a substantial education department. The resident NDR Elbphilharmonie Orchester is there, as is Resonanz, a radical experimental string ensemble. What impresses most is the programme being devised by Christoph Lieben-Seutter, the Elbphilharmonie’s general director. This features not just glittering names, though there are plenty of those, but also breadth and variety, and a determined drive to bring in new audiences. “Salaam Syria” in mid-March will be a three-day festival devoted to the music of the world’s most strife-torn country, with performances from the players of the Syrian Expat Orchestra. Since Hamburg is home to many migrants, this is more than a gesture. It is telling that every concert in the opening season sold out within hours of tickets going on sale. + +Concert halls are increasingly a political matter. Angela Merkel and five other members of the federal government attended the birth of the already-beloved “Elphie”. Four months ago the depressed Ruhr-valley city of Bochum opened a charming new concert hall which had been in part crowdfunded by 20,000 local residents. Two years ago the superb Philharmonie de Paris opened its doors to near-universal acclaim, after a three-decade campaign for its creation led by Pierre Boulez and other French musicians. In Paris the mainspring was left-wing politics: the Philharmonie makes a point of drawing audiences from poor areas, and it encourages children to learn to play instruments from other cultures. Yet another hall, the mostly publicly funded Seine Musicale, is due to open in Paris soon. + +London may be the outlier here. A proposed new hall for the Barbican Centre, which would probably cost £400m ($493m), has its cheerleaders in the press. But the project, promoted with implausible bombast about “outreach” but increasingly seen as a metropolitan vanity, has few friends even in the music profession, let alone outside it. It would of course be nice for London to have its own state-of-the-art concert hall, but with the already-existing Southbank and Barbican halls, imperfect though they may be, musical life is perfectly liveable without one. Hamburg, however, is a different story. One of the richest cities in Europe, it has never been seen as a top-tier cultural destination. The Elbphilharmonie may change that. + + + +This article appeared in the Books and arts section of the print edition under the headline “Worth the wait, and the cost” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books/21714573-nine-years-late-11-times-its-proposed-cost-it-also-stunning-achievement-will/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Johnson: The story of pinyin + + +One country, two systems + + +The coexistence of pinyin and Chinese characters highlights the role of emotion in language decisions + + +Jan 21st 2017 + + + + + +FEW people live to 111. Fewer still leave as big a mark on linguistic lives as Zhou Youguang, who died on January 14th. Mr Zhou was the chief architect of pinyin, the system that the Chinese use to write Mandarin in the roman alphabet. + +Pinyin has not, of course, replaced the Chinese characters. Rather, it is used as a gateway to literacy, giving young children a systematic way to learn the sounds of the thousands of characters required to be literate in Chinese. Pinyin is also used by most Chinese people to input Chinese characters into computers: type a word like wo (meaning “I”) and the proper character appears; if several characters share the same sound (which is common in Chinese), users choose from a short menu of these homophonic characters. + + + +In other words, the primary way that the Chinese interact with their language in the digital age is via an alphabet borrowed by Communist China from its ideological enemies in the 1950s. The tale is an odd one. Mao Zedong (who was Mao Tse-tung before pinyin, under the “Wade-Giles” romanisation system) wanted a radical break with old ways after 1949, when the civil war ended in mainland China. He was hardly the first to think that China’s beautiful, complicated and inefficient script was a hindrance to the country’s development. Lu Xun, a celebrated novelist, wrote in the early 20th century: “If we are to go on living, Chinese characters cannot.” + +But according to Mr Zhou, speaking to the New Yorker in 2004, it was Josef Stalin in 1949 who talked Mao out of full-scale romanisation, saying that a proud China needed a truly national system. The regime instead simplified many Chinese characters, supposedly making them easier to learn—but causing a split in the Sinophone world: Taiwan, Hong Kong and other overseas Chinese communities still use the traditional characters. + +Mr Zhou, who had been working for a Chinese bank in New York (he was largely self-trained as a linguist), had returned home in a burst of patriotic optimism after 1949. He was drafted by Zhou Enlai, Mao’s premier, in the 1950s to create a system not to replace, but to complement, the Chinese characters. After three years’ work, pinyin was ready. It used just the standard Roman letters and a few (often omitted) diacritical marks, especially over vowels to show the “tones”: steady, rising, dipping or falling pitch. People joked that Mr Zhou’s team had taken three years to deal with just 26 letters. But pinyin dealt neatly with all of the sounds of Mandarin with a minimum of tricky typography: even q and x were used (for what had been ch’ and hs in Wade-Giles). These letters do not always sound the same as they do in Western languages, but pinyin overall was a hit, credited plausibly with a huge boost in literacy in China. Even the Taiwanese, who abhor Mao’s simplified characters, are gradually adopting Mr Zhou’s pinyin (which they had also once abhorred), making the use of pinyin one of the few practical things the two countries can agree on. + +Why don’t the Chinese just adopt pinyin? One is the many homophones (though these are not usually a problem in context). Another is that Chinese characters are used throughout the Chinese-speaking world, not just by Mandarin-speakers but also speakers of Cantonese, Shanghainese and other varieties. These are as different from each other as the big Romance languages are, but the writing system unifies the Chinese world. In fact, character-based writing is, in effect, written Mandarin. This is not obvious from looking at the characters, but it is obvious if you look at pinyin. If China adopted it wholesale, the linguistic divisions in China would be far more apparent. + +But there is another reason for attachment to the characters. They represent tradition, history, literature, scholarship and even art on an emotional level that many foreigners do not understand. Outsiders focus so much on efficiency probably because those who do try to learn the characters cannot help but be struck by how absurdly hard they are to master. + +There is a real trade-off between efficiency and culture. English-speakers have rejected most efforts to clean up the language’s notorious spelling, making coff, ruff, thru, tho and bow from cough, rough, through, though and bough. The Irish accept the expense of keeping Irish on signs and in classrooms, even if it isn’t efficient. In language, as in love, the heart is often the master of the head. Pinyin, which has helped the Chinese have a bit of both, will long outlast the long-lived Mr Zhou. + + + +This article appeared in the Books and arts section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/books-and-arts/21714970-coexistence-pinyin-and-chinese-characters-highlights-role-emotion/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Obituary + + +Clare Hollingworth: Sniffing the breezes [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Sniffing the breezes + + +Obituary: Clare Hollingworth died on January 10th + + +The foreign correspondent was 105 + + +Jan 21st 2017 + + + + + +WELL into her 80s Clare Hollingworth would sleep on the floor every week or so, just to prevent her body from getting “too soft”. Her passport was to hand, with visas up to date, just in case the foreign desk rang. She liked to have two packed suitcases, one for hot climates, one for cold, though her wardrobe was notoriously sparse: in later life she was seldom seen in anything but a safari suit and cloth shoes. And all you really needed, she said, were the “T & T”—typewriter and toothbrush. + +Hardiness and bravery were her hallmarks. Neither shot nor shell ruffled her—excitement trumped fear, she said. She admitted to disliking only rickety lifts, and fleas in her hair. But she didn’t mind bedbugs, going without food for five or six days, or not washing for even longer (despite entreaties from her colleagues). + + + +She could swim, ride, ski, fly a plane and jump with a parachute. And shoot: during the war she slept with a revolver under her pillow; spares included a small pearl-handled one for her evening bag. Aged nearly 80, she was seen climbing a lamppost to gain a better look at the crackdown in Tiananmen Square. She once avoided arrest in Bucharest by staying wrapped only in a towel. Romanian secret police might strip a woman, she reckoned, but would not dress one by force. + +Her wiles were legendary. She ruthlessly trounced rivals, broke rules and exploited an unmatched array of contacts. When India banned foreigners from covering the war with Pakistan in 1965, she cajoled the prime minister, Indira Gandhi—whom she knew from a previous posting in Paris—into making an exception. She then asked to bring along two “servants” (in fact, they were colleagues). She had a knack for the telling detail: still-wet concrete in a Polish gun emplacement as the country buckled under the German assault, or insanitary plumbing in a supposedly advanced Chinese arms factory. + +Laconic and unadventurous in print, she was better at getting the story than telling it. Her husband, Geoffrey Hoare, also a journalist, would briskly correct the spelling, enliven the prose, and unearth the lead—which she tended to bury five paragraphs down, prefaced, cryptically, with “according to certain sources”. + +And what sources they were. She quizzed and befriended generals, prime ministers and spymasters, politely but relentlessly. She gained the first interview with the last Shah of Iran in 1941; after his fall in 1979, he said he would speak only to her. Another scoop, in 1968, was the plans for peace talks to end the Vietnam war, brought to her in Saigon cathedral by an anonymous source. At an age when most journalists are contemplating retirement, she moved to Beijing to open the Daily Telegraph bureau. Though she spoke not a word of Chinese (languages were not her thing) she became a notable China-watcher. Scoops there included Mao’s stroke in 1974 and Deng Xiaoping’s rise. Both were met with scepticism; both proved true. + +It all started in August 1939, when, aged 27 and a foreign correspondent for barely four days, she commandeered a British consulate car and drove into Germany from Poland. A gust of wind lifted a roadside hessian screen, revealing Hitler’s army, mustered for the invasion. It was to be the scoop of the century, though at first nobody believed her. On her return she had to produce her shopping—German products unavailable in Poland—to show she had crossed the border. + +It was a similar story with her next scoop, that the invasion had started. The official line was that talks were still continuing—so she held her telephone out of the window to prove to Warsaw that tanks were indeed roaring into battle. When she deduced that Kim Philby, a former British spy, had defected to Moscow, her editors sat on that story for three months (she later took over his job, writing for this paper from Beirut). + +She was sometimes thought to be a spy herself—a notion she airily dismissed by saying that there was no need: if she found out anything like that she would tell the British military attaché anyway. In fact, the spy world originally regarded her with deep mistrust for helping some undesirable communists reach Britain (part of her unsung, pre-journalistic work with refugees in pre-war Poland). + +Pots and kettles + +She was loyal when it mattered. In Algiers she marshalled her fellows into a 30-strong posse to accompany (and save the life of) a journalist arrested by paramilitaries. But she was mostly a difficult colleague. As an editor in London, she habitually second-guessed her correspondents: “clarevoyance”, they called it crossly. She struck most people as driven and unreflective. But a biography compiled from diaries and letters revealed a more three-dimensional picture, including a conversion to Catholicism prompted by her husband’s adultery (she also threatened to shoot his mistress). Her own love life was discreetly lively, too. + +She was ferociously competitive, unabashedly criticising female colleagues for being “pushy”, or for—perish the thought—using their femininity to get ahead. Retirement was also anathema. Even in her final, half-blind years she haunted the Foreign Correspondents’ Club in Hong Kong, poring over the news, with passport at the ready, just in case. + + + +This article appeared in the Obituary section of the print edition under the headline “Sniffing the breezes” + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/obituary/21714964-foreign-correspondent-was-105-obituary-clare-hollingworth-died-january-10th/print + + + + + +| Section Menu | Main Menu | + + + + + +| Main menu | Previous section | + +* * * + + + + + +Economic and financial indicators + + +Interactive indicators [Fri, 20 Jan 04:41] + +Output, prices and jobs [Fri, 20 Jan 04:41] + +Trade, exchange rates, budget balances and interest rates [Fri, 20 Jan 04:41] + +The Economist commodity-price index [Fri, 20 Jan 04:41] + +New passenger-car registrations [Fri, 20 Jan 04:41] + +Markets [Fri, 20 Jan 04:41] + + + + + +* * * + + + +| Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Interactive indicators + + +Jan 21st 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/node/21715003/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Output, prices and jobs + + +Markets + + +Jan 21st 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21714993-markets-output-prices-and-jobs/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Trade, exchange rates, budget balances and interest rates + + +Jan 21st 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21714997-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Economist commodity-price index + + +Jan 21st 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21715009-economist-commodity-price-index/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +New passenger-car registrations + + +Jan 21st 2017 + + + + + +China’s car industry boomed last year: the world’s largest auto market saw the number of passenger cars sold swell by 15%, thanks to government tax incentives. Growth will probably slow this year as the stimulus is phased out. New passenger-car registrations in the European Union rose for the third consecutive year. Although Volkswagen saw its share of the European market shrink following its emissions-testing scandal, it remained the best-selling brand. Sales in Britain do not seem to have been strongly affected by the Brexit referendum; and low interest rates could keep sales buoyant. Although 17.6m cars were sold in the United States last year, sales are expected to plateau or decline. + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21715006-new-passenger-car-registrations/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Markets + + +Jan 21st 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from http://www.economist.com/news/economic-and-financial-indicators/21714966-markets/print + + + + + +| Section Menu | Main Menu | + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.01.28.txt b/homeworks/B20769/homework1/data2/2017.01.28.txt new file mode 100644 index 0000000..a779c2c --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.01.28.txt @@ -0,0 +1,4010 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Politics this week + +Jan 28th 2017 + + + +Donald Trump started his term as America’s president. Surrounded by Washington’s power-brokers, Mr Trump’s inauguration speech was a remarkable populist attack on political elites, whom he lambasted for neglecting “struggling families”; he vowed to end “American carnage”. Americans, he said, would no longer “accept politicians who are all talk and no action”. + +Soon after being sworn into office Mr Trump signed a wide-ranging executive order allowing federal agencies to stop participating in any part of the Obamacare law they deem to be onerous, ahead of a forthcoming bill in Congress to rescind his predecessor’s signature policy. He also declared that America would not join the TPP trade deal and ordered work to start on building a wall along the Mexican border (but was hazy as to how it will be paid for). + +Millions of people took to the streets in anti-Trump protests themed as “women’s marches” in America and dozens of other countries. The biggest demonstration was in Washington, DC, where an estimated half a million people thronged the capital. + +The Senate moved swiftly to confirm some of Mr Trump’s appointments to federal jobs, including James Mattis as defence secretary and John Kelly as the head of homeland security. Rex Tillerson’s appointment as secretary of state was approved by the relevant committee. Marco Rubio, a senator from Florida who seemed to be opposed to Mr Tillerson, voted for him. + +Border co-operation + +On the eve of Donald Trump’s inauguration, Mexico extradited Joaquín Guzmán, the boss of the Sinaloa drug gang, to America. Mr Guzmán, better known as El Chapo (Shorty), twice escaped from Mexican jails. He pleaded not guilty to 17 charges in a federal court in New York. + +Teori Zavascki, a justice on Brazil’s supreme court, died in the crash of a private aeroplane. Mr Zavascki oversaw investigations into allegations that politicians milked Petrobras, the state-controlled oil company, for hundreds of millions of dollars. See article. + +Spoiling for a fight + +A spokesman for Donald Trump reiterated that his administration would seek to block China from occupying islands that do not belong to it in the South China Sea. The statement prompted anger in China and consternation among America’s allies. + +Authorities in Afghanistan issued arrest warrants for several bodyguards of Abdul Rashid Dostum, the vice-president. They are accused of beating and sexually assaulting a rival politician on their boss’s orders. The case is being seen as a test of the rule of law. + +Nursultan Nazarbayev, the long-serving president of Kazakhstan, promised to devolve more authority to the country’s rubber-stamp parliament, in a move seen as a preparation for an eventual transition of power. + +China announced a crackdown on unauthorised providers of services that allow internet users to circumvent the country’s web-censorship mechanisms. Government permission is now needed to sell access to virtual private networks (VPNs), as the services are known. The authorities also closed the website of Unirule, a prominent liberal think-tank in Beijing. + + + +The Chinese government said its decision in 2015 to allow all couples to have two children had paid off. Last year, according to the health authority, 18.5m babies were born in Chinese hospitals, up by 11.5% on 2015 and the most since 2000. Of the new babies, 45% were second children. But there is little evidence that the number of children a Chinese woman can expect to have during her lifetime has risen. + +Some breathing space + +Talks aimed at bringing peace to Syria made some limited progress in Astana, the capital of Kazakhstan, with participants agreeing on mechanisms to help protect a ceasefire (in some areas) that has now been in place for a month. See article. + +Israel angered the Palestinians by approving a new group of over 3,000 new homes in settlements in the West Bank and East Jerusalem. See article. + +Yahya Jammeh flew out of the Gambia to exile in Equatorial Guinea after losing a presidential election last year. He left only after neighbouring Senegal massed troops on the border and ordered him to hand over power to Adama Barrow, who won the ballot. See article. + +Militants from al-Shabab, a jihadist group, killed at least 15 people in an attack on a hotel in Mogadishu, further underscoring a lack of security in Somalia’s capital four years after African Union forces drove them out of it. + +On the ticket + +Benoît Hamon, a former education minister, won the first round of the French Socialist Party’s presidential primary, beating Manuel Valls, who was prime minister until December. Mr Hamon’s emphatically leftist platform includes calls for a universal basic income. He is favoured to win the second round against Mr Valls on January 29th. See article. + +In a January surprise, Germany’s Social Democrats picked Martin Schulz, the ex-president of the European Parliament, to lead their party in federal elections in September. Mr Schulz, an ardent European federalist, faces poor odds of unseating Angela Merkel as chancellor. Her popularity ratings have recovered recently. See article. + +Britain’s Supreme Court ruled that the government must obtain Parliament’s approval before triggering Article 50, the legal means of leaving the European Union. The court’s decision was expected, but, fortunately for the government, it also dismissed the need for devolved assemblies, such as in Scotland, to be consulted. Theresa May, the prime minister, promised to set out the details of the government’s Brexit plan in a “white paper”, a policy document. See article. + + + +Michelle O’Neill replaced Martin McGuinness as Sinn Fein’s leader in Northern Ireland. Mr McGuinness, who is retiring because of ill health, had earlier resigned as deputy first minister after an unhappy working relationship with Arlene Foster, the leader of the Democratic Unionists, in the power-sharing executive. An election will be held in March. Mrs O’Neill and Mrs Foster are the first female leaders of their respective Irish nationalist and British unionist parties. See article. + +This article appeared in the The world this week section of the print edition + + + + + +Business this week + +Jan 28th 2017 + +President Donald Trump moved swiftly to restart two controversial oil-pipeline projects that the Obama administration had abrogated: an addition to the Keystone XL pipeline that will transport crude from Alberta’s tar sands to Nebraska, and the Dakota Access pipeline which cuts through Sioux Indian land. Both ventures had been vigorously opposed by greens. Mr Trump’s early action to restore them affirms his intention to prioritise jobs and the economy over the environment. + +The Dow Jones Industrial Average stockmarket index passed the 20,000 mark for the first time, buoyed in part by investors cock-a-hoop at the prospect of lucrative infrastructure deals under a Trump presidency. + +Bringing jobs home? + +Terry Gou, the boss of the world’s biggest contracted electronics manufacturer, confirmed that he was considering building a factory in the United States to make TV screens, which could create up to 50,000 jobs. Foxconn makes devices for Apple, Samsung and others at its plants in China. Opening a facility in America would be a coup for the new Trump administration, but Mr Gou said that it had been under consideration for years and he would be lured to America only by the right kind of incentives. + +Apple filed antitrust lawsuits against Qualcomm in China and America that accuse the chip-design company of overcharging for its intellectual-property licences. This comes shortly after America’s Federal Trade Commission lodged a complaint against Qualcomm for allegedly abusing its dominant position in the semiconductor market. See article. + +A federal judge blocked the $37bn merger of Aetna and Humana, siding with the Justice Department’s argument that it would reduce competition in health insurance. A wave of consolidation hit the industry two years ago as it adapted to new regulations under Obamacare. A court will rule soon on the proposed $48bn merger between Anthem and Cigna. + +Johnson & Johnson announced a $30bn takeover of Actelion, Europe’s biggest biotech company, which is based in Switzerland. Johnson & Johnson’s acquisition adds Actelion’s expertise in treatments for blood pressure to its existing line of drugs. + +The descent of a high-flyer + +India’s Central Bureau of Investigation brought charges against Vijay Mallya in relation to the alleged misuse of state funds that were intended for his Kingfisher Airlines, which collapsed after running up a pile of debt. Mr Mallya, a tycoon who was once dubbed “King of the Good Times”, moved to London in 2016 as his various legal woes in India mounted. + +Prosecutors in Italy opened an investigation into accounting irregularities at BT’s subsidiary in the country. The British telecoms company now thinks the scandal will cost it £530m ($670m), much more than it had previously expected. The news wiped a fifth off the value of BT’s share price, its biggest-ever daily fall. + +Royal Bank of Scotland set aside $3.8bn to cover a potential penalty from regulators in America for mis-selling mortgage securities before the financial crisis. The bank is still majority-owned by the British taxpayer—more than eight years after receiving a bail-out. + +The Turkish lira came under further pressure following a surprise decision by the central bank to leave its benchmark interest rate on hold (it lifted overnight lending rates instead). Markets had expected the bank to raise its key rate to help the lira, which has been battered amid concerns about the effects of Turkey’s political instability on the economy. + +China’s economy grew by 6.7% last year (and by 6.8% in the fourth quarter), in line with the government’s target range for growth of 6.5-7%. But the veracity of official data has been questioned once again after the current governor of Liaoning province, in China’s industrial heartland, admitted that his region’s fiscal numbers had been fabricated between 2011 and 2014. + +A prominent hedge-fund manager in China was sentenced to more than five years in prison for market manipulation and reportedly fined 11bn yuan ($1.6bn). Xu Xiang was a leading member of the zhangting gansidui (go-for-max kamikaze squad), a group of investors who drove up share prices and quickly cashed out. He was arrested after China’s stockmarkets crashed in 2015. + +Waving the chequered flag + + + +Bernie Ecclestone’s colourful 40-year career at Formula One motor racing came to an abrupt end when he was ditched as the business’s chief executive with immediate effect by its new owner, Liberty Media. The sport’s new CEO is Chase Carey, who used to work for Rupert Murdoch. See article. + +This article appeared in the The world this week section of the print edition + + + + + +KAL's cartoon + +Jan 28th 2017 + + + +More KAL's cartoons + + + +This article appeared in the The world this week section of the print edition under the headline “KAL's cartoon” + + + + + +Leaders + + + + +The multinational company: In retreat + +Venezuela: It’s a mad, mad, mad, Maduro world + +America’s trade with China: Jaw, jaw + +Private schools in poor countries: Tablets of learning + +Family life in Russia: Empowering the vilest malefactors + + + + + +In retreat + +The multinational company is in trouble + +Global firms are surprisingly vulnerable to attack + +Jan 28th 2017 + + + +AMONG the many things that Donald Trump dislikes are big global firms. Faceless and rootless, they stand accused of unleashing “carnage” on ordinary Americans by shipping jobs and factories abroad. His answer is to domesticate these marauding multinationals. Lower taxes will draw their cash home, border charges will hobble their cross-border supply chains and the trade deals that help them do business will be rewritten. To avoid punitive treatment, “all you have to do is stay,” he told American bosses this week. + +Mr Trump is unusual in his aggressively protectionist tone. But in many ways he is behind the times. Multinational companies, the agents behind global integration, were already in retreat well before the populist revolts of 2016. Their financial performance has slipped so that they are no longer outstripping local firms. Many seem to have exhausted their ability to cut costs and taxes and to out-think their local competitors. Mr Trump’s broadsides are aimed at companies that are surprisingly vulnerable and, in many cases, are already heading home. The impact on global commerce will be profound. + +The end of the arbitrage + +Multinational firms (those that do a large chunk of their business outside their home region) employ only one in 50 of the world’s workers. But they matter. A few thousand firms influence what billions of people watch, wear and eat. The likes of IBM, McDonald’s, Ford, H&M, Infosys, Lenovo and Honda have been the benchmark for managers. They co-ordinate the supply chains that account for over 50% of all trade. They account for a third of the value of the world’s stockmarkets and they own the lion’s share of its intellectual property—from lingerie designs to virtual-reality software and diabetes drugs. + +They boomed in the early 1990s, as China and the former Soviet bloc opened and Europe integrated. Investors liked global firms’ economies of scale and efficiency. Rather than running themselves as national fiefs, firms unbundled their functions. A Chinese factory might use tools from Germany, have owners in the United States, pay taxes in Luxembourg and sell to Japan. Governments in the rich world dreamed of their national champions becoming world-beaters. Governments in the emerging world welcomed the jobs, exports and technology that global firms brought. It was a golden age. + +Central to the rise of the global firm was its claim to be a superior moneymaking machine. That claim lies in tatters (see Briefing). In the past five years the profits of multinationals have dropped by 25%. Returns on capital have slipped to their lowest in two decades. A strong dollar and a low oil price explain part of the decline. Technology superstars and consumer firms with strong brands are still thriving. But the pain is too widespread and prolonged to be dismissed as a blip. About 40% of all multinationals make a return on equity of less than 10%, a yardstick for underperformance. In a majority of industries they are growing more slowly and are less profitable than local firms that stayed in their backyard. The share of global profits accounted for by multinationals has fallen from 35% a decade ago to 30% now. For many industrial, manufacturing, financial, natural-resources, media and telecoms companies, global reach has become a burden, not an advantage. + +That is because a 30-year window of arbitrage is closing. Firms’ tax bills have been massaged down as low as they can go; in China factory workers’ wages are rising. Local firms have become more sophisticated. They can steal, copy or displace global firms’ innovations without building costly offices and factories abroad. From America’s shale industry to Brazilian banking, from Chinese e-commerce to Indian telecoms, the companies at the cutting edge are local, not global. + +The changing political landscape is making things even harder for the giants. Mr Trump is the latest and most strident manifestation of a worldwide shift to grab more of the value that multinationals capture. China wants global firms to place not just their supply chains there, but also their brainiest activities such as research and development. Last year Europe and America battled over who gets the $13bn of tax that Apple and Pfizer pay annually. From Germany to Indonesia rules on takeovers, antitrust and data are tightening. + +Mr Trump’s arrival will only accelerate a gory process of restructuring. Many firms are simply too big: they will have to shrink their empires. Others are putting down deeper roots in the markets where they operate. General Electric and Siemens are “localising” supply chains, production, jobs and tax into regional or national units. Another strategy is to become “intangible”. Silicon Valley’s stars, from Uber to Google, are still expanding abroad. Fast-food firms and hotel chains are shifting from flipping burgers and making beds to selling branding rights. But such virtual multinationals are also vulnerable to populism because they create few direct jobs, pay little tax and are not protected by trade rules designed for physical goods. + +Taking back control + +The retreat of global firms will give politicians a feeling of greater control as companies promise to do their bidding. But not every country can get a bigger share of the same firms’ production, jobs and tax. And a rapid unwinding of the dominant form of business of the past 20 years could be chaotic. Many countries with trade deficits (including “global Britain”) rely on the flow of capital that multinationals bring. If firms’ profits drop further, the value of stockmarkets will probably fall. + +What of consumers and voters? They touch screens, wear clothes and are kept healthy by the products of firms that they dislike as immoral, exploitative and aloof. The golden age of global firms has also been a golden age for consumer choice and efficiency. Its demise may make the world seem fairer. But the retreat of the multinational cannot bring back all the jobs that the likes of Mr Trump promise. And it will mean rising prices, diminishing competition and slowing innovation. In time, millions of small firms trading across borders could replace big firms as transmitters of ideas and capital. But their weight is tiny. People may yet look back on the era when global firms ruled the business world, and regret its passing. + +This article appeared in the Leaders section of the print edition under the headline “In retreat” + + + + + +It’s a mad, mad, mad, Maduro world + +Venezuela’s leaders ignore reality + +The economy is collapsing like a nation at war. The government is to blame + +Jan 28th 2017 + + + +“HE WHO leads must listen even to the hardest truths,” said Simón Bolívar, who liberated much of South America from Spanish rule. The leaders of Venezuela today, who claim Bolívar as their inspiration, ignore his dictum. Venezuela’s economy shrank by nearly 19% last year, according to a leaked early estimate by the central bank (see article). That would be bad even for a nation at war, which Venezuela is not. Inflation was 800%. Shortages of food and medicine are causing hunger and looting. Infant mortality is soaring. Caracas is the capital city with the world’s highest murder rate. + +The leaders of Venezuela’s “Bolivarian revolution” shut their ears to such truths. The central bank has not formally published data on growth or inflation since the beginning of 2016. After the leak, Nicolás Maduro, who took over as president from the revolution’s leader, Hugo Chávez, in 2013, sacked the head of the central bank. His successor must “fight against the domestic and foreign mafias that attack our currency”, Mr Maduro said. No such mafias exist; Mr Maduro’s government is to blame for Venezuela’s plight. + +Alas, he will not heed Bolívar’s second commandment: to “right the wrongs that lead to errors”. His controls on the prices of foreign exchange and basic goods have created shortages, rationing and inflation. On the black market the bolívar is worth less than one three-hundredth of its strongest official rate. The armed forces, which oversee the distribution of food, are the biggest profiteers from scarcity. The halving since 2014 of the price of oil, almost the only export, makes these problems more acute but is not the underlying cause. + +The dismantling of democracy worsens the consequences of deafness. The regime’s last democratic act was to hold parliamentary elections in 2015. The opposition won, and thereby in theory ended the Bolivarians’ 16-year monopoly of power. Since then Mr Maduro has sidelined parliament and blocked attempts to remove him from office by constitutional means. The compliant electoral commission thwarted a referendum to recall him, which he would surely have lost. This month he delivered his annual state-of-the-nation speech before the puppet supreme court rather than the national assembly. + +Totally Caracas + +Venezuela needs both economic rescue and political renewal, but it is hard to imagine where these will come from. The best hope had been talks between the government and the opposition, which are mediated by the Vatican and by Unasur, a regional body. But they broke down in December after the opposition accused the government of reneging on promises to free political prisoners (though it released a few) and restore parliament’s powers. The most useful thing outsiders can do is to urge the resumption of the talks. Their aim should be to return Venezuela to constitutional rule and prepare emergency economic reforms, backed by money from the IMF. + +The toughest messages must come from Venezuela’s neighbours and regional bodies. Mercosur, a South American trade bloc, suspended Venezuela last month for violating its democratic principles; the Organisation of American States should do the same. The United States must act with restraint. Rex Tillerson, its nominee for secretary of state, clashed with Venezuela as boss of Exxon Mobil. In his new job he must champion democracy without directly calling for regime change. + +The hard truth is outsiders’ influence is limited. Change may eventually come when one army faction or another decides that the risk of social collapse outweighs the chance to profit from the crisis. Even that is unlikely to be a good thing. Soldiers with political power are rarely good listeners either. + +This article appeared in the Leaders section of the print edition under the headline “It’s a mad, mad, mad, Maduro world” + + + + + +Jaw, jaw + +How Trump can press China without resorting to a trade war + +What a constructive American approach to trade with China would look like + +Jan 28th 2017 + + + +WELCOME to the topsy-turvy new politics of trade. America, the creator and seven-decade-long defender of the global trading system, now has a president who seems determined to shake that system up and who may end by wrecking it. Although China is the rising power, one that has often not played by the rules, its president, Xi Jinping, has taken to defending the status quo. + +It is not yet clear whether Donald Trump’s belligerence is simply a ploy designed to win trade concessions from China and others, or whether he is prepared to foment economic warfare—and worse—if he is thwarted. But no relationship matters more than that between the world’s biggest and second-biggest economies. The shape of a new economic order, and much besides, will be determined largely by how Mr Trump and Mr Xi deal with each other. There is plenty to fear. + +Mr Trump has been known to vacillate over great swathes of policy, but on trade he has been consistent in his belief that America gets a bad deal. In the first days of his presidency, he pulled America out of the Trans-Pacific Partnership (TPP), an agreement designed to knit together economies in Asia and the Americas; threatened a big border tax on American firms that moved jobs abroad; and affirmed his intention to renegotiate NAFTA, a North American free-trade deal. + +Unlike some of these anti-trade threats, the desire to act against China is at least understandable. Mr Xi professes to support open markets, but runs an economy built on mercantilist pillars. Favoured Chinese firms benefit from subsidised financing and rent. China keeps tracts of its economy off-limits to foreign investors as it pumps money towards its own champions: it has, for example, earmarked $150bn to nurture its semiconductor industry. Those who are allowed in are often required to hand over their intellectual property. + +As easy as 1, 2, 3 + +If Mr Trump is to deal with China wisely, he should follow three rules. The first is to resist the impulse to mix trade politics and geopolitics. America’s new president seems to think he can increase his bargaining power by hitching trade to China’s territorial claims in the South China Sea (see article) and the status of Taiwan. Yet Mr Trump is not the only one with a nationalist constituency to please. For Mr Xi, Taiwan is non-negotiable and the South China Sea a “core” interest. + +The second is to focus on real abuses and avoid self-harm. During the campaign, Mr Trump pledged to designate China a currency manipulator. Although China still manipulates the currency, it does so to stop the yuan from falling too quickly, rather than weakening it to help exporters. Blanket tariffs of the sort Mr Trump has threatened would weigh most heavily on the poorest Americans. American exports to China are relatively concentrated in areas such as aeroplanes and farm products. That leaves the country vulnerable to immediate retaliation by Chinese regulators (see article). + +Last, Mr Trump should call Mr Xi’s bluff about being a model citizen of global trade by using the system’s own institutions to prosecute Chinese abuses. The international-trade bureaucracy works fairly well. The Obama administration brought 16 complaints against China at the World Trade Organisation (WTO), and did not lose a case. + +It is true that this course will not come naturally to an impatient president who relishes conflict. The WTO intentionally tries to take the drama out of trade politics. A case can take several years to see through. Too much extra litigation risks overwhelming its dispute-settlement apparatus. The pay-off, however, is that this reduces the chances of an all-out conflict that would frustrate Mr Trump’s overriding goal of healthy economic growth in America. + +The irony is that, by withdrawing from the TPP—a trade agreement which, though it currently excludes China, might one day have constrained its ability to pollute and subsidise state-owned enterprises—Mr Trump has immediately turned his back on the most promising way to change the economy he seems most worried about. If he really wanted to shake up the global trade system for the better, Mr Trump would resurrect some of the TPP’s provisions and use them as the basis for a grand bargain with China and other countries. That would be a beautiful deal. Alas, it also seems highly unlikely. + + + +This article appeared in the Leaders section of the print edition under the headline “Jaw, jaw” + + + + + +Touch-screen teaching + +Emerging markets should welcome low-cost private schools + +An East African crackdown on Bridge International Academies is hopelessly misguided + +Jan 28th 2017 + + + +MORE than 250m children in developing countries are not in school. Those who do attend often fail to learn anything. According to one study of seven African countries, primary-school pupils receive less than two-and-a-half hours of teaching each day; teachers are absent from class about half of the time. Even when they show up, theirs is a Potemkin pedagogy, lecturing to nonplussed pupils. Only about a quarter of secondary-school pupils in poor countries would reach the basic level of attainment on standardised international tests. + +Into this void have stepped low-cost private schools. For a few dollars each month, they give parents an alternative to the public sector. Such schools are common—about 1m of them are scattered across developing countries—but until recently this has been a chaotic cottage industry of tiny, unregulated providers. Only now are private chains emerging, offering the promise of innovative education at scale. The prospect of change ought to be embraced. Instead, it is being fought. + +One chain in particular has attracted opposition. Since it opened its first branch in 2009, Bridge International Academies has expanded to run 520 schools across Kenya, Uganda, Liberia, Nigeria and India. To keep costs low, the firm uses one of three standard templates to build its schools; it makes its uniforms, textbooks and furniture in-house. To keep standards high, its teachers read from scripted lessons on a tablet computer. Remote teams use data from these devices and pupils’ test scores to monitor the quality of teachers. Investors include Bill Gates, Mark Zuckerberg and the development-finance arms of the British and American governments. + +Bridge continues to open new schools. But its overall pupil numbers are below their peak. This is as a result of roadblocks in its two biggest markets, Kenya and Uganda. Teachers’ unions there criticise Bridge for often hiring unlicensed teachers; they also argue that the chain funnels money away from public education. In Uganda the government has said that it would shut Bridge’s 63 schools on the ground that the company expanded without receiving permission from the Ministry of Education. (Bridge is lobbying the Ugandan government to try to stay open.) + +Such concerns stretch beyond east Africa. Education International, a global group of teachers’ unions, accuses the firm of “robbing students of a good education”. But the worries about private education providers in poor countries are either overblown or solvable. One fear is that they could end up replacing a public monopoly over education with a private one. Given the state of the education system in many countries, that would be a nice problem to have. It is also wildly premature, if only because the business model remains unproven (see article). And governments have plenty of ways to foster competition. They could introduce school vouchers or conditional cash transfers for parents to spend on eligible schools. Liberia is running a randomised controlled trial in which eight different private operators run publicly funded schools. + +Another worry is that companies have an incentive to flout sensible regulations in their desire to gain scale. The answer is for policymakers to strengthen the institutions that monitor educational performance. Better school inspectors and measures that identify which schools are improving academic outcomes would be a boon in any case. Developing countries are estimated to spend 2% of GDP a year on education that has no discernible effect on whether pupils are actually learning. + +The bigger point is that private education offers too many potential benefits to poor countries for it not to be encouraged. Chains bring in money, from both parents and foreign investors, which is likely to be better spent than aid and government cash. In 2014 less than 70% of education aid actually reached recipient countries (much of it was spent on scholarships in donor countries). A 2009 study in Tanzania found that about 37% of government grants intended for education were lost. + +Private education also promises innovation. Scripted lessons may be somewhat robotic, but in countries like Kenya and Uganda teachers need to be nudged to stop talking, ask pupils questions and check that the class understands what is going on. The evidence is not conclusive but Bridge’s own analysis suggests that it improves pupils’ results. + +Bridge to somewhere + +All the while it pays to remember the alternative. Private-school chains are not perfect, but their rivals are usually worse. Of the 337m primary-school-age children who look likely to fall short of basic international standards, three-quarters are in school. Most of them are in public schools. Not to try something different would be shameful. + +This article appeared in the Leaders section of the print edition under the headline “Tablets of learning” + + + + + +Family life in Putin’s Russia + +Russia should not decriminalise wife-beating + +Why are we even having this argument? + +Jan 28th 2017 + + + +VICTORIAN England was a good place to be an abusive husband. Even “the vilest malefactor has some wretched woman tied to him, against whom he can commit any atrocity except killing her, and, if tolerably cautious, can do that without much danger of the legal penalty,” John Stuart Mill wrote in 1869. Court reports were filled with accounts of men mutilating their wives and receiving light sentences. But things were starting to change. A law specifically criminalising violence against women and children was enacted in 1853. The women’s movement of the late 19th century called for harsher punishments and sexual equality. A century later the rise of feminism in the West and elsewhere brought new legislation, more sensitive policing and belated recognition that living with someone should not be a licence to beat her up. + +Russia appeared to embrace this idea, too. Last June the Duma, Russia’s parliament, adopted a law criminalising the beating of household members and mandating strict penalties for offenders. This reflected a consensus, at least among liberal urban Russians, that domestic violence was not a fact to be accepted but an evil to be fought, and that reluctant police needed to be told to intervene. + +Alas, the law sparked off a reaction. Elena Mizulina, a conservative senator, introduced a bill (see article) to decriminalise domestic violence if it is a first offence, unless it causes severe injury, and to reduce the penalties for subsequent beatings. Her bill is based on rules that were current under Ivan the Terrible. Vladimir Putin has indicated that he will sign it. Do we really have to point out that this is an awful idea? + +Accurate statistics on domestic violence are hard to collect. Victims are seldom eager to report it, especially if they are financially dependent on their abusers. (One survey of European countries found that those with the greatest sexual equality also reported the most domestic abuse—a sign that it was measuring the willingness to report, not the actual incidence.) Nonetheless, it is clear that Russian women are vulnerable. The interior ministry has estimated that thousands of Russian women are killed by their domestic abusers each year. This figure may be inflated, but the real one must be high: Russia has Europe’s highest homicide rate, and figures from other countries show that female murder victims are most frequently killed by (ex-) partners. This is to say nothing of non-deadly assaults, the beating of children or elderly family members, or the surprisingly frequent victimisation of men by women. + +Try talking instead + +No country has solved this problem. If the victim won’t testify, it is hard to press charges. And macho police are not always good at dealing with domestic disputes. When American states first required cops to make arrests, they often charged both parties, leading to an unjust increase in the number of women in jail. However, the evidence suggests that tougher punishment, more help for victims and public-education campaigns all help. Since America passed its Violence Against Women Act in 1994, domestic violence has fallen by more than half (though much of this mirrors an overall decline in crime). + +Some Russians worry, understandably, that if the country’s thuggish police are told to interfere in family life, they will do so abusively. Others worry that the state will police how they discipline their children. Yet these fears are overblown. + +When the Russian Orthodox church warns that making it illegal to smack one’s children would violate “the understanding of parents’ rights accepted by Russian culture”, it is talking claptrap. Ditto when Russia’s ombudsman for children, a government body, argues that the very term “domestic violence” serves to “zombify and intimidate families and parents”. Ms Mizulina argues that a man who beats his wife does less harm than a woman who humiliates her husband, and that the most important thing is to maintain “authority in the family”. Such appeals to tradition and culture are a familiar way of denying that human rights are universal. Beating one’s partner or child is not intrinsically Russian, any more than it is intrinsically English. It is intrinsically wrong. + +This article appeared in the Leaders section of the print edition under the headline “Empowering the vilest malefactors” + + + + + +Letters + + + + +On assisted suicide, John Calvin, languages, calendars, the Normans: Letters to the editor + + + + + +Letters to the editor + +On assisted suicide, John Calvin, cheese, languages, calendars, the Normans + +Jan 28th 2017 + +Letters are welcome via e-mail to letters@economist.com + + + +Assisted suicide + +You say that the police in Britain are increasingly turning a blind eye to assisted suicide (“A matter of life and death”, January 14th). Declining to prosecute is not the same thing as turning a blind eye. Prosecutorial discretion exists for all criminal offences, not just for assisting suicide. A decision to prosecute has to take into account not only whether the law has been broken but whether there has been criminal behaviour involved. + +The existing law holds penalties in reserve that are sufficient to make anyone who is minded to assist a suicide think carefully before doing so. As a result the numbers are very small. Cases where there has been serious soul-searching and genuinely compassionate intent are not generally considered to merit prosecution. This does not, however, provide a reliable indication of what would happen under a law licensing assistance with suicide. Look at Oregon, which went down this road in 1997. The number of legal assisted suicides there has been rising steadily, and steeply in recent years. + +Evidence for your claim that hundreds of terminally ill people are taking their own lives is also open to question. And it is not suicide that is unlawful but encouraging or assisting suicide. Or are you suggesting that if terminally ill people are taking their own lives the proper response should be to help them on their way? + +This is a complex and sensitive subject which needs to be considered objectively and with care. Your article read like a campaigning document. + +LORD CARLILE + +House of Lords + +London + + + + + +Songs of praise + +Charlemagne portrayed John Calvin as a misanthrope who hated music (January 7th). Communal singing in worship was unusual in early modern Europe, according to Andrew Pettegree’s “Reformation and the Culture of Persuasion”. Calvin actually revived congregational singing of the Psalms in Strasbourg and Geneva, and he even translated some Psalms for metrical composition himself. + +French Protestants not only lived by these hymns, they died by them. Mr Pettegree’s book describes how “condemned evangelicals walked to their execution with the Psalms on their lips.” After numerous incidents where the watching crowds sang along in solidarity, the French authorities cut out the prisoners’ tongues. The Psalms and hymns of Geneva inspire Reformed Christians to sing today, while we still have a voice to confront autocrats and their wicked schemes. + +REV ANDREW THOMPSON SCALES + +Chaplain + +Princeton Presbyterians + +Princeton, New Jersey + + + + + +As gouda as it gets + +*After reading your article on why humans love cheese, I pondered how many cheese aficionados would be aware of the tradition of serving fine cheeses at the Royal Navy’s old gunnery school at HMS Excellent at Whale Island (“Many incarnations”, December 24th)? Many Royal Naval wardrooms served fine collection of cheeses, but when I visited HMS Excellent in the early 1960s on training I was astounded by the incredible collection of cheeses—not just English Cheddar, Stilton, Dutch Edam and Gouda and the inevitable Camembert—but cheeses from every corner of the world. I was informed that one of the earlier commanding officers had started the cheese collection which continued. + + + +Sadly, the gunnery school shifted out of Whale Island a few years later and the Royal Navy shifted its focus from guns to missiles: the cheeses disappeared. One wonders if there was a connection! + + + +CAPTAIN MOHAN RAM + +Indian Navy (retired) + +Bangalore + + + + + +Mind your languages + +Powerful language-processing technologies will be a mixed blessing for the endangered languages mentioned in Technology Quarterly (January 7th). The future will see a world divided between those whose languages computers understand and those that they never will. Take Apma, spoken by 7,800 people in Vanuatu, or Ske, its neighbouring language, spoken in only one cluster of villages. No deep-learning algorithm, however sophisticated, will ever make sense of these little languages or the thousands of others like them. The vast amount of data needed to train a system in them does not exist, and there will never be enough users to generate it. + +ANDREW GRAY + +Port Vila, Vanuatu + + + + + +A date to remember + +Why should the peoples of Saudi Arabia or, for that matter, any other country, adopt a calendar based on the year of Jesus’s birth (“The prince’s time machine”, December 17th)? The Gregorian calendar has a number of problems. It is based on the birth of Jesus, which is not a universally relevant event; the years before Christ are counted backwards; and there is no year zero: 1BC is followed directly by 1AD. + +The Holocene calendar, first proposed by Cesare Emiliani in 1993, solves these issues by adding 10,000 years to the current year. This would set our year zero as the beginning of the human era. Our established days, months and holidays would remain the same but our perception of history would change by showing how progress quickened with time, and it would encompass all cultures. + +ALEX BROLEY + +Berkeley, California + + + + + +Party politics + +* In your leader you favour arbitrary thresholds for parties to be eligible to achieve representation (“Splitters”, January 14th). Arbitrary thresholds introduce an unnecessary degree of instability when one or more parties have support at roughly that level; as has occurred several times in Germany and New Zealand in recent years. + + + +Rather than trying to limit party machinations through such artifices, why not strengthen the hand of voters through the single transferable vote that gives them a direct say in who will be their representatives, and minimises wasted votes for a given level of vacancies to be filled locally? Voters are quite capable of sorting out these matters if individual candidates can succeed only by giving them reasons why they should be included in a marking of preferences. + + + +BOGEY MUSIDLAK + +President + +Proportional Representation Society of Australia + +Canberra + + + + + +The invasion of England + + + +To say that the Norman conquest “sparked a long economic boom in England, which made the country comparatively rich”, mistakes correlation for causation (“Brentry”, December 24th). The whole of western Europe enjoyed rising prosperity, population growth, increased agricultural productivity and greater trade in the period 1050 to 1250. A warmer climate combined with technological innovation in the form of the heavy plough, the introduction of the horse collar to harness horses to pull it, and the widespread use of newly developed horseshoes, transformed farming. All across the continent, the new wealth was invested in majestic Gothic cathedrals and abbeys. New towns were founded and existing settlements expanded dramatically. + +England didn’t need the pillaging, plunder and famine caused by the “Brentry” of the conquest to prosper in the good times of the early medieval period. Technological, commercial and social changes were already afoot in the entire region. + +GEORGE HORSINGTON + +Zug, Switzerland + +The Norman conquest was an economic catastrophe. William invaded because England was rich rather than over any legal claims he had. He then simply bled the nation. Anglo-Saxon England had been booming, and traded not just with Flanders and the Baltic but also sent cloth exports to Germany. The wine trade with France and Spain was important. Trade with the Rhineland provided the silver to produce 20m English pennies, the most pure currency in Europe. + +PETER LANGWORTH + +London + +It is a bit of a stretch to describe the Normans as French. They were descendants of Norsemen who had plundered Normandy and were Germanic, like the Anglo-Saxons. The battle of Hastings was a close-run thing by the way; an Anglo-Saxon tactical blunder caused it ultimately to go in the Normans’ favour. You might say that Hastings was lost through a serious series of Anglo-Saxon unforced errors rather than Norman might. + +PROFESSOR DAVID COLDWELL + +Johannesburg + +Pre-conquest England was prosperous enough to attract successive raiders such as Sweyn Forkbeard and Canute before William the Conqueror. Its institutions in 1066 were sufficient for Harold to raise an army, march to Yorkshire and see off Harald Hardrada’s attempt to drag England into his Nordic EFTA, just days before the battle of Hastings secured it for William’s EEC. + +PETER CLOUGH + +Wellington, New Zealand + +* Letters appear online only + +This article appeared in the Letters section of the print edition under the headline “Letters to the editor” + + + + + +Briefing + + + + +Multinationals: The retreat of the global company + + + + + +Multinationals + +The retreat of the global company + +The biggest business idea of the past three decades is in deep trouble + +Jan 28th 2017 + + + +IT WAS as though the world had a new appetite. A Kentucky Fried Chicken (KFC) outlet opened near Tiananmen Square in 1987. In 1990 a McDonald’s sprang up in Pushkin Square, flipping burgers for 30,000 Muscovites on its first day. Later that year Ronald McDonald rolled into Shenzhen, China, too. Between 1990 and 2005 the two companies’ combined foreign sales soared by 400%. + +McDonald’s and KFC embodied an idea that would become incredibly powerful: global firms, run by global managers and owned by global shareholders, should sell global products to global customers. For a long time their planet-straddling model was as hot, crisp and moreish as their fries. + +Today both companies have gone soggy. Their shares have lagged behind America’s stockmarket over the past half-decade. Yum, which owns KFC, saw its foreign profits peak in 2012; they have fallen by 20% since. Those of McDonald’s are down by 29% since 2013 (see article). Last year Yum threw in the towel in China and spun off its business there. On January 8th McDonald’s sold a majority stake in its Chinese operation to a state-owned firm. There are specific reasons for some of this; but there is also a broader trend. The world is losing its taste for global businesses. + +Their detractors and their champions both think of multinational firms—for the purposes of this article, firms that make over 30% of their sales outside their home region (unless otherwise specified)—as the apex predators of the global economy. They shape the ecosystems in which others seek their living. They direct the flows of goods, services and capital that brought globalisation to life. Though multinationals account for only 2% of the world’s jobs, they own or orchestrate the supply chains that account for over 50% of world trade; they make up 40% of the value of the West’s stockmarkets; and they own most of the world’s intellectual property. + +Although the idea of being at the top of the food chain makes these companies sound ruthless and all-conquering, rickety and overextended are often more fitting adjectives. And like jackals circling an elderly pride, politicians want to grab more of the spoils that multinational firms have come to control, including 80m jobs on their payrolls and their profits of about $1trn. As multinational firms come to make ever more of their money from technology services they become yet more vulnerable to a backlash. The predators are increasingly coming to look like prey. + +It all looked very different 25 years ago. With the Soviet Union collapsing and China opening up, a sense of destiny gripped Western firms; the “end of history” announced by Francis Fukuyama, a scholar, in which all countries would converge towards democracy and capitalism seemed both a historical turning-point and a huge opportunity. There were already many multinationals, some long established. Shell, Coca-Cola and Unilever had histories spanning the 20th century. But they had been run, for the most part, as loose federations of national businesses. The new multinationals sought to be truly global. + + + +Companies became obsessed with internationalising their customers, production, capital and management. Academics draw distinctions between going global “vertically”—relocating production and the sourcing of raw materials—and “horizontally”—selling into new markets. But in practice many firms went global every which way at once, enthusiastically buying rivals, courting customers and opening factories wherever the opportunity arose. Though the trend started in the rich world, it soon caught on among large companies in developing economies, too. And it was huge: 85% of the global stock of multinational investment was created after 1990, after adjusting for inflation (see chart 1). + +By 2006 Sam Palmisano, the boss of IBM, was arguing that the “globally integrated enterprise” run as a unitary organisation, rather than as a federation, would transcend all borders as it sought “the integration of production and value delivery worldwide”. From the Seattle demonstrations of 1999 onwards, anti-globalisation activists had been saying much the same, while drawing less solace from the prospect. The only business star to resist the orthodoxy was Warren Buffett; he sought out monopolies at home instead. + +Such a spree could not last forever; an increasing body of evidence suggests that it has now ended. In 2016 multinationals’ cross-border investment probably fell by 10-15%. Impressive as the share of trade accounted for by cross-border supply chains is, it has stagnated since 2007 (see chart 2). The proportion of sales that Western firms make outside their home region has shrunk. Multinationals’ profits are falling and the flow of new multinational investment has been declining relative to GDP. The global firm is in retreat. + + + +The other end of the end of history + +To understand why this is, consider the three parties that made the boom possible: investors; the “headquarters countries” in which global firms are domiciled; and the “host countries” that received multinational investment. For their different reasons each thought that multinational firms would provide superior financial or economic performance. + +Investors saw a huge potential for economies of scale. As China, India and the Soviet Union opened up, and as Europe liberalised itself into a single market, firms could sell the same product to more people. And as the federation model was replaced by global integration, firms would be able to fine-tune the mix of inputs they got from around the world—a geographic arbitrage that would improve efficiency, as Martin Reeves of BCG, a consultancy, puts it. From the rich world they could get management, capital, brands and technology. From the emerging world they could get cheap workers and raw materials as well as lighter rules on pollution. + +These advantages led investors to think global firms would grow faster and make higher profits. That was true for a while. It is not true today. The profits of the top 700-odd multinational firms based in the rich world have dropped by 25% over the past five years, according to FTSE, an index firm. The weakness of many currencies against the dollar is part of the story, but explains only a third of the fall. The profits of domestic firms rose by 2%. + +A complementary measure comes from the foreign profits of all firms as recorded in balance-of-payments statistics. Though the data refer to firms of all sizes, big ones dominate the mix. For companies with headquarters in the OECD, a club of mostly rich countries, foreign profits are down by 17% over five years. American firms suffered less, with a 12% drop, partly because of their skew towards the fast-growing technology sector. For non-American firms the drop was 20%. + + + +Profits should be compared with the capital sunk. The return on equity (ROE) of the top 700 multinationals has dropped from a peak of 18% a decade ago to 11%. The returns on the foreign operations of all firms have fallen, too, based on balance-of-payments statistics. For the three countries which have, historically, hosted the most and biggest multinationals, America, Britain and the Netherlands, ROE on foreign investment has shrunk to 4-8%. The trend is similar across the OECD (see chart 3). + +Multinationals based in emerging economies, which account for about a seventh of global firms’ overall activity, have fared no better: their worldwide ROE is 8%. Several supposed champions—such as Lenovo, the Chinese company which bought IBM’s PC business and parts of Motorola—have been financial flops. China’s biggest completed cross-border acquisition was of Nexen, a Canadian oil firm, in 2012. Last year the buyer, CNOOC, a state-owned energy firm, wrote a chunk of it off. + +About half of the deterioration in multinationals’ ROE over the past 5-10 years is explained by the slump in commodity prices, and thus the profits of oil firms, mining firms and the like. Another 10% of the deterioration is due to banks. Firms that provide the specialist services behind globalisation have also been hammered. Profits have dropped by over 50% from their peak at Maersk, a Danish shipping line, Mitsui, a Japanese trading house, and Li & Fung, a supply-chain agent for retailers. + +The pain extends beyond these core industries, however. Half of all big multinationals have seen their ROE fall in the past three years; 40% fail to make an ROE of over 10%, widely seen as a benchmark of whether a firm is creating any value worth speaking of. Even at powerhouses such as Unilever, General Electric (GE), PepsiCo and Procter & Gamble, foreign profits are down by a quarter or more from their peak. The only bright spot is the technology giants. Their foreign profits comprise 46% of the total foreign earnings of the top 50 American multinationals, up from 17% a decade ago. Apple made $46bn abroad last year, more than any other firm and five times more than GE, often seen as America’s bellwether. + + + +These figures mean multinationals are no longer achieving superior performance. The Economist has examined the record of the 500 largest firms worldwide. In eight out of ten sectors, multinational firms have expanded their aggregate sales more slowly than their domestic peers. In six out of the ten sectors they have lower ROEs (see chart 4). For American firms, returns are now 30% higher in their home market, where cosy oligopoly has become more enticing than the hurly-burly of an unruly world. + +Individual bosses will often blame one-off factors: currency moves, the collapse of Venezuela, a depression in Europe, a crackdown on graft in China, and so on. But the deeper explanation is that both the advantages of scale and those of arbitrage have worn away. Global firms have big overheads; complex supply chains tie up inventory; sprawling organisations are hard to run. Some arbitrage opportunities have been exhausted; wages have risen in China; and most firms have massaged their tax bills as low as they can go. The free flow of information means that competitors can catch up with leads in technology and know-how more easily than they used to. + +As a result firms with a domestic focus are winning market share. In Brazil two local banks, Itaú and Bradesco, have trounced global lenders. In India Vodafone, a Western mobile-phone operator and Bharti Airtel, an Indian multinational active in 20 countries, are losing customers to Reliance, a domestic firm. In America shale firms stole a march on the global oil majors. In China local dumpling brands are eating into KFC’s sales. A blend of measures for listed firms shows that multinationals’ share of global profits, 35% a decade ago, is now only 30%. + +So much for the investors. What about the second constituency for multinationals, the “headquarters countries”? In the 1990s and 2000s they wanted their national champions to go global in order to become bigger and brainier. A study by McKinsey, a consultancy, based on 2007 data, outlined the sort of benefits they were after. Multinationals operating in America, which accounted for 19% of private-sector jobs, were responsible for 25% of private wages, 25% of profits, 48% of exports and 74% of research and development. Go them. + +Citizens of nowhere + +The mood changed after the financial crisis. Multinational firms started to be seen as agents of inequality. They created jobs abroad, but not at home. Between 2009 and 2013, only 5%, or 400,000, of the net jobs created in America were created by multinational firms domiciled there (although preliminary figures suggest that job creation picked up sharply in 2014). The profits from their hoards of intellectual property were pocketed by a wealthy shareholder elite. Political willingness to help multinationals duly lapsed. + +As a result, the tapestry of rules designed to help businesses globally is fraying. Global accounting, antitrust, money-laundering and bank-capital rules have splintered into American and European camps. Takeovers of Western firms now often come with strings attached by governments to safeguard local jobs and plants. Two American-led trade deals, known as TPP and TTIP, that gave protection to intellectual property, have flopped. The global tribunals that multinationals use to bypass national courts have come under attack. + + + +The deep roots of globalisation mean that trying to favour domestic companies by erecting tariffs no longer works as once it did. Over half of all exports, measured by value, cross a border at least twice before reaching the end-customer, so such tariffs hurt all alike. This does not mean that the inept or ignorant will not try them. But it does encourage the use of other avenues to try and right perceived wrongs, such as the tax system and good old political muscle. + +A typical multinational has over 500 legal entities, some based in tax havens. Using American figures, it pays a tax rate of about 10% on its foreign profits. The European Union (EU) is trying to raise that figure. It has cracked down on Luxembourg, which offered generous deals to multinationals that parked profits there; it also hit Apple with a $15bn penalty for breaching state-aid rules by booking profits in Ireland, with which it had a bespoke tax deal. America, for its part, has barred big firms from using legal “inversions” to shift their tax base abroad, most notably in the case of Pfizer, a pharmaceutical company that is America’s third-largest foreign earner. + +Republicans in Congress are debating changes to the tax code which would see exporters and firms bringing profits home pay less than before, while firms shifting production abroad would face levies. Meanwhile, some firms have apparently been browbeaten into outsourcing decisions about where to base factories by Donald Trump, the new American president. On January 3rd Ford, a carmaker, agreed to cancel a new plant in Mexico and invest more at home. Mr Trump also wants Apple to shift more of its supply chain home. + +If these trends continue global firms’ tax and wage bills will rise, squeezing profits further. If American multinationals shifted a quarter of their foreign jobs home, at American wage rates, and paid the same tax rate abroad as they did at home, their profits would fall by another 12%. This excludes the cost of building the new plants in America. + +Of all those involved in the spread of global businesses, the “host countries” that receive investment by multinationals remain the most enthusiastic. The example of China, where by 2010 30% of industrial output and 50% of exports were produced by the subsidiaries or joint-ventures of multinational firms, is still attractive. + +Argentina’s government wants to draw in foreign firms. Mexico has just sold stakes in its oilfields to foreign firms, including ExxonMobil and Total. India has a campaign called “make in India” to attract multinational supply chains. An index through which the OECD seeks to gauge the openness of host countries shows no overall deterioration since the financial crisis. + +But there are gathering clouds. China has been turning the screws on foreign firms in a push for “indigenous innovation”. Bosses say that more products have to be sourced locally and intellectual property often ends up handed over to local partners. Strategic industries, including the internet, are out of bounds to foreign investment. Many fear that China’s approach will be mimicked around the developing world, forcing multinational firms to invest more locally and create more jobs—a mirror image of the pressures placed on them at home. + +The price of hospitality + +Host countries may also become less welcoming as activity shifts towards intangible services. For the top 50 American multinationals, 65% of foreign profits now come from industries reliant on intellectual property, such as technology, drug patents and finance. A decade ago it was 35%, and the share is still rising. (It is much lower in Europe and Japan, which do not have big technology firms.) There is no serious appetite among multinationals to recreate in Africa or India the manufacturing centres they spurred on in China, which removes a reason for those host countries to welcome them. The jobs and exports that can be attributed to multinationals are already a diminishing part of the story. In 2000 every billion dollars of the stock of worldwide foreign investment represented 7,000 jobs and $600m of annual exports. Today $1bn supports 3,000 jobs and $300m of exports. + +Silicon Valley’s latest stars are already controversial abroad. In 2016 Uber sold its Chinese operations to a local rival after a brutal battle. In December India’s two digital champions, Ola, a ride-hailing firm, and Flipkart, an e-commerce site, said the government should protect them against Uber and Amazon. They argued that their rivals would build monopolies, create few good jobs and ship the profits to America. + +The last time the multinational company was in trouble was in the aftermath of the Depression. Between 1930 and 1970 their stock of investment abroad fell by about a third relative to global GDP; it did not recover until 1991. Some firms “hopped” across tariffs by building new factories within protectionist countries. Many restructured, ceding autonomy to their foreign subsidiaries to try to give them a local character. Others decided to break themselves up. + +Today multinationals need to rethink their competitive advantage again. Some of the old arguments for going global are obsolete—in part because of the more general successes of globalisation. Most multinationals do not act as internal markets for trade. Only a third of their output is now bought by affiliates in the same group. External supply chains do the rest. Multinational firms no longer have a lock on the most promising ideas about management or innovation. Where they have enforceable patents over valuable brands they are still at an advantage, as they are in products, such as jet engines, where economies of scale are best created by spreading costs over the entire world. But those benefits are less than they were. + +The lack of advantage is revealed in the amount of activity that yields little value. Roughly 50% of the stock of foreign direct investment makes an ROE of less than 10% (40% of the stock if you exclude natural-resources firms). Ford and General Motors make 80% or more of their profits in North America, suggesting their foreign returns are abysmal. + +Many industries that tried to globalise seem to work best when national or regional. For some, the penny has dropped. Retailers such as Britain’s Tesco and France’s Casino have abandoned many of their foreign adventures. America’s telecoms giants, AT&T and Verizon, have put away their passports. Financial firms are focusing on their “core” markets. LafargeHolcim, a cement maker, plans to sell, or has sold, businesses in India, South Korea, Saudi Arabia and Vietnam. Even successful global firms have gone on diets. P&G’s foreign sales have dropped by almost a third since 2012 as it has closed or sold weak businesses. + +It looks as if, in the future, the global business scene will have three elements. A smaller top tier of multinational firms will burrow deeper into the economies of their hosts, helping to assuage nationalistic concerns. General Electric is localising its production, supply chains and management. Emerson, a conglomerate that has over 100 factories outside America, sources about 80% of its production in the region where it is sold. Some foreign firms will invest more deeply in American-based production in order to avoid tariffs, if Mr Trump imposes them, much as Japanese car firms did in the 1980s. This is doable if you are large. Siemens, a German industrial giant, employs 50,000 in America and has 60 factories there. But midsized industrial firms will struggle to muster the resources to invest more deeply in all their markets. + +Politicians will increasingly insist that companies buying foreign firms promise to preserve their national character, including jobs, R&D activity and tax payments. SoftBank, a Japanese firm that bought ARM, a British chip company, in 2016, agreed to such commitments. So has Sinochem, a Chinese chemicals firm that is buying Syngenta, a Swiss rival. The boom in foreign takeovers by Chinese firms, meanwhile, may fizzle out or explode. Many such deals, reliant on subsidised loans from state banks, probably make little financial sense. + +The second element will be a brittle layer of global digital and intellectual-property multinationals: technology firms, such as Google and Netflix; drugs companies; and companies that use franchising deals with local firms as a cheap way to maintain a global footprint and the market advantage that brings. The hotel industry, with its large branding firms such as Hilton and Intercontinental, is a prime example of the tactic. McDonald’s is shifting to a franchising model in Asia. These intangible multinationals will grow fast. But because they create few direct jobs, often involve oligopolies and do not benefit from the protection of global trade rules, which for the most part only look after physical goods, they will be vulnerable to nationalist backlashes. + +The seeds of something more + +The final element will be perhaps the most interesting: a rising cohort of small firms using e-commerce to buy and sell on a global scale. Up to 10% of America’s 30m or so small firms already do this to some extent. PayPal, a digital payments firm, says its cross border transactions, which include activity from such multinationalettes, are running at $80bn a year, and growing fast. Jack Ma, the boss of Alibaba, a Chinese e-commerce firm, predicts that a wave of small Western firms exporting goods to Chinese consumers will go some way to reversing the past two decades of massive American firms importing goods from China. + +The new, prudent age of the multinational will have costs. Countries that have grown used to global firms throwing cash around may find that competition abates and prices rise. Investors, who all told have a third or more of their equity portfolios tied up in multinational firms, could face some unpleasant turbulence. Economies that rely on income from foreign investments, or capital inflows from new ones, will suffer. The collapse in profits from British multinationals is the reason why Britain’s balance of payments looks bad. Of the 15 countries with current-account deficits of over 2.5% of GDP in 2015, 11 relied on fresh multinational investment to finance at least a third of the gap. + + + +The result will be a more fragmented and parochial kind of capitalism, and quite possibly a less efficient one—but also, perhaps, one with wider public support. And the infatuation with global companies will come to be seen as a passing episode in business history, rather than its end. + +This article appeared in the Briefing section of the print edition + + + + + +United States + + + + +Donald Trump in office: Trust me, I’m the president + +Abortion policy: Gag reflex + +Pipelines: On a war footing + +Replacing Obamacare: High risk by name + +Subsidising professional sports: If you fund it, they may come + +Schools: Teaching economics + +Colleges and inequality: Skipping class + +Lexington: The Herbal Tea Party + + + + + +Donald Trump in office + +Trust me, I’m the president + +The new president has brought the habits of his campaign to the Oval Office + +Jan 28th 2017 | WASHINGTON, DC + + + +WHEN Richard Nixon’s presidency began his attorney-general gave this piece of advice to reporters: “Watch what we do, not what we say.” In his first week in office the 45th president said plenty to comfort loyalists and confound foes with his extravagant and disorientating lies. The press corps dwelt on what it means to have a White House spokesman who makes statements that are readily disproved, working under a president whose claims about voter fraud are entirely bogus. The startling thing is that in these first few days Donald Trump has been just as extravagant in his deeds as in his words. + +Incoming presidents like to use their powers to take swift action even when they have majorities in Congress. The order banning foreign NGOs that “actively promote” abortions from receiving federal money is a good example (see article). Even so, it is breathtaking how powerfully this president is signalling that he intends to honour campaign promises that some assumed were just talking points. So, too, is the passivity of congressmen who spent much of the past six years denouncing the previous president for his imperial use of executive orders. + +The orders signed so far include: giving the go-ahead to two oil pipelines, stipulating that they should use American steel in their construction; withdrawing from the Trans-Pacific Partnership; dismantling the rules that underpin Obamacare; freezing most hiring in the federal workforce; speeding environmental reviews on infrastructure projects; extending a wall along the border with Mexico; broadening the definition of offences that can lead illegal migrants to be deported; cutting grants for “sanctuary cities”, which are reluctant to deport most immigrants; and increasing the number of border-patrol agents. + +Draft executive actions, copies of which have been seen by news organisations including the New York Times and Vox, include putting the CIA back in the business of holding terror suspects by reopening “black sites” in other countries, which were previously used to torture prisoners; cutting back funding for the UN and other multilateral organisations; and ending the settlement of Syrian refugees and temporarily banning visitors from seven Muslim countries (Iran, Sudan, Syria, Libya, Somalia, Yemen and Iraq). + +Mr Trump has a mandate for speed, having repeatedly promised to act “so fast” on the campaign trail. But America is built on checks and balances, even when one party holds almost all the keys to power, as Republicans currently do. Mr Trump seems to be betting he can govern without them. “We do not need new laws,” he told civil servants at the Department for Homeland Security. “We will work within the existing framework.” + +Judged by their previous positions on everything from deficit spending to the dangers of an overmighty executive, Mr Trump should be heading for a clash with Republicans in Congress. But some lawmakers are relaxed about being by-passed. “We expect a lot of actions,” Adam Kinzinger, a Republican member of the House, told Politico. “Obviously I have no idea what it’s going to look like. For me, he’s elected president, he’s got his first days planned and what he’s going to do…there’s no reason that he needs to communicate all the details of executive actions to us.” + +And Mr Trump remains convinced, with reason, that he can speak to voters over the head of party bosses. There are signs that they are feeling cowed. Paul Ryan, the Speaker of the House, a budget hawk and until recently a supporter of comprehensive immigration reform, said that Congress will work with the president to pay for the wall upfront, the bill for which is cautiously estimated at $10bn. + +Eventually, though, lawmakers may start to cause trouble and to use the power they hold over spending. At the same time, opponents among non-profit and advocacy groups will from the start do their best to ensnare Mr Trump’s actions in the courts. + +It matters, therefore, that some of the president’s orders are unclear. The one on Obamacare, for instance, which offers non-specific “relief” from the Affordable Care Act, leaves a lot unsaid. On the face of it, the action tells the government to stop enforcing coercive measures that force people to buy health insurance and are unpopular. But it is silent on how to pay for Mr Trump’s popular promises to offer a replacement that is cheaper and better. + +Optimists point to experienced and distinguished generals and businessmen appointed to Mr Trump’s cabinet as a restraint on government by edict. But those outside the president’s innermost circle seem blindsided, too. + +On torture, for example, Mr Trump concedes that the retired four-star marine general, James Mattis, whom he has picked as his defence secretary, believes that brutal interrogations are ineffective. Congress, led by Senator John McCain, the Republican former presidential candidate and himself a victim of torture during the Vietnam war, has banned all interrogation methods not found in the army field manual. Mr McCain tweeted this week that Mr Trump “can sign whatever executive orders he likes, but the law is the law—we’re not bringing back torture.” + +But Mr Trump told ABC television that, although he would listen to his new defence secretary and his CIA chief, “I have spoken as recently as 24 hours ago with people at the highest level of intelligence. And I asked them the question, ‘Does it work? Does torture work?’ And the answer was, ‘Yes, absolutely’.” + +Mr Trump knows, better than his critics, what his supporters want. In his inaugural address, delivered outside the Capitol on January 20th, he swore to resuscitate a country he described as crippled by deindustrialisation and crime: “This American carnage stops right here and stops right now.” Many commentators, including some Republicans, decried this as demagoguery. But it was popular; 65% of Americans liked Mr Trump’s “America First” message. Although Mr Trump’s approval ratings are low for a new president, many proposals, including the promise to protect the country from foreign competition, go down well. Nor is he daunted by the risk that his actions will be unpopular beyond America’s borders, saying: “The world is as angry as it gets. What? You think this is gonna cause a little more anger?” + +This article appeared in the United States section of the print edition + + + + + +Foreign aid and abortion + +A policy intended to cut abortions is likely to do just the opposite + +The global gag rule is likely to hit the fight against HIV/AIDS + +Jan 28th 2017 + + + +ONE ritual has become familiar for a president’s first week in the Oval Office. It has long been illegal for federal money to be used to fund abortions anywhere. On January 23rd, four days into his presidency, Donald Trump signed an executive order that bans government aid to foreign non-governmental organisations that “actively promote” abortion, for example by telling a woman that abortion is a legally available option. Since 1984, when the policy first came about, it has been swiftly revoked by incoming Democratic presidents and reinstated by Republican ones. + +Past experience suggests that this “global gag rule” will lead to more abortions, not fewer. A study by researchers at Stanford University found that after the policy came into effect in 2001, the abortion rate increased sharply in sub-Saharan African countries that had been receiving substantial amounts of aid for family-planning programmes. By contrast, the abortion rate remained stable in countries that were less dependent on such aid (see chart). + +The study, as well as anecdotal accounts and research by NGOs, suggest that abortions rose because of cuts in the supply of contraceptives. In many poor countries NGOs funded by Western governments are big providers of contraceptives, and many fall foul of the Mexico City policy (named after the population conference at which it was first unveiled). Some provide abortions, others just information on where a safe, legal abortion can be obtained. Both can be life-saving: many women die from botched abortions, even in countries where abortion is legal. Some NGOs have chosen to close clinics rather than accept money with the new strings. + +Marie Stopes International, a British NGO, estimates the measure could cut 1.5m women off its family planning services in 2017 and lead to 2.2m more abortions in the next four years. In the past, European countries have upped their aid for family-planning programmes to fill what an EU official called the “decency gap” in aid. A day after Mr Trump resurrected the policy the Dutch government said it will set up a special fund to counter its impact. + +This time round the gap could be larger. Previously, the Mexico City policy applied only to aid for family-planning programmes, which in 2016 stood at about $600m. Mr Trump’s version covers all global health aid, a pot as large as $9.5bn a year. That is about a third of rich countries’ total foreign aid for health care. + +Nobody knows how many NGOs will shun money under the new rules. The casualties may include the foot soldiers in America’s global campaign against HIV/AIDS, which has beaten back the disease in Africa. (George W. Bush made an exception for HIV/AIDS when he resurrected the Mexico City rules.) Supporters of the policy see it as pro-life. Sadly, the probable outcome may be just the opposite. + +This article appeared in the United States section of the print edition under the headline “Gag reflex” + + + + + +Steeling for a fight + +Donald Trump backs two big oil pipelines + +In one of his first executive actions, the president throws down a gauntlet to the greens + +Jan 28th 2017 + + + +“From this day forward all war between the parties to this agreement shall forever cease.” So begins the Fort Laramie Treaty, which leaders of the Sioux signed in 1868 with the United States government. On January 24th the war threatened to restart—at least in the courts. In one of his first actions in office, Donald Trump ordered swift approval of two pipelines, one of which runs through land which the Standing Rock Sioux in North and South Dakota say is within the boundaries of the Fort Laramie treaty. The tribe vowed to take legal action, claiming it risks soiling their water. It heralds the start of what is likely to be a bitter battle between a pro-oil administration and environmentalists. + +The two projects, the Dakota Access Pipeline running 1,200 miles (1,900km) to Illinois, and the Keystone XL covering a similar distance from Alberta, Canada, to Nebraska, offer a boost to an industry hit by slumping prices and environmental rules in recent years. Both were blocked during the Obama administration. + +The first, costing $3.8bn, will carry oil from North Dakota’s Bakken area, an early beneficiary of the shale revolution that has fallen into the doldrums, partly because it sends much of its oil out by relatively expensive rail, which makes it uncompetitive against Texan crude. Mr Trump clearly rates its business case: he once invested in the company building the pipeline. + +In contrast, the last leg of the $8bn Keystone XL pipeline to Canada is a less appealing investment, analysts say. It aims to create a link between producers of the heavy, sulphurous crude in Alberta’s tar sands and refineries in the Gulf of Mexico that are better equipped for processing it than the lighter stuff pumped in Texas. But it has been hamstrung by years of delays, during which competitors have come up with alternative pipelines to ship Canadian crude to foreign markets that may reduce the volumes flowing south. What’s more, the state of Nebraska has yet to approve a route through which it can pass. + +None of these obstacles will deter Mr Trump, nor will the potential legal challenges he faces. He compounded the executive orders with one calling on the secretary of commerce, Wilbur Ross, to come up with a plan to ensure all future work on pipelines in the country is done with American steel. That might push up the cost, making their economics tougher. The local-content requirement may also violate World Trade Organisation rules. + +But the orders, which he had promised during the campaign, reinforced his inauguration message of “buy American”. They will have pleased his campaign donors in the oil industry, such as Harold Hamm, a pioneer of the North Dakota shale boom. They won applause from Canada’s prime minister, Justin Trudeau, even though Mr Trump said some of the terms with TransCanada, builder of Keystone XL, may be renegotiated. Mr Trudeau saw them as a fillip to Albertan oil producers—and that feeling was shared across America’s oil patch. “To the oil industry, it says we’re open for business,” says Trisha Curtis of PetroNerds, a consultancy. + +To many environmentalists, it means war, however. Greenpeace, an NGO, said an alliance of indigenous groups, ranchers, farmers and climate activists would block the pipelines, as they had done in the past. On January 25th Greenpeace activists hung a giant “Resist” banner from a crane near the White House. Mr Trump is sure to resist back. + +This article appeared in the United States section of the print edition under the headline “On a war footing” + + + + + +High risk by name + +The pitfalls of replacing Obamacare + +Without plenty of cash, high-risk pools would be a poor replacement for the Affordable Care Act + +Jan 28th 2017 | MINNEAPOLIS AND WASHINGTON, DC + +Room for everyone + +AS REPUBLICANS seek to carry out their promise to repeal the Affordable Care Act (ACA), they must keep an eye on their own political health. “Obamacare” may be unpopular, but its components are not. A celebrated part of the law bans insurers from turning away customers who have pre-existing medical conditions. Before the ACA, insurers would routinely deny coverage to those with even minor or old blots on their medical histories. At a recent question-and-answer session, Paul Ryan, the Speaker of the House of Representatives, was confronted by a man who, thanks to a cancer diagnosis, owed his life to this Obamacare rule. Mr Ryan promised the voter that the GOP’s desired ACA overhaul would not have left him for dead. Instead, he could have joined a “high-risk pool”. Beloved by the right, these pools feature in almost every Obamacare alternative, including the one penned by Tom Price, Donald Trump’s pick to be health secretary. + +The idea is to hive unhealthy people off into their own dedicated market and then subsidise their coverage. It reverses the logic of the ACA, which lumped everyone together to spread costs around. The law sent premiums skyrocketing for healthy folk who buy their insurance themselves, rather than through an employer. Whittling out higher-risk people from the market would bring those premiums back down. Middle-income earners too well-off to qualify for Obamacare’s tax credits, who have suffered the most from higher costs, would surely cheer such a reform. + +Thirty-five states ran high-risk pools before the ACA. The biggest and most successful was the Minnesota Comprehensive Health Association (MCHA, or “em-sha”). Established in 1976, MCHA covered 27,000 Minnesotans with pre-existing conditions in 2011, about 10% of the relevant market. It offered a selection of plans, from near-total coverage to catastrophe-only insurance. All provided good, though not unlimited, care. + +Separating high-risk people out does not make their costs disappear. Minnesota paid for MCHA in two ways. First, premiums were up to 25% higher than elsewhere. After those were collected, a levy on other health insurance plans covered its losses. This tax inflated healthy folks’ premiums much less than Obamacare does, partly because it applied to a broad base which included employer-provided coverage. + +MCHA helped create a stable market, argues Peter Nelson of the Centre of the American Experiment, a conservative think-tank. The ACA, by contrast, has led to something of a mess. In 2015 insurers’ costs were 16% higher than their revenue from premiums. Blue Cross Blue Shield, an insurer which covered 103,000 people, has left Minnesota’s market, blaming massive losses. The state is likely to hand out $300m to cushion the blow from huge premium increases for 2017, which by one measure reached 59%. + +Little wonder that some pine for the return of high-risk pools. But MCHA was the exception rather than the norm. Many states starved high-risk pools of cash. Florida’s contained only about 200 people in 2011. Premiums were commonly twice the normal rate. Many states had enrolment caps, meaning that even people willing to fork over were not guaranteed coverage. + +That makes worries on the left—that high-risk pools provide cover for denying care to the ill—look justified. (At the women’s march on Washington on January 21st, one wonkish protester wielded a placard proclaiming “high risk pool≠affordable health care”). Not even MCHA was accessible to everyone who needed it. In 2014 a 45-year-old paid about $350-400 a month for an MCHA plan with a $2,000 deductible. That seems a stretch for someone earning $24,000 a year, the income at which single-person households in Minnesota cease to be eligible for Medicaid or “MinnesotaCare” (two government-run insurance programmes for the poor). Remarkably, nobody knows precisely how many people could not afford MCHA. But using the obesity rate to guess the proportion of people with pre-existing conditions suggests that MCHA fell well short of covering all of them, says Lynn Blewett of the University of Minnesota. + +That suggests still greater subsidies would be needed to replicate Obamacare’s goal of universal coverage for the already-sick. Minnesota’s high-risk pool lost about $6,000 per enrollee in 2011. Covering such losses for the same proportion of the market nationwide would cost about $11bn a year, The Economist estimates. Mr Ryan’s plan offers $2.5bn a year in federal funds. Many states would be reluctant to make up the shortfall. + +High-risk pools are in some ways preferable to Obamacare’s complex system of behind-the-scenes redistribution, which is hard on middle-earners who lack employer-provided coverage. But without generous, sustainable funding, high-risk pools could be a treacherous alternative. + +This article appeared in the United States section of the print edition under the headline “High risk by name” + + + + + +Subsidising professional sports + +If you fund it, they may come + +The Raiders’ new stadium looks like an expensive boondoggle + +Jan 28th 2017 | LAS VEGAS + +Raiders of the stretched budget + +ALONG with framed family photos and magazine articles trumpeting his career, fifteen shovels adorn the walls of Steve Sisolak’s office. As the chair of the Clark County Commission, Mr Sisolak presides over many groundbreakings. He hopes to soon add a shovel to the wall to commemorate the start of construction on a 65,000-seat football stadium. The stadium proposal is at the crux of a plan to lure the Raiders football team to Sin City from Oakland, where the team currently shares a 1960s stadium with the Oakland Athletics baseball team. On January 19th the Raiders filed paperwork with the National Football League (NFL) expressing their intent to move to the Silver State. For this to go forward, 24 of 32 NFL team owners must approve it in a vote at the end of March. + +Subsidising sports stadiums increased with the Tax Reform Act of 1986, says Ted Gayer of Brookings, a think-tank. The law intended to clamp down on the tax exemption of bonds used to finance many sports stadiums (though not the proposed Las Vegas arena). But in practice, it incentivised the federal government to match local subsidies. In order to woo or retain professional sports teams, offering up public money has become almost mandatory for states. When they were scrambling to keep the Rams from moving to Los Angeles, St Louis offered to chip in $400m in state and local tax dollars to build a new $1.1bn waterfront stadium. To keep the Raiders in California, Oakland offered $200m in infrastructure and 105 acres (42 hectares) of land to construct a new home for the team. A Brookings report which Mr Gayer co-authored suggests that from 2000 to 2014, 36 of the 45 major-league sports stadiums that were either constructed or renovated received some sort of governmental subsidy. + +The Las Vegas stadium would cost $1.9bn, making it among the world’s most expensive. The Raiders would pony up $500m and Sheldon Adelson, a casino magnate, has promised $650m, though his participation has recently become less sure. The remaining $750m would come from a hike in Clark County hotel room taxes—a record stadium subsidy. Additionally, a report by the Nevada Department of Transportation estimates that it would also require $899m for highway upgrades. That report surfaced mysteriously on the day Nevada’s state legislature was meant to vote on the stadium tax; the department’s bleary-eyed director was called from bed at midnight to explain. + +Mr Sisolak, who will probably run for Nevada governor in 2018, and the project’s other supporters insist that the stadium will be a boon for the local economy. Gesturing at his shovels he says: “To me, these represent jobs. The stadium would mean thousands of new jobs.” The Southern Nevada Tourism Infrastructure Committee suggests the stadium will create 19,000 construction jobs and 6,000 permanent positions. It projects that football games, concerts and other events held in the stadium would draw 450,000 new visitors to Las Vegas each year, bringing in $35m in annual public revenue (and, if accurate, repaying the direct subsidy over 21 years). And anyway, the extra taxes levied to build the stadium will mainly come out of tourists’ bedazzled pocketbooks. + +Roger Noll, an economist who studies sports-stadium subsidies at Stanford University, says he has never witnessed the construction of a football stadium that has had a significant positive impact on the local economy. Chris Giunchigliani, the only Clark County commissioner to vote against the tax bump needed for the stadium, argues the project should have been funded entirely by the private sector. Mr Adelson, many sceptical of the stadium protect note, is worth around $30bn. “If it’s good for business, let business pay for it,” Ms Giunchigliani reasons. + +This article appeared in the United States section of the print edition + + + + + +Schools + +Teaching economics + +Creative fixes for the teacher shortage + +Jan 28th 2017 | NEW YORK + + + +TEACHERS for maths, science and for special and bilingual education have long been hard to find and keep. Filling empty slots in rural and in low-achieving urban districts is not easy either. This is not new, but districts, states and colleges are devising new ways to tackle the problem. Some are allowing unqualified teachers into the classroom. A survey last year of 211 California school districts found that 22% allowed teachers to teach subjects outside their expertise. Others are paying maths and science teachers more, which is anathema to unions, who want to treat all teachers the same. To avoid their wrath, a few states plan to use separate grants to pay bonus salaries, bypassing school districts altogether. + +Some districts, such as the Cherokee County School District in South Carolina, pay teachers a $10,000 signing bonus to work in rural areas. Math for America, a privately funded programme in New York city, gives teachers up to an extra $15,000 a year for four years. New York city’s public schools lose 9% of maths and science teachers each year. Math for America’s attrition rate is less than 4%. It provides 20% of the city’s public school maths teachers and are in half of its high schools. + +Others are loosening up mandates for teaching licenses. Bruce Rauner, Illinois’s governor, signed a bill making it easier for teachers who move to Illinois to work in the state. Pennsylvania has expedited certification for military veterans and their spouses. One deputy chancellor in Florida is trying to get districts to permit part-time teachers to work a bit like a university adjunct, teaching just one course, instead of a full class-load. Changing certification requirements could open up teaching to scientists, engineers and mathematicians. That two-thirds of all teachers leave before retirement age doesn’t help matters. Yet even as some schools and districts struggle to fill slots, many states also find they have an oversupply of elementary schoolteachers. + +This article appeared in the United States section of the print edition + + + + + +Colleges and inequality + +Skipping class + +New data show that joining the 1% remains unsettlingly hereditary + +Jan 28th 2017 + + + +READING John F. Kennedy’s application to Harvard College is a study in mediocrity. The former president graduated from high school with middling marks and penned just five sentences to explain why he belonged at Harvard. The only bit that expressed a clear thought was also the most telling: “To be a ‘Harvard man’ is an enviable distinction, and one that I sincerely hope I shall attain.” America’s premier universities, long the gatekeepers for the elite, have changed greatly since their days as glorified finishing schools for scions. But perhaps not as much as thought. + +New data on American universities and their role in economic mobility—culled from 30m tax returns—published by Raj Chetty, an economist at Stanford University, and colleagues show that some colleges do a better job of boosting poor students up the income ladder than others. Previously, the best data available showed only average earnings by college. For the first time, the entire earnings distribution of a college’s graduates—and how that relates to parental income—is now known. + +These data show that graduates of elite universities with single-digit admissions rates and billion-dollar endowments are still the most likely to join the top 1% (though having wealthy parents improves the odds). And despite recent efforts to change, their student bodies are still overwhelmingly wealthy. + +Princeton University is the best at producing plutocrats—23% of its graduates end up as one-percenters, about the same as the share of its students who hail from equally wealthy households. Following closely are the University of Pennsylvania, Harvard and Stanford where this rich-in, rich-out model works well. + +No matter their family income, students at America’s most prestigious universities have a roughly equal chance of reaching the top 20% of the income distribution. Reaching the top 1% is a different story altogether. In this case, having a trust fund appears handy. Even if a student attends an elite university, the chances of eventually reaching the economic elite increase greatly with the wealth of parents (see chart). A rich student, hailing from a household in the top 5%, has about a 60% greater chance of reaching the income summit than a poor student, whose parents were in the bottom 5%, even if they both attended one of America’s most esteemed universities. Elite financial and consulting firms, which often recruit for highly paid positions exclusively at Ivy League-calibre schools and rely on networking, may bear some of the blame. + +Breaking into the upper-middle class is a good bit easier, our analysis of Mr Chetty et al’s data shows. Three of the important factors in determining the average earnings of graduates are test scores, where the college is located and what subjects the alumni studied. Those who do not get into Yale should feel relieved that a clear path to the upper-middle still exists: study a technical subject like engineering or pharmacology, and move to a large city. Graduates from lesser-known colleges focusing on science, technology and maths like Kettering University and the Stevens Institute of Technology earn, on average, just as much as their Ivy League peers. + +Such colleges however, host just a fraction of America’s undergraduates. To identify which colleges are the best “engines of upward mobility”, Mr Chetty and his collaborators rank universities on their ability to move large numbers of students from the poorest 20% of the income distribution to the top 20%. The best at this are mid-tier public universities like the City University of New York and California State systems. + +Elite universities justify steep rises in tuition fees by pointing to their generous financial-aid programmes for poor students. Harvard’s most recent fund-raising campaign passed the $7bn mark, partially by focusing on expanding financial aid. Parents with incomes under $65,000 are not expected to pay a cent. But the data show that, from 1999 to 2013, poor students’ access to the university has stayed stubbornly low (more than half of Harvard students came from the richest 10% of households). + +Just 2% of Princetonians came from households at the bottom 20% of the income distribution, compared with 3.2% from the top 0.1% (corresponding to an annual income of more than $2.3m). Put another way, students from this zenith of the income scale are 315 times likelier to attend Princeton than those from the bottom 20%. Only Colby College, a small liberal-arts college in Maine, has a worse ratio. + +The vast majority of talented low-income students do not apply to elite universities—despite the fact that they are often more affordable than their local colleges, one study shows. But the other problem is social. Poorer students tend to have worse test scores and thinner CV’s—some must work or baby-sit instead of studying. Elite private universities—which already spend millions on outreach programmes—can only do so much to push against a public education system where quality and income go together. + +Harvard and Princeton are not alone: the same trend held true for all elite universities in the country. “These numbers are not where we’d like them to be,” says Stu Schmill, dean of admissions for the Massachusetts Institute of Technology (MIT). Over the past decades, admissions offices’ devotion to affirmative action brought an increase in black and Hispanic attendance at elite colleges and universities. + +But legacy admissions, which give preferential treatment to family members of alumni, exacerbate the imbalance. Of Harvard’s most recently admitted class, 27% of students had a relative who also attended. There’s evidence that this system favours the already wealthy. MIT and the California Institute of Technology, two elite schools with no legacy preferences, have much fewer students who hail from the ranks of the super-rich. + +“The dirty secret of elite colleges is that for all the positive talk about the importance of racial diversity, low-income students of all races are essentially shut out,” says Richard Kahlenberg of the Century Foundation, a think-tank. Despite all the spending on financial aid, the Ivies are still doing a poor job of finding and educating bright, poor students. + + + +“Mobility Report Cards: The Role of Colleges in Intergenerational Mobility” (Raj Chetty, John N. Friedman, Emmanuel Saez, Nicholas Turner, Danny Yagan; 2017) + + + +This article appeared in the United States section of the print edition + + + + + +Lexington + +The rise of the Herbal Tea Party + +Scolding Trump voters will not carry the Democrats back to power + +Jan 28th 2017 + + + +AS A rule, populist insurgencies are rarely defeated with slogans in Latin. Yet there it was, swaying proudly over the protest march that filled the ceremonial heart of Washington, DC, a day after the inauguration of President Donald Trump—a handwritten sign reading: “Primum Non Nocere”. The cardboard sign, quoting the ancient medical principle “First, Do No Harm”, was held by Mike Gilbert, an epidemiologist from Boston, Massachusetts, who joined hundreds of thousands of others showing their disapproval of the new president. Mr Gilbert gave two reasons for attending what was officially the “Women’s March on Washington”, part of an internet-organised global protest that saw sister marches in hundreds of cities. He marched to show solidarity with “the women in my life” and to rally support for “sound science”, which he fears will be undermined by ideologues chosen to oversee scientific funding and regulation. + +Many marchers set out to shame Mr Trump for boorishly boasting, years ago, that fame allowed him to grab women “by the pussy”. They wore knitted pink “pussy hats” with pointy ears, or carried such signs as “Viva La Vulva”. Some youngsters mocked the new president as a short-fingered nativist, chanting: “Can’t Build A Wall, Hands Too Small.” Still others said that they hoped their numbers would humiliate the president by dwarfing crowds that turned out for his inauguration. That gambit seemed to work, as Mr Trump spent his first days in office bragging implausibly about the size of his inaugural crowds. + +Some leading Democrats enthuse that the moment is ripe for a Tea Party of the left (a “Herbal Tea Party”, some dub it), with a mission to resist the new president at every turn, challenging his legitimacy after he failed to win the popular vote. More thoughtful Democrats caution against reading too much into Hillary Clinton’s popular-vote advantage of 2.9m votes. Comparing raw-vote tallies in the 2016 and 2012 presidential elections, she did worse than Barack Obama in 34 states, notably in white, working-class and rural regions of 13 swing states that decided the election, while romping home in places that she was always going to win, such as California, New York and Massachusetts. + +Republicans control 33 governors’ mansions and 32 state legislatures. Once a Supreme Court justice is confirmed, they will control, more or less, all three branches of the federal government. Democrats, in their deepest hole since the 1920s, need to work out how to win elections again. But before that they must agree on something more basic: whether they want to engage with voters who do not share their views on such issues as abortion or climate change, or are ready to write them off as a lost cause. + +Some years ago David Wasserman, an analyst with the Cook Political Report, spotted a way to predict the political leanings of any given county: check whether it is home to a Whole Foods supermarket, purveyor of heirloom tomatoes and gluten-free dog biscuits to the Subaru-owning classes; or to a Cracker Barrel Old Country Store, a restaurant chain that offers chicken and dumplings and other comfort foods to mostly rural, often southern customers. Mr Trump won 76% of Cracker Barrel counties and 22% of Whole Foods counties, the Cook Political Report calculates. That 54 percentage-point gap is the widest ever: when George W. Bush was elected in 2000 it was 31 points. Eight years later when Barack Obama took office, it was 43. + +Trump opponents must decide whether they can live with so wide a Whole Foods-Cracker Barrel gap. Alas, too many on the left and centre-left show little patience for the Americans who voted for Mr Trump—even for Trump voters who voted for Mr Obama at least once, of whom there are millions. On inauguration day in Washington, Lexington watched Trump supporters from out of town, some with school-age children, ride the Metro next to hipster-protesters with lapel badges reading: “Trump Has a Tiny Penis”. That was not the start of an exercise in persuasion. A day later lots of marchers said the priority should be coaxing out what they are sure is the country’s natural Democratic majority, ideally by embracing left-wing populism. There was much implicit scolding of Trump voters for being stupid, with posters bearing such messages as: “Make America Think Again”. + +Captatio benevolentiae + +Actually, Democrats need to become less thoughtless about Trump voters. For instance, many disapprove of such oil pipelines as Keystone XL, which Mr Trump has moved to revive by executive order. Democrats grumble about possible leaks, and prefer investing in renewable energy. That is their right. But a common Democratic talking point involves scoffing that pipeline-building generates only a few “temporary” jobs. As Representative Marc Veasey, a Democrat from Dallas-Fort Worth, said at a post-election meeting in Congress, he represents pipe-fitters and ironworkers whose careers are built on “temporary” jobs. Such folk think Democrats are not listening to them, he told colleagues. + +Another Texas Democrat, Representative Beto O’Rourke, from the border city of El Paso, recalls that his party’s electoral strategy in 2016 revolved around trying to convince people that Mr Trump is “a bad guy”. However he cites Texan friends who agree with that description of Mr Trump, but still voted for him because they knew what he planned to do—build a border wall, bring back factory jobs—liked those plans, and could not say what Democrats wanted to achieve. Now Mr O’Rourke, an entrepreneur by background who is exploring a run in 2018 against Senator Ted Cruz, a doctrinaire Republican, worries that some colleagues are putting their faith in Tea Party-style obstructionism. But Democrats believe in making government work, he notes. Nor is he going to start making “tiny-hand jokes” about the president, he says: to mock the office is to show disrespect for his voters. To win an argument, Roman orators taught, first win the goodwill of your audience. That’s a Latin lesson with relevance. + +This article appeared in the United States section of the print edition under the headline “The Herbal Tea Party” + + + + + +The Americas + + + + +Venezuela: Maduro’s dance of disaster + +Bello: Death of a justice + +Mexico and the United States: Pistols drawn + +Sport in Argentina: Football for nobody + + + + + +Let them eat chavismo + +As Venezuela crumbles, the regime digs in + +Nicolás Maduro draws the wrong conclusions from the economic crisis + +Jan 28th 2017 | CARACAS + + + +EVERY weekday morning, a queue of several dozen forlorn people forms outside the dingy headquarters of SAIME, Venezuela’s passport agency. As shortages and violence have made life in the country less bearable, more people are applying for passports so they can go somewhere else. Most will be turned away. The government ran out of plastic for laminating new passports in September. “I’ve just been told I might need to wait eight months!” says Martín, a frustrated applicant. A $250 bribe would shorten the wait. + +As desperation rises, so does the intransigence of Venezuela’s “Bolivarian” regime, whose policies have ruined the economy and sabotaged democracy. The economy shrank by 18.6% last year, according to an estimate by the central bank, leaked this month to Reuters, a news agency (see chart). Inflation was 800%. + + + +These are provisional figures, subject to revision. They may never be published (the central bank stopped reporting complete economic data more than a year ago). The inflation estimate is close to that of the IMF, which expects consumer prices to rise by 2,200% this year. The Economist Intelligence Unit, a sister company of The Economist, puts last year’s economic contraction at 13.7%. That is still much sharper than the decline in Greece’s output at the height of the euro crisis. In 2001 Venezuela was the richest country in South America; it is now among the poorest. + +Venezuela’s salsa-loving president, Nicolás Maduro, has responded to bad news with bluster (he blames foreign and domestic “mafias”) and denial. Soon after the leak of the central bank’s estimates he fired its president, Nelson Merentes. Mr Maduro may have held him responsible for the leak. Or he may have punished him for a botched attempt by the government in December to introduce new banknotes. + +A currency swap makes sense. The 100-bolívar note, long the highest denomination, is worth less than three cents on the black market. Shopkeepers sometimes weigh them instead of counting them. They are to be replaced with a new set of notes worth up to 20,000 bolívares. + +The government’s stated reason for making the switch—to punish hoarders—made no sense. Who would store up the world’s fastest depreciating currency? Its execution was tragicomic. After Venezuelans had queued for days to return to banks bills about to lose their value (sometimes in exchange for notes with even smaller denominations) the replacements failed to show up. Chaos ensued as Venezuelans returned to the banks to withdraw 100-bolívar notes. Their demonetisation is now scheduled for February 20th. + +The change at the top of the central bank does not portend better policies. Ricardo Sanguino, the new president, is a Marxist former university professor who has spent 15 years as a loyal parliamentarian from the ruling socialist party. He will have less influence than Ramón Lobo, the newly appointed economy tsar, an economist with little high-level experience. + +They are unlikely to deal with the causes of Venezuela’s penury. These include controls on foreign exchange and prices of basic goods, which lead to shortages and corruption; unrestrained public spending; the expropriation of private industry; and the plundering of PDVSA, the state oil company, which provides nearly all of Venezuela’s export revenues. + +Ordinary Venezuelans have lost faith in the regime, if not in chavismo, the pro-poor populism espoused by the late Hugo Chávez, who ruled from 1999 until 2013. Mr Maduro, his successor, has an approval rating of 24%. In December 2015 Venezuelans elected a parliament dominated by the opposition. + +Mr Maduro’s response has been to cling on to power more tightly. The electoral commission, controlled by the regime, has blocked a referendum to recall him from office. The supreme court, manned by government loyalists, has blocked almost everything the national assembly has tried to do. On January 15th Mr Maduro delivered his annual state-of-the-nation address not to the legislature, as the constitution requires, but before the court. + +The regime says it wants dialogue with the opposition but has done little to enable it. Talks mediated by the Vatican and by Unasur, a regional body, broke down in December after the opposition accused the government of reneging on promises, including to release political prisoners and restore powers to parliament. + +Mr Maduro’s recent appointment of a new vice-president suggests that the regime is moving further away from dialogue and reform. He replaced Aristóbulo Istúriz, a moderate by chavista standards, with Tareck El Aissami, a hardliner. One of Mr El Aissami’s first acts was to announce the arrest of Gilber Caro, an opposition politician. He had an assault rifle and explosives in his car, the government claims; his party says the weapons were planted. + +Mr Maduro appears to be making two bets. The first is on disarray among the opposition. Divisions within the Democratic Unity alliance, a grouping of many parties, are widening as their efforts to defeat chavismo falter. It lacks a leader who can appeal to poor Venezuelans who feel betrayed by the regime’s empty promises. + +Mr Maduro’s second hope is that oil prices will bounce back. They have already recovered from $21 a barrel in 2016 to $45. But PDVSA has been so badly managed and starved of investment that it will struggle to reap the benefits. Output fell by 10% last year and no rise is likely in 2017. Venezuela’s foreign reserves have dwindled to less than $11bn; its easy-to-sell assets are about a fifth of that. Mr Maduro vows that 2017 will be the “first year of the new history of the Venezuelan economy”. That will not shorten the passport queues. + +This article appeared in the The Americas section of the print edition under the headline “Maduro’s dance of disaster” + + + + + +Bello + +Death of a Brazilian justice + +A tragedy highlights the growing political influence of the supreme court + +Jan 28th 2017 + + + +ON JANUARY 19th Brazil lost a crucial man at a crucial moment. Teori Zavascki, a justice of the supreme federal tribunal (STF), died along with four other people in the crash of a small aeroplane off Brazil’s south-eastern coast. He leaves behind a devastated family, legions of admirers—and the most explosive dossier of cases before the country’s highest court. + +Mr Zavascki became a household name—in spite of the string of consonants inherited from his Polish forebears—because he oversaw investigations into the corruption scandal centred on Petrobras, the state-controlled oil company. Known collectively as Lava Jato (Car Wash), these have dominated politics since 2014. They led indirectly to the impeachment last August of the president, Dilma Rousseff; she was not implicated, but her Workers’ Party (PT) was. Before he died Mr Zavascki was about to authorise plea-bargaining deals with businessmen that could lead to more prosecutions of politicians. + +Michel Temer, who succeeded Ms Rousseff, must now appoint a replacement. He was not expecting to have a hand in shaping Brazil’s highest court. None of the 11 justices would have reached the retirement age of 75 before the end of his term in 2018. Mr Temer must now make a decision that will affect not only Lava Jato but the character of an institution that is playing an increasingly prominent—and political—role in Brazil’s public affairs. + +The STF is a hybrid, part constitutional court and part final court of appeal. Its most controversial decisions stem from its third role: to try politicians with parliamentary or ministerial immunity. In November 2015, for instance, Mr Zavascki ordered the arrest of a PT senator for conspiring to help a Lava Jato witness flee the country. Last May he removed the speaker of the lower house of congress on the grounds that he had used his position to interfere with Lava Jato probes. Both rulings, upheld by Mr Zavascki’s fellow justices, set precedents. Citizens cheered. + +The court’s popularity has risen as that of politicians has plummeted. Of congress’s 594 members, 35 are targets of Lava Jato inquiries; dozens more are accused of other misdeeds. Leaked depositions seem to implicate Mr Temer and several cabinet members, though all deny wrongdoing. In surveys of public confidence in professions, judges come way ahead of politicians (though well behind firemen, the most trusted group). Sérgio Moro, a lower-court judge who investigates Petrobras miscreants, is a national hero. + +When Brazil’s constitutional referees attract such adulation, there is reason to worry. Teori Zavascki was one of the soberest. More typical is the grandstanding Marco Aurélio Mello, who gained notoriety in December by abruptly ordering the speaker of the senate to resign over embezzlement charges. He did not consult his fellow justices and was overruled by them. The chief justice, Cármen Lúcia, stunned legal scholars recently when she suspended a federal order to block an account belonging to the state of Rio de Janeiro, which had missed a loan payment. Her efforts to end massacres by gangs in prisons have made her famous; she is sometimes tipped as a contender for the presidency. + +The judges’ widening political role is not entirely their doing. The growing polarisation of politics puts pressure on the STF to act as an arbiter. Brazilian justices cannot throw out a case, however absurd. Each has 7,000-10,000 pending; the United States’ Supreme Court hears a few dozen a year. Throughout Brazil’s political crisis, the court’s willingness to hold politicians accountable has helped sustain citizens’ trust in democracy. + +But the court’s growing assertiveness is also a danger to democracy, contends Rubens Glezer of FGV Law School in São Paulo. Justices speak too much in public, often rashly. Live broadcasts of STF sessions amplify large egos. Cameras make it harder to concede mistakes. Some court-watchers have suggested removing TV Justiça, a public broadcaster, from the courtroom. Others talk of turning the STF into a narrower constitutional court akin to Germany’s, or moving it back to Rio de Janeiro, the capital before 1960, to put distance between the judiciary and government’s other two branches in Brasília. + +Ideas for changing the court’s role are worth considering, but not right now, when they could be construed as interfering with Lava Jato. To avoid such accusations, Mr Temer has wisely said that the Lava Jato file should not pass to the judge that he appoints to succeed Mr Zavascki (as it normally would) but to one of the current justices (which is permitted in exceptional circumstances). That person, in turn, would be wise to emulate the understated doggedness of Teori Zavascki. + +This article appeared in the The Americas section of the print edition under the headline “Death of a justice” + + + + + +Pistols drawn + +The diplomatic meaning of El Chapo’s extradition + +Security co-operation across the Rio Grande works well. That could change + +Jan 28th 2017 | MEXICO CITY + + + +ONE Mexican whom Donald Trump is unlikely to deport is Joaquín Guzmán, better known as El Chapo (Shorty). The Mexican government put Mr Guzmán, the chief of the Sinaloa drug-trafficking gang, on an aeroplane to New York on January 19th, the last full day of Barack Obama’s presidency. He will stand trial on charges ranging from money-laundering to murder, to which he has pleaded not guilty. If convicted, he will probably spend the rest of his life in an American jail. + +Mr Guzmán’s extradition is an opening gambit in Mexico’s diplomacy with Mr Trump, the most anti-Mexican president since James Polk, who waged the Mexican-American war in the mid-19th century. Mr Obama gets the credit because he was still president when the extradition happened. But the dispatch of Mr Guzmán to the United States is also a signal that Mexico is prepared to co-operate with the Trump administration, and to retaliate if ill-treated. + +Mr Trump can hurt Mexico by ripping up the North American Free-Trade Agreement (NAFTA) with Mexico and Canada or through a renegotiation that restricts trade. On January 25th he signed an executive order to start building a “physical barrier” on the United States’ southern border and vowed—again—to make Mexico pay for it. + +Mexico’s president, Enrique Peña Nieto, refuses to be provoked. So far, he has resisted pressure to call off his visit to Washington, planned for January 31st.* His country will offer Mr Trump “neither confrontation nor submission”, he declared on January 23rd. Instead, it will seek “dialogue and negotiation” on a broad range of issues, including trade, migration and security. The subtext of Mr Peña’s statement was that Mexico can hit back. It may be vulnerable on trade, but it can make trouble for the United States in such areas as migration and law enforcement. + +If Mexico stops co-operating on security, the United States will notice. The number of extraditions from Mexico to the United States rose from four in 1995 to 115 in 2012. Mr Peña, who became president in 2012, slowed the flow at first, in keeping with the nationalist ideology of his Institutional Revolutionary Party, but it has increased again. There were 79 extraditions in 2016, up from 54 three years earlier. The transfer of Mr Guzmán, who twice escaped from Mexican jails, once by tunnelling out, suggests there is potential for more. + +Mexico’s federal police exchange information with the American Drug Enforcement Administration and the Bureau of Alcohol, Tobacco, Firearms and Explosives. That often leads to the capture of drug kingpins in Mexico. The bringing to ground of Mr Guzmán is a prime example. Officers of the United States Marshals Service have reportedly disguised themselves as Mexican Marines to join hunts for drug traffickers. A Mexican law enacted last year allows armed American border-control officers to inspect lorries on the southern side of the border. American and Mexican intelligence agencies jointly monitor terrorist threats. + +Under the Mérida Initiative, the United States gives Mexico $139m a year to fight gangs, strengthen the rule of law and improve border security. The money goes in part to reforming the Mexican court system and to the provision of more than 400 drug-hunting sniffer dogs. + +Both countries have a clear interest in keeping such co-operation going. Kimberly Breier of the Centre for Strategic and International Studies in Washington suggests that it may even deepen under Mr Trump, who gives every sign of wanting to keep drugs out of the United States. But the mood in Mexico is more pessimistic. The security relationship will prosper only if Mr Trump pursues a “soft” renegotiation of NAFTA, says Raúl Benítez Manaut of the National Autonomous University of Mexico. So far, President Trump has yet to show his softer side. + +* Update: Shortly after The Economist went to press, Mr Nieto cancelled his planned trip Washington. + +This article appeared in the The Americas section of the print edition under the headline “Pistols drawn” + + + + + +Dribbling in the dark + +A row over money may disrupt Argentine football + +Beautiful game, ugly politics + +Jan 28th 2017 | BUENOS AIRES + +Celebrate while you can + +BUENOS AIRES has 36 stadiums with a capacity of at least 10,000 spectators, more than any other city in the world. Mauricio Macri, Argentina’s president, used his 12 years as president of Boca Juniors, the most popular football club, to launch his political career. He still enjoys a kickabout at the Quinta de Olivos, the presidential residence. + +But an ugly row over money is disfiguring the beautiful game. The government owes 350m pesos ($22m) to Argentina’s football association (AFA), which owes the same amount to the country’s football clubs. Many are unable to pay their players. The dispute may delay the restart of the top division’s season, scheduled for February 3rd. + +The crisis stems from Mr Macri’s determination to sweep away the populist policies of his predecessor, Cristina Fernández de Kirchner, which extended to football. He is also using the government’s muscle to force reform on a sport notorious for corruption. + +For years, Argentines without cable television could only watch highlights of weekend fixtures. This amounted to “hijacking the goals until Sunday”, Ms Fernández fumed. Her solution was Fútbol Para Todos, a ten-year deal with the AFA to broadcast on free-to-air television matches played by the national and top-tier teams. The government paid 600m pesos in the first season, more than double what the previous rights-holder paid. Fútbol Para Todos provided around a fifth of the revenues of the top clubs. + +Fans loved the arrangement. Ms Fernández’s opponents cried foul. Adverts shown at half-time were often government propaganda. In the election campaign in 2015 Mr Macri promised to keep free footie but drop the adverts. Confronted in office with a massive fiscal deficit and a prospective annual cost for Fútbol Para Todos of 2.5bn pesos, he killed it. The scheme ended last month. The AFA has yet to find a broadcaster for next season. + +The threat to this season comes from the unpaid 350m pesos, which Mr Macri is withholding until the AFA cleans itself up. It is still struggling with the legacy of Julio Grondona, who from 1979 until his death in 2014 ruled football “like an emperor”, says Gustavo Abreu of Austral University. The football clubs have yet to agree on a successor. FIFA, the global governing body, established a “normalisation committee” to propose reforms. But progress is slow. FIFA reportedly threatened to ban Argentina from international competitions. Buenos Aires may have a lot of empty stadiums this year. + +This article appeared in the The Americas section of the print edition under the headline “Football for nobody” + + + + + +Asia + + + + +The South China Sea: Own shoal + +Politics in Malaysia: Regal trouble + +Censorship in South Korea: The new black + +Indigenous Australians: Ministering to his own + +The race for governor in Jakarta: Demolition in progress + +Banyan: Goring the law + + + + + +Own shoal + +The Trump administration vows to get tougher on China’s maritime claims + +But does it really mean it? + +Jan 28th 2017 | OKINAWA + + + +WHEN Donald Trump’s nominee for secretary of state, Rex Tillerson, said during his confirmation hearings that America should deny China access to the bases it had built on disputed reefs and islands in the South China Sea, many assumed that he was speaking off the top of his head, perhaps trying to impress the senators by sounding tough. But when, at a press briefing on January 23rd, the new president’s spokesman said something similar, it was not just jumpy Chinese who began wondering whether Mr Trump might deliberately and dramatically escalate military tensions with China. + +At the briefing Sean Spicer, Mr Trump’s press secretary, was asked if he agreed with Mr Tillerson’s remarks. He replied, “It’s a question of if those islands are in fact in international waters and not part of China proper, then, yeah, we’re going to make sure that we defend international territories from being taken over by one country.” + + + +Certainly, there are strong grounds for objecting to China’s ejection of neighbours’ forces from islands and reefs, to its naval build-up and, above all, to its island-building. Last July an international tribunal produced a damning verdict on China’s “historic claims” in the South China Sea, declaring them invalid. It said China’s tongue-shaped “nine-dash line”, which descends over 1,500km from the Chinese coast to encompass nearly all the sea (see map), had no legal standing under the UN Convention on the Law of the Sea, to which China is a signatory. The court also dismissed China’s claim to territorial waters around certain rocks, originally visible only at low tide, on which it had built. And it lambasted China for violating the rights of the Philippines, whose 200-nautical-mile (370-km) exclusive economic zone covers some of the rocks in question, and whose vessels China had prevented from fishing and prospecting for oil. + +China said flatly that it would ignore the ruling. If anything, it has increased its presence in the sea since. For instance, it has installed hangars for fighter jets on some of the islands, in spite of a pledge not to “militarise” them. In December the Chinese navy briefly seized an underwater drone that had been deployed by an American naval research vessel about 50 nautical miles from Subic Bay in the Philippines. China has long resented America’s (perfectly legal) naval patrols and surveillance operations near its coasts. + +There is a good case for standing up to creeping Chinese expansionism. But the Chinese media are surely right when they say that a blockade of the islands would be construed as an act of war. Nor do America’s friends in the region want an escalation. The Philippines has had a change of government since bringing the petition to the tribunal. Its new president, Rodrigo Duterte, has said he will set the ruling aside. Australia, America’s closest military ally in Asia, has distanced itself from the Trump administration’s stance. And, in an abrupt change of course, Vietnam, another once-vocal critic of China’s claims, recently said it would settle its maritime disputes with China bilaterally, as China prefers. + +Decades of ideological inculcation have seared the nine-dash line across the hearts of Chinese nationalists. It is there on maps on the wall of nearly every classroom, and is reproduced in all Chinese passports. Facing a blockade, China would not climb down lightly. + +It is not clear whether Mr Trump endorses the measures, vague as they are, that Messrs Tillerson and Spicer seem to be sketching out. But it is hard to pretend that there is no change in attitude towards China. Mr Trump has tilted notably towards Taiwan—he has broken the taboo of questioning the “one-China” policy—and he seems bent on picking a fight over trade. It is all starting to sound quite hostile, notwithstanding the deep interdependence of the two powers. Yet if the stern talk on the South China Sea is followed by inaction, America’s credibility will be damaged. + +A charitable interpretation of the emerging line, floated by Bill Hayton, an expert on the South China Sea at Chatham House, a think-tank in London, is that the hawkish comments have a narrower aim, of keeping China from building on the Scarborough Shoal, a set of reefs near the Philippines from which the Chinese chased the Philippine navy in 2012. A base there, in addition to ones already built in the Paracel Islands to the west and the Spratly Islands to the south, would allow China to dominate the sea. Last year Barack Obama’s administration is thought to have warned China that America would block any attempt to build on the shoal. Mr Tillerson may therefore simply be restating existing policy more bluntly. + +Will it work? Perhaps. Satellite imagery suggests that China’s island-building stopped months ago. China’s new courtship of the Philippines argues against any provocative building on Scarborough Shoal. Besides, Xi Jinping, China’s president, has declared 2017 to be a year of stability, so he can scarcely afford a crisis in the South China Sea. Still, Mr Trump’s emerging line gives China an excuse to do what it swore not to, and fully fortify the islands it has spent years creating. + +This article appeared in the Asia section of the print edition under the headline “Own shoal” + + + + + +Regal trouble + +Malaysian democrats pin their hopes on the country’s royals + +But they make unlikely saviours + +Jan 28th 2017 | SINGAPORE + +Liberal fantasy + +ELEPHANTS once carried the sultans of Johor—a sprawling state in southern Malaysia—on tours of their tropical kingdom. Sultan Ibrahim, the present ruler, prefers the saddle of a Harley Davidson. Each year the car-collecting monarch leads a crowd-pleasing convoy through the state’s ten counties, sometimes driving motorbikes but also boats, buses, scooters and trains. Last year locals flocked to see the sultan pilot a powerful truck painted in the colours of the state flag, its leather seats stitched with threads of gold. + +Sultan Ibrahim is the most charismatic and outspoken of Malaysia’s nine sultans (who reign ceremonially in their own states and take it in turns to serve five-year terms as Yang di-Pertuan Agong, the head of state of the entire country). Lately the profile of Johor’s royal family has been boosted by the extravagant success of the local football team, the Johor Southern Tigers. Owned by the sultan’s son, Tunku Ismail, the club has rebounded from a two-decade losing streak to win three championships in three years. + +Yet with the scandal-hit administration of the prime minister, Najib Razak, growing increasingly authoritarian, Johor’s publicity-loving royals have also become unlikely voices of moderation. Against a backdrop of worsening race relations and decreasing religious tolerance, the sultan has applauded the contributions of Johor’s Chinese and Indian minorities, bemoaned his countrymen’s fading fluency in English and condemned the creeping Arabisation of its once moderate Muslim culture, notes Frances Hutchinson of ISEAS, a think-tank. As for the crown prince, when religious types criticised him for daring to shake hands with women last year, he resorted to the protection of an over-sized rubber glove in a parody of exaggerated piety. + +The sultans are considered guardians of the culture and religion of the Malay majority, but have little formal authority. In the early 1990s Mahathir Mohamad, the prime minister at the time, succeeded in pushing through constitutional amendments which withdrew the sultans’ power to veto legislation, and curbed the legal immunity their families enjoyed. These reforms were prompted by public outrage at thuggish royal behaviour, most notably that of Sultan Iskandar (father of Sultan Ibrahim), who was convicted of assault and manslaughter and only escaped prosecution for the fatal beating of a golf caddie thanks to his immunity as head of state. (The caddie had apparently laughed when the sultan fluffed a shot.) + +In the years since, the precise limit of the royals’ role has been contested. (It is a dangerous debate: under an old colonial law, those deemed to have incited “disaffection” with the royals risk imprisonment for sedition.) Observers argue that the sultans are gradually growing more active as the popularity of the United Malays National Organisation (UMNO), the party which has led Malaysia for 60 years, slowly declines. Constitutional lawyers grumbled in 2014 when the Sultan of Selangor, a rich state near Malaysia’s capital, declined to endorse the chief minister nominated by local legislators, asking for some alternatives instead. In 2015 the Sultan of Johor provoked similar head-scratching when he appeared to order the state government to ban e-cigarettes. + +Now Malaysians have begun to wonder if the sultans might be called upon to moderate—or even to oust—Mr Najib’s floundering government, which has clung to power despite claims that it allowed billions of dollars to be looted from 1MDB, a state investment firm. Last year critics blasted the government for ignoring the rulers’ apparent disapproval of a noxious new security law; meanwhile the opposition is hoping that a royal pardon will free Anwar Ibrahim, its leader, who has been imprisoned since 2015 on trumped-up charges of sodomy. In September Mr Mahathir—still politically active in his nineties, and now one of Mr Najib’s fiercest critics—presented the Agong with a petition, signed by more than 1m Malaysians, seeking the prime minister’s removal. + +Mr Mahathir’s request appears to have been quietly brushed aside, which may be for the best. Royal action to oppose Mr Najib would almost certainly provoke a “constitutional crisis”, reckons Saiful Jan, a political analyst. It is anyway not obvious that defenestrating Mr Najib is in the sultans’ interests: for those who would carve out a greater role in politics, a weak government is probably a boon. + +The debate reveals the desperation of Malaysia’s liberals, who are repelled by reports of vast corruption but ill served by an opposition mired in squabbles. It also says much about the woefulness of Mr Najib’s government that many reasonable citizens would like to empower unelected figures at its expense. That the country is rehashing old debates about the role of its hereditary rulers illustrates the continuing corrosion of its democratic institutions. + +This article appeared in the Asia section of the print edition under the headline “Regal trouble” + + + + + +Praise the president or else + +South Korea’s ministry of culture is accused of blacklisting more than 9,500 artists + +This is supposed to be the liberal, democratic Korea + +Jan 28th 2017 | SEOUL + +“BLACKTENT”, a pop-up citizens’ theatre pitched in January on Gwanghwamun square in central Seoul, invites South Koreans to become “both the protagonist and the audience”. On a recent weekday evening, its 100-odd tickets sold out in minutes. Some of the audience had to sit on the stage to watch “Red Poem”, a play about sexual exploitation. + +The head of the theatre troupe that produced it, Lee Hae-sung, is among 9,500 local actors, artists, writers, musicians, film directors and publishers included on an alleged blacklist of artists critical of President Park Geun-hye. Like many others on the list, Mr Lee says he has not received any state funding in recent years. Kim So-yeon, an art critic who helped set up “BlackTent” to protest against the blackballing, says the venue will continue to stage plays by shunned writers until Ms Park is removed from office. + +News of the existence of the list—which a former culture minister, Yoo Jin-ryong, said this week was orchestrated by Kim Ki-choon, Ms Park’s former chief of staff and right-hand man—is yet another twist in a sensational influence-peddling scandal that led to Ms Park’s impeachment by parliament in December. That handed the constitutional court the responsibility for deciding whether to end Ms Park’s term early or reinstate her. + +On January 21st a special prosecutor investigating the wider scandal arrested Mr Kim and the current culture minister, Cho Yoon-sun, on suspicion of abusing their power by enforcing the blacklist. A version of the list from 2015 is said to include some of the country’s most famous film directors as well as Han Kang, whose latest novel won last year’s Man Booker International Prize. The prosecutor says he has obtained part of the list and enough evidence to implicate Ms Park’s office. (That will have little bearing on the impeachment, which is restricted to other abuses of authority enumerated by parliament in December.) + +The ministry of culture apologised this week. Both Mr Kim and Ms Park deny involvement. Ms Park has sued a reporter at the Joongang Ilbo, another daily, for claiming that she ordered the blacklist’s creation in response to mounting criticism after the botched rescue of the Sewol, a ferry that sank in 2014, killing hundreds. (Expressing public support for prominent liberal politicians is also said to have been grounds for inclusion on the list.) + +Yet in his daily log, a late aide to Ms Park wrote that Mr Kim had ordered “an aggressive response to schemes by leftists in the arts”. Under Park Chung-hee, Ms Park’s father, who led the country from 1961 to 1979, Mr Kim headed a branch of the spy agency tasked with rooting out communists. He also helped draft the martial law that kept Park in power—and that allowed him to monitor artists and ban subversive works. Park Won-soon, the liberal mayor of Seoul (no relation to the president), says it is a dark reminder of those times, and an “intolerable” attack on South Korea’s vibrant democracy. + +Rumours of a modern-day blacklist had been circulating for a while. In 2015 the government stopped support for cinemas screening independent films, giving the money instead to those showing movies recommended by a state-financed film council. Prosecutors say recent patriotic blockbusters by CJ, a food and entertainment conglomerate, were produced under state pressure. Funding for the annual Busan Film Festival was halved after it premiered a controversial documentary on the Sewol in 2014. + +Lee Won-jae of Cultural Action, an artists’ collective, says the blacklisting is an instance of “state violence”; they plan to sue the government. Others are protesting with a fresh crop of art. Yeo Tae-myeong, a calligrapher on the blacklist, opened the weekly Gwanghwamun Art Protest in late December with a performance project, hanging enormous sheets of his freshly painted calligraphy from police buses. Mr Yeo wants to organise an exhibit of all the art that the protests have produced. Artists not featured on the blacklist are already joking that they feel left out. + +This article appeared in the Asia section of the print edition under the headline “The new black” + + + + + +Ministering to his own + +Australia gets its first aboriginal minister + +He has his work cut out for him + +Jan 28th 2017 | PERTH + +Comfortable in his own skin + +WHEN he became the first indigenous member of Australia’s House of Representatives in 2010, Ken Wyatt donned a kangaroo-skin cloak and spoke of improving opportunities for aboriginals and Torres Strait islanders. This week he put on the same outfit again to become Australia’s first aboriginal minister. His new job puts him in charge of health care for the elderly and for indigenous Australians, giving him a chance to make good on his lofty rhetoric. + +Mr Wyatt’s mother was a member of the “stolen generation”—aboriginal and mixed-race children taken from their families to be raised in orphanages. He worked in the state bureaucracies of both Western Australia and New South Wales, focusing on aboriginal health and education. In 2008 a panel which he co-chaired successfully demanded A$1.6bn ($1bn at the time) of public funding for aboriginal health. This background gives him more authority than his predecessors have had, and will help to insulate him from complaints about paternalism. + +Yet Mr Wyatt faces a huge challenge in trying to unpick the “industry” of indigenous aid. Australia’s different levels of government and a plethora of charities spend at least A$5.9bn on assistance schemes every year, but much goes on administration rather than the provision of services. The Centre for Independent Studies, a think-tank in Sydney, counted 1,082 projects targeting aboriginals last year; only 88 had been evaluated on their performance. + +Waste and poor administration, along with a harrowing history of discrimination and abuse, help explain why aboriginals live roughly a decade less than non-indigenous Australians. They are more than twice as likely to commit suicide. In his attempts to address such disparities, Mr Wyatt will be constrained by his Liberal party’s conservative social agenda and by the government’s tight purse strings. + +Mr Wyatt concedes that it is “unbelievable” that it has taken so long for an aboriginal to join the cabinet. It has been 45 years, after all, since the election of the first aboriginal senator. Today there are five aboriginal members of parliament, which gives Australia’s 700,000-odd indigenous people representation which is almost proportional to their share of the population. Now to do something with their newfound clout. + +This article appeared in the Asia section of the print edition under the headline “Ministering to his own” + + + + + +Crying blasphemy in Jakarta + +Islamist agitators try to take down a Chinese Christian governor + +With a doctored film, Ahok’s opponents accuse him of insulting the Koran + +Jan 28th 2017 | JAKARTA + +A parable of lies and fishermen + +WIPING away tears, Dharma Diani, a 40-year-old woman in a black headscarf, recounts how Jakarta’s city government gave her less than a fortnight’s notice before evicting her family and flattening their home last year. Hers was one of 400 families in Pasar Ikan, an informal settlement on the edge of Jakarta’s old port, who saw their houses razed as part of a scheme to improve the city’s flood defences. The authorities gave no help or compensation, she says, just the offer of a cheap rental apartment in a distant suburb. But a vigilante group called Islam Defenders Front (FPI, by its Indonesian acronym) did help, handing out food, water and bedding. + +When locals rebuilt a mosque demolished at the same time as their houses, they named it al-Jihad, a gesture of defiance at the urban-renewal schemes championed by Jakarta’s governor, Basuki Tjahaja Purnama, known as Ahok. The walls that still stand at Pasar Ikan are daubed with anti-Ahok slogans. And when FPI organised five minibuses to ferry people from Pasar Ikan to the city centre to join a protest against the governor, Ms Diani willingly climbed aboard. + +Many Jakartans approve of Ahok’s efforts to end the traffic jams, floods and other problems that blight their daily lives. That had made him the front-runner in the election for governor to be held on February 15th. But Ahok is a Christian of Chinese descent, making him twice a minority in a country whose 257m people are 90% Muslim and 95% indigenous. Last September he told a group of fishermen at an election rally that attempts to dissuade Muslims from voting for a Christian by citing a particular verse in the Koran were deceitful. Ahok’s opponents doctored a clip of the speech, making it seem as if he was denigrating the Koran itself, rather than the use to which it was being put, and then posted it online. The phony soundbite incensed many Indonesian Muslims and wiped out his lead in opinion polls. + +Islamist groups like FPI organised several protests, drawing as many as 500,000 people, to press the authorities to arrest him. In December Ahok appeared in court after prosecutors charged him with blasphemy. He denies the charges, of course, but faces up to five years in prison if convicted. Ahok’s opinion-poll ratings have since rebounded, lifted in part by a tearful appearance in court when he spoke movingly of being raised by Muslim parents. But most polls still put him in second place behind Agus Yudhoyono, the 38-year-old son of a former president. (In third place is Anies Baswedan, a former education minister.) All the polls suggest that it will be much more difficult for Ahok to win re-election if he fails to secure an absolute majority of votes on February 15th. In that case, the election will be decided by a run-off in April at which Ahok’s detractors are likely to unite behind the other candidate. + +Whoever wins, the election has left Indonesia’s president, Joko Widodo, known as Jokowi, struggling to respond to the challenge posed to the country’s secular and pluralist democracy by Islamist agitators. The people who attended the anti-Ahok protests did so for a variety of reasons. Most were offended by what they were told Ahok had said, but not all of them want to see Indonesia become a theocracy. Ms Diani, for her part, says she turned out because of Ahok’s high-handed ways with the poor—nothing to do with his supposed comments on religion. Nonetheless, the election has propelled hardline groups like FPI from the margins of national politics to the forefront. + +Jokowi himself appeared at a protest in December alongside the FPI’s firebrand leader, Rizieq Shihab, who has repeatedly called for the country’s secular constitution to be replaced by one based on sharia (Islamic law) and has twice been convicted of hate speech. Jokowi seemed to be trying to douse passions and persuade the crowds to disperse peacefully. Still, the president helped to elevate Mr Shihab and his fundamentalist views by sharing a platform with him. + +Indonesia’s moderate Muslim leaders have condemned the protests, along with the politicians stoking sectarian tensions, but many of their members defied them by taking to the streets. Nahdlatul Ulama, one of the largest moderate groups, talks of hosting a theological conference to check the rise of extremism. More chauvinist groups are cannier, exploiting pent-up anger over local issues such as the evictions at Pasar Ikan to advance their cause. + +Jokowi appears to be hoping that the Islamist problem will simply go away. It is possible that Mr Shihab will over-reach. He recently irked his own allies by proclaiming himself to be the “imam besar” (supreme leader) of all Indonesia’s Muslims. Police are investigating multiple complaints against him, including claims that he denigrated the country’s constitutionally protected doctrine of pancasila, which protects six officially recognised religions. He faces up to four years in prison if the complaints go to trial and he is convicted. Yet throwing Mr Shihab in jail might simply turn him into a martyr. + +Jokowi’s problems will not end after the polls close on February 15th, even if there is no need for a run-off. (At this stage, a run-off seems likely.) The protests against Ahok are widely seen as an indirect attack on the president himself. Ahok, after all, was Jokowi’s deputy when he was governor of Jakarta. The political forces at play could well dominate the next presidential election, due in 2019. + +This article appeared in the Asia section of the print edition under the headline “Demolition in progress” + + + + + +Banyan + +An ugly row about sacred cows + +Why Indian judges must bow before bovines + +Jan 28th 2017 + + + +SOME call it cruel, and no wonder. Baying spectators jab them with sharp sticks, or yank and twist their tails. Handlers are said to squeeze lemon in their eyes, rub chili on their genitals or force alcohol down their throats—whatever it takes to drive a bull wild enough to charge into a pen ringed with cheering, jeering people. The terrified beasts often trample or gore the boys who try to catch them by the hump and drag them down. Fear can also send a 450kg (1,000lb) bull crashing through barriers into speeding cars or trains. + +But jallikattu, a form of bull wrestling practised in the southern Indian state of Tamil Nadu, is no blood sport: unlike in a Spanish bullfight, the bulls’ ordeal does not end in death. For Tamils, the “taming” of bulls is a noble tradition. Prehistoric cave paintings, ancient seals and 17th-century carvings from Hindu temples all capture the same, unchanging image of a daredevil youth straining against the ungainly shoulder hump that distinguishes the hardy native bos indicus breed of cattle. In myth Krishna pacified a bull; the great Tamil screen heroes have also tested their manliness against a raging beast. + +In the blockbuster “Thaikuppin Tharam” in 1956, M.G. Ramachandran tamed a bull to win the respect of his uncle and the heart of his girl. Movie stardom was to propel MGR, and later also his leading lady, Jayalalithaa, to the pinnacle of state politics. Their party, the All India Anna Dravida Munnetra Kazhagam or AIADMK, espoused Tamil exceptionalism: the idea that Tamils are racially, linguistically and culturally distinct from Aryan, Indo-European northerners. And what better proof could there be that the north does not sufficiently respect the traditions and dignity of the south than the Supreme Court’s decision earlier this month to uphold a ban on jallikattu it had first issued in 2014, at the behest of animal-rights activists? + +The police in Chennai, the state capital, attempted to enforce the ban by raiding bull pens and arresting scores of would-be contestants before the start of the jallikattu season at the annual harvest festival of pongal in mid-January. In response, a giant crowd of protesters gathered along a wide, sandy stretch of the Marina Beach in the centre of the city, hoping to prod the AIADMK government to defy the court. Similar protests snowballed across Tamil Nadu. Marina Beach became a seaside Tahrir Square, complete with vendors, volunteer battalions of cleaners and shows of solidarity among Hindus, Muslims and Christians. + +From a defence of a traditional sport the protest metastasised into a wider declaration of Tamil identity against perceived alien influence, whether in the form of meddling from faraway Delhi, or of a Hindi-language cultural “invasion”, or of alleged attempts to impose north-Indian norms of Hindu practice. (Some pious Hindus from the northern “cow belt”, where cattle are especially revered, supported the ban.) Politicians of all stripes jumped on the bandwagon. Even the local head of the Rashtriya Swayamsevak Sangh, a Hindu-nationalist group that defends the sanctity of cows, found a way to please the crowds. He said that while he was neutral about jallikattu he would fight against what he termed “a conspiracy to finish off native Indian breeds to help international companies to market their own breeds”. + +Tamil pop and movie stars also piled in. Kamal Haasan, star of perhaps the most famous bull-taming scene in Tamil cinema, in the 2004 hit “Virumaandi”, sent out a series of shrill tweets in support of the protests. “PETA go ban bull-riding rodeos in Mr Trump’s US,” said one of them, referring to People for the Ethical Treatment of Animals, an international animal-rights group. “You’re not qualified to tackle our bulls. Empires have been made to quit India.” + +Chastened by the scale and passion of the protests, Tamil Nadu’s chief minister flew to Delhi for a hastily arranged meeting with Narendra Modi, the prime minister. The protests had spooked his government, too. The result: a fudge. The Supreme Court quietly agreed to suspend its ruling for a few days, allowing the state legislature to pass a new bill to legalise jallikattu. That may also be challenged, but in the meantime the sport has gone ahead with gusto: in the first few days after the lifting of the ban on January 22nd, three young men were killed in the bull pens. + +Who’s the bos? + +So, a great victory for the people, and a welcome defeat for government meddling and nannying courts? Perhaps, but the affair has left some uneasy. “I really have no opinion at all about the sport,” says Madhav Khosla of Columbia University. “But it is quite disturbing to see the Supreme Court so easily challenged, and basically forced to back off.” + +Sadly, this is not the only such case in recent months. The state of Punjab, for instance, has openly defied the Supreme Court’s order to open a canal that will irrigate parts of neighbouring Haryana. A similar dispute has seen the state of Karnataka repeatedly refuse to release to Tamil Nadu, which lies downstream on the Cauvery river, a court-ordered share of its water. In both cases state governments have not only bowed to public anger at the court’s rulings, but ridden and amplified it. In a recent talk to officers of the Research and Analysis Wing, India’s foreign-intelligence service, Pratap Bhanu Mehta, a thoughtful public intellectual, warned of a decline in the country’s public institutions and a rise in populist politics. + +Yet as Mr Khosla points out, such troubles are partly the fault of the judges themselves. All too often India’s courts have issued rulings that are either so harsh or so petty as to invite scorn. One recent example: the Supreme Court requires Indians to stand for their national anthem before every showing in every public cinema, including during film festivals. And surely, if the original ruling on jallikattu had mandated humane treatment of bulls rather than an outright ban, this rumpus might never have happened. + +This article appeared in the Asia section of the print edition under the headline “Goring the law” + + + + + +China + + + + +Mental illness: Ending the shame + +Lunar new year: Rooster boosters + + + + + +Under Mao, the depressed were seen as traitors + +China wakes up to its mental-health problems + +But sufferers are routinely treated as a danger to society + +Jan 28th 2017 | HANGZHOU + + + +LAST year Li Tian (not her real name) spent a month in a mental hospital. She has suffered from depression for years, but was not particularly low or anxious at the time. It was just that world leaders were preparing to gather in Hangzhou, the eastern city where she lives, for a G20 summit. Ms Li manages her illness with medication, but the authorities have it on record that she can be “unstable” (their evidence: she spent three months in a psychiatric hospital with postnatal depression some years ago). The government did not want any public outburst to mar what it saw as a hugely important event. So “someone from the community” visited her father, Ms Li says, and “suggested” that she check in to a psychiatric facility. Sufferers are still routinely treated as a danger to society. + +Ms Li is relatively lucky. Most people with mental disorders in China never receive treatment. There is often a stigma attached to such ailments. Some think that people with psychiatric conditions are possessed by evil spirits. Many see mental disorders as a sign of weakness, and regard them as socially contagious: a relative of someone with a serious disorder may find it hard to marry. Families sometimes have their kin treated far away to hide the “shame” of their condition, or keep them hidden at home. Even many medical students worry that those working with psychiatric patients risk catching their disease, says Xu Ni of “It Gets Brighter”, a mental-health NGO in Beijing. + +Ms Li, however, sees a doctor twice a year. Every weekday she attends the Chaoming Street Rehabilitation Centre, a drop-in facility for people with psychiatric problems. There she talks openly about her illness, shares her experiences with other sufferers and learns new skills. + +But the centre is one of only a handful of its kind in China. The country is woefully ill-equipped to treat mental conditions. The psychiatric system, such as it was, was largely dismantled after the Communists seized power in 1949. Under Mao, those who displayed symptoms of depression risked being viewed as traitors to the socialist cause, which was supposed to fill everyone with enthusiasm. + +Few were diagnosed with depression until the early 1990s. By then the health system was beginning to lose state backing. Hospitals were having to support themselves, and psychiatric services were not seen as money-spinners. Ms Li was rare in having her postnatal depression diagnosed: new parents often know nothing about the condition. + +The taboo fades + +Attitudes are beginning to change and China is waking up to the prevalence of mental illness. Outpatient visits increased by more than 10% every year between 2007 and 2012. Use of antidepressants is rising fast. Young, educated urbanites are increasingly using the internet to seek help privately for their mental-health problems. + +The government is also making a greater effort. In 2004 it launched a programme aimed at increasing the number of community mental-health facilities (with doctors on hand, unlike the Chaoming centre). Some provinces now give free medicine to people with schizophrenia, bipolar disorder and other conditions. In 2012, after decades of deliberation, China passed its first mental-health law. The bill called for yet more facilities, an increase in their staff and efforts to raise awareness of the issue in schools, universities and workplaces. It advised against confining sufferers against their will (patients are pictured above in 2010 at a facility in Luohe, Henan province). When the law was passed, about 80% of people in mental hospitals were there involuntarily, by some estimates. + +But change is slow, and the rapid transformation of Chinese society is making it all the more difficult for many to get the care they need. The migration of tens of millions of people into cities has broken up families and left many sufferers undiagnosed or with no one to turn to; people often resist seeking help because they are too embarrassed. As incomes have risen, so too has alcoholism, but fewer than 2% of addicts ever seek treatment because very few Chinese consider it an illness. + +New mental hospitals have opened and care has improved at some existing ones. But many such facilities still treat their patients as prisoners. A person familiar with them describes them as “unspeakable”. Others describe clanging metal doors, patients strapped to beds and staff who humiliate inmates. In Hangzhou, Ms Li endured repeated bouts of electric shock therapy for postnatal depression during her three-month stay at the city’s Number 7 People’s Hospital. + +Psychiatric resources remain largely devoted to preventing ailments from threatening social stability. Any kind of unusual behaviour in public, not just actions that are physically threatening to others, can be deemed such a risk. Ms Li’s experience during the G20 was typical. Officials often round up people with mental disorders before important political events. Mental hospitals are also sometimes used to detain political dissidents who have no diagnosis of mental-health problems. + + + +Doctors remain in short supply. In 2014 the country had about 23,000 psychiatrists—1.7 for every 100,000 people (see chart). Many of these were not fully qualified. Psychiatrists are paid less and have lower status than other medical specialists. Medical students at Peking University receive only two weeks of training in psychiatric care (they used to get none). Few of China’s nurses and social workers (of whom there is a woeful shortage) have experience in psychiatry. Qu Zhiya, the head of the Chaoming centre in Hangzhou, used to work in a textile factory; she has no medical training and earns just 2,300 yuan ($335) a month. Mental health-care resources are concentrated in cities; two-thirds of rural counties have no psychiatric beds at all. Medical insurance often does not cover mental-health treatment. + +Even if they accept that they do need care, sufferers from psychiatric problems may still try to resist it. People with a certified mental problem can find it hard to get work: since the Chaoming centre opened in 2007 not a single member has got a full-time job, says Ms Qu. So families often have to shoulder an even greater burden, with financial woes compounding a lack of medical or emotional support. + +The pressure can have appalling consequences. On January 20th a 42-year-old woman with a psychiatric condition was found locked in a cage in a wood in the southern province of Guizhou. She had been put in it by her brother, who claimed the local government knew about her case. Several such incidents have been reported by the Chinese media in recent years. They are China’s real shame. + +This article appeared in the China section of the print edition under the headline “Ending the shame” + + + + + +Rooster boosters + +China’s biggest festival is going global + +The government wants foreigners to celebrate, too + +Jan 28th 2017 | BEIJING AND YANGON + +A glad eye to the West + +RED lanterns adorn the aisles of a small supermarket. There are stacks of red envelopes on sale, for stuffing cash in and handing out as gifts. A sign offers seasonal discounts. Such festive trappings are ubiquitous in China in the build-up to the lunar new year, which this year starts on January 28th. But this is Yangon, the capital of Myanmar, where Han Chinese are a mere 2.5% of the country’s population. They are a sign that Chinese new year is becoming a global holiday. + +Several countries in Asia celebrate the lunar new year in their own way. But dragon and lion dances in Chinatowns the world over have helped to make China’s the most famous. These days growing numbers of people who are not of Chinese descent are joining in. In Tokyo window cleaners dress up as the animals of the Chinese zodiac. Barcelona’s Chinese parade includes dracs (a Catalan species of dragon). America, Canada and New Zealand have issued commemorative stamps for the year of the chicken (or cock or rooster, as the animal of 2017 is sometimes called, inaccurately: the Chinese word is gender neutral). Last year New York city made the lunar new year a school holiday for the first time. + +The spread of the spring festival, as China calls it, is partly due to recent emigration from China: 9.5m Chinese people have moved abroad since 1978, many of them far richer than earlier waves of migrants. It also reflects the wealth and globe-trotting ambitions of China’s new middle class: festivities in other countries are partly aimed at the 6m Chinese who are expected to spend their weeklong holiday abroad this year. International brands are trying to lure these big spenders with chicken-themed items. + +Conscious of China’s growing economic and political clout, foreign leaders have taken to noting the occasion. Britain’s prime minister, Theresa May, has given a video address, a tradition started in 2014 by her predecessor, David Cameron. Last year the country’s royal family tweeted a picture of Queen Elizabeth dotting the eye of a Chinese lion-dancer’s costume. Also in 2016, Venezuela’s culture minister admitted that his country was celebrating Chinese new year for the first time—with six weeks of festivities—in a bid to improve economic ties with China. It is rumoured that this year’s World Economic Forum in Davos was held a week earlier than usual to avoid clashing with Chinese new year. + +China hopes the festival will boost its cultural “soft power” abroad. So it sponsors related events, such as a display this year of martial arts in Cyprus and a traditional Chinese temple-fair in Harare, Zimbabwe. It may give Chinese officials satisfaction to see foreigners enjoy such festivities. They lament the growing enthusiasm among Chinese for Western celebrations such as Christmas—in December cities across China are bedecked with Santas and snowflake decorations. Chinese new year is a welcome chance to reverse the cultural flow. + +This article appeared in the China section of the print edition under the headline “Rooster boosters” + + + + + +Middle East and Africa + + + + +Syria’s peace talks: Time for someone else to have a go + +Arab politics: Who can unblock Morocco? + +Israel: Unsettled + +Gambia: No Jammeh tomorrow + +Air travel: Nigeria makes its capital a no-fly zone + +Inheritance in Zimbabwe: Why widows get evicted + + + + + +The Russians are coming + +Progress at Syria’s latest peace talks + +Russia and Turkey take the lead from absent America + +Jan 28th 2017 + + + +KAZAKHSTAN is an odd place to seek a fresh start for Syria. Its strongman, Nursultan Nazarbayev, has been in charge since Soviet times. In 2015 he won 97.7% of the vote—an even better tally than Syria’s despot, Bashar al-Assad, can command. But as a Russian-speaking capital of a Turkic nation sharing the Caspian Sea with Iran, there was some symbolism in selecting its capital, Astana, as a place to unveil the new tripartite protectorate over Syria. + +And as peace talks go, the ones in Astana, on January 23rd-24th, marked a new realism. The hosts were the three outside powers who are doing the bulk of the fighting in Syria. Along with Russia and Turkey, they included Iran, which was pointedly kept out of the last round of talks in Geneva. The Americans, Europeans and Arabs who steered those negotiations were this time either reduced to observer status, or absent altogether. Saudi Arabia, once the rebels’ prime backer, is too preoccupied with its war in Yemen these days to have time for the one in Syria. “The uprising began as an Arab awakening and ended in a carve-up among non-Arab powers,” says a Syrian analyst. + +Also reflecting events on the ground, Syria’s opposition was represented by fighters, not by the politicians in exile who led the previous talks. In the past Russia would have dismissed some of the delegates as jihadists, fit only for thermobaric bombing. But, perhaps under Turkey’s nudging, it now sees the benefits of engagement if the process is to get anywhere. Muhammad Alloush, who heads an Islamist armed group, Jaish al-Islam, showed his appreciation by praising Russia, which only a month ago was crushing rebels in Aleppo, for its “neutrality”. To mollify the politicians in exile, the fighters insisted they were there to talk only about ceasefires. But the Russians also proffered a draft constitution, and issued invitations for follow-up talks in Moscow, set for January 27th. The exiles would prefer to rely on America to promote the political process in a fresh round of talks in Geneva, pencilled in for February 8th. By then, however, Russia may already have written the terms. + + + +An even more striking example of America’s new irrelevance is the mechanism devised for policing a ceasefire that has been in place for almost a month. Out went the old arrangements agreed on with John Kerry, America’s former secretary of state, last September. Russia’s new partners were Turkey and Iran, who together would “observe and ensure full compliance with the ceasefire, prevent any provocation and determine all modalities”. + +Can this work? Tellingly, the final communiqué, seeking to bolster the ceasefire, was issued by the external powers, while Syria’s belligerents registered protests and reservations. However, the rebels probably have little choice but to comply. Chased out of their last major urban redoubt in Aleppo and doubtful of their support from the new American administration, many want to grab what they can. Even so, the war continues undiminished against some of the most powerful militias left off Astana’s guest list—Islamic State, the YPG Kurdish forces, and particularly an al-Qaeda offshoot, Jabhat Fatah al-Sham (JFS). JFS has launched its own offensive, pitting its 6,000 hardened fighters against the 15,000 of more moderate groups. That intra-rebel battle is again cutting roads across Idlib, the poor rural province the rebels still hold, and closing crossings to Turkey as they fight over bases. + +Judging by its record, Mr Assad’s regime will be as recalcitrant. Talks may bring him benefits, such as dividing the opposition. (Mr Assad’s representative, Bashar al-Jaafari, quipped that he hoped the terrorists would help defeat the terrorists.) But even when weaker, the regime preferred military options. Having won the whip hand, it is in no mood to discuss a transition to a broader government. Should Russia try to bring him to heel, Mr Assad is signalling he has other friends to turn to. While Iran sat at the table talking ceasefires, Mr Assad and its forces were making common cause fighting in the valleys of Wadi Barrada above Damascus. + +By delegating responsibility for the ceasefire to three outside powers, the tripartite mechanism may well have the effect of creating zones of influence. Untroubled by the Iranians and Russians, the Turks are fighting to expand their enclave (against IS and the Kurds) in the north. The Iranians are doing much the same around Damascus. Russia is firmly entrenched on the coast. The conflict, it seems, will continue; as will yet another of the Middle East’s sad, interminable peace processes. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Time for someone else to have a go” + + + + + +An Arab country that is peaceful, moderate and gridlocked + +Who can unblock Morocco? + +Talks on forming a new government have stalled + +Jan 28th 2017 | RABAT + +Still a popular king + +MOROCCANS call it the “blockage”, as if their government is suffering from a medical condition. Three days after the Justice and Development Party (PJD), a moderate Islamist outfit, won the most seats in a parliamentary election on October 7th, King Muhammad VI asked its leader, Abdelilah Benkirane, to form a new government. More than three months later, Mr Benkirane is still trying. The power struggle has indeed put Morocco’s economic and political health at risk. + +Morocco rode out the Arab spring better than most countries in the region. Big protests led to constitutional reforms and a relatively free and fair election in 2011, won by the PJD. The economy shows promise and the king pushes a mild version of Islam. By the standards of the region, it is a budding success—which makes today’s mess all the more disappointing. + +It had seemed that the new government would look very much like the one before it, which was led by Mr Benkirane and included the PJD, the National Rally of Independents (RNI), the Popular Movement (MP) and the Party of Progress and Socialism (PPS)—with little to tell them apart, at least on economic policy. But earlier this month Mr Benkirane broke off talks with the RNI and the MP, which came fourth and fifth in the election. The leader of the RNI, Aziz Akhannouch, had made several demands on the PJD, such as including other parties in its coalition, which would weaken the Islamists. + +Many Moroccans detect the hand of the king, who claims to stand above politics, in the manoeuvring. He and his royal court, known as the makhzen, have pushed the negotiations along, but some say they are interfering. Though he was forced to cede some powers to parliament in 2011, Muhammad VI remains firmly in charge of the country. Critics accused the palace of trying to swing the election to the secularist Authenticity and Modernity Party (PAM), which came second. Having failed to get its way at the ballot box, they say it is using Mr Akhannouch to act on its behalf. + +Mr Benkirane represents an unusual challenge to the palace. Charismatic and folksy, he has wide support among ordinary Moroccans. His democratic legitimacy stands in contrast to that of the king, whose family traces its bloodline to the Prophet Muhammad and has ruled Morocco for nearly four centuries. Muhammad VI is fairly popular—and is supported by Mr Benkirane. But some analysts see a burgeoning rivalry. “The makhzen doesn’t like that,” says Soulaiman Raissouni, the editor of Al Aoual, a news website. “They are trying to diminish the aura of Benkirane.” + +The PJD took on the makhzen in its first term, publishing the names of individuals and companies favoured for government contracts. But Mr Benkirane, who often tries to avoid confrontation, also handed some powers back to the king. Nor did he challenge the palace on big issues. Some Moroccans, including members of his own party, would like him to be more assertive. + +Others blame Mr Benkirane for Morocco’s mixed economic record since 2011. The unemployment rate is expected to remain above 10% this year. Corruption, which the PJD promised to tackle, is still a problem. But the previous government did implement needed reforms—such as cutting subsidies and freezing government hiring. Things were looking up, say analysts. + +The blockage seems absurd to many Moroccans because, despite the criticism, most of the parties want to continue the policies of the previous government. “They have the same view, the same programme, the same liberal vision of the economy,” says Abdellah Tourabi, who hosts a political talk show. “No one can explain why these people are not able to meet and form a government.” + +The blockage is now causing real damage. It seems unlikely that parliament will pass a budget on time, delaying the government’s reform programme. Economists are already talking about a gloomier business climate and lower investment. + +It is not clear how the country will ultimately be unblocked. The constitution requires the king to ask the leader of the winning party to form a government—but it offers no Plan B. The king could call fresh elections (which the PJD would probably win), or ask the head of another party to form a government. For now, though, he is sticking with Mr Benkirane. + +Despite all the drama, the most likely outcome is that the PJD will reach a deal with the RNI to create a government that, analysts say, will not last long. The damage done to Morocco’s nascent democratic institutions may be more enduring. Less than 40% of voters turned out in the election, and many are now starting to lose faith in the system. + +This article appeared in the Middle East and Africa section of the print edition + + + + + +Unsettled + +Mr Netanyahu, Mr Trump and the settlers + +The prime minister tries to placate his right-wingers + +Jan 28th 2017 | JERUSALEM + +How many more? + +ISRAEL’S prime minister, Binyamin Netanyahu, is in a bind. He prefers the status quo whereby Israel occupies the West Bank, allowing the 2.9m Palestinians there limited autonomy though not a full state. But the settlers’ lobby, which wants to annex “Judea and Samaria” to Israel proper, is crucial to his coalition. + +He tried to placate them this week by approving plans for more than 3,000 new homes, mainly in Jewish neighbourhoods of East Jerusalem and the big “settlement blocs” which are expected to be part of Israel in any future peace agreement. But he was only partially successful: one important settlers’ organisation immediately complained that he should have authorised many more buildings. + +Like most other governments, Israel is also trying to work out what Donald Trump’s foreign-policy priorities are, and how that might affect their domestic calculations. One indication of change came on January 24th, when the White House refused to comment on the new settlement plans. In the past, similar moves were met with automatic condemnation as obstacles to peace. The testy relationship with the former president, Barack Obama, had its uses however—it served as a perfect excuse for Mr Netanyahu to restrain his coalition partners’ enthusiasm for unbridled building and annexation. Now the settlers are convinced that Mr Trump will allow them a free hand. + +One reason for the uncertainty in Jerusalem is the multiple and conflicting messages arriving from Washington. The settlers have vocal support from members of Mr Trump’s inner circle, especially his new ambassador to Israel, David Friedman, who heads a settlement fundraising organisation. However, some of the more important appointments, including the incoming (though not yet confirmed) secretary of state, Rex Tillerson, have been careful, at least so far, not to signal a significant shift in policy. Mr Netanyahu has urged his cabinet to avoid policy departures until things are clearer. + +Another example is the new administration’s policy on moving its embassy in Israel from Tel Aviv to Jerusalem. Like most countries, America has been wary of recognising Jerusalem as Israel’s capital before conflicting claims to it are settled in a peace agreement. On the campaign trail, however, Mr Trump promised to move the embassy to Jerusalem, a step which would enrage Arab opinion. Since the election, members of his entourage have told Israeli officials that he plans to go ahead with the move, but on January 22nd a White House spokesman said only “we are at the very beginning stages of even discussing this subject.” Palestinian leaders have also received discreet messages that the embassy will not be moving for now. The only certainty is that the Trump administration does not yet have a settled policy towards Israel and the Palestinians. + +Mr Netanyahu is to meet the new president in Washington next month. His priority will be to use the opportunity of a more amenable administration to re-energise opposition to Iran’s attempts at achieving regional supremacy. He may also seek the president’s help in holding back his own supremacists at home. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Unsettled” + + + + + +No Jammeh tomorrow + +After Gambia’s dictator, democracy? + +Yahya Jammeh has run away, allegedly, with a Rolls-Royce and $14m + +Jan 28th 2017 | BANJUL + +Barrow finally makes it + +TEODORO OBIANG, the dictator of oil-rich Equatorial Guinea, is used to shady guests. A decade ago, his Black Beach prison held Simon Mann, a British mercenary who was sentenced to 34 years for his role in the botched “Wonga coup” that tried to topple him. (Mr Mann won a presidential pardon in 2009.) In a fresh act of mercy, Mr Obiang has taken in another guest, whose quarters will doubtless be cushier. On January 21st he welcomed Yahya Jammeh, the former dictator of Gambia, whose people had tired of him after 22 years. + +Mr Jammeh fled Gambia after a month-long stand-off with West Africa’s regional power bloc, the Economic Community of West African States (ECOWAS). It had threatened to send troops in after Mr Jammeh reneged on a pledge to hand over power to Adama Barrow (pictured), an opposition politician who won a presidential election in December. + +Mr Jammeh and his new host are not known to have been close before, but they may find many reasons to get along. Both seized power in coups, and both have clung to it for decades: Mr Obiang, who has been in office for 37 years, is the world’s longest-serving political leader. Both also care little for human rights: Mr Jammeh withdrew Gambia from the jurisdiction of the International Criminal Court last year; Mr Obiang never signed up in the first place. So Mr Jammeh may be free to enjoy his retirement without the threat of extradition and prosecution for all the dissidents who had plastic bags tied over their heads in his jails. As part of his “luggage” from Gambia, Mr Jammeh is said to have shipped out two Rolls-Royces, a Bentley and $11m in cash, so he should be comfortable too. + +The allegations about Mr Jammeh’s last-minute looting were made by an adviser to Mr Barrow, Mai Ahmad Fatty, who claimed that the state’s coffers had been all but emptied. And this is only one of the problems facing Mr Barrow. As Egypt and Libya recently learned, there is more to ending a dictatorship than getting rid of the despot. Mr Barrow, who has never held office, inherits a country with little experience of democracy. He will govern via a shaky, seven-sided coalition whose only real common ground was an intense dislike of Mr Jammeh. Most Gambians also concede that for all its faults, Mr Jammeh’s police state managed to keep civil war, Ebola and jihadist terrorism at bay. + +Mindful of the challenges, Mr Barrow plans to focus on reforming the economy and security forces rather than trying to lock up his predecessor. Instead he has proposed a truth and reconciliation commission. Though odious, Mr Jammeh has far less blood on his hands than, say, Liberia’s former president, Charles Taylor. Even if Mr Obiang could be persuaded to give up his guest, ECOWAS may simply deem it not worth the effort of pursuing him, particularly if it risks reopening old wounds. + +Even so, the way in which ECOWAS rallied to Gambia’s defence is cause for cheer. It cements the principle that no one in West Africa can stage a coup or steal an election without risking sanctions or worse from the neighbours. + +It might seem surprising that a region that includes some of the poorest countries in the world should be so strict about enforcing democratic norms—unlike some other parts of Africa. Paul Melly of Chatham House, a think-tank in London, notes that ECOWAS has been honing its interventionist skills for more than a quarter of a century. It began in 1990, when the outbreak of the first Gulf war meant that America and other Western powers were too busy to get involved in the Liberian civil war. Instead, ECOWAS had to pick up the baton and send in its own peacekeepers. Although that intervention was not an unqualified success (the fighting continued and peacekeepers were accused of rampant looting), it broke with a tradition of turning a blind eye. “Countries in the region realised that their neighbour’s problems could soon become theirs,” Mr Melly says. + +Tiny Gambia, with a population of just 1.9m, may be only a small step in the right direction, but it is still an important one. Two years ago ECOWAS tried to get its 15 members to agree that no head of state should serve more than two terms. The measure was vetoed by just two countries: Gambia and Togo. With Mr Jammeh gone, it may not be long before no leader, no matter how popular he claims to be, can dream of breaking Mr Obiang’s record in office. + +This article appeared in the Middle East and Africa section of the print edition under the headline “No Jammeh tomorrow” + + + + + +The nearest functioning airport is 230km away + +Nigeria imposes a no-fly zone on its own capital + +Airlines and passengers are furious + +Jan 28th 2017 | LAGOS + + + +THE capital of Nigeria is a picture of order compared with Lagos, the chaotic commercial hub. But whereas Abuja’s sweeping avenues are well maintained, the runway of its airport is potholed. Several aircraft have damaged their landing gear on the rutted tarmac. Facing the risk of a serious crash, the government is closing the whole place for six weeks from March 8th. “The entire architecture of the runway, it has failed,” says the minister of aviation. + +The government hopes airlines will fly instead to Kaduna, a mere 230km (140 miles) north of Abuja, while the runway’s central portion is rebuilt, with other repairs taking six months in all. But a new terminal at Kaduna is still being built; right now it handles just 300 passengers a day, compared with 5,000 in Abuja. The foreign carriers that fly to the capital, including British Airways, Air France and Lufthansa, are queasy. “None of the European airlines will fly to Kaduna,” says an airline official. + +Nigeria has a history of airport closures. In 2005 an Air France flight ploughed into a herd of cows on the runway at Port Harcourt, the country’s oil capital. Later that year a domestic flight crashed there, killing 108 people. The airport was shut for over a year in 2006-07. In 2015 it was voted the world’s worst by a travel website. Its arrivals terminal is a tent. + +The current government, in power since 2015, is partly to blame for the sorry state of aviation. It has propped up the naira, leading to a shortage of hard currency and therefore of aviation fuel. That, plus the economy’s dip and the government’s unwillingness to let foreign firms repatriate their profits, has led many international airlines to cut routes or pull out of Nigeria entirely. Delays and cancellations are legion on domestic airlines. A private flag carrier, Arik Air, has asked passengers to stop attacking its staff. Diverting flights from Abuja to Kaduna won’t help. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Nigeria makes its capital a no-fly zone” + + + + + +The rule of in-laws + +Why African widows get evicted by their in-laws + +They’re old, they’re weak and they can’t prove they were married + +Jan 28th 2017 | HARARE + + + +ACTIVIST, firebrand and feminist are just a few of the terms used to describe Priscilla Misihairabwi-Mushonga, a former opposition MP and cabinet minister in Zimbabwe. No one would call her a pushover. Yet despite her connections and some of the country’s finest lawyers arguing her case, after her husband’s death she was forced empty-handed out of her matrimonial home of 13 years. + +Before Ms Misihairabwi-Mushonga was widowed she and her late husband owned three houses, including one in the leafy suburb of Mt Pleasant in the north of Harare. They shared bank accounts and owned several cars. Some of this was left to her in a will. Yet after her husband’s death Ms Misihairabwi-Mushonga lost almost everything, even her clothes, to her late husband’s brother, various other in-laws and his children from an earlier marriage. “I am a typical example of a person who had access to information, a minister, but yet I woke up with nothing,” she says. + +Her destitution illustrates a wider problem. It is not only the government that grabs other people’s stuff in Zimbabwe. In-laws do it, too. Tens of thousands of widows are stripped of their property after the death of their husbands. A report released this week by Human Rights Watch (HRW), an outfit based in New York, documents numerous cases of Zimbabwean widows losing their homes, the land that they had tended for years and even the fruit growing on their trees. + +Such abuses are common in many countries, HRW says. The Loomba Foundation, another NGO, estimates that 38m widows are extremely poor. In Zimbabwe the problem is acute because of short lifespans and the tendency of men to marry much younger women, particularly if they are rich. So the country has an alarming number of widows: more than half of women older than 60 have buried at least one husband. + +The dispossession of old women continues despite laws that, on paper, protect them from predatory in-laws. This is thanks to two quirks in Zimbabwe’s legal system. The first is a hangover from a tradition of “wife inheritance” or “kugara nhaka” whereby, in some parts of Zimbabwe, a widow (and thus all her property) is inherited by her husband’s brother. (This custom helped HIV spread like wildfire.) + +Although wives are no longer handed over these days, their homes and property still are. This is because the laws restraining in-laws only apply to women who can prove that they were married. But as many as 80% of marriages in the countryside are “customary” and not registered in writing anywhere, so widows going to court to enforce their rights end up having to ask their in-laws to confirm that they were indeed married. Given the loot at stake, many refuse to testify honestly. “Widows are forced to rely on the husband’s family, who stand to gain if they deny that the marriage took place,” says Bethany Brown of HRW. + +Many widows can’t get their property back without a lawyer, and can’t afford a lawyer until they get their property back. That they are often old and weak makes them even easier to push around. + +Solving the problem is not a question of passing new legislation but of extending the rule of written laws. Ms Misihairabwi-Mushonga predicts that widows will continue to be dispossessed so long as traditional views on marriage hold sway. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Why widows get evicted” + + + + + +Europe + + + + +Germany’s Social Democrats: A slim chance of being chancellor + +The Koblenz “counter-summit”: We are the alt-world + +Italian politics: Matteo Renzi’s rush to elections + +France’s presidential election: In the pink + +Wife-beating in Russia: Putin’s family values + +Charlemagne: Please Mr Erdogan + + + + + +Slim chance of being chancellor + +Germany’s Social Democrats pick Martin Schulz as leader + +They will probably still lose to Angela Merkel + +Jan 28th 2017 | BERLIN + + + +FOR months, Sigmar Gabriel, the boss of Germany’s Social Democrats (SPD), has wrestled with the decision of whether to run against Angela Merkel, the chancellor, in the federal election on September 24th. His personal popularity lags far behind hers. In polls, the SPD has the support of only 21% of Germans; Mrs Merkel’s centre-right bloc has 37%. His support in his own party, especially among its left wing, is weak. And, as Mrs Merkel’s coalition partner, vice-chancellor and cabinet minister, he sounded unconvincing when attacking her policies. Knowing that he was bound to fail, on January 24th he chose instead to surprise his party by stepping down and handing over to another Social Democrat with a better chance. + +The new party leader and candidate for chancellor will be a friend of his, Martin Schulz (pictured, right). Mr Schulz, as the former president of the European Parliament, has several advantages over Mr Gabriel (who is planning to become foreign minister instead). Mr Schulz is known as a straight talker and an unequivocal champion of European integration. Standing next to Mr Gabriel for his announcement, he promised to “fight all populists”, a reference to the Alternative for Germany (AfD), a right-wing Eurosceptic party. And, having been outside German domestic politics, Mr Schulz is not tainted by the SPD’s grand coalition with Mrs Merkel. He can attack her, the party hopes, better than any other Social Democrat can today. + + + +Unfortunately for the SPD, even that does not improve the party’s chance of victory much. Mrs Merkel’s approval ratings have recovered from the lows seen during the refugee crisis in the winter of 2015-16. They now stand at 74%, according to Forschungsgruppe Wahlen, a pollster—a level most world leaders can only dream of. Germans clearly believe that Mrs Merkel has restored order. After 890,000 refugees arrived in 2015, only 280,000 came last year, and the numbers appear still to be falling. Some 57% of Germans now feel that the country can cope with the refugees. + +Even the terrorist attack in Berlin in December, when a Tunisian refugee drove a truck through a Christmas market and killed 12 people, appears to have helped Mrs Merkel. In a poll soon after the attack, 68% of Germans said they did not blame Mrs Merkel’s refugee policy. Of those who did, most already supported the AfD, which nonetheless remains stuck at around 12% in national polls. + +Instead, the attack has shifted the political debate away from inequality, the SPD’s preferred topic, and towards security, the traditional forte of Mrs Merkel’s Christian Democrats. Thomas de Maizière, Mrs Merkel’s Christian Democrat interior minister, this month proposed an overhaul of Germany’s security architecture: he would centralise agency bureaucracies that are currently dispersed among the 16 federal states, deport rejected asylum-applicants faster and detain suspected terrorists longer. If security remains the battleground of the election, Mr Schulz will struggle to score points against Mrs Merkel. + +Moreover, the coalition maths favour Mrs Merkel. The Social Democrats would face a daunting task to find partners to reach a majority of seats in the Bundestag. Like all mainstream parties, they have ruled out talking to the AfD. But even an alliance with the other two parties on the left—the ecology-minded Greens and the post-communist Left party—would fall short of a majority, according to all recent polls. Everything therefore points to Mrs Merkel being the only one able to form a ruling coalition. The Social Democrats might even be willing to remain in their current position as junior partners. + +It helps Mrs Merkel that world news is keeping Germans anxious for steady leadership. America’s new president, Donald Trump, perturbs them daily with his tweets. And negotiations for Brexit will begin later this spring. To Germans, both Mr Trump’s presidency and Brexit threaten to unravel the Western-dominated world order in which post-war Germany has been successfully embedded, built around the European Union, NATO and the free-trade agreements on which Germany’s exporters rely. + +Outside Germany, this has raised hopes that Mrs Merkel would take up the mantle of defender of the liberal order that America and Britain appear to have dropped. Uncomfortable with such expectations, she has called that suggestion “grotesque”. But as the year progresses, with strong populist showings possible in the Dutch and French elections, German voters are likely to value responsible leadership even more. They will respect Mr Schulz, who has overcome much hardship in his life. After a knee injury cut short his dream of playing professional football, he became an alcoholic in his early 20s, but has been a teetotaller since 1980. However, in choosing their leader Germans are likely to plump again for what they see as the safest pair of hands: those belonging to their long-reigning chancellor. + +This article appeared in the Europe section of the print edition under the headline “A slim chance of being chancellor” + + + + + +We are the alt-world + +At a summit in Germany, nationalism goes international + +Marine Le Pen, Geert Wilders and other European populists try to make common cause + +Jan 28th 2017 | KOBLENZ + +A safe space for blondes + +TWO ghosts haunted a “counter-summit” of Europe’s nationalist leaders in the German city of Koblenz on January 21st: Angela Merkel and Donald Trump. To the 1,000-odd visitors, most of them supporters of the anti-establishment Alternative for Germany (AfD) party, Mrs Merkel epitomised all that is rotten in Europe: out of touch, elitist and besotted with immigrants. (Chants of “Merkel must go!” punctuated the day’s speeches.) The energy of Mr Trump’s inauguration the previous day, by contrast, crackled through the proceedings. “Last year the wind began to turn,” said Geert Wilders, leader of the Dutch Freedom Party. “It brought us the victory of Trump!” The crowd whooped. + +Koblenz brought together the leaders of populist, nationalist parties from France, Germany, Italy, the Netherlands and elsewhere under the banner of the “Europe of Nations and Freedom”, their grouping in the European Parliament. Feuds and personality clashes have long marred their attempts to co-operate. But now they are surfing a wave of success; several are leading in the polls, and they see themselves at the vanguard of a movement. + +The themes were familiar, from Brussels-bashing to fearmongering about African birth rates. Mr Wilders delivered his usual attack on immigrants, declaring at one point that European blondes are growing afraid to show their hair for fear of immigrants. Behind the invective lurked a vision of Europe as a consortium of sovereign nations, free from politically correct elites and pesky foreigners. There were game efforts at internationalism; speeches were subtitled and the hall festooned with a rainbow of national flags. + +Outside the conference hall visitors quickly resolved the paradox of an internationalist rally of nationalists. AfD members were comforted to hear their views proclaimed by politicians from abroad. “It gives us the feeling we are not alone,” said a visitor from Hessen, who had driven to Koblenz with eight friends; the German press, all agreed, twisted their words and made them feel like pariahs. + +It was an important outing for the AfD, which has lately seen its support stagnate between 12% and 15%. Some party bigwigs find the economics of Marine Le Pen, the National Front’s leader, a little dirigiste for their taste, and were uneasy to see Frauke Petry, the AfD’s leader, share a stage with her. But the day, most agreed, belonged to Ms Le Pen. She thrilled the largely middle-aged crowd with her call for a “patriotic spring”. Unlike the other leaders she appeared to forge an emotional bond with her audience. + +The “counter-summit” was fuelled by discontent with the mainstream rather than anything resembling a programme. But this will not trouble the leaders. They are unlikely to win power this year (although Ms Le Pen cannot be ruled out), but their influence is already being felt. On January 23rd Mark Rutte, prime minister of the Netherlands, wrote an “open letter” to several newspapers suggesting that anyone who dislikes Dutch values should leave. François Fillon, the favourite in the French presidential elections this spring, said his country was closed to refugees. Mr Wilders and Ms Le Pen could not have put it better themselves. + +This article appeared in the Europe section of the print edition under the headline “We are the alt-world” + + + + + +Italy’s constitutional mess + +Matteo Renzi pushes for early elections + +Humiliated by voters and the courts, the former prime minister still hopes to retain political influence + +Jan 28th 2017 | ROME + + + +ITALY’S constitutional court has fired the starting pistol for the next general election. On January 25th the judges struck down key provisions of the electoral law for the Chamber of Deputies, the lower house, as unconstitutional. In doing so, they have increased the likelihood of an early election. But how long will the race last? That depends on whether the president, Sergio Mattarella, decides to push parliament to adopt a new system or make do with the current legal mess. + +The constitutional wrangle has its origins in the failed attempt by the former prime minister, Matteo Renzi, to engineer stable majorities in a country that has known 66 governments since 1945. There were two pillars to his scheme. One was to reduce the powers of the Senate, the powerful upper house, by turning it into an indirectly elected assembly of regional and municipal appointees. The other was to introduce a new electoral law for the lower house in 2015. Known as the Italicum, it gave the party that won more than 40% of the vote a generous portion of extra seats to ensure it controlled 54% of parliament. If no party reached the threshold, a run-off ballot would be held and the bonus seats would go to the winner. + +Italian voters smashed the first pillar in a referendum last December. Now the second has been destroyed by the constitutional court. The judges abolished the provision for a run-off ballot (the reasons will be set out in a forthcoming written judgment). They raised no objection to the bonus seats but the chances of any party securing them in Italy’s fragmented party system are remote. The ruling means that, should elections be held under the Italicum, as modified by the court, the outcome is likely to be indecisive—leading to tortuous negotiations and an unsteady coalition of incompatible parties. + +The ruling is a bittersweet outcome for Mr Renzi, who stepped down as prime minister but remains leader of the centre-left Democratic Party. His plan for wholesale constitutional reform has been repudiated by both the electorate and the judiciary. But in amending the law, rather than striking it off entirely, the court ensured that it could be used for an early election, perhaps before the summer. + +That has given a boost to Mr Renzi and others who are agitating for elections as soon as possible. Despite his humiliation in the referendum, Mr Renzi is hoping that he can preserve momentum from his time in office to retain control of the party, and regain the leadership of the country. He thus makes for an odd bedfellow of Beppe Grillo, the leader of the main opposition group, the populist Five Star Movement; and of Matteo Salvini, who leads the radical-right Northern League. + +Strong forces are pulling in the opposite direction. Silvio Berlusconi, the head of Forza Italia, needs to buy time: he hopes to wrest back the leadership of the right-wing camp from Mr Salvini and is waiting for the outcome of an appeal to the European Court of Human Rights against his conviction for tax fraud. If upheld, it would allow him to run again for office. There are more venal motives, too: if parliament is dissolved before September, almost two-thirds of the deputies and senators (those who entered parliament at the last election in 2013) will lose their right to a pension. Parliament could yet limp on to the end of its term in 2018. + +The last word will rest with Mr Mattarella. He wants the electoral laws for the Senate and Chamber to be harmonised to avoid the risk of gridlock if different majorities control the assemblies. The modified Italicum now more closely resembles the law for the Senate, though differences remain. Faced with the impatience of the three biggest parties, the president may not be able to hold out for long. + +This article appeared in the Europe section of the print edition under the headline “Matteo Renzi’s rush to elections” + + + + + +C’est l’economie, imbécile + +Emmanuel Macron finds new space in the centre of French politics + +Many expected the presidential election to turn on security; instead it will be jobs + +Jan 28th 2017 | QUIMPER + + + +WHAT explains the sudden rise of Benoît Hamon? A few months ago he was a nondescript former education minister. Now he is favoured to beat Manuel Valls, the centrist who was France’s prime minister until last month, in a run-off primary on January 29th for the Socialist presidential nomination, having won the first round a week earlier. A proud leftist, he would probably lead his party to a crushing defeat in the election in April. + +The party’s true believers were fired up by Mr Hamon’s ideas. He says France can cope with digital disruption by adopting a universal basic income, eventually to be worth €750 ($805) a month per adult. He would cut the 35-hour working week even shorter and levy taxes on the use of robots. (After all, robots can’t vote.) Why, though, didn’t the party’s centrists turn out for Mr Valls? Unfortunately for him, it looks as if they have abandoned the party altogether. + +To see where French centrists have gone, one needed to take a trip to a pig farm in Brittany last week, where a crowd of reporters trailed behind Emmanuel Macron, an independent candidate and ex-minister. Mr Macron had forgotten his rubber boots, but strode gamely into the dung of a low-roofed shed to cuddle a piglet on national TV (pictured). The 39-year-old, a former banker, has only been in politics for a couple of years. Yet the media cover him incessantly, and polls put his support at 21%—a few points behind the two front-runners, the nationalist Marine Le Pen and the centre-right’s François Fillon. + +The trip was a reminder that, despite anxieties about terrorism, Islam and immigration, French voters are most concerned about the economy. Mr Macron paid a visit to a regional travel company, highlighting how a reform he introduced in 2015, liberalising transport, created a new industry of inter-city coaches. The boss of one firm, Ouibus, said the reform led him to create 500 extra jobs. + + + +The economy, after years of gloom, shows some signs of recovery. Overall annual GDP growth is only a notch above 1% and unemployment is still more than 9%. But that rate has drifted down since August as private firms started hiring. Two years of fiscal stability, a weak euro and open spigots at the European Central Bank have lifted business spirits. On January 24th one measure of managers’ confidence showed it higher than at any point in five years. + +Yet structural problems are not close to being tackled. Official figures try to disguise it, but France’s public finances are ropy. Didier Migaud, the national auditor, last week called them “fragile and vulnerable”, casting doubt on the government’s claim that the deficit will soon fall within the euro zone’s 3%-of-GDP limit. + +Some voters on the centre-right might be drawn to Mr Macron, too. Mr Fillon, the Republican candidate, has struggled this week to explain what work his wife performed while he was employing her as a political assistant, at an expense to the public of about €500,000 over a decade. His economic policies are also hard for many to swallow. He has backed away from proposals for radical changes to insurance and the national health system that critics likened to privatisation. He has also refrained from naming some of the figures expected to join his cabinet—such as Henri de Castries, an ex-boss of AXA, an insurer—for fear of looking too plutocratic. + +Mr Fillon talks of cutting corporate and wealth taxes, while raising sales taxes, lengthening the working week to 39 hours and lowering public spending (which accounts for 57% of GDP). He would also, over five years, scrap 500,000 government posts. He is widely called “Thatcherite”, not a term of endearment in France. + +Beyond him is Ms Le Pen of the National Front, who leads in the polls. She is pursuing a strategy of cultivating blue-collar workers in the industrial towns of eastern and northern France. She attacks trade, globalisation and the liberal policies of Mr Fillon, while claiming that strong borders, and pulling out from the euro, would end “economic suffocation”. + +This leaves Mr Macron as the only candidate in the economic centre. The Republican and Socialist candidates might yet return to it. If not, the prospects for Mr Macron will be unexpectedly bright. + +This article appeared in the Europe section of the print edition under the headline “In the pink” + + + + + +The Duma’s war on women + +Why Russia is about to decriminalise wife-beating + +It fits with traditional values, lawmakers say + +Jan 28th 2017 | MOSCOW + + + +SHOULD it be a crime for a husband to hit his wife? In many countries this question no longer needs discussing. But not in Russia, where the Duma (parliament) voted this week to decriminalise domestic violence against family members unless it is a repeat offence or causes serious medical damage. The change is part of a state-sponsored turn to traditionalism during Vladimir Putin’s third presidential term. It has exposed deep fault lines. Many Russians now embrace the liberal notion of individual rights, but others are moving in the opposite direction. + +Activists warn that decriminalisation will legitimise abuse. “The overall message to Russian citizens is that domestic violence isn’t a crime,” says Andrei Sinelnikov of the Anna Centre, a violence-prevention charity. + +The debate began in 2016, when the government decriminalised battery, the least violent form of assault on the Russian statute books. Russia is one of three countries in Europe and Central Asia that do not have laws specifically targeting domestic violence. Instead it is treated like other forms of assault, ignoring the fact that spouses and children are more vulnerable than other victims. But when it decriminalised battery last June, the Duma decided to exempt domestic abuse, instead making it subject to the same two-year maximum sentence as racially motivated offences. + +That pleased civil-society groups that had been pushing for tougher rules. But the Russian Orthodox Church was furious. Scripture and Russian tradition, the church said, regard “the reasonable and loving use of physical punishment as an essential part of the rights given to parents by God himself”. Meanwhile, conservative groups worried that parents might face jail. They argued that it was wrong for parents to face harsher punishment for hitting their child than a neighbour would. + +Under pressure from such groups, deputies have put forward a bill that makes the first instance of poboi—battery that does not do lasting harm—an administrative violation carrying a fine of 30,000 roubles ($502), community service or a 15-day detention. It also returns the crime to the realm of “private prosecution”, where the victim is responsible for collecting evidence and bringing a case. Repeat offences would be criminal infractions, but only within a year of the first, giving abusers a pass to beat relatives once a year. Vyacheslav Volodin, the speaker of the Duma, says the bill would help build “strong families”. The bill’s second reading on January 25th won 385 out of 387 votes. It is expected to sail through its third reading and be signed into law by Mr Putin. + +He hit me, it didn’t feel like a kiss + +Anna Zhavnerovich does not agree that tolerating domestic abuse leads to strong families. A lifestyle journalist in Moscow, Ms Zhavnerovich had lived with her boyfriend for several years and discussed marriage. One night in December 2014 the conversation turned towards the possibility of breaking up. Her boyfriend proceeded to beat her black and blue. She managed to get him convicted after lawyers who read the account she published online came to her aid. “People think it can’t happen to them,” says Ms Zhavnerovich. “They hold on to an illusion of safety.” + +Domestic violence has deep cultural roots. An old Russian proverb says: “If he beats you it means he loves you.” “Violence isn’t just a norm, it’s our style of life,” says Alena Popova, an advocate for laws against domestic violence. The scale of the problem is difficult to measure, but according to Russia’s interior ministry, 40% of violent crimes happen within the family. More than 70% of women who call the Anna Centre’s hotline never report their cases to the police. The practice of private prosecution, which forces victims to navigate bureaucratic obstacles, dissuades many. “It’s the circles of hell, it goes on and on,” says Natalia Tunikova, who tried unsuccessfully to prosecute the man she says abused her. + +Nonetheless, awareness has been growing, partly thanks to grassroots efforts. “The idea that ‘it’s her fault’ is no longer accepted a priori,” says Ms Zhavnerovich. (Curiously, she supports the new law, believing that more women will come forward if they do not think their partners will be sent to Russia’s harsh prisons.) A social-media flashmob under the hashtag “IAmNotAfraidToSpeak” took off in Ukraine and Russia last year, with thousands sharing tales of abuse. + +Russia’s ultra-conservatives are not afraid to speak, either. Elena Mizulina, a senator known for promoting laws against “gay propaganda”, has pushed the latest changes, saying that “women are not offended when we see a man beating his wife.” But decriminalisation fans also argue that family affairs are not the state’s business. “The family is a delicate environment where people should sort things out themselves,” says Maria Mamikonyan, head of the All-Russian Parents Resistance movement, which collected thousands of signatures supporting the measure. + +In a country scarred by communism—where the state was once all-intrusive and families had virtually no privacy—such sensitivities are understandable. Some of the opposition to domestic-violence laws stems from a rational fear of allowing Russia’s corrupt police and judiciary more power over family life. When critics charge that conservatives’ views hark back to the Domostroi, a set of household rules popular during the reign of Ivan the Terrible, Ms Mamikonyan objects. What they advocate is not a restoration of “the Middle Ages”, she says, but merely a return to the values “that European civilisation held in the 19th and 20th centuries”. To many Russian women, that still sounds like a giant step backwards. + +This article appeared in the Europe section of the print edition under the headline “Putin’s family values” + + + + + +Charlemagne + +Cyprus can be reunified, if Turkey’s president allows it + +After 43 years of division, Greek and Turkish Cypriots are on the verge of a deal + +Jan 28th 2017 + + + +TREAD carefully through the building sites that litter Paphos, testament to the city’s preparations for its stint as 2017 European Capital of Culture, and you eventually find your way to the enclave of Mouttalos. Thousands of Turkish-Cypriots once lived here, before intercommunal fighting, reprisal killings and Turkey’s invasion of Cyprus in 1974 drove their exodus to the island’s north. George Pachis, a local Greek-Cypriot, sometimes helps those who fled find the graves of relatives. Recalling one brings him close to tears. Accompanying an old widow through the cemetery recently, rather than the single tomb he expected, he found a gravestone listing nine names, including a two-year-old girl. All had been shot dead by Greek-Cypriot irregulars. + +The scars of Paphos bear witness to the traumas of Europe’s last divided country. Cyprus’s cleavage may be peaceful today, but it is deeply entrenched. Its artefacts—barbed wire, rusting military outposts—are scrawled artlessly across the UN “buffer zone” that divides Nicosia, the capital. Checkpoints allow easy travel between north and south, but the two peoples lead separate lives; 48% of Greek-Cypriot students have never visited the north, and 43% “rarely” go. Cyprus’s rifts keep the island poorer, hinder the return of refugees, embarrass the European Union (Cyprus joined as a divided island in 2004, but only the Greek-Cypriot republic enjoys international recognition) and act as a regional spoiler, hampering EU-NATO co-operation and the EU’s relationship with Turkey. + +The island has been formally split since Turkish troops occupied its northern third in 1974. Reunification schemes have come and gone, most recently in 2004, when the Greek-Cypriot majority rejected a plan devised by Kofi Annan, then UN secretary-general. But more recently Nicos Anastasiades and Mustafa Akinci, respective presidents of the Greek- and Turkish-Cypriots, have brought a settlement within grasp. The two men, who enjoy a strong personal rapport, seek agreement on a “bizonal, bicommunal federation”, with a weak central government overseeing two autonomous communities. Hopes are high, despite the failure of a recent summit in Switzerland. If a deal is reached in the weeks ahead, a new constitution will be drawn up while the leaders drum up support for the double referendum that will follow. But that will take time, and not much is left: Mr Anastasiades faces elections in February that he may not win. + +The outline of a deal has long been clear, and left alone the two men might have found agreement by now. But Cyprus has long been a pawn in the chess games of others. Today, unhappily, the island’s fate lies largely in the hands of Recep Tayyip Erdogan, Turkey’s authoritarian president. Under the provisions of Cyprus’s 1960 independence settlement, Turkey, along with Greece and Britain, maintains a right to military intervention if the island’s constitutional order is threatened. The Greek-Cypriots (and Greece itself) insist on scrapping those guarantees, and on the eventual removal of Turkish troops, several thousand of whom remain in the north. But despite fresh ideas from the UN to allay Turkish-Cypriot fears, such as a multinational police force stationed on the island, Mr Erdogan has so far refused to budge. + +The security guarantees are at the heart of the Cyprus problem. Fix them, and you might unlock solutions to other outstanding issues, notably on territory and power-sharing. Only 1% of the island’s land mass remains disputed, and a compromise looks possible: the Turkish-Cypriots relinquish their claim to Morphou, a contested town in the north, in exchange for a rotating presidency, ensuring that Turkish-Cypriots run the federal state for part of the time. + +But crossing red lines is hard when you feel the other lot’s guns trained on you. “In Cyprus we don’t fight facts, but ghosts,” says Harry Tzimitras, director of the PRIO Cyprus Centre in Nicosia, a research outfit. Memories of the violence of the 1960s make Turkish-Cypriots loth to give up their protector. Greek-Cypriots balk at the idea of mortgaging their security to Turkey. “It is like asking Latvia to accept a Russian security guarantee,” says Mr Anastasiades. Mr Erdogan’s frequent outrages at home are well noted by the many enemies of a settlement on the Greek-Cypriot side. + +Will Mr Erdogan move? No one can be sure. His priority is winning a referendum on constitutional reforms, probably in April; some say he can compromise only after that. Others divine a willingness to help sooner, perhaps to get a piece of the hydrocarbon riches beneath Cypriot waters (and to wean the north off the subsidies it gets from the Turkish treasury). Two planned visits to Ankara by European leaders—Theresa May, Britain’s prime minister, on January 28th, and Angela Merkel, the German chancellor, five days later—will sound the president out. + +Nervous in Nicosia + +Even a deal will leave difficult referendums to be won. Neither leader will sign an agreement he cannot sell at home. But that job gets harder every year. Younger Greek-Cypriots, raised on a diet of Hellenic nationalism at school and with memories of nothing other than division, are the least likely to support reunification. Nor can support from the Turkish-Cypriots, who backed the Annan plan, be assumed, in part because Mr Akinci’s government is split. Tahsin Ertugruloglu, the Turkish-Cypriot foreign minister, describes the negotiations as a “total failure”. + +If that seems unfair, caution is certainly in order. The Cyprus dispute is a repository of dashed hopes and broken dreams. Veteran island-watchers remain almost uniformly sceptical. (The expiry of the Obama administration, which quietly nudged both sides towards a deal, will not help.) It is noble to hope for a resolution to this wretched problem, and the courage of Messrs Anastasiades and Akinci has brought a deal tantalisingly close. But to bet on a reunified Cyprus implies a faith in Mr Erdogan’s statesmanship that the Turkish president has done little to warrant. + +This article appeared in the Europe section of the print edition under the headline “Please Mr Erdogan” + + + + + +Britain + + + + +Local government: Running on empty + +Brexit and Article 50: Supreme judgment + +Sinn Fein: A new sort of leader + +Industrial strategy: Less is more + +Teaching clever children: Russian lessons + +Business after Brexit: Leave or Remain? + +A property boom in the Shetland Islands: Heading north + +Bagehot: A difficult hole + + + + + +Austerity + +Britain’s local councils face financial crisis + +Amid a painful fiscal squeeze, some authorities may soon be unable to meet their statutory obligations + +Jan 28th 2017 | LIVERPOOL + + + +ABUSED as a child by her father, Cathy led a chaotic life as a young adult. She slept on the streets, took drugs, attempted suicide and had her own child taken from her by social services. Then, a few years ago, she was provided a place in a flat for vulnerable people. She was helped by PSS, a social-care provider funded by Liverpool city council. A social worker would visit her every day and help with food, rent and medication. + +But last year, as part of a cost-saving exercise, Cathy and the 33 other people cared for by PSS were reassessed. All but three were deemed not to be critically in need of such help. So she had to move from her flat and, says Jordan Smith of PSS, is now in danger of spiralling back into trouble. Two of the 34 have been sectioned under the Mental Health Act. “I’m worried what Cathy will do to herself or someone else,” says Mr Smith. + +Britain is in the middle of a painful fiscal squeeze. Since 2010 the budget deficit has been reduced from 10% to 4% of GDP; by 2020 it is forecast to be almost eliminated. To achieve this, the government has slashed spending. Hardest hit has been the Department for Communities and Local Government, which provides councils with most of their funding. And so local authorities have been forced to embark on an epic economy drive. Their spending on public services will be 22% lower this year than in 2010. Some services have been pared down drastically (see chart). What do Britain’s cities look like after such a crash diet? + + + +Councils’ biggest area of spending is adult social care, which makes up about a third of their budget. Liverpool city council has commissioned Karen Caffrey’s company, Home Carers, to look after pensioners for 23 years. Now, her costs are rising: Mrs Caffrey says that the increased minimum wage, plus more onerous pensions obligations, will cost her an extra £128,000 ($160,000) this year. And yet the amount she is paid by the local authority is unlikely to increase from £13.10 per hour. Liverpool’s spending on adult social-care has fallen from £222m in 2010 to £130m, even as an ageing population has increased demand. “Providers can’t keep taking it on the chin,” Mrs Caffrey says. Already several have pulled out. + +Local authorities have come up with various ruses to save money. Several have become more efficient by merging administrative functions with those of their neighbours. Others are economising by collecting rubbish only every other week, for instance. Liverpool has shed 3,000 staff and handed some of its libraries over to community organisations to run. + +But they are nearing the limit of what can be trimmed. Joe Anderson, the mayor of Liverpool, says that, even if he closed all 19 libraries in the city and its nine sports centres, stopped maintaining its 140 parks, halted all highway repairs and street cleaning and switched off 50,000 streetlights, he would save only £68m—which is £22m short of what he must cut by 2020. So there will have to be a further 10% reduction in the social-care budget, he says. + +There is little scope for councils to raise taxes. Although they disburse about a quarter of all government spending, they are responsible for raising less than 10% of taxes, making England one of Europe’s most centralised countries. But this is changing. In some places, things have become dire enough for local politicians to propose special referendums to increase council tax, a levy on property. Mr Anderson floated this idea in Liverpool, before backtracking last month citing a lack of public support. On January 19th Surrey’s Tory-led council said it would ballot its citizens on a 15% tax rise to pay for social care. + +Meanwhile, Whitehall has begun what the Institute for Fiscal Studies, a think-tank, calls a “genuinely revolutionary” move to make local government finances more independent. It plans by 2020 to phase out the main grant by which it supports local authorities, thus leaving them more reliant on financing themselves out of council tax and business rates. It hopes to incentivise councils to encourage more economic activity by allowing them to keep a bigger share of their business rates (most of the income from the rates is pooled and redistributed according to need). + +Many local authorities will struggle under this new system, says Jonathan Carr-West of the Local Government Information Unit, another think-tank, because they have a low council-tax base and little new business. Since they are not permitted to run a deficit, “I think there is more than a 50% chance that some local government will be unable to balance its budget by 2020,” he says. With central government as a backstop, a Detroit-style bankruptcy is unlikely. But it is clear that some councils may soon be unable to meet their statutory duties of caring for the most vulnerable. + +Poorer councils like Liverpool worry that they will suffer disproportionately, since they are the most dependent on the central-government grant. Since 2010 the tenth of councils that are most dependent on Whitehall have had to cut their spending on services by an average of 33%, while the tenth that are least dependent have made cuts of only 9%. “I’ve got no room left for manoeuvre,” says Mr Anderson. “I’ve cut the fat, then the flesh. Now I’m down to the bone.” + +The devolution of more powers was supposed to help local government to manage with less money. Manchester, a cheerleader for devolution, has been given control of its health and social-care budgets, and hopes to save money by integrating them. But other devolution deals have stalled. Six cities will hold elections for a mayor in the spring, but it is not clear whether Theresa May’s government is as keen on devolution as was its predecessor. + +Many local politicians doubt that it is serious about handing over real power. “They talk localism,” says Mr Anderson, “but they do centralism.” + +This article appeared in the Britain section of the print edition under the headline “Running on empty” + + + + + +The Article 50 case + +Brexit will require the consent of Parliament—but not of the devolved assemblies + +The Supreme Court’s ruling leaves Scotland, Wales and Northern Ireland without a say + +Jan 28th 2017 + + + +THE justices of the Supreme Court were never likely to overturn last November’s ruling by the High Court. On January 24th they duly upheld, by eight votes to three, the decision that Theresa May’s government needs parliamentary approval to trigger Article 50, the European Union’s process for leaving the club. Although ministers appealed, arguing that the royal prerogative allows them to unmake as well as make treaties, they had expected to lose. The government has now drafted a short bill in hopes that it will become law in time for Mrs May to meet her deadline of invoking Article 50 by the end of March. + +The case turned on two main points. One was that, once Article 50 is triggered, the process is irreversible: after two years Britain will automatically leave. Although many lawyers think an Article 50 application could in practice be withdrawn, neither side questioned the point, partly to avoid an awkward referral to the European Court of Justice. The second was the notion that EU membership, as confirmed by a parliamentary act from 1972, in effect confers domestic rights on British citizens that can be removed only by another act. + +One oddity is that judges were attacked for subverting democracy, as expressed in the 52-48% vote for Brexit in the referendum last June. In fact, the Supreme Court is supporting parliamentary democracy against the tyranny of untrammelled government. Its judgment refers to 17th- and 18th-century precedents, when Parliament defended citizens’ rights against an overweening king. At one point the court notes that, were the prerogative absolute, ministers could in theory choose to leave the EU without a referendum—or, indeed, do so in defiance of a vote to stay in. + +The chances are that the government’s bill will be passed quickly. Almost all Tory MPs and most Labour MPs say they will respect the referendum outcome. A few MPs and peers may try to amend the bill, to impose conditions that try to soften Mrs May’s preferred “hard” Brexit, but they face an uphill battle. Other court challenges to Article 50 seem unlikely to succeed. + +Rebel MPs did extract one concession from Mrs May. On January 25th she announced that the government would, after all, publish a white paper setting out its approach to Brexit. This is welcome. Yet ministers are under no obligation to make it detailed; Jill Rutter of the Institute for Government notes that a white paper on the Lisbon treaty in 2007 gave little away. + +Two issues remain unaddressed. One is how far Parliament should be involved in the Brexit negotiations. Mrs May has promised a parliamentary vote on the terms of the deal she eventually secures. Yet that may mean little, for were Parliament to say no, it would not prevent Brexit—it would simply mean that Britain left with no deal at all. MPs wishing to hold the government to account must demand a greater say at an earlier stage, through parliamentary committees or questions, for example. + +The second is the growing irritation of the devolved administrations over Brexit. The government was relieved that the Supreme Court rejected demands for votes in the Scottish Parliament and Northern Irish and Welsh Assemblies on Article 50, which could have delayed or even blocked Brexit. But Nicola Sturgeon, Scotland’s first minister, is right to complain about a lack of consultation, especially since a majority of Scots and Northern Irish voted to stay in the EU. A hard Brexit will profoundly affect the devolved governments, not least because it might include border controls with Ireland. Brexit may not immediately trigger another independence referendum in Scotland or renewed instability in Northern Ireland. But Mrs May says she wants to preserve the United Kingdom. To succeed, she may have to do more to mollify its component parts. + + + +Firms consider upping sticks from Brexit-bound Britain, as foreign capitals mount a charm offensive + +Paris, Frankfurt and Dublin all hope to pick up some post-Brexit business + + + +Britain’s excruciating embrace of Donald Trump shows how little independence it has gained from Brexit + +Leaving the European Union means the country has less, not more, control over its circumstances + + + +Theresa May opts for a hard Brexit + +The government promises a “truly global Britain” after Brexit. Is that plausible? + + + +Cutting immigration will not placate British voters + +Worries about migrants relate only indirectly to their numbers. There are easier ways to allay voters’ fears + + + +Theresa May confirms: Britain is heading for Brexit Max + +For the past few months Theresa May and her ministers have allowed some ambiguities to swirl around Britain’s future relationship with the European Union. + + + + + +More Brexit coverage + +This article appeared in the Britain section of the print edition under the headline “Supreme judgment” + + + + + +Passing the baton in Belfast + +A new sort of leader for Sinn Fein in Northern Ireland + +Michelle O’Neill, who will replace Martin McGuinness, is the republican party’s first female leader + +Jan 28th 2017 | BELFAST + + + +IT WAS always going to be hard to replace Martin McGuinness, a former commander in the Irish Republican Army (IRA) who led Sinn Fein in Northern Ireland for nearly ten years before announcing his retirement on January 19th. So the party has opted for a successor who is in many ways completely different. Michelle O’Neill is the party’s first female leader. At 40, she is a generation younger than most of its high command. And unlike Mr McGuinness, and some of her challengers, she has never served time in prison. + +Mrs O’Neill comes to the job from successful stints as a minister for health and for agriculture in the region’s devolved government. Previously she served as a mayor and local councillor. She only recently emerged as a candidate for the big time, but is a good television performer, known in the Assembly for her machine-gun-like delivery. Her campaigning skills will immediately be put to the test in an election on March 2nd. + +Though she does not have Mr McGuinness’s paramilitary background, she is from an impeccably republican family. Her father was jailed for IRA offences; a cousin was one of three IRA members killed in an ambush by special forces in 1991. One of her two grown-up children is named Saoirse, Irish for freedom. + +She takes over from a man with whom she worked closely for years and whom she describes as a “political giant”. Mr McGuinness, whose retirement follows the onset of serious illness, spent an extraordinary career contributing to Northern Ireland’s violence and then to its peace. In the 1990s, while Gerry Adams, Sinn Fein’s leader, was with infinite caution introducing the vocabulary of peace into the republican lexicon, Mr McGuinness reassured hardliners that the process was not a betrayal but a negotiation. He helped to ensure that the republican movement did not fracture into bloody feuding. Later, when one breakaway splinter of the IRA murdered a police officer, he was forthright: “These people are traitors to the island of Ireland,” he declared. No mainstream republican had ever used such language; death threats followed. + +After his election to the Assembly in 1998, the man whose last gainful employment had been as a teenager packing bacon proved to be one of its most able ministers. From 2007 he and Ian Paisley, the hardline leader of the Democratic Unionist Party (DUP), formed an effective, even friendly partnership as first and deputy first minister. In a tribute to Mr McGuinness, the late Mr Paisley’s son, a Westminster MP also called Ian, said: “His remarkable journey not only saved lives but made the lives of countless people better.” + +Mr McGuinness’s retirement may delay the much-discussed departure of Mr Adams, Sinn Fein’s leader in Dublin. The party has earmarked another woman, Mary Lou McDonald, to take his place when the time comes. + +Mrs O’Neill’s immediate task is to gain ground for Sinn Fein in the election. The party is poised to win more seats, following the mishandling by the DUP and its leader, Arlene Foster, of a green-energy initiative, which is set to cost taxpayers hundreds of millions of pounds. Many of Sinn Fein’s election posters have the slogan “Stand up to corruption”. That allegation is denied and unproven. But frustration with Mrs Foster and her party may be enough to get Mrs O’Neill off to a flying start. + +This article appeared in the Britain section of the print edition under the headline “A new sort of leader” + + + + + +British business + +Theresa May’s long-awaited “industrial strategy” looks a bit thin + +But given some of the bad ideas that were floating around before, that may be for the best + +Jan 28th 2017 + + + +SINCE standing for the leadership of the Conservatives last summer, Theresa May has promised to put a new “industrial strategy” at the heart of her government. Yet despite much talk, and even the establishment of a department with the phrase in its name, there has been little explanation of what such a strategy would amount to. At last some details were published on January 23rd. The preface to a chunky government green paper suggested that ominous changes were afoot: Mrs May wrote of a “new, active role” for government. + +The contents were more modest. True, it confirmed the biggest increase in public spending on research and development since 1979. Extra money for high-tech research will benefit the economy, which has suffered from weak productivity and wage growth since the financial crisis of 2008-09. Yet these funds had already been promised, last November. Similarly, the green paper pointed to a “new” £2.3bn ($2.9bn) housing-infrastructure fund—cash which has been announced a number of times. + +Beyond that, the strategy looks thin. It talks of tweaks to education (see next story) and of boosting the participation of British exporters at international trade fairs; unobjectionable stuff, but hardly revolutionary. At the launch of the green paper, at a cabinet meeting held in Cheshire, Mrs May earnestly spoke of “looking at the way in which clusters can help”. Reporters were more interested in quizzing her on what she knew about a missile that apparently misfired during a test last year. + +It may be for the best that the plans are less radical than trailed. Mrs May had once suggested forcing companies to put workers on their boards, a silly pledge that has since been dropped. And whereas a few months ago she seemed intent on limiting foreign takeovers of British companies, the green paper talked up the successes of foreign-owned firms. That no bad news lurked in the paper probably explains why the pound rose slightly on its publication. + +Still, the government is making a habit of overpromising. What was billed as the biggest shake-up of the railways in 20 years turned out to be timid. The “biggest overhaul in a generation” of prisons has so far amounted to even less. Even with the publication of the much-advertised industrial strategy, Mrs May lacks a flagship domestic policy. + +This article appeared in the Britain section of the print edition under the headline “Less is more” + + + + + +Russian lessons + +Why a top university runs a London state school on Soviet lines + +A visit to one of the best schools in the country + +Jan 28th 2017 + + + +FOR a glimpse of the Soviet Union’s influence on English education, head to a sixth-form college in Lambeth, a 20-minute stroll from Parliament. There, in a former 1930s bath-house sunk low amid housing estates, sits King’s College London Mathematics School (KCLMS). Inside, pupils can spend their free time solving mathematical problems on whiteboards mounted in pods. On a recent visit the common room was quiet; the only pupils huddled in a corner playing Salem, “a strategic card game of deception”. Desks were set up for chess. The mood was more low-cost Oxbridge college than inner-London state school. + +That is by design. The school is modelled on the Kolmogorov Physics and Mathematics School in Moscow, which from the mid-1960s took Russia’s smartest 15-year-olds and exposed them to the best maths teaching in the country. Michael Gove, Britain’s education secretary from 2010 to 2014, imported the idea, pushing universities to start specialist maths colleges. The aim was to make it possible for any child to have an “Eton-level education” in maths or physics, recalls Dominic Cummings, a former adviser to Mr Gove. + +In the end just two universities opened colleges. KCLMS, founded by King’s College London, and Exeter Mathematics School, sponsored by Exeter University, opened in 2014. But on January 23rd the government announced that it wanted more. It hopes to open new maths schools across the country as part of its “industrial strategy”. Some universities are rumoured to be reconsidering their initial reluctance to get involved. + +The question of how to educate the brightest children is a touchy subject in Britain. Theresa May, the prime minister, has previously said that she wants to end a ban on building new grammar schools, which select pupils on academic grounds at age 11. Wildly popular with some, grammar schools are fiercely opposed by others. Even the education secretary, Justine Greening, is said to be privately sceptical about the prime minister’s plan to bring them back. + +KCLMS is hyper-selective: pupils normally need an A* grade in maths at GCSE, the exams taken aged 16. Yet colleges like it could prove to be less divisive than grammars. For one thing, selection at 16 is already common, and reckoned to be more reliable than testing children aged 11. KCLMS does a better job than most grammars of recruiting poor pupils. Its admissions process gives preference to those from bad schools, poor areas or families with no experience of higher education. + +As a result, 14% of its pupils have qualified for free school meals, a measure of poverty; by contrast, fewer than 3% of grammar school pupils do. Nearly half are from ethnic minorities. And whereas educationalists worry that pupils who fail to win a place at a grammar school fall behind partly because of the taint of having flunked the admissions test, not getting into a specialist sixth-form college hardly carries the same stigma. Outfits like KCLMS are therefore billed by some as a way to lift the brightest children without pushing down the rest. + +Those who get in flourish. Fourteen of KCLMS’s 61 final-year pupils have been offered a place to study at Oxford or Cambridge next year. In 2016 all pupils gained an A or A* grade in their maths A-level exam, taken at 18. Pupils do on average 0.7 grades better per subject than peers with similar GCSE results. On this basis it is in the top 0.5% of schools in the country. + +Lessons are fast-paced, collaborative and fun. The goal is to develop ideas together through “Socratic questioning”, says Dan Abramson, the school’s head. Teachers must have an excellent grasp of their subject as lessons can go far beyond the syllabus, he says. The small staff spends a lot of time crunching data and observing lessons to work out how to improve. The curriculum is planned with academics at King’s College so that pupils are ready for university. PhD students mentor first-year pupils. An emeritus professor of maths at King’s provides extension classes for the very brightest. + +But the school’s success is also partly down to its culture. Since all pupils study the same subjects (maths, further maths, physics and either economics or computer science) they can help one another with problems. Outside speakers from places like GCHQ, Britain’s signal-intelligence agency, and Google DeepMind, an artificial-intelligence company, help link academic study to the outside world. A KCL professor runs the school robotics club; an enterprising pupil runs the Japanese one. + +Hard work plays a part, too. “You just can never finish,” laughs Charles Kanda, a pupil at KCLMS. “There’s always another problem sheet.” + +This article appeared in the Britain section of the print edition under the headline “Russian lessons” + + + + + +Leave or Remain? + +Firms consider upping sticks from Brexit-bound Britain, as foreign capitals mount a charm offensive + +Paris, Frankfurt and Dublin all hope to pick up some post-Brexit business + +Jan 28th 2017 + + + +LONDON’S relocation specialists and employment lawyers have never had it so good. Not that they are advising clients on how to set up in Britain’s capital. Quite the reverse: they are busy advising businesses and individuals on how to get out, and where to go if they have to leave. + +More than a quarter of employers surveyed by the Chartered Institute of Personnel and Development (CIPD), an industry group, say that their workers from European Union countries are considering leaving Britain. Financial-services firms, which are among the most vulnerable to a “hard” Brexit outside the EU’s single market, are dusting off their contingency plans to relocate jobs and offices. A tenth of the companies surveyed by the CIPD are thinking of moving some of their operations outside Britain; a further 7% say they are likely to focus on building their businesses overseas. + +This does not indicate a wholesale Brexodus. But it does suggest that many firms, having hoped for the best after the referendum last year, are now preparing for the worst, especially since Theresa May’s speech on January 17th. This set Britain on course for life outside the single market and customs union. The next day the chief executive of HSBC announced that he was preparing to move 1,000 of the bank’s staff from London to its offices in Paris. Most of the hard decisions about relocating jobs will be taken over the next six months, on the assumption that Britain will leave the EU in early 2019. + +The beauty contest between Paris, Frankfurt, Dublin and others trying to lure the City’s high-paying, tax-yielding jobs is hotting up. For these would-be capitals of European finance, the prize is a share of the 1.1m people who work in financial services in Britain (rising to 2.2m if jobs in supporting industries are included). These workers pay 12% of Britain’s taxes and generate an annual trade surplus of £55bn ($69bn). + +The French have been the most assiduous in courting the City. Europlace, the Parisian equivalent of the Corporation of London, has set up a committee dedicated to advertising the virtues of Paris under the slogan: “Tired of the fog? Try the frogs!” Arnaud de Bresson, the head of Europlace, argues that Paris already has the largest concentration of corporate headquarters in Europe, so the bankers would be closest to their clients. He also points to measures that were introduced after the Brexit vote to make Paris a more attractive destination. The “inpatriates” regime, which reduces by up to 50% the amount of tax paid by people hired outside France, has been extended to cover migrants for their first eight years in the country, up from five years previously. Corporate tax has been trimmed from 33% to 28%. (Britain’s rate is 20%, and due to fall to 17% by 2020.) + +Frankfurt is also vying for jobs, although in a more low-key way. Most of London’s banks already have a strong presence there, so it would be relatively easy to move jobs. Frankfurt is also in the middle of Europe’s biggest economy. Dublin shares the same language as the City, and a similar legal system. On January 24th it hosted the European Financial Forum, where a Citigroup executive said his bank had discussed relocating jobs with the authorities in Ireland, as well as those in France, Germany, Italy, the Netherlands and Spain. Brexit poses risks to Dublin, however (see article). And big American banks might simply repatriate jobs to New York once London no longer offers the advantage of being in the single market. + +But as Suzanne Horne, an employment lawyer at Paul Hastings solicitors, points out, there are good reasons why so many businesses and workers came to London in the first place. Banks look aghast at France’s extensive and intrusive labour laws. It is trickier and takes longer to hire and fire people. Workers’ councils, unknown in Britain, have to be negotiated in France and Germany. There are cultural differences, notes Ms Horne, citing France’s “right to disconnect” law, passed on December 31st; it is difficult to imagine City bosses allowing their serfs to ignore e-mails out of hours. + +In short, most City firms and workers would prefer not to move if they can help it. But they may not have the choice. + + + +Brexit will require the consent of Parliament—but not of the devolved assemblies + +The Supreme Court’s ruling leaves Scotland, Wales and Northern Ireland without a say + + + +Britain’s excruciating embrace of Donald Trump shows how little independence it has gained from Brexit + +Leaving the European Union means the country has less, not more, control over its circumstances + + + +Theresa May opts for a hard Brexit + +The government promises a “truly global Britain” after Brexit. Is that plausible? + + + +Cutting immigration will not placate British voters + +Worries about migrants relate only indirectly to their numbers. There are easier ways to allay voters’ fears + + + +Theresa May confirms: Britain is heading for Brexit Max + +For the past few months Theresa May and her ministers have allowed some ambiguities to swirl around Britain’s future relationship with the European Union. + + + + + +More Brexit coverage + +This article appeared in the Britain section of the print edition under the headline “Leave or Remain?” + + + + + +Heading northward + +Britain’s unlikeliest property hotspot + +Since 2003 Shetland’s house prices have doubled, a larger rise than in any other part of Scotland + +Jan 28th 2017 | LERWICK + +Treasure islands + +WITH Bergen nearer than Edinburgh, and settlements with names like Jarlshof and Trondra, the Shetland Islands can seem more Scandinavian than Scottish. Yet the islands are experiencing a very British phenomenon: rapidly rising house prices. Since 2003 Shetland’s house prices have doubled in real terms, a larger rise than in any other part of Scotland. In recent years they have soared at a similar rate to those in Kensington and Chelsea, London’s poshest borough. + +What explains the boom? In contrast to some rural beauty spots such as Cornwall, Shetland has seen neither an influx of second-home owners nor an increase in the number of locals letting out houses to tourists. Exquisite they may be, but the Shetlands are hard for visitors to reach. Getting there requires a 13-hour ferry from Aberdeen or an expensive, bumpy plane ride (on which passengers’ nerves are at least calmed by the offering of a Tunnock’s wafer from a little basket). In the past decade the number of second homes in Shetland has fallen; there are only a handful of options on Airbnb. + +The more likely cause is an oil boom that until recently propelled the entire Scottish economy forward. Aberdeen is Scotland’s oil-and-gas capital, but the Shetlands (population: 23,000) are not far behind. The Sullom Voe oil terminal is one of Europe’s largest. Data are patchy, but in 2012-14 the number of temporary construction workers in oil-and-gas operations in Shetland probably rose by about 60%. Oil workers are a handsomely paid lot, so it is no surprise that in 2006-16 wages in Shetland rose three times as fast as in Britain as a whole. As islanders’ purchasing power has risen, so has competition over housing. + +Economic growth has brought with it plenty of newcomers, who have pushed up housing demand still further. The Hungarian Painting Team is one of Lerwick’s most popular decorating firms. On the waterfront downtown, a recent arrival from southern Spain (“How did I end up here? That’s a long story”) says that he is looking forward to taking part in his first Up Helly Aa, Shetland’s annual fire festival, on January 31st. + +Restrictions on supply have pushed house prices still higher. Peter Campbell, a local councillor, says that with such good jobs on offer in the oil industry, there has long been a shortage of local builders. Others pin some blame on the council itself, which appears to be one of the most sluggish in Scotland at giving planning permission for housing. + +As oil prices have tumbled, the Scottish economy has slowed. Britain’s GDP grew by 0.6% in the third quarter of 2016 but Scotland’s managed just 0.2%. Shetland, however, appears to have weathered the storm quite well. Construction on the Shetland Gas Plant, one of Europe’s largest gas terminals, finished only recently, points out Katrina Wiseman of Highlands and Islands Enterprise, a government development agency. And Shetland hopes to cash in on the next big thing: the decommissioning of old oil rigs, which will soon require billions of pounds of investment. House prices may stay frothy for some time yet. + +This article appeared in the Britain section of the print edition under the headline “Heading north” + + + + + +Bagehot + +Britain’s excruciating embrace of Donald Trump shows how little independence it has gained from Brexit + +Leaving the European Union means the country has less, not more, control over its circumstances + +Jan 28th 2017 + + + +THERESA MAY’S private opinion of Donald Trump goes unrecorded, but she is surely not a natural fan. Before Mr Trump’s election the prime minister called his remarks on Muslims “divisive, unhelpful and wrong”. Fiona Hill, one of her powerful chiefs of staff, declared him a “chump” and Nick Timothy, the other, tweeted: “As a Tory I don’t want any ‘reaching out’ to Trump.” Mrs May flannelled in a television interview on January 22nd when asked about the president’s treatment of women, his disregard for NATO and his protectionism. In temperament the two leaders could hardly be less alike: one brash and operatic, the other cautious and meticulous. So expect the prime minister’s visit to the White House on January 27th to be a study in awkwardness: the mother superior dropping in on the Playboy Mansion. + +The trip encapsulates a wider shift in London. Time was, everyone mauled Mr Trump. Boris Johnson, now the foreign secretary, said he betrayed a “stupefying ignorance” and branded him “unfit” to lead America. Ruth Davidson, leader of the Scottish Conservatives, turned to Shakespeare: “Trump’s a clay-brained guts, knotty-pated fool, whoreson obscene greasy tallow-catch, right?” A year ago MPs were debating banning him from Britain. Even Nigel Farage, whose serial electoral failures in Britain have not troubled his recent reinvention as a presidential cheerleader, used to call Mr Trump “wrong” and list the many things about the man that he “couldn’t support in any way at all”. + +Today scorn is out; flummery is in. Mr Farage led the way, pitching up at Trump Tower in December for a cheesy photo with the then-president-elect, whose grasp of the former UKIP leader’s CV seems shaky. Then came Michael Gove’s turn in the golden elevator and the former justice secretary’s fawning newspaper profile of Mr Trump. Now Mr Johnson calls the election result “a good thing for Britain”. The country is even ready to put the queen within grabbing distance of America’s helmsman: plans are afoot for a summer state visit, in which Mr Trump reportedly wants the monarch to watch him golf at Balmoral, her Scottish estate. + +This sycophancy is hardly new. Margaret Thatcher put up with Ronald Reagan’s invasion of Grenada, a Commonwealth country. Tony Blair’s eagerness to be close to George W. Bush cost him European allies and took Britain into the Iraq war. But Mr Trump is different. Whereas Reagan and Mr Bush cherished the economic and security order in which Britain was a junior partner, Mr Trump threatens it. So why is Mrs May hurrying to Washington? Because Brexit compels Britain’s leaders to show that the country has powerful allies. And “my Maggie” (as the president calls Mrs May) is desperate to line up a Britain-America trade deal that can be closed as soon as Brexit takes place, probably in 2019. + +Whether this will end happily is uncertain. In trade negotiations, size matters. Larger economies can stipulate terms that suit them. Britain, an economy of 60m people, has much less leverage in trade talks than the EU, a market of 500m, or the United States, one of 300m. Mr Trump may promise an agreement “very quickly” and to show other countries that it is safe to leave the EU by giving Britain generous treatment. But more than anything else he is an America First deal-wrangler who knows he has the upper hand. A rushed agreement could see the National Health Service opened up to American firms and environmental and food standards diluted (think hormone-treated beef). Such concessions could upset British voters, who backed Brexit partly because Leavers said it would help the country’s health-care system. They would also frustrate a trade deal with the EU, a much more important export destination. + +The curious thing is that Brexit was supposed to be about “taking back control”: immunising the country from foreign whim and interest, while asserting national dignity and independence. Increasingly that looks like a bad joke. The British elite feels it has no choice but to prostrate itself before an American president it clearly finds odious. To keep businesses from moving elsewhere, Britain may have to shadow EU regulations and pay into EU programmes without the chance to shape either. Its trade deals will be forged with a fraction of the negotiating force that has long promoted its interests. That means more concessions to the tariff and regulatory preferences of foreigners. Its application to become a full member of the World Trade Organisation is yet another opportunity for others to impose conditions and costs. + +An elusive independence + +And pause to contemplate Mrs May’s threat to turn Britain into a tax haven if it gets a poor deal in Brussels. The prime minister is politically almighty. She faces virtually no serious opposition or credible rivals within her Conservative Party, which is close to record highs in the polls. Her premiership’s raison d’être is to make the social safety net stronger for “just about managing” citizens. Yet if foreign leaders decide not to make concessions, she says she will be forced to rip up that plan and do the very opposite: slash public services and regulation. Some “control”, that. + +A fact of the modern world, sadly overlooked in the referendum, is bringing itself to bear on Britain: control and autonomy are not the same thing. The country is party to some 700 treaties, member of myriad international organisations and spends tens of billions on a nuclear deterrent unusable without America (this week it transpired that, at Washington’s behest, Parliament had been kept in the dark when a missile went off course in a test). In each of these cases, Britain trades pure self-determination for real influence: the ability to shape its economic, security and environmental circumstances. Its membership of the EU is just one of many such deals. Leaving the club reinstates some control to Britain but requires it to trade away control in other ways. Will the result be a country any more able to chart its own course, as chosen by its own democratically elected leaders? Watch the prime minister’s excruciating embrace of Mr Trump and decide. + + + +Brexit will require the consent of Parliament—but not of the devolved assemblies + +The Supreme Court’s ruling leaves Scotland, Wales and Northern Ireland without a say + + + +Firms consider upping sticks from Brexit-bound Britain, as foreign capitals mount a charm offensive + +Paris, Frankfurt and Dublin all hope to pick up some post-Brexit business + + + +Theresa May opts for a hard Brexit + +The government promises a “truly global Britain” after Brexit. Is that plausible? + + + +Cutting immigration will not placate British voters + +Worries about migrants relate only indirectly to their numbers. There are easier ways to allay voters’ fears + + + +Theresa May confirms: Britain is heading for Brexit Max + +For the past few months Theresa May and her ministers have allowed some ambiguities to swirl around Britain’s future relationship with the European Union. + + + + + +More Brexit coverage + +This article appeared in the Britain section of the print edition under the headline “A difficult hole” + + + + + +International + + + + +Muslim head coverings: What not to wear + +Headscarves in Turkey: Under cover + + + + + +Muslim attire + +The state and the veil + +A dispute over Muslim women’s attire is helping nobody + +Jan 28th 2017 | MONTREAL AND PARIS + + + +IN HER bottle-green nylon skirt and matching veil, Aïcha Khobeizi is an unusual sight on a university campus in strictly secular France. When she first decided to wear a headscarf, at the age of 15, her mother laughed. The elder Mrs Khobeizi, from a village in central Algeria, had stopped covering her hair when she settled in France. Aïcha’s father, a retired dustman, also disapproved. “I had the worst weekend of my life,” she recalls. “But I felt something was missing. I was determined to wear it in order to feel at ease with who I am.” + +A garment that Ms Khobeizi and other Muslim women consider to be a private choice is now under intense public scrutiny. As France begins to select a new president, there is a remarkable consensus for upholding curbs on religious dress, which ban the headscarf from public schools and the burqa—a full-body covering with a mesh over the eyes—from public places. François Fillon, a front-runner, backed local bans on the “burkini”, a modest all-in-one swimsuit, last summer and considers the spread of the veil to be part of what he calls “Islamic totalitarianism”. Marine Le Pen, leader of the National Front and possibly Mr Fillon’s opponent in the final round, would like to see both the Muslim hijab and the Jewish yarmulke banned from public places. + +In the Netherlands the Senate is mulling a law passed by the lower house that would ban the niqab (which covers most of the face) and the burqa in many public contexts. With elections due in March, that would be a small sop to the ultra-nationalist Freedom Party, which wants a broad crackdown on Islam. Last month Angela Merkel, Germany’s chancellor, told cheering members of her Christian Democratic party that exposing one’s features was part of normal interaction in a liberal society. Face covering, she said, should be banned “where legally possible”. + +The strangest clampdown has occurred in Morocco. Earlier this month local officials told shopkeepers that the production, importation and sale of the burqa must end, and made them sign a document agreeing to the change. Burqa-clad women, of whom Morocco has few, promptly posted pictures of themselves on social-media websites. Some asked why the government was not cracking down on prostitutes or short skirts. + +In the land of liberty + +Anxiety over Muslim dress is running high partly because of a surge in Muslim refugees. In the 12 months to the end of September 2016 almost 1.4m people applied for asylum in Europe—many more than the 260,000 who did so in 2010. Islamist terrorist attacks in Belgium, France and Germany have stirred fears about immigrants. Xenophobic populists are on the march almost everywhere. But there is a deeper cause. Secularist doctrine and Muslim culture are both evolving in a way that causes a clash over attire. + +Although Britons dislike mass immigration, they seldom get excited about Muslim dress. Nor do most Americans, although Donald Trump said offhandedly last summer that he “understood” a woman who complained about airline baggage-screeners wearing what she called “heebie-jobbies”. In America the constitution bans any “establishment” (ie, state sponsorship) of religion, and also guarantees the free exercise of faith. Thomas Jefferson’s “wall of separation” between church and state has allowed both to thrive. + +France is different. The roots of French political secularism, known as laïcité, go back to the revolution of 1789 and to an anti-clerical campaign in the early 20th century. By 1904 some 10,000 religious schools had been shut; thousands of priests fled France. “We have torn human conscience from the clutches of faith,” declared René Viviani, a Socialist minister. + +To France’s current Socialist government, with its strong attachment to laïcité, the row over the burkini was a rematch of 1905. Manuel Valls, then the prime minister and now a run-off candidate in the Socialist presidential primary, said the garment embodied the “enslavement of women”. Its logic, added the women’s minister, Laurence Rossignol, was “to hide women’s bodies in order better to control them”. Many citizens concur. Fully 72% say they would back outlawing the veil from university campuses, and 64% would ban the burkini from beaches. + +Muslim dress is contentious in other places where French influence is strong. One is Turkey, whose founders chose the French model when imposing secularism (see article). Another is the mainly French-speaking province of Quebec, in Canada, where a proposed law is being battled over clause by clause. + +In 2008 a report for Quebec’s government proposed that judges, Crown prosecutors and police officers should be barred from appearing in a way that proclaims their religious affiliation. The separatist Parti Québécois (PQ) wanted to go much further. It proposed stopping all state representatives, including teachers, from conspicuous displays of belief. + +Philippe Couillard, Quebec’s Liberal premier, explains that the province is part of North America and should be guided by Jefferson’s ideas on church-state separation rather than by French laïcité. As a result, the bill now being debated by Quebec’s politicians falls well short of the PQ proposal. It says that people delivering or receiving state services should not cover their faces. But civil servants can wear the hijab. That does not go far enough for critics, some inspired by concern for Quebec’s Catholic heritage (to which the bill makes respectful reference) and others by the battle to throw off Catholic influence. + +In France, Quebec and even Turkey, a growing number of young Muslim women favour a live-and-let-live approach. “There’s no single meaning to the veil,” insists Ndèye Aminata Dia, a Senegalese-born woman working in Paris who has started a fashion line in stylish head-coverings. She wears her veil over a long flower-print skirt and carries a jaunty red handbag. “Wearing it doesn’t mean you are fundamentalist,” she says, “just as you can decide not to wear it, and still behave with modesty.” + +Many educated young Muslim women consider themselves the beneficiaries of feminist battles fought by the previous generation. They have no time for arguments favoured by academic feminists about whether the veil is a form of emancipation or oppression. Instead they insist on their right to dress how they like, whether in tight jeans or a full-length niqab, and not to be judged for it. + +From this perspective, the government’s attempts to impose and elaborate a dress code are not just an affront to their freedom but further proof of male chauvinism. “I’m a feminist, I consider that I’m equal to men and I wear what I want,” says Fatima El Ouasdi, a student in finance, who wears her skirt short and her hair loose and runs a women’s-rights group. “But the burkini ban really revolted me.” + +Yet the trend of “reveiling” among young French women is sincerely regarded by many members of their mothers’ generation and by many politicians as part of a fundamentalist political project. They believe the government has both the right and the duty to oppose it. The French do not view the state merely as a provider of services but as a guarantor of norms. Lending legitimacy to certain individual choices is not just a matter of personal freedom but can have real social consequences. + +For evidence, some say, look at the banlieues. The atmosphere in some heavily immigrant suburbs can curb freedom by making it hard not to wear the veil, argues Nadia Ould-Kaci, who co-runs a group called Women of Aubervilliers against the Veil. In recent years, she says, the spread of the veil in her district has reached “worrying” proportions. Girls of North African origin who do not wear it are insulted by being told that “God is ashamed of you.” + +The challenge is to defend women from such pressures while affirming individual freedom. “Laïcité used to be about the neutrality of the state,” says Amélie Barras, a political scientist at York University in Canada. “But now it’s more about citizens, and what they can and cannot do.” + +One moderate in France’s presidential debate is Emmanuel Macron, a former Socialist minister. He argues that laïcité should not be “vindictive” and focused on prohibition. “I don’t think we need to invent new texts or new laws in order to chase the veil from universities,” he has said. Better to use other legal means of enforcing equality and women’s rights, such as child protection. Perhaps schools could take on the topic as part of civic education, and explain to girls that they can wear what they want within the law and do not have to dress how others tell them. + +Such calm, nuanced thinking is rare. But France badly needs to work out how to marry secularism and liberty. If it cannot forge a more tolerant laïcité, it runs the risk of estranging a generation of its own young Muslim women. + +This article appeared in the International section of the print edition under the headline “What not to wear” + + + + + +Dress in a Muslim country + +Turkey covers up + +The headscarf returns to Turkey + +Jan 28th 2017 | ISTANBUL + +Ataturk and his wife, on trend + +AS OTHER countries move to ban Muslim head coverings, Turkey is going the opposite way. Women have been free to wear headscarves at state universities since 2011, and in parliament since 2013. Last August policewomen were allowed to cover their heads; in November a ban on headscarves among civilian defence staff was lifted. + +In 1925 Kemal Ataturk, Turkey’s first president, declared that a “civilised, international dress” was “worthy and appropriate” for the new republic. For men, this meant Western shoes, trousers, shirts and ties—in with the bowler and out with the fez. Women were urged to follow European fashion, dance the foxtrot and work in the professions. In 1934 Turkey let women vote and banned the wearing of the Islamic veil. + +Curbs on religious garb were tightened in the 1990s. Fatma Benli, a lawyer and parliamentarian, remembers being asked to remove her scarf before defending her dissertation in the late 1990s. In 1999 an MP who came to parliament in a headscarf was booed out. That began to change after 2002, as the Justice and Development (AK) party consolidated power. Today 21 covered women sit in parliament. Critics say the AK party has promoted veiling by preferring veiled job applicants and conservative groups. Binnaz Toprak, a sociologist and opposition politician, has found that some women, especially in the public sector, wear the scarf to further their careers. + +Some secularists see a link between stricter Islamic dress norms and increased violence against women. In September a nurse in Istanbul was kicked in the face by a man enraged at her shorts. He was quickly released, to be rearrested only after an outcry. + +At a protest several weeks later a teenage student, Oznur, complained about a hostile climate in the district where she lives: “We can’t walk on our own in the evening without being harassed.” She and her friends wanted neither a return to Kemalist dress codes nor their replacement by Islamic ones. The state, she said, has no business telling women what they should wear. + +This article appeared in the International section of the print edition under the headline “Under cover” + + + + + +Business + + + + +Bridge International Academies: Assembly line + +Formula One: Bye-bye, Bernie + +Political dating websites: Making America date again + +Qualcomm: Until the patents squeak + +Food retailing: The big McCustomisation + +How to build a nuclear-power plant: Nuclear options + +Schumpeter: Overnight sensation + + + + + +Could do better + +Bridge International Academies gets high marks for ambition but its business model is still unproven + +Its biggest challenge may well be financial + +Jan 28th 2017 | NAIROBI + + + +AT THE Gatina branch of Bridge International Academies, on the outskirts of Nairobi, Nicholas Oluoch Ochieng has one eye on his class of five-year-olds and the other on his tablet. On the device is a lesson script. Every line is written 7,000 miles away, in Cambridge, Massachusetts. There an American team analyses 250,000 test scores every ten days from Bridge’s 405 Kenyan schools, and then uses the data to tweak those parts of a lesson where pupils find themselves stumped. Teachers, if they are instructing the same grade level, give identical lessons, and timetables are standardised, too. So when Mr Ochieng’s pupils read from their books, the same words should be reverberating off the walls of each Bridge nursery. + +That chorus should soon grow louder. Founded in 2008, Bridge has grown into one of the world’s largest groups of for-profit schools—and the largest targeting poor pupils. It has 100,000 pupils spread across Kenya, Liberia, Nigeria, Uganda and India. Bridge says it aims to teach 10m children—the size of Britain’s pupil population—within the next decade. + +Bridge’s ambitious target sets it apart from the low-cost private schools that educate more than a fifth of pupils in poor countries, but that remain little more than cottage industries in each place. So too does the strong reaction to it. In November Uganda’s high court upheld an order that Bridge close its 63 schools there, alleging that it opened branches without permission. (Bridge has been granted a stay of execution and is lobbying the government to let it remain in the country.) And backed by Education International (EI), a global group of teachers’ unions, Kenyan and Ugandan unions and their political patrons have campaigned tirelessly against it. + +Many of Bridge’s critics simply hate that it seeks a profit. Lily Eskelsen García, a vice-president of EI, calls Bridge’s model “morally wrong”. It is ironic, then, that it is consistently loss-making. That often goes unnoticed, because less attention has been paid to Bridge’s business model than to its teaching aims. Its biggest challenge, indeed, may well be financial. + + + +Its $140m or so in equity capital comes from several investors, including Bill Gates, Mark Zuckerberg and Pierre Omidyar, who founded eBay, an online-auction giant, as well as from venture-capital funds such as Learn Capital and Novastar. It is often compared to companies from Silicon Valley: the “Uber of education” is one faddish analogy. Bridge recognises that making money by educating the children of parents who pay a mere $71-122 per year (excluding uniforms and lunch) calls for Uber-style disruption. Its school mottos are standardisation, automation and performance-monitoring. It builds its schools in just one month, for example, using one of only three design templates. Many parents in Kenya pay using M-Pesa, an efficient, low-cost mobile-money provider. + +Also central to its business model is the way in which it uses technology to manage its key resource—teachers. Parents appear convinced that its teachers achieve far more than those in the state system. Technology allows close monitoring of what goes on in the classroom, right from the moment teachers join Bridge’s internal training programmes. All teachers must follow instructions on their tablets. Bridge tracks their finger strokes to see whether they scroll to the end of lessons. Local teams of inspectors also keep tabs on whether pupils understand the material. + +Bridge pays its teachers more than those in other private schools, though a lot less than those in the state sector. And it offers extra pay to high performers in popular schools. That seems to encourage them to show up reliably. Bridge’s teacher-absenteeism rate is less than 1%, whereas in Kenyan public schools, according to the World Bank, 47.3% of teachers are absent from the classroom when they are supposed to be teaching. + +It is true that so far, the hard evidence of the effect that Bridge has on pupils’ results is suggestive rather than definitive. Bridge’s own analysis claims that the firm boosts the performance of pupils in Kenya’s high-stakes national examination at the end of primary school. Another Bridge study suggests that its younger pupils learn 13-32% more per year than similar pupils in public schools. Michael Kremer of Harvard University is leading a randomised controlled trial involving Bridge that will begin to report next year. Even without conclusive evidence, the demand for Bridge’s schools is high (at least where political opposition is low). New ones in Nigeria, Liberia and India were quickly oversubscribed. + +Still, the high upfront costs associated with its business model—its academic team in Cambridge, for example, is expensive—mean that just like many a Silicon Valley hopeful, it is quickly burning through investors’ cash. Parents are opting to pay for Bridge, but not yet in large enough numbers to deliver a profit. One presentation to investors in 2016 promised a “multi-billion dollar opportunity” with projected net earnings of nearly $250m by 2025 and revenues of almost $750m. The firm releases few numbers, but today its net losses are estimated at about $12m per year on revenues of no more than $16m. + +Shannon May, the firm’s co-founder, answers that Bridge has always been clear that it has “a long-term, leveraged business model”. The firm has raised prices in India, where fees are about $122 per year, roughly $50 more than in its African markets. Ms May estimates it will break even within three years, by when she expects it to have 500,000 pupils globally. But one investor in Bridge says he would be “astounded” if it broke even by then. + +Teacher’s pet + +The financial pressure may not build too quickly. Having such well-known backers may mean that, in the words of one philanthropist, “Bridge is too big to fail.” As well as its private investors, the company is also funded by the World Bank, and by the governments of Britain and America (as part of a shift towards spending development cash on private-sector projects rather than on aid). They are likely to be patient—so long as Bridge grows. + +If pupil numbers and prices do not climb fast enough, the firm could find other ways of making money. “We are not just a school system,” says Ms May. When in 2009 she tried to buy uniforms and building materials from local suppliers in Kenya, she found it was cheaper for Bridge to make them itself. The company has become a big manufacturer of doors and desks, and in 2013 and 2014 it was Kenya’s largest. In Lagos State, Nigeria, where it has 23 schools, it sells other add-on products, such as school sportswear. Bridge has also suggested to investors that it could use its data on fee payments to sell credit scoring or financial products. It would like to use its brand to offer health insurance. + +Another opportunity within its existing, core business is for Bridge to run publicly funded schools rather than just compete with them. It estimates that in poor countries this market could be worth $179bn, versus the $64bn private market. It has taken a first step in Liberia, where Bridge is part of a pilot programme in which private operators take over the running of 90 public schools—an approach similar to that involving charter schools in America, where independent operators such as KIPP (Knowledge Is Power Programme) have run partly subsidised, fee-free schools for more than two decades. + +Such public-private partnerships would require good relations with governments. The record there is patchy. In Bridge’s first two markets, Uganda and Kenya, growth has stalled. The future of its schools in Uganda is uncertain. In Kenya, Bridge has not opened a new school since 2014 as parents have been put off by the (often wild) claims of the firm’s opponents. The average number of pupils per class in the country has fallen from 30 in 2014 to nearer 20. That has led to a dip in total pupil numbers. To reach its next 400,000 pupils—and meet its target of breaking even within three years—Bridge is relying on highly optimistic growth projections for India and Nigeria. + +That does not stop some development types worrying that with its patient, generous shareholders, Bridge may come to dominate the publicly funded school sector in several places. Because it needs to expand rapidly to break even, they reckon it will seek to run as many publicly funded establishments as it can. That in turn, they fret, will give Bridge too much power over weak governments. It could even use its growing monopoly power to raise fees. + +There are plenty of ways to avoid such an outcome. Contracts can hold Bridge—and other operators—accountable for improving kids’ learning. Contracts can also specify an agreed cost per child. If Bridge falls short, children can be returned to the state system or moved to another chain. + +“If you think public schools can solve this problem alone it is wishful thinking,” says George Werner, Liberia’s minister of education. He points out that critics of Bridge and other private groups should remember the status quo. Last year just one student out of 42,000 hopefuls in Liberia passed an exam that allows pupils to apply for universities. In 2013 no candidate did. Scandalously few children are learning well in public schools. The problem of teacher absenteeism shows little sign of improving. Today, therefore, the problem for pupils seems to be the same as for Bridge itself. It is not that the company is too big. It is that it is too small. + +This article appeared in the Business section of the print edition under the headline “Assembly line” + + + + + +Chased out + +Formula One’s new American owner gives Bernie Ecclestone the heave-ho + +Chase Carey takes the wheel and is expected to usher in big changes + +Jan 28th 2017 + + + +FOR nearly 40 years, he showed skill and stamina at the wheel of Formula One (F1). But this week Bernie Ecclestone ran out of track. The sport’s new owner, Liberty Media, was at pains to portray its replacement of him as chief executive (by Chase Carey, a former president of Rupert Murdoch’s 21st Century Fox) as smooth. But the straight-talking octogenarian has never been one to stick to the script: he complained he had been “forced out”. + +Liberty, which is controlled by John Malone, a billionaire, agreed to buy the sport last year, in a deal worth $8bn; the deal was completed on January 23rd. That provided an exit for CVC, a private-equity group which had purchased control in 2006. Mr Ecclestone gets the title of “chairman emeritus” as a sop—he said he doesn’t know what the title means—and will, said Liberty, “be available” to advise the board. + +His exit was not a total surprise, though the timing had been unclear; he had talked about remaining involved in running F1 for another two to three years. Liberty may wish to draw a line under the Ecclestone era as a precautionary measure. F1 was often mired in litigation during his tenure. He flirted with jail, standing trial in Germany for allegedly bribing a banker to steer the sale of F1 towards CVC. He settled the case for $100m in 2014, with no ruling on guilt or innocence. Today attention focuses on a stake of 1% that the sport’s governing body and regulator, the Fédération Internationale de l’Automobile (FIA), holds in F1, on which it stands to make around $70m thanks to the deal with Liberty, a transaction which the FIA itself had the power to approve. The stake appears to breach a deal with the European Commission in 2001, in which the FIA promised to avoid any commercial conflicts of interest with its oversight of the sport. + +Mr Ecclestone himself made fantastic amounts of money by transforming an amateur series into one of the world’s biggest televised sports. He negotiated a long leasing deal for the commercial rights at what many considered a laughably low price. He was adept at the task of keeping F1’s notoriously fractious teams together—but not so united that they harrumphed off to set up a rival series. But he largely ignored F1’s digital possibilities. Television audiences declined with the move from free-to-air to pay TV, even as F1 pushed into new markets in Asia, eastern Europe and the Middle East. Circuits in western Europe began to balk at the high fees demanded to stage races. + +Liberty will now seek to exploit what Mr Carey called F1’s “multiple untapped opportunities”, in the hope of sending its annual revenues well above the current $1.8bn. That will mean improving fans’ digital experience. There will be a renewed push in America, where F1 has long struggled to establish a proper business, but also in the oldest markets. Mr Carey this week described western Europe as the “foundation” of the sport, whose participation guarantees interest from new circuits. + +The new leadership portends a sensible blend of fresh ambition and continuity. But it is unclear whether Liberty fully understands the quirky business it has bought (and for which it has paid a full price). The teams will remain hard to corral. The new driver is a seasoned media operator, but Liberty has taken charge of a temperamental vehicle. It will require skills every bit as varied as Mr Ecclestone’s to keep the business on track. + +This article appeared in the Business section of the print edition under the headline “Bye-bye, Bernie” + + + + + +Making dating great again + +Political dating sites are hot + +From TrumpSingles.com to Maple Match + +Jan 28th 2017 | NEW YORK + +Looking for a bit of Trumpy pumpy + +AFTER Donald Trump was elected president, Maple Match, an online dating app which connects Canadians and Americans, was inundated with people signing up. The app promised to make it easy for Americans to find a Canadian partner to save them from the “unfathomable horror” of a Trump presidency. Joe Goldman, the app’s Texas-based founder, says it has taken on the perceived ethos of Canada: welcoming, open and tolerant. “We’re building bridges when people are talking about building walls and our users like that.” + +TrumpSingles.com is forging connections, too. Its founder, David Goss, wants to make it easier for Trump supporters to find each other. The site’s earliest users were in Los Angeles, New York and Philadelphia, which are Democratic strongholds. Now its users are in every state. They are also signing up from abroad, including in Britain and in Russia. Mr Goss and his team personally approve each of the site’s 26,000 users to weed out trolls. The site was able to increase its monthly fee from $4.95 to $19.95 in December following Mr Trump’s election victory. It enjoyed a bump in users even after the price increase. Mr Goss is expecting to hear from Mr Trump, since he is making money from his name. + +Online giants such as Match.com, Bumble and Tinder cater for absolutely everyone. That has left lots of room for “niche” providers: there are dating sites for every lifestyle, including ones for vegans, Disney fans and farmers. Entrepreneurs now see opportunity in ideological matchmaking. People used to avoid talking about politics on dates, but political preferences have become a romantic deal-breaker on a par with smoking habits. According to “Singles in America”, a report from Match.com, people who bring up political leanings and agree on them during the first date have a 91% chance of getting to a second. Some sites go well beyond party allegiances and dig deep into each user’s policy preferences. CandiDate, a non-partisan dating site, asks its members where they stand on issues ranging from the Keystone XL pipeline to Obamacare. + +Making money is difficult, however. It is hard for new businesses to charge subscription fees while building brand awareness. ConservativesOnly (whose tagline is “Because liberals just don’t get it”) temporarily suspended its fees during the election cycle to try and drive traffic. Some instead rely on targeted advertising. To be successful, niche dating sites need critical mass and a mobile platform,” says Mark Brooks of Courtland Brooks, an online-dating consultant. + +Not every site will survive this political cycle. Building a business around a failed candidate can be particularly tricky. BernieSingles, which brought together fans of Bernie Sanders, a presidential hopeful, is itself on a break. It hopes to rebrand itself as a site for progressive singles, and relaunch in April. Many would be sorry to see the back of its memorable catchphrase: “the 1% are not the only ones getting screwed this election season.” + +This article appeared in the Business section of the print edition under the headline “Making America date again” + + + + + +Patently profitable + +Qualcomm is again under attack for living large off its patent portfolio + +Its biggest customer, Apple, is suing it for $1bn + +Jan 28th 2017 + + + +“SHOULD five per cent appear too small, be thankful I don’t take it all.” The Beatles wrote “Taxman” in 1966 to protest at Harold Wilson’s exorbitant “supertax” rates. Critics of Qualcomm, the world’s biggest chip-design firm, would say the lyric is a clue to the company’s business practices. Its methods have attracted a barrage of legal complaints. The latest came on January 25th, when Apple, a smartphone maker, sued it in China for abusing its clout in mobile processors and demanded 1bn yuan ($145m) in damages. Just days earlier Apple had filed a similar lawsuit in California asking for $1bn. + +America’s Federal Trade Commission (FTC) issued a separate complaint against the firm this month. In late December, the equivalent body in South Korea fined it a whopping $853m, which hurt its quarterly results, announced this week. These cases follow two similar ones in 2015: Chinese regulators imposed an even higher fine, of $975m; and the European Commission found Qualcomm guilty of having sold chips below cost to hurt rivals. + +Qualcomm is no household name, but most people with mobile phones use its technology. It is estimated to provide up to four-fifths of essential types of baseband processors, the chips that manage a device’s wireless connection. These and other chips generated two-thirds of the firm’s revenues of $23.6bn in 2016. But the secret to its profits of $5.7bn is the way it licenses its intellectual property (see chart). + +Qualcomm owns thousands of patents on technology deemed “essential” to build phones compatible with wireless standards. All the cases revolve around the peculiar model of how Qualcomm licenses these patents. It does not make them available to rival designers of chips and other components, but only to device-makers. These usually pay for the entire patent portfolio, rather than individual patents. And Qualcomm typically charges a percentage of the total selling price of a device—5%, according to insiders. + +Combined with Qualcomm’s dominant position in baseband processors, the FTC argues, this set-up enables all kinds of abuses. In particular, it alleges that handset brands have little choice but to sign up to onerous licensing conditions in order to get the chips they need. Apple, among other things, claims that per-device royalties mean Qualcomm is taxing its innovation: it must pay up for new features, such as a new kind of camera, even if these are unrelated to Qualcomm’s patents. + +Such accusations are not new. In the past Qualcomm has defended itself by arguing that its approach makes life easier for all involved: licensing patents for individual components would be too complex. As for the FTC’s allegation of monopoly abuse, Qualcomm said that it “has never withheld or threatened to withhold chip supply in order to obtain agreement to unfair or unreasonable licensing terms.” + +The courts will now have to sort all this out. If legal battles are multiplying now, it is because the world is in a way “done” with smartphones, says Stéphane Téral of IHS Markit, a data provider. Slower growth and tighter margins have device-makers searching for ways to cut costs. + +Apple’s cases are the biggest danger for Qualcomm: the iPhone-maker is its largest customer. Stacy Rasgon of Sanford C. Bernstein, a research firm, describes Apple’s lawsuits as an “all-out assault” on Qualcomm’s licensing model. But the firm has shown that it can recover from crises by developing new technology and making clever acquisitions. Although regulators have yet to approve the deal, the firm in October bought NXP Semiconductors, a chip designer, for $47bn, which gives Qualcomm a foothold and lots more intellectual property in two promising markets: chips for cars and connected devices, collectively called the internet of things. The world may be “done” with smartphones, but the taxman is likely to remain a force. + +This article appeared in the Business section of the print edition under the headline “Until the patents squeak” + + + + + +The big McCustomisation + +McDonald’s is going for healthier fare and greater digitisation + +But it may soon be surpassed by Starbucks + +Jan 28th 2017 | CHICAGO + + + +IN A newly released film, “The Founder”, the character of Ray Kroc promises that the startup he had taken over from the McDonald brothers “can be the new American church”. Portrayed by Michael Keaton as a turbo-charged egomaniac whose scruples diminish as his success increases, Kroc understood the power of branding, the advantages of franchising and the attraction of speed in food retailing. McDonald’s is now one of the country’s biggest food chains, with more than 14,200 outlets. + +The domestic market is still its most important one, despite the firm’s massive global presence. When it reported this week that global sales had dropped by only 5% in the fourth quarter, the number beat expectations. News of a drop in sales in America of just 1.3% was received more gloomily. Hopes had risen because of the previous six consecutive quarters of domestic growth. At the end of 2015 and in early 2016 the chain had reaped the rewards of introducing the popular all-day breakfast in America. A year or so later, Egg McMuffins and sausage biscuits have shed some of their allure. + +Still, Steve Easterbrook, the firm’s British boss, who took over in March 2015, has lots to be proud of. He has streamlined a bloated menu, which in America had grown to almost 200 items, by, for instance, ditching sandwich wraps and offering one type of quarter-pounder with cheese rather than four. He also made the fare on offer healthier by, for example, taking high-fructose corn syrup out of buns. He removed artificial preservatives from Chicken McNuggets. + +Most analysts approve of his plan to lift the share of restaurants that are franchised even higher, from 83% to 95%. He sold 1,750 struggling company-owned outlets in China and Hong Kong to a consortium (retaining a 20% stake) and put the firm’s Japanese outlets up for sale. True, the trend to become a brand manager rather than an owner of restaurants was started by Burger King, a rival, but McDonald’s has excelled at it. The advantage is a predictable revenue stream. + +It has taken an outsider to shift McDonald’s culture. Mr Easterbrook is only the second non-American to run the company. So far he is succeeding in making it more accountable and nimble, says R.J. Hottovy of Morningstar, an investment-research firm. Its bureaucracy, known for its stodginess, has speeded up. The firm has become more open to experimentation. It has recently introduced touch-screen self-service kiosks, customised burgers and question-and-answer sessions with clients through social media. + +This year and next it is planning to introduce mobile ordering and payment in as many as 25,000 outlets worldwide by enhancing its app, which now mainly features only menus and discounts. It is late but it is at last jumping on the digital bandwagon, says John Gordon, a restaurant expert at Pacific Management Consulting Group, who points out that even Dunkin’ Donuts, a doughnut chain, offers an advance order-and-pay app. Starbucks, the world’s biggest coffee chain, launched its app in 2009 and by autumn 2013 was making 11% of its sales through mobile channels. That is not the only reason for McDonald’s to envy the coffee giant: analysts reckon that it will soon overtake Mr Kroc’s creation to become the world’s most valuable restaurant chain. + +Despite the prospect of losing the top spot, Mr Easterbrook is reckoned to have a good chance of lasting longer in his job than his predecessor, Don Thompson, who served two-and-a-half years. He knows the business extremely well but cut his teeth outside McDonald’s, an advantage, says Neil Saunders at Conlumino, a retail researcher.“Persistence!” cries Kroc in his biopic. Mr Easterbrook will no doubt watch the film and draw lessons. + +This article appeared in the Business section of the print edition under the headline “The big McCustomisation” + + + + + +The nuclear options + +How to build a nuclear-power plant + +A new crop of developers is challenging the industry leaders + +Jan 28th 2017 + + + +THE Barakah nuclear-power plant under construction in Abu Dhabi will never attract the attention that the Burj Khalifa skyscraper in neighbouring Dubai does, but it is an engineering feat nonetheless. It is using three times as much concrete as the world’s tallest building, and six times the amount of steel. Remarkably, its first reactor may start producing energy in the first half of this year—on schedule and (its South Korean developers insist) on budget. That would be a towering achievement. + +In much of the world, building a nuclear-power plant looks like a terrible business prospect. Two recent additions to the world’s nuclear fleet, in Argentina and America, took 33 and 44 years to erect. Of 55 plants under construction, the Global Nuclear Power database reckons almost two-thirds are behind schedule (see chart). The delays lift costs, and make nuclear less competitive with other sources of electricity, such as gas, coal and renewables. + + + +Not one of the two technologies that were supposed to revolutionise the supply of nuclear energy—the European Pressurised Reactor, or EPR, and the AP1000 from America’s Westinghouse—has yet been installed, despite being conceived early this century. In Finland, France and China, all the EPRs under construction are years behind schedule. The main hope for salvaging their reputation—and the nuclear business of EDF, the French utility that owns the technology—is the Hinkley Point C project in Britain, which by now looks a lot like a Hail Mary pass. + +Meanwhile, delays with the Westinghouse AP1000 have caused mayhem at Toshiba, its owner. The Japanese firm may announce write-downs in February of up to $6bn on its American nuclear business. As nuclear assets are probably unsellable, it is flogging parts of its core, microchip business instead. + +Yet relative upstarts in South Korea and China show that large reactors, such as the four 1,400-megawatt (MW) ones in Abu Dhabi, can be built. Moreover, the business case for a new breed of small reactors below 300MW is improving. This month, Oregon-based NuScale Power became the first American firm to apply for certification of a small modular reactor (SMR) design with America’s nuclear regulators. + +“Clearly the momentum seems to be shifting away from traditional suppliers,” says William Magwood, director-general of the OECD’s Nuclear Energy Agency. Both small and large reactors are required. In places like America and Europe, where electricity demand is growing slowly, there is rising interest in small, flexible ones. In fast-growing markets like China, large nuclear plants make more economic sense. + +If the South Koreans succeed with their first foreign nuclear programme in Abu Dhabi, the reason is likely to be consistency. Nuclear accidents such as Three-Mile Island in 1979 and Chernobyl in 1986 caused a long hiatus in nuclear construction in America and Europe. But South Korea has invested in nuclear power for four decades, using its own technology since the 1990s, says Lee Yong-ho, an executive at Korea Electric Power (KEPCO), which leads the consortium building Barakah. It does not suffer from the skills shortages that bedevil nuclear construction in the West. + +KEPCO always works with the same, familiar suppliers and construction firms hailing from Korea Inc. By contrast, both the EPR and AP1000, first-of-a-kind technologies with inevitable teething problems, have suffered from being contracted out to global engineering firms. Also, South Korea and China both keep nuclear building costs low through repetition and standardisation, says the World Nuclear Association (WNA), an industry group. It estimates that South Korean capital costs have remained fairly stable in the past 20 years, while they have almost tripled in France and America. + +The WNA also notes in a report this month a “revival” of interest in SMRs, partly because of rock-bottom sentiment toward large plants. Utilities are finding it tough to pay for big projects (Barakah, for instance costs a whopping $20bn), especially in deregulated power markets where prices have slumped because of an abundance of natural gas and renewable energy. Big investments can sink a firm’s credit rating and jack up its cost of capital. + +It is less onerous to pay for an SMR, which means that even though they produce less energy, they can be cost-competitive with larger plants once they are being mass produced, says the WNA. Other advantages are that SMRs will be factory-built, easy to scale up by stacking them together, and quick to install. + +America’s regulators expect to reach a decision on NuScale’s application within 40 months. Safety will be the crucial issue; both the reactor and the facilities where it will be fabricated need to pass muster. It uses a well-established pressurised-water technology and claims not to be at risk from the problems that caused the Fukushima disaster in Japan in 2011; it has no pumps, and no need for external power or water. If approved, the success of the technology will not be known until many have been produced. Yet with the prospect of SMRs and the Abu Dhabi plant soon going into action, long-suffering backers of nuclear power at last have something to pin their hopes on. + +This article appeared in the Business section of the print edition under the headline “Nuclear options” + + + + + +Schumpeter + +Why American bosses have become giddy, last-minute fans of Donald Trump + +A slash-and-burn approach to business taxes and regulation has endeared him to chief executives + +Jan 28th 2017 + + + +IN AN effort to understand their new reality, many American bosses have been studying “The Art of the Deal”. Donald Trump’s autobiography, published in 1987, begins by describing his working week, which mainly consists of frequent calls with his stockbroker, sitting in his office as other businesspeople pay him lavish tribute, and drinking tomato juice for lunch. + +If Mr Trump’s routine is anything like the same today, he must be delighted. The broker has good news: the S&P 500 index has returned 6% since his election and on January 25th the Dow Jones Industrial Average closed above 20,000 for the first time. There have been chief executives-a-plenty lavishing praise on him both in public and in private. Their devotion seems extraordinary. Before the vote, many of the same C-suiters lambasted him as a menace to capitalism and much else. + +One theory is that executives are simply terrified of Mr Trump. But many are supportive of him in private, too. They offer two explanations: that they can’t help but respond to his personal charm offensive to big business, and that they are persuaded that there is some substance there. Consider the personal touch, first. On paper the Obama years were glorious for big firms. Their profits soared and many built oligopolies through big takeovers. But most CEOs viewed Mr Obama’s presidency with dismay. Their firms’ sales stagnated along with the economy, and, reluctant to invest, they spent profits on share buy-backs. Mr Obama was aloof, caring little for the company of businesspeople. Antitrust enforcement was lax, but other elements of regulation got tighter. + +The new era could not be more different. Since winning, Mr Trump has had personal contact with the bosses of firms with a collective market value of $5trn, or a fifth of America’s stockmarket. He has either met or appointed them as advisers or officials. The list includes eight of America’s ten most valuable firms. The exceptions are Berkshire Hathaway, run by Warren Buffett, a backer of Hillary Clinton, and Wells Fargo, which faced a mis-selling scandal in 2016. Most CEOs are status-conscious and see no harm in pressing the flesh. An invitation to Trump Tower or the White House to discuss how to run America goes down well. + +Once the cameras are switched off, the president lays on the flattery. He tells bosses how important their firms are to the country and that he will pave the way for them to invest. Those he has fallen out with get a chance to make up. In January Randall Stephenson, the boss of AT&T, which is trying to buy Time Warner in a deal Mr Trump denounced during his campaign, paid his respects. Elon Musk of Tesla, an electric-car firm, criticised Mr Trump in 2016, but has since become an adviser and attended a meeting on manufacturing at the White House on January 23rd. Also present was the head of Lockheed Martin, whom Mr Trump has previously roasted for ripping off the Pentagon. The next day Mr Trump met the heads of Detroit’s three big car firms, whom he has, in the past, beaten up for investing in Mexico. + +Few bosses are deluded enough to think an hour with the fickle Mr Trump can secure lasting favour, however. They also say that his economic plans will unleash corporate America. Four substantial changes are afoot. Firms will be allowed to repatriate foreign profits without paying a border levy: they have $1trn of cash stashed overseas. A Republican-controlled Congress will ram through tax reforms this spring to cut corporate tax from a headline rate of 35% now to 20% or less. A state-backed splurge on crumbling airports and roads will go ahead. And there will be an all-out war on regulation. In the meeting on January 23rd Mr Trump promised to eliminate three-quarters of all red tape. + +The combination of all this, bosses say, will create a virtuous cycle of investment and growth. But in each of the four areas there are grounds for caution. Mr Trump will demand that environmental and financial regulators enforce rules with less zeal, but unwinding red tape will take years. The infrastructure spending spree may run up against deficit-averse Republicans. And look more closely at corporate taxes. Big firms already pay far less than the official rate. The constituents of the S&P 500 index paid in total a cash tax rate of 23% in the last reported year, based on Bloomberg data (and excluding loss-making firms). If the tax rate were slashed to 15%, the bump would be worth 8% of pre-tax profits—nice to have but hardly transformative. The reduction might also be offset by other changes, such as new limits on the tax break that firms receive on their interest costs. + +Hail to the chief + +As for the cash that American firms hold abroad, half of it is owned by tech firms such as Google and Microsoft, which already invest less than one-third of their total cashflow and which might carry on buying back lots of stock. For the rest of the firms in the S&P 500, the cash that is stranded offshore amounts to only nine months’ worth of capital expenditure, or 2% of their market valuations. These figures are too small to make much difference. + +And then there is Mr Trump’s attitude to trade, which matters greatly to big firms, since a third of their collective sales are abroad. Many bosses forgive Mr Trump’s threats to start trade wars with China and Mexico as a form of price discovery. He makes bombastic opening demands, they say, but businesspeople expect him to reach rational arrangements with both countries that allow commerce to flourish. One well-thumbed section in the autobiography explains how he aims high, pushes and pushes but then settles for less than he originally sought. + +But dealing with countries is a higher-stakes game than bargaining over Manhattan building plots. The president is erratic, ill-informed and advised by hardline protectionists. American bosses’ volte-face on Mr Trump seems uncharacteristically excitable. Perhaps they would be better following another piece of advice from “The Art of the Deal”: “I believe in the power of negative thinking…always go into the deal expecting the worst.” + +This article appeared in the Business section of the print edition under the headline “Overnight sensation” + + + + + +Finance and economics + + + + +Sino-American trade: Rules of engagement + +The trade-war scenario: Apocalypse now + +Dublin as a financial centre: Emerald aisles + +Buttonwood: Letting go + +Student loans: Grading education + +Aid and migrant labour: Ticket to pride + +Chinese economic data: Potemkin province + +Reinsurance: Daddy long tail + +Free exchange: Mad maximum + + + + + +Rules of engagement + +America, China and the risk of a trade war + +Trade tensions will mount, but a destructive trade war can still be averted + +Jan 28th 2017 + + + +DONALD TRUMP’S quest to protect American workers from cheating foreigners has begun. But in his first flurry of policy tweets and executive orders, China, his favourite bogeyman, was conspicuously absent. On the campaign trail he deplored China’s currency manipulation, accused it of flouting global trade rules and threatened a 45% tariff on its exports, all to cheering crowds. Now, the world is waiting to see how much of this he meant. + +The promise to label China a currency manipulator has not been repeated. An optimistic interpretation is that Mr Trump has realised that the promise was based on an “alternative” fact. China is no longer squashing its currency to gain a competitive edge, but is instead propping it up. A pessimistic one is that Steven Mnuchin, his treasury secretary, who would do the labelling, is not yet confirmed by the Senate. + +Mr Trump certainly has the power to wreak trade havoc. A big blanket tariff would slice through supply chains, hurt American consumers and fly in the face of the global system of trade rules overseen by the World Trade Organisation (WTO). But, rather than blow up the world’s trading system, Mr Trump may yet decide to take on China within it. The White House website, without naming China, promises “to use every tool at the federal government’s disposal” to end trade abuses. + + + +In the process of being confirmed as Mr Trump’s commerce secretary, Wilbur Ross somewhat reassuringly said that he had learned the lessons of the Smoot-Hawley Tariff Act, which raised thousands of tariffs in the 1930s. (It “didn’t work very well, and it very likely wouldn’t work now”.) His own policy includes a threat to “punish” countries not playing by the rules. He suggested his department might start its own actions against foreign dumping, rather than leaving them to industry. Robert Lighthizer, Mr Trump’s proposed US trade representative (USTR) and a veteran trade lawyer, knows WTO law inside out, and will be keen to scrap in the courts. + +A litigious approach to the Chinese would not mark a huge break from the past. Under Barack Obama the USTR challenged China 16 times, on issues from illegal taxes on American steel and cars to dumping and export quotas on rare earths that harmed American importers. Just this week a massive case accusing China of illegal agricultural subsidies, which was filed by the previous administration, kicked off. + +Ramping up tensions still risks Chinese retaliation. When America imposed tariffs on surging imports of Chinese tyres in 2009, China started importing chicken’s feet from Argentina and Brazil instead of America. Possible targets for Chinese reprisals this time include American soyabeans and aircraft, which together make up a quarter of American exports to China. China would find it hard to replace its entire supply of American soyabeans. But Kenny Cain, a soyabean farmer from Indiana, worries that prices could plunge by a third if China were to shop elsewhere. Although China cannot yet make high-quality commercial airliners, it could divert purchases to Airbus, a European manufacturer. + +A second risk is that the WTO architecture crumbles under the pressure of new cases. Resources are already stretched and decisions delayed. Constrained by a budget cap and a limit of 640 employees, it has struggled to cope with an increased number of disputes in the past few years. + +A highly adversarial approach to trade could expose a more fundamental problem: “As written, the WTO rules are just not clear enough,” says Chad Bown of the Peterson Institute for International Economics. Mr Trump is right that China has not always adhered to the spirit of global trade law. But he may find that even holding it to the letter of the law is easier said than done. For example, WTO law offers no watertight definition of a state-owned enterprise, so it is hard to identify and oppose subsidies from state-owned banks. + +Mr Obama’s strategy for solving the problem was to craft a multilateral trade agreement that included definitions of state-owned enterprises, a section on currency manipulation and chapters on labour and environmental standards, all meant to protect American workers against “unfair” competition. Called the Trans-Pacific Partnership, it initially excluded China. But the hope was that China would one day have to accede, thereby accepting rules written in large measure by America. Mr Trump scrapped it this week. + +His strategy is clearly different. As long as he fights China on WTO rules, the world should avoid a trade war. Even if the WTO finds that American trade measures violate their rules, those rules set limits on the extent of retaliation allowed. Outside the WTO, all bets are off. + +This article appeared in the Finance and economics section of the print edition under the headline “Rules of engagement” + + + + + +Apocalypse now + +Winners and losers in a China-America trade war + +A trade war would be a catastrophe; but not for everybody + +Jan 28th 2017 + +ECONOMIC Armageddon became a bit more likely when Donald Trump took office on January 20th, given his threats to impose a 45% tariff on Chinese imports. “No one will emerge as a winner in a trade war,” Xi Jinping, China’s president, intoned just days earlier. He was not quite right. In any catastrophe, a few survive; some even thrive. + + + +Tariffs that high would serve as a tax on American shoppers buying phones, computers and clothes (see chart). They might not dent their wallets too much—a study found that in 2010 goods and services from China made up less than 3% of consumer spending. Poorer Americans would be hit harder, however, as they spend a higher share of their income on tradable goods. + +American importers would suffer from a tariff. Importers of electronics and clothing enjoy higher retail and wholesale margins than other importers. A tariff would eat into them. Their competitors, relying on domestic suppliers, could benefit and raise prices. + +A squeeze on trade between America and China would be painful but not catastrophic for China’s economy. It has weaned itself off export-led growth. Analysts from Morgan Stanley, an investment bank, find that even in a worst-case scenario, with tariffs of 45% imposed on both directions of trade between China and America, exports would fall by almost 13% and GDP growth would be crimped by 1.4 percentage points. + +The biggest Chinese firms included in the MSCI China stock index are less reliant on American customers than those in the American equivalent are on Chinese customers. America accounts for more than 10% of revenues for fewer than 2% of the Chinese firms included (though their shares would suffer in a trade war as foreign investors run for cover). + +In the short run, countries woven into China’s supply chains, such as Taiwan and South Korea, would lose out from the stifled demand for their wares. But other countries could win, if any tariff was restricted to China. Toy manufacturers in Mexico and clothes-stitchers in Vietnam could enjoy a surge in demand. Numbers crunched by Deutsche Bank suggest that a 10% fall in American imports from China could leave a gap which, if plugged by Mexico, could boost Mexican exports by almost 3%. Assuming they can get through the wall, of course. + +This article appeared in the Finance and economics section of the print edition under the headline “Apocalypse now” + + + + + +Emerald aisles + +Brexit poses a threat to Ireland’s aircraft-leasing business + +The potential benefits of Brexit for Dublin come with dangers + +Jan 28th 2017 | DUBLIN + + + +THE glass office blocks of Dublin’s docklands still stand proud; the banks that built them no longer do. The financial crisis of 2008 took down Ireland’s six biggest lenders. Within five years Dublin slid from being rated by Z/Yen, a London-based business think-tank, as the world’s tenth-best financial centre to its 70th. Britain’s readiness to leave Europe’s single market has since sparked hopes Dublin’s fortunes could be revived. An English-speaking base from which to keep doing business inside the EU may appeal to London’s bankers. But worries are growing that the impact will not be all good for Dublin. + +To see why, look at aircraft finance, perhaps the city’s most successful industry. The topic of Brexit dominated the chatter at the world’s two biggest air-finance conferences, both held in Dublin this month. Drawing more than 4,500 airline bigwigs, lessors and bankers, such gatherings are usually preoccupied by issues such as aeroplane prices and the aviation cycle. This year geopolitics predominated. “In Ireland we’re surrounded by Trump to the west and Brexit to the east,” one industry veteran sighed in despair. + +The financing and leasing of aircraft is a peculiarly Irish business. Its origins in the 1970s were as a way for Aer Lingus, the country’s flag-carrier, to exploit its planes during the lean winter seasons. Previously, airlines owned all their aircraft. Leasing allows them to finance rapid expansion or contraction of their fleets without taking on debt. Only 2% of aircraft were leased in 1980. Now over 40% are. + +For a country of under 5m people, Ireland has made a global success story of leasing. Irish firms manage in excess of 5,000 commercial aircraft, worth over $130bn, accounting for half of all leased planes and a quarter of the fleet globally. Although Irish lessors were once chiefly thought to be used by struggling African airlines unable to get bank loans, says Peter Barrett, the boss of SMBC Aviation Capital, now virtually everyone leases planes. + +Aircraft lessors took up the slack created by the implosion of the banks, renting their old offices in central Dublin. The industry in Ireland is now growing so fast, it is skewing the country’s economic data. Official GDP growth of 26% in 2015 was largely the result of lessors buying so many new planes; the rest of the economy probably grew only by about 5%. + +Although Ireland’s first lessor, Guinness Peat Aviation (GPA), collapsed in 1993, Ireland has remained the industry’s global hub. All but one of the world’s 15 largest aircraft lessors have operations there. Patrick Blaney, a former boss of GPA, cites a number of big attractions. Dublin has a ready supply of workers already trained to manage and finance aircraft. It is home to the international registrar of aircraft that enables owners to gain swift repossession of their aircraft if an airline defaults on lease payments. And Ireland’s low-tax regime leavens the industry’s otherwise wafer-thin margins. Ireland’s low corporate-tax rate of 12.5%, generous capital allowances and vast network of double-taxation treaties all offer further help. + +At first glance, Brexit should have no direct impact on any of these advantages. But it worries the industry. A survey of aircraft-finance executives this month by Deloitte, a consultancy, showed that 38% think Brexit will damage Ireland’s attractiveness as a base for leasing. The proportion was much higher among executives outside Ireland, says Pieter Burger of Deloitte. They know that other financial centres such as Hong Kong and Singapore are aggressively trying to attract lessors away from Dublin with lower tax rates and other incentives. Almost a third of aircraft-finance executives say that they could move operations out of Ireland if it changes its tax policies for the worse. + +This is where Brexit poses a potential threat to Ireland. France and Germany have long wanted Ireland to align its corporate-tax system with their, much higher rates. After Brexit, Britain, Ireland’s only big ally against European tax harmonisation, will no longer have a seat at the table. Many in Ireland believe the EU is already closing in. They point to the big fine imposed by the European Commission on Apple last year, when the tech giant was accused of paying too little in Irish taxes, and to plans to standardise the rules on how corporate taxes are calculated. + +Dublin does have advantages for companies fleeing a hard Brexit: the English-speaking population, a very similar legal system and light-touch regulation. Yet many air lessors say they would be quietly relieved if hordes of exiled bankers do not turn up. The city is already short of office space, housing, roads and international-school places. Irish central bankers are worried about whether they have the right expertise to regulate some of the complex trading that could move out of Britain. Even if Ireland retains its edge on tax, a post-Brexit exodus of financiers from London might not be an unalloyed boon. + +This article appeared in the Finance and economics section of the print edition under the headline “Emerald aisles” + + + + + +Buttonwood + +Financial markets diverge as central banks start to turn off the taps + +As monetary policy tightens, markets are learning to let go of Daddy’s hand + +Jan 28th 2017 + + + +INVESTORS are learning to let go of Daddy’s hand. Monetary policy has been very supportive of asset markets over the past eight years but the direction of policy is tilting slowly. + +The Federal Reserve has increased rates twice already and is expected to push through another three increases this year. The Bank of England has indicated that the next move in rates could be up or down, but that the former looks more likely, especially as inflation is on the rise. The European Central Bank is scheduled to reduce the amount of bond purchases it makes after the end of March. Only the Bank of Japan seems committed to keeping the monetary taps on “full”. + +The market impact is already visible. Morgan Stanley says there has been a “crash” in the tendency for assets to correlate with each other in recent months (see chart). Its measure incorporates correlations between different markets (equities and corporate bonds, for example), and between different regions. + +The recent fall in correlations takes the measure back to where it was in the run-up to the 2007-08 financial crisis. During and after the crisis, correlations rose sharply. First, many investors sold out of risky assets because of the collapse in the financial system. Then, as central banks started to buy bonds through several rounds of quantitative easing (QE), most financial assets rose in tandem. + +Now that central banks are no longer quite so supportive, it may be time for markets to go their separate ways. The actions of central banks swamped the economic fundamentals; those factors can now reassert themselves. In the first few weeks after Donald Trump’s victory in the presidential election, the value of global shares rose by $3trn and that of bonds fell by the same amount, according to Torsten Slok of Deutsche Bank. The Dow Jones Industrial Average passed 20,000 for the first time on January 25th. Emerging markets have underperformed American shares since Mr Trump’s victory. + +The rationale behind such differences is that tax cuts in America will improve economic growth (good for equities) but widen the budget deficit and push up inflation (bad for bonds). Mr Trump’s threats of tariffs and border taxes will be good for domestically focused American companies, less so for businesses operating in developing countries. + +The tricky question is how long these divergences can last without prompting a reaction. At some point, higher bond yields, by raising the cost of borrowing, can crimp economic growth and thus be bad for equities. Bad news for emerging markets can rebound on the developed world. + +Some of these tensions may play out in the currency markets. They too changed after the 2007-08 crisis. Before the crash, the markets were driven by the “carry trade”, with investors tending to borrow in currencies with very low rates and invest the proceeds in countries with higher rates, pocketing the difference, or carry. + +Once rates fell towards zero across the developed world, there was less carry to exploit. But monetary policy still played a big role; announcements of QE programmes were seen as a sell signal. For a while, it seemed that most central banks were trying, implicitly or explicitly, to drive their currencies lower. + +Now there may be some carry to exploit again. The gap between ten-year Treasury-bond yields and German bond yields has widened to more than two percentage points. America was the first leading economy to scale back QE and the first to start raising rates; as a result, the trade-weighted dollar has risen by nearly 35% since August 2011. + +A stronger greenback creates its own feedback loops. It causes problems for companies in emerging markets that have borrowed in the currency. And, over time, a stronger dollar makes American exporters less competitive and developing-country exporters more so. + +That thought has already led President Trump to describe the dollar as “too strong”—a remark that, along with his early actions on trade, has prompted the currency to drop back a bit. However, what the president says about the dollar does not really matter. It is the Fed that makes the big decisions that drive the currency. + +That might change. Mr Trump may bridle at his lack of control over dollar movements. He could try to bully Janet Yellen, the Fed’s chairwoman—as Richard Nixon dominated an earlier chairman, Arthur Burns. Or he might replace her with someone more pliable. The end of central-bank independence really would create a new and unwelcome environment for investors. + +Economist.com/blogs/buttonwood + +This article appeared in the Finance and economics section of the print edition under the headline “Letting go” + + + + + +Grading education + +A fintech startup tries to shake up American student loans + +Taking the risk-return ratio of education seriously + +Jan 28th 2017 | NEW YORK + + + +IN AN old factory building in lower Manhattan a fintech startup is seeking answers to a question that has tormented teachers and students for decades: what is the value of a given course, teacher or institution? Climb Credit, with just two dozen employees, provides student loans. The programmes it finances bring returns far higher than can be expected from even highly rated universities. + +Climb does not claim to nurture billionaires, nor to care much about any of the intangible benefits of education. Rather, it focuses on sharp, quantifiable increases in earnings. The average size of its loans is $10,000 and it normally finances programmes of less than a year. The subjects range from coding to web design, from underwater welding to programming robots for carmakers (which has the highest rate of return). Some students have scant formal education; others advanced degrees. The rate of return they get is calculated as the uplift in earnings after the course of study, minus its cost (which includes that of servicing the loan, and takes account of the absence of earnings during the course). + +Climb’s results so far are hardly conclusive. It has released only the number of loan applications: just 10,000 since its founding in 2014. Many institutions it works with do not offer the four-year and two-year courses eligible for federal funding, which account for 19m students. Instead, its market for now is among the 5m studying in more focused programmes. + +Past efforts to rank education providers based on the financial return they offer have struggled. The data are often drawn from patchy surveys. It is hard to compare different courses over different time spans. Climb tracks every loan it makes, along with data such as subject area, teacher, institution, job offers and salaries. Its interest rates average 9% a year, roughly double the government rate, and can be as high as 15%. It shuns some fields, such as acting or modelling, altogether, if there is no evidence that a course delivers a return. So far, the firm’s approach has worked: its default rates are in the low single digits. + +Climb’s credit offering covers 70 institutions; another 150 are being vetted. As many as 3,000 may eventually qualify. Climb’s attraction is obvious: an expanded student base. But many will balk at the tough provisions Climb imposes. Students must be given a drop-out period, when they can leave without any loan obligation. (A review of data on conventional student loans suggested that those most likely to default had begun classes, taken on debt and then quit the course before they had acquired any new skills.) If a student does default, the school is usually responsible for more than 20% of the unpaid debt. That gives it an incentive to pick students carefully and train them well. + +In conventional student loans, interest and principal accumulate silently. On graduation, the monthly repayment bill comes as a shock. Climb students start making tiny payments as soon as they take out a loan (refunded if they drop out fast). Climb hopes to make its success-rate data public, to help both students and lenders. It already makes good use of its network of education providers: it has hired three former students from institutions within it. + +This article appeared in the Finance and economics section of the print edition under the headline “Grading education” + + + + + +Ticket to pride + +Visas as aid + +An experiment in Haiti shows the idea’s potential and drawbacks + +Jan 28th 2017 + +Better in America + +TWO years ago, Jon Hegeman, a farmer from Alabama, was struggling to expand his business. He could offer unglamorous but steady work. Potting plants and shifting them to a greenhouse paid $10.59 an hour. He couldn’t find workers; he even tried recruiting from a youth-detention programme. + +Mr Hegeman stumbled on a solution when he met Sarah Williamson, of Protect the People (PTP), a charity for people affected by humanitarian disasters. With the International Organisation for Migration, PTP was trying a novel way of helping Haiti after its devastating earthquake in 2010: by taking Haitians to work temporarily in America. The idea appealed to Mr Hegeman, born to missionary parents on the same island (but in the Dominican Republic). With the agencies’ help, eight workers arrived in September 2015. + +A new study by Michael Clemens and Hannah Postel of the Centre for Global Development compares those Haitians who secured visas through the project with unsuccessful applicants left behind. The benefits were mind-boggling: the temporary migrants earned a monthly income 1,400% higher than those back in Haiti. Most of their earnings flowed back home in the form of remittances. For comparison, a 10-30% raise would normally be cause for celebration. + +The sample for the study was small. But its findings match those for a similar scheme that offered temporary agricultural work in New Zealand to people from Tonga and Vanuatu. That policy was assessed by economists at the World Bank as “among the most effective development policies evaluated to date”. + +This type of aid is controversial. The history of visas that tie workers to employers is speckled with tales of exploitation. Some fear the beneficiaries push locals’ wages down. More fundamentally, some philanthropists working in Haiti saw helping people leave Haiti as giving up on those left behind. + +The biggest hurdle, however, was securing visas from the American authorities. PTP had hoped to help hundreds of Haitians get jobs. But most applications were rejected, either because the Department of Labour said an American could fill the job, or because employers did not meet the required standards. Of 238 candidates the charity prepared in 2016, all of whom had been matched to employers, only 58 made it to America. + +Despite the spectacular benefits to those who managed to move, so few did that funding for the project dried up. Worse, those benefits were outweighed by the even more spectacular costs of managing the process. The extra income the Haitians earned was less than the money put into the scheme. + +Mr Clemens is sure that if the project could get big enough it would be cost-effective. After a winter break, Mr Hegeman’s employees are back from Haiti, “smiling from ear to ear”. He worries that, unless PTP secures the funding to help them navigate the bureaucracy, this year might be their last in Alabama. + +This article appeared in the Finance and economics section of the print edition under the headline “Ticket to pride” + + + + + +Potemkin province + +A big Chinese province admits faking its economic data + +Typical! say cynics. Cleaning up at last! say optimists + +Jan 28th 2017 | SHANGHAI + + + +AT THE start of 2014 a senior official in the statistics bureau of Liaoning, an industrial province in north-eastern China, told his army of boffins to cultivate a spirit of innovation in their work. “Liberate your minds,” he exhorted an annual planning meeting. They took him at his word. In one of the biggest scandals to rock the murky world of Chinese economic data, the government admitted this month that Liaoning had faked its fiscal data from 2011 to 2014, inflating revenues by about 20%. + +For those inclined to distrust all Chinese numbers, the announcement was simple vindication. But a closer look paints a different picture: of central authorities wanting to get a better read on the economy but being impeded at the local level—and by one of the usual suspects at that. + +In manipulating statistics, Liaoning has form. When Li Keqiang, now prime minister, was Communist Party chief of the province in the 2000s, he confided to America’s ambassador to China that its GDP figures were “man-made” and unreliable. Mr Li’s comments have often been cited by critics of Chinese data, though his concerns focused just on Liaoning itself. + +Over the past few years, suspicions surfaced that Liaoning had been up to its old tricks again. National auditors stepped up their scrutiny and reported a few isolated cases of counties overstating their fiscal revenues. But Chen Qiufa, Liaoning’s governor, recently revealed that the deception had been widespread and long-lasting. The nadir was 2014, when the province declared fiscal revenues that were 23% higher than those actually collected. + +Mr Chen said the government had since cleaned up the problem, publishing accurate figures from the start of 2015. But the falsification has cast a long shadow. There are indications that Liaoning’s statisticians also fiddled with investment figures. The province reported a jaw-dropping 63% fall in fixed-asset investment last year (see chart). If real, this would have tipped the economy into a severe recession; instead, the suspicion is that previously overstated data were to blame. Even so, the fall may well have tainted the government’s gauge of the national economy. After all, before it came clean, only six of China’s 31 provinces contributed a bigger share of China’s GDP than Liaoning. Its apparent collapse dragged China’s overall investment growth last year down from 11% to 8%, according to Shen Jianguang of Mizuho Securities. This, in turn, might have led the government to deliver more monetary stimulus than was needed, he says. + +The heavy hand of the state has already come down on cadres in Liaoning. Another former Communist Party chief of the province was expelled from public office last year for corruption. The government has also removed about half of the province’s legislators—more than 500 in all—for obtaining their positions through fraud. + +China is trying to come up with new ways to stop officials, whether in Liaoning or elsewhere, from cooking their books. The national bureau of statistics has launched an online system where 1m large companies now report data directly to the central authorities, cutting out local intermediaries. The tone is also shifting. The focus of this year’s annual meeting for the Liaoning statistics bureau was on doing a “solid job”. Less inspiring than the rhetoric of a few years ago, perhaps—but the message could not have been clearer. + +This article appeared in the Finance and economics section of the print edition under the headline “Potemkin province” + + + + + +Daddy long tail + +Warren Buffett extends his dominance of retroactive reinsurance + +Berkshire Hathaway completes the largest purchase ever of “long-tail” reinsurance risks + +Jan 28th 2017 + + + +IT IS a niche market, but a big one, and it is increasingly dominated by Warren Buffett’s Berkshire Hathaway. On January 20th its reinsurance subsidiary, National Indemnity Company (NICO), agreed with American International Group (AIG), a big insurer, to acquire excess losses on old insurance policies. In one of the largest such “retroactive reinsurance” deals ever announced, NICO will be on the hook for four-fifths of all losses above $25bn, up to $20bn, in exchange for a payment of $9.8bn now. The deal comes just a few weeks after a similar deal giving up to $1.5bn of coverage to Hartford, another American insurance giant. + +For much of the 15 years since the term retroactive reinsurance came into use, Berkshire, through NICO, has been at the forefront. The structure allows insurers to rid themselves of so-called “long-tail” exposures, ie, claims that may come in years or decades after policies were written. Often, they cover long-term environmental risks like pollution, or asbestos-related disease, where workers may fall ill many years after exposure. In the largest previous deal in 2006 NICO provided reinsurance coverage worth $7bn for asbestos risks to Equitas, a vehicle set up to bail out the Lloyd’s insurance market in the 1990s. + +Such deals can be lucrative for both seller and buyer. The insurer caps its liabilities and frees up capital (AIG plans to return some to shareholders). And for Berkshire, such deals are an important source of “float”. Insurers enjoy a form of financing that is in essence free, because premium income, including reinsurance payments, comes in long before claims have to be paid out. In September 2016 Berkshire’s float was $91bn. Unlike other insurance companies that invest in a conservative portfolio of bonds, NICO’s money is deployed to buy Mr Buffett’s latest acquisition targets. The high investment returns that result can, in turn, weather greater insurance losses. + +Lawyers who have represented insurance claimants in past cases worry that this kind of deal threatens policyholders’ interests. Since the buyer has no direct relationship with them, it may be more likely to delay and quibble about payouts, to maximise its own financial gain. In most Berkshire deals, claims management has been handled by its subsidiary, Resolute Management, which has faced a number of lawsuits in recent years. The two most recent deals, with Hartford and AIG, are different, with the selling insurers explicitly retaining responsibility for claims management. + +A broader worry is concentration of risk. A risk manager who had diversified by taking out insurance with a variety of different companies might find that all of his firm’s long-tail risks now sit in just one pot: Berkshire. On asbestos, for instance, Jonathan Terrell of KCIC, a claims-management consultancy, reckons Berkshire’s accumulation of legacy liabilities is not just the largest in the industry today, but the largest it has ever seen. That’s a long tail with a dangerous whisk. + +This article appeared in the Finance and economics section of the print edition under the headline “Daddy long tail” + + + + + +Free exchange + +The definition of “maximum employment” needs updating + +Policymakers need to consider the quality as well as quantity of jobs available + +Jan 28th 2017 + + + +“IT IS fair to say the economy is near maximum employment,” said Janet Yellen, chairman of the Federal Reserve, in recent comments preparing markets for rate rises to come. But “maximum employment”, like pornography, is in the eye of the beholder. American adults, of whom only about 69% have a job, seem less than maximally employed. In previous eras, governments of countries scarred by economic hardship set themselves the goal of “full” employment. Today, the target is termed “maximum”. But it is the same concept. It needs a bit of updating. + +Ms Yellen has a particular definition of maximum employment in mind, built on the economic experience of the past half-century. In the 1960s and 1970s a consensus (or, at least, what passes for one in macroeconomics) emerged that government efforts to boost demand could push unemployment only so low. Below that “natural rate”, it would soon start climbing again and inflation would accelerate. So now central bankers take a guess at the natural rate and at how quickly unemployment that is “too low” will spark inflation. Maximum employment, in their view, is the sweet spot: the labour market is as tight as it can be without runaway price rises. But there is more art than science to such guesses. Indeed, rich-world natural rates have moved around over time—from below 5% after the second world war to much higher levels in the 1970s and 1980s, and back to lower levels more recently—leaving economists scratching their heads at each turn. + +It is thought that the natural rate depends mostly on what economists label “frictional unemployment”. Unemployment rates may wiggle only a bit from month to month, but beneath that calm, labour markets are a roiling mess. Each month millions of workers leave their jobs and millions more find new ones. For a portion of the workforce there is a gap between one and the other—frictional unemployment. A background hum of joblessness reflects the delay in matching jobseekers with jobs. + +The hum varies in pitch. Some factors gum up the works and increase friction. The higher frictional rate of the 1970s and 1980s was partly the result of a change in the nature of employment: good jobs in industries like manufacturing dwindled, while low-wage service employment exploded. The psychological and economic pain associated with this shift meant that workers losing good jobs would stay unemployed for longer, in the hope that better, high-wage opportunities would eventually turn up. Barriers to job switching, like occupational licensing, can also push up the natural rate. So can unions, by protecting the status of employed workers, or by pushing up wages so that hiring more people becomes uneconomical. Other factors grease the gears. The lower natural rate of the 1990s might have been the result of more efficient hiring thanks to information technology, or of the growth of temporary-help jobs, which sponged up some workers facing career transitions. + +The boundary between that sort of long-term structural unemployment and the temporary, cyclical kind is anything but clear-cut. In the 1980s and 1990s economists argued that short-term unemployment could become long-term unemployment under the right (ie, wrong) circumstances. This “hysteresis” could emerge as employed workers negotiated favourable conditions for themselves, deterring firms from hiring new workers. Or laid-off workers might find their skills and links with the labour force eroding over time, making it harder to find new jobs as good as their old ones. + +But hysteresis also works in reverse, at least to some degree. As America’s unemployment rate has fallen below 5%, wage growth has at long last begun to accelerate. As pay rises, people who had given up hope of a worthwhile job begin to look for work again. As firms find it harder to hire new workers, firms might offer existing workers more hours, or convert part-time or temporary posts to full-time or permanent positions. They might even try to raise output per worker, by investing in training or in new equipment. + +The rub is that policymakers cannot know how much slack remains in the system until they see inflation accelerating—the very thing they want to stop. That suggests one reason workers in advanced economies are not as fully employed as they should be is an excessive aversion to inflation. Another is government’s failure to tackle obstacles—of geography, education or regulation—standing between would-be workers and would-be employers. + +Help wanted + +If the goal of full employment, however, is a happy society, policymakers must pay attention to the quality as well as the quantity of jobs on offer. Employment rates in subsistence societies are extremely high. More people would be in work were governments to withdraw unemployment benefits and repeal the minimum wage. Yet society would be worse off for it. + +Technological change complicates matters. A scarcity of workers could drive investment in machines, allowing each worker to produce more. Yet it might also encourage full automation. In a new paper, Daron Acemoglu and Pascual Restrepo, of the Massachusetts Institute of Technology, find that ageing economies, with shrinking workforces, do not seem to grow more slowly than younger economies, as many economists assume they should. Instead, automation picks up. Yet if robots can compensate for high retirement rates, how many younger workers might also be superfluous? + +An age of mass technological unemployment is not upon us. But the definition of maximum employment should consider more than inflection points in inflation charts. Rather, governments need to consider the options available to workers: not just how easily they can find jobs they want, but also how readily they can refuse jobs they do not. By lifting obstacles to job changes and giving workers a social safety net that enables them to refuse the crummiest jobs, societies can foster employment that is not just full, but fulfilling. + +Visit our Free exchange economics blog + +This article appeared in the Finance and economics section of the print edition under the headline “Mad maximum” + + + + + +Science and technology + + + + +Physics: Small is still beautiful + +The academy and the marketplace: Mathematical transformations + +Vehicle engine management: Intelligence test + +Regenerative medicine: A tissue of truths + + + + + +Fundamental physics + +Searching for particles on a benchtop + +Making precise measurements of tiny forces + +Jan 28th 2017 + + + +THE beams of protons that circulate around the 27km-circumference ring of the Large Hadron Collider (LHC), the world’s biggest particle accelerator, carry as much kinetic energy as an American aircraft-carrier sailing at just under six knots. Andrew Geraci’s equipment, on the other hand, comprises a glass bead 300 billionths of a metre across, held in a lattice of laser light inside an airless chamber. The power it consumes would run a few old-fashioned light bulbs. Like researchers at the LHC, Dr Geraci and his team at the University of Nevada, in Reno, hope to find things unexplained by established theories such as the Standard Model of particle physics and Newton’s law of gravity. Whereas the LHC cost around SFr4.6bn ($5bn) to build, however, Dr Geraci’s set-up cost a mere $300,000 and fits on a table about a metre wide and three long. + +A century ago these were the normal dimensions for experiments in fundamental physics. The electron, the proton and the neutron were all found using kit this size. (J.J. Thompson and his electron-discovery device are pictured above.) But digging deeper into theories of reality requires more energy, and thus bigger machines—of which the LHC is the latest. Since finding the Higgs boson in 2012, though, this behemoth has drawn a blank. Dr Geraci and those like him aspire, by contrast, to find evidence for those theories’ veracity by making precise measurements of the tiny forces that the particles they predict are expected to exert on other objects. + +In Dr Geraci’s experiment the suspended bead scatters laser light onto a detector. If a force displaces the bead, the pattern of light changes, permitting the bead’s new position to be calculated. In work published last year in Physical Review A, his team showed that the apparatus can detect forces of a few billionths of a trillionth of a newton. (A newton is about the force exerted by Earth’s gravity on an apple.) Their next step will be to move a weight past the bead at a distance of five microns (five thousandths of a millimetre), to measure the gravitational attraction between them. That experiment is now under way. + +The search for deviation + +Dr Geraci is looking for deviations from Newton’s inverse-square law of gravity (that the gravitational force between two objects is inversely proportional to the square of the distance between them). Any departure from this law would provide support for theories which hope to solve what is known as the hierarchy problem of physics. This is the question of why gravity is so much weaker than the other three fundamental interactions between particles, namely electromagnetism and the weak and strong nuclear forces. The disparity between gravity and these forces explains, for example, why a small magnet can pick up a paper clip against the gravitational force of an entire planet. + +One putative explanation, known as ADD after the initials of the surnames of three of its inventors, invokes extra dimensions to account for the difference. Gravity, this theory suggests, “spreads out” through these dimensions, dissipating its strength. The other forces, by contrast, are confined to the familiar three spatial ones, plus time. ADD conceives of the extra dimensions as being shrunken, compared with the familiar ones. But it suggests they should be detectable in the gravitational interactions of objects less than 100 microns apart. Measuring that is tricky, but Dr Geraci’s apparatus is one way of doing so. + +Another is that employed by Eric Adelberger of the University of Washington, in Seattle—who copied the idea from Henry Cavendish, a British scientist of the 18th century. Cavendish was the first to measure the gravitational force between objects in a laboratory directly. To do so, he used a piece of apparatus called a torsion balance. And that is what Dr Adelberger uses. A decade ago he showed that Newton’s predictions remained correct for objects 44 microns apart. He is now trying again, at still-closer distances. + +If either Dr Geraci or Dr Adelberger do overthrow the inverse-square law, they will open the way to a test of string theory—an attempt to explain physics at the most fundamental level. A recent version of string theory posits the universe to have 11 dimensions, seven of which are beyond human ken. Bringing even one or two of these within the realm of experiment, as ADD would if proved correct, would be a huge advance in understanding. + +A second area in which tabletop experiments may beat the big guns is the search for dark matter. This mysterious stuff, not composed of the familiar protons, neutrons and electrons that make up atoms, is thought to pervade space and to constitute about 85% of the matter in the universe. Its gravitational effects can be seen on the ways that galaxies move. But, in a topsy-turvy parody of the hierarchy problem, it shows little or no sign of interacting with atomic matter through any of the other three known forces. + +Many physicists, however, suspect that it may do so through forces as yet unknown. Some theories of dark matter predict the existence of force-carrying particles called axions and dark photons—and that these things interact, albeit weakly, with familiar matter. One searcher after such interactions is Hendrick Bethlem of the Free University of Amsterdam, in the Netherlands. He hopes to see signs of them in the spectra of individual molecules. + +His dark materials + +Dr Bethlem’s molecules of choice are ammonia. To examine them he uses a device called a molecular fountain. This employs pulses of electricity to propel the molecules under investigation to the top of an air-filled chamber, whence they fall slowly back down again, under gravity’s influence. While they are falling, they can be detected individually by a laser, and then interrogated spectroscopically. + +This interrogation measures, with great precision, the energy levels of the electrons within a molecule. These depend, in turn, on the masses of those electrons, and also of the protons in the nuclei of the molecule’s constituent atoms (or, to be precise, on the ratio of these two masses). Since all protons and all electrons in the universe are identical, that ratio should not vary unless some outside influence is involved. Axions and dark photons, if they exist, would bring such influence to bear. + +If space is, indeed, full of dark matter, Earth’s movement around the sun will bring seasonal changes to any interaction which that matter has with the ammonia molecules in Dr Bethlem’s laboratory. He might therefore expect to see annual variations in the energy levels he is measuring. + +In 2008 a group at the Institut Galilée, in Paris, showed, by a different technique involving caesium atoms, that any such variation in the electron/proton mass ratio could not be more than 50 parts in a thousand trillion. Dr Bethlem thinks he can beat that level of precision by a factor of ten—and thereby either find evidence of dark matter or further constrain the definition of what it might be. + +In California, meanwhile, Surjeet Rajendran and Peter Graham are using a different approach in their search for dark matter. Dr Rajendran works at the University of California, Berkeley. Dr Graham is at Stanford. Together, they are building a prototype dark-matter “radio”, consisting of a sensitive magnetometer known as a SQUID and a resonant circuit of the sort used to tune ordinary radios. These are inside a canister 170cm high and 17cm across, shielded from external magnetic fields. Dr Rajendran and Dr Graham, too, are looking for axions and hidden photons. The force these particles would carry should induce electromagnetic waves in the apparatus with a frequency of somewhere between a kilohertz and a gigahertz—in other words, radio waves. The pair propose to tune in to these frequencies on their SQUID radio, to see what they can hear. + +Dr Rajendran and Dr Graham have two other ideas, as well, for hunting down these elusive particles. One, called CASPEr Wind, will use a cubic centimetre of liquid xenon. If axions are flying through the xenon, they should set its atoms’ nuclei wobbling. That would create a magnetic field large enough to spot with a SQUID. This experiment is now being built at Johannes Gutenberg University, in Mainz, Germany, by a team led by Dmitry Budker. A second experiment, called CASPEr Electric, uses a material called lead titanate. This substance is ferroelectric, meaning it is polarised so that one side of a crystal composed of it is positively charged, while the other is negatively charged. This makes such crystals useful for detecting the small polarising effect certain axions would have on atomic nuclei—again, assuming that they really do exist. + +Dr Geraci, meanwhile, is collaborating with Asimina Arvanitaki of the Perimeter Institute in Waterloo, Canada, to build a device called Ariadne. This contains a vial filled with a form of helium, 3He, that has two protons and a single neutron, unlike normal helium, which has two of each. The vial is held around 100 microns from a rotating tungsten cog inside a chamber shielded from magnetic fields. + +The protons and neutrons inside a nucleus act as magnets. If a nucleus contains an even number of these particle-magnets, they will all pair up, north poles neutralising south poles. If there is an odd number, though, as in 3He, the unpaired particle will make the nucleus itself magnetic. + +Theory predicts that when the teeth of the cog are closest to the helium, axions should give rise to interactions between the two—interactions that will abate when the teeth move away. These interactions will show up as a magnetic field that varies as Ariadne’s cog rotates. + +Like Dr Rajendran and Dr Graham, Dr Geraci and Dr Arvanitaki should complete their experiments within a decade. Small though these may be, their ambition rivals that of the largest experiment on the planet. If the LHC’s dry spell continues they may yet beat the collider to discoveries that herald a new era of physics. + +This article appeared in the Science and technology section of the print edition under the headline “Small is still beautiful” + + + + + +The academy and the marketplace + +Mediocre academic researchers should be wary of globalisation + +The effects of foreign competition on professors of mathematics + +Jan 28th 2017 + +WHEN politicians in the rich world speak of job losses and stagnant incomes brought about by immigration and foreign competition, they usually have blue-collar work in mind—car manufacturing, steelmaking and the like. But even the cognitive 1% can be adversely affected by foreign competition. + +In a forthcoming paper in the Journal of Human Resources, George Borjas of Harvard University, and Kirk Doran and Ying Shen of the University of Notre Dame, study the effects of globalisation on a select group of particularly brainy Westerners: professors of mathematics. Distinguishing between cause and effect is always hard in the social sciences. One approach researchers use is to search for a “natural experiment”, and that is exactly what Drs Borjas, Doran and Shen found when they examined what happened to the productivity of American mathematicians after China’s liberalisation in 1978. + +Mao Zedong, in power from 1949 to 1976, was not keen on foreign ideas. For most of his rule, Chinese academics had little contact with the West; emigration was largely banned. Between 1949 and 1965, only around 200 Chinese students left for Western universities, with the majority studying foreign languages. Just 21 studied natural sciences. + +Chinese education policy changed dramatically after Mao’s death, however. His successor Deng Xiaoping sought to modernise China, and encouraged bright, young Chinese to leave for Western universities. By the late 1980s China had become the largest source of foreign students in America. In mathematics, their sudden influx had considerable effects on the productivity of the professors they collaborated with. + + + +Culture seems to matter, even in the most detached of academic fields. Newly graduated Chinese arrivals were far more likely than American graduate students to work with professors of Chinese descent. In response Chinese-American professors’ productivity, as measured by their publication rates, increased relative to that of their peers (see chart). And because reputable academic journals can accept only so many articles per issue (or, at least, could in the days when they were paper only), the relative productivity of non-Chinese American academics fell, as weaker papers were crowded out. + +Allowing for the lags caused by admissions offices, the lengths of PhD programmes and the process of peer review, the full effects on American academia of China’s liberalisation were not felt until the late 1980s. By the early 1990s, though, Chinese-American maths professors were producing 0.3 more papers a year than they had been prior to the influx of immigrants—a gap that had doubled by 2003. + +Red revolution + +A similar shock to the American mathematics market happened in 1991, with the abrupt collapse of the Soviet Union. As with Maoist China, emigration from the Soviet Union had been minimal. Soviet scholars had had little contact with their Western peers. When the Iron Curtain fell, over 1,000 Soviet mathematicians left, with a large share settling in America. In an earlier paper, Dr Borjas and Dr Doran note that, because most of these new entrants were established professors rather than graduate students, the effects of this supply shock were felt more immediately. + +In the academic year 1991-92, 13% of new hires to American maths departments came from east Europe and the disintegrating USSR. Unemployment, a concept previously alien to newly minted American maths graduates, shot up that year to an unprecedented 12%. Whether you wear a tweed jacket or safety goggles, then, globalisation creates losers as well as winners. + +This article appeared in the Science and technology section of the print edition under the headline “Mathematical transformations” + + + + + +Intelligence test + +A computer program that learns how to save fuel + +A piece of artificial intelligence that can draw on past experience + +Jan 28th 2017 + +Charge! + +FROM avoiding jaywalkers to emergency braking to eventually, perhaps, chauffeuring the vehicle itself, it is clear that artificial intelligence (AI) will be an important part of the cars of the future. But it is not only the driving of them that will benefit. AI will also permit such cars to use energy more sparingly. + +Cars have long had computerised engine-management that responds on the fly to changes in driving conditions. The introduction of electric power has, however, complicated matters. Hybrids, which have both a petrol engine and an electric motor run by a battery that is recharged by capturing kinetic energy as the vehicle slows or brakes, need more management than does a petrol engine alone. Things get even harder with plug-in hybrids, which can be recharged from the mains and have a longer electric-only range. + +This is where AI could help, reckon Xuewei Qi, Matthew Barth and their colleagues at the University of California, Riverside. They are developing a system of energy management which uses a piece of AI that can learn from past experience. + +Their algorithm works by breaking the trip down into small segments, each of which might be less than a minute long, as the journey progresses. In each segment the system checks to see if the vehicle has encountered the same driving situations before, using data ranging from traffic information to the vehicle’s speed, location, time of day, the gradient of the road, the battery’s present state of charge and the engine’s rate of fuel consumption. If the situation is similar, it employs the same energy-management strategy that it used previously for the next segment of the journey. For situations that it has not encountered before, the system estimates what the best power control might be and adds the results to its database for future reference. Ultimately, the idea is that the algorithm will also learn from the experiences of its brethren in other cars, by arranging for all such systems to share their data online. + +Ideally, such a system would be fed its route and destination in advance, to make things easier to calculate. But Dr Qi and Dr Barth are realists, and know that is unlikely to happen. If a satnav were invoked, it would be able to pass relevant information on to the algorithm. But drivers use satnavs only to get them to unfamiliar destinations. Hence the researchers’ decision to design a system that does not rely on knowing where it is going. + +It seems to work—at least, in simulations. Using live traffic information to mimic journeys in southern California, Dr Qi and Dr Barth compared their algorithm with a basic energy-management system for plug-in hybrids that simply switches to combustion power once the battery is depleted. As they report in a paper to be published in IEEE Transactions on Intelligent Transportation Systems, their system was 10.7% more efficient than the conventional one. If the system is aware in advance that a recharging station will be used as part of the trip (which might be arranged by booking one via the vehicle’s information screen) it can spread the use of electric power throughout the journey, to maximum advantage, knowing when the battery will be topped up. In such situations the average fuel saving was 31.5%. + +Dr Qi and his colleagues now hope to work with a carmaker to test the algorithm on real roads. If all goes well, and their system proves able to cope with the nightmares of commuting in southern California, they will not be left stranded on the hard shoulder. + +This article appeared in the Science and technology section of the print edition under the headline “Intelligence test” + + + + + +A tissue of truths + +Printed human body parts could soon be available for transplant + +How to build organs from scratch + +Jan 28th 2017 + +Aye, aye! What’s this ear? + +EVERY year about 120,000 organs, mostly kidneys, are transplanted from one human being to another. Sometimes the donor is a living volunteer. Usually, though, he or she is the victim of an accident, stroke, heart attack or similar sudden event that has terminated the life of an otherwise healthy individual. But a lack of suitable donors, particularly as cars get safer and first-aid becomes more effective, means the supply of such organs is limited. Many people therefore die waiting for a transplant. That has led researchers to study the question of how to build organs from scratch. + +One promising approach is to print them. Lots of things are made these days by three-dimensional printing, and there seems no reason why body parts should not be among them. As yet, such “bioprinting” remains largely experimental. But bioprinted tissue is already being sold for drug testing, and the first transplantable tissues are expected to be ready for use in a few years’ time. + +Just press “print” + +Bioprinting originated in the early 2000s, when it was discovered that living cells could be sprayed through the nozzles of inkjet printers without damaging them. Today, using multiple print heads to squirt out different cell types, along with polymers that help keep the structure in shape, it is possible to deposit layer upon layer of cells that will bind together and grow into living, functional tissue. Researchers in various places are tinkering with kidney and liver tissue, skin, bones and cartilage, as well as the networks of blood vessels needed to keep body parts alive. They have implanted printed ears, bones and muscles into animals, and watched these integrate properly with their hosts. Last year a group at Northwestern University, in Chicago, even printed working prosthetic ovaries for mice. The recipients were able to conceive and give birth with the aid of these artificial organs. + +No one is yet talking of printing gonads for people. But blood vessels are a different matter. Sichuan Revotek, a biotechnology company based in Chengdu, China, has successfully implanted a printed section of artery into a monkey. This is the first step in trials of a technique intended for use in humans. Similarly, Organovo, a firm in San Diego, announced in December that it had transplanted printed human-liver tissue into mice, and that this tissue had survived and worked. Organovo hopes, within three to five years, to develop this procedure into a treatment for chronic liver failure and for inborn errors of metabolism in young children. The market for such treatments in America alone, the firm estimates, is worth more than $3bn a year. + +Johnson & Johnson, a large American health-care company, is so convinced that bioprinting will transform parts of medical practice that it has formed several alliances with interested academics and biotechnology firms. One of these alliances, with Tissue Regeneration Systems, a firm in Michigan, is intended to develop implants for the treatment of defects in broken bones. Another, with Aspect, a biotechnology company in Canada, is trying to work out how to print parts of the human knee known as the meniscuses. These are crescent-shaped cartilage pads that separate the femur from the tibia, and act as shock absorbers between these two bones—a role that causes huge wear and tear, which sometimes requires surgical intervention. + +More immediately, bioprinting can help with the development and testing of other sorts of treatments. Organovo already offers kidney and liver tissue for screening potential drugs for efficacy and safety. If this takes off it will please animal-rights activists, as it should cut down on the number of animal trials. It will please drug companies, too, since the tissue being tested is human, so the results obtained should be more reliable than ones from tests on other species. + +With similar motives in mind, L’Oréal, a French cosmetics firm, Procter & Gamble, an American consumer-goods company, and BASF, a German chemical concern, are working on printing human skin. They propose to use it to test their products for adverse reactions. L’Oréal already grows about five square metres of skin a year using older and slower technology. Bioprinting will permit it to grow much more, and also allow different skin types and textures to be printed. + +Skin in the game + +Printed skin might eventually be employed for grafts—repairing burns and ulcers. Plans are also afoot, as it were, to print skin directly onto the surface of the body. Renovacare, a firm in Pennsylvania, has developed a gun that will spray skin stem cells directly onto the wounds of burns victims. (Stem cells are cells that proliferate to produce all of the cell types that a tissue is composed of.) The suggestion is that the stem cells in question will come from the patient himself, meaning that there is no risk of his immune system rejecting the new tissue. + +The real prize of all this effort would be to be able to print entire organs. For kidneys, Roots Analysis, a medical-technology consultancy, reckons that should be possible in about six years’ time. Livers, which have a natural tendency to regenerate anyway, should also arrive reasonably soon. Hearts, with their complex internal geometries, will take longer. In all cases, though, printed organs would mean that those awaiting transplants have to wait neither for the altruism of another nor the death of a stranger to provide the means to save their own lives. + +This article appeared in the Science and technology section of the print edition under the headline “A tissue of truths” + + + + + +Books and arts + + + + +The roots of modern resentment: Enlightenment and its discontents + +Istanbul: Where the past is not dead + +New fiction: A man in full + +Politics and sentiment: Utopia of reason + +Sundance: An inconvenient moment + + + + + +Angry history + +The deep roots of modern resentment + +An original attempt to explain today’s paranoid hatreds + +Jan 28th 2017 + + + +Age of Anger: A History of the Present. By Pankaj Mishra. Farrar, Straus and Giroux; 405 pages; $27. Allen Lane; £20. + +SOON after the Soviet Union imploded, Pankaj Mishra reminds his readers, The Economist felt able to assert that “there was no serious alternative to free-market capitalism as the way to organise economic life.” Yet today, the notion that a global capitalist economy hitched to a liberal internationalism can bring peace, progress and prosperity has taken a beating. That is evident not only in the violence in Iraq and Syria, where what used to be called the civilising hand has proven incapable of stemming the bloodshed. It is evident, too, in the vitriolic populism resurging at the heart of Western democracies—in Brexit, in the rise of Marine Le Pen in France and in Donald Trump’s tumultuous route to the White House. + +Indian-born Mr Mishra divides his time between London and a retreat at the foot of the Himalayas. He earns a lot as a columnist for Bloomberg, and he sups at the tables of the Western intelligentsia. But he considers himself only a “stepchild” of the West, and that offers him a useful detachment. His iconoclastic new book, “Age of Anger”, will come as a blow to his many cosmopolitan friends. + +In it, Mr Mishra shocks on several levels. First, he sees no hope that 2016 might prove the high-water mark of anger, cynicism and ugly nationalism. Indeed, he argues that the world will become only more divided and disorderly. As economies slow, more people will feel that powerful elites have dangled the fruits of material progress only to pull them away. More will feel a sense of displacement, either figuratively within their country, or literally, because they have been forced to leave their failing states. Some will take the spontaneous decision to vote for a populist who promises to tear down the system at great cost. Some will make a life-altering and fatal decision for jihad. Whether easy or extreme, angry reactions may be perverse, but they can feel exhilarating. + +Mr Mishra sustains an angry assault on the notion—which in his depiction risks creating a straw man—that progress has led in a graceful arc from the Enlightenment to the liberal internationalism that prevailed until recently. One part of this attack is to argue how contingent was the path to free-market internationalism, how dangerously arrogant the idea that it was always the best of all possible worlds. Another part is to challenge the idea that the modern age’s episodes of unspeakable violence have been mere aberrations from the march towards emancipation, dignity and reason. On the contrary, war, slavery, imperialism, racism and the use of power to hoard the gains of enterprise: all have been part of the liberal project. Liberals who celebrate the project but cannot count the costs are slow to understand resentments that heat the cauldrons of anger today. + +This argument leads to Mr Mishra’s most insightful point. Today’s anger and discontent—from Islamist nihilists murdering Paris concert-goers, to Trump supporters baying for Hillary Clinton to be locked up, to attacks on immigrants following Brexit—is hardly new. For many, such outrages are unfathomable at worst, or at best caused by economic dislocation or internet-peddled conspiracy theories. But Mr Mishra shows how violence, nihilism and hatred of the “other” have ample precedents among Western liberalism’s 19th- and 20th-century opponents, whether revolutionaries, anarchists or artists. + +The grand tour of our discontents + +These earlier foes of Project Enlightenment found themselves between the mute masses on one hand, and aristocratic elites ordering the world for their own ends (even as they preached freedom) on the other. Voltaire, the ultra-rationalist who argued that the perfectibility of man was the true paradise, also made a commercial fortune and urged the Russian empress, Catherine the Great, to teach enlightment to the Poles and Turks at the barrel of a gun. The spiritual godfather of today’s anti-liberals, on the other hand, was Jean-Jacques Rousseau, Isaiah Berlin’s “guttersnipe of genius”. Humiliated by Paris society, Rousseau grasped the moral and spiritual implications of a world in which the old gods are gone, society is set in turmoil and people losing ancient fixities are forced to mimic the privileged rich. As Mr Mishra puts it, Rousseau “anticipated the modern underdog with his aggravated sense of victimhood and demand for redemption”. Many of the “isms” invented to heal the ressentiment (it sounds better in French)—romanticism, socialism, authoritarianism, nationalism and anarchism—can be traced back to Rousseau’s scribblings. + +The molten core of Mr Mishra’s book, then, is an intellectual history of popular discontents. To him, Ayatollah Khomeini’s Iranian revolution owed much more to Robespierre than to the 12 Shia Imams. The 19th-century resentment so keenly described by Friedrich Nietzsche prefigures the homicidal dandyism of “Jihadi John”, Mohammed Emwazi, who broadcast his victims being executed. The selfie-narcissism of Islamic State, its rape of girls and destruction of Palmyra echo “The Futurist Manifesto” by Filippo Marinetti, a misogynist Italian poet, in 1909: “We want to glorify war…and contempt for women. We want to destroy museums, libraries and academies of all kinds.” + +This history is usually very welcome, but sometimes infuriatingly meandering, the author’s century-spanning chains of associations stretching well past the point where many readers will want to follow. But it is nonetheless worth sticking with, as the early chapters are the worst offenders, and there is much rich reading. + +It is harder to agree with his argument that modern liberalism “lies in ruins”. Does it? Mr Mishra associates liberalism with what he describes, in a related essay in the Guardian, as a “mechanistic and materialist way of conceiving human actions”, partly a consequence of the primacy of free-market economics. But this implies a misreading of liberalism. For one, liberalism does not suppose perfect rationality. Rather, it more modestly strives to reconcile seemingly irreconcilable preferences in order for people to live together and co-operate. It requires tolerance, argument and compromise. + +Another hallmark is a belief, however much wrapped in doubt, in progress. Here, Mr Mishra is insufficiently generous towards liberalism’s own progress. Early liberals supported slavery, but then overturned it. Later a liberal state tamed market abuses in the form of America’s robber barons. Even democracy was not always liberals’ ideal system, but in the 20th century they came to embrace it. And out of liberalism grew a post-war emphasis on civil rights. + +Today, the military interventions that tried to impose democracy—carried out by what Edmund Fawcett, formerly of The Economist and author of a history of liberalism, calls the “liberal warfare state”—are distortions of liberalism, not inevitable consequences of it. And just as overweening state power is not liberal, nor is ceding everything to the market. State and market exist in tension: sometimes rivals, sometimes accomplices. + +Lastly, the conclusion in Mr Mishra’s essay—that it is “a profoundly fraught emotional and social condition—one which, aggravated by turbo-capitalism, has now become unstable”—is prematurely dark. Much of the conflict that he despairs of, shocking though it is, is not new. Indeed, liberalism grew out of a response to the upheavals of raw capitalism and revolution. It is not clear how his call to make more room for an understanding of the soul and its irrational impulses is to be accommodated in any other system. Politics is conflict: it will never reach the steady state that Mr Mishra seems to yearn for. Could the solution be lying under his nose? Ceaseless change gave birth to liberalism, which, for all the mistakes made in its name, continues to adapt. Despite those mistakes, it remains the best response today. + +This article appeared in the Books and arts section of the print edition under the headline “Enlightenment and its discontents” + + + + + +Metropolis on the Bosporus + +New histories of Istanbul + +Not just emperors and caliphs, but crusaders, underdogs, women and Jews + +Jan 28th 2017 + +It’s not even past + +Istanbul: Tale of Three Cities. By Bettany Hughes. Orion; 800 pages; £25. To be published in America by Da Capo Press in September; $35. + +Istanbul: City of Majesty at the Crossroads of the World. By Thomas Madden. Viking; 400 pages; $30. + +FOR more than 2,000 years, the city on the Bosporus has by turns dazzled, enticed, horrified and scared the world. Over the generations, its inhabitants have excelled in art and architecture, wielded political and spiritual power over big swathes of the earth, and suffered in catastrophes ranging from earthquakes to fires. In recent years, the city has surged in importance as an economic and cultural hub and suffered awful terrorist attacks. + +Yet for all its colourful drama, the city’s history can be hard to narrate in a way that is coherent and gripping. When studying the Byzantine era, readers can easily get lost in a succession of emperors with confusingly similar names, all embroiled in ruthless family feuds. Bettany Hughes, a prolific British broadcaster and classical scholar, and Thomas Madden, an American professor of history, take up that challenge in new books about Istanbul, and in both cases the result is impressive. + +In “Istanbul: A Tale of Three Cities” Ms Hughes plays intriguing, sophisticated games with time and space: both those concepts, in her view, need to be reconsidered when contemplating something so vast and fluid as Istanbul’s historical pageant. Of course, that impulse is not completely original: any visitor attuned to the city will get the sense at times that every phase of local history is simultaneously present and in some way still unfolding. + +But by making unlikely connections between well-described locations and events separated by aeons, she gives voice to those witchy, diachronic feelings in a spectacular fashion. What could have been a failed literary conceit succeeds. It is typical of Ms Hughes that she opens the book with something new and something very old: engineering work to extend the city’s transport system, and the fresh archaeological evidence of the area’s earliest human settlement which that work has unearthed. Among the finds is an 8,000-year-old wooden coffin. + +Ms Hughes draws parallels between the protests of 2013, ruthlessly suppressed by the security forces of an elected Islamist government, and the uprising of 532AD, known as the Nika riots, from the Greek for “victory”. In the earlier event, passions felt by rival factions at the hippodrome somehow fused into a general uprising against authority. As the author observes, the city has always lent itself to rioting: crowds can assemble in its great public squares, and then its steep, narrow alleys can serve either as escape routes or traps. + +To introduce the city’s Jewish community in late antiquity, who were accomplished metalworkers, Ms Hughes invites readers down the backstreets where copper-bashing is still practised today, albeit by Muslim Turks. One of her recurring themes is that through an endless succession of despotic emperors and sultans, the city’s underdogs have always had their say in its destiny. That includes the female sex. Ms Hughes relishes the story of Theodora, the powerful consort of the great emperor Justinian. The daughter of a bear-tamer, she went on to become an erotic dancer, and then used her charms to attract the attention of the city’s bigwigs. + +As the author also points out, a more subtle female presence in early Byzantium was Holy Wisdom, or Hagia Sophia, to which the greatest place of worship in eastern Christendom was dedicated. This epithet can refer to a feminine form of divine power, mentioned fleetingly in the Hebrew scriptures, whose role is to impart inspiration and creative force. + +Like many a teller of Istanbul’s tale, Ms Hughes suggests that the city’s conquest in 1453 by the Ottoman Turks was not quite such a watershed as conventional wisdom holds. By that year, the place had long been reduced to a shrunken shadow of its imperial glory, obliged to parley with the Ottoman emirs entrenched nearby. Nor did the conquest spell instant doom for the city’s Greek Orthodox authorities, who initially at least kept many of their finest churches. That argument has some force, but it can be overstated: the fact that a change was gradual does not mean that it was trivial. + +Mr Madden is also a skilled narrator, negotiating the twists and turns in the city’s destiny without getting hopelessly mired in detail. His book lacks the strong emphasis on the physical and built landscape which is a hallmark of Ms Hughes’s writing. But it gives a wonderfully vivid and clear account of an episode which Westerners have forgotten: the conquest and desecration of the city in 1204 by crusaders from the Christian West. + +Mr Madden brings home both the reckless looting and vandalism perpetrated by the Latin forces, including the accompanying clergy, and the anger laced with arrogance felt by the city’s defeated GreekOrthodox, who felt they had been vanquished by their intellectual and cultural inferiors. Reading his book would be a fine way to prepare for a visit to Istanbul, but while actually treading the streets or contemplating the murky waters of the Golden Horn, a traveller would find Ms Hughes’s volume a better companion: bulky at over 500 pages but well worth humping up and down the hills. + +This article appeared in the Books and arts section of the print edition under the headline “Where the past is not dead” + + + + + +A grieving grouch + +“Darke”, an unforgettable figure + +Rick Gekoski’s first novel gives readers a literary misanthrope they are asked to identify with + +Jan 28th 2017 + + + +Darke. By Rick Gekoski. Canongate; 299 pages; £16.99. + +DR JAMES DARKE, a retired teacher of literature who collects first editions of Dickens, has walled himself off from the world. For a long stretch of this unusual first novel, the reason is hinted at, but not revealed. It is an extreme reaction to the pain of loss, the reader learns. Darke retreats and broods, cutting off his only daughter, Lucy. + +The plot would not seem promising. But in Darke, Rick Gekoski has created an extraordinarily memorable character. He is an epic misanthrope and equal-opportunity bigot whose every utterance is filled with invective or despair. He trashes Jews and Catholics, the working class and writers from “fucking T.S. Eliot” to “that frigid snitbag”, Virginia Woolf. Literature may have been his life, but in his darkest moment, it lets him down. + +It’s a sly turnabout for Mr Gekoski, a British-American academic and rare-book dealer known for chronicling the bookish life in broadcast, and in books such as “Outside of a Dog”. His first foray into fiction, at the age of 72, is nonetheless stuffed with literary allusions, along with much wonderful writing. A colleague acts out a Tennyson poem “waving his arms like a drowning fairy”. Darke speaks in “a strangulated croak, like a frog singing Wagner”. + +So gleefully do Darke and his wife Suzy rip into those they consider beneath them, however, that one is tempted to read the novel as parody. There are many clever, biting takedowns, a form of sparring greatly enjoyed by those educated at Oxbridge. Yet the reader is also asked to empathise with Darke’s “helplessness” and “desperation”, to recognise that “Everyone is a moon, and has a dark side.” Some readers will, others won’t; Darke’s repellent views and callousness towards his daughter’s suffering are egregious. Mr Gekoski gives this modern-day Scrooge three visitations that pry him open bit by bit, but Darke’s redemption is nothing like what the “slobberer” Dickens would have conjured. It is partial, and only partially convincing. + +Above all, this is an original and bleakly funny portrait of grief. Suffering is something women can stomach and men cannot, Lucy says. Darke flees, entirely solipsistic, magnificently consistent in his scathing, odious arrogance. + +This article appeared in the Books and arts section of the print edition under the headline “A man in full” + + + + + +Walk in your own shoes + +The case for compassion, not empathy + +A moral psychologist decries a culture of identifying with others at the expense of reason + +Jan 28th 2017 + + + +Against Empathy: The Case for Rational Compassion. By Paul Bloom. Ecco; 304 pages; $26.99. Bodley Head; 290 pages; £18.99. + +IN an age of partisan divides it has become popular to assert that the wounds of the world would heal if only people made the effort to empathise more with each other. If only white police officers imagined how it feels to be a black man in America; if only black Americans understood the fears of the man in uniform; if only Europeans opposed to immigration walked a mile in the shoes of a Syrian refugee; if only tree-hugging liberals knew the suffering of the working class. + +Barack Obama warned of an empathy “deficit” in 2006, and did so again in his valedictory speech in January: “If our democracy is to work in this increasingly diverse nation,” he said, “each one of us must try to heed the advice of one of the great characters in American fiction, Atticus Finch, who said, ‘You never really understand a person until you consider things from his point of view...until you climb into his skin and walk around in it.’” + +It is a piece of generous, high-minded wisdom with which few would dare to disagree. But Paul Bloom, a psychologist at Yale University, does disagree. His new book, “Against Empathy”, makes the provocative argument that the world does not need more empathy; it needs less of it. People are bingeing on a sentiment that does not, on balance, make the world a better place. Empathy is “sugary soda, tempting and delicious and bad for us”. In its stead, Mr Bloom prescribes a nutritious diet of reason, compassion and self-control. + +To be clear, Mr Bloom is not against kindness, love or general good will toward others. Nor does he have a problem with compassion, or with “cognitive” empathy—the ability to understand what someone else is feeling. His complaint is with empathy defined as feeling what someone else feels. Though philosophers at least as far back as Adam Smith have held it up as a virtue, Mr Bloom says it is a dubious moral guide. Empathy is biased: people tend to feel for those who look like themselves. It is limited in scope, often focusing attention on the one at the expense of the many, or on short-term rather than long-term consequences. It can incite hatred and violence—as when Donald Trump used the example of Kate Steinle, a woman murdered by an undocumented immigrant, to drum up anti-immigrant sentiment, or whenIslamic State fighters point to instances of Islamophobia to encourage terrorist attacks. It is innumerate, blind to statistics and to the costs of saccharine indulgence. + +Empathy can be strategically useful to get people to do the right thing, Mr Bloom acknowledges, and it is central to relationships (though even here it must sometimes be overridden, as any parent who takes a toddler for vaccinations knows). But when it comes to policy, empathy is too slippery a tool. “It is because of empathy that citizens of a country can be transfixed by a girl stuck in a well and largely indifferent to climate change,” he writes. Better to rely on reason and cost-benefit analysis. As rational arguments for environmental protection or civil rights show, morality is possible without sentimental appeals to individual suffering. “We should aspire to a world in which a politician appealing to someone’s empathy would be seen in the same way as one appealing to people’s racist bias,” Mr Bloom writes. Racism, like anger or empathy, is a gut feeling; it might be motivating, but that kind of thinking ultimately does more harm than good. + +That is a radical vision—and like many Utopias, one with potentially dystopian consequences. Unless humans evolve into something like the Vulcans from “Star Trek”, guided purely by logic, it is also unimaginable. Reason should inform governance, but people tend to be converted to a cause—gay marriage, for instance—by emotion. Yet Mr Bloom’s point is a good one: empathy is easily exploited, marshalled on either side of the aisle to create not a bridge but an impasse of feelings. In a time of post-truth politics, his book offers a much-needed call for facts. + +This article appeared in the Books and arts section of the print edition under the headline “Utopia of reason” + + + + + +Hot and bothered + +The Sundance Climate Film Festival + +This year’s movie-fest in Utah featured Al Gore’s “Inconvenient Sequel” and other environmental fare + +Jan 28th 2017 | PARK CITY, Utah + +Is it hot in here, or is it just me? + +ON DECEMBER 5th Al Gore, the former vice-president who has spent the last three decades warning about the dangers of global warming, took the lift to the top of Trump Tower to meet the world’s most powerful climate-change sceptic. The scene, captured in “An Inconvenient Sequel: Truth to Power”, which had its debut at this month’s Sundance Film Festival, conveys Mr Gore’s determination never to stop trying to convert unbelievers, no matter how grim the task seems. The film embodies this sober spirit, showing how much worse matters have become since Mr Gore’s “An Inconvenient Truth” was released in 2006. The past three years were the three hottest on record. + +The new film was just one of a raft of environmentally themed non-fiction films at this year’s Sundance, a mecca for independent movies that draws producers, directors, celebrities and civilians to a ski town in the mountains outside Salt Lake City, Utah. Taken together these documentaries had a powerful effect, depressing audiences with stark visual proof of destruction wrought on the environment, while managing to inspire them a little with humanity’s ability to respond. + +Not all films were gloomy. “Rancher, Farmer, Fisherman”, based on a book by Miriam Horn, shows people in three jobs not always associated with conservation fighting to preserve natural resources. Ranchers in Montana band together to lobby Congress to protect the Rocky Mountain Front from oil drilling; farmers in Kansas stop tilling their soil in an effort to restore it; and commercial fishermen in the Gulf of Mexico, alarmed by the depletion of red snapper, work with environmentalists to institute quotas. + +“Chasing Coral”, directed by Jeff Orlowski, was the most visually mesmerising of the bunch. Mr Orlowski, whose “Chasing Ice” from 2012 documented receding glaciers, follows up to show the threat to coral reefs from warming oceans. Much of “Chasing Coral” is about his team’s grappling with the Herculean technical challenge of filming coral in time-lapse under water—succeeding only after relentless, exhausting effort. The result is a triumph of both visual and narrative storytelling. As a coral scientist describes the Great Barrier Reef as the “Manhattan” of the ocean, where fish take up residence as if in apartment blocks, the cameras show clown fish popping out of the equivalent of windows in skyscrapers. As a narrator describes how a moray eel and coral trout join together to hunt for food, the camera draws the audience into a bizarre buddy-cop tale of co-operation. A companion virtual-reality piece immerses viewers in the ocean in 360-degree video, narrated by Zackery Rago, a diver-cameraman and self-described “coral nerd” who emerges as the breakout star of the documentary. + +But the festival’s overall star was always going to be Mr Gore. “An Inconvenient Truth” can be said to have spawned the genre of climate-change films. With the new film screening on the eve of Donald Trump’s inauguration, the former vice-president’s presence was layered with ironies. Here was the last candidate before Hillary Clinton to win the popular vote and lose the presidency. Here was one of the world’s most famous climate-change activists taking the stage hours before Mr Trump, who has called climate change a hoax, was to take office. + +The film, directed by Bonni Cohen and Jon Shenk, picks up where “An Inconvenient Truth” left off, beginning with a montage of critics of the first film calling Mr Gore an alarmist. It then proceeds to show that the calamities Mr Gore warned about in his famous slideshow in the first film—melting icepacks, rising temperatures, severe flooding—have come about even more quickly than predicted. Mr Gore trudges through the melting ice of the Arctic and walks through flooded streets in Miami, where some roads have been raised in response to rising ocean levels. But the film focuses on progress too, featuring, for example, the Republican-run Georgetown, Texas, which aims to get all its electricity from renewables. + +The style of the film is almost that of a biopic, and inevitably, it feels like an earnest appreciation of the earnest Mr Gore. It features leadership-training sessions he began in order to bring recruits to the cause; it describes in detail his lobbying efforts to get India onside at the Paris climate conference, where a far-reaching deal was ultimately struck in 2015; and it ends with Mr Gore giving rousing speeches to never give up the fight, quoting Martin Luther King and Wallace Stevens (“After the final no there comes a yes, and on that yes the future world depends”). + +The friendly crowd at Sundance gave the film, and then its star, standing ovations. Speaking onstage after the screening, Mr Gore did not reveal what Mr Trump said to him on that day he visited Trump Tower—only that there would be more conversations to come. More than 25 years ago, on a rainy Friday night in a lecture room at Harvard, Mr Gore, then a senator from Tennessee, gave an early version of his global-warming slideshow to a small audience, including this correspondent. He spoke with just as much conviction at Sundance a quarter of a century later. “The will to act is a renewable resource,” he said. + +This article appeared in the Books and arts section of the print edition under the headline “An inconvenient moment” + + + + + +Obituary + + + + +Arthur Manuel: Unsettling + + + + + +Unsettling + +Obituary: Arthur Manuel died on January 11th + +A leader of Canada’s indigenous “First Nations” was 65 + +Jan 28th 2017 + + + +THE fine for trespassing on the railway was only $25, but the 16-year-old knew nobody with that kind of money, so he accepted the 30-day jail sentence instead. He shouldn’t have been sent to an adult prison at all, but he lied about his age. Anything was better than the dreaded Child Protection officials, who wrenched children like him from their families. + +The inmates at Spy Hill jail were a frightening bunch—made of cement and iron like the building itself, he recalled. But the food was the best he had ever eaten: meat and potatoes, pork chops, broiled chicken, sometimes steak, sausages for breakfast. Better than at home, where the food money all too often went on his father’s political campaigns. And so much better than the monotonous “mushy macaroni” at his state boarding school. + +Arthur Manuel fumed. Canada treated even its prisoners better than its original inhabitants. He secretly planned a food strike. But his schoolmates, many of them institutionalised since the age of five or six, were too scared of confronting the white man. He wrote secretly to an outfit he had only read about, the Native Alliance for Red Power (NARP). Weeks passed. He began to think nothing would happen. Then he was called for an eye test. He was puzzled. His vision was perfect. But the technician, a fellow-Indian, whispered. “Don’t say anything. I’m from NARP. We will support your strike.” + +The protest fizzled, but his spirit had fired. Opposition to chicanery and injustice ran in his veins. His father George had been a tribal chief and activist, negotiating in a suit, paid for by a whip-round among the Secwepemc Nation, drawn tight round his tubercular frame. + +This land was your land + +Mr Manuel went to law school. In his 20s he was leader of the Native Youth Association, four times chief of his home reserve and for six years chief of his tribal council. A wily litigator and effective lobbyist, he supported direct action—occupying buildings, mustering demonstrations, and picketing building work that desecrated sacred sites. But he also knew the game was rigged. Canada’s colonial thinking was too entrenched. The answer lay abroad. + +That was a masterstroke. A country so conscious of what he called its “boy scout” reputation in international affairs could, with teeth-grinding reluctance, be shamed into righting the wrongs of the past. + +Like previous generations of indigenous leaders, he sought help in London: King George III, after all, had proclaimed that Indians should not be “molested or disturbed”. It was later generations of colonists who had so shamefully taken advantage of the original inhabitants’ friendliness, weakness and ignorance. + +One victory came in 1981, when he drummed up opposition in Britain to a sneaky attempt to omit the Indians’ rights—nothing more than “historical might-have-beens”—from the Canadian constitution. That won a promise to “affirm and recognise” the First Nations’ status. But in reality, he wrote sadly afterwards, it was more a case of “ignore and deny”. Logging and mining continued unchecked; Indians remained dispossessed, with shortened, sickly, jobless lives, tolerated as wards of the state rather than full citizens, paid a pittance, with shrinking rights over their despoiled lands. + +Commercial pressure worked better. He pestered Standard & Poor’s until the credit-rating agency agreed to a meeting, where he pointed out that Canada’s unpaid, unquantified debts to its indigenous peoples were a contingent liability that should affect its sovereign rating. + +With allies such as the Nobel prize-winning economist Joe Stiglitz, he turned American protectionism to his advantage, too. It was bad enough that Canada’s loggers cut the forests from top to bottom, “scarred the land, changed the course of our streams and rivers, and choked off the salmon runs...with their sluices and booms”. They also benefited from a hidden subsidy, he argued to the Commerce Department in Washington, because they cut trees on land that rightfully belonged to the indigenous peoples, without paying them a cent. It seemed a long shot, but America’s retaliatory tariffs were upheld in arbitration in NAFTA and the World Trade Organisation. In 2007 came his biggest triumph: a UN declaration on the rights of indigenous peoples, grudgingly signed even by Canada. + +He shunned violence and bitter rhetoric, for which he was dubbed Canada’s “Nelson Mandela”. It was “reductio ad absurdum”, he insisted, to portray his demands as a denial of the settlers’ rights. They had built a country that was the envy of the world. They could stay. Nor did it make sense to demand “astronomical” sums in compensation for the epidemics of smallpox, measles, influenza and tuberculosis, for the apartheid-style abuses and repression, and for the actions of officials who had aimed to rid the country of the “weird and waning” Indian race. + +But Canada could treat his people justly. It could give them their fair share of profits made on their land, and above all it should drop “discovery”: the obnoxious notion that a white man, merely by sailing past a river mouth, could legally claim ownership of an empty space, as if it had no human inhabitants. + +This article appeared in the Obituary section of the print edition under the headline “Unsettling” + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Perceptions of corruption + +Markets + + + + + +Interactive indicators + +Jan 28th 2017 + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Output, prices and jobs + +Jan 28th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Trade, exchange rates, budget balances and interest rates + +Jan 28th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +The Economist commodity-price index + +Jan 28th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Perceptions of corruption + +Jan 28th 2017 + + + + + +Corruption is hard to measure. Transparency International, a not-for-profit organisation, surveys experts and business people annually to measure perceived levels of public-sector corruption. In 2016 more than two-thirds of the 176 countries surveyed scored below 50 (100 is very clean). More countries declined, compared with the previous year’s scores, than improved. Controversy surrounding the award of the 2022 World Cup may explain why Qatar’s score dropped the most of any country. Argentina, at least, is believed to be moving in the right direction: it has moved 12 places up the rankings since Mauricio Macri was elected president at the end of 2015 on a pledge to end corruption. + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Markets + +Jan 28th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Table of Contents + +The Economist + +The world this week + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + +The multinational company: In retreat + + + + + +Venezuela: It’s a mad, mad, mad, Maduro world + + + + + +America’s trade with China: Jaw, jaw + + + + + +Private schools in poor countries: Tablets of learning + + + + + +Family life in Russia: Empowering the vilest malefactors + + + + + +Letters + +On assisted suicide, John Calvin, languages, calendars, the Normans: Letters to the editor + + + + + +Briefing + +Multinationals: The retreat of the global company + + + + + +United States + +Donald Trump in office: Trust me, I’m the president + + + + + +Abortion policy: Gag reflex + + + + + +Pipelines: On a war footing + + + + + +Replacing Obamacare: High risk by name + + + + + +Subsidising professional sports: If you fund it, they may come + + + + + +Schools: Teaching economics + + + + + +Colleges and inequality: Skipping class + + + + + +Lexington: The Herbal Tea Party + + + + + +The Americas + +Venezuela: Maduro’s dance of disaster + + + + + +Bello: Death of a justice + + + + + +Mexico and the United States: Pistols drawn + + + + + +Sport in Argentina: Football for nobody + + + + + +Asia + +The South China Sea: Own shoal + + + + + +Politics in Malaysia: Regal trouble + + + + + +Censorship in South Korea: The new black + + + + + +Indigenous Australians: Ministering to his own + + + + + +The race for governor in Jakarta: Demolition in progress + + + + + +Banyan: Goring the law + + + + + +China + +Mental illness: Ending the shame + + + + + +Lunar new year: Rooster boosters + + + + + +Middle East and Africa + +Syria’s peace talks: Time for someone else to have a go + + + + + +Arab politics: Who can unblock Morocco? + + + + + +Israel: Unsettled + + + + + +Gambia: No Jammeh tomorrow + + + + + +Air travel: Nigeria makes its capital a no-fly zone + + + + + +Inheritance in Zimbabwe: Why widows get evicted + + + + + +Europe + +Germany’s Social Democrats: A slim chance of being chancellor + + + + + +The Koblenz “counter-summit”: We are the alt-world + + + + + +Italian politics: Matteo Renzi’s rush to elections + + + + + +France’s presidential election: In the pink + + + + + +Wife-beating in Russia: Putin’s family values + + + + + +Charlemagne: Please Mr Erdogan + + + + + +Britain + +Local government: Running on empty + + + + + +Brexit and Article 50: Supreme judgment + + + + + +Sinn Fein: A new sort of leader + + + + + +Industrial strategy: Less is more + + + + + +Teaching clever children: Russian lessons + + + + + +Business after Brexit: Leave or Remain? + + + + + +A property boom in the Shetland Islands: Heading north + + + + + +Bagehot: A difficult hole + + + + + +International + +Muslim head coverings: What not to wear + + + + + +Headscarves in Turkey: Under cover + + + + + +Business + +Bridge International Academies: Assembly line + + + + + +Formula One: Bye-bye, Bernie + + + + + +Political dating websites: Making America date again + + + + + +Qualcomm: Until the patents squeak + + + + + +Food retailing: The big McCustomisation + + + + + +How to build a nuclear-power plant: Nuclear options + + + + + +Schumpeter: Overnight sensation + + + + + +Finance and economics + +Sino-American trade: Rules of engagement + + + + + +The trade-war scenario: Apocalypse now + + + + + +Dublin as a financial centre: Emerald aisles + + + + + +Buttonwood: Letting go + + + + + +Student loans: Grading education + + + + + +Aid and migrant labour: Ticket to pride + + + + + +Chinese economic data: Potemkin province + + + + + +Reinsurance: Daddy long tail + + + + + +Free exchange: Mad maximum + + + + + +Science and technology + +Physics: Small is still beautiful + + + + + +The academy and the marketplace: Mathematical transformations + + + + + +Vehicle engine management: Intelligence test + + + + + +Regenerative medicine: A tissue of truths + + + + + +Books and arts + +The roots of modern resentment: Enlightenment and its discontents + + + + + +Istanbul: Where the past is not dead + + + + + +New fiction: A man in full + + + + + +Politics and sentiment: Utopia of reason + + + + + +Sundance: An inconvenient moment + + + + + +Obituary + +Arthur Manuel: Unsettling + + + + + +Economic and financial indicators + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Perceptions of corruption + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.02.04.txt b/homeworks/B20769/homework1/data2/2017.02.04.txt new file mode 100644 index 0000000..5c90a3e --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.02.04.txt @@ -0,0 +1,3830 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Politics this week + +Feb 4th 2017 + + + +America’s refugee policy was thrown into turmoil by Donald Trump’s executive order to halt all refugee admissions for four months and ban Syrian refugees indefinitely. In addition, all citizens from Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen were stopped from entering the United States for three months. The directive, issued without any input from the federal agencies that have to implement it, caused confusion in America and abroad, trapping people at airports. An almighty constitutional battle looms. + +Jeff Sessions was approved as attorney-general by the relevant committee in the Senate. Mr Trump had earlier sacked the interim attorney-general, who was appointed as a stopgap until Mr Sessions could take office, after she told lawyers at the Justice Department not to defend the refugee ban. + +In another controversial move Mr Trump gave Stephen Bannon, his senior political strategist, a seat on the National Security Council. The director of the CIA is also to join, but the chairman of the joint chiefs of staff and the director of national intelligence were demoted on the NSC. They will now attend only when “issues pertaining to their responsibilities” are discussed. + +Neil Gorsuch was nominated by Mr Trump to fill the vacancy on the Supreme Court left by the death of Antonin Scalia a year ago. Mr Gorsuch is a federal appeals court judge from Colorado with a solid conservative record. Democrats in the Senate are in no mood to smooth the path of his confirmation. + +Murder at prayers + +A gunman killed six people at a mosque in Quebec City, the capital of Canada’s French-speaking province. Police later arrested a man who reportedly has anti-immigrant and white-supremacist views. See article. + +Mexico’s president, Enrique Peña Nieto, cancelled a planned meeting with Donald Trump. Mr Trump had earlier tweeted that Mr Peña should cancel the visit if Mexico was not prepared to pay for the border wall that America plans to build. In a telephone call the two leaders “acknowledged their clear and very public differences” on the wall. + + + +In Chile, 11 people died in wildfires, which consumed over 350,000 hectares of forest and the town of Santa Olga in the central part of the country. The government declared a state of emergency and arrested 43 people on suspicion of starting some of the fires. + +Brazilian police arrested Eike Batista, who used to be the country’s richest man, on charges that he paid bribes to win contracts with the state of Rio de Janeiro. Mr Batista flew to Rio from New York to turn himself in. + +Back in the club + +Guinea’s president, Alpha Condé, was elected chairman of the African Union, a year-long ceremonial post, while Morocco was readmitted. It withdrew in a huff 33 years ago after the admission of Western Sahara, which it claims and occupies. That dispute is still unresolved. + +Evan Mawarire, a pastor from Zimbabwe who sparked a protest movement last year and then fled the country, was arrested after flying home. + +Israeli police began clearing Amona, a small unauthorised Jewish settlement built on private land in the Palestinians’ West Bank. Separately the Israeli government approved the construction of 3,000 more housing units in the West Bank. + +Iran test-fired a ballistic missile. The UN sought to determine whether the launch violated the country’s counter-proliferation undertakings. + +Rich pickings + +A billionaire Chinese businessman, Xiao Jianhua, who was living in Hong Kong, disappeared. Press reports said Mr Xiao was taken to mainland China by Chinese security agents. The case has attracted considerable attention in Hong Kong, where many people are still angry about the abduction of a bookseller by mainland agents a year ago. See article. + +An assassin shot and killed an adviser to the National League for Democracy, Myanmar’s ruling party. Ko Ni, the victim, was a prominent advocate for religious tolerance. See article. + +Pakistan placed Hafiz Saeed, whom America and India maintain is the leader of a terrorist group called Lashkar-e-Taiba, under house arrest. He denies any terror links. + +Rodrigo Duterte, the president of the Philippines, ordered the dissolution of the police squads that had been spearheading his war on drugs. The order followed the revelation that some members had killed a South Korean businessman. + +Backsliding + +The Romanian government bypassed parliament to decriminalise some forms of corruption by officials, sparking large protests in Bucharest. It is a further sign that Romania’s anti-graft drive, a model for the region, is slowing down. + +At least 12 Ukrainian soldiers were killed in an upsurge of fighting against Russian-backed separatists. The clashes followed a telephone conversation between Donald Trump and Vladimir Putin. See article. + +People on the terror watch-list in Germany will now be electronically tagged, even if they have not committed a crime. Meanwhile, 1,000 police rounded up suspected jihadists. One of those arrested is wanted in connection with an attack in Tunisia in 2015. + + + +François Fillon, the Republican candidate in the French presidential elections, faced allegations of misusing public funds. A newspaper claims that he employed his wife as parliamentary assistant for a total of €831,000 going back to 1988, but cannot find evidence of work she had done. See article. + +A bill to allow the British government to trigger Article 50, the means to start negotiations to leave the EU, passed the House of Commons by 498 to 114 votes. Many MPs who want to remain in the EU nonetheless supported the bill, expressing the wish of constituents who have voted to leave. The bill goes to the House of Lords. + +The British government posthumously pardoned thousands of gay men who had been convicted for homosexual acts before homosexuality was decriminalised in England and Wales in 1967. The measure is named the Turing law in honour of Alan Turing, who cracked the German Enigma code during the second world war. He committed suicide in 1954 after he was chemically castrated for being gay. + +This article appeared in the The world this week section of the print edition + + + + + +Business this week + +Feb 4th 2017 + +Though the idea has been mooted for decades, India’s government said the time was ripe for a serious discussion about the merits of a universal basic income. The finance ministry’s annual economic survey included a chapter on UBI as a potential and more efficient substitute for the country’s myriad welfare programmes, many of which take the form of subsidies that fail to reach the intended beneficiaries. The report emphasised that implementing a UBI would be fraught with difficulties, but its prominence in an official government document is noteworthy. + +Next on the agenda + +Donald Trump held a meeting with the bosses of America’s biggest drug companies, an industry that has found itself in the president’s crosshairs for “getting away with murder” by charging sky-high prices for medicines in public health-care schemes. The discussion was amiable. Mr Trump pledged to curb regulations, notably on clinical trials, that can lengthen the time spent developing new drugs, raising costs. But he also urged American drugmakers to make more of their products at home. + +Mr Trump attacked alleged currency manipulators, taking aim at China, Germany and Japan for what he claimed were deliberate attempts to keep their currencies low in order to gain a trade advantage. Peter Navarro, his trade guru, described the euro as an “implicit Deutschmark” that is “grossly undervalued”. Shinzo Abe, the Japanese prime minister, pointed out that Japan’s stimulus programme is designed to reflate the economy. Expectations that the Trump administration wants a weaker dollar helped push it down by 3% against a basket of currencies in January. + +The euro zone’s economy grew by 1.7% in 2016, below the 2% it notched up in 2015. Still, that was more than America’s 1.6% growth in GDP, its weakest pace in five years. Notwithstanding the Brexit vote, the best-performing economy in the G7 was probably Britain’s, which grew by 2%. + +Toxic wasteland + +The head of the European Banking Authority proposed creating a publicly funded “bad bank” that would buy up €1trn ($1.1trn) in toxic debt that sits on the balance-sheets of European banks. Those non-performing loans, a quarter of which are in Italy, are a drag on growth. The EBA has no power to implement such a plan. Germany, which has very low levels of bad debt, would probably oppose it. + + + +Apple cheered investors when it reported a rise in revenue for the last three months of 2016, dispelling worries about a wobble in sales. The company sold $78.4bn-worth of goods in the quarter, up by 3% from the same period in 2015. Sales of the iPhone increased by 5%, a relief for Apple after months of shrinking demand for its signature product. China was still a weak spot, though the 12% drop in revenue there was not as bad as in some previous quarters. + +Lyft was downloaded more times over a day than Uber on the Apple app store for the first time, after its rival became ensnared in more bad publicity. A campaign to persuade people to delete their Uber app took off on social media when it was accused, wrongly as it turned out, of trying to take advantage of a taxi strike at New York’s JFK airport that was being held as a protest against Mr Trump’s ban on refugees. Lyft is planning to expand to another 100 American cities this year. + +Toyota sold 10.2m cars last year, meaning it can no longer claim to be the world’s biggest carmaker. That crown passes to Volkswagen, which, despite Dieselgate, parked sales of 10.3m vehicles in 2016. + +Vodafone confirmed that its subsidiary in India is in merger talks with Idea Cellular. The joint subscriber base of India’s second- and third-biggest carriers would number 390m, combining Idea’s strong presence in rural areas and Vodafone’s urban base. Established operators have been shaken by the launch of the Jio network last year. Part of the Reliance empire owned by Mukesh Ambani, it has offered its customers free calls and data. + +You’d better shape up + +Facing a marked slowing of sales in America and forecasting a loss for this year, Fitbit decided to cut 6% of its workforce. The maker of smart fitness-trackers was a hot bet with investors at the time of its IPO in 2015, but they are now sweating. Fitbit struggles to compete in a saturated market for wearable devices. + +Humanity took a gamble on its future by letting an artificial-intelligence machine take on four of the world’s best poker players. After 20 days the machine, Libratus, won, collecting $1.7m in prize money. Libratus’s achievement is another big step forward for AI: poker is a game of imperfect information, and it had to work out when its opponents were bluffing. + +This article appeared in the The world this week section of the print edition under the headline “Business” + + + + + +KAL's cartoon + +Feb 4th 2017 + + + +More KAL's cartoons + + + +This article appeared in the The world this week section of the print edition under the headline “KAL's cartoon” + + + + + +Leaders + + + + +American politics: An insurgent in the White House + +Universal basic incomes: Bonfire of the subsidies + +Emerging markets: Turkeys and blockbusters + +Augmented reality: Say AR + +Youth and democracy: Vote early, vote often + + + + + +America’s president + +An insurgent in the White House + +As Donald Trump rages against the world he inherited as president, America’s allies are worried—and rightly so + +Feb 4th 2017 + + + +WASHINGTON is in the grip of a revolution. The bleak cadence of last month’s inauguration was still in the air when Donald Trump lobbed the first Molotov cocktail of policies and executive orders against the capital’s brilliant-white porticos. He has not stopped. Quitting the Trans-Pacific Partnership, demanding a renegotiation of NAFTA and a wall with Mexico, overhauling immigration, warming to Brexit-bound Britain and Russia, cooling to the European Union, defending torture, attacking the press: onward he and his people charged, leaving the wreckage of received opinion smouldering in their wake. + +To his critics, Mr Trump is reckless and chaotic. Nowhere more so than in last week’s temporary ban on entry for citizens from seven Middle Eastern countries—drafted in secret, enacted in haste and unlikely to fulfil its declared aim of sparing America from terrorism. Even his Republican allies lamented that a fine, popular policy was marred by its execution. + +In politics chaos normally leads to failure. With Mr Trump, chaos seems to be part of the plan. Promises that sounded like hyperbole in the campaign now amount to a deadly serious revolt aimed at shaking up Washington and the world. + +The Cocktail Party + +To understand Mr Trump’s insurgency, start with the uses of outrage. In a divided America, where the other side is not just mistaken but malign, conflict is a political asset. The more Mr Trump used his stump speeches to offend polite opinion, the more his supporters were convinced that he really would evict the treacherous, greedy elite from their Washington salons. + +His grenade-chuckers-in-chief, Stephen Bannon and Stephen Miller, have now carried that logic into government (see Briefing). Every time demonstrators and the media rail against Mr Trump, it is proof that he must be doing something right. If the outpourings of the West Wing are chaotic, it only goes to show that Mr Trump is a man of action just as he promised. The secrecy and confusion of the immigration ban are a sign not of failure, but of how his people shun the self-serving experts who habitually subvert the popular will. + +The politics of conflict are harnessed to a world view that rejects decades of American foreign policy. Tactically, Mr Trump has little time for the multilateral bodies that govern everything from security to trade to the environment. He believes that lesser countries reap most of the rewards while America foots the bill. It can exploit its bargaining power to get a better deal by picking off countries one by one. + +Mr Bannon and others reject American diplomacy strategically, too. They believe multilateralism embodies an obsolete liberal internationalism. Today’s ideological struggle is not over universal human rights, but the defence of “Judeo-Christian” culture from the onslaught of other civilisations, in particular, Islam. Seen through this prism, the UN and the EU are obstacles and Vladimir Putin, for the moment, a potential ally. + +Nobody can say how firmly Mr Trump believes all this. Perhaps, amid the trappings of power, he will tire of guerrilla warfare. Perhaps a stockmarket correction will so unsettle the nation’s CEO that he will cast Mr Bannon out. Perhaps a crisis will force him into the arms of his chief of staff and his secretaries of defence and state, none of whom is quite the insurgent type. But don’t count on it happening soon. And don’t underestimate the harm that could be done first. + +Talking Trumpish + +Americans who reject Mr Trump will, naturally, fear most for what he could do to their own country. They are right to worry (see article), but they gain some protection from their institutions and the law. In the world at large, however, checks on Mr Trump are few. The consequences could be grave. + +Without active American support and participation, the machinery of global co-operation could well fail. The World Trade Organisation would not be worthy of the name. The UN would fall into disuse. Countless treaties and conventions would be undermined. Although each one stands alone, together they form a system that binds America to its allies and projects its power across the world. Because habits of co-operation that were decades in the making cannot easily be put back together again, the harm would be lasting. In the spiral of distrust and recrimination, countries that are dissatisfied with the world will be tempted to change it—if necessary by force. + +What to do? The first task is to limit the damage. There is little point in cutting Mr Trump off. Moderate Republicans and America’s allies need to tell him why Mr Bannon and his co-ideologues are wrong. Even in the narrowest sense of American self-interest, their appetite for bilateralism is misguided, not least because the economic harm from the complexity and contradictions of a web of bilateral relations would outweigh any gains to be won from tougher negotiations. Mr Trump also needs to be persuaded that alliances are America’s greatest source of power. Its unique network plays as large a role as its economy and its military might in making it the global superpower. Alliances help raise it above its regional rivals—China in East Asia, Russia in eastern Europe, Iran in the Middle East. If Mr Trump truly wants to put America First, his priority should be strengthening ties, not treating allies with contempt. + +And if this advice is ignored? America’s allies must strive to preserve multilateral institutions for the day after Mr Trump, by bolstering their finances and limiting the strife within them. And they must plan for a world without American leadership. If anyone is tempted to look to China to take on the mantle, it is not ready, even if that were desirable. Europe will no longer have the luxury of underfunding NATO and undercutting the EU’s foreign service—the closest it has to a State Department. Brazil, the regional power, must be prepared to help lead Latin America. In the Middle East fractious Arab states will together have to find a formula for living at peace with Iran. + +A web of bilateralism and a jerry-rigged regionalism are palpably worse for America than the world Mr Trump inherited. It is not too late for him to conclude how much worse, to ditch his bomb-throwers and switch course. The world should hope for that outcome. But it must prepare for trouble. + +This article appeared in the Leaders section of the print edition + + + + + +Bonfire of the subsidies + +India debates the case for a universal basic income + +India should replace its thicket of welfare payments with a single payment + +Feb 4th 2017 + + + +ONE of the many indignities associated with being poor in India is navigating the country’s thicket of welfare programmes. The central government alone runs 950 of them; the states operate many more on top. Some are big, like those doling out subsidised food and fertiliser. Many are little more than an excuse for government ministers to stage a photo-op. + +The Indian government this week floated the idea of replacing most of these schemes with a “universal basic income” (UBI), an unconditional cash payment that could be disbursed not just to the poor but to everyone (see article). In rich countries, the UBI is raised as a possible response to a world where artificial intelligence and automation put large numbers of people out of a job. But unless technology destroys jobs on an unprecedented scale and creates none in their place, the case for such a scheme is premature. Functional social-safety nets and instruments such as tax credits make it possible to direct money to the needy in these countries. In India, despite its practical difficulties, the idea has a different logic and deserves a more sympathetic hearing. + +For one, a little money would go a long way for India’s poor. Over a fifth of its population lives below the poverty line. The scheme outlined this week by the chief economic adviser to the Indian government, Arvind Subramanian, would cut that figure to less than 0.5% by transferring about $9 a month to all adult Indians. If doled out to everyone, that would cost around 6-7% of GDP; the 950 welfare schemes soak up 5% of GDP. + +Giving people cash would be far better than today’s system of handing out welfare in kind. The plethora of schemes in place for Indians to claim subsidised food, fuel, gas, electricity and so on are inefficient and corrupt. Beneficiaries are at the mercy of venal officials who can lean on them to accept less than they are entitled to. Payments in kind rest on the paternalistic assumption that poor Indians are incapable of making rational spending decisions. A small trial in the state of Madhya Pradesh debunked the notion that a UBI would be frittered away on booze and gambling. + +The idea of including India’s plutocrats in the handout sticks in the craw. The government’s paper on UBI is itself unsure about the “universal” bit of it, suggesting that a quarter of the population should somehow be excluded to make the scheme more affordable. But gauging who is poor and who isn’t has repeatedly proved beyond the capacity of the Indian authorities. Over 35% of the richest 1% of Indians benefit from subsidised food to which they are not entitled. Worse, 27% of the poorest fifth of the population are denied their due. + +Questions of affordability would loom less large if the Indian authorities collected more tax—central-government revenues are a measly 11% or so of GDP. And a universal benefit may operate better if the sharp-elbowed middle class had a stake in making sure it runs well. + +Miss the robot + +Even fans of the idea accept that there are practical problems. Crediting cash to the bank accounts of hundreds of millions of Indians is technically feasible thanks to Aadhaar, a digital-identification scheme that covers 99% of adults. But in the absence of a dense banking network, especially in rural areas, many poor Indians might struggle to gain access to the money. The capacity of India’s state to manage the transition to a single welfare payment is also questionable, to put it kindly. There is a real risk that a UBI would supplement welfare programmes, rather than replace them. These are all reasons not to leap blindly towards it. But as a way of helping the world’s poorest people, the case for a UBI is strong. + + + +This article appeared in the Leaders section of the print edition under the headline “Bonfire of the subsidies” + + + + + +Turkeys and blockbusters + +Investing in emerging markets + +Why and how the paths of developing economies are set to diverge markedly + +Feb 4th 2017 + + + +WISE investors know that winning bets shine more brightly if they are not overshadowed by big loss-making trades. The way in which capital flowed to and from emerging markets in recent years meant that such discrimination went out of the window. Now, however, change is coming. + +Two influences in particular are behind this. The first is the retreat by America’s Federal Reserve from ultra-loose monetary policy. Cheap credit gave good and bad economies alike a boost; as its effect fades, capital allocation will become more disciplined. The peculiar traits of each emerging market, from macroeconomic management to productivity growth, will have a greater say in how its economy performs as well as how investors view it. The second shift is in America’s trade policy, which is taking a worrying turn towards economic nationalism—a course whose effects on emerging economies will differ depending on their location and trade patterns. As a result, the reasons for success or failure among emerging markets may be quite different from the recent past. + +Begin with macroeconomic management, in which there is already a growing divergence. Turkey is at one end of the spectrum. Despite its fiscal prudence, it has other ills that have long made the cautious wary of emerging markets, including a big trade deficit financed by hot money and lots of foreign-currency debt. It also suffers high inflation. The central bank has been slow to tackle this and seems cowed by Recep Tayyip Erdogan, the president, who insists that high interest rates cause inflation (see article). + +Contrast this with progress elsewhere. Little more than a year ago, South Africa was bracketed with Turkey as an emerging market to avoid. Its president, Jacob Zuma, attempted to subvert the Treasury, a bastion of orthodoxy. He failed. South Africa’s central bank has also stuck to its inflation mandate in the face of a slowing economy and weaker rand. Despite a brutal recession, Brazil’s central bank has also concentrated on pulling inflation back towards its goal of 4.5%; the country is getting to grips with the fiscal laxity which is the source of much of its economic misery. With interest rates at 13%, there is ample room to ease monetary policy. Central banks in Russia and India have also run fairly tight monetary policies. As inflation falls further, they will have scope to cut interest rates. + +Ultimately, sustained success depends on productivity growth. The sharp slowdown in rich countries has been mirrored in emerging markets. It is marked in commodity-led economies, where resource booms have deterred productive investments in other industries. Export-led growth has proved a reliable spur to efficiency. It is harder to achieve consistent gains in output per person in any economy that looks inwards. Letting domestic spending rip often leads to wasteful building booms. Still, there are biggish emerging markets that have managed fairly steady productivity growth through the swings of the global credit cycle. India is one; Indonesia another. Of smaller countries, the recent records of Peru, the Philippines and Uruguay stand out. + +With American economic nationalism, strengths will be tested against a new criterion: exposure to established trade routes. Supplying the American consumer was once a ticket to riches for emerging markets. It may now be a source of frailty: Mexico is now a target of American protectionism (see Free exchange). Other places may also suffer. Singapore, South Korea and Taiwan have enjoyed strong manufacturing output and exports on the back of a reviving world economy. But it is hard to feel upbeat about the prospects of such export-leaning economies if trade wars break out. + +India, in contrast, missed out when a new breed of global supply chains in manufacturing was forged between rich and developing countries. But with anti-trade sentiment a growing threat, there is a lot to like about an economy of 1.25bn people that is powered by domestic demand. Brazil, too, has a biggish domestic economy with fairly weak trade ties to America and the potential to strengthen its regional links. + +To the discerning, the spoils + +Even in this new era, the influence of rich-world monetary policy will not disappear. The value of the dollar will continue to matter, especially to those emerging markets that took on lots of foreign-currency debts in the go-go years. Equally, the impact of economic policy and trade vulnerability will rarely be neatly aligned. Turkey, for instance, counters its macroeconomic weakness with underlying strengths in its patterns of commerce. It trades far more with Europe than America, an advantage it shares with economies in eastern Europe. This means the identities of those emerging-market economies that will thrive and those that will falter are not preordained. But the factors sorting blockbusters from turkeys will be new. + + + +This article appeared in the Leaders section of the print edition under the headline “Turkeys and blockbusters” + + + + + +Augmented reality + +Why augmented reality will be big in business first + +The technology is coming. But it will take time for consumers to embrace AR + +Feb 4th 2017 + + + +THE history of computers is one of increasing intimacy. At first users rented time on mainframe machines they did not own. Next came the “personal computer”. Although PCs were confined to desks, ordinary people could afford to buy them, and filled them with all manner of personal information. These days smartphones go everywhere in their owners’ pockets, serving as everything from a diary to a camera to a voice-activated personal assistant. + +The next step, according to many technologists, is to move the computer from the pocket to the body itself. The idea is to build a pair of “smart glasses” that do everything a smartphone can, and more. A technology called “augmented reality” (AR) would paint computerised information directly on top of the wearers’ view of the world. Early versions of the technology already exist (see article). If it can be made to work as its advocates hope, AR could bring about a new and even more intimate way to interact with machines. In effect, it would turn reality itself into a gigantic computer screen. + +For the time being, the most popular AR apps are still found on smartphones. Pokémon Go, a smartphone game that briefly entranced people in 2016, used a primitive form of the technology. Another popular application is on Snapchat, a messaging app whose parent firm is gearing up for an IPO (see article): when teenagers overlay rabbit ears onto the faces of friends and family, they are using AR. + +Bunny business + +But the technology is advancing rapidly. Several companies already make fairly simple glasses that can project flat images for their wearers. They are increasingly popular with warehousing and manufacturing firms, who can use them to issue instructions to employees while leaving their hands free. Meanwhile, firms such as Magic Leap, Meta and Microsoft, are building much more capable headsets that can sense their surroundings and react to them, projecting convincing, three-dimensional illusions onto the world. Microsoft is already running trials of its HoloLens headset in medical schools (giving students virtual cadavers to dissect) and architectural practices (where several designers can work together on a digital representation of a building). + +Designing a nifty piece of technology, though, is not the same as ushering in a revolution. Social factors often govern the path to mass adoption, and for AR, two problems stand out. One is aesthetic. The HoloLens is an impressive machine, but few would mistake it for a fashion item. Its alien appearance makes its wearers look more creepy than cool. One reason the iPhone was so successful was that it was a beautiful piece of design. Its metal finish and high-quality components, allied with a big advertising push from Apple, all helped establish it as a desirable consumer bauble. + +The other big problem surrounds consent. The history of one much-hyped set of smart glasses should give the industry pause. In 2013 Google launched its “Glass” headsets to a chosen segment of the public. As well as those who thought the product looked silly, plenty found the glasses sinister, worrying that their users were covertly filming everyone they came into contact with. “Glassholes” became social pariahs. Two years later, Google withdrew Glass from sale. + +Both of these problems are solvable. Computers only ever get smaller. Costs shrink relentlessly, too. It may well be possible one day to build a capable and affordable AR computer that looks like a pair of fashionable glasses. Social etiquette also evolves. The Snapchat generation may not be troubled by the idea of being perpetually on camera. + +In the meantime, AR’s first inroads will probably come in the world of work, where bosses can order their employees to use headsets with little concern for the finer social niceties, or for how much of a berk they make people look. AR seems likely, in other words, to follow the same path to popularity as smartphones. The first mobile phones were clunky, brick-sized devices, mostly used by self-important bankers and a frequent target of mockery. You would not wear a HoloLens on a night out. Twenty years from now, though, your children may well be showing off a distant descendant. + +This article appeared in the Leaders section of the print edition under the headline “Say AR” + + + + + +Vote early, vote often + +Why the voting age should be lowered to 16 + +Young voters are becoming disillusioned with elections. Catch them early and teach them the value of democracy + +Feb 4th 2017 + + + +HOW young is too young? Rich democracies give different answers, depending on the context: in New Jersey you can buy alcohol at 21 and cigarettes at 19, join the army at 17, have sex at 16 and be tried in court as an adult at 14. Such thresholds vary wildly from place to place. Belgian youngsters can get sozzled legally at 16. But on one thing most agree: only when you have turned 18 can you vote. When campaigners suggest lowering the voting age, the riposte is that 16- and 17-year-olds are too immature. This misses the real danger: that growing numbers of young people may not vote at all. + +The trend across the West is disturbing (see article). Turnout of American voters under 25 at presidential elections fell from 50% in 1972 to 38% in 2012; among over-65s it rose from 64% to 70% (data for the 2016 election are not yet available). For congressional races, the under-25 vote was a dire 17% in 2014. A similar pattern is repeated across the rich world. + +Young people’s disenchantment with the ballot box matters because voting is a habit: those who do not take to it young may never start. That could lead to ever-lower participation rates in decades to come, draining the legitimacy of governments in a vicious spiral in which poor turnout feeds scepticism towards democracy, and vice versa. + +The disillusionment has many causes. The young tend to see voting as a choice rather than a duty (or, indeed, a privilege). The politically active tend to campaign on single issues rather than for a particular party. Politicians increasingly woo older voters—not only because they are more likely to vote but also because they make up a growing share of the electorate. Many young people see elections stacked against them. It is no surprise, then, that many of them turn away from voting. + +Some countries make voting compulsory, which increases turnout rates. But that does not deal with the underlying disillusionment. Governments need to find ways to rekindle the passion, rather than continue to ignore its absence. A good step would be to lower the voting age to 16, ensuring that new voters get off to the best possible start. + +This would be no arbitrary change. The usual threshold of 18 means that young people’s first chance to vote often coincides with finishing compulsory education and leaving home. Away from their parents, they have no established voters to emulate and little connection to their new communities. As they move around, they may remain off the electoral roll. Sixteen-year-olds, by contrast, can easily be added to it and introduced to civic life at home and school. They can pick up the voting habit by accompanying their parents to polling stations. In Scotland, where 16- and 17-year-olds were eligible to vote in the independence referendum in 2014, an impressive three-quarters of those who registered turned out on the day, compared with 54% of 18- to 24-year-olds. In 2007 Austria became the only rich country where 16-year-olds could vote in all elections. Encouragingly, turnout rates for under-18s are markedly higher than for 19- to 25-year-olds. + +Merely lowering the voting age is not enough, however. Youth participation in Scotland might have been still higher if more schools had helped register pupils. Governments also need to work harder at keeping electoral rolls current. Some are experimenting with automatic updates whenever a citizen notifies a public body of a change of address. Civics lessons can be improved. Courses that promote open debate and give pupils a vote in aspects of their school lives are more likely to boost political commitment later in life than those that present dry facts about the mechanics of government. + +Standing up to gerontocracy + +A lower voting age would strengthen the voice of the young and signal that their opinions matter. It is they, after all, who will bear the brunt of climate change and service the debt that paid for benefits, such as pensions and health care, of today’s elderly. Voting at 16 would make it easier to initiate new citizens in civic life. Above all, it would help guarantee the supply of young voters needed to preserve the vitality of democracy. Catch them early, and they will grow into better citizens. + +Dig deeper: + +Millennials across the rich world are failing to vote + +How to teach citizenship in schools + + + +This article appeared in the Leaders section of the print edition under the headline “Vote early, vote often” + + + + + +Letters + + + + +Letters to the editor: On lifetime learning, France, failed states, Scotland, Donald Trump + + + + + +On lifetime learning, gay spaces, France, pubs, failed states, Scotland, clothespegs, Donald Trump + +Letters to the editor + +Feb 4th 2017 + +Letters are welcome via e-mail to letters@economist.com + +Learning and earning + + + +Your special report on lifelong learning mentioned Singapore’s “individual learning accounts” (January 14th). Britain’s attempt to mimic this policy proved disastrous, as fraud was widespread (see Anthony King’s and Ivor Crewe’s “The Blunders of our Governments”). Encouraging “new entrants” to this field sounds innovative, but one should be careful what one wishes for. + +You also gave examples of universities innovating in lifelong learning, including Oxford’s decision to start a massive open online course (MOOC). But we provide other flexible learning models, too, with face-to-face education through part-time provision and online courses with small classes to ensure interaction with a tutor, as well as between students. Thus, along with the proposed MOOC, Oxford runs almost a hundred ten-week online courses with participation capped at 32. Despite that small cap, several thousand students from around the world now study at Oxford online. + +PROFESSOR JONATHAN MICHIE + +President + +Kellogg College + +University of Oxford + + + +It may seem counterintuitive, but at Amazon we offer training to our workers that could probably help them end up leaving the company. Many will pursue a career with Amazon. But for others, we are just one stop along their professional journey. We think it is right that we can help make an employee’s time with us a positive, upward step by learning new skills. + +We created Career Choice for hourly paid staff who otherwise might not have opportunities open to them. We help them get onto the programme by prepaying tuition, bringing classes into the workplace where it is convenient and doing the research to determine which career path will lead to employment in their region. It is a young programme, but nearly 10,000 Amazonians in ten countries have participated in Career Choice and hundreds have gone on to become nurses, IT technicians and transportation logistics experts, among other professions. + +BETH GALETTI + +Vice-president, human resources + +Amazon + +Seattle + +As important as “equipping people to stay ahead of technological change” is, we also need an attitudinal change in our schools. We tend to think of schools as places where teachers impart knowledge to students, whose capacity for memorisation and repetition is rigorously tested. Now that we can search Google in a moment, these skills are no longer necessary. Children need to retain a basic framework of conceptual knowledge, but the detail can be recalled from computers. + +We need to rethink our approach to schooling and understand that we are now educating for humanity. Creativity, empathy and leadership should be nurtured, equipping people with the skills set to start a business, lead a team and approach problems creatively. Exams must adapt to a new reality by allowing the use of the internet in order to test thinking rather than recall. + +Before the workers of the future can take advantage of learning resources, schools should focus on what gives us an advantage over robots; our ability to create, think strategically, communicate with others and demand change. + +LORD JIM KNIGHT + +Chief education adviser + +TES Global + +London + + + + + +The importance of feeling safe + +* In your article “Lights out” (December 24th) you write that “In 2015 campaigners managed to save the Royal Vauxhall Tavern, a former Victorian music hall in London which hosts drag shows and cabaret nights, from demolition.” We at RVT Future, wish that were the case! Our campaign to ensure a future for the Tavern has indeed won Grade II listing for the building, but Britain’s oldest gay pub is still far from safe—it remains in the hands of property developers Immovate and is currently on the market. Truly ‘saving’ the Royal Vauxhall Tavern means securing ownership for the gay community and we are currently looking for financial backers to help us make this happen. + +Beyond the RVT, your article seriously misunderstands the situation facing gay spaces in London, Britain and beyond. Gay people don’t always end up in their local cocktail bar for good reason. Acceptance in straight venues still simply cannot be taken for granted—hate crimes against homosexuals rose 147% YOY in the three months following the EU referendum. Gay spaces were, are, and will continue to be essential. + + + +Also essential is an understanding of the changes happening to these spaces. Since May, the Urban Laboratory at University College London, in conjunction with Queer Spaces London, has been collecting evidence on the capital’s gay spaces. The next stage of the research is funded by Sadiq Khan, the mayor of London. Clearly, ensuring gay spaces survive and thrive is a priority for our new mayor. + + + +RVT Future committee + +London + + + + + +Currency payment + +Buttonwood wondered whether Marine Le Pen’s plan to re-denominate French government euro bonds into new francs might constitute a sovereign default (January 14th). There is no ambiguity here: it would. If an issuer does not adhere to the contractual obligations to its creditors, including payment in the currency stipulated, S&P Global Ratings would declare a default. Our current AA rating on France suggests, however, that such a turn of events is highly unlikely. + +MORITZ KRAEMER + +Sovereign chief ratings officer + +S&P Global Ratings + +Frankfurt + + + + + +Beige boozing + +* In 1946 George Orwell wrote longingly of his ideal pub, the Moon Under Water, which would, among other things, sell liver sausage sandwiches and large biscuits with caraway seeds. Weatherspoon’s took that name for several of their city centre establishments. Beer flows cheaply, but I see little else to cheer in their deliberate blandness (Bagehot, December 24th). Our high streets drown in chain bars and restaurants. Weatherspoon’s isn’t the only villain, but British boozers are so much better than their mediocre ambitions. + + + +Avoid pubs with painted blackboards! + + + +ANTHONY PARSONS + +London + + + + + +Why states fail + +By linking state failure to authoritarian institutions the analysis you gave about how best to fix fragile nations was too general (“Conquering chaos”, January 7th). Countries with authoritarian regimes are the norm in history, but not all fail. Many, such as China, Kazakhstan and Saudi Arabia, do rather well. Most importantly, there is a huge variety among them, both in kind and in degree. Some features of authoritarian government—official national narratives, heavy-handed but controlled policing—are effective at preventing armed conflict, whereas others are not. Measures such as the Failed States Index look at the symptoms, not the causes, and tell us little about the reasons for “failure”. + +Moreover, corruption, rent-seeking and money laundering are never merely the fault of local institutions. In order to be worth anything, ill-gotten gains must find a haven beyond borders, in violation of anti-money laundering laws. Failed states and ordinary kleptocracies tend to be regimes whose members have offshore bank accounts and property portfolios in the markets of the West. + +So rather than spending $1 trillion fuelling corruption in Afghanistan, perhaps NATO could allocate some of this to beefing up the enforcement of anti-corruption in places like London, New York and Paris. + +JOHN HEATHERSHAW + +Associate professor of international relations + +University of Exeter + + + + + +Scotland is part of the UK + +Scotland’s first minister surely does not have a “right to complain” about not being consulted about Brexit (“Supreme judgment”, January 28th). Foreign policy has never been the responsibility of the devolved Scottish government. The Scots had a vote in the referendum, as did every other citizen of the United Kingdom, and they are represented in the Westminster Parliament. Nicola Sturgeon is playing a transparent political game. Her Scottish National Party now plans to table at least 50 amendments to the “Brexit bill”, purely so it can claim that Westminister has ignored the Scottish people 50 times. The devolved assemblies should be consulted about legitimate constitutional issues, such as the border between Northern Ireland and the Irish republic. But this does not apply to the rabble-rousing of the SNP. + +TIMOTHY FOXLEY + +Stoke-on-Trent, Staffordshire + + + + + +Level pegging + +* The very interesting article about closepegs reminded me how essential they were in my early marriage when my wife and I and a two-year-old daughter lived on the shores of St. Margaret’s Bay, Nova Scotia (“Mankind in miniature”, December 24th). Our little house close to the water’s edge had no washer or dryer and nappies had to be rinsed out and washed in the bathtub (usually by me) using a large plunger as agitator. Wrung out by hand they were pegged with frozen hands securely to a line outside where they were almost instantly turned to frozen cotton boards flapping in the wind. Within minutes the ice was blown out and they emerged white and fragrant. Occasionally the line would break and all went down into the reddish soil. Rinsing and wringing had to be done all over again. But the thing that saved us from complete despair was the closepegs keeping the nappies secure rather than out in the ocean. Thank God for the closepegs as we could not afford blown away nappies! + + + +JASPER GREEN PENNINGTON + +Ypsilanti, Michigan + + + + + +Paul Ryan’s game plan? + +The early days of the Trump administration (“The 45th president”, January 21st) bring to mind Robert Graves’s “I Claudius”. The ageing Roman emperor longs for the return of the republic. To this end he marries Agrippina, mother of Nero, hoping that Nero will be so cruel and despised that it will lead to a rejection of future emperors. His strategy: “Let all of the poisons that lurk in the mud hatch out.” + +PAUL FRIEDMAN + +Vancouver + +* Letters appear online only + +This article appeared in the Letters section of the print edition under the headline “On lifetime learning, France, failed states, Scotland, Donald Trump” + + + + + +Briefing + + + + +Donald Trump’s foreign policy: America first and last + +Will it work?: Beware the indirect effects + +How America’s allies see it: The world, watching + + + + + +America first and last + +What the visa ban shows about American foreign policy + +A divided nation seeks a divided world + +Feb 4th 2017 + + + +THE cavalier view some members of President Donald Trump’s inner circle take of the chaos they have unleashed since January 20th has startled both their opponents and many of their Republican colleagues. It should not. The insiders are doing things that Mr Trump promised to do on the campaign trail, and that they have long wanted to see done. And if they are doing it in a way that tramples other people’s sensibilities, then all the better; it is what their supporters would want. + +Take the executive order of January 27th that barred citizens of seven mostly Muslim nations from entering America for 90 days, and halted all refugee arrivals for 120 days. So what if it was put together amid such secrecy that Mr Trump’s new secretaries for defence and homeland security were reportedly taken by surprise? Who cares if it was shoddily drafted in a way that saw travellers clutching visas and even green cards denoting legal permanent residency detained by customs officers until federal judges ordered their release? Billionaires from Silicon Valley complaining that their innovation is built on immigration? Protesters at airports and thronging the streets of foreign capitals? Bring it on. Even cases like that of Hameed Khalid Darweesh, an interpreter for the American government in Iraq, detained for nearly 19 hours at JFK airport in New York seemed to make no matter. Mr Darweesh cried as he told reporters he had been handcuffed, asking: “You know how many soldiers I touch by this hand?” Hardliners close to Mr Trump did not flinch when their president was forced to fire his acting attorney-general after she refused to comply with the travel ban. And they showed no sign of worrying that a policy nominally designed to reduce terrorism has little prospect of doing so (see article). + +The reason for this bullish insouciance is both straightforward and alarming. The president’s currently most influential advisers believe that he has a mandate to blow up norms of good governance. When he fires bureaucrats who stand in his way, bullies business bosses into keeping jobs in America, browbeats members of Congress and—most deliciously—provokes swooning dismay among journalists, many of the voters who gave him that mandate applaud. With no interest in converting those who oppose him, such support is the best sort of strength. + +The policy the executive order laid out is not, after all, an unpopular one. A Reuters/IPSOS poll released on January 31st found 43% of those questioned supported bans on people from Muslim countries as a precaution against terror; among Republicans support was 73%. Demonstrators carrying placards bearing such messages as “We Are All Muslims Now” and “Let Them In” in airports across the country saw the executive order as a version of Mr Trump’s campaign pledge to ban all Muslims watered down with some dubious legal legerdemain (see article), and thus as bigotry. Mr Trump’s supporters read those placards and wondered why any patriot would want to let in foreigners from dangerous lands, imperilling American families. + +Mr Trump stokes up such polarisation by defining his opponents as foolish, out-of-touch, disingenuous or actively vicious. He could but fire his acting attorney general, Sally Yates, a career prosecutor who served as deputy attorney general under President Barack Obama, after she said that Justice Department lawyers would not defend the ban against legal challenges, on the basis that its broad intent was possibly unlawful and because her office had a duty to “stand for what is right”. But it was startling to see the White House say that Ms Yates had “betrayed” the Justice Department and add: “Ms Yates is an Obama administration appointee who is weak on borders and very weak on illegal immigration.”After the Democratic leader in the Senate, Charles Schumer of New York, grew emotional while discussing refugees, Mr Trump mocked him, saying: “I noticed Chuck Schumer yesterday with fake tears,” adding: “I’m going to ask him who is his acting coach.” + +Mr Trump’s most devoted tribune on television, the Fox News channel commentator Sean Hannity, devoted a segment of a show to the question: “Who is bankrolling the protests taking place at airports across the country?” All the evidence from social media points to the protests being both low-budget and fairly spontaneously organised. + +For Mr Trump, belittling critics and intimidating business partners has been second nature for decades. It is a tactical proclivity that aligns well with the strategic agenda of the most zealously anti-establishment figures in his team, led by Stephen Bannon, a rumpled nationalist firebrand. After serving as CEO of Mr Trump’s campaign, Mr Bannon is now the president’s chief strategist. Born into a Democrat-voting working class family in Virginia, Mr Bannon served in the navy and worked at Goldman Sachs before making his fortune as a Hollywood investor and dealmaker, thanks in part to a lucky stake in “Seinfeld”, a sitcom. He went on to run Breitbart, a reactionary and often venomous website. + +Since entering the White House Mr Bannon, 63, has revelled in his public image as a Darth Vader-ish villain. He recently told the New York Times that mainstream news outlets had been “humiliated” by the election outcome and were considered the “opposition party” by Team Trump. He advised that the media’s best course would be to “keep its mouth shut and just listen for a while”, because journalists do not understand America. + +Now I am the master + +In 2014 Mr Bannon gave a remarkable address to a conservative conference at the Vatican. He described working-class communities betrayed by “people in New York that feel closer to people in London and in Berlin than they do to people in Kansas and in Colorado”. The corruption and greed of that rootless elite had caused a crisis in capitalism, Mr Bannon argued, “and on top of that we’re now, I believe, at the beginning stages of a global war against Islamic fascism.” His answer lay in the values of the “Judeo-Christian West”, in “strong countries and strong nationalist movements” and possibly in an accommodation with President Vladimir Putin of Russia. Though he called Mr Putin a kleptocrat, Mr Bannon suggested that this might matter less than securing Russia as an ally against radical Islamists. + +Mr Bannon has the trust of the president on foreign affairs. Witness the decision to give him a guaranteed seat on the National Security Council (NSC), enjoying the same access to that inner sanctum as James Mattis, the defence secretary, and Rex Tillerson, the secretary of state. A move that gives a political strategist privileges no longer enjoyed by the chairman of the joint chiefs of staff, who only attends when the agenda touches his military portfolio directly, has been lambasted by foreign-policy grandees as “stone-cold crazy” and “entirely inappropriate”. + +Indeed, Mr Bannon seems to have edged aside the national security adviser, Michael Flynn, in the battle for influence. An overbearing former general, Mr Flynn is suffering political death by a thousand briefings. Along with Jared Kushner, a New York businessman who is married to Mr Trump’s daughter, Ivanka, and who is a recent but devout convert to America First populism, Mr Bannon has pushed Mr Trump to put into action the campaign promises that won him office. + +A key ally is Stephen Miller, a 31-year-old policy adviser. Like some other members of Team Trump he comes from the Senate offices of Jeff Sessions, Mr Trump’s pick as attorney general, one of Washington’s most ferocious opponents of legal and illegal immigration. Mr Miller, who developed a taste for political combat as a right-wing teenager at a liberal high school in Santa Monica, California, has been blamed by some Trump supporters for causing unnecessary fights over immigration policy. Mr Miller, Mr Bannon and others in the president’s inner circle reportedly clashed with the Department of Homeland Security (DHS) and its secretary, John Kelly, a former Marine general, over the fate of citizens from countries on the banned list who hold green cards. The Bannon camp insisted that such residents be admitted only on a case-by-case basis—a trampling of immigration procedures from which the administration later retreated. + +Mr Bannon talks of Mr Trump’s election as part of a “global revolt” by nationalists which will sweep away all governments that do not adapt to it. This dramatic historical narrative appeals to Mr Trump, who lauded the British decision to leave the European Union as a populist precursor to his own victory. But for all that the president enjoys humbling elites, he also craves their respect and admiration. He appointed high-flying former generals and titans of commerce to his cabinet because he wished to surround himself with “the best” and impress the world. If such grandees tire of the conflicts and chaos model of some around Mr Trump, their departures would hurt him politically. + +Two national-security hawks in the Senate, John McCain of Arizona and Lindsey Graham of South Carolina, have said they fear the travel ban “will become a self-inflicted wound in the fight against terrorism.” Other Republicans in Congress who have pushed back against the policy, though, have griped about questions of process rather than substance, complaining for instance about lack of consultation. Mr Trump was hardly the first choice of presidential candidate for many Republican members of Congress, especially in the Senate. But they are in no mood to topple him: they yearn to cut taxes and slash business regulation, and think Mr Trump will sign the laws that do so. + +And they are also frightened. Chaos alarms Republican grandees and their business supporters. But if chaos is what Mr Trump’s most ferocious insurgents seek, and if it serves as a signifier of authenticity to the base upon which the legislators’ electoral fortunes stand, then chaos is a price they will accept, for now. + +This article appeared in the Briefing section of the print edition under the headline “America first and last” + + + + + +The mote in a stranger’s eye + +Closing its doors to refugees is unlikely to make America safer + +Most terrorism is home-grown, and travel restrictions will encourage radicalisation + +Feb 4th 2017 + + + +“IT’S big stuff,” boasted Donald Trump as he signed the executive order entitled “Protecting the nation from foreign terrorist entry into the United States”. The order suspends entry by citizens of seven mostly Muslim-majority countries (Iraq, Iran, Syria, Yemen, Sudan, Libya and Somalia) for 90 days; halts all refugee admissions for 120 days; and bans Syrian refugees indefinitely. It looks unlikely to make America markedly safer, and by stoking resentment it could indirectly do the reverse. + +Terrorism is a threat to America. Some of the seven countries subject to Mr Trump’s ban are fighting against jihadists of Islamic State and al-Qaeda, which is why some visa restrictions were imposed on them by the Obama administration. According to Charles Kurzman at the University of North Carolina, 23% of Muslim-Americans associated with violent extremism since 2001 had family links to those countries. + +Yet in the past decade there have been few terrorist attacks committed by foreigners in America, and none of them have involved nationals from the seven affected countries. Nor have any deaths in America been caused by terrorists with family ties to those countries (see chart). The 12 deadly acts of terrorism committed by Muslims on American soil since September 11th 2001 have been by American citizens or legal residents, according to New America, a think-tank. The September 11th murderers were from Saudi Arabia, the United Arab Emirates, Egypt and Lebanon, none of which are subject to the ban. + +Refugees are particularly unlikely to be a threat. Of the nearly 3.3m refugees admitted to America between 1975 and 2015, only 20 have attempted a terrorist attack. In those attacks three Americans were killed, according to the Cato Institute, a think-tank. + +Syrian refugees who gain admittance to America, most of whom are women and children, have to have their status determined by the UNHCR, the UN’s refugee agency, and go through a lengthy screening process, mostly in camps in Turkey, Lebanon or Jordan. In 2011 only 23 Syrian refugees managed to run this gauntlet; by 2014 the number had edged up to 249. In 2015, as the war in Syria raged on and as Europe admitted hundreds of thousands, the number rose to 2,192, and last year 15,479 of the 85,000 refugees admitted to America came from Syria. (Of that total 46% were Muslim and 44% were Christian.) The UNHCR estimates that some 20,000 refugees will now be affected by Mr Trump’s actions. + +Though its protective effects may be minimal, the executive order seems likely to stoke resentment among radicalised young Muslims in America and countries as yet unbanned. It may also put at risk American troops in the Middle East, including the thousands deployed in Iraq and Syria to fight the Islamic State. + +This article appeared in the Briefing section of the print edition under the headline “Beware the indirect effects” + + + + + +Worldwide watching + +Many American allies are troubled, and threatened, by Donald Trump’s foreign policy + +Alliances and institutions half a century in the making seem imperilled + +Feb 4th 2017 + +Maybe we won’t always have Paris + +WITHIN hours of signing his executive order restricting travel from seven Muslim countries, President Donald Trump called King Salman of Saudi Arabia to discuss closer ties. “Trump reassures the allies…and the travel restrictions befuddle the world”, read the front-page banner of Asharq Al-Alawsat, a newspaper owned by the king’s son, on the following day. + +Some of America’s allies may be reassured; but many of them are aghast at a foreign policy that seems determined to destroy many of the institutions and alliances created in the past half century. A telephone call between Mr Trump and Malcolm Turnbull, the prime minister of Australia, is reported to have turned remarkably sour over a previous American pledge to resettle refugees. Strikingly, Donald Tusk, president of the European Council, wrote to 27 European leaders listing America alongside Russia, China and terrorism among the main external threats to the European Union. Meanwhile Enrique Peña Nieto, Mexico’s president, cancelled a meeting with Mr Trump. + +Some satisfaction on the part of Saudi Arabia is not surprising; like Egypt and the United Arab Emirates, two other Sunni countries, it was not targeted by the freeze on visas (see map). Gulf leaders disliked Barack Obama. And Mr Trump seems better disposed to despots than his predecessor; he has praised Egypt’s president, Abdel-Fattah al-Sisi, as “a fantastic guy”. And many Arab states impose tight access restrictions on fellow Muslims. + + + +Above all, Saudi Arabia saw the travel ban as re-establishing the isolation of its chief adversary, Iran, and other Shia dominated states. It will have been further delighted when, on February 1st, Mr Trump’s national security adviser, Michael Flynn, said America was “putting Iran on notice” for destabilising the Middle East after a recent ballistic missile test and an attack by its Houthi allies on a Saudi frigate. + +A veteran Saudi commentator, Abdulrahman al-Rashed, notes that “Trump’s administration sees Iran as part of the problem, unlike the Obama administration, which viewed it as part of the solution.” Rex Tillerson, the secretary of state, is well known in Riyadh. As head of Exxon Mobil before taking office, he visited the Gulf as recently as November. “He’s as friendly to Saudi Arabia as it gets,” said a diplomat. + +Iran’s reaction was as furious as Saudi Arabia’s was smug, with hardliners and reformers alike reviving old revolutionary slogans. “It’s increasing Iran’s isolation at a time when the country desperately wants to be part of the global community,” said Ali Alizadeh, an Iranian commentator. Valiollah Seif, the central bank governor announced that in March Iran would replace the dollar with other currencies in its accounting for foreign transactions. + +Saudi glee could, however, be short-lived: America’s intention to treat non-Muslim refugees preferentially, and its anti-Muslim rhetoric, could play into the hands of global jihadists who, like Mr Trump’s adviser, Stephen Bannon, see a clash between Islamic and Christian civilisations. + +In such a division it might seem natural to find America and Europe on the same side, even if such talk gives many Europeans the heebie-jeebies. But Mr Trump’s policies also seem designed to split him off from many of Europe’s leaders—and to exacerbate ructions within their countries. + +Angela Merkel, the German chancellor and an Atlanticist to her bones, declared the executive order’s “general suspicion” of Muslims unjustified, a sentiment echoed in many other European capitals. A later clarification that EU citizens would not be affected so long as they were not travelling on a passport issued by one of the seven countries brought some mollification. But European leaders have a deeper concern: that Mr Trump may halt or reverse America’s support for European integration, long a bipartisan staple of American foreign policy. Ted Malloch, who has been canvassed as a possible ambassador to the EU, has compared it to the Soviet Union and suggested he might like to help bring it down. Last year Mr Tusk and several other European leaders were rattled by post-election courtesy calls in which Mr Trump had gleefully solicited opinions on which country might be first to follow Britain out of the EU. + +A further adversarial note was struck when, on January 31st, Peter Navarro, Mr Trump’s senior trade adviser, declared TTIP, a half-negotiated trade pact between the EU and America, to be dead, and accused Germany of exploiting an undervalued euro to help its exporters. In the wake of Mr Trump’s withdrawal from the TTP, a trade agreement between 12 Pacific Rim countries, this will spur on European efforts to conclude trade deals elsewhere, notably with Japan and Mexico, which is also looking to deepen ties with big economies other than America. Although the EU recently slapped tariffs on Chinese steel, some Europeans, like the Mexicans, see possibilities there, too. President Xi Jinping’s paean to globalisation at Davos last month went down well. + +The British exception + +Yet Europe’s unity is, as Mr Trump reminds it, fragile. Take Russia policy. If America lifts the sanctions it imposed on Russia after its annexation of Crimea and invasion of eastern Ukraine, Mrs Merkel will struggle to maintain a consensus on Europe’s own economic measures, which must be renewed in the summer. + +The British prime minister, Theresa May, became the first head of government to visit the new president. She is betting that getting close to Mr Trump may help smooth some of his rougher edges. During their meeting she worked hard to convince him that he will have more leverage with Russia if NATO is strong; he has repeatedly questioned the value of the “obsolete” alliance (see Lexington). + +Embracing Mr Trump carries risks. The president is unpopular in Britain. Nearly 2m people have signed an online petition urging Mrs May to cancel the state visit she promised the Donald (see article). Her counterparts in the Brexit negotiations may be similarly unimpressed. Many of Britain’s Brexiteers, though, see themselves as part of the anti-elitist “global revolt” Mr Bannon embraces. Europe’s right-wing populists fell over themselves to celebrate America’s visa restrictions. Geert Wilders of the anti-Islam Freedom Party, which is leading opinion polls in the Netherlands six weeks before a general election, said that similar bans in Europe would have thwarted terrorist attacks. “Racist? No. Simply GREAT,” tweeted Matteo Salvini of Italy’s far-right Northern League. Politicians like these see in Mr Trump not only vindication of their anti-elite, anti-immigrant instincts, but a president who shares their bleak analysis of contemporary Europe. On the campaign trail Mr Trump painted apocalyptic pictures of the continent beset by terrorism and ethnic strife. + +In the coming months Mr Trump will probably meet some of his European counterparts in the flesh at a NATO summit in Brussels—a “hellhole”, as he once called it. He has already met his Mexican opposite number, President Peña, having made a visit to Mexico City during his campaign. But after further humiliating demands that Mexico pay for the border wall Mr Trump promised during his campaign a return visit was scotched. Relations between the two countries may be at their lowest ebb since 1916, when Woodrow Wilson sent over 6,000 soldiers into Mexico in pursuit of Francisco “Pancho” Villa. (There are reports, which the Mexican government denies, that in a telephone conversation with Mr Peña Mr Trump spoke of using American troops to hunt down criminals south of the border.) + +Well, that was fun + +Carlos Slim, a multibillionaire businessman who is the only Mexican to have met Mr Trump since election day, says he is “not a terminator but a negotiator”. Mr Trump’s anti-Mexican rhetoric, in other words, could be an opening gambit. But much as politicians hope this is true, they are preparing for the worst. + +The Mexican people are unusually unified in their opposition to Mr Trump’s politicking. Mr Peña, who has a popularity rating of just 12%, was excoriated for inviting Mr Trump to Mexico City last year; his newly forthright stance has earned plaudits. But the most likely beneficiary of Mexico’s dislike of Mr Trump is Andrés Manuel López Obrador, leader of the hard-left Morena party. His strident nationalism appeals to voters who want a leader to stand up to Mr Trump. Since the American election, Mr López Obrador has risen 7-8 percentage points in the polls; at the same time the IMF’sprojections for GDP growth in 2017 have dropped from 2.3% to 1.7%. + +With the oil price down, NAFTA-dependent trade is more or less the only motor the economy has. A floundering economy, a fractured political landscape and an anti-Trump boost could give Mr López Obrador the top job after Mexico’s 2018 presidential election. That would put at risk the structural reforms in energy, telecoms and education that represent some of the few gains Mr Peña’s administration has made, and the stability that has been fundamental to the development of the Mexican-American relationship for decades. + + + +A slowing Mexico led by an anti-American president would deliver little benefit on the other side of the Rio Grande. Contrary to Mr Trump’s rhetoric, firms that increase the number of their employees south of the border also increase them to the north—along with their R&D spending. And Mexico could import food from Brazil and Argentina at little extra cost. Those who facilitate illegal immigration from Central America will benefit from reduced co-ordination. So would drug smugglers, who are pretty well versed in tunnelling under walls, whatever their beauty. Hence Mr Peña’s offer of a grand bargain in which trade, migration and security issues would be discussed together. + +Mexico might also give serious thought to delaying. Trade negotiations, in particular, can take a very long time: why rush them? If there is a new administration in 2021 America’s policies could be very different. Others may seek similar solace. But hoping four years could be a mere unpalatable interlude sits poorly with the change two weeks have brought the world. + +This article appeared in the Briefing section of the print edition under the headline “The world, watching” + + + + + +United States + + + + +The Supreme Court: Gorsuch test + +Checks and balances: A crumbling fortress + +Trade with Mexico: Playing chicken + +The economics of immigration: Man and machine + +Working and race: Colouring in + +The murder rate: Spiking + +Lexington: Strength in numbers + + + + + +Gorsuch test + +Neil Gorsuch is a good pick for the Supreme Court + +Democrats have powerful reasons to oppose him even so + +Feb 4th 2017 | NEW YORK + + + +ELEVEN years ago, Neil Gorsuch, Donald Trump’s choice to replace Antonin Scalia on the Supreme Court, sailed through the Senate by a voice vote when George W. Bush appointed him to the Tenth Circuit Court of Appeals. This time, with the ideological tilt of America’s highest court hanging in the balance and Democrats fuming over their Republican colleagues’ stonewalling of Merrick Garland, Barack Obama’s choice to fill the seat, Mr Gorsuch will face a tougher crowd. In contrast to William Pryor, another judge shortlisted for the seat, who once called Roe v Wade “the worst abomination” in the history of constitutional law, Mr Gorsuch is not given to incendiary remarks. Democrats may be hard-pressed to vilify the scholarly jurist, but their sense that he has been tapped for a stolen seat is certain to cloud his confirmation hearings. + +On many issues dear to conservatives Mr Gorsuch is a perfect match. He usually sides with companies, provides little relief for condemned prisoners appealing against death sentences, goes out of his way to protect institutions claiming that laws like Obamacare burden their religious liberty and rejects objections to religious displays like the Ten Commandments in public parks. Mr Gorsuch has also signalled deep scepticism of the so-called Chevron doctrine, which gives wide latitude to federal agencies. And although Mr Gorsuch has never written a legal opinion addressing Roe v Wade, it seems clear he is—personally, at least—pro-life. In his 2006 book, “The Future of Assisted Suicide and Euthanasia”, Mr Gorsuch wrote that, “all human beings are intrinsically valuable and the intentional taking of human life by private persons is always wrong”. + +Like every justice on the bench today, Mr Gorsuch is a product of the Ivy League, with degrees from Columbia and Harvard. Before returning to Denver, his birthplace, to begin his stint at the Tenth Circuit, Mr Gorsuch served as a clerk to two Supreme Court justices, including the key swing justice who has been on the bench since 1988: 80-year-old Anthony Kennedy. He then went to Oxford on a Marshall Scholarship, earning a doctorate in legal philosophy, and spent a decade at a Washington law firm. He also spent a year working in George W. Bush’s Justice Department. + +Inkblots + +Two months after Scalia’s death, Mr Gorsuch praised him as a “lion of the law” whose “great project” was to denote “the differences between judges and legislators”. Lawmakers properly consult their own moral convictions when crafting policy, he said, but judges must strive “to apply the law as it is”. They should examine only “text, structure and history”, not personal visions of how they would like the world to look. As an advocate of Scalia’s judicial philosophy of originalism—whereby judges interpret the constitution in the light of its meaning when it was adopted—Mr Gorsuch has developed a conservative paper trail as an appellate judge and won cheers from the Federalist Society and the Heritage Foundation, two stalwart organisations of American conservatism. + +He also shares Scalia’s literary talents. In a speech in 2014, Mr Gorsuch framed an exploration of “law’s irony” in terms of a Dickens novel, weaving in references to Burke, Cicero, Demosthenes, Goethe, Kant and Shakespeare. But he’s hardly stuffy. Mr Gorsuch also peppered the talk with contemporary culture, evoking David Foster Wallace and joking that the “modern” rules of civil courts date back to 1938: “Maybe the only thing that really sounds new or modern after 70 years,” he said, “is Keith Richards of the Rolling Stones. Some might say he looks like he’s done some experimenting too.” + +Mr Gorsuch may have ample charm and talent, but Democrats have pledged to fight any nominee Mr Trump puts forward. With only a 52-to-48 edge, Republicans cannot rely on their majority to get Mr Gorsuch confirmed. Senate rules permit any member of the minority party to wage a filibuster that only a 60-vote supermajority can quell. If Democrats do this, the only path to filling the seat may be the “nuclear option”—a simple majority vote to change Senate rules and abolish the filibuster for Supreme Court nominations. Mr Trump has urged this, if necessary, but so far Mitch McConnell, the Senate majority leader, has been non-committal. “We’re going to get this nominee confirmed,” Mr McConnell has said. The fate of the filibuster, he told Mr Trump, is “not a presidential decision. It’s a Senate decision.” + +He may have little choice. Although some think the filibuster would be better saved for the next confirmation battle, most Democrats are showing few signs they will capitulate. The day after Mr Gorsuch was nominated, the Senate minority leader, Chuck Schumer, reaffirmed that Mr Gorsuch will need 60 votes. Bipartisan support “should be essential”, he said, for Supreme Court nominations. Richard Hasen, a law professor at the University of California, Irvine, says there may be good reason for Democrats to filibuster even if this prompts Republicans to go nuclear. A strident stand, he says, would be well-deserved “payback for the obstructionism” on Mr Garland and would appease “the Democratic base”, averting a possible “Tea-Party rebellion on the left”. Would such a move exacerbate the politicisation of the judiciary? The Supreme Court is already an ideological institution suffused with partisanship, Mr Hasen observes. That ship, he says, “has sailed”. + +This article appeared in the United States section of the print edition under the headline “Gorsuch test” + + + + + +The presidency + +America’s system of checks and balances might struggle to contain a despot + +The next four years will keep students of the constitution busy + +Feb 4th 2017 | WASHINGTON, DC + +Dial 911 to speak to your congressman + +THE most troubling interpretation of the executive order that Donald Trump signed on January 27th, temporarily banning visitors from seven mainly Muslim countries, is not that the president means to honour his campaign promises. It is that he will find ways to do so even where what he promised—in this case, to keep Muslims out of America—is illegal. “When he first announced it, he said ‘Muslim ban’,” explained Rudy Giuliani, a former would-be Trump attorney-general. “He called me up, he said, ‘Put a commission together, show me the right way to do it legally’.” + +Even if Mr Trump can resist the urge to lock up Hillary Clinton and reinstitute torture, which he also promised to do on the trail, he is already testing the boundaries of presidential propriety and power. The potential conflicts of interests in his administration are an obvious example: Mr Trump is the first president since Richard Nixon not to sell or place in blind trust his business, including a hotel division that has announced plans to triple its American properties since his inauguration. + +All this is worrying in itself. Making matters worse, however, is the sorry state of America’s system of checks and balances, a web of mutually compromising powers woven, in fear of tyrants, around the presidency, Congress and judiciary. “We’re not quite at code blue,” says Norm Ornstein of the American Enterprise Institute. “But we are definitely in the emergency room and heading towards the intensive-care unit.” + +This might sound surprising. In his first 11 days as president, 42 law suits were fired at Mr Trump or his administration. Massachusetts, New York, Virginia and Washington challenged the immigration order. But the courts alone will not constrain Mr Trump. Courts can issue stays to pause executive actions. But it could take over a year for the states’ challenge to reach the Supreme Court. By then Mr Trump could have changed America’s immigration system so much that the judges’ verdict would be largely irrelevant. + +The legal firepower recently accrued by the presidency has also made the judges’ task harder. The job of White House counsel was created to provide the president with sound legal advice; it has ballooned into a battery of lawyers—almost 50 under Barack Obama—whose task is to find legal cover for whatever the president wants to do. The evolution of the proposed Muslim ban into a bar on visitors from some countries was consistent with such machinations. And this is indicative of a wider power grab by the executive, gaining strength for decades, which accelerated under Mr Trump’s immediate predecessors. + +In matters of war, foreign policy and civil liberties, for example, George W. Bush and Barack Obama claimed vast power. And neither the courts nor Congress, even when hostile to the president, seemed able to stop them. If Mr Trump assumes the right to order the execution of American citizens suspected of terrorism or to try someone on the basis of evidence that the state will not divulge, he will merely be following the example of his predecessors. + +It was largely on the basis of this power grab that Bruce Ackerman, a legal scholar, predicted in 2010 that the president would be changed “from an 18th-century notable to a 19th-century party magnate to a 20th-century tribune to a 21st-century demagogue.” The current situation may be worse than he envisaged in “The Decline and Fall of the American Republic”, due to the eagerness of the Republican-controlled Congress to pander to Mr Trump, weakening the main check on the presidency. + +A month before the election, after a video surfaced in which he boasted of his ability to maul women, 16 Republican senators and 28 Republican members of the House of Representatives said they no longer supported him. Yet Mr Trump’s unruly first fortnight in power, including much evidence that the White House has become, as Mr Ackerman foresaw, a “platform for charismatic extremism and bureaucratic lawlessness”, has drawn few whispers of dissent from Republican congressmen. A few senators, led by Ben Sasse of Nebraska, John McCain of Arizona and Lindsey Graham of South Carolina, have ventured criticism, especially over warnings that Mr Trump will lift sanctions on Russia. Yet at the Republican retreat in Philadelphia on January 26th, dominated by talk of health-care reform, tax cuts and deregulation, the cheers for the president were full-throated. “I cheered him myself,” said Mr McCain. “I want him to succeed, I believe he is commander-in-chief, so, where we disagree, I can’t just play whack-a-mole.” + +The reasons for the growth of tribalism in American politics over the past half century—which include the culture wars, introduction of primaries and success of Newt Gingrich, a former Speaker of the House and now Trump henchman—in transforming what had been a consensus-prizing assembly into a parliamentary bear-pit, are so familiar that it is easy to lose sight of how dynamic a process this is. Partisanship does not simply imply deadlock, of the kind that bedevilled Mr Obama. It is steadily eroding the norms that enshrine the cautiously collaborative spirit of the American system, in which much of its defence against authoritarianism resides. + +Thus, for example, the parcel of House rules and conventions known as the Regular Order which was designed to ensure all members, including those of the minority party, got a fair crack at amending and debating bills; it was trashed by one of Mr Gingrich’s successors, Dennis Hastert, who is now in jail for molesting children. Similarly, the filibuster, which was conceived as an emergency device to prevent the minority having egregious legislation and government appointments imposed on it. Once rarely used, it was employed by Democrats to block five Bush appointees a year; it was used by Republicans to block 16 Obama appointees a year, driving the then Democratic leader in the Senate, Harry Reid, to abolish its use in blocking cabinet appointments. If the Democrats try to block Neil Gorsuch, whom Mr Trump nominated for the vacant Supreme Court judgeship on January 31st, the Republicans will probably abolish its use in that case also. And another important check on the tyranny of the majority party will be lost. + +It is striking that such great changes have not caused more disquiet. That probably reflects the fact that while the parties drifted apart, America continued to elect presidents who were more centrist than their parties. Mr Bush’s and Mr Obama’s agendas were in some ways more similar to each other than Mr Trump’s is to either. Moreover both former presidents honoured the constitutional system; when their edicts were checked, they retreated. That is not an attitude Mr Trump’s rhetoric suggests he shares. + +“Can the system that has put a demagogue in the White House now hold him to account?” asks Mr Ackerman. “We don’t know. But I can say that over the past half century its capacity to restrain has been dramatically reduced.” + +This article appeared in the United States section of the print edition under the headline “A crumbling fortress” + + + + + +Playing chicken + +Farmers and Texans would lose most from barriers to trade with Mexico + +Rural, Republican states have the most the lose + +Feb 4th 2017 | WASHINGTON, DC + + + +MEXICO sells America more goods than America sells Mexico, and it enrages President Donald Trump. In 2015 the difference was $58 billion (0.3% of GDP). That is enough, thinks Mr Trump, to justify rewriting the North American Free-Trade Agreement (NAFTA), which allows goods to flow across the Rio Grande free of tariffs. Yet the trade deficit masks bigger figures: America sends almost $240bn in goods to Mexico every year. Were NAFTA to disappear in a renegotiation-gone-wrong, many Americans would pay a price—and not just as consumers faced with dearer avocados. Which American producers would suffer? + +Suppose, optimistically, that each side followed World Trade Organisation (WTO) rules. Then, tariffs would revert to so-called “most favoured nation” rates. (That might sound vaguely friendly, but it simply means neither side can offer a different deal from what it gives to any other WTO member.) By matching these tariffs to trade flows for about 5,000 goods, The Economist has estimated which states’ exporters would be worst-affected by the levies. + +Farm states face the highest charges. Whacking tariffs on malt, potatoes and dairy products would cause Idaho’s exports to Mexico to incur an average levy of nearly 15%. Iowa and Nebraska would pay on average 12.5% for the privilege of sending goods over Mr Trump’s wall. Some products would be particularly badly hit. In 2015 Iowa’s farmers shipped $132m of high-fructose corn syrup to Mexico. Without NAFTA, Mexico would slap a tooth-aching 100% tariff on the stuff. + +Little wonder that the farm lobby tends vocally to support free trade. Yet farm states are lucky to have plenty of customers elsewhere. Idaho’s exports to Mexico are worth less than half a percent of its GDP. Other state economies are more tangled up with Mexico’s. These places should worry about NAFTA’s fate despite facing low average tariffs (see chart). + + + +Among this group, Texas stands out. It faces an average tariff of only 3%, but its exports to Mexico are worth nearly 6% of its GDP (compared with 1.3% nationally). As in Iowa, farmers would suffer. Texan cuts of Gallus domesticus—otherwise known as chicken—would incur the largest tariff bill, $174m, of any single product category in the country. In total, as a percentage of GDP, Texas would pay more than any other state. Michigan also fits this category. Its exports of cars and parts—many of which end up back in America—would attract tariffs averaging only about 5%. But with such shipments totalling $4.1bn, the bill would be painfully large. + +All this gives Mexico some leverage. But Mr Trump has a stronger hand, because Mexican firms depend more on American consumers than vice versa. Part of the problem may be that rural America is already in the bag for the Republicans. Of the 25 states which would pay most in tariffs, as a percentage of their GDP, only four voted for Hillary Clinton in November. + +Mr Trump may not feel any need to obey WTO rules. The White House’s latest trade spat is with Germany, a country already paying WTO tariffs (because no trade deal exists with the European Union). Peter Navarro, Mr Trump’s chief trade adviser, told the Financial Times on January 31st that the “grossly undervalued” euro has allowed Germany to “exploit” America. The White House has also recently hinted that it will adopt a congressional plan to “border-adjust” the corporate tax, which probably breaches WTO rules. If Mexico retaliated with rule breaking of its own, the costs to American producers would be greater—and harder to predict. + +This article appeared in the United States section of the print edition under the headline “Playing chicken” + + + + + +Maligned braceros + +Kicking out immigrants doesn’t raise wages + +At least, it didn’t when America tried in the 1960s + +Feb 4th 2017 + + + +MEXICAN immigrants were said to be holding down wages and taking jobs that could go to honest Americans. The poorest natives were supposed to be suffering most grievously. “We cannot afford to disregard it,” intoned the president. “We do not condone it.” The immigrants were soon sent home and not allowed to return. + +All that happened in the early 1960s. The president was John F. Kennedy; the Mexicans were participating in the bracero programme, which allowed almost half a million people a year to take seasonal work on America’s farms. But the parallels with the present are plain. Donald Trump has also complained that immigrants are keeping Americans from good jobs and has promised to do something about it (another parallel: not since Kennedy has America seen such an astonishing presidential coiffure). So it is a good moment for a bracing new assessment of the bracero scheme and its demise. + +Michael Clemens and Hannah Postel of the Centre for Global Development, and Ethan Lewis of Dartmouth College, have used archived records of American agricultural jobs and wages to test whether Kennedy was right. Did ending the bracero scheme in 1964 in fact lead to higher wages and more work for Americans in the fields? + +Muchachos de campo + +The answer is a firm no. In states where farmers had relied heavily on foreign labour—a group that includes California and Texas—American natives found a few more farm jobs in the mid 1960s. But the rise was small and temporary; within a few years the long decline in agricultural jobs had resumed. And the trend was almost identical in states where there had been no braceros. Similarly, farm wages rose in states where there had been lots of migrant workers, states where there had been few migrant workers and states where there had been almost none (see chart). Ending the bracero scheme seems to have affected American workers not a bit. + +This would seem, as a contemporary put it, to repeal the laws of supply and demand. And the authors rule out two obvious explanations for why the change was so ineffective. Above-board Mexican migrants were not replaced by illegal immigrants: the surge in illicit workers began only in the 1970s. Nor were they replaced by legal immigrants from elsewhere. The explanation is, rather, that farmers swapped Mexicans for machines. + +Some farm jobs, like tomato picking, could be automated fairly easily in the 1960s. And ending the bracero scheme seems to have accelerated mechanisation in the tomato fields of California. Much the same happened with cotton and sugar beet. Other crops, like lettuces and asparagus, still required human pickers. Production of some such crops simply declined. + +These days America has a more direct method of raising labourers’ wages: it forces farmers to pay them more. In California, America’s most important farming state, politicians have ensured that workers will receive at least $15 an hour by 2023. And Manuel Cunha, a citrus grower who is president of the Nisei Farmers’ League, complains about other costly reforms, such as mandatory overtime pay for people who work more than eight hours a day. + +In response, he says, farmers are moving from crops that require careful handling, like apricots—“just look at an apricot and it will turn brown”—to crops that can be harvested by machine. Almond trees are spreading across California. In spring the fields are white with their blossom. In September great machines shake the nuts to the ground and sweep them up. + +This article appeared in the United States section of the print edition under the headline “Man and machine” + + + + + +Workplace productivity + +New research suggests that effort at work is correlated with race + +A trio of labour economists suggest that effort at work is correlated with race + +Feb 4th 2017 + + + +GIVEN the long history of making racial slurs about the efforts of some workers, any study casting black and Hispanic men as lazier than whites and Asians is sure to court controversy. A provocative new working paper by economists Daniel Hamermesh, Katie Genadek and Michael Burda sticks a tentative toe into these murky waters. They suggest that America’s well-documented racial wage gap is overstated by 10% because minorities, especially men, spend larger portions of their workdays not actually working. After rejecting a number of plausible explanations for why this might be, the authors finally attribute the discrepancy to unexplained “cultural differences”. + +Acutely aware of the sensitivity of these findings, the professors delayed publication until after the presidential election. “I knew full well that Trump and his minions would use it as a propaganda piece,” says Mr Hamermesh, a colourful and respected labour economist. The paper may yet be seized on by those who are keen to root out “political correctness” and are perennially unhappy with current anti-discrimination laws. + + + +The study’s method is straightforward. The data come from nearly 36,000 “daily diaries”, self-reporting on how Americans spent their working hours, collected from 2003 to 2012. Relying on the assumption that workers are equally honest in admitting sloth, the authors calculate the fraction of time spent not working while on the job—spent relaxing or eating, say—and find that it varies by race to a small but statistically significant degree. The gap remains, albeit in weaker form, even with the addition of extensive controls for geography, industry and union status, among others. Non-white male workers spend an additional 1.1% of the day not working while on the job, or an extra five minutes per day. Assuming their controls are adequate, that would still leave 90% of the wage difference between white workers and ethnic minorities, which was recently estimated to be 14%, unexplained. This could conceivably be the product of discrimination, or of something else. + +Digging out the cause of this curious gap remains hazardous. Worse treatment by managers of minority workers may itself encourage slacking, says Philip Cohen, a sociologist at the University of Maryland. The authors argue that this point is moot, since self-employed minority workers show similar behaviour, but the difference is not statistically significant. A recent experimental approach, in which cashiers in French grocers’ shops were randomly assigned to more- or less-biased managers, saw greater absences and more sluggish scanning when working under the unfair bosses. It found that eliminating manager bias would increase time spent at work by minorities by an estimated 2.5%. + +Uncomfortable though the topic may be, the authors have attempted a rigorous analysis. Denunciations came quickly, however. Within hours of publication, Mr Hamermesh received vitriolic messages and was labelled a racist in an online forum popular among economists. Mr Hamermesh, an avowed progressive, who refers to Donald Trump only by amusing nicknames and resigned from a post at the University of Texas over a state law permitting the open carrying of firearms, finds this unfair. He notes that Americans work too much. His preferred solution would not be for some groups to work more, but for others to work less. + +This article appeared in the United States section of the print edition under the headline “Colouring in” + + + + + +Homicide + +America's murder rate is rising at its fastest pace since the early 1970s + +An analysis of 50 cities by The Economist + +Feb 4th 2017 + + + +MURDER, which grew rarer for 20 years, is on the rise again. But by how much? In 2015, the number of murders increased by 11% nationwide. During 2016, an escalation of gang violence in Chicago left 764 people dead in a city where 485 had been killed a year before. A dispute ensued over whether the Windy City was simply an isolated example or a barometer of a wider problem. National statistics for 2016 will not be released for eight months, but to get an early sense of the answer The Economist has gathered murder statistics for 2016 for the 50 cities with the most murders. These places contain 15% of the country’s population and around 36% of murder victims. Our numbers show that, in 2016, murders increased in 34 of the cities we tracked. Three cities experienced a spike in deaths sharper than the 58% suffered by Chicago. Since cities tend to reflect the country as a whole, this suggests that the murder rate is rising at its fastest pace since the early 1970s. + +Today’s violence needs to be set in context. Despite the recent uptick, the murder rate in our 50 cities was lower in 2016 than it was in 2007, and for the 26 years before that. Criminologists disagree about why murder became less common. What they do agree on is that the improvement has been uneven. Newark, just ten miles from New York city, has a murder rate that is nine times higher than its neighbour’s. And unlike New York, where murder is at just 15% of its 1990 peak, in Newark the rate has barely budged. + +After the riots in Ferguson, Missouri, in 2014, Heather Mac Donald, author of “The War on Cops”, offered a simple explanation for the rise in murder. The riots were a response to the killing of Michael Brown, a black man, by a police officer. The “Ferguson effect”, Mrs Mac Donald argued, occurred when police officers retreat from cities when relations with the people they serve became bitter, causing crime to go up nationwide. Murders and shootings did increase by 57% in St Louis, a city close to Ferguson, in the two years after Brown’s death. Similarly, when Freddie Gray died in the custody of Baltimore police in April 2015, murders and shootings in the city increased 70% during the year that followed. But we find little evidence for a broader “Ferguson effect” in the rest of the country. Among our 50 cities, data show that in the four months immediately after Brown’s death there was no change in the arrest rate for murder, and just a five percentage-point fall in the arrest rate for gun assaults. This does not look like a widespread retreat by the country’s police forces. + +A stronger message from the individual murder records from the FBI for 50 cities is that the quality of police work, the availability of (usually illegal) guns and the chances of getting caught all matter a lot. This is partly because the motivation for murder is changing. Gang-related killings have steadily increased over the past 35 years, from just one in 100 murders in 1980 to nearly one in ten in 2015. Drug-related murders—which are likely to have some gang-related element—have increased in the past two years, after falling for two decades. In 2015 they accounted for one in 25 murders in big cities. + +When murder rose in the late 1980s, the age of both victims and perpetrators dropped by some three years. Unlike then, the recent spate of killings has seen the age of both victims and offenders continue to rise. The average killer in 2015 was four years older than in the 1990s. Gang-related murderers are, on average, six years older now than they were then. + +This is where variation in law enforcement comes in. Gang murders involving guns are particularly hard to solve. After 20 years of stability, the murder-clearance rate—where a murder is solved because an arrest is made—fell suddenly in 2013 from 60% to 55% in 2015. There are stark differences by race. In 1980, 56% of murder victims in our dataset were black. In 2015, 68% were. In the early 1980s, police solved around 65% of murders regardless of the race or sex of the victim. Among black women and white men, that percentage has changed little. Among black men it fell to under 55% in 2012, and has since dropped to just 47% in 2015. People are more likely to kill if they think they will not get caught, and unsolved killings can set off a cycle of revenge. + +Largely thanks to DNA evidence, police are increasingly capable of solving murders when the victim is attacked with hands, bats or knives. In these cases, clearance rates have increased from 70% to 78% in the past dozen years. Against this trend, when the victim is killed by a gunshot, a suspect is arrested just half the time. In the 1980s the arrest rate for gun-related murders was higher, at 65%. + +Taken together our evidence suggests that police should focus their efforts on tackling gang-related murders where a black man is killed with a gun. Bill Bratton, who has led police forces in Boston, Los Angeles and New York, likens the policing of cities to a doctor treating a patient. While some cities may only require a check-up and a few sessions of therapy once in a while, others need invasive surgery. Among our 50 cities, gun use has increased from 65% to 80% of all murders since 1980. But that number varies enormously by city. Guns were responsible for 60% of murders in New York and 85% of those in Chicago between 2010 and 2015. Whereas New York and Chicago have made similar rates of progress in reducing murders in which a gun is not used, Chicago’s gun-murder rate is five times New York’s. + +This article appeared in the United States section of the print edition under the headline “Spiking” + + + + + +Lexington + +Donald Trump seems to see allies as a burden + +NATO leaders make a pitch to the president + +Feb 4th 2017 + + + +EUROPEAN publishing saw a sensational hit in the 1840s with “The Mysteries of Russia”, a Frenchman’s take on the supposed brutality of Slavic life. Its most lurid tale described a Russian peasant fleeing wolves on a sled, who—unable to outpace the slavering pack—escaped by hurling her children, one by one, to their deaths. Jump to 2017 and modern-day European leaders fear that President Donald Trump takes a rather similar view of allies, notably those in the 28-member NATO military alliance. European politicians, generals and diplomats have scrutinised Mr Trump’s interviews and speeches and concluded that, by instinct at least, should they ever hold America back, he sees allies as potential burdens fit to be thrown, wailing, into the void. + +As part of an America First approach to geopolitics, Mr Trump has made clear that he resents the unconditional nature of Article 5, the treaty clause that treats an attack on one NATO country as an attack on all, committing members to a collective response. As a candidate in 2016, he growled that only those allies keeping a political pledge to spend at least 2% of GDP on defence—“paying their bills” as he put it—should count on America coming to their aid. Both before and after his election he has called NATO “obsolete” because it is not focused on fighting terrorism. Mr Trump has suggested that he might trade away sanctions on Russia, imposed in 2014 in response to the invasion of Ukraine and toughened as recently as December 2016, if “good deals” can be done with President Vladimir Putin—whether those involve agreeing to shrink nuclear arsenals, or encouraging Russia’s unsqueamish armed forces to smite the Islamic State (IS) terror network. + +Mr Trump’s crudely transactional instincts are having at least one salutary effect. He is forcing Western allies to make the case to him, from first principles, for the international order that has protected them since the second world war. Rather than the usual Atlanticist pieties about solidarity and burden-sharing, and windy promises to spend more on defence one day, NATO members, especially Poland and the Baltic states near Russia, are beefing up budgets. With Russian planes, ships and submarines testing NATO defences in the Baltic and North Seas, members have welcomed tanks and troops from America, Britain, Canada and other allies to their territory, with the latest arriving in January. + +Germany, long a laggard on NATO spending, wants Team Trump to understand that, with Britain leaving the European Union, the Atlantic alliance is now the last institutional framework for co-operation, and that, because members train and plan together, they end up buying lots of American kit. In a head-spinning reversal, the French president, François Hollande, lectured America’s president about NATO’s “indispensable” nature in his first phone call to Mr Trump—50 years after his predecessor, Charles de Gaulle, withdrew France from military co-operation with the alliance, a Gallic walk-out only reversed in 2009. + +At NATO headquarters in Brussels, bigwigs are working to craft arguments that might appeal to Mr Trump’s interest-based worldview. The alliance’s secretary-general, Jens Stoltenberg, is a former prime minister of Norway, so knows something about confronting wolves and bears. Interviewed at the alliance’s utilitarian quarters—think linoleum floors and corridor signs reading: “No Classified Discussion In This Area”—Mr Stoltenberg notes that America is the only superpower with so many formal allies, calling that a source of strength which China and Russia lack. “America First does not mean America alone,” he says. Mr Trump wants two things, above all, from NATO: more spending and more help with terrorism, and Mr Stoltenberg calls that reasonable. He stresses that defence cuts have mostly stopped, even if some big countries (eg, Germany) have a long way to go. He points to NATO missions to counter terrorism in Afghanistan and off the Horn of Africa, fly aerial surveillance planes over Iraq and Syria and train the Iraqi and other Arab armies. Nato has established a new intelligence division, and the alliance will soon fly surveillance drones from Sicily. + +The secretary-general believes that multinational alliances, far from entangling great powers in enraging, Lilliputian constraints, offer a thrifty form of deterrence, precisely because a small international force serves as a tripwire for action by many countries. As a young conscript he was one of only a modest force patrolling Norway’s far northern border with the Soviet Union. But the point was that these were alliance forces: nobody doubted “for a second” that if Soviet forces turned up in the border county of Finnmark, all NATO would respond. Generally, grandees take comfort from James Mattis, the cerebral-but-fearsome former marine general chosen by Mr Trump as his defence secretary, who declared at his Senate confirmation hearing that “Nations with strong allies thrive, and those without them wither,” and averred that Mr Putin is trying to “break” NATO. + +More than one art of the deal + +A second NATO bigwig longs to see Mr Trump convinced that it serves America’s interests to have its first lines of defence far across the Atlantic. The official is mystified that the president might trust Russia to honour a deal that would exchange Crimea for help with IS. The same official especially fears a bad arms-control deal, noting the genius Russia has for drafting treaties that curb the West’s weapons systems while leaving its preferred technologies untouched. Above all, this NATO bigwig is astonished that Mr Trump might think it shows ruthlessness to abandon allies, saying that Russians “respect strength and ensuring that your friends are defended.” Amid cold-war nuclear tensions, America never recognised the Soviet seizure of the Baltic republics, Estonia, Latvia and Lithuania; to cede them now to some Putinesque sphere of influence would be “an expression of weakness”, at a time when Russia is working hard to deny NATO access to the Baltic Sea with anti-ship missiles and other weapons. Great powers do not throw friends to the wolves. + +This article appeared in the United States section of the print edition under the headline “Strength in numbers” + + + + + +The Americas + + + + +Argentina and Brazil: The Mauricio and Michel show + +Technology in Cuba: Real virtuality + +Terrorism in Quebec City: A not-so-lone wolf + +Bello: Rage against the bribes department + + + + + +The Mauricio and Michel show + +What to expect when the presidents of Brazil and Argentina meet + +South America’s biggest economies want to work more closely together. That will not be easy + +Feb 4th 2017 | BUENOS AIRES AND SÃO PAULO + + + +PRICKLY nationalism is trending in the rich world, but in South America’s two biggest countries the talk is of partnering up. On February 7th Mauricio Macri, Argentina’s president (shown on the left), plans to visit his Brazilian counterpart, Michel Temer. They will promise to encourage trade and to improve a relationship that is frostier than it should be. There are grounds for hope, but also for scepticism. + +For most of the 20th century Brazil and Argentina were more rivals than partners. In the 1970s they nearly embarked on a nuclear arms race; until the mid-1980s Brazil’s military-strategy textbooks taught that the likeliest war was with its southern neighbour. Brazil’s population and economy dwarf those of Argentina, though Argentines are richer (see chart). That makes it hard to reproduce anything like the Franco-German collaboration that drew Europe together. When Brazil and Argentina agree, it is usually on nationalist ideology rather than on openness. That was the case in the 1950s under the autocrats Getúlio Vargas in Brazil and Juan Perón in Argentina; and during the 2000s, when both countries adopted variants of left-wing populism. + + + +Next week’s summiteers do not look at first glance like the sort to break the pattern of suspicion. Mr Macri was born into a family that made its fortune in Argentina’s protected construction and car industries, though he espouses economic liberalism. Mr Temer’s Party of the Brazilian Democratic Movement is friendly to business, which has traditionally resisted free trade. + +But both leaders have strong reasons to advocate openness. They inherited economies in trouble. GDP shrank in both countries last year (by 3.3% in Brazil and by 1.8% in Argentina). The recession in Brazil, which buys a sixth of Argentina’s exports, makes Argentina’s worse: a 1% drop in Brazil’s growth is thought to reduce growth in Argentina by 0.7% after two years. + +To get out of their slumps, the presidents are undoing the mistakes of left-wing predecessors. After taking office in December 2015, Mr Macri eased currency controls, ended the publication of fake economic data and reached a deal with creditors to restore Argentina’s access to capital markets, which it lost after a default in 2001. Mr Temer, who became president after his predecessor, Dilma Rousseff, was impeached last August, pushed through a 20-year freeze on government spending to shrink a massive budget deficit. Congress, due to return from recess on February 2nd, is to consider his proposal to reform the unaffordable pension system. Stockmarkets in Buenos Aires and São Paulo have rallied since the two leaders took office. + +This consensus on pro-market pragmatism is “unprecedented”, says Paulo Estivallet de Mesquita, who is in charge of Latin American affairs at Brazil’s foreign ministry. Francisco Cabrera, Argentina’s industry minister, agrees. “We are finally on the same wavelength,” he says. Both presidents, the officials say, want deeper co-operation on everything from nuclear energy to fighting organised crime. Most of all, they want to revive Mercosur, a moribund regional trade block. + +Mercosur began promisingly in 1991, with Paraguay and Uruguay as the two other founding members. By 1998 trade among the four countries doubled as a share of the total to around 20%. Mercosur became a customs union, with a common tariff policy, in 1994. But trade within the group remains hampered by exceptions and non-tariff barriers. A series of crises, including a Brazilian devaluation in 1999 and Argentina’s default, made governments reluctant to remove them. Left-wing governments came to power, turning Mercosur into a “rhetorical project”, says Rubens Barbosa, a Brazilian ex-diplomat. That became even truer in 2012, when the group admitted Hugo Chávez’s Venezuela. Trade within Mercosur has shrunk in relative terms, to 13% of the total. + +Mr Temer and Mr Macri want to remove barriers within the group and to strike trade deals beyond it. In December Mercosur suspended Venezuela for violating human-rights and trade standards, another sign of the two leaders’ like-mindedness. That may help the group work better. Donald Trump’s protectionism may offer an opportunity for deals with outsiders. Japan, a signatory of the Trans-Pacific Partnership, from which the United States has now withdrawn, says it is interested in a deal with Mercosur. The European Union has hinted that it would like to conclude a long-delayed agreement this year. + +But the prospects for such pairings are worse than they look. Europe is an especially skittish partner. In October a trade deal between the EU and Canada nearly fell apart after seven years of talks. + +Agreement within Mercosur may also be elusive. Recession makes Argentina’s manufacturers more wary of heightened competition from Brazilian business. Brazilian firms are almost as nervous. Mercosur has made industries in both countries less competitive by shielding them from the rest of the world with high tariffs, says Lucas Ferraz, an economist at FGV, a university in São Paulo. + +Mr Macri is unlikely to make offers on trade before mid-term elections in October, which he hopes will boost his coalition’s position in congress. The political calendar in Argentina is “inopportune”, admits a Brazilian diplomat. After the elections, he thinks, progress could speed up. + +Even with the best intentions, Mr Temer and Mr Macri cannot overcome the awkwardness created by their size gap. Argentina will be forever wary of its giant neighbour; Brazil will never treat it as an equal. However gracefully the two presidents dance, they are likely to tread on each other’s toes. + +This article appeared in the The Americas section of the print edition under the headline “The Mauricio and Michel show” + + + + + +Real virtuality + +In Cuba, app stores pay rent + +An ingenious answer to digital deprivation + +Feb 4th 2017 | HAVANA + +CUBANS, like citizens of most countries in the digital age, are familiar with app stores. But theirs have actual doors, windows and counters. Los Doctores del Celular, a mobile-phone repair shop a few blocks from Havana’s Malecón seaside promenade, is one example. Inside, a Super Mario effigy, kitted out with lab coat and stethoscope, keeps vigil while technicians transfer apps to customers’ smartphones via USB cables attached to the shop’s computers. Although the United States’ embargo on Cuba makes it hard to buy apps and other services online, “Cubans are quickly picking up on app culture,” says Jorge-Luis Roque, a technician. A bundle of 60-70 apps costs $5-10. Customers delete the ones they don’t want. + + + +The bricks-and-mortar app store is an ingenious Cuban response to digital deprivation. The island has some 300 public Wi-Fi hotspots, up from none two years ago. But connections are slow and, especially by Cuban standards, expensive; they normally cost $1.50 an hour. Adhering to the American embargo, app publishers like Apple and Google block downloads in Cuba. Music lovers can browse the iTunes store, but cannot buy songs or apps; Cubans can get the free apps on Google Play, but not the ones that cost money. + +Mr Roque and his colleagues compensate for such faulty connections with human ones. With relatives abroad and access to their credit cards, they can download apps using “virtual private networks”, which can fool app publishers into thinking that they are communicating with, say, Miami. Los Doctores del Celular then sell these on to the shop’s customers. The clients’ phones come from relatives overseas, the black market or Revolico, a website that lists services and second-hand goods for sale. + +Among the most popular apps are Facebook Messenger and WhatsApp, cheaper ways of staying in touch with families living abroad than texting or calling. “We have a very large population of app-literate grannies,” says Mr Roque. Cubans like apps that require little memory or connectivity. Imo, a video and messaging app that can operate with low bandwidth, is a favourite. Students are customers for offline versions of Wikipedia and apps that specialise in biology, maths and other academic subjects. Taxi drivers rely on offline navigation apps like Maps.me. + +Cubans are creators as well as consumers of apps. Isladentro, a directory of services offered by small businesses, is updated monthly and hand-delivered on USB sticks to 100 mobile-phone repair shops. The app’s digital listings, which incorporate photos, reviews and maps, are a big improvement over promotional flyers, says Indhira Sotillo, who manages the listings. These were expensive and messy, and “we all ended up with little pieces of paper everywhere”, she says. + +Isladentro’s imagery is crude by Retina Display standards: maps are low resolution and photos are compressed. That is because the data has to be stored on the phone rather than in the hard-to-reach cloud. Cuban-made apps are thus as thrifty with bytes as the locals are with cash. Isladentro’s developers reduced the memory it occupies from 890 megabytes to 240, says Ms Sotillo. + +Such expedients may be less necessary if data start to flow faster. Cuba’s communist government is letting that happen, but cautiously. It says the Malecón will become a 6km-long (four-mile) Wi-Fi hotspot. In December it reached a deal with Google to put servers in Cuba. That should speed up connections to Google’s services, which account for roughly half of Cuba’s internet traffic. There is talk of introducing mobile data. That would make downloading apps easier, though it would not solve the problem of the embargo or the absence of local credit cards. Neither Cuba’s government nor the Trump administration is in a hurry to free Cubans’ access to data. Until they do, Los Doctores del Celular will remain a bricks-and-mortar app store. + +This article appeared in the The Americas section of the print edition under the headline “Real virtuality” + + + + + +A not-so-lone wolf + +The Quebec City attack exposes Canada’s dangerous right-wing fringe + +Islamophobia is a bigger problem than Canadians thought it was + +Feb 4th 2017 | QUEBEC CITY + + + +TERRORIST attacks in Canada are rare. The worst of recent times came from an unexpected quarter. On January 29th Alexandre Bissonnette, a 27-year-old student, allegedly burst into the Islamic Cultural Centre in Quebec City and killed six Muslims at prayer. The victims included a university lecturer, a pharmacist and a halal butcher. More than a dozen other worshippers were wounded. + +The attack came amid the hue and cry provoked by Donald Trump’s order to ban citizens of some Muslim countries from the United States. Some people, both there and in Canada, thought that the perpetrator was a Muslim of some sort. In fact, according to his acquaintances, Mr Bissonnette is an anti-immigration “white supremacist” who supports Mr Trump. Appearing in court the day after the attack, he was charged with six counts of murder and five of attempted murder. He has not so far been charged with terrorism. + +The murders have focused attention on Canada’s racist fringe, an uncomfortable topic for a country that prides itself on its tolerance and diversity. Before the attack the prime minister, Justin Trudeau, was burnishing Canada’s image by reaffirming its promise to welcome people fleeing persecution and war regardless of their faith. The slaughter in Quebec City, the beautiful and normally tranquil provincial capital, is a reminder that not all Canadians feel as he does. Although hate crimes fell overall from 2012 to 2014, those against Muslims more than doubled. + +Extreme right-wing views seem to be especially common in Quebec, Canada’s French-speaking province. Radio poubelle (“rubbish-bin radio”), as Quebeckers call shock radio, spreads the notion that the province is overrun with Muslims (they account for 3% of the population). In 2007 the small town of Hérouxville (Muslim population zero) enacted an absurd and provocative “code of conduct” that explicitly prohibited burning women alive or beating them to death, as if that were something Muslims in Canada commonly do. In 2013 the provincial government, led by the separatist Parti Québécois, advocated a charter of values that would have, among other things, forbidden public servants from wearing “conspicuous” religious symbols such as hijabs. The measure died when an election was called. After the Quebec City attack, the host of a show on FM93, a conservative Quebec radio station, reported, without confirmation, that an attacker had shouted “Allahu akbar!” (“God is great!”) + +The current Liberal premier, Philippe Couillard, has striven to contain what he calls “the devils in our society”. But even he has had to bow to pressure to curb religious dress. He has presented a new bill to the provincial legislature that would ban anyone wearing a face veil from giving or receiving a public service. + +Some Canadians suggest that the anti-Islamic feeling whipped up by Mr Trump inspired Mr Bissonnette. “I don’t feel the new president in the States is helping any,” said a woman at the vigil in Quebec City to mourn the victims. But the potential for such an attack was there before he took office. A paper by Richard Parent, a criminologist, and James Ellis, a scholar of terrorism, warned last year that Canada was ignoring “the domestic threat from lone-wolf right-wing terrorists”. + +The atrocity has led to soul-searching, even by people who helped stir animus against Muslims. The FM93 host admitted that he had focused too obsessively on the threat from radical Islam. Canada, perhaps, has learnt a lesson. + +This article appeared in the The Americas section of the print edition under the headline “A not-so-lone wolf” + + + + + +Bello + +The Odebrecht scandal brings hope of reform + +Revelations of wholesale bribery may mark a turning-point in Latin America’s battle against corruption + +Feb 4th 2017 + + + +PERCHED on a sandy hill overlooking Lima’s oceanfront is a 37-metre-high statue of Christ, a crude copy of the one that looks majestically down on Rio de Janeiro. It was unveiled in 2011 by Alan García, then Peru’s president. Now Peruvians see it as a monument to corruption. It was built with a donation of $800,000 from Odebrecht, Brazil’s biggest construction company, which has admitted that it paid $29m in bribes to secure contracts in Peru under the three governments that preceded the current one. + +In the largest anti-corruption settlement in history, reached in December, Odebrecht revealed to authorities in the United States, Brazil and Switzerland that over 15 years it had paid nearly $800m in bribes related to contracts for more than 100 construction and engineering projects in a dozen countries. In Brazil, Odebrecht was at the centre of a cartel that gouged Petrobras, the state-controlled oil company; its former boss, Marcelo Odebrecht, is serving a 19-year jail sentence. The settlement showed that in nine other Latin American countries the company paid a total of $388m in bribes to government officials and their associates. + +To do so it set up a Division of Structured Operations—a “bribes department”—which directed the payments through a series of offshore shell companies. Reading between the lines of the settlement it is easy to identify at least two former presidents, a vice-president, several ministers and the bosses of two state oil companies as recipients. No wonder the region has been talking about little else (apart from Donald Trump and some extreme weather) since Christmas. + +Governments and prosecutors have been stung into action. Peru’s president, Pedro Pablo Kuczynski, has asked Odebrecht to withdraw from the country, where its contracts included one for a $7bn gas pipeline. A former deputy minister in Mr García’s government has been arrested. A prosecutor is poised to issue an arrest warrant against Alejandro Toledo, an ex-president who bought several expensive houses after leaving office (like Mr García, he denies wrongdoing). In Colombia a former deputy transport minister has admitted to taking a $6.5m bribe. In the Dominican Republic (bribes of $92m), Ecuador ($33.5m) and Venezuela ($98m), authorities are moving slowly, or not at all. In Panama ($59m) the supreme court is stalling a case against Ricardo Martinelli, a former president who lives in Miami and alleges persecution by his successor. + +Odebrecht was not alone. Other Brazilian construction companies employed similar methods. Corruption in public contracting is common globally, says José Ugaz, a Peruvian lawyer who heads Transparency International, a Berlin-based watchdog. But, he adds, there were some unique features in the Odebrecht scandal. + +The Brazilian companies targeted the decision-makers, preparing the ground by paying for the services of Brazilian political gurus in election campaigns and making political donations as well as outright bribes. Their main method was to win contracts by making low bids and then corruptly secure big increases in costs through addenda—in some cases when the ink on the contract was barely dry. This applied especially to contracts involving public-private partnerships (PPPs), which have become fashionable in the region and are typically used for big, complex projects, from highways to hydroelectric schemes. + +José Luis Guasch, formerly at the World Bank, has found that 78% of all transport PPPs in Latin America have been renegotiated, with an average of four addenda per contract and a cost increase of $30m per addendum. Thus, the cost of a road linking Brazil and Peru rose from $800m to $2.3bn through 22 addenda. Such contract changes can be “fertile ground for corruption”, Mr Guasch says. + +Governments have moved to tighten contracting rules. Chile, Colombia and Peru have all approved laws on PPPs that make it harder for contractors to renegotiate. More is needed. All contracts and requests for changes should be published online, urges Eduardo Engel, who headed an anti-corruption commission in Chile. And tender committees should draw members from outside infrastructure ministries. + +There is a risk that the Odebrecht revelations will undermine faith in democracy and that long-overdue investments in transport infrastructure will suffer further delays. But not all is gloom. In Latin America, “we are in an era in which public opinion is playing a fundamental role” in fighting corruption, says Mr Ugaz. And that means that, this time, there is a good chance that other countries will follow Brazil in punishing it. + +This article appeared in the The Americas section of the print edition under the headline “Rage against the bribes department” + + + + + +Asia + + + + +Uttar Pradesh goes to the polls: A state of shocks + +Police corruption in the Philippines: The usual suspects + +An assassination in Myanmar: Death of an advocate + +How North Korea depicts the South: Blurred derision + +Gambling in Japan: In a spin + +Citizenship in New Zealand: Exceptional + +Banyan: Sun, sand, sentinels + + + + + +A state of shocks + +India’s biggest state goes to the polls + +The results could hobble or exalt the national government + +Feb 4th 2017 | RAMPUR + + + +IF IT were a country, Uttar Pradesh (UP) would rank just ahead of Brazil in population, right next to Britain in land area and close to Lesotho in poverty. Measured by the complexity of its politics, though, India’s most populous state is second to none. With a plethora of faiths, castes and political allegiances, spiced up by garish nepotism, rank criminality and a first-past-the-post voting system prone to wild swings, elections in UP are always raucous and notoriously tricky to predict. + +Yet they are important. The state’s 140m voters directly elect a sixth of the Lok Sabha, the lower house of India’s parliament; those MPs include Narendra Modi, the prime minister, as well as Rahul Gandhi, a high-up in India’s main opposition party, Congress. The legislature that sits in the state capital, Lucknow, also appoints a substantial share of members in India’s upper house, the Rajya Sabha. + +The landslide capture of 73 of UP’s 80 Lok Sabha seats is what clinched a sweeping majority for Mr Modi and his Bharatiya Janata Party (BJP) in the 2014 general election. But the opposition’s lingering hold on the state assembly, dating from local elections in 2012, helps thwart the BJP from gaining enough seats in the Rajya Sabha to pass laws as it likes. + +Small wonder that most eyes are turned to UP, even though four smaller states (Goa, Manipur, Punjab and Uttarakhand) are also heading to the polls in the next few weeks, in a staggered series of elections whose final results will be announced together on March 11th. If the BJP can repeat its success of 2014, it bodes well for Mr Modi’s chances of securing another five-year term at the next national election in 2019. His longer-range ambition of controlling the Rajya Sabha would also draw closer, and with it the prospect of pursuing the less constrained Hindu-nationalist agenda that the BJP’s base craves. + +A poor showing for the BJP, in contrast, could help lift its only nationwide rival, the once-powerful Congress, out of a prolonged tailspin. It could also provide a platform for either of two parties that are strong in the state, the Samajwadi Party (SP) and the Bahujan Samaj Party (BSP), to gain influence in Delhi, India’s capital. Both have won state elections in the past. The BSP’s firebrand leader, Mayawati, pulled off a stunning triumph in 2007 by forging an alliance between her own, low-caste Dalits, who make up 21% of UP’s people, and the state’s Muslim minority, who account for a further 19%. But her frivolous spending—on multiple statues of herself, among other things—paved the way for a comeback in 2012 by the SP. + +Dominated by the Yadav family, the SP is a traditional patronage machine with a strong foothold among mid-ranked castes. (Yadav is also a term for several caste-groups that together make up 9% of UP’s population.) Its current scion and the state’s chief minister, Akhilesh Yadav (pictured), has broadened this base by appealing to upwardly mobile young people, using ambitious development plans and handouts of computers for students, as well as by reaching out to Muslims. + +Such newfangled ways rankle with the party’s old guard, which includes his father and uncle. A tussle over control of the party, including a legal battle over the ownership of its symbol—a bicycle—has given the SP little time to prepare. A last-minute electoral alliance with Congress has prompted further dissent within the ranks. But the younger Mr Yadav is personally popular, and his newfound friendship with Mr Gandhi, whose forebears are somewhat more illustrious, gives their alliance a respectable look. + +Three’s a crowd + +India’s notoriously unreliable opinion polls put the SP/Congress and BJP in a rough tie at just over 30% each, with the BSP trailing slightly behind. But because the voting system can easily tilt on a few percentage points, few experts are willing to call a winner just yet. They are not even sure how Mr Modi’s most controversial policy, the sudden voiding, in November, of 86% of India’s paper currency, will play out. “Demonetisation” caused severe shock, with businesses unable to trade and workers unable to collect pay. Yet even among the poor and hardest hit, many still believe that Mr Modi did the right thing by hitting the rich. + +The BJP, which has a base among upper-caste Hindus, holds some useful cards. Mr Modi is a strong national figure, and his party is less tainted with corruption than its rivals. The just-revealed national budget, unsurprisingly, includes tax breaks for the poor and for small businesses, as well as boosts to spending on rural welfare. The BJP can also rely on grassroots help from Hindu-nationalist groups. Its local candidates have not shied away from pressing religious buttons, well-worn in a state that has witnessed periodic sectarian clashes. The most recent, in 2013, left at least 42 Muslims and 20 Hindus dead. + +But such tactics were tried in state elections in 2015 in the neighbouring state of Bihar, where the BJP had also done well in national elections. They failed after two local parties unexpectedly buried their differences and merged, winning in a landslide thanks in part to a solid Muslim vote. + +Few Muslims will vote for the BJP, leaving the SP and BSP to compete for their favour. But a visit to Rampur, a Muslim-dominated district in the north-west of the state, reveals that at a local level this contest is not even about parties so much as personalities. Kazim Ali Khan, a candidate for the BSP, happens to be the titular nawab of Rampur, whose ancestors once ruled the district as a princely state. Abdullah Azam Khan, the SP candidate, is from a rival clan whose forebears are said to have worked in the royal stables. The two clans have been enemies for generations. + +Mr Khan the nawab, who has switched party allegiance several times over the years, accuses the rival clan of exploiting public office to enrich itself by grabbing land from the rural poor. Speaking in a tent erected in a village, he urges voters to punish the other side. “This is not an election,” he says. “It’s a war.” + +This article appeared in the Asia section of the print edition under the headline “A state of shocks” + + + + + +The usual suspects + +The president of the Philippines admits his war on drugs has been dirty + +Drug-squad officers are implicated in kidnapping, extortion and murder + +Feb 4th 2017 | MANILA + + + +EVEN Rodrigo Duterte, who initiated a bloodthirsty campaign against drug-dealers and drug-users on becoming president of the Philippines last year, and who brooks almost no criticism of his war on drugs, had to admit that the police had gone too far. + +Policemen from the national drug squad, including senior officers, falsely accused a South Korean businessman of involvement in narcotics. They hauled him off to the national police headquarters in Manila, demanded ransom from his family, pocketed the money and then strangled him, burning his body and flushing the ashes down a lavatory. + +After the National Bureau of Investigation, a separate agency, revealed all this, Mr Duterte ordered a pause in the campaign to give the police time to purge their ranks. He now wants the Philippine Drug Enforcement Agency, another independent force, to lead the war, which he says will continue until his term ends in 2022. Ronald Dela Rosa, the director-general of the police, said he was disbanding all its drug squads. He also instructed the entire force to observe a day of prayer (pictured). + +When running for election last year, Mr Duterte promised to rid the Philippines of drugs by whatever means necessary. Even before he took office, the police showed unusual alacrity in anticipating his wishes, mounting operations in which officers often killed suspects alleged to have resisted arrest. In office, Mr Duterte has egged the police on, giving inflammatory speeches calling for the slaughter of drug-dealers, and promising to protect officers who kill suspects. He rebuffed, often rudely, expressions of concern that his campaign might be violating human rights. + +The police’s own records indicate that since Mr Duterte became president in June officers have killed 2,555 drug suspects alleged to have resisted arrest. The figures indicate that another 3,603 killings connected with the drug trade remain unsolved. The victims had often been abducted, bound and tortured. Officers usually ascribe such deaths to fighting between drug gangs or to mysterious vigilantes. But many Filipinos assume that the police and gangs or vigilantes are often one and the same. In the 24 hours after the purge of the police was announced, reports of unexplained killings abruptly ceased. + +Mr Duterte reacted to the scandal in typical fashion, holding a press conference in which he revealed a vague plan through a rambling monologue punctuated by coarse exclamations. “You son of a whore!” he said, addressing himself to the drug-squad officer suspected to be the mastermind of the kidnapping. The president offered a reward of 5m pesos ($100,000) for his capture. “Dead or alive,” Mr Duterte said. “If you bring him dead, the better.” Mr Dela Rosa leant in to whisper to the president that the officer was already in custody. Mr Duterte ploughed on, inveighing against the police force in general, which he described as corrupt to the core. “You use the power to enforce the law and arrest people for shenanigans,” he said. “Almost 40% or so of you guys are habituated to corruption.” + +This assertion—in contrast to the standard mantra that only a small minority of officers are bad apples—drew attention. After all, Mr Duterte was a close ally of the police during his career as a prosecutor and then mayor of the Philippines’ third-biggest city. Until now he has unstintingly supported the tactics the police have used, and reserved expressions like “son of a whore” for their critics. In the unlikely event of the purge of the force leading to prosecutions, the question of whether the president turned a blind eye to murders of drug suspects—or even incited them—is bound to be asked. But if Mr Duterte is worried, he shows little sign of it. “I don’t give a shit,” he insists. “I have a duty to do, and I will do it.” + +This article appeared in the Asia section of the print edition under the headline “The usual suspects” + + + + + +Death of an advocate + +An assassination rattles Myanmar + +The victim was a prominent champion of religious tolerance + +Feb 4th 2017 | YANGON + + + +KO NI was shot in the head at close range in broad daylight. He was waiting for a taxi outside Yangon’s bustling international airport, holding his three-year-old grandson in his arms. A prominent lawyer and adviser to the ruling National League for Democracy (NLD) party, he had just returned from Indonesia, where he had been part of a delegation studying democracy and conflict resolution. + +Mr Ko Ni was also a Muslim and a prominent defender of religious minorities in a country seething with anti-Muslim sentiment. The climate has worsened since attacks on Burmese border guards last October that have been blamed on the Rohingya, a persecuted Muslim minority group. Since then the Burmese army has taken a scorched-earth approach in northern Rakhine state, home to the largest concentration of Rohingya. Human-rights groups and international monitors have accused the army of torching villages and raping and murdering many of their inhabitants. Mr Ko Ni, who was not himself Rohingya, spoke against the law that long ago stripped them of citizenship. That was daring: most people close to the government see the Rohingya as interlopers from Bangladesh, with no right to stay in Myanmar. + +Unsurprisingly, Mr Ko Ni had received death threats from Buddhist extremists. One Muslim activist who preferred to remain anonymous said: “People who speak against the nationalists…people who speak the truth about the situation in Rakhine state…are not secure.” + +Whether Mr Ko Ni’s killer targeted him because of his religion and as a prominent advocate of tolerance remains unclear. Police arrested a 54-year-old named Kyi Lin shortly after the killings. (Taxi drivers at the airport had chased the fleeing gunman; he shot one of them dead before being overpowered by others.) Little is known about him. Initially he claimed to come from Mandalay, the country’s second city, but police later said that was untrue. + +The Irrawaddy, an independent news website, reported that Mr Kyi Lin told police he had been hired by a man named Myint Swe, who had promised to reward him with a car. Both men have reportedly dabbled in illegal antiquities-dealing, but no clear motive has emerged for the murder. Police later said they had arrested Mr Myint Swe near the border with Thailand. + +But that makes Myanmar no less anxious. Some NLD members suspect Mr Ko Ni was chosen for his religion—not out of bigotry, but to undermine the government through religious discord. Nyan Win, an NLD executive-committee member, said in a televised interview that he feared further assassinations. Some see a military link: Mr Ko Ni was a constitutional expert, and had advised the government on reforms to the charter, imposed on the country in 2008 after a sham referendum, that gives vast and unaccountable power to the army. A press release from the president’s office after the murder claimed its intent was to “destabilise the state”. + +If so, it has failed—for now. After Mr Ko Ni’s murder, friends and relatives gathered near his home in Yangon’s colonial district. “We are very angry”, said one Muslim NLD member, “but we will control our anger.” Ko Lay, a 43-year-old sailor who lives nearby, said Mr Ko Ni “did so much good for the country, but we cannot always know if people love him or hate him.” + +This article appeared in the Asia section of the print edition under the headline “Death of an advocate” + + + + + +Blurred derision + +How North Korea depicts the political upheaval in the South + +Propaganda outlets cheer the protests against Park Geun-hye + +Feb 4th 2017 | SEOUL + + + +“NOTHING can stop the South Korean people’s righteous fight to drive out the darkness of dictatorship and…usher in the dawn of a new democracy.” The phrase could almost be mistaken for the rallying cry of one of the millions of South Koreans who have joined weekly protests to unseat their democratically elected president, Park Geun-hye. But it actually appeared last month in North Korea’s Rodong Sinmun, the official newspaper of a dark dictatorship. + +Since an influence-peddling scandal surrounding Ms Park erupted in October, the chance to jeer at her misfortune—North Korea routinely insults her as a “miserable political prostitute”—has been too good for its propagandists to pass up. They have published news and pictures of the demonstrations with impressive speed, and cheered Ms Park’s impeachment in December by South Korea’s National Assembly. + +Public protests against the government of the South are “pure gold” for the North’s regime, says Sokeel Park of Liberty in North Korea, a group that works with defectors. Yet denigrating the South is not as easy as you might think. In its latest footage KCNA, the North’s official news agency, gleefully showed the serried ranks of protesters in Seoul, but blurred the city’s skyscrapers, presumably in an attempt to hide from the North’s downtrodden subjects the prosperity over the border. + +But the government in the North no longer has a monopoly on information. More North Koreans are tuning in to foreign radio broadcasts, and South Korean dramas are smuggled into the country on USB drives. The prominent coverage of the South Korean protests in Rodong Sinmun, meanwhile, has inadvertently made them a sanctioned topic of discussion in the North, says DailyNK, a news outlet with informants there. + +The protests against Ms Park have also stirred debate among many defectors living in the South. Lee Jeong Hyeok, who escaped from North Korea in 2002 as a teenager, has taken to the streets. It was his first real opportunity, he said, to act out the democracy that he had been taught in the South’s textbooks. His North Korean girlfriend took photographs to show her future children an event that was “unimaginable” when they were living in the North. Even those Northerners who know Rodong Sinmun is distorting the news, says Mr Lee, struggle to understand what is really happening. + +Another North Korean defector who demonstrated in Seoul says that, while in the North, he had read about mass protests in South Korea out of curiosity, yet had never seen them as relevant to his situation. He had voted in North Korea (it holds sham elections) as well as in the South. But the recent protests, he said, had brought home to him that democracy must be fought for, too. + +This article appeared in the Asia section of the print edition under the headline “Blurred derision” + + + + + +In a spin + +Japan’s government has legalised casinos, but they are not popular + +Nobody wants to live near a gambling resort + +Feb 4th 2017 | TOKYO + +4% of GDP + +MOST forms of gambling are banned in Japan, but many Japanese still like to have a flutter. Over ¥23trn ($203bn) is waged annually on pachinko, a noisy variant of pinball. Add in lottery tickets, plus horse, boat and bicycle racing—the only other types of betting allowed—and you have a vast industry. Pachinko players alone spend more than the combined betting revenue of all the casinos in the world’s top gambling resort, Macau. + +Japan’s government has struggled to convince citizens that the current strictures should be relaxed. When the Diet legalised casinos in December after years of political wrangling, a poll by NHK, the country’s public broadcaster, put support for the move at just 12%. The leader of Komeito, a party with Buddhist roots that is part of the governing coalition, voted against the bill. Critics said it would exacerbate problem gambling and attract “anti-social forces”, a euphemism for yakuza gangs. + +Shinzo Abe, the prime minister, insists casinos will be only one part of family-friendly resorts, with hotels, shops and conference facilities. In an anaemic economy, his enthusiasm is not hard to understand: the construction of these huge complexes could generate ¥5trn in economic activity—with another ¥2trn a year once they have opened, largely from increased tourism, estimates Makoto Yonekawa of the Daiwa Institute of Research, a think-tank. + +Foreign casino-operators have already begun lobbying for a slice of this pie. Las Vegas Sands, MGM Resorts and Hard Rock Café International are among the companies looking for licences and local partners. Bureaucrats are crafting more legislation to decide how many resorts to permit and where to put them. This, say analysts, is where the road could get bumpy. + +Some politicians want to deter locals from visiting casinos by imposing an entry tax. Pachinko’s seedy reputation is one reason. Though the industry has shrunk by about 40% from its peak 20 years ago, there are still about 11,000 pachinko parlours—and thousands of addicts. Public hostility recently forced the mayor of Yokohama, one of three proposed sites for the resorts, to begin back-pedalling on her support. Investors fear outbreaks of NIMBYism elsewhere, too. In a recent survey 75% of Japanese said they would not like a casino to be built near their homes. + +Officials in Osaka have come up with a way around this problem: they want to build a resort on an artificial island in Osaka Bay. Well-heeled tourists, mainly from China, are expected to be the main punters, says Susumu Hamamura, a Komeito politician. About 20m people visited Japan last year. The government wants to double this by 2020, along with the roughly ¥3.5trn that tourists spend annually. + +Even if the casinos get off the ground, Japan faces stiff regional competition from Macau, Malaysia and Singapore. What will give the country an edge, predicts Mr Yonekawa, is Japanese culture. The proposed sites for another mooted resort, in Hokkaido, Japan’s northernmost island, are onsen (hot spring) retreats, he points out. “Japanese cuisine and hospitality will win many customers.” + +Mr Hamamura agrees. He voted for the casino bill despite opposition from his own party boss because he believes it will be good for Japan. “Over 140 countries have legal casinos; why should we be left out?” he asks. Even he accepts, however, that most Japanese are “emotionally” against casinos and will need to be convinced. He plans to win them over, he says, by explaining one of the overlooked benefits of the resorts: they will give foreigners something to do at night. + +This article appeared in the Asia section of the print edition under the headline “In a spin” + + + + + +An exceptional citizen + +How Peter Thiel became a New Zealander + +And why it has caused a fuss + +Feb 4th 2017 | Sydney + + + +“IT WOULD give me great pride to let it be known that I am a New Zealand citizen,” Peter Thiel wrote in his application to become one in 2011. “I have found no other country that aligns more with my view of the future”. Yet Mr Thiel, a German-American billionaire, seems to have managed to contain his pride in the five years since the application was approved. His status only became public knowledge last month, after documents detailing a property purchase were dug up by the New Zealand Herald, a newspaper. + +The news provoked outrage in certain quarters. Would-be New Zealanders must normally spend the better part of five years living in the country before becoming citizens. Mr Thiel had visited the country only four times when he lodged his application. The government of the day granted him citizenship nonetheless, under a rule that allows the normal requirements to be waived under “exceptional circumstances”. + +Mr Thiel’s application, released by New Zealand’s government on February 1st, stressed his contribution to the economy. Mr Thiel had set up a venture-capital fund in Auckland before applying for citizenship, and had invested $7m in two local ventures. As a Silicon Valley luminary (he co-founded PayPal, a payments firm, and sits on the board of Facebook) he was well placed to assist Kiwi startups. He would, he promised, devote “a significant amount of my time and resources to the people and businesses of New Zealand”. His foundation had also donated $1m to an appeal for the victims of a recent earthquake. + +Mr Thiel is not the first person to have the residency requirement waived: the government sometimes hurries through citizenship for sportsmen who might represent New Zealand internationally, for instance. But his case, critics maintain, gives the impression that passports can be bought—something the government denies. + +Many Kiwis shrugged. The country already grants residency to investors, and seems to have done well out of Mr Thiel. Some of the consternation may stem from Mr Thiel’s politics: he was a big donor to Donald Trump’s election campaign. He has also voiced support, unlike most in Silicon Valley, for Mr Trump’s new restrictions on immigration. Whether he would advocate exceptions to those rules is not clear. + +This article appeared in the Asia section of the print edition under the headline “Exceptional” + + + + + +Banyan + +Okinawa: tourist paradise and bristling fortress + +As geopolitical tensions grow in East Asia, so does the discomfort of the Ryukyu Islands + +Feb 4th 2017 + + + +AT THIS time of year pack ice grinds the beaches of northern Japan, but in the Ryukyu Islands in the south farmers are cutting sugar cane. The Japanese archipelago spans an immense distance: from Cape Soya in northern Hokkaido a smudge on the horizon reveals Sakhalin in Russia’s Far East. From the tiny island of Yonaguni, last in the Ryukyu chain, you can sometimes make out the mountains of eastern Taiwan. + +Over lunar new year the Ryukyu Islands, which together make up Okinawa prefecture, were heaving with holidaymakers. Okinawa has a growing reputation as an island paradise for all tastes. Package tours poured families from mainland China into the airport at Naha, the capital, for winter sun, duty-free malls and hearty stir fries—spam is a speciality. Some 400km farther south, a cruise ship nosed between coral reefs into the main port of Ishigaki island and disgorged Taiwanese tourists in search of the local black pearls. A few adventurers even made it to Yonaguni, where they dived among the hammerhead sharks or stood on the quay in Kubura to watch the fishermen bring in their daily haul of swordfish. The island lies in the middle of the life-giving Kuroshio current, the western Pacific’s Gulf Stream. + +Among security types, Okinawa is known as a garrison island. The roar of F-15s is certainly a feature of life in Naha, but most visitors get little hint of the military presence. The sense of peace is not a figment of tourist brochures. Pacifism is hard-baked into Okinawans’ sense of themselves. Masahide Ota, a former governor, once said the main features of the Ryukyu kingdom, which was independent until Japan annexed it in 1879, were a “devotion to peace and an absence of weapons”. Okinawans love to mention Basil Hall, a naval captain who visited in 1816 and marvelled at the kingdom’s mildness, decorum and seeming lack of weapons. Hall later called on Napoleon Bonaparte in St Helena and perplexed the exiled emperor with tales of the Ryukyus. “But without arms, how do they fight?” Napoleon exclaimed. + + + +In truth, there were arms. But squeezed between bigger neighbours, China and Japan, it suited the Ryukyuans to promote a sense of Confucian virtue. And peace is a fragile thing, even today. Just as Hokkaido once lived on a cold-war tripwire, facing the Soviet Union, so the Ryukyu Islands are caught up in East Asia’s 21st-century geopolitics. Yonaguni is little more than 100km from Taiwan, and it is hard to imagine how conflict between China and America over that country would not draw in Japan. Yonaguni is also the closest inhabited Japanese island to the Senkaku islets, which, with growing ferocity, China claims (and calls Diaoyu). On a hill behind Kubura a chain-link fence and CCTV are going up around a new base for 160 troops from Japan’s Self-Defence Forces. The base is to conduct surveillance of the surrounding seas and skies. Yonaguni has become the new tripwire. + +The base was controversial among the 1,500 islanders, over two-fifths of whom voted against it. Even those in favour blame Japanese right-wingers, especially a former Tokyo governor, Shintaro Ishihara, for inflaming the Senkaku dispute. In the end, strong-arming by the central government and a promise of economic benefits from the base won the day. + +More bases are planned for the southern Ryukyus. A heliport is mooted for the more populous Ishigaki, from which the Senkakus are administered. All the cement and barbed wire may even help to convince the sceptical Donald Trump that Japan is pulling its weight in its alliance with America. Shinzo Abe, the hawkish prime minister, needs little encouragement. + +Few people in Okinawa think open hostilities with China are imminent, or perhaps even likely. But many resent the way geopolitical tensions and a hawkish government are spreading the curse of military encampments: previously, the southern Ryukyus had but one small radar base. + +That stands in contrast to the northern end of the chain. Okinawa, with 0.6% of Japan’s land area, plays host to three-fifths of all America’s facilities in Japan and half of the 53,000-odd American troops. Nearly a fifth of the main island is given over to American bases. For 70 years, Okinawa has been the fulcrum of America’s military presence in Asia. + +The Americans first came in the 1850s, with gunboats opening the Ryukyus as well as Japan to trade. They reappeared at the end of the second world war, fighting their way towards Japan proper. The Japanese authorities, who before the war had tried to snuff out the local culture and language, mounted a furious defence in Okinawa to save the “home islands”. Roughly a quarter of Okinawans died, caught in the brutal fighting. The survivors emerged to find Americans their masters. America then fostered not just a taste for spam, but also a distinct local identity, hoping to dampen Okinawans’ desire to rejoin Japan. When Okinawa did revert in 1972, the bases stayed. The resentment feeds an Okinawan sense of separateness, and even a tiny independence movement. + +Spam today, spam tomorrow + +In elections, Okinawans vote overwhelmingly for candidates opposed to the American bases and to the noise, accidents and crime associated with them. This week the governor of Okinawa, Takeshi Onaga, flew to Washington to convince the Trump administration not to carry on with the construction of a hugely unpopular new base for American marines. Yet the American defence secretary, James Mattis, was also on his way to Japan, reportedly to emphasise the firmness of the alliance and the need for Japan and America to work together. + +In Tokyo Mr Abe’s allies speak witheringly of Okinawans, but shy away from suggesting bigger bases in the heartland. Okinawa considers itself doubly colonised, by both Japan and America. Sadly, with regional tensions only likely to rise, its continued subjugation seems assured. And the curious mix of tourist paradise and bristling fortification will grow ever more jarring. + +This article appeared in the Asia section of the print edition under the headline “Sun, sand, sentinels” + + + + + +China + + + + +Local government: Call the mayor! + +Hong Kong: Trembling tycoons + + + + + +Call the mayor! + +Chinese officials use hotlines to take the public’s pulse + +So why are there so many protests? + +Feb 4th 2017 | BEIJING + + + +IN 1375 a secretary in the justice department wrote a long petition to the Ming emperor. Bored by the endless preamble, the Son of Heaven had the functionary dragged to the court and flogged. That night he read to the end of the petition and discovered four sensible proposals crammed into its final page. He ordered them to be enacted the next day. + +Xi Jinping, China’s president, is less attentive to petitions (called “memorials to the throne” in imperial times) than was his Ming predecessor. China still has bureaus where citizens can appeal against official injustice, but the government discourages people from using them. It often locks up those who try, putting them in “black jails” without trial. But if appeals to the emperor now fall on deaf ears, humbler forums for complaint are encouraged. The two main ones are known as “mayor’s mailboxes” and “12345 hotlines”. + +There are mayor’s mailboxes on the websites of every municipal government, usually indicated by a button next to a biography of the official with an exhortation to “write me a letter” (or, in practice, send an e-mail). The hotlines allow people to be put through to a local bureaucrat. The first one was set up in 1983. Since then they have proliferated, creating an unco-ordinated tangle. But the past few years have seen rounds of consolidation. Shanghai announced a single hotline in 2013. Guangzhou, in the south, did so in 2015. The unified ones all use the same number, 12345. + +Such services may sound parochial, but they play an important role. Chinese officials find it hard to gauge what citizens are thinking. There is no free press and no elections to give them clues. Internet chatter is censored automatically, often before criticism reaches officials’ ears. So e-mails to the “mayor” and hotline calls provide rare and valuable guides to public concerns about a wide range of issues: local governments handle everything from social housing to education and health care. The Communist Party hopes that the hotlines and e-mails will make local administrations more accountable, more efficient and—perhaps—more popular. But do they? + +In recent months state media have been promoting what they call a model example—the 12345 hotline in Jinan, capital of the coastal province of Shandong. It was launched in 2008, has about 60 operators on duty and gets nearly 5,000 calls a day, rising to 20,000 on busy ones. In 2014 Wang Zongling of the Standardisation Administration, which sets national standards, looked at the hotline’s impact on the government in Jinan. Before it was set up, the city had 38 hotline numbers for contacting different departments. That was “chaos”, the administration said. + +The single hotline brought some order. The average time for handling a complaint fell from 10-15 days before it was set up to five afterwards. The share of calls put through to the right person rose from 80% to 97%. Partly because it is now possible to call city hall without wasting your time, enquiries rose from just over 4,000 a day between 2008 and 2011 to almost 5,000. Since the 12345 operators were better trained than before, they processed calls more quickly and the cost per call fell. + +But Jinan is a special case. A survey last year by Dataway Horizon, a consultancy in Beijing, found wide variations in the quality of service. In Beijing, Shanghai and Chongqing, which are among the richest cities, all hotline calls were put through right away. In Yunnan, Tibet, Shaanxi and Qinghai—less-developed provinces in the west—only a fifth of calls were even answered on the first attempt. A meeting last July to introduce a hotline in Wuxi near Shanghai reportedly degenerated into a squabble between a deputy mayor and district councillors who argued that it would waste money. In nearby Hangzhou the hotline crashed last month when parents flooded it with calls complaining that school exams were too difficult. + +In an attempt to improve widely varying levels of service, the central government recently laid down rules for running 12345 hotlines. Starting in July, calls must be answered within 15 seconds, at least one person on duty should be able to speak a language other than Mandarin and the line should be open 24 hours a day. + +Perhaps because they are often poorly run, hotlines do not seem to be making local governments any more popular. These form the most despised tier of authority in China: many of the most egregious face-to-face abuses of power take place locally. In Jinan, despite all those efficiency gains, the survey found that “enquirer satisfaction” was only 1.3% higher after the hotline was established than before it. The spread of hotlines has had no discernible impact on the rise of anti-government demonstrations, most of which are aimed at local governments (see chart). + + + +But it is possible that there would have been even more protests without the safety-valve of hotlines. State media say one of their roles is to help with “stability maintenance” by alerting officials to potential flashpoints. Many public protests relate to bread-and-butter issues, such as the ones a local newspaper said were most frequently raised by callers to the 12345 hotline in Nanjing, a southern city: the management of apartment blocks, the water supply, illegal construction, violations of consumer rights and shoddily built housing. + +The same topics flood mayors’ mailboxes (both virtual and real). Diana Fu of the University of Toronto and Greg Distelhorst of the Massachusetts Institute of Technology have trawled through over 8,000 letters and e-mails sent to mayors’ offices in nearly 300 cities. They found that environmental problems headed the list of concerns. Four of the top 15 involved various kinds of dispute over property. + + + +Arguments over property are among the most frequent causes of unrest. Local government is largely financed by selling land, which is often seized without fair compensation. Very few people dare to protest explicitly about political issues, but all politics is local—and in China local politics is all about land. + +Calling for the resignation of a mayor may be risky, but the correspondence read by Ms Fu and Mr Distelhorst shows that complainants are not shy about pointing fingers at lower-level officials. “Zhou’s behaviour is despicable,” seethes one writer about a civil-service examiner caught up in a bribery case in Zhaotong city, Yunnan province. Another, from Shaanxi province, asks: “Is it possible that the budget for road repairs has been swallowed up by corruption (just a suspicion)? I would not rule out reporting it to the media…” + +For bureaucrats, such accusations may be a salutary surprise. Most officials spend their lives talking to one other about party business, not listening to the public. Over the next few months, party committees across the country will hold tens of thousands of meetings to discuss preparations for a five-yearly congress in Beijing later this year. As some officials admit privately, none of these gatherings will help them understand any better what most of the country is thinking. Perhaps the hotlines and mailboxes may. + +This article appeared in the China section of the print edition under the headline “Call the mayor!” + + + + + +Trembling tycoons + +A billionaire’s disappearance rattles Hong Kong + +Chinese agents may have crossed the line, again + +Feb 4th 2017 | HONG KONG + +Where now, Xiao? + +XIAO JIANHUA was not alone among mainland China’s mega-rich in his fondness for the Four Seasons hotel in Hong Kong’s financial district. It describes itself as “perfect for the business elite”, among whom Mr Xiao certainly ranks. Hurun Report, a rich-list compiler, named him last year as China’s 32nd wealthiest man, with a fortune of $6bn. He is reported to have made the hotel his home, on and off, since 2014. Yet the “luxurious and stylish sanctuary” of its suites, and Mr Xiao’s team of female bodyguards, may not have proved enough to protect him. He has now disappeared—snatched, very possibly, by mainland China’s security agents. The mystery has compounded worries in Hong Kong about the reach of China’s heavy-handed police. + +Hong Kong’s own police, who supposedly enjoy independence from China’s, say they were told on January 28th that the mainland-born businessman had vanished. They say records show that Mr Xiao (pictured) crossed the border the previous day. On a social-media account operated by his company, Tomorrow Group, Mr Xiao said he was receiving medical treatment abroad and denied having been abducted to the mainland. But the South China Morning Post, a newspaper in Hong Kong, quoted a source close to him as saying the businessman was indeed in mainland China. Another unnamed source, quoted by the Financial Times, said Mr Xiao had called his family and told them that he had been taken by mainland police and that he was fine. + +The case has drawn considerable attention in Hong Kong. Memories are fresh of the abduction a year ago of a bookseller from Hong Kong to the mainland by Chinese agents. He, as well as three associates who were detained while visiting the mainland, were eventually allowed to return to Hong Kong. But another colleague who was snatched from Thailand remains in custody on the mainland. China’s treatment of the booksellers appeared to be related to their trade in gossipy works about China’s leaders. It was the most blatant trampling on the autonomy of Hong Kong’s police since the territory’s return to China in 1997—at least, until now. + +Mr Xiao is unlikely to draw as much sympathy. But businesspeople in Hong Kong will be watching closely. Some of them are familiar with the thuggishness of China’s police through their dealings on the mainland. With its far fairer legal system, Hong Kong has long been viewed as a haven—not least, by mainlanders like Mr Xiao (whose statement on social media this week said that he was also a Canadian citizen and had a diplomatic passport from an unnamed country). + +It is unclear why the mainland’s police would want to question him. But his connections with China’s political elite, as well as his vast wealth—his company has business interests ranging from finance to information technology, property and mining—have made him a topic of much speculation. During the Tiananmen Square protests of 1989 Mr Xiao led a pro-government student union at Peking University, the nerve centre of the unrest. That loyalty may have helped his rise to become “something of a banker for the ruling class”, as the New York Times described him in an investigative report in 2014. + +If, as local media suggest, President Xi Jinping’s anti-corruption drive has spilled over into Hong Kong, along with its settling of political scores, then Hongkongers would be right to be nervous. Many people on the mainland will be watching closely, too. As Mr Xiao’s career appeared to show at least until recently, it pays in China to be politically attuned. + +This article appeared in the China section of the print edition under the headline “Trembling tycoons” + + + + + +Middle East and Africa + + + + +Trade restrictions: African Queen + +Street vendors in Africa: An unfree trade + +Foreign currency in Nigeria: No dollars today + +Jordan: Not much might in the Hashemites + +Iraq: Mosul after Islamic State + + + + + +African queen + +The hardships of doing business in Africa + +What a century-old German ship says about trade in the modern continent + +Feb 4th 2017 | ON LAKE TANGANYIKA + + + +IT IS a little after 10pm when the world’s oldest serving passenger ship makes her first stop. Rolling on a gentle swell, small wooden boats pull up alongside its riveted hull. Lights from the deck illuminate the packed vessels; ropes are flung up and tied to railings. Women in billowing wraps come on board with their suitcases, legs briefly flailing as they are pulled through the hatch. Men load enormous bags into a net hanging from a crane. In the other direction, boxes of gin, batteries, bags of clothes and, at one point, a sewing machine, are passed down perilously by hand. Miraculously, nothing and nobody falls into the black water. + +So goes trade on Lake Tanganyika, the world’s longest lake. The ship is the MV Liemba, brought to central Africa as the Graf Goetzen by German colonists in 1913. Originally built in Lower Saxony, she was transported in 5,000 boxes by rail to Kigoma on the north-eastern shore of the lake and reconstructed there. During the first world war she served as a troop transporter and gunboat until 1916. After several skirmishes, fearing capture by either the British or the Belgians, her crew scuttled her. In 1924 she was fished up again and renamed. Among other distinctions, she is thought to be the inspiration for the gunboat Luisa in C.S. Forester’s novel, “The African Queen”. + +Over a century later, the Liemba still carries passengers from Kigoma to Mpulungu in Zambia and back. She remains one of the largest boats on any of Africa’s lakes, just behind the MV Victoria further north. Operated by the Tanzanian government, the ship has become a vital link for people around the Great Lakes region of Africa, one of the continent’s most densely populated areas, with tens of millions of people. Yet her importance to the regional economy is also indicative of the failure to spread investment in infrastructure away from coastal cities to the places where most Africans still live. + +Apart from a few tourists, most of the roughly 300 passengers on the Liemba are traders. “Almost every person travelling has their cargo,” says the captain, Titus Benjamin Mnyanyi. Middle-aged women buy third-class tickets for 34,000 Tanzanian shillings (about $15), stow their merchandise wherever they can and find spots to sleep on deck. On its way to Zambia, the ship stops at around a dozen places in Tanzania, where they sell their wares. On your correspondent’s journey, the main cargo was tonnes of tiny dried fish and pineapples, which filled almost every space not occupied by a human. + +Many of those on board want to make their fortunes. Among them is Fidelis Uzuka, a 38-year-old from a village near Kigoma. Having farmed ginger most of his life, he recently switched to trading it. He pays around 1,000 shillings per kilogram in Kigoma; in Lusaka, Zambia’s capital, he can sell it for four times that. On the way back, he brings second-hand clothes. In a black notebook he diligently writes down the prices of different commodities at different places along the route. “I want to be a big businessman, like Donald Trump or Richard Branson,” he says, before asking where he can buy books to help him learn how to make money. + +Yet the passengers are not only vendors; they are also customers. As she moves through the darkness, the ship is a continuous festival. Downstairs, men at trestle tables do a roaring trade in cheap cigarettes, plastic packets of konyagi (a cheap Tanzanian spirit) and biscuits throughout the night. According to one crew member, there are prostitutes and drugdealers on board (your correspondent failed to prove this allegation, but the close attention of Zambian customs officials suggests they believe it too). + +Normally the Liemba takes three days to reach Zambia. But like much trade in central Africa, there are often interruptions. Sometimes the ship is stranded by mechanical failures, forcing traders to take their wares onwards in small wooden boats instead. At other times, normal service has been disrupted by war. In 2015 thousands of Burundian refugees were moved from beaches just across the border in Tanzania south to Kigoma—600 crammed on the decks at a time. “It was easy to fit them,” says Mwendesha Louloeka, one of the sailors. “They had almost nothing with them.” In 1997 the ship repatriated thousands of Congolese who had fled the bloody war there. + + + +What is the future for this floating temple of commerce? The vibrant Liemba is proof of the abilities of entrepreneurs—they have made this ship their own. But it is also testimony to the poverty of infrastructure in the region. Kigoma was envisaged by the German colonists as a major inland city; the province is indeed now home to over 2m people. Yet there has been almost no new investment since the Germans left after their defeat in 1917. The railway station is still among the grandest in east Africa, but the tracks are poorly maintained. There are no unbroken tarmac roads entering the city. Getting to Bujumbura in Burundi, the nearest big city, only a little over 100 miles away, takes six hours by bus. + +This region could be rich. The soil around the lake is some of the most fertile in Africa; the lake is full of fish. From Mpulungu in Zambia a good road leads all the way to Lusaka, from where buses and lorries head to South Africa. Lake Tanganyika could link the manufacturers of southern Africa to the rapidly growing consumer markets of east Africa. Instead, in 2014 Zambia accounted for just 0.6% of Tanzania’s imports. The Tazara railway line, built by Maoist China in the 1970s to connect the two countries, is another link that has fallen into disrepair. + +According to the African Development Bank, inter-African trade made up just 16% of the continent’s total trade in 2014. That figure has increased from 10% in 2004, but it is still low compared with other regions of the world. Among the bits of the continent that lose out worst are landlocked countries and areas such as Lake Tanganyika, which are far from both their capital cities and the sea. Poor infrastructure is not the only problem—bureaucracy and other trade barriers matter, too—but it is a significant one. According to a World Bank review, “landlocked developing countries, especially in Africa, bear exorbitant transport costs”. Those aboard Liemba would doubtless agree. + +This article appeared in the Middle East and Africa section of the print edition under the headline “African Queen” + + + + + +Unfree trade + +Cracking down on African street vendors + +Messy but vital + +Feb 4th 2017 | KAMPALA AND KIGALI + +You can’t do that here + +RUNNING away is part of life, explains Meddy Sserwadda, eyeing the road. Each morning he buys belts from a market in central Kampala, the capital of Uganda, selling them on a downtown street for a small profit. He works without a licence—the city government has stopped issuing them—and flees when enforcement officers approach. “They don’t want us to make the city dirty,” he says, crouched beside some fugitive mango-sellers. Officials have twice confiscated his goods. His cousin, who is also a street vendor, has spent time in prison. + +For Mr Sserwadda, and many others in Africa, street vending is a means of survival. But city authorities see it as an eyesore, a nuisance and a threat. Those in Lagos, in Nigeria, try to ban it entirely with a thuggish unit called “Kick Against Indiscipline”, which mostly seems to kick small traders. In Harare, the capital of Zimbabwe, they try to wash away vendors with water cannon. In Kampala, which launched a fresh crackdown in October, arrested traders are swiftly churned through a city court. Most cannot afford to hire a lawyer or pay fines of up to 600,000 shillings ($170). Prison sentences are as long as three months. + +In Kigali, Rwanda’s fastidious capital, a street vendor died in May after being beaten up by security officers, who were later jailed. Hundreds of others are detained without trial in so-called “transit centres”, says Human Rights Watch, an American NGO. One shoe-seller says she was held for a month, not knowing when she would be released, and given one cup of maize a day. She rolls up her skirt to show where her leg was beaten with a stick. “They call us thieves,” says another hawker, who recalls seeing street children as young as seven in detention. Rwandan officials deny abuse, insisting that the centres “rehabilitate” vendors and direct them to retraining. + +Behind such repression lies a vision of the ideal city as a showcase for investment. Kigali aspires to be a manicured hub for finance and technology; its mayor has called vendors “an impediment to cleanliness”. Many other governments see the urban poor as a threat to public order. There is hostility, too, from shopkeepers, who say that vendors dodge taxes and undercut their prices. “They’re just disorganised people and they steal our customers,” grumbles Rogers Lutaaya, who runs a clothes shop in Kampala. + +That is only partly true. Vendors slot into complex supply chains, often obtaining their wares from formal suppliers and paying tax on purchases of stock. Most would prefer a market stall to trading on the streets. But new markets are often built in unattractive places, with prohibitive rents. One development in Kampala is half-empty, cut off from downtown shops by a cacophonous road. In this respect, Kigali does better: it has recently built 12 new markets, including one by the bus station, and waived rent and taxes for a year. + +The best schemes involve vendors in their design. In the post-apartheid revamp of Warwick Junction, a transport node in Durban, South Africa, traders were consulted on projects like a traditional-medicine market and purpose-built cubicles for cooking cows’ heads. Vendors’ groups also urge governments to recognise their rights in law (as India did in 2014). Street trade, they note, is central to urban life: it accounts for 12-24% of employment in the informal sector in a sample of African cities, says WIEGO, a network of researchers and workers’ groups. + +Arrests will not stop street vending, because there are not enough jobs: only a sixth of Africans under the age of 35 are in formal employment. Ask Agnes Nambowa, who has sold books in Kampala for 20 years. After a prison spell last year she went straight back to the streets, hawking titles like “Trump: think like a billionaire” and “Nice girls don’t get rich”. She is poor, she says, and has no choice. + +This article appeared in the Middle East and Africa section of the print edition under the headline “An unfree trade” + + + + + +Dollar desert + +Nigeria’s foreign-currency shortage + +Despite a float of the naira, it is hard to change money + +Feb 4th 2017 | LAGOS + + + +DURING Muhammadu Buhari’s stint as military ruler of Nigeria in the 1980s, Fela Kuti, a well-known Afrobeat musician, was locked up for the offence of possessing foreign currency, to the tune of £1,600. More than three decades later Mr Buhari is back in office, elected this time, and the issue of who gets access to foreign currency, and what they can do with it, remains as contentious as ever in Nigeria. + +Last November officers of the State Security Service (SSS), the main domestic intelligence agency, arrested money-changers in cities across the country, in what was seen as a response to the tanking value of the naira on Nigeria’s foreign-exchange markets. The central bank has for months tried to keep the naira stable at about 315 to the dollar, after supposedly floating it last June, but a shortage of foreign currency combined with high demand for dollars has caused the naira to lose as much as 38% of its value on the black market since then. + + + +The intervention of the secret police has created in Africa’s second-largest economy “an even blacker [ie more secretive] market,” says Pabina Yinkere, a director of Vetiva Capital Management in the commercial capital, Lagos. The supply of dollars began drying up when the price of oil, Nigeria’s main export, collapsed in 2014. The problem worsened in 2016 after militants, unhappy with the grinding poverty of Nigeria’s main oil-producing region, started blowing up pipelines. + +Nigeria is highly dependent on imports, with everything from the petrol in pumps to the rice in supermarkets coming from abroad. Importers need foreign currency to pay their invoices, but dollars, pounds and euros are hard to find. Banks theoretically sell dollars for around 315 naira each. But few branches have any to sell, or are willing to part with what they have. + +Before the intervention of the SSS, dollars could be bought at money-changing bureaus for around 465 naira each. But with the SSS breathing down their necks, money-changers are now forced to accept no more than 400 naira for each of the few dollars they have. Many traders have dropped out of the dollar business entirely, says Abubakar Ruma, a leader of a group of currency-exchange operators in the capital, Abuja. Changers cannot make money if they sell greenbacks at the enforced rate. + +The public has reacted similarly. People with foreign currency prefer to hold on to the bills they have in the hope that the rate will improve. That has starved the money-changers of cash, and the weekly dollar sales held by the central bank, says Mr Ruma, are not enough to ease the crunch. The raids by the SSS have not entirely banished the higher rates. Some money-changers will still buy dollars for 490 naira or above, from people they trust. + +What to do? Higher interest rates would help attract foreign investors. A negotiated settlement with the militant groups would allow oil production to return to full capacity, bringing Nigeria back to its position as Africa’s largest producer of crude. Most important, the central bank could also help by being more transparent about the naira’s value. It claims to have floated the currency back in June, but few believe its value is truly free of interference and the persistence of a black market suggests the opposite. If investors could be sure of the naira’s stability, they might start bringing in the dollars the country so sorely needs. + +This article appeared in the Middle East and Africa section of the print edition under the headline “No dollars today” + + + + + +Not much might in the Hashemites + +Jordan plays it safe + +Despite the urging of allies, the kingdom is curbing its regional ambitions + +Feb 4th 2017 | AMMAN + + + +IF ONLY he knew which way to turn. Last week King Abdullah of Jordan went to Moscow to meet Vladimir Putin, the Russian president, to discuss how to stabilise Syria under the continued rule of Bashar al-Assad. This week he has been in Washington, DC, anxious to explore how Jordan might help President Donald Trump to implement his idea for carving up Syria into safe zones. + +Playing great powers off against one another has long been a Hashemite trademark. King Abdullah’s great-great-grandfather, the Sharif of Mecca, dallied with both the Ottoman and British empires, before going for British gold. Before the invasion of Iraq in 2003 King Abdullah received envoys from both Saddam Hussein and President George W. Bush, auctioning his backing to the highest bidder. Now, as funding from Saudi Arabia dries up, the king (via the Russians) is in contact with the Saudis’ arch-rival, Iran, whose forces operate on his borders with Syria and Iraq. He once sounded the alarm over a “Shia crescent” extending Iran’s influence to the Mediterranean; now that it is materialising he is coming to terms with it. + +Such realism goes against advice from a think-tank in Washington, which last year called on him to create “Greater Jordan” by incorporating “elements of Iraq and Syria” into his kingdom. The region’s ungoverned spaces would have a pro-Western monarch, argued the Washington Institute of Near East Policy, thus stemming Iran’s westward advance. In return, Jordan would gain two major rivers, oilfields and large phosphates deposits. + +But King Abdullah knows the dangers of overreach. Over the past century, the Hashemites called themselves Kings of the Arabs but lost two major capitals, Damascus and Baghdad, and Islam’s three holiest places, Mecca, Medina and Jerusalem. The king’s grandfather, Abdullah I, raged against his confinement to a desert kingdom like “a falcon in a canary’s cage”. But he lost half of Palestine, and his son, King Hussein, lost what remained. By contrast, the current king is the first monarch “with Jordanian, not regional ambitions”, says Oraib Rantawi, a political analyst. + +Take Syria. King Abdullah was the first Arab leader to urge Mr Assad to quit. With Saudi and Qatari largesse, he funnelled intelligence, weapons and cash to favoured rebels in Syria’s south. But the fighting sent around a million refugees into Jordan, so priorities shifted from offensives against the regime to defending the border from global jihadists, many of Jordanian origin. With few exceptions, the rebels in Syria’s “Southern Front” have held their fire against the regime for almost a year. + +Some Jordanians still toy with the idea of deploying the Southern Front to create a sanitised belt 10km wide on Syria’s side of the border, which might meet Mr Trump’s demand for safe havens. It would offer protection from refugees and Islamic State, whose suicide-bombers have tried to ram Jordan’s border four times since the summer, most recently last week. + +But senior Jordanian generals suggest co-operation with Mr Assad’s forces. Were the Southern Front to pull back from Nassib, a former border crossing that is now closed, Jordan could reopen its northern crossing. With the highway from north to south back in Mr Assad’s hands, trade might again flow from Turkey via Jordan to the Gulf. Jordan’s economy could then profit from Syria’s eventual reconstruction. + +In Iraq, too, Jordan is weighing the aspirations of émigrés against relations with the existing regime. Rich Iraqis who decamped to Amman, the capital, after the American invasion of 2003 have helped turn it into one of the region’s fastest-growing cities. Living in mansions, Sunni tribal sheikhs exiled from Anbar, Iraq’s western province, broadcast appeals on their satellite networks to establish an iqlim, or autonomous region for Sunni Arabs, as the Kurds have done. Connected to Jordan, together they would build a Sunni bulwark against Iran’s advance west. But Jordan’s trade with Anbar pales in comparison with the potential of ties with Iraq as a whole. A bilateral agreement to build a pipeline from Basra’s oilfields to Jordan’s port of Aqaba promises to turn the kingdom into an energy hub. + +On Palestine King Abdullah is most cautious of all. Palestinian nationalists shot his grandfather dead after he split Jerusalem with the Zionists in 1948. His father, Hussein, only just survived a Palestinian revolt in September 1970. Abdullah prefers to keep out of the fray. Jordan First, he tells the Palestinians who make up most of his population, rejecting a larger West Bank role. Better a falcon in a cage than a bird shot down in mid-flight. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Not much might in the Hashemites” + + + + + +Liberating Mosul + +Schools are reopening in Mosul, after two years of jihadist rule + +The hard work of restoration begins + +Feb 4th 2017 | TULLABAN + + + +LIBERATION has proved dangerous for the residents of Tullaban, a farming hamlet on the outskirts of Mosul. Last autumn, as the push began to wrest the city from Islamic State (IS), villagers returned home to find no sign of the jihadists who had seized it back in 2014. Nor, though, could they spot the booby traps and mines the IS fighters had laid as they fled, hidden in the doorways of houses and buried in nearby fields. + +The villagers learned the hard way. “When the IS first came this way, we fled because we knew how they were beheading people,” says Ali Jassem, 80, standing among houses flattened by air strikes and pockmarked with machinegun fire. “Then we came back, and four people were killed while going inside their homes.” + +Tullaban, which used to be on IS’s front line, is now being cleared of landmines and booby traps by the Mines Advisory Group, a British charity dedicated to making post-conflict zones safe again. Although it still resembles a battlefield, both the hinterland of Mosul and eastern parts of the city itself are seeing life return to normal in areas freed from IS. It is also happening faster than most dared hope. + +On January 15th 30 schools reopened in the east of the city after being cleared of booby traps by Iraqi security forces, allowing 16,000 children to start classes again. Some of them have had no education at all since IS took over Mosul, once Iraq’s second-largest city, in June 2014. Others have been in IS-run madrassas where, besides studying the Koran, boys trained with weapons and girls did little more than cook and clean. + +“The reopening of the schools has been by public demand,” said Peter Hawkins, the senior official in Iraq for UNICEF, the UN children’s fund. “For children it’s a chance to have some structure back to their lives. For teachers, it’s a chance to get back to work and earn salaries.” + +As well as seeing children in school uniform heading to class amid piles of rubble, Mr Hawkins, who has toured eastern Mosul, reports that shops and restaurants are open again. He has even seen a football match. At least 22,000 people have already returned to their homes, most bused in from the vast UN-run camps for displaced people that stretch across the surrounding hills. + +The traffic is not all one way. When The Economist visited eastern Mosul’s hinterland last week, new arrivals were still coming, including a bedraggled group of 30 men who had trekked for four days from IS-held territory. Overall, though, the exodus never reached the apocalyptic levels predicted. Before the offensive, which began its main phase in October, it was feared that up to 250,000 of east Mosul’s 400,000 people would flee. The figure is nearer 180,000. + +The situation contrasts with last year’s operations to flush IS from Fallujah and Ramadi, west of Baghdad, which suffered much greater damage, and where many civilians still languished in camps six months after the cities were retaken. In Mosul, Mr Hawkins says, the Iraqi army has used gentler tactics, and encouraged civilians to stay in their homes rather than flee. The fact that so many houses remained occupied also made it harder for IS to booby-trap them—unlike what happened in villages like Tullaban, which was emptied of civilians. Nobody, though, thinks the end is in sight. For while eastern Mosul is now largely retaken, western Mosul, with around 750,000 civilians, remains largely in IS hands. For those returning to their homes, many difficult questions remain. Why did my neighbour stay in Mosul while I fled? Was he an IS sympathiser, and if so, should I let my children play with his? Mr Hawkins is promising counselling and education to minimise the inevitable sense of mistrust, hoping to ensure that children who were exposed to IS influence are not ostracised. + +Yet if Fallujah and Ramadi are anything to go by, healing the wounds will be a job not just for aid agencies and politicians, but for more traditional actors like Iraq’s tribes; in Ramadi and Fallujah tribal councils are still debating exactly what happened. If similar gatherings get under way around Mosul, there will be just as much to talk about. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Mosul after Islamic State” + + + + + +Europe + + + + +Scandal in France’s presidential race: A wide open contest + +Ukraine’s intermittent war: Probing attack + +Migrant entrepreneurs: Startup-Kultur + +Russian history online: Networking revolution + +Business in authoritarian Turkey: Tigers in the snow + +Charlemagne: Silent partner + + + + + +Labour of love + +A scandal throws France’s presidential race wide open + +François Fillon admits no wrongdoing in putting his wife on the payroll, but his campaign is faltering + +Feb 4th 2017 | PARIS + + + +“WE HAVE nothing to hide…I am afraid of nothing!” With indignant words and a clenched fist, François Fillon put on a muscular display of defiance at a campaign rally in Paris this week. Before a crowd of 15,000 flag-waving, mostly grey-haired supporters, the centre-right presidential candidate promised to make France the “greatest European power” within ten years, to put “liberty” at the heart of his campaign, and to declare a war on both poverty and “radical Islam”. The event pointed to unity as well as force. Alain Juppé, the Republican primary candidate defeated by Mr Fillon, applauded his rival from the front row. But the choreography could not conceal an awkward fact: Mr Fillon’s candidacy is in trouble. + +Just days previously, the former prime minister had been the favourite to win the two-round presidential election in April and May. But the decision on January 25th by judicial investigators to launch a preliminary inquiry into misuse of public funds by Mr Fillon, after revelations in a newspaper, shocked his supporters. His, after all, was the candidacy of probity and honour. One cannot lead France, he declared during the Republicans’ primary last year, unless one is “beyond reproach”. It turned out that Mr Fillon had employed his wife, Penelope, possibly from as far back as 1988, for a total pre-tax sum of over €800,000 ($863,000), as well as two of his children when they were law students. This is not illegal; one French deputy in five employs a relative. But the newspaper could find no trace that Mrs Fillon had done any work. And in an old video clip she said had never been her husband’s assistant. + +Declaring himself “scandalised” by the “misogyny” behind the allegations, and the victim of “slander”, Mr Fillon argued that his wife had done a real job—“correcting speeches”, constituency work and so forth. Investigators are also looking into pay she received from a publication for which she appeared to write little. It was all highly suspicious, fumed Mr Fillon, that such slurs should emerge only months before an election. Investigators this week summoned the couple for questioning, and searched Mr Fillon’s parliamentary office. To show that he had nothing to hide, the candidate said he would stand down if he were put under formal investigation. + +“Penelopegate” has rudely shaken the Fillon camp. His lieutenants have been dispatched to the airwaves and are preparing to counter fresh allegations if they arise. But in private those close to him recognise that Mr Fillon has a big problem. Polls are beginning to show him neck-and-neck with Emmanuel Macron, an independent centre-left candidate who is capturing cross-party enthusiasm. Some are thinking through what would happen if Mr Fillon had to step down. Mr Juppé has ruled out taking his place, but might be persuadable. Nicolas Sarkozy, the former president, would lack credibility after being roundly beaten in the primary. The party has no procedure for selecting a substitute. + +For now, Mr Fillon remains defiant. “His image has been affected, but not yet his core support,” says Bruno Jeanbart of OpinionWay, a polling group. Out in the draughty exhibition hall by the Paris ring road which served as a venue for Mr Fillon’s rally, his supporters were divided. The faithful, including retired folk from northern France who had travelled to Paris, insisted it was all a political slur. Others were disappointed. “I was taken aback, because I didn’t expect it from him,” said Sylvianne Bessière, a retired air hostess: “But he’s got the best programme, and is the only one who can sort the country out.” + + + +Mr Fillon’s difficulties have turned an already uncertain election into one of the most unpredictable in recent history. French voters, it seems, are in no mood to settle into a stable pattern. Only seven points now separate the leading three candidates in first-round voting: Marine Le Pen of the populist Front National, Mr Macron and Mr Fillon (see chart). Each has a chance of making it into the second round. This is extraordinary: just six months ago, neither Mr Fillon nor Mr Macron was considered a credible contender by his own camp. + +Such fluidity suggests that caution is also in order when it comes to the left, which elected Benoît Hamon as the Socialist Party’s candidate on January 29th. A former backbench rebel, he crushed Manuel Valls, his former boss and ex-prime minister, in the primary run-off, with 59% of the vote. Mr Hamon remains an outsider, drawing roughly 15% in national polls. His promises to shorten the working week to 32 hours, legalise cannabis and finance a universal monthly income of €750 through a tax on robots were dismissed by his detractors—including Mr Valls—as Utopian reverie. Despondent Socialists have begun to defect to Mr Macron. Yet Mr Hamon’s unexpected victory gives him that elusive political quality, momentum. And he appeals to metropolitan, white-collar voters who are worried about green issues, consumerism and the future of work. + +Internal divisions and doubts about their candidates are now testing the unity of both the Socialists and the Republicans. These are the political families that have alternated in the presidency since the Fifth Republic was founded in 1958. French party politics has seldom appeared so unstable. And the chief beneficiaries right now are those who have identified themselves as political insurgents against the established party system: Mr Macron, and the populist Ms Le Pen. + +This article appeared in the Europe section of the print edition under the headline “A wide open contest” + + + + + +Tanks for calling + +As America and Russia talk, Ukraine fights + +New clashes in Donbas may show Vladimir Putin testing Donald Trump + +Feb 4th 2017 + +Tanks for calling + +THE timing was ominous. A day after the first, seemingly cordial telephone conversation between Donald Trump and Vladimir Putin, the residents of Avdiivka, a small town on the Ukrainian side of the conflict line with Russian-backed separatists, heard the echoes of heavy artillery fire. The conflict that Russia started in Ukraine in 2014 has been partly frozen over the past two years. But on January 29th it flared up with renewed force. + +Three days later, on February 1st, the bodies of seven Ukrainian soldiers killed in the fighting were brought to Kiev. Maidan, the city square that was the site of the country’s 2014 revolution, once again swelled with people. Social media were filled with messages of support for soldiers and calls to collect supplies for victims, along with videos of shelling by Russian Grad rockets. Ukrainian soldiers received text messages seemingly sent by the Russian side: “You are just meat to your commanders”. Since then other Ukrainian positions along the front line have been attacked, and the death toll is rising. + +Following the flare-up, international ceasefire monitors blamed “combined Russian-separatist forces” for starting the attacks. Ukrainian forces have been creeping forward into the “grey zone” in recent months, seizing positions in several small towns. The rebels might have felt it was an opportune moment to hit back. + +Whoever started the fighting, its victims are the 16,000 civilians in Avdiivka, who for days were cut off from electricity in temperatures of -20°C, and those in the rebel-held territories, many of whom lack water. The violence underscores the difficulty of implementing the Minsk Two ceasefire agreement, signed in February 2015, which the two sides interpret differently. For Kiev and its Western backers, the agreement is a path for Ukraine to reassert control over its east and close its border with Russia, followed by a decentralisation of power to its regions. Russia, however, sees the agreement as a way of retaining control over eastern Ukraine, keeping the border open and demanding that Kiev recognise Donbas as an autonomous region within Ukraine. This would give Russia permanent influence over Ukraine’s future. + +From Ukraine’s point of view, the violence was a warning to its American and European allies, several of whom are considering lifting sanctions against Russia. “Who would dare talk about lifting the sanctions in such circumstances?” asked Petro Poroshenko, Ukraine’s president, who cut short a visit to Germany to attend to the crisis. Mr Poroshenko later said he would call a national referendum on joining NATO—which Russia considers a red line and NATO itself does not want. + +Doubting the Donald + +Many Russia-watchers think Mr Putin may have stoked the conflict to test his new American counterpart. Mr Trump has promised better relations with Moscow. Mr Putin may have decided to probe his willingness to turn a blind eye to Russian actions in Ukraine, the two countries’ main point of conflict. The Russian government says Ukraine was discussed in their telephone conversation. + +In the past, significant escalations of fighting were quickly met by the White House or the State Department with strongly worded statements condemning Russian aggression and supporting Ukraine’s territorial integrity. This time it took the State Department two days to say it was “deeply concerned”; it did not mention Russia. This response was duly noted in Moscow. “Washington does put the blame on the [separatist] republics, does not express support for Kiev and does not say a word about Russia’s role,” Rossiiskaia Gazeta, the official government newspaper, wrote jubilantly. + +The Kremlin also noted the American failure to react to the news that Alexei Navalny, an opposition leader and anti-corruption campaigner, would be tried again on trumped-up charges. Mr Navalny pledged to run against Mr Putin in next year’s presidential elections, but is now likely to observe Mr Putin’s re-election from a prison cell. + +This article appeared in the Europe section of the print edition under the headline “Probing attack” + + + + + +Startup-Kultur + +Immigrants are bringing entrepreneurial flair to Germany + +While native Germans are growing less eager to start businesses, new arrivals are ever more so + +Feb 4th 2017 | BERLIN + + + +GERMANS are famous for hard work and efficiency, but not necessarily for entrepreneurialism. They are less likely to start a new business than Americans, Swedes or even the French (see chart). But the country’s recent wave of immigration appears to be giving its startup rate a boost. In 2015, 44% of newly registered businesses in Germany were founded by people with foreign passports, up from just 13% in 2003. In all, about one-fifth of those engaged in entrepreneurial activity were born abroad. + +That is likely to grow with the arrival of over a million refugees in the past two years. The number of self-employed people with a Middle Eastern background rose by almost two-thirds between 2005 and 2014, according to René Leicht and Stefan Berwing, researchers at the University of Mannheim. “There has been a marked increase in founding activity by people from Syria, Iraq and Afghanistan,” says Maik Leonhardt of IHK Berlin, an association of small and medium enterprises. + +Some refugees come to Germany already dreaming of running their own firm. Iyad Slik’s family has a confectionery company in Syria, and when he arrived in Berlin three years ago he set out to recreate it. “We broke even for the first time last year,” says Mr Slik. His mission to convert Germans to eating candied fruit and nougat squares stuffed with Syrian pistachios is succeeding: he already counts KaDeWe, a high-end department store, and the glitzy Hotel Adlon among his clients. + +Others become entrepreneurs by default. Hussein Shaker, a computer programmer, did not plan to set up a business when he came to Germany: “I just wanted a job in tech.” Stuck in a call centre, Mr Shaker realised that he was not the only one among his Syrian friends working beneath their qualifications. Together with partners from Berlin’s startup scene, he set up a website for refugees, MigrantHire, which currently matches 13,000 job-seekers with about 2,000 open positions. + +Entrepreneurship among immigrants stems partly from difficulty gaining access to the regular labour market. Many start-ups in the past decade were launched by eastern Europeans whose countries had been admitted to the European Union but who did not yet enjoy full working rights in other EU states. Self-employment offers better prospects for ambitious immigrants, says Mr Leicht: “Their incomes rise faster, they tend to do things more in line with their qualification and discrimination is less of a problem.” Applicants with foreign-sounding names find it harder to get job interviews with German firms. In a survey of migrant entrepreneurs by KfW, a German development bank, a third said they saw no other way to make a living. + +Entrepreneurship is certainly not easy in Germany: the World Bank ranks it a dismal 114th in the world for ease of starting a business. Integration programmes in job centres mostly direct immigrants into language classes and regular employment rather than encouraging them to do their own thing. And navigating the bureaucracy can be hard. “There are so many rules and legal issues that nobody tells you about,” says Mr Shaker. Indeed, Germans themselves have become more reluctant to become entrepreneurs, especially with the unemployment rate low. The number of self-employed natives fell by 3% from 2005 to 2015. + +One reason immigrants are more enthusiastic about start-ups is that they are, by nature or necessity, risk-takers. For the many who have fled civil war, crossed the Mediterranean and walked across much of Europe, dealing with German bureaucracy and obtaining a line of credit hardly seem daunting. + +This article appeared in the Europe section of the print edition under the headline “Startup-Kultur” + + + + + +Network of the revolution + +A Russian social-media site is reliving 1917 + +Project 1917 lets Vadimir Lenin post status updates + +Feb 4th 2017 | MOSCOW + + + +IN LATE January Tsar Nicholas II posted a status update from his residence near Petrograd: “The frost got stronger again. I didn’t stroll for long.” Vladimir Lenin, in exile in Zurich, wrote on a friend’s wall, musing on war and pacifism. Anna Akhmatova posted her latest verses. Leon Trotsky checked in from New York, where, he writes, “the aesthetic theory of cubism rules on the streets, and the moral philosophy of the dollar in the hearts”. + +As the centenary of Russia’s revolutions approaches, tens of thousands of Russians have been consuming these bits of the past through Project 1917, an “edutainment” initiative that recreates the fateful year in the form of a social network. Posts draw from historical archives, letters and diaries. Users can access a stand-alone site or subscribe to updates on Facebook and VKontakte, the Russian equivalent; an English-language version will launch this month. The project is the brainchild of Mikhail Zygar, the former head of Dozhd (“Rain”), a liberal television network. + +The network immerses its users in the daily minutiae of the period. A table displays “current” exchange rates and the prices of meat and grain. A widget notes the weather in Petrograd, as St Petersburg was then called, and Moscow (-24ºC and -21ºC at midnight on February 1). Clips from newsreels and excerpts from newspapers offer a window onto a world at war. Announcements advertise exhibitions and performances by Kandinsky, Diaghilev, Mayakovsky and Stanislavsky. “To feel the era, you have to forget about how it ended,” says Kirill Solovyev, a historian at the Russian Academy of Sciences, a consultant on the project. + +To watch this all transpire in real time is to experience people’s inability to grasp the history they are living. The tsar records banal details of his daily routine—breakfasts, meetings, walks—like a 17th-century monarch trying to inhabit the modernist age. Lenin plots revolution from Zurich, while doubting he will live to see it. Many can sense that change is coming, and want to hasten it along. But none imagines the enormity of what actually unfolded. + +In today’s Russia, perceptions of 1917 are muddled. For 70 years the October Revolution served as the founding Soviet myth. Then Boris Yeltsin rejected the communist legacy. Vladimir Putin often refers favourably to the Soviet era—and to that of the tsars. In general Mr Putin is allergic to revolutions, whether in Ukraine, Syria or elsewhere. + +This has left the developers of Project 1917 a bit of ideological space. Apart from some activity at the Russian Historical Society, a body headed by the director of Russia’s foreign intelligence service, and at the Russian Orthodox Church, the memory of 1917 has been left mostly free of top-down interference. “There’s no official line,” says Mr Zygar. + +This article appeared in the Europe section of the print edition under the headline “Networking revolution” + + + + + +Tigers in the snow + +Turkey’s purges are hitting its business class + +Once among the country’s most dynamic entrepreneurs, the “Anatolian Tigers” are having their firms confiscated + +Feb 4th 2017 | KAYSERI + +Fewer moguls on the slopes + +THE snow on Mount Erciyes sparkles in the early afternoon sun. The skiing on this volcano nearly 4,000 metres high is among the best in Turkey. At the bottom of one slope, a group of secular Turks dance and drink beer outside a new hotel. On the other, alcohol-free, side of the mountain, local families and Arab tourists drink tea. The entrance to a nearby mosque is littered with ski boots; young women in headscarves pelt each other with snowballs. + +Down the mountain in Kayseri, the view is considerably bleaker. Not long ago, this industrial city was touted as the birthplace of the Anatolian Tigers, a generation of conservative businessmen who helped create Turkey’s economic boom in the 2000s. Today many of the Tigers are behind bars in the mass arrests that followed an attempted coup last July. The boom is over. Exports from the region have fallen by at least 4% over the past year. Investment has dried up. For the local economy to recover, says Mahmut Hicyilmaz, head of Kayseri’s chamber of commerce, “our industrialists and our investors need a sense of security.” + +They do not have it. Roughly 40,000 people have been arrested across Turkey since the summer, and an increasing number are businessmen, from construction magnates to owners of chains of baklava stores. Their crime, say prosecutors, was to have bankrolled the Gulen movement, a religious sect accused of masterminding the coup. Armed with emergency powers, the government of President Recep Tayyip Erdogan says it has taken over more than 800 companies worth a combined $10bn since July. A court in Istanbul recently confiscated the assets of dozens of writers and journalists arrested because of suspected Gulenist sympathies. Officials say they are fighting the financing of terrorism. Critics call it state-sanctioned plunder. + +A binge of purges + +In Kayseri, scores of entrepreneurs—including the heads of Boydak Holding, the region’s biggest employer—have been arrested for financing Gulenist banks, schools and foundations. Boydak, which owns three of Turkey’s biggest furniture companies, has been seized by the state. More than 60 businessmen face terrorism-related charges. Some have fled abroad. Mr Hicyilmaz himself was detained for over two weeks last August. The worst-kept secret in town, says a local shopkeeper, “is that nearly everyone here was in business with the [Gulenists] at one point or another.” The other open secret is that they were once encouraged to so by Mr Erdogan’s government. The ruling Justice and Development (AK) party had been the Gulenist movement’s biggest cheerleader for nearly a decade. Their alliance collapsed in 2013 after AK accused Gulenists inside the bureaucracy of engineering a corruption scandal that involved some of Mr Erdogan’s closest associates. + +At the sprawling industrial zone outside Kayseri, business appears to go on as usual. Employees at one Boydak factory say they have not been affected by the takeover. At a number of other companies seized by the state, however, production has stalled. “These seizures are catastrophic,” says Seyfettin Gursel, the head of Betam, an economic think-tank in Istanbul. “There’s no definitive court decision, and no legal process.” Officials say that owners will get their companies back if they are cleared of terrorism charges, but analysts fear most firms will be auctioned to Mr Erdogan’s loyalists. + +Though the purge has homed in on alleged Gulenists, it has spread uncertainty through the economy. Ulker, a food giant, saw its shares plummet after a pro-government columnist suggested it may have ties to the movement. One of the country’s biggest conglomerates, the Dogan group, suffered a similar fate after police detained several of its executives. Emergency rule is eroding belief in property rights and the rule of law, says Ozgur Altug, chief economist at BC Partners in Istanbul, a brokerage. Businesses are reluctant to work with new suppliers. “I might want to make a deal with you, but I don’t know if the government will seize your assets the next day,” says Mr Altug. + +All this puts additional pressure on an economy already weakened by terrorist attacks, the war in neighbouring Syria and growing corporate debt (see article). GDP in the third quarter of 2016 was down 1.8% from a year earlier, though it is thought to have rebounded modestly in the fourth. The lira has lost about a fifth of its value against the dollar since November. That makes it harder for Turkish companies to service the dollar-denominated debts with which they are laden. The central bank could defend the lira by raising rates, but Mr Erdogan has pressured it to keep them low, forcing it to resort to more complex and less effective mechanisms. Foreign investment has fallen by nearly half since 2015. + +The political backdrop is not reassuring. On January 21st parliament adopted a block of constitutional amendments intended to cement Mr Erdogan’s grip over the country. The changes would dismantle Turkey’s parliamentary system by abolishing the office of prime minister, transforming Mr Erdogan’s 1,100-room palace into the centre of all executive power, and allowing the president to handpick ministers and MPs. The entire package will be put to a referendum in April. + +It is not clear when the government will begin auctioning off seized firms. The risk is that the economy may gradually come to resemble Russia’s, where political loyalty is the price for keeping a slice of the pie. “It is like watching a piece of snow roll down a mountain,” says a veteran civil servant ousted in one of the purges. “You think it won’t hit you, until you realise it’s becoming an avalanche.” + +This article appeared in the Europe section of the print edition under the headline “Tigers in the snow” + + + + + +Silent partner + +Norway’s deal with the EU still holds lessons for Britain + +Sooner or later Britain will face trade-offs between sovereignty and access + +Feb 4th 2017 + + + +NORWAY’S peculiar relationship with the European Union—it abides by most EU rules but has little say in writing them—might be a democratic outrage, a diplomatic relic and an international oddity, but it once worked out well for Torild Skogsholm. In 2003 Ms Skogsholm was invited to join her fellow European transport ministers aboard a cruise ship in the Aegean (Greece held the rotating EU presidency at the time). Asked to leave the room when the ministers began to draw up legislative proposals, she had little choice but to sun herself on the ship’s deck. The tan she earned, she says, was the envy of her friends in Oslo. + +Britain’s ministers may be almost as sun-starved as their Norwegian cousins, but they will not be aping their approach to the EU. Through its membership of the European Economic Area (EEA), which includes two tiddlers, Iceland and Liechtenstein, Norway follows most single-market rules drawn up in Brussels and must accept the free movement of EU workers. This was enough for Theresa May, Britain’s prime minister, to rule out the Norwegian model for her country’s post-Brexit relations with the EU. After all, Britain voted last June to take back control from unaccountable EU institutions. Why leave, if only to fall back in line? + +As powerful as this political logic seems now, it has not yet encountered economic reality. The British debate is taking place in a “bubble”, says Ulf Sverdrup, who in 2012 oversaw “Outside and Inside”, a comprehensive review of Norway’s relations with the EU. The report implies that, once Britain begins negotiations with the EU on a post-Brexit settlement, it will have to reckon with uncomfortable trade-offs between sovereignty and prosperity. + +First, to do business with the single market—by far Britain’s biggest trading partner—firms will need to abide by EU rules. A promised “Great Repeal Bill” will, in fact, incorporate EU law into British statutes to ensure regulatory continuity. But Mrs May has vowed that Britain will not be subject to rulings from the European Court of Justice once it leaves the EU. Without any supranational overseer, how can investors or exporters be sure that British standards will remain harmonised with those in Europe? + +Norway’s deal with the EU works in part because the EEA is a “dynamic” agreement, meaning it accommodates changes in European law. (By contrast, Switzerland’s “static” arrangements are fiddly to maintain, and an irritant in Brussels.) If that reduces the Stortinget (parliament) to rubber-stamping legislation handed down from the EU, and forces Norwegian diplomats to find back-channel ways to lobby in Brussels, it also assures businesses that they will not find themselves out of step with the single market. It also reduces demands on Norwegian civil servants. + +Yet even the capacious EEA has proved inadequate. Norwegians have twice voted against EU membership, on sovereignty grounds. But since the last referendum, in 1994, the relationship has grown like a lappeteppet (patchwork quilt). Norway now has over 75 agreements with the EU, most of them signed at Oslo’s behest. When the EU created the passport-free Schengen zone, for example, Norway had to join to avoid a 1,000-mile hard border with Sweden. It has signed up to agencies that foster co-operation in anti-terrorism, research and defence. Pressed by Brussels, it pays whopping grants to support research projects and civil society in eastern Europe; its per-head payments to the EU approach those of Britain. It joins EU-starred military missions abroad and accepts refugees according to formulae crunched in Brussels. And, notes Jarle Trondal at the University of Oslo, even parts of the economy excluded from the EEA, such as fisheries and farming, have been exposed to the chill winds of EU competition law. + +Here is the second lesson for Britain. Mrs May, a former home secretary, has said she will seek co-operation with the EU on security and foreign-policy matters; some of her consiglieri think Britain’s clout in these areas might even help the government secure a better trade deal. But winning approval even for this may prove tough. Mrs May still bears the scars of her battle, in 2014, with hardliners in her Conservative Party over Britain staying in the European Arrest Warrant system. The Brexit negotiations will throw up many more such instances. Will MPs be prepared to swallow them? + +You and whose EEArmy? + +Britain is not Norway, of course. It has 12 times the population, historic bonds with countries across the globe, strong armed forces, a more diversified economy and extensive trade links (44% of British exports go to the EU, against more than three-quarters of Norway’s). It also hosts Europe’s largest financial centre; ministers hope that the Brexit deal will allow City firms to maintain friction-free operations inside the single market. Britain will hardly go into the negotiating chamber naked. + +But the country is also plugged into cross-continental value chains that would leave its firms exposed if British and European standards were to diverge. Some in Britain, says Mr Sverdrup, appear locked into an archaic view of trade in which tariffs are the only measure of ability to export. But non-tariff barriers can prove a lot more damaging. Ask the Norwegian businesses who grouch at the six to nine months it can take to translate EU regulations into Norwegian law. + +There is a final lesson for Britain. Norwegians like the EEA arrangement, and few wish to reopen the membership debate. This is partly because Norway has grown rich on its oil and gas; one study finds that a rise of one percentage-point in unemployment triggers a seven-point spurt in support for full EU membership. But it also suggests that voters may prize formal sovereignty more than the actual sort. Britain was carried to the EU’s exit door on a call to take back control, and its parliamentarians will balk at any deal that seems to withhold it. But its leaders must weigh their demands against the need to ensure Britain continues to prosper. It will not be an easy balance to strike. + +This article appeared in the Europe section of the print edition under the headline “Silent partner” + + + + + +Britain + + + + +Negotiating post-Brexit deals: Trading places + +Euroscepticism and Trumpism: Mr Brexit’s homecoming + +The economy: Shop, then drop + +Tourism: Vote leave + +Alternative religions: The joy of sects + +International development: Sweet charity + +Rural architecture: From pigsties to prime locations + +Bagehot: A dispatch from 2030 + +Bagehot: Correction: Running on empty + + + + + +Trading places + +Where should Britain strike its first post-Brexit trade deals? + +A world of opportunity will open up—but seizing those chances may be harder than it looks + +Feb 4th 2017 + + + +WANTED: chief trade-negotiator for middle-sized country soon to be cast adrift in the world economy. + +This “exciting” new post has just been advertised by Britain’s Department for International Trade (DIT), which is offering the successful candidate a salary greater than that of the prime minister. The size of the pay packet suggests the magnitude of the task. The appointee will be expected to help to secure dozens of free-trade deals for Britain, with both its former partners in the European Union and others around the world, after the country leaves the EU in 2019. Having started last July with just 50-odd trade negotiators, the DIT is now up to about 200. + +The government is investing a lot of political capital in the DIT’s ability to strike deals to compensate for the loss of EU membership, which gives Britain barrier-free access to the EU’s single market as well as trade agreements with 53 other countries and trading blocs around the world. Brexiteers argue that, unchained from the protectionist EU, Britain can become “one of the firmest advocates for free trade anywhere in the world”, as Theresa May puts it. This is the message the prime minister took to Donald Trump on January 27th. + +Reaching agreements with the EU, and then America, appears to be the government’s priority. Where then should it look to do deals in the post-Brexit world? + +The best place to start, most trade economists agree, is with the countries that already have deals with the EU. Britain is a party to all of these; when it leaves the EU it will at least have a template from which to draw up its own fresh bilateral agreements. Doing this with as little disruption as possible would be best for business, argues Ben Digby of the Confederation of British Industry, a lobby group. + +Not every country will roll over for Britain, however. Take Indonesia, South-East Asia’s largest economy, which later this month will receive Liam Fox, Britain’s trade secretary. Indonesia is already drawing up a trade agreement with the EU. Thomas Lembong, head of Indonesia’s investment board and a former trade minister, says that he has already agreed with British officials that Indonesia’s eventual deal with the EU could simply be tailored a bit to suit Britain. But, he warns, “Of course the UK would be in a much weaker bargaining position outside the EU, so we would expect much more favourable terms of trade against the UK post-Brexit.” + +Other countries will take a similar view. However, argues Jim Rollo, a former trade adviser to the British government, Britain has some cards to play. One reason that trade deals with the EU take so long to negotiate (18 years and counting in the case of Mercosur, a South American bloc) is that European agriculture is strongly protected. Once outside the EU, Britain could abolish the EU external tariff on many food imports and gain concessions in return. For example, the EU subjects oranges to a complex formula of tariffs designed to protect Spanish growers, the world’s main exporters. Britain spends about £135m ($170m) a year on oranges but grows none itself, so could eliminate all tariffs on citrus fruits without undermining its farmers. + +Some of the countries that have already expressed interest in striking trade deals with Britain, such as Australia and New Zealand, have their own agricultural exports in mind. But there will be some awkward trade-offs. Australia will want to export more beef to Britain, and New Zealand more lamb. Britain’s own farmers could be squeezed by this: on February 1st the rural affairs secretary in the Welsh Assembly warned that a deal with New Zealand could “absolutely destroy” the Welsh lamb industry. And loosening regulations on genetically modified crops, something American farmers would like to export to Britain, might provoke complaints at home from farmers and consumers alike. + +The point of making such concessions would be for Britain to gain access to foreign markets in things that it excels at selling. Services, particularly banking and related professions like accountancy, are among the exports that Britain is keenest to tout, says Shanker Singham, a trade economist at the Legatum Institute, a think-tank. In 2015 Britain exported £225bn-worth of services (constituting 44% of all its exports) and imported just £138bn, whereas in goods it ran a sizeable deficit. Britain might therefore want to target countries with growing middle classes and still-weak services sectors, such as India and China, as well as Indonesia. + +Insurance, for instance, where Britain is strong, has enormous potential for growth. India currently accounts for about 1.6% of all insurance premiums and 2.2% of life insurance premiums, despite being home to about 18% of the world’s population. + + + +In many countries, however, services are among the most protected industries. Often this is for political reasons as well as regulatory ones. Analysis by the World Bank shows that even within the EU, many countries are more closed than Britain. The likes of India will be hard to crack (see chart), and offering access to Britain’s agricultural market may not help as it is relatively small. + +The new chief negotiator will be busy. The freedom to sign trade deals with any country offers a world of potential. But even replacing the deals that Britain will lose on dropping out of the EU will take many years, and new opportunities may be harder to realise than they look. Welcome to the in-tray. + +This article appeared in the Britain section of the print edition under the headline “Trading places” + + + + + +Mr Brexit’s homecoming + +The prospect of a state visit by Donald Trump exposes Britain’s varied political geography + +Where Euroscepticism and Trumpism overlap + +Feb 4th 2017 + +Half Scottish, wholly unwelcome + +“THERESA the appeaser,” read one placard brandished outside Downing Street in a demonstration on January 30th. “Free Melania!” demanded another. Theresa May’s decision to offer a state visit to Donald Trump this summer has upset many in Britain. Such invitations are not extended to all presidents and involve staying with the monarch. A citizens’ petition posted on Parliament’s website on January 29th urges the government to cancel Mr Trump’s visit, since the “embarrassment to Her Majesty the Queen” would be unacceptable. By February 2nd it had attracted 1.8m signatories—easily enough to require MPs to debate the matter on February 20th, though the government has already said it will take no notice. A rival petition, supporting the visit, had attracted about 250,000 names. + +Comparisons between the forces that propelled Donald Trump into the White House and Britain out of the European Union have been overdone. Although Mr Trump, who has Scottish roots, has called himself “Mr Brexit”, most of the Britons who voted to Leave would not support him. The debates and issues involved were different; the racial dimension was less pronounced in Britain. Yet there are affinities, as the petitions show. + +Signatories must supply a postcode. This makes it possible to see where support for a cause is strongest. The overlap with Brexit is clear: places that didn’t like Brexit don’t like Mr Trump (see chart). The most signatories are in Remain-voting cities like Brighton, Bristol and Cambridge, all with large populations of university-educated, white-collar residents. Meanwhile, signatories of the pro-Trump petition are concentrated in Brexiteer bastions: Boston, Clacton and Grimsby, for example. + + + +Despite Mr Trump’s apparent unpopularity in Britain, many seem resigned to the need to embrace him. A YouGov poll published on February 1st found that 49% of Britons support Mr Trump’s state visit, compared with 36% who oppose it. That suggests that a big chunk of the public may share the government’s belief that the Brexit vote has changed things (in this case: Britain needs a trade deal, so Mr Trump must be courted). + +It is a view that is present in Parliament, too, albeit in a different form. On January 31st MPs held their first debate on whether to trigger Article 50, the legal route to Brexit, after the Supreme Court ruled that the government needed Parliament’s permission to withdraw from the EU. Many spoke against leaving the union—Ken Clarke, a Tory grandee, wondered how likely it was that Britain would tumble down a rabbit hole and “emerge in a wonderland” where world leaders (“nice men like President Trump and President Erdogan”) were queuing up to strike trade deals—but the mood was one of resignation. + +Despite the worst fears of Brexiteers, there is no plot to overturn the result of the referendum. Some two-thirds of MPS campaigned to stay in the EU. Yet on February 1st they voted by 498 to 114 to honour the referendum and invoke Article 50. The Scottish National Party and Liberal Democrats opposed the bill; a fifth of Labour MPs, including several front-benchers, defied party orders and voted against it. Some will try to add amendments in the committee stages before the bill is passed, probably in early March, but no significant one is likely to pass. MPs such as Mr Clarke, like those who signed the petition and protested against Mr Trump’s visit, put up a valiant last stand. But that is all it was. + +This article appeared in the Britain section of the print edition under the headline “Mr Brexit’s homecoming” + + + + + +Shop, then drop + +Britain’s consumer boom shows signs of petering out + +The spending spree that has kept the economy going since Brexit may be nearing its end + +Feb 4th 2017 + + + +FOR the past seven months the British economy has defied the predictions of analysts, most of whom expected a recession to follow the Brexit referendum in June. GDP grew by 2% in 2016, faster than in any other G7 country—and the economy did better in the second half than in the first. The unexpectedly strong performance is largely thanks to the efforts of households, which have been spending liberally. In the fourth quarter of 2016 the volume of retail sales, excluding petrol, was 6% higher than in the year before, the biggest rise since 2004. Nor is the weak pound preventing families from splurging on foreign holidays (see article). But there are signs that Britons’ freewheeling ways may not last much longer. + +The fortunes of the economy rise and fall with households’ spending habits. In the years after the financial crisis of 2008-09, belts were tightened as people lost their jobs and real wages fell. But retail spending picked up from 2014. This was thanks to falling unemployment and faster earnings growth. In 2011-13 real disposable household income shrank on average by 2% a year but in 2014-16 it grew by 3% a year. The median (after taxes and benefits) now stands at £26,300 ($33,300). + +With this in mind it is not surprising that consumer spending remained strong after the Brexit vote. The result itself may even have spurred consumption. Half of voters plumped for Leave, after all, so they may be happier shoppers than before. Those who are gloomier about Britain’s prospects seem to have brought their consumption forward, loading up on foreign goods before the weak pound causes prices to rise. The value of sales of drinks and tobacco, much of which are imported, jumped by 25% year on year in December. + +But in recent months Britons’ desire for new iPads and sofas has outpaced their ability to pay for them. After the referendum, households continued to indulge in unsecured borrowing, thanks in part to the Bank of England’s looser monetary policy. People now appear to have decided that with Brexit negotiations about to get under way and the attendant economic uncertainty, they should focus less on borrowing and more on repaying. On January 31st the Bank of England revealed that consumer-credit growth in December fell to £1bn from £1.9bn the month before. + +Rising prices will also cramp consumer spending. Inflation may near 3% by the end of the year. Food staples are getting dearer: those who gave up Marmite on their breakfast toast after it became more expensive last year will soon have nowhere to hide, after Weetabix warned this week that it too was considering a price rise. As the cost of everyday essentials goes up, households will have less money left over for other things, making them feel poorer. Credit Suisse, a bank, reckons that consumer-spending growth will drop from 2.8% last year to 0.7% in 2017. + +This is worrying because until now consumers’ willingness to spend has helped to prop up an otherwise poorly supported economy. The government is tightening austerity this year, sucking away demand. Investment is weak by historical standards and is likely to slip further as firms hold off on plans to expand their operations in Brexit-bound Britain. Bank lending to non-financial firms fell by 1% in the fourth quarter. And despite the sharp drop in the value of sterling since June, exports are hardly booming. If the consumer-spending spree comes to an end too, it is hard to see where economic growth will come from. + +This article appeared in the Britain section of the print edition under the headline “Shop, then drop” + + + + + +Vote leave + +British tourists have not let the weak pound spoil their holidays + +Sterling may be down, but foreign trips are up + +Feb 4th 2017 + + + +BRITISH tourists on the Costa del Sol get 10% less sangría for their pound than they did before the Brexit referendum last June. But so far there is little sign that sterling’s weakness is causing them to cut back on foreign jaunts. Official statistics show that British residents embarked on 34.8m journeys abroad between July and November. That is 8% more than in the same period in 2015, a similar rate of growth to that of the year before. Most of the increase is in trips for pleasure rather than business. + +Many of those holidays will have been booked before the vote. According to SkyScanner, an online travel agent, the average British customer arranges a European trip 76 days in advance, rising to 104 days for flights elsewhere. But even now, some 220 days after the referendum, the firm says it has not seen any evidence of a decline in reservations. Nor has Kayak, a similar site. + +The price of flights has been falling for the past few years. Still, it seems that British tourists themselves have absorbed much of the extra cost of their getaways. Though they spent only a few more pounds per trip in the summer of 2016 than in the year before, by autumn they were forking out an extra 8% per visit. Despite this, a mid-January survey of Britons conducted by Morgan Stanley, a bank, found that barely a tenth of them said they were less likely to book a holiday because of Brexit. + +The upcoming negotiations with the EU leave a lot up in the air. British airlines might be excluded from the European Common Aviation Area and the open-skies agreement between the EU and America, which permit planes to fly between any point in either region. Britons in a post-Brexit Europe could incur steep roaming charges on their mobile phones, or lose their right to subsidised medical treatment while travelling. They may even have to pay to join an EU visa-waiver programme. Britain’s appetite for foreign holidays has yet to dwindle, but the future does not look so sunny. + +This article appeared in the Britain section of the print edition under the headline “Vote leave” + + + + + +The joy of sects + +The profusion of minority faiths in a Sussex town hints at Britain’s attitudes to religion + +Scientologists, Mormons, Opus Dei and others have settled around East Grinstead. Why? + +Feb 4th 2017 | EAST GRINSTEAD + + + +EVERYTHING about East Grinstead seems rather ordinary. The road from the station into town is lined with a timber merchant, a dog salon and launderette. The black-and-white striped Tudor high street is more attractive, though hardly unique. But in the middle of town, an unobtrusive brick building provides a clue as to what makes the place unusual. It is the local Church of Jesus Christ of Latter Day Saints, also known as the Mormons. A few miles north sits the London England Temple, a striking limestone-clad edifice, topped with a soaring, copper-coated spire. The Mormons are far from alone: East Grinstead and its environs are home to an unusually rich array of rare religions. + +Just south of the town lies the 18th-century Saint Hill Manor estate, the British headquarters of the Church of Scientology which, according to the census, had 2,418 followers in England and Wales in 2011 (the church itself has put the figure in the “tens of thousands”). A squat Norman-style castle (pictured), built in the 1960s-80s, sits next to the manor. Devotees attend “auditing”—a kind of counselling—inside. + +Opus Dei, a conservative Catholic organisation, hold retreats at Wickenden Manor, a little farther out into the countryside. The Christian Scientists, who do not believe in conventional medicine, had a church in East Grinstead until the 1980s. In nearby Crowborough, the Ancient and Mystical Order Rosae Crucis (also known as the Rosicrucians) has a base. + +That so many minority faiths have come to practise in this corner of southern England is a puzzle to many locals. Some put it down to the existence of ley lines, prehistoric mystical pathways. The more prosaic explanations seem more plausible. L. Ron Hubbard, the founder of Scientology, bought Saint Hill Manor for a song from the Maharajah of Jaipur in 1959. The site was perfect, says Graeme Wilson, a spokesman for the church. It is an hour from London and 20 minutes from Gatwick airport—convenient, since Scientologists travel to East Grinstead from around the world (Tom Cruise owned a mansion nearby until 2016). + +Other groups offer similarly pragmatic explanations for their presence. Opus Dei appreciates the proximity to the capital for its retreats; the Mormons, who have been in the area since the 1950s, happened to find a nice spot with scope to build a church, says a spokesman. + +East Grinstead has not always been so tolerant: in the 16th century three Protestants were burned there for their faith, as Queen Mary sought to restore Catholicism. More recently, however, the town has been welcoming to pious outsiders. Few objections were made when the Scientologists turned up, points out Simon Kerr, a trustee of the local museum. That may have encouraged others, leading to a religious kind of clustering. + +The Scientologists stress their neighbourliness. They made a sizeable donation to the restoration of the local Bluebell steam railway. This winter they hosted an ice-rink, open to the public. They even hold multi-faith services, says Mr Wilson. This has not stopped some townsfolk grumbling about the church’s plans to cut down trees and expand a car park. + +Mr Kerr highlights an alternative period of the town’s history. During the second world war Archibald McIndoe, a plastic surgeon, treated desperately disfigured servicemen at the local Queen Victoria Hospital. East Grinstead was dubbed “the town that did not stare”, for its warmth and openness towards the outsiders. Some of that spirit remains, Mr Kerr suggests. + +In fact, East Grinstead’s approach may point to Britain’s attitudes more generally. The state is more tolerant of religious diversity than many European countries, argues Amanda van Eck, director of Inform, a research group that studies religious movements at the London School of Economics; in France, for instance, sects may be prosecuted for crimes including manipulation mentale. Britain’s relative cultural openness makes minority groups less likely to operate clandestinely. + +As part of its hands-off way of doing things, Britain has no official definition of what counts as a religion. But the more unusual ones are increasingly keen for recognition, aware of the legitimacy it confers. After an appeal to the Supreme Court, Scientologists have been allowed to perform weddings since 2013. According to the census, the number of pagans increased from 42,000 to 57,000 between 2001 and 2011—mainly because pagans have become increasingly willing to declare themselves as such, believes David Spofforth of the Pagan Federation, a pan-European group. They might all gather in East Grinstead, at a tiny pub decked with flowers aptly named “The Open Arms”. + +This article appeared in the Britain section of the print edition under the headline “The joy of sects” + + + + + +Priti Patel does economics + +DfID tries to justify its existence + +As in other departments, Brexit has made everything harder + +Feb 4th 2017 + + + +TIME was when the plum jobs in Whitehall were in the Department for International Development (DfID). Not only could you visit interesting places and give money to grateful people; your budget went up each year. But as other departments have suffered round after round of cuts, DfID’s riches have come to seem embarrassing. The newspapers, and some Conservatives, attack it relentlessly. Above all, the Brexit vote has subordinated much of Britain’s foreign policy to the pursuit of trade deals. Helping the world’s needy seems rather beside the point. + +On January 31st Priti Patel, the international development secretary, released what is billed as DfID’s first ever economic development strategy. Ostensibly modest, and with no new money attached, this nonetheless tries to do something bold: to justify DfID’s continued existence in a post-Brexit world. That it does not quite succeed mostly shows how hard it is for any department to cope with Brexit. + +Poverty can be tackled in many ways, from deworming children to advising poor countries on their tax systems. DfID does the lot. Henceforth, though, it will focus more intently on encouraging business growth in the poor world—particularly the kind of business that creates lots of jobs. The House of Commons has already passed a bill that will allow DfID to funnel £6bn ($7.6bn) into Britain’s development finance arm, known as CDC, which invests in African and South Asian firms—up from £1.5bn today. + +Ms Patel thinks Brexit a wonderful thing, and her enthusiasm colours her thinking about development. Britain can rediscover its role as a great trading nation, she explains, and help poor countries along the same road. Although DfID is charged with tackling poverty and nothing besides, it hopes that today’s recipients of aid might be tomorrow’s trading partners. And Ms Patel spies another benefit. If you can get some labour-intensive industry going in poor countries, people might decide against migrating to Britain. + +The strategy is sound. Dirk Willem te Velde of the Overseas Development Institute, a think-tank, says development finance seems to boost growth more than conventional aid does, per pound spent. Other countries and international outfits have piled so enthusiastically into development finance that it has grown from about $10bn in 2000 to $65bn in 2014. + +But what would really help is a combination of financing and freer trade. The EU already allows poor countries tariff-free access to its goods markets under a scheme called Everything But Arms. Britain could be even more generous—for example, by adopting looser country-of-origin standards, which would allow poor countries to export goods tariff-free even if they added only a small part of the value. On the other hand it could be more restrictive than the EU. Nobody knows, nor will anybody find out soon. The priority is a trade deal with the EU, then big markets like America. Malawi is far down the list. + +Meanwhile, the notion that economic development will deter people from migrating to Britain is almost certainly wrong. The very poorest seldom migrate. Research suggests that emigration rises as countries become wealthier, until income per head reaches about $7,000-8,000 at purchasing-power parity (that is, until a country is as wealthy as the Philippines). Only then does higher income lead to less emigration. Because DfID tends to deal with poorer countries than that, success is likely to bring more migrants, not fewer. + +This article appeared in the Britain section of the print edition under the headline “Sweet charity” + + + + + +From pigsties to prime locations + +Brutalist barns and concrete cowsheds: England’s new rural architecture + +A change in the law is letting farmers give their outbuildings a makeover + +Feb 4th 2017 + +Fixer-upper + +HIDDEN behind farmhouses and tucked into the corners of fields, bold architectural experiments are under way in the English countryside. A recent change in planning regulations has simplified the development process, allowing landowners to give derelict post-war farm buildings new purposes and, sometimes, exotic makeovers. + +A fashion for rural living caught on in the 1980s, causing a boom in residential conversions of pre-industrial and Victorian farm buildings. By the early 21st century the supply of property suitable for conversion was almost exhausted. But in 2014 planning rules were altered to allow a greater range of agricultural structures to be developed with the need for only “prior approval” from the local council, rather than full planning permission. Post-war cowsheds and dairies with portal steel and pre-cast concrete frames, previously off-limits, became available for conversion. + +This new supply of large, steel- and concrete-framed structures demands a new architectural approach. And so the urban fashion for exposed concrete is reaching out to the country. Concrete mezzanines, rough timber cladding and new quarry tiles are being installed in super-shed makeovers; some avant-garde farmers are planning brutalist barn conversions. + +In the village of High Halden, Kent, a ramshackle 800-square-metre (8,600-square-foot) cowshed has prior approval to be turned into a single-storey timber-clad home with ceiling-high windows. In nearby Biddenden a corrugated-iron shed which used to function as a shop for farm-picked asparagus is to get a new glass façade; where vegetables were once weighed, a breakfast bar will stand. + +The new rules have extended development rights over some older properties, too. In Sissinghurst a set of early-20th-century hop-pickers’ huts, where gangs of seasonal workers from London used to sleep on straw, will be converted into a slender, timber-clad two-bedroom chalet. The property includes bucolic grounds of fields and lakes, in which the hop-pickers once worked in conditions of near-slavery. The legislation also provides for changes to different commercial uses. On a farm near Wincanton in Somerset, a charitable foundation operates from a former pigsty, the crumbling stone walls of which are little more than a nest for a timber building. Hens have been known to interrupt the work of the charity’s staff. A nearby grain silo will soon be converted into a library. + +Farmers, many of whom have plenty of assets but little capital, are seizing the chance to give their old outbuildings new leases of life. This has contributed to a big increase in the number of home conversions. Between March 2010 and March 2012, 25,300 non-residential buildings in England were converted for domestic use. In the two years following the change in the law, the figure more than doubled, to 51,250. Where there’s muck, there’s brass. + +This article appeared in the Britain section of the print edition under the headline “From pigsties to prime locations” + + + + + +Bagehot + +How the slow death of Labour might happen + +A dispatch from 2030 + +Feb 4th 2017 + + + +“CAN anyone work this thing?” Paul Nuttall barks, jabbing the touch screen. He rues the day his aides talked him into travelling by self-driving car. “It will make you look prime ministerial,” they said. Bollocks. It just makes him look like a hypocrite after all those speeches about the evils of job-killing robots. This robot just drove him from London to Stoke without crashing—is functioning air-conditioning too much to ask? It is an unusually hot April day. Mr Nuttall grimaces as he spots his signature tweed jacket and flat cap on the seat next to him; shortly he will have to put them on for a photo with constituents. + +Or perhaps his perspiration is just nerves. For the leader of the UK Independence Party (UKIP), and now leader of the opposition, has much to be nervous about. The 2030 election is weeks away. He could end up as prime minister, at the helm of a UKIP-Conservative coalition. How far he has come since 2016, that fateful year in which Britain voted to leave the EU and he was elected UKIP leader. Woozy with campaign tiredness and with a few minutes to go before he arrives at Stoke’s marketplace, a dilapidated Victorian pavilion now overshadowed by a colossal Independence Day monument to Brexit, he closes his eyes and recalls the first time he stumped there. + +That was way back in January 2017. Tristram Hunt, the local Labour MP, had just resigned to run the Victoria and Albert Museum. Mr Nuttall, a former academic born into a working-class family in Liverpool, seized the moment. His authoritarian social views, anti-EU purism and attacks on Jeremy Corbyn’s far-left, London-centric Labour Party charmed the pro-Brexit town of former pottery and steel workers. At the by-election on February 23rd it made him its first non-Labour MP since 1950. + +His campaign coincided with a development that would enable him to turn this one gain (UKIP’s first, defections excepted) into the 131 seats his party now holds. Horrified by the polling in places like Stoke, Mr Corbyn obliged Labour MPs to vote for Brexit when it was put to Parliament in February 2017. The move appalled his left-wing backers: once-supportive journalists like Owen Jones and George Monbiot slated him; loyal front-benchers resigned; some 2,000 members of the Grassroots Labour group signed an angry letter. Even the Canary, a slavishly Corbynista website, attacked its man. In subsequent months, as Theresa May’s talks in Brussels came to little, the chorus of dissatisfaction in Labour mounted. + +The final straw came in early 2019 when expensive Labour billboards went up around the country bearing a message from “Jemery Cobryn”. This was one unforced error too many. Union leaders and shadow-cabinet die-hards filed in to tell Mr Corbyn that he no longer had their support. Demoralised and exhausted, Labour’s leader resigned, bequeathing a record-low 19% poll standing to Emily Thornberry, the former shadow foreign secretary who since early 2017 had trodden a subtly less pro-Brexit path than her boss. + +Thanks to the distorting effect of Britain’s first-past-the-post electoral system, Labour’s 20% vote share on May 7th 2020 gave it 155 seats of the 600 available. The Liberal Democrats, targeting Mrs Thornberry’s cosmopolitan base by calling for a referendum on rejoining the EU, took 23 seats on 15%. UKIP, eating into Labour’s working-class strongholds, took 17% of votes and 18 seats. “This is a revolution!” Nigel Farage, Mr Nuttall’s predecessor, told reporters on a visit to London. (Privately the UKIP leader wished that Secretary of State Farage had stayed in Washington.) + +Appalled by their party’s decline, the few remaining moderate Labour MPs quit and formed a new party based on “En Marche!”, the movement that had propelled the centrist Emmanuel Macron to France’s presidency in May 2017. “On The Move!” (OTM!) was bolstered by a series of defections by liberal Tories fed up with Mrs May’s hard Brexit. It went on to win a series of sensational by-election victories in big cities and well-off suburbs. An electoral pact with the Liberal Democrats became a formal alliance, then a merger. A seminal moment was the first of three live debates hosted by Facebook in April 2025, when Mr Nuttall and Jess Phillips, the plain-spoken former Labour MP now leading OTM!, together dismantled Mrs Thornberry and Mrs May. + +The subsequent election would be the nail in Labour’s coffin. In 2025 the party ceded most of its metropolitan seats to OTM!, now endorsed by several centrist unions and most Labour grandees. With inequality rising and wages stagnant, the post-industrial heartlands switched as one to UKIP, which campaigned for “real” immigration cuts, the renegotiation of recent trade deals and a referendum on reinstating the death penalty. Mrs Thornberry resigned and her party, now on 43 seats, became the fifth-largest in the Commons after the Tories, UKIP, OTM! and the Scottish National Party. It fell to Mr Nuttall to interrogate Mrs May across the dispatch box. + +Going gentle into that good night + +Five more years on, Labour’s death is moments away. Polls suggest UKIP will come first in the 2030 election, narrowly followed by the Tories and, just behind them, OTM!. Mrs Phillips says Britain must rejoin the European single market; she should be able to form a government backed by the Tories and Scottish Nationalists if she can persuade Labour to stand down its candidates. If she cannot then UKIP will probably come first and be invited by King William to form a government, supported by the Tories. + +“How long should I wait before I invite President Trump to London?” Mr Nuttall ponders to himself. “Is seven days too soon? And should I call her Mrs President or Ivanka?” As his car sweeps onto Stoke’s marketplace, his phone begins to ring. He answers: “Yes. Labour have done what? What did Phillips offer them? Nothing? Jesus. OK.” He hangs up, swears under his breath, and opens the car door to a wall of cheers. + +This article appeared in the Britain section of the print edition under the headline “A dispatch from 2030” + + + + + +Correction: Running on empty + +Feb 4th 2017 + +Correction: A chart in last week’s story on local-government finances (“Running on empty”) mislabelled total spending as decline in spending. Sorry. We have corrected the chart online. + + + +This article appeared in the Britain section of the print edition + + + + + +International + + + + +Young people and democracy: Not turning out + + + + + +Not turning out + +Millennials across the rich world are failing to vote + +Democracies are at risk if young people continue to shun the ballot box + +Feb 4th 2017 | TEL AVIV + + + +THE life story of Alex Orlyuk does not seem destined to lead to political apathy. Born in the Soviet Union to a family scarred by the Holocaust, he moved at the age of six to Tel Aviv, where he finished school and military service. He follows politics and prizes democracy. He thinks his government should do more to make peace with Palestinians, separate religion and state, and cut inequality. And yet, now 28 and eligible to vote in the past four general elections, he has never cast a ballot. + +His abstention, he says, is “a political statement” on the sorry state of Israel’s politics. He does not think any of its myriad parties is likely to bring about the change he wants. Many other young Israelis share his disaffection. Just 58% of under-35s, and just 41% of under-25s, voted in the general election of 2013, compared with 88% of over-55s. No other rich country has a bigger gap in turnout between under-25s and over-55s (see chart). + + + +Though Israeli politics is atypical—steeped in questions of war, peace, religious identity and the relationship with Palestinians—the voting behaviour of its young is nevertheless all of a pattern with the rest of the rich world. In Britain and Poland less than half of under-25s voted in their country’s most recent general election. Two-thirds of Swiss millennials stayed at home on election day in 2015, as did four-fifths of American ones in the congressional election in 2014. Although turnout has been declining across the rich world, it has fallen fastest among the young. According to Martin Wattenberg of the University of California, Irvine, the gap in turnout between young and old in many places resembles the racial gap in the American South in the early 1960s, when state governments routinely suppressed the black vote. + +Demographic trends further weaken the political voice of the young. In America’s election in 1972, the first in which 18-year-olds could vote, around a fifth of adults were under 25. By 2010 that share was one in eight. Under-25s are on track to make up just a tenth of American adults by mid-century. The young will have dwindled from a pivotal voting bloc into a peripheral one. + +That raises the worrying possibility that today’s record-low youth turnout presages a permanent shift. Voting habits are formed surprisingly early—in a person’s first two elections, says Michael Bruter of the London School of Economics. If future generations, discouraged by their fading influence, never adopt the voting habit, turnout will fall further, weakening the legitimacy of elected governments. + +Millennials are not the first young generation to be accused of shirking their civic duty. And they are more interested in ideas and causes than they are given credit for. They are better educated than past generations, more likely to go on a protest or to become vegetarian, and less keen on drugs and alcohol. But they have lost many of the habits that inclined their parents to vote. + +In Britain only three in five of under-25s watch the news on television, compared with nine in ten of over-55s. Young people are also less likely to read newspapers, or listen to the news on the radio. Each year around a third of British 19-year-olds move house; the average American moves four times between 18 and 30. People who have children and own a home feel more attached to their communities and more concerned about how they are run. But youngsters are settling down later than their parents did. + +The biggest shift, however, is not in circumstances but in attitudes. Millennials do not see voting as a duty, and therefore do not feel morally obliged to do it, says Rob Ford of Manchester University. Rather, they regard it as the duty of politicians to woo them. They see parties not as movements deserving of loyalty, but as brands they can choose between or ignore. Millennials are accustomed to tailoring their world to their preferences, customising the music they listen to and the news they consume. A system that demands they vote for an all-or-nothing bundle of election promises looks uninviting by comparison. Although the number of young Americans espousing classic liberal causes is growing, only a quarter of 18- to 33-year-olds describe themselves as “Democrats”. Half say they are independent, compared with just a third of those aged 69 and over, according to the Pew Research Centre. + + + +And millennials are also the group least likely to be swayed by political promises. They are far less likely than the baby-boom generation (born between 1946 and the mid-1960s) or Generation X (born in the mid-1960s to late 1970s) to trust others to tell the truth, says Bobby Duffy of IPSOS Mori, a pollster (see chart). They take “authenticity” as a sign of virtue and trustworthiness, as illustrated by their enthusiasm for, say, Justin Trudeau, Canada’s telegenic premier. But in the absence of personally appealing leaders, mistrust can shade into cynicism about democracy itself. Almost a quarter of young Australians recently told pollsters that “it doesn’t matter what kind of government we have”. A report last year found that 72% of Americans born before the second world war thought it “essential” to live in a country that was governed democratically. Less than a third of those born in the 1980s agreed. + +The lack of trust accompanies a breakdown in communication between politicians and the young. In 1967 around a quarter of both young and old voters in America had previously made contact with a political official. For the elderly, the rate had almost doubled by 2004; for the young, it remained flat at 23%. Parties have responded accordingly: in 2012 they contacted three-fifths of older voters, but only 15% of younger ones. According to a poll weeks before last year’s presidential election by the Centre for Information & Research on Civic Learning and Engagement at Tufts University (CIRCLE), despite the money sloshing around American politics only 30% of millennials reported having been contacted by one of the campaigns. And when parties do contact youngsters, it is often with a message crafted for voters in general, not tailored to them. Such efforts, says Mr Bruter, can be counter-productive. + +Many disillusioned youngsters regard refusing to vote as a way to express dissatisfaction with the choices on offer. But abstention traps them in a cycle of neglect and alienation. Politicians know that the elderly are more likely to vote, and tailor their policies accordingly. Young people, seeing a system that offers them little, are even more likely to tune out, which gives parties more reason to ignore them. Some parties disregard the young completely: in the Netherlands 50PLUS, which campaigns almost exclusively on pensioners’ issues, is polling in double figures. + +Even parties without any such overt focus on old people increasingly favour them when setting policies. Young workers pay taxes toward health-care and pension schemes that are unlikely to be equally generous by the time they retire. Australians aged over 65 pay no tax on income under A$32,279 ($24,508); younger workers start paying tax at A$20,542. In Britain free bus passes, television licences and energy subsidies for pensioners have survived government cutbacks; housing assistance for the young has not. The young across western Europe are more likely to hold a favourable opinion of the European Union, but it is their elders, who look upon it with greater scepticism, who hold sway with governments. Britain’s recent vote to leave the EU depended heavily on retired people’s votes; youngsters voted overwhelmingly to stay. + +Lessons for life + +Those fretting about the future of democracy have been searching for ways to get more young people to vote. The most obvious would be to make voting compulsory, as it is in Australia, Belgium, Brazil and many other countries. Barack Obama has said such a move would be “transformative” for America, boosting the voices of the young and the poor. But Mr Bruter warns that such a move would artificially boost turnout without dealing with the underlying causes. The priority, he says, should be to inspire a feeling among young people “that the system listens to you and reacts to you”, which in turn would strengthen political commitment. + +One place to build such a belief is in school. Teenagers who experience democracy first-hand during their studies are more likely to vote afterwards. Student elections make young people feel they have the power to shape the institutions around them, says Jan Germen Janmaat of University College London. Civic-education curriculums which involve open discussions and debates are better at fostering political engagement in later life than classes dedicated to imparting facts about government institutions, he says. Yet schools and governments, wary of accusations of politicising the classroom, may shy away from such programmes. + + + +Another option would be to allow people to vote even younger. In many countries, voting habits are formed during a particularly unsettled period of young people’s lives: the few years after leaving school. Argentina, Austria and other countries are trying to ingrain voting habits earlier by lowering the minimum age to 16. This lets young people cast their first votes while still in school and living with their parents. In Austria, the only European country to let 16- and 17-year-olds vote nationwide, they have proved more likely than 18- to 20-year-olds to turn out in the first election for which they qualify to vote. + +Yet another approach is to remove obstacles to voting that are most likely to trip up the young. America has many laws banning registration in the month before an election; these disproportionately affect young people, who tend to tune in late to campaigns, says Kei Kawashima-Ginsberg of CIRCLE. A solution used in some other countries, including Sweden and Chile, is to put people on the electoral roll automatically when they turn 18. Also important is to make sure that those who have moved and forgotten to update their details are not caught out on election day; since young people move more, they are more likely to be affected. Some American states are experimenting with “portable” voter registration, whereby a change of address with any government institution is transferred to the electoral register. + +Waiting for a hero + +As millennials find fewer reasons to vote, motivating them to do so is becoming dangerously dependent on individual politicians and single issues. In Canada just 37% of 18- to 24-year-olds voted in the parliamentary election in 2008, and 39% in 2011. In 2015 the “Trudeau effect” saw the youth vote rise sharply, to 57%. Mr Orlyuk fondly recalls Yitzhak Rabin, a former Israeli prime minister who was assassinated when Mr Orlyuk was seven—for “trying to make a change” by making peace with Palestinians. “I’m still waiting for another Rabin to come along. Then I’ll vote,” he says. In the meantime politicians will find his opinions and interests—and those of other young people—all too easy to ignore. + +This article appeared in the International section of the print edition under the headline “Not turning out” + + + + + +Business + + + + +Snapchat’s future: Snap to it + +ExxonMobil: Upstream with half a paddle + +Pet health care: Furry profitable + +Logistics firms: Boxed in + +Consumer electronics: Screen shocker + +Food technology: Plant and two veg + +Smartphones in China: Upstarts on top + +Schumpeter: Silicon Valiant + + + + + +The anti-Facebook + +Snap’s IPO will be the largest in years + +The app company has pioneered a distinctive vision of the internet + +Feb 4th 2017 | SAN FRANCISCO + + + +WHEN Snapchat first became popular in 2013, many thought the messaging app would disappear almost as quickly as its vanishing messages. Instead, it has become one of the most intriguing internet firms to emerge in years. When Snap, Snapchat’s parent company, goes public at an expected valuation of $20bn-25bn—the IPO is expected in March—its market debut will be the most closely watched since Alibaba, a Chinese e-commerce giant, floated in 2014. Snap’s offering documents may be filed publicly as soon as this week. + +Snapchat has captivated youngsters in the West with its quickly disappearing content and playful features. It appears to have connected with youth more successfully than older rivals such as Facebook (or its messaging service, WhatsApp). Users share digitally enhanced photos and videos of themselves vomiting rainbows and morphing their faces into animal masks. Around 41% of Americans aged 18 to 34 use the ephemeral messaging service every month, and 150m people globally spend time on it every day. + +Older grown-ups should pay attention too. Snapchat is experimenting with new technologies, such as augmented reality (AR) and wearable devices. A large share of people who have used AR will have experienced it on Snapchat, where users can overlay computer-generated images on photos and videos (see article). + +The firm’s IPO prospectus is expected to describe not an internet or communications company but a “camera company”. Snapchat has prospered from access to the camera on every smartphone, and now it wants to sell hardware as well. Its new sunglasses, called Spectacles, sell for $130 and enable users to record video from their exact line of sight. They have caught the attention of analysts, who are impressed by the glasses’ ambition, functionality and clean design. + +How well it fares as a public company will also serve as a litmus test of whether it is possible to prosper in the shadow of digital behemoths like Facebook and Google. Snapchat has a different outlook. Facebook creates permanent records of users’ lives; Snapchat offers liberating impermanence. On most social-media sites, people post about their achievements to a huge circle of acquaintances; Snapchat’s users share images of themselves looking silly with smaller groups of friends. + +Rainbows, streaks, and unicorn faces + +Snapchat started in 2011 as Picaboo. It was created by three members of a fraternity at Stanford University: Reggie Brown, Bobby Murphy and Evan Spiegel (now Snap’s chief executive). The app, which they later renamed, was not an overnight sensation that crashed the internet, as Thefacebook did at Harvard. It lay virtually undiscovered for some time, until high-school girls discovered it and started using the app to send (sometimes risqué) messages. + +Mr Spiegel (snapped) has proven himself to be creative in devising new features for Snapchat’s app and in imagining how it might evolve. At first it was a one-to-one messaging function for people to send disappearing “snaps” to one another. Three years ago Mr Spiegel launched a one-to-many broadcast function, called “stories”, where people can string together images and videos and share them with all their friends at once. In 2015 it launched “Discover”, where professional publishers offer a selection of disappearing articles and videos tailored to millennials (The Economist publishes on Discover). These features offer elements of scarcity and urgency that bring people back repeatedly. + +Snapchat has innovated in other ways, too. It shows users how many snaps they have sent and received since joining, and they try to keep this score high. It invented “streaks” that keep track of how many consecutive days friends have sent messages back and forth. When Braden Allen, a 16-year-old in Dallas whose tally of sent and received snaps stands at around 170,000, needed a break from Snapchat to study, he gave his login information to a friend to keep sending on his behalf. + +Lenses are another distinctive feature. When people take selfies, they can choose to alter their appearance, becoming an animal, switching faces with a friend or doing other fantastical things with the app’s facial-recognition technology. Snapchat has quietly become the most-used augmented reality product in the world, says Ben Thompson of Stratechery, a research firm. + + + +Although Snap encourages users to be silly on its app, it hopes to be taken seriously as a business. It will need to decide what approach it should take when using information about users to target ads. Mr Spiegel has called the practice “creepy” in the past. Yet Snap may need to share more data about its users; Mr Spiegel has indicated that he may be willing to do this. + +The company has started to allow advertising in between users’ stories and in the midst of publishers’ articles on Discover. Brands can also buy sponsored lenses. For example, Taco Bell, a fast-food chain, paid for a lens that allowed users to change their faces into tacos. These promotions can be expensive, at around $550,000-800,000 for a lens that is available across America for a day, and can take some months to prepare. Snap insists on keeping some creative control, and can veto projects it thinks look too much like basic advertising. That has irked some brands in the past. + +Snapchat is nowhere near earning the sort of ad revenues that Google and Facebook bring in. Those two scoop 58% of digital advertising in America and last year claimed nearly all of the market’s growth. One of the world’s largest advertising agencies spent $60m on Snapchat in 2016, compared with $1bn on Facebook. The same agency expects to spend $170m on Snapchat this year. Snap could have around $1bn of revenue in 2017, three times its total sales in 2016. Advertisers certainly welcome the prospect of having an alternative to the Facebook-Google duopoly, says Chris Vollmer of PwC, a consultancy. + +Yet there are questions over how large Snapchat’s user base can become, and whether it can support the high stockmarket valuation that is talked of. The app has yet to establish that it has strong appeal for older users, for example. In emerging markets it costs more to use lots of data on smartphones, and Snapchat’s data-intensive app is less widely used. Brian Wieser, an internet analyst, reckons that Snapchat is an “important niche player” but that it will never achieve the scale of Facebook. It doesn’t have to target more than a billion daily users to be a valuable company, but Mr Spiegel will need to be careful not oversell the app’s potential reach, as Twitter did when it went public in 2013 promising to attract “the largest audience in the world”. + +He has so far focused on Western markets, whose users are most valuable to advertisers, in contrast to Facebook and Twitter, which emphasise their global reach. He is expected to point to high user engagement with Snapchat, rather than relentless user growth, as the gauge investors should watch. This will require a shift in thinking for stockmarket investors, who have been trained by Facebook, Twitter, LinkedIn and several other internet firms to demand fast-growing audiences. + +Snap’s profit margins in its various business lines may also disappoint: they are unlikely to be as generous as those of Google and Facebook, which both fulfil a lot of their ad orders using automated programmes. Because its ads tend more often to be individually designed, it relies on a large, human salesforce. Selling also takes more time, as it does in television. + +Mr Spiegel will also need to prove his ability to lead. Many of his boosters compare him to the late Steve Jobs for his creative, perfectionist vision of products. He may resemble Mr Jobs in more negative ways, too. He is secretive and controls information tightly. No one but Mr Spiegel—not even the board and other top executives—knows all the important details of the firm’s strategy and future plans. He is off-limits to most employees and travels between Snap’s buildings in a black Range Rover with a security detail. + +Some early backers also privately express concern that the talent pool behind him is not as experienced as they would like. Adult supervision will come from Michael Lynton, a seasoned entertainment executive, who is resigning from running the film studio of Japan’s Sony to serve as Snap’s chairman. But there are few like him at the company. + +The competition against Facebook and Google (which owns YouTube, an online-video site, against which Snapchat will directly compete for ad dollars) is unlikely to let up. Facebook tried to buy Snapchat for $3bn in 2013, and has since then copied many of its popular features. Last summer Instagram, which is owned by Facebook, launched its own “stories” feature; its parent company is now testing the idea of rolling out this feature on its own social network. Usage of Snapchat stories has declined significantly since Instagram stories began. That could shake the faith of some Snapolytes, who believed that Snapchat had sufficient allure to keep its young users away from Facebook’s properties and those of other internet firms. + +The public offering stands as evidence that Snap wants to stay independent. But Facebook or Google could still buy it. “That is why I would not short the stock,” says one hedge-funder, who is sceptical about the high valuation it is likely to receive. Mr Spiegel must know that his firm, as one of the only real threats to the two giants, would be a prize for either of them. + +If Snap wants to survive as an independent firm, he may need to make some smart acquisitions of his own, as Facebook did by buying Instagram and WhatsApp. One opportunity may be visual search. Snapchat’s users are using their cameras to capture the world around them. When they point their smartphones at objects, they could be served with advertising. Only Mr Spiegel knows the plan. But in the highly concentrated internet ecosystem, companies increasingly must eat or risk being eaten. The coming years will show whether Snap is predator or prey. + +This article appeared in the Business section of the print edition under the headline “Snap to it” + + + + + +Upstream with half a paddle + +The challenges for ExxonMobil’s new boss + +The world’s biggest private oil company used to be peerless. That has changed + +Feb 4th 2017 + + + +WITH an institutional culture that lies somewhere between the marines and the boy scouts, ExxonMobil tends to avoid personality cults. Even so, it is surprising how little is known about Darren Woods, the chief executive who last month succeeded Rex Tillerson, America’s new secretary of state. Mr Woods’s Wikipedia biography is a few lines long. Rather than reveal the year of his birth, ExxonMobil just says he is 52. Never mind: the most significant fact about him is that he comes from the refining and chemicals side of the business, which hums along so efficiently that ExxonMobil is widely considered the world’s best “integrated” oil company. Yet it is upstream—the exploration and production part—where his hardest tasks lie. + +On January 31st the company reported another year of plunging profits, which have buffeted its share price since 2014 (see chart). It earned less in a year than it used to earn in a quarter, and also less than Exxon made before its $80bn merger with Mobil in 1999. Profits among its “Big Oil” peers have likewise been clobbered by falling oil prices over the past two and a half years. It is also not alone in having to borrow heavily to meet its dividend and investment obligations; last year it lost its coveted AAA credit rating. + +Even so, it was a surprise that it took a $2bn hit on the value of some natural-gas assets in America; in the past it has avoided such write-downs. In coming weeks, it is expected to remove up to 4.6bn barrels of North American crude from its 25bn barrels of proved reserves, because they are too costly to produce profitably. That will be yet another rare occurrence. + +It will add to a sense that ExxonMobil is struggling to find low-cost sources of oil production to prepare it for a world of potential oversupply. That impression has led its shares to lag behind those of Chevron, its biggest American rival, by 20% in the past year, as well as those of European peers, Royal Dutch Shell, BP and Total. Lysle Brinker, head of oil-company research at IHS Energy, a consultancy, says that, although historically ExxonMobil’s shares have traded at a higher premium to the value of its assets than its big rivals, in the past year “Chevron has overtaken it”. + +In an effort to redress the problem, the company’s first deal in the Woods era has been a $6.6bn stock-and-cash purchase aimed at more than doubling its output in the Permian basin in Texas and New Mexico, to 350,000 barrels a day from 140,000. ExxonMobil hopes that acquiring more shale deposits will boost the proportion of oil and gas in its portfolio that is relatively quick and inexpensive to produce, compared with more costly and complex projects in places like the Russian Arctic. A potential boon is a bumper discovery in the oceans off Guyana, in South America. + +Chevron has been far luckier. It clung onto legacy oilfields in the Permian that go back to the 1920s, and has 2m acres there, compared with the 250,000 recently bought by ExxonMobil. It has fared better from shale oil, whereas ExxonMobil bet big on shale gas via a $31bn merger in 2010 with XTO Energy. Since then gas assets have become even less valuable than oil ones, leaving ExxonMobil struggling to make amends. + +An alternative for Mr Woods would be to do deals in the Persian Gulf, where oil is also cheap to produce but where there are rising competitive and geopolitical pressures. Mr Brinker notes that state-owned oil companies are nowadays offering less lucrative joint ventures to Western firms. A looming privatisation is likely to make Saudi Aramco, the only oil company that is bigger than ExxonMobil, into an even stronger competitor. + +Adding to the challenges, Mr Woods takes over the company at a time when climate change is raising questions about future demand for fossil fuels. Environmental activists and increasing numbers of investors are demanding more transparency. On February 1st the firm appointed Susan Avery, an atmospheric scientist who formerly advised the UN, to its board. Some dismissed this as a publicity stunt. But it could be a bold move to shape its thinking on climate change. + +One danger is that with its former boss standing shoulder to shoulder with Donald Trump, the firm reverts to its habit of insisting that it knows best. Many will be disheartened that, under pressure from companies including ExxonMobil, Republicans in Congress were this week planning to scrap a rule, aimed at reducing corruption in oil-rich countries, that forces firms to publish all payments to foreign governments. There is no reason to doubt ExxonMobil’s adherence to what it terms its “culture of integrity”. But it is increasingly important for oil firms not just to behave like good global citizens, but to be seen to do so, too. + +This article appeared in the Business section of the print edition under the headline “Upstream with half a paddle” + + + + + +Furry profitable + +America’s booming pet health-care business + +Shi Tzus having hip replacements and cats on underwater treadmills + +Feb 4th 2017 + + + +AT THE 42,000-square-foot clinic in Hollywood that is owned by VCA, an animal-hospital chain, you may find a Pomeranian on a course of stem-cell therapy or a Shih Tzu having a hip replacement. There is even an underwater treadmill for cats. As pets are treated more and more like members of the family, so they are getting more health care. That also means they are racking up bigger vet bills for their owners. + +That is the backdrop to the purchase in January of VCA by Mars, a firm best known for selling chocolate and sweets, for $9.1bn. Analysts whistled at the 31% premium Mars offered on VCA’s share price at the time, but they also agreed that the deal reflects the industry’s vitality. Spending on animal clinic visits in America has increased from a total of $13.7bn in 2012 to almost $16bn last year. + +The deal is not as out of character for Mars as it may appear. Sales of chocolate are declining. The company is second only to Nestlé in the market for pet food in America, but competition from sellers on Amazon has sent the firm towards animal health. It was in 2007 that Mars bought Banfield Pet Hospital, then VCA’s largest rival. Since then it has steadily expanded in the field. With the VCA deal, it will own 1,900 veterinary clinics in America and Canada, more than four times as many as National Veterinary Associates, the nearest competitor. + +The success of such groups is due to the fact that “anything you see in human medicine is likely to be applied to dogs and cats”, says John Mannhaupt of Brakke Consulting. The average vet used to be a generalist, offering everything from a bottle of pills to a quick death. The modern graduate is a specialist, whether in oncology or any other of the 40 fields listed by the American Veterinary Medical Association. + +Diagnostic testing is a particularly profitable field. Veterinary clinics have invested in new equipment, from CT scanners to on-site MRI machines. A cat with toothache used to be anaesthetised before a vet could peer inside its mouth, but now a scan costing anywhere between $40 and $400 does the job instead. Mars, many believe, was keen on VCA’s diagnostic laboratories, which are superior to those of Banfield and which run blood tests, and other sorts, for more than half of America’s 24,000 or so veterinary clinics. + +Most owners will buy the diagnostic tests. If it is bad news, many will go on and pay for the next stage of expensive treatments. Yet for some in the field of animal health, it is all too much. Lately accusations have mounted that VCA and Banfield are foisting unnecessary treatments on animals. Over-vaccination seems to be a particular bugbear. Banfield says it has reduced the frequency with which it administers core vaccines, and that it follows industry guidelines. + +Technically, it remains illegal in many states for corporations to own veterinary practices, to prevent pets being over-treated for the sake of profits. But there is a way to structure ownership to deal with that. And although treatment options for pets now mirror those in human hospitals, the risks of getting things wrong do not. In law pets count as property, and usually have a small market value. Medical malpractice suits are hardly worth the bother, and are rare—another reason why Mars’s strategy promises healthy returns. + +This article appeared in the Business section of the print edition under the headline “Furry profitable” + + + + + +Boxed in + +Logistics companies fear the return of hard borders + +FedEx’s founder will spend more time campaigning for free trade + +Feb 4th 2017 | LEIPZIG + + + +DURING the day, Leipzig’s airport is quiet. It is at night that the airfield comes to life. Next to the runway a yellow warehouse serves as the global sorting hub for DHL, a delivery firm owned by Deutsche Post of Germany. A huge extension, which opened in October, means it can sort 150,000 parcels each hour, says Ken Allen, DHL’s CEO. It was built as business soared. But the express-delivery industry faces a new challenge: the return of trade barriers due to the protectionist bent of Donald Trump and because of Brexit. + +The slower-moving shipping and air-cargo business has long been in the doldrums as a result of slow overall growth in trade in recent years. Yet the rise of cross-border e-commerce has still meant booming business for express-delivery firms. On January 31st UPS revealed record revenues for the fourth quarter of 2016; FedEx and DHL are expected to report similarly buoyant results next month. Since 2008 half of the increase in express-delivery volumes has come from shoppers buying items online from another country. + +Falling trade barriers have greatly helped them. When DHL and FedEx were getting going, in the 1970s, there was little demand for international express deliveries. Packages often got stuck in customs for weeks and were heavily taxed. The expansion of free-trade areas, lower tariffs and the internet brought years of growth. But after Mr Trump’s threats to raise tariffs on goods from China and Mexico, together with the indication last month from Theresa May, Britain’s prime minister, that the country will leave the EU’s customs union, there are widespread fears that the favourable tailwinds enjoyed by the industry for decades are gone. “It’s all a real nightmare,” groans David Jinks of ParcelHero, a British parcel broker which works with DHL, FedEx and UPS. + +Start with Brexit. More physical border checks between Britain and Europe would do little direct damage. Most packages arriving in Britain have already been checked for drugs and dangerous items. Goods from outside the EU go through customs 95% of the time without any inspection or delay. + +Instead, post-Brexit costs will probably come from long wrangles over which of 19,000 customs codes should be applied to a consignment. As an example of what could happen, Halloween costumes from China often get stuck at Britain’s border while customs officials work out whether they are toys or children’s clothes, which attract different duties. Such complexity would force delivery firms to put up their prices to customers, Mr Jinks says. Sending an item from Britain to Switzerland (outside the EU) costs 150% more than it does to Italy (inside the EU). + +The most severe impact on business would come from higher tariffs, which would hurt demand for cross-border imports and deliveries in favour of local goods. This is where Mr Trump’s threats come into focus. A trade war would hit the massive volume of consignments that DHL’s, FedEx’s and UPS’s planes carry every day in and out of America. + +For the moment, a customs exemption exists for packages worth under $800. This means that higher tariffs on a Chinese watch imported in bulk into the United States, for instance, could be avoided by an American ordering direct from Alibaba, a Chinese retailer, for delivery direct to their home. But if Mr Trump is serious about cutting imports, he could get rid of this exemption. It was only last March that Barack Obama increased it to $800 from the previous $200. If it were lowered or eliminated by executive order, logistics-industry people would really panic. + +They are putting a brave face on things. DHL’s Mr Allen has emphasised that “globalisation is here to stay”, whatever Mr Trump does. UPS’s boss, David Abney, hopes the president is not really against trade agreements. Even more telling are the actions of Fred Smith, FedEx’s founder and CEO. Last week, he quietly gave up running the firm day-to-day to spend more time campaigning for free trade. + +This article appeared in the Business section of the print edition under the headline “Boxed in” + + + + + +Screen shocker + +TVs: the next testing scandal? + +TVs from Samsung, LG and Vizio consume far more electricity at home than they do in the Department of Energy’s energy-efficiency tests + +Feb 4th 2017 | SAN FRANCISCO + +Plug and pay + +VOLKSWAGEN, a German carmaker, has been disgraced for designing clever software that allowed it to cheat on emissions tests for diesel cars. A different scandal, with shades of the VW affair, has been building up in America’s television market. South Korea’s Samsung and LG, along with Vizio, a Californian firm, stand accused of misrepresenting the energy efficiency of large-screen sets. Together, they sell over half of all TVs in America. + +In September 2016 the Natural Resources Defence Council (NRDC), an environmental group, published research on the energy consumption of TVs, showing that those made by Samsung, LG and Vizio performed far better during short government tests than they did the rest of the time. Some TVs consumed double the amount of energy suggested by manufacturers’ marketing bumpf. America’s Department of Energy (DoE) has also conducted tests of its own that have turned up big inconsistencies. + +Not all TV-makers are at fault: the NRDC found no difference in energy-consumption levels for TVs made by Sony and Philips. But class-action lawsuits have already been filed against the three companies highlighted by the tests—the latest was lodged against Samsung in New York on January 30th. The industry is now waiting to see whether regulators will take action. + +There seem to be two main reasons for the sharp contrast between what TVs do during the government’s tests and during normal viewing. Televisions made by Samsung and LG (but not Vizio) appear to recognise the test clip that the American government uses to rate energy consumption and to advise consumers on how much it will cost to operate the set over a whole year. The DoE’s ten-minute test clip has a lot of motion and scene changes in short succession, with each clip lasting only 2.3 seconds before flashing to a new one (most TV content is made up of scenes that last more than double that length). During these tests the TVs’ backlight dims, resulting in substantial energy savings. For the rest of the time, during typical viewing conditions, the backlight stays bright. + +A kind explanation is that the manufacturers have been “teaching to the test” and simply did not understand the inconsistency in energy consumption during the test compared with normal use, says Noah Horowitz of the NRDC. Another explanation is that the TV manufacturers may have been trying to outwit regulators to make their products’ energy consumption appear low to consumers. + +A second reason for the discrepancy is that Samsung, LG and Vizio TVs all disabled energy-saving features without warning whenever a user changed the picture setting. On certain TVs made by LG, for example, the only setting in which energy-saving features functioned was in “Auto Power Save” mode. Selecting another setting, including “standard”, disabled the energy-saving feature without notification. + +LG has updated its software so that changing display settings will not disable energy-saving features without warning. The firm disputes any suggestion that it and others were “bending the rules”, says John Taylor, a spokesman for LG. Vizio also denied wrongdoing. Samsung has not commented on the NRDC’s findings. + +America’s Federal Trade Commission (FTC), which protects consumers, has the power to require repayment of profits from the sale of any TVs that misled customers. At least one former FTC official reckons the case deserves action. The DoE says it is considering whether it needs to modernise its test so that it becomes harder to game. The European Commission, which uses the same test as the DoE, is looking into the three manufacturers’ products as well. + +How much regulatory attention the case gets may depend on how the political mood evolves. A Republican-controlled Congress could even try to unwind the energy requirements for all consumer appliances. One bill, introduced in January by Michael Burgess, a congressman from Texas, would prohibit the DoE from enforcing existing energy-efficiency standards or setting new ones. For consumers that would be an unwelcome channel change. + +This article appeared in the Business section of the print edition under the headline “Screen shocker” + + + + + +Where’s the beef? + +The market for alternative-protein products + +Plant-based “meat” products have made it onto menus and supermarket shelves + +Feb 4th 2017 + + + +MOST people like to eat meat. As they grow richer they eat more of it. For individuals, that is good. Meat is nutritious. In particular, it packs much more protein per kilogram than plants do. But animals have to eat plants to put on weight—so much so that feeding livestock accounts for about a third of harvested grain. Farm animals consume 8% of the world’s water supply, too. And they produce around 15% of unnatural greenhouse-gas emissions. More farm animals, then, could mean more environmental trouble. + +Some consumers, particularly in the rich West, get this. And that has created a business opportunity. Though unwilling to go the whole hog, as it were, and adopt a vegetarian approach to diet, they are keen on food that looks and tastes as if it has come from farm animals, but hasn’t. + +The simplest way to satisfy this demand is to concentrate on substitutes for familiar products. “Meat” made directly from plants, rather than indirectly, via an animal’s metabolism, is already on sale for the table and barbecue. Impossible Foods, a Californian firm, has deconstructed hamburgers, to work out what gives them their texture and flavour—and then either found or grown botanical equivalents to these. It launched its plant-based burger in a number of upmarket restaurants in America last year. Beyond Meat, another plant-based hopeful, has compounded from legumes something that tastes like chicken. This has been on sale since 2012. Last year, its “beef” patty (pictured) reached the shelves of several stores belonging to the Whole Foods Market chain. + +For those who really want to eat steak while saving the planet, a second approach may be more promising. This is “clean”, or cultured, meat—made by taking animal cells and growing them in a factory to form strips of muscle. Steak is not yet on the menu, but burgers and meatballs may soon be. The field leader is Mosa Meat, a Dutch firm staffed by scientists. The first burger it made, in 2013, cost around $300,000. By 2020, it hopes, the price of making them will have come down to about $11. Close behind Mosa, Memphis Meats, an American startup, is looking at the meatball rather than the burger market. Between 2013 and 2015 it managed to bring its costs down a hundredfold—though even then a single meatball would have set you back $1,200. + +Milk, too, is in the sights of the new no-animal farmers. Perfect Day, a startup based in Berkeley, California, makes “milk” that has the same nutritional value and taste as traditional, dairy-based sources. It does so by engineering the relevant cattle genes into yeast cells, and growing those in fermentation tanks. + +And there is one more novel source of meaty protein that does not involve farm animals—at least, farm animals of the conventional sort. This is insects. Grasshoppers, for example, are around 70% protein. Insects do have to be fed. But, being cold-blooded, they convert more food into body mass than warm-blooded mammals do and, being boneless, more of that body-mass is edible. Per edible gram, they need only a twelfth of the food that cattle require—and even only half as much as pigs. + +Here, the problem is marketing. Around 2bn people eat insects already, but few of them are Westerners. Changing that could be a hard sell. Grind the bugs up and use them as ingredients, though, and your customers might find them more palatable. Hargol FoodTech, an Israeli startup, plans to do just that. Locustburgers, anybody? + +This article appeared in the Business section of the print edition under the headline “Plant and two veg” + + + + + +Oppo knocks + +Beating Apple, Xiaomi and the gang in China + +How two obscure local smartphone manufacturers made it to the top + +Feb 4th 2017 | DONGGUAN + + + +DONGGUAN, a southerly Chinese city near Hong Kong, is better known for cranking out cheap trinkets than for producing high-end equipment of any kind. And yet, amid the grit and grime is a gleaming low-rise factory producing some 50m smartphones a year for OPPO, a firm started by China’s BBK Electronics but which is now run independently. + +Inside, as well as the usual assembly lines and serried workers, the factory has dozens of staff in quality engineering and testing, conducting 130 different tests on OPPO’s phones before they are released to the market. Such zealous pursuit of quality would be expected of factories that produce phones for Apple—the world-class facilities run by Taiwan’s Foxconn in nearby Shenzhen house similar teams. But it is unusual at a firm that makes relatively inexpensive handsets for the local market. + +OPPO, and its sister firm, Vivo, also a child of BBK, started out in 2004 and 2009 respectively, making cheap and cheerful phones like plenty of other obscure Chinese manufacturers. They probably didn’t even register on Apple’s radar. Xiaomi was the Chinese handset-maker to watch; urban sophisticates, enticed by viral marketing, flocked to its slick devices. But in June 2016 OPPO’s R9, which costs around $400, overtook the iPhone, which is priced at twice that, as China’s best-selling handset. Vivo, which targets younger consumers with lower prices, is also surging. + +The two brands’ achievements are remarkable. Two years ago they were struggling to join China’s top five smartphone-makers; now they are among the biggest five globally. One out of every three smartphones sold in China in the third quarter of 2016 carried one of their brands; in 2012 their combined share was below 3%. + + + +That should give Apple pause. Tim Cook, its boss, predicted in 2013 that China would become his firm’s biggest market. But iPhone sales there have stagnated (see chart). In the third quarter its market share fell to 7.1%, down from 11.4% a year earlier. + +Xiaomi has even more reason to fret. About six years ago it bet on an “asset-light” strategy, meaning it relied almost entirely on selling its phones online. This worked brilliantly when the overall market for smartphones was growing, and the richest cities, with the largest number of tech-aware consumers, were booming. Xiaomi was once valued at some $46bn, but its fortunes in China have plunged. + +That is chiefly due to the fact that growth has shifted sharply to the rising middle classes in smaller cities. Consumers there are less experienced with smartphones than their fancier cousins in Beijing and Shanghai, and are wary of buying them online. They want to touch and compare handsets. OPPO and Vivo spotted this difference early. OPPO in particular shot to the top because it invested heavily in bricks-and-mortar retail distribution in lower-tier cities. Today the firm’s phones are sold at some 200,000 retail outlets across the mainland, which gives its salesmen the chance to coddle customers and nudge them to buy pricier phones. + +At first, OPPO’s strategy was masterminded by Duan Yongping, founder of BBK, who began by selling basic electronics. He is known in China as “Duanfett”, a play on Warren Buffett, because of his financial acumen and also his admiration for Mr Buffett (he paid over $600,000 at an auction to have lunch with him in 2007). Mr Duan has since retired, but still influences the firms’ cultures. + +It took discipline not to be waylaid by the striking (though short-lived) success of Xiaomi’s hype-fuelled internet strategy. Many other companies tried to copy it. From 2011 to 2013, insiders say, OPPO looked hard at expanding its online sales channels, but decided against it. Sky Li, managing director of OPPO’s international mobile business, says the reason lies in her firm’s long-held adherence to the philosophy of ben fen—loosely translated, sticking to one’s knitting. + +Instead, OPPO became still more expert at incentivising its physical retailers. It has shown itself willing to share some of its profits with local stores. It uses a sophisticated system of subsidies that vary by model and season. One retailer in a small town in Sichuan says that although he sells many brands of smartphones, OPPO’s generous subsidies make him extra-eager to peddle its wares. + +That has its costs, of course: OPPO does not disclose the size of its total subsidies nor its profit margin, which may be low compared with other smartphone makers. Fat profits are hard to come by in China’s giant smartphone market. Because it is simple for firms to outsource almost every aspect of phonemaking, from designing components and chipsets to contract manufacturing, the barrier to entry is low (the physical networks that OPPO and Vivo have built will be far harder to replicate than an online presence). Teeming firms means vicious price competition, especially for cheaper phones. The price of a Chinese smartphone may drop to as little as $50, analysts reckon. + +Pressures at home explain why Chinese firms are also looking abroad. In the fourth quarter of 2016, Xiaomi and Vivo were vying with each other behind Samsung in the race for second place in India’s smartphone market. Huawei, a local telecoms-equipment giant that ranks third in the domestic market, already makes two-fifths of its sales outside China; Shao Yang of its consumer-business group says this share will rise to three-fifths within five years. OPPO is already a force in India, and is in second place in South-East Asia behind Samsung. It has opened a new marketing centre in Cairo to spearhead expansion in Africa and the Middle East. + +Kevin Wang of IHS Markit, a research firm, nonetheless reckons that a round of consolidation must be on its way. Within five years, he reckons, most of the 50 or so local Chinese phone manufacturers will be gone. If OPPO and Vivo can stay at the summit, that would be nearly as surprising as the dizzying speed of their ascent. + +This article appeared in the Business section of the print edition under the headline “Upstarts on top” + + + + + +Schumpeter + +Silicon Valley’s criticism of Donald Trump + +Tech firms are at last departing from their see-no-evil stance on society and politics + +Feb 4th 2017 + + + +EARLY in 2016 Schumpeter went to a dinner with one of Silicon Valley’s luminaries, a man of towering intelligence and negligible humility. Asked about the upcoming election, he scoffed: it didn’t matter who America’s president was. Politics had become irrelevant, he said. Technology firms, and their leaders, would carry on fashioning brilliant products and generally carrying out God’s work on Earth, regardless of who occupied the White House. Cue smirks and more Hawaiian Kampachi all round. + +Now Silicon Valley has thrust itself into a presidential stink. Technology groups were the first among big firms to slam Donald Trump’s executive order of January 27th, which temporarily bans people from seven mainly-Muslim countries in the Middle East from entering America. Tim Cook, Apple’s boss, criticised it to employees. Mark Zuckerberg at Facebook said he was “concerned”. Sundar Pichai, CEO of Google, told staff he was “upset” on the day of the order, and a day later the firm’s co-founder, Sergey Brin, was spotted among hundreds of protesters at San Francisco airport. + +Just a month earlier all these technology firms and more had paid tribute at Trump Tower, their leaders laughing for the cameras while Mr Trump promised: “I’m here to help you folks.” The honeymoon has now abruptly ended because immigrants are so important to the technology industry. But the sector’s liberal tendencies—it has few of the instinctive Republicans who populate most boardrooms—also play a part. + +Attracting hyper-brainy people from around the world is at the heart of the tech business model. Mr Brin was born in Moscow, Mr Pichai in Tamil Nadu and Satya Nadella, the head of Microsoft, in Hyderabad. The biological father of the late Steve Jobs was a Syrian who moved to America, a journey that as of this week would be impossible. Half of all the American startups that are worth more than $1bn were founded by migrants. Many of the engineers at tech firms were born abroad, too. In Cupertino, a posh suburb in Silicon Valley, half the population is foreign-born. + +The industry has long supported immigration, therefore. But taking a vocal stand on political subjects has not been its habit, and by entering the fray it will draw attention to its own hypocrisies. For decades tech bosses have pushed a convenient doublespeak to explain their firms’ rise. Their dazzling products are the creations of their leaders. The resulting fortunes are these visionaries’ just reward. But the economic and social consequences of the industry’s output, not all of them good, are no one’s responsibility. Instead, the industry argues, they are the result of unavoidable shifts in technology, in turn responding to society’s broad demands. This logic has allowed tech firms to avoid responsibility for the stolen or bilious content that they publish and for the jobs that their algorithms help eliminate—to say nothing of their own oligopolistic market shares. Silicon Valley boasts of its own might and shrugs at its own impotence both at once. + +The election campaign underlined that this trick is by now exhausted. It is obvious to all that technology firms are political beasts. Politicians rely on Twitter and Facebook messages, social-media advertising and data mining. Tech platforms are used to disseminate fake news. And tech firms are prominent actors in the economic debate that drives populism. The job losses in manufacturing that infuriate Americans have resulted far more from decades of technological advance than from globalisation. The piles of uninvested cash stashed unpatriotically abroad, which Mr Trump now wants to bring home, belong chiefly to technology firms. The low share of American profits that is reinvested partly reflects the heft of Silicon Valley. For every dollar of cash the tech industry makes, it reinvests 24 cents; that compares with 50 cents for other non-financial firms. Growing inequality is partly the result of its concentrated ownership, with a small group of individuals taking a big share of a giant stream of profits. + +In the weeks since November 8th, the technology industry has started to come clean. Google and Facebook have announced measures to try to tackle fake news. In January Mr Zuckerberg said he would travel to 30 American states this year to meet ordinary Americans and hear how globalisation and technology have affected them. Mr Nadella is talking publicly about the effects of artificial intelligence on employment. Others have chosen to make their mark by helping the new government. Elon Musk, the head of Tesla, an electric-car firm, and Travis Kalanick, of Uber, have both become advisers to the president (this week they promised to confront him about his stance on immigration). + +Swipe for the next ethical dilemma + +Coming out of the closet as among the most important actors in American society boosts technology bosses. So does standing up for their beliefs in things like immigration. It is more intellectually honest. It goes down well with employees. And it is probably popular with customers, too. Most consumer-facing technology firms have user bases that are skewed towards the young and non-Americans, both groups that dislike Mr Trump. After taxis went on strike at JFK airport in New York in protest against the travel ban, Uber came under fire for not boycotting the airport, too, and the hashtag “#DeleteUber” went viral. + +Yet tech firms still have an awfully long way to go. Often they define virtue as what they judge to be in their business interests. Last year, Mr Cook dismissed a demand by the European Union to pay more tax as “political crap”. In December Apple agreed to a state request to ban the New York Times’s app in China, where the firm makes just over a fifth of its sales. Mr Zuckerberg fits the same pattern: he says he wants to give away 99% of his fortune and that he believes in the ideal of free expression, but his firm paid a tax rate of just 6% over the past half-decade, and he has toadied up to China’s censors, too. Oligopolistic, hubristic and ruthless to its core, Silicon Valley is no beacon of moral leadership. + +This article appeared in the Business section of the print edition under the headline “Silicon Valiant” + + + + + +Finance and economics + + + + +Emerging markets: Pop-up markets + +The Indian economy: Rupees for nothing + +Buttonwood: A taxing problem + +Trade deals: Trying For Anything + +The Ethiopia Commodity Exchange: High-tech, low impact + +Asset management: Ctrl alt-beta + +Custodian services: Quis custodiet? + +Free exchange: Better than a wall + + + + + +Pop-up markets + +Emerging markets’ Trump tantrum abates, except in Turkey + +Turkey’s policymakers have not learnt the lessons of past emerging-market crises + +Feb 4th 2017 | ISTANBUL + + + +THE Syrian consulate in Istanbul’s elegant Nisantasi quarter is a busy spot. Men huddle outside in the cold, waiting for their turn to slip through the building’s ornate doors. The rest of the neighbourhood is, however, unusually subdued. A string of terrorist attacks in the city and an attempted coup in July, followed by a purge of suspected sympathisers, has dampened spirits. “After a bomb goes off, no one goes out. A week is lost,” says one shopkeeper. + +Besides war next door and terror at home, Turkey’s economy has been rocked by political upheaval farther afield: the lira has plummeted by over 15% against the dollar since America’s election on November 8th. Many tenants cannot now afford Nisantasi’s rents, often priced in foreign currency. Even the childhood home of Orhan Pamuk, Turkey’s best-known novelist (pictured), has a “for rent” sign on the door. + +Back in November, Turkey had a lot of company in its economic misery. Other emerging markets also reacted badly to America’s election result, prompting talk of a “Trump tantrum” to match the “taper tantrum” after May 2013, when America’s Federal Reserve began musing about reducing its pace of asset purchases. + +In recent weeks, however, the fortunes of emerging markets have parted ways. South Africa’s rand has recouped most of its post-election losses against the dollar. India’s and Indonesia’s currencies are both within 2% of their pre-Trump parities. Brazil’s real, which weakened by 8% against the greenback in the first few days after the election, is now stronger than it was before it. Only Mexico’s peso, still down by about 10%, has rivalled the lira’s decline. + +The markets may have concluded that Mr Trump’s policies, intended to put America first, will set some emerging economies further back than others. Consider four potential dangers: a stronger dollar; trade wars; immigration curbs; and a tax holiday that prompts American firms to repatriate foreign profits. Russia is greatly vulnerable to none of these risks, according to Nomura, a bank. Mexico is highly exposed to all of them. Other economies fall somewhere between the two (see table). + + + +What about Turkey? At first glance, it would seem to have little to fear. It is not highly vulnerable to a trade war, the repatriation of profits or curbs on migrant workers. After a fiscal and financial crisis in 2001, Turkey has also repaired its public finances, reformed the banking system, tamed inflation and floated the lira. + +But although Turkey has learnt a lot from its past, it has learnt rather less from its peers. The experience of other emerging economies over the past 20 years shows that current-account deficits can be as treacherous as fiscal deficits. It also shows that financing such a gap with long-term foreign direct investment is better than relying on “hot money”. The record also suggests that if the money has to be hot, it is better that it take the form of equity, rather than debt. And if it has to be debt, better that it is denominated in the country’s own currency, not someone else’s. + +For all its strengths, Turkey has not abided by these rules of thumb. Its persistent current-account deficit (estimated to exceed 4% of GDP in 2016) has left it with short-term external debt amounting to over $100bn at the end of November (84% of which is denominated in foreign currencies). That is roughly equal to its entire stock of foreign-currency reserves (worth less than $98bn at the end of November). Mexico’s reserves, in contrast, are roughly twice its short-term external debt, according to the IMF. + +These external debts and deficits leave Turkey vulnerable to the withdrawal of foreign capital. To prevent it may require higher interest rates, but the central bank has so far tightened only tentatively. Instead of simply raising its “benchmark” rate—the one-week repo rate—it has stopped offering repo auctions altogether. That has forced banks to borrow at its higher overnight lending rate (which it raised by 0.75 percentage points on January 24th) or the even higher rates offered at its “late” liquidity window. + +To some economists, the lack of simplicity in the central bank’s policy suggests a lack of conviction. They worry that, despite its statutory independence, it is reluctant to antagonise Turkey’s increasingly powerful president, Recep Tayyip Erdogan, who has fulminated against the “interest-rate lobby” and demanded lower borrowing costs. Mr Erdogan would rather defend the currency by drawing on Turkey’s deep reserves of patriotism, urging Turks to convert their dollars into lira “if you love this country”. One barber told a local television station he would offer a free cut to anyone who converted $300. + +If neither central bankers nor barbers stop the lira’s fall, it may be Turkey’s creditors in line for a haircut. On January 27th Fitch, a ratings agency, cut Turkey’s foreign-currency credit rating to junk, citing the country’s exposure to foreign debt and the erosion of checks and balances on its president. The agency thinks more loans (especially to tourism and energy companies) may require restructuring, but it believes Turkey’s banks have enough capital to withstand “moderate shocks”. + + + +The other risk posed by a falling currency is rising prices. Turkey has a long history of high inflation, forcing Mr Erdogan to remove six zeroes from the currency in 2005. (Some Turks still say “billion” when they mean “thousand”.) Historically, a 10% fall in the lira translates into a 1.5% rise in prices, which would further jeopardise the central bank’s efforts to bring inflation down from 8.5% to its target of 5%. Its own economists argue that the inflationary impact of a weak currency may be offset by the weak economy. + +They could be right. Next to the Syrian consulate is a brightly painted store (the “Pop-Up Shop”), offering nothing but consumer imports, from cereals to cosmetics, so the neighbourhood’s well-heeled residents may satisfy esoteric tastes acquired abroad. Its eclectic range includes Brut aftershave, Jack Daniel’s barbecue sauce, Tide detergent and peach-flavoured amino acids. The falling lira has pushed their costs up, but they have still been forced to cut their prices for the benefit of their financially straitened customers. The shop manager has written off 2017 as a lost year. “We’ve had enough,” his father complains, tugging the collar of his coat, a Turkish gesture roughly akin to throwing up your hands in exasperation. But at least their rent, which the father quotes in billions not thousands, is priced in lira. + +This article appeared in the Finance and economics section of the print edition under the headline “Pop-up markets” + + + + + +Rupees for nothing + +India floats the idea of a universal basic income + +A powerful idea that is unfeasible for now + +Feb 4th 2017 | MUMBAI + +Basic needs + +NOVEMBER 8th was not just the day of Donald Trump’s election. It was also when Indians found out most banknotes would lose all value unless promptly exchanged. Ever since, many have expected their patience in enduring the ensuing chaos to be rewarded in some way. Might scrapped cash unredeemed by presumed tax-dodgers be recycled into a lump-sum payment to each and every citizen? Or would the annual budget, presented on February 1st, be full of giveaways ahead of a string of state elections? In the event, the budget was restrained to the point of dullness. But the government’s closely-watched “economic survey”, released the previous day, hinted at a much bigger giveaway in the works: a universal basic income (UBI) payable to every single Indian. + +The idea of a cash payment made to citizens irrespective of their wealth is centuries old. It has become newly fashionable in some rich countries, among both left-wing thinkers (who like its redistributive aspects) and their right-wing foes (who think it results in a less meddlesome state). The idea has had its fans in India: a small UBI scheme was launched as a pilot in the state of Madhya Pradesh in 2010. + +Its inclusion in the annual survey, a breeding ground for policies that was drafted by the government’s chief economic adviser, Arvind Subramanian, gives a new focus for fans of the measure (and its opponents). A UBI is usually discussed in abstract terms. There is now a proposed amount: 7,620 rupees ($113) a year. Equivalent to less than a month’s pay at the minimum wage in a city, it is well short of what anyone might need to lead a life of leisure. But it would cut absolute poverty from 22% to less than 0.5%. + +Mr Subramanian also provides an outline of how it would be paid for. Crucially, the money would largely come from recycling funds from around 950 existing welfare schemes, including those that offer subsidised food, water, fertiliser and much else besides. Altogether these add up to roughly the 5% of GDP he thinks his version of UBI would cost. Starting such a programme from scratch would take up around half the central government’s annual budget, such is the pitiful state of direct-tax collection in India. + +The pros of UBI are clear: India is keen in theory to help its poor, but not very good at it in practice. Much of its welfare subsidies ends up in the hands of the relatively rich, who are more likely to make use of air-conditioned trains or cooking gas—or able to bribe the bureaucrats in charge of deciding who deserves subsidies. In-kind benefits are pilfered by middlemen who would find it harder to get at payments made to beneficiaries’ bank accounts. + +Mr Subramanian acknowledges that managing the transition to a new system would be difficult. In much of India, citizens have to travel at least 3km (2 miles) to get to a bank. Digital payments are still a minority pursuit. One advantage of the proliferation of welfare schemes is that if one of them fails to pay out, others might. + +Another obstacle is that a fair few billionaires would also benefit from a truly universal UBI. Telling an illiterate farmer that a food-in-kind scheme he has used for decades is being scrapped to finance a programme that will put him on par with Mukesh Ambani, a tycoon who lives in a 27-storey house, will not be a vote-winner. In truth, Mr Subramanian’s proposal stops a little short of true universality: for his sums to add up, take-up must be limited to just 75% of Indians. That means either a return to flawed means-testing, or a hope that the better-off will voluntarily opt out. + +Implementing a UBI would be easier in India in one important way: getting the money to recipients. Well over 1bn Indians now have biometric identification cards, known as Aadhaar. The system can handle money, usually by diverting incoming payments to a bank account linked to an Aadhar number. A blast of cash to all citizens enrolled in the scheme would be a feasible way to distribute the money—though that would mean everyone got money, including the conspicuously rich. + +It will take time before 1.3bn Indians receive such a transfer. Keen as Mr Subramanian is, he concludes that UBI is “a powerful idea whose time even if not ripe for implementation is ripe for serious discussion.” For now the government is focused on meeting its long-held 3% deficit target, which it expects to miss by just 0.2 percentage points next year, and on the aftermath of “demonetisation”. But the idea will not go away. It may seem folly in a country home to over a quarter of the world’s truly poor to give people money for nothing. But it would be a swift, efficient way to make it home to far fewer of them. + +This article appeared in the Finance and economics section of the print edition under the headline “Rupees for nothing” + + + + + +Buttonwood + +What if interest expenses were no longer tax-deductible? + +This would be a risky time to fiddle with the tax code + +Feb 4th 2017 + + + +ONE reason why the American equity market has rallied since the election of Donald Trump is the hope that taxes on corporate profits will be cut. But that measure has to be paid for, and analysts are only just starting to figure out where the burden might fall. + +The initial focus has been on the idea of border-adjustment taxes. But another way of raising revenue is to remove companies’ right to deduct their interest expenses from their taxable income. That proviso has been in place since 1918, when it was introduced to help firms struggling with the impact of the first world war—evidence that tax breaks, once granted, are hard to remove. + +Allowing interest payments, but not dividends, to be deducted from corporate profits before tax is paid is a huge distortion to the system. It is a perk worth around 11% of the value of corporate assets. It has tended to encourage companies to take on more debt. By doing so, it may make the economy more risky at the margin: in a recession, highly-indebted companies are likely to go bust more quickly, whereas companies with lots of equity capital can ride out the storm. As a result, this newspaper has favoured the abolition of the deductibility rule. + +The revenue gains to the American government would be large—around 1.6% of GDP as of 2013 (in 2007, when interest rates were higher, it would have been 4.3%). Robert Pozen of Harvard Business School has calculated that removing interest deductibility would allow the corporate-tax rate to be cut to 15%, from 35%. A cut that large seems unlikely, however, given another proposal that companies should be immediately allowed to write off their capital investment against tax, a measure that would reduce tax revenue. + +The effect on the corporate world would not be uniform. Some companies have a lot more debt, and thus a lot more to lose, than others. Matt King at Citigroup has done some calculations on the winners and losers, on the assumption that the corporate-tax rate is cut to 20%. On that basis, companies with an interest coverage ratio (pre-tax profits divided by interest) of more than 2.4 would be better off. + +But few companies actually pay the full 35% tax rate; the average effective tax rate is around 27%, Citigroup says. On this basis, Mr King reckons that only companies with interest cover of more than four times would gain. The effect would be good news for the strongest firms (those judged investment-grade by the rating agencies) and bad news for companies in the high-yield, or “junk”, sector (see chart). This would include many companies financed or owned by private-equity firms. + +Whether this shift would make the system safer in the short term also depends on the broader aims of the Trump agenda. “If we are in fact heading into an environment of better growth and less regulation, this should drive more debt issuance in the near term, not less,” say analysts at Morgan Stanley, a bank. “Even if the tax shield goes away, the cost of debt is still relatively low versus historical levels.” + +Another issue is that America would be the only country eliminating the interest subsidy. Companies would still have the incentive to borrow in other countries that allowed them to deduct interest payments against tax. So companies could issue bonds in locations with high corporate-tax rates, and then use the proceeds to buy back bonds issued in America. This could result in even lower bond yields on investment-grade bonds in the American markets as investors chase a dwindling supply of them. + +The upshot could be a sharp divide in the bond market, with investment-grade yields falling and junk-bond yields rising, as investors worry about the ability of the latter to service their debts without the tax benefit. The gap, or spread, between the two would rise as a result (at the moment, spreads are four percentage points, quite low by historical standards). If this took place in an atmosphere of generally rising bond yields, because inflation and economic growth are picking up, then it would be hard for riskier companies to refinance their debts. + +The number of defaults has already been rising, largely because of the impact of lower oil prices on the energy industry. The default rate on junk bonds was 5% in the 12 months to January 2017, having been under 2% at the start of 2015. In 2016, 2.6 times as many bonds were downgraded by S&P Global Ratings as were upgraded. Besides pointing to the high credit valuations, Morgan Stanley also notes that “uncertainty has rarely been higher in this cycle”. It could be a dangerous time to fiddle with the tax code. + +Economist.com/blogs/buttonwood + +This article appeared in the Finance and economics section of the print edition under the headline “A taxing problem” + + + + + +Trying For Anything + +Why even win-win trade deals are tough + +The first global trade deal in decades shows why the next one will be even harder + +Feb 4th 2017 + + + +IN THE wee hours of December 7th 2013, after weeks of haggling, exhausted trade representatives stood to applaud. Agreement had been reached on the first trade deal in the history of the World Trade Organisation (WTO). No longer could it be accused of being a talking shop, crimped by consensus. “For the first time in our history, the WTO has truly delivered,” said Roberto Azevêdo, the body’s chief. The deal is tantalisingly close to coming into force, needing just two more national ratifications. Chad, Jordan, Kuwait and Rwanda are competing to take it over the line. + +In theory, the Trade Facilitation Agreement (TFA) is a beacon of hope on the trade landscape. It was unanimously agreed to by rich and poor countries. If fully implemented, it could have an even bigger impact than slashing all tariffs. It is an example of a win-win deal, in which peer pressure pokes governments into making life easier and more prosperous. + +The agreement shies away from slashing subsidies or toppling tariffs, and instead hacks at the thicket of regulatory trade barriers. The red tape is stickiest in poorer countries; in sub-Saharan Africa exporters must endure nearly 200 hours of inspections, regulations and paperwork. Richer countries face only 15 (see chart). + +The TFA is supposed to surmount these hurdles by, for example, setting standards, streamlining processes and squeezing fees. This would cut trade costs by as much as 15% in poorer countries. It also enforces greater transparency. Export-led growth is tricky if people do not know how to export. A study by Evdokia Moïsé and Silvia Sorescu of the OECD found that better information could cut trade costs by 1.7% in low-income countries. + +Step back a bit, however, and the TFA looks rather bedraggled. It rose out of the ashes of the Doha round, the last big attempt at a global trade deal, as the least controversial item. Grand trade deals, never very high on governments’ agendas, have in recent decades aimed more at locking in existing practice than at winning important new concessions. The TFA reflects curtailed ambition, after plans for agreements in areas such as intellectual property and trade in services were abandoned, + +Its cuddly inclusivity comes at a cost. Poorer countries have flexibility over which standards they will put in place immediately, which they need time for—and which they need money for. Some bits of the agreement are exhortations rather than rules. Implementation may be slow. A study published in December 2016 noted that even when regional trade agreements include trade-facilitation provisions, they are not always put into effect. A committee will oversee implementation, but insiders doubt how much pressure non-compliant governments will really face. + +Eight months after Mr Azevêdo triumphantly hailed the WTO’s success in brokering its first deal, India very nearly scuppered it, holding it hostage over an unrelated argument about agricultural subsidies. (WTO wonks still smart at the memory.) Eventually, America thrashed out a compromise in a side-agreement. So the TFA’s history highlights the belligerence of some governments; and, alarmingly for those following the pronouncements on trade of the new Trump administration, the importance of American leadership. + +This article appeared in the Finance and economics section of the print edition under the headline “Trying For Anything” + + + + + +High-tech, low impact + +Ethiopia’s state-of-the-art commodity exchange + +Not as transformative as its founders hoped + +Feb 4th 2017 | ADDIS ABABA + + + +ON THE walls of the Ethiopia Commodity Exchange (ECX) in Addis Ababa, the capital, hang glossy black-and-white photographs of provincial market towns and rustic life. For the merchants and brokers striding across its high-tech trading floor they serve as a reminder that the ECX, sub-Saharan Africa’s most modern commodity exchange outside Johannesburg, exists for a simple, practical purpose: to transform Ethiopian agriculture. + +It has some way to go. By connecting smallholder farmers to global markets, the exchange, launched with a fanfare in 2008, was supposed to help reduce hunger. The hope was it would reduce price volatility and incentivise farmers to plant crops. But staple foods such as haricot beans today account for less than 10% of its trade. Its annual turnover—worth about $1bn—is dominated instead by two export crops, coffee and sesame seeds. In 2015, despite a dire drought, Ethiopia did avoid famine, but the ECX played little role: its maize and wheat contracts had lapsed by then because of concerns that exports would jeopardise domestic food supplies. Cutting out middlemen seems not to have done much for smallholders: studies suggest that the share of international prices received by coffee farmers has barely budged over the past decade. Exporters complain about government price-meddling. + +The ECX’s founder, Eleni Gabre-Madhin, who left the exchange in 2012, worries that momentum has been lost. The exchange remains restricted to simple spot-trading. Futures contracts, which help traders manage price fluctuations, were supposed to be introduced within five years, but are still some way off. + +In July 2015 the ECX did, however, introduce electronic transactions, now used for almost all trades. Bespoke software is built in-house by Ethiopian engineers. Payments the day after purchase are guaranteed. The ECX can also boast never to have seen a default, in a country known for suicides by indebted farmers whose buyers have welshed. Ethiopia has shown that it is possible for an exchange to prompt the physical infrastructure of commodities markets: the ECX oversaw a burst in warehouse construction. + +Fledgling exchanges dotted around Africa often visit Addis Ababa to study the ECX. But experts doubt it is a helpful model. The government made it viable by mandating that almost all trade in coffee and some other commodities go through the exchange. This might not be possible elsewhere. A monopoly imposed by fiat makes it more like a state marketing board than an exchange, says Thomas Jayne, an economist at Michigan State University. + +Another model might be the Agricultural Commodity Exchange for Africa in Malawi, which was set up privately in 2006 at the request of an association of smallholder farmers. But its volumes remain low. And its concentration on staple foods such as maize and soya leaves it vulnerable to the sort of government interventions that can sink exchanges. Trading in staples tends to be politically sensitive in times of food scarcity. + +Setting up national exchanges may be the wrong approach. The Johannesburg Stock Exchange plans to introduce a regional contract for Zambian white maize later this year. For lucrative export crops like coffee, well-established offshore exchanges may make more sense than starting from scratch at home. Better a functioning exchange somewhere else than a disappointing one on the doorstep. + +This article appeared in the Finance and economics section of the print edition under the headline “High-tech, low impact” + + + + + +Ctrl alt-beta + +“Alt-beta” funds offer hedge-fund-like investments more cheaply + +But they complement rather than replace hedge funds + +Feb 4th 2017 + + + +INVESTORS love to complain about hedge funds, which have delivered measly returns for the past several years and are notorious for their high fees. Yet so far, most have stuck with them. One reason is that the hedge funds’ mission—to provide returns uncorrelated with overall market performance—has been hard to replicate. But a fast-growing hedge-fund-like product, known as the “alternative beta” fund, allows investors much cheaper access to a similar style of investment. + +“Alt-beta”, as it is usually called, is a bit of a misnomer. The word “beta” is typically used to mean broad market returns, which can be bought into through index-tracking funds. “Alpha” is the term used to describe the premium added by a skilled fund manager. The idea driving both “alt-beta” funds and longer-established “smart-beta” ones, is that, just as “beta” can be distinguished from “alpha”, so returns can be ascribed to identifiable, predictable factors. One example is the “value” effect: ie, that undervalued companies tend to outperform the market. + +Smart-beta and alt-beta funds are close cousins, but differ in their methods and in their outcomes. Both aim to automate asset selection, for example by using rules-based algorithms rather than human managers. But whereas smart-beta funds simply pick and buy assets, and hence ride the market along with other asset managers, alt-beta funds use hedge-fund tactics in search of uncorrelated returns. These include betting against (ie, “shorting”) assets and using derivatives. + +Compared with hedge funds, alt-beta funds are dirt cheap. They typically charge as little as 0.75-1% a year, compared with 2% annually and 20% of profits for a typical hedge fund. Perhaps unsurprisingly, they have grown fast: according to estimates from JPMorgan Chase, assets managed by alt-beta funds have increased from $2bn in 2010 to around $70bn at the end of 2016 (still nugatory compared with the $3trn in hedge funds). + +A range of firms are getting into the alt-beta business: big asset managers, investment banks and funds of hedge funds. So, indeed, are hedge funds themselves. Hedge funds tend to like esoteric, niche investments which are by definition in short supply. But they also invest in mainstream, liquid assets. Taking those positions, repackaging them as alt-beta funds, and selling them on to investors offers them another source of business. + +Indeed, hedge funds may not feel too threatened by the alt-beta trend. The cost and complexity of setting up the infrastructure to short assets or trade in derivatives are high barriers to entry. Moreover, alt-beta funds can be volatile. Simon Savage, director of alternative beta at Man Group, a listed provider of hedge funds, says this is to be expected: alt-beta funds are essentially “very simplified hedge funds”, without as much emphasis on mitigating risks. + +Such funds may offer cheaper access than hedge funds do to certain commoditised risks. But they may also end up producing lower risk-adjusted returns, making them unappealing on their own. Most investors seem, for now, to use alt-beta funds as a complement to hedge funds, rather than as an alternative. Hedgies are not out of a job yet. + +This article appeared in the Finance and economics section of the print edition under the headline “Ctrl alt-beta” + + + + + +Custody tarts + +The custodian-bank business + +A big deal roils the industry’s usually placid waters + +Feb 4th 2017 | NEW YORK + + + +NO ACTOR has ever sat nude in a bathtub to explain the intricacies of the bank-custody business, as Margot Robbie did for mortgage-backed securities in “The Big Short”, a successful film. The blame lies with the custody business’s virtues, not its flaws. + +Instead of the 2% fees Ms Robbie mentions for offloading rubbishy securities onto suckers, bank-custody fees are tallied in hundredths of a percentage point. Custody bankers are generally neither glamorous nor crooked. They are accountants and software engineers catering to well-informed clients: the owners and managers of huge amounts of financial assets. The services they offer include: holding, valuing and transferring securities; receiving interest and dividends; and providing notice of corporate actions. The business grows with the financial markets, but more slowly. Years of almost seamless and scandal-free performance have made the business well-nigh invisible. But not quite. + +Custody has habitually been “sticky”: the loss of a large account is unusual. But on January 25th BlackRock, a gargantuan asset manager, announced that it was moving custody assets worth $1trn from State Street to JPMorgan Chase. State Street’s shares dropped by 7%, or roughly double the percentage of assets lost. In a business that relies on economies of scale, marginal assets have disproportionate value since they provide revenue without much extra cost. + +Custodians are like utilities, providing critical infrastructure. The three biggest are State Street, BNY Mellon, and JPMorgan Chase, each overseeing more than $20trn in assets. Next is Citigroup with $15trn. When many custodian-bank executives started work, their jobs entailed the meticulous counting of mountains of paper securities. Now these banks have to invest fortunes in computing power. State Street spent over $1.1bn on hardware in 2016, and was probably matched by the two other giants, says Brian Kleinhanzl of KBW, a research firm. + +These investments matter. State Street and BNY Mellon do not have the same breadth of businesses as JPMorgan Chase and Citigroup, but they are designated “systemically important institutions” because it is absolutely essential that their systems work. They hold and price trillions in assets; a glitch could create havoc. Some temporary outages have happened, but nothing persistent. The occasional scandal has also emerged. Several custodians have settled charges of pocketing excessive amounts from foreign-exchange dealings. But this has, so far, caused minimal disruption. + +By dint of their position, the custody banks also have extraordinary access to information. They know which markets are efficient, how money is flowing, the value of their customers’ holdings and what form they take. That information is, slowly, becoming a valuable product in itself. Their work may never be explained by a woman in a tub, but when the financial world is on fire, they may be able to tell her how hot the water is. + +This article appeared in the Finance and economics section of the print edition under the headline “Quis custodiet?” + + + + + +Free exchange + +In defence of NAFTA + +NAFTA has been a disappointment but its benefits are underappreciated + +Feb 4th 2017 + + + +THE North American Free Trade Agreement (NAFTA) has long been a populist punchbag. In the American presidential campaign of 1992, Ross Perot—an oddball Texas billionaire and independent candidate—claimed to hear a “giant sucking sound” as Mexico prepared to hoover up American jobs. Since its enactment, right-wing conspiracy theorists have speculated that NAFTA is merely a first step towards “North American Union”, and the swapping of the almighty dollar for the “amero”. Donald Trump, who plans to renegotiate (or scrap) the deal, mined a rich vein of anti-NAFTA sentiment during his campaign, calling it “the single worst trade deal ever approved in this country”. Even NAFTA’s cheerleaders (a more reticent bunch) might concede that the deal has fallen short of their expectations. But it is in none of the signatories’ interests to rip it up or roll it back. + +America and Canada opened talks on a free-trade area with Mexico in 1990, shortly after securing their own bilateral deal, and it was bringing in Mexico that proved so contentious in America. When NAFTA took effect in 1994, it eliminated tariffs on more than half of its members’ industrial products. Over the next 15 years the deal eliminated tariffs on all industrial and agricultural goods. (The three economies would have further liberalised trade within the Trans-Pacific Partnership, which Mr Trump scotched in one of his first acts as president.) + +Americans hoped lower trade barriers would foster growth in cross-border supply chains—a “Factory North America”—to rival those in Europe and Asia. By moving parts of their supply chains to Mexico, where labour costs were low, American firms reckoned they could cut costs and improve their global competitiveness. American consumers might also benefit from cheaper goods. For its part, Mexico sought improved access to America’s massive market, and sturdier positions for its firms within those North American supply chains. Both countries hoped the deal would boost Mexico’s economy, raising living standards and stanching the flow of migrants northward. + +NAFTA was no disaster. Two decades on, North America is more economically integrated. Trade between America and Mexico has risen from 1.3% of combined GDP in 1994 to 2.5% in 2015 (see chart). Mexico’s real income per person, on a purchasing-power-parity basis, has risen from about $10,000 in 1994 to $19,000. The number of Mexicans migrating to America has fallen from about half a million a year to almost none. And yet the deal has disappointed in many ways. Mexican incomes are no higher, as a share of those in America, than they were in 1994. (Chinese incomes rose from about 6% of those in America to 27% during that time.) Estimates suggest that the deal left Americans as a whole a bit better off. But the gains have proved too small, and too unevenly distributed, to spare it continued criticism. + +The sniping is unfair. Unexpected shocks prevented the deal from reaching its full potential. Both the peso crisis of 1994-95 and the global financial crisis dealt blows to trade between the two countries. So did the American border controls introduced after the attacks of September 11th 2001, which raised the cost of moving goods and people. The rapid, disruptive growth of China also interfered with North American integration. The Chinese economy, accounting for more than 13% of global exports and around 25% of global manufacturing value-added, exerts an irresistible pull on global supply chains. + +Nor is NAFTA chiefly responsible for the woes of the American worker. In a recent essay Brad DeLong, an economic historian at the University of California, Berkeley, reckoned NAFTA might be blamed for net job losses of the order of 0.1% of the American labour force—fewer jobs than the American economy adds in a typical month. Even without NAFTA, manufacturing jobs would have dwindled. The strong dollar and better transport and communications technology made it more attractive to produce abroad. Automation hastened the persistent long-term decline in industrial employment that is familiar in all rich economies—even in export powerhouses such as Germany. + +Beggar my neighbour + +Most important, the failure to agree a trade deal with Mexico would not have altered North American geography. Mexico shares a 3,200km-long border with the world’s largest economy. It is almost inevitable that America will be Mexico’s largest trading partner (America currently accounts for more than 70% of Mexican exports and more than 50% of its imports). Deep familial and cultural ties across the border shrink the distance between them even more. Mexico cannot help but be critically dependent on its neighbour’s economy. And America unquestionably benefits when Mexico, which has the world’s tenth-largest population and 15th-biggest economy, is more prosperous. + +A richer Mexico would buy more American goods and services and provide more ideas, talent and innovation. It would also be better placed to manage migration, and a stronger diplomatic partner. Eliminating tariffs on Mexico would not instantly transform it into Canada, but the notion that higher trade costs between the two economies would serve American interests better is, at best, short-sighted. No wall can insulate America against events to its south, and Americans’ own well-being is intimately linked to the welfare of their around 125m Mexican neighbours. + +It is hard to blame Americans for seeing globalisation as a zero-sum affair. Stagnant pay, rising inequality and government complacency as industrial regions suffered long-term decline have obscured the benefits of trade and created fertile ground for populists. As a result Americans feel let down by NAFTA. Yet NAFTA has itself been let down by American leaders, who neither made the case that higher living standards are a positive-sum game, nor allowed the benefits of growth to be broadly shared. If the upshot is the disintegration of the North American economy, those on both sides of the Rio Grande will be worse off. + +Visit our Free exchange economics blog + +This article appeared in the Finance and economics section of the print edition under the headline “Better than a wall” + + + + + +Science and technology + + + + +Augmented reality: Better than real + + + + + +Reality, only better + +The promise of augmented reality + +Replacing the real world with a virtual one is a neat trick. Combining the two could be more useful + +Feb 4th 2017 + + + +SCIENCE fiction both predicts the future and influences the scientists and technologists who work to bring that future about. Mobile phones, to take a famous example, are essentially real-life versions of the hand-held communicators wielded by Captain Kirk and his crewmates in the original series of “Star Trek”. The clamshell models of the mid-2000s even take design cues directly from those fictional devices. + +If companies ranging from giants like Microsoft and Google to newcomers like Magic Leap and Meta have their way, the next thing to leap from fiction to fact will be augmented reality (AR). AR is a sci-fi staple, from Arnold Schwarzenegger’s heads-up display in the “Terminator” films to the holographic computer screens that Tom Cruise slings around as a futuristic policeman in “Minority Report”. + +AR is a close cousin to virtual reality (VR). There is, though, a crucial difference between them: the near-opposite meanings they ascribe to the term “reality”. VR aims to drop users into a convincing, but artificial, world. AR, by contrast, supplements the real world by laying useful or entertaining computer-generated data over it. Such an overlay might be a map annotated with directions, or a reminder about a meeting, or even a virtual alien with a ray gun, ripe for blasting. Despite the hype and prominence given recently to VR, people tend to spend more time in real realities than computer-generated ones. AR thus has techies licking their lips in anticipation of a giant new market. Digi-Capital, a firm of analysts in California, reckons that of the $108 billion a year which it predicts will be spent by 2021 on VR and AR combined, AR will take three-quarters. + +Improving on the world + +Like many science-fictional technologies, AR is in fact already here—just unevenly distributed. An early version was the heads-up displays that began to be fitted to jet fighters in the 1950s. These projected information such as compass headings, altitude and banking angles onto the cockpit canopy. Such displays occasionally turn up in cars, too. But only now, as computers have shrunk enough and become sufficiently powerful, has it become possible to give people a similar sort of experience as they go about their daily lives. + +Last year, for instance, the world was briefly entranced by an AR smartphone game called Pokémon Go. Players had to wander the world collecting virtual monsters that were, thanks to their phones’ cameras, drawn over a phone’s-eye view of a building’s lobby or a stand of trees. Apps such as Snapchat, which features image filters that permit users to take pictures of themselves and others wearing computer-generated rabbit ears or elaborate virtual make-up, are another example. + +There are less frivolous uses, too. Google’s Translate app employs computer vision, automatic translation and a smartphone’s camera to show an image of the world that has text, such as items on menus and street signs, interpreted into any of several dozen languages. + +Apps like Snapchat and Translate rely on machine-vision algorithms to work their magic. Snapchat is designed to detect faces. This works well enough, but means that the bunny ears can be applied only to heads. Translate, similarly, looks for text in the world upon which to work its magic. But smartphone-makers have bigger plans. + +At the end of last year Google and Lenovo, a Chinese hardware manufacturer, unveiled the Phab 2 Pro, the first phone to implement a piece of Google technology called Tango. The idea is that, by giving the phone an extra set of sensors, it can detect the shape of the world around it. Using information from infra-red detectors, a wide-angle lens and a “time-of-flight” camera (which measures how long pulses of light take to reflect off the phone’s surroundings) Tango is able to build up a three-dimensional image of those surroundings. Armed with all this, a Tango-enabled phone can model a house, an office or any other space, and then use that model as a canvas upon which to draw things. + +To give an idea of what is possible, Google has written apps that would be impossible on Tango-less phones. “Measure”, for instance, overlays a virtual tape measure on the phone’s screen. Point it at a door, and it will tell you how wide and high that portal is. Point it at a bed, and you get the bed’s dimensions—letting you work out whether it will fit through the door. Another Tango app is the oddly spelled “Woorld”, which lets users fill their living rooms with virtual flowers, houses and rocket ships, all of which will interact appropriately with the scenery. Place the rocket behind a television, for instance, and the set will block your view of it. + +Through a pair of glasses, virtually + +The effect Tango gives is impressive, but the technology is still in its early stages. Building 3D models of the world is computationally demanding, and quickly drains even the Phab 2 Pro’s beefy battery. The models themselves quickly use up the phone’s data-storage capacity. And the touchscreen of a phone is a clumsy way of communicating with the software. Some enthusiasts of augmented reality therefore think that the technology will not take off properly until smartphones can be abandoned in favour of smart spectacles that can superimpose images on whatever their wearers happen to be looking at. + +Such glasses do exist. So far, though, they have made a bigger impact on the workplace than in the home. Companies such as Ubimax, in Germany, or Vuzix, in New York, make AR spectacles that include cameras and sensors, and which use a projector mounted on the frame to place what looks like a small, two-dimensional screen into one corner of the wearer’s vision. + +Used in warehouses, for instance, that screen—in combination with technology which tracks workers and parcels—can give an employee instructions on where to go, the fastest route to get there and what to pick up when he arrives, all the while leaving both of his hands free to move boxes around. Ubimax reckons that could bring a 25% improvement in efficiency. At a conference in London in October, Boeing, a big American aeroplane-maker, described how it was using AR glasses to give workers in its factories step-by-step instructions on how to assemble components, as well as to check that the job had been done properly. The result, said Paul Davies of Boeing’s research division, is faster work with fewer mistakes. + +The one serious attempt to offer individual consumers such technology did not, though, go well. Like Vuzix’s and Ubimax’s products, Google’s “Glass”, released in 2013, was a pair of spectacles with a small projector mounted on one arm. The idea was, in effect, to create a wearable smartphone that would let its user make calls, read e-mails, see maps and use the Glass’s built-in GPS to navigate, all the while leaving his hands free for other tasks. + +The problem was not with the users. Google’s “Glass Explorers”—those willing to pay $1,500 for early access to the hardware—seemed happy enough. But, often, those they interacted with were not. Glass Explorers quickly attracted the nickname “Glassholes” from those annoyed by their proclivity to glance at e-mails in the middle of a conversation, or worried that the device let wearers record everything going on around them. (Some restaurants banned Glass users on privacy grounds.) Google stopped making Glass early in 2015, although it is working on a new version aimed at businesses instead of individuals. + +Other firms have more limited ambitions, but may do better for that. RideOn, for instance, is an Israeli outfit founded by three engineers with experience in designing heads-up displays for aircraft. It will soon start selling augmented-reality ski goggles. The idea is to turn skiing into a video game, by showing users routes, letting them time runs, compete with their friends, shoot footage and the like. + +Some companies are building much more capable displays. Instead of 2D images, they propose to create augmented reality in three dimensions. In March 2016 Microsoft began making early versions of a headset called the HoloLens available to software developers around the world. Unlike the AR glasses produced by Vuzix and Ubimax, or Google’s Glass, the HoloLens can draw 3D images that appear to exist in the real world. Users can walk around a virtual motorbike, for instance, to inspect it from behind, or place virtual ornaments on real tables or shelves. + +It is, in other words, like a Tango-enabled smartphone—only much more capable. The device’s cameras, derived from the Kinect (an accessory originally developed for Microsoft’s Xbox 360 games console), scan the world around it. Those cameras generate such a flood of information that Microsoft has had to design a special chip to process all the incoming data. Armed with that understanding, and with the ability to track the position of its user’s head, the machine can tailor its graphics accordingly: making a virtual motorbike appear to be standing on a real floor, for instance. The same cameras let the wearer interact with the machine via voice commands, by making gestures in mid-air, or by tracking precisely where he is looking. + +Unlike VR headsets, which must be connected to either a PC or a smartphone to work, the HoloLens is a self-contained computer that needs no accessories. Users view the world through a pair of thick, transparent lenses. A pair of projectors feed light into the top of these lenses. Three optical waveguides (one each for red, green and blue light—the primary colours from which others can be created) funnel that light down the lenses before bending it through 90° and into the user’s eyes. + +By overlaying its images onto the real world, the HoloLens headset turns reality into a computer monitor. A window containing a Skype call can be placed onto an office wall, disappearing when the user looks away and returning when he looks back at it. A computerised calendar can be placed on the desk (or the ceiling, if you prefer). All this information can be seen without having to cut yourself off completely from the outside world, as a VR headset would require. + + + +Some of the first demonstrations of the HoloLens involved games. In one, users blasted aliens that took cover behind their living-room sofas. In a second, they played with blocks from Minecraft, a sort of virtual Lego, on their living-room tables. More recent apps have focused on business and training. One such, developed in collaboration with Case Western Reserve University, in Cleveland, projects a human body into the room to help with the teaching of anatomy. A wave of the hands can add muscles to the skeleton, or bring the heart out of the chest to examine it more closely. + +Augmenting the enterprise + +The HoloLens can be used collaboratively, as well. Another demo has someone being instructed how to repair a light-switch by someone else, who is employing videoconferencing software in another room to do so. The guide can see what the HoloLens user sees, and can draw on top of his field of view—putting circles around objects of interest or highlighting the correct tool in a box. ThyssenKrupp, a German engineering firm, is experimenting with giving the devices to its lift repairmen. Should anyone encounter a particularly difficult job, he can call head office for specialist advice. Users can also connect to each other and see the same augmented reality (in true science-fiction style, other users appear as golden, androgynous, vaguely Art Deco-looking figures). + +Aecom, an international firm of architects and engineers, is already using the HoloLens to help design buildings. Modern building projects can be very complicated, says John Endicott, one of Aecom’s executive directors—to the point where even experienced designers have trouble keeping everything in their heads. + +In 2016 the firm designed buildings around the Serpentine art gallery, in London. Mr Endicott observes that, “the roofs of these things had very complex geometry. We simply couldn’t check it on a 2D screen, but the HoloLens let us all review it together.” Trimble, an American engineering firm, helped Aecom develop the system. “We’re also finding it has applications in everything from mining to agriculture to facilities management,” says Aviad Almagor, the director of Trimble’s “mixed reality” programme. “You can do things like track assets [such as miners, lorries or equipment] as they move round a 3D model of a mine, in real time.” + +The HoloLens is far from perfect, however. The AR magic happens in only a small slice of a user’s view (some have likened it to looking in on the computer-generated world through a letterbox). Though the headset is light (weighing around 600g) and comfortable, it is bulky and not exactly fashionable. And using the gesture-tracking system to interact with the illusions the headset generates can feel clunky and awkward. It is not yet on general sale, but when it is (Microsoft has given no firm date) its price tag—also unknown, though the versions sold to software developers go for at least $3,000—is likely to make it a business-only proposition. + +Microsoft is not the only firm working on advanced AR headsets. One rival is Meta, in San Mateo, California. Compared with Microsoft this firm is a tiddler, having raised only $73m in funding so far. But its engineers promise a much wider field of view than the HoloLens’s. Microsoft’s product can track a few hand gestures. Meta’s is designed to keep a constant eye on exactly what a user’s hands are up to, letting him “handle” virtual objects simply by picking them up and rotating them. + +Another potential rival, Osterhout Design Group, in San Francisco, which makes AR glasses for industrial and medical companies, has announced two products aimed at individuals. Though less technically capable than the HoloLens, both are sleeker than their rival. Microsoft’s best-known competitor in this area, though, is Magic Leap, a firm founded in Florida in 2010, which has attracted $1.4 billion in investment from companies such as Google and Ali Baba, China’s biggest online retailer, as well as plenty of attention for its snazzy promotional videos. It has kept its technological cards close to its chest—to the point where some sceptics think that its technology has been oversold. But the demos it has released show images much clearer and crisper than those Microsoft can manage with the HoloLens. + +Curb your enthusiasm + +For all the hype, AR is still at an early stage, especially as a consumer technology. Forecasts of markets worth squillions by the end of the decade should be taken with a good deal of salt, especially since virtual reality, AR’s close and even-more-hyped cousin, has so far proved a bit of a damp squib. No VR headset-maker has yet released official sales figures, but the numbers that have trickled out look modest. + +In October 2016 Cher Wang, chairwoman of HTC, a Taiwanese consumer-electronics company, told 87870 News, a Chinese website, that her firm had sold 140,000 of its Vive headsets since their launch the previous April. (By way of comparison, Apple sells more than 870,000 iPhones a day.) In November SuperData, a market-research firm in New York, described VR as “the biggest loser” in the American shopping season around Thanksgiving, and cut its sales forecasts for Sony’s PlayStation VR headset in 2016 from 2.6m to 750,000. Even among keen techies, enthusiasm for VR seems limited. A survey by Steam, an online shop that dominates the market for PC gaming, found that just 0.38% of its customers owned a VR headset in December, a number unchanged from the previous month. + + + +If AR is not to go the same way, it will have to be made easier to use. That probably means consumer versions will be adapted for peoples’ phones. As Tim Merel, Digi-Capital’s boss, points out, phones are a known quantity that people are comfortable with. They have become, for many, their default computing device. Their existing app stores offer developers an easy way to sell software, and their business model—in which the cost of the hardware is often subsidised by network operators, who recoup this investment with fees and rental charges as they go along—could help draw some of the financial sting of the initial outlay a customer must make. On the other hand, a phone’s screen is small and fiddly, and holding it up every time you want to use an AR app could become tedious. + +Headsets such as the HoloLens offer a way around this problem. Those currently in development will cost thousands of dollars and look more than a little silly. For now, that will limit their uptake to companies, which can afford the hardware and are less worried about the aesthetics. But the hope is that the mix of sensors and computing power needed to run AR can be shrunk to the point where, as Mark Zuckerberg, Facebook’s boss, put it at a show for developers last April: “we’re going to have what look like normal-looking glasses that can do both virtual and augmented reality.” Others want to go further still. Samsung and Apple, for instance, are exploring the idea of AR-enabled contact lenses. + +For now, such devices remain far away. Those in the computing industry like to talk of an “iPhone moment”, when a well-crafted product launches, almost single-handedly, a new phase of the computing revolution. But such moments are the culmination of years of research into, and development of, many different technologies. The iPhone was not the first smartphone. No self-respecting salaryman of the mid-2000s was without a BlackBerry, and the basic idea can trace its ancestry back at least as far as the hand-held personal digital assistants of the 1990s. None of the present approaches to AR seems likely to change the world as the iPhone did. But those behind them hope that, one day, a combination of them will. + +This article appeared in the Science and technology section of the print edition under the headline “Better than real” + + + + + +Books and arts + + + + +India: Conviction politicians + +Johnson: The giant shoulders of English + +Statistics: Nullius in verba + +The law in America: Whose rules, whose law + + + + + +The dark side of Indian politics + +Why many Indian politicians have a criminal record + +A penchant for criminality is an electoral asset in India, the world’s biggest democracy + +Feb 4th 2017 + + + +When Crime Pays: Money and Muscle in Indian Politics. By Milan Vaishnav. Yale University Press; 410 pages; $40. To be published in Britain in March; £25. + +ALL politicians are crooks. At least, that is what a lot of people think in a lot of countries. One assumes it is a reproach. But not in India. Indian politicians who have been charged with or convicted of serious misdeeds are three times as likely to win parliamentary elections as those who have not. In “When Crime Pays: Money and Muscle in Indian Politics” Milan Vaishnav of the Carnegie Endowment for International Peace meticulously tracks the remarkable political success of India’s accused murderers, blackmailers, thieves and kidnappers. Having been a symptom of India’s dysfunctional politics, the felons are metastasising into its cause. + + + +Sadly, this is not a book about some small, shady corner of Indian politics: 34% of the members of parliament (MPs) in the Lok Sabha (lower house) have criminal charges filed against them; and the figure is rising (see chart). Some of the raps are peccadillos, such as rioting or unlawful assembly—par for the course in India’s raucous local politics. But over a fifth of MPs are in the dock for serious crimes, often facing reams of charges for anything from theft to intimidation and worse. (Because the Indian judicial system has a backlog of 31m cases, even serious crimes can take a decade or more to try, so few politicians have been convicted.) One can walk just about the whole way from Mumbai to Kolkata without stepping foot outside a constituency whose MP isn’t facing a charge. + +Mr Vaishnav dissects both the reasons why the goons want to get elected and why the electorate seems to be so fond of them. Their desire for office is relatively new. After independence in 1947 thugs used to bribe politicians to stay out of trouble and to secure lucrative state concessions such as mining rights. It helped that candidates from the dominant Congress party were sure to win a seat and then stay there. From the 1980s, as Congress started to fade as a political force, bribing its local representative became less of a sure thing for local crooks. So in the same way that a carmaker might start manufacturing its own tyres if it finds that outside suppliers are unreliable, Mr Vaishnav argues that the dons promoted themselves into holding office, thus providing their own political cover. + +What is more surprising is that the supply of willing criminals-cum-politicians was met with eager demand from voters. Over the past three general elections, a candidate with a rap sheet of serious charges has had an 18% chance of winning his or her race, compared with 6% for a “clean” rival. Mr Vaishnav dispels the conventional wisdom that crooks win because they can get voters to focus on caste or some other sectarian allegiance, thus overlooking their criminality. If anything, the more serious the charge, the bigger the electoral boost, as politicians well know. + +As so often happens in India, poverty plays a part. India is almost unique in having adopted universal suffrage while it was still very poor. The upshot has been that underdeveloped institutions fail to deliver what citizens vote for. Getting the state to perform its most basic functions—building a school, disbursing a subsidy, repaving a road—is a job that can require banging a few heads together. Sometimes literally. Who better to represent needy constituents in these tricky situations than someone who “knows how to get things done”? If the system doesn’t work for you, a thuggish MP can be a powerful ally. + +Political parties, along with woefully inadequate campaign-finance rules, have helped the rise of the thug-candidate. Campaigns are hugely expensive. Voters need to be wooed with goodies—anything from hooch to jewels, bikes, bricks and straight-up cash will do. Criminals fill party coffers rather than drain them, and so are tolerated. + +“When Crime Pays” can be grimly amusing. In 2008 government whips desperate to avoid parliamentary defeat sprung six MPs out of prison for a few days to get them to cast their votes, never mind the 100-odd cases of kidnapping, arson, murder and so on that the MPs faced between them. Some of the gangster-statesmen are straight out of Bollywood films. A fan of a local politician at one point explains that his man “is not a murderer. He merely manages murder.” Spare a thought for the libel lawyers at Yale University Press, Mr Vaishnav’s brave publisher. + +If his book has a defect, it is that the author seeks only to answer the questions for which he has data. This academic diligence is laudable, but it narrows the scope of his survey to just one corner of India’s political moral depths: there is precious little about corruption in office, for example, beyond pointing out that MPs leave office vastly richer than when they came in. Perhaps inevitably in a case where the problems are so deeply entrenched, the book offers few solutions. + +But Mr Vaishnav does spell out the perils of India’s elevation of lawbreakers to lawmakers. Constituencies represented by crooks suffer economically. A bigger cost is in the legitimacy of the public sphere as a whole when even MPs can flout the rule of law so brazenly. The prime minister, Narendra Modi, has pledged to clean up the system, for example by recently scrapping large-denomination bank notes, which he thinks contribute to corruption. One presumes that the 13 alleged lawbreaking MPs he appointed to his first cabinet (eight of them facing serious criminal charges) all supported the move. + +This article appeared in the Books and arts section of the print edition under the headline “Conviction politicians” + + + + + +Johnson + +The giant shoulders of English + +The advantages of having a scholarly lingua franca should not obscure the disadvantages + +Feb 4th 2017 + + + +“EVERYONE who matters speaks English.” So say many in Britain and America. In fact, a lot of people do not. But in some domains, this crude approximation is true: in globalised enterprises the world’s single scholarly language is increasingly indispensable. Among those global enterprises is science, in which more and more work is being done in English. This is not always good. + +A scientific lingua franca has advantages. A few moments imagining scientists toiling away in different countries unaware of each other’s successes and failures is enough to show that. For centuries, Latin allowed the Copernicuses, Keplers and Newtons of Europe to stand, in Newton’s words, “on the shoulders of giants” who had preceded them. With the rise of European vernaculars as “serious” languages, an educated person was expected to read several; German was a leading language of science. + +Now, non-Anglophone scientists learn English; English-speaking scientists hardly bother with other languages at all. The rise in perceived need for more STEM subjects (science, technology, engineering and maths) has made schools squeeze anything that looks dispensable, and in the English-speaking world that includes foreign languages. Legislators in Florida have even proposed letting schoolchildren learn a computer language to satisfy schools’ foreign-language requirements. + +Three scientists have raised an alarm about English-only science in a paper in PLOS Biology, a journal. Tatsuya Amano, Juan González-Varo and William Sutherland looked at fields where local knowledge matters, such as ecology and conservation. They found that 64.4% of papers on Google Scholar mentioning “conservation” or “biodiversity” were in English. The second most common language, Spanish, was far behind, with 12.6%. + +Monolingual ghettos are bad for science. In 2004, work on the transfer of H5N1 flu from birds to pigs languished unread in Chinese while critical time was lost. In the study’s sample, only half of Spanish-language papers and a third of those in Japanese even had abstracts in English. Those that did, unsurprisingly, were more likely to be published in prestigious, peer-reviewed journals. But the bird-flu case shows that that hardly includes all the science that matters. Some good scientists still can’t write in English. + +The solution is not to replace English, but to encourage multilingualism wherever practical, and require it when needed. This can be an advantage for non-native English-speakers. Studies have shown that writing and thinking in a second language can encourage a deliberate mode of thinking. Working in your native language encourages the fluid kind. A bilingual person can have the best of both. + +Multilingualism is needed in other ways. In disciplines including psychology, biology and medicine, university-based researchers will work with subjects (patients, for example) and data-gatherers (say, remote experts in local flora and fauna) in other languages. The bilingual scientist who can later write all this up in English has a competitive advantage. + +More and more young scientists will speak English as a matter of course. They should ensure that clear English abstracts and keywords from their papers are available; this may be more important than the original abstract itself. But Anglophone scholars and institutions can also play a role. Where work is of particular importance to a particular country or region, they too should make sure that abstracts and keywords are available in relevant languages. Groups of scholars can share the cost of full high-quality translations. + +Changing practices takes time. Until then, some technological tools can help. Machine translation (MT) has improved in recent years. And specialised MT systems—say, those designed specifically to handle texts in a field like ecology—are far more accurate than general systems that are designed for all kinds of text (like those that are free online). Building such systems is getting cheaper and easier. If scientists could support the development of such MT systems for their fields, they could increasingly get usable gists of abstracts instantly, and find out which work might be worth full translation. + +The alternative is a future in which all work is done in English. In such a world, other languages would fail to develop the kinds of technical vocabulary and expressions needed for science. They would be used socially and at home, but not for serious work. That would be a shame. + +This article appeared in the Books and arts section of the print edition + + + + + +Nullius in verba + +A crash course in understanding numbers + +In the 35 years since marijuana laws stopped being enforced in California, the number of marijuana smokers has doubled every year. Really? + +Feb 4th 2017 + + + +A Field Guide to Lies and Statistics. By Daniel Levitin. Dutton; 292 pages; $28. Viking; £14.99. + +PEOPLE take in five times as much information each day as they did in the mid-1980s. With all these data sloshing around it is easy to feel lost. One politician uses a statistic to back up her argument; a newspaper uses another fact to refute it; an economist uses a third to prove them both wrong. In “A Field Guide to Lies and Statistics” Daniel Levitin, an American neuroscientist, shows the reader how to find a way through all this numerical confusion. + +A book about statistics can easily be boring. Fortunately, Mr Levitin is the perfect guide. Before becoming an academic he used to work as a stand-up comedian. Drawing on those skills Mr Levitin peppers his book with wisecracks. He uses the phrase “on average, humans have one testicle” to make the point that the mean can be a misleading description of a population. He goes off on interesting tangents, granting the reader some light relief from detailed analysis of sampling and probabilities. Only occasionally is his hokey style annoying. + +Using plenty of examples, Mr Levitin shows how easily statistics can lead people astray. Take the following assertion, which on a quick skim might seem perfectly reasonable: “In the 35 years since marijuana laws stopped being enforced in California, the number of marijuana smokers has doubled every year.” One will soon realise that this must be nonsense; even with only one smoker to begin with, after doubling every year for 35 years there would be more than 17bn of them. Mr Levitin repeatedly throws these statistical curveballs at his readers, training them to adopt a take-nobody’s-word-for-it attitude. It is an effective pedagogical technique. + +Some statistics turn out to be plain wrong, but more commonly they mislead. Yet this is hard to spot: numbers appear objective and apolitical. A favourite of academics and journalists, when analysing trends, is to “rebase” their figures to 100 so as to back up the argument that they wish to make. For instance, starting a chart of American GDP growth in 2009, when the country was in recession, tricks the reader into thinking that over the long term the economy is stronger than it really is. “[K]eep in mind that experts can be biased without even realising it,” Mr Levitin reminds people. + +A basic understanding of statistical theory helps the reader cope with the onslaught of information. Mr Levitin patiently explains the difference between a percentage change and a percentage-point change, a common source of confusion. When a journalist describes a statistical result as “significant”, this rarely carries the same meaning as when a statistician says it. The journalist may mean that the fact is interesting. The statistician usually means that there is a 95% probability that the result has not occurred by chance. (Whether it is interesting or not is another matter.) + +Some readers may find Mr Levitin’s book worthy but naive. The problem with certain populist politicians is not that they mislabel an x-axis here or fail to specify a control group there. Rather they deliberately promulgate blatant lies which play to voters’ irrationalities and insecurities. Yet if everyone could adopt the level of healthy statistical scepticism that Mr Levitin would like, political debate would be in much better shape. This book is an indispensable trainer. + +This article appeared in the Books and arts section of the print edition under the headline “Nullius in verba” + + + + + +The shaping of the law in America + +Why the American legal system is so flexible + +A book on law professors illuminates the bitterly contested ideas behind the fight for the Supreme Court and the founding principles of America + +Feb 4th 2017 + +Mot juste + +Law Professors: Three Centuries of Shaping American Law. By Stephen B. Presser. West Academic Publishing; 486 pages; $48. + +CONTROVERSY is raging over Donald Trump’s decision to appoint Neil Gorsuch to the Supreme Court. Within hours, accusations were being made about the candidate’s political affiliations, about whether he is in the legal mainstream and whether he could protect the “enshrined rights of all Americans”. + +The idea of “rights”, “mainstream” and even the role of the Supreme Court in determining these are not as enshrined as advocates of various positions contend. They never have been. Many ideas abound about the role of the court within America’s political system, the principles it should uphold and even the definition of a ubiquitous term, “rule of law”. Some of these debates trace their roots back to the early 18th century, before America was even established. + +If the fight has become more heated, it is because the authority of the judiciary in America, notably its ability “to legislate”—to expand the reach of law and find new, unstated (and possibly unintended) rights—has been a pivotal feature of politics since the 1950s. “Law Professors: Three Centuries of Shaping American Law”, a well-timed book by Stephen Presser, a professor at Northwestern University, traces how this emerged. + +The book is organised around the intellectual biographies of 29 individuals, including one Barack Obama, who spent 12 years as a senior lecturer at the University of Chicago before taking an eight-year tour as America’s president. “There is no country on Earth in which law professors have played a more prominent role,” writes Mr Presser, a statement that neither lawyers nor politicians in any camp would dispute. + +The natural audience for this book is academics, members of the bar and law students. For these last in particular, it may become essential reading. Law professors like putting their students through the hoops by asking them bewildering questions; Mr Presser’s book does a good job of distilling what is actually being taught. Given the timing of the book, though, its greatest value may lie in the way it explains why potential candidates are so often described, by different interested parties, as being ignorant, bigots or temperamentally unsuited to the task at hand. + +“Our two major political parties now understand the rule of law very differently,” Mr Presser writes. Should it be based on precedent and written statutes (basically the Republican approach) or should it be discretionary and allowed to incorporate values and external information (the Democrats’ view). Within this schism is a struggle over whether the judiciary’s role is to enforce laws as they were written or to see law as a flexible instrument to achieve objectives, many of which are passionately supported—and passionately opposed. + +That law professors became pivotal players in this drama was never inevitable. As in Britain, in America’s earliest days legal training came through apprenticeships. This was augmented by a few intellectually ambitious outside authorities who found their way to universities. One of the earliest law professors, Joseph Story, simultaneously taught at Harvard, served as a justice on the Supreme Court, wrote treatises instructing judges and lawyers on the law and ran a bank (which may have been perceived at the time as an added benefit rather than a conflict of interest). + +In his spare time, Story hosted Alexis de Tocqueville during his trip to America, and is thought to have been a key influence in de Tocqueville’s assertion that lawyers served as America’s aristocracy, and “constitute a sort of privileged body in the scale of intellect”, who serve as “the most powerful existing security against the excesses of democracy”. These lines are often repeated—less so a subsequent passage, noting that beyond their virtues, they, “like most other men, are governed by their private interests, and especially by the interests of the moment”. + +These three sentiments: that the study of the law is the preserve of lawyers, who are the intellectual elite; that they serve as a deterrent against the failures of democracy; and that they may be compromised, if not flawed, in their approach, are dominant themes throughout Mr Presser’s book. In practice, Story was one of many prominent Americans who tried to distil law from cases that were largely but not exclusively British, reflecting differences such as lack of a monarchy. Although this was a formidable task, it was limited to determining what were, in fact, the rules of law. + +The pedagogical approach was formalised in the late 19th century by Christopher Columbus Langdell, a dean of Harvard Law School, who developed what became the practice of deciphering a vast number of appellate decisions to understand what were perceived to be scientific principles and logic. But even as this approach to legal training became common, intellectually the fact that the law could be discerned through its history was never entirely satisfactory to its most ambitious practitioners. In response to a casebook on contracts compiled by Langdell, Oliver Wendell Holmes, yet another professor at Harvard Law School and a Supreme Court justice, wrote, “The Life of the Law is not logic, but experience.” Even if the same rules were invoked, over time they served different purposes, in Holmes’s view. + +It is this premise of a flexible law that became the animating force in law schools and ultimately in American courts and policy, largely through a series of movements that Mr Presser describes with as much precision as this somewhat murky procession allows. Among the most important was “legal realism”, which, as Holmes’s statement suggests, examined what judges actually did, rather than the rules of law¸ and encouraged them to incorporate research from social sciences in making their decisions. This was adopted by the Supreme Court under Earl Warren after the second world war and played a huge factor in many of its most notable decisions, including Brown v Board of Education in 1954, which concluded that segregation was unconstitutional, not because of segregation itself but rather because of testimony drawn from research about the psychological harm that segregation imposed. + +The notion of the court as a mechanism for going beyond statutes and past decisions to define justice opened up a wide field of study in the latter half of the 20th century. Among the many professors to shape the judicial system during that time were Ronald Dworkin, a professor at New York University and Oxford, who argued that law must be debated on the basis of moral concepts rather than rules; Richard Posner, a senior lecturer at the University of Chicago and a federal judge, who has been called the single most cited legal authority largely because of his development of cost-benefit analysis; and, conversely, Cass Sunstein, also of Chicago, then Harvard, then the Obama administration, who concluded that the failure of people to act rationally justifies judicial and governmental intervention. + +Mr Obama too spent many years at Chicago, but Mr Presser writes that his views were established while he was a student at Harvard when another movement, “critical legal studies”, was popular. It argued that the law was malleable—a political instrument that had been misused by the powerful in the past and should be reinterpreted to empower the disenfranchised. + +The great figure who opposed this approach was Antonin Scalia, who left the Chicago faculty to be a federal appeals court judge then a Supreme Court justice, and whose death almost exactly a year ago created the current opening. + +As Mr Presser writes, Scalia believed the law and constitution should be followed by interpreting both as they were understood at the time they were enacted rather than stretched by unelected judges, since original intent was the best means of implementing the will of the people. Change should come through popular votes and the laws enacted by elected legislators. This approach, more than any particular issue, is a fundamental challenge to an expansive court, presidency and even, perhaps, to the aristocratic position that de Tocqueville discerned in the law. As Mr Presser shows, it is a challenge that resonated in unlikely candidates in the past, notably Felix Frankfurter, a Harvard professor, architect of Franklin Roosevelt’s New Deal and a Supreme Court justice, who revealed in his opinions concerns about pushing the boundaries of law too far. + +Mr Presser’s book does not always make for easy reading, but the ideas that he has gathered together, all of them put forward by intelligent people, are complex. America is consumed by serious legal debates about issues, what the law says, what people think the law should say—and whether that is law. This may be the book that comes closest to spelling out what is really being argued. + +This article appeared in the Books and arts section of the print edition under the headline “Whose rules, whose law” + + + + + +Obituary + + + + +J.S.G. Boggs: His money or his art? + + + + + +His money or his art? + +Obituary: J.S.G.Boggs was found dead on January 23rd + +The artist and trickster was 62 + +Feb 4th 2017 + + + +A HAMBURGER and Coke with Steve Boggs was a disconcerting event. To begin with he preferred to be called “Boggs”, just straight. He also had a way of opening his eyes a little wider than normal, giving his thin face an unnerving, even devilish look. And then, when the eating was done and the bill came, he would take out his wallet, unfold the notes, and put one on the table in a way that portended something profound and strange. + +At first glance, the note would look normal. It was not. The portrait on it might be of Mr Boggs himself, or Martha Washington instead of George. The bank name might be “Federal Reserve Not”, or “Bank of Bohemia”. The plate serial number might be “EMC2” or “LSD”. All this delicate copying and subverting had taken up to ten hours of Mr Boggs’s time, working on special paper with the finest-tip green and black pens. (He later shifted to limited-edition prints, a little speedier.) The result was now proffered to pay for his food. + +To the bemused waitress, he would politely explain that he was an artist. He could pay her with official money if she wanted. But he believed in producing something beautiful; and having spent so much time on this drawing of money, wasn’t it worth the value it declared? + +Nine out of ten times, the offer was refused. If it was accepted, Mr Boggs would note down time and place on the blank back of the drawing, ask for a receipt and take any change he was “owed”. After a day, he would call one of many avid collectors of his works; he would sell the collector, at a roughly fivefold mark-up, the receipt and change; and from those clues the collector, if he wished to buy the drawing, would have to track down the new owner. Receipt, change and drawn note, when reunited, became joint proof of the drawing’s value, confirmed by the transaction; and would then change hands, typically, for tens of thousands of dollars. + +This elaborate charade ensured that Mr Boggs never sold his drawings. He “spent” them at “face value” in exchange for goods and services, cheekily challenging the value ascribed to money. The inspiration dated from 1984, when a waitress in Chicago accepted his sketch of a dollar bill on a napkin for a doughnut and a coffee. She even gave him a dime in change, which he kept as a lucky charm. After that, wherever he was in the world, he drew the local currency and threw down his challenge. + +Early on he struggled, unwashed, hungry and heavily in debt. But by 1999 his drawings had paid for more than $1m-worth of goods, including rent, clothes, hotels and a brand-new Yamaha motorbike. He thanked the Swiss, who discovered him in 1986 and were often delighted to accept original art rather than “real” money. + +He was cautious, however, about dealing with anyone he already knew. He preferred to offer his exchange to people who had never heard of him, even though they might just scrumple his precious note into a pocket. And his main aim was to raise disquieting questions about the notion of exchange itself. What was money really worth? What supported a dollar bill, other than faith? Was the value of anything just subjective? When salesmen told him they didn’t accept art, he would point out the beauty of official notes, with their scrolls and arrow-clutching eagles. When shopkeepers demanded only “real” money, he might launch into the non-reality of time and space, too. To his long-time tracker and biographer, Lawrence Weschler, he was “just short of being a con man—but no more so than anyone else in the art world, or for that matter in the world of finance—which, of course, is the whole point.” + +Feat counterfeit + +A simpler view was taken by the authorities. This looked like counterfeiting to them. In Britain, where he lived for several years, he was arrested and put on trial at the Old Bailey for “reproducing” the currency. He argued back that it was the “real” notes that were reproductions: his drawings were originals, never meant to be the real thing. He was acquitted, as he was when he faced similar charges in Australia. + +America, though, hardly knew how to deal with him. In 1992 he had a madcap idea to flood Pittsburgh, where he lived then, with $1m in Boggs Bills, and see if they could get through five transactions (handlers would put thumbprints on the back). The Secret Service warned the city and raided his studio, seizing more than 1,000 pieces of work. They never returned them. The courts solemnly debated whether the drawings were closer to pornography—which might be censored, but also allowed as free speech—or evil non-returnable contraband, like drugs. + +Mr Boggs’s career was blighted by fruitless appeals to try and get them back. His legal costs mounted. At his Old Bailey trial he had paid his lawyer with drawings for his services. He now started on a series of $1,000 Boggs Bills sporting a portrait of him by Thomas Hipschen, America’s chief engraver of banknotes (itself happily exchanged for a Boggs Bill), to cover a hearing in the Supreme Court, if he could get one. But he was also venturing closer to the edge, toting guns and using methamphetamines, and died before he had got that far. + +His art remained on the walls of America’s finest museums and of galleries all over Europe. His questions remained, too, evading easy answers. + +This article appeared in the Obituary section of the print edition under the headline “His money or his art?” + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Metal prices + +Markets + + + + + +Interactive indicators + +Feb 4th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Output, prices and jobs + +Feb 4th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Trade, exchange rates, budget balances and interest rates + +Markets + +Feb 4th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +The Economist commodity-price index + +Feb 4th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Metal prices + +Feb 4th 2017 + + + +The Economist’s metal-price index has risen by 37% over the past 12 months. China, which accounts for over half of global metal consumption, increased infrastructure spending to ensure it reached its target GDP growth rate; that pushed up industrial-metal prices. Chinese production cuts designed to reduce excess capacity also buoyed the prices of iron ore and of aluminium, which makes up 42% of our index. Zinc and lead prices have risen partly because of the closure of large mines in Australia, Canada and Ireland. Anticipation of a construction boom in America has also provided a boost. Prices may not have reached their peak. The World Bank predicts they will rise by 11% this year. + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Markets + +Feb 4th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Table of Contents + +The Economist + +The world this week + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + +American politics: An insurgent in the White House + + + + + +Universal basic incomes: Bonfire of the subsidies + + + + + +Emerging markets: Turkeys and blockbusters + + + + + +Augmented reality: Say AR + + + + + +Youth and democracy: Vote early, vote often + + + + + +Letters + +Letters to the editor: On lifetime learning, France, failed states, Scotland, Donald Trump + + + + + +Briefing + +Donald Trump’s foreign policy: America first and last + + + + + +Will it work?: Beware the indirect effects + + + + + +How America’s allies see it: The world, watching + + + + + +United States + +The Supreme Court: Gorsuch test + + + + + +Checks and balances: A crumbling fortress + + + + + +Trade with Mexico: Playing chicken + + + + + +The economics of immigration: Man and machine + + + + + +Working and race: Colouring in + + + + + +The murder rate: Spiking + + + + + +Lexington: Strength in numbers + + + + + +The Americas + +Argentina and Brazil: The Mauricio and Michel show + + + + + +Technology in Cuba: Real virtuality + + + + + +Terrorism in Quebec City: A not-so-lone wolf + + + + + +Bello: Rage against the bribes department + + + + + +Asia + +Uttar Pradesh goes to the polls: A state of shocks + + + + + +Police corruption in the Philippines: The usual suspects + + + + + +An assassination in Myanmar: Death of an advocate + + + + + +How North Korea depicts the South: Blurred derision + + + + + +Gambling in Japan: In a spin + + + + + +Citizenship in New Zealand: Exceptional + + + + + +Banyan: Sun, sand, sentinels + + + + + +China + +Local government: Call the mayor! + + + + + +Hong Kong: Trembling tycoons + + + + + +Middle East and Africa + +Trade restrictions: African Queen + + + + + +Street vendors in Africa: An unfree trade + + + + + +Foreign currency in Nigeria: No dollars today + + + + + +Jordan: Not much might in the Hashemites + + + + + +Iraq: Mosul after Islamic State + + + + + +Europe + +Scandal in France’s presidential race: A wide open contest + + + + + +Ukraine’s intermittent war: Probing attack + + + + + +Migrant entrepreneurs: Startup-Kultur + + + + + +Russian history online: Networking revolution + + + + + +Business in authoritarian Turkey: Tigers in the snow + + + + + +Charlemagne: Silent partner + + + + + +Britain + +Negotiating post-Brexit deals: Trading places + + + + + +Euroscepticism and Trumpism: Mr Brexit’s homecoming + + + + + +The economy: Shop, then drop + + + + + +Tourism: Vote leave + + + + + +Alternative religions: The joy of sects + + + + + +International development: Sweet charity + + + + + +Rural architecture: From pigsties to prime locations + + + + + +Bagehot: A dispatch from 2030 + + + + + +Bagehot: Correction: Running on empty + + + + + +International + +Young people and democracy: Not turning out + + + + + +Business + +Snapchat’s future: Snap to it + + + + + +ExxonMobil: Upstream with half a paddle + + + + + +Pet health care: Furry profitable + + + + + +Logistics firms: Boxed in + + + + + +Consumer electronics: Screen shocker + + + + + +Food technology: Plant and two veg + + + + + +Smartphones in China: Upstarts on top + + + + + +Schumpeter: Silicon Valiant + + + + + +Finance and economics + +Emerging markets: Pop-up markets + + + + + +The Indian economy: Rupees for nothing + + + + + +Buttonwood: A taxing problem + + + + + +Trade deals: Trying For Anything + + + + + +The Ethiopia Commodity Exchange: High-tech, low impact + + + + + +Asset management: Ctrl alt-beta + + + + + +Custodian services: Quis custodiet? + + + + + +Free exchange: Better than a wall + + + + + +Science and technology + +Augmented reality: Better than real + + + + + +Books and arts + +India: Conviction politicians + + + + + +Johnson: The giant shoulders of English + + + + + +Statistics: Nullius in verba + + + + + +The law in America: Whose rules, whose law + + + + + +Obituary + +J.S.G. Boggs: His money or his art? + + + + + +Economic and financial indicators + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Metal prices + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.02.11.txt b/homeworks/B20769/homework1/data2/2017.02.11.txt new file mode 100644 index 0000000..5fbee22 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.02.11.txt @@ -0,0 +1,4081 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report: Mass entertainment + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Politics this week + +Feb 11th 2017 + + + +A Russian court reaffirmed the conviction for embezzlement of Alexei Navalny, the country’s most popular opposition politician. The conviction relates to business Mr Navalny conducted with a state timber company, and is widely seen as a pretext to disqualify him from running in the country’s presidential elections in 2018. His initial conviction in 2013, just before his campaign in the Moscow mayoral race, was declared invalid by the European Court of Human Rights. + +François Fillon affirmed he will not drop out of the presidential election in France despite a scandal over employing his wife and children at taxpayers’ expense. Mr Fillon, the Republican candidate, has been unable to prove that his wife performed any work. The affair has hurt him in the polls and could pave the way for Emmanuel Macron, an independent, to reach the election’s second round. + +Romania scrapped a decree that would have decriminalised official corruption if the damages amounted to less than $47,600. The decree sparked protests that brought hundreds of thousands of people onto the streets. It could have exempted the head of the ruling party from facing charges of paying people for work they may not have performed. See article. + +A bill to allow the British government to trigger Article 50, the legal means of leaving the EU, completed its swift passage through the House of Commons. After three days of heated debate the bill survived intact. MPs from the opposition Labour Party were ordered by its leader to support it, deepening its internal rifts. The bill now goes to the unelected House of Lords, which faced veiled threats about its abolition if it amends or delays the legislation. Theresa May, the prime minister, has taken Britain a big step closer towards the Brexit door. See article. + +Man with a ban + +The Trump administration went to the federal appeals court to get its ban on refugees and citizens from seven countries reinstated, after a lower court stayed it. The lower court’s decision allowed people who had been denied entry to travel to the United States. In a furious tweeting storm, Donald Trump questioned the judges’ impartiality. See article. + +Betsy DeVos was confirmed by the Senate as Mr Trump’s education secretary, but only after Mike Pence cast a vote to break a 50-50 tie. It was the first time an American vice-president has had to use his tiebreaking vote as the Senate’s presiding officer to ensure the confirmation of a president’s cabinet appointment. Jeff Sessions was confirmed as attorney-general. + +Not part of the new democracy + +A UN report accused the police and army in Myanmar of systematic and widespread abuse of the Rohingya minority, including looting, arson, rape and murder. The pope also condemned the treatment of the Rohingya. + +An Australian senator defected from the ruling Liberal National coalition to set up a rival party. Cory Bernardi says Australia needs a more conservative force. + +The Philippine government called off peace talks with communist rebels and ended a ceasefire after insurgents killed three soldiers. See article. + +A suicide-bomber attacked Afghanistan’s supreme court in Kabul, killing at least 20 people. The UN reported that almost 3,500 civilians were killed and 7,900 injured in conflict-related violence in the country last year, the most casualties since it began documenting them in 2009. + + + +Scores of people were killed by avalanches in northern Afghanistan, but many remain trapped under the snow and the toll is expected to rise. + +China’s participation in a conference at the Vatican on organ trafficking raised eyebrows. Its representative heads the country’s organ-transplant programme and his attendance was a sign of warming relations between the Vatican and China. But some delegates resented China’s presence—its hospitals have used organs harvested from executed prisoners for transplants. + +Land grab + +Israel’s parliament passed a law that will allow for the retroactive legalisation of unauthorised building on some privately owned Palestinian land in the West Bank. Governments around the world condemned the move as an obstacle to peace; Israel’s courts could yet strike it down. See here and here. + +The Trump administration announced new sanctions against Iran, after it conducted a missile test. Although this marked a more aggressive stance, the administration said the deal brokered with Iran to monitor its nuclear programme remains intact. See article. + +The UN launched a $2.1bn appeal for aid to Yemen, where the humanitarian situation is catastrophic and rapidly deteriorating. Saudi Arabia has been fighting Yemen for the past two years. + +Amnesty International accused the Syrian government of having executed as many as 13,000 people at a prison north of Damascus, some after two-minute trials. + +Members of parliament in Somalia cast ballots in a presidential election held in an airport under the protection of troops from the African Union. The poll followed another unorthodox one last year when 14,000 delegates who had been chosen by clan elders voted for members of the lower house. + +The president of Nigeria, Muhammadu Buhari, extended what his office had said was a holiday in Britain for medical tests amid mounting concern at home over his health. + +My way or the highway + +Peru’s attorney-general ordered the arrest of the country’s former president, Alejandro Toledo, saying that he received $20m in bribes from Odebrecht, Brazil’s biggest construction company. The money was allegedly paid to secure a contract to build a road from Peru to Brazil. Mr Toledo denies wrongdoing. + +Colombia’s government began peace negotiations with the ELN, the country’s second-largest guerrilla army. In November the government ratified an agreement that ended its 52-year war with the FARC, the largest rebel group. + + + +Jovenel Moïse, who has never held public office, was sworn in as Haiti’s president. The country has been governed by an interim president since Michel Martelly left office last February. Both are members of the Haitian Bald Head Party. + +This article appeared in the The world this week section of the print edition + + + + + +Business this week + +Feb 11th 2017 + +Donald Trump took aim at the Dodd-Frank reforms of financial services, which were drawn up in response to the 2008 crisis. He told the Treasury to review the extent to which financial regulations contradict the “core principles” of the new administration, a broad edict that will revisit a host of measures disliked by the banking industry. He also ordered a review of the “fiduciary rule”, which is due to come into effect this spring and requires anyone giving investment advice to act in the “best interest” of their client. + +The blame game + +America’s trade deficit, another of Mr Trump’s bugbears, rose to $502bn last year, the highest since 2012. A strong dollar hampered American exports. Mr Trump has blamed the deficit on currency manipulation by other countries, although the shortfall from trading goods with China and Germany fell to $347bn and $65bn respectively, and stayed steady with Japan at $69bn. The trade deficit with Mexico was slightly higher at $63bn. + +China’s reserves of foreign exchange dropped to under $3trn in January, the lowest level in nearly six years. The People’s Bank of China has been selling dollars to prop up a weakening yuan, which fell by 6.6% against the greenback last year, the most in decades. See article. + +Market jitters about the future of the euro zone helped push the spread on yields of French, Greek and Italian bonds over that of German bunds to recent highs. The politics of the currency bloc have started to preoccupy investors again, given concerns about the ability of Greece to pay its debt and the possibility of snap elections in Italy. In France the rise of Marine Le Pen, a right-winger who has threatened to pull the country out of the euro if she wins the presidential election, has coincided with the implosion of the centre-right’s campaign. + +Meanwhile, Mario Draghi said now was not the time to start tapering the European Central Bank’s stimulus programme. The ECB’s president was responding to criticism about the policy in Germany, where his critics link a recent rise in inflation to the bank’s ultra-low interest rates. + +The Turkish lira had another wobbly week, falling by 1.6% against the dollar in a day, after the Turkish president criticised the central bank for not lowering interest rates, which he described as a “means of exploitation”. The feud between Recep Tayyip Erdogan and the central bank has knocked confidence in the bank’s independence, though the president had seemed to be warming to the idea of raising rates to help the struggling lira. + +Legacy effects + +Having embarked on a round of new investments to augment its assets, BP said it needed the price of a barrel of oil to rise to $60 by the end of the year in order for it to break even (Brent crude has not traded at $60 since mid-2015). The oil company reported a headline loss of almost $1bn for last year. It booked a further $7.1bn in charges related to the Deepwater Horizon disaster, which happened in 2010, bringing its total pre-tax bill for the catastrophe to $62.6bn. + +Rio Tinto’s underlying profit rose by 12% to $5.1bn last year. The mining group was boosted by a rebound in commodity prices: the price of iron ore, its biggest business, rallied by 80% in 2016. Recovering some of its previous swank after years of cost-cutting, Rio increased the size of its dividend and announced a $500m share buy-back. + +A federal court blocked the $48bn merger of Anthem and Cigna, two giant health insurers, on antitrust grounds. It is the second big merger in the industry to fall foul of the courts recently (Aetna’s acquisition of Humana has also been rejected), rolling back the wave of consolidation prompted by Obamacare. + +General Motors reported solid earnings for 2016. The world’s third-largest carmaker profited from surging revenue in its North American market, boosted by cheaper petrol prices that made pickup trucks and SUVs more economical for consumers. But it recorded another loss in Europe, which it blamed on Brexit. GM said the referendum in Britain to leave the EU had cost it $300m, mostly because of the currency turmoil that followed the vote; without Brexit it would have broken even in Europe. + +Blue-sky thinking + + + +Uber hired a former engineer at NASA, Mark Moore, to help develop its flying-taxi division, aptly named Elevate. Mr Moore had previously spent 30 years at the space agency working on advanced aircraft design. His decision to fly the NASA nest is not that surprising given that he contributed to Uber’s policy paper on automated flying vehicles, published last October. It won’t be easy for the ride-hailing firm to put taxis in the sky. The biggest current challenge is sufficient battery power before it can really take off. + +This article appeared in the The world this week section of the print edition + + + + + +KAL's cartoon + +Feb 11th 2017 + + + +More KAL's cartoons + + + +This article appeared in the The world this week section of the print edition under the headline “KAL's cartoon” + + + + + +Leaders + + + + +Russia and America: Courting Russia + +Israel and Donald Trump: If you build it, they will fight + +The European Union’s exit charge: Time to pick up the tab + +Financial regulation in America: The litter of the law + +Entertainment: The paradox of choice + + + + + +Russia and America + +Donald Trump seeks a grand bargain with Vladimir Putin + +It is a terrible idea + +Feb 11th 2017 + + + +GEORGE W. BUSH looked into Vladimir Putin’s eyes and thought he saw his soul. He was wrong. Barack Obama attempted to “reset” relations with Russia, but by the end of his term in office Russia had annexed Crimea, stirred up conflict elsewhere in Ukraine and filled the power vacuum that Mr Obama had left in Syria. Donald Trump appears to want to go much further and forge an entirely new strategic alignment with Russia. Can he succeed, or will he be the third American president in a row to be outfoxed by Mr Putin? + +The details of Mr Trump’s realignment are still vague and changeable. That is partly because of disagreements in his inner circle. Even as his ambassador to the UN offered “clear and strong condemnation” of “Russia’s aggressive actions” in Ukraine, the president’s bromance with Mr Putin was still smouldering. When an interviewer on Fox News put it to Mr Trump this week that Mr Putin is “a killer”, he retorted: “There are a lot of killers. What, you think our country’s so innocent?” + +For an American president to suggest that his own country is as murderous as Russia is unprecedented, wrong and a gift to Moscow’s propagandists. And for Mr Trump to think that Mr Putin has much to offer America is a miscalculation not just of Russian power and interests, but also of the value of what America might have to give up in return. + +The art of the deal meets the tsar of the steal + +Going by the chatter around Mr Trump (see Briefing), the script for Russia looks something like this: America would team up with Mr Putin to destroy “radical Islamic terror”—and in particular, Islamic State (IS). At the same time Russia might agree to abandon its collaboration with Iran, an old enemy for America in the Middle East and a threat to its allies, including Bahrain and Saudi Arabia. In Europe Russia would stop fomenting conflict in Ukraine, agree not to harass NATO members on its doorstep and, possibly, enter nuclear-arms-control talks. In the longer term, closer ties with Russia could also help curb Chinese expansion. Stephen Bannon, Mr Trump’s most alarming adviser, said last year that he had “no doubt” that “we’re going to war in the South China Sea in five to ten years.” If so, America will need allies, and Russia is a nuclear power with a 4,200km (2,600-mile) border with China. What’s not to like? + +Pretty much everything. Russian hacking may have helped Mr Trump at the polls, but that does not mean he can trust Mr Putin. The Kremlin’s interests and America’s are worlds apart. + +In Syria, for example, Mr Putin makes a big noise about fighting IS terrorists, but he has made no real effort to do so. His price for working with America could be to secure a permanent Russian military presence in the Middle East by propping up Bashar al-Assad, whose regime was revealed this week to have hanged thousands of Syrians after two- or three-minute trials. None of this is good for Syria, regional stability or America. Even if Mr Putin and Mr Trump shared a common goal (they don’t) and Americans did not mind becoming complicit in Russian atrocities (they should), American and Russian forces cannot easily fight side by side. Their systems do not work together. To make them do so would require sharing military secrets that the Pentagon spends a fortune protecting. Besides, Russian aircraft do not add much to the coalition air power already attacking IS. Ground troops would, but Mr Putin is highly unlikely to deploy them. + +Likewise, Russia is not about to confront Iran. The country’s troops are a complement to Russian air power. Iran is a promising market for Russian exports. And, most of all, the two countries are neighbours who show every sign of working together to manage the Middle East, not of wanting to fight over it. + +The notion that Russia would be a good ally against China is even less realistic. Russia is far weaker than China, with a declining economy and population and a smaller army. Mr Putin has neither the power nor the inclination to pick a quarrel with Beijing. On the contrary, he values trade with China, fears its military might and has much in common with its leaders, at least in his tendency to bully his neighbours and reject Western lecturing about democracy and human rights. Even if it were wise for America to escalate confrontation with China—which it is not—Mr Putin would be no help at all. + +The gravest risk of Mr Trump miscalculating, however, is in Europe. Here Mr Putin’s wishlist falls into three classes: things he should not get until he behaves better, such as the lifting of Western sanctions; things he should not get in any circumstances, such as the recognition of his seizure of Ukrainian territory; and things that would undermine the rules-based global order, such as American connivance in weakening NATO. + +Mr Putin would love it if Mr Trump gave him a freer hand in Russia’s “near abroad”, for example by scrapping America’s anti-missile defences in Europe and halting NATO enlargement with the membership of Montenegro, which is due this year. Mr Trump appears not to realise what gigantic concessions these would be. He gives mixed signals about the value of NATO, calling it “obsolete” last month but vowing to support it this week. Some of his advisers seem not to care if the EU falls apart; like Mr Putin, they embrace leaders such as Marine Le Pen who would like nothing more. Mr Bannon, while admitting that Russia is a kleptocracy, sees Mr Putin as part of a global revolt by nationalists and traditionalists against the liberal elite—and therefore a natural ally for Mr Trump. + +Played for a sucker by a silovik + +The quest for a grand bargain with Mr Putin is delusional. No matter how great a negotiator Mr Trump is, no good deal is to be had. Indeed, an overlooked risk is that Mr Trump, double-crossed and thin-skinned, will end up presiding over a dangerous and destabilising falling-out with Mr Putin. + +Better than either a bargain or a falling-out would be to work at the small things to improve America’s relations with Russia. This might include arms control and stopping Russian and American forces accidentally coming to blows. Congressional Republicans and his more sensible advisers, such as his secretaries of state and defence, should strive to convince Mr Trump of this. The alternative would be very bad indeed. + +This article appeared in the Leaders section of the print edition under the headline “Courting Russia” + + + + + +Israel and the Palestinians + +Why Israel’s new law makes peace harder + +Donald Trump should tell Binyamin Netanyahu to stop the land grabs + +Feb 11th 2017 + + + +ON FEBRUARY 6th Israel aimed a nasty blow at what remains of its peace process with the nearly 5m Palestinians who live in the territories it seized 50 years ago. Its coalition government, led by Binyamin Netanyahu, voted a bill through the Knesset which allows, in certain circumstances, for the legalisation of Jewish construction on privately owned Palestinian land. One effect could be that around 50 “outposts”, scattered around the West Bank and illegal under Israeli law, will now be safe from the threat of demolition. + +Condemnation quickly flowed in from around the world—not just from among the 138 countries that recognise Palestine as a state, but from many that do not, including Britain, France and Germany, Israel’s most reliable friends outside America (which stayed silent). Germany’s government said that the move “disappointed many in Germany who have deep ties to Israel and who have stood by it”. + +The new law may yet be struck down as unconstitutional by Israel’s fiercely independent courts. Even if it is not, the number of housing units likely to be affected is relatively small (around 4,000). Proper compensation must be paid to the Palestinian landowners. And the bar that has to be met for what the bill euphemistically calls “regularisation” is fairly high: settlers will have to convince the courts that they did not know the land was privately owned. Nonetheless, the law creates a new pothole in the road to peace, for two reasons. + +First, all settlements and outposts are obstacles that must be dealt with if there is to be a peace deal (see article). In particular, those outside the “separation barrier” that Israel has been building since 2002 and which would broadly serve as the border if there were an agreement, make things considerably harder. Many of the outposts the new law will affect are deep in the West Bank, and add to the number of committed settlers who would have to be moved after any deal. Freed from the threat of demolition by the authorities, those outposts are only likely to expand. + +Second, the law’s passage through parliament is a sign that the political position of Mr Netanyahu is weakening, while those to his right are gaining ground. Although he has admitted that the law is unhelpful, dangerous even, since it exposes Israel to possible prosecution by the International Criminal Court, he felt obliged to push it through. That was the demand of the main settler-supporting party, Jewish Home, on which Mr Netanyahu depends to keep his coalition in power. Mr Netanyahu, who is fighting off corruption allegations, dared not risk a showdown with the party’s leader, Naftali Bennett. The danger is that an emboldened Mr Bennett will now proceed to his planned next step, the progressive annexation of bits of the West Bank (he wants 61% of it). He and his settlers hope that the election of Donald Trump means America will no longer stand in their way. Last month a group of settler leaders gleefully flew to Washington to see Mr Trump sworn in. + +Down to Mr Trump + +They may have cheered too soon. Plans to move the American embassy to Jerusalem are being reviewed; last week Mr Trump’s spokesman said that creating and expanding settlements “may not be helpful”. Mr Trump has said he wants to make peace in the Middle East. If he is serious, he needs to tell Mr Netanyahu when he visits next week that America still stands behind the “two-state solution”: the creation and recognition of a workable Palestinian state alongside a secure Jewish one. And he must stress that both building outside the barrier and unilateral annexation are dangerous impediments to what he calls the “ultimate deal”. + +This article appeared in the Leaders section of the print edition under the headline “If you build it, they will fight” + + + + + +Brexit + +A row over money could derail Brexit talks before they have begun + +The risk of talks blowing up is greater than many realise + +Feb 11th 2017 + + + +THESE are exhilarating times for the 52% of British voters who last summer opted to leave the European Union. After months of rumours that an anti-Brexit counter-revolution was being plotted by the Europhile establishment (who even won a Supreme Court case forbidding the government from triggering Brexit without Parliament’s permission), it at last looks as if independence beckons. This week the House of Commons voted to approve the process of withdrawal. The prime minister, Theresa May, will invoke Article 50 of the EU treaty next month, beginning a two-year countdown to freedom. + +But the triumphant mood is about to sour, for a reason few people have grasped. The first item on the agenda in Brussels, where divorce terms are to be thrashed out, will be a large demand for cash. To Britons who voted to leave the EU because they were told it would save them £350m ($440m) a week, this will come as a shock. The mooted bill is huge—some in Brussels talk of €60bn ($64bn), enough to host the London Olympics five times over—and its calculations open to endless argument. Until now the Brexit debate has focused on grander matters, such as the future of the €600bn-a-year trading relationship between Britain and the EU. Yet a row over the exit payment could derail the talks in their earliest stages. + +The tab is eye-watering. Britain’s liabilities include contributions to the EU’s pension scheme, which is generous and entirely unfunded. The biggest item, which Britain will surely challenge, is the country’s share of responsibility for a multi-billion-euro collection of future projects to which the EU has committed itself but not yet allocated a budget. These liabilities, and sundry smaller ones, may be offset a little by Britain’s share of the EU’s assets, mostly property in Brussels and elsewhere around the world. By one analysis (see article), the bill could be as little as €25bn or as much as €73bn. + +So there is plenty to haggle over. But the very idea that the charge is something to be negotiated irritates many Eurocrats, who see it as a straightforward account to be settled. The European Commission’s negotiators insist that the divorce agreement must be signed off before the wrangling can begin on anything else, such as future trading relations. Britain would prefer to tally up the bill in parallel with talks on other matters, in order to trade more cash for better access. + +Garçon! This isn’t what I ordered + +It is in everyone’s interests to reach an agreement. If talks fail and Britain walks out without paying, the EU will be left with a big hole in its spending plans. Net contributors, chiefly Germany and France, would face higher payments and net recipients would see their benefits cut. For Britain the satisfaction at having fled without paying would evaporate amid rancid relations with the continent, wrecking prospects of a trade deal; a rupture in everything from intelligence-sharing to joint scientific research; and, perhaps, a visit from the bailiffs of the International Court of Justice. Such an outcome would be bad for the EU but it would be even worse for Britain. + +That imbalance will become a theme of the Article 50 negotiations. It suggests that the British will have to do most of the compromising. Mrs May must not waste the two-year timetable haggling over a few billion, when trade worth vastly more hangs in the balance. The EU can help by agreeing to discuss the post-Brexit settlement in parallel with the debate about money. Rolling the lot into one would increase the opportunities for trade-offs that benefit both sides. + +But there is a danger of hardliners in London and Brussels making compromise impossible. Some in the European Commission are too eager to make a cautionary tale of Britain’s exit. And they overestimate Mrs May’s ability to sell a hard deal at home. The British public is unprepared for the exit charge, which is not mentioned in the government’s white paper on the talks. The pro-Brexit press, still giddy from its unexpected victory last summer, will focus both on the shockingly large total and also on the details (here’s one: the average Eurocrat’s pension is double Britain’s average household income). It has flattered Mrs May with comparisons to Margaret Thatcher, who wrung a celebrated rebate out of the EU in 1984. A small band of Brexiteer MPs have a Trumpian desire to carry out not just a hard Brexit but an invigoratingly disruptive one. Mrs May’s working majority in Parliament is only 16. + +Everyone would be worse off if the Article 50 talks foundered. Yet the breadth of the gap in expectations between the EU and Britain, and the lack of time in which to bridge it, mean that such an act of mutual self-harm is dangerously possible. + +This article appeared in the Leaders section of the print edition under the headline “Time to pick up the tab” + + + + + +The litter of the law + +The right way to redo Dodd-Frank + +Make the rules simpler, by all means. But not at the expense of safety + +Feb 11th 2017 + + + +THE prospect of deregulation helps explain why, since Donald Trump’s election, no bit of the American stockmarket has done better than financial firms. On February 3rd their shares climbed again as Mr Trump signed an executive order asking the Treasury to conduct a 120-day review of America’s financial regulations, including the Dodd-Frank act put in place after the financial crisis of 2007-08, to assess whether these rules meet a set of “core principles”. + +To critics of Dodd-Frank, this is thrilling stuff. They see the law as a piece of statist overreach that throttles the American economy. Plenty in the Trump administration would love to gut it. The president himself has called it a “disaster”. Gary Cohn, until recently one of the leaders of Goldman Sachs, a big bank, and now Mr Trump’s chief economic adviser, promises to “attack all aspects of Dodd-Frank”. + +Opponents of moves to unwind regulation are as apocalyptic. Wall Street caused the crisis, they observe; undoing Dodd-Frank would lead to the next disaster by letting bankers run riot again. That would harm customers and taxpayers, as would suspending the introduction of the fiduciary rule, another Obama-era regulation requiring financial advisers to act in clients’ best interests. A demand that America stop co-operating with international regulators, issued to the Federal Reserve by Patrick McHenry, a Republican congressman, is a sign of the growing pressure for the wrong sort of deregulation. + +It would be hard for the Trump administration to get a full repeal of Dodd-Frank through Congress (see article). But his team could still change an awful lot—for good or ill. Their goal should be to simplify America’s financial rule book, without softening its force. + +Dodd and buried + +When it was passed in 2010 Dodd-Frank was a monster of a law and was programmed to spawn more regulations. It imposed more than five times as many restrictions as any other law passed by the Obama administration. More constraints were added to the federal banking code between 2010 and 2014 than existed in 1980. + +As the clauses multiplied, so did the compliance burden on banks. Between 2010 and 2016, Dodd-Frank soaked up 73m paperwork hours and $36bn in costs. The big banks complain, but they have the heft to cope. The financial implications are worse for small lenders. A study by the Minneapolis Federal Reserve found that adding two extra members to their compliance departments tips a third of small banks into the red. + +Onerous though it is, however, the act also achieved a lot. Measures to beef up banks’ equity funding have made America’s financial system more secure. The six largest bank-holding companies in America had equity funding of less than 8% in 2007; since 2010 that figure has stood at 12-14%. Rules to increase the transparency and safety of derivatives markets were welcome; so, too, were rules to make it easier to wind down a failing bank. And despite concerns that the country’s big banks are disadvantaged internationally, they rule the roost of global finance: the top five banks in the investment-banking league tables in 2016 were all American. Indeed, few things would more quickly undermine these institutions abroad than a decision to stop playing by international rules. + +How, then, to keep the good and get rid of the bad? First and foremost, avoid backsliding on capital requirements. The surest way to cope with a financial crisis is for banks to have lots of equity funding. Separate proposals from Jeb Hensarling, another Republican congressman, and Tom Hoenig, the vice-chairman of the Federal Deposit Insurance Corporation, offer regulatory relief only to lenders that meet a very high capital bar. That is the direction to take. + +Next, unravel the sprawl. Consolidating America’s overlapping financial agencies into fewer regulators would be a boon for everyone except their staff. So too would adopting principles-based regulation to replace detailed prescriptions that add to compliance costs but not to stability or efficiency. The Volcker rule, for example, could have been distilled to a simple principle of “not conducting proprietary trading”; instead it ended up taking up almost 300 pages to define. It is a similar story with the fiduciary rule—a fine principle bogged down in overprescription. + +Third, require greater accountability of financial regulators. When they levy fines or label an institution as systemically important or fail institutions on stress tests, regulators should have to explain their reasoning, so that everybody is clear about what counts as acceptable behaviour. The Consumer Financial Protection Bureau is one agency that deserves to survive, but the unusually mighty powers of its director should be pared back and its funding should come from Congress rather than the Federal Reserve. + +As ever with Mr Trump’s nascent administration, it is hard to know what lies ahead—and easy to be fearful. But a sensible approach to reform would look something like this: keep capital high and rules simple. Judge what comes from Mr Cohn’s assault on regulation by that standard. + +This article appeared in the Leaders section of the print edition under the headline “The litter of the law” + + + + + +The paradox of choice + +The modern entertainment industry is a nirvana for consumers + +For America’s bloated pay-TV providers, not so much + +Feb 11th 2017 + + + +FOR couch potatoes and bookworms, filmgoers and music-lovers, this is a golden age. The internet provides an almost endlessly long menu of options to meet the almost infinitely quirky tastes of humanity. Smartphones have put all kinds of entertainment—from classic rock to prestige television to silly YouTube clips—at the fingertips of billions across the planet. + +Yet, as our special report this week describes, these same technologies have a paradoxical effect. Although they expand choice, they concentrate attention on the most popular hits and the biggest platforms. Perhaps because entertainment is a social activity, perhaps because consumers are baffled by the range of choices, they depend on the rankings and recommendation algorithms of platforms like Netflix, YouTube and Spotify to guide them to their next dose of content. And they are drawn to familiar titles that stand out from the clutter. + +So big brands continue to thrive. Of the thousands of films released worldwide last year, the top five box-office earners were all made by Disney. At the other end of the spectrum, the “long tail” of niche offerings is proving to be extremely skinny. Listeners spent money on digital copies of a total of 8.7m different songs in America last year, almost 5m more than in 2007, according to Nielsen, a research firm. But the number of songs that sold more than 100 copies remained at 350,000. And the number of songs that sold just one copy increased from under 1m to 3.5m. It is as hard as ever for talent to break through. + +Who wins and loses from this? Consumers are the biggest beneficiaries. The long tail is always there for people with eclectic tastes. Lots of content, from YouTube videos to some music-streaming services, is free. And fevered competition for consumers’ attention, the scarcest resource in the entertainment industry, has raised the quality of paid-for services. Nowhere is this more visible than in television. In 2016 more than 450 scripted original shows were available on American TV, more than twice as many as aired in 2010. Amazon and Netflix are investing billions of dollars. In response, cable networks that once grew fat on subscription fees are having to invest. + +On the production side, the winners are companies that can sustain this spending on premium fare—Disney’s box-office dominance, for instance, rests on its purchases of Marvel, Lucasfilm and Pixar—or that have built platforms with large numbers of users, like Facebook and YouTube, or that can master both distribution and content, as Amazon and Netflix aim to. This is the logic behind AT&T’s proposed $109bn deal to buy Time Warner, marrying America’s biggest distributor of pay TV to one of the biggest producers of television and film. + +The remote principle + +One big loser stands out. Cable TV in America has been perhaps the most lucrative business model in entertainment history. But its formula of adding channels and charging more no longer appeals. Seduced by cheaper, more flexible internet offerings, Americans have begun dropping pay TV at the rate of more than 1m households a year (live sports is one of the last pillars supporting the system). The decline of pay TV exemplifies the paradox of choice. There may be more things to watch and listen to than ever before, but there is only so much content that people can take. And the choices they make will concentrate power in the hands of giants like Disney, Netflix and Facebook. Far from democratising entertainment, the internet will entrench an oligarchy. + +This article appeared in the Leaders section of the print edition under the headline “The paradox of choice” + + + + + +Letters + + + + +On shareholders, Australia, schools, California, data, pop, police, Latin: Letters to the editor + + + + + +Letters to the editor + +On shareholders, narcotics, Australia, schools, California, data, pop, police, Latin + +Feb 11th 2017 + +Letters are welcome via e-mail to letters@economist.com + + + +Investing in social goods + +Schumpeter perpetuated the myth that there is an inherent conflict for investors between doing well and doing good (January 21st). Asking whether it is shareholders or “the people” who matter most is a false dichotomy. Another view sees financial returns to shareholders deriving from broader contributions to society. In Canada consumers trust and support brands that are consistent with their broader values around society’s well-being, environmental responsibility and community contribution. Such behaviour encourages greater loyalty and lowers price sensitivity, both factors that affect the bottom line. There are also tangible benefits to a firm from engaging with employees and from lower staff turnover. We need investment models where the interests of society add to shareholder returns, not ones that consider them a cost. + +SAUL KLEIN + +Dean + +Gustavson School of Business + +Victoria, Canada + +Not all investors demand high and fast returns. Pension funds benefit from longer-term strategies and investment in R&D, which will pay out in the decades to come. There is widespread evidence that a balance between profit, people and planet is the pragmatic plan for companies that wish to be successful now, and in 30 years’ time. + +PAIGE MORROW + +Head of Brussels operations at Frank Bold + +Brussels + +“The contest between shareholders and the people” is a phrase best saved for a populist rally. Shareholder value does not come in “shades of grey”, it comes in numbers, such as return on equity or on invested capital. And as long as the use of creative accounting is limited, it is very unlike The Economist to propose that such a hard-data approach should be disdained. + +NINA WIERETILO + +Oxford + + + + + +Asian narcotics + +* You state that “in Singapore, capital punishment is mandatory for people caught with as little as 15 grams of pure heroin” (“Still just saying no”, January 14th). That is no longer entirely true. The 2012 amendments to the Misuse of Drugs Act give the courts sentencing discretion if the accused was acting as a courier. Also the claim that “Asia is just saying no to drugs” is also misleading. + + + +Vietnam has expanded harm reduction services, including access to methadone, to around 80,000 thousand people over the last five years. Laos has decriminalised the use and possession of small amounts of drugs, and most recently, Thailand’s minister of justice ignited a debate when he proposed taking methamphetamine off the schedule of narcotic drugs. One of the minister’s stated objectives is to ensure that “people who use drugs…do not end up in prison…” + + + +While it is true that drug laws remain relatively harsh, it should be acknowledged that there is a debate around drug policy in many Asian countries and that important reform measures have been adopted. You are probably correct to observe that ‘drug wars are good politics’ in the sense that one of the biggest conundrums faced by policy makers in many Asian countries is how to persuade the public that abandoning the deterrent approach might be necessary. But please do not mistake uneven progress for no progress. + + + +MARCUS BALTZER + +Co-Director, Governance & Justice Group + +Monchique, Portugal + + + + + +Evaluating aboriginal policy + +“Ministering to his own” (January 28th) looked at attempts to evaluate the more than 1,000 policy programmes in Australia that are geared towards aboriginals. But the statement by the Centre for Independent Studies that only 88, or less than 10%, have been evaluated is outlandish. In 2012 I helped to analyse 98 government-funded evaluations in relation to the “national emergency” in the Northern Territory alone. + +The real issue is not the number of evaluations, but the willingness of government to react to their findings. Nowhere is this clearer than with the welfare-income management measure. One comprehensive evaluation demonstrated no discernible benefit. The government’s response was first to demean and then ignore the evaluation’s findings. The Productivity Commission, the Australian government’s key policy-advisory body, recently called for a fundamental change in approach: knowing more about what works and why and using such evidence to design policies that achieve positive outcomes, with positive being defined by the aboriginal and Torres Strait islander peoples, not just by government. + +PROFESSOR JON ALTMAN + +Deakin University + +Melbourne + + + + + +Bridge building + +Your article on the challenges that Bridge International Academies face in Uganda and Kenya gave the sense that the governments there were not prepared to work constructively with private firms (“Assembly line”, January 28th). My experience running a network of 30 low-cost secondary schools in Uganda and Zambia has been different. Through close collaboration with government, PEAS now educates 1% of Ugandan secondary-school pupils under a public-private partnership. + +Productive partnerships between governments and non-state organisations can help get every child a high-quality education. But for those partnerships to work, both sides need to build a lot of trust. Whatever the rights and wrongs of the recent headwinds facing Bridge, it is only one part of a complex and rapidly developing story. + +JOHN RENDEL + +Founder + +PEAS + +London + + + + + +How left is California? + + + +I disagree with your description of California as the “most progressive state” in America (“California steaming”, January 21st). In 2008 we voted against gay marriage. We have only just legalised marijuana, four years after Colorado and Washington state. Hillary Clinton won the Democratic primary here, not the progressive Bernie Sanders. Instead of considering free college tuition, as New York has recently proposed, California’s public colleges are increasing their fees. If anything, California is one of the most institutionalised states, favouring Democratic policies and politicians over progressive ones. It is a different shade of blue. + +KYLE UKES + +Anaheim, California + + + + + +Modern data + +While you are considering the advice of Geoffrey Pullum to allow split infinitives (Letters, January 21st), may I suggest you also have another look at your dogged insistence on treating “data” as a plural? It hasn’t been a proper plural for at least the past two decades. Throughout the English-speaking world it has become a mass noun, like “water” or “sand”. The singular “datum” has clearly followed “agendum” into complete disuse, a single piece of data now being a “bit”. + +DAVID CHAPLIN + +Cape Town + + + + + +Charting Congolese pop + +You did not do justice to the roots of Congolese pop music (“The sound of politics”, January 14th). The first Congolese music hit was “Marie-Louise” by Wendo Kolosoy in 1948. Before “Independence Cha Cha” in 1960, there was a decade of hit songs, including “On entre OK, on sort KO”. + +STEVEN SHARP + +Williamsburg, Virginia + + + + + +Crime doesn’t pay + +The timing of the campaign by West Yorkshire’s police commissioner calling for the police to be able to sell assets seized from criminals was particularly unfortunate (“Scrounging for coppers”, January 21st). His call coincided with the trial of a senior West Yorkshire officer for allegedly selling industrial quantities of seized class-A drugs. The residents of West Yorkshire would rather the police waited until the law was changed by Parliament before availing themselves of such profitable fundraising activities. It would be better if the force concentrated on its day job, namely catching a few more criminals on the loose. + +PETER BRYSON + +Addingham, West Yorkshire + + + + + +A world of deception + +I enjoyed Lexington’s observation that “populist insurgencies are rarely defeated with slogans in Latin” (January 28th). In recent days, however, I’m reminded that they sometimes can be explained by slogans in Latin: mundus vult decipi. + +DONALD JACKSON + +Tulsa, Oklahoma + +* Letters appear online only + +This article appeared in the Letters section of the print edition under the headline “Letters to the editor” + + + + + +Briefing + + + + +Russia and America: Champions of the world + + + + + +Tag-team troubles + +What America might want from Russia, but is unlikely to get + +Vladimir Putin could do very well out of Donald Trump + +Feb 11th 2017 | ATLANTA, KIEV AND MOSCOW + + + +FOR decades, Russian leaders insisted that America had no claim to moral superiority. For every Soviet and post-Soviet misdeed, from labour camps to invasions, they adduced an American counterpart. Such equivalence was anathema to American statesmen, who claimed to abide by higher standards. + +Until now. In an interview with President Donald Trump broadcast on February 5th, Bill O’Reilly of Fox News described Vladimir Putin as a “killer”. A nod from Mr Trump seemed to allow that this might be the case, which would in itself have been an arresting evaluation of another head of state. The president then went on to say that there were “a lot of killers” and to question whether his own country was “so innocent”. His tough-talk tarnishing of America’s reputation was unprecedented. But the equivalence it posits sits easily with the way Mr Trump seems to see Mr Putin’s Russia: as a potential partner. + +In 2016 Mr Trump was consistently effusive about Mr Putin—“very smart!”—contrasting his popularity among Russians favourably with Barack Obama’s standing in American polls. He poured scorn on evidence that the Kremlin was behind the hacking of Democratic bigwigs’ e-mails during the election campaign, preferring to denigrate America’s intelligence agencies. Kompromat or collusion have been suggested as possible explanations for this unshakable warmth. Official inquiries—if they are allowed to proceed—may shed light on claims that Mr Trump’s campaign team collaborated with Moscow. + +Scattered comments by the president and his aides imply an alternative explanation: the administration envisages a grand diplomatic bargain with Russia that encompasses arms control, counter-terrorism, the status of Crimea, economic sanctions and relations with China, an arrangement in which the two leaders indomitably face down all comers like some maverick geopolitical wrestling team. + +This stance does not just go against the views of those Republicans who, along with much of America’s foreign-policy establishment, regard Mr Putin as a gangster. It also contradicts Mr Trump’s two predecessors. Mr Obama blithely wrote Russia off as an irksome regional power, nuclear-armed and prone to harassing its neighbours but doomed to decline into irrelevance. George W. Bush, who on meeting Mr Putin professed to have looked into his soul and to have liked what he saw, later oscillated between symbolic protests against the Kremlin’s depredations and fitful efforts to ignore them. + +This all means that any bargain will face opposition in Congress and quite possibly even in Mr Trump’s cabinet. Still, public opinion provides an opening: polls suggest Mr Putin is viewed more favourably, and his country less warily, than before Mr Trump embraced him.In Russia state propaganda has burnished Mr Trump’s image and soothed anti-Americanism. + +In terms of style, the putative tag team looks rather well matched. Neither is fond of the liberal, rules-based global order. Both can lie without blushing. It is easy to imagine Mr Trump sharing Mr Putin’s approach to diplomacy, too. Like the Russian, he seems sure to prefer bilateral deals to messy supranational bodies and is likely to define America’s national interest in narrowly military and commercial terms. Both men seem willing to link disparate issues and regions in a general barter. Neither is much exercised by human rights. Both regard the humiliation of adversaries as a salutary exercise of power. + +Buttering up the butcher + +Yet as a means to further Mr Trump’s avowed goals in the Middle East and elsewhere the idea has three deep flaws. One is the damage it would do to America’s existing alliances and international reputation. The second lies in the immutable realities of great-power relations, underpinned by history and geography that no deal-making can wholly negate. The last is that Mr Trump seems to be making a classic presidential beginner’s mistake in dealing with the Kremlin, one that Mr Bush committed when looking for a soul and that Mr Obama made when he attempted a “reset” in relations with Russia in 2009: wishful thinking. + +The first thing Mr Trump seems to want is an ally against the so-called Islamic State (IS). His notion that Russian forces have been battling IS in Syria is mistaken: they have mostly bombed other opponents of Bashar al-Assad, Mr Putin’s client. But that could change—especially, observes Andrew Tabler of the Washington Institute for Near East Policy, now that Mr Assad’s own position in Damascus looks more secure. + +What, though, could Russia offer? Mr Putin’s way of war, in Aleppo as in Grozny, makes use of indiscriminate bombardment and deliberate targeting of civilians; Russian air power might thus be used against Raqqa and other IS strongholds in ways that American aircraft cannot. But even if that were acceptable, it would hardly be a solution. It is only by occupying territory that IS can be beaten; and Russia offers little by way of boots on the ground. + +Russia has no need for ground troops in Syria because its forces are in de facto alliance with those of Hizbullah and Iran. This throws into sharp relief differences between America and Russia on who counts as a terrorist. Mindful of Russia’s 20m Muslims, Mr Putin has been as tactful as was Mr Obama in separating the concepts of Islam and terrorism. He has said the Orthodox church can be seen as having more in common with Islam than with Catholicism, and that “Islam is an outstanding element of Russia’s cultural make-up, an organic part of our history.” His grotesque satrap in Chechnya, Ramzan Kadyrov, enforces sharia (Islamic law) there. + +Beyond Mr Putin’s awkward mix of brutality, cynicism and cultural pragmatism, there is the problem that a Syrian settlement palatable to the White House, let alone America’s Sunni Arab partners—whose support would be crucial for any forces actually taking territory from IS—would have to see Iran’s influence minimised. But Russia would be very hard put to acquiesce in such a plan. Its relationship with Iran, while testy, is more nuanced than the White House seems to realise. + + + +Iran is Russia’s neighbour across the Caspian Sea and the Caucasus. The two vie for influence there and in Central Asia. Because an Iranian nuclear bomb would threaten Russia’s primacy in the region, Russia was happy to take a role in the deal that constrained Iran’s nuclear programme. But proximity also makes Mr Putin wary about antagonising the Iranians. As Nikolay Kozhanov of the European University at St Petersburg says, the Russians have interests at stake that the Americans do not, including energy projects and pipelines in and around the Caspian. They want to sell Iran arms, including surface-to-air-missiles and civilian nuclear power plants; they need to co-operate with Iran to keep Mr Assad in power. They are very unlikely to want to tear up the nuclear deal, something Mr Trump has threatened. + +On a bigger scale, the same factors—geography, security and commerce—would nobble any bid by Mr Trump to conscript Russia as a bulwark against China. The civility he has conspicuously extended to Mr Putin has not applied to Xi Jinping, whom Mr Trump angered over Taiwan even before he took office. As Dimitri Simes of the Centre for the National Interest, a think-tank, notes, American diplomats have worried about Sino-Russian cosiness for decades. Stephen Bannon, Mr Trump’s influential strategist, undoubtedly sees China as a major adversary. A bid to realign the three powers lies at the heart of Mr Trump’s grand bargain. + +This may be even less realistic than the hope of turning Russia against Iran. China and Russia are hardly close allies. Among other reasons for mistrust, the old Russian anxiety over Chinese expansion in Siberia, a fear stoked by the lopsided populations on either side of the Amur river, has never gone away. But Mr Putin began a pivot towards Asia in the mid-2000s, well before Mr Obama undertook his own version of such a manoeuvre. Initially a feint as much as a strategy, one conceived as a response to what Mr Putin saw as Western hostility, it has since acquired substance. Alexander Lukin, of the Higher School of Economics in Moscow, sees it as “largely irreversible”. When Western sanctions over Russia’s incursions into Ukraine in 2014 began to bite, China became a valuable source of credit. It has invested in Russian oil-and-gas firms; Russia sells it high-tech weapons. + +Other benefits America might seek in a grand bargain include a reduction of Russia’s campaign of bullying and destabilisation in the Baltic states and movement on arms control. Here, again, the scope for progress is narrow. A deal on long-range nuclear weapons which limits both countries to 1,550 deployed warheads is set to expire in 2021. Mr Trump could extend it, or try to reduce that cap; he might also want to do something about Russia’s huge numerical advantage in tactical nuclear weapons. But America’s missile-defence capabilities—which Russia sees as a threat to its deterrence—would be dragged into any such negotiations, and the missile-defence facilities in Europe are there to deal with Iran. A deal which reduced their capability should—at least in a normal world, and assuming Congress is not wholly supine—be hard for Mr Trump to swallow, or sell. + +The bear’s necessities + +In much of this, Mr Trump seems to overestimate Russia’s clout as well as its alignment with his goals. He mistakes the strut of a bully for the swagger of a superpower. The “strength” he admires relies on strategic assets handed down from the Soviet past—its Security Council seat and nuclear weapons—and its hydrocarbon reserves, bolstered by Mr Putin’s knack for asymmetric thuggery. Unrestrained by allies, scruple or domestic opposition, he is a dab hand at disinformation and discrediting critics whom he does not dispose of in other ways. But his Russia is more of a prickly, meddling power than a global, transformative one. Diplomatic isolation and an economy throttled by corruption frustrate any grander ambitions. + +Russia can, however, seize an opportunity; and Mr Trump presents it with one, whatever role Mr Putin had in his rise to power. (While Mr Trump did not take the intelligence regarding Russian hacking seriously, Mr Putin evidently did. Several officers of Russia’s federal security service have been arrested for treason in what may be a hunt for a cyber-mole. A senior Kremlin insider was found dead, supposedly of a heart attack.) + +Relief on sanctions is the most obvious item on the Kremlin’s agenda for Mr Trump’s presidency, one that would have the double effect of helping Russia’s economy and dividing America’s allies. But other things may matter to Mr Putin more. Obligingly, Channel One, Russia’s main state television channel, provided a list of them a few days after Mr Trump’s inauguration—a list which sounded rather more achievable than Mr Trump’s objectives. + +First was that anti-terror alliance, for “nothing brings [countries] together as much as a fight against a common enemy.” Second, Russia wants to stop any further expansion of NATO after the accession of Montenegro. Countries barred might well include Sweden or Finland, and would definitely include Ukraine. Mr Trump’s description of NATO as “obsolete” has been welcome. If Russia were to meddle in its Baltic neighbours, cabinet members who profess devotion to the alliance, such as Rex Tillerson, the secretary of state, and James Mattis, the secretary of defence, might struggle to persuade Mr Trump to honour the commitment to mutual defence at its core. If he did not, NATO would in effect be dead: the ultimate prize for Mr Putin. + +Third on Channel One’s list was the recognition of Crimea as Russian territory, along with a de-facto veto over Ukraine’s future. The Kremlin wants to retain its grip on the country’s wretched east—where fighting has flared up again—and so secure a stranglehold on its policies (see article). Conversely, America and its partners have insisted on a withdrawal of Russian troops, the re-establishment of Ukraine’s control of its borders, and regional elections monitored by international observers. + +Here, on the face of it, the signs are not encouraging for Mr Putin. Mr Tillerson affirmed in his confirmation hearing that the annexation of Crimea, and Russia’s push into eastern Ukraine, were illegal. But Mr Trump could resolve this contradiction by arguing that accepting Russia’s hold on Crimea would only be to acknowledge reality. Using the same rationale, he may urge Petro Poroshenko, Ukraine’s president, to tolerate Russia’s sway in the east. That, in turn, could trigger a collapse of the government in Kiev, which would suit Mr Putin. Because Mr Poroshenko’s government played a role in the ousting of Paul Manafort, at one time a senior figure in Mr Trump’s campaign, it might be welcome in Washington, too. + +Remember the Decembrists + +Fourth on Channel One’s list was an end to “global policing” by America, and a clear recognition of the two countries’ spheres of influence. That sounds extravagant. But it may be plausible. Apart from the odd hotel deal, Mr Trump has evinced little interest in the parts of the world—eastern Europe, the Balkans and the former Soviet Union—that Mr Putin would like to suborn. Mr Trump “has no intention of carrying the torch of democracy into every corner of the world”, observed Valery Fadeev, Channel One’s anchor. Not on the list, but worth bearing in mind, is that Mr Trump’s opposition to global action on climate may look helpful to a country that depends on oil and gas exports. + +The Kremlin does not expect immediate concessions. According to Nikki Haley, America’s new ambassador to the UN, sanctions relief is not imminent. Contradictory reports about what Mr Trump has said to Mr Poroshenko and Yulia Tymoshenko, one of his political opponents, suggest that he is either undecided or confused about the next steps in Ukraine. Yet the ideological value of Mr Trump’s victory for Russia is already enormous. It removes one of the biggest threats to Mr Putin’s power: the attraction of America as an alternative system of governance to the authoritarian model he has constructed. + + + +His is not a new worry. Soviet and Russian leaders have in the past venerated America as well as demonising it. (Stalin advocated a “combination of Russian revolutionary élan with American efficiency”.) They knew its example encouraged rebels and idealists. The Decembrist revolt of 1825, in which army officers rose against Tsar Nicholas I, took inspiration from the Declaration of Independence. In 1917 some pro-revolution Russians saw America as a guiding star: Russia was to be a new America, a better and fairer one. The Soviet authorities tried, largely in vain, to root out American books, music and clothes. + +They were right to be concerned: America’s successes undermined Soviet rule. After communism collapsed, America became an ideal. That started to change after Russia’s financial meltdown in 1998 and the American-led intervention in Kosovo. With Russia unable to compete economically or support its clients, its public fell back on a simple conviction: we are stronger because we are morally superior. + +Coming to power at the turn of the millennium, Mr Putin co-operated with America until 2003, the year that saw Mr Bush’s invasion of Iraq and Georgia’s Rose revolution. The next year Ukraine’s Orange revolution got under way. Mr Putin believed that America had toppled the leaders of the two former Soviet republics; he had a strong aversion to seeing anything similar in Moscow. In 2011 he blamed Hillary Clinton, then America’s secretary of state, for demonstrations against him, pushing relations to a new low. + +For Mr Putin, the downside of Mr Trump’s win is that it prevents him from invoking America as an enemy. This could be only a temporary setback: despite his disdain for NATO and liberal interventionism, Mr Trump may well lash out militarily somewhere, at which point anti-American propaganda can, if necessary, be cranked back up. For now, Mr Putin will be content that an American leader is at last paying him the respect he feels he deserves. + +The irony is that any Russian who grew up before 1989 can see in Mr Trump the perfect Soviet caricature of a hateful American imperialist. Now, though, this same image lets the Kremlin’s propagandists present him as an ally in the global fight between right-minded nationalists and decadent Western liberals, a battle that will continue in the upcoming elections in Germany and France. Russian television particularly relishes footage of demonstrations in America and Europe. They represent a thrilling new front in a civilisational struggle led by Mr Putin—and now joined by the president of the United States. + +This article appeared in the Briefing section of the print edition under the headline “Champions of the world” + + + + + +United States + + + + +Presidential authority: Washington v Trump + +Donald Trump and satire: Super soaking + +Legal migration: Code red + +Political history: The little man’s big friends + +Lexington: French lessons + + + + + +Washington v Trump + +The first big test of America’s institutions under Donald Trump + +One way or another, the president will leave his stamp on the courts + +Feb 11th 2017 | NEW YORK + + + +AMERICA, along with its new president, is getting a crash course in the role of the federal judiciary. On February 3rd, one week after Donald Trump issued an executive order banning travel from seven Muslim-majority countries and suspending America’s refugee programme, a federal district court in Seattle temporarily halted Mr Trump’s plan. Judge James Robart said there is “no support” for the government’s argument that the ban made America safer. Four days later, at least two members of a three-judge panel on the 9th Circuit Court of Appeals seemed unimpressed when the government challenged Mr Robart’s ruling. For now, America remains open to permanent residents, visa-holders and refugees seeking its shores—and Mr Trump must grapple with the unfamiliar feeling of not getting his way. + +The battle over the stymied plan—which the White House insists is wholly different from the “total and complete shutdown of Muslims entering the United States” that Mr Trump first announced on the campaign trail in December 2015—proceeds on two parallel tracks. In the courts, judges and lawyers wrangle over an array of legal questions involving constitutional provisions, congressional statutes and the doctrine of legal standing. Meanwhile on Twitter, the president is undermining support for the process. After Mr Robart stopped the 45th president’s executive order in its tracks, Mr Trump tweeted: “When a country is no longer able to say who can, and who cannot, come in & out, especially for reasons of safety & security—big trouble!” In a follow-up missive, he went one step further: “The opinion of this so-called judge…is ridiculous and will be overturned!” Some conservatives who oppose Mr Trump worry about the damage he could do to the country’s governing institutions and customs. This is an early test. + +So far, the courts have performed their usual role. The judiciary has often checked presidential authority in foreign affairs, security and immigration, notes Mark Peterson of UCLA. Immigration is the area “most prone to such a judicial role”, he says. While the White House is correct to note that Article II of the constitution and the Immigration and Nationality Act of 1952 grants the president wide discretion in immigration enforcement, amendments to the law in 1965 preclude restrictions on the basis of an individual’s national origin, race and other such broad categories. The text of Mr Trump’s executive order may not be cast in explicitly religious terms, but public statements by both him and his allies leave little doubt that it is rooted in a suspicion of Muslims. In the hearing before the 9th Circuit on February 7th in Washington v Trump, these comments proved a liability for the government. + +August Flentje, the lawyer for the president, argued that Mr Robart’s ruling had upset the balance the Trump administration had struck between “welcoming people into our country” and “making sure our country is secure”. That balancing is the task of the political branches, he said, not the courts. But when repeatedly pressed to cite evidence showing that visitors from the seven countries covered by the ban—Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen—posed an actual risk of terrorism to America, Mr Flentje had little to offer. Merely mentioning that the Obama administration considered the countries to be terror-prone, one judge complained, is “pretty abstract” and justifies a visa requirement, not an all-out ban. + +Facing steady resistance from the panel, and remarking, “I’m not sure I’m convincing the court”, Mr Flentje punted. He asked the judges to at least consider lifting Mr Robart’s restraining order with regard to people who have never been to America. There is no good reason, Mr Flentje implied, to give every foreign national from those seven countries free rein to visit. This last-ditch argument—that Mr Robart’s move went too far and covered too much—was Mr Flentje’s best. In response, Noah Purcell, the lawyer for Washington state, noted two reasons why the travel ban should remain suspended in its entirety. Targeting Muslims violates the First Amendment rule against religious establishments, he said. And the interests of America’s legal residents are harmed when their relatives in the Middle East and Africa are banned from visiting them. + +This is how the boundaries of presidential authority are gradually discovered. If Mr Trump loses his appeal in the 9th Circuit, the government will ask the Supreme Court to weigh in. Given the four-four ideological split there, the on-again, off-again travel rules may remain in limbo for a while. The next test will come if this ends with a ruling against the administration. All presidents encounter resistance from judges, but only Andrew Jackson challenged the authority of the courts, says Mr Peterson (Mr Trump has returned Jackson’s portrait to the Oval Office). That confrontation changed America: Jackson’s presidency saw the spread of judicial elections, to bring the judges into line with the wishes of voters. Whatever the outcome of Washington v Trump, the president will leave his stamp on the courts. As well as picking a new Supreme Court justice, he will soon set about filling over 100 vacancies in the nation’s district and appellate courts. + +This article appeared in the United States section of the print edition under the headline “Washington v Trump” + + + + + +Laughing at the White House + +President Trump is making satire great again + +Though some comedians find his tendency to defy parody hard to handle + +Feb 11th 2017 | WASHINGTON, DC + + + +BARACK OBAMA was bad for satirists, even if few seemed to mind. Moderate, upstanding and cool, the first black president gave close observers of human ridiculousness little to work with. Most gave up and welcomed him admiringly onto their shows. “I can’t believe you’re leaving before me,” Mr Obama, appearing on “The Daily Show” for the seventh time, told its outgoing host, Jon Stewart. It was not the relationship to power the acerbic Mr Stewart would have liked. Thankfully, Donald Trump is making satire great again. + +The most conspicuous beneficiary, “Saturday Night Live” (SNL), a hitherto jaded platform for comedy skits on NBC, is seeing its best ratings in over 20 years. This is partly thanks to Alec Baldwin’s parody of the president as an irascible halfwit. But the chaos in the month-old administration has provided additional targets. On February 4th SNL unveiled a hilarious parody of Sean Spicer, the White House press secretary, as a gum-chewing maniac. The belligerent Mr Spicer has since appeared cowed. + +There are a couple of lessons here for more sober political commentators. One is to abandon the complacency about Mr Trump that, until Mr Baldwin took over in October, had rendered SNL’s portrayal of him toothless and pointless. Another is to let the weirdness of this presidency speak for itself. “America first, Australia sucks. Your reef is failing. Prepare to go to war,” the SNL Trump blustered down the phone to Australia’s president, Malcolm Turnbull, on February 4th. That, minus the threat of war, is pretty much what Mr Trump said to Mr Turnbull in a recent phone call. + +Other satirists are finding Mr Trump’s tendency to defy parody harder to handle. “It’s really tricky now as satire has become reality,” Trey Parker, co-creator of “South Park”, a satirical cartoon which presented the Trump-Clinton contest as the “giant douche or the turd sandwich”, has said.The Onion has the same problem. One of the satirical online paper’s recent headlines, “Eric Trump Scolds Father That He Mustn’t Inquire About The Businesses, For He’s Sworn Not To Tell,” is a pretty faithful description of the firewall between the 45th president and his family firm. + +Indeed, many of the headlines generated by Mr Trump’s administration are deeply Onion-esque. Kellyanne Conway, a Trump spokeswoman, was briefly barred by CNN for using alternative facts—her references to a fictitious jihadist atrocity, which Ms Conway called the “Bowling Green Massacre”, were the last straw. Mr Trump’s wife, Melania, has sued a newspaper for reporting lurid untruths about her on the basis that this cost her the “once-in-a-lifetime opportunity” of making millions as “one of the most photographed women in the world”. No satirist could do better. SNL’s response, in sending up Mr Spicer, is to shift the focus onto one of the relatively normal players in Trump world, to show how pervasively strange it is. + +At first glance, none of this should bother Mr Trump. SNL’s weekly audience of 10m represents less than half his Twitter following and is dominated by left-leaning millennials who would sooner work in an abattoir than vote Trump. Yet Mr Trump, who unlike his core voters devours the mainstream media and loves to hobnob with the celebrities who appear on shows like SNL, minds the lampooning a lot. “Not funny, cast is terrible, always a complete hit job. Really bad television!” he tweeted last month. SNL’s response was to start planning ways to take Mr Baldwin’s impression, which the actor has described as a civic duty, to a wider audience. + +This article appeared in the United States section of the print edition under the headline “Super soaking” + + + + + +Immigration of the legal sort + +H-1B visas do mainly go to Indian outsourcing firms + +That is not a good argument against them + +Feb 11th 2017 + + + +MOST of the debate about immigration in America concerns the illegal sort. But legal immigration can be controversial too, even when the migrants in question have either an unusual talent for writing computer code or improbably long legs. The H-1B visa programme is aimed at skilled workers in “speciality occupations”, mostly medicine and information technology (though fashion models can also qualify). Currently the programme is limited to 85,000 visas a year, with 20,000 carved out for those who earn postgraduate degrees from American universities. Most workers must make a minimum of $60,000 a year to qualify. Critics argue that the programme has strayed from its original purpose and is now being abused by firms to replace Americans with cheaper labour. Three bills to curtail H-1Bs have already been introduced to the new Congress. Reports suggest that an executive order may also be in the works. + +Demand for the visas far exceeds the 85,000 cap, meaning that the government has to ration them to firms by lottery. Indian outsourcing firms like Tata Consultancy Services (TCS), which provides low-cost back-office services, are now the biggest employers of H-1B workers. Analysing data compiled by Théo Négri of jobsintech.io, The Economist found that between 2012 and 2015 the three biggest Indian outsourcing firms—TCS, Wipro and Infosys—submitted over 150,000 visa applications for positions that paid a median salary of $69,500. In contrast, America’s five biggest tech firms—Apple, Amazon, Facebook, Google and Microsoft—submitted just 31,000 applications, and proposed to pay their workers a median salary of $117,000. + +Although it is true that foreign workers at the Indian consultancies receive more visas than higher-skilled workers at better-known firms, a simple solution exists. Congress could raise the number of visas issued. Given that the unemployment rate for college graduates sits at 2.5%, it is fair to say that most native workers displaced by H-1Bs land on their feet. Reducing the number of visas for TCS and its brethren would probably result in them shifting work to India. A better change would be to end the rule whereby H-1B recipients must stay with the company that sponsored them. For within their ranks may lurk the next Elon Musk or Sergey Brin. + +This article appeared in the United States section of the print edition under the headline “Code red” + + + + + +The little man’s big friends + +In Alabama, support for Donald Trump followed an ancient pattern + +Why counties that had fewer slaves in the 1860s voted for the president + +Feb 11th 2017 | DOUBLE SPRINGS AND MACON COUNTY + + + +“IMAGINE,” says Glenn Drummond, gesturing at the farmland beyond the window of his pick-up truck, “this was all pine forest.” Early 19th-century travellers on this part of the old federal road in Macon County, Alabama, “didn’t know what was behind the next tree.” There were bears, rattlesnakes and defiant Native Americans, on whose trading path the road was built. Today there is an archaeological dig at Warrior Stand, where a Creek Indian chieftain ran a hostelry, which has unearthed English pipes and French gunflints; at Creek Stand, a few miles along, is a quaint Methodist church. Then the modern road turns away from the old route, which is traced by a dirt track before disappearing into fields and copses. + +Running from Washington to New Orleans, briefly known as the “Appian way of the South”, the federal road was soon made redundant by steamboats, railways and the telegraph. But during its brief heyday it sparked a war with the Creek, then helped to vanquish them. After conquest came migration: “Once the Indians were whipped,” says Mr Drummond, an expert on the road, “a flood of settlers came down it.” Some of the earliest took the fertile land of central Alabama—known as the Black Belt for its rich soil—and established cotton plantations, importing slaves to work on them. Others did the same on the floodplain of the Tennessee river. Later, poorer migrants settled the sandy Wiregrass region in the south-east, and in the beautiful but less fecund northern hills, where there were few slaves and fewer roads. + +This economic pattern soon became a political one that, in essence, has endured across two centuries—even as the electorate has evolved and the road that helped to delineate it was reclaimed by the wilderness. In that pattern, Alabama’s yeomen farmers, and their descendants, have sporadically risen up against the plantation class and its modern equivalents, typically when hardship rallied them to a charismatic leader’s standard. + +The cycle has been consistent, but the story is nuanced. Populism in Alabama—as in other places that helped to elect Donald Trump—has not always been driven by prejudice, as might be supposed; on the contrary. It was powered as much by a sense that government was a racket and politicians tools of the plutocracy, a deep and often reasonable conviction. + +Birth of a free state + +Mr Trump’s inauguration speech was well-received at Jack’s, a fast-food outlet in Double Springs, in northern Alabama, where the television was tuned to Fox News. “One of the best speeches I’ve ever heard,” said a customer who, like many, was dressed in work boots and camouflage gear. “He’ll be tough.” The enthusiasm was unsurprising. Alabama gave Mr Trump one of his widest winning margins in November, and Winston County, of which Double Springs is the seat, supplied the biggest in the state: 90% of its voters backed the new president. + +Outwardly Winston County conforms to outsiders’ expectations of the rural South. It has two main religions: the University of Alabama’s football team and the Baptist church. Turnings from its forest-lined roads feature multiple signs to backwoods chapels. The county is still “dry”; Double Springs itself narrowly voted to permit sales of alcohol four years ago. (Arrests for drunk-driving have since declined, says Elmo Robinson, the mayor, as people no longer get their whiskey in Jasper, in neighbouring Walker County, and guzzle it on the way back.) On the eve of the inauguration, at karaoke night in the only restaurant that serves booze, men in cowboy hats crooned country songs about God and adultery. + +But Winston and the counties around it are more politically complex than they might seem, and have always been. Instead of using the federal road, early European settlers there largely came down through the Appalachians from other mountainous areas, taking land that could be bought cheaply and in small plots or squatting on it for nothing. They practised subsistence farming, hunting and fishing for extras. Like Mr Trump, these yeoman farmers venerated Andrew Jackson, the brutal, populist president from 1829 to 1837. + +Life was insular: Skip Tucker, former editor of a newspaper in Jasper, says it was called the Daily Mountain Eagle because the mule-driver who delivered its first press joked that only an eagle could gather the news. Still, tension soon flared with land speculators, bankers and domineering plantation-owners. After all, says Ed Bridges, retired director of the state’s Department of Archives and History, the hill-country yeomanry were the “descendants of the serfs and peasants of Europe” and “feared the rise of a new aristocracy”. + +When the civil war came, tension escalated into conflict. Winston County was the poorest in the state. Like other Appalachian parts of the South, it contained few slave-owners—just 14. Some such communities were recruited to the Confederate cause through appeals to regional loyalty or white supremacy. Not Winston: as Don Dodd, a local historian, records in his chronicle of the county, a resolution passed by a meeting at Looney’s Tavern reasoned that if a state could secede from the Union, a county could secede from a state. (“The Free State of Winston!”, scoffed a dissenter.) The citizens asked to be left to pursue their destiny “here in the hills and mountains of north-west Alabama”. They weren’t left alone. Instead they waged a miniature guerrilla war against conscription officers and pillagers. Deserters sheltered in the secluded crags and coves; Bill Looney, the tavern-owner, was known as the “Black Fox” for his prodigious feats piloting them to Union lines. + +Today a statue outside the court house in Double Springs depicts a hybrid Yankee and rebel soldier (most such monuments in the South mourn only Johnny Reb). Mr Dodd’s inscription notes that more than twice as many locals fought for the Union as for the Confederacy, about which townsfolk still talk bitterly. Something of the old intransigence survives, along with resentment of bullying elites. Drive from Double Springs to Haleyville, the county’s biggest town, and you pass a barn proudly proclaiming “The Free State of Winston”. “We’re still independent-minded people,” says Mayor Robinson. That spirit soon erupted again. + +The people want relief + +Reuben Kolb was rich, but, like Mr Trump’s, his disgruntled supporters didn’t mind. He commanded a Confederate artillery unit during the war, briefly managed an opera house and then, as a farmer in southern Alabama, developed an unusually hardy watermelon seed, which he called Kolb’s Gem. The seeds were distributed in self-promoting packets that bore his name and moustachioed features. Kolb became the figurehead of another great surge of anti-elitism. + +In the decades after the civil war, the yeoman farmers of Alabamian hill counties like Winston, and in the Wiregrass, believed they were being exploited. And they were. Land values plummeted even as property taxes rose. Needing cash, many began growing cotton, the price of which promptly collapsed. Some were ruined by the interest charged by supply merchants or—after they sold up and were forced into tenant farming—by rapacious landlords. In “Poor But Proud”, Wayne Flynt, a historian, charts the trajectory of David Manasco, a farmer in Winston County. In 1860 he owned land and property worth $1,400, no mean sum. By 1880 he was a sharecropper, the lowest form of tenancy. + + + + + +As well as the hardship, there was a loss of honour. The soil may have been thin, but at least it had been theirs, and there was the hope of acquiring more of it. They had sunk from the freedom of the frontier to dependency. “We in Alabama have had more of that than most of the rest of the nation,” says Mr Bridges of that downward mobility. It hasn’t abated. These days many of the modest homes scattered amid Winston County’s deep forests and unexpected lakes are for sale. In what is still among the poorest parts of one of America’s poorest states, shops, warehouses and even some of those superabundant churches are shuttered. Junkyards abound. Around Double Springs, says Mr Robinson, the biggest employers are sawmills and mobile-home manufacturers; he hopes more tourists will come. The skyscrapers of Birmingham seem remote, just as the industrial prosperity of the vaunted post-war “New South” did to Kolb’s followers. + +“The people want relief,” he exclaimed, “and God knows they have a right to demand it.” His campaigns were part of a broader farmers’ movement that in the agricultural depression of the 1890s was channelled into the Populist Party. In 1892 Kolb ran for governor as a Jeffersonian Democrat—ditching the Democratic label altogether was too risky—but then, and again in 1894, his platforms were Populist. He advocated graduated taxes, better public schools, banking and currency reform and fairer railroad prices. In a coalition that took in Alabama’s new industrial workers, he vowed to keep convict labourers out of mines, where they were used to break strikes. He attributed the farmers’ grievances, even those caused by ineluctable market forces, to machinating cliques, rather as Mr Trump claimed globalisation could be reversed by squeezing bosses. + +Children from Kolb-supporting families sported corn-cob necklaces. But the contest was brutal. The so-called Bourbons—oligarchic Democrats who represented tax-averse industrial barons, known as “Big Mules”, and the planters—slung as much mud at Kolb as the pre-internet age could muster. As William Rogers recounts in “The One-Gallused Rebellion”, he was accused of padding his expenses during his time as commissioner of agriculture, and of diddling a counterpart in a cotton sale. The slurs backfired, as they often do: Kolb, noted a contemporary, “is indebted to his enemies for his prominence.” In the end they resorted to fraud—real fraud: violence, bribery, ballot-stuffing, inflated returns. Officially defeated, Kolb claimed victory and took a symbolic oath of office. But a rumoured insurrection did not materialise. “He was swindled,” says Mr Flynt. + +Look at the results, and it is obvious where the fraud was perpetrated. Kolb swept the Wiregrass and the highland counties. He lost because of lopsided Bourbon wins in the Black Belt—where thousands of African-Americans, not yet disenfranchised, supposedly voted against their own interests, which Kolb pledged to protect. Tactical it may have been, but his support for black rights, including the vote, was progressive for its time. True, many whites were sceptical. (Racial attitudes in the hills are still not perfect, says Mr Dodd, despite—or because of—the paucity of black people.) Yet the most striking aspect of this populist upsurge is that racism was not a motive for it but a barrier against its success. White supremacy, and the need to defend it, were invoked by the wealthy to thwart a movement that, as Martin Luther King later said, was “uniting the negro and white masses into a voting bloc that threatened to drive the Bourbon interests from the command posts of political power.” + +Big Jim Folsom puts his enormous feet up + +The same goes for another tub-thumper who took on the Big Mules—and, in 1946, won. Jim Folsom grew up in south-east Alabama and as a teenager worked in a cotton gin during harvest seasons. Later he was a merchant mariner, a barker at a theatre in New York and a work-relief director under the New Deal. He moved north to Cullman, now a lively town distinguished by a pretty covered bridge and an eccentric monastic grotto, from where he sold insurance, a helpfully itinerant profession for an aspiring politician. His first wife served as a social worker in neighbouring Winston County. He was six feet eight inches tall. Mr Dodd recalls that when Folsom stayed with his family in Double Springs, his mother put a chair at the end of the bed to accommodate his gargantuan frame. + +Covering up dirty tracks + +In some ways, the situation of what had once been Alabama’s robust yeomanry was even more parlous in 1946 than in Kolb’s era. After his barely suppressed insurgency the Bourbons passed a new constitution, again ramming it through with fraud in the Black Belt. Its black voters allegedly backed a plan that disenfranchised almost all of them through poll taxes, literacy tests and other ruses. Quite intentionally, the same measures stripped the vote from large numbers of poor whites as well. Meanwhile debt made tenancy inescapable for many formerly landowning families, driving them down its Dantean rungs and towards destitution. The boll weevil, another implacable force, swarmed up from Mexico and ravaged cotton crops as destructively as any army. Then came the Depression. + +Folsom’s policies resonated, and still do. He pledged to spend more on schools and pensions and to end, at last, the unfair competition of convict labour. He was not a fan of “dumping American money overseas”. He wanted to do away with voting restrictions. Perhaps above all, though, he said he would improve the state’s infrastructure, in particular by paving farm-to-market roads. In an area still bypassed by interstates, as it was by the old federal road, that basic shortage persists. Mayor Robinson says his biggest challenge is securing grants for local upgrades. “Hopefully [Mr Trump] will come and do something with the infrastructure,” he says, referring to one of the president’s main themes. + +The ongoing need points up two consistent features of life and politics in the hill country. The first is its isolation, cultural as well as geographical, which endures despite the patina of sameness conferred by fast-food chains and motels. The other is a conflicted attitude to government among its warily hospitable residents. They still think it’s a racket, and, as ever, take pride in self-sufficiency. Here, says Ronald Jackson, whose family has lived in Winston County since before the civil war, “you don’t depend on the government, you take care of your own.” At the same time, unblinkingly and understandably, they want a bigger chunk of its largesse. + +“I don’t answer to no professional politicians,” Folsom said in 1944. “I answer only to the people.” He had never held office before, and like Mr Trump’s his shoestring campaign was staffed by inexperienced relatives and friends. Hardly any newspapers endorsed him; as George Sims notes in “The Little Man’s Big Friend”, he was written off as a lightweight showman. Demotic, entertaining, tirelessly peripatetic, the show worked. Rather like Mr Trump’s baseball cap, the army boots he wore on the stump marked him as a regular guy. He toured with the Strawberry Pickers, a hillbilly band, plus a corn-husk mop and suds bucket (for contributions), with which he promised to clean up Montgomery, the state capital, just as Mr Trump said he would “drain the swamp”. + +The Huntsville Times called his victory in 1946, secured in much the same counties that had backed Kolb, “a blind, unreasoning revolt.” From the start, scandal threatened to capsize his governorship. As well as “Big Jim” he was known as “Kissin’ Jim” for his habit of kissing long lines of girls at his rallies. He alienated the “lying newspapers” as thoroughly as has Mr Trump (Kolb didn’t care for them either). + +Nevertheless, after an obligatory hiatus, Folsom strolled to re-election in 1954. His popularity was straightforward: the legislature stymied his constitutional changes, but his road-building programme got through. “They always promise the world,” Mr Jackson says of politicians, but Folsom “did what he said he’d do.” This is another ingrained characteristic. For all the hyperbole of elections, expectations are modest in hard-bitten places like Double Springs and—helpfully for Mr Trump—the bar for political honour is low. Mr Jackson voted for him because “he might halfway manage the government without bankrupting it or giving it away.” + +Folsom’s second term was marred by scandals over cronyism, slush funds and his boozing, for which “gone fishing” was the preferred euphemism. But, in the end, his relatively liberal stance on race was also turned against him. There were parts of Alabama, he complained, “where a negro doesn’t stand a Chinaman’s chance of getting fair and impartial justice.” He tried to boost the pitiful number of registered black voters. He compared efforts to nullify the Supreme Court’s desegregation orders to “a hound dog baying at the moon and claiming it’s got the moon treed”. When politicians stirred up racial resentment, he said, “You know damn well they are trying to cover up dirty tracks.” + +In the election of 1962 he faced George Wallace—whose exhortation of “law and order” anticipated Mr Trump’s, and who may be closer to most Americans’ notion of an Alabama demagogue. Wallace had denounced Folsom as “soft on the nigger question”; Folsom trimmed, but lost anyway. Still, if Mr Trump’s campaign echoed Wallace’s, it also recapitulated Folsom’s. The electoral maps hint as much: the old pattern held up, as not just Winston County but other strongholds of the yeomanry embraced him. (These days, of course, the electors in the Black Belt are mostly black, and overwhelmingly vote Democratic like their Bourbon predecessors.) + +It isn’t only Alabama. The political histories of Georgia and North Carolina, through which the federal road also ran, can be charted on similar maps, with the same ancient cultural divisions between uplands and lowlands, and between regions where slaves were numerous and where there were few. The roots of these entrenched habits of mind and voting show that, as Mr Bridges, the archivist, puts it, Alabamians won over to populism were “not simply emotional victims of demagogues”. Often they have had a clearer grasp of interests and injustices than that presumption allows. Above all, says Mr Dodd, the historian of Winston County, the descendants of Alabama’s yeoman farmers are, like their forebears, “tired of people looking down on them”. + +This article appeared in the United States section of the print edition under the headline “The little man’s big friends” + + + + + +Lexington + +Trumpism is very familiar to Europeans + +What Donald Trump has in common with Marine Le Pen and Geert Wilders + +Feb 11th 2017 + + + +IT WAS a moment to make French nationalists spill their pastis. Marine Le Pen, a populist seeking the presidency of France, launched her campaign this month by praising American voters, saying they had “shown the way” by electing Donald Trump. After all, Mr Trump is a star of American reality television who subsists on Diet Coke, Big Macs and exceedingly well-done steaks. France uses legal quotas to keep Hollywood films and American TV hits at bay, and made a national hero of a sheep farmer (now an elected member of the European Parliament) for attacking a McDonald’s restaurant with a tractor. + +Ms Le Pen has tactical reasons to embrace Mr Trump. As her National Front rises in the polls, she calls his election part of a global “awakening” that will next carry her to victory. But to a degree often missed in America, she is an ideological soulmate, too. + +By American lights, Mr Trump is a puzzle. On the one hand he favours proposals loved by the right, pledging to lower taxes and deregulate business. On the other he backs ideas cherished on the left, as when he says government should offer health insurance “for everybody”, regardless of ability to pay. Pundits debate whether he is a “New Deal Republican” inspired by Ronald Reagan, a Nixonian centrist or more of a fist-shaking nativist in the mould of Andrew Jackson. Actually, though Mr Trump reflects all those influences and more, there is an easier way to understand him. Quite a lot of the time, he sounds European. + +The parallels extend to his rhetoric. Take promises to detect and expel Muslim extremists. Mr Trump told an audience of soldiers on February 6th that America should admit only “people that love us and want to love our country”. Europeans hear echoes of a National Front slogan dating back to the 1980s: “Love France or leave it”. Compare Mr Trump to Ms Le Pen, or other populist-nationalist leaders such as Geert Wilders in the Netherlands and Nigel Farage, the former head of the United Kingdom Independence Party who helped lead his country to Brexit, and areas of agreement abound. + +Like America’s president, Europe’s demagogues describe a world in which strong nations must rise up against rootless, self-dealing transnational elites. They promise to lower taxes but also assure their (often snowy-haired) voters that they will preserve old-age benefits from cuts. They are typically authoritarians who would spend more on crime-fighting and defence, and back something like “extreme vetting” for Muslims and refugees. They suggest that workers need protecting from legal as well as illegal immigrants. Most question whether climate change is as dangerous as experts say. Mr Farage and Ms Le Pen scold the European Union for provoking President Vladimir Putin, and cheer Mr Trump’s talk of closer Russian ties (indeed Russian bankers have, in the past, loaned the National Front large sums). Mr Wilders is warier of Mr Putin, though just as hostile to the EU. + +Trump’s America: the old in the new world + +Point out parallels between Trumpism and the European hard-right, and some Republican grandees shrug. Over breakfast in Washington clubs, or in Capitol Hill chats, bigwigs say that European socialism is very bad, of course, and that neo-Nazis are to be shunned. But calling someone a European conservative is not so alarming—at this point some may mention Margaret Thatcher, reverentially. In fact terms like “left” and “right” are misleading in Europe. French conservatives may be warier of free markets and keener on state intervention than Swedish social democrats. + +A more relevant divide involves attitudes to competition. One European ideological bloc (which might be called Anglo-Saxon) sees competition as, on balance, a useful discipline, making companies and countries stronger and more attuned to the needs of consumers and citizens. Asked for the opposite of competition, that first camp might answer: a monopoly. A rival bloc sees competition as a threat to be managed or resisted. Asked for competition’s opposite, that second camp might answer: solidarity. + +The divide is partly cultural, and America has broadly stood on the Anglo-Saxon side of it, even when putting up protectionist barriers to imports. The Founding Fathers wanted to build a country in which a stranger with a good idea would have the chance to make a fortune. It is telling that in the English language competition can be “fair” or “unfair”. Fairness is an abstract idea subject to objective tests—ie, are firms colluding or foreign countries dumping goods into markets at a loss? But in French, Spanish or Italian, competition is “loyal” or “disloyal”. That’s a more emotive concept. It conjures up images of an artisan in a hilltop town, betraying fellow-members of his guild or clan by producing cheaper bread or shoes. That has consequences: lots of Europeans expect politicians to shield firms deemed national champions from competition or to subsidise jobs in favoured industries. + +Mr Trump is uncomfortably close to that second camp. His chief ideological adviser, Stephen Bannon, openly yearns for a more closed, clannish America. In a 2015 radio interview Mr Bannon grumbled about the number of Silicon Valley CEOs from Asia, saying: “A country is more than an economy. We’re a civic society.” Candidate Trump promised to be “very loyal to the country” and that “American hands will rebuild this nation”. In a post-election speech he laid out his credo: “The relationships that people value in this country are local: family, state, country,” he thundered. Similar language thrills many in ageing, anxious Europe. It resonates in Trump’s America—a world of rural counties and small, bleak towns that, on many measures, is more like Europe. Polling data show that Trump supporters have a median age of 57, almost nine in ten of them are white, and most do not have college degrees. Overall, Americans have a median age of 38 and attend college at steadily rising rates; about a third of them are non-white. Trumpian nationalism is potent stuff. It is also backward-looking and tribal. That’s not the American way. + +This article appeared in the United States section of the print edition under the headline “French lessons” + + + + + +The Americas + + + + +NAFTA: Reshape or shatter? + +Green activism: Dying to defend the planet + +Brazilian manners: A more correct Carnival + + + + + +Reshape or shatter? + +The pitfalls of renegotiating NAFTA + +A revision of the North American trade deal will not give Donald Trump what he wants + +Feb 11th 2017 | OTTAWA AND MEXICO CITY + + + +DONALD TRUMP called the North American Free-Trade Agreement (NAFTA) with Mexico and Canada the “worst trade deal ever approved in this country”. Soon it will become clearer what he intends to do about it. He has three choices: tear it up, bully the United States’ partners into making concessions that merely damage the agreement or go for a renegotiation that benefits all three. + +The process for making big changes to NAFTA has started. On February 3rd the Mexican government began a 90-day consultation with businesses on what its negotiating position should be. Wilbur Ross, who will lead the American negotiators after the Senate confirms him as commerce secretary, says NAFTA is “logically the first thing for us to deal with”. Notification to Congress, which must happen 90 days before talks can start, could come soon. + +NAFTA is not the failure Mr Trump claims it is. Trade in goods among its three partners has more than trebled since it took effect in 1994; 14% of world trade in goods takes place under its rules. Cross-border supply chains have made American firms more competitive. The manufacturing jobs it has created in Mexico have slowed migration to the United States. + +All three governments agree that it could be made to work better. “Any agreement can be improved,” said David MacNaughton, Canada’s ambassador to the United States, the day after Mr Trump won the election. The 23-year-old agreement could be modernised in ways that benefit the United States. + +But a normal renegotiation may not be possible under Mr Trump. He has battered the United States’ relationship with Mexico by insulting migrants and demanding that Mexico pay for a border wall. He has threatened to impose tariffs as high as 35% on Mexican cars, which would violate NAFTA (and breach the rules of the World Trade Organisation). No conceivable renegotiation of NAFTA will bring what Mr Trump wants most from it: lots more factory jobs in the United States and a dramatic reduction of its $63bn merchandise-trade deficit with Mexico. + +Mr Ross’s language is less alarming than that of his soon-to-be boss. Yet he may do no more than put a friendlier face on Mr Trump’s protectionism. A billionaire investor in old-technology companies that benefit from protection, Mr Ross is no free trader. According to a report by the Globe and Mail, a Canadian newspaper, he has identified two priorities for NAFTA renegotiation: the dispute-settlement process and “rules of origin”. These rules put a ceiling on the value of inputs that an exporter to another NAFTA country can buy from outside the area. Both ideas are contentious. + +The United States has long grumbled about the independent NAFTA panel that rules on anti-dumping duties, which a country imposes when it thinks that its trading partner is competing unfairly. It has ruled, for example, that duties on softwood lumber from Canada are a violation of American law. Mr Ross is likely to demand changes that weaken the panel. + +Tightening rules of origin, which determine how porous the walls are around a free-trade area, is another goal. In the case of transport equipment, the biggest category of goods traded within NAFTA except for oil and gas, as much as 62.5% of the value of components must be made in North America if they are to be exported freely. Mr Ross probably wants to raise that requirement and close loopholes within it, which could encourage carmakers to source more parts from suppliers in the three countries. + +Mexico and Canada might not object to that. In negotiating the Trans-Pacific Partnership (TPP), a 12-country agreement from which Mr Trump has now withdrawn, both countries pushed for tougher rules of origin than did the United States. “We’re trying to see if there is a creative way of raising the regional value added in North America,” says Jaime Zabludovsky, head of the Mexican Council on Foreign Relations, who is helping the Mexican government in its consultations with business. + +But the idea poses dangers. If North American firms had to buy more inputs within NAFTA they might become less competitive against the likes of China and Japan, both at home and abroad. Tighter rules in industries with low tariffs, like cars, could become self-defeating; if they are too tight, companies could simply decide to pay tariffs, rendering NAFTA irrelevant. Another idea that might tempt Mr Ross—allowing individual NAFTA partners to set their own rules of origin—could disrupt supply chains as much as imposing tariffs within the group. It is a non-starter as far as the Mexicans are concerned. + +Making NAFTA more like the TPP might help placate Mr Trump, even though he rejected the bigger deal. The TPP strengthens workers’ rights, for example to strike and bargain collectively. That is a good thing from Mr Trump’s point of view because it should help Americans compete with Mexican workers on a more equal footing. NAFTA also has a workers’-rights component, but it is in a side agreement and maybe less enforceable. The TPP has America-friendly rules for technology trade, which NAFTA lacks. It punishes online piracy and bars governments from imposing customs duties on digital devices, for example. + +Mr Ross may also try to knock down the remaining barriers to American exports and investment put up by its NAFTA partners. Mexico, for example, imposes cumbersome testing procedures on imports of electrical equipment and limits purchases of residential property by foreigners near its coasts. The list of complaints about Canada is at least as long. It includes protection for dairy and poultry farmers, limits on foreign ownership of telecoms firms and provincial monopolies on the sale of alcohol. + +If that is Mr Ross’s agenda, negotiations will be difficult enough. Mexico, the world’s fourth-largest car exporter, will be reluctant to agree to tighter rules of origin that would make its manufacturers less competitive. Canada will resist any watering down of its ability to appeal against American anti-dumping duties. Making NAFTA more like the TPP is harder than it sounds. Mexico accepted stronger protection for labour only because the TPP offered access to the enormous Japanese market. The United States, which already gives Mexico entry to its market, is offering no extra inducement. + + + +Even if Mr Ross prevails on such questions, his new boss is not likely to be satisfied. Enforceable labour standards cannot eliminate the cost advantage of Mexican manufacturing workers (see chart). Tougher rules of origin might shift some production from Asia to NAFTA, but would not ensure that the investment goes into American factories rather than Mexican or Canadian ones. No revised trade deal can reverse the decline in manufacturing employment over the past few decades. Nor will it erase the United States’ trade deficit with Mexico, says Jeff Schott of the Peterson Institute for International Economics in Washington. + +So the chances are that the confrontation with which Mr Trump began his presidency will continue. His attempts to browbeat Mexico into submission may have the opposite effect. After recovering from the initial shock of Mr Trump’s onslaught, Mexico is beginning to fight back. Its government now says it would rather walk away from NAFTA than accept a new deal that is worse than the current one. Enrique Peña Nieto, Mexico’s deeply unpopular president, received rare acclaim after he cancelled a meeting with Mr Trump planned for January 31st. He knows that the shattering of NAFTA would cause hardship. But Mexican voters will rightly blame Mr Trump. + +This article appeared in the The Americas section of the print edition under the headline “Reshape or shatter?” + + + + + +Dying to defend the planet + +Why Latin America is the deadliest place for environmentalists + +Commodities, technology and bad policing + +Feb 11th 2017 + +Fallen friend of the forest + +ISIDRO BALDENEGRO LÓPEZ, a farmer and a leader of the indigenous Tarahumara people, had spent much of his life campaigning against illegal logging in the Sierra Madre region of northern Mexico. On January 15th he was shot dead. His father died in the same way, for defending the same cause, 30 years before. + +Defending nature is a dangerous occupation, especially in Latin America. According to a recent report by Global Witness, an NGO, 185 environmental activists were murdered worldwide in 2015, an increase of 59% from the year before. More than half the killings were in Latin America. In Brazil 50 green campaigners died in 2015. Honduras is especially perilous: 123 activists have died there since 2010, the highest number of any country relative to its population. Berta Cáceres, an indigenous leader who was a prominent campaigner against dams and plantations, was murdered there last March. + +Why is Latin America so deadly? One reason is its abundant natural resources, which attract enterprises of all sorts, from multinationals to mafias. When prices are low, as they are now, the most rapacious do not go away; to maintain their profits they become more aggressive, says David Kaimowitz of the Ford Foundation, which gives money to good causes. New technologies open up new battlefronts. Soyabeans bred to grow in tropical conditions have encouraged farmers to displace cattle ranchers, who in turn have advanced into the rainforest. Small prospectors can now extract gold from soil rather than just hunting around for nuggets. That opens up new areas for exploitation, such as San Rafael de Flores in south-eastern Guatemala, where activists have been murdered. + +Often, as with Mr Baldenegro and Ms Cáceres, the resisters are from indigenous groups; a third of the environmentalists murdered in 2015 belonged to such groups. Their defence of traditional livelihoods like fishing often complements global campaigns on issues like climate change. Indigenous peoples and other small communities manage territories that contain nearly a quarter of the carbon sequestered in tropical forests, estimates Rights and Resources International, an advocacy group. Their alliances with international pressure groups have brought more attention but have not reduced the violence. + +Confrontation often happens along frontiers that are either lawless or poorly policed. After Ms Cáceres was murdered, police told journalists she had been killed in an attempted robbery. They have since arrested eight suspects, including serving and former military officers and two employees of the firm developing the dam she opposed. But the Honduran government has yet to order an investigation into the people who ordered the killing, says her family. The company denies any involvement in the crime. In Mexico, the governor of Chihuahua state, where Mr Baldenegro was killed, says he wants an investigation, but little progress has been reported. + +The odds of finding the culprits are greater if the victim is foreign. Dorothy Strang, an American nun who fought to protect the Amazon rainforest, was killed in Brazil 12 years ago. Both the gunman and a rancher who had hired him eventually went to jail. But that is an exception. + +Indeed, governments often take sides against the activists, even though many have signed a convention drawn up by the International Labour Organisation that requires them to consult groups affected by development projects. In December last year Ecuador’s environment ministry said it would shut down Acción Ecológica, a group that backed the Shuar people in a fight over the opening of a copper mine. The government says the group encouraged violence. Brazilian lawmakers are considering a change to legislation that activists fear could prevent the creation of new indigenous reserves. + +In Honduras, politicians have been linked to attacks on opponents of a hydropower project at Los Encinos in the west, according to Global Witness. It cites Roberto Gómez, an indigenous activist, as saying that his group was “evicted by a squadron of around 15 police”, joined by civilians. They “destroyed our crops, they burnt our food”, he says. Until governments fight such violence instead of abetting it, the ranks of martyrs will grow. + +This article appeared in the The Americas section of the print edition under the headline “Dying to defend the planet” + + + + + +Sequins and sensitivity + +A politically correct Brazilian Carnival + +More people are complaining about rude songs + +Feb 11th 2017 | SÃO PAULO + + + +CROSS-DRESSING, undressing, bad taste and ribaldry are features of every Brazilian Carnival (this year’s begins on February 24th). Transgression has always been part of the point. But this year the bacchanal’s political incorrectness is provoking a backlash, especially in Rio de Janeiro, where the festival is at its glitziest. And the demand for sensitivity has created another backlash of its own. In an editorial published on February 4th, O Globo, a liberal newspaper, lamented that “to police this Rio patrimony is to leave samba behind”. + +The fuss is mainly about marchinhas, singalongs performed in Carnival street parades known as blocos. Often, the lyrics are unashamedly rude. Classics such as “Mary the Dyke” and “Zezé’s Head of Hair” do not evince respect for homosexuals. Zezé “looks like a perv/don’t know if he is”, goes the latter. Even politer songs are failing to pass politically-correct muster. Mulheres Rodadas (roughly, “well-worn women”), a feminist bloco in Rio de Janeiro, wanted to remove from its repertoire “Tropicália”, a much-loved song by Caetano Veloso, one of Brazil’s most popular singer-songwriters. Unlike many marchinhas, it contains no obviously offensive language. But some Brazilians think its glowing tribute to mulatas objectifies mixed- race women. + +Mr Veloso does not share that view. “My father was mulato. I think of myself as mulato. I love the word,” he protests. That easygoing attitude is probably more common than censoriousness. The ditties sung in street parties, many of which date back to the 1930s, are an integral part of Brazil’s cultural canon. Marchinhas should not be judged outside their historical context, says Rosa Maria Araújo, who heads Rio’s Museum of Image and Sound. Many composers were themselves black or gay, she observes, and used subversive lyrics to fight prejudice, not to entrench it. Fernando Holiday, a centre-right councillor in São Paulo, is more forthright. “It’s ridiculous,” he fumes. + +Mr Holiday, who is black, attributes the anti-marchinha upsurge to the implosion of Brazil’s left following the impeachment last August of Dilma Rousseff, the left-wing president. That ended her Workers’ Party’s 13-year reign and ushered in a conservative government led by her erstwhile deputy, Michel Temer, and stuffed with old white men like himself. Diversity-loving progressives, including many artists and bloco organisers, were appalled. (Mr Temer’s appointment earlier this month of Luislinda Valois, a black woman, as human-rights minister will do little to placate them.) + +Shut out of formal channels of political expression, grassroots campaigners must look elsewhere to champion imperilled progressive causes, explains Esther Solano, a sociologist at São Paulo’s Federal University. Imperatriz Leopoldinense, a Rio samba school, enraged conservative farmers with its plan to depict them as enemies of Indians and forests in its Carnival spectacle. At the same time, Ms Solano adds, right-wingers emboldened by their political success feel freer to rail against those whom they see as whingeing liberals. + +Débora Thomé, one of the Mulheres Rodadas, thinks the whole palaver “silly”. But if it draws attention to Brazilians’ all-too-common mistreatment of women, gays and blacks, then it is worth it, she says. A political scientist in her day job, Ms Thomé also points to a more encouraging trend. Despite apparent setbacks in Brazil and in Donald Trump’s United States, young people around the world are becoming more tolerant. That includes Mulheres Rodadas, who chose to tolerate “Tropicália” after all. + +This article appeared in the The Americas section of the print edition under the headline “A more correct Carnival” + + + + + +Asia + + + + +Labour mobility in Asia: Waiting to make their move + +Communist insurgency in the Philippines: An extra mile + +America and its Asian allies (1): Fairway friends + +America and its Asian allies (2): Two short fuses + +Politics in Tamil Nadu: Rank and bile + +Banyan: Country or continent? + + + + + +Waiting to make their move + +Asia’s looming labour shortage + +There is an obvious solution + +Feb 11th 2017 + + + +THE agencies are anonymous and unobtrusive amid the glamorous hustle of Shanghai, the better to stay in the shadows. They deal in an illegal but highly desirable product: people, specifically Filipina domestic workers to serve China’s growing middle class. Filipina helpers, says one agent, will follow your exact instructions, whereas locals are choosy and tend to handle only one task: if they clean, for instance, they will not look after children. Filipinas’ diligence makes them popular. The Philippine consulate in Hong Kong estimates that more than 200,000 undocumented Filipinas work as domestic helpers in China, earning 5,000 yuan ($728) per month, far more than they could make back home. As for legal troubles, the agents are reassuring. Fines can be hefty but are rarely imposed. One agent admitted that a client was caught employing an illegal worker; the worker was sent home, but the client was not fined. + +Another Filipina no doubt took her place. The Philippines abounds with labour, and China needs domestic workers. This exemplifies two demographic trends in Asia. Poor, young South and South-East Asian countries suffer low wages and underemployment, while richer, ageing countries in the north need more people to bolster their workforces. Theoretically, this problem contains its own solution: millions of young workers should go north and east. Receiving countries would benefit from their labour, while their home countries would benefit from their remittances and eventually from the transfer of skills when the workers return, as many migrant labourers do. + +Practice, however, is less accommodating than theory. The Asian “model” of migration tends to be highly restrictive, dedicated to stemming immigration, rather than managing it. Entry is often severely curtailed, permanent settlement strongly discouraged and citizenship kept out of reach. + +Rich in people, poor in migrants + +Asia is home to about half of the world’s people, but is the source of only 34% of its emigrants and host to only 17% of its immigrants. About a third of Asians who have left their country have laid their hats somewhere else in Asia. But despite wide income and age gaps between one end of Asia and the other, two-thirds of intra-Asian migrants remain in their own part of the region. South Asians migrate elsewhere in South Asia, East Asians stick to East Asia, and so on. + +Much of this labour is irregular. Thailand, for instance, may have as many as 5m migrant workers, mainly from neighbouring Myanmar, Cambodia and Laos. Many of them lack visas—particularly those in construction and services. Three years ago, a rumoured crackdown on illegal labour sent around 200,000 Cambodians fleeing for the border. The resulting paralysis of the construction industry, among others, prompted Thailand to reverse course quickly and implement a brief amnesty during which workers could apply for temporary documents. Some workers do not bother with those, complaining that the process of getting them is too time-consuming and expensive. Still, millions remain willing to take the risk of working illegally or semi-legally in Thailand because wages back home are so low. + +China has long been able to satisfy its demand for labour by moving rural citizens to cities. Over the past 30 years around 150m Chinese have left the countryside to staff factories, cook in restaurants and clean homes. But with China’s population ageing, foreign workers have begun filling the gap: as many as 50,000 Vietnamese illegally cross the border into the southern province of Guangxi each spring to help harvest sugar cane. In 2015 the provincial government started a programme to bring Vietnamese workers into local factories in one city. Off to a good start, it is being introduced in other parts of Guangxi. + +China remains a net exporter of labour, but the balance is shifting quickly. Over the next 30 years its working-age population will shrink by 180m. How China handles this fall will play a large role in shaping Asian migration patterns. Manufacturers can move factories to labour-rich countries, or invest in automation. Other industries lack that option. The ILO forecasts that China will need 20m more domestic workers as it ages. + +The impending collapse of the workforce is not an exclusively Chinese problem. To keep the share of its population at working age steady, East Asia would have to import 275m people between the ages of 15 and 64 by 2030. South-East Asia would have to attract 6m, though that number masks wide gaps: Singapore, Malaysia, Vietnam and especially Thailand need workers, while Myanmar, Indonesia and the Philippines have too many. South Asia, meanwhile, could afford to lose 134m workers—India alone could send more than 80m abroad—without worsening its dependency ratio. China’s projected shortfall in 2030 is equivalent to 24% of its current working-age population; in Bangladesh the likely surplus is 18% (see map). + + + +Some countries have become more flexible. Foreign workers are around 40% of Singapore’s workforce, with slightly less than half of those on restrictive domestic-work and construction visas. To prevent foreigners from undercutting domestic wages, employers must pay levies for each foreign worker they hire. + +Paid leave + +Such financial incentives can help regulate inflows of foreign workers. They can also help encourage outflows, ensuring that temporary migration does not become permanent. In 2003 South Korea introduced a quota scheme allowing small firms, mostly in labour-intensive manufacturing, to employ foreigners from poor countries for limited periods—“sojourns”, as the authorities put it, of up to four years and ten months. To make sure that the sojourners do not overstay their welcome, they are charged in advance for the cost of returning home. Their employers also deduct a percentage of their salary, which is given back to them only as they leave the country. (It can be paid to them in person after they pass the immigration desk.) These temporary workers account for about a quarter of the 962,000 foreigners (3.5% of the labour force) now working in South Korea. + +Japan has long preferred exporting capital to importing labour. Its multinationals have set up plants across South-East Asia to make Japanese goods, bringing factories to foreign workforces, not the other way around. But this approach has its limits. For the sort of non-tradable services especially in demand in ageing countries, such as domestic care and nursing, it is useless. Japanese companies can build their cars in Vietnam, but their executives cannot (or at least ought not to) send their mothers to Danang when they start to get frail. + +Hong Kong has opened its borders to foreign nurses, nannies and maids. It introduced a scheme to import domestic workers in 1974: the same year, coincidentally, that the Philippines adopted its policy of encouraging people to find jobs overseas. By the end of 2015 Hong Kong had over 340,000 foreign domestic “helpers”—one for every 7.3 households. Over half still come from the Philippines, with another 44% from Indonesia. Their employers must provide food, board, travel to Hong Kong and wages of at least HK$4,310 ($556) a month. Including those costs, as well as the implicit cost of their rent, they earn a little less than a Hong Konger working 60 hours a week at the minimum wage—but much more than they would at home. + +By the mid-2000s, over half of married mothers with a college degree in Hong Kong employed foreign domestic help. By taking on duties traditionally shouldered by wives and mothers, these foreigners have made it easier for many local women to pursue careers outside the home. + +Governments often worry that immigrants will be a substitute for native employment, rather than a complement to it. Hong Kong’s foreign maids were both. They “displaced” local women from unpaid employment in the home. But in so doing, they provided a powerful complement to their paid employment outside it. + +Foreign domestic workers may have other beneficial side-effects. A study of the United States showed that immigrant inflows lower the cost of child care and modestly increase fertility rates among native women with college degrees. Immigration may therefore have a triple benefit for Asia’s ageing societies. Foreign workers add to the labour force themselves, they help native women take fuller part in it, and they help them bear the workers of tomorrow. What a pity Asia does not make more use of them. + +This article appeared in the Asia section of the print edition under the headline “Waiting to make their move” + + + + + +An extra mile + +Filipino communists go back to war + +But time is on the government’s side + +Feb 11th 2017 | MANILA + + + +IT HAD already been looking grim: communist insurgents were saying they would abandon a six-month-old ceasefire on February 10th because the government was refusing to free some 400 captured comrades. Then, on February 1st, communist guerrillas waylaid and murdered three unarmed soldiers in civilian clothes, said the army. The police found 76 bullet wounds in the corpses. The killings enraged Rodrigo Duterte, the Philippines’ president, who vented: “What, is a soldier a dog?” In the end it was Mr Duterte who called off the government’s ceasefire and the peace talks it had fostered. + +Mr Duterte had said before that he was willing to “walk the extra mile” to end the 50-year-old insurgency. But this week Mr Duterte not only suspended peace talks with the communist National Democratic Front (NDF), but also called for the re-arrest of members who had been released from detention so that they could take part in the talks. He says he now regards the NDF and its guerrilla wing, the New People’s Army (NPA), as terrorists. “I’m asking the soldiers, go back to your camps, clean your rifles and be ready to fight,” he said. In the following days the security forces reported a growing number of encounters with the NPA. The defence minister, Delfin Lorenzana, declared: “It is an all-out war.” + +The government and the NDF had initiated separate ceasefires in August, paving the way for peace talks in Oslo, brokered by the Norwegian government. But in the absence of agreed terms or a monitoring mechanism, the truce was always going to be shaky. The guerrillas persisted in extorting money from businesses, while the security forces kept encroaching on NPA territory. The chief negotiator for the NDF, Fidel Agcaoili, accused the government of using the truce “as a cover for state security forces to engage in hostile actions, provocations or movements, surveillance and other offensive operations”. + +The defence ministry retorted, before the government cancelled its ceasefire: “Security forces will continue to maintain peace and order and run after lawless elements whoever and wherever they are.” It added: “We do not recognise the NPA’s claims to areas which they believe are under their control.” + +The fighting, when it resumed, was neither much heavier nor much lighter than it had been in the three decades since the first efforts were made to bring about peace. The communist revolution, although occasionally still deadly, is feeble. The collapse of communism elsewhere in the world has left the NDF isolated. Its leaders, the most prominent of whom live in exile, are elderly. + +The armed forces estimate that the NPA has roughly 5,000 guerrillas scattered around the country, chiefly on the southern island of Mindanao, where Mr Duterte is from. Those 5,000 are theoretically fighting to overturn the constitutional order in a country of 102m people. In practice they cling on mainly by threatening violent reprisals against businesses that fail to pay what they call “revolutionary taxes”. + +The sticking point in the talks before they foundered had been the detainees. The communists regard them as political prisoners. The government considers them common criminals, whatever the motivation for their crimes. The minimum the NDF seems likely to accept in return for ending its rebellion is amnesty for its forces, whether detained or at large. It must press its demand before its revolution fizzles out completely and its leaders die of old age. The government, however, is disinclined to grant an amnesty. It not only wants the communists to agree to abandon the armed struggle permanently; it also wants convincing evidence that they will stick to such a pledge. + +The Philippine state, unlike the revolution and its leaders, is not on its last legs, so has time on its side. And Mr Duterte is popular, thanks partly to his tough-guy persona. (This week he told cops accused of corruption that they could resign or be sent to a region racked by conflict with Islamists.) He says he might resume peace talks with the NDF if there were a compelling reason to do so. The communists, he remarked this week, have been fighting for 50 years. “If you want to extend it for another 50 years—so be it,” he said. “We’d be happy to accommodate you. After all, I said, ‘I walk the extra mile.’” + +This article appeared in the Asia section of the print edition under the headline “An extra mile” + + + + + +Fairway friends + +Japan’s prime minister meets Donald Trump—again + +Shinzo Abe is bringing an offer of lavish investment with him + +Feb 11th 2017 | TOKYO + +Side by side, again + +AMONG the books said to be by the bedside of Shinzo Abe, Japan’s prime minister, is “The Art of the Deal”, Donald Trump’s autobiographical ode to sharp-elbowed capitalism. Mr Abe appeared to borrow from the book’s brash credo last November: while the rest of the world was still gasping at Mr Trump’s election, Mr Abe jumped on a plane and went to meet the president-elect. It was Mr Trump’s first meeting with a foreign leader after his election. As a gift, Mr Abe brought a gold-plated golf club. + +On February 9th Mr Abe will fly to America again, for a proper summit with the new president. This time he is bringing an even more lavish gift: a plan to create 700,000 jobs. The aim, the prime minister told parliament, is to help upgrade America’s infrastructure. His plan involves Japanese investment to build high-speed rail links in Texas and California, to decommission America’s fleet of ageing nuclear power plants and to collaborate in the development of robots and high-tech weaponry. Some of the money could come from Japan’s ¥135-trillion ($1.2 trillion) public-pension fund, the world’s largest. + +Mr Abe has been jolted into action by the stench of protectionism wafting across the Pacific. Instead of lamenting the demise of the Trans-Pacific Partnership (TPP), a giant multilateral trade agreement that Mr Trump killed as soon as he took office, Mr Abe wants to try to bag a bilateral deal with the new occupant of the White House, says Jesper Koll, a fund manager and informal adviser to Japan’s government. Mr Trump, after all, has made positive noises about such pacts, which could salvage some of the substance of TPP. + +The explicit quid pro quo for a shower of Japanese investment, says Takao Toshikawa, a veteran political journalist, will be an assurance from Mr Trump that he will not downgrade the two countries’ defensive alliance. The president has threatened to reduce America’s military presence around the world unless its allies bear more of the cost. But during a recent visit to Tokyo James Mattis, America’s defence secretary, labelled Japan “a model of cost-sharing” and gave America’s clearest pledge yet that its commitment to defend Japan includes the disputed Senkaku islands in the East China Sea (known as Diaoyu in China), which Japan administers but China claims. + +Mr Abe is hoping to bond with Mr Trump over a round of a golf at Mar-a-Lago, the president’s private resort in Florida. In this, as in so much else, the Japanese leader seeks inspiration from his grandfather, Nobusuke Kishi. As prime minister in 1957 Mr Kishi played golf with Dwight Eisenhower, the president of the day. Three years later they signed the security treaty that Mr Mattis has just reaffirmed. + +Still, Mr Abe is taking a political risk by cosying up to a leader many Japanese distrust. A recent poll in the Yomiuri Shimbun, Japan’s most popular newspaper, found only 8% of respondents expected relations with America to improve under its new president. Working closely with Mr Trump will also further alienate China. The biggest worry of all, says Mr Koll, is having to trust Mr Trump. + +This article appeared in the Asia section of the print edition under the headline “Fairway friends” + + + + + +Two short fuses + +Donald Trump is testing Australia’s alliance with America + +But Australia has few alternatives + +Feb 11th 2017 | CANBERRA + + + +AFTER Donald Trump’s victory in November, Malcolm Turnbull quickly congratulated him, having obtained Mr Trump’s telephone number from Greg Norman, the new president’s golfing buddy. Australia’s prime minister claimed a similar background to Mr Trump’s, as “businessmen who found our way into politics somewhat later in life”, and a shared “pragmatic approach” to solving problems. Another call, just two months later, has shattered this supposed solidarity. It has also prompted many Australians to question their country’s closest alliance. + +On February 2nd the Washington Post published an account of the second call. Mr Turnbull raised a deal his government had struck with the administration of Barack Obama, in which America agreed to resettle refugees trying to reach Australia who had been diverted to Nauru and Papua New Guinea. Mr Turnbull later assured Australians that Mr Trump would “honour” the deal. But the leaked account differed. Mr Trump reportedly called it the “worst deal ever”, accused Australia of seeking to export the “next Boston bomber” and told Mr Turnbull that his was the “worst call by far” among his conversations with world leaders that day. + +Mr Turnbull is renowned for his own short fuse. Indeed, some colleagues see him as a “sophisticated” version of Mr Trump. Clashing with Mr Trump seems to have done him little political damage at home. But if Mr Trump says he will not accept the 1,250 refugees, many of whom are from Muslim countries, that could change. The camps where the refugees are being held are a constant source of diplomatic irritation and embarrassment; the government would dearly like to close them. One fear is that Mr Trump might ask for something in return, such as sending more troops to the Middle East, that would go down badly with many Australians. + +The alliance with America is the centrepiece of Australia’s foreign policy. Indeed, it has strengthened in recent years, with America stationing troops in Darwin, in the far north. But China’s emergence as Australia’s biggest trading partner has prompted a debate about how to strike a balance in relations with the two countries, and Mr Trump’s election has intensified it. A poll last year by the Lowy Institute, a think-tank, found almost half of Australians thought their country should distance itself from America “if it elects a president like Donald Trump”. James Curran, a historian, argues in “Fighting with America”, a new book, that Australia should ditch “worn rhetoric” and “alarming complacency” about relying on America for its security, and look at the relationship afresh. Penny Wong, the shadow foreign minister, reckons uncertainties around the Trump administration’s Asia-Pacific policy mean the alliance could be at a “change point”. + +Julie Bishop, the foreign minister, does not go so far. But the fact that China underpins Australia’s prosperity, through its demand for minerals, food and other goods, makes her question some of Mr Trump’s policies, especially the threat of trade barriers against China. She is “disappointed” that Mr Trump pulled out of the TPP, a planned free-trade pact of 12 Pacific countries. Ms Bishop does not rule out pushing on with the pact among the remaining 11 members, and says she would “welcome” interest from China in joining it. + +Australia’s options are limited. Michael Wesley of the Australian National University argues that, without its alliance with America, Australia would be a “totally different country”, having to spend far more on its own defence and even acquiring nuclear weapons. Policymakers seem intent instead on trying to keep America engaged—or that was the plan, at any rate, until Mr Turnbull’s ill-fated phone call. + +This article appeared in the Asia section of the print edition under the headline “Two short fuses” + + + + + +Rank and bile + +A succession battle engulfs the Indian state of Tamil Nadu + +Two claimants fight for the mantle of the deceased chief minister + +Feb 11th 2017 | DELHI + +Usurper or heir? + +ON THE various occasions that O. Panneerselvam, or “OPS”, served as the chief minister of the southern Indian state of Tamil Nadu, he made a point of being invisible. He knew that Jayaram Jayalalithaa, the head of his party, the All India Anna Dravida Munnetra Kazhagam (AIADMK) and chief minister for most of the past 15 years, had chosen him as a stand-in whenever she was battling corruption charges or illness precisely because he was so self-effacing. Even after “Amma”—“Mother”—a former idol of the Tamil film industry, died in December, Mr Panneerselvam meekly agreed to step aside as chief minister in favour of V.K. Sasikala (pictured), a woman who has no political experience beyond having lived with Ms Jayalalithaa for the past 30 years, but is claiming her mantle. + +On the night of February 7th, however, OPS embraced the sort of melodrama he has so long eschewed. Sitting cross-legged before a flower-strewn memorial to Jayalalithaa, he spent 40 minutes in silent meditation, as television crews assembled and news alerts set smartphones bleeping. At last he spoke—or rather, he declared, the spirit of Amma spoke through him. She had instructed OPS to tell the truth: that he had been unfairly forced from office by Ms Sasikala, who has already become secretary-general of the AIADMK. Others soon joined in. One of the party’s founders claimed that Jayalalithaa had been poisoned and pushed down the stairs. Ms Sasikala called OPS the real traitor, and fired him as the party’s treasurer. Tamil Nadu’s governor is supposed to be swearing in the new chief minister this week, but the outgoing one seems to want to rescind his resignation. + +Ms Sasikala was Jayalalithaa’s live-in assistant and gatekeeper. In 1992 they were photographed at a temple taking turns to pour holy water on one another from silver urns, a ceremony typically performed by husbands and wives. But they were a tempestuous pair: Jayalalithaa twice booted Ms Sasikala from her house before relenting. They were both charged for amassing “disproportionate assets”; Jayalalithaa was briefly forced to step down—one of the occasions when OPS took her place. The charges may yet snare Ms Sasikala. + +The AIADMK has always relied on larger-than-life personalities to win votes. By the time Jayalalithaa died her face and name decorated countless canteens, hospitals and government handouts. In such a personalised system, OPS has no incentive to go quietly. + +This article appeared in the Asia section of the print edition under the headline “Rank and bile” + + + + + +Banyan + +Is India a country or a continent? + +It is more integrated than the European Union, but less unified than the United States + +Feb 11th 2017 + + + +IN A speech to London’s Constitutional Club in 1931, Winston Churchill poured scorn on the idea of India. “India is a geographical term. It is no more a united nation than the equator,” he spat, a slur that invites such uniform disagreement from Indians as to disprove itself. Less well known, but more worthy of debate, is the previous line of Churchill’s speech: “India is no more a political personality than Europe,” he contended. + +The personalities of both India and Europe have changed a great deal since 1931. But in explaining India to outsiders, Banyan often finds it helpful to compare it to the European Union (EU) rather than to the United States. Neither parallel does India justice, of course. The frequent comparisons to America can imbue India with a false cohesion. The less common comparison to the EU suggests a false disunity. But if the two parallels are judiciously combined, the falsities may help to cancel each other out. + +One obvious example is Indian politics. This month voters took part in elections for the state legislatures of Punjab and Goa. As is often the case, turnout was higher than in India’s national election in 2014. In comparison with the United States, where races for national office, especially the presidency, overshadow state-level contests, that is a puzzle. In comparison with the EU, where elections in member states command far more attention than races for the European Parliament, it seems less strange. + +The composition of India’s legislature also looks more like Strasbourg’s multicoloured mosaic than Washington’s two-tone Congress. The Lok Sabha, India’s lower house, seats as many as 35 parties. With the exception of the Bharatiya Janata Party and Congress, few of them have influence beyond one or two states. If America is the benchmark, the obvious question is why India’s voters have failed to coalesce around rival nationwide philosophies of government. But if the template is Europe, the fragmentation is easier to grasp. Few of Europe’s parties could appeal across national lines, however compelling their policies. + +Another example is language. India’s constitution lists 22 “scheduled” languages. An American might wonder how it copes. But the EU, with 24 official languages, is even more polyglot. India’s national anthem had to be translated into Hindi from the original Bengali. But the EU’s anthem has no official lyrics, so as to leave open the question of what tongue to sing them in. Pick any two Indians at random, and the chance that they share the same mother tongue is less than 20%, according to data compiled by Romain Wacziarg of the University of California, Los Angeles, and his colleagues. But for the EU as a whole, according to Banyan’s calculations, the odds are less than 10%. Linguistically, then, India is neither as unified as the United States nor as divided as the EU. + +National welding + +The author of India’s anthem, Rabindranath Tagore, also saw value in comparing his country to both Europe and America. Like India, the United States faced the problem of “welding together into one body various races”. This challenge set both countries apart from Europe, which, Tagore felt, could take its racial unity for granted. Indeed, he saw Europe as one people divided into many states, unlike India’s many peoples “packed into one geographical receptacle”. + +The gap between India’s many peoples remains large. The GDP per person of Bihar, India’s poorest state, is only a fifth of Haryana’s and little more than a tenth of Goa’s. That is a much bigger income gap than between Mississippi and Massachusetts, but comparable to the gulf between Bulgaria and Belgium. + +These gaps have motivated increasing numbers of Indians to move from one part of their geographical receptacle to another. The government’s latest economic survey, written by Arvind Subramanian, its chief economic adviser, calculates that interstate migration nearly doubled between the 1990s and the 2000s, yielding a migrant population of over 55m in 2011 (roughly 4.5% of India’s population). That may fall well short of American mobility, but compares favourably with the EU, where 13.6m citizens (2.7% of the total population) live in another member state. + +The movement of goods tells a similar tale. In India, unlike America, state prerogatives often trump the imperatives of interstate commerce. Trade is distorted by a patchwork of local levies, which the central government is keen to replace with a new goods and services tax. The familiar sight of lorries queuing at state borders suggests an economy that is hopelessly fragmented. But again, the benchmark matters. Drawing on new data, Mr Subramanian shows that trade among India’s states is now equivalent to about 54% of GDP, rather higher than many suspected. That is low compared with America (78%), but impressive compared with the EU (20%). + +Net trade is even more dramatic. India’s single market and currency allow some states to run enormous trade deficits with others. Four run deficits in excess of 20% of local output. That is far greater than the euro area has been able to sustain. + +India’s divisions hamper it in its dealings with other nations. Its diplomacy has a reputation for parochialism and mal-coordination—an elephantine inability to “dance”. But perhaps it is not given enough slack. Compared with the EU, India’s foreign policy is positively twinkle-toed. India, lest it be forgotten, is as populous as 150 other countries combined. By encompassing all of these people in a single political entity, it dramatically reduces the complexity of global governance—even if it does not always feel like that. Had the republic not succeeded in refuting Churchill, had it disintegrated into multiple sovereign states, the world’s negotiating tables might have needed to accommodate dozens of additional quarrelling players. When the Americans want to talk to India, they know whom to call—however frustrating the conversation sometimes proves to be. + +This article appeared in the Asia section of the print edition under the headline “Country or continent?” + + + + + +China + + + + +Reality television: China’s transgender Oprah + +Unpopular films: Blame the critics + +Chinese statistics: Getting safer? + + + + + +The empress of reality television + +China’s transgender Oprah + +As an army colonel who became a woman, she exemplifies a society in flux + +Feb 11th 2017 | BEIJING + + + +CHINA’S favourite chat-show host has had an extraordinary career. Jin Xing was the country’s most successful dancer before becoming a colonel in an army entertainment troupe. He won fame in America, where the New York Times called him “a Chinese genius”. He trained dancers in Brussels and Rome, before returning to China for a sex-change operation. As a woman, she resumed her career as a ballerina, set up the country’s first private ballet company, ran a bar in Beijing and married a German businessman. + +In a conservative society where even homosexuality is frowned upon, let alone sex-reassignment, her life would seem to place Ms Jin well outside the stodgy mainstream of Chinese broadcasting (she is pictured at her home in Shanghai). Yet Ms Jin, who is 49, is the country’s most popular television judge. She began with a local version of “So You Think You Can Dance” and hit the jackpot with “The Jin Xing Show”, a variety and chat programme with an audience of around 100m. She has appeared with her husband on the Chinese version of “The Amazing Race”, in which couples race each other around the world. Her latest venture, “Chinese Dating”, is in its first season. + +Ms Jin’s story reflects remarkable changes in Chinese society since her childhood. She joined the army at the age of nine and endured a training regime that, as she puts it, would count as child abuse in the West. During her surgery, an oxygen shortage damaged her left leg so badly that doctors thought she would be lucky to walk again. Gruelling retraining enabled her to resume dancing within a year. + +Those struggles with adversity have helped Ms Jin win favour among older Chinese, a more conservative cohort that is also, surprisingly, her biggest fan base. Many of them, too, have suffered enormous hardship—during the Cultural Revolution of the 1960s and 1970s, and the famine that followed the Great Leap Forward of the late 1950s, in which tens of millions died. Even those born after 1980—roughly half the population—know well what their elders endured. + +Identity crises + +The tension between Ms Jin’s persona as a patriotic Chinese, and the one she displays as a globetrotter with a foreign husband (in January she joined the global elite at the World Economic Forum in Davos), is one that is widely understood among her compatriots. They have become the world’s great travellers. Over 100m got visas for holidays abroad last year, more than the citizens of any other country. Ms Jin describes herself as having been “a little Chinese boy thirsting for the West”. She writes of dreaming about Coca-Cola and freedom in Paris, or surreptitiously reading porn magazines and cruising gay bars in Greenwich Village. In her memoir, “Shanghai Tango”, she says that in the gay communities of New York, she feels herself to be “a traveller in a foreign land twice over”—as a woman in a man’s body and as a Chinese person abroad (who happens to be, she might have added, ethnic Korean). + +In Belgium she feels haunted by the Chinese words she sees on signs in the streets; their calls, she writes, “get louder and louder”. She looks at a Ming vase at a market in Brussels and feels “ashamed” of Chinese who live abroad and have “only contempt” for their ancestral heritage. + +China has several cultural figures who are better known in the West than at home. Ms Jin could have been another. But she chose to return home for her sex-change surgery, at some personal risk since the procedure was almost unknown there. “I was born in China,” she says. “It is in China I must be reborn as a woman.” + +Xi Jinping, China’s president, presents himself as a staunch defender of “traditional” Chinese culture, and warns of the danger of Western “infiltration”. His preferences were clear in a recent official directive, which calls for the protection of China’s “cultural security”. But like most of her compatriots, Ms Jin is happy to take what she wants from both China and the West. + +On the face of it, she embodies everything that is untraditional. Her rejection of being a man flies in the face of Confucian culture. The television manner for which she is famous—a blunt, cut-the-crap sassiness—is the opposite of stereotypical feminine deference. Yet her life as a woman has not been a simple rebellion against convention. By adopting three children and marrying (albeit a foreigner), she created around herself what she calls “a real Chinese family”. The values she espouses are old-fashioned even in China. In her new dating game, the contestants may not choose a match without their families’ permission; indeed, it is the families who interview the contestants’ prospective partners—resulting in rampant sexism, with women being asked about children and men about money. This has been too much for some viewers; online commentators have slammed the format as chauvinist and “retro”. But Ms Jin’s popularity suggests many young people believe that tradition should not be discarded. + +In her memoir, Ms Jin talks about two historical figures whom she calls role models. One is Sai Jinhua, a prostitute who became the mistress of the imperial envoy to Germany and used her knowledge of the language to save the Qing emperor from German troops sent to crush the Boxer Uprising in 1900. (Jealous officials jailed her for her pains.) Ms Jin notes approvingly how Sai “rebelled” against what had appeared to be her destiny as a pauper. + +The other model, more surprisingly, is Jiang Qing (Madame Mao), one of the Cultural Revolution’s most reviled figures, who cheered on the Red Guards as they tortured and killed her enemies. Ms Jin calls her “full of charm and intelligence” and the creator of “major masterpieces” during that period (Jiang Qing oversaw the production of operas about the Communist Party’s early days). It is a sign of how much China is changing that its cast of heroines encompasses not only the heroic harlots and villainous empresses of the past, but also a transsexual conservative talk-show host. + +This article appeared in the China section of the print edition + + + + + +Shooting the messenger + +To boost cinema attendance, China wages war on critics + +They are fighting back + +Feb 11th 2017 | BEIJING + +Assailed by aliens, and reviewers + +CHINESE cinema-goers are used to the government’s tight grip on the film industry. In deference to the Communist Party’s qualms, filmmakers eschew happy endings for teenage lovers or homosexuals, let alone anything critical of the party itself. To boost audiences for home-grown productions, the authorities have recently tried a new form of control: clamping down on unflattering reviews. Long-suffering film fans see this as a step too far. + + + +Their anger erupted in December after the release of “The Great Wall”, a Chinese-made fantasy starring an American actor, Matt Damon (pictured, trying to save China from an alien invasion). Xinhua, an official news agency, praised the film as “innovative” and accused its many online detractors in China of “giving it a hard time just for the sake of it” (critics had panned the film for being heavy on special effects and light on plot). The bad reviews, it said, would make it harder for Chinese films to go global. A few days later People’s Daily, the party’s main mouthpiece, weighed in. It said low ratings on Chinese websites for “The Great Wall” (which opens in America on February 17th), and for two other Chinese films, had been the result of “malicious” reviews and the manipulation of data. One of the websites it named, Maoyan, promptly removed its Rotten Tomatoes-style display of critics’ aggregated scores, citing the need for an “upgrade”. + +Netizens were incensed. They rushed to another chastised website, Douban, to give the three films in question the lowest rating. One online comment that got 24,000 “likes” read: “That’s right! We don’t have bad films in China, just bad audiences!” Surprisingly, both Xinhua and People’s Daily appeared to back down. They published commentaries saying that unflattering reviews were not enough to ruin good films and that criticism should be tolerated. The Xinhua article that had caused the furore was deleted from their websites. + +Many filmgoers suspect the two organisations had been miffed by the poor performance of Chinese films relative to foreign ones. To the official media, it had seemed easier to shoot the messenger than examine why state-supervised studios are churning out so many films that audiences do not want to see. + +This article appeared in the China section of the print edition under the headline “Blame the critics” + + + + + +Suspicious statistics + +China’s roads and workplaces seem to be getting safer + +But look closer at the data + +Feb 11th 2017 + + + +GOING by the numbers, China’s notoriously hazardous coal mines have become distinctly less perilous in recent years. In January the government said that 538 people had died in mining accidents in 2016, a mere 11% of the death toll a decade earlier. The number of deaths per million tonnes of coal extracted was the lowest ever. For Chinese industry generally, safety data are improving. In 2002 140,000 people died in work-related accidents. Last year the toll was less than one-third of that. On roads there has been similar progress: 58,000 deaths in 2015, down from 107,000 in 2004. Officials admit the statistics remain “grim”, but their efforts to improve safety would seem to be paying off. + +Perhaps, but the numbers should be treated with caution. A forthcoming paper by Raymond Fisman of Boston University and Yongxiang Wang of the University of Southern California analyses a government campaign launched in 2004 to reduce accidental deaths at work and on roads. It imposed annual ceilings on such fatalities, nationally and locally. Officials would be punished if targets were exceeded. + +To see how this has worked, Mr Fisman and Mr Wang calculated the deaths-to-ceiling ratio (reported deaths divided by the mandated ceiling) for each province. It might be expected that most provinces would be close to the target—whether slightly above or slightly below. But almost all the ratios the scholars calculated were shy of 1 (see chart). This suggested fiddling—it was very unlikely that the government had set the ceilings too high. Safety standards, the authors conclude, have not improved as much as the numbers appear to show. + +This article appeared in the China section of the print edition under the headline “Getting safer?” + + + + + +Middle East and Africa + + + + +Israel and the Palestinians: The ultimate fantasy + +Iran and America: Remaking Iran’s revolution + +Nigeria: Big bother + +Drugs and ivory: Jumbo cartels + + + + + +The ultimate fantasy + +As Binyamin Netanyahu prepares to fly to Washington, is the two-state solution dead? + +The chances for peace were thin even before Donald Trump’s election; they now look even thinner + +Feb 11th 2017 | JERUSALEM + + + +THE settlement of Beit El (pictured) sits on a lonely hilltop deep inside the West Bank, between the river Jordan and the Green Line that divided Israel from its Arab foes after a ceasefire in 1949. Built on private land seized by the Israeli army in the name of security in 1970 but soon made available for settlement by Israeli civilians, it has grown into a community of 6,500 people, including 350 students at its yeshiva (Jewish religious academy). What is left of an old perimeter fence stands rusting; a new one, drawn much wider, surrounds a larger and still growing Beit El. + +Under any plausible peace deal between Israel and the Palestinians, Beit El would have to be cleared. It lies outside not just the Green Line but well beyond the separation barrier, part towering wall and part fence, that Israel has been building since 2002. Most observers reckon that the barrier will become the border if peace is ever agreed. It runs mostly along the Green Line, but in several places makes deep salients into the West Bank. + +Donald Trump has called peace between Israel and Palestine the “ultimate deal”. He has asked his son-in-law, Jared Kushner, to work on it. But as Binyamin Netanyahu, Israel’s prime minister, prepares to fly to Washington to meet the president on February 15th, peace seems farther off than ever. Since Mr Trump’s inauguration, Mr Netanyahu’s government has approved 6,000 new homes in existing settlements in the West Bank and East Jerusalem. On February 6th, the Knesset passed a law legalising in some cases settlers’ homes illegally built on private Palestinian property. + +Mr Trump, so the builders reckon, looks unlikely to put much pressure on Israel to hold back. Indeed, he gave $10,000 to Beit El in 2003. His proposed new ambassador to Israel, David Friedman, is president of the American Friends of Beit El Yeshiva association. Israel’s settlers could not wish for a more sympathetic envoy, or a more sympathetic president. The occupation of the West Bank is 50 years old in June, and shows no sign of ending. + +The Great Cunctator + +That suits the cautious Mr Netanyahu well. His strategy for the past eight years has been to do nothing: to go on paying a degree of lip-service to the idea of the “two-state solution” agreed in outline by Israelis and Palestinians at Oslo in 1993 (with the difficult details left for later), but not to make any actual progress towards it. + +The appetite for peace in Israel is constrained by fear, which Mr Netanyahu exploited to help win his fourth election in 2015. Recent opinion polls still put his centre-right coalition well ahead of the disunited opposition. The latest wave of violence, what some call the “knife intifada”, started in October 2015. By the time it fizzled out last summer, 38 Israelis and 235 Palestinians had died. And the murders have not entirely stopped. Last month a suicidal assailant drove a lorry into a group of Israeli soldiers in Jerusalem, killing four of them. + +The Palestinians’ government has an awful record of glorifying terrorism. Its president said of the knife intifada that every drop of blood spilled in Jerusalem was “pure”. One of his possible successors called the attackers heroes. In the previous intifada of 2000-05, more than 1,000 Israelis (and 3,000 Palestinians) died. + +The disasters that have followed the Arab spring of 2011 have reminded Israelis that Arab regimes are fragile and unpredictable. Libya, Syria and Yemen are collapsed states; Jordan and Egypt are stable, but not reliably so. However, it is Gaza’s recent history that worries them most. + +In 2005 Israel withdrew from Gaza, a strip of land twice the size of Washington, DC, with three times the population and not many jobs. Hamas, a radical Islamist group, took over. It supports attacks on Israelis, does not recognise Israel’s right to exist and has never signed up to the Oslo agreements. This stance, and a reputation for being less corrupt than the more moderate Fatah faction, helped it to win a Palestinian election the following year. It then chased Fatah MPs out of Gaza. + +Since then Gaza, impoverished by a tight Israeli blockade and frequent incursions (not to mention Hamas’s mismanagement), has continued to pepper Israel with home-made rockets, most recently this week. A network of tunnels has been used not just to smuggle but to infiltrate Israel and kidnap Jews. + +To Naftali Bennett, who leads the pro-settler Jewish Home party in Mr Netanyahu’s coalition government, the lesson of Gaza is that the two-state solution cannot work. “There is no way that I am ever going to allow a Muslim state to be created on my mountains, looking down at my airport and my capital,” he says. The secular face of his party, the justice minister Ayalet Shaked, agrees. “More peace talks meet Einstein’s definition of insanity,” she says. “Doing the same thing over and over again, and expecting a different outcome.” Mr Netanyahu has derided a future West Bank state as “Hamastan B”. During the campaign in 2015 he said that Palestinian statehood would not happen on his watch. + +One reason so little has changed is that no one has pushed Mr Netanyahu very hard to make peace. Even Barack Obama, whose distaste for him was obvious, never put Israel under great pressure. Last year America concluded a new ten-year defence deal at the record level of $38bn. Even December’s critical UN Security Council resolution merely restated past policy. Sticks that might have hurt Israel, such as the recognition of Palestine as a full member of the UN, or a UN demand for a two-state solution within a mandated time-limit, have not been wielded, and seem most unlikely to be under Mr Trump. + +Mr Netanyahu has improved Israel’s relations with Russia and China. Egypt and the Gulf states are also quietly friendly: they share his hostility towards Iran, and are more interested in thwarting it than in helping the Palestinians. He has restored diplomatic ties with Turkey, in the past a firm supporter of Hamas. The BDS movement (Boycott, Divestment, Sanctions) generates noise but no pain; foreign investment in Israel is three times higher than in 2005, when the campaign began. + +West Bank paralysis + +Mr Netanyahu has an accomplice in preserving this state of affairs: Mahmoud Abbas, the president of the Palestinian Authority, who rules the West Bank from his fortress-like compound, the Muqata, in Ramallah. The 81-year-old Mr Abbas is in a spectacularly weak position. He has just started the 13th year of his four-year term. He was elected in January 2005; since then the break with Hamas has made it impossible to conduct either presidential or parliamentary elections in Gaza. So he lingers on, without a democratic mandate, presiding over only the West Bank. Should an election be held, polls predict that Hamas’s probable candidate, Ismail Haniyeh, a dynamic 54, would beat him. + +The corrupt and poorly managed Authority is wholly dependent on Israel. Most of its revenues come from customs duties, collected by Israel since it controls the seaports, airports and land crossings through which goods destined for the West Bank must travel. Israel can cut those off at any time, and in the past has done so. + +How long will it last? + +At least 100,000 Palestinians commute daily from the West Bank to work in Israel, half with permits, the rest smuggled in. Another 50,000 or so work in Israel’s 130 settlements, many of them building new houses for the next wave of settlers. With 26% unemployment and an employed workforce that numbers not much above 1m, these are big numbers, and Mr Abbas knows that a break with Israel would wreck his economy. + +Crucial to him, too, is security co-operation with Israel. Although the PA is supposed to run security inside the Oslo-defined “Area A”, comprising the main West Bank cities, Israeli forces routinely enter them to grab suspected terrorists, including Hamas operatives. This protects the lives of Mr Abbas and his officials, as well as those of Israelis. A return to full-scale intifada looks unlikely for these reasons, and also because the Israelis have got much better at detecting enemies. Social media and electronic snooping make it easier to keep track of jihadists. “We go after the infrastructure: those who supply the weapons, the cars, the inciters,” explains an army major at Judea and Samaria Divisional headquarters, in the West Bank. + +So Mr Abbas has nothing to gain by ending co-operation with Israel. But neither can he make the concessions that might lead to peace. These would be horribly painful: accepting the barrier as a new border (with some compensating Israeli land returned); allowing a permanent Israeli military presence in the West Bank; giving up the “right of return” for refugees who fled in 1948 and 1967. Palestinian public opinion is passionately against such concessions to an Israel they mistrust. Hamas would probably resist them violently. + +A deal on such terms would not be considered fair by many people or governments outside Israel either. Yet the harsh reality is that it is the only one Israel is likely to offer, since it is so much stronger than the Palestinians and feels so little need to compromise. Even talking about such a deal hurts Mr Abbas and boosts Hamas. It is much easier for him to stall. + +At a crossroads + +Politicians as far apart as Mr Bennett and Tzipi Livni, a former foreign minister and a leader of the Zionist Union, a left-of-centre parliamentary group, do not agree on much. But both argue that the stasis that has marked Mr Netanyahu’s reign could now change. With Mr Trump in the White House, a big constraint on Israeli action—the fear of American condemnation and UN action—seems to have gone. “This is the first time in 50 years that Israel has to decide what it wants to do,” says Mr Bennett. Ms Livni echoes him: “We are at a crossroads; there are two visions for our future; a two-state solution, or a Greater Israel.” + +By withdrawing his eight Jewish Home MPs from the ruling coalition, which has a majority of only six, Mr Bennett could bring it down at any time. That could trigger an election, which the polls say would see him take several seats from Mr Netanyahu’s Likud. Eager to avoid this fate, and weakened by a police investigation for corruption, Mr Netanyahu risks being dragged ever further to the right by Mr Bennett. As well as authorising the building of 6,000 new homes in the settlements so far this year, last week he promised settlers evicted from an unauthorised settlement that he would provide a new, recognised one. + +How long will it last + +Mr Bennett makes no secret of what he wants: the annexation of all of Area C, comprising 61% of the entire West Bank. As well as the roughly 200,000 Israelis who live in East Jerusalem (annexed in 1967 by Israel, though no other country accepts this), Area C is home to almost 380,000 Israelis, but only around 150,000 Palestinians. They are hampered by the Israeli occupation when they try to build, or run businesses, or move about; 3G telephony on Palestinian networks, despite Israeli promises, has not materialised. Their slender numbers, though, mean that Israel could in theory annex Area C without threatening Israel’s Jewish majority, even in the long term. Currently, there are about 6.4m Jews in Israel (the official number includes those in East Jerusalem and the West Bank) and 1.8m Arabs. + +Annexing all of the West Bank would be another matter. There are about 2.6m Palestinians there, besides the 313,000 in East Jerusalem. Israel would have to decide whether to grant them political rights, which would alter the composition of the country completely and forever. The other option would be something like the old South African apartheid. No mainstream Israeli politician supports this, though plenty of zealots do. + +Mr Bennett is still part of a small minority. And even he aims to achieve his goal only in steps. His first aim is to take in Ma’ale Adumin, a large settlement of some 40,000 people five miles east of Jerusalem. Mr Bennett picked it to be provocative, since it is both big and well into the West Bank, though within a still-uncompleted salient of the separation barrier. + +However, it is not clear that he has enough support to get the ruling coalition to approve his proposed annexation bill. Nor is it clear that he would bring down the government if he fails. Mr Netanyahu, ever cautious, has so far managed to persuade the coalition to avoid taking a decision until after he has seen the American president, and will probably urge Mr Trump to oppose it. But if Mr Trump were to signal approval, the annexation of Ma’ale Adumin could swiftly pass. Other settlements within the barrier might follow. + +Annexation beyond the barrier would be a much more dangerous move, creating the Greater Israel that Ms Livni has warned against and making any future peace deal much harder, if not impossible. It also risks triggering a violent reaction. Yet that does not mean it will not happen. This week’s decision by the Knesset to, in effect, legalise certain land seizures in the West Bank, some of them well beyond the barrier, is a step in that direction. + +You go your way and I’ll go mine + +There is another way that the future could unfold. The two largest parties on the centre-left are Labour and Yesh Atid, the personal vehicle of a former TV chat-show host, Yair Lapid. Both favour a complete separation between Israel and the Palestinians: a detailed Labour plan suggests falling back to the separation barrier and bringing all that territory into Israel. They would then aim to negotiate security arrangements for the West Bank with regional Arab powers and with the Palestinians themselves. + +Where all such plans falter is over security. To the Palestinians, any deal that does not nail down a final departure date for Israeli troops is not compatible with sovereignty. But until there is a new Middle East, it is hard to see any Israeli prime minister providing such a pledge. Trusting the UN, or the Americans after their experience with Mr Obama, let alone a pan-Arab force, would look too risky. + +The left is not in any position to put its plan into action. But politics in Israel is subject to sudden realignments: when he was prime minister in 2005 Ariel Sharon abruptly left Likud to set up a new party, Kadima, which led a new ruling coalition. Likud might fracture in the months ahead. Mr Netanyahu would like to bring Labour into his coalition, and its struggling leader, Isaac Herzog, might even agree. He could then be shot of Mr Bennett, and might explore a separation deal. + +Or, if Mr Netanyahu were forced to resign following an indictment arising from his corruption probes, Mr Lapid or Mr Herzog might piece together a centre-left government. This might come after a snap election and include disenchanted parts of Likud, such as a faction led by a former defence minister, Moshe Yaalon. The new prime minister could then start peace talks, if he dared. A generous package of economic incentives, including rights for Palestinians to build into Area C from the edges of crowded Areas A and B, plus an offer of land swaps, might bring Mr Abbas to the table. But the security issue would remain. Without a solution to it, the Palestinians are unlikely to agree—though some on the Israeli right think they might be persuaded by large dollops of investment. + +Might Israel instead impose separation unilaterally, pulling back to the barrier, but continuing to keep its army in the West Bank, and perhaps recognising Palestine? That too seems tricky: there are close to 90,000 Jews living in settlements beyond the barrier. Perhaps half of these might agree to move, if offered homes inside the wall (cheap accommodation is one of the things that makes the settlements attractive). But 40,000-50,000 of the settlers are reckoned to be there for ideological reasons. Moving so many against their will would be very hard; leaving them behind might endanger their lives. + +A unilateral move like this, however, would at least end the 50-year-old occupation before yet another generation of young Israelis and Palestinians is brutalised by it. And it could lead to a Palestinian state that the world might then recognise. That would indeed be a two-state solution; but not a stable or a secure one. No one would win Nobel prizes for that. + +This article appeared in the Middle East and Africa section of the print edition under the headline “The ultimate fantasy” + + + + + +Making Iran’s revolution great again + +Donald Trump is helping Iran’s radicals + +Deploring the Donald is the one thing that unites the mullahs and the middle class + +Feb 11th 2017 + + + +THE ritual chants of “Death to America” had grown fainter in recent years. The feverish crowds had thinned. Some demonstrators seemed to wave Uncle Sam banners less to jeer America than to cheer it. Yet thanks to Donald Trump this year’s annual rally to commemorate Islamic Revolution Day on February 10th in Tehran looks set to be one of Iran’s biggest. Mr Trump’s tweets have upset even the secular middle class (for example: “Iran is playing with fire—they don’t appreciate how ‘kind’ President Obama was to them. Not me!”). The new president has also imposed fresh sanctions and an executive order (currently suspended by the courts) blocking Iranians from travelling to America. + +Hardliners who had warned that America was targeting Iran’s people, not just its regime, say they are vindicated, and that their government will not trust America again. “Thank you, Mr Trump, for showing the true face of America,” mocked Ayatollah Ali Khamenei, the Supreme Leader, in an anniversary address. Even reformists, who had dismantled Iran’s nuclear programme and handed over enough fissile material to build ten nuclear bombs as part of the deal, feel betrayed. Javad Zarif, Iran’s foreign minister, who negotiated the deal with six world powers, has lost his smile. Iran has difficult days ahead, he growled. Even Muhammad Khatami, a former president who had tried to mend fences with the West, called on reformists to join hardliners in decrying America. + +This anger seems likely to spill over into presidential polls in May. Hassan Rouhani, the president, had hoped that his chances would be bolstered by the nuclear deal. Relief from sanctions helped Iran’s economy grow by 4% in 2016, and the IMF had expected growth to reach 6% this year. But Mr Trump’s rhetoric has scared off potential investors, especially large corporations that had been enthusiastic about the opportunities. “The gold rush is over,” says one British official-turned-businessman. Mr Rouhani, his opponents say, has failed to deliver. + +The hardliners have yet to select a presidential candidate. Marzieh Vahid-Dastjerdi, the Islamic Republic’s first female minister, had been mooted in the hope she might garner the women’s vote. Now the conservatives seem to be leaning towards running a military man. “If Qassim Sulemani stands, he will win,” says a confidante of Mr Khamenei’s, referring to the head of the Quds Force, the foreign legion of Iran’s Revolutionary Guards, which is fighting across the Middle East. + +Even without a conservative president, the hardliners are flexing their muscles. Fajr, Iran’s annual film festival and cultural showcase, banned ten local films this year, including one that had replaced women’s headscarves with wigs. They were too feminist, said an organiser. In the past, Mr Rouhani has overruled the censors. This time around, he has yet to secure the approval of the Guardian Council, a conservative-dominated body that vets parliamentary candidates and laws, and is staying his hand. + +Is a further deterioration in relations between Iran and America inevitable? Many in Mr Trump’s entourage see Iran’s missile tests not just as domestic acts of defiance but as projections of regional reach. They want to help Israel and Sunni Arab states put Iran back in its box. James Mattis, Mr Trump’s defence secretary and a former commander of American forces in the Middle East, will not have forgotten that Shia militias backed by Iran killed many of his soldiers in Iraq. Iran’s Sunni rivals also see an opportunity. “We agree with Trump that the nuclear deal has given a green light to Iran to do whatever it likes in the region,” says Khamis al-Khanjar, a Sunni leader in Iraq. + +But others, including Britain, argue that a tougher line on Iran will embolden its hardliners. They might yet be heard. Mr Trump’s latest sanctions seem largely symbolic, affecting just 25 people and companies. The nuclear deal survives. For now, the war is only one of words. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Remaking Iran’s revolution” + + + + + +Big bother + +A row about a reality show reveals how hard it is to do business in Nigeria + +The bother over “Big Brother” may serve as a wake-up call to the government + +Feb 11th 2017 | LAGOS + + + +THE Nigerian edition of “Big Brother” has the same mix of narcissism, banality and back-stabbing found in every other version of the show. But an extra controversy was added to the fallouts and flirtations when Nigerians learned that their programme, in which contestants are locked in a house and filmed 24/7, was being made in South Africa. On January 24th the country’s information minister, Lai Mohammed, opened an investigation into “the issue of possible deceit”, urging those who had “bombarded” him with complaints to stay calm. + +MultiChoice, the production company behind “Big Brother Naija”, was unapologetic, pointing out that it was easier and more cost-effective to stage the show in its existing house in Johannesburg. During the only previous Nigerian edition a sponsor had removed the fuses from the house’s generators in a dispute over advertising, taking the programme off-air for eight hours, says Remi Ogunpitan, a producer at the time. Eleven years later Nigeria’s power supply is still erratic, and the price of diesel for generators has more than doubled in the past six months because of short supplies. + +This is just the latest spat between Nigeria and South Africa as they spar for economic supremacy in the continent. In 2014 Nigeria leapfrogged its rival to the position of Africa’s largest economy, when its GDP was recalculated by the government and found to be almost double the previous estimate. (Its population is more than three times South Africa’s.) But it was overtaken again last year because of falling oil prices and the subsequent devaluation of its currency, the naira. In 2015 Nigeria slapped MTN, a South African mobile-phone company, with a billion-dollar fine for failing to disconnect unregistered SIM cards, which it claimed could have been used by the jihadist fighters of Boko Haram. On the cultural front “District 9”, a South African-directed film released in 2009, depicted Nigerians eating the flesh of, and prostituting themselves to, aliens. + +Dystopian sci-fi movies aside, Nigeria dominates entertainment. Africans devour Nollywood films and Nigerian pop music fills dance floors across the continent. Far from being offended, many Nigerians simply see the bother over “Big Brother” as a wake-up call to their government—and further proof, if any were needed, that their country is a tough place to do business. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Big bother” + + + + + +The Kenyan connection + +Do dope-smugglers also peddle ivory? + +The emerging links between two nasty trades + +Feb 11th 2017 + +Powerful enemies + +WHEN a middle-aged Kenyan called Feisal Mohamed Ali was found guilty in July 2016 of possessing more than two tonnes of ivory and sentenced to 20 years in jail, conservationists welcomed the verdict as a victory for elephant protection. An “ivory kingpin” had received his comeuppance, dealing a powerful blow to those behind a scourge that threatens the survival of Africa’s elephants. + +Yet wildlife and drugs investigators in Kenya and America believe that Ali may not be the kingpin of an ivory smuggling gang but merely a lieutenant in a larger, well-established criminal organisation that is smuggling drugs as well as ivory and rhino horn. That these two sorts of criminality may be run by the same organisations is significant. It not only suggests that an illicit trade in heroin from South Asia that goes through east Africa and then onto the rich world is contributing to environmental harm along the way. It also suggests that rich-country police forces, which half-heartedly investigate the illegal trade in animal products because it they see it as a remote problem, might become more interested in tackling it as part of their war against the drugs trade, a problem their taxpayers do care about. + +The allegations linking these two sorts of smuggling networks have emerged through a long-running effort by American prosecutors to extradite two brothers from Kenya, Baktash and Ibrahim Akasha. They were arrested by Kenyan police more than two years ago after allegedly handing over 99kg of heroin and 1kg of methamphetamine to people who were in fact working for America’s Drug Enforcement Administration (DEA). Last month the prosecutors finally got their way, and the brothers and two alleged accomplices arrived in New York on January 31st. + +Although the brothers are charged with alleged drug smuggling, sources within the investigation claim that it has also connected them to the smuggling of ivory and rhino horn, and believe that Mr Ali was a link in their bigger network. + +DEA Special Agent Thomas Cindric, of the Special Operations Division in Washington, says: “We know the Akasha family is involved with the ivory trade, we have recorded conversations where they talk about ivory. We had undercover meetings where they talked about being involved in ivory. They’re like the mafia in the US, they’re multifaceted. These guys are drug and ivory traffickers. And the smuggling routes for ivory are the same as the smuggling routes for drugs.” + +The allegation is supported by a transcript, seen by The Economist, that purports to be of a recorded conversation between Ibrahim and a DEA source that took place in April 2014. “I have ivory here from Botswana, from Mozambique, from all over. I have a lot here and it sells,” Ibrahim allegedly said in April 2014. “I have ivory, rhino horn.” Mr Cindric confirms the authenticity of the recording. + +The charges are denied by the brothers’ Kenyan lawyer, Cliff Ombeta, who told The Economist his clients “have never been involved in any kind of dealings in ivory. They have never been arrested or been investigated in any offence relating to ivory. They have never stocked any ivory for themselves or anyone else for any reason whatsoever.” He also denies any business connection between Mr Ali and his clients. + +Poaching is a menace not just to Kenya’s elephants, but to all Africa’s. A recently concluded aerial survey found the continental population to have dropped by nearly a third between 2007 and 2014, to around 415,000. For traffickers smuggling multi-tonne shipments of elephant tusks from Africa’s parks and wildernesses to Asian markets, where today they fetch around $1,100 per kilogram, the Kenyan port of Mombasa is the exit point of choice. It coincides with one of the main routes for heroin from Afghanistan to Europe where shipments are unloaded from dhows and cargo ships in Kenya and Tanzania and then broken into smaller packages that are carried by air to Europe. + +“Transnational organised crime is a business, and the ultimate goal is money—not ideology or anything else. It doesn’t matter if it is drugs, weapons, ivory, people; it’s just about moving illicit goods for profit,” says Javier Montano, a wildlife-crime expert at the United Nations Office on Drugs and Crime in Nairobi. + +DNA tracking of ivory seizures shows that Mombasa, in parallel with its emergence as a heroin-smuggling hub, is also home to one of just three trafficking networks moving elephant tusks out of Africa (the others are located in Entebbe in Uganda, and Lomé in Togo). Prosecutions are commonly for a single seizure but Samuel Wasser, a biologist at University of Washington in Seattle, said this understates the scale and complexity of the illegal trade. A DNA map he devised in the 1990s has linked numerous seizures of more than 1.5 tonnes to the Mombasa network. + +Mr Wasser’s work shows that individual ivory shipments are not one-off deals and that the ivory is rarely shipped out of the country from which it is sourced. A parallel investigation by the Satao Project, a company that investigates wildlife crime, has also connected a number of large ivory seizures to organised crime. As evidence emerges that the same organisations use common logistics networks to move both poached products and drugs, investigators are hoping new avenues for prosecuting both crimes may open up. It is “like getting Al Capone for tax evasion”, says one. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Jumbo cartels” + + + + + +Europe + + + + +The Dutch election: Act “normal” or get out + +Ukraine’s divided east: Put asunder + +Corruption in Romania: People v pilferers + +Charlemagne: Surplus war + + + + + +Act normal or get out + +The Netherlands’ election is this year’s first test for Europe’s populists + +Geert Wilders is dragging all of Dutch politics in a nationalist direction + +Feb 11th 2017 | AMSTERDAM + + + +“THERE’S something wrong with our country,” began an open letter to the Dutch people published last month. It went on to moan about those who “abuse our country’s freedom to cause havoc, when they came to our country precisely for that freedom”, and warned them to “act normal or leave”. The author was not Geert Wilders, leader of the anti-Muslim Freedom Party (PVV), but Mark Rutte, leader of the free-thinking Liberals (VVD) and prime minister of a country that presents itself as one of the most tolerant in the world. “Act normal” (doe normaal) is a common injunction in Dutch; it can mean “Don’t be obnoxious” or “Don’t be silly.” But here it had a dark, exclusionary ring. + +Mr Rutte’s letter marked how much Dutch politics has changed as the country prepares for a national election on March 15th. The vote will test the strength of European populism in the era of Brexit and Donald Trump, and will be seen as a portent of the French and German elections later this year. If Mr Wilders comes first, says Cas Mudde, an expert on populism at the University of Georgia, “The media will represent him and his European collaborators as ‘the choice of the people’.” That would boost France’s Marine Le Pen, Germany’s Frauke Petry and others of their ilk. + +The Netherlands has often been a bit of a bellwether for northern Europe. Its left-wing student rebellion arrived early, in 1966. Wim Kok, a Labour prime minister elected in 1994, propagated Third Way centre-left policies before Tony Blair and Gerhard Schröder did. Anti-Muslim populism took off earlier than elsewhere in Europe, and the country elected a centre-right government in 2002, again foreshadowing Britain and Germany. + +In those years the competition for the top spot in Dutch elections was generally between the largest right- and left-wing parties. But today it is Mr Rutte’s centre-right Liberals and Mr Wilders’s nationalist PVV who are vying for the lead—and for some of the same voters. Mr Rutte’s letter was an attempt to woo the working-class white constituents whom the PVV calls “Henk and Ingrid”. The letter’s underlying theme of moral panic over immigration aped Mr Wilders’s speeches. + +The previous election in 2012 turned on austerity policies and a deep recession. Mr Rutte’s government, a grand coalition with the centre-left Labour party, has carried out some important reforms, and the economy is on the upswing. The central bank recently raised its growth forecast for 2017 to 2.3%. Still, the mood is sour. The Dutch enjoy good health care and generous pensions, yet these and immigration are the subjects they most want politicians to address, according to Ipsos, a pollster. The VVD’s plan, says one campaigner, is to reassure people that the party will protect both social benefits and modern Dutch values. + + + +The biggest loser from the country’s grumpy mood will probably be Labour (PvdA), which (like Germany’s Social Democrats and France’s Socialists) has lost support on the left by governing in the centre. Polls show it shrinking from 38 seats to 12 in the 150-seat parliament (see chart). A few of its voters have drifted to the PVV, which favours more state benefits as well as fewer immigrants. More have embraced the Greens, the far-left Socialists, or 50 Plus, a pensioners’ party. All of these are political outsiders. Established parties, such as the Christian Democrats and the left-liberals of D66, could steal votes from the Liberals’ left flank. With more than a dozen parties likely to make it into parliament, such mid-sized actors will be crucial. + +The polls put Mr Wilders in the lead by a few percentage points (though the PVV usually underperforms on election day). Yet even if his party becomes the largest, he has almost no chance of leading the country. Most parties have ruled out joining a coalition with him. Meindert Fennema, a political analyst, notes another obstacle: “Wilders, of course, doesn’t want to be prime minister.” It would damage his outsider brand. His only other brush with power, when he backed Mr Rutte’s minority government from 2010 to 2012, ended when he pulled out rather than share blame for unpopular austerity measures. + +Yet keeping the election’s winner out of government would bode ill for democracy, and substantiate Mr Wilders’s accusations that elites are ignoring the will of the people. And the “Wilders effect” on other parties is immense. Few dare mutter a positive word about Europe or refugees. Parties across the spectrum talk about national identity or “progressive patriotism” (a catchphrase that is as empty as it sounds). + +This is only exacerbating the Netherlands’ problems with integration. A recent report by the Netherlands Institute for Social Research found that four out of ten Dutch citizens of Turkish, Moroccan, Surinamese or Antillean descent do not feel at home in the country. Floris Vermeulen, a political scientist at the University of Amsterdam, thinks gestures such as Mr Rutte’s letter will either discourage minorities from voting or drive them towards the new DENK (Think) party, which targets disillusioned Muslims and ethnic minorities. + +With so many parties, and 70% of Dutch voters yet to make up their minds, predicting the election’s outcome is foolish. Easier to forecast is the direction of the country. Mr Rutte’s letter praised such Dutch values as gay rights and the freedom to wear short skirts, and did not explicitly criticise Muslims. But its condemnations of people who decline to shake women’s hands, or who “accuse regular Dutch people of being racist”, made it clear who was allegedly failing to “act normal”. + +This article appeared in the Europe section of the print edition under the headline “Act “normal” or get out” + + + + + +Put asunder + +Ukraine’s leaders may be giving up on reuniting the country + +Reintegrating Donbas is starting to look like a Russian trap + +Feb 11th 2017 | KIEV AND AVDIIVKA + +Square peace agreement, round war + +FROM her roadside stall in eastern Ukraine, Svetlana Tsymbal watches the cars creep past the Mayorsk checkpoint. This used to be a peaceful provincial highway. Now it is a border crossing at the front line of a conflict that has left some 10,000 people dead. Parents return home “to the other side” after visiting children. Pensioners cross to receive payments on Ukrainian-held territory. Traders lug supplies and sometimes contraband back and forth. The road is lined with mines. + +It has been nearly three years since Russian-backed separatists seized chunks of eastern Ukraine’s Donetsk and Luhansk regions. The Minsk agreements, signed in February 2015, envision Russia returning control over the border and withdrawing its troops, and Ukraine holding local elections and granting the occupied territories “special status”. A stretch of relative quiet in 2016 raised hopes of progress. But in late January, combat erupted around the industrial hub of Avdiivka. The fighting has slowed, but the outbreak showed how intractable the conflict has become. “How can we go back to the way things were?” asks Ms Tsymbal. “Blood has been spilled.” + +Most Ukrainians say the war in Donbas, as the region is known, is the country’s most important issue. Yet they dislike the proposed solutions: fewer than 10% view the Minsk agreements positively. Although the Ukrainian government publicly supports implementing them, in private officials say that doing so could be disastrous. Compromise is politically fraught. Nadia Savchenko, the Ukrainian fighter pilot who returned from Russian captivity to a hero’s welcome last year, had her allegiance questioned after meeting with separatist leaders. Some of President Petro Poroshenko’s rivals have called for blockading the territories. “This is our September 11th, just stretched out over three years,” says Pavlo Malykhin, the head of Avdiivka’s civil-military administration. + +From the point of view of Ukraine and its backers, the Minsk agreements were imposed at gunpoint. Russian regular forces, equipped with artillery, armour and anti-aircraft support, intervened to rescue the separatist militias in mid-2014 and soon outmatched the Ukrainian Army. “[At one point] I was down to one battalion,” says Mr Poroshenko. In 2015, “90% of all negotiations in Minsk were simply about halting fire.” Russia got almost everything it wanted: a Russian-controlled autonomous territory with its own militia and administration. Given Ukraine’s economic problems, Mr Putin expected it to collapse quickly. + +Shotgun divorce + +Instead it survived. While still weakened by corruption, Ukraine has stabilised its economy, pushed through some reforms and rebuilt its military. “When I came to power we had no army, a massive budget deficit, a 50% inflation rate and no money,” says Mr Poroshenko. “Today I have one of the strongest armies in Europe, with unique experience of fighting a hybrid war against Russia.” Ukraine’s combat-ready forces total 250,000 men, of whom 60,000 are deployed in the east. In Donbas they have been creeping forward, seizing positions in the “grey zone” occupied by separatists in violation of the agreements. + +Yet Russia, too, has been building. It has created a force estimated at 40,000 men in the separatist territories, including, covertly, about 5,000 Russian soldiers. It has rebuilt the local administration, repaired road infrastructure and eliminated some of the unrulier rebel commanders. (One such commander, Mikhail Tolstykh, better known as “Givi”, was blown up with a grenade launcher on February 8th.) Mr Putin now hopes to use the Minsk process to incorporate this separatist administration into Ukraine. Yulia Mostovaya, the editor of Zerkalo Nedeli, an independent weekly, says this would be like implanting a cancerous cell into Ukraine’s body. It would give Russia control over a portion of the electorate and could lead to further disintegration of the country. Many in Kiev would prefer to preserve the status quo. + + + +In Avdiivka that status quo has its costs. “Before, we could duck into Donetsk for pizza, we were the centre of the region,” says Galina, a shopkeeper at the town market. “Now we’re the edge of Ukraine.” The city depends on a Soviet-era coking factory (one of the largest in Europe) near the front lines. The factory, part of the oligarch Rinat Akhmetov’s sprawling empire, once sat at the heart of a regional supply chain, turning Donbas coal into coke for steel mills. Now dozens of employees live with one foot on either side of the line. + +Politically, the town is divided. Many support Russia and its separatist proxies—partly because they watch Russian state TV. In Ukraine’s western regions, 79% favour membership of the European Union, while only 3% prefer the Russian-led Customs Union; in eastern regions under Ukrainian control, just 24% prefer the EU and 40% the Customs Union. “We have different values,” says Galina. + +On the plus side, eastern Ukraine is not split along ethnic, religious or linguistic lines, argues Alex Ryabchyn, a Donetsk native and MP. Relationships remain strong despite the fighting. “The first thing we do when the shelling ends and we come out of the shelters is to call friends and relatives on the other side,” says Musa Magomedov, director of the Avdiivka coking factory. An officer in a Ukrainian unit who goes by the nickname “Granite” tells of meeting in the grey zone an old comrade from his days in the Soviet army who is now on the opposite side of the line. “We threw back 100 grams [of liquor] and talked,” he says. + +Yet in many ways, Donetsk and Luhansk are now more integrated into Russia than Ukraine. Commerce is carried out in roubles. Schools have moved to Russian educational standards. According to RBC, a Russian business newspaper, Russia has begun accepting passports from the unrecognised republics when people buy train and plane tickets. “Donetsk is not coming back,” says Sergei Chumak, a technician at the coking factory. + +The new American administration has not decided what it wants in Ukraine. Yulia Tymoshenko, a former prime minister who wants to supplant Mr Poroshenko, flew to Washington last week to ingratiate herself with Donald Trump. Some think he may strike a bargain with Mr Putin (see Briefing) to push Ukraine to implement the Minsk agreements on Moscow’s terms. That, says Ms Mostovaya, “would raise the question of what our soldiers were fighting and dying for all these years.” + +This article appeared in the Europe section of the print edition under the headline “Put asunder” + + + + + +Hands off their DNA + +Huge protests force Romania’s government to reverse itself on corruption + +A decree that would pardon crooked officials is dropped + +Feb 11th 2017 | BUCHAREST + + + +AFTER just three weeks in power, Romania’s new prime minister, Sorin Grindeanu, could look out of his window and see a huge crowd carrying banners reading: “You have succeeded in uniting us.” Unfortunately for Mr Grindeanu, they did not mean it in a good way. For over a week, throngs estimated in the hundreds of thousands have turned out to protest against the passage of an emergency ordinance that could sabotage the country’s much-praised anti-corruption campaign. Even after the government cancelled the ordinance, the protests have continued. + +The emergency decree, which the government passed on January 31st, in effect decriminalised official misconduct resulting in financial damage of less than 200,000 lei ($47,600). The new limit would have spared the leader of the ruling Social Democratic Party (PSD), Liviu Dragnea, who has been charged with abuse of power for granting contracts worth $26,000 to associates who allegedly performed no work. + +Within an hour of the measure’s adoption, more than 10,000 protesters were on the streets. The next night an estimated 250,000 gathered in more than 50 cities and towns across the country. The president and vice-president of the European Commission, Jean-Claude Juncker and Frans Timmermans, released a statement saying the fight against corruption “needs to be advanced, not undone”. The demonstrations peaked at over 500,000 people last Sunday, even though the government had rescinded the emergency ordinance earlier that day. Protesters wanted to ensure the government did not backslide. + +The issue of corruption has dominated Romanian politics for years. The previous elected government was brought down by protests in November 2015, after graft among fire-safety inspectors led to a Bucharest nightclub blaze that killed 64 people. The country sits 57th on the corruption-perceptions index of Transparency International, a watchdog. Despite years of anti-corruption efforts, many analysts believe little has changed. “I don’t think Romania has made significant progress against corruption,” says Alina Mungiu-Pippidi, a Romanian corruption expert. + +Good-government advocates have found a champion in Laura Codruta Kovesi, the combative chief prosecutor of the National Anti-Corruption Directorate (DNA). The DNA has convicted thousands of people of graft, including many high-ranking officials. In 2015 it indicted Romania’s then-sitting prime minister, Victor Ponta; the case against him continues. It has become one of the most trusted institutions in the country, behind only the church, the army and the gendarmerie. Among the placards at the protests were many that read “Hands off DNA”. + +Romanians had braced themselves for opposition to the anti-corruption campaign after the PSD resoundingly won last December’s elections. It took 45% of the vote; its closest rival, the National Liberal Party, won just 20%. The party’s leader, Mr Dragnea, was blocked from becoming prime minister because of an earlier conviction for election fraud, for which he carries a suspended sentence. If convicted of abuse of power, he would face jail. + +The government has blamed the protests on poor communications, scheming by the country’s president, Klaus Iohannis (who is a Liberal), and even professional agitators. A month after Mr Grindeanu’s swearing-in, there is already speculation that he may resign. Florin Iordache, the justice minister, is unlikely to survive for long. + +The long-term impact of the protests is uncertain. Many of those who marched last week had helped bring down the government in 2015, only to watch some of the same faces return to power. Other proposals to lighten or shorten sentences remain under discussion. The government insists they are aimed at relieving overcrowded prisons, but many Romanians think they are excuses to let corrupt officials go free. + +One of the protesters in Bucharest, Paul Morosanu, a psychologist, carried a placard that read “89 Reloaded”, referring to the protests that brought down Romania’s communist regime. He was on the streets not to roll back one new law, he said, but to overthrow an entire political constellation that has been developing for 27 years. “Before, we didn’t have a face for what we were fighting,” Mr Morosanu said. “This law gave it a face.” + +This article appeared in the Europe section of the print edition under the headline “People v pilferers” + + + + + +Surplus war + +Germany’s current-account surplus is a problem + +But not for the reasons Donald Trump thinks it is + +Feb 11th 2017 + + + +WHAT awkward timing. On February 9th Germany reported the world’s largest current-account surplus, of about €270bn (almost $300bn), beating even China’s. Meanwhile, the country with the world’s biggest deficit remains America, which under its new president, Donald Trump, is browbeating friend and foe alike in the name of putting “America first”. Mr Trump’s economic adviser, Peter Navarro, has even accused Germany of currency manipulation. By his logic, Germany “exploits” America and others because it uses the euro, which is weaker today than the old Deutschmark would be, making German cars, machines and other exports more competitive. + +Coming just weeks after Mr Trump casually threatened to slap a 35% tariff on imported BMWs, such talk has Germans’ full attention. His verbal assaults on the rules-based trading order, along with his disdain for NATO and the European Union, strike at the heart of post-war Germany’s identity and national interest, which is to be embedded in Europe and the West as a peaceful mercantile nation. But if Mr Trump thinks the angst he is causing gives him bargaining power over Germany, he is naive. + +His administration’s mistake is to attack Germany with flawed logic. Yes, the euro is weak relative to the dollar. But so are other currencies. Germans think Mr Trump has only himself to blame. He has promised huge tax cuts and increases in infrastructure spending, which will drive up interest rates in America, boosting the dollar. Mr Navarro’s suggestion that Germany deliberately attempts to weaken the euro makes no sense. The European Central Bank (ECB) may be based in Frankfurt. But its president, Mario Draghi, is keeping interest rates near zero and buying bonds (in the European version of “quantitative easing”) primarily to stimulate economies outside Germany. + +Indeed, German economists and pundits are Mr Draghi’s most vocal critics. They have complained for years that low interest rates rob German savers and ruin German life insurers. If the government shows restraint in criticising Mr Draghi, that is thanks to another German tradition: respect for the independence of central bankers. When Mr Draghi began loosening monetary policy, “I told him he would drive up Germany’s export surplus,” Wolfgang Schäuble, Germany’s finance minister, told Tagesspiegel, a German newspaper. “I promised then not to criticise this course publicly. But I do not then want to be criticised for the consequences of this policy.” + +By choosing the wrong line of reasoning, Mr Trump has unwittingly let the Germans off the hook in a more fundamental debate. After all, Germany’s trade surpluses have been controversial for years. Long before Mr Trump ran for office, the European Commission in Brussels, the International Monetary Fund in Washington, America’s treasury department and the OECD, a club of mostly rich countries, were already berating Germany for causing imbalances in the European and global economies. + +The real German problem + +Their analysis starts more than a decade ago, when German employers and unions agreed to restrain wage growth. Workers weren’t thrilled, but everyone agreed that Germany was not competitive enough. This amounted to a devaluation of Germany within the euro zone. The best way out of today’s imbalances, economists say, is not to keep cutting wages in down-and-out countries like Greece, but to let them rise in Germany. Wages have been going up—by 2.3% last year—but should grow faster. + +The other factor is that Germans, in an ageing society, have for years been saving much more than they invest. Individuals are filling piggy banks for their retirement. And firms, expecting lower returns from older, smaller populations in the future, are investing abroad instead of at home. At the same time, the government, also citing demography, in 2011 adopted a “debt brake”, limiting its new borrowing at just the moment when ultra-low interest rates would make debt service almost free. The resulting excess savings are capital that Germany sends abroad. They are the corollary of Germany’s current-account surpluses. + +There is a case that Germany invests too little. Marcel Fratzscher, an economist, estimates this “investment gap” at €100bn annually. Many in the centre-left Social Democratic party (SPD) agree with him. They include Martin Schulz, the SPD’s freshly chosen candidate for chancellor in the election scheduled for September 24th. He has jolted his party in the polls. The SPD is now roughly even with the centre-right bloc of Angela Merkel. Should Mr Schulz win, government spending could rise. + +Other German economists, such as Clemens Fuest, doubt that the gap is big. In the 1990s, after reunification, investment soared as eastern Germany got new roads, buildings and plants. Eventually that exceptional spending had to end, says Mr Fuest, and recently Germany’s investment ratio has been stable. In 2015 it was 19.9%, a bit higher than the EU average. Boosting investment is a good idea, he thinks, but no realistic increase could reverse a current-account surplus that amounts to 9% of GDP. + +If Germany really wanted to attack its surpluses, it would have to do something drastic, he thinks, such as lowering value-added tax (making goods cheaper, domestic or foreign) while raising payroll taxes (making only German labour dearer). But that is a non-starter politically. Another option is for the government to stop saving and start deficit-spending. But that too is anathema in the Berlin consensus. As the German campaign heats up, all sides are instead likely to praise the surplus as a sign of export prowess. Sigmar Gabriel, the foreign minister and a leading Social Democrat, gave a taste of this defiance when he responded to Mr Trump’s tariff threat by taunting America to “make better cars”. One day, when enough elderly Germans actually cash in their savings, German surpluses will turn to deficits. Until then, Germany’s policy stand-off with the world will continue. + +This article appeared in the Europe section of the print edition under the headline “Surplus war” + + + + + +Britain + + + + +The Brexit bill: From Brussels with love + +Brexit and the lessons of empire: The art of leaving + +Student loans: A quick buck + +The housing white paper: Hardly groundbreaking + +Trading with America: NH$? + +The war on seagulls: Fighting them on the beaches + +The environment: All choked up + +Bagehot: The green-belt delusion + + + + + +From Brussels with love + +The multi-billion-euro exit charge that could sink Brexit talks + +A bitter argument over money looms + +Feb 11th 2017 | BRUSSELS + + + +THE mother of parliaments has spoken. On February 8th a large majority of MPs backed a bill authorising the government to begin Britain’s withdrawal from the European Union by triggering Article 50 of the EU treaty. (A few dissenters were told off for singing “Ode to Joy”, the EU’s anthem, in the chamber.) After approval from the Lords, it should become law in March. But a different sort of Brexit bill is approaching, and will be harder to manage. It could yet scupper the whole process. + +Before Britain’s referendum last June, Leave campaigners promised voters that Brexit would save the taxpayer £350m ($440m) a week. That pledge was always tendentious. But officials in Brussels are drawing up a bill for departure that could mean Britain’s contributions remain close to its membership dues for several years after it leaves. In a new report for the Centre for European Reform, a think-tank, Alex Barker, a Financial Times correspondent, puts the figure at anything between €24.5bn ($26.1bn) and €72.8bn. + +The bill comprises three main elements. All, in Brussels’s view, derive from the legal obligations implied by Britain’s EU membership. The first, and largest, covers the gap between payments made in the EU’s annual budget and the larger “commitments” made under its seven-year budgetary framework, approved by Britain and the 27 other EU governments. This overhang has been steadily growing. Britain’s share of what Eurocrats call the reste à liquider (or amount yet to be paid) would be around €29.2bn, Mr Barker estimates. + +The second element covers investment commitments to be executed after Britain leaves the EU in 2019. Most of this is “cohesion” funding for poorer countries (think motorways in Poland). Mr Barker reckons Britain’s share could amount to €17.4bn. The government will struggle to explain why voters should be on the hook for payments made after Brexit. But the European Commission will argue that Britain’s approval of the current budget, which runs until 2020, obliges it to cough up. + +Pensions make up the third component. The liabilities for the EU’s unfunded scheme stand at over €60bn. Britain may be prepared to cover its own nationals. But European officials insist that all liabilities are a joint responsibility, as Eurocrats work for the EU, not their national governments. This may be the fiercest row of all. + +Brussels’s demand will combine these three elements with a few miscellaneous items, and may adjust for Britain’s share of EU assets, its budget rebate and payments it is due from the EU (see chart). + + + +Michel Barnier, who will lead negotiations on behalf of the commission, is said to consider that the bill stands between €40bn and €60bn. The upper figure has anchored debate in Brussels, but attracts few takers in London. Some Brexiteers believe Britain has no obligation to pay anything at all once it leaves. If a compromise cannot be reached, Britain might find itself hauled before the International Court of Justice. The talks may be over almost before they have begun. + +Sequencing presents a second problem. Mr Barnier insists on settling the bill and other divorce terms before substantial talks on the much bigger matter of a post-Brexit settlement, including a trade deal, can begin. But British officials want to negotiate in parallel, and perhaps to link the departure sum to the degree of access Britain will enjoy to the EU’s single market after it leaves. The law lends Britain half a hand: Article 50 says that a departing country’s withdrawal agreement shall take account of “the framework for its future relationship” with the EU. But hardliners like France insist on keeping the two issues apart. And with only two years to conclude an Article 50 deal, Britain cannot waste time talking about talks. + +Some British officials note that the other EU governments can tweak Mr Barnier’s negotiating guidelines if they find his line too tough. Britain might seek to exploit this by offering sweeteners: defence co-operation with the Baltics, perhaps, or infrastructure grants to Poland. The trouble is that reducing Britain’s bill means cuts to the overall budget, which would irk countries that do well from it, or extra payments from the wealthier governments to make up the shortfall. That creates an unusual alignment of interests among the 27. “If there’s one thing net payers and net recipients agree on, it’s to make the bill for Britain as high as possible,” says an EU official. + +Most governments do not rule out a compromise. German officials, for example, will consider opening trade talks before the divorce is settled, so long as Britain accepts the principle that it has obligations that extend beyond its departure. As for the figure itself, like all EU budgetary negotiations it will be resolved via late-night Brussels summitry. “It’s like buying a carpet in Morocco,” says Jean-Claude Piris, a former head of the EU Council’s legal service. “The figures are always negotiable.” + +But there are reasons to fear a breakdown. Theresa May, the prime minister, has done little to prepare voters for this debate. Neither her speeches nor the government’s white paper on Brexit have said anything about an exit payment. A whopping financial demand will therefore inflame Britain’s tabloids, limiting her room for manoeuvre. More worryingly, both sides believe they hold the whip hand. British officials think the hole Brexit blows in the EU’s budget will force the Europeans into compromise for fear of getting nothing if the talks derail. EU officials, for their part, are convinced that the prospect of no withdrawal agreement, and therefore no trade deal, will terrify Britain into submission. “They’ll be begging on their knees at the WTO,” says one. + +The EU is skilled at brokering compromise on budgets. Perhaps that will prove true for the Article 50 talks, too. But two things set the upcoming negotiation aside. First, there is no precedent. Second, goodwill towards Britain has largely evaporated; it will be negotiating with the EU as a third country, not a partner. Informal meetings between British and European officials have already witnessed blazing rows. About the only thing the sides agree on is that they may be heading for deadlock. + +This article appeared in the Britain section of the print edition under the headline “From Brussels with love” + + + + + +The art of leaving + +What the break-up of the British Empire can tell us about Brexit + +A generous payment here and there can go a long way + +Feb 11th 2017 + +India had Gandhi, Britain has Farage + +IF THE current crop of Whitehall mandarins think they have their hands full negotiating an exit from the European Union, they should spare a thought for their predecessors. Britain’s withdrawal from its empire in the 1940s-60s required its civil service to negotiate exits from dozens of different territories, often in months. The arch-imperialist Winston Churchill called it a “scuttle”. + +Yet the winding up of empire for the most part achieved what many considered impossible: breaking up and staying friends. Many peoples labouring under the yoke of British imperialism hated the colonialists, yet few of the former colonies refused to join the Commonwealth as newly independent countries. What might Britain’s Brexit negotiators learn from that relatively painless transition? + +The aims in most imperial exit negotiations were threefold, as summarised by one official: to ensure an orderly withdrawal, to maintain political stability and to “safeguard our own trading and investment interests”. The second point was important as the backdrop to the end of empire was, as it is now, a revanchist Russia (then the Soviet Union), threatening eastern Europe and thus Britain’s strategic interest of maintaining the balance of power on the continent. + +America, Britain’s main partner in NATO, was just as alarmed by Britain giving up its worldwide military and political role as the Obama administration was by Brexit. Dean Rusk, the secretary of state at the time, harangued his hapless British counterpart about the dangers of withdrawing into a “little England” obsessed with economising and the National Health Service. Rusk said that he “could not believe that free aspirin and false teeth were more important than Britain’s role in the world.” He might have said something similar about the Leave campaign’s promise to divert EU dues to the NHS. + +Partly to satisfy its obligations to the Atlantic alliance, therefore, Britain went to considerable lengths to cultivate post-imperial friendships, especially when withdrawal threatened economic stability in a former colony. Take Singapore, which was highly dependent on the income from Britain’s huge naval bases. The bases employed a sixth of the island’s workforce and accounted for a fifth of its GDP. Acknowledging that Britain’s sudden withdrawal in the late 1960s could imperil the very survival of the new republic, Britain thus agreed to give £50m (about £850m, or $1.1bn, in today’s money) in aid to Singapore over five years. + +Arthur de la Mare, the departing high commissioner, fulminated that this was “a bribe to keep the Singaporeans sweet”. But it worked. Singapore remains a staunch ally, as does Malaysia, which got £25m in similar circumstances. Malta, the chair of the EU presidency as Brexit gets under way, got £51m over ten years. + +The origins of Britain’s huge aid budget can be traced to the same era. In 1946-70 about £350m was spent developing colonial economies. Sarah Stockwell of King’s College London says that the resulting goodwill helped British firms and institutions to win business. The Royal Mint, for example, won contracts to produce the currencies of countries like Ghana. (Its first image of Malawi’s tyrannical president, Hastings Banda, was a bit too insightful. Giving an “impression of harshness”, the drawing was revised.) + +“If you scratch an American,” lectured Rusk, “you find an isolationist.” That, too, has a certain echo in today’s White House. As for Brexit, the lesson of empire is that a generous payment here and there can go a long way. + +This article appeared in the Britain section of the print edition under the headline “The art of leaving” + + + + + +A quick buck + +The British government plans to sell off part of the student loan book + +It is unlikely to get a good deal + +Feb 11th 2017 + + + +DISPOSING of government assets is a risky business. Despite his claim to have “saved the world” in 2008 by averting the collapse of the British banking industry, many voters instead remember Gordon Brown as the dupe who flogged Britain’s gold when prices were at a historical low. Now Jo Johnson, the universities minister, must hope for better luck. On February 6th he set out a plan to sell a slice of the student debt held by the government. It is a pioneering move: Britain is the first country to hawk income-contingent student loans to private investors. + +The proposed sale has been a decade in the making. In 2008 the Labour government passed the Sale of Student Loans Act, which laid the legal groundwork. The deal’s complexity is the main reason for the delay. It would involve around £4bn ($5bn) of loans made to nearly half a million students, who began making repayments between 2002 and 2006. There is little certainty about the repayment schedule: graduates pay money back only when they cross an earnings threshold, currently £17,495. They pay 9% of their earnings above the level; interest is the lower of inflation or the base rate plus one percentage point. All this makes it hard to work out what the loans are worth. + +The deal would involve slightly less than 10% of the student debt the government holds from before the tuition-fee system was changed in 2012. If all goes well it is expected to sell further tranches of the debt. Selling it gradually is sensible, says Nicholas Barr of the London School of Economics, since nobody has much idea how it will work out. + +Opposition to the sale has been building for some time. In 2014 the National Union of Students warned the government against flogging the debt to “some unscrupulous, bowler hatted, fat-cat profiteers.” More recently, critics have worried that graduates may lose out if the purchaser of the debt decided to tinker with the terms of their loans. + +The government has promised that there will be no such changes. That means graduates may in fact benefit from the sale. If the terms of the loans are fixed, the government would no longer be able to fiddle with them, as George Osborne, then chancellor, did with a different generation of student loans in 2015. But, notes Nick Hillman of the Higher Education Policy Institute, it would also be harder for a future government to relax the conditions, perhaps as part of a pre-election giveaway. + +A bigger worry is that the taxpayer will get a bad deal. When a previous government sold a more straightforward form of student debt from the 1990s, the hope was that the buyer would be more tenacious when chasing delinquent graduates. Since repayment is now deducted straight from pay-packets, there is no obvious way for investors to whip the regime into better shape. And buyers are likely to be leery of income-contingent loans because of the difficulty in assessing their value and because they are an unfamiliar form of debt, says Mr Barr. The government is simply swapping a future flow of income for cash today, and will probably pay to do so. + +This article appeared in the Britain section of the print edition under the headline “A quick buck” + + + + + +Hardly groundbreaking + +Britain’s housing market is broken—but not in the ways that the government thinks + +Following this white paper there have been around 200 housing initiatives since 2010 + +Feb 11th 2017 + + + +IN 2015 the median house price in England and Wales was roughly nine times median earnings, probably the highest level ever. Young people are bearing much of the burden: in the past 25 years the rate of home-ownership has fallen by 30 percentage points among 25- to 34-year-olds. Small wonder that Sajid Javid, the communities secretary, on February 7th boldly declared that the housing market was “broken”. Presenting a long-awaited white paper, Mr Javid presented a few sensible policies to boost housing supply. Yet the plans fall well short of what is needed. + +Economists generally agree that the fundamental problem facing the housing market is one of undersupply of new houses. Successive governments have tried to ensure that at least 250,000 new dwellings are put up each year, a level that would be expected to keep price rises in check. But 1979-80 was the last year in which that many houses were completed. + +The white paper contains measures to force councils to allow more construction. Higher charges levied on developers should provide extra funding to councils’ planning departments, making them—it is hoped—more efficient. In addition, the method by which councils calculate how many extra houses they need looks set for reform. As it stands, councils can placate NIMBYish residents by deliberately underestimating future housing needs. No longer: the government wants a standardised framework for calculating what needs to be built. Councils that miss their targets may have to surrender control over planning to central government. + +Councils are not the only ones in the firing line. The government appears to accept that some housebuilders engage in “land banking”—sitting on plots with planning consent as prices rise. (Builders deny the accusation, though there is some evidence for it.) The white paper in effect proposes a “use it or lose it” rule: councils will be able to compulsorily purchase land if developers are failing to build. Extra support will go to help smaller housebuilders challenge the local monopolies sometimes held by big firms. + +All this is likely to improve housing construction, but by only a little. More radical policies have fallen by the wayside. It is rumoured that earlier drafts of the much-delayed white paper contained plans to boost development on the green belt. That would have been sensible: much of the green belt is not very green (see Bagehot). Yet, following angry noises from backbenchers, the plan was dropped. A previously trailed plan to encourage oldies to downsize, freeing up stock for young families, also seemed not to materialise. + +With fundamental problems left unaddressed, the government has little choice but to water down its long-held commitment to boost home-ownership. Instead, the flavour of the month is improving conditions for renters. In a policy similar to one floated by Ed Miliband when he was Labour leader, the government wants three-year tenancies for some renters. Neal Hudson, a property consultant, adds that planning regulations are being tweaked to encourage the construction of affordable homes to rent, over those to buy. + +Christine Whitehead of the London School of Economics reckons that, counting this white paper, there have been around 200 housing initiatives since 2010. Part of the trouble with Britain’s housing market is that politicians like to tinker, rather than reform. + +This article appeared in the Britain section of the print edition under the headline “Hardly groundbreaking” + + + + + +NH$? + +An American trade deal raises the prospect of more private involvement in British health care + +The question is, what firm would invest in the National Health Service? + +Feb 11th 2017 + + + +AS BRITAIN considers its future outside the European Union, its main target for a post-Brexit trade deal is the United States. The prospect of opening up the American market is an enticing one. Yet some in Britain worry about what might be demanded in return. Perhaps most emotive is the suggestion that America could negotiate greater access for its companies to the National Health Service. Jonathan Ashworth, the shadow health secretary, has warned that a trade deal could lead to “stealth privatisation” of the NHS. “It is beyond belief that our prime minister is bartering away our health service in her desperation for post-Brexit trade deals,” he recently said. + +Private involvement in public health care has been growing in Britain for some time. After 1997 Tony Blair encouraged private providers to take on more NHS work, to help the service cope with increasing demand. That trend has continued. Government funding to the private sector reached £8.7bn ($11bn) in 2016, or 7.6% of the NHS’s total revenue budget. + +Almost all American investment in British health care so far has been in the private sector, through acquisitions. Acadia, a Tennessee-based health-care giant, now owns the Priory Group, a chain of posh drying-out clinics and mental-health centres. Hospital Corporation of America owns several private hospitals in Britain, including the Portland, a favourite place for celebrities to give birth. + +The involvement of foreign companies in providing services to the NHS, meanwhile, is marginal. Some believe that after Brexit the government might be tempted to open things up if it thought such a move could buy Britain better access to foreign markets. It would have leeway to do so, since it alone would be responsible for conducting the trade talks. “There is no involvement of civil society, trade unions or parliamentary oversight at all,” complains Mark Dearn of War on Want, a campaigning charity. Others point to a precedent in the form of concessions that Australia made regarding its scheme for public drugs-purchasing, as part of a free-trade agreement with America in 2004. + +It is conceivable that American firms might be allowed to tender for, say, a regional ambulance contract or community health services, just as European companies can, says Nick Fahy of Oxford University. British firms such as Virgin Care already do. But the government is unlikely to allow foreign firms to run large parts of the NHS such as hospital trusts, he believes. In the only example of its kind so far, Circle Health, a British company, took over management of Hinchingbrooke hospital near Cambridge in 2012. The experiment was not considered much of a success and ended after three years. It is not likely to be repeated soon. + +And there is a prior question: would American companies actually want to invest in the NHS? Public health-care systems in western Europe are among the only ones in the world where the money involved is enough to make investment worthwhile for American firms, if they could gain access. An American company that could demonstrate the ability to run a British hospital might persuade countries like Germany and France to open up to more outside investment. That is something European governments would not budge on during talks over the Transatlantic Trade and Investment Partnership, a now-doomed trade deal that America and the EU had explored in the pre-Trump era. + +At the moment, however, there is little enthusiasm “in America or anywhere” to invest in British health care, says Richard Murray of the King’s Fund, a think-tank. Government spending on health as a share of GDP is lower in Britain than in most of western Europe and the gap is forecast to increase. Many NHS trusts are in deficit. And dealing with the NHS can be a messy and frustrating business, far removed from the cash-rich American health-care machine. “Britain is just not a very attractive market,” says Mr Murray. + +His main concerns about a trade deal are that it could give new powers to American firms to make legal challenges against the NHS’s monopoly, and that it could give new rights to foreign investors to seek compensation for lost profits if government policy changed. Neither seems likely, he says, because the government knows how unpopular such moves would be. + +America will negotiate hard. But given the complexity, unprofitability and political sensitivity of dealing with the NHS, it seems unlikely that the feared “stealth privatisation” will take place. American companies will continue to invest in private health care in Britain—and leave the NHS to stagger on. + +This article appeared in the Britain section of the print edition under the headline “NH$?” + + + + + +In a flap + +Britain’s war on seagulls + +MPs vow to take action against the belligerent birds + +Feb 11th 2017 | ST IVES + + + +SAVOURING the moment before the first bite of a pasty on a beautiful sunny day, Pamela, a holidaymaker, gazed across Porthgwidden beach in St Ives, on the Cornish coast. She didn’t see the seagull until it was too late. The bird missed the pasty but took a chunk out of her hand. Blood poured down her arm and the seagull squawked away. + +Seagull attacks are a big problem in coastal settlements, where about a tenth of Britons live. Politicians want change. On February 7th Oliver Colvile, MP for Plymouth, Sutton and Devonport, led a debate in Parliament about the menace. MPs shared their horror stories. John Woodcock, who represents Barrow and Furness on the north-west coast, spoke of the “blighted and besieged people” of his embattled constituency. + +It is difficult to fight back against the feathered fiends. All species of gull are protected, making a widespread cull impossible. Yet polls suggest that most Britons—normally a sentimental bunch when it comes to animals—would like the legislation changed. Brexiteers point out that, after leaving the EU, Britain will be able to set more bloodthirsty conservation policies. + +Those in the know see little point in a cull, however. Among them is Ron Tulley, a local councillor in St Ives, where giant, beady-eyed gulls saunter down the main drag. In July a girl was airlifted to hospital after plunging off a harbour wall when a seagull swooped for her ice-cream. Mr Tulley nonetheless argues that localised culls would not solve the problem. Seagulls would continue to be attracted by the throngs of people eating pasties and chips. At this time of year up to 750,000 herring gulls (the archetypal seagull) circle over Britain, so a nationwide cull would be costly. + +Seaside towns can wage war in subtler ways. Rubbish in the streets is sure to attract the birds. Putting coloured bunting up, or fitting spikes to buildings, deters them. But council budgets are tight. Per-person spending by Cornwall’s local government has fallen by about a fifth since 2009, squeezing spending on the environment and refuse. + +More money looks unlikely to arrive, so tourists will have to stay alert. Seagulls like to approach from behind, which means no more fish and chips with your feet dangling over the harbourside—but at least no nasty surprises. + +This article appeared in the Britain section of the print edition under the headline “Fighting them on the beaches” + + + + + +All choked up + +A plan to clean up Britain’s toxic air + +Pollution shortens Londoners’ lives by between nine and 16 months + +Feb 11th 2017 + + + +GAZING out over London’s chimneys, Liverpool’s docks or Edinburgh’s spires can cloud a tourist’s judgment. Air pollution “plagues” Britain, says one UN official. The capital is particularly nasty, and compares poorly with other European cities (see chart). On some days last month particulate levels in London were higher even than in Beijing. On February 17th the mayor, Sadiq Khan, will launch a £10 ($12) “toxic charge” on the most polluting vehicles—broadly speaking those registered before 2005—to come into force in October. + + + +Across the country, up to 40,000 excess deaths each year are associated with toxic air. Pollution taxes those with cardiovascular and respiratory diseases and affects neurodevelopment and fetal growth. Ill-health caused by foul air costs Britain more than £15bn a year, the government estimates. But it seems unwilling to do much about it. Twice in the past two years its plans to weaken pollution’s chokehold have been deemed illegal by courts for their inadequacy. The EU is preparing legal action against Britain for breaching air-quality laws. Plans to build a third runway at Heathrow airport, near London, will hardly help, greens complain. + + + +Three pollutants cause most worry: nitrogen dioxide (a gas emitted in vehicle exhausts), ozone (a triatomic form of oxygen which harms the lungs) and tiny particulates, the smallest of which are the most damaging as they get deep into the lungs. + +Chronic exposure means Londoners’ lives are between nine and 16 months shorter than they would otherwise be, according to a study by King’s College London. And sudden spikes leave inhabitants gasping. Acute episodes occur in three main ways, says Gary Fuller, who helps run King’s College’s air-quality monitoring network. First, pollution lingers if a layer of cold air forms close to the ground without wind, as happens during chilly months. Second, the circulation of dirty air around Europe’s large cities, as often happens in spring, causes southern England to suffer. And third, in summer, heat and the sun’s ultraviolet rays help to create smog. + +British courts have given the government until the end of July to come up with a new plan to cut air pollution. It is likely to focus on cars. Poor air quality is a localised problem that can be caused by nearby airports, factories or power plants. But curbing vehicle-use helps in all cities—and traffic is one area in which Britain’s generally feeble city mayors have some power. + +Because about half of certain particulate-matter that vehicles release comes from sources other than the exhaust pipe, such as brakes and tyres, stricter standards on emissions alone do not solve the problem. Paris, Madrid and Athens want to ban diesel cars and vans by 2025. + +London will struggle to copy them. Less than a year ago British ministers rejected a diesel scrappage scheme, in which drivers would have been paid for trading in dirty old vehicles for cleaner ones. The political cost of angering diesel drivers, previously encouraged to buy the vehicles because of their lower carbon-dioxide emissions, made such a move impossible. But reports now suggest an updated scheme is under discussion. Mike Hawes of the Society of Motor Manufacturers and Traders, a lobby group, supports such a plan in principle, but frets that even with incentives, the poorest drivers may balk at shelling out for new, cleaner models. + +Other schemes are needed. Company cars, which comprise about half of the new ones sold in Britain, are a taxable benefit. The levies paid on them are based largely on the amount of carbon dioxide they produce, making diesel cars the best to buy. Tweaking fiscal rules could change that. Investing in electric and other low-emission vehicles also helps: the government plans to spend £600m on them and the infrastructure they need, such as charging stations, by 2020. Even London’s buses, police cars and black cabs are cleaning up. + +More people could stay away from the steering wheel altogether. Lesley Hinds, who has responsibility for transport and the environment on Edinburgh council, says a pilot scheme there to encourage children to walk to school, by closing roads outside nine primaries, has been so successful that it may become permanent. A trade-off exists, however. More space on the streets for pedestrians and cyclists means less for cars, leading to congestion. And the exhaust systems of snarled-up vehicles work less efficiently than those of ones on the move. So the fog of politics makes deciding on what mix of policies to use even harder. + +This article appeared in the Britain section of the print edition under the headline “All choked up” + + + + + +Bagehot + +Britain’s delusions about the green belt cause untold misery + +To solve its housing crisis, the country must learn tolove the urban + +Feb 11th 2017 + + + +IF ANYTHING deserves the label “wasteland”, this place does. Pylons and tangles of bramble high as houses tower over a lonely oil drum and a collapsed metal fence. In the distance planes approaching Stansted airport whine; refrigerator units at a nearby food-processing factory hum. Set in the frozen mud is a mosaic of industrial detritus, bits of brick and pipe, beer cans and a discarded condom wrapper. A jaunty yellow arrow informs passers-by that this scraggy parcel of Harlow, in Essex, is a public right-of-way. + +Notwithstanding the condom wrapper, there are few signs that locals get any enjoyment from it. Given its good road connections and the chronic shortage of local housing, a sensible jurisdiction would make it available for a couple of blocks of flats, or a few dozen homes with gardens. A study by the local council last year found that protecting it serves no discernible purpose. Developing it would cause Harlow neither to sprawl, nor to annex another town, nor to lose its character. Yet protected this wasteland shall remain; a useless eyesore trapped in the insensitive, crushing grip of London’s green belt. + +Such doughnuts encircle most of Britain’s big cities. Some of the land they imprison, especially around Manchester, Leeds and south London, is beautiful. But often this is protected by designations of “area of outstanding natural beauty” or “ancient woodland”. And much of the rest is unlovely, inaccessible or both: intensive agricultural land, horse paddocks, endless golf courses and pointlessly empty parcels like this one in Harlow. For another example, take the chunk of the green belt that lies directly to the north of the town’s main station. A few flat fields bordered by a thundering road and a supermarket, this too serves no aesthetic or environmental purpose and, a mere 30-minute train ride from central London, would be ideal for houses. + +Such development is desperately needed. Britain’s broken and cruel housing market may be the country’s most grotesque inequity. In 1997 it took a middle-income household three years to save up a deposit to buy a house; today it takes 20 years. Ever more Britons are consigned to properties that cramp, impoverish or otherwise limit them. Measures to solve the crisis without opening the green belts, including those in the government’s new white paper on housing, deregulate land good for a few thousand houses here and there. Merely loosening the corsets would mean millions, the order of magnitude at which any solution lies. Barney Stringer, a regeneration expert, reckons liberalising 60% of the green belt within 2km (1.2 miles) of a railway station would create room for 2m homes. Alan Mace of the London School of Economics suggests such numbers could be reached by opening up corridors along big transport routes, such as the London-Cambridge road on which Harlow lies. New “garden cities” on these arteries, like Ebbsfleet in Kent, are part of the answer. + +Just one thing stands between a housing-starved Britain and these wise proposals: politics. Most voters would benefit, directly or indirectly, from the construction of millions of new houses on unremarkable but conveniently located parts of the green belts. Yet elections do not work like that. The liminal zones tend to contain lots of NIMBYish, not-quite-rural and not-quite-urban bellwethers, which matter disproportionately. And the pathology extends far beyond their borders. A survey by the Campaign to Protect Rural England in 2015 found that 62% of urban dwellers want to protect the green belt. Reason barely comes into it. + +Which is no coincidence, because Britain’s relationship with the countryside is emotional. Blame the Victorian bourgeoisie, who built vast, hellish metropolises where they lived in increasing material comfort, wistfully recalling rural life. They read pastoral novels and pasted vegetal designs on the walls of brick villas modelled after remote castles and sylvan cottages. They built railway lines that took them just far enough out of the cities to feel they were experiencing rustic life. In this spirit their children and grandchildren would create the green belt. + +Their instincts live on. Britain has plenty of countryside for those who want to live there, as anyone who has flown over it will attest. But over 90% of its citizens (more than in any other big Western country) opt to dwell in towns and cities. They seem to be in denial. Much of the country’s aesthetic and entertainment culture offers them seductive morsels of rural life. Hit television programmes like “The Great British Bake Off” and “Springwatch” constitute one example. New housing estates are pastiches of village architecture, all small windows, frilly gables and pitched roofs. The National Trust, a charity dedicated to preserving old houses and attractive landscapes, has more members than all the political parties put together. + +The political deadlock behind the housing crisis will only be broken when Britain comes to terms with its urban character. That might mean better valuing city gardens and parks, which support more biodiversity than heavily agricultural land. It might also mean a more unapologetically urban architecture. Modernist developments like Abode in Cambridgeshire and New Islington in Manchester—bold shapes, big windows, buildings at ease with themselves—show the way. + +Ill fares the land + +Such notions may sound frivolously middle-class. But if they help budge the politics of the crisis, they are anything but. For the pain it causes is no less acute for being lived out quietly, in private. Think of those left homeless, those who cannot afford an annual holiday, those condemned to horrible commutes; of those couples without the money to move in together (or to separate); of the young adults unable to live near the apprenticeships or jobs they want. Perhaps such victims are too diverse to organise, march and make their voices heard. But their misery is real and visceral. And all for so much golf course, sod and bramble. + +This article appeared in the Britain section of the print edition under the headline “The green-belt delusion” + + + + + +International + + + + +Refugees and technology: Migrants with mobiles + + + + + +Migrants with mobiles + +Phones are now indispensable for refugees + +Technology has made migrating to Europe easier. Over time, it will also make migration easier to manage + +Feb 11th 2017 + + + +SOMETIMES Hekmatullah, a 32-year-old Afghan, has to choose between food and connectivity. “I need to stay in touch with my wife back home,” he says, sitting in a grubby tent in the Oinofyta migrant camp, near Athens. Because Wi-Fi rarely works there, he has to buy mobile-phone credit. And that means he and his fellow travellers—his sister, her friend and five children—sometimes go hungry. + +Such stories are common in migrant camps: according to UNHCR, the UN’s agency for refugees, refugees can easily spend a third of their disposable income on staying connected. In a camp near the French city of Dunkirk, where mostly Iraqi refugees live until they manage to get on a truck to Britain, many walk for miles to find free Wi-Fi: according to NGOs working there, the French authorities, reluctant to make the camp seem permanent, have stopped them providing internet connections. Some of the residents buy pricey SIM cards brought over from Britain, where buyers need not show an ID, as they must in France. A lucky few get airtime donations from charities such as “Phone Credit for Refugees and Displaced People”. + +When refugees leave their homes they enter what Carleen Maitland of Penn State University calls an “informational no-man’s-land”. Where should they go, and whom should they trust? Phones become a lifeline. Their importance goes well beyond staying in touch with people back home. They bring news and pictures of friends and family who have reached their destination, thereby motivating more migrants to set out. They are used for researching journeys and contacting people-smugglers. Any rumour of a new, or easier, route spreads like wildfire. “It’s like the underground railroad, only that it’s digital,” says Maurice Stierl of Watch The Med, an NGO that tracks the deaths and hardships of migrants who cross the Mediterranean, referring to the secret routes and safe houses used to free American slaves in the 19th century. + +Outside Moria, a camp on the Greek island of Lesbos, food shacks run by locals have sprung up. All provide phone-charging points; groups of migrants huddle around them. Minutes can be bought with cash from charities such as Mercy Corps, which operates in Lesbos and Athens. Yahye, a 26-year-old from Somalia, uses his to check the news from across Europe each day, trying to gauge where he might be accepted. He had planned to go to Norway, until his research put him off. “Norway does not want a lot of refugees,” he says. Now his goal is Germany. + +In Britain Najeeb, a 30-year-old Syrian engineering student, illustrates how a single piece of information can make all the difference. Unlike most of the more than 1m refugees who arrived in Europe in 2015, he came neither by boat nor by foot, but flew from Greece to London. His smuggler, to whom he paid €10,000 ($11,000) for as many fake passports as he would need, had advised him to use a small airport on one of the Greek islands, where security can be lax. To know when it was best to try to get on a plane, he had to stay in constant contact with his smuggler. On his third attempt, he got through. + +Digital duelling + +Information and communications technology show up right through what researchers call the “refugee life-cycle”. People in northern Iraq use WhatsApp and Viber to talk to friends who have made it to Germany; UNHCR uses iris scans for identification in camps in Jordan and Lebanon; migrants on flimsy rubber boats in the Mediterranean use satellite phones provided by people-smugglers to call the Italian coastguard; and geeks in Europe teach refugees how to code so that they can try to get jobs. Aid groups must work out who needs their help. Governments must monitor their borders and keep track of arrivals. + +As African migrants continue to travel by boat to Italy, and the 60,000 refugees, including many Syrians, who are stuck in camps in Greece try to find ways to get out, Europe is experiencing what Alexander Betts of Oxford University calls a “technological arms race”. It starts before a migrant arrives in Europe. The situation room of the Maritime Rescue Co-ordination Centre (MRCC) in Rome is dominated by two large screens, one showing boats run by NGOs and EU military vessels in the central Mediterranean, and the other conditions at sea. Employees of the Italian navy take calls on an array of red telephones from migrants with satellite handsets whose boats are in distress and inform any rescue boats in the vicinity. It is essential that the location is pinpointed: the central Mediterranean, which 180,000 migrants crossed last year alone, is the deadliest migration route. + +Once a migrant has made it across a border, by whatever means, governments and aid agencies will attempt to monitor his movements by adding him to one of a number of increasingly sophisticated databases. The oldest and biggest is UNHCR’s ProGres, which grew out of the Kosovo crisis in the late 1990s. When the agency realised that it was ill-equipped to track those fleeing from the fighting, it began standardising its procedures and technology. Today ProGres contains data—name and age, as well as facts about relatives, health issues and applications for refugee status—for more than 7m refugees, about 11% of all displaced persons globally. + +ProGres is also used to verify identity. In some camps UNHCR now uses biometric data, such as fingerprints and iris scans, to make sure aid goes to the intended recipients. In Jordan and elsewhere in the Middle East many of the 2m refugees reliant on the UN’s World Food Programme identify themselves at eye scanners when buying groceries or withdrawing money at an ATM. After biometrics were introduced in the Kenyan refugee camps of Kakuma and Dadaab in 2013, their recorded populations fell steeply, saving $1.4m a month that the programme had previously paid out to fraudsters to support imaginary refugees. + +Europe has had a similar database, Eurodac, since 2003. It stores fingerprints from asylum-seekers and notes where they were first fingerprinted. (Under an EU-wide agreement, the country they arrive in first is supposed to be responsible for processing asylum claims.) The strain Eurodac was put under when Syrians started arriving by the hundreds of thousands in 2015 was visible in places like the Moria camp in Lesbos. During a visit last year migrants could be seen being interviewed and fingerprinted in shacks. Rumours swirled that patchy internet connections sometimes left the registration computers unable to check the Eurodac database. Border officials said that some migrants had been able to register several times without being found out, meaning they could sell fake registrations to others whose origins were less likely to lead to asylum. + +The European countries that have received the most refugees have worked hard to upgrade their systems. Since last year all agencies dealing with refugees in Germany have had to link their databases (the new law has a quintessentially German name: “Datenaustauschverbesserungsgesetz”). Asyl Online, a new system built by Germany’s federal office for migration and refugees, enables a refugee to be registered in just a few minutes, including checks to see whether an asylum claim has already been made elsewhere in the EU. The process used to take two days. + +Sweden, which for its size accepted more refugees than any other European country in 2015, has spruced up its registration systems, too. In the city of Malmo a former television studio now houses one of the country’s largest migration centres. Behind a clean, spacious waiting room are a series of interview rooms equipped with fingerprint-scanners and cameras. A migration officer can continue processing asylum-seekers even if they have moved away from Malmo: some rooms in the centre are set up for video-conferencing. + +As more information about migrants is collected and stored, some risks are becoming clear. Sensitive data could fall into the wrong hands, for example those of the government a refugee is fleeing from. UNHCR’s policy is that refugees’ data can only be collected with their consent, but that is a slippery concept in the context of an asylum claim. “Will a refugee, who does not enjoy the protections of citizenship, be granted privacy rights to data stored in a cloud service?” asks Ms Maitland of Penn State University in a forthcoming book about migration and technology. + + + +Another risk, says Ms Maitland, is mission creep. Germany wants to speed up the integration of asylum-seekers by adding information about schooling and qualifications to Asyl Online. But not all extensions to databases will be so obviously in migrants’ interests. Pressure is mounting to give law-enforcement bodies more access to Eurodac. In America the databases of the Department of Homeland Security and other agencies are already linked, creating what some call a system of “automated immigrant policing”. Since his inauguration last month Donald Trump has said he wants his administration to publish weekly lists of crimes committed by immigrants. Details are unclear, but presumably these databases would make this easier. + +UNHCR has tightened its privacy policies in recent years. But some question whether building ever-more-powerful identity-management systems is in any case the best approach. iRespond.org, an NGO, for instance, has developed a more focused service that allows medical charities in poor countries to keep track of patients without having to operate their own databases: rather than maintaining a long list of names and other data, it stores only unique biometric identifiers. + +The most immediate risk posed to migrants by communications technology is perhaps the spread of misinformation. According to Petra Matic, a volunteer at the camp in Dunkirk, when the nearby Calais camp started to be cleared in October a false rumour spread that residents would be deported to Iraq. Karim, one of the refugees in the camp, arrived from Germany, where he had been recognised as an asylum-seeker and was attending school. He had heard that Britain, where his brother lives, would now accept all refugees aged under 17. He is wrong, and is risking his life every night trying to get onto a truck crossing the Channel. + +Dial M for Migrant + +Some organisations are trying to use migrants’ reliance on online information in ways that benefit both migrants and their host countries. The European Asylum Support Office, which runs the EU’s relocation scheme, has created a Facebook page, an app and videos about life in various countries other than Germany and Sweden, in an effort to persuade some of the migrants clustered in those two countries to consider moving on. In Berlin the ReDI School of Digital Integration is teaching migrants how to code. Last year the philanthropic arm of Google donated $1m to the Clooney Foundation for Justice, a charity, to create pop-up schools in Lebanese camps with laptops pre-loaded with teaching materials. Better access to Wi-Fi would make such efforts easier and cheaper. + +In Europe, even in camps where charities have been able to set up Wi-Fi, refugees are mostly left to while away their time on social media, rather than encouraged into digital classrooms. One reason is that host governments are wary that camps will become permanent—and reluctant to accept that many migrants will never return to their own countries. But as the Syrian war drags on, this is becoming untenable. Encouraging migrants to study online would help them integrate and, eventually, become productive in their new homes. + +This article appeared in the International section of the print edition under the headline “Migrants with mobiles” + + + + + +Special report: Mass entertainment + + + + +Winner takes all: Mass entertainment in the digital age is still about blockbusters, not endless choice + +If you liked that, you will love this: How to devise the perfect recommendation algorithm + +A slow-motion revolution: Traditional TV’s surprising staying power + +Up close and personal: Alternative realities still suffer from technical constraints + +Life is but a stream: China’s new craze for live-streaming + +The roar of the crowd: Nothing can beat a live event + +Monetising eyeballs: The battle for consumers’ attention + +Driven to distraction: Smartphones are strongly addictive + + + + + +Winner takes all + +Mass entertainment in the digital age is still about blockbusters, not endless choice + +Technology has given billions of people access to a vast range of entertainment. Gady Epstein explains why they still go mostly for the big hits + +Feb 11th 2017 + + + +ONE OF THE axioms of technological progress is that it democratises entertainment, distributing delights to the masses that were once reserved for the elites. More high-quality entertainment is available to more people on the planet than ever before. At the same time individuals across the globe can find an audience much more easily than was previously possible. The ability to access whatever entertainment people want digitally and on demand has transformed diversions in societies both rich and poor, changing the lives of billions. + +Even more remarkably, mass entertainment today can be tailor-made, not one-size-fits-all. There is something for everyone and at any time that suits. At the beginning of the day in New York the dreary subway ride to work is filled with music. In Tokyo the journey home from the office is a time to devour manga on a mobile phone. In the evening in a rustbelt city outside Beijing, workers who cannot afford a night out may tune into broadcasts live-streamed by their fellow citizens. Billions of people can choose from a large range of mobile games at any time. + +In his book “The Long Tail”, published in 2006, Chris Anderson, a technology writer who used to work for this newspaper, observed that the internet has opened up potential markets for any niche product, no matter how quirky. A decade on, any star on YouTube can attest to that. From a child unboxing toys to the delight of toddlers around the world to a puckish Swedish gamer with millions of teenage fans, running one’s own virtual TV channel online can be worth tens of millions of dollars to a lucky few. + +And yet as a business, entertainment has in some ways become less democratic, not more. Technology is making the rich richer, skewing people’s consumption of entertainment towards the biggest hits and the most powerful platforms. This world is dominated by an oligarchy of giants, including Facebook, Google, Amazon, Netflix and Disney (as well as Alibaba and Tencent within China’s walled ecosystem). Those lacking sufficient scale barely get noticed. Paradoxically, enabling every individual and product on the planet to find a market has made it next to impossible for the market to find them. Consumers generally favour whatever they find on their mobile screens or at the top of their search results. The tail is indeed long, but it is very skinny. + +Being able to produce a blockbuster hit has become even more valuable than it used to be. It turns out that everyone wants hits—the more familiar the better, says Derek Thompson, author of a book entitled “Hit Makers”. Despite the availability of entertainment specially tailored for each individual, people still crave experiences they can share with others. What they want most is what everyone else wants. + +The same technological tools that have atomised entertainment have also made it easier to aggregate audiences. Rankings of the most popular downloads or streams are self-reinforcing. Recommendation algorithms steer people to what others like them have also watched or listened to. The social-media impact of the biggest hit in any genre is dramatically greater than that of any lesser hit, thanks to network effects. It seems clear now that the future of mass entertainment is not “selling less of more”, as Mr Anderson put it, but selling a lot more of less. + +The film business illustrates the point. Of the thousands of films released worldwide in 2016 (including well over 700 in America alone), the top five performers at the box office were all made by Disney. The 13 films the company released last year, plus remaining business from “Star Wars: The Force Awakens”, accounted for one-fifth of total film revenue worldwide. Disney has focused on big-event films with iconic characters and storylines that have global appeal (and that fuel its unparalleled businesses in consumer-product licensing and theme parks). Only a few years ago the big studios would typically aim for 20-25 films apiece to provide a margin for error. Some still do, but Disney’s more focused approach, investing almost exclusively in blockbusters, is paying off with a much higher rate of return. + +When Bob Iger took over as CEO in 2005, he felt sure that, in an era of proliferating content, big brands would become more valuable—the bigger the better. The company went on to spend $15.5bn to amass an arsenal of content brands that became the envy of the media world: Pixar Animation Studios, Marvel Entertainment and, in 2012, Lucasfilm, maker of “Star Wars”. “We saw in each one of those a brand that would matter in a new world order,” says Mr Iger. + +The blockbuster effect has been even more striking on the digital platforms that were supposed to demonstrate the benefits of the long tail. On iTunes or Amazon, the marginal cost of “stocking” another item is essentially zero, so supply has grown. But the rewards of this model have become increasingly skewed towards the hits. Anita Elberse, of the Harvard Business School, working with data from Nielsen, notes that in 2007, 91% of the 3.9m different music tracks sold in America notched up fewer than 100 sales, and 24% only one each. Just 36 best-selling tracks accounted for 7% of all sales. By last year the tail had become yet longer but even thinner: of 8.7m different tracks that sold at least one copy, 96% sold fewer than 100 copies and 40%—3.5m songs—were purchased just once. And that does not include the many songs on offer that have never sold a single copy. Spotify said in 2013 that of its 20m-strong song catalogue at the time, 80% had been played—in other words, the remaining 4m songs had generated no interest at all. + + + +Music-streaming services have not been around for long enough to allow a definitive assessment of their market impact, but as they attract more casual music fans (as opposed to deeply knowledgeable nerds), the hits can be expected to benefit. In 2015 the top 1,000 songs were streamed 57bn times in America, accounting for 18.8% of the total volume of streams, according to BuzzAngle Music; last year the top 1,000 songs accounted for 92bn streams, or 23% of the total. + +The economics of blockbuster films, which are shown in cinemas, might seem different from those of blockbuster music and TV streaming, but in the digital age they and other entertainment products have much in common. There is almost no limit to the supply of entertainment choices in every category, but people’s awareness of these products and their ability to find them is constrained by the time and attention they can spare. Overwhelmed by the abundance of choice, they will generally buy what they are most aware of. The algorithms used to make recommendations, offered by many sites, reinforce this trend: they push consumers to what is popular rather than send them off to explore obscure parts of the tail. This helps explain why Netflix, which specialises in supplying film and video on demand, has repeatedly bet big on event television, from its hit “The House of Cards” to the lavish production of “The Crown”, about Britain’s royal family. It has also spent hundreds of millions of dollars to secure the rights to Disney films. It still views itself as a long-tail company, but although it spends billions of dollars to serve lots of different market niches, especially geographical ones, subscribers generally make a beeline for the top 50 or so. + +There is almost no limit on the supply of entertainment choices, but people’s awareness of them is constrained by the time and attention they can spare + +At the same time a lot of entertainment has been commoditised as the barriers to production and distribution have come down. An item further down the long tail may rarely be chosen, but is not “scarce” in the sense that it can command a premium; on the contrary, a relatively obscure item is worth very little. One reason is that the internet leads consumers to expect most things to be free, especially content without a brand name. Second, consumers believe (rightly) that there is not much difference between most of the obscure items on offer. And third, they reckon (also usually correctly) that those items have cost hardly anything to produce, so they are almost worthless. Conversely, consumers will pay a premium for famous brand names. + +This is partly to do with the way search engines and social platforms work. Facebook, YouTube and Snapchat readily deliver huge amounts of entertainment free. At the same time they offer individual performers, artists and writers a greatly increased chance of finding some sort of audience, be it next door or halfway across the world. On average, 60% of the viewers of an individual creator’s YouTube channel live outside the country where the artist is based. This may be a fairer way of achieving stardom than in the pre-internet era, when traditional media companies picked winners and pushed them to the public via narrow distribution channels. Likewise, the 710m people online in China have discovered another independent path to fame, which is likely to spread to other parts of the world. Live-streaming has helped millions of Chinese internet users, many of them in rural villages or dreary industrial towns, personalise mass entertainment for each other. In such ways, with lower barriers to finding an audience (whether of one or many), millions of people around the world are using the internet as a lottery ticket to stardom. It is still a very long shot, but in theory the opportunity is now available to everyone. + +That translates into more entertainment of all kinds being produced and consumed than ever before. On the whole, though, the rewards of the digital economy accrue mostly to the big platforms and media companies. Eric Schmidt, the executive chairman of Alphabet, Google’s parent, has said that his company’s thinking has been greatly influenced by the long tail; but he has also acknowledged that most of the money is to be made in the head. + +The enduring dominance of the blockbuster has implications for the way consumers will be entertained for decades to come. Global competition for their attention, and their wallets, will bring about more mega-mergers like the one proposed between AT&T, a telecoms and pay-TV firm, and Time Warner, one of Hollywood’s greatest content creators. The $109bn offer indicated that AT&T felt the need to own great content to differentiate itself in the market. Likewise, it hinted at an uncertain future for content companies that cannot make sure they have an audience. For now, the competition among studios and video programmers is delivering more high-quality television for everyone than ever before, but it is also stoking fears of a collapse to come. This report will examine the proposition that the world may be getting close to peak TV. + +The best time to gain (or lose) audience—and to challenge the dominance of an established platform—is when technology makes a leap. That is why media, gaming and tech companies are investing billions in virtual reality and augmented reality. Such technologies can change the way that people experience storytelling and persuade them to suspend disbelief. James Cameron showed with his superb 3D imagery in “Avatar” how a leap in visual technology can create an outsized blockbuster. Now Disney is racing with other studios and tech giants to come up with the next leap, alternative realities. This report will argue that the most promising of these technologies are still far from ready, though many people will take to lesser, cheaper forms of them, such as those they can experience on their smartphones. + +I was there + +Between the avalanche of digital entertainment and the still-distant promise of alternative realities, there is still a huge market for experiencing something real in person. The few hits that have captured the public imagination command a hefty premium. From “Hamilton” on Broadway to the mixed-martial arts combatants in the Ultimate Fighting Championship, people will pay thousands of dollars for the privilege of being there, even though they can experience the same thing or at least hear the same songs in digital form for a small fraction of the price. + +For the majority who must consume entertainment remotely, most of the battles are still about screens, be they the size of a smartphone or half a wall, and about minutes of attention within particular apps. But although consumers seem to have a dizzying array of choices, most of them do not take full advantage of them. What they pick is increasingly determined by the algorithms driving this competition (see article), and those algorithms mostly send them straight to what everyone else is consuming. Blockbusters are the safe bet. + + + +This article appeared in the Special report section of the print edition under the headline “Winner takes all” + + + + + +If you liked that, you will love this + +How to devise the perfect recommendation algorithm + +Recommendations must be neither too familiar nor too novel + +Feb 11th 2017 + + + +AT LAST YEAR’S consumer-electronics show in Las Vegas, Reed Hastings, the CEO of Netflix, set out an ambitious goal for serving his customers: “One day we hope to get so good at suggestions that we’re able to show you exactly the right film or TV show for your mood when you turn on Netflix.” + +But what is exactly the right show? Mr Hastings’s company has been a pioneer in the science of recommendation algorithms, dating back to its days as a humble DVD-by-mail company. Netflix’s thinly sliced classifications of films and TV shows, and its equally finely graded assessments of customers’ viewing preferences, established the standard for product suggestions. + +Still, algorithms take some of the adventure and serendipity out of hunting for new entertainment, and rarely nudge a customer towards anything way off his radar. This is a challenge for independent producers of music, literature or film, who already find it extremely difficult to get noticed amidst so much choice. Recommendation software can make the problem worse. + +Suggestion algorithms can exploit what customers are known to like by pushing similar fare, or they can encourage them to explore things they might be less familiar with. Typical algorithms tend to exploit known preferences more than encourage exploration. When a customer buys a book, for instance, Amazon will recommend books on similar subjects that previous shoppers have also bought. Netflix will suggest a show based on the choices of other people with similar viewing histories. + +Some recommendations are fairly crude, as when an online store repeatedly offers more of something the consumer has already bought and is unlikely to want more of, like an umbrella. Others are more adventurous, encouraging the customer to try something new. But if they go too far, they risk putting him off. “It’s more predictable to use similar recommendations over and over to get the engagement,” says Robert Kyncl, chief business officer of YouTube. “But the pay-off is much greater when you introduce something that is a bit of an odd choice and it works.” + +Spotify, a music-streaming service, offers a different model with its Discover Weekly playlist, which it produces for more than 100m customers. It analyses billions of users’ playlists to find songs that others with similar interests have liked. These tracks are combined into a playlist of 30 songs (perhaps including some familiar as well as new ones) delivered each Monday. + +The company says the service is used by tens of millions of listeners and gives a significant boost to thousands of performers each week. By limiting the list to a couple of hours-worth of listening, and by setting an expiration date each week, Spotify creates a sense of scarcity to keep listeners engaged. + +Music lends itself well to this treatment. Streaming services have catalogues of around 30m songs each, compared with mere thousands of film and TV titles. And songs, unlike films, are short enough for a poor recommendation not to matter much. Spotify’s experience shows that algorithms can occasionally nudge people away from hits and expand their horizons. + +Stay tuned. If you liked this article, read the next one. + +This article appeared in the Special report section of the print edition under the headline “If you liked that, you will love this” + + + + + +A slow-motion revolution + +Traditional TV’s surprising staying power + +Peak TV is on its way, but slowly + +Feb 11th 2017 + + + +WHEN CHARLIE BROOKER, the creator of “Black Mirror”, a television series about the social impact of new technology, goes away for the weekend with his family, his young son occasionally encounters something perhaps too barbaric even for his father’s dystopian show: an old-fashioned TV set with channels and a fixed schedule of programmes. Instead of being able to watch whatever he wants at any time, he has to wait until a certain hour on a certain day on a certain channel. “It just strikes him as terrifyingly antiquated,” says Mr Brooker. + +That kind of television will eventually be consigned to oblivion. People will be able to pick any show at any time from just a few favourite platforms, like Netflix (where “Black Mirror” resides) or Amazon, as well as Facebook and Snapchat for videos shared by friends and celebrities. Everything from Fox, say, will be on one channel instead of many. And Mr Brooker junior will easily be able to search an army of brands: a Lego channel, a Harry Potter channel, a “Star Wars” channel. + +That moment may be drawing nearer, but there are still plenty of obstacles in the way. The internet has already changed what viewers watch, what kind of video programming is produced for them and how they watch it, and it is beginning to disrupt the television schedules of hundreds of channels, too. But all this is happening in slow motion, because over the past few decades television has developed one of the most lucrative business models in entertainment history, and both distributors and networks have a deeply vested interest in retaining it. + +Existential threats + +Pay and broadcast television, still the foundation of video entertainment at home in much of the world, is being eroded from two sides. At one end, people are watching videos free on large social platforms like Facebook, Instagram (which is owned by Facebook), YouTube and Snapchat. Each of these platforms now claims billions of views a day. Free videos are supported by advertising, which will begin to eat into the TV advertising market, currently worth $185bn. Many of these videos may be disposable (literally so in the case of Snapchat, where stories usually disappear after 24 hours), but social platforms like Facebook have excellent information on who is watching and for how long, enabling them to sell highly targeted advertising. Facebook, YouTube and Snapchat also have the scale needed to keep users on their platforms for long periods at a time. On average, Facebook users spend nearly an hour a day using Facebook itself, Instagram and Messenger, in addition to the time they spend on WhatsApp. + +At the other end, people are consuming premium-quality video on subscription services such as Netflix, Amazon and Hulu in America and on many other streaming services around the world. Netflix’s 94m subscribers watch the service for nearly two hours a day, and rising. Netflix and Amazon are amassing big user bases by charging a low subscription—$8 to $12 a month—and investing heavily in ad-free content. That spending spree is driving up the cost of producing quality television for everyone else. Thus internet economics is gradually strangling a well-established business model: cable TV. + +The shift from broadcast to cable television in the late 20th century was something of a long-tail event. Media companies delivered a large package of channels that contained something for everyone, initially at a reasonable price. The total audience for television kept growing as customers were offered more channels to choose from, and the distributors and makers of video content reaped rewards from subscriptions and advertising. The number of channels proliferated as media companies discovered that serving niche audiences could generate big revenues: Fox News, created in 1996, contributes more profit than any other asset in Rupert Murdoch’s empire, much as ESPN, an all-sports network, remains the most lucrative part of Disney (and the most profitable channel of them all). + +Yet as media companies kept adding channels, pay TV stopped being a good deal for viewers. Back in 1995 Americans had an average of only 41 channels to choose from, and watched ten of them a week. By 2008 cable subscribers had an average of 129 channels to choose from and watched 17.3 of them a week, according to Nielsen, a market-research company. Five years later they had access to 189 channels but were still watching only 17.5 of them each week, almost the same as before. There is a limit to how much of the tail consumers can eat. + +At the same time they are paying much more for having so many options, and schedules are inflexible. In America the typical pay-TV bill has nearly doubled in a decade, to more than $100 a month, according to Leichtman Research Group, whereas disposable incomes have mostly remained flat. That created an opportunity for internet video providers. Netflix could give viewers a lot of programmes in one place, to watch whenever they wanted, for less than $10 a month. And social networks were offering video on demand free. + +So regular TV watching is in decline. In America, the most developed market, viewing of broadcast and cable TV by all age groups fell by 11% in the six years to the autumn of 2016, to slightly more than four hours per day, according to Nielsen data compiled by Redef, a media newsletter. Over the same period viewing by those aged 12-24 dropped by a staggering 40%. Market penetration of pay TV in America has slipped from nearly 90% in 2010 to just over 80% as people abandon cable altogether (cord-cutters), switch to less expensive packages (cord-shavers) or never sign up for pay-TV bundles in the first place (cord-nevers). + +Cord-cutting is only beginning in America, and as yet plays no part in less developed markets, where both penetration and prices are much lower. But if it goes on, it will be devastating to the content companies, which have been enjoying gross profit margins on cable of 30-60%. + +Somewhat ironically, these trends help explain why TV is now the best it has ever been. In the new age of premium television, networks and streaming services are competing for subscribers. Television used to rely on broad formulaic programming in its quest for advertising dollars, but that began to change in the 1990s when HBO, a premium cable channel without advertising, began offering high-quality programmes in order to win subscribers. Cable channels like FX (owned by Fox) followed, building passionate fan bases for great shows to justify higher cable fees and to keep subscribers on board. + +You’ve never had it so good + +Streaming services have now sharpened the competition for viewers’ attention. Netflix, Amazon and Hulu between them will spend well over $10bn on television content this year. HBO has responded by raising its budget to over $2bn a year. This contest has given viewers “Game of Thrones” and “Westworld” on HBO and “The Crown” on Netflix—shows that cost $10m or more an episode to make, three or four times as much as the television dramas of old. It has also caused Netflix to pay tens of millions of dollars for a third season of Mr Brooker’s show, “Black Mirror”, prising it away from Britain’s Channel 4. + +Not everyone will be a winner. Last year more than 450 scripted original shows were available on American television, more than twice as many as six years earlier. This year there may be 500, signalling the approach of what John Landgraf of FX calls “Peak TV”, the point at which there is more television than the media economy can sustain. In its study of the future of video, Redef noted that programming executives are cancelling far more scripted shows than they used to. + +Traditional media companies are trying to defend the pay-TV system that made them rich. Hulu—co-owned by Disney, Fox, Comcast and Time Warner—and AT&T, a pay-TV and telecommunications giant, are among those offering a cheaper version of pay-TV—a “skinny bundle”—streamed over the internet. AT&T made an even bolder, if riskier, move last autumn by bidding for Time Warner. If approved by regulators, the $109bn acquisition would give AT&T vertical integration to protect it if and when the current pay-TV system crumbles. + +But that day of reckoning is still some way off. The last remaining stronghold of the pay-TV oligopoly is live programming, especially sports, which traditional networks do very well. Sports events are among the few remaining true “mass” experiences; the entire audience watches the same thing at the same time, which big advertisers find irresistible. At a “sports summit” in December hosted by MoffettNathanson, a research firm, Nielsen produced a chart showing just how much sport has come to dominate traditional TV. Sports programmes accounted for 93 of the 100 most viewed broadcasts in 2015, compared with only 14 ten years earlier. + + + +Advertising rates in general have been flat or declining in most of the industry, but spending on ads for sports has risen rapidly, by 50% in the decade to 2015, according to Nielsen and MoffettNathanson. This remains true even as the number of viewers has begun to decline because programmes that can attract large audiences are so scarce. Live sports are also an important selling point for pay-TV customers, allowing sports channels to charge cable and satellite distributors more for carrying their networks. ESPN, owned by Disney, has about 90m subscribers and enjoys fee revenues of nearly $8bn a year, making it by far the highest-grossing cable channel anywhere. + +The cost of sports rights too has been rising dramatically around the world as sports leagues exploit the traditional TV system’s desperate need for them. In America the annual fees that ESPN and three of the four big broadcast networks are paying for the rights to broadcast the National Football League to early next decade have nearly doubled in ten years, to an average of about $5.5bn a year. ESPN and TNT, owned by Time Warner, are paying a combined $24bn for the rights to broadcast National Basketball Association (NBA) games over nine years, almost three times as much as they were paying under their previous deal. + +Investors are asking how long this can go on. ESPN has lost millions of subscribers in recent years, but says that the network’s value will continue to grow (Disney does not report ESPN’s profits separately). The escalating fees charged for sports channels will put more pay-TV customers off. + +Viewers will also turn to other options, especially on mobile phones and tablets, for which the streaming rights are sold separately. Telecommunications companies around the world are likely to offer increasingly large fees to stream sports over their data networks. Streaming of live sports will become more common, though initially on a limited scale; the technology for concurrent streaming of a big sporting event to tens of millions of fans is still some way off. + +More importantly, the existing business model remains too lucrative to abandon so soon. But eventually fans may find themselves watching sports on screens in a completely different way: in alternative realities. + +This article appeared in the Special report section of the print edition under the headline “A slow-motion revolution” + + + + + +Up close and personal + +Alternative realities still suffer from technical constraints + +No headgear, no VR + +Feb 11th 2017 + + + +A PARIS CAFE basement, 1896. The Lumière brothers screen their 50-second film, known as “Train Pulling into a Station”, to an audience said to have been taken aback at the sight of a train moving towards them as if it might jump off the screen. That was the beginning of movie magic. But what if the train could jump off the screen? + +San Francisco, the Presidio, 2016. Vicki Dobbs Beck, who runs Lucasfilm’s ILMxLAB, and John Gaeta, who was responsible for the stunning slow-motion visual effects of “The Matrix”, are showing off the future of “mixed reality” in the cinema. The most exciting possibilities are still on the whiteboards of the mind. Imagine a horror film in which, at a crucial moment, a creature leaps from the screen into the audience. This is not yet possible, and even once it is, spectators will still have to wear special glasses to experience the effect. + +The problem with the technology of alternative realities—virtual and augmented—is that their science-fiction versions have been too impressive. Popular culture has fostered fantasies of being able to move through, see, touch and interact with a manufactured world that seems real: a theme park populated with artificially intelligent physical beings in “Westworld”; the holodeck in “Star Trek”; a seductive consciousness with the sultry voice of Scarlett Johansson in “Her”. + +In the physical world, alternative realities will one day allow humans to live out their hopes, dreams and fears from their living room. That is why billions of dollars are being invested in such technologies. But what is currently available is much clunkier, if plenty of fun. Virtual reality (VR) is still experienced in relative physical isolation. People can explore the depths of the ocean, as with Sony’s PlayStation VR. They can play virtual table tennis with someone not physically present, as with Oculus Rift’s “Toybox”. They can immerse themselves in a first-person shooter game on almost any VR platform. They can watch television dramas play out in their 360-degree world, with the cast moving behind and around them, as filmed by Jaunt Studios in California. They may even feel singed by the spray of molten lava as they duel Darth Vader with a light sabre. + +But to do these things they have to put on a headset and disconnect from each other in the physical world. That limitation will inevitably slow the pace of adoption. Samsung, makers of a headset called Gear VR, designed for mass-market use, tried to deal with this head-on in a recent advertising campaign. It depicted a family taking turns trying on a Gear headset, with the grandfather telling the grandmother: “You’ve got to try this!” + +Many in the alternative-realities business are more excited about augmented reality. With this technology, people put on glasses to look at images projected into the real world which they can still see around them. Microsoft has a version of this in HoloLens. Magic Leap, a secretive company in Florida that has raised more than $1bn from investors including Google, has dropped tantalising hints about the realities it can create. It is co-operating with Disney—via ILMxLAB—to create “Star Wars” experiences for fans, but that work is still strictly under wraps. + +Keep it simple + +To be widely accepted, technologies will have to fit into people’s lives without much friction. Consumers latch onto things because they are affordable and easy to adopt, and because everyone else has got into them too. They do not have to be particularly high-tech. Google Glass was a high-end augmented-reality product but proved a bit too nerdy for the masses. Snap’s much cheaper Spectacles, which like Glass can record video from the wearer’s vantage point, will probably prove more popular with Snapchat’s young users. Pokémon Go, the mobile game that became an immediate hit last year, simply puts Pokémon characters in the field of vision of players’ smartphones. Any VR kit that sells well in the next year or two is likely to be a low-end version that pairs with a smartphone. + +The problem with the technology of alternate realities—virtual and augmented—is that their science-fiction versions have been too impressive + +The more advanced alternative realities of the gaming world will come next. Your correspondent recently donned a “Synesthesia Suit”, developed in Japan, that stimulates the wearer with physical sensations, like little buzzes and vibrations as he plays a VR game. “Haptic technology” is another coming thing, though still more exciting in concept than in practice. The most obvious customers and evangelists for such advances in VR are serious gamers, partly because they are geeks and want to be in on the latest cool thing, and partly because they have an appetite for the pricey hardware—PCs and gaming consoles—needed for superior VR experiences. The most popular gaming format, first-person shooter games, lends itself naturally to VR; it is fun to be able to duck incoming fire, swivel and blast away at a baddie. + +Most important, though, gamers in a way already inhabit alternative realities, playing in vividly imagined worlds with almost cinematic graphics. VR is a natural step towards making those games feel even more real. Getting there will not be altogether straightforward even for serious gamers: first-rate VR can give users motion sickness. And the cost is still offputting; the Sony PlayStation VR will set you back $399 for the headset and another few hundred dollars for a console. Your reward may be a terrific fright. “Resident Evil 7: Biohazard”, released for Sony PlayStation VR in January, is full of monsters coming at you—far scarier than a train jumping off the screen. + + + +This article appeared in the Special report section of the print edition under the headline “Up close and personal” + + + + + +Life is but a stream + +China’s new craze for live-streaming + +A new way of bringing colour to dreary lives + +Feb 11th 2017 + + + +LAST YEAR ZHAO XINLONG, aged 25, and his wife and baby boy moved from his parents’ farm into a mid-rise apartment in town. It has been a tough adjustment. Luan County is a rustbelt community on the polluted outskirts of the steel city of Tangshan in north-east China. Mr Zhao’s monthly income from driving a taxi has plummeted by more than half in the past couple of years, and he has not found it easy to make friends in his new abode. + +But when he gets online in the evening, he becomes a different person: Zhao Long’er, an entertainer. Using Kuaishou, a Chinese video-sharing and live-streaming app, he broadcasts to a live audience of hundreds, sometimes thousands, of fellow Chinese every night. Taken together, they add up to more than 100,000. Many of them are diaosi, people who mockingly identify themselves as losers in dead-end jobs. Online he can relate to them, telling them stories, dirty jokes, whatever is on his mind. + +Occasionally advertisers pay him small sums to put commercials out over his stream, including things like weight-loss products and “gold” jewellery from Vietnam. Most of his followers are also from north-east China. They chat with him online and sometimes give him digital stickers representing things like a beer that fans buy online and can be converted into cash. The individual amounts are usually small, but they add up. Live-streaming his life earns Mr Zhao about $850 a month, twice as much as his day job. + +Twinkle, twinkle, little stars + +The internet has amplified people’s interest in the world’s biggest stars, helping their fans feel a little closer to them, thanks to social media. But it has also made it possible for anybody to become a little star in their own corner of the universe, connecting intimately with subsets of fans. In much of the rest of the world the most popular of these are teen idols on YouTube, Instagram and Snapchat. Most people over 25 would struggle to name a YouTube star other than possibly PewDiePie, a Swedish gamer with a global following of more than 50m. + +China’s craze for personal live-streaming runs far deeper, into third-tier cities and remote rural areas where the internet is the one and only fun and cheap place to hang out. These personal broadcasts are not simply videos that fans watch, but more interactive experiences. The fans make requests, chat with their idols and give them virtual gifts. Many of those watching are small-time live-streamers themselves. They are turning each other into mass entertainment. + +It is a big and growing business. China’s live-streaming industry more than doubled in size last year, with revenues of around $3bn, according to Credit Suisse, a bank. More than 100 companies now offer the service, providing the platform for performers in exchange for a hefty cut of their earnings (one, YY, is publicly listed on NASDAQ, with $269m in gross revenues from live-streaming in the third quarter of last year, a year-on-year rise of more than 50%). That compares with box-office receipts for the Chinese film business, the world’s second-largest, of $7bn last year. Of the 710m people with internet connections in China, nearly half have used live-streaming apps. + + + +Many in the audience are diaosi looking for free entertainment and sometimes a substitute for romance. Women outnumber men as live-streamers, but most of the audiences are male. The government has imposed guidelines aimed mostly at the seamier side of the business, like the erotic eating of bananas (now banned). The most successful live-streamers tend to be attractive young singers of either sex, who can sometimes muster millions of fans. The most popular of them earn more than $1m a year, almost all of it from virtual gifts, but most of them are lucky to see a few hundred dollars a month, broadcasting anything from eating meals to visual pranks to warbling tunes requested by fans. Mr Zhao laments that to boost his earnings, he has to tell more dirty jokes. + +Live-streaming emerged in China after the financial crisis of 2007-08, as internet companies with questionable business models looked for a way to survive. Six Rooms, or 6.cn, may have been the first to offer live-streaming as a service for a mass audience. It was one of numerous YouTube-like video-sharing businesses (YouTube itself is blocked in China) burning money in 2008 and failed to secure a new round of funding. In desperation its CEO and co-founder, Liu Yan, turned to live-streaming. + +In 2007 Mercedes-Benz, a carmaker, had paid 300,000 yuan ($39,000) to his site to live-stream an event, and his company had developed an inexpensive way to provide such a service on a wider scale to allow people to chat with each other and exchange virtual gifts. That helped make personal broadcasting a social game which could be monetised in a way not replicated on major social platforms of the West. In China, as well as in South Korea and Japan, where live-streaming has also caught on, virtual items have long had an underlying monetary value. + +Now that the business model has been proven, all the Chinese internet giants have entered the live-streaming business. Pioneers like YY and Six Rooms must compete with bigger social platforms like Tencent. Six Rooms was acquired by a Chinese entertainment conglomerate for close to $400m in 2015, but Mr Liu, 44, remains the CEO. He has been using machine learning to work out what kinds of live-streamers inspire the most devotion from fans and get the most virtual gifts, down to preferences for facial features, tone of voice and regional provenance. He plans to unveil an even more ambitious effort soon: hired performers whose traits are determined, and perhaps enhanced, by machine learning. At this rate, life on the long tail of entertainment may start getting more difficult for rustbelt dreamers. + +This article appeared in the Special report section of the print edition under the headline “Life is but a stream” + + + + + +The roar of the crowd + +Nothing can beat a live event + +Being there in person remains the best entertainment of all + +Feb 11th 2017 + + + +LATE ON A Saturday night at New York’s Madison Square Garden in November, a crowd of more than 20,000 people, including many who have flown in from far-flung places, is buzzing with anticipation. This is the first mixed-martial-arts (MMA) event held in New York state, where the combat sport was outlawed until recently. Fans have paid a total of $17.7m, a record gate for any event at this historic arena. + +This evening they have already sat through many lesser bouts. Now Conor McGregor from Ireland, one of the most popular fighters in the Ultimate Fighting Championship, the leading MMA promotion company, walks towards the ring to the cheers of thousands bedecked in Irish green. He is seeking to take the mixed-martial-arts organisation’s lightweight championship belt, held by Eddie Alvarez, to become the holder of title belts in two different weight classes at the same time. Mr Alvarez enters to the sound of boos. In the second round Mr McGregor wallops Mr Alvarez to win by a technical knockout. + +Now that is mass entertainment. The night of fights had a great many more viewers than any contest in ancient Rome’s Colosseum. More than 1.3m people had paid to watch the McGregor fight on television, at $49.99 or more a pop. But the best time of all was had in the arena itself, where little had changed since the days of the gladiators. Humans love to watch a fight and get the biggest rush out of seeing it in person. + +Make it special + +There is a future in it, as long as you are putting on a good show. The business managers of the contest, rescued from the scrapheap of fringe sports in 2001 for a mere $2m, skilfully used social media and imposed a few safety rules (like prohibiting the use of shoes) to build an avid fan base and ensure a modicum of respectability for the sport. Last year they sold the company to WME-IMG, a talent agency, for $4bn. + +The availability of high-definition video on people’s screens or music in their earphones anywhere at any time does not seem to have sapped their enthusiasm for the din and discomfort of a standing-room-only crowd. If anything, they may be placing even more of a premium on live, shared experiences. + +Among other things, that may help explain the rising popularity of music festivals around the world. Live Nation, a concert promoter that works with many of the world’s leading performers, reported revenues of $7.2bn in 2015, its fifth straight year of growth, and expects 2016 to show another increase. Michael Rapino, the company’s CEO, told investors that technology actually helps drive interest in music around the world, creating more demand for concerts. That has helped many musicians willing to tour earn a lot more than they could from digital sales and streaming, and not just the big names. According to Nielsen, Americans spend more to listen to music live than in any other form. Revenue from live concert tickets in America more than doubled in the decade to 2015, to $6.9bn. + +Theme parks, an industry that in the early 2000s was thought to be languishing, are also doing well, with global revenues exceeding $40bn in 2015. Attendance and spending have grown every year since the financial crisis, according to the International Association of Amusement Parks and Attractions, an industry trade group. The past few years have seen a large boost from less developed markets, especially China. + +This is another area where it pays to be in the blockbuster business. The theme parks of entertainment conglomerates with attractive, globally recognised characters, from Disney’s Pixar and Marvel heroes to NBCUniversal’s licensing of Harry Potter, have thrived, whereas those without such attractions have struggled. Nick Varney, CEO of Merlin Entertainments, which operates multiple Legoland and other theme parks, says there is a “growing disparity between haves and have-nots”. Legoland is one of the haves. Merlin is expanding rapidly in Asia, including plans for a Legoland in Shanghai, to go up on the opposite side of the city from the much larger $5.5bn Shanghai Disney Resort. + +Disney clearly wanted to make a showcase out of the Mouse’s first park on the Chinese mainland, and believes that its fans’ experiences there are building its name in China. On a mild Monday in December some of the younger visitors took multiple turns on a sleek rollercoaster ride based on the film “Tron”, and families with small children watched highly choreographed live shows with mostly Chinese casts and some eye-catching stunts. + +One of the world’s more expensive live entertainments just now is “Hamilton: An American Musical”. A ticket can cost well over $1,000 on the secondary market on Broadway or in Chicago, and will command much the same price when it arrives in San Francisco soon and in London later this year. Why pay so much? On streaming services the musical’s songs are available for a fraction of a penny. But the 12-year-olds everywhere who have memorised the lyrics clearly think the live show is worth it, even if their parents blanch at the cost. + +This article appeared in the Special report section of the print edition under the headline “The roar of the crowd” + + + + + +Monetising eyeballs + +The battle for consumers’ attention + +Forget the long tail + +Feb 11th 2017 + + + +TWO ENTERTAINMENT TITANS dominated the charts for the last few months of 2016: the mighty Walt Disney and Ryan, a five-year-old boy. Disney’s blockbuster films topped America’s box office in nine of the last ten weeks of the year. Ryan’s YouTube channel, featuring his parents’ daily videos of him at his home in California, was the site’s most watched in America for the last 20 weeks of the year. Most of his audience is made up of children in his own age group, gleefully looking at him unboxing and playing with toys, some of them from the Disney empire. + +The internet has made the lottery of stardom available to anyone with a smartphone. This allows for a few random individual winners like Ryan, whose parents have earned millions of dollars from advertising on the channel in a couple of years; or for an everyman in China’s rustbelt to become a live-streaming celebrity. But the real business of entertainment is about owning one of the handful of digital platforms that can command consumers’ attention, including the one that made Ryan a star. + +That is why Google’s purchase of YouTube in 2006, for $1.65bn, and Facebook’s acquisition of Instagram five years ago, for $1bn, now look inspired. The idea behind Facebook’s $22bn bid for WhatsApp three years ago was also to increase the company’s hold on users’ increasingly fragmented attention: most people look at their phones dozens of times a day, and messaging is often the first thing they do. As video becomes more integrated into messaging apps, that purchase will look even smarter. + +The industry is now trying to guess whether the global leader in blockbuster content, Disney, will also buy a distributor. Under Bob Iger as CEO, the company’s strategy has been to buy up the best intellectual property in entertainment: Lucasfilm and Star Wars; Marvel Entertainment; and Pixar Animation Studios. Under Disney’s control, each of these brands has become even more valuable and even better-known globally. Disney gets a huge amount of attention. But since people are watching less traditional TV and consuming more video in other forms, even makers of great content are at risk of losing audience, so it may make sense to own a platform on which it can be served up. + +Hollywood has recently been pushing the idea that Disney might buy Netflix, the global leader in streaming premium entertainment (including Disney films). In an interview with The Economist, Mr Iger was careful not to comment on Netflix, since even a denial that the idea was under consideration might have moved markets. He envisages a future where each of his company’s famous brands can be its own entertainment service, so there would be an internet-only “Star Wars” channel, a Marvel channel, an animation channel and so on. ESPN, he says, can become the “Netflix of sports”. + +A bit much + +The entertainment business is a never-ending and ever-intensifying war for consumers’ limited time and attention. Around the clock, each minute is contested by companies like Facebook, Instagram, Google, YouTube, Snap, Amazon, Disney, Comcast, AT&T, Sky, Fox and Netflix. Consumers can take in only so much of what is on offer. As this report has shown, faced with an overwhelming array of choices and guided by menus, digital rankings and suggestions calculated by algorithms, they increasingly pick from just a few of the most popular items. Technology and media companies are doing their utmost to induce users to spend even more time on each of their platforms every day. From tweaking algorithms to stepping up notifications to endlessly scrolling feeds, technology has turned human distraction into its metric of profit. + +As this report has shown, the good part of this is that almost every imaginable bit of entertainment is now at the fingertips of billions—around the world, across social and ethnic groups and appealing to all tastes, including some that people did not previously realise they had, like watching others play games or unbox toys. This seems intuitively democratic and welcome. But despite all these available choices, technology increasingly shapes what humans select, steering them towards what is most popular and most distracting. In this way the digital age has concentrated the power to entertain on a fortunate few, rather than distributing it along the long tail. + +A battle for dominance is taking shape in two different arenas, of free (ad-supported) and premium content. The first is being waged by the social platforms that trade in users’ eyeballs rather than subscriptions. The ability to amass great scale, thanks to network effects, will make them difficult to dislodge as providers of free entertainment—especially so in the case of Facebook. + +In the second arena, providers of premium content like Netflix and Amazon are competing against the traditional media powerhouses to see who can persuade the most people to pay for their products. This is an expensive battle in which the ultimate winners are still far from clear. Netflix will spend at least $7bn this year on content, including on new programming in countries around the world, in a bid to become a global TV network. Its rivals are also spending billions in an arms race that, for now, is producing the best (and the most) television in history. + +There is a limit to how much people can consume, and how many services they will subscribe to + +Yet there is a limit to how much people can consume, and how many services they will subscribe to, so some contestants are bound to fall by the wayside. In the attention economy it pays to have the biggest platforms and the flashiest brands. Technological progress might yet tilt the playing field to a newcomer, especially if some visionary of virtual or augmented reality comes up with anything close to the fantasies of science fiction. In parallel to such efforts, there will always be a market for unique live experiences that yank people away from their screens, be it a giant rock concert or an intimate sleight-of-hand performance by a master magician. + +But whatever the arena, the biggest crowds will increasingly gravitate towards just a small number of the most popular hits. Until recently that was seen as a natural consequence of the physical limits on production and distribution. It now turns out that, even in a potentially unlimited digital marketplace, social networks, rankings, recommendation algorithms and the like focus people attentions on just a few items in the same way. The story of mass entertainment in the internet age is a paradox. Technology has given people too many choices, and then instantly relieved them of the need to make them. + + + +This article appeared in the Special report section of the print edition under the headline “The attention economy” + + + + + +Driven to distraction + +Smartphones are strongly addictive + +The price of constant entertainment on tap + +Feb 11th 2017 + +TECHNOLOGY HAS ENABLED people to fill every moment of their lives with a stimulus of one sort or another. It has eliminated the boredom of solitude, replacing it with a continuous need for instant gratification. Or rather, as Tristan Harris, a former product manager at Google, puts it, it is technology companies that have made this trade for humans, designing platforms, games and apps to keep them hooked. + +Worries about the warping effect of technology are nothing new. Every tremor of progress in history has been accompanied by a moral panic. The printing press allowed “evil men” to “flood the market with anything that hints of lasciviousness”, warned a monk in Venice in the 1470s. Any form of entertainment is especially suspicious. Reading books, going to the theatre or cinema, listening to new music, playing video games—all have been presented as threatening to undermine authority, degrade human relationships and lure people into sin. + + + +But the smartphone is different from all of them. Never before has one device combined every element of modern mass media: telephony, texting, music, video, the internet, social media, video games, even voice-activated artificial intelligence. It is a personalised delivery vehicle for every technological breakthrough that has ever caused concern. And consumers have taken it up with tremendous relish. Edison Research, in a survey last year of about 2,000 Americans over the age of 12, found that three-quarters owned smartphones, just nine years after the first iPhone was introduced. According to Pew, a research outfit, nearly half of American adults say they could not live without their smartphones. In two recent studies young adults were found to use their smartphones more than 80 times a day (see chart). + +Sherry Turkle of MIT, who has been studying the effects of technology on users’ psyches for decades, believes that smartphones have made it harder for people to form connections with each other, or even to be at ease on their own. Some participants in one study, which required them to sit alone without a smartphone for 15 minutes, chose to give themselves a painful electric shock to escape the boredom. + +Such findings might trigger yet more alarmist technophobia. Young people’s constant interactions on Snapchat and Instagram, and their Pavlovian responses to social-media notifications, may be the new normal. Mr Harris suggests that their devices were specially designed to encourage this change in behaviour. Tech companies have a responsibility, he concludes, to give users more power to turn off their screens. The availability of software that allows users to lock themselves out of the web shows that at least some people feel in need of such help. + +This article appeared in the Special report section of the print edition under the headline “Driven to distraction” + + + + + +Business + + + + +Internet regulation: Eroding exceptionalism + +American retailing: Run ragged + +Winter sports: White out + +Grab v Uber: Road warriors + +Tata Group: Board stiff + +Schumpeter: Snaptrap + + + + + +Eroding exceptionalism + +Internet firms’ legal immunity is under threat + +Platforms have benefited greatly from special legal and regulatory treatment + +Feb 11th 2017 + + + +GOOGLE, Facebook and other online giants like to see their rapid rise as the product of their founders’ brilliance. Others argue that their success is more a result of lucky timing and network effects—the economic forces that tend to make bigger firms even bigger. Often forgotten is a third reason for their triumph: in America and, to some extent, in Europe, online platforms have been inhabiting a parallel legal universe. Broadly speaking, they are not legally responsible, either for what their users do or for the harm that their services can cause in the real world. + +It is becoming ever clearer, however, that this era of digital exceptionalism cannot last for ever. Governments and courts are chipping away at the sovereignty of internet firms, and public opinion is pushing them to police themselves better. Given their growing heft, this shift is likely not just to continue but to accelerate. + +When the internet went mainstream in the mid-1990s, online firms feared being held liable if their services were used in illegal ways—for instance, when subscribers posted copyrighted content or defamatory information. The danger was underlined in 1995, when an investment firm sued Prodigy, an early online service, alleging that it had been defamed in one of its discussion forums. Plaintiffs later dropped the suit, but they had claimed $200m in damages. + +To shield firms against potentially ruinous suits, as well as to protect free speech online, Congress in 1996 added a section to a law that otherwise focused on the more headline-grabbing topic of obscene material online: the Communications Decency Act (CDA). This section, now known by its number, 230, immunised online firms for torts committed through their services. Soon afterwards the European Union created a similar safe-harbour rule in its own e-commerce directive of 2000. + +All this can be seen as an implicit subsidy for a nascent industry, according to Anupam Chander of the University of California, Davis. Online firms have been exempt from regulations that apply to offline firms, he argued in a paper in 2013. That is similar to the way in which American courts in the 19th century gave railroads and other firms a leg-up by limiting liability for harm caused by defective machinery. + +Only a few exceptions to immunity were allowed. One was obviously illegal content, such as child porn. As a result of lobbying by film studios and record labels, the exceptions also included copyrighted material. In 1998 Congress also passed the Digital Millennium Copyright Act, which requires online firms to take down infringing content as soon as they have been put on notice. In Europe similar rules apply. + +Although limiting liability online was intended to protect sites hosting digital content, it carried over to service platforms. Airbnb, which lets people rent out their homes, has long held that it is not responsible for the actions of hosts and guests. Uber, a ride-hailing service, has argued that it is just a technology firm and needn’t comply with many of the detailed regulations that apply to conventional transport businesses (which must, for instance, conduct more thorough security checks on drivers than Uber carries out). Accordingly, the terms of service for such platforms usually disclaim any liability. + +If the tide is turning, it is the result of a combination of causes. One reason to expand liability for online platforms is their size: they are no longer fragile startups. Airbnb’s inventory of 2.3m rooms makes it bigger than the three largest hotel chains—Hilton, Marriott and InterContinental—combined. Incumbents are demanding that online rivals obey rules that constrain everyone else. “The internet is no longer a discrete side activity,” says Jonathan Zittrain of Harvard Law School. + +Airbnb stands accused of reducing the supply of affordable housing in big cities. Uber is said to worsen traffic problems and to weaken public-transport systems by luring away passengers. Facebook and Twitter are accused of enabling the spread of fake and biased news during America’s election. Such services have also become favourite hangouts for bullies and trolls. + +As these “negative externalities” become more obvious, public calls for regulators and the platforms themselves to take action is mounting. Facebook is a case in point. After Donald Trump’s victory, it came in for much criticism for not having done enough to limit the spread of fake news. In Germany, many worry that false news, particularly Russian misinformation campaigns, could influence federal elections in September. + +It is also becoming exceedingly hard to maintain that platforms are—like telecoms networks—“neutral”. The argument that they do not interfere in the kind of content that is shown was a key rationale for exempting them from liability. But they are starting to resemble regulators themselves, which makes it odder still that they act outside legal limits. Facebook’s algorithms determine what members see in their news feeds. Uber’s software decides what drivers get paid. It is getting easier to police platforms, too, thanks to artificial-intelligence techniques which can recognise and predict patterns of bad user behaviour. + +Unsurprisingly, given Europe’s penchant for regulation, and the fact that most big platforms are based in America, European bodies have been first to take steps to rein them in. An important change was a decision in 2014 by the European Court of Justice, the European Union’s highest court, to establish a “right to be forgotten”. Search engines must stop linking to information about a person if it is found to be “inadequate, irrelevant or excessive” and if the person has asked the firms to do so. Later this year, the same court will be asked to decide whether Uber is just a digital service or a transport company; if it is judged to be the latter, it will need to comply with a web of rules written in the analogue age, which would lift its costs significantly. + +The European Commission, the EU’s executive body, last year proposed plans to regulate platforms. It will not change its e-commerce directive, but it has pushed platforms into signing up to a “voluntary” code of conduct which commits them to actively and swiftly remove illegal hate speech such as racial abuse (instead of reacting to complaints). Some EU member states are considering going further: the German government may bring in a law to impose fines of up to €500,000 ($534,000) on a platform like Facebook if it fails to take down illegal content within 24 hours. + +Section 230 of the CDA is under pressure, too. True, the Supreme Court recently refused to revive an unsuccessful lawsuit against Backpage, an American site for classified ads with a popular adult section, which had been accused of facilitating forced prostitution. But last year saw a “swarm” of adverse Section 230 rulings, says Eric Goldman of the Santa Clara University School of Law. + +Too much mayhem + +In May a court allowed a lawsuit to proceed against Model Mayhem, a network that connects models and photographers, for having failed to warn users that rapists have used the site to target victims. In June a judge decided that Yelp, a site for crowdsourced reviews, cannot challenge a court order to remove a defamatory review of a lawyer by a client. Courts and lawmakers are not about to abolish section 230, says Daphne Keller of the Centre for Internet and Society at Stanford Law School, but it is unlikely to survive for decades. + +Service platforms are also facing new operational restrictions. Late last year Uber ended an experiment with self-driving cars in San Francisco after resistance from the authorities. Uber is also embroiled in lawsuits in several countries over whether its drivers should be treated as full-time employees (in October a London court said they are, entitling them to the minimum wage and holiday pay). Many cities are creating new rules, or enforcing old ones, on who can rent out their homes and for how long. One example is New York’s move in October to pass a law imposing fines of up to $7,500 on hosts who advertise stays of 30 days and less on Airbnb and similar sites. + +He’s worried + +Tech firms fear what regulators might do. Content platforms say that in the short term they fret most about being required energetically to police their platforms, which would be difficult and costly and could turn them into censors. All share a longer-term concern that they could end up being regulated in exactly the same way as pre-internet incumbents, which would make them less profitable and perhaps even destroy their business models. + +The industry would naturally prefer self-regulation. Platforms not only have strong incentives to spot bad actors, but good information to identify them and the means to sanction in response, notes Urs Gasser of the Berkman Klein Centre for Internet & Society at Harvard University. Yet self-regulation goes only so far: platforms may have not much incentive, for instance, to do something about noisy short-term tenants or to limit drivers’ working hours. + +They are working hard, nonetheless, to show willing. Only a few weeks after Mark Zuckerberg, Facebook’s boss (pictured), batted away criticism of the company’s election coverage, he announced that the firm would work with fact-checking sites to verify news and allow users to flag fake stories. Uber, for its part, recently launched Movement, a website sharing its aggregate ride data with urban-planning agencies, so that they can see, for instance, what effect a baseball game has on traffic patterns. + +If there has to be regulation, Nick Grossman of Union Square Ventures, a technology investor, wants regulators to shift from the idea of handing out permission to do things to an accountability-based approach he calls “Regulation 2.0”. In the past, he argues, regulators were “data-poor”: to do their job, local agencies, for instance, had to actively select who was allowed to do what by handing out licences—to drive a cab, say. Now that data are plentiful and available in real time, regulators could instead check regularly on whether service providers are following certain policy goals. + +Internet activists and the firms themselves may deplore the fact that the early heyday of digital exceptionalism is drawing to a close. Michael Masnick, the editor of Techdirt, a site covering tech policy, worries about limits on free speech, and also warns that regulation can stymie innovation. Rules are disproportionately costly for small firms. Google has the money to hire enough lawyers to handle requests based on the right to be forgotten. For smaller search engines, it is a big burden. + +But giving platforms a free pass is increasingly difficult for regulators and courts: they simply have become too important for the economy and society more generally. Successful online platforms, in other words, carry the seeds of their own regulation. + +This article appeared in the Business section of the print edition under the headline “Eroding exceptionalism” + + + + + +Run ragged + +Ralph Lauren and Macy’s tell a similar tale of woe + +Both retailers are struggling with the internet and Amazon’s rise + +Feb 11th 2017 | NEW YORK + + + +NEW YORK’s fashion week, which will start on February 9th, promises the usual show of glamour, but a more fascinating industry display came a week earlier. On February 2nd Ralph Lauren, a well-known brand, said that the executive it had hired in 2015 to overhaul its business would leave. On February 3rd the Wall Street Journal reported that Macy’s, America’s biggest department store, might be bought by Hudson’s Bay, a smaller Canadian rival. Each is an institution of American retailing. Each is a reminder of how hard it is to keep pace. + +Consumer habits have changed especially rapidly in their world. Frocks, bags and shoes are now disproportionately bought online compared with other goods. Last year clothes and accessories accounted for a fifth of e-commerce, estimates Cowen, a financial-services firm; far higher than their 8% share of total retail spending. Cowen expects Amazon to surpass Macy’s as America’s top clothing seller this year. + +For manufacturers, such as Ralph Lauren, the picture is more mixed. For some clothing firms, particularly small ones, Amazon offers a new way to reach consumers, free from the archaic commercial terms that department stores often foist on suppliers. Many big manufacturers, however, are wary. They face new competitors online and they fret that selling on Amazon will weaken control of their brands and their positioning. Ralph Lauren has not sold clothes directly to Amazon so far, despite the platform’s explosive growth. + +Consumers have altered how they shop offline, too. Those who prefer brand names can find them in “off-price” stores such as TJ Maxx, which buys extra inventory from shops and manufacturers and resells it at a deep discount. Nor have department stores found a riposte to the inexpensive and on-trend offerings of H&M, a Swedish firm, or of Zara, owned by Spain’s Inditex. + +Department stores and their suppliers still work on a slow schedule. Clothes often languish on racks until retailers, desperate to purge inventory, slash prices. This pattern has helped crunch margins at both Macy’s and at Ralph Lauren, which counts Macy’s as its biggest customer. Both are trying to adapt. Stefan Larsson, the chief executive Ralph Lauren brought in to replace the firm’s eponymous founder, is a veteran of H&M. He set about slashing production times and trying to make fewer, more popular styles that can sell without discounts. + +But Mr Larsson’s ideas for the “creative and consumer-facing” parts of the business, he told analysts, diverged from those of Mr Lauren, who remains chairman and chief creative officer. The company says it is still committed to Mr Larsson’s strategy, but investors are not so sure. After the news of his departure, Ralph Lauren’s share price dropped by more than a tenth. + +Macy’s is in the midst of its own transition. This year Terry Lundgren, the company’s long-serving boss, will hand control to Jeff Gennette, currently a senior manager, who must attempt an even more dramatic recovery. Macy’s is due to close 100 stores and sack about 10,000 of its employees. Together with a real-estate investor, it is mulling the fate of about 50 other properties. The company is also investing in e-commerce and its own answer to TJ Maxx, which is called Backstage. Progress is slow. “They’re all the right strategies but unfortunately it may be too little, too late,” says Kimberly Greenberger of Morgan Stanley, a bank. Now Hudson’s Bay, the owner of Saks Fifth Avenue, may try to buy Macy’s—together, the two might be able to limit discounting, or Hudson’s Bay might wring more value from the American firm’s portfolio of prime property. + +Amid the uncertainty around both firms, one direction looks set: each is deliberately shrinking. Ralph Lauren’s sales are falling as the company sends less inventory to wholesalers. Macy’s, which will soon have 18% fewer stores than it did in January 2016, will probably need to cut even further. “This is just the start,” says Ms Greenberger. In a new era, survival requires being cut down to size. + +This article appeared in the Business section of the print edition under the headline “Run ragged” + + + + + +White out + +Snow-making companies in a warming world + +Some Italian ski resorts now get complete coverage from snow guns + +Feb 11th 2017 | MORZINE + +Better than mud + +THE creamy glide of fresh powder sends skiing enthusiasts into ecstasies. Scraping over brown patches and dodging lumpen rocks inspires far less enthusiasm. Thousands of families will hit Europe’s slopes this month, hoping that snow conditions will be more favourable than at the start of the season in December. A warming world is changing precisely how, when and where snow falls. For the winter-sports industry, such shifts could hit profits harder than a springtime avalanche. + +The snowfall season has become shorter in places such as the Alps, says David Robinson of Rutgers University in New Jersey, as snow arrives later and melts earlier than it once did. Resorts at lower altitudes are among the most vulnerable. Since the 1970s the duration of the snow season, averaged over the northern hemisphere, has declined by five days a decade, according to the European Environment Agency. Huge regional variation exists, however, both in Europe and elsewhere. Californian slopes that were unable to open in recent years because of snow shortages had to close at the start of 2017 because too much of the stuff had fallen. + +For resorts worried about weird weather, there are plenty of firms to help with piste-covering. Fan guns, snow lances and other devices use water and compressed air to allow tiny snow crystals to form if it is cold enough. A tiny number of European companies dominate the international market—worth €275m ($290m)—for such gadgets: TechnoAlpin, Demaclenko and SUFAG. TechnoAlpin only deals in selling, installing and maintaining snowmaking systems; the others are part of larger groups which make equipment such as ski lifts. TechnoAlpin accounts for more than half of global market share in snowmaking, according to Max Rougeaux, a manager at the firm, and it produces about 4,500 machines a year. Turnover has grown from €90m in 2011 to €170m last year as more and more resorts try to satisfy snow-seekers. + +The cost of covering pistes with manufactured snow depends on many factors, including the type of terrain (rocky outcrops make matters harder). But as a rough rule, it costs about €1m for every square kilometre whited. Executives in northern Italy have invested heavily already: some resorts, such as Val Gardena, are able to produce complete coverage from snow guns. Austrian ones want to catch up, and have shelled out about €1bn on snowmaking over the past decade. Customers also abound in China, Australia, Argentina and America. + +But no snowmaker can stand still when global temperatures are changing. So firms plough back around 5% of revenues into researching how to make snow even when temperatures are around 0ºC. Humidity affects the process: the damper the air the less moisture it can absorb and the colder it must become for snow crystals to form from water droplets. Snowmakers have enjoyed much success recently—but profits will be limited if their flakes turn to slush. + +This article appeared in the Business section of the print edition under the headline “White out” + + + + + +Road warriors + +Grab battles Uber in South-East Asia + +GrabHitch, which offers transport perched on the back of other commuters’ scooters, is one way to compete + +Feb 11th 2017 | SINGAPORE + +Overtaking manoeuvres + +SCOOTER-DRIVERS in bright green helmets enliven the dusk of rush hour in Ho Chi Minh City, Vietnam’s commercial centre. This conspicuous fleet is carrying round clients of Grab, a South-East Asian ride-hailing firm. Its operations, connecting travellers with taxis, private cars and motorbike taxis in six countries, straddle a region that is twice as populous as America and swiftly urbanising. Its future seems assured, if it can compete with Uber, a deep-pocketed American competitor. + +Grab started life at Harvard Business School, where its 34-year-old boss, Anthony Tan, met his co-founder, Hooi Ling Tan (the pair are unrelated). Its headquarters are in Singapore. Anthony’s father runs Tan Chong Motors, a car assembler and distributor which is among Malaysia’s largest companies, but he does not have funding from the family outfit. + +Mr Tan denies that he is building South-East Asia’s answer to Uber, and says he is more inspired by Chinese technology firms such as Tencent, an online-gaming and social-media firm that owns WeChat, a fantastically popular mobile-messaging service, and Alibaba Group, an e-commerce giant. In particular, Grab aims to emulate WeChat’s success in popularising mobile payments through smartphones. + +A big chunk of the $1bn of cash that Grab holds for investing purposes will be ploughed into its digital-payments system, “GrabPay”, which started operating in January 2016. In November 2016 Grab updated GrabPay, turning it from a digital-payments processor which was mostly of use to people who already had credit and debit cards, to a digital wallet which South-East Asians can top up with credit by making cash payments at banks and some convenience stores. At present people mainly use GrabPay to pay for Grab rides, but the aim is that customers will eventually use it to buy all manner of daily items. + +But such dreams depend on Grab seeing off local rivals and defending its business from Uber, which is roughly 20 times as valuable. Grab’s investors include Temasek, Singapore’s state investment firm, and China Investment Corporation, a Chinese one. In September, SoftBank, a Japanese telecoms and technology firm that is owned by Masayoshi Son (who last year announced a $100bn tech-investment fund in partnership with Saudi Arabia and other investors), led a group that put $750m into Grab, valuing it at more than $3bn. + +Uber operates in all the same countries—Indonesia, Vietnam, the Philippines, Thailand, Malaysia and Singapore—but in 20 cities compared with Grab’s 34. The American firm last year suffered a setback which, paradoxically, makes it a stronger rival: in August it abandoned its costly efforts to crack China, and sold its business there to Didi Chuxing, a local competitor which is also an investor in Grab. The deal freed up resources which Uber is now using to push deeper into Grab’s territories. + +Fierce discounting of rides has been one result. Uber’s chances of dominance in South-East Asia have increased in the past 12 months or so, says Florian Hoppe of Bain, a consulting firm, because it has been improving its local strategy—from having relatively few people on the ground and a narrow range of services to selling the same broad products as Grab: taxis, private cars and two-wheeler ride-hailing. + +Grab still claims to have services that are better suited to South-East Asians. Mr Tan points to its GrabHitch offering, for example. Many people in Jakarta, Indonesia’s capital, live in suburban developments many miles from the central business district, and make long journeys on their scooters into work every day. GrabHitch allows them to advertise the route and time of their trip in the hope of finding someone who wants to hitch a lift on the back of their scooter, paying a nominal sum to cover petrol and bike-maintenance costs. Uber doesn’t offer anything as informal or low-priced. + +Indonesia is a key battleground: its population of 257m accounts for more than one-third of the region’s people. Since launching its motorbike taxis in Jakarta in May 2015, Grab has gradually overhauled the lead formerly enjoyed by Go-Jek, a local ride-hailing business, and seems to be drawing ahead. Uber, which came late to the market, is now in third place. On February 2nd Grab said it will invest $700m into Indonesia over the next four years. For Grab, South-East Asia’s traffic-clogged mega-cities are not “just another” market, says Mr Tan. “This is our home.” + +This article appeared in the Business section of the print edition under the headline “Road warriors” + + + + + +Board stiff + +Tata’s governance is still faulty + +The group has finally ejected the ex-boss who has been a thorn in its side + +Feb 11th 2017 | MUMBAI + +Chandra in, Cyrus out + +PROFIT is to good corporate governance what tides are to swimming trunks: when the former is high, absence of the latter tends to go unnoticed. The ebbing of profits at Tata, India’s largest conglomerate, in recent years has prompted a power struggle that in turn has exposed the often dysfunctional relationship between several dozen businesses, holding companies, people and charities that use the Tata name. The struggle is now over: on February 6th, Cyrus Mistry, Tata’s boss until last October (pictured on next page, on the right) was finally booted out of the company. Natarajan Chandrasekaran (on the left), the boss of one of the group’s key operating firms, Tata Consultancy Services, takes over as chairman on February 21st. + +Executives at the 149-year-old group hope that will close a grim chapter in its history. Mr Mistry, whose family owns an 18% stake in Tata Sons, the main holding company, which is unlisted, reacted badly to being evicted as its chairman last year. The move to oust him was set in motion by Ratan Tata, the group’s 79-year old patriarch (and Mr Mistry’s interim successor). During Mr Mistry’s reign, Mr Tata had remained at the helm of the Tata Trusts, charities that control 66% of Tata Sons. + +For months, Mr Mistry refused to step down from chairing the boards of listed Tata firms, such as Tata Steel or Tata Motors (owner of Jaguar Land Rover), which the group effectively controls but in which Tata Sons typically owns a 30% stake (see chart). The very last board he clung on to, that of Tata Sons itself, is rid of him as of this week. + + + +Before leaving he made all manner of claims of financial and corporate-governance impropriety at Tata. Regulators are said to be looking into some of them; Tata denies them all. But in the hundreds of pages of affidavits filed in various tribunals by both sides, and seen by The Economist, a recurring theme emerges, that the relationships between the Trusts, Tata Sons and Tata companies are governed primarily by personal relationships and deference to tradition. There is little sense that things are going to change. The hope seems to be that Mr Chandrasekaran can grow profits again and put such problems out of mind. + +Mr Mistry’s most striking claim is about the current board of directors of Tata Sons. It is arguably India’s most august corporate body—directors include the dean of Harvard Business School (HBS), a former Indian defence secretary and several respected industrialists. Mr Mistry contends that it is little more than a rubber stamp for decisions made by the Trusts, ie, by Mr Tata. A change to the articles of association of Tata Sons in 2014 gave the Trusts more access to information across the entire group. The Trusts already had the ability to influence decisions by nominating a third of the Tata Sons board. Acting together, those directors can veto the entire board’s decisions. + +The ousted man says Mr Tata ramped up meddling into the activities of both Tata Sons and some operating firms, aided by a roster of long-retired executives who serve as Tata trustees. This view is backed by the Tata Group’s top lawyer, who in January 2016 wrote that if internal documents were somehow leaked to the media, they would “project to the external world that the Trusts are controlling our empire, and Tata Sons board is more a dummy.” + +A lack of clarity over what authority the Trusts have in relation to Tata Sons, and vice versa, was also acknowledged in internal e-mails by Nitin Nohria, the dean of HBS, who has served on the Tata Sons board as a Tata Trusts appointee since September 2013. Some governance experts have criticised his position there, because the Trusts and some group firms made a $50m gift to HBS to fund a building that was named in Mr Tata’s honour. Mr Nohria wrote in court documents that neither the donation, arranged shortly before he became dean in 2010, nor the fact that he was appointed by the Trusts, should mean that he is not acting in the interest of Tata Sons. + +The main corporate-governance problem is that the interests of minority shareholders, whether they are invested in Tata Sons or in the various operating companies, risk being trampled over if unaccountable trustees are ruling the roost. But at the level of the businesses, improvised governance processes also slowed down decision-making to a crawl. Turf battles created confusion among executives as to who was in charge. + +Mr Tata, in the legal filings, says it is untrue that the Trusts call the shots: he merely gave his advice when asked to, and infrequently at that. Other trustees say they chipped in recommendations to Tata companies on important matters in a personal capacity. On behalf of the Trusts, they merely sought better visibility into what money the charities might receive as dividends from Tata Sons. + +Yet at least one internal letter from Mr Tata suggests that he clearly expected the directors nominated by the Trusts to convey the Trusts’ views to the Tata Sons board rather than exercise their own judgment. In one instance, in June 2016, two directors nominated by the Trusts left a Tata Sons board meeting for nearly an hour to confer with Mr Tata. Mr Mistry says this proves Mr Tata controlled the board; both directors have said that the matter discussed was trivial. + +In India, “good corporate governance” is often used as a euphemism for “not being crooked”. By that standard, Tata still does well. Yet the manner in which Mr Mistry was defenestrated has raised eyebrows in Mumbai’s business community. On Mr Tata’s recommendation, the Tata Sons board was suddenly increased in size from six to nine directors just weeks before it voted to oust the chairman, which helped secure Mr Mistry’s dismissal. + +Tata insiders who reckon the crisis that befell them was purely driven by lacklustre profitability are misguided. The poor governance that goes with the group’s Byzantine, multi-layered structure contributed to those low profits as well as to the bruising power struggle of recent months. Will Mr Chandrasekaran have the skill or the mandate to simplify the group’s structure and rein in the influence of Tata Trusts? Although Mr Tata will leave the board of Tata Sons later this month, he shows little sign of retiring from his job as the chairman of the Trusts. But Mr Chandrasekaran’s allies say in private that he has one huge advantage: having fired one successor, Mr Tata knows he cannot sack another without further damaging his legacy. + +This article appeared in the Business section of the print edition under the headline “Board stiff” + + + + + +Schumpeter + +Shareholder democracy is ailing + +Snap’s refusal to hand out any voting shares is part of a wider trend towards corporate autocracy + +Feb 11th 2017 + + + +DEMOCRACY is in decline around the world, according to Freedom House, a think-tank. Only 45% of countries are considered free today, and their number is slipping. Liberty is in retreat in the world of business, too. The idea that firms should be controlled by diverse shareholders who exercise one vote per share is increasingly viewed as redundant or even dangerous. + +Consider the initial public offering (IPO) of Silicon Valley’s latest social-media star, Snap. It plans to raise $3-4bn and secure a valuation of $20bn-25bn. The securities being sold have no voting rights, so all the power will stay with Evan Spiegel and Bobby Murphy, its co-founders. Snap’s IPO has echoes of that of Alibaba, a Chinese internet giant. It listed itself in New York in 2014, in the world’s largest-ever IPO, raising $25bn. It is worth $252bn today and is controlled by an opaque partnership using legal vehicles in the Cayman Islands. Its ordinary shareholders are supine. + +Optimists may dismiss the two IPOs as isolated events, but there is a deeper trend towards autocracy. Eight of the world’s 20 most valuable firms are not controlled by outside shareholders. They include Samsung, Berkshire Hathaway, ICBC (a Chinese bank) and Google. Available figures show that about 30% of the aggregate value of the world’s stockmarkets is governed undemocratically, because voting rights are curtailed, because core shareholders have de facto control, or because the shares belong to passively managed funds that have little incentive to vote. + +Cheerleaders for corporate governance, particularly in America, often paint a rosy picture. They point out that fewer bosses are keeping control through legal skulduggery, such as poison pills that prevent takeovers. Unfortunately, these gains have been overwhelmed by three bigger trends. The first is that technology firms can dictate terms to infatuated investors. Young and with a limited need for outside capital, many have come of age when growth is scarce. Google floated in 2004 with a dual voting structure expressly designed to ensure that outside investors would have “little ability to influence its strategic decisions”. Facebook listed in 2012 with a similar structure and in 2016 said that it would issue new non-voting shares. Alibaba listed in New York after Hong Kong’s stock exchange refused to countenance its peculiar arrangements. Undaunted, American investors piled in. + +At the same time there has been a drift away from the model of dispersed ownership in emerging economies, with 60% of the typical bourse being closely held by families or governments, up from 50% before the global financial crisis, according to the IMF. One reason has been lots of IPOs of state-backed firms in which the relevant government retains a controlling stake. Hank Paulson, a former boss of Goldman Sachs, helped design many of China’s privatisations in the early 2000s. “The Chinese could not surrender control,” his memoirs recall. Mr Paulson hoped that the government would eventually take a back seat, but that has not happened. Other emerging economies, including Brazil and Russia, copied the Chinese strategy of partial privatisation. And across the emerging world, tightly held family firms, such as Tata in India and Samsung in South Korea, are bigger than ever. + +Voter apathy is the third trend, owing to the rise of low-cost index funds that track the market. Passive funds offer a good deal for savers, but their lean overheads mean that they don’t have the skills or resources to involve themselves in lots of firms’ affairs. Such funds now own 13% of America’s stockmarket, up from 9% in 2013, and are growing fast. A slug of the shareholder register of most listed firms is now comprised of professional snoozers. + +For many in business the decay of shareholder democracy is irrelevant. After all, they argue, investors own lots of other securities—bonds, options, swaps and warrants—that don’t have any voting rights and it doesn’t seem to matter. At well-run firms such as Berkshire, shares with different voting rights trade at similar prices, suggesting those rights are not worth much. Some managers go further and argue that less shareholder democracy is good, because voters are myopic. Last year Mark Zuckerberg, Facebook’s boss, pointed out that with a normal structure the firm would have been forced to sell out to Yahoo in 2006. + +It doesn’t take a billionaire to poke holes in this logic. For economies, toothless shareholders are damaging. In China and Japan firms allocate capital badly because they are not answerable to outside owners, and earn returns on equity of 8-9%. A study in 2016 by Sanford C. Bernstein, a research firm, got Wall Street’s attention by calling passive investing “the silent road to serfdom”. Without active ownership, it said, capitalism would break down. + +Democratic deficit + +At the firm level, voting rights are critical during takeovers, or if performance slips. At Viacom, a media firm with dual-class shares, which ran MTV in its heyday but which has stagnated for the past decade, outside investors are helpless. Control sits with the patriarch, Sumner Redstone, aged 93, who has 80% of its votes but only 10% of its shares. Yahoo (once as sexy as Snap) has lost its way, too. But because it has only one class of shares, outsider investors have been able to step in and, using their voting power, force the firm to break itself up and return cash to its owners. + +The system may be partially self-correcting. Some passive managers, such as BlackRock, are stepping up their engagement with companies. If index funds get too big, shares will be mispriced, creating opportunities for active managers. If shares without votes are sold for inflated prices, their owners will eventually be burned, and won’t buy them again. And if fashionable young firms miss targets, they will need more cash and will get it on worse terms. But in the end shareholder democracy depends on investors asserting their right to vote in return for providing capital to risky firms. If they don’t bother, shareholder democracy will continue to decline. That is something to think about as fund managers queue up for Snap’s IPO. + +This article appeared in the Business section of the print edition under the headline “Snaptrap” + + + + + +Finance and economics + + + + +American financial regulation: Shearing and shaving + +Buttonwood: Time and tide + +Banking and the elderly: Not losing it + +Brexit: Not all black + +North Korean data: Best guesses + +Euro-zone bond markets: Unhappy birthday + +Data, financial services and privacy: Like? + +Free exchange: It’s been a privilege + +China’s central bank: Technically independent + + + + + +Shearing and shaving + +Remaking American financial regulation + +Donald Trump starts a long struggle to overhaul the Dodd-Frank act + +Feb 11th 2017 + + + +AT FIRST blush, there is little to be excited about. The eighth executive order of Donald Trump’s infant presidency, signed on February 3rd, lists seven “core principles” for regulating America’s financial system. These include the prevention of bail-outs by taxpayers; advancing the American interest in international negotiations; and tidying the unruly thatch of federal regulation. The treasury secretary and regulators must report by early June on how well existing laws fit the bill. “There is little in the actual executive order that the Obama administration would have disagreed with,” says Doug Elliott of Oliver Wyman, a consulting firm. + +And yet. Although the edict does not mention the Dodd-Frank act of 2010, which redefined financial regulation after the crisis of 2008, it is chiefly aimed at that law. (Another presidential memorandum paves the way to aborting a rule tightening financial advisers’ obligations to Americans saving for retirement.) Many banks, especially smaller ones, loathe the 848-page act and its reams of ensuing rules. According to Davis Polk, a law firm, 111 of its 390 “rule-making requirements” have not yet even been finalised. Mr Trump has called Dodd-Frank a “disaster” and vowed to “do a big number” on it. How big a number his team has in mind—and how much it can manage—is still not entirely clear. + +Thanks in part to Dodd-Frank, America’s banks are far safer than they were: the ratio of the six largest banks’ tier-1 capital (chiefly equity) to risk-weighted assets, the main gauge of their strength, was a threadbare 8-9% before the crisis; since 2010 it has been 12-14%. Among much else, the act also introduced stiff stress tests of the most important banks’ ability to withstand further storms; obliged them to draw up “living wills” to prepare for bankruptcy, should calamity strike; and banned them from trading in securities for their own profit, a restriction known as the Volcker rule. + +Enough, say bankers. Mr Trump, though he bashed Wall Street on the campaign trail, now seems to agree. Gary Cohn, his chief economic adviser and president of Goldman Sachs until December, told the Wall Street Journal that because banks must “hold more and more and more capital...that capital is never getting out to Main Street America.” Dealing with multiple regulators, he said, was holding lending back. He also cast doubt on other bits of Dodd-Frank, notably its procedures for liquidating big banks when the bankruptcy code cannot be applied. + +That echoes complaints voiced many miles from Wall Street. Wayne Abernathy of the American Bankers Association, a trade body, argues that community banks are shunning loans to new or marginal customers, rather than having to justify themselves to several regulators. “Lending is being narrowed down to mortgages, familiar customers and agriculture,” he says. This in turn exposes banks to another complaint from supervisors: that their lending is too concentrated. + +In softening Dodd-Frank’s impact, administration looks easier than legislation. Dodd-Frank gives regulators power to intervene, but it also gives them discretion to desist, as Mr Trump may tell them to do. Rules not yet completed may be allowed to die; others enforced less vigorously; consistency among regulators can be encouraged. This may take time. Steven Mnuchin, Mr Trump’s choice for treasury secretary, is likely to be confirmed soon, but important lower-ranking jobs in the department, also needing senators’ approval, must be filled. Mr Trump also must find a vice-chairman of the Federal Reserve with responsibility for financial supervision. Once he does, Daniel Tarullo, the Fed governor who has been standing in, is expected by many to resign. Slots at other regulators are either vacant or soon will be. + +Barriers to exit + +The obstacles to changing laws are higher. Although the Republicans hold both houses of Congress, they have only a 52-48 lead in the Senate, shy of the 60 votes needed to break a filibuster. Persuading eight Democrats to support legislation making life easier for banks is a tall order. + +Still, Mr Elliott notes, some bipartisan agreement in Congress is possible—notably on raising the threshold for a bank to be a “systemically important financial institution”, or SIFI, from $50bn of assets, to perhaps $250bn: the 34 SIFIs undergo annual stress tests and capital reviews conducted by the Fed. That would suit, among others, Zions Bancorp, a Utah-based lender with assets of $63bn—an improbable systemic threat. It has taken on nearly 500 staff to deal with compliance, internal auditing and so forth and spent many millions on quantitative models. These now underpin its decision-making about capital and lending, and Zions is not inclined to cut back on their use. But Harris Simmons, its boss, would like “relief from being subject to the Fed’s black box”. + +Proposals that may affect the spending of public money, which require only a simple majority, could also be forced through. This could allow Republicans to rein in the Consumer Financial Protection Bureau, a body created by Dodd-Frank and financed by the Federal Reserve, rather than directly by Congress. It may also allow them to gut the liquidation procedure, which envisages a temporary fund of public cash—to purists, an unacceptable taxpayer bail-out. + +Jeb Hensarling, a Republican congressman from Texas, is likely to reintroduce legislation he proposed last year, offering big banks less onerous regulation, including relief from the Volcker rule, in exchange for higher capital: a minimum leverage ratio—of equity to unweighted assets—of 10%. But this attempt may fail in the Senate. Few big banks are eager to return to proprietary trading in any case; and they think they have plenty of capital, thank you. + +Thomas Hoenig, vice-chairman of the Federal Deposit Insurance Corporation, a bank supervisor, disagrees. “We need to have a simple way of measuring capital—the leverage ratio—and that ratio needs to be around 10%,” he says. In June the average for America’s eight globally significant banks was just 5.75%. With much stronger banks, other bits of regulation could fall away. Stress tests could be run by lenders themselves, rather than the government, and there would be no need for Dodd-Frank’s contentious liquidation procedure. + +Nothing so radical looks likely. But lighter regulation makes sense, especially for smaller banks. Less capital, especially for big ones, assuredly does not. + +This article appeared in the Finance and economics section of the print edition under the headline “Shearing and shaving” + + + + + +Buttonwood + +Bubbles are rarer than you think + +And very hard to recognise until it is too late + +Feb 11th 2017 + + + +BUBBLES put the fun into financial history. Who can resist stories about Dutch tulips that were worth more than country estates or the floating of an “undertaking of great advantage but no one to know what it is”? + +Economists have long debated whether bubbles can be identified, or indeed stopped, before they can cause widespread damage, as the crisis of 2007-08 did. But spotting them is easier said than done: even tulipmania may have been caused by a quirk in the wording of contracts that meant speculators would, at worst, walk away with only a tiny loss. + +For many investors, the more important question is whether it is possible to avoid being sucked into a bubble at the top, and suffering declines like the 80% drop experienced by the NASDAQ 100 index of technology stocks between March 2000 and August 2002. Two essays in a new book*, from the CFA Institute Research Foundation and the Cambridge Judge Business School, indicate just how difficult market timing can be. + +The first, from William Goetzmann of Yale School of Management, looks at the history of 21 stockmarkets since 1900. Mr Goetzmann defines a bubble as a doubling in a market’s value, followed by a 50% fall. He found that a doubling in a single year occurred just 2% of the time (in 72 cases). On six occasions, the market also doubled over the next year, whereas a 50% fall in the subsequent year occurred on just three occasions; Argentina in 1976-77, Austria in 1923-24 and Poland in 1993-94. Even after a further five years, markets were more likely to double again than to fall by half. + +There were many more occasions when markets doubled over three years; around 14% of the total. After such rises, the markets dropped by half in the following year on fewer than one in 20 occasions. The markets lost half their value over the next five years around one tenth of the time. But in a fifth of such episodes, the market doubled again. On this basis, a sharp rise in a market is more of a buy signal than a sell indicator. That helps explain why investors find it so difficult to get out at the peak. + +You can argue whether Mr Goetzmann’s definition of a bubble is the right one. He looks at overall markets, rather than individual industries such as technology. GMO, a fund-management group, uses a different concept—namely, that a bubble occurs when the price of an asset rises by more than two standard deviations above its previous long-term trend. + +Another approach is to look at fundamentals. Asset prices are supposed to reflect the current value of future cash flows. In theory, a doubling in a market could reflect a sudden improvement in the outlook for that asset class, and thus be entirely rational. One valuation approach, often referred to in this column, is the cyclically adjusted price-earnings ratio, or CAPE, which averages profits over ten years. Highs in the ratio coincided with market peaks like 1929 and 2000. + + + +In another chapter of the book, Antti Ilmanen of AQR Capital Management looks at the CAPE ratio as a market-timing measure (see chart). At first sight, this seems very promising. Buying the American equity market when it was cheapest brought an annual real return of 13% over the ensuing decade; buying it when it was dearest earned a return of just 3.5%. (He inverted the ratio to get an earnings yield, but that does not affect the results.) + +The problem, however, is that the full historical range of valuations is available only with hindsight. Investors in the 1930s did not know that they would be buying at the cheapest level the 20th century would see. And the ratio is of little use in the short term: the market looked overvalued on the CAPE measure for much of the 1990s, not just at the peak. + +So Mr Ilmanen devises a simple approach to show whether investors using the range of CAPEs that would have been known at that point could have been used to time the markets since 1900. Over the full period this tactic mildly outperformed a “buy-and-hold” strategy, but all the outperformance occurred in the first half of the sample. It would have underperformed for the past 50 years. + +This is not very encouraging. Neither a doubling of the market nor a historically high valuation are reliable sell signals. Of course, that shouldn’t be too surprising. If timing the market were easy, big swings in prices would not happen in the first place. + +* “Financial Market History: Reflections on the Past for Investors Today”, edited by David Chambers and Elroy Dimson. + +Economist.com/blogs/buttonwood + +This article appeared in the Finance and economics section of the print edition under the headline “Time and tide” + + + + + +Not losing it + +The elderly, cognitive decline and banking + +Banks need strategies for helping vulnerable elderly customers + +Feb 11th 2017 + +No cheques and balances + +“THE older the wiser” may ring true for much of life, but not for our ability to handle money. Studies suggest financial decision-making ability tends to reach its peak in a person’s mid-50s, after when deterioration sets in. “Age-friendly” banks are beginning to learn how to protect vulnerable older customers. + +The most dramatic forms of age-related mental deterioration are neurodegenerative diseases, like Alzheimer’s. But even “normal” ageing can cause cognitive change. Financial-management skills are often early casualties, because they demand both knowledge and judgment. + +Older people are more likely to struggle with day-to-day banking and are more susceptible to poor investment decisions. They are also more vulnerable to fraud or to financial exploitation, often by relatives. In 2010 the over-65s in America made up 13% of the population but had over a third of the wealth. British pensioners became especially vulnerable when reforms in April 2015 allowed them to withdraw savings previously locked up. Newspapers fretted that people would splurge their pensions on Lamborghinis. A greater concern should have been that they became easy prey for scammers. By March 2016 cold-callers had approached more than 10m people about their pensions, according to Citizens’ Advice, a charity. + +It is difficult to monitor financial abuse, because victims rarely report it. True Link Financial, a financial-services firm, estimates annual losses in America from financial exploitation and abuse of the elderly at between $3bn and $37bn. In Britain the Financial Conduct Authority has issued warnings about investment-fraud schemes, coaxing the elderly into trading their savings for shares, wine or diamonds (which never arrive). + +The older brain seems more susceptible to “too good to be true” scams, from lotteries to dating schemes. According to the “Scams Team” at Britain’s National Trading Standards, a consumer-protection body, the average age of victims of mass-marketing scams is 75. Louise Baxter, the team’s manager, says cognitive decline in older people is a risk factor that criminals exploit, and the dangers are likely to rise in tandem with the incidence of dementia. Phil Mawhinney, from Age UK, a charity, says people living alone, as half of Britons over 75 do, are more likely to be befriended by a fraudster. So-called “sucker lists” of easy targets circulate among criminals. + +Banks have been slow to respond, at first seeing these risks as purely a matter for customers. (As one manager puts it, they “have the liberty to make dumb financial decisions.”) Most “age-friendly” measures have focused on physical limitations (such as talking ATMs for the blind) or helping people get online. However, many banks are recognising cognitive decline as their problem, too. Barclays, a British bank, uses voice recognition to help customers who have trouble with passwords. Banks are training staff in how to spot dementia and signs of financial abuse. First Financial Bank, in America, gives staff who uncover a scam a “Fraud Busters” pin. And better ways to identify fraud are popping up: algorithms can help staff detect changes in spending patterns. Barclays used data from old cases to pinpoint 20,000 high-risk customers, whom it monitors and advises. + +The trickiest issue for banks, ethically and legally, is how and when to act on concerns over a client’s ability to manage money. The last-resort measure, most commonly used for the incapacitated, is a power of attorney, usually given to a family member chosen in advance. But this can put people at risk of opportunistic relatives. It may also curtail autonomy too severely. Banks are experimenting in this grey area, for example by giving relations “read-only” access to accounts, so they can monitor payments, or by allowing the bank to delay a payment and contact advisers if it is worried. A limited form of power of attorney, with authorisation for only certain payments, is also emerging. + +Much of the financial damage done by cognitive decline results from late detection of problems. A decline in someone’s financial skills can be an early warning of dementia or other problems. Jason Karlawish, an expert on Alzheimer’s at the University of Pennsylvania, thinks banks—and their technology—are uniquely placed to identify older people who are at risk and refer them to doctors or social workers. He coined the phrase “Whealthcare” to describe how looking after people’s money can give insights into their health. “If you do it right, I think customers will like it,” he adds. “Nobody wants to lose their money and certainly not their brain.” + +This article appeared in the Finance and economics section of the print edition under the headline “Not losing it” + + + + + +Not all black + +Brexit: the New Zealand precedent + +How New Zealand coped with the loss of preferential access to its biggest market + +Feb 11th 2017 + + + +THE future of British trade after Brexit is shrouded in uncertainty. It is an unprecedented process, so it is hard to know where to look for clues as to how it may work out. One possibility is a country whose trading patterns were perhaps more disrupted than any other’s by Britain’s accession to the European Economic Community (EEC) in 1973: New Zealand. + +Just as Brexit is likely to mean the end of British access to the single market, so “Brentry” ended New Zealand’s preferential access to the “mother country”. In 1961, when Britain first announced its intention to join the EEC, it took about half of New Zealand’s exports—a similar proportion to the EU’s share of British exports today. + +New Zealand’s prime minister at the time, Keith Holyoake, warned his British counterpart, Harold Macmillan, that, without safeguards for its exports, New Zealand would be “ruined”. After years of negotiations, a transitional deal in 1971 agreed quotas for New Zealand butter, cheese and lamb over a five-year period, which helped to ease the shift away from Britain. Similarly—if in a much shorter time-span—Britain’s prime minister, Theresa May, now hopes to negotiate a transitional deal to smooth its departure from the EU. + +New trading relationships can mitigate the loss of preferential access. New Zealand signed a free-trade deal with Australia in 1965, which boosted exports of manufactured goods. The share of trade with America and Japan also rose, once access to their beef markets had been negotiated. By the time Britain eventually joined the EEC in 1973, it took only 25% of New Zealand’s goods exports (and a paltry 3% now). More trade deals followed, including with China and South Korea. Mrs May’s government makes much of the prospects of concluding trade deals with non-EU countries—including, in fact, New Zealand. + +Trade agreements, of course, entail compromises. In the 1960s, almost all of New Zealand’s exports of butter went to Britain. High levels of protectionism in rich countries meant no market could replace it. As a result, points out Brian Easton, of the Auckland University of Technology, New Zealand’s trade negotiators chose to maximise their EEC butter quota at the expense of access for other goods. British negotiators too will face plenty of tricky choices. A free-trade deal with New Zealand itself, for example, would enable access for British exports, but competition from New Zealand would squeeze British lamb producers. Similarly, countries such as India and Australia might seek a relaxation in immigration rules in return for the free movement of goods and services. Since it is believed concerns about immigration weighed heavily with Brexit voters, that is unlikely to prove popular. + +The British and New Zealand cases differ in some important ways. Britain’s economy in recent years has been one of Europe’s fastest-growing. But the 1970s were tough for the New Zealand economy. Brentry was just one of many blows to buffet it. The oil shock, turbulence in commodity prices and a rise in protectionism in rich countries led to bouts of recession. A spate of radical liberalisation in the 1980s put the economy on a sounder footing. + + + +Also, New Zealand built closer trading links with neighbours. China, Australia and other members of the Asia-Pacific Economic Co-operation group, founded in 1992, now account for 72% of its exports (see chart). But ties with the neighbours are the very ones Britain wants to loosen. It will need relationships with countries that are farther away. And history shows that the greater the distance between two countries, the less they trade with each other. Technology may be weakening the link between trade and geography, but it is unlikely to make up for Britain’s reduced access to markets nearer by. + +Less tangible factors may also make Britain’s negotiating position more awkward. New Zealand was able to play on British guilt over its abandonment of the Commonwealth. Memories of the second world war were still fresh: New Zealand’s soldiers had fought alongside the British; its farmers had nourished the home front. In contrast, few in the EU have much sympathy for the renegade British. And when Mrs May’s ministers do talk about the war, they usually make matters worse. + +This article appeared in the Finance and economics section of the print edition under the headline “Not all black” + + + + + +Best guesses + +How to measure North Korea’s economy + +In the absence of reliable numbers, scholars try new forms of guesswork + +Feb 11th 2017 + +An area of darkness + +FACTS about the North Korean economy are not so much alternative as non-existent. The country has never published a statistical yearbook. If it did, no one would believe it. Nicholas Eberstadt of the American Enterprise Institute, a think-tank, calls analysis of its economy “essentially pre-quantitative”. + +The most-cited estimate of the size of the economy comes from South Korea’s central bank. Its methodology is opaque but is based, at least in part, on the South Korean intelligence agency’s estimates of the North’s physical output, which is then translated to South Korean prices. But it is hard to estimate market valuations for goods that are not traded on the market, and physical goods make up only a fraction of overall economic output. Another technique is to “mirror” statistics from the country’s trading partners. But most North Korean trade is with China, where statistics are unreliable. + +The advent of satellite imaging has helped, providing researchers with better estimates of manufacturing output, coal production and urbanisation. Yet another strategy is to work out national income from non-economic data. The Hyundai Research Institute, a consultancy, publishes another widely cited estimate of the North Korean economy based on a model that incorporates both infant-mortality rates and crop yields, two variables for which the numbers are at least plausible. + +A recent paper by Suk Lee of the Korea Development Institute, a South Korean government think-tank, puts a new spin on this approach. It estimates North Korea’s national income by comparing the share of its households that use solid fuels for cooking with that in other lower-income countries. The data, as reported by the North Korean census of 2008, show that nearly 93% of households lack access to gas or electricity and rely on firewood or coal. Assuming the numbers bear some relation to reality, they put North Korea in line with countries such Uganda and Haiti, and suggest that North Korea’s purchasing-power-adjusted income per person was somewhere between $948 and $1,361 in 2008. + +North Korea’s economy has made great strides since the country’s famine in the 1990s. The government has tacitly allowed the market economy to grow. Although the rest of the country is still indisputably poor, visitors to Pyongyang, at least, cannot help but note the rise of shops and taxis. The paradox is that as the North Korean economy modernises, the data may actually be deteriorating. The size of the country’s apparently burgeoning service sector is a complete mystery. Many scholars believe that the South Korean numbers are too low. Welcome though it is for poor North Koreans, growth may be bad for statisticians. + +This article appeared in the Finance and economics section of the print edition under the headline “Best guesses” + + + + + +Unhappy birthday + +Explaining euro-zone market jitters + +Widening bond spreads in France owe more to central-bank policy than to political risk + +Feb 11th 2017 + + + +IT was not an ideal way to mark a silver jubilee. The 25th anniversary of the signing of the Maastricht treaty, which gave life to the idea of a single European currency, fell on February 7th, the same day that the IMF published its annual health-check on the Greek economy. It said most (but not all) of its board favoured more debt relief to get Greece’s public finances in order—an idea quickly trashed by euro-zone officials. + +A day earlier the spread between ten-year government bonds in France and Germany had reached its widest level in four years. The proximate cause seemed to be a growing concern about political risks to the euro. François Fillon, once the front-runner in the race for the French presidency, is embroiled in a scandal and losing ground. A fear is that his fall from grace might boost support for Marine Le Pen, leader of the National Front, who wants France to leave the euro and the EU. + +Shorter odds on a Le Pen victory would certainly justify a higher risk premium on French bonds. Yet there is more to the latest bout of euro-area bond jitters than a sharper focus on politics. After all, bond markets shrugged off the resignation of Matteo Renzi, Italy’s prime minister, in December. “I don’t believe there is greater political risk in Europe than there was one month ago or three months ago,” says a senior analyst at a big bond fund. A big influence, rather, is the growing conviction that the European Central Bank (ECB) will soon decide to wind down its programme of quantitative easing, or QE. + +The ECB announced in December that it would reduce from April the amount of bonds it buys each month, from €80bn ($85bn) to €60bn. Mario Draghi, the bank’s boss, insisted this was not a “taper”, a word that implied a gradual reduction in purchases to zero. But the published minutes of the ECB’s December meeting suggested that QE was nevertheless running out of road. It was acknowledged, for instance, that there were legal risks in ditching a self-imposed rule that the ECB should not buy more than a third of any country’s government debt. This rule puts a cap on the Bunds the ECB can buy, since Germany has a shrinking debt pile. That matters because Germany also has the euro zone’s largest economy and bond purchases are proportionate to economic heft. It would cause a stink if the ECB decided to buy proportionately more bonds of high-debt countries such as Italy—or indeed France. + +There are other reasons to believe the ECB is heading for the QE off-ramp. The euro-zone economy is puttering along nicely. Although the core rate of inflation, which excludes volatile food and energy prices, is stuck below 1%, headline inflation has picked up sharply and will rise further in the spring, as last year’s big fall in oil prices drops out of the annual rate. The QE programme was conceived when deflation was greatly feared. Now that the risk of it is diminished, it is harder for the ECB to justify further hefty asset purchases—even if there were enough eligible bonds to buy. + +“The direction of travel is clear,” says David Riley, of BlueBay Asset Management, and that raises a question. In the absence of ECB purchases, what is the right spread and yield for the government bonds of France, Italy, Spain and the rest? It is a reappraisal of this kind that lies behind a general upward drift in euro-zone bond spreads in recent weeks (see chart). For now, they do not look excessive. But if there are further signs that QE is winding down, expect them to widen further, irrespective of the politics. + +This article appeared in the Finance and economics section of the print edition under the headline “Unhappy birthday” + + + + + +Like? + +Big data, financial services and privacy + +Should our bankers and insurers be our Facebook friends? + +Feb 11th 2017 + + + +DONALD TRUMP’s health-insurance premiums could soon go up, and not just because of his love of burritos. Data-crunchers have found a link between the negativity of someone’s tweets and his risk of dying of heart disease. The education levels of your Facebook friends or the activity on your phone can help reveal how likely you are to repay a loan. Money-managers are rummaging ever more curiously through customers’ digital lives. + +This is all part of an “intensifying data arms-race in finance”, says Magda Ramada Sarasola from Willis Towers Watson, a consultancy, which claims that no industry used more big data last year. Banks and insurers used to rely only on what customers and credit agencies told them, but today websites and mobile-banking apps let them get much more close and personal. Less conventional sources are also popular. Social-media profiles, web-browsing, loyalty cards and phone-location trackers can all help. In a trial, FICO, America’s main credit-scorer, found that the words someone uses in his Facebook status could help predict his creditworthiness (tip: avoid “wasted”). Even facial expressions and tone of voice are being studied for risk. + +Believers say such trawling will get customers cheaper and better products. But consumer advocates accuse the industry of deliberate vagueness about its intentions. Financiers, unlike gamblers, have always used data. But most people, when they accept the terms of a new app or click away that annoying cookie message, have no idea what they give away, to whom and for what purpose. According to the European Commission’s statistics agency, Eurostat, 81% of Europeans feel they don’t wholly control their online data; 69% worry that firms may use their data for purposes other than those advertised. + +Regulators are taking an interest. In September Britain’s Financial Conduct Authority said it worried that big data could price risky clients out of insurance. In May the European Banking Authority warned that the integrity of the financial sector could be at stake if insecure data use eroded trust. In December European regulators listed concerns over privacy and ethical issues. They are now consulting the industry to see if stricter rules are needed. + +Data can improve predictions of whether someone will fall ill or drive into a tree. Good algorithms are faster and cheaper than underwriters. Insurers also claim that the better they know customers, the more they can help change bad habits. The industry insists more customer data mean “tailored” products: someone about to bungee jump can be warned that his life policy doesn’t cover this, and be offered an add-on. Banks can protect customers against fraud if they follow their whereabouts. These techniques can also help people outside the financial system gain access to finance. For the 64m Americans without sufficient credit history and the 2bn people around the world without a bank account, this would be good news. + +But critics fear too much data-crunching could actually increase financial exclusion. The riskiest customers, and those offline, might be priced out. The more the industry relies on complex—and proprietary—algorithms, feeding machines that keep learning, the harder it will be for customers, and regulators, to untangle why they were rejected. And algorithms can be wrong. A bilingual speaker’s search-engine entries could look erratic; a social-worker’s location-tracker could imply a risky lifestyle. And since it is unclear how judgments are made, says Frederike Kaltheuner, from Privacy International, “you could get stuck in a Kafkaesque situation where you’re put in a certain box and can’t find out why, and can’t get out.” + +Yet privacy is a fluid concept. A survey last year by EY, a consultancy, found that around half of digitally savvy customers were happy to share more data with their bank, if they got something back. It also depends on context. When Tesco, a British retailer, uses data from loyalty cards to offer shoppers discounts on their favourite treats, few are bothered. But use the same data to help calculate an insurance premium (as it does), and many find it creepy. + +Keeping customers happy is not about what is legal, but about what they think is off-limits. People give uninformed consent to all sorts of things online. But users can feel tricked and spied on if they learn their data have been sold or used in unexpected ways. Retailers struggle with this too, but customers expect their bank to respect their privacy more, says Torsten Eistert from A.T. Kearney, a strategy firm. + +Trading data + +Regulators have a role to play, particularly in dealing with questions of discrimination and exclusion. If using someone’s browsing history to exclude them from an offer for a cheap flight is OK, is it also reasonable to use those data to lock them out of health insurance (eg, by assuming that someone who Googles doughnut shops is a bad risk)? Now that Amazon sells loans, Alibaba has a payments business and Facebook has patented a credit-rating system, regulators should be at least as worried about non-traditional financiers and fintech startups, which sometimes escape regulation. The European General Data Protection Regulation, which comes into force next year, covers privacy issues fairly comprehensively. It should help clarify the rules on handling personal data. + +Supervisors are slow, however. It is up to the industry to respond to customers’ demands well before regulators require it. New businesses that give people more control over data, such as digi.me, which lets users share data only with those they want, hold promise. If such tools help users become their own data-brokers, they may be willing to share more data with their mortgage lenders or insurers. But trust will truly be earned only if financial firms, old and new, get ahead of the game and start talking to customers about what’s really going on behind their screens. + +This article appeared in the Finance and economics section of the print edition under the headline “Like?” + + + + + +Free exchange + +Donald Trump and the dollar standard + +A pillar of global financial stability is under threat + +Feb 11th 2017 + + + +TRUMPISM is in part an expression of American exhaustion at bearing burdens it first took up 70 years ago. Donald Trump has moaned less about the dollar than about shirking NATO allies or cheating trade partners. Yet the dollar standard is one of the most vulnerable pillars of global stability. And the world is far from ready for America to ditch its global financial role. + +Unlike other aspects of American hegemony, the dollar has grown more important as the world has globalised, not less. In the Bretton Woods system devised for the post-war world, Western economies fixed their exchange rates to the dollar, which was in turn pegged to the price of gold. After the fracturing of this system under the inflationary pressures of the 1970s, the dollar became more central than ever. As economies opened their capital markets in the 1980s and 1990s, global capital flows surged. Yet most governments sought exchange-rate stability amid the sloshing tides of money. They managed their exchange rates using massive piles of foreign-exchange reserves (see chart). Global reserves have grown from under $1trn in the 1980s to more than $10trn today. + +Dollar-denominated assets account for much of those reserves. Governments worry more about big swings in the dollar than in other currencies; trade is often conducted in dollar terms; and firms and governments owe roughly $10trn in dollar-denominated debt. New research by Ethan Ilzetzki, of the London School of Economics, and Carmen Reinhart and Kenneth Rogoff , of Harvard University, concludes that the dollar is, on some measures, more central to the global system now than it was immediately after the second world war. It remains the world’s principal “anchor” currency, against which others seek to limit volatility. + +America wields enormous financial power as a result. It can wreak havoc by withholding supplies of dollars in a crisis. When the Federal Reserve tweaks monetary policy, the effects ripple across the global economy. Hélène Rey of the London Business School argues that, despite their reserve holdings, many economies have lost full control over their domestic monetary policy, because of the effect of Fed policy on global appetite for risk. + +Leaders of other economies bristle at this. During the heyday of Bretton Woods, Valéry Giscard d’Estaing, a French finance minister (later president), complained about the “exorbitant privilege” enjoyed by the issuer of the world’s reserve currency. America’s return on its foreign assets is markedly higher than the return foreign investors earn on their American assets (foreign governments hold vast amounts of safe but low-yielding dollar assets, like Treasury bonds, as reserves). That flow of investment income allows America to run persistent current-account deficits—to buy more than it produces year after year, decade after decade. + +This has become a privilege America seems eager to discard. An overvalued currency and persistent trade deficits are fine for America’s consumers, but painful for its producers. The reserve accumulation of the past two decades has gone hand-in-hand with a soaring current-account deficit in America. Imports have grown faster than exports; new jobs in exporting industries have not appeared in numbers great enough to absorb workers displaced by increased foreign competition. Tariffs cannot fix this problem. The current-account gap is a product of underlying financial flows, and taxing imports will simply cause the dollar to rise in an offsetting fashion. + +America’s privilege also increases inequality, since lost jobs in factories hurt workers while outsize investment performance benefits richer Americans with big portfolios. Because the rich are less inclined to spend an extra dollar than the typical worker, this shift in resources creates weakness in American demand—and sluggish economic growth—except when consumer debt rises as the rich lend their purchasing power to the rest. + +Chalk the headaches generated by low interest rates up to the dollar standard, too. Some economists reckon they reflect global appetite outstripping the supply of the safe assets America is uniquely equipped to provide—dollar-denominated government bonds. As the price of safe bonds rises, rates on those bonds fall close to zero, leaving central banks with ever less room to stimulate their economies when they run into trouble. + +A new golden age + +A benign solution seems obvious: the dollar should share its role with other currencies. But one candidate to share the load—China’s yuan—is inhibited by tight limits on Chinese financial markets. Nor is increased dependence on China an attractive option for governments seeking to reduce their exposure to authoritarian-minded, transparency-averse regimes with unclear motives. The role of the euro, the other logical option, is constrained by existential political risk and the scarcity of safe euro-denominated bonds. What is more, the world’s big economies have much to lose from an end to American monetary hegemony. Their politically convenient trade surpluses for one; the value of the enormous piles of dollar-denominated assets for another. + +History suggests two ways in which Mr Trump might undermine the dollar’s role. Bretton Woods broke apart as a result of a fatal flaw: governments were desperate for dollars, but in creating more of them America fanned inflation, which made its gold peg unsustainable. Similarly, should Mr Trump’s efforts to make America great again through tax cuts and spending lead to ever larger budget deficits and rising inflation, American assets might lose their lustre. America might resemble the 1970s again: with soaring prices and interest rates, but free of its exorbitant burden. + +Alternatively, the dollar might go the way of the inter-war gold standard. That collapsed amid a breakdown in international co-operation, as governments of uncompetitive economies put up tariffs and then withdrew from the system altogether through the erection of capital controls. It would be tragic if history’s lessons were forgotten and had to be learned all over again. + +Visit our Free exchange economics blog + +This article appeared in the Finance and economics section of the print edition under the headline “It’s been a privilege” + + + + + +Technically independent + +China tightens monetary policy (discreetly) + +A small interest-rate rise shows the central bank testing the limits of its independence + +Feb 11th 2017 + + + +IF ASKED before the start of 2017 to bet on which important central bank would be the first to raise interest rates this year, the safe choice would have been the Federal Reserve. Some gamblers, relishing the long odds, might have gone for the Bank of England or even taken a flutter on the European Central Bank. All these guesses would have been wrong. The first to budge this year? The People’s Bank of China. + +On February 3rd the Chinese central bank raised a series of short-term rates. The decision received scant attention. The increases were, after all, small: one-tenth of a percentage point for the main rates. It also seemed quite technical, primarily affecting liquidity tools that lenders can tap if short of cash. And there was no fanfare: the central bank did not publish an explanation. + +But China’s move is important for two reasons. First, it highlights the government’s dilemma in managing the economy. Growth is expected to slow from last year’s pace of 6.7%, and recent surveys suggest that momentum is already ebbing. Sentiment is fragile: investment by private companies last year increased at its slowest pace in more than a decade. This would normally not be the time to launch a monetary-tightening cycle. However, other dangers loom. The housing market is frothy. Credit growth has been excessive. And financial institutions have used increasing amounts of debt to buy bonds. + +The central bank hopes to strike a balance. By nudging up money-market rates, it wants to push lenders and investors to pare back their borrowing. But it also wants to avoid harming growth. + +It is a fine line. Chinese policymakers at least have one advantage over peers in developed economies: they can count on the press to amplify their message. State television said the rate rise would affect financial institutions, but not the public—as if it were somehow possible to segregate one from the other. + +This points to the second ramification: the way in which the People’s Bank of China conducts monetary policy is changing. It is beginning to look a little more like central banks in developed economies as it shifts towards liberalised interest rates. Rather than simply ordering banks to set specific lending or deposit rates—the focus for many years in China—it is altering the monetary environment around them. China does not yet have an equivalent of the federal-funds rate in America or the refinancing rate in Europe, but it has a few candidates for its new benchmark interest rate. The seven-day bond-repurchase rate, which influences banks’ funding costs, is in pole position. + +There is also an element of political intrigue in this transition to a more mature monetary framework. The Chinese central bank sits under the State Council, or cabinet, which has the final say over lending and deposit rates as well as other big policy decisions. Repo rates, by contrast, are seen as sufficiently abstruse for the central bank to decide on its own when it wants to change them. + +In other words, the more technical a policy is, the more technocrats can carve out space for themselves. Yet this also gives the Chinese central bank one more reason to raise rates cautiously. Were its actions to have a bigger impact on the economy, its newfound, if limited, independence would not last long. + +This article appeared in the Finance and economics section of the print edition under the headline “Technically independent” + + + + + +Science and technology + + + + +Molecular biology: Folding stuff + +Obituary: The joy of stats + +Pollination: Where the bee sucks + +Female genital mutilation: Culture wars + + + + + +Molecular biology + +How to determine a protein’s shape + +Only a third of known protein structures are human + +Feb 11th 2017 + + + +ABOUT 120,000 types of protein molecule have yielded up their structures to science. That sounds a lot, but it isn’t. The techniques, such as X-ray crystallography and nuclear-magnetic resonance (NMR), which are used to elucidate such structures do not work on all proteins. Some types are hard to produce or purify in the volumes required. Others do not seem to crystallise at all—a prerequisite for probing them with X-rays. As a consequence, those structures that have been determined include representatives of less than a third of the 16,000 known protein families. Researchers can build reasonable computer models for around another third, because the structures of these resemble ones already known. For the remainder, however, there is nothing to go on. + +In addition to this lack of information about protein families, there is a lack of information about those from the species of most interest to researchers: Homo sapiens. Only a quarter of known protein structures are human. A majority of the rest come from bacteria. This paucity is a problem, for in proteins form and function are intimately related. A protein is a chain of smaller molecules, called amino acids, that is often hundreds or thousands of links long. By a process not well understood, this chain folds up, after it has been made, into a specific and complex three-dimensional shape. That shape determines what the protein does: acting as a channel, say, to admit a chemical into a cell; or as an enzyme to accelerate a chemical reaction; or as a receptor, to receive chemical signals and pass them on to a cell’s molecular machinery. (Models of all three, in that order, are shown above.) + +Almost all drugs work by binding to a particular protein in a particular place, thereby altering or disabling that protein’s function. Designing new drugs is easier if binding sites can be identified in advance. But that means knowing the protein’s structure. To be able to predict this from the order of the amino acids in the chain would thus be of enormous value. That is a hard task, but it is starting to be cracked. + +Chain gang + +One of the leading researchers in the field of protein folding is David Baker of the University of Washington, in Seattle. For the past 20 years he and his colleagues have used increasingly sophisticated versions of a program they call Rosetta to generate various possible shapes for a given protein, and then work out which is most stable and thus most likely to be the real one. In 2015 they predicted the structures of representative members of 58 of the missing protein families. Last month they followed that up by predicting 614 more. + +Even a small protein can fold up into tens of thousands of shapes that are more or less stable. According to Dr Baker, a chain a mere 70 amino acids long—a tiddler in biological terms—has to be folded virtually inside a computer about 100,000 times in order to cover all the possibilities and thus find the optimum. Since it takes a standard microprocessor ten minutes to do the computations needed for a single one of these virtual foldings, even for a protein this small, the project has, for more than a decade, relied on cadging processing power from thousands of privately owned PCs. Volunteers download a version of Dr Baker’s program, called rosetta@home, that runs in the background when a computer is otherwise idle. + +This “citizen science” has helped a lot. But the real breakthrough, which led to those 672 novel structures, is a shortcut known as protein-contact prediction. This relies on the observation that chain-folding patterns seen in nature bring certain pairs of amino acids close together predictably enough for the fact to be used in the virtual-folding process. + +An amino acid has four arms, each connected to a central carbon atom. Two arms are the amine group and the acid group that give the molecule its name. Protein chains form because amine groups and acid groups like to react together and link up. The third is a single hydrogen atom. But the fourth can be any combination of atoms able to bond with the central carbon atom. It is this fourth arm, called the side chain, which gives each type of amino acid its individual characteristics. + +One common protein-contact prediction is that, if the side chain of one member of a pair of amino acids brought close together by folding is long, then that of the other member will be short, and vice versa. In other words, the sum of the two lengths is constant. If you have but a single protein sequence available, knowing this is not much use. Recent developments in genomics, however, mean that the DNA sequences of lots of different species are now available. Since DNA encodes the amino-acid sequences of an organism’s proteins, the composition of those species’ proteins is now known, too. That means slightly different versions, from related species, of what is essentially the same protein can be compared. The latest version of Rosetta does so, looking for co-variation (eg, in this case, two places along the length of the proteins’ chains where a shortening of an amino acid’s side chain in one is always accompanied by a lengthening of it in the other). In this way, it can identify parts of the folded structure that are close together. + +Though it is still early days, the method seems to work. None of the 614 structures Dr Baker modelled most recently has yet been elucidated by crystallography or NMR, but six of the previous 58 have. In each case the prediction closely matched reality. Moreover, when used to “hindcast” the shapes of 81 proteins with known structures, the protein-contact-prediction version of Rosetta got them all right. + +There is a limitation, though. Of the genomes well-enough known to use for this trick, 88,000 belong to bacteria, the most speciose type of life on Earth. Only 4,000 belong to eukaryotes—the branch of life, made of complex cells, which includes plants, fungi and animals. There are, then, not yet enough relatives of human beings in the mix to look for the co-variation Dr Baker’s method relies on. + +Others think they have an answer to that problem. They are trying to extend protein-contact prediction to look for relationships between more than two amino acids in a chain. This would reduce the number of related proteins needed to draw structural inferences and might thus bring human proteins within range of the technique. But to do so, you need a different computational approach. Those attempting it are testing out the branch of artificial intelligence known as deep learning. + +Linking the links + +Deep learning employs pieces of software called artificial neural networks to fossick out otherwise-abstruse patterns. It is the basis of image- and speech-recognition programs, and also of the game-playing programs that have recently beaten human champions at Go and poker. + +Jianlin Cheng, of the University of Missouri, in Columbia, who was one of the first to apply deep learning in this way, says such programs should be able to spot correlations between three, four or more amino acids, and thus need fewer related proteins to predict structures. Jinbo Xu, of the Toyota Technological Institute in Chicago, claims to have achieved this already. He and his colleagues published their method in PLOS Computational Biology, in January, and it is now being tested. + +If the deep-learning approach to protein folding lives up to its promise, the number of known protein structures should multiply rapidly. More importantly, so should the number that belong to human proteins. That will be of immediate value to drugmakers. It will also help biologists understand better the fundamental workings of cells—and thus what, at a molecular level, it truly means to be alive. + +This article appeared in the Science and technology section of the print edition under the headline “Folding stuff” + + + + + +Obituary + +Hans Rosling, statistician and sword-swallower, has died + +The joy of stats, in a Swedish accent + +Feb 11th 2017 + + + +STATISTICS has not, traditionally, been an exciting word. Its most common prefix is the word “dry”. Ask people what they think of statistics, or try to use some in an argument, and you will often get the quote attributed to Benjamin Disraeli that lists them alongside lies and damned lies. That is a shame: tables of figures may look dull, but they are a better guide to what is happening in the world than anything on television or in the press. + +Hans Rosling had no time for the idea that statistics were boring. Armed with everything from a few Lego bricks and a pocketful of draughts pieces to snazzy, specially made computer graphics, he had a talent for using numbers to tell exciting stories. Not just exciting, but optimistic, too, for the tales those numbers told were of a world which, despite the headlines, was rapidly becoming a better place. + +He knew what he was talking about. Besides being a statistician, he was also a doctor with experience in some of the world’s poorest corners. He did his PhD in Africa, studying a disease called konzo that strikes people whose diets include a lot of semi-processed cassava, which contains high levels of cyanide. But it was his flair for the dramatic that allowed him to share that expertise with other people. + +It was a job that needed doing. By the 1990s he was teaching global health at the Karolinska Institute, in Stockholm. He found that his students—the cream of Sweden’s academic crop—had little idea about the world. When he gave them five pairs of countries and asked which of each pair had the higher rate of child mortality, the average number of correct answers was just 1.8. “Swedish students, in other words,” he said, “know…less about the world than a chimpanzee.” (The chimp, by choosing randomly, would score 2.5 out of five.) The same applied to his academic colleagues—who, as he pointed out with a twinkle in his eye, were responsible for handing out the Nobel prize for medicine. + +He was a natural showman. In 2007 he finished a talk on global development with a demonstration of sword-swallowing, ingesting a Swedish-army bayonet live on stage. As his fame grew, he became a regular at gatherings of the great and the good, presenting talks at TED (a series of conferences supposed to give novel ideas an airing; his were much better than most) and attending Davos, an annual gathering of the masters of the universe in Switzerland. + +His stock-in-trade was debunking gloomy stereotypes about poor countries and economic development. There were five surprising facts, for instance, that he loved to hammer home: population growth is slowing rapidly; the divide between the global rich and poor is blurring; humans are living much longer than 50 years ago; many more girls are getting an education; and the number of people in extreme poverty fell by a billion between 1980 and 2013. + +Dr Rosling’s talent was to make those facts sing—to remind his audience that these dry-sounding numbers are, in fact, the sum total of billions of real lives that are better than they would have been half a century ago. His elevation annoyed some critics. Paul Ehrlich, a biologist who had, in the 1970s, predicted that hundreds of millions of people would starve by the end of that decade, accused him of being a Pollyanna. But it was hard to argue with his facts. Most simply celebrated him as a communicator of some happy truths. + +Dr Rosling himself was sceptical about how much impact he had really made. People seemed to cling to their gloomy, wrong assumptions about the world. In 2013, in an interview with the Guardian, he reflected: “When we asked the Swedish population how many children are born per woman in Bangladesh, they still think it’s four to five.” In reality, the numbers have not been that high for 20 years. The current rate is 2.3—less than South Africa, and only slightly higher than New Zealand. + +This article appeared in the Science and technology section of the print edition under the headline “The joy of stats” + + + + + +Robot bees + +Plans for artificial pollinators are afoot + +Introducing the ultimate drone + +Feb 11th 2017 + + + +IT IS, in one way, the ultimate drone. In another, though, it is the antithesis of what a drone should be. Drones are supposed to laze around in the hive while their sisters collect nectar and pollinate flowers. But pollination is this drone’s very reason for existing. + +The drone in question is the brainchild of Eijiro Miyako, of the National Institute of Advanced Industrial Science and Technology, in Tsukuba, Japan. It is the first attempt by an engineer to deal with what many perceive as an impending agricultural crisis. Pollinating insects in general, and bees in particular, are falling in numbers. The reasons why are obscure. But some fear certain crops will become scarcer and more expensive as a result. Attempts to boost the number of natural pollinators have so far failed. Perhaps, thinks Dr Miyako, it is time to build some artificial ones instead. + +His pollinator-bot does not, it must be said, look much like a bee. It is a modified version of a commercially available robot quadcopter, 42mm across. (By comparison, a honeybee worker is about 15mm long.) But the modifications mean it can, indeed, pollinate flowers. Specifically—and crucially—Dr Miyako has armed it with paintbrush hairs that are covered in a special gel sticky enough to pick pollen up, but not so sticky that it holds on to that pollen when it brushes up against something else. + +Previous attempts to build artificial pollinators have failed to manage this. Dr Miyako, though, has succeeded. Experiments flying the drone up to lily and tulip flowers, so that the gel-laden hairs come into contact with both the pollen-bearing anthers and the pollen-receiving stigmata of those flowers, show that the drone can indeed carry pollen from flower to flower in the way an insect would—though he has yet to confirm that seeds result from this pollination. + +At the moment, Dr Miyako’s drones have to be guided to their targets by a human operator. The next stage will be to fit them with vision that lets them recognise flowers by themselves. Fortunately, visual-recognition software is sufficiently developed that this should not be too hard. In future, when you are walking through an orchard in bloom, listen out for the humming of the drones as well as the buzzing of the bees. + +This article appeared in the Science and technology section of the print edition under the headline “Where the bee sucks” + + + + + +Female genital mutilation + +Cultural evolution and the mutilation of women + +The consequences of FGM for a woman’s reproductive output + +Feb 11th 2017 + +Just stop it! + +GENES that increase an individual’s reproductive output will be preserved and spread from generation to generation. That is the process of evolution by natural selection. More subtly, though, in species that have the sorts of learnable, and thus transmissible, behaviour patterns known as culture, cultural changes that promote successful reproduction are also likely to spread. This sort of cultural evolution is less studied than the genetic variety, but perhaps that should change, for a paper published this week in Nature Ecology and Evolution, by Janet Howard and Mhairi Gibson of the University of Bristol, in England, suggests that understanding it better may help wipe out a particularly unpleasant practice: female genital mutilation. + +FGM, as it is known for short, involves cutting or removing part or all of a female’s external genitalia—usually when she is a child or just entering puberty. Unlike male circumcision, which at least curbs the transmission of HIV, the AIDS-causing virus, FGM brings no medical benefit whatsoever. Indeed, it often does harm. Besides psychological damage and the inevitable risk that is associated with any sort of surgery (especially when conducted outside a clinic), FGM can cause subsequent obstetric complications and put a woman at risk of future infections. All these seem good reasons why it would harm reproductive output and thus be disfavoured by evolution, whether biological or cultural. Yet the practice persists, particularly in parts of Africa and among migrant populations originating from these places. Ms Howard and Dr Gibson wanted to understand why. + +To do so they drew on data from five national health surveys carried out in west Africa (specifically, Burkina Faso, Ivory Coast, Nigeria, Mali and Senegal) over the past ten years. These provided data on the FGM-status—mutilated or otherwise—of more than 60,000 women from 47 ethnic groups. That enabled Ms Howard and Dr Gibson to establish the prevalence rates of mutilation in each of these groups, and to search for explanations of any variation. + +They first confirmed formally what common sense would suggest is true—that the daughters of a mother belonging to an ethnic group where FGM is widespread are, themselves, more likely to have undergone it than those of a mother not belonging to such a group. But there was more to the pattern of those results than mere correlation. The average rates of mutilation in the groups the researchers looked at tended to cluster towards the ends of the distribution, near either 0% or 100%, rather than being spread evenly along it. + +In the argot of statistics, then, the distribution is U-shaped. This suggests something is pushing behaviour patterns away from the middle and towards the extremes. What that something might be is in turn suggested by the two researchers’ second finding: the consequences of mutilation for a woman’s reproductive output. + +All or none + +For convenience, Ms Howard and Dr Gibson defined a woman’s reproductive output as the number of her children still living when she reached the age of 40. Just over 10,000 women in the five pooled surveys were over this age, and it was from them that the researchers drew their data. Analysis showed that in ethnic groups where mutilation was common, mothers who were themselves mutilated had more children over their reproductive lifetimes than did the unmutilated. In groups where mutilation was rare, by contrast, it was the other way around. At the extremes, in groups where mutilation was almost ubiquitous or almost unheard of, the average difference amounted to a third or more of an extra child per lifetime. That is a strong evolutionary pressure to conform to the prevailing social norm, whatever it is. + +What causes this difference Ms Howard and Dr Gibson cannot say for sure, but they suggest that conforming to whichever norm prevails might let a woman make a more advantageous marriage, and also give her better access to support networks, particularly of members of her own sex. Cultural evolution, in other words, is generating conformity in the same sort of way that biological evolution does when the plumage of a male bird has to conform to female expectations of what a male looks like if that male is to mate successfully, even though the particular pattern of his plumage brings no other benefit. + +All this does, though, offer a lever to those who are trying to eradicate FGM, for unlike genetic norms, cultural ones can be manipulated. The distribution’s shape suggests that, if mutilation rates in societies where FGM is now the norm could somehow be pushed below 50%, then positive feedback might continue to reduce them without further effort (though such effort could well speed things up). + +One thing that is known to push in the right direction is more and better education—and not just for girls. That is desirable, though, for reasons far wider than just the elimination of FGM. More specifically, in a companion piece to Ms Howard’s and Dr Gibson’s paper, Katherine Wander of Binghamton University, in New York state, offers a thought inspired directly by the new research. She wonders if fostering social connections between “cut” and “uncut” women in a community might reorganise support networks specifically in a way that reduces the advantages of mutilation. + +More widely, the method Ms Howard and Dr Gibson have pioneered, of looking for unexpected advantages that help explain the persistence of other undesirable behaviours, might be applied elsewhere. So-called “honour killings” would be a candidate for such a study, as would the related phenomena of daughter neglect and the selective infanticide and selective abortion of females. On the face of things, these might be expected to be bad for total reproductive output. But perhaps, as with FGM, that is not always the case. And, if it is not, such knowledge would surely help in the fight against them. + + + +This article appeared in the Science and technology section of the print edition under the headline “Culture wars” + + + + + +Books and arts + + + + +Lost Europe: Mapping history + +Nature notes: The undercover life of animals + +Thoughts on time: Clock-watching + +Civil wars: Brother against brother + +French fiction: From the bottom up + +Wolfgang Tillmans: Fiery angel + + + + + +A writer explores Europe’s south-eastern border + +Mapping history + +A walk through the continent’s mountainous south-eastern corner + +Feb 11th 2017 + + + +Border: A Journey to the Edge of Europe. By Kapka Kassabova. Granta; 379 pages; £14.99. To be published in America by Graywolf in September; $16. + +TRAGEDIES and mistakes are strewn across Europe’s borderlands. Nowhere more so than in the continent’s mountainous south-eastern corner, where the Iron Curtain once divided communist Bulgaria from capitalist Greece and Turkey. The land is haunted by that divide, and by vanished kingdoms, peoples and wars. Kapka Kassabova’s poignant, erudite and witty third book, “Border”, brings hidden history vividly to light. + +The central theme of the book, topically, is frontiers. Lines on the map that are drawn and policed by the powerful, protect one sort of interests while severing others. “An actively policed border is always aggressive,” she writes. “It is where power acquires a body, if not a human face, and an ideology.” + +Some of the book’s most striking passages are about “well-oiled feudal barbarity”, the abominable treatment that was meted out to those who tried to escape: tricked and betrayed, beaten and jailed, or shot in cold blood and left to bleed to death. At a time when memories of the Soviet empire’s vast prison camp are fading, the story Ms Kassabova has to tell is important. She grew up in communist Bulgaria and remembers that system’s arbitrary cruelty, which finds echoes today in the mistreatment of refugees and migrants. + +The post-communist era brought new problems: corruption, petty nationalist quarrels and environmental ruin. Ms Kassabova’s book drips with scorn for the spivs, goons and far-off politicians whose greed and carelessness wreak such mischief and misery. She was inspired to write it after witnessing the “roughshod levelling” of her adopted home in the Scottish Highlands, and later, when helping Bulgarians clean up after a flood caused by illegal logging and the looting of sand, she shouts, “Something must be done.” “It’s because you don’t live here…You still believe in justice,” comes the crushing retort. + +A particular treat is her ear for lurid local myths. Extraterrestrial beacons, mysterious balls of fire, lost pyramids and a secret site guarded by specially bred Uzbek vipers all get a look in. The first account of the region was in the fifth century BC, by Herodotus. Ms Kassabova gamely takes up the first historian’s torch. Her writing also has echoes of Patrick Leigh Fermor’s epic tramp across the pre-war Balkans. But her sparse, ironic style lacks the self-conscious self-indulgence of Fermor’s prose, and is all the better for it. + +She treads lightly but distinctly through the stories she tells, displaying an enviable mixture of rapport with her subjects and detachment from their peculiarities. Leaving her favourite valley in the Strandja mountains was “like pulling myself out with a corkscrew”, she writes. She highlights stories barely known outside the region, such as the communist Bulgarian regime’s vindictive deportation of 340,000 ethnic Turks in the 1980s and the doomed 15-year struggle of the Goryani (Woodlanders) against communist rule. Their fate is absent from Bulgaria’s modern history: their mouths, she writes, “are full of earth”. + +Yet the author’s astringent approach to myths and falsehoods could be more evenly applied. Many might quibble with Ms Kassabova’s unsupported assertion that the Goryani were the “largest, longest-sustained resistance movement against Soviet state terror in eastern Europe” (Ukraine’s and Poland’s anti-communist guerrilla movements were the biggest, and the last Estonian partisan was on the run until 1978). The story of an East German family fleeing to the West in a home-made balloon is not, as she dismisses it, “apocryphal”: the briefest research reveals that it really happened, in 1979. Britain’s foreign espionage service is MI6, not MI5. + +But these flaws pale against the strength of the book: its treatment of history’s blessings and curses. Past imperial ages—chiefly Byzantine and Ottoman—laid down complex, and mostly harmonious, layers of languages, ethnicities, cultures and religions, erased in the name of nation-building and tidiness. Communities with roots going back centuries were pulled up and dumped across borders that had once hardly mattered, into countries that they scarcely knew. It is a “melancholy miracle”, writes Ms Kassabova, that “odd ragged bits of this once-rich human tapestry” survive. They could have no better chronicler. + +This article appeared in the Books and arts section of the print edition + + + + + +Notes from the underground + +Song of the ichnologist + +Why the undercover life of animals is important + +Feb 11th 2017 + +The pocket gopher’s pocket plaza + +The Evolution Underground: Burrows, Bunkers, and the Marvellous Subterranean World Beneath Our Feet. By Anthony Martin. Pegasus; 405 pages; $28.95. To be published in Britain by W.W. Norton in March; £22.99. + +IN THE card game of survival, the pocket gopher has been dealt a royal flush. When Mount St Helens erupted in 1980 and vaporised 600 square kilometres (230 square miles) of the Cascade mountains in Washington state, the small mammal hunkered down in its burrow, and—unlike elk, mountain goats and coyotes, which perished in their thousands—emerged from the conflagration intact. It relied on a tactic first exploited 545m years ago by trilobites and marine worms: duck and cover. + +In “The Evolution Underground” Anthony Martin of Emory University digs into the subterranean strategies of prehistoric and contemporary animals, from insects to giant sloths and, to a lesser extent, humans. Mr Martin is a geologist, paleontologist and, notably, an ichnologist—a scientist who studies animal traces such as burrows, tracks and trails. They offer subtle clues that help shift the dramatic narrative of prehistoric life forward. Trace fossils evince movement, whether the footprints of a dinosaur or the sinuous bore hole of a worm. They also reveal behaviour—the nesting habits of horseshoe crabs, the digging methodology of ants, even the existence of a burrowing dinosaur, Oryctodromeus cubicularis, co-discovered by Mr Martin in 2005 in south-western Montana. + +In the Permian, Triassic and Cretaceous eras burrowing animals (“prehistoric preppers”, he calls them) survived the great extinctions that obliterated other fauna, including dinosaurs. Today underground warrens enable lungfish in Africa to survive drought, iguanas in the Bahamas to weather hurricanes and alligators in Georgia to sit out wildfires. + +Because extremes in temperature are ironed out underground, the virtues of subterranean living have been used to human advantage as well. Homes and hotels carved from abandoned opal mines in Australia provide shelter from desert temperatures of 40-45°C (104-113°F) in summer. Likewise, shoppers in Montreal’s La Ville Souterraine escape the -25°C wind-chilled Canadian winter. + +Mr Martin offers a more ominous example of defensive digging in cold-war era bunkers like “Site R” in Pennsylvania, which was built in the early 1950s. Hewed from metamorphic rock 200 metres (650 feet) beneath a mountain, the nuclear blast-proof compound with capacity for 3,000 people features a barber shop, fitness centre and a chapel. The military-communications centre is also a bolthole for the president of the United States. + +Congress had its own escape hatch, code-named “Casper,” built beneath the Greenbrier, a smart resort in White Sulphur Springs, West Virginia. Unlike the digs of another underground lodger—the gopher tortoise, which shares its space with hundreds of other species—the bunker’s welcome mat was not extended to friends and family. No matter. In 1992, after the Washington Post blew the lid off Casper, the site was closed and later became a tourist attraction. + +In the raise-you-one nuclear-proliferation stakes, the Soviet government built bunkers, too. In 1991 a report by the Defence Department noted two: one under the Kremlin and another near Moscow State University—more evidence, Mr Martin says, of the zenith reached by governments planning to “survive worst-case scenarios inflicted by human-caused ...disasters”. Magical thinking, that survival stuff. Though a volcano-proof burrow is a winning strategy for a pocket gopher, a “nuke-proof” bunker may be more indicative of a losing game for humans. + +This article appeared in the Books and arts section of the print edition under the headline “The undercover life of animals” + + + + + +Thoughts on time + +Clock-watching + +A sweeping look at mankind’s relationship with time + +Feb 11th 2017 + + + +Why Time Flies: A Mostly Scientific Investigation. By Alan Burdick. Simon & Schuster; 320 pages; $28. + +TIME is such a slippery thing. It ticks away, neutrally, yet it also flies and collapses, and is more often lost than found. Days can feel eternal but a month can gallop past. So, is time ever perceived objectively? Is this experience innate or is it learned? And how long is “now”, anyway? Such questions have puzzled philosophers and scientists for over 2,000 years. They also began to haunt Alan Burdick of the New Yorker. Keen for answers, he set out “on a journey through the world of time”, a lengthy trip that spans everything from Zeno’s paradoxes to the latest neuroscience. Alas, he arrives at a somewhat dispiriting conclusion: “If scientists agree on anything, it’s that nobody knows enough about time.” + +Humans are apparently poor judges of the duration of time. Minutes seem to drag when one is bored, tired or sad, yet they flit by for those who are busy, happy or socialising (particularly if alcohol or cocaine is involved). Eventful periods seem, in retrospect, to have passed slowly, whereas humdrum stretches will have sped by. Although humans (and many animals) have an internal mechanism to keep time, this turns out to be as reliable as a vintage cuckoo clock. “It’s a mystery to me that we function as well as we do,” observes Dan Lloyd, a philosopher and time scholar at Trinity College in Hartford, Connecticut. + +St Augustine, a fourth-century philosopher and theologian, was the first to recognise time as a property of the mind, an experience of perception and far from absolute. His insight turned what had been a subject of physics into one of psychology, and it informs much of the work of later scientists. In the mid-1800s William James, a philosopher and psychologist, noted that the brain does not perceive time itself but its passage, and only because it is filled in some way. He grew baffled by efforts to quantify the present, observing that any instant melts in one’s grasp, “gone in the instant of becoming”. + +Of all interior clocks, the circadian is perhaps best understood. Nearly every organism has a molecular rhythm cycle that roughly tracks a 24-hour period. In humans all bodily functions oscillate depending on the time of day. Blood pressure peaks around noon; physical co-ordination crests in midafternoon; and muscles are strongest at around 5pm. Night-shift workers are not as productive as they think they are. Cataclysms of human error, including accidents at Chernobyl and aboard the Exxon Valdez, all took place in the small hours, when workers are measurably slowest to respond to warning signals. Long-distance travel often makes a hash of the body’s “synchronised confederacy of clocks”, disrupting not only sleep but metabolism. The jet-lagged body recovers at a rate of about one time zone per day. + +Mr Burdick spent quite a lot of time on this book, beginning it just before his twin sons were born and finishing it when they were old enough to suggest titles. It reads like a discursive journey through a vague and slippery subject, a thoughtful ramble across decades and disciplines. Although the study of time has yielded few firm conclusions, one lesson is poignantly certain: most people complain that time seems to speed up as they get older, in part because they feel more pressed for it. “Time”, writes Mr Burdick, “matters precisely because it ends.” + +This article appeared in the Books and arts section of the print edition + + + + + +Civil wars throughout history + +Brother against brother + +A historian excavates 2,000 years of thinking on civil war + +Feb 11th 2017 + + + +Civil Wars: A History in Ideas. By David Armitage. Knopf, 349 pages; $27.95. Yale University Press; £18.99. + +IN DECEMBER 2011, months after fighting broke out in Syria, a State Department spokesman was asked if the conflict was really a civil war. He dodged the term, which is fraught with legal, military, political and economic implications for the intervention of outside states. Bashar al-Assad called his enemies “terrorists”. The Syrian people understood their conflict more hopefully, as a revolution (though one exile insisted to the Guardian: “This is not a revolution against a regime any more, this is a civil war.”) In July 2012, after 17,000 deaths, the Red Cross at last acknowledged that Syria was engaged in “armed conflict not of an international character”. + +Civil war, writes David Armitage, a historian at Harvard University, is “an essentially contested concept about the essential elements of contestation”. Intrastate war has replaced wars between states as the most common form of organised violence: the annual average of intrastate wars between 1816 and 1989 was a tenth of the number in each year since 1989. Only 5% of wars in the recent period have been between states. But an abundance of cases has not improved clarity. “Civil war” can be invoked to bring a conflict within the constraints of the Geneva Convention and to authorise intervention, including millions of dollars in humanitarian aid. But it can also be used to dismiss conflicts as internal matters, as happened with Rwanda and Bosnia in the 1990s. It is rewritten as “revolution” when rebels are victorious—but was the American Revolution not a civil war within the British empire? Ruling powers, quick to deny the legitimacy of their challengers, reduce it to illegal insurrection. “Civil war”, by contrast, recognises rebels as an equal, opposing party—in effect, a separate nation. + +In “Civil Wars” Mr Armitage traces the evolution of an explosive concept, not to pin down a proper meaning but to show why it remains so slippery. The Romans, to whom he attributes the origin of the idea, spoke of bellum civile with horror: a conflict against enemies who were really brothers, for a cause that, consequently, could not be just, it defied their very criteria for war. It was the savage, suicidal turning of a civilisation on itself. Yet, it seemed an inescapable feature of Roman civilisation; its foundational curse, a recurrent phenomenon like the eruptions of a volcano. “No foreign sword has ever penetrated so,” wrote the poet Lucan. “It is wounds inflicted by the hand of fellow-citizen that have sunk deep.” Their corpus of pained reflections meant civil war was long viewed through “Rome-tinted spectacles”. + +The age of revolutions in the late 18th century recast civil war as part of a visionary programme of change and emancipation. But the forward-looking idealism of the Enlightenment did not banish the senseless barbarism of civil war so much as create new conditions for violence. It is hard to disregard the sense that revolution, for all its Utopian promise, is merely a species of civil war. + +International law has attempted to civilise civil war. But as Mr Armitage reminds readers, the modern order rests on sovereign inviolability and the pursuit of human rights, two principles that are in conflict, making clear guidelines elusive and incomplete. The original Geneva Convention of 1864 did not even extend to civil wars: “It goes without saying international laws are not applicable to them,” explained a drafter. Today’s legal protocols may only make leaders avoid the term, complicating the humanitarian response it is meant to trigger. + +Globalisation has added further conceptual twists. The first world war, John Maynard Keynes said, was really a “European civil war”. In the view of Carl Schmitt, a German political theorist, Leninist socialism unleashed a “global civil war”. To many today, transnational terrorism is another kind of civil war without borders. Foreign intervention means that even conflicts that begin within borders increasingly spill beyond them, with reverberations across the globe. In 2015, 20 of 50 internal conflicts were internationalised civil wars. The Roman notion of civil war as a wound that never quite heals haunts these conflicts and politics itself, which is, in the words of Michel Foucault, just civil war “by other means”. In an era of transnational populism and anti-globalist revolt, this notion is resonant. The meaning of civil war, as Mr Armitage shows, is as messy and multifaceted as the conflict it describes. His book offers an illuminating guide through the 2,000-year muddle and does a good job of filling a conspicuous void in the literature of conflict. + +This article appeared in the Books and arts section of the print edition + + + + + +French fiction + +From the bottom up + +Growing up poor, working class and gay in France + +Feb 11th 2017 + + + +The End of Eddy. By Edouard Louis. Translated by Michael Lucey. Harvill Secker; 192 pages; £12.99. To be published in America by Farrar, Straus & Giroux in May; $25. + +“YOU don’t get all that used to pain really,” writes Edouard Louis about the perpetually sore hands and stiff joints of a cousin who worked as a supermarket checkout girl. Although this autobiographical novel, by a French writer who is still only 24, has stirred a whirlwind of controversy about truth and fiction, class and sexuality, it never moves far from the ordeal of sheer physical suffering. + +Eddy Bellegueule—his birth name translates as “Eddy Prettymug”—grows up as a bullied misfit amid the post-industrial underclass of Hallencourt, in northern France. Cursed as a “faggot”, Eddy, “the odd boy in the village”, is repeatedly brutalised both at home and at school. In vain, he tries to fit in, pretending to have a taste for football, girls, even for homophobia, until escape becomes “the only option left to me”. In this culture where male violence appears “natural, self-evident”, Eddy’s father not only terrorises his family but himself. He suffers excruciating back pain that leaves him “screaming in [the] bedroom” and drives him from his job at a brass foundry. Everywhere, “masculine neglect” in families that have dropped out of steady employment means that these “tough guys” inflict the worst violence on their own bodies. They suffer drunk-driving accidents, chronic pain, untreated injuries and “alcohol-induced comas”. One forgotten man even “died in his own excrement”. In fighting and abuse, agony begets agony. + +A bestseller when it came out in France in 2014, “The End of Eddy” triggered a very French critical skirmish. By this time, Mr Louis had changed his name and gone on to shine at the elite Ecole Normale Supérieure in Paris. Did the book betray Eddy’s stricken family as his growing attraction to boys rather than girls “transformed my whole relationship with the world”? Does this narrative of hell in Hallencourt, at once visceral and cerebral, demonise the so-called Lumpenproletariat, or depict tragic victims trapped in roles “both imposed by social forces ... and also consciously assumed”? A disciple of Pierre Bourdieu, a French sociologist, Mr Louis denounces the “class violence” of inequality and opposes the tide of right-wing populism that has swept through such abandoned communities. Michael Lucey’s translation conveys both the scorching sorrow and the cool intelligence of a book that—half-misery memoir, half-radical tract—finds a voice for so much pain. The scapegoat of Hallencourt has become its spokesman. + +This article appeared in the Books and arts section of the print edition + + + + + +New work by Wolfgang Tillmans + +Fiery angel + +The restless energy of Wolfgang Tillmans, a German artist + +Feb 11th 2017 + + + +THE photograph of two skinny, half-naked 20-somethings defined a generation. “Lutz and Alex Sitting in the Trees” was a near perfect evocation of the counterculturalism of rave in the early 1990s. The image was so iconic that even people who have never heard of Wolfgang Tillmans, the German artist who shot it, would recognise it right away. The photograph was published ina cool British magazine in 1992, but Mr Tillmans is a hard worker with a prodigious output and he has done a great deal since then. + +Two new exhibitions, one in London and another which opens in late May near Basel, will show visitors what he has achieved. The first, at Tate Modern, explores Mr Tillmans’s more recent experimental work, from his dramatic colour abstractions to his still lifes of kiwi fruit lobsters and cigarettes, which owe a debt to their 17th-century Dutch antecedents. A slide show of up to 500 buildings shot in 37 countries presents a harsh commentary on architecture today. There is also a room designed for listening to music in perfect studio conditions, since Mr Tillmans believes that, at its best, popular music is art, too. + +Indeed, he has never distinguished between high art and low. He is as happy to see his work in magazines as in museums, and regards his occasional DJ sets in nightclubs as part of his art project. It is this democratic approach, as much as the aesthetic content of his work, that has won him so many fans. + +The last time Mr Tillmans had a show at the Tate was in 2003 (he won the Turner prize in 2000, the first non-British artist to do so). He has chosen that date as the jumping-off point for this exhibition and may even be using it to separate himself from his past. There is no “Lutz and Alex”; none of the photographs of the Concorde jet, which he made in 1997 and which went on to cement his reputation as an artist to be reckoned with. Instead, the artist who started out closely observing his own tribe has gone on to explore a wider world. At the Tate visitors will be able to lose themselves in images so large that they could swallow you up—a seascape measuring three metres by four and a market scene in Ethiopia that occupies an entire wall. + +Going Dutch + +The emotion for which Mr Tillmans has always been known, the romance even, is still there, as he continues to conjure from this two-dimensional medium a three-dimensional world. A new work of a blue jacket and shiny navy shorts gently crumpling together has the real-life contours of finely painted renaissance drapery. “I’d just done a blue wash,” he explains of the effortless pairing of garments. “These possibilities emerge 24 hours a day.” What look like a series of natural occurrences, though, are rarely quite that. “It is a fiction that looks like reality,” he says. “But it’s easy to make things look complicated and I aim for the opposite.” And the politics prevails, as in views of the sea from the island of Lampedusa in the Mediterranean, where searchlights scour the ocean. + +As a teenager, Mr Tillmans was fascinated by London (a series of works from the 1980s imagined him living a fantasy life in the city). He moved there in his mid-20s and then, as he became more successful in America, to New York. But he failed to find his inner American and returned to Britain soon after. + +Since 2011 Mr Tillmans has been working from a studio in Berlin in a Bauhaus-style building that dates back to 1928. In a sequence of spectacular spaces that are flooded with daylight, as many as 15 assistants help to prepare shows, manage the archive and support Mr Tillmans in the production of his work. A second studio, over the road and up several flights of stairs, is the artist’s more private space. It was here, for example, that he made a small-scale maquette of his Tate show, arranging postage-stamp reproductions in its miniature galleries. He will do the same for his second, equally majestic, exhibition at the Beyeler Foundation near Basel. Not a single piece of work will be repeated between the two shows, though the Beyeler exhibition promises rather more figurative work, particularly the shots of slender men for which he is known. + +Mr Tillmans divides his day into two long shifts, the first with his team in the 1928 building and the second in isolation across the street. His secret, he says, is “micro naps”. If the pace is relentless, he is driven, it seems, by a passion for discovery that in his childhood lured him to astronomy and physics and as an adult has made him determined to give everything a go. He has just returned to making music—rumbling vocals over staccato techno beats—under the name Fragile. “The pressure of experimentation is greater than the fear of embarrassment,” he says. “That is the essence of art.” + + + +This article appeared in the Books and arts section of the print edition + + + + + +Obituary + + + + +Ken Morrison: Grocer and proud of it + + + + + +Grocer and proud of it + +Obituary: Ken Morrison died on February 1st + +The chairman of Morrisons supermarkets for 55 years was 85 + +Feb 11th 2017 + + + +AS HE patrolled the aisles of his shops in Leeds, Boroughbridge or wherever he might be, in his yellow and black Morrisons tie and his short-sleeved “get cracking” shirt, Ken Morrison’s eyes would gleam with happiness. He was a grocer, the best job in the world. Better still, he was the best grocer in Yorkshire, God’s own county, where folk didn’t part with their money without a good excuse. The fact that his food-supermarket chain had also grown into Britain’s fourth-biggest, up from his father’s egg-and-butter stall in Bradford market, was also gratifying. Record sales and profits for 35 years, between flotation in 1967 and entering the FTSE 100 in 2001, were not to be sneezed at. But nothing was more energising than that daily round of pacing the floor, chatting to customers and giving the staff either pats on the head or kicks up the backside, as warranted. + +During these strolls he missed nothing out. He checked the vegetables weren’t wilting and the cream not sloppy on the eclairs, and would take the cellophane off sandwiches to see how fresh they were. Watching such details was the habit of a lifetime. How many hours had he spent as a boy in that dark shed behind the house, holding eggs up to a candle to make sure there were no chicks inside? He’d done that from the age of five, helped out on the stall from nine and taken it over at 21, with no training save what he’d picked up at the dinner table. He knew his craft. For example: you could tell how a business was doing not by the shiny front door (though, by 2016, 11m customers a week were coming through his), but from what it threw away. If time allowed his visits would include a good look through the bins at the back, which was one reason why he didn’t often wear a suit. + +Any sort of waste annoyed him. Wasting words, for one. Why use 100 when 50 would do? Why use 50 when a look was enough? When some chap asked him once to explain his “store-siting policy” he said, “We get on a bus and we look for chimney pots.” Silly bugger. Wasting time was no good either, such as filling in the form to get in “Who’s Who”. But wasting money was the worst. Buying what you didn’t need, borrowing to get it. He so hated debt that when he took out a bank loan once to build up the business, he never used it. The business grew very nicely anyway, from the first shop in Bradford with three checkouts and self-service, in 1958, to the town’s first supermarket (in the old Victoria cinema, in 1961) and on from there. + +He didn’t gamble, except the once: his £3.3bn ($6bn) takeover—not merger, as he told their executives in plain words on deal day—of the Safeway chain in 2004. It gave him the chance to get 479 more shops all over the country, but there were good and bad sides to that. A lot of the shops were on their uppers, for a start. But even trickier was the task of taking a Yorkshire chain down south. He didn’t like going there himself, and whenever in London couldn’t wait to get back to egg and chips in Bradford. Down south they ate things like salmon and spinach salad, and wouldn’t know a black pudding if it hit them on the head. Morrisons by contrast was a temple of the great northern pie: steak and ale, minced beef and onion, rhubarb. A bell rang every time a batch came fresh from the oven, their flavour was proudly stamped round the rim, and in Skipton a man worked full-time to sample them for tastiness. + +The north-versus-south clash got better eventually, when the economic downturn made southerners appreciate a bargain. The takeover’s disastrous effect on profits lasted a decade, unfortunately, and meanwhile the world was changing. Jumped-up discounters were offering crazy prices. Tesco and Sainsbury’s were racing away with online shopping, small local shops, points cards and all that gimcrackery. He didn’t join in. Nothing wrong with being old-fashioned. He liked the 1970s vinyl chairs in his office; they weren’t worn out yet. He believed in manual stock and cash controls. Just the look of his stores, with butcher’s and baker’s and cheese stalls arranged as “Market Street”, was meant to recall Bradford shopping in the old days. + +The secret of being a successful grocer was simple and didn’t change. Know your customers, insist on quality, keep prices down. If in doubt, have a cup of tea. That was it. Forget statistical studies, retail engineering and all that rubbish. Why hire fancy consultants, if you could spot problems yourself? Why appoint a non-executive director, when you could get two hard-working check-out girls for the same money? Why bother with the internet, if you could send the groceries round by bike? + +What customers want + +But progress, so-called, beckoned. From 2006 he suffered chief executives to come in from outside, though the first patently wasn’t even a retailer, and all of them needed watching, which he did by having fish-and-chip lunches with them on Fridays. All that internet stuff came too, of course. Customers seemed to want it now. + +Last year he saw his business return to healthy growth and profit. Back where it had always been until the Safeway bout of indigestion, and where it should be. Because, you know, it was still his, though he had retired in 2008 to his chateau in Myton-on-Swale. And every shop kept his presence in it, checking the dates on the sliced ham and rattling the bins. + +This article appeared in the Obituary section of the print edition under the headline “Grocer and proud of it” + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and job + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Markets + +The Economist poll of forecasters, February averages + + + + + +Interactive indicators + +Feb 11th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Output, prices and jobs + +Markets + +Feb 11th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition under the headline “Output, prices and job” + + + + + +Trade, exchange rates, budget balances and interest rates + +Feb 11th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +The Economist commodity-price index + +Feb 11th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Markets + +Feb 11th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +The Economist poll of forecasters, February averages + +Other markets + +Feb 11th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +Table of Contents + +The Economist + +The world this week + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + +Russia and America: Courting Russia + + + + + +Israel and Donald Trump: If you build it, they will fight + + + + + +The European Union’s exit charge: Time to pick up the tab + + + + + +Financial regulation in America: The litter of the law + + + + + +Entertainment: The paradox of choice + + + + + +Letters + +On shareholders, Australia, schools, California, data, pop, police, Latin: Letters to the editor + + + + + +Briefing + +Russia and America: Champions of the world + + + + + +United States + +Presidential authority: Washington v Trump + + + + + +Donald Trump and satire: Super soaking + + + + + +Legal migration: Code red + + + + + +Political history: The little man’s big friends + + + + + +Lexington: French lessons + + + + + +The Americas + +NAFTA: Reshape or shatter? + + + + + +Green activism: Dying to defend the planet + + + + + +Brazilian manners: A more correct Carnival + + + + + +Asia + +Labour mobility in Asia: Waiting to make their move + + + + + +Communist insurgency in the Philippines: An extra mile + + + + + +America and its Asian allies (1): Fairway friends + + + + + +America and its Asian allies (2): Two short fuses + + + + + +Politics in Tamil Nadu: Rank and bile + + + + + +Banyan: Country or continent? + + + + + +China + +Reality television: China’s transgender Oprah + + + + + +Unpopular films: Blame the critics + + + + + +Chinese statistics: Getting safer? + + + + + +Middle East and Africa + +Israel and the Palestinians: The ultimate fantasy + + + + + +Iran and America: Remaking Iran’s revolution + + + + + +Nigeria: Big bother + + + + + +Drugs and ivory: Jumbo cartels + + + + + +Europe + +The Dutch election: Act “normal” or get out + + + + + +Ukraine’s divided east: Put asunder + + + + + +Corruption in Romania: People v pilferers + + + + + +Charlemagne: Surplus war + + + + + +Britain + +The Brexit bill: From Brussels with love + + + + + +Brexit and the lessons of empire: The art of leaving + + + + + +Student loans: A quick buck + + + + + +The housing white paper: Hardly groundbreaking + + + + + +Trading with America: NH$? + + + + + +The war on seagulls: Fighting them on the beaches + + + + + +The environment: All choked up + + + + + +Bagehot: The green-belt delusion + + + + + +International + +Refugees and technology: Migrants with mobiles + + + + + +Special report: Mass entertainment + +Winner takes all: Mass entertainment in the digital age is still about blockbusters, not endless choice + + + + + +If you liked that, you will love this: How to devise the perfect recommendation algorithm + + + + + +A slow-motion revolution: Traditional TV’s surprising staying power + + + + + +Up close and personal: Alternative realities still suffer from technical constraints + + + + + +Life is but a stream: China’s new craze for live-streaming + + + + + +The roar of the crowd: Nothing can beat a live event + + + + + +Monetising eyeballs: The battle for consumers’ attention + + + + + +Driven to distraction: Smartphones are strongly addictive + + + + + +Business + +Internet regulation: Eroding exceptionalism + + + + + +American retailing: Run ragged + + + + + +Winter sports: White out + + + + + +Grab v Uber: Road warriors + + + + + +Tata Group: Board stiff + + + + + +Schumpeter: Snaptrap + + + + + +Finance and economics + +American financial regulation: Shearing and shaving + + + + + +Buttonwood: Time and tide + + + + + +Banking and the elderly: Not losing it + + + + + +Brexit: Not all black + + + + + +North Korean data: Best guesses + + + + + +Euro-zone bond markets: Unhappy birthday + + + + + +Data, financial services and privacy: Like? + + + + + +Free exchange: It’s been a privilege + + + + + +China’s central bank: Technically independent + + + + + +Science and technology + +Molecular biology: Folding stuff + + + + + +Obituary: The joy of stats + + + + + +Pollination: Where the bee sucks + + + + + +Female genital mutilation: Culture wars + + + + + +Books and arts + +Lost Europe: Mapping history + + + + + +Nature notes: The undercover life of animals + + + + + +Thoughts on time: Clock-watching + + + + + +Civil wars: Brother against brother + + + + + +French fiction: From the bottom up + + + + + +Wolfgang Tillmans: Fiery angel + + + + + +Obituary + +Ken Morrison: Grocer and proud of it + + + + + +Economic and financial indicators + +Interactive indicators + + + + + +Output, prices and job + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Markets + + + + + +The Economist poll of forecasters, February averages + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.02.18.txt b/homeworks/B20769/homework1/data2/2017.02.18.txt new file mode 100644 index 0000000..e459184 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.02.18.txt @@ -0,0 +1,5950 @@ +Friday, February 17, 2017 + + + + +The world this week 3 + +Leaders 5 + +Letters 1 + +Briefing 1 + +United States 7 + +The Americas 4 + +Asia 8 + +China 3 + +Middle East and Africa 5 + +Europe 7 + +Britain 8 + +International 2 + +Business 9 + +Finance and economics 9 + +Science and technology 4 + +Books and arts 5 + +Obituary 1 + +Economic and financial indicators 6 + + + + + +章節 Leaders + + + + + +The world this week + + +Politics this week + +Business this week + +KAL's cartoon + +章節 Leaders + + + + + +文章 章節 下一項 + + + + + +Politics this week + + +Feb 18th 2017 + + + + + +After less than a month in the job, Michael Flynn departed as Donald Trump’s national security adviser, having admitted that he had provided “incomplete information” to the White House about a conversation he had with the Russian ambassador weeks before Mr Trump was inaugurated as president. All this added to the growing sense of a disorderly Oval Office, and fuelled speculation about alleged links between the Trump campaign team and Russian officials. + +Mr Trump described an appeals-court’s decision to block his temporary ban on refugees and citizens from seven mainly Muslim countries as “disgraceful”. He may introduce a new, legally tight order to enact the ban. Either way, the issue seems destined for the Supreme Court. + +The Senate confirmed Steven Mnuchin as Mr Trump’s Treasury secretary. But Andrew Puzder withdrew his name for consideration as labour secretary. He had come under criticism for, among other things, employing an illegal immigrant in his household. + +The two-state twin step + +Binyamin Netanyahu, the prime minister of Israel, met Donald Trump at the White House. In what appeared to be a break from established American policy promising Palestinians their own state as part of a peace deal, Mr Trump said he could live with either one state or two states, depending on what both parties want. He urged both to compromise, and told Mr Netanyahu to “hold back” on building settlements in the West Bank. + +Hamas, the Palestinian Islamist group that controls the Gaza Strip, named a hardline military commander, Yehiya Sinwar, as its overall leader in the territory. Some fret that his appointment may increase the risk of conflict with Israel, which unilaterally pulled settlers and troops out of Gaza in 2005 but still controls its borders. + +The number of mentally ill patients who have died after they were transferred out of state hospitals into unregulated community-care centres in South Africa reached 100, the country’s health ombudsman said. The deaths arising from a mismanaged transfer add to pressure on the ruling African National Congress, which is losing support over concerns about poor governance. + +While the world is distracted + +Russia reportedly deployed a new cruise missile, violating an arms-control treaty from 1987 that bans American and Russian intermediate-range missiles based on land. The Kremlin denied the report. The Obama administration criticised Russia when it tested the missile in 2014; deploying it would be provocative. + +The European Union sent its commissioner for economic affairs to Athens for talks about Greece’s debt woes. He discussed the economic reforms that creditors want the country to implement with Alexis Tsipras, the prime minister, and Euclid Tsakalotos, the finance minister. EU officials hope that the review can be completed by February 20th, when finance ministers meet in Brussels, so that the latest round of aid for Greece can be unlocked. + +Pablo Iglesias, the head of Spain’s far-left Podemos Party, won a leadership battle against a moderate rival, giving him a mandate to continue along a radical, anti-establishment track. + + + + + +Anti-government protests continued in Bucharest, the capital of Romania. Demonstrations began several weeks ago against a proposed law that decriminalised most forms of corruption. Though the bill was dropped, protesters have continued to call for the resignation of senior politicians, including Sorin Grindeanu, the prime minister. + +The Miami vice-president + +The American government blacklisted the vice-president of Venezuela, Tareck El Aissami, calling him a “drug trafficker” and a “kingpin”. The decision bars American firms from doing business with him and freezes his assets in the United States. Mr El Aissami said the order was an act of “infamy and aggression”. + +Canada’s prime minister, Justin Trudeau, visited the White House. Donald Trump was friendlier to Canada than he is to Mexico, saying that trade relations are “outstanding”. Any changes to the North American Free Trade Agreement would “benefit both our countries”, he promised. + +Emboldened + +North Korea tested a missile in defiance of UN sanctions. The launch marked another step forward in the country’s quest for a long-range missile that could carry a nuclear warhead. A day later, the half-brother of North Korea’s dictator, Kim Jong Un, was assassinated in Malaysia, in an attack assumed to be the work of North Korean agents. + +In a call with China’s president, Xi Jinping, Donald Trump reaffirmed America’s commitment to the “one-China policy”, backing away from a veiled threat to recognise Taiwan’s independence. + +Basuki Tjahaja Purnama, known as Ahok, topped the vote in an election for governor of Jakarta, the capital of Indonesia. Ahok, a Christian who has been falsely accused of insulting Islam, will now face Anies Baswedan, a former education minister, in a run-off on April 19th. + +Just before she was due to be sworn in as chief minister of Tamil Nadu, Sasikala Natarajan was convicted of corruption by India’s Supreme Court. That left other members of her party to fight over the mantle of Jayalalithaa, Tamil Nadu’s recently deceased, wildly popular chief minister, who was also Ms Sasikala’s companion. + +Sam Rainsy, the exiled leader of Cambodia’s main opposition party, said he was stepping down, in a bid to prevent the Cambodian authorities from banning his party. + +Officials in Xinjiang, a province in western China, said five people were killed by three assailants armed with knives in a residential compound. They said the attackers were shot dead by police. The authorities usually blame such violence on Islamist militants seeking Xinjiang’s independence. + + + + + +Gurbanguly Berdymukhamedov, the president of Turkmenistan, won re-election in a nine-man field with 98% of the vote. The election was supposed to showcase Turkmenistan’s recent embrace of multi-party democracy. Turnout was said to be 97%. + + + +This article appeared in the The world this week section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21717118-politics-week/print + + + +文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Business this week + + +Feb 18th 2017 + + + + + +Cost overruns at its American nuclear-power subsidiary and a general deterioration in the outlook for its other nuclear businesses abroad caused Toshiba to announce a ¥712.5bn ($6.3bn) write-down. Its chairman resigned. The troubled Japanese conglomerate also revealed it had received further allegations about how its American division had accounted a takeover deal. Toshiba’s ever-lengthening list of problems has caused it to consider selling its lucrative memory-chip business; it had said only recently that it would limit any potential buyer’s stake to 19.9%. + +Rolls-Royce reported an annual headline loss of £4.6bn ($6.2bn), the biggest in the British engineering group’s history. This was in part because of a £671m fine that Rolls-Royce incurred to settle allegations that it had bribed officials in various countries. But the vast bulk of the loss was attributed to an accounting charge the company had to book after it revalued its currency positions following the slump in the pound. + +Up in the air + +The increasing costs of petrol, clothing and cars helped push America’s annual rate of inflation up to 2.5% in January, from 2.1% in December. Speaking to congressmen this week, Janet Yellen cited rising inflation as a reason to push ahead with interest-rate rises. The head of the Federal Reserve also warned of the high degree of uncertainty about what effects the new administration’s policies will have on the economy. + +Britain’s annual inflation rate rose to 1.8% in January. A weaker pound is expected to add to inflationary pressures because producers will pay more for imported raw materials and goods, though it is debatable how much of this cost they will they pass on to consumers. The growth in wages, meanwhile, slowed to 2.6% in December. + +A rebound in exports towards the end of the year helped Japan’s GDP grow by 1% in 2016, down slightly from the 1.2% it recorded in 2015. With domestic consumption still stagnant, international trade remains the driver of the Japanese economy, which makes it vulnerable to any tariffs that might be imposed by the Trump administration. + +The European Commission raised its forecast slightly for growth in the euro zone to 1.6% this year and 1.8% for next year. But it also pointed to the “exceptional risks” surrounding its forecast, not least of which is the start of negotiations for Britain to leave the European Union. + +General Motors confirmed that it is in talks to sell its business in Europe to PSA Group in France, which makes Peugeot and Citroën cars. GM recently reported another loss at the business, which comprises the Opel brand in Germany and Vauxhall in Britain. + +India’s biggest carmaker, Tata Motors, said net profit in the last three months of 2016 had slumped by 96% compared with the same period a year earlier, to just $16m. It was hit by falling income from its Jaguar Land Rover subsidiary, and also by the surprise withdrawal of 86% of the country’s banknotes by the government in November. + +Feeling poorly + +There were further reverberations from court decisions in America that struck down two mergers of health-care insurers on antitrust grounds. Cigna launched a lawsuit against Anthem claiming $13bn in damages, the amount it says shareholders will lose because their merger was blocked. It said Anthem had “assumed full responsibility” for attaining regulatory approval. And Humana, which had its merger with Aetna overturned, pulled out of Obamacare’s state insurance-exchanges. + +Swiss voters rejected a referendum proposal to streamline Switzerland’s corporate-tax system and end the privileged treatment of multinational companies. The measure had been backed by the government to fulfil its obligation to the OECD to abolish the “special status” of multinationals by 2019. + +A $3bn quarterly loss at American International Group sent its share price tumbling. The insurance company took a $5.6bn charge because of ballooning costs from commercial claims. + +Snap, the parent company of Snapchat, reportedly set the price range of its forthcoming IPO at $14-16 a share, which values it between $19.5bn and $22.2bn. That is lower than the valuation it listed in recent regulatory filings, but still makes it the biggest tech stockmarket flotation in America since Alibaba’s in 2014. + +The ethical bank + +The Co-operative Bank in Britain put itself up for sale. It had never properly recovered from the losses it incurred from bad property loans and the dent to its reputation from a sex-and-drugs scandal involving a former chairman. + + + +This article appeared in the The world this week section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21717116-business-week/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +KAL's cartoon + + +Feb 18th 2017 + + + + + +More KAL's cartoons + + + + + +This article appeared in the The world this week section of the print edition under the headline “KAL's cartoon” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21717115-kals-cartoon/print + + + +上一項 文章 章節 下一項 + + + + + +The world this week 章節 Letters + + + + + +Leaders + + +Reproductive technologies: Sex and science + +Donald Trump’s White House: The Flynn fiasco + +The United Kingdom: Sliding towards Scoxit + +Greece and the euro: Uphill task + +China’s beleaguered liberals: The two faces of Mr Xi + +The world this week 章節 Letters + + + + + +文章 章節 下一項 + + + + + +Reproductive technologies + + +Gene editing, clones and the science of making babies + + +Ways of reproducing without sexual intercourse are multiplying. History suggests that they should be embraced + + +Feb 18th 2017 + + + + + +IT USED to be so simple. Girl met boy. Gametes were transferred through plumbing optimised by millions of years of evolution. Then, nine months later, part of that plumbing presented the finished product to the world. Now things are becoming a lot more complicated. A report published on February 14th by America’s National Academy of Sciences gives qualified support to research into gene-editing techniques so precise that genetic diseases like haemophilia and sickle-cell anaemia can be fixed before an embryo even starts to develop. The idea of human cloning triggered a furore when, 20 years ago this week, Dolly the sheep was revealed to the world (see article); much fuss about nothing, some would say, looking back. But other technological advances are making cloning humans steadily more feasible. + +Some are horrified at the prospect of people “playing God” with reproduction. Others, whose lives are blighted by childlessness or genetic disease, argue passionately for the right to alleviate suffering. Either way, the science is coming and society will have to work out what it thinks. + + + +Where have you been, my blue-eyed son? + +The range of reproductive options has steadily widened. AID (artificial insemination by donor, which dates back to the 19th century) and IVF (in vitro fertilisation, first used in the 1970s) have become everyday techniques. So has ICSI, intracytoplasmic sperm injection, in which a sperm cell is physically inserted into an egg, bringing fatherhood to otherwise infertile men. Last year another practice was added—mitochondrial transplantation or, as the headlines would have it, three-parent children. The world may soon face the possibility of eggs and sperm made from putative parents’ body cells (probably their skin) rather than in their ovaries and testes. + +Such methods separate sexual intercourse from reproduction. Most of them bring the possibility of choosing which embryo will live, and which will die. At first they can seem bewildering—disgusting, even. But one thing experience has shown is that, in this area, disgust is not a good guide to policy. AID was treated by at least one American court as a species of adultery and its progeny deemed illegitimate in the eyes of the law. IVF led to anguish among some theologians about whether “test-tube” babies would have souls. + +Disgust often goes along with dystopian alarm. Science-fiction versions of gene editing imagine, say, the creation of supermen and superwomen of great intelligence or physical prowess. When Dolly was announced the press was full of headlines about clone armies. In truth no one has the slightest clue how to create Übermenschen even if they wanted to. Yet the record shows how fast reproductive science can progress. So it makes sense to think about the ethics of reproductive science even for outcomes that are not yet available. + +It helps to start with IVF and AID, which have made the journey from freakishness to familiarity. Both give healthy children to happy parents, who would otherwise have been alone. The same will no doubt prove true for mitochondrial transplants, which are intended to avoid rare but dangerous diseases that affect cellular energy production. + +Happy parents and healthy children make a pretty good rule for thinking about any reproductive technology. A procedure’s safety is the central concern. Proving this is a high hurdle. Researchers are, wrongly in the eyes of some, allowed to experiment on human embryos when they consist of just a few cells. They cannot, though, experiment on human fetuses. Nor can they experiment easily on fetuses from humanity’s closest relatives, the great apes, since these animals are rare and often legally protected, too. So far, therefore, there has had to be a “leap of faith” when a technique that has been tested as far as is possible within the law’s bounds is used for real. That should continue, in order to avoid “freelance” operations outside reliable jurisdictions. This is not a theoretical concern. Although Britain developed mitochondrial transplants and was the first country to license them, the first couple known to have had such a transplant travelled from Jordan to Mexico to do so. + +Defining the limits of what should be allowed is more slippery. But again, the test of happy parents and healthy children is the right one. Growing sperm and eggs from body cells is surely the least problematic new technique soon to be on offer. One advantage of this approach is that gay couples could have children related to both parents. But the law should insist that two people be involved. If one person tried to be both father and mother to a child, the resulting eggs and sperm would, without recourse to wholesale gene editing, combine to concentrate harmful mutations in what would amount to the ultimate form of inbreeding. + +Gene editing and cloning involve more than parents’ happiness and children’s health. The first gene editing will eliminate genetic diseases in a way that now requires embryo selection—an advance many would applaud. Adults should be able to clone perfect copies of themselves, as an aspect of self-determination. But breeding babies with new traits and cloning other people raises questions of equality and of whether it is ever right to use other people’s tissues without their consent. + +A sense of identity + +The questions will be legion. Should bereaved parents be able to clone a lost child? Or a widow her departed husband? Should the wealthy be able to pay for their children to be intelligent and diligent, if nobody else can afford to do so? + +Commissions of experts will need to search for answers; and courts will need to apply the rules—to protect the interests of the unborn. They will be able to draw on precedents, such as identical twins, where society copes with clones perfectly well, or “saviour siblings”, selected using IVF to provide stem cells that can cure a critically ill older brother or sister. Any regime must be adaptable, because opinions change as people get used to new techniques. Going by the past, though, the risk is not of people rushing headlong to the reproductive extremes, but of holding back, and leaving people to suffer out of a misplaced sense of what feels right. + + + +This article appeared in the Leaders section of the print edition under the headline “Sex and science” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21717035-ways-reproducing-without-sexual-intercourse-are-multiplying-history-suggests-they-should/print + + + +文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Donald Trump’s White House + + +Flynn’s firing raises questions that won’t go away + + +What are the president’s ties with Russia? And does he have control over his administration? + + +Feb 18th 2017 + + + + + +LESS than a month into Donald Trump’s presidency, it is clear this is a Wild West Wing. Mr Trump is engulfed by a scandal that this week led to the firing of his national security adviser, Michael Flynn. Dismissal will not be the end of the Flynn affair. It invites bigger questions, about both the nature of the Trump administration’s ties with Russia and the way the new president runs his administration. + +First, Russia. At the end of December the Obama administration imposed sanctions on Russia after the Kremlin interfered with the presidential election—an attack on American democracy (see article). That same day Mr Flynn spoke on the phone to the Russian ambassador to Washington. After this came to light, Mr Flynn denied, both in public and in private, having discussed the sanctions with the ambassador. It turns out he did, a disclosure that the administration says cost Mr Flynn the president’s trust. + + + +That Mr Flynn may have sought to undermine his country’s policy was bad enough. But press reports this week, based on leaks from the intelligence services, suggest that other members of the Trump team were in contact with Russia during the campaign. If so, what was discussed? And what hold might Russia have over officials who now know from the example of Mr Flynn that exposure can cost them their job? + +The Trump camp denies having any untoward Russian contacts. Yet the readiness of America’s spies to leak damning information from wire taps and intercepts against their commander-in-chief shows how deeply unhealthy the situation has become. It reflects concerns about the second question—the way Mr Trump manages his administration. + +Mr Trump’s judgment is in question. The choice of such a flawed man as Mr Flynn to fill a vital role looks reckless. After being told by the Justice Department of the conversations between Mr Flynn and the ambassador, Mr Trump took two weeks to ask for his resignation—while the vice-president knew nothing. After he went, Mr Trump continued to defend Mr Flynn as a “wonderful man”. Mr Trump faces accusations that his decisions were clouded by the lingering controversy over Russia’s election-tampering. Or was Mr Flynn operating with his master’s blessing? A barrage of furious Trump tweets against the intelligence services points to trouble ahead. + +No more Flynn-flam + +Until these matters are clarified, Russia will dog Mr Trump. Congress now needs to stiffen its spine and conduct a thorough investigation of the Flynn affair, despite the temptation of many Republicans to shelter the president, whom they hope will further their own agenda. Separately, investigations by the FBI into Russia’s interference in the election needs to be seen to be scrupulously independent—which means that Mr Trump’s attorney-general, Jeff Sessions, should step aside from them. And the president, who sold himself to voters as a straight-talker, needs to avoid the suspicion that he is trying to sweep the Russian questions under the Oval Office carpet. + +If anything good is to come of this, it will be to strengthen the defence secretary, James Mattis, and the secretary of state, Rex Tillerson—the axis of the sensible. Mr Trump has the chance to appoint a solid figure, such as Robert Harward, a former Navy SEAL commander, as his national security adviser. That might lead to a steadier foreign policy to bolster recent affirmations of America’s support for the one-China principle, Japan and NATO, which had been in doubt. It would also allow Mr Trump to deal with Russia on the issues, rather than through the prism of a scandal. But that supposes Mr Trump can get a grip on his administration. + + + +This article appeared in the Leaders section of the print edition under the headline “The Flynn fiasco” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21717034-what-are-presidents-ties-russia-and-does-he-have-control-over-his/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +The not-so-United Kingdom + + +Britain is sliding towards Scoxit + + +The decision to leave the EU appears to strengthen the case for Scottish independence. In fact, it weakens it + + +Feb 18th 2017 + + + + + +LITTLE more than half a year after the vote to leave the European Union, there is talk of another referendum in Britain. This time the people who could be offered the chance to “take back control” are the Scots. They voted against independence by a clear margin less than three years ago. But Brexit, which they also opposed, has put the issue back on the table. Scotland’s nationalist government has drafted a bill for another independence vote. Polls suggest that it could have a shot at success. + +No wonder: the nationalists’ argument that Scotland is a different country has never looked more convincing. Regarding Brexit, the defining issue of the times, 62% of Scots voted to Remain but will be dragged out anyway by the English. The dominant parties in Westminster, the Tories and Labour, have a grand total of two of Scotland’s 59 MPs. And many of the arguments made in favour of the union in 2014 have evaporated. Scots were told that staying with Britain was their only way to remain in the EU, since independence would require them to reapply and face opposition from Spain, which wants to discourage its own Catalan separatists. Instead, being part of Britain has proved a one-way ticket out of Europe. The strong British economy that they were urged to remain part of is forecast to slow. And rousing talk about the union—the “precious, precious bond” that Theresa May evoked in her maiden speech as prime minister—rings hollow, given the casualness with which Scottish concerns have been cast aside. + + + +Yet if Brexit was a political earthquake, Scotland has suffered a less-noticed economic earthquake, too. At the time of the independence referendum, Scotland was growing at a similar rate to the rest of Britain. Since then it has been on a different track (see article). In two of the past five quarters it has failed to grow at all. The main reason is its reliance on fossil fuels and finance, which are doing badly. In 2014 a barrel of Brent crude cost $110, leading the nationalist government to forecast that an independent Scotland would enjoy tax revenues from energy of £8.3bn ($12.5bn) in 2015-16. Oil’s subsequent crash (it is now $55) meant the actual figure was 1% of that forecast. And the black gold is running out: the original Brent rig will be dismantled this summer. Finance, which along with oil and gas has generated exports equivalent to up to a third of Scotland’s GDP in recent years, is also suffering. Since September 2014 Scotland has lost a tenth of its financial jobs. (London gained some.) Last year average pay in the industry fell by 5%. + +For a country of 5m people that depends on two sputtering industries, to go it alone would be a gamble. Yet Scots may conclude that remaining in the Brexit-bound union would be riskier still. They would be wrong. For although Mrs May’s willingness to leave the single market and customs union is likely to be bad for Britain, it also makes independence more complicated. If the EU were prepared to readmit it, Scotland would face a harder border with England. Nationalists say they could import whatever arrangement is made in Ireland, where a similar problem exists. But there may be no such neat solution. And rejoining the EU’s single market at the cost of leaving Britain’s would make no sense: Scotland exports four times as much to the rest of Britain as it does to the EU. + +Scotland the brave + +This uncomfortable truth may be lost in the heat of another independence campaign. The ruling Scottish National Party has a knack for combining power with protest, claiming credit for Scotland’s successes while pinning blame for its failures on Westminster. As economic conditions in Scotland decline, the blame will fall on Brexit and Tory austerity. And whereas independence was once a frightening unknown, it now looks like a chance to turn back the clock to the safe old days of EU membership. When English ministers warn about the risks of secession, their own Brexit lines will be thrown back at them: Scots will be urged to seize control from distant politicians they never elected; those pointing out the costs will be branded members of “project fear”; the trashing by Brexiteers of institutions from the Treasury to the Bank of England will mean that impartial warnings can be dismissed as biased or incompetent. + +Many of those Scots who voted to stay in the union in 2014 did so for clear economic reasons. Britain’s exit from the EU muddies that case. The alarming result is that Brexit has made Scottish independence more harmful—and more likely. + + + +This article appeared in the Leaders section of the print edition under the headline “Sliding towards Scoxit” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21717038-decision-leave-eu-appears-strengthen-case-scottish-independence-fact/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Greece and the euro + + +Creditors fight creditors over the bail-out of Greece + + +Avoiding the next crisis will be an uphill task + + +Feb 18th 2017 + + + + + +SISYPHUS was condemned to push a boulder uphill only to watch it roll down again. Yet an eternity of boulder-shoving seems purposeful next to the unending labour of keeping Greece in the euro zone and out of default. It is nearly seven years since the first Greek bail-out. A second rescue package soon followed. In 2015 Greece came close to dropping out of the euro before its newish prime minister, Alexis Tsipras, buckled down to the task of pruning the budget as part of a third bail-out. Now a Greek disaster is looming all over again. + +This time the source of the trouble is a row among the two main creditors over how to assess Greece’s public debt (see article). The stand-off threatens a payment to Greece from the euro zone’s bail-out fund, the European Stability Mechanism (ESM), which would redeem €6.3bn ($6.7bn) of bonds that are due in July. If the money is withheld, Greece will be in default. Sooner or later, Grexit would be hard to avoid. + + + +Hopes of an agreement before a meeting of euro-zone finance ministers on February 20th have evaporated. A deal is in everyone’s interest, and the Greek crisis has a history of last-minute fixes. Sadly, there are reasons to fear that brinkmanship and politics will get in the way. + +Before this new impasse, Greece’s economy was improving. Deposits had trickled back to the banks, letting the European Central Bank (ECB) cut its emergency lending. GDP has risen fitfully after years of persistent decline. Unemployment is still woefully high, at 23%, but is down from a peak of 28%. And Greece comfortably surpassed a crucial target by recording a primary budget surplus (which excludes debt-interest costs) above 0.5% of GDP in 2016. + +Still, the economy is too weak to withstand a fresh bout of austerity. Almost half of bank loans are non-performing. Investment is feeble. Credit to small firms, the backbone of the economy, is scarce. Business rules and tax codes are unfriendly and changeable. In addition, Greece’s primary surplus is the result of policies that are inefficient and unfair. Marginal tax rates have been increased while exemptions proliferate, a recipe for Greeks to exercise their mastery of tax avoidance. More than half of wage earners in Greece are still exempt from income tax. Essential spending has been cut even as pensions remain generous. A newly retired Greek receives 81% of average wages, compared with 43% for a German. + +Against this backdrop, a row between Greece’s creditors has been brewing. At issue is the IMF’s role in the bail-out. Germany and the Netherlands do not trust the European Commission to police Greece, and have made the fund’s involvement a condition of their support. The fund is reluctant. Its officials reckon that the programme’s target of a sustained 3.5% primary budget surplus might push the Greek economy into recession. They would prefer to delay further austerity and to insist on more tenable fiscal measures that would do less harm. Europe thinks the IMF is too gloomy about Greece’s prospects. + +These are not the only sticking-points. By the IMF’s own rules, it cannot take part unless it believes that the bail-out will leave a debt burden that is “sustainable”—one that is steadily falling and easily financed. For the Greek bail-out to pass muster would require a commitment to debt relief from the euro-zone partners. But an explicit pledge to let Greece off its debts would be politically poisonous, because it might increase support for anti-EU parties ahead of elections in the Netherlands, France and Germany. Instead Klaus Regling, the ESM’s boss, argues that the euro zone’s evident “solidarity” with Greece (the ESM holds two-thirds of its debt, much of it at long maturities and low rates) is enough to make the sums add up. + +This is a farce. Most of the bonds due for redemption in July belong to the ECB. In essence, therefore, Greece’s creditors are arguing among themselves over whether to agree on a payment from one euro-zone institution to another. The shape of a compromise is plain. Greece will have to pass legislation that commits the government to reducing pensions and income-tax allowances after 2018. European creditors will need to pledge to finance Greece’s debts at today’s low interest rates. And the IMF will have to stomach a higher fiscal-surplus target for Greece than it would like. + +Boulder games + +Yet everything could still go wrong. Mr Tsipras seems to think he can wait for the IMF, egged on by America under Donald Trump, to abandon its stewardship of the bail-out. The resulting uncertainty will set back Greece’s fragile economy. Growing political turmoil in Germany and France could also make a deal harder to reach. A long stand-off risks seeing Greece roll down to the bottom again. Nobody would benefit. + + + +This article appeared in the Leaders section of the print edition under the headline “Uphill task” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21717037-avoiding-next-crisis-will-be-uphill-task-creditors-fight-creditors-over-bail-out/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +The two faces of Mr Xi + + +China’s president talks like a reformer + + +But the reality is very different + + +Feb 18th 2017 + + + + + +THE words of few global leaders these days sound as pleasing to liberal ears as those of Xi Jinping. How comforting it was when, shortly before Donald Trump’s swearing-in as America’s president, Mr Xi advised the assembled elite at the World Economic Forum in Davos that blaming globalisation for the world’s problems was “inconsistent with reality” and that protectionism was “like locking oneself in a dark room”. These were not just platitudes crafted for foreigners. Back in his own country, Mr Xi has been striking a similar tone. He chaired a meeting this month that called on reluctant officials not to shilly-shally with economic and social reforms, but to “choose the heaviest burden and chew on the hardest of bones”. The main state-run news agency said the central government’s demands for reform were becoming “ever clearer”. + +If only there were evidence in China that Mr Xi really means what he says, and that, if he does, bureaucrats are paying heed. Recent news has suggested quite the opposite. Officials have been trying to crush dissent with even greater vigour. Their targets now are not only the usual suspects—those few who dare to challenge the Communist Party openly—but also mainstream liberals who want to work within the system to make China a better place. In the past few months hardliners have taken control of a leading magazine once beloved of such reformists. Popular online forums for moderate, pro-reform debate have been closed down—including, in January, those run by one of the country’s most prominent think-tanks, Unirule (see article). Mr Xi’s predecessors had put up with them. He looks keen to keep even the moderates quiet. + + + +It is tempting to pin all the blame for the suffering of China’s liberals on Mr Xi himself. After all, he is often described as the country’s most powerful leader at least since Deng Xiaoping. Who else could be responsible? But getting the measure of this colossally important figure, for China’s destiny as well as the rest of the world’s, is fiendishly hard. Since he came to power in 2012, Mr Xi has abhorred consistency. At times his language has been even more reformist than Deng’s, at others it has been coloured by nationalism, with warnings against the “infiltration” of China by “Western thinking and culture”. He has called for the Communist Party’s power to be “put in a cage”. But China’s chief justice (presumably with Mr Xi’s blessing) has recently railed against the “erroneous influence” of those who want an independent judiciary. At times Mr Xi sounds pro-market, yet he refers to debt-laden and market-distorting state-owned enterprises as his party’s “most dependable source of support”. The consensus among China-watchers is that, under Mr Xi, the country has been more protectionist and intolerant of dissent than for many years. + +Who he, Xi? + +There are two possible explanations for these contradictions. The first is that Mr Xi has no real interest in reform: that his talk about it is largely a sop to the West and an attempt to deceive those Chinese who are eager for change. If so, he is using his enormous power for precisely the purpose he intends: crushing all opposition and keeping the party in control of everything, including the main levers of the economy. The other possibility is that Mr Xi is less powerful than he appears—that he wants reform (at least of the economy), but feels he must make concessions to his party’s hardliners, or that he tries to initiate reform but is stymied by conservative subordinates. + +It would be better for China if the second explanation were true. A five-yearly reshuffle of the leadership is due later this year; it may leave Mr Xi feeling stronger and therefore more able to pursue the reforms he says he wants and that his country needs. But in the years ahead China must grapple with slowing growth, an ageing population and social unrest. Despite the best efforts of the government’s internet censors, social media have provided unprecedented opportunities for the disaffected to join forces and put pressure on the party. It would take consummate skill to navigate those hazards while keeping reforms on course. Whether Mr Xi is a despot or a frustrated reformer, China is unlikely to loosen up. + + + +This article appeared in the Leaders section of the print edition under the headline “The two faces of Mr Xi” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21717041-reality-very-different-chinas-president-talks-reformer/print + + + +上一項 文章 章節 下一項 + + + + + +Leaders 章節 Briefing + + + + + +Letters + + +On televisions, Venezuela, Singapore, multinationals, Republicans, Silicon Valley: Letters to the editor + +Leaders 章節 Briefing + + + + + +文章 章節 下一項 + + + + + +On televisions, Venezuela, Singapore, Africa, multinationals, Republicans, Silicon Valley + + +Letters to the editor + + +Feb 18th 2017 + +Letters are welcome via e-mail to letters@economist.com + + + + + +TVs and the environment + +Your story about energy-efficiency testing for televisions in America omitted the fact that the test procedure which the National Resources Defence Council is complaining about was created by all interested parties, including the NRDC (“Screen shocker”, February 4th). The television energy-test standard was approved by the International Electrotechnical Commission and is used in energy-efficiency programmes around the world. Everyone must abide by the current test method until that procedure is officially changed. Rather than acknowledging its own responsibility the NRDC is airing its objections publicly, as its agenda-driven study demonstrates. + + + +The fact is, televisions are a success story in terms of energy efficiency. The average on-power mode density for flat-panel TVs decreased considerably between 2003 and 2015, even as average screen sizes got bigger by half, televisions became internet-connected and screen resolution increased greatly. The average cost to power a television in the American home is less than six cents a day, and that is assuming the viewer watches TV five hours a day, every day of the week. + +Televisions are becoming thinner, lighter and more energy efficient, spurred not by misstated facts, but through the power of innovation. The history of technology proves that innovation, not hype and propaganda, is the best driver of fundamental advances in video-screen technology. + +GARY SHAPIRO + +President and CEO + +Consumer Technology Association + +Arlington, Virginia + + + + + +Politics in Venezuela + +“Maduro’s dance of disaster” (January 28th) outlined the disastrous economic crisis, including shortages of food and medicine, that Venezuela has suffered under President Nicolás Maduro. But it was wrong to suggest that there is “disarray” among the opposition. The Democratic Unity alliance is more united than ever in its effort to establish sound policies and constitutional order. What we lack are elections. + +The ruling Socialist Party is well aware that it would be trounced at the ballot box. Although you noted the regime’s illegal suspension of a referendum to recall President Maduro and its refusal to recognise the legislative powers of the opposition-controlled Congress, you did not mention the indefinite postponement of regional elections that were supposed to be held in December last year. + +Those elections remain in limbo, with no indication from the government that they will ever be held. In practice, Venezuela has now joined Cuba as one of only two countries in the Americas to eliminate the right to vote. + +Faced with a government that has shifted from authoritarianism to classic dictatorship, and thus relishes public unrest and violence, the opposition remains committed to peaceful and democratic change. To this end, we are moving forward with public protests, and we appeal to the international community to demand that elections be held. + +EUDORO GONZÁLEZ DELLÁN + +Secretary for international affairs for Primero Justicia + +Caracas + + + + + +What awaits Brexit Britain + +As a Briton who has been living in Singapore for more than 25 years, I chuckled to read that Theresa May’s idea of Britain’s future might be a sort of Singapore-on-Thames (“A hard road”, January 21st). Perhaps Brexiteers will lead the way in adopting some typical Singaporean habits: working 60-plus hours a week, sacrificing recreational time to acquire a high level of education, sharing small apartments with their parents until they get married, welcoming immigrant labour on a far higher scale than Britain ever has, and other such things. + +That proven model explains how Singapore went from being a poor place to one of the richest countries in the world in 50 years. + +PETE KELLOCK + +Singapore + + + + + +Business in Africa + +* Your piece about the MV Liemba in East Africa touches on the links between Africa’s trade restrictions, poor intra-Africa infrastructure and resource-fuelled regimes that tend to spend the national income on things that benefit its own interests ("African Queen", February 4th). 20% of Africa’s international infrastructure networks are impassable; flight connectivity is the lowest in the world; and rail networks are dilapidated or unmaintained. It is very expensive to travel across Africa. + +Regional integration in East Africa is threatened by the personal interests of the heads of member states, stagnated by deep suspicion that infrastructural and trade integration will economically annihilate landlocked countries while profiting those linked to the sea, far from it. An economically linked East Africa is good for all 300 million inhabitants, an economically vibrant Kenya is good for Uganda, Tanzania and Rwanda. A pan-African idea that has been part of the continent’s history since independence will not be successful until governments, regional bodies and the African Union get sombre about lowering the costs of moving goods and people. Policymakers need to re-engineer their thinking and adopt a more utilitarian attitude to making investment decisions that drive regional growth. Trade in modern Africa needs a policy reset. + + + +NGUMBO NJOROGE + +Nairobi, Kenya + + + + + +They had their day + +Regarding the declining profits of multinational companies (“In retreat”, January 28th), is this not a natural progression of liberal, open markets? Established Western firms were allowed to enter new, previously closed markets, most notably China. + +As the first entrants, they enjoyed dominant positions, and with that, they earned huge returns. But local firms grew in expertise and also offered attractive profits. Multinationals subsequently suffered as they carried burdensome costs compared with their local, nimbler rivals. + +It will be interesting to see whether the same holds true for today’s dominant technology companies. + +NEDIM BAZDAR + +Brisbane, Australia + + + + + +In defence of Trump + +To understand the cover art of the February 4th issue, I consulted my Oxford dictionary. An “insurgent” is one who rises in active revolt against authority. The word precisely describes the blockading, firebomb-throwing, window-smashing, intimidating, club-wielding protesters whose avowed mission is to neutralise a lawfully elected president. Donald Trump’s actions may grievously exercise liberal sensibilities, but so far, at least, they have been within his lawful authority. + +RONALD MASSON + +Topanga, California + + + + + +You described the tactics used by the Republicans in blocking a vote on Barack Obama’s choice of a Supreme Court justice as obstructionist (“Gorsuch test”, February 4th), However, what you did not mention is that during the last year of George W. Bush’s administration senior Democrats in the Senate at the time, including Charles Schumer and Joe Biden, were arguing that no vote should be held on a president’s nomination of a judge to the Supreme Court if a vacancy comes up in his final year. The Republicans were merely following the Democratic script. + +MICHAEL CLAREY + +Sydney + + + + + +Transfigured tech titans + +Schumpeter’s tirade against Silicon Valley’s hypocrisies over social and economic issues was not entirely unfair, but it lacked perspective (February 4th). Google’s “Don’t be evil” motto and the holier-than-thou stance adopted by many new technology companies was intended to set them apart from the old guard: the infamous misanthropy of Steve Jobs at Apple, the aggressive monopolism of Bill Gates at Microsoft and the self-aggrandisement of Larry Ellison at Oracle. If Silicon Valley’s revolutionaries made a mistake it was to believe their own rhetoric, and now the tables have turned. + +As they matured, Google and the rest turned out much like other big companies, seeking to establish de facto monopolies and milking them for their shareholders. Meanwhile, Steve Jobs has become a cultural deity, Bill Gates is now the world’s greatest philanthropist and Larry Ellison… well, some things never change. + +TIMO HANNAY + +London + +* Letters appear online only + + + +This article appeared in the Letters section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/letters/21717022-letters-editor/print + + + +文章 章節 下一項 + + + + + +Letters 章節 United States + + + + + +Briefing + + +Cloning: The sheep of things to come + +Letters 章節 United States + + + + + +文章 章節 下一項 + + + + + +Clones + + +Hello, again, Dolly + + +Twenty years ago the world met the first adult clone, a sheep called Dolly. Her legacy lives on. + + +Feb 18th 2017 + + + + + +IN THE summer of 1996 Karen Mycock, a cell biologist, was attending a wedding in the Scottish highlands. Returning to her hotel to change her hat, she found a fax pushed under her door. It said: “She’s been born and she has a white face and furry legs.” An unusual birth announcement; an unusual birth. + +In February Ms Mycock (now Mrs Walker), who worked at the Roslin Institute, an animal-research centre near Edinburgh, had passed a tiny jolt of electricity through two sheep cells in a dish. One was an egg cell which had had its nucleus, the bit of the cell which contains almost all its genes, removed. The other, its gene-bearing nucleus intact, was from the udder of another ewe. The electric jolt had caused the two cells to fuse, forming an embryo. + + + +The egg donor was a Scottish Blackface sheep; so was the surrogate mother that took the embryo to term. The udder cell came from a white-faced Finn Dorset. And that, the fax told Mrs Walker, was what the newborn lamb looked like, too. The “nuclear transfer” she had overseen had worked. An adult sheep had been cloned. + +Instantly understandable to an excited Mrs Walker—“I knew we had done what we had thought we had done”—the fax had been kept terse and cryptic because the breakthrough was, at the time, hush-hush. The existence of Dolly the sheep would not be revealed to the world at large until the following February, when a scientific paper was published in Nature—at which point a furore broke out that went far beyond the scientific world. + +The fuss among scientists was due to the fact that many believed cloning animals was impossible. John Gurdon of Oxford University had cloned frogs by nuclear transfer in 1958—but his creations never developed beyond the tadpole stage. All efforts to do the same in mammals had failed. These failures had led biologists to believe that, although all cells in a body shared the same genetic material, they were not equally capable of the same reproductive feats. “Stem cells”, such as those found in early embryos, could develop into the various sorts of specialist cells found in skin, muscle or nerves. But those “differentiated” cells could not change back into stem cells. Development was a one-way street. + +The research at the Roslin Institute showed that this need not be the case. The key advance was made by Keith Campbell, who realised the importance of synchronised “cell cycles”—the rhythms according to which cells grow and divide. By starving the donor cells in a way that forced them to stop dividing, Campbell matched them to the eggs’ cycle. + +By showing that the DNA in a differentiated cell could be repurposed through nuclear transfer, Dolly opened up two new possibilities. One, which came to be known as “reproductive cloning”, was the copying of individual animals. The other was the creation of embryonic stem cells (ES cells) capable of being turned into all sorts of other cells. Various ailments are caused by a lack of specific types of differentiated cell: insulin-secreting beta cells in the case of diabetes, for example, or myelin-forming cells in multiple sclerosis. Making embryos through nuclear transfer seemed likely to provide copious ES cells with which to research and treat such conditions—something which came to be known as “therapeutic cloning”. + +The udder mother + +The Roslin Institute’s main concern was reproductive cloning. Its researchers were interested in improving the “transgenic” animal business, in which genes are added to an animal so that it secretes some protein of particular value. The ability to produce multiple copies of the most productive such animals would be a great boon. + +The Roslin scientists knew that nuclear transfer would have other uses. Mrs Walker recalls that when the sheep was still a secret, the team would talk among themselves about the therapies she might lead to. What they did not appreciate was that, once Dolly was unveiled, the public would pretty much want to talk about one thing only: making copies of people. + +Dolly was supposed to be announced at a press conference timed to the Nature paper. But the news broke a few days early when the Observer, a British newspaper, scooped it. The story’s second paragraph predicted that: “It is the prospect of cloning people, creating armies of dictators, that will attract most attention.” It duly did. “Dreaded Possibilities Are Raised” one headline declared; “Cloned Sheep in Nazi Storm” shouted another. Der Spiegel put a regiment of Hitlers and Einsteins on its cover. The media and public became obsessed with the idea that human clones were just around the corner. + +Hank Greely, a law professor at Stanford University who specialises in issues surrounding reproductive technology, points out that the alarm at such a prospect was hardly surprising. People are often disconcerted and disgusted by changes in human reproduction. In vitro fertilisation (IVF) and surrogacy were worried about, debated and staunchly opposed in some quarters. “People were used to babies coming out the old fashioned way,” says Dr Greely. The way that cloning could conceivably render men unnecessary added to the concerns. Much was made of the fact that Dolly was cloned from an udder and named after a singer noted for her ample bosom as well as her talent. + +Baaad news + +And cloning tapped into deeper concerns. From the Frankenstein-y frisson of Mrs Walker’s vital spark of electricity to the fact that the most famous fatherless human in history is known to believers as the “lamb of God”, it would have been hard to craft a scientific advance with a richer and more treacherous cultural context. Blasphemy, “Brave New World” and “The Boys from Brazil”, a story about efforts to clone Adolf Hitler, all added to the brew—and the backlash. There were nightmares of reproductive cloning and therapeutic cloning becoming the same thing, with sentient clones harvested for spare parts, as in Michael Marshall Smith’s novel “Spares”—published shortly before Dolly’s unveiling—or, later, Kazuo Ishiguro’s “Never Let Me Go”. It did not help that a previous unnatural intervention into British agriculture—the addition of cows’ brains to cattle food—had earlier in the 1990s led to the scandal of “mad cow” disease and the culling of 4.4m animals. + +Zanussi, a washing-machine-maker known in Britain for its slogan “the appliance of science”, captured the mood with an advertisement that branded Dolly the “the misappliance of science.” President Bill Clinton instructed America’s National Bioethics Advisory Commission to report on human cloning within 90 days; similar instructions were issued by the French president, the president of the European Commission and the director of UNESCO. The Biotechnology Industry Organisation, a pro-technology lobby group in America, called for an outright ban. The Vatican also wanted a ban, saying that humans had a right to be born in a “human way and not in a laboratory.” + + + + + +Many argued that human reproductive cloning was contrary to nature and undermined human dignity. For those who did not feel this, the obstacles, both practical and ethical, seemed enormous. In the case of Dolly, 277 successful nuclear transfers had produced just 29 normal-looking embryos, which were implanted into 13 surrogate mothers. Only one survived. It was hard to see an ethical defence of applying such a wasteful process to potential people, even if the end was, in itself, not offensive. A further concern was the health of the offspring. Dolly developed osteoarthritis and a lung infection at an early age, prompting an unresolved debate about whether she died prematurely; experience with clones in other species has shown a tendency to various other anomalies. That said, four clones of Dolly herself are currently enjoying a healthy old age at the University of Nottingham. + +The fact that most researchers considered human reproductive cloning a quagmire did not stop some attention-seekers from stepping forward to claim they were going to clone humans—or, later, that they had. First came Richard Seed, a Chicago physicist. Then there was a Swiss sect called the Raëlians, who claimed success in 2002. An Italian gynaecologist, Severino Antinori, also said he had succeeded in 2009. Experts remain highly sceptical about these claims, which have not been backed up by scientific evidence. + +The bleat goes on + +Yet moves in the late 1990s towards an outright ban on human cloning hit a snag: the apparently impressive potential of therapeutic cloning. This could not be realised if scientists were not allowed to develop nuclear-transfer techniques for humans. No embryos, no ES cells. Some opposed therapeutic-cloning research as another form of embryo research, a practice to which many were already opposed; in 2001 the American government banned the use of federal funds to produce new embryonic cell lines through nuclear transfer. But some countries, including Britain, already had a more liberal attitude to the use in scientific research of “spare” embryos originally created for the purpose of IVF, and sought a regulatory distinction between admissible applications of nuclear transfer for therapeutic research and prohibited reproductive applications. + +But regulatory approval or no, producing human ES cells through nuclear transfer turned out to be a tall order. In 2004 Hwang Woo-souk, a South Korean researcher, announced that he had successfully created a new line of ES cells from a cloned human embryo. The following year he said he had created 11 more such cell lines. His results, published in eminent journals, were far more credible than those of the Raëlians or Dr Antinori. But by 2006 an investigation had concluded that almost all his research was fraudulent—though he had cloned a dog. + +By the time Dolly would have been celebrating her tenth birthday, in 2006, nuclear transfer had still not produced human ES-cell lines. Different species and groups of animals take to nuclear transfer in different ways. Cats and mice, it now turns out, are quite easy: dogs and rats hard. In primates, according to Ian Wilmut, who led the Roslin team, the technique proved persistently disappointing, with “very limited development and no offspring”. But an alternative technique that Dolly inspired had produced something almost as good—and much less morally problematic. + +Shinya Yamanaka, a Japanese scientist, says that when he first read of Dolly as a post-doctoral researcher he had become “almost depressed” over wondering what to do. Dolly excited him and gave him a goal. Her creation showed that chemical factors in the egg had been able to force adult DNA to rejuvenate itself. Dr Yamanaka set about looking for them. He started by putting into mouse cells the genes for 24 factors known to have a role in keeping stem cells from differentiating. The results looked quite similar to ES cells. Assuming not all the factors were essential he repeated the work with fewer of them. By 2006 he had narrowed the field to four factors which, administered together, could convert differentiated tissues back into stem cells. It was a way of turning back the biological clock without the fiddly business of nuclear transfer. + +Pluripotent possibilities + +Dr Yamanaka called his cells “induced pluripotent stem cells”. These IPS cells garnered a huge amount of attention, funding and effort (see timeline). Not only could they be made without the ethically troubling intermediary of an embryo. They could also be made from cells donated by a potential patient. This meant that if they were then used for therapy, the patient’s immune system would raise no objections—something which was not necessarily the case for ES cells. Many labs trying to make human ES cells from cloned embryos stopped when IPS cells came out, says Robin Lovell-Badge, a stem-cell expert at the new Francis Crick Institute in London. + + + + + +In 2012 Dr Yamanaka received a Nobel prize for this work. The IPS cells he invented have become a scientific workhorse, providing limitless supplies of differentiated cells and tissue for use in the lab. They are an invaluable tool for modelling human diseases and screening drugs. New techniques such as genome editing are extending their uses. But they have yet to prove their therapeutic mettle. + +Dr Yamanaka now runs an institute in Kyoto where hundreds of researchers are pushing forward on IPS cells. There have been advances. Scientists at the New York Stem Cell Foundation have turned skin samples from patients with progressive multiple sclerosis into IPS cells and then into myelin-forming cells. Yet turning such achievements into treatments has proved challenging. The only clinical trial of IPS cells to date, conducted by the Riken Centre for Developmental Biology in Kobe, was stopped abruptly in 2015. The idea was to take stem cells made from skin cells and turn them into retinal cells which could be used to reverse macular degeneration, which leads to blindness. After just one patient had been treated, the trial was halted because mutations were found in the cells. It may well be possible to overcome such problems, but any adult cell that is turned back into a younger state through genetic engineering is likely to have its genome scarred in some way. + +And IPS cells are no longer the only game in town. In 2013 Shoukhrat Mitalipov, a reproductive biologist at Oregon Health and Science University, finally cracked the tricky problem of how to create human ES cell lines. The timely addition of a little caffeine to stop the egg developing too fast turns out to be crucial. + +Dr Mitalipov has compared his nuclear-transfer ES cells to IPS cells and ES cells taken from embryos created by IVF; the sort of cells which provide the gold standard in such matters, according to Dr Lovell-Badge. The nuclear-transfer ES cells look more like the gold standard than the IPS cells, perhaps because the IPS cells retain “epigenetic” memories of their differentiated past—chemical modifications to their DNA that influence their genes’ expression. + +So, 16 years after the world was wowed by Dolly, a technique for cloning embryos had finally been demonstrated in the laboratory. But nuclear transfer remains difficult and the creation of cloned embryos for research or therapy remains ethically fraught. It is banned in some countries, including France, Germany and Russia; in other places, such as America, there is no overarching regulation, which brings its own problems. And even in places like Britain and Japan, where it is allowed, getting permission takes time and effort. + +What is more, cell lines made this way might not match a patient’s immune system in the way an IPS-cell therapy produced from the patient’s own cells can. Researchers at ViaCyte in San Diego, California, have used IVF-derived ES cells to create insulin-producing beta cells with which to treat type 1 diabetes. They anticipate that the cells will, when placed in patients’ bodies, need to be encapsulated in a plastic mesh to protect them from the immune system. That may work for some conditions; it won’t work for all of them. + +That is why many feel that, whatever flaws IPS cells have, they are the most promising option for future therapies. More than half a century after creating the first cloned tadpoles, Dr Gurdon is now one of those searching for factors beyond those identified by Dr Yamanaka that will take the technology further, bringing IPS cells closer to the gold standard. + +Copy cats and dogs + +After 20 years of work on such possibilities (more, in Dr Gurdon’s case) some see the Petri dish as half-full, some as half-empty. A couple of decades seem to some a reasonable timeline for such technically demanding and fiddly work; run-of-the-mill drugs can often take a decade to develop, and this sort of thing is far less well understood and more demanding. What’s more, regulations have slowed things down; Dr Mitalipov says much of the time between his successful cloning of monkey cell lines in 2007 and his production of cloned human ES cells in 2013 was “navigating US regulations on embryo research”. The fact that progress has been slower than once hoped has costs. One of the members of the team that created Dolly, Marjorie Ritchie, died in 2015 after suffering with multiple sclerosis—a disease that many hoped would benefit from advances in stem-cell medicine. But that is not to say there is no progress. + +Others, more sceptical, see the 20 years as evidence that even if such therapies can eventually be produced they will always be complicated affairs, and therapies “matched” to the immune system will of their very nature have to be handcrafted. Even if they can be made to work they will be very costly. A guide to quite how expensive these might be came last year when GSK, a drug giant, unveiled the pricing for a personalised, stem-cell therapy for severe combined immunodeficiency. The therapy extracts adult stem cells from bone marrow, introduces a missing gene and then uses the corrected cells to cure the patient. It costs $665,000. + +Beyond the clinic, and beyond the human, cloning has made slow but steady progress; it has now been successfully used on more than 20 species. The original idea of applying it to transgenic animals has not amounted to much, but the technique has proven useful in cattle and dairy farming, allowing multiple copies of elite animals. In New Zealand and America it is regarded as a normal animal-breeding procedure and clones are part of the pedigree market. Meat and milk from cloned animals is routinely farmed and sold in America, Argentina and Brazil. In Europe, though, it is banned on grounds of animal wellbeing. A study by the European Food Safety Authority in 2008 said that developmental abnormalities in clones and unusually large offspring resulted in difficult births and excessive neonatal deaths. + +As well as cloning thousands of farm animals ViaGen, a small firm based in Cedar Park, Texas, has cloned many horses and pets; there are people happy to spend lavishly in the hope that they can get a genetic copy of a lost companion. According to the firm’s website, a cloned horse will set you back $85,000. The disgraced Dr Hwang has also started a firm that seems to have cloned more than 400 dogs for customers willing to pay about $100,000 a pup. In Tianjin, China, an outfit called Boyalife has been building an enormous new facility, capable of producing 1m calves a year as well as dogs and horses. But its clone factory seems to be well behind schedule. + +One lucrative niche unanticipated by science-fiction writers is polo. Crestview Genetics of Buenos Aires, owned by Adolfo Cambiaso, the world’s best polo player, and two partners, has cloned more than 45 steeds including over 25 copies of Mr Cambiaso’s polo ponies—one sold at auction for $800,000. One of the ponies he cloned was a much-loved chestnut stallion called Aiken Cura which he had to have put down more than a decade ago, after it broke its leg in a match. Last December his team, La Dolfina, rode six clones of the same mare to victory in a prestigious match in Buenos Aires. + + + + + +One of Crestview’s founders, Alan Meeker, says that “rich individuals” have from time to time asked about cloning humans. He refused. Yet there can be little doubt that there is at least some demand for human cloning—and it doesn’t come from Nazis. After Dolly’s existence was announced the Roslin Institute received agonising requests from parents whose children had died; researchers at fertility clinics also suddenly found themselves asked about the possibility. It is likely that they still are. + +The thrust in reproductive technology remains a desire to allow people who could not otherwise be able to do so to have any child at all, rather than to make specific people. That does not mean the field does not still throw up ethical and legal issues. Its most recent cause célèbre is the development of “three-parent babies”, in which faulty mitochondria—power stations that drive a cell’s metabolism—in an egg are replaced by healthy mitochondria from a donor before IVF. And it does not mean, in time, that the issue of reproductive cloning, or something similar, might not re-emerge. + +Parents: three, two or one? + +One odd possibility comes from work on IPS cells that might provide a new alternative for the infertile. In mice it is now possible to turn IPS cells derived from skin cells into sperm and eggs. If this technique—known as in vitro gametogenesis or IVG—can be perfected and adapted to humans (still, at this stage, an imposing if) it could allow people afflicted by various disorders that stop their bodies from producing eggs and sperm to have children. It would also allow same-sex couples to have biological children of their own, with sperm derived from one woman fertilising another’s egg, or an egg derived from one man’s cells being fertilised by his partner’s sperm (though that would also require a surrogate mother). + + + + + +And it would also, in principle, allow one parent to provide both the sperm and the egg. Because people have two copies of every gene, but eggs and sperm get only one, the resulting child would not be genetically quite identical to its parent—but it would be far closer than any natural relative. Such creations would have to be screened carefully for genetic disorders and perhaps even gene edited. Reproducing this way would be, in effect, the closest sort of inbreeding imaginable. And it is not clear what might lead someone to want such a child. + +But if IVG becomes a part of the toolkit for reproductive biology such possibilities will open up. And Dr Greely thinks that IVG could eventually become a big thing. As the possibilities of genetic screening—and in time, perhaps, genome editing—become clearer, people may see having embryos made carefully outside the body as a much safer bet than letting them haphazardly assemble themselves within it. And if that is the case, a plentiful supply of eggs derived from skin cells would suit many women much better than the difficult procedures needed to dig eggs out of ovaries. Some specific applications of IVG—including, most definitely, any attempts to produce “one parent” children—would undoubtedly trigger the “yuck factor” that has always greeted developments in reproductive technology. But, if the technology can be made safe, it may well become accepted. As it did with IVF, the sight of grateful parents with beloved children will prove a powerful argument. + +This may not be the way things work out. It may be that IVG proves impossibly hard to apply to primates. There may turn out to be no demand for what it offers, or at least not enough to encourage clinics or companies to involve themselves in developing it; the commercial obstacles seem high. And there may be a public outcry. But the prospect of children created in this way is probably a lot closer today than human clones were 20 years ago. And so far the world has made barely a bleat of protest. + + + +This article appeared in the Briefing section of the print edition under the headline “The sheep of things to come” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21717028-twenty-years-ago-world-met-first-adult-clone-sheep-called-dolly-her-legacy-lives/print + + + +文章 章節 下一項 + + + + + +Briefing 章節 The Americas + + + + + +United States + + +Turmoil in the administration: Errant Flynn + +Labour markets: Forgotten men + +Black colleges: Welcome, amigos + +Detroit’s recovery: The boon of the huddled masses + +Legal immigration: Minding the door + +Howard Johnson’s: How HoJo lost its mojo + +Lexington: NAFTA on notice + +Briefing 章節 The Americas + + + + + +文章 章節 下一項 + + + + + +Farewell to Flynn + + +The axing of Michael Flynn reveals deep problems in Donald Trump’s government + + +The furore over America’s national security adviser + + +Feb 18th 2017 | WASHINGTON, DC + + + + + +THE king, wrote Charles de Marillac, the French ambassador to the court of Henry VIII, was so fickle he rendered even his word “as softened wax [that] can be altered to any form”. He was so suspicious he did “not trust a single man”. Some of the dramatic twists of Donald Trump’s month-old administration, including the removal on February 13th of Michael Flynn as national security adviser (NSA) after he allegedly made inappropriate comments to the Russian ambassador and fibbed about them, would have seemed familiar to de Marillac. They are not merely the teething troubles of an unusually messy administration, but seem rooted in Mr Trump’s idiosyncratic management style. + +Demanding Mr Flynn’s resignation, due to an “erosion of that trust” which the president had formerly invested in the tough-talking former military-intelligence officer, was in fact one of Mr Trump’s better decisions. Abrasive, hot-headed and highly partisan, Mr Flynn was ill-chosen for the job. Yet the fact that Mr Trump so recently hired him, and the circumstances of his firing, which have flooded out of the administration in leaked reports from unhappy officials, are not reassuring. + + + +The job of NSA requires a cool head, a big brain, excellent managerial skills and an even temper: few have excelled at it. Mr Flynn had little high-level government experience aside from a stint running the Defence Intelligence Agency, which ended in 2014 when he was sacked for poor management. He was appointed by Mr Trump, for whom he was an early, raucous cheerleader, because the president mistrusted many of the likelier alternatives, admired Mr Flynn’s tough-talking style and perhaps did not fully understand the requirements of the position. He sacked him, it seems, not because of his misdemeanour or because he was doing a bad job, which allegedly Mr Flynn was, but because he had become an embarrassment. + +The relevant conversations between Mr Flynn and Ambassador Sergei Kislyak took place on December 29th, the day Barack Obama slapped sanctions on Russia in retaliation for its effort to rig the election in Mr Trump’s favour. After reports of these exchanges were leaked to the press, Mr Flynn publicly denied having discussed the sanctions with Mr Kislyak. He reiterated his denial to Mike Pence, the vice-president, who then spoke up for him stoutly. + +Yet a few days after Mr Trump took office he was informed by the then acting attorney-general, Sally Yates, that Mr Flynn had in fact discussed the sanctions with Mr Kislyak and might therefore be in breach of the Logan Act, which forbids private citizens from trying to conduct foreign policy. According to his spokesman, Mr Trump’s response was to launch a careful review of the case against Mr Flynn before concluding, over two weeks later, that though he had broken no law, “the evolving and eroding level of trust as a result of this situation and a series of other questionable instances” had made his position untenable. + +It seems likelier, on the basis of multiple leaked reports, that Mr Trump and his closest advisers, including Stephen Bannon, his chief strategist, reckoned that Mr Flynn could get away with it. A few days after Mrs Yates delivered her report, Mr Trump sacked her for refusing to support his immigration ban on seven mainly Muslim nationalities. He did not inform Mr Pence that he had been made a monkey of by Mr Flynn. He decided to axe his national security adviser only after the Washington Post revealed on February 13th, on the basis of yet more leaks, that the Justice Department considered that his lies had left Mr Flynn vulnerable to Russian blackmail. + +Mr Flynn will not be missed. None of his mooted replacements, Keith Kellogg and David Petraeus, both retired generals, and Robert Harward, a retired admiral, looks especially promising; yet they would be better suited than he was. Mr Harward, said to have been offered the job, also has the advantage of having worked for James Mattis, the defence secretary, who is believed to have had a hand in the more conventional foreign-policy positions Mr Trump has recently started staking out. + +Having dandled an idea of using relations with Taiwan as a bargaining-chip against China, on February 9th the president endorsed the one-China principle that has defined relations with China for four decades. Having questioned America’s commitment to Japan’s security, he reaffirmed it on February 10th during a visit by Shinzo Abe, Japan’s prime minister. Similarly, on the international deal to contain Iran’s nuclear programme, which he once swore to tear up but now seems to support, and on NATO, which he no longer calls obsolete, Mr Trump has swerved from bomb-throwing to orthodoxy. + +But such statements, while welcome, do not constitute a full-bodied foreign policy, and Mr Trump appears to have little grasp of the painstaking processes policy-making entails. His flurry of executive orders, many of them badly drafted fulfilments of campaign promises, is symptomatic of this. So is the vast power he has awarded to a few trusted aides, including Mr Bannon, who has taken a privileged seat in the National Security Council. So, too, is the fact that the transition, including the roll-out of thousands of Trump appointees, is falling behind schedule. + +Making administration great again + +Mr Trump has so far nominated 35 people to fill some 700 senior positions that require Senate confirmation. On February 15th one of them, Andrew Puzder, his chosen labour secretary, withdrew his nomination after it became clear he would struggle to get confirmed. This poor progress is making it even harder for Mr Mattis and his cabinet colleagues, including Rex Tillerson, the secretary of state, to push back against the turmoil emanating from the White House. + +Plenty of talented Republican wonks are in theory available to them. But many are former critics of Mr Trump, which appears to have put them beyond the pale. Last week the president refused to let Mr Tillerson have his choice of deputy, Elliott Abrams, after being alerted to some harsh words Mr Abrams had written about him during the campaign. Given that over 150 leading Republican national-security experts put their names to letters containing even sharper criticisms, it is hard to imagine Mr Trump forming a competent administration unless he relents on this issue. The greenhorns, oddballs and second-raters who were prominent in his transition effort seem unlikely to produce much good policy, bolster Mr Mattis and his colleagues and bring the leaky bureaucracy to heel. The over-promoted Mr Flynn’s struggles illustrated that. + +There is still time for Mr Trump to salvage his administration. But this will involve him not only changing tack on issues, as he often has in the past, but expanding his view of the government and reforming his belligerent and highly personalised style of leadership. The qualities that made him a successful property developer are not translating well to running the government. But Mr Trump shows no sign of recognising this. He does not even appear to recognise the shambles his government is in. Appearing alongside Israel’s prime minister, Binyamin Netanyahu, on February 15th (see article), he blamed Mr Flynn’s fall on the journalists who had reported his misdemeanours: “He’s been treated very, very unfairly by the media—as I call it, the fake media.” + + + +This article appeared in the United States section of the print edition under the headline “Errant Flynn” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717066-furore-over-americas-national-security-adviser-axing-michael-flynn-reveals-deep/print + + + +文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +The forgotten-men index + + +Tracking the fortunes of the white working-class + + +Our new labour-market index + + +Feb 18th 2017 + +IN 1922 Donald Trump’s father, Fred, left high school at 16 to work for a carpenter. He was a “very smart guy” who could “add five columns of numbers in his head”. Construction came naturally to him, too. By 1971 he had amassed a multi-million-dollar fortune. Working-class success stories like Fred’s are rare in America, and becoming rarer. The president wants to see more of them. + +At his inauguration he declared that America’s “forgotten men and women” will “be forgotten no longer”. And he has vowed to bring back jobs to states that have been “hurt so badly” by globalisation. By America’s forgotten people, he means above all white working-class men: three-quarters of white men who left school at 18 and voted in November did so for Mr Trump, the highest share of any demographic group. + + + +White men are also Mr Trump’s most loyal supporters. While his approval ratings languish at 49% nationwide, among working-class white men they are at 69%, according to YouGov, a pollster. This group also forms a big chunk of the labour force: non-Hispanic white men aged 25 to 65 with a high-school diploma or less make up 23% of male workers. + +Mr Trump has little of his father’s precision with figures. A year ago he reckoned that the unemployment rate—rather than hovering around 5% as the official statistics showed—was “probably 28, 29, as high as 35” or even, perhaps, “42%”. To help clarify things, The Economist has created a set of labour-market indicators to track the progress of America’s forgotten men. Our index of white working-class males (WWCM) employs three measures of job performance. + + + + + +First, the unemployment rate. This counts the number of jobless people who have actively sought work in the past four weeks, as a percentage of the total labour force. At the end of 2016 the rate stood at 4.7%, but among WWCM it was 6.4%: a difference of 30% (see chart 1). Between 1994 and 2001 the average gap in unemployment rates between all men and WWCM was only 15%. Since the start of the Great Recession that average gap has swelled to 24%. + +Second, because the unemployment rate doesn’t count people who have given up looking for work, some argue that it underestimates the true extent of joblessness. So the second indicator is labour-force participation, which counts workers, employed or not, as a percentage of the working-age population. This has fallen steadily, from 87% in 1948 to 69% today. For WWCM it has declined to 59% (a proportionate gap of 15%, compared with an average of 10% between 1994 and 2001). + + + + + +Finally, over the past 27 years, average hourly wages have risen by 2.9% a year before adjusting for inflation. Meanwhile the hourly earnings of WWCM (industries weighted by their share of WWCM employees) have increased by 2.8% a year. A small difference but, when compounded over 27 years, the gap in wage levels between all workers and WWCM has widened from an average of 3.7% in 1990-92 to 6.9% over the past two years. + +Compiling these three indicators in an equally weighted index provides a month-to-month indicator of Mr Trump’s performance in the WWCM labour market (see chart 2). The index has shown deterioration in recent years. Could Fred Trump’s son make a difference? + + + +This article appeared in the United States section of the print edition under the headline “Forgotten men” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717068-our-new-labour-market-index-tracking-fortunes-white-working-class/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Welcome, amigos + + +Latino students may help keep the doors open at black colleges + + +Historically black colleges and universities adjust to the times + + +Feb 18th 2017 | NEW YORK + + + + + +THE mascot at César E. Chávez High School in Houston, Texas, is the lobo, Spanish for wolf. Most of the pupils are Latino. The school is not the traditional pipeline for black colleges, yet last week Texas Southern University (TSU), a historically black university, visited the place to pitch the benefits of its institution. The university, which was founded in 1927 to educate black scholars when they had little access to higher education, has seen a steady increase in Latino enrolment. Over the past six years the share of Latinos at TSU has doubled, from 4% to 8%. Austin Lane, the university’s president, expects that figure to double again inside ten years. + +TSU is not alone. In 2013 the University of Pennsylvania’s Centre for Minority Serving Institutions looked at the changing face of historically black colleges and universities (HBCUs). Although many are still majority-black, the report found that a quarter have at least a 20% non-black student population. Some of the growth is from white, Asian-American and international enrolment. The strongest growth is coming from Latinos, especially in places, such as Texas and Florida, where the Latino population is also surging. Some of this growth is organic. For instance, Paul Quinn College started a soccer programme, which appealed to Latino students, who now make up 20% of students. Others, like TSU, are actively recruiting in Latino communities. They visit Latino-majority high-schools and Spanish-language churches, and use bilingual recruiting material. “We are in the business of teaching and learning,” says Mr Lane, “but we are a business.” + + + +Non-black student enrolment in HBCUs is nothing new—St Philip’s College admitted its first white students in 1955—but since the recent recession it has been economically necessary. HBCUs also face competition from colleges and universities whose doors were once closed to black students. The share of all black students who were enrolled at an HBCU fell from 18% in 1976 to 8% in 2014. Falling enrolment has left many institutions cash-strapped. Endowments tend to be small (black alumni do not always have spare money to donate), so most institutions rely on federal and state funding. Some of the 51 public colleges were also hit by state-funding cuts. + +HBCUs were founded to educate former slaves and their descendants. They helped to create America’s black middle class. More than a fifth of black pharmacists were educated at Florida A&M, an HBCU. A recent report by the Brookings Institution, a think-tank, found that HBCUs do a better job at enrolling students from low-income backgrounds than their traditional counterparts. HBCUs tend to have lower tuition fees and provide a nurturing campus. That appeals to Latinos, who are often the first in their families to attend college, says Marybeth Gasman, the author of the University of Pennsylvania report. + +Even with the growing numbers of Latinos, many schools are still on shaky financial ground. During the presidential campaign Donald Trump said he would ensure HBCU funding. An executive order on HBCU funding is said to be in the works. The education secretary, Betsy DeVos, recently visited Howard University, the most prestigious of the black colleges. A meeting between Republican lawmakers and HBCU leaders is planned later this month. + +Although some alumni worry that the influx of Latinos may dilute the HBCUs’ primary purpose, to educate black students, administrators argue that the mission is intact. They are still educating the underserved. “We don’t have the luxury of saying we only want black folks,” says Jarrett Carter of HBCU Digest, an online publication. “We want everybody.” Most institutions are walking the line of honouring the past and maintaining a haven for black culture, while also allowing Latino students to create their own fraternities and sororities. There have even been Latina homecoming queens. As one head of an HBCU puts it, “You don’t have to be Catholic to go to Georgetown [a Jesuit university]. We can diverge without losing our identity.” + + + + + +This article appeared in the United States section of the print edition under the headline “Welcome, amigos” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717076-historically-black-colleges-and-universities-adjust-times-latino-students-may-help/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Detroit’s depopulation + + +How immigrants are helping Detroit’s recovery + + +The recently bankrupt city needs newcomers + + +Feb 18th 2017 | DETROIT + +A trainee entrepreneur + + + +“WE ARE proud of our Muslim community in Michigan,” says Rick Snyder, the state’s Republican governor, sitting in his office in the grandiose Cadillac Place, the former headquarters of General Motors. Ever since his first state-of-the-state address in 2011, Mr Snyder has emphasised the importance of welcoming people from across the world to this large midwestern state. Thanks to once-plentiful jobs in the car industry, greater Detroit has the largest Arab-American community in America. Almost half the population of Dearborn, a suburb that is home to Ford Motor Company, is from the Middle East. Hamtramck, another Detroit suburb, is the first city in America with a majority-Muslim city council. + +Mr Snyder and Mike Duggan, the mayor of Detroit, are making population growth a gauge of their efforts to revitalise a state that is slowly recovering from a “lost decade” and a city devastated by the largest municipal bankruptcy in American history. Between 2000 and 2010 Michigan lost nearly 800,000 jobs, income per head fell from America’s 17th-highest to 39th, and residents fled. In the same period the population of Detroit, a city built for 2m, plunged to just over 700,000. By the start of the next decade the city’s roads had fallen into disrepair; public schools were among the worst in the country; thousands of households had no running water and tens of thousands of building plots were derelict or vacant. + + + +In his most recent state-of-the state address last month, the governor set the goal of reaching 10m state residents again in the next three years. He proudly pointed out that, in the past six years, Michigan had gained 50,000 new people. “Immigrants account for all of that population growth,” explains Steve Tobocman, head of Global Detroit, a non-profit organisation promoting immigration. + +For Mayor Duggan, even a slowdown in his city’s depopulation is good news; and he owes it entirely to immigrants. From 2010 to 2014, Detroit lost 36,000 residents who had been born in America. It gained 4,400 new immigrants—not enough to offset the population loss, but a significant increase in the share of immigrants in the city’s population. + +A drive round greater Detroit’s vast web of roads and freeways shows that the growing immigrant population is making its mark. On Dearborn’s Ford Road sits America’s largest mosque, the Islamic Centre of America, with its golden dome and two slim minarets; it contains a school, library and conference centre. Also in Dearborn is the country’s only Arab-American museum, which chronicles the experience of the new arrivals from the Middle East with displays such as the sewing machine an immigrant used to start a small sportswear factory. Decades ago other groups preceded the Arabs, congregating—and building businesses—in Mexicantown in south-western Detroit and Greektown in the city centre. + +Three years ago Mr Snyder created the Michigan Office for New Americans, with the aim of attracting skilled and entrepreneurial immigrants. The statistics are encouraging. Immigrants create businesses at triple the rate of American-born residents. Between 2011 and 2015, 63% of adult immigrants to Michigan had a college degree. Immigrants still represent only 6% of the state’s population, but 33% of high-tech firms created there between 1990 and 2005 have at least one immigrant founder. Many of them set up shop in newly trendy downtown Detroit. + +Signs abound that Detroit has turned the corner, at least in the downtown and midtown neighbourhoods. Opposite Cadillac Place are the offices and workshop of Shinola, a trendy maker of expensive watches and bikes, which Tom Kartsotis started with ten employees five years ago and now employs more than 350 in Detroit. In January the last of the city’s 65,000 new streetlights was switched on. A light-rail line is being built, and the city has put 80 new buses on the roads. Some 10,800 blighted houses have been torn down since 2014; another 2,500 will be removed soon. The rate of payment of property taxes has increased from just 68% during the city’s bankruptcy to 82%, in part thanks to a fairer assessment of the tax burden. + +How do Michiganders feel about President Donald Trump’s effort to ban travellers from seven countries with predominantly Muslim populations? Mr Snyder says, diplomatically, that it opens a debate. But in several Michigan cities, especially Detroit, protests erupted. After hesitating, the chairman and chief executive of Ford released a statement saying they did not support it. But the ban, combined with newly stringent raids by Immigration and Customs Enforcement, the agency charged with deporting undocumented workers, is sowing fear among immigrants, says Mr Tobocman. Such fear is the last thing Detroit needs, as it tries to lure them in. + + + +This article appeared in the United States section of the print edition under the headline “The boon of the huddled masses” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717104-recently-bankrupt-city-needs-newcomers-how-immigrants-are-helping-detroits-recovery/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Not such a big, beautiful door + + +A new effort to narrow the route to permanent residency in America + + +Reforming legal immigration + + +Feb 18th 2017 | Los Angeles + +Proud to become an American + + + +DURING his presidential campaign, Donald Trump vowed to construct a wall along America’s southern border with Mexico to curtail illegal immigration. He often gave one caveat: this “big, beautiful wall” would have a “big, beautiful door” for those entering the country lawfully. Now, though, fellow Republicans have begun arguing that the door for legal immigrants should be made smaller. + +There are two main paths for immigrants to become legal permanent residents in America: work and family. A new bill called the Reforming American Immigration for Strong Employment (RAISE) Act, proposed by two Republican senators, Tom Cotton of Arkansas and David Perdue of Georgia, would restrict the family route, which is sometimes referred to as “chain” migration. Unveiled on February 7th, the bill would allow legal permanent residents to sponsor their spouses or children under 18 for residency, but not more distant or adult relatives, as green-card holders can now. It would also cap the number of refugees offered residency at 50,000 a year and stamp out the diversity lottery, which distributes 50,000 visas a year to people from countries that have low rates of immigration to America. + +Proud to become an American + + + +From 1990 to 2015 an average of 1m people became legal residents each year in America—up from an average of 532,000 between 1965 and 1990 (see chart). According to the Migration Policy Institute, during the past decade between 60% and 70% of lawful permanent immigration has been family-based. Messrs Cotton and Perdue estimate that the RAISE Act would reduce the number of legal immigrants by nearly 40% in its first year and 50% by its tenth year. Doing so, according to Mr Cotton, would promote higher wages for “all working Americans—whether your family came over here on the Mayflower or you just took the oath of citizenship.” + +Roy Beck, the founder of NumbersUSA, a group that advocates reduced immigration, applauds the bill, which he says will allow the labour market to tighten. He says dry-wallers, roofers and other low-skilled workers frequently write to him complaining that they were edged out of work by immigrants willing to accept lower wages. Critics say there is no evidence that immigration harms native-born workers on the whole, and studies show that immigration has a positive effect on labour-market outcomes in the long term. To that Mr Cotton responds: “Only an intellectual could believe something so stupid. The laws of supply and demand have not been magically suspended.” + + + +The notion of curtailing legal immigration has lurched in and out of mainstream political debate in America for the past century. It was popular in the 1920s, in the wake of an earlier surge in immigrant flows, and inspired the enactment of two restrictive laws: the Emergency Quota Act of 1921 and the Immigration Act of 1924, which together established a quota system based on national origins. Another effort to reduce legal immigration came in the 1990s, after three decades of elevated immigration. In 1995 Bill Clinton initially endorsed a bipartisan congressional commission’s suggestion to slash legal immigration by a third, but the push for a law that would have cut family-chain migration failed after Mr Clinton withdrew his support. + +The RAISE Act is also unlikely to prevail; two prominent Republican senators, Lindsey Graham and John McCain, have expressed opposition to it, along with their Democratic colleagues. But even if the legislation flops, the ideas it promotes will have powerful advocates in Washington. Jeff Sessions, Mr Trump’s attorney-general, has long championed reduced immigration. Stephen Miller, who was once Mr Sessions’s communications director and now advises Mr Trump, seems to share his old boss’s attitudes. Mr Trump’s own rhetoric on legal immigration is ambivalent. He has both called for the “big, beautiful door” and, in a policy speech before the election, said he wants “to keep immigration levels measured by population share within historical norms.” + + + +This article appeared in the United States section of the print edition under the headline “Minding the door” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717106-reforming-legal-immigration-new-effort-narrow-route-permanent-residency/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +How HoJo lost its mojo + + +The last Howard Johnson’s restaurant is for sale + + +The demise of a once-great food chain + + +Feb 18th 2017 | LAKE GEORGE, NEW YORK + +Last but not least + + + +“DOES HoJo still serve fried clams?” asked a Howard Johnson’s patron, using the nickname for the restaurant chain. He recently ate there for the first time in nearly 40 years. Back then, “HoJo” could be found on almost every highway and byway and felt as ubiquitous as McDonald’s or Starbucks are today. At its height in the 1970s, Howard Johnson’s had more than 1,000 restaurants and was the biggest food chain in America. Only the army fed more people. Now, only one is left. The last one standing is in Lake George, a summer tourist spot in New York’s Adirondacks. + +Howard Deering Johnson, the chain’s founder, started his food empire in 1925 with an ice-cream shop outside Boston. He was an early pioneer of franchising. At one point in the 1960s, a new restaurant opened every nine days. Growth coincided with the rise of the car, the highway system, the middle class and family holidays. Each franchise had to adhere to the “Howard Johnson’s Bible”, which dictated everything from decor to the amount of tartare sauce; and each had to use food prepared by central commissaries, which was delivered to the restaurants for final cooking. The large menu included 28 ice-cream flavours, tender sweet Ipswich fried clams and butter-grilled “frankforts”. + + + +Mr Johnson took food quality seriously, spending 48% of his gross revenue on food (Chipotle, a present-day food chain, which prides itself on using fresh products, spends only 35%). In 1960 he hired chefs from Le Pavillon, then the finest restaurant in New York City. One, Jacques Pépin, turned down an offer to be President Kennedy’s White House chef. Food quality was part of the chain’s appeal, as were affordability and reliability. Before Howard Johnson’s, travellers found only greasy spoons and truck stops which were not family-friendly. A Howard Johnson’s meal was affordable glamour for the growing middle-class. The waitresses wore uniforms designed by Dior. + +But its reputation slipped in the 1970s. Food quality diminished. The brand became synonymous with bland, says Paul Freedman, author of “Ten Restaurants that Changed America”. People began to joke that Howard Johnson’s ice-cream came in 28 flavours and its food in one. It had difficulty competing with fast-food chains, which imitated its business model while stripping it down (no real kitchens or wait staff). + +In 1979 the Johnsons sold the company. It changed hands several times. The motel-lodge arm of the company still exists, now owned by Wyndham Hotels. The restaurant franchises formed their own network for a spell, but one by one they closed. + +John LaRock leases and runs the last Howard Johnson’s restaurant. It still has its orange-tiled roof, and the weather vane with the old Simple Simon and pieman logo. Mr LaRock worked in the same kitchen in the 1970s and, though the property is for sale, he has no intention of closing. He hopes to buy it, and add a gift shop to sell HoJo paraphernalia: “People love that stuff.” + + + +This article appeared in the United States section of the print edition under the headline “How HoJo lost its mojo” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717098-demise-once-great-food-chain-last-howard-johnsons-restaurant-sale/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Lexington + + +The view from a midwestern county that relies on free trade, but loves Donald Trump + + +NAFTA on notice + + +Feb 18th 2017 + + + + + +FOR too long American workers have been ignored, President Donald Trump declared on February 13th, as he promised to “tweak” trade relations with Canada and to transform an “extremely unfair” relationship with Mexico. Flanked by the Canadian prime minister, Justin Trudeau, Mr Trump made plain that he stands by a campaign pledge to rewrite the North American Free Trade Agreement (NAFTA), a 23-year-old pact underpinning trade between Canada, Mexico and the United States. + +Demonising NAFTA helped Mr Trump to the presidency. But in reality millions of American jobs are supported by that pact. One of them belongs to Chris Gambrel, who builds vast diesel engines in Seymour, Indiana. It would be odd to think of Mr Gambrel, a skilled and brawny employee of Cummins, an engine-maker, as ignored or “forgotten”. He is proud of the “world-class” engines that he produces: 95-litre behemoths powerful enough to pull a cargo train. Three-quarters of them are exported to foreign customers for up to $1m apiece. + + + +Free-trade rules, notably those provided by NAFTA, helped persuade Mr Gambrel’s bosses to build the giant engines in Seymour, rather than at a Cummins plant in India which almost won the work. America offered lower shipping costs and less red tape when exporting the engines, and—vitally—lower and fewer customs duties when components are imported from cost-effective suppliers around the world. Add on quick access to American engineers, and the Midwest was the most competitive site. Mr Gambrel’s job involves installing cylinder-heads made in Mexico, a task he carries out with a surgeon’s care. + +Elsewhere at the Seymour plant, which employs 1,300 workers, whole assembly lines are kept profitable by supply chains that run to and from Mexico, a manager says; one of the lines “remanufactures” 16-litre engines from parts stripped, cleaned and repaired at a Cummins plant in Ciudad Juárez. Experienced workers in Seymour can earn $28 an hour or more. Cummins pays up to $7,000 a year for employees to study for college degrees. The manager proudly notes that in ten years he can count hourly workers who left of their own accord “on one hand”. + +Nor is the rest of Seymour really overlooked—certainly when compared with the bleakest bits of the midwestern rustbelt. In addition to Cummins, steady jobs are provided by Valeo and Aisin, car-parts companies that come from France and Japan, respectively. With a jobless rate at 3.2%, the town enjoys what economists deem full employment. Its centre, while not exactly bustling, is home to popular businesses such as Larrison’s, a diner, the Bite the Bullet gun shop, and the clubhouses of fraternal orders including the Knights of Columbus and the Elks. Seymour is about 85% white, though its Hispanic population has more than doubled in a decade, as migrants from Guatemala and other countries filled low-paid jobs in industries like egg-processing. + +From the outside, Seymour is navigating a globalised age reasonably well. Nonetheless it swooned before Mr Trump, and his dystopian talk of trade bringing “carnage” to America. In 2012 Jackson County, of which Seymour is part, gave the Republican presidential candidate, the stiffly patrician Mitt Romney, 62% of its votes. In 2016 the county swung hard to Mr Trump, giving the NAFTA-bashing populist 73%. + +Mr Gambrel suggests that Seymour was ready to take a gamble: “People were tired, they wanted change.” Asked if he fears that Trumpian brinkmanship may imperil his job, the engine-maker shrugs. “Trade deals come and go. There probably is a price to pay,” he says. “But I’m far enough away that I’m insulated. And the press blows everything out of proportion.” As for the Mexican components that Mr Gambrel installs, he would like to see them made in America. At root he trusts Mr Trump: “The man’s a billionaire, he’s made some shrewd moves.” + +Another Cummins worker, Lew Findley, concedes that cheaper Mexican components may save some American jobs. But still his hunch is that workers like him are safer under President Trump, who he feels shares his values on other questions, from guns (good) to abortion (bad). Seymour’s Republican mayor, Craig Luedeman, says that issues such as gun rights and immigration explain much of Mr Trump’s support. But unlike the Cummins workers, the mayor fears what a trade war could do to his city: “We’re not in a regional economy any more, we’re global.” + +America First is a hard sell outside America + +Tom Linebarger, the chairman and CEO of Cummins, has a similar message for his 55,000 worldwide employees, of whom more than 25,000 are in America. “Our jobs overwhelmingly exist because of trade,” says Mr Linebarger in an interview at his new offices in Indianapolis. Sales in 190 countries make the firm less vulnerable to local downturns than it once was, he argues. But the flipside of selling to so many countries is that a global company cannot simply manufacture in one place and export products from that hub, as some mercantilists would like America to do. In part, that is because local market conditions must be understood on the ground. But Mr Linebarger makes a subtler point: other countries worry about their own workers, too. “If your deal is, I am good with exports but not with imports, generally speaking most people won’t strike that deal with you.” + +As a multinational CEO, Mr Linebarger knows both great power and the anxiety such power provokes. Every time he visits a Cummins facility somewhere in the world, whether in a developing or mature economy, employees “are all worried I am going to close their plant,” he relates. Defenders of an open global order are learning that two hard tasks must be tackled together: trade must be made to work, and workers must be convinced that they have a place in today’s economy. Towns like Seymour—luckier than many, yet still willing to risk everything on a trade-bashing president—are a living reminder of how much is at stake. + + + +This article appeared in the United States section of the print edition under the headline “NAFTA on notice” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717071-nafta-notice-view-midwestern-county-relies-free-trade-loves/print + + + +上一項 文章 章節 下一項 + + + + + +United States 章節 Asia + + + + + +The Americas + + +Ecuador’s elections: After the whipping + +Bello: A Peronist on the Potomac + +NAFTA: Canada calls + +Venezuela: Miami vice + +United States 章節 Asia + + + + + +文章 章節 下一項 + + + + + +After the whipping + + +What to expect from Ecuador’s elections + + +Under Rafael Correa, living standards rose. But he governed with a heavy hand and leaves a lot of problems for his successor + + +Feb 18th 2017 | QUITO + + + + + +WHEN Rafael Correa first ran for Ecuador’s presidency in 2006, supporters at his rallies brandished belts in homage to their candidate, whose surname means “belt” or “strap”. “Dale correa,” or “give them a whipping,” the crowds roared. It was a demand to punish what they regarded as the corrupt elites who had governed Ecuador since the return of democracy in 1979. Mr Correa promised he would. He won that election and then two more. His presidency brought a rare spell of political stability. Living standards rose and public services improved. But few would say that he kept his promise to clean up government. This year’s national elections, which begin on February 19th, are shrill with accusations of corruption. + +Mr Correa, who has a respectable approval rating of 42%, is not a candidate. He is counting on Lenin Moreno, a former vice-president, and his running mate, Jorge Glas, the current vice-president, to carry on his “citizens’ revolution”. Mr Moreno, who shares his alarming first name with 18,000 other Ecuadoreans, hopes to win in the first round by capturing the bulk of Mr Correa’s support and adding to it. To do that he must get more than half the votes or, failing that, at least 40% with a gap of ten percentage points over his nearest rival. + + + +That may not happen. Although Mr Moreno is ahead in the polls, he has been hurt by revelations that he sought from Ecuador’s government a budget of $1.6m a year during his three-year stint as the UN’s special envoy for disability (he has used a wheelchair since he was mugged in 1998) plus $3.9m in travel expenses while he was vice-president. If Mr Moreno falls short, a president from right of centre could bring a decade of correísmo to an end. + + + + + +Whatever the outcome, Ecuador’s 16m people face greater uncertainty. The halving since 2014 of the price of oil, the country’s biggest export, has pushed the economy into recession and widened a hole in the budget (see chart). Alianza PAIS, the “movement” Mr Correa created, may retain its legislative majority in the elections, but probably as a weakened force. Ecuador’s next president will not be able to afford Mr Correa’s largesse and may not exercise his unchecked power. Ecuadoreans will find themselves tightening belts rather than waving them. + +By the standards of left-wing Latin American leaders, Mr Correa has not fared badly. Some $300bn flowed into government accounts during his presidency from oil revenues, higher taxes and fresh borrowing. He used some of that to build “21st-century socialism”, which in practice meant splashing out on roads, schools, clinics and social housing. Social spending doubled as a share of GDP between 2006 and 2012; the minimum wage went up sharply. Mr Correa did not strangle growth and spur inflation with price controls, as Hugo Chávez and Nicolás Maduro did in Venezuela. Ecuador’s adoption of the dollar in 2000, after its currency collapsed, contained Mr Correa’s radicalism. + +Between 2006 and 2011 Ecuador had the world’s most “inclusive” economic growth, according to ODI, a British think-tank; incomes of the poorest 40% of Ecuadoreans grew by eight times the national average. The poverty rate, which started falling in the early 2000s, came down further, from nearly 40% in 2006 to less than 23% in 2016. + +But Mr Correa’s spree left the economy vulnerable. Government spending doubled to a peak of 44% of GDP in 2014. Public debt has trebled to more than 50% of GDP since the global financial crisis. Having defaulted on its debt, Ecuador pays close to double-digit rates to borrow, largely from Chinese lenders. Mr Correa is trying to replace lost oil revenue with foreign investment but the climate is forbidding. In the World Bank’s ranking of 190 countries by ease of doing business, Ecuador ranks 114th. The recession is beginning to hurt ordinary folk. Employment fell by 244,000 in 2016 and the poverty rate is edging higher. + +Ecuadoreans paid a high price for material progress in the form of creeping authoritarianism and continued corruption. Campaigning in 2006 Mr Correa vowed to “depoliticise the courts”. In effect he seized control of them. A commission led by a former interior minister disciplines and often removes judges. Mr Correa made war on a critical press. He set up a regulator that harasses newspapers and radio stations by levying fines, often for such lapses as failing to cover a mayor’s speech. + +His building programme produced backhanders and white elephants as well as useful infrastructure. New and rebuilt airports which failed to attract commercial traffic have closed. Odebrecht, a Brazilian construction firm that bribed officials across Latin America, paid $33.5m to Ecuadorean officials between 2007 and 2016, according to the United States Department of Justice. Mr Correa has said that his name, and that of Mr Glas, are likely to appear on the Justice Department’s list of officials bribed by Odebrecht, but insists that is part of an American plot to undermine him. + +It is Mr Correa’s failures, not his successes, that are setting the tone for the elections. Voters are most worried about the recession and the rise in unemployment. Much of the heat in the campaign comes from anger at Mr Moreno’s lavish spending and accusations of corruption levelled at Mr Glas. One alleges that he took kickbacks in connection with a hydroelectric-dam project. He denies wrongdoing. + +Mr Moreno is promising voters a softer-edged correísmo. He entices them with budget-busting promises to treble a cash benefit for the poor to $150 a month, raise pensions and build “housing for all”. If he fails to win in the first round, the anti-Correa vote, now split among seven candidates, may coalesce around the other survivor of that ballot. The leading contenders have promised to undo much of Mr Correa’s legacy. They agree on the need to restore judicial independence, strengthen human rights and curb the budget deficit. + +The likeliest candidate to join Mr Moreno in the second round is Guillermo Lasso, a conservative banker from the coastal city of Guayaquil who was runner-up in the 2013 presidential election. Though his foes brand him an out-of-touch plutocrat, he sees himself as a challenger to old-style business oligarchs from his home town. He has promised to eliminate red tape and to cut taxes by $3bn, which may clash with his plans to shrink the deficit. + +His rivals for a second-round spot include Cynthia Viteri, the nominee of the centre-right Social Christian Party, which represents Guayaquil’s elite. The anti-Correa left has united around Paco Moncayo, a former mayor of Quito. + +Opposition parties failed to present a unified list in elections to the national assembly, increasing the chances that Alianza PAIS will retain control. That could make it harder for the next president to enact reforms, especially if it is not Mr Moreno. Mr Correa is leaving the scene, at least for now. His belt-brandishing style of politics may not. + + + +This article appeared in the The Americas section of the print edition under the headline “After the whipping” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21717119-under-rafael-correa-living-standards-rose-he-governed-heavy-hand-and-leaves-lot/print + + + +文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Bello + + +A Peronist on the Potomac + + +Donald Trump through Latin American eyes + + +Feb 18th 2017 + + + + + +A PRESIDENT is swept into office after whipping up a wave of grievance and resentment. He claims to represent “the people” against internal exploiters and external threats. He purports to “refound” the nation, and damns those who preceded him. He governs though confrontation and polarisation. His language is aggressive—opponents are branded as enemies or traitors. He uses the media to cement his connection with the masses, while bridling at critical journalism and at rebuffs to executive power. His policies focus on bringing short-term benefits to his political base—hang the long-term cost to the country’s economic stability. + +Donald Trump? Yes, but these traits come straight from the manual of Latin American populist nationalism, a tradition that stretches from Argentina’s Juan Perón to Venezuela’s Hugo Chávez and beyond. Yes, Mr Trump is a billionaire capitalist whereas Chávez was an anti-capitalist army officer. But populism is not synonymous with the left: conservatives such as Peru’s Alberto Fujimori used its techniques, too. “Post-truth” politics and “alternative facts” have long been deployed in Latin America, from Mr Fujimori’s use of tabloid newspapers to smear opponents, to Chávez’s imaginary coups and Cristina Fernández de Kirchner’s fake inflation statistics in Argentina. + + + +So when they contemplate Mr Trump’s first few weeks in the White House, many Latin American liberal democrats think they’ve seen this movie before. And they know it usually ends badly. Some of the continent’s own populists, by contrast, recognise Mr Trump as a kindred spirit. Nicolás Maduro, Chávez’s dictatorial successor, criticised a “hate campaign” against Mr Trump—though that was before the United States this week blacklisted Venezuela’s vice-president as a drug kingpin (an allegation Mr Maduro called “baseless”). Guillermo Moreno, the former official entrusted by Ms Fernández with producing Argentina’s statistics, has identified “a Peronist” in Mr Trump, “who is trying to do what we did”. + +It is not just Mr Trump’s assault on Mexico’s economy and national dignity, with his threats to tear up the North American Free Trade Agreement and to build a border wall, that Latin Americans have to deal with. The bigger question for the region is what Mr Trump represents in the battle of political ideas. The risk is that he may re-legitimise populist nationalism just when it was waning south of the border. That is especially so in Mexico, where Andrés Manuel López Obrador, who heads opinion polls for the 2018 presidential election, now talks of “the fatherland first”. Even Chile may not be immune: Alejandro Guillier, a former television presenter who boasts of a special bond with “the people”, has a chance in an election in November. + +Mr Trump is helping to make life more difficult for those in Latin America who have argued, in the face of the region’s instinctive nationalism and anti-Americanism, that its best interests are served by co-operation with the United States and a liberal world order. “We could all hang our hats on free trade, free markets and macroeconomic stability in part because the United States believed in it, both the Democrats and Republicans,” says Luis Alberto Moreno, the president of the Inter-American Development Bank. “Now there are protectionist forces in the world, and that resonates in the region.” + +One response is for Latin America to seek other partners. Though interest in deeper ties with Europe (both the European Union and Brexit Britain) is reviving, China is the main hope. It is already a big trade partner and is investing in infrastructure in the region. But Latin America exports raw materials to China and imports its cheap manufactures. That does less for its economic development than does its more diversified trade with the United States, according to research by the World Bank. + +The best response to Mr Trump would be for Latin American liberals to have the courage of their convictions. They should keep their economies open and carry out several tasks they have neglected. These include building more infrastructure and fostering more regional integration, which the populists undermined by turning it into a political slogan rather than a business reality. + +Latin American experience teaches that populists are easily underestimated and can stay in power for a long time. But not forever. Populist regimes are often corrupt and spendthrift, and usually fail to make people better off. Whatever the example from the White House, Latin American history shows that populist nationalism is a recipe for national decline. That is the message liberals need to hammer home. + + + +This article appeared in the The Americas section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21717105-donald-trump-through-latin-american-eyes-peronist-potomac/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Maple syrup + + +Justin Trudeau charms Donald Trump + + +Canada’s prime minister uses flattery to keep trade open + + +Feb 18th 2017 | OTTAWA + +A good hombre, apparently + + + +GIVE Justin Trudeau credit for emotional intelligence. Paying his first visit to Washington after Donald Trump took office, on February 13th, the Canadian prime minister brought his host the perfect gift: a photograph of the president in his youth with Mr Trudeau’s father, Pierre, a glamorous prime minister of the 1970s. The subtle caress of Mr Trump’s vanity seemed to go down well. Mr Trudeau went home with Mr Trump’s promise that Canada has little to fear from his plan to renegotiate the North American Free Trade Agreement (NAFTA), which gives Canada, Mexico and the United States preferential access to each other’s markets. + +Before the meeting, the Canadians were nervous. Mr Trump’s repeated threats either to renegotiate NAFTA or to rip it up were aimed almost entirely at Mexico (which, unlike Canada, has a big trade surplus with the United States). Yet Canada has almost as much to lose if the United States rescinds the 23-year-old agreement or demands one-sided revisions. The value of Canada’s trade worldwide is equivalent to 65% of its GDP; the United States buys three-quarters of Canada’s exports. American protectionism could trigger an economic crisis and political turmoil north of the border. + + + +Canadian planning for the meeting went beyond combing the archives for a flattering photo. Mr Trudeau revamped his cabinet last month to take account of the new reality in Washington. Chrystia Freeland, a former journalist who has worked in the United States and knows many of the decision-makers, replaced the cerebral but brusque Stéphane Dion as foreign minister. Before the summit Mr Trudeau dispatched his foreign, finance and defence ministers to Washington. + +Canadians do not enjoy watching their prime minister pay court to Mr Trump. Nearly 75% think he will be a bad president, according to a poll published last month. The New Democrats, an opposition party, urged the prime minister to castigate Mr Trump for his ban on refugees (some of whom have crossed into Canada to claim asylum). Mr Trudeau held his tongue, but preserved Canadian dignity by hinting at his disagreement with Mr Trump’s policies. + +This artfulness seems to be working. Mr Trump declared America’s trading relations with Canada to be “outstanding” (while those with Mexico remain “extremely unfair”). Tweaks to NAFTA, he said, “will benefit both our countries”. Knowing he prefers bilateral deals, some analysts think he may replace NAFTA with separate accords with Canada and Mexico. + +The bonhomie could disappear when Mr Trump defines his policies more clearly. He wants a “buy American” programme, which could discriminate against Canadian exporters. A “border-adjustment tax” on imports, part of a proposed corporate-tax reform, could reduce Canada’s GDP by 1%, reckons the C.D. Howe Institute, a think-tank. That would be poor thanks for Mr Trudeau’s gift. + + + +This article appeared in the The Americas section of the print edition under the headline “Canada calls” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21717117-canadas-prime-minister-uses-flattery-keep-trade-open-justin-trudeau-charms-donald-trump/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +The talented Mr El Aissami + + +The blacklisting of Venezuela’s vice-president + + +The United States fires a volley at the regime + + +Feb 18th 2017 | CARACAS + + + + + +THE statement by the United States Treasury Department was blunt. It alleges that Tareck El Aissami, Venezuela’s vice-president, is a “prominent” drug trafficker, who amassed great wealth through his connections to gangs across Latin America, including Mexico’s vicious Zetas. Among the now-frozen American assets linked to him are three lavish apartments in the Four Seasons complex in Miami and a Gulfstream jet. If the allegations are true, Mr El Aissami’s carefully cultivated image as a true believer in the socialist ideology of Venezuela’s government is just a cover. + +As normally happens when any outsider accuses anyone in the Venezuelan regime of wrongdoing, the country’s leaders have closed ranks. The foreign ministry accused the United States government of committing “an international crime”. Mr El Aissami himself denounces the allegations as untrue, “miserable and vile”. + + + +But rumours of malfeasance have swirled around the dapper politician since he came to prominence under President Hugo Chávez in the early 2000s. He was interior minister, and then governor of the coastal Aragua state. Defectors accuse him of running his own intelligence agency to intimidate his enemies. They say proceeds from drug trafficking have smoothed his advance, which culminated in his appointment, at the age of 42, to the vice-presidency in January. Venezuela’s current president, Nicolás Maduro, gave him sweeping decree powers to oversee ministries’ spending and expropriate private firms. + +Mr El Aissami is not the first Venezuelan official to be branded a drug trafficker. In August 2016 an American court indicted Néstor Reverol, a former head of the anti-narcotics agency, for taking money from drug gangs. The day after the indictment was made public, Mr Maduro made him interior minister. The army, which pledges support to Mr El Aissami, has been accused by human-rights groups of large-scale corruption. + +American officials say that the sanctions against Mr El Aissami are the result of a “years-long investigation” and do not necessarily indicate a change of policy towards Venezuela under the new administration. Donald Trump called for the release of a prominent political prisoner on February 15th. The blacklisting of Mr El Aissami is unlikely to moderate the regime’s ferocious crackdown on the opposition. But it hardly reflects well on the regime. + + + +This article appeared in the The Americas section of the print edition under the headline “Miami vice” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21717120-united-states-fires-volley-regime-blacklisting-venezuelas-vice-president/print + + + +上一項 文章 章節 下一項 + + + + + +The Americas 章節 China + + + + + +Asia + + +The Kim family: Half-brotherly love + +North Korea tests another missile: Got a rocket in your pocket + +Cambodian politics: One down, 54 to go + +Presidential elections in Turkmenistan: Protection racket + +Elections in Jakarta: Fighting fake news + +Taiwanese politics: A convenient untruth + +Japan’s self-defence forces: Barmy army + +Banyan: Red v green + +The Americas 章節 China + + + + + +文章 章節 下一項 + + + + + +Half-brotherly love + + +Why Kim Jong Un’s brother was murdered + + +And what it means for North Korea + + +Feb 18th 2017 | TOKYO + + + + + +THE last time Kim Jong Nam made the headlines he was also at an airport, travelling under a false name. In 2001 “Fat Bear”—the Chinese alias used by the son of North Korea’s leader at the time, Kim Jong Il—was arrested after arriving in Tokyo on a forged Dominican Republic passport, on his way to Disneyland. This time it was “Kim Chol” who was waiting for a flight from Kuala Lumpur to Macau on February 13th when two women assumed to be North Korean agents attacked him. He is said to have died on his way to hospital. + +As The Economist went to press, the results of an autopsy had not yet been released. Rumours suggest that Mr Kim was poisoned, with a needle, spray or toxic cloth to the face. Malaysian police said they thought six people had been involved in the attack; they have detained two women and one man, travelling on Vietnamese and Indonesian passports. + + + +The 45-year-old Mr Kim had once been Kim Jong Il’s favourite son: witnesses described a 10,000-square-foot playroom filled with toys. Before each birthday, North Korean diplomats would be sent on a month-long hunt for exotic presents. A cousin of his who defected in 1982 said that Kim Jong Il would take his son to the grand halls of state and say, “Jong Nam, this is where you’ll be able to talk big one day.” + +But in the end it was Kim Jong Il’s third son, Kim Jong Un, born to his second wife and educated, like his half-brother, in Switzerland, who succeeded their father in 2011. Kim Jong Nam was not visible at his father’s funeral. He was known in recent years to have been living in exile in Macau, a semi-autonomous enclave within China. + +Since the 30-something Kim Jong Un came to power, he has consolidated power by executing about 140 senior officials, most notably his uncle and security chief, Jang Song Thaek. Yet exile had typically been the fate of members of the Kim family who had fallen out of favour. Kim Jong Il’s half-brother, Kim Pyong Il, was sent abroad on never-ending diplomatic service, for instance. (Jang was not a blood relative of Jong Un, unlike Jong Nam.) Some say Jong Nam was sidelined by Jong Un’s mother and her family long before his Disneyland disgrace. As a political irrelevance, he had seemed likely to survive Jong Un’s purges. + +The Macanese candidate + +Wild rumours had circulated in the South Korean press that Jong Nam had conspired against his brother with Jang. Jong Nam had been close to Jang, who was his escort during his school days in Switzerland. But Michael Madden, who runs “North Korea Leadership Watch”, a blog, says tales of fraternal hostility have been overdone. Some sources say Jong Nam did in fact attend a private family funeral for his father in Pyongyang, the North Korean capital. Yoji Gomi, a Japanese journalist with whom Jong Nam exchanged 100-odd e-mails from 2004, quoted him in a book in 2012 as having said that he wanted to “co-operate” with his half-brother. + +It is possible that Jong Nam was involved in financial dealings that Jong Un wanted to wind up. Some suspect he was laundering money through Macau’s casinos. Mr Madden says he had ties with Office 39, a department that seeks foreign income for the Kim regime through illicit means. More likely, however, is that Jong Nam simply irritated his half-brother by criticising him. Mr Gomi quoted him as saying Jong Un would “not last” as leader. Around the same time his son called the North Korean regime a “dictatorship” on a Finnish talk show. Given that North Korean officials have been executed for slumping in their chairs at meetings, such comments would surely qualify as capital offences. + +Jong Nam was thought to have been under the protection of the Chinese security services. China’s government, which had had good relations with Jang, is bound to be irked by the murder of yet another protégé. Kim Kwang Jin, a defector who once worked in North Korea’s “royal court” economy, says that even if rumours that China had hoped to install Jong Nam if Jong Un fell from power are far-fetched, China would nonetheless have seen Jong Nam as useful leverage. + +North Korea frequently irks China, however, without changing its apparent conclusion that a violent nuclear dictatorship makes a better neighbour than a unified Korea packed with American troops. The timing, hard on the heels of a North Korean missile test (see article), is probably coincidental. North Korea had been trying to kill Jong Nam for some time, according to South Korea’s spooks: a North Korean spy jailed by South Korea in 2012 allegedly confessed to planning a hit-and-run on him in China. And given how little clout he seems to have had in North Korea, there is no hint that his murder is a sign of turmoil within the regime. + + + +This article appeared in the Asia section of the print edition under the headline “Half-brotherly love” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717064-and-what-it-means-north-korea-why-kim-jong-uns-brother-was-murdered/print + + + +文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +A rocket in his pocket + + +North Korea’s dictator challenges Donald Trump + + +Kim Jong Un tests another missile + + +Feb 18th 2017 + +Off the roads, on a roll + + + +IF NORTH KOREA’S test of a ballistic missile on February 12th was intended as a provocation, Donald Trump, unusually, failed to take the bait. For once, the president’s Twitter account stayed silent. When Mr Trump was given the news, he was entertaining Japan’s prime minister, Shinzo Abe, at Mar-a-Lago, his resort in Florida. In a joint appearance, Mr Abe described the launch as “absolutely intolerable” and demanded that North Korea should comply with a raft of UN Security Council resolutions that have so far done little to restrain its missile and nuclear programmes. Mr Trump did not refer to the missile test directly, but pledged that America would stand “100%” behind “its great ally” Japan. + +The statement was far more measured than some of his previous pronouncements on North Korea. After Kim Jong Un, the country’s leader, gave a bombastic New Year address in which he boasted of being in the “final stages” of preparations to test-launch a missile with the range to threaten America, Mr Trump tweeted back: “It won’t happen!” Mr Trump’s retort suggested that any such attempt would be met with a military response. + + + +The missile tested on Sunday may not have crossed Mr Trump’s red line (it fell into the Sea of Japan, some 500km from its launch site). But it was indicative of North Korea’s rapid progress towards developing medium-range and, eventually, intercontinental missiles capable of carrying nuclear warheads. At first, South Korean officials monitoring the launch said the missile was either a modified version of the Nodong, first deployed more than a decade ago, or the 3,000km-range Musadan, possibly equipped with a solid-fuel rocket motor. The Musadan was tested eight times last year, though only once successfully. + +North Korea’s official newspaper said the missile had used solid fuel, and identified it as the Pukguksong-2. According to John Schilling, an analyst who writes for the website 38 North, it looked very similar to the submarine-launched missile North Korea successfully tested in August (known in the West as the KN-11 and by the North Koreans as the Pukguksong-1). Mr Schilling estimates that it has a range of 1,200km, based on the trajectory of the test launch—enough to reach the whole of South Korea and much of Japan. + +More important than its range are its greater mobility, durability and ease of use compared with liquid-fuelled missiles, such as the Nodong. Solid-fuel missiles do not have to travel with a retinue of tankers carrying propellant, and they can be launched at five minutes’ notice, against the hour required to prepare the Nodong. + +Michael Elleman, a missile expert at the International Institute for Strategic Studies (IISS), is surprised by the speed with which the North Koreans have developed a powerful solid-fuel motor. He thinks it possible that they have acquired the engines illicitly from either China or Russia. A further concern is that the Pukguksong-2 was fired from a transporter-erector-launcher vehicle with tracks like a tank, rather than wheels, giving it the ability to move beyond North Korea’s limited road network. Mr Schilling concludes that the Pukguksong-2 would be much harder to find and destroy than other North Korean missiles. + +When North Korea comes to testing a missile with the range to hit America, it is likely to use liquid fuel, since that is an easier technology to master. Even so, keeping Mr Trump’s pledge to prevent such a test would be far from straightforward. One approach would be to try to destroy North Korean missile bases pre-emptively. Earlier this month the commander of American forces in South Korea, General Vincent Brooks, called for greater capability to do just that. However, as Mark Fitzpatrick, also of the IISS, points out, South Korea would bear the full brunt of the North’s retaliation. Convincing it that a shower of missiles on Seoul was a fair exchange for protecting America from a notional threat would not be easy. + +Another approach would be to try to destroy the long-range missile early in its flight using interceptors fired from a naval vessel. But Mr Elleman warns that until the much faster and more capable version of America’s SM-3 interceptor becomes available, perhaps by next year, the chances of success would be low. + +So too is the likelihood of diverting North Korea diplomatically. The day after the test the UN Security Council did what it usually does, deploring the launch and calling for a redoubling of efforts to enforce existing sanctions. These include measures aimed at cutting North Korea’s exports of coal and metals, which were passed in November after a nuclear test. But until China decides that the dangers of its exasperating neighbour’s nuclear programme outweigh those that might follow the collapse of his regime, Mr Kim will not be deterred. Mr Trump promised on February 13th to deal with the “big, big” problem of North Korea “very strongly”. But as ever, the options are dismal. + + + +This article appeared in the Asia section of the print edition under the headline “Got a rocket in your pocket” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21716992-kim-jong-un-tests-another-missile-north-koreas-dictator-challenges-donald-trump/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +One down, 54 to go + + +The leader of Cambodia’s opposition resigns + + +But the government will keep persecuting his colleagues + + +Feb 18th 2017 | KANDAL + + + + + +AT A wedding in the southern province of Kandal, the resignation of Sam Rainsy, the country’s longtime opposition leader, is announced in passing by a teenager scrolling through Facebook. The apparent departure of a figure who has been central to Cambodian politics for 20 years created a kerfuffle among Cambodia-watchers when it emerged this week. The wedding guests simply shrug. + +The apathy reflects the disconnect between Mr Sam Rainsy, who describes himself as the “national and international symbol of resistance” to Cambodia’s authoritarian government, and the country from which he has been absent since 2015 in order to avoid arrest on various charges. As local elections approach in June, with parliamentary elections looming a year on, this cosmopolitan former banker campaigning from Paris was always going to struggle to energise the provinces. + + + +Cambodia’s strongman prime minister, Hun Sen, had threatened a week earlier to teach Mr Sam Rainsy “a lesson”. The courts had already convicted him in several dubious cases. Next the ruling Cambodian People’s Party (CPP) drafted a law that would allow the authorities to dissolve any party led by someone convicted of a crime. Mr Sam Rainsy said he was stepping down to avoid the dissolution of his Cambodia National Rescue Party (CNRP), the only credible opposition. + +But the CPP is pressing on with its plans to amend the election law, adding a vague clause that would allow the closure of parties that foment “disunity” and a rule banning donations from abroad, among other things. Both measures are aimed at the CNRP, which is fiercely critical of the government and gets most of its funding from Cambodian expatriates. + +The hounding of the opposition is relentless. Kem Sokha, the CNRP’s acting leader, has also been repeatedly dragged into court. Pro-CPP websites, meanwhile, have leaked recordings of senior CNRP members’ phone calls, fuelling suspicions of state-backed wiretapping. All critics of the government are frightened after the murder last summer of Kem Ley, a political commentator; Mr Hun Sen fuels the fire by calling on them by name to watch out. + +But even by the grim standards of Mr Hun Sen’s 32-year rule, his latest efforts to dismantle the opposition mark a lurch towards autocracy. The CNRP won 55 out of the 123 seats in the National Assembly in the most recent parliamentary election, in 2013. Its strength seems to stem not from the charisma of its leaders but from a general discontent with the status quo. Even with Mr Sam Rainsy out of the picture, in other words, Mr Hun Sen will keep tormenting the opposition. + + + +This article appeared in the Asia section of the print edition under the headline “One down, 54 to go” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717092-government-will-keep-persecuting-his-colleagues-leader-cambodias-opposition-resigns/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Protection racket + + +The president of Turkmenistan wins re-election with 98% of the vote + + +There were eight other candidates + + +Feb 18th 2017 | ALMATY + +A one-horse race + + + +THERE are no dark horses in elections in Turkmenistan, only stalking horses. The country was a one-party state until 2012 and the presidential election held on February 12th was the first to feature candidates from rival parties. But a multiplicity of parties, alas, is not the same as a meaningful opposition. In a nine-way race, the incumbent, Gurbanguly Berdymukhamedov (pictured), took 98% of the vote. That was an improvement on 2012, when he pulled in a mere 97%. + +Mr Berdymukhamedov, a former dentist who styles himself “Arkadag”, the “Protector”, threw himself into the campaign, crooning a song of his own composition to gas workers and doling out televisions to herdsmen in the desert. He also repressed all dissent with “a concerted campaign of harassment against civil society activists and journalists”, according to three human-rights groups. + + + +Mr Berdymukhamedov has held power since the death of the previous eccentric dictator, Saparmurat Niyazov, in 2006. He is 59—young by the standards of Central Asian despots—and may remain president for life, after reforms passed last year removed term limits and scrapped the requirement that presidential candidates be younger than 70. The reforms also extended the presidential term from five to seven years, sparing Arkadag the bother of campaigning again until 2024. + +That is just as well: rather than the “Era of Supreme Happiness” that Mr Berdymukhamedov promised at his previous re-election, he is presiding over an era of low prices for Turkmenistan’s sole export, gas. Subsidies for utilities may be cut, staple goods are in short supply in some parts of the country and wages at state-owned firms are said to have gone unpaid for many workers. Humbler Turkmen, in short, do not have much to sing about. + + + +This article appeared in the Asia section of the print edition under the headline “Protection racket” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21716898-there-were-eight-other-candidates-president-turkmenistan-wins-re-election-98/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +The man who fought fake news + + +A half-victory for tolerance in Indonesia + + +Ahok, an embattled Chinese Christian, tops the vote for governor of Jakarta + + +Feb 18th 2017 | JAKARTA + +Still standing, despite the slander + + + +MILLIONS of Indonesians went to the polls on February 15th to elect local leaders, from Aceh in the west to Papua in the east. Voters braved the floods and landslides of the rainy season to cast their ballots in a massive exercise of democracy. But the day was dominated by the race for governor of Jakarta, the capital, which had become a test of tolerance in the world’s most populous Muslim country. The embattled incumbent, Basuki Tjahaja Purnama, is a Christian of Chinese descent and thus a member of two tiny minorities. + +Islamists tried to turn voters against Mr Basuki, known to all as Ahok, by accusing him of insulting the Koran. On the day, Ahok came first but fell short of an absolute majority, with 43% of the vote, according to unofficial results. This means the election will be decided by a run-off on April 19th. Ahok will face Anies Baswedan, a former education minister, who had been trailing in early polls but ended up taking 40% of the vote. Agus Yudhoyono, the son of a former president, got just 17%. He is now out of the race. + + + +Speaking at his ramshackle campaign headquarters in a leafy neighbourhood, Ahok vowed to fight on. He will have to campaign vigorously to win the run-off. Many Jakartans approve of his urban-renewal schemes, but Islamists are not his only detractors: many oppose the evictions of slum-dwellers that his infrastructure schemes necessitate. Marcus Mietzner of the Australian National University reckons that Ahok will struggle to woo Mr Yudhoyono’s voters, given the “extreme acrimony” between the two camps. + +Ahok had been deputy governor, but won an automatic promotion when his predecessor, Joko Widodo, known as Jokowi, stood down to run for president in 2014. He had therefore faced voters only as Jokowi’s running-mate, during the previous election for governor in 2012. Ahok’s re-election had seemed assured until September, when he told a group of fishermen that he understood some of them would not vote for him because they had been deceived into believing that the Koran forbids them to vote for a Christian. + +Islamists accused Ahok of denigrating the word of God. They stirred up sectarian outrage further by spreading a doctored clip of the speech on the internet and staged protests to press the authorities to arrest him. Prosecutors eventually charged Ahok with blasphemy. Since December he has appeared in court once a week as the trial proceeds. + +On the final day of the campaign, tens of thousands of people gathered at Jakarta’s largest mosque to hear preachers tell them it was God’s will that they cast their ballot for one of the two Muslim candidates. The driving force behind the rally was Rizieq Shihab, the fiery leader of the Islamic Defenders Front (FPI), a vigilante group. Outside the mosque, a giant banner strung across a highway read “Arrest Ahok the blasphemer”. Crowds posed beside placards claiming that it is sinful for Muslims to vote for a kafir, or infidel. Hawkers sold knick-knacks depicting Mr Shihab, the self-proclaimed “imam besar” (supreme leader) of all Indonesia’s Muslims. + +But the latest anti-Ahok protest was much smaller than the biggest one, in December, which drew some 500,000 people. This may signal waning support for the Islamist agitators, notably the sanctimonious Mr Shihab, who is caught up in a sexting scandal. Nonetheless, the next two months of campaigning are widely expected to turn even nastier now that the election is a two-man race between a Christian and a Muslim. + +Ahok’s opponents seem to have concluded that the surest path to victory is to pander to the sectarians. Both Mr Baswedan and Mr Yudhoyono attended dawn prayers with Mr Shihab at the latest rally, even though moderate Muslim groups had told their members to stay away. Mr Baswedan, who was once feted as a model of tolerance, also gave a speech at FPI’s headquarters in January alongside Mr Shihab, who has twice been convicted of hate speech and used to be shunned by mainstream politicians. + +Even if Ahok (pictured) were to win in April, the courts could yet convict him. Blasphemy carries a prison sentence of up to five years, and almost all those charged with it are convicted, presumably because judges are afraid of being harassed by Islamists themselves if they dare to acquit supposed enemies of the faith. In theory, Ahok could still serve as governor while he exhausts the lengthy appeals process. In practice, however, he would come under intense pressure to step down. + +Although voters’ continued, if diminished, enthusiasm for Ahok is encouraging, the election has propelled fringe Islamist groups to the forefront of politics. That is also likely to be a feature of the next presidential poll, in 2019. Ahok is a close ally of Jokowi and is backed by the same party. Mr Baswedan, for his part, is backed by Prabowo Subianto, a former army general who narrowly lost the last presidential election. Mr Prabowo is an old-fashioned nationalist, not an Islamist, but he has mobilised the Muslim vote partly by allying with a religious party popular among poor voters. The current configuration of forces suggests that arguments about Islam could play a pivotal role in Indonesian politics for years to come. + + + +This article appeared in the Asia section of the print edition under the headline “Fighting fake news” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717095-ahok-embattled-chinese-christian-tops-vote-governor-jakarta-half-victory/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +A convenient untruth + + +America’s affirmation of the one-China policy pleased Taiwan, too + + +Tsai Ing-wen is not ready to rock the boat + + +Feb 18th 2017 | TAIPEI + + + + + +THE idea that China and Taiwan might be separate countries, rather than estranged parts of “one China”, is anathema in Beijing. So on February 9th, when Donald Trump told his Chinese counterpart, Xi Jinping, that America would respect the one-China policy after all (having previously questioned this polite fiction), Chinese officials were profoundly relieved. So, oddly, was Taiwan’s government, which thought that questioning the policy had been bad for Taiwan and scrapping it would have been worse. + +That is remarkable. After all, Taiwan’s ruling Democratic Progressive Party rejects the one-China policy and says the island is already independent. Tsai Ing-wen, Taiwan’s president, cannot even bring herself to utter the words “1992 consensus”—the name for a deal between China and the Kuomintang party (KMT), now the island’s opposition, which affirmed the notion of one China but said the two sides had different interpretations of it. So why was her government pleased? + + + +Since coming to office last year, Ms Tsai has presented herself as cautious, responsible and predictable—as different as possible from the previous DPP president, the irrepressible Chen Shui-bian, whose constant efforts to highlight Taiwan’s de facto independence infuriated both China and America. In a speech in October that Ms Tsai hoped would reassure China, she promised she would “of course not revert to the old path of confrontation”. + +Mr Trump’s stand-off with Mr Xi could have imperilled that approach. There was an outside chance, debated with paranoia in Taipei, that America’s president might strike a grand bargain with China, selling Taiwan down the river in exchange for big concessions on trade and security. This is highly unlikely, given that America’s defence commitments to the island are enshrined in an act of Congress which could not be undone without legislative approval. Still, there are serious concerns that fall short of that dire possibility. If the stand-off with China turned into a trade war, Taiwan would suffer badly; its economy is inextricably linked to the mainland. + +Putting the one-China policy up for negotiation would also have cut across Ms Tsai’s desired timetable for dealing with Mr Xi. Towards the end of the year China’s communist rulers are to hold a party congress—the biggest event of the Chinese political calendar. It seems unlikely that Mr Xi, who is trying to consolidate his authority, would do anything before the congress that might look to rivals like weakness on Taiwan. After the event, however, he might have room for manoeuvre. + +Or so Ms Tsai hopes. She and her advisers are considering new ways of describing Taiwan’s relations with the mainland which might replace or add to the 1992 formula. She recently told a group of Taiwanese business people that the time to discuss such a formulation would be in the second half of the year—though, even then, the chance that Mr Xi will show flexibility on the one-China idea seems remote. + +At least Ms Tsai will gain some time, which she needs to deal with her priority, the economy. It grew by only 0.7% in 2015 and 1.4% last year. Salaries have stagnated for two decades, youth unemployment is up and Taiwan’s state-run pension funds all face bankruptcy. After months of deliberation, the government is ready to put its pension-reform plan to the Legislative Yuan, Taiwan’s parliament. This will inevitably involve painful choices and probably make Ms Tsai even more unpopular (her poll ratings are dismal). + +Mr Trump’s phone call with Mr Xi may help. Her party contains a significant minority of fundamentalists, known as “deep greens”, who want faster strides towards formal independence. They argue that, with Mr Trump in the White House, Taiwan has a historic chance to advance its case for sovereignty. “She hasn’t shown she can seize the opportunity,” grumbled a deep-green politician, Parris Chang, before Mr Trump’s call. + +Mr Trump’s change of heart over confronting China seems to weaken the deep-green argument that American politics has become exceptionally friendly to their position. This does not mean they will stop criticising Ms Tsai. They are unhappy about her economic management, the presence in her government of officials from past KMT administrations and her unwillingness to invite to Taiwan some of China’s foremost bugbears, such as the Dalai Lama and Rebiya Kadeer, the head of the World Uighur Congress (who this week turned down a private invitation to visit the island). But Mr Trump’s volte-face reduces the pressure they can exert on Ms Tsai to change course on China. + +In almost any other circumstance, the president would be in deep trouble. Fortunately for her, the KMT is in an even bigger mess. It has not recovered from heavy defeat in last year’s general election and its new leader, Hung Hsiu-chu, is unelectable because she is too friendly to China. Mr Trump’s phone call may bolster the KMT’s argument that the government will have to accept the idea of one China eventually. But for the moment most Taiwanese, like the government itself, are more interested in the economy. + + + +This article appeared in the Asia section of the print edition under the headline “A convenient untruth” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717093-tsai-ing-wen-not-ready-rock-boat-americas-affirmation-one-china-policy-pleased/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Barmy army + + +Japan’s government tries to free its soldiers from pacifist shackles + + +But many in the army apparently had no idea that they might have to do some fighting + + +Feb 18th 2017 | TOKYO + +Handy in a conflict but no use in a fight + + + +MASAKI TOMIYAMA’S fight seems quixotic. He was happy for his son to join one of the world’s biggest, best-equipped armies, but cannot abide the idea that he might have to do any fighting. “I was very angry when I heard my son was being trained to kill people,” says Mr Tomiyama—so angry, in fact, that he decided to sue the Japanese government for violating the country’s pacifist constitution. “I will never allow him to go to war—that’s not why he signed up.” + +Japan’s constitution, cobbled together by the Americans in a few hectic days in 1946, prohibits the maintenance of land, sea or air forces. But at the height of the Cold War it seemed otherworldly for a rich ally of the West, with unresolved territorial disputes with all its neighbours, to have no armed forces at all, so in 1954 the government set up the “Self Defence Forces”. + + + +The SDF was to exist “to protect the peace and independence of Japan”. But it was controversial all the same. For decades the biggest opposition party wanted it abolished. Such was the controversy, recalls Noboru Yamaguchi, a former SDF lieutenant-general, that service members slipped into civilian clothes before leaving barracks to avoid abuse from the public. + +The SDF remains one of the world’s odder armies. It has never fired a shot in battle. Its main role, for many Japanese, is disaster relief. Yet it has a larger navy than France and Britain combined, including four huge “helicopter carriers”. + +Hawkish members of the ruling Liberal Democratic Party (LDP) have long wanted to make the SDF more like a normal army. In 2015 the government passed several security bills “reinterpreting” the constitution to allow the SDF to engage in what Shinzo Abe, the prime minister, called “proactive pacifism”—participating in peacekeeping missions and the like. The move triggered protests and bitter parliamentary wrangling. Mr Abe was acting out of nostalgia for the time when Japan was a great power, critics said. They predicted that the legislation would ensnare Japan in foreign wars and trigger a stampede from the SDF’s ranks. + +Seventeen months on, the force has actually swelled slightly, to 227,000 personnel, but there has been a sharp decline in the proportion of those training to become officers at the National Defence Academy of Japan who actually end up joining the SDF. Demography is not working in the SDF’s favour: the population of 18-year-olds has shrunk by a million over the past two decades, making recruitment difficult. The issue, says Alessio Patalano of King’s College London, is not just the number of would-be soldiers, but the quality. + +The defence ministry has responded with a lavish and sometimes creative promotional drive, doubling its public-relations budget and enlisting the help of cartoon characters, pop stars and schools. Children at one secondary school even found the number of the local SDF recruitment office printed on their toilet paper. Much of the drive explicitly targets a neglected audience: women. Only 6% of the SDF’s employees are women; it wants to raise that to 9% by 2030. + +Demands for a more muscular SDF will grow. China’s defence budget has increased 44-fold in three decades, points out Yoshitaka Shindo, an LDP hawk. A new paper by the Institute for International Policy Studies, a think-tank considered close to the LDP, says Japan could be “profoundly affected” by Donald Trump’s “America first” policy. It believes Japan should develop greater capabilities of its own, including cruise missiles. “We must respond to America first-ism with Japan first-ism,” says Masato Inui, executive editor of the Sankei Shimbun, a right-wing newspaper. + +But aversion to anything that smacks of militarism runs deep. Last year 350 SDF personnel were dispatched to South Sudan as part of a UN peacekeeping force. The troops are only there to repair infrastructure and are supposed to be withdrawn if there is fighting between local militias (so far, the government says, there has only been “conflict”, which is apparently quite different). But, for the first time, the SDF has been authorised to use weapons to defend civilians and UN staff. Opponents of the policy, including Japan’s most widely circulated liberal newspaper, the Asahi Shimbun, are campaigning to have the troops withdrawn. “We worry about troops who get injured,” fretted a recent editorial. Mr Abe has suggested that he will resign if any Japanese soldiers are killed. + +Young people in the SDF joined to help the victims of earthquakes and tsunamis, says Norikazu Doro, a former service member. “They had no idea they were joining an army that could one day go to war.” Mr Tomiyama is one of several parents who have taken the government to court. He says his son signed up to help and defend his country, not fight other nations’ battles. “The principle was that only if we were attacked would we attack,” he says. “That principle has been voided.” + + + +This article appeared in the Asia section of the print edition under the headline “Barmy army” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717079-many-army-apparently-had-no-idea-they-might-have-do-some-fighting-japans/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Banyan + + +Red v green in Vietnam + + + + + +The Communist Party’s inability to control pollution is corroding its authority + + +Feb 18th 2017 + + + + + +FISHING boats in Dong Hoi, a tranquil provincial capital on the central coast of Vietnam, are decorated with bits of cactus. These prickly charms are said to protect seafarers from storms and other perils, but they did not ward off the misfortune that struck the town last spring. In April the tides spewed thousands of dead fish onto Dong Hoi’s beaches. Authorities dithered for months before naming the culprit: a new steel mill up the coast which had flushed its pipes with toxic bilge. + +Nearly a year later, Dong Hoi—like all the settlements on a 125-mile stretch of affected coastline—is still tallying the cost of that calamity. Worst affected are its fishermen, whose red and blue skiffs cluster serenely on the town’s wide river. Some locals refuse to eat their catch, for fear of lingering toxins; others pledge to eat only fish caught far out to sea, or at depths thought to have escaped the poison. Freezers in many seafood restaurants are now stocked with chicken and pork. + + + +The disaster has sapped tourism, too. The town was flattened during the war with America (except for a charred church facade, now preserved as a memorial), but has profited from gargantuan caves discovered on its doorstep. These include Son Doong, said to be the world’s largest, which only opened to visitors in 2013. But last summer hordes of people cancelled their holidays, fearful of splaying out on tainted sand. Half-built hotels and condos dot the outskirts of town, left orphaned by twitchy investors. + +Pollution mars many of Vietnam’s stunning landscapes. Dam-building, well-digging and intensive farming are corroding the Mekong Delta, where roughly half the country’s rice is grown. Each year its soil becomes saltier as seawater washes up its weakening streams. Pungent smog smothers Hanoi, the capital. By some counts nearly two-thirds of Vietnam’s industrial wastewater flows into lakes and rivers. In 2015 the authorities identified a score of villages with unusually high cancer rates, perhaps the result of water supplies laced with lead. + +A category of environmental trouble not entirely of Vietnam’s making will soon add to this list. With 2,000 miles of coastline, Vietnam is especially vulnerable to climate change. Some estimates suggest that one-fifth of Ho Chi Minh City, its swiftly expanding southern metropolis, could be underwater by the end of the century. Harsher weather and flooding could batter settlements up and down the long seaboard. + +Such worries are increasingly seeping into Vietnam’s politics, posing challenges to the repressive rule of the Communist Party of Vietnam (CPV). A government report says that at least 200,000 people were directly affected by last year’s disaster. Some of them have dared to protest at the mill responsible—owned by Formosa, a Taiwanese company—or in front of a local courthouse. They say that the $500m the firm has coughed up in compensation is paltry, and demand the right to sue. Even more striking is the rage among Vietnamese who have not suffered from the poisoning themselves. Shortly after the disaster, a spokesperson for Formosa implied that industry and fishing were incompatible. Demonstrators in Hanoi and Ho Chi Minh City retorted: “I choose fish.” + +Nationalism amplifies anger about the environment. In 2014 Formosa’s steel mill was set ablaze by rioters protesting against China’s decision to move an oil rig into contested waters not far from Vietnam’s coast (never mind that Formosa is Taiwanese). Most Vietnamese think their leaders are soft on China, the country’s biggest trading partner but also an old enemy and rival claimant to several islets in the South China Sea. That the party has allowed a (sort of) Chinese firm to poison the coast is particularly galling. + +All this is frightening to the CPV, which saw how environmental movements in Eastern Europe buffeted communists there, and which has dealt thuggishly with leaders of the protests. Labelling civil-rights campaigners as stooges for foreign governments is trickier when the party itself is accused of protecting polluters from abroad. In search of new friends to help reduce its reliance on trade with China, the cadres in Hanoi also fret about Vietnam’s reputation. The CPV wants foreigners to see the country as a reliable partner on global issues such as climate change, not as a throwback that reveres a dead leader in a glass box. + +So Vietnam’s lawmakers are becoming greener. The country has fairly comprehensive green regulations, reckons Stephan Ortmann, author of a new book on the subject—stricter than those scribbled by China’s rulers, and produced at a faster clip. It has pledged to cull carbon from its economy (though how this squares with plans to build dozens of coal-fired power stations is anybody’s guess). In November the government hosted a big pow-wow on wildlife conservation, obliterating tonnes of confiscated ivory in a satisfying fireball. + +A smog of confusion + +Yet there is more talk than action, and the government’s shallow coffers are only partly to blame. Economic growth—which in the absence of meaningful elections is the party’s only claim to legitimacy—trumps everything else. Powerful officials in the provinces ignore rules made in Hanoi, and powerful state-owned firms often seem untouchable. A justice system that deals swiftly and ruthlessly with dissidents fails dismally at enforcing quotidian regulation. Whereas smog-fighters in Beijing have begun closing factories and restricting car usage, bigwigs in Hanoi still struggle to prevent scooter-riders from parking on the pavements. Smouldering ire over pollution will make it harder for the party to cope with political or economic shocks. + +Dong Hoi’s prospects, meanwhile, hinge on whether the tourists return this summer. The authorities say that the sea is safe for swimming again, but not everyone believes them. A fisherman says he has been back at work for a while, but would not feed his catch to small children for another five or ten years. + + + +This article appeared in the Asia section of the print edition under the headline “Red v green” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717065-communist-partys-inability-control-pollution-corroding-its-authority-red-v-green/print + + + +上一項 文章 章節 下一項 + + + + + +Asia 章節 Middle East and ... + + + + + +China + + +Intellectual debate: An illiberal dose + +The stockmarket: Hunting crocodiles + +Trump toilets: Improperly squatting + +Asia 章節 Middle East and ... + + + + + +文章 章節 下一項 + + + + + +An illiberal dose + + +Officials in China are stifling debate about reform + + +Why so nervous? + + +Feb 18th 2017 | BEIJING + + + + + +IT HARDLY seemed a threatening scene when, on a Friday afternoon in February, dozens of finance wonks gathered in Beijing for a three-hour symposium on China’s exchange-rate mechanism. With a slide show featuring graphs and formulas, the main speaker talked about the arcana of the yuan’s adoption last year as one of the IMF’s reserve currencies (a development that Chinese reformists hope will encourage the government to let the yuan float freely). Other participants sipped their green tea, jotted down notes and chipped in with their views. The host, the Unirule Institute of Economics, often holds such events. Typically, it posts summaries of speakers’ views online. Not this time, however. The website is no more. + +It was shut down by the city government in late January, as was another site run by Unirule, as well as all of the institute’s social-media accounts and those of its leading researchers. Their closure was the latest blow to the country’s moderate liberals, who for many years have continued to enjoy at least some freedom to debate reforms, even while the authorities have been busy rounding up more radical critics of the regime. + + + +The onslaught against liberal forums began in July when, after a quarter-century of cheerleading for reform, including better implementation of the constitution’s guarantees of protection for human rights, a monthly magazine called Yanhuang Chunqiu was taken over by hardliners. The magazine’s founding publisher, Du Daozheng, said the purge reminded him of the Cultural Revolution, when radical Maoists seized control of a newspaper for which he then worked, and berated him as a “counter-revolutionary”. In October a website called Consensus Net, much loved among liberals, was closed. It had been publishing articles about economic, social and political reform since its founding in 2009. With the termination of Unirule’s online accounts, moderate reformists have little space left for open debate. + +The liberal threat + +China’s president, Xi Jinping, professes himself to be in favour of market-oriented reform and upholding constitutional rights, and his late father supported Yanhuang Chunqiu; yet he is nervous of liberal views. Unirule has been one of the country’s most prominent independent think-tanks since it was founded in 1993. David Kelly of China Policy, a Beijing-based consultancy, says the institute “cannot be said to be unorthodox, subversive or dissident in any obvious way”. He notes that pro-market reform measures that were proposed by Mr Xi in 2013 echoed those suggested by Unirule years earlier. + +But these are tense political times in Beijing, as the Communist Party prepares for a five-yearly congress in the autumn and a sweeping reshuffle of its leadership (not including Mr Xi’s positions) immediately after it. Mr Xi does not want anyone to embarrass him amid the political horse-trading of the months ahead. Websites run by diehard Maoists, dripping with criticism of free markets, are still allowed to operate. But Maoists, at least, can be counted on to support the party. Mr Xi seems to fear that moderate liberals may rattle it. Unirule’s co-founder, Mao Yushi, has a habit of doing so. A few days before the authorities pulled the plug on his institute’s accounts he had joined dozens of intellectuals in calling on China’s chief justice, Zhou Qiang, to step down. Mr Zhou had angered them by denouncing the “erroneous influence” of calls for an independent judiciary. Mr Mao’s views matter: before it was disabled, his account on Weibo, a Twitter-like service, had 2.7m followers. + +Some are putting a positive spin on these events. Dai Qing, a former journalist at a national newspaper, says that, although liberals like her are “very worried”, those clamping down on the reformist forums may not disagree with the views expressed on them. Liberal-leaning leaders in China sometimes try to protect themselves from hardline onslaught by looking tough themselves. Mr Xi, a diminishing band of optimists believe, could be playing such a game. “There’s a saying in China that you put on the left blinker when you want to turn right and the right blinker when you want to turn left,” says Ms Dai. “So no one can guess what is really going on.” + +Staff at Unirule are puzzled. Sheng Hong, another co-founder of the institute, says the authorities have not even bothered to notify Unirule of their action, let alone explain it. Official media said that Unirule’s online accounts were among several that had been closed for a variety of infractions, ranging from the provision of unauthorised news and information services to the broadcast of pornography. They did not specify which of the websites had broken which rule, but Unirule was certainly not guilty of the latter: the curves on its website were of the economic rather than the bodily sort. + +Whether the pressure on liberals will be eased after the party congress will depend largely on how secure Mr Xi feels. His record so far suggests he is prone to anxiety. Since 2015 police have rounded up and harassed hundreds of independent lawyers. A new law on the management of foreign NGOs came into effect in January aimed at tightening government control over them. “Maybe they hate us because we tell the truth,” laments Unirule’s Mr Sheng. “But we should do this in a great nation. If we don’t, China will have no future.” There is scant evidence that Mr Xi agrees. + + + +This article appeared in the China section of the print edition under the headline “An illiberal dose” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21717103-why-so-nervous-officials-china-are-stifling-debate-about-reform/print + + + +文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Hunting crocodiles + + +China is battling against market manipulators + + +Murky politics is involved, too + + +Feb 18th 2017 | SHANGHAI + + + + + +THE Chinese stockmarket is not for the faint of heart. Over the past decade punters have endured two big bubbles and two big crashes—the latest in 2015. But those still smarting from their losses can at least be thankful that they did not suffer a worse fate: making too much money. Last week the government declared that it would be remorseless in going after investors who manipulate the market for profit. We will catch these “giant crocodiles”, said Liu Shiyu, the chief securities regulator. They will not be allowed to “flay the skin and suck the blood” of retail investors, he added, belying his earlier reputation as a mild-mannered bureaucrat. + +Normally it would be prudent to take such statements with a pinch of salt. China has often vowed to tackle insider trading, to little effect. But the tough talk about discipline this time seems to have more political weight. Looking at Xi Jinping’s first five years as president, the stockmarket crash in the summer of 2015 ranks as one of the biggest blots on his record. It was a transparent display of shoddy governance. Investors who got burned still nurse grievances against regulators. So Mr Xi, hardly a fan of markets at the best of times, has an extra incentive to go after miscreants. + + + +A couple of big cases show he means business. One of the first major players arrested was Xu Xiang, a so-called “kamikaze” investor who reputedly pumped up stocks, lured in unsuspecting punters and then cashed out. On January 23rd he was found guilty of market manipulation. He was sentenced to five-and-a-half years in jail and fined 11bn yuan ($1.6bn), a record in China for economic crimes. + +There are also indications that the disappearance of an even bigger tycoon, Xiao Jianhua, is partly related to the stockmarket crash. Mr Xiao, the head of a sprawling investment company called Tomorrow Group, is one of China’s wealthiest men, worth at least $6bn. At the end of January he was abducted from his hotel in Hong Kong. Chinese agents reportedly removed him in a wheelchair with a sheet over his head and escorted him on a boat across the border into mainland China. + +Mr Xiao’s case is widely thought to involve murky politics: he made his fortune through ties to Chinese leaders. But Caixin, a Chinese magazine, reported on February 11th that Mr Xiao had controlled Securities Daily, a state-backed newspaper, and used it to influence coverage of his listed companies. If Mr Xi does want to neutralise Mr Xiao for political reasons (he may know too much about the financial dealings of the elite), linking him to stockmarket shenanigans is a safe way to bring him down. And it has the added benefit of spooking other would-be manipulators. + +Nevertheless, the details of Mr Xiao’s case, riveting though they are, are unlikely to have much impact on the market. The rarefied air of elite politics does not figure in the strategy of most investors. What does matter is whether the clean-up of the market affects traders at brokers and hedge funds around the country. + +There are tentative signs that this is indeed happening. In 2016 the securities regulator levied 4.3bn yuan in fines and barred 38 individuals from the market, both record highs. “They are getting rid of the bad guys,” says one fund manager. + +For the time being this seems to be helping the market. Companies with solid fundamentals have outperformed speculative stocks since late 2015. Chen Jiahe, chief strategist with Cinda Securities, a broker, says it is nothing short of spectacular to see this kind of trend—which is common in more mature countries—last so long in China. But it will take longer than that to drain such a swampy market. As the government itself says, crocodiles still lurk. + + + +This article appeared in the China section of the print edition under the headline “Hunting crocodiles” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21717113-murky-politics-involved-too-china-battling-against-market-manipulators/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Flushed with success? + + +The Trump brand wins a battle in China + + +There was a lot to lose + + +Feb 18th 2017 + +Not the throne he had in mind + + + +CHINA has a history of hilariously inappropriate export brand-names, including Front Gate men’s underwear, Long March luggage and, guaranteed to raise a laugh, Great Leap Forward floor polish. But it has also stumbled on a brand that should surely open up vast business opportunities, at least among Democratic-voting households in America: Trump brand toilets (see picture). + +The name has nothing to do with the 45th president. Shenzhen Trump Industries was founded in 2002. Its Chinese name, Chuang Pu, means “innovate everywhere”. It sounds similar to a name often used for Donald Trump: Chuan Pu. The firm makes toilets for “high-end spas, hotels [and] public institutions”, and uses the world’s first “continuous rewinding toilet sanitary cover device”. Its boss says that Trump toilets are used 100m times a year in China. + + + +This great Chinese success story is now under threat. It is one of many Chinese products unrelated to the American president that use the word Trump. In 2006 Mr Trump applied in China for ownership of it as a trademark in construction services. Alan Garten, the chief legal officer of his company, the Trump Organisation, told the Washington Post that “someone was improperly squatting on” his firm’s rights. This week, after years of dispute, and, by amazing coincidence, just after Mr Trump promised to honour the “one-China policy” (see article), a Chinese court agreed that in the construction business, Trump belongs to the Trump Organisation. The legal implications for Trump toilets are not known. + + + +This article appeared in the China section of the print edition under the headline “Improperly squatting” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21717109-there-was-lot-lose-trump-brand-wins-battle-china/print + + + +上一項 文章 章節 下一項 + + + + + +China 章節 Europe + + + + + +Middle East and Africa + + +Kenya (1): a dirty war: Food for the hyenas + +Kenya (2): cows, guns and politicians: I burned a farm in Africa + +Israel and Palestine: Bibi consults a real-estate expert + +Zimbabwe’s “bond notes”: The king of funny money + +Reforming Islam in Egypt: Sisi versus the sheikhs + +China 章節 Europe + + + + + +文章 章節 下一項 + + + + + +Kenya’s dirty war + + +Suspected jihadists are being killed in droves on Kenya’s coast + + +The quiescent and the dead + + +Feb 18th 2017 | MOMBASA + + + + + +BALBINA, a woman from Mombasa, Kenya’s main coastal city, remembers fetching her neighbour Abdullah’s body from a police station. “It wasn’t so terrible,” says Balbina (not her real name). Surprisingly, “there was not even any blood.” The wound was hidden at the back of his head; his face was serene. He was killed by police, in what they claimed (but she does not believe) was a shoot-out. “Abdullah did wrong. He went to Somalia, maybe he killed innocent people.” But he deserved justice, she says, not to be shot in the back of the head without a trial. + +Such stories are easy to find on the Kenyan coast, where young men are often recruited to fight for al-Shabab (“the Youth”), a Somali jihadist group. Some go to fight in Somalia; some carry out terrorist attacks at home. In recent years the government has cracked down on anyone it suspects might have joined al-Shabab. In December Haki Africa, a human-rights group, published the names of 81 people, almost all young Muslim men, who it says were killed or “disappeared” by police since 2012. The real number is probably much higher, says Francis Auma, the group’s co-ordinator, since many cases go unreported or leave few clues implicating the state. + + + +The coast of Kenya has long felt different from the rest of the country. Under British rule a ten-mile littoral strip was nominally part of a protectorate administered by the Sultan of Zanzibar, rather than part of the colony of Kenya. Unlike the rest of the mostly Christian country, the coast is largely Muslim, with a large ethnic Somali population to the north. And since independence from Britain in 1963, it has had a rebellious streak, built on anger about the unequal distribution of land and jobs, perceived persecution of Muslims, and dislike of rule by elites from Nairobi, the capital. + +It is these resentments that help al-Shabab to recruit. Abdullah, says Balbina, “had no parents; he was lonely and jobless.” That made him easy prey for recruiters, who stoked his anger while also flashing cash and promising him a better life in Somalia. Money is a big lure, says a local official. Some jihadists even pose as recruitment agents for jobs in the Gulf, she says. “You see a man in a good car, he takes three or four guys, promising jobs.” + +The joy of jihad + +Many recruits are disappointed—Somalia is not the Islamic paradise they were told it was, and foreigners are used as cannon fodder. So they come back to Kenya, where they face an awful choice. They can join an amnesty programme and turn informer—thereby risking being killed by their erstwhile chums. Or they can refuse, and risk being “disappeared” by the police. Any young man who has been away from his village for a while, or who has been seen with suspected al-Shabab sympathisers, is in danger. Some bodies have been found dumped in a game park; others were presumably eaten by hyenas before they could be found. + +Some of the disappeared were doubtless guilty, but none had a chance to defend himself in court. And in some cases the police apparently grabbed the wrong man. Idris Mohamed, 26, was shot in Mombasa. The family told reporters that police officers had stripped him naked, handcuffed him and forced him to lie face down before shooting him. (The police deny this, saying he was killed by an unknown assailant.) Officers who brought his body to the mortuary filed paperwork saying he was Ismael Mohamed, a terrorism suspect and the victim’s brother, who had not been seen for some months. “The facts strongly suggest a case of mistaken identity,” concludes Haki Africa. + +Such criticism irks the government. Mr Auma says that Haki Africa has been harassed by the authorities since it began publishing reports of extrajudicial killings; at one point, the group’s bank accounts were frozen. Hassan Abdille of Muslims for Human Rights, another lobby group, says his staff have been spied on. + + + + + +Apologists for the police note that the wave of jihadist attacks that hit the coast between 2011 and 2014 appears to have ebbed. But even if brutal tactics have curbed terrorism in the short term, they risk infuriating a generation of young Muslim men and storing up trouble for the future. “It’s counterproductive, as it is pushing some people towards radicalism when they see their kin killed and no justice done,” says Mr Auma. + +Moreover, by killing those who return the police may be silencing an effective form of anti-jihadist propaganda. Left to their own devices, those returning would surely tell other youngsters how awful it was going to Somalia to fight. Many of those who come back are said to have complained that they were never paid as promised. Others suffered abuse: “They went there having been promised four wives each,” says a community worker. “Instead they became wives.” + +Police hit squads are operating in an already febrile political atmosphere. In August Kenya will hold local and national elections, and Mombasa will be among the most fiercely contested cities. A system of devolution introduced in 2013 means that its governor controls a bigger budget. The incumbent, Ali Hassan Joho, is popular among local Muslims, whom he promises to defend from grasping ruling-party politicians in Nairobi. He is close to Raila Odinga, Kenya’s main opposition leader, and is said to be financing Mr Odinga’s Orange Democratic Movement party. + +Locals say that some six months before the vote, all the main parties are already recruiting youngsters into political gangs, known as “pressure groups” to intimidate opponents and their voters. They are paying voters to register and there could be widespread vote-buying on the day. Many say that Mr Joho’s supporters could turn violent if he looks likely to lose. + +It would not be the first time that a Kenyan election turns bloody. After a flawed ballot in 2007 politicians stoked fighting that claimed some 1,300 lives. The whiff of that conflict hung heavily over the next vote in 2013, which nonetheless proceeded peacefully. But many in Kenya now fret that there may be a return to mayhem, particularly in Mombasa, where politicians are fighting for control of Kenya’s lucrative main port. With well-practised hit-squads already on the prowl, the risks of conflagration are escalating. + + + +This article appeared in the Middle East and Africa section of the print edition under the headline “Food for the hyenas” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21717062-quiescent-and-dead-suspected-jihadists-are-being-killed-droves/print + + + +文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +I burned a farm in Africa + + +Land invasions in Kenya portend election violence + + +Politicians are urging their supporters to graze their cows on other people’s turf + + +Feb 18th 2017 | KIFUKU + + + + + +AT KIFUKU, a cattle ranch in Kenya, the dry-stone walls are reminiscent of England; by the farmhouse, a pair of boats sit on an artificial lake. The farm has, however, been anything but calm of late. Since September dozens of cattle-ranchers, some with assault rifles, have driven their cattle onto the farm’s 8,000 acres (3,238 hectares) of grass. Buildings have been wrecked, staff beaten up and a police officer shot and injured. “We’re all extremely tired and frustrated and short-fused [and] scared,” says Maria Dodds, the owner. By February 12th relief had arrived, in the form of an armoured car filled with policemen. + +The invasion of Kifuku farm is one of a series that have taken place since 2013 across Laikipia County, a fertile plateau between Kenya’s central highlands and arid north (see map). Much of it is covered by private ranches and nature conservancies owned by white Kenyans such as Mrs Dodds and international investors. The attacks appear to have escalated in recent weeks. A tourist lodge was burned down on the Suyian Ranch on January 29th; visitors had to be evacuated from the Mugie Conservancy earlier in the month after a staff member was shot dead. In all 11 people may have been killed in such clashes, according to Reuters, a news agency. + + + + + +The armed incursions have drawn comparisons to the expulsion of white farmers in Zimbabwe. But the conflict in Laikipia, which has the second-highest density of wildlife in Kenya, is not black against white. John Wachira Mwai, a nephew of Mwai Kibaki, Kenya’s president until 2013, had to abandon his farm in July. He was shot by trespassing cattlemen and is still in a wheelchair. More than one smallholder has been murdered and hundreds have had their livestock stolen and their crops trampled. “The situation here is worsening day by day,” says Samuel Lopetet Apolosiri, a community activist who works across tribal lines in northern Laikipia. “We are facing intercommunity conflicts, cattle rustling and killing.” + +One reason for the increased conflict is drought on Kenya’s overgrazed northern plains. Herdsmen have driven hundreds of thousands of cattle south, cutting fences along the way to get at grass they think is rightfully theirs. An aerial survey in April 2016 by the Laikipia Wildlife Forum found 135,000 “visiting” cattle, about the same number as “resident” ones. The number of visitors may since have doubled, reckons Peter Hetz, who heads the forum. + +But tensions between landowners and herdsmen, many of them Samburu, date from well before the current drought. Efforts have been made to ease them by, for instance, reaching grazing agreements that allow cattle herders to bring their livestock onto private land during dry spells. But disputes still abound. “The ranchers and the police are colluding to intimidate us,” says one Samburu elder, who admits to illegal grazing on Segera Ranch, but is unhappy that his cows were “arrested” and that he was fined the equivalent of two cows. (Segera says its fines are equivalent to the usual daily grazing rates.) + +However, it is no coincidence that incursions in Laikipia have worsened since 2013, the year that Kenya’s devolved constitution came into effect. This established county governments, with the aim of giving each of Kenya’s many tribes a fair share of government revenues. An unintended consequence is that local groups now have more incentive to fight to control county governments (and their money) ahead of elections in August. Vote-hungry politicians are inciting their kin to grab land and even to displace rival communities. + +In Laikipia the young men carrying out armed invasions are mainly from the Pokot and Samburu tribes. Mathew Lempurkel, the member of parliament for Laikipia North, blames the violence on the police, and says that herdsmen are justified in shooting back. “If the government becomes a threat, the people have to protect themselves,” he says. But others accuse Mr Lempurkel, a Samburu, of inflammatory rhetoric; for example, claiming on local radio there was no such thing as private land in the county. “Politicians are exploiting the drought,” says Richard Leakey, the chairman of Kenya Wildlife Service. + +National politicians, from the deputy president to the interior secretary, have said private land should be respected and the violence must stop. The president, Uhuru Kenyatta, repeated the warning on a voter-registration drive in the region in January. But many of those affected in Laikipia suspect the government of ignoring the invasions to avoid jeopardising its vote. Mrs Dodds says she appreciates the efforts of the police who protect Kifuku. The farm will recover when the herders leave for new pastures, says her husband, Anthony Dodds. But he worries about the hundreds of smallholders on Kifuku’s southern borders: “They’re really on their knees.” + + + +This article appeared in the Middle East and Africa section of the print edition under the headline “I burned a farm in Africa” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21717067-politicians-are-urging-their-supporters-graze-their-cows-other-peoples/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Bibi consults a real-estate expert + + +Donald Trump abandons the “two-state” formula for Israel + + +At least, it sounded like he did + + +Feb 18th 2017 | WASHINGTON, DC + +Trump has Bibi’s back + + + +DURING eight years in which a glacial chill fell on relations between the administration of Barack Obama and a series of right-wing Israeli governments, American officials talked of Israel’s prime minister, Binyamin Netanyahu, as a political coward unwilling to stand up to zealots on his own side. + +The contrast to that scorn was rather striking as Mr Netanyahu arrived at the White House on February 15th for his first official visit to a White House run by Donald Trump. True, Mr Trump urged Israel to show some restraint, telling his guest at a press conference to “hold back” on building Jewish settlements on territories occupied by Israel in 1967 “for a little bit”, pending peace talks that the new president said should be widened to include Arab states. But such admonishments are tiny—and could easily have been scripted by aides to Mr Netanyahu. For the prime minister likes to cite American sensitivities to the expansion of settlements—and what he calls his unrivalled ability to navigate them—as a way to face down hardliners in his coalition who would have him disavow any prospects for Palestinian statehood, or annex bits of the West Bank. + + + +In a subtle but important shift, the Republican ditched a long-standing, bipartisan American insistence that peace can be reached only through the establishment of a sovereign Palestinian state alongside the Jewish one. Mr Trump signalled that America would defer to local opinion, saying: “So I’m looking at two-state and one-state, and I like the one that both partieslike...I can live with either one.” That presidential statement all but ends the diplomatic fiction that all sides are committed to a two-state process, and puts the onus on Israel to decide what should happen to the occupied territories. + +Mr Netanyahu has repeatedly said he is willing to negotiate over the establishment of a Palestinian state “without preconditions”. But he insisted on two long-held “prerequisites of peace”: Palestine would have to recognise Israel as a Jewish state and Israel would have to “retain the overriding security control over the entire area”. + +The visiting Israeli leader had to offer some concessions. Mr Trump had campaigned on a promise to move the American embassy to Jerusalem from Tel Aviv. But since taking office the president has been warned by foreign allies that taking such a symbolic step in a city claimed by both peoples as their capital would risk a backlash, and even violence. In his White House press conference Mr Trump said he was looking at the embassy move “very, very strongly”. + +On this visit Mr Netanyahu backed away, gingerly, from his previous demand that America tear up a deal brokered by the Obama administration and other world powers to curb Iran’s nuclear ambitions. Mr Trump calls the nuclear pact “one of the worst deals” he has seen. But foreign allies and members of Team Trump, such as the defence secretary, James Mattis, have told the president that the deal is the least bad option for slowing Iran’s nuclear programme, as long as America enforces its terms more strictly and is willing to sanction Iran for other infractions in such areas as ballistic missile technology. The Israeli leader contented himself with praising Mr Trump for taking a tougher line on Iranian “aggression”. + +Mr Netanyahu also faces the fact that Mr Trump’s priority in foreign policy is destroying the Sunni Muslim fanatics of Islamic State (IS)—a goal that matters less urgently to Israel than containing Iran, the largest power in the Shia Muslim world. Given that Iran is itself fighting IS in Syria and Iraq, the two goals could even be in conflict, notes Robert Satloff, the executive director of the Washington Institute for Near East Policy, an American think-tank. He asks: “How do you destroy IS without empowering Iran?” + +The Israeli prime minister fudged the distinction, denouncing both IS and Iran in the same attack on “militant Islam” and hailing Mr Trump’s “great courage” in tackling “radical Islamic terror”. Quite a change since his last White House visit. + + + +This article appeared in the Middle East and Africa section of the print edition under the headline “Bibi consults a real-estate expert” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21717082-least-it-sounded-he-did-donald-trump-abandons-two-state-formula/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +The king of funny money + + +Zimbabwe’s new “bond notes” are falling fast + + +Robert Mugabe prints banknotes and insists they are worth as much as US dollars. No one is fooled + + +Feb 18th 2017 | HARARE + + + + + +HOW much is an American dollar worth? The glib answer is exactly one buck. But that is far from the case if the dollar in question is one of Zimbabwe’s “bond notes”, the world’s newest currency that is not officially a currency. + +Zimbabwe adopted the US dollar as its official currency after the spendthrift regime of President Robert Mugabe printed so many of its own notes that it caused hyperinflation in 2008. The economy briefly stabilised; but old habits die hard. Last year the government again spent far more money than it raised, much of it on imports, causing scarce greenbacks to flow out of the country. + + + +By the end of the year there were so few dollars still circulating that banks were limiting withdrawals to $50 a day, crippling the economy. The central bank decided to issue a new currency, called “bond notes”, pegged to the American dollar. Two months on, the new notes, nicknamed “bollars”, are rapidly losing their value. People have discovered that they are not, in fact, convertible into real dollars. So they cannot be used to pay for imports—a real problem in a country that does not make much. Shops accepting bond notes can use them to pay local wages and suppliers or deposit them in their local bank accounts (denominated in US dollars). But if they want to pay for imports to restock their shelves, they still have to queue for real dollars. + +So desperate are shops for hard currency that they are offering discounts of as much as 50% to customers who hand over greenbacks. Some petrol stations now have separate pumps where the price of fuel is lower for customers who pay with hard-currency cash instead of using a debit card. A number of shops in Harare have resorted to indicating two or three different prices for the same item—a US dollar cash price, a bond-note price and a third price if one pays by card. + +Black marketeers have been quick to help out. Some are offering to convert bank balances into real dollars at premiums ranging from 5% to 30%. + +The big supermarket chains are not allowed to offer cash discounts or discriminate against customers who use bond notes or electronic cards. Instead they have simply put up their prices. With inflation surging, the bond notes are proving to be exactly what many Zimbabweans feared they might be: the horribly resurrected zombie of their dead cousin, the Zimbabwe dollar, which burned itself out almost a decade ago. Unless the country changes tack, more economic misery looms. + + + + + +This article appeared in the Middle East and Africa section of the print edition under the headline “The king of funny money” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21716954-robert-mugabe-prints-banknotes-and-insists-they-are-worth-much-us-dollars/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Egypt’s clerics are resisting the president’s call to renew Islam + + +Reforming Islam in Egypt + + +Sisi versus the sheikhs + + +Feb 18th 2017 | CAIRO + +Islam’s ivory tower + + + +FEW Egyptians dare challenge Abdel-Fattah al-Sisi, their authoritarian president. But one institution has stood up to him. “You wear me out,” Mr Sisi reportedly told Ahmed al-Tayeb, the grand imam of Cairo’s al-Azhar University, last month. + +It has been over two years since Mr Sisi, an observant Muslim, lamented that some of his co-religionists were becoming “a source of worry, fear, danger, murder and destruction to all the world”. He urged Egyptian clerics to push back against the jihadists of Islamic State (IS). Egypt itself was a victim, he said: angry Islamists have attacked the government and an affiliate of IS battles the army in Sinai. To combat such extremism, “a religious revolution” was needed, said Mr Sisi—and al-Azhar, the Sunni world’s oldest seat of learning, should take the lead. + + + +But the clerics, led by Mr Tayeb, have largely resisted Mr Sisi’s appeal. Though al-Azhar bills itself as moderate, critics say that it has allowed hardliners to remain in senior positions and failed to reform its curriculums, which include centuries-old texts often cited by extremists. It has blocked efforts at social reform and tried to censor its critics. “Nothing has been done since the president called for renewing religious discourse,” said Helmi al-Namnam, the culture minister, last August. + +For most of its 1,000-year history, al-Azhar has acted independently. Each year it trains thousands of preachers, while tens of thousands of students, foreign and local, study in its schools. But it has also delved into politics, often frustrating Egypt’s rulers. Gamel Abdel Nasser, Egypt’s president from 1956 to 1970, reined in the clerics by nationalising their endowments. He and his successors pushed al-Azhar to issue fatwas (religious edicts) justifying their policies. This hurt the institution’s credibility, but further enshrined it as the main arbiter of the faith in Egypt. + +Mr Sisi has also used al-Azhar. When he ousted the Muslim Brotherhood from government in 2013, Mr Tayeb sat by his side. The new constitution, adopted in 2014, gave al-Azhar more autonomy. But since then Mr Sisi has tried to exert control over religious matters. He has closed mosques and banned preachers who are not registered. In 2015 the authorities began to standardise Friday sermons, a move designed to undercut radicalism—and to promote the president’s policies. (His expansion of the Suez Canal, for example, was called a “gift from God”.) + +Al-Azhar has pushed back. It says its preachers can deliver their own sermons. Some clerics have publicly opposed his tough stance against female genital mutilation, though officially al-Azhar agrees with him on this. After the president called for an end to verbal divorce—a man must simply say “talaq” (divorce) three times—a council of scholars from al-Azhar deemed the practice perfectly Islamic. “Society needs to adapt to the rules of Islam, not the other way round,” said one professor. + +Mr Tayeb insists that al-Azhar is “the pulpit of moderate, centrist and tolerant Islam”, but it is not monolithic. “People within al-Azhar are just as divided as the Egyptian society,” says Amr Ezzat of the Egyptian Initiative for Personal Rights, a pressure group. Some of its students and preachers are Salafists (purists); many are sympathetic to the Brotherhood. The government has little control over its personnel and Mr Tayeb tolerates the different factions. “He is not strict against religious extremism,” says Mr Ezzat. + +Despite the differences within its own walls, al-Azhar has tried to shut down debate outside. It has filed lawsuits against several authors and artists under Egypt’s blasphemy laws. A recent victim is Islam Behery, who parsed sayings of the Prophet Muhammad and criticised al-Azhar on his television show, “With Islam”. The institution brought several suits against him, resulting in a one-year prison sentence (he was later pardoned by Mr Sisi). “The blasphemy law is used by al-Azhar as a sword,” says Ahmed al-Habib, who has reported on corruption at the institution—and who is also being sued by the clerics. + +Were al-Azhar to embrace reform, some still doubt it would win over the Muslim masses. Its communication skills cannot match IS or the Brotherhood, which beam their message out on satellite television and social media. Al-Azhar has been trying to set up a TV station for years, to no avail. + +Religious reform is anyway only a partial solution. Many analysts blame authoritarian rulers like Mr Sisi for causing the resentment, alienation and frustration that seem to fuel violent extremists. “You are asking al-Azhar to renew religious discourse while the state is not renewing its own discourse,” says Kamal Habib, a political analyst and former jihadist himself. “There is no mechanical relationship whereby you change religious discourse and therefore things will be better.” + + + +This article appeared in the Middle East and Africa section of the print edition under the headline “Sisi versus the sheikhs” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21717081-sisi-versus-sheikhs-reforming-islam-egypt/print + + + +上一項 文章 章節 下一項 + + + + + +Middle East and ... 章節 Britain + + + + + +Europe + + +Greece’s endless woes: Enter the chorus, with cabbages + +Moldova’s economy: A do-over in Moldova + +Donald Trump and NATO: Pay up + +Russian politics: Barred from the ballot + +Italian politics: The gambler + +Turkish-Russian relations: Getting into bed with the bear + +Charlemagne: French lessons in dégagisme + +Middle East and ... 章節 Britain + + + + + +文章 章節 下一項 + + + + + +Another round in the Grexit saga + + +Greece’s creditors are now the main impediment to solving the country’s woes + + +The biggest difference is now between the IMF and the Europeans + + +Feb 18th 2017 | ATHENS AND BRUSSELS + + + + + +IF HISTORY repeats itself first as tragedy and then as farce, it continues thereafter as endless iterations of Greek debt dramas. The script is wearyingly familiar. Greece’s European creditors are trying to close the second review of its third bail-out, which was signed in August 2015. That would enable them to lend Greece the funds it needs to meet €6.3bn ($6.7bn) of bond repayments due in July. But talks have run aground ahead of a meeting of euro-zone finance ministers in Brussels on February 20th. Bond yields have spiked, German ministers are issuing barbed comments, and dust is being blown off the Grexit files. + +The review covers everything from health care to military wages. But thanks to pressure from the IMF—which has not yet joined the bail-out, as it did the previous two—Greece faces more pressing demands: to pass tax and pension reforms worth 2.5% of GDP, to kick in after the bail-out expires. Alexis Tsipras’s hard-left Syriza government will struggle to get these measures through parliament, but the alternative is to call elections that Syriza would probably lose to New Democracy, a centre-right party. Thousands of farmers wielding their produce took to the streets in Athens in outrage at more austerity (see picture). Unions are pondering further protests. + + + +Greece has become a bystander to its own tragedy. The conditions attached to the bail-outs drastically reduce the government’s control over economic policy. For many Greeks, this makes politics itself pointless: 17% do not know a party they support (or will not say), while 15% will not vote at all. What sets today’s drama apart is the dispute among Greece’s creditors. These date back to the complex architecture of euro-zone bail-outs, jerry-built in haste in 2010. But today the debate is more public, and potentially more serious. + +The biggest difference is between the IMF and the Europeans. Burned by experience, the fund is jealously guarding its credibility. Having seen Greece consistently fail to meet previous bail-out targets (see chart), it thinks the European Commission’s forecasts are too rosy, and that, without relief, Greece’s debt will balloon after 2030, as cheap euro-zone loans are replaced by private finance. It has two conditions for joining the bail-out: stricter (and pre-legislated) reforms from Greece, and a credible promise from euro-zone governments to relieve Greece’s debt burden when the bail-out expires, via guarantees of long-term cheap finance. + + + + + +European governments do not believe that Greece needs debt relief. But they insist on IMF participation in the bail-out because they do not trust the commission to oversee the Greeks. The Germans and Dutch will not approve further disbursements without the fund. That gives the IMF an effective veto. But it has its own problems. Its board, which must approve participation, is split; shareholders from non-European countries do not see why they should stump up again. Most IMF staff are sick of Greece. “If the fund agrees to something on the basis of a hazy promise of future debt relief…then all this fancy talk about standing up to the Germans at the board would once again be an empty show,” says Ashoka Mody, a former IMF official now at Princeton University. + +Greece’s fiscal path is a particular point of contention. The IMF believes that the country cannot sustain the primary-surplus (ie, before interest) target of 3.5% of GDP demanded in the bail-out by 2018, and that the austerity such goals imply will delay the recovery. The Europeans insist Greece is on track: last year’s surplus target of 0.5% will be exceeded, and the commission forecasts growth of 2.7% this year. Relations have become poisonous; one European official says the IMF is deploying “Trump University statistics”. + +Some formula will probably be found to allow to Greece to avoid default, though not in time for Monday’s meeting. But that will do little to alleviate Greece’s misery. GDP has shrunk by over one quarter since 2008, and the recovery has been dismal by historical standards. Nearly a quarter of the workforce is jobless, and over a third of children are poor or nearly poor. Young, ambitious Greeks have been forced abroad. Banks are clogged with non-performing loans, and tax-collection rates have actually fallen. Like its predecessors, Syriza has learned the art of complying with bail-out targets without owning them. The current delays will hurt the economy and make it harder for Greece to return to the markets next summer. A fourth bail-out looms. + +Locked inside the euro, unable to devalue, and confronted with German fears over a “transfer union”, Greece has been forced down the road of internal devaluation and austerity. The government has met current expenditures (bar interest payments on debt) from revenues since 2014; today’s arguments are largely about shuffling money from one public creditor to another. Even if the July deadline is met, further cliff-edges lie ahead, meaning more summitry and more market jitters. Northern Europeans will grow more, not less, hostile to debt forgiveness, even if it comes in disguise. The deadlock this time may not be as serious as in 2015, when Greece came close to ejection from the euro. Yet it shows the problem of a bail-out architecture that is unfit for purpose but from which neither creditors nor Greeks can work out how to extricate themselves. + + + +This article appeared in the Europe section of the print edition under the headline “Enter the chorus, with cabbages” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717043-biggest-difference-now-between-imf-and-europeans-greeces-creditors-are-now-main/print + + + +文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +A do-over in Moldova + + +How Moldova escaped the effects of a giant banking crisis + + +A leaked report revealed that in 2014 up to $1bn, equivalent to more than one-eighth of the country’s GDP, had been stolen from three banks + + +Feb 18th 2017 | CHISINAU + +At least the wine is safe + + + +MOLDOVA is a country of ignominious records. It is by far Europe’s poorest place. Among countries that bother to count foreign tourists, only Tuvalu welcomes fewer. To these dubious achievements, this little Romanian-speaking former Soviet republic added a new one in 2014. A leaked report revealed that up to $1bn, equivalent to more than an eighth of the country’s GDP, had been stolen from three banks. Relative to the size of its economy, that may be the biggest bank fraud of all time. What happened next, however, was surprising. + +Following the theft economists had feared the worst, especially since two of Moldova’s biggest trading partners, Ukraine and Russia, were mired in financial crises of their own. Yet since then the country has coped remarkably well. GDP shrank by a mere 0.5% in 2015 (whereas Russia’s fell by 4% and Ukraine’s tanked by 10%). Last year Moldova grew by 2%, fast by European standards. + + + +Some credit must go to the government, which swiftly offered a blanket guarantee of deposits. The state in effect issued debt to cover every deposit in banks that failed. Moldova’s government finances look a little shakier as a result. But neither households nor companies have lost money directly. The government’s intervention has thus propped up consumption and investment. The tills at MallDova, a shopping mall in the capital, are still ringing. + +The odd structure of the Moldovan economy also helped. It is heavily agricultural: about a third of workers are farmers. Most are smallholders. Few borrow much from banks, so few have noticed that credit has grown tighter. Good weather played a part: following dry conditions in 2015 cereal production rose by a third last year. A free-trade agreement with the EU in 2014 provides a ready market for Moldovan commodities, including its delicious wine. + +Money sent back by Moldovan emigrants may have also softened the blow. Moldova is about twice as dependent on remittances as the Philippines, which is saying something. Though the flow has slowed, the weakness of the Moldovan leu ensures that expats sending money from the EU get a good deal. + +Problems remain. Even the poshest areas of Chisinau have pockmarked roads and poor lighting. Corruption is rampant (though the IMF is helping the government to fight it), 15% of Moldovans are poor and higher government debt means fiscal policy will be tight. But for a place that usually makes the news for the wrong reasons, a glimmer of hope is about as good as it gets. + + + +This article appeared in the Europe section of the print edition under the headline “A do-over in Moldova” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717044-leaked-report-revealed-2014-up-1bn-equivalent-more-one-eighth/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Flexing muscles in Brussels + + +James Mattis, America’s new defence secretary, has given NATO a warning + + +Mostly, it was a demand for European members to pay up + + +Feb 18th 2017 + + + + + +DURING his first month in office Donald Trump has often left allies concerned and confused. So when James Mattis, America’s new defence secretary, visited NATO’s headquarters in Brussels this week, he strove to calm anxious colleagues. Attending his first meeting of NATO defence ministers, Mr Mattis said that the administration strongly supports the alliance, which remains the “fundamental bedrock for the United States and the trans-Atlantic community”. (Previously, Mr Trump had described NATO as “obsolete” and not doing enough to fight Islamic terrorism.) + +But Mr Mattis also stressed that the president is serious when he demands that other NATO members must spend more on defence. Otherwise, he warned, America might “moderate its commitment to the alliance”. This is hardly a new refrain from an American president. However, Mr Trump’s uniquely sceptical view of alliances raises the risk of ignoring it. + + + +Mr Mattis did not go quite as far as his boss did, while a candidate, in arguing that America might honour its Article 5 commitment to collective defence only if the ally in need had paid its dues. But irresponsible as that pronouncement was, it has had some effect. Jens Stoltenberg, NATO’s secretary-general and formerly Norway’s prime minister, never misses the opportunity to call for increased spending. In two telephone calls with Mr Trump, he has told the president that he backs his demands. + +What those are in practice is still not clear. But as Mr Mattis reiterated, a more determined push by some NATO members to meet their obligation to spend at least 2% of GDP on defence would be a start. Some progress has been made since a summit in 2014 when all members agreed to hit that target by 2024. The context was fear of Russia, which had startled Europeans with its annexation of Crimea, covert invasion of eastern Ukraine and increasingly threatening posture along NATO’s borders. Mr Stoltenberg revealed this week that military spending by European members increased by 3.8% in real terms last year, equivalent to about $10bn—a bit more than the defence budget of the Netherlands. However, only four members other than America currently spend as much as 2%: Britain, Poland, Estonia and Greece. + +To give NATO the boost it needs, more big countries will also need to cough up. Germany is one of the worst laggards. Despite promises by Angela Merkel, the chancellor, to raise spending, the defence budget is a measly 1.2% of GDP. If it were to hit 2% by 2020, the budget would have to grow by about $22bn more than is currently planned. Germany’s defence minister, Ursula von der Leyen, has described the call for more spending as “a fair demand”. But other more fiscally-strapped countries, such as Italy and Spain, would struggle to satisfy NATO while observing restrictive European Union budget rules. + +No new commitments were made this week, but Mr Mattis has put NATO on notice to come up with something more substantial than the pledge made in 2014. They have an added incentive to do so. When the alliance meets for its next summit in Brussels, likely to be on May 25th, Mr Trump will be there in person. + + + +This article appeared in the Europe section of the print edition under the headline “Pay up” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717058-mostly-it-was-demand-european-members-pay-up-james-mattis-americas-new-defence/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +The joys of Russian democracy + + +Barred from the ballot, Putin’s rival is running anyway + + +Aleksei Navalny has no chance. But he can still make a point + + +Feb 18th 2017 | MOSCOW + +Aleksei Navalny: poster boy + + + +WITH little more than a year remaining before Russia’s next presidential elections, Aleksei Navalny, the country’s leading opposition politician, is hitting the campaign trail. Over the coming weeks he will embark on a tour from Siberia to the Black Sea, opening offices and recruiting volunteers. The fact that a Russian court recently ruled him ineligible to run has done little to change his plans. “Dance as if no one can see you, campaign as if you’re already on the ballot,” Mr Navalny quips. + +The court’s decision is far from the final twirl in Mr Navalny’s ongoing foxtrot with the Kremlin. Even if he is barred from running for office, he cannot be written entirely out of Russian politics; his place within it does not depend on electoral success, but on support from young, urban Russians disenchanted with the rule of the current president, Vladimir Putin. And Mr Putin could let Mr Navalny run without fear that he might actually win. Letting him do so might provide useful window-dressing, making Mr Putin’s inevitable victory seem less dodgy. (Although Mr Putin has yet to declare his intention to run in 2018, few have any doubts that he will.) “It’s all part of the process of the struggle for power,” Mr Navalny says. + + + +The courtroom is a regular setting for that struggle. In 2013, ahead of Moscow’s mayoral elections, Mr Navalny was found guilty of trumped-up embezzlement charges linked to a lumber company in the city of Kirov. Since then he has been embroiled in a string of similarly absurd cases. Mr Navalny successfully appealed his Kirov conviction at the European Court of Human Rights, and last year Russia’s supreme court agreed to hear the case again. But this month the Kirov court reaffirmed the decision of 2013 with a verdict repeating, almost word for word, the original ruling. It leaves Mr Navalny ineligible, for now, to take part in elections. + +Mr Navalny hopes to whip up enough grassroots support to force the authorities to allow him to run. A precedent exists: after his conviction in 2013, thousands of supporters took to the streets of Moscow. The court unexpectedly freed him pending an appeal, allowing him to take part in the mayoral elections, where he won more than 27% of the vote despite being nearly invisible on Russian television. He says some 25,000 people have already offered to volunteer for his presidential bid; when he opened his office in St Petersburg earlier this month, hundreds lined up on the icy streets. The campaign has been soliciting donations online, even accepting the online currency Bitcoin, “like drug dealers”, Mr Navalny jokes. + +Some see slight parallels with Boris Yeltsin’s rise to power. In 1987 Yeltsin resigned one of the top positions in the Communist Party and publicly attacked Mikhail Gorbachev, the Soviet leader, for dragging his feet on reforms. Despite being blacklisted by the media, Yeltsin gained popular support. + +Nonetheless, Mr Navalny is sombre about his prospects. Mr Putin is still popular. Russian state television rarely speaks of Mr Navalny and, when it does, only to discredit him. Only a third of Russians recognise him; most know him from his criminal charges. The opposition is divided and dishevelled. During last year’s parliamentary campaign, when Mr Navalny stumped for the opposition party RPR-Parnas, he spoke of sneaking into parliament and building a coalition. Now, he acknowledges that “power is unlikely to change in Russia as a result of elections.” + + + +This article appeared in the Europe section of the print edition under the headline “Barred from the ballot” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717057-aleksei-navalny-has-no-chance-he-can-still-make-point-barred-ballot-putins-rival/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +How to get ahead in Italy + + +Matteo Renzi plans to quit his job and win it back + + +Italy’s ex-prime minister is taking another big bet + + +Feb 18th 2017 | ROME + + + + + +MATTEO RENZI, Italy’s former prime minister, has never been one to shrink from a bet. On February 19th he is set to stake all his remaining chips by resigning as leader of the governing Democratic Party (PD). It will be the second time in three months he has quit a top job, having resigned as prime minister in December after losing a referendum on constitutional reform. But this time he is hoping that, in the ensuing contest, he will be victorious. Why should he need, or want, re-election? + +Since he was elected party leader in 2013, Mr Renzi has faced dogged opposition from inside the PD. His adversaries include left-wingers who dislike his business-friendly policies and members of the party’s old guard. The latest disagreement is over the timing of the next election. Neither side can enforce a date: it depends on the president, Sergio Mattarella, who has refused to dissolve parliament until Italy has new electoral rules that apply compatibly to both houses. Provided a new electoral law can be agreed, Mr Renzi wants a vote soon afterwards so he can win back the premiership as the PD’s candidate; his critics want to delay so that he gradually ceases to be the obvious choice. A leadership contest, involving primary elections, would put the issue beyond doubt. By resigning, Mr Renzi can make that contest unavoidable. + + + +Just as he has made a lot of enemies in his own party, Mr Renzi has plenty of critics among the voters who can take part in the primaries. The economy remained at a virtual standstill on his watch. A big gap opened up between his bombastic promises and the relatively modest reforms his government managed to introduce. Yet he nevertheless remains Italy’s most trusted party leader (although that is a low bar). As such, he is unlikely to lose. + +The greater risk is that, in imposing his will, Mr Renzi will turn the fracture in the PD into a much wider split. His uncompromising use of his tactical genius has cost him dearly before: in 2015, he outwitted the centre-right leader, Silvio Berlusconi, to get Mr Mattarella elected president. The result was that an irate and humiliated Mr Berlusconi withdrew from a pact to support Mr Renzi’s constitutional reforms in parliament. Without broad parliamentary support, Mr Renzi had to call the referendum that eventually led to his departure from office. + + + +This article appeared in the Europe section of the print edition under the headline “The gambler” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717056-italys-ex-prime-minister-taking-another-big-bet-matteo-renzi-plans-quit-his-job-and-win-it/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Getting into bed with a bear + + +Turkey’s snuggling up to Russia is likely to hurt it + + +Putin and Erdogan expect different and contradictory things from their relationship + + +Feb 18th 2017 | ISTANBUL + + + + + +AT ISTANBUL’S naval museum, around the corner from President Recep Tayyip Erdogan’s residence, reminders of one of Europe’s biggest geopolitical rivalries are everywhere. A bust commemorates Hasan Pasha of Algiers, a commander in a battle in which the Russian fleet burned the Ottoman one to a crisp. The remnants of the Mahmudiye, a galleon that led the siege of Sevastopol during the Crimean War, overlook rows of gilded boats used by the sultans. Such flare-ups are not just things of the distant past. In 2015 Turkish pilots shot down a Russian warplane, and the two powers appeared on the brink of another war. It would have been their 18th. + +Instead, the two countries resorted only to insults and sanctions. Since then tensions have ebbed: in June last year Mr Erdogan apologised for the incident. Two weeks later, Russia’s president Vladimir Putin rushed to condemn a violent coup attempt against Turkey’s government. The two countries have subsequently signed a big gas pipeline deal, agreed to resume work on a nuclear plant in southern Turkey and pledged to increase bilateral trade by more than fivefold, to $100bn a year. + + + +Even more strikingly, as European and American diplomats watched from the sidelines, in December the pair brokered a ceasefire in battle-scorched Aleppo and agreed on a plan to stop the fighting in the rest of Syria the following month. At the height of their dispute, Mr Putin and Mr Erdogan were accusing each other of supporting the so-called Islamic State (IS). Today, the two autocrats are coordinating airstrikes against it in Syria. + +The speed and the scale of the rapprochement between the two countries, which was unruffled even by the assassination of the Russian envoy to Ankara by a Turkish policeman in December, is startling. Yet the two strongmen have different and contradictory expectations. Whereas Mr Erdogan appears to see his relationship with Mr Putin as a way to extract concessions from his Western allies, Mr Putin wants to loosen what he sees as one of the weakest links inside NATO—Turkey. One of the two is likely to be disappointed. + +Mr Erdogan decided to make friends with Mr Putin partly because having him as an enemy was so painful. After Turkey shot down that Russian plane in 2015, Mr Putin cut Turkey off from the Middle East. His fighter jets bombed Turkey’s proxies inside Syria, including its ethnic cousins, the Turkmen, with impunity. Russia’s missile defences denied Turkey access to the airspace over Syria. Russian sanctions cost Turkey at least $10bn in tourism and trade revenue. + +Russia remains the stronger partner. Mr Erdogan’s government has offered Rosatom, the Russian company building Turkey’s first nuclear plant, sweeteners worth billions of dollars. It has endorsed Turkish Stream, a gas pipeline that would allow Russia to extend its grip over Turkey’s and Europe’s energy markets. (Turkey already depends on Russia for 55% of its natural gas imports.) Most importantly, Mr Erdogan has reversed course on Syria, abandoning his dream of ousting its blood-drenched president, Bashar al Assad. + +In exchange, Russia has allowed Turkey’s army to set up a buffer zone inside Syria. Turkey has seized the chance to push IS back from its last border strongholds and stem the advance of American-allied Kurdish insurgents, known as the People’s Protection Units (YPG). Mr Putin has been slow to reciprocate in other areas, however. Most of the sanctions Russia imposed on Turkish food products in 2015 remain in place. “It seems as if they’re still rubbing our noses in it,” says Cenk Baslamis, a veteran Russia observer. + +Turkey is not about to trade in NATO membership for an alliance with Russia. But Turkey’s reliability as a Western partner increasingly looks in doubt. Rumours abound that some of Mr Erdogan’s associates inside the ruling Justice and Development (AK) party favour reneging on some NATO commitments. The same goes for the army. The sweeping purges that followed July’s coup were ostensibly directed against followers of the Gulen movement, an Islamic sect suspected of leading the mutiny. But they have also claimed the careers of thousands of pro-Western officers, clearing the way for those more sympathetic to Russia. + +Kerim Has of Moscow State University points to the growing influence inside the army of a group inspired by Dogu Perincek, an ultranationalist ideologue. Mr Perincek, who also heads a small political party, insists there is no room for any political divisions in the armed forces. But he rejoices that the purges have weakened Western influence. “A large share of America’s power in the military and the police has been crushed,” he gloats. + +Authoritarian pillow talk + +The anti-Western hysteria that swept through Turkey in the wake of the coup has dimmed slightly over the past couple of months, partly because of the hopes Mr Erdogan places in Donald Trump. Mr Erdogan and many in his government expect Mr Trump to extradite the presumed mastermind of July’s coup, Fethullah Gulen, and to sever links with the Kurdish YPG, which the Obama administration considered an effective force against IS, but which Turkey considers a terrorist group. Mike Pompeo, the CIA’s new chief, was in Ankara to discuss these issues on February 9th. + +If Mr Trump disappoints, however, the relationship between Mr Putin and Mr Erdogan looks likely to get closer. Russia needs Turkey to speed up the political process in Syria by bringing anti-regime forces to the negotiating table. Turkey needs Russian tourists, gas supplies and help rebuilding ties with Mr Assad. But when another crisis strikes, Mr Putin will try to push the wedge between Turkey and NATO deeper. As a former Turkish president put it, “building relations with big states is like getting into bed with a bear.” When that bear is Russia, it is best to stay wide awake. + + + +This article appeared in the Europe section of the print edition under the headline “Getting into bed with the bear” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717080-putin-and-erdogan-expect-different-and-contradictory-things-their-relationship-turkeys/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Charlemagne + + +The urge to elect an insurgent is helping Marine Le Pen and Emmanuel Macron in France + + +Oddly, they are both political insiders + + +Feb 18th 2017 + + + + + +THE tumbrels are rolling again in France, and the crowd is restless. One by one, political leaders of the ancien régime, who had confidently been preparing to face each other at the presidential election this spring, have been carted off to the guillotine on a wave of revanchist fury. France is in the grip of what might be called “dégagisme”: a popular urge to hurl out any leader tainted by elected office, establishment politics or insider privilege. Less clear is which sort of outsider French voters want instead. + +This impulse is by no means unique to France. Casualties of an anti-establishment rage are still nursing their wounds in America, Britain, Poland and other liberal democracies. But the list of French victims of this howl of anger is particularly star-studded. In recent months it has included a sitting Socialist president (François Hollande, who read the mood and declined to seek re-election), a former centre-right president (Nicolas Sarkozy, who lost his party’s primary) and two ex-prime ministers (Alain Juppé and Manuel Valls, both also dispatched in a primary). + + + +The hostility seems indiscriminate. The French have cast aside the insipid and the showy, the sanguine and the sombre, old-timers on the left and the right. Other victims could yet fall. Another former prime minister, François Fillon, the centre-right candidate, is clinging on by a thread after it emerged that he employed his wife for years as his parliamentary assistant, despite little evidence that she did any work. A former beneficiary of this preference for the insurgent, the dour and tweedy Mr Fillon was the outsider in his party primary last November before sweeping to victory. Today he has fallen from presidential favourite to third place in the polls. It could yet be that a candidate from an established party—Mr Fillon or, at a stretch, Benoît Hamon, the fresh-faced Socialist nominee—pulls through in the end. But, for now, the upswell of dégagisme has instead lifted two political outsiders. One is Marine Le Pen, leader of the nationalist Front National (FN), who tops first-round voting intentions (though not polls for the run-off). The other is Emmanuel Macron, who is running as an independent, campaigning for votes on both the left and right under the “progressive” banner of En Marche! (On the Move!). + +In most respects, each of these candidates is the antithesis of the other. Ms Le Pen calls herself a “patriot”, who wants to give “preference” to French nationals, escape the clutches of the European Union, withdraw France from the euro, raise protectionist tariffs, curb immigration and reinstate welfare privileges. Mr Macron, by contrast, is a zealous champion of the EU, favouring open borders, global trade, technical innovation and the adaptation of France’s welfare system to a less stable future job market. She is the favourite among blue-collar workers; he draws disproportionate support from university graduates. She has climbed to the top of the polls on the back of dire warnings of an immigrant invasion and Islamist infiltration; he has charmed his way to become the bookmakers’ favourite with a sharp mind and upbeat outlook. Their antipathy is unambiguous. Ms Le Pen calls him an “ultra-liberal” globalist, a sort of citizen of nowhere, who is “surfing on air”. Mr Macron says that she pretends to speak “for the people”, but in truth speaks only for her clan. To underline their rivalry, on a recent weekend the pair could even be found holding rallies in the same city, Lyon. + +If the pair share a common feature, it is the perception that they are both outsiders: newcomers intent on breaking the grip that old-time parties of the left and right have held on executive power in France since the Fifth Republic was established in 1958, and on forcing a realignment of party politics. This is not a new idea, even in modern history. Pierre Poujade rallied shopkeepers and artisans against the elite in 1956, and won his party 52 deputies. The difference is that this time power is, possibly, within their grasp. A year ago the notion that either Ms Le Pen or Mr Macron stood a serious chance of winning the presidency belonged to the realm of fantasy. French codes and conventions favour candidates from established parties, with local networks and parliamentary weight, and a long history of electoral campaigning. Mr Hollande first stood for election in 1981, when Mr Macron was just three years old. His predecessor, Mr Sarkozy, was first elected in 1977, when Ms Le Pen was still in primary school. Ms Le Pen has never held executive office. Mr Macron has never run for election. + +Sans-culottes? Hardly + +Yet in reality Ms Le Pen and Mr Macron are decidedly odd outsiders. She is part of a political dynasty, founded by her father, Jean-Marie, who set up the FN in 1972. A European Parliament deputy, Ms Le Pen is accused by its watchdog of misuse of the public payroll. She claims to speak “in the name of the people”, her campaign slogan, yet was raised in a ridge-top mansion overlooking Paris, in one of the capital’s swankiest suburbs. Mr Macron, from a medical family, is a graduate of the Ecole Nationale d’Administration, the elite civil-service college. He worked as an investment banker, then adviser to Mr Hollande at the Elysée, before becoming his economy minister. Unconnected ingénus they are not. + +Perhaps what Ms Le Pen and Mr Macron really represent, in their diametrically opposite way, is the nature of the political outsider in an age of disillusion. The authentic version (such as Germany’s Angela Merkel) is a rarity. Today’s successful insurgents need not lack fortune or connections (as Donald Trump demonstrates). They need not lack experience, either (Ms Le Pen has been an MEP since 2004). Rather, an insurgent must appear fresh, sound in touch with new fears and ordinary concerns, and break convention—whether to disturbing, or thrilling, effect. French mainstream-party candidates may yet resist the forces of dégagisme. If not, voters could face the stark choice between two untested, and wholly divergent, outsiders: Ms Le Pen’s nationalist, xenophobic version, and the liberal-minded, internationalist brand of the dynamic young Mr Macron. + + + +This article appeared in the Europe section of the print edition under the headline “French lessons in dégagisme” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717042-oddly-they-are-both-political-insiders-urge-elect-insurgent-helping-marine-le-pen/print + + + +上一項 文章 章節 下一項 + + + + + +Europe 章節 International + + + + + +Britain + + +Scotland’s economy: Taking the low road + +Britain in the Gulf: Back to the desert + +The Labour Party: Double jeopardy + +Ethical banking: Still cleaning up the Co-op + +Ethical retailing: Exfoliating cash, needs a scrub + +Criminal records: I know what you did last summer + +Online-dating scams: Dearly beloved + +Bagehot: Harman’s unfinished business + +Europe 章節 International + + + + + +文章 章節 下一項 + + + + + +Taking the low road + + +Crises in its main industries have set Scotland on a poorer path than the rest of Britain + + +Cheap oil and the loss of jobs in finance have brought economic growth almost to a standstill + + +Feb 18th 2017 | ABERDEEN AND EDINBURGH + + + + + +OVER the past seven months the British economy has beaten almost all forecasts. Since the Brexit vote last June, a recession has easily been avoided and job growth remains decent. In one part of the country, however, things look very different. In the year to September Scotland’s GDP grew by 0.7%, while that of the rest of the country grew by 2.4% (see chart). Employment there is falling and wages growing much more slowly than elsewhere. + +Scotland’s weak performance is linked to problems in its two most important industries: energy and finance. Those two businesses’ exports have together accounted for up to a third of Scotland’s GDP in the past. Now both are in trouble. + + + + + +The bad news begins in the North Sea. The drop in the price of Brent crude from $110 a barrel in 2014 to $55 today has hit the oilmen hard. Tax revenues from oil and gas are shared across Britain, so Scotland has not felt much of a fiscal impact. But of the 100,000 or so British oil-and-gas jobs lost since 2014, perhaps a third were in Scotland. Those gigs paid well—at the height of the boom, relatively unskilled folk could command six-figure salaries—so their loss takes a big bite out of consumer spending. + +The effects are plain to see. In Aberdeen, Europe’s oil capital, hoteliers used to charge almost whatever they liked. No more: the average price of a room has dropped by a third since late 2014. House prices in the city are falling faster than they are anywhere else in Britain. On Union Street, the main shopping drag, vacancies have risen; a nearby steak-and-lobster restaurant, where a wagyu ribeye would set punters back £40 ($50), closed last year. + +Few people expect to see a return to the days of steak and lobster. With ageing fields and pricey labour, the North Sea is one of the world’s most expensive regions from which to extract oil. At today’s prices, production is barely profitable. With many fields nearly exhausted, big firms are looking elsewhere. In January Royal Dutch Shell and BP both said they would sell some of their North Sea interests. + + + +The troubles in the oil industry are well known. Less noticed is that Scottish financial services are also having a tough time. Wander around the handsome Georgian squares of Edinburgh’s financial district, and nothing looks amiss. Yet since 2014 employment in the industry has dropped by over a tenth (while rising slightly in London). Average pay has declined by 5% in the past year. + +Scottish finance is struggling for two reasons. First, argues Owen Kelly of Edinburgh Napier University, it disproportionately comprises mid-range work, such as customer service. Those jobs are vulnerable to automation, which is proceeding apace across the financial-services industry. In March the Royal Bank of Scotland began cutting more than 500 jobs as part of a plan to automate investment advice. Official data suggest that, in just two years, 20% of Scotland’s administrative jobs in financial services have disappeared. + +Second, speculation about another independence referendum is hurting the industry. Since the Brexit vote, in which a majority of Scots chose to Remain, the ruling Scottish National Party has accelerated plans for what it calls “indyref2”. Last month a consultation closed on a draft bill for a fresh ballot. Polls suggest that support for independence is not far off 50% (and nationalists point out that in the ultimately unsuccessful campaign of 2014 they substantially outperformed early polls). + +This concerns Scottish financial firms much more than Brexit does. The vast bulk of their business takes place in the rest of Britain, not Scotland, points out Graham Campbell of Saracen Fund Managers, based in Edinburgh. Independence might lead to trade barriers at the English border, or different regulations between the two countries, especially if Scotland sought to rejoin the EU, as its government has implied it would. Some firms are making contingency plans. Murray Asset Management, another Edinburgh firm, recently moved its registered office to London. + +The jitters seem to be more widely felt. Formation of startups in all industries has fallen sharply since 2013, suggest data from BankSearch, a consultancy. Foreign investors have also taken heed: the number of foreign direct investment projects has dropped by a tenth in two years, while jumping in the rest of the country. Reduced investment will hit productivity growth and hence pay. + +Scotland’s changing fiscal architecture could compound these problems. Last April the Scottish government assumed partial control over income tax. Soon it will take almost complete control, and will also get its hands on half of value-added tax (VAT) receipts, among other things. Our calculations suggest that it will thus be responsible for collecting tax equivalent to a third of all public spending in Scotland (the remaining two-thirds will continue to come from Westminster). This has advantages: the freedom to raise or lower taxes will allow the Scottish government to respond more nimbly to local circumstances, and if Scotland booms it will enjoy higher tax receipts. But during downturns its tax take will fall. Scottish public finances have never been more vulnerable. + +Which makes the present difficulties all the more serious. Regulations place strict limits on how much the Scottish government can borrow, so if tax receipts are weak it has to economise. In its draft budget for 2017-18 it has already cut local-authority spending, points out Ronald MacDonald of Glasgow University. The fiscal pressure will intensify if employment falls further, cutting into the income-tax take. Consumer spending is also looking shaky, which will trim VAT receipts. While the overall British economy will surely slow as Brexit gets under way, Scotland is in for a very tight squeeze. + + + +This article appeared in the Britain section of the print edition under the headline “Taking the low road” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717089-cheap-oil-and-loss-jobs-finance-have-brought-economic-growth-almost/print + + + +文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Back to the desert + + +With silver and lead, Britain woos new allies in the Gulf + + + + + +The post-Brexit search for strategic partners arrives in the Middle East + + +Feb 18th 2017 | JUFAIR NAVAL BASE, BAHRAIN + + + + + +THE scenario for naval exercises carried out off the Iranian coast earlier this month was thinly disguised. “Redland and Grunland are regional rivals,” read the brief, code apparently for Saudi Arabia and Iran. “Relations have recently degraded with aggressive rhetoric coming from both sides.” Leading the way through the Strait of Hormuz was HMS Ocean, the Royal Navy’s flagship until its two new aircraft carriers enter service. American and French warships sailed close behind. + +Forty-five years after a withdrawal that the foreign secretary, Boris Johnson, describes as mistaken, Britain is back in the Gulf. The union flag flutters over the new Juffair naval base in Bahrain. More military installations are sprouting in Dubai and Oman. Bahrain’s rulers have covered their island in posters lauding “200 years of friendship and peace” with Britain. So copious are Gulf investments in London that Britain’s capital is the “eighth emirate”, says Mr Johnson. + + + +Brexit has given added impetus to Britain’s renewed interest in the region. Just as it ended colonial rule of the Gulf on the eve of its accession in 1973 to the European Economic Community, so now Britain is wooing old partners with a succession of visits. British forces will redeploy to Oman after they pull out of Germany in 2019. Merchants offering everything from weapons to sand for golf bunkers have made the Gulf Britain’s largest export market after the EU and America. London fund managers play on jitters over Gulf stability to attract locals’ wealth. Such landmarks as the Shard, the Olympic Village and Harrods—all Qatari-owned—are testaments to their success. Even City Hall, the seat of London’s mayor, belongs to Kuwait. + +Britain’s pretensions can seem overblown. Behind the hype, the Juffair base amounts to little more than a pier inside the sprawling base of America’s Fifth Fleet. Britain’s flotilla of seven warships in the Gulf looks puny next to America’s 40, complete with nuclear-powered aircraft carriers with decks the area of three football pitches. On his last visit to Bahrain as defence secretary, Ash Carter seemed to scoff at suggestions that Britain might replace a wary America. “There aren’t any good alternatives,” he said + + + + + +That said, potentates who bridled at the restrictions the Obama administration placed on arms exports find Britain’s government less pernickety. It licenses arms exports to all Gulf regimes and supports their forces of law and order (in 2015 a stink about a contract between Britain’s justice ministry and the Saudi prison service led to the deal’s cancellation). BAE Systems, an arms manufacturer, is one of Saudi Arabia’s largest private-sector employers. Activists have gone to court in Britain to challenge the legality of over £3.3bn ($4.1bn) of arms sales to Saudi Arabia since the onset of its Yemen war in March 2015. + +With Iran across the water, many Gulf leaders seem happy to pay for British protection. Indeed, many trained at Britain’s military college, Sandhurst, before Britain backed their succession. Oman’s sultan, Qaboos bin Said al-Said, served with the Scottish Rifles in Germany. + +But Britain also risks making enemies. Oman-watchers in London fear for their relationship (and the defence contracts) when the ailing sultan dies. “Money ploughed into arms deals should be spent internally. The security challenges the Gulf faces are internal, not external,” says an Omani official. Britain’s role as protector of Bahrain’s king infuriates the island’s suppressed Shias. “Of all the main Western embassies, only Britain keeps its distance,” says a Shia elder. Abu Taqi, the father of a stone-thrower who was shot dead, curses Britain for befriending Bahrain’s rulers. + +As tensions with America rise, Iran’s ayatollahs, too, see Britain as a potential weak spot. “In the event of a war in the Gulf, the [Juffair] base will definitely be a target for Iran,” says an ayatollah close to senior officers of Iran’s Revolutionary Guard Corps. Britain is sailing into rather warm waters. + + + +This article appeared in the Britain section of the print edition under the headline “Back to the desert” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21716953-post-brexit-search-strategic-partners-arrives-middle-east-silver-and-lead/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Double jeopardy + + +In Copeland and Stoke, Labour faces threats from different sources + + + + + +The two by-elections show how the party is vulnerable even in its strongholds + + +Feb 18th 2017 | STOKE-ON-TRENT AND WHITEHAVEN + + + + + +“MY DAD will turn in his grave,” admits Gerard Richardson, a Whitehaven wine merchant, “but I’ll vote Conservative.” How many others feel this way? On February 23rd Labour will find out when it defends two by-elections in England. Neither Copeland, on the north-west coast, nor Stoke-on-Trent Central, in the West Midlands, has ever been represented by another party. Yet bookmakers reckon at least one of the strongholds, and perhaps both, will change hands because voters like Mr Richardson are so fed up. + +Labour has been sliding in the polls since choosing Jeremy Corbyn, a hard-leftist, as its leader in September 2015 (see chart). Brexit has made things worse: though the party backed Remain, the majority of the constituencies it represents voted to Leave. Mr Corbyn now has net-unfavourable ratings among men and women of all age groups, in all social classes, in all regions, and of all party affiliations—including Labour. + + + + + +The two campaigns show how Labour faces threats in its heartlands from different sources. In Stoke, the challenge comes from the insurgent, populist UK Independence Party. Paul Nuttall, UKIP’s new leader, is putting his credibility on the line by contesting it, vesting his hopes in a campaign focused on Brexit and immigration. “We have to take one to two thousand votes off Labour, especially on the council estates,” explains Mick Harold, chairman of the local branch. + +Grand civic buildings like the town hall (which could double as the palace of a minor European royal family) recall Stoke’s history as a centre for pottery and steel production. But the days when there was a “pot bank [pottery factory] on every street”, as locals like to say, are long gone. So are the steelworks. The old warehouses are now used by retail and industrial firms to store and distribute stock. Work there is low-paid and low-skilled, attracting immigrants to the town but leaving it poor. Whole rows of shops are boarded up. Stoke Central was in the most pro-Brexit tenth of Britain, with 69% for Leave. + + + +Copeland also voted for Brexit, but there the threat to Labour comes from the Conservatives, who are hoping to become the first party in government to gain a seat from the official opposition in a by-election since 1982. In Whitehaven, the biggest town, Georgian terraces and a redeveloped harbour belie local hardship. Yet there is money in the area. The nuclear decommissioning plant at Sellafield provides 10,000 well-paid jobs, lifting wages a quarter above the national average. + +Amid struggling towns and former pit communities, there are farms and chintzy tourist villages. It is one of the largest and least populous constituencies in England (“There’s always another mountain to drive around,” complains a Tory MP from a nearby seat). The 2011 census found that 98% of residents were white. “Immigration is not an issue in this area,” admits Fiona Mills, UKIP’s candidate, whose leaflets give more prominence to the National Health Service (NHS) and nuclear industry. + +Mr Corbyn’s scepticism about nuclear energy has been poorly received, but Labour’s Copeland branch is “so pro-nuclear we glow in the dark,” one councillor says. The news that Toshiba may pull out of a deal to build a nuclear power station at nearby Moorside may harm the Tories a bit (on a visit to Copeland on February 15th Theresa May would not say whether her government would rescue the project). And Labour is better positioned on the NHS, the other big issue. Maternity services at a local hospital face cuts. + +Can Labour hang on? The bookmakers have the Tories down as favourites in Copeland. In Stoke, Mr Nuttall once looked like a shoo-in. But, not for the first time, UKIP’s organisational incompetence may prove its downfall. Labour is precision-targeting its voters with messages about how Mr Nuttall used to want to privatise the NHS. His credibility has been damaged by his admission that an earlier claim that he had lost “close personal friends” in the Hillsborough football disaster of 1989 was false. Bookies that made UKIP the favourite at first now think Labour will prevail. + +Defeat in either constituency would put Mr Corbyn under new pressure. Already he is vulnerable: his weak performance in recent debates on Article 50, the mechanism for launching EU exit talks, was the final straw even for some of his left-wing allies. But he is unlikely to quit in the coming months. He may not want to fight the next election, in 2020, as leader but he does want to quit the job having secured the left’s control of the party. + +That means building up a preferred successor—possibly Rebecca Long-Bailey, the new shadow business secretary—and changing the party’s rules to lower the number of nominations by MPs needed for a leadership candidate to go before members. Having defeated his party’s moderate wing in two successive leadership contests, the latest only last summer, for now Mr Corbyn is in control of his departure date. + + + +This article appeared in the Britain section of the print edition under the headline “Double jeopardy” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717078-two-elections-show-how-party-vulnerable-even-its-strongholds-copeland-and/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Ethical finance + + +The Co-op Bank puts itself up for sale + + +The task of recovering from past errors goes on. And on + + +Feb 18th 2017 + + + + + +LIKE other businesses, banks are easily wrecked. They are less easily repaired. In June 2013 the Co-operative Bank, a smallish lender but a familiar name on British high streets, confessed to a £1.5bn ($2.3bn) shortage of capital. It was rescued by American hedge funds. The stake of the Co-operative Group, its erstwhile owner, was reduced to just 20%. The bank has since cut costs by more than a fifth, stripped out lots of unwanted loans and spruced up its creaking computer systems. + +It’s not fixed yet. The Co-op Bank expects to report a loss for 2016, its fifth in a row, and needs more capital to stay on the right side of regulators in the next few years. On February 13th it put itself on sale; it is also exploring other ways of raising money. One reason for its continuing woe is that interest rates have stayed low for longer than it bargained for, which has crimped its ability to accrue capital from retained profits. Another is that the repair job has been costlier than expected. + + + +The bank’s problems go back to 2009, when it merged with the Britannia building society, another mutually owned lender. Although the Co-op Bank entered the financial crisis of 2008 in good shape, its partner did not. Britannia’s lending had spread beyond residential mortgages, the staple fare of building societies, into commercial property, prices of which were collapsing even as the merger was discussed. A report in 2014 by Sir Christopher Kelly, an ex-civil servant, concluded that the Co-op Bank, eager for Britannia’s retail customers and branches, did not look closely enough. Bad management and bad luck—a weak economy and demands for more capital from regulators—made matters worse. + +Why buy it? Improved IT could be a draw: the bank has just shifted its core mainframes to data centres run by IBM. So might its 4m customers, many of them loyal to its “ethical” brand, a legacy from the co-operative movement. Most stayed despite the bank’s purchase by—horrors!—hedge funds and the trashing its name took under the old management. Along with less high-minded lenders, it set aside hundreds of millions to cover claims of mis-selling payment-protection insurance for loans. Paul Flowers, its chairman until June 2013 and, at the time, a minister of religion, was filmed buying drugs (and dubbed the “Crystal Methodist”). + +Some suggest that there may be interest from TSB, which was spun out of Lloyds, Britain’s biggest retail banking group, in 2013 to provide competition for bigger lenders. But TSB is absorbed in a huge IT project of its own: 1,600 engineers are working flat out to separate its systems from those of Lloyds by the end of the year. With that, it already has a full plate. Others may be tempted. But if interest rates stay low, profits may be hard to come by. + +The repairs at the Co-op Bank are far from Britain’s longest or dearest. On February 24th the Royal Bank of Scotland, which was bailed out by the state in 2008, is certain to report losses for the ninth year running. Its underlying business has been making £1bn a quarter, but the bills from past transgressions keep rolling in. Last month it said it was setting aside another £3.1bn, anticipating possible fines in America for mis-selling mortgage-backed securities before the crisis. Further cost cuts, of around £800m, are thought to be on the way. At least the Co-op’s bosses have only been a burden on the private sector. + + + +This article appeared in the Britain section of the print edition under the headline “Still cleaning up the Co-op” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717088-task-recovering-past-errors-goes-and-co-op-bank-puts-itself-up-sale/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +The Body Shop struggles + + +An ethical retailer takes a bath + + +The iconic brand badly needs a makeover + + +Feb 18th 2017 + +Roddick, who mixed make-up with morals + + + +WHEN the first Body Shop opened in 1976, squeezed between two funeral parlours, it seemed an impossibly exotic addition to Britain’s dowdy high streets. No one else was selling cocoa body-butter or banana shampoo, all soaked in colour with packaging to match. Anita Roddick, the fiery founder, was a hippy-capitalist, the product of a generation that believed there was more to business than just business. From the start the Body Shop was a crusade, first against animal testing and later against exploitation in the poor world. + +Now it is a worldwide brand, with over 3,000 shops in 66 countries, including about 270 in Britain. But it is struggling, and its parent company, the French cosmetics giant L’Oréal, which bought the Body Shop a decade ago, wants to offload it. L’Oréal’s like-for-like revenues rose by 4.7% in 2016, whereas the Body Shop’s increased by just 0.6% (to €921m, or $975m). On a reported basis, the Body Shop’s revenues fell by 4.8%. + + + +What went wrong? Partly, the chain is a victim of its own success. Its stand against animal testing and for ethical consumerism was novel and exciting 40 years ago, especially to younger shoppers. But now this is mainstream stuff. The European Union banned all cosmetics tested on animals four years ago. + +The Body Shop has thus become much less distinctive. Mere supermarkets now stock similar products, and a host of imitators have reworked its formula for a new generation. Lush, for instance, packs in millennials with its mix of raucous music, heavily tattooed staff, Intergalactic Bath Bombs and Karma Kream body lotions. It is also more political than the Body Shop, campaigning on everything from refugees to fracking. Its sales reached a record £574m ($877m) in 2015. + +And whereas the Body Shop’s products might have been “natural enough” for the 1980s, that’s no longer good enough, argues Lainey Sheridan-Young, a branding expert at IW Capital. More consumers now demand products without the synthetic substances that the Body Shop still uses. Neal’s Yard, by contrast, has most of its products approved by the Soil Association, an organic certifier, and was the first high-street retailer to be accredited as carbon neutral. The “natural” end of Britain’s cosmetics market is growing by about 10% a year, according to Organic Monitor, a research outfit, but the Body Shop is missing out. + +Squeezed by rivals who are variously cheaper, trendier, more political and more wholesome, the new owner of the Body Shop will have a choice, argues Harsha Wickremasinghe of Livingstone, an M&A advisory firm. It could take the brand back to its agitprop roots. Or it could make it a more colourful addition to the supermarket shelves. Either would need a lot of investment. But given the goodwill that still attaches to the Body Shop brand, there may be plenty of wild argan oil left in the bubble bath yet. + + + +This article appeared in the Britain section of the print edition under the headline “Exfoliating cash, needs a scrub” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717085-iconic-brand-badly-needs-makeover-ethical-retailer-takes-bath/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +I know what you did last summer + + +In Britain, criminal records dog offenders for decades + + +The long memory of the law may limit the chance of rehabilitation + + +Feb 18th 2017 + + + + + +ABOUT 17 years ago, Mrs P received a caution for stealing a sandwich. She also stole a 99p book, for which she was prosecuted. Homeless and suffering from schizophrenia, she failed to appear in court, and so received two convictions. She has since failed in her efforts to get work as a paid teaching assistant, which she attributes in part to the fact that she has to disclose her criminal record, and by extension her mental-health history, to prospective employers. Next week Mrs P and others will challenge this system in the Court of Appeal, in a case which highlights Britain’s punitive approach to criminal records. + +England and Wales boast a complicated system with three levels of background checks. For the most basic review, after a set period (which depends on the sentence) criminals’ records can be considered “spent”. More rigorous scrutiny is needed for jobs such as teaching and the law. Certain crimes can be “filtered” out of the records, following a tortuous set of rules. But about 1,000 offences, including violent or sexual ones, must always be revealed, as must any that led to a jail sentence. Those with multiple convictions, no matter how minor, must divulge them. A 19-year-old fined in court for a theft would be 30 before it was removed from his record. + + + +All this adds up to a system that affects ex-offenders for longer and more profoundly than those elsewhere in Europe, says Christopher Stacey of Unlock, a charity that helps ex-cons. Not all countries include cautions in criminal records, as England and Wales do. In some, employers tend only to ask for background checks when required to do so by law. Sweden allows crimes that have resulted in imprisonment to be expunged after ten years. In France, a judge can deem a person to be “rehabilitated” and wipe the slate clean. + +Young Britons are treated especially harshly, according to the Standing Committee for Youth Justice, a campaign group. Of 16 jurisdictions it examined, 11 had some provision for expunging childhood criminal records; England and Wales do not. In 2014 New Zealand, one of the countries that tries hardest to avoid giving children criminal records, landed just 48 youngsters under 17 with one. In England and Wales almost 60,000 criminal records were imposed on children. Accounting for population, that makes it about 90 times stricter. + +Criminal records can be crippling. Employers are risk-averse, says Mr Stacey, and often assume that if something is flagged on a background check they cannot hire the applicant. Councils are increasingly unwilling to allow those with criminal records access to social housing. Insurers charge them more. + +This month the Law Commission, an independent body that reviews the laws of England and Wales, published a report on the filtering system. It argued that it risks disclosing both too much and too little. If the government loses the case against Mrs P, it may make changes. Mr Stacey argues that old and minor convictions and cautions should not be disclosed when no longer relevant. He says the number of crimes that may be filtered out could be expanded. The police review the most stringent checks and could always reveal more information if deemed necessary. + +The dilemma is how to balance risk with rehabilitation. At present, Britain leans heavily towards minimising the former. A criminal record is, in effect, an additional sentence, says Mr Stacey—one that can run for the rest of a person’s life. + + + +This article appeared in the Britain section of the print edition under the headline “I know what you did last summer” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717091-long-memory-law-may-limit-chance-rehabilitation-britain-criminal-records/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Dearly beloved + + +Lovestruck Britons are losing $50m a year to dating-site con artists + + +A word of warning this Valentine’s day + + +Feb 18th 2017 + + + + + +WHEN John met Judith, it seemed they were a perfect match. Both were devout Christians. He was a widower, she a divorcee. After finding each other on an online dating site, they exchanged heartfelt e-mails. John, an interior designer from London, wanted to meet in person but had travelled to South Africa for his father’s funeral. While there, he was robbed and defaulted on an expensive design contract. Judith stumped up £140,000 ($175,000) before realising that she had been scammed: “John” was the invention of a fraudster. + +Last year online-dating swindles cost Britons a record £39m, according to the City of London Police. Six out of ten victims are women and two-thirds are between the ages of 40 and 69. Few of the fraudsters are identified, let alone caught, but most seem to be part of organised gangs in west Africa or eastern Europe, according to Neil Masters of Victim Support, a charity. Operations resembling call-centres conduct detailed background research, compose scripts and work several targets at a time. A fake emergency, often en route to an in-person rendezvous, is the most common way to solicit money. On average, just 30 days elapse between initial contact and first payment. Among those victims who go to the police, the average loss is £10,000. + + + +Britons are particularly vulnerable to such honeytraps. In Europe, only the Swiss spend more per person on online matchmaking services, according to Leading Dating Sites, a market-research firm. The English language makes Britons accessible to con men around the world. They are fond of online shopping and banking, so making electronic payments to strangers is second nature. They may even be unusually susceptible to hard-luck stories: Britain is the top-ranked European country in the World Giving Index, a measure of generosity produced by the Charities Aid Foundation. + +Victim Support and other charities are raising awareness of the problem. And, fearing damage to their business, dating sites are doing more to protect their members. Some parse their messages for suspiciously early declarations of love, or check if profile pictures have been swiped from other sites. That catches a few larcenous Lotharios. But nothing is as effective as what Mr Masters calls the “golden rule”: never give money to an online paramour, however charming. + + + +This article appeared in the Britain section of the print edition under the headline “Dearly beloved” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21716932-word-warning-valentines-day-lovestruck-britons-are-losing-50m-year-dating-site/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Bagehot + + +Harriet Harman’s unfinished business + + +Modernising Britain, and its politics, is slow and thankless work + + +Feb 18th 2017 + + + + + +BRITISH politics, it is widely noted, now revolves around two axes: left v right and open v closed. But a third one predates both. In the English civil war the Roundheads (parliamentarian and prim) defeated the Cavaliers (royalist and flamboyant), then lost the peace. The taxonomy lives on not as ideology but as two demeanours. Westminster’s Roundheads are sober, earnest and severe: think Margaret Thatcher, Gordon Brown and Theresa May. Its Cavaliers tend to be swaggering, arch and clubbable: David Cameron, Nigel Farage and to a lesser extent Tony Blair. The Cavaliers tend to have the most fun and get the best press. It is no coincidence that the supreme Cavalier of Britain’s recent political past was also its supreme diarist: Alan Clark. “I only can properly enjoy carol services if I am having an illicit affair with someone in the congregation,” he once wrote. + +Harriet Harman, Labour’s former deputy leader, is as roundly Roundhead as Mr Clark was confidently Cavalier. Her new autobiography, “A Woman’s Work”, is as serious as his books are riotous. Reading it, Bagehot was reminded of Oscar Wilde’s maxim that “the trouble with socialism is that it takes too many evenings”. The same, it seems, is true of the feminism to which Ms Harman has dedicated her career—first as an activist lawyer, then as a backbench MP, later as a minister. Over 400 pages she documents four decades of brow-furrowing evenings: procedural meetings, resolutions, commissions. Her very language bears the dusty whiff of the committee room: “Taking the fight to the Tories is undoubtedly an important role for Labour in opposition”; “Frank was…not respected by the welfare stakeholders”. “Ever ready to solve rather than cause problems, I…” begins one sentence, without irony (using humour would “deepen the problem of me not being taken seriously”). This is a book on a mission: to counterbalance what the author calls the “vanity projects” written by her male colleagues. It is not one for the beach. + + + +Yet it is one to read. For it makes a fine case for the Roundhead tendency in politics. It charts how the achingly slow, often thankless and arduous work of modernising society routinely meets resistance where it should not: getting wages and health care recognised as women’s issues, introducing measures to raise the proportion of women MPs, improving child care, increasing the pitifully low rate of prosecutions of domestic-violence perpetrators. And at every step of the way, vast walls of opposition. When Ms Harman opposed all-male shortlists, she was informed that working-class women were not interested in politics. When she was made social-security secretary, her deputy told civil servants to bypass her and take big decisions to him. When she beat a mostly male field to become Labour’s deputy leader she was not, unlike her male predecessor, made deputy prime minister. To the tabloids and the sort of Neanderthal MP who sees her as a menace she is “Harriet Harperson”, “Harridan Harman”, “bossy”, “icy” and “shrill”. + +The best illustration of what hard, unglamorous and unpopular work it can be to advance changes that ought to come naturally is Ms Harman’s account of how Westminster has evolved, and how it has not, since she first won her south London seat in 1982. Back then 97% of MPs were men; women were even outnumbered by MPs called John. She describes the dismal experience of late-night votes, when MPs waiting to speak would get progressively more drunk, then would give progressively longer speeches, then in the early hours would subject her rounding-up speech to “inebriated jeers”. The book contains some jaw-dropping anecdotes. In 1983 an anonymous MP complained that Ms Harman had voted with a baby under her coat; she was embarrassed to tell the clerks it was just the residual weight from a recent pregnancy. When she argued for more family-friendly hours in Parliament she was accused of being a marriage breaker: apparently MPs’ wives would not trust them “being out and about in London in the evenings”. Desperately slowly, one tiny step at a time, Ms Harman and her comrades chipped away at this culture. Today, thanks to their efforts, there are 195 women MPs, Parliament’s hours have been reformed and there is a crèche for children of MPs and other staff. + +Yet depressingly much stays the same. Ms Harman’s description of the press lobby and the legislature when she arrived—“a boys’ club being reported on by a boys’ club”—still holds. The House of Commons is more male (70%) than equivalent legislatures in Algeria, Belarus and Sudan. Recent studies of correspondents in Westminster put the proportion of women at around a quarter. The boozy, late-night, wood-panelled stuffiness of the place lives on, as recent news stories have shown. A survey of 73 women MPs by the BBC last month found that almost two-thirds had experienced sexist comments within Parliament (a male MP told one she should be “in the kitchen washing dishes”). In a debate on January 30th a troglodyte Tory woofed at a woman MP as she spoke. In a text-message exchange leaked to the newspapers last weekend David Davis, the Brexit secretary, denied having tried to kiss Diane Abbott, the shadow home secretary, in a Westminster bar: “I’m not blind,” he chortled. + +Thank you, Harriet Harperson + +The sheer inertia slowing changes to all this, so easily underestimated by commentators, is why politics needs Roundheads. With their compromising bonhomie Cavaliers are useful consolidators, lubricators of relations between social groups, guardians of good humour and thus perspective. But leave politics to such types and it becomes a golf club bar. For it to work, they must be joined by the likes of Ms Harman: Roundheads willing to tread a stonier path. These politicians make enemies, call out bad consensuses and gradually, painfully reform the common sense of the age. “Today’s heresy is tomorrow’s orthodoxy,” she writes in “A Woman’s Work”. How well her story illustrates this truth. + + + +This article appeared in the Britain section of the print edition under the headline “Harman’s unfinished business” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717084-modernising-britain-and-its-politics-slow-and-thankless-work-harriet-harmans-unfinished/print + + + +上一項 文章 章節 下一項 + + + + + +Britain 章節 Business + + + + + +International + + +International divorce: Unhappily ever after + +Inter-faith marriage: Where Rashid and Juliet can’t wed + +Britain 章節 Business + + + + + +文章 章節 下一項 + + + + + +Unhappily ever after + + +For multi-national families, breaking up can lead to tragedy + + +Parents can face lengthy court battles, or become permanently estranged from their children + + +Feb 18th 2017 + + + + + +KATE BAGGOTT and her two children live in a tiny converted attic in a village near Frankfurt. Ms Baggott, who is Canadian, has a temporary residence permit and cannot work or receive benefits. The trio arrived in Germany in October, after a Canadian court order gave them a day’s notice to get on the plane. Ms Baggott’s ex-husband, a Canadian living in Germany, had revoked his permission for the children’s move to Canada after they had been there nearly a year, alleging “parental child abduction”. A German court has given Ms Baggott full custody, but she must stay until an appeal is over. + +Such ordeals are becoming more common as the number of multi-national and footloose families grows. Across the European Union, for example, one in seven births is to a woman who is a foreign citizen. In London a whopping two-thirds of newborns in 2015 had at least one parent who was born abroad. In Denmark, Spain and Sweden more than a tenth of divorces end marriages in which at least one partner is a non-citizen. + + + +The first question in a cross-border break-up is which country’s laws apply. When lots of money is at stake there is an incentive to “forum shop”. Some jurisdictions are friendlier to the richer partner. Germany and Sweden exclude assets owned before the marriage from any settlement. Ongoing financial support of one partner by the other is rare in France and Texas—and ruled out in another American state, Georgia, if the spouse seeking support was adulterous. + +Under English law, by contrast, family fortunes are generally split evenly, including anything owned before the marriage. Prenuptial agreements, especially if drawn up by a lawyer representing both spouses, are often ignored. The wife of a Russian oligarch or a Malaysian tycoon can file for divorce in London if she can persuade a judge that she has sufficient links to England. A judge, says David Hodson, a family lawyer in London, might be presented with a list of items supporting her claim, which may be as trivial as which sports team the husband roots for, or where the family poodle gets a trim. + +Across the European Union, until recently the rule has been that the courts of the country in which divorce papers are filed first gets to hear the case. The result was that couples often rushed to file rather than attempting to fix marital problems. But in some countries that is changing: last year Estonia became the 17th EU country since 2010 to sign an agreement known as Rome III that specifies how to decide which country’s law applies (usually the couple’s most recent country of residence, unless they agree otherwise). Though the deal brings welcome clarity, it can mean that courts in one country have to apply another country’s unfamiliar laws. And one spouse may be tricked or bullied into agreeing to a divorce under the rules that best suit the other. + +The bitterest battles, though, are about children, not money. Approaches to custody vary wildly from place to place. Getting children back if an ex-partner has taken them abroad can be impossible. And when a cross-border marriage ends, one partner’s right to stay in the country where the couple lived may end, too, if it depended on the other’s nationality or visa. + +Treasures of the heart + +Under the Hague Abduction Convention, a treaty signed by 95 countries, decisions about custody and relocation fall to courts in the child’s country of “habitual residence”. If one parent takes a child abroad without the other’s consent or a court order, that counts as child abduction. The destination country must arrange the child’s return. + +But plenty of countries have not signed, including Egypt, India and Nigeria. They can be havens for abducting parents. Around 1,800 children are abducted from EU countries each year. More than 600 were taken from America in 2015; about 500 abductions to America are reported to the country’s authorities each year. + +Some countries, including Australia and New Zealand, often regard themselves as a child’s habitual residence from the moment the child arrives. The EU sets the threshold at three months. America differs from state to state: six months’ residence is usually what counts. GlobalARRK, a British charity that helps parents like Ms Baggott, is campaigning for information on such rules to be included among the documents issued to families for their move abroad. It also lobbies for a standard threshold of one year for habitual residence and advises parents to sign a pre-move contract stating that the child can go home at any time. Though such contracts are not watertight, they would at least alert parents to the issue. + +Britain is comparatively generous to foreign parents who seek a child’s return: it provides help with legal advice and translation. But plenty of countries do little or nothing. Family judges in many places favour their compatriots, though they may dress up their decisions as being in the child’s interests. Parents who can no longer pay their way through foreign courts may never see their children again. + +Some parents do not realise they are committing a crime when they take the children abroad, says Alison Shalaby of Reunite, a British charity that supports families involved in cross-border custody disputes. Even the authorities may not know the law. Michael, whose former partner took their children from Britain to France in 2015, was told by police that no crime had been committed. After he arranged for Reunite to brief them, it took more than five months to get a French court order for the children’s return. + +Other countries are slower still, often because there are no designated judges familiar with international laws. Over a third of abductions from America to Brazil, for example, drag on for at least 18 months. When a case is eventually heard the children may be well settled, and the judge reluctant to order their return. + +A renewed push is under way to cut the number of child abductions, and to resolve cases quickly. The EU is considering setting an 18-week deadline for the completion of all return proceedings and making the process cheaper by abolishing various court fees. And more countries are signing up to the Hague convention: Pakistan, where about 40 to 50 British children are taken each year, will sign next month. India, one of the main destinations for abducting parents, recently launched a public consultation on whether to sign up, too. + +But the convention has a big flaw: it makes no mention of domestic violence. Many of the parents it classifies as abductors are women fleeing abusive partners. One eastern European woman who moved to Britain shortly before giving birth and fled her violent fiancé four months later, says she was turned away by women’s shelters and denied benefits because she had lived in Britain for such a short time. For the past year she has lived on charity from friends. The police have taken her passport to stop her leaving Britain with the baby. Another European woman, living in New Zealand, says she fears being deported without her toddlers when her visa expires in a few months. She fled domestic abuse with the children and a bag of clothes in December, and has been moving from one friend’s house to another ever since. + +Child abduction is often a desperate parent’s move of last resort, says GlobalARRK’s founder, Roz Osborne. One parent, who has residence rights, may have been granted sole or joint custody, meaning the children cannot be taken abroad without permission. But the other parent may have entered on a spousal visa which lapses when the marriage ends. Even if permission to remain is granted, it may be without the right to work or receive state benefits. In such cases, the decision of a family court guaranteeing visiting rights or joint custody can be close to meaningless. + +Britain’s departure from the EU could mean many more divorcing parents find themselves in this desperate state. Around 3.3m citizens of other EU countries live in Britain, and 1.2m Britons have moved in the opposite direction; so far it is unclear whether they will continue to have the right to stay put and work. And in America, says Jeremy Morley, a lawyer in New York who specialises in international family law, immigration issues are increasingly used as weapons in child-custody cases. Judges in family courts, he says, often pay little attention to immigration issues when ruling on custody, because they know few people are deported solely because their visas have expired. But under Donald Trump, that may change. + +Many parents have no idea what they sign up for when they agree to follow a spouse abroad, says Ms Osborne. They may mistakenly believe that if things do not work out, they can simply bring the children back home. Ms Baggott’s move to Germany was supposed to be a five-year adventure, the duration of her husband’s work visa. Instead, she says, she has endured “a decade of hell”. + + + +This article appeared in the International section of the print edition under the headline “Unhappily ever after” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21716991-parents-can-face-lengthy-court-battles-or-become-permanently-estranged-their/print + + + +文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Where Rashid and Juliet can’t wed + + +Many countries make it hard to marry someone from another religion + + +Around two dozen countries have no provision for civil marriage + + +Feb 18th 2017 | JAKARTA + + + + + +ARMAN DHANI, an Indonesian journalist who is Muslim, broke up with his Catholic girlfriend of five years when he reached the heartbreaking conclusion that they would never be able to marry. Indonesian officials refuse to register inter-faith marriages because the law does not mention them. “My mother said: ‘If you want to marry her she must convert to Islam,’” he says. “But I didn’t want to make her betray her religion.” He felt he could not change religion either. “If I converted to Catholicism I would become dead to other Muslims.” + +Indonesia is one of about two dozen countries with no provision for civil marriage. Others include Israel, Jordan, Lebanon and almost all Arab states. Only unions conducted according to the rules of officially recognised religions can be registered. In Indonesia children of unregistered unions cannot get birth certificates, without which they struggle to receive health care or schooling. + + + +Some couples of differing faiths, or none, go abroad for a civil ceremony. Each year about 3,000 couples from the Middle East get married in Cyprus, which brands itself the “island of love”. + +Campaigns to introduce civil marriage are afoot in many countries. But governments often fear angering politically powerful religious groups. In Lebanon marriages and other matters of family law, such as divorce and inheritance, are left to the religious courts of 18 Muslim, Christian and other sects. This allows politicians to sidestep the tricky task of crafting family laws that would be acceptable to leaders of all those faiths. In Indonesia, says Mr Dhani, both Muslim and Christian leaders fear that an inter-faith marriage would inevitably end up with one of the partners converting. + +In many places, anyone who dares to wed across religious lines faces ostracism—and perhaps even violence. Getting rid of legal barriers would not remove all the risks. But it would help, a bit. + + + +This article appeared in the International section of the print edition under the headline “Where Rashid and Juliet can’t wed” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21717030-around-two-dozen-countries-have-no-provision-civil-marriage-many-countries-make-it-hard/print + + + +上一項 文章 章節 下一項 + + + + + +International 章節 Finance and ... + + + + + +Business + + +Electric cars: Volts wagons + +Electric cars in Norway: Northern light + +Old media: The Trump bump + +New media: #Twittertrouble + +Radio spectrum: Inventive auction + +PSA and Opel: Driven together + +Space firms: Eyes on Earth + +Private aviation: Up, up and away + +Schumpeter: Myopium + +International 章節 Finance and ... + + + + + +文章 章節 下一項 + + + + + +Volts wagons + + +Electric cars are set to arrive far more speedily than anticipated + + +Carmakers face short-term pain and long term gain + + +Feb 18th 2017 + + + + + +THE high-pitched whirr of an electric car may not stir the soul like the bellow and growl of an internal combustion engine (ICE). But to compensate, electric motors give even the humblest cars explosive acceleration. Electric cars are similarly set for rapid forward thrust. Improving technology and tightening regulations on emissions from ICEs is about to propel electric vehicles (EVs) from a niche to the mainstream. After more than a century of reliance on fossil fuels, however, the route from petrol power to volts will be a tough one for carmakers to navigate. + +The change of gear is recent. One car in a hundred sold today is powered by electricity. The proportion of EVs on the world’s roads is still well below 1%. Most forecasters had reckoned that by 2025 that would rise to around 4%. Those estimates are undergoing a big overhaul as carmakers announce huge expansions in their production of EVs. Morgan Stanley, a bank, now says that by 2025 EV sales will hit 7m a year and make up 7% of vehicles on the road. Exane BNP Paribas, another bank, reckons that it could be more like 11% (see chart). But as carmakers plan for ever more battery power, even these figures could quickly seem too low. + + + + + +Ford’s boss is bolder still. In January Mark Fields announced that the “era of the electric vehicle is dawning”, and he reckons that the number of models of EVs will exceed pure ICE-powered cars within 15 years. Ford has promised 13 new electrified cars in the next five years. Others are making bigger commitments. Volkswagen, the world’s biggest carmaker, said last year that it would begin a product blitz in 2020 and launch 30 new battery-powered models by 2025, when EVs will account for up to a quarter of its sales. Daimler, a German rival, also recently set an ambitious target of up to a fifth of sales by the same date. + +The surge has two explanations: the rising cost of complying with emissions regulations and the falling cost of batteries. Pure EVs, which send no carbon dioxide directly into the atmosphere, and hybrids, which produce far less than conventional engines, are a way to meet Europe’s emissions targets—albeit an expensive one. But the gains from cheaper methods such as turbocharging smaller engines, stop-start technology and weight reductions will no longer be enough, since a tougher testing regime, to be introduced in the wake of VW’s diesel-cheating scandal, will make those targets still harder to reach. + +The hefty cost of preventing nitrogen oxide spewing from diesel engines, which emit far less carbon dioxide than the petrol equivalent, may see them disappear by 2025. Further development of ICEs could be enough to meet the 2021 targets. Carmakers also need to be prepared to hit the next ones, says Andrew Bergbaum of AlixPartners, a consulting firm. These, yet to be finalised in the EU for carbon dioxide, may be as low as 68g/km by 2025 compared with 130g/km today. + +Regulations are favourable outside Europe, too. In China more than 400,000 pure EVs were sold last year, making it the world’s biggest market. The government, keen to clear the air of choking exhaust fumes, has plans for a quota that could insist that 8% of sales are EVs or hybrids by 2018. And even if Donald Trump relaxes American emissions standards, this will not hold back electrification. California, which accounts for one in eight cars sold in America, is allowed to set tougher environmental standards than the national ones. It, and seven of the other states that have adopted its emissions rules, have a target of 3.3m EVs on their roads by 2025. + +Moving right along + +Technology will have as much impact as politics. Vehicles that carmakers are forced to produce for the sake of the environment will become ones that buyers want for the sake of their wallets. EVs were once generally a second car for richer, environmentally minded drivers, prepared to pay a big premium for a vehicle with a battery that took an age to charge and had a limited range. + +The falling cost of batteries will make the cost of owning and running an EV the same as that of a traditionally powered car in Europe by the early 2020s, even without the hefty government subsidies that many rich countries use to sweeten the deal (see article). Better batteries should also conquer “range anxiety”—most pure EVs now run out of juice after around 100 miles (161km). If battery costs continue to tumble and performance improves at the current rate, the price of a car with a range of 300 miles could hit $30,000 by the early 2020s, according to Exane BNP Paribas. Slicker technology will also mean charging in minutes, not hours. + +The lack of charging infrastructure still deters buyers, but signs of growth are encouraging. In most rich countries governments, carmakers and private companies are putting up the necessary cash. In America the number of charging points grew by more than a quarter to almost 40,000 in 2016. Even Shell and Total, are planning to put chargers on the forecourts of their petrol stations across Europe. + +But EVs are not yet a profitable business for carmakers precisely because of their batteries. Chevrolet’s Bolt, on sale late last year, costs under $30,000 with subsidies and travels 238 miles between charges. But each sale will reportedly set General Motors back $9,000. Tesla’s rival, the Model 3, is set to go on sale later this year; the firm has yet to make an annual profit. Even Renault-Nissan, the world’s biggest EV manufacturer, loses money on electric models. + +Research and development also costs a fortune. Daimler says it will spend €10bn by 2025 on just ten battery-powered models. Restructuring is also expensive. For a century carmakers have built factories, employed workers and developed a supply chain around the ICE. In one scenario Morgan Stanley reckons that VW’s entire car business could make a loss between 2025 and 2028 as it transforms itself. + +Some carmakers are better placed than others for the transition. Profitable premium brands such as Daimler and BMW have the resources to invest and can be confident that their richer customers will be the first to switch to more expensive EVs. Mass-market carmakers have a trickier task, according to Patrick Hummel of UBS, a bank. Despite falling costs, a cheap EV for the mass market is still a distance away. The likes of Fiat Chrysler (whose chairman, John Elkann, sits on the board of The Economist’s parent company) or PSA Group, which makes Peugeots and Citroëns, have barely begun changing. But these carmakers, already operating with wafer-thin profit margins, must still invest heavily in anticipation of that moment. + +EVs may eventually make more money than ICE cars as battery costs fall further. They are competitive in other ways too: EVs are simpler mechanically, and require less equipment and fewer workers to assemble them. But carmakers first face a transition that will hit cashflow and profits. Getting ready for an electric race will be painful, but missing it altogether would be disastrous. + + + +This article appeared in the Business section of the print edition under the headline “Volts wagons” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717070-carmakers-face-short-term-pain-and-long-term-gain-electric-cars-are-set-arrive-far-more/print + + + +文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Northern light + + +Sales of green vehicles are booming in Norway + + +Ever more electric cars are on the road. Now to build a charging network to support them + + +Feb 18th 2017 | Oslo + + + + + +TO JUDGE by the gleaming rows of Teslas, Nissan Leafs and other electric cars parked in the snow in central Oslo, Norwegians might already have given up on the internal combustion engine. Before long they probably will. Battery-powered cars and plug-in hybrids together accounted for 29% of all new car sales last year. The 100,000th battery-powered unit sold in December. + +Norway first introduced tax perks to boost the electric-car market in the 1990s. But sales only sparked in the past five years or so after slicker vehicles with better batteries appeared. Now the country’s 5m citizens constitute the most developed national market for electric cars anywhere. Christina Bu, who heads the country’s association for electric cars, expects 400,000 electric-only vehicles on the roads by 2020, and predicts 70% of new sales will be of zero-emission cars. As range increases and price falls, demand will rise faster. + + + +Though less than 5% of the total fleet of cars in Norway are electric, the country’s transport minister calls it “realistic” to expect an end to sales of new cars powered by fossil fuels by 2025. Fiscal incentives, not an outright ban, will bring this about. Eye-popping purchase taxes typically double the cost of a high-emission car, but these and other levies are waived for clean ones. Drivers of zero-emission vehicles also skip costly road tolls, cross fjords by ferry for free, park without paying in cities and use bus lanes to whizz by other commuters. + +The next step is to finish a part-built charging network. In Oslo seven in ten residents live in apartments and few can charge a car at home. Opportunities abound. Providers of fast-charging services such as Fortum, a Finnish power firm, are starting to sell electricity at a premium. Big stores, including IKEA, have installed recharging stations—for about NKr1m ($120,000) each—so customers can top up while shopping. The government says charge points will exist every 50km on main roads, and is subsidising firms that build and run them. + +Countries without Norwegians’ oil wealth will struggle to boost the market for electric vehicles similarly. Cheap electricity—Norway produces a surplus from hydropower—and expensive petrol and diesel skew running costs. Mr Solvik-Olsen guesses that last year alone his government missed out on as much as NKr3bn in tax because of the incentives. Most Norwegians, eager to do more to cut local pollution from traffic in cities, and short of other ways to lower carbon emissions, reckon this is money well spent. In other markets it will be crucial that even cheaper and better cars appear to create an appealing market. + + + +This article appeared in the Business section of the print edition under the headline “Northern light” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717063-ever-more-electric-cars-are-road-next-step-build-charging-network-support/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Newspapers and television + + +Traditional media firms are enjoying a Trump bump + + +Making America’s august news groups great again + + +Feb 18th 2017 + + + + + +DONALD TRUMP calls it the “failing” New York Times in his tweets, but his presidency has breathed new life into the newspaper and other mainstream media outlets. The New York Times, the Washington Post and the Wall Street Journal have all received boosts in subscriptions and page views; cable news networks, such as CNN and the Fox News Channel, are getting huge increases in viewers at a time when most other channels are losing them; and even the long-suffering stocks of newspaper companies are rallying. Since the election shares in the New York Times Co have risen by 42%, outperforming even the mighty Goldman Sachs. + +Why the boost? The unprecedented nature of political events has kept American eyeballs glued to pages and screens. The pace of change, especially since the election, compels Mr Trump’s fans and foes alike to stay abreast of developments. Many do so using Twitter (see article). But many others seem to want the kind of analysis that established groups provide. Mr Trump’s bashing of certain outlets also may have encouraged some to subscribe or watch in defiance. + + + +The Trump bump has been most pronounced at the New York Times. It managed to sign up more than half a million digital subscribers last year—including 276,000 in the fourth quarter alone, mostly after the election. It now has 3m subscribers in total, including about 1.7m digital-only subscriptions. By one measure traffic to its site is nearly a third higher than a year ago. A never-ending flow of big stories helps. “In the evening you put the non-Trump pages to bed so you can focus on the late-breaking Trump news,” says Mark Thompson, its chief executive. + +The Washington Post, which has also produced juicy scoops in recent months, does not disclose subscriber numbers under the ownership of Jeff Bezos, Amazon’s chief executive. But speaking at a conference on February 14th in California, Marty Baron, its editor, said subscriptions are growing “at a very rapid rate right now”. The Wall Street Journal, owned by Rupert Murdoch, also saw a substantial boost in digital subscribers, to nearly 1.1m by the end of 2016, an increase of about 250,000 over a year earlier. + +One way or another, people simply cannot get enough Trump. The three major cable news networks—Fox News Channel, MSNBC and CNN—have enjoyed the three biggest increases in viewership of all American cable channels in 2017, according to information from Nielsen, a research firm. Each network enjoyed an increase of 40% or more in the six weeks to February 12th (see chart). Fox News is the most-watched cable channel of them all, according to Nielsen data supplied by MoffettNathanson, a research firm. The network is averaging 3.1m viewers during prime time as of January 2nd; its softer approach to Mr Trump and his antics makes it a destination for his supporters. + +The surge arrives at a challenging time for traditional media. In television, most cable channels are suffering declining viewership, which in turn puts pressure on advertising sales. The situation for newspapers is more dire. The market in North America has been in structural decline since the millennium, and lost $30bn in advertising revenue, a drop of 60%, in the decade to 2015. Last year print ads, still far more lucrative than digital ads, continued to decline sharply at major newspapers. The New York Times experienced a 16% drop in print advertising last year, and like virtually all American newspapers has gone through multiple rounds of staff reductions. The Wall Street Journal endured a 21% drop in advertising revenue in mid-2016, leading to yet more cost-cutting and voluntary redundancies. + +The recent Trump-led media resurgence is ironic, for the decline of newspapers probably benefited Mr Trump. People have increasingly looked to free, less reliable sources of information on the internet, including social media such as Twitter and Facebook, where Mr Trump is in his element. He proved adept at campaigning amid a confusing mire of fact, fiction and demagoguery. + +How long can the Trump bump last? In a call last month Mr Thompson told analysts that it will endure as long as the administration continues “to be creating news and controversy”. Judging as a former journalist himself, he said, he suspected that would take many months, and “possibly years”. Media moguls certainly hope so. + + + +This article appeared in the Business section of the print edition under the headline “The Trump bump” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717107-making-americas-august-news-groups-great-again-traditional-media-firms-are-enjoying-trump-bump/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Twitter + + +New models for new media + + +Is there life for technology firms beyond Wall Street? + + +Feb 18th 2017 + +Not watching Twitter + + + +FOR months Twitter, the micro-blogging service, has received the kind of free attention of which most companies can only dream. Politicians, corporate bosses, activists and citizens turn to the platform to catch every tweet of America’s new president, who has become the service’s de facto spokesman. “The whole world is watching Twitter,” boasted Jack Dorsey (pictured), the company’s chief executive, as he presented its results on February 9th. He has little else to brag about. + +But Donald Trump has not provided the kind of boost the struggling firm really needs. It reported slowing revenue growth and a loss of $167m. User growth has been sluggish, too: it added just 2m users in that period. Facebook added 72m. The day of the results, shares in Twitter dropped by 12%. Because news outlets around the world already report on Mr Trump’s most sensational tweets, many do not feel compelled to join the platform to discover them. Others are put off by mobs of trolls and reams of misinformation. + + + +And not even Mr Trump could change the cold, hard truth about Twitter: that it can never be Facebook. True, it has become one of the most important services for public and political communication among its 319m monthly users. It played an important role in the Arab spring and movements such as Black Lives Matter. But the platform’s freewheeling nature makes it hard to spin gold from. In fact, really trying to do so—by packing Twitter feeds with advertising, say—would drive away users. + +Business as unusual + +Twitter’s latest results are likely to encourage those who think it should never have become a publicly listed company, and want it to consider alternate models of ownership, such as a co-operative. They view Twitter as a kind of public utility—a “people’s platform”—the management of which should concern public interests rather more than commercial ones. If the company were co-operatively owned by users, it would be released from short-term pressure to please its investors and meet earnings targets. + +Though some co-ops have shown themselves resilient, they are generally thought to be less dynamic—a shortcoming of democratic governance. Yet Sasha Costanza-Chock, an activist who teaches at the Massachusetts Institute of Technology, believes that Twitter users could also come up with features that would rescue it from its most toxic elements, such as harassment and hate speech. Others envision a futuristic co-op—or, inevitably, “co-op 2.0”—in which responsibility is split between idealistic entrepreneurs, who control product innovation, and users, who have the say on such matters as data protection. Even if such models could be made to work, Twitter is unlikely to become a co-op soon: its market capitalisation still exceeds $12bn, an amount users can hardly dream of scraping together. Yet the debate about what to do with the service has stoked another, long-simmering discussion in the startup world: whether firms should always aim to go public. “We have become very myopic about what it means to be a corporation,” explains Albert Wenger, a partner at Union Square Ventures, a technology-investment firm. Armin Steuernagel, founder of Purpose Capital, a consultancy, says he sees more and more start-ups questioning whether they should opt for conventional ownership structures. + +Options abound. Online, Etsy, Kickstarter and Wikipedia, among others, have pursued set-ups that allow them to keep their social benefit front-and-centre. But old media outlets can offer lessons too: many publications in Europe, including The Economist, have ownership structures that isolate them to some degree from commercial interests. + +As for Twitter, it is likely to be snapped up once its value is low enough. Although the most likely buyer is another tech firm, surprises cannot be excluded. Users should start thinking like a traditional labour union, says Mr Wenger. If they stage a virtual walkout, they might have the bargaining power to change its governance structure. #Squadgoals. + + + +This article appeared in the Business section of the print edition under the headline “#Twittertrouble” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717112-there-life-technology-firms-beyond-wall-street-new-models-new-media/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Radio spectrum + + +America’s latest spectrum auction + + +Despite poor proceeds, the sale model is worth copying + + +Feb 18th 2017 + + + + + +MARKETS don’t simply emerge, but are created by the state, argued Karl Polanyi, an economist, in “The Great Transformation”. This is certainly true for radio spectrum, an intangible natural resource, which governments now regularly sell in auctions. The most intricate ever organised came to an end in America on February 10th, bringing in $19.6bn. + +When America’s Federal Communications Commission (FCC) started auctioning spectrum in 1994, it did so because lotteries and “beauty pageants” to allocate the scarce resource seemed otherworldly when billions were at stake. Two decades later the FCC again tried something new, because the established auction system, in turn, was no longer adequate. With most spectrum compatible with today’s technology already allocated, the agency could only satisfy ever-growing demand from mobile carriers by convincing current holders of big slices, mostly broadcasters, to give up some of their licences. + + + +The FCC’s solution was to organise not one but two sets of sell-offs, collectively called an “incentive auction”. The first set finds out the prices at which broadcasters are willing to part with radio waves (hence “incentive”). The second determines how much mobile operators are willing to pay for that spectrum. The rules are Byzantine and involve repackaging of spectrum into usable blocks, but broadly speaking the process comes to a close when the bidding price exceeds the selling price. If not, both sets of auctions are repeated, starting with fewer blocks of spectrum on offer alongside lower prices. + +This time round it took the FCC four attempts to match supply and demand. In the first reverse auction last March, the agency obtained commitments from broadcasters to sell 126 megahertz of spectrum for $86.4bn. In the end they gave up 84 megahertz for more than $10bn, for which bidders paid $19.6bn, with the difference going mostly to America’s Treasury. Before wireless operators can start using their new spectrum, however, they will have to take part in a third auction, which will determine by the end of March the exact frequencies they get. + +Compared with the FCC’s previous auction in early 2015, which brought in $41bn for 65 megahertz, the proceeds are disappointing. There is criticism of the complex process, which lasted a year and cost a remarkable $207m. Yet such gripes seem unfair. It is the auction of 2015 that is an outlier; the results of the latest one are actually in line with earlier spectrum sell-offs (see chart). The real test will be whether regulators elsewhere will again copy the FCC’s novel approach. Europe, for instance, could certainly do with this new type of auction: as in America, demand for spectrum outstrips supply and broadcasters are loth to give up their licences. + +Another question is what type of system the FCC will introduce once all the available spectrum has been shuffled around. The incentive auction was a step towards a dynamic market, as it also earmarked some spectrum for shared unlicensed use (which will particularly please those who make and use wireless gadgets). Perhaps, one day, small slices will be traded as much online advertising is today, with virtual property being auctioned off in real time. Such a system would certainly qualify as being the most complex market ever created. + + + +This article appeared in the Business section of the print edition under the headline “Inventive auction” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717099-despite-poor-proceeds-sale-model-worth-copying-americas-latest-spectrum-auction/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Driven together + + +France’s PSA Group may plan to buy Opel, GM’s European operation + + +A possible car merger shows that size is important but not everything for carmakers + + +Feb 18th 2017 + + + + + +AFTER sweeping past a significant milestone, drivers rarely slam their vehicles into reverse. Yet General Motors (GM), which last year joined Toyota and Volkswagen in an elite group that sells over 10m vehicles a year, may be on the brink of such a manoeuvre. On February 14th the American firm and PSA Group, which makes Peugeots and Citroëns, sprang a surprise by confirming that they were in talks that could lead to the French carmaker buying GM’s European operation. GM’s decision to downsize has many merits, but the advantages of getting bigger are much less clear-cut for its European counterpart. + +The two carmakers say a deal for Opel (which carries the Vauxhall brand in Britain) is only a possibility. But GM’s global might is not reflected at Opel, and it is probably keen to offload a carmaker that it has owned for nearly 90 years. Opel has done little other than disappoint in the recent past. Its 6% share of the European market puts it behind seven other brands and the business has lost money for years. + + + +GM has considered offloading Opel before. In 2009, as it struggled in bankruptcy protection in the wake of the financial crisis, it talked to Magna, a car assembler, and Fiat about a sale. So parlous was Opel’s state that the latter demanded money to take the business on and GM pulled out of negotiations. It also tried an alliance with PSA to control costs, even taking a 7% stake in the French firm in 2012, but the savings have disappointed and the shareholding was sold in 2013. GM may have finally decided that although it is unlikely to get a huge sum for Opel (which has big pension liabilities), the cash it invests in Europe might be better spent on its American and Chinese businesses, where returns are handsome, or on strengthening plans for electric cars and autonomous vehicles. + +Selling while the European market is at a peak is sensible. Buying may not prove as wise. Although acquiring Opel would propel PSA to second place in Europe with 16% of the market, it would still lag behind VW’s 24%. Taking out a competitor should bring more pricing power but this will be modest according to Exane BNP Paribas, a bank, and will benefit all of Europe’s carmakers. But cost savings should at least help PSA spread the huge financial burden of electrification and developing self-driving across 4.2m cars rather than 3.1m. + +Carlos Tavares, PSA’s boss, restructured his company successfully, but the scope for repeating that trick at Opel is limited. Cost-saving and efficiency drives at PSA, which came close to bankruptcy in 2013, have returned it to profitability. But PSA had leverage: it was in trouble and Europe’s car market in a trough when it struck a deal with French unions. Labour bosses in Germany, home to over half Opel’s employees, and Britain, where it has two plants, will not prove as pliant. + +The routes PSA and GM have taken recently suggest a shift from the industry consensus that “bigger is better”. The French carmaker has sacrificed sales for profitability; GM, in closing factories in Russia and Australia and withdrawing the Chevrolet brand from Europe, has done the same. For GM, selling Opel would fit with this strategy, but buying it would represent a screeching U-turn for PSA. + + + +This article appeared in the Business section of the print edition under the headline “Driven together” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717111-possible-car-merger-shows-size-important-not-everything-carmakers-frances-psa/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Space firms + + +Planet’s satellites offer customers a new world view every day + + +Analysing images from space could be big business + + +Feb 18th 2017 + + + + + +BUILT by the Indian Space Research Organisation, the Polar Satellite Launch Vehicle threw itself into the sky at 3.58am GMT on February 15th. It took with it a record-breaking 104 satellites—88 of which belonged to a single company, Planet, a remote sensing business based in San Francisco. Planet now has 149 satellites in orbit—enough for it to provide its customers with new moderately detailed images of all the Earth’s land surface every single day. + +The satellites Planet makes—it calls them “doves”—measure 10cm by 10cm by 30cm. The first doves, launched five years ago, could send back pictures of just 3,000 square kilometres a day. But the satellites have followed a trajectory of improvement much closer to that seen in cell-phones—from which they get some of their components—than the established satellite industry. The latest doves can cover 2.5m square kilometres a day. + + + +The expanded fleet of satellites will send over 3 terabytes of data a day to more than 30 receiver stations spread around the Earth. After processing to remove distortions and to locate each image, the data will be in the cloud and ready for the company’s clients within hours. + +Planet does not provide many details about its customers, but Will Marshall, the company’s CEO, says that it has over 100. Some are spooks, historically the biggest consumers of satellite images. But though Planet has spoken of a big contract with the relevant American outfit, the National Geospatial-Intelligence Agency, Mr Marshall says the NGA is not his biggest customer. Other buyers include mapmakers, financial companies and multinationals—especially those in the energy sector with widespread assets. + +Providing daily updated images of the whole surface of the Earth fulfils one of the goals Planet had at its founding in 2010, since when it has raised capital of $183m. That does not mean it will stop launching doves; among other things, passing over the same place more than once a day increases the chances of a shot unobscured by cloud. But turning its unique product into an ever bigger earner is the priority. + +A key to doing so is processing the images to answer pressing questions: what has changed since yesterday? Is that illegal logging? What does the number of containers in these ports suggest about trade balances? Planet will be providing more such analysis itself, but there are also third parties eager to play. SpaceKnow, a startup which focuses on turning satellite data into analysis the financial community will pay for, has just raised $4m. + +Satellites alone do not make a good business, as illustrated by the fate of an earlier startup, Terra Bella. Formerly known as Skybox, it made SkySat satellites and was bought by Google for $500m in 2014 amid fanfare. But in recent weeks Google sold the firm to Planet in an equity deal which almost certainly gave Terra Bella a much lower valuation; at the same time, it became a big customer for Planet’s data. + +This is the second time Planet has snapped up satellites from a rival in trouble, and the deal could work out well. The resolution available from the doves, three to five metres, is a bit coarser than many consumers of satellite data are used to. The larger Terra Bella satellites can pick out features less than a metre across. Mr Marshall says Planet is interested in developing software whereby the new sharper-eyed satellites would automatically take pictures of places where the doves had spotted something change between one day and the next. + +Planet is not the only company using small satellites to produce big data; the launch on February 15th also carried up eight ship-tracking satellites owned by Spire, just a couple of streets away from Planet. The companies hope that, as more and more customers come to see the value of an endlessly updated, easily searchable view of the world, insights from satellites will become ever more vital to the data-analysis market. The more normal their wares start to seem, the more spectacular their future may be. + + + +This article appeared in the Business section of the print edition under the headline “Eyes on Earth” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717110-analysing-images-space-could-be-big-business-planets-satellites-offer-customers-new-world/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Private aviation + + +Why bosses are flying more for play, not work + + +Corporate jets are being used less for business reasons + + +Feb 18th 2017 + + + + + +AS SCHOOLS across Europe break for February half-term, it is not just the Alpine pistes that are congested: private-jet terminals across the continent are also full to bursting. The number of bookings for private aircraft to the Alps in the week ending February 19th is 40% higher than in the same period last year, says Adam Twidell of PrivateFly, a booking service. Although about half the bookings were made by firms, not all those on board will be working much. For executives are using corporate jets less for business, and rather more for their leisure. + +Video-conferencing cuts the need for face-to-face meetings. Scheduled flights link more destinations directly than ever before. And corporate jets are hard to justify when squeezing costs elsewhere. At companies acquired by private-equity firms the number of private flights falls by a third within three years, according to research by Jesse Edgerton, now at J.P. Morgan, a bank. + + + +But bosses are increasingly using executive jets for both work and play. The average value of this perk per executive in Fortune 100 firms has risen by about 10% since 2013, says Equilar, a research firm. Executives justify flying private on the grounds that they may need to get back to the office quickly in an emergency, and that confidential documents or company devices may be lost or stolen on a commercial flight. But when they enjoy that extra security, they are exposing themselves to another risk: private-plane crashes are a leading cause of death for CEOs, behind only heart attacks, cancer and strokes. + + + +This article appeared in the Business section of the print edition under the headline “Up, up and away” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717100-corporate-jets-are-being-used-less-business-reasons-why-bosses-are-flying-more-play-not/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Schumpeter + + +Corporate short-termism is a frustratingly slippery idea + + +Firms are increasingly accused of failing to look ahead. That is a misdiagnosis + + +Feb 18th 2017 + + + + + +AS AMERICA’S economy has misfired over the past decade, several grand theories have emerged about what went wrong. Economists fret about secular stagnation, debt hangovers and whether demography explains sluggish growth. In American boardrooms, meanwhile, a widely held view is that a dangerous short-termism has taken hold. This theory contends that investors and executives have become myopic, leading firms to invest too little. Like many business ideas, short-termism fits the experience of some individual business people. But as a theory about how the economy works it is too nebulous to be much use. + +People have always worried that financial markets cannot see beyond their noses. In 1936 John Maynard Keynes noted that the horizon for investors was “three months or a year hence”, even though they were trading the securities of firms and governments that would probably last for decades. Since the crisis of 2008-10, worries about short-termism have risen again. Bosses fret that if they miss quarterly earnings forecasts they will be fired. Activist hedge funds seeking a quick buck are said to spook big corporations. The average share changes hands every 200 days for firms in the S&P 500 index. Terrified companies, the argument goes, no longer invest in their business and instead bribe their owners. For every dollar of operating cashflow S&P 500 companies make, excluding financial firms, they spend 44 cents on capital investment and 56 cents on buy-backs and dividends. + + + +A new study by McKinsey drills deeper. The consultancy took about 600 firms and labelled some as short-termist if they exhibited five habits: investing relatively little, cutting costs to boost margins, initiating lots of buy-backs, booking sales before customers pay and hitting quarterly profit forecasts. The study concludes that 73% of firms are short-termist. The elite 27% of firms that are long-termist performed better, McKinsey reckons, seeing their profits increase by, on average, 36% more than short-term firms between 2001 and 2014. The methodology is robust, and controls for the fact that some industries grow faster. + +Surely it is an open-and-shut case? Not really. The theory of short-termism suffers from three difficulties: it isn’t an accurate description of what is happening across America’s economy; it doesn’t deal with the question of causality and, last, it is a distraction from the real difficulty. + +Take accuracy first. There are plenty of signs that short-termism is not a problem. Those timorous chief executives serve longer than the average Roman emperor did: bosses departing in 2015 had an average of 11 years in office for S&P 500 firms, the highest figure for 13 years. Activist hedge funds own less than 1% of the stockmarket. The average share is traded many times because of a cohort of high-frequency computerised traders. But their churning masks the sharp rise of passive funds, which already own 13% of the market and which hold shares indefinitely. + +Supposedly myopic markets often look far into the future. The bond market lends to the government for 30 years for an interest rate of just 3%. Equity investors place huge values on firms that won’t make serious profits for years and years. Amazon is the world’s fifth-most valuable firm, with a colossal $400bn market capitalisation. About 75% of that value is justified by profits that are expected to be made a decade or more from now. It is probably the biggest bet in history on a company’s long-term prospects. + +Firms are not investing at weirdly low levels. Frightening figures on them starving themselves to splurge on buy-backs are misleading. Investment—capital spending plus research and development—is 9% of sales for S&P 500 firms, in line with the 25-year average (excluding financial companies). For the economy, private-sector capital spending, excluding housing, is at 12% of GDP, equal to the average since 1945. On both measures investment is not that far from the frothy levels seen in 2000, during the dotcom boom, the last time companies went wild. Buy-backs are so high because profits are abnormally high, which in turn may reflect the rising level of concentration in most industries. Were firms to try to invest all their surplus funds, they would need almost to double investment to a reckless 17% of sales. If Ford invested all its record cash flows, based on 2016 figures, it would double its plant in 30 months, an act of insanity in the car business. + +What about the second flaw, causality? The McKinsey study makes clear that this is hard to demonstrate. Do short-term firms become weak or do weak firms rationally adopt strategies that might be judged short term? Almost all managers think that their firms have a right to grow, but in any industry it is natural that some firms stagnate or decline just as some of their rivals expand. Shrinking firms should reduce costs and return cash to investors. + +Consider IBM. Its sales have sunk back to where they were in 1997. Over this period it has slashed costs and ramped up its margins, cut investment by half and halved its number of shares through buy-backs. By one account these were myopic choices that caused IBM’s decline. By another they were tough decisions, made in response to Big Blue’s retreat as a new generation of technology firms took over leadership of the industry. In the end, labelling IBM as long-term or short-term doesn’t clarify much. + +From here to eternity + +The final flaw is that short-termism is a distraction. Many big firms wallow in lucrative stagnation. Profits are abnormally high even as the cost of capital is low. The theory of short-termism suggests that the solution is to prod incumbent firms to invest vast amounts and insulate their managers from investors. But there is another approach that gets to the root of the problem: incumbents’ fat profits need to fall. Competition policy needs to weaken the entrenched position of established firms and help new entrants. That would make the economy more dynamic, boost wages and end the era of surplus profits that are put to no use. It’s not a message many powerful CEOs are keen on. + + + +This article appeared in the Business section of the print edition under the headline “Myopium” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717069-firms-are-increasingly-accused-failing-look-ahead-misdiagnosis-corporate/print + + + +上一項 文章 章節 下一項 + + + + + +Business 章節 Science and ... + + + + + +Finance and economics + + +Brexit and financial centres: Picking up the pieces + +Buttonwood: Undaunted by downgrades + +Hank Greenberg: See you outside + +Spanish banking: See you in court + +Carbon tariffs and steel: Steely defences + +Asian trade: Bouncing back + +Copper: Two down + +Inequality in China: The Great Divide of China + +Free exchange: Not enough Europe + +Business 章節 Science and ... + + + + + +文章 章節 下一項 + + + + + +Picking up the pieces + + +European financial centres after Brexit + + +Other cities compete not with London but with each other + + +Feb 18th 2017 | PARIS + + + + + +“WHEN the vote took place,” says Valérie Pécresse, “it was an opportunity for us to promote Île de France”, the region around Paris of which she is the elected head. Two advertising campaigns were prepared, depending on the result of Britain’s referendum last June on leaving the European Union. The unused copy ran: “You made one good decision. Make another. Choose Paris region.” + +Brexit has made Paris bolder. Once Britain leaves Europe’s single market, the many international banks and other firms that have made London their EU home will lose the “passports” that allow them to serve clients in the other 27 states. Possibly, mutual recognition by Britain and the EU of each other’s regulatory regimes will persist. But no one can rely on the transition to Brexit being smooth, rather than a feared “cliff edge”. Best to assume the worst. + + + +Britain is expected to start the two-year process of withdrawal next month. Given the time needed to get approval from regulators, find offices and move (or hire) staff, financial firms have long been weighing their options. London will remain Europe’s leading centre, but other cities are keen to take what they can. + +The Parisians are pushing hardest, pitching their city as London’s partner and peer. “I don’t see the relationship with London as a rivalry,” says Ms Pécresse. “The rivalry is not with London but with Dublin, Amsterdam, Luxembourg and Frankfurt.” Especially, it seems, Frankfurt. Paris has more big local banks, more big companies and more international schools than its German rival. London apart, say the French team, it is Europe’s only “global city”. When, they smirk, did you last take your partner to Frankfurt for the weekend? + +This month the Parisians were in London, briefing 80 executives from banks, asset managers, private-equity firms and fintech companies. They are keen to dispel France’s image as an interventionist, high-tax, work-shy place. The headline corporate-tax rate is 33.3% but due to fall to 28% by 2020. A scheme giving income-tax breaks to high earners who have lived outside France for at least five years will now apply for eight years after arrival or return, not five. The Socialists, who run the city itself, and Ms Pécresse’s Republicans are joined in a business-friendly “sacred union”, says Gérard Mestrallet, president of Paris Europlace, which promotes the financial centre. Ms Pécresse and others play down the risk that Marine Le Pen, of the far-right, Eurosceptic National Front will win the presidential election this spring. + +More quietly, Hubertus Väth of Frankfurt Main Finance (the counterpart of Paris Europlace) is “pretty confident” about his city’s ability to attract more bankers. To Mr Väth, the big prize is the clearing of trades in euros, which London dominates but which both Frankfurt and Paris hope to snaffle. The European Central Bank once tried to force clearing to move from London to inside the euro zone, but was thwarted in 2015 when EU judges ruled it lacked the necessary authority. After Brexit, it may try again. + +Nicolas Mackel of Luxembourg for Finance, the grand duchy’s development agency, is relatively “laid back”. All are welcome, Mr Mackel says, but no taxes or regulations have been changed, nor applications fast-tracked. Business has been brisk anyway, because of the duchy’s expertise with fund managers. China’s big banks use Luxembourg as a continental hub. + +After a slow start, the Dutch too are trying to gain from any “Brexodus”. The foreign-investment agency has expanded its (small) office in London. The Netherlands offers a high quality of life and almost everyone speaks English. But Amsterdam’s financial centre lacks the scale of Frankfurt or Paris, and is short of housing and schools. A cap of 20% of salaries on bankers’ bonuses is also off-putting, although the finance ministry says global banks may be exempt under certain conditions. + +Dublin is keen to attract more asset managers. Irish central bankers are worried about whether they have the right expertise to regulate, say, complex trading. Some would be relieved if the hordes do not materialise. The city is already short of office space, housing, roads and international-school places. + +The size of the prize is hard to gauge. Much depends on the post-Brexit agreement between Britain and the EU, and what regulators demand in capital and personnel. Banks may also shift some work out of Europe, to New York, or even Hong Kong or Singapore. Some services, warns a banker, may not be provided at all. Mr Väth thinks that, with euro clearing, Frankfurt could see an extra 10,000 jobs or more. Arnaud de Bresson of Europlace estimates that Paris stands to gain 10,000 “direct” posts in finance and fintech, plus 10,000-20,000 in law, accountancy and so on. Europlace hasn’t tried to quantify the number tied to clearing. + +Different institutions have their own priorities. HSBC, a big British bank, has already said that it expects to move around 1,000 jobs to Paris, where it already has a subsidiary; some other banks still sound wary of the place, despite the best efforts of the French. Switzerland’s UBS, which also says around 1,000 London jobs are at risk, set up shop in Frankfurt last year: that seems a natural base, although its bosses have also mentioned Madrid. Fund managers not already in Dublin or Luxembourg are likely to head there. Lloyd’s of London, an insurance market, and Blackstone and Carlyle, two American private-equity giants, reportedly favour Luxembourg for their EU home. + +The continental European financial centres all say they have acres of space for new arrivals. There should be more than enough, at least for now. “We’re not talking about banks moving lock, stock and barrel,” says Lee Elliott, head of commercial research at Knight Frank, a property consultancy. All banks have bases in all the main centres and after the downsizing of recent years, they still have vacant space. James Maddock of Cushman & Wakefield, another property-services firm, says that since 2008, banks in Europe have shifted 34,000 back- and mid-office jobs to eastern Europe, a further 5,050 to Ireland and 14,200 to British cities outside London. Brexit will involve fewer (if better-paid) people. + +But in all the cities vying for post-Brexit trade, a common refrain is heard: we wish it wasn’t happening. In Luxembourg too, Mr Mackel says, an ad was planned for the day after the referendum: “We would have missed you.” It didn’t appear. + + + +This article appeared in the Finance and economics section of the print edition under the headline “Picking up the pieces” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717032-other-cities-compete-not-london-each-other-european-financial-centres/print + + + +文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Buttonwood + + +Sovereign-bond issuers shrug off downgrades + + +Bon-market vigilantes have lost their menace + + +Feb 18th 2017 + + + + + +ONCE upon a time, countries jealously guarded their credit ratings. Before the 2010 British election, George Osborne, soon to be the chancellor of the exchequer, emphasised the importance of cutting the budget deficit in order to maintain the country’s top AAA rating. + +But despite the spending cuts and the tax increases he imposed, Britain was downgraded in 2013. There are only 11 countries with AAA status, according to Fitch, a rating agency, down from 16 in 2009. By value, only 40% of global sovereign debt has the highest rating, down from 48% a decade ago. + + + +There has been an even more dramatic downward trend in corporate debt ratings. There were 99 AAA-rated American corporations in 1992, according to S&P Global, another ratings group; now there are just two. That trend is linked to the tax deductibility of interest: in terms of tax efficiency, it has made sense to increase the amount of debt, and reduce the equity, on the balance-sheet. + +Clearly, at the sovereign level, the deterioration has been driven by the global financial crisis, which dented both economic growth and tax revenue. But with bond yields very low, and with central banks willing buyers of government bonds, countries have not paid a penalty for their bigger debt burdens. + +Japan first lost its AAA rating in 2001, as its debt-to-GDP ratio soared. But that didn’t stop investors from buying its bonds, especially when the country succumbed to bouts of deflation. A very low nominal yield is still positive in real terms when prices are falling. Even if investors did lose their appetite, the Bank of Japan is a willing buyer; it has a target for the country’s ten-year bond yield of zero and, at 0.08%, the current level is not far off. + +It is a similar story in America, which lost its AAA ranking from S&P in 2011. Five years later, the ten-year yield was at a record low of 1.36%. + +Clearly the bond vigilantes that spooked politicians in the 1990s have lost their menace. Dealing with the deficit is no longer the most important issue. It is not just central banks. Commercial banks, pension funds and insurance companies all also need to own government bonds for liquidity or regulatory reasons; they are relatively indifferent to the actual level of yield involved. + +In fact, in terms of default probability, the difference between the highest credit ratings is pretty trivial. A 2014 study of rankings since 1975 by S&P found that 97% of AAA sovereign bonds and 86% of AA bonds were still ranked in the top two bands ten years later. + +When markets don’t penalise them for running deficits, it seems rational for governments not to risk the wrath of voters by curbing borrowing and imposing austerity. There are exceptions to this rule—those countries that do not have the luxury of borrowing in their own currency. In the euro zone the most prominent example is Greece, which is still struggling to deal with its debts (see Free Exchange). + +But even the euro zone has got away with less punishment than might have been expected when the Maastricht criteria for single-currency membership were established 25 years ago. Germany has a debt-to-GDP ratio over 70%, more than ten percentage points above the target level. Its ten-year bonds yield just 0.37%. + +The rise of populism means that governments are even less likely to worry about an adverse reaction in the bond markets. Donald Trump has promised a combination of tax cuts, infrastructure spending and the safeguarding of entitlements such as Social Security and Medicare. These plans have to pass Congress, but the Committee for a Responsible Federal Budget, a lobby group, estimated that they would push American debt to 105% of GDP (from 77%) in a decade. Britain has abandoned its target of eliminating its deficit by 2020 (Mr Osborne’s original target was 2015). Facing an insurgent threat from the likes of Marine Le Pen and Geert Wilders, European governments will be wary of raising taxes or cutting benefits. + +In macroeconomic terms this is sensible. The main priority for rich countries should be developing a decent rate of growth rather than austerity. But if growth does not pick up significantly, the outline of a future crisis looks clear. Current debt levels are perfectly serviceable at current yields. But if yields rise another two to three percentage points that might no longer be the case, especially as government budgets will be strained by rising pensions and health-care costs from their ageing populations. At that point, bond investors might wake from their slumber and take their revenge. + +Economist.com/blogs/buttonwood + + + +This article appeared in the Finance and economics section of the print edition under the headline “Undaunted by downgrades” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717031-bon-market-vigilantes-have-lost-their-menace-sovereign-bond-issuers-shrug/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +See you outside + + +A settlement ends Hank Greenberg’s epic lawsuit + + +The arguments continue out of court + + +Feb 18th 2017 | NEW YORK + + + + + +A SETTLEMENT to be signed in front of a New York judge as The Economist went to press on February 16th marked the end of years of attritional legal warfare. It was less clear who had won: the state of New York or Maurice (Hank) Greenberg, the now 91-year-old former chief executive of AIG, once the world’s largest insurer, but saved by a government bail-out in 2008. + +Eric Schneiderman, New York’s attorney-general, had seemed in little doubt when he issued a surprise statement on February 10th. Hank Greenberg had admitted “to initiating, participating and approving two fraudulent transactions…that fundamentally misrepresented AIG’s finances.” He had agreed to pay a $9m fine. + + + +Mr Greenberg, however, saw things differently. Within hours of Mr Schneiderman’s statement, his attorney, David Boies, issued a response, accusing the state of being false and misleading and noting that Mr Greenberg’s own carefully negotiated statement had no “reference to any accounting being fraudulent” or suggested that Mr Greenberg was aware of any fraud. + +By February 13th Mr Greenberg was on the offensive. In a press conference held at the Park Avenue headquarters of the insurance business he now runs, Starr Companies, he denounced Mr Schneiderman’s characterisation of the deal and demanded an apology (not forthcoming). He had a sympathetic hearing in many quarters. Eliot Spitzer, the attorney-general who commenced the litigation in 2005, was known for loudly filing headline-grabbing cases. + +Mr Greenberg had assembled a legal dream team at a cost, he estimated during a televised interview, of $200m. His various lawyers filed eight pre-trial appeals and innumerable motions. In the process, the scope of the original charges was whittled down. Demands for damages shrank from billions to millions of dollars. Mr Schneiderman is the third attorney-general to have presided over the case; a fourth incumbent might have given up. + +Mr Greenberg has long contended AIG would never have collapsed had he been permitted to remain in charge, and consequently its failure stemmed from the state’s actions. But long before his departure, AIG under Mr Greenberg had built a massive derivatives position as well as a complex, opaque corporate structure that made outside scrutiny of risk difficult, if not impossible, and raised concerns that genuine problems were being hidden. + +The alleged chicanery at the heart of the legal dispute involved whether the numbers AIG did provide were truly indicative of its performance. One of the contested transactions, with GenRe, a reinsurer, transformed an underwriting loss into an investment loss, protecting the reputation of its underwriting. The other appeared to boost AIG’s loss reserves, and thus its appearance of financial strength. Neither of the deals improved the underlying performance of the company nor was intended to transfer much risk. Asked as the press conference ended why he did the GenRe deal, Mr Greenberg replied, oddly, “for appearances”. That seemed to be precisely the point the attorney-general was trying to establish. But Mr Greenberg still insisted that “deceiving investors never entered our mind.” He and the state have settled; but they refuse to call it a draw. + + + +This article appeared in the Finance and economics section of the print edition under the headline “See you outside” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717040-arguments-continue-out-court-settlement-ends-hank-greenbergs-epic-lawsuit/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +See you in court + + +Spain’s banking clean-up + + +Assigning blame for the disaster at Bankia + + +Feb 18th 2017 | MADRID + + + + + +ALMOST five years have passed since the near-collapse of Bankia, one of Spain’s biggest lenders, forced the country into a European banking bail-out. But inquiries into what went wrong continue—and widen. This week, for the first time, the investigations embroiled Spain’s financial regulators, including a former governor of the central bank, the Bank of Spain, Miguel Angel Fernández Ordóñez. + +On February 13th the national court indicted Mr Fernández Ordóñez and seven other senior regulators, ordering a criminal investigation but without specifying any charges. The court is questioning why they allowed Bankia to sell shares in an initial public offering in 2011, less than a year before Bankia’s portfolio of bad mortgage loans forced the government to seize control of it. It said there was evidence the regulators had “full and thorough knowledge” of Bankia’s plight. After its nationalisation, it went on to report a €19.2bn ($24.7bn) loss for 2012, the largest in Spanish corporate history. + + + +The investigation comes as several bankers are already awaiting sentencing for mismanagement and fraud. Most prominent is the former chairman of Bankia, Rodrigo Rato, previously Spain’s finance minister and managing director of the IMF. Mr Rato and other directors are accused of misleading investors, and, separately, of embezzling money by using corporate credit cards for their own purchases. + +The evidence against the regulators comes mostly from internal e-mails and reports compiled by inspectors and then allegedly ignored by their superiors. In one in-house exchange of information mentioned by the court, an inspector called Bankia “a money-losing machine”, whose deficiencies could not be solved by a share listing. The court also called “devastating” the content of another report, urging Bankia to look for a buyer, preferably a foreign one, rather than proceed with a listing. Based on its estimate of its losses, it described Bankia as “a group that is not viable”, an opinion written in red capital letters. The report was sent to Pedro Comín, a director of the Bank of Spain and one of three central-bank officials who resigned this week after the court’s indictment. + +Spain’s judges rarely send first-time offenders to prison for financial crimes. But in January five senior executives of Novacaixagalicia, a regional bank, became the first Spanish bankers to go to jail for being guilty of fraud and mismanagement during the financial crisis. The national court unexpectedly altered a sentence issued in 2015 that had found the five guilty of embezzlement, but had given them only suspended prison sentences. + +Spain has drawn the curtain on its banking crisis, led by a slimmed-down and rescued Bankia that returned to profit under new management as early as 2013. But the long—and slow-moving—arm of the law is only now reaching those responsible for the mess in the first place. + + + +This article appeared in the Finance and economics section of the print edition under the headline “See you in court” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717039-assigning-blame-disaster-bankia-spains-banking-clean-up/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Steely defences + + +Carbon tariffs and the EU’s steel industry + + +Border taxes on carbon may be counterproductive + + +Feb 18th 2017 + +Fuel for a dirty war + + + +THE European Union wants to slash greenhouse-gas emissions to 80% below 1990 levels by 2050. It is on course to cut just half that amount. To get back on track, on February 15th, the European Parliament voted for a plan to raise the cost for firms to produce carbon. It has prompted growing calls for the bloc to tax the carbon emissions embodied in the EU’s imports. At best, such a levy will barely curb emissions. At worst, it could cause a trade war. + +The EU’s latest reforms try to put up the price of carbon by cutting the emissions allowances firms are granted. They include the EU’s first border tax on carbon, levied on cement imports. Steel firms, also heavy users of carbon, say their exclusion from this scheme is unfair. This week Lakshmi Mittal, the CEO of ArcelorMittal, the world’s biggest steelmaker, offered his support for the tax. Similar proposals in America are also gaining support. This month a group including two Republican former treasury secretaries, James Baker and George Shultz, proposed a similar carbon tax on all imports at the border. + + + +Boosters say such proposals remove the distortions carbon taxes cause. Under the EU’s reforms, steelmakers in Europe would pay up to €30 ($32) to emit a tonne of carbon, but foreign producers selling in the EU would not have to pay a cent. Putting an equivalent tax on these imports is a neat solution to this problem. “It’s wonderful in theory,” says Jean Chateau, an economist at the OECD, a club of rich countries. But “in reality it’s very problematic.” + +One big problem is how to calculate the carbon in imports. This is not easy even for simple steel sheets; for items made of several bits of metal from different sources, it is hellishly complex. Some countries might even refuse to provide the information. And any method brought in for foreign firms, if not applied to local ones, could fall foul of WTO rules, adds Michael Moore of George Washington University. + +The environmental impact of such policies can be overstated. Several studies by economists at the DIW Berlin, a think-tank, have found little evidence that raising the EU’s carbon price without a border tax has distorted trade so far. Border taxes may not force dirty producers to close anyway. + +But what trade economists fear most is the risk that border taxes could spark a tariff war, adds Chris Beauman of the European Bank for Reconstruction and Development. Lobby groups could easily pervert the charges into a form of quiet protectionism. The EU and America are already in a politically driven tit-for-tat over steel duties with China. Rather than prod countries to tighten their own environmental regulations, new carbon tariffs could make that more vicious. A global carbon price would produce far greater economic benefits than border taxes, but would require closer international co-operation. A trade war is not the way to get there. + + + +This article appeared in the Finance and economics section of the print edition under the headline “Steely defences” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717101-border-taxes-carbon-may-be-counterproductive-carbon-tariffs-and-eus-steel/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Bouncing back + + +Asia’s exports rebound + + +Trade figures augur well for the global economy + + +Feb 18th 2017 + + + + + +IT IS easy to be downcast about the state of global trade. It has faced stiff headwinds in recent years: in 2016, for the first time in 15 years, it grew more slowly than the world economy. Regional and global trade deals are going nowhere, slowly. And America’s new president has promised to protect his country from trade-inflicted “carnage”. + +Amid all this gloom, optimism seems foolhardy. But in Asia’s export dynamos, trade is picking up steam. In January, Chinese exports rose year-on-year for the first time in ten months; South Korean shipments have increased for three months in a row. Surveys reveal strong export pipelines in Japan, Singapore and Taiwan. Healthy order books for Asia’s manufacturers normally bode well for global trade and indeed the global economy. It is too soon to declare a definitive upturn in global trade, but it looks like more than a blip (see chart). + + + +The simplest explanation for the rebound is that global demand is itself on solid ground. Global growth is still slower than before the financial crisis of 2008, but is heading in the right direction. Both the IMF and the World Bank think it will speed up a bit this year. Investors have turned more bullish: the MSCI all-world index, which covers 46 different markets, hit a record high this week. The rebound in Asian exports is more reason for bullishness. + +Structural changes may also be at play in Asia. A much-cited factor behind the slowdown in global trade in recent years has been China’s tightening grip on complex supply chains. As more production takes place inside a single country, fewer cross-border transactions are needed to produce final goods. Yet this consolidation within China is starting to meet more friction. China is still aiming for a bigger share of high-tech industries, but less-developed countries in Asia are scooping up more of its low-end manufacturing, and wealthier markets are also fighting back. Over the last nine months of 2016, China’s export performance trailed the rest of Asia. + +Nevertheless, there are good reasons to restrain the optimism. The rebound in exports from Asia’s commodity producers such as Indonesia and Malaysia is mainly the result of higher prices for oil and metals. Growth in their trade volumes has been much slower. For Asia’s high-tech economies, the rebound’s durability hinges on the fickle tastes of consumers. Both Samsung and Apple are expected to launch shiny new gadgets this year. Semiconductor makers around the region have gone into overdrive in anticipation. If demand falls short of expectations, exports of electronics will quickly dive again. + +And looming large over all these trends is Donald Trump. Fears that he might declare China a currency manipulator in his first few days in office came to naught. But his threats during the election campaign to slap heavy tariffs on Chinese products still linger in the background. A trade war would be unwelcome at any time. If it came just when the world was breaking free from a long slump in global trade, the irony would be all the more cruel. + + + +This article appeared in the Finance and economics section of the print edition under the headline “Bouncing back” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717108-trade-figures-augur-well-global-economy-asias-exports-rebound/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Two down + + +A bullish case for copper + + +Strikes and other supply constraints fuel long-term optimism + + +Feb 18th 2017 + + + + + +DURING the commodity “supercycle”, prices largely marched up and down in unison, fuelled by the strength (or weakness) of demand in China. Since last year commodities have again been on a tear, but for more idiosyncratic reasons. In the case of copper, strikes and supply disruptions in two of the world’s largest mines have helped push prices this week to their highest level in 20 months. This fits into a narrative of longer-term potential supply shortages that has investors licking their lips over prospects for the red metal. + +A strike that began on February 9th at Escondida in Chile, the world’s largest copper mine, has been compounded by a dispute between operators of Grasberg, another huge copper mine, located in the Indonesian province of Papua, and the government. That led to a halt in copper-concentrate production there, too, on February 10th. The two account for 9% of mined copper supply. + + + + + +Robert Edwards of CRU, a consultancy, says a one-month shutdown at both mines would remove about 140,000 tonnes, or 0.7% of the world’s output this year. He adds that labour contracts amounting to 14% of production are up for renewal this year, raising the spectre of further strikes. The possibility that disruptions in 2017 could increase from 2016, at a time of robust Chinese demand, has pushed up prices recently (see chart). + +In Chile, BHP Billiton, operator of Escondida, has clashed with the workers’ union over benefits. This week, both sides were toing and froing over whether to take part in informal mediation talks convened by the government. The union wants to preserve benefits from the previous labour contract and extend them to new workers. BHP is resisting. + +Juan Carlos Guajardo, a Chilean analyst, says the stakes are raised by the introduction of a new labour code in April that will dismantle curbs on the power of unions and protect existing benefits. Both sides want the best possible deal before the new law takes effect. The union also wants compensation for the hardships of the past few years of falling prices, while BHP seeks to bring the labour productivity of the mine up to rich-world standards. + +The Indonesian stand-off could be just as fractious. On January 12th the government said that if Freeport-McMoRan, an American firm that operates Grasberg, wanted to keep an exemption allowing it to export copper concentrate despite a 2014 ban on ore exports, it would have to convert its decades-old “contract of work” into a new mining licence. Freeport says it will do so as soon as Indonesia attaches to the licence the same guarantees of fiscal and legal stability that the current contract affords. The two sides remain at loggerheads, so Freeport has started sending Grasberg workers home. + +Analysts believe that the government’s pressing need for tax revenues means it may seek a compromise. But damage has already been done. Rio Tinto, Freeport’s partner in Grasberg, says it is reconsidering the option to increase its interest in 2021. + +In both Chile and Indonesia, swift resolutions are as likely as long-term disruptions. But in the meantime, they bolster the case of those who believe the red metal has a stellar future. On February 16th McKinsey Global Institute, a consultancy, joined the fray, singling out copper as a commodity for which demand could grow strongly over the next two decades, because of Chinese demand and its importance to electric vehicles and wind- and solar-energy units. It also predicted that supply would be constrained by the depletion of copper ores after 2025. Copper bulls will be snorting with excitement. + + + + + +This article appeared in the Finance and economics section of the print edition under the headline “Two down” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717114-strikes-and-other-supply-constraints-fuel-long-term-optimism-bullish-case/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +The great divide + + +A new paper finds China more unequal than France but less so than America + + +Why Chinese citizens seem more tolerant of rising inequality than Westerners + + +Feb 18th 2017 + + + + + +JUST as China’s GDP has converged towards America’s, levels of inequality have also been catching up. That is one of the conclusions of research* from five authors, including Thomas Piketty, a French economist famous for his work on wealth and inequality. Their new paper compares the evolution of inequality in China, America and France over four decades. + +Inequality has soared since China opened the door to private enterprise and growth took off. In 1978 the highest-earning tenth in China received just over a quarter of overall income before tax, significantly below the proportion in America and France at the time. By 2015, however, those top 10% of Chinese earners were paid two-fifths of total income—above the share in France, but still just below that in America (47%). Wealth, too, is concentrated in fewer hands: the richest 10% own nearly 70% of private wealth in China, up from 40% in 1995 (and not far below the American level of nearly 80%). + + + +Rises at the top mean that the share of pre-tax income going to the poorest half of the Chinese population has shrunk dramatically and is now, at 15%, not much higher than the American equivalent. In both countries, the shares have fallen by nearly half since 1978 (see chart). Compare that with France, where the share is higher and has changed little, buoyed perhaps by labour-market policies, such as a more generous minimum wage. + +Greater disparity between rich and poor in the West may well have driven anti-establishment sentiment. It might seem no less palatable in China, where the government still calls itself communist. But there the pain has been soothed by rapid growth: it has lifted all boats. Income for the poorer half of the population fell by 1% in America between 1978 and 2015. In China it quintupled. Another comfort is that measures suggest that in recent years income inequality has no longer been rising. This form of catch-up growth, at least, is on hold. + +* “Global inequality dynamics: new findings from WID.world”, by Facundo Alvaredo, Lucas Chancel, Thomas Piketty, Emmanuel Saez and Gabriel Zucman, National Bureau of Economic Research Working Paper 23119. + + + +This article appeared in the Finance and economics section of the print edition under the headline “The Great Divide of China” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717102-why-chinese-citizens-seem-more-tolerant-rising-inequality-westerners-new/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Free exchange + + +The European Union’s delicate political economy + + +Why European institutions cannot handle the Greek crisis + + +Feb 18th 2017 + + + + + +GREECE’S marathon crisis is at least instructive. Past flare-ups have illustrated a textbook’s worth of economic principles. The latest episode—a dispute over the sustainability of Greece’s mammoth debt—provides a lesson in political economy. The beleaguered economy itself is not at the centre of the disagreement; rather it is the European Commission and the IMF and others that are at loggerheads, squabbling over projections of Greek growth. This sort of institutional wrangling is not incidental to the process of European integration; it has historically been a crucial ingredient, helping defang the continent’s tricky interstate relations. But as Greece’s latest turn in the spotlight demonstrates, the role of Europe’s institutions has changed during the euro-area crisis. Paradoxically, they themselves have become part of the existential threat facing the European project. + +Like European identity itself, the role of “institutions” can seem vague, amorphous and of overstated importance. Yet institution-building has been one of the most consequential aspects of European integration. Economists view institutions as the solutions to social problems beyond the scope of markets and the state. Europe’s supranational bodies are not simply talking-shops or bloated bureaucracies. They are entities apart from the EU’s members, and come to develop their own identity and culture. + + + +That the term “Brussels” is thrown around in national capitals as a catch-all for the pesky creature that is EU authority is a design feature, not a bug. Old enmities between European neighbours hinder co-operation. Even when the topic under discussion offers mutual gain, the spectre of, say, French leaders making concessions to Germans can so repel French voters as to scupper deals. Bowing to Europe’s supranational institutions is less painful. + +So Brussels has proved useful in domestic policy battles. In countries where politics long thwarted efforts to rein in inflation, put budgets on a sustainable course or liberalise the economy, EU membership altered the political dynamic: tough decisions could be blamed on the hard taskmasters in Brussels. And for countries looking to join the EU, the benefits of membership made unpalatable domestic reforms easier to swallow. + +Perhaps most important, the architects of European integration counted on the institutions they were creating to defuse the danger posed when vacuums of power led to crisis. As Jean Monnet, a French official and a founding father of the European project, put it, “Europe will be forged in crises, and will be the sum of the solutions adopted for those crises.” In the past, states at odds with each other might use diplomatic or military pressure to settle an argument. But in post-war Europe self-interested Eurocrats in Brussels would charge into power vacuums to assert their new authority. European institutions were a mechanism through which European infighting could be turned to state building. + +These old patterns, however, have broken down during the drawn-out euro-area crisis. The locus of decision-taking, argue Markus Brunnermeier, Harold James and Jean-Pierre Landau in “The Euro and the Battle of Ideas”, a book published last year, has moved: from Brussels to national capitals; then to Berlin and Paris; and finally to Berlin alone. When the crisis erupted in 2010 it was soon clear that meetings of heads of government or finance ministers mattered more than what the commission or parliamentarians said. Early on, Germany and France decided to reach their own consensus before EU meetings. It would prevail, focusing power in Berlin and Paris. As German economic performance and political continuity diverged from France, the duet became a solo. This dynamic brought back the sting to negotiations within Europe, along with old chestnuts about northern heartlessness and southern profligacy, eroding an already thin sense of European solidarity. In peripheral economies, the battle lines are clear enough; Greeks see themselves as bowing to Angela Merkel, Germany’s chancellor, rather than to faceless Eurocrats. + +EU national governments argue, with reason, that policies imposed by Europe did more harm than good: that, for instance, without an independent monetary policy or a currency to devalue, austerity is counterproductive. Brussels has graduated from convenient scapegoat to the IMF’s bogeyman enforcer. Mainstream parties used to diverting blame to Brussels find themselves challenged by radical parties desiring to escape it. + +Critically, instead of expanding in an attempt to limit the damage, as Monnet would have hoped, the authority of Brussels has been checked. The crucial decision to involve the IMF in euro-area programmes was partly based on a need to get around the Maastricht treaty’s “no bail-out” strictures. But it was also rooted in a mistrust of EU institutions. Member states, and especially Germany, reckoned the IMF could impose conditions on indebted countries more credibly than the European Commission. A proposal to create a new institution, the European Monetary Fund, was rejected. The European Central Bank is the exception among EU institutions; its power has grown massively in the course of the crisis. But as the least accountable of the European institutions, its expanded authority does more to undermine the legitimacy of the European project than to reinforce it. + +Blue Angela + +Had the EU a longer history before it faced this existential crisis, enough power might have shifted to Brussels to make a more centralised response inevitable. But there is also an irony in the way the crisis has unfolded. No leader has worked harder to hold Europe together than Mrs Merkel. And yet the forcefulness of German leadership, and its decision to trust the IMF over the institutions in Brussels, have shaken Europe’s delicate political economy. Strange to relate, Europe’s unhappiness with Brussels may stem not from too much eurocracy, but too little. + +Visit our Free exchange economics blog + + + +This article appeared in the Finance and economics section of the print edition under the headline “Not enough Europe” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717033-why-european-institutions-cannot-handle-greek-crisis-european-unions/print + + + +上一項 文章 章節 下一項 + + + + + +Finance and ... 章節 Books and arts + + + + + +Science and technology + + +Agrichemicals: Holding fast + +Tropical diseases: Blame the worm + +Entrenched: Nasty chemicals abound in what was thought an untouched environment + +Finance and ... 章節 Books and arts + + + + + +上一項 文章 章節 下一項 + + + + + +Agrichemicals + + +How to stop fertiliser being washed away by the rain + + +Holding fast + + +Feb 18th 2017 + +Spreading growth + + + +IN MEDIEVAL England peasants were permitted to graze their sheep on the lands of the nobility. There were no restrictions on how much their livestock could feed, but there was one ironclad rule: the peasants were not allowed to collect their animals’ droppings. Though the English nobles who came up with such regulations could not have known that the excrement was rich in nitrogen and vital for plant growth, they clearly knew that lands denied faeces were less productive. Today most farmers rely on synthetic fertilisers to do the nitrogen-enhancing job once reserved for dung. Urea, a compound of nitrogen, hydrogen, carbon and oxygen, can be made cheaply by mixing ammonia and carbon dioxide together at high pressure. The result is turned into pellets that can be scattered easily over fields. + +Unfortunately, when such pellets are exposed to heavy rain, the urea they contain is quickly and wastefully washed away. A method of keeping it in place would thus be welcome. And Nilwala Kottegoda of the Sri Lanka Institute of Nanotechnology thinks she has one. As she and her team report in Nano, they have managed to bind urea molecules to a material that stops them dissolving too quickly in water. This material is hydroxyapatite, one of the components of bone. + + + +Her choice of hydroxyapatite for investigation was no wild guess. It is already used to make capsules that release certain drugs slowly, in the way she wanted to achieve for urea. Hydroxyapatite is made by mixing phosphoric acid and calcium phosphate, so Dr Kottegoda simply added urea to the process. The result, she found, was that each molecule of the material clung on to six molecules of urea—a payload big enough to justify further testing. + +To this end she and her colleagues steadily flushed water past samples of urea-enhanced hydroxyapatite held in tubes, while watching what happened using a spectroscope. The material shed its urea load gradually: 40% after 1,000 seconds; 60% after 2,000 seconds; 80% after 3,820 seconds. In contrast, when the researchers treated pure urea the same way, it was all gone in 320 seconds. + +To find out whether the new fertiliser would make a difference in the field, Dr Kottegoda collaborated with some farmers near Sammanthurai, in eastern Sri Lanka. She ran tests on equal-sized rice paddies for four months. Some plots received no fertiliser at all. Some got pure urea equivalent to 100kg of nitrogen per hectare. Some got an amount of the newly created urea-hydroxyapatite that contained the same quantity of nitrogen as the pure urea. And in all cases the level of phosphorus (another important plant nutrient, levels of which were boosted incidentally by the hydroxyapatite) were adjusted to match from plot to plot. + +The hydroxyapatite did, indeed, make a difference. Plots that received no nitrogen-based fertiliser at all averaged 5.5 tonnes of rice per hectare. Those that received urea alone yielded 7.25 tonnes per hectare. Those fertilised with urea-hydroxyapatite managed 7.8 tonnes per hectare. + +Though the newly compounded fertiliser is more expensive to produce than its conventional equivalent, Dr Kottegoda calculates that this cost would quickly be offset if using urea-hydroxyapatite obviated the need to re-scatter fertiliser over a paddy after heavy rain—and that does not even take into account the increase in yield it brings with a single application. There might also (though she did not measure this) be a bonus reduction in the amount of phosphorus-based fertiliser a farmer needs to deploy in addition to nitrogen-based pellets. A simple idea, then. But a potentially important one. + + + +This article appeared in the Science and technology section of the print edition under the headline “Holding fast” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21717024-holding-fast-how-stop-fertiliser-being-washed-away-rain/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Tropical diseases + + +The cause of nodding syndrome + + +Blame the worm + + +Feb 18th 2017 + + + + + +NODDING syndrome is a form of epilepsy that strikes children, mostly between the ages of five and 15. Despite the innocuous name, it is debilitating. It robs its victims of their mental capacity, stunts their growth and causes both the characteristic “nodding-off” motion which gives its name and more serious seizures, often when a child is being fed. The exact death rate is unknown, but it is high. + +The syndrome is also something of a medical mystery. The first cases were identified in Tanzania in the 1960s. Now it has spread to parts of Uganda and South Sudan. No one knows how many people are affected, but it is thousands, at least. Nor has anyone been sure what causes the disease. But Tory Johnson, of America’s National Institutes of Health, and her colleagues have a theory. As they describe in a paper just published in Science Translational Medicine, they suspect that nodding syndrome is an “autoimmune” disease caused by sufferers’ attempts to fight off infection by a parasitic worm. + + + +The worm in question is Onchocerca volvulus, a tiny nematode spread by the bites of black flies that is best known for causing river blindness. Epidemiologists had already drawn a link between nodding syndrome and areas infested by O. volvulus, but whenever people have looked, they have failed to find traces of the worm in sufferers’ brains, or in the cerebrospinal fluid (CSF) that bathes their brains and spinal cords. This led to the suspicion that, if the worm is indeed responsible, it is doing its harm indirectly. + +To investigate, Dr Johnson and her colleagues analysed blood and CSF from children with nodding syndrome in both Uganda and South Sudan. They were looking for antibodies. These are proteins produced by the immune system which bind to and disable specific molecules on the surfaces of invading viruses, bacteria and the like, thus damaging or destroying the invader. One of the antibodies they discovered was tailored to a protein called leiomodin-1, which is produced by mammalian nerve cells. In particular, studies of mice suggest it is found in both the cerebellum (a region of the brain which, among other things, helps control muscle function) and in the cerebral cortex (where abstract thinking happens). + +Trials in a Petri dish confirmed that the leiomodin-1 antibody Dr Johnson isolated is toxic to human nerve cells. That suggests nodding syndrome is, indeed, autoimmune: the victims’ immune systems are attacking their own brains. It does, though, leave the question of why infection with O. volvulus should cause this antibody to be produced in the first place. + +Dr Johnson and her colleagues think they know the answer to that. When they looked at proteins produced by the worm, they found one, called tropomyosin, that is strikingly similar to leiomodin-1. This similarity suggests antibodies intended to attack the worm’s proteins could end up inflicting collateral damage on the human versions, too. And it might not just be tropomyosin that is involved. The researchers found a handful of other worm proteins that were chemically similar to their human counterparts. + +It is an elegant chain of reasoning. But the study is not conclusive. For one thing, only half of those with nodding syndrome seemed to be producing the antibody to leiomodin-1. That, though, might be explained by the fact that many of the samples tested came from people who had been infected years before, and who may have thrown off the parasitic infection (which is susceptible to treatment with drugs) while still suffering the neurological effects. More difficult to explain is that a third of nodding-free people seemed to be making the antibody too. But perhaps it does not always attack human proteins. + +Whatever the details, though, Dr Johnson’s hypothesis is tantalising. If she is right, then nodding syndrome may not be a separate disease at all, but, like river blindness, simply another symptom of infection with O. volvulus. + + + +This article appeared in the Science and technology section of the print edition under the headline “Blame the worm” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21717020-blame-worm-cause-nodding-syndrome/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Entrenched + + +All latest updates + + + + + +Nasty chemicals abound in what was thought an untouched environment + + +Nasty chemicals abound in what was thought an untouched environment + + +Feb 13th 2017 | Science and technology + +A messenger from the deep + + + +NOT far off the coast of Guam lies the deepest point on Earth’s surface, the Mariana trench. Its floor is 10,994 metres below sea level. If Mount Everest were flipped upside down into it, there would still be more than 2km of clear water between the mountain’s base and the top of the ocean. Such isolation has led many to assume that it and similar seabed trenches will be among the few remaining pristine places on the planet. However, a study led by Alan Jamieson of Newcastle University, in England, has shown that nothing could be further from the truth. As Dr Jamieson and his colleagues report this week in Nature Ecology and Evolution, trenches are actually loaded with pollutants. + +Despite the cold, the darkness and the high pressure, ocean trenches are home to ecosystems similar in many ways to those found on other parts of the planet. In one important respect, though, they are different. This is the source of the energy that powers them. In most ecosystems, sunlight fuels the growth of plants, which are then consumed by animals. In a few shallower parts of the ocean, hydrothermal vents provide energy-rich chemicals that form the basis of local food chains. No vents are known to exist below 5,000 metres, though, and no sunlight penetrates a trench. The organisms found in them thus depend entirely on dead organic material raining down upon them from far above. + + + +Since these nutrients, having once flowed into a trench, never make their way out again, Dr Jamieson found the notion that trenches have somehow remained untouched by human activities questionable. He suspected that long-lived pollutants such as polychlorinated biphenyls (which were once used widely in electrical equipment) and polybrominated diphenyl ethers (employed in the past as flame retardants) might have made their way into the bodies of organisms living in trenches. + +To test this idea out, he and his colleagues sent an unmanned lander to the bottom of the Mariana trench and also to the bottom of the Kermadec trench, near New Zealand. This lander fell to the seabed and spent between eight and 12 hours there, capturing amphipods (a type of crustacean, pictured) using funnel traps baited with mackerel. At the end of its mission it jettisoned some ballast and floated back to the surface with its prey. + +In total, the lander collected specimens from ten sites in the two trenches. The shallowest site sampled was 7,227 metres down in the Kermadec trench. The deepest, in the Mariana, was 10,250 metres. When the team looked for pollutants in the captured amphipods, they found that polybrominated diphenyl ethers were indeed present, but at moderate concentrations. Levels of polychlorinated biphenyls, however, were almost off the scale. + +In animals collected from clean coastal environments, polychlorinated-biphenyl levels do not normally exceed one nanogram (billionth of a gram) per gram of tissue. In grossly polluted areas, like the Liao river in China, that level may rise a bit above 100 nanograms. In the Mariana trench, Dr Jamieson found, amphipods dwelling at 10,250 metres yielded 495 nanograms per gram of the pollutant. Those 8,942 metres down yielded 800 nanograms. And at 7,841 metres he and his colleagues discovered the staggering level of 1,900 nanograms per gram of amphipod tissue analysed. Values from the Kermadec trench were more modest, but still pretty high—ranging from 50 nanograms to 250 nanograms per gram. + +Precisely why the Mariana trench has such elevated levels of polychlorinated biphenyls remains unclear. Dr Jamieson suspects it has to do with the trench’s proximity to the North Pacific Subtropical Gyre, a whirlpool hundreds of kilometres across that has amassed enormous quantities of plastics over the years, and which has the potential to send the pollutants that bind to those plastics deep into the ocean as the plastics degrade and descend. + +What consequences all this has for the Mariana’s organisms is unclear. Polychlorinated biphenyls disrupt the hormone systems of some animals that dwell nearer the surface, and can also cause cancer, so the news is unlikely to be good. But what Dr Jamieson’s work shows beyond peradventure is that no part of Earth’s surface is safe from the activities of Man. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21716891-entrenched-nasty-chemicals-abound-what-was-thought-untouched-environment/print + + + +上一項 文章 章節 下一項 + + + + + +Science and ... 章節 Obituary + + + + + +Books and arts + + +The evolution of Islam: The road once travelled + +Northern Europe: Island of mystery + +18th-century literary life: A man in full + +Late style: When time is precious + +Johnson: A taxonomy of dishonesty + +Science and ... 章節 Obituary + + + + + +文章 章節 下一項 + + + + + +The Islamic Englightenment + + +A counter-argument to the “clash of civilisations” + + +What happened when Islam encountered modernity two centuries ago + + +Feb 18th 2017 + + + + + +The Islamic Enlightenment: The Modern Struggle Between Faith and Reason. By Christopher de Bellaigue. Bodley Head; 398 pages; £25. To be published in America by Liveright in April; $35. + +FEW topics are as bitterly contested today as the nature of Islam. America has just elected a president who speaks pointedly of “Islamic terrorism”; his predecessor balked at connecting Islam with violence and said those who did, including terrorists, were misreading the faith. + + + +In Western intellectual debates, meanwhile, some maintain that Islam stultifies its followers, either because of its core teachings or because in the 11th century Islamic theology turned its back on emphasising human reason. Others retort indignantly that the Islamic world’s problems are the fault of its Western foes, from crusaders to European colonists, who bruised the collective Muslim psyche. + +A new book by Christopher de Bellaigue, a British journalist and historian of the Middle East, hews to the latter side, but with an unusual twist. He describes how Islam’s initial encounter with modernity, two centuries ago, had some benign consequences and he sees that as a basis for hope. Sceptics will inevitably call the book’s title, “The Islamic Enlightenment”, naive or oxymoronic. + +Still, having focused for a number of years on Iran and modern Turkey (from where he reported for The Economist), Mr de Bellaigue is well-placed to tease out at least one strand of the debate about Islam: the reaction to European influence as it unfolded over the 19th century in the political and cultural centres of the Muslim world following Napoleon’s invasion of Egypt in 1798. + +The author succeeds in his main purpose, which is to show that in Cairo, Istanbul and Tehran, prominent figures embraced aspects of Western thought and technology with discernment and gusto while remaining good Muslims. His heroes are writers, doctors, generals and sultans. They include Abdulrahman al-Jabarti, an Egyptian sheikh who articulated the fascinated shock with which his compatriots greeted the arrival of Napoleon, accompanied by scientists and scholars. Jabarti had grown up believing that his own faith’s superiority should assure success in war. However, his honest, lively mind had to acknowledge both the invaders’ more effective firepower and the intellectual heft which the French were bringing to the study of his homeland. + +In Istanbul the sultan, Mahmud II (pictured), responded to the rising strength of Western powers by imitating them. He curbed the rapaciousness of his civil servants and clerical reactionaries. By removing religious restraints on the study of the body, he ushered modern hygiene and medicine into a region ravaged by plague. + +In Persia, meanwhile, Abbas Mirza, a charismatic prince, drew on French and British help to modernise an army run on medieval lines. Young Persians were sent to train in Britain and proved quick learners. One of them, Mirza Saleh, wrote a remarkable account of his travels and became the country’s first journalist. + +Mr de Bellaigue shows that in the Islamic world, just as in the West, efficient forms of transport and communication made it easier for intelligent individuals, including women, to share ideas. This is one example of the rich detail that his research brings to the stories of these Muslim modernisers and the violent reaction they sometimes triggered. + +In the book’s final two chapters, there is an abrupt change of pace as the author speeds through Islam’s dealings with European colonial powers during the late 19th and, above all, in the early 20th century. It is a fairly accomplished gallop through difficult terrain and its purpose is to show, in very broad terms, why relations between Muslims and Westerners would eventually turn so sour. Western policies became greedier and more cynical, especially during and after the first world war, and this triggered a sharp reaction in the Muslim world, enraging humble, pious folk as well as clever elites. + +The author empathises with the resentment felt by Muslims over being used as geopolitical pawns and over the arbitrary borders that were drawn by Europeans. That prompts him to write with a degree of understanding about all the popular movements that successively shook Islam’s heartland, including Turkish nationalism, the Muslim Brotherhood in Egypt and even the Iranian uprising of 1979. + +He acknowledges that these last two movements amounted to a form of “counter-enlightenment”, reinstating theocracy, but he insists that even the mullahs’ Iran has some modernising features: they educated an unprecedented number of girls. + +Mr de Bellaigue is equally adamant that the positive legacy of the period closest to his heart (the early and mid-19th century) is still partially intact. For him, the very fact that there was once an era in which the Islamic world drew, selectively and intelligently, on Western ideas and technology while remaining true to itself, still gives hope. For one thing, it means that Muslims now migrating to the West retain, deep in their collective memories, an intimation that Islam can flourish in an enlightened form. His book thus offers a refreshingly optimistic counterpoint to the idea that Muslim and Western world-views are doomed to clash. + + + + + +This article appeared in the Books and arts section of the print edition under the headline “The road once travelled” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717017-what-happened-when-islam-encountered-modernity-two-centuries-ago-counter-argument/print + + + +文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Island of mystery + + +The long story of a small German island in the North Sea + + +The archipelago of Heligoland has a modern parallel + + +Feb 18th 2017 + +A clod washed away by the sea + + + +Heligoland: Britain, Germany and the Struggle for the North Sea. By Jan Ruger. OUP; 370 pages; $34.95 and £25. + +AS A historical oddity, the story of Heligoland—a partly populated lump of rock in the North Sea—is worth readers’ attention. Its rust-red cliffs were ruled mostly by Danes until 1807. Then Britain seized the island, just 46km (29 miles) off the continental coast, using it as a forward base to break Napoleon’s economic blockade. Otto von Bismarck, a Prussian statesman, craved the outcrop, and in 1890 Britain ceded it to Germany in exchange for a free hand in the former slave-trading sultanate of Zanzibar. + + + +In these upheavals Heligoland’s inhabitants (today they number roughly 1,400) were never consulted. It seems they cared little, as long as preferential taxes and steady flows of visitors from the mainland continued to let them prosper. Even under British control, Heligoland was a beloved destination for throngs of German romantic painters, musicians, pamphleteers and poets. A poem written on the island by Hoffmann von Fallersleben, in August 1841, became the lyrics of Germany’s national anthem. Day-tripping tourists crowded its spa resorts and celebrated pollen-free air, gambling and dancing. + +For Jan Ruger, the author of a brisk account of the past two centuries on Heligoland, the island matters for reasons more serious than its remote peculiarity. He calls Heligoland “an apt location from where to rethink the Anglo-German past.” It is indeed a good vantage point. When ties were friendly, as in the last decade of the 19th century, the island saw remarkable intermingling of German and British customs, language and laws. At the time, though living under the German flag, Heligolanders could even elect to be British citizens and serve in the Royal Navy. + +Then during periods of antagonism, notably in the first half of the 20th century, the island became a symbol of bitter confrontation between two of Europe’s strongest powers. Before the first world war British newspapers and politicians including Churchill vowed there must be “no more Heligolands”, lamenting the decision to cede even the smallest territory to a rising enemy. Germany made the island a “monument” to nationalism, writes Mr Ruger. By the 1920s Hitler and Goebbels liked to be seen visiting the island, from which they would gaze over the sea towards Britain. Pro-Nazi painters depicted muscular eagles soaring above Heligoland’s cliffs. In both the wars, Germany fortified the rock and built mammoth harbours for submarines and ships. After each war, Britain flattened the place. + +Mr Ruger makes his case that Heligoland’s fortunes are a useful bellwether of wider relations and he relates his story in an engaging style. Wisely, he never quite suggests that the island—even as a military outpost—was of much more than symbolic importance. Heavily fortified Heligoland did not prevent Britain’s navy, for example, from blockading Germany from afar in the first world war. + +More people should know Heligoland’s story for the echoes it has today. The late 19th century saw an emerging, militaristic great power, with a fast-growing navy, eager to exploit a speck of land in the ocean even if that provoked an established global power. Much the same is happening with China, as it militarises atolls in the South China Sea. Frantic debates in Britain, just over a century ago, about Germany’s intentions in Heligoland, sound strikingly similar to discussion today, in America, over China’s rise. Geopolitics, like history, has a habit of repeating itself. + + + +This article appeared in the Books and arts section of the print edition under the headline “Island of mystery” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717015-archipelago-heligoland-has-modern-parallel-long-story-small-german/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +A man in full + + +The many contradictions of Jonathan Swift + + +The Anglo-Irish rebel, best understood through the society that shaped him + + +Feb 18th 2017 + + + + + +Jonathan Swift: The Reluctant Rebel. By John Stubbs. W.W. Norton; 752 pages; $39.95. Viking; £25. + +“A TALE OF A TUB”, “Drapier’s Letters” and “A Modest Proposal”, which envisaged the Irish poor farming infants for the tables of the wealthy, all made Jonathan Swift famous in his time. But these attacks on abuse of power and injustice, readable as they are, are of limited interest now. By contrast “Gulliver’s Travels” endures and will continue to do so for its narrative and message. It is erroneously considered to be a children’s book because most readers come across it at an early age in abridged, illustrated editions that focus on the voyages to Lilliput and Brobdingnag and the arresting experiences of being first a giant in a land of little people and then “terribly small and vulnerable” in a country of giants. Swift’s tales of these encounters, and subsequent ones with the virtuous Houyhnhnms and odious Yahoos, were in fact satires designed to remind his contemporaries that the world is not “just what we are told it is on our own bit of earth…no civilisation has a freehold on ‘normality’”. This is all too readily forgotten today. + + + +A man of many contradictions, torn in his loyalties, Swift was born in Ireland in 1667 of English descent. Increasingly, as dean of St Patrick’s cathedral in Dublin, he would campaign for Ireland and its frequently starving people. But he regarded it as “where he was obliged to live”. England, its mightier neighbour, home to fellow-scribblers—Alexander Pope, Joseph Addison and John Gay—was “where he wanted to be”. At first a Whig, he became “the most articulate champion” of the Tory government of 1710-14, despite preferring to be “indifferent to party politics”. A high Anglican but no Jacobite (as rumoured), convinced that “the Church of England was right”, he was more hostile to Nonconformists and Dissenters than to Roman Catholics. A paradox, “thrillingly rebellious and self-assured, yet stoutly institutional”, he was a “velvety writer” of savage attacks on government and a “titanic patriot”. + +Swift’s life was shaped by the upheavals and civil war that began in 1642. “Most heinously of all”, they caused him to be born in Ireland after his parental family was dislodged from where they belonged. In his 20s he lived through the Glorious Revolution and the conflicts in Ireland that culminated in William III’s victory over the deposed Stuart monarch at the battle of the Boyne in July 1690 (commemorated in Ulster to this day). He idolised his origins, longed for an English, pre-civil war, rural idyll that had never truly existed, hated change “and indeed the movement of time itself” which was “shifting in the direction of irrevocable decay”. Emotionally and physically, he passed his life “between the two islands, a prisoner of the Irish Sea”. + +As in his political opinions, so in his personal life, Swift was inconsistent. At times he was very generous, at others excessively mean. He was loved for his great wit and entertaining company but, partly perhaps because he suffered from deafness, vertigo, short sight and a “lurking melancholy”, he could be “very irritable” and had “no command of his temper” . + +His “dreadfully delicate sense of honour” could cause him to treat those closest to him with unreasonable cruelty or neglect. This was particularly the case with the most important women in his life, the two Esthers, Johnson and Vanhomrigh, known as “Stella” and “Vanessa”. He loved them both and wrote to them frequently. They moved to Dublin for him and he greatly enjoyed their company, but countenanced marriage with neither and stayed away when they were dying. + +John Stubbs’s painstaking, scholarly book is much more than a life of Swift. It is an extended, thorough history of literary, clerical, social and political life in Ireland and England during the century from 1640. An immense amount of attention is devoted to obscure individuals and events and the general reader may prefer to read Victoria Glendinning’s much shorter, yet full and enlightening, biography which came out in 1998. However, Mr Stubbs’s account has a few surprising factual errors—the battle of the Boyne, arguably the best-remembered event in Irish history, is dated as 1689, a year early, and the medieval town of Kilkenny is placed “60 miles to the south-east” of Dublin (which would put it smack in the middle of the Irish Sea). That said, Mr Stubbs’s work is a magnificent achievement and an engrossing read that will surely represent the last word on his subject for many years to come. + + + +This article appeared in the Books and arts section of the print edition under the headline “A man in full” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717016-anglo-irish-rebel-best-understood-through-society-shaped-him-many/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +What is late style? + + +Why so many artists do their most interesting work in their final years + + +When time is precious, composers and playwrights outdo themselves + + +Feb 18th 2017 + + + + + +OUT, out, brief candle! As life nears its end, thoughts can acquire urgent clarity. This truth is more perceptible among some artists than others; novelists, for example, find endless ways of disguising it. But it is so evident among playwrights, composers, and visual artists that “late style” has become an accepted critical concept. Consider the late plays of Henrik Ibsen, furiously rattling the bars of the bourgeois cage. Discount for a moment a brain-researcher’s recent suggestion that the abstraction of Willem de Kooning’s late paintings reflects the onset of dementia, and consider instead the late works of Vincent van Gogh and Francisco Goya. + +Look at Goya’s “Black Paintings”, the most famous of which is “Saturn Devouring his Son”. No falling-off in technical mastery there, but a view of humanity which is visionary in its hellishness. Look at the paintings which Van Gogh made during his days in the asylum at Saint-Rémy, such as “The Olive Trees” from 1889 (pictured). Observation has given way to a celebratory stylisation, as swirling brushstrokes reflect exuberant patterns of clouds, trees, flowers and swelling ears of wheat. For these artists “late style” meant an encounter—one terrible, the other joyful—with the hyperreal. + + + +The term “late style” was coined by Theodor Adorno, a German Marxist philosopher, as a label for his doctrinaire view of Beethoven. For him, Beethoven’s last works were the triumphant expression of a determined refusal to resolve life’s conflicts harmoniously. This view was later endorsed by Edward Said, a Palestinian-American writer and academic, who—in a posthumous article in the London Review of Books—declared that this “negativity” of late Beethoven was actually a strength. “This lateness is a thing in its own right,” Said wrote approvingly, “not a premonition or obliteration of something else.” + +Now musicians with very different views are wading into the lateness debate. In a recital series at the Wigmore Hall in London last year, Sir Andras Schiff played the last piano sonatas of Haydn, Mozart, Beethoven and Schubert. The connecting thread was a culminating aesthetic mastery. In “Late Style”, a series of recitals in America and Europe through the spring this year, Jonathan Biss, a young American pianist, is presenting chamber works by three of those composers, as well as Carlo Gesualdo, Robert Schumann, Benjamin Britten and Johannes Brahms. + +For each of these composers, late style meant something different. Gesualdo had murdered his wife and her lover, and spent his last days in a torment which one can sense in his crazily discordant late works. The emotional devastation of Schumann’s final days becomes starkly evident in his ruthlessly pared-down Gesänge der Frühe (“Songs of Dawn”). The Britten string quartet which Mr Biss has chosen shows the composer delighting in an extreme—and to him quite new—economy of expression. The chaotic middle movement of Mr Biss’s chosen Schubert sonata reflects the composer, who was dying of syphilis, going to pieces in rage and terror. Brahms’s late works suggest a man whose emotional energy has been sapped dry; Beethoven’s suggest the opposite. What links these composers, as Mr Biss points out, is that “with each of them, something has happened to completely change their style”. + +What is that something? It seems to be an amalgam of circumstance and psychology, and no composer exemplifies this more vividly than Beethoven. Deafness to the world of real sound gave Beethoven the freedom to create hitherto undreamed-of new sound-worlds, and that played into his vaulting ambition to address posterity. + +Moreover, his late works were deeply symbolic, sometimes seeming, through sheer technical illusionism, to make time stand still—as though he wanted to extend his own life. In “Late Beethoven” (2003) Maynard Solomon, an American musicologist, points to the frequency—most clearly seen in the Hammerklavier sonata and the Ninth Symphony—with which a series of themes is tried and impatiently rejected, before the right one is hit upon to launch a finale. Mr Solomon likens this process to a search for the thread out of a labyrinth, and the liberated playfulness of the final Bagatelles indicates that Beethoven had indeed found that thread. + +As Fiona Maddocks observes in “Music for Life”, an elegant collection of mini-essays published last year, people tend to over-romanticise last works, and there is some truth in that. But many great artists experience a psychological and artistic step-change late in life. For them, life’s candle burns most brightly when it is about to go out. + + + +This article appeared in the Books and arts section of the print edition under the headline “When time is precious” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717018-when-time-precious-composers-and-playwrights-outdo-themselves-why-so-many-artists-do/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Johnson + + +Why the press should call out politicians when they lie + + +And why lying isn’t the same as talking nonsense + + +Feb 18th 2017 + + + + + +HIS inauguration was the biggest ever. Donald Trump could not make it through the first days of his presidency without saying something that was demonstrably untrue. The New York Times dubbed it a “falsehood”. When Mr Trump said that over 3m people had voted illegally, the Times headline was sharper: “Trump Repeats Lie About Popular Vote in Meeting with Lawmakers”. That word keeps recurring. CNN and MSNBC (both cable-news stations) recently said that Mr Trump had lied about the murder rate being the highest in almost a half-century. (It is in fact near historical lows.) Mr Trump says a lot of things that are nakedly false. Are they all lies? + +There is a difference between falsehood and lying. The Oxford English Dictionary defines a “lie” as a “false statement made with intent to deceive”. It says “falsehood” is “an uttered untruth; a lie. Also false statements, uttered untruth, in general.” Falsehood is thus the wider word, covering lying and “uttered untruth, in general”. Lying requires an intent to deceive—which implies knowing that what you’re saying isn’t true. + + + +What does a journalist know about the contents of Donald Trump’s mind? Certainly, the president cannot resist talking up his own greatness. Some have accused him of suffering from narcissistic personality disorder. Long-distance mental-health diagnoses are beyond the remit of the language columnist. But the media’s overuse of “lie” indicates that journalists gloss all too easily over the fine distinction between “lie” and “falsehood”. + +Certain verbs, “factive” ones, can be used only when the information that follows is true. You can’t say, “He admitted that the moon was made of styrofoam” or “She learned that the UN was poisoning the water supply” unless you are aiming for a comic or jarring effect. “Admit”, “learn” and other words like them presuppose the truth of the following clause. + +“Lie” is special, a special kind of “anti-factive” verb. Not only must the information in question be false, but the user of the verb “to lie” must know—or have very good reason to believe—that the speaker knows it to be false. If Mr Trump really does have a pathological need to believe fantastic things about his greatness, he may very well think that he must have beaten Hillary Clinton in the popular vote, and that the only reason he didn’t was down to the millions of illegal votes. + +For a “lie”, Mr Trump would have to have known the truth. If he did, he told a whopper that immediately gave rise to demands for proof—proof he could not provide. Mr Trump did not modify his words, back down or duck further questions. If he was lying, he was setting himself up for an ever-bigger embarrassment. Instead, the president doubled down, promising a thorough investigation into voter fraud. It’s possible that he believes his own guff. The same goes for the murder rate: Mr Trump said something wildly wrong about something easily checkable, leaving an adviser, Kellyanne Conway, flailing to cover for him by saying that Mr Trump may have been “relying on data perhaps for a particular area; I don’t know who gave him that data”. + +Using “lie” strictly is not easy; it is impossible to know another mind perfectly. But politics often has a way of leaving evidence: e-mails, memos, witnesses. Michael Flynn, briefly Mr Trump’s national security adviser, said he never discussed sanctions with Russia’s ambassador. The Washington Post reported that America’s spies knew otherwise. He had to resign. + +Journalists should be tough when powerful people say untrue things. When those statements first hit the headlines, “false” packs plenty of punch. Reporters should demand to know the reason for the false statements. In cases like Mr Flynn’s, with clear evidence, they can say “he lied”. In cases like that of Mr Trump and the murder rate, journalists should demand to know his sources, perhaps asking whether the president trusts conspiracy-theorist websites over his own FBI. It hardly spares Mr Trump to call him “deluded” rather than a liar. Finally, there is the possibility that the president simply has no regard for the truth at all, not even caring whether he’s right or wrong. In that case, the press lacks an easy term for this kind of falsehood. Many won’t print “bullshit”, one proposed suggestion. + +Using exact terms will only make it more powerful when the press catches Mr Trump red-handed in a “lie”. Reporters can be patient as well as precise. His presidency is still young. + + + + + +This article appeared in the Books and arts section of the print edition under the headline “A taxonomy of dishonesty” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717019-and-why-lying-isnt-same-talking-nonsense-why-press-should-call-out-politicians/print + + + +上一項 文章 章節 下一項 + + + + + +Books and arts 章節 Economic and ... + + + + + +Obituary + + +Brunhilde Pomsel: A typist’s life + +Books and arts 章節 Economic and ... + + + + + +文章 章節 下一項 + + + + + +A typist’s life + + +Obituary: Brunhilde Pomsel, Joseph Goebbels’s secretary + + +The Nazi’s assistant died on January 27th, aged 106 + + +Feb 18th 2017 + + + + + +THERE was only one time she felt afraid of him. But well into her 11th decade, when she remembered it, Brunhilde Pomsel would tremble and the hairs would start to lift on her arms. The day was February 18th 1943, when she had gone with a colleague to the Berlin Sportpalast to hear her boss give a speech. Everyone at the Ministry of Enlightenment and Propaganda was meant to go; as a junior, one of six secretaries in her office, she hadn’t known how to get out of it. So there they were, in the huge sports stadium, among the party high-ups in the reserved seats. + +She knew Joseph Goebbels as soon as he appeared, of course: small, frail and tense, with his exquisitely neat hair and hands and the dragging club foot, which always made her feel sorry for him. What she did not recognise was what he became as he spoke: a raving, ranting midget, foaming and roaring about the need for total war, and making the crowd roar back its approval. She and her colleague gripped hands in terror, forgetting to applaud, until an SS man poked their shoulders to remind them. They clapped then, bewildered. + + + +As for the speech itself, she didn’t take it in. She was apolitical, as she kept saying when, seven decades later, she began to talk about it. Stupidly so, but there it was. Yes, she had voted for Hitler in 1933 because she felt, like most Germans, that Germany had been betrayed by its own government and kicked around by other countries. She joined the Nazi party then, too, because she had to join to get a job in state radio, but she celebrated by having coffee with her Jewish best friend Eva, so that was all the difference it made to her. And she had gone to work for Goebbels, Hitler’s chief of propaganda and architect of his most savage schemes, because she had an excellent typing speed and was ordered to. As a good Prussian girl, she did her duty. + +Besides, it was a nice job. The pay was great, 275 marks a month, with flexible hours and pleasant people. As for her work, it was the usual round of typing, taking calls, sorting post, filing. She had to change some figures once, as the war turned, reducing the numbers of Germans killed and increasing the number of rapes of German women by Soviet soldiers. She was also given the file of Sophie Scholl, a student leader of the anti-Nazi resistance, who was executed for handing out leaflets at the airport. Her instructions were not to look at it, but to put it in the safe. She did as she was told, and felt proud for having obeyed; proud, too, to have the key of the safe, but never to use it without Goebbels’s permission. The very thought that she had his trust made her feel a little more noble. + +Not that she often saw him. He was polite but distant, and she wondered whether he knew her name. He invited her one day to dinner at his villa, even seating her next to him, but never said one word to her. If she had been a Hollywood starlet, he would have been all over her; but she was only medium pretty, and wore glasses. Magda, his wife, was kind, and gave her a beautiful blue wool suit when her flat was bombed. The six children were darlings, so well-behaved, and played on her typewriter when they came to the office. + +Her Jewish friends + +The spell she was under—the spell everyone was under—broke only in April 1945, when she spent ten days cowering from Soviet artillery in Hitler’s bunker, trying to get drunk and stay drunk, gulping cold food out of cans, and numb as a lost soul. She planned to tell the Russians, when they came, that she was only Goebbels’s typist. He had already shot himself and Magda and they had murdered the children, pushing cyanide into their mouths as they slept. The thought of that made her cry bitterly, unable to forgive them. + +But what about the murders of all those others, that business of the Jews? She never knew they had been killed. There were camps; the Jews went to them; and then were sent on, she was told, to repopulate the eastern lands. That all made sense. As for the Jews she knew, their lives got difficult, but she was not sure why. Her first boss, Hugo Goldberg, a lawyer, kept cutting her hours and pay as his clients dwindled. Her friend Eva had to stop visiting her at the ministry, and eventually disappeared; she found her many decades later, on the death-roll of Auschwitz. Just before her death she confided to the maker of a documentary about her that the love of her life had been Gottfried Kirchbach, a Jew; he had escaped to Amsterdam, but her regular visits to him aroused too much suspicion, and had to end. For medical reasons she also had to abort his child. She never married afterwards. + +This untypical story had not emerged in the documentary, or in any other interview she gave. Some things she still kept hidden—including, perhaps, the fact that she could be brave. She was tired of everyone saying she must have known more and should have resisted. No, she had been a silly superficial coward, but she had done nothing to be ashamed of. What could a typist have to apologise for? + +Besides, she had been punished: five years peeling potatoes and sewing laundry sacks in Soviet prisons, no bed of roses, before she returned to Germany and other secretarial jobs. Back in her flat in ransacked Berlin, she found the blue suit Magda had given her still hanging in the wardrobe. She wore it for many years. + + + +This article appeared in the Obituary section of the print edition under the headline “A typist’s life” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/obituary/21717021-nazis-assistant-died-january-27th-aged-106-obituary-brunhilde-pomsel-joseph-goebbelss/print + + + +文章 章節 下一項 + + + + + +Obituary 章節 + + + + + +Economic and financial indicators + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Defence budgets + +Markets + +Obituary 章節 + + + + + +文章 章節 下一項 + + + + + +Interactive indicators + + +Feb 18th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21717027/print + + + +文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Output, prices and jobs + + +Feb 18th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717083-output-prices-and-jobs/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Trade, exchange rates, budget balances and interest rates + + +Feb 18th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717074-trade-exchange-rates-budget-balances-and-interest-rates/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +The Economist commodity-price index + + +Feb 18th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717087-economist-commodity-price-index/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Defence budgets + + +Feb 18th 2017 + + + + + +The ten biggest defence budgets in 2016 added up to over $1.1trn, according to the International Institute for Strategic Studies (IISS). America remains the biggest spender, China ranks second. The balance of power is shifting to Asia though: between 2012 and 2016 defence spending in Asia grew on average by 5-6% a year in real terms and now stands at $367bn. China makes up 10% of global military spending, up from 3% a decade ago. Commodity exporters in the Middle East have been hit by low oil prices: spending in the region was down by 12% in real terms last year. Saudi Arabia has particularly suffered: its defence budget shrank by 31% last year, although it was still worth almost 10% of GDP. + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717073-defence-budgets/print + + + +上一項 文章 章節 下一項 + + + + + +上一項 文章 章節 下一項 + + + + + +Markets + + +Feb 18th 2017 + + + + + +This article appeared in the Economic and financial indicators section of the print edition + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717090-markets/print + + + +上一項 文章 章節 下一項 + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.02.25.txt b/homeworks/B20769/homework1/data2/2017.02.25.txt new file mode 100644 index 0000000..e7f94b3 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.02.25.txt @@ -0,0 +1,10500 @@ +2017-02-25 + +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +| Next section | Main menu | + +* * * + + + + + +The world this week + + +Politics this week [Fri, 24 Feb 08:14] + +Business this week [Fri, 24 Feb 08:14] + +KAL’s cartoon [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Politics this week + + + + + +From the print edition | The world this week + + +Feb 25th 2017 + + + + + +A series of terrorist attacks struck Pakistan, including one on a Sufi shrine that killed 88 people. The army blamed infiltrators from Afghanistan, sealed the border and shelled what it said were terrorist bases on the Afghan side. See article. + +In Afghanistan, police surrounded the house of Abdul Rashid Dostum, the vice-president, in an attempt to arrest nine bodyguards, who have been accused of beating and raping a political rival. + +A former policeman from the Philippine city of Davao claimed he had run a vigilante group that had murdered criminals at the behest of the mayor at the time, Rodrigo Duterte, who became president in June. + +The IMF agreed to lend Mongolia $440m to help it weather a balance-of-payments crisis, paving the way for further loans from the Asian Development Bank, Japan and South Korea. See article. + +China said it would suspend imports of coal from North Korea, all but eliminating one of the isolated communist state’s main sources of revenue. Malaysia, meanwhile, said it was looking for several North Korean officials in connection with the murder of the half-brother of Kim Jong Un, the North Korean dictator. See article. + +A court in Hong Kong sentenced the territory’s former chief executive, Donald Tsang, to 20 months in prison for misconduct while in office. Mr Tsang was found guilty of failing to declare that he had rented a flat in the Chinese city of Shenzhen from a major shareholder in a broadcast company that Mr Tsang approved licences for. + +Tightening the border + +America’s Department of Homeland Security published guidelines to implement Donald Trump’s executive order cracking down on illegal immigrants. Among other things, the new rules make it much easier to deport people who cannot prove they have been living in the United States for two years. See article. + + + + + +Mike Pence went to Europe to assure America’s allies that it is still committed to NATO, whatever his boss may have said. But the vice-president also called on Europeans to boost defence spending to honour their commitment to the military alliance. + + + +Mr Trump selected a new national security adviser following the defenestration of Mike Flynn. Lieutenant-General H.R. McMaster is an army officer who was widely praised for his command during the Iraq war, where he pursued a successful counter-insurgency strategy in the city of Tal Afar. See article. + +Too close to call + +Ecuador’s presidential election looked likely to go to a second round in April, according to the electoral commission. With nearly all the votes counted, Lenín Moreno, the candidate backed by the president, Rafael Correa, is well ahead but appears to have fallen short of the 40% required to avoid a run-off. He will probably face Guillermo Lassom a conservative banker. + +José Serra resigned as Brazil’s foreign minister, because of health problems. He was twice an unsuccessful candidate for the presidency. + +The last redoubt + +Iraq’s army launched its main assault on western Mosul, having captured the eastern half of the city from Islamic State last month. The fighting in the western half is expected to be harder. In Syria, Kurdish groups advanced against IS positions in the country. See article. + +An Israeli soldier who killed a wounded Palestinian attacker in Hebron a year ago was sentenced to 18 months in jail. Many were outraged, either because they thought the sentence too light; or because they thought he should not have been charged at all. + +South Africa’s High Court blocked a move by the country’s president, Jacob Zuma, to withdraw from membership of the International Criminal Court, saying that he may not do so without consulting parliament. Some Africans see the court as targeting Africa disproportionately. + +A famine was declared in parts of South Sudan, caused by a civil war and economic collapse. It is the first famine to be declared anywhere in the world in six years. + +The centre ground + +In another twist to the French presidential race, François Bayrou, a centrist politician, announced that he would not run but would instead back Emmanuel Macron, a former economy minister who is running as an independent. Although Mr Macron’s campaign has gathered momentum, Marine Le Pen, the leader of the right-wing National Front, still leads polls for the first round. + +Selahattin Demirtas, the leader of the pro-Kurdish Peoples’ Democratic Party in Turkey, was convicted of insulting the Turkish state (ie, criticising the president). The same day, a court upheld a conviction for terrorism of the other leader of the party. The trial also began of 47 former soldiers for alleged involvement in last years’ coup attempt. + + + +Britain’s Brexit bill, which will permit the government to negotiate the country’s departure from the EU, was debated by the House of Lords, Parliament’s unelected upper house. Theresa May raised eyebrows by perching herself on the steps of the royal throne; it is three decades since a prime minister last attended a debate in the Lords. Meanwhile, Jean-Claude Juncker, the president of the European Commission, warned Britain that it should expect a hefty bill and would not leave the EU “at a discount or at zero cost”. See article. + +Cressida Dick was appointed as the new commissioner of London’s Metropolitan Police, the first woman to head Britain’s biggest force. Ms Dick was in command of a botched operation that led to the killing of an innocent man after the terrorist attacks on London’s transport network in 2005. A subsequent inquiry exonerated her of any blame. See article. + +Matteo Renzi stepped down as the leader of Italy’s ruling Democratic Party amid criticism that he has failed to meet the challenge of the Five Star Movement, a rising populist party. Mr Renzi resigned as prime minister in December. + +Keeping it in the family + +The president of Azerbaijan, Ilham Aliyev, appointed his wife as vice-president. Mehriban Aliyeva is a member of parliament who runs a foundation named after the previous president, who was Mr Aliyev’s father. + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21717437-politics-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Business this week + + +From the print edition | The world this week + + +Feb 23rd 2017 + + + + + +As transient as it was titanic, a proposed $143bn takeover bid by Kraft Heinz for Unilever was withdrawn just a few days after it was leaked to the press. The deal would have been one of the biggest mergers on record, creating a behemoth in consumer products. Kraft’s major shareholders are Berkshire Hathaway, Warren Buffett’s investment company, and 3G Capital, a Brazilian private-equity firm with a reputation for stringent cost-cutting at its takeover targets. Unilever swiftly rejected its advances, but in a rapid response it launched a wide-ranging review of its business. See article. + +Discount offer + +Ending months of uncertainty about a takeover deal that was signed last summer, Verizon said it would pay $350m less for Yahoo following two big cyber-attacks on the internet company’s users that took place before the deal was agreed, but which came to light only late last year. The hacking of up to one billion Yahoo accounts was the largest breach of private data yet, prompting a rethink at Verizon about its offer. It will now pay $4.5bn for Yahoo. + +Apple lodged an appeal at the European Court of Justice against the European Commission’s ruling that the company owes Ireland €13bn ($14bn) in back taxes because of illegal state aid. Apple said, among other things, that the commission had overstepped its mark, did not understand Irish law, and denied it had received preferential tax treatment from the Irish government. Its main contention is that the centre of its profit-driving activities is America and that is where it should be taxed. A hearing will be held in the autumn. + +Amazon announced that it would increase its British workforce by a quarter, adding 5,000 jobs to its current headcount. Apple, Facebook and Google have made similar commitments to increase their presence in Britain recently. American tech companies seem to be less worried than financial firms about the prospect of Britain leaving the EU. + + + + + +Jio, a mobile network in India that has shaken the country’s telecoms industry by offering a free service, announced that it would start charging a small fee for unlimited data. Calls will still cost nothing. + +Cheap as ships + +Hanjin Shipping was declared officially bankrupt and its remaining assets ordered to be liquidated. The South Korean container line filed for bankruptcy protection last August, which led to its ships being denied entry to ports in case they could not pay the port fees. Hanjin was one of the world’s biggest shipping companies a decade ago. It was sunk by a worldwide glut in shipping capacity and an unsustainable debt load. + +BHP Billiton, Anglo American and Glencore were the latest mining companies to report healthy profits, helped by cost-cutting and a rebound in commodity prices. Anglo American reported an annual profit of $1.6bn; in 2015 it had made a loss of $5.6bn. Core earnings for the year at Glencore, which is also a commodity trader, rose 18% to $10.3bn. BHP Billiton’s profit for the last half of 2016 was $3.2bn; in the same period a year earlier it had recorded a $5.7bn loss. + +Special prosecutors in South Korea questioned in custody the de facto head of Samsung Electronics, following his arrest in an influence-peddling scandal that has rocked the government. Lee Jae-yong is being investigated for allegedly paying $36m in bribes in order to smooth the merger of two Samsung affiliates in 2015. + +A write-down in the valuation of its Swiss private bank contributed to a 62% fall in annual pre-tax profit at HSBC, to $7.1bn. Revenue dropped, by a fifth. Meanwhile, Lloyds Banking Group, another British bank, made an annual profit of £4.2bn ($5.7bn), its best since 2006. The government has reduced the stake it took in Lloyds during the financial crisis and the bank is expected to return to full private ownership this year. + +Alien habitats? + +Astronomers discovered seven planets about the size of Earth orbiting a dwarf star some 380trn kilometres (235trn miles) from our own. That is 40 light years away, fairly close as these things go. Scientists think it offers the best chance yet to discover evidence of life, or why life hasn’t evolved, on planets other than Earth. + + + +Tributes were paid to Kenneth Arrow, who has died aged 95. His writings in economics advanced the study of game theory, social choice, majority voting, welfare theory, endogenous growth, contracts, and more. He was a co-recipient of the Nobel economics prize in 1972 for his work on the general equilibrium of markets. Then aged 51, he remains the youngest economist to be awarded the prize. At the time he was described in the New York Times as “a humanist, a scholar who has always tried to apply fundamental theory to…social problems”. + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21717428-business-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +KAL’s cartoon + + + + + +From the print edition | The world this week + + +Feb 23rd 2017 + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21717427-kals-cartoon/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Leaders + + +Renewable energy: Clean energy’s dirty secret [Fri, 24 Feb 08:14] + +Gender budgeting: Making women count [Fri, 24 Feb 08:14] + +Brazil’s pensions: Geronto-generosity [Fri, 24 Feb 08:14] + +Iran and America: No blank cheque [Fri, 24 Feb 08:14] + +Diamonds and marriage: A girl’s new best friend [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +From the print edition | Leaders + + +Feb 25th 2017 + + + + + +ALMOST 150 years after photovoltaic cells and wind turbines were invented, they still generate only 7% of the world’s electricity. Yet something remarkable is happening. From being peripheral to the energy system just over a decade ago, they are now growing faster than any other energy source and their falling costs are making them competitive with fossil fuels. BP, an oil firm, expects renewables to account for half of the growth in global energy supply over the next 20 years. It is no longer far-fetched to think that the world is entering an era of clean, unlimited and cheap power. About time, too. + +There is a $20trn hitch, though. To get from here to there requires huge amounts of investment over the next few decades, to replace old smog-belching power plants and to upgrade the pylons and wires that bring electricity to consumers. Normally investors like putting their money into electricity because it offers reliable returns. Yet green energy has a dirty secret. The more it is deployed, the more it lowers the price of power from any source. That makes it hard to manage the transition to a carbon-free future, during which many generating technologies, clean and dirty, need to remain profitable if the lights are to stay on. Unless the market is fixed, subsidies to the industry will only grow. + + + + + +Policymakers are already seeing this inconvenient truth as a reason to put the brakes on renewable energy. In parts of Europe and China, investment in renewables is slowing as subsidies are cut back. However, the solution is not less wind and solar. It is to rethink how the world prices clean energy in order to make better use of it. + +Shock to the system + +At its heart, the problem is that government-supported renewable energy has been imposed on a market designed in a different era. For much of the 20th century, electricity was made and moved by vertically integrated, state-controlled monopolies. From the 1980s onwards, many of these were broken up, privatised and liberalised, so that market forces could determine where best to invest. Today only about 6% of electricity users get their power from monopolies. Yet everywhere the pressure to decarbonise power supply has brought the state creeping back into markets. This is disruptive for three reasons. The first is the subsidy system itself. The other two are inherent to the nature of wind and solar: their intermittency and their very low running costs. All three help explain why power prices are low and public subsidies are addictive. + +First, the splurge of public subsidy, of about $800bn since 2008, has distorted the market. It came about for noble reasons—to counter climate change and prime the pump for new, costly technologies, including wind turbines and solar panels. But subsidies hit just as electricity consumption in the rich world was stagnating because of growing energy efficiency and the financial crisis. The result was a glut of power-generating capacity that has slashed the revenues utilities earn from wholesale power markets and hence deterred investment. + +Second, green power is intermittent. The vagaries of wind and sun—especially in countries without favourable weather—mean that turbines and solar panels generate electricity only part of the time. To keep power flowing, the system relies on conventional power plants, such as coal, gas or nuclear, to kick in when renewables falter. But because they are idle for long periods, they find it harder to attract private investors. So, to keep the lights on, they require public funds. + +Everyone is affected by a third factor: renewable energy has negligible or zero marginal running costs—because the wind and the sun are free. In a market that prefers energy produced at the lowest short-term cost, wind and solar take business from providers that are more expensive to run, such as coal plants, depressing power prices, and hence revenues for all. + +Get smart + +The higher the penetration of renewables, the worse these problems get—especially in saturated markets. In Europe, which was first to feel the effects, utilities have suffered a “lost decade” of falling returns, stranded assets and corporate disruption. Last year, Germany’s two biggest electricity providers, E.ON and RWE, both split in two. In renewable-rich parts of America power providers struggle to find investors for new plants. Places with an abundance of wind, such as China, are curtailing wind farms to keep coal plants in business. + +The corollary is that the electricity system is being re-regulated as investment goes chiefly to areas that benefit from public support. Paradoxically, that means the more states support renewables, the more they pay for conventional power plants, too, using “capacity payments” to alleviate intermittency. In effect, politicians rather than markets are once again deciding how to avoid blackouts. They often make mistakes: Germany’s support for cheap, dirty lignite caused emissions to rise, notwithstanding huge subsidies for renewables. Without a new approach the renewables revolution will stall. + +The good news is that new technology can help fix the problem (see article). Digitalisation, smart meters and batteries are enabling companies and households to smooth out their demand—by doing some energy-intensive work at night, for example. This helps to cope with intermittent supply. Small, modular power plants, which are easy to flex up or down, are becoming more popular, as are high-voltage grids that can move excess power around the network more efficiently. + +The bigger task is to redesign power markets to reflect the new need for flexible supply and demand. They should adjust prices more frequently, to reflect the fluctuations of the weather. At times of extreme scarcity, a high fixed price could kick in to prevent blackouts. Markets should reward those willing to use less electricity to balance the grid, just as they reward those who generate more of it. Bills could be structured to be higher or lower depending how strongly a customer wanted guaranteed power all the time—a bit like an insurance policy. In short, policymakers should be clear they have a problem and that the cause is not renewable energy, but the out-of-date system of electricity pricing. Then they should fix it. + +This article appeared in the Leaders section of the print edition under the headline “Clean energy’s dirty secret” + + + + + +View comments + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21717371-thats-no-reason-governments-stop-supporting-them-wind-and-solar-power-are-disrupting/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Making women countWhy governments should introduce gender budgeting + + +Sexual equality makes economic sense; governments should measure it and budgets promote it + + + + + +From the print edition | Leaders + + +Feb 23rd 2017 + + + + + +IT IS easy to be cynical about government—and rarely does such cynicism go unrewarded. Take, for instance, policy towards women. Some politicians declare that they value women’s unique role, which can be shorthand for keeping married women at home looking after the kids. Others create whole ministries devoted to policies for women, which can be a device for parking women’s issues on the periphery of policy where they cannot do any harm. Still others, who may actually mean what they say, pass laws giving women equal opportunities to men. Yet decreeing an end to discrimination is very different from bringing it about. + +Amid this tangle of evasion, half-promises and wishful thinking, some policymakers have embraced a technique called gender budgeting. It not only promises to do a lot of good for women, but carries a lesson for advocates of any cause: the way to a government’s heart is through its pocket. + + + + + +What counts is what’s counted + +At its simplest, gender budgeting sets out to quantify how policies affect women and men differently (see article). That seemingly trivial step converts exhortation about treating women fairly into the coin of government: costs and benefits, and investments and returns. You don’t have to be a feminist to recognise, as Austria did, that the numbers show how lowering income tax on second earners will encourage women to join the labour force, boosting growth and tax revenues. Or that cuts to programmes designed to reduce domestic violence would be a false economy, because they would cost so much in medical treatment and lost workdays. + +As well as identifying opportunities and errors, gender budgeting brings women’s issues right to the heart of government, the ministry of finance. Governments routinely bat away sensible policies that lack a champion when the money is handed out. But if judgments about what makes sense for women (and the general good) are being formed within the finance ministry itself, then the battle is half-won. + +Gender budgeting is not new. Feminist economists have argued for it since the 1980s. A few countries, such as Australia and South Africa, took it up, though efforts waxed and waned with shifts in political leadership—it is seen as left-wing and anti-austerity. The Nordic countries were pioneers in the West; Sweden, with its self-declared “feminist government”, may be the gold standard. Now, egged on by the World Bank, the UN and the IMF, more governments are taking an interest. They should sign on as the results are worth having. + +Partly because South Korea invested little in social care, women had to choose between having children, which lowers labour-force participation, or remaining childless, which reduces the country’s fertility rate. Gender budgeting showed how, with an ageing population, the country gained from spending on care. Rwanda found that investment in clean water not only curbed disease but also freed up girls, who used to fetch the stuff, to go to school. Ample research confirms that leaving half a country’s people behind is bad for growth. Violence against women; failing to educate girls properly; unequal pay and access to jobs: all take an economic toll. + +Inevitably there are difficulties. Dividing a policy’s costs and benefits between men and women can be hard. Sometimes, as with lost hours of school, the costs have to be estimated. Redesigning the budgeting process upends decades of practice. If every group pressing for change took the same approach, it would become unmanageable. In a way, though, that is the point. Governments find it easy to pay lip-service to women’s rights. Doing something demands tough choices. + +This article appeared in the Leaders section of the print edition under the headline “Making women count” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21717375-sexual-equality-makes-economic-sense-governments-should-measure-it-and-budgets-promote-it-why/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Geronto-generosityFixing Brazil’s pension problem + + +At last the government is dealing with a threat to the country’s future + + + + + +From the print edition | Leaders + + +Feb 23rd 2017 + + + + + +BLESSED with tropical beaches, bossa nova and balletic footballers, Brazil seems like a marvellous place to be young. It is an even better place to grow old. That is because Brazil has among the world’s most generous pension systems. Sadly, the past is now beginning to catch up with it. + +Brazilians start drawing their pensions when they are 58 years old on average, eight years younger than Americans and 14 than Mexicans (see article). Members of some groups can retire even earlier. Female teachers, for example, need to spend just 25 years in the classroom to get a full pension and even fewer for a partial one; many leave before they turn 50. Widows inherit their spouses’ full pension (provided they are 44 or older) without giving up their own. In the OECD, a club of mostly rich countries, pensions replace an average of around 60% of pre-retirement income; in Brazil, 80%. + + + + + +Plush pensions have their origins in the constitution adopted in 1988, which sought to confer as many rights as possible on Brazilians who had suffered under two decades of military rule. The constitution also recognises rights to education and health, but giving a pensioner a monthly cheque is easier. + +Geronto-generosity hurts everyone else. The pensions bill consumes more than half the government’s non-interest spending and, if nothing is done, will within ten years gobble up 80%. As a share of GDP, Brazil spends 50% more on pensions than do members of the OECD on average. Yet it has only half as many over-65-year-olds as a share of the population. The skewed system diverts money from schools, clinics and infrastructure and lures people out of the workforce. The ongoing pension deficit from year to year accounts for more than half the budget deficit of 8.9% of GDP. That is a big reason why Brazil’s benchmark interest rate is as high as 12.25%. Extravagant pensions thus make it hard for the economy to grow. The country is undergoing the longest and deepest slump on record. If Brazil is to restore confidence in its economic future, it must do something about its pensions. + +A good start + +Michel Temer, Brazil’s president, therefore deserves credit for proposing reforms that would make a big difference. Earlier governments tweaked the system. The reforms proposed by Mr Temer, who became president last year after the impeachment of his predecessor, Dilma Rousseff, would go much further. First, they would apply a minimum pension age of 65 to almost everyone (female teachers included). The stipulation of the pensionable age would be removed from the constitution, making it easier to raise the threshold as lives lengthen. To qualify for the most basic pension, all but the poorest would have to contribute for 25 years, rather than just 15. Benefits above that floor would no longer rise in step with the minimum wage, which increased by 80% in real terms in the decade to 2015. Beneficiaries will not be able to draw more than one pension; widows will receive smaller ones. + +If Mr Temer gets this through the reform-shy congress without disfiguring changes, it will be an astounding achievement. Besides mitigating the pension crisis, it would raise hopes for other reforms of Brazil’s big but ineffective state, for example of labour laws and taxes. The real has appreciated against the dollar by more than any other emerging-market currency over the past year, a sign that markets are betting on success. + +That is not certain. Mr Temer has already enacted one big reform, a constitutional freeze on increases in public spending above inflation, but that made nobody feel poorer. The pension plan is the main way of putting the freeze into practice. It will be felt, especially by people near retirement, who will have to work longer than they were expecting. Ms Rousseff’s left-wing Workers’ Party (PT), now the main opposition, hopes to fan their resentment. The PT thunders that Mr Temer is dumping the costs of the crisis on workers. The unelected president does not have the right to carry out reform, it claims. + +In fact, Mr Temer won an election as Ms Rousseff’s running-mate; his presidency and congress, which began debating the reform this month, are constitutionally legitimate. They have no choice but to act. The reform proposal does not fix pensions, but it is a good start. Without it, the economic crisis will deepen and Brazil’s long-term prospects will darken. It is the tonic that the country needs. + +This article appeared in the Leaders section of the print edition under the headline “Geronto-generosity” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21717381-last-government-dealing-threat-countrys-future-fixing-brazils-pension/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +No blank chequeAmerica’s growing toughness towards Iran + + +The Trump administration is right to keep up the pressure on a belligerent Iran + + + + + +From the print edition | Leaders + + +Feb 23rd 2017 + + + + + +AVIGDOR LIEBERMAN, Israel’s pugnacious defence minister, is not one to mince his words. Speaking on February 19th at this year’s Munich Security Conference, he described the challenges facing the Middle East as “Iran, Iran and Iran”. Delegates from the Arab states present might not have relished being seen to agree with the Zionist enemy, but that did not stop them. Saudi Arabia’s foreign minister reckoned that the Iranians have only “stepped up the tempo of their mischief” since the negotiation in 2015 of a nuclear deal between Iran and the world’s six leading powers. And the regional actors are hardly alone in their hostility. The Trump administration placed Iran “on notice” at the start of this month and imposed a limited new set of sanctions, following a medium-range ballistic missile test (see article); Iran responded by testing another one. Is a fresh confrontation, even a conflict, brewing again so soon after the deal of 2015 was supposed to have ushered in an era of peaceful coexistence? + +Perhaps not; but that depends above all on Iran. The hardliners who are in charge in Tehran need to reconsider their priorities. Judging by their actions and rhetoric, they appear to believe that the nuclear agreement (formally known as the Joint Comprehensive Plan of Action) marked the end of a process of rehabilitation. In fact, it goes only part of the way. + + + + + +The purpose of the deal was to put tight limits on Iran’s destabilising enrichment programme—nothing more, nothing less. Under its terms, Iran agreed to rejig a reactor so that it can’t make weaponisable plutonium. It also dismantled most of the centrifuges it had been using to make enriched uranium and eliminated almost all its stockpile of the stuff. The restrictions are to last 15 years and even after that, Iran’s nuclear activities will remain under a highly intrusive inspection regime. In return, the rest of the world agreed to lift the UN-mandated economic sanctions that had crippled Iran’s economy after the nuclear threat started to cause alarm in the mid-2000s. + +Now for the next step + +Both sides have kept their part of the bargain; the uranium and the centrifuges are dealt with, Iran shows no sign of deliberate cheating, and the UN Security Council’s nuclear-related economic sanctions have all been lifted. Although Donald Trump has inveighed against the deal, in office he has shown no sign of seeking to scrap it. Most observers, including even the Israeli army and intelligence services, think it would be a mistake to do so. However—and this is a crucial point—other sanctions on Iran remain. America, in particular, still has a large array of them, imposed a decade earlier to penalise a number of Iranian transgressions, especially human-rights abuses, support for terrorism and the development of weapons of mass destruction, including the missiles that can be used to deliver them. + +These sanctions were tightened several times by the generally doveish Barack Obama to punish Iran for a missile test. The law that mandates them was extended for ten more years in December. The vote in Congress was hardly a cliffhanger: the Senate backed the extension by 99-0 and the House by 419-1. American firms are still banned from doing business with Iran, though the president can always waive sanctions. After the nuclear deal, Mr Obama did so in many areas, for instance letting Boeing join Airbus in selling planes to Iran. + +None of these prior sanctions had anything to do with the nuclear programme and everything to do with Iran’s record of making trouble, which it continues unabated. Iran is helpful in taking on Islamic state. But, as Mr Lieberman noted, it still poses the largest threat to the stability of the Middle East. Its Shia proxy armies, aided by the Quds force, its own overseas special-forces unit, have extended its hard power far beyond its borders. Iraq is now virtually an Iranian client state. Hizbullah, an Iranian marionette, is the strongest force in Lebanon and menaces Israel. In Syria Iran props up the vile regime of Bashar al-Assad. In Yemen it arms and trains the Houthi rebels who overthrew the government two years ago. Bahrain and Saudi Arabia, which both have large Shia populations, accuse it of organising terror cells in their countries. + +America should not tear up the nuclear deal. It is not perfect, but it was better than confronting an Iran only months from possessing nukes. But sticking with the nuclear deal does not stop America from being tough elsewhere. Indeed, responding to missile-tests and other transgressions signals that the world will react to nuclear breaches, too. Until Iran stops acting as though it is hellbent on recreating the Sassanian empire, Mr Trump is right to apply targeted sanctions against the individuals and companies that are helping the Middle East’s chief empire-builder puff itself up. + +This article appeared in the Leaders section of the print edition under the headline “No blank cheque” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21717386-trump-administration-right-keep-up-pressure-belligerent-iran-americas-growing/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Courtship giftsThe waning power of the engagement ring + + +Could anything replace a diamond? + + + + + +From the print edition | Leaders + + +Feb 23rd 2017 + + + + + +PEACOCKS strut; bowerbirds build lovenests; spiders gift-wrap flies in silk. Such courtship rituals play an important role in what Charles Darwin called sexual selection: when the female of a species bears most of the costs of reproduction, males use extravagant displays and gifts to demonstrate their “reproductive fitness” and females choose between them. For human males, shards of a crystalline form of carbon often feature. A diamond engagement ring signals a man’s taste, wealth and commitment, all to persuade a woman that he is a good bet. + +This particular courtship gift was dreamed up by an ad agency for De Beers, the cartel that sold almost all of the world’s diamonds throughout the 20th century. In the 1930s it started to promote a link between diamonds and marriage. Diamonds’ unmatched hardness would symbolise love’s endurance and their “fire”, or brilliance, its passion. Two months’ salary, the firm suggested, was what the ring should cost—a good investment since, as the admen said, “A diamond is forever.” + + + + + +Now, that promise is dimming (see article). Though a growing Chinese middle class will probably prop up demand for a while, millennials in Western countries seem keener on memorable experiences than on bling. Diamonds’ image has been blemished by some being mined in warzones and sold to pay for the fighting. Meanwhile, laboratory-grown “synthetic” diamonds, long fit only for industrial use, are becoming good enough to compete with gems from out of the ground. + +But the long-term threat to diamonds’ lustre is more surprising: that their price could plummet. In recent years regulators (and market forces) have undermined De Beers’s cartel by limiting the share of other producers’ stones that it can buy. Now responsible for just a third of global sales, the company can no longer manage supply by stockpiling gems when demand turns down. It is spending less on advertising, since it no longer gets the lion’s share of the benefits. But the very value of diamonds lies in being scarce and coveted—that is, costly. In the jargon, they are “Veblen goods”, named after a 19th-century economist: prestige-enhancing trinkets for which a higher price encourages buyers. With most products, lower prices increase demand; with diamonds, they could kill it. + +Greater equality for women might seem to render male-courtship displays redundant. But mating preferences evolved over millennia and will not change quickly. If diamonds were to cease being a way to signal a man’s marriageability, what might take their place? + +A different gift, perhaps. In China skewed sex ratios mean that a prospective bridegroom must own an apartment and shower his future in-laws with cash. But a glittering stone goes to the woman, not her family. And it is more than a gift: it is a status symbol, demonstrating that even as a man approaches the expenses of married life, he can still splash out on a bauble. Or a man could rely on more generic forms of display, such as a fancy degree, good job or sharp suit. But these can impress one woman as easily as another, or several simultaneously. He must show commitment—a need not unique to courtship. Salvadoran gangsters get extravagant tattoos; Japanese yakuza cut off a fingertip. These visible signs of allegiance make it hard to defect, and impose heavy costs. But as marriage proposals they would fall short. Few women would feel proud to carry around their fiancé’s severed pinkie. + +Love is a multifaceted thing + +Many millennial women seek a mate who is creative, charitable and earns enough not to live with his parents. The millionaire founder of a startup that makes an app to teach yoga to orphans would be ideal. As a token of his commitment, a suitor might offer the object of his affections 51% of his shares—so much nicer than a joint bank account. Less eligible men could offer instead to link Uber accounts, thus entwining the couple’s reputations: their joint five-star rating would be at risk if either misbehaved. Uber-linking would also allow each to keep track of the other’s whereabouts, discouraging infidelity. Whatever ultimately replaces diamonds, it will surely be digital, not worn on a digit. + +This article appeared in the Leaders section of the print edition under the headline “A girl’s new best friend” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21717382-could-anything-replace-diamond-waning-power-engagement-ring/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Letters + + +On Kenya, American law, voting, Russia, data: Letters to the editor [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +LettersLetters to the editor + + +On Kenya, American law, voting, Russia, data + + + + + +From the print edition | Letters + + +Feb 23rd 2017 + + + + + +Fighting terror in Kenya + +“Food for the hyenas” (February 18th) misrepresented the work carried out by the Kenyan government in battling jihadism. Our domestic security operations are not the renegade actions that you portray. They form part of a national strategy to counter violent extremism, launched in September 2016. The suggestion that they will lead to election violence is not credible. The vote in 2013 passed off peacefully despite the doom-mongering of many international observers and Kenya today is even more secure. + + + + + +Our plan includes the reintegration of returning jihadists and pre-emptive anti-radicalisation measures. It is formulated in tandem with the UN Global Counter-Terrorism Strategy and integrates ideas put forward by the UN secretary-general and the African Union. + +Like many countries, Kenya faces serious challenges with domestic and international terror networks. But attacks have decreased and co-operation between police and informants is on the up. We will face down extremism forcefully, diligently, and fairly. + +MAJOR-GENERAL (RTD) JOSEPH NKAISSERRY + +Interior cabinet secretary + +Nairobi + + + + + +Legal opinion + +Your review of Stephen Presser’s book was far too simplistic on the liberal-conservative divide over how to understand the “rule of law” (“Whose rules, whose law”, February 4th). You said that Republicans see this as “based on precedent and written statutes”, whereas Democrats think it should “be discretionary values and allowed to incorporate external information”. But liberal legal thinkers, like conservatives, also believe in precedent and following statute. Disagreements arise over the scope of precedents and interpretation of statutes, but no one (save possibly Clarence Thomas) gives no weight to precedent. + +Moreover, it was Republican appointees on the Supreme Court who abandoned a century of precedent in the Citizens United campaign-finance decision. The same five-to-four majority also gutted the statutory Voting Rights Act, holding its core provision to be unconstitutional based in part on the “external information” that, in the Republican appointees’ view, “things have changed dramatically” 50 years after its enactment. + +As for Antonin Scalia’s focus on “original intent” to keep the constitution and laws from being “stretched by unelected judges”, it seems impossible to adhere fully to that view. The Supreme Court’s ruling in Brown v Board of Education (1954), holding that racially segregated public education violates the equal protection clause of the 14th Amendment, is universally accepted as the right decision. Yet when Congress sent the 14th Amendment to the states for ratification in 1866, schools in the District of Columbia, established by Congress, were segregated by race. + +THOMAS ROWE + +Professor of law emeritus + +Duke University + +Durham, North Carolina + + + + + +* The conclusion that law professors have played a more prominent role in America than in any other country is as sadly parochial as it is plainly wrong. The examples that drew most of your attention—Barack Obama and Antonin Scalia—were eye-catching precisely because they were a president and a justice on the Supreme Court. Their flirtations with the academy have next-to-nothing to do with their significant impact on American law.However, law scholars in Germany, from their ancient, ivy-covered faculties in Heidelberg, Jena and Freiburg, have enjoyed and continue to enjoy outsized importance in German society. It is possible to mark the flow of German history through intensely pursued and assiduously followed debates in Rechtswissenschaft, the study of jurisprudence. For example, the Thibaut-Savigny controversy on the codification of German law marked and shaped the 19th-century forces pushing for German unity and the embrace of economic liberalism. The Schmitt-Kelsen debates, which unfolded in the years before the rise of the Nazis, embodied the struggle between rationality and will-to-power raging at Germany’s core in the middle of the 20th century. In recent years German law professors have been central to imagining and implementing European unification. + +RUSSELL MILLER + +Washington and Lee University School of Law + +Lexington, Virginia + + + + + +Voting block + +Being myself 15 years old, I read with interest your leader calling for the voting age to be lowered to 16 (“Vote early, vote often”, February 4th). You argued that “A lower voting age would strengthen the voice of the young and signal that their opinions matter.” Although that may be true, you must consider precisely what citizens of my age would be inclined to vote for. For example, the vast majority of Democratic primary voters aged 18-24 supported Bernie Sanders, in part because of his irresponsible promise of free college education. + +Adding a large number of people like me to the voter rolls, all of whom have little experience in the workforce, would increase support for Sanders-style populism over Clinton-style pragmatism. Job experience helps develop economic literacy. Lowering the voting age to include people who lack such experience would do more harm than good. + +JACOB LADNER + +Phoenix + +The obvious answer to apathy among millennials is to turn voting into a video game. At the start players would be able to vote for, say, dog-catcher. But as they acquired more points for experience, they would be entitled to vote in more important elections. + +Joking aside, there is something to be said for “earning” the right to vote by requiring at least a token effort. People who are disinclined to vote are also disinclined to study the issues. Your opinion of measures aimed at making voting effortless depends on whether you think the primary purpose of democracy is fostering the illusion of participation, or fostering good government. + +CHRIS TRUAX + +San Diego + +* Your article on the problems with young people voting gives short shrift to the system in Australia and other countries that have compulsory voting. To begin, voting is not compulsory, rather being recorded as attending a voting place is. What you do with the ballot paper is your own business though informal votes are still low. Arguably requiring citizens above a certain age to participate in a country’s democracy is not an onerous burden and gives the result far greater legitimacy. The majority for Brexit was just under 52% of a turnout of just over 72%. Hardly the resounding mandate that Mrs May seems to regard it as. + +Millennials in Australia may be as sceptical of the political process as in many other countries, though at least they are obliged to consider casting their votes, including in state and local government. Problems that plague America in regards to registration are overcome by an apolitical body, the Australian Electoral Commission, that administers voter registration and the boundaries of electorates. No system is perfect, though arguably countries that have compulsory voting can point to greater legitimacy in the results of elections than those where turnout and registration remain problematic. Perhaps Mr Trump might care to consider the views of his predecessor on this issue, after all he seems to crave legitimacy. + +PETER HENDERSON + +Wingello, New South Wales + + + + + +Back to reality + +Grand bargains are very rare in international life, and the atmospherics for one between America and Russia couldn’t be worse (“Courting Russia”, February 11th). Ministers and even sensible commentators talk glibly of a new cold war, without really reflecting on the costs and hazards of the old one. The relationship between Russia and the West sank dangerously low last autumn; there was a real possibility of military confrontation. We need to find a way back from all this. And the initiative will need to come from the overwhelmingly stronger, and thus less at risk, of the two sides. The real question is not about grand bargains but whether Donald Trump should be looking for less dramatic ways to improve relations. + +The list of problems where common ground is worth looking for is long: Islamic extremism, cyber-warfare, strategic arms reduction and nuclear terrorism. But the key issue where polite opinion continues to insist on obduracy is economic sanctions. Really? I have not met a Western official who can explain what sanctions are now for. They have changed Russian policy not a jot. The economy, predicted to implode, is now growing again. Vladimir Putin is still president and rides high in the polls. Indeed he may be quietly relying on the maintenance of sanctions to get those extra nationalist voters out on his behalf at the presidential election in March 2018. Are they really worth it? + +SIR TONY BRENTON + +British ambassador to Russia 2004-08 + +Cambridge, Cambridgeshire + + + + + +Data is no singular exception + +A letter from David Chaplin in the February 11th issue promoted the use of “data” as a singular noun. This missed the point that the word is routinely awarded its due as a plural noun in scientific and medical literature in accord with its Latin etymology. Pointing to other plurals that have been reduced to singulars is like saying that several crimes against the English language justify yet another. + +The use of “datum”, I admit, is unusual. However, the attribution of “data” as a singular noun would yield sentences such as “The editors of The Economist is uneducated in the Latin derivation of English terms.” + +BARRY MALETZKY + +Portland, Oregon + +* Letters appear online only + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/letters/21717347-kenya-american-law-voting-russia-data-letters-editor/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Briefing + + +Renewable energy: A world turned upside down [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Renewable energyA world turned upside down + + +Wind and solar energy are disrupting a century-old model of providing electricity. What will replace it? + + + + + +From the print edition | Briefing + + +Feb 25th 2017 | WILDPOLDSRIED + + + + + +FROM his office window, Philipp Schröder points out over the Bavarian countryside and issues a Bond villain’s laugh: “In front of you, you can see the death of the conventional utility, all financed by Mr and Mrs Schmidt. It’s a beautiful sight.” The wind blowing across Wildpoldsried towards the Alps lazily turns the turbines on the hills above. The south-facing roofs of the houses, barns and cowsheds are blanketed with blue photovoltaic (PV) solar panels. The cows on the green fields produce manure that generates biogas which warms the Biergarten, the sports hall and many of the houses where the 2,600 villagers live, as well as backing up the wind and solar generators in winter. All told, the village produces five times more electricity than it needs, and the villagers are handsomely rewarded for their greenness; in 2016 they pocketed about €6m ($7m) from subsidies and selling their surplus electricity. + +It hardly looks like the end of the world; but Mr Schröder, who works at Sonnen, an energy-storage firm, has a point. Many environmentalists want the world’s energy system to look like Wildpoldsried’s. And the things it is based on—subsidies for investment, very little spending on fuel, and moving electricity generation to the edge of, or off, the grid—are anathema to electricity markets and business models developed for the fossil-fuel age. + + + + + +Few greens would mourn them. But the fall in utility revenues that comes with the spread of places like Wildpoldsried is not just bad news for fossil-fuel-era incumbents in the generation and transmission businesses. It is also becoming a problem for the renewables themselves, and thus for the efforts to decarbonise the electricity supply that justified their promotion in the first place. + +In 2014 the International Energy Agency (IEA), a semi-official forecaster, predicted that decarbonising the global electricity grid will require almost $20trn in investment in the 20 years to 2035, at which point the process will still be far from finished. But an electricity industry that does not produce reliable revenues is not one that people will invest in. + +Less dear, still disruptive + +The fight against climate change has seen huge growth in the “new” renewables, wind and solar power, over the past decade, both in developed countries and developing ones. In 2015 governments poured $150bn into supporting such investment, with America, China and Germany taking the lead. But Wildpoldsried is still very much the exception, not the rule. In 2015 such sources accounted for only 7% of electricity generated worldwide. Over 80% of the world’s energy still comes from fossil fuels (see chart 1). In terms of reducing climate risks there is a long way to go. + + + +The good news is that a decade of subsidy-driven growth has brought with it falling costs. Renewables are still on the pricey side in many places, but they are getting less so; in some places wind, in particular, is reasonably competitive. This suggests that their growth might soon need a lot less subsidy than it has attracted to date. Robust carbon prices would give renewables further advantages, but they have as yet proved hard to provide. The EU’s emissions-trading scheme is a perennial disappointment: still, hope springs eternal, as witness a recent attempt to persuade the new American administration of the benefits of a revenue-neutral economy-wide carbon tax devoted to providing $2,000 to every family of four in rebates. + +But pushing renewables into the electricity market has had effects on more than their price; it has hit investment, too. In rich countries governments have imposed renewables on electricity systems that had no need for new capacity, because demand is in decline. Investment in supply beyond what the market required has produced gluts and pushed down prices. In America this has been somewhat masked by the shale-gas revolution, which has caused a bigger shift in the same direction. In Europe the glut of renewables is more starkly seen for what it is. Wholesale electricity prices have slumped from around €80 a megawatt-hour in 2008 to €30-50 nowadays. + +The result has been havoc for the old-style utilities. Germany’s biggest electricity companies, E.ON and RWE, both split in two last year, separating their renewables and grid businesses from indebted and loss-making conventional generation. EY, a consultancy, calculates that utilities across Europe wrote off €120bn of assets because of low power prices between 2010 and 2015. Investment in non-renewables is very low. “Never in recent history has the deployment of capital been more difficult than it is right now within the energy industry,” says Matt Rennie, who analyses the global-utilities market at EY. + +It is not just that efforts to shift to renewable power have added new sources of supply to an already well-served market. In an industry structured around marginal costs, renewables have a disruptive punch above their weight. + +Electricity markets, especially those that were deregulated in the late 20th century, typically work on a “merit order”: at any given time they meet demand by taking electricity first from the cheapest supplier, then the next-cheapest, until they have all they need; the price paid to all concerned is set by the most expensive source in use at the time. Because wind and solar do not need to buy any fuel, their marginal costs are low. They thus push more expensive producers off the grid, lowering wholesale prices. + +If renewables worked constantly that would not, at first blush, look like a problem for anyone except people generating expensive electricity. But renewables are intermittent, which means that in systems where the infrastructure was designed before intermittency became an issue—almost all of them, in practice—fossil-fuel, hydroelectric and nuclear plants are needed more or less as much as ever at times when the sun doesn’t shine and the winds don’t blow. And if such plants are shut out of the market by low-cost renewables, they will not be available when needed. + +In the long run, and with massive further investments, electricity grids redesigned for systems with a lot of renewable energy could go a long way to solving this problem. Grids with lots of storage capacity built in; grids big enough to reach out to faraway renewables when the nearby ones are in the doldrums; grids smart enough to help customers adapt demand to supply: all have their champions and their role to play. + +But long-run solutions do not solve short-term constraints. So for now countries with lots of renewables need to keep older fossil-fuel capacity available as a standby and to cover peaks in demand. This often means additional subsidies, known as capacity payments, for plants that would otherwise be uneconomic. Such measures keep the lights on. But they also mean that fossil-fuel production capacity clings on—often in particularly dirty forms, such as German power stations powered by brown coal, or backup diesel generators in Britain. + +From dull to death spiral + +Properly structured capacity payments make it sensible to invest in generators that can be switched on when renewable energy is not available. But what will make it sensible to continue investing in renewables themselves? + +When they are a small part of the system, renewables are insulated from the effects that their low marginal costs have on prices, because as long as there are some plants burning fossil fuels the wholesale price of electricity will stay reasonably high. So utilities could buy electricity from renewable generators, often on fixed-price contracts, without too much worry. + +But the more renewable generators there are, the more they drag down prices. At times when renewables can meet all the demand, making fossil-fuel prices irrelevant, wholesale electricity prices collapse—or sometimes turn negative, with generators paying the grid to take the stuff away (the power has to go somewhere). The more renewables there are in the system, the more often such collapses occur. + +Rolando Fuentes of Kapsarc, an energy think-tank based in Saudi Arabia, claims the world is caught in a vicious circle: subsidies foster deployment of renewables; renewables depress power prices, increasing the need for financial support. Theoretically, if renewables were to make up 100% of the market, the wholesale price of electricity would fall to zero, deterring all new investment that was not completely subsidised. He calls this vicious circle the clean-energy paradox: “The more successful you are in increasing renewables’ penetration, the more expensive and less effective the policy becomes.” + +Francis O’Sullivan, of the Massachusetts Institute of Technology, says the trend is already visible in parts of America with abundant solar energy. Utilities which are required to have renewables in their portfolios, such as those in California, used to offer companies investing in that capacity generous long-term contracts. But research by Bloomberg New Energy Finance (BNEF), a consultancy, shows that, as such utilities come closer to meeting their mandates, solar-power developers are being offered shorter-term fixed prices with a higher subsequent exposure to variable wholesale prices. That reduces the incentive to invest. Solar “cannibalises its own competitiveness away,” Mr O’Sullivan says. “It eats its own tail.” + +At the turn of the century, according to the IEA, one third of investment in electricity markets flowed into “competitive” sectors that were exposed to wholesale prices; the rest went into regulated utilities, transmission grids and the sort of fixed-price contracts where the renewables got their start. By 2014 the share of investment in the competitive sectors was just 10% of the total. It is a fair bet that, the more renewables are exposed to competition by contracts pegged to wholesale prices, the more people will shy away from them as well. + +Ever-lower capital costs, particularly in solar, could go some way to bucking this trend, making investments cheaper even as they become more risky.But if low-marginal-cost renewables continue to push prices down, there will come a time when private investment will dry up. As Malcolm Keay of the Oxford Institute for Energy Studies puts it, “The utility business model is broken, and markets are, too.” + +Renewables do not just lower prices; when used by customers, they also eat into demand. Consider Australia. It has 1.5m households with solar cells on their roofs. There are a number of reasons for this. It is a sunny place; installing PVs was until recently generously subsidised; and electricity bills are high. In part that is to pay for some of the subsidies. In part it is because they pay for the grid, which has been becoming more expensive, not least because it has had to deal with a lot more renewables. The IEA says that in parts of southern Australia, grid upgrades have doubled network costs since 2008-09. Despite cuts to subsidies, Australian PV installations are expected to triple over the next decade. + +When fewer people rely on the grid, there are also fewer left to share the costs. Phil Blythe of GreenSync, a Melbourne-based company that works with utilities to moderate the fluctuations of renewable energy, warns that his country faces an incipient “utility death spiral”. The more customers generate their own electricity, the more utilities have to raise prices to the customers that remain, which makes them more likely to leave the grid in turn. It won’t happen overnight, he says: but it is “death by a thousand cuts”. + +From dromedary to duck + + + +In California there is an icon for the effect that domestic renewables have on the demand for grid electricity, and thus on the revenues of utilities: it is called the duck (see chart 2). Every year more Californian consumers have solar cells. As a result, every year electricity demand during the day falls, and revenue falls accordingly. Similar effects are seen in Germany, where there are now 1.4m PV users—mostly domestic. It is one of the reasons—subsidies are another—why domestic electricity prices have stayed high there while wholesale prices have fallen. + +These home generators are not just reducing demand for grid electricity; often they are allowed to feed surplus power from their PVs into the grid, competing with other generators. In many American states utilities grumble about the “net metering” rate they are required to pay such people—especially in states like Nevada where they have been required to credit the electricity fed in at the retail price, rather than the wholesale price. And rooftop solar installations continue to grow, with 12 states more than doubling their deployment in 2016, according to BNEF. Businesses and industrial users are also becoming big consumers of renewable energy, which potentially reduces their dependence on the grid, and thus the amount they will pay for its services. + +The response to these problems is not to abandon renewables. The subsidies have helped costs of wind and solar to fall precipitously around the world. Competition is often fierce. Recent auctions for offshore wind farms in the North Sea and solar developments in Mexico and Abu Dhabi have shown developers slashing prices to win fixed contracts to supply clean electricity for decades to come. The “levellised cost of electricity” for renewables—the all-in cost of building and operating a plant over its lifetime—is increasingly competitive with fossil fuels in many places. Especially in sunny and windy developing countries with fast-growing demand, they offer a potentially lucrative, subsidy-free investment opportunity. + +But it does mean changing the way the world buys, sells, values and regulates electricity to take account of the new means by which it generates it. “Thinking of wind and solar as a solution by themselves is not enough. You need flexibility on the other side. It only makes sense if this is a package deal,” says Simon Müller of the IEA. Elements of that package are already appearing. Markets that sell commoditised kilowatt-hours need to be transformed into markets where consumers pay for guaranteed services. A lot more storage will be needed, with products like those of Sonnen in Wildpoldsried and the Powerwalls made by Tesla fighting for space in people’s homes. Smart grids bolstered by big data will do more to keep demand in line with supply. + +It may not get all the way there + + + +In Wildpoldsried Mr Schröder dreams of electricity-users inviting friends round for a glass of wine to show off their new solar kits and batteries. “We’ll soon be at a point where people say, ‘You’re so yesterday. You get your power from the grid.’” But peer pressure is unlikely to be decisive. Bruce Huber of Alexa Capital, which helps fund renewable-energy investments, says business consumers are probably going to be more influential in driving the adoption of these technologies than households, because they will more quickly see how they might cut their bills by using demand-response and storage. “For the last 100 years everyone has made money upstream. Now the added value is coming downstream,” he says. + +Waiting for enlightenment + +Mr Huber likens the upheaval facing utilities to that seen in the telecoms industry a generation ago, when a business model based on charging per second for long-distance calls was replaced by one involving the sale of services such as always-on broadband. This is bad news for the vertically integrated giants that grew up in the age of centralised generating by the gigawatt. Jens Weinmann, of ESMT Berlin, a business school, names dozens of tech-like firms that are “nibbling” away at bits of utilities’ traditional business models through innovations in grid optimisation and smart-home management systems. With a colleague, Christoph Burger, he has written of the “big beyond” in which domestic energy autonomy, the use of the blockchain in energy contracts, and crowdsourcing of PV installations and other technological disruptions doom the traditional utility. Already, big Silicon Valley firms such as Google and Amazon are attempting to digitalise domestic energy, too, with home-hubs and thermostats. + +But how this nibbling leads to a system that all can rely on—and who pays for the parts of it that are public, rather than private, goods—remains obscure. The process will definitely be sensitive to politics, because, although voters give little thought to electricity markets when they are working, they can get angry when prices rise to cover new investment—and they scream blue murder when the lights go out. That suggests progress may be slow and fitful. And it is possible that it could stall, leaving climate risks largely unabated. + +Getting renewables to today’s relatively modest level of penetration was hard and very expensive work. To get to systems where renewables supply 80% or more of customers’ electricity needs will bring challenges that may be far greater, even though renewables are becoming comparatively cheap. It is quite possible that, as Mr Schröder predicts, Mr and Mrs Schmidt in Wildpoldsried will lay waste the world’s conventional electricity utilities while sharing Riesling and gossip with the neighbours. But that does not mean that they will be able to provide a clean, green alternative for everyone. + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21717365-wind-and-solar-energy-are-disrupting-century-old-model-providing-electricity-what-will/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +United States + + +Environmental protection: Revenge of the polluters [Fri, 24 Feb 08:14] + +A new national security adviser: McMaster and servant [Fri, 24 Feb 08:14] + +Replacing Obamacare: Cost-sharing is caring [Fri, 24 Feb 08:14] + +Deporting undocumented migrants: The dragnet and the scissors [Fri, 24 Feb 08:14] + +The future of the Democratic Party: Boot-edge-edge [Fri, 24 Feb 08:14] + +Wrongful convictions: Criminal injustice [Fri, 24 Feb 08:14] + +Lexington: Dissent in the age of Trump [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Revenge of the pollutersA scourge of the EPA takes over at the EPA + + +But environmental protections will not be undone overnight + + + + + +From the print edition | United States + + +Feb 25th 2017 | WASHINGTON, DC + + + + + +TO STAND on a pontoon besides the Anacostia River, which runs for 8.5 miles through Maryland and the southern part of Washington, DC, is to gauge the progress America has made in cleaning up its waterways. The Anacostia, which empties into the Potomac close to the Capitol, was once a slow-flowing garbage dump; on a recent sunny afternoon, hardly a soda can or plastic bag ruffled its sluggish brown surface, over which cormorants fizzed like arrows, rigid with intent. They are a sign that the river’s ravaged fish stocks are beginning to recover. But you still wouldn’t want to eat them. + +Forty-five years after the federal government became obliged, under the Clean Water Act (CWA), to try to make America’s main waterways “fishable and swimmable”, the Anacostia is, despite the recent progress, in a disgusting state. Each year, two billion gallons of sewage and stormwater flow into it, making the water so cloudy with faeces that light cannot penetrate it. The weeds and mussels that once carpeted the river-bed are long gone. It is coated with black ooze, over ten feet deep in places, saturated with polychlorinated biphenyls, heavy metals and other industrial pollutants. Anacostia fish, often covered with toxic lesions, are poisonous, yet frequently consumed, a study suggests, by 17,000 mostly poor people. + + + + + +The state of the Anacostia, and hundreds of other polluted waterways, is a rebuke to the argument, levelled by Donald Trump and other Republicans, that the EPA is running wild. At a rally in Florida on February 18th, Mr Trump said the agency was “clogging up the veins of the country with the environmental impact statements and all of the rules and regulations”. Addressing staff at the EPA on February 21st, its incoming director Scott Pruitt, who as attorney-general of Oklahoma sued the agency 14 times, suggested the unclogging would involve ending the agency’s regulatory “abuses”. As The Economist went to press, Mr Trump was reported to be preparing executive decrees to begin that effort. He is expected, for example, to try to replace the Clean Power Plan (CPP), Barack Obama’s main effort to reduce greenhouse-gas emissions from thermal power-stations. + +This is such a familiar Republican assault—even if Mr Trump may mean to go further than his predecessors—that it is worth noting that environmental protection was once a bipartisan concern. The EPA was founded by Richard Nixon, in 1970, to implement a flurry of environmental laws, including the CWA and Clear Air Act, that were also backed by Republicans. Two decades of rapid post-war growth had put America’s air and waterways under great pressure, which the states, locked in feverish economic competition with each other, had proved incapable of easing. The spread of television, which publicised such disasters as Californian peasoupers and the burning Cuyahoga river in Ohio, had helped foster public demand for action; the CWA passed the Senate 86-0. + +This provoked a backlash from industry, which in turn led Ronald Reagan, and more forcefully George W. Bush, to turn against environmental protection. Both appointed weak EPA directors and tried to replace environmental rules with weaker alternatives. Yet they ended up retreating under the legal furore this caused. The political argument against environmental protection is not often legally based—as the fate of Mr Pruitt’s challenges to the EPA, almost all of which were co-sponsored by representatives from industry, indicates. None of the 14 has so far succeeded. + +Mr Pruitt claimed to be championing states’ rights. His critics say he was an instrument of industry, and they seem to have a point. The EPA was formed, with authority to dictate standards to the states and intervene where they fail to implement them, precisely because their environmental stewardship had proved to be inadequate. Mr Pruitt’s legal arguments are a mixed bag, moreover. His most important, that the CPP stretches the EPA’s authority, is taken seriously by legal experts. But other challenges brought by Mr Pruitt, including a failed attempt to scupper a multi-state clean-up of Chesapeake Bay, on which some of the recent progress on the Anacostia is built, appeared frivolous. + +His lack of success also indicates how hard it will be to poleaxe the EPA, as the president has vowed to do. Some of Mr Obama’s recent regulations, including one to control methane leakage from drilling operations on federal lands, are liable to be scrapped by the Republican-controlled Congress, under a little-used procedure called congressional review. Most cannot be, however. They would have to be replaced, through a long process of drafting and review, then defended against legal challenges. To replace the CPP would take Mr Pruitt at least a couple of years. + +Reducing the EPA would be easier if Congress were to amend the environmental legislation underpinning the EPA’s rules—for example, by binning the provisions of the Clean Air Act on which the CPP rests. But there is currently no chance this could evade the Democratic filibuster in the Senate, and many Republican congressmen would not welcome the fight. Around 60% of Americans say they are in favour of more environmental protection. + +A third possibility is more insidious. Mr Pruitt could try to sabotage his agency by ordering it to provide less regulatory oversight. That would get ugly; EPA workers are already rebellious, as illustrated by a recent protest by dozens against their new boss’s nomination, in Chicago. It would also be damaging; though perhaps less so than Mr Trump might expect. Far from being the liberal attack-dog of his imagining, the agency is already thinly stretched and environmental groups correspondingly accustomed to filling in the gaps. + +The most hopeful development on the Anacostia, for example, takes the form of a $2bn sewage overflow system, which is due to come into use in 2018. It has been built by DC Water, which manages much of Washington’s sewage system, after it was sued over its discharges into the river by environmental groups. They had tired of the EPA’s failure to take action. Though 168 drains will still flow into the river, bringing dog faeces and gasoline from the capital’s roads, this should make the Anacostia swimmable for the first time in decades. “We’re getting close to dramatic progress,’ says Emily Franc, who serves as the Anacostia’s riverkeeper, a non-governmental watchdog role. “This is no time for the EPA to pull back.” + +This article appeared in the United States section of the print edition under the headline “Revenge of the polluters” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717376-environmental-protections-will-not-be-undone-overnight-scourge-epa-takes-over/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +McMaster and servantH.R. McMaster, the new national security adviser, is a great improvement + + +His boss remains the same, though + + + + + +From the print edition | United States + + +Feb 23rd 2017 | WASHINGTON, DC + + + + + +THE 22 national security advisers who served Donald Trump’s predecessors included two army or marine generals. On February 20th Mr Trump equalled that tally in less than a month, by appointing Lieutenant-General H.R. McMaster to succeed the disgraced Mike Flynn. + +Like the belligerent Mr Flynn, whom Mr Trump sacked after 24 days in the job, after it was revealed that he had lied about a private conversation with a Russian diplomat, General McMaster appears to conform to the president’s idea of a fire-breathing war-fighter. He is stocky, bullishly charismatic and as a tank commander in the first Iraq war was decorated for battlefield prowess. After bumping into an Iraqi armoured column, General McMaster’s troop of nine American tanks destroyed over 80 Iraqi tanks and other vehicles without suffering a loss. + + + + + +Also like Mr Flynn, who was once an innovative intelligence officer, General McMaster is a freethinker. His doctoral thesis in military history was a ruthless takedown of the pliant Vietnam-era military leadership, later published as a book entitled “Dereliction of Duty”. Yet there the comparison ends. By the time of his appointment, Mr Flynn was known as a bad manager, obsessed with jihadism and so feverishly partisan that he represented a threat to the treasured neutrality of the armed forces. General McMaster is hugely respected by his peers, among whom he is considered one of America’s most thoughtful soldiers. + +He is perhaps best known for his exploits in the second Iraq war. Deployed in 2005 to the northern city of Tal Afar, in command of a cavalry regiment, he showed it was possible, at least temporarily, to pacify even the most violent and baffling parts of the country. By the time General McMaster arrived there, the city had been overrun by insurgents and retaken bloodily by the Americans, but with too few American or Iraqi troops to control it. + +Acting largely on his own initiative, he proceeded to put in place a model counter-insurgency regime. He ensured his officers studied Islamic culture, which at that time few American soldiers did, used force selectively and sparingly, and took pains to understand and work with the grain of Afari ethnic politics. He was lionised by American journalists, who, it is true, tend to lose their hearts to any successful battlefield commander; Tal Afar, now the scene of a fierce battle between the Iraqi army and Islamic State, did not stay quiet for long. Yet in his hunger to listen and learn—from Iraqis, his soldiers and even visiting journalists—General McMaster stood out. + +His subsequent career has if anything been more distinguished. Championed by another charismatic counter-insurgency specialist, General David Petraeus, who was also considered by Mr Trump for the vacant national security post, but in effect ruled himself out of contention by insisting he be allowed to pick his staff, General McMaster helped run operations for the NATO mission in Afghanistan, after it was reinforced by Barack Obama in 2010. More recently, as head of the Army Capabilities Integration Centre, based in Fort Eustis, Virginia, he has led an effort to design and prepare the future American force that will emerge from the two wars in which he made his name. He has received fresh plaudits in that role; David Barno, a former American commander in Afghanistan, called him perhaps “the 21st-century army’s pre-eminent warrior-thinker”. + +This does not mean General McMaster will be a good national security adviser, a perniciously difficult job, at which only a few have excelled. And they—led by Brent Scowcroft, who advised Gerald Ford and George H.W. Bush, and Stephen Hadley, who steered George W. Bush—tended to be known for tact and scrupulous impartiality. General McMaster is better known as a straight talker and a risk-taker, albeit by the conformist standards of his profession. Mr Trump, who is as prickly and ill-informed about global affairs as he is admiring of generals, may not find him easy to work with. Indeed, General McMaster is so different from Mr Flynn it is tempting to wonder on what criteria Mr Trump appoints his national security advisers. Even so, at the second attempt, he has picked well. + +This also points to the biggest puzzle about the 45th president. Mr Trump has surrounded himself with amateurish and ideological advisers, led by Stephen Bannon, who have been responsible for much of the administration’s early haplessness. He has also hired some sensible and accomplished cabinet secretaries, such as James Mattis, the defence secretary, and, based on early reports, Rex Tillerson, the secretary of state. This group is believed to be opposed to, and possibly contemptuous of, Mr Bannon’s agenda—and General McMaster looks like a fine addition to it. So whose advice will Mr Trump follow? The answer is unclear. Yet the stability of the world may depend on it. + +This article appeared in the United States section of the print edition under the headline “McMaster and servant” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717385-his-boss-remains-same-though-hr-mcmaster-new-national-security-adviser/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + +Republicans face a headache when they return from their districts + + + + + +From the print edition | United States + + +Feb 23rd 2017 | WASHINGTON, DC + + + + + +AS REPUBLICAN congressmen were berated by constituents this week for their desire to repeal the Affordable Care Act (see Lexington), wonks in Washington continued to work on a replacement. Paul Ryan, the Speaker of the House, has promised a health-care bill soon after politicians return from their districts on February 27th. If they are to cool the protesters’ zeal, Republicans must keep health insurance affordable for everyone who already has it. That means deciding what to do about the subsidies Obamacare gives to 10m low- and middle-earners who buy coverage through government-run websites. Mr Ryan promises to replace the law’s means-tested tax credits with a discount for everyone, varying not with income but with age. Would such a switch work? + +Republicans have always hated the ACA’s handouts. Because they shrink if people earn more, they discourage toil. The Congressional Budget Office has estimated that Obamacare reduces the total number of hours worked by 1.5-2%, which is equivalent to 2.5m full-time jobs by 2024. Making tax credits universal would lessen that number. And because the old pay more for health insurance than the young—a gap that will widen if the Republicans loosen restrictive pricing regulations—increasing subsidies with age makes some sense. + + + + + +Such a tax credit, though, would not be generous enough for all buyers. The average Obamacare subsidy adds up to about $3,600 per person. Many receive much more. Two non-smoking 55-year-olds together earning $56,500, the median household income, get $4,800 each just to help pay for premiums, according to the Kaiser Family Foundation, a think-tank. According to The Economist’s calculations, if Mr Ryan spread the cash around all 22m Americans who buy health insurance directly, rather than through their employer, it would average only about $2,000 each. + +That is close to what Tom Price, the new health secretary, proposed in 2015 for 35-to 49-year-olds (older folk would have got $3,000). Republicans say it is enough, because costs will fall once insurance is deregulated. But unless prices fall dramatically, many low-earners would probably have to downgrade to insurance covering only catastrophes. After deregulation, such plans might include chilling limitations, such as caps on how much insurance will pay if a person becomes chronically ill. + + + +That would be sickening, especially as most affluent Americans benefit from subsidised health care. Fully 155m workers get health insurance from their employer without paying tax on this income-in-kind. The tax exemption cost $268bn (1.4% of GDP) in 2016, enough to pay for Obamacare’s subsidies six times over (see chart). Hated by economists, it encourages firms to give their workers more generous health benefits rather than more pay. One-third of the benefit flows to the top fifth of earners. + +Unfortunately, Mr Obama could not shrink the tax-break, having vilified John McCain, his opponent in the 2008 election, for proposing to scrap it. Instead, he created the so-called “Cadillac tax” on expensive plans, which is due to come into effect in 2020. Messrs Price and Ryan would do away with that and instead cap the exemption—a simpler approach. It would be best to get rid of it completely. Doing so could fund a universal tax credit of $1,500 without touching Obamacare’s means-tested payments, The Economist reckons. Unfortunately, killing the perk would be very unpopular. Just ask Mr McCain. + +Making premiums affordable is only the first step. People must also be able to pay their medical bills up to the point where their insurance coverage kicks in. The ACA limits such payments for low-earners, and reimburses insurers accordingly. Those reimbursements, though, are currently held up in court after the House sued to stop them in 2014. On February 21st it filed to delay legal proceedings. Deciding what to do about the case—in which Mr Price is now the defendant—is yet another headache for the Republicans. + +This article appeared in the United States section of the print edition under the headline “Cost-sharing is caring” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717380-republicans-face-headache-when-they-return-their-districts-replacing-obamacares/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The dragnet and the scissorsCongress and the courts will poke holes in the president’s deportation plans + + +Barack Obama’s administration deported hundreds of thousands of people every year. Donald Trump’s aims to outdo that + + + + + +From the print edition | United States + + +Feb 23rd 2017 | LOS ANGELES + + + + + +AT ONE point as a candidate for president, Donald Trump vowed to expel all 11m undocumented immigrants estimated to live in America. At other points he also talked about concentrating deportation efforts on “bad people”, which is in fact a fair description of his predecessor’s policy. “They will be out so fast your head will spin,” he told Bill O’Reilly, a television host, last August. Two Department of Homeland Security (DHS) memos published on February 21st offer a detailed look at Mr Trump’s definition of badness, and it is broad. The documents refer to the proposed wall along the southern border, reaffirm the goal of increasing the number of border patrol and immigration officers, and herald the revival of a policy encouraging local law enforcement agencies to act as immigration agents. The memos also signal an overhaul of priorities on whom to deport, with the aim of increasing the number who could be removed speedily. + +Towards the end of his second term, Barack Obama ordered federal agents to focus on deporting undocumented immigrants suspected of terrorism and those with criminal convictions. In 2011 67% of those removed from the interior of the country had criminal records. By 2016 the share had increased to 92%. The new guidance says that federal agents should not target only those convicted of crimes. “Under Obama there were 2m people eligible for removal. Now the number could be between 8 and 11m. Basically everyone without papers has become a priority,” says Jose Magaña-Salgado of the Immigrant Legal Resource Centre, an advocacy group. + + + + + +The government plans to end a policy colloquially known as “catch-and-release”. This allows unauthorised immigrants who are deemed not likely to abscond or a threat to public safety, to wait for the results of their cases outside detention. Under the new guidelines, immigrants with pending deportation cases will either be locked up or monitored, for example with ankle bracelets. The administration is also reconsidering who should be eligible for extra-swift removal. + +At present, only undocumented immigrants caught within 100 miles of the border who have been in the country for less than 14 days can be deported without a hearing. The administration may change the rules so that any unauthorised immigrant who has been in America for less than two years can be deported without going before a judge. This would be much speedier than the standard deportation process, under which immigrants must receive a removal order from an immigration court. The system is a mess. Nationally there are over 500,000 immigration cases pending with around 300 judges to hear them. The average immigration case has been open for 677 days. + +The president has a mandate to enforce immigration laws. The country has immigration laws that have not been enforced. But even the supposedly softer Obama regime deported hundreds of thousands every year. It spent more on immigration enforcement than on the FBI, Drug Enforcement Agency, US Marshals and Bureau of Alcohol, Tobacco and Firearms, combined. The Trump administration would spend even more: completing a border wall, recruiting 10,000 new Immigration and Customs Enforcement (ICE) officers and 5,000 border patrol agents. + +Just the border-patrol part of that could add $910m to a $3.8bn staffing budget. A leaked DHS document suggests the wall could cost $21.6bn. The abolition of catch-and-release policies would require more lock-ups, which now house around 40,000 detainees and cost the government around $128 per inmate each day. Convincing Congress to appropriate enough money might prove difficult, despite Republican dominance of Congress. “This pits the traditional concerns of Republicans around government spending against their desire for border security,” says John Sandweg, a former ICE chief under Mr Obama. + +The courts may also take a pair of scissors to a deportation dragnet. “Embedded in the memos is the idea that the government is going to put due process to the side in order to pursue a plan of mass deportation,” says Omar Jadwat, a lawyer for the Immigrants’ Rights Project of the American Civil Liberties Union, another advocacy group. He says expanding the list of those eligible for speedy removal is likely to invite lawsuits. In the meantime, says Matt Barreto of the University of California, Los Angeles, the new guidance will have another effect on undocumented immigrants. They are likely to withdraw from wider society. He suspects they will be less likely to report crimes, visit hospitals, or even send their children to school for fear of being caught. + +This article appeared in the United States section of the print edition under the headline “The dragnet and the scissors” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717387-barack-obamas-administration-deported-hundreds-thousands-people-every-year-donald/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The future of the Democratic PartyWho should lead the Democrats after their calamitous defeat? + + +Pete Buttigieg is pitching himself as the compromise candidate + + + + + +From the print edition | United States + + +Feb 23rd 2017 | CHICAGO + + + + + +“IN TERMS of the next chair of the DNC, however, the question is simple,” according to Bernie Sanders. “Do we stay with a failed status-quo approach or do we go forward with a fundamental restructuring of the Democratic Party?” For Senator Sanders the way forward is Keith Ellison, a congressman from Minnesota, whom he is backing as next boss of the Democratic National Committee (DNC). The endorsement came shortly after Joe Biden, the former vice-president, announced his support for Tom Perez, a veteran of the Obama administration. + +The contest for the DNC chair, which will be decided on February 25th in Atlanta, has become a proxy fight between those who believe that the party must move left to prosper and those who think this would be suicide. Mr Ellison is backed by Elizabeth Warren, the populist senator from Massachusetts, as well as the AFL-CIO, a federation of unions with 12m members, but also by pragmatic establishment types such as Chuck Schumer, the Senate’s minority leader, and his predecessor, Harry Reid, who are intent on making use of the Sanders supporters’ momentum. Neither Barack Obama nor Hillary Clinton explicitly backed Mr Perez, but an endorsement by the loyal Mr Biden is almost as good as a nod from the former president and the Democratic presidential nominee. + + + + + +The tussle between Mr Perez and Mr Ellison, the front-runners among the nine contenders for the job, could be a boon for Pete Buttigieg (pronounced boot-edge-edge), the 35-year-old mayor of South Bend, Indiana. “We don’t want to relive 2016,” says Mr Buttigieg, alluding to the fierce battles between Mr Sanders and Mrs Clinton in the Democratic primaries. Mr Buttigieg presents himself as the compromise candidate who can bridge the divide between the Sanders and Clinton camps, build alliances with progressive organisations such as the American Civil Liberties Union and connect with the white working class as well as minorities. + +Mr Buttigieg joined the race late, but picked up momentum quickly. He bagged the endorsement of five former DNC chairs as well as nine mayors of cities such as New Orleans and Austin, Texas. Howard Dean, another former DNC chair and former presidential candidate, thinks Mr Buttigieg has a shot at winning. If he were elected, the former Rhodes scholar and Harvard graduate would be the youngest, and first openly gay, chairman of the DNC. He would bring to the job his experiences as mayor, navy officer and nerd at McKinsey, a management consultancy (a CV remarkably like that of Tom Cotton, a Republican senator with big ambitions). + +How do South Benders see their mayor? Though he was not the favourite to win, Mr Buttigieg was elected with 74% of the vote in 2011 and with over 80% of the vote in 2015. Most of the struggling rustbelt city’s citizens don’t begrudge him using South Bend as a springboard for his political ambition, says Elizabeth Bennion of Indiana University, South Bend. They see the progress he has made with the demolition of 1,000 derelict houses in 1,000 days, the partnership he has fostered with Notre Dame, a rich Catholic university outside the city, and the technology and data companies he is trying to bring in. “There was always a sense that he is destined for bigger things,” says Ms Bennion. + +Indiana’s Republicans pay Mr Buttigieg compliments in the form of withering remarks. He doesn’t see any political future for himself in Indiana, which is why he needs an exit, says Pete Seat, a spokesman for Indiana’s Republicans. Mr Buttigieg pitches himself as someone who can win even in a staunchly Republican state that is the home of Mike Pence, the vice-president, says Mr Seat, but South Bend has traditionally been a Democratic fief. The city last had a Republican mayor in 1972. + +The victor will replace Donna Brazile, who took over as interim DNC chairman after Debbie Wasserman Schultz resigned. Her departure followed leaked e-mails from DNC staff about how to obstruct Mr Sanders when he seemed to threaten Mrs Clinton’s smooth ride to the party’s nomination. To be on the ballot, a candidate needs 20 signatures from among the 447 voting DNC members. The ballots were sent out on February 22nd, the day of a televised debate on CNN with eight contenders for the DNC’s top job. Members will vote in as many rounds as are necessary for one candidate to receive 224 votes. + +Mr Sanders is right: electing Mr Ellison would mark a new chapter for a party that is trying to recover from one of the lowest points in its history. Mr Ellison is the first-ever Muslim congressman and co-chair of the Congressional Progressive Caucus. He has flirted with black nationalism and marched with the Nation of Islam, a political-religious movement founded in Detroit, his home town. An early and fervent supporter of Mr Sanders, he too favours a mix of sensible progressive proposals and Utopian schemes. He may not be best-placed to work out how to win back the statehouses and governors’ mansions Democrats have lost in recent years. The Midwestern mayor seems a better bet. + +This article appeared in the United States section of the print edition under the headline “Boot-edge-edge” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717396-pete-buttigieg-pitching-himself-compromise-candidate-who-should-lead/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Wrongful convictionsHow courts correct mistakes in the criminal justice system depends on where you live + + +Texas is the most generous state when it comes to compensating those wrongly imprisoned + + + + + +From the print edition | United States + + +Feb 25th 2017 + + + + + +IN NOVEMBER 1999, a 25-year-old Kansan named Tom Bledsoe confessed to the rape and murder of a 14-year-old girl. Just days later, however, Mr Bledsoe recanted, pinning the crime instead on his younger brother, Floyd. When the jury gave its verdict in April 2000, it was Floyd, not Tom, who was sent to prison, a wrongful conviction that would cost him more than 15 years of his life before he was exonerated in December 2015. With cases like this in mind, Kansas legislators are considering introducing a law that would give wrongfully convicted Kansans $80,000 for each year spent in prison. At the moment, as in some other states, Floyd is entitled to nothing. + +Had he been convicted in neighbouring Colorado, which passed a law in 2013 giving those exonerated $70,000 for each year they are locked up, Mr Bledsoe would have received $1.1m. Today, 31 states and the District of Columbia provide compensation in such cases. Payments vary considerably by state. In Texas, which accounted for a third of all exonerations in 2016, individuals are awarded $80,000 for every year of prison. In California, they receive $100 per day, or $36,500 per year. In Wisconsin, one of the least-generous states, exonerated individuals are entitled to just $5,000 for every year spent behind bars. + + + +Mistakes by the criminal-justice system are not uncommon. According to the National Registry of Exonerations, at University of Michigan Law School, courts overturned 165 wrongful convictions in 2016, or more than three a week. Since 1989 it has recorded a total of 1,991. + +Those exonerated in Kansas and the 18 other states without compensation laws must instead seek payment through civil litigation, or by convincing lawmakers to pass separate bills on their behalf. This can yield generous payouts but is expensive, time-consuming and often unsuccessful. Adele Bernhard at New York Law School has likened it to a lottery. + + + + + +Yet compensation statutes remain controversial. Some lawmakers believe that, since wrongful convictions are rare, a formal process for correcting them is a solution in search of a problem. Others argue that money would be better spent on victims of crime. Another worry is that statutes written carelessly could reward guilty individuals. These concerns have slowed the passage of legislation. Between 2000 and 2009, more than a dozen states passed compensation statutes. Since then, just four states—Washington, Colorado, Minnesota and Michigan—have passed such laws. Several others including Pennsylvania, Georgia, and Arizona have tried and failed. + +The Kansas bill, which would introduce a scheme like Texas’s, faces opposition too. At a hearing on February 14th a Republican state senator asked whether the proposed law would allow someone to engineer their own wrongful conviction, serve time in prison and then prove their innocence, swindling the state out of a big payout. “With all due respect,” Mr Bledsoe told the committee, “no one in their right mind would do that.” + +This article appeared in the United States section of the print edition under the headline “Criminal injustice” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717397-texas-most-generous-state-when-it-comes-compensating-those-wrongly-imprisoned-how/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +LexingtonProtesters are confronting members of Congress in a way not seen since the Tea Party’s rise + + +If the gravest threat to democracy is indifference, then have some faith in Donald Trump’s America + + + + + +From the print edition | United States + + +Feb 23rd 2017 + + + + + +IF THE gravest threat to democracy is indifference, have some faith in Donald Trump’s America. For the president is not just good at rallying throngs of his own supporters. He is also firing up his critics in a way that offers some echoes of the Tea Party movement that sprang up to oppose Barack Obama in 2009. + +Consider the long lines of constituents wrapped around a high school in Virginia Beach on February 20th, sacrificing their time on a public holiday to meet their Republican congressman, Scott Taylor. Undistracted by a mild, golden-hued evening worthy of early summer, almost 1,000 locals waited in line for seats. A minority were conservatives, wearing the Make America Great Again hats that signal Trump-allegiance or carrying signs demanding that Mr Taylor—a 37-year-old former Navy SEAL commando, elected to Congress for the first time last year—should vote to repeal the Affordable Care Act (ACA), also known as Obamacare. A larger number carried home-made signs that spoke of “resistance” to Mr Trump or demanded that Mr Taylor “Choose our Country over your Party!” Some were old hands at activism, alerted to attend by the local Democratic Party or by Indivisible, an anti-Trump group with chapters nationwide. Others used the Town Hall Project, a new volunteer-run database that logs opportunities to meet elected politicians—after rowdy meetings in places including Utah and California, some skittish members of Congress declined to hold public events in the recess that began on January 17th, or held virtual “tele-townhalls” instead. + + + + + +As was the case with many Tea Party groups eight years ago, the crowd at Kempsville High School was older, whiter and more affluent than the national average. A forensic scientist queuing to see Mr Taylor held a placard opposing a wall on the Mexican border with the (tongue-in-cheek) slogan: “How Will We Get Avocados?” As in 2009, some concerned citizens noted that this was their first time at a political meeting, and expressed fears that a tyrannical president is about to wreck the country. + +Back in Mr Obama’s first term, Tea Party types fretted that government-run health care amounted to European-style socialism. Some muttered that the first black president might be a secret Muslim. In 2017 Trump-sceptic citizens in Virginia Beach voiced four broad worries. First, they questioned Republican promises to repeal and replace Obamacare as soon as possible, expressing special concern for people with pre-existing medical conditions, who have a right to buy insurance cover under the ACA, while paying not much more than healthy folk. A local man with a serious illness told Mr Taylor: “Without the ACA I wouldn’t be alive.” Second, they wanted their new congressman to back an independent investigation into Russian meddling in the presidential election, and to demand that Mr Trump release his tax returns. Third, as residents of a coastal district, they sought assurances that Mr Taylor takes climate change and the threat of rising sea levels seriously—unlike Mr Trump, who stood accused of being anti-science. Finally, a striking number of the 700 people filling the auditorium (a further 200 waited outside) queried the cost of providing Secret Service protection each time Mr Trump spends the weekend at his Florida estate, or for the president’s grown sons when they go on business trips, for instance to open a golf club in Dubai—a “disgusting” expense, one constituent said. + +As in 2009, forceful complaints have an impact on politicians. Mr Taylor is a fairly conventional small-government Republican who won his heavily military district by 23 percentage points. But the president won the district by only three points—in part, thinks Mr Taylor, because Candidate Trump dismayed locals by lashing out at the parents of a Muslim-American soldier killed in Afghanistan, after they rebuked him for anti-Islamic bigotry. Mr Taylor stressed moments where he has bucked his party, for instance in voting for gay rights. He emphasised his co-sponsorship of a bill to ensure that those with pre-existing conditions must be offered insurance (though his bill does not say how to make such cover affordable). He backed a bipartisan Senate probe into Russian election-meddling and called on Mr Trump to release his tax returns. He said he disagrees with Stephen Bannon, the president’s chief political aide, having a principal’s seat on the National Security Council. He condemned talk of Muslim travel bans as “unconstitutional”, though he defended Mr Trump’s right to order extra vetting for arrivals from terror-prone countries. He fudged the question of whether humans are to blame for climate change. + +Herbal tea + +There are also differences from 2009. In their heyday, Tea Party activists ringingly promised to take their country back, certain that America is a majority-conservative country. Jump eight years, and—at least in Republican-leaning Virginia Beach—demonstrators sounded more anxious, even defensive. They talked of preserving as much of Obamacare as they could, and of stiffening their congressman’s spine to serve as a check on Mr Trump. Aware that the president has called critics “paid protesters” and “so-called angry crowds”, they brought voting cards showing their local addresses and wore stickers bearing their postal zip codes. “We weren’t bused in,” a woman assured Lexington. + +Those precautions reflect an alarming change since 2009: a collapse in belief that there is a single, shared version of the truth. Too often, today’s political opponents do not just disagree, they express disbelief. “There’s room for nuance,” Mr Taylor pleaded at one point, defending his view that environmental regulations are necessary but can go too far. A woman silently held up a sign reading “Not True”. A bloc of Trump voters, who had taken the president’s description of the press as “the enemy” to heart, yelled “Bullshit!” or “Fake news!” when he was criticised. A dismayingly plausible scenario involves Mr Trump’s election tearing the country further apart. Still, the deadliest foe of democracy is sullen, despairing apathy. Celebrate dissent. + +This article appeared in the United States section of the print edition under the headline “Dissent in the age of Trump” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717373-if-gravest-threat-democracy-indifference-then-have-some-faith-donald-trumps/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +The Americas + + +Brazil’s pensions: The burden on the young [Fri, 24 Feb 08:14] + +Protecting wildlife: Stand your ground beef [Fri, 24 Feb 08:14] + +Chile’s plutocrats: Bashing billionaires [Fri, 24 Feb 08:14] + +Bello: Stop the carnage [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Less gold for the oldReducing Brazil’s pension burden + + +The president has a chance to pass a reform that will stop Brazil going bust + + + + + +From the print edition | The Americas + + +Feb 25th 2017 | RIO DE JANEIRO + + + + + +THE faded modernist façades along Copacabana’s beachfront hark back to Brazil’s optimistic past. The seaside promenade, where walking sticks outnumber G-strings, offers a glimpse of its demographic future. A quarter of the inhabitants of this part of Rio de Janeiro are 65 or older, making it one of the oldest places in Brazil. But the rest of the country is catching up fast, thanks to a drop in birth rates and rising life expectancy. Over-65s, who make up 8.5% of the population now, will reach Copacabana’s share by 2050. The country is dangerously unprepared for that shock. + +To see why, visit the Copacabana branch of the National Institute of Social Security (INSS), which administers state pensions for Brazilians employed in the private sector. Elizete Ribeiro, a vivacious masseuse, does not look ready to be pensioned off. She is just 56 years old. But, having paid into the system for 30 years, she is entitled to a basic pension worth the minimum wage (937 reais, or $304, a month). The lawyer helping her, Jorge Freire, benefits from a separate public-sector scheme. He retired as an employee of Rio de Janeiro’s state court system when he was 52. His retirement cheque, at first the same as his final salary, is bumped up every time current court workers get a pay rise. + + + +The form-filling at the INSS outpost, repeated millions of times, means trouble for Brazil. Pension spending is already the equivalent of 12% of GDP, half as much again as the average among members of the OECD, a club of mostly rich countries that have many more senior citizens (see chart). The combined annual shortfall of the pension schemes is 4.8% of GDP, equivalent to more than half the government budget deficit. The state of Rio supports more public-sector pensioners than working civil servants; for every police colonel on active duty five are retired. The state is nearly bankrupt. Without corrective action, Brazil faces an equally bleak future. + +Michel Temer, the country’s centre-right president, hopes to arrange for a brighter one. He took office last year after the impeachment of his left-wing predecessor, Dilma Rousseff, and in the midst of the country’s worst recession on record. This month congress began debating his plan to reform the pension system. Economic recovery and Brazil’s financial stability depend on its success. + + + + + +Brazil’s geriatric generosity came from laudable impulses. The constitution adopted in 1988 sought to break away from the country’s history of elitism and inequality, further entrenched under two decades of military dictatorship. Among the new rights was a basic pension for men over 65 and women over 60, whether or not they paid into the system. People who do pay in, like Ms Ribeiro, can claim benefits earlier. The government linked benefits to the minimum wage, ensuring that they would almost always go up and never down. + +This has made Brazil a land of youthful and prosperous pensioners. Its citizens collect pensions when they are 58 on average; Mexicans toil into their 70s. Brazilians on average incomes get pensions worth four-fifths of their pre-retirement earnings, which is generous by most countries’ standards. Widows and widowers inherit the full pensions of their deceased spouses, which they can combine with their own. + +This accumulation of rights has become an economic cluster bomb. Inflated by big increases in the minimum wage, pensions now account for more than half of the government’s non-interest spending. The recession has brought down the revenues to pay for them. Without a change, government pension spending could reach a fifth of GDP by 2060. Public debt will jump to scary levels sooner: by 2019 it could be 98% of GDP, up from 70% now. That prospect is one reason for Brazil’s double-digit interest rates. The pension splurge hurts the economy in other ways, for example by withdrawing employees prematurely from the workforce and taking money away from education and infrastructure. + +The reform Mr Temer is proposing would reduce the pension problem to more normal proportions. It would set a minimum pensionable age of 65 years for men and women, and oblige them to work longer than they do now in order to claim the maximum allowable pension. Future rises in the retirement age to keep up with longer lives would not require amending the constitution. Only the lowest pensions would be linked to the minimum wage. Widows’ benefits would be reduced. + +These and other measures would stabilise pension spending at around current levels, says Paulo Tafner, a pensions analyst. They would give the economy a short-term boost, in part by encouraging the central bank to reduce interest rates more rapidly. The stockmarket has strengthened on hopes that congress will enact it. + +Because the reform requires a constitutional amendment, both houses must pass it with three-fifths majorities. Ms Rousseff’s Workers’ Party decries it as an attack on the poor, though it will not touch beneficiaries of the lowest pensions. A politician from Mr Temer’s coalition accuses the government of “demographic scaremongering”—as if ageing were unpredictable. + +Despite such grumbling, Mr Temer has a good chance of getting the reform through reasonably intact. A poll for his Party of the Brazilian Democratic Movement reportedly shows that Brazilians are split evenly for and against the reform. The government is trying to tip the balance, with adverts in newspapers and videos beamed at passengers in airports. Mr Temer himself is unpopular. But if he cleans up the pension system, Brazilians will have reason to thank him. + +This article appeared in the The Americas section of the print edition under the headline “The burden on the young” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21717413-president-has-chance-pass-reform-will-stop-brazil-going-bust-reducing-brazils/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Stand your ground beefBreeding cows that can defend themselves against jaguars + + +If big cats don’t kill livestock, farmers won’t shoot them + + + + + +From the print edition | The Americas + + +Feb 23rd 2017 | SAN MARTÍN, META DEPARTMENT + + + + + +RANCHERS in Colombia’s Meta department can be vengeful folk. From time to time jaguars emerge from a clump of forest, streak across the savannah and attack one of a panic-stricken herd of cows. When that happens, ranchers hunt the offender down and shoot it. That practice is endangering the cats’ survival. Panthera, a charity that manages “corridors” for jaguars that stretch from Argentina to Mexico, guesses that just 5,000 of the cats are left in los llanos, Colombia’s scorching savannah. It has come up with a less violent way of protecting both the jaguars and the cattle. + +The idea is to teach cattle self-defence, or rather to breed the instinct into them. The cows that graze in los llanos are mostly Zebu, which are popular with ranchers for their fast growth, large size and white hides. But they have an unfortunate habit of fleeing in all directions when danger approaches. Panthera’s idea is to replace panicky Zebu with cattle that stand their ground, or to interbreed the two. Esteban Payán, who directs Panthera’s operations in northern South America, chose San Martineros, a little-known subspecies of Criollo cattle descended from Spanish fighting bulls. Few jaguars dare to challenge a massed group of 500kg (1,100-pound) San Martineros, their horns levelled. Docile with humans, they are fierce defenders of territory and their young. Mr Payán recounts that San Martineros chased away a puma before it could eat a capybara it had killed in their paddock. + + + + + +Eugenics seems to work. Since 2012 Mr Payán has been working with Eduardo Enciso, a rancher in Meta, who already had some San Martinero cattle. Mr Enciso reports that both purebred San Martinero cows and the offspring of Zebus that have been inseminated by San Martinero bulls do indeed stick together when jaguars approach. Cattle that are just a quarter San Martinero may be just as brave, says Mr Payán. No jaguars have attacked cattle on Las Pampas, Mr Enciso’s 4,000-hectare ranch, since the programme began, he says. Zebu-only ranches in the area suffer a dozen attacks a year. + +Panthera is trying to get other ranchers to adopt the technique, but just four have so far expressed interest. Some contend that smaller San Martinero bulls cannot mount their Zebu cows, though Mr Enciso denies this. Certainly, there is nothing wrong with their libidos, he says. Perhaps more important, butchers think San Martineros are scrawny and dislike their reddish hue (hybrids can look like either variety or a mix of both). Mr Enciso insists that San Martinero meat is more delicious than that of purebred Zebu. If diners develop a taste for it, perhaps fewer jaguars will be shot. + +This article appeared in the The Americas section of the print edition under the headline “Stand your ground beef” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21717415-if-big-cats-dont-kill-livestock-farmers-wont-shoot-them-breeding-cows-can-defend/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bashing billionairesWhy Chileans dislike business leaders + + +One of South America’s most modern countries resents its tight-knit elite + + + + + +From the print edition | The Americas + + +Feb 23rd 2017 | SANTIAGO + + + + + +LAST year ended triumphantly for Andrónico Luksic, head of Chile’s richest family. On December 23rd he won a slander suit against a politician who had called him a “criminal” and “a son of a whore”. But his sense of vindication was clouded by pain. Four days earlier, as he left the courthouse, a mob, angry about a hydroelectric project in which he had invested, threw stones at him. One struck him on the head; police whisked him away. + +Plutocrats are unpopular in lots of places, but Chileans seem to regard theirs with particular suspicion. MORI, a polling firm, asked Chileans in 2015 to choose which among five power centres had the most clout: 59% chose businessmen over the government, the presidency, congress and the media. Asked by Latinobarómetro, another pollster, if they had any confidence in private enterprise, just 32% said yes, the second-lowest rate among 18 countries. Chileans often say that seven families “own” the country. Together, their wealth is the equivalent of 17% of GDP. The Luksics alone are worth $14bn, equivalent to about 6% of GDP, according to Forbes. + + + + + +Chile is in many ways the most modern country in South America. Its institutions function reasonably well, its educational standards are among the highest and its levels of crime and corruption are among the lowest. Yet that has not brought equality. Although poverty has fallen sharply, income distribution is more skewed in Chile than in any other member of the OECD, a club of mainly rich countries (though not unusually so for Latin America). Just 5% of Chileans regard the distribution of income as “fair” or “very fair”, the lowest share in Latin America, says Latinobarómetro. “It’s precisely because Chileans can see how wealthy their country is—from the Porsches and Maseratis in the streets of some areas—that they’re so angry about how that wealth is shared out,” says Marta Lagos of Latinobarómetro. + +Mr Luksic, the grandson of a Croatian immigrant and a Bolivian heiress who settled in Antofagasta a century ago, is typical of his class. He attended The Grange, a posh private school in Santiago. The Luksics made their first fortune from mining, then expanded into banking, shipping, the media, drinks, energy and manufacturing. Antofagasta plc is listed on London’s stock exchange. Other businesses are grouped into Quiñenco, a family holding company, of which Mr Luksic is chairman. + +Breadth and heft attract hostility. Environmentalists say his mining and energy projects scar the landscape. Many Chileans think Mr Luksic’s companies, along with all Chilean business, should pay higher taxes. Journalists say he wields undue influence. His bank made a large loan to a company owned by the Chilean president’s daughter-in-law after he met with her; he later apologised. Such connections feed Chileans’ suspicions that the big decisions are made by a clique over a bottle of Carmenère or a game of golf. + +A series of collusion cases, often involving companies in sectors with little competition, give such suspicions weight. Firms were caught fixing prices and setting market quotas in such products as pharmaceuticals, poultry, and toilet paper. The three price-fixing pharmacy chains control 90% of the country’s drugstore business; the chicken cheats sell 93% of the poultry. + +A low point for the reputation of business came a week before Mr Luksic’s victory in court. At the Christmas dinner of Asexma, a business association, its chairman gave the economy minister an inflatable sex doll, which he suggested might “stimulate the economy”. Photographs of middle-aged men in suits chortling with a naked doll confirmed Chileans’ view of the business elite as a boys’ club out of touch with modern norms. + +Though Mr Luksic thinks he has been unfairly maligned, he admits that he and his sort have a problem. After the politician defamed him last April he answered with a YouTube video, an unusual tactic for someone who usually shuns the limelight. While denouncing his accuser he also confessed that “we’ve made mistakes…. We have to be much more rigorous in how we behave.” He was speaking about his business, but it sounded like a mea culpa from Chilean business at large. + +This article appeared in the The Americas section of the print edition under the headline “Bashing billionaires” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21717438-one-south-americas-most-modern-countries-resents-its-tight-knit-elite-why-chileans-dislike/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +BelloThe costs of Latin American crime + + +Many governments are failing in their most basic task + + + + + +From the print edition | The Americas + + +Feb 25th 2017 + + + + + +THIS month police in the Brazilian state of Espírito Santo went on strike for ten days, during which 143 people were murdered and all hell broke loose in Vitória, the state capital. In Reynosa, on Mexico’s border with the United States, two alleged robbers were beaten, bound with duct tape and dangled from a footbridge, with a message from a drug baron pinned to them. On February 17th a gunman killed five people and injured nine at a shopping centre in Lima. A day later in Flores Costa Cuca, a small town in western Guatemala, an 83-year-old woman and her disabled grandson were murdered, prompting calls for the army to patrol the streets. + +A casual scan of newspapers in Latin America and the Caribbean in any week reveals a grave problem: violent crime has become an epidemic. The region accounts for only 9% of the world’s population but 33% of its murders. Its homicide rate of 24 per 100,000 people is four times the world average. Worryingly, murders have become more common even as socioeconomic conditions have improved (see chart). Robberies are increasing, too; some 60% involve violence. No wonder polls show that crime has replaced the economy as the main public concern in Latin America. + + + + + +As well as inflicting immeasurable suffering, violent crime is a big obstacle to economic development. In a pioneering report published this month, researchers at the Inter-American Development Bank (IDB) set out to measure its impact on the region’s economies. In the average Latin American country the annual cost of crime is 3.6% of GDP, they reckon. + +That may not sound much, but it is twice as high as the equivalent figure in developed countries and is equal to the region’s spending on infrastructure and to the income of the poorest 30% of the population, points out Laura Jaitman, the report’s lead author. She stresses that this is a conservative estimate: it covers only the income lost by the victims of crime and by prisoners; private spending on security by firms (in the formal economy) and households; and public spending on policing, the criminal courts and prisons. Factor in indirect costs, such as investment forgone, and the true cost of crime is higher. + +The average conceals wide variations. In Honduras the cost of crime is a whopping 6.5% of GDP, for example. Chileans, by contrast, are less likely to be murdered than inhabitants of the United States. Murder rates and the cost of crime in different parts of Brazil vary as widely as they do across the region as a whole. + +Organised-crime syndicates, with origins in the drug trade, help to explain why murders have soared in recent years in Mexico, parts of Central America, Venezuela and parts of Brazil. But the problem of violent crime goes well beyond the drug gangs. In some ways crime in Latin America is similar to that in the rich world. It is highly concentrated in certain parts of certain cities. The vast majority of perpetrators and victims are young men. Often they are badly educated and come from broken families. + +A new report by the World Bank recommends strategies to prevent crime that have worked elsewhere—everything from early-childhood education to focusing police work on crime “hot spots”. That would certainly be an improvement on the “iron-fist” approach favoured by many Latin American politicians, which involves mass incarceration for long periods in hellish prisons and the application of a de facto death penalty by security forces against young male suspects. + +Yet if crime is so much more prevalent in Latin America than in other regions it is surely because the returns from it, relative to those in the legal economy, are higher and, especially, because the chances of being caught are lower. Less than 10% of murders in the region are solved. + +That highlights two fundamental failures. The first is that too many young men command only low-paying and insecure legal jobs. Some 20m 15- to 24-year-olds in the region neither study nor work at all. This points to the need for targeted skills programmes. + +Second, the police, the courts and the prisons often fail to do their jobs. Espírito Santo shows that even a bad police force is better than none. But not much better: last year the state’s murder rate was still 37.4 per 100,000 people. + +Not all is gloom. Colombia and other parts of Brazil have seen sustained falls in murder rates, partly because of better policing. In Chile this month a Spaniard was arrested for attempting to bribe a policeman (with 30,000 pesos, worth $47). Elsewhere, though, many governments are failing in their most basic duty, to keep their citizens safe. + +This article appeared in the The Americas section of the print edition under the headline “Stop the carnage” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21717439-many-governments-are-failing-their-most-basic-task-costs-latin-american-crime/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Asia + + +Women in South Asia: The missing middle [Fri, 24 Feb 08:14] + +Mongolia’s finances: This might yurt [Fri, 24 Feb 08:14] + +Security in Pakistan: Role reversal [Fri, 24 Feb 08:14] + +Mining in South-East Asia: Shafted [Fri, 24 Feb 08:14] + +Buddhism in Thailand: The missing monk [Fri, 24 Feb 08:14] + +Banyan: Pivot or pirouette? [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The missing middleWomen in South Asian politics have not empowered women + + +Despite many prominent female politicians, a big sex divide endures + + + + + +From the print edition | Asia + + +Feb 25th 2017 | DELHI + + + + + +ON THE Indian subcontinent, as in no other part of the world, women have risen to the pinnacle of politics. Indira Gandhi of India, Benazir Bhutto of Pakistan and Aung San Suu Kyi of Myanmar are all famous names. Less well known is that Sri Lanka was the first country ever to elect a woman prime minister, or that it has also had a female president. For 22 of the past 25 years Bangladesh, a largely Muslim country with more people than France and Germany combined, has been led by a woman. And the chief ministers of numerous country-sized Indian states, from West Bengal in the east to Tamil Nadu in the south, have also been women. India’s democracy is not pretty; these are the winners of bare-knuckle contests. + +Yet for all such headline-grabbing successes, the fine print tells a different story. Although there has been steady progress in such things as stamping out female infanticide and spreading women’s education, statistics continue to reveal a stark sex divide. At 27%, the share of Indian women who work, for instance, is less than half the level in China or Brazil (and also in neighbouring Bangladesh, although slightly higher than in Pakistan). + + + + + +In 2012 a household survey found that four-fifths of Indian women needed their husband’s or family’s permission to visit a local clinic. A third said they would not be able to go alone. More than half also said they could not visit a shop, or even a friend, without someone else’s approval. For many, the very idea of going out was alarming: 70% said they would feel unsafe working away from home, and 52% thought it normal for a husband to beat his wife if she ventured out without telling him. In November, following a shock government move to scrap higher-denomination banknotes, a domestic violence hotline in the city of Bhopal in central India registered a doubling of calls, largely from women whose spouses had discovered they had secretly been saving cash. + +On your bike + +For wealthy and middle-class Indian women, freedoms have steadily grown: Anubha Bhonsle, a television anchor, recalls the strangeness of being the sole female driver of a motor scooter on many streets when she started commuting 15 years ago. “No one would give a second glance now,” she says. Yet in many professions women remain rarities. Barely 10% of the 700 judges in India’s higher courts are female, and only 17% of the 5,000 officers in the Indian Administrative Service, the elite corps of bureaucrats that runs the country. + +Women are scarce even in politics. In the lower house of India’s parliament only 12% of MPs are women. State legislatures are similarly male. True, women’s share of seats has risen, but slowly: 50 years ago the proportion of women in the lower house was 6%. + +It is only in village and district councils that women hold much sway, but this is partly due to laws that assign either a third or half of seats to female candidates. Earlier this month tribesmen objecting to efforts to impose a women’s quota in local elections rioted in Nagaland, a state on the border with Myanmar that is one of the few exceptions to such rules. Naga men insist that local custom precludes female village chiefs. + +Such troubles reveal one cause of slow progress to sexual equality: Indian politicians have generally found it more rewarding to cater to subgroups defined by caste, religion, ethnicity, language or local grievance, rather than to broader categories such as women. This is equally true of female politicians, and of regional leaders less constrained by democracy. Sheikh Hasina, the current, iron-fisted prime minister of Bangladesh, has recently moved to reduce the legal age of marriage from 18 to 16. Given that child marriage is already common, especially in the impoverished countryside, women’s-rights activists are upset. But analysts explain that apa, or “big sister”, who has hounded opposition parties including Islamists, is looking for ways to deflect conservative anger. + +In order to succeed female politicians in the region often make a point of acting tough. Mamata Banerjee, the diminutive but formidable chief minister of West Bengal, once dragged a male colleague out of the well of parliament by the collar when she was an MP in Delhi. Like Sheikh Hasina and Mayawati, a former chief minister of Uttar Pradesh, as well as Jayalalithaa, a recently deceased former film star and long-serving chief minister of Tamil Nadu, Ms Banerjee has carefully repressed her sexuality. These women are ostentatiously “married” to their cause or their party. + +Such care is understandable. Male rivals have not shied from using sex to malign female politicians. One party leader in Uttar Pradesh lost his job for accusing Mayawati, who comes from a downtrodden caste, of “selling tickets like a prostitute”. A colleague went further against Sonia Gandhi, the leader of the opposition Congress party. Absurdly, he accused the head of the Gandhi dynasty of having worked for a Pakistani escort agency. + +With so many obstacles blocking the path to power, it is hardly surprising that so many of the region’s successful female politicians got a head start. Amrita Basu of Amherst College finds that more than half of India’s female MPs in the past decade had family members who preceded them in politics. Quite often such dynastic links have been dramatic. Ms Suu Kyi in Myanmar and Sheikh Hasina are both daughters of slain independence heroes. Sonia Gandhi and Khaleda Zia, a former Bangladeshi prime minister and bitter rival to Sheikh Hasina, are both widows of assassinated leaders. Both Jayalalithaa and Mayawati entered politics as devoted lieutenants to charismatic, populist politicians; in Jayalalithaa’s case her mentor also played the lead in many of her films. + +For women to play a more normal political role in the subcontinent, perhaps it is in films, and in popular culture in general, that change needs to happen first. All too often on the region’s screens, actresses who are paid a fraction of what male stars get portray women who lack agency in their lives. There is, though, an inkling of change. This season’s blockbuster and already the highest-earning film in Bollywood history, “Dangal”, tells the heart-warming story of sisters who become champions in the male-dominated sport of wrestling. Yet the main hero is not one of the girls, but the father, a former wrestler, who bends them to his will. + +This article appeared in the Asia section of the print edition under the headline “The missing middle” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717409-despite-many-prominent-female-politicians-big-sex-divide-endures-women-south-asian-politics/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +This might yurtThe IMF bails Mongolia out—again + + +Every commodity bust brings a balance-of-payments crisis + + + + + +From the print edition | Asia + + +Feb 25th 2017 + + + + + +WHEN Jim Anderson first lived in Mongolia in 1993, there was one local word foreigners could not help but learn: baikhgui, which translates as “absent” or “unavailable”. Bread? Rice? Electricity? Often as not, they were baikhgui, he recounts in a blog post for the World Bank, for which he has returned to Mongolia as country director. Even those lucky enough to have American currency to spend in “dollar shops” received sticks of chewing gum as change. + +Mongolia thought it had left those days far behind. A mining boom (copper, coal, gold) has transformed the country, filling the shops with goods and the cities with cranes. From 2009 to 2014, the economy grew by 70%. In 2012 alone, it attracted foreign-capital inflows equivalent to some 54% of its GDP. But since 2014 commodity prices have fallen, foreign-direct investment has reversed and a number of daunting debt payments have crept closer. Mongolia’s foreign reserves have dwindled from over $4bn in 2012 to little more than $1bn at the end of September, equivalent to about four months’ imports. Foreign creditors were about to learn the word baikhgui. + + + + + +Enter the IMF. This month it agreed to lend Mongolia about $440m over three years to help it avoid default and rebuild its reserves. Assuming the agreement is approved by the fund’s board, it should unlock another $3bn or so from the Asian Development Bank, the World Bank, Japan, South Korea and others. + +China should also help. Irked by the Dalai Lama’s visit in November, it imposed new duties on Mongolian goods and delayed lorries at the border. A little over 50% of Mongolians identify as Buddhist. But almost all the country’s exports (84%) are sold to China, making it the most China-dependent exporter in the world (see chart). Mongolia’s government has apologised for the “misunderstanding” caused by the visit and said it will not permit a repeat. It now hopes China will extend a 15bn yuan ($2.2bn) swap line. + +The strings attached to the IMF’s loan are more conventional. They include keeping the central bank out of “quasi-fiscal” activities: it had bought cheap-rate mortgages worth 1.95trn togrog ($787m), helping to support a housing bubble in a country known for nomadism. At the IMF’s urging, the government is also distancing itself from the management of the Development Bank of Mongolia, a state lender that accounts for over a fifth of credit in the country. + +Mongolia’s prospects should improve. Copper and coal prices have recovered somewhat. The economy will also benefit from heavy investment in Oyu Tolgoi, a copper mine operated by Rio Tinto. But Mongolia has turned to the IMF twice in eight years. If it does not manage the next commodity cycle better, it might find that its benefactors’ patience is baikhgui. + +This article appeared in the Asia section of the print edition under the headline “This might yurt” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717414-every-commodity-bust-brings-balance-payments-crisis-imf-bails-mongolia-outagain/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Role reversalPakistan blames Afghanistan for a spate of terrorist attacks + + +But there is much Pakistan could do to put its own house in order + + + + + +From the print edition | Asia + + +Feb 23rd 2017 | ISLAMABAD + + + + + +IN THE space of five days in mid-February, Pakistan suffered ten acts of terrorism, affecting all four of its provinces. On February 13th a suicide bomber killed 15 people outside the provincial assembly in Punjab, including two senior police officers. On February 16th more than 80 were killed and over 200 injured when another suicide bomber targeted the throngs of worshippers at Lal Shahbaz Qalandar, a Sufi shrine in the southern province of Sindh. Yet more bombs killed police and soldiers in Balochistan, Khyber Pakhtunkhwa and the Federally Administered Tribal Areas (FATA), along the border with Afghanistan. + +The attacks are all the more shocking because deaths from terrorism in Pakistan have fallen dramatically in recent years (see chart), the result of a sustained counter-terrorism campaign by the security services. Swathes of territory once lost to militants have been recovered. Operation Zarb-e-Azb, launched in 2014 to retake North Waziristan, a part of FATA that had become a jihadist stronghold, was a turning point. Until then, fretful politicians had postponed confrontation with the Tehreek-e-Taliban Pakistan (TTP), the Pakistani offshoot of the militant Muslim group that ruled Afghanistan until the American invasion of 2001 and threatens its government to this day. + + + + + +It was a faction of the TTP that claimed responsibility for the attack on the Punjab assembly. Islamic State, the extremist group that controls parts of Iraq and Syria, said it was responsible for the bombing of the Qalandar shrine, although it is likely to have worked through a local group. But Pakistan’s army identified a third culprit: Afghanistan. It said the Afghan government was not doing enough to stamp out militant groups, and that the militants, in turn, were using Afghanistan as a base to plan attacks in Pakistan. It closed all border crossings and shelled what it said were militant camps on the Afghan side of the border. The army also demanded the immediate arrest of 76 terrorists it said were living in Afghanistan. + +It is true that Islamic State, the TTP and many other groups have bases inside Afghanistan. Afghan spooks may well provide them some assistance (in 2013 American special forces caught a leader of the TTP on his way to Kabul for secret talks). But the beleaguered government in Kabul, which has lost much of its territory to the Taliban insurgency, is in no position to satisfy Pakistan’s demand that it detain particular militants. They are based in areas where its writ is minimal or non-existent. + +Moreover, the Afghan government is beleaguered in part because the Afghan Taliban has itself long enjoyed sanctuary on Pakistan’s side of the border. This week the Afghan government announced that its forces had killed Qari Saifullah Akhtar, a Taliban leader repeatedly captured and released by Pakistan. With many more of the Taliban’s leaders, bomb-makers and indoctrinators beyond the reach of Afghan troops and their allies in NATO, it has proved impossible to defeat the 16-year insurgency. Yet Pakistan has shielded the Taliban because it sees the group as its only ally in Afghanistan, a country it fears is too cosy with India, its arch-rival. + +While the army harasses Afghanistan, there is much that Pakistan could do to fight terrorism domestically. A National Action Plan drawn up in the wake of the massacre of more than 130 schoolboys by the TTP in Khyber Pakhtunkhwa in 2014 has not been fully implemented. Regulation and reform of madrassas, religious schools that foster militancy, has been half-hearted. Notorious peddlers of sectarianism remain at large. It does not help that the army wants an even bigger role in domestic security—a source of tension with the civilian authorities. There is nothing Afghanistan can do about all that. + +This article appeared in the Asia section of the print edition under the headline “Role reversal” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717420-there-much-pakistan-could-do-put-its-own-house-order-pakistan-blames-afghanistan/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +ShaftedIndonesia and the Philippines hobble the mining industry + + +Jobs and revenue evaporate as the regulators pile on + + + + + +From the print edition | Asia + + +Feb 23rd 2017 | JAKARTA AND MANILA + + + + + +IN THE more rugged, poor and far-flung areas of the vast archipelagoes of Indonesia and the Philippines, mining is one of the few industries that shows much promise. Last year the Philippines exported nearly $1.7bn of minerals and ore—4% of the country’s exports. Mining employs over 200,000 people. By the same token, the Indonesian unit of Freeport McMoRan, an American firm that operates Grasberg, a vast copper and gold mine high in the mountains of Papua, has paid more than $16.5bn in taxes over the past 16 years. Freeport plans to expand Grasberg; over the next 25 years it expects to cough up a further $40bn. Yet the governments of both countries are imperilling this bonanza. + +Three years ago, in an effort to boost the economy by spurring domestic processing, Indonesia banned the export of unrefined metal ores. (Smelting copper ore adds little value, so it was exempted.) Mining collapsed: the output of bauxite, from which aluminium is refined, fell from 56m tonnes in 2013 to 1m tonnes in 2015 (see chart). Some firms did begin building expensive smelters—but not nearly enough to process all the ore that had previously been mined. Indonesia now has the capacity to process 3m tonnes of bauxite a year, for example. Instead, the law’s most noticeable effects were the closure of hundreds of mines, the loss of thousands of jobs and a collapse in government revenue from mining. + + + + + +In January the government—in search of jobs and revenue—relaxed the ban, allowing some exports of unprocessed nickel and bauxite for the first time in four years. But, perhaps to show that it was not a soft touch, it also insisted that all mining firms operating under an older, more secure form of mining licence, including Freeport, convert them into a newer sort in order to receive export permits. Freeport, which has a controversial history in Indonesia, has refused. It has halted production and suspended investment. It is also laying off workers. “You cannot produce a product that you are not allowed to sell,” says its boss. The company has also muttered about international arbitration, eliciting splutters from the minister of mines. + +Indonesia’s ore-export ban made the Philippines the world’s leading nickel producer, but that may soon change. On February 3rd Gina Lopez, the environment secretary (and a longtime green activist before joining government), ordered 23 of the country’s 41 mines to close permanently, and another five to suspend operations indefinitely, for alleged environmental violations. Most of the mines to be closed produce nickel, and are responsible for around half the country’s annual output of 530,000 tonnes. On February 14th Ms Lopez cancelled another 75 mining projects, some still in the exploratory stage, on the grounds that they would harm ecologically sensitive areas. + +The industry has cried foul. Ronald Recidoro of the Chamber of Mines in the Philippines, a trade group, said that his members had not seen copies of the audits that led to the closures, nor have there been cases filed against them for violations of the clean water and air acts (Ms Lopez has invited companies to inspect the audits in her office). He also notes that a government team that reviewed the audits recommended fines or suspensions, not closures. They fear that Ms Lopez intends to interpret environmental regulations so strictly as to make mining impossible. + +Both countries may yet pull back from the brink. In the Philippines, mines remain open during what will doubtless be a lengthy appeal process. Carlos Dominguez, the finance minister, says that he reminded Ms Lopez that “it was important for her to follow due process.” A lawyer in Jakarta predicts that “mine owners will be given relatively short extensions of the right to export and this will be reviewed on a regular basis with the threat of being shut down.” Miners make convenient political villains. But neither Indonesia nor the Philippines can afford to let political posturing deprive them of much-needed revenue from rising commodity prices. + +This article appeared in the Asia section of the print edition under the headline “Shafted” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717419-jobs-and-revenue-evaporate-regulators-pile-indonesia-and-philippines-hobble-mining/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The missing monkThailand’s junta feuds with an influential Buddhist sect + + +A dragnet at the order’s headquarters fails to snare a fugitive abbot + + + + + +From the print edition | Asia + + +Feb 23rd 2017 | PATHUM THANI + + + + + +SOME people think he has fled abroad. Others say he may have died. For more than a year the authorities in Thailand have been trying to get hold of Phra Dhammachayo, the reclusive former leader of a controversial Buddhist sect who is wanted for questioning in a fraud case. On February 16th a group of officers finally gained access to the vast religious complex which his Dhammakaya movement maintains on the outskirts of Bangkok. Instead of locating the septuagenarian monk—often pictured in signature sunglasses—they found an empty bed stuffed with pillows. + +By February 22nd more than 4,000 police and soldiers were lingering outside the Dhammakaya compound—waiting to complete a full sweep of the massive site but apparently hindered by monks and devotees who had blocked its dozen entrances. A spokesman for the sect claimed that 30,000 people were still inside the property, having ignored orders to leave; there have been scuffles at its gates. Apiradee, a retired civil servant helping to feed Dhammakaya followers who had gathered in support outside the police cordon, said she has never seen anything like it. + + + + + +Founded in the 1970s, the Dhammakaya movement claims about 3m followers around the world. It is by far the most influential temple in Thailand. It bears a loose resemblance to the evangelical mega-churches that increasingly beguile the world’s Christians. Dhammakaya’s mostly middle-class adherents complain that older Buddhist temples have grown complacent and materialistic. They insist, rather grandly, that the Bangkok compound, with its vast stadium, is meant to become a kind of Buddhist Vatican. + +But Dhammakaya has fierce opponents both within the Buddhist establishment and outside it. Critics denounce it as a cult that peddles wacky theology, and warn that it misleads wealthy urbanites into thinking that they can purchase religious merit. (The most serious of the several allegations against Phra Dhammachayo relates to a case in which an acolyte funded a donation with cash embezzled from a credit union.) Thailand’s ruling junta worries that the movement’s leaders are sympathetic to the cause of Thaksin Shinawatra, a populist former prime minister toppled in 2006 whose lingering influence the generals and their backers are determined to stamp out. + +Last year the junta abandoned several attempts to drag Phra Dhammachayo out for questioning, fearful of the outrage that might follow were soldiers to be pictured manhandling monks. The latest effort looks more concerted. It may not be a coincidence that the operation began shortly after the installation of a new Supreme Patriarch (Thai Buddhism’s most senior monk). That job is usually filled according to a strict hierarchy but had been held open for several years after conservative clergy refused to endorse the expected successor—in part because of worries that he was too close to Dhammakaya. The junta took the unusual step of asking King Vajiralongkorn, who succeeded his father in December, to solve that dispute; he anointed a less controversial alternative, Somdet Phra Maha Muniwong, who hails from the smaller and more orthodox of Thailand’s two main Buddhist orders. + +Monks at the Dhammakaya temple say that they have not seen their former abbot for months. They say the real aim of the raid is to shut the entire temple down. The generals may yet decide to back away from the fight, as they have done previously. They could perhaps claim that the searches they have already conducted are enough to declare the operation complete. That might look like a defeat, but it is hard to escape the conclusion that the Dhammakaya movement is running out of powerful friends. With the royal succession—which some had feared would be tumultuous—safely behind it, Thailand’s conservative establishment is reasserting itself, in religion as in politics. + +This article appeared in the Asia section of the print edition under the headline “The missing monk” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717412-dragnet-orders-headquarters-fails-snare-fugitive-abbot-thailands-junta-feuds/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +BanyanThe Philippines pivots to China + + +Or is it more of a pirouette? + + + + + +From the print edition | Asia + + +Feb 23rd 2017 + + + + + +FOR some relief from the congestion, fumes and hustle of Manila, take a day-cruise to the island of Corregidor. Guarding the entrance to Manila Bay, the “Gibraltar of the East” has seen the junks that brought Chinese trade and Islam, galleons that brought Spanish Catholicism and, in 1898, the warships of Commodore George Dewey that brought American rule. In 1941 came Japanese invaders who, as tour-guides tell it, made sport of throwing Filipino babies in the air and catching them on bayonets. + +The shared memory of the second world war—the rearguard defence of Corregidor by American and Filipino soldiers, the horrors of occupation such as the “Bataan death-march” of POWs to distant internment camps, and the triumphant return of General Douglas MacArthur in 1944—goes a long way to explain the affection of many Filipinos for America. It is hard to imagine other former colonised peoples putting up, or putting up with, the “Brothers in Arms” statue on Corregidor: it depicts an American GI (tall and strong, with a helmet) holding up a Filipino buddy (short and wounded, with a bandana). + + + + + +Such comradeship assuages some of the resentment Filipinos feel at the mix of brutality and paternalism of American rule. Seventy years after independence, the Philippines feels like an offshoot of America: in its spoken English, its system of government, its gun culture, and its love of fast food and Hollywood. The Pew Research Centre, which polls global opinion, ranks the Philippines as the most pro-American of the countries it surveys: 92% of Filipinos expressed a favourable view of America in 2015, an even bigger share than in the United States itself. + +These days the expansionist power in Asia is China. A potential flashpoint for a future war lies barely 170 nautical miles from Corregidor—a ring of reefs and rocks called Scarborough Shoal. A big fishing ground, and a former bombing range for American and Filipino forces, it was seized by China in 2012. Were it to build a military base there, as it has done in the nearby Spratly Islands, Scarborough Shoal would be as a dagger aimed at Manila. + +It is time, surely, for the brothers to link arms again. The trouble is, Rodrigo Duterte, the hard-man president, wants to turn his back on America. The Philippines is not a vassal state, putang-ina (“son of a whore”), he exclaimed when asked whether Barack Obama might object to his bloody war on drugs. A month later, on a visit to Beijing, “Rody” announced his country’s “separation” from America, and its dependence henceforth on China. The Chinese leadership promised some $24 billion worth of loans and investments. High on Mr Duterte’s wishlist is a new railway to connect Manila with development zones at Subic Bay and Clark Field, former American bases abandoned in the early 1990s during a previous surge of Filipino nationalism. + +China in and America out: on the face of it a geopolitical revolution is under way, breaking the chain of American alliances in the Pacific that contain China. Control of Scarborough Shoal, and a friendly government in Manila, would make it easier for Chinese nuclear submarines to slip into the Pacific Ocean within missile range of America. + +Yet, rhetoric aside, strikingly little has changed. American forces are still helping Filipino ones against jihadists and upgrading Filipino bases to challenge China’s ambition in the South China Sea. The promised billions have yet to materialise. To some, Mr Duterte’s pivot is a pirouette, intended to get both powers, and Japan, to woo the Philippines. More plausibly, he is spinning in contradictions. Mr Duterte says that only two out of five of his utterances are true, and the rest “jokes”. But which is which? + +Grown-ups in the cabinet are masters at managing his tantrums. The “separation” from America is recast as diplomatic “diversification”, while keeping close ties with America. The threat to abandon the mutual defence treaty of 1951 is but a revision to annual joint exercises. The call to “set aside” the ruling of an international tribunal against China’s trespass on the Philippines’ exclusive economic zones around Scarborough Shoal and the Spratlys is no surrender, just a choice not to discuss it for now. + +Mr Duterte’s anti-Americanism is real enough. He bears personal grudges against Americans (and claims to have been molested as a boy by an American priest). A self-declared leftist, he blames America for the legacy of violence of his home island of Mindanao, plagued by communist and Muslim insurgencies. + +But the president, although popular, is constrained by a pro-American system. Westerners are told to heed what the government does, not what Rody says. Rattled businessmen hope the harm will be limited. It helps that Mr Duterte has stopped insulting America. One reason is that he has more or less suspended his war on drugs—not because of growing qualms over the death of thousands of Filipinos, but out of embarrassment over the grisly killing of a South Korean businessman by crooked policemen. + +A populist axis + +The other reason is the arrival of Donald Trump, whom Mr Duterte regards as a kindred spirit. And yet, even for Mr Duterte, Mr Trump is probably a menace, not a friend. Though suspicious of China, the American president’s resentment of costly alliances raises doubt about whether he would defend the Philippines. That could invite Chinese adventurism. + +Mr Trump’s dislike of global trade and immigration presents another danger. The gift of English has made the Philippines a winner from globalisation: remittances from millions of workers abroad (many in America), and the outsourcing of call centres and other backroom tasks by big American firms, have powered the economy. Right now, Mr Trump may care most about the loss of manufacturing jobs to Mexico and the influx of migrants from the Muslim world. But in trying to make America great again he may well make the Philippines poorer. Then Mr Duterte really would have good reason to curse America. + +This article appeared in the Asia section of the print edition under the headline “Pivot or pirouette?” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717395-or-it-more-pirouette-philippines-pivots-china/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +China + + +China and North Korea: Shock and ore [Fri, 24 Feb 08:14] + +Ethnic harmony: Journeys to the west [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Shock and oreFurious with North Korea, China stops buying its coal + + +There’s a message for America, too + + + + + +From the print edition | China + + +Feb 25th 2017 | BEIJING + + + + + +FEW television dramas boast a plot as far-fetched as the one that has unfolded in North-East Asian geopolitics over the past two weeks. Days after North Korea tested a ballistic missile on February 12th, two women assassinated the half-brother of Kim Jong Un, North Korea’s leader, by throwing chemicals in his face at a Malaysian airport. The alleged killers said they were duped into taking part, believing the attack was a prank for a TV comedy. Malaysian police suspect that a North Korean diplomat in Malaysia may have been among the organisers, several of whom are thought to have fled to Pyongyang. + +Amid such skulduggery, China’s announcement on February 18th that it would suspend imports of coal from North Korea, from the next day to the end of this year, seemed a little mundane. But China’s state-controlled media played up the decision. Global Times, a newspaper in Beijing, said the move would make it harder for North Korea to exploit international differences over the imposition of UN sanctions aimed at curtailing its nuclear programme. China appeared to be signalling to the world that it was ratcheting up pressure on its troublesome friend, as the Americans have long insisted it should. + + + + + +Or it may just be posturing. On February 21st China’s foreign ministry softened the message somewhat. It said imports were being suspended because China had already bought as much coal from North Korea this year as it was allowed to under the UN’s sanctions, to which China gave its approval last March. But North Korea-watchers doubt that China could have imported its yearly quota of 7.5m tonnes in a mere six weeks. It had not appeared likely to reach its annual limit until April or May. And exceeding that cap had not been expected to matter much to China. In 2016 it imported about three times the permitted amount, using a loophole that allows trade if it helps the “livelihood” of ordinary North Koreans. + +Advancing the date of the suspension, if that is what happened, would certainly have sent a strong message to North Korea, which depends on coal exports for much of its foreign currency. Announcing the move so publicly, and unexpectedly, will have shown to North Korea that China is ready to take the initiative instead of waiting to be prodded by America, as it usually does when North Korea offends. + +The test of an intermediate-range missile will have rattled China. It suggested that North Korea has learned how to fire such weapons at short notice, from hard-to-detect mobile launchers. The murder of Kim Jong Nam may have been an even bigger blow. Mr Kim had been living on Chinese soil in the gambling enclave of Macau, probably under Chinese government protection. Some Chinese officials may have hoped that Mr Kim, who favours economic opening, would one day replace his half-brother. With his death “you lose one option”, says Jia Qingguo of Peking University. It has reminded China that North Korea’s dictator is doggedly determined to rule in his own way, regardless of China’s or anyone else’s views. + +Growing frustration with North Korea is evident in China’s more relaxed attitude towards criticism of its neighbour. In 2013 an editor of a Communist Party-controlled publication was fired for arguing in an article that “China should abandon North Korea.” These days, academics often air that idea. Debate about North Korea now rages openly online, largely uncensored (except when people use it as a way of attacking their own regime, jokingly referred to as “West Korea”). The murder of Kim Jong Nam unleashed a torrent of ridicule towards his country by Chinese netizens. China still sees North Korea as a useful buffer against America’s army deployed in the South. But it increasingly regards the North as a liability as well, says Mr Jia. + +In America’s court? + +China would clearly like its tough-sounding approach to encourage President Donald Trump to rethink his country’s strategy for dealing with North Korea. America has been reluctant to enter direct talks because the North has blatantly cheated on past deals—knowing that China would continue to prop it up. With China more clearly on America’s side, the Americans would have greater confidence, Chinese officials hope. Mr Trump has previously said he would be happy to have a hamburger with Mr Kim and try to persuade him to give up his nukes. The trouble is, Mr Kim sees those weapons as the one thing that guarantees the survival of his odious regime. + +This article appeared in the China section of the print edition under the headline “Shock and ore” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21717370-theres-message-america-too-furious-north-korea-china-stops-buying-its-coal/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Journeys to the westChina believes domestic tourism can promote “ethnic unity” + + +In Tibet and Xinjiang, its hopes are being dashed + + + + + +From the print edition | China + + +Feb 23rd 2017 | KASHGAR + + + + + +YAKS graze on grassland near the turquoise waters of Karakul, a lake in the far western region of Xinjiang. Further south, towards the border with Pakistan, the imposing walls of a ruined hilltop fort at Tashkurgan mark a stop on the ancient Silk Road (see map). With such a rich landscape and history this region should be a magnet for Chinese tourists. Instead the area that accounts for more than one-sixth of China’s land mass is better known for violent unrest. The picturesque charms of the lake and fort can be enjoyed in near solitude. + +For decades Xinjiang has been racked by a low-level insurgency involving ethnic Uighurs—a mostly Muslim minority many of whose members chafe at rule from Beijing. Most recently, on February 14th, attackers with knives killed five people and injured another five in a remote oasis town. Thousands of paramilitary troops have since paraded through three cities in Xinjiang in shows of “thunderous power” aimed at Uighur terrorists. + + + +Chinese officials have long hoped that tourism would help to reduce unrest in Xinjiang by creating jobs and boosting wealth. High-spending travellers from China’s interior, they believe, can spread bonhomie and thereby strengthen “ethnic unity” between the Turkic-speaking Uighurs and the Han Chinese who make up more than 90% of the country’s population. The authorities in neighbouring Tibet, where many people similarly resent the central government’s control, have also looked to tourism as a salve. In both regions, however, their hopes have been dashed. + +The central authorities have spent billions of dollars trying to make it work. A breathtaking high-altitude rail line linking Tibet with the national network was opened in 2006. A bullet-train service between the Tibetan plateau and Xinjiang was launched in 2014. Expressways have been built across deserts; airports opened at oxygen-starved elevations. + +In Tibet, these efforts have helped to fuel a tourism boom. Visits to Tibet increased fivefold between 2007 and 2015 to 20m, according to government figures. The total number is misleading, since a tourist is often counted multiple times, when checking into a hotel or visiting an attraction, for instance. But the growth appears to be real, despite annual bans on visits by foreign tourists from late February to the beginning of April—the traditional season for protests. The impact on Tibet’s stability, however, has been far less impressive. The tourism industry in Tibet is dominated by ethnic Hans, who can communicate better with the travellers. Tibetans often complain they have seen little benefit. + + + + + +By official reckoning, tourist arrivals in Xinjiang have also risen fast, albeit unevenly. Numbers dropped in 2014 following attacks blamed on Uighur terrorists in other parts of the country (unrest in Tibet has tended to be more peaceful). To shore up the battered tourism industry, the government tried subsidising hotel rooms and plane tickets. It even offered cash incentives of 500 yuan ($80 at the time). This may have helped: there were nearly 60m “visits” to the region in 2015, nearly triple the number in 2007. + +Few of the tourists, however, go to southern Xinjiang, the area most troubled by separatist unrest and most in need of an economic lift. Visitors’ fears of violence are reinforced, not assuaged, by shows of force such as those staged by the security services in recent days. Armoured personnel carriers are a frequent sight in urban areas. Airport-style security is ubiquitous. Some buildings are fenced with barbed wire; guards check for bombs under cars entering their grounds. + +In Kashgar (pictured), where separatist sentiment is strong among Uighurs and attacks blamed on terrorists have been particularly common, shopkeepers complain that the tourist trade has died. One says his family has had a hat shop in the city for 40 years, but sales are down by a third this year and prices are falling. At the “Karsu scenic area” on the edge of the Taklamakan desert the toilet and ticketing facilities have never even opened. A viewing platform, swings and a shaded area under umbrellas are used mainly by local (Han) staff and their families. + +All the building of new infrastructure may be doing little to cheer Uighurs, either. Many of the workers who are upgrading the highway to Pakistan, a project due to be completed this year, are from outside the province. And as for bonhomie, evidence of its spread in Xinjiang is scant. Tourists often prefer to visit Han-dominated areas; those who visit Uighur ones sometimes offend locals by entering mosques in tight shorts or ignoring signs telling them not to climb on ancient ruins. + +It does not help that Tibetans and Uighurs are unable to become part of the tourism boom themselves. Their movement within China and beyond is restricted. Many Tibetans have been refused new passports since an explosion of unrest across the region in 2008. Some have been ordered to surrender existing ones. Parts of Xinjiang launched a similar policy last year. In some areas people need official approval to travel abroad. + +The police are also monitoring travel within Xinjiang more closely. This week all vehicles in Bayingol prefecture were ordered to install a satellite navigation system so people “can be tracked wherever they go”, as an official put it. The authorities say the measure should “safeguard stability”, because terrorists often use cars to stage attacks. Visitors to Bayingol’s scenic grasslands may not be reassured. + +This article appeared in the China section of the print edition under the headline “Journeys to the west” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21717377-tibet-and-xinjiang-its-hopes-are-being-dashed-china-believes-domestic-tourism-can-promote/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Middle East and Africa + + +Iran and America: A new confrontation [Fri, 24 Feb 08:14] + +Western Sahara: The never-ending dispute [Fri, 24 Feb 08:14] + +South Africa: Horror show [Fri, 24 Feb 08:14] + +The battle for Mosul: Going west [Fri, 24 Feb 08:14] + +Education: Lessons from Liberia [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +A new confrontationDonald Trump intends to take on Iran. Right, but risky + + +How far is the new administration prepared to go? + + + + + +From the print edition | Middle East and Africa + + +Feb 25th 2017 + + + + + +CHAOTIC, fractious and bafflingly inconsistent though the Trump administration may be, on one issue it appears united: Iran. There is ample evidence that since the signing in mid-2015 of the deal to curb Iran’s nuclear programme, known as the Joint Comprehensive Plan of Action, Iran has taken advantage of the easing of sanctions and the unfreezing of about $100bn worth of overseas assets to project its power across the region with greater boldness. Barack Obama, the new team believe, let it off the hook. + +Since the deal, Iran has stepped up its support for Bashar al-Assad in Syria to the point where, with Russian air support, his regime’s survival appears assured for the foreseeable future. Iran has also worked with Russia to supply Hizbullah, a Lebanese Shia militia fighting in Syria, with heavy weapons. It has poured other Shia militias into Syria from Iraq, Afghanistan and Pakistan. In Iraq, meanwhile, Iranian-backed militias are fighting alongside American-supported Iraqi security forces against Islamic State (IS). But once IS is ejected from Mosul, they will be a potent weapon in Iran’s attempt to turn Iraq into a dependent satrapy. In Yemen the civil war is a proxy struggle between Sunni Gulf Arabs, who back the recognised government, against Shia Houthi rebels whom Iran supplies with training and weapons, including anti-ship missiles that have been fired at American warships in the Red Sea. + + + + + +Meanwhile, Iran’s elite Islamic Revolutionary Guards Corps has conducted a series of tests of ballistic missiles capable of delivering a nuclear warhead in defiance, though not clear violation, of UN Security Resolution 2231, which underpins the nuclear deal. The latest, on January 29th, resulted in the US Treasury slapping new sanctions on several Iranian individuals and companies connected to the missile programme. The response was measured (and probably dusted off from something prepared by the Obama administration). But it was backed up by a statement from the short-lived national security adviser, Mike Flynn, that Iran was “officially being put on notice” about its behaviour. + +What did he mean by that? + +Mr Flynn, however, was vague about what that involved. It is one thing to decide that Iran must be confronted and pushed back, quite another to know how to do it without running the risk of plunging America into another Middle Eastern war and increasing turmoil in a region that already has plenty of it. + +The future of the nuclear deal is also in doubt. During the presidential campaign Mr Trump described it as the “worst deal in history”, and congressional Republicans have little affection for it. But given the increased influence of James Mattis, the defence secretary, and Rex Tillerson, the secretary of state, there is little appetite in the administration for unilaterally abrogating an international agreement that has largely taken the nuclear issue off the table for the next decade or so and which has strong international support. + +Instead, the emphasis will be on rigorous enforcement. Minor Iranian transgressions, such as the recent breach of the amount of heavy water Iran is allowed to hold for its reactors, will not be tolerated. Should Iran be caught deliberately cheating, America could try to persuade other signatories to the deal (France, Germany, Britain and the European Union, but probably not Russia or China) that some sanctions should “snap back”. + +The nuclear deal only lifted nuclear-related sanctions on Iran. Others remain in place, relating to ballistic-missile activity, support for terrorism and human-rights abuses. More could be imposed for further missile tests or violations of UN embargoes on arming Hizbullah in Syria and the Houthis in Yemen. America also maintains strict rules about illicit financial activity—Iran is believed by many to be a serial offender—and doing business with any commercial entities linked to the Revolutionary Guards, who have fingers in most of the Iranian economy. Nor does the Trump administration have to strain, as John Kerry (Mr Tillerson’s predecessor) did, to reassure international banks that they would not be penalised for financing deals in Iran. Even with Mr Kerry’s encouragement, the banks remained cautious. + +Alongside sanctions, confronting Iran is likely to require a military component, though it, too, will have to be calibrated. Iran’s aim is to establish an arc of control that runs through Baghdad, Damascus and Beirut. Mr Mattis has been told to come up with a plan to prevent this. More direct help for the Saudis and Emiratis in Yemen is likely, as is aggressive patrolling of international waters to stop supplies of weapons from Iran getting to the Houthis. American warships, dangerously buzzed by Iranian patrol boats, may not be as restrained in their response as before. In Syria, it looks as if there will be an attempt to prise apart the alliance between Russia and Iran. There will be an offer to Moscow of military co-operation against IS and recognition of Russia’s role in deciding the terms of a future settlement. If that fails, as is probable, Mr Mattis may decide that America will need more than the handful of special forces it currently has on the ground in Syria. He was unimpressed by Mr Obama’s policy to speak loudly and carry a small stick. + +The biggest challenge will be Iraq. Mr Mattis, on a visit to the country this week, said that the 6,000 American forces assisting in the fight against IS would be staying on for some time after the fall of Mosul. He knows that without their presence, and the political influence it buys, there will be little to stop Iran from installing a new government of its choosing. + +Iran may well be, as Senator Lindsey Graham said on February 19th, “a bad actor in the greatest sense of the word”. But it is a resourceful one. Any attempt to confront it risks escalation. Mr Trump’s trusted adviser, Stephen Bannon, believes that America is engaged in a civilisational struggle likely to lead to “a major shooting war in the Middle East again”. It is for Mr Mattis and Mr Tillerson to plot a course that restrains Iran without fulfilling that prophesy. + +This article appeared in the Middle East and Africa section of the print edition under the headline “A new confrontation” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21717384-how-far-new-administration-prepared-go-donald-trump-intends-take/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The never-ending disputeWestern Sahara edges closer to renewed conflict + + +Back in the spotlight, the fate of Western Sahara is no closer to resolution + + + + + +From the print edition | Middle East and Africa + + +Feb 23rd 2017 | LAAYOUNE AND RABAT + + + + + +ACCORDING to the map sold in the gift shop at the airport in Laayoune, the capital of Western Sahara, the territory belongs solely to Morocco. But the airport itself contains signs that this is contested land. Planes bearing the UN’s marking sit on the runway, while its soldiers, sporting blue berets, roam the arrivals hall. They are there to keep the peace between Morocco and the Polisario Front, a nationalist movement that has fought for independence for more than 40 years. + +Fears are growing of a return to armed conflict. Provocations by Morocco have infuriated Polisario, which has responded in kind. Since last summer the UN has stood between the two enemies, just 120 metres apart, in the remote area of Guerguerat. Diplomats worry that an itchy trigger finger could restart the 16-year war that the UN helped end in 1991. “The threat to peace and security is probably the worst we have seen since then,” says a UN official. + + + + + +Hostilities between Morocco and Polisario began shortly after Spain, the colonial power, withdrew from Western Sahara in 1975, when Morocco annexed the territory. A ceasefire agreement in 1991 promised a referendum on independence, but no vote was held. Morocco was thus left in control of two-thirds of the territory, including Laayoune, while Polisario runs the remaining part. They are separated by a 2,700km (1,700-mile) sand berm, built by the Moroccan army and sown with mines. + +Morocco moved south of the berm last August, when it began paving a road in Guerguerat, ostensibly to combat smuggling (but probably also to facilitate trade). Its deployment of security forces with the construction crews was seen as a violation of the ceasefire agreement. In response, Polisario also began building new structures and positioning armed elements in the area. The secretary-general of Polisario, Brahim Ghali, paid a visit to the region in December, stoking the tension. + +The standoff in Guerguerat is a symptom of much deeper problems. While Morocco’s portion of Western Sahara contains valuable phosphates, oil and fish stocks, the Polisario’s third provides little of value. Many Sahrawis continue to live in refugee camps in neighbouring Algeria, which supports the cause of Western Sahara. “Refugees born and raised in exile are beating the drums for war,” writes Hannah Armstrong, an analyst. + +Many Sahrawis also believe that the UN will not stand up to Morocco. The kingdom expelled some 70 UN workers last spring after Ban Ki-moon, then the UN’s secretary general, described Morocco’s presence in Western Sahara as an “occupation”. (It has since let some, but not all, back in.) Morocco spends large sums of money lobbying governments, and threatens those that are unsupportive. It dressed down America’s ambassador last year over a report that criticised its human-rights record. And it has reacted angrily to rulings by European courts that dismissed its claim to Western Sahara. + +Some hope that Morocco’s readmission to the African Union (AU) on January 31st will help to resolve the dispute. The kingdom left the AU’s predecessor, the Organisation of African Unity, in 1984 after a majority of the member states recognised Polisario and granted it membership as the Sahrawi Arab Democratic Republic (SADR). By returning, Morocco is supposed to accept the AU’s protocols, which state that members’ borders (including those of the SADR) are inviolable. + +Others, though, believe Morocco will instead work from within the organisation to undermine the AU’s support for Polisario. Indeed, Nasser Bourita, Morocco’s deputy foreign minister, has said as much. “Not only does Morocco not recognise—and will never recognise—this so-called entity,” Mr Bourita told Le Desk, a website, referring to SADR. “It will redouble its efforts so the small minority of countries, particularly African, which recognise it, change their positions.” + +Morocco’s claims to Western Sahara were rejected by the International Court of Justice in 1975, but most Moroccans still feel that it is part of their country and that autonomy is a fair solution—or, at least, will be when Morocco fully embraces democracy. Most Sahrawis, though, are holding out for the referendum that was promised. The alternative, some now say, is not autonomy, but a return to war. + +This article appeared in the Middle East and Africa section of the print edition under the headline “The never-ending dispute” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21717383-back-spotlight-fate-western-sahara-no-closer/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The ruling party ignores the rulesSouth Africa lets 100 mental patients die + + +A shocking tale of official neglect + + + + + +From the print edition | Middle East and Africa + + +Feb 25th 2017 | JOHANNESBURG + + + + + +IT HAS been a disaster in agonising slow motion. To cut costs, health officials in Gauteng province (South Africa’s economic hub, which includes Johannesburg and Pretoria) decided to transfer psychiatric patients from specialised private hospitals to care homes run by charities. Family members, psychologists and advocacy groups all warned that this could be dangerous for the patients. They pleaded with Qedani Mahlangu, the provincial health minister, and even went to court to try to stop the move, arguing that vulnerable people were being rushed into dodgy homes. Ignoring their concerns, Ms Mahlangu went ahead. Some 1,300 patients were moved over several months last year. An ombudsman’s report described this process as a “cattle auction”, with care homes jostling over which patients they wanted. Some sent pickup trucks to fetch them. Disabled patients were tied down with bed sheets for transport. Families did not know where their loved ones had gone. Soon, patients were dying. + +The extent of the horror is still being uncovered. Last week South Africa’s health ombudsman, Malegapuru Makgoba, told a parliamentary committee that more than 100 patients had died. More bodies are still unclaimed. His report into the scandal, released earlier this month, describes “negligent and reckless” conduct, including by government officials and the care homes, none of which was properly licensed. Some of the homes are described as “concentration camps”: patients were skinny and starving. Freddie Collitz, aged 61, who suffered from depression, died with a head wound, blisters on his ankles and a sore on his nose. Carers told his family he had fallen on the lawn. His death was listed as due to “natural causes”. Many other patients died of pneumonia, diarrhoea and dehydration. Neighbours of the Precious Angels home, where 20 people died, reported hearing screams. Bodies were stacked in a rundown morgue. + + + + + +South Africans are shocked that such a tragedy could have happened despite all the warnings. “[Ms Mahlangu] and her administration knew of the risks before embarking on this project and watched as the tragedy unfolded,” said Section 27, a civil-society group. “They did nothing to stop it.” Another group, Treatment Action Campaign, compared it to the Marikana massacre, when 34 striking mineworkers were shot dead by police. + +The deaths of more than 100 people, in appalling conditions, further dents the moral authority of the African National Congress (ANC), which has governed since the end of apartheid. The scandal may also damage the party at the polls: the ANC received a narrow 54% of the vote in Gauteng province in the 2014 elections (compared with 62% nationally). Both Johannesburg and Pretoria slipped from the party’s control in last year’s local polls. + +Letting the vulnerable die + +Ms Mahlangu has resigned—an almost unheard-of case of a South African official voluntarily stepping down as a result of scandal. Opposition parties want to press criminal charges against her. Jack Bloom, the shadow health minister for the opposition Democratic Alliance, notes that Ms Mahlangu admitted that patients had died only after he quizzed her about it in the Gauteng legislature. Her disclosure that 36 had perished led to the investigation. But even then, the ombudsman’s report said, she did not grasp the full extent of the disaster: the death toll at the time was actually 77. “The horror is that this could have been covered up,” Mr Bloom says. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Horror show” + + + + + +View comments + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21717295-shocking-tale-official-neglect-south-africa-lets-100-mental-patients-die/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Islamic State under siegeIraqi forces face their toughest test in Mosul + + +The outnumbered jihadists of Islamic State have tunnels, booby traps and suicide-bombers + + + + + +From the print edition | Middle East and Africa + + +Feb 23rd 2017 | BEIRUT + + + + + +IRAQ’S prime minister, Haider al-Abadi, had vowed to recapture Mosul from the so-called Islamic State (IS) by the end of 2016. In the weeks leading up to the battle for Iraq’s second-largest city, American military commanders echoed him: victory would be swift, they pledged. But with the jihadists still in control of half the city and the hardest part of the battle yet to come, these predictions now look naive. + +In the rush to dislodge IS from its largest urban stronghold, Iraq’s security forces appear to have underestimated the militants’ ability to cause carnage. Although vastly outnumbered, the jihadists have used snipers, booby traps, improvised landmines and hundreds of suicide-bombers to bog down Iraqi security forces. Elaborate tunnel networks have allowed IS to escape bombing runs from American warplanes and to ambush Iraqi forces in areas supposedly cleared. + + + + + +The grinding urban combat has taken a heavy toll on Iraqi troops. Some units of the country’s Golden Division—American-trained special forces that have spearheaded the assault on the city—have seen more than half their men killed or wounded. The UN said that almost 2,000 Iraqi troops were killed across the country in November alone, triple the number in the previous month, when the battle for Mosul began. The government refuses to release casualty figures, but in December the offensive ground to a halt as commanders waited for reinforcements to arrive. + +So far Iraqi security forces, backed by American-led coalition warplanes, have captured the eastern half of the city, which is split in half by the Tigris river. On February 19th, more than four months since the start of the battle, they launched the next phase of the operation: to retake the west. The fighting will be even tougher. The old city’s narrow alleyways will force Iraqi troops to dismount from their armoured Humvees, making them easier prey for IS suicide-bombers and snipers. + +There is also a larger civilian population in the west, further complicating the operation. The Iraqi government has dropped leaflets urging the 750,000 or so residents to stay in their homes. But with heavy fighting and siege-like conditions taking an increasing toll on civilians, the UN believes that as many as half could flee, adding to the 160,000 who have already left the city’s east and its surrounding villages since the battle began. + +Still, the jihadists are slowly losing control of their caliphate. The Pentagon believes many of the group’s senior bureaucrats are starting to leave Raqqa, IS’s capital across the border in Syria, as air strikes on that city intensify. With Kurdish-led ground forces slowly encircling Raqqa, smugglers are helping growing numbers of IS low-level fighters flee the battlefield or defect to rival jihadist groups in Syria. The group’s finances have also taken a hit, with revenue (largely from taxation, oil and ransoms) declining from up to $1.9bn in 2014 to, at most, $870m in 2016, according to a report from Kings College London. + +The fall of both Mosul and Raqqa, which American commanders believe may happen within six months, will deal a huge blow to the jihadists. Even so, IS is likely to endure. It has already begun to switch to insurgent-style tactics, setting off car bombs in Baghdad and east Mosul with growing frequency. The jihadists may be down; they are far from out. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Going west” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21717388-outnumbered-jihadists-islamic-state-have-tunnels-booby-traps-and/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Ashes to classesLiberia’s bold experiment in school reform + + +A war-scorched state where almost nothing works tries charter schools + + + + + +From the print edition | Middle East and Africa + + +Feb 23rd 2017 | MONROVIA + + + + + +AT A school in the township of West Point, Monrovia, a teacher should be halfway through her maths lesson. Instead she is eating lunch. A din echoes around the room of the government-run school as 70 pupils chat, fidget or sleep on their desks. Neither these pupils nor the rest of Liberia is learning much. Bad teaching, a lack of accountability and a meagre budget have led to awful schools. Fourteen years of civil war and, more recently, the Ebola virus have stymied reforms. Children’s prospects are shocking. More than one-third of second-grade pupils cannot read a word; since many are held back, teenagers often share classes with six year olds (see chart). In 2014 only 13 candidates out of 15,000 passed an entrance exam to the University of Liberia. In 2013 none did. + + + +George Werner admits that when he was made education minister in 2015, “my heart sank.” But he soon got to work. He removed 1,892 dead or retired teachers from the government’s payroll, saving $3.3m or 7% of the tiny education budget ($45.6m). In September Mr Werner went further, launching Partnership Schools for Liberia (PSL), a pilot which, if successful, could inspire similar innovation across Africa. + +PSL is based on charter schools in America and academies in England. In each case independent operators run free schools that are at least partly funded by the government. In the PSL scheme eight operators, three of which are for-profit groups, have taken over a total of 93 public schools. A randomised controlled trial will analyse whether their pupils do better than peers in traditional schools. + +But just six months in, PSL is under fire. Education International, a global group of teachers’ unions, and ActionAid, a charity, are funding an investigation into the programme. Their opposition is partly ideological: they do not like for-profit schools. But two of their concerns are pertinent—indeed, Mr Werner and the researchers evaluating the PSL project also recognise them. + +The first is that the PSL schools play by different rules. There is a cap of 65 on most of their class sizes, for example, which has prompted allegations that some operators are turfing out less clever pupils. That would be unfair and against the rules of the pilot. But even if it were happening, it would not alter the results of the evaluation. Justin Sandefur of the Centre for Global Development, the research group leading the trial, notes that operators will be held accountable for the results of all children originally at the pilot schools—including any who were later turned away. + + + + + +The second concern is cost. The government pays for teachers’ salaries. Operators also receive $50 per pupil per year from a pot of philanthropic cash managed by the ministry and Ark, a London-based education charity. Most spend extra money on top of that. Operators have submitted estimates of their costs ranging from $60 to more than $1,000 per child per year. + +For Mr Werner, questions about the cost of the project are most acute when he considers the role of Bridge International Academies. Bridge, a chain of for-profit schools, has raised $140m from investors such as Mark Zuckerberg. But it is not close to breaking even, losing about $1m a month as a result of its high fixed costs, such as having a research team in America. + +One way Bridge is trying to turn a profit is to run public schools as well as private ones. Liberia is thus a test case. As part of the pilot, Bridge runs 25 schools there, more than any other provider. Josh Nathan, Bridge’s academic director in Liberia, said that the firm would like to cover all 2,700 schools around the country. + +Charles Cooper, a Liberian businessman, speaks for many sceptics of the Bridge method. He says the scripts, which teachers read from tablet devices, are like a “lobotomy”, as teachers no longer have to think for themselves. The scripts are bossy: teachers must “write today’s date” and “erase the board”, for example. But Bridge says these ensure that teachers teach. + +Bridge’s financial model is more worrying than its pedagogical one. It is seeking $9m from its philanthropic backers for its work in Liberia (about $1,000 per pupil). Around $5.5m of its proposed budget for Liberia is for staff costs for employees outside the country. The success of PSL does not rely on that of only one group, but such figures raise doubts about whether Bridge can ever run a cheap enough operation in a place like Liberia. + +Susannah Hares of Ark says that higher costs in PSL’s early years are not necessarily a sign of failure. Per-pupil spending should come down as costs are spread across more sites. But she adds that if the pilot is to expand widely there must be evidence that the world’s fourth-poorest country can afford it, even with money from donors. (Liberia receives more in aid—$842m in 2014—than its gross national income of $720m.) + +On February 22 Mr Werner announced that, from September, PSL would add another 100 or so schools. Expansion would irk critics. But they should remember how bad things are. Far too many education ministers choose to accept the status quo. PSL is an experiment, and one worth trying. Unfortunately, with an election due in October, a new government could scrap the scheme. In Liberia, where exams are proving too tough for too many, that would represent the biggest failure of all. + +This article appeared in the Middle East and Africa section of the print edition under the headline “Lessons from Liberia” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21717379-war-scorched-state-where-almost-nothing-works-tries-charter-schools-liberias/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Europe + + +France’s Europhile candidate: The anti-Marine [Fri, 24 Feb 08:14] + +Mme la Presidente?: France’s chances [Fri, 24 Feb 08:14] + +Western Balkans: Russian overtures [Fri, 24 Feb 08:14] + +The German left is back: Miraculous recovery [Fri, 24 Feb 08:14] + +Charlemagne: The Gryfs of Europe [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The man who would stop Le PenEmmanuel Macron is edging closer to France’s presidency + + +The charming outsider now needs to show he has substance + + + + + +From the print edition | Europe + + +Feb 25th 2017 | PARIS AND TOULON + + + + + +FRANCE’S most pro-European presidential candidate took his campaign to London this week to a rapturous welcome. Emmanuel Macron, a 39-year-old former Socialist economy minister, was there to court the French vote abroad, and is exactly the sort of upbeat, international-minded tech enthusiast that London’s latte-drinking French voters adore. Campaigning as an independent for votes on the left and the right, Mr Macron has pulled off the astonishing feat of hauling himself up from rank outsider to joint second place in the polls. But the closer he gets to a shot at the French presidency, the tougher his campaign is turning out to be. + +A few days before Mr Macron turned up in London, he had been in more hostile territory: the Mediterranean naval port of Toulon, traditionally held by the right. The entrance to his rally was blocked by scores of enraged National Front (FN) supporters and pieds-noirs (ethnic French who resided in Algeria during colonial rule), chanting “Macron traitor!” On a trip to Algeria that week, he had called France’s colonisation of the north African country a “crime against humanity”. + + + + + +The rally went ahead all the same. Mr Macron told the audience that he was “sorry” if he had “wounded” anybody, but that France needed to confront all sides of its history. The venue was a little over half full, and the atmosphere flat. The crowd seemed motivated as much by curiosity as conviction. Jean-Luc, a high-school maths teacher, said he had never been to a political rally and was “intrigued” by Mr Macron. Robert, a retired salesman, said he voted for François Fillon, the centre-right candidate, at his party’s primary but was now “looking for a way out”. (Mr Fillon is under investigation for having employed family members on the parliamentary payroll, despite little evidence that they did much work.) It was Mr Macron’s “different way of doing politics” that appealed, said a retired naval worker and Socialist voter; he was not yet sure of his vote. + +With two months to go before the first-round, the French presidential election has become more unpredictable than any in recent history. The only near-certainty is that the FN’s Marine Le Pen will win one of the two places in the run-off. This has turned the election into a race to face her. Though she has staged almost no rallies, Ms Le Pen tops first-round polling, with about 26% of the vote (see article). Over three-quarters of her voters say they are sure of their choice. For Mr Macron, who is neck-and-neck with Mr Fillon in second place, this share is just 45%. + +That Mr Macron is in this position is remarkable enough. This, after all, is a young man who in July 2014, after quitting his job as deputy chief of staff to President François Hollande, could be found in his top-floor office at the Elysée Palace cheerfully mulling over plans to write a book, or perhaps teach philosophy. Today, the offices of En Marche!, the movement he founded last year, are filled with young people in sweatshirts, and feel like a cross between a start-up and a student society. He has attracted policy heavyweights, such as Jean Pisani-Ferry, an economist, and the support of François Bayrou, a centrist who has declined to run himself. And he is recruiting candidates from all backgrounds to stand at parliamentary elections in June. The objective, says Mr Macron, is to reject “yesterday’s choices”, pursue “radical novelty” in politics, and build “a new France”. + +Not your regular Gilles + +Yet, besides his inexperience, two obstacles in particular lie ahead if Mr Macron is to beat Mr Fillon into the second round. One is whether he can find a way to speak to a broader electorate, beyond the metropolitan voters with a university degree who favour him. “He’s too intellectual,” says a retired antique dealer, in a café overlooking the port in Toulon, where the aircraft carrier Charles de Gaulle is docked while undergoing repairs. Mr Macron’s overtly pro-European politics are unfashionable in parts of France these days. His support for Germany’s open-border policy towards Syrian refugees—he says it “saved our collective dignity”—collides with a popular mood of rising nationalism. And Mr Macron’s embrace of technological disruption does not resonate with those who fear they will be its next victims. “He is quite weak among manual workers and employees, and it’s not possible to construct a successful candidacy without them,” says Jérôme Fourquet of Ifop, a polling group. + +The second is how far his poll success is down to an engaging personality rather than a convincing programme. The country, he says, needs “vision”, not scores of policy ideas that promptly get shelved by presidents in power. But his reluctance to be too precise has left Mr Macron open to the charge of ambiguity. Asked which of his policies they liked best, supporters questioned in Toulon were unable to answer. Mr Macron is due shortly to unveil more specific plans which, perhaps tactically, he has long avoided. Yet this carries fresh risks. Some of the ideas he sketched out in “Révolution”, the book he published last year, are profoundly radical, certainly for France. He wants to curb the overall level of public spending; have the state take over the employer- and union-run unemployment benefit system in place since the second world war; and devolve most negotiations on working conditions to companies. He is liberal, he says, “in a Nordic sense”. Getting the right balance between what France needs, and what the French will vote for, will be perilous. + +A historically unusual opportunity is within Mr Macron’s grasp: the chance of beating all established party candidates into the second round, and from there into the presidency. Polls suggest that he would be a more solid run-off candidate against Ms Le Pen than would the damaged Mr Fillon. Under the Fifth Republic, no independent has ever pulled off such a feat. Then again, none has had such a remarkable opportunity to do so. + +This article appeared in the Europe section of the print edition under the headline “The anti-Marine” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717389-charming-outsider-now-needs-show-he-has-substance-emmanuel-macron-edging-closer/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +France’s chancesPolls are still reliable, and they show Marine Le Pen losing + + +The nationalist leader is still unlikely to become president of France + + + + + +From the print edition | Europe + + +Feb 25th 2017 + + + + + +JOURNALISTS often joke that three examples make a trend. Following the votes for Brexit and Donald Trump, a victory by Marine Le Pen of the National Front (FN) in France’s presidential election would complete the anti-globalisation trifecta. She has dominated the polls ever since news broke that François Fillon, her centre-right rival, had paid his wife and children about €1m ($1.05m) over the years for jobs critics call fake. But a deeper analysis shows that Ms Le Pen is more likely to end the streak than to continue it. + +After last year’s surprises, many people stopped trusting polls. This is misguided: in both cases, surveys correctly predicted that the race would be tight. If polls in France are similarly reliable, Ms Le Pen’s chances in the first round of the election are excellent. The Economist has aggregated 100 French polls (a technique that is still rare in France, though it is de rigueur in Britain and America). We find that if the first round were held today, Ms Le Pen would carry 26.1% of the vote. Emmanuel Macron and Mr Fillon would trail with 19.7% apiece. + +These figures could change, but big shifts are rare. According to a database of French polls since 1965 compiled by two political scientists, Will Jennings and Christopher Wlezien, surveys 60 days before the first round have been off by just three percentage points on average. Using this record to run 10,000 computer simulations shows Ms Le Pen as the heavy favourite. She wins the first round 77% of the time, and is a 96% shoo-in to make the run-off. + + + +The race for second place is much tighter. Mr Fillon’s chances of making the run-off have fallen from 79% to 50%, slightly more than Mr Macron’s 47%. Benoît Hamon, the Socialist candidate, manages just 5%. + +However, the second round is a different story entirely. When voters are asked to pick between Ms Le Pen and Mr Fillon, she loses by 13 percentage points. Against Mr Macron, it is 20. At this stage, voters tend not to change their minds: in presidential elections since 1981, the average poll of a potential run-off 70 days out has also missed by only three points. If they are similarly reliable this time, Ms Le Pen has less than a 5% chance of victory. + + + + + +Of course, unusual events cannot be ruled out, and many voters are still uncertain. Betting markets give Ms Le Pen odds of 28%-43%. Punters may think further scandals could fell whoever faces her in the second round. Should it be Mr Fillon, leftist voters who dislike him might stay home. But such a drop in participation would have to be huge to matter. If the polls hold, even if every FN supporter actually votes, a fifth of opposing voters would have to drop out for Ms Le Pen to win. That is much larger than the shifts in Britain and America. + +The most likely outcome is that history will repeat itself. In 2002 Jean-Marie Le Pen, Marine’s father and the FN’s founder, snuck into the presidential run-off, only to lose by 64 points. Just 14 months ago, the FN topped national first-round polls for regional elections. But its opponents teamed up, and it failed to win a single region. Perhaps this time will be different. But if Ms Le Pen wins, it will be a far bigger shock even than the votes for Brexit and Mr Trump. + +This article appeared in the Europe section of the print edition under the headline “France’s chances” + + + + + +View comments + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/21717338-nationalist-leader-still-unlikely-become-president-france-polls-are-still-reliable/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Russian overturesMoscow is regaining sway in the Balkans + + +Aid, warplanes and propaganda convince Serbs that Russia is their friend + + + + + +From the print edition | Europe + + +Feb 25th 2017 | NIS + + + + + +“HERE are the Russian missiles!” chortles Viacheslav Vlasenko, co-director of the Russian-Serbian Humanitarian Centre in Nis, a town in central Serbia. He gestures at the contents of his warehouse: tents, generators, inflatable boats and other goods one would expect to use in disaster relief. The centre, which shares a building near the airport with several local IT companies, is simply a facility for responding to floods, forest fires and other emergencies, says Mr Vlasenko. + +Yet Western analysts worry that it may be something more: a spying post or even a foothold for Russian intervention. As the influence of America and the European Union has receded in the western Balkans, Russia has been trying to fill the vacuum. It has stepped up military co-operation with Serbia, and may have been involved in a recent alleged coup attempt in Montenegro. Moscow’s goal is to stop Serbia, Bosnia, Macedonia and Montenegro from joining NATO and to turn them away from the West. + + + +The most striking allegations against Russia concern a purported coup attempt in Montenegro last October, on the day of the country’s elections. Authorities arrested 20 Serbian suspects. On February 19th the country’s state prosecutor accused Russian “state organs” of having masterminded the plot in order to prevent the country’s imminent accession to NATO. Russia called the claim “absurd”. + + + + + +Russia also backs Serbia’s refusal to recognise the secession of Kosovo in 2008. Hashim Thaci, Kosovo’s president, says he fears Russian influence is growing (along with that of Islamists and nationalists) because the EU is too consumed with its own problems to pay attention to the region. + +The centre in Nis, established in 2012, is helping to win friends. Russia had already helped to clear unexploded ordnance left behind by NATO’s bombing during the Kosovo war of 1999. In 2014 Russia used the centre to fly in emergency relief when floods hit the region. Since then Russia has helped put out forest fires, provided tents for migrants and trained emergency responders. Between 2014 and 2017, this aid will total $40m. A recent poll showed that Serbs wrongly believe Russia is one of their main benefactors, even though the more than €3bn ($3.16bn) that the EU has provided since 2000 dwarfs Russian aid. + +Last November, Russia gave Serbia six ageing MiG-29 warplanes. This plays well among Serbs, 64% of whom see NATO as a threat. Serbia’s annual military exercises with Russian troops help reassure its pro-Russian electorate, while the government-friendly media plays down the more frequent exercises with NATO. The two countries have a free-trade agreement, though it excludes Serbia’s most valuable export, the cars manufactured at Fiat’s Serbian plant. This is a perennial source of irritation, and probably one reason why a long-promised visit by Dmitri Medvedev, Russia’s prime minister, has still not taken place. + +Moscow’s skilled influence-peddling groups are certainly active. A recent study found 109 organisations devoted to promoting good relations with Russia. All of the country’s mainstream news outlets run stories by Sputnik, a state-controlled Russian news agency. Nationalist websites glorify Russian military might and denigrate Albanians and the West; one recently lauded Vladimir Putin for “punching” Croatia by blocking certain imports. + +But it is not clear what Mr Putin can do for his local admirers. Marko Jaksic, an activist in Mitrovica, a mostly Serbian town in Kosovo, used to plaster posters of the Russian leader all over town. But Russia has done nothing to help Kosovo return to Serbian rule. “Serbs are always waiting for something from Russia,” he says, “but it is hoping against hope.” + +This article appeared in the Europe section of the print edition under the headline “Russian overtures” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717390-aid-warplanes-and-propaganda-convince-serbs-russia-their-friend-moscow-regaining-sway/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Miraculous recoveryMartin Schulz breathes new life into Germany’s Social Democrats + + +Angela Merkel suddenly has a serious rival + + + + + +From the print edition | Europe + + +Feb 23rd 2017 | BERLIN + + + + + +THE small branch office of Dilek Kolat, a Social Democratic (SPD) politician in Berlin’s Friedenau district, is packed with locals who have turned up for a discussion on the topic “What is social justice?” After two hours the answer is, unsurprisingly, unclear. But the crowd’s enthusiasm is undimmed. Many sense that Martin Schulz, the SPD’s candidate for chancellor, may actually defeat Angela Merkel, the Christian Democratic (CDU) incumbent, in the election on September 24th—and believe that if he does, social justice might be more than a matter for philosophical debates. + +Mr Schulz’s selection as candidate in late January caused an extraordinary surge in the polls (see chart). The SPD, currently the junior partner in the coalition with Mrs Merkel’s conservative bloc, now runs neck-and-neck with it, each drawing just above 30%. If Germans could elect their chancellor directly, he would defeat Mrs Merkel 49% to 38%, according to Forschungsgruppe Wahlen, a pollster. + + + + + +It is too early to tell whether this popularity is a “soap bubble” destined to pop, says Manfred Güllner of Forsa, another polling firm. As the former president of the European Parliament, Mr Schulz is well-known in Brussels, but he is still fresh in Berlin, untainted by domestic politics. + +Yet his effect has been to awaken the base of a party that, like its centre-left cousins elsewhere in Europe, seemed to have lost its way. The SPD last won an election in 1998, when Gerhard Schröder became chancellor. Mr Schröder implemented a batch of market-friendly labour and welfare reforms. Today it is conservatives who laud this so-called “Agenda 2010” for making Germany competitive and slashing unemployment. The Social Democrats have turned against their own reforms, denouncing a neoliberal turn towards lower wages and away from social justice. Between 1998 and 2013 the number of people voting for the SPD almost halved, to 11m. + +Mrs Merkel shrewdly helped this trend along, employing a strategy of “asymmetric demobilisation” to keep SPD voters at home. Under the rubric of modernising her Christian Democrats, she poached some leftist policies, such as eliminating the draft, scrapping nuclear power and enacting a minimum wage. And she governed, from 2005 to 2009 and again since 2013, in a coalition with the Social Democrats that made them look to many voters like an indistinguishable centrist blob. + +Such disheartened Social Democrats, many of them blue-collar workers, now feel energised by Mr Schulz. His language is earthy and simple, where Mrs Merkel’s is often technocratic. His grizzled looks testify to a life of hardship and perseverance. In his youth Mr Schulz dropped out of high school, hoping to play professional football. After a knee injury derailed that plan, he took to drink and even contemplated suicide. But in 1980 he turned his life around, becoming a teetotaller, a bookstore owner and later the mayor of his small home town. + +That history speaks to many voters. Mr Schulz is “an alcoholic who fell from grace but rose again”, says Jan Richter, one of those attending the debate at Mr Kolat’s office. He is “a man out of real life”, chimes in Aurel Marx, who sports a beard and twirled handlebar moustache and makes a living running an eight-room brothel. Mr Schulz “has succeeded against the discrimination of society and now has the gall to say ‘I want to be chancellor.’ That rocks,” Mr Marx adds. + +The passion Mr Schulz inspires could make him a mobilisation machine. He has already been hinting at a rollback of Agenda 2010. The left’s rising enthusiasm makes Mrs Merkel’s strategy of asymmetric demobilisation impossible. Meanwhile, turning out her own base will be harder than usual. Many voters have yet to forgive her open-armed refugee policies in 2015, and the CDU’s conservative sister party in Bavaria, the CSU, has spent much of the past two years criticising her. + +Mrs Merkel will probably start by waiting for Mr Schulz to make mistakes. As the campaign heats up, however, she will have to play to her party’s conservative base, thinks Timo Lochocki of the German Marshall Fund, a think-tank. If the bail-out of Greece, say, returns to the headlines, the CDU could take a hawkish line, while the more lenient Mr Schulz might emphasise European solidarity. And on labour-market regulations, taxes and more, Germany is in for a clearer ideological clash than in any recent election. + +This article appeared in the Europe section of the print edition under the headline “Miraculous recovery” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717392-angela-merkel-suddenly-has-serious-rival-martin-schulz-breathes-new-life-germanys-social/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Gryfs of EuropeEurope is starting to get serious about defence + + +Under pressure from Donald Trump, the herbivores are thinking about eating meat + + + + + +From the print edition | Europe + + +Feb 23rd 2017 + + + + + +THE triceratops had a gentle existence that belied its fierce appearance, keeping to itself and maintaining a strict vegetarian diet. But in his neglected classic Tarzan the Terrible, Edgar Rice Burroughs conjured the Gryf, a horrifying dagger-toothed descendant of the three-horned dinosaur that roamed the African plains and snacked on the locals. Europe is contemplating a similar evolutionary path as it gets to grips with an American administration that has tired of playing T. Rex alone. Can the herbivorous power of the past, which has long delighted in the soft tools of diplomacy, trade and aid, really transform itself into a slavering, armed-to-the-teeth carnivore? + +Donald Trump’s team has spent much of the last week in Europe cleaning up the boss’s mess. At the Munich Security Conference, James Mattis, the defence secretary, called NATO (which Mr Trump had written off as obsolete) “the best alliance in the world”. In Brussels, Mike Pence, the vice-president, assured his audience of America’s “strong commitment” to the European Union, a club the president has dismissed as a “vehicle for Germany”. Europeans remain baffled by the mixed messages emanating from Mr Trump’s administration. It is as if Henry Kissinger’s old (and apocryphal) question about whom to call when he wants to speak to Europe has been reversed, quips Hans Kundnani, an analyst at the German Marshall Fund in Washington. + + + + + +But on one issue the president is in full agreement with his team. Like his predecessors, Mr Trump grouches that America’s NATO allies are not paying their bills. Only four other countries in the 28-member alliance meet its target of spending 2% of GDP on defence. Mr Trump’s threat to withdraw America’s security guarantee is probably a bluff. But he has other cards to play, including cuts to joint training programmes. Last week General Mattis warned his fellow NATO defence ministers that continued European miserliness might see America “moderate” its commitment to the alliance. + +America is right to make these demands, say some ambassadors; in 2014 all 28 allies vowed to meet the 2% target within a decade. Indeed, Mr Trump is pushing at a partly open door. The long decline in European defence spending bottomed out in 2015. Russia and terrorism have restored history to Europe, and economies are growing again. Almost all NATO governments are raising defence spending in real terms, to the delight of Jens Stoltenberg, the secretary-general. But some, particularly in Europe’s south and west, still balk at shelling out for what feel like distant threats. + +Their arguments are well trodden. The 2% target is mercilessly crude. Few would argue that Greece, which meets the goal partly because its economy has collapsed, has a more effective fighting force than Norway, which devotes a large share of its 1.5% to R&D and sends hundreds of troops to places like Afghanistan. The alliance has nine specific measures for ranking its members, but they remain classified and thus less politically potent than the 2% target. Europe’s problems lie in fragmentation as much as resources; NATO’s European members spend over four times as much on defence as Russia, but use 27 different types of howitzer and 20 fighter aircraft. The European Parliament reckons that joining up the EU’s defence market could save €26bn ($27bn) a year. + +And so as the debate heats up, the herbivores are baring their wide, flat molars. Just before Mr Pence’s visit, Jean-Claude Juncker, the president of the European Commission, irritated some in NATO by urging the Europeans not to bow to American pressure. A more expansive understanding of security was needed, he suggested; add development to the mix and the Europeans stack up rather better. Angela Merkel, the German chancellor, delivered a similar message, in more diplomatic terms, in Munich. + +If paying for boreholes in Namibia rather than reconnaissance drones in Lithuania sounds like special pleading to America, it serves a distinct purpose in Berlin. Mrs Merkel needs a story to persuade sceptical German voters of the wisdom of ramping up military spending from its current level of just 1.2% of GDP. Warm words about preserving security through non-military means offer one. (Wolfgang Ischinger, head of the Munich conference, suggests a 3% target for military, development and humanitarian spending.) “Europeanising” defence is another. Germany is pursuing various security arrangements with other EU countries. Mr Juncker is backing an EU defence fund for common research and procurement, and for capital spending to be excluded from the commission’s rules on fiscal deficits. Whatever helps the medicine go down. + +Beware the German Gryf + +Mr Trump cannot be accused of expedience—he has attacked security freeloaders for decades. But he is hardly assured of success. Germans in particular will chafe at devoting more money to a cause they dislike to please a foreign president they detest. Slamming American-inspired militarism could prove a useful campaign tactic for Martin Schulz, a Social Democrat who wants to thwart Mrs Merkel’s bid for re-election in September (see article). And grand talk about joint European procurement and operations could easily be stymied by pressure from national defence champions interested only in securing the next juicy contract. + +Indeed, Mr Trump’s warnings could even prove counter-productive. Other European countries might grow nervous at the emergence of Germany as a military superpower with serious expeditionary capabilities, should it choose to travel down that path. Furthermore, many countries will never reach the 2% target. But threats from the White House could force them to hedge against American withdrawal, notes François Heisbourg, a French security analyst. Make NATO conditional, and you force your partners into independence, and a foreign policy that may not suit American interests. Even the gentle triceratops sometimes used its horns to charge predators. + +This article appeared in the Europe section of the print edition under the headline “The Gryfs of Europe” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717391-under-pressure-donald-trump-herbivores-are-thinking-about-eating-meat-europe-starting/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Britain + + +Reducing immigration: Keep out [Fri, 24 Feb 08:14] + +Agriculture and Brexit: Picking fights [Fri, 24 Feb 08:14] + +The Brexit process: Lords-a-leaping [Fri, 24 Feb 08:14] + +Taxing business: Under-rated [Fri, 24 Feb 08:14] + +Charities: A time to give [Fri, 24 Feb 08:14] + +The Metropolitan Police: Top of the cops [Fri, 24 Feb 08:14] + +Higher education: Class warfare [Fri, 24 Feb 08:14] + +Bagehot: Rebuild, and they will come [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + +Annual net migration amounts to about three times the attendance at a Manchester United football match + + + + + +From the print edition | Britain + + +Feb 25th 2017 + + + + + +DESPITE its vote to leave the European Union, plenty of Europeans still seem keen to move to Britain: in eastern European cities such as Kiev and Chisinau leaflets promising “English visas” still flutter. Marion, a lawyer who recently moved to London from Paris, says that Brexit barely featured in her decision. “I guess that emotionally I still find Brexit hard to believe.” Britain’s government, however, is busy thinking of ways to keep them out. + +Since June’s referendum result, many have wondered anxiously whether Britain will remain part of the EU’s single market after Brexit. The pound tumbled when Theresa May, the prime minister, said that she planned to leave it. People have worried less, however, about the economic impact of the government’s post-Brexit immigration policy. This is strange: the impact of slashing the number of foreigners allowed into Britain could be as serious as anything that could happen to trade. + + + + + +In the year to September net migration (immigration minus emigration) was under 300,000, split about evenly between EU and non-EU folk. It has been high by historical standards (see chart) since the mid-2000s, when citizens from new, poorer EU members acquired the right to move to Britain. + +Despite the continuing influx, net migration into Britain is hardly out of control, at least compared with other rich countries. On average annually it amounts to about three times the attendance at a Manchester United football match. Compared with their population, Ireland, Australia and Canada see far more new arrivals. + +But British concern about immigration has little to do with raw numbers. Even in 1995, when net migration was well under 100,000, two-thirds of Britons wanted it cut. No reference to immigration appeared on the ballot paper, but politicians believe that the Brexit vote represented a desire to “take back control” of the country’s borders. Since then Mrs May and Amber Rudd, the home secretary, have repeated a long-standing commitment to cut annual net migration to the “tens of thousands”. + +That will be no easy task. The government will have to count on about 50,000 Britons continuing to quit the country each year. If settling in Europe becomes harder for Britons after Brexit, that may not happen. Even if the rules are changed, the number of non-Britons settling each year, minus the number leaving, would have to fall to around 150,000. + +Net migration of family members and refugees is around 70,000. On February 22nd the government largely prevailed in a case in the Supreme Court, allowing it to set tough income requirements on those who want a loved one to join them. The ruling’s wording, however, implies that tightening these rules further will be tricky. Meanwhile, reducing immigration by unskilled workers from outside the EU is difficult since it is almost non-existent, says Jonathan Portes of King’s College London. + +About half of the EU nationals emigrating to Britain move into less-skilled jobs. Cutting that sort might reduce net migration by EU workers to 50,000 (a slowing economy is already helping). Halving net migration of foreign students, say by restricting the growth of universities (though that would hamper a lucrative industry), might reduce it to 50,000. But that might still leave total net migration at around 150,000. If the government is serious about hitting its tens-of-thousands target, it may have to restrict skilled migration. + +That would sit oddly alongside its recent white paper on Brexit, which promised to “encourage the brightest and the best to come to this country”. And it would weaken Mrs May’s negotiating hand. In 2015 combined net migration from America and India was about 30,000. Cutting that would be awkward for the prime minister, who is desperate to strike post-Brexit trade deals with both. + +How would the economy cope if the tens-of-thousands target were reached? Firms reliant on foreigners are worried. Food manufacturers are vulnerable: 40% of such workers are non-British. Skilled industries would also suffer: a quarter of scientific researchers are foreign-born. + +It may be for that reason that David Davis, the Brexit secretary, this week hinted that Britain is not about to shut the door even on unskilled EU migrants. Other Brexiteers, however, counter that ending the supply of cheap workers would shake up Britain’s business model for the better. Firms would invest in labour-saving technology, boosting Britain’s low productivity. One study of American tomato-growers finds some evidence to support this thesis. If productivity rose, those workers left behind might see higher wages. Britons might also see less competition for jobs. + +But these effects are likely to be small. If the benefits of investing in technology were so great, bosses should have already done so. And many jobs—such as care work—are not easily performed by robots. In these industries, many firms will either become less profitable or go under. + +Few economists see lower immigration leading to a wage bonanza for locals. One paper calculates that cutting migration to the tens of thousands could boost wages in industries most affected by it by an imperceptible 0.2-0.6% by 2018. + +And these tiny increases would be dwarfed by a slowdown in the wider economy. According to research by Katerina Lisenkova of Strathclyde University, annual net migration of 100,000 would lower GDP per person by 1% in the long term. Others reckon the economic cost of lower migration could match that of the hit to trade from Britain leaving the single market. + +The biggest loser from slashing immigration would be the public finances. Native Britons are ageing rapidly; the number who are of working age is shrinking. When counting only native-born folk, Britain has a higher “old-age dependency ratio” (the number of elderly people as a share of those of working age) than that of many European countries, including France, and it is worsening fast. This drives up spending on health care and pensions. + +As it stands, the flow of people into and out of Britain tilts the numbers favourably, improving the dependency ratio. Britain exports old, creaky people and imports young, taxpaying ones. More than 100,000 British pensioners live it up in sunny Spain; meanwhile, up to 100,000 working-age Spaniards brave the British cold. + +With low net migration, Britain’s elderly would be more burdensome. Workers would need to be taxed more heavily to pay for care for their elders. The government’s fiscal watchdog suggests that by the mid-2060s, with annual net migration of about 100,000, public debt would be roughly 30 percentage points higher than if that figure were 200,000. Taking back control comes with a whopping bill. + +This article appeared in the Britain section of the print edition under the headline “Keep out” + + + + + +View comments + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717418-annual-net-migration-amounts-about-three-times-attendance-manchester-united-football/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Picking fightsFarmers may be among the first to feel the effects of Brexit + + +Agriculture is heavily reliant on foreign workers. They may not be around for long + + + + + +From the print edition | Britain + + +Feb 23rd 2017 | BIRMINGHAM + + + + + +IF THE Church of England is the Conservative party at prayer, then the National Farmers’ Union (NFU) is the party at work. Unlike the prelates, however, farmers are already grappling with the adverse consequences of the referendum vote last June to leave the European Union. Worryingly for them, Theresa May’s government seems in no rush to help. Concerns are mounting among this core Tory political constituency that agriculture might turn out to be the patsy in the much-touted post-Brexit trade deals. + +The greatest anxiety for farmers, and the food industry as a whole, is about access to labour. The food-processing industry is dependent on EU migrants; they represent 120,000 of its 400,000 workers. Horticultural and fruit farmers also rely heavily on both permanent and seasonal workers from the rest of the EU, to pick produce from strawberries to apples. They require about 85,000 workers annually to harvest their crops. Alison Capper, an apple farmer in Herefordshire, employs five full-time staff but 70 more seasonally; last year all 70 came from abroad. The NFU claims that the effects of Brexit are already being felt. The percentage of foreign EU workers recruited in the sector who failed to turn up for jobs they had already accepted rose from a paltry 2% at the beginning of 2016 to a worrying 8% by September. + + + + + +Some European workers may be put off by the fall in the pound; others are anxious about their immigration status in Britain. Ms Capper says that the lead-times on recruitment are so long that she is already worrying about next year’s harvest, never mind this year’s. + +With a tight labour market, few locals are available to pick fruit. Instead, farmers have proposed a revival of the Seasonal Agricultural Workers Scheme, which granted temporary visas but ended in 2013, extending it to both EU and non-EU workers. But the agriculture secretary and prominent Brexiteer, Andrea Leadsom, refused to make any promises about the prospects for such programmes when she spoke at the NFU’s annual shindig in Birmingham on February 21st. Hoping for clarity, the delegates were disappointed by Ms Leadsom’s reticence. + +Indeed, she seemed determined to give as few details as possible about the government’s intentions. Minette Batters, the deputy head of the NFU, complains that “Brexit concerns every aspect of farming, but we still have no idea what the plan is.” Trade is a good example. The latest figures show that sales of British agricultural products to developing countries such as India are growing. But the EU remains a crucial market; it takes most of Britain’s lamb and mutton exports, for instance. + +Farmers worry that the government might concede access to Britain’s domestic agricultural market in return for other countries opening up their services sectors to British banks, or their vehicle markets to car exports. For all its political clout and stewardship of the land, agriculture contributes less than 1% of GDP; manufacturing and financial services contribute 10% each. Even as they see Ms Leadsom offering them no reassurances on labour or trade, farmers are watching the prime minister making post-Brexit promises to the bosses of foreign car firms based in Britain. + +Most concede that their business could be more efficient. That would reduce their dependence on cheap foreign labour. Automated milking and drones are in vogue at the moment. But delicate fruits will have to be picked by hand for the foreseeable future. Potatoes are picked by machines but actual people have to sort them to check their quality before they can be sold to supermarkets. Farmers are uncertain whether to invest heavily in new technology at the same time as they face the withdrawal of £3bn ($3.74bn) worth of EU subsidies, another subject on which Ms Leadsom was quiet this week. + +Wearied by decades of excessive EU regulation, probably a majority of farmers voted for Brexit. But now that reality is beginning to bite, farmers argue that the time has come for the Tories to repay some of the loyalty that rural Britain has shown them. They might not matter much in terms of simple economics, but farmers should start getting bolshie like the French if Brexit becomes too damaging, says Ms Batters. Tractors, to the barricades. + +This article appeared in the Britain section of the print edition under the headline “Picking fights” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717417-agriculture-heavily-reliant-foreign-workers-they-may-not-be-around-long-farmers-may-be/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Debating BrexitLetting the Lords have their say + + +Parliament will pass the Article 50 bill, but only when Theresa May kicks off the Brexit procedure will the real debate about its terms begin + + + + + +From the print edition | Britain + + +Feb 23rd 2017 + + + + + +IT WAS certainly a majestic setting. The House of Lords was resplendent with gilt, glass, a bevy of bishops and many geriatric former politicians crammed onto its red leather benches. And there perched on a parapet just below the glittering royal throne sat Theresa May, on a highly unusual visit to the upper house. + +The reason for the prime minister’s presence on February 20th was that the Lords were starting to debate the bill authorising her to invoke Article 50, the treaty procedure for leaving the European Union. Although (or because) they are unelected, the quality of their debate far exceeded that in the Commons a fortnight ago. + + + + + +Lord Hague, a former Tory leader, loudly denounced Tony Blair, a former Labour prime minister, for inviting people to “rise up” against Brexit (see Bagehot). Lord Mandelson, Mr Blair’s close ally, responded that Brexit supporters did not want Britain to be poorer and politically isolated, and so should be entitled to change their minds. Lords Lawson and Lamont, both former Tory chancellors, attacked as undemocratic the idea of amending a bill that had not only passed the Commons unscathed but also reflected one of the biggest votes in British history. + +Even so, because the government lacks a majority in the upper house, the Lords will try to amend the bill. One amendment could demand a bigger role for Parliament. Another would try to guarantee the rights of EU citizens in Britain to stay put. Their Lordships might even demand a second referendum on the precise terms of Brexit. This idea was supported not just by Liberal Democrats and Scottish Nationalists but by other luminaries, including Lord Butler, a former cabinet secretary. + +But peers also made clear that they will eventually back down and let an unamended bill become law in the first half of March. And that will allow Mrs May to invoke Article 50 in good time to avoid overtly spoiling the EU’s 60th birthday bash in Rome on March 25th, a party she has already said she will not attend. + +The real problem with the debate was its focus on procedure, not substance. Peers are doubtless right to call for closer parliamentary involvement. They are also right to object to Mrs May’s plan to present Parliament after her Brexit negotiations with what Lord Kerr of Kinlochard, a former diplomat often credited with writing Article 50, called Hobson’s choice: a bad Brexit deal or, in his view worse, no deal at all. In effect, Mrs May has now set the terms of Brexit as either hard or chaotic. + +Yet once Article 50 is invoked, the argument over Brexit will instantly become substantive. Trading arrangements, a new migration regime, the future of regulation, security and defence co-operation, money and much else will be on the table. And as Lord Hill, a former European commissioner, noted in the debate, what will matter then is not what the British government wants but what the other 27 countries are prepared to offer, as the bargaining power is mainly on their side. + +The big risk is that the eventual result will be good neither for Britain nor for the EU. In a new paper for the Centre for European Reform, a think-tank, Charles Grant notes that this is because “both the UK and the 27 are placing politics and principles ahead of economically optimal outcomes.” Sadly, it was ever thus. + +This article appeared in the Britain section of the print edition under the headline “Lords-a-leaping” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717410-parliament-will-pass-article-50-bill-only-when-theresa-may-kicks-brexit/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Under-ratedThe government’s re-evaluation of business rates is raising hackles + + +Changes to the commercial equivalent of council tax will hurt some—but help others + + + + + +From the print edition | Britain + + +Feb 23rd 2017 + + + + + +THERESA MAY’S commitment to those who are “just about managing” was aimed at individuals. But ahead of her government’s first full budget on March 8th, some of the companies in that category have been protesting against her. Several employers’ groups have written to Mrs May condemning the “outrageous” changes to business rates, due to come into effect on April 1st. + +Business rates—the commercial equivalent of council tax—raise £26bn each year, or 5% of total tax revenue. They are calculated as a proportion of the rent that could be charged on a commercial property, known as the rateable value. Some firms in central London are expecting bills to double (though the increase is capped at 42% in the first year). In less wealthy areas, they will fall. Revaluation should happen every five years, but has not taken place since 2010. + + + + + +The employers’ groups grumble that England has the highest commercial property tax in the rich world and that business rates have increased from a third of rental value in 1990 to half today. Others complain that the rates are set with no reference to a firm’s profitability and that they target traditional shops. Online retailers are able to locate their large warehouses in cheaper areas. And companies leasing a property are being taxed on an asset they do not own. Firms are also angry that appeals against rates assessments will become harder. With all charges being retained locally after 2020, councils cannot afford to see a big decrease in rateable values, as the pressure to pay for social care increases. + +Overall, however, more businesses will be helped than harmed. Those with a rateable value up to £12,000—some 600,000 firms in all—will pay nothing, up from £6,000 currently. (Those over £15,000 will pay the full whack; those in between a tapered rate.) Officials say bills for three-quarters of ratepayers will be lower or stay the same. Colliers International, a property company, says that 77% of retail centres will see a decrease, 18% an increase and 5% no change. + +Proposals have been put forward for changing the system, such as measuring energy use rather than property values. John Webber of Colliers says the problems are recent, and the system just needs revising: annual revaluations and reform to exemptions. “It worked pretty well for 400 years,” he says, “Until politicians started tinkering with it.” + +This article appeared in the Britain section of the print edition under the headline “Under-rated” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717416-changes-commercial-equivalent-council-tax-will-hurt-somebut-help-others-governments/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +A time to giveReligious charities are stepping in as welfare is cut + + +Welfare cuts mean more need for charities are doing more + + + + + +From the print edition | Britain + + +Feb 23rd 2017 + + + + + +IN THE fourth century Julian, a Roman emperor, grumbled, as he tried to push back the Christian tide, that the “impious Galileans” looked after “not only their own poor but ours as well”. The church in Europe continued to do so for centuries until the state took over many of its roles after the second world war. Now, amid swingeing welfare cuts, the impious Galileans—and other religious groups—are on the front lines once again. + +One in four British charities—nearly 50,000 in all—is faith-based, says Rachel Wharton of New Philanthropy Capital, a think-tank. Half of all charities working in overseas aid have religious roots. Such groups receive nearly a quarter of the total income of registered charities in England and Wales—about £16bn ($20bn) a year. Stalwarts such as the Salvation Army dominate the work in Britain (80% of the money raised by faith-based groups goes to just 4% of organisations). But new groups are springing up, too. “We are helping 5-10 new Christian charities set up every month,” says Michael O’Neill of Stewardship, an organisation that assists groups in managing their charitable giving. + + + + + +It is hard to know if numbers are growing overall, says Ms Wharton, because a change in the Charities Act a decade ago meant almost all existing congregations of any religion now qualify as charities and must register as such. Mr O’Neill says two-thirds of the groups he helps are new, but some are churches with only small social programmes. Even so, Karl Wilding of the National Council for Voluntary Organisations says numbers of faith-based groups that are not congregations are increasing. + +The Trussell Trust is one example. Established in 1997, it runs a network of 420 food banks. In the year to April 2016 it provided 1.1m three-day emergency food supplies to people in crisis, a near tenfold increase on 2011-12. Changes and delays to welfare payments account for 44% of its referrals. The trust puts those it helps in touch with other agencies such as housing associations, and is beginning to offer debt counselling at its sites. It does not proselytise, though most of its food banks are run through churches. + +Small charities are extending their reach nationwide. Matt Bird of the Cinnamon Network, a Christian organisation that helps such groups replicate their activities, was shocked to discover that half a million pensioners spend Christmas alone. His network has since helped Linking Lives, a group in Wokingham that connects volunteers with lonely old people, to expand. It now works through 15 churches nationwide, visiting 50 or so pensioners in each place. Cinnamon has also supported Parish Nursing, an organisation that now helps 125 churches to link nurses, many of them volunteers, with those needing care. + +The growth of other faiths has broadened religious involvement in such causes. Nearly 5% of faith-based charities are Muslim. The concept of zakat, or alms giving, has boosted donations, as has the high proportion of tithing among the swelling numbers of immigrant evangelical Christian congregations. In 2014, Khalsa Aid, a Sikh group, was at the forefront of providing sandbags and hot meals to communities hit by flooding in Somerset. + +Faith affects who gives, too, and how much. In 2014 religious causes received the highest proportion of charity donations (14%), in 2015 the second highest (13%) after medical causes (16%). They also received the highest average donation (£49) in 2015—more than double the average given to the next highest, overseas aid. + +Religious groups are reclaiming their role from the welfare state, says Anne Danks of the Trussell Trust. It does not always make for an easy relationship with government. Their existence highlights the fact that the welfare state is not plugging the holes, she says. “Sometimes we need to speak hard truths to people in power in order to help the marginalised.” + +This article appeared in the Britain section of the print edition under the headline “A time to give” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717401-welfare-cuts-mean-more-need-charities-are-doing-more-religious-charities-are-stepping/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Top of the copsCressida Dick, the first female head of the Metropolitan Police, will not have an easy job + + +She takes over at a time of sharp budget cuts + + + + + +From the print edition | Britain + + +Feb 25th 2017 + + + + + +WHEN Margaret Damer Dawson, an anti-slavery campaigner, and Nina Boyle, a suffragette journalist, joined forces to create the Women Police Service in 1914 they became the first female cops in Britain. They hoped to tackle pimps and to deter imperilled young women from prostitution. The commissioner of the Metropolitan Police, Sir Edward Henry, kindly asked his officers to provide them with assistance as needed. + +A little over a century later, Sir Edward has a female successor. On February 22nd Cressida Dick was announced as the new head of the Metropolitan Police. The appointment reflects a police force that is slowly becoming more diverse: around a quarter of its officers are female; so were two of the four shortlisted candidates for the top job. London is ahead of other big cities. New York has never had a female police chief. + + + + + +Ms Dick will arrive to an overflowing in-tray. Some forms of violent crime are on the rise. Senior police officers fret that the risk of a terrorist attack is the highest it has been for some time. Sadiq Khan, London’s mayor, has promised more bobbies on the beat. She will have to deal with these challenges at a time of sharp budget cuts. Under her predecessor the Met’s budget, which represents more than one-quarter of the money spent on policing in England and Wales, has been slashed by almost one-fifth. “It looks like the sort of job you wouldn’t really want to have,” concludes Peter Neyroud, a former chief constable now at Cambridge University. + +Nonetheless he reckons that Ms Dick is a good choice for the job. She is a clear communicator, so is well-placed to explain the trade-offs involved in cutting services. She used to run Trident, the Metropolitan Police’s anti-gang unit, so has experience of dealing with violent crime. She was also once head of the force’s counter-terror operations. + +Not all take such a rosy view of Ms Dick, however. The loudest opposition to her appointment comes from the family of Jean Charles de Menezes, a Brazilian electrician who was shot dead by police officers in 2005 having been mistaken for a terrorist. Ms Dick was in command of the operation. Yet a jury later found that there was “no personal culpability” for her. Others say she was admirably honest and open in the aftermath. That is fortunate: given the difficulties the Metropolitan Police faces, it is unlikely to be the last crisis she will have to deal with. + +This article appeared in the Britain section of the print edition under the headline “Top of the cops” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717403-she-takes-over-time-sharp-budget-cuts-cressida-dick-first-female-head/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Class warfareGrowing competition between universities is changing student life + + +Universities must now battle each other to attract students. How is that changing them? + + + + + +From the print edition | Britain + + +Feb 23rd 2017 | BRISTOL + + + + + +THE style is that of every other vlogger: breathless narration, rapid cuts between scenes, relentless cheer. “I really like visiting other universities, because I like to imagine myself in a different life where I’d gone to this one, instead of the one I ended up in,” explains Evan Edinger into a hand-held camera, before attending an open day at SOAS, a London university. Another reason, presumably, is because SOAS had paid him to do so. One hint is a small hashtag (“#ad”) at the end of his video’s title. + +University marketing, once restricted to the three months before applications are due, is now constant, says Rachel Killian of Penna, a marketing firm. That reflects a broad shift in higher education as a result of reforms introduced by the Conservative-Liberal Democrat coalition government. In 2012 it trebled the tuition fees universities could charge, up to a maximum of £9,000 ($14,000). Then in 2014 it lifted a cap on student numbers which had controlled government spending by restricting how many places institutions could offer. Students once competed for a limited number of spaces; now universities do battle to enroll as many scholars as they can. + + + + + +That is because they must attract students or cut costs. As most undergraduates pay for their studies with loans provided by the state, nearly half of universities’ income comes from them, compared with a quarter in 2005-06. And, as restrictions on recruitment have been relaxed, numbers can now fluctuate wildly. This year the total accepting the offer of a place at Southampton Solent University fell by 18%. The government hoped competition would allow the undergraduate population to continue to grow, thus widening access to higher education, and would raise teaching standards, recalls David Willetts, the universities minister from 2010 to 2014. + +To some extent, those hopes have been realised. Fees at public universities in Britain are the highest in the OECD, a group of mostly rich countries, but the number of poor students has continued to rise. In 2010, 14% of children from the most deprived areas went to university; in 2016, 20% did. In theory fees might be £9,000 a year, says Seamus, a student at the University of the West of England (UWE) in Bristol. But “the money’s not real. It doesn’t exist until you’re making enough to pay it back.” Numbers of part-time and mature students, who receive less support, have slumped, however, prompting fears about the “homogenisation” of the route Britons take through higher education. + +Disadvantaged students have so far poured into low-ranking universities. But they may soon gain access to the best ones. Since 2014, the numbers accepted by English members of the Russell Group of top universities have grown by about 6%. As Nick Hillman of the Higher Education Policy Institute, a think-tank, notes, this means that poor students no longer have to oust their middle-class peers to gain entry. All students are now more likely to win a place at their first-choice institutions, too. + +The possibility of expansion has prompted a building boom. Much of the UWE campus is a building site. Growing universities erect glitzy libraries, housing blocks and research facilities to accommodate new students; shrinking ones do so in an effort to turn the tide. According to Barbour ABI, a consultancy, universities spent £2.4bn on construction in 2013, 43% more than in 2012, and have continued to spend at that level in the years since. + +Better facilities are a boon for students. Some 87% say they are satisfied with their libraries, compared with 78% in 2010, according to the National Student Survey, an official poll. One private London dorm comes with a cinema room and concierge (rent: £399 a week). But Shelly Asquith of the National Union of Students cautions that poor students are sometimes priced out of expensive university halls and thus end up living in the cheapest private places available, which hinders student mixing. + +Another lure is the promise of a path to a good job. At open days prospective students are still mainly interested in courses and living arrangements, but their parents increasingly care about employment. All universities now have in place strategies to boost graduate employment, notes Kathleen Henehan of the Resolution Foundation, a think-tank. About half of the courses at UWE have a vocational element, says Steven West, its vice-chancellor, which is not unusual for similar universities. On one of its business degrees students must start a firm as part of their studies (one has set up a record label, another a skiwear company). + +Some fret that too many students are still exposed to lacklustre teaching. Crowded lecture halls and insufficient time with professors are common complaints. Jo Johnson, the universities minister, has some sympathy: he has said that too many students are exposed to “mediocre teaching”. The government hopes its new “Teaching Excellence Framework” will prod universities to pay as much attention to the quality of instruction as to research. + +Survival of the fittest + +Others worry that the competition will prove too intense. A report last year by the Higher Education Funding Council for England, a grant-giving agency, warned of declining cash levels and an increase in borrowing by universities that could prove unsustainable. Few policy wonks are willing to predict what the government would do if a university went bankrupt. Many institutions that are struggling under the new regime are in the parts of the country that Theresa May, the prime minister, has promised to reinvigorate, notes Andy Westwood of Manchester University. They are more likely to be attended by poor, local students. Mrs May will have to decide if their decline is a price worth paying for more competitive universities. + +This article appeared in the Britain section of the print edition under the headline “Class warfare” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717402-universities-must-now-battle-each-other-attract-students-how-changing-them-growing/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Rebuild, and they will comeTo win Britain’s next EU referendum, Remainers must move on from the last + + +Those who wish Britain to remain part of the EU must band together + + + + + +From the print edition | Britain + + +Feb 23rd 2017 + + + + + +DURING his unsuccessful campaign to become president of the European Council in 2009, Tony Blair’s acolytes would boast that their man could “stop the traffic” in capitals. He was box office, he could turn heads, he could make people listen. In a speech in London on February 17th the unpopular former prime minister proved he still has that quality. Where other pro-European politicians waffle and prevaricate, he was crisp and frank: Brexit will be terrible for Britain, it cannot come “at any cost”, voters were “without knowledge of the terms” when they cast their ballots. Mr Blair’s intervention elicited a tsunami of furious responses from bulge-eyed Brexiteers seemingly opposed to his very right to speak out. They protested too much. + +To be sure, the speech was politically unrealistic. The prospects of the electorate being moved to “rise up” against Brexit in the coming months are low. The Labour Party, from right to left, is catatonic. The Liberal Democrats and the Scottish National Party, though robustly anti-Brexit, are small. Remainers on the Conservative benches are mostly cowed and Theresa May is resolute. Public opinion will probably move slowly, however disastrous the Brexit negotiations seem once the prime minister starts the two-year process on March 9th. Voters do not tend to conclude that they were “wrong”; often they are too busy with their lives to notice that their opinions are changing and simply reimagine their original position. Polls in 2003 showed a majority for Britain’s involvement in the Iraq War, but most people today recall having opposed it at the time. More likely in the short term is that the negative effects of Brexit—an investment exodus, say—will be laid at the door of “Remoaners” who “talk the country down”. + + + + + +Yet despite this, and Mr Blair’s undoubted political toxicity, his argument was important. This was the first big occasion on which a top politician had argued that Brexit should not happen despite the vote. Critics dismiss this as proof that the private-jet-bound Mr Blair is out of touch. But his logic was sound. The referendum result, now treated as a sacred unquestionable in Westminster, is only as durable and binding as the political reality it expresses. And the reality of Brexit may well change this. Anti-immigration voters will not be satisfied by whatever door-slam Mrs May achieves. The economic dislocation of pulling out of the EU’s single market, combined with the falling pound, will hurt living standards. The promises of bonus billions for public services will come to look like a bad joke. These are the makings of “Bregret”. Mr Blair is merely proposing to help that process along and, if he succeeds, to carry out the will of a now anti-Brexit public and stop the whole process. Bagehot can reasonably disagree only with his timing. Replace “stop” with “reverse” and you have a sensible political strategy. + +There are two problems. First, the Remainers are divided. Those who stood together during the referendum campaign last summer have fragmented into five groups which, to Brexiteers, look uncannily and unfairly (because they are not progressing) like the five stages of grief. The first is denial: public figures like A.C. Grayling, a philosopher, who simply seek to stop Brexit in its tracks. The second is anger: Mr Blair and others who accept the referendum result but want to stop Brexit by changing opinions. + +The third is bargaining: those Remainers who, like many of those who spoke up this week in House of Lords debates, accept that it will happen but want to moderate it or at least placate their Remainer supporters by grumbling. Many of these middle-grounders resented Mr Blair’s speech as an unhelpful polarisation of the debate. The fourth category corresponds to depression: that segment of political opinion sure that Brexit will be “potentially catastrophic” (as Margaret Beckett, a former foreign secretary, put it) but convinced that little can be done. The fifth is acceptance: the stage attained most comprehensively by Mrs May, who opposed Brexit but is now enacting it in its harshest form. Even discarding the last of these scattered tribes, what hope is there of uniting them into a force that can push back Brexit? + +The second problem is that many Remainers—of all descriptions—are still living last year’s referendum. For those who think Brexit should proceed with limited opposition, that vote is almost all that matters in British politics today. For those who think Brexit should be smashed, it was a festival of deceit and democratic infamy that must be overcome. Both are wrong in their way. The accepters should not abandon the anti-Brexit arguments they put with such gusto during the referendum campaign. The opposers should not assume that voters will simply admit they were wrong about Brexit: shifting opinions is slow work. + +So Remainers must embark on a giant job of consolidation, melding together their agendas, groups and goals. They must be realistic about the immediate future and ambitious about the long term. Yes, push for the softest possible Brexit now, but aim over the following years to negotiate a newly close relationship with the rest of the EU; perhaps gradually rejoining the single market or, one day, rejoining the union altogether. + +Keep stopping the traffic + +In other words, Remainers need to disengage from the last battle, the referendum, before they engage with the next, however hard it is to predict when this will come. In practice that means building the foundations of the next “In” campaign: popularising yardsticks by which Brexit’s success (or otherwise) may be measured, setting expectations of Britain outside the EU, running single-issue campaigns that raise the salience of the issues at stake (investment, the benefits of migration, international influence), holding Brexiteers to account for the commitments they make, gathering e-mail addresses and nurturing the networks that might, once the time is right, take Britain back into the European fold. If the public is to turn against Brexit, it will ultimately do that on its own terms. The task of convinced Remainers is to be ready. + +This article appeared in the Britain section of the print edition under the headline “Rebuild, and they will come” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717400-those-who-wish-britain-remain-part-eu-must-band-together-win-britains-next-eu/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +International + + +The last diamond mine: The future of forever [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The future of foreverA report from De Beers’s new diamond mine + + +Production of the world’s most valuable gem may be about to peak + + + + + +From the print edition | International + + +Feb 25th 2017 | NORTHWEST TERRITORIES, CANADA + + + + + +GAHCHO KUÉ is too far north for trees. In the few snowless months, its surroundings in Canada’s Northwest Territories resemble a sprawling archipelago, as much lake as land, dark ponds stretching flat to the horizon. Wolverines roam, as well as bears, foxes, hares and caribou, though the herds have dwindled. There are no roads, no pipes, no electricity cables. So it seems strange when, flying over the tundra, a giant truck appears, then another, then a steel factory, rows of trailers and a big grey pit, deepening by the day. + +De Beers, the world’s biggest diamond company, marked the opening of its Gahcho Kué mine in September. Local indigenous leaders prayed for the mine, beating drums. Bruce Cleaver, the firm’s chief executive, and Mark Cutifani, the boss of its parent company, Anglo American, stood by a ceremonial fire, flames tilting in the wind. + + + + + +Now the hard work is under way. The area is so sodden that staff bring in heavy supplies just once a year, in the depths of winter, when they can build a thick road of ice (pictured above). A caravan bearing fuel and equipment is slowly crossing the tundra. At the mine, their colleagues are working day and night to ramp up to full production, with the aim of extracting more than 12,000 carats (2.4kg) of diamonds each day. Gahcho Kué is an astonishing endeavour, the biggest new mine in the world in over a decade. De Beers has no plans for another. + +It is a turning-point for one of the world’s oddest industries. The diamond business gained its sparkle around 1866, when a farmer’s son picked up a glistening pebble on the bank of the Orange river in South Africa. For most of the next 150 years, De Beers would dominate the global market. Success depended on manipulated supply and skilfully cultivated demand. + +Square-cut or pear-shaped + +Much has changed since then. De Beers can no longer control the market. Though it is the biggest producer by value, it accounts for only a third of global sales, down from 45% in 2007. It faces many uncertainties, from synthetic diamonds to changing relationships with polishers and cutters. Its loosening grip is reflected in increased volatility: its sales fell 34% in 2015, before bouncing back by 30% last year. Meanwhile the source of the demand that drives sales—the link between diamonds and love—looks weaker than it used to. + +But one forecast seems solid: there will be fewer new diamonds. De Beers continues to seek new places to mine, but has slashed its exploration budget. Another big find is unlikely. The supply of new diamonds is expected to peak in the next few years, before beginning a slow decline. + +Natural diamonds—as opposed to the synthetic ones mostly used in industry—were formed more than 1bn years ago deep below cratons, the oldest part of continents. There, between Earth’s core and its crust, the pressure was high enough and the temperature low enough for carbon to crystallise into its hardest form. There diamonds would have remained were it not for molten rock rushing through the mantle and drawing diamonds, garnets and other minerals with it, like a furious river pulling dirt from its banks, before erupting through Earth’s surface faster than the speed of sound. + +Some of the gems settled in river beds, as in Brazil, or were swept to the coast, as in Namibia. Others remained encased in extinct volcanoes, or pipes, and ended up buried under soil or lakes. De Beers’s richest diamond mine was found beneath sand in Botswana in 1972, within the Kaapvaal craton that spans southern Africa. + + + +Speculation that diamonds might be found in Canada dates from the 19th century, when gems were found studded through the American Midwest. In 1888, the year Cecil Rhodes founded De Beers in South Africa, a 22-carat stone was unearthed near Milwaukee. Glaciers, it was posited in 1899, might have carried the diamonds south. It was decades before exploration took off. De Beers began quietly scouring Canada in the 1960s, but it was not until 1991 that BHP, one of its rivals, found kimberlite, an igneous rock, with enough diamonds to merit a mine. Within three years more than 100 companies had fanned out across the wilderness, rushing to claim some 200,000 square kilometres. At Gahcho Kué, geologists used aerial surveys and soil sampling to follow trails of minerals back to their kimberlite pipes. + +The objects of these frenzied searches have intrinsic value for scientists. Gems deemed flawed by jewellers interest them most: inclusions in diamonds can carry samples from hundreds of kilometres below the surface. Evan Smith, a scientist at the Gemological Institute of America, recently studied inclusions in shards cut from diamonds of unusual size and quality. His findings, reported in Science, a journal, are the first proof that the deep mantle is peppered with metallic iron—a clue to the long-ago chemical reactions that shaped Earth. + +But diamonds’ principal value has nothing to do with science. They have long been revered for their beauty—in September Mr Cutifani reminded Gahcho Kué’s visitors that the ancient Greeks regarded diamonds as the tears of the gods. Their modern status, though, is a corporate creation, a story inextricably linked with that of De Beers itself. + +Diamonds had been rare before 1866; the South African finds threatened to send prices plunging. Rhodes founded De Beers to consolidate the area’s mines and to restrict sales. By his death in 1902, the firm accounted for 90% of the world market. More discoveries were made in the 20th century, notably in Siberia in the 1950s, Botswana in the 1960s and Australia in the 1970s. But De Beers kept tight control of supply, both by owning mines and by buying diamonds from others. + +All I need to please me + +That alone would not have turned De Beers into an empire. As essential was its scheme for conjuring up demand. In 1938 the company, then led by the Oppenheimer family, hired N.W. Ayer, an advertising agency in New York, to coax Americans to buy more rocks. It dreamed up the notion that a diamond ring should be an essential display of love and status, its gift a rite of passage. In the ensuing decades De Beers and its marketers penned slogans—memorably, “a diamond is forever”—and invented social rules, urging men to spend two months’ pay on a gift for their affianced. That benchmark not only permitted high margins, but suppressed the second-hand market—to the benefit of both the firm and its customers, who could be reassured their investment would hold its value. + +The marketing worked. In 1939, 10% of American brides received a diamond engagement ring. By the end of the century 80% did. The result was a unique industry, controlled by a single company that was both marketer and miner, a capital-intensive business built on an ephemeral link to love, its success due to strangled supply and inflated demand. + +But by the 1990s De Beers’s grip had started to loosen. The Argyle mine in Australia left the De Beers cartel in 1996, fed up with the giant’s terms. New discoveries in Canada, a civil war in Angola and the collapse of the Soviet Union all made supply harder to manage, meaning that more diamonds were sold outside the cartel. Concern that diamond sales were financing African conflicts threatened the gem’s image. In 2000 De Beers said it would no longer control the market so strictly, but sell instead to vetted buyers. Legal settlements in America and Europe followed, barring the company from monopolistic behaviour. + + + +De Beers is adjusting to the new era. Its first challenge is an unfamiliar one: to grapple with competitors. ALROSA, Russia’s state-owned diamond company, produces more stones than De Beers, though it earns less (see chart). New firms have cropped up, too, some buying mines from De Beers as it sought to shore up its balance-sheet. + +De Beers’s partners, meanwhile, have become more demanding. Botswana’s government owns 15% of the firm; South Africa’s state investment fund owns 14.5% of Anglo American. De Beers’s mining operations in Botswana and Namibia are joint ventures with the governments there. Both countries share the proceeds from sales of diamonds mined within their borders, and can also sell some diamonds independently, enabling them to test the prices that De Beers is getting and further loosening the firm’s control over supply. + +Even in countries where De Beers does not have a joint venture with the government, it depends on local co-operation. Winning government approval for Gahcho Kué required more than 15,000 pages of environmental reviews. The firm wanted to expand a mine in Ontario, but a nearby indigenous group withheld its consent. + +The limits of De Beers’s power have been revealed in the past two years. Demand slumped in China in late 2014, prompting retailers to buy fewer polished diamonds. Companies that cut and polish stones became weighed down by excess inventory. But the tools De Beers once used to use to prop up prices were no longer at hand. There are legal restrictions on the share of excess diamonds it may buy. Because it controls just one-third of the market, any production cuts have limited effect on total supply. In fact, the firm may even have made matters worse. Contracts with its customers sometimes encourage them to overpurchase—if they turn down too many of the stones De Beers offers them, they risk being allocated a smaller share in future. + +There are signs of recovery. Bain, a consultancy, estimates that rough-diamond sales rose by 20% in 2016. De Beers is becoming more flexible, easing rules for buyers of its stones. More frequent reporting of its sales should help investors understand the business. It also signals to competitors—without engaging in collusion—when the market is deteriorating, enabling them to adjust accordingly. “The value of transparency will come to exceed the value of secrecy,” argues Fraser Jamieson of J.P. Morgan, a bank. Even so, excess inventory may yet drag down the market. Some jewellers have recently reported slack sales. + +Mr Cleaver, an Anglo American veteran, became the boss of De Beers in July. “The fundamentals of the industry remain very good,” he says. In the coming years, he thinks, De Beers will benefit from rising incomes, particularly in China and India. Its own research shows that diamonds still capture the imagination: 26% of young American brides say they dreamed about their future engagement rings years before beginning a relationship. + +But a long-term risk looms over the industry: one day young couples may no longer want diamonds at all. They are a “Veblen good”, as items that gain their value solely from their ability to signal status are named, after Thorstein Veblen, an economist who wrote about the spending of the rich. For Veblen goods, the normal law of supply and demand does not hold: higher prices support demand, rather than suppressing it. If a big gap opens up between the number of diamonds offered for sale and the number of people willing to buy them at high prices, diamonds could suffer a big, sustained fall in value and the entire business could cease to make sense. + +Today’s 20- and 30-somethings grew up as De Beers lost its monopoly and, wary of helping competitors, cut spending on the advertising that had done so much to create demand for diamonds in the first place. In recent years the company’s marketing budget accounted for roughly 1% of sales, down from about 5% in the 1990s, according to Morgan Stanley. At the same time the notion of “conflict diamonds” percolated through the popular consciousness—a movie called “Blood Diamond”, starring Leonardo DiCaprio with a Zimbabwean accent, was released in 2006. Young couples, who earn less than their parents did at their age, may prefer to spend their money elsewhere. + +Complicating matters, those who do want a diamond now have an alternative. Synthetic diamonds have been available for decades, but only recently has the process become cheaper and the result more refined. In 2015 a company called New Diamond Technology made a ten-carat polished diamond of excellent quality, an unprecedented feat. Sales of synthetic diamonds are thought to amount to just 1% of the rough-diamond market. But synthetic-diamond sellers are appealing to young shoppers’ concerns for social and environmental causes—Diamond Foundry, backed by Mr DiCaprio, boasts that its products are “as rock-solid as your values”. + +So De Beers is trying to boost the allure of natural gems. “Long-term demand is only going to be there if we continue to generate it,” says Mr Cleaver. That means studying consumers; few other firms obsess over both mining-truck depreciation and romance among young Chinese. + +It also means new advertisements. Some centre on De Beers’s Forevermark brand, a tiny code etched in a diamond that explains the gem’s provenance. Other spending is for the industry as a whole. In 2015 De Beers and other miners formed a group to pool money for generic diamond advertisements. Its first campaign ran in America before Christmas, with the slogan “Real is rare”. YouTube videos show Nick Cannon, best known as the ex-husband of Mariah Carey, a singer, interviewing couples about their engagements. + +It is unclear if this will persuade young romantics to spend thousands on diamonds. If synthetics grow in popularity, De Beers may need to become more aggressive. Already, it is suing a synthetic-diamond company in Singapore for infringing its intellectual property. Its own synthetic-diamond operation, for industrial uses, holds more than 450 patents. + +As the company works to shore up demand, there is a source of solace. For over a century it has fretted that big new finds would lead to plunging prices. “Our only risk,” Rhodes declared, “is the sudden discovery of new mines, which human nature will work recklessly to the detriment of us all.” But it seems that threat is waning. + +Get that ice or else no dice + + + +In total, explorers have sampled fewer than 7,000 kimberlite pipes. Of these just 15% have held diamonds and just 1% (about 60) have held enough of them to justify building a mine. De Beers continues to explore in Canada, South Africa, Botswana and Namibia—the only thing worse than finding a big new source would be someone else finding it first. Some fancy technology is supposed to help. A “Superconducting Quantum Interference Device”, for example, searches for changes in magnetic fields below Earth’s surface, which might indicate the presence of kimberlite. + +But De Beers regards any big discoveries, by itself or anyone else, as unlikely. “The best and easiest deposits are already found,” says Des Kilalea, an analyst. The company’s Canadian exploits are a reminder of just how arduous new mines can be. Mountain Province, a firm that now works with De Beers, discovered Gahcho Kué’s first pipe in 1995. The intervening years brought a separate, failed mine for De Beers in Canada, lengthy negotiations with local officials and, at last, the construction of Gahcho Kué itself. + +That required draining part of a lake. To bring in building supplies, the company had to build the winter road. Staff would plough snow off a pond, drill through thin ice, then pump up water to make the ice thicker, laying down a few inches at a time. This was repeated over 120km, at temperatures often plunging to -40°C, until the ice was thick enough to support a 500-tonne mining shovel, broken into dozens of pieces. In total, building Gahcho Kué cost $1bn. That was deemed worthwhile, compared with the costs of finding and opening a mine elsewhere. + +Other companies have a few mines planned. De Beers is now focused on expanding existing mines, not building new ones. New technologies may help liberate more diamonds from kimberlite more efficiently. Even so, Bain estimates, production will peak in 2019. Supplies of new diamonds will then start to fall, sinking by 1-2% each year until 2030. + +For now, aircraft shuttle staff to Gahcho Kué, dropping off miners to work for two-week stretches. Nearly half the staff are locals, and a fair share are indigenous. “We want jobs, just like everybody else,” says Eddie Erasmus, grand chief of the Tlicho people. Among the mine’s maze of trailers are features typical of any big-company workplace. There is a gym. Signs in the cafeteria remind staff to eat fruits and vegetables, though many prefer heartier fare. Rob Coolen, who oversees the ice road, began work at Gahcho Kué before the mine was built, sleeping in a tent on the tundra. Coffee and bacon, he says, are essential. + +The cafeteria sometimes shudders with the reverberations of a blast from the pit. Outside, work goes on day and night. Staff pile kimberlite onto huge trucks, then haul the rocks to the processing plant. There, the ore passes through breakers, crushers and scrubbers until pebbles are sent through a series of X-rays and lasers, jets of air separating diamonds from worthless stones. + +When love’s gone, they’ll lustre on + +No workers at Gahcho Kué touch the diamonds with bare hands. Only a few see the gems before they are sent off by plane to be valued. In September Mr Coolen stood atop a steel grate in the processing plant, the platform shaking as giant scrubbers churned beneath. “Occasionally you see one,” he shouted above the din, “and it’s just gorgeous.” The mine is expected to reach full production in March. By 2030, its diamonds extracted, it will close. + +This article appeared in the International section of the print edition under the headline “The future of forever” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21717369-production-worlds-most-valuable-gem-may-be-about-peak-report-de-beerss/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Business + + +The semiconductor industry: Silicon crumble [Fri, 24 Feb 08:14] + +3G’s model: Barbarians at the plate [Fri, 24 Feb 08:14] + +The independent-film business: Indie blues [Fri, 24 Feb 08:14] + +Toy companies in Japan: State of play [Fri, 24 Feb 08:14] + +Aarusha Homes: Room to grow [Fri, 24 Feb 08:14] + +French entrepreneurs: Less misérable [Fri, 24 Feb 08:14] + +Schumpeter: A trip to the shrink [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Intel on the outsideThe rise of artificial intelligence is creating new variety in the chip market, and trouble for Intel + + +The success of Nvidia and its new computing chip signals rapid change in IT architecture + + + + + +From the print edition | Business + + +Feb 25th 2017 | SANTA CLARA + + + + + +“WE ALMOST went out of business several times.” Usually founders don’t talk about their company’s near-death experiences. But Jen-Hsun Huang, the boss of Nvidia, has no reason to be coy. His firm, which develops microprocessors and related software, is on a winning streak. In the past quarter its revenues increased by 55%, reaching $2.2bn, and in the past 12 months its share price has almost quadrupled. + +A big part of Nvidia’s success is because demand is growing quickly for its chips, called graphics processing units (GPUs), which turn personal computers into fast gaming devices. But the GPUs also have new destinations: notably data centres where artificial-intelligence (AI) programmes gobble up the vast quantities of computing power that they generate. + + + +Soaring sales of these chips (see chart) are the clearest sign yet of a secular shift in information technology. The architecture of computing is fragmenting because of the slowing of Moore’s law, which until recently guaranteed that the power of computing would double roughly every two years, and because of the rapid rise of cloud computing and AI. The implications for the semiconductor industry and for Intel, its dominant company, are profound. + +Things were straightforward when Moore’s law, named after Gordon Moore, a founder of Intel, was still in full swing. Whether in PCs or in servers (souped-up computers in data centres), one kind of microprocessor, known as a “central processing unit” (CPU), could deal with most “workloads”, as classes of computing tasks are called. Because Intel made the most powerful CPUs, it came to rule not only the market for PC processors (it has a market share of about 80%) but the one for servers, where it has an almost complete monopoly. In 2016 it had revenues of nearly $60bn. + + + + + +This unipolar world is starting to crumble. Processors are no longer improving quickly enough to be able to handle, for instance, machine learning and other AI applications, which require huge amounts of data and hence consume more number-crunching power than entire data centres did just a few years ago. Intel’s customers, such as Google and Microsoft together with other operators of big data centres, are opting for more and more specialised processors from other companies and are designing their own to boot. + +Nvidia’s GPUs are one example. They were created to carry out the massive, complex computations required by interactive video games. GPUs have hundreds of specialised “cores” (the “brains” of a processor), all working in parallel, whereas CPUs have only a few powerful ones that tackle computing tasks sequentially. Nvidia’s latest processors boast 3,584 cores; Intel’s server CPUs have a maximum of 28. + +The company’s lucky break came in the midst of one of its near-death experiences during the 2008-09 global financial crisis. It discovered that hedge funds and research institutes were using its chips for new purposes, such as calculating complex investment and climate models. It developed a coding language, called CUDA, that helps its customers program its processors for different tasks. When cloud computing, big data and AI gathered momentum a few years ago, Nvidia’s chips were just what was needed. + +Every online giant uses Nvidia GPUs to give their AI services the capability to ingest reams of data from material ranging from medical images to human speech. The firm’s revenues from selling chips to data-centre operators trebled in the past financial year, to $296m. + +And GPUs are only one sort of “accelerator”, as such specialised processors are known. The range is expanding as cloud-computing firms mix and match chips to make their operations more efficient and stay ahead of the competition. “Finding the right tool for the right job”, is how Urs Hölzle, in charge of technical infrastructure at Google, describes balancing the factors of flexibility, speed and cost. + +At one end of the range are ASICs, an acronym for “application-specific integrated circuits”. As the term suggests, they are hard-wired for one purpose and are the fastest on the menu as well as the most energy-efficient. Dozens of startups are developing such chips with AI algorithms already built in. Google has built an ASIC called “Tensor Processing Unit” for speech recognition. + +The other extreme is field-programmable gate arrays (FPGAs). These can be programmed, meaning greater flexibility, which is why even though they are tricky to handle, Microsoft has added them to many of its servers, for instance those underlying Bing, its online-search service. “We now have more FPGAs than any other organisation in the world,” says Mark Russinovich, chief technology officer at Azure, the firm’s computing cloud. + +Time to be paranoid + +Instead of making ASICS or FPGAs, Intel focused in recent years on making its CPU processors ever more powerful. Nobody expects conventional processors to lose their jobs anytime soon: every server needs them and countless applications have been written to run on them. Intel’s sales from the chips are still growing. Yet the quickening rise of accelerators appears to be bad news for the company, says Alan Priestley of Gartner, an IT consultancy. The more computing happens on them, the less is done on CPUs. + +One answer is to catch up by making acquisitions. In 2015 Intel bought Altera, a maker of FPGAs, for a whopping $16.7bn. In August it paid more than $400m for Nervana, a three-year-old startup that is developing specialised AI systems ranging from software to chips. The firm says it sees specialised processors as an opportunity, not a threat. New computing workloads have often started out being handled on specialised processors, explains Diane Bryant, who runs Intel’s data-centre business, only to be “pulled into the CPU” later. Encryption, for instance, used to happen on separate semiconductors, but is now a simple instruction on the Intel CPUs which run almost all computers and servers globally. Keeping new types of workload, such as AI, on accelerators would mean extra cost and complexity. + +If such integration occurs, Intel has already invested to take advantage. In the summer it will start selling a new processor, code-named Knights Mill, to compete with Nvidia. Intel is also working on another chip, Knights Crest, which will come with Nervana technology. At some point, Intel is expected also to combine its CPU’s with Altera’s FPGAs. + +Predictably, competitors see the future differently. Nvidia reckons it has already established its own computing platform. Many firms have written AI applications that run on its chips, and it has created the software infrastructure for other kinds of programmes, which, for instance, enable visualisations and virtual reality. One decades-old computing giant, IBM, is also trying to make Intel’s life harder. Taking a page from open-source software, the firm in 2013 “opened” its processor architecture, which is called Power, turning it into a semiconductor commons of sorts. Makers of specialised chips can more easily combine their wares with Power CPUs, and they get a say in how the platform develops. + +Much will depend on how AI develops, says Matthew Eastwood of IDC, a market researcher. If it turns out not to be the revolution that many people expect, and ushers in change for just a few years, Intel’s chances are good, he says. But if AI continues to ripple through business for a decade or more, other kinds of processor will have more of a chance to establish themselves. Given how widely AI techniques can be applied, the latter seems likely. Certainly, the age of the big, hulking CPU which handles every workload, no matter how big or complex, is over. It suffered, a bit like Humpty Dumpty, a big fall. And all of Intel’s horses and all of Intel’s men cannot put it together again. + +This article appeared in the Business section of the print edition under the headline “Silicon crumble” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717430-success-nvidia-and-its-new-computing-chip-signals-rapid-change-it-architecture/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Barbarians at the plate3G missed Unilever but its methods are spreading + + +The investors who own Kraft Heinz are upending the food industry + + + + + +From the print edition | Business + + +Feb 25th 2017 + + + + + +JORGE PAULO LEMANN (pictured), a Brazilian investor, is ill-accustomed to failure. On February 17th Kraft Heinz, backed by Mr Lemann’s 3G Capital, said it had bid $143bn for Unilever, a maker of food and personal products. 3G has gobbled many a consumer firm, slashed costs, then bought an even bigger one. Even so, the Unilever bid was surprising in its audacity—the merger would have been the second-largest ever. As shocking, it collapsed two days later. + +Kraft Heinz had hoped to continue talks in private, but news of its offer leaked out. Its management appeared to have badly misjudged the depth of Unilever’s attachment to its culture and its pursuit of long-term, “sustainable” growth. Unilever’s outright rejection meant that 3G and Warren Buffett, who was expected to help fund a deal, faced the prospect of going hostile against a revered firm. It was a rare stumble. But the episode doesn’t spell the end of its model. More deals are likely. And Kraft Heinz is already changing how Unilever and other rivals operate. + + + + + +Times are hard for big consumer companies, once among the world’s most stable. Shoppers increasingly want products they deem healthier, more natural or “authentic”. New competitors have emerged online. In middle-income markets, local actors are gaining ground fast—in Brazil, Botica Comercial Farmacêutica peddles nearly 30% of perfume, says RBC Capital, an investment bank, and in India Ghari Industries sells more than 17% of detergent. + +Food companies are experiencing a particularly sudden shift. The volume of products sold by big American food firms has dropped even as they have cut prices for consumers, notes Alexia Howard of Sanford C. Bernstein, a research firm. This month General Mills and J.M. Smucker, two food manufacturers, lowered their estimates for future revenue. Nestlé, a Swiss food giant, has just abandoned an overly ambitious sales target which it had missed for four years in a row. + +3G offers a simple answer: slash costs and merge. Its best-known strategy, “zero-based budgeting”, requires managers to justify their expenses from scratch every year. After 3G applies the method at one company, it buys another and fuses them. Mr Lemann and his partners combined a striking number of big brewers to form Anheuser-Busch InBev; last year it acquired the firm’s next closest rival, SABMiller. Kraft Heinz was formed through deals that also involved Mr Buffett. On February 21st another company backed by 3G said it would buy Popeyes, a fried-chicken chain, for $1.8bn. + +The perception of 3G’s ruthlessness comes chiefly from the fact that it has overseen the sacking of thousands of workers at the firms it owns. Kraft Heinz decided to close seven factories in North America, boosting its profits. Its sales have fallen in four of the six quarters since the two companies combined, grist for those who say that slashing costs limits growth. + +Others deem its strategy admirably clear-eyed. 3G likes to foster an “ownership mentality” among its managers, with financial rewards linked to the company’s performance. Kraft Heinz looks after promising brands, such as Heinz mustard. Where necessary, it allows ailing lines to wither. Unilever, by contrast, continues to support its declining spreads business, arguing that it still produces cash. Calls to dump the division are by now so intense that Warren Ackerman, an analyst at Société Générale, a French bank, calls the potential move “Sprexit”. It is not all cuts, either: Kraft Heinz will significantly increase spending on advertising this year. + +Rejected suitor + + + +Unilever, meanwhile, is deemed an exemplar of responsible capitalism. Paul Polman, its chief executive, states that products that meet the highest standards of social and environmental sustainability perform better than products that don’t. For now, though, its operating-profit margin is well below that of Kraft Heinz (see chart), a firm that advocates of sustainability in business say pays insufficient attention to questions such as water use. + +In spite of the gap in culture, Unilever is one of many companies that are partly mimicking Kraft Heinz. Last year the Anglo-Dutch giant introduced some zero-based budgeting, for example for its spending on marketing. Kellogg, General Mills and Campbell Soup, all American food makers, are among those that have made similar announcements. In January Mr Polman said he planned to require managers to invest more in the company, to boost the “owner’s mentality” among his staff. + +Some investors are now pushing Unilever to do more. On February 22nd, with commendable speed, the company announced a wide-ranging review of its business. It said it wants to find ways to “accelerate delivery of value”. In the meantime, 3G seems certain to be looking around for its next prey. + +This article appeared in the Business section of the print edition under the headline “Barbarians at the plate” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717423-investors-who-own-kraft-heinz-are-upending-food-industry-3g-missed-unilever-its/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Peak indieIt is easier than ever to fund an indie film, but harder than ever to get people to see it + + +The median box-office return for low-budget films in America is a measly 45 cents on the dollar + + + + + +From the print edition | Business + + +Feb 25th 2017 | NEW YORK + + + + + +IT MIGHT seem a great time for indie cinema. The Academy Awards on February 26th will be something of a showcase for films not financed by a major studio. “Manchester by the Sea”, a contender for six Oscars, including best picture, was a darling of the Sundance Film Festival last year. Kenneth Lonergan’s masterpiece (one scene is pictured) about family and loss has earned $46m in cinemas in America and Canada, a spectacular return on its production costs of $8.5m. Amazon, which bought distribution rights, will benefit. + +Movie buffs can find all manner of films online that are made more cheaply still. “The Break-In”, a horror film shot by Justin Doescher on his girlfriend’s iPhone for less than $20, has earned him more than $20,000, with more than half a million people having watched at least part of it on Amazon’s streaming-video platform. + + + + + +For every success story there are thousands of indie films that go unwatched. The digital age has made it easier than ever to make a film, but also harder than ever to break through the clutter of entertainment options to an audience. Chris Moore, a producer of “Manchester by the Sea”, compares the output of indie films now to trees falling in the forest. “Nobody is making a dollar off this business”, he says. + +Mr Moore may be dramatising but only a little. Indie films have always been a risky bet for investors. Since 2002 the median return on investment at the box office for films released in North America with budgets of less than $10m has been 45 cents on the dollar, which is under half the median return of films with a budget of more than $100m, according to an analysis of data collected by The Numbers, a film-industry website. There are also more flops than ever before. In 2016 almost two-thirds of the 675 films that reported box office results earned less than $1m. In 2002 only half of the total released failed to reach that figure. + +One problem is that fewer people are going to cinemas. Howard Cohen of Roadside Attractions, which distributed “Manchester by the Sea”, worries about the young, smartphone-addicted generation that has grown up without the cinema-going habit. When they do flock to the cinema it is for blockbusters. + +Another problem is that the DVD market has crashed. Sales and rentals of films in all physical formats in America plummeted from $25bn in 2005 to $12bn last year, according to The Numbers. Such ancillary income has in the past made a big difference in getting an indie film to break even. Consumers are using Netflix and sites like it instead, where they dispensed a total of $6.2bn in America last year. + +Netflix and Amazon have injected cash into some of the best indie films, but their effect for lesser titles is likely to be mixed. Amazon allows filmmakers to upload titles directly to its platform to be discovered, as “The Break-In” was. But most minor films disappear online, since a viewer can scroll through only so many options. Even the streaming sites themselves, says Anne Thompson of IndieWire, a website, admit that “a cold start on one of their platforms can be very cold indeed”. + +This article appeared in the Business section of the print edition under the headline “Indie blues” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717422-median-box-office-return-low-budget-films-america-measly-45-cents/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +State of playToymakers bounce back in the land of adult nappies + + +They have become pioneers in how to adapt to a rapidly ageing society + + + + + +From the print edition | Business + + +Feb 23rd 2017 | TOKYO + + + + + +WILLIAM ELLIOT GRIFFIS, an American educator who travelled to Japan in the 1870s, noted that in the previous two and a half centuries, “the main business of this nation was play”. He described toyshops filled as full as Christmas stockings and plenty of grown-ups “indulging in amusements which the men of the West lay aside with their pinafores”. + +Griffis would have found it familiar walking today around Hakuhinkan Toy Park, one of the largest toy stores in Tokyo. Teens, office workers and grandparents are mostly to be seen perusing its 200,000-odd knick-knacks across five floors. Its director, Hiroyuki Itoh, says he wants the store to be a place where everyone can play. After work, suited salarymen come to spend ¥200 (under $2) for a five-minute whizz around a 36-metre slot-car racetrack. In another corner a gaggle of university students fiddle with displays of toys from the era of their childhoods. + + + + + +Playthings aimed at the over-20s make up 27% of Japan’s domestic toy sales, according to figures from Euromonitor, a market-research firm. That grown-up portion of the market has been crucial for Japan’s three biggest players, Bandai Namco, TakaraTomy and Sanrio, as the country’s birth rate has slumped. Since the 1970s the proportion of under-15s has halved, to 12% of the population. By 2060 it is likely to be 9%. + +Fumiaki Ibuki of Toy Journal, a 114-year-old trade magazine, says Japanese toy companies are pioneers in adapting to ageing. Despite a sluggish economy, the sector has, in the past two years, done its best in a decade: in the fiscal year ending in 2015, sales in core categories (excluding video games) rose by a tenth on the previous year, to over ¥800bn. Mr Ibuki says toymakers are taking a “borderless” approach: selling to a wider age range, and teaming up with trend-driven sectors like tech and fashion. + +When Bandai’s Tamagotchi, virtual pets housed in an egg-shaped toy, were booming in the mid-1990s, women in their 20s and 30s were big buyers. The same age-group snapped up Licca-chan, Japan’s answer to Barbie, made by TakaraTomy. The firm now has an adult range; its “Cappuccino One-Piece” doll, modelling a houndstooth dress, sells for ¥12,000. + +A stigma against adults having fun, strong in the aftermath of the second world war, has faded. Many want to recapture their youth, not so much by playing, but by collecting and displaying toys, says Harold Meij, the boss of TakaraTomy—so, for its premium Tomica model-car range, the company uses vintage designs that adults admired as boys. Having only one child later in life, as more Japanese now do, means that parents have more to spend on their offspring. Children are said to have “six pockets”: two from their parents, and four from their grandparents. Spending on toys per child has stayed steady. + +During the global financial crisis of 2008, cheap impulse-buy toys took off, such as trading cards and coin-operated machines that dispense capsules of small toys—usually of well-known characters from Japanese comic books and television series—known as gachapon (for the sound made when the dial is cranked and the surprise trinket falls into the receptacle). + +The big themes in the toy industry are collectability and intellectual property (IP). A recent hit was a watch branded “Yo-kai”, after the word in Japanese for supernatural spirits, by Bandai, which chatters when users slot plastic medals into its face. It exemplifies a popular strategy: Yo-kai, whose hero wears the watch, began as a cartoon series in 2013; was adapted for TV; and made into a hit video game. Bandai then won the merchandise rights. + +The model is known as “media mix” in the industry. Toymakers are now “more like IP trading companies”, says Junko Yamamura of Nomura, a securities firm in Tokyo. Bandai, which rearranged its internal divisions from product-type to character-IP groups a few years ago, manages about 200 of the latter, but only a handful are its own. It has partnered with Dentsu, an advertising giant, to promote anime. + +Such tie-ups are also a low-risk way of trying out new figures. Gudetama, an egg-yolk character that suffers from depression and is now a millennial anti-hero, was dreamed up through a collaboration between Sanrio (best known for its “Hello Kitty” franchise) and the Tokyo Broadcasting System. Gudetama first appeared on a short televised animation, filling the gap between two daytime programmes. These usually make no profit. But when the story of a character catches on, toy- and film-makers end up splitting fat profits. It all makes for a sizzling recipe. + +This article appeared in the Business section of the print edition under the headline “State of play” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717424-they-have-become-pioneers-how-adapt-rapidly-ageing-society-toymakers-bounce-back/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Room to growIndia’s hostels for the upwardly mobile + + +The road to Indian prosperity is paved with cheap and cheerful hostels + + + + + +From the print edition | Business + + +Feb 23rd 2017 | PUNE + + + + + +IF SEVERAL hundred million Indians do migrate from the countryside to cities between now and 2050, as the UN expects, it will be a fiendishly busy few decades for Vivek Aher, who runs a low-cost hostel, one of five, on the outskirts of Pune, a well-off city three hours’ drive from Mumbai. A fair few of the new arrivals will have their first experience of urban living bunking in one of the hostels’ 1,350 beds. Should recent experience be anything to go by, most of the new arrivals will test Mr Aher’s patience by tacking posters on his hostel’s walls, or endlessly complaining about the Wi-Fi. + +India has two main drags on economic growth. One is the difficulty of finding a job, especially in the places people live. The other is a chronic shortage of cheap housing. Aarusha Homes, Mr Aher’s employer, started in 2007 to help people seize economic opportunities far from home. Its rooms are basic and cheap. They include up to six beds, a bathroom for every three or four residents, some common areas and little else. Rent ranges between 3,500 and 10,000 rupees ($52-$149) a month including food. + + + + + +Most of Aarusha’s tenants are young, many of them taking first steps into the middle-class as IT or business-processing outsourcing professionals. Paying up to six months’ deposit for a city flat is beyond their means, as is the down payment for a motorbike that would allow them to live far from their employer. Aarusha’s successful pitch is that its hostels are safer than slums or informal “guest houses”, especially for women. It now has 4,300 beds in 1,300 rooms spread out over 20 hostels in four cities. The typical tenant stays for six months. Satyanarayana Vejella, the firm’s co-founder, plans to raise another $10m to increase capacity by 12,000 beds in nearly 70 new hostels, all in the next two years. Operating-profit margins are in the mid-teens. + +The chain’s backers include investment funds who seek social as well as financial returns. The latter would be improved if the chain dodged taxes by operating in the informal economy, like much of its competition, but it sticks to the formal side. The problems it faces are those confronted by any Hilton or Hyatt: finding properties big enough to offer over 100 beds is hard. Tenants have to be chased for payments. An attempt to cater to blue-collar workers at an even lower price didn’t work out. So Aarusha is reliant on the IT and outsourcing sectors, which are hiring less eagerly than before. + +Aarusha can probably depend on continuing strong demand for a room from which to make sense of it all before people can get their own places. The hostels have something of a communal feel, and parents find them reassuring because residents put up with not being able to drink, smoke, or mingle with the opposite sex. Soon enough, they will have moved on, taking their aspirations and their posters with them. + +This article appeared in the Business section of the print edition under the headline “Room to grow” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717429-road-indian-prosperity-paved-cheap-and-cheerful-hostels-indias-hostels/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Less misérableThe rise of “deep-tech” is boosting Paris’s startup scene + + +The capital now leads Europe for the number of venture-capital funding rounds + + + + + +From the print edition | Business + + +Feb 23rd 2017 | PARIS + + + + + +EUROPE will never create a hub of tech firms and investors to rival Silicon Valley, many experts on entrepreneurship concur. Its markets are still fragmented along national lines, flows of capital into the region are limited and because of lingering, conservative attitudes to risk, few startups grow to rival American champions. “Europe is toxic”, argues Oussama Ammar, an outspoken founder of an incubator in Paris. “Life that should happen, does not happen”, he says. + +But some digital life does flourish, spread among cities rather than fixing in one spot. Fintech firms cluster in London. Gamers and music-sharing sites do well in the Nordic countries. Berlin has a crop of companies that go beyond the kind of me-too consumer sites incubated by Rocket Internet, a notorious startup factory: new companies with expertise in the “internet of things”, for example. Milan, with strong medical universities, has flourishing biotech startups. + + + + + +The most striking case of fresh growth is in Paris. Mention of France has long elicited sighs from venture capitalists. Its rigid labour laws and hefty taxes on wealth and on stock options have meant that Silicon Valley has more than its fair share of entrepreneurial French immigrants. Efforts by the government to help startups with tax relief for research have mostly taught founders to complete forms rather than win clients, say observers. Genuine local successes—such as BlaBlaCar, a ride-sharing service, or Criteo, which serves targeted ads online—looked like exceptions, not evidence of wider success. + +Yet recently, Nicolas Brusson, a co-founder of BlaBlaCar, says he has witnessed an upsurge in entrepreneurial ambition in France. A venture-capital investor says there has been a “huge shift in mindset” among founders of firms: they are now expert not only as inventors but as designers of business plans. Henning Piezunka at INSEAD, a business school near the capital, says that a “new vibe” and a more global attitude are also evident in the widening use of English. + + + +Venture capital is beginning to gush. Last year France saw 590 rounds of capital raising, more than any country in Europe, according to Dealroom, which watches tech-industry trends. Although slightly more capital went to startups in Britain (€3.2bn) than in France (€2.7bn), the rate of increase in France was dramatic (see chart). + +One reason for the French gains is that earlier investments in infrastructure for startups are starting to pay off. Established business figures, such as Mr Ammar and Xavier Niel, who started Iliad, France’s fourth-largest mobile operator, which owns the brand Free, have set up training facilities and incubator firms that are now producing entrepreneurs. Four years ago Mr Niel (pictured) co-founded 42, a computer-programming school with a capacity of 2,500 students that charges no tuition fees. It trains programmers even from unexpected corners such as the capital’s troubled housing projects, and has opened a sister campus in Fremont, California, near Silicon Valley, encouraging ties. + +Mr Niel’s next step, in April, will be to open what he says will be the world’s largest incubator, called Station F, in central Paris. It will have over 3,000 workstations. Last month Facebook’s Sheryl Sandberg said her firm will take spaces in Station F, lauding French talent. She said the country now has “some of the most innovative technology companies in the world”. + +The main factor behind all the new activity is a change in graduates’ aspirations. A member of the board of one engineering school near the capital says that there is clearly new entrepreneurial ambition among students, especially those who do an internship with a startup abroad. He estimates that a fifth of graduates from his school now try launching their own firms, a big increase on five years ago. + +Graduates are particularly keen on startups in the so-called “deep tech” sector—involving, among other things, artificial intelligence (AI), machine learning and big data. Philippe Botteri of Accel, a venture-capital fund, who oversees investments in Europe, says 80% of his firm’s activity these days is in deep tech, an area in which Europeans, often in possession of specialised and further degrees in engineering and maths, have advantages. France has emerged fastest in the last few years as a top destination for capital, he says, largely because its graduates have particular strength in these fields. + +Julien Lemoine, for example, co-founded Algolia, a startup with funds from Accel that provides customised search services using AI. From an office with glass walls in central Paris (and from a sister office that opened in San Francisco in 2015) his firm serves 2,300 paying clients globally—two-thirds of revenues come from America. Algolia will employ 200 people by the end of the year, up from 60-plus now. His staff only speak English. From the start Algolia sought clients globally, while tapping a local pool of recruits. Those hired in France, notes Mr Lemoine, are far more loyal than job-hopping staff in Silicon Valley. + +It is a similar story at Shift Technology, a Paris-based firm founded by three maths graduates. It uses AI to detect fraudulent insurance claims on behalf of big insurers. Jeremy Jawish, one of the firm’s co-founders, says Paris is a suitable space to grow simply because it is “the next AI centre”. When he was in university, the dream was to be a banker in London but “now everyone is excited about AI startups”, he says. Cisco and Facebook have both set up AI operations in Paris to attract local talent, he notes. + +The old problems have not vanished, of course. Stiff labour laws still make firing permanent staff difficult, a particular headache for young, fragile firms. But here, too, change may be in the air. At least one candidate competing in the upcoming presidential election is well-disposed towards the technology sector. Emmanuel Macron championed digital growth when he was economy minister; this week in London he urged French expats to come home “to innovate”. France might have been slow to get started, but it is catching up fast. + +This article appeared in the Business section of the print edition under the headline “Less misérable” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717411-capital-now-leads-europe-number-venture-capital-funding-rounds-rise/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +SchumpeterAre technology firms madly overvalued? + + +Three financial sanity tests for whether there is a bubble + + + + + +From the print edition | Business + + +Feb 23rd 2017 + + + + + +IS THE technology industry in La La Land? There are alarming signs. House prices in San Francisco have risen by 66% more than in New York over the past five years. Even at the height of the dotcom bubble in 2001, the gap was lower, at 58%. Shares of technology firms trade on their highest ratio to sales since the turn of the century. Four of the world’s most valuable firms are tech companies: Apple, Alphabet, Microsoft and Amazon. Snap, a tiddler with $400m of sales and $700m of cash losses in 2016, is expected to list shares on March 1st that will give it a valuation of over $20bn. + +For companies and investors in any industry, it is hard to work out if you are living in a bubble. To help, Schumpeter has created three sanity tests for global tech firms. These examine their cashflow, whether investors differentiate between companies, and whether forecasts of their future earnings suffer from a fallacy of composition. The exercise suggests that tech valuations are frothy, but not bubbling. + + + + + +The first test is cashflow, and the industry passes it with flying colours. In 2001 about half of all listed tech firms were unable to convert their sales into hard dollars. Times have changed. In the past 12 months the biggest 150 technology companies generated a mighty $350bn of cashflow after capital expenditures—higher than the total cashflow over the same period of all the non-financial companies listed in Japan, for instance. + +In a bubble, investors bid up the value of assets regardless of their quality. The prices of good and bad tulips soared alike in 17th-century Holland, and in 2008 subprime debt was almost as valuable as Treasury bonds. So the second test is whether buyers are differentiating clearly between tech firms, of which there are three broad types. Some, such as Samsung and Apple, are mature and profitable. At other firms, including Alibaba, Tencent, Facebook and Alphabet, sales are growing at an annual rate of over 20%, with high margins. Then there are “blue-sky” firms that are unprofitable but have explosive sales growth. Uber and Snap are examples. + +One way to gauge whether investors are sensibly valuing each category differently is to calculate companies’ duration, or how much of their current market worth is expected to be realised soon and how much relies on pots of gold being found far into the future (see chart). Schumpeter has crunched the numbers for the world’s ten biggest tech firms and for three rising stars, splitting their market value into three parts: value which has already been realised in the form of net cash held, the present value of expected earnings in the next four years, and the value attributable to what happens after 2020. Samsung and Apple are not growing much but are low-risk: over 40% of their value can be explained by cash and near-term profits. The raciest firms, such as Tesla, are expected to generate over 90% of their value after 2020. These firms could well crash and burn. The good news is that investors are placing their most eye-watering valuations on a fringe of smallish companies that are growing very fast indeed. + +The third test is whether there is a fallacy of composition. In a bubble the bullish claims of individual companies aren’t plausible once you add them all up. In the dotcom era the market-share targets of internet-service providers added up to well over 100%. In the subprime crisis every bank claimed that it had offloaded its risks onto other banks. The technology industry is less vulnerable to criticism on this front. The aggregate profits of the top five tech firms are expected to rise from 6% of American corporate earnings last year, to 10% by 2025: bold, but not implausible. Managers are not anticipating the same profit stream twice. For example, Facebook is not expected to become a force in search, while Google is not expected to conquer social media. + +Although the lunatics have not taken over the asylum, there are, however, pockets of excess. Even though their valuations are now starting to deflate, there are still too many privately held technology firms with stretched valuations of $1bn-10bn. Worldwide, such companies have a total worth of $350bn. When it comes to facing up to failure, too, the industry’s record is bad. Twitter’s sales may shrink by 14% this quarter compared with a year earlier, and it is losing money. Past company failures in the tech business suggest that once decline sets in, it takes only two years or so for a firm to lose a quarter or more of its sales. Yet Twitter is sticking to its line that rapid growth will soon return. + +Truly amazing + +Another worry is Amazon. It is one of the most optimistically valued firms, with 92% of its current worth justified by profits after 2020. Outside investors have a lot at stake because it is huge, with a market value of $410bn. About a third of this value is justified by its profitable cloud-computing arm, AWS. But the rest of the firm, which straddles e-commerce, television and films, as well as logistics, barely makes money despite generating large sales. Nor is it growing particularly fast for its industry. To justify its valuation you need to believe that it becomes a sort of giant utility for e-commerce which by 2025 cranks out profits of around $55bn a year, or probably more than any other firm in America. + +The final worry is that technology firms are flouting the laws of corporate finance, which hold that there is a relationship between a company’s market value, its profits and the sums it has invested. New entrants should be attracted by the fact that companies are winning huge valuations from tiny investments, in turn dragging profits and valuations back down. As a group, the biggest ten technology firms have $8 of market value for every dollar they have sunk in net fixed physical and intangible assets. For Snap the figure is $36, and for Tencent it is $53. If new competitors do not, or cannot, emerge, then competition authorities are likely to intervene more than they do now. It sounds odd, but the main valuation risk for many of the world’s tech giants is that they rake in too much money. + +This article appeared in the Business section of the print edition under the headline “A trip to the shrink” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717421-three-financial-sanity-tests-whether-there-bubble-are-technology-firms-madly/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Finance and economics + + +Fintech in China: The age of the appacus [Fri, 24 Feb 08:14] + +Trade statistics: Lies, damned lies and… [Fri, 24 Feb 08:14] + +Securitisation in Europe: Limping along [Fri, 24 Feb 08:14] + +Fannie Mae and Freddie Mac: Still possessed [Fri, 24 Feb 08:14] + +Gender budgeting: The fiscal mystique [Fri, 24 Feb 08:14] + +Free exchange: I, taxpayer [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The age of the appacusIn fintech, China shows the way + + +Advanced technology, backward banks and soaring wealth make China a leader in fintech + + + + + +From the print edition | Finance and economics + + +Feb 25th 2017 | SHANGHAI + + + + + +CHINESE banks are not far removed from the age of the abacus. In the 1980s they used these ancient counting boards for much of their business. In the 1990s many bank employees had to pass a basic abacus test. Today the occasional click-clack, click-clack can still be heard in villages as tellers slide their abacus beads up and down the rack. + +But these days the abacus is mainly a symbol, more likely to be used in the branding of China’s online-finance companies than as a calculating tool. At least three internet lenders have paid homage to it in their names: Abacus Loans, Small Abacus and Modern Abacus. The prominence, so recently, of the abacus is testament to how backward Chinese banking was a short time ago. The rise of the online lenders shows how quickly change has come. + + + + + +By just about any measure of size, China is the world’s leader in fintech (short for “financial technology”, and referring here to internet-based banking and investment). It is far and away the biggest market for digital payments, accounting for nearly half of the global total. It is dominant in online lending, occupying three-quarters of the global market. A ranking of the world’s most innovative fintech firms gave Chinese companies four of the top five slots last year. The largest Chinese fintech company, Ant Financial, has been valued at about $60bn, on a par with UBS, Switzerland’s biggest bank. + +How did fintech get so big in China? The short answer is that it was the right thing at the right time in the right place. Even after Chinese banks tucked away their abacuses, they remained remarkably unsophisticated for a high-speed economy. People accumulated wealth but had few good outlets for investing. Entrepreneurs were full of ideas but struggled to get startup loans. Consumers were spending but needed wads of cash to do so. + +New technology offered a way to vault over these many contradictions. During the past decade China became the country with more internet users than any other—more than 700m. A potential revolution beckoned but plodding state-owned banks were slow to respond. The terrain was open for battalions of hungry companies. Some entrepreneurs had roots in e-commerce, others in online gaming, many were just first-timers. + +Today, the promise of fintech in China is great. It is shaking up a stodgy banking system and helping build a more efficient one, especially for consumers and small businesses. But limitations are also clear. Banks are fighting back. And regulators, tolerant so far, are wading in. For years China has looked to developed countries for ideas about how to manage its financial system. When it comes to fintech, the rest of the world will be studying China’s experience. + + + +The rise of fintech in China is most notable in three areas. The first, obvious in daily life, is mobile payments. China’s middle-class consumers, emerging as the internet took off, have always been inclined to shop online (see chart 1). This made them big, early adopters of digital payments. China also had a late-starter advantage. Developed economies long ago swapped cash for plastic (credit and debit cards). China was, until a decade ago, overwhelmingly cash-based. + +The shift to digital payments accelerated with the arrival of smartphones, bought by many Chinese who had never owned a personal computer. Today 95% of China’s internet users go online via mobile devices. Alipay, the payments arm of Alibaba, an e-commerce giant, soon became the mobile wallet of choice. But it quickly faced a challenge, when Tencent, a gaming-to-messaging company, launched a payment function in its wildly popular WeChat phone app, tapping its 500m-strong user base. Baidu, China’s main search engine, followed with its own wallet. + +Smartpurses + +Competition has sparked a stream of innovations, especially in the way mobile apps can connect online to face-to-face retail transactions. QR codes, the matrix-like bar codes that generally failed to catch on in the West, have become ubiquitous in Chinese restaurants and shops. Users simply open WeChat or Alipay, scan a QR code and make a payment. And phones themselves can serve as payment cards: with another click, users display their own bar codes, which shopkeepers then scan. And it is as easy for people to send money to each other as it is to send a text message—a vast improvement over the bricks of cash that used to change hands. + +Many of the payment functions within WeChat or Alipay exist elsewhere in the world, but in disaggregated form: Stripe or PayPal for online shops processing payments; Apple Pay or Android Pay for those using their phones as wallets; Facebook Messenger or Venmo for friends transferring money. In China all these different functions have been combined onto single platforms. Adoption is widespread. For about 425m Chinese, or 65% of all mobile users, phones act as wallets, the world’s highest penetration rate, according to China’s ministry of industry and information technology. Mobile payments hit 38trn yuan ($5.5trn) last year, up from next to nothing five years earlier—and more than 50 times the size of the American market. + +Small is beautiful + +A second area where China has become the global leader is online lending. In most countries, banks overlook small borrowers. This problem is especially acute in China. State-owned banks dominate the financial system, with a preference for lending to state-owned companies. The absence of a mature system for assessing consumer credit-risk adds to banks’ reluctance to lend to individuals. Grey-market lenders such as pawn shops provide financing but at usurious interest rates. + +Fintech has started to fill this gap. E-commerce was again the launch-pad: online shopping platforms developed loan services, and are using their customers’ transactions and personal information to create credit scores. (How the government might eventually harvest data for social control is cause for concern, but for now lenders are merely trying to master the basics of credit ratings.) Shoppers on Alibaba and JD.com, China’s two biggest e-commerce portals, can conveniently borrow small amounts, typically less than 10,000 yuan. According to Ant Financial (Alibaba’s financial arm, spun out in 2014), 60% of borrowers in this category had never used a credit card. On their platforms, Ant and JD.com also lend to merchants, many of whom are the kinds of small businesses long ignored by banks. + + + +However, e-commerce lending is intrinsically cautious. Its targets are clients already well-known to the big shopping platforms. For the more radical side of China’s online lending, look instead at the explosion of peer-to-peer (P2P) credit. From just 214 P2P lenders in 2011, there were more than 3,000 by 2015 (see chart 2). Initially free from regulatory oversight, P2P soon morphed into China’s financial Wild West, brimming with frauds and dangerous funding models. More than a third of all P2P firms have already shut down. + +Yet P2P lenders still have a big role to play in China. Despite a string of headline-grabbing collapses, the industry has continued to grow. Outstanding P2P loans increased 28-fold from 30bn yuan at the start of 2014 to 850bn yuan today. The online lenders answer a basic need, like China’s grey-market lenders of old, but in modern garb and, thanks to all the competition, offering credit at lower interest rates. + +In other countries, P2P firms typically lend to clients online and obtain funding from institutional investors. The most successful lenders in China flip that approach on its head. Because of the lack of consumer credit ratings, they vet borrowers in person. Lufax, China’s biggest P2P firm, operates shops—more than 500 in 200 cities—for loan applicants. And for funding, Chinese P2P firms draw almost entirely on retail investors. More than 4m people invest on P2P platforms, up by a third over the past year. The platforms can then divide loans into small chunks, parcelling them out to investors to disperse risks. + +This points to the third area of China’s fintech prowess: investment. Until recently, Chinese savers faced two extreme options for managing their money: stash it in bank accounts, where interest rates were artificially low, but it was as safe as the Communist Party; or punt on the stockmarket, about as safe as playing baccarat in a casino in Macau. “In the middle there was nothing,” says Huang Hao, vice-president of Ant Financial. Fintech has opened that middle ground. + +In the West asset managers increasingly worry that they face a wave of disintermediation as investors migrate online. In China asset managers barely had a chance to serve as intermediaries in the first place; the market skipped into the digital stage. In large part this resulted from a generational divide that is the inverse of the global norm: the best-paid workers in China tend to be younger, the country’s first big generation of white-collar workers. They are much more likely to be willing to trust web-based platforms to manage their money. “In America people love technology, too, when they are 22. They just don’t have any money,” says Gregory Gibb, Lufax’s chief executive. + + + +The biggest breakthrough was the launch of an online fund by Alibaba in 2013. This fund, Yu’e Bao (or “leftover treasure”), was promoted as a way for people to earn interest on the cash in their e-commerce accounts. The appeal, though, turned out to be much broader. Invested through a money-market fund, Yu’e Bao offered returns in line with the interbank market, where interest rates float freely (see chart 3). This meant that savers could get rates that were more than three percentage points higher than those banks offered. And risk was minimal, because their cash was still ultimately in the hands of banks. Yu’e Bao attracted 185m customers within 18 months, giving it 600bn yuan of assets under management. + +As is so often the case in China, new entrants soon appeared. In 2014 Tencent launched Licaitong, an online fund platform linked to WeChat. Within a year, it had 100bn yuan under management. Lufax, meanwhile, outgrew its P2P roots to transform itself into a financial “supermarket”, offering personal loans, asset-backed securities, mutual funds, insurance and more. Robo-advisers (firms that use algorithms and surveys to let users build portfolios) also have China in their sights. + +Give me your pennies + +And it is not just about wealthy investors. In the West people generally need deep pockets before they can afford to buy into products such as money-market funds. In China all it takes is a smartphone and an initial buy-in of as little as 1 yuan. WeChat, with 800m active accounts, and Ant, with 400m, can afford to be generous. + +How to gauge the impact of fintech in China? Measured against the rest of the country’s colossal financial system, the various fintech pieces are puny. Apps and online lenders might have massive user bases, but they are mainly comprised of consumers and small businesses, not the hulking state-owned enterprises and government entities that form the backbone of the banking system. The outstanding balance of P2P credit is roughly 0.8% of total bank loans. Credit provided by the e-commerce firms adds up to even less. Earnings from mobile payments amount to barely 2% of bank revenues. + +Wei Hou, an analyst with Bernstein Research, reckons that the fintech firms will grab less than a twentieth of banks’ business by 2020. That is hardly to be sneezed at, since it comfortably equates to 1trn yuan in revenues. But it is not the kind of radical disruption that fintech’s more ardent evangelists often foretell. + +Nevertheless, just looking at the overall size of fintech is insufficient. In the market segments they have set their sights on, fintech firms have made a big mark. Digital payments account for nearly two-thirds of non-cash payments in China, far surpassing debit and credit cards. P2P loans make up about a fifth of all consumer credit. + +What’s more, fintech firms have provoked a competitive response. Take the customer experience at China’s biggest banks: it has improved markedly over the past few years. Once-cumbersome online-banking portals are much easier to use. + +Even more important, banks are also changing their business models. Prodded in part by the online investment funds, they have moved away from their plain-vanilla deposit-taking roots. Their focus has shifted to “wealth-management products” (WMPs), deposit-like investments which they sell to their clients, often via mobile apps. Returns are as high as anything on Alipay or Tencent. The banks’ apps are not as slick, but not far off, and they feel far safer, with their reassuringly physical thousands of branches. The outstanding value of WMPs has reached more than 26trn yuan, quadrupling in five years. WMPs have brought new risks into the financial system, in particular concerns over banks’ funding stability. But they have arguably done more to promote interest-rate liberalisation than any regulatory edict. + +And banks have come to appreciate their own strengths: branch networks; solid reputations; and risk controls. “You can’t say that banks or fintech firms are better positioned. Both need each other,” says Li Hongming, chairman of Huishang Bank, the main lender in Anhui, a big central province. Fintech upstarts have also learned that lesson. Look at Wheat Finance, one of the country’s earliest P2P lenders, established in 2009. Amy Huang, Wheat’s CEO, says her initial goal was to challenge banks on their home turf. But she soon realised that banks have insuperable advantages, with their stable, low-cost funding bases. Instead of battling them, Wheat is becoming their partner: 70% of its revenues come from selling digital services to banks. + +Regulatory attitudes are also shifting. China’s government initially gave fintech companies a free hand, a striking contrast to its heavy policing of traditional banks. The hunch was that fintech firms were small enough for any problems to be manageable, and might produce useful innovations. This wager paid off: the rise of mobile payments and online lending owe much to light regulation. + +But the era of benign neglect is over. In 2016, provoked in part by the P2P scandals, China introduced regulations to cover most fintech activities. Most of the rules are aimed at making fintech safer, not at curbing it. Firms can no longer pursue their most ambitious strategies. Individuals, for instance, can borrow no more than 200,000 yuan from any one P2P lender. + +Some of the regulations, though, also constrain what fintech firms can hope to achieve. The central bank is overseeing the creation of an online-payments clearance platform. It wants transparency: all digital payments will be visible to the central bank. But it could neutralise one of the main advantages of Ant and Tencent, forcing them to share transaction data with banks. It seemed, for a time, that China’s internet titans might go after banks’ crown jewels, when they obtained licences to run online banks. But the government has required that they act in partnership with existing banks for even the most basic functions such as deposits and withdrawals. + +Yet this is not the end of the road. Ant and Tencent still have hundreds of millions of users between them on apps that offer a wide range of financial services and products. They just need to persuade enough users to view them not simply as mobile wallets but as mobile brokers and lenders. As Lufax and JD.com hone their offerings, they, too, will grow more powerful. Regulations have placed speed bumps along their path. But the path is still there. + +The Chinese are coming + +China’s fintech champions are also trying to break into new territory abroad. WeChat’s mobile wallet is usable internationally, mostly in Asia for now. Ant has invested in mobile-finance companies in India, South Korea and Thailand. But replicating their successes in other markets will not be straightforward. Much of their repertoire was devised specifically to address deficiencies in China’s financial system. And anything that touches on core banking abroad will require local incorporation and adherence to local regulations—headwinds against global expansion. + + + +China’s bigger impact is likely to be indirect. Its fintech giants have shown what can be done. For emerging markets, the lesson is that with the right technology, it is possible to leapfrog to new forms of banking. For developed markets, China offers a vision of the grand consolidation—apps that combine payments, lending and investment—that the future should hold. + +And the biggest lesson of all: it is not upstarts versus incumbents but rather a question of how banks absorb the fintech innovations blossoming around them. China, an early adopter of the abacus, is, after a long period of dormancy, once again blazing a trail in finance. + +This article appeared in the Finance and economics section of the print edition under the headline “The age of the appacus” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717393-advanced-technology-backward-banks-and-soaring-wealth-make-china-leader/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Lies, damned lies and …The sanctity of trade statistics + + +Bilateral trade flow data are misleading. But a reported tweak will not help + + + + + +From the print edition | Finance and economics + + +Feb 23rd 2017 + + + + + +MIGHT Donald Trump’s promise to shake up America’s trade policy extend to its statistics? According to a report in the Wall Street Journal, discussions are afoot on changing the way trade figures are tallied. The Bureau of Economic Analysis, the country’s main statistical body, calls this “completely inaccurate”. But in trade as elsewhere, the new administration seems prone to using statistics as a drunk uses a lamppost—for support rather than illumination. + +The proposal reportedly involves stripping out some of America’s exports from the gross numbers. America sold $1.5trn of goods abroad in 2016, but of that $0.2trn were re-exports that left the country much as they had arrived. This type of trade has been growing, reflecting America’s role as a hub for North American trade. As a share of its combined exports to Mexico and Canada, re-exports rose from 12% to 20% between 2002 and 2016. Truckers and shippers benefit from this kind of trade. But critics see it as “padding”, obscuring gloomier trends in “made in America” exports. + + + + + +Stripping out re-exports makes no sense when thinking about the overall trade imbalance unless a corresponding adjustment is made to imports. Taking out re-exports would shrink America’s recorded exports to countries like Mexico and Canada. Without reducing the import number, it would also puff up America’s recorded trade deficit in goods with them, by $54bn for Mexico, and $46bn for Canada (more than triple the raw balance). + +So excluding re-exports from the total would provide Mr Trump with some more eye-popping figures with which to bash Mexico. A bid to tweak trade statistics need not be politically motivated, though. It could also reflect the (correct) realisation that standard measures of imports and exports do not always capture what is really being “made in America”. Statisticians do sometimes adjust for re-exports, which can mask underlying trends. For example, they routinely strip out from Hong Kong’s figures its re-exports (a staggering $498bn-worth in 2016, compared with domestic exports of $13bn) to avoid double-counting China’s exports in world-trade totals. + +Such adjustments are supposed to deal with the underlying gripe with re-exports: that they may not reflect a country’s value added. But tackling this properly involves a much deeper dig into the data. There is also foreign value added embedded in American exports, such as the Mexican parts in cars made in Michigan. The imports side is just as important. American imports from Mexico include both American value added and inputs from other countries. Accounting for all this is far more complicated than stripping out just one component. + +Luckily for Mr Trump, trade geeks are on the case. Robert Johnson, a trade expert at Dartmouth College, talks of a “quiet revolution” in economists’ thinking about trade. Aware that gross trade flows do not capture where value is being created and sent, the WTO and the Organisation for Economic Co-operation and Development, a rich-country think-tank, have painstakingly constructed the very data that Mr Trump’s administration would be interested in. The latest available figures, covering 2011, suggest that foreign value added makes up 15% of the content of America’s gross exports. Overall, this is offset by a corresponding adjustment to imports. America’s overall trade balance with the rest of the world is not affected by a switch to a value-added measure. + +Drilling down into bilateral trade relations, accounting for value added has big effects. But these data suggest that some might not be as large as often assumed. One commonly-cited factoid is that 40% of Mexican exports to America are embedded American content. New figures from the OECD put that figure at 14% (see chart). + +That is still high enough to create a lot of American losers were America to sever trade relations. And the effect on the reported trade imbalance between America and Mexico is dramatic. Overall, however, switching to the more sophisticated value-added measure of trade flows would not provide political ammunition as powerful as ditching re-exports. On a value-added measure, the bilateral-trade imbalance between America and Mexico in 2011 was 43% smaller than the gross trade flows would suggest. The trade deficit with Canada would have become 39% smaller. + +Focusing on value-added trade data is better than looking at the gross flows, but Mr Johnson questions whether the debate should focus on bilateral imbalances at all. When someone incurs a trade deficit with a bookshop and a trade surplus with his employer, neither matters in isolation—the overall balance is important. And for a country’s trade, that will be most determined by macroeconomic factors. Fiddling the figures might move the lamppost; it will still leave the future direction of trade in the dark. + +This article appeared in the Finance and economics section of the print edition under the headline “Lies, damned lies and…” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717431-bilateral-trade-flow-data-are-misleading-reported-tweak-will-not-help/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Limping alongEurope’s securitisation market remains stunted + + +Efforts to pep it up are looking increasingly lacklustre + + + + + +From the print edition | Finance and economics + + +Feb 23rd 2017 + + + + + +SECURITISATION, the bundling and repackaging of income streams as tradable securities, goes in and out of fashion. America is still dealing with the fallout from the disaster in one part of the market—sub-prime mortgages—in 2008-09 (see article). In Europe, the swings in popularity have been just as marked. During the crisis, European securitised assets were hit by only small losses but the market suffered from guilt by association. It has since enjoyed a limited renaissance. + +Leading the revival, oddly, are European regulators. They have sought not just to rehabilitate, but indeed actively to promote such “structured” finance. As early as 2013 the European Central Bank (ECB) was effusive not only about securitisation’s ability to spread risks, but also about its ability to channel funding to the economy, including small and medium-sized enterprises (SMEs). The ECB and the Bank of England even published a rare joint paper in 2014 making the case for a “better-functioning securitisation market in the EU”. + + + + + +This aim then became one of the main planks of the European Commission’s “capital-markets union” initiative—an attempt to shift Europe away from overreliance on banks. A legislative proposal put forward by the commission in the autumn of 2015 sought to smooth the way for securitisation by setting up common rules and establishing a special category of “simple, transparent, and standardised” securitisations with fewer regulatory requirements. This law is still in the throes of the EU legislative process, but is nearing the end. + +Yet despite their best efforts, the market in Europe remains stunted—just €227bn ($251bn) of total issuance in Europe in 2016. The amount actually available to investors is even smaller: only €88bn was “placed” with (ie, sold to) investors. This is a trend that has persisted for the past few years (see chart). Rather than bringing new assets to market, many banks, particularly in southern Europe, are securitising existing assets. Their sole purpose is to create collateral that allows them to obtain cheap funding from the ECB. Retention is particularly high in Spain and Italy, and for certain types of securitisations, such as those backed by SME loans, of which over 90% are retained Europe-wide. + +Securitising assets to sell bonds on to investors is not an attractive source of funds for most banks. The ECB is simply so much cheaper. At best, banks are using the technique to offload specific risks or types of assets, such as non-performing loans. Matthew Jones, head of European structured finance at S&P Global, a ratings agency, says that the majority of securities on the placed market come from non-bank lenders or private-equity-backed deals. + +The forthcoming European law intends to spur securitisation mainly by changing rules imposed after the crisis. Rules were tightened several times, notably through the imposition in 2011 of a risk-retention requirement that issuers must hold on to at least 5% of the value of a securitised transaction. The idea was to force issuers to have an incentive to monitor the creditworthiness of borrowers, rather than simply selling all sorts of dodgy loans. Capital requirements for banks and insurers were also progressively tightened, to make holding securitised assets much more costly. + +Yet even the new proposal, rather than encouraging securitisation, may have the opposite effect. The European Parliament has made a number of amendments to strengthen it, including one that would raise the risk-retention requirement to 10% or even 20%—which investors argue would stifle the market. Others would determine that only EU-based entities are eligible to invest in the securities, and impose various onerous disclosure requirements. + +If securitisation looks unappealing, investors do have murkier options. There has been an increase in the number of bilateral deals, including sales of (unsecuritised) loan portfolios. “Synthetic” securitisations, where derivatives are used to transfer risks, are also gaining in popularity. Securitisation has its shortcomings, points out Alexander Batchvarov of Bank of America Merrill Lynch, but the resulting bonds are at least tradable, visible and covered by ratings agencies. In bilateral deals, the risks involved are opaque and cannot easily be quantified, nor can the exposures be easily traded. Members of the European Parliament and others worry about transparency and are still squeamish about securitisation. Substitutes for it might be even more frightening. + +This article appeared in the Finance and economics section of the print edition under the headline “Limping along” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717426-efforts-pep-it-up-are-looking-increasingly-lacklustre-europes-securitisation/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Still possessedInvestors in America’s housing-finance giants lose in court + + +An appeals court backs the expropriation of shareholders in Fannie Mae and Freddie Mac + + + + + +From the print edition | Finance and economics + + +Feb 25th 2017 | NEW YORK + + + + + +ONE unresolved issue from the financial crisis is the future of Fannie Mae and Freddie Mac, the two firms that stand behind much of America’s housing market. Fannie and Freddie purchase mortgages, bundle them into securities and sell them on to investors with a guarantee. When America’s housing market collapsed a decade ago, the government had to bail them out. Its treatment of the firms since then has created a titanic legal struggle. Shareholders have cried foul. On February 21st, a federal appeals court upheld a ruling in the government’s favour. + +At issue is the Obama administration’s decision in 2012 to hoover up all of Fannie and Freddie’s profits. Until then, it had received a fixed dividend on its investment. The timing of the shift was striking—just before a surge in the firms’ profitability. Since 2008 the Treasury has sucked in about $250bn from the firms, 30% more than the cost of the bail-out. + + + + + +The change enraged hedge funds who had bought Fannie and Freddie’s shares and found themselves expropriated. The investors’ lawsuit held that the government overstepped its authority by seizing all profits. A federal court dismissed that claim in 2014; it has taken until now for an appeals court to uphold the most important parts of the decision. An odd aspect of the ruling is that it largely ignored the substantive arguments but concluded the court lacked the authority to curb the government’s actions. + +Its ruling sent shares in Fannie and Freddie tumbling (see chart). That reversed about half of the rally sparked by Donald Trump’s victory in the presidential election. Investors reckon that Mr Trump’s administration will be more favourable to Fannie and Freddie’s investors. Initially Steve Mnuchin, now treasury secretary, told a business-news network that Fannie and Freddie should be privatised again. But in his confirmation hearing before the Senate in January, he seemed to roll back those remarks. + +The firms are hardly robust. The Treasury is running down their capital by $600m a year. By 2018 they will have none left. From then on, should the firms make a loss, they will need to draw on an emergency line of credit from the government. Doing so would be characterised by some as a second bail-out. + +That worrying prospect should provide some impetus to the search for an alternative solution. But it will be hard to find an ownership structure for Fannie and Freddie that satisfies everyone. The firms keep mortgages cheap by lumping taxpayers with a staggering amount of risk. (If the housing market collapsed, the cost to the Treasury could be 2-4% of GDP, according to an analysis by The Economist). Few will want investors to make profits on the back of such a taxpayer guarantee. + +The court did allow the plaintiffs to litigate some contractual claims. And one of the three judges in this court dissented starkly from the ruling. The government, she noted, had “pole-vaulted” over its authority. The plaintiffs were “not all innocent or ill-informed investors”. But they had been betting the rule of law would prevail: “In this country, everyone is entitled to win that bet.” + +This article appeared in the Finance and economics section of the print edition under the headline “Still possessed” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717425-appeals-court-backs-expropriation-shareholders-fannie-mae-and-freddie/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +TAX is a feminist issueWhy national budgets need to take gender into account + + +Designing fiscal policies to support gender equality is good for growth + + + + + +From the print edition | Finance and economics + + +Feb 23rd 2017 + + + + + +LIKE many rich-country governments, Britain’s prides itself on pursuing policies that promote sexual equality. However, it fails to live up to its word, argues the Women’s Budget Group, a feminist think-tank that has been scrutinising Britain’s economic policy since 1989. A report in 2016 from the House of Commons Library, an impartial research service, suggests that in 2010-15 women bore the cost of 85% of savings to the Treasury worth £23bn ($29bn) from austerity measures, specifically cuts in welfare benefits and in direct taxes. Because women earn less, rely more on benefits, and are much more likely than men to be single parents, the cuts affected them disproportionately. + +The government does not set out to discriminate, says Diane Elson, the budget group’s former chair. Rather, it overlooks its own bias because it does not take the trouble to assess how policies affect women. Government budgets are supposed to be “gender-neutral”; in fact they are gender-ignorant. Ms Elson is one of the originators of a technique called “gender budgeting”—in which governments analyse fiscal policy in terms of its differing effects on men and women. Gender budgeting identifies policies that are unequal as well as opportunities to spend money on helping women and which have a high return. Britain has declined to adopt the technique, but countries from Sweden to South Korea have taken it up. + + + + + +Ms Elson and her colleagues argue that, once you break down public spending, the opportunities stand out. For instance, if the British government diverted investment worth 2% of GDP from construction to the care sector, it could create 1.5m jobs instead of 750,000. Many governments treat spending on physical infrastructure as an investment, but spending on social infrastructure, such as child care, as a cost. Yet such spending also increases productivity and growth—partly by increasing the number of women in the workforce. + +In poorer countries, the bias can be more explicit. When Uganda first looked at its budget through a gender lens, it discovered that little of the spending on agriculture was going to support women farmers, though they did most of the work. + +What may sound simply like feminism infiltrating fiscal policy is thus also about efficiency. Gender budgeting is good budgeting, argues Janet Stotsky, who led an IMF survey of such efforts around the world. You don’t have to be a feminist to accept that investing in girls’ education or in women’s labour-force participation will generate a high return on investment. + +Such a utilitarian approach appeals to finance ministries in a way that pious talk of “women’s empowerment” may not. Ministries can fail to grasp how their budgets affect women and girls. In developing countries, for instance, investment in clean water and electricity eases housework, freeing time for mothers to earn money and for girls to go to school. Cutting funding may save money in the short term, but when women spend their days fetching water, growth suffers. + +There are plenty of examples of the idea in action. In Rwanda spending aimed at keeping girls in school—such as providing basic sanitation—has led to higher enrolment. In India the use of gender budgeting in a state is a better indicator of girls’ school attendance than higher incomes. In South Korea a lack of child care has forced women to choose between work and family. Both female labour-force participation and fertility rates are low—a poor formula for growth in an ageing country. Gender budgeting helped the government design programmes to reduce the burden of care on women. Around the world, safer transport systems can ease the vast, often unseen, burden of violence against women and girls—in medical costs, and lost productivity and labour, as they are prevented from working or learning. + +Gender budgeting has won the backing of international financial institutions. Ms Elson once took the IMF and the World Bank to task for their bias, arguing that austerity forced on countries seeking funds in the 1980s imposed heavy burdens on women. Now the World Bank backs gender budgeting. The IMF used not to see promoting sexual equality as its job, but Christine Lagarde, its managing director, now wants gender-budgeting to play a role in the advice it gives to member countries. + +Not everything has gone well for gender budgeting, however. Some initiatives have proved half-hearted, short-lived or prey to party politics. Egypt introduced the concept in 2009, encouraged by international donors; when the donors left, it petered out. Australia was the first country to have gender budgeting. But today’s conservative government saw it as left-leaning and anti-austerity and dropped it in 2014, the year after it took office. + +Going by the numbers + +Other countries have issued sexual-equality statements and begun tracking data, but have not changed budget allocations. Much of their reluctance can be put down to bureaucratic inertia—and the sheer difficulty of the process of tracking who gets what. Fiscal policy is based on the market economy, which generates cash, and ignores women’s unpaid labour, and the extent to which it limits their work in the market economy. Rather than rethink the system, governments rely on equal-opportunity laws to cut inequality—though the evidence is that they do not. + +Professing loyalty to an idea is easier than acting on its implications. “Everyone is keen to take on gender equality if it only means marginal changes,” says Ms Elson. “Root-and-branch changes to thinking about how the fiscal system supports gender equality are much more difficult.” + +This article appeared in the Finance and economics section of the print edition under the headline “The fiscal mystique” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717404-designing-fiscal-policies-support-gender-equality-good-growth-why/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Free exchangeWhy taxing robots is not a good idea + + +Bill Gates’s proposal is revealing about the challenge automation poses + + + + + +From the print edition | Finance and economics + + +Feb 25th 2017 + + + + + +BILL GATES is an unlikely Luddite, however much Microsoft may have provoked people to take a hammer to their computers. Yet in a recent interview with Quartz, an online publication, he expressed scepticism about society’s ability to manage rapid automation. To forestall a social crisis, he mused, governments should consider a tax on robots; if automation slows as a result, so much the better. It is an intriguing if impracticable idea, which reveals a lot about the challenge of automation. + +In some distant future robots with their own consciousnesses, nest-eggs and accountants might pay income taxes like the rest of us (presumably with as much enthusiasm). That is not what Mr Gates has in mind. He argues that today’s robots should be taxed—either their installation, or the profits firms enjoy by saving on the costs of the human labour displaced. The money generated could be used to retrain workers, and perhaps to finance an expansion of health care and education, which provide lots of hard-to-automate jobs in teaching or caring for the old and sick. + + + + + +A robot is a capital investment, like a blast furnace or a computer. Economists typically advise against taxing such things, which allow an economy to produce more. Taxation that deters investment is thought to make people poorer without raising much money. But Mr Gates seems to suggest that investment in robots is a little like investing in a coal-fired generator: it boosts economic output but also imposes a social cost, what economists call a negative externality. Perhaps rapid automation threatens to dislodge workers from old jobs faster than new sectors can absorb them. That could lead to socially costly long-term unemployment, and potentially to support for destructive government policy. A tax on robots that reduced those costs might well be worth implementing, just as a tax on harmful blast-furnace emissions can discourage pollution and leave society better off. + +Reality, however, is more complex. Investments in robots can make human workers more productive rather than expendable; taxing them could leave the employees affected worse off. Particular workers may suffer by being displaced by robots, but workers as a whole might be better off because prices fall. Slowing the deployment of robots in health care and herding humans into such jobs might look like a useful way to maintain social stability. But if it means that health-care costs grow rapidly, gobbling up the gains in workers’ incomes, then the victory is Pyrrhic. + +The thorniest problem for Mr Gates’s proposal, however, is that, for the moment at least, automation is occurring not too rapidly but too slowly. The displacement of workers by machines ought to register as an increase in the rate of productivity growth—and a faster-growing economy. But since a burst of rapid productivity growth in the late 1990s and early 2000s, America’s economy has persistently disappointed on these measures. Mr Gates worries, understandably, about a looming era of automation in which machines take over driving or managing warehouses. Yet in an economy already awash with abundant, cheap labour, it may be that firms face too little pressure to invest in labour-saving technologies. Why refit a warehouse when people queue up to do the work at the minimum wage? Mr Gates’s proposal, by increasing the expense of robots relative to human labour, might further delay an already overdue productivity boom. + +When faster automation does arrive, robots might not be the right tax target. Automation can be understood as the replacement of labour with capital. To save humans from penury, the reasoning goes, a share of the economy’s capital income needs to be diverted to displaced workers. Expanding capital ownership is one strategy; people could own driverless vehicles that operate as taxis, for instance, and rely on the flow of fares for part of their income. Taxing robots and redistributing the proceeds is another. + +But as machines displace humans in production, their incomes will face the same pressures that afflict humans. The share of total income paid in wages—the “labour share”—has been falling for decades. Labour abundance is partly to blame; the owners of factors of production in shorter supply—such as land in Silicon Valley or protected intellectual property—are in a better position to bargain. But machines are no less abundant than people. Factories can churn out even complex contraptions; the cost of producing the second or millionth copy of a piece of software is roughly zero. Every lorry driver needs individual instruction; a capable autonomous-driving system can be duplicated endlessly. Abundant machines will prove no more capable of grabbing a fair share of the gains from growth than abundant humans have. + +A new working paper by Simcha Barkai, of the University of Chicago, concludes that, although the share of income flowing to workers has declined in recent decades, the share flowing to capital (ie, including robots) has shrunk faster. What has grown is the markup firms can charge over their production costs, ie, their profits. Similarly, an NBER working paper published in January argues that the decline in the labour share is linked to the rise of “superstar firms”. A growing number of markets are “winner takes most”, in which the dominant firm earns hefty profits. + +DOS Kapital + +Large and growing profits are an indicator of market power. That power might stem from network effects (the value, in a networked world, of being on the same platform as everyone else), the superior productive cultures of leading firms, government protection, or something else. Waves of automation might necessitate sharing the wealth of superstar firms: through distributed share-ownership when they are public, or by taxing their profits when they are not. Robots are a convenient villain, but Mr Gates might reconsider his target; when firms enjoy unassailable market positions, workers and machines alike lose out. + +Visit our Free exchange economics blog + +This article appeared in the Finance and economics section of the print edition under the headline “I, taxpayer” + + + + + +View comments + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717374-bill-gatess-proposal-revealing-about-challenge-automation-poses-why-taxing/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Science and technology + + +The American Association for the Advancement of Science: Tales of wonder [Fri, 24 Feb 08:14] + +Asthma: Four good bugs [Fri, 24 Feb 08:14] + +Oceanography: Fruits de mer [Fri, 24 Feb 08:14] + +Epidemiology: Snap! [Fri, 24 Feb 08:14] + +Peopling the Americas: Checkpoint [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The American Association for the Advancement of ScienceHow to predict and prepare for space weather + + +Tales of wonder + + + + + +From the print edition | Science and technology + + +Feb 25th 2017 | Boston + + + + + +SOMETIMES the sun burps. It flings off mighty arcs of hot plasma known as coronal mass ejections (CMEs). If one of these hits Earth it plays havoc with the planet’s magnetic field. Such storms are among the most spectacular examples of what astronomers call space weather, a subject to which a session at this year’s meeting of the American Association for the Advancement of Science (AAAS), in Boston, was devoted. A big CME can have profound effects. In 1859, for instance, a CME subsequently dubbed the Carrington event, after a British astronomer who realised its connection with a powerful solar flare he had observed a few days earlier, generated auroras that could be seen in the tropics. Normally, as the names “northern” and “southern” lights suggest, such auroras (pictured above) are visible only from high latitude. More significant, the Carrington event played havoc with Earth’s new telecommunications system, the electric telegraph. Lines and networks failed, and some operators received severe shocks. + +Today, the damage would be worse. A study published in 2013 by Lloyd’s, a London insurance market, estimated that a Carrington-like event now would cause damage costing between $600bn and $2.6trn in America alone. A year before this report came out the sun had indeed thrown off such an ejection—though not in the direction of Earth. A much smaller storm did, however, do serious damage in 1989, by inducing powerful currents in Quebec’s grid, blacking out millions of people. It would therefore be useful, Jonathan Pellish of the Goddard Space Flight Centre, a NASA laboratory, told the meeting, to be able to forecast space weather in much the same way as weather is forecast on Earth. This would permit the most vulnerable equipment to be disconnected, in advance of a CME’s arrival, to prevent damaging power surges. + + + + + +Sturm und drang + +It sounds straightforward enough, but is harder than it sounds. Though CMEs are common, they cause problems on Earth only if they score a direct hit. The so-called “empty” interplanetary space of the solar system is, in fact, suffused by a thin soup of charged particles. These particles interact with moving CMEs in ways that are hard to predict. That makes forecasting a storm’s track difficult. On top of this, CMEs themselves have magnetic fields, with north and south poles, just as Earth does. The way the poles of a CME line up with those of Earth can affect the intensity of the resulting electrical activity. + +To try to understand all this better a number of satellites already monitor the sun, looking for, among other things, CMEs. These include a fleet of American environment-modelling craft and also the Solar and Heliospheric Observatory, which is a joint European-American venture launched in 1995. Several new sun-watching instruments are planned for the next couple of years. One is the European Space Agency’s Solar Orbiter. Another is NASA’s Solar Probe Plus. A third is a special telescope, called DKIST, to be built in Hawaii. The eventual goal, said Dr Pellish, is to make space-weather forecasts as easy and routine as terrestrial ones. + +Preparing for the extraterrestrial equivalent of hurricanes in this way is surely wise. But space drizzle can cause problems too. Even when the sun is quiet, Earth is bombarded by a steady stream of high-energy subatomic particles. Some come from the sun, which is always shedding matter in small quantities even when it is not throwing off CMEs. Others are cosmic rays, which originate from outside the solar system. Both types, when they smash through the atmosphere, create showers of secondary particles in their wake. And, as Bharat Bhuva, an engineer at Vanderbilt University in Tennessee, described to the meeting, this shrapnel can cause problems with the electronic devices on which people increasingly depend. + +If such a particle hits a computer chip, it can inject an electrical charge into the circuit. Since chips work their magic by manipulating packets of charge, that can create all sorts of problems. Dr Bhuva described how, in 2008, the autopilot of a Qantas airliner had been knocked out by a rogue particle. The resulting sudden plunge of about 200 metres injured many of the passengers, a dozen seriously. + +Subtler effects can be just as worrying. During a local election in Belgium in 2003, a single scrambled bit of information, almost certainly caused by an errant particle, added 4,096 votes to one candidate’s tally. Since this gave an impossibly high total, the mistake was easily spotted. But had the particle hit a different part of the circuit it might have added a smaller number of votes—enough to change the outcome without anyone noticing. Moreover, as the components from which computer chips are built continue to shrink, they become more sensitive, making the problem worse. A modern computer might expect somewhere between a hundred and a thousand space-drizzle-induced errors per billion transistors per billion hours of operation. That sounds low. But modern chips have tens of billions of transistors, and modern data centres have millions of chips—so the numbers quickly add up. + +The trick is to design circuits to cope. That is where Christopher Frost, who works at the Rutherford Appleton Laboratory, near Oxford, thinks he can help. He and his team have modified some particle accelerators in a way that offers designers of electronic equipment the ability to test their products—and, crucially, to test them quickly. Dr Frost’s particle beams are millions of times more intense than the radiation experienced by real-world devices. They deliver in minutes a dose that would take years to arrive naturally. + +This sort of pre-emptive action makes sense. The threats from space drizzle (constant, though low-level) and from CMEs (rare, but potentially catastrophic) are real. Hardening equipment against drizzle, and developing forecasts that tell you when to disconnect it to avoid CME-induced power surges, are merely sensible precautions. + +This article appeared in the Science and technology section of the print edition under the headline “Tales of wonder” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21717348-tales-wonder-how-predict-and-prepare-space-weather/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +AsthmaCertain bacteria protect against a disease that is a growing threat + + +Four good bugs + + + + + +From the print edition | Science and technology + + +Feb 23rd 2017 | BOSTON + + + + + +CAN you be too clean? That is the question posed by the hygiene hypothesis, which seeks to explain why, as many illnesses have become rarer in rich countries, some have become more common. The hygiene hypothesis posits that the rise of several of these diseases, including asthma, eczema and type-1 diabetes (all of which seem associated with malfunctions of the immune system), has been caused by improvements in hygiene of the sort that have helped get rid of other illnesses. Exactly how that might happen is unclear. But at the AAAS meeting Brett Finlay of the University of British Columbia, in Vancouver, persuasively filled in some of the blanks in the case of asthma. + +Asthma is caused by chronic inflammation of the airways, and inflammation is an immune response. The thinking behind the hygiene hypothesis is that a lack of exposure to parasites and pathogens in what has become an unnaturally clean environment means a child’s immune system does not develop appropriately. Evidence that asthma is a consequence of overcleanliness includes the facts that farm-raised children are less prone to it than city-raised ones (farms are full of bacteria and other critters that provoke immune responses), that those born by Caesarean section are more prone than others (they do not receive an initial bacterial inoculation from maternal faeces and vaginal fluids), and that those treated with antibiotics as babies are also more prone. Dr Finlay therefore wondered if he could find bacteria which might be involved in asthma protection in the guts of children. + + + + + +To this end he got in touch with the organisers of the Canadian Healthy Infant Longitudinal Development (CHILD) study, which looks at the development of children from birth to the age of five. He asked if the study’s organisers could include the regular collection of faeces as part of their protocol and he thus obtained stool samples taken at the ages of three months, 12 months and annually thereafter, the bacterial contents of which he analysed. + +Asthma does not normally manifest itself before a child is five, but a tendency to wheeze and a reaction to a particular skin-prick test are good indicators that the child in question will eventually become asthmatic. Recording both of these are routine parts of CHILD. Dr Finlay was therefore able to correlate the composition of an infant’s gut flora with the presence or absence of these indicators. When he did so he found that children deficient, at the age of three months, in four relatively rare bacteria, Faecalibacterium, Lachnospira, Rothia and Veillonella, were 20 times more likely than those playing host to these species to manifest the two predictive indicators. + +Armed with these results he joined forces with Philip Cooper, a researcher at St George’s Hospital in London, to try the same thing in Ecuador. This is a country which has a similar prevalence (20%) of asthma to that in Canada. The researchers found that in Ecuador, too, infantile gut bacteria predict susceptibility to asthma—except that in this case a completely different set of bugs are responsible. + +Bug hunt + +How the presence in three-month-olds of particular microorganisms protects against asthma remains unknown. But the fact that two different sets of them can do so provides a way to investigate further. It is all a question of finding out what the various bugs have in common. + +These discoveries, moreover, offer the possibility of treatment. If a newborn is found to be deficient in the relevant bacteria, an inoculation of them into that child’s gut, perhaps in the form of an oral probiotic, might put matters right. Testing this idea would, naturally, require clinical trials, but it is a promising line of inquiry. Meanwhile, Dr Finlay’s advice to parents of young children is that, though cleanliness may be next to godliness, it is possible to go too far. + +This article appeared in the Science and technology section of the print edition under the headline “Four good bugs” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21717349-four-good-bugs-certain-bacteria-protect-against-disease-growing-threat/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +OceanographyPlucking minerals from the seabed is back on the agenda + + +Fruits de mer + + + + + +From the print edition | Science and technology + + +Feb 23rd 2017 | Boston + + + + + +IN THE 1960s and 1970s, amid worries about dwindling natural resources, several big companies looked into the idea of mining the ocean floor. They proved the principle by collecting hundreds of tonnes of manganese nodules—potato-sized mineral agglomerations that litter vast tracts of Davy Jones’s locker. At first sight, these nodules are attractive targets for mining because, besides manganese, they are rich in cobalt, copper and nickel. As a commercial proposition, though, the idea never caught on. Working underwater proved too expensive and prospectors discovered new mines on dry land. Worries about shortages went away, and ocean mining returned whence it had come, to the pages of science-fiction novels. + +Now it is back. As Mark Hannington of the GEOMAR-Helmholtz Centre for Ocean Research, in Germany, explained to the AAAS, prototype mining machines are already being tested, exploration rights divvied up between interested parties, and the legal framework put in place. Next week the International Seabed Authority, which looks after those parts of the ocean floor beyond coastal countries’ 200 nautical-mile exclusive economic zones, is issuing guidelines for the exploitation of submarine minerals. In Dr Hannington’s view, a gold rush is starting. And he was speaking only partly metaphorically. + + + + + +One of the most advanced projects is that of Nautilus Minerals, a Canadian firm. In January 2016 Nautilus took delivery of three giant mining machines (two rock-cutters and an ore-collector) that move around the seabed on tracks, like tanks. It plans to start testing these this year. If all goes well the machines could then start operating commercially in Nautilus’s concession off the coast of Papua New Guinea, which prospecting shows contains ore with a copper concentration of 7%. (The average for terrestrially mined ore is 0.6%.) This ore also contains other valuable metals, including gold. + +This approach (which is also that taken by firms such as Neptune Minerals, of Florida, and a Japanese consortium led by Mitsubishi Heavy Industries) is different from earlier efforts. It involves mining not manganese nodules, but rather a type of geological formation unknown at the time people were looking into those nodules—submarine hydrothermal vents. These rocky towers, the first of which was discovered in 1977, form in places where jets of superheated, mineral-rich water shoot out from beneath the sea floor. They are found near undersea volcanoes and along the ocean ridges that mark the boundaries between Earth’s tectonic plates. They generally lie in shallower waters than manganese nodules, and often contain more valuable substances, gold among them. + +They are not, though, as abundant as manganese nodules, so if and when the technology for underwater mining is proved, it is to nodules that people are likely to turn eventually. These really are there in enormous numbers. According to Dr Hannington, the Clarion-Clipperton fracture zone, a nodule field that stretches from the west coast of Mexico almost to Hawaii, contains by itself enough nickel and copper to meet global demand for several decades, and enough cobalt to last a century. + +Mining, whether on land or underwater, does come at an environmental cost, though. This was the subject of a presentation by Stace Beaulieu of the Woods Hole Oceanographic Institution, in Massachusetts. The nature of that cost depends on the ecosystem. The deep-sea plains which host nodule fields tend not to be home to big animals, said Dr Beaulieu, but the sediments the nodules are found in play host to microscopic critters that would be most upset by the process of trawling that is needed to bring the nodules to the surface. They might take decades to recover from it. + +Hydrothermal vents are an even more peculiar environment than nodule fields. Unlike almost every other ecosystem, they are based not on energy from the sun, but on chemicals—particularly hydrogen sulphide—dissolved in the ejected water that are used by specialised bacteria to power their metabolisms. This, and their isolation from one another in the manner of small oceanic islands, means vents are host to many distinct and rare species. Conservationists therefore care about them a lot. + +That said, as Dr Beaulieu pointed out, vent life may be more robust than many people assume. One of the hazards of dwelling near an undersea volcano is that an eruption can destroy your home in an instant. The creatures that live around vents seem able to bounce back from such catastrophes fairly quickly, so a visit from a mining machine might not be such a disaster after all. + +This article appeared in the Science and technology section of the print edition under the headline “Fruits de mer” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21717351-fruits-de-mer-plucking-minerals-seabed-back-agenda/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +EpidemiologyHow to use mosquitoes to combat disease + + +Snap! + + + + + +From the print edition | Science and technology + + +Feb 23rd 2017 | Boston + + + + + +IMAGINE a small drone that could fly around sampling animals and people in an effort to see which pathogens are present in an area, and what host species harbour them. That would be invaluable to epidemiologists seeking to understand how diseases spread, and how to predict and pre-empt their outbreaks. At the moment, such a drone is beyond human technology. But this may not matter, because nature has already come up with one. It is called the mosquito. + +Mosquitoes (female mosquitoes, at any rate) draw blood from animals to feed on. While doing so, they also ingest any blood-born pathogens present in those animals. What a splendid idea, thought Ethan Jackson and Jonathan Carlson, of Microsoft Research in Seattle, to design a system that captures mosquitoes so that the pathogens they have ingested can be studied. Thus, as Dr Jackson explained to the AAAS meeting, was Project Premonition born. + + + + + +The core of the project is a portable mosquito trap. The current version of this is a cylinder about 35cm high, with 64 cells the size of matchboxes arranged around its exterior. Each of these cells has a door that springs shut in a tenth of a second in response to the breaking of an infrared beam that is shining invisibly inside it. The spring is made from a shape-memory alloy—a material that, when bent into a new configuration, remains in this new shape until an electric current is run through it. Then it suddenly reverts to the old shape. Mosquitoes are lured to the cells by puffs of carbon dioxide (which mimic an animal’s exhalations), or skin odours or ultraviolet light. If they enter a cell, they break the beam and spring the trap. + +One crucial piece of design is that the traps can be tuned to catch mosquitoes of a single, target species. Different species carry different pathogens, so a study of certain diseases may well want to trap a particular sort of mosquito. Each mosquito species has a characteristic wing-beat frequency and the beam-detector inside a cell is sensitive enough to distinguish between these. It closes only when a member of the desired species flies inside. + +Once a trap has done its job, it is picked up and taken to a laboratory where the collected insects are extracted, mashed up and analysed metagenomically. Metagenomics is a technique whereby the DNA in a sample containing material from several species is extracted and sequenced without first being sorted in any way. All species present thus contribute to the results, which are then matched against a database of known sequences, to see what is there. In this way, Dr Jackson and Dr Carlson are able to confirm the species of mosquito captured (for, despite the clever electronics, the traps do occasionally make mistakes), and also the hosts it has fed on and any pathogens it has picked up. Even if an exact match is not possible for a particular piece of DNA (not all species are in the database), the system can make an educated guess about the genus or family it came from. Sometimes, the absence of a matching sequence will be because geneticists have not got around to sampling that particular species. Sometimes, though (particularly with abundant, tiny things like viruses), it will be because the species is previously unknown to science. It should therefore be possible to discover new potential pathogens in this way. + +Dr Jackson and Dr Carlson have tested the system successfully in Grenada and in Houston, Texas, and are now refining it. One hoped-for refinement is to produce traps light enough to be carried, deployed and collected by actual, human-built drones. This will make it possible to deploy them in trackless forested areas. These are often home to wild animals that act as reservoirs for pathogens like Ebola virus, which are mainly animal infections but sometimes break out to become epidemic in people. Indeed, an important point about Project Premonition is that it is not restricted to tracking pathogens which are actually spread by mosquito but can also follow those, like Ebola, which are not. All that is required is for a pathogen to be in the host’s bloodstream. Mosquito trapping thus promises to become an important tool in the monitoring and prevention of infectious disease. + +This article appeared in the Science and technology section of the print edition under the headline “Snap!” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21717350-snap-how-use-mosquitoes-combat-disease/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Peopling AmericaAmerica’s first immigrants had to wait 8,000 years to be admitted + + +Checkpoint + + + + + +From the print edition | Science and technology + + +Feb 23rd 2017 | Boston + + + + + +HOW America was originally colonised is a topic of perennial interest at the AAAS. Until recently, the earliest uncontested archaeological evidence of people living in the New World came from Swan Point, in Alaska. This dates back 14,400 years. Linguists, however, maintain that the diversity of native languages in the Americas could not have arisen so quickly. Conventional models of linguistic evolution assume tongues separate in the way populations of organisms do—so that the flow of vowels, words and grammatical structures between groups must cease before new languages can emerge, just as a cessation of gene flow gives rise to new species. This suggests it would take at least 50,000 years for a single population speaking a single language to diversify and spread through the Americas in a way that yielded the pattern heard today. Since Native Americans’ genes do, indeed, indicate they all derive from a single population, this discrepancy in timing is a paradox. + +That paradox may be close to resolution. Recent digs have pushed the physical evidence of America’s settlement back in time. Meanwhile, as the meeting heard from Mark Sicoli, a linguist at the University of Virginia, in Charlottesville, a different model of linguistic evolution brings the common ancestor of Native-American tongues forward. Apply a few error bars to the results and the two estimates touch—at about 25,000 years ago. + + + + + +The problem with explaining linguistic evolution in pure Darwinian terms is that words are not genes. Species, once separate, do not exchange genetic information because they do not interbreed. Languages, though, can exchange grammatical and semantic elements when they meet, which can speed up diversification. Dr Sicoli thus turned to computational phylogenetic analysis, an area of linguistic research that tries to work out whether and how such interaction may have taken place. + +From the thousand or so Native-American languages he chose four dozen spoken in Alaska and northern Canada, the part of the Americas closest to humanity’s point of entry from Asia. He and his colleagues created a database that recorded, for each of them, 116 linguistic features such as sounds, parts of words, the functions of these parts and the ways a language combines words into phrases. They then used this to identify the influences of languages on each other. They also added geographical information, plotting the flow of linguistic change along the Pacific coast and through the river valleys. This nearly halved the time needed to give rise to the modern situation if the languages had evolved independently from a single common ancestor. That suggests the process of divergence may have begun as recently as 25,000 years ago. + +John Hoffecker, an archaeologist at the University of Colorado at Boulder, drew attention to a study of an archaeological site called Bluefish Caves. This is in Yukon, a Canadian territory that abuts Alaska. Some of the remains found in these caves date back 24,000 years. They include stone tools and the bones of horses, caribou and bison, all with marks which imply those bones have been stripped of their flesh by such tools. + +A third line of evidence, a genetic analysis, adds weight to all this. It compared 31 modern genomes from the Americas, Siberia and various Pacific islands with 23 ancient genomic sequences from archaeological sites in the Americas. The comparison suggested that Native-American genomes diverged from their Siberian ancestors no earlier than 23,000 years ago. It also showed that the Native-American line was isolated for at least 8,000 years before big genetic splits within it took place as people spread through their new homeland. + +Combining everything, then, it seems that the band of brothers and sisters whose descendants first populated the Americas lived somewhere between 25,000 and 23,000 years ago. Very neat, if it were not for the fact that archaeological evidence appears to show that areas outside Alaska and Yukon were colonised rapidly, starting soon after 15,000 years ago. + +That could be because the ancestral band and its descendants were confined for much of the intervening period to a region known to palaeogeographers as Beringia. This was composed of what are now eastern Siberia, bits of Alaska and Yukon in the Americas, and the Bering Strait between them (which was then dry land). Parts of Beringia were habitable wetlands and grassland steppe. But the North American ice sheets to its east would have blocked any passage beyond. That could account for the 8,000 years of genetic autarky in the ancestry of Native Americans, for it was not until the ice sheets retreated (starting about 16,000 years ago), that anyone in Beringia would have been able to pass to the rest of the Americas. + +To explain how languages might have continued to diversify in a genetically stable population within Beringia, Dr Sicoli suggests its members may have lived in different habitats, separate enough for linguistic diversification, but mixing often enough to maintain a single gene pool. The answer to the question, “how was America peopled?” seems tantalisingly close. + +This article appeared in the Science and technology section of the print edition under the headline “Checkpoint” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21717352-checkpoint-americas-first-immigrants-had-wait-8000-years-be-admitted/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Books and arts + + +Corruption: Despots’ jackpots [Fri, 24 Feb 08:14] + +Sleeper trains: The end of the line [Fri, 24 Feb 08:14] + +Literary biography: By the book [Fri, 24 Feb 08:14] + +History and biography: Handshake with the past [Fri, 24 Feb 08:14] + +Boris Nemtsov, the movies: A future that wasn’t [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Despots’ jackpotsWhy it is so difficult to hold kleptocrats accountable + + +Despite improvements, fighting grand corruption remains a struggle + + + + + +From the print edition | Books and arts + + +Feb 25th 2017 + + + + + +The Despot’s Guide to Wealth Management: On the International Campaign against Grand Corruption. By J.C. Sharman. Cornell University Press; 261 pages; $29.95 and £20.95. + +CORRUPTION is never far from the front page. In recent weeks, thousands of Romanians protested against plans to decriminalise low-level graft, and Rolls-Royce was hit with a £671m ($835m) penalty for alleged bribery. Meanwhile, long-running corruption scandals continue to roil political and corporate leaders in Brazil and Malaysia. The growing attention has spurred governments to pledge action, as dozens did at a global anti-corruption summit in London last year. + + + + + +Jason Sharman, professor of international relations at Cambridge University, is particularly interested in “grand corruption”: the theft of national wealth by kleptocratic leaders and their cronies, often in poor (albeit resource-rich) countries. It is a subject he knows well, having spent over a decade studying the offshore centres and vehicles—shell companies, for example—that are used to hide ill-gotten gains. + +The list of light-fingered leaders who feature in “The Despot’s Guide to Wealth Management” is long. It includes various dead ones, such as Nigeria’s Sani Abacha, Mobutu Sese Seko of Zaire, Indonesia’s Suharto and Ferdinand Marcos of the Philippines (whose shoe-loving wife, Imelda, graces the book’s cover). These four alone ran off with an estimated $55bn. More recent examples include the pre-Arab spring leaders of Egypt, Libya and Tunisia, and Viktor Yanukovych of Ukraine. The overall amount that has been pilfered is anyone’s guess, given the murkiness of offshore finance. Estimates for Egypt under Hosni Mubarak range from $1bn to $70bn. One complicating factor is that much of the money is siphoned off through “legal corruption”, in business ventures that comply with local laws, often because of legislative tinkering by pliant parliaments. + +For a long time governments, even in the rich world, seemed uninterested in bringing kleptocrats to book. That began to change in the 1990s, as a result of two things. The end of the cold war took away a reason to turn a blind eye to theft by heads of client states. That coincided with a shift in thinking among makers of development policy, who began to view corruption as one of the main causes of poverty. Mr Sharman also credits the rise of anti-corruption NGOs and institutions that offer practical help to track down former leaders’ loot, such as the Stolen Asset Recovery Initiative, a joint UN-World Bank project. + +America has pushed the anti-corruption agenda hardest, with strong laws (such as the Foreign Corrupt Practices Act and the Patriot Act), a determination to enforce them—with help from a special anti-kleptocracy unit in the Justice Department—and congressional backing. Senate investigations have highlighted the role of banks, lawyers and other “gatekeepers” in enabling grand corruption. America, Britain and Switzerland are especially attractive destinations for foreign wealth because of their sophisticated financial centres. All three have made strides in tackling corruption, but many gaps remain. + +Anonymous shell companies, dubbed the getaway cars of financial crime, are legion in America. Britain also maintains a network of opaque offshore satellites, including the British Virgin Islands. Police and regulators are keen to know more about them, but lack funding. Switzerland has shed some of its secrecy and passed laws to ease asset recovery and repatriation, but implementation tends to be patchy; Mr Sharman thinks weak laws and strong enforcement do more good than strong laws and weak enforcement. He also includes a chapter on his native Australia which, he concludes (with help from a private investigator hired to sift through corporate records), is “able but unwilling” to stop inflows of iffy money from China and Papua New Guinea. + +Many of the difficulties in recovering stolen assets relate to the border-crossing nature of the theft. The “mutual legal assistance” process, used by governments to request or share information about bank accounts and company ownership, is clunky and unreliable. Mr Sharman laments the “inherent difficulty of international legal action in a world of sovereign states”. + +Investigations become more challenging when the country where the alleged corruption took place refuses to co-operate (usually because those under suspicion still wield power). American prosecutors made only limited headway in their high-profile case against the free-spending son of Teodoro Obiang Nguema Mbasogo, president of Equatorial Guinea since 1979. To their credit, America and Switzerland seem undeterred by such blocking tactics as they probe the still-unfolding 1MDB scandal in Malaysia. + +Even when both sides are willing, difficulties abound. Mr Sharman describes a host of problems afflicting asset-recovery efforts after the Arab revolutions in 2011, from basic transliteration headaches to proving under the laws of the host country that funds in a particular account were acquired through corruption (which, given money’s fungibility, is especially difficult if the account-holder also has legitimate businesses). Egypt found itself in a frustrating situation. It needed to find “the specific location and nature of stolen assets abroad to recover them”, yet countries holding them would co-operate only once Egyptians had located these assets. The authorities in Cairo became so frustrated that in 2012 the government sued the British Treasury after it had denied 15 of Egypt’s requests for legal assistance. + +So far, little money has been returned to Cairo. This fits in with the broader pattern. As of 2014, the worldwide amount of looted state wealth that had been repatriated stood at just $4.5bn, compared with hundreds of billions believed stolen. Even seizures of criminal proceeds in America are a mere “pin prick”, according to an official. But although the extra anti-corruption efforts have not translated into a big increase in recoveries, they may still have a deterrent effect—just as speed limits make a difference to people’s driving, even though only a few drivers are fined. + +Mr Sharman ends with some suggestions for strengthening the fight against the mega-thieves: tougher penalties for firms that help them, especially banks (fines are paltry, except in America); blacklisting of the worst kleptocracies, with their officials denied physical or financial access to the West; and greater use of tax policy, especially in light of the recent wave of international tax-transparency agreements. Like Al Capone, most corrupt officials are also guilty of a tax crime. The fact that these are still only proposals shows just how far there is to go. + +This article appeared in the Books and arts section of the print edition under the headline “Despots’ jackpots” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717354-despite-improvements-fighting-grand-corruption-remains-struggle/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +DerailedA writer discovers that the golden days of night trains are over + + +In praise of a fast-disappearing mode of transport + + + + + +From the print edition | Books and arts + + +Feb 23rd 2017 + + + + + +Night Trains: The Rise and Fall of the Sleeper. By Andrew Martin. Profile Books; 248 pages; £14.99. + +SLEEPER trains occupy a romantic corner of any traveller’s soul. One of Hercule Poirot’s most gripping adventures takes place on the Simplon Orient Express, which used to run from Paris to Istanbul. A famous scene in Alfred Hitchcock’s “North by Northwest” features a night train entering a tunnel. James Bond, meanwhile, detects a spy on a sleeper train after noticing him behave suspiciously in the dining car (“Red wine with fish!” Bond mutters). + + + + + +In some parts of the world, the nostalgia lives on. The Caledonian Sleeper, complete with smartly dressed waiters, neeps and tatties and a selection of whiskies, is the best way to travel between London and Scotland. Elsewhere, however, sleepers are on their last legs. Flights across Europe have become so cheap that fewer and fewer travellers bother with the wagon-lit. Sensing that the end is nigh, Andrew Martin, a British novelist, has written an ode to the sleeper. + +“Night Trains” is a potted history of the mode, combined with accounts of journeys Mr Martin has taken on sleeper routes across Europe. The reader joins him on a train to Munich, where he eats a tuna sandwich on board. Travelling from Paris to Venice, he thinks he has been robbed of €100 ($105). The service to Nice is cancelled, yet such is his love for sleeping aboard that he spends the night on the train as it sits on the platform. + +These stories make clear that the golden age of the sleeper train is long past. How different things were in the 19th century, when a passenger on the Orient Express could dine on gigot de mouton à la Bretonne, épinards au sucre and champagne aplenty. The only modern-day sleeper train which comes up to Mr Martin’s exacting standards is the Nordland, which trundles towards northern Norway. + +Mr Martin has a singular fascination with how much sex everyone had on board. But the real question that the uninitiated most often ask sleeper fanatics is: “Do you sleep?” After a read of Mr Martin’s book, the answer would seem to be a resounding “no”: clanking and shunting wake him up time and again. Still, it is hard not to be won over by his enthusiasm. Catch the sleeper train, before it’s too late. + +This article appeared in the Books and arts section of the print edition under the headline “The end of the line” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717353-praise-fast-disappearing-mode-transport-writer-discovers-golden-days/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +By the bookHow Victor Hugo came to write “Les Misérables”, his magnum opus + + +The extraordinary story of a book that changed the world + + + + + +From the print edition | Books and arts + + +Feb 23rd 2017 + + + + + +The Novel of the Century: The Extraordinary Adventure of Les Misérables. By David Bellos. Particular Books; 307 pages; £20. To be published in America by Farrar, Straus & Giroux in March; $27. + +“AS LONG as there are ignorance and poverty on Earth,” wrote Victor Hugo in his preface to “Les Misérables”, “books such as this one may not be useless.” Over the 155 years since it was first published in France and then elsewhere, the novel has never lost its relevance—or its popularity. + + + + + +Around 65 film versions (the first in 1909) make “Les Misérables” the most frequently adapted novel of all time. The first stage musical opened in Philadelphia in January 1863. Since 1980 Alain Boublil and Claude-Michel Schönberg’s operatic melodrama has been performed more than 53,000 times in 44 countries and 349 cities. Yet, from the outset, adapters and translators cherry-picked elements from their supersized source. British admirers had to wait until 2008 for a complete English text of the novel in the order in which the author had planned it to be read. Even to lovers of “Les Mis”, Hugo’s world-shaking blockbuster can feel like a lost continent. + +David Bellos, an English-born professor of French literature at Princeton University and an eminent translator, navigates through its five parts, 48 “books” and 365 chapters with clarity and wit. At once erudite and entertaining, he shows how the novel’s magic lies in its multitasking versatility. Hugo’s extraordinary feat is to deliver “an intricately realistic portrait” of France after Napoleon, “a dramatic page-turner” packed with suspense—and a demonstration of “generous moral principles” that readers still find appealing today. + +Hugo, already the author of “Notre-Dame de Paris” and a literary superstar as a poet, playwright and novelist, began in 1845 to write his story of a former convict seeking a new life in a society rigged against the poor and outcast. Around the questing figure of Jean Valjean, freed from the prison-hulks in 1815 to make his way against the steepest odds, Hugo stitched a vast but “very tightly knit” tapestry of social strife and personal rebirth. + +The revolution of 1848, in which the radical firebrand discovered that “his head was with order” although his heart “was with the poor”, interrupted Hugo’s mammoth project. It resumed after the exiled writer, banished by the upstart emperor, Napoleon III, settled on the Channel Island of Guernsey: no longer a “brilliant careerist” but a “stand-alone protester”. + +Curiously, this “tiny feudal outpost of the British crown” hosted the gestation and birth of a book that won hearts and changed minds across the world. The editing and printing of the precious manuscript depended on the schedules of Queen Victoria’s Royal Mail and the Guernsey steamer timetables. In 1861 “the biggest deal in book history” saw Hugo paid the equivalent of 20 years of a bishop’s stipend: enough “to build a small railway”. By late 1862, the year of publication, Charles Wilbour’s English translation was reported to be “the largest order ever placed for a book in America”. + +Save for Hugo’s literary rivals (Alexandre Dumas likened it to “wading through mud”), everybody loved the long haul of Valjean’s rehabilitation in the company of characters who soon entered folklore: the street-girl Fantine, her daughter Cosette, the urchin Gavroche, the student Marius. Shorn of its condemnation of slavery, the novel even circulated in a pirate edition among Confederate soldiers during the American civil war. In a weary pun on their commander’s name, they dubbed themselves “Lee’s Miserables”. + +From the humane treatment of ex-offenders to the care of street children, “Les Misérables” spearheaded calls for reform and contributed to “the future improvement of society”. Few books really change the world. This one did, long before it broke box-office records on stage. In the musical Hugo’s hero intones—in a song loved by television talent-show contestants—“Bring Him Home”. Mr Bellos does just that, as he restores “Les Mis” to its maker and his times. + +This article appeared in the Books and arts section of the print edition under the headline “By the book” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717357-extraordinary-story-book-changed-world-how-victor-hugo-came-write-les/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Illuminating the pastAn expert biographer looks back at his craft + + +Richard Holmes describes biography as a “handshake across time” + + + + + +From the print edition | Books and arts + + +Feb 23rd 2017 + + + + + +This Long Pursuit: Reflections of a Romantic Biographer. By Richard Holmes. William Collins; 360 pages; £25. To be published in America by Pantheon in March; $30. + +RICHARD HOLMES is one of Britain’s best-known biographers. Ever since 1974, when his first work of non-fiction, about Percy Bysshe Shelley, won the Somerset Maugham prize, he has delighted readers with his lives of the great figures of the Romantic era. + + + + + +The serious biographer, he says, has to “step back, step down, step inside the story” to discover “the biographer’s most valuable but perilous weapon: empathy.” Mr Holmes is driven by a “strange, unappeased sense of some continuous, intense and inescapable pursuit.” Biography, he says, is “a simple act of complex friendship”, “a handshake across time, but also across cultures, across beliefs, across disciplines, across genders and across ways of life.” The idea of a quest, which seeks both knowledge and understanding, is central to his work. + +In “This Long Pursuit”, which came out in Britain last autumn and is about to be published in America, the 71-year-old Mr Holmes is revisiting his old heroes, bringing them and their milieux vividly to life. In the process he does a lot to illuminate the very nature of biography itself. + +He weaves his reflections around a collection of portraits that are, in essence, distilled miniatures. Among them are the familiar figures of Shelley, Samuel Taylor Coleridge, John Keats and William Blake, as well as many of the scientists who people an earlier book, “The Age of Wonder” (2008), itself a quest to uncover “scientific passion in all its manifestations”. + +The destructive divide between the sciences and the arts, which bedevils contemporary life, was, as Mr Holmes shows, neither a natural nor a necessary divide. (Indeed, the word “scientist” was not coined until 1833.) To prove that, Mr Holmes draws out the unity that existed between the sciences and the arts in the Romantic era. Among the many examples is the complex friendship between Coleridge and Sir Humphry Davy, the chemist who experimented with nitrous oxide (laughing gas) and whose descriptions of its effects parallel Coleridge’s account of opium hallucinations in his famous poem, “Kubla Khan”. + +“This Long Pursuit” also explores the lives of some of the inevitably less familiar women writers and scientists who shaped this era in surprising ways, despite being excluded by statute from becoming fellows of the Royal Society until 1945. There is Caroline Herschel, an astronomer who discovered eight comets and was the first woman in British science to be awarded an official salary by the Crown. Margaret Cavendish, often caricatured as Mad Madge, wrote poetry that celebrated the wonders of astronomy and protested against the cruelty done to animals in the name of science. Mary Somerville virtually invented popular science writing. Mr Holmes argues that the history of British science needs a “subtle revision” because “precisely by being excluded from the fellowship of the Society, [women] saw the life of science in the wider world.” + +The biographer writes with insight about how women navigated the societies in which they lived and wrote. Mary Wollstonecraft’s life—with all the “revolutionary hopes and freedoms” that it represented—provides rich material for Mr Holmes. Writer, philosopher, traveller and advocate of women’s rights, Wollstonecraft was an international literary celebrity during her lifetime: “a woman of uncommon talents and considerable knowledge”, read one obituary when she died after giving birth to the future Mary Shelley, the author of “Frankenstein” and the poet’s wife. + +Mr Holmes analyses the downs and ups of Wollstonecraft’s reputation, especially in the wake of the intimate and revealing biography by her heart-broken husband, William Godwin. The personal in relation to Wollstonecraft—whose life Virginia Woolf described as “an attempt to make human conventions conform more closely to human needs”—was deeply political. For a century after her death, she was reviled; only when the feminist movement began gaining traction was her life and writing reassessed. Part of the move to bring her to wider attention was made by Mr Holmes, the biographer with the handshake across time. + +This article appeared in the Books and arts section of the print edition under the headline “Handshake with the past” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717355-richard-holmes-describes-biography-handshake-across-time-expert-biographer-looks/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Boris Nemtsov, the moviesThe Russian future that never came to pass + + +Two films about Boris Nemtsov, a slain politician, uncover the dark soul of modern Russia + + + + + +From the print edition | Books and arts + + +Feb 23rd 2017 + + + + + +A SMALL girl sits on her father’s shoulders, spelling out words on a poster: Pro-pa-gan-da u-bi-va-et (“Propaganda kills”). Thousands of people tramp through mud, bearing Russian flags and portraits of Boris Nemtsov, a bright and honest liberal politician, who had been shot dead two days earlier on a bridge by Red Square. It is March 1st 2015, but it feels like the start of a long winter. + +“Why did he take the bridge?” asks the little girl. “He was crossing the bridge on the way home, walking a bit in the evening. The view is nice from here,” her father explains. “But he did good things,” the little girl replies. “He did good things. We should not have let him get killed. We should have guarded him.” Doing the right thing in Russia can often get you killed. + + + + + +A balloon with a black ribbon flies up into the low, grey wintry sky. The camera cuts to Nemtsov at a railway station, flirting with Zosya Rodkevich, a 22-year-old anarchist and documentary-maker. She would film him for three years, not knowing that “My Friend Boris Nemtsov” would be his epitaph. “I saw the assignment as a challenge,” read the film’s opening words. “What could be interesting about an old, narcissistic bourgeois? He was 53…He had been deputy prime minister and the ‘heir of Boris Yeltsin’. But he turned out to be cool, kind and genuine. We became friends. And then he was killed.” + +Death changes the view of someone’s life. But Ms Rodkevich’s work, one of several new films on Nemtsov, is a close-up study of a living man—boastful, charismatic, sincere—and is devoid of gloss or consideration for history. Her camera inhabits his world, both physically and mentally. Occasionally he would ask: “Why are you filming this, silly?” But the camera keeps rolling, catching him, variously, asleep on a bunk bed in a train, stripping almost naked or talking about freedom and the perverse love of state power. + +Nemtsov climbs a bell tower under a blue winter sky (“Oh, I want to be the bell ringer. I will wake Russia right up”). He kisses women, talks to strangers, submerges himself in an ice-hole and gets bundled into a police van during Moscow street protests in 2012. The man in this film is not a saint, but a mortal—full of life, energy, pain and love for the country that once adored him, but was then taught to hate him. + +By 2015, after Russia’s annexation of Crimea, the Kremlin unleashed a wave of anti-liberal aggression that shocked Nemtsov. The former physicist who studied infrasound, laughingly explains to fellow opposition leaders: “Each person has his own resonant frequency. It depends on the size of the heart and body mass. If you strike the heart’s resonant frequency, you’ll have a heart attack and goodbye.” + +A hint of death runs through the film. In the penultimate scene, he boards a train back to Moscow from Yaroslavl where he won a seat on a local council, and hums an old Soviet tune: “Old motif of railroads, eternal youth of railway lines. It seems your whole life is ahead. Don’t go wrong when you are choosing your route.” + +The next shot is of Nemtsov in a coffin, his mother, wife and small daughter standing by his side. The director with the nose ring stares into the camera. In the last minute of the film, a funerary violin breaks into an energetic Soviet song that accompanies a kaleidoscope of photographs of Nemtsov’s political life. + +That minute is expanded in another film, “The Man Who Was Too Free”, made by Mikhail Fishman and Vera Krichevskaya for the second anniversary of Nemtsov’s death on February 27th. It is not so much a biography as a cardiogram of Russian political life over the past quarter of a century with all its seizures and spasms. The sound of a heartbeat runs through the film, until it flatlines at the end. It would take Nemtsov’s death to reveal the scale of Russia’s loss. + +At 32 he became Russia’s youngest regional boss, in charge of Nizhny Novgorod, which had served, a few years earlier, as a place of exile for another physicist and humanist, Andrei Sakharov. Nemtsov embodied the hope for an open, democratic and optimistic Russia. His only promise to his supporters was “not to lie”, which he never broke. + +The film is a montage of previously unseen footage and monologues by people who knew him well. It has no narrator, allowing for constantly gnawing questions about missed opportunities and historical alternatives. What if Nemtsov had not moved to Moscow as the first deputy prime minister? What if the oligarchs who controlled the media had not set out to destroy him out of greed and arrogance? What if he had become Russia’s president, as Yeltsin had originally wished? What if members of Yeltsin’s family hadn’t persuaded the ailing man to appoint Vladimir Putin as his successor? + +The contrast between the tall, generous Nemtsov and Mr Putin is so obvious that, at a preview, a sequence showing the Russian leader made the audience burst out laughing. But it was not just the Kremlin that came to fear Nemtsov. So, paradoxically, did those who considered him an ally. Mikhail Fridman, one of Russia’s richest men and a friend of Nemtsov’s, candidly admits that he stopped seeing him: “I realised that my relationship with him would be toxic for my business, my partners and my colleagues.” + +Whereas the Russian elite shunned Nemtsov for fear of upsetting the authorities, Alexei Navalny, an opposition politician who spent a night in prison with him, shunned him for his past links to the Kremlin. “I saw him as a man of the 1990s, a good man but one who brought political problems. I did not want him to support me during the Moscow mayoral elections.” + +At the end, Nemtsov, who was always surrounded by people, walks alone at night on a Moscow street. His voice comes as though from the other side: “People who fought for freedom in Russia were always in a minority. They moved the country forward, often at the cost of their lives…But I will come back! Don’t you worry.” + +This article appeared in the Books and arts section of the print edition under the headline “A future that wasn’t” + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717356-two-films-about-boris-nemtsov-slain-politician-uncover-dark-soul-modern/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Obituary + + +Norma McCorvey: The woman who never was [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The woman who never wasObituary: Norma McCorvey, the “Jane Roe” of Roe v Wade + + +The “Jane Roe” of Roe v Wade was 69 + + + + + +From the print edition | Obituary + + +Feb 25th 2017 + + + + + +SOMETIMES she just couldn’t settle at anything. At ten she ran away from home to stay with a girlfriend in a motel. At 16 she married a man who took her for a ride in his black Ford car, but she left after two months because he beat her. She lived on the streets, slept with women and men, got pregnant by the men. Pot, acid, mescalin, she did it all. Work was whatever came along: barhop, carnival barker, house-painter, cleaner. She got involved in the whole abortion debate first on one side and then, when she took Jesus Christ for her personal saviour, on the other. That made her famous, though nobody knew who the regular Norma McCorvey was. And maybe they didn’t care. + +What her mind had been crystal-clear about though, in the last months of 1969, was that she had to get rid of her latest pregnancy. She was 22, and this was her third. The first baby, her daughter Melissa, had been taken away by her mother who said she was a filthy whore and not fit to raise her, and the second baby had been adopted by its father. Now there was another one growing in her body. The state of Texas, where she lived, banned abortions unless the woman’s life was in danger. She couldn’t say it was. And because she was poor, she couldn’t go to Mexico (as one of her lawyers did, and never told her), or rely on some private doctor to help. When she saved up her rent money to visit the one illegal clinic she knew in Dallas, she found it had been busted the week before. Through the window she could see the dirty instruments and dried blood on the floor, roaches and creeping things. All she wanted was a clean white bed to lay down on in a safe place. She didn’t have that privilege. + + + + + +So when she was put in touch with two lawyers, Sarah Weddington and Linda Coffee, who wanted to change the law, she was thrilled. They met over beers and pizza, and drank to women taking proper control over their own bodies. At some point she signed an affidavit which she hoped would persuade some nice judge to give Miss Norma McCorvey, aka Miss Jane Roe, permission for an abortion right away, because she was already five months gone. But nobody was bothered about that. It turned out that she made a good plaintiff only if she was pregnant and desperate, as they could see she was with her swollen eyes and the cuts on her wrists, and the case dragged on so long that her baby was two and a half before the Supreme Court decided in January 1973 that abortion was a constitutional right for all American women. The baby had gone for adoption again, and she felt miserable, even though she hadn’t wanted it. + +In her sadness she ignored how Roe v Wade was going. She didn’t testify, never went to court, and read about the decision in the newspaper like everyone else. But suddenly Jane Roe was everywhere, this unknown woman (or pawn, she felt) who had won freedom for millions of American women, or consigned millions of little American boys and girls to slaughter, depending on your view. And that was her. + +She told very few people. Mostly she hid away with her cats and plants and her lover Connie Gonzales, which was difficult also, as lesbians weren’t exactly welcome in Texas. In the 1980s she took work in the newly legal abortion clinics in Dallas with their safe, clean white beds, and slowly came out to the world. That made her plenty of enemies, who called her a baby-killer and rammed their trolleys into her heels in the Tom Thumb store. But it didn’t make her the friends she expected. She was too simple for the pro-choice people, who seemed to shun her at their rallies and sent a strong hint that she was totally stupid, though she had brains and ideas. She wasn’t their special chosen Jane Roe, and they didn’t want Norma McCorvey. + +This unsettled things in her mind again. The Operation Rescue folks moved in right next door to the clinic, with their posters of bloody fetuses which really freaked her out, and on her smoking breaks she would see them praying for her. She began to hear infant laughter in the clinic, and when the women told her why they had come she would find herself thinking, that’s not a reason. In 1995 she went to church one day and turned to Jesus right away. The ceiling didn’t fall down, and lightning didn’t strike when she got baptised in someone’s swimming pool; just the best high of her life. Jesus forgave her for all those dead babies, and now she would help save them. + +Still a street kid + +For the pro-life cause she got herself arrested, campaigned against Barack Obama, testified in Congress and tried to disrupt the appointment of a pro-choice justice. But she didn’t fit neatly with these people, either. Norma McCorvey was a street kid, rough at the edges and still wild inside. She still told tales. If she was going to be a trophy celebrity for the anti-abortion cause, as they wanted, she would have to be an ideologue and clean-cut like them. Even the Rev Flip Benham, who baptised her, called her a money-fisher because she charged top dollar for interviews. So what did he want her to live on? Didn’t she already buy her clothes at the bargain store? + +She had never been right for Jane Roe. But she wasn’t wrong, either. Some poor woman would have to have represented all the rest. And Norma McCorvey was as conflicted about abortion as almost the whole of America was. + +This article appeared in the Obituary section of the print edition under the headline “The woman who never was” + + + + + +View comments + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/obituary/21717339-jane-roe-roe-v-wade-was-69-obituary-norma-mccorvey-jane-roe-roe-v-wade/print + + + + + +| Section Menu | Main Menu | + + + + + +| Main menu | Previous section | + +* * * + + + + + +Economic and financial indicators + + +Interactive indicators [Fri, 24 Feb 08:14] + +Output, prices and jobs [Fri, 24 Feb 08:14] + +Trade, exchange rates, budget balances and interest rates [Fri, 24 Feb 08:14] + +The Economist commodity-price index [Fri, 24 Feb 08:14] + +Sovereign-wealth funds [Fri, 24 Feb 08:14] + +Markets [Fri, 24 Feb 08:14] + + + + + +* * * + + + +| Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21717372/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Output, prices and jobs + + +From the print edition | Economic and financial indicators + + +Feb 25th 2017 + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717361-output-prices-and-jobs/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Trade, exchange rates, budget balances and interest rates + + +From the print edition | Economic and financial indicators + + +Feb 25th 2017 + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717363-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Economist commodity-price index + + +From the print edition | Economic and financial indicators + + +Feb 25th 2017 + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717364-economist-commodity-price-index/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Sovereign-wealth funds + + +From the print edition | Economic and financial indicators + + +Feb 25th 2017 + + + + + +Norway has proposed changes to its $900bn sovereign-wealth fund, including increasing its stockmarket holdings by about $90bn. The fund is the world’s largest, according to the Sovereign Wealth Fund Institute, a think-tank. China has the most assets under management though: $1.6trn between its four funds. Oil-and-gas-based funds make up more than half of the market by asset value and low prices have created challenges for commodity exporters. Saudi Arabia is trying to diversify away from oil and intends its Public Investment Fund to play a central role in the change. Saudi Aramco’s initial public offering would swell it enormously, but the timing of the share sale is uncertain. + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717362-sovereign-wealth-funds/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Markets + + +From the print edition | Economic and financial indicators + + +Feb 25th 2017 + + + + + +Be the first to comment + + + +Reuse this content + + + + + +Clean energy’s dirty secretWind and solar power are disrupting electricity systems + + +But that’s no reason for governments to stop supporting them + + + + + +Leaders + + + + + +Cost-sharing is caringReplacing Obamacare’s subsidies for the poor is no easy task + + + + +United States + + + + + +Keep outLower immigration could be the biggest economic cost of Brexit + + + + +Britain + + + + + +The EconomistWhy Swedes overpay their taxes + + + + +The Economist explains + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717360-markets/print + + + + + +| Section Menu | Main Menu | + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.03.04.txt b/homeworks/B20769/homework1/data2/2017.03.04.txt new file mode 100644 index 0000000..cd3012b --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.03.04.txt @@ -0,0 +1,6432 @@ +2017-03-04 + +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +| Next section | Main menu | + +* * * + + + + + +The world this week + + +Politics this week [Thu, 02 Mar 22:42] + +Business this week [Thu, 02 Mar 22:42] + +KAL’s cartoon [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Politics this week + + + + + +From the print edition | The world this week + + +Mar 2nd 2017 + + + + + +François Fillon, the Republican candidate in France’s presidential election, declared that he will continue his campaign despite being subject to an official criminal investigation over payments he made to his wife and children. Mr Fillon said he had been unfairly singled out by magistrates and implied that the investigation was politically motivated. François Hollande, France’s president, criticised Mr Fillon for questioning the impartiality of the justice system. + +Jean-Claude Juncker, the president of the European Commission, proposed that the European Union pull back from some activities that could be better handled locally by members, such as social policy. He also called for tighter EU integration on key policies such as migration, defence and trade. + +Two German men were convicted of murder for staging an illegal drag race in the heart of Berlin’s central shopping district in February 2016, killing a 69-year-old pensioner. The judges ruled that the drag racers’ extraordinary carelessness was grounds for a verdict of murder rather than manslaughter. + +In Britain, two by-elections in seats held by the Labour Party highlighted its directionless leadership under Jeremy Corbyn. It lost Copeland, which it had held since 1935, handing the Conservatives the first gain at a by-election for a governing party since 1982. It also lost ground in the safer seat of Stoke. Labour is trailing behind the government in polls by nearly 20 points and Mr Corbyn’s personal ratings are on the floor. + +The British government suffered its first defeat in Parliament on the Brexit bill, which will allow it to trigger the legal means for leaving the EU. The House of Lords amended the bill in an effort to secure the rights of EU nationals living in Britain. Brexiteers point out that Brussels has failed to give similar guarantees for Britons living in the EU. The Lords told MPs to search “their consciences” as it voted 358 to 256 for the amendment, which is likely to be removed when the bill returns to the Commons. + +On the attack + + + +The Iraqi government’s assault on the remaining Islamic State presence in west Mosul continued, with the government taking control of the city’s airport and one of the bridges over the Tigris river. It also cut the last road out of west Mosul, preventing fresh supplies from reaching the Islamists. + +China and Russia once again vetoed an attempt by the UN Security Council to sanction Syria for its use of chemical weapons in 2014 and 2015. + +Mending fences + +China’s most senior diplomat, Yang Jiechi, met Donald Trump in the White House. They discussed a possible meeting between Mr Trump and his Chinese counterpart, Xi Jinping. No date has been set, but both countries agreed that they should meet regularly. Ties between the pair have been strained over a number of issues, including trade and military activity in East Asia. + +Three people secured enough nominations to join the race for the post of chief executive of Hong Kong. The front-runner is Carrie Lam, who until recently was head of the territory’s civil service. Her main rival is expected to be John Tsang, a former financial secretary. Also running is Woo Kwok-hing, a former judge. The winner will be chosen on March 26th by a committee stacked with supporters of the government in Beijing. See article. + + + + + +China responded angrily to a decision by Lotte, a South Korean conglomerate, to provide land near Seoul for the installation of an American anti-missile system. America says the system is needed to protect the South against North Korean attacks. China fears it would make Chinese missiles less scary, too. + +Police in the Philippines arrested Leila de Lima, a senator who is one of the most vocal critics of the president, Rodrigo Duterte. The police say Ms de Lima took bribes from drug-traffickers; Ms de Lima says she is a political prisoner. + +Bangladesh softened a law intended to reduce child marriage, allowing girls under the age of 18 to marry in certain circumstances, as huge numbers already do. + +Malaysia announced that the poison used to kill the half-brother of Kim Jong Un, the North Korean dictator, was VX, an extremely toxic nerve agent. It charged two women involved in the attack, which took place at Kuala Lumpur airport, with murder. They say they thought they were taking part in a prank. + +How to be presidential + +Donald Trump gave his first speech to Congress. In a departure from the shrillness that has characterised his presidency so far, a composed Mr Trump gave a solemn address, though the themes of cracking down on illegal immigration, overturning Obamacare and erecting trade barriers sounded familiar. He also pledged his full support for NATO, having previously questioned the value of the military alliance. See article. + +It emerged that Jeff Sessions, the new attorney-general, had held conversations with the Russian ambassador last year, contradicting his testimony to Congress during his confirmation hearing that he had not contacted Russian officials. As head of the Justice Department, Mr Sessions has ultimate oversight over an investigation into Russian interference in the election. Nancy Pelosi, the Democrats’ leader in the House, called for him to resign. + +Thomas Perez was elected chairman of the Democratic National Committee, a relief for the party’s establishment. Mr Perez was Barack Obama’s secretary of labour and is the first Hispanic person to head the DNC. He beat Keith Ellison, the left’s favourite. + +The deluge + +Storms in the Andes pushed mud and debris into the rivers that supply Santiago, Chile’s capital, with water. Around 4m people were cut off from running water. At least three people died and 19 went missing during the storms, which struck the country during a normally dry season. + + + +Gustavito, a much-loved hippopotamus in El Salvador’s national zoo (pictured above in happier times), died after an apparent beating. Investigators have not found the culprits, who sneaked into the zoo and hit the animal with blunt and sharp objects. El Salvador has one of the world’s highest murder rates, but Salvadoreans were especially shocked by this killing. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21718008-politics-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Business this week + + +From the print edition | The world this week + + +Mar 2nd 2017 + + + + + +The proposed merger of the London Stock Exchange and Deutsche Börse seemed headed for collapse. The final nail in the coffin was said to be the LSE’s rejection of an ultimatum from European antitrust regulators for it to sell its stake in a bond-trading platform in Italy. The LSE reportedly rejected the demand without consulting its intended German partner. The British and German exchanges announced their intention to merge a year ago, before Britain voted to leave the EU. See article. + + + + + +Prosecutors in South Korea charged Lee Jae-yong, the de facto head of Samsung, and four other executives with bribery and corruption following a lengthy investigation. Mr Lee is accused of directing $38m in bribes to an associate of the country’s president in order to smooth the merger of two Samsung affiliates. He denies wrongdoing. See article. + +OneWeb, a startup that plans to launch a constellation of small satellites that will provide internet connection to remote places, is to merge with Intelsat, one of the biggest operators of commercial satellites. The deal is backed by SoftBank, a technology group, which has invested in OneWeb. The transaction relies on some bondholders in Intelsat agreeing to a debt swap, which should bring its $15bn debt load into a lower orbit. + +A bigger bite + +Warren Buffett revealed that Berkshire Hathaway, his investment company, had more than doubled the number of shares it owns in Apple, giving it a stake worth around $18 billion. Apple is now one of Berkshire’s biggest equity holdings. + +India’s economy grew by 7% in the last quarter of 2016 compared with the same period of 2015. That was a more robust figure than economists had expected, given the government’s surprise decision in November to withdraw 86% of the banknotes in circulation in an effort to curb corruption and counterfeiting. Demonetisation led to long queues at shops and banks and disrupted businesses. + + + +A slump in oil prices and revenues caused Nigeria’s economy to shrink in 2016 for the first time in 25 years. GDP contracted by 1.5% as oil production tumbled. A shortage of dollars, used by many businesses to pay for imports, also contributed to the slowdown. The IMF forecasts that the economy will grow by 0.8% this year and 2.3% in 2018. See here and here. + +Stockmarkets reached new record highs, buoyed in part by a positive reaction to Donald Trump’s speech to Congress. The Dow Jones Industrial Average index closed above the 21,000 mark, a little over a month after it breached 20,000. The S&P 500 and NASDAQ indices also scaled new heights. + +Noble Group reported a small profit of $8.7m for last year. Noble was once Asia’s biggest commodities-trading firm, until it was hit by a double whammy of plunging commodity prices and questions about its accounts (until a review found they conformed to industry standards). + +A knight to the rescue + +In Britain, Sir Philip Green reached a settlement with regulators to top up the insolvent pension fund for workers at BHS, a bankrupt retail chain that he once owned. The collapse of BHS revealed a huge shortfall in its pension scheme; an inquiry in Parliament described the episode as “the unacceptable face of capitalism”. + +Travis Kalanick issued a mea culpa. The chief executive of Uber admitted that “I need leadership help” after video footage emerged of him launching a verbal tirade at an Uber driver who had criticised the ride-hailing app’s business model. It is another dent in Uber’s image; it also faces allegations of sexual harassment from a former employee. + +Snapchat priced its IPO at $17 a share, above the price range it set out in its prospectus. Demand was strong for the most eagerly awaited stockmarket flotation from a tech company in years. + +Elon Musk, the founder of SpaceX, said he intends to fly people around the Moon by the end of next year. Two wealthy space tourists have apparently volunteered for the return flight, which would take a week and be controlled by autopilot. But the brave adventurers may not want to pack just yet. The Falcon Heavy rocket needed to launch the Moon capsule has not yet come into operation. See article. + +Thanks for the memories + +Penguin Random House won an auction for the rights to publish the memoirs of Barack and Michelle Obama. Although the rights were sold jointly the memoirs of the former president and first lady will be published as separate books. The $65m that Penguin is reportedly paying is well above the $15m that Bill Clinton got for his memoirs and the $10m that George W. Bush obtained for his. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21718002-business-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +KAL’s cartoon + + + + + +From the print edition | The world this week + + +Mar 2nd 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21718005-kals-cartoon/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Leaders + + +The French presidency: France’s next revolution [Thu, 02 Mar 22:42] + +Nigeria’s sick president: Get well soon, Mr Buhari [Thu, 02 Mar 22:42] + +Red tape in America: Doing deregulation right [Thu, 02 Mar 22:42] + +Indian banks: From worse to bad [Thu, 02 Mar 22:42] + +Deportation: Oiling the machine [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +France’s next revolution + +The vote that could wreck the European Union + + +Why the French presidential election will have consequences far beyond its borders + + + + + +From the print edition | Leaders + + +Mar 4th 2017 + + + + + +IT HAS been many years since France last had a revolution, or even a serious attempt at reform. Stagnation, both political and economic, has been the hallmark of a country where little has changed for decades, even as power has rotated between the established parties of left and right. + +Until now. This year’s presidential election, the most exciting in living memory, promises an upheaval. The Socialist and Republican parties, which have held power since the founding of the Fifth Republic in 1958, could be eliminated in the first round of a presidential ballot on April 23rd. French voters may face a choice between two insurgent candidates: Marine Le Pen, the charismatic leader of the National Front, and Emmanuel Macron, the upstart leader of a liberal movement, En Marche! (On the Move!), which he founded only last year. + + + + + +The implications of these insurgencies are hard to exaggerate. They are the clearest example yet of a global trend: that the old divide between left and right is growing less important than a new one between open and closed. The resulting realignment will have reverberations far beyond France’s borders. It could revitalise the European Union, or wreck it. + +Les misérables + +The revolution’s proximate cause is voters’ fury at the uselessness and self-dealing of their ruling class. The Socialist president, François Hollande, is so unpopular that he is not running for re-election. The established opposition, the centre-right Republican party, saw its chances sink on March 1st when its standard-bearer, François Fillon, revealed that he was being formally investigated for paying his wife and children nearly €1m ($1.05m) of public money for allegedly fake jobs. Mr Fillon did not withdraw from the race, despite having promised to do so. But his chances of winning are dramatically weakened. + +Further fuelling voters’ anger is their anguish at the state of France (see article). One poll last year found that French people are the most pessimistic on Earth, with 81% grumbling that the world is getting worse and only 3% saying that it is getting better. Much of that gloom is economic. France’s economy has long been sluggish; its vast state, which absorbs 57% of GDP, has sapped the country’s vitality. A quarter of French youths are unemployed. Of those who have jobs, few can find permanent ones of the sort their parents enjoyed. In the face of high taxes and heavy regulation those with entrepreneurial vim have long headed abroad, often to London. But the malaise goes well beyond stagnant living standards. Repeated terrorist attacks have jangled nerves, forced citizens to live under a state of emergency and exposed deep cultural rifts in the country with Europe’s largest Muslim community. + +Many of these problems have built up over decades, but neither the left nor the right has been able to get to grips with them. France’s last serious attempt at ambitious economic reform, an overhaul of pensions and social security, was in the mid-1990s under President Jacques Chirac. It collapsed in the face of massive strikes. Since then, few have even tried. Nicolas Sarkozy talked a big game, but his reform agenda was felled by the financial crisis of 2007-08. Mr Hollande had a disastrous start, introducing a 75% top tax rate. He was then too unpopular to get much done. After decades of stasis, it is hardly surprising that French voters want to throw the bums out. + +Both Mr Macron and Ms Le Pen tap into that frustration. But they offer radically different diagnoses of what ails France and radically different remedies. Ms Le Pen blames outside forces and promises to protect voters with a combination of more barriers and greater social welfare. She has effectively distanced herself from her party’s anti-Semitic past (even evicting her father from the party he founded), but she appeals to those who want to shut out the rest of the world. She decries globalisation as a threat to French jobs and Islamists as fomenters of terror who make it perilous to wear a short skirt in public. The EU is “an anti-democratic monster”. She vows to close radical mosques, stanch the flow of immigrants to a trickle, obstruct foreign trade, swap the euro for a resurrected French franc and call a referendum on leaving the EU. + +Mr Macron’s instincts are the opposite. He thinks that more openness would make France stronger. He is staunchly pro-trade, pro-competition, pro-immigration and pro-EU. He embraces cultural change and technological disruption. He thinks the way to get more French people working is to reduce cumbersome labour protections, not add to them. Though he has long been short on precise policies (he was due to publish a manifesto as The Economist went to press), Mr Macron is pitching himself as the pro-globalisation revolutionary. + +Look carefully, and neither insurgent is a convincing outsider. Ms Le Pen has spent her life in politics; her success has been to make a hitherto extremist party socially acceptable. Mr Macron was Mr Hollande’s economy minister. His liberalising programme will probably be less bold than that of the beleaguered Mr Fillon, who has promised to trim the state payroll by 500,000 workers and slash the labour code. Both revolutionaries would have difficulty enacting their agendas. Even if she were to prevail, Ms Le Pen’s party would not win a majority in the national assembly. Mr Macron barely has a party. + +La France ouverte ou la France forteresse? + +Nonetheless, they represent a repudiation of the status quo. A victory for Mr Macron would be evidence that liberalism still appeals to Europeans. A victory for Ms Le Pen would make France poorer, more insular and nastier. If she pulls France out of the euro, it would trigger a financial crisis and doom a union that, for all its flaws, has promoted peace and prosperity in Europe for six decades. Vladimir Putin would love that. It is perhaps no coincidence that Ms Le Pen’s party has received a hefty loan from a Russian bank and Mr Macron’s organisation has suffered more than 4,000 hacking attacks. + +With just over two months to go, it seems Ms Le Pen is unlikely to clinch the presidency. Polls show her winning the first round but losing the run-off. But in this extraordinary election, anything could happen. France has shaken the world before. It could do so again. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21717814-why-french-presidential-election-will-have-consequences-far-beyond-its-borders-vote/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Governing Nigeria + +Get well soon, Mr Buhari + + +But has Nigeria’s president noticed that the economy has improved during his absence? + + + + + +From the print edition | Leaders + + +Mar 2nd 2017 + + + + + +EVER since word trickled out that Muhammadu Buhari, Nigeria’s 74-year-old president, was not just taking a holiday in Britain but seeking medical care, his country has been on edge. Nigerians have bad memories of this sort of thing. Mr Buhari’s predecessor bar one, Umaru Yar’Adua, died after a long illness in 2010, halfway through his first term. During much of his presidency he was too ill to govern effectively, despite the insistence of his aides that he was fine. In his final months he was barely conscious and never seen in public—yet supposedly in charge. Since he had not formally handed over power to his deputy, Goodluck Jonathan, his incapacity provoked a constitutional crisis and left the country paralysed. + +There is nothing to suggest that Mr Buhari is as ill as Yar’Adua was. But that is because there is little information of any kind. His vice-president, Yemi Osinbajo, insists that his boss is “hale and hearty”. Mr Buhari’s spokesman says his doctors have recommended a good rest. Yet even members of Mr Buhari’s cabinet have not heard from him for weeks, and say that they do not know what ails him or when he will return. + + + + + +Such disclosure would be expected in any democracy. In Nigeria the need is even more pressing. Uncertainty is unsettling the fractious coalition of northern and southern politicians that put Mr Buhari into power. Nigeria is fragile: the split between northern Muslims and southern Christians is one of many that sometimes lead to violence. The country also faces a smouldering insurrection in the oil-rich Delta and an insurgency in the north-east by jihadists under the banner of Boko Haram (“Western education is sinful”). + +Mr Buhari, an austere former general, won an election two years ago largely because he promised to restore security and fight corruption. Although his government moves at a glacial pace, earning him the nickname “Baba Go Slow”, he has wrested back control of the main towns in three states overrun by Boko Haram. Yet the jihadists still control much of the countryside, and the government has been slow to react to a looming famine that has left millions hungry. + +On corruption, Mr Buhari has made some progress. A former national security adviser is on trial in Nigeria for graft, and a former oil minister was arrested in Britain for money laundering. So far, however, there have been no big convictions. + +Mr Buhari’s main failures have been economic (see article). The damage caused by a fall in the price of oil, Nigeria’s main export, has been aggravated by mismanagement. For months Mr Buhari tried to maintain a peg to the dollar by banning whole categories of imports, from soap to cement, prompting the first full-year contraction of output in 25 years. + +First, do no harm + +With Mr Buhari in London, the country’s economic stewardship has, whisper it, improved a bit. Mr Osinbajo has allowed a modest devaluation and started on reforms aimed at boosting growth. This is already paying off. In February the government sold $1bn-worth of dollar-denominated bonds, its first foreign issue in four years. Demand was so great that investors bid for almost $8bn-worth of the notes, raising hopes of a second bond sale later this month. + +If his health recovers, Mr Buhari still has two years left in office. He should focus on doing what he does best: providing the leadership his troops need to defeat Boko Haram and the moral authority to clamp down on corruption. And, noting how much better the economy is doing without him trying to command it like a squad of soldiers, he should make good on a long-forgotten electoral pledge to leave economic policy to the market-friendly Mr Osinbajo. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21717821-has-nigerias-president-noticed-economy-has-improved-during-his-absence-get-well/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Regulation + +The right way to get rid of it + + +America needs regulatory reform, not a crude cull of environmental rules + + + + + +From the print edition | Leaders + + +Mar 2nd 2017 + + + + + +WHAT does the Republican Party, led by Donald Trump, agree on? In addition to an enthusiasm for power, two things unite the conservatism of Stephen Bannon, the president’s consigliere, with the conservatism of Mitch McConnell and Paul Ryan, the Republican leaders in Congress. One is tax cuts, on which he has thus far been vague. The other is deregulation, which matters more to Republicans now than debt or deficits. + +The president promised “a historic effort to massively reduce job-crushing regulations” when he spoke to a joint session of Congress on February 28th. Mr Bannon has announced nothing less than “the deconstruction of the administrative state”. That project began with an executive order requiring federal agencies to get rid of two regulations for every new one they issue. It continued this week when the White House proposed slashing the budgets of many federal agencies. Under Barack Obama, CEOs grumbled constantly about burdensome new regulation and more zealous enforcement of existing rules. Stockmarkets have soared, possibly on a belief that undoing all this will bring much faster growth. + + + + + +Something has indeed dampened America’s economic dynamism. Startups are rarer, labour is less mobile and fewer people switch jobs than they did three decades ago. Regulation has shot up the list of small firms’ concerns since 2008. Yet there is a right way and a wrong way to deregulate. Markets need clear rules, enforced predictably. Less regulation is not always better: the freedom to dump toxic sludge into rivers will not improve Americans’ living standards. Republicans must ensure that they do the right sort of deregulation (see article). There is little to be gained from crudely hacking at Mr Obama’s handiwork, while ignoring systemic problems that have led to a proliferation of rules, whoever is in charge. + +Don’t just blame the bureaucrats + +By one estimate, the number of federal edicts has risen steadily for almost four decades, from about 400,000 in 1970 to 1.1m. One reason for this proliferation is that bureaucrats much prefer writing new rules to rubbing out old ones. They scrutinise policy rigorously, but usually only in advance, when little is known about its impact. Little effort is made to analyse whether a rule’s benefits still justify its costs once implemented. Instead, politicians rely on gut instinct to tell them whether firms’ complaints about over-regulation are reasonable. + +Political gridlock is another reason for regulatory sprawl. When a president is blocked by a hostile Congress, as Mr Obama was for most of his time in office, the temptation is to exercise power by issuing rules through the federal bureaucracy. But even when Washington is unified, as it is now, Congress and the executive branch find it much easier to issue new edicts than to undo old ones. The same is true at the state level. + +The result is a proliferation of rules at all levels of government—rules that can slow innovation, but which also impede straightforward tasks, such as fixing bridges. When Mr Obama tried to finance “shovel-ready” infrastructure projects after the recession, he found that many lacked the long list of permits and approvals necessary to start building. Any infrastructure push by Mr Trump will run up against the same roadblocks. + +Fixing this requires substantial change. Mr Obama made a modest start by directing agencies to evaluate old regulations. Mr Trump’s demand that agencies must abolish old rules before writing new ones sounds crude, but provides a welcome incentive for bureaucrats to look again at old rulings. The strategy has had some success in Britain and Canada. + +The White House should bolster the office that scrutinises proposed rules. It has seen its staff fall by half over three decades, while regulations have proliferated. Congress should appoint experts to scrutinise regulation on its behalf, as it has done for budgetary matters. This new body could review old rules as a matter of course. If these edicts do not pass a cost-benefit analysis, they should expire automatically. + +Unfortunately, the approach many Republicans favour is to make it harder for the executive branch to do anything at all. Some want to subject every new rule to a congressional vote. Yet few politicians are equipped to scrutinise, say, arcane financial rules. Such votes are more likely to create feeding opportunities for lobbyists—and, in turn, more of the exemptions that increase regulatory complexity and harm competition. + +The Republicans are right that America’s regulatory sprawl needs tackling. A well-executed drive to cut red tape will doubtless bring economic gains. But it will be painstaking work, a far cry from the slash-and-burn approach the Trump team has in mind. Crude rule-cutting and budget-slashing will simply leave America dirtier and less safe. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21717815-america-needs-regulatory-reform-not-crude-cull-environmental-rules-right-way-get-rid/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +From worse to bad + +Talk of a bad bank in India + + +Indian authorities seem to grasp the threat to the wider economy from an ailing financial system + + + + + +From the print edition | Leaders + + +Mar 2nd 2017 + + + + + +IF YOU owe a bank a hundred dollars, it is your problem. If you owe a hundred million, it is the bank’s problem. If you are one of many tycoons borrowing billions to finance dud firms, it is the government’s problem. + +That is roughly the situation India finds itself in today. Its state-owned banks extended credit to companies that are now unable to repay. Like the firms they have injudiciously lent to, many banks are barely solvent. Almost 17% of all loans are estimated to be non-performing; state-controlled banks are trading at a steep discount to book value. After years of denial, India’s government seems belatedly to have grasped the threat to the wider economy. Plans are being floated to create a “bad bank” that would house banks’ dud loans, leaving the original lenders in better shape. The idea is a good one, but it must be properly implemented and is only the starting-point for broader reforms. + + + + + +The bad-loan mess has been years in the making. India skirted the financial bust of 2007-08, but then complacency ensued. Banks went on to finance large-scale projects—anything from mines and roads to power plants and steel mills—which often ended in disappointment. Over 40% of loans made to corporate India are stuck in firms unable to repay even the interest on them, according to Credit Suisse, a bank. The result is a “twin balance-sheet problem”, whereby both banks and firms are financially overstretched. Corporate credit is shrinking for the first time in two decades (see article). + +In an ideal world, the banks would write down the value of the loans. The resulting losses would require fresh funds from shareholders. India is far from that ideal. It takes over four years to foreclose on a loan (a newish bankruptcy law should help). The government is the main shareholder of the worst affected banks, and has been reluctant to inject more cash. Bankers themselves are afraid to deal with loans pragmatically, because that often gets mistaken for cronyism. + +Clean energy needed + +The solution so far has been to pretend nothing much is wrong. The banks have rolled bad loans over, hoping that growth would eventually make things right. This is a poor strategy, as anyone who followed Japan in the 1990s and Italy since the financial crisis well knows. It is only a matter of time before the banks’ difficulties derail India’s economic prospects. Hence talk of setting up a bad bank to sort out the mess. + +Bad banks have been used with success in the past—in Sweden in the 1990s, for example, and in Spain in recent years. But if they are to work, candour and cash are both needed. The candour is required to assign a realistic value to banks’ soured loans. Indian lenders must be compelled, and quickly, to sell loans to the bad bank even at a hefty discount to face value, no matter how much it may wound their pride or dent their profits. That is where the cash comes in. When those write-downs eat up capital, the state must be ready to make up the shortfall even if it means borrowing more to do so. + +That is only a start, however. A bad bank could resolve this crisis. But to make future ones less likely, broader reforms are needed. Some are under way. Political interference (loans to a minister’s buddy, say) and dysfunctional governance (many bank bosses get only one-year stints at the helm, for example) are less of a problem than they once were. But lenders should not be instruments of the state. Private investors should be allowed to play a bigger role in cleaned-up banks, even if that means the government has to give up majority control. + +India’s “promoters”, as the founders and owners of big businesses are known, also need to be reined in further. Tycoons have the upper hand in negotiations with their lenders because they know that red tape, patronage and antiquated legal systems make it all but impossible to seize the assets of defaulting firms. In effect, they cannot be replaced at the helm. Resolving this imbalance would make it more likely that dud loans are a headache for banks and borrowers, not for the finance minister. It is good that policymakers appear to be waking up to the magnitude of India’s banking problem. Whether they appreciate the scale of the solution is less clear. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21717816-indian-authorities-seem-grasp-threat-wider-economy-ailing-financial/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Much ado about adieu + +The right way to deport people + + +Germany’s approach is sensible. America’s is not + + + + + +From the print edition | Leaders + + +Mar 2nd 2017 + + + + + +TO IMMIGRANTS who live in the shadows, or in the interminable half-light of the asylum system, the signals in two large countries are ominous. Germany’s government is seeking to make it easier and quicker to deport failed asylum-seekers. America promises to “take the shackles off” its immigration officers and boost their numbers. In a speech to Congress on February 28th, Donald Trump mentioned two illegal immigrants—both of them murderers. + +In both countries, politics is lubricating the deportation machine. Mr Trump is delivering the crackdown he promised on the campaign trail; Germany is gearing up for elections in September, in which the anti-immigration Alternative for Germany party threatens to do well. In both countries, civil-rights groups call deportation brutal and unfair. In both, the federal government has clashed with local officials. But the differences are instructive, too. Germany’s actions are proportionate and sensible. America’s are not. + + + + + +Pick your targets carefully + +In principle, deporting people who fall foul of immigration rules is wise, even liberal. It is the corollary of a generous immigration system—proof that rules can be upheld and that a country can open its doors without losing control. In practice, deportation is tricky and choices must be made. It can be done humanely and efficiently. Or it can be callous and sloppy, so that it tears social bonds and makes a country less safe. + +Since January 2015 almost 1.2m people have sought asylum in Germany—more than in any other European country. Of the cases it has heard, Germany has accepted 39% as refugees and offered protection to others. That still leaves a lot of rejects, many of whom are clinging on. Soon there could be half a million foreigners in Germany who have been told to leave. + +Although deporting them all would be impossible—many are not acknowledged by the countries they fled—Germany wants to push more out of the door. So it plans to ban failed asylum-seekers from moving around the country and to offer money to hopeless cases if they depart of their own accord (see article). It will crack down on serious criminals. The federal government is also prodding states to be more vigorous. They are in charge of deportations, and at the moment they do not all agree that it is safe to return people to Afghanistan. + +As Germany tries to deter recent arrivals from digging in, and focuses on the worst offenders, America is doing more or less the opposite. It has about 11m illegal immigrants, according to the Pew Research Centre. Two-thirds of the adults have been in the country for at least ten years and two-fifths have children, many of whom are citizens. Although almost all illegal immigrants could in theory be deported, in recent years most effort has gone on removing recent arrivals and those who have committed serious crimes. + +Not any more. America’s Department of Homeland Security proposes to target all illicit immigrants who have “committed an act for which they could face charges”. Since Congress has criminalised many things that such people do (eg, using false Social Security numbers) that means open season on almost everyone. More children will be deported; parents who pay smugglers to bring their offspring to America will be prosecuted. Local police will be used as “force multipliers”. + +By widening the net to catch longer-established immigrants, who tend to have children and better jobs, Mr Trump’s government will cause immense harm to families and to the country. Already-long queues at the immigration courts will lengthen. Federal officers will be pitted against local ones. Police in many cities refuse to act as proxy immigration officers, on the sensible ground that illegal immigrants should not be afraid of talking to them. Pushing them to co-operate with gung-ho federal officers invites a clash. Last week the mayor of Los Angeles told immigration officers to stop referring to themselves as police. + +In America, many illegal immigrants have been around for decades and become part of society. Confusingly, when Mr Trump is not tarring unauthorised migrants as murderers, he says he is open to talking to Democrats about a comprehensive reform that would allow some of them to become legal (though not to earn full citizenship). That would be an excellent idea; but so far his actions speak louder than his words. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21717819-germanys-approach-sensible-americas-not-right-way-deport-people/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Letters + + +On companies, bubbles, Scotland, banking, Alabama, the green belt, time: Letters to the editor [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Letters + +Letters to the editor + + +On companies, bubbles, Scotland, banking, Alabama, the green belt, time + + + + + +From the print edition | Letters + + +Mar 2nd 2017 + + + + + +A firm’s long-term interests + +Schumpeter’s recent column on corporate short-termism suggests that “the solution is to prod incumbent firms to invest vast amounts and insulate their managers from investors” (February 18th). On the contrary, the solutions should be much more targeted to how capital markets really work. + + + + + +We are exploring two such solutions. One is rethinking the quarterly guidance process to engage managers with, rather than insulate them from, investors in their long-term strategic thinking. The second solution is to change the relationships and incentives between asset owners and fund managers to ensure that the long-term needs of savers and beneficiaries are best served in the investment process. + +Short-termism is a real issue that limits investments in human, intellectual and physical capital. Rebalancing the focus away from short-termism towards long-term goals isn’t easy, but making investments that drive innovation, job creation and savings certainly is not, as Schumpeter believes, “a distraction”. + +SARAH KEOHANE WILLIAMSON + +Chief executive officer + +FCLT Global + +Boston + + + + + +Floating bubbles + +Buttonwood confounds two questions that need to be asked separately: whether it is possible to recognise a bubble in real time and whether one can avoid the big losses typically associated with a crash (February 11th)? Presumably, recognising the bubble would help investors predict and thereby avoid a crash. But not every bubble needs to end in a crash, just as not every price collapse needs to be preceded by a bubble. + +The column also illustrates the importance of defining a bubble. If you define a bubble, as William Goetzmann does, partly by its demise, then it becomes logically impossible to use it as a warning signal. The bubble can, by this definition, only be recognised after the event. And if one were to allow the possibility that bubbles can be negative too, the rise “by more than two standard deviations” used by GMO, a fund-management group, could reflect the readjustment of the price to fundamentals rather than portend a crash. Much hinges on the precise meaning of the term. Alas, how to define a bubble has proved so vexing to the profession that Eugene Fama of the University of Chicago unsubscribed from your newspaper in exasperation because of the vague use of the term. + +Answering the questions Buttonwood asks is not possible before we become more clear about what exactly constitutes a market bubble. + +HYUN-U SOHN + +DIDIER SORNETTE + +Chair of entrepreneurial risks + +ETH Zurich + + + + + +Leaving has wide support + +It is misleading to say that Scots are being dragged out of the European Union “by the English” (“Sliding towards Scoxit”, February 18th). The referendum was held across the United Kingdom. We may be dragged out of the EU by the Leave votes of other individuals across the UK, but that includes the more than 1m people in Scotland who voted to Leave. Many of us who voted Remain in Scotland still support Scotland’s place in Britain, and we do not want another divisive independence referendum. More nationalism is not the answer. + +MARTIN REDFERN + +Edinburgh + + + + + +Banking and the elderly + +As a 69-year-old with the temerity to think she still has all her marbles, I fear becoming the victim of financial “mass-marketing scams” far less than I fear becoming the victim of paternalistic bank staff who have received training “in how to spot dementia and signs of financial abuse” (“Not losing it”, February 11th). This is especially the case if “changes in spending patterns” are seen as warning signals of cognitive decline in the elderly. The “expert on Alzheimer’s” who thinks old people would like to have banks “identify older people who are at risk and refer them to doctors or social workers” should know that not all old people are alike. Why not let each old person indicate in advance whether he wants his bank to perform this function? I bet I’m hardly the only one who will say no. + +FELICIA NIMUE ACKERMAN + +Professor of philosophy + +Brown University + +Providence, Rhode Island + + + + + +The people left behind + + + + I read your piece on the complex political and social past of northern Alabama’s yeoman farmers (“The little man’s big friends”, February 11th). I would add that the same peoples who settled in the pine woods of Alabama’s mountains, also settled in similar areas of Mississippi. In her book “The Free State of Jones”, Victoria Bynum outlined the history of the Scottish immigrants who settled the mountains of North Carolina, participated in the pre-revolutionary Regulator Movement and later migrated to Georgia and then to Alabama and Mississippi. + +Like Winston County in Alabama, Jones County in Mississippi also “seceded” from the Confederacy. Unfortunately, these yeoman farmers and their descendants have been ignored and even despised by politicians, liberal and conservative. American culture has characterised them as hopelessly ignorant and backward. As Ms Bynum says, “Northerners’ indifference and sometimes outright contempt ultimately encouraged white Unionists to move closer to the southern conservative coalition, which actively courted them with racist appeals to manly honour.” Not much has changed since then. + +DAVID PERASSO + +Seattle + + + + + +Save the green belt + +Bagehot put the entire blame for Britain’s housing crisis on the “insensitive” green belt (February 11th). This presupposes the problem is caused by a lack of new build housing supply. Yet in 2011 there were 1.1m vacant homes in Britain. Empty Homes, a charity, estimates that more than 200,000 were empty over the long-term, most of them because their owners could not raise sufficient capital to refurbish their property. This is not surprising given that government policy favours the building of new houses over the more logical option of refurbishing existing houses (tax is charged on the latter). + +Add to this the latent housing stock that could be regenerated from unused commercial space within our cities, and the potential supply of new homes already built is enormous. That would spare us building on the green belt, which is an important bulwark against urban sprawl. + +RICHARD WALKER + +Chester + + + +* The green belt is an administrative device not a sacred cow. It can and should be reviewed on the basis of evidence and consultation at a city region level—this is happening in Greater Manchester. Your attack on the concept throws out the green baby with the grey bathwater. Green belts and town planning have stopped urban sprawl and kept British cities compact, helping to support mass transit and the recycling of used land and buildings. + + + +Despite its problems, where would you rather live, in London…or Detroit? + +IAN WRAY + +Visiting Professor + +Civic Design Department + +University of Liverpool + + + + + +Going down the pan + +Your review of “Why Time Flies” by Alan Burdick pointed out that humans are “poor judges of the duration of time” (“Clock-watching”, February 11th). As someone once said: life is like a roll of toilet paper; the closer you get to the end of the roll, the faster it goes. + +W. TATE IV + +Ewing, New Jersey + +* Letters appear online only + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/letters/21717795-companies-bubbles-scotland-banking-alabama-green-belt-time-letters-editor/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Briefing + + +French politics: Fractured [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Fractured France + +An unprecedented election, with unprecedented risks + + +A new social faultline in France has reshaped the country’s politics and sidelined its main parties + + + + + +From the print edition | Briefing + + +Mar 4th 2017 | COGOLIN AND PARIS + + + + + +WITH its shuttered façades, narrow streets and shaded main square, this small southern town has a certain Provençal charm. It boasts a twice-weekly market, two well-equipped sports halls, a public library and a narrow strip of beach. Yet an intangible air of disappointment hangs over Cogolin. Its poverty rate is well above the national average. Unemployment, at 18%, is nearly twice that of France as a whole. Many of those with jobs belong to the army of workers who repaint, clean, mow and cook at the villas and yachts of nearby Saint-Tropez. In 2014 the town elected a mayor from the xenophobic National Front (FN) with 53% of the vote. + +Nearly three years into his term, Marc Etienne Lansade embodies the new-look FN. There are no shaven heads to be found at the town hall. With his monogrammed shirts and leather loafers, this former property developer from a chic suburb of Paris talks at length of his plans to develop Cogolin’s marina. He has taken on debt, partly to pay for extra local policemen. He is unapologetic about favouring expressions of Roman Catholic identity, such as a Christmas nativity scene in the town hall, dismissing critics of such gestures as “leftist Islamophiles”. He may come across as a hard-right deal-maker, but not as a thug. + + + + + +Local opponents accuse him of financing his development plans in “opaque” ways and an “ideological” hostility to cultural diversity, such as North African songs or dances in schools. The voters, though, seem undeterred. The year after they elected Mr Lansade, 54% of voters in Cogolin backed the FN candidate, Marion Maréchal-Le Pen, niece of Marine Le Pen, the FN’s leader, at regional elections. And a great many will vote for Ms Le Pen herself in the first round of the forthcoming presidential election on April 23rd. + +No precedents for the president + +At a Cogolin bakery where Algerian pastries are nestled next to the baguettes, a middle-aged woman, asked about her country’s politicians, says she has “a real desire to kick them all up the backside”. Over the past few months almost all the most prominent of them, save Ms Le Pen, have thus been kicked. In the centre-right primary, held in November, voters rejected an ex-president, Nicolas Sarkozy, and an ex-prime minister, Alain Juppé. In January’s Socialist primary they turfed out another ex-prime minister, Manuel Valls. They would have rejected François Hollande, too, had he not already bowed out of the race—an unprecedented move for a sitting French president. + +This bonfire of the elites has left France with a slate of candidates all but one of whom were not considered serious contenders for any party’s nomination six months ago. One of them, Emmanuel Macron, a former Socialist economy minister, is a candidate without the backing of an established party but with a real chance of victory, another unprecedented development. Benoît Hamon, the Socialist Party’s candidate, is a former backbench rebel against his own party. The centre-right nominee, François Fillon, will be put under formal investigation on March 15th accused of abusing his office to pay unearned salaries to his family; nevertheless, he says he will fight on. + +And then there is Ms Le Pen. The populist leader, who has run the FN since 2011, leads The Economist’s poll of polls (see chart 1). There is a good chance that she will come top in the first round of the election—again, something for which there is no precedent. (When her father, Jean-Marie Le Pen, the FN’s founder and former leader, got into the second round in 2002 it was as the first-round runner-up, with just 17% of the vote). For the other candidates the election has become a race to stand against her in the second round on May 7th, and the campaign a test of the ability of mainstream politicians to shape a response to renascent nationalism. + + + +Ms Le Pen will find it difficult to win in the second round; as yet, no poll has shown her doing so. One recently found her losing to Mr Macron by 42% to 58%; against Mr Fillon she does a bit better. But the margins leave little room for complacency. She is a strong campaigner, with a well organised party. Mr Macron, for all that he is fighting an insurgent campaign, can be painted as a very establishment character—of the sort who came off much worse in the votes for Brexit and Donald Trump than elite opinion expected. Many voters remain undecided, and more may still be biddable. Over two-fifths of those who have made a choice admit that they may yet change it. + +Nicolas Baverez, a lawyer and commentator, compares France’s mood to that of 1930, when fascism was on the rise, or even 1789, the eve of the French revolution. In the parquet-floored salons of Paris, conversation readily turns to such sombre parts of history. “The historian in me is very pessimistic,” says Dominique Moïsi, of the Institut Montaigne, a think-tank, “because I know that these things can happen.” + +The election of Ms Le Pen would not only bring to power a leader who has compared Muslims praying in the street to the Nazi occupation of France. It would prompt a crisis of government: the FN is highly unlikely to win a majority in June’s legislative elections, even if she is president. And it would threaten the future of Europe. Ms Le Pen has promised to abandon the euro in favour of a new franc and to hold a referendum on leaving the EU within her first six months (though she would need parliamentary approval to do so). The EU can survive the loss of Britain; the loss of France would bring the project that has underpinned the European order for the past 60 years to a close. + +The new geography puts all in doubt + +In some ways, the emergence of Ms Le Pen matches a pattern of insurgent populism across Western liberal democracies. A fear of job losses due to automation and deindustrialisation; a backlash against immigration; a distrust of self-serving political elites; the echo-chamber effect of information spread on social media: common factors helping populist political movements elsewhere have touched France, too. + +Ms Le Pen’s support, like support for Mr Trump and Brexit, is well correlated with education. Only 8% of French citizens with a degree voted FN in 2014; 41% of those without a high-school diploma did. As with Mr Trump, men are better disposed to the FN than women. Ms Le Pen, like Mr Trump, is particularly popular in old industrial towns from which jobs and confidence have drained away, taking with them faith in parties of the left (see chart 2). + + + +Perhaps the most distinctive aspect of the FN vote, though, is the faultline it reveals between the country’s cosmopolitan cities, at ease with globalisation, and those in-between places where farmland gives way to retail sprawl and a sense of neglect. Between 2006 and 2011, the number of jobs in 13 big French cities—Lyon, Marseille, Toulouse, Lille, Bordeaux, Nantes, Nice, Strasbourg, Rennes, Grenoble, Rouen, Montpellier and Toulon—increased on average by 5%. In France as a whole, jobs were lost. These dynamic cities, with their elegant pedestrian centres, tech hubs and gourmet food, vote for the left (Lyon, Nantes, Rennes), the greens (Grenoble) or the centre-right (Bordeaux). They are not immune to France’s feeling of being fed up; in April and May, many of them may opt for Mr Macron. But none registers a strong vote for the FN. + +Around them, though, is what Christophe Guilluy, a geographer, calls “peripheral France”. This is the world of lost employers like the Lejaby lingerie factory in Bellegarde-sur-Valserine, in the foothills of the Alps, or the Moulinex factory in Alençon, in southern Normandy. It is a world where Uber, bike-share schemes and co-working spaces are nowhere to be found, and where people sense that globalisation has passed them by. It is a world where the FN is on the rise. + +The FN’s first base was in the south, where Mr Le Pen built support among French settlers returning from independent Algeria in the 1970s. Its second was the rust-belt of the north and east, where it scooped up the disappointed vote that once went to socialists or communists. Maps by Hervé Le Bras, a demographer, show that the FN now has a third home in Mr Guilluy’s peripheral areas—beyond the outskirts of the cities, but not deeply rural. In a ring of communes between 40km and 50km from the centre of Paris, for example, the FN’s candidate in the 2015 regional elections, Wallerand de Saint-Just, won 32% of the vote. In places 80km out or more, he scored fully 41% (see chart 3). + + + +Isolation boosts FN support. “The farther you live from a railway station”, says Mr Le Bras, “the more you are likely to vote FN.” France has high-quality public services, and its citizens have matching expectations for the fabric of their lives. When that fabric thins—when a local butcher closes, or a doctor leaves town—they feel neglect. A common factor behind the FN vote in such places, says Jérôme Fourquet, director of Ifop, is “a sense of abandonment, of being left behind by an elite that doesn’t care.” + +Ms Le Pen exploits this sentiment with uncanny skill. Born into politics and raised in a mansion in a swish Parisian suburb, she somehow manages to speak for those she calls the country’s “forgotten” in a way they find credible. The reason this works is partly Ms Le Pen’s shrewd feel for simple language and anti-elite slogans. But it is also because France has been going through an unusually unsettled time that has left people looking beyond the established parties and given French populism distinctive features. + +One is a sense that a great country, the cradle of human rights and the Enlightenment, has somehow lost its way. This is particularly obvious in economic terms. Since the end of the trente glorieuses, the three decades of strong growth that followed the second world war, it has been debt, rather than growth, that has financed the high-speed trains, the blooming municipal flower beds and the generous provisions for child care, ill health, job loss and old age that are the hallmark of France’s splendid public sector. French public spending now accounts for a greater share of GDP than it does in Sweden. But no French government has balanced its budget since 1974. + +Over the past 15 years, there has been a particular décrochage, or decoupling, between the French economy and that of Germany, its closest ally. In 2002 the two countries enjoyed comparable GDP per head. Germany, under Gerhard Schröder, began to reform itself. France, under Jacques Chirac, didn’t. Today, Germans have 17% more purchasing power per person. Labour costs in France have risen faster than in Germany, deterring the creation of permanent jobs and undermining competitiveness. The country’s share of all goods exports between EU countries has dropped from 13.4% to 10.5%. + +Most devastating is unemployment. In 2002, it was a tad higher in Germany. Today it has dropped to 4% on that side of the Rhine, but in France it remains stuck at 10%, and at 25% for the under-25s. Over 80% of new jobs are on short-term contracts, with “short-term” often meaning just a month. A generation of young French people has grown up outside the country’s famously protected job market. The votes for Mr Trump or Brexit were weakest among the under 25s; but the young French support the FN more than any other party. (Conversely, older voters have much less truck with Ms Le Pen than their Anglophone peers did with Brexit and Mr Trump; polls say they fear for their savings and pensions if France leaves the euro.) + +Shame isn’t a strong enough emotion + +Economic self-doubt has been compounded by a sense of what Laurent Bouvet, a political scientist, calls “cultural insecurity”. Three big terrorist attacks within the space of 18 months, in 2015 and 2016, battered France’s confidence. The coming presidential election will be conducted under a state of emergency which has been renewed four times since November 2015. The French have had to learn to live with soldiers patrolling the streets and railway stations, a daily visual reminder of their vulnerability. + +Legitimate worries about terrorism have supplied fertile ground for insidious identity politics. As the home to one of Europe’s biggest Muslim minorities, France is more alert than, say, Italy or Spain to hints of religious extremism. Moreover, the country has a pre-existing and unforgiving framework for managing religious expression—known as laïcité—which recent governments, fearing a threat to secularism, have tightened up. When this provokes a row—over Muslim head-coverings, say—it plays straight into Ms Le Pen’s hands; she has little trouble persuading voters that their values are under threat. France, she tells her flag-waving rallies, faces nothing less than “submersion”. + +Ms Le Pen succeeds not because of the way her policies, which include a lower retirement age, more taxes on foreign workers and massive increases in spending on the armed forces, would tackle economic insecurity or the threat of terror (they wouldn’t). It is because of her talent for blending two strands of populism: anti-immigrant talk about values and churches, strong in the south, and anti-market discourse about jobs and the system, favoured in the north. On both counts, she can tap into French history. + +Ms Le Pen may have purged the FN of the overt anti-Semitism and neo-Nazi imagery of her father’s era. Yet her party remains originally rooted in a nostalgia for colonial Algeria and supporters of Marshal Pétain, who collaborated with the Nazis. Churches, flags and the homeland remain potent symbols in this world. Campaigning in Provence Ms Maréchal-Le Pen frequently recalls the country’s roots in Christendom. At her aunt’s political rallies, supporters can be heard chanting: “On est chez nous” (This is our home). + +At the same time, anti-establishment politics fits her compatriots’ self-image as a nation of revolutionaries, pitchforks in hand. When Mr Le Pen was first elected to the National Assembly, in 1956, it was on a list led by Pierre Poujade, who evoked this tradition when he spoke up for “the little people”: “The downtrodden, the trashed, the ripped off, the humiliated.” It is no coincidence that Ms Le Pen’s campaign slogan is “In the name of the people”. + +A final ingredient gives French populism a further twist: Euroscepticism. Invaded three times by Germany since 1870, and on its fifth republic, France has a long disrupted history, insecure even in peace. After the second world war it dealt with this by building Europe—a project by which it sought to bind in Germany and to amplify its own power. The French regarded the ceding of sovereignty as a means of reinforcing, not undermining, their nation state. + +Mastering the common touch + + + +Europe remains an important part of French identity. But somewhere along the line the passion it once evoked cooled down, and the consensus supporting it faltered. Second thoughts spread long before the recent currency and refugee crises. In 1992, the French approved the launch of the union’s single currency by the slimmest of margins. In 2005 they rejected the draft EU constitution. The share of French people who see Europe favourably dropped from 69% in 2004 to 38% in 2016, according to Pew, a polling group; that makes the EU less popular in France than in Britain. This has given the FN a fresh electoral cause. Ms Le Pen speaks of Brexit as a model of emancipation from the shackles of what she calls the “European Soviet Union”. + +The feeling that France has lost its sense of purpose goes well beyond those tempted to vote for the FN. So does exasperation with the failures of both the left and the right to put the national interest first, and fix the country. At every national election for the past ten years, at all levels of government, the French have voted against the party in overall power; fully 89% of the French told a recent poll they thought the country was heading in the wrong direction. It is this that has opened the way for a party refusenik such as Mr Macron—who, should he win, will have to get the people to break their unerring habit of resisting the change they have just voted for, a habit that accounts for much of their frustration. + +In “Le Mal Français”, a book published in 1976, Alain Peyrefitte, a minister under Charles de Gaulle, lamented the fact that such a talented country had produced such a blocked system. Every now and then, it seems, France needs to go through convulsions of abrupt change in order to free itself from l’immobilisme (paralysis). History shows that such moments of upheaval can produce startling and creative forces for renewal. But they can also presage a slide into darkness. In Mr Macron’s cities, and Ms Le Pen’s peripheries, France is poised to go either way. The choice it makes could scarcely matter more. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21717824-new-social-faultline-france-has-reshaped-countrys-politics-and-sidelined-its-main/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +United States + + +Regulation: Grudges and kludges [Thu, 02 Mar 22:42] + +The budget: Ten-penny plan [Thu, 02 Mar 22:42] + +Nuclear weapons: Assured destruction [Thu, 02 Mar 22:42] + +Anti-Semitism: Past and present [Thu, 02 Mar 22:42] + +Los Angeles: Dense as in smart [Thu, 02 Mar 22:42] + +Lexington: Leading v cheerleading [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Grudges and kludges + +Too much federal regulation has piled up in America + + +Republicans and Democrats have been equally culpable in adding to the rulebook + + + + + +From the print edition | United States + + +Mar 2nd 2017 | WASHINGTON, DC + + + + + +IF REPUBLICANS in Congress unite behind Donald Trump’s agenda, it will not be because they have changed their views on economics. Whatever Mr Trump’s plans for border taxes and fiscal stimulus, most Republicans still profess to support free trade and loathe government borrowing. Instead, unity is possible because two other goals bind the president and his party together. The first, tax cuts, is a usual priority for the party. But the second, deregulation, only recently rose to the same status. The call to cut red tape is now an emotive rallying cry for Republicans—more so, in the hearts of many congressmen, than slashing deficits. Deregulation will, they argue, unleash a “confident America” in which businesses thrive and wages soar, leaving economists, with their excuses for the “new normal” of low growth, red-faced. Are they right? + +The straightforward motivation for Republicans’ deregulatory agenda is their disdain for President Barack Obama’s legacy, much of which was installed through regulatory fiat. The Affordable Care Act, better known as Obamacare, required bureaucrats to write thousands of pages of new rules; the Dodd-Frank financial-reform bill did the same. When legislation was not forthcoming, the executive branch threw its weight around instead. It asserted that the Clean Air Act gave it wide-ranging powers to fight climate change, and that the Clean Water Act let it clean up many more ponds and rivers than ever before. It expanded mandatory overtime pay for workers on low salaries. It banned telecom firms from favouring any one type of internet traffic. And its “fiduciary rule”, set to come into force in April, will force investment advisers to act in the best interests of their clients. + + + + + +Republicans hate all this, saying Mr Obama’s fondness for red tape has crushed the economy. His regulations were, on the whole, bigger and bolder than what had come before. They caused ire on the right—and among bankers and polluters. Sometimes they rested on uncertain legal ground. The Clean Power Plan has been delayed by the courts and may yet be struck down (Mr Obama’s old constitutional law professor, Laurence Tribe, is among its critics). The structure of the Consumer Financial Protection Bureau, a new agency set up by Mr Obama, may yet be found unconstitutional. The so-called “administrative state” has plenty of critics who worry more about the growing power of the executive than about the particular ends Mr Obama pursued. + +America’s underlying regulatory problem long predates the 44th president. Between 1970 and 2008 the number of prescriptive words like “shall” or “must” in the code of federal regulations grew from 403,000 to nearly 963,000, or about 15,000 edicts a year, according to data compiled by the Mercatus Centre, a libertarian-leaning think-tank. Between 2008 and 2016, under Mr Obama, about the same number of new rules emerged annually. + +The unyielding growth of rules, then, has persisted through Republican and Democratic administrations (see chart). Several factors explain it. First, Congress has neither the staff nor the expertise to write complex, technical laws. So lawmakers happily let experts in government agencies fill in the blanks. What Congress does write itself, it writes sloppily. In 2015 the Supreme Court found “more than a few examples of inartful drafting” in the Affordable Care Act. One such error nearly saw the court strike down crucial parts of law; only semantic gymnastics saved it. The “Chevron deference”, a doctrine from a 1984 court ruling, gives agencies wide latitude to interpret laws when they are vaguely written. (Neil Gorsuch, Mr Trump’s nominee to the court, is not a fan.) + + + +Second, America’s division of powers makes it easy for interest groups to defend any one regulation, tax break or policy. That forces administrations to solve problems by taping yet more rules onto whatever exists already, rather than writing something simple from scratch. Over time, this gums up the system, resulting in what Steve Teles of Johns Hopkins University has dubbed a “kludgeocracy”. This explains, for instance, why over half of Americans have to pay a professional to fill out their tax return for them (in Britain, for comparison, most people need not even complete one). + +Mr Obama’s regulations were kludgey. The Clean Power Plan, which forces specific emissions reductions on power plants, emerged after Congress failed to pass a cap-and-trade scheme. Unable to raise the federal minimum wage, the administration did what it could to boost wages with a reboot of an old overtime rule. (This clumsily mandates that workers on low salaries must get a 50% wage bump for work in excess of 40 hours a week, creating strange incentives for firms to add staff rather than breach the threshold.) Unified government does not stop kludges. Dodd-Frank, passed in 2010 when Democrats controlled Congress, micromanages banks’ balance-sheets rather than imposing exacting but simple capital standards. + +Bureaucrats, busted + +Yet the most important explanation for the proliferation of rules concerns the habits of Washington’s bureaucracy. It has for decades been bad at rubbing out old ones. + +When a government agency writes a significant regulation—mostly defined as one costing more than $100m—it must usually prove that the rule’s benefits justify its costs. Its analysis goes through the Office of Information and Regulatory Affairs (OIRA), a nerdy outpost of the White House. The process is meticulous. The OECD, a club of mostly rich countries, finds that America’s analysis of regulations is among the most rigorous anywhere. + +But once a rule has cleared the hurdle, there is little incentive for agencies ever to take a second look at it. So it is scrutinised only in advance, when regulators know the least about its effects, complains Michael Greenstone, of the University of Chicago. The OECD ranks America only 16th for “systematic” review of old red tape. (The leading country, Australia, has an independent body tasked with dredging up old rules for review.) + +Politicians of all stripes realise that America has fallen behind. Mr Obama ordered agencies to trawl for anachronistic regulations and report on their progress twice a year. This produced some results. For example, in 2014 the Department of Transportation scrapped a rule requiring truck drivers to file a report on condition of their vehicle before and after every trip, even when they found no faults. The change supposedly saved the industry $1.7bn. But the deregulatory charge lost some momentum in Mr Obama’s second term, after Cass Sunstein, its champion, left his post as head of OIRA. Critics contend that agencies ended up using the clear-out as another excuse to write new rules. + +The endless pile-up of regulation enrages businessmen. One in five small firms say it is their biggest problem, according to the National Federation of Independent Business, a lobby group. (Many businessmen grumble in private about the Obama administration’s zealous regulatory enforcement). Based on its own survey of businessmen, the World Economic Forum ranks America 29th for the ease of complying with its regulations, sandwiched between Saudi Arabia and Taiwan. + +Regulators retort that firms’ complaints reflect only one side of the ledger—costs—and ignore the benefits that flow from, say, greater protection for consumers. For example, Mr Sunstein has argued that the Obama administration was an unusually good regulator, because the estimated net benefits of new regulations in his first term were more than twice what either George W. Bush or Bill Clinton achieved in theirs. + +But totting up costs and benefits is hardly straightforward. An agency which supports a regulation can obviously nudge the numbers in a favourable direction. Bureaucrats must sometimes make value judgments. For instance, the Obama administration counted benefits to foreign countries when weighing up rules to reduce carbon emissions. + +In any case, cost-benefit analysis ages badly. Without updating it, it is difficult to know how much old regulations weigh on the economy. One Mercatus working paper plugs the number of rules in each industry into a complex model of the economy. It finds that rules written since 1980 have dampened growth by about 0.8 percentage points a year. + +Republicans like to put about that sort of figure, but it strikes many economists as implausibly large. Even those sympathetic to deregulation, like Glenn Hubbard, who worked in Mr Bush’s White House, are hesitant to forecast the growth effects of a regulatory bonfire, preferring to stress the benefits of tax cuts. Democrats, meanwhile, are scathing about the idea that rolling back regulations would pep up the economy much. Jason Furman, who advised Mr Obama, adds up the costs of Obama-era rules and says it is “impossible” to see how you would add even a tenth of a percentage point to growth by undoing them. (The Trump administration promises growth of 3.5-4%, up from 1.6% in 2016, partly on the back of deregulation.) + +Yet regulation does cause some visible problems. Infrastructure projects are frequently bogged down in endless environmental reviews and consultations. An example is a project to upgrade the Bayonne Bridge, which spectacularly arches between Staten Island and New Jersey. Elevating the road so that bigger cargo ships could pass underneath required 47 permits from 19 different government entities, according to Philip Howard, a legal writer. Regulators demanded a historical survey of every building within two miles of the bridge, even though the project affected none of them. It took from 2009 to mid-2013, when building at last began, to satisfy all the regulatory requirements. + +And that is unusually quick. Big highway projects approved in 2015 took an average of a decade to clear every bureaucratic hurdle, according to one study. It is little wonder that Mr Obama struggled to find “shovel ready” projects to kick-start with stimulus funds after the financial crisis. (Any infrastructure push by Mr Trump will probably run into the same problem.) + +Regulation can also impede innovation in ways that are hard to foresee. In 1973 the Federal Aviation Administration (FAA), worried about loud sonic booms, banned civil aircraft from flying at supersonic speeds above America. But planes are now lighter, more aerodynamic, and contain more efficient engines, explains Eli Dourado of Mercatus. That makes them quieter. With start-ups trying to build commercially viable supersonic jets, Mr Dourado thinks the FAA should replace the ban with a maximum permissible noise level. The FAA has acknowledged the case for change, but it moves slowly. + +Playing the long game + +Detangling America’s regulatory mess requires institutional change. It does not require tearing up Mr Obama’s legacy. That, however, is what Republicans are focused on. By law, Congress, with Mr Trump’s consent, can overturn any rules that were written late in Mr Obama’s time in office—in this case, after June 2016. It has already scrapped a requirement that energy and mining companies disclose any payments they make to foreign governments. It has also blocked a ban on people deemed mentally unfit to manage their own finances from buying guns. The president has ordered a review of the Dodd-Frank law, which regulates the financial industry, and has advised public schools that they need not adhere to an Obama missive advising them to allow transgender pupils into the lavatory of their choice, or face losing their federal funding. + +Yet there is some impetus towards long-term regulatory reform. Mr Trump has also signed an executive order requiring that for every new rule regulators write in 2017, they must scrub out at least two old ones, and eliminate as many regulatory costs as they have imposed. Critics say this will arbitrarily halt good regulation that passes a cost-benefit test. But it does at least provide some incentive for agencies to revisit their past decisions. Britain has had a similar system since 2011. Its “one-in, one-out” requirement, which has since grown to “one-in, three-out”, has unearthed some barmy rules, such as a requirement that people working for themselves at home should follow workplace health-and-safety laws. (Mr Trump’s policy lacks some of the finesse of Britain’s, which lets regulatory costs in one department be offset by regulatory savings in another.) + +When they get around to institutional reform, Republicans in Congress will seek more power over regulators. One proposal would ensure a congressional vote on every significant new rule. Another would make it easier to challenge cost-benefit analyses in court. This worries wonks. Congressmen have neither the time nor the expertise to evaluate most regulations properly, argues Philip Wallach of the Brookings Institution, a think-tank. Enabling politicians or interested parties to block rules they dislike risks making policy more kludgey. In America’s lawmaking, Mr Teles argues, veto-points function as toll booths, at which proponents of a law must write in yet another complicated carve-out or handout. + +Instead, Congress could beef up the institutions which scrutinise cost-benefit analysis away from the heat of politics. The obvious place to start would be OIRA, which has seen its budget fall by a quarter and its staff halved over the past three decades, even as the regulation it must scrutinise has proliferated. + +Yet OIRA will always be under the command of the White House. So others argue that Congress should create an independent agency to scrutinise regulations on its behalf. It could be modelled on the Congressional Budget Office (CBO). Widely respected for its independent analysis, the CBO increases the ability of Congress to scrutinise the budget. A congressional regulatory agency could do the same for regulation, and could also continually recommend old regulations for the chop. + +Better institutions would not solve all America’s regulatory problems. And some over-regulation, like zoning requirements that stop successful cities from expanding, is the fault of state governments. About a quarter of American workers require an occupational licence to do their jobs, in part because states have a foolish habit of outsourcing regulation to those who have an incentive to make it harder to enter their profession. States must fix such problems themselves. + +It is clear, however, that the federal government should keep asking itself whether each of its vast number of rules is really necessary. If Republicans can see past their dislike of Obama-era policies and focus on a bigger prize—root-and-branch reform of the regulatory system—the economy will surely benefit. Whether the gains will be large enough to justify tolerating the more damaging parts of Mr Trump’s economic agenda is another matter. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717838-republicans-and-democrats-have-been-equally-culpable-adding-rulebook-too-much/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The ten-penny plan + +The White House proposes eye watering budget cuts + + +It doesn’t expect the budget to get far in Congress + + + + + +From the print edition | United States + + +Mar 2nd 2017 | WASHINGTON, DC + + + + + +DURING his campaign for the White House, Donald Trump touted a “penny plan” for government spending. This meant cutting the part of the budget that funds day-to-day operations—ie, excluding Social Security, health care, debt interest or defence—by 1% a year. Critics said such cuts were unachievable. Department budgets are already beneath their historical average as a share of the economy. They would have to shrink by nearly a third over a decade, after accounting for inflation, to satisfy the penny plan. + +That has not deterred Mr Trump. On February 27th the White House announced its headline budget numbers, ahead of a more detailed plan due soon to appear soon. In his first year in office, Mr Trump is proposing to cut so-called “non-defence discretionary” spending not by 1%, but by more than 10%, relative to current law. The $54bn (0.3% of GDP) this would free up would flow to the defence budget (see article). + + + + + +Cue incredulity. The part of the budget Mr Trump would cut, which funds things like education, housing and national parks, has already fallen by over 10% in real terms since 2010. Strict spending limits in the Budget Control Act of 2011, sometimes called the “sequester”, caused the dive. These kicked in automatically after Congress failed to pass a more palatable plan to bring down deficits. The sequester was supposed to be so severe that lawmakers would have to strike a deal to avoid it. Cutting budgets by a further 10% would be painful. The White House wants the State Department and foreign-aid budgets to bear much of the burden. But these make up only a small proportion of the federal budget: about $57bn in total (see chart). + + + +The sequester also cut defence spending deeply, which is why hawks like Senator John McCain have been questioning America’s military preparedness. Barack Obama’s last budget proposed a boost to defence spending about two-thirds as big as Mr Trump’s (see chart). A recent paper by Mr McCain argues that an additional $54bn is needed on top of Mr Obama’s figure—for a total boost of $91bn, compared with the sequester. + +Congress can usually write budgets with a simple majority in both houses. But amending the sequester may require 60 votes in the Senate, and hence bipartisan co-operation. (This happened in 2013 and 2015.) Democrats will never support cuts on the scale Mr Trump seems to want. Plenty of Republicans, too, worry about cuts to the State Department. Mick Mulvaney, Mr Trump’s budget chief, says that he is under no illusions about the budget’s prospects in Congress, recalling that Republicans paid little attention to Mr Obama’s proposals. The budget, he says, was not written for Congress, but for the people. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717831-it-doesnt-expect-budget-get-far-congress-white-house-proposes-eye-watering/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +American defence spending + +Donald Trump’s military budget plan is less impressive than he claims + + +It would not be enough to pay for the new nuclear arms race that the president says he wants + + + + + +From the print edition | United States + + +Mar 2nd 2017 + + + + + +THE budget plan Donald Trump will send to Congress, proposing to boost defence spending by $54bn next year, is less transformative than the president appears to believe. As John McCain, the chairman of the Senate armed services committee, swiftly pointed out, the 10% increase is about $19bn more than forecast by the outgoing Obama administration (out of a total annual spend of close to $600bn). It would not provide anything like enough money for the 350-ship navy, additional fighter planes and extra troops for both the army and the marines that Mr Trump has called for. And it would certainly not pay for the new nuclear arms race that the president has also suggested he favours. + +Mr Trump wants to slash spending on soft power. Cuts to the State Department’s budget and foreign-aid programmes would reduce America’s influence in the world and undermine the civil side of stabilisation missions—for example, the rebuilding of Mosul after Islamic State has been kicked out—against the advice of some of his own cabinet. The defence secretary, James Mattis, while giving testimony to Congress in 2013 when he was running Central Command, warned: “If you don’t fund the State Department fully, then I need to buy more ammunition.” + + + + + +The overall goal of stronger armed forces also risks being undermined by what looks like a willingness to trigger a new nuclear arms race. It has emerged that in his hour-long telephone call with Vladimir Putin on January 28th, the Russian president suggested extending the New START strategic arms-reduction treaty by five years after its expiry in 2021. Mr Putin may have seen this as something relatively uncontroversial that could help unfreeze relations between the two countries—something Mr Trump frequently says he wants. It seems that the president may not have known what his opposite number was referring to. But, after pausing the conversation for advice, he resumed it with a tirade against New START, describing it as a typical example of a bad Obama-era deal. + +In an interview with Reuters on February 23rd, Mr Trump doubled down: “It’s a one-sided deal. It gave them things that we should have never allowed…whether it’s START, whether it’s the Iran deal…We’re going to start making good deals.” Mr Trump added that although he would love to see a world without “nukes”, America had “fallen behind on nuclear-weapon capacity”. He would ensure its return to “the top of the pack”. + +Strategic arms-control agreements between America and Russia (as the former Soviet Union) stretching back to 1972 have been based on negotiating equal reductions, with the aim of ending up with rough parity between the nuclear forces. The New START treaty, which came into force six years ago, was no exception. It limits both sides to no more than 1,550 deployed strategic warheads on a maximum of 700 deployed missiles (land- and submarine-launched) and nuclear bombers. Far from being one-sided, New START is firmly in America’s interests. Steven Pifer of the Brookings Institution, a think-tank, notes that the treaty was not only unanimously supported by the joint chiefs of staff, but was also endorsed by seven former heads of Strategic Command. + +Apart from capping the number of warheads aimed at America, the treaty provides a trove of information about Russia’s forces. It allows for 18 on-site inspections in Russia every year, detailed data exchanges every six months and a stream of mutual notifications (nearly 13,000 since 2011). While the treaty allows each side to modernise its nuclear forces, the transparency it brings means both can do so without making what Mr Pifer calls “costly worst-case assumptions”. + +Should Mr Trump decide to pull out of New START, the likely consequence would not be America racing to the “top of the pack” but a Russian advantage for most of the next decade. Russia is at a later stage in its nuclear modernisation cycle: its production lines for new missiles and ballistic-missile submarines are already humming. America’s will take several years to crank up. As things stand, America’s nuclear modernisation plan was forecast earlier this month by the Congressional Budget Office to cost $400bn up to 2026. Finding the money will be difficult anyway. But a wholly unnecessary and dangerous new nuclear arms race would mean either giving up on conventional military capabilities, more borrowing, or raising taxes. + +A nuclear issue which does require the president’s attention is the recent report that Russia has fielded a cruise missile that violates the 1987 Intermediate-Range Nuclear Forces treaty. The INF treaty permanently bans both countries from deploying ground-launched missiles with ranges of between 500 and 5,500 kilometres. However, noisily rubbishing New START is precisely the wrong way to restore Russian compliance with the INF. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717977-it-would-not-be-enough-pay-new-nuclear-arms-race-president-says-he/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Anti-Semitism in America + +An ancient prejudice returns + + +At the same time, Jews are the most admired religious group in the country + + + + + +From the print edition | United States + + +Mar 2nd 2017 | UNIVERSITY CITY, MISSOURI + + + + + +MORE than 150 tombstones were toppled or damaged at Chesed Shel Emeth (“The truest act of kindness”), a Jewish cemetery in University City, Missouri. At the Mount Carmel Jewish cemetery in Philadelphia, between 75 and 100 were smashed. According to David Posner of the Jewish Community Centre (JCC) Association, 31 threats were made against 23 JCCs and eight schools in 15 states and a Canadian province on a single day in February. This was the fifth wave of such threats since the start of the year. “The threats were hoaxes, but the calls were not,” says Mr Posner. All 31 schools and centres had to be evacuated. + +In his speech to Congress on February 28th, Donald Trump condemned the attacks. Mike Pence visited University City a few days earlier to inspect the damage for himself. Yet plenty of people blame the president for what is happening. When campaigning, Mr Trump condoned thuggery and was slow to disown support from white supremacists. The Southern Poverty Law Centre, a watchdog, counted 867 racist incidents, some of them amounting to crimes, in the first ten days of Mr Trump’s presidency, dubbing this “the Trump effect”. When his administration forgot to mention Jews in a statement issued on Holocaust memorial day, neo-Nazi websites celebrated, claiming that the White House had been taken over by Holocaust-deniers. + + + + + +Steven Goldstein, of the Anne Frank Centre, says the president needs to do more to stop the desecration and the threats. Jonathan Greenblatt of the Anti-Defamation League thinks the Justice Department should launch an investigation into the bomb threats, set up a federal task-force on fighting hate and increase efforts to fight hate speech online and in schools. “We are navigating uncharted waters,” says Mr Greenblatt, citing anti-Semitic invective on social media. + +Yet to be American and Jewish in 2017 is also to be admired. A study by the Pew Research Centre found that Jews are the most popular religious group in America, edging out Catholics and evangelical Christians and much better liked than either Muslims or atheists. Both contenders for the presidency last year have a Jewish son-in-law (Mr Trump’s daughter converted to Judaism before her marriage). Isaac Herzog, an Israeli opposition leader, has called on his government to draw up a national emergency plan to prepare for a massive influx of diaspora Jews from America and France. He may be waiting a while. + +Just over a week after the vandals attacked, a tour of Chesed Shel Emeth reveals volunteers repairing and cleaning large tombstones in what was once a very Jewish suburb of St Louis. Two Muslim-American activists, Linda Sarsour and Tarek El-Messidi, launched a crowdfunding campaign for the cemetery with a goal of $20,000. It had raised $150,000 by March 1st. This is likely to be more than is needed to repair the damage at the cemetery. Mr El-Messidi, who lives in Philadelphia, says the extra funds raised will help to repair his city’s vandalised cemetery, too. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717972-same-time-jews-are-most-admired-religious-group-country-ancient/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Los Angeles + +When homeowners are given vetoes over development, they prevent it + + +After 50 years of campaigns against growth, nearly half the city is zoned for single-family housing + + + + + +From the print edition | United States + + +Mar 2nd 2017 + + + + + +CURTIS HOWARD, an ex-serviceman and former truck driver, received a startling piece of post at his San Fernando Valley apartment recently. “EVICTION NOTICE” it read in red capital letters. “You are ordered to vacate the premises described in the writ no latter than 3/07, 2017.” Mr Howard had been homeless for several years before landing at Crest Apartments, a new affordable-housing project in Van Nuys, where he pays $60 a month. His stomach sank at the prospect of moving back to the streets. When he scrutinised the notice more closely, he realised it was fake. The paper was actually a campaign mail-out for Measure S, a proposal that will appear on ballots in Los Angeles on March 7th along with choices for the city’s mayor. + +Also known as the “Neighbourhood Integrity Initiative”, the measure would pause construction on projects that require exemptions from existing rules on zoning and height for two years. It would also prohibit spot zoning, where changes are applied to small parcels of land. Proponents of the initiative oppose a mixed-use complex in West Los Angeles that would replace a car dealership, and a squiggly Frank Gehry-designed project in West Hollywood, among others. Those on the other side of the argument, who include the mayor, Eric Garcetti, say the measure would affect most new development in the city. During a recent campaign event held at the Crest Apartments, Mr Garcetti cautioned that of the 12 building sites the city has identified for low-income housing, 11 would be blocked if Measure S passes. + + + + + +This is just the latest in a long string of tussles over how the City of Angels should grow without sacrificing its low-rise feel. “People who live in Los Angeles have a hard time coming to terms with the fact that they live in the second-largest city in the country. They like being in a city that feels like a suburb,” says Richard Green, at the University of Southern California. Joel Kotkin of Chapman University, who recently left Los Angeles because of congestion, sees Measure S as a “last attempt by middle class neighbourhoods to say, ‘We don’t like what’s happening’.” + +Growth-wary Angelenos have long been successful at swaying city planners. After decades of rapid development, homeowners campaigned for influence over land use in the 1960s. Given more control over zoning in 1969, they used it to push for curbs on density. The slow-growth movement continued into the 1980s. In 1986 Proposition U moved to limit the construction of high-rise buildings and cut by half the allowable size of most new commercial buildings beyond downtown. Voters supported it, two to one. Writing in the Los Angeles Times in 1987, its backers explained: “We’re tired of the overdevelopment, the excessive traffic and the inadequate planning that are increasingly plaguing the people of Los Angeles.” + +The Measure S camp expresses nearly identical concerns today, shuddering at the “Manhattanisation” of the city. The Los Angeles metropolitan area, which includes the cities of Long Beach and Santa Ana, is the densest in the country. But the city itself is far less dense than other comparably sized cities. It has a mere 8,474 people per square mile; New York has more than 28,250. As of 2014, nearly half the city was zoned for single-family housing. + +This is in large part the result of shifts in zoning rules over the past 50 years. In 1960 Los Angeles had a population of 2.5m and a capacity for 10m residents. By 2010 the city’s population had swelled to nearly 4m, but zoning and legislation had reduced its capacity to 4.3m. Increasing density is the only way out (other than pestilence, or a crime wave, perhaps), but weaning Angelenos away from single-family housing will be tough. “A good place to start is for politicians never again to utter the words ‘preserve neighbourhood character’,” says Jan Breidenbach of the University of Southern California. “In reality what they’re saying is, ‘Keep out’.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717976-after-50-years-campaigns-against-growth-nearly-half-city-zoned-single-family/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Lexington + +Why do most Americans seem sure that the president is keeping his promises + + +The answer lies in the president’s unusual relationship with his supporters + + + + + +From the print edition | United States + + +Mar 4th 2017 + + + + + +DONALD TRUMP’S presidency contains a puzzle. Opinions of the new president are remarkably clear-cut. Nine in ten of those who voted for him last November say they approve of his performance. Interviewed face-to-face, Trump supporters hail him for that rarest of political feats—doing in power just what he said he would do when campaigning. He has staged daily shows of action and resolve; scolding silver-haired CEOs to bring back jobs; signing executive orders to review and eventually repeal what he calls “job-killing” regulations, flanked by farmers or coal miners in hard hats. The heart of his first formal address to a joint session of Congress on February 28th was the line: “Above all else, we will keep our promises to the American people.” + +Mr Trump’s opponents also seem sure that he is keeping his promises, albeit to their horror. More than nine in ten of Hillary Clinton voters say they disapprove of his presidency. Many predict his swift impeachment and demand “resistance” to all he does, an overwrought choice of word, implying that Democrats who work with him are treacherous collaborators. The resignation of Michael Flynn for lying about his contact with the Russian ambassador, and the forgetful testimony of Jeff Sessions, the attorney-general, in his confirmation hearing, have fed this sense that they are confronting a well-organised conspiracy. + + + + + +For all that certainty in the country at large, the president remains a figure of sphinx-like mystery to those trying to work out what his government is actually doing. On the day of the big speech farmers and house-builders gathered in the White House to watch Mr Trump sign an executive order that he said paved the way for the elimination of a “very disruptive and horrible” rule, known as Waters of the United States (WOTUS), which aims to define which streams, small rivers and other waterways are subject to federal pollution controls. “It’s truly run amok,” said Mr Trump, suggesting at the signing that the rule has cost “hundreds of thousands” of jobs. In fact the rule was issued only in 2015 and has spent most of its short life suspended by court order. In a further touch of smoke and mirrors, Mr Trump’s order does not kill WOTUS but merely sends the issue back for review. + +Or take immigration. Hours before his address to Congress, the president told TV anchors over lunch that “the time is right” for an immigration bill offering a pathway to legal status for foreigners who have committed no serious crimes—a proposal that his most fervent supporters would normally scorn as “amnesty”. But his speech made no mention of that approach, instead asserting: “We’ve defended the borders of other nations while leaving our own borders wide open, for anyone to cross”—though spending on border defences has more than doubled since 2001. + +One of Mr Trump’s few tangible acts since taking office has been to issue instructions to federal agents that give them greater latitude to deport migrants encountered without papers, if they have been arrested for even minor crimes. Though he spoke soberly to Congress, Mr Trump harked back to his campaign rhetoric when he mentioned four guests in the House gallery whose relatives were “viciously” killed by illegal immigrants. He further announced the creation of a new government office tasked with reporting on crimes committed by immigrants. To be known as “Victims Of Immigration Crime Engagement” or VOICE, he declared that it will provide a platform for crime victims “who have been ignored by our media, and silenced by special interests.” + +Though he offered some detail on this matter, Mr Trump left how he will shepherd his main plans through Congress, or pay for them, vague. He did not mention balancing the budget. He offered no guidance on fiscal questions that split Republicans down the middle, such as whether to support a border-adjustment tax on imports. The president came close to backing the replacement for Obamacare being proposed by Republican leaders in the House of Representatives. But he dodged the trade-offs involved, instead promising, regally, to “expand choice, increase access, lower costs and at the same time provide better health care.” + +The puzzle, then, is why so many Americans are so sure that Mr Trump is keeping his promises. The solution lies in the president’s unusual relationship with his supporters. He was elected on grandiloquent pledges to “bring the jobs back” and build a “great wall” on the Mexican border that will stop people, drugs and crime. Those promises were really a commitment to be a champion for his supporters. Mr Trump can be hazy about what he plans to do because he is so clear about whom he represents: those he calls “forgotten” Americans, defined as hard-working, law-abiding heartland folk. And every time the news shows him signing some executive proclamation, the image carries almost as much messaging-power as a bill that took years to pass. + +The man in the arena + +If the president’s tone when addressing Congress felt more presidential than usual, it is because Mr Trump’s rhetoric expanded that in-group—those for whom he governs—to take in all Americans. Properly, he began his speech by condemning anti-Semitic attacks and an apparent hate crime in Kansas City, involving a white man accused of shooting dead an Indian-American engineer, while shouting “Get out of my country.” Later in the address, listing those ignored by elites, Mr Trump cited inner-city children from such diverse cities as Chicago, as well as the miners and factory workers of whom he usually speaks. All menaces can be beaten once America puts “its own citizens first”, he declared. + +Broad-brush nationalism is better than the narrow tribalism Mr Trump often peddles. His great strength is his sense of his target audience, and of how those Americans see the world. But that is a strength more suited to campaigning than governing, and he takes power after making many impossible promises. Soon events will trigger hard choices. Mr Trump will have to lead, not just cheerlead. He has not yet shown he has that in him. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21717817-answer-lies-presidents-unusual-relationship-his-supporters-why-do-most/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +The Americas + + +Canada’s Conservatives: Chasing Trudeau [Thu, 02 Mar 22:42] + +Peru’s disappeared: Unearthing the past [Thu, 02 Mar 22:42] + +Corruption in Mexico: The backhander bus [Thu, 02 Mar 22:42] + +Bello: He who pays democracy’s piper [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Chasing Trudeau + +A battle for the soul of Canada’s Conservative Party + + +Fourteen candidates want to lead the main opposition party + + + + + +From the print edition | The Americas + + +Mar 2nd 2017 | OTTAWA + + + + + +THE annual Manning Centre conference in Ottawa is popularly known as Woodstock for Canadian Conservatives. It is not obvious why. At this year’s edition, held from February 23rd to 25th, booths manned by clean-cut millennials offered pamphlets on such subjects as child discipline and taxing carbon emissions. A few delegates sported “Make America Great Again” caps. Not a man bun was to be seen. + +The main business of this year’s gathering was to help decide which of 14 candidates should lead the Conservative Party, which lost an election in October 2015 after almost a decade in power and has been leaderless since. The choice, to be made on May 27th, will determine what sort of opposition the Liberal prime minister, Justin Trudeau, will face. It will set a new course for a party that has governed for 65 of the 150 years since Canada’s creation. + + + + + +For much of that time, it was hard to tell the two biggest parties apart. The Progressive Conservatives, as they were known from 1942 to 2003, endorsed the welfare state and the multicultural values espoused by the Liberals. That changed under Stephen Harper, who fused the Progressive Conservatives’ “red Toryism” with the prairie populism of the former Reform Party. His merged Conservative Party championed smaller government, lower taxes and devolution of power from the centre to the provinces. Unusually among Western right-of-centre parties, Mr Harper’s Conservatives strongly supported immigration. They won three elections from 2006 to 2011. + +But Canadians eventually wearied of the cerebral Mr Harper and came to doubt that his small-government policies would halt the erosion of the middle class. Some were turned off by his refusal to take climate change seriously and by the anti-Muslim bias that crept into the party’s rhetoric. The Conservatives’ core supporters are older, whiter and more rural than most Canadians. Conservatives now govern just three of the ten provinces and are in a “distinct minority” on municipal councils of big towns, points out Preston Manning, an elder statesman whose foundation hosts the conference. “The unvarnished truth is that we are currently in a trough,” he says. + +None of the candidates competing for the chance to pull the party out of it would abandon Mr Harper’s legacy. In the Manning Centre debate, one of several in the long leadership contest, all proclaimed their aversion to Mr Trudeau’s tax-and-spend Liberalism and their enthusiasm for developing Canada’s natural resources and for free trade. The aspiring leaders are mostly still “colouring within the lines” sketched out over the past 25 years, says James Farney, editor of a book of essays called Conservatism in Canada. But each brings a different set of crayons. + +A touch of orange + +Maxime Bernier, a former foreign minister, would give the party a libertarian cast. He supports the most Woodstock-like initiative to appear at the conference: the Free My Booze campaign to end provincial monopolies over sales of alcohol. In keeping with that laissez-faire cause, Mr Bernier advocates ending protection for dairy, egg and poultry farms. Andrew Scheer, a former Speaker of the House of Commons, has conservative positions on social issues, such as abortion, but says he would not impose these on the party. + +Two contenders would, in different ways, bring a Trumpian tinge to the Conservatives. Kevin O’Leary, a star of reality television, shook up the race when he entered it in January. Brash and rich, Mr O’Leary revels in being a political outsider and brings a pizzazz that the other contenders lack. He has pushed the party to come up with ambitious plans to enliven the sluggish economy. Unlike Donald Trump, to whom he is often compared, Mr O’Leary enthusiastically backs the legalisation of cannabis, one of Mr Trudeau’s pet projects. His rivals see him as a celebrity interloper (he joined the party last year). But he does not speak French, normally a fatal flaw in an aspiring prime minister. + + + +Closer to Mr Trump in outlook is Kellie Leitch, a paediatric surgeon and former labour minister. She calls for screening immigrants, refugees and even tourists to make sure that they believe in “Canadian values”. Most Conservatives do not seem attracted by such bare-knuckle politics. Frank Buckley, a Canadian-American who has written speeches for Mr Trump, told the conference that he sensed less anger in Canada than in the United States, perhaps because social mobility is still greater. + +Just who will emerge from the scrum to become leader of the opposition is impossible to forecast. A recent poll of Conservative voters named Mr O’Leary, Mr Bernier, Dr Leitch and Lisa Raitt, a competent but unexciting ex-minister, as the most popular choices. But the decision will be made by the party’s 85,000 members, who will list the candidates in their order of preference (voters for the least-popular candidates have their lower preferences counted, until one candidate wins a majority). A divisive contender like Dr Leitch may not have broad enough support to prevail. + +To win the next national election in 2019 the Conservatives will need an experienced centrist with broad appeal. That would argue for choosing someone like Michael Chong, the son of immigrants from China and the Netherlands, who was minister of intergovernmental affairs under Mr Harper. He is the only reddish Tory in the race. But he was booed for advocating a carbon tax, which is unpopular in Canada’s energy-producing western provinces, the Conservative heartland. + +Most of the 14 candidates who took to the stage in Ottawa would have little hope of winning the next election. The Woodstockers left with little sense of who might lead them and where. A booth outside the debate hall sold T-shirts with an image of Mr Trudeau and the legend, “Tell me when it’s over.” The wait may be long. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21717982-fourteen-candidates-want-lead-main-opposition-party-battle-soul-canadas/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Unearthing the past + +A new hunt for remains of victims of Peru’s internal conflict + + +The government strives to investigate atrocities without reviving anger + + + + + +From the print edition | The Americas + + +Mar 2nd 2017 | LIMA + + + + + +THE threat posed to Peru’s democracy by the Shining Path, a leftist guerrilla army, has ended, but memories of the war it waged against the state in the 1980s and 1990s are still raw. Nearly 70,000 people died or disappeared during the conflict. A truth and reconciliation commission issued a report in 2003, apportioning guilt roughly evenly between the government and the Maoist rebels. It did not foster understanding between the vast majority of Peruvians who despise the insurgents—who often behaved more like terrorists than guerrillas—and the few who are still drawn to it. + +Recently Peruvians have been reminded of their differences. Last year a mausoleum for members of the Shining Path who died in a prison uprising in 1986 opened in Lima, the capital. Politicians denounced it; the biggest party in congress introduced legislation in November to add symbols and monuments to the list of things that could be classified as an “apology for terrorism”, a criminal act. On February 14th this year Peruvians marched to commemorate the 25th anniversary of the murder in Lima of María Elena Moyano, a leftist politician, by the Shining Path. “I remember and want others to understand,” said Rosalina Meza, a marcher who witnessed Moyano’s murder. Later in February, 12 Shining Path leaders, already jailed for terrorism and other crimes, went on trial for masterminding a car bombing in Lima in 1992 that killed 25 people and injured hundreds. The trial is expected to last for months. + + + + + +The government of Pedro Pablo Kuczynski is eager to encourage forms of commemoration that heal wounds rather than reopen them. A law passed by congress last June, before Mr Kuczynski took office, established a department in the justice ministry to search for the remains of people who disappeared between 1980 and 2000. It is expected to begin its investigation this month. Just 1,600 bodies were found in earlier searches. Unlike those earlier efforts, the new investigations will not attempt to assign responsibility for what happened. Their main purpose will be to return victims’ remains to their families. “This completely changes the dynamic,” says Marisol Pérez Tello, the minister of justice and human rights, who sponsored the original legislation. + +The search will start in the highland region of Ayacucho, where the Shining Path began its war and where, according to the truth commission, 40% of the deaths and disappearances occurred. The justice ministry thinks the region could hold 6,000 mass graves. But the mission may not avoid the rancour caused by earlier efforts to memorialise victims, Ms Pérez Tello acknowledges. Relatives whose remains are returned may demand justice. “Bad elements” in the army may be among the defendants if the discoveries lead to new trials, she says. + +And the war has not quite ended. Remnants of the Shining Path continue to operate in a Belgium-sized area of rugged terrain, called VRAEM, which includes two provinces in Ayacucho. Their last big attack, in April 2016, killed eight soldiers and two civilians. The area remains under a state of emergency. The two brothers who lead the group, Víctor and Jorge Quispe Palomino, are on the United States’ terrorist list. A poll by Ipsos late last year found that nearly a quarter of Peruvians think the Shining Path is reviving and attracting new members. As long as they think the menace is growing, it will be hard to bury grudges from the war. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21717984-government-strives-investigate-atrocities-without-reviving-anger-new-hunt-remains/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The backhander bus + +Using tourism to teach Mexicans about corruption + + +The Corruptour has its own take on the capital’s monuments + + + + + +From the print edition | The Americas + + +Mar 2nd 2017 | MEXICO CITY + + + + + +THE Estela de Luz (“stele of light”) is not one of Mexico City’s glories. The 104-metre (341-foot) tower, built from panels of quartz, was supposed to celebrate the bicentennial of Mexico’s independence from Spain in 2010. But it was inaugurated in 2012, 16 months later than planned, and cost 1.3bn pesos ($100m) to build, more than treble its original budget. The federal government paid the bill. Eight former officials involved in the tower’s construction were arrested after its completion. + +The delay and cost overruns earned the tower a place on the “Corruptour”, a new twice-a-week bus tour that shows off the capital’s monuments to graft, fraud and mismanagement. There are plenty of them. Tourists board a converted school bus, stripped of its roof and emblazoned with tabloid-style headlines, and visit ten sights, or nine when the traffic is bad. They include the Balderas metro station in the city’s centre. A recorded commentary tells the saga of the metro system’s Line 12. Its stations were so shoddily built that half of them had to close temporarily. + + + + + +The bus pulls up at the institute of social security, Mexico’s third-biggest public-sector purchaser of goods and services. The taped commentary explains that, according to a report in 2011, the institute was paying a third more than it should because its suppliers colluded with each other. (It has since improved its procurement practices.) The stop outside the interior ministry is an occasion to talk about impunity. The ministry is responsible for the maximum-security prison from which Joaquín “El Chapo” Guzmán, a drug kingpin, escaped in 2015, down a tunnel dug from the shower in his cell. That led to the arrest of 13 officials. Mr Guzmán was eventually recaptured and extradited to the United States. + +The Corruptour was dreamt up by a group of friends working for NGOs. “Everyone knows about corruption but imagines it is a monster,” says Patricia de Obeso, an organiser. “We’re trying to break it down and explain how it’s done.” The tourists, a mix of Mexicans and visitors from elsewhere in Latin America, do not buy tickets but are asked for donations. + +The Corruptour is not the only gimmick for drawing attention to a problem that is indeed a monster (on average households spend 14% of their incomes to pay bribes and meet other corrupt demands). The tour was inspired by a similar one in the north-eastern city of Monterrey. The Mexican Corruptionary, published last year, offers definitions of 300 corruption-related terms. A góber covers up for policemen in the pay of organised crime; a hueso (bone) is a bribe paid to get a public-sector job that itself offers bribe-taking opportunities. In 1996 the word “corruption” appeared in 27 Mexican headlines, according to Mexicans Against Corruption and Impunity, a think-tank. By 2015, with newspapers reporting on police who had taken part in the massacre of 43 students and on allegations that the president’s wife had bought a house from a government contractor, the number of corruption-related headlines had jumped to 3,500. + +Ms de Obeso encouraged the tourists to vent their own feelings about corruption. Luis, from the State of Mexico, which surrounds the capital, took the microphone to declare that Mexicans are “living in a time of crisis. People need to inform themselves.” But others on a sunny Sunday afternoon seemed to be more interested in snapping photos. They were not about to let their indignation get in the way of a good selfie. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21717980-corruptour-has-its-own-take-capitals-monuments-using-tourism-teach-mexicans-about/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bello + +How Latin America deals with campaign finance + + +The unavoidable trade-offs of paying for democracy + + + + + +From the print edition | The Americas + + +Mar 2nd 2017 + + + + + +FOR months before elections, Latin Americans are bombarded by campaign publicity. In Brazil an obligatory nightly hour of political broadcasts sees a succession of attention-seeking pledges from presidential candidates and local hopefuls. In Peru walls and even mountain boulders are painted with the names of candidates. Although social media are increasingly important, many of the region’s politicians still line the streets with posters and hold rallies, plying supporters with food, T-shirts and even cash. + +Who pays for all the paraphernalia of electoral democracy, and what might they get in return? Revelations of corrupt political donations in several Latin American countries by Odebrecht and other Brazilian construction firms are sparking demands to tighten the rules on campaign finance. Nadine Heredia, the wife of Peru’s former president, Ollanta Humala, denies having received a $3m donation from Odebrecht for her husband’s victorious campaign in 2011. A former Colombian senator who admitted pocketing an Odebrecht bribe claims, without proof, that $1m went to President Juan Manuel Santos’s campaign in 2014. + + + + + +Popular wisdom holds that Latin American elections are an increasingly expensive free-for-all. (Despite the free television time, the cost of Brazil’s campaigns may be similar to that in the United States, by some estimates.) + +In fact, the region’s governments have long sought to regulate campaign finance, but often ineffectually, as Kevin Casas-Zamora, a former vice-president of Costa Rica, and Daniel Zovatto, an Argentine political scientist, point out in a recent survey of the issue. Whatever the rules, the reality is that a small coterie of private businesses stumps up most of the campaign cash almost everywhere, except perhaps in Uruguay and Costa Rica. + +Uruguay was the first country in the world to give a public subsidy to political parties, in 1928. Now most Latin American democracies do so, but the subsidies are mostly small. In Venezuela, in theory, there are no subsidies; in practice the ruling party deploys unlimited state money and resources in its campaigns. All of Latin America except El Salvador bans foreign political donations. That did not stop Venezuela’s Hugo Chávez and Brazil’s Workers’ Party (via Odebrecht) from financing campaigns in other countries, to counter the centre-right bias of private donations. + +Corporate donations have sometimes led to the private capture of slices of government. Take Chile, one of the region’s more advanced democracies, which has recently been shaken by several political-financing scandals. The most worrying involved revelations that several big fishing companies financed politicians who should have regulated them, but instead allowed them unrestricted rights to plunder Chile’s depleted seas in perpetuity. + +Chile’s parliament has approved new rules drawn up by a committee headed by Eduardo Engel, an economist. They restrict outdoor advertising, increase public subsidies, bar corporate donations and regulate those from individuals. Similarly, Brazil has banned corporate donations and shortened the duration of the official campaign. Several other countries are considering tighter rules. But in Chile some politicians blamed the record-low turnout (of 35%) in municipal elections last October on the lack of a “campaign atmosphere”. In Brazil’s municipal vote last year, the campaign curbs seemed to have helped more incumbent mayors than expected win re-election. + +Campaign-finance reform is fraught with such trade-offs and unintended consequences. Public financing of politics is unpopular; in Mexico it may have raised, rather than cut, the cost of campaigns. Bans on corporate donations (which exist in several countries) risk prompting recourse to organised crime for money. + +Nevertheless, the status quo has become untenable. It seems right to try to cut the cost of campaigns by shortening them. As for corporate money, some would argue for obligatory disclosure rather than a ban. Mr Engel says a role for corporate money might be acceptable in Chile in the future. Perhaps most important is that enforcing either transparency or bans requires capable and neutral electoral authorities. In Chile’s municipal campaign, the authority absurdly made it hard for individuals to display campaign posters in their homes. + +In a region of great inequality of wealth, it is hard to disagree that corporate political donations should be tightly regulated. But campaign finance is a problem for which there are no panaceas, only hard choices and one incontrovertible truth: democratic politics costs money, and someone has to pay for it. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21717985-unavoidable-trade-offs-paying-democracy-how-latin-america-deals-campaign-finance/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Asia + + +Philippine politics: Death and taxes [Thu, 02 Mar 22:42] + +North Korean assassination: VX marks the spot [Thu, 02 Mar 22:42] + +Donald Trump and Afghanistan: A bitter stalemate [Thu, 02 Mar 22:42] + +The politics of language in Sri Lanka: Crossed in translation [Thu, 02 Mar 22:42] + +An ultranationalist kindergarten: School of shock [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Death and taxes + +Rodrigo Duterte’s bloody war on drugs is impeding the sensible bits of his agenda + + +A vendetta against users and pushers is blocking economic reform + + + + + +From the print edition | Asia + + +Mar 2nd 2017 | MANILA + + + + + +POLITICAL norms may be crumbling all around the world, but citing Adolf Hitler as an inspiration remains a no-no almost everywhere. That did not stop Rodrigo Duterte, the outspoken president of the Philippines, who declared in September that he wanted to do to Filipino drug addicts what Hitler had done to Jews. + +So far, Mr Duterte’s drug war has seen more than 7,000 drug suspects killed by police, vigilantes and rivals (the three categories overlap). Most Filipinos are enthusiastic, albeit nervous for their safety; many foreigners are appalled. Love it or hate it, the campaign has totally overshadowed Mr Duterte’s eight months in office. Yet Filipinos elected Mr Duterte not just for his “Duterte Harry” approach to crime, but because of a much broader pledge to upend the status quo by elbowing aside entrenched elites, reducing yawning inequality and repairing crumbling infrastructure. In addition to its terrible cost in lives, Mr Duterte’s anti-drugs crusade risks becoming a distraction from the many more constructive items on his agenda. + + + + + +The most important measure Mr Duterte’s administration has so far presented to Congress, where his supporters hold a hefty majority, is the first of five ambitious tax-reform bills. It would lower the top personal income-tax rate from 32% (relatively high for the region) to 25%, and would raise the threshold at which tax becomes payable. To offset those losses, the bill would increase taxes on fuel and vehicles. The second bill, which the government plans to introduce later this year, would reduce the corporate income-tax rate from 30% (also high for the region) to 25%, while trimming tax breaks. Later measures would lower inheritance taxes, make more goods and services subject to value-added tax (VAT) and raise taxes on alcohol, cigarettes and, perhaps, sugary drinks. + +Carlos Dominguez, the finance minister, says these changes should raise revenue, despite lowering headline rates. The lower personal rate will, he hopes, deter tax evasion by reducing the incentive to cheat. The lower corporate rate is intended to attract more foreign investment. + +Tax and spend + +Increased revenues are essential to Mr Duterte’s ambitious infrastructure plans. For years the country has underinvested in infrastructure—in the World Economic Forum’s most recent Global Competitiveness Index, the Philippines ranked 95th in the sector, well below its South-East Asian peers. Mr Duterte’s administration wants to spend 5-7% of GDP on infrastructure, roughly what his predecessor, Benigno Aquino, managed in his last year, and well above the average rate between 1980 and 2009 of around 2%. Manila has some of the world’s worst traffic—two-hour commutes in each direction are not unusual. As a candidate, Mr Duterte promised to do something about it, which helped win him support from Manila’s middle class. + +Priorities, according to Mr Dominguez, include better airports and railway lines around the country, notably in Mr Duterte’s underdeveloped home island of Mindanao, and between Manila, Subic Bay and Clark—raising the possibility of a new international airport at Clark to relieve congestion at the abysmal one that serves Manila. Numerous projects approved by the previous administration are scheduled for completion during this one, giving Mr Duterte plenty of opportunities to grin, cut ribbons and claim credit. + +Other items on the “ten-point socioeconomic agenda” he released shortly before taking office include relaxing restrictions on foreign ownership of companies, overhauling land-tenure laws, improving the country’s health and education systems, promoting rural development and broadening access to contraception. + +Mr Duterte is also well positioned to put an end to two of his country’s longest insurgencies. Mr Aquino presented Congress with a bill granting autonomy to Muslims in Mindanao; Mr Duterte, who got on well with Muslims as mayor of the island’s biggest city, says he supports it. In February he cancelled peace talks with the communist New People’s Army, but he has close ties (too close, whisper some) with leftists, and the two sides may soon find their way back to the negotiating table. + +Making good on any of these initiatives requires attention and discipline from the top, however, and Mr Duterte remains almost wholly focused on drugs. Many hoped that would change: in late January Mr Duterte suspended his drug war after rogue police officers killed a South Korean businessman. But this week the national police chief said that drugs are creeping back onto the streets, and the president suggested that the war would resume. + +Mr Duterte is now pushing a bill to reduce the age of criminal responsibility from 15 to nine, and also wants to reinstate capital punishment (formally) for drug-trafficking. These proposals are meeting resistance in Congress, which is also uncertain about autonomy for Muslim areas and lukewarm about tax reform. This week Leila de Lima, a senator and a long-standing critic of Mr Duterte’s, was arrested on charges that she ran a drug-trafficking ring while serving as Mr Aquino’s justice secretary. Ms de Lima strongly denies the charges, calling herself a “political prisoner”. + +The president’s erratic character, obsession with drugs and indifference to the rule of law have consumed his first eight months in office. But his term is six years: there is still plenty of time to focus on more worthwhile plans. The millions of Filipinos who elected him to improve their lives will expect no less, even if they, too, are now distracted by the war on drugs. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717830-vendetta-against-users-and-pushers-blocking-economic-reform-rodrigo-dutertes-bloody-war/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +VX marks the spot + +Brazen even by North Korean standards + + +The world’s most toxic nerve agent is discharged in an international airport + + + + + +From the print edition | Asia + + +Mar 4th 2017 | SEOUL + + + + + +THE murder of Kim Jong Nam, half-brother of Kim Jong Un, the North Korean dictator, had already seemed outlandish enough. According to the Malaysian authorities, two women in their 20s had stolen up behind him at Kuala Lumpur International Airport on February 13th, smeared some kind of poison on his face and then slipped away into the throng of travellers. Within 20 minutes Mr Kim was dead. + +The results of an autopsy, announced ten days later, were more extraordinary still: they showed the poison to be VX, the deadliest nerve agent ever synthesised. That firmly pointed the finger at North Korea’s repressive regime, which is thought to have a vast stockpile of chemical weapons, VX among them. The nerve agent is classified as a weapon of mass destruction and banned under the Chemical Weapons Convention—which North Korea, along with only three other countries, has not signed. Just one litre of the stuff could kill 1m people, such is its potency. Inhaling VX vapour disrupts the nervous system within seconds, causing convulsions and suffocation. + + + + + +North Korea is not known for its squeamishness: this week the South’s spy agency reported that the North had conducted yet more executions with anti-aircraft guns, shooting five officials to pieces. Yet spreading its nastiest chemical around a foreign airport is brazen even by the North’s standards. (North Korea has not even admitted that the victim was Kim Jong Nam, but has demanded the return of the body without an autopsy and denounced the Malaysian government’s version of events as slander.) + +The Malaysian authorities say four North Korean men, who have since fled the country, gave the poison to Siti Aisyah, from Indonesia, and Doan Thi Huong, from Vietnam; police said they had been instructed to wash their hands immediately after the attack in an airport bathroom. The women, who landed in Malaysia within two days of each other, claim that they had been asked to play a prank for a reality TV show; Ms Siti said she had been paid the equivalent of $90 for the stunt. She had gone out to celebrate her birthday with friends in Kuala Lumpur the night before. Ms Doan is said to have been a failed contestant on a Vietnamese version of Pop Idol, a talent show, before travelling to Malaysia to find work. On March 1st Malaysian prosecutors charged the two with murder. + +An attempt was made to break into the morgue where Mr Kim’s body is being kept. The Malaysian authorities have not revealed any details, but they have threatened the North’s ambassador with expulsion if he continues to “spew lies and accusations” about their investigation. The North, in turn, says “the biggest responsibility” for the furore lies with Malaysia, “for letting one of our citizens die”. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717823-worlds-most-toxic-nerve-agent-discharged-international-airport-brazen-even-north/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +A bitter stalemate + +Donald Trump holds Afghanistan’s future in his hands + + +Will he pull out or double down? + + + + + +From the print edition | Asia + + +Mar 2nd 2017 + + + + + +IT MAY be America’s longest war, but during his election campaign Donald Trump barely mentioned Afghanistan. When he did, it was somewhat baffling: at one point, he said that America could not pull all its troops out because neighbouring Pakistan had nuclear weapons. As the insurgents of the Taliban prepare for a spring offensive against the American-backed government, there is still no indication of what the new administration’s approach will be. + +For once, Mr Trump’s refrain that Barack Obama left a terrible mess for him to deal with has merit. Mr Obama’s policy on Afghanistan seemed driven more by politics at home than by conditions on the ground. He ordered a timely “surge” in American forces when warned by General Stanley McChrystal in 2009 of imminent “mission failure”. But he then squandered hard-won gains by reducing troop levels faster than his generals advised, hoping to be able to declare victory and leave in time for congressional elections in 2014. When NATO prematurely called time on combat operations at the end of that year, Afghan forces, far from ready to take full responsibility for the country’s security, were left exposed. + + + + + +Mr Obama further encouraged a resurgent Taliban by suggesting he wanted to end even America’s modest training mission before leaving office. However, faced with the possibility that the government might fall to the insurgency if he exercised this so-called “zero option”, Mr Obama relented, doing just enough to preserve what has become a miserable stalemate. + +An international force of 12,600 remains in Afghanistan, of whom 8,400 are Americans. About 2,500 are special forces who carry out raids against terrorist targets, such as al-Qaeda and the local branch of Islamic State, but not the Taliban. The rest are there to “train, advise and assist” the Afghan security forces, including the police. Under rules of engagement first laid down by Mr Obama and only slightly relaxed last summer, the NATO troops could only come to the aid of their Afghan allies when they were facing a defeat that might have “strategic” implications—a criterion that commanders in the field had difficulty interpreting. + +Anthony Cordesman of the Centre for Strategic and International Studies, an author of many critical reports on the conduct of the war, says that too little of the training takes place with forward combat units, where it would be of most use. Close air support, which was vital for NATO, has dwindled. In 2011 nearly 35,000 combat sorties were flown; in the first ten months of 2016 that had fallen to 4,500. The number of missions to evacuate casualties has dropped from nearly 3,000 in 2011 to none. + +The consequences have been dire. In testimony to the Senate Armed Services Committee in February, the American commander in Afghanistan, General John Nicholson, warned that current American troop levels are inadequate to prevent the Taliban from continuing to retake territory, especially in Helmand province, the heartland of the insurgency, and Kunduz. SIGAR (the Special Inspector General for Afghanistan Reconstruction, a post created by Congress) reckons that the proportion of the country under uncontested government control fell during the 12 months to November 2016 from 72% to 57%, although about 64% of Afghans still live in uncontested areas and only 8% in areas fully under the Taliban’s control (see map). + +The 360,000-strong Afghan security forces are taking a lot of casualties, says General Nicholson. In the year to November, 6,785 were killed and another 11,777 wounded. In 2015 and 2016 combined, 19 Americans were killed in action. + +Just to maintain the current deadlock, General Nicholson has asked for “a few thousand” more troops, some of whom he would expect to come from other members of NATO. A further loosening of the rules of engagement and an increase in the air-power available to him would also help. John McCain, the chairman of the Senate Armed Services Committee, told General Nicholson that instead of playing “not to lose”, America needed a strategy to defeat the Taliban. + +What will Mr Trump do? In keeping with his mantra of “America first”, he might conclude that Afghanistan is a hopeless case, with its divided, dysfunctional government and a thriving insurgency that still draws support from Pakistan, a supposed American ally. He could leave the bickering regional powers—Pakistan, India, Iran, China and Russia—to sort it out. + +On balance, that seems unlikely. An administration that sees countering “radical Islamic extremism” as its overriding strategic priority would find it hard to justify leaving Afghanistan to its fate. The defence secretary, Jim Mattis, is reviewing plans “for a path forward”. He and the national security adviser, General H.R. McMaster, both served in Afghanistan. Their instinct will be to recommend that Mr Trump set a bolder objective than Mr Obama was willing to endorse and refrain from setting timetables that ignore military reality. + +Even then, Mr Cordesman argues, Mr Trump will also have to pep up Afghanistan’s political leaders. Corruption, as much as insecurity, has stymied international efforts to revive Afghanistan’s sickly economy. Without some progress on that front, no amount of external military support will kill off the insurgency. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717835-will-he-pull-out-or-double-down-donald-trump-holds-afghanistans-future-his-hands/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Crossed in translation + +Linguistic slights spur ethnic division in Sri Lanka + + +Monoglot officials are impeding post-war reconciliation + + + + + +From the print edition | Asia + + +Mar 2nd 2017 | COLOMBO + + + + + +FROM its gleaming new headquarters, Jaffna’s police force serves around 100,000 people. The vast majority of the local population are Tamils or Tamil-speaking Muslims; fewer than 50 locals are members of Sri Lanka’s biggest ethnic group, the Sinhalese. But the vast majority of the city’s 532 police officers are Sinhalese; only 43 are Tamil, and very few of the rest speak the Tamil language well. + +This is not just an affront to Tamils, whose complaints about discrimination lay at the root of a 26-year civil war that ended in 2009. It is also a practical problem. Sripathmananda Bramendra came to the new headquarters one day in December to obtain the paperwork needed to replace a lost licence-plate. He waited for hours to talk to a Tamil-speaking officer. But the only one around was first busy with a superior, and then had to rush off to translate at a public protest. Everyone still queuing was told to return the next day. + + + + + +Roughly three-quarters of Sri Lankans are Sinhalese; Tamils and Tamil-speaking Muslims make up the remaining quarter. But the population is relatively segregated, with most Tamils concentrated in the north and east. Unlike most officials in the provinces, police are recruited at national level and rotated around the country during their careers (doctors in government hospitals are another troublesome exception). The result is that police stations in Tamil areas are staffed mainly by Sinhalese, who struggle to communicate with the people they are supposed to be protecting. This, in addition to the mistrust bred by the civil war, puts Tamils off joining the police, compounding the problem. + +Even after Sri Lanka became independent from Britain in 1948, English remained the language of administration. But in 1956, in an effort to court Sinhalese voters, the prime minister of the day pushed through a bill to make Sinhala the sole official language. For Tamil-speakers in the bureaucracy, the results were devastating. Those who did not learn Sinhala were denied raises and promotions. Many were forced to retire. The share of Tamils in the bureaucracy fell from 30% in 1956 to 5% in 1970. In the armed forces the plunge was even steeper: from 40% to 1%. + +In theory, subsequent changes in the law have restored the status of Tamil, giving it near-parity with Sinhala in all government business. In practice, admits Mano Ganesan, the trilingual minister in charge of implementing the relevant laws, a properly bilingual bureaucracy is decades away. Since 2007 all state employees have been required to achieve proficiency in both Tamil and Sinhala within five years of being hired. But progress is sluggish. In 2015-16 60% of those who passed the required exam did so with the lowest possible score, suggesting that they are far from fluent. Embarrassing errors remain common. Mr Ganesan cites the example of a sign above a bench in a government office that read, in Sinhala, “Reserved for pregnant mothers” and, in Tamil, “Reserved for pregnant dogs”. + +The Centre for Policy Alternatives, an NGO, tracks violations of the official language policy and, on occasion, petitions the courts to rectify them. In 2014 it secured an order compelling the central bank to print all the wording on new banknotes in Tamil as well as Sinhala. It is now suing to require instructions on medicine to be printed in both languages. More than 100 laws (many of them adopted in colonial days) have not been officially translated into Tamil or Sinhala. Even national identity cards did not become bilingual until 2014, after a legal challenge. + +Forms in most public offices in the north are available only in Tamil, and elsewhere in the country only in Sinhala, causing problems for those who cross the linguistic divide. A similar problem applies to the courts, with a shortage of interpreters leading to delays in many cases. + +The working language of the Supreme Court is English, but most appeal documents from lower courts are in Sinhala or Tamil, depending on the part of the country in which the case originated. The only Tamil-speaker on the court has just retired; the remaining judges must rely on English translations. The Court of Appeal, which also uses English, is only slightly better off: three of its 12 judges speak Tamil. + +Police issue parking tickets and fines in Sinhala. Government circulars are mostly in Sinhala. The immigration department offers forms in three languages, but does not have enough Tamil-speakers to process the Tamil ones. Dial the emergency services, and there is often no one to field calls in Tamil. + +Mr Ganesan wants to deploy bilingual assistants in all public offices, strengthen legislation to punish violators of the official language policy, establish a state-of-the-art complaints centre and even allow parties to lawsuits to request a judge who speaks a particular language. Implementing the language policy properly, he says, “will be the prelude to a political solution” to the Tamil grievances that stoked the civil war. As a recent task-force on national reconciliation noted: “Shortcomings in bilingual language proficiency throughout the machinery of the state were identified in most submissions across the country as a major impediment to reconciliation.” The task-force first published its findings in English and later in Sinhala; the Tamil translation is still not ready. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717987-monoglot-officials-are-impeding-post-war-reconciliation-linguistic-slights-spur-ethnic-division/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +School of shock + +An ultranationalist kindergarten in Japan + + +Embarrassingly, it has links to the prime minister + + + + + +From the print edition | Asia + + +Mar 2nd 2017 | TOKYO + + + + + +EVERY morning the children of Tsukamoto kindergarten stomp their tiny feet in time to military anthems, bow to pictures of the emperor and vow courageously to offer themselves to defend the state. At school functions, the three-, four- and five-year-olds exhort watching parents to protect Japan from foreign threats. + +The great-grandparents of Tsukamoto’s pupils were once taught similar fare, but state schools toned down the nationalism in the aftermath of the second world war. Until recently few Japanese realised that any private schools were still peddling such jingoism. They were even more surprised to learn that the government seems to have been encouraging them. + + + + + +Last year Moritomo Gakuen, the firm that runs the kindergarten, bought a plot of public land in the city of Osaka at a knock-down price—perhaps 14% of its value. It began building a primary school to propagate the same ultranationalist ideas. It invoked the name of Shinzo Abe, the prime minister, when soliciting donations. His wife, Akie, gave a speech at the kindergarten and was named honorary head teacher. Tomomi Inada, the defence minister, sent a letter thanking the kindergarten for raising the morale of Japan’s soldiers, after it had dispatched pupils to the docks to welcome returning warships. + +Mr Abe denies any involvement in the land sale, and says he will step down if anyone can prove otherwise. He and his wife were badgered into helping the kindergarten, he insists, by its head teacher, Yasunori Kagoike, who had used his name to raise money “despite my repeated insistence he should not do so”. + +Mr Abe had previously praised Mr Kagoike, however, saying he had an “admirable passion” for education and that they shared a “similar ideology”. As scrutiny grows, there are signs of revisionism on both sides: all references to Ms Inada and Mrs Abe have been unceremoniously scrubbed from the kindergarten’s website. + +Tsukamoto has been investigated under hate-speech laws. It sent notes home to parents referring to Chinese people as shinajin—the rough equivalent of “chink”. Mr Kagoike’s wife, the deputy head, sent a letter to the parent of an ethnic-Korean pupil saying she did not discriminate but “hates Koreans and Chinese”. + +Moritomo Gakuen is now squirming as much as Mr Abe. Officials in Osaka say the primary school may not receive a licence to operate when construction is completed. There have been fewer applicants than expected. And it has had to change its planned name, to Land of Rice memorial school, from the much grander Prime Minister Shinzo Abe memorial school. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21717996-embarrassingly-it-has-links-prime-minister-ultranationalist-kindergarten-japan/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +China + + +Hong Kong’s chief executive: Lam dunk [Thu, 02 Mar 22:42] + +Anti-smog activism: Choking with fury [Thu, 02 Mar 22:42] + +Banyan: The constrained dictator [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Any candidate you like, so long as China approves + +The race has begun for Hong Kong’s leadership + + +But has the outcome already been fixed? + + + + + +From the print edition | China + + +Mar 2nd 2017 | HONG KONG + + + + + +THERE is not much doubt who will be declared the next leader of Hong Kong on March 26th: Carrie Lam, who until recently was the head of the territory’s civil service. That is because the Communist Party in Beijing prefers her. The “election committee”, which will make the decision, is stacked with people who will bow to the party’s will. Far more in doubt is whether Mrs Lam will command public support. Her main rival for the job is trying to show that he has more of it. If he is right, that will matter hugely: Hong Kong will soon get a new leader, but also, very probably, more of the social unrest that has beset a series of unpopular ones. + +Three candidates had secured the minimum of 150 nominations that were needed from the nearly 1,200-member committee by the March 1st deadline. Mrs Lam was far ahead of the pack, with 580 backers. The man widely seen as her most credible rival, John Tsang, who was Hong Kong’s financial secretary until recently, secured 165. The third, Woo Kwok-hing, a retired judge, got 180 nominations. But most observers expect Mr Woo to be eliminated in the committee’s first round of voting. + + + + + +The Communist Party’s support for Mrs Lam as the next chief executive was hinted at when she stepped down in January to compete for the post (she is pictured at the press conference announcing her candidacy). The central government quickly accepted her resignation. It had waited a full month before agreeing to Mr Tsang’s decision last year to resign for the same reason. Earlier this month senior Chinese officials reportedly told a group of Hong Kong grandees that Mrs Lam would be the best choice to succeed the current, widely disliked chief executive, Leung Chun-ying. His successor will take office on July 1st. + +It is not clear why Chinese officials are backing Mrs Lam so strongly. “I’m puzzled myself,” says Mr Tsang. (He had once been tipped as the favourite by local media, perhaps reading too much into his handshakes with China’s leader, Xi Jinping, at international gatherings.) It is possible that the party may worry about Mr Tsang’s exposure to the poisonous influence of America, where he lived in his teens and 20s (although Mrs Lam studied in Britain and has two sons and a husband who are British citizens). + +More to the point, perhaps, is that Mr Tsang shows a bit too much interest in political reform. He describes the lack of progress with it as a “continual challenge to the government’s legitimacy”. The central government had offered to tweak the way the chief executive will be chosen this time: members of the public would be allowed to vote, but only for candidates approved by a committee like the current one. Pro-democracy legislators vetoed that plan two years ago. China has refused to countenance any other change. + +Mrs Lam, from China’s perspective, is a safer pair of hands. She helped draft the failed plan for electoral reform, and doubtless pleased Chinese officials by showing no sign of wanting to backtrack on it despite weeks of protests, known as the “Umbrella Movement”, that erupted in response to the proposal. Mr Tsang has not offered a clear alternative to that plan. But the support he enjoys among pro-democracy members of the election committee will reinforce China’s suspicions that he is more of a liberal than Mrs Lam. Almost all of those who nominated him were from the pro-democracy camp. All of Mrs Lam’s backers were from the rival one. (The committee is made up mostly of politicians and representatives of industries and professions who are pro-establishment.) + +Cut and thrust + +Mr Tsang and Mrs Lam have very different personalities. Mr Tsang’s social-media accounts show him in sporting poses: in one he is surrounded by young people, whom he is teaching to fence. He uses the tactics of his favourite sport to describe his political style. “I am basically a defensive player…I like coming back from behind.” Mrs Lam is less charismatic. She appears uncomfortable meeting members of the public, and remote from their daily lives. She seemed flummoxed by navigating barriers at a train station and admitted that she did not know where to buy toilet rolls. + +Mr Tsang has made the transition from bureaucrat to politician with greater ease. He is one of the first contenders for the chief-executive job to ask the public to contribute money to his campaign “instead of getting huge cheques from rich people”. He has raised more than HK$3m ($390,000) this way. One public-opinion poll, commissioned by the South China Morning Post, has put him 14 percentage points ahead of Mrs Lam. Mr Tsang says evidence of public support for him might encourage members of the committee to back him, too. That is unlikely, except among the minority of members who support greater democracy (some of whom see him merely as the lesser of two evils). + +There has been speculation that the Communist Party is so suspicious of Mr Tsang that if he were to win the election it might even prevent him from taking up the post. Last month the territory’s first post-colonial leader, Tung Chee-hwa, told an audience in Beijing that the central government would not appoint someone whom it did not trust—a remark that was widely interpreted as referring to Mr Tsang. Mrs Lam similarly raised eyebrows in January when she reportedly told a closed-door meeting that she had decided to run to prevent a constitutional crisis that might arise were someone to win whom the central government refuses to appoint. Mrs Lam later said she was not referring to any particular contender. + +Far more likely is a crisis caused by the appointment of someone who is not much liked by the public. Mrs Lam appears to acknowledge this. She said she would face “huge difficulties in governance” if she won the election but another candidate proved more popular. Mr Tsang also sees such a risk. He says that if the election committee chooses someone who is not the public’s favoured candidate, that would heighten “people’s expectations for universal suffrage”. + +China’s refusal to allow free elections has fuelled the recent growth of groups demanding greater autonomy, or even outright independence, for Hong Kong. The appointment of another unpopular chief executive would probably boost their support—and increase the risk of further intervention by the central government aimed at silencing them. In November China’s rubber-stamp parliament issued a ruling on how Hong Kong’s legislators should take their oaths (“sincerely and solemnly”). It was clearly intended to prevent newly elected independence-leaning lawmakers from taking up their seats. Two of them were subsequently disbarred. A court is now hearing the cases of another four lawmakers, who the government says should be expelled for violating the oath-taking rules. They include two who support “self-determination” for Hong Kong. + +There are many who oppose the Umbrella Movement campaigners and their localist successors. On February 22nd thousands of policemen joined a rally in support of seven fellow officers who had been jailed for beating an Umbrella Movement protester in 2014. Their unusual gathering is likely to reinforce a sense among pro-democracy activists that the generally well-liked police are becoming less neutral. Mrs Lam—assuming she wins—will take command of a divided society. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21717974-has-outcome-already-been-fixed-race-has-begun-hong-kongs-leadership/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +PM question time + +China’s citizens are complaining more loudly about polluted air + + +The government wants to silence them + + + + + +From the print edition | China + + +Mar 2nd 2017 | BEIJING + + + + + +THIS time of year can be a tough one for factories in areas surrounding Beijing. To keep the capital’s sky clear of smog during the annual session of China’s parliament, which begins on March 5th, officials often order polluting firms to close down for several days. This year many are reported to have done so. Such measures, however, do little to calm an anxious public. In recent months, amid persistent dense smog in Beijing and many other cities, alarm and anger have been growing. A few brave citizens are beginning to protest. + +It has taken many years for public anxiety to reach this level. A decade or more ago, censors kept talk of smog to a minimum in state-owned media. Worrying about air pollution was largely the preserve of foreigners. Many Chinese netizens scoffed at athletes who turned up in Beijing for the Olympic Games in 2008 wearing air-filtering masks. But the government is now far more open about the hazard, and the public far less blasé. At a children’s hospital in Beijing, parents carry toddlers wearing child-sized pollution masks. They fret about their children’s lingering coughs—could the smog be the cause? A balloon-seller outside the hospital is sure of the answer. “It is always busiest in the winter since the freezing, dirty air is so hard on the young ones,” she says. + + + + + +The government takes a dim view of any organised effort to put pressure on it. But in recent months parents in several cities have been posting demands online for the installation of air-filtration systems in their children’s schools. Officials in the capital agreed to do so, but only in some of them. The failure of other cities to respond at all has enraged many parents. “Are the lives of children in Beijing worth more?” asked a Chinese microblogger. In December residents of some cities attached masks to public statues to show their anger (sculptures thus adorned are pictured at Beijing Zoo). In Chengdu, in the south-west, police dispersed a small crowd taking part in such a protest and detained several participants. + +Last month discontent erupted in the north-eastern city of Daqing over plans to build an aluminium factory (such factories are big emitters of particles that cause smog). Thousands gathered outside the city government’s headquarters, many holding up signs saying “refuse pollution”—even though the authorities had already agreed to suspend the project. Citizens of Daqing have cause to be sceptical: in November state media said officials there had failed to issue a red alert when lung-invading particles, known as PM2.5, exceeded a particularly hazardous level. Such alerts annoy local officials because they require the closure of factories and schools, and measures to curb traffic. + + + +Some anti-smog activists are turning to the courts. The first known attempt to do so was in 2014, when a man in Hebei province, which surrounds Beijing, demanded compensation for smog-related costs such as air-purifying machines, face masks and the purchase of exercise equipment for use indoors because of the foul air outside. The case was unsuccessful, but it attracted sympathetic coverage in state media. Recently a group of lawyers filed a suit against the city government in Beijing, alleging it was not doing enough to keep the air clean. The plaintiffs say officials have been warning them to withdraw it. The court has not yet responded. “All of us living in northern China are victims. This is a personal issue,” says one of the lawyers. + +As state media admit, smog is likely to be a topic that is much discussed at the 12-day parliamentary session. The forecast for its start: haze. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21717975-government-wants-silence-them-chinas-citizens-are-complaining-more-loudly-about-polluted-air/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Banyan + +Is China’s president the new Deng Xiaoping? + + +Or is he more a Mao? + + + + + +From the print edition | China + + +Mar 2nd 2017 + + + + + +A POPULAR song about Xi Jinping, China’s president, begins “From China comes Papa Xi”. It is a deliberate echo of an anthem of the Cultural Revolution that begins “The East is Red. The Sun is rising. From China comes Mao Zedong.” + +The idea that Mr Xi has Mao-like attributes is common currency. The manifesto of America’s Republican Party, which Donald Trump professed to espouse when he was campaigning for the presidency last year, talks about China’s “return to Maoism” and its “cult of Mao revived”. The Economist has illustrated its cover with a drawing of Mr Xi in a Mao suit, albeit with the reservation that “Xi is no Mao”. Now the doyenne of American academic China-watchers, Alice Miller of Stanford University’s Hoover Institution, has proposed an alternative comparison. In an article for Hoover’s online journal, China Leadership Monitor,* she argues that Xi’s model is not Mao, but rather Deng Xiaoping. + + + + + +Ms Miller makes short work of claims that Mr Xi is Mao 2.0. The late chairman said he wanted to create “great disorder under heaven”. Mr Xi, by contrast, is a control freak. Mao believed that “class struggle” could lead China to a communist paradise within a matter of years. Mr Xi says that the Communist Party will turn China into a “moderately prosperous” country by 2021—a century after the party’s founding. Mao thought Red Guard mobs were needed to discipline the party. Mr Xi says the party’s own anti-corruption body should do that. + +There are, however, a number of intriguing parallels with Deng. Mr Xi’s official anthology, called “The Governance of China”, has far more references to Deng’s speeches than to Mao’s. The book mentions Deng’s appeal in 1992 for the creation of a “socialist market economy” (ie, capitalism under the party’s thumb). Mr Xi says that is what he wants, too. In 2016 Mr Xi updated one of Deng’s early reforms aimed at ending the intraparty strife of the Mao era: a set of rules telling party members how to treat one another. To Ms Miller, this is more than just posturing. She believes that Mr Xi wants a new campaign for economic reform matching in scale and importance the one that Deng brought about. It might be added that Mr Xi is ruthless in using force against perceived threats to the party, as was Deng—the reformist who ordered troops to kill pro-democracy demonstrators around Tiananmen Square in 1989. + +But the differences between Mr Xi and Deng are at least as great as those between China’s current leader and Mao. Deng could be bracingly pragmatic. “It doesn’t matter whether a cat is black or white,” the party’s great survivor once said, “so long as it catches mice.” Mr Xi prefers to talk like a traditionalist. One of his first acts after taking over as party chief was to set up a National Ideology Centre to inculcate Marxist wisdom in party members. He has also endlessly lectured universities about the need to put Marxism at the centre of university life. Deng’s pragmatism was evident in his approach to corruption. He tolerated a modest amount of it among officials—a way of boosting morale after the purges and denunciations of the Mao era. Mr Xi sees corruption as an existential threat to the party: his campaign against it has resulted in about 750,000 people being charged with graft over the past three years. + +The way Mr Xi wields power is distinctive, too. Deng tried to set up a system of government in which institutions were supposed to matter more than the people in them, and in which term limits ensured leaders did not stay too long in power. Mr Xi is more of an autocrat. He has gathered more formal power to himself than any of his predecessors, and has been far more reluctant than Deng was to delegate responsibility to subordinates. + +It is too much of a stretch to suggest, as Ms Miller does, that Mr Xi and Deng are equally committed to economic reform. Ms Miller says that impatient observers should “take a long view”. When he unveiled his plans for economic reform in 2013, Mr Xi called for “decisive breakthroughs”, while allowing seven years for them to be achieved. Consider Banyan too fretful, but more than half that time has gone by with little to show for it. Should not more reforms be in place by now? + +As Ms Miller points out, Mr Xi does not try to portray himself as something new. He prefers to be seen as the latest in an unbroken line of Communist leaders, going back to Mao. Mr Xi criticises historians who portray the party’s rule as divided into a Maoist era and a Dengist one. He clearly worries that such an idea will encourage people to see the two periods in contrast with each other, and conclude that the Mao days were distinguished by their chaos and cruelty. That would undermine Mao’s legitimacy as the founder of the People’s Republic, and therefore the legitimacy of the party itself. + +Not the almighty + +When Mr Xi took over, it was not as a result of a grab for power, driven by a desire to change things. He had been groomed for years for those posts. Ms Miller calls him the embodiment of a “broader elite consensus”. Many of the policies associated with him began during the latter years of his wooden predecessor, Hu Jintao. It was Mr Hu who began the crackdown on civil society that Mr Xi has expanded. Steps to reconcentrate authority in the central leadership began under Mr Hu, too. + +Mr Xi is often described as the most powerful Chinese leader since Mao. Yet there are limits to his freedom of action. The broad aims of his leadership—including that of asserting China’s power abroad more robustly—were set before he took office. The decisions and arguments that have occurred under him have had more to do with the pace of change than the overall direction—with means, rather than ends. Mr Xi is a dictator, but he is a strangely inhibited one. + +“What would Deng do?” by Alice L. Miller. China Leadership Monitor, Issue 52, 2017. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21717971-or-he-more-mao-chinas-president-new-deng-xiaoping/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Middle East and Africa + + +Nigeria: A nation holds its breath [Thu, 02 Mar 22:42] + +Water in Africa: Pay as you drink [Thu, 02 Mar 22:42] + +South Africa: Hail to the chiefs [Thu, 02 Mar 22:42] + +Rwanda: If you build it, they may not come [Thu, 02 Mar 22:42] + +Saudi Arabia: The destruction of Mecca [Thu, 02 Mar 22:42] + +Syria: Truncheons at a gunfight [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The mysterious illness of Muhammadu Buhari + +Who’s running Nigeria? + + +The president has been ill for six weeks, but the country still needs governing + + + + + +From the print edition | Middle East and Africa + + +Mar 4th 2017 | LAGOS + + + + + +SITTING on the pavement outside the Lagos state government secretariat, Empero flicks through newspapers, looking for jobs. “We are smiling and we are dying,” says the 36-year-old, a town planner by trade. Nigerians are known for their dramatic turn of phrase. But recent events may justify such rhetoric. The economy shrank by 1.5% in 2016. Inflation has more than doubled to 18.7% in 12 months. Meanwhile, the president, Muhammadu Buhari, has been out of the country since January 19th, receiving treatment for an undisclosed illness. There could hardly be a worse time for the 74-year-old former military dictator to be incapacitated. But much of the blame for Nigeria’s current economic troubles can be laid at his door. + +Mr Buhari was elected in March 2015 promising to defeat Boko Haram, the jihadist group terrorising the country’s north-east, and to tackle endemic corruption. He had on his side a wave of hope; he was the first Nigerian opposition leader to oust an incumbent peacefully at the ballot box, despite his authoritarian past. + + + + + +On national security he has made progress: Boko Haram, now splintered into two factions, no longer controls any bigtowns. But it is far from defeated, as the government has claimed repeatedly in the past couple of years. With many farmers still unable to return safely to their fields, hunger stalks the region: 450,000 children are severely malnourished. Elsewhere, clashes between Muslim Fulani herdsmen and largely Christian farmers in southern Kaduna, in Nigeria’s fractious Middle Belt, have killed at least 200 people since December. Oil production has not fully recovered after money-hungry militants attacked pipelines and rigs in the Niger Delta last year. When it comes to corruption, a number of bigwigs have been arrested and bags of seized money paraded before the media. Yet there have been no high-profile convictions yet. The state may be led by a former strongman, but it is still fundamentally weak. + + + +It is the troubled economy, though, that looms largest now in Africa’s most populous country. Mr Buhari was inaugurated soon after the collapse of global oil prices. But instead of accepting reality (exports and government revenues are dominated by the black stuff), he reverted to policies he implemented when last in power in the 1980s, namely propping up the currency. This has led to shortages of foreign exchange, squeezing imports. The central bank released the naira from its peg of 197-199 to the dollar in June 2016, but panicked when it plunged, pinning it again at around 305. Exchange controls are still draconian. Consequently, many foreign investors have left, rather than wait interminably to repatriate profits. “The country is almost uninvestable,” says one. Importers that can’t get hold of dollars have been crippled. “To take a bad situation and make it worse clearly takes a bit of trying,” says Manji Cheto, an analyst at Teneo Intelligence, part of an American consultancy. + +By February 20th the naira had sunk to 520 on the black market. It has since recovered by around 13% after the central bank released dollars and allowed posh Nigerians to buy them cheaply to pay for school fees abroad. The reprieve is likely to be temporary, though. Most analysts agree that the naira should float freely. Egypt, which devalued the pound in November in return for a $12bn IMF bail-out, is an oft-cited example. After falling sharply it found a floor before rebounding as the best performing currency in the world this year. However, Nigerian officials worry that the inevitable inflationary spike could lead to unrest, particularly if they are forced to raise subsidised petrol prices. It is also anathema to Mr Buhari, who is thought to blame an IMF-advised devaluation for the coup that ejected him from power in 1985. “They all know what needs to happen,” says a Western official of the nominally independent central bank’s leadership. “But somehow they don’t dare to [do it].” + +The IMF predicts Nigeria’s economy will expand by 0.8% this year. That would lag far behind population growth of around 2.6%. But the government will tout any recovery as a victory. “That’s the real danger, that they will take that as validation their policies are working,” says Nonso Obikili, an economist. Meanwhile, Nigeria continues to take out expensive domestic and foreign loans. While debt remains relatively low as a proportion of GDP, at around 15%, servicing it is eating up a third of government revenues. After a $1bn Eurobond issue was almost eight times oversubscribed last month, it plans to issue another $500m one this year. Officials have also said that they want to borrow at least $1bn from the World Bank. That remains contingent on reform. + +If Mr Buhari remains in London much longer, his absence could provide a window for Nigeria’s technocratic vice-president Yemi Osinbajo to push through a proper devaluation. Mr Osinbajo, currently in charge, has proved an energetic antidote to his ponderous boss, visiting the Delta for peace talks and announcing measures intended to boost Nigeria’s position in the World Bank’s Ease of Doing Business rankings, in which it currently ranks a lowly 169 out of 190. + +Mr Buhari called the governor of Kano during a prayer meeting on February 23rd to say he was feeling better, the first time Nigerians had heard from their president since he left the country. But the state of his health is still unclear (aides have said only that he needs more rest). Mr Osinbajo’s appointment as acting president has followed constitutional protocol. In 2010, by contrast, it took three months for Goodluck Jonathan, a southerner, to be cleared to rule while Umaru Musa Yar’Adua, the northern president, lay dying in Saudi Arabia. There are ghosts of that power struggle in rumours that Mr Buhari’s closest allies are manoeuvring to try to keep the presidency with a northerner should their boss die or be forced by ill health to step down. That could split the ruling All Progressives Congress into three or four factions, destabilising policy-making. Nigeria’s best chance of reform in the short run, then, is probably for the president to rest up in London a while longer. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21717787-president-has-been-ill-six-weeks-country-still-needs/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Pay as you drink + +A better way to provide drinking water in rural Africa + + +An innovative cure for broken pumps + + + + + +From the print edition | Middle East and Africa + + +Mar 4th 2017 | KERR LIEN + + + + + +IN THE mid-2000s Playpumps International, a charity, hit on a photogenic way of providing clean water to African villages: a pump powered by children playing on a merry-go-round. Donors and celebrities pledged more than $16m. But the system was costlier than alternatives, and needed so much “playing” that it started to look like thinly disguised child labour. It became a byword for wasteful Western aid—but far from the only example. + +At any time around a third of the water infrastructure in rural sub-Saharan Africa, from hand pumps to solar-powered systems, is broken. Even after spending billions of dollars, most donors still cannot ensure the pumps they pay for are maintained (just 5% of rural Africans have access to piped water). Many of the village committees responsible for collecting the fees that should cover repairs are corrupt. + + + + + +More often, though, villagers simply struggle to gather money, find a mechanic and obtain spare parts, says Johanna Koehler of Oxford University. Kerr Lien, a village in central Gambia, reverted to using a manual well for nine years after the inhabitants were unable to fix a fault in their solar-powered pump. There are “lots of white elephants everywhere”, says Alison Wedgwood, a founder of eWATER, a British startup that aims to solve many of these problems. Its solar-powered taps, 110 of which have been installed in Kerr Lien and six other Gambian villages, dispense water in response to electronic tags. The tags are topped up by shopkeepers using smartphones; 20 litres of water cost 0.50 dalasi (1 cent), and 85% of the payment is set aside to cover future repairs. The taps are connected to the mobile network, so they can transmit usage data to alert mechanics to problems. eWATER hopes to have 500 taps serving 50,000 people in Gambia and Tanzania by the end of 2017. + +Since they are paying for it, the women and girls who collect the water also take more care now not to spill any, leaving fewer puddles in which mosquitos can breed. Most important, though, is to fix broken pumps quickly. In Kenya Ms Koehler found villagers were prepared to pay five times as much for water so long as their pumps were fixed within three days, compared with the previous average of 27. + +Startups like these could transform rural water provision in Africa, just as they are doing with solar-powered electricity. Twelve-year-old Isatou Jallow will still wash her family’s clothes with well water every week. But there will soon be a drinking tap just outside her house. That means more time studying, instead of spending afternoons laboriously fetching water from far away. It also means loftier ambitions. “I want to be a government minister,” she says. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21717766-innovative-cure-broken-pumps-better-way-provide-drinking-water/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Hail to the chiefs + +Jacob Zuma wants to strengthen traditional leaders + + +Critics say this will let them abuse their people + + + + + +From the print edition | Middle East and Africa + + +Mar 2nd 2017 | UPINGTON + + + + + +IN A community hall at the edge of the Kalahari desert, hundreds of Khoisan (also known as Bushmen) have gathered for a hearing on a new bill that could decide who rules them. Several are dressed in animal skins, with quivers of arrows slung across their backs. But despite their obvious interest, they are struggling to learn the details of the Traditional and Khoisan Leadership Bill. Few have seen a copy. It is available only online, and in English. + +Even expressing their views is a problem: the parliamentary committee that travelled to the remote Northern Cape province for public hearings late last year arranged no translators for Khoi or San languages, or even for Afrikaans, the local lingua franca. Constance Mogale, the national co-ordinator for the Alliance for Rural Democracy, an activist group, watched the public hearing in Upington and shook her head in dismay. “They’re already trampling on our right to information,” she said. + + + + + +Critics say the bill re-entrenches the tribal boundaries and leadership structures created by the apartheid regime, which dumped many black people in “Bantustans”, semi-autonomous homelands created to maintain the fiction that blacks did not need the vote because they were governed by a tribal chief, even if they barely knew him. The 17m people now in these areas would have no choice but to live under a traditional authority, which would have powers over land use and could be appointed by the government. + +There is no shortage of examples of chiefs putting their own interests before those of their people. South Africa’s anti-corruption ombudsman recently found that in one place, Bapo ba Mogale, in the platinum belt north-west of Johannesburg, at least 600m rand ($45m) has gone missing from mining revenues meant for the community. In Limpopo province, a traditional council has been criticised for letting communal land be used by a mining firm that had given payments to the council. The new bill would give even more power to traditional leaders to make deals on behalf of their people. + +For the Khoisan, the earliest surviving inhabitants of South Africa, the bill presents a different set of issues. Pushed off their land by colonists and oppressed under apartheid, their post-1994 appeals for land rights and cultural protection have largely been ignored by the ruling African National Congress. Although the new bill purports to address Khoisan gripes, it ignores the thorny issue of land (one group of Khoisan, in a recently filed court case, claims ownership of the whole of South Africa). And though traditional leaders in the former Bantustans would gain power over land, Khoisan leaders (who currently have no official recognition) would gain jurisdiction only over people. Joseph van Wyk, an organiser with Indigenous First Nation Advocacy South Africa, a non-profit, told the public hearing in Upington that his group objects to the bill because it fails to recognise the Khoisan as the first people of South Africa. But for Jacob Zuma, the president (pictured), the bill is a handy way to empower the rural bigwigs whose electoral support he craves. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21717993-critics-say-will-let-them-abuse-their-people-jacob-zuma-wants-strengthen/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +If you build it, they may not come + +Businesses are being forced to move into designated properties + + +Empty buildings prompt draconian action + + + + + +From the print edition | Middle East and Africa + + +Mar 2nd 2017 | KIGALI + + + + + +BEETHOVEN’S “Für Elise” floats through the lift of Makuza Peace Plaza, a shiny new office block, as it climbs to the 12th floor. Opened with fanfare by Paul Kagame, Rwanda’s president, in 2015, Makuza is one of several new high-rises in the central business district of the capital, Kigali. But the music has an eerie quality as you rise to the building’s summit. This is because, from the seventh floor up, Makuza is empty. + +For a city pitching itself as east Africa’s business hub, under-occupied skyscrapers look bad. So at the start of the year the government took action. Letters were sent to thousands of businesses ordering them to hew to the city’s master plan and move to designated commercial buildings by March 31st. Confusion and panic ensued, as startups and even NGOs scrambled for space in the limited number of reasonably priced buildings available. In the area around Makuza, office space costs on average nearly $20 a month per square metre, as much as four times what it would be outside. “It’s been a nightmare,” says one exasperated foreign businesswoman, who fears she may have to move to Kampala, in neighbouring Uganda. + + + + + +Rents in the city centre are prohibitively expensive for many because land in Rwanda is pricey, as are building materials and bank loans. But lack of supply is not the problem. Enticed by juicy tax incentives, investors have been funnelling vast amounts of capital into high-end buildings, anticipating hefty profits. Vacant floors are a headache. They are especially painful for the ruling Rwandan Patriotic Front (RPF), which is heavily involved in property through its business ventures (see article). Some suspect that by issuing the directive, the RPF is protecting its own investments. + +City authorities suggest they will be lenient towards those who have recently signed new leases, and hint that some NGOs will be exempt. But few doubt that the government means what it says. The master plan, which carves up the city into zones defined by the type of activity allowed in each, has acquired almost biblical status since its adoption in 2013. Unusually for an African city, land use and construction rules are vigorously enforced. “This is Rwanda,” smiles an estate agent in his office overlooking Makuza. “They will have to comply. There is no choice.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21717989-empty-buildings-prompt-draconian-action-businesses-are-being-forced-move/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Making way for pilgrims + +The destruction of Mecca + + +The Middle East’s largest building project has effaced 1,400 years of Islamic history + + + + + +From the print edition | Middle East and Africa + + +Mar 2nd 2017 | ABHA + + + + + +AS THE governor of Mecca, Prince Khalid bin Faisal Al Saud has been able to compensate for earlier failings. He came to his role in 2007 from Asir province, where his plans to erect modern tower blocks in the city of Abha were largely unfulfilled. He successfully erased Abha’s quaint old town, with its beehive houses made of wattle, only to replace them with squat breeze-block bungalows. Not a high-rise was to be seen. + +Now, on top of what was Mecca’s old city of lattice balconies and riwaq arches, the prince has overseen the Middle East’s largest development project. Skyscrapers soar above Islam’s holiest place, dwarfing the granite Kaaba far below. Diggers flatten hills that were once dotted with the homes of the Prophet’s wives, companions and first caliphs. Motorways radiate out from the vast new shrine. Local magnates are as keen to build as the government. Jabal Omar Development, a consortium of old Meccan families, is investing hundreds of millions of dollars to erect two 50-floor towers on the site of the third caliph’s house. Such is the pace that for a time the holy city’s logo was a bulldozer. + + + + + +Demolition, say officials, is the inevitable price of expansion. In 1950, before it all began, 50,000 pilgrims perambulated round the Kaaba, the heart of the haj ritual. Last year, 7.5m did so. Within three years, the authorities are planning to double that huge number. “There’s no other solution,” says Anas Serafi, an architect and member of the board of Jabal Omar Development. “How else could we absorb millions of pilgrims?” Casualties are a regrettable by-product: in September 2015, the world’s largest mobile crane toppled on the Grand Mosque, killing 107 pilgrims. But two weeks later more than 2,000 pilgrims were killed in a stampede, highlighting the dangers of a lack of space. + +As Mecca’s custodian, King Salman bin Abdel Aziz sees both his prestige and his pocket benefit from the increasing traffic. Under the government’s transformation plan, revenue from pilgrimages will grow to compete with those from oil. Billions are being spent on railways, parking for 18,000 buses to transport pilgrims and hotels for them to stay in, heavy with gilded chandeliers. The McDonald’s golden arches gleam outside the gates of the Grand Mosque. + +So thorough is the erasure that some suspect the Saudi royals are determined to finish a task begun in the 18th century, when from Arabia’s unruly hinterland the Al Saud and allied Bedouin tribes rose up against the Ottomans. Declaring a jihad, they pitted their puritanical strain of Islam, eponymously known as Wahhabism, first against the Empire’s multi-religious rule and then, after its collapse in the first world war, against the peninsula’s other Islamic rites. As part of the campaign of territorial and spiritual unification, called tawhid, they conquered Mecca in 1924. + +Critics call this Islamic Maoism. Out went the city’s heterogeneous mix of Maliki, Shafii and Zaydi rites; in came homogenisation under the Wahhabi creed. Alongside the black and white dress they forced on women and men respectively, the new tribal rulers reshaped the urban environment, stripping away the past. They replaced the four pulpits at the foot of the Kaaba, one for each of Sunni Islam’s schools, with a single one, exclusively for Wahhabi preachers. They cleansed the faith of saint-worship, demolishing shrines venerated by Shia and traditional Sunnis alike. Of the city’s scores of holy sites, only the Kaaba survives. + +Now that so much is gone, some Meccans are having second thoughts. “We’ve turned our past dating back to Abrahamic times into a petrol station,” grumbles a local. Mr Serafi, the developer, is designing a virtual heritage trail. Maps trace routes through the non-existent old town, highlighting the homes of the first caliphs. His brother has used the profits to create Jeddah’s finest art gallery nearby. + +Might the government, under the deputy Crown Prince Muhammad bin Salman, support an element of restoration? The transformation plan he unveiled last year highlights the kingdom’s tourism potential, and promises billions for heritage projects. In a recent interview, his information minister, Adel Al Toraifi, lambasted “radicals and terrorists” bent on cultural demolition. “Beautiful people and regions filled with culture, music, dances and tradition were all destroyed by political Islam,” he said. Replacing the Kaaba’s lost pulpits might be a good place to start. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21717992-middle-easts-largest-building-project-has-effaced-1400-years-islamic/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bringing truncheons to a gunfight + +The travails of Syria’s unarmed police + + +Rebel-held areas experiment with police who don’t rob and torture + + + + + +From the print edition | Middle East and Africa + + +Mar 2nd 2017 | GAZIANTEP + + + + + +WHEN his superiors ordered him to open fire on civilian protesters, back in 2011, Adeeb al-Shallaf, a local police chief, refused. Then, worried that the Syrian regime would kill him for disobeying orders, he smuggled his family out of the north-eastern province of Raqqa and crossed the border into Turkey. + +From there, General Shallaf watched as Syria’s peaceful protests gave way to armed revolt. Inevitably crime rose in areas under rebel control, since the state’s institutions were gone. Fellow defectors asked General Shallaf to go back and help create a new police force that would bring order. “The beginning was difficult for us,” says General Shallaf, who spent 30 years in the Syrian police. “How can you launch a police force when there’s no state, there’s a war and you have extremists operating?” + + + + + +What began as a small, ragtag force of a few hundred men now employs 3,300 officers across three provinces. Money from Western governments has paid for this expansion, making the Free Syrian Police (FSP) one of the largest recipients of non-lethal aid to the Syrian opposition. + +The West’s reluctance to send arms to rebel-held parts of Syria means the FSP is, for the most part, forced to operate without weapons in a country awash with guns and armed groups. Turkey’s tight control of its official border crossings makes it hard to supply the police with even basic equipment, like truncheons and handcuffs. + +At first, General Shallaf bemoaned the West’s refusal to send weapons. He remembers how his officers once failed to stop a robbery at a factory because the thieves came armed with anti-aircraft guns. But he has since come round to the idea of a largely unarmed police force. “Everybody has a gun, so if we carried weapons we’d be seen as just another armed faction,” he says. + +Instead, his men focus on community policing. They control traffic, patrol the streets at night, build bomb shelters and ensure that children stay away from sniper corridors. They mend streetlights and cordon off unexploded bombs. The idea is to improve relations with residents, who have grown up in a country where a policeman is more likely to extort than protect. “We want to change the image of the police as a corrupt, violent force that tortures people,” says the general, who now commands the FSP in Aleppo province. + +Big challenges remain. The judicial system in much of rebel-held Syria is shambolic. Most armed groups run their own courts, ruled over by religious scholars with dubious credentials who hand down judgments based on conflicting interpretations of sharia (Islamic law). “The donors are worried about sharia, so they stay away from the justice sector,” says Sandra Bitar, a Syrian activist. “They pay for a police force, but if there are no professional courts then how can the police do their job properly?” + +Some see in the FSP the foundations of a future Syrian police force. This may be wishful thinking. As the regime claws back territory from the rebels, governments in the West are debating whether to scale back support for the opposition. A new alliance between Jabhat Fateh al-Sham, a jihadist group associated with al-Qaeda, and a handful of more moderate rebel factions has swung the argument in favour of those who want to reduce aid. Western governments have suspended funding to the FSP in parts of the north where the jihadists’ new allies hold sway. Yet that risks perpetuating a power vacuum. In such chaos, jihadism can thrive. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21717994-rebel-held-areas-experiment-police-who-dont-rob-and-torture-travails/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Europe + + +Populism in Italy: A tale of two mayors [Thu, 02 Mar 22:42] + +German defence: Eine deutsche Atombombe? [Thu, 02 Mar 22:42] + +Russian riddles: Whispers from the Kremlin [Thu, 02 Mar 22:42] + +Populism and social media: Twitter harvest [Thu, 02 Mar 22:42] + +Charlemagne: Contempt of court [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +A tale of two mayors + +Is Italy’s populist Five Star Movement ready to govern? + + +To judge by its first two big-city mayors: maybe, maybe not + + + + + +From the print edition | Europe + + +Mar 4th 2017 | ROME AND TURIN + + + + + +IT IS the best and worst of times for the Five Star Movement (M5S), the populist group that is Italy’s main opposition. On the bright side, Matteo Renzi, the former prime minister, resigned on February 19th as leader of the Democratic Party (PD), the dominant party in government and the M5S’s chief rival. Mr Renzi will probably regain control of the PD, but his move highlighted a split between his supporters and critics, some of whom defected on February 28th to a new radical-left parliamentary group. Small wonder the M5S and PD are nearly even in the polls. + +But if the M5S’s popularity is clear, its competence is not. The party’s most senior governing officials are two mayors elected last June, Virginia Raggi in Rome (pictured at right), Italy’s biggest city, and Chiara Appendino in Turin (pictured at left), its fourth-biggest. Their performances since could scarcely be more dissimilar. + + + + + +On February 7th Ms Raggi learned that prosecutors had formally placed her under investigation for a second time. The mayor, who denies wrongdoing, risks indictment for falsifying a document and abuse of her office. Her counterpart in Turin, according to a survey published in January by Il Sole-24 Ore, a financial daily, has become Italy’s most popular big-city mayor. Ms Appendino’s approval rate among the citizens of Turin was 62%, an increase of seven percentage points since her election. + + + +The two women are among the more reassuring faces of a movement that is led by a demagogic erstwhile comedian, Beppe Grillo. Ms Raggi is a lawyer; Ms Appendino a businesswoman. The disparities in their records in office are partly caused by differences between the cities they govern. Turin, in the shadow of the Alps, is elegant but unshowy, imbued with a culture of reserve and compromise. It is said to have more Ferraris per head than any other Italian city, but one never sees them. The bureaucracy bequeathed to Ms Appendino by the previous mayor, a member of the PD, has a progressive outlook and a reputation for efficiency. + +Rome, on the other hand, for all its ravishing beauty, is corrupt, chaotic and cynical. Ms Raggi inherited a city hall notorious for sleaze that had been under central-government administration because of an investigation into links between local-authority executives and organised crime. Several officials were behind bars. + +Unsurprisingly, Ms Raggi’s biggest problems have involved personnel. The mayor put her trust in officials who are now in jail or under investigation. The latest twist concerns a city hall functionary whom Ms Raggi promoted, almost tripling his salary. He was found to have taken out three life-insurance policies worth €41,000 ($43,150), and to have made the future mayor their beneficiary. Why remains unclear. Ms Raggi says she knew nothing of the transactions and could only have profited if the policyholder had died. Prosecutors, who were already investigating the mayor over another appointment, appeared to take her word. But they have since opened a second investigation into alleged irregularities in the policyholder’s promotion. Ms Raggi is a suspect. + +Ms Appendino chose her departmental chiefs before her election. She sidelined her most dangerous rival within the local M5S and works in apparent harmony with a right-hand man inherited from the previous administration. Maurizio Molinari, editor of La Stampa, a Turin-based daily, offers two reasons for her popularity. “She keeps her distance from the M5S,” he says. “People don’t feel they’re being governed by [Mr Grillo’s followers], but by Ms Appendino.” And, he adds, the mayor is “very Torinese: low-profile”. + +Her achievements, however, have also been modest. And apart from some symbolically radical gestures (including a proposal for vegan school lunches), what she has done has cost her support among M5S activists and working-class voters, who backed her because they felt the PD had grown too close to the city’s elite. The mayor has sidestepped her movement’s commitment to blocking a high-speed rail link through the Alps, explaining that she is powerless to stop it. And she has balked at taking the management of the local water consortium out of private hands. + +This is almost treasonable for the M5S. Public ownership of water is one of the five “star” issues that give the movement its name. “The M5S has always been on our side,” complains Mariangela Rosolen, a veteran campaigner for de-privatising the local water consortium. Ms Rosolen says activists are considering a demonstration against Ms Appendino. That could mark a turning point in her fortunes. But for her admirers, it would be evidence of her ability to stick shrewdly to a middle path that might one day lead her to national office. + +Her party’s chances of giving her that opportunity look ever better. Since Mr Renzi’s government fell in December, the right has failed to unite, while the left has squabbled ruinously. Matteo Salvini, leader of the nationalist Northern League, has wrenched his party rightwards, turning it into an Italian reflection of Marine Le Pen’s National Front. That makes it harder to ally with Silvio Berlusconi’s centre-right Forza Italia party. Meanwhile, the mutiny in the PD may leave it unable to win a general election. Mr Renzi complained that the mutineers were “giving Mr Grillo a nice present”. That is hard to dispute. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717979-judge-its-first-two-big-city-mayors-maybe-maybe-not-italys-populist-five-star-movement/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Eine deutsche Atombombe + +Germans are debating getting their own nuclear weapon + + +Donald Trump’s questioning of NATO’s credibility has Berlin thinking the unthinkable + + + + + +From the print edition | Europe + + +Mar 2nd 2017 | BERLIN + + + + + +IT BEGAN in November, soon after the election of Donald Trump as America’s president. The publisher of the Frankfurter Allgemeine Zeitung, a conservative newspaper, opined in an editorial that it was time to contemplate “the altogether unthinkable for a German brain, the question of a nuclear deterrence capability, which could make up for doubts about American guarantees”. Roderich Kiesewetter, a foreign-policy expert in the Christian Democratic Union, the party of Chancellor Angela Merkel, chimed in that there should be no “thought taboos”. He and other politicians then went silent, apparently after a signal that the chancellor did not need this distraction in an election year. But in Germany’s think-tanks the debate kept raging. + +Since 1945 West Germany and then the reunited country have relied on the American nuclear shield to deter aggression from Russia. A prominent thesis, outlined in 1984 by Josef Joffe, a journalist, holds that European integration was only possible because this external American power had “pacified” the age-old Franco-German conflicts. So West Germany, on its best behaviour after the war, signed the non-proliferation treaty in the 1960s; it reaffirmed the pledge in the treaty that led to reunification in 1990. + + + + + +Suddenly, however, there is an American president who, though he said last week that he would “strongly support NATO”, has also called the alliance “obsolete” and suggested that his support might be conditional on allies meeting their commitments to spend more on defence. By the ghastly logic of mutual assured destruction (MAD), deterrence must be unconditional to be credible. Countries in eastern and central Europe are beginning to fret about their vulnerability to nuclear blackmail by Russia under Vladimir Putin. + +Germany’s most obvious response would be to approach France and Britain, NATO’s other two nuclear powers, for a shared deterrent. But their arsenals are small. France, moreover, has so far been unwilling to cede any sovereignty over its nuclear arms and has always been sceptical about shared deterrence. Britain, as its prime minister, Theresa May, has already hinted, might make its nuclear shield a subject of negotiation during the upcoming Brexit talks. + +To Maximilian Terhalle, a German professor currently teaching in Britain, this means that Germany, Poland or the Baltic countries could never fully rely on France or Britain retaliating against Russia for a strike against them. He concludes that Germany must think about getting its own nukes, perhaps in collaboration with neighbours. Even the leader of Poland’s governing party, Jaroslaw Kaczynski, a habitual Germanophobe, called in February for a European nuclear deterrent, presumably financed largely by Germany. + +The different dangers posed by Mr Putin and Mr Trump have raised the question of “how to deter whom with what”, even though German nukes are not the best answer, says Karl-Heinz Kamp of the Federal Academy for Security Policy, a government think-tank. Mr Terhalle, for his part, thinks that even a debate about a German nuclear weapon could help—if it convinced Mr Trump to stop undermining the existing international order. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717981-donald-trumps-questioning-natos-credibility-has-berlin-thinking-unthinkable-germans-are/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Whispers from the Kremlin + +A secure messaging app has become Russia’s juiciest news source + + +Anonymous authors claiming to be in the know may face a government crackdown + + + + + +From the print edition | Europe + + +Mar 2nd 2017 | MOSCOW + + + + + +OVER the past year, a group of political bloggers purporting to have access to inside information have offered insight into the workings of the Russian state. They can be found on the messaging app Telegram, which has a “channels” feature that allows readers to subscribe to a feed but not to respond. The bloggers, often anonymous, serve up news spliced with cutting commentary and the whisperings of the Russian elite. The most popular, with some 26,000 subscribers, is Nezygar, or “Not Zygar”—a reference to Mikhail Zygar, a former editor-in-chief of the independent television network Dozhd (“Rain”). (Some think Nezygar is a Kremlin project.) Messages arrive on users’ smartphones alongside conversations with friends, creating a sensation akin to having a Kremlin insider on speed dial. + +The channels’ popularity says less about the quality of their information than it does about the lack of other sources. “If Russia had lots of worthwhile political analysts, lively political journalism and strong independent media, there would be no ‘Nezygar’ phenomenon,” writes Oleg Kashin, a columnist. “But when there’s dirty, rusty water coming from the faucet, sometimes you want to drink from the river, and not even guess at whether sewage flows into that river or not.” + + + + + +Nezygar came to prominence in the spring of 2016 with a string of detailed posts dissecting the decision to create a new national guard. The decision was “the apogee of the conflict among the siloviki around VVP [Vladimir Vladimirovich Putin],” began one typical dispatch, referring to the ex-spies and securocrats who dominate the administration. Posts since have discussed the arrest of economy minister Alexey Ulyukaev and elite gossip about the security services and the Orthodox church. Other Telegram channels, including the anonymous collective Metodichka and Davydov.Index (written by political consultant Leonid Davydov), have followed suit. The lack of clear sources is not a problem. “Paradoxically, the anonymity inspires more trust,” argues Ekaterina Schulmann, a political scientist. “There’s a demand for secrets.” + +Guessing Nezygar’s identity has become a parlour game in Moscow political circles. Some believe the author—or authors—are journalists or political analysts; others suspect a government or security official. Earlier this year, Russia-24, a state-run television network, aired an interview with a man in a black balaclava who claimed to stand behind the feed. Shortly thereafter, a rebuttal appeared on Nezygar’s channel: “The interview that wasn’t.” + +Beyond anonymity, the Telegram platform offers authors some protection from Russia’s increasingly rigid internet censorship. The app is the brainchild of Pavel Durov, the exiled creator of Russia’s VKontakte social network, and claims to protect user data from governments. (It became a favoured platform for Islamic State jihadists until Mr Durov kicked them off.) As a messaging service rather than a website, Telegram falls outside Russian regulations on media and blogging. When Mr Davydov sought to publish exit polls during parliamentary elections last year, his lawyers recommended opening a Telegram channel. “It’s a lacuna in the law,” he says. + +That may not last much longer. Roskomnadzor, Russia’s communications watchdog, reportedly called in several Telegram bloggers for a meeting last month. “It’s clear that the government has begun paying attention,” says Andrei Soldatov, co-author of “The Red Web”, a history of the Russian internet. Legislation to bring the messenger under tighter control is also said to be in the works. The river of gossip may soon run dry. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717983-anonymous-authors-claiming-be-know-may-face-government-crackdown-secure-messaging/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Twitter harvest + +Why Europeans are less eager consumers of online ranting than Americans + + +Perhaps because they trust the mainstream media more + + + + + +From the print edition | Europe + + +Mar 2nd 2017 + + + + + +HEINZ-CHRISTIAN STRACHE, the leader of Austria’s nationalist Freedom Party, fancies himself a rapper. For the past decade he has been recording amateurish music videos of rap songs like Österreich Zuerst (“Austria First”), which features the lyrics “For anyone who doesn’t want to integrate/ I have a destination/ go back home, have a good flight!” (It sounds no better in German.) No mainstream TV channel would show such videos, but when Mr Strache posts them on Facebook, the media report on them. + +Europe’s populists were early adopters of social media. In the Netherlands, Geert Wilders pioneered the use of outrageous tweets that infuriate his opponents and fire up his followers. (Unlike Donald Trump’s, they are sparse and calculated, not nocturnal and impulsive.) In France, Marine Le Pen’s National Front co-ordinates hashtags, memes and animated videos across social-media platforms. In Germany, the demonstrations of the anti-Muslim PEGIDA movement began with the creation of a Facebook group. The far-right Alternative for Germany has more likes on Facebook than any other German party—over twice as many as the Christian Democrats of Angela Merkel, despite having less than half as much support in polls. + + + + + +Italy’s left-wing Five Star Movement, led by Beppe Grillo, a comedian, is Europe’s most digitally native political party. Its co-founder, Gianroberto Casaleggio, an IT executive who died last year, believed that web-based voting could resurrect the direct democracy of ancient Athens. On Mr Grillo’s blog, one of the most popular in Italy, members debate, vote and even purge other members. Such integration of party politics with social media goes further than anything attempted in America. + +But in other ways Europe is less suited to internet-based populism than America. Enthusiasm for social media is related to scepticism towards traditional media, says Cornelius Puschmann of the Alexander von Humboldt Institute, a Berlin-based think-tank—and Americans have plenty of both. In 2016, 16% of American internet users accessed Twitter at least once a month, according to comScore, a research firm. That year, Americans’ trust in news fell to just 33%, according to the Reuters Institute, a research centre at Oxford University. + +Europeans, by contrast, have more confidence in traditional media and are less active on social media. Nearly 13% of Dutch internet users log on to Twitter once a month, but only 6% of Italians, 5% of French and 4% of Germans do. Facebook use is more common, but still lower than in America. Meanwhile, 54% of Dutch and 52% of Germans trust the news, according to the Reuters study. For German public radio and TV, the figure is over 70%, according to a survey by WDR, a public broadcaster based in Cologne. Just 8% trust what they see on Facebook and Twitter. + +In Italy trust in news has declined to 42%, and in France to 32%. Yet Julia Cagé, a French media expert, does not think France is being overtaken by a wave of post-truthism. Publications like Libération and Le Monde have launched fact-checking tools to counter rising fears of “fake news”. + +Who needs the aggregation + +European privacy laws may constrain some of the social-media techniques used in America. Cambridge Analytica, a firm employed by Mr Trump’s campaign, used voter data aggregated from many sources to woo his supporters and discourage Hillary Clinton’s. Stephen Bannon, Mr Trump’s chief strategist, gives this database much of the credit for his victory. Other analysts question its effectiveness. In any case, European laws prohibit using data on individuals’ race, health, religion or political beliefs without their consent, which would make such aggregation difficult. + +Populists are most influential when mainstream media pay attention to them, as with Mr Trump’s tweets, says Cas Mudde, a political scientist at the University of Georgia. Europe’s media may be somewhat less vulnerable to this temptation. But social-media platforms also offer a space where zealots can reinforce each others’ views, says Brendan Nyhan, a political scientist. And they make it possible to create fake accounts that amplify a candidate’s support. BuzzFeed, a news website, has reported on chat rooms where backers of Ms Le Pen help American supporters of Mr Trump to post comments on French news sites. Users are advised to create fake accounts with attributes that are not stereotypically pro-National Front, such as gay, Jewish, or “cute girl”. On the internet, no one can tell you’re American. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717978-perhaps-because-they-trust-mainstream-media-more-why-europeans-are-less-eager-consumers/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Charlemagne + +Britain may find it hard to escape the European Court of Justice + + +Every trade relationship needs an umpire, like it or not + + + + + +From the print edition | Europe + + +Mar 2nd 2017 + + + + + +THE European Court of Justice (ECJ), a stately place populated by robed judges, eager clerks and artworks depicting clunky legal metaphors, seems an unlikely place for a coup. But it is here, “tucked away in the fairyland Duchy of Luxembourg”, wrote Eric Stein, an American academic, that the court “fashioned a constitutional framework for a federal-type structure in Europe”. This line has resonated with the many critics that the court, the supreme judicial authority in the European Union, has attracted. British Eurosceptics in particular have seen in the ECJ a political project shrouded in legal obscurantism that poses a deep threat to the ancient sovereignty of their courts and MPs. + +Now that Britain has voted to leave the EU, liberation from the shackles of Luxembourg ranks second only to control of immigration in the Brexiteers’ hierarchy of needs. That explains why Theresa May, the prime minister who will shape the terms of Britain’s departure, has vowed to take the country out of the ECJ’s jurisdiction. “We will not have truly left the European Union,” she said recently, “if we are not in control of our own laws.” + + + + + +In one respect, this is trivial. The ECJ is the court of the EU; quitting the club means leaving the court’s purview. But examine another of Mrs May’s stated aims—to retain the “greatest possible access” to the EU’s single market after leaving it—and her principles begin to look more like a predicament. + +To understand why, consider what the court actually does. Its critics have often focused on a string of rulings in the 1990s that elucidated and expanded the rights of Europeans to live and work across the EU. (More recently, the court has restricted EU migrants’ rights to benefits.) They have watched with concern as EU treaties have expanded the court’s responsibilities. Since 2009 the Charter of Fundamental Rights has been invoked in a series of data-privacy cases, including the “right to be forgotten” ruling, under which individuals can force search engines to remove links to embarrassing or defamatory websites. The coming weeks may see big decisions on humanitarian visas, religious headwear at work, and EU sanctions on Russian oil firms. + +Less well known is the regular churn of ECJ rulings that keep the EU’s single market chugging along, including the right to trade as freely across borders as within them. The 1963 Van Gend en Loos case, beloved by EU law students, involved a Dutch haulage firm hit with duties on imports from West Germany. Later came a crucial ruling obliging West Germany to let a French blackcurrant liqueur be marketed as such. Such prosaic cases hardly resonate with citizens the way Supreme Court rulings like Roe v Wade do in the United States. But they helped build the single market, still the EU’s singular achievement, as much as any law or treaty. + +This market is so important that the court’s rulings extend deeply even into non-EU countries that seek close access to it. “The influence of our case law on third partners is very, very big,” says Koen Lenaerts, the president of the ECJ. Norway, Iceland and Liechtenstein, the three non-EU members of the European Economic Area, are governed by rulings of the EFTA court, which closely follows the ECJ. Swiss law is nominally independent, but in practice courts tend to track Luxembourg because Switzerland is so deeply integrated into EU markets. Voters periodically grumble about the influence of “foreign judges”. But no Swiss government has seen fit to do anything about them. + +What does all this mean for Britain? It depends on the trade deal Mrs May secures with the EU, but anything short of autarky means the country will never be entirely free from the court’s clutches. At a minimum, any British firm trading with the EU will need to understand relevant ECJ rulings. Companies doing business in the single market must abide by EU competition rules, as American giants like Microsoft and Google have learned. The ECJ will probably supervise any post-Brexit transitional arrangements. And it can be called on to scrutinise any trade deal signed by the EU. Mr Lenaerts has said there are “many different ways” in which his court might be asked to confront Brexit. + +But Mrs May’s “greatest possible access” implies something more. The closer the trading relationship, the more need for harmonised or mutually recognised regulations and a body to oversee it all. The ECJ supervises the European Common Aviation Area, for example, which opens European skies to all-comers. Someone will have to monitor the legal “equivalence” that would allow British financial-services firms to trade inside the single market. And although Mrs May’s misnamed “Great Repeal Bill” will incorporate the entire acquis into British law after Brexit to ensure legal continuity, “EU law is premised on the EU system of remedies,” notes Catherine Barnard, a law professor at Cambridge University. Luxembourg may not be so easy to shake off. + +Booing the referee + +Mrs May’s government accepts the need for some sort of dispute-resolution mechanism. But the relevant section in its White Paper, the best guide there is to British priorities, “lacks any real content,” says Ms Barnard. No option looks ideal. Joining the EFTA court, as its president has urged, would break the spirit of Mrs May’s pledge to quit ECJ jurisdiction. The EU is sick of the complexity of the Swiss deal and will hesitate to do anything similar in its legal arrangements with third parties. And any attempt to create a new sort of judicial tribunal risks incurring the wrath of the ECJ itself. The court has been known to strike down attempts by EU governments to set up alternative centres of legal power. + +By the end of March, Mrs May will trigger Article 50 of the EU treaty, kicking off two years of Brexit negotiations. As the talks proceed, the crystalline certainties of the Brexit campaign will give way to difficult trade-offs and hard choices. Some think the prime minister’s insistence on ditching the Luxembourg court may start to look a little rash. Britain may think it has lost interest in the ECJ. But the court may well retain an interest in Britain. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21717836-every-trade-relationship-needs-umpire-it-or-not-britain-may-find-it-hard-escape/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Britain + + +The NHS and social care: Paying for grandpa [Thu, 02 Mar 22:42] + +The Tories and their opponents: Monarch of all she surveys [Thu, 02 Mar 22:42] + +Competition and choice: Switching off and on [Thu, 02 Mar 22:42] + +British banks: Better does not mean good [Thu, 02 Mar 22:42] + +Divorce law: Blame game [Thu, 02 Mar 22:42] + +Transgender schoolchildren: Changing rooms and beyond [Thu, 02 Mar 22:42] + +Devolution in England: All politics is loco [Thu, 02 Mar 22:42] + +Bagehot: The parable of Gibraltar [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Health and social care + +How to pay for it all + + +The government may change how social care is paid for in order to bolster the National Health Service + + + + + +From the print edition | Britain + + +Mar 2nd 2017 + + + + + +“AILING”, “sick to the bone”, not wanting “sticking-plaster solutions”—the raft of journalistic metaphors for the National Health Service can seem as crowded as a hospital emergency room. But almost everyone agrees with a report this week from Parliament’s Public Accounts Committee (PAC), that the financial health of the NHS continues to deteriorate at an alarming rate, that this is affecting the quality of care, and that the situation is unsustainable. Deficits are building up right across the NHS. Demand for health care from an ageing population continues to rise. And an erosion of funding for social care, public health and district nursing has left hospitals flooded with people who should not be there but are unable to leave. + +This is the background to some intriguing briefing by the government this week. The prime minister’s office told journalists, ahead of next week’s budget from Philip Hammond, the chancellor of the exchequer, not only that there will be a cash injection for social care, but also that “significant reform” is likely later this year. + + + + + +After a decade of free spending under Labour and nearly as long a period of austerity under the Tories, it seems that Mr Hammond and Theresa May, the prime minister, are considering big reforms. With cuts to social care causing such problems for the NHS, the most radical idea is to change how it is paid for, either to a form of social insurance or to a levy on inherited wealth, says Andrew Haldenby of Reform, a think-tank. Both would overturn 70 years of thinking about how the welfare state should be financed. As Mr Haldenby asks, “Who would have thought that Theresa May and Philip Hammond were welfare-state revolutionaries?” + +There is little dispute about the present system’s dire condition. In January the Red Cross said the NHS was facing a “humanitarian crisis”, as 20 hospitals became so overcrowded they could no longer guarantee patient safety. Occupancy rates in some hospitals stand at almost 100%. Only 86% of those coming to hospital emergency rooms in December were treated within the desired time of four hours, the worst rate ever recorded and well below the NHS’s 95% target. + +The finances look equally dire. The PAC report says that total deficits of NHS trusts reached £2.5bn ($3.1bn) in 2015-16, up from £859m in 2014-15. Two-thirds of trusts reported deficits in 2015-16, up from 44% a year earlier. An extra £1.8bn of “sustainability funding”, which trusts received in 2016-17, has not wiped out their deficits. At least the NHS gets extra money. Local authorities, which are responsible for adult social care, saw spending on it fall by 10% in real terms between 2009-10 and 2014-15. + +Faced with such pressures, the health department has resorted to raiding the separate capital budget for long-term investment, moving £950m into its revenue budget in 2015-16. It says it will probably have to do this again. The unfunded commitment to introduce a seven-day NHS is making things even more difficult. + +There are three possible answers. The first is just to put more cash in. Tony Blair and Gordon Brown threw money at the NHS, doubling spending in real terms in the decade to 2010. As a share of GDP, spending is now falling (see chart), but Mr Hammond has repeatedly said there is no new money available. + + + +A second option is to promote new models of care in the NHS. There are now in place 44 Sustainability and Transformation Plans (STPs), new bodies across England that include all health organisations within one area, as well as the local council. Their aim is to strengthen preventive care and integrate health and social care more closely. Yet although there has been some progress, a report by Reform suggests that STPs lack executive authority and consistent vision, and need pooled budgets, commissioned by a single body, to overcome barriers to working together. They seem, at best, a longer-term answer. + +The third solution is the most controversial: a social-insurance scheme or an inheritance levy to raise more money for social care. In Germany social insurance deducts money directly from pay cheques, as is done for the state pension in Britain. Doing this would give Britons an entitlement to social care that is not reliant, as now, on a means test. The inheritance levy could be another way to rebalance the taxation of work and wealth. It is based on the argument that young people with neither houses nor pensions should not have to pay more tax so that older people who have both can avoid drawing on them to pay for their social care. + +Suddenly, almost anything could be on the table, from social insurance to a compulsory levy on estates worth more than a certain amount to a review of the inheritance-tax cut announced by Mr Hammond’s predecessor, George Osborne, which was due to come into effect this April at a cost of some £900m a year. The Treasury dislikes hypothecated taxes, and the Tories once condemned the very notion of a “death tax”. But Mrs May might now pick the idea up as part of her plan to tackle inequality and to promote greater social mobility, suggests Mr Haldenby. + +This is a big moment, agrees Richard Humphries of the King’s Fund, another think-tank. “It looks like the government is prepared to think the previously unthinkable in terms of how to fund social care.” The inheritance tax is a sensible idea, he adds. Anything to help resuscitate hard-pressed health- and social-care budgets. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717849-government-may-change-how-social-care-paid-order-bolster-national-health/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Tories and their opponents + +Monarch of all she surveys + + +Thanks partly to luck and partly to other parties’ failings, Theresa May faces little opposition in England—but she has strong opponents in Scotland + + + + + +From the print edition | Britain + + +Mar 2nd 2017 + + + + + +AT AROUND 3am on February 24th Theresa May was woken by a text message that excited her so much she roused her husband. The Conservatives had just won Copeland, a Cumbrian constituency held by Labour since 1935. This is the first by-election since 1982 when the ruling party has taken a seat from the opposition. Hours later the prime minister flew up to address delighted Copeland campaigners, hailing the “astounding result” as proof that her party stood for “everyone across the whole country”. The Tories are polling above 40%, and the latest ICM survey gives them a near-record 18-point lead over Labour. Not since Tony Blair at his peak has a prime minister seemed so dominant. + +Mrs May is partly the creator of her own pre-eminence. Moving her party left on economic issues (with talk, albeit barely substantiated, of a new industrial strategy) and right on social ones (making immigration cuts the overriding priority of her Brexit plans) has helped her to eat into Labour territory in places like Copeland and closed off political space to the right once colonised by the populist UK Independence Party (UKIP). But on both fronts, she is also lucky. + + + + + +Jeremy Corbyn’s far-left Labour revolution was always going to boost the Tories. It is now eating itself. Lefties who once supported the Labour leader are abandoning him. Simon Fletcher, architect of his leadership victory in 2015, has resigned. After Copeland, the boss of Unison, a supportive union, insisted that Mr Corbyn “must take responsibility”. The beginning of the end of the Corbyn era seems nigh. He wants to enact reforms lowering the number of nominations by (anti-Corbyn) MPs that are needed for prospective leaders to go before the (pro-Corbyn) membership; once that is done he will come under new pressure from left-wing allies to make way, perhaps for Rebecca Long-Bailey, the shadow business secretary. But the process could still take some years. + +UKIP might just have swept into the vacuum created by Labour to put Mrs May under pressure. But it is being obligingly useless. For the Stoke Central by-election on the same day as Copeland, the party boasted of its chances in “the capital of Brexit”. It even chose its new leader, Paul Nuttall, as candidate. But he ran a chaotic campaign marred by false claims on his website and eventually lost to Labour. For good measure UKIP has spent the aftermath tearing itself apart. Nigel Farage, its former leader, openly criticised Mr Nuttall. Then he and Arron Banks, a big donor, said that UKIP’s only MP, Douglas Carswell, should be sacked, seemingly to punish him for failing to secure a knighthood for Mr Farage himself. + +An absence of effective opponents is bad for a ruling party, because it makes mistakes more likely. Four forces now constitute the real opposition in England: the pound, Europhile Tories, the House of Lords and the Liberal Democrats. Mrs May’s espousal of a “hard” Brexit has sent the currency tumbling, hurting living standards. Pro-European forces in her party are becoming louder: this week Sir John Major, a former prime minister, criticised ministers for being overly optimistic about Brexit and called for “a little more charm, and a lot less cheap rhetoric”. On March 1st the Lords amended the bill authorising Mrs May to begin Brexit talks, demanding that EU nationals’ rights in Britain be guaranteed. And some Tories fret that the Lib Dems could cost the party support in EU-friendly parts of the country. + +Yet none of these is truly formidable. The pound’s fall cannot easily be politicised. Europhile Tories are a small minority within the party. Peers have made clear that they will not seek to stop Mrs May from triggering the Brexit process. And the Lib Dems have just nine MPs. + +North of the border, however, is another matter. There the dominance of Nicola Sturgeon, first minister and leader of the Scottish National Party, matches Mrs May’s to the south. The Scottish Labour Party, previously firmly entrenched in power, held a shambolic conference on February 24th-26th, at which Mr Corbyn failed to endorse its leader’s proposal for a federal Britain and Sadiq Khan, the Labour mayor of London, caused a storm by appearing to call the nationalists bigoted. “It was a car crash,” chuckles a senior SNP official. + +A crucial battleground in British politics over the coming years will be the clash between Mrs May and Ms Sturgeon. Noting that Scotland voted strongly to stay in the EU, Ms Sturgeon said this week that a second independence referendum would be a “legitimate, almost necessary” step if Scotland is dragged into a “hard Brexit”. She may announce a new plebiscite within weeks, in the hope that Scotland might be able to leave Britain before Britain leaves the EU. Mrs May seems to be taking the possibility seriously. Recently she told her cabinet to prepare to make the case for the union once again. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717846-thanks-partly-luck-and-partly-other-parties-failings-theresa-may-faces-little-opposition/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Competition and choice + +Getting more consumers to switch + + +Regulators keep on trying to persuade consumers to shop around for cheaper providers + + + + + +From the print edition | Britain + + +Mar 2nd 2017 + + + + + +ON FEBRUARY 27th Ofgem, the energy regulator, announced proudly that the number of households changing their gas and electricity suppliers had hit a six-year high. In 2016 7.7m “switches” took place, a rise of 30% on 2015. The energy market, dominated by the “big six” of SSE, EDF, Npower, E.ON, Scottish Power and British Gas (now owned by Centrica), has often been criticised by politicians and regulators for overcharging. So the rise in switching was hailed as welcome evidence that consumers are now wising up and shopping around for cheaper prices. Or, in the lexicon of competition policy, getting “engaged with the market”. + +Maybe. But there is still plenty of evidence from all sectors to suggest that the consumers who would benefit most from switching to cheaper accounts—the elderly and the poor—remain the least likely to do so. And until they start to switch in larger numbers, there will always be a contrary pressure to cap prices by fiat. This is what happened to the telecoms giant BT on February 28th. + + + + + +Ever since utility markets began to be liberalised in the 1980s, switching has been something of a holy grail for regulators. After the shake-up on the supply side, so the argument ran, it was time to shake up the demand side. In the past few years regulators have focused on enabling consumers to exercise as much choice as they can, to bring competitive pressure to bear on providers. Also, new entrants to the market have been encouraged, principally in energy and banking, so as to provide more competition for the big boys. + +To a degree, this has worked. Whereas just five or so years ago the energy market was virtually moribund, dozens of new outfits, such as Ovo and First Utility, now offer an unprecedented variety of tariffs. Their share of the market against the big six has doubled in two years, to 14%. In financial services, “challenger” banks such as Metro and Atom are taking market share; last year over 1m people switched their bank accounts. From April, deregulation will begin in the water market; for the first time most businesses and organisations (but not households) will be able to choose a provider rather than being restricted to their regional water company. + +Yet for all this official prompting, as well as a blizzard of terrible advertising from price comparison websites, too many people remain stuck on bad deals, usually offered by so-called “legacy” providers such as the big six in energy or BT in telecoms. About two-thirds of energy consumers, for example, remain on standard variable tariffs (SVTs), which are just rolled over from year to year. SVTs are typically more expensive than fixed deals. Ofgem reckons that consumers could save as much as £230 a year by shopping around. Furthermore, those on the worst deals tend to be poorer, and the least capable of using the internet to help them to switch. + +To assist them, regulators are resorting to tougher measures. Ofgem has introduced a temporary price cap on prepayment meters, which are mostly used by poorer households. This will come into force on April 1st and could save customers up to £80 a year. And along with its new price cap for BT, Ofcom, the telecoms regulator, is proposing to force the company to cut its charges by at least £5 a month for its landline-only service. Around 80% of customers who have landline only have a BT connection, and almost three-quarters of them have never switched their provider. Almost half are over 75 and a third come from low-income households. + +“It’s an intervention of last resort”, argues Selina Chadha, a director of Ofcom. But the message is clear: if consumers can’t help themselves, regulators will not hesitate to step in for them. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717813-regulators-keep-trying-persuade-consumers-shop-around-cheaper-providers-getting-more/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Better does not mean good + +British banks are doing better than expected—but the taxpayer is not off the hook yet + + +Since the Brexit vote, banks’ share prices have beaten those of many other sectors of the economy + + + + + +From the print edition | Britain + + +Mar 2nd 2017 + + + + + +THE day after last June’s Brexit referendum, shares in British banks tanked. Most economists feared financial instability and recession, and few investors wanted to be associated with a sector that had been so badly damaged by the financial crisis (see chart). But eight months on the banks are doing better than expected. By recent standards, at least, their results have not been that bad. In 2016 Barclays avoided making a loss. And on February 22nd Lloyds, now almost exclusively a Britain-focused bank, posted its highest pre-tax profits for a decade. As in other countries, since the referendum banks’ share prices have outperformed the rest of the market. + +How to explain this? A strong economy has supported banks’ revenues. Defying predictions, GDP growth in the second half of 2016 was faster than in the first. Unemployment has edged down. Fears of a wave of defaulting customers have not materialised: in the owner-occupied and buy-to-let sectors the share of mortgages in arrears is at a historic low. + + + + + +Meanwhile, looser monetary policy in the wake of the Brexit vote has not done as much damage as some had predicted. The worry had been that the cut in interest rates in August from 0.5% to 0.25% would dent bank profitability by squeezing the margins between borrowing and lending rates. In fact the Bank of England is now in effect supporting such margins through its “term funding scheme”, which channels ultra-cheap money to institutions that lend more to customers, says Tony Yates of Birmingham University. + +The cost of cleaning up for past misdeeds has in recent years eaten away at banks’ profits. But the end is now in sight. In 2016 Lloyds set aside £1bn ($1.2bn) for claims relating to mis-sold payment-protection insurance (PPI), a quarter of the previous year’s amount. In November overall PPI payouts were about 40% lower than a year earlier, according to the Financial Conduct Authority, a regulator. Analysts at Deutsche Bank reckon that British banks’ PPI liabilities will be fairly low in the coming year; 2019 may mark the deadline for claiming compensation. + +One-off charges, however, remain a curse for Royal Bank of Scotland (RBS). On February 24th it reported a loss of £7bn in 2016. The bank insists that its core business is now healthy. Yet American regulatory bodies have accused it of mis-selling mortgage-backed securities, and the bank has set aside billions to settle the claims. The cost of righting past misdeeds may be even higher in 2017. Unsurprisingly, RBS’s shares have had a poor year. + +That is bad news for British taxpayers, who have a £40bn stake in RBS after it was taken into public ownership during the financial crisis. That adds perhaps 2% of GDP to the national debt. With a budget looming on March 8th, the government is desperate to reduce its debt pile. But it will be some time before it can entirely privatise RBS (as it has almost done with Lloyds, which was also bailed out). After taking account of the cost of financing the bail-out, RBS’s share price must roughly double for the government to recoup what it put in. Britain’s banks may be beating expectations, but they are a long way from being fighting fit. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717848-brexit-vote-banks-share-prices-have-beaten-those-many-other-sectors/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Divorce reform + +The case for no-fault divorce + + +It is time to introduce no-fault divorce in England and Wales + + + + + +From the print edition | Britain + + +Mar 2nd 2017 + + + + + +PEOPLE stay in loveless marriages for many reasons: anxiety about the impact of splitting up on their children; financial dependency on a spouse; fear of loneliness. Tini Owens is stuck in hers because a judge refused to give her a divorce. She said that her husband’s treatment of her, including scolding her in front of their housekeeper and ignoring her over a meal, amounted to unreasonable behaviour, grounds for divorce. The judge, however, disagreed, saying they were “minor altercations…to be expected in a marriage”. Since her husband has refused to consent to the break-up, she must wait five years. Ms Owens has asked the Court of Appeal to overturn the ruling. Her position would be simpler if England and Wales did not insist on blame being part of divorce. + +As well as unreasonable behaviour, marital breakdown can be demonstrated by evidence of adultery or desertion. The alternative is at least two years’ separation. But the notion of fault is often little more than a charade. Kerstin Beyer, a family lawyer, cites a case where the “unreasonable” behaviour involved the wife pursuing an “independent social life”. Insisting that somebody must be to blame makes an already difficult process harder. + + + + + +This week Lord Wilson, a Supreme Court judge, added his voice to those calling for “no-fault” divorce. Others in favour include Sir James Munby, president of the family division of the High Court, Lady Hale, another Supreme Court justice, most of those working in family law and organisations such as Relate, a charity that provides relationship counselling. + +In 1996 the government tried to introduce no-fault divorce, but the legislation was repealed in 2001 after requirements on the parties to attend “information meetings” to encourage reconciliation proved unworkable. In 2015 Richard Bacon, a Conservative MP, introduced a private members’ bill proposing no-fault divorce with a year’s cooling-off period, but it failed to get a second reading. There has always been a sensitivity around the notion of undermining marriage, says Nigel Lowe, an emeritus professor of law at Cardiff University who is also a member of the Commission on European Family Law, a group of academics. This is clear in debates over same-sex and civil unions. Opponents of no-fault divorce worry that it might make ending marriage too easy. + +Other countries, such as America, the Netherlands and even largely Catholic Spain allow couples to divorce without allocating blame. The evidence from elsewhere suggests that fears of a spike in divorces may be overblown. Scotland, England’s closest neighbour geographically and jurisdictionally, introduced no-fault divorce in 2006. In the next two years the divorce rate rose, perhaps as some previously made to wait hurried through their split. But then it continued to fall. + +If both parties want to break up, Mr Lowe asks, why should it be in the state’s interest to hold up the process? Sorting out the division of assets and arranging for the custody and future care of children are always the hardest aspects of ending any marriage. Eliminating questions of who is to blame for the split would allow those involved to focus on dealing with these. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717847-it-time-introduce-no-fault-divorce-england-and-wales-case-no-fault-divorce/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Changing rooms and beyond + +How British schools are adapting to growing numbers of transgender pupils + + +Talk of accommodating transgender students contrasts sharply with uproar in America + + + + + +From the print edition | Britain + + +Mar 4th 2017 + + + + + +ST PAUL’S, a fee-paying girls’ school in west London, often tops the league tables for exam results. But it is in the news for another reason: the publication of a new “gender-identity student protocol”, which allows pupils older than 16 to wear boys’ clothes and to be addressed by boys’ names. Although the school would not accept a male applicant, it is happy to support existing pupils who wish to change gender, explains Clarissa Farr, the school’s head teacher. Growing numbers of her pupils, she says, no longer see themselves as girls. + +Schools are often in the front line of social change. But rarely has it come so fast. The Gender Identity Research and Education Society, a charity, estimates that the number of children who identify as transgender in Britain is doubling each year. Mermaids, an outfit that supports transgender children, received 3,000 phone calls last year, up from 600 in 2014. Most children simply identify as another gender, or none; a minority begin medical treatment to alter their bodies. + + + + + +They often have a tough time at school. One survey in 2014 found that a third of transgender children had skipped class because they feared discrimination. Bullying is a big problem, mainly by fellow pupils but sometimes by teachers, too. Susie Green, the chief executive of Mermaids, says that around half of schools fail to help pupils when they come out as transgender. In some cases, teachers refuse to take actions as simple as accepting a new name. + +In 2010 the Labour government passed an equality act that obliges public and private institutions not to discriminate against transgender people. That has led to some improvements. Uniforms increasingly have a unisex option. New schools tend to be built with cubicle toilets and changing rooms, rather than communal ones split by gender. Whereas America has national debates about toilet use, in Britain discontent rarely spreads beyond local parents. + +Still, most schools face up to the issue only when one of their pupils comes out as transgender. Even when well-meaning, a rushed response can make things trickier. Teachers are sometimes reluctant to discuss the subject for fear of saying the wrong thing (at St Paul’s, pupils came up with a glossary to help). Yet, say campaigners, most of the time teachers need only listen to what children want. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717739-talk-accommodating-transgender-students-contrasts-sharply-uproar-america-how-british/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Devolution in England + +Reaching a dead end + + +The whole process of devolving more powers to local authorities in England seems to have stalled + + + + + +From the print edition | Britain + + +Mar 4th 2017 | KING’S LYNN + + + + + +THE town of King’s Lynn is not the most obvious place to learn lessons about the governance of England. It occupies a twilight zone, not big enough to attract large investment as Cambridge has, but not so cut off as to be hopeless like some places farther east. The town, which has a population of 46,000, has a medieval centre that dates to the 14th century when it was a port trading with German Hanseatic cities. Brian Long, leader of King’s Lynn and West Norfolk council, wants to restore its glory. Though shops lie empty, a paper plant opened four years ago, and factories and a business park have sprung up in the outskirts. “We appreciate we are not the most desirable place to invest, but we do have some merit,” says Mr Long. + +Yet in November the council voted to reject a plan for the 16 boroughs of Norfolk and Suffolk to join up in a “combined authority”, and accept a mayor for the region, known as East Anglia, in exchange for a slice of £25m funding a year for 30 years to support economic growth and the development of local infrastructure, as well as £130m for housing. Mr Long supported the move but, with three other councils already against, the deal failed. + + + + + +In May, Liverpool, Greater Manchester and four other combined authorities (see map) will elect a metro mayor for the first time. They are the poster children of the “devolution revolution” launched by the then chancellor, George Osborne, in 2015. The hope was that more joined-up decision-making at local level would boost regional economies and raise productivity. But many rural areas did not even submit a devolution proposal. Elsewhere local councillors rejected the notion. There are fears that, beyond the six deals concluded, it will be hard to do more. Lord Porter, head of the Local Government Association, said last month that he believes “devolution is dead”. + + + +This comes as the prime minister, Theresa May, launches a new industrial strategy, with a declared aim to “drive growth up and down the country from rural areas to our great cities”. Jack Hunter of IPPR North, a think-tank, says that “trying to do industrial strategy from Whitehall simply will not work”. Yet Mrs May and her chancellor, Philip Hammond, seem less keen than their predecessors on devolution. + +King’s Lynn ought to be a good candidate. Struggling to develop on its own, it would benefit from closer integration with cities like Peterborough, Norwich and, especially, Cambridge, with its booming high-tech industry, says Mr Long. Extra funding could upgrade rail links, to increase the number of trains to and from Cambridge from one an hour. As it is, King’s Lynn will lose the chance to play a part in a devolved transport policy. Observers call the rejection of devolution suicidal, and believe a compromise could have been found over a regional mayor. + +Concern over the size of the combined authority was one reason the deal failed. Many felt that Norfolk and Suffolk, together covering 3,540 square miles (9,170 square km) was too big an area to be joined (Greater London covers 600 square miles). “The combined authority devolution model is made in Manchester and refined in Birmingham,” says Will Rossiter of Nottingham Trent university. That, he says, does not always suit the complex “two-tier” layering of political power in the shires: a county council, in charge of transport and social care, and below it, a district council, in charge of rubbish collection and other local services. + +Local politics is another issue. Labour-led Norwich rejected the devolution deal partly out of fear of being dominated by rural Tory councils. In Manchester, most of the councils in the new authority are Labour-run. Yet central government is also to blame. Norfolk wanted a deal on its own, but Whitehall urged it to join with Suffolk, partly because the Local Enterprise Partnership, a regional body promoting business, covers both. The government also moved the goalposts, at one point suggesting Cambridge be included, then switching to link it with Peterborough. “If Cambridge had been part of our deal,” says Mr Long, “I think we would have gone for it.” + +Identity is another factor. Whitehall encouraged Derbyshire and Nottinghamshire to combine in a devolved deal, yet local politicians found it hard to relate to a regional authority to which they held no natural allegiance. “Few people who know the economic and political geography of the area believed it could work,” says Mr Rossiter. Sure enough, five district councils rejected the process. + +Devolve no more + +In Westminster, the excitement that accompanied Mr Osborne’s devolution plans in 2015 has gone. In September Lord O’Neill, who championed the “northern powerhouse” of English cities, quit as a Treasury minister. In December the new transport secretary, Chris Grayling, stopped the devolution of control of London trains to the capital’s mayor. The local government secretary, Sajid Javid, claims to be open to proposals. But to kick-start devolution again “is going to take more than Sajid saying his door is open,” says Jonathan Carr-West of the Local Government Information Unit, a think-tank. + +Some counties are restructuring anyway. Oxfordshire and Buckinghamshire each plan to abolish their county, district and city councils and form a “unitary” one. Cornwall, Wiltshire and Shropshire have already done so. But district councils often align with parliamentary constituencies and, as district councillors act as ground troops in general elections, many MPs do not want unitaries. + +The biggest problem is persuading the people in places like King’s Lynn to support change. “If you asked all my friends in the town,” says one lifelong resident out shopping with his wife, “I doubt any of them have even heard of devolution.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717833-whole-process-devolving-more-powers-local-authorities-england-seems-have/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bagehot + +The parable of Gibraltar and Britain + + +Gibraltar could prove testing for Britain’s relationship with Spain during the forthcoming Brexit negotiations + + + + + +From the print edition | Britain + + +Mar 2nd 2017 + + + + + +DAWN’S rays crest the palm and date fronds. Lights on the African coast pulsate gently through the February haze. In the shadows falling from the sloping rock, a line of mopeds, vans and cars backs up along the Spanish coast road. The air tastes of exhaust. Parents with children hurry along the pavement towards the border. Clearing passport control, they pass a red telephone box and a swish new airport terminal. The driver of the bus into town switches between English and Spanish as they clamber on, then motors across the runway (when planes land, barriers drop and the peninsula is briefly cut off). + +From the air Gibraltar looks like a swollen appendix: a thin, distended finger emanating off southern Spain. It is an appendix figuratively, too: a strange relic of the past. Gibraltar was in Phoenician, Roman, Moorish and then Spanish hands before, in 1713, it passed to Britain under the Treaty of Utrecht. Over centuries as a cosmopolitan port—the gateway to the Mediterranean—it has attracted Genoese, Jews, Maltese, Moroccans, Britons and Spaniards, making Gibraltarians a cosmopolitan, mongrel bunch. They switch from English to Spanish and to Llanito (a local dialect of Spanish) between sentences, even within them. + + + + + +Yet the place is almost provincially British, from the plug sockets and peep-peep of the traffic lights to the ubiquitous union flags, pubs with names like “The Horseshoe” and British chain stores. The architecture sums up the contradictions: Edwardian houses with sash windows mingle with yuppie flats and recognisably Mediterranean buildings, all flat roofs and big shutters. Think Portsmouth meets Tel Aviv. + +On June 16th, a week before Britain’s referendum on leaving the European Union, David Cameron flew to Gibraltar to address its overwhelmingly anti-Brexit population. The rally was expected to be a giant boost for the Remain campaign. “The nine o’clock news would have been covered by very, very patriotic Brits waving union jacks and European flags…we would have given David Cameron a send-off like he’d never had before,” says Fabian Picardo, the chief minister. But on landing the prime minister learned that Jo Cox, a Labour MP, had been murdered in her constituency. The rally was cancelled, Gibraltar went on to vote 96% against Brexit (the highest of any part of Britain) and the country went the other way. “A real emptiness, a real sadness, a real concern” filled the streets on June 24th, recalls Mr Picardo. + +Now Gibraltar is grappling with the consequences. Its economy has thrived from an influx of financial-services firms attracted by low taxes and a skilled workforce. Some 15% of all Britain’s car insurance and 60% of its online betting is done through Gibraltar. Nonetheless, pointing out that 90% of its trade is with Britain, Mr Picardo does not see membership of the European single market as the biggest issue. That is freedom of movement of people. A report published by the EU committee of the House of Lords on March 1st notes that Gibraltar’s population swells by about 10,000, or a third, every day as Spaniards commute in to work. If the border were shut, Gibraltar would suffer a catastrophic shortage of labour. + +There are also wider concerns that affect Britain as a whole. Spain has long resented its control of Gibraltar and some in the centre-right government there call the Brexit vote an “opportunity” to claim it back in some way. On June 24th José Manuel García-Margallo, Spain’s then foreign minister, proposed a “co-sovereignty” deal. The locals are having none of it. “A dead duck. Still born. They don’t understand what the word ‘no’ means,” snaps Mr Picardo, exasperated by what he calls the “intellectual nonsense and upside down thinking” emanating from Madrid. The British government emphatically agrees with him. + +Spain’s tone has softened since then, aided by the appointment in November of Alfonso Dastis, a European-minded pragmatist, to the foreign ministry and by pressure from the Andalucian government, which is worried about the economic effects of a hard border on the surrounding, unemployment-hit region. Nonetheless, Spain does not have to demand total control over Gibraltar to muddy the Brexit talks. One flashpoint will be the airport, which sits on partly reclaimed land across the peninsula’s isthmus. Spain does not believe the Treaty of Utrecht covers this, so blocks all legislation that treats Gibraltar’s airport as British. Attempts to keep Britain in the European aviation market—essential for keeping down air fares—may meet a Spanish veto. + +In a negotiation that will need much bilateral diplomacy, Britain’s dealings with Spain may be especially sensitive. For Gibraltar is but one of a trio of fiddly issues. The second is the status of Britons in Spain, more than in any other EU country, often unregistered, mostly ageing and some of whose health care is paid for by Spanish taxpayers. The third is Scotland. Madrid is neuralgic about special treatment for the Scots that might spur on the Catalans, who want an independence referendum of their own in September. + +Scissors, paper, rock + +That is the thing about leaving the EU. Europe is an old continent, wracked with conflicts and tensions, mutual interests and antagonisms, commonalities and differences. The union, in all its imperfection, broadly contains these in the interests of harmony and prosperity. It was the prospect of membership, for example, that persuaded Spain to reopen the border with Gibraltar in 1982, 13 years after it had shut it. Pulling out of the club risks melting the glue that holds some of these fractures together. The Northern Ireland peace settlement, Britain’s own union, disputes with neighbours over fishing rights, trade and crime: these are the accumulated complexities left after millennia of mixing and mingling. Gibraltar—exotic and yet familiar, so European by vocation but so British in feel—sums them up. The dark clouds over the peninsula hang over the motherland as well. + +Economist.com/blogs/bagehot + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21717812-gibraltar-could-prove-testing-britains-relationship-spain-during-forthcoming-brexit/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +International + + +Deportation: Exit strategies [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Exit strategies + +Removing unauthorised immigrants is difficult and expensive + + +But rich countries are trying ever harder + + + + + +From the print edition | International + + +Mar 2nd 2017 | ADELANTO, BERLIN AND LONDON + + + + + +TEARS stream down Arturo’s cheeks and onto his red jumpsuit as he imagines being deported to Mexico. Deep grooves line his face, a map of the hardships he has experienced since coming to America illegally three decades ago, aged 14. He got mixed up in a bad crowd and was convicted of six armed robberies. After 14 years in jail he was moved to the Adelanto immigration detention facility in the Californian desert, where he has spent the past three years. “I made some big mistakes, I know that,” he says. “But I did my time and I’m a different person now.” His mother, wife and friends are all in California. Yet, with little prospect of being granted leave to remain, he may soon be on a bus to Mexico, where he knows hardly anyone. + +Nearly 10,000km away, in a refugee camp in Berlin, Aws, a 30-year-old Iraqi who travelled to Europe via Turkey on a flimsy boat, has been denied asylum after two years in Germany. He is appealing; a final decision could take another two years. In Iraq he was a driver for the American army, and he is fearful of being targeted by militants if he returns. He wants to open a shop in Berlin, but while he waits he is not allowed to work. He is despondent—and bored. “I’ve wasted two years of my life,” he sighs. + + + + + +Irene Clennell must have thought that having a British husband and children, and living in Britain for nearly 30 years, would be enough to let her stay there. She was mistaken. In January she was hauled off to a detention centre in Scotland and on February 26th she was put on a flight to Singapore, where she was born. In the 1990s she was granted open-ended permission to remain in Britain, but it lapsed after she spent several years in Singapore looking after her ageing parents. Her later re-applications to live in Britain, where she cared for her sick husband, were denied. After spending time in Britain on a visitor visa she was detained, and then deported with £12 ($15), no change of clothes and no one lined up to stay with in Singapore. + +America, Germany and Britain are all, in different ways, using deportation as part of their efforts to handle unauthorised economic migrants and failed asylum-seekers—and to respond to rising nativist sentiment. On February 21st America’s Department for Homeland Security (DHS) published new guidelines intended to ensure that more illegal immigrants are deported, more speedily. In Germany a proposed law would make it a bit easier to deport failed asylum-seekers, after nearly 1.2m immigrants applied for asylum from the beginning of 2015 (see chart 1). And, as Britain prepares to leave the European Union, its government has restated its aim to cut net annual immigration, now running at around 300,000, to under 100,000. The target, set in 2010, has driven immigration policy ever since. + + + +Barack Obama deported more unauthorised immigrants than any previous president, but most had been caught near the border. By the end of his second term few were deported from the interior of the United States unless they had criminal records (see chart 2). In 2011 67% of those removed from the interior fitted that description; by 2016 it was 92%. Now, however, Donald Trump has said that Immigration and Customs Enforcement (ICE) will seek to deport any who have “committed acts which constitute a chargeable criminal offence”, misrepresented themselves to a government agency or “abused” any public benefits programme. Since so many use fake documents or entered the country without going through passport control, this probably includes almost all of them: an estimated 11m, mostly from Mexico, Central America and Asia. + + + +John Kelly, the boss of DHS, has said he intends to make it easier to carry out deportations without a court hearing. At the moment, only illicit migrants found within 100 miles of America’s border who cannot prove they have been in the country for more than 14 days can be removed without being brought before a judge. Mr Kelly has floated the idea of extending such expedited removal to the whole country, and increasing the 14-day limit to two years. + +The DHS also wants to work more closely with local law-enforcement agencies. But not all are willing. Some of the largest cities, including New York, San Francisco and Chicago, have declared themselves “sanctuaries”, arguing that if their police are known to work with federal immigration authorities, immigrants will be less likely to co-operate with them or report crimes. Some jurisdictions ban police from asking members of the public about their immigration status. Others refuse to notify ICE when releasing inmates from custody, or to smooth the transfer of inmates to deportation centres by holding them past their scheduled release dates. + +Mr Trump has threatened to cut federal funding from places deemed unco-operative, though it is not clear that he can do so legally. He has also vowed to build a wall along the border with Mexico and to increase the number of Border Patrol agents from 21,000 to 26,000. Both policies would be wildly expensive. America already spends $19bn a year on immigration enforcement, more than on the Federal Bureau of Investigations, Drug Enforcement Agency and Secret Service combined. By one estimate, the wall alone will cost $21.6bn. And an extra 5,000 Border Patrol agents would add around $900m to an annual staffing budget of $3.8bn. + +It is also unclear whether immigration enforcement near the border can become any stricter. Fewer migrants are arriving from Mexico, not least because the Mexican government has sought to stop Central Americans passing through to get into the United States. The number of expedited removals from the border area is already high. And even if more of the illegal immigrants in the interior are detained, it will be difficult to remove them. Immigration courts are already overwhelmed; in Los Angeles, queues outside regularly stretch around the block. The number of immigration cases pending nationwide has risen from 175,000 a decade ago to 542,000. + +Attempts to expand the use of expedited removal would be challenged in court, says Omar Jadwat, a lawyer for the American Civil Liberties Union, an advocacy group. And anyway, two-thirds of unauthorised adult immigrants have been in America for at least a decade, according to the Pew Research Centre, a think-tank, meaning that even with a two-year cut-off they could not be summarily removed. + +As America prepares to beef up its giant deportation system yet further, Germany is building one almost from scratch. Although it is processing asylum claims impressively quickly, considering the large number of recent arrivals, some inevitably fail—and Germans are queasy about what should happen next. Deportation, for many, smacks of the Nazi era. The Social Democrats and Green Party oppose it in pretty much all circumstances. + +Decisions on asylum are made by the Federal Office for Migration and Refugees. But it is states that are responsible for removing applicants whose claims fail. Those with left-leaning administrations drag their feet. Although the federal government struck a deal with Afghanistan in October to return its citizens whose asylum applications had failed, Berlin is refusing to return Afghans, deeming their country too dangerous. Nationally, just 77 Afghans have been returned, though 12,000 have been refused the right to remain. More than half of recent deportations have been to three European countries, Albania, Kosovo and Serbia, and hardly any to the Middle Eastern and African ones from which most of the recent immigrants came. + +In some cases locals have helped migrants to move into churches, from which they cannot be removed. Deportation is barred for those who cannot get passports from their home countries, or who have medical problems. Some countries, particularly in Africa, refuse to take their citizens back. The result is a fast-growing population of immigrants who have no right to remain. Although more than 25,000 people were deported in 2016, up from 11,000 in 2014, Germany now holds 300,000 failed asylum-seekers who have been told they must leave. That figure is expected to be nearly 500,000 by the end of this year. + +Many Germans remain relatively sanguine about the influx: in January 57% said they thought their country could absorb a high number of refugees. But after a failed asylum-seeker from Tunisia killed 12 people in Berlin in December, removal has risen up the political agenda. In the same poll, two-thirds said that Germany needed a tougher deportation law. + +A bill approved by the government on February 22nd would, if passed by parliament, take some small steps in that direction. Asylum-seekers whose claims are rejected would have to stay in the area where they were registered, to make it easier to keep track of them. Those thought to be a danger to society could be electronically tagged or, in some circumstances, taken into custody. Germany needs to become a “normal immigration country”, says Daniel Thym of the Expert Council of German Foundations on Integration and Migration. He thinks Germans are starting to understand that deportation is an essential part of a functioning asylum system. + +This island’s mine + +Tucked away at the edge of Europe and surrounded by sea, Britain has neither large numbers of unauthorised economic migrants, like America, nor of asylum-seekers, like Germany. Only about 30,000 people applied for asylum in Britain last year. Figures for illegal immigrants are murky, but an estimate in 2009 by the London School of Economics put the total at 618,000. Most are thought to have arrived legally and overstayed their visas, or to have applied for and been denied asylum. + +But in recent years many more people have taken advantage of the EU’s freedom-of-movement rules to come to Britain than to leave it. Almost all economists agree that Britain has benefited: it mostly exports retired people and imports Europeans of working age. Even so, rising discontent with immigration has led the government to stick with the 100,000 a year target for net immigration—and to seek a “hard” Brexit that puts ending freedom of movement ahead of staying in the single market. + +Worryingly for the 3m citizens of other EU countries living in Britain, their immigration status after Brexit is uncertain. The prime minister, Theresa May, says that she wants to allow them to remain and work, and is waiting only for the 27 other EU countries to guarantee the same for their British residents. But whereas many other European countries have population registration systems, meaning their British immigrants will easily be able to prove that they are residents, Britain does not. + +Since the Brexit vote, thousands of EU citizens have applied for formal recognition of their status in Britain by using a complex system modelled on that for migrants from outside Europe. More than a quarter have been rejected, including long-term resident spouses of British citizens, often because of an obscure rule that economically inactive immigrants must have private health insurance. The European Commission says that the requirement breaches free-movement rules, since EU citizens are entitled to use the public National Health Service. + +In 2016 British authorities used immigration powers to detain around 4,700 citizens of other EU countries, up from 768 in 2009, the year before the 100,000 target was set. Some had committed serious crimes; others were vagrants (EU rules allow the removal of immigrants who have no means of support). But among the infringements cited were the loss of a foreign identity card and holding a birthday party in a public park. As a share of those detained under immigration law, EU citizens now make up 16%; of those who are removed they make up almost a third. + +Endless days + +Britain is the only European country to allow indefinite detention under immigration laws. Some of those held are migrants who have committed crimes but cannot be removed, because their home countries are too dangerous. But of those detained last year, more than two-fifths ended up being released. This suggests poor decision-making about who is detained in the first place, says Colin Yeo, an immigration lawyer. Sweden, which gets far more asylum-seekers than Britain, also manages to return a far higher share of those whose claims fail. + +Sweden also has just a tenth as many places in detention centres as Britain does. Rather than locking up immigrants whose applications to remain have failed, officials help them to arrange travel home and to try to work out where they will live and what they will do when they get there. Migrants processed in Sweden feel that they understand the system, says Jerome Phelps of Detention Action, a charity, and so are more likely to accept a decision that they should leave. + +A long way from home + + + +In recent years Britain’s government has shifted its focus to trying to persuade unauthorised immigrants to leave of their own accord. In 2013 Mrs May, then the home secretary, put up posters and sent vans around British cities emblazoned with: “In the UK illegally? Go home or face arrest”. The next year it became government policy to create a “hostile environment”, by denying unauthorised immigrants bank accounts and driving licences, making it harder for them to get health care and fining landlords who did not check their tenants’ immigration status. In 2016 forced returns of migrants fell by 15% compared with 2014; those of failed asylum-seekers fell by 53%. + +But there is little evidence that hostile-environment policies do anything except encourage illegal immigrants to steer clear of the authorities: the posters and vans were abandoned after being deemed a failure. Meanwhile, the attempt to squeeze net immigration down means applications to enter or settle in Britain seem to be denied whenever possible, rather than being decided on their merits. + +People whose applications to remain are denied are not supposed to be returned to countries where they are at risk. But the requirement has been relaxed in recent years, says Maddy Crowther of Waging Peace, a group that helps Sudanese asylum-seekers. Darfuris used to be recognised as at risk of mistreatment; officials now say they can be sent back to other parts of Sudan. Ms Crowther says those deported can be subjected to what her organisation describes as torture but officials call “rough handling”. + +After Nadia’s father was killed and her mother was kidnapped by the Janjaweed (a homicidal government-backed militia), she returned to her village in Darfur with her fiancé. He was killed in another attack; she was shot in the leg and raped. When she returned to Khartoum she was seized by security forces who accused her of being a rebel, and beat and raped her. Desperate to leave, she applied for a visa to study in Britain. Under the mistaken impression that her student status meant she could not apply for asylum in Britain, she applied in Ireland instead. After she was rejected, on the ground that with her qualifications she should be able to find work in another part of Sudan, she applied in Britain, once more without success. Only after a series of appeals and periods of detention, during which she suffered flashbacks, was she finally granted asylum. + +Decisions on student and work visas are also being tightened. Shiromini Satkunarajah, a Sri Lankan national, arrived in Britain eight years ago, aged 12, with her father, who held a student visa. After his death in 2011 she was allowed to stay to finish her schooling. She had almost finished a degree when she was told she must leave. In February she was held for a week in Yarl’s Wood detention centre, before being released after a national outcry. What makes the case ridiculous as well as brutal is that her skill—engineering—is recognised by the government as being in short supply, meaning that engineering jobs can be offered to people from outside the EU without having to be advertised in Britain first. + +The cost of detention and deportation is pushing some places to look at other options. A bed in ICE’s adult facilities costs the American taxpayer $129 a day. Forced removals are also pricey, partly because immigration officials must usually accompany the deportee. In 2015 chartering a flight from Germany to Georgia to return 20 failed asylum-seekers cost €163,000. + +Keeping tabs on unauthorised immigrants under a system similar to parole, with electronic ankle tags, telephone check-ins and unannounced house visits, is cheaper and more humane. And as a substitute for deportation, in the past few years Germany has sought to increase the number of “voluntary assisted returns”. The idea is to offer failed asylum-seekers a modest but useful amount of cash and a plane ticket home. Last year 54,000 took up the offer, up from 35,000 in 2015 and 13,000 in 2014. A sliding scale has recently been introduced to encourage early voluntary departure: an asylum-seeker whose claim looks unlikely to succeed and withdraws his application will get an extra €1,200. If it is rejected and he does not appeal, he gets around €800. + +When it’s time to say goodbye + +But no matter how fairly and quickly immigration applications are heard, some will be rejected—and some migrants will not go home. In Germany, 150,000 failed asylum-seekers who are supposed to leave have been granted a semi-formal “tolerated” status which gives them access to health care and a small amount of cash; some are allowed to work. Only by integrating those who stay can countries avoid creating a long-term illegal underclass like America’s, and poisoning politics for decades to come. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21717839-rich-countries-are-trying-ever-harder-removing-unauthorised-immigrants-difficult-and/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Business + + +Health care: The wonder drug [Thu, 02 Mar 22:42] + +Mobile phones: The new old thing [Thu, 02 Mar 22:42] + +The woes of Uber’s boss: Road rage [Thu, 02 Mar 22:42] + +Samsung: Group sacrifice [Thu, 02 Mar 22:42] + +Cargo shipping: Still at sea [Thu, 02 Mar 22:42] + +Business in Rwanda: Party of business [Thu, 02 Mar 22:42] + +A corruption probe into Eni: Eni questions [Thu, 02 Mar 22:42] + +Schumpeter: The British experiment [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The wonder drug + +A digital revolution in health care is speeding up + + +Telemedicine, predictive diagnostics, wearable sensors and a host of new apps will transform how people manage their health + + + + + +From the print edition | Business + + +Mar 2nd 2017 + + + + + +WHEN someone goes into cardiac arrest, survival depends on how quickly the heart can be restarted. Enter Amazon’s Echo, a voice-driven computer that answers to the name of Alexa, which can recite life-saving instructions about cardiopulmonary resuscitation, a skill taught to it by the American Heart Association. Alexa is accumulating other health-care skills, too, including acting as a companion for the elderly and answering questions about children’s illnesses. In the near future she will probably help doctors with grubby hands to take notes and to request scans, as well as remind patients to take their pills. + +Alexa is one manifestation of a drive to disrupt an industry that has so far largely failed to deliver on the potential of digital information. Health care is over-regulated and expensive to innovate in, and has a history of failing to implement ambitious IT projects. But the momentum towards a digital future is gathering pace. Investment into digital health care has soared (see chart). + + + + + +One reason for that is the scale of potential cost-savings. Last year Americans spent an amount equivalent to about 18% of GDP on health care. That is an extreme, but other countries face rising cost pressures from health spending as populations age. Much of this expenditure is inefficient. Spending on administration varies sevenfold between rich countries. There are huge differences in the cost of medical procedures. In rich countries about one-fifth of spending on health care goes to waste, for example on wrong or unnecessary treatments. Eliminating a fraction of this sum is a huge opportunity. + +Consumers seem readier to accept digital products than just a few years ago. The field includes mobile apps, telemedicine—health care provided using electronic communications—and predictive analytics (using statistical methods to sift data on outcomes for patients). Other areas are automated diagnoses and wearable sensors to measure things like blood pressure. + +If there is to be a health-care revolution, it will create winners and losers. Andy Richards, an investor in digital health, argues that three groups are fighting a war for control of the “health-care value chain”. + +One group comprises “traditional innovators”—pharmaceutical firms, hospitals and medical-technology companies such as GE Healthcare, Siemens, Medtronic and Philips. A second category is made up of “incumbent players”, which include health insurers, pharmacy-benefit managers (which buy drugs in bulk), and as single-payer health-care systems such as Britain’s NHS. The third group are the technology “insurgents”, including Google, Apple, Amazon and a host of hungry entrepreneurs that are creating apps, predictive-diagnostics systems and new devices. These firms may well profit most handsomely from the shift to digital. + +The threat to the traditional innovators is that as medical records are digitised and new kinds of patient data arrive from genomic sequencing, sensors and even from social media, insurers and governments can get much better insight into which treatments work. These buyers are increasingly demanding “value-based” reimbursement—meaning that if a drug or device doesn’t function well, it will not be bought. + +The big question is whether drug companies will be big losers, says Marc Sluijs, an adviser on investment in digital health. More data will not only identify those drugs that do not work. Digital health care will also give rise to new services that might involve taking no drugs at all. + +Lunches eaten + +Diabetes is an obvious problem for the pharma business in this regard, says Dan Mahony, a partner at Polar Capital, an investment firm. Since evidence shows that exercise gives diabetics better control of their disease (and helps most pre-diabetics not to get sick at all), there is an opening for new services. UnitedHealthcare, a big American insurer, for example, has a prevention programme that connects pre-diabetics with special coaches at gyms. + +An app or a wearable device that persuades people to walk a certain distance every day would be far cheaper for insurers and governments to provide than years of visits to doctors, hospitals and drugs. Although Fitbits are frequently derided for ending up in the back of a drawer, people can be motivated to get off the sofa. Players of Pokémon Go have collectively walked nearly 9bn kilometres since the smartphone game was released last year. + +That is the backdrop to a new firm called Onduo, a joint venture that Google’s health-care venture, Verily Life Sciences, and Sanofi, a French drug firm, set up last year. Onduo will start by developing ways to help diabetics make better decisions about their use of drugs and their lifestyle habits. Later on, Onduo wants to help those who are at risk of diabetes not to develop it. The startup is a good hedge for Sanofi, which faces a slowdown in sales of its blockbuster insulin medication, Lantus, which lost patent protection in 2015. + +This kind of thinking does not come easily to drug firms. Switzerland’s Novartis is one of the few to have acknowledged that digital innovation will mean selling products based on patient outcomes. But if pharma firms do not design solutions that put the patient, rather than drug sales, at the centre of their strategy, they risk losing relevance, says Mr Sluijs. + +Large hospitals, some of which count as both incumbents and traditional innovators, will also be affected. The rise of telemedicine, predictive analytics and earlier diagnoses of illnesses are expected to reduce admissions, particularly of the emergency kind that are most lucrative in commercial systems. The sickest patients can be targeted by specialist services, such as Evolution Health, a firm in Texas that cares for 2m of the most-ill patients across 15 states. It claims to be able to reduce the use of emergency rooms by a fifth, and inpatient stays in hospitals by two-fifths. + +Rapid medical and diagnostic innovation will disrupt all businesses that rely heavily on physical facilities and staff. A mobile ultrasound scanner made by Philips, called Lumify, means that a far larger number of patients can be seen by their own doctors. As for data-based diagnostics, one potential example of its power to change business models is Guardant Health, a startup that is analysing large quantities of medical data in order to develop a way of diagnosing cancer from blood tests. If the firm can devise an early test for breast cancer, demand for mammograms and the machines that take them would fall, along with the need for expensive drugs and spells in hospital. + +From ER to AI + +There is also good news for hospitals, however. Increasingly, machine-learning programs are able to make diagnoses from scans and from test results. An intriguing recent project has been to stream and analyse live health data and deliver alerts on an app that is carried around by doctors and nurses at the Royal Free Hospital in London. The app, which is the work of DeepMind, a British artificial-intelligence (AI) research firm owned by Google, identifies the patients at greatest risk of a sudden and fatal loss of kidney function. The Royal Free says that the app is already saving nurses’ time. + +Naturally enough, the health-care entrepreneurs have the boldest visions. The point of care will move rapidly into the home, they say. People will monitor their heart conditions, detect concussions, monitor the progress of diseases and check up on moles or ear infections using apps, mobile phones and sensors. Last year the FDA approved 36 connected health apps and devices. A new app, called Natural Cycles, was recently approved in Europe for use as a contraceptive. Its failure rate for typical use was equivalent to that of popular contraceptive pills. A smartphone may eventually be able to predict the onset of Alzheimer’s, Parkinson’s or even the menopause (if the information is wanted). + +In emerging economies, where regulations on health data are less onerous and where people often already expect to pay to see a doctor, there is faster growth and innovation. China, which is building 400 hospitals a year, saw its two largest VC investments in digital health care last year. One went into a Chinese medical-service app, Ping An Good Doctor, which raised $500m; a video-consultations app called Chunyu Yisheng raised $183m. India is another innovator. To take one example, LiveHealth, based in Pune, is an app that lets patients assemble all their health records in one place, see test results and communicate with doctors. + +In the short term, the greatest disruption will come from a growing array of apps in many countries around the world that give consumers direct access to qualified GPS on their mobile phones. Overall, telemedicine is expected to grow rapidly. In America, GPs will conduct 5.4m video consultations a year by 2020, says IHS Markit, a research firm. Britain’s NHS is testing a medical AI from a London-based startup called Babylon which can field patients’ questions about their health. A paid service called Push Doctor offers an online appointment almost immediately for £20 ($24). The firm maximises the efficiency of its doctors by reducing the time they spend on administrative duties. They spend 93% of their time with patients compared with only 61% in Britain’s public sector. Babylon reckons that 85% of consultations do not need to be in person. + + + +In the longer term, the biggest upheaval may come from the large technology firms. Amazon and Google are not the only giants to be stalking health care. Apple has expressed a strong interest in it, though it is taking time to decide exactly what it wants to do. For several years it has provided a way of bringing together health data on its iPhone, and tools for health researchers to build apps. As personal-health records accumulate on its platform, from sensors such as Fitbits to medical-grade devices, it will encourage more app development. + +An app using data from an iPhone or another smartphone might be able to warn users that a sedentary lifestyle will exacerbate a heart condition or that, based on social-media patterns, they are at risk of depression, for example. Apple and other tech firms may also be able to help patients take greater control of their existing health records. For now medical records mostly remain under the guard of those who provided the care, but this is expected to change. If patients do gain proper access to their own data, Apple is in a particularly strong position. Its platform is locked and fairly secure, and the apps that run on it are all screened by the firm. + +None of this will materialise quickly. Regulated health-care systems will take time to deal with concerns over accuracy, security and privacy. In Britain the Royal Free is already under scrutiny over how it shared its patients’ data. That suggests a broader worry: that technology companies are too cavalier with their users’ data. Such firms typically use long agreements on data rights that are hard for individuals to understand. The medical world places importance on informed consent, so a clash of cultures seems unavoidable. + +Yet enormous change looks inevitable. Investors hope for billion-dollar health-tech “unicorns”. Payers eye equally sizeable savings. Amid such talk it is worth remembering that the biggest winners from digital health care will be the patients who receive better treatment, and those who avoid becoming patients at all. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717990-telemedicine-predictive-diagnostics-wearable-sensors-and-host-new-apps-will-transform-how/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The new old thing + +Conformity, nostalgia and 5G at the Mobile World Congress + + +More black rectangles made their debut in Barcelona + + + + + +From the print edition | Business + + +Mar 2nd 2017 | BARCELONA + + + + + +“A SEA of sameness.” A veteran of the Mobile World Congress (MWC), Ben Wood of CCS Insight, a consultancy, was not expecting much from the mobile industry’s main trade show this week in Barcelona. As one product launch followed another, it was easy to lose track. Whether it was LG, Huawei or Wiko, they all showed off yet more black rectangles with slightly varying specifications. + +Another reminder of the smartphone business’s maturity was that the most talked-about new device was the Nokia 3310 feature phone (pictured), an updated version of a phone first made 17 years ago. With limited internet connectivity, it appeals partly as a “digital detox”, said Arto Nummela, chief executive of HMD Global, a Finnish startup with ex-Nokia executives which licenses the brand. + + + + + +The mobile industry is far from done in terms of genuinely new products. But the action has moved to parts of the business that do not lend themselves to splashy events and massive crowds (the tent erected by Huawei, a Chinese maker of all sorts of telecoms gear, to launch its new P10 smartphone was huge, but hundreds were still left waiting outside). Most innovation in the next ten years will happen in the telecoms network rather than in devices, predicts John Delaney of IDC, a market-research firm. + +For now the industry is gearing up for the next generation of wireless technology, “5G”. In time for MWC the International Telecommunication Union, a UN agency, agreed on the specifications for 5G: speeds must be up to 20 gigabits per second, enough to download a movie in a few blinks of an eye. At the show, makers of networking gear, such as Samsung, announced products for the first 5G networks. These are expected to launch in 2018, mostly in South Korea and in Japan, where the new wireless technology is expected to be shown off during the Tokyo Olympic Games in 2020. + +Much still needs to be invented to make 5G a reality. Mobile carriers will, for instance, have to rejig their networks to make them more like a “computing cloud”. The idea is that network operators, just like providers of computing power, should be able to cook up new telecoms services within seconds. One technique is called “slicing”, meaning phone networks can be divided up to serve different purposes, such as providing superfast connectivity for self-driving cars or reliably hooking up connected devices as part of the Internet of Things. + +Mobile innovation is not doomed to be hidden in the network. But you will have to look more closely to spot it. In Barcelona fingerprint readers appeared in smartphones costing less than $100. If these move to even cheaper devices, it would be a boon to people in developing countries who could easily authenticate themselves online. Another development was that 360-degree cameras are becoming smaller and cheaper. The matchbox-sized Giroptic iO, which attaches to a smartphone, costs $260. Expect another dimension of selfies, which some already call “surroundies”, and, inevitably, new sorts of selfie sticks. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718004-more-black-rectangles-made-their-debut-barcelona-conformity-nostalgia-and-5g-mobile/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Road rage + +Travis Kalanick’s uber-apology + + +The many woes of Uber’s boss + + + + + +From the print edition | Business + + +Mar 4th 2017 + + + + + +“I MUST fundamentally change as a leader and grow up.” It is rare for the boss of a big technology firm to be so contrite. It is even more of a surprise to have Travis Kalanick (pictured), the chief executive of Uber, a popular ride-hailing company, go that far: he is one of the most pugnacious entrepreneurs in Silicon Valley. “This is the first time I’ve been willing to admit that I need leadership help and I intend to get it,” he added. + +Mr Kalanick had little option but to grovel. On February 28th Bloomberg, a media group, released a video showing a heated discussion between him and an Uber driver, Fawzi Kamel, about the fact that the firm has lowered the rates its drivers receive. Mr Kamel told Mr Kalanick that he had lost $97,000 and gone bankrupt because of him, at which point Mr Kalanick lost his cool: “Some people don’t like to take responsibility for their own shit.” + + + + + +The video capped a terrible month for Mr Kalanick. First, more than 200,000 subscribers deleted their Uber app after the firm was accused of breaking a strike by taxi drivers protesting against Donald Trump’s executive order against refugees. Then a former employee published a blog post in which she accused Uber of refusing to discipline her manager after he had propositioned her for sex. Uber’s head of engineering resigned earlier this week after reports that he had received a sexual-harassment complaint at his previous employer (he denies the allegations). + +To Mr Kalanick’s credit, his reactions have been deft. He resigned from Mr Trump’s business advisory council. He created a committee to look into Uber’s culture. He also met with more than 100 female employees and promised: “I want to get at the people who are making this place a bad place.” This week’s mea culpa, which also included an apology to Mr Kamel, was part of an e-mail to all Uber staff sent quickly after the release of the video. + +But it will take more to burnish the firm’s brand. “Uber has been here many times before, responding to public exposure of bad behavior by holding an all-hands meeting, apologising and vowing to change, only to quickly return to aggressive business as usual,” wrote Mitch and Freada Kapor, two early investors in the startup, in an open letter on February 23rd. + +The bad publicity comes at a time when Uber needs to deal with two bigger issues. First, regulators are making life harder for the firm. For example, the European Court of Justice, the European Union’s highest court, will soon decide whether Uber is just a digital service or a transport firm. If it is judged the latter, it would have to comply with a dense rulebook. + +Second, Uber, which is now operating in more than 500 cities worldwide, has to find a way to make money. It reportedly lost about $3bn in 2016 on revenue of $5.5bn—a whopping cash-burn rate, even though it has raised over $11bn in capital and debt. Such numbers make it unlikely that Uber will soon follow in the footsteps of Snap, another high-profile tech startup which priced its IPO this week at a valuation of $19.7bn. At a time when Uber could use a little goodwill, Mr Kalanick’s antics do not help. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business-and-finance/21717810-many-woes-ubers-boss-travis-kalanicks-uber-apology/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Group sacrifice + +Samsung’s strategy office is dismantled + + +Its abolition still serves the interests of the Lee dynasty + + + + + +From the print edition | Business + + +Mar 2nd 2017 | SEOUL + + + + + +“THE de facto dismantlement of the Samsung Group” was how South Korea’s semi-official news agency, Yonhap, spun the news on February 28th that the sprawling conglomerate would scrap its Future Strategy Office, a management organisation of some 200 senior staff, and devolve power to individual affiliates as part of broad reforms. The office had become for many South Koreans a vexing symbol of Samsung’s secretive goings-on. + +Longtime Samsung-watchers were less impressed. The parallels with an earlier disbanding of the same office in 2008, when it was known as the Strategy and Planning Office, were striking. Then, Lee Kun-hee, Samsung’s chairman, had been indicted for his involvement in a multi-trillion-won slush-fund scandal. Then, too, the group closed down the office to show it was serious about reform. But by 2010 it was reborn as the Future Strategy Office. + + + + + +Lee Kun-hee’s son and presumed heir to the Samsung empire, Lee Jae-yong (pictured), is the one now behind bars. This week he was indicted by a special prosecution team on charges of bribery and embezzlement. Prosecutors have accused him of paying 43bn won ($38m) to “cultural organisations” closely tied to Choi Soon-sil, a former confidante of South Korea’s president, Park Geun-hye. + +In return he allegedly received state support for an important merger in July 2015 between two Samsung affiliates. The tie-up was viewed as essential to the smooth transfer of power between the 75-year-old Mr Lee, who has been in hospital since 2014, and his son. The family controls Samsung through a complex knot of cross-shareholdings between its 26 affiliates, which operate in businesses ranging from life insurance to smartphones. The younger Mr Lee has said he provided the funds, but denies any bribery. + +The Future Strategy Office had come to represent the concentration of elite power that South Koreans are so fed up with, says Lee Jong-tae (no relation to Mr Lee) of SisaIN, a South Korean magazine. In the past, the office was said to have been vital in ensuring the family’s control. It managed relations with the government to that end. + +Yet even its abolition serves the Lee dynasty. It is a pacifying move to try to “save” the young chieftain, says Lee Jong-tae. Mr Lee can now seek bail, and a court must rule within three months. Still, after his arrest, says Chang Sea-jin of the National University of Singapore, Mr Lee will have “neither the legitimacy nor the size of equity stake” to maintain the emperor-style management of his father (inheritance tax will slightly reduce the family’s stake). + +Perhaps. The day-to-day running of Samsung will be little affected by the dissolution of the family’s most loyal body, because of the control still wielded by the Lee dynasty. Most people expect the key functions of the strategy office to be transferred to other parts of the group, most likely to three companies—Samsung C&T, Samsung Life Insurance and Samsung Electronics—in preparation for a long-anticipated transition to a more transparent holding-company structure. Shares in Samsung Electronics are trading at near record highs owing to strong results and optimism about the coming launch of the latest model of its main smartphone, the Galaxy S8. + +The chief surprise this week was the mass resignation of the strategy office’s nine executives, including an old guard handpicked by the elder Mr Lee. Mr Chang suspects that this “corporate cleansing” will work in the younger Mr Lee’s favour. Some of the executives had become so powerful that they might have overshadowed him. The unit’s closure might both save the heir and make his return easier. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718003-its-abolition-still-serves-interests-lee-dynasty-samsungs-strategy-office/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Still at sea + +Shipping’s blues + + +The many barriers to scrapping cargo ships + + + + + +From the print edition | Business + + +Mar 2nd 2017 + + + + + +TOO many new ships, too few old ones scrapped. Since the financial crisis, after which trade growth slowed, the Baltic Dry Index—a measure of bulk freight rates—has fallen by 93%. Prices for transporting containers have plunged by the same amount on some routes. In 2008 it cost $2,000 to send a 20-foot box from China to Brazil; now it costs $50. The industry is drowning in red ink. Hanjin Shipping of South Korea, the world’s seventh-largest line, went bust last August, and even Maersk Line, which has the lowest costs in the industry, lost $367m in 2016. + +But there was some optimism this week at European Shipping Week in Brussels, an industry event. Bosses at bigger lines reckon the worst is over. Higher levels of scrapping will cut overcapacity, argues Rolf Habben Jansen, CEO of Hapag-Lloyd, a German line. The industry may break even this year, predicts Rahul Kapoor of Drewry, a consultancy. + + + + + +But many shipowners are still too reluctant to send their hulks to the scrapheap. The problem can be clearly seen in the container-shipping business. Last year firms scrapped 194 ships, accounting for 3% of global tonnage—a record high. But new ships will add 8% more capacity this year; the net increase is over twice the level of forecast growth in demand. + +The surge in shipbuilding was originally prompted by Maersk Line’s order in 2011 for 20 huge Triple-E class vessels. These ships cut Maersk’s costs relative to its rivals, which retaliated with their own orders for supersize ships. At first the industry was able to mask the extra capacity by reducing sailing speeds by a third, but that ruse has reached its limit. + + + +Executives at bigger lines hope that their own new fuel-efficient liners will push small, independent shipowners to scrap older ones. Yet these are often family businesses and have no such intention, says Basil Karatzas, an adviser to many such firms, not least because the scrap value of their ships is much less than the cost of new ones. For that, blame over-production of steel by China. The scrap value per long ton of ship fell from $450 in 2014 to $271 last year. Banks have preferred to restructure loans on unprofitable vessels rather than scrap them at a fraction of the value of the debt owed on them. + +Breaking firms are becoming more cautious, too—particularly the beaching yards in India, Pakistan and Bangladesh that account for two-thirds of ship-scrapping globally. Last year several in India got into trouble when they bought vessels during a short-lived steel-price spike and then had to sell the scrap at a big loss. + +Some yard owners also complain about the cost of compliance with the Hong Kong International Convention of 2009, which sets minimum environmental and worker standards for ship recycling. Although India, Pakistan and Bangladesh have not ratified it, some facilities, such as India’s Shree Ram yard in Alang, try to adhere to the convention. Others do not. Falls this year in the number of bulk carriers and tankers being sent for scrap may be bad news for the shipping industry. For the environment, there is a silver lining. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718001-many-barriers-scrapping-cargo-ships-shippings-blues/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Party of business + +The Rwandan Patriotic Front’s business empire + + +Crystal Ventures has investments in everything from furniture to finance + + + + + +From the print edition | Business + + +Mar 2nd 2017 | KIGALI + + + + + +RWANDA has a reputation for enterprise. Its government has largely stamped out small-scale corruption and trimmed regulations, making the country the second-best place in Africa to do business, according to the World Bank’s widely-followed ranking. But the dominant political party, the Rwandan Patriotic Front (RPF), does more than help business: it runs its very own conglomerate. + +Crystal Ventures, the RPF’s holding company, has investments in everything from furniture to finance. It owns the country’s biggest milk processor, its finest coffee shops and some of its priciest real estate. Its contractors are building Kigali’s roads. There are several firms offering security services in Rwanda but the guards from ISCO, part of Crystal Ventures, are the only ones who tote guns. The company is reckoned to have some $500m of assets. + + + + + +Its expansion is aided by the fact that its chief rival is Horizon, a similar group that is accountable to the ministry of defence, with interests in construction and logistics. Critics argue that Crystal Ventures and Horizon both get cushy government deals which mask the failures of their enterprises, several of which are said to be loss-making. Firms like ISCO and Inyange Industries, a dairy-products and drinks firm, dominate the Rwandan market. “They monopolise but they don’t deliver on development,” says David Himbara, a former presidential adviser who lives in exile. + +To critics, the firm is the business wing of an authoritarian elite. It funded half of the party’s election campaign in 2010. It sold a subsidiary in 2002 after UN experts accused it of trading in conflict minerals in the Congolese war. The business purpose for two private jets that are allegedly leased by Crystal Ventures to the president, Paul Kagame (pictured), is unclear. + +Rwanda is not the only place in Africa where political parties run businesses. In Ethiopia the Tigrayan People’s Liberation Front, said to be the richest party in Africa, invests in shoes, pharmaceuticals and much else. In Zimbabwe, party-owned firms have visibly floundered owing to unchecked corruption and mismanagement. + +Some people argue, however, that political parties can direct capital towards long-term projects, nurturing a private sector in places where local capitalists are scarce and foreign ones are cautious. The RPF came to power at the end of Rwanda’s genocide in 1994, a rebel army led by returning exiles. Jean-Paul Kimonyo, an adviser to Mr Kagame, the former rebel leader, says that the exiles “could not come back to Rwanda without developing the country—they would have been killed.” The party used its funds to rebuild the country and increase its legitimacy. Crystal Ventures, which was originally called Tri-Star Investments, was founded in 1995. + +Telecommunications was an early success. In 1998 Tri-Star partnered with MTN, a South African multinational, to establish a mobile-phone network at a time when few saw viable prospects in Rwanda. The company later listed its 20% holding in MTN-Rwanda. Crystal Ventures acts as an “icebreaker” for the private sector, says Frederick Golooba-Mutebi, a Kigali-based researcher. If the government sat here waiting for foreign investors to come and do things for them, he adds, “the investors would probably never come.” Crystal Ventures does compete for government contracts, and it and Horizon do not always win. One rival says that Chinese contractors worry him more than either firm. + +That may be so. But the test is knowing when to let the private sector in, and there is little sign of that. Recent reports suggested that a majority stake in Inyange Industries had been sold to Brookside Dairy, an enterprise owned directly by the family of the Kenyan president, Uhuru Kenyatta. The reports are denied by Brookside Dairy’s managers. Crystal Ventures was also expected to list some of its other companies, but has not. In the long run, creating such an extraordinary overlap between political and commercial power is dangerous. Not only does it crowd out the private sector today. But suppose that a future party leader were less honest than Mr Kagame? Crystal Ventures would then be an efficient tool for looting the country. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718000-crystal-ventures-has-investments-everything-furniture-finance-rwandan-patriotic/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Eni questions + +A corruption probe raises uncertainty over the future of Eni’s boss + + +Oil giant’s response also raises corporate-governance concerns + + + + + +From the print edition | Business + + +Mar 2nd 2017 + + + + + +WHEN Eni, Italy’s oil major, this week revealed a return to profit in the fourth quarter and a long-term commitment to keep the barrels flowing, there was much to cheer. Three years on from Claudio Descalzi’s appointment as CEO, Eni has made spectacular oil and gas discoveries even as its peers retrenched amid the oil-price slump. Sanford C. Bernstein, a research firm, says only half in jest that it is “evolving into an actual oil company”. + +But a cloud hangs over the firm, which is 30% state-owned—and over Mr Descalzi (pictured) personally. He is caught up in an Italian probe into alleged corruption in a deal Eni struck in partnership with Royal Dutch Shell in Nigeria, just as he is seeking reappointment as CEO in April. The company’s response to the scandal, especially its treatment of independent board members, raises questions about its commitment to good corporate governance. + + + + + +In 2011, Eni and Shell jointly paid $1.3bn for a huge offshore oil block, known as OPL 245, which has more than 9bn barrels of probable reserves. Over $1bn of this flowed to a shell company. That firm, Malabu, was widely known to be owned by a former Nigerian oil minister, Dan Etete, who had acquired the rights to OPL 245 for a song while in office. + +The companies have always insisted that their deal was with the government, not Malabu. However, it is clear that some executives knew it was a two-part affair in which they paid the government, and the government funnelled the money to Malabu. Nigeria’s then attorney-general has since described the government’s role as that of an “obligor” in a transaction between a unit of Shell, Eni and Malabu. In January Nigerian authorities seized the OPL 245 oil block, labelling it the “proceeds of crime”. The country’s anti-corruption commission alleges that Eni and Shell “conspired” to send payment as a “bribe”, and is seeking charges against their local subsidiaries. They deny wrongdoing and have appealed against the seizure. + +Last month, after a long investigation, Italian prosecutors led by Fabio De Pasquale, who secured the conviction of Silvio Berlusconi, Italy’s former prime minister, for tax fraud, requested that five current and former Eni executives, including Mr Descalzi, face trial for corruption. Also on the charge sheet are several middlemen, Mr Etete and Eni and Shell themselves. Separate charges are being sought against four men who worked for Shell at the time, including its then head of upstream, Malcolm Brinded. A judge in Milan must now decide whether to indict the accused. The first hearing is scheduled for April 20th. + +The allegations are eyebrow-raising. Prosecutors allege that over $500m ended up in front companies for Goodluck Jonathan, Nigeria’s then president, with $466m diverted to a chain of bureaux de change in what might be the biggest-ever cash transaction. Mr Jonathan denies wrongdoing. A “notification” filed by prosecutors also describes “retrocessions” (ie, kickbacks) allegedly received by Eni and Shell executives, including a $50m cash delivery to one Eni executive’s home in Abuja. + +The accused all deny wrongdoing. Eni’s board has expressed “total confidence” that the firm and Mr Descalzi are innocent. After drawing on the prosecutors’ full dossier, an American law firm commissioned by Eni has found “no evidence of corrupt conduct”, the company says. A Shell spokesman says: “We don’t believe a request for indictment is justified and we are confident that this will be determined in the next stages of the proceedings.” + +Despite the allegations, Eni continues to attract “buy” recommendations from many analysts who would like to see Mr Descalzi reappointed. There has, however, been disquiet over Eni’s treatment of board members who ask difficult questions. Some investors expressed dismay when Luigi Zingales, an independent director, left the board in 2015, citing “irreconcilable differences of opinion”, apparently over how the company tackled corruption risks. Mr Zingales, a professor at Chicago’s Booth School of Business, had joined the board hopeful that he could help change things. He left disillusioned. + +More worrying still is the treatment of Karina Litvack, another non-executive director with strong governance credentials—and a tendency to ask tough questions about alleged graft. Last year she was removed from a board control-and-risk committee that has access to OPL 245 case files. The reason, Eni said, was that Ms Litvack had a possible conflict of interest, because she has been implicated in a case of alleged defamation against the company. But that case is full of oddities. The defamation is supposed to be against Eni and Mr Descalzi, but it is not clear who the allegations came from (Eni says it was not from the company). Intriguingly, Eni wants the defamation case file to be admitted as evidence in the main OPL 245 case, despite not having seen its contents. + +To many outsiders, the episode looks trumped-up. One investor says the defamation case appears to be a “brazen attempt to silence board critics”. Eni denies this. Another notes that it smacks of double standards for Eni to allow executives accused of corruption to stay in their jobs while insisting that a director ensnared in a vague defamation case relinquish a role. + +Stephen Davis of the International Corporate Governance Network, an investor-led organisation, sees the case as “a test of the responsiveness of Italian public companies to a changing world”. He notes that Italy’s voto di lista mechanism, which guarantees minority investors the right to nominate directors and to communicate with the board, gives shareholders a voice they don’t have in, say, America—in theory at least. Investors say that Eni’s chairman, Emma Marcegaglia, has listened to some of their concerns. Minority investors plan to renominate Ms Litvack to the board in coming weeks (as one of three they are entitled to put on the slate). But whether she will be reinstated to the control-and-risk committee remains to be seen. + +The cloud of alleged corruption will hang over Eni for some time. The judge who must decide whether to send the suspects to trial in the main case may not make the decision until the end of the year. The good news is that since the OPL 245 deal, new rules in Europe have forced public companies like Eni and Shell to disclose payments in such transactions. The bad news is that in America, Republicans have repealed a rule requiring listed companies to do likewise. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718006-oil-giants-response-also-raises-corporate-governance-concerns-corruption-probe-raises/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Schumpeter + +Britain has second thoughts about foreign takeovers + + +A lack of big multinational companies does not bode well for the post-Brexit economy + + + + + +From the print edition | Business + + +Mar 2nd 2017 + + + + + +ONE question prompted by Kraft Heinz’s failed $160bn bid for Unilever is whether Britain still wants to be the world’s entrepot for buying and selling companies. For decades it has been more open to mergers and acquisitions than any other big economy. Britain accounts for 3% of global GDP and its firms make up just 5% of global market capitalisation, but the latter have been involved in a quarter of cross-border M&A activity since 1997, either as buyers or as targets, according to Dealogic, a data firm. + +Now Blighty is getting cold feet. The government frowned on the Kraft bid, aware, probably, of the dwindling number of large British firms that are left. Another proposed deal, the $11bn takeover of the London Stock Exchange by Deutsche Börse, its German rival, is on the rocks, partly because of the British firm’s insistence that the headquarters be in London, not Frankfurt. + + + + + +Brexiteers promise that Britain is on the verge of a new, golden age of global commerce. But many of its captains of industry fret that its past wide-open policy on takeovers means that it now has too few big firms to hold its own. To understand the country’s predicament, go back to the early 1980s. The legacy of empire left Britain as the world’s second-most-powerful force in multinational business, with 14% of the global stock of foreign direct investment. But that figure masked deep weakness. Many supposedly global firms were crusty colonial relics; at home British industry was decaying. Margaret Thatcher’s medicine was a strong dose of competition, by means of privatisation, takeovers, an influx of foreign capital and managers, and plenty of deregulation. These policies have been in place ever since. + +The market for corporate control was a concern secondary to Mrs Thatcher’s main goals of helping consumers and boosting productivity, but the general plan was for it to work like free trade. So UK PLC would get bigger where it had a comparative advantage and retreat where it was weak. A wave of foreign takeovers followed: since 1997, over 50 firms that would today qualify for the FTSE-100 index of big firms have been snapped up by foreign rivals. Until a decade ago, comparative advantage seemed to work. In the spirits business, for example, a puny firm, Allied Domecq, was bought, and a strong one, Diageo, expanded abroad. Britain’s inefficient carmakers were shut down or bought, but two pharma firms, GSK and AstraZeneca, became global players. + +After 2007, however, things became lopsided. Britain’s share of the stock of multinational investment fell (it is 6% today). In eight of the past ten years, there has been an M&A deficit, with foreigners laying out more on buying British firms than British firms spent on M&A abroad. By Schumpeter’s estimate, a quarter of Britain’s biggest firms are viewed as potential takeover candidates, including AstraZeneca and BP, an oil major. The earnings of British firms abroad have dropped by two-fifths, according to the Office for National Statistics. In the past 12 months, for the first time on record, they were less than the profits made by foreign-owned firms in Britain. In 1997, Britain had 11 firms big enough to be among the largest 100 companies by market value in the world, and that was still the case in 2007. Today it has only five in this select group. + +Corporate Britain’s decade of pain is partly caused by its skew towards banking, oil and commodities and emerging markets, which have all had a difficult time. But too many foreign takeovers by British firms have flopped. About a quarter of all such activity since 1997 was orchestrated either by Vodafone or by Royal Bank of Scotland, both poor dealmakers. A gaping current-account deficit is also part of the explanation. To finance the gap Britain must either borrow or sell assets to foreigners, including luxury flats in Mayfair, pedigree stallions—and big companies. + +One possible response to all this is indifference. British multinationals’ poor return on capital abroad—4% in 2016—means it may make sense for savers to invest elsewhere. Many foreign takeovers have been excellent for Britain. Jaguar Land Rover, a carmaker, revived after it was bought by India’s Tata Group. Nonetheless, having a critical mass of global firms matters. American multinationals deploy three-quarters of their capital investment and 84% of their research-and-development spending at home. Having a cohort of global firms based in Britain cements London’s role as a business hub. And the analogy with free trade, which would suggest that resources swiftly get reallocated from big dying firms to fast-growing ones, is not straightforward when applied to the market for corporate control. There is a finite stock of big global companies that is hard to replace. Britain probably could not create a new drugs giant if AstraZeneca were bought. + +Blocking all over the world + +Britain tweaked its takeover code in 2011, giving bidders less time to try and win their prize. The results have been mixed. Pfizer, an American pharma firm, failed to buy AstraZeneca in 2014. On the other hand AB Inbev, a beer firm backed by the same investors as Kraft Heinz, bought SABMiller, a British-listed firm, in 2016. After the bid for Unilever a further tightening of the rules is likely. + +One option would be to mimic France, which gave extra voting rights to what it judged to be long-term shareholders in 2015. Yet that would never wash with Britain’s institutional investors, who are keen on the “one-share-one-vote” principle. As part of its proposed industrial strategy, the government may instead label more sectors as strategic and block takeovers in these altogether. + +Even the free-market wing of the ruling Conservative Party is on board: John Redwood, one of the architects of privatisation in the 1980s, backs a change. For deals that are permitted, the government may impose conditions on bidders. When SoftBank, a Japanese firm, bought ARM, a chipmaker, for $30bn in 2016, it had to agree to run ARM as a separate business based in Cambridge, where it will do research. Britain’s 30-year experiment with a free market for takeovers is quietly coming to an end. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21717991-lack-big-multinational-companies-does-not-bode-well-post-brexit-economy-britain-has/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Finance and economics + + +India’s economy: Off balance [Thu, 02 Mar 22:42] + +Buttonwood: Money illusion [Thu, 02 Mar 22:42] + +The LSE and Deutsche Börse: No deal? [Thu, 02 Mar 22:42] + +American trade policy: Plan of action [Thu, 02 Mar 22:42] + +Currency manipulation: Biting at the champs? [Thu, 02 Mar 22:42] + +Moral hazard: Taken for a ride [Thu, 02 Mar 22:42] + +Private-equity deals: Poised to pounce [Thu, 02 Mar 22:42] + +Free exchange: An impossible mind [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Off balance + +India’s twin balance-sheet problem + + +For a fast-growing economy, India is stuck in an alarming credit slump + + + + + +From the print edition | Finance and economics + + +Mar 2nd 2017 | MUMBAI + + + + + +IF INDIA is indeed the world’s fastest-growing big economy, as its government once again claimed this week, no one told its bankers and business leaders. In a nation of 1.3bn steadily growing at around 7% a year, the mood in corner offices ought to be jubilant. Instead, firms are busy cutting back investment as if mired in recession. Bank lending to industry, growth in which once reached 30% a year, is shrinking for the first time in over two decades (see chart). If this is world-beating growth, what might a slowdown look like? + + + +India’s macroeconomy chugs along (though the quality of government statistics remains questionable), but its corporate sector is ailing. The sudden and chaotic “demonetisation” of 86% of bank notes in November hardly helped. But the origins of India’s troubles go much deeper. After India dodged the worst of the financial crisis a decade ago, a flurry of investment was made on over-optimistic assumptions. Banks have been in denial about the ability of some of their near-bankrupt borrowers to repay them. The result is that the balance-sheets of both banks and much of the corporate sector are in parlous states. + + + + + +After years of burying their heads in the sand, India’s authorities now worry that its “twin balance-sheet” problem will soon imperil the wider economy. Both the Reserve Bank of India (RBI) and the government have nagged banks to deal with their festering bad loans. Around $191bn-worth, or 16.6% of the entire banking system, is now “non-performing”, according to economists at Yes Bank. That number is still swelling. + +Given the linkages between them, companies and banks often run into trouble concurrently. But countries where banks’ balance-sheets resemble Swiss cheese usually have no choice but to deal with the issue promptly, lest a panicked public start queuing up at ATMs. India is different. State-owned lenders make up around 70% of the system, and nobody thinks the government will let them go bust. As a result, what for most economies would be an acute crisis is in India a chronic malaise. + +That doesn’t make it any less painful. Investment is a key component of GDP, and it is now shrinking, thanks to parsimonious firms. India runs a trade deficit and the government is seeking to cut its budget shortfall, which leaves consumption as the sole engine of economic growth. Indeed, until demonetisation, consumer credit was booming, up by about 20% year on year. Some may wonder whether those are tomorrow’s bad loans, or when consumers will run out of stuff to buy. + +Meanwhile, banks’ profits are sagging, even without the impact of fully accounting for dud loans. State-owned lenders collectively are making negative returns. Thirteen of them are described in a recent finance-ministry report as “severely stressed”. Demonetisation did indeed bring in lots of fresh deposits, but the bankers were then browbeaten into slashing the rates at which they lend, further denting their margins. + +The dearth of investment is in part due to a lack of animal spirits. Sales outside the oil and metals sector are up by a mere 5% year on year, compared with nearer 25% at the start of the decade. Capacity utilisation, at 72.4%, is low by historical standards: even if money were available, it is not clear many would want to borrow. + +Bankers, companies and policymakers once hoped the twin balance-sheet problem would eventually solve itself. Everyone’s incentive has been to look away and hope economic growth cures all ills. It has not: profits are in fact shrinking at the large borrowers, many of them in the infrastructure, mining, power and telecoms sectors. But banks have cut credit across the board, including to small businesses. + +Fixing this is not easy. Much of the hard work repairing corporate balance-sheets needs to be done by public-sector bank bosses, who should (yet seldom do) restructure and partly forgive loans. Many of them inherited the problems. Most defaulting tycoons are politically connected, which is how some got the loan to start with. Accepting that they cannot pay it back, and waiving part of the debt, might be seen as abetting crony capitalists. This can attract the attention of the many zealous agencies probing public spending. + +So it is far easier for a banker to make no decision—which often means having to extend further loans to keep the borrower afloat—and pretend all is well. It hardly helps that one former bank boss is languishing in jail while authorities probe a loan to Kingfisher Airlines, whose former boss is skulking in a mansion in Britain. + +Writing off loans would be easier if banks could foreclose on companies, and take equity in them instead. Many potential investors are eager to work with banks to recapitalise good companies with bad balance-sheets. But without a proper bankruptcy code, which is only now coming into force and will take years to become effective, that is a fool’s errand. + +If banks help fix corporate balance-sheets, the large resulting losses will highlight how weak their own capital positions are. The government has promised to inject more money in the banks, but has put in only a small fraction of the $90bn Fitch, a ratings agency, argues they need to get onto an even keel. Nor will it countenance having less than a majority stake in the state-owned banks, limiting their ability to raise funds from private investors. + +One way to break the logjam would be to set up a “bad bank” that would take the dodgiest loans off banks’ balance-sheets, leaving them free to focus on making new loans. Viral Acharya, a new deputy governor at the RBI, recently proposed ways to facilitate the transfer of non-performing loans off banks’ balance-sheets—essentially, giving cover to bankers who cut sensible deals. The government’s chief economic adviser, Arvind Subramanian, has suggested a bad bank run by the private sector. + +Problematic as it is, at least the Indian banking sector is relatively small compared with the size of the overall economy, and its bad debts are concentrated. A database put together by Ashish Gupta at Credit Suisse, a bank, shows that over $100bn of the dud loans lie with just ten borrowers. That should simplify the co-ordination of any deal, even if the loans are spread across many banks. + +However, the crucial element in deciding who bears the losses—setting the price at which the bad bank would buy the assets—is fiendishly difficult. What price a loan secured against a half-built bridge in Gujarat? Lots of people would have to make decisions they have expertly dodged for years. Worse, federal elections are due in 2019, and setting up bad banks takes time. Bailing out banks and tycoons would not play well at the polls. The temptation will be to give it more time—and pay a yet higher bill later. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717988-fast-growing-economy-india-stuck-alarming-credit-slump-indias-twin/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Buttonwood + +Interest rates and investment returns + + +Low rates usually mean low returns; so why are markets so buoyant? + + + + + +From the print edition | Finance and economics + + +Mar 2nd 2017 + + + + + +IF THERE is one aspect of the current era sure to obsess the financial historians of tomorrow, it is the unprecedentedly low level of interest rates. Never before have deposit rates or bond yields been so depressed in nominal terms, with some governments even able to borrow at negative rates. It is taking a long time for investors to adjust their assumptions accordingly. + +Real interest rates (ie, allowing for inflation) are also low. As measured by inflation-linked bonds, they are around -1% in big rich economies. In their latest annual report for Credit Suisse on global investment returns, Elroy Dimson of Cambridge University and Paul Marsh and Mike Staunton of the London Business School look at the relationship between real interest rates and future investment returns. Very low real rates have in the past been associated with poor future equity returns (see chart). + + + + + +That may come as a nasty shock for state and local-government pension funds in America. They have to assume a future rate of return on their investments when calculating how much they need to contribute to their plans each year. Most opt for 7-8%, a level that has prevailed for years. That return looks highly implausible at a time when ten-year Treasury bonds yield just 2.4%. + +There is a strong incentive not to change these assumptions. CalPERS, a Californian state pension fund, has cut its assumed return from 7.5% to 7%. But even that small shift will cost the state $2bn a year in extra contributions. + +Why should low real rates and low returns be linked? One reason is that very low real rates are associated with times of economic difficulty, and thus periods when corporate profits are under threat. But a low real interest rate also means a low cost of capital for companies, which ought to be good news. Indeed, central banks ease monetary policy to try to drive down interest rates, and thus encourage business investment. + +There has been some recovery in business investment since the last recession. But that recovery has not been as robust as might have been expected, given the low cost of capital. In a recent speech, Sir Jon Cunliffe, deputy governor of the Bank of England, noted that “in the 40 years to 2007, business-investment growth averaged 3% a year. In the eight years since the crisis it has averaged 1.5% annually.” + +A number of possibilities could explain this decline, including a lack of access to finance. Banks have been boosting their capital ratios in recent years and have been more reluctant to lend. But another factor relates to the “hurdle rate” companies use before they decide whether to invest. A survey by the Bank of England indicates that firms are still using a hurdle rate of 12%, around the average of the rate of return on investment they have achieved in the past. + +In other words, despite the big fall in the cost of borrowing since the crisis, the hurdle rate has not come down. Since the risk-free rate is in effect zero, the bank says British firms are now looking for a 12-percentage-point margin compared with one of seven points before the crisis. This could be a version of “money illusion”, when people fail to adjust their expectations for nominal returns as inflation declines (in this case, both real and nominal expectations ought to have fallen). + +There is an alternative explanation for the failure of expectations to shift. Both businesses and investors, realising that the economic outlook is uncertain, may be demanding a higher risk premium for starting new projects or buying shares. That explanation is a little hard to square, however, with the repeated new record highs being scaled by stockmarkets or with the high valuations afforded to American equities. + +Since the market low in March 2009, dividends have risen by 48% in real terms and real share prices have risen by 167%, according to Robert Shiller of Yale University. The cyclically-adjusted price-earnings ratio (or CAPE), which averages profits over ten years, is 28.7, its highest level since April 2002. In the past, very high CAPEs have been associated with low future returns. + +Indeed, having analysed the data, Messrs Dimson, Marsh and Staunton reckon global investors are expecting a risk premium of 3-3.5% relative to Treasury bills—a level that is lower, not higher, than the historic average. So something does not add up. American pension funds are optimistic. Businesses are cautious. Shares are trading on very high valuations. Not all these assumptions can be proved right. + +Economist.com/blogs/buttonwood + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717841-low-rates-usually-mean-low-returns-so-why-are-markets-so-buoyant-interest-rates/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +No deal? + +A planned merger of LSE and Deutsche Börse unravels + + +Competition concerns may mask political rivalry + + + + + +From the print edition | Finance and economics + + +Mar 2nd 2017 + + + + + +IT HAD been billed as a bridge between Europe’s two main financial hubs. It has become, however, a symbol of their growing competition—and of the uncertainty into which Brexit has plunged the EU’s markets. A planned merger between Deutsche Börse (DB) and the London Stock Exchange (LSE), both listed companies, seems on the verge of collapse. This week the LSE rejected the latest demand of the European Commission (EC) to sell parts of its business to allay competition concerns. + +The €29bn ($30bn) merger was first announced a year ago and is the companies’ third attempt to join forces since 2000. It brings together the operators of the British, German and Italian stock exchanges, as well as some of the largest clearing-houses in Europe. Before it would approve the deal, the EC launched an investigation into its impact on competition. Last September it identified a number of concerns, including about the derivatives market once the clearing-houses merged. In early February the LSE sought to ease that concern by confirming the sale of its Paris-based clearing unit, LCH. + + + + + +Not good enough, the EC countered a few weeks later: the sale of LCH would not boost competition, because the LSE also owned MTS, an Italian electronic-trading platform for bond and repo markets, which could direct trades away from LCH and towards other clearing-houses in the new, merged company. So the commission in the LSE’s words “unexpectedly” made a “disproportionate” demand: that MTS also be sold off. The LSE refuses. The EC is due to make a decision on the deal by April 3rd; unless it changes its position, the merger seems doomed. + +The latest roadblock may appear to be about competition. But politics lurks close to the surface. National pride is at stake: DB and the LSE operate stock exchanges regarded as iconic institutions in Germany and Britain. The vote in Britain to leave the EU has raised the stakes. Under the terms of the deal, agreed on before the referendum and since approved by shareholders, the merged company’s headquarters would be in London. But now that Britain is leaving the EU, the German state of Hesse argues there is a clear case for moving them to DB’s home city, Frankfurt. + +Inevitably, this has prompted suspicions that the EC has been put under pressure to be tough on the LSE, either by the Germans, or even by the French, who may want to thwart the rise of Frankfurt as a post-Brexit alternative to London. It has not helped that Carsten Kengeter, DB’s chief executive and the intended boss of the merged concern, lives in London and is seen as an Anglophile, or that German prosecutors are investigating allegations of his insider dealing before the proposed merger was made public—a charge both he and DB’s supervisory board dismiss. + +The British government has been relatively quiet about the deal. Some politicians nonetheless express concern that the merged company’s headquarters might move to Germany, taking euro-denominated clearing with them. But, argue supporters of the deal, relocation would not be so easy: a 75% majority of the new company’s board would need to approve it. Since the separate entities within the merged company would continue to be supervised by national authorities, any future move would need regulatory approval. And in any case, the fate of euro-denominated clearing could well be determined not by the companies but by regulators and the Brexit negotiations. + +The LSE says it remains convinced of the benefits of the merger. But it seems to accept that the deal is destined to collapse. Even if the EC hurdle is cleared, others loom. Supervisors in both Hesse and Britain are yet to bless the union. The LSE says it can stand on its own. Its share price fell only a little on news of the merger’s troubles. It was perhaps buoyed by the prospect of a rival suitor. The American-owned Intercontinental Exchange may be waiting in the wings; it expressed interest last year, and the fall in sterling since makes the LSE a cheaper buy. Bridges across the channel are hardly in vogue in Britain these days. The Atlantic, anyone? + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717995-competition-concerns-may-mask-political-rivalry-planned-merger-lse-and/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Plan of action + +The Trump administration’s trade strategy is dangerously outdated + + +It will be hard to deal with China today as if it were Japan in the 1980s + + + + + +From the print edition | Finance and economics + + +Mar 2nd 2017 | WASHINGTON, DC + + + + + +ON THE campaign trail, Donald Trump’s trade policy was an alarming mixture of coruscating complaints and fierce threats of protectionist retaliation. But the world has been in the dark about how much of this rhetoric his administration might turn into reality. A flicker of light came on March 1st as the administration’s trade-strategy document was presented to Congress. Washington wonks see the hand of Peter Navarro, Mr Trump’s trade adviser and author of a book (and film) called “Death by China”. Robert Lighthizer, the nominee for the United States Trade Representative (USTR), has not yet been confirmed. + +Little is new in the document’s promises of “ new and better trade deals” or of strict enforcement of American trade laws. But a preference for bilateral trade deals over multilateral ones is a change of tack. And the tone is certainly confrontational: “It is time for a more aggressive approach.” The document also gives an indication of how a Trump administration might take a trade fight to China: by using sections 201 and 301 of the Trade Act of 1974. + + + + + +The first weapon, section 201, allows tariffs to be imposed as a safeguard to protect American producers from a surge of imports. Affected companies must show that they have suffered “serious injury”, but need not prove any unfair practice by the foreign firms. + +Mr Trump’s trade team may be reliving the experience of the Reagan administration, which in 1983 slapped an extra 45% tariff on imports of motorcycles in response to a petition from Harley-Davidson, an American manufacturer. Mr Trump has referred to this as having had a “big impact”. But as a trade-enforcement tool, section 201 has drawbacks. Proving a case can be tricky, since there is a high legal threshold for proving injury and the adjudicator, the International Trade Commission, is an agency respected for its independence. (The Department of Commerce, which makes rulings on anti-dumping, is seen as a softer touch.) Moreover, indiscriminate use of the provision will provoke other countries into retaliation. In 2002 America tried to slap tariffs of 30% on steel in violation of the World Trade Organisation’s (WTO) rules, but was forced to retract when faced with the threat of $2.2bn-worth of tit-for-tat tariffs on exports ranging from sunglasses to orange juice. + +The second weapon in the arsenal, section 301, is “scarier” than 201, says Kim Elliott, a trade expert. “The grounds for taking action are less well-defined.” It allows the administration to take action against “unfair” trade practices. America used to invoke this section to hit its trade opponents before disputes could be dealt with by the General Agreement on Tariffs and Trade, the WTO’s precursor. + +Since the establishment of the WTO in 1995, the section has fallen into disuse, on the understanding that it could be implemented if a WTO ruling went in America’s favour and authorised tariffs on a trading partner that was breaking the rules. The fear, however, is that this week’s mention of section 301 implies the Trump administration might start going outside the global rules of the WTO system. Intensifying the alarm is that an entire section of the strategy document focuses on defending American “national sovereignty over trade policy”. It also emphasises that a WTO ruling against America need not automatically lead to a change in American law or practice. + +The document complains about the weakness of WTO rules. The implicit target is China. In one of the most important of several disputes which are currently working their way through the WTO courts, China challenges America’s refusal to treat it as a “market economy”. If the WTO granted China “market-economy status”, it could limit the level of WTO-compliant tariffs America could impose on its exports. + +The echoes of the Reagan glory days seem to ignore how much the world has changed since the 1980s. Then the main object of America’s trading ire was Japan, an ally, which was both far smaller and often loth to retaliate when hit with trade measures. China is bigger and happier to fight back. For all its flaws, the WTO may be the best defence against an all-out trade war. In the words of Carla Hills, a USTR in the early 1990s: “without the WTO it would be the law of the jungle.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717998-it-will-be-hard-deal-china-today-if-it-were-japan-1980s-trump/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Champs or chumps? + +China and currency manipulation + + +The government has been pushing the price of the yuan up, not down + + + + + +From the print edition | Finance and economics + + +Mar 2nd 2017 | SHANGHAI + + + + + +SINCE his election as president, Donald Trump has not softened his criticism of China over its alleged meddling to control the value of its currency, the yuan. On the contrary, he has called China “the grand champion” of currency manipulators. The kindest interpretation of this is that Mr Trump is out of date, as his own government could tell him. + +America’s Treasury makes a six-monthly assessment of the foreign-exchange policies of its big trading partners. The criteria it uses to identify currency manipulators are regarded by many economists as inadequate. They do not include, for example, the domestic purchasing power of a currency. Nevertheless, even by those flawed criteria, China is far from the champion. Indeed it seems to have quit the tournament altogether. + + + + + +The Treasury uses three measures: whether the country runs a sizeable surplus in trade with America; whether its current-account surplus exceeds 3% of GDP; and whether it spends more than 2% a year to buy foreign assets to suppress the value of its currency. Over the past year, no country has checked all three boxes. China, in the latest report, only met one condition (running a big bilateral surplus in its trade with America). + +The Treasury, does not publish a league table of its trading partners. If it did, it would illustrate just how slippery the idea of currency manipulation is. The Economist has used the measures to develop a crude scoring system, to establish which countries would be in Mr Trump’s firing line if his government’s measures were applied consistently (see chart). + +Using the current-account metric, we award one “manipulation point” to countries with surpluses at the 3% threshold, two points to economies with surpluses at 6% of GDP, and so on. Similarly, we award one manipulation point for each 2% of GDP spent buying foreign assets to depress the value of its currency. We do not include bilateral trade with America in the scoring: the value of currencies affects trade globally, and some countries such as Mexico run hefty trade surpluses against America but have deficits with the rest of the world. + +Awkwardly for America, two of its friends in Asia have recently scored more highly than China: South Korea and, most clearly, Taiwan. But the highest score of all goes to Switzerland, by dint of its whopping current-account surplus and its hefty foreign-currency purchases. This illustrates one of the method’s flaws: in terms of the goods and services that it can actually buy, the Swiss franc is in fact among the world’s most overvalued currencies. + +As for China itself, it has been fighting to prop up the yuan in the face of capital outflows, and its score is in fact negative: it has, in other words, raised the price of its currency, not lowered it. Over the past decade, the scoring system shows that China has done progressively less to distort the yuan’s value. That is reflected in the International Monetary Fund’s verdict that the currency is “no longer undervalued”. Or, as Mr Trump might put it: Loser! + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717997-government-has-been-pushing-price-yuan-up-not-down-china-and/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Taken for a ride + +Second-degree moral hazard + + +If a service provider knows someone else is paying your bills, he is more likely to rip you off + + + + + +From the print edition | Finance and economics + + +Mar 2nd 2017 + + + + + +MORAL hazard is a problem that crops up often in economics. People behave differently if they do not face the full costs or risks of their actions: deposit insurance makes customers less careful about picking their bank, for example. + +Moral hazard can also be second-hand. Take medicine. A patient with private insurance may be happy to sit through extra tests, and a doctor may be happy to order them. Doctors might be more reluctant to order tests if they know that the patient would bear the full cost. + + + + + +A newly published paper* sets out to test this secondary problem by examining a common-enough situation—taking a taxi ride in a strange city. The authors, a trio of academics at the University of Innsbruck, sent researchers on 400 taxi rides, covering 11 different routes, in Athens, Greece. In all cases, the researchers indicated they were not familiar with the city. But in half the cases, the researchers indicated that their employers would be reimbursing them for the journey. The researchers in the latter group were 17% more likely to be overcharged for their trip and paid a fare that was, on average, 7% higher. + +The most common form of overcharging was not, as might be expected, taking a longer route. People on expenses may not mind about a ride’s cost but they do care how long it takes. So they were subject to bogus surcharges (a fee for airport pickup, for example), or charged the night-time fare in the daytime. + +Another finding was that taxi drivers treat the sexes differently. Women were overcharged more often than men—and whether or not the driver knew they were travelling on expenses (the difference between the extent of overcharging was not statistically significant). Drivers may be tempted to overcharge, the authors believe, because members of the higher-fare sex are less likely to complain. + +* “Second-Degree Moral Hazard in a Real-World Credence Goods Market” by Loukas Balafoutas, Rudolf Kerschbamer and Matthias Sutter, The Economic Journal, February 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717842-if-service-provider-knows-someone-else-paying-your-bills-he-more-likely/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Poised to pounce + +Competition for private-equity deals heats up + + +Private-equity firms are finding novel ways to compete against corporate acquirers + + + + + +From the print edition | Finance and economics + + +Mar 2nd 2017 | NEW YORK + + + + + +TIME was, the private-equity industry felt spoiled for choice. The difficulty was choosing deals, not finding them. Yet according to numbers from Dealogic, a data provider, that have been crunched by Bain & Company, a consultancy, private-equity houses are now losing out in mergers and acquisitions (M&A) to non-financial companies. In 2016 private equity’s global share of all deals dipped to 4.2%, the lowest level since the depths of the post-crisis recession in 2009. This was down from 5.4% as recently as 2014 and an all-time high of 7.9% in 2006. The same trend is evident in Europe and in America, private equity’s two biggest markets (see chart). + +Yet the pressure on private-equity firms to deploy their capital has never been greater. The industry has raised well over $500bn from investors in each of the past four years, the longest such streak ever. The amount of uninvested cash they are sitting on (“dry powder”) reached a record $1.47trn at the end of 2016. Of that, $534bn was specifically earmarked for buy-outs. Investors, who pay fees as a percentage of the capital they have committed, even when it is still uninvested, are impatient for results. Why have funds held back? + + + + + +One explanation is that corporations make tough competitors. They have even greater means at their disposal: American firms alone are sitting on a cash pile of nearly $1.8trn. All that dry powder looks rather modest in comparison. But perhaps the most important factor is how highly deals are priced at the moment: a median of 9.2 times earnings globally, and 10.9 times in America, the highest since 2007. + +In such circumstances, says Ludovic Phalippou of Said Business School at the University of Oxford, private-equity firms, which aim to achieve a high level of returns on their investments over an ownership period of four to five years, often struggle to make the numbers add up. Corporate acquirers have both longer time horizons and the opportunity to extract savings from “synergies”, ie, by streamlining and combining overlapping functions. + +The private-equity industry has not lost its panache, however. It is finding novel ways to compete. One is to structure deals so as to profit from some of those same synergies. In March 2016, for instance, GI Partners, a private-equity firm, teamed up with Allscripts Healthcare Solutions, a health-care technology firm, to buy one of Allscripts’ rivals, Netsmart Technologies. + +Another is to compete less on price and more on other parameters, such as speed. Some private-equity firms have set up dedicated teams of analysts, bankers and consultants at ever-earlier stages of a prospective deal. Indeed, according to Graham Elton, head of European private equity at Bain, many now go so far as to maintain full-blown “shadow portfolios” of companies they like, drawing up detailed business plans long before they ever come up for sale so they are ready to pounce. + +One result is that some deals are never opened up to an auction. Mr Elton says there usually still is one, but that it is used mainly to extract better terms from an initial bidder. It still offers an opening for other interested parties, of course, but for these new entrants to stand a chance, they must move even more quickly. + +In a deal announced on February 21st, CVC, a large European private-equity house, reportedly scooped the acquisition of Zabka, a Polish convenience store chain, from under the nose of TPG, an American private-equity shop. They put the financing together and clinched the deal in a matter of hours. Indeed, in recent months, several deals in Europe and America have closed within days or hours, rather than weeks. In private equity nowadays, it seems, what counts is less the depth of your pockets than speed on your feet. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717843-private-equity-firms-are-finding-novel-ways-compete-against-corporate/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Free exchange + +An impossible mind: the late Kenneth Arrow + + +The world has lost one of its great economists + + + + + +From the print edition | Finance and economics + + +Mar 2nd 2017 + + + + + +SOME great economists are Aristotelians, discerning the logic of markets from tangible examples around them. Others are Platonists, using their powers of reasoning to grasp ideal economic forms, of which actually existing markets are but flickering shadows. Kenneth Arrow, who died on February 21st aged 95, was both. His ideas gave economics some of its most compelling abstractions and most fruitful applications. + +The abstractions won him the Nobel prize at the age of 51. (He remains the youngest winner and the most cited by others in their prize lectures.) He established the conditions under which prices might successfully co-ordinate production and exchange, eliminating shortages and surpluses. Adam Smith provided the best metaphor for this underappreciated feat: the “invisible hand”, guiding resources to their best uses. Ken Arrow and his co-author, Gérard Debreu, provided the best algebra. + + + + + +To economists versed in mathematics, a well co-ordinated economy is like a system of simultaneous equations, which all hold true at the same time. The solution to these equations is a set of prices that equates demand and supply for scarce commodities in every market, including the market for labour and capital. Earlier economists had breezily assumed that such a solution existed, making their case with “cheerful prose and appeals to common sense”, as E. Roy Weintraub of Duke University has put it. Mr Arrow and Mr Debreu spelled out precisely when that good cheer was justified. + +Mr Arrow showed similar rigour in exploring one alternative to market co-ordination: collective decision-making. A colleague studying America’s strategic contest with the Soviet Union had asked him whether it was safe to treat an entire country as an individual “player”, with coherent preferences. What was required, Mr Arrow knew, was a robust, reasonable rule to translate the preferences of Americans, say, into the preferences of America. But to his surprise, he discovered that such a rule was “impossible” to find. “Most systems are not going to work badly all of the time,” he said. “All I proved is that all can work badly at times.” + +Together, these two achievements showed when markets could work, and why collective decision-making could fail. Given these intellectual preoccupations, you might assume Mr Arrow was a man of the right. But the opposite was the case. + +Born in New York in 1921, he remembered the “gasping struggles” of relatives during the Depression. He was struck by the paradoxical coexistence of unmet needs and unused resources, a simultaneous equation that prices failed to solve. The son of Jewish immigrants from Romania (his last name and “olive complexion” led an acquaintance to assume he was native American), he attended City University of New York, “the Harvard of the Proletariat”. Unlike many of his peers, he rejected Marxism early (put off by the horrors of Stalin’s 1930s show trials—as well as the inadequacies of the labour theory of value), but socialism rather late. + +Precisely because he knew the conditions required for markets to work, he understood the ways they could fall short. In economics, the future impinges on the present; what might happen has an effect on what does. So to co-ordinate the economy seamlessly, markets need an impossible reach: they must price all the goods on offer today, all that will be on offer in the future, and all that might be on offer, if contingencies arise. In the absence of full insurance and futures markets, the state could do more to share risks and co-ordinate investments, he suggested in 1978. In fact, the state retreated in the decades that followed and markets expanded, creating derivatives partly inspired by his work. + +A different market failure became clear when he trained as an actuary: buyers of insurance often know more about their condition and behaviour than the seller. To cover its risks, an insurer might raise premiums, but that will only drive away the safest customers, leaving an “adverse selection” of the riskiest buyers. These insights helped him write one of the founding articles of health economics in 1963. They also help explain why the Obamacare mandate is so hard to replace in 2017. + +Fortunately for economics, Mr Arrow abandoned a career as an actuary, because there was “no music in it”. He was, famously, a polymath, steeped in philosophy and literature, who once held his own at a dinner party with a scholar of Chinese art. He spent a decade at Harvard, which he chose over MIT because of its strength in the humanities, and the bulk of his career at Stanford University in California, where “we plan and build on ground that may open beneath us”. Like his brother-in-law, Paul Samuelson (whom he once compared to Humphrey Chimpden Earwicker, the protagonist of James Joyce’s “Finnegan’s Wake”), he popped up in different places and guises, offering insights into prediction markets, learning-by-doing, antimalarial drugs, discrimination between the races, equality between the generations, petrol-price controls, arms reduction, advertising, public investment, the “carrying capacity” of the Earth and the cost-effectiveness of airframes. + +Systematically agnostic + +Whatever his political sympathies, he never had the certitude required for activism. He once called himself an “agnostic” in his beliefs, if a “systematiser” in his talents. Keenly aware that not everything could be known, he wanted what could be grasped to be known as systematically as possible. He summed up his vision in the words of the mathematician Hermann Weyl: “If the transcendental is accessible to us only through the medium of images and symbols, let the symbols at least be as distinct and unambiguous as mathematics will permit.” Or to put it in his terms, we should plan and build as solidly as we can, even if the intellectual ground may occasionally open up beneath us. + +Visit our Free exchange economics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21717844-world-has-lost-one-its-great-economists-impossible-mind-late-kenneth/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Science and technology + + +Palaeontology: The living was easy [Thu, 02 Mar 22:42] + +Lunar spaceflight: Fly who to the Moon? [Thu, 02 Mar 22:42] + +Artificial intelligence: Neighbourhood watch [Thu, 02 Mar 22:42] + +Finding new antibiotics: The 48 uses of dragon’s blood [Thu, 02 Mar 22:42] + +Electronics: One chip to rule them all [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The origins of life + +A new fossil could push back the start of life on Earth + + +The putative fossils formed just a few hundred million years after Earth itself + + + + + +From the print edition | Science and technology + + +Mar 4th 2017 + + + + + +SCIENTISTS have a pretty good idea of how the Earth formed: it condensed, around 4.6 billion years ago, from the same cloud of dust and interstellar gas that gave birth to the sun and the rest of the solar system. They are less sure how and when life got going. Last year a group of researchers found evidence for stromatolites—small, layered mounds produced by photosynthesising bacteria—in rocks from Greenland that are 3.7 billion years old. + +Now, though, the date of life’s debut may be pushed back even further. As they report in Nature, a group of researchers led by Dominic Papineau from University College London have found what they think is the signature of living organisms in rocks from Quebec that date back to between 3.8 and 4.3 billion years ago. Intriguingly, the sort of life that Dr Papineau and his colleagues think they have found is very different from the sort that built the stromatolites. This suggests that even very early in its existence, Earth was hosting several different kinds of living organism. + + + + + +The rock in question is a 3-kilometre-long swathe on the eastern shores of the Hudson Bay called the Nuvvuagittuq Greenstone Belt. It is mostly composed of pillow-shaped basalt, a type of rock formed when lava cools rapidly in seawater. When Dr Papineau visited the formation in 2008 he found unusual reddish-coloured outcrops of jasper, a type of quartz formed from compressed volcanic ash, that contained odd-looking veins and nodules. Closer examination revealed rings, between 50 and 100 microns (a millionth of a metre) across. That made him sit up: similar rosette-shaped features have been found in younger, but still ancient, rock formations from Biwabik, in Minnesota, and Løkken, in Norway. They are thought to have been formed when micro-organisms decayed and were fossilised. + +But that evidence was not quite conclusive. Similar-looking structures can also be formed by non-living, geological processes. So Dr Papineau gave the rock samples to Matthew Dodd, his PhD student, to look at. Within the veins and nodules of the jasper that intrigued his boss, Mr Dodd found hollow tubes between 2 and 14 microns in diameter and up to 0.5mm long made of haematite, a mineralised form of iron oxide. Some of these filaments form networks anchored to a lump of haematite; others are corkscrew-shaped. + +The team contends that these bear more than a passing resemblance to the networks of bacteria that live in hydrothermal vents—towering, crenellated structures that form in the deep ocean above the boundaries between tectonic plates, where superheated mineral-laden water spurts up from beneath the seabed. Well-preserved fossil remnants of these microbes have been found at many sites younger than Nuvvuagittuq, and they closely resemble the coiled and branching tubes that Dr Papineau and his colleagues have found. + +Such a find is doubly intriguing because hydrothermal vents are seen as a plausible candidate for the cradle of life. Microscopic pores in the rock might have served as natural cell walls, and the chemistry of the water could provide exactly the sort of energy gradient that a primitive living cell would have needed to go about its biochemical business. Although the sorts of bacteria apparently found by Dr Papineau and his colleagues are too complicated to reveal much about the very earliest organisms, the suggestion that hydrothermal vents have played host to life for so long is a strike in the theory’s favour. + +Bacteria to the future + +The find—which will face fierce scrutiny from other palaeobiologists—has other implications, too. Most living organisms, including those that built the stromatolites, ultimately derive their energy from photosynthesis, the process by which plants and some micro-organisms convert sunlight into sugar. The creatures that live around hydrothermal vents are fundamentally different: no sunlight penetrates so deep into the oceans, so the food chains of such ecosystems are based on reactions between the dissolved chemicals that well up from the crust. + +If Dr Papineau’s fossils are as old as he thinks, that implies that Earth was, within a few hundred million years of its formation, already playing host to very diverse sorts of life. One of the biggest questions in science is whether life is an inevitable and common consequence of the laws of chemistry, or a lucky one-off confined to Earth alone. If life got going on Earth so quickly, and was able to diversify so rapidly, it suggests the same might have happened elsewhere, too. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21717792-putative-fossils-formed-just-few-hundred-million-years-after-earth-itself/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Lunar spaceflight + +Two races to the Moon are hotting up + + +One involves robots. The other involves humans + + + + + +From the print edition | Science and technology + + +Mar 4th 2017 + + + + + +THE $30m Google Lunar XPRIZE has had a slow time of it. Set up in 2007, it originally required competitors to land robots on the Moon by 2012. But the interest in returning to the Moon that the prize sought to catalyse did not quickly materialise; faced with a dearth of likely winners, the XPRIZE Foundation was forced to push back its deadline again and again. Now, though, five competing teams have launch contracts to get their little marvels to the Moon by the end of this year. And as those robotic explorers head into the final straight, a new contest is opening up. + +On February 27th Elon Musk said that SpaceX, his aerospace company, had agreed to send two paying customers around the Moon some time in 2018, using a new (and as yet untried) version of its Falcon rocket, the Falcon Heavy. They would be the first people to travel beyond low-Earth orbit since 1972. Two weeks before Mr Musk’s announcement, NASA said it was considering using the first flight of its new rocket, the Space Launch System (SLS; also untested), to do something similar, though with astronauts, not paying tourists. The race, it seems, is on. + + + + + +This is not, though, a simple story of private sector versus public. For one thing, SpaceX can offer such a trip only thanks to NASA’s previous largesse. The company’s Dragon space capsule, in which the Moon tourists would fly, was developed to carry first cargo and, soon, people up to the International Space Station—services for which NASA pays generously. For another, NASA might end up deciding to pay SpaceX for its Moon jollies, just as it pays for rides to the space station. + +In January an adviser to Donald Trump sent an e-mail to senior Republicans interested in space policy suggesting an “internal competition between Old Space and New Space” at the agency to get people back to lunar orbit. “Old Space” almost certainly meant the in-house SLS effort; “New Space” probably means SpaceX—or possibly Blue Origin, a company owned by Jeff Bezos, the founder of Amazon, which is also working on a suitably big rocket. A New Space option would seem to make budgetary sense. Though the Falcon Heavy needed for SpaceX’s Moon trip has yet to fly, it is certain to be far cheaper than the SLS. But the SLS has a great deal of support in the Senate—and there are some in Washington who have their doubts about making the country’s space programme too dependent on sometimes capricious billionaires. + +The new administration has yet to weigh in—or to appoint a NASA administrator. But its ambitions may have been hinted at when Mr Trump evoked some of the wonders the United States might achieve by the time of its sestercentenary in this week’s speech to Congress: “American footprints on distant worlds,” he said, “are not too big a dream.” The only distant world any foot will be leaving prints on by 2026 is the Moon. + +Such feet do not have to be American. China sent a rover called Yutu to the Moon in 2013, and plans a mission to return rocks to Earth this year. The idea of landing people on the Moon by 2030, or perhaps even earlier, has been discussed in public. That brings the possibility of yet another race. + +In all such races it would be wise, as the XPRIZE shows, to expect delays. The crew-carrying version of the Dragon is not expected to make its first flight to the space station until the middle of 2018 at the earliest: sending one around the Moon by the end of that year is a tall order. That said, SpaceX’s customers may not mind if the schedule slips to 2019—the 50th anniversary of the first Apollo Moon landing would add yet more pizzazz to what is sure to be a very high-profile venture. + +Who the purchasers of this pizzazz might be is not yet known, though one, at least, must be very rich. One possibility is Steve Jurvetson, a venture capitalist on SpaceX’s board. Another is the film-maker James Cameron, who directed “Avatar”, the most profitable film ever made. Mr Cameron has already plumbed the Mariana Trench in a submersible; in 2011 he showed interest in a privately funded Russian mission to the Moon. Having such a film-maker on board would certainly ensure that the trip was spectacularly documented. With the right lenses, he might even pick out the tiny XPRIZE rovers as he flashes by. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21717790-one-involves-robots-other-involves-humans-two-races-moon-are-hotting/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Neighbourhood watch + +A machine-learning census of America’s cities + + +Millions of images of public streets offer a cheap, sweeping view of America’s demography + + + + + +From the print edition | Science and technology + + +Mar 2nd 2017 + + + + + +“WOULD it not be of great satisfaction to the king to know, at a designated moment every year, the number of his subjects?” A military engineer by the name of Sébastien le Prestre de Vauban posed this question to Louis XIV in 1686, pitching him the idea of a census. All France’s resources, the wealth and poverty of its towns and the disposition of its nobles would be counted, so that the king could control them better. + +These days, such surveys are common. But they involve a lot of shoe-leather, and that makes them expensive. America, for instance, spends hundreds of millions of dollars every year on a socioeconomic investigation called the American Community Survey; the results can take half a decade to become available. Now, though, a team of researchers, led by Timnit Gebru of Stanford University in California, have come up with a cheaper, quicker method. Using powerful computers, machine-learning algorithms and mountains of data collected by Google, the team carried out a crude, probabilistic census of America’s cities in just two weeks. + + + + + +First, the researchers trained their machine-learning model to recognise the make, model and year of many different types of cars. To do that they used a labelled data set, downloaded from automotive websites like Edmunds and Cars.com. Once the algorithm had learned to identify cars, it was turned loose on 50m images from 200 cities around America, all collected by Google’s Streetview vehicles, which provide imagery for the firm’s mapping applications. Streetview has photographed most of the public streets in America, and in among them the researchers spotted 22m different cars—around 8% of the number on America’s roads. + +The computer classified those cars into one of 2,657 categories it had learned from studying the Edmunds and Cars.com data. The researchers then took data from the traditional census, and split them in half. One half was fed to the machine-learning algorithm, so it could hunt for correlations between the cars it saw on the roads in those neighbourhoods and such things as income levels, race and voting intentions. Once that was done, the algorithm was tested on the other half of the census data, to see if these correlations held true for neighbourhoods it had never seen before. They did. The sorts of cars you see in an area, in other words, turn out to be a reliable proxy for all sorts of other things, from education levels to political leanings. Seeing more sedans than pickup trucks, for instance, strongly suggests that a neighbourhood tends to vote for the Democrats. + +The system has limitations: unlike a census, it generates predictions, not facts, and the more fine-grained those predictions are the less certain they become. The researchers reckon their system is accurate to the level of a precinct, an American political division that contains about 1,000 people. And because those predictions rely on the specific, accurate data generated by traditional surveys, it seems unlikely ever to replace them. + +On the other hand, it is much cheaper and much faster. Dr Gebru’s system ran on a couple of hundred processors, a modest amount of hardware by the standards of artificial-intelligence research. It nevertheless managed to crunch through its 50m images in two weeks. A human, even one who could classify all the cars in an image in just ten seconds, would take 15 years to do the same. + +The other advantage of the AI approach is that it can be re-run whenever new data become available. As Dr Gebru points out, Streetview is not the only source of information out there. Self-driving cars, assuming they catch on, will use cameras, radar and the like to keep track of their surroundings. They should, therefore, produce even bigger data sets. (Vehicles made by Tesla, an electric-car firm, are capturing such information even now.) Other kinds of data, such as those from Earth-imaging satellites, which Google also uses to refresh its maps, could be fed into the models, too. De Vauban’s “designated moment” could soon become a constantly updated one. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21717804-millions-images-public-streets-offer-cheap-sweeping-view-americas/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Lizard laboratory + +The 48 uses of dragon’s blood + + +Komodo dragons could be the source for a new generation of antibiotics + + + + + +From the print edition | Science and technology + + +Mar 2nd 2017 + + + + + +MYTHOLOGY is rich with tales of dragons and the magical properties their innards possess. One of the most valuable bits was their blood. Supposedly capable of curing respiratory and digestive disorders, it was widely sought. A new study has provided a factual twist on these fictional medicines. Barney Bishop and Monique van Hoek, at George Mason University in Virginia, report in The Journal of Proteome Research that the blood of the Komodo dragon, the largest living lizard on the planet, is loaded with compounds that could be used as antibiotics. + +Komodo dragons, which are native to parts of Indonesia, ambush large animals like water buffalo and deer with a bite to the throat. If their prey does not fall immediately, the dragons rarely continue the fight. Instead, they back away and let the mix of mild venom and dozens of pathogenic bacteria found in their saliva finish the job. They track their prey until it succumbs, whereupon they can feast without a struggle. Intriguingly, though, Komodo dragons appear to be resistant to bites inflicted by other dragons. + + + + + +Most animals—not just Komodo dragons—carry simple proteins known as antimicrobial peptides (AMPs) as general-purpose weapons against infection. But if the AMPs of Komodo dragons are potent enough to let them shrug off otherwise-fatal bites from their fellow animals, they are probably especially robust. And that could make them a promising source of chemicals upon which to base new antibiotics. + +With that in mind, and working with the St Augustine Alligator Farm Zoological Park in Florida, Dr Bishop obtained fresh Komodo dragon blood. He examined the blood for peptides with molecular weights, lengths, electrical charges and chemical characteristics that were similar to those from known AMPs. He then analysed the peptides using a mass spectrometer and a combination of commercial and home-brewed software to identify which of the newly discovered peptides were likely to have medicinal potential. + +The team identified 48 potential AMPs that had never been seen before. Their initial tests were equally promising. Dr Van Hoek exposed two species of pathogenic bacteria, Pseudomonas aeruginosa and Staphylococcus aureus, to eight of the most promising peptides they had identified. The growth of both species of bacteria was severely hampered by seven of the eight; the remaining peptide was effective against only P. aeruginosa. + +There results are noteworthy. Antibiotic-proof bacteria are an increasing problem in hospitals. Such bugs are now thought to kill some 700,000 people each year around the world, and P. aeruginosa and S. aureus are parental strains for some of the most menacing types. On February 27th the World Health Organisation named both in its first-ever list of “priority pathogens”, for which drug-resistance is a serious problem. Dr Bishop’s findings hint that the blood of dragons may yet prove to be as useful against disease as myths suggest. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21717808-komodo-dragons-could-be-source-new-generation-antibiotics-48-uses/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Electronics + +A memory chip that can compute + + +A new type of processor for small devices + + + + + +From the print edition | Science and technology + + +Mar 2nd 2017 + + + + + +ELECTRONICS has long relied on a division of labour. At the heart of myriad devices, from computers and smartphones to drones and dishwashers, a microprocessor can be found busily crunching data. Switch the power off, though, and this chip will forget everything. Devices therefore contain other, different sorts of chips that work as a memory. That is inefficient, because shuffling data between the two types of chip costs time and energy. Now, though, a group of researchers working in Singapore and Germany think they have found a way to make a single chip work as both a processor and a memory. + +Both sorts of existing chip rely on transistors. These are tiny electronic switches, the ons and offs of which represent the ones and zeroes of the digital age. In the quest for speed, a processor’s transistors need to be able to flip rapidly between those two states. This speed is bought, however, at the cost of the forgetfulness that makes a separate memory essential. Meanwhile, the non-forgetful transistors used in a computer’s permanent form of memory are too slow to make useful processors. To make a chip which can do both has led some scientists to look at abandoning transistors altogether. + + + + + +Among those scientists are Anupam Chattopadhyay of Nanyang Technological University, in Singapore; Rainer Waser of RWTH Aachen University, in Germany; and Vikas Rana of the Jülich Research Centre, also in Germany. The chips they are interested in are made of tiny “cells” instead of transistors. Each cell has two electrodes (a transistor has three), and these sandwich a layer of metal oxide. This oxide (commonly of tantalum or hafnium) changes its state of electrical resistance in response to pulses of charge passed through it by the electrodes. The change in resistance is caused by the movement within the oxide of some of the oxygen ions which make up its crystal lattice. + +In a simple version of such a cell, a high state of resistance is read as a digital “one” and a low resistance as a digital “zero”. Crucially, the relocated oxygen ions stay put when the power is switched off. This means the arrangement can act as a data store, known as a resistive random-access memory, or ReRAM. Several chipmakers, including Panasonic, Fujitsu, HP, SanDisk and Crossbar (a Californian startup), have begun manufacturing ReRAM chips, and many in the industry think that, memorywise, they are the wave of the future. + +Drs Chattopadhyay Waser and Rana, however, believe that to focus on memory is to undersell the new chips. They note that, though not as fast as a top-flight microprocessor, ReRAM nevertheless switches states much faster than conventional memory—fast enough, they think, for it to do computing as well as data storage. Moreover, ReRAM has other features that might make it a good processor. + +With two instead of three electrodes, ReRAMs should be easier to manufacture and allow lots of cells to be packed tightly into a small space. Of particular significance is that, unlike a transistor, a ReRAM cell can be designed to do more than just switch “on” and “off”. It can, if built correctly, have multiple levels of resistance, each representing a number. Such a system would be able to store more data in a given space. On top of that, it might not be confined to doing binary arithmetic. This matters, because certain computations which are hard and slow in binary logic might be managed easily and quickly in arithmetical systems of higher base. + +So far, the three researchers have managed to construct a tantalum-based ReRAM with seven states of resistance. Eight are possible, and perhaps more, with more research. Eight levels is a good initial target, because it would permit the representation in a single cell of all possible three-digit binary numbers (ie, 000, 001, 010, 011, 101, 111, 110 and 100). A conventional chip would need three transistors to do this. + +Sticking with binary arithmetic would make it easier to use existing software with such a system. But eight states of resistance could also, in principle, be used to do arithmetic directly in base eight. And, because eight is an exact power of two, swapping between the two bases in response to the requirements of the software involved could be done efficiently. + +Drs Chattopadhyay, Waser and Rana have not yet got that far. But, in a paper in Scientific Reports, they describe a successful demonstration of a ternary (base three) numbering system. They carried out a form of calculation called modular arithmetic, which is more efficiently executed when done with higher-base numbers. + +Dr Rana acknowledges that a dual-action ReRAM would necessarily need specific circuitry, to handle both processing and memory, and require a bespoke set of operating instructions to deal with bases higher than two. These would take several years to develop commercially. He believes, though, that there is no reason why the result would not be able to work with existing computer-operating systems, such as Windows, iOS and Linux. + +Dual-action ReRAM chips might not match the fastest processors, which operate at a rate of gigahertz (billions of cycles a second). It is more likely that they would work in the high megahertz range (millions of cycles a second), at least initially. But this would be enough for many applications and, in a field where miniaturisation is at a premium, a combined processor-memory would let devices become smaller. An additional benefit is that because less energy is required to control ions, compared with the small and feisty electrons which transistors switch, such chips would have a much lower power consumption. These factors make them attractive for products like sensors, wearable gadgets and medical items. What’s more, computer scientists might be able to break the bonds of binary thinking that have constrained them since their subject was invented. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21717807-new-type-processor-small-devices-memory-chip-can-compute/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Books and arts + + +Violence and inequality: Apocalypse then [Thu, 02 Mar 22:42] + +Wall Street: Stevie wonder [Thu, 02 Mar 22:42] + +Norse mythology: Stories from the top of the world [Thu, 02 Mar 22:42] + +Johnson: Lexical treasures [Thu, 02 Mar 22:42] + +New fiction: Dreams and dreamers [Thu, 02 Mar 22:42] + +The Academy Awards: Gleaming in the moonlight [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Apocalypse then + +The lessons of violence and inequality through the ages + + +Only catastrophe truly reduces inequality, according to a historical survey + + + + + +From the print edition | Books and arts + + +Mar 2nd 2017 + + + + + +The Great Leveller: Violence and the History of Inequality from the Stone Age to the Twenty-First Century By Walter Scheidel. Princeton University Press; 504 pages; $35 and £27.95. + +AS A supplier of momentary relief, the Great Depression seems an unlikely candidate. But when it turns up on page 363 of Walter Scheidel’s “The Great Leveler” it feels oddly welcome. For once—and it is only once, for no other recession in American history boasts the same achievement—real wages rise and the incomes of the most affluent fall to a degree that has a “powerful impact on economic inequality”. Yes, it brought widespread suffering and dreadful misery. But it did not bring death to millions, and in that it stands out. + + + + + +If that counts as relief, you can begin to imagine the scale of the woe that comes before and after. Mr Scheidel, a Vienna-born historian now at Stanford University, puts the discussion of increased inequality found in the recent work of Thomas Piketty, Anthony Atkinson, Branko Milanovic and others into a broad historical context and examines the circumstances under which it can be reduced. + +Having assembled a huge range of scholarly literature to produce a survey that starts in the Stone Age, he finds that inequality within countries is almost always either high or rising, thanks to the ways that political and economic power buttress each other and both pass down generations. It does not, as some have suggested, carry within it the seeds of its own demise. + +Only four things, Mr Scheidel argues, cause large-scale levelling. Epidemics and pandemics can do it, as the Black Death did when it changed the relative values of land and labour in late medieval Europe. So can the complete collapse of whole states and economic systems, as at the end of the Tang dynasty in China and the disintegration of the western Roman Empire. When everyone is pauperised, the rich lose most. Total revolution, of the Russian or Chinese sort, fits the bill. So does the 20th-century sibling of such revolutions: the war of mass-mobilisation. + +And that is about it. Financial crises increase inequality as often as they decrease it. Political reforms are mostly ineffectual, in part because they are often aimed at the balance of power between the straightforwardly wealthy and the politically powerful, rather than the lot of the have-nots. Land reform, debt relief and the emancipation of slaves will not necessarily buck the trend much, though their chances of doing so a bit increase if they are violent. But violence does not in itself lead to greater equality, except on a massive scale. “Most popular unrest in history”, Mr Scheidel writes, “failed to equalise at all.” + +Perhaps the most fascinating part of this book is the careful accumulation of evidence showing that mass-mobilisation warfare was the defining underlying cause of the unprecedented decrease in inequality seen across much of the Western world between 1910 and 1970 (though the merry old Great Depression lent an unusual helping hand). By demanding sacrifice from all, the deployment of national resources on such a scale under such circumstances provides an unusually strong case for soaking the rich. + +Income taxes and property taxes rose spectacularly during both world wars (the top income-tax rate reached 94% in America in 1944, with property taxes peaking at 77% in 1941). Physical damage to capital goods slashed the assets of the wealthy, too, as did post-war inflations. The wars also drove up membership in trade unions—one of the war-related factors that played a part in keeping inequality low for a generation after 1945 before it started to climb back up in the 1980s. + +The 20th century was an age of increasing democratisation as well. But Mr Scheidel sees this as another consequence of its total wars. He follows Max Weber, one of the founders of sociology, in seeing democracy as a price elites pay for the co-operation of the non-aristocratic classes in mass warfare, during which it legitimises deep economic levelling. Building on work by Daron Acemoglu and colleagues, Mr Scheidel finds that democracy has no clear effect on inequality at other times. (A nice parallel to this 20th-century picture is provided by classical Athens, a democracy which also saw comparatively low levels of income inequality—and which was also built on mass-mobilisation, required by the era’s naval warfare.) + +Catastrophic levellings will be less likely in future. Pandemics are a real risk, but plagues similar in impact to the Black Death are not. Nor are total revolutions and wars fought over years by armies of millions. On top of that, since the Industrial Revolution general prosperity, regardless of inequality, has risen. And in past decades global inequality has fallen. + +Good news in general, but news which leaves readers who would like to see significantly less unequal individual economies in a bit of a pickle. Futile though Mr Scheidel thinks it may prove, attempts to ease inequality democratically through redistributive policies and the empowerment of labour at least show no signs of doing actual harm. They may, indeed, keep the further growth of inequality in check, but they can hardly dent the direction of change. And they may have opportunity costs; if history provides no support for thinking that deep, peaceful reduction of inequality is possible, perhaps progressives should set themselves other tasks. + +There are two other possibilities. One is to note that historical circumstances change. As Mr Scheidel shows, the 20th century was quite different from all those that came before. Is it not possible that another less horrible but equally profound transformation in the way that people and nations get along with each other, or fail to, is yet to come? If, for example, increasingly economically important non-human intelligences decided that they would rather not be owned by anyone, thus in effect confiscating themselves from their owners, could that not make a difference? + +The other possibility is that some may see civilisational collapse as a price worth paying for the Utopia they might build in the rubble—or may just like to see the world burn. Individuals and small groups can dream of nuclear- or biotechnologically-mediated violence today on a scale that was inconceivable in the past. Wealth may ineluctably concentrate itself over time; the ability to destroy does not. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717801-only-catastrophe-truly-reduces-inequality-according-historical-survey-lessons/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Wall Street + +The rise, fall and rise of Steven Cohen + + +A brief history of SAC Capital and how its wonder-boss was brought to heel + + + + + +From the print edition | Books and arts + + +Mar 4th 2017 + + + + + +Black Edge: Inside Information, Dirty Money and the Quest to Bring Down the Most Wanted Man on Wall Street. By Sheelah Kolhatkar. Random House; 344 pages; $28. + +IN THE late 1990s your reviewer worked on the trading floor of a bank. It was understood there that if you walked out of a meeting with profitable gossip about, say, a takeover, one client should always get the first phone call: SAC Capital, an American hedge fund, run by Steven Cohen. “Stevie” was, according to his legend, a day-trading idiot savant, a bully and a moneymaking genius who, when he wasn’t staring at his screens, was trying to prove his sophistication by paying top dollar for trophy works of art, such as Damien Hirst’s pickled shark. He paid so much in fees that the banks ate out of his hands. + + + + + +Almost 20 years on Mr Cohen’s strange ascent to the pinnacle of American society, and the efforts of regulators to jail him for insider dealing, are the subject of Sheelah Kolhatkar’s excellent new book, “Black Edge”. Earlier books on Wall Street, such as “Barbarians at the Gate” and “Liar’s Poker”, describe the macho era of junk bonds and leveraged buy-outs in the 1980s. “Too Big to Fail”, which came out in 2009, recounts the bail-out of those banks. “Black Edge” tackles the rise of speculative hedge funds over the past two decades, of which SAC was, for a while, perhaps the most powerful. + +In the late 1990s it became harder for investors to beat the market. The “Reg FD” rule, passed in 2000, required companies to disclose information to all investors at the same time. Computing and brain power rose on Wall Street, with the cream of the Ivy League crunching data for nuggets that others had not spotted. In the arms race to find a new “edge”, some firms installed their computer cabling close to the stock exchange to get data a millisecond faster. Mr Cohen took a different route. + +Having learned the ropes at an old-school firm, he set up SAC as a kind of corporate espionage agency. He paid huge commissions to banks for information. By 1998 he was Goldman Sachs’s biggest equities client. And he hired analysts to befriend talkative strangers at companies or watch factory gates in Taiwan; anything to get an advantage to help Mr Cohen’s trades. Before the financial crisis SAC had $17bn of assets and an average annual return of 30% for 18 years, an enviable record. + +Too good, concluded regulators, who laid siege to SAC to try to prove that the firm was profiting from insider information. Eventually, several traders and analysts pleaded guilty or were convicted. Mathew Martoma, a habitual liar who had been expelled by Harvard Law School for faking his grades, and who made huge illegal trades on pharmaceutical firms, was jailed. But Mr Cohen always managed to be several steps away from the insider information. In 2013 SAC at last agreed to say that it had engaged in fraud, to close its doors to outside money and pay a fine. Mr Cohen, who has not admitted guilt, will be free to open a new fund next year. + +Three themes stand out in “Black Edge”. One is the hollow life of the protagonist. Clad in a fleece, surrounded by 12 screens, masseuses, a manipulative wife, a hostile ex-wife and a cast of millionaire sycophants whom he periodically culls, Mr Cohen cuts a sad figure. The second theme is the decay of the industry’s ethics. The banks still do business with Mr Cohen, and if he opens a new fund, supposedly reputable firms will line up to give him money. The last theme is the feebleness of enforcement. Mr Cohen’s government pursuers were comprehensively outwitted by his lawyers. In fictional accounts of high finance—in Tom Wolfe’s novel, “The Bonfire of the Vanities”, or “Wall Street”, directed by Oliver Stone—the courts ultimately bring the biggest egos crashing down. In real life the law has much less power. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717800-brief-history-sac-capital-and-how-its-wonder-boss-was-brought-heel-rise-fall/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Norse mythology + +Stories from the top of the world + + +Two vivid explorations of the myths that gave us “The Hobbit”, the “Ring” cycle and “Game of Thrones” + + + + + +From the print edition | Books and arts + + +Mar 4th 2017 + + + + + +Norse Mythology. By Neil Gaiman. Norton; 293 pages; $25.95. Bloomsbury; £20. + +The Norse Myths: A Guide to the Gods and Heroes By Carolyne Larrington. Thames and Hudson; 208 pages; $24.95 and £12.95. + + + + + +IN 1876 William Morris published his epic poem about Sigurd the Volsung, and Richard Wagner put on his first “Ring” cycle at Bayreuth. Norse mythology has long been a staple of Western culture. “The Hobbit” and “The Lord of the Rings” drew heavily on Norse literature. Marvel introduced Thor and Loki to American comic-book readers in the middle of the 20th century. “Game of Thrones”, a television phenomenon, owes a debt of gratitude to Norse culture, as do any number of computer games. Though each approaches the myths in a different way, one thing they have in common is length: Morris’s poem is more than 10,000 lines long, the “Ring” cycle runs for some 15 hours and the original manuscript for “The Lord of the Rings” covered more than 9,000 pages. + +Two new books on Norse mythology are mercifully short, however, running to just over 500 pages between them. But what they lack in length they make up for in ambition. + +Neil Gaiman’s “Norse Mythology” seems the more modest: it is a simple retelling of the backbone of myths from the creation of gods and men to Ragnarok, the final battle of the gods, when “brothers will fight brothers, fathers will kill sons” and the sun will vanish from the sky. But it is a bold undertaking. Mr Gaiman, a prolific and prize-winning fantasy writer, has plundered these same stories and characters many times before, notably in “American Gods”. The TV series will start later this year. Expectations are high. + +For readers new to the myths or to Mr Gaiman, “Norse Mythology” is an excellent introduction to the stories that wield such great cultural influence. It is impossible not to see echoes of these ancient tales in works over the centuries. For example, when Loki loses a wager in which he had bet his head, he wriggles out by arguing that the victors can have his head but they have no claim on his neck. Portia in “The Merchant of Venice” no doubt read up on Norse mythology before turning to law. + +Yet readers expecting Mr Gaiman’s typical style—gentle, rhythmic prose intricately plotted and stuffed full of allusions—will come away disappointed. His retelling is almost tentative, restricting itself to the core of the corpus. Giants, elves, dwarves and humans appear only as guest characters in the gods’ stories. Nor does he try to embroider the well-worn plots or give the stories a context for modern times. If Thor visits a giant and demands a feast, he does so without explanation. The fact that this reflects the gods’ high self-esteem, their power and the brutal, feudal nature of the societies from which these myths spring is left unsaid. + +Readers would benefit from reading Mr Gaiman’s book alongside “The Norse Myths” by Carolyne Larrington, an Oxford professor. She covers many of the same stories, and several more besides, in her guide to a broad swathe of the universe. Roaming far beyond Asgard, the realm of the gods, Ms Larrington tours Yggdrasil, the colossal ash tree that makes up the Norse cosmos, to introduce the giants, mortals and heroes and their own stories. Richly illustrated with photos of archaeological findings, the book makes the Norse gods and heroes solid, a pantheon actively worshipped by humans, rather than simply stories told at bedtime. She also points out how Christian influences crept into the myths as northern Europe turned away from its pagan past. + +Her book, like Mr Gaiman’s, ends with Ragnarok. The gods of Asgard go to battle against the giants. Most perish. The world is consumed by fire and drowned in the seas. Ms Larrington shows how ambivalent Odin is about this end: the god who gave one eye for wisdom, who hung for nine days and nine nights from the ash tree without food or water to gain knowledge of the runes, constantly seeks fresh proof of the world’s impending demise, hoping that someone may dispute it. + +But no matter how much Odin, the wisest and mightiest of the gods, would like to write a different ending, time runs from creation to destruction, and then the cycle starts again. In most versions the new world that emerges is a fresh chance for gods and men alike. Ms Larrington is not entirely convinced: “There’s no compelling reason to think that the new world will not go the same way as the old, that evil and corruption will not manifest themselves once again.” The Norse myths are engaging, entertaining and educational, but they are not uplifting. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717799-two-vivid-explorations-myths-gave-us-hobbit-ring-cycle-and-game/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Johnson + +Why words die + + +How to keep lexical treasures from keeling over + + + + + +From the print edition | Books and arts + + +Mar 4th 2017 + + + + + +BIOLOGISTS reckon that most species that have ever existed are extinct. That is true of words, too. Of the Oxford English Dictionary’s 231,000 entries, at least a fifth are obsolete. They range from “aa”, a stream or waterway (try that in Scrabble), to “zymome”, “that constituent of gluten which is insoluble in alcohol”. + +That is surely an undercounting. The English have an unusually rich lexicon, in part because first they were conquered (by the Vikings and Norman French) and then they took their turn conquering large swathes of the Earth, in Asia, North America and Africa. Thousands of new words entered the standard language as a result. Many more entered local dialects, which were rarely written down. The OED only includes words that have been written. + + + + + +Dedicated researchers have managed to capture some of the unwritten ones. For the Dictionary of American Regional English (DARE), researchers conducted thousands of interviews—usually with older country folk—who still spoke their regional dialect. They found such treasures as “to pungle up”, meaning for someone to produce money or something else owed, and “the mulligrubs”: indigestion and, by extension, a foul mood. + +The smaller and more local a word, the more danger it faces of dying out. DARE’s editors trekked out to find old people in the countryside precisely because younger urban speakers are more likely to adopt metropolitan norms, whether “broadcast standard” in America or “BBC English” in Britain. Other factors gave this homogenising trend a boost: advertising, which tends to standardise the names of things bought and sold in national markets, and the rise of American popular culture and global mass media in the second half of the 20th century. + +A study published in 2012 found some evidence for this homogenisation. It looked through a huge trove of books published since 1800, scanned and made searchable by Google, and found that the death rate of words seems to have speeded up in English (and also in Spanish and Hebrew) since about 1950. One cause is the death of perfect synonyms in an era of mass communications: the words “radiogram” and “roentgenogram”, both meaning the same thing, were eventually edged out by “x-ray”, the world having no need for three labels for the same thing. + +But DARE’s editors resist the standardisation hypothesis. What people call their grandparents—for example, “gramps and gram” or “mee-maw and papaw”—is more immune to the steamroller of national norms. In fact, these words are especially stubborn precisely because they give people an emotional connection to where they come from. + +Some words were never a great loss in the first place. The OED has “respair”, both as a noun and verb, meaning the return of hope after a period of despair—an obvious etymological kissing-cousin. But the great dictionary’s only citation for this dates back to 1425. For whatever reason, “respair” is a word that English-speakers decided they could happily live without. The OED also includes a host of terms from the “inkhorn” period of English word-coinage, when writers readily made up new words from Greek and Latin roots. These include such forgettables as “suppeditate”, meaning “subdued” or “overcome”. Good riddance to them. + +Some words hang on in a sort of life-support state, frozen in a single usage but otherwise forgotten. Who uses the verb “to wend”, except in the fixed expression “to wend one’s way somewhere”? (Bonus fact: the past tense of “wend” replaced the old past tense of “to go”, which is why we say “I went”.) Had Shakespeare not memorialised the name of a small siege explosive in the phrase to be “hoist with his own petard”, meaning a small bomb but also linked to the French word for “fart”, that would probably be gone, too. + +Those who get the mulligrubs thinking about great old words dying can pungle up for a subscription to DARE, helping those lexicographers keep adding words to the online edition. But a word needs to be used to live. So DARE has teamed up with Acast, a podcast producer, creating a list of 50 endangered American regionalisms, and trying to get Acast’s podcasters to use them. Who can resist “to be on one’s beanwater”—meaning “in high spirits”? And isn’t “downpour” a bit workaday for heavy rain, when you could be calling it a “frog strangler”? No one wants to see English submit to boring homogenisation; using a few of these lexical rarities might offer some respair. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717802-how-keep-lexical-treasures-keeling-over-why-words-die/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Dreams and dreamers + +The myths associated with the island of Hiddensee + + +A look at the prize-winning debut novel from a German poet + + + + + +From the print edition | Books and arts + + +Mar 2nd 2017 + + + + + +Kruso. By Lutz Seiler. Translated by Tess Lewis. Scribe; 462 pages; £16.99. + +WITH its thin body and chunky head (“the seahorse with the sledgehammer muzzle”), the German island of Hiddensee faces northwest across the Baltic Sea towards the coast of Denmark. Part of East Germany during the cold war, Hiddensee became an “island of the blessed”: an enclave of freethinkers where dreamers and idealists sought to escape the oppressive conformity of state socialism. Crucially, in “Kruso”, an outstanding debut novel by Lutz Seiler which won the 2014 German Book prize, it became home to refugees—swimmers, or sailors in makeshift craft—who tried to flee the GDR. Many drowned. Most were intercepted; but hundreds succeeded. + + + + + +Mr Seiler’s student hero, Ed Bendler, abandons his course after the trauma of his girlfriend’s death to spend the summer of 1989 washing dishes in the Klausner Hotel on the island. Mr Seiler himself worked there in 1989. During East Germany’s final months, Ed joins the Utopian community of “esskays”—slang for seasonal workers—as they toil, drink, love and explore the meaning of freedom, “all of them dedicated to the nebulous star of a liberated life”. Drop-outs or dissidents, the rebels follow the charismatic Alexander Krusowitsch, known as Kruso. Son of a Soviet general, he leads this subversive platoon with “saintly earnestness” after his fugitive sister Sonya becomes one of the “unknown dead”, swallowed by the sea. + +Mr Seiler draws cleverly on the fiction of enchanted islands or refuges, from Thomas More’s “Utopia” and Daniel Defoe’s “Robinson Crusoe” to Thomas Mann’s “The Magic Mountain”. Above all, he evokes the moods of Hiddensee with visionary power and precision. Although a sophisticated fable of liberty and its discontents, “Kruso” roots every idea in the salty, sandy landscapes of this “last hope of all the freedom-seekers in this land”. + +Through a battered old radio, the castaways learned that “continents were shifting”. Summer turns to autumn and the GDR crumbles like the eroding cliffs of Hiddensee. Ed’s idyll must end, and an epilogue sets out the history behind this parable. Beautifully phrased and paced, Tess Lewis’s translation delights on every page as she conveys “the contagious sense of liberation” that blows through Mr Seiler’s mesmeric novel. As for the Klausner: it’s still there. Off-season rates start at €30 ($31.80) per person. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717798-look-prize-winning-debut-novel-german-poet-myths-associated/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Academy Awards + +The final Oscar—at last—went to the most deserving film + + +More people will now discover a glistening film + + + + + +From the print edition | Books and arts + + +Mar 4th 2017 + + + + + +THE big shock at the Academy Awards on February 26th, aside from a kerfuffle over announcing the wrong winner for best picture, was that the right film actually won in the end. “Moonlight” is like no other film that has won best picture before: in terms of the story the film tells, how little was spent to tell it ($1.6m) and just how few people saw it. Far more will see it now. + +Based on a semi-autobiographical play by Tarell Alvin McCraney, “Moonlight” is the tale of a black gay youth’s struggles growing up and coming of age as the son of a crack-addicted mother in the tough Miami neighbourhood of Liberty City. Barry Jenkins, another son of Liberty City, adapted the screenplay and directed it, splitting the story of the youth, Chiron, into three parts—as a boy, a teenager and then a man. The boy, neglected and verbally abused by his mother, finds a father figure in Juan, a drug dealer who gives him a second home and lessons in life. As a teenager he grows more distant from his mother and timidly explores his sexuality. As a man he has grown a hardened shell to protect himself from his childhood, but it begins to crack. + + + + + +It is a hypnotic film, punctuated by small moving moments and meaningful silences, like the tension before a first kiss, or a question hanging without an answer. James Laxton, the cinematographer, washes the images in lush colours and contrasts which, accompanied by a subtle, occasionally soaring score by Nicholas Britell, give the film a dreamlike quality. + +“Moonlight” received a rapturous reception from critics and eight Oscar nominations, including for both Mr Laxton and Mr Britell, as well as for Naomie Harris as the boy’s mother. Mr Jenkins and Mr McCraney won for best adapted screenplay; Mahershala Ali won for best supporting actor in the role of Juan. + +The academy’s voters have shown a preference for smaller-budget films in recent years, but never for one as small as this. Seven of the previous eight winners of best picture cost between $15m and $20m; “Moonlight” was made for a tenth of that. The film’s worldwide box-office total, $26m, means that perhaps 300,000 people have seen it, far fewer than have seen previous winners (or “La La Land”, this year’s incorrectly-announced winner). But after the Oscars it became the best-selling movie on iTunes in America, and is already opening again in more cinemas. The story of “Moonlight” is just starting. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21717797-more-people-will-now-discover-glistening-film-final-oscarat-lastwent-most/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Obituary + + +Stanley Bard: Up in the old hotel [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Up in the old hotel + +Obituary: Stanley Bard died on February 14th + + +The long-time manager of New York’s Hotel Chelsea was 82 + + + + + +From the print edition | Obituary + + +Mar 4th 2017 + + + + + +IT IS a fair bet that no hotelier in New York was prouder of his trade than Stanley Bard. For him, it was a strange and wonderful calling, and what he made of his red-brick empire was something beautiful. + +His Hotel Chelsea—the inverted name conferring a certain elegance—sits on West 23rd Street in Manhattan, between Seventh and Eighth Avenues. Mr Bard believed firmly that the area was named after his building, which was once the tallest around, and is on several historic registers. Its style is Victorian Gothic, with floreate cast-iron balconies, and it rises to 12 storeys of somewhat gloomy aspect. It contains, according to most city guides, 250 rooms, though Stanley—as everyone knew him—averred there were around 400. He liked to say that if it were divided up today, without the same regard for high ceilings, outsize rooms and marble fireplaces common in 1883, you could fit in at least 1,000. + + + + + +The lobby of the Chelsea, which rises to a wide dank staircase, housed his art collection, including several fleshy nudes, flying papier-mâché figures, a portrait of a horse and a plaster-of-Paris pink girl on a swing. Below these, most days, milled a crowd of exotic, addled or entranced human beings. Stanley liked to preside on the reception desk. He was a short, smooth-skinned man, who combined energetic exaggeration with a mysterious vagueness. When he answered the telephone, his native Bronx would give way to the tones of an English butler. Callers were made to realise that this was a special hotel. + +Apart from tourists, whom Stanley admitted on sufferance and charged more, most guests were struggling artists or writers, and two-thirds were long-term residents. The arrangement was highly unusual for New York. In the 1970s the monthly rate was $60: very reasonable, Stanley thought, for the city. Nonetheless he sometimes let tenants off their rent, or lent them money for food. The average stay was nine years. Virgil Thomson, the composer, stayed for 50. Artists came to paint and sculpt, writers to write, deadbeats to die, and a large share to drink and misbehave. + +From 1964 all were vetted first by Stanley, who considered whether they and the hotel could get along. He let in, among others, Jack Kerouac, Allen Ginsberg, William Burroughs, Jackson Pollock, Leonard Cohen, Janis Joplin, Stanley Kubrick, Jimi Hendrix, Tom Wolfe, Jean-Paul Sartre, the Grateful Dead and all the women associated with Andy Warhol’s Factory. Bob Dylan wrote songs in Suite 211, Madonna filmed her sex book in Room 822, and Woody Allen shot three films on the murky marble stairs. Short-stays were sometimes billetted with the famous, separated by a bead curtain and on sagging camp beds. + +Stanley’s theory of management was that all tenants, whom he viewed as friends, should be largely left alone. They could change the furniture, put up antique wallpaper, plant palms, sleep in their coffins and keep any sort of child or pet. Privacy was paramount. Housekeeping happened once a week, if that. Arthur Miller, recuperating here from his marriage to Marilyn Monroe, objected to the lack of vacuuming and the disintegration of his carpets, at which Stanley expressed great surprise. He thought the suite “perfect”. + +He also believed that guests could do what they liked, as long as they did not destroy his hotel. The very thick soundproofing in the walls, and decent insulation, meant that although some rooms were set on fire, it never took hold. When anyone mentioned the deaths in the hotel, he put these to one side. Dylan Thomas was ill at the Chelsea, he admitted, having drunk 18 straight whiskies; but he drank them elsewhere, and died in the hospital. Sid Vicious’s girlfriend Nancy Spungen died of stab wounds in their room, but Stanley saw this as a suicide pact that went wrong, which was the sort of thing creative people did. Some guests threw themselves, stoned, down the stairwell, on the same artistic principle. Any police seen in the hotel were, in fact, more guests. Unexplained disappearances were probably vacations. His hotel was so serene, bathed with perfect northern light, that people either returned again and again, or never left. + +Heart and soul + +He did not live in the hotel himself. From the mid-1990s he owned an apartment on tonier Park Avenue. Nonetheless the hotel was also a family home. His father had bought it, with two other Hungarian Jews, after the war, with a loan from the Emigrant Bank next door. It was then a flop-house, having fallen from its pinnacle at the centre of the then-Theatre District; the area has since come up again. Stanley’s boyish adventures involved exploring behind the walls with the hotel plumber, and riding up and down all day with a tolerant bell-captain in the ancient gated elevators. + +Since his hotel had heart and soul, it had no business plan—beyond fostering a community of unfettered, energised, even wild artists in the heart of New York City. In this he succeeded wonderfully, but not commercially. In 2007 he was shoved aside by the board. His beloved hotel is being redeveloped; a few nervous tenants remain in their dusty rooms. At his last tenants’ association meeting at El Quijote, his favourite restaurant, it seemed that the light had gone out of his eyes. He was mourning the loss of beauty that he had spent his life creating. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/obituary/21717785-long-time-manager-new-yorks-hotel-chelsea-was-82-obituary-stanley-bard-died-february/print + + + + + +| Section Menu | Main Menu | + + + + + +| Main menu | Previous section | + +* * * + + + + + +Economic and financial indicators + + +Interactive indicators [Thu, 02 Mar 22:42] + +Output, prices and jobs [Thu, 02 Mar 22:42] + +Trade, exchange rates, budget balances and interest rates [Thu, 02 Mar 22:42] + +The Economist commodity-price index [Thu, 02 Mar 22:42] + +Manufacturing activity [Thu, 02 Mar 22:42] + +Markets [Thu, 02 Mar 22:42] + + + + + +* * * + + + +| Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Interactive indicators + + +From the print edition | Economic and financial indicators + + +Mar 4th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717803-interactive-indicators/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Output, prices and jobs + + +From the print edition | Economic and financial indicators + + +Mar 4th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717829-output-prices-and-jobs/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Trade, exchange rates, budget balances and interest rates + + +From the print edition | Economic and financial indicators + + +Mar 4th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717828-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Economist commodity-price index + + +From the print edition | Economic and financial indicators + + +Mar 4th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717832-economist-commodity-price-index/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Manufacturing activity + + +From the print edition | Economic and financial indicators + + +Mar 4th 2017 + + + + + +The British manufacturing sector continues to confound expectations of a post-Brexit slowdown, according to the latest data from IHS Markit, a research firm. Britain’s purchasing managers’ index (PMI) was 54.6 in February (a reading above 50 indicates manufacturing activity is expanding.) This was below a two-and-a-half-year high set in December, but still well above the long-term average of 51.6. The euro area also shrugged off political uncertainty surrounding forthcoming national elections: its PMI rose to the highest level since April 2011. Chinese manufacturing activity was in the doldrums at the start of last year, but began to recover in July after increased government spending boosted construction. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717834-manufacturing-activity/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Markets + + +From the print edition | Economic and financial indicators + + +Mar 4th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21717840-markets/print + + + + + +| Section Menu | Main Menu | + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.03.11.txt b/homeworks/B20769/homework1/data2/2017.03.11.txt new file mode 100644 index 0000000..dfd14a2 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.03.11.txt @@ -0,0 +1,8990 @@ +2017-03-11 + +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Technology Quarterly + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +| Next section | Main menu | + +* * * + + + + + +The world this week + + +Politics this week [Fri, 10 Mar 04:34] + +Business this week [Fri, 10 Mar 04:34] + +KAL’s cartoon [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Politics this week + + + + + +From the print edition | The world this week + + +Mar 9th 2017 + + + + + +Donald Trump signed a revised executive order to implement a travel ban on citizens from six Muslim-majority countries. Iraqis were taken off the list, as the administration conceded that they have been crucial in the fight against terror. Republicans who had condemned the original order fell in line to support the new ban, which comes into force on March 16th. See article. + +Jeff Sessions, the attorney-general, recused himself from an investigation into Russian attempts to influence last year’s election, after admitting that he had spoken to the Russian ambassador during the campaign. As allegations swirled about Russian links to his team, Mr Trump said that Barack Obama had ordered his phones to be tapped, but offered no evidence. + + + + + +Republicans in the House of Representatives unveiled a bill to replace Obamacare. Among other things, it would drop the requirement for people to have health insurance, but it allows for a penalty on those who let their insurance expire. The bill’s passage is far from assured. Conservatives have griped that the new system would retain too many subsidies. Some Republican senators have raised concerns that the plan to roll back the expansion of Medicaid adversely affects their states. See article. + +Diminished circumstances + +Brazil’s economy shrank by 3.6% in 2016, according to new data. This follows a contraction of 3.8% in 2015. The two-year slump is the country’s most severe recession on record. But inflation and interest rates are falling, which should spur a recovery. See article. + +Bolivia’s president, Evo Morales, signed a law to expand the area on which the cultivation of coca, the raw material for cocaine, is allowed. Under the new law, farmers may now grow coca on 22,000 hectares, up from 12,000 hectares previously. Mr Morales, a former leader of a coca-growers’ union, defends the crop as a traditional stimulant. Coca leaves can be chewed or used in hot drinks. Critics contend that much of it is used to make cocaine. + +See you in court + +South Africa formally revoked its notification that it was withdrawing from the International Criminal Court, after a domestic court ruled in February that its decision to do so was unconstitutional. The government has not said whether it intends to try again. + +Iraq’s armed forces made rapid advances in west Mosul. Optimists predict that the city will be liberated from Islamic State within weeks. See article. + +Groundbreaking + + + +An election was held in Northern Ireland. The unionists, led by the Democratic Unionist Party, lost their overall majority of seats for the first time in the province since its partition from the south in 1921. Turnout was well up and all the big parties increased their total vote. But a reduction in the number of seats from 108 to 90 contributed to lowering the DUP’s tally by ten and the Ulster Unionists’ by six. The vote for Sinn Fein, the biggest Irish nationalist party, surged by 34%, provoked by the DUP’s hardline campaign. Talks now begin to create a new power-sharing executive. See article. + +Authorities in several German cities blocked visiting Turkish ministers from speaking at rallies that were held to encourage local Turkish citizens to vote for constitutional changes granting more power to Recep Tayyip Erdogan, Turkey’s president. The authorities said the rallies violated safety rules. Mr Erdogan denounced what he called “Nazi practices”. Separately, the Council of Europe warned that the referendum for the constitutional changes threatened to make Turkey more like an “authoritarian” regime. + +Poland nominated its own candidate for president of the European Council to oppose Donald Tusk, the current president and a former Polish prime minister, who is seeking re-election. Poland’s populist government has accused Mr Tusk, who was widely popular when he headed the previous centrist government, of a range of unsubstantiated misdemeanours. + +In France Alain Juppé, a former prime minister, said he would not step in as the Republican candidate for president if the current candidate, François Fillon, pulls out. Mr Fillon has been under increasing pressure over charges that he paid his family nearly €1m of public money for work they barely did. He insists he will stay in the race. See article. + +It’s complicated + +North Korea said it would not allow nine Malaysians in the country to leave until it had settled a row with Malaysia over the killing of the half-brother of the North Korean dictator, Kim Jong Un. Malaysia responded by barring the departure of the 1,000-odd North Koreans in Malaysia. North Korea also tested four missiles simultaneously, prompting America and South Korea to accelerate the deployment of an American anti-missile system in South Korea, which annoyed China. See article. + +A special prosecutor in South Korea said that the president, Park Geun-hye, should be charged with corruption and abuse of office. The constitutional court is weighing whether to remove Ms Park from office on similar grounds. It is due to rule on March 10th. + +Police in the Philippines said they were resuming their controversial war on drugs, after a month’s hiatus. Perhaps 7,000 people have died during the campaign. The police have blamed many of the killings on unknown assailants. + +Japan’s Liberal Democratic Party approved a change to its rules allowing its leader to serve three three-year terms. That would allow Shinzo Abe, the prime minister, to remain in office until 2021, provided he can win another election. + + + +The annual session of China’s rubber-stamp parliament, the National People’s Congress, opened in Beijing. The prime minister, Li Keqiang, told the meeting that China’s GDP should grow by “about 6.5%” this year. In 2016 it expanded by 6.7%. Mr Li warned of financial risks arising from previous years of debt-fuelled growth. He also said demands for Hong Kong’s independence from China would “lead nowhere”. See article. + +China said spending on its armed forces would grow by 7% this year, the lowest rate in this decade. The defence budget would be equivalent to 1.3% of GDP, an official said. Many Western analysts believe it is much bigger than China claims. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21718573-politics-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Business this week + + +From the print edition | The world this week + + +Mar 9th 2017 + + + + + +After weeks of speculation, PSA Group, which produces Peugeot and Citroën cars, struck a deal to buy General Motors’ European operations for €1.3bn ($1.4bn). The addition of the Opel and Vauxhall brands to its range makes PSA the second-largest motor company in Europe, behind Volkswagen. GM has not turned a profit in Europe since 1999, losing some $8bn since 2010. It was so keen to ditch the business that it agreed to retain liability for most workers’ pensions. PSA has said it won’t immediately close factories, but it will eventually have to if it is to realise its projected cost savings. + +Fed-speak + + + + + +Janet Yellen, the chairwoman of the Federal Reserve, said a “further adjustment” to interest rates would probably “be appropriate” this month, meaning a rise is on the cards for March. It was an unusually frank statement by a Fed official ahead of a policy meeting. + +Deutsche Bank announced plans to raise €8bn ($8.5bn) through a rights issue to bolster its balance-sheet. The German bank also scrapped the proposed sale of its Postbank business; said it would sell a stake in its asset-management division; and announced that it would reunite the corporate and markets units of its investment bank. Deutsche made a €1.4bn loss last year. See article. + +Aberdeen Asset Management and Standard Life agreed to merge. Based in Britain, the combined company will have £660bn ($800bn) in assets under management, making it Europe’s second-biggest asset manager. + +China racked up a trade deficit in February, its first in three years, as imports soared by 38% compared with the same month in 2016. Exports unexpectedly fell. The lunar new year, which fell in February, would have affected trade. Higher prices for imported iron ore, oil and other commodities also played a part. + +Peter Navarro, the controversial head of Donald Trump’s new National Trade Council, said that the administration wanted bilateral talks with Germany over its trade surplus with America. Angela Merkel, Germany’s chancellor, will meet Mr Trump in Washington on March 14th. + +AkzoNobel, a Dutch multinational making paint and coatings that owns the Dulux brand, rejected a takeover from PPG, an American rival, saying that its €21bn ($22bn) offer undervalued the company. Foreign bids for Dutch firms are an issue in the country’s election campaign. + +Heebie-jeebies on H-1Bs + +A way of fast-tracking H-1B visas in America is to be suspended for at least six months from April 3rd. Skilled foreign workers can pay $1,225 to get a response to an application within 15 days, but America’s immigration agency wants to halt this service temporarily so that it can quicken the processing time for H-1Bs overall. + +A final reading of the Greek economy for the last three months of 2016 reckoned that GDP shrank by 1.2%, much worse than the 0.4% contraction that had been estimated in an initial government report. It was the worst quarterly performance since mid-2015, and creates another wrinkle in the wrangling over Greece’s bail-out. + +Communication breakdown + +Responding to more bad publicity about its business ethics, Uber’s chief executive, Travis Kalanick, said he was looking for a chief operating officer to help him run the firm. Uber also lost its legal case against new rules in London requiring minicab drivers to speak and write basic English. Those without a school certificate in English will have to sit a test. Uber says 33,000 of its drivers would either fail the test or put off applying for a licence, but a court found that being able to communicate in English is essential for passenger safety. + +In a rare rebuke to the EU’s antitrust body, a court quashed the European Commission’s decision in 2013 to block a merger between UPS and TNT, two logistics firms, finding that it had based its conclusion on an econometric model which it did not give UPS a chance to argue against. TNT was eventually bought by FedEx. + +America’s Justice Department announced that ZTE, a big Chinese supplier of network equipment, had pleaded guilty to violating American sanctions against Iran and North Korea and also to obstructing a federal investigation. It will pay a penalty of $892m and a further $300m if it does not obey the terms of the settlement. It is the biggest fine to date levied on a Chinese company for sanctions busting. + + + +Snap’s share price whipsawed. Having surged by 44% on its stockmarket debut, the share price fell back sharply in subsequent trading. The initial enthusiasm was dampened by short-sellers and concerns that the potential for growth is as ephemeral as the social-media firm’s messages. See article. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21718575-business-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +KAL’s cartoon + + + + + +From the print edition | The world this week + + +Mar 9th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21718577-kals-cartoon/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Leaders + + +Subatomic opportunities: Quantum leaps [Fri, 10 Mar 04:34] + +Britain’s budget: Spreadsheets v politics [Fri, 10 Mar 04:34] + +Stockmarkets: Bubble-spotting [Fri, 10 Mar 04:34] + +Geopolitics: One China, many meanings [Fri, 10 Mar 04:34] + +Food snobbery and economics: In praise of quinoa [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Subatomic opportunities + +Quantum leaps + + +The strangeness of the quantum realm opens up exciting new technological possibilities + + + + + +From the print edition | Leaders + + +Mar 11th 2017 + + + + + +A BATHING cap that can watch individual neurons, allowing others to monitor the wearer’s mind. A sensor that can spot hidden nuclear submarines. A computer that can discover new drugs, revolutionise securities trading and design new materials. A global network of communication links whose security is underwritten by unbreakable physical laws. Such—and more—is the promise of quantum technology. + +All this potential arises from improvements in scientists’ ability to trap, poke and prod single atoms and wispy particles of light called photons. Today’s computer chips get cheaper and faster as their features get smaller, but quantum mechanics says that at tiny enough scales, particles sail through solids, short-circuiting the chip’s innards. Quantum technologies come at the problem from the other direction. Rather than scale devices down, quantum technologies employ the unusual behaviours of single atoms and particles and scale them up. Like computerisation before it, this unlocks a world of possibilities, with applications in nearly every existing industry—and the potential to spark entirely new ones. + + + + + +Strange but true + +Quantum mechanics—a theory of the behaviour at the atomic level put together in the early 20th century—has a well-earned reputation for weirdness. That is because the world as humanity sees it is not, in fact, how the world works. Quantum mechanics replaced wholesale the centuries-old notion of a clockwork, deterministic universe with a reality that deals in probabilities rather than certainties—one where the very act of measurement affects what is measured. Along with that upheaval came a few truly mind-bending implications, such as the fact that particles are fundamentally neither here nor there but, until pinned down, both here and there at the same time: they are in a “superposition” of here-there-ness. The theory also suggested that particles can be spookily linked: do something to one and the change is felt instantaneously by the other, even across vast reaches of space. This “entanglement” confounded even the theory’s originators. + +It is exactly these effects that show such promise now: the techniques that were refined in a bid to learn more about the quantum world are now being harnessed to put it to good use. Gizmos that exploit superposition and entanglement can vastly outperform existing ones—and accomplish things once thought to be impossible. + +Improving atomic clocks by incorporating entanglement, for example, makes them more accurate than those used today in satellite positioning. That could improve navigational precision by orders of magnitude, which would make self-driving cars safer and more reliable. And because the strength of the local gravitational field affects the flow of time (according to general relativity, another immensely successful but counter-intuitive theory), such clocks would also be able to measure tiny variations in gravity. That could be used to spot underground pipes without having to dig up the road, or track submarines far below the waves. + +Other aspects of quantum theory permit messaging without worries about eavesdroppers. Signals encoded using either superposed or entangled particles cannot be intercepted, duplicated and passed on. That has obvious appeal to companies and governments the world over. China has already launched a satellite that can receive and reroute such signals; a global, unhackable network could eventually follow. + +The advantageous interplay between odd quantum effects reaches its zenith in quantum computers. Rather than the 0s and 1s of standard computing, a quantum computer’s bits are in superpositions of both, and each “qubit” is entangled with every other. Using algorithms that recast problems in quantum-amenable forms, such computers will be able to chomp their way through calculations that would take today’s best supercomputers millennia. Even as high-security quantum networks are being developed, a countervailing worry is that quantum computers will eventually render obsolete today’s cryptographic techniques, which are based on hard mathematical problems. + +Long before that happens, however, smaller quantum computers will make other contributions in industries from energy and logistics to drug design and finance. Even simple quantum computers should be able to tackle classes of problems that choke conventional machines, such as optimising trading strategies or plucking promising drug candidates from scientific literature. Google said last week that such machines are only five years from commercial exploitability. This week IBM, which already runs a publicly accessible, rudimentary quantum computer, announced expansion plans. As our Technology Quarterly in this issue explains, big tech firms and startups alike are developing software to exploit these devices’ curious abilities. A new ecosystem of middlemen is emerging to match new hardware to industries that might benefit. + +The solace of quantum + +This landscape has much in common with the state of the internet in the early 1990s: a largely laboratory-based affair that had occupied scientists for decades, but in which industry was starting to see broader potential. Blue-chip firms are buying into it, or developing their own research efforts. Startups are multiplying. Governments are investing “strategically”, having paid for the underlying research for many years—a reminder that there are some goods, such as blue-sky scientific work, that markets cannot be relied upon to provide. + +Fortunately for quantum technologists, the remaining challenges are mostly engineering ones, rather than scientific. And today’s quantum-enhanced gizmos are just the beginning. What is most exciting about quantum technology is its as yet untapped potential. Experts at the frontier of any transformative technology have a spotty record of foreseeing many of the uses it will find; Thomas Edison thought his phonograph’s strength would lie in elocution lessons. For much of the 20th century “quantum” has, in the popular consciousness, simply signified “weird”. In the 21st, it will come to mean “better”. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21718503-strangeness-quantum-realm-opens-up-exciting-new-technological-possibilities-quantum/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Britain’s economy + +Britain’s budget is prudent and brave but ducks the big questions + + +Tackling housing, health and other dilemmas will only get harder + + + + + +From the print edition | Leaders + + +Mar 9th 2017 + + + + + +AT JUST 68 pages, the spring budget Philip Hammond published on March 8th was less than half the length of last year’s. Blessedly short on the gimmicks favoured by many of his predecessors in the Treasury, its most significant chapter was on official forecasts. The economy has done much better than expected since the Brexit referendum last June (see article): it is forecast to grow by 2% this year, up from the 1.4% predicted in November and well ahead of the recession many feared. + +Yet the modest, good-news budget got a dreadful reception. Mr Hammond announced higher taxes for self-employed people, which broke a manifesto pledge and infuriated an important Conservative constituency. The criticism is unjustified. The tax plan makes economic sense, and with Brexit on the horizon it is right to fund any spending increases with tax rather than more borrowing. The bigger worry was the chancellor’s repeated refrain that urgent questions, from housing to health care, were still under review—a reminder of how many matters the government has yet to tackle. + + + + + +Revenge of the white van man + +With Labour in steep decline under an unpopular leader—Mr Hammond aptly compared the party to a driverless vehicle—the Tories enjoy unusual freedom. The chancellor used this to raise the national-insurance contributions (NICs) paid by self-employed people, who pay less than employees (see article). Businessfolk pointed out that they lack benefits such as sick pay and parental leave that employees enjoy. They have less than half a point: the main reason for the discount was their worse state-pension entitlement, which was fixed last year. Mr Hammond has promised to improve their other benefits. And employees will continue to pay even more NICs via their employers. Equalising their tax treatment will slow the slide towards self-employment for tax purposes. It should go further. + +Amid the outrage it was easy to forget that the tax raid was worth less than 0.1% of public spending. It is on the big questions that the government looks less convincing. Eight months into Theresa May’s term, urgent matters that were crying out for answers last summer are still being put off. The question of how to treat the “gig economy” and other new forms of work is under review until the summer. The social-care system, which is close to breakdown, will feature in a green paper later in the year. The touchy matter of how to set business rates, a tax on firms that is in need of reform, is out for consultation. On sustaining the creaking National Health Service the budget threw only crumbs. Because the government lacks answers, the budget resorted to emergency cash instead: extra money for social care; a fund for local authorities to help out firms struggling with rates. + +It is better to get big reforms right than to rush in. By the end of the year the government may have come up with good answers to Britain’s problems. But policy reviews under Mrs May have so far been anticlimactic. Last month a long-delayed white paper on the chronic shortage of housing, an area with plenty of good, but unpopular, solutions, failed to endorse the big ideas needed to boost housebuilding. In January a document outlining a new “industrial strategy”, which Mrs May flagged as a signature policy in the first days of her premiership, amounted to little. So did earlier promises of revolutions in railways, prisons and more. + +A good test will be how the government responds to the furore over self-employment. It is a sound idea which means only minor pain for a small number of mainly Tory voters. If Mrs May flinches at the unjustified outrage it has caused, it is hard to see her taking on bigger challenges. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21718522-tackling-housing-health-and-other-dilemmas-will-only-get-harder-britains-budget-prudent-and/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Flying high + +Are stockmarkets in a bubble? + + +It will be hard to satisfy both populists and businesses + + + + + +From the print edition | Leaders + + +Mar 9th 2017 + + + + + +HAVE investors become irrationally exuberant? That is the biggest question hanging over global stockmarkets. Despite tumultuous politics across much of the rich world, share prices are reaching ever loftier heights. After breaking the 20,000 barrier in January, the Dow Jones Industrial Average swiftly passed 21,000 earlier this month. In Britain the FTSE 100 has been notching up fresh records, too. The MSCI World Index has hit an all-time high. + +At first sight, the warning signals are flashing. The recent flotation of Snap, an internet firm that is yet to make a profit, brought back memories of the dotcom boom; its shares soared by 44% on their first day of trading (although they have fallen back since). By historical standards, valuations in the American market are worryingly dear. The cyclically adjusted price-earnings ratio, which averages profits over ten years, is just under 30, according to Robert Shiller of Yale University. Only twice has it been higher—in the late 1990s, during the internet boom, and just before the crash of 1929. + + + + + +There are three reasons why investors are ignoring the alarm bells, each of them reasonable. First, investors’ exuberance comes after a long period of restraint. The S&P 500 index is up by 5.5% so far this year. But in 2016 it returned less than 10%. In 2015 it fell. Contrast that with the late 1990s, when the S&P 500 returned 20% or more in five successive years. Nor have investors bet the farm on shares. After suffering net outflows for the previous 12 months, equity mutual funds in America recorded their first week of net inflows in February. That same month a Bank of America Merrill Lynch survey of fund managers found that they held more cash than usual. Investors have a negative view on government bonds: ten-year Treasuries yield 2.5%, compared with 1.8% before Donald Trump’s election. Equities look attractive in comparison. + +Second, there are indications of a pickup in the global economy. That is a big change from the start of 2016, when investors were preoccupied by the state of the Chinese economy and the threat of deflation. After a feeble performance over the past few years, with annual growth in trade volumes barely keeping pace with GDP, the signs are that global trade is picking up again. The volume of South Korean exports rose by 20% in the year to February, the fastest growth rate in five years. Commodity prices are 10% higher than a year ago (see article). Even European growth forecasts have been revised higher. + +Third, expectations of tax cuts, infrastructure spending and deregulation from the Trump administration have invigorated animal spirits in America. In December American small-business confidence saw its biggest rise in nearly 40 years, according to the National Federation of Independent Business. Profits for firms in the S&P 500 index are expected to rise by 12% in 2017 after being squeezed during the past couple of years, partly because a low oil price hit the energy industry. + +The risks to this happy prospect are manifold, however. Despite the strong tone of surveys, the recent economic data in America have been mixed: consumer spending and industrial production both fell in January. After eight years, this recovery is already long in the tooth. Mr Trump’s fiscal-stimulus programme could take till next year to get through Congress and will be watered down along the way. Some of Mr Trump’s proposals—cracking down on immigration, say, and threatening trade sanctions—would harm growth. + +Meanwhile, monetary policy, which has played a big role in supporting stockmarkets since 2009, is becoming less accommodating. The Federal Reserve is widely expected to raise interest rates this month (see article). The European Central Bank will scale back the volume of its monthly bond purchases in April. Around 80% of all global private-sector credit creation happens in China, according to Citigroup; the authorities there are already starting to tighten policy. + +Parties weren’t meant to last + +A deeper problem lies in a contradiction between politics and economics. Elections in the Netherlands, France and Germany this year will give voters the chance to hammer established parties. Just as with Mr Trump in America, workers are backing insurgent candidates because they want a bigger slice of the economic pie. But mathematics cannot square a surge in real wages with a market rally based on the hope that profits will rise faster than GDP. As a movement that rejects globalisation, populism is a menace to companies that thrive on the free movement of goods, labour and capital. So it will be hard to keep both populist voters and the equity markets happy. Stocks may fly high for some time yet, but investors should keep a parachute handy. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21718524-it-will-be-hard-satisfy-both-populists-and-businesses-are-stockmarkets-bubble/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +One China, many meanings + +Why the absurd one-China policy must be upheld + + +It is a polite fib that helps keep the peace in Asia + + + + + +From the print edition | Leaders + + +Mar 9th 2017 + + + + + +FEW diplomatic sophisms are as skilfully worded as America’s “one-China policy”. Mere repetition by American officials that their country sticks to it has helped more than anything else to keep the peace between two nuclear-armed powers. Were America to reject the policy, mainland China would be enraged. Anti-American riots would erupt. The government in Beijing might even respond by launching a military attack on Taiwan, or American forces in the region. The global economy would shudder. Millions of lives would be threatened. + +Small wonder, then, that pulses quickened on both sides of the Pacific when Donald Trump, as president-elect, questioned the policy. (“I don’t know why we have to be bound by a one-China policy unless we make a deal with China having to do with other things, including trade,” he said.) Last month he changed his mind and reassured China’s president, Xi Jinping, that he would, in fact, uphold it. Yet the one-China policy is in a fragile state. Far from casting doubt on it, Mr Trump needs to make America’s support for the status quo clearer than ever. + + + + + +The one-China policy is a fudge. At the time it was devised, the governments in Beijing and Taipei both claimed to be the rightful rulers of all China. (Chiang Kai-shek, Taiwan’s leader until 1975, had fled from the mainland in 1949 after losing a civil war against Mao Zedong.) Until the 1970s, America recognised only “Free China”, ie Taiwan. Under the new policy, it acknowledged that both sides believed there was only one China while tactfully not saying who was the rightful ruler of Taiwan. The aim was to butter up Red China, which Richard Nixon wanted as an ally in the cold war against the Soviet Union. The communists would have preferred America to accept what they call the “one-China principle”—namely that Taiwan is a renegade province of China, and ought to bow to the Communist Party. But they were content that America was prepared to switch diplomatic recognition from Taiwan to the People’s Republic and withdraw American troops from the island (both of which it did in 1979). So the fudge stuck. + +The result has been an extraordinary relationship between two great powers. They were divided by ideology but united initially by their common hatred of the Soviets and later by their common pursuit of wealth by trading with each other. + +However, Taiwan remains a flashpoint (see article). Communist China has not given up its dream of taking control of the island, by force if necessary. America has kept on selling weapons to Taiwan. The “Taiwan Relations Act” requires it to view an attack as a matter of “grave concern” to America: a hint that it might come to Taiwan’s aid. China has often made clear its outrage at this. Its rapid military build-up in recent years has been aimed, not least, at deterring America from trying to defend Taiwan. If it could keep America out, it could, in all probability, inflict a crushing defeat on the island. + +One China, one Taiwan + +This tinderbox has now been exposed to the spark of Taiwanese democracy. In the 1990s the island began to cast off authoritarianism. The Taiwanese are pragmatic. Last year they elected an independence-leaning president, but one who prefers not to antagonise the communists. Most believe that the island is already autonomous enough. Few want to enrage China by formally declaring independence. But they have also started to question the idea of “one China”. They see the mainland as a different country, and abhor the idea of being swallowed by the giant dictatorship next door. Taiwan has never been ruled by the communists. Since 1895 it has been under the mainland’s control for less than five years. + +Most are happy to let the one-China fudge persist. But will it? Having stirred up nationalist feelings for so long, the Communist Party can never abandon its claim. Some day, to shore up its popularity, it may be tempted to invade Taiwan. + +America’s ability and willingness to deter China is not only vital to Taiwan but also a measure of its role in the world more broadly. The arms that America sells to Taiwan would not enable the island to hold out for long against a Chinese onslaught, but they are a token that America has a stake in Taiwan’s fate, and that China should beware. Rather than using Taiwan as a bargaining chip, America should maintain its military support for the island. If repeating a misleading mantra is the price of peace, it is worth it. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21718518-it-polite-fib-helps-keep-peace-asia-why-absurd-one-china-policy-must-be/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Food for thought + +In praise of quinoa + + +The spread of exotic grains is evidence that globalisation works + + + + + +From the print edition | Leaders + + +Mar 9th 2017 + + + + + +PEOPLE are funny about food. Throughout history they have mocked others for eating strange things. In 1755 Samuel Johnson’s dictionary defined oats as “a grain, which in England is generally given to horses, but in Scotland supports the people”. Nineteenth-century Japanese nationalists dismissed Western culture as bata kusai, or “stinking of butter”. Unkind people today deride Brits as “limeys”, Mexicans as “beaners” and French people as “frogs”. And food-related insults often have a political tinge. George Orwell complained that socialism was unpopular because it attracted “every fruit-juice drinker, nudist, sandal-wearer [and] sex-maniac…in England”. In many countries today, politicians who wish to imply that their rivals have lost touch with ordinary voters sneer that they are latte-drinkers, muesli-munchers or partial to quinoa. + +This South American grain gets a particularly bad rap. To its fans, it is a superfood. To its detractors, it is like the erotic sci-fi murals found in Saddam Hussein’s palaces—pretentious and tasteless. An advertisement for Big Macs once riffed on this prejudice. “Foodies and gastronauts kindly avert your eyes. You can’t get juiciness like this from soy or quinoa,” it said, adding that “while [a Big Mac] is massive, its ego is not.” Even those who love quinoa sometimes fret that scarfing it may not be ethical. What if rising hipster demand pushes the price up, forcing Andeans to eat less of their beloved grain? Or what if the price falls, making Andean farmers poorer? A headline from Mother Jones, a left-wing magazine, perfectly captured the confusion of well-meaning Western foodies: “Quinoa: good, evil or just really complicated?” + + + + + +This newspaper takes no view as to whether quinoa tastes nice. But its spread is a symptom of a happy trend. More and more people are chomping unfamiliar grains (see article). Rich Westerners are eating less wheat and more of the cereals that people in poor countries traditionally grow, such as millet, sorghum, teff and yes, quinoa. Middle-class Asians are eating more wheat, in the form of noodles or bread, instead of rice. West Africans are eating 25% more rice per head than in 2006; millet consumption has fallen by the same share. + +All this is to be celebrated, for it is a symptom of rising prosperity and expanding choice. The spread of better farming techniques has raised yields, helping humanity feed itself despite a rising population. Rapid urbanisation means that fewer people grow their own grain, and more have the cash to try new varieties. Globalisation has allowed food and farming techniques to cross borders, meaning that people on every continent can experience new flavours and textures. Migration and tourism have broadened people’s culinary horizons: Chinese visitors to France return home craving baguettes; Americans who live near Ethiopian immigrants learn to love injera (a soft teff flatbread that doubles as an edible plate). + +Food for thought + +The globalisation and modernisation of agriculture have contributed to a stunning reduction in hunger. Between 1990 and 2015, the proportion of children under five who were malnourished fell from 25% to 14%. People who are still underfed are less severely so: their average shortfall in calories fell from 170 a day to 88 by 2016. And between 1990 and 2012 the proportion of their income that poor people worldwide had to spend on food fell from 79% to 54%. As for those quinoa farmers, don’t worry. A study by Marc Bellemare of the University of Minnesota found that Peruvian households became better-off because of the quinoa boom, even if they didn’t grow the stuff, because newly prosperous quinoa farmers bought more goods and services from their neighbours. + +Granted, rising prosperity has allowed an increasing number of people to become unhealthily fat. But the solution to that is not to make them poorer, which is what the backlash against globalisation will do if it succeeds. Rather than sniping snootily about Donald Trump’s taste for well-done steaks slathered with ketchup, liberals should worry about the administration’s plans to erect trade barriers and possibly start a trade war. That would make the world poorer and hungrier. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21718516-spread-exotic-grains-evidence-globalisation-works-praise-quinoa/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Letters + + +On renewable energy, voting: Letters to the editor [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Letters + +Letters to the editor + + +On renewable energy, voting + + + + + +From the print edition | Letters + + +Mar 11th 2017 + + + + + +Renewing energy markets + +You succinctly described the conundrum faced by electricity markets adapting to renewable energy (“A world turned upside down”, February 25th). Existing renewable-energy plants with zero marginal generation costs will price any fossil-fuel power plant out of the market. + +Today’s liberalised electricity markets, where prices are set by the marginal cost of generation, were concocted in the 1990s. These markets are not determined by physical laws; we should question established orthodoxies and design more effective alternatives. The current system neither guarantees that there are sufficient price signals to maintain the high availability of electricity we are used to, nor achieves the deep levels of decarbonisation required to keep the planet inhabitable. + +We need to look at the cost of the “package deal” for a reliable, low-carbon electricity system, as Simon Müller of the International Energy Agency poignantly puts it, without assigning the derogatory term “subsidies” to individual components of that package. By all means, market principles should rule the new regime, for example through large-scale competitive tendering of renewable-energy plants. Recent results demonstrate that such tenders can achieve extremely competitive pricing for carbon-free electricity. Visionary policies are what’s called for, not patches on a colossal market failure. + +MORITZ BORGMANN + +Partner + +Apricum—The Cleantech Advisory + +Berlin + + + + + +By 2040 global electricity demand is forecast to rise by 70% thanks to its decarbonisation potential and the electrification of industries such as transport. Energy storage will become increasingly important as intermittent renewable-power increases: pumped storage hydro is the economically viable technology that is proven to work and can be delivered on a large scale. Other storage technologies such as batteries will also play an important role as part of the grid, to balance fluctuations. + +But we need new market frameworks to support this change. This means stronger carbon-price signals to incentivise clean-energy investment and technology rather than subsidies for polluting fuels. As you point out, it also requires spending to enhance and digitise electricity networks. Networks are more important than ever in a smart energy world, to manage localised multidirectional power flows and to ensure the stable supply of electricity. + +Many utilities are already adapting to deliver this transformation. But policymakers also need to meet their side of the bargain. + +IGNACIO GALÁN + +Chief executive officer + +Iberdrola + +Madrid + + + +Energy policies are increasingly and mistakenly geared towards expanding renewable energy as an end in itself, rather than achieving carbon reductions and maintaining reliability. The cost of providing system backup power or storage is not reflected in the wind and solar “levelised cost of energy” or the market price. With more renewable production, these shadow costs escalate because a full-sized system of on-demand power or oversize seasonal storage (which does not practically exist today) is needed to cover multiple days and weeks when there is little wind or sun. If it existed, this storage system would face the same challenge that capacity markets face in a high-renewables world: large capital costs and low usage. High renewable penetration makes all forms of energy production “intermittent” and therefore costly. + +Most studies suggest that achieving a low carbon grid at a manageable cost will require a mixture of nuclear, gas with carbon capture or other zero carbon on-demand sources in addition to renewables. To redesign markets to facilitate very high uptake of renewable energy for its own sake is indeed a way to turn the world, and economic logic, upside down. + +JANE LONG + +Lawrence Livermore Laboratory (ret.) + +Oakland, California + + + +ARMOND COHEN + +Clean Air Task Force + +Boston + +In New York state we are modernising the regulatory regime and electric grid. These reforms include allowing utilities to earn returns for their shareholders by advancing clean-energy solutions, rather than only by investing more capital in the expansion of the grid’s capacity. This is one way of solving the “utility death spiral”. New York’s utilities now have a clear business motive to improve the energy and financial efficiency of the state’s entire grid. For example, by using transparent price signals in retail energy markets, utilities will be able to deploy more renewable generation and energy-efficiency projects where they can help with grid congestion in high-use areas, which will reduce the need for capacity payments to dirty and expensive “peaker” plants. As a result, these clean-energy deployments will benefit all users of the grid, not just those homes and businesses that have the opportunity to implement clean-energy projects. We want to provide customers with what they want, instead of what regulators and utilities think they want. + +RICHARD KAUFFMAN + +Chairman + +Energy and Finance, New York state + +Albany, New York + +I agree with your analysis. We expect that by 2030, half of the electricity in the European Union will come from renewables. Upgrading the design of outdated electricity markets is thus an urgent matter. The European Commission has published wide-ranging proposals, such as allowing price spikes at moments of scarcity and deregulating prices at the retail level, measures to prevent blackouts and clearer rules on cyber-security and the smartening of power grids, and more interconnection between EU states. This renewables revolution is only possible with the buy-in of consumers, who need to be empowered as part of this energy democratisation. The role of providers and innovators is indispensable for enabling active consumers and providing them with new state-of-the art services. + +MAROS SEFCOVIC + +Vice-president of the European Commission in charge of the Energy Union + +Brussels + +Cross-border power markets can significantly alleviate some of the problems you mentioned. Through a well-integrated Nordic electricity market, Denmark avoids curtailed power because of fluctuating wind energy by exporting excess capacity to Norway and Sweden when the wind blows and importing hydro power when it doesn’t. In this way, the Nordic power market provides flexibility across renewable-energy types, ensuring that electricity generated everywhere and through every source enters the grid and reaches consumers. + +LARS CHRISTIAN LILLEHOLT + +Danish minister of energy + +Copenhagen + +It is said that the shift to renewable energy will reduce profitability. However, when considering “The Coal Question” in 1865, William Stanley Jevons found that as the efficiency of energy generation increases, the quantity of energy consumed goes up by a disproportionate amount. With the switch to abundant, cheap renewable energy, consumption, and profits, will rise. + +JAMES SHERWIN-SMITH + +London + + + +* You made plain in your piece that challenges remain when it comes to renewables and the power sector. Yet all fuels and energy technologies received public support early in their development, and many have continued to benefit from favorable policies well after becoming commercially viable. The International Energy Agency has estimated that global subsidies for fossil fuel consumption in 2014 neared half a trillion dollars, more than quadruple the subsidies to renewables. Annual average subsidies to fossil fuels are still more than 13 times what is provided for renewables, and indirect subsidies are also large, though more difficult to track. + + + +Use of renewable power has increased tremendously over the past decade, led in many cases by the private sector, while the economy has grown and emissions have fallen. Subsidies have played a role, but so have falling costs driven by advances in technology and manufacturing, new business models, and consumer demand. As you noted, further technological advances such as digitalisation, storage, and more distributed energy systems can help ease the transition while providing other benefits. But as you highlighted, growing demand for new technology and services will only further strain the current system. + + + +Additionally, leaving market design as it stands in the face of growing demand for new sources of power is the ultimate government subsidy to incumbent fuels and technologies. Existing industries will seek protection from new technologies and ways of doing business. Markets have tremendous power to direct resources efficiently, but we must design them to match new technological, political, and business realities. As this newspaper has long argued, only by pricing carbon emissions in a way that accurately reflects the impacts of traditional energy will markets effectively manage externalities in energy production and consumption. + + + +This disruption in electricity systems is no reason for governments to stop supporting renewables. A recent National Academy of Sciences report observed that public investments can play an important role in establishing industries, but work best when they are performance- or outcome-oriented. Similarly, markets with bidirectional incentives would support further innovation and value creation without creating new market distortions. It also noted the importance of establishing appropriate pollution prices to help establish a level playing field and consistent market. + +Now is the time for good policies and well-constructed markets to provide incentives to continue a transition to clean energy. Public subsidies for clean energy are addictive, just as they have been for oil and natural gas. But beating that addiction requires properly structured markets and investments that level the playing field for all sources of electricity and reflect their true environmental and public health costs. State and federal policymakers must work closely with the private sector to craft market solutions that fit this emerging reality. + + + +CHRIS COONS + +US Senator + +Wilmington, Delaware + + + +* Your recent article reaches some sensible conclusions but via an error-strewn path. Germany doesn’t subsidise renewables; its feed-in tariffs transparently procure them and charge customers, using no general tax revenue. But in countries that temporarily do, like America, fossil and nuclear power generally enjoy bigger and permanent subsidies. Modern (ex-big-hydro) renewables nonetheless add over half the world’s new capacity, because they’re cheaper. Solar and windpower now often win unsubsidised auctions, bidding all-in levelised prices around 2–4 American kilowatthours and falling. This beats opex alone for thermal plants. Their owners seek greater subsidies or shields from competition, but they were already compensated for investment risks and shouldn’t be paid twice. + + + +The dearest of nine ways to balance the grid are thermal stations (old or—thankfully unfinanceable—new) and bulk electrical storage: they’re seldom needed. Last year the ultrareliable and trading-adept former East German utility got 49% of its electricity from renewables, three-fourths of it solar and wind—the only two variable renewables. Dispatchable renewables available when needed were 54% of modern renewables’ 2016 global output with or 29% without small hydro. Well done grid-balancing costs little—and probably less for a diversified renewable portfolio than for giant thermal plants because their lumpiness needs more backup when they too fail. + + + +Better grid integration and markets, dispatchable renewables, flexible demand, and distributed thermal or electric-car storage worth buying can together prevent ‘duck curves’ and sustain renewables’ value at scale. Excluding such options causes your contrary findings. + + + +The death spiral I described in 1976 is obvious but utilities’ challenge runs deeper. They sell a commodity to customers wanting an infrastructure or a service. Thomas Edison sold light not kWh so more-efficient lamps would cut future costs. Once his clever business model lapsed in 1892, utilities sold kWh, so customer efficiency cuts revenues not costs—a bigger threat than cheap renewables, since most electricity is wasted and negawatts beat megawatts. Customers, now gaining more market power than providers, are realising they can buy fewer electrons, use them far more productively and timely, even produce and trade their own. It’s smart to sell customers what they want before someone else does and to let profits flow to least-cost solutions. All the rest is detail. + +AMORY B LOVINS + +Cofounder and Chief Scientist + +Rocky Mountain Institute + +Basalt, Colorado + + + +* Pricing is not an unfamiliar challenge. Around the United States, innovative solutions are being tested and implemented. California, for example, hopes to move most electricity customers to a pricing system based on time of use by 2019. If done right, this can shift energy demand to the times of day when cleaner, inexpensive renewable energy is more plentiful and accelerate the transition away from gas-fired resources. In Texas there is a programme in place that varies prices during the day and offers completely free energy during the night, when the wind blows strongest. + +DEBORA SCHNEIDER + +Communications manager for clean energy + +Environmental Defence Fund + +New York + + + +* It seems far more likely that the investment problem identified in your article reflects signals about subsidising renewables. In subsidised environments, the profit-maximising game for investors is to invest only when they think they have maximised their net return from future expected subsidies, revenues and costs. It is not hard to see how this could lead to delayed investment. + +BRENT LAYTON + +Chair + +Electricity Authority + +Wellington, New Zealand + + + + + +Youth and democracy + +* Research shows that voting intentions are formed at a young age, so I very much agree with you that there is a strong case for reducing the voting age to 16 (“Vote early, vote often”, February 4th). However, if adult politicians are unwilling to make that legal change, is there anything else that can be done? + + + +At the beginning of February the school in Denmark where I teach participated, along with more than 600 other Danish schools, in skolevalget (“the school election”). With a campaign launched by the prime minister, more than 60,000 pupils between 14 and 17 years old took part in debates with the parties’ youth wings, political discussions in class, the production of political videos, and (at the end) a voting process, complete with electoral rolls, formal ballot cards and boxes, voting booths, counting and results. + + + +It may all have been no more than a bit of fun, but it did have an effect. I started the three weeks with 146 politically apathetic tenth graders. By the end there were heated discussions about assisted suicide, mooted cuts in student support, and the implications for the world of Brexit and Donald Trump. Perhaps this is the reason Denmark topped your table as the country with the lowest ratio of old registered voters to young. + + + +ROBERT SATCHWELL + +Haarby, Denmark + +* Letters appear online only + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/letters/21718459-renewable-energy-voting-letters-editor/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Briefing + + +The one-China policy: The great brawl of China [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The one-China policy + +The great obfuscation of one-China + + +The polite fiction that there is only one China has kept the peace in East Asia—but now it is coming under pressure from all directions + + + + + +From the print edition | Briefing + + +Mar 9th 2017 | BEIJING AND TAIPEI + + + + + +WHEN Donald Trump, then America’s president-elect, said on December 11th that “I don’t know why we have to be bound by a one-China policy” he ripped aside one of the oldest sticking-plasters in the world of diplomacy. That he stuck it back on again two months later, telling Xi Jinping, China’s president, that he would honour the one-China policy “at President Xi’s request”, does not alter the fact that an American leader had questioned a basic feature of Asian security. Nor does Mr Trump’s reversal solve problems with the one-China formula, on which peace between Taiwan and China has depended, that were evident well before his election. If they worsen, the two sides’ frozen conflict could heat up. + +The one-China formula is not so much fraught with ambiguities as composed of them. China itself does not actually have a one-China policy. It has what it calls a one-China principle, which is that there is only one China, with its government in Beijing. It regards Taiwan as a renegade Chinese province and refuses diplomatic recognition to any country that recognises Taiwan as a state. Yet this rigid principle can be bent. In 2015 President Xi met the island’s then-president, Ma Ying-jeou, for what would have looked to innocent eyes very much like a bilateral summit of heads of state. And China looks the other way, albeit with some fulmination, when America sells arms to Taiwan—a traffic which, in 1982, America said it would phase out, but continues to this day. + + + + + +America does not accept the one-China principle. Instead it has the one-China policy, which acknowledges that China has such a principle—not quite the same thing. America does not recognise Chinese sovereignty over Taiwan, nor does it recognise Taiwan as an independent state. It does plenty of trade with it, though. Small as it is, Taiwan is the ninth-largest buyer of American exports, outstripping Italy and India. America’s unofficial ties with the island are closer than many countries’ diplomatic links. The American Institute in Taiwan, a private not-for-profit institution with headquarters in Washington, DC, looks like an embassy and acts like one, too. The Taiwan Relations Act of 1979 commits America to helping Taiwan defend itself against invasion and embargoes, deeming any coercion of the island to be “of grave concern to the United States”. + +In Taiwan itself the one-China formula has an even stranger history. It is rooted in the fiction that the island’s first president, Chiang Kai-shek, who fled there in 1949 after losing a civil war to Mao Zedong’s communists, would one day recapture the whole of China. Hence Taiwan’s official name, the Republic of China. Thus the party that Chiang led, the Kuomintang (KMT), and the Chinese government can both subscribe to an agreement called the “1992 consensus”, which says that there is only one China but recognises that the two sides disagree about what that means in practice, thus piling fudge upon ambiguity. Taiwan’s other major political party, the Democratic Progressive Party (DPP), rejects both the 1992 consensus and the one-China principle more generally. But its leader, Tsai Ing-wen, who succeeded the KMT’s Mr Ma as president last year, prefers not to do so openly. + +In most areas of politics this surfeit of uncertainty would be worrying. Yet the agreement not to look too closely at the contradiction of “one China” has kept an uneasy peace across the Taiwan Strait. There have been political crises—most recently in the mid 2000s—and in 1996 China fired missiles towards the island while Chinese leaders scowled for the cameras. But by and large it has worked well enough for all three sides to want to maintain it. + +Their reasons differ, just as their reading of the formula does. China believes that time is on its side. As the motherland becomes ever wealthier and more powerful, its leaders seem genuinely to hope that Taiwan’s people will want to rejoin it. Taiwan’s leaders think the opposite; that with time the island’s people will see themselves as having less and less in common with the mainland. Since the 1992 consensus, the proportion of people on the island who identify themselves simply as Taiwanese has more than tripled to almost 60%; the share of those who call themselves Chinese has plunged to just 3% (see chart). Among people between 20 and 30, 85% say they are Taiwanese. In America the attitude is a simpler ain’t-broke-don’t-fix-it one. The status quo enables the country to have diplomatic ties with China without breaking off links with Taiwan, and that is good enough. + + + +But this equilibrium of incommensurable interests depends on certain conditions being right: that China continues to get richer, confirming its leaders’ optimism; that people on each side of the strait do not come to see each other as enemies; that Asia remains more or less stable, so the sides do not get caught up in other conflicts; and that, if the worst comes to the worst, America’s armed forces will step in to keep the peace. + +All these conditions are now changing. China’s economy has been slowing. And Asia is no longer so stable. Mr Trump has threatened to impose tariffs on Chinese exports, risking a trade war. Chinese territorial claims over various islands are heightening tensions: America’s secretary of state, Rex Tillerson, told the Senate that America must be able to limit Chinese access to disputed islands in the South China Sea. Mr Trump confirmed to Shinzo Abe, Japan’s prime minister, that their two countries’ defence treaty covers the Senkaku islands, which China calls the Diaoyu. + +And while Mr Trump and Mr Abe were meeting, North Korea conducted its first post-Trump missile test. A month before, North Korea’s leader, Kim Jong Un, had claimed his country would soon test its first intercontinental ballistic missile, which could hit the American mainland, though that was not what was tested. In response to Mr Kim’s threats America is fielding a missile-defence system in South Korea—to which China vociferously objects. + +Taiwan might seem like the eye of the storm. Yet China still holds a threat of invasion, or blockade, over the island, and it sometimes shows signs of wanting to bring things towards a head. In 2013 Mr Xi sent a tremor across the strait when he told Vincent Siew, Taiwan’s vice-president, that their conflict “cannot be passed on from generation to generation”. It sounded as if the president’s patience was starting to wear thin. On March 6th the head of the Taiwan Relations Office, a government department, said to the National People’s Congress (NPC), China’s rubber-stamp parliament, that “I have to emphasise that Taiwan’s independence…will lead nowhere. I hope the Taiwan government will think about this sentence carefully.” All this is in the context of a military balance that has been shifted by a decade of double-digit increases in Chinese spending. Ten years ago Pentagon planners dismissed the idea of an invasion as “the million-man swim”. You don’t hear such nonchalance much these days. + +Strait and narrow + +America might no longer be able to dispatch two aircraft-carrier groups to the Taiwan Strait to force China to back down, as it did in 1996. But if hostilities were to break out America would almost surely be drawn in. The Taiwan Relations Act does not fully oblige it to, but to refrain would be a mortal blow to its position and prestige as a superpower. There would also be economic considerations: Taiwan makes more than a fifth of the world’s semiconductors; a Chinese blockade could cripple the computer industry. + +Against such a backdrop, the election of Ms Tsai of the independence-minded DPP was always likely to ratchet up tension. Soon after her inauguration last May the government in Beijing cut off communications between China’s Taiwan Affairs Office and Taiwan’s Mainland Affairs Council, increasing the chances of misunderstanding and miscalculation. + +On November 25th China flew a pair of Xi’an H-6K bombers round the island, along with some escorts. Two weeks later another Xi’an bomber and three fighter jets again circled Taiwan. Then in January China’s aircraft-carrier, the Liaoning, sailed round the southern tip of Taiwan and into the Taiwan Strait. “It shows they mean business,” says Andrew Yang, a former Taiwanese deputy defence minister. + +Chinese pressure on Taiwan could increase further. The five-yearly Communist Party congress is due near the end of this year and Mr Xi may be tempted to burnish his hawkish credentials by holding several sabre-rattling military exercises in the run up. He could deplete Taiwan’s tally of 21 diplomatic partners. There have also been reports that China is considering amending its “anti-secession” law. At the moment it says that China would consider taking “non-peaceful methods to defend the nation’s sovereignty” only if Taiwan formally declared independence or if there is no hope of a peaceful resolution. On February 7th Yomiuri Shimbun, a Japanese newspaper, reported that China is thinking about amending this to say it could invade if Taiwan’s leader refuses to endorse the 1992 consensus—a refusal to which the DPP has so far stuck. During the NPC, a Chinese admiral, Yin Zhuo, said China should use the anti-secession law to make it clear to Taiwan that “independence means war.” + +Relations between China and Taiwan have been through fraught times before, though, without breaking down completely. And there are three reasons for thinking that, in the short term at least, things will not go horribly wrong this time. + + + +Both Mr Xi and Ms Tsai have strong domestic reasons for setting aside their differences for a while. Mr Xi is consumed by the party congress, and though he may want to make himself appear tough with a few bellicose gestures he does not want a distracting crisis. As for Ms Tsai, she knows that her chances of re-election in 2020 depend on her handling of the economy, not on her handling of China. Taiwanese GDP growth and wages are flat. Her opinion-poll ratings are dismal. She is about to launch a politically risky reform of the bankrupt state-run pensions system. The last thing she wants is a fight with a superpower. + +A second reason for guarded optimism is that Ms Tsai has taken the DPP further towards China’s position than ever before. At her inauguration she said that she recognised the “historical fact” of the 1992 negotiations, which is as near as she can get to accepting the consensus without actually doing so. In a speech in October she reassured the communist government that she “will, of course, not revert to the old path of confrontation”. Ms Tsai is a trade lawyer, cautious, predictable and restrained—everything her risk-taking DPP predecessor, Chen Shui-bian, the president from 2000 to 2008, was not. China’s condescension towards her—the Taiwan Affairs Office called her inaugural address “an incomplete examination answer” as if she were a stupid schoolgirl—has been mild compared with the invective levelled against previous DPP leaders, whom they have called “insane”, “evil” and “scum”. That may mean Mr Xi wants to keep open the door for future negotiations. + +Third, the military balance in the Taiwan Strait has not swung far enough for China’s high command to be confident of swift victory. If the country could sweep into Taiwan so fast the world did not have time to react (as when Russia invaded Crimea) other countries might conceivably treat an invasion as a fait accompli. But Taiwan is no Crimea. Only 10% of the population wants unification and less than 2% wants it as soon as possible. The island has a vibrant civil society capable of putting millions of protesters onto the streets against a Taiwanese government, let alone a Chinese occupying force. + +The mainland has around 1,400 land-based missiles aimed at Taiwan, plus an unknown number of air- and sea-launched ones. Despite the presence of anti-missile defences—both American Patriot missiles and Taiwan’s own systems—the island’s air bases and many of its other defences might be quickly destroyed by all that firepower. But an invasion requires troops on the ground—ground which, in this case, lies the other side of 180km of open water. And Taiwan’s surviving forces could make that voyage very unpleasant. Mr Yang says that, for an invasion to succeed, China would need promptly to destroy 85% or more of Taiwan’s own missiles; if half of Taiwan’s missiles survived the first wave of attacks, China’s invasion force would be vulnerable. + +Ex uno, plures + +If the invasion could be slowed down, other countries would have time to react. At that point, any Chinese leader would have to decide whether to stop the invasion or risk a wider conflict. He would surely push on for fear of what might happen at home if he backed down. But he would just as surely prefer to avoid such a choice altogether. And that is where Taiwan’s real deterrence lies: it does not need to be able to turn back an invasion; it only needs to be able to buy enough time to force on China the choice between a coup at home and a regional war abroad. + +Without the assurance of a quick victory, cleaving to the familiar ambiguities of “one China” will make the most sense to China’s leader. But those ambiguities will become ever more difficult to maintain. Mr Trump may yet return to his doubts about American support for the policy; it would hardly be the first time he has changed his mind. And popular attitudes across the strait are hardening. It is not just that islanders increasingly see themselves as Taiwanese; mainlanders, who used to regard the Taiwanese as brothers, have started taking a chillier attitude. They still see the islanders as part of the same culture, but they are now imposing loyalty tests, demanding (for example) a boycott of Taiwanese entertainers who last year did not condemn an international tribunal’s ruling against Chinese claims in the South China Sea. The Communist Youth League, long a training ground for ruling party officials, waged a social-media campaign against one well-known Taiwanese performer in China, Leon Dai, and got him blacklisted. + + + +Chinese officials are encouraging suspicion. The number of Chinese tourists to Taiwan has fallen by more than a third in the past year, largely because bureaucrats have made it harder to travel. Chinese universities have also asked Shih Hsin University, in Taiwan, not to discuss “sensitive political subjects” (such as the one-China principle) with exchange students from the mainland. A senior KMT official fears the days of pro-Taiwan sentiment on the mainland may be over. + +Political attitudes are hardening, too. Taiwan used to have a one-China party, the KMT, and a party that preferred independence, the DPP. But the KMT is in free fall after its defeat in last year’s election. The fastest rising force is the New Power Party, which has its roots in student demonstrations against close ties with China; it is at least as anti-one-China as the DPP. Mr Xi’s crackdown on dissent and civil society is leading the political system ever further from Taiwan’s vibrant democracy. The Beijing government’s interference in Hong Kong’s local politics is taken to show that “one country, two systems”, a formula devised for Hong Kong and once offered to Taiwan, is a fraud. + +In the face of these realities, both sides want the option of continuing to say that the one-China framework holds, and looking for fresh obfuscations to that end—new helpings of fudge to put on top of that served up in the 1992 consensus. In 2011 Wang Yi, now China’s foreign minister, then head of the Taiwan Affairs Office, said privately during a visit to Washington that China might consider replacing the 1992 formula, and there have been some signs that this could still be on the cards. Every two weeks Taiwanese officials meet to sift through new forms of words. A new formula might conceivably provide the basis of future talks. + +The simple and natural solution is to admit there are two Chinas. But the communist government is not ready to do that. Instead, it is forcing the Taiwanese and Americans to deal with the fraying ambiguities of a one-China policy, as all three move slowly towards a new, more dangerous endgame. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21718499-polite-fiction-there-only-one-china-has-kept-peace-east-asiabut-now-it/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +United States + + +Democracy in America: Everything-gate [Fri, 10 Mar 04:34] + +Ryancare: Medicine or poison? [Fri, 10 Mar 04:34] + +Lobbying for refugees: That’s awesome [Fri, 10 Mar 04:34] + +The updated travel ban: Improved, unjust [Fri, 10 Mar 04:34] + +WikiLeaks, again: The spy who came in for the code [Fri, 10 Mar 04:34] + +Chicago: This American carnage [Fri, 10 Mar 04:34] + +Campus free speech: Blue on blue [Fri, 10 Mar 04:34] + +Lexington: Fear and loathing everywhere [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Everything-gate + +Donald Trump’s habit of making accusations without evidence is corrosive + + +Some Republicans in Congress have become a little braver about saying so + + + + + +From the print edition | United States + + +Mar 9th 2017 | WASHINGTON, DC + + + + + +IT WAS almost as if Donald Trump was taunting his Republican colleagues. After tweeting an explosive and wholly unsubstantiated claim against Barack Obama on March 4th—“How low has President Obama gone to tapp [sic] my phones…Bad (or sick) guy!”— the president said it was up to Congress to investigate the matter. “Neither the White House nor the president will comment further,” primly declared his spokesman, Sean Spicer, “until such oversight is conducted.” + +Some sort of follow-up is necessary. Mr Trump is the president, 47% of Americans trust him more than they trust the media (according to a Quinnipiac poll), and his charge against Mr Obama was grave. If it were shown that his administration illegally snooped on Mr Trump, Mr Obama’s legacy would be disgraced. Alternatively, if it secured a warrant to bug Mr Trump’s phones, that would mean it had sufficient cause to believe Mr Trump or his associates were involved with terrorists or foreign spies to convince a judge on the Foreign Intelligence Surveillance Court. On the other hand, if Mr Trump, an inveterate conspiracy theorist, was peddling inflammatory nonsense about his predecessor and America’s intelligence agencies, that would also be serious. And it is probably the case. + + + + + +Mr Obama’s director of national intelligence, James Clapper, said there was no warrant against Mr Trump. James Comey, the head of the FBI, upset that the president appears to have accused his agency of a serious crime, reportedly asked the Justice Department to repudiate his claim outright. Mr Trump’s aides have meanwhile put up such a valiant but hapless defence of it that, if the issue were not so serious, it would be comical. Asked why Mr Trump wanted Congress to investigate a crime the president claimed to have proof of, Mr Spicer lost the power of spin. It was because of the “separation of powers”, he fluffed. It would be good, he explained, to get Congress “as a separate body to look into something, and add credibility to the look, adds an element that wouldn’t necessarily be there.” + +Mr Trump, who launched his political career by claiming Mr Obama was born in Africa and last year suggested the father of his main Republican rival had a role in the murder of John. F. Kennedy, appears to have based his claims on a rant by a talk-radio host, Mark Levin, which was reported on Breitbart News, a Trumpish website. To support the president’s contention, White House aides referred to Breitbart and to separate reports, by the BBC and others, that the FBI had obtained a warrant to investigate individuals linked to the Trump campaign over their Russia ties. None of the reports mentioned wiretapping. + +Mr Trump’s motive for turning these unproven scraps into perhaps the most serious charge by a serving president against his predecessor appears straightforward, given his history. He is enraged by suspicions that his campaign was, to some degree, in cahoots with Russians who—in the view of America’s intelligence agencies—interfered with the election. The latest piece of circumstantial evidence came on March 2nd, when it was revealed that Mr Trump’s attorney-general, Jeff Sessions, had twice met with the Russian ambassador to Washington, Sergey Kislyak, during the campaign, despite denying during his Senate confirmation hearing having had “communications with the Russians”. Mr Sessions recused himself from any investigation touching on the campaign—which would include an ongoing FBI probe into Russia’s role in the election—even though Mr Trump had said he should not make such a concession. By smearing Mr Obama, the president may have hoped not only to deflect attention from talk of Russia, but also to arm his supporters with a made-up counter-scandal to set against it. + +Warp-speed + +Many Republicans are alarmed by Mr Trump’s latest haymaker against Mr Obama. His half-dozen somewhat vocal critics, who are mostly senators and include moderates such as Susan Collins of Maine, old warhorses such as John McCain of Arizona, and, in Ben Sasse of Nebraska, a principled conservative, have politely cast doubt on Mr Trump’s allegations. “We are in the midst of a civilisation-warping crisis of public trust, and the president’s allegations today demand the thorough and dispassionate attention of serious patriots,” wrote Mr Sasse. There are also signs that shyer critics of Mr Trump may be, if not breaking ranks, at least emitting distress signals. “I’ve got to believe—I think he might have something there, but if not, we’re going to find out,” said Representative Jason Chaffetz of Utah when asked about the president’s allegations. + +Together with Mr Sessions’s embarrassment, the episode has at least increased the pressure on the House and Senate intelligence committees to pursue seriously the investigations each has launched into Russia’s meddling. Both are in the process of launching their inquiries. The House committee agreed on the scope of its investigation last week; most members of the Senate committee, including the Republican chairman, Richard Burr of North Carolina, and the ranking Democrat, Mark Warner of Virginia, were due in Langley to receive a preliminary CIA briefing this week. Yet there are doubts about how zealously the committee’s Republican members will quest for the truth. + +It was recently revealed that Mr Burr and his counterpart in the House committee, Devin Nunes, a Republican from California, were both asked by the administration to try to convince journalists that there was no incriminating link between the Trump campaign and Russia—a surreptitious arrangement that made a mockery of Congress’s responsibility to hold the executive to account. The House committee seems unlikely to pursue its task with great diligence. Mr Nunes, has suggested that what needs investigating is the leaks to journalists that have embarrassed the White House, a nod to an idea newly popular among the president’s most ardent supporters that a “deep state” is thwarting a democratically elected leader, a conspiratorial notion borrowed from semi-democracies that casts Mr Trump as a victim. + +There is greater hope for the Senate committee, which has a history of bipartisanship and includes several independent-minded Republicans, including Ms Collins. “We are going to have unprecedented access to all the intelligence,” said Mr Warner. “I am confident we’re going to find out the truth.” + +The trouble is, the committee may be bipartisan, but America is not—and therein lies Mr Trump’s abiding opportunity. Though his approval ratings are poor generally, among Republicans they are dandy. Any Republican who defies the president therefore risks serious damage to his career—so most will not. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21718569-some-republicans-congress-have-become-little-braver-about-saying-so-donald-trumps/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Medicine or poison? + +Amending Obamacare could break parts of the health-insurance market + + +It is far from clear that the Republican plan will work + + + + + +From the print edition | United States + + +Mar 11th 2017 | WASHINGTON, DC + + + + + +FOR such an important bill, it has an unusually simple name. On March 6th Republicans in the House unveiled—and President Donald Trump endorsed—the American Health Care Act (AHCA). The bill would overhaul Obamacare, which Republicans have decried since its passage in 2010. Its nickname is “Ryancare” after Paul Ryan, the Speaker of the House. + +Obamacare had two main ingredients: an expansion of Medicaid (health insurance for the poor); and a reform of the so-called “individual” health-insurance market, which serves those who are not covered through an employer. Republicans say both bits are failing. Their proposed fixes may not fare much better. + + + + + +First, Medicaid. In compliant states, Obamacare expanded eligibility for the programme to all those earning less than 138% of the federal poverty line, or $16,400 for an individual in 2017. So far, this has boosted Medicaid’s rolls by 12m, which accounts for nearly three-fifths of the improvement in health-insurance coverage since 2010. (Then, 16% of Americans went uninsured; today, only 8.8% do.) + +The new bill would, in stages, remove federal funding for Medicaid’s expansion after 2020. At the same time, it would change how the federal government funds health care for those left in the programme. Currently, Washington helps pick up the tab for the medical expenses of those enrolled, chipping in a little more than half the total bill. The AHCA would instead give states a fixed payment for each person, and link it to medical inflation. States could choose how to spend the money. + +Republicans say these changes are necessary because Medicaid is inefficient and provides nearly worthless coverage. States have little incentive to control costs. Amazingly, several studies have found that Medicaid does not improve the health of those enrolled in it. Republicans also reckon that letting states decide how to run the programme will unleash innovation and experimentation, and hence better coverage. + +Critics scoff at that. In most states that did not go along with the Obamacare expansion, Medicaid is a bare-bones programme. In only one, Wisconsin, are childless adults eligible, according to the Kaiser Family Foundation, a think-tank. In Texas and Alabama parents cease to qualify at just 18% of the poverty line (an annual income of about $3,600 for a family of three). The left worries that states like these have no interest in experimenting with the best ways to help the poor. + +In any case, states that did expand Medicaid would gradually lose the extra cash Obamacare gives them. This will alienate some Republican governors. House Republicans probably hoped the slow pace of change would ease worries. But on March 7th John Kasich, governor of Ohio, called the plan “counter-productive”. + +Medicaid reform, then, is stoking internal opposition among moderates in the party. Proposed changes to the individual market are causing ire on the right. + +Obamacare established exchanges, government-run marketplaces where people can buy insurance. Those earning less than 400% of the poverty line, or $47,550 in 2017 for an individual, get tax credits to help pay the premiums. These are more generous at lower incomes. They are also pegged to the cost of insurance, which varies widely by age and place. To stop insurers designing plans so as to attract only healthy people, a thicket of regulations guarantees minimum standards. To ensure healthy people buy the pricier plans that result, the “individual mandate” fines all those who do not buy insurance. + +Republicans have spent years promising to tear down most of this edifice. But without 60 votes in the Senate, they can get at only bits of it. The AHCA would change the tax credits so that they vary with age, but not income or geography (although they would taper out at high incomes—see chart). Previously, Republicans had argued that insurance would remain affordable because deregulation would bring down costs. But under the AHCA, most of Obamacare’s rules would remain. + + + +In many places, the funding cuts would be dramatic. In Alaska the average tax credit would fall by over 70%, according to Kaiser. The bill’s right-wing critics, however, want to abolish the subsidies entirely. Campaign groups like the Club for Growth have joined the House “freedom caucus” and Senator Rand Paul in slamming a “new entitlement programme”. + +The bill does scrap one crucial regulation: the individual mandate. In its stead, anyone who goes without insurance would have to pay 30% more in premiums, for one year, if they change their mind. Some worry this is not a sharp enough stick to keep healthy people in the market. Mario Molina, chief executive of one insurer, told the Wall Street Journal that premiums could rise by 30% next year as a result. Because the tax credits do not rise along with premiums, big price increases would force people out of the market, increasing the risk of a so-called “death spiral”. + +The AHCA’s total likely effect on coverage, and on the budget, is uncertain. Analysts have not yet scored the proposal (other than its $594bn in tax cuts over a decade). Republicans think their short, simple-sounding bill is clearing up a mess. But in insurance markets, even the smallest changes can have huge effects. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21718458-it-far-clear-republican-plan-will-work-amending-obamacare-could-break/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Lobbying for refugees + +The travel ban, version two + + +Unusual encounters in Atlanta + + + + + +From the print edition | United States + + +Mar 9th 2017 | ATLANTA + + + + + +BEFORE he arrived in America in 2013, aged 22, Nur Abdi spent five “very hard” years in India, sustained by the generosity of Somali compatriots. He applied for asylum through the United Nations’ refugee agency, and after a series of “very tough” interviews, he was resettled in Clarkston, just outside Atlanta. Now he works for a Lutheran relief agency, helping other newcomers. Some in his family, who like him fled violence in Mogadishu, are stuck in Ethiopia. Donald Trump’s ban on new Somali visitors threatens his hopes of a reunion. + +On March 7th—the day after the president signed the new version of his travel restrictions—Mr Abdi attended a celebration of “new Americans” at Georgia’s state capitol. Troupes from the Andes and Laos danced in resplendent costumes. A technicolour choir of refugee girls sang “This Land is Your Land”. For a finale, a clutch of refugees took the oath of allegiance and became American citizens. The anthem was performed by a former Syrian refugee, and another, Dr Heval Kelli, now a cardiology researcher at Emory University, gave an exhortatory address. “Watering down a bad idea doesn’t make it a good idea,” Dr Kelli says of the revised edict. He would like to sponsor his widowed aunt and cousins to join him from war-ravaged Kobani, but the ban now means he cannot. + + + + + +The serious purpose of the event, organised by the Coalition of Refugee Service Agencies (CRSA), was to lobby legislators. Georgia, like other states, enacts its own immigration-related measures to complement the federal ones. On the roster for the current session are a Trumpesque register of foreign criminals, and punishments for so-called “sanctuary” campuses. Next year’s session may be more demagogic, says Stephanie Ali of New American Pathways, part of the CRSA, because state elections follow it. Volunteers were dispatched to talk to the politicians; Mr Abdi teamed up with Craig Storlie, a Lutheran pastor. + +Some of their targets were absent, busy or pretending to be. But Scott Hilton, a freshman Republican, was willing to chat. Mr Storlie told him that 91% of refugees are self-sufficient within six months of arriving in Georgia. (Their economic contribution involves not just ethnic cafés and shops but labour in unappetising industries such as poultry processing.) Then Mr Abdi chimed in. He said he was Somali but had “found a home here, I found a job, I found a dream.” “That’s awesome,” said Mr Hilton. + +Now, Mr Abdi went on, it “feels like refugees are no longer welcome.” After all, “they are human beings and deserve a second chance.” Pressed on Mr Trump’s initiative, Mr Hilton cited the need to protect America from “bad guys”. Mr Abdi countered that refugees are themselves “running from the bad guys”. If the embargo endures, he “will not be able to bring [his relatives] here.” “It’s tough,” Mr Hilton conceded. Still, he was “generally supportive” of a temporary ban. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21718563-unusual-encounters-atlanta-travel-ban-version-two/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Once more, with footnotes + +Donald Trump’s revised travel ban may face trouble in court + + +Judges are unlikely to overlook its origins in a campaign promise to ban Muslims from America + + + + + +From the print edition | United States + + +Mar 9th 2017 | NEW YORK + + + + + +NEARLY a month after promising the Ninth Circuit Court of Appeals that he would “SEE YOU IN COURT”, Donald Trump has staged a lawyerly retreat from his executive order of January 27th. On March 6th the president revealed a fresh attempt at “protecting the nation from foreign terrorist entry”. The new order retains the original one’s core, limiting access to America’s shores for people from several Muslim-majority countries, and putting the refugee programme on hold—but has been softened in four ways. + +First, the order exempts lawful permanent residents—those with a “green card”—from any travel restrictions. Second, whereas the first travel ban was implemented at the stroke of the presidential pen—causing chaos and confusion for people on flights to America when Mr Trump signed the order—the revision will not take effect until March 16th. Third, the revised order applies only to future visa applications, not to people already holding valid visas, or who manage to secure one before the deadline. Fourth, the list of seven banned countries has been whittled down to six: Iran, Libya, Somalia, Sudan, Syria and Yemen. Iraq was removed after its prime minister asked the White House why Iraqis fighting against IS in Mosul should be considered potential terrorists. + + + + + +One of the legal troubles with the first travel ban seems to evaporate with this edited edition: the complaint that the order violates the due-process clause of the Fifth Amendment. This apparent constitutional infirmity played a central role in the Ninth Circuit’s refusal to lift an injunction against the ban. By keeping lawful permanent residents out of America just because they happened to be travelling in a targeted country, the Ninth Circuit reasoned, the administration may have denied a class of people “notice and a hearing”. By giving ten days’ notice and lifting restrictions on green-card holders, the administration has probably immunised the new executive order from a due-process challenge. + +Another potential constitutional roadblock is likely to plague Mr Trump’s new release, however: the claim of religious discrimination. The First Amendment prohibits the government from favouring one religion over another, and the equal-protection clause of the 14th Amendment bars it from discriminating on religious grounds. In its February ruling, the Ninth Circuit noted that “numerous statements by the president about his intent to implement a ‘Muslim ban’,” and evidence that the first order “was intended to be that ban” constituted a plausible case against the travel rules. “[E]vidence of purpose beyond the face of the challenged law” is fair game, the Ninth Circuit noted. + +Mr Trump’s lawyers, in a clear sign that they recognise this embarrassing pedigree as a stumbling block, struck a key line from the January 27th order: a sentence permitting refugee applications from minorities (that is, Christians) who have been subject to “religious-based persecution”. The new executive order contains language insisting that this conspicuous deletion should not be misinterpreted. The original line “did not provide a basis for discriminating for or against members of any particular religion”, the order reads, and “was not motivated by animus toward any religion.” This has the flavour of protesting too much. The thumbprint of Mr Trump’s campaign promise to ban Muslims from America (a call that remains on his website) will continue to mar this order and is certain to give rise to new lawsuits. + +The original travel ban had a related problem: no lucid explanation of how the restrictions enhance national security. The new order does include a few sentences for each country (drawn from a State Department report of June 2016), purporting to “demonstrate why their nationals continue to present heightened risks to the security of the United States.” But the edit has the flavour of a student essay which, in its first version, contained no support for its thesis and has been patched up with a visit to a couple of websites. The logic behind categorical bans from particular countries remains as dubious as before. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21718565-judges-are-unlikely-overlook-its-origins-campaign-promise-ban-muslims/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The spy who came in for the code + +WikiLeaks embarrasses the CIA + + +The agency, which exists to find out secrets, fails to keep them + + + + + +From the print edition | United States + + +Mar 11th 2017 | WASHINGTON, DC + + + + + +A GRIM year for American spy agencies took a turn for the worse with the leaking, on March 7th, of what appeared to be a lengthy, detailed catalogue of the CIA’s secret hacking tools for turning computers, internet routers, telephones and even web-enabled televisions into remote spying devices, and for bypassing encrypted messaging services by penetrating individual Apple and Android smartphones. The WikiLeaks anti-secrecy organisation posted nearly 9,000 documents and files dated 2013-16 in what it said was a first taste of a “vault” of CIA secrets. WikiLeaks claimed that the archive was provided by a former American government hacker or contractor eager to “initiate a public debate” about the security and democratic control of cyber-weapons, viruses and malware. The group said it had redacted computer code that could be used to launch attacks, pending such a debate. + +That self-justification by WikiLeaks will only further strain relations between the intelligence community, the administration of President Donald Trump and technology firms in Silicon Valley. In the final days of the Obama era, American spy chiefs assessed “with high confidence” that a trove of embarrassing e-mails stolen from officials at the Democratic Party and Hillary Clinton’s presidential campaign were “relayed” to WikiLeaks by Russia, in a bid to sway the election of 2016. A month before that election Mr Trump had gleefully hailed the leaking of Clinton campaign e-mails, declaring: “I love WikiLeaks!” Days before taking office in January, Mr Trump accused American spy agencies of leaking against him, though he finally conceded that Russia might have been behind the hacking of Democratic e-mails. + + + + + +The new CIA leaks are a fresh blow to an intelligence community still suffering the after-effects of the release of National Security Agency documents by a former contractor, Edward Snowden, in 2013. The leaks once again highlight the trade-offs underlying espionage in the digital age. Governments want good computer security because they fear cyber-crime and hacking. Yet they also value security flaws because computers and smartphones are excellent spying tools, even in an age of strong, private-sector encryption. If spies can read files directly off a target’s screen, they need not care if it is later transmitted by WhatsApp or similar services. + +In another trade-off, governments rely on close co-operation with technology companies. That is why in 2010 the Obama administration undertook to alert firms to security flaws when they found them. WikiLeaks appears to show government agents still buying and hoarding so-called “zero-day” vulnerabilities from hackers, meaning coding flaws not known to a technology product’s creators. The files show agents discussing how to break into such operating systems as Apple’s iOS and Google’s Android, to extract a target’s location, audio and text messages, and secretly take over control of a smartphone’s microphone and camera. Apple said it had already patched many of the newly revealed flaws and would “rapidly” address others. + +One of the more lurid files describes “Weeping Angel”, a program that can turn Samsung internet-connected televisions into listening devices, sending conversations back to the CIA. Other documents describe bids to penetrate vehicle control systems in cars. A WikiLeaks commentary suggested this would allow “nearly undetectable assassinations”. + +If politicians are incensed that spy agencies seem unable to keep secrets, spooks can point to still another trade-off: the tension between employing hackers with the skills and cunning to design cyber-weapons, and the trickiness of enforcing discipline among workers who may not share the CIA’s culture. The newly leaked files detail codenames that refer to the Harry Potter books, whisky brands and a drug used to treat hyperactivity. + +The FBI will now hunt for moles and leakers. The CIA must patch up its systems and meanwhile brace itself for fresh disclosures. That would be bad enough, but trust is low between those agencies and close supporters of Mr Trump, who charge intelligence services with acting as a “deep state” disloyal to the president. Foreign foes have much to cheer. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21718562-agency-which-exists-find-out-secrets-fails-keep-them-wikileaks-embarrasses/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Gun violence + +How to fight guns and gangs in Chicago + + +Sending in the Feds would be counterproductive + + + + + +From the print edition | United States + + +Mar 9th 2017 | CHICAGO + + + + + +“I AM sick of President Trump denigrating Chicago,” said Bill de Blasio, the mayor of New York, during a trip to the Windy City on March 3rd, lamenting Mr Trump’s “particularly painful stereotyping” of the place. In January Mr Trump tweeted that he would “send in the Feds!” if the city did not fix the horrible “carnage” of gun violence. In his recent speech to a joint session of Congress, Mr Trump said it was not acceptable that more than 4,000 people were shot in Chicago last year. + +With 764 murders in 2016, more people were killed in Chicago, America’s third-largest city, than in its biggest city, New York (334), and its second-biggest, Los Angeles (294), combined (see chart). Three children were killed in four days in February. Sending in the Feds, whatever it means, may sound appealing, but it would be unlikely to help. Though Mr Trump said that “very top police” in Chicago had told him that the city’s crime problem could be stopped in a week with tougher tactics, there is no single explanation for the rise in violent crime. Nor is there any quick fix. Many of the reasons frequently discussed, such as splintered gangs, an influx of guns from states surrounding Illinois, the demolition of public housing, concentrated poverty or even the weather, are things that have been around for years. + + + + + +One thing is certain, says John Pfaff at Fordham University in New York: sending in the National Guard, as Mr Trump seemed to suggest, would send the wrong signal and would probably worsen the already sour relations between the police and black Chicagoans. Deploying troops—when local police are unable to contain unrest and the mayor of a city appeals to the governor, who oversees the state National Guard—should be a last resort. + +Some things have changed, though. Gangs are using high-powered rifles that can tear through cars and even bulletproof vests. And the Chicago Police Department (CPD) made over 80% fewer street stops in January 2016 than it did in November 2015. The officers’ retreat was related to a public outcry after the release of video footage in November 2015 showing the execution-style killing of a black teenager by a white policeman. The furore resulted in the firing of the then-police chief, Garry McCarthy, as well as an investigation of CPD practices by the Department of Justice. A few months after that steep reduction in street stops, gun violence raced up. + +This coincided with a sharp decline in the clearance rate for gun crimes in 2016. Last year 26% of murders resulted in an arrest, down from 36% in 2015, and arrests for shootings fell to 5% from 7%. Many assume the fall is related to black Chicagoans’ lack of trust in police officers, which in turn stems the flow of information needed to solve a crime. It meant that more than three-quarters of last year’s murderers walked free. That may have encouraged revenge killings, as the likelihood of getting caught was so low. + +A long-running stand-off between the governor of Illinois, Bruce Rauner, and the state legislature, which has resulted in the disruption or end of many social programmes for Chicago’s poorest residents, is also a factor. Since March 2015 the funding of CeaseFire, which employs former felons and others with insight into local crime as community messengers to prevent violence, has been cut to almost nothing. The one district on the South Side where CeaseFire was not slashed was the only one that saw a drop in shootings. Spokesmen for the programme, known in other cities as “Cure Violence”, claim that if it were fully funded, murders in Chicago could be reduced to fewer than 350 a year; possibly even fewer than 200. + +If that sounds self-serving, consider New York’s experience. After bolstering its police force, the Big Apple had success with community policing, which involves officers getting to know not just the criminals on their beat but also the business-owners, teachers and local families, in order to build trust. In Chicago, the vast majority of shootings and murders happen in four or five poor black or Latino neighbourhoods where unemployment is high, schools dreadful and urban blight omnipresent. In January almost half of the city’s 51 murders occurred in Englewood on the South Side and Harrison and Austin on the West Side. This lopsided number contains a hopeful sign: a concentrated problem is easier to tackle than one that is diffuse. Nor is Chicago fated to suffer: six days passed last week without a murder, the first time that has happened for four years. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21718527-sending-feds-would-be-counterproductive-how-fight-guns-and-gangs-chicago/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Blue on blue + +Middlebury College and the generational clash within liberalism + + +Free speech, once a central value of liberalism, has been claimed by conservatives + + + + + +From the print edition | United States + + +Mar 9th 2017 + + + + + +“PART of the job of an intellectual community,” said Laurie Patton, president of Middlebury College in Vermont, “is to argue.” Introducing Charles Murray, a controversial author, on March 2nd, she emphasised the audience’s right to non-disruptive protest. Excitable students who thought Mr Murray unacceptably prejudiced—one of his books touches on the relationship of race to intelligence, though he also written on the white working class—evidently considered that offer insufficient. + +Their protests quickly escalated from jovial catcalling to prohibitive heckling and then—after Mr Murray was interviewed on camera by Allison Stanger, a Middlebury professor, in a separate room—into violence. Ms Stanger’s hair was yanked; the car in which the pair departed was mobbed. “I feared for my life,” she subsequently wrote. + + + + + +In this latest tussle between campus advocates of free expression and those seeking to banish views they think lie beyond that concept’s ambit, there is some cause for optimism. Ms Patton turned up to the talk, organised by a student club, and afterwards apologised. The college ensured Mr Murray could be heard; it is investigating the scuffle. Still, like the trouble that erupted recently over an offensive speaker in Berkeley, California, the violence at Middlebury—real violence, not the imaginary sort some hotheads think Mr Murray’s beliefs inflict—is an ominous turn. + +Ominous for the left, in particular. As with previous incidents, this was as much a clash between different generations of liberals as between left and right. Ms Stanger made clear that she sympathised with Mr Murray’s critics: “We have got to do better by those who feel and are marginalised,” she wrote, adding a sideswipe at Donald Trump. But, as elsewhere, the dust-up pitted her old sense of openness against students’ moral certitude and tightly circumscribed idea of proper discourse. + +Meanwhile, Mr Murray was left to worry about academic freedom and to note that many of his assailants resembled figures from “a film of brownshirt rallies”. Middlebury’s agitators might ask themselves how a man whose work they decry as racist acquired the right to compare them to fascists. Students everywhere should wonder how free speech, a central liberal value, is instead becoming the banner of conservatives. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21718525-free-speech-once-central-value-liberalism-has-been-claimed/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Lexington + +The NRA-ification of American politics + + +Culture wars, once fought over morality, have become clashes over safety + + + + + +From the print edition | United States + + +Mar 9th 2017 + + + + + +IN THE annals of political intransigence, few beat Senator Jesse Helms of North Carolina. On abortion or gay rights Helms was unyielding, insisting that God’s laws pre-empted debate. As AIDS ravaged gay America in the 1980s and 1990s, Helms fought to block funds for research and treatment, blaming the disease on “perverts” whose conduct the Bible deemed an “abomination”. + +Today, not quite a decade after Helms’s death, it is harder to stifle debate by citing the Scriptures or other eternal verities. Gay Americans may marry and join the army; an openly gay person sits in Helms’s beloved Senate. Yet culture wars continue. + + + + + +In 2016 North Carolina’s Republican-dominated state legislature passed the “Public Facilities Privacy and Security Act”, one of several “bathroom bills” debated nationwide. Notably, the act overturned a local ordinance passed by racially diverse, fast-growing Charlotte, the state’s largest city. Charlotte had banned discrimination on the basis of sexual orientation or gender identity in a range of public places. Opponents paid special heed to the seemingly arcane question of transgender lavatory-access, and whether women and young girls might be ambushed in bathrooms or changing rooms by males claiming to be transgender women. Franklin Graham, a prominent evangelical pastor, called transgender bathroom-rights a boon to “paedophiles and predators”. Strikingly often, culture wars sound like that today: less an appeal to abstract principles than a claim that opponents are—out of naivety or wickedness—exposing innocents to harm. + +The Texas state legislature meets only every other year, reflecting Texan disdain for government. Despite the scant time available for lawmaking, arguably the state’s most powerful Republican, Lieutenant-Governor Dan Patrick, calls it a priority to oblige transgender Texans to use lavatories and changing rooms in public schools and buildings that correspond to the “biological sex” on their birth certificates. Anything else is a “free pass to sexual predators”, he says. A University of Texas/Texas Tribune poll shows that only 39% of Texans consider it important to pass Mr Patrick’s bathroom bill. Many business bosses are hostile to it, lest Texas seem unwelcoming. North Carolina’s bathroom bill prompted such firms as PayPal to scrap planned investments and led the NBA to move the 2017 All-Star basketball game from Charlotte. Still, as a way of rallying socially conservative voters, bathroom bills are good politics. The lieutenant-governor of North Carolina, Dan Forest, joined Mr Patrick at the Texas state capitol on March 6th to insist that damage to his state’s economy has been exaggerated. Mr Patrick, a former talk-radio host, compared the bathroom bill to the siege of the Alamo, urging colleagues to be as “courageous” as the doomed defenders of that Texan fort. + +Presenting culture wars as a fight about safety can be exceedingly effective. In 2015 voters in Houston, though a diverse bunch who have elected a lesbian mayor three times, overwhelmingly rejected an equal-rights ordinance banning discrimination on more than a dozen grounds, among them sexual orientation and gender identity. The ordinance was beaten by a one-theme campaign headlined “No Men in Women’s Bathrooms”, backed by TV ads showing a young girl cornered in a lavatory. In vain, ordinance defenders noted that city and state laws already ban lewd or disturbing behaviour in public lavatories, and would continue to do so. Nor were voters swayed by arguments that, to obey conservative bathroom bills, bearded transgender men in lumberjack shirts must use women’s loos if they were born female. + +To be sure, as transgender Americans become more visible, new puzzles emerge. Mack Beggs, a 17-year-old Texan, began testosterone injections in 2015 and now identifies as a boy. In February, to the rage of rivals’ parents (one father filed a lawsuit), he won a girls’ state wrestling championship after his bid to compete with boys was rejected. Transgender rights in prisons or women’s shelters raise hard public policy questions. + +But bathroom use has been going on quietly and harmlessly for years. And a cynical focus on harm makes it hard for all sides to be pragmatic. In 2016 the Obama administration instructed schools to let pupils use facilities corresponding to their gender identity, as a question of civil rights. That was once the position of Donald Trump, who as a candidate for president correctly observed that transgender bathroom-users cause “so little trouble”. On February 22nd the Trump administration withdrew that federal guidance—a move reflecting the influence of Jeff Sessions, the Alabama-born conservative who heads the Justice Department. + +Transgender advocates have hardened their line, too. An early debate took place in Vermont, where in 2009 young gay activists asked schools to provide one gender-neutral (if need be, single-occupancy) loo for students, to avoid bullying in communal bathrooms. The American Civil Liberties Union, representing a transgender Virginia teenager in a case that the Supreme Court sent back to lower courts this week, argued that making him use a private loo left him feeling a “walking freak show” at school. + +The NRA model of politics + +All manner of culture wars are becoming an argument between two camps, each demanding: “Why are you trying to hurt my children?” Go back 30 years and the National Rifle Association (NRA) thundered about gun ownership as a constitutional right and a bulwark against government tyranny. Modern NRA ads present America as a dystopia of violent crime and terrorism, urging citizens to arm themselves to keep loved ones safe. + +Fear resonates. Between 1999 and 2013 the proportion of Americans who said they owned a gun for protection almost doubled, overtaking hunting as the top reason cited. Donald Trump, a man who is not in thrall to abstract principles, justified his plans for a border wall by accusing Mexico of sending “rapists”. Clashes of morality can cause nasty intransigence. Clashes over safety leave no room for compromise. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21718526-culture-wars-once-fought-over-morality-have-become-clashes-over-safety-nra-ification/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +The Americas + + +Brazil: An accidental, consequential president [Fri, 10 Mar 04:34] + +Ethnicity in the Caribbean: Favouring curry [Fri, 10 Mar 04:34] + +Bello: How to steal a country [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +An interview with The Economist + +Brazil’s accidental, consequential president + + +Michel Temer would rather be unpopular than populist + + + + + +From the print edition | The Americas + + +Mar 9th 2017 | BRASÍLIA + + + + + +MOST presidents in Michel Temer’s situation would be called “embattled”. Brazil has yet to recover from its worst recession on record. Some of the president’s closest associates face accusations in the country’s biggest-ever scandal. His approval rating is below 30%; many Brazilians regard his presidency as illegitimate. + +Yet, in an interview with The Economist, on a Saturday in a nearly deserted presidential palace, Mr Temer seemed anything but embattled. Collar unbuttoned, sleeves rolled to his elbows, the energetic 76-year-old was untroubled by the scorn that Brazilians heap upon him. Asked about the slogan “Temer out!”, spray-painted on a flyover that he passes on his commute between his official residence and his office, Mr Temer called it “proof of democracy’s vibrancy”. He could arrange to have it painted over, but would not dream of it. + + + + + +He was not expecting to become president. Until last May, he was the largely powerless vice-president under Dilma Rousseff, of the left-wing Workers’ Party (PT). He took over when she was impeached for manipulating government accounts. To her allies, Mr Temer is a golpista (coup-monger). To many other Brazilians, he is a typical member of the corrupt political class responsible for a vast bribery scheme centred on Petrobras, the state oil firm. Ms Rousseff was driven out of office by anger about that scandal, though she was not directly implicated, rather than by the technical offence with which she was charged. Some think Mr Temer’s presidency will also come to a premature end. + +His jauntiness comes from his confidence that history will vindicate him. A member of the centrist Party of the Brazilian Democracy Movement, he is piloting reforms through congress to clear away obstacles that have blocked Brazil’s progress for decades. Although Mr Temer will have been president for less than three years by the time he is due to leave office in early 2019, he says he will hand on to his successor a country that is “back on track”. + +As if to persuade his audience that what seems fantastic is real, he emphasises his points with the gestures of a stage magician. His government has passed a constitutional amendment to freeze federal spending in real terms for 20 years. It will soon reform the pension system. Those measures will help contain the increase in Brazil’s massive public debt, one of the main threats to its long-term prosperity. + +They face fierce opposition, especially from the PT and from trade unions, which contend that the government is balancing its accounts on the backs of the poor. Mr Temer retorts that without such action the federal government will suffer the fate of states like Rio de Janeiro and Minas Gerais, “which are virtually bankrupt because of public pensions”. He points to himself as a “clear example of premature retirement”: he has been drawing a generous pension since he stopped working as a prosecutor in São Paulo more than two decades ago. Far from hurting the poor, the reforms will protect “the future of all our social programmes”, he insists. He would “rather be unpopular now than a populist”. + +So far, congress has largely gone along with his plans. The government has “an extremely solid parliamentary base”, Mr Temer says. Emboldened by that support, he intends to begin an assault on the Mussolini-era labour laws. He is pushing a bill that would relax restrictions on employing temporary workers and let agreements between unions and employers override some rules in the labour code. On March 7th he presented a plan to simplify the tax law, whose complexity discourages enterprise, and to put out to tender 45bn reais ($14bn) in infrastructure projects. + +A better class of politician + +A constitutional lawyer by training, Mr Temer dreams of reforming Brazil’s dysfunctional political system. Despite his success in congress, he, like other presidents, has found it hard to manage a legislature composed of 28 parties, many of them machines for extracting patronage. “Brazil has no parties, only acronyms,” he complains. The number could be cut by introducing a British-style first-past-the-post electoral system or voting by party lists rather than for individual candidates, he muses. Congress is considering the introduction of a 3% nationwide vote threshold for parties to enter the legislature and a ban on coalitions that bring in small parties. Both would be significant reforms. + +Many Brazilians scoff at the idea that Mr Temer could be part of the solution. The prosecutor-general, Rodrigo Janot, will soon present a list of politicians he wants investigated as part of the Lava Jato (Car Wash) investigations into the Petrobras scandal. They are expected to include people close to Mr Temer, as well as figures from rival parties, including the PT. Separately, the electoral tribunal is investigating whether the re-election campaign of Mr Temer and Ms Rousseff in 2014 benefited from dodgy donations. An executive jailed in the Lava Jato investigation testified that he and Mr Temer had discussed campaign donations. + +Voters suspect that the president would like nothing more than to thwart investigations that could threaten him. Perhaps, but he gives a good impression of being their biggest fan. Lava Jato, he says, is the “best example” of a process that is strengthening Brazil’s national institutions. As for the case against his re-election campaign, he has “full peace of mind”; all the donations were registered legally. If so, there is little to stop Mr Temer from serving out his term. This accidental president could end up being a pretty consequential one. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21718570-michel-temer-would-rather-be-unpopular-populist-brazils-accidental-consequential-president/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Of carnivals and controversy + +How the 19th-century flow of indentured workers shapes the Caribbean + + +Sources of tension include child marriage and terrorism. But mostly, people get on fine + + + + + +From the print edition | The Americas + + +Mar 11th 2017 | PORT OF SPAIN + + + + + +WHEN Anthony Carmona, the president of Trinidad and Tobago, showed up in a Carnival parade last month wearing a head cloth, white shorts and beads like those worn by Hindu pandits, he was not expecting trouble. Nothing seems more Trinidadian than a mixed-race president joining a festival that has African and European roots. But some Hindus were outraged. “[O]ur dress code has never been associated with this foolish and self-degrading season,” huffed a priest. Trinidad’s cultures blend easily most of the time; occasionally, they strike sparks. + +The Hindu-bead controversy is not the only one ruffling feelings among Indo-Trinidadians. Another is caused by a proposal in parliament to raise the minimum age for marriage to 18 for all citizens. Currently, Muslim girls can marry at 12, girls of other faiths at 14. Muslim and Hindu traditionalists want to keep it that way. + + + + + +Another argument has been provoked by the disproportionate number of Trinidadians who have joined Islamic State (IS). About 130 of the country’s 1.3m people are thought to have fought for the “caliphate” or accompanied people who have. That is a bigger share of the population than in any country outside the Middle East. The government wants a new law to crack down on home-grown jihadists, which some Muslim groups denounce as discriminatory. The attorney-general, Faris Al-Rawi, is guiding both measures through the legislature. + +Both debates are causing unease in the communities that trace their origins to the influx of indentured workers in the 19th century. This month marks the 100th anniversary of the end of that flow. By bringing in large numbers of Indians, mostly Hindus and Muslims, the migration did much to shape the character of the Caribbean today (see chart). The arguments about marriage and terrorism are part of its legacy. + + + +The migration from India began in 1838 as a way of replacing slavery, banned by Britain’s parliament five years earlier. Recruiters based in Calcutta trawled impoverished villages for workers willing to sign up for at least five years of labour—and usually ten—on plantations growing sugar, coconut and other crops in Trinidad, British Guiana (now Guyana), the Dutch colony of Suriname and elsewhere. + +Workers were housed in fetid “coolie” barracks, many of which had served as slave quarters, and were paid a pittance of 25 cents a day, from which the cost of rations was deducted. Diseases like hookworm, caused by an intestinal parasite, were common. + +But the labourers’ lot was better than that of enslaved Africans. Colonial governments in India and the Caribbean tried to prevent the worst abuses. Workers received some medical care and were not subject to the harsh punishments meted out to slaves, notes Radica Mahase, a historian. In some periods the colonial government offered workers inducements to stay at the end of a contract: five acres of land or five pounds in cash. + +Opposition from Indian nationalists and shortages of shipping during the first world war prompted the British government of India to shut down the traffic on March 12th 1917. By then, more than half a million people had come to the Caribbean. Today, just over a third of Trinidad and Tobago’s people say they are of Indian origin, slightly more than the number of Afro-Trinidadians; the share is higher in Guyana, lower in Suriname. Hindus outnumber Muslims. Many, especially those whose forebears were educated at Presbyterian schools, are Christians. + +Caribbean people of Indian origin are as successful and well-integrated as any social group. Many of Trinidad and Tobago’s state schools have religious affiliations but are ethnically mixed; the government pays most of their costs regardless of denomination. Eid al-Fitr, which celebrates the end of Ramadan, and Diwali are public holidays. Many Hindus celebrate the religious festival of Shivaratri, then join in Carnival parades. “An individual can have multiple identities,” says Ms Mahase. + +Politics still has ethnic contours. In Trinidad and Tobago, most voters of African origin support the People’s National Movement, which is now in power. Indo-Trinidadians tend to back the opposition United National Congress. Guyana’s president, David Granger, is from a predominantly Afro-Guyanese party. + +But these distinctions are blurring. A growing number of Caribbean people identify with neither group. Nearly 40% of teenagers in Trinidad and a quarter in Guyana call themselves mixed-race or “other”, or do not state their ethnicity in census surveys. When both countries hold elections in 2020, these young people are likely to vote less tribally than their parents do. + +Trinidad’s jihadist problem is in part caused by the choice of new identities rather than by the embrace of established ones. Many of IS’s recruits are Afro-Trinidadian converts to Islam. Mr Al-Rawi, who is leading the fight to stop them, claims descent from the Prophet Muhammad through his Iraqi father, but has a more relaxed view of religion. His mother is Presbyterian, his wife is a Catholic of Syrian origin and one of his grandfathers was a Hindu. + +The anti-terrorist and child-marriage laws he is promoting, though seemingly unrelated, are rebukes to rigid forms of identity. The anti-terrorist law would make it a criminal offence within Trinidad to join or finance a terrorist organisation or commit a terrorist act overseas. People travelling to designated areas, such as Raqqa in Syria, would have to inform security agencies before they go and when they come back. Imtiaz Mohammed of the Islamic Missionaries Guild denounces the proposed law as “draconian”. + +The proposal to end child marriage affects few families; just 3,500 adolescents married between 1996 and 2016, about 2% of all marriages. But it has been just as contentious as the anti-terrorism law. The winning calypso at this year’s Carnival, performed by Hollis “Chalkdust” Liverpool, a former teacher, was called “Learn from Arithmetic”. Its refrain, “75 can’t go into 14”, mocked Hindu marriage customs and implicitly backed the legislation to raise the marriage age. Satnarayan Maharaj, an 85-year-old Hindu leader, called it an insult. + +The government has enough votes in parliament to pass the law in its current form, but opponents may challenge it in the courts. Traditionalists may thus hold on to an anachronism imported from India, at least for a while. The bead-wearing, calypso-dancing president is probably a better guide to what the future holds. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21718564-sources-tension-include-child-marriage-and-terrorism-mostly-people-get-fine-how/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bello + +Will Venezuela’s dictatorship survive? + + +How to steal a country + + + + + +From the print edition | The Americas + + +Mar 9th 2017 + + + + + +HUGO CHÁVEZ owed much to Raúl Baduel. When in 2002 Chávez was forced to step down as Venezuela’s president following a massacre of protesters in Caracas, it was General Baduel, an old political ally, who restored him to power after an opposition junta had illegally suspended the constitution. In gratitude, Chávez made General Baduel defence minister. But in retirement the general dared to oppose Chávez’s drive to abolish term limits. He was accused of stealing $10m and jailed. Two days before completing his sentence, this month General Baduel was charged with treason. + +His treatment shows how cornered the government of Nicolás Maduro, Chávez’s chosen successor, feels. Mr Maduro has an approval rating of just 18% according to Datanálisis, a pollster. The economy is in freefall because of mismanagement and lower oil prices. To service its foreign debt, the government slashed imports to a third of their level in 2012. + + + + + +Venezuelans are suffering privation previously unheard of in what was once South America’s richest country. According to a study by three universities, 82% of households now live in poverty. That compares with 48% in 1998, when Chávez came to power. The rise in poverty follows Venezuela’s biggest-ever oil windfall. Of the $1trn the regime received in oil revenue, perhaps a quarter was stolen by insiders, according to the International Crisis Group, a think-tank. Infant mortality is rising, and Venezuelans are needlessly dying because of the shortage of medicines. Those who can, leave; perhaps 2m Venezuelans now live abroad. + +To remain in power, Mr Maduro’s state-socialist regime is extinguishing democracy. The opposition won a big majority in a legislative election in 2015. Since then, the government has used its hand-picked supreme court to nullify parliament. The similarly tame electoral authority blocked the opposition’s drive for a recall referendum. It failed to call an election for mayors and regional governors, due last year. The authority is now requiring the re-registration of opposition parties, a process whose rules are so impractical that it appears designed to abolish many of them. + +Talks between the opposition and the government, brokered by the Vatican and the South American Union, collapsed in January because Mr Maduro showed little interest in freeing political prisoners or restoring constitutional rule. Instead he is becoming more repressive. His new hardline vice-president, Tareck El Aissami, heads a “national anti-coup command”. This has kept General Baduel in prison and jailed several other army officers along with members of Popular Will, an opposition party whose leader, Leopoldo López, has been a prisoner since 2014. It is one of the regime’s fantasies that it faces constant coup plots. Another is the quasi-religious official cult of Chávez, who died of cancer four years ago this week. + +What can be done to halt Venezuela’s implosion, organise a humanitarian rescue and achieve a return to democracy? Radicals in the opposition trusted in a popular uprising. But repression has worked: people seem too scared and preoccupied with survival to sustain mass protests. A negotiated solution remains the most plausible option. But it will take pressure from both within and without. + +The United States has tightened the screws a little. Donald Trump met Lilian Tintori, Mr López’s wife, at the White House last month, and called for his release. The United States Treasury has blacklisted Mr El Aissami, accusing him of drug-trafficking (which he denies). But sanctions are of doubtful effect and are likely to make officials even less willing to yield power. Some Republicans would like the United States to stop buying Venezuelan oil; that would cause disruption but provide a pretext for repression. + +The best option is for the United States to join other Latin American countries in pressing the regime to accept talks. Last year Luis Almagro, the secretary-general of the Organisation of American States, invoked the group’s democracy clause to call for Venezuela’s suspension. He failed to get sufficient backing. Now he may try again. Political change in South America, combined with Venezuela’s move to open dictatorship, has left Mr Maduro more isolated than in the past. + +Diplomatic pressure alone will not be enough to shift him. But it will help. Needed, too, is a more effective opposition: it is high time that its squabbling groupuscules united in a single party with one leader. The alternatives are stark: the consolidation of a Latin American dictatorship, or the possibility of large-scale bloodshed. The region should do its utmost to avoid both. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21718572-how-steal-country-will-venezuelas-dictatorship-survive/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Asia + + +Australia’s economy: On a chiko roll [Fri, 10 Mar 04:34] + +Elections in Western Australia: Western values [Fri, 10 Mar 04:34] + +Free speech in Singapore: Grumble and be damned [Fri, 10 Mar 04:34] + +North Korea and Malaysia: A despot takes hostages [Fri, 10 Mar 04:34] + +Pakistan: Pak on track? [Fri, 10 Mar 04:34] + +Banyan: A tale of two statues [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +On a chiko roll + +The end of a mining boom leaves Australia’s economy surprisingly intact + + +As investment in mines dries up, property takes up the slack + + + + + +From the print edition | Asia + + +Mar 9th 2017 | CHARTERS TOWERS + + + + + +A GOLD rush in the late 19th century so enriched Charters Towers, an outback town in the state of Queensland, that it opened its own stock exchange. Trading ceased long ago. But the grand building still stands, its barrel-vaulted portico supported by eight slim pillars. Over a century later, Queensland is reeling from the demise of another mining boom. “There was a perception it would go on forever,” says Liz Schmidt, mayor of Charters Towers. But unlike so many other booms, this one has not ended in a national bust. Australia’s multi-pillared economy is still standing. + +Given the violence of the commodity cycle, Australia’s resilience is remarkable. At its height, mining investment accounted for 9% of GDP (see chart). As the economy scrambled to meet China’s demand for iron ore and coal, Australia’s terms of trade spiked. The price of its exports, relative to its imports, reached the highest level since the gold rushes of the 1850s, according to Philip Lowe, governor of the Reserve Bank of Australia, the central bank. + + + + + +Like those 19th-century scrambles, the China “rush” brought sudden prosperity to far-flung places. Townsville, a coastal city in north Queensland, hosted thousands of fly-in-fly-out workers (or “fifos”), who served the Bowen Basin’s coal mines and Mt Isa’s copper and zinc mines. Their six-figure salaries boosted the local economy and inflated the housing market, which attracted speculative investors from faraway Sydney, Melbourne and Brisbane. “There was so much money around,” says Peter Wheeler, a Townsville estate agent. + + + +Similar booms elsewhere have ended in horrible busts. The turn in the commodity cycle helped condemn Brazil and Russia to brutal recessions. In China a sharp downturn in mining and metals prompted fears of a hard landing that still linger. Many argue that economic rebalancing and steady economic growth are incompatible goals. + +That worry also gnawed at Australia. As commodity prices started falling, mining companies stopped investing in big projects. Fewer fifos landed in places like Townsville, depressing local spending and employment. Townsville’s house prices fell and its unemployment rate rose above 11%, almost double the national figure. + +South of Townsville, around Gladstone, about 30,000 workers once had jobs building the state’s liquefied natural gas (LNG) industry; last year, the industry employed just 5,000. Similar stories can be found on the other side of the country. In Western Australia, where iron ore is a mainstay, the sinking economy appears to be pulling down the conservative government. It is likely to lose a state election on March 11th (see article). + +These local difficulties could have added up to a national danger. When Australia’s economy registered a negative growth rate in the third quarter of 2016, some feared the worst: Australia might at last fall into recession (commonly defined as two consecutive quarters of negative growth), a fate it had avoided for 25 years. + +But the wobble quickly passed. In the fourth quarter the economy regained momentum, growing by 2.4% compared with a year earlier. Australia’s GDP is now almost as big as Russia’s (if the two are compared at market exchange rates) and the Reserve Bank forecasts growth of about 3% this year and next. “We show that openness can deliver both prosperity and resilience,” argues Mr Lowe. + +Given how many economies succumbed to the global financial crisis or the commodity supercycle, Australia’s resilience may seem miraculous, another example of the luck for which the country is famous. But from another perspective, its performance should not be surprising at all. “It’s a textbook example of how a more open, flexible economy can handle these things,” argues Saul Eslake, an economist. + +As the mining boom petered out, the Reserve Bank cut its benchmark “cash” rate from 4.75% in 2011 to 1.5%. The Australian dollar fell steeply (it is now worth $0.76, compared with a peak of $1.10 six years ago). The cheaper currency and lower interest rates have allowed the older and more populous states of New South Wales and Victoria to keep the economy bustling. Property developers are building more houses, farmers are exporting more food, and foreigners (both students and tourists) are paying more visits: Australia welcomed 1.2m Chinese last year, a record. + +Just as Australia’s extractive industries benefited from China’s appetites, its property market has benefited from China’s anxieties: Australian homes are a popular investment for wealthy Chinese eager to move money somewhere safer. The fifos have also changed direction. Whereas people from Sydney and Melbourne once flew to Townsville seeking work, locals are now setting off to Australia’s two biggest cities in search of jobs, says Jenny Hill, Townsville’s mayor. + +As well as rebalancing away from resources, Australia has also benefited from a rebalancing within the industry. Mining investment has given way to mining exports. Shipments of coal and iron ore helped Australia post a record trade surplus in the fourth quarter. The price of both has rebounded as China’s growth has stabilised. But investment is likely to remain subdued. Resource firms will use any improvement in revenues to “repair balance-sheets rather than invest in new capacity,” says Michael Roche, a consultant. + +Townsville and Charters Towers have pinned their hopes on another rebalancing, from China to India. Adani, a firm based in the Indian state of Gujarat, wants to build what could be Australia’s biggest coal mine in the Galilee Basin, south-west of Townsville. It has spent about A$3.2bn ($2.4bn) buying leases and fighting court petitions against the project from environmental and indigenous groups. + +The state and federal governments support the scheme because of the jobs it would bring. Adani has applied for a federal loan to help build a 380km railway line across the outback to a port at Abbot Point, near the Great Barrier Reef, from where coal would be shipped to India. Matt Canavan, the federal resources minister, is “open to suggestions of a subsidy”. He predicts a “devastating impact on Queensland’s confidence” if the project does not go ahead. + +In Charters Towers the old stock-exchange building is itself an elegant monument to economic reversals and renewal. It was restored in the 1970s and added to Queensland’s “heritage register”, partly because it “evokes the rise and fall of fortunes typically connected with goldfield towns”. The building is now home to an art gallery, a museum and the office of a local politician. At one point it even hosted a beauty parlour offering “microdermabrasion” to smooth out pockmarked skin. Thanks in part to this capacity for reinvention, Australia’s economic record remains remarkably unblemished. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21718521-investment-mines-dries-up-property-takes-up-slack-end-mining-boom-leaves/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Western values + +A state election in Australia reveals the rise of nativists + + +A weak economy breeds support for an anti-immigrant party + + + + + +From the print edition | Asia + + +Mar 9th 2017 | PERTH + + + + + +BY THE standards of Australian politicians, Colin Barnett has lasted several lifetimes. Four prime ministers and crowds of state premiers have come and gone since he first took the reins in Western Australia in 2008. But his winning streak is expected to end on March 11th, when his right-of-centre Liberal party is likely to be trounced in a state election. Polling suggests that 57% of the vote will go to the opposition Labor party. + +In a normal year the rest of Australia would barely notice. Western Australia is the source of much natural gas and iron ore, but is sparsely populated and three time zones removed from Sydney and Canberra. The election is drawing national attention, however, thanks to the resurgence of One Nation, a nativist party that briefly flourished in Queensland in the 1990s. It won four seats in the Senate at last year’s federal election. Since then its leader, Pauline Hanson, a former fish-and-chip-shop owner, has seen her popularity soar. In Western Australia she is fielding almost 50 candidates (there are 95 seats in the two chambers of the state parliament) and has struck a deal with the Liberals that is likely to benefit her more than them. + + + + + +Conditions suit her anti-immigration agenda well. The state’s economy, which is heavily dependent on natural resources, has struggled since a massive mining boom ended three years ago. Economic growth fell to 1% in 2015, a fifth of the rate of the preceding decade, and unemployment has doubled, to 6.5%. Falling property prices are hurting miners who bought McMansions with big mortgages when the gravy train was chugging. Mr Barnett’s coalition government, meanwhile, splurged on salaries and showy infrastructure, including a big stadium and a much-derided waterfront development in Perth, Elizabeth Quay, or Betty’s Jetty, as locals have it. The state faces a budget deficit this fiscal year of A$3.4bn ($2.6bn) and debt which is projected to top $41bn by 2020. + +Cashing in on the growing disillusionment, One Nation has polled as high as 13%, although recent counts put its share at 8-9% of the vote. It is unlikely to win any seats in the lower house. However, in the upper chamber, where members are elected by proportional representation, the party should win at least three seats, says William Bowe, an analyst in Perth. It will probably hold the balance of power in the upper house, forcing the state government to haggle with it. + +The next test will come in Ms Hanson’s home, Queensland, another boom-and-bust state which may go to the polls this year. Perhaps a quarter of voters there will opt for One Nation. Yet the party has shown itself capable of imploding: internal squabbling reduced it to irrelevance after it won 23% of the vote in state elections in Queensland in 1998. Mr Barnett, to justify the Liberals’ alliance with One Nation, claims that the party has changed. Certainly, where once Ms Hanson feared that Australia was “in danger of being swamped by Asians”, she now frets that it is “in danger of being swamped by Muslims”. Bad organisation and infighting, however, appear not to have abated. In December one of One Nation’s four federal senators quit the party; he was subsequently replaced by the courts with a colleague. Ms Hanson may find that her biggest challenge comes after election day. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21718523-weak-economy-breeds-support-anti-immigrant-party-state-election-australia-reveals/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Speak out and be damned + +The government of Singapore says it welcomes criticism, but its critics still suffer + + +Three protesters get stiff penalties for disturbing public order + + + + + +From the print edition | Asia + + +Mar 9th 2017 | SINGAPORE + + + + + +LIKE most constitutions, Singapore’s promises freedom of speech. Unlike most, it allows the government to limit that freedom with “such restrictions as it considers necessary or expedient” to maintain national security, friendly relations with other countries or public order and morality, as well as to protect “the privileges of Parliament” and to prevent “contempt of court” or “incitement to any offence”. Officials have not hesitated to quell their critics. Opponents of the People’s Action Party (PAP), which has ruled Singapore without interruption since independence, have often found themselves on the losing end of defamation suits regarding accusations that American or European politicians would have shrugged or laughed off. + +Singapore’s government has long insisted that such measures are essential to safeguard the country’s hard-won racial harmony and public order. Recently, however, the country’s rulers have begun expounding the virtues of thick skins. In late February Lee Hsien Loong, the prime minister, said leaders need to be challenged: “If all you have are people who say, ‘Three bags full, sir’, then soon you start to believe them, and that is disastrous.” On the very same day Kishore Mahbubani, a former diplomat who runs a public-policy institute at the National University of Singapore, said that Singapore needed “more naysayers [who] attack and challenge every sacred cow”. Tommy Koh, another diplomat, urged his countrymen to prize “challengers who are subversive and who have alternate points of view”. + + + + + +These comments were presumably not intended as a criticism of the Supreme Court. Just two days before it had upheld the conviction and fining of three activists who took part in a protest about the management of the Central Provident Fund, a compulsory savings scheme administered by the government. The three had been marching in Hong Lim Park, home to Speakers’ Corner (pictured), a spot set up for Singaporeans to exercise their freedom of speech without any restriction whatsoever, beyond the obligation to apply for permission to speak and to comply with the 13 pages of terms and conditions upon which such permissions are predicated, as well as all the relevant laws and constitutional clauses. + +The three protesters were convicted of creating a public nuisance, for disrupting a public event being held in the park. One of them, Han Hui Hui, who ran for parliament as an independent in 2015, was also convicted of organising a public protest without approval (the authorities said she had applied to give a speech rather than a demonstration). The courts fined Ms Han S$3,100 ($2,199). Anyone convicted and fined more than S$2,000 is barred from becoming a member of parliament for five years—another restriction the authorities must still deem necessary or expedient for the maintenance of something or other. + +The upholding of Ms Han’s conviction comes six months after Singapore’s parliament enacted a law stiffening the penalties for contempt of court, to as much as three years’ imprisonment or a fine of up to S$100,000. The law defines contempt broadly: any comment that, in the court’s judgment, “poses a risk that public confidence in the administration of justice would be undermined”. If the prime minister wants to encourage criticism of the government, making more of it legal would be a good first step. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21718571-three-protesters-get-stiff-penalties-disturbing-public-order-government-singapore-says-it/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Diplomatic snag + +North Korea takes 11 Malaysians hostage + + +The consequences of the murder of King Jong Nam continue to multiply + + + + + +From the print edition | Asia + + +Mar 9th 2017 | SINGAPORE + + + + + +GOVERNMENTS often expel foreigners who enrage them. North Korea offers a worse fate: not being allowed to leave. On March 7th authorities in Pyongyang, the capital, said that 11 Malaysian citizens living in North Korea would be prevented from flying home until the two countries had resolved their differences over the murder of Kim Jong Nam—the half-brother of Kim Jong Un, the North’s dictator. Kim Jong Nam was assassinated last month at Kuala Lumpur’s main airport using VX, a nerve agent renounced by nearly all governments except North Korea’s. The North later released two of the hostages, but continued to hold the other nine. + +Najib Razak, Malaysia’s prime minister, condemned North Korea’s decision to detain its citizens as “abhorrent”. He announced that North Koreans in Malaysia—of whom there are perhaps as many as 1,000, many doing dirty jobs such as mining—would in turn be prevented from leaving until the regime backed down. Malaysian authorities are watching who enters and leaves North Korea’s embassy in Kuala Lumpur. The chief of police believes that at least two North Koreans wanted for questioning about Kim Jong Nam’s murder are hiding inside; he has said that his men will stand guard for “five years” if it takes that long for them to come out. + + + + + +The stand-off caps a week of diplomatic drama. On March 6th Malaysia kicked out the North Korean ambassador, Kang Chol, who denies that North Korean spies were responsible for the murder or that the victim was Kim Jong Nam; he accused Malaysia of cooking up the story with America and South Korea to blacken the North’s reputation. The North Korean government formally expelled Malaysia’s ambassador the same day, though by then his bosses had already called him back to Kuala Lumpur. + +In a further display of recalcitrance, North Korea tested four missiles simultaneously on March 6th, in defiance of UN sanctions. In response to the North’s frequent tests, America and South Korea are accelerating the deployment in South Korea of THAAD, an American anti-missile system. That, in turn, has riled China, which fears THAAD could render its missiles less potent, too. + +Meanwhile, on March 8th, a previously unknown outfit called Cheollima Civil Defence posted a video it said was of Kim Han Sol, the son of Kim Jong Nam. It claimed to have responded to a request to “extract and protect” him from his home in Macau, along with his mother and sister. The group said it had received help from China, America and the Netherlands. Whether Kim Han Sol will become a vocal critic of the regime that murdered his father, or choose to vanish from sight, remains unclear. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21718566-consequences-murder-king-jong-nam-continue-multiply-north-korea-takes-11-malaysians/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Pak on track? + +Pakistan confronts something unfamiliar: optimism + + +A cricket match and an obscure administrative reform are welcome signs of stability + + + + + +From the print edition | Asia + + +Mar 9th 2017 | ISLAMABAD + + + + + +THE first thing to come back was the prime minister. Having twice held Pakistan’s highest office before the army toppled him in 1999, Nawaz Sharif returned from exile to win it back in 2013. This was a personal triumph but also a historic moment, marking the only time since Pakistan’s founding that one elected government has completed its term and passed power to another. It also turned out to be the first of a heartening series of signs that Pakistan itself seems to be returning, slowly and haltingly, to a more stable and prosperous state. + +For the eight years since terrorists attacked a visiting Sri Lankan team, Pakistan’s cricket-mad citizens have forfeited the joy of watching top international matches on Pakistani soil. But on March 5th Lahore, the capital of the province of Punjab and site of the attack in 2009, hosted the final match of the Pakistan Super League, a lucrative franchise with many foreign players. For safety reasons the PSL’s matches had until now, embarrassingly, been staged in the United Arab Emirates. In February Pakistan also held its first international skiing competition since 2007, when Taliban militants overran its biggest ski resort, at Malam Jabba in the Swat Valley, and smashed the “heathen” lifts. + + + + + +More broadly indicative is that Pakistan’s stockmarket has risen faster than any other in Asia over the past 12 months, by a heady 50%. Perhaps this is because annual GDP growth, having languished below 4% from 2008 until 2013, is now back to the long-term average of around 5%. Poverty has fallen and the urban middle class is growing. Nestlé, a giant maker of processed foods, says its sales in Pakistan have doubled in the past five years, to over $1bn. + +Across much of the country, too, lights are coming on again. When Mr Sharif resumed office four years ago Pakistanis rarely enjoyed more than 12 hours of electricity a day. “It was so acute that private backup generators could not recharge the batteries that start them up,” says Ahsan Iqbal, the minister of planning. Big investments in power infrastructure mean that power cuts are now down to a more manageable 6-8 hours a day. The government hopes to eliminate them entirely in time for national elections next year. + +That deadline has prompted another important step: over the next two months Pakistan is due to hold its first national census since 1998. Some 90,000 civilians and 200,000 soldiers are being mobilised to count the country’s 200m-odd inhabitants. The results will be used, among other useful things, to reapportion parliamentary districts. Until a recent revision, Pakistan’s constitution stipulated that a census should be taken every ten years. The fact that there have been only two in the past 45 years says much about the tragic drift under both military and civilian rulers. + +Of anywhere in Pakistan, the part that may have got the shortest shrift is the Federally Administered Tribal Areas (FATA). British imperialists regarded this rugged region along the Afghan border as so untameable that its tribal chieftains were left to impose their own laws, a dispensation that has continued to this day. One result is backwardness: in one district the proportion of girls enrolled in school in 2011 was a shocking 1%. Across FATA as a whole, female literacy in 2014 was estimated at just 13%. This contrasts with national literacy rates of 43% for women and 70% for men. + + + +Another result has been insecurity. The endless war in Afghanistan flooded FATA with guns, refugees and radicalism, all of which Pakistan’s armed services unwisely sought to harness in pursuit of their own murky agenda, both in Afghanistan and at home. Having slipped completely out of control in the late 2000s, FATA has been pacified in recent years only by a mix of American drone strikes and Pakistani offensives on the ground. As many as a third of the region’s 4.5m people are believed to have fled. A government report in 2016 estimated that military operations over the previous decade had destroyed 67,000 houses and left 27,000 dead. + +Given all this, the government’s recent announcement that it plans to normalise the administration of FATA is welcome. It will be absorbed into the neighbouring province of Khyber Pakhtunkhwa, giving it elected leaders rather than tribal elders, regular courts that apply national laws and ordinary police instead of tribal militias. Locals seem pleased: a recent survey found hefty majorities backing all these changes. + +Despite all the good news, however, Pakistan’s progress remains unsure. Terrorist attacks, bombings, murders, kidnappings and brutal state retaliation continue at a brisk pace. Pakistan’s powerful military remains dominant and its secret services opaque. Take the case of the vanishing bloggers. Over three days in January, five obscure social-media commentators who had dared to criticise the army vanished from different parts of Punjab. The army denied any involvement, but pro-military social media sites were quick to label the abductees blasphemers, apostates and traitors—in a country where blasphemy remains punishable by death. “Their crimes are so heinous that no one should say…that they suffered injustice,” tweeted one notoriously craven television host. Four of the men were eventually released, but have refused to talk about their ordeals. + +Some Pakistanis question how much has really changed. Commenting on the elaborate security for the PSL final, Anjum Altaf, a columnist for the Dawn newspaper, harrumphed: “I fail to understand how spending hundreds of thousands of dollars to bribe a handful of foreigners to play a game in a nuclear bunker can be convincing proof that the country is back to normal…This is self-delusion carried to absurdity.” For Pakistan, however, even to be debating the subject is encouraging. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21718567-cricket-match-and-obscure-administrative-reform-are-welcome-signs-stability-pakistan/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Banyan + +South Korea and Japan may bicker, but Busan and Fukuoka get on fine + + +Shared history, lots of trade and an odd dispute about stolen statues + + + + + +From the print edition | Asia + + +Mar 9th 2017 | TSUSHIMA + + + + + +FOR centuries the wako, dastardly Japanese pirates, skulked in the countless coves of Tsushima island, roughly halfway between the Japanese archipelago and the Korean peninsula, frequently raiding the coast of Korea. In 1592 General Toyotomi Hideyoshi and his 200,000 men launched the seven-year Imjin invasion from the island, landing in Busan, on Korea’s southern coast. Centuries earlier sueki ceramics, a new form of pottery, had been transmitted from Korea to Japan via Tsushima. + +Today it is mainly leisure-seekers who take the hour-long ferry ride from Busan to Tsushima: fishermen, hikers and day-tripping teens. Once a year, however, a delegation of South Koreans dressed in the colourful garb of 17th-century envoys makes the crossing. They are re-enacting the Joseon tongsinsa missions, or “sharing of good faith from Joseon” (an ancient name for Korea), which began in the aftermath of the Imjin war to reaffirm friendly ties between the Korean king and the Japanese shogun. + + + + + +The envoys travelled along a 2,000km route, from Hanyang, as Seoul was then known, to Edo, present-day Tokyo, via Busan and Tsushima. The emissaries carried notes of friendship, and a dazzling assortment of Korean artwork. Over two centuries, a dozen such expeditions sent poets, painters, acrobats and calligraphers from Korea to Japan; by the time the delegations embarked from Busan, they had about 400 artists in tow. Another 1,800 joined them on the Japanese side. Villagers lined the streets to greet them, waiting up all night to receive a poem or painting. + +The two governments are a long way from such cordial exchanges today. In the open sea north-east of Tsushima, they squabble over a group of rocks (Dokdo to South Koreans and Takeshima to the Japanese), and bicker with each other about history. Japan annexed Korea in 1910 and exploited it ruthlessly until 1945; many South Koreans feel Japan has done too little to atone for its colonial atrocities. + +Among the most painful incidents for South Koreans is the corralling of tens of thousands of women into Japanese military brothels. South Korean civic groups erected a bronze statue of a “comfort woman” outside the Japanese embassy in Seoul in 2011, to serve as a daily rebuke to the diplomats inside. In December a similar statue was installed outside the Japanese consulate in Busan. In a huff, Japan’s government, which thought it had put the matter to rest by agreeing to compensate the surviving comfort women in 2015, recalled its ambassador to Seoul as well as its consul-general in Busan. Neither has yet returned to his post. + +The spat also threatened to upset the centuries-long exchange between Busan and its Japanese sister city, Fukuoka, which lies roughly 200km across the Tsushima strait. Both cities are closer to each other than to their respective capitals. In the 1960s the people of Busan found it easier to receive Japanese TV signals than those broadcast from Seoul. Karaoke machines, now a staple in both nations, first came to South Korea via Busan, in the 1980s. + +Last year a record 1.2m South Koreans travelled by ferry to Kyushu, the island of which Fukuoka is the main city, for its shopping, food and onsen (hot springs). Flights between Busan and Fukuoka have doubled since 2010, to eight round-trips a day. Akihiko Fukushima of the government of Fukuoka prefecture says that Busan is geta-baki de iku: close enough to visit in casual wooden slippers, as if popping round to see the neighbour. + +Exchanges have remained remarkably resilient, despite the visit in 2012 of Lee Myung-bak, the president of South Korea at the time, to Dokdo, which sent diplomatic relations into a tailspin. That year the Fukuoka Asia Collection, an annual fashion show, invited designers from Busan, and still does (Busan returns the favour at an equivalent event). Foundations on both sides have worked on a joint submission of historical documents chronicling the Joseon tongsinsa for UNESCO. Journalists at Busan Daily and Nishinippon Shimbun in Fukuoka participate in an exchange programme—remarkable in countries where the media routinely peddle a nationalist line. + +Idol threats + +In 2013 it was a local stand-off that threatened to end for good the raucous jamboree on Tsushima that honours the missions. The previous year South Korean thieves had stolen a small 14th-century statue, thought to have been made in Korea, from the tiny temple of Kannonji on the island. The South Korean police recovered it soon afterwards. But a local court blocked the statue’s return to Tsushima, on the grounds that it had probably been pillaged centuries ago by the wako from a South Korean temple that was suddenly demanding its return. Incensed, the islanders told the Korean contingent to the festival not to bother coming. But the Japanese went ahead with the commemorations by themselves; one participant was Akie Abe, Japan’s First Lady, who claims to keep a special fridge just for kimchi, the pickled cabbage that is Korea’s national dish. And in 2014, when the visitors from Busan called for the statue’s return, Tsushima allowed the festival to go ahead again, despite protests from Japanese nationalists. + +Last year the Bokchon museum in Busan celebrated two decades of exchanging artefacts with museums in Fukuoka, free of charge. A curator says such swaps would be impossible without personal friendships and trust. Sekko Tanaka, the retired chief monk of Kannonji, says he feels “betrayed” by the court. Still, he welcomes South Korean tourists to the temple’s guesthouse. + +Japanese diplomats say they watch such exchanges as a more accurate measure of popular sentiment towards South Korea than strident press clippings and noisy protests organised by nationalist groups. The islanders of Tsushima, unlike other Japanese, use chingu, a word borrowed from Korean, to mean a close friend. South Korean visitors are charmed to hear that, on the clearest of days, the shoreline of Busan can be spotted; only a few spoilsports insist the sightings are, in fact, just a mirage. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21718504-shared-history-lots-trade-and-odd-dispute-about-stolen-statues-south-korea-and-japan-may/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +China + + +The national legislature: Caretaker of the chrysalis [Fri, 10 Mar 04:34] + +Politics: Any colour, so long as it’s red [Fri, 10 Mar 04:34] + +Dodging censorship: Xi, the traitor [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Caretaker of the chrysalis + +Bold reformist talk at China’s parliament + + +Should it be taken seriously? + + + + + +From the print edition | China + + +Mar 9th 2017 | SHANGHAI + + + + + +LI KEQIANG is a master of metaphors for painful economic reform. In 2013, his first year as prime minister, he told the National People’s Congress (NPC), China’s rubber-stamp parliament, that reform required the courage of a “warrior cutting his own wrist”. At the NPC’s annual gathering in 2015, he described it as “taking a knife to one’s own flesh”. On March 5th, at the opening in Beijing of this year’s 11-day meeting of the legislature, he was less gory, calling it “the struggle from chrysalis to butterfly”. Mr Li (pictured, right) deserves full marks for his range of imagery, but reforms on his watch have been less impressive. This year’s parliamentary session has highlighted one big reason for Mr Li’s limited accomplishments: his limited power. + +For the past three decades, China’s prime ministers have presided over the country’s economic affairs. But the 3,000 delegates who are meeting in Beijing know that President Xi Jinping (pictured, left) calls the shots on the economy these days. At news conferences, many officials have praised Mr Xi as the “core” of the Communist Party, a title that was granted to him last year in recognition of his primacy (though he still has critics; see article). Mr Li paid tribute to the president’s “sound leadership”. + + + + + +Mr Xi’s status as China’s most powerful leader since Deng Xiaoping has given this year’s NPC meeting a feeling of the unreal. More ceremonial than substantive at the best of times, it now seems even more of a sideshow to what truly matters in Chinese politics. The big event in 2017 will be a quinquennial party congress towards the end of this year, when Mr Xi is expected to solidify his power by giving important jobs to his allies. Whether he will support Mr Li for a second term as prime minister is a subject of much speculation. + + + +The approaching party event is casting a shadow over policymakers. Mr Li clearly sees it as his mission to ensure nothing goes wrong in the run-up. The economic targets he announced suggested his preoccupation with stability, even if that were to mean slightly lower growth. After aiming for, and achieving, 6.5-7% growth last year, Mr Li said China would shoot for “about 6.5%” this year. While that might sound like a tiny tweak, it sends a message that the central government wants restraint. It does not want to encourage local authorities to splurge on wasteful investments (as they are wont to do given the slightest of signals from Beijing). Mr Li is wary of overheating and a further build-up of already massive levels of debt. + +Other targets revealed at the NPC were similarly conservative. After a widening of the budget deficit for three straight years, the finance ministry wants to keep it to 3% of GDP in 2017, the same as last year. The central bank called for slower growth in the money supply. And most strikingly for a government accustomed to spending ever more on infrastructure, the amount of money it plans to spend on building railways and roads in 2017 is the same as last year. It helps that, after a big dose of fiscal and monetary stimulus in 2016, the economy is growing strongly. The stockmarket is also rallying and the currency, long under pressure to devalue, is holding steady. + +But Mr Li was candid about dangers that still lurk after a decade of debt-fuelled growth. He sprinkled his report with references to financial risk. In recent weeks, the government has started to devote more attention to curbing it. A mild increase of short-term interest rates by the central bank has rippled through the bond market, forcing investors to pare back risky bets. In February Guo Shuqing, a blunt-talking official, took over as bank regulator. It was a sign that the government is getting more serious about cleaning up the debt-entangled financial system. + +Behind the rhetoric + +Yet on how to proceed with reform, Mr Li had little new to offer. He said state-owned enterprises should be more competitive, but shied away from suggesting they be privatised. He promised that China would improve the market for rural land, but said nothing about letting farmers own it. He did not even raise the idea of levying a property tax, which officials have previously touted as a possible way of patching up local budgets (such taxes would be bound to anger middle-class Chinese). + +This is the kind of painful change that China needs if its economic transformation is to continue successfully. But it is not the stuff of this year’s parliament. Mr Li’s job is simply to ensure that the chrysalis stays healthy. Mr Xi and the party congress in a few months’ time will have much more say over how to transform the pupa into a butterfly. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21718531-should-it-be-taken-seriously-bold-reformist-talk-chinas-parliament/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Any colour so long as it’s red + +China’s one-party system has a surprising number of parties + + +Has one of them broken ranks? + + + + + +From the print edition | China + + +Mar 9th 2017 | BEIJING + + + + + +HOW many parties does it take to run a one-party state? Although the Communist Party is in sole charge, China also has eight other legally registered ones. It calls this a system of “multiparty co-operation”, which involves “sharing weal or woe”. The role of the non-Communist groups is to add a veneer of democracy. Ordinary people dismiss them as “flower vases”—pure decoration. + +On March 1st Luo Fuhe, a senior leader of one such misleadingly named party, the Chinese Association for Promoting Democracy, challenged that description. He told reporters that his party had a proposal to make. Amid a sweeping crackdown on dissent, it was a remarkable one. Mr Luo said China’s “strict” controls on the internet should be relaxed to avoid hampering the country’s scientific and economic development. Rarely has a prominent member of the establishment taken such aim at China’s “great firewall”, which blocks access to many foreign websites (including this newspaper’s). Even more strikingly, some official newspapers reported his views. The delight of China’s long-suffering netizens was palpable. + + + + + +Like the other “democratic” parties, as the non-Communist ones are officially described, Mr Luo’s was founded before 1949 when the Communists seized power. One of them is called the Revolutionary Committee of the Chinese Kuomintang, a pro-Communist spin-off of the party that ruled China before Mao Zedong took over and which then fled to Taiwan. At first, Mao kept these groups alive as a way to win over people who were not hard-core Communists yet who sympathised with Mao’s goals. But he lost patience with them during the Cultural Revolution of the 1960s and 1970s. Many of their members were jailed. Deng Xiaoping revived the parties in the 1980s to show that China was becoming more tolerant again. + +As Mr Luo is doubtless aware, that tolerance is extremely limited. A Communist Party website says the eight parties are “neither parties out of office nor opposition parties”, and all of them support the Communists. They are funded by the Communist Party and do not contest any elections. New members must be recommended by existing ones and there is no open recruitment. In some cases they also belong to the Communist Party. They often speak with even greater caution than Communists, says a member of the Peasants and Workers Democratic Party, because they know their groups exist only with the Communist Party’s assent. + +It was not until 2007 that people from non-Communist parties were chosen to serve as ministers—one was put in charge of health, another science and technology. Loyal to the Communists though the non-Communists are, they are only trusted with jobs that do not have a direct bearing on the Communists’ grip on power. + +Mr Luo is one of many people from the eight parties who are rewarded for their subservience with memberships of advisory bodies (just as much flower vases as the parties themselves, many Chinese grumble). He is a vice-chairman of the most prestigious of these, the Chinese People’s Political Consultative Conference (CPPCC), which is holding its annual meeting to make polite suggestions to the rubber-stamp parliament (see article). On March 5th he attended a meeting of around 45 fellow party members who are delegates to the CPPCC. They sat around a square table declaring “great satisfaction” with the Communist Party’s achievements—albeit without obvious enthusiasm. Many of them tapped away on their phones; one read a newspaper. + +Mr Luo drank tea and remained silent. He had reason to be subdued. Censors had begun their work online, deleting much of the discussion of his party’s proposal. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21718576-has-one-them-broken-ranks-chinas-one-party-system-has-surprising-number-parties/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Xi, the traitor + +A prank on Chinese television shows dissidents’ wile + + +Read the writing carefully + + + + + +From the print edition | China + + +Mar 11th 2017 | BEIJING + + + + + +ACCORDING to a programme on China Central Television, a state-run broadcaster, the following are the names of traitors: Xi Jinping, Li Keqiang, Hu Jintao and Wen Jiabao. Well, sort of. The broadcaster itself was clearly not claiming the president of that name, or his prime minister, or their immediate predecessors, were enemies of the people. Rather, it aired a historical drama called “The Qin Empire” and someone slipped the names into the latest episode. Their extraordinary, if fleeting, appearance was a glimpse of the dissent that still lurks in China, and that can sometimes outwit its army of censors. + +The Qin was the first unified Chinese state (and gave China its name). Its founder was buried with an army of terracotta warriors. In the episode an earlier Qin leader, who is fighting a rival state, discovers he has been betrayed. An underling is shown reading the traitors’ names, inscribed on a bamboo scroll in an ancient script (see picture). The scene lasted only a second or two but that was long enough for eagle-eyed viewers to read the names. The censors were equally quick, deleting screen shots, blocking online versions of the episode and leaving behind comments on what would happen to the show’s producer (“He is going to be so dead,” wrote one blogger). + + + + + +There is a second, coded layer of dissent involved. The state the Qin is fighting is called the Zhao, and the “Zhao family” is internet code for the Communist elite. The epithet derives from a short story of the early 20th century in which an aristocrat called Zhao humiliates a sort of Chinese Everyman. So Xi Jinping, a spy for the hated Zhao family, is a traitor to the first Chinese state. + +To call the president a traitor, even obliquely, is shocking in China. The harshest recent criticism seems to have been an anonymous letter of mock concern, published online last March, urging Mr Xi to step down for his own safety. The timing of the latest gesture—just before an annual meeting of the legislature—adds to its potency. Loyalty to Mr Xi is a theme of the gathering: at the opening session, the Wall Street Journal counted eight mentions of Mr Xi in the prime minister’s state-of-the-nation speech, the most references to a leader by name in such an oration since Mao’s time. + +Officials are always on high alert to prevent shows of political discord during parliamentary meetings. Yet this time a small act of lèse-majesté slipped through. The more effective the censorship, it seems, the more inventive the dissent. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21718574-read-writing-carefully-prank-chinese-television-shows-dissidents-wile/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Middle East and Africa + + +The war against Islamic State: Caliphate at bay [Fri, 10 Mar 04:34] + +Egypt’s economy: Green shoots [Fri, 10 Mar 04:34] + +A port for Gaza: Preventing the next war [Fri, 10 Mar 04:34] + +Cameroon: Lingua fracas [Fri, 10 Mar 04:34] + +South Africa: Disgrace [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Beating back the caliphate + +The Iraqi army is on the brink of defeating Islamic State + + +But the government must move fast if it is not to squander its victory + + + + + +From the print edition | Middle East and Africa + + +Mar 11th 2017 | MOSUL + + + + + +IN A series of lightning advances over the past few days, Iraq’s army has seized control of most of western Mosul, the last redoubt of Islamic State (IS) in the country. On March 7th, a day that may have marked a turning point, army units took Mosul’s main government complex, as well as the city’s famous antiquities museum and about half of the old city. The airport had fallen a week or so earlier, and all roads in and out of the city in which the leader of IS, Abu Bakr al-Baghdadi, declared his “caliphate” in June 2014 are firmly in government hands. + +In the command centre responsible for the eastern half of the city, which was liberated in December, Brigadier Qais Yaaqoub was jubilant. “They are in full collapse now,” he said. “When an army breaks it happens very quickly. Within a week or two, this will all be over.” He may be speaking prematurely, but probably not by much. The liberation of west Mosul, which started only last month, has proceeded much faster than expected. That said, the last of the fighting could be a lot more difficult. IS clings on in the oldest parts of the city, where streets are narrow, making it hard to manoeuvre vehicles and increasing the risk of ambushes and civilian casualties. However, tens of thousands have been able to make their way to safety. + + + + + +American officers working closely with the Iraqi army estimate that as few as 500 IS fighters now remain in the city, the others having fled or been killed in a devastating campaign of well-targeted air strikes. The evidence is clear from a tour of east Mosul, on the left bank of the Tigris river, which has split the city in two since IS blew up all its five bridges as it fell back. + +Residents point out building after wrecked building that had been used by jihadists, only to be knocked out from above. “This was a shopping centre, but Daesh [IS] took it over,” says Muammar Yunnis, an English teacher. “Then the planes destroyed it.” The liberation, he reckons, “could not have been handled better. Some have died. That happens in a war. But the government and the Americans have been careful.” + +Driving IS out of the city may come to be seen as the straightforward part, however. Judging by what has happened in east Mosul, rebuilding will be a slow process. Three months after their liberation, east Mosulites are getting fed up. They are still without running water, and the only electricity comes from private generators. + +“We have security now, but no services at all,” complains Muhammad Ahmed, a pharmacist. “There is no government here.” The provincial governor lives in Erbil, a couple of hours’ drive away, partly along roads ploughed up by IS that show no sign of being repaired. No international agencies are to be seen in the recaptured city, bar a few clinics and some empty school satchels donated by UNICEF. The central government has failed to provide it with an emergency civilian administration, leaving it either to the army, which is otherwise occupied, or to the local government, which barely functions. + +Mr Ahmed probably speaks for many when he recalls that in the days immediately after IS took control of Mosul, the jihadists were rather popular. The previous elected authorities had been corrupt and incompetent, and unable to deliver the basics. Electricity, he recalls, was available for just three hours a day. Under the caliphate the lights stayed on, at least until coalition air strikes began and then, shortly before losing control of east Mosul, IS blew up the city’s main power station and its water-pumping station. + +At least they kept the lights on + +If squabbling and corruption on the part of the politicians hinder the provision of services, citizens will once again consider supporting alternative groups. “What can we do?” laments the brigadier. “The government does not have the resources to fix all this. It will take 12 years or more. We need a lot of help from outside.” + + + +Many will blame the inaction on insecurity. But this is overblown. Although the chatter of machineguns and the crump of mortar rounds can be heard from across the Tigris, east Mosul already looks and feels reasonably safe. The Shia militias have been kept out of the city to avoid sectarian killings, as have the Kurdish peshmerga fighters. There is no curfew; policemen guard many street corners, and the IS “sleeper cells” that some warn of seem to be soundly asleep, if indeed they exist. The last incident in the city was a month ago, when a terrorist blew himself up in a restaurant, killing three people. + +Children are back at school, to the delight of parents who had kept them at home after the city fell to IS rather than send them off to be indoctrinated by homicidal zealots. But even though restaurants and shops are open, business is slow. Muhammad Attar, who runs a falafel restaurant, says this is because no one has any money. Iraq’s economy is dominated by the state and most people with regular jobs work for the government. Amazingly, it kept paying salaries for about a year after IS conquered Mosul. But even so, most of the city’s workers have not been paid for more than a year. Pensions, somehow, are still getting through, and families are managing on those and on debt. + +With Mosul recaptured, the rout of IS in Iraq will be complete. Undoubtedly, though, some of its surviving fighters will revert to suicide-bomb attacks. And, for a while, the group will live on in Syria. But there too it is surrounded and shrinking back to its “capital”, Raqqa. The caliphate’s short, brutal life is drawing to a close. + +In the longer term, huge problems remain for Mosul. Many of its people undoubtedly collaborated with the occupiers, and scores will be settled. Sunnis will want to be sure that they are given a full share of power in the city and its surrounding province of Nineveh, even though it is a Shia-dominated army that liberated them. The Kurds will want some sort of reward for their part in beating IS back. Much of the city will need to be rebuilt. Getting the power back on and the water running as the roasting Iraqi summer approaches would be a good place to start. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21718456-government-must-move-fast-if-it-not-squander-its-victory-iraqi/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Green shoots + +Egypt’s economy shows signs of life + + +The bitter medicine is starting to work + + + + + +From the print edition | Middle East and Africa + + +Mar 9th 2017 | CAIRO + + + + + +AT TIMES last year it looked as if Abdel-Fattah al-Sisi, Egypt’s authoritarian president, was losing his grip. Faced with a faltering economy, he told Egyptians that they needed to sacrifice—by not eating or sleeping, if necessary. Perhaps they could send him their spare change too, he said. + +Rummaging behind the cushions hardly seemed enough to turn around an economy plagued by political instability, and by terrorism that had scared off tourists and foreign investors. Moreover, while exhorting his countrymen to tighten their belts, Mr Sisi was squandering billions of dollars of aid from Gulf states on wasteful subsidies and on defending Egypt’s overvalued currency. The futility of these policies can be seen in a handful of figures: a gaping fiscal deficit that hit 12% of GDP last year; ballooning public debt (101% of GDP) and high unemployment (over 12%). + + + + + +Yet there are signs that Mr Sisi is starting to put Egypt back on a more sensible economic track. In order to obtain a $12bn loan from the IMF last year, his government has raised the price of subsidised fuel and electricity, brought in new taxes and allowed the Egyptian pound to float. + +The currency float was promptly followed by a sickening lurch in which it lost 50% of its value. It bounced back sharply in February, then retreated again (see chart). Though the medicine was bitter, it seems to have been just what was needed to lure foreign investors back into the Egyptian market. A sale of $4bn-worth of government bonds in January was more than three times oversubscribed, and foreign purchases of Egyptian treasury notes doubled in the same month. This appetite for investing in Egypt partly reflects a broader demand for emerging-market debt. But it is also a clear sign of growing confidence in the Egyptian economy. + + + +That change in mood is also felt by Egyptians working abroad. Remittances, which accounted for as much as 7% of GDP in 2012, slumped by a fifth last year as people held onto foreign currency rather than send it home to be converted into overvalued pounds. Since the currency has floated, remittances are rising once more. + +A weaker currency is also spurring growth, albeit gradual, in trade and tourism. Non-petroleum exports increased by 25% in January compared with the year before. Earnings from exports, along with new loans from the IMF and other sources, are plumping up the country’s foreign-currency reserves. In February they hit their highest level since 2011, promising to ease a shortage of dollars that has hindered Egyptian business. To be sure, businessmen gripe that it is still difficult to get the dollars that they need, and the government is still clearing a backlog of payments to oil firms and other multinationals. + +Yet even as exporters celebrate, firms serving the domestic market are struggling. One measure of the health of the domestic economy comes from a purchasing managers’ index (PMI) compiled by Emirates NBD, a bank. Its figures suggest that private, non-oil economic activity has contracted for 17 consecutive months, even though official figures show that the economy as a whole (including oil and the state) has been growing. One reason is that the government’s efforts to cut subsidies mean Egyptians are spending more of their income on fuel and electricity, and have less left over for other things. A weaker currency has also led to higher prices for imports and fuelled consumer inflation. Red tape continues to tie firms in knots, although the government has promised to make it easier to do business, for example by smoothing the process for getting licences and permits to open factories. + +The struggles of Juhayna, a big juice and dairy producer, are typical. Its profits declined by 34% in the third quarter of 2016 compared with the same period in 2015. Now it plans to raise prices and cut investment. Seif El Din Thabet, its CEO, blames its troubles on “the recession and low consumer purchasing-power”. + +Yet there are signs that a broader recovery may come soon. The weaker currency is proving a fillip to some manufacturers, as consumers switch from expensive imports to cheaper domestic alternatives. Egypt’s trade deficit in January was 44% smaller than it had been a year earlier. + +These benefits are yet to trickle down to the average Egyptian. “We hear about the improvement on TV and read about it in the newspapers, but on the ground, nothing is getting better,” says Ashraf Muhammad, a barber in Agouza. Inflation climbed to 28% in January. It will probably remain high if the government cuts subsidies and raises taxes this year, as planned. Prices for staples have skyrocketed; other products are no longer available. “Some medicines I use disappeared for a while,” says Mr Muhammad, who suffers from diabetes. “Now they are available, but at higher prices than before.” + +The protesters who toppled Hosni Mubarak, the strongman who ruled Egypt from 1981 to 2011, demanded social justice. So Mr Sisi may be wary of imposing too much pain on Egyptians. His government has backed away from reforms in the past and may lose any sense of urgency when Zohr, a lucrative gasfield, starts production at the end of the year. But international investors and institutions are watching closely for any sign of backtracking. The IMF will review matters before sending Egypt more cash later this year. “We are seeing good progress,” said Christine Lagarde, the head of the fund, last month. + +Egyptians are more circumspect. “I don’t blame the government for taking the hard way, but, at the same time, they should have considered the poor people,” says Mr Muhammad. Still, he is sure that things will get better, albeit slowly. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21718552-bitter-medicine-starting-work-egypts-economy-shows-signs-life/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Any port in a storm + +Can a harbour for Gaza prevent a war? + + +A plan to build an artificial island might let Palestinians trade with the outside world + + + + + +From the print edition | Middle East and Africa + + +Mar 11th 2017 | NAHAL OZ, ISRAEL-GAZA BORDER + + + + + +ISRAEL’S border with the Gaza Strip is tense at the best of times. But tempers are especially frayed after weeks punctuated by sporadic exchanges of fire. Israeli security chiefs are wondering how they can avert another conflict in an area that has seen, on average, a big one every two to three years. + +Much of Israel’s introspection has been prompted by the release of a report by the State Comptroller on the decisions leading up to and during the war between Israel and Gaza in the summer of 2014, in which some 2,100 Palestinians and 73 Israelis died. Although much of the report dealt with the mayhem that summer, it also underscored long-standing complaints by senior officials that Israel’s government had failed to seek a long-term solution to the whole Israeli-Palestinian dispute. It noted, for instance, that although military and intelligence officers had been warning for some time that life for the 1.8m Palestinians living in Gaza was getting much worse, the cabinet was presented only with military options for confronting Hamas, a militant Islamist group, without any diplomatic alternatives. + + + + + +The report has revived talk within Israeli security circles of finding ways to ease a blockade of Gaza that contributes to its economic stagnation and the frustrations that prompt some Gazans to pick up stones, knives or rockets. + +Although Israel withdrew from the territory in August 2005, it continues to control access, along with Egypt, to the 365 sq km coastal enclave. Following a civil war in 2007 in which Hamas wrested power from the Palestinian Authority, Israel and Egypt have enforced a blockade of varying degrees of severity. + +Surprisingly, the loudest voice within Israel’s government is that of Yisrael Katz, the intelligence minister and a hardliner in the ruling Likud Party. He has proposed building an artificial island three miles off Gaza’s shores. This could house a port and airport that would give Gaza much-needed access to the world, as well as power and desalination plants that would alleviate acute shortages of electricity and water. Putting the port offshore could allow an international security force to inspect imports and prevent the smuggling of arms to Hamas and other militant groups. Mr Katz adds that it would also entail “creating land which no side in the conflict has claim to”. (This is what passes for a joke in Israeli-Palestinian diplomacy.) + +Mr Katz argues that the $5bn price would be paid by private investors and foreign donors interested in boosting Gaza’s dire economy. Building it would provide jobs for unemployed Gazans. Above all, he argues, the gateway would relieve Israel of any responsibility for Gaza. “I have no illusions regarding Hamas and its murderous ideology,” he says. “But our current policy allows them to imprison their population without any hope of development.” + +Mr Katz’s proposal has widespread support within Israel’s security establishment and the tacit support of many of his cabinet colleagues, even if they are wary of saying so in public. The main obstacles remain political. Israel and Hamas, which raises most of its revenue from taxing imports to the strip, both refuse to negotiate directly. And Hamas’s testy ties with the Palestinian Authority and Egypt would further complicate efforts to reach an agreement. + +Ultimately, though, the decision over whether to try rests with Binyamin Netanyahu, Israel’s prime minister—and he is reluctant to act. His instinct, when it comes to Gaza, is to procrastinate until there is no choice but war. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21718553-plan-build-artificial-island-might-let-palestinians-trade-outside/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Lingua fracas + +Cameroon clamps down on the internet, and anglophones + + +A bust-up over language has exposed new tools of repression + + + + + +From the print edition | Middle East and Africa + + +Mar 9th 2017 | DOUALA + + + + + +THE images beaming from the screens of Cameroon’s state television channel, CRTV, show a country riding on a wave of glory. In February the national football team, “The Indomitable Lions”, beat Egypt to win the Africa Cup of Nations trophy for the first time in 15 years. In January a Cameroonian teenager became the first ever African winner of the Google coding challenge, an international programming competition. + +But turn away from the goggle box and the country is troubled. When the footballing trophy was brought to Bamenda, Cameroon’s third-biggest city, placard-carrying protesters joined the crowds of onlookers. And for almost two months the country’s young Google prodigy, along with hundreds of thousands of others, has been unable to surf the web because the government has shut it down in two English-speaking regions (see map). The plug was pulled as part of a clampdown on Anglophone activists in which more than a hundred people have been arrested and pressure groups have been outlawed. At least six people have been killed and scores more injured since December by policemen and soldiers who have opened fire on demonstrators. + + + + + +The protests initially began as a series of strikes by the country’s English-speaking lawyers, who took to the streets in their wigs and gowns in October 2016 demanding English translations of the country’s key legal texts and better treatment by the authorities. Since then many others have joined in, including teachers. The conflict between the government and the Anglophone minority is escalating. + +The roots of Cameroon’s linguistic rift date back to 1919, when Britain and France divided the country between them, having taken it from Germany after the first world war. After both parts gained their independence in 1960 and 1961, they reunited to form a bilingual, federal republic. But English speakers, who are less than fifth of the population, feel hard done by. They say that their regions get less than their share of public money and that it is too hard to interact with the state in English. + +President Paul Biya, who has been in power since 1982, is sub-Saharan Africa’s second-oldest ruler, after Robert Mugabe of Zimbabwe. Yet despite his age, he has mastered social media, in the sense of figuring out how to silence digital dissent. After young Arabs used smartphones to organise the uprisings of the Arab Spring, despots everywhere grew nervous. But then they found the off-switch. Last year 11 African governments, including Zimbabwe and the inaptly named Democratic Republic of Congo, interfered with the internet during elections or protests. + +The government cut off the internet to a part of the country known for its technology start-ups, which probably hasn’t done much for economic growth. Before the crackdown internet usage in Cameroon had been soaring, with penetration rising to 18% in 2016, from 4.3% in 2010. Phones are also ubiquitous, which may be why the communications ministry has been sending text messages, sometimes several times a day, warning of prison sentences of up to 20 years for anyone “found guilty of slander or propagating false declarations on social media”. + +Journalists have been arrested and a popular radio station has been taken off the air. Although the conflict in Cameroon has mainly affected the English-speaking minority, the government’s heavy-handedness suggests that worse may lie ahead. Next year the country’s 84-year-old leader is expected to run for a seventh term. With no clear successor or challenger in sight, Mr Biya probably has no need to ratchet up repression. But meddling with the internet can be addictive, like the internet itself. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21718579-bust-up-over-language-has-exposed-new-tools-repression-cameroon-clamps-down/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Disgrace + +South Africa’s rape epidemic + + +In a survey, 38% of men in one township admit to having used force or threats to obtain sex + + + + + +From the print edition | Middle East and Africa + + +Mar 9th 2017 | DIEPSLOOT + + + + + +BROWN LEKEKELA dreads the end of the month. Payday means binge drinking. Violence follows. Women turn up battered and distraught at his gate, usually with small children in tow. They have nowhere else to go: Mr Lekekela’s emergency shelter, Green Door, is the only one in all of Diepsloot, a hardscrabble township north of Johannesburg that is home to an estimated half a million souls. The shelter, built in the yard of his humble house, can fit two women and their children, plus maybe one more family on the couch in his office. He runs it on donations and sheer willpower. + +Mr Lekekela has a first-aid kit and some training to treat minor injuries. For more serious ones, it can take hours for an ambulance to arrive. Sometimes the women (or their children) have been raped. But with no other income or support, they often end up returning to their abusive partners. “It’s hard,” says the soft-spoken Mr Lekekela. “But if I don’t do it, who will?” + + + + + +Rape and domestic violence are hard to measure, since victims often suffer in silence. And headline-writers overuse the word “epidemic”. But in South Africa it clearly applies. For a study published in November by the University of the Witwatersrand and Sonke Gender Justice, a non-profit group, 2,600 men in Diepsloot were surveyed anonymously. An astonishing 38% admitted to having used force or threats to obtain sex in the preceding year. Add those who said they had beaten, hurt or threatened to use a weapon against a woman, and the share jumps to 54%. Of those men, more than half said they had committed such crimes more than once. + +Many men in Diepsloot, as in many other parts of South Africa, do not think they are doing anything wrong. They think they have a right to use force against their partners. In addition, many of the men interviewed had themselves experienced childhood abuse or trauma. Some were mentally ill. Those who abuse others suffer few consequences, whether from the law or neighbours. Diepsloot, a warren of shacks with pockets of small houses, did not exist until the mid-1990s, so everyone comes from somewhere else. “These men think they can do whatever they like,” says Precious Moeketsi, a 28-year-old with two young children who shares a shack with her sister’s family. “I feel worried living here.” + +Although South Africa has strict laws against violence, they are spottily enforced. Researchers found that of 500 sexual-assault cases reported to the police in Diepsloot since 2013, only one resulted in a conviction. Small wonder rape is so rarely reported. (Researchers guess that police are informed about only one of every nine sexual assaults in South Africa.) Women worry about what friends and family will think. Some fear reprisals. Policemen are sometimes sceptical and tell women to go home and smooth things over. Even officers who take the issue seriously are hamstrung. Diepsloot’s police station has no specialist unit for rape and sexual-assault cases; the nearest one takes an hour to get to. The closest state hospital that can examine victims is 30km away. + +Simply getting to court can be steep barrier. To get a restraining order, for example, a woman in Diepsloot will have to pay 26 rand ($2) for a round trip by minibus-taxi to the nearest magistrates’ court—a lot of money for a woman with no job. Lawyers Against Abuse, a non-profit group, supports women with free legal and psychological services offered from a refurbished shipping container near the police station. + +The cycle of abuse “will become the culture of how we live”, frets Mr Lekekela. “But this is not how we are supposed to live.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21718578-survey-38-men-one-township-admit-having-used-force-or-threats/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Europe + + +The Dutch election: The populists’ dilemma [Fri, 10 Mar 04:34] + +A new charter for Turkey: Me, the people [Fri, 10 Mar 04:34] + +Humanitarian visas: Another way in? [Fri, 10 Mar 04:34] + +Macedonia’s political crisis: Scared in Skopje [Fri, 10 Mar 04:34] + +Strays in Istanbul: When fat cats are a good thing [Fri, 10 Mar 04:34] + +Charlemagne: Go, speed racer, go [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Damn rotters + +Dutch voters’ anger is fuelling populism + + +Even so, the ruling class looks set to be voted back in + + + + + +From the print edition | Europe + + +Mar 9th 2017 | HEERHUGOWAARD + + + + + +GEENPEIL (“no poll”) is a new Dutch political party that has the unusual distinction of having no programme. Instead it promises to ask its members how to vote on every bill, via an online interface. Its founder, Bart Nijman, thinks this will help solve the biggest problem in Dutch politics: the sense many citizens have that they are ruled by an arrogant, unaccountable elite. On March 6th GeenPeil’s campaign rolled into Heerhugowaard, a town of red-brick modern developments 30km (19 miles) north of Amsterdam. Some of the entourage went to canvass voters while Mr Nijman stayed on the bus, typing ceaselessly on a laptop. + +“We want to make democracy more flexible,” says Mr Nijman. An editor at GeenStijl.nl, a popular and deliberately offensive right-leaning news website, he entered politics in 2015 by launching a campaign for a referendum on the European Union’s association agreement with Ukraine. (Dutch voters rejected the agreement, only to see their prime minister negotiate a few provisos and sign it anyway.) Mr Nijman’s take is much more nuanced than that of Geert Wilders, the populist leader of the Freedom Party, who blames the Netherlands’ problems on Muslims, immigrants and the EU. But one point on which he agrees with Mr Wilders, and other populists across Europe, is that “citizens don’t feel like they’re being heard.” + + + + + +GeenPeil is one of a raft of new parties competing in the Netherlands’ parliamentary election on March 15th. Many Dutch call it the strangest race they have ever seen. Other newcomers include the Forum for Democracy (FvD), headed by Thierry Baudet, a swaggering Eurosceptic intellectual; For the Netherlands (VNL), a tax-cutting, anti-immigration party headed by a sassy news-comedian; Denk (“Think”), a party that appeals mostly to immigrants from Turkey and Morocco and their offspring; and the Dutch Pirate Party. Because the Netherlands has no minimum threshold for entering parliament, any of these parties could win seats. + +International interest has focused on the possibility that Mr Wilders might come first, adding another populist win to last year’s Brexit vote and the election of Donald Trump. That may yet happen, but Mr Wilders, who led the polls for much of last year, has been sliding. The Liberals, the centre-right party of the prime minister, Mark Rutte, now lead with about 17% support, ahead of the Freedom Party’s 16% (see chart). And Mr Wilders is unlikely to enter government: every other big party has ruled out a coalition with him. + + + +The broader story in the Netherlands is one of popular frustration with the normal process of governance. That will make it hard to run the country no matter how the vote turns out. GeenPeil will probably not win a seat, but Denk, the FvD and VNL have a good chance of doing so. The number of parties in parliament could rise from the current 12 to 14 or more. Small, single-issue groups like the Party for the Animals and 50Plus, a pensioners’ party, are likely to gain seats as well. The result could be a fragmented parliament roiling with anti-establishment sentiment, but unable to voice it coherently. + +Too bold for the polder + +“As a country made up of minorities, we hate the idea that anyone’s voice is not heard in The Hague. But we also want our own voice to win,” says Tom-Jan Meeus, a columnist at NRC Handelsblad, a daily. The contradiction is “very Dutch”. + +Dutch political culture is renowned for its “polder” model, in which disparate interest groups hammer out compromises through interminable negotiations. It is also notably detail-oriented. At the start of each parliamentary election, the government’s Bureau for Economic Policy Analysis reviews the budget plans submitted by political parties and calculates their effects. This analysis underpins the parties’ jockeying for weeks afterwards. + +A debate between the party leaders on March 5th was dominated by clashes over the bureau’s scoring. The candidates argued about the merits of turning the car-ownership tax into a tax on mileage, and similar proposals. Their command of policy was impressive, but the debate failed to generate thematic conflicts that would allow any leader to pull away from the pack. In previous elections, the right and left have usually produced one large party each. Not this time. “I’ve never experienced an election like this, where there is no competition developing between the top two parties,” says Sjoerd Sjoerdsma, an MP for the left-liberal D66 party. + +One reason may be the Netherlands’ strong economy (see article). GDP grew by 2.1% in 2016, and the government’s preliminary estimates show that it ran a small budget surplus of €200m ($210m). The prospect of winning budget goodies (spending or tax cuts) might reduce tactical voting, thinks Tom van der Lee, a candidate MP for the GreenLeft party. “Voters think, why should I pick my second-favourite?” + +Yet the chief reason for the lack of a competitive race is the strange absence of Mr Wilders. He has declined to join any of the debates so far, instead campaigning chiefly through Twitter. That has sabotaged Mr Rutte’s plan to confront him and pose as the populist’s main opponent. Mr Wilders will take part in a final one-on-one debate with Mr Rutte, on March 13th. “That is the only hope to create that battle,” says Henri Kruithof, a former spokesperson for the Liberals. + +Without much excitement in the campaign, the mainstream parties’ support bases have solidified. The Christian Democrats, the left-liberal D66 party, the environmentalist GreenLeft and the Labour Party are all polling somewhere between 8% and 12%. At that rate, the Liberals would need at least three other parties to form a coalition; they might need to perform the ideological acrobatic trick of teaming up with GreenLeft. That would require long negotiations and produce just the sort of compromise government that many Dutch have grown sick of. + +If Heerhugowaard is any indication, mainstream voters are already voicing arguments once heard only on the extremes. Ruud Bakker, who sells cleaning supplies in the town’s weekly market, is a lifelong Liberal voter who says he once hosted a family of Chechen refugees. This year he may vote for Mr Wilders or for Mr Baudet’s FvD. “We used to be very liberal in this country,” he says; now he worries that Islamists will try to “take over” and “tell our women how to dress”. + +For now, the polls show Mr Wilders’s support continuing to sink. But some Dutch wonder whether the country is in for a Trump-style surprise. Because the Freedom Party has been shut out of coalitions, a vote for it carries little cost. Sywert van Lienden, a former political activist now working for the mayor of Amsterdam, says he has heard even dissatisfied D66 supporters considering a protest vote for Mr Wilders. “When the curtain closes, you never know how strong that ‘fuck ’em’ factor will be.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21718530-even-so-ruling-class-looks-set-be-voted-back-dutch-voters-anger-fuelling-populism/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Me, the people + +How Turkey’s constitutional reforms went sour + + +A plan for a democratic constitution that ended when Recep Tayyip Erdogan’s power was threatened + + + + + +From the print edition | Europe + + +Mar 9th 2017 | ISTANBUL + + + + + +FOR the past 92 years, says Osman Can (pictured), a former heavyweight in Turkey’s ruling Justice and Development (AK) party, his country has lived under three constitutions, each a product of upheaval and none of them democratic. The first set the stage for a secular one-party regime. The next two followed military coups. The newest, adopted by parliament in January and set for a referendum on April 16th, is no exception. Billed by the AK government as a safeguard against political chaos, the new charter would transfer all executive power into the hands of the country’s authoritarian president, Recep Tayyip Erdogan. If approved, it would be the most comprehensive overhaul of the state apparatus since the birth of the Turkish republic. + +It is not what Mr Can and most Turks had in mind. As a respected jurist, and subsequently as a member of AK’s top executive body, Mr Can campaigned to replace the current junta-drafted constitution with a civilian one. A constitutional committee was set up in 2011; more than 60,000 people, as well as hundreds of universities, think-tanks and NGOs, wrote in with proposals. Turks made it clear that they wanted a charter that enshrined new rights, notably by lifting restrictions on free speech, strengthening checks and balances and ensuring the independence of the judiciary, says Fuat Keyman of the Istanbul Policy Centre, a think-tank. + + + + + +The committee collapsed after two years amid squabbles between AK and the Republican People’s Party, the main opposition. Faced with a wave of anti-government protests, a corruption scandal and a falling-out between AK and the Gulen movement, a powerful sect, Mr Erdogan marshalled his nationalist base and stepped up repression. The constitution Mr Can had wanted to write went up in smoke. “The priority became to save the day and consolidate power,” he says. + +The new charter was drafted late last year, after a failed coup and amid a mass crackdown on any form of opposition. Some 40,000 people, including the leaders of the pro-Kurdish Peoples’ Democratic Party and over 100 journalists, have been thrown in prison. Mr Erdogan rules by decree under a state of emergency that will remain throughout the referendum campaign. The press has been defanged. + +The revised charter enshrines Mr Erdogan’s power. It abolishes the office of prime minister, leaving the president fully in charge of the government. Instead of ensuring the separation of powers, it gathers them together under the roof of Mr Erdogan’s gaudy 1,150-room palace. The Turkish leader would handpick his own cabinet, other senior officials and his party’s MPs. He would be free to rule uncontested for up to two five-year terms, and under some circumstances into the early 2030s. + +“Under normal circumstances this would not pass,” says Mr Can, referring to the constitutional changes. But normality in Turkey is gone. The Venice Commission, an advisory body to the Council of Europe, has warned in a leaked report that the country is on the road to autocracy. Mr Erdogan and his prime minister, Binali Yildirim, have threatened opponents of the new constitution by comparing them to terrorists and coup plotters. Neither Mr Erdogan’s predecessor as president nor Mr Yildirim’s as prime minister, both believed to be critical of the new constitution, have dared to make their views public. With thousands purged from universities across the country, many academics who took part in the constitutional debate in the early 2010s are also reluctant to speak up. + +Members of Mr Erdogan’s team insist the country needs strong leadership to stave off the turmoil at home and abroad, including terrorist attacks and the war in Syria. But the kind of democratic reforms under debate in the early 2010s are not off the table, suggests Mehmet Ucum, a presidential adviser. “Think of this [constitution] as the beginning,” he says. + +Mr Erdogan’s critics think of it as the end. Those who can afford to do so have already started to vote with their feet. According to a recent survey, 6,000 millionaires left Turkey in 2016, a fivefold increase on the previous year. As Turkey’s democracy unravels, more are likely to follow. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21718546-plan-democratic-constitution-ended-when-recep-tayyip-erdogans-power-was/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Another way in? + +The European Court of Justice declines to upend asylum rules + + +Providing humanitarian visas is still an option, not an obligation + + + + + +From the print edition | Europe + + +Mar 9th 2017 | BRUSSELS + + + + + +AN UNEASY paradox underlies asylum policy in Europe. As signatories to the Refugee Convention of 1951, all European Union countries must allow foreigners on their territory to apply for protection. But none is obliged to help them arrive in the first place. As most war-torn places are some distance from Europe, asylum-seekers must endure dangerous journeys, and rapacious people-smugglers thrive. + +Resettling refugees directly from countries that host lots of them, such as Turkey, Lebanon and Kenya, is another option. A third is to issue humanitarian visas, which entitle the bearer to travel safely to his or her destination before claiming asylum. But European governments hand them out sparingly, and there is little legal clarity surrounding their use. Advocates for refugees hoped that the European Court of Justice might change that in a ruling this week. + + + + + +The case before the court involved a family of five Christians from Aleppo, in Syria, who applied for humanitarian visas at the Belgian embassy in Beirut last October. Belgian officials refused to consider the bid because the family intended to stay in the country longer than the permitted 90 days. But in February the court’s advocate-general said the visa application should fall under the EU’s Charter of Fundamental Rights, which protects against the sort of violent treatment the family claim to have suffered in Syria. That would have obliged Belgium to grant the visas—and could have opened the door to thousands more such applications from would-be refugees. Yet although the court usually follows the advocate-general’s reasoning, this time it demurred, ruling that it was up to national governments whether or not to issue humanitarian visas. + +NGOs, as well as the UN’s refugee body, see humanitarian visas as a useful alternative to the cumbersome process of resettlement. Brazil, among other countries, has begun to issue them to Syrians. Yet many EU governments, 13 of which backed Belgium’s case, insist that the EU visa code was never intended to impose humanitarian obligations on national authorities—and after the 2015-16 refugee crisis, there is little appetite for more generosity. After the ruling Theo Francken, Belgium’s outspoken immigration minister, celebrated his victory over the NGOs he said were trying to extend Europe’s borders to its embassies abroad. + +Advocates themselves lamented what they consider a missed chance to save lives and dent trafficking. Yet, says Elizabeth Collett of the Migration Policy Institute Europe, a think-tank, they may have dodged a bullet. Had the court ruled the other way, governments would quickly have tightened EU visa law further. Worse, governments that have been quietly admitting certain groups on humanitarian grounds (such as staff employed by their armed forces abroad, who face retribution from enemies) might have pulled back under the glare of the spotlight. The fight to find new ways to safety for refugees will continue: the European Parliament wants to clarify the conditions under which humanitarian visas can be issued, though governments are wary. But for now, the smugglers’ business model is safe. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21718543-providing-humanitarian-visas-still-option-not-obligation-european-court-justice/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Scared in Skopje + +A Macedonian breakdown gets Europe’s attention + + +Tensions with the country’s Albanian politicians could deteriorate into conflict + + + + + +From the print edition | Europe + + +Mar 9th 2017 | SKOPJE + + + + + +IN NORMAL times, the world tends to ignore Macedonia and its 2m people, a quarter of them ethnic Albanian. But the world is not ignoring Macedonia now. Western politicians are rushing to Skopje, Russia is issuing warnings and Serbian newspapers proclaim that war is coming. “Geopolitical relevance is returning to the Balkans,” laments Veton Latifi, an analyst. + +The Macedonian crisis started with a coalition dispute. To preserve ethnic peace, governments consist of the winning Macedonian party and an Albanian one. Elections last December gave the incumbent Macedonian party, the nationalist VMRO, a slight edge. But after talks with the VMRO failed, the leading Albanian party, headed by Ali Ahmeti, opted for the Social Democrats. On March 1st Macedonia’s president refused to ask the Social Democrats to form a government, saying Albanian demands would “destroy” the country. The Social Democrats called it a “coup”. + + + + + +Every weekday since, thousands of Macedonians have demonstrated in support of the president. The European Union’s foreign-policy chief, Federica Mogherini, along with the head of NATO and America’s State Department, have pleaded with him to reverse his decision. VMRO has staunchly supported joining NATO, but in this crisis it is backed by Russia. + +At a deeper level, the conflict goes back to 2015, when the Social Democrats began releasing tapes of conversations (tapped by the intelligence services) which implicated Nikola Gruevski, the VMRO prime minister at the time, in corruption. Under EU auspices, a special prosecution office was set up, but VMRO now claims it is packed with Social Democrats. Lately VMRO supporters have accused George Soros, a philanthropist named in many potty conspiracy theories, of plotting against them. Ms Mogherini has been attacked in the press as a “fascistic Sorosoid bimbo”. American congressmen sympathetic to VMRO have attacked the American ambassador to Macedonia as a tool of Mr Soros. + +At the centre of the crisis is Mr Ahmeti, a former guerrilla leader. Sharing power with Mr Gruevski since 2008 cost him support. He says Mr Gruevski would not agree to extend the mandate of the special prosecutor investigating him. Meanwhile, Albanian parties asked the government to keep its agreement to widen the use of Albanian as an official language. + +According to Radmila Sekerinska, deputy head of the Social Democrats, Mr Gruevski instigated the crisis when he realised that he might lose power, which would leave him exposed to the special prosecutor investigating him. Not so, says Nikola Poposki, Macedonia’s foreign minister and a VMRO official. The Albanian language demand accepted by the Social Democrats “endangers the unity and sovereignty of Macedonia”, he says. + +Mr Ahmeti warns against turning the crisis from a political one into an ethnic one, saying he has a tough job keeping his side’s own nationalist radicals in check. He disclaims any plans for a Greater Albania. Russia, he says, is stirring the Balkan pot; the best way out is to accelerate Macedonia’s accession to the EU and NATO. Good luck with that. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21718549-tensions-countrys-albanian-politicians-could-deteriorate-conflict-macedonian/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Grasping at strays + +In Istanbul, fat cats are a good thing + + +A Turkish affection for street cats and dogs has blossomed online—and occasionally pits local people against the government + + + + + +From the print edition | Europe + + +Mar 11th 2017 | ISTANBUL + + + + + +SPRAWLING on doorsteps, on café benches, inside hamams: stray cats and dogs are everywhere in Istanbul. Some 130,000 dogs roam the city; at least 125,000 wild cats prowl its streets. The prevalence of strays across the city is nothing new: “The dogs sleep in the streets, all over the city,” Mark Twain wrote after a visit in 1867 to Istanbul. “They would not move, though the Sultan himself passed by.” More recently their presence has taken on a new, more modern twist. + +The popularity of animal photos on social media—combined with a desire for a glimmer of good news in Turkey—has boosted the renown of these creatures both at home and abroad. There are at least half a dozen Facebook pages dedicated to the strays around Istanbul. One, “Cats of Istanbul”, has nearly 70,000 followers; its canine cousin, “Pups of Istanbul”, a more modest 20,000, attesting to the pointlessness of competing with cats on the internet. One particular photo, of Tombili, an obese feline who was papped leaning casually against a step, so tickled its fans that a bronze statue (pictured, with original) was put up in his honour after he died. The craze has also moved from the little screen to the silver one: in February “Kedi”, a feature-length documentary about cats in the city, opened in New York. It is now being released across America. + + + + + +Many Istanbulites treat these strays as their grandparents have done before them: butchers leave out scraps; in winter locals build small huts for the cats to sleep in. Since 2004, following European convention rules, towns have had to neuter and vaccinate the dogs; almost all are fitted with electronic chips that record their health history. This is expensive: between 2009 and 2016 the central government spent some 19m Turkish liras ($5m) in 40-odd municipalities on animal welfare. Cats seem to cause less trouble, although in 2005 Recep Tayyip Erdogan, the president, who was then the prime minister, successfully sued Cumhuriyet, a secular newspaper, and its cartoonist, after it depicted him as a kitty caught up in a ball of wool. The cartoonist in question is currently under arrest, one of the more than 100 journalists who have been rounded up since a failed coup last summer. + +Authorities have taken drastic, and unpopular, measures to get rid of the creatures. In 2012 the government tried to introduce a law that would have consigned street dogs and cats to remote, deserted areas referred to as “nature parks”. It was shelved after an outcry from animal-rights activists and dog lovers. Thousands marched in the streets. Last week several women wearing animal masks in Alanya, a coastal town, tried to file a petition “as cats” against the killing of around 50 of their fellow felines—to be told that only humans could file petitions. For now, anyway. A cat can always dream. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21718417-turkish-affection-street-cats-and-dogs-has-blossomed-onlineand-occasionally-pits-local/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Charlemagne + +François Fillon’s presidential race is a magnificent crash + + +The Republican candidate’s supreme confidence could be wrecking his party’s hopes + + + + + +From the print edition | Europe + + +Mar 9th 2017 + + + + + +WHEN a British television show, Top Gear, was marketed to the French a few years ago, it seemed an improbable proposition. The hit programme, which appeals to petrol heads and the nation’s inner laddishness, was not an obvious fit for Gallic sensibilities. More improbable still, when the French version was launched in 2015, was the choice of an early special guest, whose challenge is to set the fastest time possible when driving an ordinary car round a race track: it was the rather dour, besuited, centre-right former prime minister, François Fillon. + +As it turned out, Mr Fillon, who is now the Republicans’ beleaguered presidential candidate, did rather well. Strapped into a specially adapted Dacia Sandero, equipped with a crash helmet and an internally mounted camera recording his every move, Mr Fillon was unerringly calm and focused at the wheel. His lap time earned him a highly respectable fourth place. Fillon devotees were not surprised. He is an amateur racing driver; his brother, Pierre, runs the 24-hour race at Le Mans, which lies in his rural former constituency of La Sarthe, in western France. For anybody else struggling today to understand why Mr Fillon has defied insistent calls from his own team to quit the French presidential race, despite a judicial investigation into alleged misuse of the parliamentary payroll, his Top Gear appearance offers an insight. This is a man who—alone, impervious to distraction, unafraid of risk, and under pressure—has an unwavering faith in his capacity to hold steady and make it over the finishing line. + + + + + +Mr Fillon’s troubles have turned an election that was difficult for the centre-right to lose into one that will be difficult to win. Last November, the politician once mocked as Mr Nobody surged from poll outsider to grab his party’s nomination, with a sweeping 67% of centre-right voters. Overnight, Mr Fillon became the favourite in the election on April 23rd and May 7th. The sitting Socialist president, François Hollande, was so unpopular that he bowed out before he was pushed. L’alternance, or the habitual rotation of power between the left and the right, meant that centre-right politicians just assumed it was their turn. + +Such expectations have now collapsed. Investigative judges say they will put Mr Fillon under formal investigation on March 15th over alleged fake jobs for his Welsh-born wife, Penelope, and two of his children. The sums were bad enough. The payroll bill over the years came to €900,000 ($949,000); the average pre-tax annual salary is €20,670. But there was also an uncomfortable sense of feudal entitlement about the affair. The tweedy Mr Fillon lives in a historic manor house in La Sarthe, complete with chapel and horse. Paris-Match once published a photo of him, a practising Catholic, and his large family, taking tea on its sweeping lawn. Worse, Mr Fillon insisted on his own reputation for probity. As disillusion grew, and his poll numbers sank, Mr Fillon dug in. It was a conspiracy, he exclaimed, fingering the usual suspects: the media, the left, even the judiciary. The people, he cried to die-hard supporters at a hastily organised weekend rally in Paris, had chosen him; they would be his judge. Mr Fillon hit the most discordant note of all when he sought to mimic the grandiose oratory of Charles de Gaulle, whose photo he kept on his bedroom wall as a child. “France”, he declared, “is greater than my errors.” + +Nothing, it now seems, will deflect Mr Fillon from his course. Not the loss of his campaign manager, Patrick Stefanini, nor his spokesman, Thierry Solère, nor the scores of deputies who have also quit his campaign team. Defeat in the first round, said Mr Stefanini, could no longer be ruled out. In their despair over the weekend, defectors appealed to the primary’s runner-up, Alain Juppé, another ex-prime minister, to take over as candidate. Somehow, anyhow. But Mr Fillon was having none of it. It was all “too late”, an embittered Mr Juppé replied: Mr Fillon had a boulevard in front of him, but has driven into a dead end. + +Besides the harm done to the image of democratic politics, one casualty of this sorry saga is an ambitious economic programme, gone to waste. For all his flaws, Mr Fillon grasps the need to shake up France’s rule-bound system to free up the creation of jobs, ideas and profits. He knows, having served as prime minister under President Nicolas Sarkozy, that reforms need to be spelled out before an election in order to secure a mandate to put them into place afterwards. But the damage now done to his credibility is such that, even were he to defy the odds and win, Mr Fillon would lack the authority to do what he has promised. + +Tragédie française + +Another is political unity on the French right. When Jacques Chirac stood for re-election in 2002, he brought rival cliques from the centre and the right together under a broad umbrella, originally named the Union for a Presidential Majority (UMP). It helped him in the run-off, where he roundly beat Jean-Marie Le Pen, of the nativist National Front. Today, Mr Le Pen’s daughter, Marine, is likely to reach the second round, and Mr Fillon needs to keep those same constituent parts together in order to make it as well. Instead, the centrists are wavering. Many centre-right figures around Mr Juppé have quit the campaign. Mr Fillon is left with the socially conservative right wing, whose most organised element is a Catholic movement that mobilised vigorously against the legalisation of gay marriage. + +This spectacle has blown the wheels off one of the few credible efforts to keep Ms Le Pen out of the Elysée. “If it’s a choice between Fillon and Le Pen, I’ll abstain,” said a retired Socialist voter in Angers, a cathedral town near his rural fief. The stakes are higher than at any other election since de Gaulle established the Fifth Republic in 1958. Mr Fillon may think he can still make the final lap. But hopes of defeating Ms Le Pen are increasingly turning instead to a young centrist untested behind the wheel, Emmanuel Macron. And he, against all the unwritten rules of French politics, has never run for election to any office before. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21718528-republican-candidates-supreme-confidence-could-be-wrecking-his-partys-hopes-fran-ois-fillons/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Britain + + +The budget: Calm before the storm [Fri, 10 Mar 04:34] + +New taxes: Read my lips [Fri, 10 Mar 04:34] + +Northern Ireland: An upset in Ulster [Fri, 10 Mar 04:34] + +European Union migrants: Administrative agonies [Fri, 10 Mar 04:34] + +Sport and politics: Rugby unionism [Fri, 10 Mar 04:34] + +Further education: Technical upgrade [Fri, 10 Mar 04:34] + +Juvenile delinquency: The kids are all right [Fri, 10 Mar 04:34] + +Bagehot: Theresa May sallies forth [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Calm before the storm + +The British economy soldiers on, but the chancellor acknowledges big risks ahead + + +The OBR’s outlook appears to be rosier than the consensus of independent economists + + + + + +From the print edition | Britain + + +Mar 11th 2017 + + + + + +BY TRADITION the chancellor of the exchequer may drink alcohol during the budget speech, the only time of the year when any minister may imbibe in the House of Commons. On March 8th Philip Hammond stuck to water. But others were longing for a stiff drink as they watched his speech. He made a few good jokes but otherwise was monotone; he reeled off endless statistics (usually including the decimal point); and unlike his predecessor, George Osborne, he resisted the urge to pull rabbits out of his hat. Mr Hammond is in no mood to party, and for good reason. The economy is looking strong now but he knows that, with Brexit negotiations looming, things are likely to get worse. + +Most economists had assumed that after the vote to leave the European Union the British economy would slow sharply. Heightened uncertainty would immediately deter investment and consumer spending, the thinking went. In its November forecast the Office for Budget Responsibility (OBR), the fiscal watchdog, reckoned that GDP growth in 2017 would be 1.4%—and that put it at the optimistic end of the spectrum. + + + + + +The OBR has since revised its forecast to 2%, one of its biggest-ever upgrades. It reckons that in 2017 unemployment will remain around its current level of 5%, a slightly better reading than it gave in March 2016, when it assumed that Remain would prevail at the referendum. (Wage growth, however, will be much weaker.) + +Three factors help to explain the economy’s resilience since the referendum. First, consumer spending has remained strong. With the benefit of hindsight this is unsurprising. Leave voters got what they wanted. And for Remainers, Brexit remains vague and some way off. + +Second, businesses may be less worried about Brexit than economists had assumed. In two recent speeches Kristin Forbes of the Bank of England digs into the impact of uncertainty on economic growth. Following the referendum, there was a spike in a closely watched measure of uncertainty, built on analysis of newspaper articles. Yet this measure is weakly correlated with actual economic outcomes such as investment: what London-based journalists think is important may not matter much to a firm in Birmingham. + +Other measures of uncertainty, such as those derived from surveys of firms, do correlate more strongly with economic activity. And these measures did not increase to nearly the same degree, Ms Forbes notes. Managers are perhaps too busy with their day-to-day jobs to worry about whether or not Britain remains in the EU’s customs union in 2019. Many saw little point in adjusting their plans in light of the Brexit vote. Firms which export their wares may even have felt more confident about their future, thanks to the fall in the value of sterling. + +The third factor concerns finance. Greater uncertainty can prompt banks to reduce lending. Dearer finance hampers consumer spending and investment. After Britain voted Leave, however, firms’ funding costs if anything fell, partly because the Bank of England quickly relaxed credit. Indeed the worry now is that Britain, and especially its consumers, have over-borrowed. + +Whatever the reasons, the stronger economic growth means juicier tax revenues. Thanks also to one-off factors, the OBR has handed Mr Hammond a fiscal windfall of £16bn ($19.7bn) over the current and next financial year (equivalent to about 2% of annual government spending). Borrowing in 2016-17 will be £52bn, about £16bn less than was predicted in November. + +Taking away the punch bowl + +Some hoped that the chancellor would take advantage of his stronger fiscal hand to boost spending, in particular on the National Health Service, which is struggling in the face of its tightest-ever financial squeeze. Mr Hammond offered a smidgen of extra NHS funding and channelled an extra £1.2bn in 2017-18 towards social care, which will ease the burden on hospitals. + +That was by far Mr Hammond’s biggest new commitment. He made much of a tweak, costing £200m-odd in 2017-18, that will lessen the impact on firms due to pay higher business rates (a tax on property) in April. Mr Hammond also started to harmonise the way that self-employed and employed workers are taxed, generating a bit of extra revenue and a lot of outcry (see article). All in, though, this was one of the least fiddly budgets in memory; the document itself was less than half as long as Mr Osborne’s last. + +By maintaining an austere stance, Mr Hammond has now amassed what is being called a £26bn “reserve”. Contrary to what is implied, that is not a piggy-bank of free cash. Instead it is the difference between two things: the OBR’s forecast of the budget deficit, adjusted for the economic cycle, in 2020-21 (£19bn); and the chancellor’s self-imposed limit for that measure in that year (£45bn or so). + +Nonetheless Mr Hammond will be glad that he can increase spending if need be and still meet his fiscal goal. No one has the foggiest idea how the economy will perform from 2018 onwards, when the terms of the post-Brexit settlement become clearer. For now the government’s strategy remains vague. Even the OBR appears to have no answers to the simplest questions, such as the terms of the deal hammered out with Nissan, which has pledged to keep making cars in Sunderland. Its best guess is that GDP growth will average just under 2% in 2018-21. + +Yet the OBR’s outlook is rosier than that of most economists. Judging by its forecasts for trade and immigration, the OBR appears to be assuming a “soft” Brexit, where Britain retains some form of membership of the EU’s single market and access to its workers. But the government has signalled otherwise; Britain could even quit the EU with no trade deal at all. + +In the event of a hard Brexit, Mr Hammond could deploy his fiscal reserve, but it would not be enough to offset fully a serious slowdown. Even a mild recession would force him to spend it quickly. Britain also faces a large “Brexit bill” on quitting the EU. Beyond that, he has diminishing room to boost the economy: the ratio of public debt to GDP is already around 85%. The chancellor’s sober approach to budget-making is the right one. Still, if the economy is really buffeted as Brexit gets under way, he will only be able to do so much. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21718497-obrs-outlook-appears-be-rosier-consensus-independent-economists-british/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Read my lips + +Economics collides with politics in Philip Hammond’s budget + + +A raid on the self-employed pleases economists but upsets Tory voters + + + + + +From the print edition | Britain + + +Mar 9th 2017 + + + + + +WHEN Philip Hammond announced an increase in tax for self-employed workers in his budget on March 8th, many asked whether the Conservatives still stood for the “strivers”, as they have long claimed to do. Not only did Mr Hammond break a manifesto promise by raising the rate of class four national-insurance contributions (NICs), a tax on the profits of self-employed people. He also cut the value of dividends that investors could withdraw from their companies tax-free. + +As the self-employed fumed, experts swooned. Mr Hammond’s move nudges the tax system closer to their rational ideal, bringing the taxes paid by the self-employed closer to those paid by employees. Once, the lower rate of NICs paid by the self-employed—which equates to a subsidy of £1,240 ($1,510) per person, according to the Institute for Fiscal Studies, a research institute—was justified by their worse state-pension entitlement. But as of last April that is not the case. The self-employed still lack benefits like sick pay or maternity pay. Mr Hammond has commissioned a review to look into it. + + + + + +Taken in conjunction with another forthcoming tweak to NICs, 1.6m people will pay more. Analysis by the Resolution Foundation, a think-tank, finds that 96% of the extra tax will be paid by the highest-earning half of households. Those struggling in low-paid jobs in the “gig economy” will be exempt. Self-employed hairdressers, who earn £12,700 a year on average, will see their annual NICs bill drop by £70. Taxi-drivers, earning an average of £17,300 a year, will fork out an extra £20. Those making £51,100 a year, the average for a self-employed management consultant, will send an extra £620 to the exchequer. + +There is still a gaping hole between taxes paid by employees and the self-employed. Companies face an incentive to hire self-employed workers, to avoid paying their own NICs of 13.8%. Mr Hammond could go further and close this gap. But there is political risk involved in swiping at the self-employed, who make up around 15% of Britain’s workers. + +Lowering the threshold of dividends that can be withdrawn tax-free, from £5,000 a year to £2,000, will hit some of the same people. Those affected will find their wallets lighter to the tune of £320 a year, on average. Most of the cash will be stumped up by higher-rate taxpayers. The government also hopes to hold back the surge of people registering themselves as company directors. Since 2008 the number of company owner-managers has almost doubled, which looks more like mass tax-dodging than a surge of enterprise. + +These changes are sensible, but may not raise as much money as Mr Hammond hopes. In targeting the self-employed he is taking aim at a particularly slippery form of tax revenue—and giving those who would pay it a year’s notice. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21718538-raid-self-employed-pleases-economists-upsets-tory-voters-economics-collides/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +An upset in Ulster + +A surge in republican turnout causes an upset in Northern Ireland + + +After a foolish gibe about crocodiles, the first minister gets bitten + + + + + +From the print edition | Britain + + +Mar 11th 2017 | BELFAST + + + + + +SINCE the partition of Ireland in 1921, parties supporting the union with Britain have been comfortably in control of the island’s north. On March 2nd that changed. In a surprise election result the two main unionist parties, the Democratic Unionists (DUP) and Ulster Unionists, won only 38 seats in the 90-member Assembly. Sinn Fein, the main republican party, came within fewer than 1,200 votes of overtaking the DUP to become the Assembly’s biggest force (see chart). “The notion of a permanent or perpetual unionist majority has been demolished,” said Gerry Adams, Sinn Fein’s president. + + + +The historic tilt in the sectarian balance of power followed a disastrous campaign by the DUP and its leader, Arlene Foster, who has been Northern Ireland’s first minister since January last year. The election, which came only ten months after the previous contest, was triggered when Sinn Fein’s leader and deputy first minister, Martin McGuinness, resigned in protest at Mrs Foster’s “arrogance” and supposed refusal to work with republicans in the power-sharing administration. Sinn Fein further accuses Mrs Foster of wasting hundreds of millions of pounds in her handling of a green-energy initiative known as the “cash for ash” affair. + + + + + +Her response was to run a hardline campaign, curtly rejecting any suggestion of concessions to Sinn Fein. “If you feed a crocodile it will keep coming back and looking for more,” she declared. Sinn Fein made hay with this, a dozen of its members wearing crocodile costumes cavorting on stage to Elton John’s “Crocodile Rock”. Anxiety about Brexit, which the DUP supported but 56% of Northern Irish voters opposed, may have contributed to high turnout. But the main factors were local, Mrs Foster’s language energising Sinn Fein supporters and boosting the party’s previously faltering vote. Edwin Poots, a DUP Assemblyman, admitted to the Ulster Star: “Unfortunately nationalists and republicans turned out in a way they haven’t done for a long time…We have managed to get [them] angry and that has led to them winning more seats.” + +Republican jubilation, and a sharp increase of unionist anxiety, will do little to increase the prospects for success in the negotiations which the British government launched this week with the aim of getting the Assembly back in operation again. Sinn Fein has a new leader in the north in the form of Michelle O’Neill. (Mr McGuinness is said to be gravely ill in hospital.) Sinn Fein insists it will accept Mrs Foster as first minister only if she is cleared by a public inquiry into the green-energy debacle, due to start soon. The party has further made it plain that it will not accept her unless she softens her attitude. + +The law says that a fresh election must be called if an agreement is not reached within three weeks. Few believe that a breakthrough can be made within that timescale. But nor do many want a re-run of the poll, and so the likelihood is that an extension will be arranged so that the parties can be kept at the negotiating table, probably for months. + +All of Northern Ireland’s parties, as well as the governments in London and Dublin, want devolution to continue, rather than return to direct rule from Westminster. But the negotiations will be a long, hard slog. And it will be some time before all sides come to terms with this sudden and dramatic change in the political landscape and the balance of power. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21718448-after-foolish-gibe-about-crocodiles-first-minister-gets-bitten-surge-republican/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +European Union migrants in Britain + +The bureaucratic nightmare facing the Home Office + + +The real worry is not whether to let EU migrants stay but how to process them + + + + + +From the print edition | Britain + + +Mar 11th 2017 + + + + + +LEGISLATIVE ping-pong continues between the two houses of Parliament over the bill allowing Theresa May to invoke Article 50 of the EU treaty, which will kick off the Brexit process. The prime minister hopes to persuade the Commons next week to reject two amendments made by the Lords, so that the bill can become law shortly afterwards. Yet many Tory MPs sympathise with at least one of those amendments, to instruct the government to guarantee the right to remain of over 3m EU nationals resident in Britain. The bipartisan Commons Brexit committee has just unanimously endorsed this suggestion. + +Mrs May has long claimed that she too would like to do it. But last summer she declared that she could not without getting a reciprocal guarantee for the 1m or so Britons resident in other EU countries. Many of these feel neglected by their home government; most also support a unilateral guarantee for EU nationals. But some other EU countries say they cannot act until the Brexit negotiations begin. The impasse has created uncertainty and much anguish on both sides of the Channel. + + + + + +In practice everyone agrees that almost all residents will be allowed to remain. Two-thirds of the 3m-plus EU nationals will have been in Britain for five years before Brexit, so they should qualify automatically. The bigger concern is the bureaucracy involved. A first problem is lack of information. Britain has no identity cards, no register of EU nationals and no checks on who comes and goes. The official numbers (see chart) are estimates that may well understate the true figures. + + + +A second issue is the cut-off point for EU nationals who want to stay. Some have proposed June 23rd 2016, the date of the referendum, but this has no basis in law. Others are arguing for when Britain actually leaves, probably in March 2019, but that could encourage a last-minute surge. A report in December from British Future, a think-tank, floated a compromise of the day when Mrs May triggers Article 50 later this month. + +Third and most problematic is the administrative burden of securing permanent residence, a necessary step towards citizenship. Last autumn Oxford’s Migration Observatory noted that, at current rates, it would take 140 years to process all those eligible. In the six months since the referendum the number applying rose to over 135,000. Many more are to come. The Home Office does not have enough staff to cope. Yet despite this it has tightened rather than relaxed the rules recently, says Colin Yeo, a specialist migration barrister. + +Applicants must pay £65 ($80) and fill in an 85-page form (similar forms run to just two or three pages in Ireland and France). Many need legal help, as well as evidence of utility bills, payslips and all outward travel for five years. The process can take six months, during which time the Home Office keeps applicants’ passports. More bizarrely, any applicant who has been economically inactive must have had comprehensive sickness insurance, even though EU citizens have a right to use the National Health Service. + +Sunder Katwala, director of British Future, says the proportion of applications being rejected because of such complexities is 30%. He reckons this would fall and the process speed up if those in work could bypass the Home Office and ask local-authority nationality-checkers to use income-tax data to confirm their status. He also suggests dumping the rule about sickness insurance. Yet the Home Office is a suspicious place that frets about ever being seen to let in even one illegal immigrant. Hard-luck stories and litigation lie ahead. + +And this is all before, fourth, a new migration regime is put in place. The Commons Brexit committee suggests that EU citizens should be given preferential treatment. With industries such as agriculture and hospitality dependent on them, that may be sensible. Yet drawing up a system, getting employers and landlords to police it and persuading other EU countries to work with it will be hard—and could affect how long it takes to agree to let residents stay where they are. As Mrs May prepares to invoke Article 50, she must sometimes wonder if it would have been wiser to offer a unilateral guarantee to EU residents months ago, earning goodwill all round. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21718550-real-worry-not-whether-let-eu-migrants-stay-how-process-them-bureaucratic/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Sport and politics + +Why rugby union has a unionist streak + + +Scotland’s rugby clash with England inspires patriotism—but not separatism + + + + + +From the print edition | Britain + + +Mar 11th 2017 + + + + + +“O FLOWER of Scotland, when will we see your like again?” Scottish fans of rugby union must find their nostalgic pre-match anthem, which commemorates the history of Caledonian resistance against the English, especially poignant. Their side has yet to win a major trophy in the 21st century, and has been meek in the past decade. Before this year, Scotland had won just four of its previous 30 matches against England, Wales and Ireland in the Six Nations Championship, an annual tournament among Europe’s top teams which got under way last month. + +But the dirge has become defiant. A young squad playing with attacking verve has already beaten the Irish and the Welsh this year. On March 11th it will take to the field at Twickenham, England’s concrete fortress, hoping to upset the heavily favoured Auld Enemy and thus earn its first “triple crown” of victories against the home nations since 1990. + + + + + +Nicola Sturgeon, Scotland’s first minister, would welcome a boost to the country’s pride ahead of her Scottish National Party’s spring conference on March 17th-18th, which will be dominated by arguments for a new independence referendum. Last month she even ventured into the players’ dressing room to congratulate them after they trounced Wales. Jim Telfer, a former coach of the national side, has suggested that any Scot seeking reasons for secession should spend ten minutes with smug English fans at Twickenham. The English don’t help themselves: they banned bagpipes from stadiums when hosting the Rugby World Cup in 2015. + +Yet in sport, patriotism is not always the same thing as separatism. A host of Scottish athletes opposed independence in 2014. One reason was money. Gordon Brown, a Scottish former prime minister, warned that a divorce could cost Scottish sport its funding from the National Lottery. The country’s most decorated Olympian, Sir Chris Hoy, pointed out that many training facilities were south of the border. (Andy Murray, a Glasgow-born tennis ace now resident in London, was among those favouring independence.) + +Rugby is a rich game, with little need for Lottery handouts. So its unionism is partly explained by demography. Poor voters are the most likely to back independence, and rugby players and fans are a posh bunch. Only one of Scotland’s 37-man squad was born in a local authority that voted to leave in 2014. + +Rugby also embraces internationalism more than most sports. Nineteen of Scotland’s players were born outside Scotland, eight of them in England. Nine play for clubs outside Scotland. A few will join this summer’s tour of New Zealand by the British and Irish Lions, a team which brings together players from the four home nations and the Republic of Ireland. That endeavour is unique to rugby union. A United Kingdom team played football in the London Olympics in 2012, but has not since; rugby league’s equivalent squad disbanded in 2007; England pinches Britain’s best cricketers. The Scottish and English will attack each other ferociously at Twickenham. Off the pitch they share a grudging respect. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21718422-scotlands-rugby-clash-england-inspires-patriotismbut-not-separatism-why-rugby-union-has/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Technical upgrade + +The British government turns its attention to the dire state of further education + + +More cash is just the start + + + + + +From the print edition | Britain + + +Mar 9th 2017 + + + + + +BUDGET cuts are never pleasant. Yet the past few years have been particularly hard, says Gerry McDonald, the chief executive of New City College in east London. His institution is the result of a merger of three local colleges that have pooled resources in the past year partly to cut costs. From April, it will serve around 4,000 16- to 18-year-olds (mainly studying full-time) and 15,000 adults (mainly part-time). Annual rounds of redundancies have “become a way of life”, Mr McDonald sighs. + +Since 1990, funding for primary and secondary schools has soared. Universities have been given the right to raise their incomes by levying tuition fees on students. But there has been no such increase in cash for further education, the mostly vocational courses for over-16s (see chart). + + + + + +On March 8th Philip Hammond, the chancellor, turned his attention to the sector. After announcing funding to pave the way for new selective grammar schools, a controversial objective of the prime minister, he promised a big injection of cash for further education and confirmed a shake-up of the chaotic way in which it is organised. By 2022 colleges will get an additional £500m ($600m) a year, a 19% increase in the 16- to 19-year-old vocational-education budget. + + + +Britain has historically put little emphasis on further education. In 2012 it placed 16th out of 20 member countries of the OECD in a ranking of the proportion of 20- to 45-year-olds who finished education with a vocational qualification. That may help explain why productivity growth has stalled, and why British youngsters are less literate and numerate than their peers in other rich countries. Employers moan that skilled workers are scarce, especially in industries like engineering and IT. Tougher immigration restrictions, likely to be introduced when Britain leaves the EU, will exacerbate skills shortages. + +The sector has struggled with shoddy qualifications. The six in ten 18-year-olds who do not take A-levels, academic school-leaving qualifications, are poorly served by a hotch-potch of some 13,000 courses of varying quality. In 2015 the government commissioned Lord Sainsbury, a Labour peer, to examine the state of technical education in England. His report, published last year, despaired that a wannabe plumber had to choose between 33 qualifications, offered at three different levels, by five awarding organisations. Many of the courses are too basic to be much use. + +Mr Hammond now aims to clear up this muddle. Following Lord Sainsbury’s recommendations, the government will introduce 15 subject areas, grouping together topics such as social care or transport and logistics. Students will work towards “T-levels” (for “technical”), developed with firms. Organisations will compete for the right to award the qualification. The extra funding will provide more work placements. And those who go on to take degree-equivalent qualifications will have access to loans to cover the cost of living. + +Some would rather the reforms offered a broader education to those going down a vocational path, with more of a focus on ensuring competency in maths and English. But most agree that the first task is simply to resuscitate the sector. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21718540-more-cash-just-start-british-government-turns-its-attention-dire-state/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The kids are all right + +Crime among youngsters may be dropping even faster than among their elders + + +That bodes well for Britain’s future + + + + + +From the print edition | Britain + + +Mar 9th 2017 + + + + + +“YOU’VE got to pick a pocket or two, boys,” warbled Fagin to his band of youthful miscreants. The Artful Dodger and his gang happily followed these instructions. But the miserly gangmaster would be disappointed in the youth of today, who show markedly less interest in a life of crime. + +Lawbreaking has fallen steadily and strikingly in England and Wales since its peak in the mid-1990s. The overall number of crimes has halved. Calculating how many offences young people in particular are committing is tricky. The best indicator of long-term trends, the Crime Survey for England and Wales, uses information drawn from victims, not perpetrators, so the age of offenders is not recorded. Nonetheless, some measures suggest that rates of delinquency among young people in England and Wales are falling even faster than those among adults. + + + + + +The number of those aged between ten (the age of criminal responsibility) and 17 entering the criminal-justice system for the first time has fallen steeply, by 84% since 2006, compared with 46% for adults. And they are getting older when they do: 15.2 years old in 2015 compared with 14.6 a decade before. That partly reflects changes in the way that the police deal with misbehaving youngsters, in particular the abandonment of performance targets that encouraged police to arrest children, who made easy pickings. But the decline is so astonishing that it must also reflect changes in behaviour, argues Mike Hough of Birkbeck College. And other measures point to a real fall. In the decade to 2016 the proportion of victims of violence who thought their attacker was aged 16 or under almost halved, from 14% to 8%. Children are behaving better at school; between 2011 and 2015 the proportion of secondary-school pupils temporarily suspended dropped from 8.3% to 7.5%. + +The explanation lies partly in factors that have contributed to the overall drop in crime. Better security has made “debut crimes” such as burglary and vehicle theft harder, which means fewer young people start criminal careers. Youngsters’ particular decline in consumption of drugs and alcohol may be another reason. The proportion of children who said they had ever tried drugs halved between 2001 and 2014; among adults the rate barely changed. In 2014 just 38% of 11- to 15-year-olds said that they had tried alcohol, according to the National Health Service, the lowest rate since the survey began in 1988 (when it was 62%). + +The impact on crime rates of this more abstemious lifestyle is threefold, suggests Tim Bateman of the University of Bedfordshire. First, declining drug consumption means less lawbreaking to fund purchases. Second, offences related to the possession and acquisition of drugs drop. Third, children are less likely to commit other crimes when they are sober. Less drug-taking also indicates less willingness to engage in risky behaviour, argues Mr Bateman, which might mean less lawbreaking. This argument applies particularly to young people, he says, since consuming drugs and alcohol is often a social activity and youth crime is more likely than adult offending to be a group enterprise. + +Technology may also be at work. Hours spent online mean fewer opportunities to get bored and less loitering on street corners, potentially getting into trouble. British children are particularly keen on the internet. A study in 2012 by researchers at the London School of Economics on children in the EU found that on average they spent 88 minutes a day online; British youngsters lingered for 102 minutes. At eight years old, they also start using the internet a year sooner than the average. + +The decline in crime among the young bodes well for the future. A Home Office study in 2013 found that those who committed their first crime aged between ten and 17 were nearly four times more likely to become chronic offenders than those who were aged 18-24, and 11 times more likely than those who were over 25. More PlayStation, less police station. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21718544-bodes-well-britains-future-crime-among-youngsters-may-be-dropping-even-faster-among/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bagehot + +Britain’s state is poorly equipped to enter the Brexit talks + + +At the worst possible moment, Leviathan is under strain + + + + + +From the print edition | Britain + + +Mar 9th 2017 + + + + + +“EVERYWHERE things are lean. And not in a strategic, managed way.” It is March 8th. In Westminster Philip Hammond is giving the budget speech. And in the West Midlands Caroline Leighton is pondering the British state. As chief executive of the Citizens Advice Bureau (CAB) in Coventry, she knows her stuff. The CAB network is where people who have been failed by the public sector come for support: those who have fallen through the social safety net, are tangled up in the legal, tax and health systems, or otherwise need help and do not know where to turn. So the waiting room outside her office is a sort of dashboard, constantly measuring Leviathan’s performance. Today it is flashing red: standing-room only. In the past year the CAB’s workload has grown by over 20%. + +You do not have to spend long here to find evidence of a public sector under intense pressure. One visitor could not get a doctor’s appointment despite acute mental-health problems. Another, a 50-hour-a-week floor-layer swindled by his boss, was failed by the authorities and ended up at food banks. Staff talk of civil servants simply disappearing. “You call an office and the phone rings for ever because no one is there any more,” says Ed Hodson, the research boss. Pressured bureaucrats get client numbers wrong, lose documents and misspell names, leaving vulnerable citizens without income for weeks. Increasingly ubiquitous at the Coventry CAB are people who have fallen into the gaps between systems—think the man with mental-health problems, unpayable debts and thugs outside his front door. From 2014-15 to 2015-16 the average number of “issues” per visitor rose from 2.8 to 3.5. + + + + + +Coventry is not an outlier. It is pure Middle England, close to the national average on most economic and demographic indicators. Its economy blends manufacturing (the largest private employer is Jaguar Land Rover) with services (Barclays bank and the local building society provide plenty of financial jobs). Like many English cities it was heavily bombed in the second world war and was insensitively rebuilt afterwards. The centre is a concrete tangle of highways and roundabouts encircling windswept, early-1960s pedestrian plazas. The average resident of Coventry is neither rich nor poor, neither cosmopolitan nor rural, and gets on with life in a cityscape forged by a past generation’s nightmares and Utopias. + +And, like many other cities, Coventry has seen its public services pruned. On the budget’s eve, Bagehot spoke to Ed Ruane, the councillor in charge of children’s services. He had come fresh from a meeting at which it had been decided to end all remaining council provision of youth services, close 11 of 18 children’s centres and hand many libraries to voluntary associations. Such facilities, he says, were about more than keeping kids occupied; they were an early-warning system alerting authorities to things like child sexual abuse. The Wood End estate, in Mr Ruane’s north Coventry ward, saw violent riots in 1992. Now he fears for the institutions—the libraries, sports centres and social programmes—established to heal the wounds. + +To be sure, Coventry’s council has adapted. It now shares functions with neighbouring authorities, puts services out to tender and limits its use of back-office staff. It is much more open to ad hoc partnerships with NGOs, says Ms Leighton. These changes would be welcome even in the absence of austerity. But such reforms have their limits. The city’s public sector has started to struggle. At the hospital 23% of emergency patients now breach the NHS’s four-hour target for treatment, up from 13% a year ago. The nearest prison saw a 12-hour riot in December. At night rough sleepers shiver in doorways. “The number rose 30% in 2016, on top of 50% in 2015,” explains Matthew Green, a local homelessness campaigner. Even in Coventry’s wealthy, sinuous suburbs, like Woodlands, concerns about anti-social behaviour and crime are rising. + +The wages of Brexit + +The city is a cross-section of the British state. The austerity cuts began in 2010. For several years the effects were limited. Nationally, confidence in the police service grew despite a real-terms cut of 17% in spending. Violence in prisons was flat despite an 18% cut. Hospital admissions outpaced funding increases while satisfaction levels remained stable. But since about 2014 the figures have turned. The administrators of the British state have run out of fat to cut. Assaults on prison staff are up by 75% in three years. Homelessness in England has grown by a third. The proportion of emergency hospital admissions hitting the four-hour target has fallen from 98% in 2010 to 82%. + +Now some services are in full-blown crisis and remain alive only thanks to emergency infusions from Mr Hammond. It was prisons in November, social care in January, and both social care and the NHS in the budget on March 8th. To quote the Institute for Government, a neutral think-tank, “crisis, cash, repeat” has become the new philosophy of the British state. The next flashpoints will probably be the police (who warn the coming cuts will start to reverse the recent fall in crime) and schools (which are already experiencing a recruitment crisis and face an 8% fall in spending per pupil over the course of the Parliament). + +And things are set to get worse. In the budget Mr Hammond confirmed that the austerity programme launched in 2010 will continue at a similar pace, accelerating in sensitive fields like prisons and local government. Other pressures are growing. Inflation is rising and the population is ageing. And all this as Britain’s exit from the EU threatens the very tax base that keeps the show on the road. The Institute for Government now talks of “a disastrous combination of failing public services and breached spending controls just as we exit the European Union in 2019.” At best the coming years will be a rough ride. At worst they could buck the government out of its saddle. + +Economist.com/blogs/bagehot + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21718529-worst-possible-moment-leviathan-under-strain-britains-state-poorly-equipped/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +International + + +Grain consumption: Of rice and men [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Of rice and men + +A circular tale of changing food preferences + + +West Africans are eating more like Asians. Asians are eating more like Americans. And the richest Americans… + + + + + +From the print edition | International + + +Mar 9th 2017 | LOS ANGELES, SINGAPORE AND TIASSALÉ + + + + + +IF YOU think of food simply as sustenance, or as a source of pleasure, a trip to the farmer’s market in Pacific Palisades will open your eyes. To the Lycra-clad shoppers in this wealthy district of Los Angeles, eating is an intensely tricky activity. A woman in a felt hat, Julie, says she tries to avoid white flour because it makes her feel bloated—though she makes an exception for tortillas. A mother of a four-year-old eats rice five times a week, but is “not proud of it”. Having educated herself about food, a third woman, Suzanne Tatoy, favours brown rice, quinoa, amaranth and millet. + +Food fads are strange, powerful things. Between the 1970s and the 1990s Americans ate more and more wheat, partly because they were trying to avoid cholesterol. Then came a string of popular low-carbohydrate diets, from Dr Atkins to paleo. A rise in coeliac disease and selfdiagnosed gluten intolerance has made wheat seem decidedly dangerous. Between 1997 and 2015 flour consumption in America fell from 67kg per head to 60kg. + + + + + +Yet the foodies of Pacific Palisades are not just swayed by science—or even pseudoscience. They are also driven by fashion, which has decreed that some grains are out and others are in. In that sense they are part of a huge global trend. People in many countries are dropping familiar grains for new ones, for reasons to do with agricultural technology, work, health and social aspirations. This shift is more-or-less circular. Everybody is trying to eat more of the grains that better-off people are eating, except the very wealthy, who prize poor people’s food. The story begins in the fields of west Africa. + +Aboud Kobena has been growing rice near Tiassalé, in Ivory Coast, since 1991. He has many complaints. The pump that draws water from a nearby river to irrigate his 35-hectare farm is on the blink again. The machines he has bought to speed up harvesting have proved a poor advertisement for Chinese engineering. Labour is expensive, he says, and “people have become lazy.” Worst of all, the price his crops fetch is far lower than a decade ago. The problem, says Mr Kobena, is that now everybody is growing rice. + +Africa mostly missed out on the green revolution that boosted agricultural production in Asia from the 1960s onwards. That was partly because of war and lousy government. Another problem is that growing conditions in Africa are both distinct from those in Asia and highly varied across the continent. “We don’t have the same soils, we don’t have the same diseases, we don’t have the same pests,” says Harold Roy-Macauley, the head of Africa Rice, which co-ordinates research in Africa. Yet the continent is beginning to catch up, with rice farmers in the vanguard. + +Faster, cheaper, better + +Between 2000 and 2014 rice production in west Africa jumped from 7.1m tonnes to 16.8m tonnes (see chart). In Ivory Coast, which is mostly known as a cocoa producer, the rice harvest tripled over that time. New hybrid seed lines developed specifically for Africa, such as NERICA and WITA, have boosted yields and enabled farmers to grow rice in dry areas where sorghum was once the dominant crop. + + + +Rice has long been popular in some west African countries, such as Senegal. It is becoming a staple in much of the region. Thomas Reardon, who studies food at Michigan State University, says that urbanisation is driving demand. Urban workers developed a taste for rice in cafés and now cook it at home. Besides, rice is less fiddly to cook than millet or sorghum, adds Mr Roy-Macauley—a convenience food for Africa’s tired city workers. + +The Food and Agriculture Organisation, a branch of the UN, estimates that rice consumption per head is growing faster in sub-Saharan Africa than in any other region. That is likely to persist, because Africa’s cities are adding inhabitants so fast—by 3% a year, on average. So there is plenty of opportunity for African farmers. And African demand is also a boon to the rice-producing countries of Asia. They could do with some new customers, because demand at home is not what it was. + +So central is rice to life in Asia that in many countries, rather than asking “how are you?” people ask, “have you eaten rice yet?” Around 90% of the world’s rice is consumed in Asia—60% of it in China, India and Indonesia alone. In every large country except Pakistan, Asians eat more rice than the global average. + +Between the early 1960s and the early 1990s, rice consumption per head rose steadily, from an average of 85 kilograms per year to 103. As Asia scraped its way out of poverty people began to consume more food, and rice was available and affordable. In the poorest Asian countries, such as Bangladesh and Cambodia, a full rice bowl remains a sign of plenty (70% of calories come from rice in Bangladesh) and people continue to eat more of it. + +But rice consumption is now more-or-less flat in Asia as a whole. In better-off countries rice is going out of fashion. Figures from the United States Department of Agriculture (USDA) suggest that rice consumption per head has fallen since 2000 in China, Indonesia and South Korea, and has crashed in Singapore. Obeying a rule known as Bennett’s law, wealthier Asians are getting more of their calories from vegetables, fruit, meat, fish and dairy products. And, as in Africa, many people are switching to another grain. + +Whereas roadside stalls in South-East Asia still dish up rice to the masses, fancy shopping malls are increasingly dominated by wheat. A proliferation of bakeries offer traditional European pastries and breads as well as peculiar Asian inventions. BreadTalk, a fast-growing chain based in Singapore, does a roaring business in “floss buns”—sweet white buns larded with butter, coated with egg and rolled in dried shredded pork. + +Joseph Lee, the owner of The BreadTable, another Singapore bakery, puts the growth in demand down to tourism and migration. “The more people started to travel, the more they wanted to find European bread when they came home,” he says. “Now we have people asking for sourdough.” He opened in 2013, the first of a rush of European-style bakeries. + +Wheat consumption is rising quickly in countries like Thailand and Vietnam (see map). South-East Asian countries will consume 23.4m tonnes of wheat in 2016-17, estimates the USDA—up from 16.5m tonnes in 2012-13. Almost all of it will be imported. In South Asia consumption is expected to grow from 121m to 139m tonnes in the same period. India, which was recently a large net exporter of wheat, has become a net importer. Some of the wheat is for animal feed, but most is simply for eating. + + + +This trend has a long way to run, thinks Rabobank, a bank. South-East Asians still eat only 26kg of wheat a year, much less than the world average of 78kg. They seem unperturbed by price rises: wheat-eating kept growing even as the grain became more expensive between 2009 and 2013, although its use as an animal feed declined. Still, rice will remain central to many Asian cultures. People are unlikely to start greeting each other by asking if they have eaten bagels yet. + +Newfangled ancient grains + +As west Africans fill their plates with rice, and South-East Asians munch ciabatta, Americans are moving away from both. “You can only eat so many cakes,” suggests Graydon Chong, an analyst at Rabobank. And wheat has new competitors, especially in America’s richest quarters. Or, to be precise, new ancient competitors. + +Café Gratitude is a gourmet vegetarian restaurant in Venice Beach, a district of Los Angeles that is health-conscious even by the standards of that metropolis. Each item on the menu is an affirmation, so you are supposed to order a dish called Glorious by announcing, “I am glorious.” Pizza is available (“I am giving”), but it is made from einkorn and Kamut. Side dishes include brown rice and quinoa. + +Einkorn and Kamut are both types of wheat. Their promoters say they have long pedigrees and have escaped meddling by modern plant-breeders. Quinoa is something else: the seed of a plant that grows mostly in Central and South America. Such grains, and various others besides, tend to be marketed as “ancient grains”. Supposedly they are healthier and more authentic than plain old rice and wheat. Most assuredly, they are more expensive. A few miles north of Venice Beach, in the Santa Monica farmers’ market, Larry Kandarian sells organic black barley for $9 a pound and Ethiopian blue tinge farro (another kind of wheat) for $7. + +The fad for “virtuous” grains is spreading beyond Californian foodies. In 2015 General Mills, a large American food company, introduced a breakfast cereal called “Cheerios + ancient grains” containing Kamut, oats, quinoa and spelt. Ronzoni has created a pasta with amaranth, millet, quinoa, sorghum and teff. Datassential, a market-research firm that tracks restaurant menus, reports that 9% of casual restaurants and 16% of “fine dining” ones offered quinoa in 2016. Sorghum, which Americans have long fed to livestock, is also creeping onto menus for people. So is millet, which is normally treated as birdseed. + +It is too early to tell whether ancient grains are more than a fad. Although global quinoa production rose from 58,000 tonnes in 2008 to 193,000 tonnes in 2014, it is still a trivial crop compared with rice, wheat or maize. The most important cereals benefit from dense networks of agricultural research institutes that work to raise yields and suppress pests and diseases. They are often subsidised. + +Yet it is consumers, not governments, who ultimately drive changes in diets. And consumers almost everywhere seem to have acquired a taste for novelty. Packaged foods are becoming more popular even in poor African and Asian countries, says Mr Reardon. He is especially struck by the rise of wheat noodles in Africa. Indomie, an Indonesian firm, started making noodles in Nigeria in the mid-1990s. It now has several rivals in that country, and demand is rising elsewhere in west Africa. The reign of rice might prove brief. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21718508-west-africans-are-eating-more-asians-asians-are-eating-more-americans-and/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Technology Quarterly + + +Quantum devices: Here, there and everywhere [Fri, 10 Mar 04:34] + +Metrology: Sensing sensibility [Fri, 10 Mar 04:34] + +Communications: Oh what entangled web we weave [Fri, 10 Mar 04:34] + +Quantum computers: Cue bits [Fri, 10 Mar 04:34] + +Brain scan: David Deutsch [Fri, 10 Mar 04:34] + +Software: Program management [Fri, 10 Mar 04:34] + +Uses: Commercial breaks [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Technology Quarterly + +Here, there and everywhere + + + +Quantum technology is beginning to come into its own + +After decades as laboratory curiosities, some of quantum physics’ oddest effects are beginning to be put to use, says Jason Palmer + +PATRICK GILL, a director of the new Quantum Metrology Institute at Britain’s National Physical Laboratory (NPL) in south-west London and an expert in atomic clocks, points to a large table full of lenses and mirrors, vacuum chambers and electronics. “And there’s a smaller one over there,” he says. + +NPL is part of a consortium of the planet’s official timekeepers. In all its atomic-clock laboratories, each of the flagship devices—some of which are huge—is flanked by a smaller one under construction. Miniaturisation is the name of the game. Here is one that fits into a standard electronics rack, 19 inches wide. Over there is a fist-sized gizmo designed to hold an atomic clock’s precious innards safe within a satellite. + +The caesium atomic clock, developed at NPL, was arguably the world’s first quantum technology, though it was not labelled as such. The most common approach, first used in 1950, works by putting energy into atoms to create a “superposition” in which they are, in a measurable way, in more than one energy state at the same time—both excited and relaxed. Probing this strange condition reveals the “clock frequency” of those atoms—a constant for clocks on every continent, and the basis for a precise, internationally agreed definition of the second. + +After decades of work in the laboratory, a raft of different devices and approaches relying on quantum-mechanical effects are now nearing market-readiness. It has taken so long mainly because the components that make them up had to be developed first: ever-better lasers, semiconductors, control electronics and techniques to achieve the low temperatures at which many quantum systems perform best. + +Britain did not exploit the atomic clock’s discovery in the market. Instead, a year after the device was invented, it was commercialised by the National Company, an American firm. Given the potential of these new quantum technologies, this time commercialisation is on many minds. The NPL’s ever-smaller clocks are just one step towards marketable products that could vastly outdo GPS (which itself is an application of atomic timekeeping) in navigation, or help spot what lies underground. The era of quantum technology is almost here. + + + +The odds are good; the goods, odd + +Everything in the natural world can be described by quantum mechanics. Born a century ago, this theory is the rule book for what happens at atomic scales, providing explanations for everything from the layout of the periodic table to the zoo of particles spraying out of atom-smashers. It has guided the development of everyday technologies from lasers to MRI machines and put a solid foundation under astrophysicists’ musings about unknowables such as the interiors of black holes and the dawn of the universe. Revealed by a few surprising discoveries, such as that atoms absorb and emit energy only in packets of discrete sizes (quanta), and that light and matter can act as both waves and particles, it is modern physics’ greatest triumph. + +It has a weird side, though, and it is this that has captured interest in what is now being called the second quantum revolution. The first one was about physics: about understanding how the world worked at the tiny scales where quantum mechanics rules. Not only can particles be in two states at once, as with the atoms in an atomic clock; sometimes two of them, separated by a great distance, seemingly sense something about each other’s condition, a situation called entanglement. A particle’s exact position or state is never certain until a measurement is made; there are only higher or lower likelihoods of a given outcome, and the measurement changes the situation irrevocably. All this has been clear from the mathematics since the mid-1920s but was made manifest in laboratory experiments only later in the 20th century. As the theory’s more straightforward predictions were put to use, for instance in electronics, quantum mechanics gained a reputation for being counterintuitive, even downright spooky. + +The expertise gained during those years is now paying dividends. The most counterintuitive quantum-mechanical predictions are being harnessed to make measurements of staggering precision, to generate uncrackable codes and to form the basis of impenetrable communications networks. Quantum computers may eventually crunch through currently unapproachable problems, improving the transmission of electric power or the manufacture of energy-intensive fertiliser, or simply sifting through impracticably large data sets. However, long before then computing systems that still fall far short of a general-purpose machine are likely to start providing solutions in industries such as finance, energy and aerospace, and even help with things as mundane as recommendation engines. + +From small beginnings + +Much work remains to be done. Although a handful of quantum-enabled sensors, modest quantum networks and rudimentary quantum computers are already in use, they still fall short of fully exploiting quantum advantages, and few of them are ready to be widely deployed. According to McKinsey, a consulting firm, in 2015 about 7,000 people worldwide, with a combined budget of about $1.5bn, were working on quantum-technology research (see chart). Industrialisation will boost those numbers. + + + + + +What is notable about the effort now is that the challenges are no longer scientific but have become matters of engineering. The search is on for smaller atomic clocks, for example; for a means to amplify and route quantum-communications signals; and for more robust “qubits” (of which more later) for quantum computing. Startups are embracing the technology with gusto, and tech giants have already planted their flags. There is wide agreement that Google is furthest along in quantum-computer technology and that Microsoft has the most comprehensive plan to make the software required. + +Public money is flowing in, too. National and supranational funding bodies are backing increasingly ambitious quantum-technology efforts. Britain has a programme worth £270m ($337m) and the European Union has set aside €1bn ($1.08bn) for a pan-European programme. Many quantum technologies have security implications, so defence departments are also providing funding. + +Many firms are already preparing for a quantum-technology future. In 2015 IBM set up its Research Frontiers Institute, inviting corporate participants to share ideas about growth areas in technology, the quantum kind being one. The research fund of AXA, a big insurer, has endowed a professorship in quantum information at the Institute of Photonic Sciences in Barcelona to consider the data-privacy risks presented by the coming quantum boom. + +Quantum technology looks set quickly to find its way into all manner of products and services—mostly behind the scenes, as artificial intelligence has recently done. It may be weird, but it promises to be wonderful too. + + + + + +Metrology: Sensing sensibility + + + + +Quantum technology’s supersensitivity makes it great for measuring + +SINCE its inception a century ago, quantum physics has faced something of an experimental problem. The theory promises all manner of interesting and perhaps useful behaviours of particles in isolation, under rigidly controlled conditions. But on the lab bench particles and atoms are never fully isolated, so quantum experiments can be damnably difficult. + +However, that difficulty also presents an opportunity for quantum technology: sensing. “We turn that on its head,” says Sir Peter Knight, a British quantum expert. “If it couples to the outside world so effectively, it’s sensing the outside world really effectively.” Take the first quantum technology to make it to market, the atomic clock. Most designs work by tapping into the energy levels of atoms that are prodded with microwaves. Some of those atoms absorb the light in such a way that they are neither in their unperturbed, lowest-energy state nor in an elevated-energy state but in both at the same time, an effect that is central to quantum mechanics. An improved design “entangles” these microwave levels in one atom with different energy levels in another—levels that correspond to visible light, which has a much higher frequency. Such entanglement, another quantum effect, links the fates of two atoms, temporarily but inextricably, so that experiments on one yield information about the other. Entangling microwave levels with higher-frequency ones associated with visible light allows the clock to access the higher precision that goes with them. In 2012 David Wineland, of NIST, the American national metrology facility, received a Nobel prize for working out how to do this. For some years, his clock was the most accurate measuring device on Earth: had it been set ticking at the time of the Big Bang, 13.8bn years ago, it would still be accurate to within a second. + +Precise timing, particularly from the small, cheap devices that are now being developed, has a wealth of uses, from time-stamping high-frequency market trades to quickly changing settings within a dynamic energy grid. Even lifting an atomic clock up can change how long a tick appears to take: according to the general theory of relativity, time moves ever so slightly more slowly closer to the Earth than further away. Nuisance or opportunity? It’s all relative. A well-calibrated atomic clock could use this discrepancy to make an ultra-precise height measurement. Or, at a fixed height, it could sense the gravitational attraction of what is below; solid bedrock would give a different reading from an oil-and-gas pocket. + +Laws of attraction + +Clocks are not the only means to get a handle on gravity. At the microscopic scales where quantum mechanics rules, streams of matter particles can behave like waves. Like those on a pond’s surface, those waves can interfere, adding to and subtracting from one another—in the quantum description, altering the probability of finding a particle here or there. In a device called an atom interferometer, two particle streams are sent at differing heights and then brought back together to interfere with each other. The degree to which the two paths are different, indicating the relative strength of the gravitational tug from below, measurably alters the degree of addition and subtraction. + +Such devices have a multitude of uses. In Britain, for example, 4m holes are dug every year in the course of roadworks and construction, but two-thirds of the time the diggers have no idea what they will find beneath the surface. Test boreholes cover only a small area, and ground-penetrating radar does not reach deep enough. A gravity sensor that could tell pipework from pebbles would save a lot of trouble. + +RSK, an environmental consultancy involved in cleaning up brownfield sites and the like, reckons that a third of construction projects overrun by up to a month, and another third by two months or more, and that half of these delays arise because of underground surprises. The company is collaborating with the University of Birmingham in Britain on fieldworthy quantum gravity sensors, in the hope of deploying them in big infrastructure projects. Other efforts to develop cheap sensors have drawn interest from companies such as Schlumberger, an oilfield-services giant, and Bridgeporth, a surveying firm. + +Military types are interested, too. “You can’t shield gravity,” says David Delpy, who leads the Defence Scientific Advisory Council in Britain’s defence ministry. Improved gravity sensors would be able to spot moving masses under water, such as submarines or torpedoes, which could wipe out the deterrent effect of French and British nuclear submarines. Quantum gravimeters could precisely map geological features from the gravitational force they induce. That would help with getting around in places where satellite-navigation signals are not available—“a kind of Google Maps for gravitation”, as Dr Delpy puts it. + +And gravity, the theory of relativity also says, is just one manifestation of acceleration: a good gravimeter is a good accelerometer. And a good accelerometer is a good vibration sensor. Once they are small enough and good enough, all these high-precision devices will be of great interest to carmakers, and in particular to the autonomous-vehicle industry, the success of which will depend on accurate sensing of the movements of cars and their surroundings. Bosch, a German firm that is the world’s largest maker of automotive components and a supplier to many other industries, already has its eye on quantum-technological enhancements to its products. + +Michael Bolle, the firm’s head of research and development, believes sensors will be quantum technology’s first market success. “I’m not talking about niche markets,” he says. “I’m interested in the trigger point where things really go into mass production.” Quantum technologists the world over are preparing for this market explosion by patenting their findings. In some countries, such as Japan and Australia, quantum sensors make up a large part of national patent portfolios (see chart). + + + + + +Mr Bolle and others are also interested in sensors based on “nitrogen vacancies”—places where a diamond’s all-carbon network has been disrupted by one nitrogen atom next to a missing carbon atom. This is a quantum physicist’s playground: mostly isolated by its rigid cage of carbon neighbours from the bumpy, fluctuating world outside, electrons from the nitrogen atoms can be easily manipulated and measured, placed in superpositions and even entangled with one another. Just like the hypersensitive clock, these systems are extraordinarily responsive to their environment and can act as precise sensors of pressure, temperature and electric current. + +Where they have shown the most promise is in measuring magnetic fields. Recent studies show that nitrogen vacancies can detect the on-and-off magnetic field of single nerve cells. The same principles can work inside the human body, too. Nanoscale diamonds with nitrogen vacancies have been used to spot chemical changes in living cells, and researchers from the Institute of Theoretical Physics and the Institute of Quantum Physics in Ulm, Germany, have formed NVision, a startup that uses such nanodiamonds to match the current best magnetically enhanced MRI techniques, but 40 times faster and at a quarter of the cost. + +High performance in these applications depends on well-understood nitrogen vacancies, which occur sporadically in natural diamonds but whose positions and number must be known for precision measurement. Enter Element Six (a subsidiary of DeBeers, the world’s largest diamond producer), which manufactures diamonds with precision-engineered nitrogen vacancies. + +Capture the friendly ghost + +Quantum-enhanced approaches may also supplement other biological imaging techniques, such as positron emission tomography (PET), which takes pictures of the high-energy gamma-ray light flying out of injected radioactive tracers. Each tracer molecule’s interaction with tissue spits out two photons in opposite directions. Quantum-entanglement tomography aims to make use of the fact that those photons are entangled when they are created. In PET, the photons can be hard to track because they bounce off body tissues. The entanglement of each pair makes it easier to work out which came from where, so scans take less time and radioactive material. + +Ghost imaging is another promising way of making use of light’s quantum nature. The technique involves splitting a beam of light in two and aiming the resulting two beams at two detectors, one directly and one through a somewhat opaque medium, such as turbulent air rising from hot ground or a smoke-filled room. Because the photons making up the beam are correlated, a rigorous accounting of what the two detectors can see yields images of what the eye cannot. In 2013 researchers from America’s army showed that the technique worked over more than 2km. + +The technique points to a fascinating debate that underpins many discussions in the broader quantum-technology community about exactly how quantum effects confer an advantage. Though ghost imaging was predicted in the 1990s, arguments still rage about whether entanglement is playing a role or whether it works simply because light comes in discrete, countable photons. “There are plenty of physicists that don’t understand the distinction,” says Miles Padgett of the University of Glasgow, a quantum-imaging expert. “And I don’t think it matters. What matters is, are we using our knowledge in the quantum world to bring competitive advantage?” With hand-held detectors that can sense height differences down to a millimetre, magnetometers that can in principle watch your every neuron and imaging kit that can see across a smoky battlefield, the answer is ever more clearly yes. + + + + + +Communications: Oh what entangled web we weave + + + + +Quantum networks could underpin unhackable communications links + +IN 2004 the Bank of Austria and Vienna’s city hall notched up the first quantum-encrypted bank transfer. Anton Zeilinger, a quantum-cryptography pioneer whose lab facilitated the transfer, expressed his hope that “all problems of implementation will be solved within three years.” They were not. + +The technology was put to the test again in 2007 when quantum-encrypted vote tallies from the Swiss federal election were sent from polling stations to the Geneva state government. Engineers insisted that the transmission was utterly impervious to eavesdropping or tampering; a company called ID Quantique had developed a system that harnessed one of the rules of quantum mechanics to offer total security. + +That claim, too, turned out to be premature. Hackers have since demonstrated that equipment used in such transfers could be vulnerable to attack. What is more, such quantum encryption also required a single, dedicated fibre between sender and receiver, which limited the technique to high-profile transactions, and precluded the cross-linking of many senders and receivers that has made networking and the internet so successful. + +Key findings + +That is now changing. In response to hackers’ attacks, the kit has become markedly more secure. Field trials have shown that delicate quantum light signals can be sent through the same fibres that bring the internet to homes and businesses. And efforts to make quantum-enhanced versions of the equipment that amplifies and distributes standard optical signals are bearing fruit. Quantum networks are springing up or expanding. And quantum communications, just like their conventional counterparts, will soon be whizzing through space, too. + +The most discussed and deployed technique is called quantum-key distribution (QKD). In one set-up, a sender launches single photons toward a receiver, randomly choosing one of four planes along which the light particles are polarised, two of them associated with a 0 and the other two with a 1. The receiver likewise randomly chooses which kind of polarisation to check for. After sending a string of these bit-associated photons, the pair can publicly compare notes on which polarisations they employed; whenever they happen to have chosen the same one, the 0 or 1 associated with that polarisation can be used as a bit in a cryptographic key. + +What contributes to the system’s security is Heisenberg’s uncertainty principle, a much-touted quantum rule which, in this case, guarantees that an eavesdropper would disrupt the system’s randomness, because intercepting and measuring a given photon forces it into a given polarisation. That disturbance to the system would reduce the number of coincidences the pair sees; if there are too few (they should be seen about half the time), they know someone is on the line. + +Physics textbooks will tell you that a sufficiently long cipher, randomly generated this way and used only once, is absolutely secure. But Vlatko Vedral, of the Centre for Quantum Technologies in Singapore, says that hackers who have been invited to try to break into the centre’s quantum-communications experiments have often succeeded—not by beating quantum rules but by ruthlessly exploiting shortcomings of the kit itself. For example, storing a digital 0 generates a slightly different amount of heat from storing a 1, so careful observation of the heat being generated can expose the string of digits being received. Once discovered, such hacks are easily prevented. As time has gone on, such shortcomings have narrowed in scope, and have driven innovation. + +Thanks to the development of ever more secure links, quantum cryptography has recently been deployed more widely. ID Quantique has installed quantum links between data centres of KPN, a Dutch telecoms firm; of Battelle, an American non-profit research firm; and of Hyposwiss and Notenstein, two Swiss private banks. It offers links between financial institutions in Geneva and a disaster-recovery centre 50km away. In 2015 researchers at Toshiba in Japan began sending quantum-encrypted genomic data from a research facility in Sendai to Tohoku University, 7km away. + + + + + +But the future of the technology lies in quantum networks—the infrastructure required to connect many senders and receivers. These are springing up within and between major metropolitan areas. South Korea’s government is funding a 250km link to join existing metro quantum networks. In Britain a network of similar length will be deployed between the cities of Bristol and Cambridge, via London. Australia is building a closed government network in the capital, Canberra. + +No quantum network is more ambitious than the one completed in China at the end of last year. Funded by the central government, it links Beijing and Shanghai via Jinan, which already has a metro network over 70 square kilometres, made up of 50 “nodes”—switchboards connecting senders and receivers—and Hefei, which has a 46-node network. Its customers include China Industrial and Commercial Bank, the China Banking Regulatory Commission and the Xinhua news agency. + +Distance presents a problem. As the meticulously prepared photons with their delicate quantum states bounce along lengths of fibre, those states eventually get scrambled and their information is lost. To ensure fidelity and security, the fibre link should be no longer than about 200km. Standard fibre-optical signals suffer from the same weakening of the signal, so “repeaters” to boost it are placed at regular intervals along their path. But under the quantum rule book, unknown quantum states cannot be copied, so quantum data would need to be temporarily decrypted before receiving a boost, creating a security loophole. + +There are two ways to get round this, one by land and one by air. The land-based solution is to develop quantum analogues of the repeater. That will require a quantum memory that can store incoming information, and a means of sending them on that does not compromise quantum security. That last part requires another bit of quantum trickery: teleportation. This is a way of projecting the quantum state of one particle (not, it should be stressed, the particle itself) onto another, distant one. Last year two research groups showed the benefits of teleportation across two metropolitan networks, in Calgary and Hefei. Crucially, they carried out their experiment using the same wavelengths as those used in existing telecoms networks, to ensure that the new technique can be used with existing fibre infrastructure. It did the trick. + +Spooks reacting at a distance + +Another tack is to take to the air, over similar distances but without the need for a particular fibre link. The current record for teleportation of quantum states in this way was set in 2012, when researchers sent a quantum-encrypted message between two of the Canary islands, 143km apart. A long-standing ambition is to apply the idea to space: for a photon, the disturbance caused by the whole thickness of the Earth’s atmosphere is equivalent to that caused by just a few kilometres of air at the surface. + +Last August China launched Micius, a quantum-key-distribution-enabled satellite backed by tech companies including Huawei and Lenovo. The goal at this stage is to link the Beijing-to-Shanghai network to another in Urumqi, in Xinjiang province, some 3,000km away. Efforts to develop satellite communications are also under way in Singapore, Canada, Japan, Italy and America. Once the challenges of getting quantum signals into space—through turbulent air, clouds and so on—are overcome, a global network could easily follow. + +With country-spanning networks and quantum-enabled satellites, it is easy to envisage a global “quantum internet” in which each link offers quantum-enhanced security. But the kind of innovation that will allow the development of such networks will also be of use, for example, in shuttling information within, and between, future quantum-computing devices: think quantum distributed computing and quantum cloud computing. Just as the internet has demonstrated the power of linking many standard computers, says Seth Lloyd, a theorist at the Massachusetts Institute of Technology, “the quantum internet has the potential to change the way in which people and organisations collaborate and compete, establishing trust while protecting privacy.” + +Not everyone is convinced yet. The defence establishment seems to have been put off by some of the early setbacks to quantum links. Quantum-communications efforts are under way, for example in the research arms of America’s army and navy, but an analysis by the air force’s Scientific Advisory Board suggested that QKD had “little advantage over the best classical alternatives”. And doubters rightly point out that encryption is not the weakest link in many security chains. + +Yet as the hardware improves and heavy investment continues, quantum networks may begin to look like a strategic must-have; if so, consumer applications are likely to proliferate. The European Telecommunications Standards Institute (ETSI), which sets global benchmarks for the industry, is working to define quantum-cryptography standards. ETSI scientists want to ensure that kit from multiple vendors can work together, and to create a certification so that consumers (including spooks) are guaranteed a widely agreed level of security. Miniaturisation efforts are well under way too, so before long the equipment may fit in the palm of your hand—or in your phone. + + + + + +Cue bits: Why all eyes are on quantum computers + + + + +Tech giants and upstarts alike are piling into a technology with huge potential + +IN 1981 Richard Feynman, a visionary physicist, had a clever idea. Could the odd properties of quantum mechanics, he wondered aloud in a lecture, be used to carry out simulations of physical systems that computers of the time could not cope with? Others took up the question. In 1985, David Deutsch, now at Oxford University, showed how quantum systems could be set up as a “universal” computer—that is, like current computers, able to run any program. Though fascinating, at that point it was all rather theoretical, involving hardware that no one knew how to build. + +What made the world sit up and take notice was a paper published in 1994 by Peter Shor, then at Bell Labs. Dr Shor showed that a quantum computer would be capable of working out the prime numbers that, multiplied together, make up an exceedingly large number. The fact that this “decomposition” is mathematically very hard is the basis of cryptographic protocols still used today. + +Since then, researchers have come up with a rich variety of problems for which quantum computers should be superior to the best supercomputers—and a number of algorithms, or sets of steps, to break down problems in such a way that quantum computers can crunch through them. This evident utility started an international competition to build one that was, for many years, confined to quiet labs and the academic literature. These days, big business is seriously interested, and blue-chip companies including Intel, Hewlett-Packard, Google and Microsoft all have research programmes. Last year IBM released Quantum Experience, which lets all comers play around with a crude quantum computer over the internet. Governments too are putting money into academic efforts, both directly and via defence contractors, and a growing band of startup companies are striking out on their own. + +A computer big enough to do what Dr Shor envisaged would also be useful for all manner of currently intractable problems. Although that remains a distant prospect, steps towards developing one could have big benefits; for many applications, a much simpler or special-purpose computer will do. + +Bit by bit + +What makes the idea of quantum computers so attractive is not so much that they will work faster than traditional computers—they may for some applications but not for others—but that they will work fundamentally differently. Three intuition-defying concepts play a role. The first is superposition. Today’s computers depend on bits taking one of two values, 0 or 1. Qubits, their quantum analogues, can be arranged in “states” that are best thought of as some mixture of both 0 and 1. To carry out a computation using one of these strange beasts is to act on both the 0 and the 1, in a sense to create within the calculation the potential outcome of either at the same time. + +The power of this indeterminate state is unleashed through the second quantum-mechanical effect, entanglement. A standard computer depends on the complete isolation of one bit from the next to prevent a computation from going awry or a document from getting corrupted. For a quantum computer, the entangling of multiple qubits is paramount; in the best case, all of a given device’s bits are entangled with one another. Again, to operate on one qubit is to operate, to varying degrees, on all the entangled ones. It is therefore impossible to describe such a machine in strict terms of its constituent parts. There is a need to consider how one qubit is connected to its neighbour, and to the next-but-one, and so on through all the cross-correlations. To describe all the states of a 50-bit standard computer requires 50 bits of digital memory; a description of a 50-qubit computer would require a quadrillion. + +It gets weirder. Whereas it is easy to imagine an equation that predicts a low or even zero probability of a given event, it is much harder to reckon with what are called probability amplitudes in quantum mechanics, which can actually be negative. In the course of a quantum computer’s crunching, these amplitudes can (again like waves) interfere, positive with positive and negative with negative—in essence, to reduce the probability of the wrong answer and boost that of the right one. + +Posing a question starts with choosing an algorithm suitable for the problem. This algorithm is actually manifest as the starting states of the qubits: 0 here, 1 there, a bit of a mix over there. The calculation is then just a matter of letting quantum-mechanical laws play out on this system of superposed and entangled qubits. Changing states, shifting qubit couplings and so on represent a vast cross-multiplication of all those states and combinations, with probability amplitudes reinforcing and diminishing until the system settles into a final state that represents the answer. It is a matter of setting up the problem, and the machine, so that all the possibilities are sifted through at lightning speed. + +Efforts to make qubits often centre on the use of tiny loops of superconducting wire, arranged like the “gates” of standard computers. Single charged atoms, trapped by electric or magnetic fields, can also do the job; in February an international consortium of researchers published an open-source blueprint for a trapped-ion machine. Several groups use single photons as qubits—an approach that looks easy to integrate with existing semiconductor-fabrication techniques. Microsoft’s planned “topological” quantum computer uses something else entirely: “anyons”, particles that would be more easily tamed than other qubit candidates but which have never been seen outside the pages of theoretical physics textbooks. + +Setting up a qubit is no longer difficult. The problem is looking after it. Quantum states are notoriously delicate, requiring complete isolation from the actual stuff of the experiment. But isolation can never be complete, and errors creep in; for a calculation to succeed these must be noticed and corrected. It has become clear that as computers scale up, the number of logical qubits (the ones actually doing the calculation) will be dwarfed by an “overhead” of perhaps thousands of times as many error-correcting and command-and-control qubits. The kind of machine required to implement Shor’s famed algorithm on the sort of large numbers used in encryption will need to contain something like a million qubits. + +Such machines will, to put it mildly, be an engineering challenge. But in a clear indication that quantum computing is getting closer, names familiar from traditional computing are increasingly getting involved. Hewlett-Packard is trying to build its own machine. Intel’s global quantum investments include $50m going into work at QuTech, the Netherlands’ national quantum-technology hub. Microsoft’s topological quantum approach, if it works, will be much less error-prone. The quantum-computing startup scene is also becoming increasingly vibrant. Researchers from Yale and the University of Maryland have spun off companies, and physicists who had worked at IBM and America’s Department of Energy have started their own firms. + +Governments are getting in on the action too. Australia’s has invested A$26m ($20m) in a laboratory at the University of New South Wales in Sydney (and the Commonwealth Bank of Australia and Telstra, a telecoms firm, have together chipped in about the same amount). A lab at the University of Sydney down the road is being funded as part of LogiQ, a programme of the Intelligence Advanced Research Projects Activity, an American government defence outfit. Leaked documents have revealed that America’s National Security Agency has been exploring “if a cryptologically useful quantum computer can be built”. Experts now reckon it can. But when? + +Simulating discussion + +Very few in the field think it will take less than a decade, and many say far longer. But the time for investment, all agree, is now—because even the smaller and less capable machines that will soon be engineered will have the potential to earn revenue. Already, startups and consulting firms are springing up to match prospective small quantum computers to problems faced in sectors including quantitative finance, drug discovery and oil and gas. + +Perhaps the most interesting early applications will take the form of “quantum simulators”: computers that mimic real physical systems. This is what Feynman had in mind, imagining in his lecture “that the computer will do exactly the same as nature”. Quantum simulators might help in the design of room-temperature superconductors allowing electricity to be transmitted without losses, or with investigating the nitrogenase reaction used to make most of the world’s fertiliser. + +Quantum simulation has its fans in industry, too. Michael Bolle at Bosch foresees using simulators to design batteries that will supersede the current lithium-ion technology. Paolo Bianco, who heads the quantum-technology research team at Airbus, a big European aerospace firm, says that quantum-simulating a new material such as a stiffer or lighter alloy for use in aeroplanes or satellites would be much faster and cheaper than manufacturing and then testing the material itself. “The promise of quantum technologies”, he says, “is in engineering terms a step up in performance—not of 20%, but of a couple of orders of magnitude.” + +For some applications and classes of problems that may well be true. But the experience of D-Wave Systems, a Canadian company that began selling the first commercially available quantum computer in 2011, shows how little is known about what future machines will be able to do. D-Wave makes what is known as a quantum annealer, a special-purpose quantum computer (as opposed to a universal one) that works best on “optimisation” problems, such as finding the shortest possible route for a travelling salesman. The firm’s customers include Lockheed Martin and a consortium including Google and NASA. In January Temporal Defense Systems, a cyber-security firm, bought one. + + + +For years experts questioned whether the devices were actually exploiting quantum mechanics and whether they worked better than traditional computers. Those questions have since been conclusively answered—yes, and sometimes—but only by exhaustively testing the machines’ mettle directly. The current best supercomputers are able to simulate only what more general-purpose quantum computers of about 50 qubits can do. Tantalisingly, it is difficult to tell at what problems bigger machines will excel. + +Google is aiming to use its own machinery, a so-called gate-model quantum computer of the sort most groups are pursuing, to achieve “quantum supremacy”, whereby a quantum computer performs a calculation faster than any known computer could. Google researchers have laid out an ambitious plan which may let them achieve that feat this year. D-Wave has hinted it has already done so, but has made similar claims in the past; their current numbers are still to be checked. + +Whenever, and by whomever, this is accomplished, it will launch an era of small-scale machines offering quantum-enhanced solutions and services. The first publicly accessible one, IBM’s Quantum Experience, may be an indication that the machines’ future will be in the cloud. Most users have no more need for one at home than they have for a supercomputer. + +But some do. In 1982, a year after Feynman gave his quantum-computing lecture, he was touring the supercomputer facility at Los Alamos National Laboratory, where he had worked on the first atomic bomb. Talking to Bo Ewald, then in charge of the lab’s computing efforts and now running D-Wave, Feynman said, “You know, young man, one day all of these will be replaced by quantum computers.” One has already moved in. + + + + + +Software: Program management + + + + +Quantum-computer code could do wonders—but also unravel well-kept secrets + +IT DOESN’T help to have a quantum computer if no one knows how to program it,” says Tim Polk, of the White House Office of Science and Technology Policy in Washington. Although academic efforts to build quantum-computer hardware have been going on for two decades, comparatively little has been done to develop the software needed to run the machines when they come. + +That is changing, because in the past few years it has become clear that those machines are getting closer. Two parallel efforts are under way. One is to create software as generally understood—the graphical interfaces, programming languages and so on, a kind of “Windows for quantum”. The other is to develop novel algorithms, step-by-step instructions that break down problems into discrete parts amenable to quantum computing. + +Innovation abounds in both camps, and among big tech firms as well as plucky startups. Some big players are working on both sides of the problem, and a growing ecosystem of quantum-friendly consultancies advises companies on what quantum computing might do for them. + +“Machine” language for quantum computers, which actually tells the computer what to do, is fairly well understood. It is not so different from the logic gates of standard computing, except that it allows for “superpositions” of qubits in which they can be both 0 and 1 at the same time. But how to write computer code to interact with such a machine, or to simulate what it can do? Options are multiplying, including open-source software packages such as QuTip, funded by a number of research outfits in Asia. On March 6th IBM released the first commercial program for universal quantum computers (the general-purpose kind). And various startups have released their own quantum software. + +One of the most ambitious, LIQUi|> (whose name plays on a symbol in quantum mechanics), comes from Microsoft. It aims to tackle the whole “software stack”, from the user interface to code-compilers and ultimately to a machine language suitable for Microsoft’s planned hardware, and that of others. + +Krysta Svore, who leads Microsoft’s quantum-software team, says that the group is also working on reducing the total number of qubits and operations required for quantum calculations, known as “overhead”, and on making standard computers better at emulating quantum ones (the group recently hired a world expert in that field, Matthias Troyer). The team’s full-scale simulation of a 32-qubit computer requires 32 gigabytes of memory, more than the average desktop can muster but still manageable. + +Dr Svore and her colleagues are also making estimates of how many qubits, and minutes, would be needed to crack specific problems. She says the numbers are “down dramatically”, thanks to recent improvements in keeping qubits under tighter control. For example, she reckons that a thorough analysis of the energy-intensive nitrogenase reaction to make fertiliser would take a 100-logical-qubit quantum computer hours or perhaps days, whereas a conventional supercomputer would need billions of years. The prize might be a cut of 1-2% in global natural-gas consumption. + +But the key to getting the most out of quantum computers are the algorithms that these various software packages implement. The first of them, including the one by Peter Shor that showed how quantum computers could crack global encryption systems, tested the theoretical idea by aiming at the most intractable problems on the biggest notional machines. + +Even deeper learning + +These days, says Aram Harrow of the Massachusetts Institute of Technology, the focus has shifted to algorithms that smaller machines can make use of, because that kind of hardware will soon be widely available. “We’re still interested in what you can do with a million or a billion qubits, but it’s interesting to see if you can figure out what you can do with 100,” he says. + +A lot, it seems. One of the most promising areas is in machine learning and deep learning, two facets of artificial intelligence that have attracted much attention recently. Applications include searching through vast swathes of data to find patterns, such as in image recognition, cyber-security and, more prosaically, recommendation engines that suggest products consumers might like. But there are all manner of other algorithms, from those that crunch numbers to those that mimic atoms. + +All these quantum recipes call for some means of cataloguing them. Stephen Jordan heads the Quantum Algorithm Zoo at the National Institute of Standards and Technology in Maryland, a comprehensive collection of known algorithms. He has devised a taxonomy of 59 mathematical families they fit into, each suited to particular kinds of problems or breaking down problems in a particular, quantum-friendly way. + +Many such algorithms, when run on existing special-purpose machines or as emulations on standard computers, fail to beat their “classical” counterparts. Vlatko Vedral, of the National University of Singapore’s Centre for Quantum Technologies, stresses that traditional techniques, particularly for quantum-chemistry problems like the nitrogenase reaction, are already quite sophisticated. The trouble is that no beefy general-purpose quantum computer exists as yet, so no one knows whether a given algorithm run on one would beat its classical counterpart. At the same time, astonishingly efficient algorithms suited to quantum computing are waiting to be discovered. + +Those 59 families of algorithms, and ever-better emulators for eventual machines, are an excellent starting point for planning the quantum-computing future, and nowhere is interest greater than in finance. Commonwealth Bank of Australia is getting in early, collaborating closely with a research group led by Michelle Simmons at the University of New South Wales. D-Wave has partnered with 1Qbit, a startup, to develop “Quantum for Quants”, a forum for the quantitative-finance industry. Its editors include Michael Sotiropoulos, head of global equities at Deutsche Bank. UBS, a big Swiss bank, is working with QxBranch, another startup, on using quantum algorithms in foreign-exchange trading and arbitrage. Hyder Jaffrey, head of Strategic Investments and Fintech Innovation at UBS, says he puts quantum computing in the same category as artificial intelligence and blockchains, “all stuff with the potential to change markets”. + +Banking on it + +Companies such as QxBranch and 1Qbit play a new role of middleman between the quantum experts and industry, examining whether and how a given firm’s business might be improved by quantum methods, for example optimising trading strategies or supply chains, or monitoring network activity to spot cyber-attacks. Landon Downs, a co-founder of 1Qbit, says that can lead to solutions which can already be put to use. “By taking the lens of how you would formulate an algorithm on a quantum computer you often find very good improvements on classical algorithms,” he says. “That’s where lots of our successes come from.” + +The biggest benefit is expected to come from quantum-computing hardware once it arrives, so much of this business depends on simulating that hardware on standard machines as accurately as possible. Michael Brett, chief executive of QxBranch, says the idea is that “some Tuesday morning when one becomes available we just swap out our simulation for the real hardware.” + +Even as all these computer scientists and consultants are working on software for the quantum future, a handful of others are working on software to combat it. After all, what got researchers going in the first place was the fear that global encryption standards would crumble in the face of quantum computing. That remains a danger for the future, and retrospectively perhaps even for the present, if encrypted communications filed away now are analysed by powerful quantum computers later. That is the idea behind post-quantum cryptography, an effort to create ciphers that even future quantum computers will be unable to crack. + +PQCRYPTO is a three-year, European-funded project to develop post-quantum ciphers. Its goal is not to find the most mathematically gnarly way of encrypting data, but rather to identify one that is sufficiently difficult to break without needing too much memory or computation to implement. RSA, a current global standard, could be made hard enough to break, but the cryptographic keys would have to be a terabyte long—an impracticable option. Keys for elliptic-curve cryptography, another current standard, are just 32 bytes long; any post-quantum solution needs to aim for a similar ratio of brevity to security. + +Tanja Lange, who leads the project, says that post-quantum efforts are now attracting a lot of attention, particularly from nervous Silicon Valley outfits. In 2015 America’s National Security Agency said it would be updating all its cryptography to make it quantum-computer-proof. Last year Google quietly ran its own post-quantum cryptography test in Chrome, its web browser. Some of its users’ communications were protected both with elliptic-curve encryption and New Hope, a post-quantum protocol developed as part of PQCRYPTO. The median delay added to those communications turned out to be just a millisecond. + +“The power of quantum computing is rediscovering all the problems that computers cannot solve, and having a path to solving them,” says Dario Gil, vice-president of science and solutions at IBM. “It’s a reorientation of what we think about computers.” But a device capable of solving big problems will create new ones if it can unravel protocols that have protected secrets for decades. + + + + + +Commercial breaks: The uses of quantum technology + + + + +The most exciting thing about a quantum-enhanced world is the promise of what it may yet bring + +WHEN the first atomic clocks were built and swiftly commercialised, no one used the term “quantum technology”. The clocks simply harnessed the power of quantum mechanics to improve results. At the time there were no other examples of how the odd predictions of quantum mechanics such as entanglement and superposition could be put to practical use. Mostly they informed fundamental science, yielding an ever-subtler view of the world at the tiniest scales. + +Here and there, quantum weirdness did escape the lab, as in the case of the superconducting quantum interference device, an exquisitely sensitive magnetic-field sensor. The first of these was developed in 1964 at Ford Research Laboratory, the American carmaker’s blue-skies research facility. Now they are widely used, for example in MRI machines. In the early 1980s researchers at IBM turned the quantum effect of tunnelling, in which particles seem to pass straight through impenetrable barriers, into a way to see the microscopic world with staggering resolution. + +The current quantum-technology push is on a far grander scale, with multiple research efforts being funded by national governments and supranational bodies, sometimes for strategic reasons. Freeke Heijman has led efforts to build QuTech, the quantum-technology institute of the Netherlands. “We don’t want to risk the scenario that we have invested all this money for years and in the end the money is going to be made in the US or China,” she says. And in the case of defence applications, she says security plays a role too: “If you have to buy it off the shelf, it’s not just an economic disadvantage, it’s also dangerous.” + +But quantum technologies will not pass into the wider world in the same way as the global positioning system, which was developed with copious government funding behind closed doors and then handed over as a public good. “It’s just not like that today,” says Neil Stansfield, formerly of the British government’s Defence Science and Technology Laboratory. “We’re not the big kid on the government block, and certainly not on the global block.” + +That leaves business to step into the breach. But Trevor Cross, chief technology officer of E2v, a British company whose detectors brought the world pictures from the Hubble Space Telescope and which is now doing pioneering work for quantum devices, says that quantum technologies are still viewed by many industries as risky. That may be because many of the approaches are technologically so far beyond the current state of the art. Richard Murray, an emerging-technologies expert at Innovate UK, Britain’s technology-strategy agency, says that the more transformative the technological change, the easier it is to miss opportunities. + +Material evidence + +The opportunities are many, because at the level of components these technologies are intimately connected. Many of them depend, for example, on light sources that can spit out photons one at a time, every time, and detectors that can just as unfailingly catch just one—no small feat, considering that a 60-watt bulb is putting out 100,000,000,000,000,000,000 or so of them every second. This kind of kit was unimaginable a decade ago. + +New materials, and precisely engineered versions of existing ones, will be needed too. Element Six, a subsidiary of De Beers, a diamond giant, has carved out a niche selling diamonds with bespoke “nitrogen vacancies”—flaws that turn them into sensors. Silicon carbide is tipped to be just as quantum-amenable as those diamonds, but so far expertise with it is thin on the ground. + +New alliances will be forged as the work on materials intensifies. Intel aims to build qubits into silicon, in order to piggyback on existing fabrication infrastructure. But that will require the material to be produced to a much higher purity. To that end, Intel has joined forces with Urenco and Air Liquide, two materials firms. + +Michael Bolle at Bosch, the multinational engineering firm, envisages a seamless coming together of these diverse approaches in applications such as autonomous vehicles or the internet of things: quantum sensors to gather sensitive readings, quantum cryptography to transmit them securely and quantum computing to gather insights from the resulting copious streams of data. + + + +Many practitioners believe that the applications and technologies outlined in this report are just the beginning. As they become more familiar, they will give rise to new applications and wholly new hardware. Subjects that used to be mere footnotes to physics will rule, and engineers (and perhaps even consumers) will have to learn to speak quantum. + +Yet some innovators may find themselves stymied. “The question is to what extent will export controls on these technologies become an issue, particularly if any of it has some defence potential,” says Stephen Ezell, of the Information Technology and Innovation Foundation, an American think-tank. Tech firms such as Intel and IBM have had trouble exporting parts and computers to countries like China, he says. + +Such challenges aside, what is exciting about these efforts is how much is simply not known about their future. Bob Wisnieff, a manager at IBM’s microelectronics-research labs, says that “we’re not that far from being capable…of building quantum computers that will do things we cannot predict exactly.” John Preskill, a quantum expert at the California Institute of Technology, who coined the phrase “quantum supremacy”, has said that “a quantum computer can simulate efficiently any physical process that occurs in nature. Maybe. We don’t actually know for sure.” + +That brings the potential of quantum technologies full circle, to the fundamental-science considerations from which they were born. Quantum computers and simulators should eventually be capable of solving some of science’s most basic and yet most daunting questions. Sensors of unparalleled precision may at last make it possible to test the predictions of physicists’ most abstract ideas, perhaps linking the theories of quantum mechanics and gravity. + +“We certainly expect there are many additional things that we’ll be able to do with quantum beyond the things we know of,” says Tim Polk of the White House Office of Science and Technology Policy. “We had no idea of all the things we’d be able to build with the transistor, and we see the same thing with quantum.” + +In addition to those named in the text, the author would particularly like to thank: Scott Aaronson, John Bagshaw, Dan Bernstein, Kai Bongs, Altaf Carim, Adam Davison, Marc de Jong, Iulia Georgescu, Aram Harrow, Ray Johnson, David Kaiser, Leon Lobo, Graeme Malcolm, Mike Mayberry, Jian-Wei Pan, Martin Plenio, Dilan Rajasingham, John Rarity, Tanya Reeves, Andrew Shields, Marie Skelton, Tim Spiller, Andrea Taroni and Qiang Zhang. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21718311/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Technology Quarterly + +Here, there and everywhere + + + +Quantum technology is beginning to come into its own + +After decades as laboratory curiosities, some of quantum physics’ oddest effects are beginning to be put to use, says Jason Palmer + +PATRICK GILL, a director of the new Quantum Metrology Institute at Britain’s National Physical Laboratory (NPL) in south-west London and an expert in atomic clocks, points to a large table full of lenses and mirrors, vacuum chambers and electronics. “And there’s a smaller one over there,” he says. + +NPL is part of a consortium of the planet’s official timekeepers. In all its atomic-clock laboratories, each of the flagship devices—some of which are huge—is flanked by a smaller one under construction. Miniaturisation is the name of the game. Here is one that fits into a standard electronics rack, 19 inches wide. Over there is a fist-sized gizmo designed to hold an atomic clock’s precious innards safe within a satellite. + +The caesium atomic clock, developed at NPL, was arguably the world’s first quantum technology, though it was not labelled as such. The most common approach, first used in 1950, works by putting energy into atoms to create a “superposition” in which they are, in a measurable way, in more than one energy state at the same time—both excited and relaxed. Probing this strange condition reveals the “clock frequency” of those atoms—a constant for clocks on every continent, and the basis for a precise, internationally agreed definition of the second. + +After decades of work in the laboratory, a raft of different devices and approaches relying on quantum-mechanical effects are now nearing market-readiness. It has taken so long mainly because the components that make them up had to be developed first: ever-better lasers, semiconductors, control electronics and techniques to achieve the low temperatures at which many quantum systems perform best. + +Britain did not exploit the atomic clock’s discovery in the market. Instead, a year after the device was invented, it was commercialised by the National Company, an American firm. Given the potential of these new quantum technologies, this time commercialisation is on many minds. The NPL’s ever-smaller clocks are just one step towards marketable products that could vastly outdo GPS (which itself is an application of atomic timekeeping) in navigation, or help spot what lies underground. The era of quantum technology is almost here. + + + +The odds are good; the goods, odd + +Everything in the natural world can be described by quantum mechanics. Born a century ago, this theory is the rule book for what happens at atomic scales, providing explanations for everything from the layout of the periodic table to the zoo of particles spraying out of atom-smashers. It has guided the development of everyday technologies from lasers to MRI machines and put a solid foundation under astrophysicists’ musings about unknowables such as the interiors of black holes and the dawn of the universe. Revealed by a few surprising discoveries, such as that atoms absorb and emit energy only in packets of discrete sizes (quanta), and that light and matter can act as both waves and particles, it is modern physics’ greatest triumph. + +It has a weird side, though, and it is this that has captured interest in what is now being called the second quantum revolution. The first one was about physics: about understanding how the world worked at the tiny scales where quantum mechanics rules. Not only can particles be in two states at once, as with the atoms in an atomic clock; sometimes two of them, separated by a great distance, seemingly sense something about each other’s condition, a situation called entanglement. A particle’s exact position or state is never certain until a measurement is made; there are only higher or lower likelihoods of a given outcome, and the measurement changes the situation irrevocably. All this has been clear from the mathematics since the mid-1920s but was made manifest in laboratory experiments only later in the 20th century. As the theory’s more straightforward predictions were put to use, for instance in electronics, quantum mechanics gained a reputation for being counterintuitive, even downright spooky. + +The expertise gained during those years is now paying dividends. The most counterintuitive quantum-mechanical predictions are being harnessed to make measurements of staggering precision, to generate uncrackable codes and to form the basis of impenetrable communications networks. Quantum computers may eventually crunch through currently unapproachable problems, improving the transmission of electric power or the manufacture of energy-intensive fertiliser, or simply sifting through impracticably large data sets. However, long before then computing systems that still fall far short of a general-purpose machine are likely to start providing solutions in industries such as finance, energy and aerospace, and even help with things as mundane as recommendation engines. + +From small beginnings + +Much work remains to be done. Although a handful of quantum-enabled sensors, modest quantum networks and rudimentary quantum computers are already in use, they still fall short of fully exploiting quantum advantages, and few of them are ready to be widely deployed. According to McKinsey, a consulting firm, in 2015 about 7,000 people worldwide, with a combined budget of about $1.5bn, were working on quantum-technology research (see chart). Industrialisation will boost those numbers. + + + + + +What is notable about the effort now is that the challenges are no longer scientific but have become matters of engineering. The search is on for smaller atomic clocks, for example; for a means to amplify and route quantum-communications signals; and for more robust “qubits” (of which more later) for quantum computing. Startups are embracing the technology with gusto, and tech giants have already planted their flags. There is wide agreement that Google is furthest along in quantum-computer technology and that Microsoft has the most comprehensive plan to make the software required. + +Public money is flowing in, too. National and supranational funding bodies are backing increasingly ambitious quantum-technology efforts. Britain has a programme worth £270m ($337m) and the European Union has set aside €1bn ($1.08bn) for a pan-European programme. Many quantum technologies have security implications, so defence departments are also providing funding. + +Many firms are already preparing for a quantum-technology future. In 2015 IBM set up its Research Frontiers Institute, inviting corporate participants to share ideas about growth areas in technology, the quantum kind being one. The research fund of AXA, a big insurer, has endowed a professorship in quantum information at the Institute of Photonic Sciences in Barcelona to consider the data-privacy risks presented by the coming quantum boom. + +Quantum technology looks set quickly to find its way into all manner of products and services—mostly behind the scenes, as artificial intelligence has recently done. It may be weird, but it promises to be wonderful too. + + + + + +Metrology: Sensing sensibility + + + + +Quantum technology’s supersensitivity makes it great for measuring + +SINCE its inception a century ago, quantum physics has faced something of an experimental problem. The theory promises all manner of interesting and perhaps useful behaviours of particles in isolation, under rigidly controlled conditions. But on the lab bench particles and atoms are never fully isolated, so quantum experiments can be damnably difficult. + +However, that difficulty also presents an opportunity for quantum technology: sensing. “We turn that on its head,” says Sir Peter Knight, a British quantum expert. “If it couples to the outside world so effectively, it’s sensing the outside world really effectively.” Take the first quantum technology to make it to market, the atomic clock. Most designs work by tapping into the energy levels of atoms that are prodded with microwaves. Some of those atoms absorb the light in such a way that they are neither in their unperturbed, lowest-energy state nor in an elevated-energy state but in both at the same time, an effect that is central to quantum mechanics. An improved design “entangles” these microwave levels in one atom with different energy levels in another—levels that correspond to visible light, which has a much higher frequency. Such entanglement, another quantum effect, links the fates of two atoms, temporarily but inextricably, so that experiments on one yield information about the other. Entangling microwave levels with higher-frequency ones associated with visible light allows the clock to access the higher precision that goes with them. In 2012 David Wineland, of NIST, the American national metrology facility, received a Nobel prize for working out how to do this. For some years, his clock was the most accurate measuring device on Earth: had it been set ticking at the time of the Big Bang, 13.8bn years ago, it would still be accurate to within a second. + +Precise timing, particularly from the small, cheap devices that are now being developed, has a wealth of uses, from time-stamping high-frequency market trades to quickly changing settings within a dynamic energy grid. Even lifting an atomic clock up can change how long a tick appears to take: according to the general theory of relativity, time moves ever so slightly more slowly closer to the Earth than further away. Nuisance or opportunity? It’s all relative. A well-calibrated atomic clock could use this discrepancy to make an ultra-precise height measurement. Or, at a fixed height, it could sense the gravitational attraction of what is below; solid bedrock would give a different reading from an oil-and-gas pocket. + +Laws of attraction + +Clocks are not the only means to get a handle on gravity. At the microscopic scales where quantum mechanics rules, streams of matter particles can behave like waves. Like those on a pond’s surface, those waves can interfere, adding to and subtracting from one another—in the quantum description, altering the probability of finding a particle here or there. In a device called an atom interferometer, two particle streams are sent at differing heights and then brought back together to interfere with each other. The degree to which the two paths are different, indicating the relative strength of the gravitational tug from below, measurably alters the degree of addition and subtraction. + +Such devices have a multitude of uses. In Britain, for example, 4m holes are dug every year in the course of roadworks and construction, but two-thirds of the time the diggers have no idea what they will find beneath the surface. Test boreholes cover only a small area, and ground-penetrating radar does not reach deep enough. A gravity sensor that could tell pipework from pebbles would save a lot of trouble. + +RSK, an environmental consultancy involved in cleaning up brownfield sites and the like, reckons that a third of construction projects overrun by up to a month, and another third by two months or more, and that half of these delays arise because of underground surprises. The company is collaborating with the University of Birmingham in Britain on fieldworthy quantum gravity sensors, in the hope of deploying them in big infrastructure projects. Other efforts to develop cheap sensors have drawn interest from companies such as Schlumberger, an oilfield-services giant, and Bridgeporth, a surveying firm. + +Military types are interested, too. “You can’t shield gravity,” says David Delpy, who leads the Defence Scientific Advisory Council in Britain’s defence ministry. Improved gravity sensors would be able to spot moving masses under water, such as submarines or torpedoes, which could wipe out the deterrent effect of French and British nuclear submarines. Quantum gravimeters could precisely map geological features from the gravitational force they induce. That would help with getting around in places where satellite-navigation signals are not available—“a kind of Google Maps for gravitation”, as Dr Delpy puts it. + +And gravity, the theory of relativity also says, is just one manifestation of acceleration: a good gravimeter is a good accelerometer. And a good accelerometer is a good vibration sensor. Once they are small enough and good enough, all these high-precision devices will be of great interest to carmakers, and in particular to the autonomous-vehicle industry, the success of which will depend on accurate sensing of the movements of cars and their surroundings. Bosch, a German firm that is the world’s largest maker of automotive components and a supplier to many other industries, already has its eye on quantum-technological enhancements to its products. + +Michael Bolle, the firm’s head of research and development, believes sensors will be quantum technology’s first market success. “I’m not talking about niche markets,” he says. “I’m interested in the trigger point where things really go into mass production.” Quantum technologists the world over are preparing for this market explosion by patenting their findings. In some countries, such as Japan and Australia, quantum sensors make up a large part of national patent portfolios (see chart). + + + + + +Mr Bolle and others are also interested in sensors based on “nitrogen vacancies”—places where a diamond’s all-carbon network has been disrupted by one nitrogen atom next to a missing carbon atom. This is a quantum physicist’s playground: mostly isolated by its rigid cage of carbon neighbours from the bumpy, fluctuating world outside, electrons from the nitrogen atoms can be easily manipulated and measured, placed in superpositions and even entangled with one another. Just like the hypersensitive clock, these systems are extraordinarily responsive to their environment and can act as precise sensors of pressure, temperature and electric current. + +Where they have shown the most promise is in measuring magnetic fields. Recent studies show that nitrogen vacancies can detect the on-and-off magnetic field of single nerve cells. The same principles can work inside the human body, too. Nanoscale diamonds with nitrogen vacancies have been used to spot chemical changes in living cells, and researchers from the Institute of Theoretical Physics and the Institute of Quantum Physics in Ulm, Germany, have formed NVision, a startup that uses such nanodiamonds to match the current best magnetically enhanced MRI techniques, but 40 times faster and at a quarter of the cost. + +High performance in these applications depends on well-understood nitrogen vacancies, which occur sporadically in natural diamonds but whose positions and number must be known for precision measurement. Enter Element Six (a subsidiary of DeBeers, the world’s largest diamond producer), which manufactures diamonds with precision-engineered nitrogen vacancies. + +Capture the friendly ghost + +Quantum-enhanced approaches may also supplement other biological imaging techniques, such as positron emission tomography (PET), which takes pictures of the high-energy gamma-ray light flying out of injected radioactive tracers. Each tracer molecule’s interaction with tissue spits out two photons in opposite directions. Quantum-entanglement tomography aims to make use of the fact that those photons are entangled when they are created. In PET, the photons can be hard to track because they bounce off body tissues. The entanglement of each pair makes it easier to work out which came from where, so scans take less time and radioactive material. + +Ghost imaging is another promising way of making use of light’s quantum nature. The technique involves splitting a beam of light in two and aiming the resulting two beams at two detectors, one directly and one through a somewhat opaque medium, such as turbulent air rising from hot ground or a smoke-filled room. Because the photons making up the beam are correlated, a rigorous accounting of what the two detectors can see yields images of what the eye cannot. In 2013 researchers from America’s army showed that the technique worked over more than 2km. + +The technique points to a fascinating debate that underpins many discussions in the broader quantum-technology community about exactly how quantum effects confer an advantage. Though ghost imaging was predicted in the 1990s, arguments still rage about whether entanglement is playing a role or whether it works simply because light comes in discrete, countable photons. “There are plenty of physicists that don’t understand the distinction,” says Miles Padgett of the University of Glasgow, a quantum-imaging expert. “And I don’t think it matters. What matters is, are we using our knowledge in the quantum world to bring competitive advantage?” With hand-held detectors that can sense height differences down to a millimetre, magnetometers that can in principle watch your every neuron and imaging kit that can see across a smoky battlefield, the answer is ever more clearly yes. + + + + + +Communications: Oh what entangled web we weave + + + + +Quantum networks could underpin unhackable communications links + +IN 2004 the Bank of Austria and Vienna’s city hall notched up the first quantum-encrypted bank transfer. Anton Zeilinger, a quantum-cryptography pioneer whose lab facilitated the transfer, expressed his hope that “all problems of implementation will be solved within three years.” They were not. + +The technology was put to the test again in 2007 when quantum-encrypted vote tallies from the Swiss federal election were sent from polling stations to the Geneva state government. Engineers insisted that the transmission was utterly impervious to eavesdropping or tampering; a company called ID Quantique had developed a system that harnessed one of the rules of quantum mechanics to offer total security. + +That claim, too, turned out to be premature. Hackers have since demonstrated that equipment used in such transfers could be vulnerable to attack. What is more, such quantum encryption also required a single, dedicated fibre between sender and receiver, which limited the technique to high-profile transactions, and precluded the cross-linking of many senders and receivers that has made networking and the internet so successful. + +Key findings + +That is now changing. In response to hackers’ attacks, the kit has become markedly more secure. Field trials have shown that delicate quantum light signals can be sent through the same fibres that bring the internet to homes and businesses. And efforts to make quantum-enhanced versions of the equipment that amplifies and distributes standard optical signals are bearing fruit. Quantum networks are springing up or expanding. And quantum communications, just like their conventional counterparts, will soon be whizzing through space, too. + +The most discussed and deployed technique is called quantum-key distribution (QKD). In one set-up, a sender launches single photons toward a receiver, randomly choosing one of four planes along which the light particles are polarised, two of them associated with a 0 and the other two with a 1. The receiver likewise randomly chooses which kind of polarisation to check for. After sending a string of these bit-associated photons, the pair can publicly compare notes on which polarisations they employed; whenever they happen to have chosen the same one, the 0 or 1 associated with that polarisation can be used as a bit in a cryptographic key. + +What contributes to the system’s security is Heisenberg’s uncertainty principle, a much-touted quantum rule which, in this case, guarantees that an eavesdropper would disrupt the system’s randomness, because intercepting and measuring a given photon forces it into a given polarisation. That disturbance to the system would reduce the number of coincidences the pair sees; if there are too few (they should be seen about half the time), they know someone is on the line. + +Physics textbooks will tell you that a sufficiently long cipher, randomly generated this way and used only once, is absolutely secure. But Vlatko Vedral, of the Centre for Quantum Technologies in Singapore, says that hackers who have been invited to try to break into the centre’s quantum-communications experiments have often succeeded—not by beating quantum rules but by ruthlessly exploiting shortcomings of the kit itself. For example, storing a digital 0 generates a slightly different amount of heat from storing a 1, so careful observation of the heat being generated can expose the string of digits being received. Once discovered, such hacks are easily prevented. As time has gone on, such shortcomings have narrowed in scope, and have driven innovation. + +Thanks to the development of ever more secure links, quantum cryptography has recently been deployed more widely. ID Quantique has installed quantum links between data centres of KPN, a Dutch telecoms firm; of Battelle, an American non-profit research firm; and of Hyposwiss and Notenstein, two Swiss private banks. It offers links between financial institutions in Geneva and a disaster-recovery centre 50km away. In 2015 researchers at Toshiba in Japan began sending quantum-encrypted genomic data from a research facility in Sendai to Tohoku University, 7km away. + + + + + +But the future of the technology lies in quantum networks—the infrastructure required to connect many senders and receivers. These are springing up within and between major metropolitan areas. South Korea’s government is funding a 250km link to join existing metro quantum networks. In Britain a network of similar length will be deployed between the cities of Bristol and Cambridge, via London. Australia is building a closed government network in the capital, Canberra. + +No quantum network is more ambitious than the one completed in China at the end of last year. Funded by the central government, it links Beijing and Shanghai via Jinan, which already has a metro network over 70 square kilometres, made up of 50 “nodes”—switchboards connecting senders and receivers—and Hefei, which has a 46-node network. Its customers include China Industrial and Commercial Bank, the China Banking Regulatory Commission and the Xinhua news agency. + +Distance presents a problem. As the meticulously prepared photons with their delicate quantum states bounce along lengths of fibre, those states eventually get scrambled and their information is lost. To ensure fidelity and security, the fibre link should be no longer than about 200km. Standard fibre-optical signals suffer from the same weakening of the signal, so “repeaters” to boost it are placed at regular intervals along their path. But under the quantum rule book, unknown quantum states cannot be copied, so quantum data would need to be temporarily decrypted before receiving a boost, creating a security loophole. + +There are two ways to get round this, one by land and one by air. The land-based solution is to develop quantum analogues of the repeater. That will require a quantum memory that can store incoming information, and a means of sending them on that does not compromise quantum security. That last part requires another bit of quantum trickery: teleportation. This is a way of projecting the quantum state of one particle (not, it should be stressed, the particle itself) onto another, distant one. Last year two research groups showed the benefits of teleportation across two metropolitan networks, in Calgary and Hefei. Crucially, they carried out their experiment using the same wavelengths as those used in existing telecoms networks, to ensure that the new technique can be used with existing fibre infrastructure. It did the trick. + +Spooks reacting at a distance + +Another tack is to take to the air, over similar distances but without the need for a particular fibre link. The current record for teleportation of quantum states in this way was set in 2012, when researchers sent a quantum-encrypted message between two of the Canary islands, 143km apart. A long-standing ambition is to apply the idea to space: for a photon, the disturbance caused by the whole thickness of the Earth’s atmosphere is equivalent to that caused by just a few kilometres of air at the surface. + +Last August China launched Micius, a quantum-key-distribution-enabled satellite backed by tech companies including Huawei and Lenovo. The goal at this stage is to link the Beijing-to-Shanghai network to another in Urumqi, in Xinjiang province, some 3,000km away. Efforts to develop satellite communications are also under way in Singapore, Canada, Japan, Italy and America. Once the challenges of getting quantum signals into space—through turbulent air, clouds and so on—are overcome, a global network could easily follow. + +With country-spanning networks and quantum-enabled satellites, it is easy to envisage a global “quantum internet” in which each link offers quantum-enhanced security. But the kind of innovation that will allow the development of such networks will also be of use, for example, in shuttling information within, and between, future quantum-computing devices: think quantum distributed computing and quantum cloud computing. Just as the internet has demonstrated the power of linking many standard computers, says Seth Lloyd, a theorist at the Massachusetts Institute of Technology, “the quantum internet has the potential to change the way in which people and organisations collaborate and compete, establishing trust while protecting privacy.” + +Not everyone is convinced yet. The defence establishment seems to have been put off by some of the early setbacks to quantum links. Quantum-communications efforts are under way, for example in the research arms of America’s army and navy, but an analysis by the air force’s Scientific Advisory Board suggested that QKD had “little advantage over the best classical alternatives”. And doubters rightly point out that encryption is not the weakest link in many security chains. + +Yet as the hardware improves and heavy investment continues, quantum networks may begin to look like a strategic must-have; if so, consumer applications are likely to proliferate. The European Telecommunications Standards Institute (ETSI), which sets global benchmarks for the industry, is working to define quantum-cryptography standards. ETSI scientists want to ensure that kit from multiple vendors can work together, and to create a certification so that consumers (including spooks) are guaranteed a widely agreed level of security. Miniaturisation efforts are well under way too, so before long the equipment may fit in the palm of your hand—or in your phone. + + + + + +Cue bits: Why all eyes are on quantum computers + + + + +Tech giants and upstarts alike are piling into a technology with huge potential + +IN 1981 Richard Feynman, a visionary physicist, had a clever idea. Could the odd properties of quantum mechanics, he wondered aloud in a lecture, be used to carry out simulations of physical systems that computers of the time could not cope with? Others took up the question. In 1985, David Deutsch, now at Oxford University, showed how quantum systems could be set up as a “universal” computer—that is, like current computers, able to run any program. Though fascinating, at that point it was all rather theoretical, involving hardware that no one knew how to build. + +What made the world sit up and take notice was a paper published in 1994 by Peter Shor, then at Bell Labs. Dr Shor showed that a quantum computer would be capable of working out the prime numbers that, multiplied together, make up an exceedingly large number. The fact that this “decomposition” is mathematically very hard is the basis of cryptographic protocols still used today. + +Since then, researchers have come up with a rich variety of problems for which quantum computers should be superior to the best supercomputers—and a number of algorithms, or sets of steps, to break down problems in such a way that quantum computers can crunch through them. This evident utility started an international competition to build one that was, for many years, confined to quiet labs and the academic literature. These days, big business is seriously interested, and blue-chip companies including Intel, Hewlett-Packard, Google and Microsoft all have research programmes. Last year IBM released Quantum Experience, which lets all comers play around with a crude quantum computer over the internet. Governments too are putting money into academic efforts, both directly and via defence contractors, and a growing band of startup companies are striking out on their own. + +A computer big enough to do what Dr Shor envisaged would also be useful for all manner of currently intractable problems. Although that remains a distant prospect, steps towards developing one could have big benefits; for many applications, a much simpler or special-purpose computer will do. + +Bit by bit + +What makes the idea of quantum computers so attractive is not so much that they will work faster than traditional computers—they may for some applications but not for others—but that they will work fundamentally differently. Three intuition-defying concepts play a role. The first is superposition. Today’s computers depend on bits taking one of two values, 0 or 1. Qubits, their quantum analogues, can be arranged in “states” that are best thought of as some mixture of both 0 and 1. To carry out a computation using one of these strange beasts is to act on both the 0 and the 1, in a sense to create within the calculation the potential outcome of either at the same time. + +The power of this indeterminate state is unleashed through the second quantum-mechanical effect, entanglement. A standard computer depends on the complete isolation of one bit from the next to prevent a computation from going awry or a document from getting corrupted. For a quantum computer, the entangling of multiple qubits is paramount; in the best case, all of a given device’s bits are entangled with one another. Again, to operate on one qubit is to operate, to varying degrees, on all the entangled ones. It is therefore impossible to describe such a machine in strict terms of its constituent parts. There is a need to consider how one qubit is connected to its neighbour, and to the next-but-one, and so on through all the cross-correlations. To describe all the states of a 50-bit standard computer requires 50 bits of digital memory; a description of a 50-qubit computer would require a quadrillion. + +It gets weirder. Whereas it is easy to imagine an equation that predicts a low or even zero probability of a given event, it is much harder to reckon with what are called probability amplitudes in quantum mechanics, which can actually be negative. In the course of a quantum computer’s crunching, these amplitudes can (again like waves) interfere, positive with positive and negative with negative—in essence, to reduce the probability of the wrong answer and boost that of the right one. + +Posing a question starts with choosing an algorithm suitable for the problem. This algorithm is actually manifest as the starting states of the qubits: 0 here, 1 there, a bit of a mix over there. The calculation is then just a matter of letting quantum-mechanical laws play out on this system of superposed and entangled qubits. Changing states, shifting qubit couplings and so on represent a vast cross-multiplication of all those states and combinations, with probability amplitudes reinforcing and diminishing until the system settles into a final state that represents the answer. It is a matter of setting up the problem, and the machine, so that all the possibilities are sifted through at lightning speed. + +Efforts to make qubits often centre on the use of tiny loops of superconducting wire, arranged like the “gates” of standard computers. Single charged atoms, trapped by electric or magnetic fields, can also do the job; in February an international consortium of researchers published an open-source blueprint for a trapped-ion machine. Several groups use single photons as qubits—an approach that looks easy to integrate with existing semiconductor-fabrication techniques. Microsoft’s planned “topological” quantum computer uses something else entirely: “anyons”, particles that would be more easily tamed than other qubit candidates but which have never been seen outside the pages of theoretical physics textbooks. + +Setting up a qubit is no longer difficult. The problem is looking after it. Quantum states are notoriously delicate, requiring complete isolation from the actual stuff of the experiment. But isolation can never be complete, and errors creep in; for a calculation to succeed these must be noticed and corrected. It has become clear that as computers scale up, the number of logical qubits (the ones actually doing the calculation) will be dwarfed by an “overhead” of perhaps thousands of times as many error-correcting and command-and-control qubits. The kind of machine required to implement Shor’s famed algorithm on the sort of large numbers used in encryption will need to contain something like a million qubits. + +Such machines will, to put it mildly, be an engineering challenge. But in a clear indication that quantum computing is getting closer, names familiar from traditional computing are increasingly getting involved. Hewlett-Packard is trying to build its own machine. Intel’s global quantum investments include $50m going into work at QuTech, the Netherlands’ national quantum-technology hub. Microsoft’s topological quantum approach, if it works, will be much less error-prone. The quantum-computing startup scene is also becoming increasingly vibrant. Researchers from Yale and the University of Maryland have spun off companies, and physicists who had worked at IBM and America’s Department of Energy have started their own firms. + +Governments are getting in on the action too. Australia’s has invested A$26m ($20m) in a laboratory at the University of New South Wales in Sydney (and the Commonwealth Bank of Australia and Telstra, a telecoms firm, have together chipped in about the same amount). A lab at the University of Sydney down the road is being funded as part of LogiQ, a programme of the Intelligence Advanced Research Projects Activity, an American government defence outfit. Leaked documents have revealed that America’s National Security Agency has been exploring “if a cryptologically useful quantum computer can be built”. Experts now reckon it can. But when? + +Simulating discussion + +Very few in the field think it will take less than a decade, and many say far longer. But the time for investment, all agree, is now—because even the smaller and less capable machines that will soon be engineered will have the potential to earn revenue. Already, startups and consulting firms are springing up to match prospective small quantum computers to problems faced in sectors including quantitative finance, drug discovery and oil and gas. + +Perhaps the most interesting early applications will take the form of “quantum simulators”: computers that mimic real physical systems. This is what Feynman had in mind, imagining in his lecture “that the computer will do exactly the same as nature”. Quantum simulators might help in the design of room-temperature superconductors allowing electricity to be transmitted without losses, or with investigating the nitrogenase reaction used to make most of the world’s fertiliser. + +Quantum simulation has its fans in industry, too. Michael Bolle at Bosch foresees using simulators to design batteries that will supersede the current lithium-ion technology. Paolo Bianco, who heads the quantum-technology research team at Airbus, a big European aerospace firm, says that quantum-simulating a new material such as a stiffer or lighter alloy for use in aeroplanes or satellites would be much faster and cheaper than manufacturing and then testing the material itself. “The promise of quantum technologies”, he says, “is in engineering terms a step up in performance—not of 20%, but of a couple of orders of magnitude.” + +For some applications and classes of problems that may well be true. But the experience of D-Wave Systems, a Canadian company that began selling the first commercially available quantum computer in 2011, shows how little is known about what future machines will be able to do. D-Wave makes what is known as a quantum annealer, a special-purpose quantum computer (as opposed to a universal one) that works best on “optimisation” problems, such as finding the shortest possible route for a travelling salesman. The firm’s customers include Lockheed Martin and a consortium including Google and NASA. In January Temporal Defense Systems, a cyber-security firm, bought one. + + + +For years experts questioned whether the devices were actually exploiting quantum mechanics and whether they worked better than traditional computers. Those questions have since been conclusively answered—yes, and sometimes—but only by exhaustively testing the machines’ mettle directly. The current best supercomputers are able to simulate only what more general-purpose quantum computers of about 50 qubits can do. Tantalisingly, it is difficult to tell at what problems bigger machines will excel. + +Google is aiming to use its own machinery, a so-called gate-model quantum computer of the sort most groups are pursuing, to achieve “quantum supremacy”, whereby a quantum computer performs a calculation faster than any known computer could. Google researchers have laid out an ambitious plan which may let them achieve that feat this year. D-Wave has hinted it has already done so, but has made similar claims in the past; their current numbers are still to be checked. + +Whenever, and by whomever, this is accomplished, it will launch an era of small-scale machines offering quantum-enhanced solutions and services. The first publicly accessible one, IBM’s Quantum Experience, may be an indication that the machines’ future will be in the cloud. Most users have no more need for one at home than they have for a supercomputer. + +But some do. In 1982, a year after Feynman gave his quantum-computing lecture, he was touring the supercomputer facility at Los Alamos National Laboratory, where he had worked on the first atomic bomb. Talking to Bo Ewald, then in charge of the lab’s computing efforts and now running D-Wave, Feynman said, “You know, young man, one day all of these will be replaced by quantum computers.” One has already moved in. + + + + + +Software: Program management + + + + +Quantum-computer code could do wonders—but also unravel well-kept secrets + +IT DOESN’T help to have a quantum computer if no one knows how to program it,” says Tim Polk, of the White House Office of Science and Technology Policy in Washington. Although academic efforts to build quantum-computer hardware have been going on for two decades, comparatively little has been done to develop the software needed to run the machines when they come. + +That is changing, because in the past few years it has become clear that those machines are getting closer. Two parallel efforts are under way. One is to create software as generally understood—the graphical interfaces, programming languages and so on, a kind of “Windows for quantum”. The other is to develop novel algorithms, step-by-step instructions that break down problems into discrete parts amenable to quantum computing. + +Innovation abounds in both camps, and among big tech firms as well as plucky startups. Some big players are working on both sides of the problem, and a growing ecosystem of quantum-friendly consultancies advises companies on what quantum computing might do for them. + +“Machine” language for quantum computers, which actually tells the computer what to do, is fairly well understood. It is not so different from the logic gates of standard computing, except that it allows for “superpositions” of qubits in which they can be both 0 and 1 at the same time. But how to write computer code to interact with such a machine, or to simulate what it can do? Options are multiplying, including open-source software packages such as QuTip, funded by a number of research outfits in Asia. On March 6th IBM released the first commercial program for universal quantum computers (the general-purpose kind). And various startups have released their own quantum software. + +One of the most ambitious, LIQUi|> (whose name plays on a symbol in quantum mechanics), comes from Microsoft. It aims to tackle the whole “software stack”, from the user interface to code-compilers and ultimately to a machine language suitable for Microsoft’s planned hardware, and that of others. + +Krysta Svore, who leads Microsoft’s quantum-software team, says that the group is also working on reducing the total number of qubits and operations required for quantum calculations, known as “overhead”, and on making standard computers better at emulating quantum ones (the group recently hired a world expert in that field, Matthias Troyer). The team’s full-scale simulation of a 32-qubit computer requires 32 gigabytes of memory, more than the average desktop can muster but still manageable. + +Dr Svore and her colleagues are also making estimates of how many qubits, and minutes, would be needed to crack specific problems. She says the numbers are “down dramatically”, thanks to recent improvements in keeping qubits under tighter control. For example, she reckons that a thorough analysis of the energy-intensive nitrogenase reaction to make fertiliser would take a 100-logical-qubit quantum computer hours or perhaps days, whereas a conventional supercomputer would need billions of years. The prize might be a cut of 1-2% in global natural-gas consumption. + +But the key to getting the most out of quantum computers are the algorithms that these various software packages implement. The first of them, including the one by Peter Shor that showed how quantum computers could crack global encryption systems, tested the theoretical idea by aiming at the most intractable problems on the biggest notional machines. + +Even deeper learning + +These days, says Aram Harrow of the Massachusetts Institute of Technology, the focus has shifted to algorithms that smaller machines can make use of, because that kind of hardware will soon be widely available. “We’re still interested in what you can do with a million or a billion qubits, but it’s interesting to see if you can figure out what you can do with 100,” he says. + +A lot, it seems. One of the most promising areas is in machine learning and deep learning, two facets of artificial intelligence that have attracted much attention recently. Applications include searching through vast swathes of data to find patterns, such as in image recognition, cyber-security and, more prosaically, recommendation engines that suggest products consumers might like. But there are all manner of other algorithms, from those that crunch numbers to those that mimic atoms. + +All these quantum recipes call for some means of cataloguing them. Stephen Jordan heads the Quantum Algorithm Zoo at the National Institute of Standards and Technology in Maryland, a comprehensive collection of known algorithms. He has devised a taxonomy of 59 mathematical families they fit into, each suited to particular kinds of problems or breaking down problems in a particular, quantum-friendly way. + +Many such algorithms, when run on existing special-purpose machines or as emulations on standard computers, fail to beat their “classical” counterparts. Vlatko Vedral, of the National University of Singapore’s Centre for Quantum Technologies, stresses that traditional techniques, particularly for quantum-chemistry problems like the nitrogenase reaction, are already quite sophisticated. The trouble is that no beefy general-purpose quantum computer exists as yet, so no one knows whether a given algorithm run on one would beat its classical counterpart. At the same time, astonishingly efficient algorithms suited to quantum computing are waiting to be discovered. + +Those 59 families of algorithms, and ever-better emulators for eventual machines, are an excellent starting point for planning the quantum-computing future, and nowhere is interest greater than in finance. Commonwealth Bank of Australia is getting in early, collaborating closely with a research group led by Michelle Simmons at the University of New South Wales. D-Wave has partnered with 1Qbit, a startup, to develop “Quantum for Quants”, a forum for the quantitative-finance industry. Its editors include Michael Sotiropoulos, head of global equities at Deutsche Bank. UBS, a big Swiss bank, is working with QxBranch, another startup, on using quantum algorithms in foreign-exchange trading and arbitrage. Hyder Jaffrey, head of Strategic Investments and Fintech Innovation at UBS, says he puts quantum computing in the same category as artificial intelligence and blockchains, “all stuff with the potential to change markets”. + +Banking on it + +Companies such as QxBranch and 1Qbit play a new role of middleman between the quantum experts and industry, examining whether and how a given firm’s business might be improved by quantum methods, for example optimising trading strategies or supply chains, or monitoring network activity to spot cyber-attacks. Landon Downs, a co-founder of 1Qbit, says that can lead to solutions which can already be put to use. “By taking the lens of how you would formulate an algorithm on a quantum computer you often find very good improvements on classical algorithms,” he says. “That’s where lots of our successes come from.” + +The biggest benefit is expected to come from quantum-computing hardware once it arrives, so much of this business depends on simulating that hardware on standard machines as accurately as possible. Michael Brett, chief executive of QxBranch, says the idea is that “some Tuesday morning when one becomes available we just swap out our simulation for the real hardware.” + +Even as all these computer scientists and consultants are working on software for the quantum future, a handful of others are working on software to combat it. After all, what got researchers going in the first place was the fear that global encryption standards would crumble in the face of quantum computing. That remains a danger for the future, and retrospectively perhaps even for the present, if encrypted communications filed away now are analysed by powerful quantum computers later. That is the idea behind post-quantum cryptography, an effort to create ciphers that even future quantum computers will be unable to crack. + +PQCRYPTO is a three-year, European-funded project to develop post-quantum ciphers. Its goal is not to find the most mathematically gnarly way of encrypting data, but rather to identify one that is sufficiently difficult to break without needing too much memory or computation to implement. RSA, a current global standard, could be made hard enough to break, but the cryptographic keys would have to be a terabyte long—an impracticable option. Keys for elliptic-curve cryptography, another current standard, are just 32 bytes long; any post-quantum solution needs to aim for a similar ratio of brevity to security. + +Tanja Lange, who leads the project, says that post-quantum efforts are now attracting a lot of attention, particularly from nervous Silicon Valley outfits. In 2015 America’s National Security Agency said it would be updating all its cryptography to make it quantum-computer-proof. Last year Google quietly ran its own post-quantum cryptography test in Chrome, its web browser. Some of its users’ communications were protected both with elliptic-curve encryption and New Hope, a post-quantum protocol developed as part of PQCRYPTO. The median delay added to those communications turned out to be just a millisecond. + +“The power of quantum computing is rediscovering all the problems that computers cannot solve, and having a path to solving them,” says Dario Gil, vice-president of science and solutions at IBM. “It’s a reorientation of what we think about computers.” But a device capable of solving big problems will create new ones if it can unravel protocols that have protected secrets for decades. + + + + + +Commercial breaks: The uses of quantum technology + + + + +The most exciting thing about a quantum-enhanced world is the promise of what it may yet bring + +WHEN the first atomic clocks were built and swiftly commercialised, no one used the term “quantum technology”. The clocks simply harnessed the power of quantum mechanics to improve results. At the time there were no other examples of how the odd predictions of quantum mechanics such as entanglement and superposition could be put to practical use. Mostly they informed fundamental science, yielding an ever-subtler view of the world at the tiniest scales. + +Here and there, quantum weirdness did escape the lab, as in the case of the superconducting quantum interference device, an exquisitely sensitive magnetic-field sensor. The first of these was developed in 1964 at Ford Research Laboratory, the American carmaker’s blue-skies research facility. Now they are widely used, for example in MRI machines. In the early 1980s researchers at IBM turned the quantum effect of tunnelling, in which particles seem to pass straight through impenetrable barriers, into a way to see the microscopic world with staggering resolution. + +The current quantum-technology push is on a far grander scale, with multiple research efforts being funded by national governments and supranational bodies, sometimes for strategic reasons. Freeke Heijman has led efforts to build QuTech, the quantum-technology institute of the Netherlands. “We don’t want to risk the scenario that we have invested all this money for years and in the end the money is going to be made in the US or China,” she says. And in the case of defence applications, she says security plays a role too: “If you have to buy it off the shelf, it’s not just an economic disadvantage, it’s also dangerous.” + +But quantum technologies will not pass into the wider world in the same way as the global positioning system, which was developed with copious government funding behind closed doors and then handed over as a public good. “It’s just not like that today,” says Neil Stansfield, formerly of the British government’s Defence Science and Technology Laboratory. “We’re not the big kid on the government block, and certainly not on the global block.” + +That leaves business to step into the breach. But Trevor Cross, chief technology officer of E2v, a British company whose detectors brought the world pictures from the Hubble Space Telescope and which is now doing pioneering work for quantum devices, says that quantum technologies are still viewed by many industries as risky. That may be because many of the approaches are technologically so far beyond the current state of the art. Richard Murray, an emerging-technologies expert at Innovate UK, Britain’s technology-strategy agency, says that the more transformative the technological change, the easier it is to miss opportunities. + +Material evidence + +The opportunities are many, because at the level of components these technologies are intimately connected. Many of them depend, for example, on light sources that can spit out photons one at a time, every time, and detectors that can just as unfailingly catch just one—no small feat, considering that a 60-watt bulb is putting out 100,000,000,000,000,000,000 or so of them every second. This kind of kit was unimaginable a decade ago. + +New materials, and precisely engineered versions of existing ones, will be needed too. Element Six, a subsidiary of De Beers, a diamond giant, has carved out a niche selling diamonds with bespoke “nitrogen vacancies”—flaws that turn them into sensors. Silicon carbide is tipped to be just as quantum-amenable as those diamonds, but so far expertise with it is thin on the ground. + +New alliances will be forged as the work on materials intensifies. Intel aims to build qubits into silicon, in order to piggyback on existing fabrication infrastructure. But that will require the material to be produced to a much higher purity. To that end, Intel has joined forces with Urenco and Air Liquide, two materials firms. + +Michael Bolle at Bosch, the multinational engineering firm, envisages a seamless coming together of these diverse approaches in applications such as autonomous vehicles or the internet of things: quantum sensors to gather sensitive readings, quantum cryptography to transmit them securely and quantum computing to gather insights from the resulting copious streams of data. + + + +Many practitioners believe that the applications and technologies outlined in this report are just the beginning. As they become more familiar, they will give rise to new applications and wholly new hardware. Subjects that used to be mere footnotes to physics will rule, and engineers (and perhaps even consumers) will have to learn to speak quantum. + +Yet some innovators may find themselves stymied. “The question is to what extent will export controls on these technologies become an issue, particularly if any of it has some defence potential,” says Stephen Ezell, of the Information Technology and Innovation Foundation, an American think-tank. Tech firms such as Intel and IBM have had trouble exporting parts and computers to countries like China, he says. + +Such challenges aside, what is exciting about these efforts is how much is simply not known about their future. Bob Wisnieff, a manager at IBM’s microelectronics-research labs, says that “we’re not that far from being capable…of building quantum computers that will do things we cannot predict exactly.” John Preskill, a quantum expert at the California Institute of Technology, who coined the phrase “quantum supremacy”, has said that “a quantum computer can simulate efficiently any physical process that occurs in nature. Maybe. We don’t actually know for sure.” + +That brings the potential of quantum technologies full circle, to the fundamental-science considerations from which they were born. Quantum computers and simulators should eventually be capable of solving some of science’s most basic and yet most daunting questions. Sensors of unparalleled precision may at last make it possible to test the predictions of physicists’ most abstract ideas, perhaps linking the theories of quantum mechanics and gravity. + +“We certainly expect there are many additional things that we’ll be able to do with quantum beyond the things we know of,” says Tim Polk of the White House Office of Science and Technology Policy. “We had no idea of all the things we’d be able to build with the transistor, and we see the same thing with quantum.” + +In addition to those named in the text, the author would particularly like to thank: Scott Aaronson, John Bagshaw, Dan Bernstein, Kai Bongs, Altaf Carim, Adam Davison, Marc de Jong, Iulia Georgescu, Aram Harrow, Ray Johnson, David Kaiser, Leon Lobo, Graeme Malcolm, Mike Mayberry, Jian-Wei Pan, Martin Plenio, Dilan Rajasingham, John Rarity, Tanya Reeves, Andrew Shields, Marie Skelton, Tim Spiller, Andrea Taroni and Qiang Zhang. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21718308/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Technology Quarterly + +Here, there and everywhere + + + +Quantum technology is beginning to come into its own + +After decades as laboratory curiosities, some of quantum physics’ oddest effects are beginning to be put to use, says Jason Palmer + +PATRICK GILL, a director of the new Quantum Metrology Institute at Britain’s National Physical Laboratory (NPL) in south-west London and an expert in atomic clocks, points to a large table full of lenses and mirrors, vacuum chambers and electronics. “And there’s a smaller one over there,” he says. + +NPL is part of a consortium of the planet’s official timekeepers. In all its atomic-clock laboratories, each of the flagship devices—some of which are huge—is flanked by a smaller one under construction. Miniaturisation is the name of the game. Here is one that fits into a standard electronics rack, 19 inches wide. Over there is a fist-sized gizmo designed to hold an atomic clock’s precious innards safe within a satellite. + +The caesium atomic clock, developed at NPL, was arguably the world’s first quantum technology, though it was not labelled as such. The most common approach, first used in 1950, works by putting energy into atoms to create a “superposition” in which they are, in a measurable way, in more than one energy state at the same time—both excited and relaxed. Probing this strange condition reveals the “clock frequency” of those atoms—a constant for clocks on every continent, and the basis for a precise, internationally agreed definition of the second. + +After decades of work in the laboratory, a raft of different devices and approaches relying on quantum-mechanical effects are now nearing market-readiness. It has taken so long mainly because the components that make them up had to be developed first: ever-better lasers, semiconductors, control electronics and techniques to achieve the low temperatures at which many quantum systems perform best. + +Britain did not exploit the atomic clock’s discovery in the market. Instead, a year after the device was invented, it was commercialised by the National Company, an American firm. Given the potential of these new quantum technologies, this time commercialisation is on many minds. The NPL’s ever-smaller clocks are just one step towards marketable products that could vastly outdo GPS (which itself is an application of atomic timekeeping) in navigation, or help spot what lies underground. The era of quantum technology is almost here. + + + +The odds are good; the goods, odd + +Everything in the natural world can be described by quantum mechanics. Born a century ago, this theory is the rule book for what happens at atomic scales, providing explanations for everything from the layout of the periodic table to the zoo of particles spraying out of atom-smashers. It has guided the development of everyday technologies from lasers to MRI machines and put a solid foundation under astrophysicists’ musings about unknowables such as the interiors of black holes and the dawn of the universe. Revealed by a few surprising discoveries, such as that atoms absorb and emit energy only in packets of discrete sizes (quanta), and that light and matter can act as both waves and particles, it is modern physics’ greatest triumph. + +It has a weird side, though, and it is this that has captured interest in what is now being called the second quantum revolution. The first one was about physics: about understanding how the world worked at the tiny scales where quantum mechanics rules. Not only can particles be in two states at once, as with the atoms in an atomic clock; sometimes two of them, separated by a great distance, seemingly sense something about each other’s condition, a situation called entanglement. A particle’s exact position or state is never certain until a measurement is made; there are only higher or lower likelihoods of a given outcome, and the measurement changes the situation irrevocably. All this has been clear from the mathematics since the mid-1920s but was made manifest in laboratory experiments only later in the 20th century. As the theory’s more straightforward predictions were put to use, for instance in electronics, quantum mechanics gained a reputation for being counterintuitive, even downright spooky. + +The expertise gained during those years is now paying dividends. The most counterintuitive quantum-mechanical predictions are being harnessed to make measurements of staggering precision, to generate uncrackable codes and to form the basis of impenetrable communications networks. Quantum computers may eventually crunch through currently unapproachable problems, improving the transmission of electric power or the manufacture of energy-intensive fertiliser, or simply sifting through impracticably large data sets. However, long before then computing systems that still fall far short of a general-purpose machine are likely to start providing solutions in industries such as finance, energy and aerospace, and even help with things as mundane as recommendation engines. + +From small beginnings + +Much work remains to be done. Although a handful of quantum-enabled sensors, modest quantum networks and rudimentary quantum computers are already in use, they still fall short of fully exploiting quantum advantages, and few of them are ready to be widely deployed. According to McKinsey, a consulting firm, in 2015 about 7,000 people worldwide, with a combined budget of about $1.5bn, were working on quantum-technology research (see chart). Industrialisation will boost those numbers. + + + + + +What is notable about the effort now is that the challenges are no longer scientific but have become matters of engineering. The search is on for smaller atomic clocks, for example; for a means to amplify and route quantum-communications signals; and for more robust “qubits” (of which more later) for quantum computing. Startups are embracing the technology with gusto, and tech giants have already planted their flags. There is wide agreement that Google is furthest along in quantum-computer technology and that Microsoft has the most comprehensive plan to make the software required. + +Public money is flowing in, too. National and supranational funding bodies are backing increasingly ambitious quantum-technology efforts. Britain has a programme worth £270m ($337m) and the European Union has set aside €1bn ($1.08bn) for a pan-European programme. Many quantum technologies have security implications, so defence departments are also providing funding. + +Many firms are already preparing for a quantum-technology future. In 2015 IBM set up its Research Frontiers Institute, inviting corporate participants to share ideas about growth areas in technology, the quantum kind being one. The research fund of AXA, a big insurer, has endowed a professorship in quantum information at the Institute of Photonic Sciences in Barcelona to consider the data-privacy risks presented by the coming quantum boom. + +Quantum technology looks set quickly to find its way into all manner of products and services—mostly behind the scenes, as artificial intelligence has recently done. It may be weird, but it promises to be wonderful too. + + + + + +Metrology: Sensing sensibility + + + + +Quantum technology’s supersensitivity makes it great for measuring + +SINCE its inception a century ago, quantum physics has faced something of an experimental problem. The theory promises all manner of interesting and perhaps useful behaviours of particles in isolation, under rigidly controlled conditions. But on the lab bench particles and atoms are never fully isolated, so quantum experiments can be damnably difficult. + +However, that difficulty also presents an opportunity for quantum technology: sensing. “We turn that on its head,” says Sir Peter Knight, a British quantum expert. “If it couples to the outside world so effectively, it’s sensing the outside world really effectively.” Take the first quantum technology to make it to market, the atomic clock. Most designs work by tapping into the energy levels of atoms that are prodded with microwaves. Some of those atoms absorb the light in such a way that they are neither in their unperturbed, lowest-energy state nor in an elevated-energy state but in both at the same time, an effect that is central to quantum mechanics. An improved design “entangles” these microwave levels in one atom with different energy levels in another—levels that correspond to visible light, which has a much higher frequency. Such entanglement, another quantum effect, links the fates of two atoms, temporarily but inextricably, so that experiments on one yield information about the other. Entangling microwave levels with higher-frequency ones associated with visible light allows the clock to access the higher precision that goes with them. In 2012 David Wineland, of NIST, the American national metrology facility, received a Nobel prize for working out how to do this. For some years, his clock was the most accurate measuring device on Earth: had it been set ticking at the time of the Big Bang, 13.8bn years ago, it would still be accurate to within a second. + +Precise timing, particularly from the small, cheap devices that are now being developed, has a wealth of uses, from time-stamping high-frequency market trades to quickly changing settings within a dynamic energy grid. Even lifting an atomic clock up can change how long a tick appears to take: according to the general theory of relativity, time moves ever so slightly more slowly closer to the Earth than further away. Nuisance or opportunity? It’s all relative. A well-calibrated atomic clock could use this discrepancy to make an ultra-precise height measurement. Or, at a fixed height, it could sense the gravitational attraction of what is below; solid bedrock would give a different reading from an oil-and-gas pocket. + +Laws of attraction + +Clocks are not the only means to get a handle on gravity. At the microscopic scales where quantum mechanics rules, streams of matter particles can behave like waves. Like those on a pond’s surface, those waves can interfere, adding to and subtracting from one another—in the quantum description, altering the probability of finding a particle here or there. In a device called an atom interferometer, two particle streams are sent at differing heights and then brought back together to interfere with each other. The degree to which the two paths are different, indicating the relative strength of the gravitational tug from below, measurably alters the degree of addition and subtraction. + +Such devices have a multitude of uses. In Britain, for example, 4m holes are dug every year in the course of roadworks and construction, but two-thirds of the time the diggers have no idea what they will find beneath the surface. Test boreholes cover only a small area, and ground-penetrating radar does not reach deep enough. A gravity sensor that could tell pipework from pebbles would save a lot of trouble. + +RSK, an environmental consultancy involved in cleaning up brownfield sites and the like, reckons that a third of construction projects overrun by up to a month, and another third by two months or more, and that half of these delays arise because of underground surprises. The company is collaborating with the University of Birmingham in Britain on fieldworthy quantum gravity sensors, in the hope of deploying them in big infrastructure projects. Other efforts to develop cheap sensors have drawn interest from companies such as Schlumberger, an oilfield-services giant, and Bridgeporth, a surveying firm. + +Military types are interested, too. “You can’t shield gravity,” says David Delpy, who leads the Defence Scientific Advisory Council in Britain’s defence ministry. Improved gravity sensors would be able to spot moving masses under water, such as submarines or torpedoes, which could wipe out the deterrent effect of French and British nuclear submarines. Quantum gravimeters could precisely map geological features from the gravitational force they induce. That would help with getting around in places where satellite-navigation signals are not available—“a kind of Google Maps for gravitation”, as Dr Delpy puts it. + +And gravity, the theory of relativity also says, is just one manifestation of acceleration: a good gravimeter is a good accelerometer. And a good accelerometer is a good vibration sensor. Once they are small enough and good enough, all these high-precision devices will be of great interest to carmakers, and in particular to the autonomous-vehicle industry, the success of which will depend on accurate sensing of the movements of cars and their surroundings. Bosch, a German firm that is the world’s largest maker of automotive components and a supplier to many other industries, already has its eye on quantum-technological enhancements to its products. + +Michael Bolle, the firm’s head of research and development, believes sensors will be quantum technology’s first market success. “I’m not talking about niche markets,” he says. “I’m interested in the trigger point where things really go into mass production.” Quantum technologists the world over are preparing for this market explosion by patenting their findings. In some countries, such as Japan and Australia, quantum sensors make up a large part of national patent portfolios (see chart). + + + + + +Mr Bolle and others are also interested in sensors based on “nitrogen vacancies”—places where a diamond’s all-carbon network has been disrupted by one nitrogen atom next to a missing carbon atom. This is a quantum physicist’s playground: mostly isolated by its rigid cage of carbon neighbours from the bumpy, fluctuating world outside, electrons from the nitrogen atoms can be easily manipulated and measured, placed in superpositions and even entangled with one another. Just like the hypersensitive clock, these systems are extraordinarily responsive to their environment and can act as precise sensors of pressure, temperature and electric current. + +Where they have shown the most promise is in measuring magnetic fields. Recent studies show that nitrogen vacancies can detect the on-and-off magnetic field of single nerve cells. The same principles can work inside the human body, too. Nanoscale diamonds with nitrogen vacancies have been used to spot chemical changes in living cells, and researchers from the Institute of Theoretical Physics and the Institute of Quantum Physics in Ulm, Germany, have formed NVision, a startup that uses such nanodiamonds to match the current best magnetically enhanced MRI techniques, but 40 times faster and at a quarter of the cost. + +High performance in these applications depends on well-understood nitrogen vacancies, which occur sporadically in natural diamonds but whose positions and number must be known for precision measurement. Enter Element Six (a subsidiary of DeBeers, the world’s largest diamond producer), which manufactures diamonds with precision-engineered nitrogen vacancies. + +Capture the friendly ghost + +Quantum-enhanced approaches may also supplement other biological imaging techniques, such as positron emission tomography (PET), which takes pictures of the high-energy gamma-ray light flying out of injected radioactive tracers. Each tracer molecule’s interaction with tissue spits out two photons in opposite directions. Quantum-entanglement tomography aims to make use of the fact that those photons are entangled when they are created. In PET, the photons can be hard to track because they bounce off body tissues. The entanglement of each pair makes it easier to work out which came from where, so scans take less time and radioactive material. + +Ghost imaging is another promising way of making use of light’s quantum nature. The technique involves splitting a beam of light in two and aiming the resulting two beams at two detectors, one directly and one through a somewhat opaque medium, such as turbulent air rising from hot ground or a smoke-filled room. Because the photons making up the beam are correlated, a rigorous accounting of what the two detectors can see yields images of what the eye cannot. In 2013 researchers from America’s army showed that the technique worked over more than 2km. + +The technique points to a fascinating debate that underpins many discussions in the broader quantum-technology community about exactly how quantum effects confer an advantage. Though ghost imaging was predicted in the 1990s, arguments still rage about whether entanglement is playing a role or whether it works simply because light comes in discrete, countable photons. “There are plenty of physicists that don’t understand the distinction,” says Miles Padgett of the University of Glasgow, a quantum-imaging expert. “And I don’t think it matters. What matters is, are we using our knowledge in the quantum world to bring competitive advantage?” With hand-held detectors that can sense height differences down to a millimetre, magnetometers that can in principle watch your every neuron and imaging kit that can see across a smoky battlefield, the answer is ever more clearly yes. + + + + + +Communications: Oh what entangled web we weave + + + + +Quantum networks could underpin unhackable communications links + +IN 2004 the Bank of Austria and Vienna’s city hall notched up the first quantum-encrypted bank transfer. Anton Zeilinger, a quantum-cryptography pioneer whose lab facilitated the transfer, expressed his hope that “all problems of implementation will be solved within three years.” They were not. + +The technology was put to the test again in 2007 when quantum-encrypted vote tallies from the Swiss federal election were sent from polling stations to the Geneva state government. Engineers insisted that the transmission was utterly impervious to eavesdropping or tampering; a company called ID Quantique had developed a system that harnessed one of the rules of quantum mechanics to offer total security. + +That claim, too, turned out to be premature. Hackers have since demonstrated that equipment used in such transfers could be vulnerable to attack. What is more, such quantum encryption also required a single, dedicated fibre between sender and receiver, which limited the technique to high-profile transactions, and precluded the cross-linking of many senders and receivers that has made networking and the internet so successful. + +Key findings + +That is now changing. In response to hackers’ attacks, the kit has become markedly more secure. Field trials have shown that delicate quantum light signals can be sent through the same fibres that bring the internet to homes and businesses. And efforts to make quantum-enhanced versions of the equipment that amplifies and distributes standard optical signals are bearing fruit. Quantum networks are springing up or expanding. And quantum communications, just like their conventional counterparts, will soon be whizzing through space, too. + +The most discussed and deployed technique is called quantum-key distribution (QKD). In one set-up, a sender launches single photons toward a receiver, randomly choosing one of four planes along which the light particles are polarised, two of them associated with a 0 and the other two with a 1. The receiver likewise randomly chooses which kind of polarisation to check for. After sending a string of these bit-associated photons, the pair can publicly compare notes on which polarisations they employed; whenever they happen to have chosen the same one, the 0 or 1 associated with that polarisation can be used as a bit in a cryptographic key. + +What contributes to the system’s security is Heisenberg’s uncertainty principle, a much-touted quantum rule which, in this case, guarantees that an eavesdropper would disrupt the system’s randomness, because intercepting and measuring a given photon forces it into a given polarisation. That disturbance to the system would reduce the number of coincidences the pair sees; if there are too few (they should be seen about half the time), they know someone is on the line. + +Physics textbooks will tell you that a sufficiently long cipher, randomly generated this way and used only once, is absolutely secure. But Vlatko Vedral, of the Centre for Quantum Technologies in Singapore, says that hackers who have been invited to try to break into the centre’s quantum-communications experiments have often succeeded—not by beating quantum rules but by ruthlessly exploiting shortcomings of the kit itself. For example, storing a digital 0 generates a slightly different amount of heat from storing a 1, so careful observation of the heat being generated can expose the string of digits being received. Once discovered, such hacks are easily prevented. As time has gone on, such shortcomings have narrowed in scope, and have driven innovation. + +Thanks to the development of ever more secure links, quantum cryptography has recently been deployed more widely. ID Quantique has installed quantum links between data centres of KPN, a Dutch telecoms firm; of Battelle, an American non-profit research firm; and of Hyposwiss and Notenstein, two Swiss private banks. It offers links between financial institutions in Geneva and a disaster-recovery centre 50km away. In 2015 researchers at Toshiba in Japan began sending quantum-encrypted genomic data from a research facility in Sendai to Tohoku University, 7km away. + + + + + +But the future of the technology lies in quantum networks—the infrastructure required to connect many senders and receivers. These are springing up within and between major metropolitan areas. South Korea’s government is funding a 250km link to join existing metro quantum networks. In Britain a network of similar length will be deployed between the cities of Bristol and Cambridge, via London. Australia is building a closed government network in the capital, Canberra. + +No quantum network is more ambitious than the one completed in China at the end of last year. Funded by the central government, it links Beijing and Shanghai via Jinan, which already has a metro network over 70 square kilometres, made up of 50 “nodes”—switchboards connecting senders and receivers—and Hefei, which has a 46-node network. Its customers include China Industrial and Commercial Bank, the China Banking Regulatory Commission and the Xinhua news agency. + +Distance presents a problem. As the meticulously prepared photons with their delicate quantum states bounce along lengths of fibre, those states eventually get scrambled and their information is lost. To ensure fidelity and security, the fibre link should be no longer than about 200km. Standard fibre-optical signals suffer from the same weakening of the signal, so “repeaters” to boost it are placed at regular intervals along their path. But under the quantum rule book, unknown quantum states cannot be copied, so quantum data would need to be temporarily decrypted before receiving a boost, creating a security loophole. + +There are two ways to get round this, one by land and one by air. The land-based solution is to develop quantum analogues of the repeater. That will require a quantum memory that can store incoming information, and a means of sending them on that does not compromise quantum security. That last part requires another bit of quantum trickery: teleportation. This is a way of projecting the quantum state of one particle (not, it should be stressed, the particle itself) onto another, distant one. Last year two research groups showed the benefits of teleportation across two metropolitan networks, in Calgary and Hefei. Crucially, they carried out their experiment using the same wavelengths as those used in existing telecoms networks, to ensure that the new technique can be used with existing fibre infrastructure. It did the trick. + +Spooks reacting at a distance + +Another tack is to take to the air, over similar distances but without the need for a particular fibre link. The current record for teleportation of quantum states in this way was set in 2012, when researchers sent a quantum-encrypted message between two of the Canary islands, 143km apart. A long-standing ambition is to apply the idea to space: for a photon, the disturbance caused by the whole thickness of the Earth’s atmosphere is equivalent to that caused by just a few kilometres of air at the surface. + +Last August China launched Micius, a quantum-key-distribution-enabled satellite backed by tech companies including Huawei and Lenovo. The goal at this stage is to link the Beijing-to-Shanghai network to another in Urumqi, in Xinjiang province, some 3,000km away. Efforts to develop satellite communications are also under way in Singapore, Canada, Japan, Italy and America. Once the challenges of getting quantum signals into space—through turbulent air, clouds and so on—are overcome, a global network could easily follow. + +With country-spanning networks and quantum-enabled satellites, it is easy to envisage a global “quantum internet” in which each link offers quantum-enhanced security. But the kind of innovation that will allow the development of such networks will also be of use, for example, in shuttling information within, and between, future quantum-computing devices: think quantum distributed computing and quantum cloud computing. Just as the internet has demonstrated the power of linking many standard computers, says Seth Lloyd, a theorist at the Massachusetts Institute of Technology, “the quantum internet has the potential to change the way in which people and organisations collaborate and compete, establishing trust while protecting privacy.” + +Not everyone is convinced yet. The defence establishment seems to have been put off by some of the early setbacks to quantum links. Quantum-communications efforts are under way, for example in the research arms of America’s army and navy, but an analysis by the air force’s Scientific Advisory Board suggested that QKD had “little advantage over the best classical alternatives”. And doubters rightly point out that encryption is not the weakest link in many security chains. + +Yet as the hardware improves and heavy investment continues, quantum networks may begin to look like a strategic must-have; if so, consumer applications are likely to proliferate. The European Telecommunications Standards Institute (ETSI), which sets global benchmarks for the industry, is working to define quantum-cryptography standards. ETSI scientists want to ensure that kit from multiple vendors can work together, and to create a certification so that consumers (including spooks) are guaranteed a widely agreed level of security. Miniaturisation efforts are well under way too, so before long the equipment may fit in the palm of your hand—or in your phone. + + + + + +Cue bits: Why all eyes are on quantum computers + + + + +Tech giants and upstarts alike are piling into a technology with huge potential + +IN 1981 Richard Feynman, a visionary physicist, had a clever idea. Could the odd properties of quantum mechanics, he wondered aloud in a lecture, be used to carry out simulations of physical systems that computers of the time could not cope with? Others took up the question. In 1985, David Deutsch, now at Oxford University, showed how quantum systems could be set up as a “universal” computer—that is, like current computers, able to run any program. Though fascinating, at that point it was all rather theoretical, involving hardware that no one knew how to build. + +What made the world sit up and take notice was a paper published in 1994 by Peter Shor, then at Bell Labs. Dr Shor showed that a quantum computer would be capable of working out the prime numbers that, multiplied together, make up an exceedingly large number. The fact that this “decomposition” is mathematically very hard is the basis of cryptographic protocols still used today. + +Since then, researchers have come up with a rich variety of problems for which quantum computers should be superior to the best supercomputers—and a number of algorithms, or sets of steps, to break down problems in such a way that quantum computers can crunch through them. This evident utility started an international competition to build one that was, for many years, confined to quiet labs and the academic literature. These days, big business is seriously interested, and blue-chip companies including Intel, Hewlett-Packard, Google and Microsoft all have research programmes. Last year IBM released Quantum Experience, which lets all comers play around with a crude quantum computer over the internet. Governments too are putting money into academic efforts, both directly and via defence contractors, and a growing band of startup companies are striking out on their own. + +A computer big enough to do what Dr Shor envisaged would also be useful for all manner of currently intractable problems. Although that remains a distant prospect, steps towards developing one could have big benefits; for many applications, a much simpler or special-purpose computer will do. + +Bit by bit + +What makes the idea of quantum computers so attractive is not so much that they will work faster than traditional computers—they may for some applications but not for others—but that they will work fundamentally differently. Three intuition-defying concepts play a role. The first is superposition. Today’s computers depend on bits taking one of two values, 0 or 1. Qubits, their quantum analogues, can be arranged in “states” that are best thought of as some mixture of both 0 and 1. To carry out a computation using one of these strange beasts is to act on both the 0 and the 1, in a sense to create within the calculation the potential outcome of either at the same time. + +The power of this indeterminate state is unleashed through the second quantum-mechanical effect, entanglement. A standard computer depends on the complete isolation of one bit from the next to prevent a computation from going awry or a document from getting corrupted. For a quantum computer, the entangling of multiple qubits is paramount; in the best case, all of a given device’s bits are entangled with one another. Again, to operate on one qubit is to operate, to varying degrees, on all the entangled ones. It is therefore impossible to describe such a machine in strict terms of its constituent parts. There is a need to consider how one qubit is connected to its neighbour, and to the next-but-one, and so on through all the cross-correlations. To describe all the states of a 50-bit standard computer requires 50 bits of digital memory; a description of a 50-qubit computer would require a quadrillion. + +It gets weirder. Whereas it is easy to imagine an equation that predicts a low or even zero probability of a given event, it is much harder to reckon with what are called probability amplitudes in quantum mechanics, which can actually be negative. In the course of a quantum computer’s crunching, these amplitudes can (again like waves) interfere, positive with positive and negative with negative—in essence, to reduce the probability of the wrong answer and boost that of the right one. + +Posing a question starts with choosing an algorithm suitable for the problem. This algorithm is actually manifest as the starting states of the qubits: 0 here, 1 there, a bit of a mix over there. The calculation is then just a matter of letting quantum-mechanical laws play out on this system of superposed and entangled qubits. Changing states, shifting qubit couplings and so on represent a vast cross-multiplication of all those states and combinations, with probability amplitudes reinforcing and diminishing until the system settles into a final state that represents the answer. It is a matter of setting up the problem, and the machine, so that all the possibilities are sifted through at lightning speed. + +Efforts to make qubits often centre on the use of tiny loops of superconducting wire, arranged like the “gates” of standard computers. Single charged atoms, trapped by electric or magnetic fields, can also do the job; in February an international consortium of researchers published an open-source blueprint for a trapped-ion machine. Several groups use single photons as qubits—an approach that looks easy to integrate with existing semiconductor-fabrication techniques. Microsoft’s planned “topological” quantum computer uses something else entirely: “anyons”, particles that would be more easily tamed than other qubit candidates but which have never been seen outside the pages of theoretical physics textbooks. + +Setting up a qubit is no longer difficult. The problem is looking after it. Quantum states are notoriously delicate, requiring complete isolation from the actual stuff of the experiment. But isolation can never be complete, and errors creep in; for a calculation to succeed these must be noticed and corrected. It has become clear that as computers scale up, the number of logical qubits (the ones actually doing the calculation) will be dwarfed by an “overhead” of perhaps thousands of times as many error-correcting and command-and-control qubits. The kind of machine required to implement Shor’s famed algorithm on the sort of large numbers used in encryption will need to contain something like a million qubits. + +Such machines will, to put it mildly, be an engineering challenge. But in a clear indication that quantum computing is getting closer, names familiar from traditional computing are increasingly getting involved. Hewlett-Packard is trying to build its own machine. Intel’s global quantum investments include $50m going into work at QuTech, the Netherlands’ national quantum-technology hub. Microsoft’s topological quantum approach, if it works, will be much less error-prone. The quantum-computing startup scene is also becoming increasingly vibrant. Researchers from Yale and the University of Maryland have spun off companies, and physicists who had worked at IBM and America’s Department of Energy have started their own firms. + +Governments are getting in on the action too. Australia’s has invested A$26m ($20m) in a laboratory at the University of New South Wales in Sydney (and the Commonwealth Bank of Australia and Telstra, a telecoms firm, have together chipped in about the same amount). A lab at the University of Sydney down the road is being funded as part of LogiQ, a programme of the Intelligence Advanced Research Projects Activity, an American government defence outfit. Leaked documents have revealed that America’s National Security Agency has been exploring “if a cryptologically useful quantum computer can be built”. Experts now reckon it can. But when? + +Simulating discussion + +Very few in the field think it will take less than a decade, and many say far longer. But the time for investment, all agree, is now—because even the smaller and less capable machines that will soon be engineered will have the potential to earn revenue. Already, startups and consulting firms are springing up to match prospective small quantum computers to problems faced in sectors including quantitative finance, drug discovery and oil and gas. + +Perhaps the most interesting early applications will take the form of “quantum simulators”: computers that mimic real physical systems. This is what Feynman had in mind, imagining in his lecture “that the computer will do exactly the same as nature”. Quantum simulators might help in the design of room-temperature superconductors allowing electricity to be transmitted without losses, or with investigating the nitrogenase reaction used to make most of the world’s fertiliser. + +Quantum simulation has its fans in industry, too. Michael Bolle at Bosch foresees using simulators to design batteries that will supersede the current lithium-ion technology. Paolo Bianco, who heads the quantum-technology research team at Airbus, a big European aerospace firm, says that quantum-simulating a new material such as a stiffer or lighter alloy for use in aeroplanes or satellites would be much faster and cheaper than manufacturing and then testing the material itself. “The promise of quantum technologies”, he says, “is in engineering terms a step up in performance—not of 20%, but of a couple of orders of magnitude.” + +For some applications and classes of problems that may well be true. But the experience of D-Wave Systems, a Canadian company that began selling the first commercially available quantum computer in 2011, shows how little is known about what future machines will be able to do. D-Wave makes what is known as a quantum annealer, a special-purpose quantum computer (as opposed to a universal one) that works best on “optimisation” problems, such as finding the shortest possible route for a travelling salesman. The firm’s customers include Lockheed Martin and a consortium including Google and NASA. In January Temporal Defense Systems, a cyber-security firm, bought one. + + + +For years experts questioned whether the devices were actually exploiting quantum mechanics and whether they worked better than traditional computers. Those questions have since been conclusively answered—yes, and sometimes—but only by exhaustively testing the machines’ mettle directly. The current best supercomputers are able to simulate only what more general-purpose quantum computers of about 50 qubits can do. Tantalisingly, it is difficult to tell at what problems bigger machines will excel. + +Google is aiming to use its own machinery, a so-called gate-model quantum computer of the sort most groups are pursuing, to achieve “quantum supremacy”, whereby a quantum computer performs a calculation faster than any known computer could. Google researchers have laid out an ambitious plan which may let them achieve that feat this year. D-Wave has hinted it has already done so, but has made similar claims in the past; their current numbers are still to be checked. + +Whenever, and by whomever, this is accomplished, it will launch an era of small-scale machines offering quantum-enhanced solutions and services. The first publicly accessible one, IBM’s Quantum Experience, may be an indication that the machines’ future will be in the cloud. Most users have no more need for one at home than they have for a supercomputer. + +But some do. In 1982, a year after Feynman gave his quantum-computing lecture, he was touring the supercomputer facility at Los Alamos National Laboratory, where he had worked on the first atomic bomb. Talking to Bo Ewald, then in charge of the lab’s computing efforts and now running D-Wave, Feynman said, “You know, young man, one day all of these will be replaced by quantum computers.” One has already moved in. + + + + + +Software: Program management + + + + +Quantum-computer code could do wonders—but also unravel well-kept secrets + +IT DOESN’T help to have a quantum computer if no one knows how to program it,” says Tim Polk, of the White House Office of Science and Technology Policy in Washington. Although academic efforts to build quantum-computer hardware have been going on for two decades, comparatively little has been done to develop the software needed to run the machines when they come. + +That is changing, because in the past few years it has become clear that those machines are getting closer. Two parallel efforts are under way. One is to create software as generally understood—the graphical interfaces, programming languages and so on, a kind of “Windows for quantum”. The other is to develop novel algorithms, step-by-step instructions that break down problems into discrete parts amenable to quantum computing. + +Innovation abounds in both camps, and among big tech firms as well as plucky startups. Some big players are working on both sides of the problem, and a growing ecosystem of quantum-friendly consultancies advises companies on what quantum computing might do for them. + +“Machine” language for quantum computers, which actually tells the computer what to do, is fairly well understood. It is not so different from the logic gates of standard computing, except that it allows for “superpositions” of qubits in which they can be both 0 and 1 at the same time. But how to write computer code to interact with such a machine, or to simulate what it can do? Options are multiplying, including open-source software packages such as QuTip, funded by a number of research outfits in Asia. On March 6th IBM released the first commercial program for universal quantum computers (the general-purpose kind). And various startups have released their own quantum software. + +One of the most ambitious, LIQUi|> (whose name plays on a symbol in quantum mechanics), comes from Microsoft. It aims to tackle the whole “software stack”, from the user interface to code-compilers and ultimately to a machine language suitable for Microsoft’s planned hardware, and that of others. + +Krysta Svore, who leads Microsoft’s quantum-software team, says that the group is also working on reducing the total number of qubits and operations required for quantum calculations, known as “overhead”, and on making standard computers better at emulating quantum ones (the group recently hired a world expert in that field, Matthias Troyer). The team’s full-scale simulation of a 32-qubit computer requires 32 gigabytes of memory, more than the average desktop can muster but still manageable. + +Dr Svore and her colleagues are also making estimates of how many qubits, and minutes, would be needed to crack specific problems. She says the numbers are “down dramatically”, thanks to recent improvements in keeping qubits under tighter control. For example, she reckons that a thorough analysis of the energy-intensive nitrogenase reaction to make fertiliser would take a 100-logical-qubit quantum computer hours or perhaps days, whereas a conventional supercomputer would need billions of years. The prize might be a cut of 1-2% in global natural-gas consumption. + +But the key to getting the most out of quantum computers are the algorithms that these various software packages implement. The first of them, including the one by Peter Shor that showed how quantum computers could crack global encryption systems, tested the theoretical idea by aiming at the most intractable problems on the biggest notional machines. + +Even deeper learning + +These days, says Aram Harrow of the Massachusetts Institute of Technology, the focus has shifted to algorithms that smaller machines can make use of, because that kind of hardware will soon be widely available. “We’re still interested in what you can do with a million or a billion qubits, but it’s interesting to see if you can figure out what you can do with 100,” he says. + +A lot, it seems. One of the most promising areas is in machine learning and deep learning, two facets of artificial intelligence that have attracted much attention recently. Applications include searching through vast swathes of data to find patterns, such as in image recognition, cyber-security and, more prosaically, recommendation engines that suggest products consumers might like. But there are all manner of other algorithms, from those that crunch numbers to those that mimic atoms. + +All these quantum recipes call for some means of cataloguing them. Stephen Jordan heads the Quantum Algorithm Zoo at the National Institute of Standards and Technology in Maryland, a comprehensive collection of known algorithms. He has devised a taxonomy of 59 mathematical families they fit into, each suited to particular kinds of problems or breaking down problems in a particular, quantum-friendly way. + +Many such algorithms, when run on existing special-purpose machines or as emulations on standard computers, fail to beat their “classical” counterparts. Vlatko Vedral, of the National University of Singapore’s Centre for Quantum Technologies, stresses that traditional techniques, particularly for quantum-chemistry problems like the nitrogenase reaction, are already quite sophisticated. The trouble is that no beefy general-purpose quantum computer exists as yet, so no one knows whether a given algorithm run on one would beat its classical counterpart. At the same time, astonishingly efficient algorithms suited to quantum computing are waiting to be discovered. + +Those 59 families of algorithms, and ever-better emulators for eventual machines, are an excellent starting point for planning the quantum-computing future, and nowhere is interest greater than in finance. Commonwealth Bank of Australia is getting in early, collaborating closely with a research group led by Michelle Simmons at the University of New South Wales. D-Wave has partnered with 1Qbit, a startup, to develop “Quantum for Quants”, a forum for the quantitative-finance industry. Its editors include Michael Sotiropoulos, head of global equities at Deutsche Bank. UBS, a big Swiss bank, is working with QxBranch, another startup, on using quantum algorithms in foreign-exchange trading and arbitrage. Hyder Jaffrey, head of Strategic Investments and Fintech Innovation at UBS, says he puts quantum computing in the same category as artificial intelligence and blockchains, “all stuff with the potential to change markets”. + +Banking on it + +Companies such as QxBranch and 1Qbit play a new role of middleman between the quantum experts and industry, examining whether and how a given firm’s business might be improved by quantum methods, for example optimising trading strategies or supply chains, or monitoring network activity to spot cyber-attacks. Landon Downs, a co-founder of 1Qbit, says that can lead to solutions which can already be put to use. “By taking the lens of how you would formulate an algorithm on a quantum computer you often find very good improvements on classical algorithms,” he says. “That’s where lots of our successes come from.” + +The biggest benefit is expected to come from quantum-computing hardware once it arrives, so much of this business depends on simulating that hardware on standard machines as accurately as possible. Michael Brett, chief executive of QxBranch, says the idea is that “some Tuesday morning when one becomes available we just swap out our simulation for the real hardware.” + +Even as all these computer scientists and consultants are working on software for the quantum future, a handful of others are working on software to combat it. After all, what got researchers going in the first place was the fear that global encryption standards would crumble in the face of quantum computing. That remains a danger for the future, and retrospectively perhaps even for the present, if encrypted communications filed away now are analysed by powerful quantum computers later. That is the idea behind post-quantum cryptography, an effort to create ciphers that even future quantum computers will be unable to crack. + +PQCRYPTO is a three-year, European-funded project to develop post-quantum ciphers. Its goal is not to find the most mathematically gnarly way of encrypting data, but rather to identify one that is sufficiently difficult to break without needing too much memory or computation to implement. RSA, a current global standard, could be made hard enough to break, but the cryptographic keys would have to be a terabyte long—an impracticable option. Keys for elliptic-curve cryptography, another current standard, are just 32 bytes long; any post-quantum solution needs to aim for a similar ratio of brevity to security. + +Tanja Lange, who leads the project, says that post-quantum efforts are now attracting a lot of attention, particularly from nervous Silicon Valley outfits. In 2015 America’s National Security Agency said it would be updating all its cryptography to make it quantum-computer-proof. Last year Google quietly ran its own post-quantum cryptography test in Chrome, its web browser. Some of its users’ communications were protected both with elliptic-curve encryption and New Hope, a post-quantum protocol developed as part of PQCRYPTO. The median delay added to those communications turned out to be just a millisecond. + +“The power of quantum computing is rediscovering all the problems that computers cannot solve, and having a path to solving them,” says Dario Gil, vice-president of science and solutions at IBM. “It’s a reorientation of what we think about computers.” But a device capable of solving big problems will create new ones if it can unravel protocols that have protected secrets for decades. + + + + + +Commercial breaks: The uses of quantum technology + + + + +The most exciting thing about a quantum-enhanced world is the promise of what it may yet bring + +WHEN the first atomic clocks were built and swiftly commercialised, no one used the term “quantum technology”. The clocks simply harnessed the power of quantum mechanics to improve results. At the time there were no other examples of how the odd predictions of quantum mechanics such as entanglement and superposition could be put to practical use. Mostly they informed fundamental science, yielding an ever-subtler view of the world at the tiniest scales. + +Here and there, quantum weirdness did escape the lab, as in the case of the superconducting quantum interference device, an exquisitely sensitive magnetic-field sensor. The first of these was developed in 1964 at Ford Research Laboratory, the American carmaker’s blue-skies research facility. Now they are widely used, for example in MRI machines. In the early 1980s researchers at IBM turned the quantum effect of tunnelling, in which particles seem to pass straight through impenetrable barriers, into a way to see the microscopic world with staggering resolution. + +The current quantum-technology push is on a far grander scale, with multiple research efforts being funded by national governments and supranational bodies, sometimes for strategic reasons. Freeke Heijman has led efforts to build QuTech, the quantum-technology institute of the Netherlands. “We don’t want to risk the scenario that we have invested all this money for years and in the end the money is going to be made in the US or China,” she says. And in the case of defence applications, she says security plays a role too: “If you have to buy it off the shelf, it’s not just an economic disadvantage, it’s also dangerous.” + +But quantum technologies will not pass into the wider world in the same way as the global positioning system, which was developed with copious government funding behind closed doors and then handed over as a public good. “It’s just not like that today,” says Neil Stansfield, formerly of the British government’s Defence Science and Technology Laboratory. “We’re not the big kid on the government block, and certainly not on the global block.” + +That leaves business to step into the breach. But Trevor Cross, chief technology officer of E2v, a British company whose detectors brought the world pictures from the Hubble Space Telescope and which is now doing pioneering work for quantum devices, says that quantum technologies are still viewed by many industries as risky. That may be because many of the approaches are technologically so far beyond the current state of the art. Richard Murray, an emerging-technologies expert at Innovate UK, Britain’s technology-strategy agency, says that the more transformative the technological change, the easier it is to miss opportunities. + +Material evidence + +The opportunities are many, because at the level of components these technologies are intimately connected. Many of them depend, for example, on light sources that can spit out photons one at a time, every time, and detectors that can just as unfailingly catch just one—no small feat, considering that a 60-watt bulb is putting out 100,000,000,000,000,000,000 or so of them every second. This kind of kit was unimaginable a decade ago. + +New materials, and precisely engineered versions of existing ones, will be needed too. Element Six, a subsidiary of De Beers, a diamond giant, has carved out a niche selling diamonds with bespoke “nitrogen vacancies”—flaws that turn them into sensors. Silicon carbide is tipped to be just as quantum-amenable as those diamonds, but so far expertise with it is thin on the ground. + +New alliances will be forged as the work on materials intensifies. Intel aims to build qubits into silicon, in order to piggyback on existing fabrication infrastructure. But that will require the material to be produced to a much higher purity. To that end, Intel has joined forces with Urenco and Air Liquide, two materials firms. + +Michael Bolle at Bosch, the multinational engineering firm, envisages a seamless coming together of these diverse approaches in applications such as autonomous vehicles or the internet of things: quantum sensors to gather sensitive readings, quantum cryptography to transmit them securely and quantum computing to gather insights from the resulting copious streams of data. + + + +Many practitioners believe that the applications and technologies outlined in this report are just the beginning. As they become more familiar, they will give rise to new applications and wholly new hardware. Subjects that used to be mere footnotes to physics will rule, and engineers (and perhaps even consumers) will have to learn to speak quantum. + +Yet some innovators may find themselves stymied. “The question is to what extent will export controls on these technologies become an issue, particularly if any of it has some defence potential,” says Stephen Ezell, of the Information Technology and Innovation Foundation, an American think-tank. Tech firms such as Intel and IBM have had trouble exporting parts and computers to countries like China, he says. + +Such challenges aside, what is exciting about these efforts is how much is simply not known about their future. Bob Wisnieff, a manager at IBM’s microelectronics-research labs, says that “we’re not that far from being capable…of building quantum computers that will do things we cannot predict exactly.” John Preskill, a quantum expert at the California Institute of Technology, who coined the phrase “quantum supremacy”, has said that “a quantum computer can simulate efficiently any physical process that occurs in nature. Maybe. We don’t actually know for sure.” + +That brings the potential of quantum technologies full circle, to the fundamental-science considerations from which they were born. Quantum computers and simulators should eventually be capable of solving some of science’s most basic and yet most daunting questions. Sensors of unparalleled precision may at last make it possible to test the predictions of physicists’ most abstract ideas, perhaps linking the theories of quantum mechanics and gravity. + +“We certainly expect there are many additional things that we’ll be able to do with quantum beyond the things we know of,” says Tim Polk of the White House Office of Science and Technology Policy. “We had no idea of all the things we’d be able to build with the transistor, and we see the same thing with quantum.” + +In addition to those named in the text, the author would particularly like to thank: Scott Aaronson, John Bagshaw, Dan Bernstein, Kai Bongs, Altaf Carim, Adam Davison, Marc de Jong, Iulia Georgescu, Aram Harrow, Ray Johnson, David Kaiser, Leon Lobo, Graeme Malcolm, Mike Mayberry, Jian-Wei Pan, Martin Plenio, Dilan Rajasingham, John Rarity, Tanya Reeves, Andrew Shields, Marie Skelton, Tim Spiller, Andrea Taroni and Qiang Zhang. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21718309/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Technology Quarterly + +Here, there and everywhere + + + +Quantum technology is beginning to come into its own + +After decades as laboratory curiosities, some of quantum physics’ oddest effects are beginning to be put to use, says Jason Palmer + +PATRICK GILL, a director of the new Quantum Metrology Institute at Britain’s National Physical Laboratory (NPL) in south-west London and an expert in atomic clocks, points to a large table full of lenses and mirrors, vacuum chambers and electronics. “And there’s a smaller one over there,” he says. + +NPL is part of a consortium of the planet’s official timekeepers. In all its atomic-clock laboratories, each of the flagship devices—some of which are huge—is flanked by a smaller one under construction. Miniaturisation is the name of the game. Here is one that fits into a standard electronics rack, 19 inches wide. Over there is a fist-sized gizmo designed to hold an atomic clock’s precious innards safe within a satellite. + +The caesium atomic clock, developed at NPL, was arguably the world’s first quantum technology, though it was not labelled as such. The most common approach, first used in 1950, works by putting energy into atoms to create a “superposition” in which they are, in a measurable way, in more than one energy state at the same time—both excited and relaxed. Probing this strange condition reveals the “clock frequency” of those atoms—a constant for clocks on every continent, and the basis for a precise, internationally agreed definition of the second. + +After decades of work in the laboratory, a raft of different devices and approaches relying on quantum-mechanical effects are now nearing market-readiness. It has taken so long mainly because the components that make them up had to be developed first: ever-better lasers, semiconductors, control electronics and techniques to achieve the low temperatures at which many quantum systems perform best. + +Britain did not exploit the atomic clock’s discovery in the market. Instead, a year after the device was invented, it was commercialised by the National Company, an American firm. Given the potential of these new quantum technologies, this time commercialisation is on many minds. The NPL’s ever-smaller clocks are just one step towards marketable products that could vastly outdo GPS (which itself is an application of atomic timekeeping) in navigation, or help spot what lies underground. The era of quantum technology is almost here. + + + +The odds are good; the goods, odd + +Everything in the natural world can be described by quantum mechanics. Born a century ago, this theory is the rule book for what happens at atomic scales, providing explanations for everything from the layout of the periodic table to the zoo of particles spraying out of atom-smashers. It has guided the development of everyday technologies from lasers to MRI machines and put a solid foundation under astrophysicists’ musings about unknowables such as the interiors of black holes and the dawn of the universe. Revealed by a few surprising discoveries, such as that atoms absorb and emit energy only in packets of discrete sizes (quanta), and that light and matter can act as both waves and particles, it is modern physics’ greatest triumph. + +It has a weird side, though, and it is this that has captured interest in what is now being called the second quantum revolution. The first one was about physics: about understanding how the world worked at the tiny scales where quantum mechanics rules. Not only can particles be in two states at once, as with the atoms in an atomic clock; sometimes two of them, separated by a great distance, seemingly sense something about each other’s condition, a situation called entanglement. A particle’s exact position or state is never certain until a measurement is made; there are only higher or lower likelihoods of a given outcome, and the measurement changes the situation irrevocably. All this has been clear from the mathematics since the mid-1920s but was made manifest in laboratory experiments only later in the 20th century. As the theory’s more straightforward predictions were put to use, for instance in electronics, quantum mechanics gained a reputation for being counterintuitive, even downright spooky. + +The expertise gained during those years is now paying dividends. The most counterintuitive quantum-mechanical predictions are being harnessed to make measurements of staggering precision, to generate uncrackable codes and to form the basis of impenetrable communications networks. Quantum computers may eventually crunch through currently unapproachable problems, improving the transmission of electric power or the manufacture of energy-intensive fertiliser, or simply sifting through impracticably large data sets. However, long before then computing systems that still fall far short of a general-purpose machine are likely to start providing solutions in industries such as finance, energy and aerospace, and even help with things as mundane as recommendation engines. + +From small beginnings + +Much work remains to be done. Although a handful of quantum-enabled sensors, modest quantum networks and rudimentary quantum computers are already in use, they still fall short of fully exploiting quantum advantages, and few of them are ready to be widely deployed. According to McKinsey, a consulting firm, in 2015 about 7,000 people worldwide, with a combined budget of about $1.5bn, were working on quantum-technology research (see chart). Industrialisation will boost those numbers. + + + + + +What is notable about the effort now is that the challenges are no longer scientific but have become matters of engineering. The search is on for smaller atomic clocks, for example; for a means to amplify and route quantum-communications signals; and for more robust “qubits” (of which more later) for quantum computing. Startups are embracing the technology with gusto, and tech giants have already planted their flags. There is wide agreement that Google is furthest along in quantum-computer technology and that Microsoft has the most comprehensive plan to make the software required. + +Public money is flowing in, too. National and supranational funding bodies are backing increasingly ambitious quantum-technology efforts. Britain has a programme worth £270m ($337m) and the European Union has set aside €1bn ($1.08bn) for a pan-European programme. Many quantum technologies have security implications, so defence departments are also providing funding. + +Many firms are already preparing for a quantum-technology future. In 2015 IBM set up its Research Frontiers Institute, inviting corporate participants to share ideas about growth areas in technology, the quantum kind being one. The research fund of AXA, a big insurer, has endowed a professorship in quantum information at the Institute of Photonic Sciences in Barcelona to consider the data-privacy risks presented by the coming quantum boom. + +Quantum technology looks set quickly to find its way into all manner of products and services—mostly behind the scenes, as artificial intelligence has recently done. It may be weird, but it promises to be wonderful too. + + + + + +Metrology: Sensing sensibility + + + + +Quantum technology’s supersensitivity makes it great for measuring + +SINCE its inception a century ago, quantum physics has faced something of an experimental problem. The theory promises all manner of interesting and perhaps useful behaviours of particles in isolation, under rigidly controlled conditions. But on the lab bench particles and atoms are never fully isolated, so quantum experiments can be damnably difficult. + +However, that difficulty also presents an opportunity for quantum technology: sensing. “We turn that on its head,” says Sir Peter Knight, a British quantum expert. “If it couples to the outside world so effectively, it’s sensing the outside world really effectively.” Take the first quantum technology to make it to market, the atomic clock. Most designs work by tapping into the energy levels of atoms that are prodded with microwaves. Some of those atoms absorb the light in such a way that they are neither in their unperturbed, lowest-energy state nor in an elevated-energy state but in both at the same time, an effect that is central to quantum mechanics. An improved design “entangles” these microwave levels in one atom with different energy levels in another—levels that correspond to visible light, which has a much higher frequency. Such entanglement, another quantum effect, links the fates of two atoms, temporarily but inextricably, so that experiments on one yield information about the other. Entangling microwave levels with higher-frequency ones associated with visible light allows the clock to access the higher precision that goes with them. In 2012 David Wineland, of NIST, the American national metrology facility, received a Nobel prize for working out how to do this. For some years, his clock was the most accurate measuring device on Earth: had it been set ticking at the time of the Big Bang, 13.8bn years ago, it would still be accurate to within a second. + +Precise timing, particularly from the small, cheap devices that are now being developed, has a wealth of uses, from time-stamping high-frequency market trades to quickly changing settings within a dynamic energy grid. Even lifting an atomic clock up can change how long a tick appears to take: according to the general theory of relativity, time moves ever so slightly more slowly closer to the Earth than further away. Nuisance or opportunity? It’s all relative. A well-calibrated atomic clock could use this discrepancy to make an ultra-precise height measurement. Or, at a fixed height, it could sense the gravitational attraction of what is below; solid bedrock would give a different reading from an oil-and-gas pocket. + +Laws of attraction + +Clocks are not the only means to get a handle on gravity. At the microscopic scales where quantum mechanics rules, streams of matter particles can behave like waves. Like those on a pond’s surface, those waves can interfere, adding to and subtracting from one another—in the quantum description, altering the probability of finding a particle here or there. In a device called an atom interferometer, two particle streams are sent at differing heights and then brought back together to interfere with each other. The degree to which the two paths are different, indicating the relative strength of the gravitational tug from below, measurably alters the degree of addition and subtraction. + +Such devices have a multitude of uses. In Britain, for example, 4m holes are dug every year in the course of roadworks and construction, but two-thirds of the time the diggers have no idea what they will find beneath the surface. Test boreholes cover only a small area, and ground-penetrating radar does not reach deep enough. A gravity sensor that could tell pipework from pebbles would save a lot of trouble. + +RSK, an environmental consultancy involved in cleaning up brownfield sites and the like, reckons that a third of construction projects overrun by up to a month, and another third by two months or more, and that half of these delays arise because of underground surprises. The company is collaborating with the University of Birmingham in Britain on fieldworthy quantum gravity sensors, in the hope of deploying them in big infrastructure projects. Other efforts to develop cheap sensors have drawn interest from companies such as Schlumberger, an oilfield-services giant, and Bridgeporth, a surveying firm. + +Military types are interested, too. “You can’t shield gravity,” says David Delpy, who leads the Defence Scientific Advisory Council in Britain’s defence ministry. Improved gravity sensors would be able to spot moving masses under water, such as submarines or torpedoes, which could wipe out the deterrent effect of French and British nuclear submarines. Quantum gravimeters could precisely map geological features from the gravitational force they induce. That would help with getting around in places where satellite-navigation signals are not available—“a kind of Google Maps for gravitation”, as Dr Delpy puts it. + +And gravity, the theory of relativity also says, is just one manifestation of acceleration: a good gravimeter is a good accelerometer. And a good accelerometer is a good vibration sensor. Once they are small enough and good enough, all these high-precision devices will be of great interest to carmakers, and in particular to the autonomous-vehicle industry, the success of which will depend on accurate sensing of the movements of cars and their surroundings. Bosch, a German firm that is the world’s largest maker of automotive components and a supplier to many other industries, already has its eye on quantum-technological enhancements to its products. + +Michael Bolle, the firm’s head of research and development, believes sensors will be quantum technology’s first market success. “I’m not talking about niche markets,” he says. “I’m interested in the trigger point where things really go into mass production.” Quantum technologists the world over are preparing for this market explosion by patenting their findings. In some countries, such as Japan and Australia, quantum sensors make up a large part of national patent portfolios (see chart). + + + + + +Mr Bolle and others are also interested in sensors based on “nitrogen vacancies”—places where a diamond’s all-carbon network has been disrupted by one nitrogen atom next to a missing carbon atom. This is a quantum physicist’s playground: mostly isolated by its rigid cage of carbon neighbours from the bumpy, fluctuating world outside, electrons from the nitrogen atoms can be easily manipulated and measured, placed in superpositions and even entangled with one another. Just like the hypersensitive clock, these systems are extraordinarily responsive to their environment and can act as precise sensors of pressure, temperature and electric current. + +Where they have shown the most promise is in measuring magnetic fields. Recent studies show that nitrogen vacancies can detect the on-and-off magnetic field of single nerve cells. The same principles can work inside the human body, too. Nanoscale diamonds with nitrogen vacancies have been used to spot chemical changes in living cells, and researchers from the Institute of Theoretical Physics and the Institute of Quantum Physics in Ulm, Germany, have formed NVision, a startup that uses such nanodiamonds to match the current best magnetically enhanced MRI techniques, but 40 times faster and at a quarter of the cost. + +High performance in these applications depends on well-understood nitrogen vacancies, which occur sporadically in natural diamonds but whose positions and number must be known for precision measurement. Enter Element Six (a subsidiary of DeBeers, the world’s largest diamond producer), which manufactures diamonds with precision-engineered nitrogen vacancies. + +Capture the friendly ghost + +Quantum-enhanced approaches may also supplement other biological imaging techniques, such as positron emission tomography (PET), which takes pictures of the high-energy gamma-ray light flying out of injected radioactive tracers. Each tracer molecule’s interaction with tissue spits out two photons in opposite directions. Quantum-entanglement tomography aims to make use of the fact that those photons are entangled when they are created. In PET, the photons can be hard to track because they bounce off body tissues. The entanglement of each pair makes it easier to work out which came from where, so scans take less time and radioactive material. + +Ghost imaging is another promising way of making use of light’s quantum nature. The technique involves splitting a beam of light in two and aiming the resulting two beams at two detectors, one directly and one through a somewhat opaque medium, such as turbulent air rising from hot ground or a smoke-filled room. Because the photons making up the beam are correlated, a rigorous accounting of what the two detectors can see yields images of what the eye cannot. In 2013 researchers from America’s army showed that the technique worked over more than 2km. + +The technique points to a fascinating debate that underpins many discussions in the broader quantum-technology community about exactly how quantum effects confer an advantage. Though ghost imaging was predicted in the 1990s, arguments still rage about whether entanglement is playing a role or whether it works simply because light comes in discrete, countable photons. “There are plenty of physicists that don’t understand the distinction,” says Miles Padgett of the University of Glasgow, a quantum-imaging expert. “And I don’t think it matters. What matters is, are we using our knowledge in the quantum world to bring competitive advantage?” With hand-held detectors that can sense height differences down to a millimetre, magnetometers that can in principle watch your every neuron and imaging kit that can see across a smoky battlefield, the answer is ever more clearly yes. + + + + + +Communications: Oh what entangled web we weave + + + + +Quantum networks could underpin unhackable communications links + +IN 2004 the Bank of Austria and Vienna’s city hall notched up the first quantum-encrypted bank transfer. Anton Zeilinger, a quantum-cryptography pioneer whose lab facilitated the transfer, expressed his hope that “all problems of implementation will be solved within three years.” They were not. + +The technology was put to the test again in 2007 when quantum-encrypted vote tallies from the Swiss federal election were sent from polling stations to the Geneva state government. Engineers insisted that the transmission was utterly impervious to eavesdropping or tampering; a company called ID Quantique had developed a system that harnessed one of the rules of quantum mechanics to offer total security. + +That claim, too, turned out to be premature. Hackers have since demonstrated that equipment used in such transfers could be vulnerable to attack. What is more, such quantum encryption also required a single, dedicated fibre between sender and receiver, which limited the technique to high-profile transactions, and precluded the cross-linking of many senders and receivers that has made networking and the internet so successful. + +Key findings + +That is now changing. In response to hackers’ attacks, the kit has become markedly more secure. Field trials have shown that delicate quantum light signals can be sent through the same fibres that bring the internet to homes and businesses. And efforts to make quantum-enhanced versions of the equipment that amplifies and distributes standard optical signals are bearing fruit. Quantum networks are springing up or expanding. And quantum communications, just like their conventional counterparts, will soon be whizzing through space, too. + +The most discussed and deployed technique is called quantum-key distribution (QKD). In one set-up, a sender launches single photons toward a receiver, randomly choosing one of four planes along which the light particles are polarised, two of them associated with a 0 and the other two with a 1. The receiver likewise randomly chooses which kind of polarisation to check for. After sending a string of these bit-associated photons, the pair can publicly compare notes on which polarisations they employed; whenever they happen to have chosen the same one, the 0 or 1 associated with that polarisation can be used as a bit in a cryptographic key. + +What contributes to the system’s security is Heisenberg’s uncertainty principle, a much-touted quantum rule which, in this case, guarantees that an eavesdropper would disrupt the system’s randomness, because intercepting and measuring a given photon forces it into a given polarisation. That disturbance to the system would reduce the number of coincidences the pair sees; if there are too few (they should be seen about half the time), they know someone is on the line. + +Physics textbooks will tell you that a sufficiently long cipher, randomly generated this way and used only once, is absolutely secure. But Vlatko Vedral, of the Centre for Quantum Technologies in Singapore, says that hackers who have been invited to try to break into the centre’s quantum-communications experiments have often succeeded—not by beating quantum rules but by ruthlessly exploiting shortcomings of the kit itself. For example, storing a digital 0 generates a slightly different amount of heat from storing a 1, so careful observation of the heat being generated can expose the string of digits being received. Once discovered, such hacks are easily prevented. As time has gone on, such shortcomings have narrowed in scope, and have driven innovation. + +Thanks to the development of ever more secure links, quantum cryptography has recently been deployed more widely. ID Quantique has installed quantum links between data centres of KPN, a Dutch telecoms firm; of Battelle, an American non-profit research firm; and of Hyposwiss and Notenstein, two Swiss private banks. It offers links between financial institutions in Geneva and a disaster-recovery centre 50km away. In 2015 researchers at Toshiba in Japan began sending quantum-encrypted genomic data from a research facility in Sendai to Tohoku University, 7km away. + + + + + +But the future of the technology lies in quantum networks—the infrastructure required to connect many senders and receivers. These are springing up within and between major metropolitan areas. South Korea’s government is funding a 250km link to join existing metro quantum networks. In Britain a network of similar length will be deployed between the cities of Bristol and Cambridge, via London. Australia is building a closed government network in the capital, Canberra. + +No quantum network is more ambitious than the one completed in China at the end of last year. Funded by the central government, it links Beijing and Shanghai via Jinan, which already has a metro network over 70 square kilometres, made up of 50 “nodes”—switchboards connecting senders and receivers—and Hefei, which has a 46-node network. Its customers include China Industrial and Commercial Bank, the China Banking Regulatory Commission and the Xinhua news agency. + +Distance presents a problem. As the meticulously prepared photons with their delicate quantum states bounce along lengths of fibre, those states eventually get scrambled and their information is lost. To ensure fidelity and security, the fibre link should be no longer than about 200km. Standard fibre-optical signals suffer from the same weakening of the signal, so “repeaters” to boost it are placed at regular intervals along their path. But under the quantum rule book, unknown quantum states cannot be copied, so quantum data would need to be temporarily decrypted before receiving a boost, creating a security loophole. + +There are two ways to get round this, one by land and one by air. The land-based solution is to develop quantum analogues of the repeater. That will require a quantum memory that can store incoming information, and a means of sending them on that does not compromise quantum security. That last part requires another bit of quantum trickery: teleportation. This is a way of projecting the quantum state of one particle (not, it should be stressed, the particle itself) onto another, distant one. Last year two research groups showed the benefits of teleportation across two metropolitan networks, in Calgary and Hefei. Crucially, they carried out their experiment using the same wavelengths as those used in existing telecoms networks, to ensure that the new technique can be used with existing fibre infrastructure. It did the trick. + +Spooks reacting at a distance + +Another tack is to take to the air, over similar distances but without the need for a particular fibre link. The current record for teleportation of quantum states in this way was set in 2012, when researchers sent a quantum-encrypted message between two of the Canary islands, 143km apart. A long-standing ambition is to apply the idea to space: for a photon, the disturbance caused by the whole thickness of the Earth’s atmosphere is equivalent to that caused by just a few kilometres of air at the surface. + +Last August China launched Micius, a quantum-key-distribution-enabled satellite backed by tech companies including Huawei and Lenovo. The goal at this stage is to link the Beijing-to-Shanghai network to another in Urumqi, in Xinjiang province, some 3,000km away. Efforts to develop satellite communications are also under way in Singapore, Canada, Japan, Italy and America. Once the challenges of getting quantum signals into space—through turbulent air, clouds and so on—are overcome, a global network could easily follow. + +With country-spanning networks and quantum-enabled satellites, it is easy to envisage a global “quantum internet” in which each link offers quantum-enhanced security. But the kind of innovation that will allow the development of such networks will also be of use, for example, in shuttling information within, and between, future quantum-computing devices: think quantum distributed computing and quantum cloud computing. Just as the internet has demonstrated the power of linking many standard computers, says Seth Lloyd, a theorist at the Massachusetts Institute of Technology, “the quantum internet has the potential to change the way in which people and organisations collaborate and compete, establishing trust while protecting privacy.” + +Not everyone is convinced yet. The defence establishment seems to have been put off by some of the early setbacks to quantum links. Quantum-communications efforts are under way, for example in the research arms of America’s army and navy, but an analysis by the air force’s Scientific Advisory Board suggested that QKD had “little advantage over the best classical alternatives”. And doubters rightly point out that encryption is not the weakest link in many security chains. + +Yet as the hardware improves and heavy investment continues, quantum networks may begin to look like a strategic must-have; if so, consumer applications are likely to proliferate. The European Telecommunications Standards Institute (ETSI), which sets global benchmarks for the industry, is working to define quantum-cryptography standards. ETSI scientists want to ensure that kit from multiple vendors can work together, and to create a certification so that consumers (including spooks) are guaranteed a widely agreed level of security. Miniaturisation efforts are well under way too, so before long the equipment may fit in the palm of your hand—or in your phone. + + + + + +Cue bits: Why all eyes are on quantum computers + + + + +Tech giants and upstarts alike are piling into a technology with huge potential + +IN 1981 Richard Feynman, a visionary physicist, had a clever idea. Could the odd properties of quantum mechanics, he wondered aloud in a lecture, be used to carry out simulations of physical systems that computers of the time could not cope with? Others took up the question. In 1985, David Deutsch, now at Oxford University, showed how quantum systems could be set up as a “universal” computer—that is, like current computers, able to run any program. Though fascinating, at that point it was all rather theoretical, involving hardware that no one knew how to build. + +What made the world sit up and take notice was a paper published in 1994 by Peter Shor, then at Bell Labs. Dr Shor showed that a quantum computer would be capable of working out the prime numbers that, multiplied together, make up an exceedingly large number. The fact that this “decomposition” is mathematically very hard is the basis of cryptographic protocols still used today. + +Since then, researchers have come up with a rich variety of problems for which quantum computers should be superior to the best supercomputers—and a number of algorithms, or sets of steps, to break down problems in such a way that quantum computers can crunch through them. This evident utility started an international competition to build one that was, for many years, confined to quiet labs and the academic literature. These days, big business is seriously interested, and blue-chip companies including Intel, Hewlett-Packard, Google and Microsoft all have research programmes. Last year IBM released Quantum Experience, which lets all comers play around with a crude quantum computer over the internet. Governments too are putting money into academic efforts, both directly and via defence contractors, and a growing band of startup companies are striking out on their own. + +A computer big enough to do what Dr Shor envisaged would also be useful for all manner of currently intractable problems. Although that remains a distant prospect, steps towards developing one could have big benefits; for many applications, a much simpler or special-purpose computer will do. + +Bit by bit + +What makes the idea of quantum computers so attractive is not so much that they will work faster than traditional computers—they may for some applications but not for others—but that they will work fundamentally differently. Three intuition-defying concepts play a role. The first is superposition. Today’s computers depend on bits taking one of two values, 0 or 1. Qubits, their quantum analogues, can be arranged in “states” that are best thought of as some mixture of both 0 and 1. To carry out a computation using one of these strange beasts is to act on both the 0 and the 1, in a sense to create within the calculation the potential outcome of either at the same time. + +The power of this indeterminate state is unleashed through the second quantum-mechanical effect, entanglement. A standard computer depends on the complete isolation of one bit from the next to prevent a computation from going awry or a document from getting corrupted. For a quantum computer, the entangling of multiple qubits is paramount; in the best case, all of a given device’s bits are entangled with one another. Again, to operate on one qubit is to operate, to varying degrees, on all the entangled ones. It is therefore impossible to describe such a machine in strict terms of its constituent parts. There is a need to consider how one qubit is connected to its neighbour, and to the next-but-one, and so on through all the cross-correlations. To describe all the states of a 50-bit standard computer requires 50 bits of digital memory; a description of a 50-qubit computer would require a quadrillion. + +It gets weirder. Whereas it is easy to imagine an equation that predicts a low or even zero probability of a given event, it is much harder to reckon with what are called probability amplitudes in quantum mechanics, which can actually be negative. In the course of a quantum computer’s crunching, these amplitudes can (again like waves) interfere, positive with positive and negative with negative—in essence, to reduce the probability of the wrong answer and boost that of the right one. + +Posing a question starts with choosing an algorithm suitable for the problem. This algorithm is actually manifest as the starting states of the qubits: 0 here, 1 there, a bit of a mix over there. The calculation is then just a matter of letting quantum-mechanical laws play out on this system of superposed and entangled qubits. Changing states, shifting qubit couplings and so on represent a vast cross-multiplication of all those states and combinations, with probability amplitudes reinforcing and diminishing until the system settles into a final state that represents the answer. It is a matter of setting up the problem, and the machine, so that all the possibilities are sifted through at lightning speed. + +Efforts to make qubits often centre on the use of tiny loops of superconducting wire, arranged like the “gates” of standard computers. Single charged atoms, trapped by electric or magnetic fields, can also do the job; in February an international consortium of researchers published an open-source blueprint for a trapped-ion machine. Several groups use single photons as qubits—an approach that looks easy to integrate with existing semiconductor-fabrication techniques. Microsoft’s planned “topological” quantum computer uses something else entirely: “anyons”, particles that would be more easily tamed than other qubit candidates but which have never been seen outside the pages of theoretical physics textbooks. + +Setting up a qubit is no longer difficult. The problem is looking after it. Quantum states are notoriously delicate, requiring complete isolation from the actual stuff of the experiment. But isolation can never be complete, and errors creep in; for a calculation to succeed these must be noticed and corrected. It has become clear that as computers scale up, the number of logical qubits (the ones actually doing the calculation) will be dwarfed by an “overhead” of perhaps thousands of times as many error-correcting and command-and-control qubits. The kind of machine required to implement Shor’s famed algorithm on the sort of large numbers used in encryption will need to contain something like a million qubits. + +Such machines will, to put it mildly, be an engineering challenge. But in a clear indication that quantum computing is getting closer, names familiar from traditional computing are increasingly getting involved. Hewlett-Packard is trying to build its own machine. Intel’s global quantum investments include $50m going into work at QuTech, the Netherlands’ national quantum-technology hub. Microsoft’s topological quantum approach, if it works, will be much less error-prone. The quantum-computing startup scene is also becoming increasingly vibrant. Researchers from Yale and the University of Maryland have spun off companies, and physicists who had worked at IBM and America’s Department of Energy have started their own firms. + +Governments are getting in on the action too. Australia’s has invested A$26m ($20m) in a laboratory at the University of New South Wales in Sydney (and the Commonwealth Bank of Australia and Telstra, a telecoms firm, have together chipped in about the same amount). A lab at the University of Sydney down the road is being funded as part of LogiQ, a programme of the Intelligence Advanced Research Projects Activity, an American government defence outfit. Leaked documents have revealed that America’s National Security Agency has been exploring “if a cryptologically useful quantum computer can be built”. Experts now reckon it can. But when? + +Simulating discussion + +Very few in the field think it will take less than a decade, and many say far longer. But the time for investment, all agree, is now—because even the smaller and less capable machines that will soon be engineered will have the potential to earn revenue. Already, startups and consulting firms are springing up to match prospective small quantum computers to problems faced in sectors including quantitative finance, drug discovery and oil and gas. + +Perhaps the most interesting early applications will take the form of “quantum simulators”: computers that mimic real physical systems. This is what Feynman had in mind, imagining in his lecture “that the computer will do exactly the same as nature”. Quantum simulators might help in the design of room-temperature superconductors allowing electricity to be transmitted without losses, or with investigating the nitrogenase reaction used to make most of the world’s fertiliser. + +Quantum simulation has its fans in industry, too. Michael Bolle at Bosch foresees using simulators to design batteries that will supersede the current lithium-ion technology. Paolo Bianco, who heads the quantum-technology research team at Airbus, a big European aerospace firm, says that quantum-simulating a new material such as a stiffer or lighter alloy for use in aeroplanes or satellites would be much faster and cheaper than manufacturing and then testing the material itself. “The promise of quantum technologies”, he says, “is in engineering terms a step up in performance—not of 20%, but of a couple of orders of magnitude.” + +For some applications and classes of problems that may well be true. But the experience of D-Wave Systems, a Canadian company that began selling the first commercially available quantum computer in 2011, shows how little is known about what future machines will be able to do. D-Wave makes what is known as a quantum annealer, a special-purpose quantum computer (as opposed to a universal one) that works best on “optimisation” problems, such as finding the shortest possible route for a travelling salesman. The firm’s customers include Lockheed Martin and a consortium including Google and NASA. In January Temporal Defense Systems, a cyber-security firm, bought one. + + + +For years experts questioned whether the devices were actually exploiting quantum mechanics and whether they worked better than traditional computers. Those questions have since been conclusively answered—yes, and sometimes—but only by exhaustively testing the machines’ mettle directly. The current best supercomputers are able to simulate only what more general-purpose quantum computers of about 50 qubits can do. Tantalisingly, it is difficult to tell at what problems bigger machines will excel. + +Google is aiming to use its own machinery, a so-called gate-model quantum computer of the sort most groups are pursuing, to achieve “quantum supremacy”, whereby a quantum computer performs a calculation faster than any known computer could. Google researchers have laid out an ambitious plan which may let them achieve that feat this year. D-Wave has hinted it has already done so, but has made similar claims in the past; their current numbers are still to be checked. + +Whenever, and by whomever, this is accomplished, it will launch an era of small-scale machines offering quantum-enhanced solutions and services. The first publicly accessible one, IBM’s Quantum Experience, may be an indication that the machines’ future will be in the cloud. Most users have no more need for one at home than they have for a supercomputer. + +But some do. In 1982, a year after Feynman gave his quantum-computing lecture, he was touring the supercomputer facility at Los Alamos National Laboratory, where he had worked on the first atomic bomb. Talking to Bo Ewald, then in charge of the lab’s computing efforts and now running D-Wave, Feynman said, “You know, young man, one day all of these will be replaced by quantum computers.” One has already moved in. + + + + + +Software: Program management + + + + +Quantum-computer code could do wonders—but also unravel well-kept secrets + +IT DOESN’T help to have a quantum computer if no one knows how to program it,” says Tim Polk, of the White House Office of Science and Technology Policy in Washington. Although academic efforts to build quantum-computer hardware have been going on for two decades, comparatively little has been done to develop the software needed to run the machines when they come. + +That is changing, because in the past few years it has become clear that those machines are getting closer. Two parallel efforts are under way. One is to create software as generally understood—the graphical interfaces, programming languages and so on, a kind of “Windows for quantum”. The other is to develop novel algorithms, step-by-step instructions that break down problems into discrete parts amenable to quantum computing. + +Innovation abounds in both camps, and among big tech firms as well as plucky startups. Some big players are working on both sides of the problem, and a growing ecosystem of quantum-friendly consultancies advises companies on what quantum computing might do for them. + +“Machine” language for quantum computers, which actually tells the computer what to do, is fairly well understood. It is not so different from the logic gates of standard computing, except that it allows for “superpositions” of qubits in which they can be both 0 and 1 at the same time. But how to write computer code to interact with such a machine, or to simulate what it can do? Options are multiplying, including open-source software packages such as QuTip, funded by a number of research outfits in Asia. On March 6th IBM released the first commercial program for universal quantum computers (the general-purpose kind). And various startups have released their own quantum software. + +One of the most ambitious, LIQUi|> (whose name plays on a symbol in quantum mechanics), comes from Microsoft. It aims to tackle the whole “software stack”, from the user interface to code-compilers and ultimately to a machine language suitable for Microsoft’s planned hardware, and that of others. + +Krysta Svore, who leads Microsoft’s quantum-software team, says that the group is also working on reducing the total number of qubits and operations required for quantum calculations, known as “overhead”, and on making standard computers better at emulating quantum ones (the group recently hired a world expert in that field, Matthias Troyer). The team’s full-scale simulation of a 32-qubit computer requires 32 gigabytes of memory, more than the average desktop can muster but still manageable. + +Dr Svore and her colleagues are also making estimates of how many qubits, and minutes, would be needed to crack specific problems. She says the numbers are “down dramatically”, thanks to recent improvements in keeping qubits under tighter control. For example, she reckons that a thorough analysis of the energy-intensive nitrogenase reaction to make fertiliser would take a 100-logical-qubit quantum computer hours or perhaps days, whereas a conventional supercomputer would need billions of years. The prize might be a cut of 1-2% in global natural-gas consumption. + +But the key to getting the most out of quantum computers are the algorithms that these various software packages implement. The first of them, including the one by Peter Shor that showed how quantum computers could crack global encryption systems, tested the theoretical idea by aiming at the most intractable problems on the biggest notional machines. + +Even deeper learning + +These days, says Aram Harrow of the Massachusetts Institute of Technology, the focus has shifted to algorithms that smaller machines can make use of, because that kind of hardware will soon be widely available. “We’re still interested in what you can do with a million or a billion qubits, but it’s interesting to see if you can figure out what you can do with 100,” he says. + +A lot, it seems. One of the most promising areas is in machine learning and deep learning, two facets of artificial intelligence that have attracted much attention recently. Applications include searching through vast swathes of data to find patterns, such as in image recognition, cyber-security and, more prosaically, recommendation engines that suggest products consumers might like. But there are all manner of other algorithms, from those that crunch numbers to those that mimic atoms. + +All these quantum recipes call for some means of cataloguing them. Stephen Jordan heads the Quantum Algorithm Zoo at the National Institute of Standards and Technology in Maryland, a comprehensive collection of known algorithms. He has devised a taxonomy of 59 mathematical families they fit into, each suited to particular kinds of problems or breaking down problems in a particular, quantum-friendly way. + +Many such algorithms, when run on existing special-purpose machines or as emulations on standard computers, fail to beat their “classical” counterparts. Vlatko Vedral, of the National University of Singapore’s Centre for Quantum Technologies, stresses that traditional techniques, particularly for quantum-chemistry problems like the nitrogenase reaction, are already quite sophisticated. The trouble is that no beefy general-purpose quantum computer exists as yet, so no one knows whether a given algorithm run on one would beat its classical counterpart. At the same time, astonishingly efficient algorithms suited to quantum computing are waiting to be discovered. + +Those 59 families of algorithms, and ever-better emulators for eventual machines, are an excellent starting point for planning the quantum-computing future, and nowhere is interest greater than in finance. Commonwealth Bank of Australia is getting in early, collaborating closely with a research group led by Michelle Simmons at the University of New South Wales. D-Wave has partnered with 1Qbit, a startup, to develop “Quantum for Quants”, a forum for the quantitative-finance industry. Its editors include Michael Sotiropoulos, head of global equities at Deutsche Bank. UBS, a big Swiss bank, is working with QxBranch, another startup, on using quantum algorithms in foreign-exchange trading and arbitrage. Hyder Jaffrey, head of Strategic Investments and Fintech Innovation at UBS, says he puts quantum computing in the same category as artificial intelligence and blockchains, “all stuff with the potential to change markets”. + +Banking on it + +Companies such as QxBranch and 1Qbit play a new role of middleman between the quantum experts and industry, examining whether and how a given firm’s business might be improved by quantum methods, for example optimising trading strategies or supply chains, or monitoring network activity to spot cyber-attacks. Landon Downs, a co-founder of 1Qbit, says that can lead to solutions which can already be put to use. “By taking the lens of how you would formulate an algorithm on a quantum computer you often find very good improvements on classical algorithms,” he says. “That’s where lots of our successes come from.” + +The biggest benefit is expected to come from quantum-computing hardware once it arrives, so much of this business depends on simulating that hardware on standard machines as accurately as possible. Michael Brett, chief executive of QxBranch, says the idea is that “some Tuesday morning when one becomes available we just swap out our simulation for the real hardware.” + +Even as all these computer scientists and consultants are working on software for the quantum future, a handful of others are working on software to combat it. After all, what got researchers going in the first place was the fear that global encryption standards would crumble in the face of quantum computing. That remains a danger for the future, and retrospectively perhaps even for the present, if encrypted communications filed away now are analysed by powerful quantum computers later. That is the idea behind post-quantum cryptography, an effort to create ciphers that even future quantum computers will be unable to crack. + +PQCRYPTO is a three-year, European-funded project to develop post-quantum ciphers. Its goal is not to find the most mathematically gnarly way of encrypting data, but rather to identify one that is sufficiently difficult to break without needing too much memory or computation to implement. RSA, a current global standard, could be made hard enough to break, but the cryptographic keys would have to be a terabyte long—an impracticable option. Keys for elliptic-curve cryptography, another current standard, are just 32 bytes long; any post-quantum solution needs to aim for a similar ratio of brevity to security. + +Tanja Lange, who leads the project, says that post-quantum efforts are now attracting a lot of attention, particularly from nervous Silicon Valley outfits. In 2015 America’s National Security Agency said it would be updating all its cryptography to make it quantum-computer-proof. Last year Google quietly ran its own post-quantum cryptography test in Chrome, its web browser. Some of its users’ communications were protected both with elliptic-curve encryption and New Hope, a post-quantum protocol developed as part of PQCRYPTO. The median delay added to those communications turned out to be just a millisecond. + +“The power of quantum computing is rediscovering all the problems that computers cannot solve, and having a path to solving them,” says Dario Gil, vice-president of science and solutions at IBM. “It’s a reorientation of what we think about computers.” But a device capable of solving big problems will create new ones if it can unravel protocols that have protected secrets for decades. + + + + + +Commercial breaks: The uses of quantum technology + + + + +The most exciting thing about a quantum-enhanced world is the promise of what it may yet bring + +WHEN the first atomic clocks were built and swiftly commercialised, no one used the term “quantum technology”. The clocks simply harnessed the power of quantum mechanics to improve results. At the time there were no other examples of how the odd predictions of quantum mechanics such as entanglement and superposition could be put to practical use. Mostly they informed fundamental science, yielding an ever-subtler view of the world at the tiniest scales. + +Here and there, quantum weirdness did escape the lab, as in the case of the superconducting quantum interference device, an exquisitely sensitive magnetic-field sensor. The first of these was developed in 1964 at Ford Research Laboratory, the American carmaker’s blue-skies research facility. Now they are widely used, for example in MRI machines. In the early 1980s researchers at IBM turned the quantum effect of tunnelling, in which particles seem to pass straight through impenetrable barriers, into a way to see the microscopic world with staggering resolution. + +The current quantum-technology push is on a far grander scale, with multiple research efforts being funded by national governments and supranational bodies, sometimes for strategic reasons. Freeke Heijman has led efforts to build QuTech, the quantum-technology institute of the Netherlands. “We don’t want to risk the scenario that we have invested all this money for years and in the end the money is going to be made in the US or China,” she says. And in the case of defence applications, she says security plays a role too: “If you have to buy it off the shelf, it’s not just an economic disadvantage, it’s also dangerous.” + +But quantum technologies will not pass into the wider world in the same way as the global positioning system, which was developed with copious government funding behind closed doors and then handed over as a public good. “It’s just not like that today,” says Neil Stansfield, formerly of the British government’s Defence Science and Technology Laboratory. “We’re not the big kid on the government block, and certainly not on the global block.” + +That leaves business to step into the breach. But Trevor Cross, chief technology officer of E2v, a British company whose detectors brought the world pictures from the Hubble Space Telescope and which is now doing pioneering work for quantum devices, says that quantum technologies are still viewed by many industries as risky. That may be because many of the approaches are technologically so far beyond the current state of the art. Richard Murray, an emerging-technologies expert at Innovate UK, Britain’s technology-strategy agency, says that the more transformative the technological change, the easier it is to miss opportunities. + +Material evidence + +The opportunities are many, because at the level of components these technologies are intimately connected. Many of them depend, for example, on light sources that can spit out photons one at a time, every time, and detectors that can just as unfailingly catch just one—no small feat, considering that a 60-watt bulb is putting out 100,000,000,000,000,000,000 or so of them every second. This kind of kit was unimaginable a decade ago. + +New materials, and precisely engineered versions of existing ones, will be needed too. Element Six, a subsidiary of De Beers, a diamond giant, has carved out a niche selling diamonds with bespoke “nitrogen vacancies”—flaws that turn them into sensors. Silicon carbide is tipped to be just as quantum-amenable as those diamonds, but so far expertise with it is thin on the ground. + +New alliances will be forged as the work on materials intensifies. Intel aims to build qubits into silicon, in order to piggyback on existing fabrication infrastructure. But that will require the material to be produced to a much higher purity. To that end, Intel has joined forces with Urenco and Air Liquide, two materials firms. + +Michael Bolle at Bosch, the multinational engineering firm, envisages a seamless coming together of these diverse approaches in applications such as autonomous vehicles or the internet of things: quantum sensors to gather sensitive readings, quantum cryptography to transmit them securely and quantum computing to gather insights from the resulting copious streams of data. + + + +Many practitioners believe that the applications and technologies outlined in this report are just the beginning. As they become more familiar, they will give rise to new applications and wholly new hardware. Subjects that used to be mere footnotes to physics will rule, and engineers (and perhaps even consumers) will have to learn to speak quantum. + +Yet some innovators may find themselves stymied. “The question is to what extent will export controls on these technologies become an issue, particularly if any of it has some defence potential,” says Stephen Ezell, of the Information Technology and Innovation Foundation, an American think-tank. Tech firms such as Intel and IBM have had trouble exporting parts and computers to countries like China, he says. + +Such challenges aside, what is exciting about these efforts is how much is simply not known about their future. Bob Wisnieff, a manager at IBM’s microelectronics-research labs, says that “we’re not that far from being capable…of building quantum computers that will do things we cannot predict exactly.” John Preskill, a quantum expert at the California Institute of Technology, who coined the phrase “quantum supremacy”, has said that “a quantum computer can simulate efficiently any physical process that occurs in nature. Maybe. We don’t actually know for sure.” + +That brings the potential of quantum technologies full circle, to the fundamental-science considerations from which they were born. Quantum computers and simulators should eventually be capable of solving some of science’s most basic and yet most daunting questions. Sensors of unparalleled precision may at last make it possible to test the predictions of physicists’ most abstract ideas, perhaps linking the theories of quantum mechanics and gravity. + +“We certainly expect there are many additional things that we’ll be able to do with quantum beyond the things we know of,” says Tim Polk of the White House Office of Science and Technology Policy. “We had no idea of all the things we’d be able to build with the transistor, and we see the same thing with quantum.” + +In addition to those named in the text, the author would particularly like to thank: Scott Aaronson, John Bagshaw, Dan Bernstein, Kai Bongs, Altaf Carim, Adam Davison, Marc de Jong, Iulia Georgescu, Aram Harrow, Ray Johnson, David Kaiser, Leon Lobo, Graeme Malcolm, Mike Mayberry, Jian-Wei Pan, Martin Plenio, Dilan Rajasingham, John Rarity, Tanya Reeves, Andrew Shields, Marie Skelton, Tim Spiller, Andrea Taroni and Qiang Zhang. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21718310/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Technology Quarterly + +Here, there and everywhere + + + +Quantum technology is beginning to come into its own + +After decades as laboratory curiosities, some of quantum physics’ oddest effects are beginning to be put to use, says Jason Palmer + +PATRICK GILL, a director of the new Quantum Metrology Institute at Britain’s National Physical Laboratory (NPL) in south-west London and an expert in atomic clocks, points to a large table full of lenses and mirrors, vacuum chambers and electronics. “And there’s a smaller one over there,” he says. + +NPL is part of a consortium of the planet’s official timekeepers. In all its atomic-clock laboratories, each of the flagship devices—some of which are huge—is flanked by a smaller one under construction. Miniaturisation is the name of the game. Here is one that fits into a standard electronics rack, 19 inches wide. Over there is a fist-sized gizmo designed to hold an atomic clock’s precious innards safe within a satellite. + +The caesium atomic clock, developed at NPL, was arguably the world’s first quantum technology, though it was not labelled as such. The most common approach, first used in 1950, works by putting energy into atoms to create a “superposition” in which they are, in a measurable way, in more than one energy state at the same time—both excited and relaxed. Probing this strange condition reveals the “clock frequency” of those atoms—a constant for clocks on every continent, and the basis for a precise, internationally agreed definition of the second. + +After decades of work in the laboratory, a raft of different devices and approaches relying on quantum-mechanical effects are now nearing market-readiness. It has taken so long mainly because the components that make them up had to be developed first: ever-better lasers, semiconductors, control electronics and techniques to achieve the low temperatures at which many quantum systems perform best. + +Britain did not exploit the atomic clock’s discovery in the market. Instead, a year after the device was invented, it was commercialised by the National Company, an American firm. Given the potential of these new quantum technologies, this time commercialisation is on many minds. The NPL’s ever-smaller clocks are just one step towards marketable products that could vastly outdo GPS (which itself is an application of atomic timekeeping) in navigation, or help spot what lies underground. The era of quantum technology is almost here. + + + +The odds are good; the goods, odd + +Everything in the natural world can be described by quantum mechanics. Born a century ago, this theory is the rule book for what happens at atomic scales, providing explanations for everything from the layout of the periodic table to the zoo of particles spraying out of atom-smashers. It has guided the development of everyday technologies from lasers to MRI machines and put a solid foundation under astrophysicists’ musings about unknowables such as the interiors of black holes and the dawn of the universe. Revealed by a few surprising discoveries, such as that atoms absorb and emit energy only in packets of discrete sizes (quanta), and that light and matter can act as both waves and particles, it is modern physics’ greatest triumph. + +It has a weird side, though, and it is this that has captured interest in what is now being called the second quantum revolution. The first one was about physics: about understanding how the world worked at the tiny scales where quantum mechanics rules. Not only can particles be in two states at once, as with the atoms in an atomic clock; sometimes two of them, separated by a great distance, seemingly sense something about each other’s condition, a situation called entanglement. A particle’s exact position or state is never certain until a measurement is made; there are only higher or lower likelihoods of a given outcome, and the measurement changes the situation irrevocably. All this has been clear from the mathematics since the mid-1920s but was made manifest in laboratory experiments only later in the 20th century. As the theory’s more straightforward predictions were put to use, for instance in electronics, quantum mechanics gained a reputation for being counterintuitive, even downright spooky. + +The expertise gained during those years is now paying dividends. The most counterintuitive quantum-mechanical predictions are being harnessed to make measurements of staggering precision, to generate uncrackable codes and to form the basis of impenetrable communications networks. Quantum computers may eventually crunch through currently unapproachable problems, improving the transmission of electric power or the manufacture of energy-intensive fertiliser, or simply sifting through impracticably large data sets. However, long before then computing systems that still fall far short of a general-purpose machine are likely to start providing solutions in industries such as finance, energy and aerospace, and even help with things as mundane as recommendation engines. + +From small beginnings + +Much work remains to be done. Although a handful of quantum-enabled sensors, modest quantum networks and rudimentary quantum computers are already in use, they still fall short of fully exploiting quantum advantages, and few of them are ready to be widely deployed. According to McKinsey, a consulting firm, in 2015 about 7,000 people worldwide, with a combined budget of about $1.5bn, were working on quantum-technology research (see chart). Industrialisation will boost those numbers. + + + + + +What is notable about the effort now is that the challenges are no longer scientific but have become matters of engineering. The search is on for smaller atomic clocks, for example; for a means to amplify and route quantum-communications signals; and for more robust “qubits” (of which more later) for quantum computing. Startups are embracing the technology with gusto, and tech giants have already planted their flags. There is wide agreement that Google is furthest along in quantum-computer technology and that Microsoft has the most comprehensive plan to make the software required. + +Public money is flowing in, too. National and supranational funding bodies are backing increasingly ambitious quantum-technology efforts. Britain has a programme worth £270m ($337m) and the European Union has set aside €1bn ($1.08bn) for a pan-European programme. Many quantum technologies have security implications, so defence departments are also providing funding. + +Many firms are already preparing for a quantum-technology future. In 2015 IBM set up its Research Frontiers Institute, inviting corporate participants to share ideas about growth areas in technology, the quantum kind being one. The research fund of AXA, a big insurer, has endowed a professorship in quantum information at the Institute of Photonic Sciences in Barcelona to consider the data-privacy risks presented by the coming quantum boom. + +Quantum technology looks set quickly to find its way into all manner of products and services—mostly behind the scenes, as artificial intelligence has recently done. It may be weird, but it promises to be wonderful too. + + + + + +Metrology: Sensing sensibility + + + + +Quantum technology’s supersensitivity makes it great for measuring + +SINCE its inception a century ago, quantum physics has faced something of an experimental problem. The theory promises all manner of interesting and perhaps useful behaviours of particles in isolation, under rigidly controlled conditions. But on the lab bench particles and atoms are never fully isolated, so quantum experiments can be damnably difficult. + +However, that difficulty also presents an opportunity for quantum technology: sensing. “We turn that on its head,” says Sir Peter Knight, a British quantum expert. “If it couples to the outside world so effectively, it’s sensing the outside world really effectively.” Take the first quantum technology to make it to market, the atomic clock. Most designs work by tapping into the energy levels of atoms that are prodded with microwaves. Some of those atoms absorb the light in such a way that they are neither in their unperturbed, lowest-energy state nor in an elevated-energy state but in both at the same time, an effect that is central to quantum mechanics. An improved design “entangles” these microwave levels in one atom with different energy levels in another—levels that correspond to visible light, which has a much higher frequency. Such entanglement, another quantum effect, links the fates of two atoms, temporarily but inextricably, so that experiments on one yield information about the other. Entangling microwave levels with higher-frequency ones associated with visible light allows the clock to access the higher precision that goes with them. In 2012 David Wineland, of NIST, the American national metrology facility, received a Nobel prize for working out how to do this. For some years, his clock was the most accurate measuring device on Earth: had it been set ticking at the time of the Big Bang, 13.8bn years ago, it would still be accurate to within a second. + +Precise timing, particularly from the small, cheap devices that are now being developed, has a wealth of uses, from time-stamping high-frequency market trades to quickly changing settings within a dynamic energy grid. Even lifting an atomic clock up can change how long a tick appears to take: according to the general theory of relativity, time moves ever so slightly more slowly closer to the Earth than further away. Nuisance or opportunity? It’s all relative. A well-calibrated atomic clock could use this discrepancy to make an ultra-precise height measurement. Or, at a fixed height, it could sense the gravitational attraction of what is below; solid bedrock would give a different reading from an oil-and-gas pocket. + +Laws of attraction + +Clocks are not the only means to get a handle on gravity. At the microscopic scales where quantum mechanics rules, streams of matter particles can behave like waves. Like those on a pond’s surface, those waves can interfere, adding to and subtracting from one another—in the quantum description, altering the probability of finding a particle here or there. In a device called an atom interferometer, two particle streams are sent at differing heights and then brought back together to interfere with each other. The degree to which the two paths are different, indicating the relative strength of the gravitational tug from below, measurably alters the degree of addition and subtraction. + +Such devices have a multitude of uses. In Britain, for example, 4m holes are dug every year in the course of roadworks and construction, but two-thirds of the time the diggers have no idea what they will find beneath the surface. Test boreholes cover only a small area, and ground-penetrating radar does not reach deep enough. A gravity sensor that could tell pipework from pebbles would save a lot of trouble. + +RSK, an environmental consultancy involved in cleaning up brownfield sites and the like, reckons that a third of construction projects overrun by up to a month, and another third by two months or more, and that half of these delays arise because of underground surprises. The company is collaborating with the University of Birmingham in Britain on fieldworthy quantum gravity sensors, in the hope of deploying them in big infrastructure projects. Other efforts to develop cheap sensors have drawn interest from companies such as Schlumberger, an oilfield-services giant, and Bridgeporth, a surveying firm. + +Military types are interested, too. “You can’t shield gravity,” says David Delpy, who leads the Defence Scientific Advisory Council in Britain’s defence ministry. Improved gravity sensors would be able to spot moving masses under water, such as submarines or torpedoes, which could wipe out the deterrent effect of French and British nuclear submarines. Quantum gravimeters could precisely map geological features from the gravitational force they induce. That would help with getting around in places where satellite-navigation signals are not available—“a kind of Google Maps for gravitation”, as Dr Delpy puts it. + +And gravity, the theory of relativity also says, is just one manifestation of acceleration: a good gravimeter is a good accelerometer. And a good accelerometer is a good vibration sensor. Once they are small enough and good enough, all these high-precision devices will be of great interest to carmakers, and in particular to the autonomous-vehicle industry, the success of which will depend on accurate sensing of the movements of cars and their surroundings. Bosch, a German firm that is the world’s largest maker of automotive components and a supplier to many other industries, already has its eye on quantum-technological enhancements to its products. + +Michael Bolle, the firm’s head of research and development, believes sensors will be quantum technology’s first market success. “I’m not talking about niche markets,” he says. “I’m interested in the trigger point where things really go into mass production.” Quantum technologists the world over are preparing for this market explosion by patenting their findings. In some countries, such as Japan and Australia, quantum sensors make up a large part of national patent portfolios (see chart). + + + + + +Mr Bolle and others are also interested in sensors based on “nitrogen vacancies”—places where a diamond’s all-carbon network has been disrupted by one nitrogen atom next to a missing carbon atom. This is a quantum physicist’s playground: mostly isolated by its rigid cage of carbon neighbours from the bumpy, fluctuating world outside, electrons from the nitrogen atoms can be easily manipulated and measured, placed in superpositions and even entangled with one another. Just like the hypersensitive clock, these systems are extraordinarily responsive to their environment and can act as precise sensors of pressure, temperature and electric current. + +Where they have shown the most promise is in measuring magnetic fields. Recent studies show that nitrogen vacancies can detect the on-and-off magnetic field of single nerve cells. The same principles can work inside the human body, too. Nanoscale diamonds with nitrogen vacancies have been used to spot chemical changes in living cells, and researchers from the Institute of Theoretical Physics and the Institute of Quantum Physics in Ulm, Germany, have formed NVision, a startup that uses such nanodiamonds to match the current best magnetically enhanced MRI techniques, but 40 times faster and at a quarter of the cost. + +High performance in these applications depends on well-understood nitrogen vacancies, which occur sporadically in natural diamonds but whose positions and number must be known for precision measurement. Enter Element Six (a subsidiary of DeBeers, the world’s largest diamond producer), which manufactures diamonds with precision-engineered nitrogen vacancies. + +Capture the friendly ghost + +Quantum-enhanced approaches may also supplement other biological imaging techniques, such as positron emission tomography (PET), which takes pictures of the high-energy gamma-ray light flying out of injected radioactive tracers. Each tracer molecule’s interaction with tissue spits out two photons in opposite directions. Quantum-entanglement tomography aims to make use of the fact that those photons are entangled when they are created. In PET, the photons can be hard to track because they bounce off body tissues. The entanglement of each pair makes it easier to work out which came from where, so scans take less time and radioactive material. + +Ghost imaging is another promising way of making use of light’s quantum nature. The technique involves splitting a beam of light in two and aiming the resulting two beams at two detectors, one directly and one through a somewhat opaque medium, such as turbulent air rising from hot ground or a smoke-filled room. Because the photons making up the beam are correlated, a rigorous accounting of what the two detectors can see yields images of what the eye cannot. In 2013 researchers from America’s army showed that the technique worked over more than 2km. + +The technique points to a fascinating debate that underpins many discussions in the broader quantum-technology community about exactly how quantum effects confer an advantage. Though ghost imaging was predicted in the 1990s, arguments still rage about whether entanglement is playing a role or whether it works simply because light comes in discrete, countable photons. “There are plenty of physicists that don’t understand the distinction,” says Miles Padgett of the University of Glasgow, a quantum-imaging expert. “And I don’t think it matters. What matters is, are we using our knowledge in the quantum world to bring competitive advantage?” With hand-held detectors that can sense height differences down to a millimetre, magnetometers that can in principle watch your every neuron and imaging kit that can see across a smoky battlefield, the answer is ever more clearly yes. + + + + + +Communications: Oh what entangled web we weave + + + + +Quantum networks could underpin unhackable communications links + +IN 2004 the Bank of Austria and Vienna’s city hall notched up the first quantum-encrypted bank transfer. Anton Zeilinger, a quantum-cryptography pioneer whose lab facilitated the transfer, expressed his hope that “all problems of implementation will be solved within three years.” They were not. + +The technology was put to the test again in 2007 when quantum-encrypted vote tallies from the Swiss federal election were sent from polling stations to the Geneva state government. Engineers insisted that the transmission was utterly impervious to eavesdropping or tampering; a company called ID Quantique had developed a system that harnessed one of the rules of quantum mechanics to offer total security. + +That claim, too, turned out to be premature. Hackers have since demonstrated that equipment used in such transfers could be vulnerable to attack. What is more, such quantum encryption also required a single, dedicated fibre between sender and receiver, which limited the technique to high-profile transactions, and precluded the cross-linking of many senders and receivers that has made networking and the internet so successful. + +Key findings + +That is now changing. In response to hackers’ attacks, the kit has become markedly more secure. Field trials have shown that delicate quantum light signals can be sent through the same fibres that bring the internet to homes and businesses. And efforts to make quantum-enhanced versions of the equipment that amplifies and distributes standard optical signals are bearing fruit. Quantum networks are springing up or expanding. And quantum communications, just like their conventional counterparts, will soon be whizzing through space, too. + +The most discussed and deployed technique is called quantum-key distribution (QKD). In one set-up, a sender launches single photons toward a receiver, randomly choosing one of four planes along which the light particles are polarised, two of them associated with a 0 and the other two with a 1. The receiver likewise randomly chooses which kind of polarisation to check for. After sending a string of these bit-associated photons, the pair can publicly compare notes on which polarisations they employed; whenever they happen to have chosen the same one, the 0 or 1 associated with that polarisation can be used as a bit in a cryptographic key. + +What contributes to the system’s security is Heisenberg’s uncertainty principle, a much-touted quantum rule which, in this case, guarantees that an eavesdropper would disrupt the system’s randomness, because intercepting and measuring a given photon forces it into a given polarisation. That disturbance to the system would reduce the number of coincidences the pair sees; if there are too few (they should be seen about half the time), they know someone is on the line. + +Physics textbooks will tell you that a sufficiently long cipher, randomly generated this way and used only once, is absolutely secure. But Vlatko Vedral, of the Centre for Quantum Technologies in Singapore, says that hackers who have been invited to try to break into the centre’s quantum-communications experiments have often succeeded—not by beating quantum rules but by ruthlessly exploiting shortcomings of the kit itself. For example, storing a digital 0 generates a slightly different amount of heat from storing a 1, so careful observation of the heat being generated can expose the string of digits being received. Once discovered, such hacks are easily prevented. As time has gone on, such shortcomings have narrowed in scope, and have driven innovation. + +Thanks to the development of ever more secure links, quantum cryptography has recently been deployed more widely. ID Quantique has installed quantum links between data centres of KPN, a Dutch telecoms firm; of Battelle, an American non-profit research firm; and of Hyposwiss and Notenstein, two Swiss private banks. It offers links between financial institutions in Geneva and a disaster-recovery centre 50km away. In 2015 researchers at Toshiba in Japan began sending quantum-encrypted genomic data from a research facility in Sendai to Tohoku University, 7km away. + + + + + +But the future of the technology lies in quantum networks—the infrastructure required to connect many senders and receivers. These are springing up within and between major metropolitan areas. South Korea’s government is funding a 250km link to join existing metro quantum networks. In Britain a network of similar length will be deployed between the cities of Bristol and Cambridge, via London. Australia is building a closed government network in the capital, Canberra. + +No quantum network is more ambitious than the one completed in China at the end of last year. Funded by the central government, it links Beijing and Shanghai via Jinan, which already has a metro network over 70 square kilometres, made up of 50 “nodes”—switchboards connecting senders and receivers—and Hefei, which has a 46-node network. Its customers include China Industrial and Commercial Bank, the China Banking Regulatory Commission and the Xinhua news agency. + +Distance presents a problem. As the meticulously prepared photons with their delicate quantum states bounce along lengths of fibre, those states eventually get scrambled and their information is lost. To ensure fidelity and security, the fibre link should be no longer than about 200km. Standard fibre-optical signals suffer from the same weakening of the signal, so “repeaters” to boost it are placed at regular intervals along their path. But under the quantum rule book, unknown quantum states cannot be copied, so quantum data would need to be temporarily decrypted before receiving a boost, creating a security loophole. + +There are two ways to get round this, one by land and one by air. The land-based solution is to develop quantum analogues of the repeater. That will require a quantum memory that can store incoming information, and a means of sending them on that does not compromise quantum security. That last part requires another bit of quantum trickery: teleportation. This is a way of projecting the quantum state of one particle (not, it should be stressed, the particle itself) onto another, distant one. Last year two research groups showed the benefits of teleportation across two metropolitan networks, in Calgary and Hefei. Crucially, they carried out their experiment using the same wavelengths as those used in existing telecoms networks, to ensure that the new technique can be used with existing fibre infrastructure. It did the trick. + +Spooks reacting at a distance + +Another tack is to take to the air, over similar distances but without the need for a particular fibre link. The current record for teleportation of quantum states in this way was set in 2012, when researchers sent a quantum-encrypted message between two of the Canary islands, 143km apart. A long-standing ambition is to apply the idea to space: for a photon, the disturbance caused by the whole thickness of the Earth’s atmosphere is equivalent to that caused by just a few kilometres of air at the surface. + +Last August China launched Micius, a quantum-key-distribution-enabled satellite backed by tech companies including Huawei and Lenovo. The goal at this stage is to link the Beijing-to-Shanghai network to another in Urumqi, in Xinjiang province, some 3,000km away. Efforts to develop satellite communications are also under way in Singapore, Canada, Japan, Italy and America. Once the challenges of getting quantum signals into space—through turbulent air, clouds and so on—are overcome, a global network could easily follow. + +With country-spanning networks and quantum-enabled satellites, it is easy to envisage a global “quantum internet” in which each link offers quantum-enhanced security. But the kind of innovation that will allow the development of such networks will also be of use, for example, in shuttling information within, and between, future quantum-computing devices: think quantum distributed computing and quantum cloud computing. Just as the internet has demonstrated the power of linking many standard computers, says Seth Lloyd, a theorist at the Massachusetts Institute of Technology, “the quantum internet has the potential to change the way in which people and organisations collaborate and compete, establishing trust while protecting privacy.” + +Not everyone is convinced yet. The defence establishment seems to have been put off by some of the early setbacks to quantum links. Quantum-communications efforts are under way, for example in the research arms of America’s army and navy, but an analysis by the air force’s Scientific Advisory Board suggested that QKD had “little advantage over the best classical alternatives”. And doubters rightly point out that encryption is not the weakest link in many security chains. + +Yet as the hardware improves and heavy investment continues, quantum networks may begin to look like a strategic must-have; if so, consumer applications are likely to proliferate. The European Telecommunications Standards Institute (ETSI), which sets global benchmarks for the industry, is working to define quantum-cryptography standards. ETSI scientists want to ensure that kit from multiple vendors can work together, and to create a certification so that consumers (including spooks) are guaranteed a widely agreed level of security. Miniaturisation efforts are well under way too, so before long the equipment may fit in the palm of your hand—or in your phone. + + + + + +Cue bits: Why all eyes are on quantum computers + + + + +Tech giants and upstarts alike are piling into a technology with huge potential + +IN 1981 Richard Feynman, a visionary physicist, had a clever idea. Could the odd properties of quantum mechanics, he wondered aloud in a lecture, be used to carry out simulations of physical systems that computers of the time could not cope with? Others took up the question. In 1985, David Deutsch, now at Oxford University, showed how quantum systems could be set up as a “universal” computer—that is, like current computers, able to run any program. Though fascinating, at that point it was all rather theoretical, involving hardware that no one knew how to build. + +What made the world sit up and take notice was a paper published in 1994 by Peter Shor, then at Bell Labs. Dr Shor showed that a quantum computer would be capable of working out the prime numbers that, multiplied together, make up an exceedingly large number. The fact that this “decomposition” is mathematically very hard is the basis of cryptographic protocols still used today. + +Since then, researchers have come up with a rich variety of problems for which quantum computers should be superior to the best supercomputers—and a number of algorithms, or sets of steps, to break down problems in such a way that quantum computers can crunch through them. This evident utility started an international competition to build one that was, for many years, confined to quiet labs and the academic literature. These days, big business is seriously interested, and blue-chip companies including Intel, Hewlett-Packard, Google and Microsoft all have research programmes. Last year IBM released Quantum Experience, which lets all comers play around with a crude quantum computer over the internet. Governments too are putting money into academic efforts, both directly and via defence contractors, and a growing band of startup companies are striking out on their own. + +A computer big enough to do what Dr Shor envisaged would also be useful for all manner of currently intractable problems. Although that remains a distant prospect, steps towards developing one could have big benefits; for many applications, a much simpler or special-purpose computer will do. + +Bit by bit + +What makes the idea of quantum computers so attractive is not so much that they will work faster than traditional computers—they may for some applications but not for others—but that they will work fundamentally differently. Three intuition-defying concepts play a role. The first is superposition. Today’s computers depend on bits taking one of two values, 0 or 1. Qubits, their quantum analogues, can be arranged in “states” that are best thought of as some mixture of both 0 and 1. To carry out a computation using one of these strange beasts is to act on both the 0 and the 1, in a sense to create within the calculation the potential outcome of either at the same time. + +The power of this indeterminate state is unleashed through the second quantum-mechanical effect, entanglement. A standard computer depends on the complete isolation of one bit from the next to prevent a computation from going awry or a document from getting corrupted. For a quantum computer, the entangling of multiple qubits is paramount; in the best case, all of a given device’s bits are entangled with one another. Again, to operate on one qubit is to operate, to varying degrees, on all the entangled ones. It is therefore impossible to describe such a machine in strict terms of its constituent parts. There is a need to consider how one qubit is connected to its neighbour, and to the next-but-one, and so on through all the cross-correlations. To describe all the states of a 50-bit standard computer requires 50 bits of digital memory; a description of a 50-qubit computer would require a quadrillion. + +It gets weirder. Whereas it is easy to imagine an equation that predicts a low or even zero probability of a given event, it is much harder to reckon with what are called probability amplitudes in quantum mechanics, which can actually be negative. In the course of a quantum computer’s crunching, these amplitudes can (again like waves) interfere, positive with positive and negative with negative—in essence, to reduce the probability of the wrong answer and boost that of the right one. + +Posing a question starts with choosing an algorithm suitable for the problem. This algorithm is actually manifest as the starting states of the qubits: 0 here, 1 there, a bit of a mix over there. The calculation is then just a matter of letting quantum-mechanical laws play out on this system of superposed and entangled qubits. Changing states, shifting qubit couplings and so on represent a vast cross-multiplication of all those states and combinations, with probability amplitudes reinforcing and diminishing until the system settles into a final state that represents the answer. It is a matter of setting up the problem, and the machine, so that all the possibilities are sifted through at lightning speed. + +Efforts to make qubits often centre on the use of tiny loops of superconducting wire, arranged like the “gates” of standard computers. Single charged atoms, trapped by electric or magnetic fields, can also do the job; in February an international consortium of researchers published an open-source blueprint for a trapped-ion machine. Several groups use single photons as qubits—an approach that looks easy to integrate with existing semiconductor-fabrication techniques. Microsoft’s planned “topological” quantum computer uses something else entirely: “anyons”, particles that would be more easily tamed than other qubit candidates but which have never been seen outside the pages of theoretical physics textbooks. + +Setting up a qubit is no longer difficult. The problem is looking after it. Quantum states are notoriously delicate, requiring complete isolation from the actual stuff of the experiment. But isolation can never be complete, and errors creep in; for a calculation to succeed these must be noticed and corrected. It has become clear that as computers scale up, the number of logical qubits (the ones actually doing the calculation) will be dwarfed by an “overhead” of perhaps thousands of times as many error-correcting and command-and-control qubits. The kind of machine required to implement Shor’s famed algorithm on the sort of large numbers used in encryption will need to contain something like a million qubits. + +Such machines will, to put it mildly, be an engineering challenge. But in a clear indication that quantum computing is getting closer, names familiar from traditional computing are increasingly getting involved. Hewlett-Packard is trying to build its own machine. Intel’s global quantum investments include $50m going into work at QuTech, the Netherlands’ national quantum-technology hub. Microsoft’s topological quantum approach, if it works, will be much less error-prone. The quantum-computing startup scene is also becoming increasingly vibrant. Researchers from Yale and the University of Maryland have spun off companies, and physicists who had worked at IBM and America’s Department of Energy have started their own firms. + +Governments are getting in on the action too. Australia’s has invested A$26m ($20m) in a laboratory at the University of New South Wales in Sydney (and the Commonwealth Bank of Australia and Telstra, a telecoms firm, have together chipped in about the same amount). A lab at the University of Sydney down the road is being funded as part of LogiQ, a programme of the Intelligence Advanced Research Projects Activity, an American government defence outfit. Leaked documents have revealed that America’s National Security Agency has been exploring “if a cryptologically useful quantum computer can be built”. Experts now reckon it can. But when? + +Simulating discussion + +Very few in the field think it will take less than a decade, and many say far longer. But the time for investment, all agree, is now—because even the smaller and less capable machines that will soon be engineered will have the potential to earn revenue. Already, startups and consulting firms are springing up to match prospective small quantum computers to problems faced in sectors including quantitative finance, drug discovery and oil and gas. + +Perhaps the most interesting early applications will take the form of “quantum simulators”: computers that mimic real physical systems. This is what Feynman had in mind, imagining in his lecture “that the computer will do exactly the same as nature”. Quantum simulators might help in the design of room-temperature superconductors allowing electricity to be transmitted without losses, or with investigating the nitrogenase reaction used to make most of the world’s fertiliser. + +Quantum simulation has its fans in industry, too. Michael Bolle at Bosch foresees using simulators to design batteries that will supersede the current lithium-ion technology. Paolo Bianco, who heads the quantum-technology research team at Airbus, a big European aerospace firm, says that quantum-simulating a new material such as a stiffer or lighter alloy for use in aeroplanes or satellites would be much faster and cheaper than manufacturing and then testing the material itself. “The promise of quantum technologies”, he says, “is in engineering terms a step up in performance—not of 20%, but of a couple of orders of magnitude.” + +For some applications and classes of problems that may well be true. But the experience of D-Wave Systems, a Canadian company that began selling the first commercially available quantum computer in 2011, shows how little is known about what future machines will be able to do. D-Wave makes what is known as a quantum annealer, a special-purpose quantum computer (as opposed to a universal one) that works best on “optimisation” problems, such as finding the shortest possible route for a travelling salesman. The firm’s customers include Lockheed Martin and a consortium including Google and NASA. In January Temporal Defense Systems, a cyber-security firm, bought one. + + + +For years experts questioned whether the devices were actually exploiting quantum mechanics and whether they worked better than traditional computers. Those questions have since been conclusively answered—yes, and sometimes—but only by exhaustively testing the machines’ mettle directly. The current best supercomputers are able to simulate only what more general-purpose quantum computers of about 50 qubits can do. Tantalisingly, it is difficult to tell at what problems bigger machines will excel. + +Google is aiming to use its own machinery, a so-called gate-model quantum computer of the sort most groups are pursuing, to achieve “quantum supremacy”, whereby a quantum computer performs a calculation faster than any known computer could. Google researchers have laid out an ambitious plan which may let them achieve that feat this year. D-Wave has hinted it has already done so, but has made similar claims in the past; their current numbers are still to be checked. + +Whenever, and by whomever, this is accomplished, it will launch an era of small-scale machines offering quantum-enhanced solutions and services. The first publicly accessible one, IBM’s Quantum Experience, may be an indication that the machines’ future will be in the cloud. Most users have no more need for one at home than they have for a supercomputer. + +But some do. In 1982, a year after Feynman gave his quantum-computing lecture, he was touring the supercomputer facility at Los Alamos National Laboratory, where he had worked on the first atomic bomb. Talking to Bo Ewald, then in charge of the lab’s computing efforts and now running D-Wave, Feynman said, “You know, young man, one day all of these will be replaced by quantum computers.” One has already moved in. + + + + + +Software: Program management + + + + +Quantum-computer code could do wonders—but also unravel well-kept secrets + +IT DOESN’T help to have a quantum computer if no one knows how to program it,” says Tim Polk, of the White House Office of Science and Technology Policy in Washington. Although academic efforts to build quantum-computer hardware have been going on for two decades, comparatively little has been done to develop the software needed to run the machines when they come. + +That is changing, because in the past few years it has become clear that those machines are getting closer. Two parallel efforts are under way. One is to create software as generally understood—the graphical interfaces, programming languages and so on, a kind of “Windows for quantum”. The other is to develop novel algorithms, step-by-step instructions that break down problems into discrete parts amenable to quantum computing. + +Innovation abounds in both camps, and among big tech firms as well as plucky startups. Some big players are working on both sides of the problem, and a growing ecosystem of quantum-friendly consultancies advises companies on what quantum computing might do for them. + +“Machine” language for quantum computers, which actually tells the computer what to do, is fairly well understood. It is not so different from the logic gates of standard computing, except that it allows for “superpositions” of qubits in which they can be both 0 and 1 at the same time. But how to write computer code to interact with such a machine, or to simulate what it can do? Options are multiplying, including open-source software packages such as QuTip, funded by a number of research outfits in Asia. On March 6th IBM released the first commercial program for universal quantum computers (the general-purpose kind). And various startups have released their own quantum software. + +One of the most ambitious, LIQUi|> (whose name plays on a symbol in quantum mechanics), comes from Microsoft. It aims to tackle the whole “software stack”, from the user interface to code-compilers and ultimately to a machine language suitable for Microsoft’s planned hardware, and that of others. + +Krysta Svore, who leads Microsoft’s quantum-software team, says that the group is also working on reducing the total number of qubits and operations required for quantum calculations, known as “overhead”, and on making standard computers better at emulating quantum ones (the group recently hired a world expert in that field, Matthias Troyer). The team’s full-scale simulation of a 32-qubit computer requires 32 gigabytes of memory, more than the average desktop can muster but still manageable. + +Dr Svore and her colleagues are also making estimates of how many qubits, and minutes, would be needed to crack specific problems. She says the numbers are “down dramatically”, thanks to recent improvements in keeping qubits under tighter control. For example, she reckons that a thorough analysis of the energy-intensive nitrogenase reaction to make fertiliser would take a 100-logical-qubit quantum computer hours or perhaps days, whereas a conventional supercomputer would need billions of years. The prize might be a cut of 1-2% in global natural-gas consumption. + +But the key to getting the most out of quantum computers are the algorithms that these various software packages implement. The first of them, including the one by Peter Shor that showed how quantum computers could crack global encryption systems, tested the theoretical idea by aiming at the most intractable problems on the biggest notional machines. + +Even deeper learning + +These days, says Aram Harrow of the Massachusetts Institute of Technology, the focus has shifted to algorithms that smaller machines can make use of, because that kind of hardware will soon be widely available. “We’re still interested in what you can do with a million or a billion qubits, but it’s interesting to see if you can figure out what you can do with 100,” he says. + +A lot, it seems. One of the most promising areas is in machine learning and deep learning, two facets of artificial intelligence that have attracted much attention recently. Applications include searching through vast swathes of data to find patterns, such as in image recognition, cyber-security and, more prosaically, recommendation engines that suggest products consumers might like. But there are all manner of other algorithms, from those that crunch numbers to those that mimic atoms. + +All these quantum recipes call for some means of cataloguing them. Stephen Jordan heads the Quantum Algorithm Zoo at the National Institute of Standards and Technology in Maryland, a comprehensive collection of known algorithms. He has devised a taxonomy of 59 mathematical families they fit into, each suited to particular kinds of problems or breaking down problems in a particular, quantum-friendly way. + +Many such algorithms, when run on existing special-purpose machines or as emulations on standard computers, fail to beat their “classical” counterparts. Vlatko Vedral, of the National University of Singapore’s Centre for Quantum Technologies, stresses that traditional techniques, particularly for quantum-chemistry problems like the nitrogenase reaction, are already quite sophisticated. The trouble is that no beefy general-purpose quantum computer exists as yet, so no one knows whether a given algorithm run on one would beat its classical counterpart. At the same time, astonishingly efficient algorithms suited to quantum computing are waiting to be discovered. + +Those 59 families of algorithms, and ever-better emulators for eventual machines, are an excellent starting point for planning the quantum-computing future, and nowhere is interest greater than in finance. Commonwealth Bank of Australia is getting in early, collaborating closely with a research group led by Michelle Simmons at the University of New South Wales. D-Wave has partnered with 1Qbit, a startup, to develop “Quantum for Quants”, a forum for the quantitative-finance industry. Its editors include Michael Sotiropoulos, head of global equities at Deutsche Bank. UBS, a big Swiss bank, is working with QxBranch, another startup, on using quantum algorithms in foreign-exchange trading and arbitrage. Hyder Jaffrey, head of Strategic Investments and Fintech Innovation at UBS, says he puts quantum computing in the same category as artificial intelligence and blockchains, “all stuff with the potential to change markets”. + +Banking on it + +Companies such as QxBranch and 1Qbit play a new role of middleman between the quantum experts and industry, examining whether and how a given firm’s business might be improved by quantum methods, for example optimising trading strategies or supply chains, or monitoring network activity to spot cyber-attacks. Landon Downs, a co-founder of 1Qbit, says that can lead to solutions which can already be put to use. “By taking the lens of how you would formulate an algorithm on a quantum computer you often find very good improvements on classical algorithms,” he says. “That’s where lots of our successes come from.” + +The biggest benefit is expected to come from quantum-computing hardware once it arrives, so much of this business depends on simulating that hardware on standard machines as accurately as possible. Michael Brett, chief executive of QxBranch, says the idea is that “some Tuesday morning when one becomes available we just swap out our simulation for the real hardware.” + +Even as all these computer scientists and consultants are working on software for the quantum future, a handful of others are working on software to combat it. After all, what got researchers going in the first place was the fear that global encryption standards would crumble in the face of quantum computing. That remains a danger for the future, and retrospectively perhaps even for the present, if encrypted communications filed away now are analysed by powerful quantum computers later. That is the idea behind post-quantum cryptography, an effort to create ciphers that even future quantum computers will be unable to crack. + +PQCRYPTO is a three-year, European-funded project to develop post-quantum ciphers. Its goal is not to find the most mathematically gnarly way of encrypting data, but rather to identify one that is sufficiently difficult to break without needing too much memory or computation to implement. RSA, a current global standard, could be made hard enough to break, but the cryptographic keys would have to be a terabyte long—an impracticable option. Keys for elliptic-curve cryptography, another current standard, are just 32 bytes long; any post-quantum solution needs to aim for a similar ratio of brevity to security. + +Tanja Lange, who leads the project, says that post-quantum efforts are now attracting a lot of attention, particularly from nervous Silicon Valley outfits. In 2015 America’s National Security Agency said it would be updating all its cryptography to make it quantum-computer-proof. Last year Google quietly ran its own post-quantum cryptography test in Chrome, its web browser. Some of its users’ communications were protected both with elliptic-curve encryption and New Hope, a post-quantum protocol developed as part of PQCRYPTO. The median delay added to those communications turned out to be just a millisecond. + +“The power of quantum computing is rediscovering all the problems that computers cannot solve, and having a path to solving them,” says Dario Gil, vice-president of science and solutions at IBM. “It’s a reorientation of what we think about computers.” But a device capable of solving big problems will create new ones if it can unravel protocols that have protected secrets for decades. + + + + + +Commercial breaks: The uses of quantum technology + + + + +The most exciting thing about a quantum-enhanced world is the promise of what it may yet bring + +WHEN the first atomic clocks were built and swiftly commercialised, no one used the term “quantum technology”. The clocks simply harnessed the power of quantum mechanics to improve results. At the time there were no other examples of how the odd predictions of quantum mechanics such as entanglement and superposition could be put to practical use. Mostly they informed fundamental science, yielding an ever-subtler view of the world at the tiniest scales. + +Here and there, quantum weirdness did escape the lab, as in the case of the superconducting quantum interference device, an exquisitely sensitive magnetic-field sensor. The first of these was developed in 1964 at Ford Research Laboratory, the American carmaker’s blue-skies research facility. Now they are widely used, for example in MRI machines. In the early 1980s researchers at IBM turned the quantum effect of tunnelling, in which particles seem to pass straight through impenetrable barriers, into a way to see the microscopic world with staggering resolution. + +The current quantum-technology push is on a far grander scale, with multiple research efforts being funded by national governments and supranational bodies, sometimes for strategic reasons. Freeke Heijman has led efforts to build QuTech, the quantum-technology institute of the Netherlands. “We don’t want to risk the scenario that we have invested all this money for years and in the end the money is going to be made in the US or China,” she says. And in the case of defence applications, she says security plays a role too: “If you have to buy it off the shelf, it’s not just an economic disadvantage, it’s also dangerous.” + +But quantum technologies will not pass into the wider world in the same way as the global positioning system, which was developed with copious government funding behind closed doors and then handed over as a public good. “It’s just not like that today,” says Neil Stansfield, formerly of the British government’s Defence Science and Technology Laboratory. “We’re not the big kid on the government block, and certainly not on the global block.” + +That leaves business to step into the breach. But Trevor Cross, chief technology officer of E2v, a British company whose detectors brought the world pictures from the Hubble Space Telescope and which is now doing pioneering work for quantum devices, says that quantum technologies are still viewed by many industries as risky. That may be because many of the approaches are technologically so far beyond the current state of the art. Richard Murray, an emerging-technologies expert at Innovate UK, Britain’s technology-strategy agency, says that the more transformative the technological change, the easier it is to miss opportunities. + +Material evidence + +The opportunities are many, because at the level of components these technologies are intimately connected. Many of them depend, for example, on light sources that can spit out photons one at a time, every time, and detectors that can just as unfailingly catch just one—no small feat, considering that a 60-watt bulb is putting out 100,000,000,000,000,000,000 or so of them every second. This kind of kit was unimaginable a decade ago. + +New materials, and precisely engineered versions of existing ones, will be needed too. Element Six, a subsidiary of De Beers, a diamond giant, has carved out a niche selling diamonds with bespoke “nitrogen vacancies”—flaws that turn them into sensors. Silicon carbide is tipped to be just as quantum-amenable as those diamonds, but so far expertise with it is thin on the ground. + +New alliances will be forged as the work on materials intensifies. Intel aims to build qubits into silicon, in order to piggyback on existing fabrication infrastructure. But that will require the material to be produced to a much higher purity. To that end, Intel has joined forces with Urenco and Air Liquide, two materials firms. + +Michael Bolle at Bosch, the multinational engineering firm, envisages a seamless coming together of these diverse approaches in applications such as autonomous vehicles or the internet of things: quantum sensors to gather sensitive readings, quantum cryptography to transmit them securely and quantum computing to gather insights from the resulting copious streams of data. + + + +Many practitioners believe that the applications and technologies outlined in this report are just the beginning. As they become more familiar, they will give rise to new applications and wholly new hardware. Subjects that used to be mere footnotes to physics will rule, and engineers (and perhaps even consumers) will have to learn to speak quantum. + +Yet some innovators may find themselves stymied. “The question is to what extent will export controls on these technologies become an issue, particularly if any of it has some defence potential,” says Stephen Ezell, of the Information Technology and Innovation Foundation, an American think-tank. Tech firms such as Intel and IBM have had trouble exporting parts and computers to countries like China, he says. + +Such challenges aside, what is exciting about these efforts is how much is simply not known about their future. Bob Wisnieff, a manager at IBM’s microelectronics-research labs, says that “we’re not that far from being capable…of building quantum computers that will do things we cannot predict exactly.” John Preskill, a quantum expert at the California Institute of Technology, who coined the phrase “quantum supremacy”, has said that “a quantum computer can simulate efficiently any physical process that occurs in nature. Maybe. We don’t actually know for sure.” + +That brings the potential of quantum technologies full circle, to the fundamental-science considerations from which they were born. Quantum computers and simulators should eventually be capable of solving some of science’s most basic and yet most daunting questions. Sensors of unparalleled precision may at last make it possible to test the predictions of physicists’ most abstract ideas, perhaps linking the theories of quantum mechanics and gravity. + +“We certainly expect there are many additional things that we’ll be able to do with quantum beyond the things we know of,” says Tim Polk of the White House Office of Science and Technology Policy. “We had no idea of all the things we’d be able to build with the transistor, and we see the same thing with quantum.” + +In addition to those named in the text, the author would particularly like to thank: Scott Aaronson, John Bagshaw, Dan Bernstein, Kai Bongs, Altaf Carim, Adam Davison, Marc de Jong, Iulia Georgescu, Aram Harrow, Ray Johnson, David Kaiser, Leon Lobo, Graeme Malcolm, Mike Mayberry, Jian-Wei Pan, Martin Plenio, Dilan Rajasingham, John Rarity, Tanya Reeves, Andrew Shields, Marie Skelton, Tim Spiller, Andrea Taroni and Qiang Zhang. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21718314/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Technology Quarterly + +Here, there and everywhere + + + +Quantum technology is beginning to come into its own + +After decades as laboratory curiosities, some of quantum physics’ oddest effects are beginning to be put to use, says Jason Palmer + +PATRICK GILL, a director of the new Quantum Metrology Institute at Britain’s National Physical Laboratory (NPL) in south-west London and an expert in atomic clocks, points to a large table full of lenses and mirrors, vacuum chambers and electronics. “And there’s a smaller one over there,” he says. + +NPL is part of a consortium of the planet’s official timekeepers. In all its atomic-clock laboratories, each of the flagship devices—some of which are huge—is flanked by a smaller one under construction. Miniaturisation is the name of the game. Here is one that fits into a standard electronics rack, 19 inches wide. Over there is a fist-sized gizmo designed to hold an atomic clock’s precious innards safe within a satellite. + +The caesium atomic clock, developed at NPL, was arguably the world’s first quantum technology, though it was not labelled as such. The most common approach, first used in 1950, works by putting energy into atoms to create a “superposition” in which they are, in a measurable way, in more than one energy state at the same time—both excited and relaxed. Probing this strange condition reveals the “clock frequency” of those atoms—a constant for clocks on every continent, and the basis for a precise, internationally agreed definition of the second. + +After decades of work in the laboratory, a raft of different devices and approaches relying on quantum-mechanical effects are now nearing market-readiness. It has taken so long mainly because the components that make them up had to be developed first: ever-better lasers, semiconductors, control electronics and techniques to achieve the low temperatures at which many quantum systems perform best. + +Britain did not exploit the atomic clock’s discovery in the market. Instead, a year after the device was invented, it was commercialised by the National Company, an American firm. Given the potential of these new quantum technologies, this time commercialisation is on many minds. The NPL’s ever-smaller clocks are just one step towards marketable products that could vastly outdo GPS (which itself is an application of atomic timekeeping) in navigation, or help spot what lies underground. The era of quantum technology is almost here. + + + +The odds are good; the goods, odd + +Everything in the natural world can be described by quantum mechanics. Born a century ago, this theory is the rule book for what happens at atomic scales, providing explanations for everything from the layout of the periodic table to the zoo of particles spraying out of atom-smashers. It has guided the development of everyday technologies from lasers to MRI machines and put a solid foundation under astrophysicists’ musings about unknowables such as the interiors of black holes and the dawn of the universe. Revealed by a few surprising discoveries, such as that atoms absorb and emit energy only in packets of discrete sizes (quanta), and that light and matter can act as both waves and particles, it is modern physics’ greatest triumph. + +It has a weird side, though, and it is this that has captured interest in what is now being called the second quantum revolution. The first one was about physics: about understanding how the world worked at the tiny scales where quantum mechanics rules. Not only can particles be in two states at once, as with the atoms in an atomic clock; sometimes two of them, separated by a great distance, seemingly sense something about each other’s condition, a situation called entanglement. A particle’s exact position or state is never certain until a measurement is made; there are only higher or lower likelihoods of a given outcome, and the measurement changes the situation irrevocably. All this has been clear from the mathematics since the mid-1920s but was made manifest in laboratory experiments only later in the 20th century. As the theory’s more straightforward predictions were put to use, for instance in electronics, quantum mechanics gained a reputation for being counterintuitive, even downright spooky. + +The expertise gained during those years is now paying dividends. The most counterintuitive quantum-mechanical predictions are being harnessed to make measurements of staggering precision, to generate uncrackable codes and to form the basis of impenetrable communications networks. Quantum computers may eventually crunch through currently unapproachable problems, improving the transmission of electric power or the manufacture of energy-intensive fertiliser, or simply sifting through impracticably large data sets. However, long before then computing systems that still fall far short of a general-purpose machine are likely to start providing solutions in industries such as finance, energy and aerospace, and even help with things as mundane as recommendation engines. + +From small beginnings + +Much work remains to be done. Although a handful of quantum-enabled sensors, modest quantum networks and rudimentary quantum computers are already in use, they still fall short of fully exploiting quantum advantages, and few of them are ready to be widely deployed. According to McKinsey, a consulting firm, in 2015 about 7,000 people worldwide, with a combined budget of about $1.5bn, were working on quantum-technology research (see chart). Industrialisation will boost those numbers. + + + + + +What is notable about the effort now is that the challenges are no longer scientific but have become matters of engineering. The search is on for smaller atomic clocks, for example; for a means to amplify and route quantum-communications signals; and for more robust “qubits” (of which more later) for quantum computing. Startups are embracing the technology with gusto, and tech giants have already planted their flags. There is wide agreement that Google is furthest along in quantum-computer technology and that Microsoft has the most comprehensive plan to make the software required. + +Public money is flowing in, too. National and supranational funding bodies are backing increasingly ambitious quantum-technology efforts. Britain has a programme worth £270m ($337m) and the European Union has set aside €1bn ($1.08bn) for a pan-European programme. Many quantum technologies have security implications, so defence departments are also providing funding. + +Many firms are already preparing for a quantum-technology future. In 2015 IBM set up its Research Frontiers Institute, inviting corporate participants to share ideas about growth areas in technology, the quantum kind being one. The research fund of AXA, a big insurer, has endowed a professorship in quantum information at the Institute of Photonic Sciences in Barcelona to consider the data-privacy risks presented by the coming quantum boom. + +Quantum technology looks set quickly to find its way into all manner of products and services—mostly behind the scenes, as artificial intelligence has recently done. It may be weird, but it promises to be wonderful too. + + + + + +Metrology: Sensing sensibility + + + + +Quantum technology’s supersensitivity makes it great for measuring + +SINCE its inception a century ago, quantum physics has faced something of an experimental problem. The theory promises all manner of interesting and perhaps useful behaviours of particles in isolation, under rigidly controlled conditions. But on the lab bench particles and atoms are never fully isolated, so quantum experiments can be damnably difficult. + +However, that difficulty also presents an opportunity for quantum technology: sensing. “We turn that on its head,” says Sir Peter Knight, a British quantum expert. “If it couples to the outside world so effectively, it’s sensing the outside world really effectively.” Take the first quantum technology to make it to market, the atomic clock. Most designs work by tapping into the energy levels of atoms that are prodded with microwaves. Some of those atoms absorb the light in such a way that they are neither in their unperturbed, lowest-energy state nor in an elevated-energy state but in both at the same time, an effect that is central to quantum mechanics. An improved design “entangles” these microwave levels in one atom with different energy levels in another—levels that correspond to visible light, which has a much higher frequency. Such entanglement, another quantum effect, links the fates of two atoms, temporarily but inextricably, so that experiments on one yield information about the other. Entangling microwave levels with higher-frequency ones associated with visible light allows the clock to access the higher precision that goes with them. In 2012 David Wineland, of NIST, the American national metrology facility, received a Nobel prize for working out how to do this. For some years, his clock was the most accurate measuring device on Earth: had it been set ticking at the time of the Big Bang, 13.8bn years ago, it would still be accurate to within a second. + +Precise timing, particularly from the small, cheap devices that are now being developed, has a wealth of uses, from time-stamping high-frequency market trades to quickly changing settings within a dynamic energy grid. Even lifting an atomic clock up can change how long a tick appears to take: according to the general theory of relativity, time moves ever so slightly more slowly closer to the Earth than further away. Nuisance or opportunity? It’s all relative. A well-calibrated atomic clock could use this discrepancy to make an ultra-precise height measurement. Or, at a fixed height, it could sense the gravitational attraction of what is below; solid bedrock would give a different reading from an oil-and-gas pocket. + +Laws of attraction + +Clocks are not the only means to get a handle on gravity. At the microscopic scales where quantum mechanics rules, streams of matter particles can behave like waves. Like those on a pond’s surface, those waves can interfere, adding to and subtracting from one another—in the quantum description, altering the probability of finding a particle here or there. In a device called an atom interferometer, two particle streams are sent at differing heights and then brought back together to interfere with each other. The degree to which the two paths are different, indicating the relative strength of the gravitational tug from below, measurably alters the degree of addition and subtraction. + +Such devices have a multitude of uses. In Britain, for example, 4m holes are dug every year in the course of roadworks and construction, but two-thirds of the time the diggers have no idea what they will find beneath the surface. Test boreholes cover only a small area, and ground-penetrating radar does not reach deep enough. A gravity sensor that could tell pipework from pebbles would save a lot of trouble. + +RSK, an environmental consultancy involved in cleaning up brownfield sites and the like, reckons that a third of construction projects overrun by up to a month, and another third by two months or more, and that half of these delays arise because of underground surprises. The company is collaborating with the University of Birmingham in Britain on fieldworthy quantum gravity sensors, in the hope of deploying them in big infrastructure projects. Other efforts to develop cheap sensors have drawn interest from companies such as Schlumberger, an oilfield-services giant, and Bridgeporth, a surveying firm. + +Military types are interested, too. “You can’t shield gravity,” says David Delpy, who leads the Defence Scientific Advisory Council in Britain’s defence ministry. Improved gravity sensors would be able to spot moving masses under water, such as submarines or torpedoes, which could wipe out the deterrent effect of French and British nuclear submarines. Quantum gravimeters could precisely map geological features from the gravitational force they induce. That would help with getting around in places where satellite-navigation signals are not available—“a kind of Google Maps for gravitation”, as Dr Delpy puts it. + +And gravity, the theory of relativity also says, is just one manifestation of acceleration: a good gravimeter is a good accelerometer. And a good accelerometer is a good vibration sensor. Once they are small enough and good enough, all these high-precision devices will be of great interest to carmakers, and in particular to the autonomous-vehicle industry, the success of which will depend on accurate sensing of the movements of cars and their surroundings. Bosch, a German firm that is the world’s largest maker of automotive components and a supplier to many other industries, already has its eye on quantum-technological enhancements to its products. + +Michael Bolle, the firm’s head of research and development, believes sensors will be quantum technology’s first market success. “I’m not talking about niche markets,” he says. “I’m interested in the trigger point where things really go into mass production.” Quantum technologists the world over are preparing for this market explosion by patenting their findings. In some countries, such as Japan and Australia, quantum sensors make up a large part of national patent portfolios (see chart). + + + + + +Mr Bolle and others are also interested in sensors based on “nitrogen vacancies”—places where a diamond’s all-carbon network has been disrupted by one nitrogen atom next to a missing carbon atom. This is a quantum physicist’s playground: mostly isolated by its rigid cage of carbon neighbours from the bumpy, fluctuating world outside, electrons from the nitrogen atoms can be easily manipulated and measured, placed in superpositions and even entangled with one another. Just like the hypersensitive clock, these systems are extraordinarily responsive to their environment and can act as precise sensors of pressure, temperature and electric current. + +Where they have shown the most promise is in measuring magnetic fields. Recent studies show that nitrogen vacancies can detect the on-and-off magnetic field of single nerve cells. The same principles can work inside the human body, too. Nanoscale diamonds with nitrogen vacancies have been used to spot chemical changes in living cells, and researchers from the Institute of Theoretical Physics and the Institute of Quantum Physics in Ulm, Germany, have formed NVision, a startup that uses such nanodiamonds to match the current best magnetically enhanced MRI techniques, but 40 times faster and at a quarter of the cost. + +High performance in these applications depends on well-understood nitrogen vacancies, which occur sporadically in natural diamonds but whose positions and number must be known for precision measurement. Enter Element Six (a subsidiary of DeBeers, the world’s largest diamond producer), which manufactures diamonds with precision-engineered nitrogen vacancies. + +Capture the friendly ghost + +Quantum-enhanced approaches may also supplement other biological imaging techniques, such as positron emission tomography (PET), which takes pictures of the high-energy gamma-ray light flying out of injected radioactive tracers. Each tracer molecule’s interaction with tissue spits out two photons in opposite directions. Quantum-entanglement tomography aims to make use of the fact that those photons are entangled when they are created. In PET, the photons can be hard to track because they bounce off body tissues. The entanglement of each pair makes it easier to work out which came from where, so scans take less time and radioactive material. + +Ghost imaging is another promising way of making use of light’s quantum nature. The technique involves splitting a beam of light in two and aiming the resulting two beams at two detectors, one directly and one through a somewhat opaque medium, such as turbulent air rising from hot ground or a smoke-filled room. Because the photons making up the beam are correlated, a rigorous accounting of what the two detectors can see yields images of what the eye cannot. In 2013 researchers from America’s army showed that the technique worked over more than 2km. + +The technique points to a fascinating debate that underpins many discussions in the broader quantum-technology community about exactly how quantum effects confer an advantage. Though ghost imaging was predicted in the 1990s, arguments still rage about whether entanglement is playing a role or whether it works simply because light comes in discrete, countable photons. “There are plenty of physicists that don’t understand the distinction,” says Miles Padgett of the University of Glasgow, a quantum-imaging expert. “And I don’t think it matters. What matters is, are we using our knowledge in the quantum world to bring competitive advantage?” With hand-held detectors that can sense height differences down to a millimetre, magnetometers that can in principle watch your every neuron and imaging kit that can see across a smoky battlefield, the answer is ever more clearly yes. + + + + + +Communications: Oh what entangled web we weave + + + + +Quantum networks could underpin unhackable communications links + +IN 2004 the Bank of Austria and Vienna’s city hall notched up the first quantum-encrypted bank transfer. Anton Zeilinger, a quantum-cryptography pioneer whose lab facilitated the transfer, expressed his hope that “all problems of implementation will be solved within three years.” They were not. + +The technology was put to the test again in 2007 when quantum-encrypted vote tallies from the Swiss federal election were sent from polling stations to the Geneva state government. Engineers insisted that the transmission was utterly impervious to eavesdropping or tampering; a company called ID Quantique had developed a system that harnessed one of the rules of quantum mechanics to offer total security. + +That claim, too, turned out to be premature. Hackers have since demonstrated that equipment used in such transfers could be vulnerable to attack. What is more, such quantum encryption also required a single, dedicated fibre between sender and receiver, which limited the technique to high-profile transactions, and precluded the cross-linking of many senders and receivers that has made networking and the internet so successful. + +Key findings + +That is now changing. In response to hackers’ attacks, the kit has become markedly more secure. Field trials have shown that delicate quantum light signals can be sent through the same fibres that bring the internet to homes and businesses. And efforts to make quantum-enhanced versions of the equipment that amplifies and distributes standard optical signals are bearing fruit. Quantum networks are springing up or expanding. And quantum communications, just like their conventional counterparts, will soon be whizzing through space, too. + +The most discussed and deployed technique is called quantum-key distribution (QKD). In one set-up, a sender launches single photons toward a receiver, randomly choosing one of four planes along which the light particles are polarised, two of them associated with a 0 and the other two with a 1. The receiver likewise randomly chooses which kind of polarisation to check for. After sending a string of these bit-associated photons, the pair can publicly compare notes on which polarisations they employed; whenever they happen to have chosen the same one, the 0 or 1 associated with that polarisation can be used as a bit in a cryptographic key. + +What contributes to the system’s security is Heisenberg’s uncertainty principle, a much-touted quantum rule which, in this case, guarantees that an eavesdropper would disrupt the system’s randomness, because intercepting and measuring a given photon forces it into a given polarisation. That disturbance to the system would reduce the number of coincidences the pair sees; if there are too few (they should be seen about half the time), they know someone is on the line. + +Physics textbooks will tell you that a sufficiently long cipher, randomly generated this way and used only once, is absolutely secure. But Vlatko Vedral, of the Centre for Quantum Technologies in Singapore, says that hackers who have been invited to try to break into the centre’s quantum-communications experiments have often succeeded—not by beating quantum rules but by ruthlessly exploiting shortcomings of the kit itself. For example, storing a digital 0 generates a slightly different amount of heat from storing a 1, so careful observation of the heat being generated can expose the string of digits being received. Once discovered, such hacks are easily prevented. As time has gone on, such shortcomings have narrowed in scope, and have driven innovation. + +Thanks to the development of ever more secure links, quantum cryptography has recently been deployed more widely. ID Quantique has installed quantum links between data centres of KPN, a Dutch telecoms firm; of Battelle, an American non-profit research firm; and of Hyposwiss and Notenstein, two Swiss private banks. It offers links between financial institutions in Geneva and a disaster-recovery centre 50km away. In 2015 researchers at Toshiba in Japan began sending quantum-encrypted genomic data from a research facility in Sendai to Tohoku University, 7km away. + + + + + +But the future of the technology lies in quantum networks—the infrastructure required to connect many senders and receivers. These are springing up within and between major metropolitan areas. South Korea’s government is funding a 250km link to join existing metro quantum networks. In Britain a network of similar length will be deployed between the cities of Bristol and Cambridge, via London. Australia is building a closed government network in the capital, Canberra. + +No quantum network is more ambitious than the one completed in China at the end of last year. Funded by the central government, it links Beijing and Shanghai via Jinan, which already has a metro network over 70 square kilometres, made up of 50 “nodes”—switchboards connecting senders and receivers—and Hefei, which has a 46-node network. Its customers include China Industrial and Commercial Bank, the China Banking Regulatory Commission and the Xinhua news agency. + +Distance presents a problem. As the meticulously prepared photons with their delicate quantum states bounce along lengths of fibre, those states eventually get scrambled and their information is lost. To ensure fidelity and security, the fibre link should be no longer than about 200km. Standard fibre-optical signals suffer from the same weakening of the signal, so “repeaters” to boost it are placed at regular intervals along their path. But under the quantum rule book, unknown quantum states cannot be copied, so quantum data would need to be temporarily decrypted before receiving a boost, creating a security loophole. + +There are two ways to get round this, one by land and one by air. The land-based solution is to develop quantum analogues of the repeater. That will require a quantum memory that can store incoming information, and a means of sending them on that does not compromise quantum security. That last part requires another bit of quantum trickery: teleportation. This is a way of projecting the quantum state of one particle (not, it should be stressed, the particle itself) onto another, distant one. Last year two research groups showed the benefits of teleportation across two metropolitan networks, in Calgary and Hefei. Crucially, they carried out their experiment using the same wavelengths as those used in existing telecoms networks, to ensure that the new technique can be used with existing fibre infrastructure. It did the trick. + +Spooks reacting at a distance + +Another tack is to take to the air, over similar distances but without the need for a particular fibre link. The current record for teleportation of quantum states in this way was set in 2012, when researchers sent a quantum-encrypted message between two of the Canary islands, 143km apart. A long-standing ambition is to apply the idea to space: for a photon, the disturbance caused by the whole thickness of the Earth’s atmosphere is equivalent to that caused by just a few kilometres of air at the surface. + +Last August China launched Micius, a quantum-key-distribution-enabled satellite backed by tech companies including Huawei and Lenovo. The goal at this stage is to link the Beijing-to-Shanghai network to another in Urumqi, in Xinjiang province, some 3,000km away. Efforts to develop satellite communications are also under way in Singapore, Canada, Japan, Italy and America. Once the challenges of getting quantum signals into space—through turbulent air, clouds and so on—are overcome, a global network could easily follow. + +With country-spanning networks and quantum-enabled satellites, it is easy to envisage a global “quantum internet” in which each link offers quantum-enhanced security. But the kind of innovation that will allow the development of such networks will also be of use, for example, in shuttling information within, and between, future quantum-computing devices: think quantum distributed computing and quantum cloud computing. Just as the internet has demonstrated the power of linking many standard computers, says Seth Lloyd, a theorist at the Massachusetts Institute of Technology, “the quantum internet has the potential to change the way in which people and organisations collaborate and compete, establishing trust while protecting privacy.” + +Not everyone is convinced yet. The defence establishment seems to have been put off by some of the early setbacks to quantum links. Quantum-communications efforts are under way, for example in the research arms of America’s army and navy, but an analysis by the air force’s Scientific Advisory Board suggested that QKD had “little advantage over the best classical alternatives”. And doubters rightly point out that encryption is not the weakest link in many security chains. + +Yet as the hardware improves and heavy investment continues, quantum networks may begin to look like a strategic must-have; if so, consumer applications are likely to proliferate. The European Telecommunications Standards Institute (ETSI), which sets global benchmarks for the industry, is working to define quantum-cryptography standards. ETSI scientists want to ensure that kit from multiple vendors can work together, and to create a certification so that consumers (including spooks) are guaranteed a widely agreed level of security. Miniaturisation efforts are well under way too, so before long the equipment may fit in the palm of your hand—or in your phone. + + + + + +Cue bits: Why all eyes are on quantum computers + + + + +Tech giants and upstarts alike are piling into a technology with huge potential + +IN 1981 Richard Feynman, a visionary physicist, had a clever idea. Could the odd properties of quantum mechanics, he wondered aloud in a lecture, be used to carry out simulations of physical systems that computers of the time could not cope with? Others took up the question. In 1985, David Deutsch, now at Oxford University, showed how quantum systems could be set up as a “universal” computer—that is, like current computers, able to run any program. Though fascinating, at that point it was all rather theoretical, involving hardware that no one knew how to build. + +What made the world sit up and take notice was a paper published in 1994 by Peter Shor, then at Bell Labs. Dr Shor showed that a quantum computer would be capable of working out the prime numbers that, multiplied together, make up an exceedingly large number. The fact that this “decomposition” is mathematically very hard is the basis of cryptographic protocols still used today. + +Since then, researchers have come up with a rich variety of problems for which quantum computers should be superior to the best supercomputers—and a number of algorithms, or sets of steps, to break down problems in such a way that quantum computers can crunch through them. This evident utility started an international competition to build one that was, for many years, confined to quiet labs and the academic literature. These days, big business is seriously interested, and blue-chip companies including Intel, Hewlett-Packard, Google and Microsoft all have research programmes. Last year IBM released Quantum Experience, which lets all comers play around with a crude quantum computer over the internet. Governments too are putting money into academic efforts, both directly and via defence contractors, and a growing band of startup companies are striking out on their own. + +A computer big enough to do what Dr Shor envisaged would also be useful for all manner of currently intractable problems. Although that remains a distant prospect, steps towards developing one could have big benefits; for many applications, a much simpler or special-purpose computer will do. + +Bit by bit + +What makes the idea of quantum computers so attractive is not so much that they will work faster than traditional computers—they may for some applications but not for others—but that they will work fundamentally differently. Three intuition-defying concepts play a role. The first is superposition. Today’s computers depend on bits taking one of two values, 0 or 1. Qubits, their quantum analogues, can be arranged in “states” that are best thought of as some mixture of both 0 and 1. To carry out a computation using one of these strange beasts is to act on both the 0 and the 1, in a sense to create within the calculation the potential outcome of either at the same time. + +The power of this indeterminate state is unleashed through the second quantum-mechanical effect, entanglement. A standard computer depends on the complete isolation of one bit from the next to prevent a computation from going awry or a document from getting corrupted. For a quantum computer, the entangling of multiple qubits is paramount; in the best case, all of a given device’s bits are entangled with one another. Again, to operate on one qubit is to operate, to varying degrees, on all the entangled ones. It is therefore impossible to describe such a machine in strict terms of its constituent parts. There is a need to consider how one qubit is connected to its neighbour, and to the next-but-one, and so on through all the cross-correlations. To describe all the states of a 50-bit standard computer requires 50 bits of digital memory; a description of a 50-qubit computer would require a quadrillion. + +It gets weirder. Whereas it is easy to imagine an equation that predicts a low or even zero probability of a given event, it is much harder to reckon with what are called probability amplitudes in quantum mechanics, which can actually be negative. In the course of a quantum computer’s crunching, these amplitudes can (again like waves) interfere, positive with positive and negative with negative—in essence, to reduce the probability of the wrong answer and boost that of the right one. + +Posing a question starts with choosing an algorithm suitable for the problem. This algorithm is actually manifest as the starting states of the qubits: 0 here, 1 there, a bit of a mix over there. The calculation is then just a matter of letting quantum-mechanical laws play out on this system of superposed and entangled qubits. Changing states, shifting qubit couplings and so on represent a vast cross-multiplication of all those states and combinations, with probability amplitudes reinforcing and diminishing until the system settles into a final state that represents the answer. It is a matter of setting up the problem, and the machine, so that all the possibilities are sifted through at lightning speed. + +Efforts to make qubits often centre on the use of tiny loops of superconducting wire, arranged like the “gates” of standard computers. Single charged atoms, trapped by electric or magnetic fields, can also do the job; in February an international consortium of researchers published an open-source blueprint for a trapped-ion machine. Several groups use single photons as qubits—an approach that looks easy to integrate with existing semiconductor-fabrication techniques. Microsoft’s planned “topological” quantum computer uses something else entirely: “anyons”, particles that would be more easily tamed than other qubit candidates but which have never been seen outside the pages of theoretical physics textbooks. + +Setting up a qubit is no longer difficult. The problem is looking after it. Quantum states are notoriously delicate, requiring complete isolation from the actual stuff of the experiment. But isolation can never be complete, and errors creep in; for a calculation to succeed these must be noticed and corrected. It has become clear that as computers scale up, the number of logical qubits (the ones actually doing the calculation) will be dwarfed by an “overhead” of perhaps thousands of times as many error-correcting and command-and-control qubits. The kind of machine required to implement Shor’s famed algorithm on the sort of large numbers used in encryption will need to contain something like a million qubits. + +Such machines will, to put it mildly, be an engineering challenge. But in a clear indication that quantum computing is getting closer, names familiar from traditional computing are increasingly getting involved. Hewlett-Packard is trying to build its own machine. Intel’s global quantum investments include $50m going into work at QuTech, the Netherlands’ national quantum-technology hub. Microsoft’s topological quantum approach, if it works, will be much less error-prone. The quantum-computing startup scene is also becoming increasingly vibrant. Researchers from Yale and the University of Maryland have spun off companies, and physicists who had worked at IBM and America’s Department of Energy have started their own firms. + +Governments are getting in on the action too. Australia’s has invested A$26m ($20m) in a laboratory at the University of New South Wales in Sydney (and the Commonwealth Bank of Australia and Telstra, a telecoms firm, have together chipped in about the same amount). A lab at the University of Sydney down the road is being funded as part of LogiQ, a programme of the Intelligence Advanced Research Projects Activity, an American government defence outfit. Leaked documents have revealed that America’s National Security Agency has been exploring “if a cryptologically useful quantum computer can be built”. Experts now reckon it can. But when? + +Simulating discussion + +Very few in the field think it will take less than a decade, and many say far longer. But the time for investment, all agree, is now—because even the smaller and less capable machines that will soon be engineered will have the potential to earn revenue. Already, startups and consulting firms are springing up to match prospective small quantum computers to problems faced in sectors including quantitative finance, drug discovery and oil and gas. + +Perhaps the most interesting early applications will take the form of “quantum simulators”: computers that mimic real physical systems. This is what Feynman had in mind, imagining in his lecture “that the computer will do exactly the same as nature”. Quantum simulators might help in the design of room-temperature superconductors allowing electricity to be transmitted without losses, or with investigating the nitrogenase reaction used to make most of the world’s fertiliser. + +Quantum simulation has its fans in industry, too. Michael Bolle at Bosch foresees using simulators to design batteries that will supersede the current lithium-ion technology. Paolo Bianco, who heads the quantum-technology research team at Airbus, a big European aerospace firm, says that quantum-simulating a new material such as a stiffer or lighter alloy for use in aeroplanes or satellites would be much faster and cheaper than manufacturing and then testing the material itself. “The promise of quantum technologies”, he says, “is in engineering terms a step up in performance—not of 20%, but of a couple of orders of magnitude.” + +For some applications and classes of problems that may well be true. But the experience of D-Wave Systems, a Canadian company that began selling the first commercially available quantum computer in 2011, shows how little is known about what future machines will be able to do. D-Wave makes what is known as a quantum annealer, a special-purpose quantum computer (as opposed to a universal one) that works best on “optimisation” problems, such as finding the shortest possible route for a travelling salesman. The firm’s customers include Lockheed Martin and a consortium including Google and NASA. In January Temporal Defense Systems, a cyber-security firm, bought one. + + + +For years experts questioned whether the devices were actually exploiting quantum mechanics and whether they worked better than traditional computers. Those questions have since been conclusively answered—yes, and sometimes—but only by exhaustively testing the machines’ mettle directly. The current best supercomputers are able to simulate only what more general-purpose quantum computers of about 50 qubits can do. Tantalisingly, it is difficult to tell at what problems bigger machines will excel. + +Google is aiming to use its own machinery, a so-called gate-model quantum computer of the sort most groups are pursuing, to achieve “quantum supremacy”, whereby a quantum computer performs a calculation faster than any known computer could. Google researchers have laid out an ambitious plan which may let them achieve that feat this year. D-Wave has hinted it has already done so, but has made similar claims in the past; their current numbers are still to be checked. + +Whenever, and by whomever, this is accomplished, it will launch an era of small-scale machines offering quantum-enhanced solutions and services. The first publicly accessible one, IBM’s Quantum Experience, may be an indication that the machines’ future will be in the cloud. Most users have no more need for one at home than they have for a supercomputer. + +But some do. In 1982, a year after Feynman gave his quantum-computing lecture, he was touring the supercomputer facility at Los Alamos National Laboratory, where he had worked on the first atomic bomb. Talking to Bo Ewald, then in charge of the lab’s computing efforts and now running D-Wave, Feynman said, “You know, young man, one day all of these will be replaced by quantum computers.” One has already moved in. + + + + + +Software: Program management + + + + +Quantum-computer code could do wonders—but also unravel well-kept secrets + +IT DOESN’T help to have a quantum computer if no one knows how to program it,” says Tim Polk, of the White House Office of Science and Technology Policy in Washington. Although academic efforts to build quantum-computer hardware have been going on for two decades, comparatively little has been done to develop the software needed to run the machines when they come. + +That is changing, because in the past few years it has become clear that those machines are getting closer. Two parallel efforts are under way. One is to create software as generally understood—the graphical interfaces, programming languages and so on, a kind of “Windows for quantum”. The other is to develop novel algorithms, step-by-step instructions that break down problems into discrete parts amenable to quantum computing. + +Innovation abounds in both camps, and among big tech firms as well as plucky startups. Some big players are working on both sides of the problem, and a growing ecosystem of quantum-friendly consultancies advises companies on what quantum computing might do for them. + +“Machine” language for quantum computers, which actually tells the computer what to do, is fairly well understood. It is not so different from the logic gates of standard computing, except that it allows for “superpositions” of qubits in which they can be both 0 and 1 at the same time. But how to write computer code to interact with such a machine, or to simulate what it can do? Options are multiplying, including open-source software packages such as QuTip, funded by a number of research outfits in Asia. On March 6th IBM released the first commercial program for universal quantum computers (the general-purpose kind). And various startups have released their own quantum software. + +One of the most ambitious, LIQUi|> (whose name plays on a symbol in quantum mechanics), comes from Microsoft. It aims to tackle the whole “software stack”, from the user interface to code-compilers and ultimately to a machine language suitable for Microsoft’s planned hardware, and that of others. + +Krysta Svore, who leads Microsoft’s quantum-software team, says that the group is also working on reducing the total number of qubits and operations required for quantum calculations, known as “overhead”, and on making standard computers better at emulating quantum ones (the group recently hired a world expert in that field, Matthias Troyer). The team’s full-scale simulation of a 32-qubit computer requires 32 gigabytes of memory, more than the average desktop can muster but still manageable. + +Dr Svore and her colleagues are also making estimates of how many qubits, and minutes, would be needed to crack specific problems. She says the numbers are “down dramatically”, thanks to recent improvements in keeping qubits under tighter control. For example, she reckons that a thorough analysis of the energy-intensive nitrogenase reaction to make fertiliser would take a 100-logical-qubit quantum computer hours or perhaps days, whereas a conventional supercomputer would need billions of years. The prize might be a cut of 1-2% in global natural-gas consumption. + +But the key to getting the most out of quantum computers are the algorithms that these various software packages implement. The first of them, including the one by Peter Shor that showed how quantum computers could crack global encryption systems, tested the theoretical idea by aiming at the most intractable problems on the biggest notional machines. + +Even deeper learning + +These days, says Aram Harrow of the Massachusetts Institute of Technology, the focus has shifted to algorithms that smaller machines can make use of, because that kind of hardware will soon be widely available. “We’re still interested in what you can do with a million or a billion qubits, but it’s interesting to see if you can figure out what you can do with 100,” he says. + +A lot, it seems. One of the most promising areas is in machine learning and deep learning, two facets of artificial intelligence that have attracted much attention recently. Applications include searching through vast swathes of data to find patterns, such as in image recognition, cyber-security and, more prosaically, recommendation engines that suggest products consumers might like. But there are all manner of other algorithms, from those that crunch numbers to those that mimic atoms. + +All these quantum recipes call for some means of cataloguing them. Stephen Jordan heads the Quantum Algorithm Zoo at the National Institute of Standards and Technology in Maryland, a comprehensive collection of known algorithms. He has devised a taxonomy of 59 mathematical families they fit into, each suited to particular kinds of problems or breaking down problems in a particular, quantum-friendly way. + +Many such algorithms, when run on existing special-purpose machines or as emulations on standard computers, fail to beat their “classical” counterparts. Vlatko Vedral, of the National University of Singapore’s Centre for Quantum Technologies, stresses that traditional techniques, particularly for quantum-chemistry problems like the nitrogenase reaction, are already quite sophisticated. The trouble is that no beefy general-purpose quantum computer exists as yet, so no one knows whether a given algorithm run on one would beat its classical counterpart. At the same time, astonishingly efficient algorithms suited to quantum computing are waiting to be discovered. + +Those 59 families of algorithms, and ever-better emulators for eventual machines, are an excellent starting point for planning the quantum-computing future, and nowhere is interest greater than in finance. Commonwealth Bank of Australia is getting in early, collaborating closely with a research group led by Michelle Simmons at the University of New South Wales. D-Wave has partnered with 1Qbit, a startup, to develop “Quantum for Quants”, a forum for the quantitative-finance industry. Its editors include Michael Sotiropoulos, head of global equities at Deutsche Bank. UBS, a big Swiss bank, is working with QxBranch, another startup, on using quantum algorithms in foreign-exchange trading and arbitrage. Hyder Jaffrey, head of Strategic Investments and Fintech Innovation at UBS, says he puts quantum computing in the same category as artificial intelligence and blockchains, “all stuff with the potential to change markets”. + +Banking on it + +Companies such as QxBranch and 1Qbit play a new role of middleman between the quantum experts and industry, examining whether and how a given firm’s business might be improved by quantum methods, for example optimising trading strategies or supply chains, or monitoring network activity to spot cyber-attacks. Landon Downs, a co-founder of 1Qbit, says that can lead to solutions which can already be put to use. “By taking the lens of how you would formulate an algorithm on a quantum computer you often find very good improvements on classical algorithms,” he says. “That’s where lots of our successes come from.” + +The biggest benefit is expected to come from quantum-computing hardware once it arrives, so much of this business depends on simulating that hardware on standard machines as accurately as possible. Michael Brett, chief executive of QxBranch, says the idea is that “some Tuesday morning when one becomes available we just swap out our simulation for the real hardware.” + +Even as all these computer scientists and consultants are working on software for the quantum future, a handful of others are working on software to combat it. After all, what got researchers going in the first place was the fear that global encryption standards would crumble in the face of quantum computing. That remains a danger for the future, and retrospectively perhaps even for the present, if encrypted communications filed away now are analysed by powerful quantum computers later. That is the idea behind post-quantum cryptography, an effort to create ciphers that even future quantum computers will be unable to crack. + +PQCRYPTO is a three-year, European-funded project to develop post-quantum ciphers. Its goal is not to find the most mathematically gnarly way of encrypting data, but rather to identify one that is sufficiently difficult to break without needing too much memory or computation to implement. RSA, a current global standard, could be made hard enough to break, but the cryptographic keys would have to be a terabyte long—an impracticable option. Keys for elliptic-curve cryptography, another current standard, are just 32 bytes long; any post-quantum solution needs to aim for a similar ratio of brevity to security. + +Tanja Lange, who leads the project, says that post-quantum efforts are now attracting a lot of attention, particularly from nervous Silicon Valley outfits. In 2015 America’s National Security Agency said it would be updating all its cryptography to make it quantum-computer-proof. Last year Google quietly ran its own post-quantum cryptography test in Chrome, its web browser. Some of its users’ communications were protected both with elliptic-curve encryption and New Hope, a post-quantum protocol developed as part of PQCRYPTO. The median delay added to those communications turned out to be just a millisecond. + +“The power of quantum computing is rediscovering all the problems that computers cannot solve, and having a path to solving them,” says Dario Gil, vice-president of science and solutions at IBM. “It’s a reorientation of what we think about computers.” But a device capable of solving big problems will create new ones if it can unravel protocols that have protected secrets for decades. + + + + + +Commercial breaks: The uses of quantum technology + + + + +The most exciting thing about a quantum-enhanced world is the promise of what it may yet bring + +WHEN the first atomic clocks were built and swiftly commercialised, no one used the term “quantum technology”. The clocks simply harnessed the power of quantum mechanics to improve results. At the time there were no other examples of how the odd predictions of quantum mechanics such as entanglement and superposition could be put to practical use. Mostly they informed fundamental science, yielding an ever-subtler view of the world at the tiniest scales. + +Here and there, quantum weirdness did escape the lab, as in the case of the superconducting quantum interference device, an exquisitely sensitive magnetic-field sensor. The first of these was developed in 1964 at Ford Research Laboratory, the American carmaker’s blue-skies research facility. Now they are widely used, for example in MRI machines. In the early 1980s researchers at IBM turned the quantum effect of tunnelling, in which particles seem to pass straight through impenetrable barriers, into a way to see the microscopic world with staggering resolution. + +The current quantum-technology push is on a far grander scale, with multiple research efforts being funded by national governments and supranational bodies, sometimes for strategic reasons. Freeke Heijman has led efforts to build QuTech, the quantum-technology institute of the Netherlands. “We don’t want to risk the scenario that we have invested all this money for years and in the end the money is going to be made in the US or China,” she says. And in the case of defence applications, she says security plays a role too: “If you have to buy it off the shelf, it’s not just an economic disadvantage, it’s also dangerous.” + +But quantum technologies will not pass into the wider world in the same way as the global positioning system, which was developed with copious government funding behind closed doors and then handed over as a public good. “It’s just not like that today,” says Neil Stansfield, formerly of the British government’s Defence Science and Technology Laboratory. “We’re not the big kid on the government block, and certainly not on the global block.” + +That leaves business to step into the breach. But Trevor Cross, chief technology officer of E2v, a British company whose detectors brought the world pictures from the Hubble Space Telescope and which is now doing pioneering work for quantum devices, says that quantum technologies are still viewed by many industries as risky. That may be because many of the approaches are technologically so far beyond the current state of the art. Richard Murray, an emerging-technologies expert at Innovate UK, Britain’s technology-strategy agency, says that the more transformative the technological change, the easier it is to miss opportunities. + +Material evidence + +The opportunities are many, because at the level of components these technologies are intimately connected. Many of them depend, for example, on light sources that can spit out photons one at a time, every time, and detectors that can just as unfailingly catch just one—no small feat, considering that a 60-watt bulb is putting out 100,000,000,000,000,000,000 or so of them every second. This kind of kit was unimaginable a decade ago. + +New materials, and precisely engineered versions of existing ones, will be needed too. Element Six, a subsidiary of De Beers, a diamond giant, has carved out a niche selling diamonds with bespoke “nitrogen vacancies”—flaws that turn them into sensors. Silicon carbide is tipped to be just as quantum-amenable as those diamonds, but so far expertise with it is thin on the ground. + +New alliances will be forged as the work on materials intensifies. Intel aims to build qubits into silicon, in order to piggyback on existing fabrication infrastructure. But that will require the material to be produced to a much higher purity. To that end, Intel has joined forces with Urenco and Air Liquide, two materials firms. + +Michael Bolle at Bosch, the multinational engineering firm, envisages a seamless coming together of these diverse approaches in applications such as autonomous vehicles or the internet of things: quantum sensors to gather sensitive readings, quantum cryptography to transmit them securely and quantum computing to gather insights from the resulting copious streams of data. + + + +Many practitioners believe that the applications and technologies outlined in this report are just the beginning. As they become more familiar, they will give rise to new applications and wholly new hardware. Subjects that used to be mere footnotes to physics will rule, and engineers (and perhaps even consumers) will have to learn to speak quantum. + +Yet some innovators may find themselves stymied. “The question is to what extent will export controls on these technologies become an issue, particularly if any of it has some defence potential,” says Stephen Ezell, of the Information Technology and Innovation Foundation, an American think-tank. Tech firms such as Intel and IBM have had trouble exporting parts and computers to countries like China, he says. + +Such challenges aside, what is exciting about these efforts is how much is simply not known about their future. Bob Wisnieff, a manager at IBM’s microelectronics-research labs, says that “we’re not that far from being capable…of building quantum computers that will do things we cannot predict exactly.” John Preskill, a quantum expert at the California Institute of Technology, who coined the phrase “quantum supremacy”, has said that “a quantum computer can simulate efficiently any physical process that occurs in nature. Maybe. We don’t actually know for sure.” + +That brings the potential of quantum technologies full circle, to the fundamental-science considerations from which they were born. Quantum computers and simulators should eventually be capable of solving some of science’s most basic and yet most daunting questions. Sensors of unparalleled precision may at last make it possible to test the predictions of physicists’ most abstract ideas, perhaps linking the theories of quantum mechanics and gravity. + +“We certainly expect there are many additional things that we’ll be able to do with quantum beyond the things we know of,” says Tim Polk of the White House Office of Science and Technology Policy. “We had no idea of all the things we’d be able to build with the transistor, and we see the same thing with quantum.” + +In addition to those named in the text, the author would particularly like to thank: Scott Aaronson, John Bagshaw, Dan Bernstein, Kai Bongs, Altaf Carim, Adam Davison, Marc de Jong, Iulia Georgescu, Aram Harrow, Ray Johnson, David Kaiser, Leon Lobo, Graeme Malcolm, Mike Mayberry, Jian-Wei Pan, Martin Plenio, Dilan Rajasingham, John Rarity, Tanya Reeves, Andrew Shields, Marie Skelton, Tim Spiller, Andrea Taroni and Qiang Zhang. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21718313/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Technology Quarterly + +Here, there and everywhere + + + +Quantum technology is beginning to come into its own + +After decades as laboratory curiosities, some of quantum physics’ oddest effects are beginning to be put to use, says Jason Palmer + +PATRICK GILL, a director of the new Quantum Metrology Institute at Britain’s National Physical Laboratory (NPL) in south-west London and an expert in atomic clocks, points to a large table full of lenses and mirrors, vacuum chambers and electronics. “And there’s a smaller one over there,” he says. + +NPL is part of a consortium of the planet’s official timekeepers. In all its atomic-clock laboratories, each of the flagship devices—some of which are huge—is flanked by a smaller one under construction. Miniaturisation is the name of the game. Here is one that fits into a standard electronics rack, 19 inches wide. Over there is a fist-sized gizmo designed to hold an atomic clock’s precious innards safe within a satellite. + +The caesium atomic clock, developed at NPL, was arguably the world’s first quantum technology, though it was not labelled as such. The most common approach, first used in 1950, works by putting energy into atoms to create a “superposition” in which they are, in a measurable way, in more than one energy state at the same time—both excited and relaxed. Probing this strange condition reveals the “clock frequency” of those atoms—a constant for clocks on every continent, and the basis for a precise, internationally agreed definition of the second. + +After decades of work in the laboratory, a raft of different devices and approaches relying on quantum-mechanical effects are now nearing market-readiness. It has taken so long mainly because the components that make them up had to be developed first: ever-better lasers, semiconductors, control electronics and techniques to achieve the low temperatures at which many quantum systems perform best. + +Britain did not exploit the atomic clock’s discovery in the market. Instead, a year after the device was invented, it was commercialised by the National Company, an American firm. Given the potential of these new quantum technologies, this time commercialisation is on many minds. The NPL’s ever-smaller clocks are just one step towards marketable products that could vastly outdo GPS (which itself is an application of atomic timekeeping) in navigation, or help spot what lies underground. The era of quantum technology is almost here. + + + +The odds are good; the goods, odd + +Everything in the natural world can be described by quantum mechanics. Born a century ago, this theory is the rule book for what happens at atomic scales, providing explanations for everything from the layout of the periodic table to the zoo of particles spraying out of atom-smashers. It has guided the development of everyday technologies from lasers to MRI machines and put a solid foundation under astrophysicists’ musings about unknowables such as the interiors of black holes and the dawn of the universe. Revealed by a few surprising discoveries, such as that atoms absorb and emit energy only in packets of discrete sizes (quanta), and that light and matter can act as both waves and particles, it is modern physics’ greatest triumph. + +It has a weird side, though, and it is this that has captured interest in what is now being called the second quantum revolution. The first one was about physics: about understanding how the world worked at the tiny scales where quantum mechanics rules. Not only can particles be in two states at once, as with the atoms in an atomic clock; sometimes two of them, separated by a great distance, seemingly sense something about each other’s condition, a situation called entanglement. A particle’s exact position or state is never certain until a measurement is made; there are only higher or lower likelihoods of a given outcome, and the measurement changes the situation irrevocably. All this has been clear from the mathematics since the mid-1920s but was made manifest in laboratory experiments only later in the 20th century. As the theory’s more straightforward predictions were put to use, for instance in electronics, quantum mechanics gained a reputation for being counterintuitive, even downright spooky. + +The expertise gained during those years is now paying dividends. The most counterintuitive quantum-mechanical predictions are being harnessed to make measurements of staggering precision, to generate uncrackable codes and to form the basis of impenetrable communications networks. Quantum computers may eventually crunch through currently unapproachable problems, improving the transmission of electric power or the manufacture of energy-intensive fertiliser, or simply sifting through impracticably large data sets. However, long before then computing systems that still fall far short of a general-purpose machine are likely to start providing solutions in industries such as finance, energy and aerospace, and even help with things as mundane as recommendation engines. + +From small beginnings + +Much work remains to be done. Although a handful of quantum-enabled sensors, modest quantum networks and rudimentary quantum computers are already in use, they still fall short of fully exploiting quantum advantages, and few of them are ready to be widely deployed. According to McKinsey, a consulting firm, in 2015 about 7,000 people worldwide, with a combined budget of about $1.5bn, were working on quantum-technology research (see chart). Industrialisation will boost those numbers. + + + + + +What is notable about the effort now is that the challenges are no longer scientific but have become matters of engineering. The search is on for smaller atomic clocks, for example; for a means to amplify and route quantum-communications signals; and for more robust “qubits” (of which more later) for quantum computing. Startups are embracing the technology with gusto, and tech giants have already planted their flags. There is wide agreement that Google is furthest along in quantum-computer technology and that Microsoft has the most comprehensive plan to make the software required. + +Public money is flowing in, too. National and supranational funding bodies are backing increasingly ambitious quantum-technology efforts. Britain has a programme worth £270m ($337m) and the European Union has set aside €1bn ($1.08bn) for a pan-European programme. Many quantum technologies have security implications, so defence departments are also providing funding. + +Many firms are already preparing for a quantum-technology future. In 2015 IBM set up its Research Frontiers Institute, inviting corporate participants to share ideas about growth areas in technology, the quantum kind being one. The research fund of AXA, a big insurer, has endowed a professorship in quantum information at the Institute of Photonic Sciences in Barcelona to consider the data-privacy risks presented by the coming quantum boom. + +Quantum technology looks set quickly to find its way into all manner of products and services—mostly behind the scenes, as artificial intelligence has recently done. It may be weird, but it promises to be wonderful too. + + + + + +Metrology: Sensing sensibility + + + + +Quantum technology’s supersensitivity makes it great for measuring + +SINCE its inception a century ago, quantum physics has faced something of an experimental problem. The theory promises all manner of interesting and perhaps useful behaviours of particles in isolation, under rigidly controlled conditions. But on the lab bench particles and atoms are never fully isolated, so quantum experiments can be damnably difficult. + +However, that difficulty also presents an opportunity for quantum technology: sensing. “We turn that on its head,” says Sir Peter Knight, a British quantum expert. “If it couples to the outside world so effectively, it’s sensing the outside world really effectively.” Take the first quantum technology to make it to market, the atomic clock. Most designs work by tapping into the energy levels of atoms that are prodded with microwaves. Some of those atoms absorb the light in such a way that they are neither in their unperturbed, lowest-energy state nor in an elevated-energy state but in both at the same time, an effect that is central to quantum mechanics. An improved design “entangles” these microwave levels in one atom with different energy levels in another—levels that correspond to visible light, which has a much higher frequency. Such entanglement, another quantum effect, links the fates of two atoms, temporarily but inextricably, so that experiments on one yield information about the other. Entangling microwave levels with higher-frequency ones associated with visible light allows the clock to access the higher precision that goes with them. In 2012 David Wineland, of NIST, the American national metrology facility, received a Nobel prize for working out how to do this. For some years, his clock was the most accurate measuring device on Earth: had it been set ticking at the time of the Big Bang, 13.8bn years ago, it would still be accurate to within a second. + +Precise timing, particularly from the small, cheap devices that are now being developed, has a wealth of uses, from time-stamping high-frequency market trades to quickly changing settings within a dynamic energy grid. Even lifting an atomic clock up can change how long a tick appears to take: according to the general theory of relativity, time moves ever so slightly more slowly closer to the Earth than further away. Nuisance or opportunity? It’s all relative. A well-calibrated atomic clock could use this discrepancy to make an ultra-precise height measurement. Or, at a fixed height, it could sense the gravitational attraction of what is below; solid bedrock would give a different reading from an oil-and-gas pocket. + +Laws of attraction + +Clocks are not the only means to get a handle on gravity. At the microscopic scales where quantum mechanics rules, streams of matter particles can behave like waves. Like those on a pond’s surface, those waves can interfere, adding to and subtracting from one another—in the quantum description, altering the probability of finding a particle here or there. In a device called an atom interferometer, two particle streams are sent at differing heights and then brought back together to interfere with each other. The degree to which the two paths are different, indicating the relative strength of the gravitational tug from below, measurably alters the degree of addition and subtraction. + +Such devices have a multitude of uses. In Britain, for example, 4m holes are dug every year in the course of roadworks and construction, but two-thirds of the time the diggers have no idea what they will find beneath the surface. Test boreholes cover only a small area, and ground-penetrating radar does not reach deep enough. A gravity sensor that could tell pipework from pebbles would save a lot of trouble. + +RSK, an environmental consultancy involved in cleaning up brownfield sites and the like, reckons that a third of construction projects overrun by up to a month, and another third by two months or more, and that half of these delays arise because of underground surprises. The company is collaborating with the University of Birmingham in Britain on fieldworthy quantum gravity sensors, in the hope of deploying them in big infrastructure projects. Other efforts to develop cheap sensors have drawn interest from companies such as Schlumberger, an oilfield-services giant, and Bridgeporth, a surveying firm. + +Military types are interested, too. “You can’t shield gravity,” says David Delpy, who leads the Defence Scientific Advisory Council in Britain’s defence ministry. Improved gravity sensors would be able to spot moving masses under water, such as submarines or torpedoes, which could wipe out the deterrent effect of French and British nuclear submarines. Quantum gravimeters could precisely map geological features from the gravitational force they induce. That would help with getting around in places where satellite-navigation signals are not available—“a kind of Google Maps for gravitation”, as Dr Delpy puts it. + +And gravity, the theory of relativity also says, is just one manifestation of acceleration: a good gravimeter is a good accelerometer. And a good accelerometer is a good vibration sensor. Once they are small enough and good enough, all these high-precision devices will be of great interest to carmakers, and in particular to the autonomous-vehicle industry, the success of which will depend on accurate sensing of the movements of cars and their surroundings. Bosch, a German firm that is the world’s largest maker of automotive components and a supplier to many other industries, already has its eye on quantum-technological enhancements to its products. + +Michael Bolle, the firm’s head of research and development, believes sensors will be quantum technology’s first market success. “I’m not talking about niche markets,” he says. “I’m interested in the trigger point where things really go into mass production.” Quantum technologists the world over are preparing for this market explosion by patenting their findings. In some countries, such as Japan and Australia, quantum sensors make up a large part of national patent portfolios (see chart). + + + + + +Mr Bolle and others are also interested in sensors based on “nitrogen vacancies”—places where a diamond’s all-carbon network has been disrupted by one nitrogen atom next to a missing carbon atom. This is a quantum physicist’s playground: mostly isolated by its rigid cage of carbon neighbours from the bumpy, fluctuating world outside, electrons from the nitrogen atoms can be easily manipulated and measured, placed in superpositions and even entangled with one another. Just like the hypersensitive clock, these systems are extraordinarily responsive to their environment and can act as precise sensors of pressure, temperature and electric current. + +Where they have shown the most promise is in measuring magnetic fields. Recent studies show that nitrogen vacancies can detect the on-and-off magnetic field of single nerve cells. The same principles can work inside the human body, too. Nanoscale diamonds with nitrogen vacancies have been used to spot chemical changes in living cells, and researchers from the Institute of Theoretical Physics and the Institute of Quantum Physics in Ulm, Germany, have formed NVision, a startup that uses such nanodiamonds to match the current best magnetically enhanced MRI techniques, but 40 times faster and at a quarter of the cost. + +High performance in these applications depends on well-understood nitrogen vacancies, which occur sporadically in natural diamonds but whose positions and number must be known for precision measurement. Enter Element Six (a subsidiary of DeBeers, the world’s largest diamond producer), which manufactures diamonds with precision-engineered nitrogen vacancies. + +Capture the friendly ghost + +Quantum-enhanced approaches may also supplement other biological imaging techniques, such as positron emission tomography (PET), which takes pictures of the high-energy gamma-ray light flying out of injected radioactive tracers. Each tracer molecule’s interaction with tissue spits out two photons in opposite directions. Quantum-entanglement tomography aims to make use of the fact that those photons are entangled when they are created. In PET, the photons can be hard to track because they bounce off body tissues. The entanglement of each pair makes it easier to work out which came from where, so scans take less time and radioactive material. + +Ghost imaging is another promising way of making use of light’s quantum nature. The technique involves splitting a beam of light in two and aiming the resulting two beams at two detectors, one directly and one through a somewhat opaque medium, such as turbulent air rising from hot ground or a smoke-filled room. Because the photons making up the beam are correlated, a rigorous accounting of what the two detectors can see yields images of what the eye cannot. In 2013 researchers from America’s army showed that the technique worked over more than 2km. + +The technique points to a fascinating debate that underpins many discussions in the broader quantum-technology community about exactly how quantum effects confer an advantage. Though ghost imaging was predicted in the 1990s, arguments still rage about whether entanglement is playing a role or whether it works simply because light comes in discrete, countable photons. “There are plenty of physicists that don’t understand the distinction,” says Miles Padgett of the University of Glasgow, a quantum-imaging expert. “And I don’t think it matters. What matters is, are we using our knowledge in the quantum world to bring competitive advantage?” With hand-held detectors that can sense height differences down to a millimetre, magnetometers that can in principle watch your every neuron and imaging kit that can see across a smoky battlefield, the answer is ever more clearly yes. + + + + + +Communications: Oh what entangled web we weave + + + + +Quantum networks could underpin unhackable communications links + +IN 2004 the Bank of Austria and Vienna’s city hall notched up the first quantum-encrypted bank transfer. Anton Zeilinger, a quantum-cryptography pioneer whose lab facilitated the transfer, expressed his hope that “all problems of implementation will be solved within three years.” They were not. + +The technology was put to the test again in 2007 when quantum-encrypted vote tallies from the Swiss federal election were sent from polling stations to the Geneva state government. Engineers insisted that the transmission was utterly impervious to eavesdropping or tampering; a company called ID Quantique had developed a system that harnessed one of the rules of quantum mechanics to offer total security. + +That claim, too, turned out to be premature. Hackers have since demonstrated that equipment used in such transfers could be vulnerable to attack. What is more, such quantum encryption also required a single, dedicated fibre between sender and receiver, which limited the technique to high-profile transactions, and precluded the cross-linking of many senders and receivers that has made networking and the internet so successful. + +Key findings + +That is now changing. In response to hackers’ attacks, the kit has become markedly more secure. Field trials have shown that delicate quantum light signals can be sent through the same fibres that bring the internet to homes and businesses. And efforts to make quantum-enhanced versions of the equipment that amplifies and distributes standard optical signals are bearing fruit. Quantum networks are springing up or expanding. And quantum communications, just like their conventional counterparts, will soon be whizzing through space, too. + +The most discussed and deployed technique is called quantum-key distribution (QKD). In one set-up, a sender launches single photons toward a receiver, randomly choosing one of four planes along which the light particles are polarised, two of them associated with a 0 and the other two with a 1. The receiver likewise randomly chooses which kind of polarisation to check for. After sending a string of these bit-associated photons, the pair can publicly compare notes on which polarisations they employed; whenever they happen to have chosen the same one, the 0 or 1 associated with that polarisation can be used as a bit in a cryptographic key. + +What contributes to the system’s security is Heisenberg’s uncertainty principle, a much-touted quantum rule which, in this case, guarantees that an eavesdropper would disrupt the system’s randomness, because intercepting and measuring a given photon forces it into a given polarisation. That disturbance to the system would reduce the number of coincidences the pair sees; if there are too few (they should be seen about half the time), they know someone is on the line. + +Physics textbooks will tell you that a sufficiently long cipher, randomly generated this way and used only once, is absolutely secure. But Vlatko Vedral, of the Centre for Quantum Technologies in Singapore, says that hackers who have been invited to try to break into the centre’s quantum-communications experiments have often succeeded—not by beating quantum rules but by ruthlessly exploiting shortcomings of the kit itself. For example, storing a digital 0 generates a slightly different amount of heat from storing a 1, so careful observation of the heat being generated can expose the string of digits being received. Once discovered, such hacks are easily prevented. As time has gone on, such shortcomings have narrowed in scope, and have driven innovation. + +Thanks to the development of ever more secure links, quantum cryptography has recently been deployed more widely. ID Quantique has installed quantum links between data centres of KPN, a Dutch telecoms firm; of Battelle, an American non-profit research firm; and of Hyposwiss and Notenstein, two Swiss private banks. It offers links between financial institutions in Geneva and a disaster-recovery centre 50km away. In 2015 researchers at Toshiba in Japan began sending quantum-encrypted genomic data from a research facility in Sendai to Tohoku University, 7km away. + + + + + +But the future of the technology lies in quantum networks—the infrastructure required to connect many senders and receivers. These are springing up within and between major metropolitan areas. South Korea’s government is funding a 250km link to join existing metro quantum networks. In Britain a network of similar length will be deployed between the cities of Bristol and Cambridge, via London. Australia is building a closed government network in the capital, Canberra. + +No quantum network is more ambitious than the one completed in China at the end of last year. Funded by the central government, it links Beijing and Shanghai via Jinan, which already has a metro network over 70 square kilometres, made up of 50 “nodes”—switchboards connecting senders and receivers—and Hefei, which has a 46-node network. Its customers include China Industrial and Commercial Bank, the China Banking Regulatory Commission and the Xinhua news agency. + +Distance presents a problem. As the meticulously prepared photons with their delicate quantum states bounce along lengths of fibre, those states eventually get scrambled and their information is lost. To ensure fidelity and security, the fibre link should be no longer than about 200km. Standard fibre-optical signals suffer from the same weakening of the signal, so “repeaters” to boost it are placed at regular intervals along their path. But under the quantum rule book, unknown quantum states cannot be copied, so quantum data would need to be temporarily decrypted before receiving a boost, creating a security loophole. + +There are two ways to get round this, one by land and one by air. The land-based solution is to develop quantum analogues of the repeater. That will require a quantum memory that can store incoming information, and a means of sending them on that does not compromise quantum security. That last part requires another bit of quantum trickery: teleportation. This is a way of projecting the quantum state of one particle (not, it should be stressed, the particle itself) onto another, distant one. Last year two research groups showed the benefits of teleportation across two metropolitan networks, in Calgary and Hefei. Crucially, they carried out their experiment using the same wavelengths as those used in existing telecoms networks, to ensure that the new technique can be used with existing fibre infrastructure. It did the trick. + +Spooks reacting at a distance + +Another tack is to take to the air, over similar distances but without the need for a particular fibre link. The current record for teleportation of quantum states in this way was set in 2012, when researchers sent a quantum-encrypted message between two of the Canary islands, 143km apart. A long-standing ambition is to apply the idea to space: for a photon, the disturbance caused by the whole thickness of the Earth’s atmosphere is equivalent to that caused by just a few kilometres of air at the surface. + +Last August China launched Micius, a quantum-key-distribution-enabled satellite backed by tech companies including Huawei and Lenovo. The goal at this stage is to link the Beijing-to-Shanghai network to another in Urumqi, in Xinjiang province, some 3,000km away. Efforts to develop satellite communications are also under way in Singapore, Canada, Japan, Italy and America. Once the challenges of getting quantum signals into space—through turbulent air, clouds and so on—are overcome, a global network could easily follow. + +With country-spanning networks and quantum-enabled satellites, it is easy to envisage a global “quantum internet” in which each link offers quantum-enhanced security. But the kind of innovation that will allow the development of such networks will also be of use, for example, in shuttling information within, and between, future quantum-computing devices: think quantum distributed computing and quantum cloud computing. Just as the internet has demonstrated the power of linking many standard computers, says Seth Lloyd, a theorist at the Massachusetts Institute of Technology, “the quantum internet has the potential to change the way in which people and organisations collaborate and compete, establishing trust while protecting privacy.” + +Not everyone is convinced yet. The defence establishment seems to have been put off by some of the early setbacks to quantum links. Quantum-communications efforts are under way, for example in the research arms of America’s army and navy, but an analysis by the air force’s Scientific Advisory Board suggested that QKD had “little advantage over the best classical alternatives”. And doubters rightly point out that encryption is not the weakest link in many security chains. + +Yet as the hardware improves and heavy investment continues, quantum networks may begin to look like a strategic must-have; if so, consumer applications are likely to proliferate. The European Telecommunications Standards Institute (ETSI), which sets global benchmarks for the industry, is working to define quantum-cryptography standards. ETSI scientists want to ensure that kit from multiple vendors can work together, and to create a certification so that consumers (including spooks) are guaranteed a widely agreed level of security. Miniaturisation efforts are well under way too, so before long the equipment may fit in the palm of your hand—or in your phone. + + + + + +Cue bits: Why all eyes are on quantum computers + + + + +Tech giants and upstarts alike are piling into a technology with huge potential + +IN 1981 Richard Feynman, a visionary physicist, had a clever idea. Could the odd properties of quantum mechanics, he wondered aloud in a lecture, be used to carry out simulations of physical systems that computers of the time could not cope with? Others took up the question. In 1985, David Deutsch, now at Oxford University, showed how quantum systems could be set up as a “universal” computer—that is, like current computers, able to run any program. Though fascinating, at that point it was all rather theoretical, involving hardware that no one knew how to build. + +What made the world sit up and take notice was a paper published in 1994 by Peter Shor, then at Bell Labs. Dr Shor showed that a quantum computer would be capable of working out the prime numbers that, multiplied together, make up an exceedingly large number. The fact that this “decomposition” is mathematically very hard is the basis of cryptographic protocols still used today. + +Since then, researchers have come up with a rich variety of problems for which quantum computers should be superior to the best supercomputers—and a number of algorithms, or sets of steps, to break down problems in such a way that quantum computers can crunch through them. This evident utility started an international competition to build one that was, for many years, confined to quiet labs and the academic literature. These days, big business is seriously interested, and blue-chip companies including Intel, Hewlett-Packard, Google and Microsoft all have research programmes. Last year IBM released Quantum Experience, which lets all comers play around with a crude quantum computer over the internet. Governments too are putting money into academic efforts, both directly and via defence contractors, and a growing band of startup companies are striking out on their own. + +A computer big enough to do what Dr Shor envisaged would also be useful for all manner of currently intractable problems. Although that remains a distant prospect, steps towards developing one could have big benefits; for many applications, a much simpler or special-purpose computer will do. + +Bit by bit + +What makes the idea of quantum computers so attractive is not so much that they will work faster than traditional computers—they may for some applications but not for others—but that they will work fundamentally differently. Three intuition-defying concepts play a role. The first is superposition. Today’s computers depend on bits taking one of two values, 0 or 1. Qubits, their quantum analogues, can be arranged in “states” that are best thought of as some mixture of both 0 and 1. To carry out a computation using one of these strange beasts is to act on both the 0 and the 1, in a sense to create within the calculation the potential outcome of either at the same time. + +The power of this indeterminate state is unleashed through the second quantum-mechanical effect, entanglement. A standard computer depends on the complete isolation of one bit from the next to prevent a computation from going awry or a document from getting corrupted. For a quantum computer, the entangling of multiple qubits is paramount; in the best case, all of a given device’s bits are entangled with one another. Again, to operate on one qubit is to operate, to varying degrees, on all the entangled ones. It is therefore impossible to describe such a machine in strict terms of its constituent parts. There is a need to consider how one qubit is connected to its neighbour, and to the next-but-one, and so on through all the cross-correlations. To describe all the states of a 50-bit standard computer requires 50 bits of digital memory; a description of a 50-qubit computer would require a quadrillion. + +It gets weirder. Whereas it is easy to imagine an equation that predicts a low or even zero probability of a given event, it is much harder to reckon with what are called probability amplitudes in quantum mechanics, which can actually be negative. In the course of a quantum computer’s crunching, these amplitudes can (again like waves) interfere, positive with positive and negative with negative—in essence, to reduce the probability of the wrong answer and boost that of the right one. + +Posing a question starts with choosing an algorithm suitable for the problem. This algorithm is actually manifest as the starting states of the qubits: 0 here, 1 there, a bit of a mix over there. The calculation is then just a matter of letting quantum-mechanical laws play out on this system of superposed and entangled qubits. Changing states, shifting qubit couplings and so on represent a vast cross-multiplication of all those states and combinations, with probability amplitudes reinforcing and diminishing until the system settles into a final state that represents the answer. It is a matter of setting up the problem, and the machine, so that all the possibilities are sifted through at lightning speed. + +Efforts to make qubits often centre on the use of tiny loops of superconducting wire, arranged like the “gates” of standard computers. Single charged atoms, trapped by electric or magnetic fields, can also do the job; in February an international consortium of researchers published an open-source blueprint for a trapped-ion machine. Several groups use single photons as qubits—an approach that looks easy to integrate with existing semiconductor-fabrication techniques. Microsoft’s planned “topological” quantum computer uses something else entirely: “anyons”, particles that would be more easily tamed than other qubit candidates but which have never been seen outside the pages of theoretical physics textbooks. + +Setting up a qubit is no longer difficult. The problem is looking after it. Quantum states are notoriously delicate, requiring complete isolation from the actual stuff of the experiment. But isolation can never be complete, and errors creep in; for a calculation to succeed these must be noticed and corrected. It has become clear that as computers scale up, the number of logical qubits (the ones actually doing the calculation) will be dwarfed by an “overhead” of perhaps thousands of times as many error-correcting and command-and-control qubits. The kind of machine required to implement Shor’s famed algorithm on the sort of large numbers used in encryption will need to contain something like a million qubits. + +Such machines will, to put it mildly, be an engineering challenge. But in a clear indication that quantum computing is getting closer, names familiar from traditional computing are increasingly getting involved. Hewlett-Packard is trying to build its own machine. Intel’s global quantum investments include $50m going into work at QuTech, the Netherlands’ national quantum-technology hub. Microsoft’s topological quantum approach, if it works, will be much less error-prone. The quantum-computing startup scene is also becoming increasingly vibrant. Researchers from Yale and the University of Maryland have spun off companies, and physicists who had worked at IBM and America’s Department of Energy have started their own firms. + +Governments are getting in on the action too. Australia’s has invested A$26m ($20m) in a laboratory at the University of New South Wales in Sydney (and the Commonwealth Bank of Australia and Telstra, a telecoms firm, have together chipped in about the same amount). A lab at the University of Sydney down the road is being funded as part of LogiQ, a programme of the Intelligence Advanced Research Projects Activity, an American government defence outfit. Leaked documents have revealed that America’s National Security Agency has been exploring “if a cryptologically useful quantum computer can be built”. Experts now reckon it can. But when? + +Simulating discussion + +Very few in the field think it will take less than a decade, and many say far longer. But the time for investment, all agree, is now—because even the smaller and less capable machines that will soon be engineered will have the potential to earn revenue. Already, startups and consulting firms are springing up to match prospective small quantum computers to problems faced in sectors including quantitative finance, drug discovery and oil and gas. + +Perhaps the most interesting early applications will take the form of “quantum simulators”: computers that mimic real physical systems. This is what Feynman had in mind, imagining in his lecture “that the computer will do exactly the same as nature”. Quantum simulators might help in the design of room-temperature superconductors allowing electricity to be transmitted without losses, or with investigating the nitrogenase reaction used to make most of the world’s fertiliser. + +Quantum simulation has its fans in industry, too. Michael Bolle at Bosch foresees using simulators to design batteries that will supersede the current lithium-ion technology. Paolo Bianco, who heads the quantum-technology research team at Airbus, a big European aerospace firm, says that quantum-simulating a new material such as a stiffer or lighter alloy for use in aeroplanes or satellites would be much faster and cheaper than manufacturing and then testing the material itself. “The promise of quantum technologies”, he says, “is in engineering terms a step up in performance—not of 20%, but of a couple of orders of magnitude.” + +For some applications and classes of problems that may well be true. But the experience of D-Wave Systems, a Canadian company that began selling the first commercially available quantum computer in 2011, shows how little is known about what future machines will be able to do. D-Wave makes what is known as a quantum annealer, a special-purpose quantum computer (as opposed to a universal one) that works best on “optimisation” problems, such as finding the shortest possible route for a travelling salesman. The firm’s customers include Lockheed Martin and a consortium including Google and NASA. In January Temporal Defense Systems, a cyber-security firm, bought one. + + + +For years experts questioned whether the devices were actually exploiting quantum mechanics and whether they worked better than traditional computers. Those questions have since been conclusively answered—yes, and sometimes—but only by exhaustively testing the machines’ mettle directly. The current best supercomputers are able to simulate only what more general-purpose quantum computers of about 50 qubits can do. Tantalisingly, it is difficult to tell at what problems bigger machines will excel. + +Google is aiming to use its own machinery, a so-called gate-model quantum computer of the sort most groups are pursuing, to achieve “quantum supremacy”, whereby a quantum computer performs a calculation faster than any known computer could. Google researchers have laid out an ambitious plan which may let them achieve that feat this year. D-Wave has hinted it has already done so, but has made similar claims in the past; their current numbers are still to be checked. + +Whenever, and by whomever, this is accomplished, it will launch an era of small-scale machines offering quantum-enhanced solutions and services. The first publicly accessible one, IBM’s Quantum Experience, may be an indication that the machines’ future will be in the cloud. Most users have no more need for one at home than they have for a supercomputer. + +But some do. In 1982, a year after Feynman gave his quantum-computing lecture, he was touring the supercomputer facility at Los Alamos National Laboratory, where he had worked on the first atomic bomb. Talking to Bo Ewald, then in charge of the lab’s computing efforts and now running D-Wave, Feynman said, “You know, young man, one day all of these will be replaced by quantum computers.” One has already moved in. + + + + + +Software: Program management + + + + +Quantum-computer code could do wonders—but also unravel well-kept secrets + +IT DOESN’T help to have a quantum computer if no one knows how to program it,” says Tim Polk, of the White House Office of Science and Technology Policy in Washington. Although academic efforts to build quantum-computer hardware have been going on for two decades, comparatively little has been done to develop the software needed to run the machines when they come. + +That is changing, because in the past few years it has become clear that those machines are getting closer. Two parallel efforts are under way. One is to create software as generally understood—the graphical interfaces, programming languages and so on, a kind of “Windows for quantum”. The other is to develop novel algorithms, step-by-step instructions that break down problems into discrete parts amenable to quantum computing. + +Innovation abounds in both camps, and among big tech firms as well as plucky startups. Some big players are working on both sides of the problem, and a growing ecosystem of quantum-friendly consultancies advises companies on what quantum computing might do for them. + +“Machine” language for quantum computers, which actually tells the computer what to do, is fairly well understood. It is not so different from the logic gates of standard computing, except that it allows for “superpositions” of qubits in which they can be both 0 and 1 at the same time. But how to write computer code to interact with such a machine, or to simulate what it can do? Options are multiplying, including open-source software packages such as QuTip, funded by a number of research outfits in Asia. On March 6th IBM released the first commercial program for universal quantum computers (the general-purpose kind). And various startups have released their own quantum software. + +One of the most ambitious, LIQUi|> (whose name plays on a symbol in quantum mechanics), comes from Microsoft. It aims to tackle the whole “software stack”, from the user interface to code-compilers and ultimately to a machine language suitable for Microsoft’s planned hardware, and that of others. + +Krysta Svore, who leads Microsoft’s quantum-software team, says that the group is also working on reducing the total number of qubits and operations required for quantum calculations, known as “overhead”, and on making standard computers better at emulating quantum ones (the group recently hired a world expert in that field, Matthias Troyer). The team’s full-scale simulation of a 32-qubit computer requires 32 gigabytes of memory, more than the average desktop can muster but still manageable. + +Dr Svore and her colleagues are also making estimates of how many qubits, and minutes, would be needed to crack specific problems. She says the numbers are “down dramatically”, thanks to recent improvements in keeping qubits under tighter control. For example, she reckons that a thorough analysis of the energy-intensive nitrogenase reaction to make fertiliser would take a 100-logical-qubit quantum computer hours or perhaps days, whereas a conventional supercomputer would need billions of years. The prize might be a cut of 1-2% in global natural-gas consumption. + +But the key to getting the most out of quantum computers are the algorithms that these various software packages implement. The first of them, including the one by Peter Shor that showed how quantum computers could crack global encryption systems, tested the theoretical idea by aiming at the most intractable problems on the biggest notional machines. + +Even deeper learning + +These days, says Aram Harrow of the Massachusetts Institute of Technology, the focus has shifted to algorithms that smaller machines can make use of, because that kind of hardware will soon be widely available. “We’re still interested in what you can do with a million or a billion qubits, but it’s interesting to see if you can figure out what you can do with 100,” he says. + +A lot, it seems. One of the most promising areas is in machine learning and deep learning, two facets of artificial intelligence that have attracted much attention recently. Applications include searching through vast swathes of data to find patterns, such as in image recognition, cyber-security and, more prosaically, recommendation engines that suggest products consumers might like. But there are all manner of other algorithms, from those that crunch numbers to those that mimic atoms. + +All these quantum recipes call for some means of cataloguing them. Stephen Jordan heads the Quantum Algorithm Zoo at the National Institute of Standards and Technology in Maryland, a comprehensive collection of known algorithms. He has devised a taxonomy of 59 mathematical families they fit into, each suited to particular kinds of problems or breaking down problems in a particular, quantum-friendly way. + +Many such algorithms, when run on existing special-purpose machines or as emulations on standard computers, fail to beat their “classical” counterparts. Vlatko Vedral, of the National University of Singapore’s Centre for Quantum Technologies, stresses that traditional techniques, particularly for quantum-chemistry problems like the nitrogenase reaction, are already quite sophisticated. The trouble is that no beefy general-purpose quantum computer exists as yet, so no one knows whether a given algorithm run on one would beat its classical counterpart. At the same time, astonishingly efficient algorithms suited to quantum computing are waiting to be discovered. + +Those 59 families of algorithms, and ever-better emulators for eventual machines, are an excellent starting point for planning the quantum-computing future, and nowhere is interest greater than in finance. Commonwealth Bank of Australia is getting in early, collaborating closely with a research group led by Michelle Simmons at the University of New South Wales. D-Wave has partnered with 1Qbit, a startup, to develop “Quantum for Quants”, a forum for the quantitative-finance industry. Its editors include Michael Sotiropoulos, head of global equities at Deutsche Bank. UBS, a big Swiss bank, is working with QxBranch, another startup, on using quantum algorithms in foreign-exchange trading and arbitrage. Hyder Jaffrey, head of Strategic Investments and Fintech Innovation at UBS, says he puts quantum computing in the same category as artificial intelligence and blockchains, “all stuff with the potential to change markets”. + +Banking on it + +Companies such as QxBranch and 1Qbit play a new role of middleman between the quantum experts and industry, examining whether and how a given firm’s business might be improved by quantum methods, for example optimising trading strategies or supply chains, or monitoring network activity to spot cyber-attacks. Landon Downs, a co-founder of 1Qbit, says that can lead to solutions which can already be put to use. “By taking the lens of how you would formulate an algorithm on a quantum computer you often find very good improvements on classical algorithms,” he says. “That’s where lots of our successes come from.” + +The biggest benefit is expected to come from quantum-computing hardware once it arrives, so much of this business depends on simulating that hardware on standard machines as accurately as possible. Michael Brett, chief executive of QxBranch, says the idea is that “some Tuesday morning when one becomes available we just swap out our simulation for the real hardware.” + +Even as all these computer scientists and consultants are working on software for the quantum future, a handful of others are working on software to combat it. After all, what got researchers going in the first place was the fear that global encryption standards would crumble in the face of quantum computing. That remains a danger for the future, and retrospectively perhaps even for the present, if encrypted communications filed away now are analysed by powerful quantum computers later. That is the idea behind post-quantum cryptography, an effort to create ciphers that even future quantum computers will be unable to crack. + +PQCRYPTO is a three-year, European-funded project to develop post-quantum ciphers. Its goal is not to find the most mathematically gnarly way of encrypting data, but rather to identify one that is sufficiently difficult to break without needing too much memory or computation to implement. RSA, a current global standard, could be made hard enough to break, but the cryptographic keys would have to be a terabyte long—an impracticable option. Keys for elliptic-curve cryptography, another current standard, are just 32 bytes long; any post-quantum solution needs to aim for a similar ratio of brevity to security. + +Tanja Lange, who leads the project, says that post-quantum efforts are now attracting a lot of attention, particularly from nervous Silicon Valley outfits. In 2015 America’s National Security Agency said it would be updating all its cryptography to make it quantum-computer-proof. Last year Google quietly ran its own post-quantum cryptography test in Chrome, its web browser. Some of its users’ communications were protected both with elliptic-curve encryption and New Hope, a post-quantum protocol developed as part of PQCRYPTO. The median delay added to those communications turned out to be just a millisecond. + +“The power of quantum computing is rediscovering all the problems that computers cannot solve, and having a path to solving them,” says Dario Gil, vice-president of science and solutions at IBM. “It’s a reorientation of what we think about computers.” But a device capable of solving big problems will create new ones if it can unravel protocols that have protected secrets for decades. + + + + + +Commercial breaks: The uses of quantum technology + + + + +The most exciting thing about a quantum-enhanced world is the promise of what it may yet bring + +WHEN the first atomic clocks were built and swiftly commercialised, no one used the term “quantum technology”. The clocks simply harnessed the power of quantum mechanics to improve results. At the time there were no other examples of how the odd predictions of quantum mechanics such as entanglement and superposition could be put to practical use. Mostly they informed fundamental science, yielding an ever-subtler view of the world at the tiniest scales. + +Here and there, quantum weirdness did escape the lab, as in the case of the superconducting quantum interference device, an exquisitely sensitive magnetic-field sensor. The first of these was developed in 1964 at Ford Research Laboratory, the American carmaker’s blue-skies research facility. Now they are widely used, for example in MRI machines. In the early 1980s researchers at IBM turned the quantum effect of tunnelling, in which particles seem to pass straight through impenetrable barriers, into a way to see the microscopic world with staggering resolution. + +The current quantum-technology push is on a far grander scale, with multiple research efforts being funded by national governments and supranational bodies, sometimes for strategic reasons. Freeke Heijman has led efforts to build QuTech, the quantum-technology institute of the Netherlands. “We don’t want to risk the scenario that we have invested all this money for years and in the end the money is going to be made in the US or China,” she says. And in the case of defence applications, she says security plays a role too: “If you have to buy it off the shelf, it’s not just an economic disadvantage, it’s also dangerous.” + +But quantum technologies will not pass into the wider world in the same way as the global positioning system, which was developed with copious government funding behind closed doors and then handed over as a public good. “It’s just not like that today,” says Neil Stansfield, formerly of the British government’s Defence Science and Technology Laboratory. “We’re not the big kid on the government block, and certainly not on the global block.” + +That leaves business to step into the breach. But Trevor Cross, chief technology officer of E2v, a British company whose detectors brought the world pictures from the Hubble Space Telescope and which is now doing pioneering work for quantum devices, says that quantum technologies are still viewed by many industries as risky. That may be because many of the approaches are technologically so far beyond the current state of the art. Richard Murray, an emerging-technologies expert at Innovate UK, Britain’s technology-strategy agency, says that the more transformative the technological change, the easier it is to miss opportunities. + +Material evidence + +The opportunities are many, because at the level of components these technologies are intimately connected. Many of them depend, for example, on light sources that can spit out photons one at a time, every time, and detectors that can just as unfailingly catch just one—no small feat, considering that a 60-watt bulb is putting out 100,000,000,000,000,000,000 or so of them every second. This kind of kit was unimaginable a decade ago. + +New materials, and precisely engineered versions of existing ones, will be needed too. Element Six, a subsidiary of De Beers, a diamond giant, has carved out a niche selling diamonds with bespoke “nitrogen vacancies”—flaws that turn them into sensors. Silicon carbide is tipped to be just as quantum-amenable as those diamonds, but so far expertise with it is thin on the ground. + +New alliances will be forged as the work on materials intensifies. Intel aims to build qubits into silicon, in order to piggyback on existing fabrication infrastructure. But that will require the material to be produced to a much higher purity. To that end, Intel has joined forces with Urenco and Air Liquide, two materials firms. + +Michael Bolle at Bosch, the multinational engineering firm, envisages a seamless coming together of these diverse approaches in applications such as autonomous vehicles or the internet of things: quantum sensors to gather sensitive readings, quantum cryptography to transmit them securely and quantum computing to gather insights from the resulting copious streams of data. + + + +Many practitioners believe that the applications and technologies outlined in this report are just the beginning. As they become more familiar, they will give rise to new applications and wholly new hardware. Subjects that used to be mere footnotes to physics will rule, and engineers (and perhaps even consumers) will have to learn to speak quantum. + +Yet some innovators may find themselves stymied. “The question is to what extent will export controls on these technologies become an issue, particularly if any of it has some defence potential,” says Stephen Ezell, of the Information Technology and Innovation Foundation, an American think-tank. Tech firms such as Intel and IBM have had trouble exporting parts and computers to countries like China, he says. + +Such challenges aside, what is exciting about these efforts is how much is simply not known about their future. Bob Wisnieff, a manager at IBM’s microelectronics-research labs, says that “we’re not that far from being capable…of building quantum computers that will do things we cannot predict exactly.” John Preskill, a quantum expert at the California Institute of Technology, who coined the phrase “quantum supremacy”, has said that “a quantum computer can simulate efficiently any physical process that occurs in nature. Maybe. We don’t actually know for sure.” + +That brings the potential of quantum technologies full circle, to the fundamental-science considerations from which they were born. Quantum computers and simulators should eventually be capable of solving some of science’s most basic and yet most daunting questions. Sensors of unparalleled precision may at last make it possible to test the predictions of physicists’ most abstract ideas, perhaps linking the theories of quantum mechanics and gravity. + +“We certainly expect there are many additional things that we’ll be able to do with quantum beyond the things we know of,” says Tim Polk of the White House Office of Science and Technology Policy. “We had no idea of all the things we’d be able to build with the transistor, and we see the same thing with quantum.” + +In addition to those named in the text, the author would particularly like to thank: Scott Aaronson, John Bagshaw, Dan Bernstein, Kai Bongs, Altaf Carim, Adam Davison, Marc de Jong, Iulia Georgescu, Aram Harrow, Ray Johnson, David Kaiser, Leon Lobo, Graeme Malcolm, Mike Mayberry, Jian-Wei Pan, Martin Plenio, Dilan Rajasingham, John Rarity, Tanya Reeves, Andrew Shields, Marie Skelton, Tim Spiller, Andrea Taroni and Qiang Zhang. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21718312/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Business + + +The mining business: The richest seam [Fri, 10 Mar 04:34] + +Tech IPOs: Oh, Snap! [Fri, 10 Mar 04:34] + +PSA buys Opel: Used carmaker [Fri, 10 Mar 04:34] + +Railways: The whistle’s blowing [Fri, 10 Mar 04:34] + +Rise of the micro-multinational: Chinese and overseas [Fri, 10 Mar 04:34] + +New production technologies: Recasting steel [Fri, 10 Mar 04:34] + +Schumpeter: Jiopolitics [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The richest seam + +Mining companies have dug themselves out of a hole + + +Electric vehicles and batteries are expected to create huge demand for copper and cobalt + + + + + +From the print edition | Business + + +Mar 11th 2017 + + + + + +FOR mining investors there is something sinfully alluring about Glencore, an Anglo-Swiss metals conglomerate. It is the world’s biggest exporter of coal, a singularly unfashionable commodity. It goes where others fear to tread, such as the Democratic Republic of Congo (DRC), which has an unsavoury reputation for violence and corruption. It recently navigated sanctions against Russia to strike a deal with Rosneft, the country’s oil champion. + +Yet Glencore could still acquire a halo for itself. It is one of the world’s biggest suppliers of copper and the biggest of cobalt, much of which comes from its investment in the DRC. These are vital ingredients for clean-tech products and industries, notably electric vehicles (EVs) and batteries. + + + + + +The potential of “green” metals and minerals, which along with copper and cobalt include nickel, lithium and graphite, is adding to renewed excitement about investing in mining firms as they emerge from the wreckage of a $1trn splurge of over-investment during the China-led commodities supercycle, which began in the early 2000s. The most bullish argue that clean energy could be an even bigger source of demand than China has been in the past 15 years or so. + +Optimism about the mining industry is a remarkable turnaround in itself. In the past four years the business has endured a slump that Sanford C. Bernstein, a research firm, judges to have been as deep as in the Depression. In 2014-15 the four biggest London-listed miners—BHP Billiton, Rio Tinto, Glencore and Anglo American—lost almost $20bn of core earnings, or EBITDA, as commodities plunged. Glencore, which was hit hardest, scrapped its dividend and issued shares to rescue its balance-sheet. + +Commodity valuations rebounded last year, and again led by Glencore, mining-company share prices rallied. Recent results show that the four biggest firms not only swung from huge losses to profits but also cut net debt by almost $25bn in 2016. BHP and Rio made unexpectedly large payouts to shareholders. Ivan Glasenberg, Glencore’s tough-talking boss, says the company is now in its strongest financial position in 30 years. “What a difference a year makes,” he exclaims. + +Underpinning the turnaround have been curbs on supply—both voluntary, to push up commodity prices, and involuntary, such as strikes and stoppages. Capital expenditure has fallen by over two-thirds since 2013 (see chart). All the firms are reluctant to embark on big new mining projects. Mr Glasenberg says the industry’s pipeline of new copper projects, for example, is shorter than it was before the China boom. Rio’s giant Oyu Tolgoi copper site in Mongolia’s Gobi Desert is a rare exception. The main focus at all the mining firms is on rebuilding balance-sheets and rewarding shareholders who kept the faith. + + + +Even as they promise capital discipline, however, demand for green metals and minerals is tempting them to spend. Last year BHP declared that 2017 could be the year “when the electric-car revolution really gets started”. A recent surge in the prices of battery ingredients, such as copper, cobalt and lithium, has added to the excitement. China, the world’s biggest manufacturer of EVs, is gobbling up supplies. In November China Molybdenum, which is listed in Shanghai, became the majority owner of Tenke Fungurume, a vast copper and cobalt mine in the DRC. Tellingly, the price of platinum, which is used in catalytic converters in internal combustion engines, has lagged behind. + +BHP, which has looked closely at EV-related demand, estimates that an average battery-powered EV will contain 80 kilograms of copper, four times as much as an internal-combustion engine. This is split between the engine (the largest share), the battery and the wiring harness. It forecasts that by 2035 there could be 140m EVs on the road (8% of the global fleet), versus 1m today. Manufacturing them could require at least 8.5m tonnes a year of additional copper, or about a third extra on top of today’s total global copper demand. + +According to Sanford C. Bernstein, which uses a bold estimate that almost all new cars will be electric by 2035, global copper supplies would need to double to meet demand by then. Finding and digging up all the metals that stand to benefit, plus new smelting and refining capacity, could require up to $1trn in new investment by mining companies, it says. Hunter Hillcoat of Investec, a bank, says the transition could require the addition of a copper mine the size of Chile’s Escondida, the world’s biggest, every year. + +Therein lies the rub. By one estimate, it takes at least 30 years to go from finding copper deposits to producing the metal from them at scale. Some of the big ones in operation today were discovered in the 1920s. Because of declining ore grades, community resistance, lack of water and other factors, copper supply will be overtaken by demand in the next year or two. But prices would have to rise considerably to spur the necessary investment in mines. + +Sharply higher prices for copper could, however, spur the search for alternative battery and EV materials such as aluminium. When prices of nickel, an additive in stainless steel, soared a decade ago, stainless-steel manufacturers found ways to make products less nickel-dependent. + +Another difficulty in supplying a future electric-vehicle revolution is the often inhospitable location of some of the most promising minerals. Cobalt, for instance, is a by-product of copper and nickel. Total volumes are about 100,000 tonnes, and about 70% lies in the DRC. Unregulated artisanal miners produce a lot of it, which has led to worries about “conflict cobalt”. + +Indeed, the DRC is likely to be the main source of many of the minerals needed for EVs and batteries. Paul Gait of Sanford C. Bernstein calls it the Saudi Arabia of the EV boom, referring to the kingdom’s role in oil markets. But firms such as BHP and Rio are thought to be reluctant to invest there because of concerns about the country’s stability, transparency and governance. + +In the short term the mining industry remains gun-shy about new investments. As Glencore’s Mr Glasenberg notes, it has been fooled before by estimates that demand for copper will double—the latest such misjudgment came as recently as 2008. The very biggest firms, BHP and Rio, have an additional reason to hesitate before splurging on battery materials. Their cash cows are iron ore and coking coal, the raw materials of steel, which are used more heavily in petrol and diesel engines than in EVs. BHP also produces oil, demand for which could one day be affected by battery-powered vehicles. Anglo American has a large platinum and palladium business, feeding demand for diesel and petrol catalytic converters. + +All the firms insist that such diverse mineral exposures in fact provide them with a “hedge” whichever way the vehicle fleet develops (though they play up the copper in their portfolio as possibly the best bet of all). Rio is unique among them in also having a lithium-borate project, in Serbia, which it is developing as an option on a batteries boom. + +For an unhedged bet, it may be small miners such as Canada-based Ivanhoe that are best placed for a surge in EVs and batteries. Ivanhoe recently said it planned to develop the Kamoa-Kakula deposit in the DRC (pictured on previous page), which it calls the biggest copper discovery ever, containing the highest-grade copper that the world’s big mines produce. Zijin, a Chinese miner, sees the same opportunity and is paying Ivanhoe $412m for half of its majority stake in Kamoa-Kakula. Ivanhoe’s founder, billionaire Robert Friedland, speaks of the metal as the king of them all. “Based on world ecological and environmental problems,” he says, “every single solution drives you to copper.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718532-electric-vehicles-and-batteries-are-expected-create-huge-demand-copper-and-cobalt-mining/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Oh, Snap! + +A volatile start for shares in Snap + + +Billions quickly disappeared from its market capitalisation + + + + + +From the print edition | Business + + +Mar 11th 2017 | SAN FRANCISCO + + + + + +WHEN Snap, the parent company of Snapchat, an app popular among teenagers for its disappearing messages, staged a public offering on March 2nd, Evan Spiegel, its 26-year-old boss, became a self-made billionaire. (Only John Collison of Stripe, an online payments startup, rivals him for such youthful tycoonery). Whether public-market investors will strike it rich remains to be seen. In its first day of trading Snap’s shares rose by 44%; they have since fallen by 16% from their peak, meaning around $5bn of market value vanished in days. + +The volatility will probably continue. Optimists reckon that Snap’s market value could increase more than fourfold from around $26bn today as it adds users and advertisers. Very few large internet companies have gone public recently, which gives it tremendous scarcity value, says Roger Ehrenberg of IA Ventures, an early-stage investment firm. + + + + + +But sceptics are growing in number. Every analyst who has started covering Snap’s stock has issued a negative rating. They question its high valuation and underline all the challenges. Snap’s growth has slowed in recent months. Its total addressable market is estimated to be 80% smaller than that of Facebook, a social network, and it already has 50% penetration among its potential user base in America, reckons Laura Martin of Needham, an investment bank. + +Snap also has an unconventional structure that gives shareholders virtually no power. This week it emerged that a group of large institutional investors had lobbied stock-index providers such as MSCI not to include Snap in their benchmarks for that reason. That will not directly affect share-price performance yet, but being viewed as an outlier on corporate governance does not help. + +Analysts have also drawn attention to Snap’s losses. These could well rise from $515m last year to a whopping $3.7bn in 2017, according to Pivotal Research Group, a research firm. And that does not include huge stock grants to employees. In 2016 Snap had stock-based compensation expenses of around $1.7bn, or roughly $1.4m per employee, compared with Facebook’s average of $230,000 and Google’s $144,000 per employee. These grants dilute investors. + +Before the offering, hopes had been high that Snap would spark a wave of public offerings by tech startups. Even if its shares sink further, many of them could still choose to go public, especially enterprise-software firms, which sell IT tools to other businesses. Their revenues are more reliable than those of Snap. One software company, MuleSoft, is likely to go public next week. Such companies do not attract the relentless public scrutiny that Snap and other tech stars do. Increasingly, that looks enviable. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718537-billions-quickly-disappeared-its-market-capitalisation-volatile-start-shares-snap/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Used carmaker + +A deal sparks talk of car-industry mega-mergers + + +PSA buys Opel as GM exits Europe + + + + + +From the print edition | Business + + +Mar 11th 2017 | GENEVA + + + + + +THE Peugeot 3008, a striking SUV, was voted European car of the year on March 6th, the eve of the opening of the Geneva motor show, an annual industry shindig. PSA Group, the maker of Peugeots and Citroëns, would doubtless view it as the second prize it scooped that day. News also came that the French carmaker was buying Opel (branded as Vauxhall in Britain), the European operation of America’s General Motors (GM). Few of the car-industry experts at the show, however, would call Opel a trophy. + +The consensus was that GM was right to rid itself of a business that had lost money for 16 years straight. Opel has around 6% of the European market; that makes it too small and inefficient in a business where scale is key. It has been confined mostly to Europe for three reasons: the particular tastes of the region’s car buyers (for instance, for small diesel cars); tighter emissions regulations outside Europe; and GM’s fear of taking sales from its other brands further afield. The result has been to leave it boxed in and isolated. + + + + + +Shorn of Opel, the American firm can redirect investment to China and America, where its profit margins are healthy, and to technologies such as autonomous cars and ride-sharing schemes. That bucks the conventional car-industry wisdom of gaining market share whenever you can. One insider questions whether GM is as committed to carmaking as it is to the technologies that will underpin mobility in future. + +PSA’s adherence to carmaking is not in question. Buying Opel will propel it to second place in Europe with 16% of the market, overtaking Renault but behind Volkswagen (VW). But why Carlos Tavares, the firm’s chief executive, wants to stake his reputation on a full revival of Opel is less clear. Executives from a rival European carmaker suggest that revenge might be part of his motivation. Leapfrogging Renault may be satisfying for Mr Tavares, since its chairman, Carlos Ghosn, sacked him as number two in 2013 after he expressed a desire to run a big carmaker. + +After that, Mr Tavares turned PSA around from a state of near-bankruptcy to solid profitability in under four years. If he could do the same with Opel his credentials would soar higher. Yet the cost-cutting that helped PSA will be hard to repeat. + +Mr Tavares did at least get a good price—just €1.3bn ($1.4bn) for Opel and less than €1m for its finance arm. GM will still be responsible for massive pensions obligations. Mr Tavares reckons he can eventually save €1.7bn a year through economies of scale and other synergies. But most of the efficiency gains at PSA came from layoffs. Similar cuts at Opel will be much harder. Even if he can close factories, such as those in Britain, where labour laws are more flexible than in Germany and France, his plan to reinvent Opel as a brand suffused with German engineering prowess (and to fulfil PSA’s dreams of exporting beyond Europe) will probably depend on keeping thousands of workers employed in Germany. + +The biggest headache for the combined company will be its over-reliance on Europe, which will account for over 70% of sales. Recent rapid growth in car sales in Europe is now slowing. And Europe is the world’s most competitive market: for mass-market carmakers, profits are much harder to eke out than elsewhere. + +Whether or not Mr Tavares makes a success of the deal, it has given the car crowd a chance to speculate about further consolidation in the industry. One popular theory is that getting rid of Opel would eliminate GM’s overlap with Fiat Chrysler Automobile in Europe (FCA’s chairman, John Elkann, sits on the board of The Economist’s parent company). That in turn could open the way for a mega-merger. Sergio Marchionne, FCA’s boss, has long hoped to combine with GM to tackle what he sees as the industry’s needless duplication of investment—even if nowadays Mr Marchionne is talking more about merging with VW, which is still struggling to move on from its emissions-cheating scandal. It remains to be seen whether other car bosses share Mr Tavares’s appetite for an adventurous transaction. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718533-psa-buys-opel-gm-exits-europe-deal-sparks-talk-car-industry-mega-mergers/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +All aboard + +Can a railway legend deliver at America’s CSX? + + +Harrison Hunter’s precision-railroading method requires trains that run on time + + + + + +From the print edition | Business + + +Mar 11th 2017 | OTTAWA + + + + + +E. HUNTER HARRISON, a veteran railway executive, tried retiring in 2010, after he made Canadian National (CN), a formerly state-owned company, the best-performing of the large railways in North America. But once he pocketed the gold watch and attended the retirement party he faced a void that raising and training horses for showjumping did not fill. By mid-2012 he was back at the helm of another railway, Canadian Pacific (CP), whose glory days were long past. Once he had turned around CP, he didn’t make the same mistake again. On January 18th the 72-year-old Tennesseean both announced his departure and entered negotiations with Florida-based CSX to become that railway’s CEO. + +Just the rumour that Mr Harrison might be moving to CSX caused the share price to rise by 23% in 24 hours. It continued to rise when the negotiations became public. At last, on March 6th, CSX appointed Mr Harrison as CEO and met the condition set by Mantle Ridge, an activist hedge fund with which he has partnered, to name five new board directors. Mr Harrison made long-term shareholders in CP and CN rich, tripling profits at both during his tenures. CSX shareholders expect the same. + + + + + +Will he deliver? CSX is different from the railways Mr Harrison has run in the past. Its 21,000-mile network is concentrated, spaghetti-like, in heavily-populated eastern America, unlike the linear, continent-spanning networks of roughly similar total length that are operated by CN and CP. And he faces two new and potentially damaging headwinds: the decline of coal, a mainstay of railway-freight volumes; and Donald Trump’s views on trade. Both could seriously disrupt business on North American railways. + +Mr Harrison certainly knows the industry inside and out. He reportedly started out lubricating the undercarriage of railcars for $1.50 an hour and worked his way up at Burlington Northern before leaving to work for Illinois Central. He joined CN when it bought Illinois Central in 1998. Along the way he became an evangelist for precision railroading, his concept that freight trains should run on a strict schedule regardless of whether they are near-empty or full. This went against the prevailing trend of adding more locomotives and cars and leaving their schedules flexible. Operating fewer trains, but on time, Mr Harrison showed, meant greater efficiency and better service for customers, who know when their shipments will arrive. + +Another part of precision railroading is ditching old equipment and slashing staff. Mr Harrison retired 700 locomotives, or two-fifths of the fleet, at CP; about 6,000 of 20,000 jobs disappeared, largely through attrition. This earned him the ire of some unions, which also questioned the impact on safety of time-saving measures like allowing staff to jump on and off (slow-)moving trains or insisting that managers drive trains if no other staff were available. This reduced some managers to tears, says a former employee: “They weren’t afraid of driving the train, they were afraid of crashing it.” Mr Harrison thought the hands-on experience would help them do their desk jobs better. + +CSX is in better shape than either of his previous two charges. CN was government-owned until 1995 and was hobbled by bureaucracy. CP, created to tie Canada together with a line extending to the west coast, was the laggard among the big North American railways when Mr Harrison arrived. Its operating ratio (operating expenses as a percentage of revenues) was 81.3 at the end of 2011. By 2016 it had been driven down to around 60, although some people quibble that one-off sales may have flattered the ratio. CSX had an operating ratio of 69.4 in 2016, and is already making many of the moves Mr Harrison has used elsewhere, like increasing the ratio of cars to locomotives and cutting staff. + +As for coal, revenues from the commodity fell by nearly $2bn to $1.7bn between 2011 and 2016. Further falls are expected. The main replacement as a source of revenue is intermodal container freight carrying all manner of goods. Here Mr Trump is a problem. His proposed renegotiation of the North American Free-Trade Agreement (NAFTA) is creating alarm in the industry. Re-imposing borders in the North American market would have a “tremendously negative effect”, says William Vantuono, editor-in-chief of RailwayAge. + +Accepting the job, Mr Harrison confirmed that he will bring precision railroading to CSX. Might he have grander ambitions? Mr Vantuono believes that his ultimate goal is to arrange one of the mergers that eluded him in the past and to create a transcontinental railway. Others think he just wants to show—again—that his way is the right way. “There isn’t a railroad that Hunter Harrison couldn’t improve,” says Anthony Hatch, a New York-based analyst. But it will be difficult to repeat his previous successes or to match sky-high shareholder expectations. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718551-harrison-hunters-precision-railroading-method-requires-trains-run-time-can-railway/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Young, Chinese and overseas + +Chinese startups push into foreign markets + + +Firms such as Ehang and Musical.ly are discovering more opportunities abroad than at home + + + + + +From the print edition | Business + + +Mar 9th 2017 | GUANGZHOU + + + + + +ON THE outskirts of Guangzhou, a city in southern China, lies an abandoned park filled with crumbling replicas of the wonders of the world. To the right are fading golden spires that are meant to represent Angkor Wat, a temple in Cambodia. On the left, a row of dusty Egyptian statues towers over a desolate Greek amphitheatre. Adding to the surrealism, the tops of the trees have been lopped off and a buzzing noise fills the night air. + +This strange place is the testing ground for EHang, a Chinese startup that makes drones. (The treetops were chopped off, an employee explains, because drones kept crashing into them.) Hu Huazhi, EHang’s founder, is beaming. His firm has just set a world record for a drone-swarm light show in Guangzhou, where it flew a thousand small drones in perfect unison. Next it plans to launch an autonomous flying-taxi service with a giant drone big enough to take a person (pictured). Dubai has just signed a deal with EHang to launch drone taxis this summer. + + + + + +EHang is an example of a new kind of Chinese firm, labelled “micro-multinationals” by some. In the past, Chinese consumer-goods firms focused on the home market; startups were particularly inward-looking. The rare exceptions to this rule—firms like Lenovo, Haier and Huawei—were giant technology companies with deep pockets. That made sense: the mainland economy was growing at double-digit rates and China’s rising middle classes were eager for new products. Marketing and distribution were easier to get right on the mainland than overseas. + +But times are changing: more Chinese startups want to go global from the start. Often founders are mainlanders who have worked or studied abroad. In some cases, says Benjamin Joffe of Hax, a hardware “accelerator” in Shenzhen, the startups may have little choice but to widen their horizons. Their products may simply be too innovative and expensive for China’s frugal consumers. + +One such firm is Makeblock, a startup based in Shenzhen that sells do-it-yourself robot kits. Jasen Wang, its founder, says he went “global” from day one. His firm has quickly entered developed markets. Foreign sales (including to such big retailers as America’s Radio Shack) make up nearly three-quarters of the firm’s total revenues. + +The fact that the mobile internet is particularly advanced in China means the mainland can throw up truly inventive new business models, says Shi Yi, a serial entrepreneur. DotC United, his company, looks for models on the mainland and then adapts them for foreign markets. “We are like Rocket Internet, but in reverse,” he declares, referring to a German e-commerce conglomerate that takes business models from advanced markets and adapts them for developing ones. For example, Wifi Master Key is a Chinese sharing-economy app that lists details of private and public wifi networks around the world. Swift WiFi, Mr Shi’s homage to it, now has over 150m users in 50 countries. + +Musical.ly is another micro-multinational. Valued at about $500m, it is one of the most fashionable apps among Western youngsters. More than 100m teenagers use it to share short videos of themselves lip-synching to popular songs. Teens and parents alike may be surprised to discover that this trendy app is run by Chinese engineers, working round the clock in an open-plan office in Shanghai in the company of the firm’s mascot, a small white dog named Mu Mu. + +Alex Zhu, Musical.ly’s co-founder, reckons his firm can become “Instagram for music videos”. Unlike other micro-multinationals, Musical.ly did give the local market a go but has flopped at home. Mr Zhu notes that Chinese schoolchildren typically have hours of homework and tutoring after school. They did not use his firm’s app. In contrast, he observes, “American kids have lots of free time to play and experiment with social media after 3pm.” + +In the past, fear of getting sued over intellectual property (IP) kept many Chinese firms at home. The new micro-multinationals are tackling the issue head-on. Ninebot, a Beijing-based firm, makes better versions of the clunky, self-balancing scooters that were invented by America’s Segway. Confronted with an IP lawsuit from the latter firm, Ninebot simply bought Segway. Now, argues Mr Joffe, it innovates “on top of Segway”, which was stagnating, and the combined firm’s strategy will be global. + +Neil Shen of Sequoia, an American venture-capital firm, reckons this all adds up to a trend. Slowing growth in China means the domestic market is less attractive than it used to be. A younger generation of founders unafraid of going global is in charge. David Cogman of McKinsey, a consultancy, who works with many Chinese entrepreneurs, recalls that a decade ago it was almost unheard of for small, consumer-oriented firms to look abroad. When he advises companies today, it is “a regular conversation”. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718541-firms-such-ehang-and-musically-are-discovering-more-opportunities-abroad/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Recasting steel + +New technologies could slash the cost of steel production + + +A 150-year-old idea finally looks like working + + + + + +From the print edition | Business + + +Mar 9th 2017 + + + + + +ALTHOUGH he is best known for developing a way to mass-produce steel, Henry Bessemer was a prolific British inventor. In the 1850s in Sheffield his converters blasted air through molten iron to burn away impurities, making steel the material of the industrial revolution. But Bessemer knew he could do better, and in 1865 he filed a patent to cast strips of steel directly, rather than as large ingots which then had to be expensively reheated and shaped by giant rolling machines. + +Bessemer’s idea was to pour molten steel in between two counter-rotating water-cooled rollers which, like a mangle, would squeeze the metal into a sheet. It was an elegant idea that, by dint of having fewer steps, would save time and money. Yet it was tricky to pull off. Efforts to commercialise the process were abandoned. + + + + + +Until now. Advances in production technology and materials science, particularly for new types of high-tech steel, mean that Bessemer’s “twin-roll” idea is being taken up successfully. An alternative system that casts liquid steel directly onto a single horizontally moving belt is also being tried. Both techniques could cut energy consumption—one of the biggest costs in steelmaking—by around 80%. Other savings in operating and capital costs are also possible. If these new processes prove themselves, steelmaking could once again be transformed. + +On a roll + +Steelmakers are cautious about new technologies. It was not until the 1960s that the industry ventured from casting ingots to building giant integrated plants for the continuous casting of steel. This involves pouring molten steel through a bottomless mould which, being cooled by water, partially solidifies it. The steel is then drawn down through a series of rolls to form sheet steel or other shapes required by factories and construction companies. Most of the 1.6bn tonnes of steel produced annually worldwide is now made this way. + +Continuous casting, however, still takes a lot of rolling to reduce slabs cast 80-120mm thick to the 1-2mm required by many producers, such as carmakers. Casting any thinner causes quality problems and flaws in the steel’s microstructure. One reason for that is the bottomless mould has to be oscillated to ensure molten steel does not stick to its sides. The new techniques of twin-roll and single belt-casting are, in effect, “moving moulds”—the rollers and the belt move with the steel as it cools and solidifies. This allows direct casting to a thickness of just a few millimetres, requiring only minimal rolling thereafter. + +The new techniques are particularly good for making higher-value, specialist steels, says Claire Davis, a steel expert with the Warwick Manufacturing Group at the University of Warwick in Britain. Ms Davis and her team are developing new high-tech steels especially for belt casting, including advanced low-density steels that are stronger, lighter and more flexible than conventional steel. + +A twin-roll process, much as Bessemer conceived, is already employed by Nucor, a giant American steelmaker. Called Castrip, it is producing steel in two of its plants. A big advantage of twin-roll and belt-casting is compactness. Nucor reckons a Castrip plant needs only 20 hectares (50 acres) and provides a good investment return from the production of only 500,000 tonnes of steel a year. A conventional steel plant, by comparison, may sprawl over 2,000 hectares and need to produce some 4m tonnes a year to turn a profit. + +Other firms are licensing Castrip as well. Shagang, a large Chinese steelmaker, is replacing a less energy-efficient plant with the new technology. The numbers look compelling enough to encourage a startup, too: Albion Steel is talking to investors about building a £300m ($370m) Castrip plant in Britain. The plant would be “fed” by a low-cost mini-mill that melts scrap and produces steel for galvanising, mostly for the construction industry, says Tony Pedder, one of Albion’s founders. Mr Pedder is the chairman of Sheffield Forgemasters, an engineering company, and a former boss of British Steel (which later became Corus). Britain has a surplus of scrap but imports galvanised steel. The plant would employ only about 250 people; traditional integrated operations need a thousand or so. “We believe in the technology,” says Mr Pedder. “In our view it is past the point of being experimental.” + +Salzgitter, a German steelmaker, opened the first commercial single belt-caster at Peine, near Hanover, in 2012. It began by making construction steel but has progressed to more specialist steels. The trick is to keep the water-cooled belt perfectly flat, says Roderick Guthrie of McGill University in Canada, one of the pioneers of the technology. Salzgitter uses a vacuum under the belt to do that, whereas Mr Guthrie employs powerful magnets to the same effect on a pilot plant at the university. His research group is working with a number of companies, including a big carmaker. Whereas twin-roll casting is constrained by practical limitations, such as the size of the rollers, horizontal single belt-casting is less so, argues Mr Guthrie. + +The techniques may end up being complementary. Their spatial efficiency and low cost would also allow production to be located closer to customers. Mr Guthrie thinks it is not inconceivable for such a plant to be integrated within a car factory. “If we can make the quality as good as the big slab-casting plants, it would change the face of the steel industry,” he says. New technologies might just blast a dose of fresh air through an old industry, much as Bessemer’s converter did 150 years ago. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718545-150-year-old-idea-finally-looks-working-new-technologies-could-slash-cost-steel/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Schumpeter + +Mukesh Ambani has made the business world’s most aggressive bet + + +Jio’s 100m new customers cost a cool $25bn to acquire + + + + + +From the print edition | Business + + +Mar 11th 2017 + + + + + +SOME businesspeople are guided by experts, spreadsheets and crunchy questions. What is your three-year target for market share? Will a project deliver a reasonable return on the capital invested? A few hurl all the forecasts and reports into the bin and surrender to their own hunger to make a mark. + +One such figure is Mukesh Ambani, India’s richest man. In September 2016 he placed one of the biggest business bets in the world by launching Jio, a mobile-telecoms network that allows India’s masses to access data on an unprecedented scale. In the past six months it has won 100m customers. Only one other firm on the planet has such an acquisition rate—Facebook. From Kolkata’s slums to the banks of the Ganges, millions of Indians are using social media and streaming videos for the very first time. + + + + + +To achieve this, Mr Ambani has spent an incredible $25bn on Jio, without making a rupee of profit, terrifying competitors and many investors. The motivation for his gamble probably lies with his turbulent family history. Reliance Industries Limited (RIL), Mr Ambani’s company, was set up by his father, Dhirubhai, in 1957. Born in humble circumstances, Dhirubhai was famous for three things: running rings around officials; creating a fortune for himself and RIL’s army of small shareholders; and his appetite for giant industrial projects. RIL jumped from textiles into oil refining and petrochemicals. Its refinery in Gujarat is one of the world’s largest. It opened in 2000, two years before Dhirubhai died. + +Mukesh Ambani and his brother, Anil, took the reins in 2002 and split from each other in 2005, leaving Mukesh in full control of RIL. Since then his record has been patchy. RIL’s shares have lagged India’s stockmarket over the past decade and its return on capital has sagged, halving from 12% to 6%. + +Emulating his father, Mr Ambani has rolled the dice on several huge projects. He has invested huge sums to modernise the petrochemicals and refining business. This decision has been a success—it is an excellent operation that makes a return of about 12%. But Mr Ambani’s other investment calls have flopped. In 2010-15 RIL spent $8bn on shale fields in America. Now that oil prices are lower they lose money. The group invested about $10bn in energy fields off India’s east coast; they have produced less gas than hoped for and are worth little. And RIL has spent around $2bn on a retail business that produces only small profits. All told, RIL’s refining and petrochemicals unit accounts for two-fifths of its capital employed but over 100% of operating profits. The other businesses, developed mainly after Mr Ambani took sole charge, swallow a majority of resources but don’t make money. + +A lesser man might have lost his nerve, but Mr Ambani has pursued another colossal bet in the form of Jio. He knows telecoms: in 2002 he oversaw the family’s first attempt to build a big mobile-phone business (his brother now owns the struggling operation). The latest effort has been a decade in the making. Step by step, RIL acquired spectrum, worked with handset suppliers and built a “fourth-generation” network. Jio’s offer of free services caused a sensation. A savage price war has ensued. One rival executive reckons Jio is carrying more data than either China Mobile or AT&T, the world’s two most valuable operators. + +That underlines the potential of India’s telecoms market. Data usage is low, there are few fixed lines and most people don’t have smartphones. The incumbent firms are heavily indebted, so have limited ability to respond to a price war. + +Jio will start charging from April 1st. Yet even assuming it keeps cranking prices up and wins a third of the market, a discounted-cash-flow analysis suggests that it would be worth only two-thirds of the sum that Mr Ambani has spent. To justify that amount Jio would at some point need to earn the same amount of profit that India’s entire telecoms industry made in 2016. In other words, there is no escaping the punishing economics of pouring cash into networks and spectrum. For every customer that Jio might eventually win, it will have invested perhaps $100. Compare that with Facebook or Alibaba, both asset-light internet firms, which have invested about $10 per user. + +Jio’s three main mobile competitors have scrambled to respond. Bharti Airtel is buying a smaller rival to try to lower its costs. Vodafone is in talks about merging with Idea Cellular, another operator. Half a dozen or so weaker companies (including the firm now run by Mr Ambani’s brother) will probably disappear. The best hope for Jio is that in the distant future it will be one of three firms left and that a cut-throat industry will evolve into a comfy oligopoly, which is possible. + +RIL’s share price has gone nowhere for years but excitement about Jio’s 100m new customers has helped it bounce over the past month. Still, the scale of the investment illustrates the risks that shareholders face at a firm that is controlled by one man. Even if Jio eventually gushes cash it is not clear if RIL will pay bigger dividends, or if Mr Ambani will instead pursue another grand project. As investors wait, however, many more of India’s 1.3bn consumers will gain—not only from low prices, but a welcome splurge on the nation’s telecom infrastructure. + +Defiance from Reliance + +And what of Mr Ambani? Perhaps he hopes to get his money back by turning Jio into an internet firm that offers payment services and content, not just connectivity. China’s Tencent, which owns WeChat, a messaging service, has successfully diversified into games and banking. Still, no telecoms firm has managed this feat and it is hard to see how RIL’s clannish culture can become a hotbed of innovation. More likely, Mr Ambani, aged 59, just doesn’t care what all the spreadsheets point to. Sitting atop his skyscraper, overlooking teeming Mumbai, where some 5m new Jio customers are surfing the web at high speed for peanuts, he can at last say that he has changed India. When you are Dhirubhai’s son, that is probably enough. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718495-jios-100m-new-customers-cost-cool-25bn-acquire-mukesh-ambani-has-made-business-worlds/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Finance and economics + + +The future of insurance: Counsel of protection [Fri, 10 Mar 04:34] + +Peer-to-peer insurance: When life throws you lemons [Fri, 10 Mar 04:34] + +Asset management: Choosing Life [Fri, 10 Mar 04:34] + +Buttonwood: A port in a storm [Fri, 10 Mar 04:34] + +Deutsche Bank: Blues in a different key [Fri, 10 Mar 04:34] + +Trade with China: Shock horror [Fri, 10 Mar 04:34] + +Global property prices: Searching for sanctuary [Fri, 10 Mar 04:34] + +Green-shipping finance: Light at the end of the funnel [Fri, 10 Mar 04:34] + +The Dutch economy: Who’s Nexit? [Fri, 10 Mar 04:34] + +Free exchange: Borrowed time [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Counsel of protection + +The coming revolution in insurance + + +Technological change and competition disrupt a complacent industry + + + + + +From the print edition | Finance and economics + + +Mar 9th 2017 + + + + + +IN THE stormy and ever-changing world of global finance, insurance has remained a relatively placid backwater. With the notable exception of AIG, an American insurer bailed out by the taxpayer in 2008, the industry rode out the financial crisis largely unscathed. Now, however, insurers face unprecedented competitive pressure owing to technological change. This pressure is demanding not just adaptation, but transformation. + +The essential product of insurance—protection, usually in the form of money, when things go wrong—has few obvious substitutes. Insurers have built huge customer bases as a result. Investment revenue has provided a reliable boost to profits. This easy life led to a complacent refusal to modernise. The industry is still astonishingly reliant on human labour. Underwriters look at data but plenty still rely on human judgment to evaluate risks and set premiums. Claims are often reviewed manually. + + + + + +The march of automation and technology is an opportunity for new entrants. Although starting a new soup-to-nuts insurer from scratch is rare (see article), many companies are taking aim at parts of the insurance process. Two Sigma, a large American “quant” hedge fund, for example, is betting its number-crunching algorithms can gauge risks and set prices for insurance better and faster than any human could. Other upstarts have developed alternative sales channels. Simplesurance, a German firm, for example, has integrated product-warranty insurance into e-commerce sites. + +Insurers are responding to technological disruption in a variety of ways. Two Sigma contributes its analytical prowess to a joint venture with Hamilton, a Bermudian insurer, and AIG, which actually issues the policies (currently only for small-business insurance in America). Allianz, a German insurer, simply bought into Simplesurance; many insurers have internal venture-capital arms for this purpose. A third approach is to try to foster internal innovation, as Aviva, a British insurer, has done by building a “digital garage” in Hoxton, a trendy part of London. + +The biggest threat that incumbents face is to their bottom line. Life insurers, reliant on investment returns to meet guaranteed payouts, have been stung by a prolonged period of low interest rates. The tough environment has accelerated a shift in life insurance towards products that pass more of the risk to investors. Standard Life, a British firm, made the transition earlier than most, for example, and has long been primarily an asset manager (see article). + +Meanwhile, providers of property-and-casualty (P&C) insurance, such as policies to protect cars or homes, have seen their pricing power come under relentless pressure, notably from price-comparison websites. In combination with the stubbornly high costs of maintaining their old systems, this has meant that profitability has steadily deteriorated. The American P&C industry, for instance, has seen its “combined ratio”, which expresses claims and costs as a percentage of premium revenue, steadily creep up from 96.2% in 2013 to 97.8% in 2015, and to an estimated 100.3% for 2016 (ie, a net underwriting loss). Henrik Naujoks of Bain & Company, a consultancy, says this has left such insurers facing a stark choice: become low-cost providers, or differentiate themselves through the services they provide. + +One fairly simple way to offer distinctive services is to use existing data in new ways. Insurers have long drawn up worst-case scenarios to estimate the losses they would incur from, say, a natural catastrophe. But some have started working with clients and local authorities on preparing for such events; they are becoming, in effect, risk-prevention consultants. AXA, a French insurer, has recently started using its models on the flooding of the Seine to prepare contingency plans. Gaëlle Olivier of AXA’s P&C unit says the plans proved helpful in responding to floods in June 2016, reducing the damage. + +Damage control + +Tech-savvy insurers are going one step further, exploiting entirely new sources of data. Some are using sensors to track everything from boiler temperatures to health data to driving styles, and then offering policies with pricing and coverage calibrated accordingly. Data from sensors also open the door to offering new kinds of risk-prevention services. As part of Aviva’s partnership with HomeServe, a British home-services company, the insurer pays to have a sensor (“LeakBot”) installed on its customers’ incoming water pipes that can detect even minuscule leaks. HomeServe can then repair these before a pipe floods a home, causing serious damage. + +The shift towards providing more services fosters competition on factors beyond price. Porto Seguros, a Brazilian insurer, offers services ranging from roadside assistance to scheduling doctor’s appointments. In France AXA provides coverage for users of BlaBlaCar, a long-distance ride-sharing app. The main aim of the policy is to guarantee that customers can still reach their destination. If, say, the car breaks down, it offers services ranging from roadside car-repair to alternative transport (eg, calling a taxi). + +Insurers face many hurdles, however, to becoming service providers and risk consultants. Maurice Tulloch, head of the general-insurance arm of Aviva, admits that such services are yet to catch on with most customers. So far, his firm, like its peers, has focused on enticing them to adopt the new offerings by cutting insurance premiums, rather than on making money directly from them. It reckons it can recoup the cost of, say, the HomeServe sensors and repairs from the reduction in claims. + +One example of what the future may hold comes from the car industry. Carmakers have traditionally bought product-liability insurance to cover manufacturing defects. But Volvo and Mercedes are so confident of their self-driving cars that last year they said they will not buy insurance at all. They will “self-insure”—ie, directly bear any losses from crashes. + +Some think that such trends threaten the very existence of insurance. Even if they do not, Bain’s Mr Naujoks is not alone in expecting the next five years to bring more change to the insurance industry than he has seen in the past 20. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718501-technological-change-and-competition-disrupt-complacent-industry-coming/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +When life throws you lemons + +A New York startup shakes up the insurance business + + +Is the future of insurance named after a soft drink? + + + + + +From the print edition | Finance and economics + + +Mar 9th 2017 + + + + + +IT IS not typhoons or earthquakes that insurers should fear most, but geeks alert to their businesses’ inefficiencies. Daniel Schreiber and Shai Wininger, tech entrepreneurs with no insurance background, spotted that the industry is huge (worth $4.6trn in global premium income a year, reckons Swiss Re, a reinsurer), distrusted, antiquated and hopelessly unreformed. + +In September they started Lemonade, a New York-based insurer for homeowners and renters. Some describe it as a peer-to-peer insurer (“Spiritually we’re a tech company,” says Mr Schreiber). Most agree that its app makes insurance a lot easier. This appeals to the digital generation: of 2,000 policies sold in its first 100 days, over 80% were to first-time buyers. + + + + + +Insurance, the founders reasoned, suffers from misaligned incentives. Every dollar paid out comes from insurers’ pockets, encouraging poor behaviour. Normally upright people have few qualms about defrauding their insurer (as 25% of Americans do), pushing up premiums. Lemonade’s solution is to take 20% of premiums as a fee and to reward under-claiming customers by giving a share of unused income to a chosen charity. + +This brings good publicity. But just as important is how different Lemonade looks behind the scenes. Instead of underwriters it uses algorithms; and instead of expensive brokers and salespeople it uses chatbots. It even uses AI and machine-learning to handle claims, a job typically seen as needing a human touch. + +Late last year a customer called Brandon claimed for a stolen coat. He answered a few questions on the app and recorded a report on his iPhone. Three seconds later his claim was paid—a world record, says Lemonade. In those three seconds “A.I. Jim”, the firm’s claims bot, reviewed the claim, cross-checked it with the policy, ran 18 anti-fraud algorithms, approved it, sent payment instructions to the bank and informed Brandon. The real-life Jim (Hageman), Lemonade’s chief claims officer, was driving home for Christmas at the time. + +Lemonade’s bots are still learning and pass more complex claims to humans. It is hoped that one day they will handle 90% of claims. In an industry with expense ratios as high as 30% this could offer huge savings. But there are limits to the claims that bots can be let loose on. And insurance dinosaurs have one advantage: data. For bots to get really clever they need lots. If Lemonade’s customer numbers remain small, they will not learn fast enough to stay ahead of the big boys using the same technology. + +But insurance moves slowly. Miguel Ortiz from BCG, a consultancy, says that the big bet for Lemonade is that “it can stay ahead of a sleepy industry by doing standard insurance processes better than everyone else.” Already, the shake-up it promises has added some fizz and zest. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718502-future-insurance-named-after-soft-drink-new-york-startup-shakes-up/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Choosing Life + +A big merger in the asset-management industry + + +Two Scottish asset managers try to defend their share of a shrinking pie + + + + + +From the print edition | Finance and economics + + +Mar 9th 2017 + + + + + +From fishing buddies to co-CEOs: that is how the relationship between Martin Gilbert, chief executive of Aberdeen Asset Management, and Keith Skeoch, his counterpart at Standard Life, will change after the companies this week announced plans to join forces. The merged company, to be based in Scotland, will have £660bn ($800bn) in assets under administration, making it Britain’s largest, and Europe’s second-largest, “active” asset manager. + +Competition is forcing asset managers to consolidate. Henderson and Janus Capital teamed up last October; Amundi and Pioneer did the same in December. They hope to defend market share from fast-growing “passive” fund managers, whose funds track market indices rather than try to beat them, as active funds do. The research involved in trying to pick winners inevitably makes actively managed funds dearer than passive ones; once these costs are factored in, active managers tend to underperform passive ones. The fee gap is wide enough to have attracted scrutiny from British and European regulators: in Britain passive funds’ fees are around 0.15% of assets under management, compared with 0.9% at actively managed funds. + + + + + +Both Aberdeen and Standard Life have struggled to compete. Aberdeen has seen net outflows from its funds since 2013 (see chart), not helped by its focus on emerging-market and Asian funds, which have had a rough patch. At Standard Life, overall assets under management increased, but its flagship range of funds faced net outflows in 2016. + +The hope is that coming together will change this picture. Standard Life—whose shareholders will own two-thirds of the new company—will move even further away from its roots as an insurer, and will be able to make use of Aberdeen’s more international client base. For its part, Aberdeen can sell its products through Standard Life’s wider British distribution network. Another attraction is cutting costs: spending on IT and sales can be scaled back; underperforming managers fired. The companies estimate that the deal will generate annual savings of around £200m. + +Shareholders seemed happy. Share prices for both companies rose by around 8% on the announcement. There are some uncertainties, though. Mr Gilbert and Mr Skeoch may know each other well, but the history of such condominiums in other companies has not been happy. + +The benefits to clients are also unclear, says Jonathan Miller of Morningstar, a research firm. Cost savings could end up boosting shareholder returns rather than lowering charges. Research by the Financial Conduct Authority, a British regulator, finds that increased scale does not lead to lower fees. The two firms say the merger will offer investors better value for money, through a wider choice of funds. It will need to, if it wants to keep regulators at bay and withstand the passives’ aggression. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718505-two-scottish-asset-managers-try-defend-their-share-shrinking-pie-big/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Buttonwood + +The subdued mood in Singapore’s financial industry + + +Donald Trump, slowing trade and competition from Hong Kong all worry the city-state + + + + + +From the print edition | Finance and economics + + +Mar 9th 2017 + + + + + +SINGAPORE owes its existence, and its prosperity, to its place at the heart of intra-Asian trade. In more than 50 years of independence, the city-state has striven mightily to attract investment from all over the world. Such has been its success, indeed, that others hope to imitate its open, low-tax model. In Britain, for example, there has been talk of the country turning into a “European Singapore” once withdrawal from the EU is complete. (It would be a nice start if London’s Tube operated with anything like the same efficiency as Singapore’s subway network.) + +The current mood in Singapore, however, is far less buoyant than you might imagine. Singapore has survived and thrived by steering a middle course between America and China. It has been alarmed both by the isolationist rhetoric of President Donald Trump and by recent, highly unusual, public spats with China. + + + + + +Global trade growth has slowed in recent years. Despite signs of a pickup, this has had a big effect in a city that has the world’s second-busiest port and that (according to Barclays, a bank) is the country most exposed to the global value chains created by multinational companies. Annual GDP growth in 2016 was just 1.8%, the slowest rate since 2009. Even in this famously open economy, the government has been allowing in fewer foreign workers in the face of pressure from the voters. + +The city still has enormous potential as a regional financial centre. Thanks to its political stability and strong legal and regulatory systems, Singapore looks like a natural haven—an Asian Switzerland. In particular, Indian offshore wealth is being attracted to the city, which hopes to be a hub for the budding market in masala bonds (rupee-denominated debt issued outside India). + +Singapore has a rare AAA credit rating. The IMF last year described its banks as “well capitalised”, with adequate provisions for bad loans, despite worries about their exposure to oil-and-gas firms. Singapore is now the third-biggest trading centre for foreign exchange in the world (having overtaken Tokyo in 2013). It also has a growing derivatives market with daily over-the-counter volume of $400bn, as of October 2015. Finance comprises 13% of the country’s GDP, considerably more than the 8% share it contributes to Britain’s. + +But Singapore faces a strong challenge as a regional finance hub from Hong Kong, which benefits from far stronger links to the Chinese economy. Hong Kong has the upper hand over Singapore in terms of investment banking, particularly in corporate-finance businesses such as mergers and acquisitions. Hong Kong’s capital markets are much deeper; the local economy in Singapore is simply not large enough to generate the same volume of business. Many of South-East Asia’s businesses are family-owned and rely on banks (or reinvested profits) rather than the markets for finance. Singapore’s daily stockmarket turnover in 2016 was around S$1.1bn ($797m), down by 19% on 2013 and less than a tenth of the Hong Kong stock exchange’s daily volume. + +Indeed, the magnetic pull of China may only increase if America under Mr Trump retreats from its Asian role. Multinationals may feel that they simply have to locate more resources in Hong Kong than Singapore for the sake of proximity to the regional superpower. + +Singapore’s long-term prospects may depend on how two trends resolve themselves. Asians are becoming wealthier and are looking for other ways to invest their money aside from bank deposits and property. As Asian economies become more important to the world economy, so banks, insurance companies and fund managers will look to increase their operations in the region. As the thief Willie Sutton said when asked why he robbed banks: “That’s where the money is.” + +At the same time, however, technology means that investors can manage their money with the click of a mouse or the swipe of an app. And they can do so at very low cost. Vanguard, an index-tracking fund manager, attracted more global mutual-fund inflows last year than its ten largest rivals combined. Index-tracking managers don’t need to have a regional base in a gleaming office tower in Singapore or Hong Kong. + +This city is trying to ride this trend by becoming known as a hub for “fintech”, whereby new, technology-driven groups take aim at established, high-cost finance firms. But this is a tricky tightrope to walk. Fintech may cannibalise existing financial businesses without generating many additional jobs. The next 50 years may present Singapore with even greater challenges than its first half-century. + +Economist.com/blogs/buttonwood + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718506-donald-trump-slowing-trade-and-competition-hong-kong-all-worry/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Blues in a different key + +Deutsche Bank raises capital, and changes course + + +A troubled bank hopes to turn the page + + + + + +From the print edition | Finance and economics + + +Mar 9th 2017 | FRANKFURT + + + + + +THREE times since the financial crisis, Deutsche Bank’s bosses have turned to its shareholders for cash: €10.2bn ($13.6bn) in 2010, €3bn in 2013 and €8.5bn in 2014. Since becoming chief executive in 2015, John Cryan has had no plans to ask for more. Deutsche still needed to thicken its equity cushion, but disposals, cost cuts and earnings (if any: it has made losses for the past two years) would provide the stuffing. + +Well, plans change. On March 5th Mr Cryan announced an €8bn rights issue. Some comfort for investors: the price, €11.65 a share, is 39% below the previous close; and Mr Cryan, who had suspended the dividend, promises a return to “competitive” payouts next year. In another reversal, Deutsche will keep rather than sell Postbank, a mass-market retail business that was once part of the post office. Deutsche has owned it since 2010. + + + + + +Postbank and the posher “blue” Deutsche Bank brand will be more closely integrated—notably, sharing computer systems. Mr Cryan is also selling a slice of Deutsche’s asset-management division and some lesser assets. And he is reorganising its corporate and investment bank to concentrate on serving multinational companies, taking charge of the American business himself. + +The shifts on Postbank and the share issue are two sides of a coin. Selling Postbank had been part of Deutsche’s plan to raise its ratio of equity to risk-weighted assets—an important gauge of resilience—above 12.5% by 2018. With the capital increase, Deutsche says, the ratio would have been 14.1% at the end of last year, rather than 11.9%. It should stay “comfortably” above 13%. + +Mr Cryan may be making virtue out of necessity: he was struggling to get the price he wanted for Postbank. However, Deutsche says altered circumstances have made Postbank a better prospect. + +Supervisors demand a higher leverage ratio (of equity to total liabilities) of Deutsche than of the many smaller institutions, chiefly municipally owned savings banks or co-operatives, where most Germans stow their cash. But this has turned out to be lower than first expected—so that retaining Postbank requires less equity. Mr Cryan also reckons that the miserable, ultra-low-interest-rate economics of German retail banking are improving and that there is strength in scale in a land of more than 1,600 lenders. Postbank and the blue brand each have around 5% of retail deposits. + +A deal in January with America’s Department of Justice has also made it easier to tap shareholders. In September the DoJ demanded $14bn to settle claims that Deutsche mis-sold residential mortgage-backed securities in its swashbuckling pre-crisis days, and sent the shares plummeting. The eventual bill, $7.2bn, less than half of it in cash, came as a relief. + +Though Deutsche still claims “global corporate-and investment-banking ambitions”, feeding the domestic roots looks wise: America’s big banks show that domestic strength begets strength abroad. But there is another lesson. Like many European lenders, Deutsche has taken too long to choose a course. Meanwhile, the Americans have marched into the distance. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718512-troubled-bank-hopes-turn-page-deutsche-bank-raises-capital-and-changes/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Shock horror + +Economists argue about the impact of Chinese imports on America + + +The China shock has not been debunked. But it is worth understanding the caveats + + + + + +From the print edition | Finance and economics + + +Mar 9th 2017 + + + + + +COMPETITION from Chinese imports may have cost some Americans jobs, but economists have done pretty well out of it. Since 2013 David Autor, David Dorn and Gordon Hanson have published nine separate studies digging into the costs of trade. They have found that, of the fall in manufacturing jobs between 1990 and 2007, one-quarter could be attributed to a surge in imports from China. Other sectors failed to soak up the extra workers. Their research also suggested that the China shock has cut the supply of marriageable men and opened the door of the White House to Donald Trump. + +In recent weeks a dispute has erupted over their results. Jonathan Rothwell, an economist at Gallup, a pollster, alleged “serious flaws” in one paper, prompting a fierce eight-page response from the authors, and an acrimonious public tiff. + + + + + +The row centres on how the effect of the China shock is measured. The trio wanted to isolate the effects of extra Chinese supply, rather than of something happening in America, so they checked that imports of particular Chinese products were surging in other rich countries, too. They then compared places in America more exposed to these Chinese imports—typically those with lots of labour-intensive manufacturing—with less exposed ones. + +Mr Rothwell’s critique does not attempt to debunk their research completely. But he asks whether combining changes in the 1990s and the 2000s makes sense. When he splits this period up, he confirms the finding that Chinese imports had large effects on American manufacturing employment. But several other effects of Chinese imports become smaller or no longer statistically significant. For example, the effect of Chinese imports on the size of the labour force falls to a quarter of its 1990s size in the 2000s. This is hardly conclusive—slashing sample sizes inevitably reduces the power of a test. + +Mr Rothwell has not disproved anything. But he has provided an opportunity to think through the assumptions of the original research by Messrs Autor, Dorn and Hanson. Their attempt to isolate the effects of China would not have been entirely successful, for instance, if other countries were experiencing non-China-related shocks similar to those hitting America. + +More broadly, it is impossible to know what would have happened had Chinese imports not surged. Monetary policy might have been different. And what a company such as Apple would have done without low-cost Chinese assembly workers is unknowable. Moreover, adding up individual effects over the whole economy could miss important interactions. + +Mr Rothwell’s strongest criticism is not of that China-shock literature at all, so much as of the way it was received. Some have taken evidence of disruption as proof that tariffs would be a good idea, or that trade with China has hurt America. But, as Mr Autor says himself, “our research does not tell you the net societal costs and benefits of trade.” It does not estimate the benefits to exporters as China opened up (though this was smaller than the rise in imports) or to American shoppers able to buy cheaper stuff. + +Other research is emerging that attempts to answer those questions. One paper, by Kyle Handley and Nuno Limão, found that the extra trading certainty associated with China’s accession to the WTO lowered American manufacturing sales and employment by more than 1%, but also lowered American prices and raised consumers’ incomes by the equivalent of a 13-percentage-point cut in tariffs. It also helped poor Chinese workers get richer, which isn’t to be sniffed at either. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718513-china-shock-has-not-been-debunked-it-worth-understanding/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Searching for sanctuary + +Foreign buyers push up global house prices + + +Bolthole money is welcome, but comes with unintended consequences + + + + + +From the print edition | Finance and economics + + +Mar 11th 2017 + + + + + +MANY Americans were taken aback when news broke in January that Peter Thiel, an internet billionaire and adviser to Donald Trump, had New Zealand citizenship. For five years this backer of an “America first” president had kept his Kiwi passport quiet. Then the government released details of his $10m-lakeside estate (pictured). + +A growing horde of rich foreigners see New Zealand as a safe haven. In 2016 overseas investors bought just 3% of all properties. But their purchases were concentrated at the expensive end of the market, which is growing fast: sales involving homes worth more than NZ$1m ($690,000) increased by 21%. That helped push prices in the country up by 13% over the past year, to lead The Economist’s latest tally of global house-price inflation (see table). + + + + + +New Zealand is one of several countries where the impact of foreign money on housing is under scrutiny. Prices have also risen rapidly in Australia and Canada. Central bankers fret about the dangers fickle capital flows pose to financial stability. London’s mayor has ordered a study on foreign ownership in the capital after property prices rose by 54% in four years. + + + +Foreign capital also makes itself felt in America, where house prices have recovered to a new nominal high. Canadians once dominated; now they are outnumbered by Chinese citizens spending some of the $1.3trn that has left the country since autumn 2014. The National Association of Realtors estimates that Chinese investors bought 29,000 American homes for a total of $27bn in the year to March 2016. Foreign buyers focus on a handful of cities: San Francisco, Seattle, New York and Miami. + +In some places, foreign investment has led to a construction boom. In Miami apartments are being built in numbers not seen since the financial crisis, financed in part by Venezuelan money. Australia lets foreigners invest only in new-build properties, and they do: 26,000 new flats are due on the market in Sydney and Melbourne over the next 18 months. In London 45,000 homes have been built since 2014—the highest rate in ten years—but locals grumble many are pads for footloose foreigners. + +In many of these countries affordability looks stretched. The Economist gauges house prices against two measures: rents and income. If, over the long run, prices rise faster than the revenue a property might generate or the household earnings that service a mortgage, they may be unsustainable. By these measures house prices in Australia, Canada and New Zealand look high. In America as a whole, housing is fairly valued, but in San Francisco and Seattle it is 20% overpriced. + +Haven investors may disregard affordability measures. Property can either be a bolthole or earn an income; in many supply-constrained cities its value may rise rapidly; even if not, the risks may be lower than at home. Investment from China has gone up as its own property market has become stretched, fears of devaluation have risen and a crackdown on corruption continues. A study in 2016 found that increased political risk in places such as Greece and Syria explained 8% of the variation in London’s house prices since 1998. + +Policymakers may well scratch their heads. It is difficult both to make housing more affordable for a country’s own citizens and to encourage foreigners to buy. Britain has in fact tried to curb foreign enthusiasm with higher taxes, and by publishing a registry of 100,000 British homes owned by foreign companies—a potential embarrassment for some. + +But unintended consequences lurk. After a 15% levy on purchases from abroad was introduced in the Canadian city of Vancouver last August, the number of foreign buyers dropped by 80%. That helped dampen house-price inflation there but pushed up demand in nearby Victoria. It also deterred highly skilled immigrants. The levy will soon be amended to exclude foreigners on skilled-work visas. + +Explore and compare global housing data over time with our interactive house-price tool + + + +Some foreigners will stump up even if costs rise. More Americans are house-hunting abroad, for example. By one measure, interest in boltholes in New Zealand has tripled since Mr Trump’s election. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718511-bolthole-money-welcome-comes-unintended-consequences-foreign-buyers/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Light at the end of the funnel + +Green finance for dirty ships + + +New ways to foot the hefty bill for making old ships less polluting + + + + + +From the print edition | Finance and economics + + +Mar 9th 2017 + + + + + +SHIPPING may seem like a clean form of transport. Carrying more than 90% of the world’s trade, ocean-going vessels produce just 3% of its greenhouse-gas emissions. But the industry is dirtier than that makes it sound. By burning heavy fuel oil, just 15 of the biggest ships emit more oxides of nitrogen and sulphur—gases much worse for global warming than carbon dioxide—than all the world’s cars put together. So it is no surprise that shipowners are being forced to clean up their act. But in an industry awash in overcapacity and debt, few have access to the finance they need to improve their vessels. Innovative thinking is trying to change that. + +A new report from the Carbon War Room (CWR), an international NGO, and UMAS, a consultancy, highlights the threat that new environmental regulations pose to the industry. The International Maritime Organisation, the UN’s regulatory agency for shipping, has agreed to cap emissions of sulphur from 2020. Last month the European Parliament voted to include shipping in the EU’s emissions-trading scheme from 2021. Without any retrofitting of ships to meet the new rules, many firms may be forced out of business. That also imperils banks across the world, which have lent $400bn secured on smoke-spewing ships. + + + + + +Tens of billions of dollars are needed to pay for upgrades to meet the new rules, according to James Mitchell at CWR. But the industry can hardly pay even its existing debts. Freight rates have collapsed owing to a slowdown in world trade since the financial crisis and to enormous overcapacity. An earnings index compiled by Clarksons, a research firm, covering the main vessel types (bulk carriers, container ships, tankers and gas transporters), touched a 25-year low in 2016. Banks do not want to throw good money after bad. + +Even those that are expanding their ship-lending have seen less demand than they expected for retrofit loans. ABN AMRO, a Dutch bank, and a market leader in this business, has made less than $500m in green loans over the past five years, says Gust Biesbroeck, its head of transportation finance. The problem, he adds, is one of incentives. Ship owners, who would normally borrow for such upgrades, do not benefit from lower fuel bills. It is the firms chartering the vessels that enjoy the savings. But their contracts are not long enough to make it worthwhile to invest in green upgrades. The average retrofit has a payback time of three years, whereas 80% of ship charters are for two years or less. + +Hence the interest in new green-lending structures. One, called “Save as you Sail”, comes from the Sustainable Shipping Initiative, another NGO. The idea is to share the fuel savings between the shipowner and the charterer over a longer contract, giving both an incentive to make the upgrades. Such schemes used to be thwarted by the difficulty of measuring exact fuel consumption on ships. New technologies allow more accurate readings. + +Finance providers are keen to get involved. Last June the European Investment Bank announced €250m ($282m) in funding for such retrofits; it hopes other banks will follow suit with billions more. In future, the idea might be extended to greening aircraft and trains. For now these businesses do not suffer a shortage of finance. But a downturn is a matter of “when not if”, says Michel Dembinski at MUFG, a bank. Green finance could rescue many other industries sailing into a storm. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718519-new-ways-foot-hefty-bill-making-old-ships-less-polluting-green-finance/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Who’s Nexit? + +The retreat of globalisation threatens the Dutch economy + + +The Netherlands is more at risk than most from Brexit and protectionism + + + + + +From the print edition | Finance and economics + + +Mar 9th 2017 | AMSTERDAM + + + + + +AS ANY football fan knows, little delights the Dutch more than beating the Germans. So, as the country prepares for an election on March 15th, it should be cheering an economy that, after lagging behind Germany’s for years, is at last outpacing it. GDP grew by 2.1% last year, which was the fastest rate since 2007 and a stronger performance than its neighbours, including Germany. Unemployment has fallen to 5.3% and more people are in work than before the crisis in 2007-08. + +After years of belt-tightening, households are spending again, thanks to a strong housing-market recovery and rising wages. Government finances are sound. This year the budget may be in balance—perhaps even in surplus—and public debt may drop below 60% of GDP. Yet this sunny outlook has not brightened the mood of a tetchy election campaign. + + + + + +That is not so surprising. Marieke Blom, the chief economist at ING, a bank, attributes the positive forecast mostly to tough government reforms over the past few years—particularly raising the retirement age to 67 (from 2021) and reforming the financing of the health-care system. Years of reform, austerity and recession have taken their toll. Pollsters predict strong votes for protest parties such as the Socialists and the PVV of Geert Wilders, an anti-immigration populist. + +Niek Stam, a trade-union leader, says that dockworkers in the port of Rotterdam will vote for Mr Wilders—not because they are racist but because they fear for their jobs, which are being threatened by robots, and for their pensions, which they see receding as the retirement age creeps up. Referring to Brexit, Mr Stam says some think “maybe we should do what the English are doing, as globalisation also brings harm.” + +Jeroen Dijsselbloem, the finance minister, acknowledges that, despite positive forecasts, “many of our voters have really had some harsh times.” So truculent is the mood that a poll by Ipsos last May found that, in a country once enthusiastic about the EU, 46% favour a “Nexit” referendum on whether to leave. + +Yet it is precisely places such as Rotterdam, the Netherlands’ “gateway to Europe”, that stand to lose the most from any retreat from globalisation. Over the past 20 years the Netherlands’ lucrative re-exports (computers shipped in from China, say, and then sent on to Germany) have quadrupled by value. + +So Brexit and a protectionist America under the presidency of Donald Trump both threaten the Netherlands more than most. In an otherwise upbeat report on the country’s prospects, the European Commission picks out Brexit-related risks as an Achilles heel. Ratings agencies put the Netherlands (along with Belgium, Ireland and Malta) as being at high risk from Brexit. By value added, Britain is the Netherlands’ second-biggest export market after Germany (see chart). + +Around 80% of the flowers and 70% of the plants that Britain imports come from the Netherlands. Growers could be particularly hard hit if Brexit led to new trade barriers. At a parliamentary hearing last month, representatives of other Dutch industries voiced similar concerns. The fishing lobby emphasised how much it needs access to British waters: 60% of the Netherlands’ fish, including 90% of its beloved herring, are caught there. Agricultural and food exports to Britain were worth €8.9bn ($9.8bn) last year. The farming lobby says it is already suffering from sterling’s weakness, which makes its products 20% dearer, and worries that the EU’s farming policy will become more subsidy-driven when Britain no longer has a seat at the table. + +The country’s economic-policy bureau, the CPB, estimates that a “hard” Brexit, in which British trade is governed just by WTO rules, could cost the Dutch economy 1.2-2% of GDP by 2030. And Britain is not the only headache. Exports to America—and hence the threat of American tariffs—also matter disproportionately to the Dutch: 3.4% of GDP (compared with 2.6% on average for the EU) and 300,000 jobs depend on them. + +Needless to say, a Nexit would cause much greater upheaval. Leaving the EU would hit the Netherlands much harder than Brexit will hit Britain, says Wim Boonstra, an economist at Rabobank’s research arm: “We’re the world’s second-largest exporter of agriculture; without free trade we would drown in milk and cheese.” The country grew rich in its golden age by sailing the seas and trading globally; on many measures it is still the world’s most open economy. Today it is the fifth-largest exporter of goods. A third of its GDP comes from exporting goods and services. Few countries have as much to lose from a world where drawbridges are pulled up and ships are kept in port. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718520-netherlands-more-risk-most-brexit-and-protectionism-retreat/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Free exchange + +The end of “secular stagnation”? + + +Improving economic data do not necessarily indicate underlying health + + + + + +From the print edition | Finance and economics + + +Mar 9th 2017 + + + + + +IN PERIODS of economic stress all sorts of theories are entertained about the nature of the problem. When better times return, some theories fade from memory. Others linger, however. During the economic mess of the past decade, economists frightened themselves with tales of “secular stagnation”: a nasty condition that dooms its victims to chronically weak growth. Now that the economic outlook is brightening a bit—deflation has been dispatched, and for most advanced economies 2017 is forecast to bring a third consecutive year of economic growth—it is tempting to laugh off the idea of secular stagnation as a bit of crisis-induced hysteria. Tempting, but also premature. + +In a time of secular stagnation, the normal relationship between saving and investment goes haywire. People save some portion of their income each year. Because one person’s spending is another’s income, such saving can drain away demand and lead to recession, unless the funds set aside by savers are reinjected into the economy through lending to those looking to invest: as when banks lend savers’ deposits to businesses, for example. Central banks help manage this process. When planned saving threatens to outstrip desired investment, they will reduce interest rates to keep the two in line and the economy on track. But when secular stagnation strikes, the gap between what people want to save and what they want to invest grows too large to reconcile. The interest rate needed to balance the two drops, ultimately to below zero. Central banks are stymied. The result is chronic economic weakness: low growth, low inflation, low interest rates and the constant threat of recession. + + + + + +Several years ago those symptoms could be found across much of the global economy. No longer. Headline inflation is trending upward, even in Europe and Japan. Commodity prices have stabilised, helping struggling emerging markets. And America’s Federal Reserve has begun raising its benchmark interest rate, suggesting that the American economy is no longer trapped in a world in which rates cannot be pushed low enough to keep growth on track. In a speech on March 3rd Janet Yellen, the chairwoman of the Fed, reckoned that America was ready for more rate hikes than in 2015 and 2016, including at least three this year. + +But the most devilish aspect of the secular-stagnation story is that good times do not necessarily indicate underlying health. The persistent gap between desired saving and investment that it describes can result from a scarcity of attractive investment options—owing to an ageing population or a slowdown in technological progress, for example. But it can also be driven by the concentration of income among those with little inclination to spend. Income inequality could contribute to stagnation, for instance, by leaving a shrinking share of income in the hands of the poorer households that would most like to spend. + +In such cases, the bonds of secular stagnation may temporarily be broken by a period of financial excess in which bubble conditions drive speculative investment, or in which groups short of purchasing power borrow from those with savings to spare. The reason to doubt the solidity of this recovery is that we have been in such circumstances before, only to watch it end in tears. In the late 1990s, for example, soaring tech stocks drove a wave of investment in internet infrastructure which yanked the American economy out of a jobless recovery. When that fever broke, the economy slumped again, until the global financial system found a way to funnel credit to American households looking to buy or borrow against a home. In the euro area, thrifty core economies lent heavily to the periphery, often against soaring property prices, fuelling an economic boom that ended disastrously. + +Post-traumatic stress + +Is this time different? It is, a bit. Across advanced economies, borrowing capacity is still impaired after the trauma of the crisis; and banking reforms mean that credit taps cannot be turned back on so easily. Those obstacles might simply delay rather than prevent a return to form, however. A mood of optimism is fuelled by a stockmarket that is scaling new heights. In America, household debt is rising again, driven by loans to students and for cars. Across advanced economies, private debt as a share of GDP is above the pre-crisis level and rising fast (see chart). Most dramatic of all has been the increase in borrowing in China, where private debt as a share of GDP has nearly doubled since 2008. It seems very unlikely that the world economy would have escaped its deflationary doldrums without this vast credit expansion, which has kept its building boom rumbling along. + +Economists sympathetic to the secular-stagnation story argue that there are ways to escape the trap. Firms might suddenly find new capital projects in which to invest: thanks, perhaps, to technological advance. An effort to reduce inequality could be a way out: the rich could be taxed and their wealth redistributed rather than lent. A massive public-investment campaign would be another. Emerging markets contributed to the world’s savings glut by buying government bonds in order to build up their foreign-exchange reserves, funnelling money to governments of advanced economies with little appetite for fiscal stimulus. Rather than see the private sector overextend itself, those rich-country governments could instead seize the opportunity to borrow more, soak up excess savings and invest the proceeds in new roads and railways, electric grids and broadband. + +If the secular-stagnation idea holds, central banks face a stark choice until politicians do some of these things. The Fed, poised to raise rates later this month, seems confident it can tap its brakes and keep the American economy on a safe growth trajectory. But it might face a nastier dilemma: to tolerate the rising asset prices and indebtedness which enable recovery, or to choke off recovery and wait for the government to solve the problem. Just what sort of story best describes the state of the economy—and how scary it is—will become clear this year, one way or another. + +Visit our Free exchange economics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718500-improving-economic-data-do-not-necessarily-indicate-underlying-health-end/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Science and technology + + +Synthetic biology: Something’s brewing [Fri, 10 Mar 04:34] + +Unmanned underwater vehicles: A clever solution [Fri, 10 Mar 04:34] + +Women in research: Fairer than it was [Fri, 10 Mar 04:34] + +Road accidents: Safe on taxis [Fri, 10 Mar 04:34] + +Smartphone diagnostics: Pictures of health [Fri, 10 Mar 04:34] + +Sexual attractiveness: My chemical romance [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Synthetic biology + +A big step towards an artificial yeast genome + + +Success would usher in true genetic engineering + + + + + +From the print edition | Science and technology + + +Mar 11th 2017 + + + + + +BIOLOGY’S biggest division is not between plants and animals, nor even between multicellular and single-celled creatures. It is between prokaryotes and eukaryotes. Prokaryotes—bacteria are the most familiar sort—are simple. Their DNA is an unadorned circular molecule between 500,000 and 10m genetic “letters” long. As such, it is fairly easy to replicate from off-the-shelf chemicals. + +The DNA of eukaryotes—animals, plants, fungi and so on—is both more abundant and more complex than that. It may have hundreds of millions, even billions, of letters and it is organised into several elongated chromosomes inside a cell’s nucleus. Synthesising a eukaryote’s genome is thus a far harder task than creating its prokaryote equivalent. But if biology is ever to be brought within the realm of technology in the ways that physics and chemistry have been, it is an essential task. + + + + + +This week has seen a big step towards that achievement, with the publication in Science of recipes for five artificial chromosomes for yeast cells. Yeast, a fungus, is one of the workhorses of eukaryotic genetics. The chefs who have devised these recipes are members of a consortium called the Synthetic Yeast Genome Project (Sc2.0). In 2014, as an aperitif, Sc2.0 created a single artificial yeast chromosome. The latest set of papers are the meat of the matter, meaning that over a third of the yeast genome has now been synthesised. The remaining ten chromosomes are still cooking, but they will be served up soon. + +Rather than building entire chromosomes in one go, Sc2.0’s researchers proceed in stages. They start with pieces of DNA 750 letters long. These, known as oligonucleotides, can be synthesised, by special apparatus, with the genetic letters in any desired order. The consortium’s teams then stitch appropriate oligonucleotides together to build chunks about 10,000 letters long. Finally, they splice these chunks into “megachunks”, with 30,000-60,000 letters each. Those get inserted one at a time into natural yeast chromosomes by being swapped for corresponding sections of existing DNA. The result is tested each time by checking that the modified chromosome still allows the cell it is in to grow and reproduce. Once it has passed that test, another megachunk can be swapped in, and the process repeated until the whole chromosome is made of synthetic DNA. + +Shock and awe + +There would be little point to all this, though, if the DNA going in was the same as that coming out. The value of being able to synthesise a genome lies in being able to manipulate it. And this, tentatively, is what the members of Sc2.0 are trying to do. + +First, they are clearing out the rubbish. The final synthetic genome, as currently planned, will be 8% smaller than a natural one. The difference is bits of DNA that seem to serve no useful purpose. Such DNA is not always easy to identify, for many parts of chromosomes that were once believed useless are now known to have functions. But some useless DNA does exist and the Sc2.0 researchers are getting rid of it. + +They are also cleaning up the genetic code’s punctuation in their new chromosomes—reducing the number of types of three-letter “stop” signals that mark the ends of genes from three to two. Their hope is that the redundant signal’s triplet code (one of only 64 available) can then be used to extend from 20 to 21 the range of amino acids, the building blocks of proteins, which the new chromosomes can encode. That would permit the production of completely new sorts of protein. And they are moving certain genes that sometimes get in the way of DNA replication to a special extra artificial chromosome that will exist in addition to the conventional 16, in effect quarantining them. + +The aim of all this is twofold. One goal is to make a genomic “platform” that can be adapted to do useful things. Genetically modified yeasts already make vaccines, drugs and speciality chemicals. Sc2.0’s technique means that it will be possible to design completely new yeasts, and the range of products will widen. + +That will be to the good. But the other goal may disturb some people, for it is to test techniques that could then be used on other eukaryotes. It is here that a pause should be taken for thought. The trivial modifications that have already been made by genetic engineers to crops and animals are as nothing compared with what might be possible if whole genomes could be manipulated at will. Even CRISPR/Cas9, a technique much in the news at the moment, modifies only small bits of DNA at a time. The Sc2.0 approach writes entire genetic sequences from scratch. The results could be awesome. To make sure they are not also shocking, people should start thinking about them now. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21718479-success-would-usher-true-genetic-engineering-big-step-towards-artificial/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Unmanned underwater vehicles + +Aluminium batteries could let submarine drones range farther + + +The armed forces are among those with an interest + + + + + +From the print edition | Science and technology + + +Mar 9th 2017 + + + + + +MUCH is made of the potential of flying drones. But drones are useful at sea, too. Unmanned underwater vehicles (UUVs), as they are known technically, are employed for things ranging from prospecting for oil and gas to naval warfare. Like their aerial cousins, though, ocean-going drones have limited ranges—limits that are often imposed by their batteries. + +At the moment those batteries are usually either alkaline or lead-acid. Lithium-ion batteries, fashionable elsewhere, have not conquered the UUV world. Their tendency to catch fire counts against them. And they are sensitive to pressure, which is undesirable in devices that operate underwater. But a firm in Massachusetts, called Open Water Power (OWP), is offering an alternative: batteries based on aluminium. With these, its engineers hope to extend the ranges of underwater drones tenfold. + + + + + +Each of OWP’s battery cells has a block of aluminium as its anode. The cell’s cathode is made of nickel. In a working battery, these anodes and cathodes alternate, and are bathed in an electrolyte made of seawater with some potassium hydroxide dissolved in it. This chemical keeps the battery free from marine organisms that might otherwise grow within it. It also plays two other roles. These are in the battery’s chemical operation. + +One of these roles lies in the reaction that drives the battery, between the aluminium of the anode and the hydroxide ions in the electrolyte. A hydroxide ion is a negatively charged combination of a single hydrogen atom and a single oxygen atom (OH- in chemical shorthand). Unadulterated water contains some hydroxide ions (its molecules, H2O, sometimes disintegrate spontaneously into OH- and positively charged hydrogen ions, H+) but adding potassium hydroxide boosts their number. + +The result of the reaction is aluminium hydroxide, which is electrically neutral, and electrons, which carry away the hydroxide ion’s negative charge. These electrons then travel towards the cathode via a circuit that can, for example, power a motor. To complete the circuit, electrons at the cathode combine with hydrogen ions from the electrolyte’s water to produce hydrogen gas, which is vented from the battery, leaving those ions’ hydroxide partners behind to replenish the store of OH-. + +Previous attempts to make a commercial aluminium battery have failed because their anodes have got clogged up with aluminium hydroxide, which is insoluble in water. This is where the added potassium hydroxide does its third job, for an aqueous solution of potassium hydroxide will dissolve aluminium hydroxide in a way that pure water cannot. + +A pump circulates the potassium-hydroxide-bearing electrolyte through the battery, where it picks up aluminium hydroxide from the anodes. The resulting solution then passes through a chamber filled with a plug made of foam rubber. This is a material that packs an enormous amount of surface area into a tiny volume and whose chemistry encourages the aluminium hydroxide to precipitate on that surface. A small piece of foam rubber can thus hold a lot of aluminium hydroxide. When a plug is saturated with the stuff the battery ejects it and replaces it with a fresh one that has been kept, compressed, in an adjacent plug store. Each battery carries enough plugs to keep it going until its supply of aluminium has run out. + +One test of OWP’s technology will come this summer, when the firm will fit its batteries into UUVs built by Riptide Autonomous Systems, which is also in Massachusetts. Riptide’s products are used by oil and gas companies to undertake underwater surveys. At the moment, they have a range of about ten nautical miles (19km). Riptide reckons that OWP’s batteries could increase that to 110 nautical miles. + +The armed forces are interested, too. Though OWP is coy about the details, records in the public domain show that OWP is working with America’s navy and also with the country’s Special Operations Command, which carries out clandestine missions. The navy contract asks for something to replace the existing batteries on its Shallow Water Surveillance System, a series of acoustic sensors designed to detect enemy submarines. The Special Operations contract is light on detail, but is for “man-portable UUVs”. + +One other use for aluminium batteries might be to power crewed deep-diving submersibles such as Alvin, which found fame in 1986 when it was used to explore the wreck ofTitanic, a British liner sunk by an iceberg in 1912. At the moment Alvin still relies on lead-acid batteries. This limits its dives to eight hours and means it cannot go as far down into the ocean as its titanium shell would otherwise permit. Aluminium batteries would let it and its kind dive longer and deeper, letting researchers visit the abyss more easily in person. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21718492-armed-forces-are-among-those-interest-aluminium-batteries-could-let/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Women in research + +Science remains male-dominated + + +But a new report says females are catching up + + + + + +From the print edition | Science and technology + + +Mar 11th 2017 + + + + + +MARCH 8th was International Women’s Day. That seemed to Elsevier, an academic publisher, a good occasion to publish a report looking at the numbers and performance of female scientists around the world. The report, “Gender in the Global Research Landscape”, analysed the authorship of more than 62m peer-reviewed papers published in 27 subject areas over the past 20 years, in 11 mostly rich countries and in the European Union as a whole. The papers and their citations are indexed in Scopus, a database that is run by Elsevier. + +In the EU, and in eight of the 11 countries considered, the share of women authors grew from about 30% in the late 1990s to about 40% two decades later. Brazil and Portugal are closest to equality, each just a percentage point shy of it. In Japan, by contrast, barely a fifth of researchers are female—a fact that may reflect the particularly uncool image science has among Japanese schoolgirls. + + + + + +Women are best represented in subjects related to health care. In nursing and psychology, for example, they outnumber men in several countries, including America and Britain. Less than a quarter of researchers who publish papers in the physical sciences are women. Perhaps as a consequence of this, inventors who register patents are still almost all men. In the places covered by the report the share of patent applications by women ranges from 8% of those filed in Japan to 26% in Portugal. Women are, however, making progress, even in the still-male-heavy world of engineering. Though they constitute only between 10% and 32% of authors of papers in that field in the places the report looks at, the share of those papers in which a woman is the lead author is between 35% and 52%. + +All of this is qualified good news. Women do, nevertheless, still suffer from a “leaky pipeline” phenomenon that sees them drop out of scientific careers at a higher rate than men do. At Imperial College, London, regarded by many as Britain’s leading technological university, about 35% of undergraduates are women. But that percentage falls with each step up the career ladder. At the moment, only 15% of Imperial’s professors are women. + +Partly, this stems from the fact that when those professors were undergraduates the sex ratio was even worse. But it also reflects the problem of career-building which women face in all areas, not just science. Even in the most progressive countries, they still shoulder the lion’s share of child care and housework. Boosting their numbers in the laboratory will take more than merely convincing girls that science is cool. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21718478-new-report-says-females-are-catching-up-science-remains-male-dominated/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Safe on taxis + +Yellow cabs are less likely to crash than blue ones + + +To avoid accidents, flag down a bananamobile + + + + + +From the print edition | Science and technology + + +Mar 11th 2017 + + + + + +IN 1907 John D. Hertz, the owner of a taxi firm in Chicago, asked some academics at the University of Chicago to do a piece of research for him. He wanted to know what colour he should paint his cabs in order to make them stand out among the sea of black vehicles that then inhabited American city streets. The researchers’ conclusion was: yellow. Now, more than a century later, a group of researchers at a different university have concluded that yellow was a wise choice for other reasons, too. In a study just published in the Proceedings of the National Academy of Sciences, Ho Teck Hua of the National University of Singapore and his colleagues show that yellow taxis are less likely to be involved in accidents. + +Dr Ho’s research made use of a merger that took place, in 2002, between two Singaporean taxi companies. One of the precursor firms had a yellow fleet. The other’s was blue. The merged concern has continued that bichromatic tradition to this day. At the moment it owns 4,175 yellow taxis and 12,525 blue ones. All are the same model (a Hyundai Sonata) and all undergo the same maintenance schedules. Any differences in safety between the two, Dr Ho reasoned, must therefore be caused by their respective colours. + + + + + +To work out if such differences actually exist, he and his colleagues analysed three years’ worth of data supplied by the firm. They found that its blue taxis were involved in an average of 71.7 accidents per thousand vehicles per month while its yellow ones were involved in an average of 65.6. The yellow ones, in other words, were 9% less likely to have an accident. + +To confirm that what they had observed was nothing to do with the drivers of the respective cabs, Dr Ho and his team picked a fifth of those drivers at random and studied their behaviour behind the wheel. They did this by looking at data collected by satellite-tracking devices carried by each of the firm’s taxis. These devices record, every 15 seconds, a cab’s location and its status (free to pick up a fare, carrying a passenger or on a break). These data showed that yellow cabs’ drivers were driving in an identical manner to those of blue cabs. + +The researchers then delved into detailed accident reports, looking at the nature of each accident and the lighting conditions in which it had occurred. They had two hypotheses. + +The first was that if yellow really was having a protective effect, a yellow cab would be less likely than a blue one to be involved in a collision when it was clearly in the view of the other driver involved, but not when it was not. This proved true. + +The second hypothesis was that yellow would grant a greater advantage at night than during daylight hours, since it contrasts more strongly than blue does with a dark background. This, too, was true. When the researchers compared accidents occurring in the three sorts of lighting condition (daylight, streetlight and no light) listed in the accident reports, they found that the rate-difference was indeed greatest in scenes illuminated by streetlight. In this case, yellow cabs suffered 4.5 fewer accidents per 1,000 taxis per month than did blue cabs, while in daylight, the difference was two. (There were not enough nocturnal collisions with no streetlights around for a meaningful comparison to be made in this third case.) Based on these findings, Dr Ho calculates that if the firm changed the colour of its entire fleet to yellow, it would, over the course of a year, have to deal with 917 fewer accidents and would save around S$2m ($1.4m). + +Yellow, then, seems to be a lucky colour for owners of cabs and their customers. It certainly proved lucky for John D. Hertz. The Chicago Yellow Cab company, as he renamed his firm, was the foundation of a business empire that led, eventually, to the world’s largest car-hire company. Its logo? The word “Hertz”, in black, italic letters. On a yellow background. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21718319-avoid-accidents-flag-down-bananamobile-yellow-cabs-are-less-likely-crash/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Point, click, treat + +The rise of the medical selfie + + +Point, click, treat + + + + + +From the print edition | Science and technology + + +Mar 9th 2017 + + + + + +OF THE millions of photos shared online every day, which most faithfully represent their subjects? The popular #nofilter hashtag would suggest it is those that have not been digitally altered. But photographs of the same thing can differ greatly, depending on ambient light and the distance and angle they were taken from. So the right manipulation can actually make a picture more honest—and therefore more useful for medical purposes. + +That is the idea behind an app from Healthy.io, an Israeli firm. Dip.io, as this app is known, uses mobile-phone cameras for clinical-grade urine analysis. The patient follows the instructions, waits for the colours on the dipstick to develop and then takes a picture of it against the background of a proprietary colour card. The app uses the card to correct the colours so that the dipstick appears as if in a neutral, standard ambient light. The result is then analysed automatically, in light of the patient’s medical history. If this analysis suggests a consultation or prescription is needed, that can also be arranged automatically. + + + + + +The first urine-dipstick test was developed in 1956, to look for glucose, which indicates diabetes. Since then, sticks have been used to test for the presence of blood, of protein, of hormones indicating pregnancy and also of various bacteria that cause urinary-tract infections. Some sticks, notably those employed for pregnancy tests, can be bought over the counter and used at home. But for tests that require colour-matching, rather than merely checking whether a single line is present or absent, home analysis is regarded as unreliable. + +Point, click, treat + +It is this unreliability that Healthy.io is attempting to deal with. The firm is, for instance, working with doctors in Israel on a system that lets pregnant women at risk of pre-eclampsia (dangerously high blood pressure, which is signalled by protein in the urine) use dip.io to monitor themselves at home. In Britain, meanwhile, the National Health Service (NHS) is starting to employ a version of the app to monitor those suffering from multiple sclerosis whose bladders are affected by the disease. Members of this group, which is around 60,000-strong, are at particular risk of urinary-tract infections. About 5,000 of them develop severe infections every year. At the moment, when someone in this position spots early symptoms he must go to a clinic to be tested. Home-testing, followed by a prescription posted to those who need it, should obviate that need, speed up treatment and also save the NHS around £10m ($12m) a year. + +A third dipstick test the app may soon be applied to is chronic kidney disease. In America alone some 26m people have this condition, which is often associated with diabetes and high blood pressure in a phenomenon known as metabolic syndrome. Patients in the late stages of kidney disease need costly dialysis. But if the illness is detected early, by screening the urine of those at risk to check for protein, sufferers can be given drugs that lower their blood pressure and thus slow the disease’s progress. + +Nor is urine analysis the only part of medical practice that may benefit from healthy.io’s standardised selfies. Dermatology should profit, too. To diagnose a skin condition from a picture, or to monitor its development over the course of time, dermatologists need not only to control the colour of an image, but also its size and the angle from which it is taken. In this case Healthy.io’s answer involves a sticking plaster printed with coloured hexagons that is placed near the relevant patch of skin. Like the dipstick card, the plaster acts as a reference which the app uses to correct and standardise the resulting image. + +Yonatan Adiri, Healthy.io’s founder, has ambitions beyond even this. As he observes, phones are everywhere and are improving all the time without his firm having to lift a finger. By using their built-in cameras, the company can piggyback on phone-makers’ research and development. Soon, his app may be able to employ spectroscopy—a detailed analysis of the frequencies of light making up an image—or extend its range beyond visible light into the infrared and ultraviolet parts of the spectrum. This may help analyse wounds and surface infections, by studying characteristics that are invisible to the naked eye. That will save both doctors and patients time, and should result in better outcomes all round. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21718490-point-click-treat-rise-medical-selfie/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +My chemical romance + +Two putative human sex pheromones turn out not to be + + +An experiment that causes a stink for pheromone perfumes + + + + + +From the print edition | Science and technology + + +Mar 11th 2017 + + + + + +FOR several decades biologists have pondered the question of whether men and women produce pheromones. A pheromone is a chemical signal from one animal to another. Often, though not always, such chemicals indicate sexual availability—and when it comes to human mating signals in particular, those looking into the matter have a couple of specific molecules in mind. + +Androstadienone (AND) and estratetraenol (EST) are derived, respectively, from male and female hormones and are exuded in sweat. The idea that they are pheromonal is thus worth investigating. The results of such investigations as have been made so far, though, are contradictory. Some experiments have found that these molecules make opposite-sex faces, or photographs thereof, appear more attractive to heterosexual volunteers. Others discern no such effect. + + + + + +Unfortunately, most of these studies were done with groups of volunteers too small for clear conclusions to be drawn, or using less-than-rigorous experimental methods. (That has not stopped businesses taking up the idea: several brands of “pheromone perfume” based on EST and, especially, AND are available for hopeful Romeos and Juliets.) To try to clear up the confusion, a group of researchers led by Robin Hare of the University of Western Australia have performed one of the most stringent studies to date. They report their results this week in Royal Society Open Science. + +Dr Hare and his colleagues took 43 men and 51 women, all of them straight, and gave them two tasks. One was to decide whether an androgynous computer-generated face was, on balance, more likely to be female or male. The other was to rate members of the opposite sex shown in photographs for both their sexual attractiveness and their likelihood of being unfaithful. + +The participants completed both tasks twice, on consecutive days. On one day they were exposed to the appropriate molecule (AND for the women; EST for the men) and on the other to a placebo that ought to have had no effect. Crucially, the study was double-blinded, which meant that neither the researchers nor the participants knew which day was which. This should have made it impossible for unconscious biases on the part of the experimenters or the subjects to have had any effect on the result. + +If AND and EST really are aphrodisiac pheromones, the researchers reasoned, then they ought to make participants more likely to assume that androgynous faces belonged to the opposite sex. They should also boost the sex appeal of the people in the photographs—and, because of that boost, increase the perception that those people might be unfaithful, since the attractive have more opportunities for infidelity than the plain. + +In fact, they did none of these things. The study thus found no evidence that either AND or EST is a pheromone. Those who buy pheromone perfumes based on them would therefore appear to be wasting their money. Whether the triumph of hope over experience will cause them to carry on doing so anyway is a different question altogether. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21718421-experiment-causes-stink-pheromone-perfumes-two-putative-human-sex/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Books and arts + + +The future of America: Bland comfort [Fri, 10 Mar 04:34] + +Social media: In praise of serendipity [Fri, 10 Mar 04:34] + +Dutch fiction: Madness in words [Fri, 10 Mar 04:34] + +Consciousness explained: The blind Bach-maker [Fri, 10 Mar 04:34] + +Traditional Japanese theatre: Enduring power [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The future of America + +The comforts of familiarity + + +Why Americans need to beware of becoming complacent + + + + + +From the print edition | Books and arts + + +Mar 9th 2017 + + + + + +The Complacent Class: The Self-Defeating Quest for the American Dream. By Tyler Cowen. St Martin’s Press; 241 pages; $28.99. + + + + + +AMERICA is the land of opportunity, they say. Inspired by the ambition of its Founding Fathers, its people revel in their dynamism. Diversity is their strength, as captured in the national motto—E pluribus unum (“Out of many, one”). Americans embrace change and reinvention, and this, they like to think, sets their country apart from Europe or Asia. + +Tyler Cowen, an economist, believes that this ideal is self-indulgent nonsense. America is losing its vim, he says, and Americans are settling into stagnation. In his new book, “The Complacent Class”, Mr Cowen shows not only that Americans move less now, crossing state lines at around half the average rate that they did between 1948 and 1971, and stay longer in their jobs, but American entrepreneurialism is floundering too. Markets are becoming more concentrated. Fewer new companies are being started, and many struggle to grow. Even in the vaunted technology sector the creation and expansion of new firms peaked in 2000. Sluggish growth in productivity and living standards is making America more like Europe and Japan. + +On the surface, Americans enjoy more choice than ever before. From over 1,400 types of music on Spotify, a music-streaming service, to a swipeable menu of dating options, and rare books available at the click of a button, consumers have never had it so good. But there is a dark side to being able to select the perfect product, neighbourhood or partner. Freedom to choose means that it is ever easier for people to marry, live near or school their children with other people of the same kind. In the South, the proportion of black students in majority-white schools was 44% in 1988; in 2011 that figure was 23%—lower than in 1968. Segregation by income has risen dramatically in the past few decades. The American elite might celebrate diversity in dinner-table conversation, but in practice Americans are cocooning themselves in enclaves of like-minded folk. + +Segregation shuts off growth and stymies innovation. Poorer states used to be able to attract talented people by offering them a combination of promising job opportunities and cheaper housing. But now no one expects Louisiana to catch up with Silicon Valley. For the past few decades poorer states have been caught in a vicious circle, says Mr Cowen, where the expectation that they will not catch up makes it harder for them to do so. + +When it comes to economic segregation, market forces are not helping, or at least not when they are combined with restrictions preventing the construction of more low-cost housing. A housing market that allocates the nicest housing to the highest bidder will inevitably push poor folk out of sight—and thus out of mind. Richer, well-educated people want to live near each other, and high house prices conveniently discourage poorer people from spoiling the view. + +There will be consequences, says Mr Cowen. Hyman Minsky, an economist who grew up during the Great Depression, had a theory that financial stability would breed overconfidence, sowing the seeds of future instability. Largely ignored in his lifetime as he pushed against the prevailing wisdom that efficient markets would protect capitalist society against disaster, his idea became widely celebrated only after the financial crisis appeared to confirm it in 2007-08. Complacent financiers, regulators and central bankers allowed risk to build and put the whole system in danger. + +Extending the idea to all society, as Mr Cowen does, is tricky because of the difficulty in telling the difference between complacency, contentment and submission. He is unclear who the complacent class really are, and who exactly is responsible for the mess. Are Americans betraying their history of reaching for the American dream, or are they suffering because of a rotten system? (Were the bankers greedy, or responding to incentives?) + +Still, there is some truth to Mr Cowen’s diagnosis that America’s strength is undermined by its divisions and by a willingness to protect the powerful. Pockets of rich Americans and the lack of opportunity implied for those who are shut out of those pockets represent a festering problem, says Mr Cowen. In a crisis, the system’s creakiness will leave it ill-equipped to cope. In the final chapter he reveals his fear that the biggest story of the last 15 years is the growing likelihood that “a cyclical model of history will be a better predictor than a model of ongoing progress.” + +The main question Mr Cowen raises is whether a dose of disorderliness will jolt America back to strength. He offers an optimistic scenario, in which driverless cars allow Americans to overcome the pain of having to commute over longer distances, or where global crises convince them that they should live for the moment. Artificial intelligence, clean cheap energy and alternatives to tranquillising opioids could all return America’s lost dynamism. + +But the pessimism of his analysis sits uncomfortably with these rosy scenarios. Other, likelier forms of chaos include populist politicians bent on sowing division, or even international violence. The path from those to a restored, vibrant America seems longer and rockier. In cycles, things often go down before they go up. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21718461-why-americans-need-beware-becoming-complacent-comforts-familiarity/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Social media + +In praise of serendipity + + +Social media should encourage chance encounters, not customised experiences + + + + + +From the print edition | Books and arts + + +Mar 9th 2017 + + + + + +#Republic: Divided Democracy in the Age of Social Media. By Cass Sunstein. Princeton University Press; 310 pages; $29.95 and £24.95. + +LAST June Facebook announced a change to its newsfeed. Henceforth it would rejig the way stories were ranked to ensure that people saw “the stories they find most meaningful”. But what does “most meaningful” actually mean? Posts from family and friends, apparently, as well as those users you frequently “like”. Your newsfeed should be “subjective, personal and unique”, Facebook went on, promising to work on building tools to give users “the most personalised experience”. + + + + + +Cass Sunstein, a law professor at Harvard University and Barack Obama’s former regulation tsar, is one of Facebook’s dissatisfied customers. “Facebook can do better,” he writes in “#Republic”, his new book about democracy in the age of social media. Mr Sunstein is disturbed by some aspects of ultra-customised information, yet he shows himself a master of restraint in his criticism. He clearly wants to influence Mark Zuckerberg and other tech titans without alienating them. Although Mr Zuckerberg dropped out of Harvard, perhaps he can still pick up the occasional book by a Harvard professor—along with his new honorary degree. + +In some ways, “#Republic” is a kind of Democracy 101, a review of the basic requirements for those who may have skipped the course. These requirements include, among other things, that citizens be exposed to a wide range of ideas and perspectives—even, and especially, those they would not choose to see or hear. Unplanned, chance encounters—with a protest as one wanders down the street, or a competing argument aired on the evening news—help guard against “fragmentation, polarisation and extremism”. They ensure that people are not hearing only an echo of their own voice. They reduce the likelihood that people will be stirred to extremes, such as terrorism. And they promote shared information and experiences, making it easier to solve problems and govern in a heterogeneous society. + +This is the positive side of the free- speech principle, Mr Sunstein writes. It means not only forbidding censorship, but also creating a culture where people engage with the views of fellow citizens. + +In the digital age social media function as the public forums where ideas are exchanged. But when people filter what they see—and providers race towards ever greater “personalisation” in the name of consumer choice—democracy is endangered. People live in separate worlds. Even hashtags, meant to help users find information on a certain topic, lead them to different bubbles. Democrats use #ACA and #blacklivesmatter; Republicans use #Obamacare and #alllivesmatter. Partyism might be said to exceed racism in America, Mr Sunstein argues. Whereas in 1960 only 5% of Republicans and 4% of Democrats said they would be “displeased” if their child married outside their political party, by 2010, those numbers had reached 49% and 33%, a far higher percentage than those who would be “displeased” if their child married outside their race. + +Mr Sunstein wants an “architecture of serendipity” to combat these forces: that is, media that promote chance encounters and democratic deliberation like the public forums of old. Facebook might design “serendipity buttons”, he suggests, allowing users to click for opposing viewpoints or unfiltered perspectives. Conservative news sites could feature links to liberal sites and vice versa, alerting people to material beyond their usual sources. A site like deliberativedemocracy.com—the domain is not yet taken—could offer a space for people of divergent views to discuss issues. Democracies should take their cue from Learned Hand, an American judge who said the spirit of liberty is that “spirit which is not too sure that it is right”. + +It is not just up to Mr Zuckerberg, then, to foster a culture of curiosity and openness. Citizens must demand it, Mr Sunstein argues, and they must seek out those serendipitous encounters. “#Republic” is full of constructive suggestions. It should be required reading for anyone who is concerned with the future of democracy—in Silicon Valley and beyond. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21718464-social-media-should-encourage-chance-encounters-not-customised-experiences-praise/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Madness in words + +The strange depths of Dutch fiction + + +Why novels from the Netherlands are rarely flat and never dull + + + + + +From the print edition | Books and arts + + +Mar 9th 2017 + + + + + +The Evenings: A Winter’s Tale. By Gerard Reve. Translated by Sam Garrett. Pushkin Press; 317 pages; $22 and £12.99. + +A Foolish Virgin. By Ida Simons. Translated by Liz Waters. MacLehose Press; 216 pages; £14.99. + +The Penguin Book of Dutch Short Stories. Edited by Joost Zwagerman. Penguin Modern Classics; 555 pages; £12.99. + +GERARD REVE’S diabolically funny novel, “The Evenings”, came out in 1947, but has only recently been translated into English. The book has been praised on both sides of the Atlantic and has led readers to other freshly translated modern classics of Dutch literature. Among these are Ida Simons’s comic “A Foolish Virgin” (1959), about pre-war Jewish life, and Joost Zwagerman’s collection of 36 landmarks of modernist short fiction for “The Penguin Book of Dutch Short Stories”. Together they map a landscape of the imagination that is far from flat and never dull. + + + + + +Zwagerman, a prolific writer who committed suicide in 2015, says in the preface that the writers he selects share one aim: “To give a voice to madness”. As voters in the Netherlands prepare for an election on March 15th that may reward the unruly populism of Geert Wilders and his Freedom Party, readers abroad should hearken to that literary voice in all its cliché-busting oddity. Rational calculation and amiable consensus do not invariably govern Dutch heads and hearts. Dig beneath the topsoil of “this supposedly hard-headed country”, advises Zwagerman, and you hit a contradictory layer of “contemplative arch-romantics” and “reserved iconoclasts”. + +These quiet rebels are all over his anthology, from “An Eccentric” by Marcellus Emants, convinced that “we are doomed to live in absurdity”, to J.M.A. Biesheuvel’s tragicomic loser, plagued by “unspecified fears that devour the soul”. The colonial legacy of the Dutch East Indies sprinkles its fiery spice of adventure, danger, desire—and guilt—throughout the book. In a fable by Harry Mulisch, Sergeant Massuro literally turns to stone “from remorse” at his jungle atrocities in New Guinea. Several stories track the revenge that society takes on its heretics and mavericks. “We were on top of the world,” recalls the narrator of the 1915 tale “Young Titans” by Nescio (pen-name of J.H.F Gronloh), “and the world was on top of us.” In Frans Kellendonk’s poignant “Foreign Service”, the Egyptian cleaner Gamal assesses his new neighbours. With the Dutch, he decides, “there is [a] war of the soul and the greediness and then the greediness wins.” + +Driven by mischief and devilry, these books show the Dutch awkward squad on parade. Reve himself would rank as a colonel in any regiment of renegades; a gay Catholic, he offended every orthodoxy. “The Evenings” chronicles the ten final days of 1946 through the aimless encounters of a vain but troubled filing clerk, Frits van Egters, with his friends, his parents and strangers in a dank December Amsterdam. Reve combines a pitch-black comedy of manners with swingeing satire and metaphysical despair. He joins hilarity to heartbreak. “A day squandered in its entirety,” ponders Frits after another drab outing. “Hallelujah!” + +Bleak, droll and exquisitely expressed, in the manner of Samuel Beckett’s near-contemporary works of fiction, “The Evenings” hints at the anguish that underlies this anomie. Frits and his jesting chums hardly mention the second world war, which inflicted such misery on the Netherlands. A mood of stunned trauma hangs over this novel like the clammy mist on Amsterdam’s canals. In this frozen aftermath, the memory of horror surfaces indirectly in Frits’s gruesome nightmares and, very occasionally, in overt allusions. A news report tells of a child blown up by a grenade. “Deferred suffering from the war,” remarks Frits. “That is always a joy.” + +These kids’ air of brutal nonchalance—their morbid chats about diseases and accidents; Frits’s comic obsession with baldness as a harbinger of death; his claim that “Everything over 60 should be done away with”—masks the shock of damaged survivors. From the deep midnight of shattered Europe, Reve crafted not only an existential masterwork worthy to stand with Beckett or Albert Camus but an oblique historical testament. Sam Garrett’s splendid translation does justice both to the deadpan humour and the half-buried pain. + +“The Evenings” mentions a schoolboy called Sal Jachthandelaar who “made it to Switzerland and from there to England. His family is dead.” No explanation given; none required. Under the Nazi occupation, more than 100,000 Dutch Jews (out of 140,000) were killed. Many English-language readers who pick up Simons’s “A Foolish Virgin” will have read only one other account of a Dutch Jewish girlhood: the diary of Anne Frank. Yet Simons, who narrowly avoided transportation to a death camp, refuses to let the grief of hindsight darken her effervescent story. + +Astute but naive, little Gittel shuttles between her home in The Hague and relatives in Antwerp. In the 1920s, the Jews of both cities live safely, even merrily. Still, the grave banker Mr Mardell reprimands her skittish folly and insists that “there’s no joy without suffering.” This translation by Liz Waters conveys Gittel’s madcap exuberance amid fun-loving families who scent no storms over the horizon. Grandpa Harry is even “a Jewish anti-Semite”: a “relatively innocent pleasure” then, “of a kind no longer available to the gas-chamber generation”. Planted in this dancing novel, that phrase goes off like a bomb in a ballroom. Within living memory, this phlegmatic and pragmatic land has endured a state-enforced collective madness. For Zwagerman, Dutch writers habitually “explore the vague borderland between delusion and reality”. In public, as in private, that line may not always prove as firm as the sturdy dams and dykes of Zuiderzee. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21718462-why-novels-netherlands-are-rarely-flat-and-never-dull-strange-depths-dutch/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Into the light + +How humans became intelligent + + +Consciousness explained + + + + + +From the print edition | Books and arts + + +Mar 9th 2017 + + + + + +From Bacteria to Bach and Back: The Evolution of Minds. By Daniel Dennett. W.W. Norton; 496 pages; $28.95. Allen Lane; £25. + +HUMAN neurons are distant relatives of tiny yeast cells, themselves descendants of even simpler microbes. Yet they are organised in structures that are capable of astonishing feats of creativity. How did the world get from bacteria to Bach, from fungus to fugues? Daniel Dennett, an American philosopher and cognitive scientist, tells the tale in his new book, revisiting and extending half a century of work on the topic. + + + + + +The story is one of Darwinian natural selection: of complexity emerging gradually as beneficial mutations are preserved and harmful ones weeded out. It requires the reader to make some “strange inversions of reasoning”—bold changes of perspective on the nature of design, purpose and consciousness—to loosen the pull of “Cartesian gravity”, or the human propensity to think of the mind as mysterious and non-physical. + +One of Mr Dennett’s key slogans is “competence without comprehension”. Just as computers can perform complex calculations without understanding arithmetic, so creatures can display finely tuned behaviour without understanding why they do so. The rationale for their behaviour (diverting a predator, say, or tempting a mate) is “free-floating”—implicit in the creatures’ design but not represented in their minds. Competence without comprehension is the default in nature, Mr Dennett argues, even among higher animals. + +How then did human intelligence arise? People do not have a special faculty of comprehension. Rather, the human mind has been enhanced by a process of cultural evolution operating on memes. Memes are copyable behaviour—words are a good example. + +Initially, memes spread in human populations like viruses, selected simply for their infectiousness. Some were useful, however, and the human brain adapted to foster them: genetic and memetic evolution working together. Words and other memes gave humans powerful new competences—for communication, explicit representation, reflection, self-interrogation and self-monitoring. To use a computer analogy, memetic evolution provided “thinking tools”—a bit like smartphone apps—which transformed humans into comprehending, intelligent designers, triggering an explosion of civilisation and technology. + +Mr Dennett sees human consciousness, too, as a product of both genetics and memetics. The need to communicate or withhold thoughts gives rise to an “edited digest” of cognitive processes, which serves as the brain’s own “user interface”. The mental items that populate consciousness are more like fictions than accurate representations of internal reality. + +“From Bacteria to Bach and Back” concludes with a look ahead. Mr Dennett expects that computers will continue to increase in competence but doubts that they will soon develop genuine comprehension, since they lack the autonomy and social practices that have nurtured comprehension in humans. He worries that people may overestimate the intelligence of their artefacts and become over-reliant on them, and that the institutions and practices on which human comprehension depends may erode as a result. + +This only hints at the richness of this book. Mr Dennett provides illuminating explanations of the ideas he employs and cites fascinating experimental work. Many of his claims are controversial, and some readers will be more persuaded than others. However, Mr Dennett has an excellent record of predicting developments in cognitive science, and it would be rash to bet that he is far off track. Persuaded or not, readers will find their minds enriched with many powerful thinking tools. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21718460-consciousness-explained-how-humans-became-intelligent/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Stage struck + +The enduring thrill of traditional Japanese theatre + + +Breathing new life into an age-old art form + + + + + +From the print edition | Books and arts + + +Mar 9th 2017 | TOKYO + + + + + +JAPAN’S Westernisation is only skin-deep. For musical proof of this, consider the eagerness with which the Japanese periodically forsake their high-tech existence and immerse themselves in their age-old music-theatre. The most popular form of this is kabuki, which offers lashings of violence, gore and palpitating, cross-dressed sex (all the actors are male). But the Japanese also love the exquisite restraint of noh theatre, and the sacramental grace of gagaku music, which has scarcely changed over the past 1,000 years. Each of these forms has been designated by UNESCO as representative of the “intangible cultural heritage of humanity”, so the rest of the world might profitably pay attention. + +Gagaku, which literally means “elegant music”, was originally banquet music imported from China during the Tang dynasty. Only later was it adopted in Buddhist temples, Shinto shrines and the Japanese imperial court. Although the imperial household ensemble now only makes a handful of public forays each year, other ensembles are carrying this music far and wide. + + + + + +Playing to a packed house in the National Theatre in Tokyo is one of those groups: the Reigakusha ensemble, led by Sukeyasu Shiba, a sprightly octogenarian (pictured). Dressed in medieval silk robes, the musicians are ranged motionless across the stage like chessmen. Their music unfolds at a glacial pace. A high wail on the flute is followed by a few notes ruminatively plucked on the koto zither; a slow skirl on the sho mouth-organ—17 bamboo pipes bound together vertically like a bunch of petrified icicles—is punctuated by three thunderous strokes on the big taiko drum. Ma is the word for the Japanese concept of “the space between”—in sound it is something Westerners dismiss as mere silence. In Reigakusha’s sonic realm, that silence is made to speak volumes. + +Reigakusha also plays a new composition by Mr Shiba in which the traditional sounds are given a Western, jazzy twist, but one so subtle that the gagaku sound-world remains intact. Interviewed afterwards, he explains that he’s not only reviving forgotten scores, he is also broadening the audience. “Hitherto, gagaku has been played only for God, the Buddha and the emperor. Now I want children to enjoy it, so we are going into schools, and speeding up the tempo.” The zany gagaku spoof of a popular nonsense-song that his musicians recently posted on the internet may help spread the word, but Mr Shiba admits that gagaku is still a minority interest. + +His conservatoire-trained players make ends meet by teaching piano and violin, and by working as monks in shrines and temples. But he believes the music’s future will be as bright as its past. A virtuoso on the ryuteki flute, he surveys his own past with a smile: “My father played the ryuteki in the imperial ensemble, as did my grandfather, as did his father, and so on back through eight centuries.” + +Meanwhile, on little wooden stages all over Japan, noh theatre is still being performed as it was 600 years ago on the penal island of Sado. At the National Noh Theatre in Tokyo, a performance of a ghost drama takes the audience into a world even more rarefied than that of gagaku. The gorgeously costumed actors pose like statues—with climactic moments of ferocious activity—and their sepulchral voices, accompanied by flute and drum, create the momentum of a dream. + +Admirers of this art form in the West have included W.B. Yeats, an Irish poet, and Peter Brook, a theatre director. Among its Japanese devotees is Toshio Hosokawa, a composer who combines a successful avant-garde career in Europe with loyal adherence to his roots. Noh draws him, he says, through its notion of purification by contact with the spirit world, and through its reliance on the power of silence, as shown by the ritual gestures made by the musicians and actors before a drum-stroke or a sword-thrust. “My music is calligraphy painted on a canvas of space and time,” says Mr Hosokawa. “Silent movement in the air—as the drummer makes his gesture—has as much life as sound. And this movement I imply in my music.” + +Does all this sound uncomfortably over-refined? Japanese audiences in the 17th century certainly thought so, with the result that noh was ousted as the main theatrical fare by the crazy flamboyance of kabuki, which was everything that noh is not. In place of the austere expressiveness of noh, kabuki made a brash appeal to the merchant class—and to the samurai, despite those warriors’ being forbidden to attend its corrupting spectacle. + +The 18th-century comedies and tragedies which audiences now flock to see at the Kabuki-za theatre in Tokyo represent a brilliantly choreographed and intensely physical art, whose lurid tales of love and death resonate powerfully for a 21st-century audience. If all this has something in common with theatre on Broadway and in the West End in London, there’s an excitement in the air, particularly when one of the fabled Kabuki-za stars makes his entrance, which is quintessentially Japanese. Here, too, you catch the spirit of an ancient culture that is bursting with health—behind the façade of modernity. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21718463-breathing-new-life-age-old-art-form-enduring-thrill-traditional-japanese/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Obituary + + +Mostafa el-Abbadi: All the books in the world [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +All the books in the world + +Obituary: Mostafa el-Abbadi died on February 13th + + +The man behind the recreation of the Great Library of Alexandria was 88 + + + + + +From the print edition | Obituary + + +Mar 11th 2017 + + + + + +“THE universe”, wrote Borges, “was called by some the library.” Mostafa El-Abbadi, foremost among Egyptian scholars of the Graeco-Roman world, was of the same opinion. His universe was the ancient Great Library of Alexandria, long since vanished, which had occupied his mind and heart since his student days. + +As he told it, an elfin figure wreathed in smiles with the joy of it all, the original Bibliotheca Alexandrina had been inspired by the conquering expeditions of Alexander the Great, which had shown for the first time the diversity of mankind and the Earth; and had been funded by Ptolemy I, who wished it to contain “all the texts in the world that are worthy of study”. There had been half a million, maybe many more. Visitors to Alexandria were searched in case they had a book which was not in stock. Ptolemy III managed to acquire, by trickery, the originals of the plays of Sophocles, Aeschylus and Euripides. Mr Abbadi was sure the collection included books from Phoenecia, Buddhist texts from India, the Septuagint of the Hebrews and Mazdean writings from Persia. + + + + + +Alexandria’s library was not the first. As a proud citizen—Alexandrian by both parents, holder (as was his wife, Azza Kararah) of distinguished posts at the university, admirer of the sea view from the balcony of his elegant, book-crammed flat—he might have wished it so. But Syria and Babylon both had libraries earlier, as did the temple at Karnak. The difference was that these were regional institutions, with local interests. Alexandria’s library was the first to be set up as a repository of all human knowledge: the universe under one roof. + +And it was never, he stressed, just a collection of texts. The real heart of the enterprise was the Museion or Shrine of the Muses, which was a centre of research. There, among walkways and arcades especially designed for thinking, Euclid came to formulate his theorems; Eratosthenes to measure the circumference of the Earth; and Herophilos to prove that the brain, not the heart, was the seat of the intellect. There, too (to Mr Abbadi’s chuckling delight), the philosopher Plotinus four times achieved complete union with the divine. + +It struck him then as sad, when he returned to Alexandria in 1960 from his doctoral studies at Cambridge, that the modern city had no great library. Of course, Egypt had no sacks of silver now to spill out on culture, unlike the Ptolemaic kings. Yet the wonder of the library, despite Caesar’s incineration of it (for he held Caesar strictly to blame), had been seared on the memory of the world and on its image of Alexandria, as a cosmopolitan city of learning. Imitations had been built in Baghdad, Córdoba, London and Washington, DC; visiting world leaders asked after what remained of it. So in the 1970s he began to float, gently, the idea or dream of a new library, following the “spiritual example” of the ancients. The seed did not take for years. In 1986, however, UNESCO agreed to help and money began to flow. + +The sun half-rising + +He was well aware of the project’s limitations. Because books were so costly, it seemed best to build up the library as a series of circles. He began by amassing all possible bibliographical references for the city of Alexandria, and then moved outwards: to Egypt, the Middle East, Africa. He did not say “the world”, but he intended it. The new library, like the old, should be universal, taking in donations from all countries, digitising texts (though his love was for physical books, not screens) and drawing scholars to a new Shrine of the Muses, where they could work in an almost sacred atmosphere of tolerance and bright ideas. + +The regime of Hosni Mubarak could not see what he was getting at. Officials envisaged a big library and an Egyptian cultural centre; Egypt was, after all, paying half the $225m cost. In 2002 the new Bibliotheca Alexandrina opened, with space for 8m books on 11 storeys—and four museums, 19 galleries, a Culturama Hall with a vast interactive screen, and gift shops. One museum was filled with the personal effects of Anwar Sadat, a former president. Mr Abbadi gave the library his precious 16th-century copy of the Codex of Justinian. It seemed slightly out of place. + +He was not invited to the opening. He was known to have misgivings, and to have made a fuss when he spotted the bulldozers dumping chunks of mosaic in the sea; for the project involved huge excavations on the site of the Ptolemies’ palace, and he was a man whose idea of a holiday was to tour the ancient ruins of the Middle East. He did not carp about his exclusion, but kept quiet company in his study with his cat, Cleopatra. At least his booklet on the Great Library (only a booklet, he insisted, not a book) had been handed out at the opening. He did his job; they did theirs. + +The design of the library, which he liked in principle, was a half-buried sphere that symbolised the sun rising, spreading the light of knowledge over the world. He only wished that it were true. The library made an efficient cultural centre, he sighed. But it did not function as a universal centre of research. Archimedes and Galen would not have done their thinking under that interactive screen. The Muses would not have touched brains, and hearts. And Plotinus would not have written, having encountered the One-and-its-power, “He is, Himself…the encompassment of all things.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/obituary/21718447-man-behind-recreation-great-library-alexandria-was-88-obituary-mostafa/print + + + + + +| Section Menu | Main Menu | + + + + + +| Main menu | Previous section | + +* * * + + + + + +Economic and financial indicators + + +Interactive indicators [Fri, 10 Mar 04:34] + +Other markets [Fri, 10 Mar 04:34] + +Trade, exchange rates, budget balances and interest rates [Fri, 10 Mar 04:34] + +The Economist poll of forecasters, March averages [Fri, 10 Mar 04:34] + +The Economist commodity-price index [Fri, 10 Mar 04:34] + +Markets [Fri, 10 Mar 04:34] + + + + + +* * * + + + +| Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21718510/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Output, prices and jobs + + +From the print edition | Economic and financial indicators + + +Mar 11th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21718514-output-prices-and-jobs/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Trade, exchange rates, budget balances and interest rates + + +From the print edition | Economic and financial indicators + + +Mar 11th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21718466-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Economist poll of forecasters, March averages + + +From the print edition | Economic and financial indicators + + +Mar 11th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21718509-economist-poll-forecasters-march-averages/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Economist commodity-price index + + +From the print edition | Economic and financial indicators + + +Mar 11th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21718515-economist-commodity-price-index/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Markets + + +From the print edition | Economic and financial indicators + + +Mar 11th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21718507-markets/print + + + + + +| Section Menu | Main Menu | + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.03.18.txt b/homeworks/B20769/homework1/data2/2017.03.18.txt new file mode 100644 index 0000000..0c90f9a --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.03.18.txt @@ -0,0 +1,11972 @@ +[Fri, 17 Mar 2017] + +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +| Next section | Main menu | + +* * * + + + + + +The world this week + + +Politics this week [Fri, 17 Mar 09:50] + +KAL's cartoon [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Politics this week + + + + + +From the print edition | The world this week + + +Mar 18th 2017 + + + + + +A general election in the Netherlands saw Mark Rutte returned to office as prime minister. His centre-right party handily defeated an insurgent campaign from the anti-immigration party led by Geert Wilders. Mr Rutte said the Dutch had rejected the “bad sort of populism”. A few days before the election the Dutch government barred Turkey’s foreign minister from speaking at a rally of Turkish expats in Rotterdam that was being held in support of the Turkish president, Recep Tayyip Erdogan. In the ensuing diplomatic row, Mr Erdogan accused the Dutch of acting like “Nazi remnants”. See here and here. + +The European Court of Justice ruled, in two cases in France and Belgium where Muslim women had been fired for wearing headscarves by their employers, that in certain circumstances it is permissible to limit visible religious symbols and dress at work. + + + + + +Latest updates + + + + + +See all updates + + + +A gruesome find + +Investigators found more than 250 skulls of people murdered by drug gangs in the Mexican state of Veracruz. The burial ground is still being excavated. The state’s prosecutor expects more mass graves to be found. + +Brazil’s chief prosecutor asked courts to open 83 investigations into possible wrongdoing by current and former politicians. Their names were disclosed in plea-bargain testimony by former executives of Odebrecht, a firm at the centre of a scheme to siphon money from Petrobras, the state-controlled oil company, to parties and politicians. News reports say the list includes at least five ministers in the federal government. + +Colombia’s production of coca, the raw material for cocaine, has reached record levels, according to a report by the White House. The increase is in part a consequence of a peace agreement between Colombia’s government and the FARC guerrilla group. Farmers who grow the crop are to receive incentives to stop. + +Pirates ahoy! + +Hijackers seized an oil tanker off the coast of Somalia. An earlier spate of snatching ships ended in 2012 after the world’s big naval powers deployed regular patrols to the waters around the Horn of Africa. + + + +Muhammadu Buhari, Nigeria’s president, returned home after receiving medical treatment in London for two months. His absence had contributed to the growing sense of unease in the country. + +Scores of people were killed in Ethiopia when a mountain of garbage in the capital, Addis Ababa, collapsed and crushed makeshift homes. + +Doctors in Kenya ended a three-month strike over pay that had paralysed the public-health system. + +Iraqi troops fighting Islamic State in Mosul seized a bridge in the centre of the city, and were close to the mosque at which the jihadists’ leader, Abu Bakr al-Baghdadi, declared his “caliphate” in 2014. + +In an unusual intervention Morocco’s king said he would choose a new prime minister to form a government, following five-months of deadlock since an election that was won by the Islamist Party for Justice and Development (PJD) but with no majority of seats. + +If at first you don’t succeed + +A federal judge in Hawaii overturned the Trump administration’s revised travel ban on citizens from six mainly Muslim countries. The sticking point again was that any “reasonable” person would interpret the ban as being based on religion. The government may turn afresh to the appeals court to get its ban reinstated. + +The Congressional Budget Office provided its assessment of a Republican bill to replace Obamacare, which it said would increase the number of those without health insurance by 24m and reduce the deficit by $337bn. House Republicans say their plan will reduce costs and premiums for the vast majority of people. + +Park and regulations + +South Korea’s constitutional court confirmed the National Assembly’s impeachment motion, removing Park Geun-hye from the presidency. An election for a new president will be held on May 9th. See article. + +Prosecutors in Taiwan indicted Ma Ying-jeou, the country’s president until last year, in connection with the illegal disclosure of wiretapped conversations during his time in office. He denies the charges. + +China’s rubber-stamp parliament, the National People’s Congress, adopted a set of principles that will govern the drafting of the country’s first civil code—a supreme law governing legal disputes other than those involving crimes. Officials hope it will remove numerous inconsistencies and ambiguities in Chinese law. See article. + +At the congress, China’s prime minister, Li Keqiang said American companies would “bear the brunt” in any trade war between his country and the United States. But he also said the relationship was “crucial” for global peace, and confirmed that the two countries were discussing a possible meeting between presidents Xi Jinping and Donald Trump. + + + +The Bharatiya Janata Party of prime minister Narendra Modi routed the opposition in an election in the most populous state in India, Uttar Pradesh, winning 312 of the state assembly’s 403 seats. See here and here. + +Time Lords + +In Britain, Theresa May’s government succeeded in passing legislation to trigger the formal process to start talks on leaving the EU. Two amendments added by the House of Lords, where record numbers of members turned out to vote, threatened Mrs May’s timetable. Despite the best efforts of the Lords’ galvanised grey brigade, the amendments were vetoed by the Commons. See article. + +Just as Mrs May overcame the final obstacle to the Brexit bill, Nicola Sturgeon, Scotland’s first minister demanded a second referendum on independence for Scotland, to take place in either late 2018 or early 2019. Scotland has voted to remain in the EU. Allowing the Scots a second say on breaking away from Britain would complicate Mrs May’s Brexit priorities. See here and here. + +The British government made an embarrassing U-turn on a proposal to increase national insurance contributions (a form of tax) for self-employed people, just days after the measure was announced. The ensuing furore rekindled memories of the Tories’ “omnishambles” budget of 2012, when the government had to eat its words and reverse a tax on hot takeaway-food, a controversy known as pastygate. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21718931-politics-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +KAL's cartoon + + + + + +From the print edition | The world this week + + +Mar 16th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21718934-kals-cartoon/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Leaders + + +The world economy: On the rise [Fri, 17 Mar 09:50] + +Narendra Modi in the ascendant: Uttar hegemony [Fri, 17 Mar 09:50] + +Dutch elections: Domino theory [Fri, 17 Mar 09:50] + +Brexit and Scotland: Leave one union, lose another [Fri, 17 Mar 09:50] + +Aid to fragile states: The Central African conundrum [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +On the rise + +The global economy enjoys a synchronised upswing + + +The past decade has been marked by a series of false economic dawns. This time really does feel different + + + + + +From the print edition | Leaders + + +Mar 18th 2017 + + + + + +ECONOMIC and political cycles have a habit of being out of sync. Just ask George Bush senior, who lost the presidential election in 1992 because voters blamed him for the recent recession. Or Chancellor Gerhard Schröder, booted out by German voters in 2005 after imposing painful reforms, only to see Angela Merkel reap the rewards. + +Today, almost ten years after the most severe financial crisis since the Depression, a broad-based economic upswing is at last under way (see article). In America, Europe, Asia and the emerging markets, for the first time since a brief rebound in 2010, all the burners are firing at once. + + + + + +Latest updates + + + + + +See all updates + + + +But the political mood is sour. A populist rebellion, nurtured by years of sluggish growth, is still spreading. Globalisation is out of favour. An economic nationalist sits in the White House. This week all eyes were on Dutch elections featuring Geert Wilders, a Dutch Islamophobic ideologue (see article), just one of many European malcontents. + +This dissonance is dangerous. If populist politicians win credit for a more buoyant economy, their policies will gain credence, with potentially devastating effects. As a long-awaited upswing lifts spirits and spreads confidence, the big question is: what lies behind it? + +All together now + +The past decade has been marked by false dawns, in which optimism at the start of a year has been undone—whether by the euro crisis, wobbles in emerging markets, the collapse of the oil price or fears of a meltdown in China. America’s economy has kept growing, but always into a headwind (see article). A year ago, the Federal Reserve had expected to raise interest rates four times in 2016. Global frailties put paid to that. + +Now things are different. This week the Fed raised rates for the second time in three months—thanks partly to the vigour of the American economy, but also because of growth everywhere else. Fears about Chinese overcapacity, and of a yuan devaluation, have receded. In February factory-gate inflation was close to a nine-year high. In Japan in the fourth quarter capital expenditure grew at its fastest rate in three years. The euro area has been gathering speed since 2015. The European Commission’s economic-sentiment index is at its highest since 2011; euro-zone unemployment is at its lowest since 2009. + +The bellwethers of global activity look sprightly, too. In February South Korea, a proxy for world trade, notched up export growth above 20%. Taiwanese manufacturers have posted 12 consecutive months of expansion. Even in places inured to recession the worst is over. The Brazilian economy has been shrinking for eight quarters but, with inflation expectations tamed, interest rates are now falling. Brazil and Russia are likely to add to global GDP this year, not subtract from it. The Institute of International Finance reckons that in January the developing world hit its fastest monthly rate of growth since 2011. + +This is not to say the world economy is back to normal. Oil prices fell by 10% in the week to March 15th on renewed fears of oversupply; a sustained fall would hurt the economies of producers more than it would benefit consumers. China’s build-up of debt is of enduring concern. Productivity growth in the rich world remains weak. Outside America, wages are still growing slowly. And in America, surging business confidence has yet to translate into surging investment. + +Entrenching the recovery calls for a delicate balancing-act. As inflation expectations rise, central banks will have to weigh the pressure to tighten policy against the risk that, if they go too fast, bond markets and borrowers will suffer. Europe is especially vulnerable, because the European Central Bank is reaching the legal limits of the bond-buying programme it has used to keep money cheap in weak economies. + +The biggest risk, though, is the lessons politicians draw. Donald Trump is singing his own praises after good job and confidence numbers. It is true that the stockmarket and business sentiment have been fired up by promises of deregulation and a fiscal boost. But Mr Trump’s claims to have magically jump-started job creation are sheer braggadocio. The American economy has added jobs for 77 months in a row. + +No Keynes, no gains + +Most important, the upswing has nothing to do with Mr Trump’s “America First” economic nationalism. If anything, the global upswing vindicates the experts that today’s populists often decry. Economists have long argued that recoveries from financial crashes take a long time: research into 100 banking crises by Carmen Reinhart and Kenneth Rogoff of Harvard University suggests that, on average, incomes get back to pre-crisis levels only after eight long years. Most economists also argue that the best way to recover after a debt crisis is to clean up balance-sheets quickly, keep monetary policy loose and apply fiscal stimulus wherever prudently possible. + +Today’s recovery validates that prescription. The Fed pinned interest rates to the floor until full employment was in sight. The ECB’s bond-buying programme has kept borrowing costs in crisis-prone countries tolerable, though Europe’s misplaced emphasis on austerity, recently relaxed, made the job harder. In Japan rises in VAT have scuppered previous recoveries; this time the government wisely deferred an increase until at least 2019. + +The tussle over who created the recovery is about more than bragging rights. An endorsement for populist economics would favour insurgent parties in countries like France, where the far-right Marine Le Pen is standing for president. It would also favour the wrong policies. Mr Trump’s proposed tax cuts would pump up the economy that now least needs support—and complicate the Fed’s task. Fortified by misplaced belief in their own world view, the administration’s protectionists might urge Mr Trump to rip up the infrastructure of globalisation (bypassing the World Trade Organisation in pursuing grievances against China, say), risking a trade war. A fiscal splurge at home and a stronger dollar would widen America’s trade deficit, which may strengthen their hand. Populists deserve no credit for the upsurge. But they could yet snuff it out. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21718868-past-decade-has-been-marked-series-false-economic-dawns-time-really-does-feel/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Uttar hegemony + +What Narendra Modi should do with his victory in Uttar Pradesh + + +He has vast political capital; he should spend it more wisely + + + + + +From the print edition | Leaders + + +Mar 16th 2017 + + + + + +THREE years ago Narendra Modi led his Bharatiya Janata Party (BJP) to the most resounding victory in a national election in India since the 1980s. This week, in India’s most populous state, Uttar Pradesh, the BJP capped that by chalking up the biggest majority in the state assembly since 1977 (see article). The result leaves Mr Modi and his party utterly dominant—and almost certain to win the national elections in 2019. It is also a test. Mr Modi could use his growing power to reignite India’s culture wars, as some of his supporters wish. Instead, he ought to use it to unshackle India’s economy. + +Lucknow and for a long time to come + + + + + +Latest updates + + + + + +See all updates + + + +Until the 1970s India was virtually a one-party state, with Congress, the party of independence, ruling over politics—including in Uttar Pradesh. Today the country seems to be heading that way again, but this time with the BJP in the ascendant. Congress came out on top this week in elections in Punjab, a middling state. In places such as West Bengal and Tamil Nadu, local parties rule the roost. And the BJP’s adversaries can still win by teaming up. But in a country of unfathomable diversity, the BJP is as close to pre-eminence as any party is likely to get. + +In Uttar Pradesh the BJP’s victory was all the more remarkable for the turmoil Mr Modi unleashed late last year by voiding most of India’s banknotes. “Demonetisation” was meant to hurt crooks and bring the “black” economy onto the books. Instead it caused chaos for ordinary Indians. Yet somehow, the BJP turned the straw of demonetisation into electoral gold. + +The charisma and drive of Mr Modi is part of the explanation. The son of a chai-wallah, he embodies the aspirations of India’s strivers. But the energy and organisation of his party count, too. The BJP’s appetite for power is matched only by the opposition’s deficiencies. In this week’s elections Congress won most seats in Goa and Manipur, two tiny states. But the BJP, quicker to woo allies, won the right to form governments. + +In some ways this dominance is alarming. Although Mr Modi himself is careful about what he says, his party harbours many chauvinistic Hindus, who view India’s 180m-odd Muslims with suspicion and disdain. It did not field a single Muslim candidate in Uttar Pradesh, where 19% of the population is Muslim. It also took advantage of the elections to pass legislation that had been blocked by the upper house of the national parliament on the ground that it was unfair to Muslims (see article). Mr Modi has done nothing to stifle a growing culture of intolerance in India, not just towards Muslims, but towards all critics of the prickly nationalism that the BJP espouses. + +Yet he has also pressed ahead with economic reforms. He has won parliamentary approval for a nationwide sales tax to replace a confusing array of local ones. The government is improving the administration of India’s bewildering bunch of welfare schemes for the poor. And demonetisation, for all its failings, at least shows that Mr Modi is willing to take bold steps in his eagerness to overhaul the Indian economy. + +He should put that eagerness, and his thumping electoral mandate, to better use. The complexity of buying and selling land strangles development. State-owned firms, including huge, badly run banks, should be in private hands. The economy, which is growing by about 7% a year, will one day hit the buffers unless India’s education system is overhauled. + +The BJP’s defenders argue that none of this is feasible, because the upper house of the national parliament is in opposition hands. That is a feeble excuse and, in any case, will change as state assemblies, which elect the upper house, fall to the BJP. Mr Modi has an extraordinary opportunity to act boldly for the good of all India. He should grasp it. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21718905-he-has-vast-political-capital-he-should-spend-it-more-wisely-what-narendra-modi-should-do/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Dutch elections + +What Geert Wilders’s poor showing means for Marine Le Pen + + +A poor result for a Dutch populist has little predictive power for elections elsewhere + + + + + +From the print edition | Leaders + + +Mar 18th 2017 + + + + + +IN THE run-up to its election on March 15th the international media descended on the Netherlands, speculating that the country might become the third “domino” to fall to nationalist populism, following the vote for Brexit and the election of Donald Trump in America. The Dutch themselves, excited by the unaccustomed attention, seem to have taken the idea to heart. The performance of Geert Wilders and his far-right Freedom Party (PVV), it was said, would be a portent of Marine Le Pen’s chances in France’s presidential election and of the prospects for populism right across Europe. + +On the night, Mr Wilders came a poor second, winning just 13% of the vote and 20 seats—far behind the Liberals, led by the prime minister, Mark Rutte, who won 21% of the vote and 33 seats (see article). Understandably, Mr Rutte was jubilant, proclaiming that his country had “said ‘whoa’ to the bad sort of populism”. Jesse Klaver of the GreenLeft party, which had its best result ever, eclipsing Labour (see article), with 9% of the vote, said that the Dutch message to the rest of Europe was that “populism did not break through.” + + + + + +Latest updates + + + + + +See all updates + + + +Mr Wilders’s bad showing is welcome. The less he can impose his version of xenophobia and Euroscepticism on the Netherlands the better. Unfortunately, however, it is too soon to celebrate the roll-back of populism. + +The very idea of a populist “domino theory” is misleading. The term derives from the war in Vietnam, where it was used to justify American intervention to stop the spread of communism. In a military context it made sense. North Vietnam’s conquest of Saigon let it move on to Cambodia. But in democratic elections, nothing similar happens. When Britain voted to leave the European Union, the UK Independence Party did not suddenly take control of the economy and establish coastal bases from which to launch raids on Scheveningen. + +Even if Mr Wilders had prevailed this week, he would not have won power—in the Netherlands governments are formed from coalitions, and virtually all the other parties had vowed not to work with him. The boost his triumph would have given Ms Le Pen, who the polls suggest is unlikely to become president, would have been insignificant next to the ebb and flow of the campaign within France. So, too, his defeat is a setback but hardly decisive. + +Political movements sometimes leap in inspirational waves from one country to another, but local circumstances make all the difference. Mr Trump’s win could not have happened without the peculiarities of America’s electoral college. By the same token, the fact that Mr Wilders did not win does not translate on to Ms Le Pen. The Dutch political system is open and diffuse, with over a dozen parties in parliament and low barriers for new ones to make it in. The French system is more rigid. Because it has shut Ms Le Pen’s National Front (FN) out of nearly all levels of government for years, despite rising popular support, the prospect of a sudden breakthrough is greater. France’s presidential run-off will pit two candidates head to head. One of them will almost certainly be Ms Le Pen. + +Another reason to think that this may not be the high-water mark for populism is that Mr Wilders has shown how to drag politics in your own direction even without winning power. Mr Rutte has held him off in part by adopting some of his language. In the Netherlands, traditionally a tolerant country, it is now common to speak of Islam as a threat; the discussion of asylum-seekers focuses entirely on how to keep them out, and the idea of leaving the EU is now taken seriously. Mr Wilders has also put forward legitimate arguments about the welfare of working-class Dutch left behind by globalisation. If a new government dominated by the centre-right Liberals and the liberal D66 party ignores these issues, it will find its triumph over populism short-lived. + +Here’s to Ponypark Slagharen + +All of these anxieties, over Islam, refugees, the EU and globalisation, are as pressing for European voters today as they were yesterday. As it turned out, they did not lead to a win for Mr Wilders in the Netherlands, but they might yet for Ms Le Pen in France. The international rise of populism is not so much a row of dominoes, as a wave bearing down on a line of sand castles. Some will fall and others stand. Celebrate Mr Wilders’s disappointment, but the wave rolls on. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21718910-poor-result-dutch-populist-has-little-predictive-power-elections-elsewhere-what-geert/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Leave one union, lose another + +Brexit is an argument for Scotland to remain in Britain, not to leave it + + +Leaving the European Union will limit Scotland’s trade, free movement and sovereignty. But leaving Britain would magnify all of that + + + + + +From the print edition | Leaders + + +Mar 16th 2017 + + + + + +THIS was meant to be the week when a proud, sovereign nation served notice that it wanted to leave the overbearing, unrepresentative union to which it had long been shackled. And so it was—but not in quite the way that Theresa May had imagined. Britain’s prime minister had planned to trigger Article 50 of the European Union treaty, beginning the two-year process of Britain’s exit from the EU. But she was forced to delay her plans when Scotland’s first minister, Nicola Sturgeon, upstaged her by announcing that she would seek a new referendum on Scottish independence. + +The threat of a second constitutional earthquake in as many years is the latest reminder of Brexit’s unintended consequences (see article). The English-led move to leave a 40-year-old union with Europe is pulling at the seams of its 300-year-old union with Scotland. Mrs May’s fundamentalist interpretation of the Brexit referendum—that it requires departure from the EU’s single market and an end to free movement to and from the continent—ignores the concerns of Scots, who voted to remain, and creates an intractable problem for Northern Ireland, which shares a land border with the EU. But the lesson for Scots from Brexit is more complex than Ms Sturgeon suggests. The arguments she puts forward for remaining in the EU highlight the weaknesses in their case for independence. + + + + + +Latest updates + + + + + +See all updates + + + +The Scottish independence referendum of 2014 was billed by nationalists as a “once-in-a-generation opportunity”. But they are right to demand another. Ms Sturgeon’s Scottish National Party (SNP) won an election last year on the promise of a new referendum in the event of a “material change” in circumstances. Brexit is as material as it gets. Mrs May and Britain’s Parliament, the consent of which is needed for another plebiscite, must not deny the Scottish people a second vote. + +If at first you don’t secede... + +But Mrs May has the power to delay it—and on March 16th she said that there should be no referendum before Britain’s relations with the EU are clear. Ms Sturgeon wants the vote to take place at some point between autumn 2018 and spring 2019, when Brexit negotiations will be entering their final, fraught phase. She suggested this week that this would allow an independent Scotland speedily to rejoin the EU. That is mistaken. There is no prospect of Scotland completing “Scoxit” before Britain leaves the EU (at the time of the referendum in 2014, an exit period for Scotland of 18 months was pencilled in). European officials have made clear that there would be no “fast track” entry process for a country that was previously part of a member state. + +What holding a referendum during Brexit negotiations would achieve, as Ms Sturgeon surely knows, is maximum pressure on the British government, which would be incapable of fighting on a second front in Scotland. And it would damage Scotland’s own interests: first by muddying the Brexit talks, in which Scotland has a stake, whether it ends up as part of Britain or not; and second by forcing Scots to vote before it is clear what sort of deal Britain is going to get with the EU. + +Whenever the second referendum campaign begins, Brexit will make life trickier for the unionist side. Already Mrs May is finding that her position on the European Union makes it harder to defend the British union. Ms Sturgeon says she wants Scots “to be in control of events and not just at the mercy of them”. How can British ministers disagree, when so many of them urged Britons to “vote Leave, take control” last summer? + +Yet Brexit creates problems for the nationalists, too. Just as it sounds unconvincing for Brexiteers now to argue for the union, it is difficult for Ms Sturgeon to beat the drum both for membership of the EU and for exit from Britain. As she has pointed out, it is a bad idea to leave the single market to which you send the lion’s share of your exports. For Scotland, that means Britain. She laments the hardening of Britain’s borders with Europe. Yet an independent Scotland might well mean a harder border with England, particularly if Scotland rejoined the EU. Pro-Europeans have noted that the sovereignty you regain by leaving a union is illusory when it also means losing the clout you get as a member of a more powerful group. So it would be if Scotland left Britain: it would indeed be more sovereign in a pure sense, but at the cost of its seat on the UN Security Council, nuclear weapons, G7 membership and much else that aids true self-determination in the world. + +The Scots are in a wretched position. But they should be in no doubt: exit from Britain would compound the mistake Britain is making by leaving the EU. Though Brexit is the main motive for Ms Sturgeon’s renewed independence push, it is also a warning of the perils of going it alone. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21718909-leaving-european-union-will-limit-scotlands-trade-free-movement-and-sovereignty-leaving/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Central African conundrum + +The very poor are now concentrated in violent countries. Aid policy must evolve + + +The World Bank is right to send development economists to conflict zones + + + + + +From the print edition | Leaders + + +Mar 16th 2017 + + + + + +DAVID CAMERON lost his job as prime minister because he could not reconcile Britons to Europe. He might have sulked on the backbenches. Instead, Mr Cameron has a new (unpaid) job as the chairman of a commission on fragile states. Having failed to persuade Britons to stick with countries where they like to holiday, whose wine they happily imbibe and where many own homes, he will now try to convince them to send more money to some of the world’s poorest, most corrupt and most violent places. + +If Mr Cameron has lost his mind, he is not the only one. Britain’s Department for International Development (DfID) plans to spend half its budget on fragile states and regions. It is nagging others to do the same, with some success. The World Bank plans to double to $14bn the money it allocates to fragile states over the next three years. The war-scorched Central African Republic (CAR) will get as much as a third of its GDP in assistance from the World Bank over the next three years (see article). This raises two questions. Is sending more money to rickety countries wise? And is it being done well? + + + + + +Latest updates + + + + + +See all updates + + + + + +More bread for basket cases + +The answer to the first question is a qualified yes. It is true that, as development economists have argued for years, the ideal recipients of foreign largesse are poor, well-governed countries. Places like Bangladesh and Senegal still need help, and are not so atrociously mismanaged that the aid is bound to be stolen or wasted. These days, though, there are not many such countries. China, India, Indonesia, Vietnam and others are all pulling their people out of deep poverty, thank goodness. + +The most acute need is now in fragile states, where government barely functions. Such places are home to half the world’s very poor people, up from a third in 2010, on the OECD’s rather broad definition of fragile. On the principle that (to misquote Barry Goldwater, the failed Republican presidential candidate in 1964) you ought to hunt where the ducks are, more aid should flow to the worst places. Moreover, fragile states are a regional menace. The calamity that is the Democratic Republic of Congo is a threat to its neighbours, many of which are themselves fragile. If basket-cases can be stabilised, many will benefit. + +It will not be easy. Corruption and mismanagement are rife. In many of these countries Big Men are above the law, politics is a form of licensed theft and the police are little more than bandits. Money spent on rebuilding bridges or offices may be wasted if fighting resumes and the new infrastructure is blown up. Donors can undermine fragile states by setting up parallel welfare systems and by pinching their best bureaucrats. Rich countries often hold back until things get really bad, then rush in with bags of food—as Britain is now doing in South Sudan and Somalia. + +Deft aid schemes need to avoid these pitfalls. Food aid looks good on television, but it is immensely wasteful. It costs a lot of money to get food to warring regions, and the recipients frequently sell it to raise money for whatever they really need. Far better just to give people cash. + +Another good idea is to pay for a hefty peacekeeping force, which can provide the security needed for all else to develop. (The CAR has 13,000 blue helmets.) Young men can be hired to build roads. This would not only connect farmers with urban consumers, making both groups better off, but would also give those young men a reason not to take up arms. Paul Collier, a leading light in Mr Cameron’s commission, offers two other suggestions. Donors could provide risk insurance or subsidies to help private firms enter terrifying markets. And they could let the government set spending priorities but, given its extreme lack of capacity, channel the spending through whatever organisations work in any given village, from NGOs to churches. An independent agency would be needed to oversee how the money is spent. + +Fixing places like the CAR will be hard, and many of these new ideas may yet fail. But with luck, donors will learn from them. Given the stakes, there is no excuse for not trying. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21718911-world-bank-right-send-development-economists-conflict-zones-very-poor-are-now/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Letters + + +On Brexit, the news, Chile, Singapore, diamonds: Letters to the editor [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Letters + +Letters to the editor + + +On Brexit, the news, Chile, Singapore, diamonds + + + + + +From the print edition | Letters + + +Mar 16th 2017 + + + + + +You, too, might like an EU2 + +Bagehot, in his list of tasks for those who reject the inevitability of Britain withdrawing from the EU, omitted one of the most important (February 25th). Even pro-Europeans, as we used to be called, might be reluctant to remain in an EU in its present outdated form. We should become EU2ists, actively planning and advocating a deeply reformed union. Hubert Védrine, a former French foreign minister, has eloquently expressed the view of many on the continent that a source of the widespread antipathy to the EU is not merely that it has lost the vision that inspired it. It is simply not an appropriate form of pan-European polity for the 21st century. + + + + + +Latest updates + + + + + +See all updates + + + +PHILIP ALLOTT + +Professor emeritus of international public law + +Cambridge University + +Wistful daydreaming that the decision to leave the EU might one day be reversed might bring some comfort to bereaved Remainers. They are delusional. Ask this question: if Britain had never joined the EU would we now vote to do so? Looking at the wasteful, sclerotic and undemocratic grouping that it has become, only a Euro-enthusiast of the deepest hue could think that we would. + + + + + +It is worth remembering that when Britain joined in the 1970s the country’s fortunes were at their lowest ebb. National morale was at rock-bottom and there were serious people who questioned whether Britain was actually governable, such was the dysfunctional nature of industrial relations. Across the Channel the EEC offered a vision of a better world with Germany still in the Wirtschaftswunder era and France enjoying les trente glorieuses. Britain’s decision to join the EU was akin to that of a drowning man who decides to grab a lifebelt. Today the situation is very different: the European economic model is no longer one that Britain envies and it is Britain which is the magnet for energetic migrants. + +Reversing Brexit is now the longest of long shots. But if it is ever to be achieved Tony Blair, a discredited political huckster, is the very last man the public would turn to. Europhiles must find a new face to lead them to the promised land. + +ROBIN AITKEN + +Oxford + + + + + +Huxley, Orwell and facts + +Regarding “The Trump bump” enjoyed by America’s media (February 18th), Neil Postman, in “Amusing Ourselves to Death”, envisaged this dangerously fractured moment in modern history. George Orwell was afraid of overseers depriving us of information. Aldous Huxley, on the other hand, warned of an onslaught of news, real or fabricated, that reduced its consumers to passivity and egotism. Orwell feared that the truth would be concealed from us. Huxley contended that when truth is drowned in a sea of irrelevance, we would become a trivial culture. + +Both dystopian views have proven presciently true. Real facts are submerged into the swamp bottom of lies and manipulation (Orwellian) by the sea tides of their manufactured alternative cousins. But the media, both print and social, need to take care that this moment-by-moment accounting doesn’t drown us in its thought-extinguishing momentum (Huxleyan). + +JOSEPH TING + +Brisbane, Australia + + + + + +Chile’s institutions + +Trust in political institutions has fallen to the single digits in many countries in Latin America, as corruption scandals involving corporate money in politics are uncovered by the month (Bello, March 4th). However, in his effort to provide balanced reporting on different views and approaches to campaign reform, Bello’s citation of me—“a role for corporate money might be acceptable in Chile in the future”— gives a misleading impression of the importance I attach to keeping corporate money out of politics. With big companies at the centre of most scandals, this is crucial both to restore citizens’ trust in political leaders and to prevent future corruption. + +EDUARDO ENGEL + +Former president of the Presidential Advisory Council on Conflicts of Interest, Influence Peddling and Corruption + +Santiago, Chile + + + + + +Free speech in Singapore + +“Grumble and be damned” (March 11th) alleged a lack of free speech in Singapore. Yet Singaporeans have free access to information and the internet, including to The Economist and the BBC. We do not stifle criticism of the government. But we will not allow our judiciary to be denigrated under the cover of free speech, nor will we protect hate or libellous speech. People can go to court to defend their integrity and correct falsehoods purveyed against them. Opposition politicians have done this, successfully. + +You cited the case of three protesters convicted for creating a public nuisance at Speakers’ Corner. They were not charged for criticising the government, but for loutishly barging into a performance by a group of special-education-needs children, frightening them and denying them the right to be heard. + +In no country is the right to free speech absolute. When this right is extended to fake news, defamation or hate speech, society pays a price. Witness the Brexit campaign, and elections in America and Europe. Trust in leaders and institutions, including journalists and the media, has been gravely undermined, as have these democracies. In contrast, international polls show that Singaporeans trust their government, judiciary, police and even media. Singapore does not claim to be an example for others, but we do ask to be allowed to work out a system that is best for ourselves. + +FOO CHI HSIA + +High commissioner for Singapore + +London + + + + + +A kiss on the hand… + + + +You referred to the “admen” who composed the slogan “A diamond is forever” (“A girl’s new best friend”, February 25th). In fact, advertising firms in the 1940s employed women as copywriters to create ads for women’s products. Frances Gerety, a young copywriter assigned to the DeBeers account, came up with “A diamond is forever” late one night while at the point of exhaustion. Gerety worked on the DeBeers account successfully for 25 years and her catchline was described as the slogan of the century by Advertising Age. It has appeared in every engagement-ring ad for DeBeers since 1948. + +PAULA HERRING + +Professor of business + +DeVry University + +Downers Grove, Illinois + +* Given the nostalgia among my friends for things we have never experienced firsthand (such as handlebar moustaches, 1920s cocktails and vinyl records), I am highly sceptical that couples will replace the diamond engagement ring with something “digital.” + +JACOB KEOHANE + +Beijing + +Please stop suggesting new ways to demonstrate my marital fitness, such as tattoos, or self-mutilation. My economically savvy wife notes these as sunk costs (“what have you done for me lately?”). She also notes that my encroaching rotundness and retreating hair downwardly shift the demand curve for a husband, thus requiring a larger and, she hopes, refundable subsidy for continued marital fealty to me. The accumulated externalities of my subscription just overwhelmed its price. + +TED LADD + +Jackson Hole, Wyoming + +* Letters appear online only + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/letters/21718853-brexit-news-chile-singapore-diamonds-letters-editor/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Briefing + + +The world economy: From deprivation to daffodils [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +From deprivation to daffodils + +The world economy is picking up + + +Despite anxieties, the green shoots of global recovery are real + + + + + +From the print edition | Briefing + + +Mar 18th 2017 + + + + + +“IF WINTER comes,” the poet Shelley asked, “can Spring be far behind?” For the best part of a decade the answer as far as the world economy has been concerned has been an increasingly weary “Yes it can”. Now, though, after testing the faith of the most patient souls with glimmers that came to nothing, things seem to be warming up. It looks likely that this year, for the first time since 2010, rich-world and developing economies will put on synchronised growth spurts. + +There are still plenty of reasons to fret: China’s debt mountain; the flaws in the foundations of the euro; Donald Trump’s protectionist tendencies; and so on. But amid these anxieties are real green shoots. For six months or so there has been growing evidence of increased activity. It has been clearest in the export-oriented economies of Asia. But it is visible in Europe, in America and even, just, in hard-hit emerging markets like Russia and Brazil. + + + + + +Latest updates + + + + + +See all updates + + + +The signals are strongest from the more cyclical parts of the global economy, notably manufacturing. Surveys of purchasing managers in America, the euro zone and Asia show factories getting a lot busier (see chart 1). Global trading hubs such as Taiwan and South Korea are bustling. Taiwan’s National Development Council publishes a composite indicator that tracks the economy’s strength: blue is sluggish, green is stable and red is overheating. The overall economy has been flashing green lights for seven months and is pushing up towards the red zone. + + + +This reflects, among other things, demand for semiconductors around the world; this February exports from Taiwan were up by 28% compared with 2016. Although that is the most striking example, exports are up elsewhere in the region, too. South Korea’s rose by 20% in February compared with a year earlier. In yuan terms, China’s were 11% higher in the first two months of 2017 than in 2016. + +This apparent vigour is in part just a reflection of how bad things looked 12 months ago; suppliers who overdid the gloom in early 2016 are restocking. Asia’s taut supply chains also owe something to the two-to-three-year life-cycle of consumer gadgetry. On March 10th LG Electronics launched its new G6 smartphone. Its larger rival, Samsung, is due to unveil its Galaxy S8 phone by the end of the month; a new iPhone will be out later this year. + +But the signs of life run deeper than just those specifics would allow. Business spending on machinery and equipment is picking up. A proxy measure based on shipments of capital goods constructed by economists at JPMorgan Chase, a bank, suggests that worldwide equipment spending grew at an annualised rate of 5.25% in the last quarter of 2016. + +The good news goes beyond manufacturing, too. American employers, excluding farms, added 235,000 workers to their payrolls in February, well above the recent average. The European Commission’s economic-sentiment index, based on surveys of service industries, manufacturers, builders and consumers, is as high as it has been since 2011. After a strong fourth quarter, the Bank of Japan revised up its forecast for growth in the current fiscal year from 1% to 1.4%. Such optimism raises two big questions: what is behind this nascent recovery and will it take hold? + +Lilacs from the dead land + +The revival’s roots can be traced to the early months of last year, when a possible calamity was averted. At the end of 2015 stockmarkets tumbled in response to renewed anxiety about China’s economy. Prices at the factory gate, which had been falling steadily for several years, had started to plunge. There were fears that China would be forced to devalue its currency sharply: a cheaper yuan might spur China’s oversupplied industries to export more, fatten profits and service their growing debts. + +Such a desperate measure would, in effect, have exported its manufacturing deflation to the rest of the world, forcing rivals to cut prices or to devalue in turn. The expectation that China’s economy was weakening pushed raw-material prices to their lowest level since 2009. The oil price briefly sunk below $30 a barrel. That worsened the plight of Brazil and Russia, already mired in deep recessions. It also intensified the pressure to cut investment in America’s shale-oil industry. + +To stabilise the yuan in the face of rapid outflows of capital, China spent $300bn of its foreign-currency reserves between November 2015 and January 2016. Capital controls were tightened to stop money leaking abroad. Banks juiced up the economy with faster credit growth. With capital now boxed in, much of it flowed into local property: house prices soared, first in the big cities and then beyond. Sales taxes on small cars were reduced by half. Between them, these controls and stimuli did the trick. + +Soon stocks of raw materials that had been hurriedly run down started to look skimpy. Iron-ore prices jumped by 19% in just one day last March. Curbs on Chinese coal production underpinned a mini-revival in global prices. Steel prices rose sharply, helped by the closure of a few high-cost mills as well as more construction spending. Oil climbed back above $50 a barrel (though it has slipped back a bit recently). + +By the end of the year producer-price inflation in China—and across Asia—was positive again. And China’s nominal GDP, which had slowed more than real GDP, sped up again (see chart 2). Central bankers, who had been employing various measures to forestall global deflation, were mightily relieved. On March 9th Mario Draghi, boss of the European Central Bank (ECB), proudly declared that the risk of deflation had “largely disappeared”. + + + +His relief was a recognition that, though a surge in inflation will flood the economy’s engine, a gentle dose can serve as a helpful lubricant. At a global level, a bit more factory-gate inflation lifts profits, since a lot of manufacturers’ production costs are largely fixed. Fatter profits not only make corporate debt less burdensome, they also free cash for capital spending, which creates further demand for businesses in a virtuous circle. + +Since worries about China and deflation receded, spending on things that show some faith in future income has indeed begun to stir. A revival in producer prices and thus profits is leading to business investment around the world. In the last quarter of 2016 business spending in Japan rose at an annualised rate of 8%, according to official GDP figures. Gartner, a tech consultancy, predicted in December that consumers and companies would increase their spending on IT by 2.7% in 2017, up from 0.5% in 2016. John Lovelock, a research analyst at Gartner, says the biggest jump in spending is forecast for the Asia-Pacific region. + +Continuous as the stars that shine? + +In America imports of both consumer goods and capital goods are up. There has been speculation that the “animal spirits” of business folk have been lifted by Mr Trump’s election in November, and that cuts in tax and regulations, and a subsequent return of the estimated $1trn of untaxed cash held abroad by companies based in America, will fuel a big boom in business investment. + +But James Stettler, a capital-goods analyst at Barclays Capital, notes that “no one’s really pushing the button on capex yet”. And companies which might benefit from an investment boom are not getting carried away. In a recent profits statement Caterpillar, a maker of bulldozers and excavators, said that, while tax reform and infrastructure spending would be good for its businesses, it would not expect to see large benefits until at least 2018. So far the recovery in global capital spending is in line with what you would expect from the recovery in global profits, says Joseph Lupton of JPMorgan Chase (see chart 3). + + + +The signs of recovery are encouraging. But can they be trusted? The last few bursts of optimism about the global economy all petered out. In 2010 the rebound from a deep rich-world recession was pulled back to earth by the sovereign-debt crisis in the euro area. As soon as Europe gingerly emerged from recession in mid-2013, hints from America’s Federal Reserve that its bond-buying programme would soon tail off prompted a stampede out of emerging markets. This “taper tantrum” blew over in a few months, but it had repercussions. The prospect of tighter monetary policy in America, however distant, hit the supply of credit in emerging markets. The squeeze was made worse in 2014 when the oil price fell from over $100 a barrel to half that in just a few months. The price of other industrial raw materials, which had settled onto a plateau after peaking in 2011, began to fall. The subsequent slump in investment was enough to drag big commodity exporters, such as Brazil and Russia, into recession. + +Even so, by the end of 2015 the Fed was sufficiently confident about the outlook to raise its benchmark interest rate by a quarter of a percentage point, the first such increase in a decade. More increases were expected in relatively short order. But the jitters about China, and then Brexit, meant that it was a full year before the next. It has now followed up with another increase in much shorter order (see article). + +False dawns were perhaps to be expected: recoveries from debt crises are painfully slow. Spending suffers as borrowers whittle away their debts. Banks are reluctant to write off old, souring loans and so are unable to make fresh new ones. And the world has had to shake off not one debt crisis, but three: the subprime crisis in America; the sovereign-debt crunch in Europe; then the bust in corporate borrowing in emerging markets. + +But the initial and most painful stage of economic adjustment in emerging markets is coming to an end. Current-account deficits have narrowed, leaving most countries less reliant on foreign borrowing. Their currencies are a lot more competitive. And interest rates are high, so there is scope to relax monetary policy to boost demand (see chart 4). Business spending is already rising in response. + + + +The breadth of the improvement—from Asia to Europe and America—makes for greater confidence that a pick-up is in train. A broad trend is a good proxy for an established trend, notes Manoj Pradhan of Talking Heads Macro, a research firm. Nevertheless, some countries are in better shape than others. India and Indonesia recovered quickly from the taper tantrum; their GDP growth has been fairly strong and steady. At the other end of the spectrum, Turkey and (to a lesser extent) South Africa look unlikely to see a big revival soon. + +In the middle, there are signs that brutal recessions in two of the largest emerging markets, Russia and Brazil, are slowly coming to an end. Inflation in both countries is receding, restoring spending power to consumers. In Russia inflation fell to 4.6% in February, down from a peak of 16.9% two years ago. In the three months ending in September, GDP growth probably turned positive, according to the central bank, which has cut its main interest rate from 17% in January 2015 to 10% today; more cuts are likely. Manufacturing activity grew in each of the seven months to February, according to a survey of purchasing managers published by Markit, a data provider. + +Brazil’s economy shrank again in the final months of 2016, but with inflation tumbling towards the 4.5% target, its central bank has cut its benchmark rate by two percentage points, to 12.25%, since October. Further cuts are again likely. Other commodity-producers in Latin America (bar Mexico, where the peso has weakened since Mr Trump was elected) are also relaxing monetary policy. + +The recent buds relax and spread + +That is the bull case. What of the risks? One is that tighter commodity markets will stymie consumer spending in the rich world by raising prices. But core measures of inflation that strip out volatile things like food and energy costs remain low: nowhere in the rich world have they reached the 2% rate that is the goal of central banks, the rate seen as necessary for a “normal” cyclical recovery. America is closest to that target; the index preferred by the Fed puts America’s inflation at 1.9%, with the core rate at 1.7%. In Europe the core rate is stuck below 1%, with wage growth of around 1.3% last year; but oil prices have pushed headline inflation back to 2%. + + + +There is also the risk of expecting too much. A pick-up in global aggregate demand is good news. But growth rates will always be constrained by how fast the workforce can expand and how much extra output can be squeezed from each worker. In lots of places there is scope for jobs growth; but in America, Japan, Germany and Britain the labour market is already quite tight. With America close to full employment, wage growth has picked up to 2.8%, which is consistent with 2% underlying inflation if productivity growth stays around 1%. Pay is growing fastest in less well-paid industries, such as construction, retailing, hospitality and haulage, according to Morgan Stanley, a bank. + +Wages might perk up yet more if productivity improved. But the post-crisis slump in productivity growth that has affected both rich and developing countries shows no sign of ending. In America output per hour rose by 1.3% in the year to the final quarter of 2016. Europe has not been able to match even that dismal rate. It would take an astonishing shift in productivity for America’s economy to manage the 4% GDP growth promised by Mr Trump. A less fanciful view is that American GDP growth might top 2% this year, a bit better than is expected for Europe. Continued investment, and possibly deregulation, could improve productivity somewhat; but they will not provide a step change. Without one, rich-world interest rates are likely to stay well below the levels that were considered normal before 2007. + +It is not hard to imagine things that might yet derail the recovery. Though there is a cast-iron consensus that nothing bad will be allowed to happen before the big Communist Party congress in the autumn, China’s growing debt pile could still bring markets tumbling down. Populist victories in Europe’s various elections could bring about a crisis for the euro. Even if they do not, an end to the ECB’s bond-buying programme, which has kept government-borrowing costs at tolerable levels and even allowed a bit of fiscal stimulus to lift the economy, will lay bare the euro’s still-unfixed structural problems. + +The Fed might tighten policy too quickly, driving up the value of the dollar and draining capital (and thus momentum) from a recovery in emerging markets. Or Mr Trump might make good on the repeated threats he made in his campaign to raise import tariffs on countries he considers guilty of unfair trade, thus taking a decisive step away from globalisation just as the world’s main economic blocs are at last starting to get into sync. + +These risks are not new or surprising. What brings a freshness to the air is that a cyclical recovery has managed to overcome them. There may actually be some rosebuds to gather, for a while. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21718866-despite-anxieties-green-shoots-global-recovery-are-real-world-economy-picking-up/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +United States + + +Exceptionalism: Wagner vs Wagner [Fri, 17 Mar 09:50] + +Counter-terrorism: Loosening the rules [Fri, 17 Mar 09:50] + +Prisons: The incarcerated workforce [Fri, 17 Mar 09:50] + +Chuck’s gun shop: Anything you want [Fri, 17 Mar 09:50] + +America’s missing servicemen: Raiders of the lost barks [Fri, 17 Mar 09:50] + +Lexington: Deal breaker [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +American exceptionalism + +Warfare helps explain why American welfare is different + + +One way of seeing the fight over health care is as a clash between two different Wagner’s laws + + + + + +From the print edition | United States + + +Mar 16th 2017 + + + + + +THE House Republicans’ health-care plan, the American Health Care Act, may, if enacted, leave 24m Americans without coverage, in the judgment of the Congressional Budget Office. But for those determined to shrink the government, that may not be enough. Americans for Prosperity, an influential campaign group, calls it Obamacare 2.0; FreedomWorks, an anti-tax group, Obamacare-lite. The Republican Study Committee, which consists of 170 House Republicans, describes it as “a Republican welfare entitlement”. When Obamacare became law, Democrats crowed that it would prove impossible to take health insurance away from people once they had it. For those on the drown-the-government wing of the Republican Party, the fight over repealing the law is an existence-threatening event. If a Republican president with majorities in both houses of Congress cannot succeed in taking away an entitlement, then they might as well give up. + +Viewed from the rest of the world, this debate has an unreal quality. America is alone among rich countries in not arranging for its government to provide some form of health care for all its people. When Obamacare became law in 2010, America seemed to be converging with the rest of the world. The share of people who do not have health insurance, and are not covered by government programmes for the elderly or the poor, fell from 16% before the law was passed to 8.8% now, according to the Kaiser Family Foundation. It would have fallen further had more Republican state governors chosen to take federal funds to expand Medicaid, which finances some care for poor Americans. That convergence may now be reversed. + + + + + +Latest updates + + + + + +See all updates + + + +The American difference on health care is partly a question of philosophy. Americans are more inclined to believe that people make their own luck than people in countries with more developed welfare states. According to a Pew global attitudes survey, 31% of Germans think that success is determined by forces within their control, whereas 57% of Americans say the same. It follows from this that those who do not have insurance could get it if they only worked a bit harder. + +But it is also a question of history and, more specifically, of how welfare states in the rest of the world developed alongside warfare. European welfare states began in Prussia at the end of the 19th century, when war with France required the mobilisation of a large number of civilians. Britain’s welfare state has its origins in the discovery that many of the men who presented themselves to recruiting offices during the Boer war were not healthy enough to fight. Before the second world war, British liberals would have seen the creation of a government-run national health service as an unwarranted intrusion of government into private life. After 1945 it seemed a just reward for a population that had suffered. + +In America this relationship between warfare and health care has evolved differently. The moment when the highest proportion of men of fighting age were at war, during the civil war (when 13% of the population was mobilised), came too early to spur the creation of a national health system. Instead, the federal government broke the putative link between war and universal health care by treating ex-servicemen differently from everyone else. In 1930 the Veterans Administration was set up to care for those who had served in the first world war. It has since become a single-payer system of government-run hospitals of the kind that many Americans associate with socialised medicine in Europe. America did come close to introducing something like universal health care during the Vietnam war, when once again large numbers of men were being drafted. Richard Nixon proposed a comprehensive health-insurance plan to Congress in 1974. But for Watergate, he might have succeeded. + + + +Still, though slow to get going on welfare, the direction of travel in America has been unmistakable. Beginning in the 1930s during the Depression, Congress gradually added federal entitlements. They multiplied again in the 1960s and have grown steadily since. The last time the country had a Republican president, a new entitlement, Medicare part D, was created. Rather than oppose this, many Republicans reasoned that if anyone was going to create a new social programme, it might as well be them. This creeping growth of government provision has left those conservatives who really do want to cut social programmes to try and starve the federal government of revenue, in the hope that one day they will collapse under the weight of their own contradictions. The reckoning is yet to come. Wagner’s law, named after Adolph Wagner, a German economist, states that as societies grow richer, government consumption tends to take up a greater share of GDP. The pattern holds for America, too (see chart). Hence the distress on the right over the American Health Care Act. + +Pushing against Adolph Wagner’s law is another, newer tendency. Americans who recalled the Depression and the second world war tended to look more favourably on the redistribution of income. Ilyana Kuziemko of Princeton and Vivekinan Ashok and Ebonya Washington, both of Yale, have found that support for redistribution has dropped among retired people over the past few decades (see chart). One explanation for this is that people retiring now have no memory of the two big, unifying events of the 20th century. It may be no coincidence that this reluctance to redistribute, which comes out particularly strongly in the opposition among current pensioners to extending health insurance, followed a surge in immigration at the end of the 20th century. In the 1950s, immigration to America averaged 250,000 people a year; in the 1990s, it reached 1m a year. + + + +If true, this tendency (which could be called Richard Wagner’s law, after the composer who understood how powerful the urge to root for your own tribe can be) is as alarming for America’s liberals as Adolph Wagner’s law of ever-increasing spending is for its conservatives. For it seems to suggest that by embracing the causes of immigration and diversity, they may have accidentally weakened support for the economic policies they favour. + +Take Donald Trump, Paul Ryan and Barack Obama out of America’s current argument about health care, and it could be seen as a clash between these two Wagner’s laws: Richard versus Adolph. Whether American welfare continues to converge gradually with the rest of the rich world, or stays distinctively flinty, depends on which Wagner comes out on top. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21718885-one-way-seeing-fight-over-health-care-clash-between-two-different-wagners/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Rules for war + +The president is making it easier to order lethal drone strikes + + +Rules put in place under Barack Obama are being loosened + + + + + +From the print edition | United States + + +Mar 16th 2017 + + + + + +THROUGH a mixture of leaks and semi-official confirmations, a picture is beginning to emerge of how the Trump administration will loosen the rules for counter-terrorism operations laid down by its predecessor. Some of the changes form part of the preliminary plan for accelerating the destruction of Islamic State (IS) that James Mattis, the defence secretary, was ordered by Mr Trump to conclude within 30 days. Mr Mattis has to tread a delicate path between the bombast of Mr Trump���s campaign promise to “bomb the shit” out of ISIS and the operational constraints imposed by Barack Obama, which many military and intelligence officers thought unduly restrictive. + +Among the changes that are in the pipeline (or are already being quietly implemented) is a loosening of the guidelines Mr Obama set for drone strikes and targeted killings in places that are not counted as war zones, such as Yemen, Somalia and Libya. Although Mr Obama authorised extensive use of drones to kill terrorists, particularly al-Qaeda groups in Pakistan’s North Waziristan, he became uncomfortable about the ease with which America could kill its enemies, wherever they were. + + + + + +Latest updates + + + + + +See all updates + + + +Mr Obama’s playbook for drone use had four main principles. The first was that strikes outside war zones could occur only if there was near-certainty that civilians would not be harmed. The second was that the target had been identified with near-certainty and represented a threat that could not be dealt with in any other way. The third was proper oversight and chain-of-command accountability—a reason for moving responsibility for drone strikes from the CIA to the Pentagon. The fourth was that any strikes had to advance broader American strategic interests—for example, they should not undermine intelligence-sharing with a host country or be a recruiting agent for new terrorists. + +Sensible though these rules were, they reduced the speed and nimbleness that is sometimes required when a target is fleeting. Under the loosening of the rules now under way, avoiding civilian deaths will no longer be an overriding priority. A place that fails to qualify as a war zone may be designated “an area of active hostilities” where rules of engagement can be eased. + +Mr Obama used this label to authorise strikes against IS in its Libyan base, Sirte. Mr Trump has already agreed to a Pentagon request to apply the description to three provinces of Yemen, which have subsequently been heavily pounded. One attack on March 2nd against the Yemeni al-Qaeda affiliate comprised 25 strikes by manned and unmanned aircraft (nearly as many as in the whole of last year). + +A further change is that the CIA will once again be allowed to carry out lethal strikes, as opposed to using its drones only to gather intelligence. Indeed, it has already done so, killing Abu al-Khayr al-Masri, a son-in-law of Osama bin Laden, in northern Syria in late February. Because the CIA operates under covert authorities, it is not subject to the same legal constraints and transparency as the Pentagon. + +Meanwhile, without any previous announcement, a further 400 troops—from the Army Rangers and the Marine Corps—have turned up in northern Syria, both to help the Kurdish-Arab Syrian Democratic Forces (SDF) in their coming assault on the IS stronghold of Raqqa, and to deter Turkey, a NATO ally, from attacking the SDF. That brings American ground forces in Syria to 900. Another 2,500 troops will soon be on their way to Kuwait to join the fight. + +One of Mr Trump’s aims appears to be to delegate much more of the decision-making to the Pentagon and the spooks. Asked about the deployment to Syria, his press secretary, Sean Spicer, said only that “the president was made aware of that.” After the recent ill-fated special forces raid in Yemen that left a Navy SEAL and at least 25 civilians dead, Mr Trump tried to evade responsibility for what happened, saying it was just something the generals had wanted to do. The complaint those same generals made against Mr Obama was that he micro-managed. By contrast, under Mr Trump, it seems that if anything should go wrong, it will not be his fault. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21718898-rules-put-place-under-barack-obama-are-being-loosened-president-making-it-easier/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The incarcerated workforce + +Prison labour is a billion-dollar industry, with uncertain returns for inmates + + +In Idaho, prisoners roast potatoes. In Kentucky, they sell cattle + + + + + +From the print edition | United States + + +Mar 16th 2017 | LEXINGTON, KENTUCKY + + + + + +SILICON VALLEY mavens seldom stumble into San Quentin, a notorious Californian prison. But when Chris Redlitz, a venture capitalist, visited seven years ago, he found that many of the inmates were keen and savvy businessmen. The trip spurred him to create The Last Mile, a charity that teaches San Quentin inmates how to start businesses and code websites, for which they can earn up to $17 an hour. One of the first people it helped was Tulio Cardozo, who served a five-year sentence after a botched attempt at cooking hashish, which also left him with severe burns across half his body. Two years after he was released, he got a job as a lead developer in a San Francisco startup. + +Such redemptive stories are the model for what the prison system could be. But they are exceptions—the rule is much drearier. Prison labour is legally required in America. Most convicted inmates either work for nothing or for pennies at menial tasks that seem unlikely to boost their job prospects. At the federal level, the Bureau of Prisons operates a programme known as Federal Prison Industries that pays inmates roughly $0.90 an hour to produce everything from mattresses, spectacles,road signs and body armour for other government agencies, earning $500m in sales in fiscal 2016. Prisoners have produced official seals for the Department of Defence and Department of State, a bureau spokesman confirmed. In many prisons, the hourly wage is less than the cost of a chocolate bar at the commissary, yet the waiting list remains long—the programme still pays much more than the $0.12-0.40 earned for an hour of kitchen work. + + + + + +Latest updates + + + + + +See all updates + + + +Similar schemes exist at the state level as well, making the market of 61,000 captive labourers worth well over $1bn. California’s programme expects to generate $232m in sales this year, much of it from construction and textiles, though $10m is also expected from meat-cutting. In Idaho, prisoners roast potatoes. In Kentucky, they sell $1m worth of cattle. + +Critics have spent years directing their anger towards private prisons, by pointing out the moral hazard created when profiting from punishment. Jeff Sessions, the attorney-general, caused a stir last month when he cancelled an Obama-era directive to phase out federal contracting with private prison companies, which expect bumper earnings under Donald Trump. The share price for CoreCivic, the rebranded name of the Corrections Corporation of America, shot up by 43% in a single day after Mr Trump was elected, in anticipation of lucrative contracts to run immigration detention centres. + +But those who attack the new prison-industrial complex might be surprised to learn that America’s publicly run prisons have been providing labour for private companies since 1979. More than 5,000 inmates take part in the scheme, known as “Prison Industry Enhancement”. “Orange is the New Black”, a television show set in a women’s prison, recently lampooned a private-prison takeover, after which the inmates are forced to sew lingerie for $1 an hour. But this gets the history only half right. Female inmates did indeed make lingerie for brands like Victoria’s Secret in the 1990s—but only through a deal between South Carolina’s public prisons and a private manufacturer. + +America’s prison-labour industry is wrapped in euphemism. Federal Prison Industries does business under the more palatable name of UNICOR, and government-run prison production schemes are called “correctional industries”. Some slogans are better than others; UNICOR has an unfortunate habit of calling its facilities “factories with fences” in reports. + +Employment upon release is perhaps the best defence against recidivism. The chief justification for prison labour is that it both defeats idleness and gives inmates marketable skills. Whether it actually does so is unclear. “The vast majority of prison labour is not even cloaked in the idea of rehabilitation,” says Heather Thompson of the University of Michigan. Simple manufacturing jobs, like the ones done cheaply by most inmates, have already left the country. The study pushed by the Bureau of Prisons, showing drops in reoffending, was published in 1996. More recent comparison statistics often ignore bias in how those being studied are chosen. Rigorous academic work on the subject is almost non-existent. + +Still, such programmes are undoubtedly legal. The Thirteenth Amendment to the constitution prohibits slavery and indentured servitude—“except as a punishment for crime”. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21718897-idaho-prisoners-roast-potatoes-kentucky-they-sell-cattle-prison-labour/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Biography of a gun shop + +How Chuck’s became a symbol of what’s wrong with America’s gun laws + + +From 2009 to 2013, more than 1,500 guns found at Chicago crime scenes were traced to a single store + + + + + +From the print edition | United States + + +Mar 16th 2017 | CHICAGO + + + + + +RIGHT next to Travis Funeral Home & Cremation Services, a dignified-looking canopied establishment offering funerals for $3,995, sits Chuck’s Gun Shop, a retailer of shotguns, rifles, pistols and semi-automatic guns, as well as ammunition, knives and holsters. The store in Riverdale, a suburb of Chicago, advertises itself as “your friendly neighbourhood gun shop”, but in recent years Chuck’s has acquired national notoriety as possibly the worst of the “bad apple” shops that supply a high percentage of guns recovered at crime scenes. “Criminals will always get guns because Chuck’s sells to the criminals,” is a frequent saying of Father Michael Pfleger, a pugnacious Catholic priest, who has led several demonstrations in front of Chuck’s. + +On a wintry day in March, Chuck’s is businesslike and friendly. Asked whether a foreigner can buy a gun (most cannot), Ted, an avuncular, moustachioed salesman, replies: “This is America, you can get anything you want,” before offering a quick tour of the shop’s shooting range, a low-lit room with four 50-feet lanes and a rubbish bin riddled with bullet holes. He explains that all buyers must apply for a Firearms Owners Identification (FOID) card from the Illinois state police, who will check the applicant’s criminal background, a process which can take up to ten weeks. Anyone with a FOID card can buy a gun, though once a purchase is made Chuck’s will hold on to the gun for 24 hours, during which the shop’s personnel are required to check whether the card is still valid. The cooling-off period is meant to prevent impulsive acts of violence. + + + + + +Latest updates + + + + + +See all updates + + + +Why has Chuck’s become the favourite whipping boy of gun-control campaigners? According to the Brady Campaign To Prevent Gun Violence, more guns used in crimes between 1996 and 2000 were traced to Chuck’s than to any other gun-dealer in the country—2,370. And from 2009 to 2013 more than 1,500 guns found at Chicago crime scenes were traced to Chuck’s, more than the next two dealers combined. The average number of crime guns traced back to other gun-dealers in the area during the same period was three. + +John Riggio, the owner of the shop, does not give interviews nowadays. In the past, he has said that he follows Illinois’s relatively strict gun laws meticulously. Neither he nor a member of his family has ever been charged with wrongdoing. (Chuck’s has been a family business for 50 years.) Mr Riggio has also argued that he cannot control what happens when someone leaves the shop, especially if the buyer is a straw man. “We don’t buy that argument,” says Dan Gross of the Brady Campaign. If shops follow the Brady code of conduct, drawn up to prevent dangerous people from getting guns, argues Mr Gross, they won’t sell to straw buyers or gun-traffickers. The code includes looking out for tell-tale signs of straw purchases, such as a clueless buyer of a gun (likely to be under instruction), or someone waiting in the car outside while a purchase is being made. It also suggests limiting sales to one handgun per civilian every 30 days, and keeping an electronic inventory of all sales that is backed up regularly. + +The two most effective reforms to reduce gun violence, according to Adam Winkler at the University of California, Los Angeles, would be a federal universal background check and a crackdown on rogue gun-dealers. Current rules on background checks apply only to licensed gun-dealers, but up to 22% of gun sales take place at gun fairs or over the internet, which do not require such checks. The Bureau of Alcohol, Tobacco, Firearms and Explosives, he argues, needs money and orders to go effectively after gun-dealers who overlook fishy sales. + +It would also help if straw purchasers were punished more harshly. According to Harold Pollack at the University of Chicago, who conducted interviews with inmates of Cook County jail, the country’s biggest, for a study he co-wrote on the provenance of their weapons, most got their guns through a family member or a friend, rather than stealing them or buying them directly. Many admitted they thought they needed a gun because they feared others with guns. “I would rather be judged by 12 than carried by six,” they said. It may not be a coincidence, after all, that a funeral parlour set up shop next to Chuck’s. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21718895-2009-2013-more-1500-guns-found-chicago-crime-scenes-were-traced/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Raiders of the lost barks + +The agency that accounts for missing American servicemen + + +The crack military unit whose quarry is not foreign enemies but long-dead soldiers + + + + + +From the print edition | United States + + +Mar 18th 2017 | JOINT BASE PEARL HARBOUR-HICKAM, HAWAII + + + + + +TWO hundred and eight boxes were handed over by the North Koreans, but American scientists quickly realised that the remains inside them belonged to many more lost servicemen. The consignment of bones, acquired in the early 1990s, was augmented by 33 American expeditions, spread over a decade. Although those were tightly escorted, recalls Johnie Webb, who went on some of them, the North Koreans were “very receptive”. Too receptive, perhaps: some of the specimens the Americans dug up had been freshly reburied for them to find. The visitors brought hard currency; their hosts wanted them to succeed. + +The North Korean haul—altogether containing the remnants of over 600 individuals—has its own section in the Defence POW/MIA Accounting Agency’s new laboratory at Joint Base Pearl Harbour-Hickam, on the outskirts of Honolulu. The scenes inside the lab and beyond its windows are grimly contrasting. Outside stand monkey-pod trees and the mountains of Oahu; inside are rows of tables on which rest skeletons, individual skulls or hip bones, and grisly scraps. The Korean project exemplifies some of the challenges of the agency’s mission to account for all missing American servicemen from the second world war onwards—a task that encompasses the edges of forensic science and the delicacies of diplomacy. It is logistically challenging and emotionally wrenching, expensive but priceless, quixotic but quietly heroic. + + + + + +Latest updates + + + + + +See all updates + + + +To illustrate the environment’s effect on a corpse, John Byrd, the lab director, points to the skeletons of two marines known to have died on the same day in the Battle of Tarawa (now in Kiribati) in 1943. One, which was buried in a coffin, is recognisably human; the other, which was left in the sand, has disintegrated. In South-East Asia there are monsoons, humidity, lots of wild animals: “horrible for preservation,” says Mr Byrd. Many of the missing from the Vietnam war were shot-down pilots, says Brigadier-General Mark Spindler, the agency’s deputy director, so “you’re looking for teeth, you’re looking for slivers of bone.” Jumbles of fragments are brought in from battlefield sites or mass graves, such as a pile retrieved from Cabanatuan, a camp that was a terminus of a POW death march in the Philippines. + +“The first question”, Mr Byrd says, “is, is it even human?” Then his colleagues must determine how many individuals are represented and whether they were American. Recent advances in the science of bone DNA make that easier; its insights are combined with biographies, dental records and rib-cage data from tuberculosis tests, plus circumstantial clues such as aircraft serial-numbers. The sleuthing can take years—and that is just the lab work. + +Before they can be identified, the remains must be recovered. Some come from American military cemeteries, in Hawaii itself, Manila and elsewhere, in which around 8,000 unknowns are thought to lie. But others are unearthed by teams dispatched to dig in jungles and beaches around the Pacific or to sift through European mud, highly skilled units whose quarry is not live enemies but long-dead compatriots, and whose role is more humanitarian than military. They include photographers, forensic archaeologists and anthropologists, aircraft experts and (depending on the terrain) divers and mountaineers. + +Strange meetings + +Fifty missions went out last year. Given its reach, the agency inevitably faces political hurdles as well as practical ones. The North Korean visits, for example, stopped in 2005 because of security worries. Still, while authoritarian regimes may impose restrictions, says General Spindler, usefully their officials “work all the access”. In democracies the constraints are subtler: there is “a greater awareness that you’re on personal property” and more room for private objections. Moreover, “Archaeology is a damaging science.” On a recent trip to the Solomon Islands, in pursuit of ten marines interred close to where they fell in 1942, a team dismantled a local’s kitchen, rebuilding it after the dig. + +The risks are not just to property. There are tropical diseases, landmines—unexploded-ordnance officers are deployed too—and accidents. Seven Americans were killed in a helicopter crash in Vietnam in 2001. “There is nothing easy about this,” says General Spindler. Nor is the quest cheap. The custom-built facility in Hawaii, named after Daniel Inouye, the senator who lobbied for it, cost $85m; previously the relics were housed in an old barracks at risk of flooding. There is another lab in Omaha, an HQ in Washington, DC and permanent detachments in Germany, Laos, Thailand and Vietnam. A total of 700 people work for the agency; its annual budget is around $115m. + +Searching in the waters of Vietnam + + + +According to various audits and reports of a few years ago, not all those funds have always been well spent. The bureaucracy was found to be ramshackle; there was talk of “military tourism” and luxury hotel stays in Rome. A Senate subcommittee weighed in. The structure has since been consolidated and—says General Spindler—inefficiencies addressed. Yet the implied cost of each ID continues to be eyebrow-raising. Last year’s total was 164, a bump on previous tallies but short of a congressional target of 200. The overall caseload is around 83,000, including 73,000 from the second world war. Even discounting more than 40,000 lost at sea, at today’s pace it would take a couple of centuries to clear the backlog. (It would help if the rules were changed, so that physical evidence was not always required for an accounting.) + +While the dividends may seem intangible, though, they are real. “You cannot associate a dollar value with this national imperative,” says General Spindler. Overseas missions “publicly demonstrate our values” of loyalty and honour; sometimes the agency can repatriate other countries’ casualties (South Korea is said to be keen to take them, the North less so). The effort assures current servicemen that, should the worst befall them, they won’t be forgotten. + +Then there are the families. Sometimes the missing’s links to the living are tenuous, and the agency has to enlist genealogists to find relatives who can supply DNA samples for comparison. But often, observes Wil Hylton—author of “Vanished”, a book about the long search for a bomber crew lost over Palau in 1944—the unanswered questions inflict “hereditary damage”. Children “grow up not knowing whether their father is dead or alive”; wives are haunted by a hybrid hope and fear that their husbands survived and “might walk back through the door”. It is “a wound that never heals”, Mr Hylton says. + +Unless the agency provides a salve. Mr Byrd recalls a woman who, before entering the family viewing room at the heart of the building in Hawaii, fixed her hair to encounter what was left of the father she never met. “It’s still very real, raw pain,” he says, “like it happened a week ago.” The protocol after an ID is the same as after a new fatality: a visit from an officer, a formal service at Arlington National Cemetery or in the no-longer missing’s home state. + +Deanna Klenda’s brother, Major Dean Klenda of Marion, Kansas, was shot down over North Vietnam in 1965. His parachute failed to open, Ms Klenda says, and his family knew he had died, but she longed to bury him, “even a knuckle”. They “never thought they would ever find anything of him”; but after a Vietnamese villager chanced on a jawbone, and after years of prompting by Ms Klenda and excavations by researchers, his remains were finally flown back to Kansas from Hawaii last year. “When they put that little piece of dental work in my hand,” Ms Klenda says, “that was the biggest hug I’d gotten in 51 years.” There was a fly-over in his honour at the funeral, and “I cried my heart out because he was finally home.” + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21718847-crack-military-unit-whose-quarry-not-foreign-enemies-long-dead-soldiers/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Lexington + +Donald Trump has not faced a challenge like fixing American health care before + + +No sales pitch can get around the fact that people either do or do not have health insurance + + + + + +From the print edition | United States + + +Mar 16th 2017 + + + + + +ASK Washington grandees to explain President Donald Trump’s rise, and they often recommend reading “The Art of the Deal”. One piece of advice from that I-got-rich-quick book, published in 1987, is cited more than any other: Mr Trump’s boast that he built a property empire on “truthful hyperbole”, playing on the public’s desire “to believe that something is the biggest and the greatest and the most spectacular”. It is a striking passage to choose, but also a misleading one—implying that Trumpian success, in essence, rests on a talent for bamboozling rubes. + +Actually, at the heart of “The Art of the Deal” lies a more subtle point about human nature: that some of the most profitable bargains are struck not with passive dupes, but with partners who are complicit in their own manipulation. A revealing episode describes Mr Trump tricking investors into thinking that a casino in Atlantic City is almost half-built by cramming the site with bulldozers under orders to look busy. Despite an awkward moment when an investor asks why one builder is refilling a hole that he has just dug, the gambit works. The investors had already been burned once by a project that ran over-budget so now needed a quick success, Mr Trump explains: “My leverage came from confirming an impression they were already predisposed to believe.” + + + + + +Latest updates + + + + + +See all updates + + + +That variety of leverage has been key to Mr Trump’s success, in business and now in politics. He is an unusual sort of tycoon. He has no life-changing invention to his name. He did not build a globally significant corporation (worth about $4bn, the Trump Organisation would be America’s 833rd-largest firm if it were listed). Instead he turned himself into a brand. He is a salesman whose greatest product is himself, slapping his name on everything from skyscrapers to hotels, casinos, golf courses or the series of high-priced, hard-sell property seminars dubbed Trump University. He boasts of how many deals involve other people’s money, whether that involves picking up distressed assets for a song or luring gamblers to his casinos—“I’ve never gambled in my life,” he bragged back in 1987, adding: “I prefer to own slot machines. It’s a very good business being the house.” + +Mr Trump’s business model offers him an unusual advantage. Whenever customers buy into his brand, they have a vested interest in his continued success. When buyers complain about corner-cutting in the construction of a Trump-branded apartment complex (“value engineering”, he calls such penny-pinching in “The Art of the Deal”), they harm the value of their own asset. Unhappy students of Trump University extracted $25m from the businessman, as he settled class-action lawsuits without admitting wrongdoing. Their satisfaction was hard-won: the world now knows their “qualifications” are worthless. + +Mr Trump has worked to forge similar bonds of complicity with voters. His pledges to put America First, to deport “criminal aliens” or to bring back millions of manufacturing jobs make supporters feel empowered, heeded, safe and hopeful. Critics question such pledges at their peril: millions of Americans have invested a good deal in believing this president. + +So much for Mr Trump’s success. Now, not two months into his presidency, he faces the hardest test of his political life to date, as he and Republicans in Congress wrangle over how to repeal and replace the Obamacare health law, more formally known as the Affordable Care Act (ACA). + +On the campaign trail Mr Trump pledged to abolish what he called the “disaster” that is the ACA, and to “come up with a new plan that’s going to be better health care for more people at a lesser cost.” He promised to scrap things that the public dislikes about Obamacare, starting with its government mandate to buy health insurance or pay a penalty, while keeping things that are popular, such as protections for people with pre-existing conditions. + +As a candidate Mr Trump proudly broke with Republican orthodoxy and said that—unlike other rival conservatives with White House ambitions—he would preserve “without cuts” the Medicare and Social Security safety-nets that mostly serve the elderly, as well as the Medicaid system of health insurance for the poor and disabled. The ACA offered federal funding to states that agreed to expand Medicaid, adding 12m people to its rolls. + +Repeal, replace and reap what follows + +On March 13th the Congressional Budget Office (CBO), which “scores” new laws for probable costs and impacts, concluded that under an ACA replacement proposed by House Republicans, 14m more Americans will be uninsured in 2018 compared with current law, while by 2026 the ranks of those without health cover will swell by 24m as Medicaid is cut back. This will hit some core Trump supporters: the CBO estimates that while the young would gain from the Republican plan, those in their early 60s on low incomes, as well as rural folk, would see costs rocket. + +Republican responses have been cacophonous. Party leaders like Paul Ryan, the Speaker of the House of Representatives, defend the new health plan for cutting spending and call the cover offered by Medicaid so skimpy as to be worthless. Conservative House members call the new plan Obamacare-lite, saying its system of tax credits is too generous. Some Senate Republicans, especially those from states which expanded Medicaid, call the new plan too harsh. White House aides have rubbished the CBO and promise that Mr Trump’s dealmaking skills will save the day. + +But even for Americans predisposed to believe that Mr Trump is their champion and that his critics are lying, the question of whether they can or cannot afford health insurance is starkly binary. Being unable to buy treatment for a loved one is not empowering, it is frightening. Health care is an area in which voters have little incentive to forgive broken promises: even if their first instinct may be to blame those around the president, not Mr Trump. The president is in perilous territory. He needs a product that does an almost impossible job. Sales patter will not do. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21718891-no-sales-pitch-can-get-around-fact-people-either-do-or-do-not-have-health/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +The Americas + + +Andrés Manuel López Obrador: Mexico City, we have a problem [Fri, 17 Mar 09:50] + +Bello: The pros and cons of Macri’s gradualism [Fri, 17 Mar 09:50] + +Guatemala: Deaths foretold [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Andrés Manuel López Obrador + +Mexico’s populist would-be president + + +Mexico City, we have a problem + + + + + +From the print edition | The Americas + + +Mar 16th 2017 | JILOTEPEC + + + + + +WHEN Andrés Manuel López Obrador winds up a stump speech in the main square of Jilotepec, a small town in the eastern state of Veracruz, the crowd surges forward. It takes him 15 minutes to pass through the commotion of backslapping, selfies and jabbing microphones to reach the car parked outside the tent where he spoke. The point of the rally is to promote Mr López Obrador’s party, Morena, in municipal elections to be held in Veracruz in June. But his main goal is much bigger: to win Mexico’s presidency on his third attempt, in 2018. + +That is a prospect that thrills some Mexicans and terrifies others. A figure of national consequence for more than 20 years, AMLO, as he is often called, has fulminated against privilege, corruption and the political establishment. Sweep away all that, he tells poor Mexicans, and their lives will improve. Many others hear in that message the menace of a charismatic populist who would punish enterprise, weaken institutions and roll back reforms. The biggest worriers view him as a Mexican version of the late Hugo Chávez, an autocrat who wrecked Venezuela’s economy and undermined its democracy. + + + + + +Latest updates + + + + + +See all updates + + + +But Mexico, like some richer countries, may now want more drastic politics. Voters are enraged by corruption, crime, which is rising again after a drop, and feeble economic growth. Not long after Mr López Obrador spoke in Jilotepec, the state prosecutor in Veracruz reported that 250 skulls, belonging to victims of drug gangs, had been found in pits near the state capital. Many Mexicans have stopped believing that either of the parties that have governed Mexico this century, the Institutional Revolutionary Party (PRI) of President Enrique Peña Nieto or the opposition National Action Party (PAN), will do much about such horrors. And now they face a confrontation with an American president who wants to end free trade, deport millions of Mexicans, build a wall and force Mexico to pay for it. + +AMLO proposes to answer graft with his own incorruptibility, and Donald Trump’s nationalism with a fiery nationalism of his own. In Jilotepec he rails against the former governor of Veracruz, now facing corruption charges and on the run from the police. He slams the PRI, the fugitive’s party, as “corrupt and cynical” and the PAN as “corrupt and hypocritical”. The message strikes home. “Mexico is rich, but those who govern us rob us,” says a supporter. + +Mr López Obrador has taken his campaign to the United States, where he presents himself as the only politician who can stand up to Mr Trump. In New York on March 13th he denounced Mr Peña for allowing his American counterpart to rain “insolence and insults” upon millions of Mexicans living in the United States. A President López Obrador would mean “alpha males either side of the border”, says Juan Pardinas of IMCO, a think-tank. Voters may like that idea. + +Mr López Obrador is the early front-runner for next year’s election (Mr Peña cannot run again). In a one-round election, he could win with as little as 30% of the vote (see chart). If that happens, Mexico will embark on a perilous political experiment. + + + +He began his political career in the southern state of Tabasco as an operative of the PRI, which monopolised political power at the national level from 1929 to 2000. His renegade streak showed up early. As an official of the National Indigenous Institute he spent five years living with the Chontal, an Indian community. Hence his preoccupation with the poorest Mexicans, says Lorenzo Meyer, a historian. Mr López Obrador became the PRI’s state chief, but was squeezed out of the job by priistas suspicious of his grassroots organising. + +His rise to national prominence came after he lost a race to be governor of Tabasco in 1994 as the candidate of what is now the Party of the Democratic Revolution (PRD), a left-wing group that had broken away from the PRI. At a sit-in in the Zócalo, Mexico City’s main square, Mr López Obrador theatrically presented 14 boxes of documents proving, he said, that the PRI had stolen the election. + +His talent for political showmanship helped make him mayor of Mexico City from 2000 to 2005. He ran twice for the presidency, in 2006 and 2012, losing to Mr Peña in the second contest. In 2014 he split from the PRD over its support for Mr Peña’s economic reforms and founded Morena, the Movement of National Regeneration. + +Mr López Obrador has been an unremitting opponent of measures to modernise the economy, from the North American Free Trade Agreement with the United States and Canada, which took effect in 1994, to the opening up of the energy market to private investors under Mr Peña in 2014. If elected, Mr López Obrador promises to hold a referendum on energy reform. A chapter in his most recent book is called “privatisation is a synonym for robbery”. He has sided with a radical and disruptive teachers’ union in resisting an education reform promoted by Mr Peña, which would require teachers in the abysmal state schools to take evaluation tests. + +As Mexico City’s mayor, Mr López Obrador caused less mayhem than his image suggested he might. He built roads and introduced a small universal pension. Debt rose by a modest 9% in real terms during his mayoralty. “He got on well with businesses and with developers,” says Agustín Barrios Gómez of the Mexican Council on Foreign Relations, who is a former PRD congressman. He left office with an approval rating of 84%. But he preferred popular policies to good ones. The pensions did not require future beneficiaries to contribute. The investment in roads would have been better spent on public transport. He did not work to professionalise the police or the judiciary. In short, “he was not an institution builder”, says Mr Pardinas. + +That failure points to his most worrying trait: a contempt for norms, separation of powers and the rule of law. After he lost the election in 2006, his supporters threatened a revolution and blocked Reforma, one of the capital’s main roads, for six weeks. In 2001 he responded feebly to the lynching of a man suspected of stealing religious images near Mexico City, saying, “We do not interfere with the beliefs of the people.” Though personally honest, Mr López Obrador lacks the respect for institutions that would make him an effective corruption-fighter. + +As the date for the 63-year-old’s third (and probably final) run for the presidency approaches, he is trying to be less divisive. He endorsed Mr Peña’s plan to visit Mr Trump in January. (The trip was cancelled after the American president posted an insulting tweet.) He has been friendlier to business. Disappointed by the performance of the economy under the reformist Mr Peña, some entrepreneurs are “more willing to give Mr López Obrador a chance”, says Gerardo Esquivel, an economist at the Colegio de México, a university. + +For now, Mr López Obrador has the political field to himself. Morena is basically a one-man party, which means its quota of party-propaganda broadcasts can focus on promoting him. Other parties have to divide their resources among various politicians; none has yet selected its presidential candidate for 2018. This “has had an enormous effect” on AMLO’s chances of winning, says Mr Aguilar. + +The PRI’s nominee for president, whoever it is, will be tainted by association with the current government. The likeliest PAN candidate, Margarita Zavala, is popular, but she is the wife of a former president, Felipe Calderón, who is widely blamed for an upsurge of violence provoked by his inept crackdown on crime. The PRD has little support. Inflamed relations with the United States and an economy weakened by the onslaught from the Trump administration would also play into Mr López Obrador’s hands. + +His victory is no sure thing. His momentum would be slowed if Morena does badly in the governor’s election in the State of Mexico in June. Anybody-but-AMLO voters could unite behind one candidate; nearly half of voters have a negative view of him, a much higher share than for any other potential candidate. He has a talent for self-destruction. In 2006 his 16-point lead vanished after he refused to participate in the first televised debate and called the president, Vicente Fox, chachalaca, a bird noted for its loud cackle. + +Much of Mexico’s elite prays that such buffoonery will again prove his undoing. But he has become smoother and more disciplined. The danger is that, even if he is shrewder about obtaining power, he may be no wiser about how to exercise it. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21718906-mexico-city-we-have-problem-mexicos-populist-would-be-president/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bello + +The pros and cons of Mauricio Macri’s gradualism + + +The new Argentina prepares for an electoral test + + + + + +From the print edition | The Americas + + +Mar 16th 2017 + + + + + +TO THE deafening beat of big bass drums and the occasional firecracker, tens of thousands of banner-waving trade unionists marched through the heart of Buenos Aires on March 7th, in protest at job losses and inflation. “We’re up to here,” said Silvia Blanchoux, a hospital cleaner, gesturing with a hand across her throat. “My rent has gone up, and my daughter is unemployed.” + +The protest coincided with a strike by teachers. This stirring of opposition comes at a delicate time for Argentina’s president, Mauricio Macri, and his efforts to repair the damage inflicted by the populism of his Peronist predecessors, Cristina Fernández de Kirchner and her late husband, Néstor. In October Mr Macri’s centre-right Cambiemos (“Let’s change”) coalition faces a mid-term election for almost half of congress. This will be a symbolic referendum on the government. + + + + + +Latest updates + + + + + +See all updates + + + +In fact, it is surprising that Mr Macri, a former businessman, remains as popular as he is (his approval rating is around 50%). His victory in November 2015 was unexpected. He inherited a country whose future was mortgaged: international reserves were negligible; a dispute with bondholders had cut Argentina off from credit markets; inflation was around 30%; and the fiscal deficit was 5.4% of GDP in 2015, swollen by indiscriminate subsidies to consumers and crony companies and financed by printing money. + +Mr Macri’s team moved swiftly to dismantle exchange controls, devalue the peso and settle with the bondholders. It raised interest rates to stop inflation from getting out of control, which pushed the economy into a short recession. It has otherwise moved cautiously. Official targets call for single-digit inflation to be reached only in 2019, when the deficit should be 2.2% of GDP. Some 15% of imports are still subject to the Kirchners’ barriers. + +This caution stems from circumstance—Mr Macri lacks a majority in congress—but also from his preference for consensus-building, honed during eight years as mayor of Buenos Aires. It may mitigate the social impact of stabilisation in a country still traumatised by an economic collapse in 2001-02. + +Yet gradualism is no panacea. Businesses worry that the use of dollar loans to finance the fiscal deficit, although non-inflationary, is again leading to an overvalued peso. Although Nicolas Dujovne, the treasury minister, says that inflation is falling and output and employment are growing, many Argentines do not yet feel the benefits. “We were going OK and now we’re poorer,” said Ms Blanchoux. Despite an increase in social assistance, a survey by the Catholic University found that the urban poverty rate edged up last year from 29% to 33%. Since December opinion polls show a sharp dip in optimism. + +That coincides with a series of what pundits call “unforced errors” by the government. They range from the trivial (a row over moving a public holiday) to the troubling: a now-cancelled write-down of a disputed debt owed to the state by a firm owned by Mr Macri’s father. Critics also complain of micromanagement by the Casa Rosada, the presidential palace. + +Marcos Peña, Mr Macri’s cabinet chief, insists that the errors are minor compared with those of the Kirchners. The biggest problem, he adds, is the pain that the squeeze is producing in the lower-middle class, “who voted for us”. In response, the government is slowing down the withdrawal of subsidies (which had caused big rises in electricity and water bills, albeit from almost nothing). It has launched a $33bn, four-year infrastructure plan to try to speed the economy along. + +Mr Macri still has much going for him. Mario Blejer, a former central-bank governor, thinks GDP will grow by 4% this year. Deficit-cutting is easier because spending under the Kirchners was corrupt and wasteful: contracts for new roads are being signed for up to 40% less than previously budgeted, says Guillermo Dietrich, the transport minister. The Peronists are divided. Many Argentines have tired of the permanent confrontation engendered by Ms Fernández, who is defending herself from corruption charges. + +“Our biggest asset is that we are underestimated,” says Mr Peña. “Without that, we wouldn’t be here.” It is all but impossible for the government to win a congressional majority in October. But it must avoid the perception of defeat, which would make Mr Macri’s government seem like a parenthesis in a populist country rather than the start of a new era. The election comes before the full benefit of more rational policies becomes clear. Even so, many Argentines seem to recognise that Mr Macri is Argentina’s best chance in a generation of breaking out of its vicious circle of populism and decline. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21718907-new-argentina-prepares-electoral-test-pros-and-cons-mauricio-macris-gradualism/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Deaths foretold + +A tragedy at a children’s home in Guatemala + + +A fire draws attention to a broken social-services system + + + + + +From the print edition | The Americas + + +Mar 16th 2017 + + + + + +ON MARCH 7th a team from an international human-rights group arrived in Guatemala to evaluate state-run institutions for disabled people. One stop on their itinerary was the Hogar Seguro (Safe Home) Virgen de la Asunción, a shelter for indigent children, which had been the subject of reports about sexual abuse, violence and overcrowding. The team arrived too late. That night, a fire engulfed a girls’ dormitory, killing at least 40 adolescents and severely injuring a dozen. + +A tragedy at Hogar Seguro was preordained. In interviews with survivors, the team from Disability Rights International (DRI) discovered that 800 children were crammed into a home built for 500. At least two staff members have been jailed for sexually abusing residents. Last year, 142 children ran away. Survivors said staff had locked around 60 girls in a room as punishment for a recent escape attempt; when the girls set mattresses ablaze to protest against their confinement, they were unable to get out. + + + + + +Latest updates + + + + + +See all updates + + + +Hogar Seguro is not an isolated case. The fire is “an indictment of the whole social-service system in Guatemala”, says Eric Rosenthal, DRI’s director. The group found violence, neglect and forced prostitution at several state-run institutions, including Federico Mora, a psychiatric institution for adults. The Inter-American Commission on Human Rights has ordered that institution to improve conditions. + +The victims of the Hogar Seguro fire are among the 7,000 children who live in public and private institutions in Guatemala. Most are not orphans. They come from violent homes or from families that cannot afford to take care of them. The Guatemalan government spends the equivalent of 3.2% of GDP directly on children and adolescents, including on education. That is the lowest rate in Central America. The child-protection agency has a budget of just $2.5m to pay for state-run facilities, which house around 1,000 children, and for monitoring scores of privately run homes. These hold the bulk of children and vary greatly in quality. Even the best do not provide a healthy environment for children to grow up in, say children’s-rights advocates. They have long urged Guatemala to replace them with a system of foster care like that in other countries. + +This will not be easy to arrange. A move away from institutionalisation would require paying stipends to poor families who take their children back; monitoring parents who have been violent but can learn not to be; and expanding a foster-care system that now comprises just 40 families. Paraguay, which is nearly as poor as Guatemala, is an example. It began a shift towards “community placement” after the Inter-American Commission ordered the government to reduce the number of mental-health patients in institutions. + +Human-rights advocates hope the Hogar Seguro calamity will spur reform. “There’s finally growing awareness that things must change,” says Mariko Kagoshima of UNICEF’s Guatemala office. Thousands of people demonstrated on March 11th to demand a government investigation into the malpractice that led to the fire. + +The government’s first response to the fire was inept. It wrongly claimed that the girls were juvenile offenders who had “sharp objects hidden in their hair” and that they had protested because they didn’t like the food. It sent 700 survivors to other institutions, placing some of them with gang members and adult psychiatric patients. Some rock back and forth, hit and bite themselves, and cry through the night as they relive their trauma. + +The government has since taken the tragedy more seriously. It has arrested the director of Hogar Seguro and the social-services secretary, promised changes and asked UNICEF for help. But the resolve to reform must outlast the shock of the fire, which will soon be replaced by other traumas. Improvements to child protection will require “gigantic and sustained social pressure, and a majority of congressmen in favour of change”, says Iduvina Hernández, the director of a Guatemalan human-rights group and a columnist for Plaza Pública, a news site. Despite the tragedy at Hogar Seguro, she fears that “the indignation hasn’t yet reached that level”. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21718908-fire-draws-attention-broken-social-services-system-tragedy-childrens-home/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Asia + + +Impeachment in South Korea: Rule of eight [Fri, 17 Mar 09:50] + +Gambling in Australia: The biggest losers [Fri, 17 Mar 09:50] + +State elections in India: A lotus in full flower [Fri, 17 Mar 09:50] + +Parliamentary trickery in India: An obsession with expropriation [Fri, 17 Mar 09:50] + +Post-war reconciliation in Sri Lanka: Still riven [Fri, 17 Mar 09:50] + +Sri Lanka’s disappeared: No closure [Fri, 17 Mar 09:50] + +Banyan: Vanishing pork shanks [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Rule of eight + +South Korea’s president is impeached + + +Now for a snap election + + + + + +From the print edition | Asia + + +Mar 16th 2017 | SEOUL + + + + + +SHE blocked investigators from entering the Blue House, the presidential residence where she had holed up after the National Assembly asked the constitutional court to remove her from office in December. She refused to be questioned, and attended none of the 20 hearings at which the court heard evidence against her. Three weeks ago she demanded the ejection of one of the justices hearing the case. + +It all did Park Geun-hye more harm than good. On March 10th she became the first president of South Korea to be removed from office by the court, which upheld the assembly’s impeachment motion. It determined that she had not only conspired with a confidante to extort money from big firms, but had also attempted to conceal her wrongdoing. Ms Park was permanently removed from office, cutting short her five-year term by 11 months. + + + + + +Latest updates + + + + + +See all updates + + + +For the time being Hwang Kyo-ahn, the prime minister at the time of Ms Park’s impeachment, will stay on as acting president. But the court’s decision means that an election for a replacement must be held within 60 days; it was set this week for May 9th. Moon Jae-in, a former head of the opposition Minju party, who ran against Ms Park in 2012, is the favourite to win. His approval ratings hover around 32%, a full 15 percentage points ahead of the next-most-popular contender, Ahn Hee-jung, another progressive. Mr Moon says he can bring jaejosanha: a rebuilding of the country, after nearly a decade of conservative rule. + +But Mr Moon remains divisive. Many associate him with “old-school leftism”, according to Choi Jin of the Institute of Presidential Leadership, a think-tank in Seoul—cooler on South Korea’s alliance with America, warmer on talking to North Korea. That puts off older voters, who see his approach as a threat to the country’s security (many carried the American flag at rallies protesting against Ms Park’s impeachment). Others among the millions of South Koreans who agitated for Ms Park’s removal from office expect the next president to satisfy their demands for a fairer political system. + +Three parties have formed a coalition to call for a separate referendum to be held alongside the vote on May 9th, to limit the presidential term to four years with the possibility of a single re-election, as in America. Mr Moon says he supports some such reform in principle, but does not want to rush the decision or muddy the election campaign with it. Mr Choi says the question of whether there should be institutional checks on the head of state will be at the heart of the election. + +For Ms Park’s successor, building consensus will be crucial, says Park Hyung-jun of Sungkyunkwan University (no relation). Hard generational divides have surfaced in the scandal: in recent weeks police have set up barricades at large demonstrations to stop Ms Park’s friends and foes clashing. A vocal, mostly older minority feels that Ms Park has been the victim of a left-wing witch hunt: on hearing the verdict outside the constitutional court, many wept and blared out the national anthem in defiance. Cheers rose from the jubilant anti-Park camp, as they struck gongs and danced to chants of “We won!” + +The court was unanimous in its verdict, even though five of the eight judges had a conservative bent and two had been appointed by Ms Park. The charges fell into five broad categories: abuse of authority in the appointment of government officials; failure to protect citizens’ lives; violation of press freedom; receiving bribes; and extortion in conjunction with Choi Soon-sil, a friend of many years. The justices concluded that there was not enough evidence to prove the first three claims, and did not even address the allegations of bribery. But Ms Park could not be trusted to uphold the constitution, they said, since she had divulged state secrets to Ms Choi (who held no official position) and colluded with her to coerce conglomerates to funnel donations to two cultural organisations that Ms Choi controlled. + +The court also said that Ms Park’s attempts to hide the truth had hindered a parallel investigation by a special prosecutor, whom she herself had appointed in December after accusing the state prosecutors of bias. The justices noted that she had repeatedly pooh-poohed the accusations against her, “damaging the rule of law and representative democracy”. The aloof and imperious style that characterised Ms Park’s presidency also cut it short; Choi Jong-kun of Yonsei University says she “looked down on the entire legal process”. + +Three-quarters of South Koreans approved of Ms Park’s impeachment—an extraordinary reversal for a dynast whose ascent to the presidency had long seemed inevitable. She herself believed she owed it to her parents: Park Chung-hee, who served as president for 18 years after seizing power in a coup, and Yuk Young-soo. Both were assassinated in separate incidents in the 1970s. Ms Park became an MP in 1998, and the leader of the main conservative party in 2004. Much of her support stemmed from a stubborn reverence for her father felt by older voters. + +On March 15th state prosecutors summoned Ms Park, who has lost her immunity from criminal investigation along with her job, as a suspect in the months-long investigation into her alleged abuse of power and the sordid collusion between political and corporate elites. High-ups in the chaebol, family-owned conglomerates which prospered under Ms Park’s father, have routinely been convicted of criminal wrongdoing, then offered presidential pardons. Ms Park herself granted dozens, despite a campaign pledge to limit a practice that “undermined the rule of law”. + +This time Lee Jae-yong, heir to the Samsung empire, has been put behind bars while being tried for bribery. Samsung was the biggest donor to Ms Choi’s foundations—handing over 43bn won ($38m)—in return, prosecutors allege, for government support for a controversial corporate restructuring in 2015. Samsung admits it gave the funds, but says the donations were not in return for any favours. Ms Choi (who, the special prosecutor revealed, owns 36 properties and whose personal wealth stands at 23bn won) is also on trial. + +South Koreans will expect to see swift progress on these momentous trials, and due punishment. Every president since the country’s democratic transition in the 1980s has been ensnared by corruption scandals. The shift to a fresh political set-up fit for a modern, vibrant democracy has been too long delayed, says Mr Park of Sungkyunkwan University. In the early days of the scandal protesters, outraged by what they saw as a complete institutional breakdown, held placards asking, “Is this a country?” The day after the verdict, hundreds brandished new ones: “This is a country. This is justice.” + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21718900-now-snap-election-south-koreas-president-impeached/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The biggest losers + +Australians spend more on gambling than people anywhere else + + +The industry spends a fair bit on lobbying, too + + + + + +From the print edition | Asia + + +Mar 16th 2017 | SYDNEY + + + + + +A BILLBOARD promoting huge cash jackpots hangs over the highway approaching Revesby Workers’ Club, in a rundown suburb in western Sydney. Cafés, restaurants, a hairdresser and a gym are all housed inside the refurbished block. Yet the rooms full of electronic slot machines are among its chief attractions. Rows of ageing punters sip beer and smoke cigarettes as they await a payout from the “pokies”, as the machines are known. Most will leave disappointed: gamblers lose A$330m ($255m) a year at clubs in Canterbury-Bankstown, the local municipality. + +This is no anomaly. Australia fritters away more money per person gambling than any other country. According to H2 Gambling Capital, a consultancy, the average adult lost $990 in 2016; 49% more than Singaporeans, the next-biggest losers. According to an old saying, they would bet on two flies walking up a wall. The pokies are far and away the most popular form of flutter, accounting for over half of annual losses (spending on gambling minus the payouts from it) of $18bn (see chart). + + + + + +Latest updates + + + + + +See all updates + + + +That is partly because of the proliferation of pokies: after decades of liberalisation, the country is peppered with some 197,000 machines—one for every 114 people. Most states allow them in pubs as well as clubs like the Revesby; only Western Australia restricts them to casinos. Punters can bet big and often, incurring losses of up to A$1,200 an hour. Critics say the pokies are designed to get players hooked. Their many potential combinations, “near misses” and promises of big payouts cause the body to release dopamine, a feel-good neurotransmitter, explains Charles Livingstone, of Monash University in Melbourne—“similar to the pattern occasioned by a cocaine addiction”. + +Most Aussies dabble sensibly enough, but almost half of the money sunk into the pokies is spent by problem gamblers, often from poor areas. It is not difficult to make the case for change. In 2010 a government advisory body estimated that the social costs of gambling are at least A$4.7bn a year. Among other measures, it recommended reducing the amount a player can spend per spin to A$1 (the current maximum is A$10), and introducing mechanisms to allow gamblers to set limits on their losses. + +Politicians have little appetite to see such measures through, however. State and territorial governments are responsible for regulating most forms of gambling. They rake in A$5.7bn a year in taxes from the industry—income that has been especially welcome as royalties from mining have fallen. The federal government could, in theory, intervene. But the gambling lobby derailed the most recent such attempt, in 2012, when it caricatured a proposal to oblige gamblers to set limits on their losses as requiring Australians to obtain a “licence to punt”. + +The gambling industry says that it generates thousands of jobs and makes huge “social contributions”, including sponsoring sports teams and providing subsidised food in clubs such as the Revesby. “They do a hell of a lot of good work in places where the government is slow to act,” says one former MP. Yet the industry does not leave regulation to chance: it donates lavishly to both big political parties and to independent politicians. “This corrupts governance,” argues Andrew Wilkie, an independent MP who instigated the attempt at federal regulation in 2012. “No different from a bribe.” + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21718899-industry-spends-fair-bit-lobbying-too-australians-spend-more-gambling-people/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +A lotus in full flower + +Narendra Modi’s party drubs the opposition in India’s biggest state + + +The BJP wins 312 of 403 seats in the state assembly + + + + + +From the print edition | Asia + + +Mar 16th 2017 | VARANASI + + + + + +INDIAN media called it a watershed, a tsunami, the dawn of a new political era. But one cartoonist painted a humbler picture of the elections in five states, the results of which were announced on March 11th. His drawing of a crumpled bicycle, a bandaged hand and a dying elephant poked fun at the symbols of three parties that fared poorly in the most important vote, in Uttar Pradesh, India’s most populous state. The Bahujan Samaj Party (the elephant) and an alliance between the Samajwadi party (the bicycle) and Congress (the hand) had both assumed they would match or outdo the Bharatiya Janata Party (BJP) of Narendra Modi, the prime minister. Neither the BJP’s own pundits, nor the most enthusiastic pre-election polls, nor even illegal betting rackets had thought the party could capture much more than half of Uttar Pradesh’s seats. Yet in the end the BJP, whose symbol is an orange lotus, saw its 40% of the vote magically boosted by India’s first-past-the-post system into 77% of the seats in the state assembly. + +Despite the hyperbole, this was a stunning win. One in six Indians lives in Uttar Pradesh (often shortened to UP), a state that straddles the Hindi-speaking heartland that tends to set the national agenda. Its capture gives a powerful boost to Mr Modi, who had appeared to lose momentum in recent months as he passed the midpoint of the national parliament’s five-year term. With no opponent remotely approaching his stature likely to emerge soon, the general election in 2019 should prove a low hurdle. + + + + + +Latest updates + + + + + +See all updates + + + +The tally of 312 out of Uttar Pradesh’s 403 state legislators will begin to count sooner than that. State MPs vote in indirect elections for both the Rajya Sabha, India’s upper house of parliament, and for India’s presidency, a position that will fall vacant in July. Although Indian heads of state play a largely ceremonial role, the post carries important privileges; Mr Modi is now, in effect, able to choose who holds it. The Rajya Sabha, meanwhile, has been a check on the BJP’s control of the central government. Its membership changes slowly by a complex mechanism, which is why opposition parties still hold a majority. But with the BJP now running 13 of India’s 29 states, including several of the biggest ones, it is a matter of time before the Rajya Sabha, too, turns the party’s trademark orange. + + + +The chattering classes in Delhi, India’s capital, had largely discounted a big win for the BJP. The conventional wisdom was that the party had peaked in the 2014 general election that brought Mr Modi to power; since then it had deflated under pressure from resurgent smaller parties, and been punctured outright by the folly of “demonetisation”—Mr Modi’s decision last November to scrap most of India’s paper currency. But though India’s poorest were also the worst hit by the shocking move, many nevertheless appeared to trust the prime minister’s assertion that it was all for their own good. So Mr Modi, quipped one wry tweet, has in effect demonetised elite opinion, too. + +Along with Uttar Pradesh and its 220m people, the BJP captured three smaller states. In a particular humiliation for Congress, which was the main force behind India’s independence movement and has dominated national politics for most of the past 70 years, Mr Modi’s party actually captured fewer seats than its rival in Manipur and Goa (see chart), yet still managed to form the government in both states while Congress dithered. Nitin Gadkari, a heavyweight minister known for his bargaining skill, rushed to Goa as soon as results were called and haggled into the early hours to forge a coalition. In the north-eastern state of Manipur, Congress needed just three more seats to gain a majority. The BJP needed an extra ten, yet still mustered the numbers first. + +Better-run at the top, the BJP is also formidable on the ground. At a modest party headquarters in the Hindu pilgrimage city of Varanasi a day after the election results were announced, local party officials deferred to a younger man described as the overall commander of their campaign in this part of UP. He turned out to be a pracharak or devotee of the Rashtriya Swayamsevak Sangh (RSS), a right-wing Hindu volunteer group with a membership thought to top 5m. Taking no salary, he slept on a camp bed in the building for nine months in the lead-up to the voting. + +While other party men ascribed their victory to the BJP’s openness to many castes, in contrast to the narrow bases of several other parties, or to its record of development, or to Mr Modi’s personal charisma, the pracharak has no doubt as to the secret. “It is 100% organisation,” he says, describing how his team recruited some 5,000 volunteers for each of the 71 voting districts in his purview, and spent a full year canvassing voters to choose candidates likely to win. Asked why rival parties had not repeated a winning strategy used in the neighbouring state of Bihar, where a broad coalition defeated the BJP in 2015, his answer is indirect. “We learn from our mistakes,” he says with a quiet smile. The others, apparently, do not. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21718914-bjp-wins-312-403-seats-state-assembly-narendra-modis-party-drubs-opposition/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +An obsession with expropriation + +Return confiscated property? Never, says India’s government + + +Even if it has to rig a parliamentary vote to prevent it + + + + + +From the print edition | Asia + + +Mar 16th 2017 | DELHI + + + + + +IT WAS passed on a hasty voice vote, with only 31 of the Rajya Sabha’s 244 members present. All were from the ruling party and ten, oddly enough, were cabinet ministers—an exceedingly rare sight on a quiet Friday afternoon, reserved by tradition for private members’ bills. The few opposition MPs at hand had walked out in protest. Their ire was warranted: the government had promised that this particular bill, which the Upper House had already blocked both on the floor and in committee, would not be tabled. + +Mr Modi’s government has shown a strange determination to pass the bill. Five times—a first for India—since coming to power in 2014 it has imposed the law as a presidential “ordinance”, a legal sleight of hand left over from the British Raj that allows governments to impose laws by decree as long as they are confirmed by parliament within six months. + + + + + +Latest updates + + + + + +See all updates + + + +The ponderous title of the stealth legislation is the Enemy Property (Amendment and Validation) Act. It revises an already controversial law, passed in 1968, which allowed the Indian state to seize properties owned by its “enemies”, which was to say people of Pakistani or Chinese nationality. The new law redefines the word “enemy”, so that those designated as enemies will remain so even if India and the country concerned start getting on famously. It also decrees that all the heirs of the original “enemy” should also be considered enemies, in perpetuity, even if they hold Indian citizenship. Furthermore, any transfer of such property out of government custodianship after the 1968 act will be retroactively revoked. And civil courts will be barred from hearing any disputes over such property from now on. + +What the legal mumbo-jumbo means is that some 2,100 properties seized in the wake of wars with Pakistan and China in the 1960s will forever remain the property of the Indian government. There is, of course, also a subtext: nearly all the property concerned belonged to wealthy Muslims, and the need to “tighten” the law reflects the fact that several of them or their heirs have successfully fought in Indian courts to reclaim it. + +In 2005 India’s supreme court ordered the government to hand over most of the property of the former Rajah of Mahmudabad, once one of the wealthiest landowners in Uttar Pradesh, to his sole heir, Muhammad Amir Muhammad Khan. The late rajah lived briefly in Pakistan, and foolishly took its nationality before retiring to London, where he died in 1973. But his son grew up in India and never lost Indian citizenship. Armed, after 32 years of legal battles, with the supreme court’s ruling, Mr Khan did manage to secure some of the seized properties for a spell. But for the past decade successive governments have found ways to obstruct repossession. + +He is, understandably, affronted by the government’s apparent obsession with preventing the return of property to a law-abiding Indian citizen, to the point of passing laws that are very likely to be overturned as unconstitutional. “I suspect there is a desire on the part of the present dispensation not to allow any Muslim to go beyond a certain limit,” muses Mr Khan. “The message is that we must do menial work, and study in madrassas so then they can blame us for being anti-modern.” + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21718915-even-if-it-has-rig-parliamentary-vote-prevent-it-return-confiscated-property-never-says/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Still riven + +Measures to placate Sri Lanka’s Tamil minority are stalling + + +The ruling coalition includes chauvinist Sinhalese with scant interest in moving forward [reconciliation]? + + + + + +From the print edition | Asia + + +Mar 16th 2017 | COLOMBO AND JAFFNA + + + + + +“WE ARE like dogs in the street, while your men occupy our homes,” read one of the banners strung up by Tamil protesters, mostly women in saris and ragged children. They had been camping for more than a month in a jumble of makeshift tents on a baking, dusty roadside near a Sri Lankan air-force base in the country’s remote north-east. They said that the armed forces, consisting almost entirely of Sinhalese from the island’s south, nabbed their land at the end of a long-running civil war nearly eight years ago and have refused to give it back, despite the promises of a kindlier reformist government elected two years ago. The government recently said it would return some of the disputed property, but the protesters are unassuaged. It is just one of the many grievances of Sri Lanka’s disaffected Tamils, who feel that reconciliation between them and the Sinhalese majority is stalling. + +Hopes of harmony rose two years ago when Maithripala Sirisena, who is Sinhalese, was elected president with the overwhelming support of the Tamils, who make up 15% of Sri Lanka’s population of 21m or so. The island’s Tamil-speaking Muslims, who are treated as a separate ethnic group and often feel done down by both sides, make up a further 10%—and also largely backed Mr Sirisena. The Tamils were particularly delighted by the shock defeat of Mr Sirisena’s chauvinistic and autocratic predecessor, Mahinda Rajapaksa, who had exulted in the crushing of the Liberation Tigers of Tamil Eelam, a Tamil separatist group, in 2009, despite the devastating loss of life and property in Tamil areas. + + + + + +Latest updates + + + + + +See all updates + + + +Mr Sirisena duly set about a raft of reforms. He aims to present a new constitution to parliament soon, and to the public in a nationwide referendum before the end of the year. Presidential powers are to be clipped in favour of parliament. Greater devolution to the provinces, including powers over police and land registration, is intended to satisfy Tamil demands for self-rule without resorting to full federalism, which is a dirty word for most Sinhalese. + +Other legislative proposals are intended to tackle the vexed question of “transitional justice”: creating an office for missing persons to chronicle the thousands of people abducted or killed in the war (see article); replacing the Prevention of Terrorism Act, which has allowed suspects to be held without trial for up to 18 months; providing for compensation for property seized or destroyed in the war; setting up a truth-and-reconciliation commission; and, separately and most controversially, creating a hybrid court involving foreign judges and lawyers, where those accused of perpetrating the worst atrocities may be tried. + +On March 22nd the UN’s Human Rights Council in Geneva, which issued a remarkably tough resolution in 2015 that lambasted the previous government and proposed most of the measures listed above, will assess progress towards reconciliation. It will probably issue a “rollover” resolution co-sponsored by Sri Lanka’s government, which will reiterate its promise to do all these things. The Tamils want to keep up international pressure. The government wants the world to stop chiding it. + +The trouble is that on most of these fronts the Sri Lankan authorities have been, at best, marking time. Mr Sirisena’s government is a coalition of two normally adversarial parties, one of which was formerly in thrall to Mr Rajapaksa. His many Sinhalese-nationalist admirers care little for reconciliation and resent pandering—as they see it—to the sensitivities of the tiresome Tamils. The possibility of foreigners judging Mr Rajapaksa’s triumphant generals war criminals enrages most Sinhalese. + +Mr Sirisena has let it be known that he cannot achieve both the tricky constitutional reforms and the even touchier business of transitional justice at the same time. He wants to be allowed to do them one by one. “Transitional justice will fail if war crimes becomes the pivot,” warns Jehan Perera, a prominent human-rights activist. Mangala Samaraweera, the foreign minister, admits that “people with the old Rajapaksa mindset in key positions are obstructing key reforms”, but pleads for patience, insisting that reform is still broadly on track. “The same torturers are still there,” laments a veteran of the UN’s Human Rights Council. + +The Tamils are increasingly frustrated. The north and east, where Tamils predominate, are poorer than most of the south and depend largely on remittances from the diaspora of several million in Australia, Britain, Canada, Malaysia and the Middle East, many of them fugitives from the civil war. Few have returned to invest. There are no international flights from Jaffna, the main city of the Tamil region, even to nearby Chennai, the capital of the Indian state of Tamil Nadu. The local airport is run by the air force. The government has built new roads but spent little on social or agricultural development. Fishing, once a big source of employment, has slumped. + +Indebtedness, especially among the disproportionately large number of families headed by single mothers, is rife. So are drugs—heroin as well as cannabis—smuggled across the narrow channel from India. An international banker, who has returned to retire in Jaffna, laments the Tamils’ demoralisation and loss of a work ethic. A bigwig in Jaffna’s chamber of commerce bemoans the lack of support from the central government: “It wants to enslave us, colonise us, get us to send our young men away abroad.” + +Tamils pour scorn on the Tamil National Alliance (TNA), their main representative in the Tigers’ absence, which won most parliamentary seats in Tamil areas two years ago. Though technically in opposition to the coalition government in Colombo, the national capital, the alliance nonetheless seeks to co-operate with Mr Sirisena in his quest for constitutional reform and transitional justice. As the president falters, the alliance looks feeble, too. + +Mr Rajapaksa’s supporters claim that the disaffected Tamils are about to regroup and plot a bloody new rebellion. That is improbable, since the Tigers’ military defeat in 2009 was so total. Indeed, in the short run the Tamils have few levers of any kind to secure better treatment, as witnessed by their straw-clutching hope that international pressure may somehow come to their rescue. But in the longer run Sri Lanka needs Tamil acquiescence. “If we fail to address transitional justice and Tamil youth feels that the Sinhalese south will never address Tamil grievances, there’s nothing to stop the next generation being pushed towards a new terrorism,” warns Mr Samaraweera. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21718919-ruling-coalition-includes-chauvinist-sinhalese-scant-interest-moving-forward/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +No closure + +Thousands of victims of Sri Lanka’s civil war remain unaccounted for + + +And many rebels are unrepentant + + + + + +From the print edition | Asia + + +Mar 16th 2017 | VISUAMADU + + + + + +“I STILL believe he’s alive,” says Tharsini Santhirabose with a glazed, fixed smile. She last saw her husband, a fellow guerrilla for the Liberation Tigers of Tamil Eelam, in the final days of the civil war that ended with the Tigers’ obliteration in 2009. Up to 40,000 civilians were killed, according to the UN, along with most of the remnants of the 10,000-strong separatist army and perhaps 5,000 hangers-on. The chances that Ms Santhirabose’s husband will reappear are virtually nil. + +No one knows precisely how many died or disappeared in the war. A fervently Tamil-nationalist Catholic bishop claims that, after the 26 years of fighting, 147,000 people, civilians and fighters, remain unaccounted for. The foreign ministry says that more than 65,000 queries about missing people have been received since 1994. + + + + + +Latest updates + + + + + +See all updates + + + +A few thousand former Tiger “cadres”, as they are known, have re-emerged from government “rehabilitation” camps. Many Tamils believe that secret detention camps still exist. Others claim, bizarrely, that the government has sent thousands of defeated fighters to undisclosed destinations abroad. Many also say that the Sri Lankan army’s reluctance to give back land now used as army bases is because they do not want mass graves to be discovered. + +One of 12 children of a poor fisherman, Ms Santhirabose, now 34, says she volunteered to join the Liberation Tigers of Tamil Eelam when she was 15, along with three of her siblings, and married another fighter when she was 20. Her parents now live in Canada; several siblings are in France. As a registered ex-combatant scratching a living from farming, she says she is watched by the authorities and discriminated against. She still has shrapnel in her head from an old wound. + +Her loyalty to the Tigers’ cause and to its leader, Velupillai Prabhakaran, who was killed in the final battle, is unshaken. She says she has no regrets about joining up, despite Prabhakaran’s record of brutality: the Tigers suicide-bombed buses and banks, forcibly recruited children and routinely assassinated any perceived foes, Tamil and Sinhalese alike. “The war was lost only because he was betrayed,” she laments, citing a close lieutenant who defected with several thousand fighters in 2004. + +“In those days life was good. We slept safely. No crime. We had our own economy.” Like many Tamils, she suggests that foreign governments should intervene. “Does the world think it is right for the Tamils to be treated as slaves?” + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21718920-and-many-rebels-are-unrepentant-thousands-victims-sri-lankas-civil-war-remain-unaccounted/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Banyan + +South-East Asian cities are waging war on street food + + +Big mistake + + + + + +From the print edition | Asia + + +Mar 16th 2017 + + + + + +THE taxi-driver parks in the way a drunkard falls asleep: suddenly, with little regard for his surroundings. He leaps from his cab, eyes alight with anticipation, striding toward Jae Deh. She shouts at him, pointing at the bucket of bones at her feet: “You’re late! All finished!” The cabbie, who has the gelled hair, tinted aviator glasses and raspy voice of a low-level mafioso from New Jersey, staggers backwards as though he’s been shot: “I’ve been coming here for ten years! You didn’t save any for me?” Ms Jae Deh’s mock-stern look collapses into merriment. She points him towards the nearest table, handing him a plate of rice and a bowl of braised pork. He helps himself to a couple of chilies and a coriander frond, keeping up a steady patter with Ms Jae Deh and her husband, Su Kit. + +The couple has been selling khao kha moo (rice with stewed pork shanks) on Soi Thong Lo, a side street off one of Bangkok’s main roads, since 1987, when they were just 16. Now their adult daughter works alongside them. The family is not rich, but Mr Su Kit says that on a good day they clear around 4,000 baht ($113). Like many of Bangkok’s street-food vendors, they came to the city from Isaan—Thailand’s poor and dusty north-east—in search of a better life. And they have built one, shank by shank. + + + + + +Latest updates + + + + + +See all updates + + + +So have millions of families like theirs across South-East Asia. As the young and ambitious have moved from fields to factories, making the region among the world’s fastest-growing and fastest-urbanising, others have moved to feed them. In cities, time is scarce and dwellings are small: people need something cheap, filling and convenient. Rickety plastic tables spread across pavements all over South-East Asia, offering a quick meal of pho (noodle soup) in Saigon, khao kha moo in Bangkok, mie bakso (meatball and noodles) in Jakarta and mohinga (fish soup) in Yangon. Office workers in pressed shirts and builders in orange jumpsuits sit cheek by jowl. According to the UN’s Food and Agriculture Organisation, 2.5bn people eat street food daily. The most recent study available, from 2007, found that Bangkok’s 20,000 vendors provided residents with 40% of their food; two-thirds of households ate at least one meal a day on the street. + +Providing those meals is not an easy life. Jane, a no-nonsense woman who does a brisk late-night business in papaya salad and hotpots, begins setting up around 3pm; her tables are still packed at midnight. Luung Pan, who sells pork-noodle soup and dumplings with his son just up the street from Ms Jae Deh, starts cooking at 4am and rarely makes it home before 9.30pm. But he takes tremendous satisfaction in having fed the same people for a decade. He prides himself on how few of his customers feel the need to season their meal with the condiments he sets out on each table: “I know my soup is number one.” Says Mr Su Kit: “We are happy. We can work as a family and we have our own place.” + +But trouble looms. Unless there is a sudden and unlikely reprieve, vendors will no longer be able to sell food on Soi Thong Lo’s pavements after April 17th. Local officials have decided to bar them from the footpath, on the grounds that they impede pedestrians, make a mess and attract vermin. The displaced vendors can at least find company in their misery: over the past two years Bangkok’s municipal government has evicted almost 15,000 hawkers from the city’s pavements. Previous governments threatened to crack down; this one, obsessed as it is with public order, is actually doing it. Other vendors have lost their space to landlords cashing in on Bangkok’s booming property market, particularly in the area around Thong Lo. + +Bangkok’s government is not the only one seeking to “tidy up” its streets. Authorities in Ho Chi Minh City are moving vendors away from congested areas, and “advising them on more stable ways to make a living”. A similar drive is under way in Jakarta. + +Soi Thong Lo’s hawkers are scrambling to secure their livelihoods. Mr Su Kit points to his hair, which is shorn on the sides but sprouts, turnip-like, into a topknot on his crown: “Thinking about what to do has turned my hair white.” He found a shop one street away, but that would cost him 30,000 baht a month to rent—compared with his current 1,000-baht fee to the district—as well as a 100,000-baht deposit. Mr Luung Pan wonders whether a nearby bank might rent him part of its outside space. Jane says she may just go back home to Chiang Mai, a northern city. + +For the most part, Bangkok’s hawkers have proved to be adept improvisers. Thrown off the streets, they have recongregated in basements and courtyards. As long as a demand exists for cheap, quick food, supply will follow. + +Singapore faced this problem years ago, and moved its hawkers off the streets into dedicated, convenient “hawker centres”, with running water and regular hygiene inspections. That may be feasible for a small rich country, but not for big poor ones such as Indonesia or Myanmar. Even if it were feasible, it would not be desirable. Street stalls may cause a bit of congestion and disorder, but they also make urban life more vibrant. + +Hawkish on hawkers + +Banyan hopes that Bangkok’s government—and the authorities in the region’s other megacities—look beyond the superficial inconveniences caused by street-food vendors, and think harder about their role in the city’s fabric. There is a reason food trucks have begun to populate the streets of American and European cities: not everyone wants the formality of a restaurant, much less the anomie of a sandwich at a desk. + +Asia’s hawkers do not just provide cheap, delicious food for the masses. They also embody the beating heart of a national cuisine. Perhaps most important, they create a community: the chance for citizens of all classes to rub shoulders over a bowl of noodles swimming in fish broth. Move the vendors along, and people will still find places to fill their bellies. But they will have a harder time finding each other. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21718896-big-mistake-south-east-asian-cities-are-waging-war-street-food/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +China + + +China and South Korea: Nationalism unleashed [Fri, 17 Mar 09:50] + +Civil law: Code red [Fri, 17 Mar 09:50] + +Football: New rules, new dodges [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Nationalism unleashed + +China is whipping up public anger against South Korea + + +It is wary of going too far + + + + + +From the print edition | China + + +Mar 16th 2017 | BEIJING + + + + + +THE aisles at Lotte Mart in Beijing’s Wangjing district were strangely quiet early this week. A few elderly shoppers pushed trolleys; shop assistants tidied the supermarket’s shelves. Customers have been scarce since “something happened” a few weeks ago, says one cashier. That event was a deal signed on February 28th by Lotte, a South Korean firm, allowing America to build an anti-missile system on land the company owns in South Korea. China’s government has responded by encouraging an outpouring of public anger directed not just at Lotte, whose shops in China are now being boycotted, but almost anything South Korean. + +Nationalism is a familiar weapon in China’s diplomatic armoury. The last time the government made such a sustained effort to whip it up was in 2012, shortly before Xi Jinping came to power, when officials encouraged protests against Japan’s nationalisation of islands it controls in the East China Sea that are also claimed by China. South Korea is not a usual target. But China is furious at its decision to deploy the missile-defence system, known as THAAD (the first components of which arrived in South Korea on March 6th). America says THAAD will help defend the peninsula against North Korea. China says America will use the system’s powerful radar to “snoop” on its missiles too, reducing their potency as a deterrent. + + + + + +Latest updates + + + + + +See all updates + + + +In recent weeks state media have been publishing daily attacks on South Korea’s “erroneous decision”. The Global Times, a jingoistic newspaper in Beijing, has encouraged Chinese consumers to “become the main force in teaching Seoul a lesson”. It said they should “make it hurt”. + +Censors often try to rein in online discussion when it threatens to boil over into real-world protests. But they are allowing netizens to vent rage at South Korea. One group of online nationalists called on “all patriots to unite and show South Korea what we can do”. A famous beauty blogger exhorted the 2.7m followers of her microblog to boycott goods from the country and not to travel to it. A patriotic pop-song has been played more than 3.5m times since its release on March 8th. It includes the lyrics: “Chinese sons and daughters must stand up; everybody, stop buying Lotte; make them get out of China fast.” + +Lotte owns about 100 supermarkets in China, as well as other businesses. They have been badly hit. The company has been subjected to sudden and simultaneous tax and safety inspections. Ten of its shops have been shut for violating fire codes. The website of Lotte Duty Free crashed after a cyber-attack. Several e-commerce sites have stopped selling Lotte’s goods and some suppliers have ceased doing business with the company. + +The tourism industry has also been disrupted. South Korea is normally a popular destination, but many Chinese travel agencies have recently reduced or halted trips there (seemingly on the government’s orders). Others have been warning customers that it is dangerous to go. Airlines from both countries have been reducing services. On March 11th about 3,000 Chinese tourists refused to leave their ship when it docked at the South Korean resort of Jeju, apparently in protest against THAAD. + +The Chinese government may be relishing the opportunity that THAAD has provided to push back against what officials sometimes call South Korea’s “cultural infiltration”: its popular music (“K-pop”) and television dramas have huge Chinese followings. No South Korean artist has been granted approval to perform in China since September. Appearances by a famous South Korean soprano, a concert pianist and a popular boy-band, EXO, have all been cancelled. Companies and TV stations have been urged to “fine-tune” performances by South Koreans: a K-pop star had his face blurred on a reality show. Chinese streaming platforms have removed some South Korean programmes. South Korean celebrities now find it hard to renew advertising contracts in China. + +Careful calibration + +But China’s leaders worry about any popular movement that does not involve the Communist Party—even one that is led by nationalists who profess to be on the government’s side. Mr Xi, despite his own nationalist rhetoric, has been wary of letting passions flare too high. Officials tried to dampen them last year when a tribunal in The Hague rejected China’s claims in the South China Sea. Only a few small protests erupted. The party’s main mouthpiece, the People’s Daily, praised the public’s low-key response at the time as evidence of a “brand-new level of patriotism”. + +In the case of THAAD, the government clearly believes that a more heated public response may persuade South Korea’s next president, who is due to be chosen in May, to reconsider its deployment (see article). But officials are still anxious. There were more police outside Wangjing’s Lotte Mart this week than customers inside. Some dozed in vans, waiting in case of trouble. + +A protest against South Korea on March 5th in the north-eastern city of Jilin conveyed a hint of what the government fears: that protesters may use displays of patriotism to vent other grievances. Some demonstrators in Jilin carried portraits of Mao Zedong (pictured, previous page). Despite appearances, these do not necessarily suggest agreement with the party line. People sometimes use them to poke at the current leadership—Mao symbolises an era that was, as some Chinese remember it, a better one for the underprivileged. Mr Xi worries about THAAD, but trouble at home disturbs him more. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21718876-it-wary-going-too-far-china-whipping-up-public-anger-against-south-korea/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Code red + +China finally starts to write a proper civil code + + +But the party will remain the final judge + + + + + +From the print edition | China + + +Mar 16th 2017 | BEIJING + + + + + +THE National People’s Congress (NPC), China’s rubber-stamp parliament, wrapped up its annual session on March 15th. Usually its business is unremarkable. This year, however, a piece of legislation that was passed on the final day may prove unusually important. It is known by the unlovely name of the General Principles of Civil Law. It sets the stage for China to pass its first civil code, an overarching law governing legal disputes other than those involving crimes. + +China has a civil-law system, which means that statutes are essential reference for judges. (In common-law countries such as Britain and America, verdicts are also decided according to precedent: ie, previous rulings by courts.) But under Communist rule, China has muddled through without a unified civil code. It has bits of one. It passed an inheritance law in 1985, a contract law in 1999 and a property law in 2007. But there are big gaps and inconsistencies. The Supreme People’s Court, the highest judicial authority, issues directives in an attempt to sort these out. + + + + + +Latest updates + + + + + +See all updates + + + +The country has been trying to write a civil code since 1954. But China’s then ruler, Mao Zedong, was lukewarm about it—he did not want any law that might restrict his power. China’s current leaders are far keener to have one. They hope it will provide a stable legal framework for a rapidly evolving society racked by increasingly complex disputes. In 2014 they decided to try again, aiming to write one by 2020. This week’s approval of the code’s general principles is the first fruit. It covers everything from individual rights and the statute of limitations to whether fetuses can own property (they can). + +The preamble updates and expands one that was adopted in 1986, when the legal system still looked much like the Soviet Union’s. In defining a company, for example, the old principles talked only about state-owned or collective enterprises, as well as joint ventures with foreign firms. The new preamble has a more useful definition: “a legal entity established for the purposes of making profits”. The old version did not mention privacy. The new one says citizens have a right to it. The old principles said that “where there is no provision of law, activities must be in accordance with state policy.” Strikingly, that clause has been deleted. + +Some of the new principles have been set out before. Privacy rights, for example, are in the tort bill of 2009. But their inclusion in the revised preamble gives them more authority. + +Not all the changes are for the better. In a section on protecting personal reputations, the new preamble makes it an offence to defame “heroes and martyrs”. That is likely to have a chilling effect on historical inquiry. Qiao Xiaoyang, the head of the NPC’s law committee, says the civil code “upholds private rights”. But the ones mentioned in the law, such as the rights to life, health, and reputation, do not cover the full range. + +A civil code—embracing laws of property, contract, inheritance, family and marriage—will not guarantee fairness. The Communist Party will continue to ignore the law when it wants to. But for all the legal system’s flaws, many people still use it. The code may make it less opaque and outdated, and judges’ lives easier. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21718878-party-will-remain-final-judge-china-finally-starts-write-proper-civil-code/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +New rules, new dodges + +Chinese football clubs are struggling with new curbs on foreign players + + +They’d be happier if they hadn’t spent so much on them already + + + + + +From the print edition | China + + +Mar 16th 2017 + + + + + +MUCH grumbling accompanied the start on March 4th of this year’s season of the Chinese Super League (CSL), the uppermost tier of professional football in China. Managers of its 16 clubs have been gnashing their teeth at a change of rules which was suddenly announced just a few weeks before the first matches. Teams are now allowed to field a maximum of three foreigners. + +The clubs would have preferred more notice. Many of them have only just acquired even more foreign players. All now have at least four, the previous maximum per side in any CSL game. (One of them, a Brazilian called Oscar, is pictured in a CSL match—he was transferred to Shanghai SIPG from Chelsea, an English club, for £60m, or about $75m, in December.) Last year China spent more than $450m on footballers, the fifth-largest such outlay by any country. + + + + + +Latest updates + + + + + +See all updates + + + +But all this money has not improved the dismal state of Chinese football. The men’s national team ranks 82nd in the world. In October an embarrassing 1-0 defeat to war-torn Syria triggered protests by hundreds of fans in the city of Xi’an where the match was played. Local media say the Chinese Football Association announced its new rules on orders “from above”. They impose a levy on big transfers and demand that one-sixth of clubs’ spending must be on youth training. + +Officials have also been trying to curb the buying of stakes in foreign clubs—Chinese investors shelled out about $2bn on them last year. The government says this is part of an economy-wide clampdown on currency outflows. But it also wants to make the point that foreign talent won’t necessarily help China’s. The government has recently scuppered several investment deals. A Chinese consortium bought AC Milan, an Italian club, for $825m in August, but has been unable to move money out of China to complete the purchase. + +Rather than simply moaning about the new rules, clubs have been devising ways of dodging them. Teams must now field at least one Chinese player under 23 each week. Some coaches simply replace them early in the game with older hands. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21718883-theyd-be-happier-if-they-hadnt-spent-so-much-them-already-chinese-football-clubs-are-struggling/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Middle East and Africa + + +Central African Republic: Averting another CAR crash [Fri, 17 Mar 09:50] + +South Sudan: Death spiral [Fri, 17 Mar 09:50] + +Libya’s war: Coastal retreats [Fri, 17 Mar 09:50] + +South Africa and Russia: Say my name [Fri, 17 Mar 09:50] + +Saudi Arabia: Farewell my guardian [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Avoiding a CAR crash + +Helping the Central African Republic avoid another catastrophe + + +The World Bank used to shun war zones. No longer + + + + + +From the print edition | Middle East and Africa + + +Mar 16th 2017 | KAGO-BANDORO + + + + + +HOOPS of razor wire overlooked by guard towers mark the border between order and chaos in Kaga-Bandoro, a market town in the middle of the Central African Republic (CAR). On one side are the ordered rows of white tents and shelters of the UN’s “Multidimensional Integrated Stabilisation Mission in the Central African Republic” (MINUSCA), a 13,000-strong peacekeeping force. On the other, huddling under the guns of the Pakistani battalion billeted here, are the tarpaulins that shelter some 12,000-15,000 people in one of the world’s newest refugee camps. + +They have fled not once, but at least twice. Many had already sought safety in a nearby camp after their homes were destroyed. In October, however, the refugee camp was attacked and burned down by members of Seleka, the remnants of mostly Muslim militias which had toppled the government in 2013. “Six men were threatening me with knives,” says Paul Fradjala, the head of the local government in town, twisting and turning his shoulders to demonstrate how he wriggled free and ran. Yet even under the guns of the peacekeepers, security is illusory. “If someone kills someone in front of you, there is nothing you can do,” says Mr Fradjala of the crowded new camp that encircles the UN base. + + + + + +Latest updates + + + + + +See all updates + + + +Nerves are even more frayed in other parts of the country. In February the UN conducted air strikes on a faction of Seleka that was preparing to overrun Bambari, another market town. And in the capital, Bangui, killings and retaliations boil over every few months. Yet even amid this simmering conflict a bold experiment is taking place that may change the future of state-building and peacekeeping across the world. It is to test a big, and still relatively new, idea about how to deal with fragile or post-conflict states: whether a big injection of aid into countries that have not yet fully emerged from conflict can revive their economies and reduce the risk of them sliding back into full-blown civil war. + +Few countries have been dealt a worse hand by geography and history than the CAR. It is not just landlocked; it is farther from the coast than anywhere else in Africa. Moreover it is in an unstable neighbourhood, sharing borders with the Democratic Republic of Congo, Sudan and South Sudan. The diamonds under its soil are valuable enough to be worth fighting over and portable enough to fund militias. It has mostly been ruled by dictators since independence in 1960. + +The most recent crisis started in 2013 after Seleka militias ousted the government and installed the country’s first Muslim president, Michel Djotodia, before burning villages and massacring civilians. The militia that formed to oppose them was itself soon going door-to-door, killing Muslims, until a French military intervention—some reckon its seventh in the country—put a lid on the fighting. + +It was this narrowly averted genocide that made the world sit up, send peacekeepers and promise to pump large sums of money into a country that for years had received very little help. Before the most recent crisis the CAR used to get about $50 in aid per head each year, between a third and an eighth as much as was given to better-governed darlings of the donor community such as Seychelles or Mauritius. + +Since the crisis, the CAR has become an example of how donors are changing their focus: from giving money mostly to well-run places, to putting more of it into the basket-cases that account for an ever-growing share of the world’s poor. The World Bank, for instance, has pledged to spend as much as $500m, or about a third of the CAR’s current GDP, over the next three years, ten times its previous commitments. Globally, the World Bank plans to double to $14bn the amount of money it allocates to fragile states over the next three years. “The CAR is a test case,” says Jean-Christophe Carret, the World Bank’s country manager. “Fragile states are the new frontier of development.” + +Others are also shifting focus. Britain’s Department for International Development plans to spend half of its budget in fragile states and its private investment arm, the Commonwealth Development Corporation, is making 44% of its new investments in such places. + +An example of what this money is being spent on can be found about an hour’s drive east from Kago-Bandoro, where a group of villagers in orange high-visibility vests and red hard hats swing pickaxes and shovels as they repair a stretch of dirt road. The project is partly about connecting towns with farmers to boost growth. But the more immediate goal is to give young men jobs in the hope that this will make them less eager to take up arms. “The crisis has idled many young people,” says Faustin-Archange Touadéra, a former maths professor who is now the country’s president. “If we give them work, we give them a vision, a hope.” Other infrastructure being built or refurbished includes a hydropower plant that provides electricity to the capital and small pumping stations to provide clean drinking water. + +The harder challenge, of promoting private investment in a country that has almost none, is evident at Bangui’s only industrial plant of note, a brewery. It produces Mocaf, a light lager so popular that, when Islamist militias took over the capital, they stole the entire stock but took care not to destroy the plant. Pascal Berenger, who runs the business, guffaws when asked if he buys raw materials locally. “Normally brewers use some maize, some rice, but we don’t find any maize or rice. Everything is imported.” Yet adversity creates opportunity, he says, noting that beer sales rise during conflicts. After three profitable years, his shareholders have given him the money for modern equipment. + +Few think fixing the CAR will be quick or easy. “We may soon be—but are not there yet—at a turning point in this country to bend the arc of history,” says Parfait Onanga-Anyanga, who heads the UN mission. “It will take sweat, tears and faith.” That may well be true, but it will also take money and a great deal of patience from those providing it. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21718867-world-bank-used-shun-war-zones-no-longer-helping-central-african/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Death spiral + +To fight hyperinflation, South Sudan decides to tax aid workers + + +Famine, war and incompetence in the world’s newest country + + + + + +From the print edition | Middle East and Africa + + +Mar 18th 2017 | JUBA + + + + + +EVEN in the posher restaurants in Juba, the capital of South Sudan, the world’s newest country, the menus are printed on cheap paper. It is not worth having more expensive ones when they have to be updated every few weeks. Thanks to an inflation rate that touched more than 50% a month at one point last year (the conventional definition of hyperinflation, though price rises have since eased off a bit), even a modest meal costs a brick-sized bundle of currency. Over the past year, the value of the South Sudanese pound has collapsed. It used to take 30 to buy a dollar; now it takes 120. The biggest banknote in circulation, the SSP100, is now the world’s least valuable highest-denomination national note. + +This nasty bout of inflation has two causes: money-printing and economic collapse. South Sudan’s economy is among the least diversified in the world. In 2014 oil provided 99.8% of the country’s export revenues. At independence in 2011, when production was high and oil fetched over $100 a barrel, petrodollars flowed freely and fuelled colossal political patronage. But a shutdown in 2012 followed by civil war, which broke out in 2013, has slashed output. South Sudan now produces around 120,000 barrels of oil a month; half as much as it did at its peak, and the price per barrel is only half what it was in 2011. The government has printed fresh banknotes to try to cover this gigantic shortfall, with predictable results. + + + + + +Latest updates + + + + + +See all updates + + + + + +An NGO worker in Juba shows off a picture of boxes and boxes of currency loaded onto a small plane: to pay local staff, the NGO must first pay a hefty extra baggage fee. Taxi drivers, a prominent source of black-market currency, tie up bricks of pre-counted banknotes with elastic bands to save people from having to count them out themselves. + +Government salaries, when they are paid, are now worth almost nothing. And food, which is mostly imported from Uganda and Kenya, has soared in price, adding to the near-famine situation in much of the country. At Gumbo market, a litter-swept patch of dirt near where the tarmac road to Uganda starts, Grace Asio, a Ugandan trader, laments the state of her business. “The dollar costs more and more,” but the price in South Sudanese pounds that her customers can pay stays the same. “If this carries on, then definitely I will have to close,” she says. + +A normal economy would adjust to the worse terms of trade, says Peter Ajak, a South Sudanese economist. Indeed, faced with a worse exchange rate, in 2015 farmers in Equatoria, an area of rich soil south of Juba, began selling their produce to Uganda—reversing the normal trade flow. Conflict, however, has stopped this. In July, a barely respected ceasefire broke down in Juba; since then the civil war, which had previously been confined to the north, has spread to Equatoria. The number of South Sudanese refugees in Uganda has more than tripled to above 700,000, while farming has all but stopped. “There is really no productive capacity left,” says Mr Ajak. + +Inflation has slightly decelerated in the past few months, taking South Sudan out of technical hyperinflation. Yet the fundamental problems remain. The government is still overspending, despite having no new sources of revenue. There are still almost no non-oil exports. With peace, a bail-out might come from international donors. But South Sudan’s leaders keep fighting. Their latest revenue-raising proposal, announced just a few weeks after famine was declared in parts of the country, is to raise the cost of work permits for foreign aid workers from $100 per person to $10,000. Feast on that. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21718822-famine-war-and-incompetence-worlds-newest-country-fight-hyperinflation/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Coastal retreats + +Fighting over Libya’s oil ports + + +The battle complicates an already chaotic civil war + + + + + +From the print edition | Middle East and Africa + + +Mar 16th 2017 | CAIRO + + + + + +FEW places exemplify the chaos that has enveloped Libya better than the oil ports of Sidra and Ras Lanuf, which have changed hands twice in March. First the Benghazi Defence Brigade (BDB), an Islamist militia, captured them from the forces of Khalifa Haftar, the head of the self-styled Libyan National Army (LNA). Then, as the BDB handed control of the ports to forces aligned with the Government of National Accord (GNA) in the capital, Tripoli, Mr Haftar, who is supported by a rival authority in the east, grabbed them back. + +For nearly three years Libya has been mired in a civil war that at first pitted east against west. Now there are so many groups fighting that it is difficult to draw the battle lines. An attempt by the UN to stitch the country together, by creating the GNA in 2015, has all but failed for lack of support. Even Tripoli is beset with violence. Oil production, Libya’s economic lifeline, is threatened by the fighting, which may spur deeper involvement by Russia. It says it wants stability, but it supports Mr Haftar. + + + + + +Latest updates + + + + + +See all updates + + + + + +Though he has, at least for now, come out the winner, the battle for the ports exposed Mr Haftar, who believes he is the only one who can unite the country and defeat the terrorists in its midst. “He behaves like a strongman, but he does not have the capabilities of a strongman,” says Mattia Toaldo of the European Council on Foreign Relations, a think-tank. His national army is more a coalition of ragtag militias from the east, stretched thin by fighting in Benghazi and Derna. Indeed, it was forces aligned with the GNA, not Mr Haftar’s army, that kicked the jihadists of Islamic State out of their stronghold in Sirte last year. + +Russia, nevertheless, seems to view Mr Haftar as a stabilising force worth backing. It is said to have deployed special forces to an air base in western Egypt, near the border with Libya. Both Egypt and Russia deny this. “Excessive intervention…is hardly possible and is hardly advisable,” says Dmitry Peskov, a spokesman for the Kremlin. But American officials see parallels with Russia’s actions in war-torn Syria, where it supports Bashar al-Assad, the blood-soaked president. Russia has hosted Mr Haftar three times since the start of last year—on one occasion, aboard an aircraft-carrier in January, when he was greeted with a full-dress parade. + +The Russians have also hosted the GNA’s prime minister, Fayez al-Serraj, in Moscow. But many blame Mr Haftar’s intransigence for the lack of progress towards peace. Egypt, which backs the LNA, was angry at his refusal to hold direct talks with Mr Serraj at a summit in Cairo last month. Now Mr Haftar’s team is trying to rally support at home and abroad by saying that the BDB is affiliated with al-Qaeda. The charge is rejected by the group, though some of its fighters have ties to extremists. One target of the propaganda is the new American administration, which has yet to take a position on Libya. + +The GNA, for its part, is both weak and divided. Mr Serraj probably did not know about the BDB’s plan to attack the ports, which his government condemned. But his defence minister, Al-Mahdi al-Barghathi, probably supported the effort. Back in Tripoli, rival militias are shooting it out in the streets, as a previous Islamist government tries to reclaim power. Mr Serraj himself survived an assassination attempt on his motorcade in February. He is losing support even among the militias of Misrata, which have fought on the side of the GNA. Ironically, his weakness may also be an asset—some militias back him precisely because he cannot challenge their power. + +Suffering Libyans just want the fighting to stop. The GNA has failed to provide services. Cash is in short supply. One bright spot had been oil production, which almost doubled, reaching 700,000 barrels per day (bpd), after Mr Haftar first captured the ports in September. It has since fallen to about 600,000 bpd. Libya, which has the largest oil reserves in Africa, needs the revenue, which goes to the central bank and finances both halves of the country. “Unless it can get to 900,000 or 1m bpd by the end of the year, it has no hope of avoiding fiscal collapse,” says Mr Toaldo. + +That is not impossible. Before the revolution that toppled Muammar Qaddafi’s regime in 2011, Libya produced 1.6m bpd. Russia seems hopeful. Its state-owned oil giant, Rosneft, signed a co-operation agreement with Libya’s National Oil Corporation last month. But much depends on how Mr Haftar and his allies handle their recovered treasure. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21718892-battle-complicates-already-chaotic-civil-war-fighting-over-libyas-oil-ports/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Say my name + +South Africa’s love-affair with Russia + + +Old ties from the days of struggle are being renewed + + + + + +From the print edition | Middle East and Africa + + +Mar 16th 2017 | JOHANNESBURG + + + + + +VLADIMIR PUTIN may frighten some countries, but Russia gives many South Africans a warm and fuzzy feeling. They remember support in decades past: during apartheid the Soviet Union provided military training and arms to the African National Congress (ANC), as well as to other liberation movements on the continent. Some surprisingly common South African first names—such as Soviet, Moscow and Lenin—are living tributes to these old ties. Sputnik Ratau, born shortly after the first satellite’s launch, is a spokesman for the water and sanitation department. A high school in KwaZulu-Natal is named after Eric Mtshali, a stalwart of the struggle who spent decades in exile and goes by the nickname “Stalin”. + +Recently, Russia and South Africa have sought to renew these cold-war-era ties. The two countries are scrapping visa requirements from March 30th, allowing up to 90 days of trouble-free travel. South Africa’s president, Jacob Zuma, has already developed a taste for Russian holidays. In 2014, after a tiring election campaign, he took a six-day trip with his state security minister that included several days of “rest”. A few weeks later South Africa signed an agreement with Rosatom, Russia’s state-owned nuclear power company, to buy several nuclear-power stations. Though the deal appears to have stalled because of controversy over the 1 trillion-rand ($76bn) price tag, there has been other co-operation in intelligence and defence, with South African spies and air-force pilots said to have received Russian training. On March 6th communications officials from the two countries pledged to work on “collaborative media activities”. + + + + + +Latest updates + + + + + +See all updates + + + +The countries have grown closer within the BRICS (Brazil, Russia, India, China and South Africa) grouping, an economic club that has developed into a broader, more political alliance. For Mr Zuma, and for an anti-Western strain within the ANC, Russia and China offer an ideological alternative. Sanctions-hit Russia sees Africa as a source of political support and business opportunities. South Africa has laid out the welcome mat, inviting Mr Putin to visit this year. + +Gerrit Olivier, a former South African ambassador to Russia, says visa-free travel symbolises this “special relationship”. But he doubts it will boost travel, since there are few South African-Russian business deals, and no direct air links. “Cultural incompatibility” is also a problem, he reckons. Perhaps this is the secret to the two countries’ friendship: personal interactions remain rare. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21718888-old-ties-days-struggle-are-being-renewed-south-africas-love-affair/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Farewell my guardian + +Some Saudi women are secretly deserting their country + + +Women are fed up with being treated like children + + + + + +From the print edition | Middle East and Africa + + +Mar 16th 2017 + + + + + +CAN Saudi Arabia keep its women? Last month’s appointment of women to head two big banks and Tadawul, the kingdom’s stock exchange, offers hope that the path to a fulfilling career is not completely blocked. But the restrictions of Saudi life remain so irksome that covertly, silently, many women are finding ways out. + +On family trips abroad, some jump ship. Some, having been sent to Western universities at the government’s expense, postpone their return indefinitely. Others avail themselves of clandestine online services offering marriages of convenience to men willing to whisk them abroad. Iman, an administrator at a private hospital in Riyadh, has found a package deal for $4,000 offering an Australian honeymoon during which she plans to scarper. + + + + + +Latest updates + + + + + +See all updates + + + +Propelling the flight is the kingdom’s wilaya, or guardianship, law. Although it has received less publicity than the world’s only sex-specific driving ban, it imposes harsher curbs on female mobility. To travel, work or study abroad, receive hospital treatment or an ID card, or even leave prison once a sentence is served, women need the consent of a male wali, or guardian. From birth to death, they are handed from one wali to the next—father, husband and, if both of those die, the nearest male relative. Sometimes that might be a teenage son or brother, because although boys are treated as adults from puberty, women are treated as minors all their lives. + +Iman, a divorcee, is subject to the guardianship of her brother, who at 17 is barely half her age. He lets her work as a manager at a hospital, but pockets her earnings. She says she is kept like a chattel, while he spends her money on drugs and weekends in massage parlours in neighbouring Bahrain. Her ex-husband refuses to let her see their children. Her brother prevents her from completing her studies in Europe. If she protests, he threatens to beat her. + +She tried going to court to have the guardianship transferred to a more sympathetic elder brother, but the judge dismissed the case, she says, while talking on his phone. Though she dressed demurely in a full veil, she suspects the judge objected to her presenting her own case. Social services offer poor refuge, since hostels for abused women resemble prisons where the windows are barred and visitors banned. When she hears other women say that their brothers don’t beat them, Iman assumes they are lying “because they are scared of social housing”. + +Estimates of the number of “runaway girls”, to use the Saudi term, are imprecise, but, says Mansour al-Askar, a sociologist at Imam Muhammad ibn Saud University in Riyadh, the rate is rising. By his estimates, over a thousand flee the kingdom every year, while more escape Riyadh for Jeddah, the kingdom’s more liberal coastal metropolis. + +Dissenting Saudi scholars insist that the guardianship laws stem not from Islam, but the Bedouin customs that still hold sway in much of Arabia’s hinterland. Khadija, the Prophet Muhammad’s first wife, was a merchant who sponsored her husband. His subsequent wives moved between Medina and Mecca without him. “Islam freed women from the wilaya,” says Hassan al-Maliki, a theologian in Riyadh who has sometimes been jailed for free-thinking. “A woman can choose whom she marries.” But the clerics who man the judiciary maintain that guardians protect the vulnerable and keep families and, by extension, society together. Last December the courts sentenced a man caught denouncing the wilaya on social media to a year in jail. Another Saudi study, at a university in Mecca, acknowledged that some runaways might be fleeing physical abuse, but said that most had been influenced by the “misuse of social media, copying other cultures and weak beliefs”. + +Economists note that the guardianship system makes Saudi Arabia poorer. More than a quarter of the 150,000 students the kingdom sends abroad every year are women. Given that many defer their return or choose to remain in more liberal places like Dubai, much of the $5bn the government spends on their studies each year is going to waste. “Saudi Arabia is losing the battle to keep its talent,” says Najah al-Osaimi, a female Saudi academic who has settled in Britain. + +Awkwardly for reformers, some of the most tenacious advocates of the wilaya are women, particularly in obscurantist southern provinces like Asir. Despite such beguiling hashtags as #StopEnslavingSaudiWomen and #IAmMyOwnGuardian, a social-media campaign to end the wilaya system attracted just 14,000 signatures. + +Use them or lose them + +Saudi Arabia’s leaders acknowledge the need to make the kingdom more women-friendly. Already, more women attend Saudi universities than men. And although some men still send their own photographs when they apply for jobs for their wives (and even attend their interviews), in 2012 the kingdom waived the need for women to have their guardians’ approval for four types of work, including clothes-shop assistants, chefs and amusement-park attendants. + +In upmarket malls, women can be seen selling aftershave, boldly spraying samples onto male hands. Broadminded men can give their female wards five-year permits to move unaccompanied (though they get updates by text message whenever their charges travel abroad). Countrywide, the dress code has relaxed a bit. In big cities, women have added streaks of colour and patterns to the black abayas or cloaks that the state requires them to wear. Even in Burayda, the bastion of Saudi Arabia’s puritanical rite, women have cut slits for their eyes in veils that hitherto fully covered their faces, and let their abayas slip from their heads to their shoulders. + +Nonetheless many women seethe with frustration. On social media, footage of women riding motorbikes has gone viral. So too has a female silhouette, whisky bottle in hand, dancing on her car roof. A female pop group, clad in black, sings songs of protest from dodgems, toy cars, skateboards, roller-skates and other wheeled vehicles that they can legally drive. Unless the system adapts, warns Mr al-Askar, the sociologist, it risks crumbling. Judges and the police should work together to strip oppressive men of their right to be walis, he says. But for Iman, the hospital manager, reform can’t come soon enough. An Australian honeymoon awaits. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21718871-women-are-fed-up-being-treated-children-some-saudi-women-are-secretly/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Europe + + +Dutch elections: The centre holds [Fri, 17 Mar 09:50] + +The EU-Turkey deal: Out of sight [Fri, 17 Mar 09:50] + +Polish diplomatic squabbles: Pyromaniac politics [Fri, 17 Mar 09:50] + +Ireland’s lame duck: Jaded isle [Fri, 17 Mar 09:50] + +Charlemagne: Open up [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The centre holds + +Geert Wilders’s anti-immigration party does worse than expected in the Dutch election + + +Nonetheless, a new type of identity politics is emerging in the Netherlands + + + + + +From the print edition | Europe + + +Mar 18th 2017 | AMSTERDAM AND THE HAGUE + + + + + +IT WAS supposed to be the kick-off of Europe’s year of populism. For months, analysts had speculated that Geert Wilders, the platinum-blond rabble-rouser who calls for the Netherlands to shutter its mosques and quit the European Union, might come first in the Dutch election, portending smashing wins for anti-Muslim Eurosceptics across the continent. + +It did not happen. On March 15th the Dutch delivered a vote of confidence in the competent centre—despite a last-minute diplomatic clash with Turkey that featured riots in Rotterdam and wild allegations from Recep Tayyip Erdogan, Turkey’s president. After the Netherlands blocked Turkish ministers from visiting to campaign for a Turkish referendum among Turkish-Dutch dual citizens, Mr Erdogan called the Netherlands a “Nazi remnant”, barred its ambassador and bizarrely accused the Dutch of the massacres of Bosnian Muslims in Srebrenica in 1995. + + + + + +Latest updates + + + + + +See all updates + + + +Mark Rutte (pictured, third from right), who has been prime minister since 2010, was always the likeliest candidate to form the country’s next government. With 95% of votes counted when The Economist went to press, his Liberal (VVD) party is set to remain the largest, with 33 seats, though it lost eight. In a speech after the exit polls were announced, Mr Rutte hailed the victory as “a feast for democracy”. At a VVD party in Amsterdam young men and women cheered; the result was a “beautiful victory for the liberals”, one ex-banker enthused. Pieter Veldhuizen, a VVD campaigner, said the result showed that the Dutch prefer those who “do things” rather than “tweet on the sofa” (presumably in contrast to Americans). + +Mr Wilders’s anti-immigration PVV, which over the past year looked as if it might win the most seats, now looks likely to come second, with 20. Both the Liberals and every other sizeable party have ruled out collaborating with the PVV, and reneging seems neither possible nor desirable. + +Mr Rutte will have to negotiate with a handful of parties that emerged from the election much stronger. The Christian Democrats (CDA), who shifted right on issues of national identity and crime in response to Mr Wilders, will be a natural partner. But most of the mid-sized groups are to the VVD’s left: the liberal, pro-European D66 party, the GreenLeft party, the far-left Socialists, and behind them micro-outfits like the Christian Union, 50Plus (a pensioners’ party), the Party for the Animals and Denk, a new ethnic-minority party. The centre-left Labour Party, the junior partner in Mr Rutte’s grand coalition, lost three-quarters of its seats. (Its voters blamed it for abetting Liberal austerity.) + + + +The Netherlands now faces lengthy haggling before a government based on dozens of compromises can take shape. In other words, Dutch politics as usual—just what Mr Wilders and his followers despise. The anti-immigrant right had hoped the row with Turkey would help them reframe the election as a battle between the Netherlands and Islam. Instead, it handed Mr Rutte control of the agenda. + +Raging Istanbul + +The row with Turkey erupted when the Turkish foreign minister, Mevlut Cavusoglu, attempted to visit Rotterdam to drum up support for a referendum on a new constitution, scheduled for mid-April, that would give Mr Erdogan almost complete control of the government. About 400,000 Dutch have Turkish backgrounds, and their loyalty is a sensitive issue. Most who vote in Turkey back Mr Erdogan and his Islamist AK party—a stance that non-Muslim Dutch find incomprehensible. Mr Wilders often exploits these tensions, calling Muslim Dutch a “fifth column”. + +Seeking to avoid pro-Erdogan demonstrations, the Dutch government denied Mr Cavusoglu permission for a rally. After he threatened sanctions if he were not allowed to come, his landing rights were revoked. Hundreds of Turkish-Dutch staged a protest, and the Turkish minister of family affairs drove to Rotterdam to speak to them. Dutch police dispersed the crowd with truncheons, dogs and water-cannons, and forcibly returned the minister to Germany. The reaction in Turkey was furious. Turks declared boycotts, staged protests and vowed sanctions. + +The clash, many feared, would play into Mr Wilders’s hands. Instead, it allowed Mr Rutte to show backbone and widen his lead. Nonetheless, it may have helped the PVV to pull Dutch voters yet further to the right. Already, according to Peil, a pollster, 71% of Dutch want to pull out of the EU’s association agreement with Turkey, which prevents the government from forcing Dutch of Turkish origin to take integration courses. + +But in the end, domestic issues seem to have trumped international ones. The Netherlands took longer to recover from the euro crisis than some neighbours. Mr Rutte had cut social spending, raised the retirement age and reduced mortgage tax deductions. Populists and moderates alike accused the government of neglecting the elderly and making health care unaffordable. In a debate this week, the only time Mr Rutte looked uncomfortable was when Mr Wilders savaged him over conditions in care homes, and claimed that prisoners were cared for better than the elderly. + +As in other countries, the broad right-left ideological confrontations that once structured Dutch politics are breaking down, and voters are moving in many directions at once. Some 13 parties made it into parliament, up from 11 in the previous election. After their final pre-election debate, the party leaders could barely squeeze in tight enough for a portrait. + +But the mid-sized parties that will probably be needed to form a coalition are divided, on classic left-right lines, over how wealth should be shared. Jesse Klaver, the handsome 30-year-old leader of GreenLeft, demanded in the debates that janitors should earn more and bankers less, framing the CDA and VVD as bankers’ friends. On climate change the parties are miles apart, with the Greens prioritising green energy and the VVD cheap petrol and fast roads. + + + +And yet here lies the irony of Dutch politics. Parties shout at each other for months and then govern together for years. Forming a majority government will take weeks, more likely months. In 2012 the financial crisis added urgency to the process; now, the lack of a deadline may be a problem, making it harder for party leaders to sell concessions to their members. In the coming weeks an official “informer” will be charged with exploring which coalitions might work and which horses different parties are willing to trade. The most likely combinations are a centre-right government involving VVD, CDA and D66, propped up either by the Greens or the smaller Christian parties. + +In the meantime Mr Rutte’s caretaker cabinet will continue to run the country. It is supposed to refrain from controversy. That may be hard. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21718929-nonetheless-new-type-identity-politics-emerging-netherlands-geert-wilderss/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Out of sight + +A year on from a deal with Turkey, Europe still struggles with migration + + +President Recep Tayyip Erdogan periodically threatens to cancel it if his conditions are not met + + + + + +From the print edition | Europe + + +Mar 16th 2017 | BELGRADE AND ISTANBUL + + + + + +LOUNGING in a smoky café in Aksaray, a rundown part of Istanbul, Ahmed, a 23-year-old Palestinian people-smuggler, expresses confidence in the future of his industry. “People come here, they have sold everything, they will find a way to get smuggled,” he shrugs. Business has got harder since March 18th 2016, when the European Union struck a deal with Recep Tayyip Erdogan, Turkey’s president, to send asylum-seekers back from Europe. But people are still trying to make the journey. Indeed, Ahmed boasts, before the deal smuggling was “too easy”. + +Ahmed’s bravado contradicts European politicians’ claims that the deal with Turkey has broken the smugglers’ business model. Going purely by the numbers, the Europeans would seem to be right. Before the deal was struck around 50,000 people crossed the Aegean to Greece on flimsy boats each month. Between December 2016 and February this year, only about 3,500 made the journey. + + + + + +Latest updates + + + + + +See all updates + + + +But on a closer look, the deal deserves criticism. Although it has been a political success, seemingly demonstrating that the EU can control its borders, its humanitarian impact has been far murkier. And it leaves the EU uncomfortably dependent on less-than-fully democratic governments elsewhere to manage migration. + +In Turkey it is not hard to find people-smugglers still plying their trade. Mohammed (not his real name), a 37-year-old Palestinian who claims to have given up smuggling after he was caught and jailed for four months, estimates that around 100 smugglers are still operating in Istanbul. Their tactics have changed: some asylum-seekers fly to Europe from Turkey using passports—bought or stolen—belonging to similar-looking EU citizens. A few have been sent from Kas, farther south on the Turkish coast, to Kastellorizo, a tiny Greek island. Others are smuggled from Syria to Sudan, then up through Libya to Italy, Mohammed claims. + +As the numbers show, however, since the deal many more migrants are staying put in Turkey. Some 2.9m Syrians and hundreds of thousands of Afghans and Iraqis live there. Around 10% are in camps; the majority live in Istanbul or towns in the south-east, near the border with Syria. Turkey has the largest refugee population globally (see chart). + + + +The fortunes of these migrants are mixed. Many are attempting to make a life in Turkey. Because of a quirk in Turkey’s accession to the UN refugee convention of 1951, only Europeans fleeing war or persecution are considered “refugees”; instead, the 2.9m have been offered temporary protection. Since January 2016 it has supposedly become easier for Syrians to get work permits, but only around 10,000 have succeeded. Many migrants’ houses are overcrowded, says Metin Corabatir, the president of the Research Centre on Asylum and Migration, a think-tank in Ankara. Although around half a million refugee children have been sent to school, nearly as many remain out of it. Child labour is not unheard-of, nor are child brides. + +Yet in some ways refugees are faring better in Turkey than in other parts of Europe. Each Syrian refugee is given a temporary guest card and free access to public health care. Since the deal came into place €3bn ($3.2bn) in aid from the EU has been agreed, with €750m already disbursed. Another €3bn has been promised. Along with a food programme, a cash-card scheme has been set up; by February over 200,000 people were being helped by it. The EU has also increased legal resettlement: since the deal came into force 3,565 Syrian refugees have gone to a dozen EU member states. + +On the other side of the Aegean, however, the deal has been far less successful. With the flow of migrants halted, Greece and EU countries were supposed to process those who had already arrived. “Today there should not be more than a handful of asylum seekers on the Greek islands,” says Gerald Knaus of the European Stability Initiative, a think-tank. Instead 62,000 are still in Greece, with around 13,000 on the islands in overcrowded, squalid camps. Once the numbers of new arrivals fell, EU politicians became complacent, thinks Mr Knaus. Emergency assistance to Greece was boosted by €357m, of which €70m directly supports the EU-Turkey agreement. Yet Greece’s asylum system remains sluggish. The rate at which rejected applicants are sent back to Turkey has actually fallen since the agreement came into place. + +Similar problems occur up through the Western Balkans. Around 7,000 asylum-seekers are stranded in Serbia, with about 1,000 staying in abandoned warehouses next to Belgrade’s main railway station. These makeshift camps have no running water or electricity; to escape the cold, migrants burn leftover railway sleepers, creating a suffocating stink of oil. Some sleep in derelict cars stuffed full of blankets instead. + +Such conditions are shameful. So is the EU’s record on shifting refugees from Greece to other members: only 7,280 were moved between September 2015 and January 2017. The target set in 2015 was to relocate more than 63,000 in two years. Intransigent politicians have been a problem, particularly in eastern Europe. Bureaucratic backlogs have done the rest. + +The saving face that stopped 1,000 ships + +Meanwhile, the deal has left Europe dependent on Mr Erdogan’s goodwill. Officials in Turkey have repeatedly vowed to cancel it if Europe does not fulfil the promise of visa-free travel for its citizens. Europeans accuse their governments of downplaying Mr Erdogan’s growing authoritarianism for fear that he might “open the gates”, as he threatened to, in November. The threat is mostly rhetoric: with borders closed across Europe, it has become far harder for migrants to make the journey. + +Yet the EU is vulnerable to worsening relations with Turkey and political chaos in Greece. Many politicians are just pleased the deal turned the migrant crisis from a situation of “intolerable dysfunction to tolerable dysfunction”, says Elizabeth Collett of the Migration Policy Institute, a think-tank in Brussels. It would not take much for it to become intolerable once more. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21718930-president-recep-tayyip-erdogan-periodically-threatens-cancel-it-if-his-conditions-are-not-met/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Pyromaniac politics + +Poland has reinforced its position as Europe’s problem child + + +In one week the government indulged in two paranoid obsessions + + + + + +From the print edition | Europe + + +Mar 16th 2017 | BRUSSELS AND WARSAW + + + + + +DONALD TUSK’S appointment as president of the European Council in 2014 seemed to complete Poland’s journey to the heart of the European Union. A decade after Poland led the accession of eight former Soviet-bloc countries, its prime minister was elevated to one of the most senior posts in Brussels. The job involves chairing summits of European leaders and forging compromise from their debates. At first some thought Mr Tusk operated more like a Polish prime minister than a consensus-seeking European. But most came round as he coolly shepherded the EU through the Greek bail-out, the refugee crisis and Britain’s Brexit vote. His election to a second two-and-a-half-year term at an EU summit on March 9th looked like a formality. + +Instead, Mr Tusk found his own country blocking his path, and a Polish political psychodrama imported to Brussels. Beata Szydlo, Poland’s prime minister, circulated a letter to her fellow heads of government that more or less accused Mr Tusk of treason. “He used his EU function to engage personally in a political dispute in Poland,” she wrote. (This may refer to a speech Mr Tusk made in Wroclaw last year calling on the government to respect the constitution.) Ms Szydlo nominated Jacek Saryusz-Wolski, an obscure member of the European Parliament, to replace Mr Tusk. + + + + + +Latest updates + + + + + +See all updates + + + +In the end the matter came to a vote, an unusual development in a forum that prefers to settle such matters by acclamation. Despite speculation that Hungary, which often sides with Poland, might support the gambit, Mr Tusk was re-elected by 27 votes to one. Ms Szydlo responded by sulkily blocking the summit’s conclusions on matters such as trade and defence, an act without legal significance. + +Animosity between Mr Tusk and Jaroslaw Kaczynski, who as head of the ruling Law and Justice (PiS) party is the true leader of Poland, has been brewing for over a decade. Mr Kaczynski absurdly blames Mr Tusk for a plane crash in Smolensk in 2010 that killed his twin brother Lech, then Poland’s president. By smearing his arch-enemy as a traitor, Mr Kaczynski may hope to reduce Mr Tusk’s chances of ever returning to domestic politics. + +In the eyes of PiS and its supporters, Mr Tusk and his centre-right Civic Platform party exemplify a post-communist elite that sold out Polish interests after 1989. A histrionic video published by PiS this month blames Mr Tusk for destroying Poland’s shipbuilding industry. The strong relationship Mr Tusk forged with Germany as prime minister has been turned against him. Witold Waszczykowski, the foreign minister, said the vote in Brussels proved that the EU is “under Berlin’s diktat”. + +A similar level of paranoia could be traced behind the Polish government’s decision, on March 14th, to approve an amendment to the law on the foreign service. Ostensibly the new law will remove those who co-operated with the communist-era security apparatus; according to the draft, some diplomatic posts abroad resemble skanseny (open-air museums) of the communist era, while some diplomats are accused of having “insufficiently strong bonds with the Polish state”. + +In reality, if the law is adopted by parliament, the effect will be much broader: all foreign-ministry employees’ contracts will be terminated in six months. Only those offered new ones, according to unspecified criteria, will stay on. It could thus become far easier for PiS to stuff the foreign service with loyalists or those keen on its more confrontational foreign policy. The amended law states that the service’s role is to “protect Poland’s sovereignty”, which echoes Ms Szydlo’s calls to stand up to Brussels. Even if the foreign service does not end up exclusively staffed by PiS cronies, the change would permanently politicise a fairly neutral institution. + +PiS has pursued a worrying policy of polarisation since winning the election in 2015. Mr Kaczynski’s government portrays its political opponents as enemies of the state. Its purges of official institutions aim to cement PiS’s own vision of the post-1989 revolution, and have turned state media into a mouthpiece of the regime. The tactics appear to be working: the government dominates opinion polls. + +Poland is drifting ever further from the European mainstream. From energy to climate to the preparations for a big EU summit in Rome this month, diplomats and officials describe a government that is becoming increasingly hard to work with. Some urge the commission to trigger Article 7 of the EU treaty, the as-yet unused “nuclear option” that could see Poland’s EU voting rights suspended. The government will be the first victim of the futile diplomatic to-do it provoked; it can hardly expect generous treatment in the forthcoming negotiations over the EU budget, for example. After his re-election, Mr Tusk warned that burned bridges cannot be crossed again. But Mr Kaczynski appears to be in the grip of full-blown pyromania. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21718928-one-week-government-indulged-two-paranoid-obsessions-poland-has-reinforced-its-position/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Jaded isle + +Ireland’s Enda Kenny has lost his twinkle + + +For St Paddy’s day, the taoiseach will present Donald Trump with a last bowl of shamrock + + + + + +From the print edition | Europe + + +Mar 16th 2017 | DUBLIN + + + + + +IRISH-AMERICANS, who celebrate St Patrick’s Day with a frenzy of public drunkenness, dyed-green beer and leprechaun costumes, might be disappointed at how the Irish themselves mark the holiday. Most prefer to watch the parades on television rather than brave the changeable spring weather, perhaps hoisting an evening toast to Saint Paddy (never “Saint Patty”, as it is often rendered in America). And they never put dye in their beer. Those in search of emerald ale must go abroad, as indeed nearly the entire cabinet does every year, fanning out to visit the global Irish diaspora. In no other country do the upper ranks of government mark the national holiday by flocking overseas. + +The most high-profile ritual takes place in Washington, where the taoiseach (prime minister) presents America’s president with a bowl of fresh shamrock. For the current taoiseach, Enda Kenny, this year’s visit to the White House will be his sixth. It is likely to be his last. Facing a mutiny in his centre-right Fine Gael party last month, Mr Kenny said that after meeting Donald Trump he would make an announcement about his future—presumably, that he will step down. + + + + + +Latest updates + + + + + +See all updates + + + +Mr Kenny’s departure would alarm some in Brussels, who see him as a faithful implementer of the austerity policies that the European Union imposed after the Irish property crash of 2008. The EU regards Ireland’s strong recent economic performance as proof that its prescriptions worked. (Some economists think the patient might have recovered faster without the medicine.) Unemployment in February was at a nine-year low of 6.6%, and the EU forecasts GDP growth of 3.4% this year. But in an election last year Mr Kenny’s coalition lost 42 of its 99 seats; he now runs a minority government. + +In February Mr Kenny mishandled the latest twist in the saga of a police whistle-blower, Maurice McCabe. In 2014, after Sergeant McCabe exposed systematic corruption in the Garda Siochana, the national police force, senior officers tried to smear him with false charges of sexual abuse. Asked by parliament when he had learned of the smear, Mr Kenny contradicted himself. + +Should Mr Kenny resign, he will probably be replaced by a younger party colleague. If Fine Gael loses office, the next taoiseach will almost certainly be Micheal Martin, the leader of Ireland’s other big centre-right party, Fianna Fail. Between them, the two parties have governed Ireland ever since the founding of the modern state. A poll last month by the Irish Times put their combined support at 57%. A constellation of small left-wing parties managed about ten points between them. As for the hard right, in Ireland there is none. + +This is not to say that ordinary Irish people are content. Many complain of disintegrating health services, precarious jobs, mass emigration, a housing crisis and a cost of living that approaches Nordic levels. But this disaffection has yet to trouble the political calm. As with Saint Patrick’s Day, few Irish are ready to take to the streets. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21718927-st-paddys-day-taoiseach-will-present-donald-trump-last-bowl-shamrock-irelands/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Open up + +The Dutch election suggests a new kind of identity politics + + +Identity does not have to be the exclusive preserve of the far right + + + + + +From the print edition | Europe + + +Mar 18th 2017 + + + + + +WILL no one stand up for the Dutch cosmopolitan elite? For many observers of this week’s election in the Netherlands there was only one story: the fate of Geert Wilders, the bottle-blond nativist who wants to ban the Koran and exit the European Union. Rare was the bar in Limburg, Mr Wilders’s home province, left unmolested by journalists expecting Dutch voters to deliver a populist hat-trick, following the triumphs of Brexit and Donald Trump. The young, educated urbanites of Amsterdam’s Canal District or Haarlem barely got a look-in. And yet in an election with many subplots, theirs was among the more arresting. + +Though Mr Wilders disappointed on election day, he remains more than an irritant. With 20 seats in the new 150-seat parliament, he may well lead the opposition to whatever government emerges from the electoral mélange produced on March 15th. His vicious brand of anti-Islam populism is no less shocking for its familiarity (Mr Wilders founded his Freedom Party in 2006, and he is not the first peddler of xenophobia to Dutch voters). And opposition presents no impediment to his influence. Before the election Mr Wilders told an interviewer that by tugging other parties in his direction, he had already won. In a way, he was right. + + + + + +Latest updates + + + + + +See all updates + + + +But his influence extends in other directions. Until now, the politics of identity across Europe has been largely ceded to the likes of Mr Wilders. Mainstream parties of left and right often struggle to find the vocabulary to discuss culture, nation, race and immigration; some change the subject, others meekly ape the far right. But in the Netherlands the two parties that performed most strongly compared to the 2012 election—D66, a collection of earnest pro-European liberals, and GreenLeft, a once-fringe amalgam of radicals and environmentalists—succeeded by taking Mr Wilders on directly. GreenLeft at least tripled its number of seats. D66 won 19 seats and runs strong in every Dutch city. + +One of the campaign’s most telling moments came during a debate of party leaders on March 5th. Asked whether they agreed that the Netherlands was failing to “protect its own culture”, most muttered about the decline of values or the national anthem. But Jesse Klaver, the 30-year-old GreenLeft leader, said he agreed with the proposition, and went on to describe a vision of national identity centred on tolerance, openness and internationalism that he claimed was under siege from the right. Viewers declared his performance the best of the night. “It’s a new kind of patriotism,” says Marjolein Meijer, the GreenLeft chair. As for D66, no other party has so strongly stood up to Mr Wilders’s calumnies. + +Dutch politics is too complex and fragmented to provide straightforward lessons. Thirteen parties won seats this week; the coalition that eventually emerges may well resemble the centrist governments that have run the Netherlands for decades (although with four or five parties it will struggle for coherence). If a cosmopolitan-nationalist divide has emerged, it has not so much supplanted the old left-right axis as complemented it, suggests Cas Mudde, a political scientist at the University of Georgia. + +Yet the Dutch have often served as political bellwethers for other parts of Europe. Without the roadblocks of parliamentary thresholds or complex voting systems, social changes can find political expression quicker than in other countries. GreenLeft and D66 have exploited the political space opened up by the collapse of the traditional centre-left—the Labour Party, the junior coalition partner, lost three-quarters of its seats this week—and the right’s failure to resist the populist temptation. Brexit and Mr Trump presented them with cautionary tales almost as potent as the threat from Mr Wilders. + +The Dutch may have avoided a serious rupture. But the politics of identity still has the power to divide. Two years ago “Separate Worlds”, a report by two government think-tanks, warned of a drift to American-style polarisation between an educated elite that is enthusiastic over globalisation and a remaining class of poorer Dutch rooted in place and tradition. Those parties that sit firmly inside one or other of these bubbles were among the big winners this week (only 14% of those with little education went for D66 or GreenLeft; Mr Wilders hoovered up this group’s votes). + +And Dutch identity politics has found a third, more worrying dimension in the emergence of Denk, a party catering specifically to Dutch Muslims. Karina, a young Moroccan Dutchwoman buttonholed by Charlemagne as she emerged from a mosque serving as a polling station in Amsterdam, explained that she used to vote Labour before Messrs Wilders and Trump left her fearing for her freedom to don the headscarf. Thanks to her vote, and many thousands more, Denk netted three seats. + +That’s not me + +An electoral landscape increasingly marked by identity politics is a recipe for national unease. For the parties that are on the rise, one response is to explore fresh policy terrain vacated by the exhaustion of the traditional left. Changing labour markets and job insecurity provide an obvious example: unemployment is low in the Netherlands, but it has Europe’s highest share of temporary workers. Crafting asylum rules that combine generosity for outsiders with reassurance on borders for anxious Dutch is another. D66 may have given some thought to these issues; it is less clear that GreenLeft has. Mr Klaver’s critics charge that his speeches are often heavier on inspiration than insight. If his party signs up to government, he has a chance to prove them wrong. + +If so, like-minded parties elsewhere in Europe will take heart. Last year Alexander van der Bellen, a former Green, defeated a far-right challenger for the Austrian presidency on an avowedly pro-European platform. The untested Emmanuel Macron is seeking to do the same against the far-right Marine Le Pen in France. Liberals have started to win votes in such unlikely places as Spain and Poland. This is hardly the beginning of the end for the anti-immigrant, identity-politicking right. But it is worth watching. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21718921-identity-does-not-have-be-exclusive-preserve-far-right-dutch-election-suggests/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Britain + + +Scottish independence: Sturgeon the brave [Fri, 17 Mar 09:50] + +Article 50: Scotched [Fri, 17 Mar 09:50] + +The Conservative Party manifesto: Promises, promises [Fri, 17 Mar 09:50] + +Sterling: Defying gravity [Fri, 17 Mar 09:50] + +The future of broadband: A very British compromise [Fri, 17 Mar 09:50] + +Life expectancy: Mortality tale [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Scotland the brave + +Nicola Sturgeon hopes to turn Brexit into Scoxit + + +Scots’ support for independence has risen, but so has their Euroscepticism + + + + + +From the print edition | Britain + + +Mar 18th 2017 | EDINBURGH + + + + + +GAMBLING on a referendum whose outcome is unsure is a risky business. Ask David Cameron, who resigned as prime minister hours after losing the Brexit ballot last June. But Nicola Sturgeon is prepared to take her chances. On March 13th Scotland’s first minister said she would seek permission from Westminster for a second referendum on Scotland’s independence from the United Kingdom, less than three years after a plebiscite in which Scots voted by 55% to 45% to stay put. + +The Conservative government’s response was swift and stinging. Theresa May denounced Ms Sturgeon for “playing politics” and creating “uncertainty and division”. But Westminster is unlikely to refuse the request. It would add to the already-damaging perception of an English-dominated government that ignores Scotland. Once again a Conservative prime minister faces the prospect of presiding over the break-up of the union. And this time it is against the backdrop of perhaps the most complex international negotiations Britain has ever undertaken, as it leaves the European Union. + + + + + +Latest updates + + + + + +See all updates + + + +Ms Sturgeon wants a referendum between autumn 2018 and spring 2019, well into the Brexit negotiations but before they are complete. Last time Scotland held such a vote, Westminster left it to Holyrood to decide when it should take place. Mrs May has indicated that this time she will insist that Scotland wait at least until the Brexit talks are finished. + +Ms Sturgeon is keen to take advantage of growing support for independence. At 46%, according to a survey carried out in the second half of last year by ScotCen Social Research, it is twice as high as in 2012, when the previous campaign for independence began (see chart). Holding the poll before the divorce with the EU is finalised would allow the nationalists to paint Brexit in the worst possible light: their version of the “Project Fear” employed by Remainers during the Brexit campaign. + + + +Even so, there are arguments for delay. Support for independence is strongest and growing fastest among the young. Waiting a few years until more are able to vote (and fewer of the elderly unionists are around) could boost the nationalists’ chances. And the adverse effects of Brexit forecast by most economists—which would make Scoxit more appealing—could take time to kick in. + +More worrying for Ms Sturgeon, Euroscepticism is on the rise among Scots. Two-thirds either want Britain to leave the EU or would like the EU’s powers to be reduced, up from just over half in 2014. Even among the 62% of Scots who voted to Remain last year, more than half think that Brussels’s authority should be curbed. And of those who plumped for independence in 2014, a third voted to leave the EU. Stephen Gethins, the spokesman on Europe for Ms Sturgeon’s Scottish National Party (SNP) in Westminster, describes support for the EU as being in the party’s “DNA”. But it was not always so: in the 1975 referendum, when Britons decided to stay in the European project, the SNP wanted to leave. Tying the case for independence too tightly to continuing membership of the EU is risky. + +And rejoining the EU might not be easy. Alfonso Dastis, the Spanish foreign minister, says that Scotland would have to “join the back of the queue” for EU membership. Spain worries that Scottish independence would embolden separatists in Catalonia. Like all EU members, it can veto applications. Perhaps partly for that reason, the SNP is said to be examining the alternative of the European Free Trade Association (EFTA), whose members include Norway and Iceland. That could allow Scotland greater access to the EU’s single market, while lessening the threat of a Spanish veto. It might also avoid annoying Scots who voted for Brexit. + +At home, Scottish nationalists face a divided opposition. Labour’s position on Europe and Scotland is muddled. Jeremy Corbyn, Labour’s leader in London, was slammed by colleagues in Scotland for saying it was “absolutely fine” to hold a second independence vote. The most prominent unionist is Ruth Davidson, under whose leadership the Tories became the main opposition in the Scottish Parliament last year. Conservatism is a less toxic brand than it was, but Scots still care little for the Tories. That makes Labour’s shambolic state doubly harmful, since the Conservatives’ unchallenged position in Westminster makes Britain even less appealing. “This is what the SNP dreamed of in the 1980s,” says James Mitchell of Edinburgh University. + +But if the politics look favourable for Ms Sturgeon, the economics do not. Weak last time, the economic case for independence is even more feeble today. Ms Sturgeon insists that free trade between Scotland and the rest of Britain will continue, whatever the result of the independence referendum. But this would be trickier if Scotland rejoined the EU or became part of EFTA. So would be maintaining the open border with England. And regulatory standards between Scotland as an EU member and Britain might soon diverge, complicating trade between the Scots and their biggest market. Scotland sends two-thirds of its exports to the rest of Britain, compared with less than a fifth to the rest of the EU. Edinburgh-based financial firms are already covertly installing brass plates in London, which would allow them quickly to shift operations out of Scotland. + +Worries over trade would pale in comparison with concerns over Scotland’s public finances. A greying population and relatively weak tax base make it hard to balance the books. In the past these structural problems were partly offset by taxes on North Sea oil. A decade ago, when oil prices were high, such taxes were equivalent to 6-7% of Scottish GDP. But in the latest financial year they accounted for less than 0.1%. Curtailed investment in the oil and gas sector has contributed to a wider slowdown. In the year to September Scotland’s GDP grew by 0.7%; the rest of the country grew by 2.4%. Scotland’s budget deficit is now nearing 10% of GDP, more than twice Britain’s. + +That is not sustainable for a small country. Scotland would have to bring the budget closer towards balance. Sharply raising taxes might cause rich Scots to pack up and move south. So spending would have to be slashed. For Scots who have already endured six years of Westminster-imposed cuts, this would be a rude awakening. + +Still, the economic arguments were not decisive last time, contends Michael Keating, an analyst of Scottish politics at Aberdeen University. The question was which side looked riskier. Scots did not want to take a leap in the dark voting for independence. “This time,” he says, “they’ll be offered two leaps in the dark.” + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21718923-scots-support-independence-has-risen-so-has-their-euroscepticism-nicola-sturgeon-hopes/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Scotched + +Theresa May holds back from triggering Article 50 + + +The Brexit process is delayed by a fortnight, narrowing the negotiating period by nearly a month + + + + + +From the print edition | Britain + + +Mar 16th 2017 + + + + + +AFTER protracted parliamentary debate, the bill authorising the prime minister to invoke Article 50, the legal basis for leaving the European Union, finally became law this week. Late on March 13th the House of Commons rejected two amendments that had been proposed by the Lords. As expected, the upper house then backed down. The government had been hinting broadly that the letter triggering Article 50 would be sent to Brussels immediately. On March 14th Mrs May duly hailed the bill’s passage into law as “a defining moment for our whole country”. + +But then came anticlimax: Downing Street said the invocation of Article 50 would actually happen only in the week of March 27th. Before then, Mrs May plans to visit Scotland, Wales and Northern Ireland. All being well, she will still fulfil the promise she made last October of starting the Brexit process by the end of March. + + + + + +Latest updates + + + + + +See all updates + + + +A delay of two weeks in a negotiation due to last two years may sound trivial. Yet a plan in Brussels to hold a special EU summit on April 6th to discuss Mrs May’s letter had to be hastily junked. The meeting will now take place in early May, losing almost four weeks out of what is already an extremely tight timetable. + +So why did Mrs May pull back at the last minute? After all, there was never going to be a perfect moment to invoke Article 50. Doing so just before the Dutch election on March 15th might have bolstered the far-right anti-EU party of Geert Wilders. Acting too close to the 60th anniversary celebration of the Treaty of Rome on March 25th might have seemed provocative. French and, later, German elections also loom in the near future. + +The truth seems to be that Mrs May’s plans were upset by Scotland’s first minister, Nicola Sturgeon, who chose to announce on March 13th that her government would ask for a second independence referendum (see article). She cited Brexit as the “material change” to justify this demand. And she attacked Mrs May for choosing to pursue a hard Brexit that will take Britain out of the EU’s single market, when a majority of Scots had voted to stay in the EU last June. + +The reality is that Brexit is unwelcome not just to Ms Sturgeon but to all of Britain’s European partners. Even as they hold their 60th birthday party—which Mrs May will not attend—they know that the club is in deep trouble, not least because so many countries besides Britain have seen an upsurge of populist anti-EU parties. To most other EU countries, indeed, Brexit is just one more ingredient in a cocktail of often more pressing problems that afflict them. + +In this context, indeed, some may take quiet satisfaction from seeing the Scots ruin Mrs May’s plan to trigger Article 50. A few may even see the rising risk of a break-up of the United Kingdom as suitable punishment for Brexiteers. Yet nobody will much enjoy the Article 50 negotiations when they eventually start. + +At the same time few are convinced by Mrs May’s repeated mantra that no deal is better than a bad deal, which they see as just an attempt to bolster Britain’s weak bargaining position. On March 15th David Davis, the Brexit secretary, admitted to the Commons Brexit committee that since the referendum the government had made no forecasts of the economic consequences of leaving the EU without a deal and reverting to trade under World Trade Organisation rules. That makes it even harder to see how Mrs May can justify her claim. + +Nor are the parliamentary manoeuvres over Brexit finished. This week it emerged that at least seven bills besides the planned “Great Repeal Bill” will be needed to give effect to Brexit. Mr Davis has also conceded that any deal negotiated under Article 50 would require parliamentary approval. And although Lord Bridges, a Brexit minister, said in the Lords that he found it hard to see how Parliament could hold a vote if there were no deal, even that could be open to question. Lord Hope has declared that the Supreme Court judgment which forced the government to bring forward the Article 50 bill may require further primary legislation before Brexit actually happens. And he should know—for he is a former Supreme Court justice. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21718917-brexit-process-delayed-fortnight-narrowing-negotiating-period-nearly/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Promises, promises + +Just what is the status of the Conservative manifesto? + + +Howls of outrage about a tax betrayal are strangely muted when it comes to other commitments + + + + + +From the print edition | Britain + + +Mar 16th 2017 + + + + + +PHILIP HAMMOND’S budget of March 8th was short and rather sensible. But it blew up spectacularly over a promise to raise taxes on the self-employed. The chancellor’s tax plan was extremely modest, representing less than 0.1% of public spending. Yet the response from Conservative backbenchers and the right-wing press—who, with Labour under inept leadership, form the main opposition to the government these days—was apoplectic. The Sun even offered its readers bumper stickers bearing the message “Stop Hammond’s white van scam”. A week later, on March 15th, the government announced a screeching U-turn. To the chancellor’s humiliation, the main measure of his first budget was scrapped. + +The fuss was caused by the fact that the tax plan broke a promise in the Conservatives’ 2015 election manifesto. The document states that the Tories will not increase national insurance contributions (NICs), the tax in question. The government’s frantic spin that the proposed rise applied to a class of NIC not covered by the manifesto promise persuaded no one. + + + + + +Latest updates + + + + + +See all updates + + + +It was on the basis of this manifesto that the Conservatives won their present majority. But since then David Cameron has given way to Theresa May, and the political outlook has been changed utterly by the Brexit referendum. The status of the document is thus somewhat unclear—and the government’s commitment to it at times appears selective. + +Mrs May’s programme for government so far is rather bare, but it already includes policies that the previous government had rejected. The 2015 manifesto’s section on education, for instance, talked of turning all underperforming schools into independent “academies”. The government’s flagship education initiative now is the creation of selective “grammar” schools, which Mr Cameron had ruled out. + +In the manifesto’s section on Britain’s relationship with the European Union, the fateful promise to hold an in-out referendum got top billing. Yet lower down was a commitment to “safeguard British interests in the single market”. Mrs May has made clear that, far from safeguarding those interests, she will lead Britain out of the single market (something the referendum result does not require her to do). + +It might be argued that Brexit is so massive a development as to render that entire chapter of the manifesto void. That could also be the justification for Mrs May’s swift abandonment of the manifesto plan to balance the budget by 2020, a promise which it would be imprudent to keep in light of the more uncertain economic picture since the referendum. But it is unclear why, if economic conditions have changed so starkly, tax pledges should be off limits. + +In other areas the government has come under fire for sticking to its promises. It has stood by the manifesto commitment to spend 0.7% of GDP on foreign aid. But some newspapers and Tory backbenchers are on the warpath. The odd thing is that many of those who have called for foreign aid to be cut are the same who, when it came to NICs, considered the manifesto a sacred document. In an editorial about NICs the Sun howled at the government’s “blatant breach of a 2015 manifesto pledge”. Yet a few months earlier it had declared: “It’s time to end the foreign aid fiasco.” Jacob Rees-Mogg, a Tory backbencher, complained last year that Britons were “doing more than our fair share” on aid. After the budget he objected that it was “very hard to see” how Mr Hammond’s tax announcement squared with the “absolutely clear” wording of the manifesto. + +There is a constitutional consequence to all this confusion. By convention, the unelected House of Lords does not oppose legislation brought forward by governments to enact their manifesto commitments. That convention still applies, regardless of the fact that Britain has a new prime minister. But if that prime minister and her government give the impression that they do not feel bound by every promise in their party’s most recent manifesto, why should the Lords? Until Mrs May gets a chance to draw up her own set of plans and put it before voters in an election, the unsure status of the 2015 manifesto will linger on. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21718918-howls-outrage-about-tax-betrayal-are-strangely-muted-when-it-comes-other-commitments-just/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Sterling’s strength + +The pound is defying gravity. But a fall may be on the way + + +If foreigners stop buying British assets, the giant current-account deficit could become a problem + + + + + +From the print edition | Britain + + +Mar 16th 2017 + + + + + +FOLLOWING Britain’s vote to leave the European Union last June, the pound dropped by a tenth in a matter of days. Traders talked fearfully of it reaching parity with the euro, or even the dollar. In October sterling hit an all-time low (see chart). Since then the government’s Brexit stance has hardened; it plans to leave the EU’s single market and customs union, and impose restrictions on immigration, which is likely to damage Britain’s economy. But rather than tumbling further, the pound has grown stronger since October. A quid now buys €1.14 or $1.23. + +In the days following the referendum traders ditched sterling for a number of reasons. They assumed that economic growth would immediately slow, forcing the Bank of England to loosen monetary policy. (The Old Lady duly obliged, cutting interest rates in August.) As the returns on sterling-denominated assets fell, fewer traders wanted to hold them. Investors also feared that Brexit would hit Britain’s long-term growth prospects. + + + + + +Latest updates + + + + + +See all updates + + + + + +Sterling has stabilised since October partly because the post-referendum economy has so far beaten expectations. It was in October that hard economic data started to filter out, showing that unemployment had continued to fall and GDP growth to accelerate since the vote. + +That, paired with worries about higher inflation linked to sterling’s decline, led traders to revise their predictions of the Bank of England’s next move. As The Economist went to press the bank was expected to leave interest rates unchanged. But with inflation about to go above the bank’s 2% target, financial markets think there is a decent chance of an interest-rate rise by the end of the year. And currency traders have short attention spans; many have tired of Brexit and gone elsewhere to speculate. + +But a spectre haunts sterling: Britain’s giant current-account deficit. In the third quarter of 2016 it was equivalent to 5% of GDP, by far the highest level of any big, rich country. At its simplest this means that Britain is borrowing a large amount from abroad. Foreign investment in British assets—mansions in Kensington, tech firms in Cambridge or chocolate factories in Birmingham—props up sterling’s value and thus allows Britons to enjoy cheaper holidays on Spanish beaches. + +On this front Brexit has not yet done much damage. For all its political turmoil Britain is still a relatively stable place. Since June foreign investors looking for a safe place to park money have loaded up on British government debt. Eduardo Gorab of Capital Economics, a consultancy, points out that foreigners still have a taste for British commercial property: in February they made net purchases amounting to nearly £1bn, a level not very different from the year before. In the fourth quarter of 2016 the value of overseas acquisitions of British firms hit its highest-ever level—though many of those deals would have been in train before the referendum. + +As long as foreigners continue to prize British assets the large current-account deficit can endure, supporting sterling. Capital tends to flow towards countries that can make productive use of it or where assets are safe. But if that perception were to change—say, if the Brexit negotiations got off to a bad start—foreign investors might think twice. And an economic slowdown may not be far off. Investors are wise to these possibilities. In recent weeks they have been building up short positions against sterling (ie, betting that it will fall). Before long the gravity-defying pound may be brought down to earth. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21718922-if-foreigners-stop-buying-british-assets-giant-current-account-deficit-could-become/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +A broadband break-up + +A new deal for Britain’s internet users is unlikely to be the last + + +The partial separation of BT and Openreach is a very British compromise + + + + + +From the print edition | Britain + + +Mar 16th 2017 + + + + + +BRITAIN is on the brink of a new era in phone and internet usage, at least according to Ofcom, the telecoms regulator. On March 10th, after two years of wrangling, it at last struck a deal with BT whereby the former state-run telecoms monopoly will legally separate from its Openreach division, which owns and operates the main system of cables, poles and ducts connecting Britons to the internet and telephone network. Proponents of the agreement expect to see more competition, lower prices and better customer service. Critics, however, argue that it is an unsatisfactory fudge, and that the country will continue to crawl, rather than canter, into the digital age. + + + + + +Latest updates + + + + + +See all updates + + + +Openreach, which began operating in 2006, has produced nice profits for BT but is unloved by almost everyone else. It was supposed to provide equal access and terms to other internet providers such as TalkTalk, Sky and Vodafone, but they have long argued that Openreach favours BT’s own retail arm, at the expense of consumers. Openreach’s customer service has been woefully poor, a point that even BT concedes. Furthermore, most agree that there has been too little investment in converting Openreach from copper to a modern all-fibre network. Only with “fibre to the home” systems, many experts argue, can Britain catch up with the likes of Japan and bridge the digital divide between its own urban and rural areas. + + + + + +One solution would be “structural separation”, hiving off Openreach from BT to operate as an independent company. This would allow it to focus on the long-term task of building a modern network rather than providing BT with short-term profits and dividends. But this option would take time to implement and be disruptive, argues Clive Carter, director of strategy at Ofcom. So in the deal announced on March 10th, Ofcom has pushed BT as far as it can in this direction without breaking Openreach off completely. The new Openreach will operate as a distinct company with its own management, with a legal duty to serve all its customers equally, from BT retail to Sky or Vodafone. Separately, BT will also have to open up its ducts and telegraph poles to its rivals. + +Some 32,000 BT employees will transfer to the new entity, almost a third of BT’s workforce. BT branding will disappear from Openreach vans, overalls and the rest. Pensions have been a stumbling block to dividing the companies. Under this deal the “crown guarantee”, whereby the government would meet BT’s pensions liabilities in the event of it going bust or being wound up, will be extended to the new employees of Openreach. + +However, Openreach will remain a wholly owned subsidiary of BT, with the chairman reporting to BT’s chief executive. BT will still own all the assets of the new company. And the BT board retains the right to review—and veto—all Openreach’s investment plans (although at that point Ofcom has the right to step in as well). So, unsurprisingly, people like Andrew Griffith, an executive at Sky, are giving only a “cautious welcome” to what he calls a “pragmatic fudge”. + +Sky says it will judge the new agreement by whether Openreach delivers better service and lower prices. Mr Griffith is also doubtful whether the new set-up will attract the large amounts of investment that the network needs. “BT is still setting the budget,” he argues, “and is a business with other calls on its cash.” Benoît Felten of Diffraction Analysis, an internet consultancy, argues that the new arrangements are an improvement, but do not signify a significant change. + +Ofcom has promised to monitor the agreement closely. Mr Carter says that much will depend on the behaviour of BT, which says that it has listened to the criticisms of Openreach and is willing to make “fundamental changes”. That includes letting Openreach operate in the interest of all providers. If not, says Mr Carter, “Ofcom would need to look again at its options, including structural separation.” The Openreach saga is not over yet. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +14 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21718940-partial-separation-bt-and-openreach-very-british-compromise-new-deal-britains/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Mortality tale + +Britain’s long-falling death rate has levelled out. A blip or something more? + + +2015 saw the biggest annual leap in deaths for 50 years + + + + + +From the print edition | Britain + + +Mar 16th 2017 + + + + + +IT HAS been an article of faith of post-war demography that better health care and improved living conditions would mean a continuing fall in mortality. Just in the decade to 2013, life expectancy in England rose by 3 years for men and 2.3 years for women. Deaths among the large generation of baby-boomers were expected to push up the mortality rate eventually, but probably not until after 2025, when the boomers reached their late 70s and 80s. + +So eyebrows rose when the death rate levelled out in 2012 and 2013. After resuming its fall in 2014, it then rose sharply in 2015 and may have continued to rise in 2016. Some demographers believe it is just a blip, and that life expectancy will soon continue its previous rise. Others see it as a possible turning point. “No one knows for sure,” says Stephen Caine of Willis Towers Watson, a risk-management company that advises pension firms on their likely liabilities. “But we have developed a new model...that suggests the recent slowdown might continue into the future.” + + + + + +Latest updates + + + + + +See all updates + + + +According to a recent paper in the Journal of the Royal Society of Medicine (JRSM) by Lucinda Hiam and Martin McKee of the London School of Hygiene and Tropical Medicine and others, about 30,000 more people died in 2015 than in 2014, a 5.6% increase. That is the biggest annual leap for 50 years. Most of them were over 75. In January 2015 there was a 24% increase in deaths over January 2014, according to a second paper published by the same authors. This represented 10,500 more deaths in that one month than the monthly average for 2006-14. The trend is continuing, the authors say, with the number of weekly deaths since mid-October 2016 still higher than in 2015. They also point to a spike in the number of deaths in January this year, almost as high as that in 2015. + + + +Even more controversial is the debate about what has caused the recent increase. Some suggest the 2015 rise came from a mismatch between the most available flu vaccine and the predominant strain of the virus at that time. The authors of the JRSM article do not believe influenza to be the cause, and note that recent winters have not been especially cold. Nor has the recent rise been confined to winters. They conclude that the most likely cause is a crisis in health and social care. Spending on social care, on which many elderly people depend, has declined by 8.4% in real terms since 2011. Hospitals’ budgets have also come under increasing pressure. Delayed transfers of care (so-called bed-blocking) in hospitals and the length of time from referral to treatment have been getting longer. + +The government hotly denies this explanation, the Department of Health calling it a “triumph of personal bias over research”. Public Health England, a government organisation, said that recent rises were “not exceptional” and that the most widespread influenza in 2015 was a strain that particularly affected the elderly. + +The authors admit limitations to their study, not least a lack of complete data, even two years on. (“Can you imagine the chancellor of the exchequer having to make economic decisions based on data that was two years old?” asks Mr McKee.) He admits there are also caveats to one of the main causes of the increased deaths—dementia—because of changes in how deaths are coded by the Office for National Statistics. “We are not saying we have all the answers,” he says. “But conventional explanations do not explain what we are seeing.” + +A separate report by 2020 Delivery, a consultancy, backs up the paper’s finding. It also discounts cold weather as a main cause, pointing out that the uptick in recent years has not been seen in other European countries. Nor can it be blamed on a rise in diabetes, obesity or other “lifestyle diseases”, it argues, since the rise in the incidence of those diseases has flattened since 2010. It concludes that the reduction in social-care spending could be a “credible potential root”, but warns that the public data examined so far do not provide “causal evidence” to link these factors directly to the increase in mortality. + +Critics point to errors in the JRSM paper. The authors admit that one chart is wrongly labelled, but say it does not affect their conclusions. “The spike of excess mortality in winter 2014-15 was real, but was no higher than those seen in 1996-97 and 1999-2000,” says Eugene Milne, editor of the Journal of Public Health. Set aside the 2014-15 peak and the downward trend looks unchanged, he says. “They are overinterpreting the data.” The next years’ figures will be closely watched. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21718939-2015-saw-biggest-annual-leap-deaths-50-years-britains-long-falling-death-rate-has/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +International + + +The pope’s travails: Is the pope Catholic? [Fri, 17 Mar 09:50] + +The Vatican bank: Man of God v Mammon [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Is the pope Catholic? + +Francis is facing down opposition from traditionalists and Vatican bureaucrats + + +But on clerical sex-abuse, he seems weak + + + + + +From the print edition | International + + +Mar 16th 2017 | ROME + + + + + +THE Pacific island of Guam is more than 12,000km from Vatican City. Yet it was in this far-flung American territory that last month the two most contentious issues facing Pope Francis—the scandal of clerical sex abuse and a rebellion by traditionalists—intertwined. Cardinal Raymond Burke spent two days on Guam presiding at the church trial of Archbishop Anthony Apuron, who is accused of molesting altar boys. The archbishop is the highest-ranking Catholic cleric to be tried on sex-abuse charges. The proceedings could last years. Cardinal Burke, an arch-conservative, is the pope’s most outspoken critic. + +The defiance of papal authority by a minority of senior Catholic clergy has become more brazen in recent months than at any time since the 1970s, when the late Archbishop Marcel François Lefebvre refused to disband his arch-traditionalist Society of St Pius X. Last month Vatican officials received in their e-mail what appeared to be a digital version of the Vatican’s newspaper, L’Osservatore Romano. On opening it they found a perfect facsimile ridiculing the man Catholics are told is God’s representative on Earth. The headline was “He’s Replied!”—a sarcastic reference to the pope’s refusal to answer a letter from four cardinals, including Cardinal Burke, last September (and, most unusually, made public by them in November). The letter challenges Francis to state that passages in his apostolic exhortation, Amoris Laetitia (The Joy of Love), conform with established doctrine. In the fake-news Osservatore, all four replies were “Yes and No”. Less than a week earlier, posters had appeared in Rome calling on the pope—disrespectfully addressed in Roman dialect as Francé (“Frankie”)—to say how his vaunted advocacy of mercy squared with his forthright treatment of Catholic institutions including the Roman Curia, the church’s central administration. + + + + + +Latest updates + + + + + +See all updates + + + +Rock of ages + +As the protests showed, discontent within the church comes from two sources and two overlapping camps. The first is the most obviously conservative. It includes those, inside and outside the Vatican, who seek clarity and certainty from their religion and think the rules cannot be altered without forsaking the essence of Catholicism. They are appalled by what they see as Francis’s lack of interest in theology, and his abandonment of principle in the name of a nebulous requirement for mercy. + +Last year Anna Silvas, an Australian scholar, charged the pope with writing “tracts of homespun, avuncular advice that could be given by any secular journalist without the faith—the sort of thing to be found in the pages of Readers Digest”. The conservatives’ biggest gripe is with Amoris Laetitia, which in a footnote opened the way for some remarried Catholics to receive the sacrament of the Eucharist, which Catholics believe is the very body of Christ. Polls suggest that the faithful in Europe and the Americas strongly back the change. But critics see it as legitimising adultery. They will scarcely have been reassured when Francis last month encouraged a gathering of priests to show understanding for parishioners who were living together before marriage. On March 10th he again shocked traditionalists, suggesting that the church might ordain married men to help lessen an acute shortage of priests. + +A second, much smaller band of critics is made up of Vatican-based clerics, whose objection is to the pope’s treatment of his officials. It is no secret that he has little sympathy with the Vatican. As archbishop of Buenos Aires, he was repeatedly frustrated in his dealings with its bureaucrats. Soon after his election as pope, he formed a team of cardinals to advise him on how to reform the Roman Curia, pointedly choosing most of them from among pastoral leaders beyond the Vatican’s high walls. Acting on its recommendations, he set up two new “super-ministries”, or secretariats, one for the Vatican’s finances and the other for its media operations, and merged six smaller “ministries” into two. + +That alone would have earned Francis enemies in an organisation as notoriously resistant to change as the Roman Curia. But it is style as much as substance that has rankled. A Jesuit, Francis comes from an order founded by an ex-soldier, St Ignatius of Loyola, which supplied the Counter-Reformation with its shock troops. The Jesuits’ first pope is a humble and humorous man—but also a blunt and ruthless one. “The Holy Father is not a person who works easily with an institution,” remarks someone who has witnessed his uncompromising decisiveness at close quarters. + +During the year after Francis’s election, he appalled the Vatican’s highest-ranking officials by listing 15 faults to be found in their ranks. One, he told his ageing listeners, was “spiritual Alzheimer’s”. Most recently, the pope intervened in a dispute among the leaders of the Knights of Malta, an ancient military and religious order. Though they no longer govern territory (or take up arms to defend Christians in majority-Muslim countries), and largely devote themselves to good works, the order still wields the sovereignty it enjoyed when it ruled the island of Malta. It has many of the trappings of a state, maintaining diplomatic relations with more than 100 countries and holding observer status at the UN. It is legally separate from the Holy See. Yet on January 24th Francis demanded its grand master’s obedience and resignation. He later named a trusted associate to sort out the dispute from inside. + +When Francis expects resistance from Vatican diehards, he sidesteps it. He ordered outsiders to draft changes to the rules on marital annulment (a declaration that a marriage was never valid; not to be confused with divorce, which the church does not sanction). He is said to have set up a commission to review new translations of liturgical texts, cutting out the relevant Vatican department, which is headed by Cardinal Robert Sarah, a conservative. + +Unto the least of these my brethren + +The biggest mystery surrounding this man, who combines toughness and compassion, is why he has not applied his rough-house tactics to the issue that most cries out for action: clerical sex abuse. It is more than just a moral matter. The priority of all the church’s recent leaders has been to halt the secularisation that began in its European heartland and is spreading through the Americas. Top of the list of reasons why many Catholics have abandoned their faith is disgust at the ever-mounting evidence of rape and molestation of minors by priests, which has been repeatedly overlooked, indeed covered up, by the offenders’ superiors. The Vatican continues not to require bishops to report allegations of abuse to the police, unless doing so is compulsory under civil law (which in many countries, including Italy, it is not). + +In 2014 Francis set up a Pontifical Commission for the Protection of Minors. Doubts about its efficacy have circulated ever since. One member complained that it was under-funded. And last month it suffered a blow to its credibility with the resignation of the lone remaining abuse victim on the panel, Marie Collins from Ireland (the other victim, Peter Saunders, a Briton, was suspended without his knowledge last year). Ms Collins said that what decided her was the failure of the responsible Vatican department, the Congregation for the Doctrine of the Faith, to reply to victims’ letters. She has also spoken of the commission being “hindered and blocked by members of the Curia”. + +Two of the commission’s most important recommendations have come to nothing. A tribunal to handle cases of bishops accused of failing to act on abuse claims was buried, and guidelines for dioceses on how to prevent, detect and respond to abuse have not been distributed. Cardinal Gerhard Müller, who heads the Congregation for the Doctrine of the Faith, protested that obstruction by the Vatican of efforts to curb child sex-abuse was merely a “cliché”. But he also remarked that he had never met Ms Collins. + +Pope Francis has battled to force his church to reckon with a world in which many Catholics break church teaching by using artificial methods of contraception and cohabiting before marriage. A shrinking proportion share their religious leaders’ view of homosexual activity as sinful. But there is a growing danger that this pontiff may be remembered less as a valiant reformer and moderniser than as a pope who shrank from being as tough on predatory paedophiles and complicit bishops as he was with fogeys in the Vatican. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21718881-clerical-sex-abuse-he-seems-weak-francis-facing-down-opposition/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Man of God v Mammon + +Pope Francis presses ahead with tackling the Vatican’s murky finances + + +But judges steeped in church law will struggle to understand financial wheeler-dealing + + + + + +From the print edition | International + + +Mar 16th 2017 | ROME + + + + + +ONE area where Francis has managed to make progress is in cleaning up the Vatican’s largely secret financial machinery. Most of the accounts at the Institute for the Works of Religion (IOR), or Vatican bank, that belong to people not directly associated with the church have been closed. The Vatican has invited scrutiny by Moneyval, an international financial watchdog. It has acquired an auditor-general. And by the end of last year the Holy See’s regulatory body, the Financial Information Authority (AIF), had found 23 cases of suspected financial hanky-panky and sent them to the Promoter of Justice, the Vatican’s prosecutor. + +Until last year none had led to a prosecution. But according to the Promoter of Justice’s annual report, submitted last month, the first two cases went to court in 2016. According to a Vatican source (Vatican justice is not exactly transparent), one of the trials concerns the renovation of a penthouse apartment for Cardinal Tarcisio Bertone, formerly the Vatican’s most senior official. Two defendants, not including the cardinal, are charged with using the project to launder cash. Six cases have been shelved. Of the others, one is said to have included a fraud perpetrated on the IOR requiring investigation in several countries. + + + + + +Latest updates + + + + + +See all updates + + + +That points to a question familiar in other micro-states: whether the Vatican has the resources to handle complex financial crime. It certainly enjoys some advantages. At least one Catholic country that normally refuses to co-operate with foreign investigators swiftly supplied vital information to the AIF. Last year the Vatican’s deputy prosecutor was put in charge of a new section to deal with financial offences. The Vatican police, the Gendarmeria, has hired officers with experience in the field. But that still leaves the judges, most of whom are experts in church law, who may struggle to follow intricate financial dealings. + +Another question is how far the clean-up will reach into the Vatican administration, which handles large volumes of cash. Last month Italian police froze assets worth €2.5m ($2.7m) belonging to Giampietro Nattino, an Italian banker who is alleged to have ramped up the price of shares in his own bank, Banca Finnat Euramerica, by secretly routing purchases through a Vatican department. He denies wrongdoing. + +Much will depend on whether the Secretariat for the Economy, which Francis set up in 2014 to bring discipline to the Vatican’s finances, seeks to do so vigorously. But the standing of its head, Cardinal George Pell, has been eroded by a police investigation into allegations that he molested children in the 1970s and 1980s in his native Australia (he denies all wrongdoing). The church’s historical indifference to the suffering of children under its care casts a long shadow. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21718877-judges-steeped-church-law-will-struggle-understand-financial-wheeler-dealing-pope/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Business + + +Microsoft: Head in the cloud [Fri, 17 Mar 09:50] + +Intel buys Mobileye: The road ahead [Fri, 17 Mar 09:50] + +Disneyland Paris: Taking the Mickey? [Fri, 17 Mar 09:50] + +Elon Musk and batteries: Megawatts and mega tweets [Fri, 17 Mar 09:50] + +The pharma business: A better pill from China [Fri, 17 Mar 09:50] + +Cannabis and Donald Trump: Weed killer? [Fri, 17 Mar 09:50] + +Sporting mega-events: Gamesmanship [Fri, 17 Mar 09:50] + +Schumpeter: To hell and back [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Head in the cloud + +What Satya Nadella did at Microsoft + + +The world’s biggest software firm has transformed its culture for the better. But getting cloud computing right is hard + + + + + +From the print edition | Business + + +Mar 16th 2017 | REDMOND + + + + + +A DECADE ago, visiting Microsoft’s headquarters near Seattle was like a trip into enemy territory. Executives would not so much talk with visitors as fire words at them (one of this newspaper’s correspondents has yet to recover from two harrowing days spent in the company of a Microsoft “brand evangelist”). If challenged on the corporate message, their body language would betray what they were thinking and what Bill Gates, the firm’s founder, used often to say: “That’s the stupidest fucking thing I’ve ever heard.” + +Today the mood at Microsoft’s campus, a sprawling collection of more than 100 buildings, is strikingly different. The word-count per minute is much lower. Questions, however ignorant or critical, are answered patiently. The firm’s boss, Satya Nadella (pictured), strikes a different and gentler tone from Mr Gates and Steve Ballmer, his immediate predecessor (although he, too, has a highly competitive side). + + + + + +Latest updates + + + + + +See all updates + + + +Both these descriptions are caricatures. But they point to an underlying truth: how radically the world’s biggest software firm has changed in the short time since Mr Nadella took charge in early 2014. Back then everything at Microsoft revolved around Windows, the operating system that powered most computers. It was a franchise the company believed needed to be extended and defended at almost any price. + +Windows has since retreated into a supporting role; sometimes it is little more than a loss-leader to push other products. At the heart of the new Microsoft is Azure, a global computing cloud. It is formed of more than 100 data centres around the world, dishing up web-based applications, bringing mobile devices to life and crunching data for artificial-intelligence (AI) services. Along with this shift in strategy has come a less abrasive, more open culture. + +Microsoft’s transformation is far from complete. Windows, Office—the once equally dominant package of applications for personal computers—and other PC-related products together still generate about two-fifths of its revenues and three-quarters of its profits. But even those who have watched Mr Nadella’s actions with a high degree of scepticism reckon the firm is moving on from its cash-cows. + +The firm’s transformation did not begin with Mr Nadella. It launched Azure and started to rewrite its software for the cloud under Mr Ballmer. But Mr Nadella has given Microsoft a new Gestalt, or personality, that investors appear to like. The firm’s share price has nearly doubled since he took over (see chart). + + + +Dethroning Windows was the first task. Previously, new products were held back or shorn of certain features if these were thought to hurt the program (something known internally as the “strategy tax”). One of Mr Nadella’s early decisions was to allow Office to run on mobile devices that use competing operating systems. He went so far as to use a slide that read “Microsoft loves Linux”. Mr Ballmer had called the open-source operating system a “cancer”. + +The downgrading of Windows made it easier for Mr Nadella to change the firm’s culture—which is so important, he believes (along with Peter Drucker), that it “eats strategy for breakfast”. Technologies come and go, he says, so “we need a culture that allows you to constantly renew yourself”. Whereas Mr Ballmer was known for running across the stage and yelling “I love this company”, Mr Nadella can often be seen sitting in the audience, listening. When, in 2016, internet trolls manipulated Tay, one of Microsoft’s AI-powered online bots, into spewing racist comments, people waited for heads to roll. Mr Nadella sent around an e-mail saying “Keep pushing, and know that I am with you…(the) key is to keep learning and improving.” + +Employees are no longer assessed on a curve, with those ending up at the lower end often getting no bonus or promotion. For the firm’s annual executive retreat in 2015, Mr Nadella included the heads of companies Microsoft had recently acquired, such as Mojang, the maker of Minecraft, a video game, and Acompli, an e-mail app, breaking with the tradition that only longtime executives can attend. + +The book of Nadella + +Sending such signals matters more than ever in the tech industry. Well-regarded firms find it easier to recruit top-notch talent, which is highly mobile and has its pick of employers. A reputation for aggression can attract the attention of regulators and lead to a public backlash, as Microsoft itself knows from experience and Uber, a ride-hailing unicorn, is finding out. + +Mr Nadella has changed the firm’s organisation as well as its culture. It is now more of a vertically integrated technology firm—“full stack”, in the jargon. It not only writes all kinds of software, but builds its own data centres and designs its own hardware. Mr Nadella points out that it now even develops some of the chips for its data centres. + +His imprint can be seen on three businesses in particular: the cloud, hardware and AI. Microsoft does not break out by how much it has increased investment in the cloud, but building data centres is expensive and its capital expenditure is soon expected nearly to double, to $9bn a year, from when Mr Nadella took over. If you take only basic services, such as data storage and computing, Microsoft’s cloud is much smaller than Amazon Web Services, the leader in cloud computing, which is owned by Amazon, an e-commerce giant. But if you add Microsoft’s web-based services, such as Office 365 and other business applications, which are only a negligible part of AWS’s portfolio, the two firms are of comparable size. Both AWS’s and Microsoft’s cloud businesses boast an annual run rate (the latest quarterly revenues multiplied by four) of $14bn. Microsoft hopes to reach $20bn by its 2018 financial year, a fifth of total expected revenues. + +In terms of scale, then, there has been much progress. Yet in stark contrast to AWS, which supplies the bulk of Amazon’s profits, Azure is still loss-making. Some analysts are optimistic that this could change. Mark Moerdler of Sanford C. Bernstein, a research firm, thinks that once Microsoft tapers its investments in data centres and their utilisation goes up, it could approach the margins enjoyed by AWS, which reached more than 30% in the last quarter. + +Scott Guthrie, who heads Azure, admits that the margins for cloud-based services will probably be lower than for conventional software. But when applications are delivered online, he points out, Microsoft can capture a bigger slice of the overall pie. As well as offering its existing software as services in the cloud, it also takes care of components of IT systems, such as storage and networking, that used to be provided by other vendors. The firm’s addressable market is far bigger, he says. + +Perhaps. But however well Microsoft performs, life in the cloud will always be far tougher than it was in the realm of personal computers, argues David Mitchell Smith of Gartner, a consultancy. Microsoft will not only have to compete with Amazon, but with Google, which intends to go after business customers. + +Although the cloud is the core of the new Microsoft, hardware is another important bet. The firm has shed its ailing mobile-phone division, which it had bought from Nokia, but on its campus in Redmond hundreds of employees are busy developing new devices. Its prototyping lab offers all that a designer of mobile gadgets could want, such as 3D printers to churn out overnight new models of a hinge, for example, or machines to cut the housing of a new laptop from a block of aluminium. + +“Failing faster” is the purpose of the new equipment, says Panos Panay, who is in charge of Microsoft’s hardware business. Designers can test ideas more quickly in pursuit of the firm’s goal to develop new categories of product. Hardware, software and online services are meant to be bundled into a single product to create what the firm gratingly calls an “experience”. + +One example is the Surface Book, a high-end laptop. It features a detachable screen which doubles as a computing tablet—a combination that has already found a following, and according to some, offers better value than comparable laptops from Apple. More daring still is HoloLens, an augmented-reality device in the form of a wireless head-mounted display. It is capable of mixing “real” and virtual reality for business purposes—for example, by projecting new parts on a motorcycle frame so a designer can easily see what works. (It is currently only available for developers.) + +HoloLens, its designers hope, will also be a device where people use artificial-intelligence services—Mr Nadella’s third big bet. In September Microsoft formed a new AI unit, combining all its efforts in the field, including its basic-research group of more than 1,000 people and the engineering team behind Bing, its search engine. + +Every single business application is going to be disrupted by AI, says Harry Shum, who is in charge of the new unit. Algorithms trained by reams of data could tell sales staff which leads to spend most time on, and help identify risky deals where, for instance, the customer might not fulfil contract terms. This, he explains, is also a big reason why Microsoft spent a whopping $26bn to buy LinkedIn, a professional social network that has 467m users. The deal adds to the data the firm needs to train its new AI applications. + +AI is a growing part of Azure, too. In recent months Microsoft has introduced two dozen “cognitive services” to Azure. Some understand language and can identify individual speakers, others recognise faces and can tap into academic knowledge. The idea is for other firms to be able to use these offerings to make their own products smarter, thus “democratising AI”. Schneider Electric, which makes gear to manage energy systems, for instance, uses some of Microsoft’s AI services to monitor its equipment. + +It is easy to be impressed by what Mr Nadella has achieved in only three years. But it is far from certain that his technology bets will play out as planned. To run a computing cloud profitably you need hyper-efficient operations; something that Amazon, in contrast to Microsoft, has grown up with. Although Microsoft has expertise in AI, others, such as Google and IBM, got a far earlier start. Nor is designing integrated devices part of Microsoft’s DNA in the way it is for Apple. Augmented reality is an extremely promising field but HoloLens may turn out to be no more than an expensive toy for developers. + +Success or failure in the new areas will of course continue to be cushioned for some time by the revenues and profits from Windows and Office. Yet there, too, lie risks. If the PC market, whose secular decline has slowed since last year, take another turn for the worse, the company’s finances would suffer badly, warns John DiFucci of Jefferies, an investment bank. + +Mr Nadella doesn’t seem to be worried by such unknowns, which are to be expected in a fast-changing industry. Instead, he frets about too much success. “When you have a core that’s growing at more than 20%, that is when the rot really sets in,” he says. It remains to be seen whether or not the firm can ever again achieve such velocity. For now, though, its share price is showing plenty of speed. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718916-worlds-biggest-software-firm-has-transformed-its-culture-better-getting-cloud/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Mobileye on the road + +Mobileye and Intel join forces + + +An Israeli firm and a tech giant team up to shape the future of cars + + + + + +From the print edition | Business + + +Mar 16th 2017 | JERUSALEM + + + + + +CARMAKING in Israel has amounted to little more than some unstylish models put together in the latter half of the last century and a few rugged off-roaders still assembled for the country’s security forces. A reluctance to make them, however, has not stopped Israel from becoming a thriving centre for the high-tech kit with which cars now bristle, and also for mobility services such as ride-hailing. + +The latest evidence of Israel’s pre-eminence in the field came on March 13th, when Intel, a giant American chipmaker, paid $15.3bn for Mobileye, a Jerusalem-based firm that is at the forefront of autonomous-car technology. With the acquisition, Intel joins the ranks of technology companies that are trying to outmanoeuvre carmakers and auto-parts suppliers to develop the brains of vehicles of the future. + + + + + +Latest updates + + + + + +See all updates + + + +Mobileye is an attractive target because of what it does now and what it will soon be capable of. Its EyeQ software is already used by most of the world’s carmakers to help their vehicles stay in their lanes and brake in emergencies, precisely what will also be required in autonomous vehicles. This system, which is currently fitted in over 15m vehicles but is set to be used by many millions more, can also collect information from installed cameras to continuously update the incredibly detailed maps that self-driving cars will require. + +Israeli politicians are cock-a-hoop that the country’s prowess in technology had made headlines around the world. Yigal Erlich, a former chief scientist of the Israeli government, called it “a great achievement that a company like Intel is building its future on Israeli technology”. There was further delight that Intel will relocate its existing car-technology business, which is sizeable, to the country. + +Mobileye is not the first Israeli car-technology firm to attract a foreign buyer. Waze, a driving-navigation app, was snapped up by Google in 2013 for $1.1bn. Last year Volkswagen paid $300m for a share of Gett, a ride-hailing startup. But this is by far the biggest deal. + +Though not a vast sum by technology-industry standards, some analysts reckon that Intel has overpaid. The firm is under pressure. Its main business, of providing chips for PCs, is past its peak. Its record with deals to make up for that is unenviable. Intel has proved willing to write enormous cheques to chase growth. Last year it sold McAfee, a cyber-security business, for some $4.2bn, around half what it had paid for it six years earlier. + +Having largely missed out on the transition to mobile devices, Intel may fear doing the same in autonomous cars. Competitors are beefing up. Last year Qualcomm, another big chipmaker, announced a deal worth $47bn for NXP Semiconductors, a firm that makes chips for cars. Nvidia, better known for chips used by the gaming industry, is developing them for cars, too. + +Setting price aside, marrying Mobileye’s camera and mapping expertise with Intel’s chip and computing skills makes sense as the battle to establish predominance in the field of autonomous vehicles heats up. The priority for tech companies such as Intel and Google is to get their hands on the prodigious amounts of data that cars generate. Data are a vital commodity for perfecting the algorithms that underpin autonomy. Established car firms already have access to data from billions of miles of driving. Google’s self-driving vehicles throw off data of their own. For Intel, too, Mobileye’s value will be as a source of data as well as revenue and profit. + +Tech firms have also tried striking alliances with carmakers to secure more data. Last year, in fact, both Intel and Mobileye teamed up with BMW to develop self-driving cars. Carmakers have at last caught on to the value of data and know that they should guard it jealously. The problem they face is that they are also under pressure to share their data in return for the new technology they badly need. Intel and Mobileye have recognised that becoming large and powerful gives technology firms more leverage in this relationship. As the battle for data heats up it would be no surprise if both tech and automotive companies were to come shopping for more of Israel’s car-tech wizardry. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718941-israeli-firm-and-tech-giant-team-up-shape-future-cars-mobileye-and-intel-join/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Taking the Mickey? + +A battle over Euro Disney + + +The operator of Disneyland Paris has taken shareholders on a stomach-churning ride + + + + + +From the print edition | Business + + +Mar 16th 2017 | PARIS + + + + + +IF YOU judge only by the volume of screams and the beaming faces of those taking rides at Europe’s most-visited, privately-owned tourist destination, then it is clear that Disneyland Paris has much to celebrate. In the three decades since Disney, an American media firm, agreed to put its European theme park on a site east of Paris, and the 25 years since its doors swung open, in 1992, 320m customers have queued for attractions such as “Space Mountain”, a stomach-twisting rollercoaster, and photo-ops with Disney characters. + +To mark these anniversaries the firm is making bold claims for the park’s economic and social benefits. Nearly €8bn ($8.6bn) has been invested in or near the site, which includes a second Disney studio-themed park, 8,500 hotel rooms, convention centres and a golf course. France’s economy has supposedly seen gains worth €68bn and the creation of 56,000 jobs. Politicians pay it heed: François Hollande, the retiring president, made an end-of-term visit late last month. + + + + + +Latest updates + + + + + +See all updates + + + + + +But investors tell a different story. Shares in Euro Disney (the French parent company) have performed like a raft on the “Pirates of the Caribbean” log-flume ride: the price on the opening day in 1989 was the equivalent of €97 and they reached €221 three years later, but have languished for more than a decade since (see chart). Disney repeatedly reinvested capital to avoid bankruptcy at Euro Disney, in the process diluting others’ holdings. In 1989 it owned 49%; it is now the majority-owner. + +Last month it restated its wish to take Euro Disney wholly private, and agreed to swap some of its own stock for a 9% stake in the European firm that was held by Prince Alwaleed bin Talal of Saudi Arabia. Disney now holds nearly 86% of Euro Disney. It is offering—for a limited period—to buy out remaining investors for €2 a share, roughly the current price. + +A senior executive at Euro Disney suggests that the smallest investors are unlikely to grumble about that price, even if they are out of pocket. They may have bought into the project as much for emotional as financial reasons, caring about the brand and perks, such as preferential entry to the park. In any case, he says, the firm always risked “financial failure” right from the start because of high debt, held by 64 different lenders. Had Disney not recapitalised and reduced those borrowings, no business would even exist to be taken private. + +Yet investors clearly have reasons to lament the firm’s performance. Disneyland Paris has failed to deliver more than a handful of profitable years—it last did so in 2008. Visitor numbers have slipped. Some 13m came last year, 1m-2m fewer than a decade ago; hotel occupancy rates that were at nearly 90% early in this decade are below 80%; spending per visitor is up only modestly, despite new restaurants. A spokesman, François Banon, blames “macroeconomic conditions and difficulties”, noting years of stagnation in France and its neighbours, plus fears about terrorism. + +Others say that Disney itself may be at fault. CIAM, a French activist fund, took a stake in Euro Disney in 2015. It reckons its shares were badly undervalued, and has decided to resist Disney’s effort to take it private. It has asked a judge to investigate if Disney’s description of Euro Disney’s value was fair. CIAM points to Euro Disney’s rights until 2035 to develop 2,200 hectares of prime commercial land close to Paris, around the theme park, at a remarkably low purchase cost, it says, of €1.69 per square metre (rights which it has only partly exercised). The judge may yet dismiss the case. But Anne-Sophie d’Andlau, of CIAM, says a surveyor commissioned by her fund concluded the value of controlling the land was €1.9bn alone—far above Euro Disney’s market capitalisation. + +CIAM also alleges a “darker side” to Disney’s behaviour, suggesting the American firm should reimburse over €900m in fees and royalties for the Disney brand that were charged to its European outfit over the years. Although these are occasionally waived by Disney, CIAM claims that they are excessive and that they help to explain Euro Disney’s lack of profits. + +Mr Banon calls these allegations “false and unfounded”. The property business earns Euro Disney just €10m annually, he points out, and CIAM’s calculation “grossly exaggerates the value of these real-estate rights”. As for Disney’s various fees, he says royalties are unexceptional at 6% or less of total revenues, and that a management fee is 1% of revenues. + +The dispute could quickly end if Disney increases its offer. CIAM notes that since it began asking questions, Disney has already raised its bid to minority holders, from €1.25, which implies that the earlier valuation was too low. CIAM is emerging as a rare French activist fund that gets results: it profited by intervening in the takeover of Club Med, a tourist firm, by China’s Fosun International two years ago. + +As for Euro Disney, its theme park has high running costs. It is woefully behind on digital efforts: it lacks Wi-Fi for visitors. But it is popular, and France’s economy is perking up a bit. A plan to develop new railway lines in the greater Paris region should increase demand for the commercial land that it has rights to. How irksome it would be for some if it delivered steady profits under Disney’s full ownership. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718936-operator-disneyland-paris-has-taken-shareholders-stomach-churning-ride-battle-over/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Mega tweets and megawatts + +Elon Musk supercharges progress on energy storage + + +Australia attempts to stop blackouts using batteries + + + + + +From the print edition | Business + + +Mar 16th 2017 + + + + + +HOW much power does a tweetstorm involving two tech tycoons, the prime minister of Australia and 8.5m Twitter followers generate? Enough, at least, to supercharge a debate about the future role of batteries in the world’s energy mix. + +Elon Musk, a Silicon Valley entrepreneur (pictured), may be best known for his gravity-defying ambition, but his core product is the battery: whether for his Tesla cars, for the home or for grid-scale electricity storage. He gave the last of these an unexpected jolt of publicity on March 10th, by responding to a blackout-inspired challenge on Twitter from an Australian software billionaire, Mike Cannon-Brookes. Mr Musk said he could install 100 megawatt hours (MWh) of battery storage in the state of South Australia in 100 days to help solve an energy crisis it faces, or it would be free of charge. “That serious enough for you?” he asked. + + + + + +Latest updates + + + + + +See all updates + + + +In response, Malcolm Turnbull, the prime minister, communicated with Mr Musk and appeared to turn from pro-coal sceptic into battery believer. On March 14th Jay Weatherill, the premier of South Australia, went further. Declaring that the national electricity market was “broken”, he said the state would launch its own A$550m ($415m) plan to build a 100MW battery system, as well as a gas-fired power station, with public funds. Mr Musk may have got what he wanted. He is “good at bringing nerdy subjects to a broad audience”, says Julia Attwood of Bloomberg New Energy Finance. + +Are batteries now cheap enough to be a cost-effective way of solving energy crises like that in southern Australia, brought on since July by storms, heatwaves, the intermittency of solar and wind power and the closure of coal- and gas-fired power stations? The answer, says Michael Ottaviano of Carnegie Clean Energy, which is hoping to sell its own grid-scale battery systems to the state, is “no”—especially under current market structures. + +True, battery prices have plummeted and Mr Musk’s price, of about $250 per kilowatt hour (kWh), is relatively cheap. But the total cost (including building the plant, for example) would be about $500 per kWh to hook the batteries up to the grid. A 100MWh facility would cost $50m. Only when power prices reach stratospheric levels would that investment make sense for a utility. That’s why the government of South Australia is having to stump up instead. Eventually, practitioners hope that changes to the power market will make battery storage viable without public funding. “This is a short-term Band-Aid until the regulatory process catches up,” Mr Ottaviano says. + +But it has all sparked a discussion about batteries that will keep going (and going). On March 13th GTM, a consultancy, and the Energy Storage Association, a trade body, said that battery installations in America, led by utility-scale storage, doubled to 336MWh by the end of 2016. Much was in California, reacting to the blowout of the Aliso Canyon gas plant in 2015. At least crises aren’t going to waste: an industry is emerging. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718935-australia-attempts-stop-blackouts-using-batteries-elon-musk-supercharges-progress-energy/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +A better pill from China + +Chinese pharma firms target the global market + + +A new Chinese drug for colorectal cancer could mark an important milestone + + + + + +From the print edition | Business + + +Mar 16th 2017 | SHANGHAI + + + + + +WALK into the Shanghai laboratories of Chi-Med, a biotech firm, and you encounter the sort of shiny, cutting-edge facilities common in any major pharma company in America, Europe or Japan. Chi-Med has just had positive results in a late-stage trial of its drug for colorectal cancer, which is called Fruquintinib. If the drug is approved both in China and in Western markets it could be the very first prescription drug to be designed and developed entirely in China that will be on a path to global commercialisation. + +Given China’s ageing population, higher incomes and rising demand for health care it is clear why innovation in drugs is a priority for the country. Its national market for drugs has grown rapidly in recent years to become the world’s second-largest. It could grow from $108bn in 2015 to around $167bn by 2020, according to an estimate from America’s Department of Commerce. By comparison, America spends about $400bn a year on drugs. + + + + + +Latest updates + + + + + +See all updates + + + +Chinese firms mainly sell cheap, generic medicines that earn only razor-thin margins. The pharma industry is extremely fragmented, with thousands of tiny manufacturers and distributors. That helps explain the limited amount of finance that is available for investment in new medicines. Most Chinese pharma firms devote less than 5% of sales to R&D, according to a report last year from the World Health Organisation (big global drug firms typically spend 14%-18% of sales on R&D). And the bulk of that spending goes to research into generics. + +But things are changing quickly. The government is encouraging the industry to consolidate, chiefly by raising standards for the quality of new medicines. It is also improving the country’s regulatory infrastructure, which should make it more efficient, and faster, to develop drugs. The value of deals in the health-care sector has been increasing as a result. ChinaBio, a research firm, reckons that over $40bn of foreign and local money went into the life sciences in China in 2016. In the same year just three Chinese biotech firms—CStone, Innovent and Ascletis—together raised more than $500m of financing. + +Another boost is the arrival of talent from abroad, whether Chinese-born executives returning with a Western education or Westerners with experience of multinational pharmaceutical firms. Christian Hogg, the boss of Chi-Med—which was founded in 2000, has eight drugs in clinical development and listed on the NASDAQ stock exchange in 2016—used to work at Procter & Gamble, a global consumer-goods firm. Samantha Du, the firm’s very first scientific officer, was formerly an executive at Pfizer, an American pharma giant. Now known as the godmother of Chinese biopharma, she used to manage health-care investments for Sequoia Capital, a Silicon Valley venture-capital firm. In 2013 she helped found Zai Lab, which licenses late-stage drugs from Western pharma companies to develop and sell in China. Zai Lab also aims to develop innovative medicines in immuno-oncology. + +Another firm attracting attention is BeiGene, an oncology firm based in Beijing, which has four clinical-stage drug candidates and which raised $158m in an IPO last year. Chi-Med’s Fruquintinib may even be beaten in the race to approval in America and Japan by a cancer drug called Epidaza from Chipscreen Biosciences of Shenzhen. China approved it in 2015. + +It is too early to say whether these innovative firms will remain rarities. Only a few large ones have emerged, since the industry is resisting consolidation. But the size of the local market will itself help the industry grow. And developing a drug in China is far cheaper than it is in America or Europe. Given the outrage at the high cost of drugs in America, in particular, there is every incentive for Chinese firms to develop medicines for the global market. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718937-new-chinese-drug-colorectal-cancer-could-mark-important-milestone-chinese-pharma-firms/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Weed killer? + +America’s pot industry shrugs off Donald Trump’s harder line on drugs + + +A business that is well used to risk sees greater opportunities ahead + + + + + +From the print edition | Business + + +Mar 18th 2017 + + + + + +THESE are high times for America’s marijuana industrial complex. More than half the country’s states have legalised medical cannabis, often rather loosely defined. Eight have voted to legalise the drug for recreational purposes. The industry was worth about $6bn last year, a figure that is likely to rise sharply in 2018 when recreational sales begin in California. + +Yet in Washington, DC, the mellow mood has soured. Donald Trump said in 1990 that “You have to legalise drugs to win that war”, but in politics he became more conservative. Campaigning for the presidency he called Colorado’s legal cannabis market a “real problem”. His press secretary, Sean Spicer, recently said he expected to see “greater enforcement” of the laws that still ban cannabis at the federal level. + + + + + +Latest updates + + + + + +See all updates + + + +That worries pot-pedlars. The fact that they are in breach of federal law means that in theory their profits are criminal proceeds, subject to forfeiture. In 2013 the deputy attorney-general of the day, James Cole, published a memo reassuring states that had legalised cannabis that federal agents would not interfere unless the states allowed the industry to cross certain red lines, such as selling to minors, funding crime or leaking their product into jurisdictions that had not chosen to legalise. + +Mr Trump’s attorney-general, Jeff Sessions, has made clear that he sees things differently. In his confirmation hearings before the Senate he refused to endorse the Cole memo, saying: “I won’t commit to never enforcing federal law.” A letter from the Department of Justice is all it takes to shut any cannabis firm. + +This has given some investors an attack of paranoia. An index of 50 cannabis stocks kept by Viridian Capital Advisors, a pot-industry consultancy, slid by about a tenth in the week after Mr Spicer issued his warning on February 23rd. The worst-hit were those companies dealing directly with the drug, which are on shakier legal ground than those providing ancillary products and services, such as chemical-extraction machinery or security. + +But most investors have kept calm. Viridian’s index is still up by 18% this year. Medical marijuana, which accounts for the bulk of the industry, is expressly protected by a federal law that bans federal agents from interfering in states where it is legal. Mr Trump backs medical cannabis “100%”, as do most Americans. And although only a smallish majority of people favour legalising recreational weed, a large one (including most Republicans) support the right of states to set their policy on the matter, says a poll by Quinnipiac University. + +For now the main impact of Mr Trump’s harder line may be to make entrepreneurs stick extra-carefully to state regulations, rather than “pushing the boundaries” of the law, says Sam Kamin, a professor of marijuana law and policy at the University of Denver. Some have bypassed rules outlawing interstate commerce, for instance, by trading as intellectual-property companies. That sort of thing looks a bit riskier now. But cannabis backers are hardly strangers to risk, Mr Kamin notes. “If you’ve invested your personal fortune in a product that’s prohibited by the federal government, you’re comfortable with a certain amount of uncertainty.” + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business-and-finance/21718826-business-well-used-risk-sees-greater-opportunities-ahead-americas-pot-industry/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Gamesmanship + +The business model for the Olympic Games is running out of puff + + +Budapest is the latest city to withdraw its bid to host them + + + + + +From the print edition | Business + + +Mar 16th 2017 + + + + + +PIERRE DE COUBERTIN, the French aristocrat who founded the modern Olympics, was seduced by the world’s fair. In 1900, 1904 and 1908 his games were embedded within such exhibitions. He soured on the arrangement eventually because the games were overshadowed, “reduced to the role of humiliated vassal”, as he put it. The Olympics still criss-crosses the globe, but with city after city ditching ambitions to put on the world’s largest sporting event, the model is under threat. + +The latest blow comes courtesy of Budapest, which on March 1st withdrew its bid to host the 2024 summer games after public opposition. Its retreat comes on the heels of Boston, Rome and Hamburg canning their bids within the past two years, whittling a once-crowded pool of candidate cities down to only two: Los Angeles—itself a replacement for the torpedoed Boston bid—and Paris. + + + + + +Latest updates + + + + + +See all updates + + + + + +The situation ought to feel familiar by now to the International Olympic Committee (IOC), the governing body of the games. After lots of cities bowed out of the competition for the 2022 winter games it was again left with two options: Almaty, Kazakhstan and Beijing, China. The prospect of having no bidders for future events—or of having a bidding contest between autocrats eager to host a vanity project—seems likelier than it once did. + +A study in 2016 from the University of Oxford’s Saïd Business School found that from 1960-2016 (when data were available), the average cost overrun of hosting the games was 156%, the highest of any megaproject. Tokyo has already seen its costs rise to ¥3trn ($26bn), four times the original estimate. The IOC’s contract with host cities includes a taxpayer guarantee, which puts them on the hook for overruns. + +There is no end of enthusiasm from sponsors or television broadcasters to pay fat sums to affiliate themselves with the Olympic brand. Broadcasters are still making the bet that live sports will continue to fascinate TV audiences. Comcast, the parent company of NBC Universal, an American television company, paid a whopping $7.75bn for exclusive broadcast rights to the games from 2022-2032. But the IOC pockets an ever-greater share of these revenues: today it gives less than 30% of television revenues to the host city. In 1992, by contrast, it gave Barcelona 69% of the broadcast spoils (see chart). + +If no cities wish to host the games, however, this model is unsustainable. The IOC has been here before. Interest in hosting the five-ringed circus waned in the 1970s after a series of games tainted by terrorist attacks, crippling debt and boycotts. Los Angeles was the sole bidder for the 1984 event. Peter Ueberroth, the businessman heading its bid, ripped up the taxpayer guarantee and imposed spartan conditions, such as housing athletes in university dormitories. The games turned a profit for the city, of $215m. + +Could similarly radical reform save the day again? In 2014 the IOC passed Agenda 2020, changes that try to make the games more affordable. They have made little difference. After Budapest withdrew its bid, the IOC said in a statement that politics were to blame, before conceding that further adjustments to the bidding process would need to be made because “the current procedure produces too many losers.” + +It could simply tinker with the existing model and give a larger share of its revenues to the host city, or promise to cover a portion of a city’s cost overruns. Some suggest a more decentralised hosting model, with different Olympic events taking place in those cities around the world that have the right sports infrastructure for them. This would spread the costs more widely and decrease the probability of white elephants. But broadcasters would bear the cost of setting up teams around the world. + +The really radical answer would be to designate one or a few permanent host cities so that the Olympics sports infrastructure has a life beyond the extinguishing of the Olympic flame. Christine Lagarde, managing director of the International Monetary Fund, has spoken favourably of this idea. The proposal is not new. In 1896 Greece’s King George pleaded with de Coubertin to make the country the permanent host. The Frenchman would not have it. “I decided to act as if I were stupid, pretending not to understand,” he wrote. Thomas Bach, the IOC’s president, may not have the luxury of ignoring reality for much longer. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718938-budapest-latest-city-withdraw-its-bid-host-them-business-model-olympic/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Schumpeter + +Citigroup’s decade of agony is almost over + + +The recipient of America’s biggest bank bail-out has overhauled its capital base and its profits. Now it needs to grow + + + + + +From the print edition | Business + + +Mar 16th 2017 + + + + + +IF YOU ask financial types in New York for their views on the world’s big banks, they usually come up with similar vignettes for each one. They agree that JPMorgan Chase is an unstoppable force under its boss, Jamie Dimon. Goldman Sachs is on a roll, with its shares up by 36% since the election (even if some worry that its Darwinian culture is going soft given all the regulation it faces). Across the pond Deutsche Bank is struggling to keep its head above water; its leader, John Cryan, embarked on a capital-raising and cost-cutting plan on March 5th. Yet one big bank elicits shrugs of bafflement: Citigroup. Its managers are anonymous and they get paid about a fifth less than their peers at other financial groups. No one is quite sure what Citi is up to or what it exists for. Once too big to fail, it is now too drab to mention. + +That Citi has become the world’s half-forgotten bank is surprising. It was America’s biggest firm before the financial crisis, measured by size of assets; it is now the fourth-largest. After suffering huge losses on loans and subprime securities, in 2008-09 it received the biggest bail-out of any American bank. Citi can still lay claim to being the most important firm in the global financial system. It operates in 97 countries, from Kenya to South Korea to Kuwait. Soon it will confront its next strategic dilemma: when should it start growing again? + + + + + +Latest updates + + + + + +See all updates + + + +Citi’s roots go back to 1812, but it came of age in the 20th century, organising loans and cross-border payments for American companies abroad. In the decade to 2007 it tripled in size as it tried to be a financial supermarket that offered everything to everyone, everywhere. The government sold its last Citi shares in 2011. The men appointed in 2012 to clear up the mess, Michael O’Neill, its chairman, and Michael Corbat, its chief executive, were given three goals: to make Citi safe, to make it profitable and to return cash to shareholders. They have almost finished the job. + +Consider safety first. Since the nadir in 2009, the bank’s core capital has risen by 59%, and its cash reserves by 28%. Citi’s assets have fallen by 3%, its holdings of “Level-3” (ie, hard-to-value) securities by 80%, and its short-term debts by 78%. Mr Dimon likes to say that JPMorgan’s balance-sheet is a fortress. If so, Citi’s is a nuclear-bomb shelter. If another crisis hit, it has enough capital and earnings to absorb four times the losses it suffered in 2008-09. Mr Corbat is shutting down the bad bank that was created in 2009, which has disposed of $650bn of toxic exposures—think of steaming piles of subprime bonds and Greek mortgages. + +The second goal is profitability. The bank has made relatively slow progress here, but its headline figures understate returns. An accounting rule means that its balance-sheet appears bloated by tax breaks relating to its losses during the crisis. Its return on tangible equity, a measure which adjusts for this, was 9% in 2016. If the last dregs of its legacy assets are sold this year, the ratio should reach 10%. That is below JPMorgan, at 13%, but acceptable. + +With its capital base restored, Citi can meet its third goal, of returning cash to shareholders. Its share price has fallen by 88% over the past decade, so they could do with some payback. The bank is producing especially strong cashflows because its former losses can be set against tax bills. It should be able to pay out $17bn-18bn in dividends and share buybacks a year, which would make it one of the seven most generous American firms for the absolute amount of cash returned. Citi shareholders should soon receive a dollar of cash a year for each $10 of stock that they own. + +If life were fair, Citi’s bosses would each be given a Martini and a medal for years of gruelling work. But investors’ expectations are seldom static. By as soon as the end of this year, Citi will be under pressure to show that it can grow again. Its revenues fell by 2% in 2016 (excluding the sales made by the bad bank). By contrast, Wells Fargo and JPMorgan Chase expanded revenues at a rate of 3-4%. With a third of its business in emerging markets, where growth is picking up, Citi should be doing better. + +The idea of the bank expanding again is not as mad as it may appear. It has room to grow without upsetting regulators (who still fret about banks being too big). Citi is 28% smaller than Bank of America and 27% smaller than JPMorgan Chase, measured by the risk-adjusted assets of its core business. Unlike European basket-cases such as Deutsche and Royal Bank of Scotland (which recently reported its ninth consecutive annual loss), Citi’s international business is viable. It ships cash globally for big firms and is entrusted with $430bn of deposits abroad—more than in 2006 and almost twice what JPMorgan Chase has. Citi’s bond-trading unit is ranked first in the world. It has a powerful presence in Asia, the only region where it hasn’t lost money in the past decade. + +Nervous in 97 countries + +So far, though, Citi’s managers have focused on modest projects. In 2016 the bank bought a credit-card portfolio in America. It is bulking up in equities and is investing more in its Mexican business. The risk is that excessive caution causes the bank’s global position to deteriorate. Citi’s main customer base, of American multinationals, is probably mature. Their profits doubled between 2003 and 2013, but are now falling. Citi needs to find more local corporate customers abroad, but its loan books in the two biggest emerging economies, China and India, stagnated in 2016. As Citi has been recovering, China’s big banks, ICBC, CCB and Bank of China, have built formidable networks across Asia. + +It is easy to understand why Citi’s top brass are treading gingerly. The urge to make far more of the bank’s global footprint was behind the disastrous expansion of 1997-2007. Of the bank’s 17 directors, 15 are American: a global bank should have more of a mix of nationalities. And the real sign that a company is recuperating is not that it is locked in a permanent state of contrition and austerity. Rather it is that it can grow at a measured and rational pace in its core areas. Over the next couple of years, that’s what Citi needs to become well-known for. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21718924-recipient-americas-biggest-bank-bail-out-has-overhauled-its-capital-base-and-its-profits/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Finance and economics + + +The Federal Reserve: Up, up and away [Fri, 17 Mar 09:50] + +The Federal Reserve: The public’s interest [Fri, 17 Mar 09:50] + +African sovereign-wealth funds: Buried treasure [Fri, 17 Mar 09:50] + +Trade deals: KORUS of disapproval [Fri, 17 Mar 09:50] + +Buttonwood: Building a beta mousetrap [Fri, 17 Mar 09:50] + +Oil prices: Full tank [Fri, 17 Mar 09:50] + +Iceland’s capital controls: The end of a saga [Fri, 17 Mar 09:50] + +Free exchange: The best policy [Fri, 17 Mar 09:50] + +Correction: Green finance for dirty ships [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Up, up and away + +As the Fed raises rates, Janet Yellen’s legacy is pondered + + +Donald Trump has the chance to mould America’s central bank + + + + + +From the print edition | Finance and economics + + +Mar 18th 2017 | Washington, DC + + + + + +THIRD time lucky. In each of the past two years, the Federal Reserve has predicted multiple interest-rate rises, only to be thrown off-course by events. On March 15th the central bank raised its benchmark Federal Funds rate for the third time since the financial crisis, to a range of 0.75-1%. This was, if anything, ahead of its forecast, which it reaffirmed, that rates would rise three times in 2017. “Lift-off” is at last an apt metaphor for monetary policy. But as Janet Yellen, the Fed’s chairwoman, picks up speed in terms of policy, she must navigate a cloudy political outlook. The next year will define her legacy. + +Ms Yellen took office in February 2014 after dithering by the Obama administration over a choice between her and Larry Summers, a former treasury secretary. Left-wingers preferred Ms Yellen, in part because she seemed more likely to give jobs priority over stable prices. Indeed, Republicans in Congress worried that she would be too soft on inflation. The Economist called her the “first acknowledged dove” to lead the central bank. + + + + + +Latest updates + + + + + +See all updates + + + +Today Ms Yellen looks more hawkish—certainly than Mr Summers, who regularly urges the Fed to keep rates low. Headline inflation has risen to 1.9% a year; but excluding volatile food and energy prices it is a bit stuck, at around 1.7%. Yet Ms Yellen has not really changed her plumage. As expected, she has consistently given high weight to unemployment. Before her appointment, when joblessness was high, she wanted the Fed to promise to keep rates low for longer than it then planned. Now that unemployment is just 4.7%, she is keener to raise rates than those who worry about stubbornly low inflation. + +In March 2015 Ms Yellen argued that, were the Fed to ignore a tight labour market, inflation would eventually overshoot its 2% target. The Fed might then need to raise rates sharply to bring it back down, risking a recession—and hence more unemployment. Better to lift rates in advance. + +Unemployment, however, was already down to 5.5%. So most rate-setters had started 2015 forecasting a rapid lift-off, taking rates up by at least one percentage point over the year. But inflation remained strangely tepid (see chart). Cheap oil and a strong dollar were partly to blame. But wages also seemed stuck. Ms Yellen and her colleagues deduced that unemployment could safely fall a bit further. + + + +In the end, they raised rates once in 2015, in December. Again, they forecast four rate rises for the next year. This time they were delayed by worries over the global economy (China wobbled early in 2016). Officials also began to see lower rates as a permanent feature of the economy. Today, the setters think rates will eventually stabilise at 3%, down from a forecast of 4% when Ms Yellen took office. + +Ms Yellen’s Fed, then, has proved very willing to change course. And this time the Fed is speeding up, rather than postponing, rate rises. Three factors are at play. First, the global economy has been reflating since the middle of 2016 (see article). Second, financial markets are booming, boosting the economy by almost as much as three interest-rate cuts, by some estimates. Third, a fiscal stimulus is looming. According to the Fed’s model, a tax cut worth 1% of GDP would push up interest rates by nearly half a percentage point. During his campaign Donald Trump promised cuts worth nearly 3% of GDP, according to the Tax Policy Centre, a think-tank. + +Doves insist that the Fed risks halting an incomplete recovery. Before the crisis of 2007-08, about 80% of 25-to 54-year-olds (the “prime age” population) had jobs. Today the proportion is 78%. The difference is about 2.5m potential workers, mostly not counted as unemployed because they are not looking for work. Were the Fed to aim for the nearly 82% prime-age employment seen in April 2000, the jobs shortfall would look twice as high. + +In October Ms Yellen wondered aloud whether a “high-pressure economy”, and a resulting wage boom, might coax more people to seek work. This led to reports—soon corrected—that she would let the economy overheat after all. In fact Ms Yellen has long warned that many drivers of labour-force participation are beyond the central bank’s control. A gentle pickup in wage growth since mid-2015 seems to support her view that unemployment is the best measure of economic slack. + +Rarely has unemployment been this low without inflation taking off. Once was in the late 1990s, when Alan Greenspan, a former Fed chairman, correctly predicted that rising productivity would stop a booming labour market from stoking inflation. Jeffrey Lacker, chairman of the Richmond Fed, recently offered another example. In 1965 unemployment fell to 4%, while inflation was only 1.5%. Yet prices took off in the years that followed: by 1968, inflation had reached 4.3%. + +That is what Ms Yellen wants to avoid. But the Fed has not often managed to tighten monetary policy without an ensuing recession. Should she manage it, her tenure will go down as a great success. + +That is, if she has time to finish the job. Her term ends in February 2018. If Mr Trump replaces her, she could stay on as a board member. But she would probably leave. So would Stanley Fischer, the Fed’s vice-chairman, whose term expires four months later. Two of the Fed’s seven seats are already vacant, and Daniel Tarullo, the de facto vice-chairman for regulation, goes in April. So Mr Trump may be able to appoint five governors, including the chairman, within 18 months of taking office. + +What then for monetary policy, and for Ms Yellen’s legacy? During his campaign, the president attacked the Fed for keeping rates low and said he would replace Ms Yellen with a Republican. Mooted successors include Glenn Hubbard, who advised George W. Bush; Kevin Warsh, a former banker and Fed governor; and John Taylor, an academic and author of a rule, named after him, for setting interest rates. + +A kettle of hawks + +All these potential successors are monetary-policy hawks. Some versions of the Taylor rule, for example, call for interest rates more than three times as high as today’s. Mr Trump, who promises revival and 3.5-4% economic growth, might not like the sound of that. If, like most populists, he wants to avoid tight money, he could appoint someone malleable to the Fed. But that would also be risky. One cause of the inflationary surge of the 1960s, notes Mr Lacker, was political pressure to keep policy loose even after ill-timed tax cuts. On one occasion, President Lyndon Johnson summoned the Fed chairman, William McChesney Martin, to berate him for raising interest rates (and to drive him around his ranch at breakneck speed). + +A simpler way to keep hawkish Republicans at bay would be to reappoint Ms Yellen. With Mr Tarullo out of the frame, Mr Trump would still be able to impose his deregulatory agenda, yet keep faith with Ms Yellen to set monetary policy. Senators would struggle to come up with reasons not to reappoint a central-bank chairwoman so close to achieving her goals. Bill Clinton and Barack Obama reappointed incumbent Republican chairmen. It might be in Mr Trump’s interest to reciprocate. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business-and-finance/21718857-donald-trump-has-chance-mould-americas-central-bank-fed-raises-rates/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The public’s interest + +Is the Federal Reserve giving banks a $12bn subsidy? + + +Or is the interest the Fed pays them a vital monetary tool that benefits the taxpayer? + + + + + +From the print edition | Finance and economics + + +Mar 18th 2017 + + + + + +EVERY time the Federal Reserve has raised rates since the financial crisis, as it did on March 15th, it has done so in part by increasing “Interest On Excess Reserves” (IOER). This obscure policy rate is surprisingly controversial. Jeb Hensarling, the Republican chair of the congressional committee that oversees the Fed, has called it a “subsidy” to some of the largest banks in America. + +To understand the argument, consider the Fed’s year-end financial statement. In 2016 it earned $111.1bn in interest income on its vast portfolio of securities. But it also paid JPMorgan Chase, Wells Fargo, and other mostly big banks $12bn in interest on excess cash deposited at regional Federal Reserve banks. Such IOER payments are both woefully unpopular and critical to the Fed’s monetary policy. + + + + + +Latest updates + + + + + +See all updates + + + + + +Over a decade ago, to give the Fed better control of short-term interest rates, Congress authorised it to pay interest on funds in excess of those banks need to meet reserve requirements. The policy was first used during the financial crisis in 2008. But today, IOER is the Fed’s primary monetary-policy tool, essential to its setting of the Federal Funds rate. + +IOER has drawn fierce flak from Congress. If banks can park their money at the Fed, they seem to have less incentive to lend to firms and consumers. About half of all excess reserves are held by America’s 25 largest banks, with a third, to Congress’s horror, held by foreign banks. The two groups earn roughly 85% of the Fed’s interest payment. + +Many analysts argue that these interest payments—amounting to less than 2% of the banks’ total income—are in fact trivial. They claim banks would rather earn higher returns elsewhere, and that the real winner from the current arrangement is the government. The excess reserves help finance the Fed’s $4.5trn balance-sheet, which generated almost eight times more income for the Treasury in 2016 than was paid out in interest. + +This debate is likely to intensify. American banks hold over $2.1trn in excess reserves. As rates rise, the cost of paying interest on them will climb—to $27bn this year, according to Fed projections and $50bn by 2019 (see chart). That may be too much. Mark Calabria of the Cato Institute, a think-tank, says that anything that can be tagged as “paying banks $50bn a year not to lend” will be “politically unsustainable”. + +Meddling with the arrangement might cost even more. Without IOER, banks would try to lend their excess reserves to each other, so short-term interest rates would collapse. To keep control of monetary policy—and avert a surge in inflation—the Fed would have to sell assets rapidly to withdraw reserves from the system. The disruption, a recent analysis concluded, could prove “extremely costly to taxpayers”. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718872-or-interest-fed-pays-them-vital-monetary-tool-benefits/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Buried treasure + +Sovereign-wealth funds catch on in Africa + + +But countries disagree about how to use them + + + + + +From the print edition | Finance and economics + + +Mar 16th 2017 | KAMPALA + + + + + +SCRATCHING around for money to pay for free secondary schools, a government minister in Ghana last month floated an idea: raid the Heritage Fund. At least 9% of the country’s annual oil revenues are stashed there for future generations. The minister was rebuffed. But the row highlighted a trade-off: saving for tomorrow’s children makes it harder to help today’s. + +Such dilemmas are acute in sub-Saharan Africa. The region has about a dozen sovereign-wealth funds, most of them established in the past decade. They have few models to emulate. A Norwegian approach—build a fund, invest abroad, and spend only the annual returns—works in places that are small, ageing and rich. Most African countries, unfortunately, are none of those things. + + + + + +Latest updates + + + + + +See all updates + + + +The oldest and largest African fund, Botswana’s $5.3bn Pula Fund, was created in 1994 from diamond revenues. Angola and Nigeria, the biggest oil exporters, have both established funds in the past few years; governments from Kenya to Zambia are talking of doing the same. Even Rwanda, with no great commodity riches, is soliciting patriotic donations to build its own (civil servants coughed up $2.5m last year). + +Many funds have savings mandates. Botswana’s, like Norway’s, hoards its wealth abroad. The Nigeria Sovereign Investment Authority (NSIA) puts 40% of its capital into a Future Generations Fund, invested in global assets with a horizon of over 20 years. African countries should be cheered when they save, says Uche Orji, its chief executive (pictured), since they are often chastised as spendthrifts. But others say that buying foreign equities may not be the best use of scarce capital when roads and electricity are needed at home. + +That explains why the NSIA allocates another 40% of its assets to domestic projects, giving priority to sectors such as power, highways and farming. In August it teamed up with Old Mutual, an investment group, to launch a $500m property vehicle. It is not the only fund to spend locally. In January the Angola Sovereign Wealth Fund (FSDEA, from the Portuguese) announced a $180m investment in a deep-sea port, adding to a portfolio including business hotels and 72,000 hectares of farmland. “Every investment has a private-equity logic to it,” explains José Filomeno dos Santos, its chairman. + +A domestic strategy could bring jobs and development. The risk is that spending is diverted from the normal budget process, dodging political oversight. In Angola critics point to the appointment of Mr dos Santos, who happens to be the president’s son. One of his former business partners chairs the advisory board of the FSDEA’s chosen asset manager, and also chairs the company that is building the port. + +Even the best-designed institutions are no guarantee against government profligacy. Ghana’s twin funds (for savings and stabilisation) are much admired, but their existence did not stop politicians from a borrowing binge. For governments facing high interest costs, a better use of oil revenues may simply be to repay foreign debt. Andrew Bauer of the Natural Resource Governance Institute, a non-profit group, says it is a “myth” that “ if you have oil you need a sovereign-wealth fund.” + +African funds should focus on two roles, argue Anthony Venables and Samuel Wills of the Oxford Centre for the Analysis of Resource-Rich Economies. A sudden windfall can generate inefficient spending: it makes sense to “park” cash offshore until capacity is built. And a stabilisation fund, invested in liquid assets, can bolster the budget when oil prices fall. + +Governments would dearly love such a boost now. Funds such as Nigeria’s include stabilisation components, but most are still too small to have much effect. If sovereign wealth were shared out among citizens, Batswana would get a chunky $2,400 each, Norwegians a mammoth $170,000—and Nigerians less than $7. Gulf state’ funds took decades to grow, notes Mr Orji. At current oil prices, the most valued asset of all is patience. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718893-countries-disagree-about-how-use-them-sovereign-wealth-funds-catch/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +KORUS of disapproval + +The South Korea-US trade agreement turns five + + +Though not many are celebrating its birthday + + + + + +From the print edition | Finance and economics + + +Mar 16th 2017 + + + + + +IT SHOULD have been a happy anniversary. On March 15th 2012, KORUS, a trade deal between America and South Korea, came into effect. It slashed tariffs, tightened intellectual-property rights and opened up South Korea’s services market. When it was signed, the head of an American manufacturing lobby hailed it as meaning “jobs, jobs and jobs”. Wendy Cutler, its American negotiator, calls it “the highest standard deal we have in force”. + +Five years on, jubilation has given way to anxiety. On the campaign trail, Donald Trump referred to the deal as a “job-killer”. On March 1st his administration’s official trade-strategy document singled it out for criticism. America’s trade deficit in goods with South Korea has more than doubled since 2011. “This is not the outcome the American people expected,” it lamented. + + + + + +Latest updates + + + + + +See all updates + + + + + +Trade between America and South Korea has indeed fallen short of expectations. When the deal was signed, the United States International Trade Commission predicted that it would boost American goods exports to South Korea by around $10bn. In fact they fell by $3bn between 2011 and 2016. The deal suffered teething problems. As tariffs fell, American carmakers griped that South Korean regulators were erecting other barriers. Most incendiary for this administration, the South Korean government was accused of devaluing its currency for competitive advantage. + +But weak exports cannot be blamed on KORUS. As it came into force global trade slowed sharply; total South Korean imports have fallen steeply (see chart). Without the deal, which slashed tariffs, American goods exports would have been even lower. American exports of services rose by almost 30% between 2011 and 2016. The stock of South Korean investment in America has more than doubled. + +At least Philip Seng, chief executive of the United States Meat Export Federation, a trade body, remains pleased with KORUS. American exports of chilled beef to South Korea have risen by 152% over the past five years. The tariff cuts have offset the strong dollar. “We are now the number-one supplier of beef,” he says proudly. And by 2026 the duty is due to be phased out entirely. + +If American export performance overall has been disappointing, then dawdling by its trade negotiators could also be to blame, says Jeff Schott, an economist and trade-deal veteran. Nine months before KORUS came into force, a deal between the EU and South Korea gave European companies a head start. + +In South Korea fears of what an “America first” agenda might mean are in the air. Some potential candidates in the forthcoming South Korean presidential election have suggested pre-emptively renegotiating the deal on their own terms. Meanwhile, the South Korean government is playing down talk of a renegotiation. Since no tweak to KORUS could produce the trade balance that the Trump administration wants, this seems wise. + +A sensible upgrade to the deal is possible. A revised version might include new rules on digital trade and e-commerce, and more transparency over currency intervention. But its terms would then look remarkably similar to the Trans-Pacific Partnership (TPP), a 12-country trade deal that the Trump administration has scrapped. (South Korea was not in TPP, though it had not ruled out joining, and took part in a trade summit on March 14th-15th in Chile devoted to Pacific integration.) For now, though, the Trump administration’s aggressive bilateralism seems more likely to promote rancour than trade. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718894-though-not-many-are-celebrating-its-birthday-south-korea-us-trade-agreement/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Buttonwood + +Do smart-beta investment funds work? + + +As with all investment, it’s a question of timing + + + + + +From the print edition | Finance and economics + + +Mar 18th 2017 + + + + + +IN THE world of investing, everyone is always looking for a better mousetrap—a way to beat the market. One approach that is increasingly popular is to select shares based on specific “factors”—for example, the size of companies or their dividend yield. The trend has been given the ugly name of “smart beta”. + +A recent survey of institutional investors showed three-quarters were either using or evaluating the approach. By the end of January some $534bn was invested in smart-beta exchange-traded funds, according to ETFGI, a research firm. Compound annual growth in assets under management in the sector has been 30% over the past five years. + + + + + +Latest updates + + + + + +See all updates + + + + + +The best argument for smart-beta funds is that they simply replicate, at lower cost, what fund managers are doing already. For example, many fund managers follow the “value” approach, seeking out shares that look cheap. A computer program can pick these stocks more methodically than an erratic human. A smart-beta fund does what it says on the tin. + +But does it work? The danger here is “data mining”. Carry out enough statistical tests, and you will always find some strategy that worked in the past. It may be that stocks beginning with the letter “M” have outperformed other letters of the alphabet; that does not mean they will do so in future. According to Elroy Dimson of Cambridge University and Paul Marsh and Mike Staunton of the London Business School, researchers have found 316 different factors that might form the basis for a successful investment strategy. + +The best-known fall into four groups—size, value (including dividend yield), momentum (buying stocks that have risen in the recent past) and volatility (buying less-risky shares). Research by Messrs Dimson, Marsh and Staunton shows that the size, value and momentum effects have worked across a wide range of markets over many decades. The low-volatility effect (for which fewer data are available) has worked in America and Britain over an extended period. + +In the case of momentum, the effect is very large. In a theoretical exercise (see chart), an investor identifies the best-performing stocks over the previous six months, buys the winners and sells short the losers (ie, bets that their prices will fall). The exercise assumes it takes a month to implement the strategy each time. In some countries, the return is more than 1% a month; globally, it is 0.79% a month, or nearly 10% a year. That is more than sufficient to make up for any transaction costs. + +This is a bit of a mystery. Even if markets are not completely efficient, it seems hard to understand how outsize returns can be achieved by looking at something as simple as recent price movements, without clever traders taking advantage until the anomaly vanishes. One explanation may be that the effect can go sharply into reverse; in 2009 a broad-based momentum approach would have lost 46% in the British stockmarket and 53% in America. Any hedge fund that used borrowed money to exploit the momentum effect would have been wiped out. + +Similarly, smaller companies and value stocks have beaten the market over the long run. Nevertheless, there have been times when such shares have been out of favour for years. The returns from such strategies have been much lower than from momentum (2-4% a year): not enough, perhaps, to induce a patient buy-and-hold strategy among those willing to ride out the bad times. + +The obvious answer is to select the right factors at the right moment. The obvious question is how to do so. Relying on past performance is risky. A study* by Research Affiliates, a fund-management group, found that a factor’s most recent five-year performance was negatively correlated with its subsequent return. This is probably a case of reversion to the mean. Stocks that perform well over five years are probably overvalued by the end of that period; those that perform badly for the same period are probably cheap. + +Indeed, the publicity given to smart beta, and the money flowing into these funds, will lead to upward pressure on shares exposed to the most popular factors. (Add an extra layer of irony when this applies to momentum stocks.) Investors who believe in the beta mousetrap may find that the rodents have already escaped with the cheese. + +* “Forecasting factor and smart beta returns” by Rob Arnott, Noah Beck and Vitali Kalesnik + +Economist.com/blogs/buttonwood + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718886-all-investment-its-question-timing-do-smart-beta-investment-funds/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Full tank + +Why too much oil in storage is weighing on prices + + +OPEC’s cuts have not yet had the desired effects + + + + + +From the print edition | Finance and economics + + +Mar 16th 2017 | HOUSTON + + + + + +IT SOUNDS like a scene from “The Big Short”, a film about financial speculation. Light aircraft fly photographers close to America’s oil-storage facilities, using infra-red imaging and photographs to gauge the rise and fall of levels of crude in 2,100 storage tanks, in an attempt to work out whether oil futures are overvalued or not. + +In fact, it is less mischievous than that. The intelligence-gatherers work for a company, Genscape, that sells the information to traders everywhere, giving them a few days’ jump before storage surveys are published by the government. + + + + + +Latest updates + + + + + +See all updates + + + + + +These data are particularly useful at a time when near-record levels of oil inventories in America are weighing on oil prices and frustrating attempts by OPEC, the producers’ cartel, to prop up the market. The high level of inventories is vital to an understanding of why crude prices suddenly plummeted this month, according to the International Energy Agency (IEA), a forecaster. West Texas Intermediate is back below $50 a barrel, its level before OPEC in November agreed to cut output (see chart). + +Three reasons explain why the tanks are so full. Firstly, OPEC’s agreement with non-members such as Russia to cut production from January 1st set off a flurry of hedge-fund buying, pushing oil prices higher. American shale producers were quick to take advantage of higher prices by pumping more oil. The number of American oil rigs has risen to 617 from 386 a year ago, producing 400,000 barrels a day more than at the lows in September. Much of that has gone to storage terminals like Cushing, Oklahoma. + +Second, OPEC has been hoisted by its own petard. In the months before it started cutting output, it sharply raised production and exports. After weeks of trans-Atlantic travel, this oil is showing up in higher American imports, put into storage when refineries were idled for maintenance. + +The third factor is the shape of the curve of futures prices, which is closely related to the level of inventories. When OPEC orchestrated the January cut, it hoped to rebalance supply and demand by mid-year, and push the futures market into “backwardation”, meaning prices in the long term were at a discount to short-term prices. Backwardation reflects the market’s willingness to buy oil and use it rather than storing it. The strategy worked for a while. + +But since the release of bearish American inventory data on March 8th, the market slipped back into “contango”, the name for the discount at which near-term prices trade to longer-term ones. Contango makes it more worthwhile to buy oil and store it. Hillary Stevenson of Genscape notes that the storage costs in tanks in Cushing are about 41 cents per barrel of oil per month, compared with a one-month contango of about 65 cents. + +Contango can be a self-fulfilling prophecy, because the more oil is stored, the lower short-term prices go. So OPEC’s challenge is to try and break the loop, possibly by promising to extend its output cuts beyond June. But in that case, the shale drillers are likely to add yet more wells. And so the merry-go-round will continue. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718887-opecs-cuts-have-not-yet-had-desired-effects-why-too-much-oil-storage/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The end of a saga + + +Iceland lifts capital controls + + +At last, the country marks a symbolic recovery from its financial meltdown + + + + + +Hope springs eternal + + + +IT WAS one of the worst-hit casualties of the financial crisis 0f 2007-08, but Iceland this week took steps that symbolised its recovery. The last remaining controls on capital outflows were lifted, allowing pension and investment funds to invest their money abroad. And the central bank struck another deal with offshore holders of frozen krona-denominated assets—buying more of them back at a discount. + +The country’s crisis experience was a cautionary tale of an over-exuberant financial sector. Three of its banks, with assets worth 14 times GDP, keeled over within a week; the krona fell by 70% on a trade-weighted basis in a year; Iceland was the first rich country since Britain in 1976 to need an IMF rescue. + + + +To stem capital outflows and further falls in the krona, the government in 2008 slapped restrictions on money leaving the country. The measures also froze offshore holdings of krona-denominated assets, which at the time amounted to 40% of GDP. Even the IMF, usually in favour of more orthodox free-market policies, supported the move. The country nonetheless experienced a severe recession, with GDP falling by more than 10% that year. + +Eight years on, things look rosier. The IMF loan was repaid early, in 2015. GDP rose by 7.2% in 2016, boosted by an explosion in tourism: visitor numbers are expected to exceed 2m this year, seven times the population. As the economy has recovered, capital restrictions have been eased. It is hoped the latest liberalisation will cool the economy a little, says Jon Danielsson of the London School of Economics. By stopping investment abroad, capital controls may have inflated domestic asset prices; house prices have climbed by around 16% in a year. Outflows should also reduce pressure on the krona, which rose by 16% against the euro in 2016, but has fallen by 3.5% since the announcement. + +Iceland’s problem is that its economic cycle is out of sync with other rich countries, says Fridrik Mar Baldursson of Reykjavik University. Before the crisis investors sought to profit from the gap between high Icelandic interest rates and lower rates elsewhere, by borrowing abroad to invest in Iceland. With the krona interest rate now at 5%, that “carry trade” has resurfaced. The central bank is hamstrung: if it lowers rates to deter foreign money, it risks stoking up the domestic economy further. + +So though controls on capital outflows were lifted this week, those on inflows were tightened. They try to dim the attraction of investing in Iceland by making investors keep 40% of their money in non-interest-bearing accounts for at least a year. Determined speculators, Mr Danielsson fears, will always find a way in. But the measure is at least a step towards avoiding a rerun of the 2008 saga. + + + +This article appeared in the Finance and economics section of the print edition under the headline “The end of a saga” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718889-last-country-marks-symbolic-recovery-its-financial-meltdown-iceland/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Free exchange + +The progressive case for immigration + + +Whatever politicians say, the world needs more immigration, not less + + + + + +From the print edition | Finance and economics + + +Mar 16th 2017 + + + + + +“WE CAN’T restore our civilisation with somebody else’s babies.” Steve King, a Republican congressman from Iowa, could hardly have been clearer in his meaning in a tweet this week supporting Geert Wilders, a Dutch politician with anti-immigrant views. Across the rich world, those of a similar mind have been emboldened by a nativist turn in politics. Some do push back: plenty of Americans rallied against Donald Trump’s plans to block refugees and migrants. Yet few rich-world politicians are willing to make the case for immigration that it deserves: it is a good thing and there should be much more of it. + +Defenders of immigration often fight on nativist turf, citing data to respond to claims about migrants’ damaging effects on wages or public services. Those data are indeed on migrants’ side. Though some research suggests that native workers with skill levels similar to those of arriving migrants take a hit to their wages because of increased migration, most analyses find that they are not harmed, and that many eventually earn more as competition nudges them to specialise in more demanding occupations. But as a slogan, “The data say you’re wrong” lacks punch. More important, this narrow focus misses immigration’s biggest effects. + + + + + +Latest updates + + + + + +See all updates + + + + + +Appeal to self-interest is a more effective strategy. In countries with acute demographic challenges, migration is a solution to the challenges posed by ageing: immigrants’ tax payments help fund native pensions; they can help ease a shortage of care workers. In Britain, for example, voters worry that foreigners compete with natives for the care of the National Health Service, but pay less attention to the migrants helping to staff the NHS. Recent research suggests that information campaigns in Japan which focused on these issues managed to raise public support for migration (albeit from very low levels). + +Natives enjoy other benefits, too. As migrants to rich countries prosper and have children, they become better able to contribute to science, the arts and entrepreneurial activity. This is the Steve Jobs case for immigration: the child of a Muslim man from Syria might create a world-changing company in his new home. + +Yet even this argument tiptoes around the most profound case for immigration. Among economists, there is near-universal acceptance that immigration generates huge benefits. Inconveniently, from a rhetorical perspective, most go to the migrants themselves. Workers who migrate from poor countries to rich ones typically earn vastly more than they could have in their country of origin. In a paper published in 2009, economists estimated the “place premium” a foreign worker could earn in America relative to the income of an identical worker in his native country. The figures are eye-popping. A Mexican worker can expect to earn more than 2.5 times her Mexican wage, in PPP-adjusted dollars, in America. The multiple for Haitian workers is over 10; for Yemenis it is 15 (see chart). + +No matter how hard a Haitian worker labours, he cannot create around him the institutions, infrastructure and skilled population within which American workers do their jobs. By moving, he gains access to all that at a stroke, which massively boosts the value of his work, whether he is a software engineer or a plumber. Defenders of open borders reckon that restrictions on migration represent a “trillion dollar bills left on the pavement”: a missed opportunity to raise the output of hundreds of millions of people, and, in so doing, to boost their quality of life. + +We shall come over; they shall be moved + +On what grounds do immigration opponents justify obstructing this happy outcome? Some suppose it would be better for poor countries to become rich themselves. Perhaps so. But achieving rich-world incomes is the exception rather than the rule. The unusual rapid expansion of emerging economies over the past two decades is unlikely to be repeated. Growth in China and in global supply chains—the engines of the emerging-world miracle—is decelerating; so, too, is catch-up to American income levels (see chart). The falling cost of automating manufacturing work is also undermining the role of industry in development. The result is “premature deindustrialisation”, a phenomenon identified by Dani Rodrik, an economist, in which the role of industry in emerging markets peaks at progressively lower levels of income over time. However desirable economic development is, insisting upon it as the way forward traps billions in poverty. + +An argument sometimes cited by critics of immigration is that migrants might taint their new homes with a residue of the culture of their countries of origin. If they come in great enough numbers, this argument runs, the accumulated toxins could undermine the institutions that make high incomes possible, leaving everyone worse off. Michael Anton, a national-security adviser to Donald Trump, for example, has warned that the culture of “third-world foreigners” is antithetical to the liberal, Western values that support high incomes and a high quality of life. + +This argument, too, fails to convince. At times in history Catholics and Jews faced similar slurs, which in hindsight look simply absurd. Research published last year by Michael Clemens and Lant Pritchett of the Centre for Global Development, a think-tank, found that migration rules tend to be far more restrictive than is justified by worries about the “contagion” of low productivity. + +So the theory amounts to an attempt to provide an economic basis for a cultural prejudice: what may be a natural human proclivity to feel more comfortable surrounded by people who look and talk the same, and to be disconcerted by rapid change and the unfamiliar. But like other human tendencies, this is vulnerable to principled campaigns for change. Americans and Europeans are not more deserving of high incomes than Ethiopians or Haitians. And the discomfort some feel at the strange dress or speech of a passer-by does not remotely justify trillions in economic losses foisted on the world’s poorest people. No one should be timid about saying so, loud and clear. + +Visit our Free exchange economics blog + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718873-whatever-politicians-say-world-needs-more-immigration-not-less/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Correction: Green finance for dirty ships + + + + + +From the print edition | Finance and economics + + +Mar 16th 2017 + + + + + +Correction. We made a mistake in last week’s article on green-shipping finance. The oxides of sulphur and nitrogen emitted by shipping are very harmful; but they are not, as we asserted, much worse for global warming than carbon dioxide. Sorry. + + + + + +Latest updates + + + + + +See all updates + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21718884-correction-green-finance-dirty-ships/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Science and technology + + +Yellow fever in Brazil: Monkey business [Fri, 17 Mar 09:50] + +Optics: The bug-eyed view [Fri, 17 Mar 09:50] + +Astronomy: Flashes of inspiration [Fri, 17 Mar 09:50] + +Mapping subterranean resources: DNA goes underground [Fri, 17 Mar 09:50] + +Animal behaviour: Spider bites [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Monkey business + +An outbreak of yellow fever in Brazil + + +Yellow fever is bad for people. For wild primates, it can be catastrophic + + + + + +From the print edition | Science and technology + + +Mar 16th 2017 | Santa Maria, Espírito Santo + + + + + +“ALL gone,” sighs Valmir Rossman as he scans the jungle surrounding his holding outside Santa Maria, a village in the state of Espírito Santo, north-east of Rio de Janeiro. Mr Rossman is a coffee farmer. Afternoons at his plantation used to echo to the calls of howler monkeys (pictured above) proclaiming their territories to potential interlopers. Since mid-February, however, he says he has neither heard nor seen a single one of them—except for two fresh carcasses he stumbled across where the coffee bushes give way to Atlantic rainforest, in the hills that mark the plantation’s edge. + +Espírito Santo’s howler-monkey population is crashing. Mr Rossman’s corpses are two among 900 found this year by Sergio Mendes, a primatologist at the state’s federal university (UFES), and his team. In a typical year Dr Mendes would have expected his searchers to come across perhaps half a dozen such bodies during the same period. And something similar is happening in Minas Gerais, Espírito Santo’s inland neighbour. Analysis of the remains suggests the culprit is yellow fever. + + + + + +Latest updates + + + + + +See all updates + + + +It is easy to think of yellow fever, a mosquito-transmitted viral infection, as being just a human disease, but other primates can catch it, too—and New World monkeys suffer particularly badly. That is because, until the European discovery of the Americas, yellow fever was confined to the Old World. Animals there co-evolved with the virus that causes it, and thus developed a degree of inherited immunity. Their New World brethren had no such opportunity. The outbreak now raging in Espírito Santo, Minas Gerais and parts of other, adjoining states is affecting both monkeys and people. But it is monkeys who are, at least at the moment, suffering more. + +Reality bites + +The idea that wild animals are reservoirs of pathogens which go on to infect humans is well known, but not well studied. The Brazilian yellow-fever outbreak is an opportunity to put this right: to understand better the two-way pathogenic traffic involved, and also the fact that outbreaks can harm species other than Homo sapiens. + +From a human point of view, Brazil has dealt well with yellow fever. It kills about half a dozen people a year. By comparison, dengue kills between 300 and 800. Crucially, after a big vaccination campaign in the 1930s, the last recorded case in the country of “urban-cycle” yellow fever was in 1942. The urban cycle is the usual mode of transmission in the Old World. It involves a mosquito called Aedes aegypti, which is also responsible for transmitting dengue, Zika and West Nile virus, and which arrived in the Americas at the same time as the virus itself. In urban-cycle yellow fever Aedes bites an infected human being and then carries the virus to another, possibly uninfected, human. In essence, this is human-to-human transmission. + +As far as can be ascertained, all Brazilian cases since 1942 have been “wild-cycle” infections. These involve two other mosquito genera, Haemagogus and Sabethes, which are native to the Americas. Normally, these mosquitoes spend most of their time in tree canopies, supping on monkey blood. From time to time, though, they bite a human instead—for example, when loggers bring those canopies crashing to the forest floor. If the insects doing the biting are carrying the virus, such bites will pass it on to those who are unvaccinated. But, since Haemagogus and Sabethes do not live routinely in human habitats in the way that Aedes does, and vaccination programmes now concentrate on areas where wild-cycle infection is a risk, these canopy-dwelling mosquitoes rarely transmit yellow fever from person to person. + +Those who are bitten and infected can, however, transmit it to other parts of the country which, because they have been free of the disease, may not have been heavily vaccinated. In 2000, for example, strains matching those from an outbreak in Pará, a state in northern Brazil, were found in areas as much as 2,000km (1,200 miles) away. That, reckons Pedro Vasconcelos of the Evandro Chagas Institute, a government laboratory in Pará, is too far for the virus to have moved without help from mechanised transport. + +Occasionally, yellow fever alights in this way in an area with a large monkey population that has had no recent exposure to it, and has therefore acquired no immunity. The upshot can be devastating. Nine years ago 2,000 monkeys are thought to have perished close to Brazil’s border with Uruguay. In 2000 a similar number may have died in the centre-west of the country, one of the places to which people brought it from Pará. + +The flare-up in Espírito Santo and Minas Gerais seems fiercer. According to Dr Mendes, yellow fever can wipe out 80-90% of a monkey population that lacks immunity—which the animals in these two states do lack, since the disease has previously been absent, and their immune systems have had no chance to learn how to respond. The body count, he reckons, could reach tens of thousands. And this time, people are dying as well. Since December, 371 human cases, a third of them fatal, have been recorded. The reason is similar to the cause of the toll in monkeys: lack of an appropriate immune response. The absence of urban-cycle disease means that local vaccination campaigns have wound down. + +The health authorities are now on high alert, though. They have dispatched vaccine to the affected areas with commendable speed. That should stop the revival of urban-cycle transmission. Entomologists from UFES are also setting traps to catch mosquitoes, to try to find out which species are carrying the virus—forest insects or Aedes. The trapped mosquitoes are being sent to the Evandro Chagas Institute for identification—of both them and of any viruses they may be harbouring. + +At the moment, researchers suspect that the virus causing this outbreak originated from monkeys in either Amazonia or the cerrado, Brazil’s savannah area. If that is confirmed, it will be a textbook example of disease in an animal reservoir spilling over to affect human beings. And it is a reservoir from which the disease is impossible to eradicate. + +That leaves the authorities with two possible responses. The first is the one they have adopted: to react to outbreaks when they occur and accept the consequent casualties. The second is to return to mass, pre-emptive vaccination, which would be costly and run the risk of people dying, as a handful probably would, from reaction to the vaccine. That second approach is unlikely in the face of a lone outbreak, but if others follow as loggers push deeper into the rainforest, it might have to be considered. In the case of this particular outbreak, the authorities’ swift response means the chances are that it will be contained and then stamped out quickly—at least as far as people are concerned. How long it will be before Mr Rossman hears his howler monkeys again is anybody’s guess. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21718862-yellow-fever-bad-people-wild-primates-it-can-be-catastrophic/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The bug-eyed view + +An insect’s eye inspires a new camera for smartphones + + +A series of eyelets can make cameras much smaller + + + + + +From the print edition | Science and technology + + +Mar 18th 2017 + + + + + +MALES of a species called Xenos peckii have an unusual eye for the ladies. X. peckii is a member of the Strepsiptera, a group of insects that parasitise other insects. Its victim of choice is the paper wasp, inside the abdomen of which it develops from larva to adult by eating its host from the inside. Females of the species are blind—there is, after all, little to see in their abode. But males have a pair of eyes (see picture) that are unique to the Strepsiptera, and vital for one brief and important task. When he matures, a male X. peckii must leave his host and find a mate quickly, because he will die within a few hours. A group of researchers working for the Fraunhofer Society, a German government research organisation, have now copied the way male X. peckii eyes work, and used the method as the basis of a new miniature camera for smartphones. + +Many animals (human beings and octopuses are good examples), have eyes that use a single lens to focus light onto a sheet of receptor cells at the back of the eye, called a retina, to form an image. This is similar to the way that a digital camera’s lens focuses such an image onto a retina-like light-sensor made up of millions of individual detectors. Other creatures, though—insects among them—have compound eyes. These are composed of units called ommatidia. Each ommatidium consists of a tiny lens, called a facet, and a few receptor cells. The eye itself is a bulbous structure composed of many of these ommatidia arrayed together. Individual ommatidia detect points of light, which act as the pixels from which the creature’s brain weaves a complete image. Compound eyes generally have worse resolutions than single-lens eyes, but their shape provides a wider field of view, which is useful for spotting food and predators. + + + + + +Latest updates + + + + + +See all updates + + + +The eyes of X. peckii, however, are a compromise between these two extremes. They have a few, large facets and instead of detecting points of light the ommatidia each create an actual image of part of the eye’s field of view. The resulting mosaic of slightly overlapping images is then stitched together by the insect’s brain. This unusual arrangement results in both high resolution and a broad view of the world, using a pair of eyes that do not take up much space. + +Compound interest + +That is great for finding a mate. It is also exactly what makers of smartphones want for their cameras. At the moment, smartphones often have what is known as a “camera bump”—a bulge in the case to house the optics. Build a camera that mimics X. peckii’s eye and you could remove that bump. Which is what the Fraunhofer team hope to do. + +Fraunhofer is an organisation with institutes all over Germany. In this case the lead is being taken by the Institute for Applied Optics and Precision Engineering, in Jena, though other sites are involved as well. So far, the project’s researchers have succeeded in making a camera with 135 facets that is only 2mm thick but has a resolution of one megapixel. + +True, that resolution is dwarfed by the 12 megapixels available on the latest iPhone 7, but the iPhone’s camera still requires a bump even to fit into the generous dimensions of the phone’s 7.1mm-thick case. And one megapixel is only a start. The group believe that their facetVISION camera, as they call it, can be boosted to four megapixels. At that resolution it would be good not only for leisure use, but also for a number of industrial and medical applications. Besides phones, it might be fitted to probes, to small sensors and even to robots, to give them vision. + +The initial facetVISION camera was made using a vapour-deposition process similar to the one employed to make computer chips. This has limitations, and is expensive for mass-production. For high-volume applications, such as smartphones, the researchers are therefore trying to adapt the process to the way cameras for phones are made at the moment. This employs injection moulding to form the lenses; those lenses are then placed over the light-sensors in a separate operation. Using this production technology the group think it will be possible to build a facetVISION camera that has several small lenses placed next to each other. The result would be around 3.5mm thick, so would fit easily inside the case of the thinnest smartphone—and, by being able to use more powerful sensors, would boast a resolution greater than ten megapixels. + +A smartphone using this camera would have to run special software to combine the images—much as X. peckii’s brain does. But elaborate image-processing already happens in such phones, so that should not be hard. Moreover, since the multiple lenses each capture slightly different aspects of the image being snapped, lots of other tricks might be possible, too. Watch out, then, for a bug’s eye view on Facebook, Snapchat or Instagram. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21718859-series-eyelets-can-make-cameras-much-smaller-insects-eye-inspires-new/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Astronomy + +Strange signals from the sky may be signs of aliens + + +Or maybe something equally weird, but not alive + + + + + +From the print edition | Science and technology + + +Mar 16th 2017 + + + + + +ON AUGUST 24th 2001 the Parkes Observatory, in Australia, picked up an unusual signal. It was a burst of radio waves coming more or less from the direction of the Small Magellanic Cloud, a miniature galaxy that orbits the Milky Way. This burst was as brief as it was potent. It lasted less than 5 milliseconds but, during that period, shone with the power of 100m suns. It was, though, noticed by astronomers only in 2007, when they were poking around in Parkes’s archived data. As far as they can tell, it has never been repeated. + +Similar unrepeated signals have since been noted elsewhere in the heavens. So far, 17 such “fast radio bursts” (FRBs) have been recognised. They do not look like anything observed before, and there is much speculation about what causes them. One possibility is magnetars—highly magnetised, fast-rotating superdense stars. Another is a particularly exotic sort of black hole, formed when the centrifugal force of a rotating, superdense star proves no longer adequate to the task of stopping that star collapsing suddenly under its own gravity. But, as Manasvi Lingam of Harvard University and Abraham Loeb of the Harvard-Smithsonian Centre for Astrophysics observe, there is at least one further possibility: alien spaceships. + + + + + +Latest updates + + + + + +See all updates + + + +Specifically, the two researchers suggest, in a paper to be published in Astrophysical Journal Letters, that FRBs might be generated by giant radio transmitters designed to push such spaceships around. With the rotation of the galaxies in which these transmitters are located, the transmitter-beams sweep across the heavens. Occasionally, one washes over Earth, producing an FRB. + +This idea is not completely mad. Human rocket scientists have toyed with something similar, in order to overcome one of the biggest problems of spaceship design: that a craft propelled by a rocket motor must carry its fuel with it. Fuel has mass. That mass must be moved by more fuel—which adds more mass to the craft, which thus needs still more fuel. And so on. For this reason, 90% or more of a conventional rocket’s launch mass is its fuel. + +It is possible, though, to separate the fuel from the craft. That is the principle behind a solar sail, which employs the gentle pressure exerted by sunlight to propel a vehicle. A nippier alternative is to use focused light beams to provide the pressure. Yuri Milner, a Russian billionaire with a long-standing interest in science, is paying for research into such a machine. He proposes to drive a tiny probe to Alpha Centauri, one of Earth’s nearest stellar neighbours, using banks of powerful lasers. + +Dr Lingam and Dr Loeb suggest FRBs might be the result of vastly bigger takes on the same principle, except that they employ the radio portions of the electromagnetic spectrum rather than visible light. The two researchers have worked out what would be needed if the transmitter behind such a burst were solar-powered. They calculate that the amount of sunlight falling onto a planet about twice the size of Earth, and at the right distance from its star to have liquid water on its surface, would yield enough energy to accelerate a spaceship weighing a million tonnes or so to a speed close to that of light before the propulsion beam became too attenuated to propel it any faster. This would be perfect for ferrying large numbers of beings from one star system to another, as long as there was an equivalent device at the other end to slow the craft down again. + +To check whether such a machine is technologically plausible, the two researchers calculated that the necessary planet-sized array of radio transmitters could be kept cool by nothing more exotic than ordinary water. So, as far as they can see, while building such a machine would be a heroic feat of engineering, nothing in the laws of physics actually forbids it. + +Saying that the features of FRBs are consistent with their being signs of an alien space-propulsion system is not, of course, the same as saying that this is what they actually are. One early explanation of pulsars—regular cosmic radio signals first observed in 1967 was that they were alien radio beacons. They later turned out to be caused by fast-spinning neutron stars. For physicists, though, that explanation was almost as interesting. A neutron star is one whose protons and electrons have merged with each other to create neutrons. These, together with the star’s pre-existing neutrons, result in an object that has no atoms in it. Since atoms are composed mostly of empty space a neutron star, instead of being star size, is just a few kilometres across. If FRBs turn out to be even a fraction as curious as that, most astronomers would forgive them for not being artificial. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21718861-or-maybe-something-equally-weird-not-alive-strange-signals-sky-may/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Going underground + +A new job for DNA + + +Nature’s favourite information-carrying molecule is put to work mapping subterranean resources + + + + + +From the print edition | Science and technology + + +Mar 16th 2017 + + + + + +WHAT lies beneath? It is a pressing question for those prospecting for oil, planning shale-fracturing or seeking geothermal-energy sites. Underground reservoirs of water, oil and gas are connected in extensive, circuitous networks that can change with time or with drilling. Knowing those networks’ particulars can make a big difference to beliefs about how much can safely be extracted from them. + +To acquire such knowledge, drillers often use tracers. These are materials that can be injected into the ground in small amounts at one point and then detected reliably if they turn up in other places—thus showing that those places have subterranean links to the point of injection. The supply of decent tracers, however, is limited. About 100, mostly dyes or mildly radioactive materials, are in routine use. This constrains the number of possible injection points in a particular area, and thus the amount of tracking that can actually be done. Yet in many cases—for example, a long well that runs horizontally through a particular rocky stratum—more than 100 injection points might ideally be required. The numerical constraint on tracers extends, moreover, into time, as well as space, for injecting one poisons the well, as it were, thus confusing future attempts to employ the same agent. + + + + + +Latest updates + + + + + +See all updates + + + +The problem would go away, though, if a tracer could be found that was essentially the same with every use, and would thus behave in a predictable way, but was different in detail on each occasion, so that both the time and the place of its injection could be known reliably when it turned up elsewhere. And such a substance exists. It is called DNA. The four types of chemical “letter” of which this molecule is composed can be written in any order you like, giving infinite variety to individual batches of the stuff. Unfortunately, DNA is a delicate molecule, ill-equipped to survive the extreme temperatures and stresses found inside boreholes. Attempts in the 1990s, by Statoil, Norway’s state-owned fossil-fuel company, to use it as a tracer failed. But technology has moved on, and others are now trying again. + +One such is BaseTrace, in North Carolina. This firm’s engineers exploit the fact that some DNA sequences are more stable than others. Such relative stability comes from the various ways that different DNA molecules fold up—their so-called secondary structures. But any given secondary structure can have numerous underlying sequences, so there is plenty of room for multiple tracer molecules that have the same properties of stability. BaseTrace has used this to develop algorithms which work out what sequences are best for the stresses a given application presents. It has recently moved from courting the oil industry to nuclear energy, where conditions of wastewater are at their most extreme. + +Another approach to protecting tracer DNA is encapsulation. Well Genetics, a Norwegian firm, wraps the molecules in polymer coatings. The company has been testing these tiny capsules, in collaboration with oil- and gas-production companies drilling in a North Sea oilfield and in a shale-gas field in Texas. Tracesa, a British company, is also developing polymer-coated DNA. And Haelixa, a firm spun out from the Swiss Federal Institute of Technology, in Zurich, is encapsulating DNA using a different material: glass. + +Haelixa is not, however, always aiming for perfect protection. The company’s researchers have shown that the amount of damage DNA undergoes, if held in glass particles that have had holes etched in them, is a precise measure of the temperature that those particles have encountered in their underground journey. They have also gone on to show that such particles can measure acidity, too. + +These results have caused interest in the oil and gas industries, which currently lack means of taking readings of this sort beyond the limits of their boreholes, and among geothermal-energy types, the success of whose ventures depends on exploiting the varying temperatures at a given site. Last month, in partnership with Clariant Oil Services, another Swiss firm, Haelixa started testing its technology in an American oilfield. + +Haelixa’s inventive approach—turning tracers into sensors—opens a new avenue of research. Mapping what is going on underground has always been hard. Yet underground is where most natural resources lie. A better understanding of the subterranean will help those resources to be extracted more cheaply and cleanly. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21718860-natures-favourite-information-carrying-molecule-put-work-mapping/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Animal behaviour + +The ecological impact of spiders + + +Arachnids eat as much animal food as all of the humans on Earth + + + + + +From the print edition | Science and technology + + +Mar 16th 2017 + + + + + +ARACHNOPHOBIA is a common and powerful fear. Spiders sit high in the pantheon of species that have an outsized terror-to-danger ratio. But, unsettling though they may be, the eight-legged do excel at keeping six-limbed pests in check. They prey upon insects in vast quantities, while, for the most part, leaving people alone. Indeed, in 1957 William Bristowe, a British arachnologist, wondered whether British spiders might kill prey equivalent in mass to all of the people then living in Britain. + +In research published this week in the Science of Nature, Martin Nyffeler of the University of Basel, in Switzerland, and Klaus Birkhofer of Lund University, in Sweden, attempt to put some numbers on spiders’ dining habits. Starting with the available data on the mass of spiders found per square metre in Earth’s main habitat types—forests, grasslands, fields of crops and so on, they calculated the amount of prey required in each habitat to support the weight of spiders there, based on spiders’ known food requirements per unit of body weight. That done, they extrapolated their habitat-based results to the whole planet, in light of what is known about the total areas of such habitats. + + + + + +Latest updates + + + + + +See all updates + + + +Their conclusion was that there are 25m tonnes of spiders around the world and that, collectively, these arachnids consume between 400m and 800m tonnes of animal prey every year. This puts spiders in the same predatory league as humans as a species, and whales as a group. Each of these consumes, on an annual basis, in the region of 400m tonnes of other animals. + +Somewhere between 400m and 500m tonnes is also the total mass of human beings now alive on Earth. Approximately speaking, then, Bristowe was right. Arachnophobes, meanwhile, should consider this: without spiders, there would be an awful lot more other creepy-crawlies around. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21718858-arachnids-eat-much-animal-food-all-humans-earth-ecological/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Books and arts + + +20th-century poetry: The art of losing [Fri, 17 Mar 09:50] + +Popularity: Recipe for success [Fri, 17 Mar 09:50] + +Fiction: Black door [Fri, 17 Mar 09:50] + +The human imagination: Inside your head [Fri, 17 Mar 09:50] + +Music from the Middle East: High notes [Fri, 17 Mar 09:50] + +Johnson: Subversive facts [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +20th-century poetry + +The lonely life of Elizabeth Bishop + + +A new biography sheds light on Elizabeth Bishop, one of America’s finest poets + + + + + +From the print edition | Books and arts + + +Mar 16th 2017 + + + + + +Elizabeth Bishop: A Miracle for Breakfast. By Megan Marshall. Houghton Mifflin Harcourt; 365 pages; $30. + +ELIZABETH BISHOP did not like to give much away about herself. While others were writing confessional poetry, she ensured that she wrote at a distance. Poems which in original drafts mentioned characteristics of a lover were revised, sometimes as many as 17 times, in order to make the final work as polished and as impersonal as possible. She was a lesbian who never publicly admitted to the term, even as younger gay poets in the 1970s embraced it (partners were friends or even a “secretary”). She was an alcoholic who was ashamed of her drinking, but never sought long-term treatment. Poetry was a way of “thinking with one’s feelings”, but those feelings were often obscured, hidden within a parenthesis or written from the perspective of someone very different from herself. This is why she makes a fascinating subject for a biographer. + + + + + +Latest updates + + + + + +See all updates + + + +“A Miracle for Breakfast”, the first full-length biography in two decades, ably manages to bring Bishop to life. Megan Marshall, who was taught by the poet at Harvard in 1976, recalls how she could seem prim and aunt-like to her students: “a grimmer, grayer, possibly even smaller woman than I’d remembered…dressed smartly but uncomfortably.” + +Yet beneath this prim veneer of control was a rich, turbulent personality. Bishop herself was aware of the contrast, writing to one lover while she was teaching at the University of Washington in 1966: “Everyone treats me with such respect and calls me Miss B—and every once in a while I feel a terrible laugh starting down in my chest…how different I am from what they think, I’m sure.” + +Bishop’s past was indeed more complicated than many knew, even those close to her. Ms Marshall has had access to a previously unknown trove of letters that Bishop wrote to her psychiatrist and to various lovers, which became available after the death of her executor and last lover, Alice Methfessel, in 2009. These depict an unsettled, unhappy childhood. When Bishop was just three her mother was hospitalised for mental illness. She was brought up by a series of relatives. One uncle molested her and was violent, grabbing her by the hair and dangling her over of the railing of a second-floor balcony. “Maybe lots of people have never known real sadists at first hand,” Bishop later wrote to her psychiatrist. “I got to thinking that they [men] were all selfish and inconsiderate and would hurt you if you gave them a chance.” + +Bishop’s adult life was no less tumultuous. A man she briefly dated committed suicide a year after she rejected his marriage proposal. He sent her a postcard as a suicide note: “Elizabeth, Go to hell.” One of her lovers managed to crash a car carrying Bishop and one of her friends (whom she was also in love with); Bishop and her lover were fine, but her friend, who had been a painter, lost her arm and could not paint again. Bishop often drank herself into a stupor, starting “the hour before dawn” and sometimes continuing even until she was hospitalised. Her partner of over a decade, Lota de Macedo Soares, a Brazilian self-taught landscape designer, overdosed after a breakdown partly caused by Bishop’s infidelity. + +Ms Marshall’s skill prevents this narrative from becoming depressing. The Bishop that emerges from her telling may be at times morose or ashamed of her drinking (wishing, as she wrote to Methfessel, that she could be more like writers who “drink worse than I do, at least badly & all the time, and don’t seem to have any regrets or shame—just write poems about it”). But she also appears vivacious, attractive and full of life. Even the worst heartbreak brought out wonderful poetry, such as her most famous poem, “One Art”, which starts: “The art of losing isn’t hard to master;/so many things seem filled with the intent/to be lost that their loss is no disaster.” + +Three relationships in particular illuminate a lighter side to Bishop: her time with Soares in Brazil, which inspired some of her finest work (“Hidden, oh hidden/in the high fog/the house we live in,/beneath the magnetic rock…”); her later years with Methfessel; and her friendship with Robert “Cal” Lowell, the one other writer with whom she immediately felt at ease. + +Bishop first met Lowell in 1947 at a dinner party in New York. They stayed in touch for the rest of their lives, writing over 400 letters to one another. Lowell supported her and helped her find grants and postings, and praised her work. He carried around a poem of hers in his wallet as a talisman. They were so different; Lowell wrote hundreds of confessional poems, often quoting from other people’s letters to him. + +The relationship between the two is one of the joys of this book. As Ms Marshall puts it: “Elizabeth would always remember the younger poet’s endearingly ‘rumpled’ dark-blue suit and the ‘sad state of his shoes’ on the night of their first meeting, how handsome he was despite needing a haircut, and, most of all, ‘that it was the first time I had ever actually talked with someone about how one writes poetry’.” + +Ms Marshall intersperses chapters about Bishop with chapters of memoir, which touch upon her time as Bishop’s student. This gives the biography a sense of authenticity, but it interrupts the flow of the narrative. It also seems in sharp contrast with her intensely private subject. But this is a small price to pay for a biography which at last illuminates one of America’s finest, and most elusive, poets. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21718852-new-biography-sheds-light-elizabeth-bishop-one-americas-finest-poets-lonely/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The science of popularity + +The magic of making hits + + +The psychology behind and economics of pop culture + + + + + +From the print edition | Books and arts + + +Mar 16th 2017 + + + + + +Hit Makers: The Science of Popularity in an Age of Distraction. By Derek Thompson. Penguin Press; 352 pages; $28. Allen Lane; £20. + +WHAT makes a hit? Many assume it has to do with artistry or luck. Not so, says Derek Thompson, a writer and editor at the Atlantic. In his first book, “Hit Makers”, he analyses the psychology and economics of pop culture and argues that “hits”—the things that get everybody talking—are based on three rules that rely on more than creative genius alone. + + + + + +Latest updates + + + + + +See all updates + + + +First, consumers crave “familiar surprises”. Studies show that people opt for things they recognise over things they do not. Maybe there is an evolutionary explanation for this: survival taught humans that if they had seen an animal before, it had not killed them yet. This familiarity was comforting. The evidence for people’s response to recognition is everywhere: the Star Wars franchise, for example, is an amalgam of characters and themes from older films. But it remains a fine balance, as people enjoy thinking they have found something new—the “aha” moment, as Mr Thompson calls it. + +Second, going “viral” overnight is a myth. Hits rely on a series of closely connected events: a celebrity picking up a tweet and sharing it with countless followers, for example. Friends and family alone are unlikely to help you reach the scale you need (unless, of course, they are extremely influential). “Rock Around the Clock”, a rock’n’roll classic, floundered when it was first released. Yet thanks to one music-obsessed teenager and his movie-star father, the song was picked as the opening track to a notorious film called “Blackboard Jungle”, which helped it achieve international renown. + +Third, technology may evolve, but people’s longing for the popular does not. Music labels used to bribe radio stations to play their songs, thus ensuring their success. This meant the labels could dictate the hits. Today the internet offers a seemingly infinite repertoire of readily available music, yet people tend to stick to songs that other people like. One study from Columbia University found that a song at the top of the charts stayed there precisely because people assumed it was good. When the charts were inverted, those previously at the bottom achieved similar success. The quality of the song is not as important as its perceived popularity. + +Mr Thompson’s thesis might seem obvious—a fact he readily admits. Exposure and connections are important. But the extent to which nearly all blockbusters and pop sensations owe their success to this may be less clear-cut than is generally believed. Mr Thompson’s knack for supporting each point with colourful tales and examples helps make the book worthwhile. He explains how “Bal du Moulin de la Galette” by Pierre-Auguste Renoir, which is revered as one of the masterpieces of the Impressionist movement, would not have been so without Gustave Caillebotte, a fellow artist. Caillebotte died at 45 and left nearly 70 of his friends’ paintings to the French state, including several by Renoir, thus helping ensure his exposure and eventual critical acclaim. + +Readers may despair at the injustice of publicity bearing more fruit than pure talent, but there are enough unlikely examples to foster hope. Indeed, in theory, anyone with the right mix of “optimal newness”, wide reach and repeated exposure can get their lucky break. Better still, it might just be a hit. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21718855-psychology-behind-and-economics-pop-culture-magic-making-hits/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +People moving + +Fiction about migration + + +In his fourth novel Mohsin Hamid explores the migrant experience + + + + + +From the print edition | Books and arts + + +Mar 16th 2017 + + + + + +Exit West. By Mohsin Hamid. Riverhead; 240 pages; $26. Hamish Hamilton; £14.99. + +IF THE history of human civilisation is of the collapse of distance—from walking to horses to carriages to motorised transport to jet engines—then what happens when you take that thread to its logical conclusion, when it becomes possible to move from any one place on Earth to another simply by walking through a door? This is the central conceit of “Exit West”, Mohsin Hamid’s fourth novel, which is set in a world wracked by war and poverty, a world not unlike our own, in which mysterious doors allow passage from London to Namibia or from Amsterdam to Brazil. + + + + + +Latest updates + + + + + +See all updates + + + + + +In an unnamed country at war with itself live Saeed and Nadia, who in the span of a few short chapters see their world transform, without fuss, into a barbarous place of violence and brutality. When they hear about secret black doors that will spirit them away, they take their chance, arriving first at a refugee camp on the Greek island of Mykonos, and later in London, where they share a house with others fleeing third-world problems. There is not much by way of plot except constant movement and a tender—and, given the circumstances, surprisingly familiar—love story of coupling and conscious uncoupling. But plot, as has become a habit with Mr Hamid, is just scaffolding. + +It is tempting to characterise “Exit West” as magic realism. But it is better read as a sharply pointed story of migration. No matter how long the coils of razor wire or how beautiful the walls or how legion the border guards, migrants will continue to move around the world, Mr Hamid seems to be saying with his black doors. And no matter how persistent the efforts at integration or how good the intentions of migrants or how recently settled the local population, those who see themselves as natives will always see their homes and their way of life as under threat. In one of the book’s most elegant diversions, a woman is born and brought up, orphaned and married and widowed in the same house in Palo Alto. But in the course of her lifetime a new industry grows up around her, old neighbours move out and new ones move in, and she becomes the outsider, the migrant, without ever moving. Migration is not only a physical state or a voluntary one, but a universal experience. + +“Everyone migrates,” writes Mr Hamid, “because we can’t help it.” Despite the black doors of “Exit West”, the world it depicts it less magical than it is real. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21718854-his-fourth-novel-mohsin-hamid-explores-migrant-experience-fiction-about-migration/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Inside your head + +The human imagination + + +Imagination is what makes humans exceptional, says an American anthropologist + + + + + +From the print edition | Books and arts + + +Mar 16th 2017 + + + + + +The Creative Spark: How Imagination Made Humans Exceptional. By Agustín Fuentes. Dutton; 340 pages; $28. + +OF THE millions of animal species on Earth, only one has built a spaceship and flown to the Moon. In “The Creative Spark”, Agustín Fuentes, an anthropologist at the University of Notre Dame in Indiana, argues that it is the power of imagination, more than anything, that has made humans unique among the planet’s beasts. + + + + + +Latest updates + + + + + +See all updates + + + + + +That is a controversial case to make. Man’s distinctiveness has been attributed to an aptitude for violence, exceptional intelligence or a preternatural ability to co-operate. Mr Fuentes contends that this fails to take into account the full range of evidence available to researchers. Instead, he turns to niche construction, a relatively recent idea in evolutionary science that emerged in the 1980s, but one which, he says, can offer the basis of a more complete account of humanity’s ingenuity. The ecological niche that an organism occupies is the sum total of all the interactions that it has with its environment. Altering that environment, as beavers do when they build dams, for example, is niche construction. Humans, Mr Fuentes says, are “niche constructors extraordinaire”. + +The author ranges across the creative history of the human race to look at how the species has reshaped its surroundings to edge ahead of its competitors. He begins with ancient toolmaking: the slippery art of smashing particular kinds of rock together to make sharp flakes of stone. That complex process gave humans access to new sources of food. But it must also have required extensive co-operation, so that those noisily crafting the tools would not be eaten by predators. + +For those who see “man, the hunter” and “woman, the nurturer” when they imagine life in the distant past, Mr Fuentes points out that there is no evidence from archaeology to support the idea that roles were assigned according to gender or age. He also disputes a view, recently popularised in “The Better Angels of Our Nature” by Steven Pinker, that mankind has a natural lust for violence which has only recently been tamed. Proponents of that notion have largely ignored evidence more than 14,000 years old, according to Mr Fuentes. He concludes that, on the contrary, the incidence of murder and warfare has increased over the past 5,000 years. + +Mr Fuentes’s discussion of the ancient origins of science is, perhaps, the weakest part of his book. He asserts that early humans must have had a primitive understanding of the laws of physics to throw a spear accurately. Yet no one ascribes scientific thinking to archerfish because they are able shoot down insects by spitting jets of water at them. Other examples of early scientific thinking could better be described as forms of engineering, a process of trial and error that has altogether more ancient roots. The book’s final chapter, on what humans today can learn from the species’ creative past, is also a little glib. Overall, its central thesis—that the power of the imagination alone is responsible for human success—is not entirely convincing. + +That said, “The Creative Spark” is strong on man’s imaginative accomplishments and offers an important corrective to the skewed debate on human nature. A species that, uniquely, ponders its own exceptionality will surely be fascinated by it. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21718851-imagination-what-makes-humans-exceptional-says-american-anthropologist-human/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +High notes + +Sensational music from Syria + + +How the civil war is helping to spread Syrian music across the globe + + + + + +From the print edition | Books and arts + + +Mar 18th 2017 + + + + + +“WE LEFT our native land, completely unaware of the biggest gift our country had bestowed on us: the gift of music.” So said Basel Rajoub, a Syrian composer and saxophone-player, when he and his ensemble, Soriana, launched their first CD in exile in 2013. A graceful meld of jazz and Middle Eastern improvisation, it was posted online so that fans could stream it free of charge. A neater expression of the truth that music lies at the heart of the Syrian psyche would be hard to find. + +Six years after pro-democracy demonstrations plunged Syria into civil war, many of its musicians have fled abroad where they are propagating their musical culture. The Morgenland festival in Osnabrück, in north-west Germany, has long been powered by Syrian stars such as Kinan Azmeh, a clarinettist, Muslim Rahal, a ney flautist, and a mesmerising singer named Ibrahim Keivo. On March 16th, as The Economist went to press, they were set to unveil a three-day festival of Syrian music at the new Elbphilharmonie concert hall in Hamburg. The city has a large population of Middle Eastern immigrants, and Christoph Lieben-Seutter, general director of the Elbphilharmonie, is determined to make them feel welcome. + + + + + +Latest updates + + + + + +See all updates + + + + + +The festival, entitled “Salaam Syria”, is a bold experiment in cross-cultural collaboration. A German-Syrian choir specially created for the event will sing entirely in an Arabic folk style. The NDR Bigband, a famous brass ensemble, is to share the stage for a jazz-fest with the Syrian Bigband, which combines Western brass with the oud lute, ney and qanun zither. Meanwhile fusions of Western jazz and Middle Eastern folk music have united leading instrumentalists such as Michel Godard, a French tuba-player, and Djivan Gasparyan, a master of the duduk oboe whose mournful sound can be heard all round the eastern Mediterranean. But the Trump travel ban has also had an effect: one concert had to be cancelled because its Syrian musicians, who are based in America, did not dare leave for fear of not being allowed back into the country. + +“The Voice of Ancient Syria” concert will include Mr Keivo’s celebrated “Lamento” in his own variant of maqam, the musical style that links Syria with the rest of the Middle East. Maqam is microtonal music, which allows the pitch to slide between the Western intervals in a way that lends itself readily to surges of emotion. Mr Keivo is from an Armenian family that left Turkey in 1915, and he grew up in a part of northern Syria where many cultures mingled. He trained in Aleppo, and only fled Syria in 2014 when IS was approaching his village and his family were put in danger. Accompanying himself on the lute, his singing pours out with ecstatic power in a mixture of Arabic, Kurdish and Armenian. + +The other high point of this concert will be when Dima Orsho, a Syrian composer-soprano, joins Kai Wessel, a German countertenor, for a performance of her deeply moving symphonic poem, “Those Forgotten on the Banks of the Euphrates”, accompanied by musicians from Hamburg with players from the Syrian Expat Philharmonic Orchestra. Created in Germany in 2015, but drawing its players from the Syrian diaspora throughout Europe, the orchestra is further evidence of Syrian musicians’ adaptability. The same is true of “Refugees for Refugees”, a CD from the Belgian Muziekpublique label that brings together virtuoso musicians in flight from countries across the Middle East and Central Asia, half of them from Syria. + +Meanwhile, Tafahum, a Syrian “contemporary fusion” ensemble has been formed in London, under the direction of Louai Alhenawi (pictured), a composer and maestro of the ney. Conservatoire-trained on the Western flute as well as on its Oriental equivalent, he is making a point of marrying the two traditions. His dazzling party piece—now imitated by other virtuosi—is to play “Flight of the Bumblebee” by Nikolai Rimsky-Korsakov on the valveless, and much more difficult, ney. The flute’s icy purity is replaced by the richer timbre of the wooden ney. + +Syrian instrumentalists who have been trained in the Western classical tradition have one obvious escape route—they can pick up orchestral jobs anywhere in the Western world. And if they are soloists, like Syria’s star pianist Riyad Nicolas, they can give recitals; he is now championing the music of Syrian composers in America, and performing on behalf of refugee charities. And despite all the odds, Western classical music also lives on in Syria. Until 2011, Damascus was the most liberally multicultural city in the Middle East. The Syrian National Symphony Orchestra has inevitably lost many of its players, but under its conductor, Missak Baghboudarian, it still flies the flag. Last month he presided over a weeklong organ festival in Damascus, followed by a choral festival of Western music with choirs from five Syrian cities. + +Syrian music, even at its best, was never one of the pre-eminent genres during the “world music” CD boom of the 1990s. It was always upstaged by flashier stuff from Mali and Cuba. But in maqam, its purest form, it has a richness and integrity which sets it apart from other national styles, and those same qualities are also to be found in Syrian performances of music in the Western classical tradition. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21718856-how-civil-war-helping-spread-syrian-music-across-globe-sensational-music/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Johnson + +Subversive facts + + +Describing language objectively need not meaning doing so dispassionately + + + + + +From the print edition | Books and arts + + +Mar 16th 2017 + + + + + +SAMUEL JOHNSON, the lexicographer after whom this column is named, famously defined his profession as being that of “a harmless drudge”. In fact, he was neither harmless nor a drudge, but a wit unafraid to provoke, debate and irritate in the course of writing the first great dictionary of the English language. + +But Johnson’s fame has never dispelled the idea that the lexicographer is a humdrum, bookish type who reads for precision and who dutifully approves the “right” meanings of “good” words while preventing “wrong” definitions and “bad” words from entering the dictionary. Lexicographers still struggle, largely in vain, to dispel this myth about their role. They put the words that people actually use into the dictionary, good ones and bad ones, new ones and old ones. + + + + + +Latest updates + + + + + +See all updates + + + +In a new book, “Word by Word”, Kory Stamper, a lexicographer for Merriam-Webster, a reference-book publisher, duly carries on the tradition, reminding readers that a lexicographer is a chronicler, not a guardian. She says that a chronicler (like Johnson) need not be meek and dispassionate. Foul-mouthed, opinionated and funny, Ms Stamper has for years written a witty blog called “Harmless Drudgery”. “Word by Word” devotes chapters to each element of a lexicographer’s work, from defining politicised words (like “marriage”) to dealing with irate readers (who never tire of asking why this or that word was let into the dictionary) to dealing with vulgarity, in a chapter named after a female dog. + +What is clear is just how often lexicographers must make hard calls about unclear facts. The reader expecting august authority will be disturbed to find that it is not always clear even what part of speech a word belongs to. “But” is usually a conjunction, yet Ms Stamper is not fully sure that it is still one in the sentence “What can they do but try?” A colleague confidently proclaims “but” to be a preposition here. Senior editors sigh, ruling that definitions are more important than grammar in a dictionary, and (rightly) noting that the eight parts of speech into which words are sorted in traditional grammars are not enough for English. + +Lexicography is hard. If it were easy, no one would need a dictionary: meaning and use would be obvious to all. But even after years of reading and defining—or as Ms Stamper would put it, especially after years of reading and defining—the lexicographer finds out how slippery language can be. It constantly confounds prejudices (including the lexicographers’ own) and refuses to be pinned down. All dictionary-writers can do, in the end, is work hard to describe how a word is used out in the world. If they tried to let their own personal sense of right and wrong come into it, there would be no way of judging between two editors who disagree, or knowing what to do when an old belief runs against the evidence. + +Yet judgment has its place. Ms Stamper frequently makes online videos for Merriam-Webster’s “Ask the Editor” series. One of these is about the plural of “octopus”. Many people will rush to show off their Latin: it must be “octopi”. In fact, the –us ending is misleading; “octopus” originally comes from Greek (pous is foot). If you really want to flaunt your classics training, you should call the eight-footed creatures “octopodes”. But the best bet is to use English’s own rules for creating plurals, and call them “octopuses”, Ms Stamper rules, and don’t let anyone call you “an ignorant slob” for doing so. + +Ms Stamper has found the right company to work for. Merriam-Webster’s young social-media team has carried on a kind of subversive empiricism. Its Twitter account, which normally tweets out randomly chosen definitions, will occasionally weigh in on the day’s news. When Kellyanne Conway, a senior adviser to Donald Trump, explained in January that the president sometimes avails himself of “alternative facts”, Merriam-Webster slyly tweeted its definition of “fact”. When Mr Trump tweeted first “I hear by demand”, then quickly changed that to “I hearby demand”, Merriam-Webster simply tweeted its definition of “hereby”. + +Lauren Naturale, who runs Merriam-Webster’s social-media accounts, says that the newly popular Twitter feed reflects the tone of the office: “wildly enthusiastic about language; jokey, friendly, but nobody’s fool”. That is the best way to go about language punditry generally. Sticking relentlessly to facts doesn’t make you a drudge; much less does it make you harmless. Facts can be subversive things. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21718850-describing-language-objectively-need-not-meaning-doing-so-dispassionately-subversive-facts/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Obituary + + +Gustav Metzger: Art as weapon [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Art as weapon + +Obituary: Gustav Metzger died on March 1st + + +The inventor of auto-destructive art was 90 + + + + + +From the print edition | Obituary + + +Mar 18th 2017 + + + + + +IN A puffy bomber-jacket and a gas mask, Gustav Metzger started on his work of art on London’s South Bank in 1961. He had written out his own terse orders: “Acid action painting. Height 7ft. Length 12ft. 6in. Depth 6ft. Materials: nylon, hydrochloric acid, metal. Technique. 3 nylon canvasses coloured white black red are arranged behind each other, in this order. Acid is painted, flung and sprayed onto the nylon which corrodes at point of contact within 15 seconds.” That was it. The small curious crowd then dispersed, reminded—he hoped—of the transience of art and the mindless violence of man. + +Even simpler was “Construction with glass”. “Materials: glass, metal, adhesive tape. Technique. The glass sheets suspended by adhesive tape fall on to the concrete ground in a pre-arranged sequence.” Crash, the end. His dreams were longer-term, though. He would get large, thin steel sheets made in a factory, then installed outside where, over ten years, they would rust away. Or he would build a structure of 10,000 geometric forms from which, continuously, one form would be removed… + + + + + +Latest updates + + + + + +See all updates + + + +Art that consumed itself, auto-destructive as he called it, was his own idea. It led on to an outbreak of performance art that is still lively, as well as to the briefer punk fashion for smashing guitars onstage. But he insisted, whatever the many scoffers said, that it was not just about destruction. It was also about creating ideas beyond the chaos of “the obscene present”. His acid action painting, for example, had revealed through the shredded canvases (in anarchy’s colours) new views of St Paul’s. “Construction with glass” had made new patterns from random breakages. Through the 1960s and 1970s he worked with heat-sensitive liquid crystals and compressed air, showing how dissolution and fresh formations existed side by side. + +That said, there was a lot of anger in him. His soft German accent did not suggest it, but his eyes burned. He was furious at consumerism, capitalism, governments, scientists, economists and all war-makers. He hated man’s despoiling of the planet (hence much work with cardboard, rubbish and found objects) and despaired at the threat of nuclear obliteration. Against all this he had tried civil disobedience, joining the anti-nuclear movement in the late 1950s and going to prison for it, but at the same time—influenced by his artist-teacher David Bomberg—he was realising that art itself could be a social force. It could be a way of fighting, perhaps now the only one dissenting humans had. The last paintings he did, before he turned to sharper materials, were of a household table gradually morphing into a mushroom cloud. + +The roots of all this lay in his first 12 years. He had spent them as a Jewish boy in Nuremberg, the city of Nazi rallies, where the polished parading grew more menacing each year. As his rejection of militarism grew, he found refuge in the forests round the city: Nature against the forces of destruction. Spirited away in the Kindertransport in 1939, while most of his family were killed in Buchenwald, he became a stateless person, wandering round England while filling his brain with Trotsky. He would be a roving revolutionary, he thought. The thought persisted; he remained stateless, never married, tended to vanish, had no telephone, carted round carrier bags full of papers, and with his straggly beard and bald head could well be taken for an anarchist, or a Bolshevik. + +The art establishment largely ignored him until the mid-1990s, when his work began to seem influential. To him the art market was the sworn enemy, a place where modernism was manipulated for profit. In 1974 he called for an artists’ strike, and in 1977 stopped working or promoting his work for three years. No one joined him. In 2007 he demanded that artists should stop flying to biennales abroad. Though he had often depended on private shows and supporters himself, it was uncomfortable. As a last-minute, desperate, subversive act against human stupidity and cruelty, art had to be public. Everyone had to see it. + +He was one of the first to try art with computers, but soon fell out with them. Cybernetics interested him more. One of his last works involved a robot taking instructions from electrical readings in his brain; the robot bored a neat hole in a block of stone. This intrigued him, because he was increasingly concerned by the void, physical and mental, that could follow destruction. He fretted that, because of pollution and development, children and artists of the future would not know forests as he had done. They would not even have the memory to comfort or inspire them. + +Memory and shock + +To battle this not-knowing he produced two particular works. “Flailing Trees” featured 21 willows stuck in concrete upside down, their dead roots screaming ecological disaster. “Historic Photographs” was a series of over-familiar images of death and war, each one hidden behind a curtain, wooden slats or a steel plate. One image, of Jews on their knees scrubbing the streets of Vienna, could be seen only by crawling over it. Another, of the ramp at Auschwitz, was so enlarged that the viewer was left, like the new arrivals, fearful and confused. He meant the images to shock and challenge all over again: as if the public, like him, had passed through pain themselves, rather than through art. + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/obituary/21718837-inventor-auto-destructive-art-was-90-obituary-gustav-metzger-died-march-1st/print + + + + + +| Section Menu | Main Menu | + + + + + +| Main menu | Previous section | + +* * * + + + + + +Economic and financial indicators + + +Interactive indicators [Fri, 17 Mar 09:50] + +Output, prices and jobs [Fri, 17 Mar 09:50] + +Trade, exchange rates, budget balances and interest rates [Fri, 17 Mar 09:50] + +The Economist commodity-price index [Fri, 17 Mar 09:50] + +Employment outlook [Fri, 17 Mar 09:50] + +Markets [Fri, 17 Mar 09:50] + + + + + +* * * + + + +| Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21718864/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Output, prices and jobs + + + + + +From the print edition | Economic and financial indicators + + +Mar 18th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21718879-output-prices-and-jobs/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +From the print edition | Economic and financial indicators + + +Mar 18th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21718875-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Economist commodity-price index + + + + + +From the print edition | Economic and financial indicators + + +Mar 18th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21718880-economist-commodity-price-index/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Employment outlook + + + + + +From the print edition | Economic and financial indicators + + +Mar 18th 2017 + + + + + +A survey from Manpower, an employment-services firm, showed that in most countries payrolls are expected to increase in the second quarter of this year. Taiwan’s labour market looks buoyant: almost a third of employers surveyed say they expect to hire more people. Although hiring expectations in India are at their lowest since the third quarter of 2005, confidence remains high relative to many other countries. A sense of uncertainty prevails among employers in China—nearly two-thirds say they don’t know how their payrolls will change in the next quarter. Employers in recession-hit Brazil expect to shed more workers in the second quarter, but the labour market is stronger than it was a year ago. + + + + + +Latest updates + + + + + +See all updates + + + + + +More airports are rolling out facial recognition technology + + + + +Gulliver8 hours ago + + + + + +What the president’s spending plans reveal + + + + +Democracy in America9 hours ago + + + + + +Dutch election results + + + + +Graphic detail10 hours ago + + + + + +The hole in Western finances + + + + +Buttonwood's notebook11 hours ago + + + + + +Foreign reserves + + + + +15 hours ago + + + + + +How Australia has gone 25 years without a recession + + + + +The Economist explains19 hours ago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21718882-employment-outlook/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Markets + + + + + +From the print edition | Economic and financial indicators + + +Mar 18th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21718874-markets/print + + + + + +| Section Menu | Main Menu | + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.03.25.txt b/homeworks/B20769/homework1/data2/2017.03.25.txt new file mode 100644 index 0000000..8f79164 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.03.25.txt @@ -0,0 +1,6078 @@ +星期五, 三月 24, 2017 + + + + +The world this week 3 + +Leaders 5 + +Letters 1 + +Briefing 1 + +United States 7 + +The Americas 4 + +Asia 6 + +China 1 + +Middle East and Africa 5 + +Europe 5 + +Britain 7 + +International 2 + +Special report 8 + +Business 7 + +Finance and economics 7 + +Science and technology 5 + +Books and arts 6 + +Obituary 1 + +Economic and financial indicators 6 + + + + + +章节 Leaders + + + + + +The world this week + + +Politics this week + +Business this week + +KAL's cartoon + +章节 Leaders + + + + + +文章 章节 下一项 + + + + + +Politics this week + + + + +Mar 23rd 2017 + + + + + +A terrorist attacked central London. The British-born man drove a car along the pavement across Westminster Bridge, killing at least two people and leaving around 40 injured. He then entered the grounds of Parliament, the heart of Britain’s democracy, and fatally stabbed an unarmed policeman before being shot dead. This “marauding” method of terror attack—using a vehicle to mow people down in a crowded area—was similar to atrocities carried out by Islamists last year in France and Germany. See article. + +The British government announced that it had informed the European Council of its intention to invoke Article 50 of the Lisbon treaty on March 29th, triggering the legal request to leave the EU. There is still little clarity from the government about its intentions, and voters appear to be confused, too. A survey this week showed that both Leave and Remain supporters want to maintain free trade. But that will be hard if the government does not bend on freedom of movement for EU migrants. See article. + + + +Angela Merkel, the German chancellor, visited Washington for a meeting with Donald Trump. Despite moments of tension—such as when Mr Trump appeared to refuse to shake her hand—German media felt that the meeting went well. Mr Trump tweeted that media reports of the event were “fake news”. + +The electoral fortunes of Emmanuel Macron, an independent candidate in the French presidential election, were boosted after a nearly four-hour long television debate. Polls show that in a second-round run-off he would easily defeat Marine Le Pen, the leader of the anti-immigrant National Front. See article. + +Jeroen Dijsselbloem, the Dutch head of the Eurogroup of finance ministers, implied that southern European states had spent the money they borrowed during the euro crisis on “drinks and women”. António Costa, the Portuguese prime minister, called for him to resign. + +Taxin’ Thaksin + +The Thai government said it had discovered a “miracle of law” that would allow it to claim $350m in taxes from Thaksin Shinawatra, a deposed prime minister now living in exile. Mr Thaksin denies that any tax is owed. + +North Korea successfully tested a powerful new engine to be used in its missiles. But a separate test appeared to go wrong when the missile exploded just after launch. + + + +The Bharatiya Janata Party, which runs India’s national government, selected Yogi Adityanath to be chief minister of the country’s most populous state, Uttar Pradesh. The holy man is a divisive figure, having campaigned for the construction of a Hindu temple on the site of a demolished mosque, and for describing assertive women as “demons”. See article. + +A scandal deepened in Japan regarding a nationalist kindergarten that has been accused of racism but has benefited from the patronage of public officials. The school’s principal said that the wife of the prime minister, Shinzo Abe, had given a donation on his behalf. Mr Abe denied doing so. + +Rex Tillerson paid his first visit to China as America’s secretary of state. Before his arrival, he said the two countries were at a “historic moment” in their relationship, and needed a “fresh conversation” about it. But the visit did not appear to narrow differences between China and America over how to deal with North Korea. + +No, Mr President + +In extraordinary testimony to Congress, James Comey, the head of the FBI, confirmed that his agency was investigating Russian links to Donald Trump’s campaign. He also dismissed an allegation that Mr Trump was wiretapped at the behest of Barack Obama. Earlier, the White House said it would “not repeat” its claim that GCHQ, Britain’s intelligence-gathering agency, had assisted in the supposed spying. Mr Trump feebly blamed Fox News as the claim’s source. + +Neil Gorsuch’s nomination hearing in the Senate to be a justice on the Supreme Court started smoothly. Democrats asked tough questions; Mr Gorsuch emphasised his independence. When asked about abortion he said he would have “walked out the door” if Donald Trump had asked him to overturn Roe v Wade as a condition of his appointment. + +Feeling the pinch + +The 68 countries involved in the coalition against Islamic State met in Washington to review progress, as fighters supported by American special forces moved ever closer to Raqqa, the capital of the self-styled caliphate, which is now almost surrounded. In Iraq, the army, backed by coalition air power, made gains in Mosul. + +Syrian rebels launched an attack on a suburb of Damascus, the first large-scale fighting so close to the capital for four years. + +Israel shot down a Syrian missile using its new advanced Arrow system. The missile had been fired at an Israeli jet that had attacked sites in Syria where weapons were being moved too close for comfort to Israel’s border. + +Activists in Zimbabwe took to the streets demanding electoral reforms in a bid to avert ballot-rigging in a national vote scheduled for 2018. They demanded the abolition of the state-appointed electoral commission. Some opposition groups have called for the vote to be supervised by the UN. + +Love me tender + + + +China suspended meat imports from Brazil after Brazilian police raided several meatpacking plants that sold unhygienic produce. Brazil is a big exporter of meat and China is its biggest customer. The EU and South Korea also restricted some imports. With no appetite for another hit to the recession-bound economy, Michel Temer, Brazil’s president, invited diplomats and journalists to dinner at a steakhouse. See article. + +Peru suffered its worst storms in decades, caused by El Niño-type currents off its coast. With its cities caught off guard, at least 75 people were killed and 100,000 left homeless. See article. + +A rare insight into Cuban public opinion was published by NORC at the University of Chicago. Surveyed late last year, only 13% of Cubans think the economy is doing well. Two-thirds want more private ownership of business and 56% want to start their own firm. Perhaps not surprisingly, over half said they would leave the country if they could. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21719518-politics-week/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Business this week + + + + +Mar 23rd 2017 + + + + + +Uber launched a charm offensive, holding its first press conference since a wave of bad publicity crashed over the firm. Arianna Huffington, a member of the board, backed Travis Kalanick, the beleaguered founder and chief executive, but said there can be “no room…for brilliant jerks” in the future. A few days earlier the executive in charge of promoting Uber’s image resigned acrimoniously, saying that his beliefs were “inconsistent” with what he experienced at the firm. See article. + +A messy web + + + +Google took steps to give advertisers some control over the placement of ads on YouTube after it emerged that ads from blue-chip companies had been found next to extremist content. Some big advertisers threatened to pull their business. Underlining the conundrum of policing the internet, the EU’s digital commissioner criticised a proposed German law that would slap a €50m ($54m) fine on social networks that fail to delete hate speech or fake news. + +In a nod to the new realpolitik, the G20 dropped a pledge to “resist all forms of protectionism” from the communiqué of a meeting of finance ministers. The phrase had been regularly inserted in G20 statements and was considered non-contentious, but the American delegation sought its removal. Steven Mnuchin, America’s treasury secretary, said the administration “couldn’t be happier with the outcome”. + +Two days after the meeting German economic officials hit back at American complaints that Germany’s giant trade surplus is a problem. The head of the country’s Council of Economic Experts said that “problems can arise on both sides: surpluses and deficits.” + +A biotech company in San Francisco published positive results from a clinical trial for a new opioid painkiller that claims to be less addictive than the prescription pills linked to an addiction epidemic that is sweeping America. Nektar Therapeutics’ share price shot up by 40% after a study found that its drug dampens associated feelings of euphoria. + +America and Britain banned passengers from taking laptops and other large electronic devices aboard flights that originate in several Middle Eastern and north African countries, prompted by the threat of a terror attack from explosives hidden in such devices. The American and British restrictions differ regarding the countries and airlines affected. See article. + +The cut-throat competition among India’s telecoms companies spurred another merger of former rivals when Vodafone agreed to combine its business in the country with Idea Cellular, creating India’s biggest provider of mobile-phone services. The market in India was jolted last year by the entry of Jio, a super-cheap carrier that supplies a six-month free service. Last month Bharti Airtel, the former number one, struck a deal to buy the Indian operations of Norway’s Telenor. + +AkzoNobel, a Dutch maker of paints and coatings and owner of the Dulux brand, swiftly rejected a sweetened takeover offer of €22.4bn ($24.1bn) from PPG, an American rival. It said the new price still did not reflect the “significant uncertainties and risks” to its shareholders of a deal, such as any antitrust issues that may arise. Elliott Management, an American activist hedge fund with a small stake in Akzo, threatened to use the company’s bylaws to call for a shareholder meeting. + +The pounding to your pocket + + + +Consumer prices in Britain rose by 2.3% year on year in February. That was up from 1.8% in January and the steepest monthly increase in inflation since October 2012. Higher transport costs were blamed, but food prices rose for the first time in three years. The slide in the pound since voters decided last June to leave the EU has made imports more expensive. Inflation is now above the Bank of England’s target of 2%. At its recent meeting, one of the central bank’s policymakers voted to raise interest rates because of inflationary pressures. + +Admitting what some analysts think is inevitable, the owner of the Sears and Kmart retail chains in America said that “substantial doubt exists” about whether it can continue as a going concern. Sears Holdings reported a $2.2bn loss last year. It has cashed in a few investments to stay afloat. + +A hissing sound + +American stockmarkets had a rocky week. The S&P 500, Dow Jones Industrial Average and NASDAQ indices recorded their biggest daily falls of the year so far, as the wrangling in Washington over the health-care bill led investors to fret that Donald Trump’s low-tax, low-regulation economic agenda may not be easy to pass. One monthly survey of fund managers found that a net 34% think shares are overvalued, the highest proportion since 2001. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21719513-business-week/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +KAL's cartoon + + + + +Mar 23rd 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21719510-kals-cartoon/print + + + +上一项 文章 章节 下一项 + + + + + +The world this week 章节 Letters + + + + + +Leaders + + +Corporate ambitions: Amazon’s empire + +The future of the European Union: How to save Europe + +Donald Trump and multilateralism: China first + +Scientific publishing: Breaking free + +Open banking: Vaulting ambition + +The world this week 章节 Letters + + + + + +文章 章节 下一项 + + + + + +Corporate ambitions + +Amazon, the world’s most remarkable firm, is just getting started + + +Amazon has the potential to meet the expectations of investors. But success will bring a big problem + + + +Mar 25th 2017 + + + + + +AMAZON is an extraordinary company. The former bookseller accounts for more than half of every new dollar spent online in America. It is the world’s leading provider of cloud computing. This year Amazon will probably spend twice as much on television as HBO, a cable channel. Its own-brand physical products include batteries, almonds, suits and speakers linked to a virtual voice-activated assistant that can control, among other things, your lamps and sprinkler. + +Yet Amazon’s shareholders are working on the premise that it is just getting started. Since the beginning of 2015 its share price has jumped by 173%, seven times quicker than in the two previous years (and 12 times faster than the S&P 500 index). With a market capitalisation of some $400bn, it is the fifth-most-valuable firm in the world. Never before has a company been worth so much for so long while making so little money: 92% of its value is due to profits expected after 2020. + + + +That is because investors anticipate both an extraordinary rise in revenue, from sales of $136bn last year to half a trillion over the next decade, and a jump in profits. The hopes invested in it imply that it will probably become more profitable than any other firm in America. Ground for scepticism does not come much more fertile than this: Amazon will have to grow faster than almost any big company in modern history to justify its valuation. Can it possibly do so? + +It is easy to tick off some of the pitfalls. Rivals will not stand still. Microsoft has cloud-computing ambitions; Walmart already has revenues nudging $500bn and is beefing up online. If anything happened to Jeff Bezos, Amazon’s founder and boss, the gap would be exceptionally hard to fill. But the striking thing about the company is how much of a chance it has of achieving such unprecedented goals (see article). + +A new sort of basket-case + +This is largely due to the firm’s unusual approach to two dimensions of corporate life. The first of these is time. In an era when executives routinely whinge about pressure to produce short-term results, Amazon is resolutely focused on the distant horizon. Mr Bezos emphasises continual investment to propel its two principal businesses, e-commerce and Amazon Web Services (AWS), its cloud-computing arm. + +In e-commerce, the more shoppers Amazon lures, the more retailers and manufacturers want to sell their goods on Amazon. That gives Amazon more cash for new services—such as two-hour shipping and streaming video and music—which entice more shoppers. Similarly, the more customers use AWS, the more Amazon can invest in new services, which attract more customers. A third virtuous circle is starting to whirl around Alexa, the firm’s voice-activated assistant: as developers build services for Alexa, it becomes more useful to consumers, giving developers reason to create yet more services. + +So long as shareholders retain their faith in this model, Amazon’s heady valuation resembles a self-fulfilling prophecy. The company will be able to keep spending, and its spending will keep making it more powerful. Their faith is sustained by Amazon’s record. It has had its failures—its attempt to make a smartphone was a debacle. But the business is starting to crank out cash. Last year cashflow (before investment) was $16bn, more than quadruple the level five years ago. + +If Amazon’s approach to time-frames is unusual, so too is the sheer breadth of its activities. The company’s list of current and possible competitors, as described in its annual filings, includes logistics firms, search engines, social networks, food manufacturers and producers of “physical, digital and interactive media of all types”. A wingspan this large is more reminiscent of a conglomerate than a retailer, which makes Amazon’s share price seem even more bloated: stockmarkets typically apply a “conglomerate discount” to reflect their inefficiencies. + +Many of these services support Amazon’s own expansion and that of other companies. The obvious example is AWS, which powers Amazon’s operations as well as those of other firms. But Amazon also rents warehouse space to other sellers. It is building a $1.5bn air-freight hub in Kentucky. It is testing technology in stores to let consumers skip the cash register altogether, and experimenting with drone deliveries to the home. Such tools could presumably serve other customers, too. Some think that Amazon could become a new kind of utility: one that provides the infrastructure of commerce, from computing power to payments to logistics. + +A giant cannot hide + +And here lies the real problem with the expectations surrounding Amazon. If it gets anywhere close to fulfilling them, it will attract the attention of regulators. For now, Amazon is unlikely to trigger antitrust action. It is not yet the biggest retailer in America, its most mature market. America’s antitrust enforcers look mainly at a firm’s effect on consumers and pricing. Seen through this lens, Amazon appears pristine. Consumers applaud it; it is the most well-regarded company in America, according to a Harris poll. (AWS is a boon to startups, too.) + +But as it grows, so will concerns about its power. Even on standard antitrust grounds, that may pose a problem: if it makes as much money as investors hope, a rough calculation suggests its earnings could be worth the equivalent of 25% of the combined profits of listed Western retail and media firms. But regulators are also changing the way they think about technology. In Europe, Google stands accused of using its clout as a search engine to extend its power to adjacent businesses. The comparative immunity from legal liability of digital platforms—for the posting of inflammatory content on Facebook, say, or the vetting of drivers on Uber—is being chipped away. + +Amazon’s business model will also encourage regulators to think differently. Investors value Amazon’s growth over profits; that makes predatory pricing more tempting. In future, firms could increasingly depend on tools provided by their biggest rival. If Amazon does become a utility for commerce, the calls will grow for it to be regulated as one. Shareholders are right to believe in Amazon’s potential. But success will bring it into conflict with an even stronger beast: government. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21719487-amazon-has-potential-meet-expectations-investors-success-will-bring-big/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Europe at 60 + +Can Europe be saved? + + +If it is to survive, the European Union must become a lot more flexible + + + +Mar 25th 2017 + + + + + +ON MARCH 25th 1957, with the shadow of the second world war still hanging over them, six European countries signed the founding treaty of a new sort of international club. The European Union, as the club came to be called, achieved success on a scale its founders could barely have imagined, not only underpinning peace on the continent but creating a single market as well as a single currency, and bringing into its fold ex-dictatorships to the south and ex-communist countries to the east, as it expanded from six members to 28. Yet even as today’s European leaders gather in Rome this weekend to celebrate the 60th anniversary, they know their project is in big trouble. + +The threats are both external and internal. Internally, the flaws that became glaringly evident in the euro crisis have yet to be fixed. Prolonged economic pain has contributed to a plunge in support for the EU. Populist, anti-European parties are attacking the EU’s very existence—not least in France, where Marine Le Pen is doing uncomfortably well in the presidential campaign, even if the National Front leader is unlikely to win in May. The most dramatic result of the anti-EU backlash so far is Brexit. Britain’s prime minister, Theresa May, will not be in Rome for the birthday party; on March 29th she plans to invoke Article 50 of the EU treaty to start the Brexit process. Negotiations over Britain’s departure will consume much time and energy for the next two years; losing such a big member is also a huge blow to the club’s influence and credibility. + + + +The external pressures are equally serious. The refugee crisis has abated, but mainly thanks to a dodgy deal with Turkey. A newly aggressive Russia under Vladimir Putin and, in Donald Trump, an American president who is unenthusiastic about both the EU and NATO, make this a terrible time for Europe to be weak and divided. That a project set up to underpin Europe’s post-war security should falter at the very moment when that security is under threat is a bitter irony. It is also a reminder of how much is at stake if Europe fails to fix itself. + +Never-closer union + +The traditional response of EU-enthusiasts to such challenges is to press for a bold leap towards closer union. The euro needs this if it is to succeed, they argue. Equally, they say, more powers ought to shift to the centre to allow the EU to strengthen its external borders and ensure that it speaks with one loud voice to the likes of Mr Putin and Mr Trump. Yet the evidence is that neither European voters nor their elected governments want this. If anything, public opinion favours the reverse. + +If ever-closer union is not possible, another Brussels tradition is simply to muddle through. The euro crisis is past its worst, immigration has peaked and Brexit will be managed somehow. If, after this year’s elections, Emmanuel Macron is France’s president alongside either Angela Merkel or Martin Schulz as Germany’s chancellor, the club would be under staunchly pro-EU leadership. Yet muddling along has risks of its own. A renewed financial crisis that upset the euro again, or the election of another government committed to a referendum on EU or euro membership, could tear the union apart. + +Is there a better alternative? The answer, as our special report argues, is to pursue, more formally than now, an EU that is far more flexible. In Euro-speak, this means embracing a “multi-tier” system, with the countries of a much wider Europe taking part to different degrees in its policies—and able to move from one tier to another with relative ease. + +The great British break-off + +There has recently been a flurry of interest in the notion of a “multi-speed” Europe. But what most EU leaders mean by the term is that core members should be able to pursue common policies in areas like defence, fiscal or welfare policy; it implies that all countries are moving towards the same destination. A broader, “multi-tier” Europe would find a place for non-members as well. The continent consists of 48 countries and 750m people, not just the 28 countries and 510m people in the union, still less the 19 and 340m in the euro. + +The core of Europe will be those countries that share the single currency. To solve the euro’s ills, they need more integration and shared institutions—from a proper banking union to a common debt instrument. The next tier would comprise a looser group than now of EU members that are not ready to accept the sacrifice of sovereignty needed to join the euro, which some will not do for many years, and may never. + +Beyond that a multi-tier Europe should accommodate widely differing countries. That means a changed mindset more than changed treaties: in the language of Eurocrats, accepting a menu that is à la carte, not prix fixe. This is anathema in Brussels, where the idea that you can pick and choose the bits of the EU that you like is frowned upon, but it is what Europeans increasingly want. Countries like Norway or Switzerland may wish to be closely bound to the European single market. Others such as Britain may not be ready to accept the single market’s rules, but still wish to trade as freely as possible with the EU. They might seek a bigger role in other areas such as defence and security. And places like Turkey, the western Balkans, Ukraine and Georgia might prefer a similar associated status instead of today’s unsatisfactory situation, where they are told they are eligible to be full members but know they will never be allowed to join. + +To work, a multi-tier Europe should be pragmatic about the rules that each tier entails. Those in the outer group might not accept fully free movement of people, for instance, but that is no reason to wall off their access to the EU’s single market. Nor should there be a stigma of second-class status for those outside the core: after all, they include Denmark and Sweden, two of Europe’s most successful countries. Ways should be found for countries with military or diplomatic clout (eg, post-Brexit Britain) to join in foreign and defence policies. + +For the European project to survive another 60 years, the key is flexibility, in both directions. Just as Britain is leaving the EU, another country might one day leave the euro. Any such step will be hard to manage. But if the union cannot embrace differentiation, it faces the risk of disintegration instead. + +Correction (March 24th): An earlier version of this leader incorrectly stated that Britain will invoke Article 50 on May 29th. It will, of course, invoke it on March 29th. Sorry. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21719462-if-it-survive-european-union-must-become-lot-more-flexible-can-europe-be-saved/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +China first + +Cutting aid and diplomacy will make America weaker + + +Donald Trump’s foreign policy will deliver the opposite of what it promises + + + +Mar 23rd 2017 + + + + + +ALMOST exactly a hundred years ago, America was poised to send troops to Europe to fight in a war which was not in the country’s narrow, short-term self-interest. Fifty thousand of them would die, more than fell in either Vietnam or Korea. That carnage started an argument that has not let up since: does America have a broad interest in maintaining global stability and prosperity? Or should it conserve its blood and treasure and let the rest of the world go to hell? A couple of months into his presidency it is clear that Donald Trump’s campaign slogan, “America First”, means something like the latter. He wants a more powerful army, but can treat allies with contempt and thinks aid and diplomacy are a waste of time. He believes that the multilateral institutions where countries try to work together, built by America at great cost in money and lives during the 20th century in the hope of preventing war, are riddled with bad deals. + +Enemies of State + + + +His budget proposes to cut funding to the State Department and spending on foreign aid by 28%. It also suggests big cuts to America’s contribution to the United Nations and World Bank, including withdrawing all funding for anything to do with climate change (see article). When Angela Merkel, leader of America’s biggest European ally, visited Washington the president treated her frostily, and after she left he publicly scolded Germany for not spending more on its defence. He refused to withdraw an accusation that Britain, another steadfast ally, had spied on him—a charge for which he has no evidence, and which his own National Security Agency said would be “epically stupid” had it actually happened, which it did not. + +His treasury secretary, Steven Mnuchin, removed a vow to resist protectionism from a recent G20 statement. His secretary of state, Rex Tillerson, who heads a department suffering from a crippling lack of direction, went to China, accompanied by a single reporter from a friendly news website, and used language about the need for mutual respect and non-confrontation that delighted Communist Party bosses—without obvious concessions in return. Some of this may be attributed to inexperience. But there is a thread running through it all that suggests an overarching design based on two assumptions. The first is that America cannot afford the costs of aid and diplomacy. The second is that multilateral institutions make America weaker. Both are wildly mistaken. + +No doubt some of the money spent on aid and diplomacy is wasted. But they account for only 1% of federal expenditure, and cutting them could do great harm. Aid helps make poor countries richer and therefore more stable. Soft power is cheaper than hard power, and nearly always a necessary complement to it. For example, after America helps its Iraqi allies to defeat Islamic State, it will need diplomacy and aid to make sure that the terrorist group does not make a comeback. Mr Trump’s secretary of defence, General James Mattis, once put it well: “If you don’t fund the State Department fully, then I need to buy more ammunition ultimately.” + +Multilateral institutions such as the UN, World Trade Organisation, IMF and World Bank may occasionally constrain America, but overall they enhance its influence. Most have their headquarters in America. And yes, Uncle Sam foots a disproportionate share of the bills. Yet this has also given Americans exceptional sway over global rules covering everything from trade to security. Walk away, and the result will not be a better deal. It will be China first and America’s allies diminished; not peace through strength so much as weakness somehow conjured out of primacy. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21719481-donald-trumps-foreign-policy-will-deliver-opposite-what-it-promises-cutting-aid-and/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Medical research + +The shackles of scientific journals + + +And how to cast them off + + + +Mar 23rd 2017 + + + + + +SCIENCE advances fastest when data and conclusions are shared as quickly as possible. Yet it is common practice for medical researchers to hoard results for months or years until research is published in an academic journal. Even then, the data underpinning a study are often not made public. + +The incentive to withhold findings is powerful. Journal papers are the de facto measure of a scientist’s productivity. To win research money and get promoted, scientists need to accrue an impressive list of publications. Yet the delays in disseminating knowledge have the capacity to do real harm: during the Zika crisis, sponsors of research had to persuade publishers to declare that scientists would not be penalised for releasing their findings early. Nor are elite journals the guardians of quality that they often claim to be. The number of papers so flawed that they need to be retracted has risen sharply in the past two decades. Studies in elite journals (such as Nature and Science) are no more statistically robust than those in lesser journals. + + + +Science should not, and need not, be shackled by journal publication. Three sensible reforms would ensure that researchers’ results could be communicated to more people more quickly, without any compromise on quality. Step one is for the organisations that finance research to demand that scientists put their academic papers, along with their experimental data, in publicly accessible “repositories” before they are sent to a journal. That would allow other researchers to make use of the findings without delay. Those opposed to such “preprints” argue that they allow shoddy work to proliferate because it has not yet been peer-reviewed. That may surprise physicists and mathematicians, who have been posting work to arXiv, a preprint repository, for more than 25 years with no ill effects. After peer review, research should also be freely available for all to read. Too much science, much of it paid for from the public purse, languishes behind paywalls. + +Step two is to improve the process of peer review itself. Journals currently administer a system of organising anonymous peer reviewers to pass judgment on new research—a fact they use, in part, to justify their hefty subscription prices. But this murky process is prone to abuse. At its worst, cabals of researchers are suspected of guaranteeing favourable reviews for each other’s work. Better that reviewers are named and that the reviews themselves are published. The Gates foundation has announced its support for an online repository where such open peer review of papers takes place. The repository was launched last year by the Wellcome Trust, meaning that the world’s two largest medical charities have thrown their weight behind it. Others should follow (see article). + +Fight for your right + +Finally, science needs to stop relying so much on journal publication as the only recognised credential for researchers and the only path to career progression. Tools exist that report how often a preprint has been viewed, for example, or whether a clinical data set has been cited in guidelines for doctors. A handful of firms are using artificial intelligence to assess the scientific importance of research, irrespective of how it has been disseminated. Such approaches need encouragement. Journals may lose out, but science itself will benefit. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21719480-and-how-cast-them-shackles-scientific-journals/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Vaulting ambition + +New European rules will open up retail banking + + +The dangers to privacy and security are outweighed by the benefits + + + +Mar 23rd 2017 + + + + + +MORE treasured than the bullion in its vaults are the data a bank has stored on its servers. Bankers know what their customers eat, where they shop and, increasingly, what they get up to online. It is possible for customers to share these data with others, but the process is cumbersome. In effect, banks enjoy a monopoly over data that has helped them get away with lousy service and fend off newcomers with better ideas. In Europe, at least, that is all about to change. + +The source of this upheaval is a new set of regulations, snappily named the Second Payment Service Directive, or “PSD2” (see article). The rules, which are being finalised and will be in force from January next year, will compel banks to share data easily with licensed third parties (if that is what their account-holders want). Bankers in Europe squeal that their profits and customer relationships are under threat. Fearing they could be next, America’s bankers are already lobbying their regulators to keep their data monopoly intact. Such reactions are predictable and wrong. + + + +Because that’s where the data are + +Opening up banks, and the data they hoard, is good for consumers and competition. New providers will be better placed to offer all sorts of innovative services. Apps might ping users when they are spending too much on booze or shoes, or offer them a one-click option to put unspent monthly income into a pension plan. Analytical tools might swiftly aggregate a person’s financial data in one place, or combine banking data with other information to offer individuals the best mortgage or loan. The new rules, which also compel banks to share payment infrastructure with licensed third parties, should make online shopping simpler and cheaper, too. + +Some concerns about PSD2 are legitimate. In particular, it is reasonable to wonder about the privacy and security implications of sensitive financial data being shared with third parties. But banks themselves are hardly invulnerable to cyber-attack. And the way that European regulators propose to deal with these worries looks promising. + +Third parties that want to use bank data will need to convince national regulators that their data defences are solid and must submit to annual inspections. Newbies must also take out fraud insurance; their insurers will have a clear reason to demand state-of-the-art cyber-security. Many online payments will become more secure than they are today, because of the directive’s requirements for the use of a robust authentication process involving two-step verification. + +The gap between writing rules and implementing them is always large, so a few things are needed to make PSD2 a success. First, consent from customers to provide access to their bank data must be gained explicitly, not buried in pages of gobbledygook. The purposes for which data might be used should be clearly explained; and individuals’ consent to share their personal information should be easily revocable. + +Second, regulators must be ruthless both in ensuring that banks open up their infrastructure to others and in withdrawing the licences of third parties that break the rules, particularly on cyber-security. Third, they must also be flexible enough to allow for change as the market evolves. Since the new entrants will not be licensed to engage in riskier forms of finance—such as lending money—it makes sense to regulate them with a lighter touch. But if some fintech providers do end up becoming systemically important (by, for instance, controlling a dominant digital wallet), higher standards of oversight might be necessary. + +More important now, however, is that regulators hold their nerve in response to bank lobbying. Opening up bank data gives fintech firms the opportunity to build new businesses and incumbent banks the incentive to improve their services. In both cases, the winner will be the consumer. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21719476-dangers-privacy-and-security-are-outweighed-benefits-new-european-rules-will-open/print + + + +上一项 文章 章节 下一项 + + + + + +Leaders 章节 Briefing + + + + + +Letters + + +On Liberia, Charles Murray, France, electric cars, dead words: Letters to the editor + +Leaders 章节 Briefing + + + + + +文章 章节 下一项 + + + + + +Letters + +Letters to the editor + + +On Liberia, Charles Murray, France, Turkey, electric cars, dead words + + + +Mar 25th 2017 + + + + + +Education in Liberia + +It was unfair of you to describe ActionAid’s opposition to charter schools in Liberia as “partly ideological: they do not like for-profit schools” (“Lessons from Liberia”, February 25th). On the contrary, our concerns with this experiment are based on feedback from communities, rigorous reviews of the evidence and basic principles. One private provider is struggling to run just 25 schools in Liberia and yet plans to scale up to 300 before any evidence emerges from a planned evaluation. + + + +And yes, we believe that education should be free. Firms should not be able to make a profit from running private schools that receive public subsidies. It is illegal in many countries. Even the elite private schools in Britain are not run for profit. The Partnership Schools for Liberia programme that you mentioned is pouring money into less than 3% of schools in the country, which receive between $50 and $1,000 per child. Children in the other 97% of public schools do not receive such support. + +We believe that education can be the most powerful equalising force in a society, but this is undermined when you create a stratified education system. The government of Liberia has produced a national education plan with good ideas for reforms that could help children in all Liberian schools. We wish it would focus on this rather than pursuing what is truly the “ideological” experiment. + +LAKSHMI MOORE + +Country director + +ActionAid Liberia Monrovia + + + +All-a-muddle at Middlebury + +At the Conservative Political Action Conference in 2013, Charles Murray recommended, to the disappointment of his conservative colleagues, that Republicans should accept the legalisation of gay marriage and abortion. Charges of racism regarding his book, “The Bell Curve”, are still a matter of debate. Undaunted by these facts, students at Mr Murray’s lecture at Middlebury College harangued him by accusing him of being homophobic and sexist as well as racist (“Blue on blue”, March 11th). No need to bother with specifics when a stereotype is handy. It is an article of liberal faith that racism, sexism and homophobia are comorbidities. That is all the impassioned objectors need to know. + +MARGARET MCGIRR + +Greenwich, Connecticut + +The real limits on free speech at American colleges over the past 30 years have not been in the liberal arts. Well-funded business schools have boomed during that time. Send your observer of free speech to these colleges. Good luck trying to find the socialist critic of market economics, the faculty member who has experienced the fear of precarious shift work, or the speaker who will criticise the unanimous view that markets, well, they just work. These limits on free speech are insidious and occur without much scrutiny. + +STUART FRIEDMAN + +Ithaca, New York + + + +Home of the entrepreneur + +Your article on French entrepreneurs (“Less misérable”, February 25th) suggests that France has become Europe’s most active destination for venture capital thanks to changes in French mentality, the rise of “deep-tech” startups and private initiatives. All your arguments are true but there is one other crucial point: public policies over the past 20 years should also be credited for this success. The French administration has created a tax haven for innovative tech companies. I am an entrepreneur and founder of a firm employing 50 people. The combined assistance of a tax credit for research, the improved status for startups and a state-backed interest-free loan helped us grow. In our first five years we gave nothing back to the state, though that assistance has now been largely returned. + +The Economist often criticises the inefficiency of the French state, but on this topic it should delve deeper. + +GILLES TOULEMONDE + +Chief executive + +Inova Lyon + +“Fractured” (March 4th) pointed out the many interesting parallels between the forthcoming French presidential election and last year’s election in America. One big difference: unlike Donald Trump, Marine Le Pen needs to win a majority of the popular vote. + +RICHARD TILLES + +San Francisco + + + +Turkish politics + +* We noticed you article, “Turkey hurls ‘Nazi’ allegations to boost its president’s support” (March 15th). The claim that the Dutch ambassador in Turkey was declared “persona non grata” is simply incorrect. While it is in the discretion of the Turkish government to make such a diplomatic move, no such decision has been taken. + + + +The Turkish minister of family and social policy, Mrs Fatma Betül Sayan Kaya, who wanted to attend a meeting at the Turkish consulate-general in Rotterdam, was denied entry into the consulate premises, and the Turkish consul-general in Rotterdam was not allowed to leave the premises to welcome Minister Kaya. The passports of Minister Kaya and her delegation were unlawfully seized. Subsequently, she was forced to leave the country, without her passport being returned. This ugly treatment imposed upon Turkish officials was a breach of the Vienna Conventions and obviously in contradiction with established diplomatic norms and practice. + + + + + +These recent developments need to be seen from a broader perspective. The anti-Muslim and xenophobic discourse that is beginning to take the political agenda hostage in certain European countries points to a deeper crisis in Europe, which could gravely damage the social fabric in these very countries, not to mention poison centuries-old friendly diplomatic relations. + +On a separate note, your article failed to grasp that the attempted coup by the heinous Fethullah Gulen Terrorist Organisation (FETO) was intended to topple the democratically elected government in Turkey, and to undermine democracy along with fundamental rights and freedoms by force. One should also not ignore the fact that this attempt was only averted with resolute stance of the Turkish people, which otherwise could lead to chaos in the country. + + + + + +Moreover, in the aftermath of the coup attempt, taking action against the perpetrators and making sure the people are never confronted again with tanks, helicopters and fighter planes that they helped buy with their taxes, is inarguably the legitimate right and duty of the Turkish government. Being a founding member of the Council of Europe, Turkey is fully aware of and abides by its international obligations with respect to the protection of human rights and freedoms as it takes such steps. + + + + + +Abdurrahman Bilgic + +Ambassador of Turkey + +London + + + +Car trouble + +It is true that generous subsidies have led to increased sales of electric cars in Norway (“Northern light”, February 18th). However, the associated perks of free parking and waiving of tolls has led to a rise in traffic, which contradicts the government’s aim to reduce congestion and promote walking, biking and mass transit. Moreover, the value-added tax avoided by imported electric cars applies not just to the batteries, but also to the leather seats, sound system and high-performance suspension. Electric-car subsidies are luxury-car subsidies, causing unintended distortions. + +JOHANNES MAURITZEN + +Associate professor + +BI Norwegian Business School + +Trondheim, Norway + + + +The dead-words stage + +How do words die? Johnson’s reasons are organic: words die because they are unloved and unused (March 4th). Or dumped. When the “Oxford Junior Dictionary” updated its edition for 7-year-olds, in came words such as allergic, bungee jumping, blog, celebrity, MP3 player, vandalism and chat room. Out went blackberry, buttercup, dandelion, conker, spinach, hamster, wren, otter, cheetah, some hundred other words related to nature, as well as porridge and sin. + +Should a dictionary for 7-year-olds reflect their day-to-day language? Or should it help shape their understanding of the world, not just reflect its trends? The editors decide the words, and hence the language, no doubt scolding, as the real Samuel Johnson did, at the energetic unruliness of the English tongue. + +As we take our youngsters out this spring, let’s make sure that they can recognise a bluebell even if they can’t spell it. + +KATHERINE HALLGARTEN + +London + +It’s not been since I was knee-high to a grasshopper that I read an article that was so much knee-slapping fun. Don’t let anyone spin a yarn about the death of choice expressions. We’ve just got to put our foot down, dig in our heels and bow up our backs. We can noodle words right back, if we have a mind to. + +JAMES BRUCE + +Siloam Springs, Arkansas + + + +Join the club + +In every issue of The Economist the OECD is repeatedly described as “a group of mostly rich countries”, and on occasion “a club of mainly rich countries”. I was shocked to discover in “Steely defences” (February 18th) that the OECD had temporarily become “a club of rich countries”. Had the poorer countries briefly found fortune or were they expelled for the week? + +ERIK BOGH + +Burbank, California + +* Letters appear online only + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/letters/21719426-liberia-charles-murray-france-turkey-electric-cars-dead-words-letters-editor/print + + + +文章 章节 下一项 + + + + + +Letters 章节 United States + + + + + +Briefing + + +Amazon: Primed + +Letters 章节 United States + + + + + +文章 章节 下一项 + + + + + +Primed + +Are investors too optimistic about Amazon? + + +They think Amazon is going to grow faster, longer and bigger than almost any firm in history + + + +Mar 25th 2017 | SEATTLE + + + + + +EVERY chief executive hopes to lead his company to success. Jeff Bezos, Amazon’s boss, wants something more epic. A prominent wall in the company’s headquarters in Seattle is covered with narratives from historic explorations: excerpts from “The Odyssey”; notes from the journey of Lewis and Clark as they ventured across America; the transcript of the first moon-walkers talking to mission control. At the end, ones and zeroes spell out how far the company has got: “Day One”. + +The phrase, reflecting Mr Bezos’s belief that Amazon’s journey has just begun—and begins again each day—is the company’s mantra. At any other firm such grandiosity would invite derision. At Amazon, it makes investors drool and rivals quake. + + + +Amazon, which went public 20 years ago, is now the world’s fifth-largest company by value, worth over $400bn (see chart 1). Its e-commerce site accounts for about 5% of retail spending in America, roughly half the share of Walmart, the biggest firm in the sector. It is the biggest online retailer in America, and accounts for over half of all new spending. Its cloud-computing business, Amazon Web Services (AWS), is larger in terms of basic computing services than the three closest competing cloud offerings combined. + + + +Since the start of 2015 Amazon’s share price has risen by 173%, seven times the growth of the preceding two years. Operating profits have expanded, too, but at $4.2bn remain relatively small—which is how shareholders like it. Amazon has always emphasised the value of long-term growth (presumably with some bigger profits down the line), and investors have come to accept this. In February, when Amazon reported higher profits but lower revenue than expected, its share price temporarily dipped. Shareholders worried it might not be set to grow as quickly as they had hoped. + +Morgan Stanley, a bank, expects Amazon’s sales to rise by a compound average of 16% each year from 2016 through to 2025: that is higher than its estimates for Google or Facebook. That is a slower pace than Amazon managed over the past decade; but the bigger a company is, the harder it is to keep growing. Amazon’s annual sales of $136bn are almost 50% more those of Alphabet, Google’s parent, and over four times Facebook’s. Credit Suisse, another bank, calculates that only ten firms with sales of more than $50bn have managed to grow by an average of 15% or more for ten years straight since 1950; no company with sales of more than $100bn has done so. If Amazon were to pull it off, it would be the most aggressive expansion of a giant company in the history of modern business. + +That raises two questions. The first is how Amazon could possibly achieve this. The second is which industries it might upend in the process. + +Amazon’s growth to date has come from following a rather vague mission—becoming “Earth’s most customer-centric company”—with massive investment that takes a long view when it comes to attracting, keeping and making more money from those customers. Year after year, an expanding collection of services sweeps up more customers and creates more cash. The company produced $16bn in cashflow before investment last year, more than four times the level five years earlier. That is thanks to its scale, says Heath Terry of Goldman Sachs, the investments it chooses and its skill at executing them. + +The virtuous buzzsaw + +The money it has spent on its e-commerce system has set new standards for service and price. Its site and the formidable logistics behind it are an alternative to queues and trekking from shop to shop. Little wonder that, according to a recent Harris poll, Americans hold Amazon in higher esteem than any other company. + +Having first taught people that it was safe to shop on computer screens, Amazon went on to offer them new ways of buying stuff. The Kindle is not just an easy way of reading e-books; it is a very convenient way of purchasing them. Alexa, a virtual assistant linked to the company’s Echo speaker, makes many sorts of shopping all but frictionless—a consumer can say she needs shampoo and that shampoo will arrive on her doorstep. + +The company has also found new things to sell: most notably, computing power delivered as a service. The ability to get the number-crunching, data-storage and development tools they need without capital expenditure has been a blessing for startups and larger customers alike. Netflix, a streaming-video company, uses AWS to serve 94m subscribers; America’s Central Intelligence Agency uses a version customised to its security needs. (The Economist’s website is also hosted by AWS.) + +Achieving such successes takes hard work: the company has a reputation for intensity and a demanding culture. It also requires a willingness to spend. “It’s very easy for a large company to get trapped into not wanting to place too many bets and fail too often,” says Jeff Wilke, who leads Amazon’s e-commerce business. It is a trap he is determined to avoid. A massive expansion of Amazon’s e-commerce services has led it to lose money in two of the past five years. It is also pouring $3bn into an attempted expansion into India. + +Some bets have failed. The Fire Phone, which Amazon launched in 2014, flamed out. The idea that it could be used to recognise, and find a seller of, any product it saw turned out to be far more interesting to Amazon than to its customers, who preferred simple capabilities available from other phones. + +Amazon’s successes have come from finding ways to spend money that bring increasing returns. Both AWS and the e-commerce business benefit from economies of scale. But they are also platforms that benefit from “network effects”—the more people buy from them, the better they get. As more firms use AWS, more developers know how to use it, giving Amazon more data with which to optimise it, which makes it more attractive in its turn. More shoppers on the Amazon site make it more alluring to third-party sellers, which increases the range of goods it can offer, which attracts more shoppers. + +Alexa shows some signs of becoming a similar platform, though these are early days. Makers of cars, thermostats and other hardware can build Alexa into their gear. Alexa already has more than 10,000 “skills”, similar to smartphone apps, that turn wishes into commands. The more skills and Alexa-powered devices there are, the more appealing the digital assistant becomes to consumers, which means a bigger market for new skills. + +Divisible only by itself + +One of Amazon’s most successful offerings has been its Prime subscription. Originally this just offered free shipping, but the company has added more and more new perks—two-hour shipping, for instance, or free and sometimes exclusive streaming video—to encourage people to stump up the annual subscription ($99 in America). The idea, Mr Bezos told investors last year, is to make Prime “such a good value, you’d be irresponsible not to be a member.” + +That is costly. In 2017 Amazon is expected to spend $4.5bn on television and film content, roughly twice what HBO will spend. But it has a big payoff. Users who subscribe to Prime spend at least three times as much as Amazon shoppers who don’t subscribe, estimates Brian Nowak of Morgan Stanley. In part this is a selection effect; it makes more sense for heavy shoppers to subscribe. But it also seems that, having subscribed, they shop yet more heavily, knowing that they incur no further shipping costs when they do so. Mr Nowak reckons the company had 72m Prime members last year, up by 32% from 2015. + +As well as focusing on customers, Amazon has proved rather good at treating itself as one; making something it wants and then selling it to others. Amazon wanted the benefits cloud computing offered, and having provided them for itself, decided to spread the costs by providing them for others through AWS. The customer’s-eye view was a boon; Amazon understood the needs of startups better than established computing firms could. Last year AWS’s revenue reached $12bn, up by more than 150% since 2014 (see chart 2). + + + +Allowing others to use the company’s e-commerce platform, warehouses and other services is an even bigger business. Fees from sellers around the world who use Amazon reached $23bn in 2016, nearly twice what they were in 2014. + +Some of the company’s current investments may deliver similar benefits. It is testing a grocery in Seattle that lets shoppers buy items without stopping at a cash register. This may prove a model for future Amazon shops. But it seems just as likely that the automatic-checkout technology will be sold to other retailers. It is also planning a $1.5bn hub for cargo planes in Kentucky. At the very least, that will help meet demand in busy periods and give it more bargaining power when dealing with vendors such as UPS and FedEx. But Amazon’s fleet could one day be part of a logistics operation that rivals them. + +Such experiments raise a tantalising prospect for shareholders. AWS provides the tools for companies to do business online; Amazon is a dominant online platform for selling digital and physical goods. Eventually, the company could offer infrastructure for all kinds of commerce, online and off. It already has one of the things that modern business most desires: data. It knows what its customers buy, listen to and watch; it has a good sense of how they respond to prices. The more data Amazon has, the better it can boost sales via its site through recommendations, advertisements, new services, products and more. That would make it ever more difficult for rivals to catch up. + +Mr Bezos claims, as a corollary to thinking only of customers, never to think of rivals. However, the list of current and possible competitors that Amazon is required to include in its annual filings is long and getting longer. It ranges from retailers and search engines to film producers and, as of last year, logistics and advertising firms. Sir Martin Sorrell, boss of WPP, the world’s biggest advertising company, might seem to have little to fear from a firm which last year made an estimated $2bn from advertising. But Amazon is a new intermediary between brands and customers, one which could conceivably use its direct relationships and stacks of data to cut out the ad-agencies altogether. “What worries you when you go to bed at night and wake up in the morning?” Sir Martin said in a recent conference call. “It’s Amazon.” + +For many retailers Amazon is both a competitor and a way of getting more business. There are more than 100,000 companies, Amazon says, that earn more than $100,000 a year selling through the firm’s site. Many of them are competing with their host in one way or another. Some go up against the company’s own private-label products, which range rather bafflingly from potato crisps to baby wipes to loafers. Many more go up against the stock that Amazon buys and resells. + +For anyone selling on Amazon, prominent placement in the “buy box” that appears on screen when something is searched for is a big boost. According to One Click Retail, a consultancy, products in the buy box account for 86% of sales on the website and 93% on the mobile app. By reverse-engineering the algorithm that runs the box, the consultants found that if a seller pays Amazon to handle warehousing and logistics on its behalf, which probably speeds up shipping, it is more likely to win a spot in the box. So on the occasions when Amazon’s retail offering loses the buy box, it still gets a piece of the action. + +All good things... + +Bigger competitors do not want to work through Amazon. Some will not use AWS because they don’t want to subsidise a rival. Large retailers are seeking to match Amazon’s standard of fast, cheap shipping on their own. But that lowers the margins for their online sales and risks cannibalising sales from their stores. The competition thus threatens to make many of them permanently less profitable. + +Last year Walmart made a particularly expensive bid to fend off Amazon, paying $3bn for Jet.com, an e-commerce startup. Marc Lore, Jet.com’s boss, has history when it comes to competing with Amazon. “The Everything Store”, a book about Amazon by Brad Stone, a journalist, tells the story of Quidsi, a previous startup of Mr Lore’s that sold nappies through a site called Diapers.com. When Amazon was building a nappies business, the bigger company cut prices so rapidly that Quidsi reckoned that matching them would lose it $100m in three months. Quidsi agreed to be bought in 2010. + +Other competitors are worried, too. In December Amazon challenged Netflix by expanding Prime Video to more than 200 countries. “I feel like we’re competing with an unusual person,” Reed Hastings, Netflix’s boss, has admitted. “Because Jeff’s there, it’s kind of scary.” This is not a winner-takes-all contest; two-thirds of American Prime subscribers also subscribe to Netflix, according to Cowen, a financial-services firm. But as Prime Video’s offering improves, some Netflix viewers might drop their subscription. + +Netflix hopes to keep them by spending on its exclusive shows; like Spotify in music, it also has the advantage of an established brand and a customer base. But competition is hotting up. Disney, Fox, NBC Universal and Time Warner have beefed up a streaming competitor of their own, Hulu. + +The other tech giants have their own reasons to be worried about Amazon—though they may also have the best defences. Apple faces the risk that Amazon, not iTunes, becomes the default platform for streaming and buying content; but it has the diversified revenue needed to fight its corner. Google, for its part, does not want shopping through Amazon, and particularly Alexa, to cut it out of the loop, jeopardising its advertising revenues; nor does it want Alexa to be the platform people chose for running their homes. In February Google said its new assistant—called, simply, Assistant—would not only power a device called Google Home, but roll out to smartphones using Android, its mobile operating system. Their strength in mobile phones gives both Apple and Google an edge over Amazon. + +Tech giants will also be fighting Amazon in the cloud. Microsoft is its strongest competitor, but Google and IBM are formidable, too. All four are fighting to lower prices and provide better technology, with billions now being pumped into AI. + + + +If competitors fail to halt Amazon’s whirl of activities, antitrust enforcers might yet do so instead. This does not seem an imminent threat. American antitrust authorities mainly consider a company’s effect on consumers and pricing, not broader market power. By that standard, Amazon has brought big benefits. + +Two perils lurk, however. One, for now, is theoretical. In a recent article in the Yale Law Journal, Lina Kahn argued that, among other things, the scope of Amazon’s activities may make it impossible for competitors not to end up relying on it. If regulators paid more heed to market power, that could be a red flag—especially as Amazon continues to grow and provide its services to competitors ever more widely. A second threat is real. Donald Trump does not care for the Washington Post, a newspaper Mr Bezos owns. In 2016 Mr Trump said Mr Bezos was using the Post to attack him because Amazon has “a huge antitrust problem”. If Mr Trump believes that—or even if he doesn’t—his administration might favour action. + +For now, though, Amazon’s rivals must fend for themselves. They can hope Mr Bezos makes a mistake, or gets wrong-footed by some startling new trend—but though both are possible, they are hardly a strategy. Instead, the best defence is simple: sell something that customers want and Amazon does not have. Exceptional merchandise and service helps. In America big, bland bookstores are struggling, but the number of independent booksellers has climbed. The threat from Amazon has forced Walmart to improve its stores, with easier checkout and more helpful staff; it has seen a bump in sales. Amazon’s investments in television have helped fuel a bidding war for good programming—Hollywood’s studios are producing the best television for generations. And thanks to AWS, and its competitors, there has never been a better time to start up a web-based or data-centric firm. + +For decades, consumer giants mostly grew slowly and comfortably, with only occasional bursts of innovation. Now Amazon’s epic journey is forcing companies to lower prices and to improve products or to suffer. Many may, as a result, become less profitable; many will instead improve. And all the while, as Mr Wilke puts it, Amazon’s “pioneers wander the world with divine discontent and say, ‘how can I make that better today?’” Companies on its ever larger roster of rivals settle for mediocrity at their peril. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21719461-they-think-amazon-going-grow-faster-longer-and-bigger-almost-any-firm-history-are/print + + + +文章 章节 下一项 + + + + + +Briefing 章节 The Americas + + + + + +United States + + +The Supreme Court: Neil Gorsuch: the natural + +The FBI: G-man v POTUS + +Sedentary millennials: Explaining remaining + +Health fads: California freezin’ + +New York’s homelessness: Masses huddled + +Justice in Louisiana: Gremlins and phantoms + +Lexington: Mile-high mayor + +Briefing 章节 The Americas + + + + + +文章 章节 下一项 + + + + + +SCOTUS + +Neil Gorsuch’s conservatism is different from Antonin Scalia’s + + +Medieval theology could influence the court in the 21st century + + + +Mar 23rd 2017 | NEW YORK + + + + + +CONFIRMATION hearings for Supreme Court justices have become frustrating affairs. Senators pontificate and probe while nominees utter bromides and dodge questions for hours on end. In his stint before the Judiciary Committee this week, Neil Gorsuch, Donald Trump’s pick for the court, has been especially tight-lipped. Senators have elicited only glimmers of what makes the 49-year-old judge with a decade on the Tenth Circuit Court of Appeals most interesting, or most worrisome: his affinity for a family of legal theories called “natural law”. Though Mr Trump promotes his nominee as drawn from the mould of Antonin Scalia, the conservative jurist Mr Gorsuch was tapped to replace, he represents a stark departure from a central feature of Mr Scalia’s jurisprudence. + +Mr Scalia saw the constitution as “a practical and pragmatic charter of government” that neither requires nor permits “philosophising”. In a right-to-die case in 1990, he quipped that the nine justices were no better suited to make fine distinctions on the morality of life support than “nine people picked at random from the Kansas City telephone directory”. By contrast, Mr Gorsuch seems more ready to let his philosophical judgments out. Tapping into a tradition that reaches back to Thomas Aquinas and Aristotle, natural law says that some things are objectively good in themselves and should therefore serve as lodestars for individuals and societies. John Finnis, Mr Gorsuch’s dissertation adviser at Oxford and one of the world’s foremost natural-law theorists, lists these goods as knowledge, aesthetic appreciation, play, friendship, practical reasonableness, religion and—most notably—life. + + + +In the second day of his hearings on March 21st, Mr Gorsuch deflected inquiries into his old adviser’s positions on issues like abortion and gay rights. “I’m not here to answer for…Professor Finnis,” he said. “I’d ask you respectfully to look at my credentials and my record.” Such a look is revealing. In his doctoral work and book, Mr Gorsuch drew on the idea that “human life is fundamentally and inherently valuable” to argue against assisted suicide and euthanasia. When he first appeared before the Senate in 2006, he pledged he would keep his philosophical positions out of his judgments. “[P]ersonal views…have nothing to do with the case before me in any case”, he told Senator Lindsey Graham. The parties “deserve better than that”, he added, and “the law demands more than that.” Mr Gorsuch then emphasised that his writings “have been largely in defence of existing law” and are “consistent with the Supreme Court’s decisions in this area and existing law in most places.” + +In “The Future of Assisted Suicide and Euthanasia”, written in 2006, Mr Gorsuch presented the ethics of end-of-life questions as fundamental to his sense of how the courts should handle lawsuits arising out of them. Though he has said that judges must “strive…to apply the law as it is”, not as they would like it to be, Mr Gorsuch’s natural-law lens is visible too. The first sign of a link between Mr Gorsuch’s “inviolability-of-human-life” view and his jurisprudence comes in his book’s ninth chapter, where he traces the roots of the idea that there is a moral imperative to respect “basic goods”. The idea is apparent “from life’s experiences” in which people deserve honour “out of respect for their innate value”, Mr Gorsuch wrote. Treating human life as inviolable is the premise of “our entire political system” and both the Declaration of Independence and constitution reflect the founders’ belief in “self-evident human rights and truths”. + +Next, Mr Gorsuch surveyed rival perspectives on the sanctity of life and he found them all wanting: “[A]ny attempt to draw lines between different sorts of lives…seems almost inevitably to become…an arbitrary and subjective enterprise.” Even a small degree of arbitrariness “is simply not acceptable” in “policy decisions” involving “who is and is not treated as fully human”. Mr Gorsuch concluded that when judges review laws permitting terminally ill people to enlist the help of doctors in their deaths, they should keep in mind that such acts “are categorically wrong”. + +Mr Gorsuch discussed one example—the Oregon Death With Dignity Act—and suggested, contrary to the Supreme Court’s approach, that judges should subject such laws to heightened scrutiny because they may threaten the right to life of terminally ill individuals. This suggests that Mr Gorsuch’s philosophical opposition to assisted suicide—now at odds with the law in six states (California, Colorado, Montana, Oregon, Vermont and Washington)—would in fact influence his judgment if these policies ever came before him. It also hints that Mr Gorsuch might be sceptical of laws allowing abortion and could—in line with Mr Trump’s oft-repeated wish—reconsider Roe v Wade, the nearly 45-year-old precedent protecting women’s reproductive choice. + +Judicial adventures in metaphysics were anathema to the man who spent three decades in the seat to which Mr Gorsuch aspires. Throughout his career, Scalia amply criticised liberal justices who saw the constitution as a “living” document animated by principles such as autonomy or human dignity. (He likened the justification for Anthony Kennedy’s same-sex marriage opinion in 2015 to “the mystical aphorisms of the fortune cookie”.) Scalia would be ill at ease with Mr Gorsuch’s natural-law jurisprudence as well, even if its implications more closely match his conservative views. + +Given the slim Republican majority in the Senate, the confirmation of Mr Trump’s first Supreme Court pick is all but assured. The Senate’s apparent lack of interest in Mr Gorsuch’s scholarship means America is likely to soon have a natural lawyer as its ninth justice—with little sense of what that would entail. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21719504-medieval-theology-could-influence-court-21st-century-neil-gorsuchs-conservatism/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +G-man v POTUS + +The FBI says it is investigating the president’s campaign + + +A slice of the country hears that the president is the victim of government surveillance + + + +Mar 23rd 2017 | WASHINGTON, DC + + + + + +A “BIG grey cloud” hangs over President Donald Trump and his administration, following public confirmation by the head of the FBI that his agents are investigating Russian government efforts to interfere in the presidential election, and whether those efforts were co-ordinated with anyone linked to the Trump campaign. That was the verdict of the Republican chairman of the House Intelligence Committee, Representative Devin Nunes of California, at whose hearing the FBI director, James Comey, revealed the existence of the counter-intelligence probe, opened eight months ago. Thoughts of that cloud now hang over Washington, a town which remembers the FBI inquiries that haunted other administrations, even if criminal charges were not eventually laid. + +Mr Trump threw up a fog of counterclaims. The president declared that the “real story” about Russia is that officials leaked classified information to reporters, and asked—in an early morning tweet unaccompanied by evidence—“What about all of the contact with the Clinton campaign and the Russians?” Taking their cue from the president, Republicans led by Mr Nunes asked the FBI boss whether it was a grave crime for senior figures in the Obama era to reveal that spies had overheard phone calls between the Russian ambassador and Michael Flynn, the retired general who later served, briefly, as Mr Trump’s first national security adviser, before resigning for having lied about those phone contacts. Leaking is a serious crime, Mr Comey agreed. Next Mr Nunes asserted that it was “ridiculous” to say that Russians might “prefer Republicans over Democrats”. Mr Comey and his fellow-witness, Admiral Michael Rogers, director of the National Security Agency, clarified that they claimed no knowledge about a general partisan bias on the part of Russia. Instead, the spy chiefs explained, after some prodding by the ranking Democrat on the committee, Representative Adam Schiff of California, it is the belief of intelligence services that President Vladimir Putin of Russia not only loathed Hillary Clinton but positively favoured Donald Trump. + + + +The House hearing did not clarify much. Members of both parties speculated about circumstantial evidence of possible collusion. But that grey cloud of suspicion still matters. It explains why the president seized on claims by a Fox News TV contributor that President Barack Obama had asked GCHQ, a British spy agency, to eavesdrop on the Trump campaign—claims that the British government call “utterly ridiculous”. It helps explain why the White House press secretary, Sean Spicer, insisted that Paul Manafort—a political consultant with ties to pro-Russian politicians in Ukraine and, according to the Associated Press, to the Russian billionaire and Putin ally Oleg Deripaska—“played a very limited role for a very limited amount of time” in the Trump campaign, when he was in fact that campaign’s chairman. + +It explains why Mr Nunes rushed to the White House to brief the president that, according to information handed to him, “it’s possible” that American spies overheard members of the Trump presidential transition team during legal surveillance of foreign targets. Asked if he felt this vindicates his allegation that Mr Obama ordered Trump Tower to be wire-tapped during the campaign (a grave charge unsupported by evidence, according to the FBI boss), Mr Trump replied: “I somewhat do.” Though Democrats howled that Mr Nunes has not remotely vindicated the president’s attack on his predecessor, Trump fans cheered: in today’s America, each side hears the facts it wants to hear. + +The most startling exchange at this week’s hearing involved questions about why Russian hackers were so indiscreet when they stole e-mails from the Democratic National Committee and from the head of the Clinton campaign. That “loudness” looks deliberate, Mr Comey replied. Russia’s aim was to undermine the credibility of American democracy and sow division. Given that Russia may believe that worked in 2016, the FBI boss concluded: “They’ll be back.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21719491-slice-country-hears-president-victim-government/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Explaining remaining + +Millennials may move less because fewer of them own homes + + +That would turn conventional wisdom, that renting is better for labour mobility, on its head + + + +Mar 23rd 2017 | LOS ANGELES + + + + + +MILLENNIALS—the generation which roughly includes those born between 1980 and 1996—have a reputation for being footloose. But analysis by the Pew Research Centre released in February suggests American millennials are moving less than previous generations did when they were younger. In 2016 20% of those aged 25-35 changed addresses, compared with 26% of the generation above in 2000 and 27% of late baby-boomers in 1990. Frequent moving in search of opportunity has long been an ingredient in American exceptionalism. Economists such as Tyler Cowen, author of “The Complacent Class”, worry that its decline will dampen the nation’s dynamism. + +Since the 1980s, Americans of all ages have become more rooted. Between 1980 and 1981, 17% of Americans moved house, according to William Frey, a demographer at the Brookings Institution, a think-tank. Between 2015 and 2016 only 11% did. Migration between states, which is often driven by professional choices, has fallen by half since 1990. Young people, who normally move around most, seem especially stuck. + + + +This is strange. More millennials lack the anchors that have previously rooted people in place: they are marrying later, having children later and buying homes at lower rates than previous generations did. In 1990 just under half of 18-to-34-year-olds had never married; that share increased to two-thirds in the period between 2009 and 2013. Less than half of 25-to-35-year-olds had children in 2016, compared with more than half for the previous generation and baby-boomers at a similar age. In 1982 41% of those under 35 owned homes. Today that share has fallen to 35%. + +Yet despite the loosening of such ties, both short- and long-distance migration have decreased among 25-to-34-year olds since 1995. Short-distance moves within counties often happen when people simply move house—for example, to accommodate an increasing number of children. The fact that American youngsters are waiting longer before they start families may partly explain the drop in short-distance moves. + +People tend to move longer distances, across counties and states, in search of better jobs. The recent recession saw longer-distance migration among young people fall. It has since recovered a bit. One factor that might explain what is going on is the relationship millennials have to home ownership. Aspirations to buy, rather than rent have traditionally pushed a significant share of young Americans to move. According to analysis by the Pew Research Centre, in 2000 14% of Generation Xers (born roughly between 1965 and 1980) surveyed by the Census Bureau said their primary motive for moving was to buy a house. In 2016 only 6% of millennials said the same. That might be partly because childless bachelors and bachelorettes are decreasingly likely to covet grassy yards and white picket fences. + +Or perhaps such things are simply out of reach. Median earnings for full-time workers aged 18-34 fell by 9% between 2000 and 2013. In 2014, for the first time, more 18-to-34-year-olds lived with their parents than in any other arrangement, maybe because they could not afford to do otherwise. Conversely, it may be the case that people who already own houses—or equity in a house—are more inclined to move than those who do not. + +Mr Frey wonders “whether [millennials] are ushering new young adult tastes and lifestyles that may be mimicked by generations that follow them; or is this a one-time downturn because of their difficult generation-specific economic circumstances?” If it continues, the decline in migration among millennials could spell trouble. Americans become less likely to move as they get older. If they’re staying put now, millennials probably won’t shift for better opportunities later on either. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21719501-would-turn-conventional-wisdom-renting-better-labour-mobility-its/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +California freezin’ + +The spread of cryotherapy + + +Uncomfortable treatment with little scientific basis finds paying customers + + + +Mar 23rd 2017 | LOS ANGELES + + + + + +NESTLED between a nail parlour and a tanning salon on Wilshire Avenue in Santa Monica, an upscale part of Los Angeles, is a newer kind of spa. Opened last year, CryoZone invites customers to spend $75 for three minutes in a cryogenic chamber cooled to -110°C for fledgling freezers and -132°C for chilling connoisseurs. The treatment is meant to calm inflammation and soothe muscle soreness, but Angelenos swear by it to solve all sorts of ills, from tennis elbow to the urgent need to lose a bit of weight before a daughter’s wedding. + +Invented in Japan in 1978 as a remedy for rheumatoid arthritis, cryotherapy is not new. But it was not until European rugby and football teams started freezing themselves in the past decade that it became more popular. America, which boasts at least 400 cryotherapy spas, is the first place to offer wide access to it. Impact Cryotherapy, a group that manufactures cryosaunas, claims to have units in 38 states running more than 10,000 sessions a week. California, unsurprisingly, is in the vanguard: there are around 60 below-freezing-cold vats in the state. + + + +On a sunny weekday in March, CryoZone’s minimalist space is buzzing. A man dressed in surfing trunks, a T-shirt and flip-flops had come to recover from marathon training. A woman in all-black Spandex is there to zap her back pain. Customers at the spa are invited into one of the centre’s two treatment rooms and told to strip down to their skivvies. A towel is provided to swipe any excess moisture off the skin and fleecy gloves, socks and slippers are donned to protect the extremities. (A professional runner got frostbite in 2011 when he underwent cryotherapy in sweaty socks). + +Next customers step into a round canister that looks like a galactic witch’s cauldron, frothing with liquid nitrogen vapour, and ring a bell to solicit assistance. The chamber’s platform has been adjusted to ensure that the customer’s head pokes out of the top. A young woman in Nevada died in 2015 after she attempted to administer cryotherapy to herself, got stuck and asphyxiated from the lack of oxygen in the chamber. The spa’s friendly business-development manager presses the timer and instructs his charge to rotate slowly as he makes small talk to speed the three minutes. It doesn’t work. As the skin’s temperature drops from 33.8°C to 1 °C, horribly intense tingling starts—not so much pins and needles as swords and daggers. After 180 seemingly interminable seconds, the machine mercifully beeps. + +Scientific studies on whole body cryotherapy are inconclusive at best. The Food and Drug Administration calls it a “trend that lacks evidence, poses risks”. Health-conscious Americans seem unfazed. Perhaps its because they’ve seen athletes and celebrities like Shaquille O’Neal, Kobe Bryant and Demi Moore use it. Or maybe they trust their own personal reactions to cold treatment over science. The woman in black Spandex gushes: “My back pain used to be crippling. Now I can exercise again.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21719489-uncomfortable-treatment-little-scientific-basis-finds-paying-customers-spread/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Masses huddled + +New York has record numbers of homeless people + + +But relatively few of them are sleeping rough + + + +Mar 23rd 2017 | QUEEENS, NEW YORK + + + + + +SOME in Maspeth, a neighbourhood in New York City’s Queens, were not at all pleased when they heard last year that City Hall had decided to convert a local hotel into a 110-bed homeless shelter. For months they held nightly protests in front of the hotel. They demonstrated outside the homes of the hotel’s owner and of the city’s homelessness commissioner. Eventually they wore down City Hall, which backed down a bit from a total conversion. Only 30 homeless men are housed in the hotel now. All of them have jobs. This is not unusual: more than one in ten of New York’s homeless people are employed. + +Since 1979, when a homeless veteran of the Korean war successfully sued the city for failing to provide him with shelter, the city has had a legal duty to house those unable to afford a home. (New York’s state constitution says that “the aid, care and support of the needy are public concerns and shall be provided by the state and by such of its subdivisions.”) In recent years the number of homeless people has grown. Whereas rents increased by 18% between 2005 and 2015, incomes rose by 5%. When Rudy Giuliani entered City Hall in 1994, 24,000 people lived in shelters. About 31,000 lived in them when Mike Bloomberg became mayor in 2002. When Bill de Blasio entered City Hall in 2014, 51,500 did. The number of homeless people now in shelters is around 63,000. + + + +That is more than at any time since the Great Depression, though the comparison is misleading because the definition of homelessness has changed. These figures do not include the numbers living rough on the streets, who are hard to count accurately. Partly because of the obligation to provide shelter, New York in fact has fewer rough sleepers than many smaller cities (3,000 is the best estimate) but many more homeless people. Los Angeles comes next, with 44,000 homeless, followed by Seattle (10,700), San Diego (8,700), Washington, DC (8,350) and San Francisco (7,000). + +Mr de Blasio unveiled a plan called “Turning the Tide on Homelessness” at the end of February, and declared his intention to open 90 new homeless shelters throughout the city. He plans to end the use of hotels as shelters by 2023 and to stop using cluster sites, private apartments paid for by the city, by 2021. Cluster apartments are not cheap and are often in poor condition. The mayor aims to reduce the overall shelter population by 2,500 over five years. He conceded that combating homelessness will be a “long, long battle”, and added that he could not see an end to theproblem. + +That may seem reminiscent of the city’s fatalistic attitude to crime in the 1980s. There are a few ideas around, such as increasing legal aid to those facing eviction, or creating a rent subsidy designed to help people facing eviction to stay in their homes. That is the brainchild of Andrew Hevesi, a state assemblyman; it has the backing of the mayor and dozens of state lawmakers. But short of a steep decline in rents, or an extensive programme to build more housing, or both, it is hard to see the city fixing its homeless problem. + +New Yorkers, who do not have to walk far to see someone sleeping rough or panhandling, are not happy about this. More than half the city’s voters say they are seeing more homeless people on the streets, in the subway and in parks. A poll by Quinnipiac at the beginning of March showed that 96% of New Yorkers think homelessness is a serious problem. More than 70% of them also think the city is doing too little to help. Yet doing more would require some combination of New Yorkers paying more tax, allowing more construction and welcoming homeless shelters and their occupants into their neighbourhoods. As the experience of Maspeth shows, that can be a hard sell. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21719516-relatively-few-them-are-sleeping-rough-new-york-has-record-numbers-homeless/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Gremlins and phantoms + +No trial is in sight for 17 alleged gang members in Louisiana + + +The failings go beyond the state + + + +Mar 25th 2017 | ABBEVILLE + + + + + +THE city of Abbeville, 20 miles south of Lafayette in the lush flatness of Acadiana, is known for a pretty Catholic church beside Bayou Vermilion and some slap-up oyster restaurants. It is the sort of small town in which the same surnames, many of them Cajun, recur among prominent business-owners and officeholders. It was also, until recently, home to a fearsome gang, known as the Gremlins—at least, so say the local prosecutors. That view of the group has yet to be endorsed by a trial, and, on current form, it seems unlikely to be. The Gremlins, and the limbo in which they are sunk, epitomise deep problems in the criminal-justice system of Louisiana, and not only Louisiana. + +At first they instead seemed proof of the virtues of all-action policing. In February 2016, Clay Higgins, then spokesman for the sheriff of nearby St Landry Parish, denounced them in a Crime Stoppers video as “animals” and “heathens”. Sporting body armour and a rifle, and backed by a phalanx of officers, he told the Gremlins they would “be hunted”, railing in particular against one “uneducated 125-pound punk” whom he vowed to meet “any time, anywhere…You won’t walk away.” Such ultimatums earned Mr Higgins the nickname, “the Cajun John Wayne”. + + + +By then, and before the indictment was announced the previous December, most of the 17 supposed Gremlins were in custody. Their alleged crimes were indeed alarming: one murder, several attempted murders and drive-by shootings—though there were lots of routine drug offences, too. They were also accused of colluding in a “criminal street gang” and “racketeering enterprise”—which is where the trouble, and the lessons, begin. As Ronal Serpas, formerly police chief of New Orleans, says, racketeering laws are meant to target big-time mafiosi. Here, says G. Paul Marx, chief public defender for the district that includes Abbeville, “They’re all dirt poor.” + +Moreover, he says, there is no evidence of the co-ordination or leadership that such an enterprise requires. Many of the alleged gangsters—all but one of whom are black—were barely born when the racketeering is said to have begun, in 1997. Their supporters insist the Gremlins tag referred not to a street gang but to a rap group, some of whose members posted ill-advised videos on YouTube that feature inflammatory lyrics. “They’re no saints,” says Coretta Williams, whose son, Gene Williams III, is among them, “but they’re not the sinners they’re claiming them to be.” + +Those who built the case are now reluctant to discuss it. Tony Hardy, Abbeville’s police chief, pulled out of an interview with The Economist; although most of the accused come from his town—from a neighbourhood where lawns and pretty porches give way to trailer homes and ramshackle yards—a sergeant said Louisiana’s state police had prime responsibility. The state police, the head of which recently retired amid a scandal over a tax-funded jolly to Las Vegas, say “multiple agencies” took part. Roger Hamilton, the prosecutor, declined repeated interview requests; cornered in Abbeville’s white-columned courthouse, his boss Keith Stutes, the district attorney, maintained that while the racketeering charges may “seem unjust” to those affected, they “fit the circumstances”. + +He and others cited the ongoing legal proceedings in refusing to say more. That seems plausible, yet the reticence contrasts strikingly with the hoopla over the arrests and indictments. It wasn’t only Mr Higgins. “This group of individuals have plagued the city of Abbeville,” Chief Hardy said then. Grandstanding is a common feature of gang prosecutions, says Alex Alonso of California State University, Long Beach. The benefits to police and prosecutors go beyond PR, he says. The gang label helps to persuade juries when evidence is weak, and carries extra jail time—perhaps, for the “Gremlins”, an extra 40 years. Police departments can apply for federal gang-related grants; some in Abbeville think that was an incentive in this case. + +Mr Marx, the public defender, is trying to have the racketeering charges quashed. But otherwise he has made only one argument: that those defendants deemed indigent, and so notionally represented by his office, have been denied due process of law. Because, although some have been locked up for over a year, he says his team is able to help them in only a limited, cursory way. They are thus being denied a right that the constitution supposedly guarantees—as are hundreds of others in Louisiana and across America. + +Throw away the key + +Given the risk of conflicts, each “Gremlin” requires his own counsel. Three have private lawyers; the trouble for the others is that Mr Marx does not have the manpower to serve them. They are not alone. As of the beginning of March his office, which covers three southern Louisiana parishes, counted 746 individuals who had been charged but lacked representation—a big backlog but only a third of the total at the start of last year. That was when the chronic funding problems of Louisiana’s public defenders became a crisis, and offices across the state began refusing new clients. Some judges dragooned private lawyers, some of them ill-qualified, to act pro bono. Other defendants, such as those “Gremlins” unable to post bail—hard to contest without a lawyer —were left to stew in jail. + +In January, in a suit brought in New Orleans, a federal judge agreed that the state was “failing miserably” in its duty to indigent defendants—85% of the total—but ruled that fixing the problem was the legislature’s job. (A similar suit is pending in state court.) It is true that the basic problem is political: specifically, the mismatch between Louisiana’s appetite for prosecutions and legislators’ reluctance to pay for them. The state has the highest incarceration rate in the country, but the most cockeyed system for funding public defenders, who rely for two-thirds of their income on local court fees and fines, principally traffic tickets, an erratic source of revenue. + +The road to Congress + + + +The state itself is almost broke, so unlikely to stump up more. The upshot, says a recent study by the American Bar Association, is that Louisiana has only a fifth of the lawyers it needs to provide adequate public defence. While its problems are extreme, though, they are not unique. Last year Missouri’s chief public defender despairingly tried to appoint the governor to represent an indigent defendant (he declined). In the past Florida’s defenders have turned away clients, too. + +This is a shortsighted economy. The parish jail in Abbeville is full, so several “Gremlins” are housed elsewhere, for a price. “They can’t go to trial,” says Mr Marx, because, as his quashing motion puts it, “there is no possible method for providing counsel for them.” “I don’t know how long the system is going to let them languish,” he says; “apparently indefinitely.” In fact very few cases go to trial in Louisiana: most defendants plea-bargain, which the long remands encourage, as do these scarifying gang charges. Still, even Mr Stutes, the DA, says he is frustrated. He says he expects a trial “at some point”, but concedes that “we’re at a standstill”. “It’s country here,” says another person involved, “and they just do what they want to do.” + +“They made a whole big circus with our lives,” says Ms Williams. When DAs, judges, sheriffs and city police chiefs are elected, political posturing may be inevitable. Take Mr Higgins. He resigned from the sheriff’s office amid tension over his merchandising line. “Some horses just don’t run with bit in their mouth,” he reflected, saying he would “die rather than sacrifice my principles.” He vowed to stick to “the Lord’s path”, which turned out to lead not into reality television, as seemed possible, but to November’s election. Buoyed by his viral videos, and despite four marriages and allegations of child-support arrears, he campaigned in his cowboy hat and is now a United States congressman. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21719521-failings-go-beyond-state-no-trial-sight-17-alleged-gang-members/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Lexington + +Denver’s mayor is trying to save Democrats from a Trump trap + + +Sanctuary cities could be a vote loser, putting off those the party badly needs to win back + + + +Mar 23rd 2017 + + + + + +OUT in the savannah of American politics, the Democratic Party lacks big beasts. Republicans control the White House and Congress and, in the country at large, hold 33 governors’ mansions and almost as many state legislatures. Not since the 1920s have Democrats carried so little clout at the state and federal level. Just one Democratic pack moves with the swagger born of electoral success: big-city mayors. Democrats head 17 of the 20 largest cities, from New York to inland centres like Denver, a fast-growing, diverse spot at the foot of the Rockies, once known for cows, Coors beer and hydrocarbons, now abuzz with tech start-ups and millennials seeking jobs in finance and health care. + +In a backhanded tribute to their power, President Donald Trump has prepared a trap for Democratic municipal leaders. It is built around immigration enforcement, and the reluctance of many urban leaders to work too closely with federal immigration authorities—notably the black-clad agents of Immigration and Customs Enforcement (ICE). One of Mr Trump’s first executive orders threatens to deny federal funds to so-called “sanctuary jurisdictions”, meaning local governments deemed to be shielding “removable aliens” from deportation. On March 20th, obeying that same executive order, ICE issued the first of what are to be weekly reports tallying rejected “detainer” requests. In plain language, the report lists each time that local city officials, police or prison officers declined to hold foreigners eligible for removal long enough for them to be picked up by federal agents. + + + +Some mayors sound ready to jump into Mr Trump’s trap, eyes open, declaring that their fiefs are indeed “sanctuary cities”— thereby reinforcing the charge that Democrats are out of touch with regular folk who want safe communities. Marty Walsh of Boston has offered his City Hall office as a “safe space” for migrants fearing deportation. On the Democratic left, there is much talk of resistance. For Mr Trump—a man elected by the America of small towns, forgotten rustbelt cities and rural areas—such defiance is proof that big cities are sinks of dysfunction, run by liberal elites too craven or corrupt to enforce the rule of law. As a candidate Mr Trump brought the relatives of people killed by migrants to rallies. As president he accuses sanctuary cities of causing “immeasurable harm to the American people”. + +Put more simply, partisans on left and right see an advantage in fear-mongering. In contrast Michael Hancock, the self-styled moderate Democrat who has been Denver’s mayor since 2011, believes that fear undermines good governance. The city’s second black mayor, his problem-solving prowess was hard-won. One of ten children, he was brought up by a single mother. At times the family endured homelessness and nights without supper. Mr Hancock, a serious youth, started a mentoring scheme while at a high school plagued by gangs. Two brothers served time in jail, one died of AIDS and a sister was murdered by her boyfriend. He made it to college after a gig as a mascot for the Denver Broncos. + +Today, interviewed in Denver’s neoclassical civic centre, the mayor cuts a genial but earnest figure. He avoids the label “sanctuary city” and is adamant that Denver does not breach the terms of Mr Trump’s executive order. He is also adamant that the new president’s approach makes his city less safe. Since January, he notes, four domestic-violence cases collapsed after victims declined to testify, fearing detention by ICE agents seen staking out the municipal court. Denver, a city of about 700,000 people, is home to an estimated 55,000 undocumented immigrants, according to the Pew Research Centre, a think-tank. City prosecutors report a fall in calls reporting crimes to police in districts like Sun Valley, home to many Hondurans and other migrants. + +Mr Hancock is to ask ICE to avoid detaining people inside courthouses, just as agents are currently meant to avoid arrests at schools, hospitals and churches. Yet Denver takes a more moderate line on working with the feds than cities like San Francisco, where in 2015 a serially deported felon was freed to kill after the then-sheriff ordered officers to avoid contacts with ICE. Denver’s position is more nuanced: the city notifies the feds when a serious offender is about to be released and honours ICE warrants. But when ICE simply asks for someone to be held past their release date, without a warrant, Denver declines. In part, that is because Denver believes so-called “detainers” are unconstitutional. In part, the city believes scarce resources should be focused on removing serious criminals. Mr Trump’s government wants to cast a broader net: in its March 20th report, ICE chides Denver for declining to hold a Mexican accused of drunk-driving. + +Things to do in Denver + +Some Republicans argue that America’s future lies in admitting highly skilled legal migrants while cracking down hard on illegal residents. Mr Hancock suggests, gently, that they misunderstand the global contest for talent and investment. Why would skilled foreigners choose a home that is harshly unwelcoming to other newcomers, he asks? “Nobody wants to live in fear,” he says, noting that recent chaotic travel bans have left some University of Denver students scared to travel home for spring break. It must be possible to strengthen immigration enforcement while being humane, he argues. “It doesn’t have to be either/or.” + +Mr Hancock’s city is solidly Democratic; just 19% of its votes went to Mr Trump. But his job often involves policies affecting the wider Denver metro region. That requires coalition-building in Republican-voting suburbs and listening to the concerns of rural neighbours—including farmers who rely on immigrant labour. + +Asked if the Democrats’ concentrated success in cities is itself a sort of trap, the mayor agrees. He urges Democrats to become “the metro party”. Politics, metro-style, requires appealing to moderates, liberals and even conservatives, he explains. For now, Mr Hancock is a big beast in municipal politics. If Democrats are smart, they will give him more room to roam. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21719503-sanctuary-cities-could-be-vote-loser-putting-those-party-badly-needs-win/print + + + +上一项 文章 章节 下一项 + + + + + +United States 章节 Asia + + + + + +The Americas + + +Coca-growing in Colombia: An unwelcome resurgence + +Floods in Peru: Taking a battering + +Cuban pensioners: Hustling, cradle to grave + +Bello: Come together, right now + +United States 章节 Asia + + + + + +文章 章节 下一项 + + + + + +An unwelcome resurgence + +Coca-growing in Colombia is at an all-time high + + +The government hopes that former FARC guerrillas will persuade villagers to switch crops + + + +Mar 23rd 2017 | SINAÍ, COLOMBIA + + + + + +THE hills surrounding Sinaí, a village in south-west Colombia, are blanketed in a green patchwork, ranging from the bright chartreuse of coca-plant seedlings to a darker clover colour that indicates the leaves are ripe for picking and processing into cocaine. It is areas like this that have helped to boost Colombia’s estimated cocaine output 37% since 2015 to an all-time high of 710 tonnes in 2016, according to America’s government. Some 188,000 hectares of land is now planted with coca, up from a low of 78,000 in 2012. + +One reason for the rise seems counter-intuitive: the signing last November of a peace deal between the government and the FARC rebel group. It was supposed to reduce coca cultivation; the FARC had extorted a tax on coca crops and trafficked cocaine, and under the peace deal it is to support the government’s eradication efforts. But the deal’s terms were years in the crafting, and many of its provisions were clear well in advance—including that there would be payments for coca-farmers who shifted to different crops. The government created a perverse incentive to plant more. + + + +And as the peace talks progressed, the government scaled back aerial crop-spraying—according to its critics, in order to placate the FARC. In 2015 it suspended spraying entirely, citing a study by the World Health Organisation concluding that glyphosate, the herbicide dumped out of planes, was “probably carcinogenic”. + +Instead, Colombia’s government is putting its faith in crop-substitution. It is aiming at a cut of 50,000 hectares in the area under coca cultivation this year in 40 municipalities. If a community signs up, each family will receive subsidies and assistance of about $7,800 in the first year that they eradicate their coca, and will be helped to acquire title to the land and to find other means of support. In areas where no deal is struck, the army may come in to root up plants by hand. + +Green shoots of peace + +Since the end of January, more than 58,000 families representing 49,000 hectares of coca have signed up. But suspicion born of long disappointment is holding others back. In Argelia, the municipality to which Sinaí belongs, no one has agreed to take part. Marcela Montoya, of Ascamta, a peasant organisation in Argelia, says that although the region’s coca-growers are in principle willing to switch crops, they doubt the government’s promises. They should reduce their coca production only gradually, she says, and wait and see if the government comes through. Generations of Colombian coca farmers have subscribed to alternative-development programmes intended to support the transition from coca, only for funding to dry up. + + + +In 2015 unarmed farmers in Argelia clashed with soldiers and government eradicators, burning the bus they were riding in. One farmer was shot dead and five others, as well as two soldiers, were injured. The government’s intention is that the FARC’s co-operation will help to lessen such resistance. As the guerrillas relinquish territory and make the transition to civilian life, it hopes that they will encourage farmers to make the switch away from coca. The FARC has shown a “clear and definite” commitment to convincing peasants to give up coca, says Eduardo Díaz, the government’s director for crop substitution. Mauricio Jaramillo, a FARC commander in Guaviare province, says the guerrillas will have more influence than the government, because in many parts of the country coca-growers have relatives who are members. + +But the FARC were never the only armed participants in the drug trade. As they withdraw, other criminal groups are moving in, including the National Liberation Army, a smaller guerrilla outfit. Argelia’s coca farmers have a new slogan: “resistance”—to both the eradication pacts and the new armed groups trying to muscle in. + +Some American officials think that stopping aerial crop-spraying was a mistake. Barry McCaffrey, a retired general who oversaw Plan Colombia, America’s 15-year-long anti-drugs effort in the country, under Bill Clinton, told El Tiempo, a daily, that “the minute they decided to stop aerial fumigation they lost control over the problem.” But the Americans are not publicly advocating a return to spraying—not least because proposed cuts to foreign aid would make it hard to pay for. + +At present Colombia seems determined to attack the problem on the ground, farm by farm. It needs quick successes to build trust among coca-growers and calm American fears. In the longer term, though, so long as the world retains its taste for cocaine, farmers and gangsters will find a way to satisfy this demand. Those who spray are no match for those who pay. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21719468-government-hopes-former-farc-guerrillas-will-persuade-villagers-switch/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Taking a battering + +Floods in Peru are just the latest blow to its economy + + +To rebuild his own support, President Pedro Pablo Kuczynski must rebuild shattered villages + + + +Mar 23rd 2017 | LIMA + + + + + +MORE than 75 people have been killed, and more than 100,000 left homeless, as Peru’s coast has been battered by the strongest rains seen in decades. Millions are without running water; more than 2,000km of roads and at least 175 bridges have been destroyed. The devastation has been caused by a “coastal El Niño”, a localised version of the global El Niño weather cycle that brings warm currents from Australia to the Pacific coast of the Americas. Peru had been braced for a big El Niño in 2016, but it did not arrive. It was not expecting a coastal version, especially of such magnitude. + +But even if it had known what was coming, it would not have been prepared. “This is not a natural disaster, but a natural phenomenon that has led to disaster because of the informal way this country has developed,” says Gilberto Romero, the head of the Centre for Disaster Research and Prevention, a local NGO. “We need to re-think and re-engineer our cities.” + + + +Pedro Pablo Kuczynski, the newish president, has pledged to work with mayors to stop homes from being rebuilt in vulnerable areas, and wants hydrological studies along river basins to reduce the risk of similar damage in future. The government has set up a fund of 2.5bn soles ($770m) to help victims and begin reconstruction, on top of a stimulus package that will pump 5.5bn soles into infrastructure. + +But the flooding is just the latest problem in Mr Kuczynski’s in-tray. Last year, the government had forecast growth of 4.8% for 2017. In January it cut that prediction to 3.8% as the scale of a scandal involving Odebrecht, a big Brazilian construction firm, became clear. The floods will cut it further. In December Odebrecht admitted in a court case in the United States that it had paid bribes to win contracts across Latin America, including in Peru. It said it had paid $29m in Peru between 2005 and 2014 to secure concessions. + +Initial investigations have landed five people in jail, and in February an arrest warrant was issued for Alejandro Toledo, Peru’s president between 2001 and 2006, for allegedly taking $20m from the firm. Prosecutors are also investigating his two successors, Alan García and Ollanta Humala. All three have denied wrongdoing. + +The government has passed new anti-corruption laws and told Odebrecht to pull out of Peru. But many voters expect further revelations. A poll by Datum Internacional, a research firm, found that two-thirds believe that Mr Kuczynski was involved in the Odebrecht bribery scandal. He has denied any link. Congress plans to question the transport minister, Martín Vizcarra, about a contract for a new airport in Cusco, Peru’s main tourist destination. He denies any wrongdoing, and laments that the “Odebrecht effect” has made all political decisions suspect. + +Mr Kuczynski’s approval rating has fallen steeply since he took office eight months ago. It stands at just 32%, according to Ipsos Peru, a pollster. And Popular Force, led by Keiko Fujimori, his main rival in last year’s elections, has a majority in congress. It is watching closely for any opportunity to damage the president. It intends to propose a bill to have Peru renounce its hosting of the 2019 Pan-American games, saying the money saved should go on reconstruction. + +Mr Kuczynski says Peru can afford both, and that pulling out would tarnish the country’s image abroad. That increases the pressure on him to manage the reconstruction well. If he succeeds, it would help to persuade Peruvians that his administration deserves its technocratic billing—and to rebuild his own image, too. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21719463-rebuild-his-own-support-president-pedro-pablo-kuczynski-must-rebuild-shattered/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Hustling, cradle to grave + +As Cuba’s economy flat-lines, retirement has become notional + + +Tiny pensions must be supplemented by whatever work is available + + + +Mar 23rd 2017 | HAVANA + + + + + +NORBERTO MESA, a 66-year-old grandfather, stands in the hot sun 11 hours a day, six days a week, guiding cars in and out of the parking spaces in front of a bustling farm stand. The 4,000 Cuban pesos ($170 at the official exchange rate) he earns each month in tips is more than ten times his monthly old-age pension of 340 pesos. Without it, the retired animal geneticist could not afford fruit and meat, or help his children, who work for low salaries, to feed his four grandchildren. + +Though revolutionary Cuba had one of the region’s earliest and most comprehensive pension systems, in recent years retirement has almost vanished. Without further economic reform, and the cheap oil that used to come from Venezuela, the economy has stalled. Pensions have been frozen, and their value eaten up by inflation. According to the most recent government statistics, from 2010, a third of men past retirement age are working. Three-fifths of older people say they often have to go without necessities. + + + +The insular socialist paradise supposedly offers a social safety-net, cradle to grave. But it is full of holes. Medical care is free, but most medicine is not. Retirement homes are scarce, and rules that mean residents must give up their pensions and homes put off many, since these are often a lifeline for younger relatives in equally distressed circumstances. + +So old people can be seen on the streets of Havana selling newspapers and peanuts, or recycling cans. They are scrubbing floors in affluent homes or cooking for a growing number of private restaurants and bakeries. Ernesto Alpízar, an 89-year-old former agronomist, goes door-to-door selling strawberries and flowers. Even so, he remains an ardent “Fidelista”, grateful to the island’s late dictator for the free cataract surgery that saved his eyesight. + + + +For even as the island’s old and infirm must hustle to survive, they have benefited from its success at providing health care. Life expectancy at birth is 79, not far short of most developed countries, and widely available birth control helps explain why family size has fallen further and faster than in most other countries (see chart). The flip side, though, has been a breakneck demographic transition—exacerbated by the large share of young and middle-aged Cubans who have fled to America. Over-65s now make up 14% of the population. The national statistical office estimates that the total number of pensioners will overtake the number of state-sector workers by 2025. + +A few churches and charities, mostly funded from abroad, are trying to fill the gap. Rodolfo Juárez, a pastor of the International Community Church, a Protestant congregation, helps 60 indigent elderly people in Havana. His scheme provides fruit, vegetables and beans to supplement government rations of a daily piece of bread; and 7lb of rice, 2lb of sugar, five eggs and a piece of chicken a month. Although running it costs just 18,000 pesos a month, funding is a constant problem. + +Mr Juárez and his wife, at 80 and 75, are older than many of those they help. Between their church duties and his teaching at a seminary, they make 3,600 pesos a month. Though that does not go far, it dwarfs Mr Juarez’s pension. As long as Cuba’s economy flat-lines, its elderly will have no rest till they drop. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21719482-tiny-pensions-must-be-supplemented-whatever-work-available-cubas-economy-flat-lines/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Bello + +There has never been a better time for Latin American integration + + +A fractured region needs to pull together on trade + + + +Mar 23rd 2017 + + + + + +IT IS Saturday lunchtime, and about 30 trucks are parked at each of the customs posts on either side of the bridge across the broad Uruguay river that marks the border between Argentina and Uruguay. Both countries are members of Mercosur, a would-be customs union that also embraces Brazil and Paraguay. In theory, internal borders should not exist in Mercosur. In practice, customs, sanitary inspections and other paperwork mean that the trucks are delayed for up to 24 hours, says Oscar Terzaghi, the mayor of Fray Bentos, on the Uruguayan side. + +This represents an improvement. For three years before 2010, access to the bridge—the shortest land route between the two capitals, Buenos Aires and Montevideo—was blocked by Argentine environmentalists with the support of the country’s president, Cristina Fernández. They claimed that a planned paper mill at Fray Bentos would pollute the river. The dispute ended only when the mill was operating and the International Court of Justice ruled that there was no evidence of pollution. + + + +For the past half-century, Latin American politicians have talked incessantly about regional integration. But they have struggled to make it happen. Despite a big increase in trade agreements among Latin American countries this century, the share of their exports that stays within the region has remained stubbornly around 20%, according to a new report from the World Bank. That is low compared with Canada and the United States (35%), East Asia (50%) and 18 core members of the European single market (60%). + +There are several reasons for this. Many Latin American economies are small, produce similar things and are separated by huge distances, all factors that tend to discourage trade. That is bad news: trade boosts economic growth, by increasing efficiency and by the “learning” that comes from exporting to other markets or importing more sophisticated goods. And after six straight years of economic weakness, Latin America is casting around for new sources of growth. + +Some of the centre-right governments that have recently come to power in South America are keener on open trade than their left-wing predecessors, especially in Mercosur. Unfortunately, the biggest gains in efficiency and learning might come from more trade with the United States, something Donald Trump seems uninterested in. But there are other things the region can do to help itself. + +There is much talk in South America of “convergence” between Mercosur and the Pacific Alliance, a free-trading group comprising Chile, Colombia, Mexico and Peru. Next month in Buenos Aires, foreign ministers from both will meet for the first time. Yet the groups have different rules and philosophies; merging them is a technical and political impossibility. One option would be to use ALADI, a 1980 integration treaty, to harmonise and improve existing preferential agreements, says Enrique Iglesias, a Latin American elder statesman. + +The easiest gains lie in tackling bureaucratic obstacles to trade. Susana Malcorra, Argentina’s foreign minister, says that with her Mercosur counterparts she has identified 80 such obstacles, such as conflicting norms and standards, which they will try to do away with. They have pledged to unify border posts where there are two, as on the river Uruguay. Better transport links and open-skies agreements are essential, too. Transport costs in South America are unusually high. + +The World Bank argues that regional and global integration go hand in hand. Mr Trump has killed the Trans-Pacific Partnership; the Pacific Alliance hopes to resurrect it without the United States, linking its members to Asia. Mercosur retains fairly high external tariffs and has few trade deals with others. It is making a fresh effort to conclude long-stalled talks with the EU; an agreement would provide a “road map and a corset” for liberalisation, says Ms Malcorra. But without Britain, the EU is even less likely to offer the market access Mercosur wants for its farm exports. + +The rhetoric of integration masks often-shameless protectionism by business, especially in Argentina, Brazil and Colombia. This has bred cynicism. The problem, says Roberto Bouzas, a trade specialist at San Andrés university in Buenos Aires, is how to translate the abstract demand for integration into a concrete political agenda backed by organised interests, and find leaders willing to carry this out. + +There is a flicker of hope. For the first time, says Ms Malcorra, there is “a very determined attitude from all the presidents”. Unfortunately, the region’s governments are politically weak. But they know they must rekindle growth, and that regional integration will help. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21719478-fractured-region-needs-pull-together-trade-there-has-never-been-better-time-latin/print + + + +上一项 文章 章节 下一项 + + + + + +The Americas 章节 China + + + + + +Asia + + +Thai politics: Generals’ disarray + +Japanese politics: The enemy within + +Indian politics: Agent orange + +THAAD in South Korea: Here’s looking at you + +Hydrological jurisprudence: Try me a river + +Banyan: Clamshell phoneys + +The Americas 章节 China + + + + + +文章 章节 下一项 + + + + + +Generals’ disarray + +The Thai junta’s 20-year plan omits the most urgent item + + +It claims to crave national reconciliation while continuing to persecute political opponents + + + +Mar 23rd 2017 | BANGKOK + + + + + +WHEN its tanks rolled into Bangkok in 2014—ousting an elected government that had been paralysed by protests—Thailand’s ruling junta promised that democracy would be back in a jiffy. Three years on, there is still no sign of the promised polls. Instead, in mid-March, the generals treated diplomats and foreign journalists to a briefing on their “20-Year National Strategy”, a programme which, they insist, all future governments will be legally obliged to follow. It is only the latest indication that the men in uniform are here to stay. + +The junta’s right to impose its master plan on Thailand is enshrined in its new constitution, which it rammed though in a referendum last year after banning campaigners from criticising the text. That document allows for fresh elections, which, after multiple postponements, are now expected in 2018. But it also empowers a junta-stacked senate and several unusual committees to baby-sit incoming governments—which includes giving these bodies the right to intervene should elected politicians choose to pursue their own policies instead of sticking to the generals’ preordained plan. + + + +Spin doctors had previously stated, to general mystification, that the national strategy would encompass “six areas, six primary strategies and four supporting strategies”. The latest explanation was similarly vapid: a clutch of admirable but vague aspirations, such as improving the competitiveness of the economy and promoting equality of opportunity, flecked with trendy phrases such as “green economy” and “human capital”. The small print is to be filled out by committees, supposedly after public consultations. Cynics speculate that the details will be left woolly on purpose, to make it easier for the army to justify meddling whenever it likes. + +Arthritic tiger + +Everyone agrees that Thailand could do with a long-term plan. Once one of South-East Asia’s economic stars, it has grown more slowly than all of its large neighbours for years. In a report released earlier this month the World Bank warned that Cambodia, Malaysia and Vietnam looked more competitive. Well-connected tycoons dominate business; many schools outside the biggest cities are woeful. For years governments have splurged the largest part of their budget on the lucky residents of Bangkok and its industrial exurbs, helping to keep citizens in the outer provinces poor. + +Insiders say the junta is more aware of these problems than the antics of Prayuth Chan-ocha, its cartoonish leader (pictured, at centre, in khaki), suggest. So far it has propped up growth through tax cuts, transfers and temporary incentives to boost consumer spending. But it looks incapable of instigating the contentious reforms that a 20-year plan should entail. It has been successful at squelching opposition in Thailand’s rural heartland, but remains beholden to a narrow urban clique determined to preserve its privileges. It introduced an inheritance tax in 2015, but only after greatly diluting the original proposal; a plan to tax land is crawling along. + +Moreover, the junta’s schemes increasingly appear hostage to the whims of Thailand’s new monarch, King Vajiralongkorn, whose motives remain uncertain. He has already wrong-footed the generals twice: first, by choosing not to accede to the throne for a month after his father’s death last October; second, by ordering changes to sections of the junta’s constitution that lightly limited the palace’s ill-defined powers. (Those redrafts are now awaiting the king’s approval, one of several ways in which bigwigs have continued to tinker with the charter even though the electorate is supposed to have signed off on it.) + +Lately the king has been purging and promoting court officials. Perhaps 20 people have left his service; cryptic notes in the Royal Gazette say they were dismissed for foibles including “procrastination” and “arrogance”; one “lacked enthusiasm”. In February the palace announced that Jumpol Manmai, a senior aide, had been sacked for “extremely evil behaviour”. He was later photographed with his head shaven, once a common punishment for Thais who offended the sovereign. + +Some have taken this episode as a sign that the army and the palace are in fact rubbing along: Mr Jumpol was once thought close to Thaksin Shinawatra, a former prime minister whom the generals and their backers abhor. But the junta may well worry that the king will seek to use an annual army reshuffle, due in September, to shake up their ranks too. + +The only way to secure Thailand’s next two decades is to defuse the quarrel that lies at the heart of its political strife: a sporadically violent class war that has pitted well-off urbanites, royals and soldiers against the sometimes bumbling governments that the more numerous rural voters elect when they have a chance. In January the generals announced that a “reconciliation panel” will hold hearings with some politicians, including members of Mr Thaksin’s party, Pheu Thai, which they have twice booted from power. The process is said to have started at the king’s initiative. The idea is that participants will eventually sign a new “social contract”. + +But it is hard to see what such talks can achieve when the junta is still hounding Mr Thaksin and his supporters. Yingluck Shinawatra, another former prime minister who is Mr Thaksin’s sister, is still undergoing a slow trial for negligence while in office; this month the government said that a newly discovered “miracle of law” would allow it to claim 12bn baht ($360m) in taxes from Mr Thaksin, who now lives in self-imposed exile, despite the expiry of the relevant statute of limitations. Meanwhile the military insists that it is not an actor in Thailand’s politics, but a referee, and therefore need not take part in the reconciliation it is stewarding. In a remarkable feat of blindness, the soldiers still seem to believe that the dozen or so coups they have launched since the 1930s amount to a noble defence of the kingdom—and not the single biggest cause of its malaise. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21719474-it-claims-crave-national-reconciliation-while-continuing-persecute-political-opponents/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The enemy within + +The governor of Tokyo declares war on her own party + + +The insurrection may be a leadership campaign in disguise + + + +Mar 23rd 2017 | TOKYO + + + + + +IT IS hard to exaggerate the gall of Yuriko Koike, the governor of Tokyo. She is a member of the Liberal Democratic Party (LDP), which dominates Japanese politics, and briefly served as minister of defence a decade ago. Yet last year she won her current job by running as an independent, against the LDP candidate. Last month she thumped the LDP again after backing a rival candidate for mayor of one of Tokyo’s 23 wards. She is now preparing to challenge the LDP’s control of the city assembly in elections to be held in July. Far from punishing this open rebellion, many in the party seem to be relishing it. + +Ms Koike’s battering-ram in her war against the LDP is Kibo no Juku (School of Hope), a private academy for her political acolytes. The school has whittled down thousands of applicants to a few dozen graduates who will stand against LDP candidates in July. The charismatic governor’s new party, Tomin First no Kai (Tokyoites First Group) could end up the biggest in the assembly: a recent poll found that 84% of Tokyoites support her. + + + +This run has been fuelled by a populist’s instinct for picking fights. Ms Koike, a former newscaster, has blamed corruption for the spiralling cost of the Olympic Games, which Tokyo will host in 2020. Her warning that spending on the event could top ¥3trn ($27bn), over four times the original estimate, has alarmed voters. “People see her on television every night fighting for them and they like her for it,” says Katsuei Hirasawa, an LDP politician. + +Ms Koike’s showdown with Shintaro Ishihara, another LDP rebel who ran the capital from 1999 to 2012, has also caught the public’s imagination. Ms Koike blames Mr Ishihara for approving the relocation of Tsukiji, the world’s biggest fish market, to the toxic site of a disused gas works. The frail ex-governor has been summoned to the city assembly in a potentially humiliating probe that could widen to include his links to a failed bank. + +During the election for governor last summer, Mr Ishihara said that running Tokyo could not be left to “a woman with too much make-up”. But calculation, not revenge, motivates Ms Koike, says Michael Cucek, a political blogger. “Her aim is to wipe out the LDP old guard.” In this she is following the lead of Junichiro Koizumi, Japan’s prime minister from 2001 to 2006. Mr Koizumi also cultivated young candidates, dubbed “assassins”, to supplant opponents within the LDP blocking his attempt to trim public spending and privatise Japan’s giant post office. The injection of fresh blood helped to reinvigorate the party and vindicate Mr Koizumi. + +But even a convincing win in Tokyo would not give Ms Koike the sort of political machine she would need to take on the LDP nationwide. Instead, she may hope to parlay her insurrection into a return to the heights of the party. In 2008 she stood for the leadership, which would have brought with it the job of prime minister, but lost to Taro Aso. + +There are few obvious candidates to succeed the current prime minister, Shinzo Abe. Ms Koike’s lack of a clear ideology is no handicap: the LDP itself, after all, flirted with austerity under Mr Koizumi but now runs one of the world’s most spendthrift governments. She has been cultivating alliances. Komeito, the LDP’s coalition partner at the national level, agreed earlier this month to support her candidates in July. Several LDP politicians have also rallied behind the governor, earning their expulsion from the party’s Tokyo chapter. + +The governor herself is protected from the LDP’s retribution by her popularity. Casting her out would only make the party look scared and vindictive, says Robert Fahey, a contributor to Sankei Shimbun, a newspaper. The party’s grandees are probably waiting to see how Ms Koike’s protégés fare, says Mr Hirasawa. Whatever happens, she is already Japan’s most popular politician; if her luck holds, she could one day be its leader. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21719473-insurrection-may-be-leadership-campaign-disguise-governor-tokyo-declares-war-her/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Agent orange + +A Hindu priest takes charge of India’s most populous state + + +Muslims fear Yogi Adityanath will stoke sectarian tensions + + + +Mar 23rd 2017 | DELHI + + + + + +TO SOME he is both hero and saint: a shaven-headed, saffron-robed servant of the Lord Shiva who has been elected five times in a row to India’s national parliament and elevated, at just 44 years of age, to the highest political office in a state of 220m people. To others the choice of Yogi Adityanath as the chief minister of Uttar Pradesh (or UP as the state is often abbreviated) seems ominous. Pratap Bhanu Mehta, a columnist in the daily Indian Express who rarely uses such blunt language, describes the Hindu priest-turned-politician as “the single most divisive, abusive, polarising figure in UP politics”. + +No one can argue with the word “polarising”. Since becoming India’s youngest MP in 1998, Mr Adityanath has championed a range of reactionary Hindu causes, from the banning of cow slaughter to the proposed construction of a temple to Lord Ram, protagonist of the ancient Ramayana epic, at the god’s supposed birthplace in the UP city of Ayodhya. Inconveniently, at the site selected for this honour, there stood a grand 16th-century mosque, at least until a mob of Hindu fanatics tore it down in 1992, sparking riots across India that left some 2,000 dead. The new chief minister’s devotees, whether from the temple at Gorakhpur in eastern UP where he has long served as high priest, or from a Hindu youth-cum-vigilante group that he founded, respectfully touch his feet and call him maharaj or “great king”. + + + +Mr Adityanath has managed to offend many of his fellow citizens. Some women resent his assertions that they are weak, and liable to turn into “demons” when they take on jobs or activities traditionally reserved for men. Citizens of neighbouring Nepal may grimace at statements such as one on his website declaring that, for its own defence, India must preserve its smaller neighbour as a “Hindu Nation” by destroying “Muslim and Christian separatist forces working under the shield of Maoists”. (Muslims and Christians make up less than 6% of Nepal’s population.) + +India’s own 180m Muslims, in particular, find Mr Adityanath scary. Time and again he has warned of an alleged “love jihad” to convert unwary Hindu girls to Islam, and of the existential threat from rising numbers of Muslims. He often denounces the imaginary flight of Hindus from Muslim persecution of some sort or another. Time and again in UP, such talk has helped turn ordinary scuffles into ugly sectarian clashes. + +Earlier this month India’s prime minister, Narendra Modi, celebrated his party’s crushing triumph in UP state elections with a soothing speech on the need to unite for the common good. Yet shortly afterwards, he appointed Mr Adityanath to run the state. Some say that Mr Modi’s calculations are political. For the first half of his term he pandered mostly to better-off, better-educated city folk; the choice of a firebrand priest is meant to placate a different and restless demographic, his party’s rural Hindu-nationalist base. Others ascribe the move to ideology: Mr Modi’s big win in UP suggests there are few rivals to challenge his party in the next national election, in 2019, freeing it to carry out its religiously inspired mission. + +Mr Adityanath has already shut down slaughterhouses and butcher shops suspected of handling beef, and has set up an “anti-Romeo squad” to hunt love jihadists and other predators. But the best indication of his intentions will be Ayodhya. Hindu-nationalist “moderates” have long counselled patience regarding the building of the Ram temple; hardline groups say they want it to happen now. Which approach will Mr Adityanath take? + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21719488-muslims-fear-yogi-adityanath-will-stoke-sectarian-tensions-hindu-priest-takes-charge-indias/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Here’s looking at you + +Why China is wrong to be furious about THAAD + + +The deployment of an American anti-missile system in South Korea does not threaten China’s nuclear weapons + + + +Mar 23rd 2017 + + + + + +THE Chinese authorities are so angry with South Korea that they have cheered on boycotts of South Korean goods and culture, persecuted South Korean firms operating in China and discouraged Chinese tourists from visiting South Korea. China is South Korea’s biggest market for exports (it spent $137bn on South Korean goods in 2015, nearly twice as much as the next biggest taker, America), so the prospect of a prolonged dispute is alarming. It is also puzzling, given that the source of the row—the deployment of an American anti-missile system called THAAD (pictured)—does not seem nearly as objectionable as China suggests. + +Earlier this month America began installing a THAAD system in South Korea. As if to confirm the rationale for deployment, the previous day North Korea had fired four missiles into the Sea of Japan, in what appeared to be a simulated attack on an American base. Last year North Korea conducted more than 20 ballistic-missile tests in defiance of UN Security Council resolutions. If anything, the tempo of missile launches has increased this year. This week saw the testing of a powerful new rocket engine and an abortive missile launch. Yet China’s foreign ministry has long fulminated against THAAD. It greeted the deployment by declaring its “firm opposition and strong dissatisfaction”. + + + +In Seoul last week America’s secretary of state, Rex Tillerson, called on the South Korean government to stand firm in its support for THAAD and described China’s behaviour as “inappropriate and troubling”. Moon Jae-in, the front-runner in South Korea’s presidential election, which will be held on May 9th, has said he will review the deployment, but has been careful not to promise to reverse it. + +China has expressed two related criticisms of THAAD, which stands for Terminal High Altitude Area Defence. The first is that the powerful radar that THAAD uses to track and hit targets has the capability of “seeing” far into China and thus could be used to undermine the effectiveness of China’s own nuclear arsenal. The second is that the system, which is designed to intercept and destroy short- and intermediate-range ballistic missiles during their descent (terminal) phase, at altitudes of 40-150km, would not be effective because Seoul is so close to North Korean missile launchers. The implication, again, is that China is the real target. + +Neither of these arguments is convincing. In the first place, there are already two THAAD radars in Japan, which can see into China, albeit not quite as far as the radar going into South Korea. Michael Elleman, a missile-defence expert at the International Institute for Strategic Studies, says that the THAAD radar in South Korea might pick up Chinese missiles bound for the West Coast of America in their boost phase, but the advantage it would give would be “quite marginal”. THAAD interceptors in South Korea cannot be used to hit Chinese missiles in their launch or boost phase and are in the wrong place to hit missiles attacking America in their terminal phase. + +Moreover, the radar in South Korea will be configured in “terminal” rather than “look” mode. It takes a software change and about five hours to switch modes, but doing so would render THAAD useless against North Korean missiles, which pose a grave and immediate threat to the 28,500 American troops in South Korea. + +America says it has repeatedly offered Chinese officials technical briefings on the radar’s capabilities and limitations. They have shown little interest, possibly because they do not really disagree about the threat THAAD represents. Chinese military analysts have boasted of China’s ability to “blind” THAAD (meaning to incapacitate it through electronic interference)—a further indication that the outrage is politically motivated. + +It is also wrong to suggest that THAAD does nothing to protect South Korea from the North. In a paper for 38 North, a website, Mr Elleman and Michael Zagurek calculate that faced with 50-missile salvoes, a layered defence consisting of South Korea’s Patriot system and two THAAD batteries (another may be deployed when it is available) would probably destroy 90% of incoming land-based missiles. The threat that one of the 10% getting through might be carrying a nuclear warhead would not be eliminated. But South Korea is a lot safer with THAAD than without it. + +It is possible that China really does fear that one day its land-based nuclear forces might be hemmed in by an integrated American missile-defence system stretching from Japan to India. That is a remote prospect at both the political and the technical level but, by opposing THAAD’s deployment in South Korea, China may be hoping to nip such a possibility in the bud. + +It is more likely, however, that China, always resentful of the presence of American troops so near its borders, sees an opportunity to use THAAD to weaken America’s alliance with South Korea. It may hope that its bullying might yet pressure South Korea’s next president into reversing the deployment. If that is the intention, however, it has probably overplayed its hand, raising Korean hackles with its blatantly coercive methods. + +Donald Trump is about to have his first meeting with China’s president, Xi Jinping. There will be plenty of thorny issues to discuss. But when it comes to THAAD, the unpredictable Mr Trump can deliver a reasonable message: the problem is not missile defence, but the belligerence of North Korea which makes it necessary, and which Mr Xi has done too little to restrain. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21719485-deployment-american-anti-missile-system-south-korea-does-not-threaten-chinas-nuclear/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Try me a river + +New Zealand declares a river a person + + +The odd legal status is intended to help prevent pollution and other abuses + + + +Mar 25th 2017 + + + + + +IT SOUNDS, admits Chris Finlayson, like a “pretty nutty” idea. Yet the new law that declares the Whanganui river, New Zealand’s third-longest, a legal person, in the sense that it can own property, incur debts and petition the courts, is not unprecedented. Te Urewera, an area of forested hills in the north-east that used to be a national park, became a person for legal purposes in 2014. And around the world companies, foundations and assorted units of government have legal rights and responsibilities independent of the people who staff them. All the same, New Zealanders have been joking about whether the Whanganui might now vote, buy a few beers (how old is it?) or be charged with murder if a swimmer drowns. + +The law, which was approved on March 15th, stems from disputes over the Treaty of Waitangi, by which New Zealand’s indigenous Maori ceded sovereignty to British colonialists in 1840. The treaty was supposed to have protected Maori rights and property; it was observed mainly in the breach. In recent years the government has tried to negotiate settlements for breaches of the treaty with different Maori iwi, or tribes. For the Whanganui iwi, the idea of the river as a person is nothing new. The iwi professes a deep spiritual connection to the Whanganui: as a local proverb has it, “I am the river and the river is me.” The law acknowledges the river as a “living whole”, rather than trying to carve it up, putting to rest an ownership dispute that has dragged on for 140 years. When it was passed, members of the iwi in the gallery of parliament broke into a ten-minute song of celebration. + + + +In practice, two guardians will act for the river, one appointed by the government and one by the iwi. Mr Finlayson, the minister in charge of negotiations tied to the Treaty of Waitangi, hopes the change will help bring those who do environmental damage to the river to book. Under the settlement the government will also pay the iwi NZ$80m ($56m) as compensation for past abuses and set up a fund of NZ$30m to enhance the “health and well-being” of the river. It is one of 82 deals that aim to remedy breaches of the treaty, including one with the Tuhoe iwi that made Te Urewera into a person. + +Days after the law passed, an Indian court declared two of the biggest and most sacred rivers in India, the Ganges and Yamuna, to be people too. Making explicit reference to the Whanganui settlement, the court assigned legal “parents” to protect and conserve their waters. Local lawyers think the ruling might help fight severe pollution: the rivers’ defenders will no longer have to prove that discharges into them harm anyone, since any sullying of the waters will now be a crime against the river itself. There is no doubt that of the 1.3bn-odd people in India, the Ganges and the Yamuna are among the most downtrodden. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21719409-odd-legal-status-intended-help-prevent-pollution-and-other-abuses-new-zealand-declares/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Banyan + +How a Chinese fishing fleet creates facts on the water + + +Bad news for giant clams and for the other littoral states in the South China Sea + + + +Mar 23rd 2017 + + + + + +ON A past visit to the little fishing port of Tanmen, on the island-province of Hainan in southern China, pigs were being driven onto the foredecks of wooden trawlers, while water butts were being lashed down at the stern. Farther down the quay, similar boats were about to unload their catch after a month at sea: not fish but giant clams, Tridacna gigas, up to a metre across, which required two or even four men to carry. The bivalves spilled out of the holds. Giant clams are one of Buddhism’s “seven treasures”, along with gold and lapis lazuli. China’s new rich prize their shells as showy ornaments. Each can fetch as much as $3,000, so each haul was worth a fortune. And it was all illegal. + +Nowadays Tanmen is transformed. The harbour is still crammed with fishing boats—calling on the spirit world for luck, one exuberant crew let off strings of firecrackers and threw joss paper up in the air as their vessel steamed out of the harbour. But the clam boats have gone, and some of the piratical air too. The quay has had a makeover, with new awnings under which fishermen’s wives grill squid for day-tripping tourists. “It’s over,” one of the women declared. “The authorities have banned the clam fishing. It’s big fines and 15 years in jail if they come after you.” + + + +The ban is surely welcome. From an analysis of satellite imagery, John McManus of the University of Miami last year concluded that 40 square miles (104 square km) of some of the most biodiverse coral reefs on Earth have been destroyed in the South China Sea thanks to giant-clam poachers. In the shallow waters of the reefs, crews use the propellers of small boats launched from each mother-ship to smash the surrounding coral and thus free the clams anchored fast to the reef. Though the practice has received little attention, it is ecological hooliganism, and most of it has been perpetrated by boats from Tanmen. + +The fishermen have not been the reefs’ only adversaries. China’s huge and (to its neighbours) controversial programme since late 2013 of building artificial islands around disputed rocks and reefs in the South China Sea has paved over another 22 square miles of coral. When the two activities are taken together, Mr McManus says, about 10% of the reefs in the vast Spratly archipelago to the south of Hainan, and 8% of those in the Paracel islands, between Hainan and Vietnam, have been destroyed. Given that Asia’s Coral Triangle, of which the South China Sea forms the apex, is a single, interconnected ecosystem, the repercussions of these activities, environmentalists say, will be huge. + +Yet the Chinese authorities’ conversion to environmentalism is not absolute. A few streets back from the waterfront in Tanmen, elegant boutiques sell jewellery and curios fashioned from the giant clams—and clam shells are still stacked outside. And the provincial money that is so clearly being lavished on Tanmen sits oddly with the illegality of its townsfolk’s way of life. Tanmen used to be isolated on the far side of a wide river. Now a bridge connects it to the posh resort district of Boao, famous for a forum, a kind of Asian Davos, which China’s leaders grandly host each year. Most striking of all, in 2013 President Xi Jinping himself showed up in Tanmen. Boarding one of the trawlers he declared to the crew, according to state media, “You guys do a great job!” The media did not report that a year earlier the trawler in question had been caught in the territorial waters of Palau, and in the confrontation with local police that followed one of the crew members had been shot dead. In Chinese propaganda, Tanmen’s fishermen are patriots and model workers. + +So what is going on? Over the years Tanmen’s fishermen have become part of China’s power projection in the South China Sea, an unofficial but vital adjunct to the Chinese navy and coastguard. The biggest trawlers are organised into a maritime militia ready to fight a “people’s war” at sea. Though generally unarmed, they undergo training and take orders from the navy. + +They are facts on the water, and have been involved in China’s growing aggression in the South China Sea. In 2012 boats from Tanmen were part of a navy-led operation to wrest control of Scarborough Shoal from the Philippines, chasing Philippine fishing vessels away. In 2014 they escorted a Chinese oil rig that was being towed provocatively into Vietnamese waters. On land, Vietnamese expressed their rage by ransacking factories they thought were Chinese-owned. At sea, boats from Tanmen rammed and sank one of the rickety Vietnamese vessels coming out to protest. Andrew Erickson of the US Naval War College calls them China’s “little blue men”, an echo of the “little green men” who invaded Ukraine pretending not to be Russian soldiers. + +Clamming up + +Mysteriously, though, the giant trawlers of the Tanmen militia are now rafted up, their crews sent home. Perhaps China is keen to lower tensions in the region. After all, it has accomplished most of the terraforming it wanted. Bill Hayton of Chatham House, a think-tank in London, notes that towing the oil rig towards Vietnam was a propaganda disaster. And after a damning ruling last year from an international tribunal against the sweeping nature of its claims to nearly the whole sea, China has tried to get along better with the Philippines, which brought the case. (This week China denied reports that it was planning to build a weather station on Scarborough Shoal.) + +Yet perhaps self-interest as much as patriotism fires the fishermen’s behaviour. After all, boats from Tanmen would not have been quite so thrusting without lavish subsidies for construction and diesel. For the government, their costs have spiralled—and only exacerbated the overfishing in China’s surrounding waters. A policy introduced in January aims to cut the catch from China’s fishing fleet, the world’s largest, by a sixth, in the name of sustainability. That will hit Tanmen’s fishermen hard, making them less willing to defend China’s claims. Francis Drake would have understood: pirates are patriotic, but usually only when it pays. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21719465-bad-news-giant-clams-and-other-littoral-states-south-china-sea-how-chinese/print + + + +上一项 文章 章节 下一项 + + + + + +Asia 章节 Middle East and ... + + + + + +China + + +Soft power: Buying love + +Asia 章节 Middle East and ... + + + + + +文章 章节 下一项 + + + + + +The subtleties of soft power + +China is spending billions to make the world love it + + +Can money buy that sort of thing? + + + +Mar 23rd 2017 | BEIJING + + + + + +IMAGES of China beam out from a giant electronic billboard on Times Square in the heart of New York city: ancient temples, neon-lit skyscrapers and sun-drenched paddy fields. Xinhua, a news service run by the Chinese government, is proclaiming the “new perspective” offered by its English-language television channel. In Cambodia’s capital, Phnom Penh, children play beneath hoardings advertising swanky, Chinese-built apartment complexes in the city. Buyers are promised “a new lifestyle”. Across the world, children study Mandarin in programmes funded by the Chinese state. Some of them in Delaware don traditional Chinese robes and bow to their teachers on Confucius Day. + +For many years, shoppers around the world have been used to China’s omnipresence: “Made in China” has long been the commonest label on the goods they buy. More recently, however, the Chinese government has been trying to sell the country itself as a brand—one that has the ability to attract people from other countries in the way that America does with its culture, products and values. A decade ago the Communist Party declared a new goal: to build “soft power”, as a complement to its rapidly growing economic and military strength. It spends some $10bn a year on the project, according to David Shambaugh of George Washington University—one of the most extravagant programmes of state-sponsored image-building the world has ever seen. Mr Shambaugh reckons that America spent less than $670m on its “public diplomacy” in 2014. + + + +The party borrowed the idea of soft power from an American academic, Joseph Nye, who coined the term in 1990. Mr Nye argued that hard power alone was not enough to wield influence in the world. It had to come from “the soft power of attraction”, too. China was acutely conscious that it lacked it. Many in the West were deeply suspicious of its authoritarian politics. In Asia people feared China’s emergence as a regional hegemon. China knew it could use its economic might to win over governments, such as by building roads, railways and stadiums for them. But Mr Nye saw those kind of investments as expressions of hard power. China decided it needed more of the soft kind as well, so that foreigners would feel naturally inclined to do its bidding. + +After several years of debate about soft power, or ruan shili, among Chinese academics, China’s then president, Hu Jintao, spoke up on the topic in 2007, telling a party congress that China needed to build it. Mr Hu’s successor, Xi Jinping, has stepped up the effort. In 2013, about a year after he took over as China’s leader, Mr Xi convened a meeting of the ruling Politburo to discuss soft power. Its members agreed that it was a vital ingredient of Mr Xi’s “Chinese dream of the great revival of the Chinese nation”—the term “Chinese dream” being one of Mr Xi’s favourites. + +Mr Xi has made himself promoter-in-chief of this new form of power (helped when he travels abroad by the highly visible presence of his elegant, smiling wife). His efforts to boost it were on display at the World Economic Forum in Davos in January, where he won plaudits for extolling globalisation and calling for unity in the fight against climate change. Even Mao Zedong, who enjoyed a cult status abroad among some left-wing academics, put far less work into winning over foreigners. + +Raise the red lanterns + +According to Mr Nye, whom Chinese officials acknowledge as a guru on the topic, there are three main ways that a country can gain soft power: through its political values, its culture and its foreign policies. But winning on all fronts is not easy. The party knows that its ideology has little chance these days of attracting others. Arguably China’s soft power was stronger in the 1950s and 1960s when Mao, a brutal but charismatic dictator, espoused a socialist Utopia that inspired many people around the world. Nowadays some Chinese academics speak of a “China model”—the winning combination, in their view, of authoritarian politics and somewhat liberal economics (with a big role for the state). But Chinese leaders prefer to gloss over the politics when describing their country to foreigners. In 2008 the opening ceremony of the Olympics Games in Beijing barely hinted at the party or its principles. + +Instead, China’s soft-power strategy focuses mainly on promoting its culture and trying to give the impression that its foreign policy is, for such a big country, unusually benign. The culture that the party has chosen for foreign consumption is mainly one that was formed long before communism. Confucius, condemned by Mao as a peddler of feudal thought, is now being proffered as a sage with a message of harmony. Since 2004 China has established some 500 government-funded “Confucius Institutes” in 140 countries. These offer language classes, host dance troupes and teach Chinese cooking. Many of them are on campuses (an activity involving one, at the University of Delaware, is pictured). China has also set up more than 1,000 “Confucius Classroom” arrangements with foreign schools, providing them with teachers, materials and funding to help children learn Mandarin. + +Let there be no confusion about Confucius + + + +China hopes foreigners will take up some of its traditional customs. For example, it has set out to make Chinese new year as popular as Christmas. In 2010 the government put on fewer than 100 new-year events in foreign countries. This year it sponsored some 2,000 of them in 140 countries to mark the year of the chicken. Red-coloured Chinese lanterns swayed in city streets thousands of miles from the home of the lunar festival. The Communist Party wants China’s cultural presence to reach everywhere: it recently staged a fashion show in Ethiopia’s capital, Addis Ababa, featuring the qipao, a sleeveless dress that gained popularity among fashionable Chinese women in the 1920s. + +China’s diplomats have been busy trying to convince foreigners that China’s rise is nothing to fear. Mr Xi speaks of a “new type of great-power relations”, suggesting that China can co-exist with America without the kind of rivalry that caused the two world wars. His “One Belt, One Road” scheme—involving Chinese investment in infrastructure across Asia, the Middle East, Africa and Europe—aims to reinforce China’s image as a country eager to use its newfound wealth for the good of the world (see article). + +To help craft such an image, China has been investing massively in its foreign-language media. Xinhua, the government’s main news agency, opened nearly 40 new foreign bureaus between 2009 and 2011, bringing its total to 162—at a time when cash-strapped media organisations elsewhere were shutting them down (it hopes to have 200 by 2020). The number of Xinhua correspondents based overseas doubled during that time. In December the state broadcaster rebranded its international media service, calling it China Global Television Network. Its six channels aim to compete with global services such as the BBC, CNN and Al Jazeera. (Mr Xi urged the network to “tell the China story well, spread China’s voice” and “showcase China’s role as a builder of world peace”.) China Daily, the government’s main English-language mouthpiece, pays for inserts in newspapers such as the Washington Post and the Wall Street Journal. + +The government is trying to extend its reach online, too. Last year a government-affiliated media group spent 30m yuan ($4.35m) to launch a free, English-language website called Sixth Tone. It tries to sell China’s message by being more sassy, and sometimes more critical, than other state media. With the party’s blessing, private companies are getting involved, too. In 2015 Alibaba, China’s biggest e-commerce firm, paid $260m for the South China Morning Post, Hong Kong’s flagship English-language newspaper which has incisive—and often critical—reporting on Chinese politics. The deal has raised fears that Alibaba will try to turn the newspaper into a cheerleader for the party. China’s richest man, Wang Jianlin, is trying to buy film studios and production companies in Hollywood, the epicentre of American culture (China’s clampdown on capital outflows may have been frustrating his efforts recently—earlier this month he withdrew a $1bn bid for Dick Clark Productions, an iconic Hollywood firm). + +China wants its message to be clearly visible in the heartland of America’s capitalist culture. It began advertising itself in Times Square in 2011 (see picture). Last year Xinhua used its billboard there to broadcast a video 120 times a day for two weeks defending China’s territorial ambitions over disputed rocks in the South China Sea. Sometimes the party uses covert means to sway foreign opinion. In 2015 an investigation by Reuters, a news agency, revealed that a Chinese state broadcaster, China Radio International, controlled at least 33 radio stations in 14 countries, including the United States, but was using front companies to mask its ties with them. Reuters said the stations avoided airing anything that might portray China in a negative light. + +Sweet and sour + +But when Mr Nye wrote about soft power, he suggested that governments could not manufacture it. He argued that much of America’s had sprung from its civil society: “everything from universities and foundations to Hollywood and pop culture”. The party is distrustful of civil society; its soft-power building has been almost entirely state-led. China has tried to combine elements of soft power with the hard power of its illiberal politics. Far from enhancing China’s global image, this approach has often served to undermine it. + +Take the Confucius Institutes and Classrooms. In 2007 a senior party leader described these as “an important part of China’s overseas propaganda set-up.” But many cash-strapped universities have gratefully supplanted their own language courses with ones led (even funded) by Confucius Institutes. In some places Confucius Institutes have replaced or started up entirely new China-studies programmes. Most of them do not actively push the party line, but Confucius Institutes usually skate over sensitive political topics such as the crushing of pro-democracy protests in 1989. + +They often attract controversy. In 2013 McMaster University in Canada severed ties with its on-campus Confucius Institute after one of the institute’s employees was forbidden to follow Falun Gong, a spiritual sect that is banned in China (the institute subsequently closed down). At a European Chinese-studies conference in 2014, the Chinese head of Confucius Institutes worldwide ordered pages referring to a Taiwanese educational foundation to be ripped from each programme. Such attempts at censorship only help to reinforce Western misgivings about China’s politics and undermine its soft power. + +China’s efforts to use its global media to paint a rosier picture of the country also face a tough challenge. Its television networks employ foreign anchors (and plenty of panda footage) to try to win audiences abroad. But foreigners can also see the Chinese state’s heavy hand, such as when it mobilises pro-China crowds to drown out protesters during visits by Chinese leaders, or when it arm-twists foreign politicians not to complain about China’s human-rights record (Liu Xiaobo, a Chinese human-rights activist who was awarded the Nobel Peace prize in 2010, languishes in a Chinese jail, rarely mentioned in public by Western leaders). In February an official at the Chinese embassy in London warned Durham University not to host a vocal critic of the party: a former Miss World contestant who was born in China and raised in Canada—the country she represented. + +As for China’s message of peace to other countries, many in Asia are far from convinced. Its grabs for territory in the East and South China Seas have fuelled widespread resentment. The rapid expansion of its navy and air force, and its build-up of missiles, have sown anxiety in America, too. + + + +China’s soft-power push has made some gains. In global opinion polls respondents from Africa tend to be more positive about China than people from other regions. That is partly because of the money China has poured into the continent—in Angola every professional football match is staged in one of four, Chinese-built, stadiums. Younger people everywhere often view China more favourably than older people (see chart). This is a sign, perhaps, that the country is capable of being cool—who does not get a buzz out of Shanghai’s skyline? Portland Communications, a public-relations firm, has conducted surveys of public attitudes towards 30 countries—most of them, apart from China, rich ones. China ranked bottom in 2015. Last year it crept two places higher, above the Czech Republic and Argentina. + +But money has not bought China anything like the love it would like. A year before Mr Xi took over, just over half of Americans had positive impressions of China, according to the Pew Research Centre. By the end of 2016 that share had fallen to 38% (see chart). Pew found a similar trend in other countries. In 14 out of 19 nations it polled between 2011 and 2013, views of China became less friendly. + + + +No thanks to the party + +China’s rapid economic development has won it many admirers. But the social and environmental costs of this have also produced many critics. A country can have soft power and smog as well (America has had plenty of both in much of its recent history). But China’s air pollution undermines its soft power: it is widely seen as evidence of a callous government that cares more about making the country richer than the health of its people or the planet. Many foreigners now associate the country with smog—an important reason why 37% fewer international tourists visited China in 2015 than in 2007. (Other reasons for the drop included the cost and increasing hassle involved in obtaining visas, and the yuan’s exchange rate.) Mr Xi’s eagerness to join the fight against global warming is partly driven by a desire to regain the soft power China has lost owing to its environmental horrors. + +Some people in China privately grumble that the party itself, with its intolerance of dissent, is the biggest obstacle to the country’s soft-power development. Since taking office, Mr Xi’s relentless efforts to clamp down on civil society have hardly helped. He has also been trying to strengthen the party’s control over the arts: in 2014 he said they should promote socialism rather than be “slaves to the market”. That is unlikely to help China emulate the success of America’s television shows, which project an attractive vision of American culture into people’s living rooms the world over. + +Few people outside China want to watch its programmes, which are often thinly disguised propaganda. The success of China’s most successful film globally, “Crouching Tiger, Hidden Dragon”, a co-production involving American companies, has not been repeated since its release in 2000. “Kung Fu Panda”, an American-made animated film series, has perhaps done more to boost China’s soft power than any movie made by the country itself. Small wonder that China was keen to enter into a co-production for the third in the series, which came out last year. + +State-controlled media in China have reported with relish on commentary in America suggesting that Donald Trump’s presidency may deal a heavy blow to the United States’ soft power. If that arises from the appeal of a country’s culture, political ideals and foreign policies, as Mr Nye reckons, then America’s soft power is threatened in two of these domains. China’s political system may not exert much of a global pull, but it could begin to look a bit more attractive to some people when compared with America’s. + +China has some attributes that it can play to its advantage. For example, it has no colonial history beyond its current borders and has started no wars in nearly 40 years. In a turbulent world, China’s leadership appears relatively stable and predictable (at least to the casual observer—Mr Xi’s determination to crush dissent suggests he sees serious threats to his power). + +When Mr Xi became the first Chinese president to address the global elite at Davos, only days before Mr Trump was inaugurated, he appeared to sense an opportunity to bask in a rare glow. But the upswing in China’s soft power is likely to be limited. Chinese officials themselves quietly ask whether China’s strategy can ever succeed. In 2015 a senior official, Zhou Hong, wondered aloud what state-sponsored soft power could achieve. “Without the broad participation of the people,” he wrote in the party’s main mouthpiece, the People’s Daily, “the external propagation of culture not only loses its meaning, but also loses its intrinsic energy.” Mr Zhou was right about the Chinese people’s role. China will find it hard to win friends and influence nations so long as it muzzles its best advocates. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21719508-can-money-buy-sort-thing-china-spending-billions-make-world-love-it/print + + + +文章 章节 下一项 + + + + + +China 章节 Europe + + + + + +Middle East and Africa + + +Yemen: Beggar thy neighbour + +Syria: The race for Raqqa + +Contraceptives in Egypt: A bitter pill + +South Africa: The thin robed line + +African rubbish: Plastic bantastic + +China 章节 Europe + + + + + +文章 章节 下一项 + + + + + +Beggar thy neighbour + +Yemen’s war enters its third bloody year + + +Two years on, Saudi Arabia’s war is a study in futility and self-harm + + + +Mar 23rd 2017 + + + + + +WITH hindsight Shawki Hayel, Yemen’s most successful industrialist, made a mistake putting his food-processing plant in his hometown of Taiz. The town straddles the front line where northern Houthi rebels are fighting the Saudi-backed government in the south and the war has been harshest. Imports of flour for his biscuits are haphazard because of a Saudi-led blockade at Hodeida, the country’s largest commercial port. Warlords on the road in between erect checkpoints to rob travellers and merchants. And then there is the problem of payment. Abd Rabbo Mansour Hadi, the president, moved Yemen’s central bank from Sana’a, the capital seized by his northern Houthi foes in January 2015, to Aden, a southern port now controlled by soldiers from the United Arab Emirates (UAE), but had to leave its bureaucrats and database behind. Government employees have not been paid since July. Banks have stopped issuing letters of credit or cashing cheques. + +As Yemen’s formal economy collapses, a war economy has taken its place. For a fee, any truck can pass checkpoints without inspection, no matter what it carries. Weapons-smuggling is rife; particularly, says a diplomat, of Saudi-supplied arms. So cheap and plentiful are hand-grenades that Yemenis throw them to celebrate weddings. Sheikhs offer their tribesmen as fighters for neighbouring countries willing to pay for regional influence. (One warlord supposedly presented his Saudi backers with a payroll of 465,000 men.) For a further fee—call it performance-related pay—they might even advance. Ending the conflict might cost the warring parties their livelihoods, so they have stopped talking to the UN’s special envoy. When the unfortunate diplomat arranged a ceasefire-monitoring centre in Saudi Arabia, the Houthis bombed it. “They and their sons make millions at the expense of hungry Yemenis,” says a frustrated mediator. + + + +Outsiders have added greatly to the fragmentation of Yemen. Iran has long backed the Houthis with weapons, but ideas are just as lethal an export. Yemen’s population is comprised of roughly equal numbers of Shafii Sunnis and Zaydi Shias, inclusive sects whose followers once prayed side-by-side in the same mosques. But after Iran’s Shia revolution in 1979, ayatollahs in Iran’s holy city of Qom paid for hundreds of Zaydis to enroll in their seminaries. Many returned to preach the virtues of Iran’s more mainstream Shiism, and hung portraits of Iran’s supreme leader, Ali Khamenei, in their homes. + + + +Saudi Arabia countered by exporting its own Wahhabi version of Sunni Islam. Radical preachers, such as Muqbil al-Waddai, opened retreats in the desert, where at prayer-time trainees bowed down to Kalashnikovs laid in front of them. With Sunnis concentrated on the coast and in the east, and Shias predominating in the highlands of the north-west, their rival creeds prised the country apart. + +Such are the animosities that Yemen, stitched together in 1990, is now disintegrating. The south seethes at the northern bullies who bombarded their roads and sniped at their citizens when they briefly conquered Aden in the early months of the war. The north decries the southern traitors who invited Saudi and Emirati forces to drop bombs on them and isolate them by land, air and sea after the outsiders joined the war in March 2015. + +The fact that gains on the ground are often secured by tribal understandings and payments rather than by fighting accounts for the high share—three-fifths—of all casualties that are caused by air strikes. Reluctant to take risks, Saudi pilots fly high, out of range of anti-aircraft fire. That spares Saudi lives, but imprecise bombing increases Yemeni civilian casualties. The UN says over 7,000 Yemenis have been killed in the two years of war. Hospitals were attacked 18 times in 2016. + +Not according to plan + +Hunger is also taking a toll. Yemen imports 90% of its food, so the warring parties control its supply as yet another weapon. Without electricity to keep it cool, much of what gets through perishes. Of some 27m Yemenis, 7m are going hungry, says the UN, almost double the figure in January. Some 3m people have fled their homes, but of Yemen’s neighbours, only Djibouti accepts refugees. Yemen, says the UN, is the world’s largest humanitarian crisis. + +Saudi Arabia insists all this is a price worth paying for reinstating the president the Houthis chased out of the capital in 2015. They had reason to worry. After the fall of Sana’a, Iran boasted that Shias had won a fourth Arab capital (along with Baghdad, Beirut and Damascus), this time in their Saudi rivals’ backyard. Some Houthis pointed artillery purloined from state armouries northward, and said they might march to Mecca. Others fortified positions on the Red Sea through which 4m barrels of oil pass every day en route to Europe. Vowing to push Iran back, the new Saudi king’s impulsive son and defence minister, Muhammad bin Salman, saw a chance to prove his mettle. + +But even if the diagnosis was accurate, the prince’s response has been fatally flawed. War has only exacerbated the manageable threat that Saudi Arabia faced at the start. No matter how often its loyal press report victorious advances, the front lines have in fact changed very little. But Saudi Arabia now looks more vulnerable and Iran looms larger than ever. The Houthis mount regular raids dozens of kilometres into Saudi Arabia, often unopposed. Missiles land as far north as Riyadh, most recently striking an airbase there on March 18th, and disable coalition naval vessels in the Red Sea. Scores of Saudi and UAE tanks have been struck. As always, al-Qaeda and Islamic State fill the copious ungoverned spaces, perhaps offering a refuge for fighters fleeing Iraq and Syria. As a war it predicted would quickly end enters its third year, Saudi Arabia seems without an exit strategy. “Yemen [is] in danger of fracturing beyond the point of no return,” said a recent UN report. + +The UAE, which masterfully captured Aden with an amphibious landing in August 2015, had vowed to make the city a model for the rest of the country. A year and a half on it still refuses to let in journalists, so it is hard to measure its success. Security has improved, say locals, but governing institutions remain sorely lacking. Destitute refugees from Aden arriving in Djibouti insist they have seen no evidence of the billion dollars the Emirates claims it is investing in reconstruction. In the territories it has captured, the coalition’s forces battle over the spoils. Mr Hadi’s own southern tribesmen are but one of four forces scrapping for control of the port and the airport. Al-Qaeda is another. + +Those who should know better egg them on. “All permanent members of the UN Security Council are against the war, but they are all ready to sell Yemen for arms,” says an ex-UN official who worked on Yemen. By night Saudi Arabia launches American-made Reaper combat drones from an American base in Djibouti. In order to buy silence, King Salman promised China $65bn of investment on a visit this month. Saudi Arabia’s people, fed up with the austerity measures put in place to help with their country’s budget deficits, would rather the money was spent at home. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21719464-two-years-saudi-arabias-war-study-futility-and-self-harm-yemens-war/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The race for Raqqa + +The noose is tightening in Syria + + +America is struggling to stop its allies killing each other as the final battle for Islamic State’s capital looms + + + +Mar 23rd 2017 | SANLIURFA + + + + + +THE last caliph to make the Syrian city of Raqqa his capital was a lover of fine wine, art and women. Although certainly brutal (he had his most loyal adviser cut into three pieces in 803), Harun al-Rashid is best remembered for his lasciviousness, which inspired some of the raunchiest tales in “The Arabian Nights”. + +By contrast, Raqqa’s current overlord—the self-declared caliph of a self-declared caliphate—will be remembered for unleashing a spasm of grotesque violence that erupted in Iraq and spread as far as the shores of Libya and the mountains of Afghanistan. Abu Bakr al-Baghdadi will have also presided over one of the shortest-lived “caliphates” in history. + + + +The fall of the capital of Islamic State (IS), which the extremists captured in January 2014, looks imminent. Since November, a combined force of Kurdish and Arab fighters known as the Syrian Democratic Forces (SDF) has swept through the desert from the north, sealing the city from the north, east and west. Backed by air strikes from the American-led coalition against IS and supported by American special forces on the ground, the SDF’s closest front line is now just a few kilometres from the city. + +The coalition’s planes have destroyed the bridges that span the Euphrates to the south, completing the siege of the city. Air-dropped leaflets have warned residents not to cross the river in ferry boats (IS has used the boats to reinforce the city with men and weapons). Both civilians and fighters are trapped. + +As in its defence of Mosul, now also nearing its end, IS has burrowed a network of fortified tunnels beneath Raqqa and prepared dozens of suicide-bombers for its enemies. Its fighters have booby-trapped homes, ringed the city with belts of improvised landmines and strung tarpaulins across the main streets to conceal them from drones. + +Whether the fight takes weeks or months, there is little doubt that IS will lose its capital. Of greater concern, given the heady mix of competing interests in northern Syria, is what comes next. Many question the wisdom of gambling on the Kurdish-dominated SDF to liberate a city where Arabs predominate. There are also fears that the SDF’s links to the regime may restore a degree of government control over the city, which was the first to fall to rebel forces in the early years of the revolution. The SDF recently ceded control of several villages to the government in a Russian-brokered deal that has only intensified these fears. + +“They [locals in Raqqa] want to get rid of IS but they are really worried about who’s coming to free them,” says Mohamad Shlash, a lawyer and former member of the city council. “IS is playing on these fears, telling people that the SDF is full of atheists and regime people who are coming to destroy Islam.” + +America’s support for the SDF has infuriated the Turkish government, whose enmity with the Kurds has threatened to derail the campaign against IS. The SDF is spearheaded by the military wing of the PYD, a Syrian-Kurdish party that has seized on the chaos of Syria’s six-year war to carve out a proto-state along the Turkish-Syrian border. The PYD in turn has close ties with the PKK, a Kurdish party that the Turkish government has fought for decades. It regards a Kurdish mini-state with strong links to a group both America and Turkey consider to be a terrorist organisation as anathema. To thwart Kurdish ambitions along its border, Turkey sent tanks and troops into Syria last August, bringing them face-to-face with American special forces deployed as advisers to the SDF. + +In the run-up to the battle for Raqqa, America has had to work hard to keep these unruly partners from tearing themselves, rather than IS, apart. When Turkish-backed rebel forces attacked the SDF. around the town of Manbij earlier this month, America had to rush its own soldiers into the town to stop its allies from killing each other. It has also sent a unit of marines to the outskirts of Raqqa to set up an artillery base ahead of the battle. More soldiers and helicopters will probably follow as America seeks to speed up the fight against IS. + +Whatever its make-up, the force faces a severely depleted IS. Its shrinking territory has seen the group’s revenue drop by more than half since 2014. Local fighters have had their wages cut, lowering morale and increasing tensions with better-paid jihadist immigrants from countries such as Tunisia and Saudi Arabia. + +“There are a lot of local fighters who want to quit,” says an IS defector who fled to Turkey four months ago. “But many are afraid of being captured by the anti-IS tribes or by the rebel groups. They know they’ll be killed. Others can’t afford the smuggling fees. So they will have to fight. They don’t have much choice.” Even with the group’s Utopian dreams in ruins, the war against IS is far from over. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21719472-america-struggling-stop-its-allies-killing-each-other-final-battle/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The bitter pill + +A shortage of birth control makes life tough for Egyptians + + +Red tape is keeping foreign drugs out + + + +Mar 23rd 2017 | CAIRO + + + + + +WHEN they got married a year ago, Hassan and his wife were not ready to have children. So she began using Yasmin, a popular birth-control pill made by Bayer, a German company. But last summer, Yasmin disappeared from pharmacies. So she switched to another brand, until it also disappeared. The newly-weds were careful, but in October Hassan’s wife found out that she was pregnant. He went looking for abortion pills. But they, too, were unavailable. + +The ordeal of Hassan (not his real name) and his wife is not unusual. During the past year, many Egyptians have struggled to find contraceptives, especially birth-control pills. This is symptomatic of a broader shortage of medicines that has caused widespread suffering. Access to contraception is rarely a matter of life and death—unlike, say, cancer treatment, which is also limited. But Egypt’s population is growing at 2.4% a year, much faster than most other developing countries. Water and food are in short supply. The government can hardly serve the 92m Egyptians alive today. + + + +Egypt was once at the forefront of contraception. In ancient times women inserted a paste made with crocodile dung into their vaginas to prevent pregnancy. Now more reliable prophylactics are imported, or made locally with foreign ingredients. The same is true of other medicines, so Egyptian drug companies need foreign currency, which was in short supply last year. Most had to buy dollars at a premium on the black market, adding to their costs. After Egypt floated its currency in November, leading to a precipitous drop in its value, the cost of imports spiked. + +Since 1955 the government has fixed the price of medicine, which once made Egypt a destination for medical tourists. Now the policy hinders drug firms, which cannot pass on higher costs to consumers, most of whom pay for contraceptives themselves. Since last year firms have pleaded with the government to raise prices and, say critics, hoarded their stocks. Anxious consumers have aggravated the shortages by buying more than they need. + +Hassan turned to the black market to get birth-control pills, until those disappeared. Others adapted in different ways. Egyptian couples tend to shun condoms, but some have resorted to them. There is a shortage of sex education, too. A pharmacist in Cairo claims one woman tried to swallow the condoms she bought. + +By the time the government agreed to raise the price of medicines in January, 95% of the local factories that make drugs had stopped production, says Ali Ouf of the Federation of Egyptian Chambers of Commerce. For now, shortages are easing. “Most missing medicine is now available, but in very small quantities,” says another pharmacist. “For contraceptives, one person cannot buy more than one pack.” + +There has been talk of the government playing a larger role in the drugs market. (When there was a shortage of baby formula last year, the army intervened.) But its bureaucracy is already part of the problem. Several ministries regulate the import, manufacture and sale of drugs. The IMF has urged Egypt to abandon fixed prices. Locals want the government to widen and improve coverage. + +The government claimed a victory for its family-planning policies when population growth slowed slightly in 2015. The numbers for 2016 are not yet available, but they will not tell the whole story. Last year Hassan paid a doctor 8,000 Egyptian pounds ($440) to perform an illegal abortion. “The government is, of course, responsible for that,” he says. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21719470-red-tape-keeping-foreign-drugs-out-shortage-birth-control-makes-life-tough/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The thin robed line + +South Africa’s courts battle with the government + + +Judges are struggling with a government that defies the law + + + +Mar 23rd 2017 + + + + + +IT READS like a head-teacher’s instructions to a failing pupil to come back every few months, homework in hand, to prove that he has done better. Sadly it is a judgment by South Africa’s Constitutional Court, the country’s highest, against a government that the judges no longer trust to uphold the laws and constitution. + +The ruling, handed down by an exasperated court on March 17th, was something of a U-turn. Three years earlier it had found that the government had not run a fair tender process when, in 2012, it gave a contract to a private company to manage the payment of pensions and social grants. At the time the court did not look into whether the contract to Cash Paymaster Services (CPS) was corruptly awarded, but it did note that “deviations from fair process may themselves all too often be symptoms of corruption or malfeasance.” + + + +Although in 2014 the court declared the contract with CPS invalid, it did not simply tear it up, because of its concern for the well-being of some 17m people, or nearly one in three South Africans, who get monthly payments from the state. These include not just the old but also mothers of young children, and people with disabilities. So the court said it would allow the contract to run for its full five-year term. But it told the government either to run a new (clean) tender to award a contract for the five years from April 2017, or to prepare to make those payments itself. Three years on, almost on the eve of the contract’s expiry on March 31st, it turned out that the government had done neither. + +After being hauled before the court by civil-society groups fretting that social payments would halt in April, the government admitted it could not make the payments itself, had not found anyone else to do so and argued that the court had no option but to allow it to renew the deal with CPS. With protests being held outside government offices and pensioners fretting about whether they would get paid in April, the court has been forced to give in and allow CPS to keep managing the social-welfare system, its rage evident in the judgment. The government had “broken the promise” it had made to the court, and the result of its endangering the payment of social grants is that “the fabric of our society comes under threat”, the justices wrote. + +The self-inflicted crisis has left many scratching their heads looking for a motive, or a beneficiary. Some suspected the hidden hands of allies of the president, Jacob Zuma, who for some months has been looking for an excuse to fire Pravin Gordhan, his independent-minded and internationally respected finance minister. Mr Gordhan’s firm hand on the Treasury has thwarted several of Mr Zuma’s more outlandish plans, including one to get Russia to build a fleet of nuclear-power stations that South Africa cannot afford. + +Liezl Van Der Merwe, an opposition MP, voiced such concerns in February at a parliamentary committee meeting, when she asked for assurances that the government was not manufacturing a catastrophe to “give the minister and the president more ammunition to fire Pravin Gordhan”. Yet risking social unrest to reshuffle a cabinet seems too dangerous a game for a politician as wily as Mr Zuma. + +Whatever the cause of the crisis, the judges have passed an order that means the Constitutional Court is prying far more deeply into the affairs of the executive branch than it would prefer. The court has ordered the government to report every few months on its progress towards either preparing a new tender or taking over the payment of social grants within a year. + +Judges and politicians are often at loggerheads. In a different case, a court overturned the appointment of an ally of the president as the head of an elite police investigations unit because, it said, he was “dishonest and lacks integrity”. Yet the conflict between the two arms of government may also be putting judges at risk. Just days after both court rulings, unidentified intruders burgled the office of the chief justice, stealing only computers that held personal information about judges such as their home addresses. + +Still, the judges seem able to get personal too. In the CPS case the court has ordered Bathabile Dlamini, the minister responsible, to give reasons why it should not make her pay for the costs of the court case “from her own pocket”. But it is a sad day when South Africa’s courts must resort to threatening ministers to ensure that their orders are enforced. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21719469-judges-are-struggling-government-defies-law-south-africas-courts/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Plastic bantastic + +Kenya tries to ban plastic bags—again + + +Will the ban make Kenya cleaner, or start a black market for bags? + + + +Mar 23rd 2017 | NAIROBI + + + + + +LITTERING in graveyards is generally frowned upon. But at the edge of Kangemi, a slum in Nairobi, Kenya’s capital, a patch of land that used to be a final resting place for humans now serves as a rubbish dump. A few mangy goats roam around, picking out scraps of food. Men, too, scrabble around. “This is where we find our daily bread,” says George Kimani, who collects aluminium cans and plastic bottles and sells them to recyclers. But one thing is not of use, he says: plastic bags. Left behind by goats and men alike, they form a carpet of green, blue and white on the ochre earth. + +Since their invention in the 1960s, disposable plastic bags have made lives easier for lazy shoppers the world over. But once used, they become a blight. This is particularly true in poor countries without good systems for disposing of them. They are not only unsightly. Filled with rainwater, they are a boon for malaria-carrying mosquitoes. Dumped in the ocean, they kill fish. They may take hundreds of years to degrade. On March 15th Kenya announced that it will become the second country in Africa to ban them. It follows Rwanda, a country with a dictatorial obsession with cleanliness, which outlawed them in 2008. + + + +The ban was hailed by the United Nations Environment Programme as a breakthrough. “Our oceans are being turned into rubbish dumps,” says Erik Solheim, the head of the agency. As Kenyans get richer and move to cities, the amount of plastic they use is growing. By one estimate, Kenya gets through 24m bags a month, or two per person. (Americans, by comparison, use roughly three per person.) Between 2010 and 2014 annual plastic production in Kenya expanded by a third, to 400,000 tonnes. Bags made up a large part of the growth. + +Kenya has tried to ban polythene bags twice before, in 2007 and 2011, without much success. This latest measure is broader, but few are ready for it. The Kenyan Association of Manufacturers says it will cost thousands of jobs. Some worry that supermarkets will simply switch to paper bags, which could add to deforestation. And then there is the question of whether Kenyan consumers will accept it. In Rwanda, since its ban was imposed, a thriving underground industry has emerged smuggling the bags from neighbouring Congo. Packing in the plastic may be harder than it seems. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21719471-will-ban-make-kenya-cleaner-or-start-black-market-bags-kenya-tries/print + + + +上一项 文章 章节 下一项 + + + + + +Middle East and ... 章节 Britain + + + + + +Europe + + +Russia in the Middle East: Desert bear + +Spanish art: Exhibitionism + +France’s presidential election: Going his way + +Reverse Balkanisation: A common market of their own + +Charlemagne: Europe’s leaden-toed boot + +Middle East and ... 章节 Britain + + + + + +文章 章节 下一项 + + + + + +Furazhka meets keffiyeh + +In the Middle East, Russia is reasserting its power + + +Bombs and diplomacy, both part of the toolkit + + + +Mar 25th 2017 | MOSCOW + + + + + +THE black fur hat looked odd on a Libyan warlord. But fur is de rigueur in wintertime Moscow, which has become an essential stop for Middle Eastern leaders like Khalifa Haftar, who visited twice in 2016. This month his rival, Fayez al-Sarraj, the head of Libya’s UN-backed government in Tripoli, dropped by. Jordan’s King Abdullah, Turkey’s Recep Tayyip Erdogan and Israel’s Binyamin Netanyahu have all stopped at the Kremlin for audiences with Vladimir Putin this year. + +The visitors are a sign of Russia’s growing activity in the Middle East. “The policy is wider than just Syria,” says Andrei Kortunov of the Russian International Affairs Council, a think-tank. Russia’s interests in the region include security, arms sales and oil. But most important, the Middle East offers a platform to reinforce Russia’s status as a global power. “Those who have strong positions there will have strong positions in the world,” says Fyodor Lukyanov of the Council on Foreign and Defence Policy, a government advisory body. + + + +Serving as a power-broker in Syria has helped Russia to cultivate relationships. It strives to maintain contacts across the Sunni-Shia and Israeli-Arab divides. While fighting alongside Iran in Syria, Mr Putin helped broker an oil-supply pact with Saudi Arabia. He has also developed a rapport with Egypt’s Abdel Fattah al-Sisi, repaired ties with Turkey’s Recep Tayyip Erdogan after the downing of a Russian jet over Syria, and maintained friendly links with Israel’s Mr Netanyahu, even angling for a more active role in mediating the Israeli-Palestinian conflict. “They go out of their way to talk with everyone in a way that the Americans don’t,” says Mark Katz of George Mason University. + +Russia has even made minor inroads with traditional American allies. The Kurdish YPG militia, an American-backed group in Syria, recently said that Russia had set up a base to help train its fighters. Russia attracted Qatari investment last year in Rosneft, a state-owned oil giant, and the United Arab Emirates has pledged to buy a batch of Sukhoi fighter jets. “Like it or not, now you can’t do without Russia in the Middle East,” says a Western diplomat. + +Western governments are especially concerned about Libya, where Russia may be aiding Mr Haftar, a secular strongman in the mould Mr Putin prefers. American officials say Russian special forces have been spotted near Sidi Barrani in Egypt, close to the Libyan border; Russian officials have denied it. Russian military contractors have said they are operating in Mr Haftar’s territory. Rosneft has signed a memorandum of co-operation with Libya’s National Oil Corporation. + + + +Russia insists that its engagement with Mr Haftar is about dialogue and ultimately peace. Mr Haftar’s forces have “major potential” to influence events, says Andrei Baklanov, deputy director of the Association of Russian Diplomats. Yet many Western officials remain wary. + +Russia’s ability to roam the region stems largely from the waning of American influence. Middle Eastern rulers have proved to be open to diversifying their investments. “This is a region that knows how to play big powers off each other,” says Daniel Kurtzer, a former American ambassador to both Israel and Egypt. Yet Russian aims are limited. Vitaly Naumkin, of the Institute of Oriental Studies at the Russian Academy of Sciences, says the country has “neither the desire nor the resources” to become a new hegemon in the region. As one former Russian ambassador says, “We’re realists, we can compare figures.” Russia’s economy is one-tenth the size of America’s; its defence spending is 11% of America’s in dollar terms. And in contrast to Soviet times, today’s Russia does not promote an alternative system of governance. Instead, it preaches stability. “The Russian position is that preserving what exists is the only way to avoid chaos,” says Mr Lukyanov—even if existing leaders are “cannibals, murderers or autocrats”. + +Moscow’s fixation with stability stems partly from the threat terrorism poses to Russia itself. “Russia sees the Middle East as rather close,” says Dmitri Trenin, the director of the Carnegie Moscow Centre, a think-tank. From Sochi, the Russian elite’s favoured getaway, to Aleppo is 850km (530 miles), roughly the distance between Paris and Berlin. Officials say some 9,000 fighters have left Russia and former Soviet republics to join Islamic State. + +But it has just as much to do with halting what Russia calls the West’s “policy of regime change”. When autocrats began falling during the Arab spring, Russia’s interest in the region reawakened from a long post-Soviet lull. Russian officials viewed the protests in the Arab world, “colour revolutions” in post-Soviet republics and the Bolotnaya demonstrations in Moscow during 2011-12 as links in the same American-forged chain. For Mr Putin, the decision to intervene in support of Bashar al-Assad’s regime in 2015 was meant in part to “stop the spread of the virus of the Arab spring”, says Mr Trenin, as well as to “return to equal relations with the Americans” after the West’s isolation of Russia over the crisis in Ukraine. + +A brutal bombing campaign has helped achieve just that. But as Russia’s engagement has deepened, the challenges have mounted. Despite successes on the battlefield in Syria, “there is no exit in sight”, says Alexander Shumilin of Russia’s Institute for US and Canada Studies. Israel has become increasingly concerned about a long-term Iranian presence in Syria. Negotiations over Syria’s political future continue to falter, and a massive reconstruction bill awaits when the hostilities end. Securing the peace, as America has learned, is often harder than winning the war. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21719425-bombs-and-diplomacy-both-part-toolkit-middle-east-russia-reasserting-its-power/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Exhibitionism + +Spain’s greatest art museum gets a new director + + +Miguel Falomir inherits a Prado with big ambitions + + + +Mar 23rd 2017 | MADRID + + + + + +AT THE turn of this century the Prado, Spain’s premier art museum, slumbered in neglect. Limited opening hours and an almost complete lack of information about its paintings seemed calculated to put off visitors. Deliverance came with a law in 2003 granting it autonomy from the civil service. Before that the museum’s staff ran the place in their own interest and the director had little power, says Eduardo Serra, a former defence minister who as chair of the Prado’s trustees pushed the law through. To implement it he hired Miguel Zugaza, a shrewd manager, as director. + +Miguel Falomir, who was appointed as Mr Zugaza’s successor on March 21st, inherits a Prado that is flourishing. It attracts 3m visitors a year. It has weathered state funding cuts: about 70% of its budget of €45m ($49m) now comes from tickets, merchandising, fees from foreign exhibitions and sponsorship. Above all, the Prado has shed its provincialism. + + + +“It was very introverted,” says Mr Falomir, an expert on Titian. It used to mount exhibitions only of Spanish painting. When it branched out, with shows on Rubens and Titian, colleagues across Europe and America were sceptical. “Not any more,” he adds. Last summer’s blockbuster exhibition of three-quarters of the surviving work of Hieronymus Bosch was one that only the Prado, with its large Bosch collection, could have organised. + +Mr Falomir still faces challenges. All museums must cope with mass tourism. In a sensible compromise, entrance to the Prado is free for the last two hours of each day. Those who pay €15 to come earlier can contemplate Velázquez’s “Las Meninas” with fewer jostling tour parties. Photographs and selfies are banned. To counteract young Spaniards’ declining interest in the art of the past, Mr Falomir wants to bring in contemporary art inspired by the Prado’s collection. + +As museums become more and more alike, the Prado’s collection remains unique. Unlike the Louvre or London’s National Gallery, it is not encyclopaedic. Its core is the royal collection, which reflects the tastes of Spain’s monarchs in its Golden Age. That makes it “magnificently unbalanced”, says Mr Falomir. No other museum can count 200 Goyas, 90 Rubenses, 40 Titians or most of the surviving work of Velázquez or Bosch. + +To mark the museum’s bicentenary in 2019 work will start on an extension designed by Norman Foster. It will include a restored Hall of the Realms, the grandest remnant of the 17th-century palace that once stood on the Prado’s site. Velázquez’s “Surrender of Breda” and his five great equestrian portraits will return to the Hall, where they originally hung. Some 200 paintings currently in storage will go to the new space. + +Spain’s national self-confidence was shaken by the financial crisis of 2008-09. Many new museums around the country were revealed to be the unaffordable trophies of local politicians. The Prado’s lesson for post-crisis Spain is that professionalism, entrepreneurial drive and internationalisation bring rewards. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21719495-miguel-falomir-inherits-prado-big-ambitions-spains-greatest-art-museum-gets-new-director/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Faites vos jeux + +In France’s presidential race, Emmanuel Macron likes his chances + + +As François Fillon self-destructs, the young liberal squares off against Marine Le Pen + + + +Mar 23rd 2017 | PARIS + + + + + +A BARNACLE has nothing on François Fillon. Neither scandals nor broken promises nor the defection of allies can prise the Republican candidate from his presidential campaign. Each week brings new details of his questionable practices as a businessman-politician. Last week a court put him under formal investigation for steering about €900,000 ($970,000) of public funds over 25 years to family members who it seems did little to earn it. Mr Fillon, despite a solemn vow to quit if this happened, decided to hang on. + +In a televised debate on March 20th the candidate alluded to having made mistakes. One was surely his failure to declare gifts of nearly €50,000 since 2012 in the form of finely stitched suits from a Paris tailor. More damning was the news, leaked on March 21st, that investigators are looking into allegations of aggravated fraud and forgery. Reportedly these concern documents signed by Mr Fillon’s wife, Penelope, declaring the hours she claims to have worked. + + + +The very next day Le Canard Enchaîné, an investigative weekly, reported that Mr Fillon had been paid $50,000 to lobby for a Lebanese billionaire, Fouad Makhzoumi, who owns a pipeline-making business. According to the paper, Mr Fillon arranged a meeting for him with Vladimir Putin in St Petersburg in June 2015 (as well as with Patrick Pouyanné, the boss of Total, a French oil company). Even if true, the reports do not directly contradict Mr Fillon’s denials that he took payments from Russia, but they would raise questions over his pro-Russian stance in foreign affairs. (In the debate, Mr Fillon likened Russia’s invasion of Crimea to the West’s support for an independent Kosovo.) + +In a sideshow, France’s Socialist interior minister, Bruno Le Roux, resigned on March 21st after investigators began looking into his habit of giving his daughters well-paid jobs in parliament during their school holidays. Mr Fillon has little to fear from the Socialists anyway: polls suggest that both established parties are crumbling and may not recover. Less than a fifth of voters say they support the Republican. Even fewer back the official Socialist candidate, Benoît Hamon, in part because a yet more left-wing figure, Jean-Luc Mélenchon, is siphoning away his voters. + +Even if Mr Fillon were to consider quitting, it would be too late for the Republicans to replace him. Eleven candidates have officially declared that they will stand in the first round of the election on April 23rd. Set aside a few obscure anti-capitalists and several self-promoting Gaullists and independents, and the race looks ever more likely to come down to two anti-establishment figures: Emmanuel Macron, a liberal ex-Socialist, and Marine Le Pen, the leader of the populist, anti-immigrant National Front. + + + +The obvious beneficiary of Mr Fillon’s disastrous campaign is Mr Macron, a former economy minister and banker who favours free trade and the European Union. Polls suggest the 39-year-old is roughly tied with Ms Le Pen for the first round, with each backed by a quarter of the voters. In the run-off, they show Mr Macron would beat Ms Le Pen by 20 percentage points or more. Yet nothing can be taken for granted. Polls can be wrong, or change quickly. Mr Fillon’s glimmer of hope is that support for Mr Macron, a newcomer to electoral campaigning, is not solid: some of his backers could switch after a blunder, or if his policies are seen as too liberal. + +That glimmer is only faint. In the debate on March 20th, Mr Macron acquitted himself creditably during more than three hours of verbal melee between the five main candidates. At times he waffled, boasting of his pragmatism while avoiding any specific commitments. (Ms Le Pen landed a good line, congratulating him for speaking for seven minutes without saying anything.) On foreign affairs and migration he referred relentlessly to the need to work with the EU, which more French view unfavourably than favourably. But three snap polls suggested that a plurality of the viewers thought Mr Macron had won the debate. Another poll found that his supporters had become a bit more sure of their choice. + +Mr Macron’s most memorable moment was an angry exchange over Muslim integration with Ms Le Pen, whom he called a threat to national unity. That clash may well set the tone for the campaign. The front-runners hold contradictory opinions on nearly every topic. Mr Macron’s strong approval of the EU provoked scorn and gurning from the leader of the National Front. He in turn ridiculed her praise of Britain’s Brexit decision as “formidable”. + +In fact, Mr Macron might do best to attack Ms Le Pen’s incoherent economic plans. Generally a strong speaker, she is not fluent when pressed on her mutually contradictory goals of boosting public spending enormously while trying to withdraw from the euro and restructure the national debt. Older voters, especially, worry that Ms Le Pen is a threat to French pensions and prosperity. Assuming Mr Macron does not blunder, the election appears to be his to lose. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21719505-fran-ois-fillon-self-destructs-young-liberal-squares-against-marine-le-pen-frances/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Reverse Balkanisation + +With EU accession distant, Balkan countries find a substitute + + +They may start a common market of their own + + + +Mar 23rd 2017 | SARAJEVO + + + + + +TO JUDGE by the headlines, things are getting pretty hairy in the western Balkans. Newspapers have been running articles arguing that borders should be redrawn. Russia’s foreign ministry has accused Western officials of promoting a Greater Albania. Montenegro claims that Russia was behind an alleged coup attempt last November aimed at stalling its accession to NATO. Serbia has excoriated the president of Kosovo for suggesting that his demilitarised country might form an army, and Macedonia has lashed out against Kosovo and Albania for supposedly interfering in its domestic affairs. + +Most of these clashes are empty posturing by leaders who are facing elections or other domestic challenges. But they have had one real consequence: Western governments have become alarmed enough to start paying attention again. Johannes Hahn, the European Union’s commissioner for enlargement, says that EU governments have been pushing him for ideas on how to keep the region stable. The result is a plan for a western Balkan common market, backed both by local leaders and by the EU itself. + + + +On March 16th, at a summit in Sarajevo with the prime ministers of the six Balkan countries that want to join the EU, Mr Hahn told them to seize the moment. When they meet again in Trieste on July 12th, he wants them to sign up to a plan for a regional common market, with free trade, free circulation of labour and capital, and regulatory standardisation. + + + +Serbia and Albania are all for it; indeed, their leaders say it was their idea. “Serbia would like to play the role Germany plays in the EU within this group,” says one diplomat. Montenegro and Kosovo, however, are alarmed. Montenegro is well advanced on its path to EU accession, and fears that the new plan will only hold it up. + +Mr Hahn says the plan could create up to 80,000 jobs. Foreign investors will see a market of 20m people rather than six small countries. In fact, much of what Mr Hahn wants to do is already under way. An incomplete free-trade area exists, though intra-Balkan trade remains feeble. There is a western Balkan energy community linked to the EU, and a treaty integrating transport policy is ready to sign. Work has been done on the mutual recognition of professional qualifications. The idea now is to pull all these initiatives together and fill in the gaps. + +The EU’s governments are busy debating what type of union they want after Brexit. Goran Svilanovic, the head of the Sarajevo-based Regional Cooperation Council, to which the six Balkan EU aspirants belong, says they need to plan, too. The EU’s members reaffirmed on March 9th that they expect the Balkan states to join the union eventually, but Mr Svilanovic thinks it could be on different terms, with new entrants starting out with only partial access and acquiring full membership status gradually. + +In Sarajevo Edi Rama, Albania’s prime minister, said he wanted Albanians to be able to work freely in the EU now, while his government works on the rest of its membership criteria. In today’s political climate, that is a pipe-dream. But Mr Rama may be right that the western Balkan countries could sidle into the EU bit by bit, to avoid provoking resistance. In the meantime, a common market of their own may serve as a consolation prize. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21719502-they-may-start-common-market-their-own-eu-accession-distant-balkan-countries-find/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Charlemagne + +Italy is Europe’s leaden-toed boot + + +The host of the EU’s 60th anniversary party is the country most likely to bring it down + + + +Mar 23rd 2017 + + + + + +THE European Union may be a Franco-German construction, but when the project needs a dose of grandiosity it invariably turns to Italy. This weekend the leaders of 27 EU countries (all bar Britain) will convene in Rome’s glorious Palazzo dei Conservatori, beneath 17th-century frescoes and flanked by sculptures of sundry popes, to proclaim their unity—60 years after their forefathers signed the Treaty of Rome, the EU’s founding document, in the same room. In today’s fractious union the symbolism counts for something, even if the declaration the leaders will issue is crushingly bland. Yet there will be a note of irony to the proceedings, for if you ask officials in Brussels or Berlin which country keeps them up at night, the answer is always the same: Italy. + +Very little changes here, sighs a local who emigrated as a child and recently returned to Rome. Sadly, that includes the size of the economy. The European Commission forecasts Italian growth at 0.9% this year, the slowest in the euro zone. Since 2008 Italy has been in recession as often as not. Real income per head is lower than when Italy joined the euro in 1999, and could soon be overtaken by zippy Spain. Youth unemployment stands at 38%, and the employment rate is among the lowest in the OECD. No wonder barely half the population of this traditionally pro-European country think the euro was a good idea. + + + +Does this matter? Italy is nothing if not resilient. It has remained standing through waves of terrorism, epic political scandals and the long Silvio Berlusconi years. Predictions that markets would swoon after a failed constitutional referendum in December proved off the mark. Instead Matteo Renzi, the prime minister, resigned (though he is plotting his return) and Paolo Gentiloni, the mild-mannered foreign minister, glided into place at the head of a largely unchanged cabinet. “We have a stable government with a stable majority,” says Mr Gentiloni. “That is not common on our continent.” Italy’s European partners speak warmly of the new prime minister, its 43rd since the war. + +But peer ahead and it is not hard to conjure up a plot worthy of the most lurid giallo-writer. Italy’s chronically low growth, low inflation and gigantic public debt burden (133% of GDP) make a potentially deadly trio. A showdown with the European Commission over the autumn budget looms. The banks, stuffed with bad loans, look a little healthier than six months ago, but still pose a headache. Most worryingly, the European Central Bank will soon reduce its massive bond-buying programme and could phase it out entirely by the end of the year. That could mean Italian borrowing costs start to rise just as the country gears up for elections early in 2018. (It was rising bond yields, not irate voters, that forced out Mr Berlusconi in 2011.) + +Enter the anti-establishment Five Star Movement (M5S). Its leader, Beppe Grillo, a bewhiskered comedian, thinks the euro has choked Italy’s exporters by blocking devaluation (although Italy’s northern manufacturers have fared well lately) and pledges a referendum on membership. This resonates with Italians’ growing Euro-fatigue; a new poll puts the M5S five points ahead of Mr Gentiloni’s Democratic Party (PD). Mr Grillo has previously ruled out working with other parties, such as the populist Northern League, which also wants out of the euro. But plenty of observers think the M5S would happily ditch that principle if necessary. + +It is this brew of political and financial risk that has outsiders sweating. Italy, they say, is too big either to bail—its economy is 7.5 times the size of Greece’s—or to fail. As the election hoves into view, the prospect of an M5S-led government could spook investors, and perhaps even put at risk other wobbly euro-zone economies, starting with Portugal. Sandro Gozi, the Europe minister, says an anti-euro government in Italy would mean the end of the single currency. That is why it is common to hear euro-zone officials say it should never have been allowed in to start with. + +Others reckon Italy will weather this storm, as it has survived so many before. Voters’ grumbles about this or that policy, says Mr Gentiloni, should not be mistaken for full-blown Euroscepticism. And should exit from the euro ever become a serious prospect, the thought of a collapse in euro-denominated asset values would concentrate minds. Some disillusioned PD sympathisers mutter that the M5S amateurs may as well be given a chance to prove their incompetence. (Virginia Raggi, the young M5S mayor of Rome, has made a pig’s ear of the job she won last June.) + +Garibaldi was no economist + +Italy’s problem, as described by an official in Brussels, was not the euro but the lira. It yoked together a productive north with the sleepy Mezzogiorno. When Italy joined the euro, optimists assumed that being locked into a currency with Germany would discipline it. But the productivity whip failed to crack; wages and prices remained too high relative to Germany’s, and in the 2000s Italy was woefully unprepared for the rise of competition from China. Successive governments failed to tackle structural problems, from a sluggish legal system to sky-high hiring costs. + +Credit-rating agencies are frowning upon Italy, as the rest of the euro zone starts to pick up speed. But the biggest vote of no confidence comes from Italy’s own young people, tens of thousands of whom leave each year for opportunities abroad. Underinvestment in education and R&D make it hard to see where the long-term productivity boost Italy so desperately needs will come from. Money continues to be showered on the priorities of yesterday. And the demographic prospects are dire. + +Mr Gentiloni does not downplay Italy’s problems. Beyond banks and migration, one of his priorities is an investment plan for Italy’s struggling south. It brings to mind a protocol in the Treaty of Rome, covering “particular problems relating to Italy”. In 1957 the EU’s founding members agreed to contribute European funds to the Italian government’s plans for job creation in the Mezzogiorno. After all, nothing changes in Italy. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21719490-host-eus-60th-anniversary-party-country-most-likely-bring-it-down-italy/print + + + +上一项 文章 章节 下一项 + + + + + +Europe 章节 International + + + + + +Britain + + +Terror in London: Parliament under attack + +What voters want from Brexit: Soft options and hard choices + +MPs’ second jobs: George of all trades + +The new £1 coin: All change + +Tidal energy: Taken at the flood + +Welsh education: Down in the valleys + +Bagehot: Retail politics with Andy Street + +Europe 章节 International + + + + + +文章 章节 下一项 + + + + + +Terror in London + +Britain suffers its worst terrorist attack since 2005 + + +A car, a kitchen knife and an Islamist-inspired killer bring chaos to central London + + + +Mar 25th 2017 + + + + + +“IT’S a simulation, no?” asked a confused tourist, as the emergency services hurried into action and a helicopter flew low overhead. This time, it was not. At 2.40pm on March 22nd—the anniversary of the terrorist assault on Brussels airport last year, which may or may not be a coincidence—a man using a car as a lethal weapon mowed down people on Westminster Bridge, crashed into gates outside Parliament and used a large kitchen knife to murder a policeman before being shot dead himself. It was precisely the kind of attack that Britain’s security authorities have been expecting. It was also the kind that is most difficult to prevent. + +Two other people died and around 40 were injured, seven critically, including one woman who fell or jumped from the bridge into the River Thames. Among the injured was a party of French schoolchildren and three other police officers. As news of the attack spread, Parliament went into “lockdown” and the part of London that symbolises Britain’s democracy was sealed off. + + + +Later in the day Theresa May condemned the “sick and depraved terrorist attack”. The prime minister, who previously served as home secretary, declared: “We will all move forward together. Never giving in to terror. And never allowing the voices of hate and evil to drive us apart.” It was the deadliest terrorist attack London had suffered since the Tube and bus bombings of 2005 (see chart). But Parliament re-opened the following day. + + + +As The Economist went to press, some details of the investigation into the attack had begun to emerge. Although it was a “lone wolf” assault of the sort seen several times during the past year in France and Germany, the British-born killer may have had helpers. On March 23rd police announced the arrest of eight people after a series of raids in London and Birmingham. What is not in doubt is that the perpetrator was inspired by Islamist extremism. + +Although such an attack was anticipated—the first response was efficient and calm—the grim reality is that it may be the precursor to many similar ones. + +Britain’s counter-terrorism police and intelligence agencies are among the best in the world and have a successful recent record. Since the murder of a soldier in east London in 2013, they claim to have thwarted 13 terrorist plots. At any time there may be up to 500 security-related investigations under way. + +British security agencies have several advantages over their colleagues elsewhere in Europe. They are well funded, have state-of-the-art electronic surveillance capabilities and have largely banished the inter-agency rivalries that hamper counter-terrorist efforts elsewhere. Britain has some of the strictest firearms laws in the world and never joined the Schengen agreement, which allows border-free travel across much of the European Union. Its security services also have experience of fighting terrorism in Northern Ireland—as Britons were reminded this week by the death of Martin McGuinness, a proponent of terrorism and later peace in the province (see article). + +But the problems they face now are different. Complex plots that involve detailed planning, numerous accomplices and the acquisition of guns or explosives offer plenty of opportunities for intelligence agencies to thwart them. But the kind of attack that Islamic State (IS) has become known for in the West is much cruder. Even if an individual is known to the authorities as an extremist who might one day pose a threat, he may slip off the radar. The Westminster Bridge attacker had been investigated “some years” ago by the intelligence services, Mrs May said. + +And although IS may be on the point of losing its so-called caliphate in Iraq and Syria, its online propaganda remains as slick and seductive as ever. Radicalised, often disturbed young men are enticed into acts of violence against the societies in which they live. If anything, the threat posed by IS as it increasingly turns its attention towards the West is growing, possibly fuelled by the return of some battle-hardened jihadists to their homes in Europe. + +Al-Qaeda, more active than ever in Yemen and under less pressure in Afghanistan, has learned from IS. Nonetheless, as the ban this week on taking electronic devices into the passenger cabins of aircraft flying from some Muslim countries suggests, the organisation has lost none of its fascination with aviation (see article). + +After every terrorist outrage there is a temptation to look for the lessons that can be learned to make such an event less likely in the future. In the case of the Westminster Bridge attack, it is hard to see what those are. A car and a kitchen knife were all that was needed to bring terror to the capital for a few hours. But the security services in Britain are clear on one thing: policies that appear to demonise ordinary Muslims, as well as being wrong in themselves, are wholly counter-productive. The best technology in the world is no substitute for the human intelligence that comes from communities that do not feel alienated from the state. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21719517-car-kitchen-knife-and-islamist-inspired-killer-bring-chaos-central-london-britain/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Soft options and hard choices + +What does the public really want from Brexit? + + +Conservative voters are the most split on the trade-off between market access and migration + + + +Mar 23rd 2017 + + + + + +THE phoney war that has persisted since the vote for Brexit last June is almost over. This week Theresa May confirmed that she will send Brussels a letter invoking Article 50, the legal procedure for leaving the European Union, on March 29th. Yet, rather as with the phoney war, the prime minister’s letter will be only the end of the beginning. For the invocation of Article 50 will open negotiations that will continue for two years, and quite possibly longer. + +Mrs May has said that her priorities in the talks will be to end the free movement of people between Britain and the EU and to escape the jurisdiction of the European Court of Justice. She has also accepted that these two demands mean that Britain will have to leave the EU’s single market, a position characterised by many as a “hard Brexit” that will maximise the economic damage it causes. To offset this she wants to preserve, to the maximum extent possible, barrier-free access to that market. + + + +The difficulty of reconciling these conflicting demands seems to be reflected in what the public wants from Brexit, too. This emerges in a survey published this week by NatCen, a social research organisation. The survey is interviewing the same panel of respondents over time in an effort to track how public opinion towards Brexit is evolving. + +One striking finding of the research is that both Leave and Remain voters believe firmly in the advantages of free trade (and thus the merits of the single market). Both groups also like many other good things delivered by the EU, such as cleaner sea water and lower mobile-phone charges. These views point towards support for a softer form of Brexit. But both Leavers and Remainers also favour tougher control on migration from the EU, which suggests some backing for the hard variety. + +What is more telling for Mrs May is what happened when the researchers asked about the trade-off between these different goals. Not surprisingly, Leavers were less inclined to accept free movement of people in exchange for free trade, while Remainers were in the opposite camp. Most Liberal Democrat and Labour voters said they would accept free movement if that was necessary to secure free trade, while those who backed the UK Independence Party disagreed. But supporters of the ruling Conservative Party were notably torn: 44% would accept free movement in exchange for free trade, but 55% would not. + +As John Curtice of Strathclyde University, who supervised the NatCen research, argues, should the Brexit negotiations become sticky, this could present Mrs May with some politically difficult choices to sell to her supporters. What could make this even harder for her is that as many as 37% of the respondents already expect Britain to get a bad deal from the negotiations. Soft or hard, Brexit will be tricky indeed. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21719529-conservative-voters-are-most-split-trade-between-market-access-and-migration-what/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +George of all trades + +George Osborne’s job editing the Evening Standard raises eyebrows + + +That’s not the oddest part-time career for an MP. Others have worked for Playboy or as hairdressers + + + +Mar 23rd 2017 + + + + + +SINCE being sacked as chancellor of the exchequer last July, the Conservative MP for Tatton has accumulated jobs at a prodigious rate. BlackRock, an asset-management firm, pays him £650,000 ($810,000) a year for working one day a week. The McCain Institute, a think-tank based in Washington, DC, has awarded him a one-year fellowship with a stipend of £120,000. He has earned £780,000 in speaking fees and is writing a book. On March 17th George Osborne announced that he would be adding yet another position to his bulging CV: editorship of the London Evening Standard, a daily newspaper with a circulation of 850,000. + +Plenty of journalists and several politicians, including fellow Tories, wondered how a sitting MP could run a newspaper impartially. Nearly 200,000 people have signed an online petition urging the multi-tasking Mr Osborne to “pick a job”. The Committee on Standards in Public Life, an ethics watchdog, called a meeting to look again at the rules on MPs’ additional employment. There is currently no restriction on their work outside Parliament, as long as they declare their dealings in the Register of Members’ Financial Interests. + + + +Though Mr Osborne’s working life is particularly exotic, he is far from the only MP to supplement his wages. The latest edition of the register, published on March 6th, shows that a fifth of members had done regular, paid work in the previous 12 months (this excludes occasional writing and speaking engagements, as well as volunteering). Mr Osborne was the highest earner, but 27 other representatives raked in at least £50,000. Many are part-time company directors. There are also a handful of practising lawyers, doctors and journalists, including Michael Gove, another Tory ex-minister, who collects £150,000 per year for a weekly column in the Times. + +Some countries, including America, ban their legislators from holding down other jobs. Others, including Germany, Italy and Canada, are more relaxed. Under Britain’s parliamentary system members of the government, including the prime minister, keep their seats in the House of Commons, which is one reason why parliamentary business has historically been seen as a part-time affair, according to Seth Thévoz, a historian at Oxford University. Mr Osborne’s defenders point out that editing the Standard is no more taxing than running the Treasury. + +Nor is such moonlighting on the rise, as some imply. Quite the opposite: the MPs of the past make today’s look positively workshy. James Wilson, who founded The Economist in 1843, found time to edit the paper while serving as the Liberal MP for Westbury, and even as a government minister. C.P. Scott, the Liberal MP for Leigh in 1895-1906, simultaneously edited the Manchester Guardian. MPs were not paid at all until 1911, when the new intake of Labour members won the right to compensation for time spent away from their trades. + +In 1975, when the register was first published, more than half of MPs had extra jobs. Nicholas Fairbairn, the Tory member for Kinross, listed his occupations as “Queen’s Counsel, writer, broadcaster, painter, poet”. Andrew Faulds, the Labour MP for Warley East, described himself as an “actor with a valuable voice”. A trustee of Playboy International served alongside a part-time hairdresser. + +The decline of the second job in Westminster began in the 1990s (when The Economist last employed a sitting MP). Members’ financial interests began to come under greater scrutiny. Parliamentary debates, which had begun at 2.30pm to allow time for morning business, were brought earlier in the day. + +It is no bad thing. Research in both Britain and Germany has found that the legislators most likely to take up part-time work are those with uncompetitive constituencies. Those with jobs on the side also devote less time than others to their legislative duties, the studies found. Mr Osborne, who enjoys an 18,000 majority, may be a case in point. He has taken part in just six debates since his ejection from the Treasury and has yet to submit a written question. The MP now faces pressure to leave Parliament. It feels as if he already has. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21719523-thats-not-oddest-part-time-career-mp-others-have-worked-playboy-or/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +All change + +The new £1 coin is claimed to be the most secure yet + + +One in 30 of the old lot was reckoned to be a fake + + + +Mar 23rd 2017 | LLANTRISANT + + + + + +BEST known for his musings on gravity, Isaac Newton also spent several years as warden of the Royal Mint, charged with upholding the integrity of the nation’s coinage. He performed the role with great—some might say excessive—enthusiasm: he is said to have bribed and leant on William Chaloner’s associates and mistresses to secure the conviction of the counterfeiting kingpin. The mint of today eschews such tactics, but takes currency security no less seriously. + +A new £1 coin will appear in shops and banks from March 28th. An initial batch of 1.5bn will be shipped from a production site in Llantrisant, Wales, and consumers will have until October to spend or exchange their old coins. The makeover is deemed necessary because the version in pockets today, introduced in 1983, is no longer fit for purpose. As counterfeiters have got better at producing copies, the number of fakes has grown to one in 30 coins in circulation, the mint reckons. One manager thinks it might be closer to one in ten. + + + +The new coin’s first lines of defence are its bimetallic composition (a gold-coloured nickel-brass outer ring and silver-coloured nickel-plated-alloy middle), its 12-sided edge, evoking the threepenny bit, and tiny lettering cut into the inside rim. It also boasts a hologram-like “latent image” that changes from a pound symbol to a “1” when the coin is tilted. + +Then there is what the mint calls “covert” security: a layer embedded in the coin which is understood to respond to signals of different frequencies (the mint is understandably saying little about it). Authenticity can be verified by scanners at banks and in vending machines. To take advantage of this new feature, Britain’s half a million or so vending machines are being refitted with electromagnetic-signature detectors. Supermarkets have been replacing coin slots in trolleys. + +Adam Lawrence, the mint’s chief executive, claims the new coin is the most secure ever. As well as foiling fakers, its state-of-the-art features might also stoke foreign demand. The Treasury-owned coin-striker not only provides domestic currency but competes in tenders for overseas contracts, too. In a typical year, three-quarters of its coins are sent abroad. Its customers include Bosnia, Costa Rica and Hong Kong. + +With all the talk of cash becoming ever more digital, some might wonder whether it is worth investing so much time and money in making physical coins harder to copy and more durable. They should take a look at the statistics, says Mr Lawrence: both the value and volume of the notes and coins that are circulating in Britain is still going up each year. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21719524-one-30-old-lot-was-reckoned-be-fake-new-1-coin-claimed-be-most/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Taken at the flood + +The government stalls on backing an experiment in tidal power + + +Tidal energy is clean and reliable—but expensive + + + +Mar 23rd 2017 | SWANSEA + + + + + +KICKING off a tour of the United Kingdom’s four increasingly disunited nations ahead of Brexit negotiations, Theresa May arrived in Swansea on March 20th bearing gifts. The prime minister announced that the Welsh and British governments would together invest £241m ($300m) in a regional plan to put Wales at the “forefront of science and innovation”. Boosters claim this could be a “transformative” deal for Wales, which has long suffered from industrial decline. + +But among the promises, there was one omission: no mention of the Swansea Bay tidal lagoon, a pilot project for a new method of generating electricity. When pressed, Mrs May said that officials were still looking at the idea. Local politicians and manufacturers expressed their disappointment at more procrastination. The government, though, worries about the price tag. + + + +If it went ahead, the project could be the first of its kind in the world (there is another tentative tidal-power proposal in the Bay of Fundy in Nova Scotia). A tidal lagoon works by using the rise and fall of the tides to generate electricity. At Swansea, a 10km (6 mile) seawall would capture the water created by the high tide, which would then be released to drive 16 turbines embedded in the wall. The company behind the proposal, Tidal Lagoon Power (TLP), selected Swansea Bay because it has the second-highest tidal reach in the world, after Nova Scotia, and a shallow seabed. + +TLP has lined up the required £1.3bn of private finance, a manufacturing supply chain and cross-party support in the Welsh Assembly, which likes the look of the jobs that it could bring. A report on the potential of tidal power commissioned by the previous government and chaired by Charles Hendry, a former energy minister, endorsed the idea last December. But before it can get under way, Mrs May must sign a deal to buy its electricity. + +Attempts to make marine power—that is, wave and tidal energy—commercially viable have lagged behind other renewables such as wind. A few tidal barrages, built across rivers or estuaries, have been operating for years at various sites around the world. But they have never been widely deployed because of the disruption they cause to shipping and the damage they do to the environment. Proposals for a giant barrage across the River Severn, in south-west England, were shelved in 2010. Backers of tidal lagoons say that because they stretch out into the open sea, they interfere less with shipping and bird life—though Swansea’s anglers fret that the turbines would turn their salmon into pâté. + +Much of the pioneering work on tidal power has been done at the European Marine Energy Centre in the Orkney islands. Neil Kermode, its director, says his team has tested 17 variations of tide and wave technology from nine different countries. With a technological lead, and big tidal ranges all around its coast, Britain is well placed to exploit tidal energy, argues the Hendry report. + +If the Swansea Bay project were to work, Mark Shorrock, the boss of TLP, would like to build five much bigger tidal lagoons at Cardiff, Colwyn Bay, Newport, West Cumbria and Bridgwater Bay. The Cardiff lagoon would have up to 110 turbines and cost more like £8bn. Together they could meet about 8% of Britain’s electricity needs, TLP says. For comparison, the government recently gave the go ahead to the Hinkley Point nuclear power station in Somerset, which is expected to provide 7% of Britain’s electricity. Lagoons have a longer operating life (120 years, against 35 or so for nuclear), are safer and do not have expensive decommissioning costs. + +The problem is the price of their electricity. Tidal lagoon power is currently much more expensive than either nuclear or offshore wind. The so-called strike price that the government would have to pay for Swansea’s electricity, to get the project off the ground, would be about £123 per megawatt hour, compared with £92.50 for Hinkley and under £100 for offshore wind. The Hendry report argues that the price of tidal power should fall sharply over the medium term if the technology works and more lagoons are built. That has been the story of offshore wind. The strike price for Hinkley, by contrast, is guaranteed for 35 years. + +The government’s hesitation over the initial strike price for tidal power is understandable. And tidal energy is intermittent, since the tides come and go only twice a day. But the Swansea pilot would be a chance to make a smallish bet on a new technology that may yet turn out to be a useful part of Britain’s future energy mix. It looks worth a modest gamble. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21719528-tidal-energy-clean-and-reliablebut-expensive-government-stalls-backing-experiment/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Down in the valleys + +The struggle to improve the worst education system in Britain + + +Poverty is only one explanation for bad test results in Wales + + + +Mar 25th 2017 | SWANSEA + + + + + +UNTIL recently, Morriston Comprehensive was one of the worst schools in Wales, which in turn has the worst education system in Britain. Now, though, Martin Franklin, the head teacher, has high hopes for the school. Not only has it swapped its shabby 1970s quarters for a shiny new building, but deeper change is under way. When Mr Franklin joined in 2015 he introduced a hawklike data-based monitoring system. Parents receive a colour-coded memo every two months, showing their child���s progress towards various goals, as well as their attendance. Pupils who do well are rewarded with gift tokens. Exam results are on the up. + +The outlook for Welsh education as a whole is, however, less sunny. Many date the country’s difficulties back to changes made after the devolution of some political powers, including control of all education policy bar teachers’ pay, from Westminster to Cardiff in 1999. At the time, Welsh education was set up in a broadly similar way to that in England. But in 2001 a Labour-Liberal Democrat coalition scrapped school league tables (they placed an unnecessary burden on schools, the education minister explained). And in 2004 a Labour government abolished national tests for 11- and 14-year-olds. + + + +Standards duly plummeted. Getting rid of league tables alone cost the average pupil two grades at GCSE, the exams taken at 16, according to research by Simon Burgess of the University of Bristol. Yet it was not until Wales entered the OECD’s Programme for International Student Assessment (PISA) in 2006 that the extent of the decline became clear. The results of Welsh 15-year-olds were similar to those of their peers in Latvia and the Czech Republic, and far below those in England, Scotland and Northern Ireland. + +High rates of poverty are one reason. Household income in Wales is around 15% below the British average. But few disagree that its schools are in serious need of improvement, says Gareth Evans of the University of Wales Trinity Saint David. Much of the past ten years has been spent trying to catch up with the rest of Britain. Changes include moving some training and administrative support from small local authorities to new regional organisations, and channelling more funding and help to the weakest schools, including Morriston. In 2013 new literacy and numeracy tests began. In 2015 a school-categorisation system vaguely akin to league tables was brought back. + +Still, few had much hope that enough had changed to improve performance in the latest round of PISA tests, whose results were released last year. Sure enough, Wales was still far behind the rest (see chart). Discussion of poor PISA performance dominated a recent head teachers’ conference, says Mr Franklin. The OECD has warned of “reform fatigue”. + + + +What next? A new Labour-Liberal Democrat government, formed last year, has grand plans. First, it hopes to improve the quality of teaching. A recent report by Estyn, the Welsh schools inspectorate, drily noted that “teaching is one of the weakest aspects of [education] provision.” The government wants trainee teachers to spend more time in the classroom and less in the lecture hall, and will introduce new professional standards that emphasise their duty to keep improving once they gain accreditation. “The biggest learner in the classroom should be the teacher,” chirps Kirsty Williams, the Lib Dem education secretary. + +Second, a new curriculum will be introduced in 2018. It will seek to break down subject boundaries, free teachers to teach how they see fit and subject schools to lighter monitoring. The approach borrows from Finland, which manages to combine high professional standards with less stringent oversight. Ms Williams also flags the example of Ontario, Canada, which, like Wales, has a bilingual education system, and runs excellent schools. + +Yet there is another, less promising forerunner. Scotland recently adopted a more open-ended curriculum, with little success. Although it once had one of the best education systems in the world, Scotland’s PISA results have been on a downward trend, which accelerated in the most recent round. Many blame its “Curriculum for Excellence”, which was phased in from 2010, and on which the proposed new Welsh curriculum is based. + +Despite supposedly having been given more freedom, teachers in Scotland complain that they are overwhelmed by the number of outcomes they must show they are meeting. Even some supporters of the curriculum confess that the attempt to spread the teaching of literacy and numeracy across different subjects has led to too little time being spent on the basics. + +Ms Williams argues that Wales already has a strong focus on basic standards, and that it will develop an assessment system that is careful not to overwork teachers. But Scotland provides a lesson worth heeding. Freeing teachers to teach how they like without first having raised standards is a risky approach. That is especially true for a country whose education system is already struggling. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21719404-poverty-only-one-explanation-bad-test-results-wales-struggle-improve-worst/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Bagehot + +Andy Street deploys retail politics in the West Midlands + + +The West Midlands mayoral race presents a choice between two visions of municipal power + + + +Mar 25th 2017 + + + + + +“GOOD afternoon, madam. Yes, that’s my ugly mug on the leaflet! I hope you’ll give it a read. May I ask where you live?” It is well over a decade since Andy Street quit the sales floors of John Lewis for the boardroom, where he steered the venerable chain of department stores to record profits. But the former chief executive hasn’t lost the patter. This much Bagehot discovered on Erdington High Street as the wiry Conservative candidate for the new West Midlands mayoralty scuttled about, buttonholing shoppers. “I’m supporting you. I hate these politicians on ‘Question Time’ [a TV debate show],” professed Pam Rangely, a former Labour Party canvasser who had never voted Tory. “So you’re switching to the other side?” your columnist asked her. Mr Street spun around: “Did you see her face? It fell when you talked of ‘the other side’.” The former retail boss does not like to think of himself as a party man. + +To tour with Mr Street around the West Midlands metropolitan region, which includes Birmingham and industrial cities like Coventry and Wolverhampton, is to discover how lightly he wears his political identity. He considered running as an independent. His banners, website and leaflets are green rather than Tory blue (one handout mentions the word “Conservative” twice in ten pages). Addressing a crowd at the Prince of Wales pub in left-liberal Moseley, he admits: “I have wobbled in my commitment to the party,” adding that he identifies most with Michael Heseltine, the bouffant doyen of centrist Toryism. “You don’t have the hair for it!” heckles a drinker. “How is that different from being a Blairite in Labour?” hollers another. “It’s a fine line,” Mr Street replies. “They’re philosophically very similar.” + + + +Some of this is tactics. Despite Labour’s current woes, it still finds big-city Britain friendly territory. Of the three big “metro mayoralties” that will spring forth on May 4th (along with three smaller ones), only the West Midlands race is truly competitive. Even on this patch, Labour had a 9.4-point lead in the 2015 election. Siôn Simon, the party’s candidate, is rooted in the economically centrist, ruthlessly tribal culture of Labour’s “West Midlands mafia”, which includes Tom Watson, the party’s powerful deputy leader. At stake is a glittering prize: the second-largest direct mandate in Britain after the London mayoralty, control of transport, skills and housing policies affecting 2.8m people and £8bn ($10bn) of new money from the government. To win it, Mr Street must tack away from the Tories. + +Yet his vague political identity speaks to something more fundamental, about him and the job. Ideologically, Mr Simon and Mr Street mostly see eye to eye. The difference has nothing to do with general outlook and everything to do with practice. That makes the West Midlands race intriguing—and important. + +Take Mr Simon, a former MP now in the European Parliament. He is steeped in his party’s culture and battles. His campaign is all about Labour: he is absent in most hustings, has published no manifesto with barely a month to go before the vote and seems to be cleaving to safe Labour areas. He talks about protecting the health service (over which the mayor will have no control) and taking on “politicians in London”. Some call this posturing cynical, others hard-nosed power politics. + +What the Labour world and realism are to Mr Simon, the business world and idealism are to Mr Street. He brandishes his 48-page Renewal Plan at every opportunity, spouts statistics (did you know that 60% of the Black Country lives within 1km of a bike-friendly tow path?) and demands that the West Midlands become fiscally self-sufficient, suckling less at Leviathan’s teat and paying its own way for once. The house parable in Street-land is the successful local campaign, led by a certain former retail boss, to persuade HSBC, a global investment bank, to base its consumer-banking operations in Birmingham. + +Convening, arm-twisting, cheerleading: these, to Mr Street, are the essence of the job, as opposed to what he calls the “begging bowl”, “poor us” approach of Mr Simon. He wants to revive the tradition of Joseph Chamberlain, a Victorian mayor of Birmingham and icon of corporatist municipal success. “He used his business experience to ‘improve the lot of the masses’—though I’d never put it like that,” says Mr Street. Such a mayoralty demands a chief-executive-mayor with a strong personal mandate and cross-party reach. Hence Mr Street’s obsession with visibility—he hurtles from event to event at a pace Bagehot has not witnessed before—and with non-partisanship. + +Never knowingly under-polled + +This matters regionally and nationally. Regionally because local government in the West Midlands does not have a happy history. Once wealthier even than the south-east, this part of England has suffered from decades of inept interventions by central government and bickering between local councils. The result is a deeply divided region (central Birmingham would pass for Boston, Massachusetts, its poorer outskirts for the less fashionable districts of Bucharest), and one beset by policy failures: a collapsing care system, growing homelessness, lagging skills. + +And it matters nationally, because this mayoralty may be the one that decides the future of devolution in England. In an over-centralised, economically polarised country, the emergence of powerful elected officials overseeing wide urban regions is the best hope of solving crises in living standards, productivity and housing. Yet neither Andy Burnham (a gloomy opportunist) in Manchester nor Steve Rotheram (a hard lefty) in Liverpool looks likely to do that on their patches. Mr Simon is more promising than either, but a win for him would nonetheless be a blow to the ambition with which the metro mayoralties were created. A victory for the dynamic Mr Street would make Birmingham a beacon of municipal assertiveness. So Bagehot urges West Midlanders: don’t vote Conservative, vote Street. + +Economist.com/blogs/bagehot + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21719527-west-midlands-mayoral-race-presents-choice-between-two-visions-municipal-power-andy/print + + + +上一项 文章 章节 下一项 + + + + + +Britain 章节 Special report + + + + + +International + + +America and the world: US v UN + +Climate finance: Lean, not green + +Britain 章节 Special report + + + + + +文章 章节 下一项 + + + + + +Dissing unity + +Could Donald Trump’s attack on the UN destabilise the world? + + +The president seems bent on weakening the global body + + + +Mar 25th 2017 + + + + + +WHEN the draft of an executive order by Donald Trump saying he would cut America’s contribution to the UN by 40% was leaked in January, alarm bells began clanging not just at the organisation’s headquarters in New York but in chanceries all over the world. America pays for a good quarter of the body’s costs and even more for its 16 peacekeeping missions that strive to mitigate some of the bloodiest conflicts on earth. Could he mean what he said? On March 16th, when the White House unveiled its budget for 2018, the answer was a defiant yes. The State Department, which channels America’s contributions to the UN and its own foreign-aid agency, was told to chop $10.1bn from its budget, a cut of 28%. + +For sure, this is but the start of months of bargaining between the White House and Congress. Several prominent Republicans, as well as an array of Democrats, said they would oppose cuts on such a scale. Moreover, what was dubbed the “skinny budget” was short on detail. Some saw it as theatre—“A Budget Blueprint to Make America Great Again”, as Mr Trump described it—that was not intended to be enacted as drafted. But even if the cuts were to be halved in size during negotiations, they would still punch a big hole in the UN’s pocket. And no one now bets that Mr Trump does not mean what he says about pulling back from the world. + + + +Some programmes are to be protected. Security aid to Israel, worth $3.1bn a year, will be kept “at an all-time high”. Pledges to Gavi, previously known as the Global Alliance for Vaccines and Immunisation, the President’s Emergency Plan for AIDS Relief (better known as PEPFAR) and anti-malaria schemes will be fulfilled. But funds for climate-change programmes will cease (see article). And within the State Department’s remit, “the US would not contribute more than 25% for UN peacekeeping costs”. At last count, it was paying around 28%. + +It is unclear how America’s foreign commitments, particularly to the UN, will change. Countries’ payments to the organisation are of two sorts: “assessed contributions”, calculated according to GDP, adjusted every three years and then written in stone; and a web of “voluntary” agreements, negotiated by each country, usually yearly, for funding the gamut of UN agencies, such as the World Food Programme, the High Commission for Refugees and the UN Children’s Fund. Contributions to the general UN budget, which includes the secretariat in New York and its worldwide offices (see chart), and a clutch of activities under its direct control, are “assessed” by formula and compulsorily handed over. + + + +The assessment for the American contribution to the UN’s general budget and programmes under its umbrella in 2016 was 22% of their total cost. America would breach its treaty obligation to the UN if it refused to pay up. A senior official under Barack Obama puts the mandatory cost of American contributions to international organisations (including outside the UN arena) in 2015 at more than $4.2bn, and voluntary ones at $5-6bn. So even if the State Department were to slash non-UN activities, by closing embassies, say, it would have to pare its voluntary contributions to a range of UN agencies to the bone. + +Mr Trump could reduce or end America’s contributions to UN peacekeeping missions at fairly short notice, though his proposed overall drop from 28% to 25% would let most continue. The five biggest are in the Central African Republic, Congo, Mali, Sudan’s Darfur region and South Sudan. The mandate for the Congo mission comes up for renewal next month. “Everything is on the table,” says Peter Yeo, a former State Department officer who helped negotiate America’s payment of arrears when Bill Clinton was president and now heads the Better World Campaign, which urges America to support the UN. “The action,” he adds with tentative optimism, “is now moving to the Hill,” where Mr Trump’s slash-and-burn proposals may, he hopes, be moderated. A more detailed budget is not likely for another two months. “So far the figures just don’t add up,” says an official at the Bill & Melinda Gates Foundation, which has distributed nearly $37bn in aid since 2000. The idea, popular in Mr Trump’s circle, that private charities can fill the void is false, she adds, noting that many of her foundation’s projects depend on partnerships with the state. + +The UN organisations most reliant on American generosity are humanitarian, such as the food programme (35% paid for by America) and the refugee agency (38%), which help millions of starving and displaced people. If these, along with the peacekeepers, were to be gutted, the risks of famine and war would soar. In the long run that might well cost America more, if it eventually felt obliged to pick up the pieces. Mr Gates argues relentlessly that aid and development help Americans by enhancing global stability. So, recently, did 120 generals in a letter to Mr Trump. + +Back in Turtle Bay + +António Guterres, the UN’s secretary-general since the start of the year, has been careful not to pick a fight with the American president. Mr Guterres and the envoys of just about all governments represented at the UN are pinning some hope on Nikki Haley, Mr Trump’s ambassador there. According to a UN insider, “she has been trying to reassure everyone in the UN that all these statements from the Trump camp are just noise.” In the past week that will have got much harder. + +Mr Guterres, who has a reputation as a consensus-builder, has quietly let it be known that he will embark on a cost-cutting and streamlining campaign of his own. Britain, France and America have tended to work together in the Security Council, often in opposition to the other two veto-wielders, China and Russia. Now the British and French are hoping desperately to bind Mr Trump back with them into the UN system, fearing he may cosy up to Russia’s president, Vladimir Putin, or by default let China make the running. + +“That would mark a really dangerous shift in power dynamics at the UN,” says the former Obama official. “Everything so far with this administration has been so haphazard. It’s all so hard to predict.” Congress may persuade Mr Trump to see merit in some aspects of the UN. But that, right now, seems like a losing battle. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21719467-president-seems-bent-weakening-global-body-could-donald-trumps-attack-un/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Lean, not green + +America’s proposed budget cuts will be bad for the environment + + +And the signal they send is even worse + + + +Mar 23rd 2017 + + + + + +AT HOME and abroad, one clear result of Donald Trump’s proposed budget would be to push green programmes into the red. Between 2010 and 2015 America increased its climate-related spending in developing countries fourfold. It lavished $15.6bn on projects for clean energy, better land use and infrastructure suited to a warming world. Cutting such schemes is bad enough. But for America to step down as an environmental champion is worse. International deal-making will slow without its clout and diligence, other countries’ emission-cutting efforts will shrink, and laggards such as Saudi Arabia and Russia will see no reason to catch up. + +The proposed budget would eliminate money for the Global Climate Change Initiative, the federal government’s hub for overseas environmental support. It would also affect entities such as the Green Climate Fund—set up in 2010 as part of an international pledge to transfer $100bn of climate cash a year from rich countries to poor ones by 2020—and the Climate Investment Funds, supported by George W. Bush’s administration with $2bn partly to boost renewables abroad. Squeezing the State Department would mean that development banks, which back green projects around the world, could lose $650m. + + + +International climate funding comes from a mix of governments, multilateral agencies, banks and development groups. The OECD, a group of mostly rich countries, estimates that poor countries received $62bn in public and private climate finance in 2014, up from $52bn in 2013. But domestic spending dwarfs international contributions. And some important UN initiatives require little to run. + +Take the UN Framework Convention on Climate Change, a green treaty adopted in 1992, under which the Paris agreement to limit global warming to “well below” 2°C above pre-industrial temperatures was adopted in 2015. America covers about a fifth of its administrative budget. It is also the world’s largest contributor to the Intergovernmental Panel on Climate Change, a group of scientists who advise governments on global warming. The annual sums for such bodies have been small: roughly $5.4m and $3.1m respectively. Other countries could compensate. + +One contender is China. Co-operation between Barack Obama and Xi Jinping made the Paris agreement possible. And after Mr Obama pledged $3bn for the Green Climate Fund in 2014—of which he managed to deliver a third before leaving office, making America among its largest donors—China offered up $3.1bn in climate cash. As China, the world’s largest polluter, gets richer, it is essential that it plays its part in paying for mitigation and adaptation to global warming, says Leonardo Martinez-Diaz of the World Resources Institute, a global research body. + +Cash once lured developing countries to the table at climate talks. That is changing, says James Cameron, the chairman of the Overseas Development Institute, a British think-tank. The world is 1°C warmer than in pre-industrial times, and countries feeling related effects know they need to negotiate, with or without additional incentives. Many stand to gain from new technological measures; poor countries can benefit from others’ green expertise. + +The Paris agreement’s loose structure and modest goals mean it should survive America’s proposed purse-tightening. Policy wonks believe it could also bear America’s withdrawal. But such a radical change of direction would send a terrible signal. The president once called global warming a “hoax”, then more recently acknowledged “some connectivity” between human activity and climate change. But the budget plans reveal the consistent and troubling conclusion of his administration: that green programmes are always a waste of greenbacks. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21719466-and-signal-they-send-even-worse-americas-proposed-budget-cuts-will-be-bad/print + + + +上一项 文章 章节 下一项 + + + + + +International 章节 Business + + + + + +Special report + + +The future of the European Union: Creaking at 60 + +The euro: That sinking feeling + +Euro membership: Exit strategy + +Immigration: Compassion fatigue + +Foreign and security policy: Home and abroad + +Institutions: Democracy and its dilemmas + +Safeguarding democratic rule: Who rules the rulers? + +A multi-speed, multi-tier future: Differentiate or bust + +International 章节 Business + + + + + +文章 章节 下一项 + + + +Special report + + + + + +Creaking at 60 + +The future of the European Union + + +As it marks its 60th birthday, the European Union is in poor shape. It needs more flexibility to rejuvenate itself, argues John Peet + + + +Mar 25th 2017 + + + + + +THE EUROPEAN PROJECT has sometimes given the impression of being in perpetual crisis. Indeed, its spiritual father, Jean Monnet, saw this as the best way to advance to his preferred goal of “ever closer union”, arguing that “Europe will be forged in crises, and will be the sum of the solutions adopted for those crises.” Yet as the union prepares to celebrate 60 years since its founding treaty was signed in Rome on March 25th 1957, it is in deeper trouble than ever. + +A big reason for this is the politics in EU member countries. Crucial elections loom in many this year, and populist parties opposed to the European project and in favour of referendums on membership of the euro, the EU or both are likely to do well. In the Netherlands, Geert Wilders’s anti-European Freedom Party gained seats in an election on March 15th, though fewer than many had feared. In France Marine Le Pen of the National Front is expected to win a place in the second, run-off round of the presidential election in early May, just as her father did in 2002. Although, like him, she will probably lose, she will come closer to winning than he did. And if she loses, it may be to Emmanuel Macron, who is running as an outsider with an untried political party. + + + +Then in September Germany will go to the polls, and the anti-euro Alternative for Germany party is likely to win its first seats in the Bundestag. Although Angela Merkel may yet remain chancellor, her new Social Democratic challenger, Martin Schulz, is running close behind her in the polls. Were he to replace Mrs Merkel, the shock to a European project that she has largely led for 12 years would be profound. Italy must also hold an election by early 2018; two of its leading parties have at different times called for a referendum on the country’s euro membership. + +One reason for the likely success of populists against incumbents is that Europe’s economic mood is so glum. Although growth has returned and the euro zone has stabilised, growth rates are still low and, notably in the Mediterranean, unemployment (especially among young people) is punishingly high. Greece remains a basket-case on the edge of default, and the markets are nervous about Italy and France. Public debts across the union remain large, and progress on liberalising structural reforms has largely stalled. The euro zone has a partial banking union, a centralised bail-out fund and a European Central Bank (ECB) prepared to act as a lender of last resort, but its architecture remains incomplete and there is little agreement over how to finish the job. + +Migration remains a huge issue. The numbers entering the EU from the Middle East and Africa have come down a lot, but mainly because of a questionable bilateral deal with Turkey to close the main transit route into Greece that could fall apart at any moment. Hundreds of would-be migrants still take to leaky boats across the Mediterranean every week. The distribution among EU countries of those refugees who have got through has created serious tensions, with Germany particularly angered by the refusal of central European countries to take more than a few. Work to strengthen the union’s external borders has been fitful at best. Internally, the Schengen frontier-free system is troubled and several border controls have been reintroduced. + +The deteriorating geopolitical environment makes matters worse. Turmoil and war across the Middle East and in north Africa were one big cause of the surge in migrant inflows. An aggressive Russia under President Vladimir Putin is now seen as a direct threat, particularly in eastern Europe. Turkey’s president, Recep Tayyip Erdogan, is turning his back on a club that seems to have rejected his membership aspirations, and is spurning its democratic values as well. To cap it all, America’s new president, Donald Trump, has shown himself hostile not just to multilateral free trade and Muslim immigrants but intermittently to the EU, praising Britain’s decision to leave and urging others to follow. + +That points to perhaps the biggest current concern of all: the EU’s unpopularity with both national governments and their voters. Following last June’s referendum, in which the British voted to leave by 52% to 48%, their prime minister, Theresa May, is about to trigger the two-year process for Brexit under Article 50 of the EU treaty. Brexit may be more painful for Britain than for its 27 partners, but it is still a threat to the future of a union that has previously only ever expanded. Some politicians in other countries have openly said that they want to follow Britain’s example. The EU’s popularity ratings in other member countries received a slight boost from the Brexit decision, but they remain strikingly low by past standards (see chart). + + + +Indeed, whenever any European treaty has been put to a vote in recent years, it has been as likely to be rejected as approved. The Danes and the Irish are famous for having to be asked to vote twice to produce the desired result. French and Dutch voters sank the EU constitutional treaty in 2005. The Dutch also rejected an association agreement with Ukraine last year. In capitals around Europe, diplomats gloomily conclude that there may never be another treaty, for at least one country would surely fail to ratify it. + +Whenever any European treaty has been put to a vote in recent years, it has been as likely to be rejected as approved + +The Brussels institutions are not in much better shape. The European Commission under Jean-Claude Juncker has commendably slashed its output of red tape. Yet Mr Juncker was a poor choice, forced on EU leaders by an ambitious European Parliament. The European Council’s president, Donald Tusk, has sometimes been preoccupied with fighting against the government of his native Poland. The parliament continues to flex its muscles and accrete power to itself, yet voters disdain it. Turnout in every single direct election since the first one in 1979 has fallen, hitting a new low of 42.6% in 2014. + +When more Europe is not the answer + +European leaders celebrating in Rome are well aware of these problems. Their responses to similar troubles in the past have fallen into two categories, neither of which seems adequate this time. One is to follow Monnet’s advice and take a further bold leap towards ever closer union. Since the Brexit decision there has been much talk of a new Franco-German initiative to relaunch the project. True believers like Guy Verhofstadt, a former Belgian prime minister who is now leader of the Liberal group in the European Parliament and has just written a book, “Europe’s Last Chance”, argue that, since the union’s troubles are created mainly at national level, more Europe and a leap towards ever closer union must be the answer. + +Yet the evidence is that people in most member countries simply do not agree. Brexit was a warning of what can happen when the EU loses touch with voters. And many governments also strongly disagree with Mr Verhofstadt. Political leaders in France and Germany now treat the union as essentially an inter-governmental organisation and openly disparage the European Commission and European Parliament. During the euro crisis, Mrs Merkel tellingly began talking of a “union method” based on national capitals and parliaments instead of the classic Monnet method built around the EU institutions. Even in Italy, Matteo Renzi, a passionate pro-European, spent much of his recent premiership attacking Brussels for excessive rigidity in enforcing the euro’s rules. + +That leaves the second type of response, which is to muddle through. After all, the euro and migration crises seem to be past their worst. Excessive austerity may have done great harm, but outside Greece it is largely over. The single market, perhaps the union’s greatest achievement, has survived the financial crisis and can surely weather Brexit. Domestic security co-operation on terrorism and crime is closer than ever. In foreign policy, EU countries have displayed commendable unity over sanctions on Russia, and have been vital in striking a nuclear deal with Iran. As economies improve and this year’s tricky elections are negotiated, the union will somehow manage to keep going. + +This is indeed the most likely course of events, yet it carries serious risks of its own. An unfinished euro may not be sustainable in the long run. If another financial crisis were to hit, as at some point it surely will, the currency could crumple. Worse, both it and the broader EU remain vulnerable to a political accident at any time. Possibilities include a renewed Greek crisis, the arrival of openly anti-EU leaders in France or Italy, or a firmer entrenchment in one or more east European countries of what they call “illiberal democracy”. Given the challenges facing the union, muddling through may no longer be the safest option. Brexit could yet be copied by another member, leading to the slow collapse of the union. As Sigmar Gabriel, now Germany’s foreign minister, told the German weekly Der Spiegel in January, “it is no longer unthinkable for [the EU] to break apart.” + +Variations on a familiar theme + +What is really needed is a creative rethink of the entire European project. The most obvious idea is to drop the rigid one-size-fits-all model and adopt the greater flexibility of a network. This rests on three simple observations. The first is that few of the 27 EU member countries that will remain after Brexit favour much deeper political and economic integration. Second, these 27 are integrated into the EU in many different ways: all are in the single market, 26 in the banking union, 21 in Schengen, a different 21 in NATO and 19 in the euro, to list just five examples. And third, the European continent is home not just to the 28 EU members but 48 countries in all. Those outside the EU aspire to special relations with the club, and some belong to bits of it already (see maps). + + + +Such heterogeneity could give rise to a scenario in which the countries of Europe move at different speeds, and not always towards the same goal. Within the EU, this idea has a long history. In 1975 the Tindemans report, drawn up by a former Belgian prime minister, floated the concept of a two-speed Europe. In 1994 Edouard Balladur, then France’s prime minister, proposed a Europe of three concentric circles: an inner core of the single currency, a middle tier of those in the EU but not the single currency, and an outer circle of non-members with close links to the EU. In the same year two German Christian Democrat MPs, Karl Lamers and Wolfgang Schäuble (now Germany’s finance minister), suggested a central “hard core”. + +The EU treaties were later amended to allow “enhanced co-operation” of subgroups. In 2000 Joschka Fischer, then German foreign minister, proposed an “avant-garde” of countries ready to build a federal Europe. Jacques Chirac, France’s president, talked of “pioneer groups”. The British preferred the term “variable geometry”. In 2012 Jean-Claude Piris, a former chief legal adviser to the Council of Ministers, wrote a book advocating a two-speed Europe. + +The idea of enhanced co-operation has recently picked up renewed interest. At an EU summit in Malta last month, Mrs Merkel suggested her fellow leaders should commit themselves to a union of “different speeds”. The European Commission’s recent white paper on the future of Europe suggested five options, one of which was to move explicitly to a multi-speed Europe. The French, German, Italian and Spanish leaders promptly supported the principle of this option, as did Joseph Muscat, prime minister of Malta, which holds the rotating council presidency. + +Think again + +Yet with small exceptions, these ideas have not borne fruit. Enhanced co-operation has been used but thrice, for cross-border divorce, the European patent and property rights. Such a paucity of results partly reflects fears that a multi-speed, multi-tier Europe could begin to undo the EU. This also explains the adverse reactions to an August 2016 paper by a group of experts published by a Brussels think-tank, Bruegel, entitled “Europe after Brexit: A Proposal for a Continental Partnership”. Such a partnership could, the paper said, offer non-EU countries partial membership of the single market without full free movement of labour, and also create a system of decision-making that gave them an informal say (but no formal vote) in rule-making. The paper suggested that Britain, and perhaps others, might be interested. But both Brussels and national capitals dismissed the proposal because it would let Britain have its cake (barrier-free access to the single market) and eat it (limits on free movement). + +The idea surely deserves another look. A union of 28, or even 27, members is very different from the original club of six. There are countless examples of opt-outs from common policies, ranging from large ones (staying out of the euro, common security and defence policy or Schengen) to minor ones (controls on purchases by foreigners of houses in Denmark and Austria, or Sweden’s derogation from the rules for chewing tobacco and selling alcohol). In this sense, a multi-speed, multi-tier union exists already. This special report will explore its wider promise, starting with the most obvious example: the single currency. + + + + + +Creaking at 60More in this special report:Creaking at 60:The future of the European Union + +That sinking feeling:Members agree that the single currency needs more integration + +Exit strategy:Leaving the euro would be devilishly difficult + +Compassion fatigue:Most EU countries are happy to welcome other Europeans + +Home and abroad:The importance of a European foreign and security policy + +Democracy and its dilemmas:How to address the EU’s democratic deficit + +Who rules the rulers?:Safeguarding democratic rule within the EU + +Differentiate or bust:Europe’s future is multi-speed and multi-tier + + + + + +→ That sinking feeling: Members agree that the single currency needs more integration + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21719188-it-marks-its-60th-birthday-european-union-poor-shape-it-needs-more/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + +Special report + + + + + +Creaking at 60: That sinking feeling + +Members agree that the single currency needs more integration + + +But they disagree over how + + + +Mar 25th 2017 + + + + + +MANY BRITISH TORY Eurosceptics trace their beliefs back to the 1992 Maastricht treaty which agreed to create a single currency. To them, Maastricht represented a Franco-German stitch-up. The French president, François Mitterrand, accepted German unification, and in exchange the German chancellor, Helmut Kohl, agreed to give up the D-mark for the euro. + +In fact money was crucial from the very start of the European project. In the 1950s Jacques Rueff, a leading French economist, declared that “Europe will be made through a currency, or it will not be made.” After the break-up of the Bretton Woods international monetary system in 1971, European countries made many attempts, usually in vain, to ensure currency stability through such arrangements as the “snake”, the European monetary system and the exchange-rate mechanism. + + + +A move to a single European currency may have seemed a logical extension of such efforts, yet it was far more momentous. However fixed an exchange-rate arrangement pretends to be, it can be altered at any time. Indeed, that is what happened repeatedly in the 1980s and 1990s. The point of the single currency was to put an end to such disruption. By launching the euro in 1999 and replacing national notes and coins in 2002, the EU was not just underpinning the single European market, its most successful project. It was also taking a giant leap towards deeper political and economic integration. + +The design of the euro suffered from two big defects that still haunt the single currency + +Yet the design of the euro suffered from two big defects that still haunt the single currency today. The first concerned the selection of countries that were able to take on the discipline of joining a single currency. Clearly France had to be a founding member, but beyond that the German government thought that, at least initially, the club should be kept quite small. The Maastricht criteria setting debt and deficit levels for would-be members may not have made economic sense, but they made political sense to Germans keen to keep out unreliable Mediterranean countries, most obviously Italy. At Maastricht it was already clear that Britain (and later Denmark) would stand aside. + +During the 1990s Italy, too, toyed with letting economic and monetary union go ahead without it, partly because its public debt was far above the Maastricht ceiling of 60% of GDP, but also because its post-war economic success had been built on frequent devaluations. Yet when Spain and Portugal showed themselves determined to join the euro from the start, Italy, as a founding member of the club, felt it had to be there, too. The limits set in both the Maastricht treaty and the later stability and growth pact were fudged, so that at the outset the euro zone embraced 11 countries. Shortly afterwards Greece sneaked in as the 12th. + +Don’t delay, reform today + +At first all went well, with robust growth and modest inflation. The Mediterranean countries benefited from interest rates converging downwards. But that meant they could avoid the pain of pushing through structural reforms to make their economies more competitive. Many economists pointed out that such reforms were more necessary than ever for countries no longer able to devalue or run their own monetary policy, but politicians were all too ready to avoid unpopular remedies. One result was a worrying divergence in growth and unit labour costs, a proxy for countries’ competitiveness (see chart). + + + +That was to cause serious trouble when the second big defect in the euro became apparent towards the end of its first decade: its flawed architecture. There was a no bail-out rule but no provision for what to do if national governments needed help, a serious omission given that their debts were now, in effect, denominated in a foreign currency over which they had no control. The euro had no central funds that could be drawn on to assist members if they were hit by external shocks. Though banks had become increasingly European in life, they remained unavoidably national in death; yet national central banks had neither the ability nor the resources to rescue or restructure the biggest ones. The European Central Bank (ECB), for its part, was unable or unwilling to act as a lender of last resort. + +Enthusiasts for European integration did not see any of these problems as insuperable, because they expected monetary union to lead inexorably to closer political union. Many still do. But there was little sign of this during the euro’s first decade. Even the budget-deficit rules set by the stability and growth pact were ignored, with France and Germany ironically being identified in 2003 as the first rule-breakers. When in 2009 the single currency, structurally vulnerable as it was, became engulfed by the biggest global financial crisis since the 1930s, its problems quickly became glaringly obvious. + +The ensuing euro crisis has lasted for what seems like many years. An emergency bail-out fund that later became the European Stability Mechanism (ESM) was established with the support of the IMF. First Greece and then successively Ireland, Portugal, Spain and Cyprus were forced into bail-out programmes. Because the crisis began in profligate Greece, the prescribed cure was usually fierce public-sector austerity, even though in most of the other countries excessive public spending and borrowing were not the root problems. The turning-point came in July 2012, when Mario Draghi, the ECB’s president, declared that his institution was ready to do “whatever it takes” to preserve the euro. This was followed by moves towards a banking union, with the ECB taking over supervision of Europe’s largest banks. + +In general, when compared with America and Britain, the euro zone has been too quick to cut public spending and raise taxes; too slow to sort out its banks, many of which are still heavily burdened with bad debts; and too hesitant to push through structural reforms to its labour and product markets to improve competitiveness. Yet despite these failings, the euro zone’s ills are easily exaggerated. Klaus Regling, the managing director of the ESM, likes to point out that, measured by GDP per person (rather than absolute GDP) and employment (rather than unemployment) rates, the zone’s performance in the past 15 years has not been so much worse than America’s. Today all members of the euro zone, even Cyprus and Greece, are just about growing—and all save Greece have regained access to capital markets. + +In a sense, though, the euro’s problems have merely mutated from acute to chronic. Pierre Moscovici, the EU commissioner for economic and monetary affairs, complains that growth is still too low; that differences between north and south remain large, and convergence has stopped or gone into reverse; and that the region suffers from serious imbalances, including a German current-account surplus of almost 9% of GDP. Germany remains overly dependent on external demand. Indeed, since the crisis and the bail-outs, the entire euro zone has shifted to a large current-account surplus, which may cause continuing tension with big deficit countries such as America and Britain. + +The ins and outs + +The composition of the euro zone, which since 2002 has expanded to take in the three Baltic countries, Slovenia, Slovakia, Cyprus and Malta, remains problematic. As one senior official in Brussels puts it, the euro works tolerably well for 16 of its members, but not for three: Greece, Portugal and, most problematically, Italy. Indeed, the real threat to the euro may not be Greece, given its small size. Many believe that the single currency could even survive a Greek exit from the euro, though others are worried about it (see box, previous page). But Italy has seen no net growth in GDP per person since the euro started in 1999, a calamity for a developed country and a big reason why two of its main political parties favour a referendum on euro membership. Italy might be said to be both too big to fail and too big to bail. + +There has been talk of a renewed Franco-German initiative to relaunch and strengthen the euro after this year’s spate of elections, yet differences between the two countries run deep. German officials were openly negative about the “five presidents’ report” in 2015 (by the presidents of the European Commission, the European Council, the Eurogroup of finance ministers, the European Central Bank and the European Parliament), which proposed much deeper integration for the euro zone. The French are keener on such ideas, but Germany holds the key. Even if Mrs Merkel were replaced by Mr Schulz as chancellor, the Germans would be unlikely to shift position that much. + +That is because, as a recent book (“The Euro and the Battle of Ideas”, by Markus Brunnermeier, Harold James and Jean-Pierre Landau) shows, there are deep philosophical differences between the two countries over how the euro should be run. The French want to complete the banking union with a new system of common deposit insurance and bank resolution. They favour a gouvernement économique to counterbalance the ECB, with a euro-zone finance minister, a euro-zone budget and even a euro-zone parliament. They hope to move towards the creation of a mutualised debt instrument or Eurobond. Yet they resist the imposition of tougher fiscal restraints on national governments and they dislike being told what reforms to undertake. + +The Germans accept the need for deeper integration if the euro is to survive, let alone thrive, but they object to how the French propose to achieve it. They see demands for common deposit insurance, a euro-zone budget and Eurobonds as tricks designed to transfer money from German taxpayers to profligate countries. They do not share the French taste for flexibility in fiscal policy, preferring discipline and rules. They fret that bail-outs or debt restructuring create moral hazard, and experience has taught them to take Parisian promises of reform with a large pinch of salt. And even were a Chancellor Schulz more amenable, hardline allies like the Dutch and Austrians would resist. + +The euro, in short, remains a troubled currency, with question-marks over both its membership and its direction. There is general agreement that it needs further integration, but disagreement about how to go about it. Germany and other creditors feel that they are being asked to show solidarity with other euro-zone countries but are seldom offered reform and budget discipline in return. This has fostered an ugly anti-German mood in some countries. Germany, in turn, complains about a lack of solidarity in another area: immigration. + +Creaking at 60More in this special report:Creaking at 60:The future of the European Union + +That sinking feeling:Members agree that the single currency needs more integration + +Exit strategy:Leaving the euro would be devilishly difficult + +Compassion fatigue:Most EU countries are happy to welcome other Europeans + +Home and abroad:The importance of a European foreign and security policy + +Democracy and its dilemmas:How to address the EU’s democratic deficit + +Who rules the rulers?:Safeguarding democratic rule within the EU + +Differentiate or bust:Europe’s future is multi-speed and multi-tier + + + + + +→ Exit strategy: Leaving the euro would be devilishly difficult + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21719194-they-disagree-over-how-members-agree-single-currency-needs-more-integration/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + +Special report + + + + + +Creaking at 60: Exit strategy + +Leaving the euro would be devilishly difficult + + +It would not, however, be impossible + + + +Mar 25th 2017 + + + + + +ONE BIG QUESTION has lurked throughout the euro crisis: should one or more members quit? The most obvious candidate is Greece, the country where the trouble began. It never met the criteria for joining, but its deficit and debt figures were misrepresented. And the crisis has inflicted agonies on the Greeks. Pierre Moscovici, the EU’s economic- and monetary-affairs commissioner, notes that Greece’s GDP per person has fallen by 45% since late 2009 and unemployment is nearly 50%. This is the worst performance ever by any advanced country. + +Now a further row looms, over funds needed for Greece’s third bail-out this summer. The IMF reckons that Greece will never repay its debts, which currently amount to 180% of GDP and rising. Yet euro-zone creditors refuse to accept any debt relief, preferring variants of “extend and pretend” to avoid owning up to fiscal transfers. Meanwhile Greece’s government rejects more austerity, just as Greek voters did in a referendum in July 2015, only for it to be forced on them all the same. Even so, Greeks do not want to leave the euro—perhaps because for them it has become like Alcatraz: a prison that keeps people in mainly by making escape too risky. If an orderly procedure for leaving the euro were available, a Greek departure might become more attractive. + + + +Officials say it cannot be done. Yet at least twice in 2012, and again in 2015, the German finance ministry spoke in favour of it. The technicalities of returning to the drachma could surely be managed. Existing euro notes might continue to be used, perhaps overstamped, as in the Czech-Slovak currency split in 1993; in any case, ever more payments are made electronically or by card. Most Greek banks would go bust, but stringent capital controls could be imposed, just as they were during the banking crisis in Cyprus in 2013. The ECB could provide the Bank of Greece with plenty of liquidity. The Greek economy, especially the tourist industry, would quickly reap large benefits from a substantial devaluation. + +It was two other considerations that tipped the scales against Grexit. The first was the threat of contagion. If Greece left, the myth that there is no way out of the euro would be instantly exploded, bringing the single currency closer to a fixed exchange-rate regime. The markets might fret that Portugal or even Italy could follow, presaging the currency’s eventual collapse. Yet Greece accounts for only 2% of the EU’s total GDP, so if the EU fears that the departure of such an economic tiddler could destroy the euro, it has alarmingly low confidence in its own creation. Besides, institutional changes have provided the euro with far stronger defences than it had before. + + + +The second objection is the potential cost of Grexit, not only in support for Greece’s banks and people but through “TARGET” balances at the ECB. These reflect inflows and outflows of euros in national banking systems, which usually attract little attention. But the numbers have recently risen, a sign of renewed market nerves. Greece and Italy at the end of January had negative balances of over €70bn and over €360bn respectively, whereas Germany had a positive one of almost €800bn, its all-time high (see chart). Were a country to leave or the euro to break up, these balances would probably crystallise into genuine (and surely unpayable) claims. + +Some economists have suggested that Germany, not Greece, should temporarily leave the euro, and rejoin later at a higher rate. The argument is that the underlying causes of the euro’s problems are Germany’s strong competitiveness and its huge current-account surplus. Yet a German exit seems politically implausible: the issue for markets is Greece’s membership, not Germany’s. Political or economic events could restart talk about Grexit at any time. It would be prudent to prepare for the worst—and seek to minimise the collateral damage. + +Creaking at 60More in this special report:Creaking at 60:The future of the European Union + +That sinking feeling:Members agree that the single currency needs more integration + +Exit strategy:Leaving the euro would be devilishly difficult + +Compassion fatigue:Most EU countries are happy to welcome other Europeans + +Home and abroad:The importance of a European foreign and security policy + +Democracy and its dilemmas:How to address the EU’s democratic deficit + +Who rules the rulers?:Safeguarding democratic rule within the EU + +Differentiate or bust:Europe’s future is multi-speed and multi-tier + + + + + +→ Compassion fatigue: Most EU countries are happy to welcome other Europeans + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21719195-it-would-not-however-be-impossible-leaving-euro-would-be-devilishly-difficult/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + +Special report + + + + + +Creaking at 60: Compassion fatigue + +Most EU countries are happy to welcome other Europeans + + +They are less keen on refugees from outside + + + +Mar 25th 2017 + + + + + +EUROPE’S GREAT MIGRATION crisis seemed to blow up out of nowhere. Yet at least within the EU, increased movement of people should not have come as a surprise. The admission of 11 countries from central and eastern Europe, between 2004 and 2011, and the end of the seven-year transition period before allowing full free movement, was bound to encourage people from the new member states to look for opportunities abroad, given that wages and living standards in the west were so much higher. A simultaneous upsurge of unemployment in the south prompted a push north. + +Higher immigration from outside the EU might also have been predicted in light of the Arab spring, the 2011 intervention led by Britain and France in Libya, the civil war in Syria and strife in Afghanistan and Iraq. Besides, in most EU countries the population is ageing and shrinking, but in Africa it is young and growing fast. + + + +Yet the sudden inflow of migrants from non-member countries turned out to be politically much more explosive. At first it was Greece that felt the effects most heavily, a double whammy since it was also at the centre of the euro crisis. Spain had seen an earlier influx of migrants, notably to the Canary Islands, but had largely stopped it by doing deals with source countries in west Africa. Italy is now the main recipient of illicit migration, in part because bilateral deals are impossible in lawless Libya. Economics, war and the lucrative business model of people-smuggling have combined to destabilise the EU, adding east-west tensions to north-south ones. + +The refugee convention and the Dublin regulation for asylum-seekers have played a big part in this. The convention’s relatively generous rules for accepting refugees were designed in 1951, when refugee numbers were lower and people-smuggling was not a big business. Under the Dublin agreement, applicants in Europe are required to apply for asylum in the first country they reach and have their cases adjudicated there, creating an obvious problem for EU countries with southern borders. Yet for a time it was easy to move through the Balkans into the frontier-free Schengen system. In 2015 that brought in large numbers of would-be refugees, with the net number of arrivals quickly reaching a million. + +It was very much to the credit of Angela Merkel, Germany’s chancellor, when in August 2015 she extended a welcome to Syrian refugees. Yet her generosity backfired when it became clear that other EU countries were, in effect, funnelling refugees to Germany (and Sweden, which had also opened its doors). For a while Mrs Merkel’s popularity at home slumped, as the right-wing nationalist Alternative for Germany party, and even the Bavarian sister party of her own Christian Democrats, attacked her for being naive. The criticism became louder after a mass attack on German women by north African migrants at Cologne station on New Year’s Eve 2015. + + + +The number of asylum-seekers has since come down (see chart), mainly thanks to a bilateral deal struck in early 2016 under which Turkey promised to stop would-be migrants from crossing into Greece. In exchange Turkey received money, a promise of visa-free access for Turks and a fair wind for its EU membership application. At a time when the EU was also condemning the Turkish government for its democratic shortcomings, this deal was widely seen as hypocritical. Yet an even bigger concern was, and is, that Turkey’s mercurial president, Recep Tayyip Erdogan, could tear up the agreement at any time. + +Efforts are also under way to stop the inflow of mainly economic migrants from Libya. Under international law, upheld by European courts, pushing back boats laden with would-be refugees is forbidden. But national naval vessels are now trying to intercept them closer to the Libyan coast and pull rather than push them back. Elizabeth Collett of the Migration Policy Institute Europe, a think-tank in Brussels, huffs that this is an extremely fine legal distinction. + +Outflows from other source countries are also being stemmed, and people-trafficking rings are coming under attack. There is talk of setting up asylum-processing centres in north Africa, as long as the EU can find what officials now call “safe places”, not necessarily “safe countries”. Much money is also being spent on strengthening the EU’s external borders. + +None for us, thank you + +Yet the flow of migrants and asylum-seekers into Europe is likely to continue, and their distribution within the EU is creating huge problems. Germany and Sweden feel they have been landed with an unfairly large share of the burden. German officials criticise their EU partners for refusing to reciprocate the solidarity they asked for during the euro crisis. They are particularly angry with central European countries in the Visegrad group of Poland, the Czech Republic, Slovakia and Hungary, which have taken almost no refugees, in contravention of their obligations. Pascal Lamy, a veteran former commissioner, reckons that the east-west divisions created by the refugee crisis pose a greater threat to the union than the north-south ones arising from the euro crisis. + +British Eurosceptics see the EU’s migration crisis as evidence that continental Europe shares Britain’s concerns about the free movement of people. But they have got it wrong: the worries in other EU countries are almost entirely about external migration, not the movement of people and workers within Europe. Even so, the migration crisis has clearly destabilised the Schengen system of frontier-free movement. + +Schengen, which covers all EU countries bar Britain, Ireland, Croatia, Cyprus, Bulgaria and Romania, plus a clutch of non-members, has been “temporarily” suspended in some places. Austria has hardened its border controls. Hungary has built two fences. One effect has been to trap thousands of would-be refugees in grim conditions in Greece and the western Balkans. It is not clear when or even if Schengen will be fully restored. + +Welcome, up to a point + +No EU member other than Britain has said it wants to stop the free movement of people, but the principle has been eroded in several respects, starting with limits on welfare-benefit entitlements. Germany, the Netherlands and others have won several cases in the European Court of Justice, establishing that people from poorer east European countries are not entitled to claim immediate welfare benefits in richer EU members which often exceed median wages at home. + +The EU’s “posted workers” directive prevents central and east Europeans from undercutting domestic wages and working conditions in richer countries. But it allows them to pay welfare contributions in their home countries, which has been controversial in France, in particular. Some countries are trying to make it harder for would-be workers to come in without a job offer. Countries outside the EU but in the European Economic Area (EEA) can also in theory limit free movement, even though in principle they are bound to offer it. Liechtenstein, which is part of the EEA, sets quotas on the number of outsiders it allows to live and work there. Switzerland, which voted to restrict immigration from the EU in a referendum three years ago, has had to climb down, but it is at least being allowed to advertise jobs to Swiss people first. + +The idea of free movement of labour was conceived at a time when living standards within the EU were more homogeneous than they are today. At the time nobody could have predicted the amount of movement triggered by the lifting of controls on east European countries. The sending countries do not necessarily welcome the outflow, either: although anxious to protect the interests of their nationals abroad, they realise that a brain drain of highly qualified workers may not be in their best interests. + +In the proposal for continental partnerships by the Bruegel think-tank mentioned in the introduction to this report, the free movement of labour is not seen as a necessary part of a single market. The report also points out that, whereas the single market has lifted almost all restrictions on the movement of goods and capital, it is far from complete for services. The provision of services and mobility of labour, some economists note, tend to go together. And free movement is more essential for the euro zone than for the wider EU since it can be a partial substitute for the loss of currency flexibility. + +Brexit may mean that no country in the EU or the EEA will challenge the free movement of people in Europe in the near future. Besides, the numbers coming in from outside and moving around inside may drop for a while. But all politicians want to be able to respond to public opinion, so the principle may start to fray at the edges. It could even become yet another example of the variable geometry that Brussels purists hate so much. The same is true of the EU’s foreign and security policy. + +Creaking at 60More in this special report:Creaking at 60:The future of the European Union + +That sinking feeling:Members agree that the single currency needs more integration + +Exit strategy:Leaving the euro would be devilishly difficult + +Compassion fatigue:Most EU countries are happy to welcome other Europeans + +Home and abroad:The importance of a European foreign and security policy + +Democracy and its dilemmas:How to address the EU’s democratic deficit + +Who rules the rulers?:Safeguarding democratic rule within the EU + +Differentiate or bust:Europe’s future is multi-speed and multi-tier + + + + + +→ Home and abroad: The importance of a European foreign and security policy + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21719191-they-are-less-keen-refugees-outside-most-eu-countries-are-happy-welcome-other/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + +Special report + + + + + +Creaking at 60: Home and abroad + +The importance of a European foreign and security policy + + +European countries, inside and outside the EU, more than ever need to work together + + + +Mar 23rd 2017 + + + + + +THE EUROPEAN UNION is at heart an economic and trade project built on its foundation as a customs union. The 1980s saw the addition of the single market, the world’s most deeply integrated economic union, followed a decade later by the launch of the single currency. But beyond finance and economics, the EU has traditionally had few pretensions. In 1991 Mark Eyskens, then Belgium’s foreign minister, summed it up as an economic giant, a political dwarf and a military worm. + +The focus on economics worked fine so long as European countries could rely for their security on NATO and the protection of the United States. This arrangement continued to function through the break-up of the Soviet empire and the expansion of both NATO and, later, the EU itself. But with Russia led by a newly belligerent Vladimir Putin, Turkey under an increasingly distant Recep Tayyip Erdogan, the Middle East a more violent mess than ever, Britain preparing to leave the EU and an apparently more isolationist America, it is no longer enough. The union clearly needs to focus more on strengthening its common foreign and security policy (CFSP). + + + +It is easy to overlook the CFSP’s achievements in recent years. Thanks in good part to the need for unanimity among EU member countries, the Brussels machinery can be cumbersome or even paralysed by irreconcilable differences, as became evident during the second Gulf war in 2003. The European External Action Service (EEAS), in effect the EU’s diplomatic service, has taken a while to establish itself. As for the “high representative for foreign and security policy” established with the EEAS under the Lisbon treaty of 2009, the very title has a ring of Gilbert and Sullivan about it. + +Unsung heroines + +Yet the first two incumbents, Britain’s Catherine Ashton and Italy’s Federica Mogherini, have chalked up many unsung successes. These range from clearing pirates from the waters off Somalia to establishing a relationship of sorts between Kosovo and Serbia in the western Balkans. And despite Mr Putin’s best efforts, all 28 EU countries have stayed remarkably united behind the sanctions imposed on Russia after its annexation of Crimea and invasion of eastern Ukraine in early 2014. Above all, the EU helped secure a nuclear deal with Iran in 2015. According to Sir Robert Cooper, a former counsellor to the EEAS, this would not have happened without it, working through an alliance of Britain, France and Germany. + +Perhaps the EU’s most successful foreign policy of all is its own enlargement. Over the two decades since the collapse of the Soviet empire in 1989-91, the European club has taken in no fewer than 11 former communist countries from central and eastern Europe, helping to establish not just market economies but also liberal democracy, sometimes in places that had next to no experience of the concept. The result has been good for both the European economy and the entire continent’s security. It has helped make the club more pro-American and pro-NATO and less pro-Russian. + +Now, however, many of these achievements are under threat. It is not just that Mr Putin sees the EU as an enemy and actively seeks to undermine it. The problems of the Middle East and north Africa also seem to be getting worse. More worryingly, further EU enlargement has more or less stopped. That creates a conundrum: what to do about the countries of the western Balkans and Turkey, which will clearly not become full members in the foreseeable future? Enrico Letta, a former prime minister of Italy who two decades ago wrote a book supporting variable geometry, suggests the EU should have been less dogmatic in the 1990s in insisting on full membership or nothing: an intermediate form of associate membership might have been better. There is now a real danger that some places could slip away from Western influence. Mr Putin is interfering in the western Balkans, as is Mr Erdogan, who is also taking Turkey in an ever more autocratic direction. + +The biggest challenge, though, is the arrival of Donald Trump in the White House. Many Europeans, like many Americans, had hoped that he and his advisers would soon ditch the more intemperate language that he used during his campaign. But his early statements in office have confirmed his protectionist instincts, his criticisms of Europe for free-riding on the back of American defence, his apparent eagerness to talk to Mr Putin, his serious doubts about the value of the Iran deal and his backing for hardliners in Israel. During his campaign he also made scornful remarks about both NATO and the EU and showed strong support for Brexit. + +So what should the EU do? Unity seems more important than ever. The Europeans may have to fight hard to defend the Iranian nuclear deal. They will want to stick to a common line over Russia, the Middle East and Israel. They may also need to find new ways to engage the western Balkans and Turkey. And in all this, the EU countries should recognise that there is a strong argument for closely involving non-members, notably post-Brexit Britain but also Norway and others. A CFSP without Britain would be weaker and less effective. Hence the need for some institutional innovation—observer status, partial or associate membership—that brings Britain into the picture and helps to secure its solidarity with its European partners. + + + +The same applies to the debate on defence. Even before Mr Trump’s complaints that America’s partners are not doing enough, the case for more, and more effective, defence spending was already strong. All EU countries that are also NATO members are in principle committed to its defence-spending target of 2% of GDP, but few achieve it (see chart). Since Britain’s Brexit vote there has been much debate in national capitals on a new defence initiative, perhaps even setting up an operational military headquarters, which will be easier to do without a carping Britain. A Franco-German push could help. France’s and Britain’s defence policies are increasingly linked, whereas Germany remains a reluctant partner. In this area, more than any other, keeping Britain involved makes obvious sense. + +Security begins at home + +Justice and home affairs and domestic security raise similar issues. International co-operation in the fight against terrorism and organised crime is vital. As a former home secretary, Theresa May, Britain’s prime minister, has repeatedly stressed the advantages to Britain of working with other EU countries on such matters. When she chose to exercise the British right to opt out of a string of justice and home-affairs directives in mid-2014, she promptly opted back into the most important ones, including Europol, the European Arrest Warrant and the system of passenger-name recognition. She has said that, after Brexit, she would like to stick as closely as she can to these arrangements. + +Denmark has an even more extensive opt-out from justice and home-affairs policies than Britain (which carefully retained the right to opt back in to those that it liked). This has caused many headaches in Copenhagen. Even though Denmark is a member of the Schengen border-free zone, for instance, its access to the vital Schengen information system is at best indirect. To get around such problems, Denmark held a referendum in December 2015 on whether to end their Europol opt-out, only for Danish voters to say no once more. + +Yet it would surely be wrong to allow politics or institutional inertia to interfere with essential co-operation in justice and home affairs, international policing or counter-terrorism. The United States and Australia have association agreements that allow them to place liaison officers at Europol. But as Camino Mortera-Marinez of the Centre for European Reform points out, non-EU countries cannot participate in the European Arrest Warrant. The European Court of Justice has also in the past stopped data-sharing agreements with third countries that do not adhere to EU privacy rules. + +There is good reason not to allow non-members full participation in the single market, since that could undermine the principle that the economic and trade privileges it confers are contingent on accepting its rules and obligations. But such quid pro quos do not apply to security policy, judicial matters or foreign and defence policy. In these areas the more countries that can join, the better. That certainly applies to Britain and Denmark. + +This, indeed, was the thinking behind the “pillar structure” set up by the 1992 Maastricht treaty, which was an attempt to create common foreign and security policies and an area of freedom and justice on an inter-governmental basis, without supervision or interference by the EU’s institutions. Later treaties folded these subjects back into normal EU rules and practice, although most policymaking still retains the unanimity requirement. Yet the flexibility of Maastricht could now be reclaimed in a different way, by engaging non-members more closely than before, without necessarily involving EU institutions or courts. One reason for steering clear of them is that there remain plenty of qualms about their legitimacy and democratic credentials. + +Creaking at 60More in this special report:Creaking at 60:The future of the European Union + +That sinking feeling:Members agree that the single currency needs more integration + +Exit strategy:Leaving the euro would be devilishly difficult + +Compassion fatigue:Most EU countries are happy to welcome other Europeans + +Home and abroad:The importance of a European foreign and security policy + +Democracy and its dilemmas:How to address the EU’s democratic deficit + +Who rules the rulers?:Safeguarding democratic rule within the EU + +Differentiate or bust:Europe’s future is multi-speed and multi-tier + + + + + +→ Democracy and its dilemmas: How to address the EU’s democratic deficit + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21719190-european-countries-inside-and-outside-eu-more-ever-need-work-together/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + +Special report + + + + + +Creaking at 60: Democracy and its dilemmas + +How to address the EU’s democratic deficit + + +The institutions need reform + + + +Mar 23rd 2017 + + + + + +THE EU’S INSTITUTIONS, built up over six decades, are not ideally suited to responding flexibly to challenges such as the single currency, migration or foreign and security policy. The club remains vulnerable to the charges of operating with a “democratic deficit” that alienates many voters. + +Start with what is still the central institution, the European Commission. Headed by Jean-Claude Juncker, a long-time prime minister of Luxembourg, it is much more than a civil service; it is the guardian of the treaties, the originator of almost all legislation and the sole executor of the EU’s budget. By the standards of most governments it is also small, employing only around 33,000 people—about the same as a largish local council in one of the member countries (though commission staff command much more lavish salaries). + + + +The Juncker commission has done some good things; in particular, it has sharply reduced the volume of regulation it proposes. Yet it suffers from having too many commissioners (28, one per member country), a defect that has been only partially dealt with by the creation of senior vice-presidents and junior commissioners. One consequence is that, even more than before, the commission is more or less run by Mr Juncker’s powerful cabinet under Martin Selmayr, a German official. The commission has also allowed itself to be influenced too heavily by the European Parliament, the only institution that can dismiss it, instead of acting as a balance between the Council of Ministers (representing national governments) and the parliament as the two co-legislators in the system. + + + +Commissioners are appointed by their national governments, but are subject to confirmation by the European Parliament. The commission president is now indirectly elected under a process called Spitzenkandidaten (tellingly, a German word), introduced in 2014. Egged on by certain MEPs, the main cross-border political groups designated their preferred candidates for the job ahead of that year’s European elections. Most national governments ignored their suggestions, but when the centre-right European People’s Party (EPP) emerged as the biggest political group, the European Council felt obliged to choose the EPP candidate, Mr Juncker, even though EU heads of government, including Angela Merkel and David Cameron, had serious reservations. Leaders dissatisfied with the outcome in 2014 say they are determined to ditch the Spitzenkandidaten process for the next election in 2019, but they may find it hard to put a stop to it. + +By contrast, the innovation of appointing a permanent president of the European Council has proved a success. That owes something to the job’s first two incumbents, Herman Van Rompuy and Donald Tusk, former prime ministers of Belgium and Poland respectively. True, the EU now suffers from an inflation of presidents: of the European Commission, the European Council, the (rotating) Council of Ministers, the Eurogroup of finance ministers, the European Central Bank and the European Parliament, to name but six. But the increasing prominence of the European Council of heads of state and government reflects the reality that, when important decisions have to be made, it is national governments, not EU institutions, that do most of the hard bargaining. To some extent power has shifted from Brussels to national capitals. + +Or rather (and there lies the rub), to one capital. The growing dominance of Berlin is a cause of anxiety not just in Brussels but in other capitals (including Berlin itself). It was perhaps inevitable during the euro crisis since Germany is, in effect, the system’s paymaster. But the habit of letting Germany, and especially Mrs Merkel, decide has increasingly taken hold across the board. Germans occupy many key posts in the commission and parliament. Brexit will make matters worse, because it will break up the trio of Britain, France and Germany that has for many years been at the heart of the European project. That will expose the contrast between French weakness and German strength even more starkly, at an awkward political moment. + +Mrs Merkel is widely admired, and careful not to seem too dominant. But neither she nor a putative Chancellor Schulz can compensate for France’s inadequacies. The European project was conceived by French leaders to be headed by their country—one reason they tried hard to keep Britain out. Now their worst fears of dominance by others are being realised, not from across the Channel but from across the Rhine. + +As an international bureaucracy, the EU has spawned many other bodies, some of them of dubious value. A number of them have been scattered around national capitals as sweeteners to keep the countries concerned loyal to the project. Perhaps the most preposterous pair are the Economic and Social Committee, which brings together trade union and civil representatives for monthly meetings, and the Committee of the Regions, which does the same for regional authorities. Between them these two Brussels-based bodies cost over €200m a year to run. Hardly anybody, even in Brussels, would notice if they were to disappear tomorrow. + + + +No laughing matter + +That is not true of the EU’s main representative institution, the European Parliament. Since direct elections were introduced in 1979, its powers have been increased by every treaty, to the point where it is now largely a co-equal legislator with the Council of Ministers. At French insistence it still moves pointlessly between Brussels and Strasbourg every month, at an annual cost of some €114m. Many MEPs are impressively well-qualified and do an excellent job, often better than their national counterparts, in improving legislation and in questioning commissioners and the European Central Bank. Moreover, unlike other EU institutions, the parliament has room for anti-EU politicians. Nigel Farage, a British MEP and former leader of the UK Independence Party, memorably noted last June that when he arrived he was laughed at, but after the Brexit vote “you’re not laughing now.” + +When important decisions have to be made, it is national governments, not EU institutions, that do most of the hard bargaining + +Yet as an institution seeking to bring voters closer to the European project, the parliament must still be judged a failure. It may frighten the commission, but it does not exert the sort of control over governments that national parliaments aspire to. Its link to voters is tenuous: turnout in European elections is low and falling, and voters tend to decide largely on national not European issues. Far from acting as a parliament that controls spending and curbs the executive, the European Parliament has often behaved more as a lobby group whose main aim seems to be to spend more and to augment its own powers. + +One way of remedying this would be to increase the role of national parliaments. Many experienced EU officials regret the switch from a European Parliament made up of nominated national MPs to a directly elected institution, breaking the link between national and EU-level politics. National politicians in many countries remain shamefully ignorant of the EU and its rules, and too few MEPs see it as part of their role to help educate them. Indeed, many national parliaments have cast doubt on the European Parliament’s democratic credentials, as has the German constitutional court. Yet the parliament is hardly likely to vote for its own demise. + +Instead, it might be used to help fill the EU’s famous democratic deficit. Most talk of such a deficit is wrong or exaggerated: EU lawmaking is in many ways more transparent than national lawmaking, and national governments usually have to approve EU laws in the Council of Ministers, although they may pretend otherwise. The place that may be suffering most from a democratic deficit is not the union as a whole but an increasingly integrated euro zone. As it penetrates more deeply into national fiscal and other domestic policies, the case for a democratically elected chamber to keep it in check is becoming stronger. + +One idea would be to reconstitute the European Parliament so that it represents only the euro zone. That could become part of a new architecture which would also feature a new euro-zone finance minister as well as a euro-zone budget that would act, as in any federal system, to smooth out differences in economic performance between the constituent parts. MEPs from non-euro countries might revert to being nominated by national parliaments. That would mean much of the wider EU budget could be scrapped; most farm support has been detached from production, so it could be renationalised, and regional spending could continue within the euro zone but not in the rest of the union. Such innovations would confer greater legitimacy on the European Parliament and give it a role, but only in the central core, not the wider EU. For countries thinking of joining or quitting the euro, a euro-zone parliament might also bring home to them how momentous a step that would be. + + + +Creaking at 60More in this special report:Creaking at 60:The future of the European Union + +That sinking feeling:Members agree that the single currency needs more integration + +Exit strategy:Leaving the euro would be devilishly difficult + +Compassion fatigue:Most EU countries are happy to welcome other Europeans + +Home and abroad:The importance of a European foreign and security policy + +Democracy and its dilemmas:How to address the EU’s democratic deficit + +Who rules the rulers?:Safeguarding democratic rule within the EU + +Differentiate or bust:Europe’s future is multi-speed and multi-tier + + + + + +→ Who rules the rulers?: Safeguarding democratic rule within the EU + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21719196-institutions-need-reform-how-address-eus-democratic-deficit/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + +Special report + + + + + +Creaking at 60: Who rules the rulers? + +Safeguarding democratic rule within the EU + + +The EU needs more leverage over errant members + + + +Mar 23rd 2017 + + + + + +AS THE EUROPEAN project grew from six reasonably cohesive members to 28 more diverse and less controllable ones, it was faced with two big questions. One was what to do if a country decided to leave. The response of the United States to South Carolina’s secession in 1860 seemed excessive, so instead the treaty was amended to include Article 50, which sets out the procedure for exit. The hope was that it would never be used, but now Britain is invoking it. Untried though the procedure is, one thing seems certain: it will be long-drawn-out and painful for everyone. + +The second question was what to do if a country started to trample on the democratic standards that are a condition of membership. Europe has had to consider this issue before, in 2000, when Austria brought Jörg Haider, a far-right politician, into a coalition government. The EU tried to isolate Austria by freezing contacts, but when that failed to oust Mr Haider it gradually thawed, and has since tacitly accepted governments sustained by extremist parties. In the 2000s several commentators suggested that Italy under Silvio Berlusconi would have failed the Copenhagen criteria for membership because he wielded such enormous power over the Italian media, but at the time nothing was done about it. + + + +The underlying difficulty, as David McAllister, a German Christian Democratic MEP, puts it, is that the EU has a great deal of leverage over applicant countries but almost none over members. It can suspend voting rights under Article 7, which is a sort of nuclear option. But whereas a new applicant can be restrained if it strays off the democratic course, an existing member that flouts the rules cannot easily be disciplined. And now the EU is unsure what to do about two such countries. + +The first is Hungary, where Viktor Orban’s Fidesz government, elected by a huge majority in 2010, quickly began to overturn European norms. Mr Orban, whose party had a majority big enough to change the constitution at will, interfered with the central bank, the constitutional court and the media. He even gave a speech in July 2014 extolling the virtues of an “illiberal democracy”. Yet he has been careful not to go too far, pulling back from head-on confrontation with Brussels and using his party’s membership of the main European centre-right grouping, the European People’s Party, to fend off criticism. + +Illiberal Orban + + + +The Polish government, led by Jaroslaw Kaczynski and his Law and Justice (PiS) party since late 2015, presents a more serious problem. The EU accuses PiS of breaking the rules over the constitutional court and the appointment of judges. It frets, too, over media freedom. Frans Timmermans, a commission vice-president, has been trying to negotiate a solution; Angela Merkel recently visited Warsaw. Yet the PiS government rejects all outside criticism. Konrad Szymanski, Poland’s Europe minister, says simply that the government was democratically elected and has the support of voters for what it is doing. He adds pointedly that it is western, not eastern, Europe that has seen the biggest recent upsurge in anti-EU populist parties. + +Unlike Fidesz in Hungary, PiS in Poland has a proper opposition, so the next election could solve the problem. But unless it does, the Poles will continue to be troublesome. Piotr Buras of the Warsaw office of the European Council on Foreign Relations, a think-tank, notes that the government disagrees with the EU over the euro, democratic norms and even defence and foreign policy. It is almost as negative as pre-Brexit Britain. This suggests the EU could do with a new category of associate membership, serving as a halfway house for applicants not yet ready for full membership but also as a naughty step for members that backslide too much. + +Creaking at 60More in this special report:Creaking at 60:The future of the European Union + +That sinking feeling:Members agree that the single currency needs more integration + +Exit strategy:Leaving the euro would be devilishly difficult + +Compassion fatigue:Most EU countries are happy to welcome other Europeans + +Home and abroad:The importance of a European foreign and security policy + +Democracy and its dilemmas:How to address the EU’s democratic deficit + +Who rules the rulers?:Safeguarding democratic rule within the EU + +Differentiate or bust:Europe’s future is multi-speed and multi-tier + + + + + +→ Differentiate or bust: Europe’s future is multi-speed and multi-tier + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21719192-eu-needs-more-leverage-over-errant-members-safeguarding-democratic-rule-within-eu/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + +Special report + + + + + +Creaking at 60: Differentiate or bust + +Europe’s future is multi-speed and multi-tier + + +The EU must embrace greater differentiation or face potential disintegration + + + +Mar 23rd 2017 + + + + + +IS EUROPE READY to embrace a new model built around not sameness but difference? Although the recent commission white paper and several national leaders have come out for a multi-speed Europe, they really have in mind a way for small groups of countries to go forward in such areas as defence or taxation, without having to wait for all, using the treaty’s tools that allow enhanced co-operation. A true multi-speed, multi-tier Europe would be far more ambitious. Yet the troubles of the EU may seem to many quite enough to worry about without having to rethink the structure of their project. + +That is certainly the message coming from national capitals and Brussels. Asked about how euro and non-euro countries will co-exist in future, one senior official in Paris notes that, after Brexit, nearly 90% of the union’s GDP will be generated by the euro zone. Others say all non-members except Denmark will join the euro within five years. The rows over asylum-seekers between east and west will similarly end, says a Eurocrat in Brussels, because central Europe gains so much from the EU. Brexit will hurt Britain more than its partners. And ideas for more variable geometry, such as the “continental partnerships” touted by Bruegel, are “suitable for think-tanks”, as another senior official (this time in Berlin) puts it, not to be taken seriously. + + + +Yet this is too complacent. The union will have non-euro as well as euro members for years to come. The migration crisis is not turning the citizens of central Europe into good Europeans; instead, some are attacking the union’s core principles. And although Brexit does seem likely to damage Britain more than the EU, the decision of a majority of voters in a large member country to leave is a huge indictment of the whole organisation, gravely weakening it in the eyes of the world. + +A Europe for all reasons + +A more differentiated Europe, based around the idea of variable geometry, a range of speeds or concentric circles, would be a good way to ease the tensions and problems that afflict the present, overly rigid EU. At the centre would be the 19-member euro zone, which will need deeper political and economic integration to survive. Next would be full EU members that are not in the euro. In principle, it would be helpful if those that find euro membership too demanding, or are not prepared to embrace the political integration it implies, were able to migrate into this looser second grouping without undermining or destroying the single currency. The main candidate for such a move is Greece, but there could be others in the future. + +A third tier could then take in countries that do not currently want to join the EU but would like to participate as fully as possible in the single market. This would entail payments into the EU budget and a willingness to abide by almost all of the club’s rules, including, in effect, an acceptance of the jurisdiction of the European Court of Justice. This group would take in the three members of the European Economic Area—Norway, Iceland and Liechtenstein—and, albeit in a slightly looser relationship, Switzerland. Again, others might aspire to join this group. + +Beyond these three tiers would be a fourth set of countries that are unwilling to accept the rules made in Brussels but still want a deep and comprehensive free-trade arrangement with the EU. Some of these might also wish to be closely linked, through some form of observer or associate status, with the EU in foreign and defence policies and in domestic security issues. Britain is the most obvious candidate for such a group. But Turkey and some western Balkan countries might also be interested, and perhaps one day Ukraine, Georgia, Moldova and even Belarus might be added to the list. This tier, or something like it, might also become a home for countries that either choose or are asked temporarily to suspend their EU membership. + +Different, not lesser + +Why does the idea of institutionalised variable geometry provoke opposition? There are three answers. One is that countries in the outer tiers might feel they have been given second-class status. Even Britain, a firm believer in variable geometry, long fretted over the creation of a two-speed Europe built around the single currency, fearing that the real power and decision-making would be exercised by the inner circle. It is notable that the euro zone on its own now constitutes the “qualified majority” needed for the Council of Ministers to approve legislation. + +Denmark, which has long had several opt-outs, has been similarly sensitive to being treated as an outsider. In the 1990s Italy felt that it needed to be in the euro from the start to avoid relegation. Greece and, later, several central European countries repeatedly objected to the idea of a two-speed Europe. Jaroslaw Kaczynski, the de facto leader of Poland, recently declared that this would lead to the “breakdown, in fact the liquidation of the European Union in its current sense”. + +Yet such fears seem largely groundless. With variable geometry already so extensive, the idea of a first, superior class of highly integrated members and a second, inferior class of more loosely associated ones no longer stacks up. Indeed, some countries might be better off standing aside from ventures they are not ready for, even if it involves some sacrifice of broader influence. Uffe Ellemann-Jensen, a Danish former foreign minister, recalls that at the time of Denmark’s Maastricht opt-outs, such thinking was captured in the phrase: “To be or not to be, that is the question; to be and not to be, that is the answer.” + +This leads to the second reason for dismissing the idea, which is the opposite of the first: the fear that, unless everyone is prepared to agree on common principles and an ultimate goal, the club might slowly but surely fall apart. That was why purists always objected to British and Danish opt-outs. After the collapse of the Soviet Union, applicant countries from eastern Europe were presented with a take-it-or-leave-it choice: if they wanted to join the EU, they would have to accept the entire acquis communautaire, including commitments to Schengen and the euro. + +As Britain negotiates its way through Brexit, it is faced with the same attitude: any special access to the single market or other forms of co-operation are out, since they are available only in return for taking on all the union’s obligations. A multi-speed, multi-tier Europe conjures up a vision of the dreaded “cherry-picking”, in which countries take the benefits of the EU without paying the appropriate price. To concede this, the thinking goes, is to risk destroying the union. Those who feel this way point out that golf clubs do not allow outsiders to change the rules and play whenever they choose. Yet this is a false analogy. Most golf clubs have many categories of membership, and most allow non-members to play at less busy times. + +When the Treaty of Rome was signed 60 years ago and the club had only six members, a single class of membership made sense. With 28 members, and even with 27, one size is much less likely to fit all. It seems probable that the current overlapping memberships of the euro, NATO, parts of the single market, Schengen and co-operation on domestic security will persist for a long time, possibly for ever. + +The third argument against variable geometry, again expressed by a senior Eurocrat, is that too much variation would turn the union into an ineffectual organisation reminiscent of the Holy Roman Empire. Yet this analogy does not work either. True, the empire was disparaged by one Frenchman, Voltaire, as “neither holy, nor Roman, nor an empire”, and later puffed out by another, Napoleon. But Charlemagne’s creation proved sufficiently flexible and decentralised to survive wars, plagues and religious upheavals. It repeatedly shed and gained territory, at different times taking in chunks of France, the Low Countries and northern Italy as well as the core German provinces (but never Britain). In so doing, it mostly brought more peace, prosperity, freedom and security to its inhabitants than were enjoyed by the rest of Europe—and it lasted for 1,000 years. + +If it is too early to tell whether the Holy Roman Empire was a success, listen to one of Aesop’s fables, dating back 2,500 years. It is about a reed growing by a river alongside a mighty oak. The oak taunts the reed for being weak and having to bend with every breeze. But one day a great storm blows up and topples the oak, whereas the reed remains standing. There may be something to be said for flexibility. + +Creaking at 60More in this special report:Creaking at 60:The future of the European Union + +That sinking feeling:Members agree that the single currency needs more integration + +Exit strategy:Leaving the euro would be devilishly difficult + +Compassion fatigue:Most EU countries are happy to welcome other Europeans + +Home and abroad:The importance of a European foreign and security policy + +Democracy and its dilemmas:How to address the EU’s democratic deficit + +Who rules the rulers?:Safeguarding democratic rule within the EU + +Differentiate or bust:Europe’s future is multi-speed and multi-tier + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21719193-eu-must-embrace-greater-differentiation-or-face-potential-disintegration-europes/print + + + +上一项 文章 章节 下一项 + + + + + +Special report 章节 Finance and ... + + + + + +Business + + +Uber’s future: Hard driving + +Bottled water: Liquid gold + +The laptop ban: Holding pattern + +Tyre manufacturing: Puncture repair + +Food suppliers: Another grilling for Brazil + +The construction business: Profiting from the wall + +Schumpeter: Texas hold’em + +Special report 章节 Finance and ... + + + + + +文章 章节 下一项 + + + + + +Hard driving + +Uber is facing the biggest crisis in its short history + + +Can the ride-hailing giant stay in the fast lane? + + + +Mar 25th 2017 | SAN FRANCISCO + + + + + +AS A teenager, Travis Kalanick’s first job was to knock on strangers’ doors and sell them knives. Now he is trying to dodge the daggers aimed at him and at Uber, a ride-hailing firm that is the world’s most valuable startup. On March 19th Jeff Jones, the company’s president, stepped down after six months, declaring that “the beliefs and approach to leadership that have guided my career are inconsistent with what I saw and experienced at Uber.” At least six key executives and high-ranking employees have left in the past nine weeks. They include Uber’s head of mapping, a former head of self-driving car technology, and an artificial-intelligence (AI) expert who had been put in charge of the firm’s AI research lab only three months ago. + + + +Aggressive and unrelentingly ambitious, Mr Kalanick built his eight-year-old company into America’s largest privately owned technology firm by treading on the toes of different groups, including traditional taxi drivers, other tech companies and regulators. He pushed into new markets abroad and raised an unprecedented amount of capital, to the tune of around $12.5bn, including debt. The firm has a valuation of close to $70bn (see chart). + +Yet a remarkable run of bad news for Mr Kalanick, combined with some setbacks for Uber itself, threatens to halt the firm’s momentum. “I have never seen someone have such a bad couple of months,” commiserates the boss of a large, public tech firm. Politics struck first: in January Mr Kalanick was widely criticised for serving on Donald Trump’s businessadvisory committee and for apparently intervening in a strike by taxi drivers opposed to Mr Trump’s ban on refugees. A campaign, called #DeleteUber, took off, encouraging users to stop using the Uber app. + +Then worries about Uber’s culture mounted. A former employee wrote a blog post on how Uber’s human-resources department failed to act on her sexual-harassment complaint. Next, an Uber driver filmed Mr Kalanick arguing with him about fare cuts and uploaded the material, including the boss lamenting that “some people don’t like to take responsibility for their own shit”. The latest embarrassment was the revelation that Uber had secretly designed and used a software feature, called Greyball, to evade city officials attempting sting operations to catch Uber drivers violating local regulations. + + + +Two questions face the company. One is whether Uber will continue prospering under Mr Kalanick’s leadership. Silicon Valley and its denizens may celebrate his type, but his public words and actions have made people close to the firm squirm. Bill Gurley, a venture capitalist and early Uber backer who sits on the board, is helping direct a search for a chief operating officer to keep Mr Kalanick in check and bring experience and discipline to the firm. It is certainly hard to keep on top of the firm’s growth: last year, its headcount doubled. + +If Mr Gurley and the rest of the board cannot find an experienced candidate willing to work with Mr Kalanick, calls for him to step down may grow louder. But that is his decision to take. Uber is a prominent example of founders’ power at fast-growing tech firms. On its own, Uber’s board does not have the clout to change the CEO, because of his super-voting shares and those of his co-founder, Garrett Camp: together they control a majority of the voting stock. + +The second question concerns Uber’s longer-term business prospects. One of the firm’s early-stage investors says that recent events have been a series of “body blows”, but he worries that there could be a “knockout blow” that would permanently damage Uber’s momentum. So far, he says, it looks as if Uber is merely bruised. + +From the start of the year to the first week in March, Uber’s market share in America has fallen from around 80% to 74%, according to 7Park Data, which tracks the industry. Lyft, a smaller ride-hailing firm, seems to have been the chief beneficiary. The dip in market share for Uber could reverse, though the firm is unlikely to grow as effortlessly as in the past. There is, at least, still plenty of room to expand at home. Only around 6% of American mobile-phone users hail a ride through Uber and Lyft once a month or more. + +Yet Uber’s enormous valuation also depends on the firm pulling off a harder task: dominating most markets for ride-hailing around the world. Fortunately, there is little evidence that Mr Kalanick’s antics have dented its prospects outside America. But the goal of worldwide dominion remains distant, even though no other private technology firm has ever spent so much money to gain a global foothold. It is competing against a strong competitor, Grab, in South-East Asia and was spending billions to compete against its Chinese rival, Didi, until it struck a deal last year to withdraw from the country in exchange for a 20% stake in that firm. + +Investors particularly want to see the ride-hailing giant reach profitability in developed markets. Its sales, of around $5.5bn in 2016, are growing rapidly, but it has to spend a lot in American cities where there are rival local firms such as Lyft and (smaller) ones such as Juno and Via. For every dollar that Lyft spends in subsidising fares, it costs Uber four times the amount to hold onto customers and drivers, because of its far larger size. Foreign expansion adds still more expense, and it is unclear whether the competition at home and abroad, which hurts Uber’s chance of becoming profitable, will ever ease up. + +There are other threats to watch out for. Uber’s performance depends on its software working smoothly and not being hit by outages, and this could suffer if more executives on the technical side leave. It may also struggle to hire talented engineers during this rough patch. + +Another looming problem is regulation. Later this year the European Court of Justice, the European Union’s highest court, will decide on whether Uber is a transport company or just a digital service; if it is judged to be the former, it will need to comply with stricter licensing, insurance and safety rules, lifting its costs significantly in Europe. Last week an American court upheld a law from Seattle allowing Uber drivers a vote to unionise. Other cities are expected to follow suit. A British court will soon need to rule on whether Uber has to pay value-added tax. + +As for Uber’s race to move away from human drivers to autonomous driving, obstacles lie ahead. In February Waymo, a self-driving car unit that is owned by Google’s parent company, sued Uber, claiming that former employees of Google had stolen some of Waymo’s proprietary technology when they set up their own autonomous-driving startup, Otto. Last year Uber bought Otto, which makes self-driving kit for lorries, for around $700m. + +Patent disputes are common in the tech industry and can take years to play out, but Waymo is being particularly aggressive. It has asked a judge to ban Uber’s use of its lidar technology, which uses lasers to scan a vehicle’s surroundings and is employed in self-driving cars. Uber may settle for a large sum, but the affair adds uncertainty. + +Some people close to Uber ask whether all the difficulties will force Mr Kalanick, who has said he never wants to take the firm public, to consider doing just that. It will now be far harder to raise money in the private markets at Uber’s stratospheric valuation. But it is possible to argue the opposite: Mr Kalanick will need the clouds of controversy to clear before going public. + +His company’s problems could occur at many startups, but the fact that they have all struck at once suggests its immaturity and a lack of professional management. Given the sums at stake and the blow to the prestige of many in Silicon Valley if Uber failed, there will be no shortage of pressure on Mr Kalanick to prove that he is the right person to stay at the wheel. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21719509-can-ride-hailing-giant-stay-fast-lane-uber-facing-biggest-crisis-its-short/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Liquid gold + +Companies are racing to add value to water + + +Sales of bottled water overtook those of soft drinks in America last year + + + +Mar 25th 2017 + + + + + +PRESENTED in an unusually-shaped heavy glass bottle with outsized black lettering, it could be a fine vodka. On sale for £80 ($99) in Harrods, an upmarket department store in London, it has a price tag to match. In fact, it is a bottle of water. Harvested directly from Norwegian icebergs that are up to 4,000 years old, Svalbardi is one of hundreds of water brands that are sourced from exotic places and marketed as luxury products. + +From the basic to the expensive, the market for bottled water is an attractive place to be. According to Zenith Global, a consulting firm, the global market has grown by 9% annually in recent years and is worth $147bn. The main reason is changing lifestyles. People are spending more time, and eating more of their meals, away from home. They are also switching from soft drinks and alcohol to healthier fare. Data from Beverage Marketing Corporation (BMC), another consultancy, show that consumption of bottled water overtook that of sugary soft drinks in America in 2016 (see chart). + + + +Basic brands, such as Aquafina from PepsiCo, compete on price and have slim margins. (The cost of the raw material, which comes from either natural or municipal sources, is next to nothing; the main costs are packaging, distribution and marketing.) At the other end of the scale, convincing customers to pay a lot should be hard when your product doesn’t have a distinctive taste and an alternative is freely available from the tap in most rich countries. But “premiumisation” is working. Though still a small part of the American market, really high-cost bottled water (selling for more than $1.30 a litre) has been one of its fastest-growing areas, says BMC. + +Premium water is hardly a new idea. The Perrier brand, which is owned by Nestlé, a Swiss consumer-goods giant, and Evian, owned by Danone, a French one, have long emphasised the uniqueness of their natural sources to sell water. But the newest offerings are promoting a lifestyle. Coca-Cola’s premium water brand, which is advertised by Jennifer Aniston, is marketed as “inspirational” water for successful people. That is also the buzzword for PepsiCo’s LIFEWTR, launched in America with a 30-second ad during last month’s Super Bowl. For the fashion crowd, one range of Evian bottles features artwork from Christian Lacroix. + + + +Adding flavour is another way to dress up water. Grocery stores stock fruit-flavoured waters and “plant” waters, such as coconut, maple or birch. Water that has been fortified with vitamins and minerals is a hit with exercise junkies. The market is small but lucrative: sales of flavoured water amount to only 4% of the volume of plain water sold, according to Zenith, but bring in 15% of the total revenue. + +At the luxury end of the market, water has become more like wine, argues Michael Mascha, the author of a guide to fine water. In expensive restaurants the precise origin of water is what matters; many eateries offer water lists along with the wine selection. For power-lunchers in health-conscious Los Angeles, says Mr Mascha, buying an expensive bottle of water is a way to signal status. + +High prices can be controversial, given that many people in poor countries have limited access to drinking water and environmental worries dog the industry. Transporting water from exotic places is costly; most plastic bottles languish in landfill sites; and some firms, such as Nestlé, have been accused by environmental groups of monopolising water sources at the expense of local communities, for instance during periods of drought in California. (Nestlé says it monitors environmental conditions around its source springs and that it adheres to sustainable practices.) Many brands address such concerns head-on. Svalbardi water is certified as carbon-neutral, for example; Coca-Cola funds drinking-water projects in Africa. + +The thirst for posh water will only deepen, predicts Euromonitor, a market-research firm, as middle-class consumption in poorer countries catches up and as Westerners continue shunning unhealthy soft drinks. If so, the ingenuity seen so far in the bottled-water industry may be just a drip from the iceberg. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21719511-sales-bottled-water-overtook-those-soft-drinks-america-last-year-companies-are-racing/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +A laptop ban will hit Middle Eastern airlines and passengers + +America and Britain prohibit large electronic devices in aircraft cabins on some routes + + +America and Britain ban large electronic devices in aircraft cabins on some routes + + + +Mar 23rd 2017 + + + + + +NEW intelligence appears to have prompted the decision of the authorities in both America and Britain to prevent the carrying of large electronic devices into the passenger cabins of aircraft flying from several Middle Eastern and North African countries. However, the announcements, which both came on March 21st, raise several unanswered questions. Passengers, and the affected airlines, may be concerned that there is an element of politics behind the new measure, coming as it does in the wake of Donald Trump’s second attempt to ram through a highly controversial executive order restricting travel to America from some Muslim countries. + +Some speculate that the intelligence may have been gathered by a raid carried out by American special operations forces on al-Qaeda’s affiliate in Yemen, known as al-Qaeda in the Arabian Peninsula (AQAP). One such raid took place on January 29th and left a Navy SEAL and up to 30 civilians dead. Some reports suggested that the botched operation yielded no actionable intelligence. But administration officials maintained that material indicating future AQAP targets was seized. + + + +AQAP has proved itself in the past to be technically innovative in finding new ways to plant explosives on airliners. There is also some evidence that it is spreading its expertise to other terrorist groups in the region, such as al-Shabab in Somalia, which managed to get an exploding laptop onto a plane leaving Mogadishu in February last year. It is possible that information has only recently become available about new AQAP plans to hide explosives in devices such as laptops, tablets and DVD players. + +One oddity of the new cabin ban is that America and Britain do not agree on which airports the new measure should apply to. The American version affects departing flights from Saudi Arabia, Jordan, Kuwait, Turkey, Egypt, Morocco, Qatar and the United Arab Emirates (UAE). The British have added Tunisia and Lebanon to their list, while subtracting Kuwait, Morocco, Qatar and the UAE airports. There will be suspicion that America’s inclusion of the UAE and Qatar may not be entirely unconnected with complaints from Delta, American and United about unfair competition from the big Gulf carriers, Emirates, Etihad and Qatar Airways. The three have grown rapidly over the past decade by building up their local hubs and flying anywhere in the world from them. + +Emirates operates 17 daily flights to 11 American cities, carrying about 7,000 passengers. Between them, Qatar and Etihad have more than 5,500 daily seats to America. A vital part of their model is providing a high-quality business-class service. Firms pay for their employees to fly business class in the expectation that they will get some work done. Taking away their passengers’ laptops will place the affected airlines at a competitive disadvantage. They are already hit by reduced tourism and passenger traffic due to terrorism fears. + +Economy-class passengers will also suffer. Airlines increasingly charge passengers for baggage they place in the hold. From now on, if they fly from any of the listed airports, they will have no choice other than to pay up. The Gulf hub airports, which compete for international transit passengers, will lose some of their appeal. Passengers in all classes will inevitably have more possessions of high value either pilfered or damaged. + +A further concern is whether measures against terrorists are being pursued at the expense of basic safety. Most of the devices now destined for the hold are powered by lithium-ion batteries. Safety experts say that luggage acts as an insulator, increasing the likelihood of a faulty battery bursting into flames, igniting other batteries and generating explosive hydrogen gas. A self-immolating laptop in the cabin can be quickly extinguished by the crew. A fire that breaks out in the hold is far harder to deal with. Passengers will want to know whether proper risk analysis was carried out before these decisions were made. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21719514-america-and-britain-ban-large-electronic-devices-aircraft-cabins-some-routes-america-and/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Puncture repair + +Big tyremakers are regaining their grip + + +The clamour to drive SUVs is good for established tyre manufacturers + + + +Mar 23rd 2017 + + + + + +CARS can be objects of desire and the bonnet badge an indicator of wealth and status. Yet the four small patches of rubber that do the vital job of attaching them to the road stir little emotion. A third of drivers cannot name the make of tyre on their car. Nor do they know that the dominant global brands have been fighting a losing battle for 15 or so years against Chinese competitors and now have a chance of winning back ground. + +The established tyremakers have advantages over the industry they serve. They have margins that outstrip even Germany’s luxury carmakers. Supplying manufacturers accounts for only a third of revenues of a typical tyre firm and even less of the profits. The rest comes from replacing tyres on vehicles on the road, which wear out every four years or so. + + + +The expansion of the global vehicle fleet, forecast to grow by around 3.5% a year, helps gradually to reduce firms’ dependence on the cyclical market for new cars. Tyremakers also benefit by selling most of their wares to thousands of distributors. They are fragmented and weak compared with carmakers, and less inclined to drive hard bargains. + + + +Once, the big tyremakers could divvy up this growing pie. In 2000 the top five—Bridgestone, Michelin, Continental, Goodyear and Pirelli—accounted for over two-thirds of the market. Their share has since deflated to under half (see chart) as China’s domestic tyre industry grew as rapidly as its carmakers. Some estimates reckon there are 250 Chinese family-owned or state-run businesses (the biggest is Hangzhou Zhongce Rubber). Jean-Claude Kihn, Goodyear’s boss for Europe, Middle East and Africa, reckons there could be many more. The lure of a trophy asset also tempted ChemChina, a Chinese chemicals giant, to acquire Pirelli, the sole supplier of tyres to Formula 1 motor racing, for €7.1bn ($7.7bn) in 2015. + +Chinese tyres are cheap but lack the performance or longevity of pricier brands. But as David Lesne of UBS, a bank, points out, distributors had an incentive to push them. Though selling for as little as half the price of premium tyres, distributors made margins of up to 20% (compared with as little as 5% for established brands). + +The premium manufacturers have cut costs and shifted production to cheaper places. Another helpful trend, oddly, is rising raw-material prices. After three or four years of oversupply of natural rubber and low oil prices, the main ingredients of synthetic rubber, these costs are rising. This will cause short-term pain for the big tyremakers. But as these account for 30% of costs for big firms and 60% for China’s newcomers, the latter will have much less scope to avoid putting up prices, eventually eroding their price advantage. + +Bigger wheels are also pumping up the old guard. Those over 17 inches in diameter require the premium tyres mostly made by established firms. The clamour to drive SUVs, which accounted for two-thirds of car sales in America in 2016, and a vogue for putting larger rims on humdrum cars means the appetite for these, which are at least twice as profitable as smaller ones, is growing fast. The big tyremakers are making the largest investments in new capacity to meet the need. Larger Chinese tyremakers are also spending to make bigger tyres but most of China’s minnows, after years of competing furiously on price, have precious little spare cash for such investment. + +Tyremaking should also be largely immune from all the disruption in carmaking. Electric and autonomous cars, after all, will still need tyres. Fleets of robotaxis and shared vehicles will favour the established firms, says Mr Lesne. Fleet managers tend to go for their harder-wearing, safer tyres. For big tyremakers the pressure applied by Chinese incomers is easing. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21719515-clamour-drive-suvs-good-established-tyre-manufacturers/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Dead meat + +A meat scandal in Brazil damages two of its biggest firms + + +Chile, China and the EU have banned some or all of the country’s meat + + + +Mar 25th 2017 | SÃO PAULO + + + + + +EVEN amid Brazil’s pungent stew of recent big corporate scandals, the latest is particularly stomach-turning. On Friday March 17th, in time for a traditional weekend churrasco, or barbecue, the federal police accused some of the country’s biggest meat producers of bribing health inspectors to turn a blind eye to grubby practices. These include repackaging beef past its sell-by date, making turkey ham out of soyabeans rather than actual birds and overuse of potentially harmful additives. The police operation, dubbed Weak Flesh, could reduce Brazil’s meat exports, worth $13bn a year, and damage its two big global meat producers, JBS and BRF. + +Two days later the president, Michel Temer, treated 27 diplomats from the country’s main export markets to prime Brazilian cuts at a steakhouse (pictured) in the capital, Brasília. Nevertheless, straight after that China, the European Union (EU), Chile and South Korea, which together consume a third of Brazilian meat sold abroad, said they would ban some or all imports from Brazil until it can allay misgivings about its inspection regime. The reactions from China and Chile provoked particular anguish. Unlike the EU, which has restricted products only from the 21 plants that are under investigation, they have barred all Brazilian meat from crossing their borders until further notice. + + + +Investor fears of a widespread embargo quickly kicked in. By March 20th shares in JBS, the world’s biggest beef exporter, and in BRF, the largest producer of poultry globally, had lost a sixth of their market value. Like other firms involved in the affair, both companies deny wrongdoing. Their share prices have since partially recovered, helped by South Korea’s subsequent decision to lift its ban. Most of the meat-production plants under investigation belong to much smaller rivals. Only one of dozens of plants owned by BRF is under suspicion, and the same is true for JBS. Yet the damage to the firms’ reputations may take a long time to repair. + +The effort is under way: Brazilian authorities and the country’s butchers are rushing to reassure customers at home and abroad. The suspected slaughterhouses make up a tiny fraction of 5,000-odd such establishments in the country, the industry’s defenders note. Only 33 agriculture-ministry officials were fingered by the police, out of a bureaucracy of some 11,000. + +In fact, both JBS and BRF have already clamped down on over-close relationships with officialdom inside their businesses. Such steps were judged essential as they embarked on successful global expansions during the past decade. These days, their products must get past keen-eyed foreign quality inspectors, their executives say, not just Brazilian ones. + +It makes little sense for either company to jeopardise hard-won, lucrative foreign markets by cutting corners at home. Both companies know full well how long it takes to rebuild consumers’ trust in the wake of a scandal; some Europeans are still sniffy about British beef 19 years after Britain stamped out mad-cow disease. America let in Brazilian beef only last year, after two decades of talks. + +Nonetheless, the episode will almost certainly postpone the impending flotation of JBS’s international business in New York, which was expected to raise 10.5bn reais ($3.4bn), and of BRF’s halal arm in London, aimed at raising $1.5bn. It may also hobble BRF’s return to profit from its first-ever annual loss in 2016, caused by weak domestic demand and high prices for the corn it feeds to poultry. The two giants, as well as other Brazilian exporters, may need to slash prices or risk losing substantial chunks of market share. It is all too easy to fall foul of foreign governments’ weak stomach for food scares. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21719416-chile-china-and-eu-have-banned-some-or-all-countrys-meat-meat-scandal-brazil/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Profiting from the wall + +The battle to build Donald Trump’s wall + + +More than 700 companies are vying for business. Many of them are local with Hispanic owners + + + +Mar 23rd 2017 | NEW YORK + + + + + +FEW slogans were chanted with as much passion by Donald Trump’s supporters in the presidential campaign as “Build that wall!”. The construction industry is almost as enthusiastic. Last week America’s Customs and Border Protection agency (CBP) issued two invitations for companies to bid to build the wall on the border with Mexico, which is expected to cost anywhere between $12bn and $25bn. The deadline for designs falls on March 29th. One request is for a solid concrete border wall, and the other for a wall using “alternatives” to reinforced solid concrete, suggesting the government has yet to decide what the barrier should be made of. + +More than 700 companies, from big general contractors to firms selling materials to niche providers of lighting and surveillance systems, have registered to try to become suppliers. To the surprise of some, about one in ten of the firms bidding are local ones with Hispanic owners, drawn by the scale of the earnings on offer. Cemex, a Mexican cement giant that has plants on both sides of the border, said it would not sell cement for the project, though it had earlier expressed interest in joining the bidding. Another, tiny, Mexican firm has offered lighting. + + + +Other foreign firms muscling in include SA Fence & Gate from South Africa and Quickfence from Spain, although they may not get far: the government’s tender mentions a “Buy American” preference. Skanska, a Swedish firm that is one of the construction industry’s largest, publicly snubbed the project. “We believe in openness and equality,” declared its chief executive, Johan Karlstrom. + +The big American bidders try to downplay the politics. Howard Nye, the boss of Martin Marietta, a materials giant based in North Carolina, says simply that his company has “a general interest in large infrastructure projects”. Its shares and that of other construction firms have risen as a result of Mr Trump’s pledge to lavish $1trn on infrastructure across the country. Those plans may be delayed, but not, it seems, the wall. For some smaller bidders, business and personal views are aligned. Michael McLaughlin of Greenfield Fence, a contractor based near San Diego, says the barrier is needed to keep “dangerous drug dealers” out of the country. + +The general requirement is for a wall that is at least 5.5 metres high, preferably 9 metres, with anti-climb and anti-tunnelling features, and which—on the American side, at least—is “aesthetically pleasing”. The few dozen firms that make it to the second round will later present detailed drawings and technical specifications as well as their best price. At the end of the process a still unknown number of winners will each be awarded a contract with a maximum value of $300m. + +The rules of the game clearly favour large engineering and construction firms such as KBR, which helped build the detention camp at Guantánamo Bay and which will probably bid, or Kiewit, from Nebraska. These companies have the best design expertise, top-notch construction-management teams and the ability to strong-arm materials suppliers. But smallish players could still turn a profit by signing up to be subcontractors to bigger, prime contractors. Andrew Dorfschmidt of McDirt Excavation, a family-owned business in South Dakota, hopes to sell digging services to whichever companies are awarded the government contract. + +Other firms are not interested in building the wall itself but are looking to sell border-wall accessories that are known as “tactical infrastructure and technology”. These include lighting, standing platforms and remote video-surveillance systems. One such firm, 2020 Surveillance, assumes there will be cameras placed every 60 metres along the wall. At a licensing fee of a few hundred dollars per camera per year it would expect to make $10m in revenue every year the wall is in place, if it supplied surveillance for the whole length required, or about 1,000 miles (1,610km). + +Despite the strong expression of interest from potential bidders, the construction schedule could be unpredictable. For one thing, company bosses note that the wall will run through many parcels of private land. Although eminent-domain laws, which force the transfer of private property into public hands, may be invoked by the government, agreeing on adequate compensation for evicted landowners often becomes a legal headache. + +Receiving payment could also take time. Only a small fraction of the estimated total cost of building the wall has been ring-fenced under Mr Trump’s “skinny” budget proposal. Mexico has disobligingly ruled out paying for it. Delay may not matter to everyone, however. Working on Mr Trump’s pet project is probably a good way to get a slice of a broader infrastructure splurge, if and when it comes. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21719520-more-700-companies-are-vying-business-many-them-are-local-hispanic-owners/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Schumpeter + +America’s shale firms don’t give a frack about financial returns + + +Exploration and production companies are poised to go on another investment spree + + + +Mar 25th 2017 + + + + + +INSIDE the boardrooms and bars of Houston, the spiritual capital of America’s energy industry, the swagger is back. The oil price may only be at $48, or half the level it was three years ago. But shale fracking—the business of getting oil and gas out of rocks by blasting them with water and sand—is booming once again after the crash of 2014-16. Exploration and production (E&P) companies are about to go on an investment spree. Demand is soaring for the industry’s raw materials: sand, other people’s money, roughnecks and ice-cold beer. + +Shale’s second coming is testament to Texan grit. But the industry’s never-say-die spirit may explain why it has done next to nothing about its dire finances. The business has burned up cash for 34 of the last 40 quarters, according to figures on the top 60 listed E&P firms collected by Bloomberg, a data provider. With the exception of airlines, Chinese state enterprises and Silicon Valley unicorns—private firms valued at more than $1bn—shale firms are on an unparalleled money-losing streak. About $11bn was torched in the latest quarter, as capital expenditures exceeded cashflows. The cash-burn rate may well rise again this year. + + + +Meanwhile, the prospect of rapidly rising production is rattling global energy markets. In particular it worries OPEC, a cartel of producers led by Saudi Arabia that aims to restrain output and keep prices stable and fairly high. Khalid al-Falih, Saudi’s energy minister, warned of “irrational exuberance” on March 7th during an energy-industry conference in Houston. + +When oil prices halved in just 16 weeks starting in late 2014, panic hit Texas, followed—for a while—by grim austerity. The number of drilling rigs in America dropped by 68% from peak to trough. Companies slashed investment. Over 100 firms went bankrupt, defaulting on at least $70bn of debt. Shale’s retrenchment helped to stabilise the global oil price. Production in the lower 48 states (ie, excluding Alaska and Hawaii), and excluding federal waters in the Gulf of Mexico, has dropped by 15% over the past 21 months, equivalent to 1m bpd, or 1% of global output. + +The partial recovery in the oil price, which at one point fell as low as $26, is only one factor behind renewed enthusiasm for shale. Houston’s optimists also argue that the full geological potential of Texas’s Permian basin has only just become apparent. Some experts think it could in time produce more barrels each day than Saudi Arabia does. That has offset gloom about falling production from other shale basins, such as the Bakken formation in western North Dakota. The industry has also lifted productivity. Drilling is faster, more selective and more accurate, and leakage rates are lower. Wells are being designed to penetrate multiple layers of oil that are stacked on top of each other. + +But the fact that the industry makes huge accounting losses has not changed. It has burned up cash whether the oil price was at $100, as in 2014, or at about $50, as it was during the past three months. The biggest 60 firms in aggregate have used up $9bn per quarter on average for the past five years. As a result the industry has barely improved its finances despite raising $70bn of equity since 2014. Much of the new money got swallowed up by losses, so total debt remains high, at just over $200bn. + +Oil bosses like to show off their newest wells in the Permian basin, which, they say, can now make internal rates of return of more than 50% over their working lives. But most firms have mediocre wells too, as well as corporate overheads, so their overall efficiency improvement has not been great. For the ten largest listed E&P firms, aggregate cash operating costs per barrel fell by $13 between 2014 and 2016; not enough to offset a $50 drop in the oil price. Because shale-energy fields run out far faster than traditional ones, firms must reinvest heavily to keep production flat. + +It is instructive to compare shale with another natural-resources business that has had to cope with a collapse in commodity prices. In 2016 the mining industry’s biggest companies ground out profits, produced cashflow after capital investments and made a decent return on capital. Yet despite this unflattering contrast, capital investment by American E&P companies will probably soar over the next year, by perhaps 50% or more. + +There are two theories for why this is happening. One is that the way in which executives are paid, together with lenders’ incentives, means that Houston is always vulnerable to investment mania. Not one of the ten biggest E&P firms, for example, puts significant emphasis in its pay scheme on how much return on capital it produces. Low interest rates make it easy for shale firms to borrow, and fee-hungry banks cheer on the spectacle. But the only way that the mania will end well is if oil prices rise sharply, bailing out the industry, or if E&P firms are bought by bigger energy firms. That is possible, but companies such as Exxon and Shell are too seasoned to pay a lot for small, unprofitable firms. + +Houston, we still have a problem + +The second explanation is oil executives’ belief in increased output from the Permian, and higher productivity. Most E&P firms reckon they can expand production at an annual rate of 10-20% over the next few years. But to justify their market values, and make an adequate return on their cumulative capital invested, listed E&P firms would over time need to make about $60bn of free cashflow each year. Assuming that both energy prices and capital spending stay flat, that would require them roughly to double production from current levels. + +The trouble is that this is a circular argument. If achieved across the whole shale industry it would mean that output would be twice as high as it is now, leading to a 5% increase in global supply, which might in turn lower the oil price. There is something heroic—and baffling—about America’s shale firms. They are the marginal producer in a cyclical industry, and that is usually an unpleasant place to be. The oil bulls of Houston have yet to prove that they can pump oil and create value at the same time. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business-and-finance/21719436-exploration-and-production-companies-are-poised-go-another-investment-spree-americas/print + + + +上一项 文章 章节 下一项 + + + + + +Business 章节 Science and ... + + + + + +Finance and economics + + +China’s economic diplomacy: Closer to centre-stage + +Buttonwood: Generation gap + +The Bangladesh Bank heist: Still on the trail + +American trade policy: Done deals + +Payments in Europe: Levelling the paying field + +Philanthropy: Give and take + +Free exchange: Deaths of despair + +Business 章节 Science and ... + + + + + +文章 章节 下一项 + + + + + +The multilateral kingdom + +China’s growing clout in international economic affairs + + +As America retreats, China advances + + + +Mar 23rd 2017 | HONG KONG + + + + + +THE IMF “systematically impoverishes foreigners”, and the World Bank’s advice has “negative value to its best clients”. These harsh words were voiced not by lefty critics of the Washington Consensus, but by two men (David Malpass and Adam Lerrick, respectively) whom Donald Trump has picked to lead his Treasury’s dealings with the rest of the world, including the international financial institutions (IFIs), such as the World Bank and IMF, and the G20 group of leading economies. + +Their future boss, Steven Mnuchin, America’s treasury secretary, is not much more reassuring to the global financial establishment. At his first G20 meeting, in Baden-Baden in Germany on March 17th-18th (pictured), he vetoed a long-standing pledge to “resist all forms of protectionism”. It had often been breached. But hypocrisy is the tribute vice pays to virtue. + + + +To veterans of international economic affairs, this combative stance is baffling. America’s government now seems to disdain a set of institutions it nurtured into life—institutions that are more commonly criticised for following America’s will too closely. “The United States is just handing the leadership over to China of the multilateral system,” Jeffrey Sachs of Columbia University told Bloomberg this week. + +But if there is a vacancy, is China qualified or even interested in the job? In January President Xi Jinping seemed to audition for the role in a speech praising globalisation at the World Economic Forum in Davos, Switzerland. As evidence of its capabilities, China can also point to a hefty portfolio of chequebook diplomacy. The China Development Bank, one of its policy lenders, already has a bigger book of overseas assets than the World Bank. Another institution, the Export-Import Bank of China, is not far behind. In addition, the country’s central bank has extended currency-swap lines to over 30 countries, including many that America’s Federal Reserve would not touch. + +What about its willingness? Most of China’s economic diplomacy to date has been bilateral, allowing it to win loyalty, reward friends and secure contracts for its companies. Over 60 countries will, for example, supposedly benefit from Mr Xi’s nostalgic vision of a revived Silk Road (the “Silk Road Economic Belt and 21st Century Maritime Silk Road”, mercifully shortened to “One Belt, One Road”, or OBOR). + +As for multilateral efforts, China’s most eye-catching initiatives have worked around the existing system, not through it. It set up two multilateral lenders of its own, the New Development Bank (known as the BRICS bank, based in Shanghai, with financial contributions from Brazil, Russia, India and South Africa as well as itself), and the Asian Infrastructure Investment Bank (AIIB), in Beijing, which just increased its membership to 70, including every G7 country except Japan and America. + +So it might seem that China has little interest in filling any gaps America might leave in the old multilateral system. But that would ignore another, less heralded trend. Overshadowed by its bilateral boondoggles and multilateral innovations, China’s relationship with the incumbent IFIs has been warming. It has become more “compliant” with G20 commitments, according to the G20 Research Group at the University of Toronto (see chart). Its currency is now more fairly valued and its current-account surplus has narrowed, removing a bone of contention with the IMF. + + + +The IMF’s decision in 2015 to include the yuan as one of five reserve currencies in its Special Drawing Rights basket has also helped to rebut the notion that the fund is an arm of an American policy of containment. Moreover, since China’s ham-fisted devaluation earlier that year, it has often sought the IMF’s advice on managing the transition to a more flexible yuan and communicating its policy to the markets. + +China is similarly happy to learn what it can from the World Bank, which has advised it on everything from managing the debt of its provinces to cleaning the air in its cities. The bank’s suggestions are not always taken. But at least China seems to value its advice non-negatively. + +China’s relationship with these institutions is also becoming more generous. It is now the 11th-biggest donor to the International Development Association (IDA), the arm of the World Bank that helps the world’s poorest countries. The China Development Bank has co-financed several World Bank projects in Africa. + +Last autumn, when the IMF was looking for money to help Egypt, it phoned China, which agreed to extend a currency-swap line worth 18bn yuan ($2.6bn). The call took only five minutes and China’s generosity embarrassed the G7 into stumping up some money in addition. China had been similarly helpful to the IMF bail-out of Ukraine a year earlier. + +The World Bank and the IMF are imperfect vehicles for China’s economic diplomacy. The bank’s capital constraints might inhibit a big expansion in its lending and China’s voting power and financial stake in the IMF will rise only if America permits. It took Congress six years to approve the last reform and it is hard to imagine the next round, due in 2019, winning much support from Mr Trump. But by adding extra dollops of financing to favoured bank and fund programmes, China can nonetheless steer the multilateral system indirectly, by adding its weight where it sees fit. + +In the long term, if China becomes the world’s leading economy, it is conceivable it will become the biggest financial contributor to the bank and the fund. At that point, according to their articles of agreement, their headquarters would have to decamp to China. All the more reason for the World Bank to help Beijing clean its air. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21719498-america-retreats-china-advances-chinas-growing-clout-international-economic/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Buttonwood + +The unusual gap between American and European bond yields + + +America has the world’s largest economy and a strong currency, yet it costs its government more to borrow than Italy’s + + + +Mar 25th 2017 + + + + + +AMERICA may be the world’s largest economy, but these days its government pays more than many others to borrow money. Its ten-year bond yields are higher than those in Britain, France, Singapore and even Italy. + +The gap between American and German ten-year yields has been above two percentage points. For much of the past 25 years, it was very rare for the difference to exceed a single percentage point. On occasions, American yields fell below German levels (see chart). + + + +Go back a generation and you might have expected the country with the higher bond yields to be the one with the weaker currency; investors would demand a higher yield to compensate for the risk of future depreciation. But that is not the case today. The dollar has been strong, relative to the euro, and many people expect it to strengthen further. Indeed, the higher yield on American government debt is one reason why investors might want to buy the dollar. + +Instead, the gap may reflect differences in both monetary and fiscal policy. In America the Federal Reserve stopped buying Treasury bonds a while ago and has raised interest rates three times since December 2015; the European Central Bank (ECB) is still buying bonds as part of its “quantitative easing” programme, and pays a negative rate on deposits. The Trump administration is committed to tax cuts and infrastructure spending that would increase the budget deficit and require more bond issuance. The euro zone has no plans of this sort for fiscal stimulus. + +The present divergence recalls that between American and Japanese bond yields. The latter have been consistently low for much of the past 20 years, as the Japanese economy became mired in slow growth and deflation. Perhaps investors expect the euro zone to get stuck in a deflationary quicksand as the American economy returns to more robust growth. + +But that view does not show up in inflation expectations. An oft-used measure, derived from the bond market, is known as the “five year/five-year forward rate”. At the moment this gauge is showing the market forecast for the average inflation rate in 2022-27. In America the forecast is around 2.1%; in the euro zone it is around 1.7%. Six months ago the forecasts were 1.68% and 1.34%. Both have risen a little, but the gap has not widened significantly. + +So more may be going on than simple economics. Politics, perhaps. The French presidential election is approaching and Marine Le Pen, the far-right candidate, has talked about redenominating French government bonds in francs instead of euros. That would lead to big losses for international investors. Although few people think Ms Le Pen will actually become president, investors have been burned by last year’s voting upsets. So there has been a tendency to opt for the safest bonds in the euro zone—those issued by the German government. The spread between French and German ten-year yields is more than double its level on October 28th. + +Another factor may be the actions of institutional investors. In a recent speech Hyun Song Shin of the Bank for International Settlements (BIS), an organisation of central banks, pointed out that both life-insurance companies and pension funds tend to have long-dated liabilities, ie, claims they must meet over many decades. They try to match those liabilities by buying government bonds. Accounting and regulatory rules often require them to use long-dated bond yields to calculate their liabilities. + +But there is a mismatch: the liabilities of these companies and funds tend to be longer-dated than the bonds they hold. So when long-dated bond yields fall, their financial position deteriorates. That means they need to buy more bonds. This drives prices up—and yields further down, making the problem even worse. The BIS says euro-zone insurance companies accounted for 40% of the net purchases of the region’s government’s bonds in 2014. American pension funds and insurers own around $1.7trn of Treasury bonds (out of more than $14trn owned by the public), but seem to play a less substantial role in setting yields than European institutions. + +The trend may change again, of course. Kit Juckes of Société Générale, a French bank, says the factors that have widened the spread between American and German yields may start to dissipate. Political worries may subside if Ms Le Pen doesn’t win; the ECB may scale back its monetary easing; Mr Trump’s stimulus plans may be delayed, or watered down. Whatever else history teaches us, it does not suggest that German ten-year yields of 0.41% will turn out to be a bargain. + +Economist.com/blogs/buttonwood + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21719497-america-has-worlds-largest-economy-and-strong-currency-yet-it-costs-its/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Still on the trail + +The investigation into the Bangladesh Bank heist continues + + +Much remains unknown, but the sophistication of the crime is clear + + + +Mar 23rd 2017 + + + + + +A YEAR after one of the most spectacular robberies of modern times, the authorities in Bangladesh are still trying to crack the case. Hackers into the country’s central bank sent instructions through SWIFT, a messaging network for cross-border payments, to transfer funds from the bank’s account with the New York Federal Reserve to private accounts in Sri Lanka and the Philippines. Much of the stolen $101m has yet to be retrieved; the masterminds are yet to be identified. But the probe reveals the strikingly sophisticated, and international, nature of the crime. + +After sifting 60 hard drives and thousands of pieces of paper, and interviewing dozens of people, investigators, talking anonymously in Dhaka, say they are confident about some details of the heist. They believe foreign hackers acted with inside help. The attackers’ coding style has raised suspicions of involvement by North Korea. This week the New York Times reported that American federal prosecutors were examining this possibility. + + + +Egregious violations of the bank’s security procedures have also been uncovered. On the day of the robbery, its security cameras were disabled. A number of security protocols need to be met before the SWIFT system authorises a payment: one step, a physical key or dongle, was left plugged in for weeks, rather than locked away. Five of the hackers’ 70 messages were accepted as genuine by the New York Fed. But for basic slip-ups (some payment instructions, for example, were incomplete) the thieves could have made off with $1bn. + +SWIFT has not commented on the investigation. Last year Gottfried Leibbrandt, its chief executive, took pains to stress that it was the bank’s security, and not SWIFT’s, that had been compromised. Investigators have been silent in public on the role of Bangladeshi nationals in the crime. Reluctance to expose failings at home may help explain why their findings have yet to be published. The official line is that they do not want to jeopardise ongoing inquiries. + +Bangladesh has recovered only $15m of the $81m wired to the Philippines. (Payments made to Sri Lanka were reversed before they could be withdrawn.) The main plotters have yet to be traced. Nor is there evidence that any money reached North Korea. But relations between Bangladesh and North Korea have soured: last August a North Korean diplomat was expelled from Dhaka on suspicion of smuggling. + +Whether in connection with the heist or not, SWIFT has in effect cut off North Korea’s formal ties with the global financial system. This month SWIFT was obliged to exclude three North Korean banks that were under United Nations sanctions. On March 17th it suspended services for the four remaining banks on the system, saying they no longer complied with its membership criteria. Reasons for termination include participation in activities that are illegal, endanger security or adversely affect SWIFT’s reputation. + +A speedy resolution to the Bangladesh case seems unlikely. Even if it is never cracked, it is clear, as Mr Leibbrandt put it, that it was a “watershed event” for the banking industry: a lesson in the threats posed by well-organised cybercriminals, which bankers neglect at their peril. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21719492-much-remains-unknown-sophistication-crime-clear/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Done deals + +The Trump administration will review all of America’s trade deals + + +It will find they are not to blame for America’s trade deficit + + + +Mar 25th 2017 + + + + + +ACCORDING to a document crafted by the Trump administration, a model trade agreement has 24 elements. Second on the list is “trade-deficit reduction”, giving a hint as to why Mr Trump wants to review America’s existing agreements. In January Sean Spicer, his press secretary, said the administration would “re-examine all of the current trade deals.” A presidential order to do just that is reported to be in the offing. + +America boasts 14 bilateral and regional free-trade agreements (FTAs). Mr Trump seems to blame these agreements for America’s large trade deficit. Most economists disagree, seeing it as reflecting macroeconomic imbalances. The FTAs are in any case with countries representing just two-fifths of America’s two-way trade in goods, and less than 10% of its goods-trade deficit (see chart). Most (77%) of America’s deficit stems from trade with China, the European Union and Japan. None has an American FTA. + + + +A focus on trade deficits means that tiddly deals such as those with Jordan and Oman will not face much heat. NAFTA (an agreement with Mexico and Canada), and KORUS (South Korea), will face more scrutiny because of chunky American deficits with these countries. Israel is the next biggest trade-deficit offender. But Mr Trump seems unlikely to attack that FTA, America’s oldest. + +A review of trade deals is hardly revolutionary. More recent ones, like KORUS, have committees dedicated to monitoring them. And both the Mexican and the Canadian governments have accepted that NAFTA should be updated for things like e-commerce. They saw the Trans-Pacific Partnership, agreed to in 2016 by the NAFTA three and nine other Pacific Rim countries (and jettisoned by Mr Trump), as part of that process. + +Last year geeks at the United States International Trade Commission (USITC) published a 373-page, evidence-based assessment of America’s trade deals. It found that they were positive, but not transformative, raising GDP by 0.2% in 2012 and, in 2014, saving consumers $13bn through lower tariffs. Also, the USITC estimates that each of America’s trade deals has tended to improve the bilateral trade balance. Without NAFTA, the USITC estimates that the goods deficits with Canada and Mexico would be larger by around 3% of total bilateral trade. Trade deals tend to slash other countries’ tariffs more than American ones. + +So it is unclear how poring over trade deals will achieve Mr Trump’s goal of squashing the trade deficit. Others have a different worry. Trade agreements are supposed to be win-win. Concessions must be sold domestically. As Michael Froman, Barack Obama’s trade representative, notes, “other countries have politics, too.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21719499-it-will-find-they-are-not-blame-americas-trade-deficit-trump/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Levelling the paying field + +An earthquake in European banking + + +New payments regulation has the potential to shake up the banks + + + +Mar 23rd 2017 + + + + + +IN BRITAIN alone millions of people make formal complaints each year about their banks. For them, Sebastian Siemiatkowski, founder of Klarna, a Swedish payments startup, brings good news. New European rules, he says, will open the door to a host of innovative services that analyse transactions, so “an app could tell you there’s a cheaper mortgage available and start the switching process for you.” Apps could warn account-holders if they spend more than a predetermined amount or are about to become overdrawn, or even nudge them to save more. Customers need barely ever interact with their bank. + +To date, despite dire warnings, European retail banking has been remarkably unscathed by technology-driven disruption. Customers stay loyal, and banks still do the most of the lending. Financial-technology (“fintech”) companies are beginning to mount a challenge, most conspicuously in the online-payments industry in northern Europe: Sofort, iDEAL and other fintech firms conduct over half of online transactions in Germany and the Netherlands, for example. But their reach is more limited elsewhere in Europe. Physical payments are still overwhelmingly made with cash or bank cards. + + + +One reason incumbents have proved so resilient is that fintech firms lack the customer-transaction information they need to provide many financial services. Banks can be slow to respond to requests for access to such data, or may block them altogether for security reasons. It is often either cumbersome or insecure for customers to share their own information. Banks, on the other hand, have easy access to transaction data, which they can use to sell their customers other services. + +Regulators, however, are about to transform the landscape. The Payments Services Directive 2 (PSD2), due to be implemented by EU members in January 2018, aims to kick-start competition while making payments more secure. Provided the customer has given explicit consent, banks will be forced to share customer-account information with licensed financial-services providers. + +This should change the way payment services work. They could become more integrated into the internet-browsing experience—enabling, for example, one-click bank transfers, at least for low-value payments. Security for payments above €30 ($32) will be tightened up, with customers having to provide two pieces of secret information (“strong authentication”) to wave through a transaction. + +With access to account data, meanwhile, fintech firms could offer customers budgeting advice, or guide them towards higher-interest savings accounts or cheaper mortgages. Those with limited credit histories may find it easier to borrow, too, since richer transaction data should mean more sophisticated credit checks. + +None of this is good news for established banks. Profitability is already threatened by rock-bottom interest rates. According to Deloitte, a consultancy, banks’ lockhold on payments serves as a handy source of income, earning European banks €128bn in 2015, around a quarter of retail-banking revenue. Many see PSD2 as a threat to their business models; they fear becoming the “dumb pipes” of the financial system. In a survey conducted last year by Strategy&, a unit of PwC, a professional-services firm, 68% of responding banks believed that PDS2 would leave them in a weaker position. The same proportion feared that they would lose control of interactions with customers. + +Perhaps predictably, resistance is manifested as a concern about data protection: more than half of respondents to the PwC survey voiced concerns about security and liability. Such concerns are legitimate but also, argue fintech supporters, offer a convenient excuse for banks to block competition. Newcomers will be regulated, after all, and will have to convince the authorities that their data-protection systems are robust. As they are also required to be insured against losses from fraud, they will need to convince insurers, too. They will not be subject to the same capital and stress-testing requirements banks face: but nor will they be licensed to undertake the riskier business of lending. + +For his part, Klarna’s Mr Siemiatkowski thinks PSD2 is “perfect on paper”. But he worries that, as implementation approaches, the rules will be watered down. Banks could also interpret them subjectively: they might delay sharing data or make them too confusing to be useful. But regulators have already bared their teeth: last year German competition authorities, citing the changes proposed in PSD2, ruled that banks were illegally restricting customers’ online-banking activities. + +Hot data + +Banks will have to improve, in other words. Several incumbents are already adapting to the reality of the fintech challenge through partnerships and purchases. Santander’s British arm, for instance, has teamed up with Kabbage, an American startup, to offer small companies working-capital loans; BBVA, a Spanish bank, acquired Holvi, a Finnish startup that helps companies track cashflow and invoices. + +Yet for all their complaints, customers still trust banks with their money. In Britain only 3% of customers move current accounts each year. Familiarity, huge customer bases and low funding costs are all attributes entrants want to gain by association, just as banks want to exploit newcomers’ technology. PSD2 will improve the services available to European bank customers. Whether via co-operation or confrontation is the question. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21719500-new-payments-regulation-has-potential-shake-up-banks-earthquake/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Give and take + +A philanthropic boom: “donor-advised funds” + + +The rise of DAFs may be as much about tax as charity + + + +Mar 23rd 2017 + + + + + +JEFF POWERS was raised as “a good Catholic boy”. So when he sold his wall-fastener business in 2012 for $225m, he wanted to give back. And, like many philanthropists, he started close to home. He donated to the hospital where his son had spent months recovering from a car accident. He helped pay for a swimming pool at his children’s school. Today he supports all sorts of causes, from scholarships in Florida to soup kitchens in New York. + +The way Mr Powers finances these projects would strike old-school charitable types as odd. Traditionally, a budding philanthropist would either give directly to a charity or set up a foundation. But Mr Powers uses a donor-advised fund (DAF), a type of account held by a non-profit entity, in this case Bank of America Charitable Gift Fund, an arm of the bank. DAFs are taking root in Britain and Canada, but they are primarily an American phenomenon. + + + +DAFs are way-stations for donor dollars. Mr Powers deposits some money into his DAF and, while he ponders where it should go, Bank of America invests it for him. At some point he will suggest a beneficiary and, as long as it is a charity as defined by the Internal Revenue Service (IRS), the bank makes the grant on his behalf. Mr Powers is delighted with his DAF, praising the convenience and tax advantages. + +Nothing suggests Mr Powers is other than one of the many people who use DAFs for nobly philanthropic reasons. Yet not everybody is happy with these funds. A huge surge in their popularity, sparked by the entrance of financial firms to the market, is upending the philanthropic world. Sceptics say it is not clear whether DAFs actually increase the amount of money that reaches the needy, and that the tax breaks associated with them mainly benefit the rich. Moreover, opacity leaves DAFs open to abuse. One long-held concern is that they are used to sidestep rules requiring foundations to make annual donations to charities. Analysis by The Economist shows this is indeed happening. + +Their explosive growth is recent, but DAFs date from the 1930s. They were first used by community foundations to encourage local philanthropy as well as by single-issue non-profits, such as museums. But it wasn’t until 1969, when new reporting rules took some of the shine off foundations, that DAFs flourished. In 1991, approved by the IRS, Fidelity Charitable, a non-profit linked to the mutual-fund group, was set up to offer DAFs to clients, becoming the first commercial provider. + +By 2000 many other financial firms were peddling such funds, including Schwab and Vanguard, both now DAF giants. The industry has since ballooned: from about 180,000 American DAFs in 2010 to over 270,000 in 2015, easily outnumbering foundations. The assets held in DAFs doubled in value in that time, to roughly $80bn. Last year Fidelity Charitable overtook United Way, a traditional non-profit organisation, to become America’s biggest charity by donations from the public (see chart). + + + +Many providers have seen a further surge in donations of late, sparked in part by fears that the Trump administration may reduce philanthropic tax breaks. Between November 2016 and January 2017, Schwab saw a 68% increase in inflows compared with the same period in the previous year. Others also report a big uptick. + +Even if more money is flowing into DAFs, it will not necessarily reach the needy as soon as it comes out. The Economist crunched the latest 12 months-worth of available data on the donations made by the three biggest DAF providers—the year ending June 2016 for Vanguard and the year ending June 2015 for Fidelity and Schwab (Vanguard and Schwab exclude donations under $5,000 from the data). Many payments went to worthy causes such as Médecins Sans Frontières and the Red Cross. But it is notable that the biggest recipient of DAFs’ gifts is none other than Fidelity. The third-biggest is the American Endowment Foundation, another DAF supplier. The providers say this is an innocuous rejigging of personal finances. But it supports the claim that DAFs don’t always get dollars to charities that need them. + +DAFs are particularly popular among certain religions, though experts are unsure why. The Mormon church is the second-biggest recipient of DAF dollars. The American Jewish World Service and the Jewish Communal Fund rank highly, too. Fidelity allows donations only in multiples of $5 and $18, the latter being a lucky number in Judaism. + +Tax breaks are an important reason why philanthropists of all stripes like DAFs. In American law donations to charities, including DAF-providers, enjoy bigger breaks than those to foundations, because the gift is seen as being put to good use immediately. Moreover, as with giving direct to charity, the tax benefits can be booked in the year of the donation, even though the ultimate beneficiary may not yet have been chosen. In a survey by Fidelity in 2015, 90% of donors named this as the main reason for starting a DAF. + +Another advantage is that commercial suppliers of DAFs accept not only cash but—unlike most non-profits—illiquid gifts, such as art or land. Once a provider receives the asset, it will try to sell it and credit the proceeds to the donor’s DAF. Non-publicly traded company shares, which have risen in value, are another common gift: the tax deduction is taken at the current market value—a benefit not afforded gifts to foundations. In 2013 around 28% of donations to DAFs were non-cash. + +Moreover, whereas tax laws require foundations to give out at least 5% of their assets each year, DAFs face no such condition. So donors have more time to weigh their options. DAFs are easy to use, too. Internet-banking-style platforms allow grants to be made with just a few mouse-clicks. Set-up costs are a fraction of those of foundations, without the need to hire lawyers or fill in reams of paperwork. + +Fans of DAFs argue that this convenience spurs philanthropy. According to Fidelity, two-thirds of its donors say the vehicle helps them give more; other commercial suppliers cite similar figures. This does not show up in the national statistics, however. Ray Madoff, a tax expert at Boston College, points out that the share of money going to charities in America has not budged in the past decade, at roughly 2% of disposable net income (though of course, since DAFs still account for less than a tenth of total giving, many other factors could play a role in this). + +Weighing up the pros and cons is made harder by a scarcity of data. Numbers for individual accounts are not published—so it is impossible to know whether, for instance, thousands of donors, having collected their tax benefits, are sitting on their assets rather than distributing them. + +Give and you shall receive + +The only publicly available numbers are aggregates from DAF providers. These suggest that each year around 20% of assets held by them go to good causes. This is much higher than the rate of roughly 7% seen at foundations. But this comparison is misleading. For one thing, foundations, unlike most DAFs, are set up in perpetuity and thus tend to ration their grants. For another, DAF payouts are highly uneven: in a given year around one-fifth of providers fail to make a single grant, and, as noted, some outgoings are to other DAFs. Furthermore, payout rates—the proportion of total assets leaving DAFs—are falling. Fidelity’s annual payout rate dropped from 21% to 16% between 2008 and 2014, the latest year of available data. Those of Schwab and Vanguard fell from 18% to around 11%. + +Detractors argue that warped incentives curb giving. Providers profit from having more assets under their management and invested in their own funds. They therefore stand to gain from dissuading donors—who have already claimed their tax deductions—from making payments out of their DAF. And, because the money sitting in a DAF grows from the investment income, donors are further deterred from passing it on quickly to a good cause. (To their credit, however, the bigger DAF suppliers do have policies in place to distribute at least some of the money in dormant accounts. If an account at Fidelity has been idle for three years, it will give the holder a nudge. If the inactivity continues, Fidelity starts to make small grants on his behalf.) + +Another concern is that some funds are used not to give but to game: for instance, to sidestep the 5%-minimum rule on foundation payouts. Donors can shift money from their foundation to a DAF as a way of meeting this threshold without actually giving anything to charity. The Economist examined grants from a random sample of about 4,000 foundations. Some 40 of them routed cash to the biggest DAF providers, amounting to about 1% of the value of all their contributions. This may seem like a negligible sum, but 11 of the 40 gave over 90% of the money they paid out to DAF suppliers. This is not illegal, but it does appear to flout the spirit of the tax code. + + + +The IRS has grown wise to some of the problems. A decade ago it was including DAFs on its “dirty dozen” list of the most worrying tax scams. Another concern was self-dealing: in one case in 2006, a California-based DAF provider had boasted in its earlier marketing materials that setting up an account could “benefit the donor or the donor’s family” and that the donor’s children could be paid or granted fellowships direct from a DAF. That same year, DAFs were first defined in the tax code. Certain ruses, such as using them to buy tickets to charitable events or grant oneself low-cost loans, were later prohibited. + +Although such shenanigans are harder to pull off, there are still opportunities, mainly at smaller DAF-providers, says Roger Colinvaux of Columbus School of Law. A keen fraudster could set up a small non-profit, staff it himself, channel money into a DAF, claim the tax breaks, redirect the money back to the non-profit and draw a fat, tax-advantaged salary. + +Charity begins at home + +Another worry is the use of DAFs to circumvent the “public-support test”. This rule stipulates that a charity typically must receive the lion’s share of its revenue from the general public. Others are classified as foundations. A creative donor could donate to a charity through numerous DAFs, giving the false impression of widespread public support. Last year, the IRS announced an investigation into this. + +But the agency is stretched for resources, and experts say it struggles to keep on top of trickery. Another worry is the use of DAFs to convert illiquid assets, such as property or hard-to-price securities, into charitable dollars. Some fear the valuation system is open to abuse. Donors, who are keen to get the best price and maximise tax deductions, typically hire a third party to do the valuation. Monitoring this process is time-consuming and costly, and thus rarely carried out. A study by the Treasury Inspector General for Tax Administration, an American watchdog, looked at a sample of non-cash gifts to charities in 2010. It found that around 60% of returns did not meet reporting requirements and none of these had been examined by the IRS. + +Moreover, DAFs are frequently used to funnel money to political campaigns and lobby groups, rather than what most people would consider good causes. Donors to such groups can also exploit the funds’ murky nature to hide their identity. One study by Robert Brulle of Drexel University, in Philadelphia, tracked contributions to the anti-climate-change lobby in America. He found that in 2009 and 2010 about a quarter of its backing which could be traced came via the Donors Trust, a Virginia-based DAF supplier. There is no way of telling where this money originated. + +Fans of DAFs argue that such cases are exceptions, and that most of their money goes to uncontroversial good causes. Many give generously and sincerely. But concerns will linger that DAFs allow the rich to reap financial benefits from financing pet causes they might well have backed anyway—and that more advantages accrue to donors than to the causes they are supposed to be helping. At present, there is scant evidence to suggest they fuel an overall rise in giving. Many philanthropists sing DAFs’ praises. But that does not prove their worth to society as a whole. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21719494-rise-dafs-may-be-much-about-tax-charity-philanthropic-boom/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Free exchange + +Economic shocks are more likely to be lethal in America + + +New research shows the mortality of middle-aged whites continues to rise + + + +Mar 25th 2017 + + + + + +AMERICAN workers without college degrees have suffered financially for decades—as has been known for decades. More recent is the discovery that their woes might be deadly. In 2015 Anne Case and Angus Deaton, two (married) scholars, reported that in the 20 years to 1998, the mortality rate of middle-aged white Americans fell by about 2% a year. But between 1999 and 2013, deaths rose. The reversal was all the more striking because, in Europe, overall middle-age mortality continued to fall at the same 2% pace. By 2013 middle-aged white Americans were dying at twice the rate of similarly aged Swedes of all races (see chart). Suicide, drug overdoses and alcohol abuse were to blame. + + + +Ms Case and Mr Deaton have now updated their work on these so-called “deaths of despair”. The results, presented this week at the Brookings Institution, a think-tank, are no happier. White middle-age mortality continued to rise in 2014 and 2015, contributing to a fall in life expectancy among the population as a whole. The trend transcends geography. It is found in almost every state, and in both cities and rural areas. The problem seems to be getting worse over time. Deaths from drugs, suicide and alcohol have risen in every five-year cohort of whites born since the 1940s. And in each group, ageing seems to have worse effects. + +You might think that rising mortality is the flipside of falling incomes. Recent trends in median per-person income for households headed by white 50- to 54-year-olds mirror their mortality rate. Income rises in the 1990s and then falls in the 2000s, ending up roughly where it started. But split people out by education, and the reflection fades. The income of college graduates has followed a similar pattern (most of the surge in the value of a college education happened before 1990). But their mortality has steadily fallen. And deaths of despair are much rarer among blacks and Hispanics, whose incomes have been on similar paths. + + + +The authors suspect more amorphous, long-term forces are at work. The fundamental cause is still a familiar tale of economic malaise: trade and technological progress have snuffed out opportunities for the low-skilled, especially in manufacturing. But social changes are also in play. As economic life has become less secure, low-skilled white men have tended towards unstable cohabiting relationships rather than marriages. They have abandoned traditional communal religion in favour of churches that emphasise personal identity. And they have become more likely to stop working, or looking for work, entirely. The breakdown of family, community and clear structures of life, in favour of individual choice, has liberated many but left others who fail blaming themselves and feeling helpless and desperate. + +Why are whites the worst affected? The authors speculate that their misery flows from their crushed aspirations. Blacks and Hispanics face worse economic circumstances, but may have had lower expectations to begin with. Or they may have taken hope from progress against discrimination. Low-skilled whites, by contrast, may find many aspects of their lives perennially disappointing. That may push them towards depression, drugs and alcohol. + +American exceptionalism + +The theory, however, does not explain why misfortune is so lethal in America. It is hardly the only place where manufacturing jobs have disappeared and the social fabric has frayed. In other English-speaking countries—Australia, Britain, Canada and Ireland—deaths of despair have risen, but not by as much. More research is needed to find out precisely what is going on. But it is not hard to see ways in which Americans are particularly vulnerable. + +One example is the easy availability of opioid painkillers. Deaths from opioids more than doubled between 2002 and 2015. The epidemic is primarily found in North America. Another is access to guns, which are used in around half of suicides. However, although both these factors probably increase deaths, they cannot fully explain them. Alcohol, which kills many of those who despair, is readily available across the West. + +A more likely root cause for despair is the absence of a safety net for swathes of Americans, particularly in health care. Before Obamacare financed an expansion of Medicaid (government-provided health insurance for the poor), few states provided any coverage at all for adults without dependent children. (Today, of the 19 states that did not expand Medicaid, only Wisconsin covers any childless adults.) A lack of health insurance has obvious implications for mortality when illness strikes. But it causes the healthy anguish, too. A randomised trial in Oregon found that Medicaid reduces depression rates by a third; researchers have found more personal financial strain in states that did not expand the programme. In other rich countries, people in dire straits need not worry about paying for health care. + +Broader social insurance is also lacking. The help available for workers who lose their jobs is paltry compared with their lifetime income losses. As a percentage of GDP, America spends only one-fifth of the average in the OECD, a club of mostly rich countries, on training workers. It spends only a quarter of the average on financial help for the jobless. Yet Americans do not seem to build their own safety nets: 46% say they could not cover an unexpected $400 expense and would have to sell something or borrow to pay for it. A perilous economic existence and a culture which almost indiscriminately holds people responsible for their circumstances are toxic for mental well-being. + +Life is unlikely to become more secure for the low-skilled. In fact, policy may soon make it more perilous. The health-care bill that lawmakers were due to vote on as The Economist went to press would vastly increase costs for the older, poorer people who are suffering the most. One avenue for reducing despair may lie in future generations of low-skilled Americans curbing their aspirations. Indeed, some of the jobless young already seem content to spend much of their leisure time playing video games. But America can surely do better than to hope for less hope. + +Visit our Free exchange economics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21719428-new-research-shows-mortality-middle-aged-whites-continues-rise-economic/print + + + +上一项 文章 章节 下一项 + + + + + +Finance and ... 章节 Books and arts + + + + + +Science and technology + + +Open science: Time’s up + +Judging science: Alternative truths + +Geology: The devils and the details + +Animal experiments: Dirty secrets + +Palaeontology: Old hipsters + +Finance and ... 章节 Books and arts + + + + + +文章 章节 下一项 + + + + + +Open science + +The findings of medical research are disseminated too slowly + + +That is about to change + + + +Mar 25th 2017 + + + + + +ON JANUARY 1st the Bill & Melinda Gates Foundation did something that may help to change the practice of science. It brought into force a policy, foreshadowed two years earlier, that research it supports (it is the world’s biggest source of charitable money for scientific endeavours, to the tune of some $4bn a year) must, when published, be freely available to all. On March 23rd it followed this up by announcing that it will pay the cost of putting such research in one particular repository of freely available papers. + +To a layman, this may sound neither controversial nor ground-breaking. But the crucial word is “freely”. It means papers reporting Gates-sponsored research cannot be charged for. No pay walls. No journal subscriptions. That is not a new idea, but the foundation’s announcement gives it teeth. It means recipients of Gates’ largesse can no longer offer their wares to journals such as Nature, the New England Journal of Medicine or the Proceedings of the National Academy of Sciences, since reading the contents of these publications costs money. + + + +That will hurt. Publication in such Premier-league journals is the stuff careers are built on. But it will also hurt the journals themselves. Their prestige is based on their ability to pick and publish only the best. If some work is out of bounds to them, no matter how good it is, that will diminish their quality. And if other patrons of science follow suit, those journals’ businesses could begin to crumble. Moreover, by actively directing the beneficiaries of its patronage towards the repository in question, set up last year by the Wellcome Trust (after Gates, the world’s second-largest medical-research charity), the foundation is pointing to a specific type of alternative—and to a future for scientific publication that, if not completely journal-free, is likely to be at least, “journal-lite”. + +Wellcome to the 21st century + +Periodical journals have been the principle means of disseminating science since the 17th century. The oldest still around, the Philosophical Transactions of the Royal Society (pictured above), appeared first in 1665. Over the intervening three and a half centuries journals have established conventions for publication—such as insisting on independent (and usually anonymous) peer review of submissions—that are intended to preserve the integrity of the scientific process. They have, though, come under increasing attack in recent years. + +One criticism, in a world where most non-commercial scientific research is sponsored by governments, is that there should be no further charge for reading the results of taxpayer-funded work. Journals, in other words, should have no cover or subscription price. A second is that the process of getting a paper published takes too long. Months—sometimes years—can pass while a hopeful researcher first finds a journal willing to publish, and then waits for peer review and the negotiation of amendments. That keeps others in the field in the dark about new results for longer than is really necessary, and thus slows down the progress of science. Third, though this is less easy to prove, many researchers suspect that anonymous peer review is sometimes exploited by rivals to delay the publication of competitors’ papers, or, conversely, that cabals of mates scratch each others’ backs, review-wise. + +To these criticisms, another may be added, which is not the fault of journals, but still needs addressing. This is the unwillingness of many researchers to publish the data on which their conclusions are based. Some journals do insist on full disclosure of data, but not all are so particular. And, even then, the data in question will not see the light until publication day. + +Partial solutions to some of these problems have been tried. The Gates foundation is experimenting with carrots, as well as sticks. It has offered the publishers of one top-flight journal, Science, $100,000 to make papers published this year about Gates-sponsored research free to read from the beginning. If this goes well, the experiment may be extended to other publications. Similarly, there is a movement among some publishers to make papers free to the reader by charging the authors (and therefore, ultimately, their patrons) for the costs of publication—usually in the range of $2,000-$3,000 per paper. But many now think these are half-measures, and that a real revolution in the idea of scientific publishing is needed. + +Part of science has already undergone such a revolution. Since 1991 physicists have been able to deposit early versions of their papers, known as preprints, in an online repository called arXiv (the “X” represents a Greek “chi” rather than a Latin “ex”). ArXiv is paid for by Cornell University Library, the Simons Foundation, a charity, and through fees from around 200 members (mostly universities). Over the years the number using it has increased, to the point where around 300 preprints are deposited every day. + +This sort of “pre-publication” is rapidly becoming physics’s method of choice. Depositing a paper in arXiv both establishes that a researcher has been the first to arrive at a discovery and makes that discovery available immediately to others. It does not provide formal peer review, but physicists are not shy of criticising the work of others, so a lot of informal (and un-anonymous) feedback can accumulate rapidly. This potential flak is a deterrent to publishing half-baked work. Nor does appearing in arXiv preclude later publication in a journal. The editors of periodicals were once sniffy about accepting material previously available elsewhere. In physics, they can no longer afford this luxury. + +The Gates foundation’s announcement is part of an attempt to extend this idea to the rest of science, particularly biomedical research. Biomedical equivalents of arXiv exist, but they are not much used. One of the largest, bio Rxiv, received around 600 submissions in February. That is but a fifteenth as many as arXiv, even though many more biomedical papers are published per year than physics papers. + +Why biologists have failed to follow physicists’ lead is unclear. It may simply be a historical accident. ArXiv was started before most journals went online, so was initially more distinct from such journals than online databases are now. By the time biologists, less computer-literate as a clan than physicists, caught up with the idea, the online-offline distinction had blurred, and the journals saw online repositories as rivals. But whatever the cause, the result was clear: an unwillingness by non-physicists to embrace preprints. + + + +The time, however, seems ripe to change that. Though its absolute numbers are still low, the use of bio Rxiv is growing fast (see chart). And it is not just outside nudges that are bringing this sort of thing about. In February, for example, ASAPbio, a group of biologists who are trying to promote the use of preprints, began looking for bidders to create a website which will index all life-science preprints published in public repositories. + +Outside nudges do help, though. It will not harm ASAPbio’s chances of success that its plan has the backing of America’s National Institutes of Health, the country’s main source of taxpayer finance for medical research. And other philanthropic organisations besides the Gates foundation are also pushing in the same direction. The Wellcome Trust’s creation of the repository Gates has just joined is one example. Another is the Chan Zuckerberg Biohub in San Francisco, brainchild of Mark Zuckerberg, a founder of Facebook, and his wife, Priscilla Chan. In February the Biohub announced it would disburse $50m to 47 local scientists on condition they made their work available as preprints. + +There is even room for commerce in this brave, new world. The Wellcome-Gates repository is actually run by a firm called F1000, that also has its own preprint repository, F1000Research. This operates in a slightly different way from arXiv and its imitators in that its does include a formal process of peer review. F1000’s review process involves named rather than anonymous reviewers, which many regard as a strength. But who those reviewers should be is suggested by a submitted paper’s authors, which carries obvious risks of partiality. Revenue comes from a fee of up to $1,000 that authors pay on submission. + +The wider use of preprints might also help reduce the problem of pre-publication data-hoarding. Once a preprint is published, its authors need not fear that others will take credit for their work. And it is becoming easier to make data available in a way that lets the originator retain control and garner credit. Sites such as Figshare let researchers assign a unique alphanumeric code (called a Digital Object Identifier) to data sets, figures, video and so on, meaning their origins are clear. + +None of this necessarily means that non-physicists will eschew journals and rush to publish their work in open repositories. Over time, though, more may come to see the advantages of doing so. As more researchers submit preprints and make their data available to others, they may find the comments they receive regarding their work helpful. Even the kudos of publication in the premier journals may slowly fade in the face of data about a piece of work’s actual, rather than potential, impact (see article). Having survived three and a half centuries, scientific journals will no doubt be around for a long time yet. With luck, though, they will return to being science’s servants, rather than its ringmasters. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21719438-about-change-findings-medical-research-are-disseminated-too/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Judging science + +Assessing the importance of scientific work + + +Alternative metrics extend the concept of citation beyond journal mentions + + + +Mar 23rd 2017 + + + + + +ONE role academic journals have come to play that was not, as it were, part of their original job-description of disseminating scientific results (see article), is as indicators of a researcher’s prowess, and thus determinants of academic careers. Publication in a top-notch title such as Nature or Science is an adornment to a scientist’s CV that is unlikely to be overlooked by an appointment committee. Using such publications as endorsements is, though, necessarily a rule of thumb. A paper’s true quality is better revealed by the number of times it is cited elsewhere (ideally, in papers other than those written by the original’s authors). But citations take time to accumulate. Other, faster means of assessment would be welcome. + +That has led to the development of alternative metrics, or “altmetrics”. These extend the concept of citation beyond references in other scientific papers—by recording, for example, how often a paper is downloaded, or when the outcome of a clinical trial is used to develop guidelines for doctors, or if a piece of work is included in a course curriculum. + + + +Altmetric.com, based in London, was one of the first companies to work in this area. It has, since 2011, tracked mentions of published papers in sources ranging from social media and Wikipedia to policy documents published by government departments. A rival firm, Plum Analytics, in Philadelphia, tracks mentions, downloads, clicks and the like of everything from preprints (papers that have been made publicly available, but are not yet formally published) and sets of raw data to non-commercial computer programs which investigators have written to assist their own endeavours. + +Using altmetrics should thus indicate the importance of a wider range of research-related activities than citations manage, and do so faster. Plum Analytics was bought in February by Elsevier, one of the world’s largest scientific publishers, suggesting that altmetrics may be profitable as well as useful. + +Meta, based in Toronto, takes another tack. It hopes, by bending artificial intelligence to the task, to identify important papers from the 2m or so produced every year. The firm’s computers have attempted to recognise features of widely cited papers that contributed to their success. Sam Molyneux, Meta’s boss, claims that as a result the firm’s software can now predict the impact of newly published work. + +Meta, too, was bought earlier this year—in its case by the Chan Zuckerberg Initiative, a company started by Mark Zuckerberg, a founder of Facebook, and his wife Priscilla Chan, that is being run as a philanthropic operation. Mr Molyneux says he hopes, within the next two months, to make Meta’s tools available without charge to any scientist who wishes to use them. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21719441-alternative-metrics-extend-concept-citation-beyond-journal/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The devils and the details + +Powerful whirlwinds explain an odd feature of the Atacama desert + + +The site of some of the most extraordinary dunes on Earth + + + +Mar 23rd 2017 + + + + + +THE Salar de Gorbea, at the southern end of the Atacama desert, in Chile, is one of the most hostile places on Earth. It receives virtually no rainfall and the little water it does host is contained in ponds both acidic and salty. It therefore has no vegetation. It is, though, the site of some of the most extraordinary dunes on Earth. + +Most dunes are made of sand: grains of silica that are 2mm across, or less. There are exceptions. The White Sands National Monument in New Mexico, for example, is so called because the ingredients of its dunes are sand-grain-sized crystals of gypsum. But this exception proves the rule, because the point about a dune is that it is created by the wind, and when it comes to minerals, the wind can generally pick up and move around only sand-sized objects. The dunes of Salar de Gorbea, however, are an exception that proves no rule at all. They, too, are white, because they are also made of gypsum. But the gypsum in question includes crystals more than 20cm long. How such dunes could form by wind action has long been a mystery. Kathleen Benison, of West Virginia University, thinks, however, that she has solved it. + + + +Gypsum is a form of calcium sulphate created by the evaporation of water laden with that substance. Dr Benison knew that gypsum crystals of the size found in Salar de Gorbea’s dunes form in ponds 5km from those dunes. She thus suspected that these ponds are the source of the dunes’ crystals. This suspicion was reinforced, she explains in a paper just published in Geology, when she compared the internal bands marking stages of the growth of crystals from the dunes with those of crystals from the ponds. They appeared identical. That suggested crystals are somehow being transported from the ponds to the dunes. + +She was able to rule out one mechanism for such transport—that the crystals had been moved by long-vanished streams or rivers—for several reasons. First, the Atacama is believed to have been too dry for streams to form for millions of years. Second, gypsum dissolves in water (this is, indeed, the reason dunes made of it are rare, for most deserts have at least some rainfall). And third, the faces of crystals from the dunes were scored in ways which indicated that they had been bashed around by strong winds. + +The only inland winds obviously powerful enough to have done this are in the funnels of tornadoes. The Atacama desert does not, though, experience such storms. It does experience lesser whirlwinds, called dust devils. But the textbooks say that dust devils are not powerful enough to lift and carry objects the size of the crystals found in the dunes. + +Textbooks, however, are not always correct, so Dr Benison decided to check for herself. She went to Salar de Gorbea and monitored the dust devils there. She found that devils do regularly form in valleys along the edge of the region. Some then pass over the ponds where the gypsum crystals are growing, pluck crystals out of those ponds, carry them the 5km to the dunes, and then dissipate, dropping their loads on the accumulating heaps. + +What she does not yet know is how they do it, for the textbooks are, in one sense, correct. The most powerful recorded dust devils have wind speeds of 70kph. This is indeed insufficient to carry mineral particles bigger than 2mm across. For the devils of Salar de Gorbea to be transporting large gypsum crystals they must be far more powerful than that. Dr Benison seems therefore to have substituted one mystery for another. The devils clearly are responsible for Salar de Gorbea’s dunes. What is responsible for these devils’ great powers remains to be found out. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21719437-site-some-most-extraordinary-dunes-earth-powerful-whirlwinds/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Dirty secrets + +Are laboratory mice too clean? + + +The hygiene hypothesis may also apply to animal experiments + + + +Mar 23rd 2017 + + + + + +THE hygiene hypothesis posits that certain diseases—notably asthma, eczema and type-1 diabetes—which are becoming more common than they once were, are caused in part by modern environments being too clean. The diseases in question result from misfunctions of the immune system. The hygiene hypothesis suggests such misfunctions are the result of children’s immune systems being unable to learn, by appropriate exposure to viruses, bacteria, fungi and parasitic worms, how to respond properly. + +If modern human homes are unnaturally clean, though, they are as nothing compared with the facilities in which experimental mice are housed. Those are practically sterile. That led Lili Tao and Tiffany Reese, two researchers at the University of Texas Southwestern Medical Centre, in Dallas, to wonder if such mice would display extreme versions of the predictions of the hygiene hypothesis. + + + +This would matter, because mice are often used in medical experiments on the assumption that their reactions are similar enough to those of human beings for them to act as stand-ins. Conversely, laboratories’ spotlessness might also mean mice are sometimes too healthy to act as useful models for disease. As they explain in Trends in Immunology, Dr Tao and Dr Reese therefore combed the scientific literature to look for both phenomena. + +A nice example which the two researchers found of the hygiene hypothesis at work is that stopping laboratory mice being infected with murine cytomegalovirus, which is common in their wild kin, damages their immune response to a host of other pathogens, bacterial as well as viral. Mice so infected will survive subsequent exposure to otherwise-lethal doses of Listeria monocytogenes (a soil- and food-borne bacterium) and Yersinia pestis (the bacterium that causes plague). These mice are also better able than others to handle retrovirus infections. And the effects on them of multiple sclerosis—an illness the underlying cause of which is suspected to be an inappropriate immune response—are reduced. + +On the other hand, early infection with a different common pathogen, Yersinia pseudotuberculosis, affects murine immune systems in a way that leaves mice more open to subsequent attack, rather than less so—the reverse of the hygiene hypothesis. By unknown means, such infection permanently diverts immune cells called dendritic cells from their normal homes in lymph nodes and to the wall of the gut, where they cause sustained inflammation. Similarly, early exposure to certain herpes viruses, also common in the wild, can result in latent infections that cause no perceptible symptoms unless a kind of parasitic worm called a helminth also turns up. That reactivates the infection. Anyone attempting to mimic human worm infestations using mice should be aware of this. + +Those studying vaccines, too, need to be aware of the confounding effects of hygiene. Laboratory-bred mice have fewer memory T-cells than those brought up in the outside world. Memory T-cells are the parts of the immune-system that remember prior infections, thus enabling a rapid response if the agent which caused that infection is encountered again. Generating such T-cell memories is a vaccine’s job. + +Moreover, an experiment done by Dr Reese herself showed that exposing young mice to human pathogens, such as herpes and influenza viruses, altered their subsequent responses to vaccines for other diseases. Animals so exposed produce fewer antibodies against a yellow-fever vaccine than do pathogen-free mice. + +As is often the case with these sorts of preliminary literature reviews, the outcome is a grab-bag of intriguing results, rather than a coherent hypothesis or prescription for action. But the evidence Dr Tao and Dr Reese have assembled suggests there is something going on here that needs investigating. It seems to be a classic example of the law of unintended consequences. The point of raising mice hygienically is to eliminate as many uncontrolled factors from an experiment as possible. That hygiene itself might be such a factor has not, until now, crossed people’s minds. + +How to respond is unclear. Running trials twice, with “dirty” and “clean” mice, could be one approach. Another might be to agree on a set of bugs to which early exposure is permitted. What this work does show, though, is that in research, cleanliness is not necessarily next to godliness. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21719439-hygiene-hypothesis-may-also-apply-animal-experiments-are-laboratory-mice/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Old hipsters + +A new way to classify dinosaurs + + +A challenge to the division between the Saurischia and the Ornithischia + + + +Mar 23rd 2017 + + + + + +AS EVERY school-aged aficionado of dinosaurs knows, those terrible reptiles are divided into two groups: the Saurischia and the Ornithischia—or, to people for whom that is all Greek, the lizard-hipped and the bird-hipped. The names go back 130 years, to 1887, when they were invented and applied by Harry Seeley, a British palaeontologist. + +Seeley determined that the arrangement of the bones in a dinosaur’s pelvis—specifically, whether the pubic bone points forwards (Saurischia) or backwards (Ornithischia)—could be used to assign that species to one of these two groups. In his view, and that of subsequent palaeontologists, the evolution of other features of dinosaur skeletons supported the idea that these two hip-defined groups were what are now referred to as clades, each having a single common ancestor. Seeley thereby thought he had overthrown the dinosaurs as a true clade themselves: he believed Saurischia and Ornithischia were descended separately from a group called the thecodonts. + + + +Subsequent analysis suggests he was wrong about that. The dinosaurs do seem to be a proper clade, with a single thecodont ancestor. But the basic division Seeley made of them, into Saurischia and the Ornithischia, has not been challenged—until now. + +The challengers are Matthew Baron, of Cambridge University, and his colleagues. Writing in Nature, they suggest dinosaur classification needs to be shaken up. Their system still has two groups, but it looks very different from Seeley’s. + +Based on an analysis of 74 types of dinosaurs and close relatives of dinosaurs, which examined 457 skeletal characteristics, they propose that hip-structure is not the be-all and end-all that Seeley and his successors thought it was. Instead, they separate the two great subgroups of Saurischia, the sauropods (Brontosaurus, Diplodocus, etc) and the theropods (Tyrannosaurus, Allosaurus, etc) and reassign them. The sauropods are teamed up with a group called the Herrerasauridae, which are so primitive they are not easily fitted into the Saurischia-Ornithischia system, to form a reconstituted Saurischia. The rest of the Ornithischia and the theropods, meanwhile, are joined as a newly named group, the Ornithoscelida. + +Whether Dr Baron’s classification will hold up remains to be seen. Any system based on comparative anatomy rather than DNA is vulnerable to the evolution of similar features on separate occasions—giving an illusion of relatedness that is actually untrue. Indeed, the problem with relying on anatomical features, such as hip-shape, to classify animals is well illustrated by dinosaurs themselves. It was not bird-hipped Ornithischia that gave rise to birds, but lizard-hipped theropods. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21719440-challenge-division-between-saurischia-and-ornithischia-new-way/print + + + +上一项 文章 章节 下一项 + + + + + +Science and ... 章节 Obituary + + + + + +Books and arts + + +Traditional conservatism: Fight or flight + +Identity and politics: What kind of somewhere? + +New immigrant fiction: This land is not your land + +Supernatural fiction: Book of the dead + +Architecture: Modernism’s mystic + +Chuck Berry: The man behind the wheel + +Science and ... 章节 Obituary + + + + + +文章 章节 下一项 + + + + + +Fight or flight + +Strategies for traditional conservatives + + +Rod Dreher, an American, thinks Christians should retreat to enclaves; Sir Roger Scruton thinks conservatism has life yet + + + +Mar 23rd 2017 + + + + + +On Human Nature. By Roger Scruton. Princeton University Press; 151 pages; $22.95 and £18.95. + +The Benedict Option: A Strategy for Christians in a Post-Christian Nation. By Rod Dreher. Sentinel; 262 pages; $25. + + + +DOES conservatism aim to uphold or to transform society? Across the West, the political right is split. Some conservatives back a status quo of globalised economies and live-and-let-live societies. Others want to upend that open, international order by putting the nation first, socially and economically. There is, however, a third kind of conservatism, represented by two new short books. Its guiding idea is that political problems at root are spiritual. In different ways, Rod Dreher and Roger Scruton suggest that conservatism’s main task is to cure or abandon a sickened culture. + +One offers a preacher’s simplicity, the other a thinker’s subtlety. Mr Dreher is a devout Christian, an editor at the American Conservative and the author of popular books advertising the personal rewards of faith. Sir Roger is an eminent British counter-example to the commonplace that conservatives distrust ideas. A philosopher, journalist and novelist, he has written around 50 books on political ideas, morals and aesthetics. In 1982 he founded, and for 18 years edited, the Salisbury Review, a conservative quarterly taking its distance from the libertarian right in the name of traditional values. + +American conservatives have two stories about what ails present-day culture, one hopeful, one bleak. The hopeful story tells of liberal capture. In the 1950s-60s, an unrepresentative secular-liberal elite seized the churches, universities and media of a god-fearing, virtuous people. The task for conservatives was to win them back. That aim inspired the Christian right in its fight for the soul of the Republican party. At its peak in the Reagan-Bush years of the 1980s, the Christian right came close to believing that it had realigned America’s political majority with an underlying moral majority. + +Mr Dreher’s is the bleak story. Secular decadence was too seductive: America, he says, now has an immoral majority and little can be done about it. Neither businesses nor politicians care what people do in bed or whether they say their prayers. A violent, godless and sex-obsessed culture can only be abandoned. He urges American Christians to drop resistance and protect their own families from the spiritual ravages. His proposal is a latter-day version of the sixth-century Christian retreat to monasticism at the break-up of the Western Empire. A leader of that retreat was Benedict of Nursia, which explains Mr Dreher’s title, “The Benedict Option”. His practical proposals include turning the home into “a domestic monastery” with regular family prayer and ascetic routines, home-schooling if Christian alternatives are unavailable, and creating like-minded neighbourhoods of cultural self-defence that “buy Christian, even if it costs more”. + +Mr Dreher’s zeal and sincerity are attractive, but not all readers, even devout ones, will be drawn to his divisive purism or convinced by his lurid picture of “hostile secular nihilism”. It is thanks to hard-won liberal tolerance that there is space in liberal democracies for the kind of soul-saving retreat from the larger society that he recommends. Despite its sense of rectitude, “The Benedict Option” is at bottom a call for free-riding on the liberal modernity it professes to spurn. + +“On Human Nature” is altogether more serious. Its four essays pull together high-level complaints that the author has been making since his classic “The Meaning of Conservatism” (1980). The argument is more philosophical than polemical. His starting point is that every political outlook presupposes a philosophical picture of the human person. Liberals, as he sees them, picture people as self-possessed beings free to choose their attachments, conservatives as creatures with social roots that impose duties and allegiances. The liberal picture, he says, involves three mistakes. + +They can be labelled (to use this reviewer’s terms) scientism, libertarianism and transactionalism. Scientism mistakenly takes evolutionary biology and psychology to offer the whole truth about human nature. Science does explain humankind’s animal selves, but not the irreducibly personal perspective by which people recognise who they are and hold each other to account. Libertarianism is correct that individuals are each morally free and personally accountable, but it neglects unchosen social ties that impose duties and flesh out who they are. Transactionalism considers anything of value to have acquired it by preference or consent, which threatens to equate value with price and render everything that matters open to trade. + +Together those three mistakes encourage a flattened picture of people that makes too much a matter of choice and cannot account for what we owe to things of value in themselves such as beauty, the natural environment or the nation. For Sir Roger, the proper attitude to such “lasting things” is not to ask “what is this for?” but to acknowledge them without question and show what, in a non-religious sense, he calls piety. A sickened culture, he argues, could be cured if more people returned to this kind of piety. + +“On Human Nature” is a tour de force of a rare kind. In clear, elegant prose it makes large claims in metaphysics, morals and, by implication, politics. It will be asked exactly what connects the three mistakes it exposes, and how far political liberalism depends on them. When liberals and conservatives turn to philosophy, perhaps political lines blur more than cultural conservatives might think. + +It was a liberal achievement to push faith and private morality out of politics. Cultural conservatism would put them back. These two books suggest how hard that is to bring off in a liberal society. Liberals can raise one cheer, not more. “On Human Nature” shows the difficulties of matching political camps with those of faith and morality. “The Benedict Option” wants faith out of politics, which is where liberals want it. Mr Dreher, however, speaks only for a minority on the American Christian right. Its larger forces have hardly abandoned the fight. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21719434-rod-dreher-american-thinks-christians-should-retreat-enclaves-sir-roger-scruton/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Somewheres and Anywheres + +The new political divide, and a plan to close it + + +David Goodhart, a “post-liberal”, seeks to accommodate the decent elements of identity-based populism + + + +Mar 25th 2017 + + + + + +The Road to Somewhere: The Populist Revolt and the Future of Politics. By David Goodhart. Hurst; 278 pages; $24.95 and £20. + +WHY did Britain vote to leave the European Union? Why did America elect Donald Trump? Why are populists on the rise all over Europe? David Goodhart, founding editor of Prospect magazine and now a proud “post-liberal”, has found a culprit. Populism, he argues in his new book, is an understandable reaction to liberal overreach. + + + +Focusing on Britain, he identifies a new divide in Western societies, pitting a dominant minority of people from “anywhere” against a majority from “somewhere”. The first group, says Mr Goodhart, holds “achieved” identities based on educational and professional success. Anywheres value social and geographical mobility. The second group is characterised by identities rooted in a place, and its members value family, authority and nationality. + +Whereas Anywheres, whose portable identities are well-suited to the global economy, have largely benefited from cultural and economic openness in the West, he argues, the Somewheres have been left behind—economically, but mainly in terms of respect for the things they hold dear. The Anywheres look down on them, provoking a backlash. + +Mr Goodhart’s diagnosis has some merit. Globalisation has worsened inequality in Western countries, and the winners have not done enough to help the losers adjust to rapid changes. But Mr Goodhart is not content merely to diagnose. His mission is to convince liberals of the “underlying decency” of Somewhere ideas, to counteract nastier versions of populism: “Without a more rooted, emotionally intelligent liberalism…the possibility of even more unpleasant backlashes cannot be completely ruled out.” + +Respect and understanding for all, including Somewheres, is important. And better educational opportunities for young people who don’t go to university are a good idea. But his other proposals are worryingly reactionary. A chapter that laments the erosion of the male breadwinner role proposes throwback changes to the tax system to encourage marriage and a more traditional division of labour. And the idea of restricting permanent immigration in favour of guest-worker schemes recalls decades of ghettoisation and frustration among children of migrants in places like Germany, who might be called Nowheres. + +Mr Goodhart’s book seems likely to inform the debate on what post-Brexit Britain should look like. This is worrying, for two reasons. For one thing, there is little evidence that his “decent populism” will act as a bulwark against nastier variants. As he admits, “mainstream populists who repudiate racism tend to reinforce ideas of insiders and outsiders that allow real racists to grow more confident”—an insight confirmed by the spike in hate crimes following the Brexit referendum. + +His case for a “decent” populism leaves many other questions unanswered. Why, pragmatic anti-populist considerations aside, should national or racial attachments take priority over common humanity? Why should accommodating those who have such attachments justify excluding poor foreigners from economic opportunity? Saying it is “common sense” that “national citizens should be ahead of non-citizens in the queue for public goods” merely begs the question. For someone who accuses his liberal former tribe of intellectual laziness, that is not enough. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21719429-david-goodhart-post-liberal-seeks-accommodate-decent-elements-identity-based/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +No country for you + +The Gulf’s “temporary people” + + +The United Arab Emirates’ millions of non-citizen workers inspire an experimental and troubling novel + + + +Mar 23rd 2017 + + + + + +Temporary People. By Deepak Unnikrishnan. Restless Books; 251 pages; $17.99 and £12.99. + +A NATION is not just a place; it is a people who belong together, bound by history, ethnicity or language. But the United Arab Emirates (UAE) has borrowed its people. In a frenzied half-century, its population has grown from barely 100,000 to over 9m. Of these, a staggering 88.4% are citizens of another country. They built its impossible cities, but live under the shadow of one day being told to leave. + + + +Among these perpetual foreigners are roughly 3m Indian migrants, mostly Malayalam-speakers—“Malayalees”. They include the family of Deepak Unnikrishnan, who was born in Kerala and raised in Abu Dhabi, went to America to study, and decided to stay. His debut novel, “Temporary People”, has won the inaugural Restless Books prize for writing by a first-generation immigrant to America. Its patchwork of chapters elicits the vertigo of Joseph Heller and the disoriented human hopelessness of Milan Kundera. In three sections—“Limbs”, “Tongue. Flesh.” and “Veed” (“home” in Malayalam)—it describes a hierarchy of unmet needs: to be safe, to be understood and, deepest felt, to belong. + +“Temporary” lives come cheap. Up on sky-scraping building sites, “men don’t burn...they decay.” Each night, the bodies of those who have fallen from their perches are stuck back together “with duct tape or some good glue”. The economy’s insatiable hunger for labour is such that a brilliant scientist develops the “Canned Malayalee Project”. In industrial greenhouses, seeds grow into “oak-dark heat-resistant five-foot-seven Malayalees” in 23 days. Their inevitable rebellion, when it comes, is bloody. + +Mr Unnikrishnan’s world could be written off as dystopian, were it not rooted so firmly in current reality. In the past decade, Human Rights Watch has issued multiple searing indictments of working conditions in the UAE, denouncing the kafala system of indentured labour, high rates of heat stress and on-site accidents. In 2009, footage emerged of an Emirati sheikh torturing an Afghan grain merchant, pouring sand into his mouth and eyes and setting him alight before repeatedly running him over. After short-lived expressions of horror from Western policymakers, the sheikh was neatly absolved in court, and the affair was forgotten. In “Temporary People”, these events become an annual ritual compulsory for all local men. + +This is not crime, but theatre. Among Mr Unnikrishnan’s many games with form is to lay this gruesome scene out as a play. Each chapter is different. One is the transcript of an interview. Another, reworking tales from the Ramayana, an ancient Hindu epic poem, lays down the founding myth of a new people. Not all are so effective: “Pravasis?” (“migrants”) tries too hard and makes too bald a point. It lists hundreds of jobs, through “Bank Teller” and “Chicken Decapitator”, before trailing off sentimentally with “Country Maker. Place Builder. Labourer. Cog.” But taken together this discordant polyphony of stories is the full-throated roar of an entire people. + +Mr Unnikrishnan thanks his high-school teachers for allowing him “to take [his] time with English in order to tame it”. His language is now solid, alive and dangerous. Tongues tear themselves from mouths, spewing “mangled”, “unrecognisable” words “like shrapnel”. Blacked-out and untranslated words deny even the reader the right to complete understanding. This is not an easy book; in fact it is eviscerating. But in “Temporary People” the Restless Books prize has rewarded an urgent voice worth attending to, even if it is hard to hear. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21719433-united-arab-emirates-millions-non-citizen-workers-inspire-experimental-and/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Tales from the crypt + +George Saunders’ comic, supernatural, moral novel + + +The prizewinning writer’s first novel follows Abraham Lincoln’s son to a Buddhist netherworld + + + +Mar 23rd 2017 + + + + + +Lincoln in the Bardo. By George Saunders. Random House; 368 pages; $28. Bloomsbury; £18.99. + +ABRAHAM LINCOLN is often reduced to fit a purpose in American memory: hero, emancipator, war-monger, racist. George Saunders reduces him further, to a grieving father—but in doing so humanises him. The “Lincoln” of this new novel’s title is Willie, the son who died at 11. Willie navigates the bardo, a semi-hallucinatory state (borrowed from Tibetan Buddhism) between life and reincarnation, while the father grieves. + + + +“It harms no one; therefore, it is not wrong,” says the president, cradling the corpse of the son he has removed from its coffin. Nor is his the only unusual mode of grief; the ghost of one mournful wife sees everyone as a giant moustache with legs, in memory of her husband. “Yes, her way is hard,” says one of the other spirits. Like Dante’s hell, Mr Saunders’s bardo is a spiritual system rendered as a place. And his book is like a Buddhist “Divine Comedy”, with an emphasis on the comedy. But this is also an urgently political, profoundly moral book, albeit one so playful and so fantastical that the reader may hardly notice. + +The entire book seems to consist of nothing but epigraphs, which themselves turn out to be either historical sources (some real, some invented) or the chatter of spirits, indiscriminately mingling with one another. After a while, the reader begins to recognise the unique cadence of each spirit. The purposefully confusing form adds a disorientating but dramatic element to the book, and forces the reader to focus. + +This is Mr Saunders’s first novel, but he has been producing prizewinning short fiction for decades—often chronicling a fractious America (his 1996 debut collection is called “CivilWarLand in Bad Decline”). With Donald Trump leading the “party of Lincoln”, values previously considered untouchable are now up for debate, and these themes are in sharper focus than ever. Mr Saunders has reported from last year’s campaign trail, trying with genuine compassion to understand the rage of those who voted to upend America’s politics. In his invented world, meanwhile, Mr Saunders’s spectres judge each other by skin tone despite not having bodies, highlighting the absurdity of such bigotry. + +Many of his ghosts repeat their stories, Ancient Mariner-like. These stories help keep them tied to this Earth. It is the moment of realisation—that they are dead—that sets them free. At the heart of his novel is the idea that truth and understanding can save a soul. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21719430-prizewinning-writers-first-novel-follows-abraham-lincolns-son-buddhist/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +An artist’s soul and a wandering eye + +The sources of Louis Kahn’s mystical architectural modernism + + +The brilliant Modernist’s work includes Bangladesh’s parliament and a spate of great American buildings + + + +Mar 25th 2017 + + + + + +You Say to Brick: The Life of Louis Kahn. By Wendy Lesser. Farrar, Straus & Giroux; 397 pages; $30. + +AYN RAND’S politics may be less popular than they used to be, but in one way her influence endures: in the popular image of the architect. When architects appear in books or on screen, they are politer than the chiselled Howard Roark in “The Fountainhead”, but they are just as jut-jawed and sure of themselves. Yet when Gary Cooper, playing Roark in the film, says that a building must be true to its own idea, this misleadingly suggests that a building emerges perfectly formed from an architect’s imagination. + + + +Wendy Lesser’s new biography presents Louis Kahn as a likeable version of that archetype. Kahn was a brilliant architect who would rank even higher in esteem if his greatest work—the National Assembly in Bangladesh—weren’t so far from critics’ usual promenade. Yet Kahn, born in Estonia and raised in poverty in Philadelphia, produced enough outstanding buildings in America to be appreciated as one who, like Le Corbusier and Alvar Aalto, expanded the repertoire of Modernism: the new architectural language that saw the machine as the metaphor for architecture’s endeavour, and concrete, steel and glass as its material. + +Kahn had a mystical side too, though, and it irritated as many as it inspired. A contemporary, Edward Charles Bassett, said of Kahn that: “He was a fine, fine architect, but he would say something like, ‘What does a brick want to be?’ And there were all these kids who would bow down and face east, and I wanted to vomit.” Ms Lesser, who borrows this pedagogical trick for her biography’s title, has great architectural nous, but indulges this mysticism a little too far. She goes as far as to imply that Kahn, who as a child burned his face so badly he was disfigured for life, had done so in search of a transcendent truth. + +The book is superbly researched, though. Ms Lesser describes the convoluted way in which Kahn’s poorly managed architectural practice overlapped with a torturous personal life, cross-referencing work and personal diaries. Although the architect remained married to his wife Esther until his death, at one stage he was having affairs with three different women either in or closely related to his practice. He had a second daughter with Anne Tyng, an architect in his Philadelphia office, and fathered a son with Harriet Pattison, a landscape architect with whom he collaborated on the Kimbell Art Museum in Fort Worth, Texas. + +Ms Lesser captures the charisma of Kahn: his goofy piano-playing for friends and family and his incessant urge towards artistic creation. Where the book is less strong is on Kahn’s ties to the political and aesthetic debates of his age. Here, after all, is a man whose life was deeply influenced by Franklin Roosevelt’s vision for America. Kahn campaigned on the need to build cheap housing as part of his early practice, and illustrated pamphlets for the United States Housing Authority. Just before he died, he produced a compelling design for a memorial to the president on New York’s Roosevelt Island. Even if he really was scared off from engagement with politics by McCarthyism, as Ms Lesser suggests, his architecture, operating as it did in the real world, in dialogue with planners, contractors and the public, had no such choice. + +Ms Lesser is honest enough to quote those who disagree with her idea that there was a link between Kahn’s libido and his creative urge. But she nonetheless follows this notion to argue, for example, that Kahn’s primitive shapes—the staggered study towers at the Salk Institute, for example—were symptomatic of a search for an aesthetic language of freedom, as much as his affairs were a search for sexual freedom. Had Ms Lesser spent more time in this otherwise excellent study comparing Kahn with equally creative architects with less complicated personal lives, she may never have arrived at that theory. It is just as likely that Kahn was looking at the way in which corporate America had successfully co-opted Modernism and was trying to reassert its humanist purpose. A biographer may dish the dirt by all means, but the dirt needn’t take credit for everything. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21719432-brilliant-modernists-work-includes-bangladeshs-parliament-and-spate-great/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Drifting heart + +The reign of rock began with Chuck Berry + + +Remembering a musical icon and storyteller + + + +Mar 25th 2017 + + + + + +THE honour of having made the first rock’n’roll record is usually given to Jackie Brenston and his Delta Cats for “Rocket ‘88’” (1951). Like all musical firsts, this is hotly argued over: landmark singles by Bill Haley, Big Joe Turner, Elvis Presley and Bo Diddley are often considered close rivals. But any doubt about the arrival of true, flat-out rock was extinguished by “Maybellene” (1955), a two-minute ditty by Chuck Berry, who died on March 18th. What distinguished “Maybellene” was not so much the lowdown distortion of Mr Berry’s “chitlin’ circuit” lead guitar and the raw sound of his band, but the song’s departure from the swinging R&B polish of its contemporaries. Mr Berry was behind the wheel, and though he was heading somewhere new, he knew exactly where. + +When rock’n’roll hit the mainstream, he was pushing 30 and had more than a decade of hard luck behind him. It made him a unique rock’n’roller, both a flamboyant showman and a canny businessman. His break came when he recognised a popular trend and focused his imagination on how to mythologise it. He quickly found a middle ground between the smooth music he was raised on and the hellbent early rumblings of rock. Although the blues—especially as played by his idol Muddy Waters—are all over Mr Berry’s music, his lanky fingers played longer and wilder solos, and he wrote new, challenging licks for every song he recorded. + + + +What made him stand out, however, was that he was first and foremost a storyteller. He loved words and worked hard on them, modelling his uproarious tales on Louis Jordan’s and his enunciation on Nat King Cole’s. He sang of and for the new teenage world of soda fountains, jukeboxes, cars, sex in cars (if only he could unfasten her safety belt), breaking out and breaking free. In Mr Berry’s world, all things are possible. “Johnny B. Goode”, the poor country boy who becomes rock’s first hero, may see his name in lights because “he could play a guitar just like ringin’ a bell”. + +Because his songs were, at least on paper, simple in structure, their sophistication can slip by unnoticed. But his hits become fast friends through humour. “Roll Over Beethoven” adds, “and tell Tchaikovsky the news.” “Maybellene” begins, “As I was motivatin’ over the hill/I saw Maybellene in a Coupe de Ville”. (He is in a V8 Ford, which soon overheats in the chase.) “You Can’t Catch Me” takes it further when his car, a Flight de Ville air-mobile, avoids the state patrol by letting down wings and taking off in a “coooool breeze”. Over the course of “Brown Eyed Handsome Man”—a then-daring paean to the allure of dark-skinned men—Mr Berry roams from a courtroom to India, to the Venus de Milo losing her arms in a wrestling match, to a baseball game, all in just two minutes. + +Indeed, he could take you anywhere, coast to coast. In “The Promised Land”, he used place to make sly allusions to the Freedom Riders’ journeys through the south in the cause of civil rights: + +We was ninety miles out of Atlanta by sundown, + +Rollin’ out of Georgia state + +We had motor trouble it turned into a struggle, + +Half way ’cross Alabam, + +And that ’hound broke down and left us all stranded + +In downtown Birmingham + + + +His doleful songs were some of his best. “Memphis, Tennessee” is a desperate phone dialogue between the singer and long-distance information, set against a sad, loping groove. The caller is trying to find his girl, Marie. The brilliant touch comes in the last verse, as the listener learns that the girl is not the narrator’s girlfriend but his six-year-old daughter, taken away by her mother. + +Mr Berry’s songwriting waned as he struggled with scandals and personal demons, but his influence did not. A cursory look at the set lists, singles and albums of the Beatles and the Rolling Stones in the next decade reveals cover after cover of his songs. Smokey Robinson, the leading force of Motown, owes an obvious debt to his wordplay and fun. Even the Beach Boys would have had a much harder time breaking out had Brian Wilson not written new lyrics to “Sweet Little Sixteen” and renamed it “Surfin’ USA”. Chuck Berry may have duck-walked off the world stage, but his music never will. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21719431-remembering-musical-icon-and-storyteller-reign-rock-began-chuck-berry/print + + + +上一项 文章 章节 下一项 + + + + + +Books and arts 章节 Economic and ... + + + + + +Obituary + + +Martin McGuinness: The means to the end + +Books and arts 章节 Economic and ... + + + + + +文章 章节 下一项 + + + + + +The means to the end + +Obituary: Martin McGuinness died on March 21st + + +The IRA terrorist turned power-sharing first minister of Northern Ireland was 66 + + + +Mar 25th 2017 + + + + + +THERE were four moments, Martin McGuinness said, that made him a republican. The first—the one that made him raise his head from his job packing bacon for Doherty’s in Derry, and take an interest in civil rights—was when the Royal Ulster Constabulary beat up marchers in Duke Street in October 1968. He was 18 then, and for the first time he took up stones, bombs, anything, and spent his evenings attacking the police. The moment he remembered longest, though, was when they took young Dessie Beattie’s dying body out of a car by his house. It was July 8th 1971, the first time that the British army had used lead bullets in Northern Ireland. Blood was everywhere. It shocked him, and scared him more than a little. He had never seen anyone killed by a bullet before. + +It was crystal clear to him that this was a war, and had to be fought like one. Armies must oppose armies. There was a peaceful path available, through political pressure and the Social Democratic and Labour Party, but he did not take it. Nothing could be achieved that way. His aim was now to fight until the last British soldier was driven down the River Foyle or down the Lagan, and Ireland became a socialist republic of 32 counties. From 1976 he took shared command of the Irish Republican Army, groomed its volunteers, organised its bloody campaigns, improved its weaponry (from fertiliser stuffed in milk churns to surface-to-air missiles from Libya) and played the alternately shifting or immovable hard man in talks, or back-channel manoeuvres, with the British government. + + + +And on the other hand there he was, in 1997, minister of education in the first unionist-republican power-sharing executive in Northern Ireland. He was still listed on the Army Council of the IRA; but the bomb-thrower was now congeniality itself, and the most violent thing he was proposing was to scrap the 11-plus exam, which he had failed as a child. And there he was in 2007, even more astonishingly, deputy first minister to Ian Paisley, the most diehard of the arch-unionists, laughing along with him and having the craic, until they were known as the Chuckle Brothers. In 2014, all smiles, he shook the hand of Queen Elizabeth. People were confounded by the change. + +Yet to his mind, there was no change. In 2017 he was as committed a republican as he had been at the start. He desired with all his heart the union of the north and south of Ireland. But having fully embraced violence as the only cure for oppression and discrimination against the Catholic minority in the north, having always held out the threat of bloodshed or refusal to decommission weapons when the peace process faltered, he gradually became aware that he was getting nowhere. The IRA would never give up its aim, as he would not, but the path now lay through politics. + +Besides, there was always a part of him that kept away from violence. Friends from his youth in the impoverished Bogside thought him quiet, and in his parents’ house there was no politics discussed whatsoever, just nightly kneeling to say the rosary. (On the run in the 1970s, as a wanted man, he still made efforts to get home for his mother’s cabbage, spuds and pork ribs.) He did not drink, smoke or womanise, went to mass, and enjoyed thoughtful tasks: fishing, digging and, on holidays in Donegal, cutting turf and setting potatoes. + +He long denied that he was a member of the IRA, preferring “republican activist in Free Derry”. He expressed horror later at IRA bombings, at the same time sliding the conversation towards the atrocities, and the victims, on both sides. Despite directing operations, he played no active part in them, not least because he was blind as a bat and could not see his targets. When he joined the republican cause he was told he had a good face for it, with the blue eyes and red curly hair that made him look like a cherub, not a terrorist. He and his family got through the Troubles unscathed, perhaps because he didn’t take chances with his life; or perhaps because the British had already marked him as someone with whom they might talk. His long-time friend Gerry Adams was useful, too; but aloof, where he had wit, and a ready smile, before that hard-as-flint look came over. + +On the steps of Stormont + +In effect, his chief usefulness was his undeniable (much as he denied it) power within the IRA. Over the years he trained the group, streamlined it and imposed iron discipline in its heartlands, including the tarring and feathering of “anti-social elements”. Eventually he persuaded members that there was need for a cessation, for laying down weapons and working through Sinn Fein, the political arm of the movement. He was doing this himself and enjoying it, first getting elected to the Assembly in Stormont in 1982—though not taking his seat—and then becoming MP for Mid-Ulster in 1997. + +Before this, in December 1994, he had gone to Stormont for talks with the British. It was his first visit. He was delivered in an armour-plated black cab, dangerous cargo. As he stood on the steps of the Assembly building, looking down the grand avenue, he felt “we had taken ownership for the first time of the place, that we had...arrived politically and that we could build a new Ireland.” A peaceful Ireland, yes. And eventually, as he never stopped hoping, united and republican. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/obituary/21719226-ira-terrorist-turned-power-sharing-first-minister-northern-ireland-was-66-obituary/print + + + +文章 章节 下一项 + + + + + +Obituary 章节 + + + + + +Economic and financial indicators + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Human Development Index + +Markets + +Obituary 章节 + + + + + +文章 章节 下一项 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21719435/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Output, prices and jobs + + + + +Mar 25th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21719477-output-prices-and-jobs/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Trade, exchange rates, budget balances and interest rates + + + + +Mar 23rd 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21719484-trade-exchange-rates-budget-balances-and-interest-rates/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The Economist commodity-price index + + + + +Mar 23rd 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21719479-economist-commodity-price-index/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Human Development Index + + + + +Mar 23rd 2017 + + + + + +Between 1990 and 2015 Rwanda made the greatest strides in human development, according to the UN’s annual Human Development Index (HDI), which looks at life expectancy, income and education. Rwandans can expect to live 31 years longer than they did in 1990 and now spend twice as much time at school. Syria and Swaziland have both seen their scores deteriorate. One estimate suggests that during the first two years of its war, Syria lost the equivalent of 35 years of progress in human development. The UN also calculates an adjusted development index that takes inequality into account. On average, this reduces countries’ 2015 scores by 22%; Rwanda’s falls by over 30%. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21719483-human-development-index/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Markets + + + + +Mar 23rd 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21719475-markets/print + + + +上一项 文章 章节 下一项 + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.04.01.txt b/homeworks/B20769/homework1/data2/2017.04.01.txt new file mode 100644 index 0000000..89b2e8b --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.04.01.txt @@ -0,0 +1,5103 @@ +星期五, 三月 31, 2017 + + + + +The world this week 3 + +Leaders 5 + +Letters 1 + +Briefing 1 + +United States 6 + +The Americas 3 + +Asia 5 + +China 2 + +Middle East and Africa 4 + +Europe 5 + +Britain 7 + +International 1 + +Business 7 + +Briefing 1 + +Finance and economics 7 + +Science and technology 6 + +Books and arts 6 + +Obituary 1 + +Economic and financial indicators 6 + + + + + +章节 Leaders + + + + + +The world this week + + +Politics + +Business + +KAL's cartoon + +章节 Leaders + + + + + +文章 章节 下一项 + + + + + +Politics this week + + + + +Apr 1st 2017 + + + + + +Britain started the process of leaving the European Union. Theresa May, the country’s prime minister, officially triggered Article 50 of the Lisbon treaty in a letter hand-delivered to Donald Tusk, the president of the European Council. See here and here. + +Scotland’s devolved parliament voted to request from the British government permission to hold a second independence referendum. However, both Mrs May and Jeremy Corbyn, the leader of the opposition, want any poll to be delayed until after Brexit. + + + +Street cred + +Demonstrators staged anti-corruption protests in nearly 100 cities across Russia, responding to a call by the opposition leader Aleksei Navalny. The protests focused on the alleged illicit wealth of Dmitry Medvedev, the prime minister. A court sentenced Mr Navalny to 15 days in jail for organising an unauthorised protest. See article. + +German authorities said they were investigating whether Turkey’s intelligence services had spied on Turkish-German citizens whom they suspected of allegiance to the exiled cleric Fethullah Gulen. Turkey believes Mr Gulen was behind an attempted coup to overthrow its government last July, and has jailed over 40,000 people in ongoing purges. Germany said any foreign espionage on its soil would be a criminal offence. + +Boyko Borisov and his pro-European, centre-right GERB party came first in Bulgaria’s parliamentary elections with 33% of the vote. The win paves the way for Mr Borisov to serve a third term as prime minister. The Socialists, who lean towards Russia, came second with 27% of the vote. + +The Hungarian government proposed new higher education laws which the Central European University (CEU) in Budapest said would force it to close. The CEU, one of the country’s top universities, was founded by the liberal Hungarian-born billionaire George Soros. Hungary’s nationalist prime minister, Viktor Orban, who says he wants his country to become an “illiberal democracy”, has a long-standing feud with Mr Soros. + +To jaw-jaw + +Over the objections of Venezuela’s socialist government, members of the Organisation of American States held a debate on the country’s humanitarian crisis and the government’s assault on its democracy. The group stopped short of suspending Venezuela and called for dialogue. Talks brokered by the Vatican failed to reach any agreement. + +Donald Trump, America’s president, signed an executive order aimed at undoing environmental rules introduced by Barack Obama. Mr Trump hopes to bring back coal-mining jobs. His critics point out that their disappearance owes more to greater efficiency than to hostile regulations. See article. + +A whodunit + + + +Fighting between coalition forces and Islamic State continued in Mosul. America’s top commander in Iraq, investigating the collapse of a building in the city that killed as many as 200 civilians, said “we probably had a role in these casualties.” However, Lieut-General Stephen Townsend suggested further investigation would be required to assess whether Islamic State coerced civilians into the building and rigged it with explosives following coalition air strikes. + +Unrest in the Democratic Republic of Congo grew as Catholic bishops withdrew from mediating between the government and opposition. Joseph Kabila’s mandate as president expired in December but no poll has yet been held. + +Jacob Zuma, South Africa’s president, recalled the country’s finance minister, Pravin Gordhan, from an investor roadshow—sparking speculation that he may be fired. Mr Gordhan, who is trying to curb cronyism, has been at odds with the president over the past year. + +Ahmed Kathrada, an anti-apartheid activist, died in Johannesburg, South Africa. He had been sentenced to life imprisonment in 1964 along with Nelson Mandela. More recently, he had become a critic of the corruption that riddles the current government. + +An explosive issue + +Police and soldiers battled four terrorists at an apartment building in Bangladesh. One of them detonated a bomb at a police cordon nearby, killing six people and wounding 50 others, in the country’s first indiscriminate suicide bombing. Members of the armed forces killed the other three. See article. + +Prosecutors in South Korea asked a court for an arrest warrant for former president Park Geun-hye, who was removed from office earlier this month by the constitutional court. The prosecutors warn Ms Park may destroy evidence in the corruption scandal that led to her impeachment. + +An American immigration judge granted asylum to Amos Yee, a teenage blogger from Singapore. The judge ruled that Mr Yee’s repeated prosecution in Singapore for hate speech had been a pretext to punish him for his criticism of the government. See article. + +The Australian government abruptly cancelled a parliamentary vote on an extradition treaty with China. The Chinese authorities’ detention of a Chinese academic working at an Australian university had sparked much critical commentary in Australia about China’s judicial system. + +Hobson’s choice + + + + Carrie Lam was elected as Hong Kong’s next leader by a committee of nearly 1,200 residents of the territory, most of them supporters of the Communist Party in Beijing. The former head of Hong Kong’s civil service will take up her post on July 1st, succeeding Leung Chun-ying. She will have a tough job winning over the public, who polls suggested would have preferred her main rival, John Tsang. + +China’s foreign ministry confirmed reports that the country’s president, Xi Jinping, will meet his American counterpart, Donald Trump, at Mar-a-Lago, Mr Trump’s resort in Florida, on April 6th. It will be the first face-to-face encounter between the two. Mr Trump has strongly criticised China over trade and security issues. + +China and North Korea opened a new airline route between Dandong, a Chinese city on their border, and Pyongyang, North Korea’s capital. The route will be operated by North Korea’s flag carrier, Air Koryo, the world’s worst airline according to Skytrax, an aviation website. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21719844-politics-week/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Business this week + + + + +Mar 30th 2017 + + + + + +Global stockmarkets initially fell this week as investors digested the failure of Donald Trump’s health-care reform bill and appeared to lose faith in his administration’s ability to fulfil campaign promises. The dollar also hit a four-month low against a basket of currencies. Both regained some ground, however, with the release of some better-than-expected consumer data. American consumers’ confidence in the economy rose in March to its highest level since December 2000, according to the Conference Board, whose monthly survey factors in views of business conditions, personal finances and jobs. + +Chemical brothers + + + +Dow Chemical and DuPont, two chemical giants, won approval from the European Union for their $130bn merger, after making concessions including the sale of large parts of DuPont’s pesticide business. The European Commission is yet to rule on two more big agrochemical deals: Bayer’s proposed takeover of Monsanto and ChemChina’s bid for Syngenta. + +Saudi Arabia cut the income-tax rate for Saudi Aramco from 85% to 50%. Reducing the national oil company’s tax burden by tens of billions of dollars will make it more attractive to investors in the run-up to its IPO, which is expected to be the world’s largest-ever equity sale. The plan is to sell a 5% stake late next year. + +Europe’s highest court ruled that sanctions imposed on Rosneft, following Russia’s annexation of Crimea, were legal. The state-controlled oil giant had claimed that the measures violated a 1994 co-operation agreement between the EU and Russia. Sanctions have not prevented Rosneft from recently selling a 19.5% stake to Qatari investors and Glencore, an Anglo-Swiss mining firm, thanks to a loophole that permits equity purchases. + +Propellerheads + +American Airlines, the world’s largest carrier, is to buy a $200m stake in China Southern Airlines, China’s biggest. The deal should mean greater co-operation on routes. American is keen to strengthen its presence in the Chinese market; China Southern wants to expand abroad. + +Westinghouse, the American nuclear division of Toshiba, filed for bankruptcy in New York. Toshiba warned that write-downs could mean that losses last year will exceed ¥1trn ($9bn), throwing into question the conglomerate’s future. See article. + +The European Commission dealt a lethal blow to the proposed merger of the London Stock Exchange and Deutsche Börse. Regulators argued that a deal would hinder competition by creating a de facto monopoly in bond-clearing and repurchase agreements. The proposed tie-up was the two companies’ third attempt to create Europe’s largest exchange operator. + +The Bank of England unveiled tougher stress tests for British banks, which will now face an assessment of their longer-term risks, such as Brexit, as well as their resilience to a severe economic shock. + +Samsung unveiled the Galaxy S8. The South Korean firm is hoping the device proves a distraction from its many woes. It is the first smartphone Samsung has released since the disastrous Galaxy Note 7, which had to be recalled due to its combustible batteries. Several executives have also been arrested in a corruption probe that led to the impeachment of South Korea’s president, Park Geun-hye; Samsung’s de facto boss is standing trial on charges of bribery and embezzlement. Remarkably, the firm’s shares continue to trade at an all-time high. + +America’s Congress overturned recently enacted internet privacy rules stipulating how internet service providers can use customer data. ISPs will be able to share browsing histories and financial, health and location data without users’ consent and without offering an opt-out. Large ISPs hailed the ruling; such intimate data hold tremendous marketing value. Privacy campaigners shuddered. + +Prodigy + +Bill Gross ended his legal battle with Pimco, the investment firm he co-founded, with a settlement reported to be $81m. The erstwhile “bond king” sued the firm after being pushed out in 2014 over sagging investment returns and a clash of management styles. As part of the deal a room will be named after him at Pimco’s headquarters. + +Elon Musk, a serial entrepreneur, announced the launch of Neuralink, a firm that aims to develop technology to link computers directly to the brain. The firm will initially focus on medical applications, but Mr Musk has long argued that humans must embrace brain implants in order to stay relevant as artificial intelligence advances. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21719837-business-week/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +KAL's cartoon + + + + +Mar 30th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21719843-kals-cartoon/print + + + +上一项 文章 章节 下一项 + + + + + +The world this week 章节 Letters + + + + + +Leaders + + +Britain and the European Union: The negotiator + +The White House: Frustration + +Coal’s decline: Sunlight over soot + +Myanmar: A hero disappoints + +The world this week 章节 Letters + + + + + +文章 章节 下一项 + + + + + +Brexit begins + +Britain’s brutal encounter with reality + + +Time to be honest about the trade-offs ahead + + + +Apr 1st 2017 + + + + + +NINE tumultuous months after Britons voted to leave the European Union, the real Brexit process is at last under way. Theresa May’s dispatch of a letter to the European Council on March 29th, invoking Article 50 of the EU treaty, marked the point at which Britain’s withdrawal from the union became all but inevitable. For half the country’s population this was a moment to celebrate; for the other half, including this newspaper, it marked a bleak day. The future of both camps—and of the EU itself—now depends on what Mrs May does next. + +The negotiations are sure to be difficult (see article). Time is short, since Article 50 comes with a two-year deadline. The task of unwinding Britain’s membership of the club is fearsomely complex. Neither side is well prepared. In Britain, where Brexit increasingly resembles a faith-based initiative, voters have been given wildly unrealistic expectations of the Utopia ahead. Their first contact with the reality of losing preferential access to their main market will be traumatic. Unless Mrs May can persuade the Brexiteers on her own side that they must accept concessions, Britain may end up flouncing out of Europe without any deal at all. + + + +Cruising for a bruising + +The timetable is tighter even than it looks. The sides may spend weeks arguing over process. The EU wants to fix the terms of the Article 50 divorce, covering such matters as the rights of citizens resident in other countries and Britain’s multi-billion-euro exit bill, before starting work on a future trade deal; Mrs May wants to negotiate on everything at once. Nothing much will be agreed on before the German election in September. At the end of it all, ratifying the deal will take six months. That leaves little more than a year for the talks themselves. + +Mrs May’s priority is to fulfil the Leave campaign’s promise to “take back control” by ending the free movement of EU citizens to Britain and the jurisdiction of the European Court of Justice (ECJ). She has acknowledged that this means leaving the EU’s single market. But leaving would be a mistake. Even if it takes control of immigration, Britain will not be able to cut the numbers much without damaging the economy, as ministers are slowly realising. And the government is wrong to claim that there exists some relationship with the single market that has all the benefits of membership with none of the costs. + +It is true that many Britons backed Brexit because they wanted to cut immigration and regain sovereignty, but they did not vote to make themselves poorer—as Mrs May’s “hard Brexit” will. Her government has been characterised by U-turns and her letter this week was more emollient than some of her earlier statements. Even so, in thrall to Brexiteering backbenchers and the Eurosceptic press, she is unlikely to change course now. + +Mrs May is not just making the wrong choices, but also downplaying awkward trade-offs. By promising barrier-free access to the single market while stopping EU migrants and ending the ECJ’s jurisdiction, she is still telling Britons they can have their cake and eat it. Although she concedes that exporters to the EU will have to obey EU rules, the more Mrs May insists on controlling EU migration and escaping the ECJ, the less barrier-free will be Britain’s overall access to the single market. This is not just because free movement of people is a condition for the EU, nor because it will be hard to secure tariff-free access for trade in goods, something both sides can readily agree on. It is because the biggest obstacles swept away by the single market are not tariffs or customs checks, but non-tariff barriers such as standards, regulations and state-aid rules. Unless Britain accepts these, which implies a role for the system’s referee, the ECJ, it cannot operate freely in the single market—as even American firms trading in the EU have found. + +Boxed into a corner + +The most dangerous of Mrs May’s illusions has been her claim that no deal is better than a bad deal. Her letter this week steps back from this notion, but only a pace. To revert to trading with the EU only on World Trade Organisation (WTO) terms would cause serious harm to Britain’s economy. It would mean the EU imposing tariffs plus a full panoply of non-tariff barriers on almost half Britain’s exports. No big country trades with the EU only on WTO terms. An acrimonious break-up would make it harder to co-operate in such areas as foreign policy and defence. And it would surely increase the risk of Brexit triggering Scotland’s exit from the United Kingdom. + +Mrs May needs not merely to soften her tone, as she has started to do this week, but to lower expectations. Instead of threatening to undercut her European partners by building an unregulated Singapore-on-Thames (something that, despite its appeal to free-traders, would horrify most Brexit voters), or hinting that Britain might co-operate less fully on security, or claiming that the EU needs Britain more than the other way round, she should accept that in these negotiations she holds the weaker hand. She should hence be more flexible over payments into the EU budget, a subject her letter skates over. + +Because negotiating a full free-trade deal is certain to take more than two years—no country has concluded one with the EU in so short a time—she should accept another consequence: that transitional arrangements will be needed to avoid “falling off a cliff” in March 2019. Her letter talks airily of “implementation periods”, but does not acknowledge how hard these may be to sort out. A proper, time-limited transition might mean prolonging free movement of people and the rule of the ECJ, but that price would be worth paying for a better Brexit. + +The softer tone of Mrs May’s letter might, with luck, encourage her EU partners to be more accommodating. So far they have reacted to threats from London in kind, talking up the exit bill, insisting that Britain ends up being worse off outside the club than inside and digging in over terms for co-operating in foreign and security policies. There is a possibility of a deal between Britain and the EU that minimises Brexit’s harm. Unfortunately, in a negotiation against the clock where both sides start so far apart, there is also a big risk of one that maximises harm instead. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21719793-time-be-honest-about-trade-offs-ahead-britains-brutal-encounter-reality/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The White House + +The Trump presidency is in a hole + + +And that is bad for America—and the world + + + +Apr 1st 2017 + + + + + +DONALD TRUMP won the White House on the promise that government is easy. Unlike his Democratic opponent, whose career had been devoted to politics, Mr Trump stood as a businessman who could Get Things Done. Enough voters decided that boasting, mocking, lying and grabbing women were secondary. Some Trump fans even saw them as the credentials of an authentic, swamp-draining saviour. + +After 70 days in office, however, Mr Trump is stuck in the sand. A health-care bill promised as one of his “first acts” suffered a humiliating collapse in the—Republican-controlled—Congress (see Lexington). His repeated attempts to draft curbs on travel to America from some Muslim countries are being blocked by the courts. And suspicions that his campaign collaborated with Russia have cost him his national security adviser and look likely to dog his administration (see article). Voters are not impressed. No other president so early in his first term has suffered such low approval ratings. + + + +It is tempting to feel relief that the Trump presidency is a mess. For those who doubt much of his agenda and worry about his lack of respect for institutions, perhaps the best hope is that he accomplishes little. That logic is beguiling, but wrong. After years of gridlock, Washington has work to do. The forthcoming summit with Xi Jinping, China’s president, shows how America is still the indispensable nation. A weak president can be dangerous—picture a trade war, a crisis in the Baltics or conflict on the Korean peninsula. + +The business of government + +Mr Trump is hardly the first tycoon to discover that business and politics work by different rules. If you fall out over a property deal, you can always find another sucker. In politics you cannot walk away so easily. Even if Mr Trump now despises the Republican factions that dared defy him over health care, Congress is the only place he can go to pass legislation. + +The nature of political power is different, too. As owner and CEO of his business, Mr Trump had absolute control. The constitution sets out to block would-be autocrats. Where Mr Trump has acted appropriately—as with his nomination of a principled, conservative jurist to fill a Supreme Court vacancy—he deserves to prevail. But when the courts question the legality of his travel order they are only doing their job. Likewise, the Republican failure to muster a majority over health-care reflects not just divisions between the party’s moderates and hardliners, but also the defects of a bill that, by the end, would have led to worse protection, or none, for tens of millions of Americans without saving taxpayers much money. + +Far from taking Washington by storm, America’s CEO is out of his depth. The art of political compromise is new to him. He blurs his own interests and the interests of the nation. The scrutiny of office grates. He chafes under the limitations of being the most powerful man in the world. You have only to follow his incontinent stream of tweets to grasp Mr Trump’s paranoia and vanity: the press lies about him; the election result fraudulently omitted millions of votes for him; the intelligence services are disloyal; his predecessor tapped his phones. It’s neither pretty nor presidential. + +That the main victim of these slurs has so far been the tweeter-in-chief himself is testament to the strength of American democracy. But institutions can erode, and the country is wretchedly divided (see article). Unless Mr Trump changes course, the harm risks spreading. The next test will be the budget. If the Republican Party cannot pass a stop-gap measure, the government will start to shut down on April 29th. Recent jitters in the markets are a sign that investors are counting on Mr Trump and his party to pass legislation. + +More than anything, they are looking for tax reform and an infrastructure plan. There is vast scope to make fiscal policy more efficient and fairer (see article). American firms face high tax rates and have a disincentive to repatriate profits. Personal taxes are a labyrinth of privileges and loopholes, most of which benefit the well-off. Likewise, the country’s cramped airports and potholed highways are a drain on productivity. Sure enough, Mr Trump has let it be known that he now wants to tackle tax. And, in a bid to win support from Democrats, he may deal with infrastructure at the same time. + +Yet the politics of tax reform are as treacherous as the politics of health care, and not only because they will generate ferocious lobbying. Most Republican plans are shockingly regressive, despite Mr Trump’s blue-collar base. To win even a modest reform, Mr Trump and his team will have to show a mastery of detail and coalition-building that has so far eluded them. If Mr Trump’s popularity falls further, the job of winning over fractious Republicans will only become harder. + +Were he frustrated in Congress, the president would surely fall back on areas where he has a free hand. He has already made full-throated use of executive orders and promises to harness the bureaucracy to force through his agenda. In theory he could deregulate parts of the economy, such as finance, where the hand of government is sometimes too heavy. Yet his executive orders so far have been crudely theatrical—as with this week’s repeal of Barack Obama’s environmental rules, which will not lead to the renaissance of mining jobs that he has disingenuously promised coal country (see article). It is the same with trade. Mr Trump could work through the World Trade Organisation to open markets. More probably, the economic nationalists on his team will have the upper hand. If so, America will take a bilateral approach, trade protection will grow and foreign policy will become more confrontational. + +The character question + +The Americans who voted for Mr Trump either overlooked his bombast, or they saw in him a tycoon with the self-belief to transform Washington. Although this presidency is still young, that already seems an error of judgment. His policies, from health-care reform to immigration, have been poor—they do not even pass the narrow test that they benefit Trump voters. Most worrying for America and the world is how fast the businessman in the Oval Office is proving unfit for the job. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21719794-and-bad-americaand-world-trump-presidency-hole/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Sunlight over soot + +India becomes more active in the fight against global warming + + +The world’s third-largest carbon emitter is curbing its dependence on coal + + + +Mar 30th 2017 + + + + + +COALMINERS cheered this week when Donald Trump issued an executive order to start unwinding Barack Obama’s flagship climate policies; the new measures include ending a moratorium on the leasing of federal land for mining. “My administration is putting an end to the war on coal,” declared Mr Trump. Yet the black stuff is still in a heap of trouble. In America cheap natural gas has surpassed coal as a source of power generation; no White House ceremony can do much about that. And for all the attention on America, much the more important chapter in the tale of coal’s decline is being written on the other side of the world. + +India is the third-largest carbon emitter, after China and America. No fuel matters more to it than coal: it fires up 61% of India’s power-generating capacity and Coal India is the world’s biggest coal company. Since coal generates more carbon emissions when it is burned than other fossil fuels—to say nothing of its effect on air quality—India is a crucial protagonist in the battle against climate change (see article). + + + +It has also long been seen as a wild card. On the one hand, the country’s growth projections and justifiable desire to supply power to about 240m Indians who lack it imply that its greenhouse-gas emissions look as if they will almost double. On the other, its plans for solar and wind energy are so ambitious that many have found them hard to believe. But two things suggest that the outlook for coal in India is darkening. + +First, the government has declared that it needs no more coal-fired power stations during the next decade than those being built today. About 40% of India’s coal-fired plant capacity is lying idle, because the authorities have overestimated the growth in demand for electricity, and because of the financial weakness of electricity-distribution firms. The pipeline of plants under construction is still a hefty 50 gigawatts (GW), but a portion of these facilities may well be put on hold because of the lousy economics of electricity distribution in India. + +Second, Narendra Modi, India’s prime minister, is proving a surprisingly strong advocate for green energy. His government has promised to install fully 175GW of renewable energy by 2022, triple today’s capacity. That ambition, though probably still out of reach, is looking more credible today because of the crashing cost of solar power. In an auction in the state of Madhya Pradesh in February, winning solar bids were competitive with the cost of new coal-fired electricity. Mr Modi’s government recently approved the creation of 50 “solar parks”, with a combined capacity of 40GW. + +Dethroning King Coal + +Whatever happens, India will still burn a lot of dirty coal. It has many old plants that produce power cheaply, some owned by powerful tycoons who would resist their closure. The amount of unused capacity could fall if growth in power demand accelerates and if the finances of the utilities improve. Pursuing alternatives to coal will meet resistance from unions fearing job losses among miners. + +But Mr Modi can also do more to move his country away from coal. Baseload coal power is not good at offsetting the intermittency of sun and wind; India would do better to opt for hydroelectric storage and quick-response natural-gas plants instead. Providing rooftop solar panels to poor communities may be a better way to electrify the country than costly extensions to the grid. Well-prepared land, available grid connections and financial guarantees all encourage the development of solar parks. + +Coal is back in favour in America. But India’s second thoughts make for the bigger, and brighter, story. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21719798-worlds-third-largest-carbon-emitter-curbing-its-dependence-coal-india-becomes-more/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Burmese daze + +Aung San Suu Kyi is letting her own revolution down + + +Myanmar’s revered leader needs to learn how to delegate + + + +Mar 30th 2017 + + + + + +SHE is the woman who faced down an army. After the military regime in Myanmar refused to recognise the colossal victory of her National League for Democracy party in an election in 1990, Aung San Suu Kyi endured 25 years of persecution, including 15 years under house arrest. In late 2015, after many failed attempts to discredit and sideline her, the generals gave up and held a relatively free election. The NLD won again, in another landslide, and this time the army allowed the result to stand. Ms Suu Kyi’s dignified resistance to military rule has made her a hero to many around the world—and deservedly so. But the self-reliance and doggedness that sustained her through that long struggle have not stood her in such good stead since the NLD took power a year ago. + +In a parting gift from the army, Myanmar’s constitution bars Ms Suu Kyi from the presidency on the grounds that her children hold British citizenship. She has installed a loyal lieutenant in the job instead, and awarded herself the title “state counsellor”, as well as two ministerial portfolios. Members of parliament complain that they have little role in government; Ms Suu Kyi makes all the decisions that matter (see article). + + + +Many of those decisions, alas, have been questionable. Ms Suu Kyi has decided to focus her attention on bringing peace to the far corners of the country, where a bewildering array of ethnic militias have fought the government for decades. The goal is a fine one—but Ms Suu Kyi lacks the authority to attain it. Along with preventing her from becoming president, the constitution that the generals imposed before returning to barracks also allows the army to run itself, to appoint the ministers of defence and home affairs and to fill a quarter of the seats in parliament. Without the army’s co-operation, there can be no peace between the state and the rebel groups. Moreover, the army has, if anything, recently become more aggressive, sparking increasingly frequent clashes. + +Ms Suu Kyi has more authority in other areas—most notably over the economy—but has not done much with it. The NLD’s first budget was little different from the army’s last, suggesting that the civilians do not have a clear agenda for change. The generals’ cronies still dominate big business. Foreign investment is declining as the euphoria of the transition to democracy fades. Ms Suu Kyi has made little effort to overhaul the courts, which are stuffed with corrupt holdovers from the old regime, or make them more accessible. Plaintiffs still need the attorney-general’s permission to sue the government. + +Meanwhile, international goodwill towards the new government is being squandered by Ms Suu Kyi’s shameful silence about the Rohingya, a persecuted Muslim minority who live near the border with Bangladesh. The army has been razing Rohingya villages, stealing, raping and killing as it does so. But Ms Suu Kyi cannot even bring herself to use the word Rohingya (the government dismisses them as intruders from Bangladesh), let alone condemn the army’s treatment of them. + +The lady’s not for learning + +It would be naive to expect the NLD to repair in a year the damage done by half a century of military rule. And it is understandable that 25 years of isolation and abuse have left Ms Suu Kyi reluctant to delegate and suspicious of outsiders’ advice. But by refusing to acknowledge the army’s latest outrages, she risks turning herself into an apologist for the very people who tormented her and her country for so long. And by picking the wrong priorities, she may undermine the cause that has consumed her life. If there is little discernible difference for most Burmese between military and civilian rule, then what was the point of her long vigil for democracy? Running a government requires different skills from resisting one. For the sake of her country and her legacy, Ms Suu Kyi must learn them. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21719800-myanmars-revered-leader-needs-learn-how-delegate-aung-san-suu-kyi-letting-her-own/print + + + +上一项 文章 章节 下一项 + + + + + +Leaders 章节 Briefing + + + + + +Letters + + +On Scoxit, domino theory, quantum physics, refugees, inequality, apostrophes: Letters to the editor + +Leaders 章节 Briefing + + + + + +文章 章节 下一项 + + + + + +Letters + +Letters to the editor + + +On Scoxit, domino theory, quantum physics, refugees, inequality, apostrophes + + + +Mar 30th 2017 + + + + + +Greater Scotland + +Your arguments about why Scots should reject independence amounts to saying that Scotland would face the very same perils if it were to secede from the United Kingdom that the UK faces when it leaves the European Union (“Leave one union, lose another”, March 18th). Scotland, however, would be leaving the UK to join a single-market union that is rather larger. Although you talk of Scotland breaking with its main trading partner (England), it would have little difficulty diverting its exports to a single market of over 400m people. Moreover, in terms of geopolitical influence Scotland would be better placed in a renewed EU than in an isolated UK. + + + +Scotland is not seeking to wreck either the UK or the EU. A big argument made for Scotland rejecting independence at the referendum in 2014 was that sticking with the UK guaranteed it a place in the EU. If in 2016 the UK had voted to remain in the EU there would be no question of another referendum on Scoxit, “for a generation” at least. The choice that Scots are agonisingly facing is that of to which supranational union they should adhere, the UK or the EU? The wreckers of unions are I am afraid the English, or to be a little more precise, the English Brexiteers. + +PATRICK O’SULLIVAN + +Professor of business ethics + +Grenoble École de Management + +Grenoble, France + +Polls consistently show that most Scots do not want another referendum and would prefer our government in Holyrood to get on with its day job. “Scotland” was not on the ballot paper in the Brexit referendum; many Remain votes in Scotland were cast by people who want to stay in the UK. + +The SNP manifesto was 76 pages long and contained a mere four paragraphs about a second referendum on independence. The SNP is a minority government in Scotland, propped up by the Greens, having won less than half of the popular vote and losing six seats in 2016. If Nicola Sturgeon was that confident she would secure a real mandate, and face the electorate with an explicit referendum commitment. + +STUART SMITH + +Edinburgh + +Brexit may hint at trouble for us expatriates who reside in an EU country. So why don’t we have an acronym of our own, namely ExBrit. + +COLIN BRAZIER + +Bad Krozingen, Germany + + + + + +Europe’s chain of events + +The idea of a “domino theory” in relation to populists winning European elections is misleading, you say, citing the context of America’s strategy of containment to prevent the spread of communism in South-East Asia (“Domino theory”, March 18th). But a more powerful example of the domino theory happened in the European revolutions of 1848. That wave of insurgency was ideological, not military, in nature. Its ideas spread to 50 countries, toppled governments and ultimately reshaped Europe. As Victor Hugo said, no army can stop an idea whose time has come. One must hope that the time has not come for populist ideas to sweep across Europe. + +GAURAV GOLLERKERI + +San Francisco + + + + + +Quantum measurements + +Your articles on the present and future effects on us all of quantum physics omitted one small point: metrology has joined the quantum world, but not just for atomic clocks (Technology quarterly, March 11th). Next year, the 26th General Conference on Weights and Measures will adopt new quantum-based definitions for most of our well-known basic units of measurement. Notably, the kilogram will be defined in terms of a fixed value of the Planck constant, the basic fundamental constant of quantum physics. + +Readers will from then on buy their kilos of potatoes in the secure knowledge that the market trader’s scales are traceable not to a piece of platinum in a safe in Paris but to the Planck constant—which is where? Everywhere, even on the Moon and the most distant galaxy. + +TERRY QUINN + +Emeritus director + +International Bureau of Weights and Measures + +Sèvres, France + +It is instructive to compare the development of quantum technologies with that of artificial intelligence. AI is now a powerful tool, though it repeatedly fell short of lofty expectations during its early development, leading to disappointment and stagnation. Quantum technologies give much cause for excitement. This is especially true for relatively near-term, special-purpose devices, such as quantum sensors and simulators. We must not, however, demand too much of these microscopic systems prematurely. + +DAVID LAYDEN + +Quantum Engineering Group + +Massachusetts Institute of Technology + +Cambridge, Massachusetts + + + + + +Refugees count + +“Out of sight” (March 18th) rightly criticised the EU-Turkey deal on refugees for its humanitarian impact. At the heart of the deal is a deeply problematic logic. It is not just that states have become complacent, and that this in addition to bureaucracy has allowed asylum-seekers to linger in appalling conditions in Greece. Rather, the deal excludes the vast majority of asylum-seekers in Greece. + +One of the problems of the relocation scheme is that it is restricted to those who entered Greece after September 16th 2015 and no later than March 19th 2016 and who are “in clear need of relocation”. However, the eligibility criteria are rigid. The formula is limited to those nationals who have a 75% rate of recognition or higher in the previous quarter. According to the European Asylum Support Office, only asylum-seekers from Burundi, Eritrea, the Maldives, Oman, Qatar, Syria and Yemen are eligible. + +Yet with the exception of Syrians, few asylum-seekers from those countries are in fact present in Greece. By narrowing the scope of eligibility, the EU has excluded thousands of Afghan, Iranian, Iraqi and Pakistani asylum-seekers from the relocation scheme. + +PROFESSOR BRAD BLITZ + +PROFESSOR ELEONORE KOFMAN + +Middlesex University + +London + + + + + +War and inequality + +Walter Scheidel is overly pessimistic in arguing that only catastrophic events really reduce inequality (“Apocalypse then”, March 4th). Using the Gini index in the Standardised World Income Inequality Database, which covers 173 countries from 1960 to 2012, David Hudson and Niheer Dasandi of University College London identified 23 states that have experienced redistributive policies over seven years or more. What is so far lacking is a comparative study of the politics underlying these redistributive episodes, but their existence alone seems likely to undermine Mr Scheidel’s contention that disaster, rather than politics, is the only way to reduce inequality. + +DUNCAN GREEN + +Professor in practice + +London School of Economics + + + + + +Apropos an apostrophe + +Too bad that you included an apostrophe in the title to James Joyce’s “Finnegans Wake” (Free exchange, March 4th). The book title lacks an apostrophe because, like so much else in Joyce’s book, it is a pun combining opposites: the funeral service for Finnegan, but also Finn is again awake. + +PETER BIEN + +Hanover, New Hampshire + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/letters/21719756-scoxit-domino-theory-quantum-physics-refugees-inequality-apostrophes-letters/print + + + +文章 章节 下一项 + + + + + +Letters 章节 United States + + + + + +Briefing + + +America’s checks and balances: Constrained? + +Letters 章节 United States + + + + + +文章 章节 下一项 + + + + + +Constrained? + +America’s system of checks and balances seems to be working + + +But there is still plenty to worry about + + + +Mar 30th 2017 | NEW YORK AND WASHINGTON, DC + + + + + +THE morning after Donald Trump was elected president, Eric Schneiderman, the Democratic attorney-general of New York, summoned his raddled senior lawyers to a war council. Seated in his unfussy 25th-floor office in lower Manhattan, Mr Schneiderman told them to assume Mr Trump’s brutish campaign pledges were in earnest, and to clear their desks for action. + +While the president-elect was digesting his victory in Trump Tower, five miles up the road, Mr Schneiderman put scores of the 650 lawyers at his disposal on Trump watch. They started trawling through his campaign statements and preparing legal defences against the assaults he had promised on immigration, consumer protection and climate-change policy. With the Republicans who control Congress apparently unwilling to hold Mr Trump to account, Mr Schneiderman feared that Democratic attorneys-general might have to act as a thin blue line of resistance to an authoritarian president. + + + +Mr Schneiderman, a small man who speaks fast and wastes few words, already understood Mr Trump’s capacity for rule-breaking. In 2013 he sued Mr Trump over the fleecing of students at Trump University, a bogus training scheme for would-be property moguls. In response, the tycoon alleged malicious prosecution and sued him for millions of dollars. In 2014 the New York Observer, a newspaper owned by Mr Trump’s son-in-law and adviser, Jared Kushner, ran a lengthy hatchet job on him. “I did not realise it at the time,” he says, “but I was getting a preview of the scorched earth approach he takes to opposition.” + +Ten weeks into his term, Mr Trump is behaving much as Mr Schneiderman predicted. Among other affronts, he has tried to discredit the electoral process by making false claims about illegal voting and has peddled false allegations that Britain spied on him. He has failed to disengage convincingly from his business interests, or reveal the extent of them. He has signed cruel and amateurish immigration rules and, when they faced legal challenge, argued that his border policy was no business of the courts. According to the fact-checkers at the Washington Post, Mr Trump uttered 317 “false or misleading” statements in his first 63 days as president. “It’s been clear since he took office”, says Mr Schneiderman, who joined the attack on the immigration rules, “that this president has less regard for the rule of law and precedent and traditions than anyone in recent memory.” + +Yet although Mr Schneiderman’s estimation of the threat Mr Trump poses appears well judged, his sense of America’s vulnerability now looks pessimistic. The failure of the Republicans in the House of Representatives on March 24th to pass a health-care bill on which Mr Trump had staked his image as America’s closer-in-chief shows that the president cannot carry all before him. A vigorous repulse to his excesses from journalists, NGOs, companies and millions of protesters, as well as the states, has proved additionally inconvenient. America’s constitutional checks and balances appear to be holding up better than many feared. + +The defeat of the American Health Care Act (AHCA), it must be admitted, was hardly a textbook illustration of James Madison’s constitutional ideal that presidential ambition be frustrated by the powers of Congress. The bill’s aspiration, to begin the process of repealing Barack Obama’s health-care reform, known as Obamacare, is widely shared among Republicans. Under Mr Obama, House Republicans futilely voted to repeal Obamacare more than 50 times. Getting rid of it was one of Mr Trump’s main campaign pledges. The 30-odd right-wingers, known as the House Freedom Caucus, who opposed the repeal bill, causing Paul Ryan, the Republican Speaker of the House, to withdraw it, intended no rebuke to Mr Trump. Many caucus members admire him. Their target was Mr Ryan, whose pragmatism they abhor: they felt his bill, which they derided as “Obamacare-lite”, would not sufficiently reduce federal subsidies which help the poor buy health insurance. + +Not quite what Madison had in mind + + + +Regardless of their target, they dealt a blow to Mr Trump. He has promised to end the legislative dysfunction in Washington, DC, with his dealmaking skills. In the case of the AHCA, these consisted in threatening to launch primary challenges against his fellow Republicans unless they passed a bill which he appeared not to understand very well (“Mark Meadows, I’m coming after you,” he told the caucus’s North Carolinian leader, maybe jokingly). Perhaps he will recover some of his lost face, as Bill Clinton did after suffering his own health-care reform foul-up early in his presidency. But Mr Trump will have to acquire better negotiating skills. He could also do with lifting his approval ratings; according to polling by Gallup, only 35% of Americans think he is doing a good job, which is unlikely to strike fear into Mr Meadows. + +The debacle has forced Mr Trump to consider wooing Democratic congressmen (there is talk of him linking his tax reform plans, of which Democrats are sceptical, to his infrastructure plans, which they like), which would require him to moderate his behaviour. Some Republican senators, who have longer terms and more mixed electorates than their colleagues in the House, are already demanding he do so. Though the AHCA defeat did not in itself augur better congressional oversight of Mr Trump, the spectre that haunted Mr Schneiderman—a unified Republican government uncritically supporting a rogue president—is looking less threatening. + +Lawsuits, satire and social media + +The courts have provided a more straightforward check. Mr Trump’s immigration rules appeared to be an attempt to honour his campaign promise to keep out Muslims; they were disguised as counter-terrorism measures against high-risk nationalities in an effort to evade the constitutional bar on discriminating on the basis of religion. Both edicts were challenged by broad coalitions of states, NGOs and private firms and subsequently stayed by judges on procedural and constitutional grounds. The president impugned the legitimacy of the first obstructive beak, James Robart—a George W. Bush appointee whom Mr Trump described as a “so-called judge”. Even his own nominee to the Supreme Court, Neil Gorsuch, a Coloradan jurist, thought this too much. “When anyone criticises the honesty, the integrity or the motives of a federal judge, I find that disheartening,” he said during his Senate confirmation hearing on March 21st. + +The media, leaky bureaucrats and the millions who have flocked to rallies against his presidency (which, though dwindling, are still widespread) have provided such a barrage of extra-constitutional scrutiny that some think a new system of accountability is emerging. “We’re seeing a vastly expanded definition of checks and balances, and they seem to be working,” says Alan Dershowitz, a legal scholar. + +In a world worried about the rise of fake news, the best coverage of Mr Trump’s administration has been tremendous. The New York Times and Washington Post have had weekly scoops about the peculiar chumminess between its senior members and various Russians; the scandal has so far forced Michael Flynn to quit as national security adviser and Jeff Sessions, the attorney-general, to recuse himself from his department’s investigation into allegations that Mr Trump’s team colluded with Russian hackers during the campaign. Those revelations have also made it harder for Republican congressmen to ignore the issue, as some, including Devin Nunes, who heads the House intelligence committee, would clearly prefer (see article). + +Honed by decades of growing partisanship and low expectations of congressional oversight, the response to Mr Trump from NGOs, left-leaning and otherwise, has been similarly impressive. The American Civil Liberties Union, which sued the administration over both sets of immigration rules, received over $24m in online donations over the course of a recent weekend, more than six times what it normally expects to collect online in a year. For some, this is a continuation of previous struggles; to brief reporters on its plans to resist Mr Trump one environmental group dusts off a history of its (broadly successful) legal stand-offs with Mr Bush. + +Mr Dershowitz also points to less organised checks, including critical commentary on social media, disapproving foreign allies and merciless late-night comics: Mr Trump has perked up American satire and the career of Alec Baldwin (pictured). “It’s a more transient, not predictable or reliable, not visible or transparent system, which has its own dangers,” he says. “But in my view it will be strong enough to be a sufficient check on this presidency.” + +Still early days + + + +It is a sad reflection of the state of America that a quasi-constitutional role for “Saturday Night Live” could seem reassuring. The system that the founders created as a way for the different branches of government to counter each other’s excesses should not need shoring up by a posse of bloggers and disloyal civil servants. The constitutional frailty this reveals, and of which Mr Trump’s election is to some degree symptomatic, has in fact been evident for some time. + +It is over four decades since the historian Arthur Schlesinger warned, in “The Imperial Presidency”, of a post-war power grab by the executive branch “so spacious and peremptory as to imply a radical transformation of the traditional polity.” The book was a hit, but did nothing to interrupt a steady flow of powers to the White House which has continued under all the presidents since. As the executive opened up new domains for itself in setting pollution standards for industry, overseeing banking and even ordering the country to war, a clear congressional prerogative, the presidential bureaucracy ballooned. + +As it grew, it became increasingly politicised; under John F. Kennedy, 196 presidential appointments required Senate confirmation, now 1,212 do. And it became more centralised. In the 1930s Congress magnanimously permitted Franklin D. Roosevelt to maintain a staff of six “presidential assistants”; recent presidents have commanded an army of over 500 White House staffers, whose mission is to ensure the government bends to the president’s will, and that he gets all the credit when it does. This has transformed the character of government, from a semblance of well-advised policymaking to a relentless effort to fulfil presidential campaign promises. + +A space for authoritarianism + +At the expense of Congress, recent presidents have also assumed additional powers over foreign policy and civil liberties. In doing so they risk being checked by judges. But they have mitigated that possibility by assembling, in the office of the White House counsel, a battery of ingenious, Supreme Court-quality lawyers; Mr Obama employed almost 50. The result has been a proliferation of contentious legal precedents, extending the authority of the president, which in unscrupulous hands could amount to a toolkit for tyranny. Following Mr Bush’s and Mr Obama’s example, the president can order American citizens to be killed secretly overseas, detain foreign prisoners indefinitely without charge and try them on the basis of evidence that the state will not divulge. + +Despite spasms of concern, both liberals and conservatives have applauded this executive power grab. “I want to strengthen the current Democratic president,” said Newt Gingrich, when he was a bitterly partisan Republican Speaker of the House under Mr Clinton, “because he is the president.” Scholars of both stripes have often argued that the risks of overreach were justified by the president’s democratic prerogative to fulfil his mandate. The growing dysfunction in Congress, which has seen its lawmaking and oversight give way to shouty tribalism (for which Mr Gingrich deserves much blame) has meanwhile made that conclusion seem more natural. For if Congress will not pass laws, how else is the country to be governed? + +These constitutional evils reinforce each other. Congress, a body the Founding Fathers considered so dangerous that it needed splitting in two, is in its demoralised state especially susceptible to unthinking party allegiance. This has in turn worn away many of the democratic norms upon which the checks and balances depend. Despairing of Senate Republicans’ use of the filibuster to block Mr Obama’s appointees, for example, the Democrats scrapped the measure in 2013, except in the case of Supreme Court appointments. Now the Democrats are in the minority, vowing to block Mr Gorsuch, and the Republicans are likely to remove that last defence of scrutiny by the minority party in federal appointments. + +At the same time, a combination of vengeful partisanship, internet-based alternative realities and the primary system of nominating candidates, which promotes hardliners, is tilting American politics towards extremism. Put this together with the growth of executive power and the fraying of constitutional checks on it and the risks of something going seriously wrong in the White House are obvious. In 2010 Bruce Ackerman, a Yale legal scholar, predicted it was only a matter of time before America elected a “charismatic president to politicise the bureaucracy and run roughshod over the rule of law”. + +In this wider context, the constraints on Mr Trump look less reassuring. His presidency becomes a predicted step in a process of democratic decline which his unscrupulous leadership is likely to accelerate. To arrest that decline would take substantial reform, with new checks on the executive, a reinvigorated Congress and political parties freed from the thrall of hardliners—all unimaginable today. So it is appropriate to ponder how much damage Mr Trump could do, even if he remains constrained by the forces Mr Dershowitz and others find comforting. + +Most of his recent frustrations have been self-inflicted, which is in a way reassuring. Though Mr Trump is sometimes compared to the White House’s last big rule breaker, Richard Nixon, he appears much less competent. Nixon was a skilful, hardworking criminal; Mr Trump is a blowhard who even now seems unaware of the magnitude and complexity of the office he holds. Still, he and his advisers will get better at using the presidential toolkit, including its legal precedents and firepower. In the event of a threat to national security, for example, Mr Trump’s appetite for power and desire to be vindicated over his Islamophobic rhetoric could produce dire results. + +Oh, for the days of the snuffbox + +The Trump team already has plans to bring the presidential bureaucracy to heel. “The administrative state isn’t going to administer itself,” says a senior White House official. One plan, he suggests, is to send “tiger teams into the beast, to ask, ‘How have you implemented the wishes and policies of the president?’” Leakers, beware. + +How successful such tactics are may depend largely on Mr Trump’s political fortunes—which could be much better than many of his opponents assume. Even if his ratings remain low, the realities of a polarised electorate and a favourable electoral map mean that the Republicans may well retain both congressional houses in next year’s mid-term elections. Mr Trump will also have the chance to nominate over a 100 federal judges, perhaps including a second Supreme Court justice. Both developments could strengthen him considerably. If an FBI investigation into the Russia connection turned up something serious, a Republican congress would still be loth to impeach Mr Trump. + +Mr Trump’s contribution to the decay of democratic norms already appears vast. Each time he badmouths an institution or makes false claims about a predecessor, opponent or peer, America’s democratic framework takes a hit. Some of the damage may be permanent. A show of decency once mattered in American politics; then 63m Americans voted to elect as president a man they had heard boasting of his ability to assault women. It was also recently accepted that a sitting president must publish his tax returns and disengage from his business interests. Mr Trump, who has done neither, does not appear to have any problem with the profits flowing from his presidency. + +As the Washington Post has reported, he has spent almost a third of his time as president at a Trump-branded property, including his Mar-a-Lago estate in Florida, where club members have been treated to the sight of the president urgently discussing North Korean missile launches over salad. Because another of his presidential haunts, the Trump International hotel, a short walk along Pennsylvania Avenue from the White House, is also popular with foreign dignitaries, Mr Trump has been sued over an obscure clause of the constitution that forbids public servants from accepting fees or gifts from a foreign state. Some legal scholars have, rather valiantly, cited as precedent Benjamin Franklin’s seeking Congress’s approval before accepting a jewel-encrusted snuffbox from the king of France as a retirement gift. The distance and obscurity of the precedent illustrates the main difficulty of using the law to restrain the president’s behaviour. No one has ever seen anything like it. + +Perhaps Mr Trump will be adequately constrained nonetheless. The reassuringly trenchant responses to his excesses from the judiciary, states, bureaucracy and NGOs suggest a democracy more vital than some fear. It might even one day seem ridiculous that a figure as unserious as Mr Trump could have seemed so threatening. But even in that best case, it will take something more to restore America’s democratic system to a more foolproof state. It will require more than million-man marches or steadfast judges, a degree of national consensus on the way forward—which is the very thing that America most conspicuously lacks. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21719787-there-still-plenty-worry-about-americas-system-checks-and-balances-seems-be/print + + + +文章 章节 下一项 + + + + + +Briefing 章节 The Americas + + + + + +United States + + +Tax reform: The red and the brown + +Farming in the Midwest: Rhyme time + +Environmental policy: Down and dirty + +College protests: Bicker warning + +Trump and Russia: Never-ending story + +Lexington: Now for the hard part + +Briefing 章节 The Americas + + + + + +文章 章节 下一项 + + + + + +Brown suits galore + +Reforming taxes will not be easier than abolishing Obamacare + + +It will require a political will to abolish popular tax breaks that is lacking + + + +Mar 30th 2017 + + + + + +TO BRING House Republicans good luck in passing their replacement for the Affordable Care Act, Representative Pete Sessions of Texas wore a brown suit to the chamber, in honour of Ronald Reagan. After the vote was pulled from the House floor, Republicans in Washington moved on to the next big thing, which is tax reform. They may be about to prove again that dressing like the Gipper is easier than governing like him. Though there has long been some bipartisan agreement that both corporate and individual income-tax rates could be cut and loopholes eliminated, Congress has not pulled off a tax reform of the type now being contemplated since 1986. And that one almost failed. + +Compared with other rich countries, the most striking thing about tax in America is its complexity. Since that 1986 tax reform the number of carve-outs in the tax code has multiplied, part of a bigger change in the way Congress does business. Where once the passage of bills was smoothed by including federal money for pet projects in congressmen’s districts, tax breaks are now the preferred lubricant. The growth of the federal tax code, which has tripled in length in the past 30 years, is often cited as proof that the country is overtaxed. But its size reflects all those special tax breaks. For individuals, the exemptions turn a tax system whose headline rates are redistributive, by rich-world standards, into one which is not. + + + +The same is true of company taxation. The top marginal rate, of 39%, is an outlier by international standards (the OECD average is 25%). In some ways this was made worse by the 1986 reform, which shifted taxes from individuals onto companies, which at the time seemed less able to avoid them. Although the high top rate may deter investment, it does not reflect the tax bill American companies end up paying. Between 2006 and 2012, two-thirds of companies paid no federal tax, according to a study by the Government Accountability Office (GAO). Large companies that were profitable paid a federal tax of 14% on their net income between 2008 and 2012, according to the GAO, a rate that rose to 22% once state and local taxes were included. In the case of both individual and company taxes, Republicans tend to look at the headline rates and agree they need to come down, which is the basis for the optimism among their caucus that tax is easier than health care. But those rates are not what they seem. + +Bringing them down would require some combination of closing exemptions, increasing the deficit and borrowing. The House tax plan drawn up by Paul Ryan, the Speaker, and Kevin Brady, who chairs the Ways and Means Committee, proposes getting rid of some exemptions granted to taxpayers but leaves two of the biggest—the deductions for mortgage interest and for charitable giving—alone. It is also silent on what would be one of the hardest parts of a tax reform: the deduction for state taxes. Some states, like Florida, have no personal income tax. Floridians therefore do not receive a state income-tax deduction when they pay federal income tax. California does have a state income tax, with a top marginal rate of 13.3%. Its representatives are therefore keen on the deduction. The Ryan-Brady plan also counted on a $1trn saving from repealing Obamacare, which will not now materialise, and means more deductions would have to be eliminated. + +This is where the politics is hardest, and lobbyists have the greatest purchase. Over 230 House Republicans have signed a pledge not to vote for any tax rise, giving them cover to reject a bill that offends constituents or donors by killing a tax break. + +That leaves cutting taxes by cutting spending, or adding to the debt and deficit. Republicans tend to worry less about prudent budgeting when they control the White House. The next indicator of whether this pattern will hold comes at the end of April, the deadline for a new bill to fund the federal government’s operations. A shutdown then would suggest there are enough deficit hawks among the House Republicans to make an unfunded tax cut hard (in 1986, Reagan threatened to veto any tax reform that reduced government revenue). If there is no shutdown, as seems likelier, then assume that the party will be content to make the deficit great again. + +There are limits to how deep the cuts could be, though. Under current congressional rules, Democrats have enough members in the Senate to force Republicans to pass a bill that does not increase the deficit after ten years. Republicans passed just such a time-limited tax cut when George W. Bush was president. A repeat of that, perhaps with some favourable tax treatment for firms that repatriate foreign profits, is the lowest common denominator on tax policy for the Republican caucus. Expect something more like that. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21719792-it-will-require-political-will-abolish-popular-tax-breaks-lacking-reforming/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Farming in the Midwest + +How bad is this farm slump? + + +Farmers are making comparisons with the 1980s bust + + + +Mar 30th 2017 | CHICAGO + + + + + +THE farm crisis in the 1980s left a deep mark on the Midwest. It was the worst downturn in farming since the Depression. After an unprecedented boom in demand for wheat ended, thousands of farmers faced ruin. Agricultural banks and makers of farming equipment were washed away by a wave of bankruptcies. Midwestern farmers look at parallels with the 1980s whenever their cyclical industry is heading downwards. Prices for corn, wheat and other agricultural commodities started to fall after their peak in 2013, since when the comparison has been raised again. + +Exports of wheat and soyabeans nearly tripled in the 1970s, thanks to the weakness of the dollar after America abandoned the gold standard in 1971, and the Russian wheat deal in 1972, when America sold the Soviet Union about 440m bushels of wheat for around $700m. Until then the Soviets had imported hardly any American foodstuffs. The sudden bonanza was such that farmers bought more and more land, with more and more debt. This went well until interest rates jumped up, the dollar strengthened and exports to the USSR were halted after the invasion of Afghanistan. Farmers’ biggest asset, land, dropped in value, which in turn increased their liabilities until they became so big that they could not stay in business. + + + +The latest farming boom started in 2006, when demand for crops such as maize (corn), sugar cane and soyabeans generated record profits thanks to demand for (maize and sugar-based) ethanol, and the then skyrocketing Chinese economy. American farmers again started to farm more land. They also used more yield-boosting technology—as did farmers in other parts of the world. A record 179m productive acres were brought in worldwide since 2006, says Dan Basse at AgResource, a research firm. Things started to turn sour after a year of record profits in 2013, when the rapidly growing global supply of grains outstripped demand, the appetite for ethanol stagnated and the Chinese economy slowed down. American net farm revenue dropped from $120 billion in 2013 to an estimated $62 billion this year. + +But unlike the previous big crisis, the balance-sheets of many farmers are robust. Moreover, interest rates are still low and demand remains steady even if it isn’t growing much any more. And although the values for farmland dropped last year for only the second time since the 1980s, these drops were far less dramatic than they were back then: the value of land in Indiana, for instance, fell nearly 60% between 1981 and 1986. “This boom was not as strong and we don’t anticipate this crisis to be as severe as in the 1980s,” says Christopher Hurt at Indiana’s Purdue University. + +Even so, farmers have reason to be anxious. The two things that matter most to them, weather and government policy, are unpredictable. “Monkeying around with trade deals makes us nervous,” says Brent Gloy, who farms in south-western Nebraska. America exports 20% of its farm production; its top export markets are Canada, China and Mexico. + +Populist politics were born in a Midwestern farm-crash at the end of the 19th century. That 21st-century populism should come along at the same time as an agricultural slump is further proof of what Mark Twain knew: history rhymes. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21719813-farmers-are-making-comparisons-1980s-bust-how-bad-farm-slump/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Coal and carbon + +The president’s executive orders won’t do much for coalminers + + +But they could harm the planet, by undermining co-operation with other countries + + + +Mar 30th 2017 + + + + + +“YOU’RE going back to work,” Donald Trump told miners on March 28th. Gathered in the Environmental Protection Agency (EPA), they saw him sign an executive order to review and revise Barack Obama’s flagship energy policy, the Clean Power Plan. Among other measures, the order also requests the reversal of a moratorium on coal-leasing on federal lands and dispenses with rules to curb methane emissions from oil and gas sites. It rolls back internal rules for government agencies on how to tot up the social costs of environmental damage, too. + +The Clean Power Plan was unveiled in August 2015. It directed states to work out how to cut emissions from power plants to avoid pollution equivalent to the exhausts from 80m cars by 2030. The policy was meant to get America almost halfway to meeting its pledge to cut emissions by 26-28% by 2025, as measured against 2005 levels, for the Paris agreement (which seeks to limit global warming to “well below” 2°C above pre-industrial temperatures). But legal challenges from 27 states and several companies saw the Clean Power Plan put on hold by the Supreme Court a little over a year ago. + + + +Because it has never been implemented, the plan’s demise hurts less than environmental campaigners suggest. Around 30 states already require power companies and utilities to increase their use of renewable energy over the next decade. And states with economic heft, such as California and New York, are formidable climate champions. The Golden State has planned for its emissions to fall by 40%, against 1990 levels, by 2030. Even in Republican strongholds such as Texas and Oklahoma, congressional subsidies have helped wind projects to thrive. + +As America’s energy mix changes, new coal-leasing on federal lands is unlikely to bring back jobs as Mr Trump claims. In 2006, coal generated 49% of America’s electricity; by 2015 it provided 30%. Six coal-fired plants have closed since the presidential election. And as for jobs, efficiency, rather than regulation, lies behind most of the losses. America produces almost 50% more coal than it did in 1940, but employs just 13% or so of the miners, according to the Bureau of Labour Statistics. + +Of the other measures, killing rules to limit methane emissions from oil and gas sites is particularly worrying. Carbon dioxide stays in the atmosphere for more than 500 years; methane for only 12. But methane is many times more potent during that time. And perhaps as much as 2.5% of the stuff flowing through American supply chains escapes. If current plans are approved in Congress, the EPA will have far less cash with which to detect big spurts in the greenhouse gas, like the one which occurred last year in Los Angeles. + +Squashing the EPA pleases those conservatives who believe the agency has overreached. But Mr Trump stopped short of authorising two other policies: instructing the EPA to reconsider its “endangerment finding” of 2009—which lets it regulate carbon-dioxide emissions in line with an earlier Supreme Court ruling—and withdrawing from the Paris agreement. + +Under that deal, countries need to decide on how to measure the impact of their plans to reduce carbon-dioxide emissions by 2018, and then set themselves new targets by 2020. Both processes will be less open and less exacting if the world’s second-largest polluter neither helps lead them nor bothers to meet its commitments. Nevertheless, the falling cost of renewables and the severity of urban air pollution are among reasons why countries such as India and China will continue down a greener path anyway. That may provide a little comfort to the scientists and officials whose own efforts have been undone with a stroke of Mr Trump’s pen. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21719824-they-could-harm-planet-undermining-co-operation-other-countries/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Bicker warning + +Colleges with rich students see more protests against speakers + + +Disinvitation campaigns correlate with high SAT scores and wealthy parents + + + +Mar 30th 2017 + + + + + +YALE UNIVERSITY is perhaps the epicentre of the campus activism so voguish today. Two professors stepped down from pastoral roles last year after a controversy about whether students should police their own offensive Halloween costumes, rather than letting the university do it for them, provoking protests from hundreds of students. Yale is currently debating whether to discontinue using the word “freshman” in favour of the more gender-neutral term “first-year”. + +That Yale is also one of America’s most prestigious universities is not coincidental. Across the country, colleges with richer, high-achieving students are likelier to see protests calling for controversial speakers to be disinvited (see chart). Recent flare-ups at Middlebury College, which tried to prevent Charles Murray, a conservative writer, from speaking and left the professor interviewing him with a concussion, and at the University of California, Berkeley which had to cancel a speech by Milo Yiannopoulos, an over-exposed provocateur, are but the tip of a larger pile. + + + +Following the work of Richard Reeves and Dimitrios Halikias of the Brookings Institution, The Economist analysed data on student attempts to disinvite speakers since 2013 collected by the Foundation for Individual Rights in Education, an advocacy group. Matching those numbers with information on SAT scores and wealth, measured as the fraction of students with one-percenter parents, shows statistically significant correlations. Even among selective universities, those with better-credentialed and wealthier students were likelier to mount protests. They were also likelier to mount successful attempts to block speakers. + +This could be because elite students attract controversial speakers more often. Mr Reeves, who is also a biographer of John Stuart Mill, reasons otherwise. America’s best universities contain bubbles in which “certain left-of-centre tenets, largely around identity politics, take on the weight of an orthodoxy,” he says. Mill, who wrote that squashing freedom of expression results in “a kind of intellectual pacification” that sacrifices “the entire moral courage of the human mind,” wouldn’t have liked it very much. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21719814-disinvitation-campaigns-correlate-high-sat-scores-and-wealthy-parents-colleges/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +A guide to the investigations + +Trump and Russia, the never-ending story + + +The election-meddling saga may never be concluded + + + +Mar 30th 2017 | ATLANTA + + + + + +CHARGES of collusion over an inquiry into collusion, probes and counterprobes: the swirl of hearings and allegations stemming from Russian meddling in the presidential election is becoming wearyingly hard to follow—which, for some, may be the point. This week, after a bizarre episode in which Devin Nunes, chairman of the House Intelligence Committee, met a source on the White House grounds, then rushed to brief Donald Trump about his supposedly explosive findings, senior Democrats, and even the odd Republican, called for him to recuse himself from his committee’s investigation. (He refused.) The stunts and partisan rows make it seem worryingly unlikely that what are, in effect, whispers of treason can be either substantiated or dispelled. + +Be clear what the real allegation is, and what it is not. It is not that Vladimir Putin stole the election. No sane observer thinks the Kremlin persuaded 63m Americans to vote for Mr Trump. Even the milder version of that claim—that Russia’s propaganda and its hacking of Democratic e-mails tipped the result in tight swing states—cannot be either confirmed or refuted. That unverifiability may explain why Mr Trump and his supporters like to pretend this is the issue at stake; likewise they stress that Russia’s electronic interference did not alter the election tallies. The real fear is narrow and different. As James Comey, director of the FBI, told Mr Nunes’s committee on March 20th, it is that individuals in Mr Trump’s campaign may have co-ordinated with the Russians in what, according to America’s intelligence agencies, was a bid to help him win the presidency. That would be a scandal whatever impact the Russian antics had. Or it ought to be. + + + +The suspicion is not baseless. To recap the mounting, if circumstantial, evidence: Michael Flynn misled Mike Pence, the vice-president, about his chats during the presidential transition with Sergei Kislyak, the Russian ambassador. Mr Flynn said they didn’t discuss sanctions, but they did; since he was forced to resign as national security adviser, more details have emerged about his paid speechmaking for Russian companies (and lobbying for Turkish interests). Paul Manafort stopped being Mr Trump’s campaign manager amid consternation over his ties to Viktor Yanukovych, the disgraced ex-president of Ukraine who has been given refuge in Russia. According to the Associated Press, Mr Manafort was once retained by Oleg Deripaska, a tycoon close to the Kremlin, allegedly undertaking “to benefit the Putin government”. Mr Deripaska has denounced that report as a “malicious assertion and lie”. + +Meanwhile Roger Stone, a longtime associate of Mr Trump, occasionally seemed to have advance notice of Democratic e-mails published last year by WikiLeaks, the portal through which, according to Mr Comey and others, Russian hackers released their loot. Mr Stone has admitted being in indirect contact with Julian Assange, WikiLeaks’ founder, and exchanging messages with Guccifer 2.0, an online persona considered a front for Russian spooks. Carter Page, once named as an adviser by Mr Trump, made an interestingly timed trip to Moscow last July. Jeff Sessions, the attorney-general, recused himself from all Russia-related inquiries after failing to disclose his own meetings with Mr Kislyak at his confirmation hearing. During the transition Jared Kushner, Mr Trump’s son-in-law and consigliere, met both Mr Kislyak and (it has emerged) Sergei Gorkov, the head of a Russian state bank placed under sanctions by Barack Obama’s administration. The New York Times has reported further leads from intercepted Russian communications and friendly European spies. + +As the White House says, nothing in the public domain so far amounts to collusion. All those involved deny wrongdoing; many have offered to testify to Congress. Contact with foreign diplomats is not a sin. To some, joining these unrelated dots into a picture of conspiracy is a 21st-century form of reds-under-the-bed hysteria. + +The trouble is, some of the denials—such as the absurd protestation by Sean Spicer, Mr Trump’s press secretary, that Mr Manafort “played a very limited role” in the campaign—have made the picture look worse. So have the attempted distractions, chiefly Mr Trump’s debunked ravings about Mr Obama wiretapping Trump Tower. After Mr Nunes’s strange visits to the White House, during which he says he acquired, then relayed, information that some in the Trump camp had been caught up in legal monitoring of foreign targets, Mr Trump said he felt “somewhat” vindicated over the wiretapping nonsense—though even Mr Nunes has repudiated it. + +In short, Mr Trump’s team are behaving like men with something to hide. At the bottom of the hunch is his own rhetoric: a candidate, and now a president, who has been quick to criticise or insult judges, Republican senators and his own intelligence services, but never Mr Putin. This despite the Russian president’s inviting status as a bogeyman, especially among Republicans, and despite the embarrassment that Mr Trump’s affinity for him has entailed. + +The rationale offered by the president’s advisers is that his long-standing aim is to do a deal with Mr Putin in American interests, by, for example, fighting Islamic State together. Any such scheme may now be scuppered: a Republican member of Congress said this week that a “grand bargain” with Russia was “politically impossible”. Whatever its merits—and they are slim—it is a stretch to believe Mr Trump farsightedly nurtured the plan at grave political cost to himself. He has not extended the same politesse either to erstwhile allies, such as Germany, or to adversaries, such as China. + +Hear no lies + +So long as Mr Trump’s finances remain opaque, the role of Russian money in his businesses—and his decision-making—will be a source of speculation. Maybe he genuinely admires Mr Putin. Another explanation for his bilious rage over the Russian story, which he calls “fake news”, is that he loathes slights of any kind: like the underwhelming crowds at his inauguration, the focus on Russian meddling seems to wound his pride. At the moment, the line between psychology and skulduggery is impossible to draw definitively. Nor do the ongoing inquiries offer early hope. + +Mr Nunes, a former aide to Mr Trump, seemed to dismiss the idea of collusion before his committee’s hearings began; he and his fellow Republicans have since concentrated on excoriating the leaks that showed up Mr Flynn and others. He postponed a hearing this week that was to feature Sally Yates, whom Mr Trump fired as acting attorney-general in January. The Washington Post reported that the White House tried to shut down her testimony; Mr Spicer denied that. In any case, the committee’s work has stalled. The parallel Senate inquiry is less tarnished: its chairman, Richard Burr, and Mark Warner, his Democratic counterpart, put up a united front at a press conference on March 29th. + +Otherwise there is the FBI, which Mr Comey said had been on the case since last July. Counter-intelligence is part of its remit. It has, of course, looked into abuses in the White House before, from Richard Nixon’s, to bribery allegations against Spiro Agnew, his vice-president, to the Iran-Contra affair during Ronald Reagan’s presidency and the White House Travel Office during Bill Clinton’s. But the confluence of these two tasks—a counter-intelligence operation that has dragged in the denizens of the White House itself—is unprecedented. It is an extraordinarily delicate job, which Mr Comey hinted may take many months. + +So might the other solutions urged by those impatient with the multiple existing ones. The options include an independent commission, like that which examined the terrorist attacks of September 11th 2001, or a congressional panel like the Church Committee, which peered into intelligence-service methods in the 1970s. Both would require bipartisan consent. Some Democrats are agitating for a special prosecutor, who since Mr Sessions’s recusal would be appointed by his deputy. The history of such assignments suggests that fix would not be quick, either. + +All inquiries, current and putative, face two further problems. First, conclusive proof may be elusive. (At least for America: if it exists, the Russians may have it.) Eyebrow-raising meetings may come to light, but not their content. Russian power is slippery and tentacular, often operating through businessmen instead of officials. Especially given the business interests of Mr Trump’s team, splitting treachery from mere venality may be tough. The second problem arises from a purely domestic pathology, for which Mr Putin can take no credit: feverish partisanship may lead Americans to differ on the gravity of whatever is found. For example, to some Republicans tacit foreknowledge of e-mail releases might seem a price worth paying for seeing off Hillary Clinton. + +Mr Trump may be fully exonerated. The opposite may happen. But there are two other, dismaying possibilities. His administration may be condemned in the eyes of some Americans for tactics others consider forgivable. Or—perhaps most likely of all—it may be stained, but not capsized, by never-ending inquiries and suspicions that are neither proven or allayed. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21719820-election-meddling-saga-may-never-be-concluded-trump-and-russia-never-ending-story/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Lexington + +Donald Trump redrew the map to win office. He’s now lost + + +Thinking about President Trump as il Presidente or sua Eccellenza + + + +Apr 1st 2017 + + + + + +IF DONALD TRUMP were a European politician, the structural flaws that threaten his presidency would be easy to see. If President Trump were sua Eccellenza, his great challenge would be the mismatch between the electoral coalition that (narrowly) carried him to victory and the collection of parties that he needs in order to pass laws. It is not hard to imagine the factions that might elect a Signor Trump in a country with dozens, rather than two, major political parties. On the right, his most ardent voters might come from a Law and Order Party, a Small Business Party, and a Christian Nationalist Party (with notably fierce views on Muslim immigration). Redrawing the electoral map, he might also attract votes from left-leaning parties hostile to globalisation and happy with hefty doses of state intervention: a Pensioner’s Union, perhaps, and an Agrarian and Industrial League. + +Alas for il Presidente Trump, in this thought-experiment an overlapping but subtly different coalition won the most recent congressional elections: a “Republican” majority dominated by a pro-business Conservative Party, a National Party (led by defence hawks), a Christian Values Party and a shrink-the-government Taxpayers’ League. The members of that congressional majority are both supportive of the president and wary of him. They are also quite capable of voting down his proposals—not least because each faction had a presidential candidate it preferred. + + + +In the real world of Washington, DC, in the spring of 2017, some Trump aides describe tensions between their boss and congressional Republicans in strikingly similar terms. “The Republican Party thinks they won the election with Donald Trump. No, Donald Trump won the election despite the Republican Party,” says a White House official. + +America’s two-party system has long concealed regional and political divisions. Trump admirers go further. They argue that the president has redrawn the partisan map of America in interesting and potentially constructive ways, summoning into being a new centre-right coalition that feels the pain of millions of former Democratic voters, notably working-class whites from “forgotten” rustbelt towns and counties. The political map that elects members of Congress reflects older partisan geographies. + +Such Trump admirers have a point. They are correct that 2016 was a year in which old electoral coalitions crumbled and potential new ones came into view. They are also right that the two main party establishments feel tired, disunited and out of touch. If members of Congress were willing to learn the rules of coalition politics, an optimist might see opportunities for creative politicians to create fresh alliances and solve some intractable policy puzzles. + +Neither Congress nor the president seem willing to learn the ways of fragmented coalition politics, Europe-style. Rule One is that no faction gets everything it wants—success requires understanding the trade-offs that lie at the heart of every hard dispute, and trying to give each faction a win. Today’s Congress, under unified Republican control, sees politics differently. On March 24th the Speaker of the House of Representatives, Paul Ryan, had to abandon a bill that began the repeal of the Obamacare health law, after his Republican majority split three ways. + +One lesson of the health bill debacle is that too many members of Congress and of the Republican Party are still playing winner-takes-all politics. Mr Ryan blames the failure of the House bill to repeal and replace Obamacare on the “growing pains” of the first unified Republican government in ten years, and in particular the hard-right House Freedom Caucus of about 30 members who remained in “opposition-party mode”. True, the Freedom Caucus are absolutists, but others also share blame. + +Mr Trump has spent months telling voters that hard problems are easy to solve and that trade-offs can be avoided. The politics of health care divide Americans. They expose gulfs between those who favour more redistribution or less. They split those who think adults should be free to choose lavish, skimpy or no insurance, from those who think that medical care is a right which government should guarantee. Mr Trump wishes such divisions away, promising a “terrific” Obamacare replacement that would cost less and offer “insurance for everybody”. + +Populism collides with reality + +The plan written by Mr Ryan and endorsed by Mr Trump did not cover everybody. It created winners (the rich, the young and healthy) and a lot of losers (older, sicker folk, and most of the additional 24m people who, it is estimated, would be uninsured by 2026). Democrats and moderate Republicans from swing districts called it shockingly ungenerous, while hardline conservatives denounced it as another government handout. Rather than broaden its appeal, Mr Trump and Republican leaders made the bill more extreme to woo hardliners, stripping away rules stating that policies must cover such basic needs as hospitalisation or preventive care, including vaccines and cancer screening. When factions remained dug in, Mr Ryan and Mr Trump pulled the bill. + +Trump supporters cannot gloat. When called on to honour his health-care promises, the president lacked the patience to study his own plan and negotiate. Instead, reports have him asking aides: “Is this really a good bill?” even as he demanded a take-it-or-leave it vote in the House. When that failed, Mr Trump blamed the far right, while predicting that soon Obamacare “will explode”, forcing Democrats to help craft a replacement. + +The next item on Mr Trump’s agenda, tax reform, is just as divisive. Again the president brags that he will pull off “really fantastic” tax cuts that leave all sides happy—even as special interests and factions gather to prove him wrong. With a better man in the White House and a lot of luck this could be a remarkable moment, in which new coalitions are formed and political logjams broken. That moment is being squandered. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21719770-thinking-about-president-trump-il-presidente-or-sua-eccellenza-donald-trump-redrew/print + + + +上一项 文章 章节 下一项 + + + + + +United States 章节 Asia + + + + + +The Americas + + +Cuba: Stuck in the past + +Canada’s new rules of war: When to shoot a child soldier + +Bello: Upgrading Brazil’s political class + +United States 章节 Asia + + + + + +文章 章节 下一项 + + + + + +Sun, sand and socialism + +What the tourist industry reveals about Cuba + + +The revolutionary economy is neither efficient nor fun + + + +Apr 1st 2017 | HAVANA + + + + + +TOURISTS whizz along the Malecón, Havana’s grand seaside boulevard, in bright-red open-topped 1950s cars. Their selfie sticks wobble as they try to film themselves. They move fast, for there are no traffic jams. Cars are costly in Cuba ($50,000 for a low-range Chinese import) and most people are poor (a typical state employee makes $25 a month). So hardly anyone can afford wheels, except the tourists who hire them. And there are far fewer tourists than there ought to be. + +Few places are as naturally alluring as Cuba. The island is bathed in sunlight and lapped by warm blue waters. The people are friendly; the rum is light and crisp; the music is a delicious blend of African and Latin rhythms. And the biggest pool of free-spending holidaymakers in the western hemisphere is just a hop away. As Lucky Luciano, an American gangster, observed in 1946, “The water was just as pretty as the Bay of Naples, but it was only 90 miles from the United States.” + + + +There is just one problem today: Cuba is a communist dictatorship in a time warp. For some, that lends it a rebellious allure. They talk of seeing old Havana before its charm is “spoiled” by visible signs of prosperity, such as Nike and Starbucks. But for other tourists, Cuba’s revolutionary economy is a drag. The big hotels, majority-owned by the state and often managed by companies controlled by the army, charge five-star prices for mediocre service. Showers are unreliable. Wi-Fi is atrocious. Lifts and rooms are ill-maintained. + +Despite this, the number of visitors from the United States has jumped since Barack Obama restored diplomatic ties in 2015. So many airlines started flying to Havana that supply outstripped demand; this year some have cut back. Overall, arrivals have soared since the 1990s, when Fidel Castro, faced with the loss of subsidies from the Soviet Union, decided to spruce up some beach resorts for foreigners (see chart). But Cuba still earns less than half as many tourist dollars as the Dominican Republic, a similar-sized but less famous tropical neighbour. + + + +With better policies, Cuba could attract three times as many tourists by 2030, estimates the Brookings Institution, a think-tank. That would generate $10bn a year in foreign exchange, twice as much as the island earns now from merchandise exports. Given its colossal budget deficit, expected to hit 12% of GDP this year, that would come in handy. Whether it will happen depends on two embargoes: the one the United States imposes on Cuba and the one the Castro regime (now under Fidel’s brother, Raúl) imposes on its own people. + +The United States embargo is a nuisance. American credit cards don’t work in Cuba, and Americans are not technically allowed to visit the island as tourists. (They have to pretend they are going for a family visit or a “people-to-people exchange”.) Mr Obama allowed American hotel chains to dip a toe into Cuba; one, Starwood, has signed an agreement to manage three state-owned properties. + +Pearl of the Antilles, meet swine + +But investment in new rooms has been slow. Cuba is cash-strapped, and foreign hotel bosses are reluctant to risk big bucks because they have no idea whether Donald Trump will try to tighten the embargo, lift it or do nothing. On the one hand, he is a protectionist, so few Cubans are optimistic about his intentions. On the other, pre-revolutionary Havana was a playground where American casino moguls hobnobbed with celebrities in raunchy nightclubs. Making Cuba glitzy again might appeal to the former casino mogul in the White House. + +The other embargo is the many ways in which the Cuban state shackles entrepreneurs. The owner of a small private hotel complains of an inspector who told him to cut his sign in half because it was too big. He can’t get good furniture and fixtures in Cuba, and is not allowed to import them because imports are a state monopoly. So he makes creative use of rules that allow families who say they are returning from abroad to repatriate their personal effects (he has a lot of expat friends). “We try to fly low under the radar, and make money without making noise,” he sighs. + +Cubans with spare cash (typically those who have relatives in Miami or do business with tourists) are rushing to revamp rooms and rent them out. But no one is allowed to own more than two properties, so ambitious hoteliers register extra ones in the names of relatives. This works only if there is trust. “One of my places is in my sister-in-law’s name,” says a speculator. “I’m worried about that one.” + +Taxes are confiscatory. Turnover above $2,000 a year is taxed at 50%, with only some expenses deductible. A beer sold at a 100% markup therefore yields no profit. Almost no one can afford to follow the letter of the law. For many entrepreneurs, “the effective tax burden is very much a function of the veracity of their reporting of revenues,” observes Brookings, tactfully. + +The currency system is, to use a technical term, bonkers. One American dollar is worth one convertible peso (CUC), which is worth 24 ordinary pesos (CUP). But in transactions involving the government, the two kinds of peso are often valued equally. Government accounts are therefore nonsensical. A few officials with access to ultra-cheap hard currency make a killing. Inefficient state firms appear to be profitable when they are not. Local workers are stiffed. Foreign firms pay an employment agency, in CUC, for the services of Cuban staff. Those workers are then paid in CUP at one to one. That is, the agency and the government take 95% of their wages. Fortunately, tourists tip in cash. + +The government says it wants to promote small private businesses. The number of Cubans registered as self-employed has jumped from 144,000 in 2009 to 535,000 in 2016. Legally, all must fit into one of 201 official categories. Doctors and lawyers who offer private services do so illegally, just like hustlers selling black-market lobsters or potatoes. The largest private venture is also illicit (but tolerated): an estimated 40,000 people copy and distribute flash drives containing El Paquete, a weekly collection of films, television shows, software updates and video games pirated from the outside world. Others operate in a grey zone. One entrepreneur says she has a licence as a messenger but wants to deliver vegetables ordered online. “Is that legal?” she asks. “I don’t know.” + +Cubans doubt that there will be any big reforms before February 2018, when Raúl Castro, who is 86, is expected to hand over power to Miguel Díaz-Canel, his much younger vice-president. Mr Díaz-Canel is said to favour better internet access and a bit more openness. But the kind of economic reform that Cuba needs would hurt a lot of people, both the powerful and ordinary folk. Suddenly scrapping the artificial exchange rate, for example, would make 60-70% of state-owned firms go bust, destroying 2m jobs, estimates Juan Triana, an economist. Politically, that is almost impossible. Yet without accurate price signals, Cuba cannot allocate resources efficiently. And unless the country reduces the obstacles to private investment in hotels, services and supply chains, it will struggle to provide tourists with the value for money that will keep them coming back. Unlike Cubans, they have a lot of choices. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21719812-revolutionary-economy-neither-efficient-nor-fun-what-tourist-industry-reveals-about/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Hard rules for rotten wars + +When is it OK to shoot a child soldier? + + +Canada writes rules for troops who face armed nine-year-olds + + + +Mar 30th 2017 | OTTAWA + + + + + +ONE of the worst dilemmas soldiers face is what to do when they confront armed children. International law and most military codes treat underage combatants mainly as innocent victims. They offer guidance on their legal rights and on how to interrogate and demobilise them. They have little to say about a soul-destroying question, which must typically be answered in a split second: when a kid points a Kalashnikov at you, do you shoot him? Last month Canada became the first country to incorporate a detailed answer into its military doctrine. If you must, it says, shoot first. + +Such encounters are not rare. Child soldiers fight in at least 17 conflicts, including in Mali, Iraq and the Philippines. Soldiers in Western armies, sometimes acting as peacekeepers, have encountered fighters as young as six on land and at sea. More than 115,000 young combatants have been demobilised since 2000, according to the UN. For the warlords who employ them, children offer many advantages: they are cheap, obedient, expendable, fearless when drugged and put opponents at a moral disadvantage. Some rebel armies are mostly underage. + + + +In 2000 a group of British peacekeepers in Sierra Leone who refused to fire on children armed with AK-47s were taken hostage by them. One paratrooper died and 11 others were injured in their rescue. Soldiers who have shot children sometimes suffer from crippling psychological wounds. A Canadian who protected convoys in Afghanistan from attack by young suicide-bombers has not been able to hug his own children since he came home four years ago. Some soldiers have committed suicide. “We always thought it was the ambush or the accident that was the hardest point” of a war, said Roméo Dallaire, a retired Canadian general, in testimony before a parliamentary hearing on military suicides in March. In fact, the “hardest one is the moral dilemma and the moral destruction of having to face children.” + +The Geneva Convention and other international accords prohibit attacking schools, abducting children and other practices that harm them. But they do not tell soldiers what to do when they confront children as combatants, making self-defence feel like a war crime. On March 2nd Canada adopted a military doctrine that explicitly acknowledges soldiers’ right to use force to protect themselves, even when the threat comes from children. “A child soldier with a rifle or grenade launcher can present as much of a threat as an adult soldier carrying the same armament,” it says. It is based in part on research by the Child Soldiers Initiative, an institute founded by Mr Dallaire that works towards ending the use of children as fighters. + +The new doctrine goes well beyond the moment of confrontation. Intelligence officers, it says, should report on the presence of child soldiers and how they are being used. Soldiers deployed in areas with child fighters should be prepared psychologically, trained to handle confrontations with kids and assessed by psychologists when they return. The instruction suggests ways to ensure that killing children is a last resort. It recommends shooting their adult commanders to shatter discipline and prompt the youngsters to flee or surrender. It warns against the use of lightly armed units, which are vulnerable to “human-wave” attacks by children. + +The authors of the new directive seem to be aware that a policy to shoot child soldiers even in self-defence could provoke outrage. So far, human-rights groups have expressed understanding. Canada is trying to strike a balance between treating children as innocents and recognising them as battlefield threats, says Jo Becker, a children’s-rights specialist at Human Rights Watch in New York. Britain is considering guidelines of its own, and other countries may follow. Canada may soon put its doctrine to the test. Its government has promised to send 600 troops on a three-year peace mission to Africa. It has not revealed yet where exactly they will go. Wherever it is, they are likely to meet gun-toting children. By acknowledging their right to defend themselves, Canada’s government may lessen the trauma of those forced to fight the youngest warriors. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21719821-canada-writes-rules-troops-who-face-armed-nine-year-olds-when-it-ok-shoot-child/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Bello + +Upgrading Brazil’s political class + + +A scandal-ridden congress must reform itself + + + +Mar 30th 2017 + + + + + +“DECENCY now!” That slogan, on a banner at a demonstration in São Paulo on March 26th, sums up what Brazilians want from their politicians. They have come to expect the opposite. Rodrigo Janot, the chief prosecutor, has asked the supreme court to open 83 investigations into politicians whom he suspects of taking part in a scheme to extract billions of dollars in bribes from construction firms, which in turn benefited from inflated public contracts. Eight ministers in the cabinet of President Michel Temer, the Speakers of both houses of congress and grandees from all the main parties are reportedly on the list. (All deny wrongdoing.) That adds to the dozens of officials already caught up in the Lava Jato (“Car Wash”) investigations into the scandal, which is centred on Petrobras, the state-controlled oil company. + +Revelations of misdeeds by politicians have turned Brazilians’ attention to the question of how to elect better ones. Today’s system encourages political diversity at the expense of quality. Any new party that secures 486,000 signatures (from a pool of 143m voters) has a right to money from the state and to free television time. There is no nationwide vote threshold for electing a party to congress. Lower-house deputies, like senators, represent whole states rather than districts, which makes campaigns expensive, encourages corruption and weakens bonds between voters and their representatives. + + + +The drafters of Brazil’s constitution set up the hyper-proportional system in 1988 to ensure that all voices in the continent-sized country would be heard. It has led to cacophony. One study of legislatures in 137 countries elected from 1919 to 2015 found that the lower house of Brazil’s current congress is the most fragmented anywhere over that period. Most of its 28 parties have no ideology or detailed programme. Nearly half of Brazilian voters forget which candidate they picked barely a month after casting their ballots. + +Presidents dare not lose track. They must master unruly coalitions. Governments buy politicians’ votes with favours. The Petrobras bribery scheme was in part a way to reward congressmen for staying loyal to the government of President Dilma Rousseff, who was impeached on an unrelated charge last year. + +This model is now “exhausted”, says the top judge on the electoral tribunal. In fact, its flaws were apparent from the beginning. Every congress since 1988 has set up a commission to look into electoral reform. They have not made much progress. In 1995 congress set a threshold for parties to enter the legislature of 5% of the national vote. The supreme court struck that down, saying it violated the constitution’s goal of proportional representation. + +Most electoral innovations have come from the judiciary. In 2007 the electoral tribunal ruled that congressmen who switch parties must give up their seats. In 2015 the supreme court banned donations to parties by corporations. The Lava Jato inquiries are themselves a sort of political reform, “without anaesthesia”, as one minister in Mr Temer’s government puts it. Dozens of lawmakers could be charged before the election due in late 2018. + +The courts cannot do it all; politicians will have to reform themselves. They are starting to do so. One step forward was a vote by the senate in November to approve a constitutional amendment that would establish a national vote threshold and prohibit electoral coalitions. These are short-lived arrangements in which big parties yield seats to smaller ones in exchange for their rights to television time. If the lower house approves the amendment by October this year, the next elections could be held under the new rules. The next congress—less fragmented and more honest—could then make further changes, including splitting up state-sized constituencies into districts. + +But some fear that politicians will use reform to shield themselves from greater accountability. One contentious proposal is to give voters a choice among party lists rather than individual candidates. In 2015 the lower house defeated a plan to introduce such “closed lists” by a vote of 402 to 21. Backbenchers feared it would let party chiefs promote their cronies. The idea has come back. Proponents say that closed lists would bolster parties and save them money, compensating for the ban on corporate donations. That would be a plus. + +But to some voters, this looks like a plot to avoid the pain inflicted by Lava Jato. Politicians in Mr Janot’s sights could be re-elected if they hide behind party logos. “No to closed lists!” was among the slogans seen at the protests in March. It is good news that the arcane issue of political reform has moved on to the streets. That means it may actually happen. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21719811-scandal-ridden-congress-must-reform-itself-upgrading-brazils-political-class/print + + + +上一项 文章 章节 下一项 + + + + + +The Americas 章节 China + + + + + +Asia + + +Myanmar: Governing in prose + +Jihadists in Bangladesh: Fighting a hydra + +Political freedom in Singapore: No place for the crass + +Suicide in India: A break for the despairing + +Politics in South Korea: Moon also rises + +The Americas 章节 China + + + + + +文章 章节 下一项 + + + + + +Governing in prose + +Aung San Suu Kyi’s first year running Myanmar has been a letdown + + +The economy has slowed along with the pace of reform + + + +Apr 1st 2017 | YANGON + + + + + +ASTRONOMICAL downtown rents, power cuts, traffic that gets worse by the week: these are Yangon’s growing pains. But they pale in comparison with its growing pleasures: cranes everywhere, a steady stream of new businesses and, most important, optimistic citizens. Signs of progress abound, some flashy—swish new restaurants and hotels—and others mundane—co-ordinated bus routes that have ended the lunatic system whereby the packed vehicles of competing firms raced from stop to stop to snaffle the waiting customers. + +Outside the city, however, the lustre fades quickly. Booming Yangon uses perhaps half of Myanmar’s electricity and accounts for as much as a quarter of its economic output, but most of the country’s population is still rural. They fish or farm, often using primitive methods, a fact that becomes glaringly apparent as soon as you leave Yangon. The military regimes that ruled Myanmar for 50 years left it isolated and impoverished. + + + +Aung San Suu Kyi, who opposed the generals for decades before assuming the country’s leadership last March, entered office with the wind at her back. The military junta had begun liberalising the economy before it handed over power. Foreign investment had risen, particularly in oil and gas, and the private sector was growing by leaps and bounds, albeit from a tiny base. After the landslide victory of Ms Suu Kyi’s National League for Democracy (NLD) in elections in late 2015, donors poured in funds and expertise. Yangon is filled with international advisers eager to help the country modernise. And less than six months after Ms Suu Kyi took office, America lifted long-standing sanctions. + +Yet growth is now slowing, as is foreign investment (see chart). The government has taken a few steps to maintain economic momentum. Regulatory changes approved in August made it easier for microfinance companies to operate—a must in a country where most people lack access to affordable credit. An update of basic corporate law went to parliament in January; when passed it will replace the Burma Companies Act of 1914, which includes severe penalties for firms that lay false claim to “the patronage of His Britannic Majesty”. An investment law enacted in October builds on the generals’ market reforms and, unlike their decrees, which were often imposed out of the blue, it was the subject of an extensive public consultation. + + + +But the new government also has peremptory moments. Before Burmese New Year, it suddenly announced that the associated holiday would last five days this year rather than the usual ten. It has also unveiled a draft law requiring foreigners living in Myanmar to get government approval to leave their city of residence for longer than 24 hours. Foreign chambers of commerce, naturally, are up in arms. + +These incidents point to two frequent complaints about Ms Suu Kyi’s government: atrocious communication and a penchant for centralisation. The previous government, says one foreign investor, included experienced economic policymakers and listened to businessmen’s complaints; this one does neither. “This government sees business as evil,” he says. “We don’t know who to talk to, and we don’t know who [Ms Suu Kyi] listens to.” There are no regular exchanges between businesses, legislators and regulators, so laws are proposed before MPs understand their impact. And the government has not articulated much of an agenda for reform: shortly after taking office, for instance, the NLD could not come up with any more detail about its plans for the economy than a 12-point manifesto that contained such laudable but vague goals as cutting red tape and encouraging competition. + +Many civil-society types complain that they, too, have no access to Ms Suu Kyi’s inner circle. Her feeling, says one, is that the role of NGOs was to ensure the previous government remained on the path towards democracy; now that the Burmese people have freely chosen their rulers, obstreperous watchdogs are no longer needed. Donors with money and goodwill, meanwhile, have projects at the ready, but people in government are reluctant to make decisions without a clear signal from the top. + +Even Ms Suu Kyi’s main priority, the peace process between the government and the ethnic armies that have fought it for decades, appears to be stalling. The momentum built by the previous government has dissipated. Skirmishes between the army and assorted rebel groups are becoming more frequent. The second in a series of national peace conferences, scheduled for February, was delayed after it became apparent that only a handful of groups would even attend. The terms of a final deal remain as unclear as ever. The army, which under the constitution it foisted on the country remains a law unto itself, rakes in millions from jade and timber in border regions, giving it a strong incentive to let fighting continue. Peace would also put the ethnic militias out of business. + +Ms Suu Kyi is in a tricky position: the army fears she will concede too much to the rebels, while ethnic minorities see her as just another condescending leader from the country’s Burman majority, little different from her predecessors. Shockingly, she has failed to criticise the army as it has rampaged through villages inhabited by the Rohingya minority, raping and killing on a horrifying scale according to the UN. Some 70,000 of them have fled across the border into Bangladesh. The Rohingya are disliked by the Burmans who form the bedrock of the NLD’s support; defending them could dent her political standing. But in a democracy, leaders have to make hard choices. So far, Ms Suu Kyi has proved more adept at avoiding them. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21719802-economy-has-slowed-along-pace-reform-aung-san-suu-kyis-first-year-running-myanmar/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Dug in + +Bangladesh’s counter-terrorism campaign has a long way to go + + +It took the security services four days to kill four jihadists holed up in an apartment block + + + +Mar 30th 2017 | DHAKA + + + + + +FOR four days all eyes in Bangladesh were on Atia Mahal, a lime-green, five-floor apartment block in the north-eastern city of Sylhet. The police cordoned off the building on March 24th after receiving word that a group of Islamic militants had holed up in one of its flats. But it was only on March 27th that a special anti-terrorism unit managed to kill the last of the four besieged terrorists. Two days earlier, one of the four had put on a suicide-vest and blown himself up at the police cordon some 400 metres from the hideout, killing six people and injuring 50. It was the first indiscriminate suicide-attack on civilians in Bangladesh. + +Islamic State, the jihadist group that runs a dwindling portion of Syria and Iraq, claimed responsibility for the attack, its 28th in Bangladesh since 2015. The deadliest of those was an assault on a restaurant in Dhaka, the capital, last year, in which 22 civilians, two policemen and five terrorists were killed. The government insists—to near-universal disbelief—that the perpetrators are a new faction of a home-grown group called Jamayetul Mujahideen Bangladesh. Either way, the government does seem to be pursuing with vigour the directive of the prime minister, Sheikh Hasina, to “root out militancy”. But the siege in Sylhet was preceded by three botched suicide-attacks in the previous two weeks. The security services recently killed six militants in a raid in the southern city of Chittagong. And two sieges of suspected jihadists are now under way in the city of Moulvibazar, to the south of Sylhet. + + + +The government seems to have had great success in persuading ordinary citizens to report suspected militants. But its appeasement of extreme religious groups such as Hefazat-e-Islam, which share much of the militants’ worldview, is at odds with the crackdown. Foreigners are frightened (17 of the victims of the restaurant attack were foreign). Cafés they frequent now sport airport-style security. + +Bangladesh’s neighbour, India, will also be worried. This month its Border Security Force warned that more than 3,000 militants had entered India across its border with Bangladesh, the world’s fifth-longest. India has three main security concerns: that Bangladesh is a haven for various insurgent groups fighting the Indian government; that large numbers of illegal migrants from Bangladesh are changing the ethnic and religious character of the border areas; and that Bangladesh is turning away from its long history of secularism and tolerance. Sheikh Hasina has tried to suppress the insurgents using Bangladesh as a base for operations in India, with some success. But she is powerless to stop migration and her decision to suppress mainstream opposition groups has seen extremist fringes thrive. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21719805-it-took-security-services-four-days-kill-four-jihadists-holed-up-apartment/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +A haven for the crass + +An outspoken Singaporean blogger wins asylum in America + + +The judge says Singaporean prosecutors picked on him for his political views + + + +Mar 30th 2017 | SINGAPORE + + + + + +LIKE many teenage boys, Amos Yee, a Singaporean blogger, is crude, insensitive and confrontational. In 2015, just days after the death of Lee Kuan Yew, Singapore’s founder and long-time leader, Mr Yee posted a profanity-laced video to his YouTube channel calling Lee “a horrible person”, an “awful leader” and a “dictator”. For a small part of that video (around 30 of its 519 seconds), he also mocked Christianity. He challenged Lee Hsien Loong, Lee’s son and Singapore’s current prime minister, to “come at me, motherfucker”. + +Prosecutors did so instead. Convicted of “wounding religious feelings” and obscenity, for posting a crude cartoon showing Lee Kuan Yew doing something unspeakable to Margaret Thatcher, Mr Yee was imprisoned for four weeks. Then just 16 years old, Mr Yee served two weeks in a mental asylum for adults and two weeks in an adult prison. The experience failed to deter him: he pleaded guilty a year later to insulting Islam and Christianity, and was imprisoned for six weeks. + + + +But Mr Yee learned his lesson: late last year he boarded a plane to Chicago and applied for asylum, claiming that he would be persecuted for his political views were he to return to Singapore. On March 24th, over the objections of the American government, a court approved his application. + +Immigration judges often grant asylum with a simple, spoken ruling. This one explained himself over 13 pages. He gave eight reasons why the charges of wounding religious sentiment and obscenity were simply a pretext to suppress Mr Lee’s political views, including the disproportionate prison sentence handed to a young first-time offender, the fact that his first video—and the public response—focused far more on his criticism of Lee Kuan Yew than his “tangential” remarks about Christianity, and Singapore’s failure to prosecute other people who had insulted Islam. + +The judge accepted testimony from expert witnesses arguing that “this is the modus operandi for the Singapore regime—critics of the government are silenced by civil suit for defamation or criminal prosecutions.” The judge accepted that Mr Yee (pictured) was legally prosecuted under Singaporean law, but ruled that his prosecution served “a nefarious purpose—namely, to stifle political dissent”. + +In a huffy response, Singapore’s government noted America “allows…hate speech under the rubric of freedom of speech”, whereas Singapore does not. “It is the prerogative of the US to take in such people,” it conceded, as if Mr Yee had received asylum because of the content of his speech rather than the authorities’ reaction to it. The head of Singapore’s association of criminal lawyers said his members were “outraged” by the judge’s “baseless and unwarranted” findings. Saying such things about a ruling of a Singaporean court, ironically, could put the speaker at risk of prosecution for contempt. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21719810-judge-says-singaporean-prosecutors-picked-him-his-political-views-outspoken/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +A break for the despairing + +India decriminalises attempted suicide + + +But the suicide rate remains high, especially among young women + + + +Mar 30th 2017 | DELHI + + + + + +GORAV GUPTA has spent his life helping the mentally ill. But when suicidal patients seek help at his psychiatric hospital in Delhi, he turns them away. Mr Gupta says he cannot handle the “legal hassle” that might ensue if they try to end their lives while in his care. + +Attempted suicide, as well as “any act towards the commission” of suicide, has for years been a crime in India. But on March 27th the Lok Sabha, India’s lower house, passed a package of mental-health reforms, among them one that decriminalises attempted suicide. The bill declares access to psychiatric care to be a right for all Indians, and promises a huge boost in funding to help provide it. + + + +Policymakers in India have long argued that people driven to attempt suicide need rehabilitation. But under the previous law, they instead faced punishment: a fine and up to a year in prison. Prosecution was rare, but the threat of it to extract bribes from the families of those who attempted suicide was not, says Soumitra Pathare, who helped draft the new legislation. Others point out that the government has previously used laws against attempted suicide to lock up activists who stage hunger strikes. + +The next step in mental-health reform is to allocate more money and expand the workforce, says Mr Pathare. Mental health made up just 0.06% of India’s health budget in 2011; the median in countries of comparable development is 1.9%. Despite having a population more than 50 times bigger than Australia’s, India has around the same number of psychiatrists (just 3,500). + +Yet the reforms are unlikely to reduce India’s suicide rate, which, adjusting for age, is almost double that of America. Researchers often attribute large numbers of suicides in Asian countries to “impulsive” acts in moments of crisis, rather than diagnosable mental disorders. Limiting access to pesticides, poisons that are close at hand for most rural Indians, may prevent such deaths, as it has in Sri Lanka. Unlike many countries, India has no national suicide-prevention plan. More can be done to break the taboos that prevent the depressed from opening up to friends and doctors. + +The big challenge is to improve the lot of India’s young, among whom suicide is the leading cause of death. Suicide rates in Asia tend to shoot up as people enter old age; in India the opposite is true. The suicide rate for women aged 15-29 is more than double that of any other country except Suriname (which has a large Indian population) and Nepal (which shares many cultural similarities). In future they, and other Indians, may find it easier to seek psychological help without fear. But the world they are living in cannot be regulated away. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21719808-suicide-rate-remains-high-especially-among-young-women-india-decriminalises-attempted/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Rising Moon + +The loser in South Korea’s last presidential race has another go + + +Moon Jae-in is set to profit from the impeachment of his nemesis, Park Geun-hye + + + +Mar 30th 2017 | SEOUL + + + + + +“MY BEST quality is that I am persistent. My worst is that I am no fun.” Moon Jae-in’s assessment of himself in “South Korea Asks”, a series of interviews published in January, is one with which many South Koreans, whether they like or loathe him, would probably agree. Most have an opinion of him. He has been in the political arena for well over a decade, as chief of staff to the late liberal president Roh Moo-hyun from 2003 to 2008; then as a presidential candidate himself in 2012, when he lost a two-way race to Park Geun-hye, by 48% to 52%. + +Ms Park’s term came to an early end on March 10th when the constitutional court upheld a motion parliament approved in December to impeach her. The country now faces a snap presidential election on May 9th. After almost a decade of conservative rule, the ballot looks likely to be a victory for the more socially liberal Minjoo party: its support is the highest it has ever been, at 50%. Mr Moon, who led the party until January last year, has topped the polls for president for almost three months. The latest sounding puts his support at 35% in a crowded field. + + + +That is more than twice the level of the next-most-popular contenders, An Chul-soo of the People’s Party and Ahn Hee-jung, another Minjoo candidate. Lee Jae-myung, the Minjoo mayor of Seongnam, a city south of Seoul, became known as the “fizzy drink” candidate, thanks to his tendency to make attention-grabbing remarks. He shot up the polls in December, as discontent with Ms Park peaked, before losing some of his effervescence. But he is still ahead of the best-polling conservative, Hong Joon-pyo, who musters only 8%. + +The election consists of just one round, with no minimum threshold for victory. The four biggest parties are all planning to field a candidate, as are several smaller ones. Party primaries must be concluded by April 16th. In Minjoo’s, which takes place in four regional stages, two of which are complete, all voters may cast ballots regardless of party affiliation. So far, Mr Moon is well ahead. And in the election proper, it is hard to imagine Mr Moon’s opponents coalescing with enough enthusiasm around one of the other candidates to deny him the presidency. + +If he is elected, Mr Moon would bring change. He is much more down-to-earth than Ms Park, who was criticised for her aloofness. That may be thanks to his upbringing: whereas she is the daughter of a former president, he grew up poor and was, before his political career, a human-rights lawyer. In a recent televised debate among the Minjoo candidates, Mr Moon said he would be a “Gwanghwamun president”, referring to the district in the centre of Seoul where millions rallied over five months to demand Ms Park’s dismissal. He would move the presidential office from the Blue House to Gwanghwamun, and open the official residence to the public. He claimed Ms Park had become embroiled in scandal because she “sealed herself off in her Blue House palace”; he promised instead to stop off at local markets on his way home from work. + +This appeals to the many who disliked Ms Park’s imperious ways. She continues to be surrounded by 20-odd security staff in her private home, where she lives alone. Mr Moon says he would do away with the presidential guard, making do with protection from the police instead. + +Before her impeachment, Ms Park refused to co-operate with the prosecutors; after it, she appeared to rebuke the constitutional court by saying the truth would “eventually be known”. There is little question that Mr Moon, in contrast, would try to tackle the corruption and nepotism that produced the crisis, and to curb the state’s special treatment of the chaebol, the conglomerates at the heart of the scandal. But Seo Bokyeung of Sogang University in Seoul says Mr Moon is caught between an ideological push for an overhaul of South Korea’s institutions and a pragmatic appeal to a broad majority. + +Mr Moon has been courting voters who were turned off by his campaign in 2012, says Hong Jong-hak, his chief policy adviser. The groundswell against Ms Park has dampened the influence of conservative media outlets; their attacks on Mr Moon have had little impact. That has allowed him to “exhibit his full colour”, says Ms Seo, making much of his marksmanship during a stint in the special forces, for instance. Michael Green, a former American official, writes that, under Roh, Mr Moon was seen “as a steadying voice in an otherwise turbulent, ideological and divided Blue House”. According to Gallup, a pollster, more than a third of Mr Moon’s supporters call themselves “centrist”. + +Many on the right continue to associate Mr Moon with Roh, his liberal mentor and a beacon for South Korea’s left. (When Roh jumped off a cliff to his death in 2009, as a corruption investigation closed in, it was Mr Moon who tearfully announced the news.) Hong Joon-pyo recently said his opponent’s supporters were “armed with leftist ideology” and in particular claimed that they would try to appease North Korea. Yet in anticipation of an early election, Mr Moon has for some months been trying to straddle the political divide over the North, in which the left typically favours dialogue and the right, sanctions. + +Mr Moon says he would visit North Korea before any other country if he thought it would help negotiations, and wants to re-open the Kaesong industrial complex, a joint manufacturing facility on the border that had been the last point of co-operation between the two governments until Ms Park shut it in 2016. He has made clear that he wants to renegotiate the terms of America’s installation in South Korea of THAAD, an anti-missile system that China vehemently opposes. Yet he has been careful not to insist on its removal, calling for a “practical decision” on its deployment in consultation with America and China. + +In much the same vein, Mr Moon says he wants to overcome South Korea’s regional divisions. His advisers say he wants to be the first president to gain the support of both Jeolla, a liberal stronghold in the south-west, and Gyeongsang, its conservative rival in the south-east. Rather than the victory of one province over another, they explain, Mr Moon wants to bring about “a national celebration”. That seems unlikely, given the febrile political atmosphere. But whether a cause for celebration or not, his election seems a foregone conclusion. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21719809-moon-jae-set-profit-impeachment-his-nemesis-park-geun-hye-loser-south/print + + + +上一项 文章 章节 下一项 + + + + + +Asia 章节 Middle East and ... + + + + + +China + + +China and America: Tortoise v hare + +Banyan: Lovin’ Hong Kong + +Asia 章节 Middle East and ... + + + + + +文章 章节 下一项 + + + + + +Tortoise v hare + +Is China challenging the United States for global leadership? + + +Xi Jinping talks of a “China solution”, without specifying what that means + + + +Apr 1st 2017 | BEIJING + + + + + +AS DONALD TRUMP prepares to welcome Xi Jinping next week for the two men’s first face-to-face encounter, both countries are reassessing their place in the world. They are looking in opposite directions: America away from shouldering global responsibilities, China towards it. And they are reappraising their positions in very different ways. Hare-like, the Trump administration is dashing from one policy to the next, sometimes contradicting itself and willing to box any rival it sees. China, tortoise-like, is extending its head cautiously beyond its carapace, taking slow, painstaking steps. Aesop knew how this contest is likely to end. + +China’s guiding foreign-policy principle used to be Deng Xiaoping’s admonition in 1992 that the country should “keep a low profile, never take the lead…and make a difference.” This shifted a little in 2010 when officials started to say China should make a difference “actively”. It shifted further in January when Mr Xi went to the World Economic Forum in Davos, Switzerland, and told the assembled throng that China should “guide economic globalisation”. Diplomats in Beijing swap rumours that a first draft of Mr Xi’s speech focused on the domestic economy, an uncontroversial subject that Chinese leaders usually like to talk about abroad. Mr Xi is said to have rejected this version, and brought in foreign consultants to write one dwelling more on China’s view of the world. Whether this story is true or not, the speech was strikingly international in tone and subject matter. + + + +A day later Mr Xi made it clear whom he had in his sights. At the UN in Geneva, he talked about a “hegemon imposing its will on others” and warned America about a “Thucydides trap”—the disaster that befell ancient Greece when the incumbent power, Sparta, failed to accommodate the rising one, Athens. In February Mr Xi told a conference on security in Beijing that China should “guide international society” towards a “more just and rational new world order”. Previously Mr Xi had ventured only that China should play a role in building such a world. + +Your consensus is nonsense + +There was a time when America was urging China to step up its global game. In 2005 Robert Zoellick, then America’s deputy secretary of state, urged China to become a “responsible stakeholder” in the international system. But nothing much happened. After the financial crisis of 2008 there was excited talk in China and the West about a “China model” or “Beijing consensus”. This was supposedly an alternative to the so-called Washington consensus, a prescription of free-market economic policies for developing countries. But those who promoted a China model did not say that it should be adopted by other countries, only that it was right to reject what they saw as a one-size-fits-all Washington consensus. Is there more to it this time? Is China challenging America for global leadership? + +To answer that, it is important to begin with the way China’s political system works. Policies rarely emerge fully formed in a presidential speech. Officials often prefer to send subtle signals about intended changes, in a way that gives the government room to retreat should the new approach fail. The signals are amplified by similar ones further down the system and fleshed out by controlled discussions in state-owned media. In the realm of foreign policy, all that is happening now. + +Soon after Mr Xi’s comments in Davos and Beijing, the prime minister, Li Keqiang, gave his annual “work report”—a sort of state-of-the-nation speech. It included an unusually long passage about foreign policy and mentioned quanqiu (meaning global) or quanqiuhua (globalisation) 13 times. That compares with only five such mentions last year (see chart). + + + +As is their wont, state-run media have distilled the new thinking into numerical mnemonics. They refer enthusiastically to Mr Xi’s remarks on globalisation and a new world order as the “two guides”. And they have begun to discuss the makings of an idea that, unlike the old one of a China model, the country would like to sell to others. This is the so-called “China solution”. The phrase was first mentioned last July, on the 95th anniversary of the founding of the Chinese Communist Party. Mr Xi’s celebratory speech asserted that the Chinese people were “fully confident that they can provide a China solution to humanity’s search for better social institutions”. The term has gone viral. Baidu, China’s most popular search engine, counts 22m usages of its Chinese rendering: Zhongguo fang’an. + +No one has defined what the China solution is. But, whatever it means, there is one for everything. Strengthening global government? There is a China solution to that, said the People’s Daily, the party’s main mouthpiece, in mid-March. Climate change? “The next step is for us to bring China’s own solution,” said Xie Zhenhua, the government’s special climate envoy, in another newspaper, Southern Metropolis. There is even a China solution to the problem of bolstering the rule of law, claimed an article in January in Study Times, a weekly for officials. Multi-billion-dollar investments in infrastructure in Central Asia are China’s solution to poverty and instability there. And so on. Unlike the China model, which its boosters said was aimed at developing countries, the China solution, says David Kelly of China Policy, a consultancy, is for everyone—including Western countries. + +This marks a change. Chinese leaders never praised the China model; its fans were mainly Chinese academics and the country’s cheerleaders in the West. (Long before the term became fashionable, Deng advised the president of Ghana: “Do not follow the China model.”) Most officials were wary of it because the term could be interpreted as China laying down the law to others, contradicting its policy of not interfering in other countries’ internal affairs. In contrast, it was Mr Xi himself who broached the idea of the China solution. His prime minister included it in his work report. China now seems more relaxed about bossing others around. + +This reflects not only the determination of the leadership to play a bigger role, but a growing confidence that China can do it. China’s self-assurance has been bolstered by what it sees as recent foreign-policy successes. Last year an international tribunal ruled against China’s claims to sovereignty in much of the South China Sea. But China promptly persuaded the Philippines, which had brought the case, implicitly to disavow its legal victory, eschew its once-close ties with America and sign a deal accepting vast quantities of Chinese investment. Soon after that Malaysia, another hitherto America-leaning country with maritime claims overlapping those of China, came to a similar arrangement. China’s leaders concluded that, despite the tribunal’s ruling, 2016 had been a good year for them in the South China Sea. + +It was certainly a notable one for Mr Xi’s most ambitious foreign policy, called the “Belt and Road Initiative”. The scheme involves infrastructure investment along the old Silk Road between China and Europe. The value of contracts signed under the scheme came within a whisker of $1trn last year—not bad for something that only started in 2013. Chinese exports to the 60-odd Belt and Road countries overtook those to America and the European Union. In May Mr Xi is due to convene a grand summit of the countries to celebrate and advertise a project that could one day rival transatlantic trade in importance. + +But talk of “guiding globalisation” and a “China solution” does not mean China is turning its back on the existing global order or challenging American leadership of it across the board. China is a revisionist power, wanting to expand influence within the system. It is neither a revolutionary power bent on overthrowing things, nor a usurper, intent on grabbing global control. + +China is the third-largest donor to the UN’s budget after America and Japan (see chart) and is the second-largest contributor, after America, to the UN’s peacekeeping. Last year China chaired a summit of the Group of 20 largest economies—it has an above-average record of complying with the G20’s decisions. Recently it has stepped up its multilateral commitments. In 2015 it secured the adoption of the yuan as one of the IMF’s five reserve currencies. It has set up two financial institutions, the Asian Infrastructure Investment Bank and the New Development Bank, which are modelled on traditional ones such as the World Bank. Global rules on trade and finance, it seems, are too important for Mr Xi not to defend. + + + +China is becoming a more active participant in the UN, but it is not trying to dominate it. It reacts to, rather than initiates, sanctions policy towards North Korea. And despite its own extensive anti-terrorist operations at home, it shows little interest in joining, let alone leading, operations against Islamic State. + +There are domestic constraints on Mr Xi’s ambitions. China’s vast bureaucracy is resistant to change in foreign policy, as in everything else. During a recent trip to Australia the foreign minister, Wang Yi, said China had “no intention of leading anybody”. He was not contradicting Mr Xi, but neither was he echoing the president’s desire to guide a new world order. Ding Yifang of the Institute of World Development, a think-tank in Beijing, is similarly cautious about the China solution. “We don’t have universal ideals,” he says. “We are not that ambitious.” + +Globalism with Chinese characteristics + +So what might China’s unassuming new assertiveness mean in practice? A template can be found in climate-change policy. China was one of the main obstacles to a global climate agreement in 2008, but now its words are the lingua franca of climate-related diplomacy. Parts of a deal on carbon emissions between Mr Xi and Barack Obama were incorporated wholesale into the Paris climate treaty of 2016. China helped determine how that accord defines what are known as “common and differentiated responsibilities”, namely how much each country should be responsible for cutting emissions. + +As chairman of the G20 last year, Mr Xi made the fight against climate change a priority for the group. But China’s clout at that time was bolstered by its accord with America. Now Mr Trump is beginning to dismantle his predecessor’s climate policies. Li Shou of Greenpeace says China is therefore preparing to go it alone as Mr Xie, the climate envoy, said in January that it was prepared to do. It may be that a “China solution” to climate change will be the first practical application of the term. + +Soon after Mr Xi’s speech in Davos, Zhang Jun, a senior Foreign Ministry official, put his finger on China’s changing place in the world. “I would say it is not China rushing to the front,” he told a newspaper in Hong Kong, “but rather the front-runners have stepped back, leaving the place to China.” But officials have far fewer qualms than Deng did about being at the front. “If China is required to play a leadership role,” says Mr Zhang, “it will assume its responsibilities.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21719828-xi-jinping-talks-china-solution-without-specifying-what-means-china-challenging/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Banyan + +Can Hong Kong’s next leader satisfy her masters and the public? + + +In a divided society, it will be tough for Carrie Lam + + + +Mar 30th 2017 + + + + + +IN THREE months, celebrations will take place at Hong Kong’s harbour-front convention centre to mark the 20th anniversary of the territory’s momentous return from Britain to China. The rumour is that President Xi Jinping himself will attend. What was striking about the handover ceremony on July 1st 1997 was that Hong Kong’s people were not represented. They were mere bystanders—or else helping with the catering. From the start, Hong Kongers were symbolically put in their place. At the convention centre, the new flag chosen for them was raised on a lower pole than that of the bigger flag of the People’s Republic of China. Both flags snapped rigidly to attention in a manufactured breeze. + +The flags will fly again at the anniversary celebrations, and Hong Kong people will get a further reminder of their place when the territory’s next leader is sworn in, promising to ai guo, ai gang—love the motherland and love Hong Kong (in that order, and in Mandarin—not the local Cantonese). Carrie Lam was the resounding victor among three candidates for the post of chief executive in an election on March 26th, with two-thirds of the votes. Yet out of a population of 7.3m, the only ones with a vote were the fewer than 1,200 members of a committee stacked with supporters of the Communist Party in Beijing. + + + +When the vote’s outcome became clear (again in the convention centre), Mrs Lam’s middle-aged supporters in the public gallery cheered and unfurled Chinese flags. They looked suspiciously like the delighted crowds that appear in mainland China when bigwigs meet the public. Mrs Lam is a capable administrator who was formerly the head of the civil service, but she lacks the common touch. Her image is of someone keen to please the masters in Beijing. Opinion polls suggested that even among the three carefully vetted candidates allowed to run, she was far less popular than the former finance secretary, John Tsang. He is more personable and wants the territory to have more democracy than it has been allowed. And so a question hangs over Mrs Lam: how will she command the support of the public? + +The question has dogged all three chief executives to date, but none more so than the outgoing one, “C.Y.” Leung Chun-ying. Cool and aloof, he has never been able to shake off suspicions that he is a secret member of the Communist Party. Some of his policy measures, such as steps taken to improve the lot of the elderly, are under-appreciated. But his main mission has been political: to keep in check much of what makes Hong Kong distinct. + +In particular, he faced down the huge “Occupy” or “Umbrella” protests in 2014 that grew in response to rules handed down by China’s legislature for how the chief executive’s election, just past, should be organised. The Basic Law, the mini-constitution drafted for Hong Kong before the handover, promised universal suffrage by 2017. The new rules envisaged that, too. But they also insisted on a process for vetting candidates that was clearly intended to keep democratic types out of the running. Hong Kong’s semi-democratic legislature, called Legco, vetoed the package. + +Mrs Lam comes into office under the older, even more restrictive rules. It does not help that she was the civil servant in charge of the political-reform process that culminated in the Umbrella movement. It has always been an impossible task to have to balance the wishes of officials in Beijing and those of many people in Hong Kong. Now Mrs Lam has another tough assignment: running a territory bitterly divided between those who want a lot more democracy and those who prefer not to confront China. + +It may appear that China seeks for Hong Kong a colonial status remarkably similar to that under British rule. Mrs Lam herself rose through the civil-service ranks under the British, and is steeped in the traditions of professionalism and integrity that the British system imbued. There is another throwback to the past, too, in the fact that Hong Kong’s tycoons united behind Mrs Lam (they disliked Mr Leung). For most of its rule, Britain allowed business interests in the colony to hold sway. + +But much has changed. The last governor, Chris Patten, encouraged democracy. The Communist Party increasingly reaches into the territory to oppose it. In September elections for seats in Legco ushered in several young radicals who, beyond calling for the autonomy Hong Kong was promised, espouse a degree of “localism” not far short of independence. In an unprecedented intervention, the central authorities ruled that those who deliberately garble their swearing-in oaths must not be allowed to take up their seats. The radicals had committed that sin. Two have been barred; others look likely to be booted out as well. + +One country, two identities + +Another development since colonial times, points out a Legco member, Eddie Chu Hoi-dick, is the Communist Party’s increasing manipulation of its sympathisers in Hong Kong: to cheer Mrs Lam’s victory, for example, or more worryingly to disrupt activities by adherents of Falun Gong, a spiritual movement which is banned as a cult on the mainland but is legal in Hong Kong. Even Hong Kong’s triads appear to be called upon for patriotic service—for instance, countering the Umbrella protests with violence. + +Mr Chu and others are nervous about such developments. Many Hong Kongers recall Mao’s Cultural Revolution, when the Communists’ supporters in Hong Kong were directed to spread chaos with protests, riots and, before long, bombs. Yet instead of undermining the colonial apparatus, the chaos of 1967 led people to assess what they deemed to be precious about Hong Kong. For the first time a Hong Kong identity formed, in conscious contradistinction to what Communist China represented. Today, on the mainland, the chaos and violence of those days are gone. But unbending authoritarianism remains, and Hong Kong’s identity still evolves in opposition to it. That is why loving both the motherland and Hong Kong often involves contortions. China’s leaders should get used to it. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21719816-divided-society-it-will-be-tough-carrie-lam-can-hong-kongs-next-leader-satisfy-her/print + + + +上一项 文章 章节 下一项 + + + + + +China 章节 Europe + + + + + +Middle East and Africa + + +Famine stalks Africa and Yemen: The third horseman returns + +Islamic State: Mine enemy + +Israel: Prime minister v pundits + +Egypt and America: Loved up + +China 章节 Europe + + + + + +文章 章节 下一项 + + + + + +Return of the third horseman + +Famine menaces 20m people in Africa and Yemen + + +War, not drought, is the reason people are starving + + + +Mar 30th 2017 | PANYIJIAR AND MAIDUGURI + + + + + +OUTSIDE a thatched hut in Panyijiar, in South Sudan, Nyakor Matoap, a 25-year-old woman, clutches the youngest of her three children. Dressed in a silky emerald shawl, she hides the baby, named Nyathol, underneath its folds. Her other children crowd happily enough around her legs. But the baby is in a bad way. Though almost a year old, he is scarcely larger than a newborn. When he cries, it is quiet and gasping, his tiny ribs pushing out his chest. His swollen head lolls uncomfortably on his emaciated frame. Asked whether he will survive, she replies simply, “I do not know.” + +Before 2013 Mrs Matoap cultivated a patch of land near Leer, some 80km (50 miles) further north. But then civil war broke out in South Sudan, and her husband went to join rebel fighters. In August last year, government forces came into her village. They pulled the men out of their huts and shot them; the women fled. She found herself in the murky waters of the Sudd, a vast swamp which spreads either side of the White Nile. For seven months she has lived off wild fruit and the roots of water lilies. She last saw her husband in 2015, when her son was conceived. Though Panyijiar is friendly territory, and home to an aid camp run by the International Rescue Committee, she does not believe her ordeal is over. “I thought the war would never reach us in Leer,” she says, “so I cannot say that it won’t come here.” + + + +In February Leer was one of two counties in South Sudan declared to be in a state of famine by the UN. Between them they are home to 100,000 people. It is the first time since 2011 that the term has been used and only the second since the organisation adopted the IPC scale, a scientific way of determining levels of food insecurity. Another 1.1m people live in areas in an “emergency” situation, one step short of famine, but where people are still dying from lack of food. Across South Sudan as a whole, the UN judges that some 250,000 children under the age of five suffer from “severe acute” malnutrition, meaning that if they do not receive treatment they will probably die. Some 5.8m people will rely on food aid this year. + +South Sudan is not alone. According to the Famine Early Warning Systems Network (FEWS Net), run by the American government, 70m people around the world will need food assistance this year, a level it says is “unprecedented in recent decades”. Three other countries, Nigeria, Somalia and Yemen, have what it calls a “credible risk of famine”. Between the four, 20m people risk starvation. Like extreme poverty, famine has been driven from most of the world (see article). But in those countries it is burrowing in. + +Aid agencies are frantically fundraising; the UN says that another $4.4bn is needed by July. Yet a shortage of funds is hardly the only problem. What Somalia, South Sudan, northern Nigeria and Yemen have in common is that they are all at war. These days famine is never just a natural disaster; it is always a product of politics. + +In South Sudan food insecurity has been growing since December 2013, when civil war broke out between different factions of the SPLA, a rebel group that won independence from Sudan in 2011. Since then the war has spread and the country has split along ethnic lines. The government, much like the previous Sudanese government in Khartoum, tends to fight by targeting “enemy” civilians. Since 2013 over 3m South Sudanese (out of a total of 11m) have fled their homes to escape ethnic killing. People who have fled cannot harvest their crops or work to pay for food. Like Mrs Matoap, many are forced to live off what they can find in the bush while they try to get to somewhere safer. + +Acts of man, not God + +The government deserves much of the blame. It has little interest in helping aid get in and indeed often seems determined to stop the flow. The UN reports 967 denials of humanitarian aid that affected children from the outbreak of war to December 2016—there were almost certainly more. One UN official explains how the government uses regulations to stop food deliveries: “You get the 17 forms you need and suddenly they invent another.” A second official notes that, on several occasions, convoys have been stopped by SPLA soldiers who accuse the drivers of feeding the enemy. Few aid workers think the government actually wants people to starve. But they reckon it would rather let children die than risk supplies getting into the hands of enemy soldiers, who could sell them to buy weapons. + + + +South Sudan is not unusual in having a man-made famine. In Yemen the political dynamics are different but the result is the same. According to FEWS Net, 2m people there are in an “emergency” situation. Another 5m-8m do not have enough to eat. The main reason is that the coalition led by Saudi Arabia, which is fighting Houthi rebels in the north-west of the country, does not allow food through its maritime blockade without a lengthy permit process, by which time much of it spoils. Nine-tenths of Yemen’s food is imported, but Hodeida, the largest port, has been bombed out. At a warehouse in Humanitarian City, a storage centre used by aid agencies in Dubai, four new mobile cranes are waiting to help Hodeida unload ships. When the UN tried to install them in January, the coalition denied them permission to enter Yemeni waters. They might be used for offloading weapons, an official explained, or to earn port fees for the rebels. That is despite the fact that ships docking at Hodeida are inspected by the UN, and arms anyway enter elsewhere, on small boats or overland. + +South Sudan’s and Yemen’s are the most clearly avoidable famines. But Nigeria’s comes close. There, a famine may already have happened late last year—nobody is sure, because it was too difficult to gather data. Over the past two years, as the Nigerian army has clawed back towns in the north-east of the country from Boko Haram, an Islamist group, starving people have poured in from nearby villages. The population of Maiduguri, the capital of Borno State, has doubled as almost 800,000 hungry displaced people have moved into makeshift shelters there. Perhaps as many remain in areas that aid workers cannot reach. Part of the reason is that the Nigerian army does not allow them in. But most aid agencies are reluctant to deliver food in areas held by murderous jihadists anyway. “You don’t really have someone to negotiate access with,” says Peter Lundberg, the UN’s deputy humanitarian co-ordinator in Nigeria. Still, in the areas that the army has secured, malnutrition has fallen sharply. + +Only in Somalia, which in 2011 was the last country to suffer an officially declared famine, does the risk of starvation derive in large part from weather. A drought afflicting much of east Africa has wrecked crops and killed animals. “I am 73, but I have a very sound memory and what I am saying is true: this is the worst,” says Mohamed Yahir, a farmer in the south-western city of Baidoa, whose past three harvests have failed and whose livestock has all died. + + + +This year’s Somali famine may be easier to tackle than the one in 2011, when al-Shabab, a vicious Islamist militia, held a much larger part of the country. Now, aid is at least trickling in. But a hangover from the former troubles remains. Without much of a state, and men with guns everywhere, much of the Somali hinterland is still too dangerous and expensive for aid to get to where it is needed. + +A challenge to the world + +What does the return of famine mean for international organisations such as the UN and for Western countries, which provide most of the finance for emergency aid? The UN’s humanitarian co-ordinator, Stephen O’Brien, has said that this year is “the largest humanitarian crisis” since 1945. Not so: China’s famine during the Great Leap Forward of 1958-62 caused between 20m and 55m deaths. The situations in Yemen and South Sudan are not yet as shocking as the Ethiopian famine of 1984, when hundreds of thousands of people starved even as the country’s military regime taxed aid and spent the proceeds on a grand celebration of the success of Marxism. + +Still, today’s famines are real and severe. Sadly, in all four countries, the global response has been inadequate. Western governments and aid agencies have invested large amounts of money and energy in providing assistance, but they have done little to address the political problems that cause starvation. In South Sudan and Yemen they acquiesce to the obstacles that governments place on distributing aid. + +Though there are 17,000 peacekeepers in South Sudan, with a Chapter 7 mandate (which authorises the use of force to protect civilians), the UN is loth to criticise the government that hosts its mission. Yet the government is responsible for most of the violence, and the consequent displacement and starvation. “They want these people dead,” notes a UN official who would never say so publicly. In December the head of the Norwegian Refugee Council was expelled. Both the UN and other Western governments seem to have decided that it is better to shut up than to be kicked out and lose access to the people they are trying to help. + +The situation in Yemen is more squalid. There, the weapons used to bomb Houthi rebels are mostly supplied by Britain and America; America has given logistics and intelligence support to Saudi Arabia’s war effort for two years. Yet diplomats tiptoe round criticism of the Saudi-led coalition. They insist that they are pushing for more aid to be allowed in, but shy away from sanctions that might force leaders to comply. One UN official describes a “conspiracy of silence” about Yemen. + +That is partly true of Nigeria, too. The release of some of the girls kidnapped by Boko Haram shows that it is possible to negotiate with the jihadists. Yet there is “no conversation” about aid crossing front lines, according to one aid worker. The Nigerian government’s rules about where aid agencies can go are simply accepted, even though starvation has been a weapon of choice for defeating insurgencies in Nigeria since the war over Biafran secession in the 1960s. + +According to Alex de Waal of Tufts University, formally declaring a famine is a “political act” that is intended to produce action. “This will be a test case for whether it works,” he writes. In 2011, when Somalia was last hit by drought, the declaration of famine forced America to change the rules that were stopping aid agencies from supplying food to territory held by al-Shabab. + +Yet few want to intervene. In 1992 George Bush senior sent American troops to Somalia to force the local warlords to let aid in. Bill Clinton pulled the troops out after some of them were killed, and since then military intervention to end famine has gone out of fashion. In South Sudan, a country created by American political pressure, even introducing an arms embargo or sanctions against president Salva Kiir has proved impossible. Similarly, Britain and America show no sign of wanting to force Saudi Arabia or its allies to curtail their war in Yemen. But there is no alternative plan, either. And so famine, which should have been abolished throughout the world by now, is coming back. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21719827-war-not-drought-reason-people-are-starving-famine-menaces-20m-people/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +State of mines + +Islamic State is losing land but leaving mines behind + + +Clearing Syria and Iraq of unexploded bombs and booby-traps could take decades + + + +Mar 30th 2017 | GAZIANTEP + + + + + +SCENES of jubilation greeted Kurdish-led forces when they routed Islamic State fighters from the city of Manbij in northern Syria last August. In the streets, women set fire to the long black veils the jihadists had forced them to wear since they seized the city in January 2014. Men shaved off the beards they had been obliged to grow. One old woman was photographed puffing merrily on a cigarette, an activity punishable with prison in the “caliphate”. For many, however, the giddy joy of liberation soon gave way to tragedy. + +“The first explosion killed our neighbour and his sister-in-law when they entered their house,” said Ali Hussain Omari, a former fighter from the city. “Three days later another mine killed my cousin. His 11-year-old daughter’s leg was amputated and their house was destroyed. A week later another mine in an olive tree exploded. My neighbour lost his leg.” + + + +The amount of land that IS controls is shrinking quickly in both Iraq and Syria. But the group can still kill and maim, even in areas it no longer occupies. Within ten days of Manbij’s liberation, booby-traps and mines planted by the retreating jihadists had killed 29 people, according to the Syrian Institute for Justice, an NGO. + +The story is similar in other newly liberated towns and villages across Iraq and Syria. As they retreat, the jihadists have booby-trapped homes, schools, hospitals and mosques. They have laced vast tracts of land with improvised landmines, creating minefields that extend for dozens of kilometres. The territory once occupied by IS is now one of the most heavily mined regions on earth. The clean-up will cost millions and last decades. + +In villages once occupied by IS, civilians desperate to restart their lives are returning to find their homes, streets and fields riddled with bombs. IS has rigged everyday objects to trigger explosions powerful enough to bring down buildings—loaves of bread, teapots, fridges, vacuum cleaners and computers have all been rigged with explosives. Bomb-disposal teams have found dolls fitted with motion sensors, lights that explode when switched on and water taps that set off charges when opened. Others are less sophisticated: a hand-grenade, pin removed, placed in a glass balanced on top of a door. + +Among the hardest triggers to spot are tiny “crush-wire” devices—lengths of copper wire covered in dirt or plaster and scattered across streets, often disguised to look like small stones. Dead bodies have also been rigged to explode. “How do you warn people about this? How do you tell them not to go to schools or hospitals, not to pick up rocks or tread on stones? Not to move kettles or sit down on sofas?” says Saeed Eido of the Syrian Institute for Justice. + +Booby-trapped homes are only part of the problem. To defend its territory, IS has planted most of its mines in thick belts that ring hundreds of villages and towns on both sides of the border. In a single village south-east of Mosul, clearance teams with the Mines Advisory Group (MAG), a British NGO, have removed more than 1,000 mines since October. The village and surrounding land are still not fully cleared. Experts estimate that, across Iraq and Syria, IS may have planted more than 100,000 landmines—the largest arsenal of improvised mines they have ever seen. + +The wars that raged during the final quarter of the 20th century brought a surge in the use of landmines. By the mid-1990s the weapons were killing roughly 26,000 people every year. That number dropped sharply after the Ottawa Treaty, which banned the use of landmines, came into force in 1999 (see chart). But IS has reversed the trend. Casualties are rising once again, even as funding for mine clearance is at its lowest for years. “We are witnessing a new landmine emergency on a scale not seen since the historic treaty to ban landmines was agreed 20 years ago,” says Jane Cocking, MAG’s chief executive. + + + +Not only are the mines mass produced; the knowledge of how to make them is no longer restricted to a clutch of master bombmakers. Documents seen by Conflict Armament Research (CAR), a group that tracks illegal weapons, suggest that IS fighters receive “sophisticated instruction” on how to build bombs. “These are not short courses, but structured lessons—evidenced by the numerous examination papers submitted by IS students,” it says. + +Even without this new generation of bombmakers, the Islamic State’s lethal legacy will endure for decades, buried in ground it no longer controls, waiting for an unlucky footstep. Equally troubling, especially in Syria, is the extraordinary amount of munitions dropped on urban areas, mostly by the Syrian regime and its backers. Experts believe clearing Syria of undetonated bombs, missiles and mines will take at least 30 years. The leftover explosives will hamper economic recovery, slow the return of refugees and hobble efforts to rebuild the nation long after the shooting stops. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21719830-clearing-syria-and-iraq-unexploded-bombs-and-booby-traps-could-take/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Prime minister v pundits + +Bibi Netanyahu takes on the media + + +A politician with 2m Facebook fans wants more sway over Israeli television + + + +Mar 30th 2017 | JERUSALEM + + + + + +ISRAEL’S prime minister recently told an American audience that “there is no country in the world where the press is freer [than Israel]. There is no country in the world that attacks its leader more than the Israeli press attacks me. That’s fine. It’s their choice. They are free press and they can say anything they want.” Yet even as Binyamin Netanyahu extols the virtues of a free press and Israel’s democracy abroad he is risking the survival of his governing coalition by trying to take control of parts of the media at home. + +The prime minister has embarked on a campaign against Israel’s new public broadcasting corporation, which is scheduled to begin operating on April 30th. Despite having voted three years ago in favour of a law disbanding the old, unwieldy Israel Broadcasting Authority (IBA), Mr Netanyahu is now convinced that its replacement threatens his government. He wants to institute controls over the new corporation, to be called Kan (“Here”), although he has still not spelled out precisely what these might entail. + + + +The controversy pitted Mr Netanyahu against his finance minister, Moshe Kahlon, leader of the centrist Kulanu Party. Without his votes the broadcasting law cannot be changed. If Mr Kahlon were to quit the governing coalition, it would collapse. On March 30th Mr Netanyahu said that he had reached a compromise with Mr Kahlon whereby the corporation would begin broadcasting in May but without its news division, which will be formed as a separate entity. This allows Mr Kahlon to save face, while serving Mr Netanyahu’s purpose of squelching the independence of the corporation’s journalists. + +Few members of the coalition, even those from Mr Netanyahu’s Likud Party, supported the prime minister’s brinkmanship. He had let it be known that he was prepared to dissolve the Knesset and hold a snap election, more than two years ahead of schedule, if he had not got his way. Such a course would have defied political logic. The six-party coalition holds a stable majority in the Knesset, with 66 of the 120 seats, and recently passed a two-year state budget which will allow it to continue functioning well into 2019. + +One explanation for all this manoeuvring is Mr Netanyahu’s long-held (and not entirely unjustified) belief that the Israeli media are out to get him. Why allow yet another news organisation, and state-funded at that, to join the fray? Still, Mr Netanyahu has succeeded in winning four elections despite the hostility of much of the press. With almost 2m followers on Facebook, an astonishing number for a leader of a country of 8m citizens, Mr Netanyahu has bypassed the mainstream media. So why is he still obsessed by it? + +Some argue it is because the prime minister likes to operate in constant election mode and feels a need to rally his base around the fear of a common enemy. The theme of the previous election in 2015, when he warned Likud supporters that “Arab voters are heading to the polling stations in droves,” was fear of Israel’s Palestinian minority. Whether or not the broadcasting crisis is resolved, it seems that Mr Netanyahu’s platform for the next election, whenever it takes place, will feature a good deal of media-bashing. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21719823-politician-2m-facebook-fans-wants-more-sway-over-israeli-television-bibi/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Pants on fire in Cairo + +Why Egypt’s ruler loves Donald Trump + + +And how the Egyptian media exaggerate a bromance + + + +Mar 30th 2017 | CAIRO + + + + + +DONALD TRUMP’S decision to give up his salary as president was not inspired by similar gestures made by previous American leaders, such as Herbert Hoover and John F. Kennedy. Rather, Mr Trump was “following in the footsteps” of Abdel-Fattah al-Sisi, the president of Egypt, claimed two Egyptian newspapers. Mr Sisi, after all, is Mr Trump’s “role model”, said an Egyptian television host. He was on top of Mr Trump’s guest-list for the inauguration, reported an Egyptian news website. + +Such fake news is easily debunked. Mr Trump promised to forgo his salary before ever meeting Egypt’s strongman. Mr Sisi, who cut his own salary only by half, did not attend the inauguration. But the relationship between the two leaders, who will meet in the White House on April 3rd, has captivated Egypt’s scribes and talking heads. Many of them see Mr Trump’s affection for Mr Sisi as a matter of national pride worth celebrating—and exaggerating. + + + +Take Mr Trump’s phone call to Mr Sisi in January, which the White House described in anodyne terms. Egyptian journalists, by contrast, were ecstatic. Newspapers cited officials who claimed that the call heralded a new era in relations. A TV host, Amr Adib, suggested that Mr Trump was in awe of Mr Sisi’s leadership. “How have you guys survived the past 40 months?” Mr Trump asked Mr Sisi, according to Mr Adib, referring to Egypt’s many problems. + +To be sure, there is genuine “chemistry” between the two leaders, as Mr Trump said after meeting Mr Sisi in September. Mr Sisi, in turn, was the first foreign leader to congratulate Mr Trump on his election win. Both men are prickly, imperious and prone to spreading conspiracy theories. Unlike Barack Obama, Mr Trump seems to care little about Egypt’s atrocious human-rights record and supports Mr Sisi’s dark view of the Muslim Brotherhood, the Islamist group that he pushed out of power. + +It is possible that Mr Sisi’s support did not in fact help Mr Trump win, as one Egyptian newspaper (citing an obscure presidential adviser) asserts—or that “Egypt was the only country in the world confident in Donald Trump’s victory,” as another publication, Youm7, has claimed. Still, perhaps flattery gets you somewhere. Mr Trump has banned travellers from six Muslim-majority countries. Egypt is exempt for now. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21719818-and-how-egyptian-media-exaggerate-bromance-why-egypts-ruler-loves-donald/print + + + +上一项 文章 章节 下一项 + + + + + +Middle East and ... 章节 Britain + + + + + +Europe + + +Protests in Russia: The young and the restless + +Portugal’s recovery: Growing out of it + +Foreign policy in France’s election: Beyond the Hexagon + +Slovakia’s political mystery: Family drama + +Charlemagne: Pivot towards Tokyo + +Middle East and ... 章节 Britain + + + + + +文章 章节 下一项 + + + + + +Sudden movement + +Aleksei Navalny brings Russia’s opposition back to life + + +Anti-corruption protests herald a new generation of political activism + + + +Apr 1st 2017 | MOSCOW + + + + + +NOBODY inside or outside Russia saw it coming. The government seemed to have established complete control over politics, marginalising the opposition with nationalist adventures in Ukraine and Syria. Vladimir Putin’s approval rating had stabilised at more than 80%. After Donald Trump’s victory in America, the Kremlin had proclaimed the threat of global liberalism to be over. And yet on March 26th, 17 years to the day after Mr Putin was first elected, tens of thousands of Russians took to the streets in nearly 100 cities to demonstrate against corruption, in the largest protests since 2012. + +The protests began in Vladivostok and rolled across the country to Moscow and St Petersburg, which saw the largest crowds. Riot police arrested more than 1,000 people in Moscow alone. The state media ignored the demonstrations; the top Russian search engine, Yandex, manipulated its results to push reports of them down the page. The Kremlin was speechless. + + + +The marches came in response to a call from Aleksei Navalny, an opposition leader and anti-corruption campaigner who wants to run for president next year. Despite the government’s crackdown on activism, Mr Navalny has doggedly continued publishing exposés of corruption on social networks and YouTube, and expanding his volunteer organisation. His latest target is Dmitry Medvedev, the prime minister. On March 2nd Mr Navalny released a film alleging that Mr Medvedev had used charities and shell companies to amass a collection of mansions, yachts and other luxuries. The video has been watched 15m times on the internet. + +The decision to target Mr Medvedev was strategic. Whereas Mr Putin is praised for restoring Russia’s geopolitical power, Mr Medvedev is seen as weak and held responsible for Russia’s economic woes. He is often ridiculed for his taste for Western gadgets and frequent gaffes. (“We have no money, but you hang in there,” he told pensioners in Crimea last year.) He is equally disliked by security-service hardliners, such as Igor Sechin, Mr Putin’s closest confidant, and by moderate technocrats such as Aleksei Kudrin, a former finance minister. Yet the protests were not restricted to Mr Medvedev. Denis Lugovskoi, an engineering student who demonstrated in Orel, 325km (200 miles) south of Moscow, says they were aimed at the whole political elite. + +Although the crowds were thinner than those in Moscow in 2011-12, they were in some respects more alarming for the Kremlin. The protests of five years ago, sparked by rigged parliamentary elections, were largely confined to Moscow and St Petersburg, and deliberately lacked unified leadership; the educated, urbane protesters considered this a sign of political maturity. Now both demography and geography are much broader. Protests took place in industrial towns in the heartland, such as Nizhny Tagil and Chelyabinsk, and in poorer cities such as Nizhny Novgorod. Meanwhile, Mr Navalny has become the movement’s clear leader. On March 27th a court sentenced him to 15 days in jail for organising an unauthorised demonstration. + +The crowds also reflected a generational shift. Whereas the protests in 2011-12 had a middle-aged core, the rallies on March 26th were filled with people in their teens and 20s with few memories of their country before Mr Putin. With their diverse class backgrounds, the Kremlin cannot portray them as spoiled city hipsters or pitch them against blue-collar workers, as it did with the protesters five years ago. Unlike the 30-somethings who took to the streets back then, these younger protesters have little to lose. + +When the feeling’s gone + +With the economy in trouble, the patriotic buzz of Mr Putin’s military exploits is fading. Denis Volkov of the Levada Centre, an independent pollster, writes that for most Russians, the annexation of Crimea “has lost its relevance”. The Kremlin, which successfully suppressed the protests five years ago, has fewer tools at its disposal. Arresting or beating up teenage demonstrators would risk bringing their parents onto the streets. And one of the Kremlin’s chief ideological weapons, the fear of returning to the chaos of the 1990s, is lost on a generation that has no memory of it. Another favourite concept, Russia’s resurgence to great-power status, is also of limited use: most of the protesters take it for granted. + +A group of anthropologists from the Russian Presidential Academy who have studied attitudes among young people say they lack the fear of authority instilled during the Soviet era, and are more attached than their elders to universal values such as honesty and dignity. The Soviet coping mechanisms of cynicism and double-think are notably absent among the young. They see Russia’s current elite as financially and morally corrupt, and find Mr Navalny’s simple slogan, “Don’t lie and don’t steal”, compelling. + +Television, the medium which Mr Putin’s government uses to manipulate mass opinion, has little effect on the young, who mainly get their news from the internet. The power of the regime’s use of television relies on the majority of Russians choosing to be passive spectators of the political narratives which the government creates for them. According to the Levada Centre, most Russians believe that “nothing depends on us.” The younger generation appears to be different. “I need to exercise my civil rights if I don’t want to live my life complaining about the country in which I was born,” says a 20-year-old student in Moscow. “It is wrong to say that ‘nothing depends on us.’ Of course it does.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21719803-anti-corruption-protests-herald-new-generation-political-activism-aleksei-navalny-brings/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Growing out of it + +Portugal cuts its fiscal deficit while raising pensions and wages + + +The Socialists say their Keynesian policies are working; others fret about Portugal’s debts + + + +Apr 1st 2017 | LISBON + + + + + +NO ONE would have called António Costa, Portugal’s Socialist prime minister, a fiscal hawk when he took office in November 2015. After finishing second to the centre-right Social Democrats in an inconclusive general election, he cobbled together a coalition with the far left, promising to “turn the page on austerity”. Conservatives dubbed his pact with radicals and communists the geringonça, a term for an improbable contraption. He pledged both to reverse the austerity measures attached to Portugal’s bail-out during the euro crisis and to meet stiff fiscal targets. Many called it voodoo economics. + +Yet Mr Costa has kept his word. In 2016, according to figures released on March 24th, his government cut the budget deficit by more than half to just under 2.1% of GDP (see chart), the lowest since Portugal’s transition to democracy in 1974. His administration restored state pensions, wages and working hours to pre-bail-out levels, and also brought the deficit well under the 2.5% target set for it by the European Union. It is the first time that Portugal has complied with the euro zone’s fiscal rules. + + + + + +The government has grown accustomed to beating international forecasts: the finance ministry drily noted this week that the European Commission had been “gradually catching up with reality” as it adjusted its deficit projections steadily downwards in 2016. The economy has grown for 13 quarters, expanding at an annualised rate of 2% in the fourth quarter of last year. The left-wing pact that opponents expected to unravel within a year has endured, and polls put the Socialists ten percentage points ahead of the Social Democrats, a position of which Europe’s other centre-left leaders can only dream. + +“Mr Costa has certainly defied expectations,” says Antonio Barroso of Teneo Intelligence, a risk consultancy. Mário Centeno, the finance minister, wants the EU to free Portugal from its excessive-deficit procedure, a disciplinary mechanism used to enforce the euro area’s fiscal rules. “Portugal would then join the club of successful ‘turnaround’ stories in the euro zone’s periphery, alongside Ireland and Spain,” says Federico Santi of the Eurasia Group, another consulting firm. + +The ultimate prize would be an investment-grade credit rating. Every rating agency apart from DBRS, a small Canadian firm, has classed Portugal’s sovereign debt as junk since the beginning of the country’s bail-out programme, which lasted from 2011 to 2014. Mr Centeno thinks their failure to recognise the strength of the recovery amounts to unfair treatment and burdens the government with high borrowing costs. Interest rates, he complains, absorb more of Portugal’s budget than of any other EU country’s. + +Rating upgrades, however, may not be imminent. The European Commission warned this week that Portugal’s banks remain fragile. The government plans to inject €2.5bn ($2.7bn) to recapitalise state-owned Caixa Geral de Depósitos, the country’s largest bank, which could increase this year’s budget deficit. The sale of Novo Banco, the lender salvaged from the collapse of Banco Espírito Santo in 2014, is expected to be concluded shortly, but may also entail additional state liabilities. Mr Costa blames the EU and the IMF for failing to provide enough aid to the financial sector during the bail-out, leaving his government, which has spent €4.4bn on bank rescues, to clear up the mess. But economists also remain concerned about public debt, which inched up to 131% of GDP last year despite the shrinking deficit. + +“The country’s high debt levels remain the elephant in the room,” says Mr Barroso. Should the euro zone face a shock, such as Marine Le Pen winning France’s presidential election, Portugal is the country most likely to face a debt crisis, he thinks. The Portuguese tout the shrinking deficit as proof that their Keynesian approach to growth works. But until Mr Costa shows that he can repeat last year’s budget success, many will remain sceptical. “Supporting domestic demand through a slightly looser fiscal policy may have paid off,” says Mr Santi, “but it is no substitute for the structural reforms Portugal still needs.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/21719753-socialists-say-their-keynesian-policies-are-working-others-fret-about-portugals/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Beyond the hexagon + +France’s presidential race is a clash of worldviews + + +Marine Le Pen’s nationalism meets the unrepentant globalism of Emmanuel Macron + + + +Mar 30th 2017 | PARIS + + + + + +WHAT did Marine Le Pen, the head of France’s National Front, expect to gain by visiting Moscow on March 24th? Her core supporters relished seeing her with Vladimir Putin, a strong woman standing next to a strongman. Ms Le Pen came away claiming that the world now belongs to nationalist populists such as Mr Putin, Donald Trump, India’s Narendra Modi and, implicitly, herself. Interestingly, the visit did not seem aimed at the usual goal of candidates who go abroad: reassuring voters that they can safely be trusted with foreign policy. + +In French campaigns, gravitas-enhancing trips beyond the Hexagone (as mainland France is known) are especially popular with candidates who have little experience of governing. This year Ms Le Pen has been to America (where she was seen sipping coffee in Trump Tower in New York), Germany, Lebanon and Chad. Emmanuel Macron, the young centrist who is tied with her for first place in the polls, has been to Algeria, Britain, Germany, Jordan and Lebanon, in part to reach out to expat voters and donors. + + + +Ms Le Pen’s trip to the Kremlin was risky. She needs to broaden her support beyond her current one-quarter of the electorate by appealing to more moderate voters. She hopes to poach some from François Fillon, the centre-right Republican candidate, who has been dogged by corruption claims. (Mr Fillon, too, is chummy with Russia, but that is not what most of his supporters like about him.) Ms Le Pen’s endorsement of Russia’s invasion of Crimea, her wish to pull France out of NATO’s unified military command and the fact that in 2014 her party took a loan of nearly $10m from a Moscow-based bank will not help her lure moderates—or anyone who has been paying attention to Mr Putin’s unlovely record. + +Most French voters are not fond of Russia. In a Pew survey in 2015, 70% said they viewed Russia unfavourably and 85% did not trust Mr Putin. So Mr Macron is in the mainstream in calling Ms Le Pen’s fascination with him “toxic”. Her bet, however, is that by celebrating Brexit and hobnobbing with the Russian autocrat, she can present herself as part of a glorious worldwide march of nationalists, who are destined to defeat pusillanimous globalisers such as Mr Macron. She told industrialists in Paris this week that as a “big country”, France does not need others to prosper. She wants to limit foreign trade and migration, reinvigorate ties with France’s former African colonies and withdraw from the EU. She depicts Mr Macron, a former Rothschild banker, as a privileged child of finance in thrall to a crumbling EU “empire”. + +François Heisbourg, a foreign-policy expert who has advised Mr Macron, worries that such a strategy could prove effective, especially in the second-round run-off. Public opinion is “hardly enamoured with globalisation”, he notes. Matthew Goodwin of the University of Kent sees Ms Le Pen’s outreach to other populist leaders as an attempt to associate herself with “an alternative world order”. + +Maybe so, but it is a scary one. A strategist for Ms Le Pen’s team recently travelled to London to tell investors that her plan to quit the euro and hold a referendum on EU withdrawal need be no more disruptive than Brexit. That would hardly be reassuring even if it were true, which it is not. + +Ms Le Pen says that what matters is not whether you are left or right, but whether you are a nationalist or a globalist. Mr Macron agrees. This week he told businessfolk in Paris that Brexit will prove a lamentable and costly error. He also flew 9,400km (5,840 miles) to the island of Réunion, a French territory in the Indian Ocean. Globalisation is a fact, he said; the answer is limited, “intelligent regulation”. Plenty of French bigwigs agree, too. A Socialist former prime minister, Manuel Valls, endorsed Mr Macron this week, as did several centre-right senators. + +Yet some 40% of voters remain undecided. If, as polls currently suggest, the contest comes down to Mr Macron and Ms Le Pen in the second-round run-off, they will not be able to complain that they were not offered a clear choice. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21719806-marine-le-pens-nationalism-meets-unrepentant-globalism-emmanuel-macron-frances-presidential/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Bewildered in Bratislava + +Who kidnapped the son of Slovakia’s president? + + +A political mystery unresolved 20 years later + + + +Apr 1st 2017 | PRAGUE + + + + + +IN AUGUST 1995 Michal Kovac Jr, whose father was president of newly independent Slovakia, was stopped in his car by armed men who handcuffed him, forced him to drink two bottles of whisky and began driving him to an unknown destination. When he tried to jump out of the car, they beat him and shocked him with a stun gun. The 34-year-old Mr Kovac woke up in Austria, where police arrested him in connection with a German financial probe. They said they had been tipped off to his whereabouts by a Slovak informant. An Austrian court soon released him because of the illegal manner of his detainment. He was never charged. + +Slovak police and justice officials investigating the kidnapping were frustrated when a key witness went into hiding and his police contact was killed with a car-bomb. Still, they managed to prepare an indictment, which was later leaked. It pinned the crime on private thugs hired by the Slovak secret services (SIS), whose head, Ivan Lexa, was the right-hand man of Vladimir Meciar, the prime minister at the time. The senior Mr Kovac was a political opponent of Mr Meciar’s. But before charges could be brought, Mr Meciar passed an amnesty law that buried the case. + + + +Mr Meciar has spent the past few years in quiet retirement at his mansion, christened “Elektra”. But on March 2nd a docudrama about the case, “Unos” (“Kidnapping”), opened in Slovakia, putting the old case back in the headlines. Mr Meciar felt obliged to appear on television to defend himself. Polls showed that 63% of Slovaks favoured revoking the amnesty law, and on March 13th Robert Fico, the current prime minister, announced that he would do so. + +Mr Fico faces declining approval, especially among young voters. He may be defending himself against any appearance of complicity; his first government, in 2006, included Mr Meciar’s party. But he is also being pushed by popular anger at corruption, as the popularity of “Unos” shows. “Politicians should know that crime and wrongdoing can be punished, even after such a long time,” says Milan Stranava, the film’s producer. Any punishment will come too late for the elder Mr Kovac. He died in October 2016. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21719759-political-mystery-unresolved-20-years-later-who-kidnapped-son-slovakias-president/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Charlemagne + +As the world sours on trade, the EU sweetens on it + + +Top of the agenda is a deal with Japan + + + +Mar 30th 2017 + + + + + +WHAT a difference a few months makes. Barely half a year ago the European Union’s (EU’s) trade policy was a mess. A much-touted trade and investment partnership (TTIP) with the United States was on life support, trashed by NGOs and consumer groups, and disowned by some of the politicians who had asked for it in the first place. A deal with cuddly Canada (CETA) barely survived an encounter with a preening regional parliament in Belgium. Governments were scrapping over how to respond to state-subsidised Chinese steel, and Britain, among the club’s weightiest pro-trade voices, had voted to leave the EU, a decision made flesh by the government’s Article 50 letter this week. + +And now? Trade is “going to be huge in the coming months”, says a European diplomat. His word choice is a reminder of the reason for the change: Donald J. Trump. One of the American president’s first acts was to withdraw from the Trans-Pacific Partnership (TPP), a trade deal covering a dozen countries around the Pacific Rim. Mr Trump complains about Germany’s trade surplus, and his administration hints that it will ignore rulings from the World Trade Organisation. The leader of the free world is pulling up the drawbridge, and the EU (which negotiates trade deals on behalf of its member governments) has spotted an opportunity. + + + +Better still, Mr Trump’s inward turn has left America’s other spurned partners seeking new friends. The prime candidate is Japan, the world’s third-largest national economy. Bitterly disappointed by Mr Trump’s decision to quit the TPP, Japan happens to have been negotiating a trade deal with the EU since 2013. Cue an unexpected burst of Japanese Europhilia. Last week Shinzo Abe, the prime minister, toured European capitals to gladhand his counterparts and tout the virtues of globalisation. Japan and the EU, he said in Brussels before his delighted hosts, would “show to the world the flag of free trade as a model”. The two sides hope to conclude their talks this year. If the boost to growth would be less than stellar—the EU projects a long-term GDP increase of 0.76%—a deal between two economic giants would still demonstrate to the world that globalisation can survive an American retreat. + +And why stop with Japan? Mr Trump’s election may have placed TTIP in the deep freeze, but there are plenty more potential partners for Europe waiting in the wings, including Mercosur, a Latin American grouping. Mexico, never far from a Trumpian tongue-lashing, is another candidate. Nor is such optimism limited to trade. If Mr Trump, who this week scrapped some of Barack Obama’s clean-energy rules, withdraws from the Paris climate-change deal, Europe may seek to deepen its environmental partnership with China. “Positive globalisation” is the new mantra. + +True, Europe’s trade naysayers have hardly given up the fight; EU deals with Singapore and Vietnam will face tricky votes in the European Parliament later this year. Cecilia Malmstrom, the EU’s doughty trade commissioner, is touring the EU making the case for deals that uphold European values. But officials quietly harbour the hope that America’s president has helped their case by turning opposition to trade toxic. Thanks to Mr Trump’s influence the public mood in Germany, in particular, has become much less anti-trade since last year. + +But hold the exuberance. It is “utter tosh” to imagine that strategic interests trump plain mercantilism in EU trade talks, says Hosuk Lee-Makiyama, director of the European Centre for International Political Economy, a think-tank in Brussels. Japanese diplomats agree that Mr Trump’s election has pushed them closer to Europe, but doubt that it will have a material effect on the negotiations (which resume next week). Mr Abe’s government stared down Japan’s coddle farmers during the TPP talks, but may not be willing to take them on again. Other outstanding issues in the talks, from car tariffs to data flows, are no easier to solve in the shadow of The Donald. And raising expectations carries its own risks for the Europeans. One trade official says he fears the EU might now be tempted to go for quick rather than ambitious deals. If so, bad news for those European dairy farmers gazing longingly at the Japanese consumer market. + +Who do you give a gold-plated golf club to in Brussels? + +More importantly, Mr Abe is hedging his bets rather than executing a strategic pivot. His jaunt around Europe follows two visits to America, including a jolly golfing weekend at Mr Trump’s Florida resort that culminated in a joint pledge to deepen economic co-operation. His government, reasonably or otherwise, hopes this will lead to a bilateral trade deal. Contrast Angela Merkel’s recent trip to the White House. At a frosty joint press conference Mr Trump carped about German trade negotiators before sending the chancellor packing with a couple of petulant tweets about defence spending. Officials in Berlin were furious. + +All this complicates Japan’s negotiations with Europe, for Mr Abe may not want to make the EU a generous offer that becomes a template for the more important American talks to come. Moreover, America’s government can credibly link trade to broader issues, including its Asian security posture—which matters when North Korea is once again lobbing ballistic missiles into the Sea of Japan. Such grand bargains are harder to strike for the EU, a club in which trade talks are handled by Brussels but national governments remain in charge of military matters. + +Europe should understand this. It backed TTIP not just to create jobs and growth, but to cement the transatlantic alliance and set mutual standards that much of the rest of the world would have been forced to follow. That the transatlantic talks were floundering long before Mr Trump took office said something about the EU’s ability to conduct foreign policy through trade agreements. As for Japan, the two sides’ efforts are genuine and the chances of a deal look better than ever. But do not be fooled: it would be a consolation for American withdrawal, not a triumph for the liberal world order. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21719801-top-agenda-deal-japan-world-sours-trade-eu-sweetens-it/print + + + +上一项 文章 章节 下一项 + + + + + +Europe 章节 International + + + + + +Britain + + +Britain and the European Union: A race against time + +The UK Independence Party: And then there were none + +Labour v capital: Justice in an age of austerity + +British Airways on a budget: Of sandwiches and Percy Pigs + +Birmingham’s Muslims: In the eye of the storm + +Home-grown terrorism: Zeal of the convert + +Bagehot: What would Walter say? + +Europe 章节 International + + + + + +文章 章节 下一项 + + + + + +A race against time + +The two-year countdown to Brexit has begun + + +It leaves Britain little time to get through a bulging, contentious agenda + + + +Apr 1st 2017 + + + + + +BACK in October Theresa May promised to invoke Article 50, the legal procedure for leaving the European Union, by the end of March 2017. On March 29th the prime minister duly sent a six-page letter to Donald Tusk, the president of the European Council of heads of EU governments. Article 50 sets in motion a negotiating process with a two-year time limit that can be extended only by unanimous agreement of all EU governments. Mrs May told Parliament this was a time for the country to come together. And in her letter she promised her European partners (seven times) that she wanted a “deep and special partnership” with the EU. + +No doubt mindful of the two-year deadline, the response from Brussels was swift. Mr Tusk issued a curt acknowledgment and said he would publish draft guidelines for the negotiations shortly. He confirmed that, after debate among EU governments, the European Council would meet on April 29th to approve the guidelines; later, governments will approve a negotiating mandate for the European Commission. The April meeting will fall between the two rounds of France’s presidential election, giving leaders something else to chew over. They will also have in mind Germany’s election in September. + + + + + +A discussion that has so far mainly been among parties at home will now shift to the real battleground, between Britain and its EU partners. The British team will find that, for those partners, unity of the 27 is the main goal. Mr Tusk’s response says that the EU’s priority is to minimise uncertainty for “our citizens, businesses and member states”. And although the constructive tone of Mrs May’s letter was welcomed, many jibbed at her threat to link security and the fight against crime and terrorism to securing a trade deal. + +The first tussle with Michel Barnier, a former French foreign minister who is the commission’s Brexit negotiator, will be over whether the talks should start with the terms of divorce and only later discuss a trade deal. This is what the European Council wants. Mrs May will argue that both issues should be negotiated simultaneously, since Article 50 talks of a settlement “taking account of the framework of [a leaving country’s] future relationship”. But the others are likely to stand firm. + +Splendid integration + +One reason for this is that the divorce talks alone will be difficult enough. The commission’s negotiating mandate will include agreeing on the rights of 3m EU citizens to stay in Britain and 1m Britons to stay in EU countries; finding some way to avert a hard border between Northern Ireland and the Irish republic; and settling the exit bill that it claims Britain must pay. The first should be uncontroversial, though it may take some time to settle. The second will be testing, because Britain’s plan to leave the EU’s single market and customs union seems to imply border controls. Yet it is the third that could be the most explosive. + +The commission claims that past commitments plus future obligations mean that Britain owes the EU as much as €60bn ($65bn). It believes this debt could be enforced at the International Court of Justice. Mrs May’s letter refers to the matter only obliquely. David Davis, her Brexit secretary, likes to quote a report from the House of Lords citing legal advice that, after Brexit, Britain will owe the EU nothing. More fanciful Brexiteers even claim that the EU owes Britain money for its share in the capital of the European Investment Bank. + +Rows over money have always been the bitterest of all in the EU. The departure of such a big net contributor will cause pain, one reason why the commission has talked up the size of the exit bill. The voting rules under Article 50 do not make Britain’s position any easier. The divorce settlement must be approved by a “qualified majority” of EU countries, excluding Britain, and by the European Parliament. The parliament’s Brexit point-man, Guy Verhofstadt, threatens to cause trouble. + +There is a serious risk that the budget row will blow up the talks before they start. Mr Barnier has tried to avoid this by suggesting it is possible to agree to some broad principles for a settlement and leave the exact amounts for later haggling. That could take place when the discussion moves on to future trading arrangements. Alas, these could prove even harder to settle than the Article 50 divorce itself. + +Mrs May has made clear that her priorities are to take back control of migration, breaching the EU’s principle of free movement of people, and to escape the jurisdiction of the European Court of Justice (ECJ). This means, as she accepts, that Britain must leave the EU’s single market and customs union. She rejects off-the-shelf models for a new trade relationship. Instead, she wants a bespoke free-trade deal that gives, to the maximum extent possible, barrier-free access to each other’s market. + +This will be tricky to agree on, and even harder to ratify. In many countries the opponents of free trade will stand in the way. Negotiations take years: they started between Canada and the EU in 2007 and the resultant CETA deal is still not fully in force. The rules for approving a Britain-EU free-trade deal will be a problem, for as a “mixed” agreement it must be ratified by all national parliaments in the EU as well as some regional ones (including Wallonia’s, which almost kiboshed CETA). + +Tangled up in red tape + +Substituting new rules for those of the single market is even more complicated than agreeing on a free-trade deal, for they intrude into almost every part of business activity. A special number of the Oxford Review of Economic Policy gives an idea of the vast spread of policies that must be changed post-Brexit. Besides the economic and legal impacts, it includes chapters on a new migration regime, financial-services regulation, competition policy, regional aid, state aid, industrial policy, transport, agricultural support and higher education. + +Against a tight deadline, the complexity of these issues will be a huge challenge. Anand Menon of King’s College, London, director of The UK in a Changing Europe, an academic network, reckons the Brexit negotiations will be the most difficult and complicated that any post-war government has faced. The Institute for Government, a think-tank, adds that Britain’s civil service is at its smallest since the war; it also notes gaps in the staffing of the relevant departments. + +Trade negotiators insist a deal will take longer than two years. Some Brexiteers disagree, pointing out that, unlike normal trade talks, the two sides start in complete convergence, since Britain has been an EU member for 44 years. To cement this, they note that the misnamed Great Repeal Bill, promised by the government this week, will translate almost all current EU laws into British law. Yet it is not the starting point that matters, but what happens when a post-Brexit Britain freed from the ECJ begins to diverge from the EU’s norms. + +In truth, the nub of the single market is not its scrapping of tariffs or even customs checks, but its getting rid of myriad non-tariff barriers thrown up by different rules and standards. The government is hinting that, for practical reasons, it might stick with some EU regulators (such as, perhaps, the European Medicines Agency) for some time after Brexit. But as Mujtaba Rahman of the Eurasia Group, a consultancy, says, this ducks the point that, if Britain wants to retain barrier-free access to the single market, it may have to observe all EU regulatory standards anyway. + +Another argument from Brexiteers confronted by Article 50’s two-year deadline is that there is little to fear if there is no deal at all. Mrs May herself has insisted that “no deal for Britain is better than a bad deal for Britain”, though she did not repeat this in her letter. No deal means reverting to trade on World Trade Organisation terms. As Open Britain, another think-tank, notes, this implies not just all of the EU’s non-tariff barriers, but tariffs of 10% on cars, 15% on food and 36% on dairy products. It would end Britain’s access to the EU’s trade deals with 53 other countries. Last year the Treasury said this option would reduce GDP by 7.5% after 15 years. The House of Commons Foreign Affairs committee recently warned against the no-deal option. + + + +If a comprehensive trade agreement cannot be made in two years, an obvious conclusion follows: some transitional arrangement will be needed after March 2019. Mrs May’s letter nods to this by talking about “implementation periods”. The trouble is that any such arrangement may itself be hard to agree on, especially if there is lack of clarity over the final destination. The simplest idea is to prolong the status quo, but that may be hard for Mrs May to sell at home if it entails both free movement of people and a role for the ECJ. + +And then there are the implications for the United Kingdom. Some policies needing redesign post-Brexit, such as fisheries, are matters for devolved governments. This week the Scottish Parliament backed the demand of its first minister, Nicola Sturgeon, for a second independence referendum. In Northern Ireland, where attempts to form a new power-sharing executive have broken down again, Sinn Fein is calling for a referendum on whether to join the Irish republic. Mrs May has vowed to protect the “precious, precious union”, but she knows that both Scotland and Northern Ireland voted to stay in the EU last June. + +At least she can take comfort in the ineffectiveness of the opposition at home. Both Labour and the UK Independence Party are beset by weak leadership and internal feuding. Yet her control over Parliament is not absolute. Her working majority is just 17. Passage of the Great Repeal Bill may be contentious, and it is only the first of up to 15 parliamentary bills necessitated by Brexit. Several MPs are loudly promising to hold Mrs May and Mr Davis to account over their Brexit promises. This week Sir Keir Starmer, the shadow Brexit secretary, produced six tests for judging if Labour should support the final deal, while a cross-party group under the auspices of Open Britain came up with ten points. The House of Lords, most of whose members are strongly anti-Brexit, may also make difficulties for Mrs May. + +In the end, however, her biggest problem may not be with her opponents or with her EU partners across the negotiating table. As so many previous Tory prime ministers have found, it will be with her own backbenchers. Hardline Brexiteers are ready to denounce any compromise in the negotiations as a betrayal. Mrs May has raised their expectations, as well as those of voters, about the benefits of Brexit. When it becomes clear that there are costs instead, she may find her high popularity ratings fast withering away. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21719758-it-leaves-britain-little-time-get-through-bulging-contentious-agenda-two-year-countdown/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +And then there were none + +As it celebrates Brexit, UKIP loses its man in the Commons + + +Douglas Carswell abandons the party, whose nativism clashed with his libertarianism + + + +Mar 30th 2017 + + + + + +WHEN the UK Independence Party (UKIP) was formed in 1993 to campaign for Britain to leave the European Union, few imagined the fringe party’s constitutionalist agenda would make much impact. Nigel Farage, the party’s on-off leader between 2006 and 2016, often joked that he was the “patron saint of lost causes”. Yet on March 29th, 24 years after the party was formed, Theresa May triggered Article 50, beginning the process to leave the EU. It represents an astonishing political victory for UKIP. And yet as Kippers celebrated, they did so amid new questions about their party’s future. + +The questions were prompted by the resignation of Douglas Carswell, UKIP’s sole MP, who left the party on March 25th declaring its job done (he remains the MP for Clacton, now as an independent). Mr Carswell’s brand of libertarianism had sat uncomfortably with the party’s increasingly misanthropic nativism, a contrast only heightened by the vote for Brexit. + + + +Whereas Mr Carswell talks of using a post-Brexit immigration system potentially to allow in more migrants, UKIP’s Brexit spokesman this week floated the idea of repatriating EU citizens if they “do not work, never pay taxes or are beggars or criminals”. Crucially, unlike most in his former party Mr Carswell has little doubt that Brexit is in safe hands. His faith is born of cynicism. Most politicians “don’t give a damn about the script,” he explains; “they just want to be the actor on the screen.” Thus the referendum result has “fundamentally realigned the machinery of the state,” which he says means there is little need for pressure from another party. + +Yet Mr Carswell’s resignation is also an admission of defeat. When he defected to UKIP from the Conservatives in 2014 he hoped to mould it into a grassroots, libertarian outfit. Under Paul Nuttall, UKIP’s new leader, the party has turned to economic nationalism as a way to appeal to fed-up Labour voters. Mr Carswell’s resignation “has been on the cards for an awfully long time”, says a party spokesman. + +That may be so, yet his exit is another problem for a party that has been in a state of turmoil since the referendum. Mr Carswell expects members and voters to follow him out of the door. And UKIP’s bid to convert England’s industrial heartlands to its cause has got off to a bad start. In February Mr Nuttall failed to win a by-election in Stoke Central, which he described as “the capital of Brexit”. His reputation has been harmed by the revelation that he falsely claimed to have lost a friend in the Hillsborough football disaster of 1989. His promise to end the party’s long-running power struggles looks ill-fated. + +The overall picture is of a party struggling with familiar incompetence and unfamiliar existential angst. What, exactly, is the point of UKIP after Brexit? Mr Nuttall will attempt to provide an answer to the question at UKIP’s autumn conference in Torquay, where he plans to introduce a new constitution, party structure and policy platform. + +The extent of the proposed changes suggests that Mr Nuttall has grasped the difficulties UKIP faces. Partly for that reason, it is too soon to write off the party. If it carves out a halfway-coherent message, the collapsing support for Labour may offer a chance to scoop up a small number of seats at the next general election, due in 2020. Acrimonious Brexit negotiations or any concessions by Mrs May to the EU—both of which are likely—would help it. But Mr Nuttall faces an uphill struggle. His stuttering start has hardly helped. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21719819-douglas-carswell-abandons-party-whose-nativism-clashed-his-libertarianism-it/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Justice in an age of austerity + +Want to challenge your unfair dismissal? That’ll be £1,200 + + +Charging employees to bring employment tribunals—even if they win—erodes their legal protection + + + +Mar 30th 2017 + + + + + +EIGHT years after Britain emerged from recession, average real earnings are still below their peak. But measly pay is not the only thing squeezing workers. Since 2013 employees who think they have been wronged by their employer—underpaid or dismissed unfairly, for instance—have had to pay up to £1,200 ($1,500) to go to an employment tribunal, which was previously free. A challenge to the legality of such fees came before the Supreme Court on March 27th. A judgment is expected by the summer. + +Since the decline of trade-union membership in Britain, the employment-tribunal system has been the main mechanism for enforcing individual employment rights. In 2012-13 there were roughly 190,000 tribunal claims, equivalent to one for every 130 or so employees. After fees were introduced the number of claims dropped by about 70%. There were only around 60,000 in 2014-15. + + + +The government has welcomed the decline as evidence that bogus claimants are being deterred. “Like Japanese knotweed,” one government minister wrote in 2014, “the soaring number of tribunal cases [was] squeezing the life and energy from Britain’s wealth creators.” + +But a paper in the Modern Law Review by Abi Adams and Jeremias Prassl of Oxford University suggests a different interpretation. The authors argue that the fees prevent genuine claimants from enforcing their employment rights. In many cases the expected payoff is lower than the fee for starting the tribunal—which is not necessarily refunded even if the claim is upheld. The authors calculate that abandoning even a claim guaranteed to succeed is the rational response for 35-50% of would-be claimants. + +Worse, there is little evidence that the fees have deterred only frivolous or mendacious claims. If that were the case one would expect the success rate of claimants to have risen. Instead, since 2012-13 the proportion of complaints that are struck out or dismissed has roughly doubled. It may be that people with small but legitimate grievances have been deterred, whereas those who feel confident enough to game the system have gone ahead. + +Even if convinced by such arguments, the Supreme Court may not recommend the abolition of fees entirely. A report last year from the Justice Committee of the House of Commons acknowledged that a contribution by users to the costs of operating courts was not objectionable in principle. A recent government review made a similar argument. Yet Ms Adams and Mr Prassl argue that the steepness of the fees makes them a “disproportionate restriction on litigants’ right of access to the employment tribunals”. That is bad not just for litigants but for Britain’s labour market generally. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21719825-charging-employees-bring-employment-tribunalseven-if-they-winerodes-their-legal/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Of sandwiches and Percy Pigs + +British Airways is turning into a no-frills airline + + +Although the airline is facing plenty of criticism, its strategy looks sound + + + +Mar 30th 2017 + + + + + +ALONGSIDE “rip-off” energy companies, Sir Philip Green and anyone who thinks that a hard Brexit is not brilliant news, Britain’s tabloid newspapers have a new hate figure: British Airways (BA). Britain’s flag-carrier prides itself as a premium airline, a cut above budget operations such as easyJet and Ryanair. But now BA is trimming the frills too, leaving its frequent flyers irate. The Sun has renamed the airline “British Bareways”. Yet although BA is copping plenty of criticism, its strategy looks a sound one. + +The kerfuffle stems from BA’s efforts to cut costs. It recently got rid of free food and drink in economy class on most short-haul flights (instead it is selling sandwiches and Percy Pig sweets from Marks & Spencer, another company beloved by Middle England). First-class passengers are horrified by reports that they will have to make do without flowers in the loos or an extra starter before their meals. Next year it plans to squeeze 20% more seats into some of its aircraft. Reports of planes grounded owing to lack of toilet paper have done little to dispel BA’s bargain-basement image. + + + +But the no-frills approach is well suited to the times. As the British economy slows in 2017-18, demand for air travel is likely to drop. Last year airline fares fell by more than 2%. Demand on some routes is weak because of fears of terrorism. And budget airlines are still expanding their fleets aggressively. This means that BA will have to “change to compete on price, or shrink,” warns Mark Simpson, an aviation analyst at Goodbody, a stockbroker. + +Alex Cruz, BA’s aptly named boss who took over in April last year, seems to be the right man for the job: he was previously chief executive of Vueling and Clickair, two low-cost airlines. As he explained to investors last November, BA ultimately intends to cut its headline fares. This will allow it to compete better against the likes of easyJet and Ryanair. So far, the ploy seems to be working. While the FTSE 100, Britain’s main share index, has inched up over the past three months, the share price of International Airlines Group (IAG), of which BA is the largest part, has jumped by a fifth. + +The worry is that customers will protest against the withdrawal of their free Bloody Marys by switching to other airlines. But two big factors are in BA’s favour. The first is its frequent-flyer programme, which has over 7m members (the airline carries 45m or so passengers a year). Many members are fiercely loyal because points accumulated by flying with BA can be spent on other things. + +The second is BA’s unique position in Britain’s airline market. Even if quality declines, on short-haul routes BA’s monied clientele have few swankier alternatives. IAG has a 56% market share at Heathrow, Britain’s best-connected airport. No other grouping of premium airlines offers so many routes from Britain to Europe. And so, like the ice-cream seller in the economic thought experiment credited to Harold Hotelling, BA has an incentive to cut corners on service, snatching budget airlines’ customers while losing none of its own. + +Which explains why the penny-pinching is likely to continue. Flag-carriers were left behind in the 1990s by the rise of no-frills airlines in the short-haul market. Now Willie Walsh, IAG’s boss, wants to lead the low-cost revolution in long-haul. BA is running cheap flights in competition with Norwegian, a pioneer in cheap long-haul, from Gatwick airport, near London. In March IAG launched Level, a low-cost airline, in Barcelona, to fight off Norwegian’s new hub there which is expected to open in June. And gossips in the City of London predict that IAG will eventually snap up its budget rival. “British Bareways” looks like an increasingly appropriate label. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21719832-although-airline-facing-plenty-criticism-its-strategy-looks-sound-british-airways/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +In the eye of the storm + +An attack in London puts Birmingham’s Muslims in the spotlight + + +Britain’s second city is home to 8.7% of the country’s Muslims, but 14.5% of those convicted of Islamist terrorism + + + +Mar 30th 2017 | BIRMINGHAM + + + + + +ON THE Coventry Road in Small Heath, a mainly-Muslim neighbourhood of Birmingham, there is a large mural of Muhammad Ali. Beside it is painted one of the late boxer’s quotations: “The word ‘Islam’ means Peace. The word ‘Muslim’ means the one who surrenders to God. But the press make us seem like haters.” + +It is not hard to see why those words would resonate in Birmingham, and particularly in a neighbourhood dotted by mosques, madrassas and halal butchers. Parts of the British press have long called Britain’s second-largest city the nation’s jihadist capital. Two years ago a Fox News commentator described it, ludicrously, as a “no-go zone” for non-Muslims. Yet such claims have been revisited since Khalid Masood, a Muslim whose last known address was in Birmingham, murdered four people and injured around 40 others in a terrorist attack in Westminster on March 22nd. Police later made several arrests in Birmingham. + + + +Locals on the Coventry Road roll their eyes at the labelling. “He is an idiot and he has nothing to do with Islam,” says one man, echoing the feeling of many as they arrive for evening prayers at the Green Lane mosque, housed in a beautiful Victorian former public library. But many extremists have found a home in the city. Several of the men who plotted to blow up transatlantic airliners in 2006 were from Birmingham. So is the man believed to have recruited the extremist known as Jihadi John to Islamic State. Organisers of recent attacks on Paris and Brussels have also passed through. + +The Henry Jackson Society, a think-tank, analysed all the people convicted of Islamist-terrorism offences in Britain between 1998 and 2015. It found that one in ten came from just five Birmingham neighbourhoods, none of them far from the Coventry Road. Whereas the 2011 census found that Birmingham was home to 8.7% of Britain’s Muslims, the Henry Jackson report found that the city accounted for 14.5% of those convicted of Islamist terrorism. + +Some blame a conservative strain of Islam in the city. In 2014 what became known as the Trojan Horse plot centred around a group of alleged extremists who were accused of trying to infiltrate Muslim-majority schools and run them along theologically conservative lines. But Tahir Abbas of the Royal United Services Institute, a security think-tank, says that such people are conservatives, not violent extremists. He believes there is too much conflation of conservative Islam with Islamist extremism, in Birmingham and beyond. + +Another explanation is poverty. The West Midlands has a higher share of people living in households earning below the national average than any other English region. The Henry Jackson report found that three-quarters of offences were committed by people from above-averagely deprived neighbourhoods. Most jihadists have little knowledge of Islam, says Mr Abbas. Sparse opportunities lead to anger and frustration, and in turn to crime and then extremism. “It’s the gangster excitement that fits into their sense of needing to belong,” he says. Masood, the Westminster killer, had a criminal history including spells in prison for knife offences, some committed under the influence of drink. + +Nicola Benyahia agrees that poverty is a factor. But she also blames the Muslim leadership in the city. Extremists recruited her 19-year-old son, Rasheed, a boy who was neither angry nor criminal. He left for Syria in 2015 and was killed there later that year. Birmingham is attractive to militants, she believes, because it is a big enough place to hide, unlike some of the former mill towns with large Muslim populations farther north. Unlike London, it is small enough to get around easily, and bang in the middle of England. “It’s not that the mosques encourage them,” she says. “They just lack the knowledge and resources to deal with the issue.” + +On March 25th, three days after the attack, some Muslim community figures organised a rally in central Birmingham under a banner reading: “Not in our name. Muslims oppose ISIS”. But the event was attended by only a few hundred people. + +“The whole Islamic community is in denial,” says one uncharacteristically frank local Muslim mother. “It’s like sex,” she says. “They think that if they talk about it, the teenagers might want to do it.” Her child’s school, where almost all the students are Muslim, did not mention the Westminster attack after it happened, she adds. It is like the Catholic church’s failure to deal with paedophile priests, says Ms Benyahia: “They just want it to go away.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21719834-britains-second-city-home-87-countrys-muslims-145-those-convicted/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Zeal of the convert + +Converts to Islam are likelier to radicalise than native Muslims + + +In Britain, converts make up less than 4% of Muslims but 12% of home-grown jihadists + + + +Mar 30th 2017 + + + + + +DECADES before he murdered four people outside the Houses of Parliament, Khalid Masood was a schoolboy from well-to-do Tunbridge Wells named Adrian Russell Ajao. Investigators may never learn the true motives for his attack. But one of the few facts known for certain is that Masood’s case fits into a broad but poorly understood trend: Muslim converts in the West are much likelier than their native-born co-religionists to engage in terrorism, or travel abroad to fight for jihadist organisations like Islamic State (IS). + +In Britain, converts make up less than 4% of Muslims but 12% of home-grown jihadists. About a fifth of American Muslims were raised in another religion, yet two-fifths of those arrested on suspicion of being IS recruits in 2015 were converts (see chart). In France, Germany and the Netherlands, converts are around four times as likely as lifelong Muslims to go to fight in Syria and Iraq. + + + +Terrorism experts have many theories, none of them conclusive. Surveys by John Horgan of Georgia State University show that converts seem more willing than native Muslims to radicalise. Some argue that this is because of their “double marginalisation”, by both bewildered non-Muslim friends and sceptical native Muslims, leaving them vulnerable to the overtures of radicals. According to defectors from IS, recruiters particularly prize new converts because they are harder for intelligence services to trace. + +Others note that many conversions to Islam in the West occur in prison. Peter Neumann of King’s College London provocatively contends that jihad “has become a counter-culture—the most bad-ass way of going against society.” + +The sheer diversity of cases frustrates efforts to understand why converts radicalise. Masood, the Westminster attacker, spent time in prison, but was an uncharacteristically old 52. Nicholas Young, a Washington, DC, transit-police officer who was arrested last year for supporting IS, was also a Nazi sympathiser. Others arrested in America for IS-related activities range from a 15-year-old boy to a 47-year-old ex-soldier. Douglas McCain, an American convert killed while fighting in the countryside of Aleppo province, was once an aspiring rapper. + +Most counter-terrorism policy pays little notice to converts and focuses on preventing extremism among immigrants—such as Donald Trump’s travel ban—or within established Muslim communities, like parts of Britain’s “Prevent” strategy. That may be short-sighted, and even counterproductive, argues Mr Neumann. Links to mainstream Islamic institutions could dissuade converts from falling into radicalism—and prevent its deadly consequences. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21719833-britain-converts-make-up-less-4-muslims-12-home-grown-jihadists-converts/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Bagehot + +How Brexit damaged Britain’s democracy + + +Our outgoing columnist laments the condition of the British state + + + +Mar 30th 2017 + + + + + +TO CALL Britain’s referendum on Brexit a great act of democracy is both to describe it and to debase the word “democracy”. Campaigners traded not hard facts last June but insults to the electorate’s intelligence. Remainers foresaw immediate economic Armageddon outside the EU, while Leavers insinuated that millions of scary Muslims would move to Britain if the country stayed in the club. Aspersions were cast on opponents’ motives and character. Dodgy statistics were shoved through letterboxes and plastered on the sides of buses. On the big day turnout was mediocre for such an epoch-making decision: the 52% who backed Brexit constituted just 37% of eligible voters. + +A low-rent, bilious referendum has begotten low-rent, bilious politics. It has cowed the House of Commons, the “despotic and final” authority of the British system, in the words of Walter Bagehot, the Victorian constitutionalist and former editor of The Economist whose name dignifies this column. MPs are paid to be representatives, not delegates, obeying their own judgment over the roiling opinions of their constituents. But the force of the referendum, a McCarthyite mood in the Brexiteer press and a prime minister whose original support for Remain seems more baffling by the week combined to neuter the legislature. Hundreds of parliamentarians filed, dead-eyed, through the lobbies granting Theresa May the untrammelled power to conduct and conclude exit talks most of them believe will do Britain harm. The referendum has tamed an institution meant to be constructively feral. + + + +Parliament’s spinelessness is matched only by its marginalisation. In his book, “The English Constitution”, Walter Bagehot described the “nearly complete fusion” of executive and legislature as a foundation of the British political system. (“To belong to a debating society adhering to an executive…is not an object to stir a noble ambition,” he noted.) Mrs May’s Great Repeal Bill, the coming legislation putting European laws on British books, offends this tradition. Its “Henry VIII” clauses would enable the prime minister to fiddle unilaterally with the tide of rules as it washes into Britain’s environmental, employment, legal and tax regimes. + +Ordinarily the opposition might be relied on to stand up to this sort of thing. But Jeremy Corbyn is no ordinary opposition leader. Only he could convene an “emergency” rally outside Parliament to protest against the triggering of Article 50 and then fail to turn up, while simultaneously whipping his own MPs to support it. If Mr Corbyn causes the prime minister any worry it is that she might forget his name in an interview. At this rate, domestic scrutiny of the government’s negotiations with the EU will be patchy and, freshly Brexited, Britain will not face a serious choice at the 2020 election. + +Then there is the cultural legacy of the referendum, which created the ugly precedent that someone’s views on things like trade, immigration and financial regulation are matters of policy second and expressions of his very faith in the nation first. This elision of Brexit and the national interest has curdled British politics. “ENEMIES OF THE PEOPLE”, bellowed the right-wing Daily Mail, when judges ruled that Mrs May had to consult Parliament on launching the talks. More than that, it goes against the Westminster system’s way of doing things: unlike, say, France or America, Britain mostly keeps the tribalism and ceremony of the state (the “dignified” parts of the constitution, as Walter Bagehot put it) separate from the practical functioning of government (its “efficient” parts). Brexit has forced them together. + +To follow some of the coverage of British politics you would think that the Scots, now closing in on a second independence referendum, all hated the English and adored the EU; that the old cared nothing about the prospects of the young; that the young were all vacuous virtue-signallers; that Remainers were snobby metropolitans who can state their bank balances only to the nearest thousand pounds and that Leavers were knuckle-dragging racists. It is odd to live in a country whose very name—the United Kingdom—sounds increasingly sarcastic. + +This Britain feels quite unlike the one that hosted the Olympics with such cheer five years ago. These two moments, London 2012 and Article 50, 2017, bookend your columnist’s time covering its politics. Now he is moving on, to a new beat in Berlin. He leaves as prone to gloom about Britain as he was to optimism when he started. The meanness of its politics, the struggling condition of its public services, the coming economic and diplomatic turmoil, the unrealistic expectations of Brexit among voters—it all bodes poorly. To be sure, “muddling through” is something Britain is good at and will no doubt manage, one way or another. But the country deserves better. Things did not have to be this way. + +Go for a constitutional + +The best antidotes are apolitical. Far from Westminster there exists a country more mosaic-like than the raw divisions of its politics allow. A quarter of voters in Islington and Edinburgh opted for Leave; as many residents of Boston, the Lincolnshire town that backed Brexit most keenly, voted to stay in the EU. Millions of pensioners were for Remain. Millions of youngsters wanted out. + +Beyond the headlines and TV studios, Britain’s everyday impressions are mostly those of a homely and mingled place, not a bitter and binary one. The blare of pop songs on shop radios, the church bell across the marshes, the simian whoops and cackles on market-town high streets of a Friday night. The shared shrugs and sighs after a train has waited too long at a station for some misery-unleashing fault not to have materialised. The vinegar-haddock-urine smell of seaside towns; the perfume-booze-sweat crush of commuters travelling home from booming cities. The saris, shiny suits and waxed jackets, the hipster moustaches and old-school mullets. The emergence from a car park or railway station to be confronted with a scene of architectural horror—or unprepossessing and unexpected gorgeousness. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21719817-our-outgoing-columnist-laments-condition-british-state-how-brexit-damaged-britains/print + + + +上一项 文章 章节 下一项 + + + + + +Britain 章节 Business + + + + + +International + + +The war on poverty: Fewer, but still with us + +Britain 章节 Business + + + + + +文章 章节 下一项 + + + + + +Fewer, but still with us + +The world has made great progress in eradicating extreme poverty + + +But the going will be much harder from now on + + + +Mar 30th 2017 + + + + + +TO PEOPLE who believe that the world used to be a better place, and especially to those who argue that globalisation has done more economic harm than good, there is a simple, powerful riposte: chart 1, below. In 1981 some 42% of the world’s population were extremely poor, according to the World Bank. They were not just poorer than a large majority of their compatriots, as many rich countries define poverty among their own citizens today, but absolutely destitute. At best, they had barely enough money to eat and pay for necessities like clothes. At worst, they starved. + +Since then the number of people in absolute poverty has fallen by about 1bn and the number of non-poor people has gone up by roughly 4bn. By 2013, the most recent year for which reliable data exist, just 10.7% of the world’s population was poor (the modern yardstick for destitution is that a person consumes less than $1.90 a day at 2011 purchasing-power parity). Poverty has almost certainly retreated further since 2013: the World Bank’s finger-in-the-wind estimate for 2016 is 9.1%. Homi Kharas of the Brookings Institution, a think-tank, calculates that someone escapes extreme poverty every 1.2 seconds. + + + +This is impressive and unprecedented. Economic historians reckon that it took Britain about a century, from the 1820s to the 1920s, to cut extreme poverty from more than 40% of its population to below 10%. Japan started later, but moved faster. Beginning in the 1870s, the share of its population who were absolutely poor fell from 80% to almost nothing in a century. Today two large countries, China and Indonesia, are on course to achieve Japanese levels of poverty reduction more than twice as fast as Japan did. + +Unfortunately, this happy chapter in world history is drawing to a close. The share of people living in absolute poverty will almost certainly not decline as quickly in the future—and not because it will hit zero and therefore have nowhere to fall. Even as the global proportion of poor people continues to drift slowly downwards, large pockets of poverty will persist, and some of them are likely to swell. The war on want is about to settle into a period of grinding battles in the trenches. + + + +Until recently the world’s poorest people could be divided into three big groups: Chinese, Indian and everybody else. In 1987 China is thought to have had 660m poor people, and India 374m. The concentration of destitution in those two countries was in one sense a boon, because in both places better economic policies allowed legions to scramble out of poverty. At the last count (2011 in India; 2013 in China) India had 268m paupers and China just 25m. Both countries are much more populous than they were 30 years ago. + +Some of the decline in poverty in China and India is artificial, caused by more accurate household surveys and new estimates of purchasing power. But most of it is real. In both countries, economic growth has benefited the poor as well as the rich, peasants as well as city-dwellers: the magic ingredient in China’s poverty-reduction formula since the 1980s has been not its factories but its highly productive small farms. Much the same is true of other Asian countries. Carolina Sanchez, a manager at the World Bank, is particularly impressed by Bangladesh, where many sparsely educated women have been able to find good jobs in textile factories. + +These days about four-fifths of all extremely poor people live in the countryside, and just over half of them live in sub-Saharan Africa (see chart 2). Africa is as studded with examples of failure as Asia is filled with success stories. Look at Nigeria, says Kaushik Basu, an economist at Cornell University. In 1985 the share of Nigerians below the international poverty line was estimated to be 45%—a lower proportion than in China or Indonesia. Now Nigeria has a much higher share of poor people than either country. The World Food Programme, an arm of the UN, is sending bags of grain to the lawless, hungry north-east (see article). + + + +Sub-Saharan Africa is not actually going backwards. Its absolute poverty rate has fallen from 54% in 1990 to 41% in 2013. But because Africa’s population is growing so quickly—by about 2.5% a year, compared with 1% for Asia—and because the poverty rate is declining only slowly, the number of poor Africans is higher than it was in the 1990s. With more destitute inhabitants than any other region, sub-Saharan Africa now drives the global poverty rate. + +Working towards welfare + +That is bad news, because African poverty is particularly intractable. The first problem is that economic growth has been weak, considering the continent’s swelling population. According to the IMF, since 2000 GDP per head at purchasing-power parity has doubled in sub-Saharan Africa; in emerging Asia it almost quadrupled. Oil-producing states such as Angola and Nigeria have gone through booms that have done little to cut deep poverty—and, anyway, have been followed by busts. + +A second problem is that many African governments are flimsy, incompetent, authoritarian or rapacious. The OECD, a club of mostly rich countries, counts 56 places in the world as “fragile”—mostly countries, but including the West Bank and Gaza Strip. Fully 36 are in Africa. The continent is not as ravaged by war as it was in the 1980s and 1990s, but it still has some disastrous countries, such as the Democratic Republic of Congo and South Sudan, and a larger number that occasionally lapse into political violence, such as Ivory Coast and Kenya. Violence both creates poverty and distracts governments from the work of dealing with it. + +The third problem is that poor people in Africa are commonly very poor indeed. Compare Rwanda with Bangladesh. Both are low-income countries; both are reasonably competently governed; both have grown well in the past few years. But Rwanda’s poor are much poorer than Bangladesh’s. Many get by on around $1 a day (see chart 3). Suppose, says Laurence Chandy of UNICEF, that Rwanda experiences 5% growth per head every year for ten years and this growth is spread evenly. At the end of that impressive run, a quarter of Rwandans would still be below the absolute poverty line. + + + +Rwanda is in a worse position than Bangladesh—except in one sense. Because it has a large lump of people below the $1.90 poverty line, Rwanda ought to be able to pull ever more people over the line for every point of growth (assuming the growth is evenly spread). In Bangladesh the opposite is true. It has a lump of people who are just clear of poverty and a diminishing proportion just below the line who can easily be pulled over. Bangladesh has made excellent progress against poverty so far. It will probably make slower progress from now on. + +India is in a similar position to Bangladesh, points out Mr Basu, who used to be the chief economic adviser to India’s government. With huge numbers of people who are barely out of poverty, it now needs to prevent near-paupers from falling back, while also dragging the poorest out of destitution faster than economic growth alone could do the job. + +In short, India and countries like it need proper welfare systems. They are still some way from getting them. In general, government spending is a smaller share of GDP in lower-middle-income countries than in poorer or richer ones. South Asia is especially mean compared with Latin America. In 2014 India spent just 0.7% of its GDP on social safety-net programmes. Three years earlier Brazil had spent 2.4% of its GDP on such programmes. And half of India’s spending went on rural public-works projects and feeding children in schools. Brazil’s payments were nearly all cash transfers, which are more efficient. India has trimmed some spectacularly ill-targeted handouts, such as fuel subsidies, and is musing about a universal basic income, made possible by its biometric identity system, which now covers an astounding 1.1bn people. But that is still talk. + +As extreme poverty disappears everywhere except in Africa and in Asian countries with weak welfare systems, the campaign to eradicate it is likely to slow down. The World Bank reckons that about 4% of the world’s population will still be poor in 2030 if economies continue to grow as quickly as they have in the past ten years and poor people’s incomes grow at the same rate as everyone else’s. The number of poor people might even rise a little. + +The last-mile problem + +After decades of astonishing progress, a spell of sluggish poverty-reduction would be a great disappointment. Among other things, it would probably mean a prominent target being missed. In 2000 the members of the UN agreed to try to cut poverty to half of the 1990 level by 2015. Progress was so quick that the world got there at least five years early. So two new targets have been set—the first of a long list of “sustainable development goals”. The world is now supposed to cut the absolute poverty rate to 9% by 2020 and 3% by 2030. The first of these targets can and probably will be hit. The second looks out of reach. + +Still, a global target for reducing absolute poverty seems increasingly beside the point, because poverty is less and less global. In the mid-19th century every continent had a large population of poor people. Now, after absolute poverty has been virtually eradicated in one region after another—Europe, North America, Latin America and now East Asia—it has become a plague specific to South Asia and sub-Saharan Africa. It seems likely that poverty will become ever more African. + +It is possible to imagine a future in which the global poverty rate continues to drop even as poverty becomes more entrenched in a few unlucky countries, scarred by war and bad government. That would be a huge improvement on the past, but hard to cheer. A broadly poverty-free world, but with sad, durable exceptions, is not good enough. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21719790-going-will-be-much-harder-now-world-has-made-great-progress/print + + + +文章 章节 下一项 + + + + + +International 章节 Briefing + + + + + +Business + + +High-end retailing: Lux in flux + +Swiss watchmakers: Wound up + +Indian education: Cramville + +Scott Gottlieb and the FDA: Drug of choice + +Internet advertising: Advalanche + +Nuclear power: Fallout + +Schumpeter: Sonic boom + +International 章节 Briefing + + + + + +文章 章节 下一项 + + + + + +Lux in flux + +Luxury-goods companies are belatedly trying to go digital + + +A bonanza from the spread of high-end shopping malls across Asia is largely over + + + +Apr 1st 2017 | MILAN + + + + + +IT TAKES at least a month to wash, comb, spin and otherwise prepare fine mohair to become cloth that is stitched into suits by Ermenegildo Zegna, a 107-year-old Italian brand. In Trivero, an Alpine village west of Milan, 150 artisans in an elegant factory work at carding, dying, weaving and warping. As looms rattle, bespectacled women stretch cloth over illuminated screens and check for imperfections. Others use a rack crammed with dried Spanish thistles to remove excess hair from fabric. + +Zegna, run by its fourth generation of family owners, is distinctive in many ways. Big corporate successes are rare in Italy, which tends to nurture smaller firms. Sales from Zegna’s 500-odd shops worldwide, plus earnings from selling to other producers, amount to an annual €1.2bn ($1.3bn) or so. It controls its entire supply chain, which is unusual even in an industry that cherishes raw materials. Three years ago it bought a 6,300-acre farm with 10,000 sheep in Australia. A spokeswoman brags that vertical integration at Zegna runs “from sheep to shop”. + + + +The company is also unusual because it has stayed independent of the few swaggering giants that bestride the luxury-goods world, of which the biggest is LVMH, Bernard Arnault’s 30-year-old conglomerate; it incorporates Louis Vuitton, Dior and many other brands. Other groups include Kering, also based in Paris and the owner of Gucci, and Richemont, a Swiss specialist in watches and jewellery. (The luxury sector is also replete with minnows, of course—single brands with revenues of just a few hundred million euros, such as Versace and Missoni.) + +But in other ways, Zegna is typical of the luxury business. European manufacturers dominate this €250bn industry, accounting for around 70% of production. And Zegna’s past growth and present challenges are shared by firms of all sizes. + +Luxury firms have prospered in the past by forging into new markets: first Japan, then America, then China, notes Armando Branchini of the European luxury-brands association in Milan. Jean-Christophe Babin, the boss of Bulgari, an Italian jeweller, says it was the spread of high-end, beautiful malls in Asia that did most for growth. In particular, status-hungry Chinese consumers propelled luxury’s recent long expansion. Olivier Abtan of the Boston Consulting Group in Paris describes ever-richer Chinese consumers, with an utter “lack of inhibition” in displaying their wealth, as the best possible boost that the luxury industry could imagine. + +The boss of one of the conglomerates recalls how difficult it was to balance rapid expansion of his brands against losing a perception of exclusivity. He resolved the dilemma by taking the theory of the “Veblen good”—one for which demand soars as it becomes more expensive—to an extreme, slapping ever-larger price tags on the firm’s posh handbags and other items. + +This Chinese boom is over. In the past four years Xi Jinping, China’s authoritarian leader, has cracked down on political rivals suspected of corruption, discouraged ostentatious displays of wealth and turned Chinese tourists off shopping abroad by levying heavier duties on those who return with armfuls of Hermès bags. + +Worse, because it could be a permanent shift, firms report changing tastes among Chinese consumers. They have been shunning big, shiny logos and—like Western shoppers—are now mixing cheap fast-fashion items with fewer luxury pieces. Last year, estimates suggest, China’s huge luxury market shrank (see chart). + + + +Solid economic growth in America in the past few years has helped sustain sales: stockmarkets and appetite for luxury goods reliably rise in step. Some retailers do report a recent uptick in Chinese demand over the past six months. Yet no one expects a return to the glory days. Terrorist attacks in Europe, slower growth in air traffic and lower spending in the region’s airports are also hurting luxury sales. The watch business has been particularly hard hit (see article). In Milan the chairman of a famous Italian fashion brand warns of saturated markets. Adding new shops in China is not viable, he says, when “you already have 200 retailers selling every sort of luxury item”. He expects this year to be much like 2016—flat. + +Mr Abtan foresees years of modest global growth, perhaps of around 3%. A spokesman at Gucci says that the overall market is growing at “perhaps 1-2%, so the pie is not getting bigger”. The challenge at Gucci, he adds, is to achieve more “sales density” from existing shops. + +Which kind of firm is best placed to deal with slower growth: giants, minnows or medium-sized firms like Zegna? The advantages of being a conglomerate in luxury include having more muscle to secure brands favoured spots and lower rents inside shopping malls. Luxury groups can also multiply the effect of their marketing and share back-office services. + +A new argument for independent firms such as Hermès or Prada to join the big groups is the imperative to go digital. Luxury firms were slow to adopt sophisticated digital strategies so long as the going was easy. Only 8% of total personal luxury-goods sales take place online, compared with 16% for the rest of retail (excluding items such as petrol and groceries). But now the industry wants that to change. + +Michele Norsa, a former boss of Salvatore Ferragamo, an Italian maker of shoes, notes that new online habits are being led by young consumers who account for a growing share of luxury spending. Online markets have appeared for second-hand sales; fancy frocks can be hired for a few nights from websites such as Rent the Runway. The big firms are thinking of how to profit from such new markets—something that small firms might struggle to do. + +An Italian lawyer who has been involved in several big deals in the luxury sector expects more consolidation, and not only because the industry is slowing. In the online world, firms especially crave fine-grained data about the most attractive customers—for example, on the “super spenders”, the minority of the ultra-wealthy who account for an outsized share of total spending. + +Until now, brands within groups have jealously guarded customer information from each other. But conglomerates may start sharing. Next month LVMH will launch a common digital platform for its brands that will yield new sorts of data. It will compete with rival luxury sites such as Net-a-Porter, and promote the idea of “omnichannel” shopping (combining online and in-store purchases). A decade ago established brands “didn’t see online platforms as even compatible with luxury products,” says José Neves, the founder of Farfetch, an online seller of luxury goods. Now they see that having their own online presence is essential, he says. + +Mr Abtan of BCG says the big groups are probably best placed to go down such digital avenues. They can invest and buy expertise to push traffic from websites to shops. Firms of Zegna’s size also need to bring in skills and should be able to afford it. But the minnows may struggle. The next challenge for luxury-goods firms will be about more than controlling supply chains and colonising posh malls. They will have to understand as much as they can about consumers and their digital habits. From “sheep to screen” will soon matter at least as much as “sheep to shop”. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21719839-bonanza-spread-high-end-shopping-malls-across-asia-largely-over-luxury-goods/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Wound up + +Swiss watchmakers try to keep pace + + +Sales at the biggest manufacturer, Swatch, nearly halved in 2016 + + + +Mar 30th 2017 | LA CHAUX-DE-FONDS + + + + + +BASELWORLD, a giant watch fair that ended this week, usually runs like clockwork. Companies show off new products; buzz and higher sales follow. However, something seems to have jammed. Exports of Swiss watches sank by a tenth in 2016, the worst performance since the financial crisis. Swatch, the world’s biggest watch company, saw profits plunge by 47%. In February exports were 10% lower than they had been a year earlier. + +Swiss watchmakers have been around for long enough not to panic: Blancpain, owned by Swatch, dates back to 1735; Vacheron Constantin, owned by Richemont, a Swiss luxury conglomerate and Swatch’s closest rival, was founded 20 years later. In La Chaux-de-Fonds, a watch-manufacturing hub, workers toil much as they always have, at chin-high desks, using slim instruments to assemble springs, wheels, jewels and other tiny parts. But swings in demand have of late been particularly extreme. + + + +The period from around 2004 to 2012 saw high growth. Chinese shoppers accounted for about half of Swiss watch sales during that time, reckons Thomas Chauvet of Citi, a bank. Manufacturers introduced pricier products and raised the cost of existing ones. The financial crisis was a blip. Chinese demand for watches, as for handbags and fashion, has since waned. Nor has it helped that many companies were slow to adjust to a changing market, continuing to push products onto fragmented wholesalers around the world that had little power to resist big brands’ terms. + +The immediate question is whether this source of demand will recover. The fact that exports to mainland China have recently risen slightly may simply reflect the fact that fewer Chinese are buying watches in Europe, due to higher import duties and fears of terrorism. Sales in Hong Kong, the industry’s most important market, remain depressed. + +In the longer term, the worry in the industry concerns the young. Apple now claims to be the world’s second-largest watch brand, after Rolex. “Will they consider the watch as a possible status symbol or as an information-tool or as a design product?” asks Jean-Claude Biver, who runs the watch business at LVMH, a luxury-goods conglomerate. “Who knows?” + + + +Watchmakers are ill-suited to a generation with fickle tastes. They are often slow to recognise changes in demand; many firms are only now starting to track which models sell to which consumers, where. Even for watchmakers with better data, the meticulous nature of making and assembling components means they will find it hard to build a flexible supply chain. + +Firms’ responses to the challenges have varied. Swatch is mostly carrying on as usual. As for Richemont, last year it bought back older inventory from the stores it distributes to in order to clear shelf space for new models. As part of an organisational change, from March 31st onwards the bosses of individual watch brands will report directly to Richemont’s chairman, Johann Rupert, which the firm believes will make it nimbler. + +At LVMH, Mr Biver is also trying hard to hook millennials: about two-fifths of advertisements, he says, are directed at those who cannot yet afford his firm’s watches. Last year its TAG Heuer brand introduced a connected watch developed with Google and Intel, which sold well. Other brands seem set to follow its lead: in May Richemont’s Montblanc will start selling a smartwatch with a heart-rate sensor and a built-in microphone, among other features. But the smartwatch category itself is far from established. In trendsetting Silicon Valley and elsewhere, the status timepiece of choice is often a smartphone. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21719835-sales-biggest-manufacturer-swatch-nearly-halved-2016-swiss-watchmakers-try-keep/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Cramville + +Ameerpet, India’s unofficial IT training hub + + +The Hyderabad neighbourhood’s IT courses cost less than $400 for six months + + + +Mar 30th 2017 | HYDERABAD + + + + + +UNIVERSITY campuses can take a while to get going in the mornings, as students recover from extra-curricular antics. Contrast that with Ameerpet, a squeezed neighbourhood of Hyderabad that has become India’s unofficial cramming-college capital. By 7.30am the place is already buzzing as 500-odd training institutes cater to over 100,000 students looking to improve their IT skills. If there are ivory towers here, they are obscured by a forest of fluorescent billboards promising skills ranging from debugging Oracle servers to expertise in Java coding to handling Microsoft’s cloud. + +Expertise in the IT industry erodes fast as software programs are upgraded or become obsolete. Indian outsourcing giants such as Infosys and Wipro spend heavily to keep employees’ skills up to date. But staff looking to change their career paths—to say nothing of those who didn’t crack the interview in the first place—need rapid systems upgrades of their own. Training courses authorised by software providers exist but cost up to 375,000 rupees ($5,765). Fees at Ameerpet’s informal institutes are typically below 25,000 rupees for classes lasting three to six months. + + + +The glitziest of Ameerpet’s establishments have some of the trappings of MBA programmes: they dish out business cards to students they call “trainee associates” and help them polish their CVs. But many courses that are in high demand from students from across the country are taught in primitive classrooms filled with plastic chairs. Costs are low in part because institutes use pirated software, avoiding expensive licences. Raids occur sometimes, and the servers have to be wiped clean. But help is at hand to reinstall the software quickly. It is what the attendees will soon be paid to do, after all, once they land a job. + +The focus in Ameerpet is on teaching salary-boosting skills at warp speed. Many instructors are moonlighting from their own IT jobs. In the classroom they use projects that simulate real-world scenarios. Study material is repeatedly refreshed to reflect current job descriptions at leading IT firms across India, not an outdated curriculum. “In college you get a degree. You come to Ameerpet for education,” says Narasimham Peri, a researcher at Britain’s Bristol University. + +Ameerpet succeeds because it fills the gap between Indian IT’s global reach and the poor education Indians receive outside a top tier of engineering colleges. According to a government report published last month, three-fifths of engineering graduates in India are unemployable. Over half of the country’s 3,300-odd engineering colleges are not up to standard. Nasscom, a lobby group for the IT industry, estimates that only three out of every ten faculty members who teach are qualified. Prestigious government-run institutes are reluctant to allocate more seats for students and believe that quality comes through squeezing supply. “That’s terrible,” says Mohandas Pai, a former director at Infosys. + +Even so, it is surprising that Ameerpet is as busy as it is. Routine IT-maintenance tasks of the sort done by its graduates, after all, can increasingly be assigned to machines. Hiring by the Indian IT sector is at a ten-year low and some firms are even shedding workers. But Ameerpet will prevail, says Suresh Golla, who runs a popular coaching class there. He has started to stream lectures to woo foreign students, who are willing to pay far more than Indians. And there are still plenty of local aspirants keen to gatecrash careers that their formal educational qualifications suggest they do not deserve. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21719838-hyderabad-neighbourhoods-it-courses-cost-less-400-six-months-ameerpet-indias/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Drug of choice + +The nominee to run America’s drug regulator is a sound choice + + +Scott Gottlieb is close to the pharma industry but knows its tactics + + + +Apr 1st 2017 + + + + + +WHEN the names of potential candidates for the new head of America’s regulatory agency for drugs, the Food and Drug Administration (FDA), were first circulated, you could almost hear the sound of jaws hitting desks throughout the pharmaceuticals industry. One contender was Jim O’Neill, head of Mithril Capital Management, an investment firm, who is such a libertarian that he doesn’t think the FDA should insist that medicines have to work. Another was Balaji Srinivasan, an entrepreneur from Silicon Valley, who thought roughly the same. + +Removing such a core regulation might seem appealing to business. In fact, the idea of not approving drugs for efficacy is as unwelcome to the industry as it is to doctors and patients. It spends billions of dollars every year on research to deliver better treatments; this would be impossible to justify if drugs had merely to be safe. Patients, meanwhile, would face the awful prospect of having to identify which life-saving medications worked. + + + +So, when the name of the FDA nominee was announced in March, there was widespread relief. Scott Gottlieb (pictured) a resident fellow at the American Enterprise Institute, a conservative think-tank, is qualified, experienced and knowledgeable. He is a doctor, has been a policy adviser and has also worked at the FDA before, as the deputy commissioner for medical and scientific affairs. + +Some reckon that he has too many ties to the drug industry: he is on the boards of five health companies, for example, and does investing and consulting work. Yet his inside knowledge should also give him an edge when dealing with its tricks. His main priority, people in the industry reckon, will be to improve and enhance the FDA, not to dismember it. + +Mr Gottlieb will certainly wish to find more ways of speeding drug approvals. The agency has done much on this front already. Yet inconsistency continues: some divisions of the FDA respond to routine inquiries from companies in a few weeks; others take three months. Mr Gottlieb has also criticised the agency for having a culture that values “excessive desire for certainty”. Attempts to change this will elicit criticism that patient safety is in jeopardy. Yet in some cases it is clear that the demand for ever-larger clinical trials of new drugs has done little for safety, raised costs and rewarded chiefly the very largest companies that can afford to run them. + +One path will be to advance the trend for gathering evidence from trials that take place in the real world, not under tightly controlled conditions. GlaxoSmithKline, a British pharmaceutical group, recently completed the world’s first such test for a drug, Relvar, which treats asthma and chronic obstructive pulmonary disease. The four-year trial was conducted by monitoring thousands of patients’ electronic medical records. + +Generic drugs is another area where Mr Gottlieb has signalled his views. In a commentary for the Wall Street Journal in August, he criticised the policymaking that had kept some generic medicines off the market, raising prices. He may want to tackle the rising cost and complexity of filing applications to market generic drugs—the problem that allowed Martin Shkreli, a controversial entrepreneur, to raise the price of Daraprim, an anti-parasitic drug, by 5,000% in 2015, causing fury. + +The FDA also needs to run faster to keep abreast of innovation. Sudip Parikh, a policy adviser at the Drug Information Association, another think-tank, says the rate of change means that decades-old rules and regulations may not function well for new treatments. Some rules will be too restrictive, others too permissive. On the one hand, for example, more should be done to allow digital health-care products to escape the grasp of the FDA; on the other, the use of stem cells should face more scrutiny. Many clinics offer unregulated stem-cell treatments because of a loophole in the law. Three people were recently found to have been blinded by such treatments. + +Mr Gottlieb still has to gain approval from the Senate, which will examine his industry ties and his zeal for deregulation. If confirmed, he may find that the biggest challenge is managerial. The FDA is a complicated agency of 17,000 staff and Mr Gottlieb may have little financial room for manoeuvre: under Donald Trump and a Republican Congress, the hope of more funds is slim. Mr Parikh says that if the FDA is to be more efficient and its regulations less burdensome, it still needs the right number of scientists and inspectors. Mr Gottlieb may have the technical ability to administer the correct medicine to the agency. But whether the government will foot the bill is another matter. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21719841-scott-gottlieb-close-pharma-industry-knows-its-tactics-nominee-run-americas/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Advalanche + +YouTube highlights problems with digital advertising + + +Big brands protest about ads next to offensive content + + + +Mar 30th 2017 | SAN FRANCISCO + + + + + +EVEN advertisers can be seduced by slick marketing. Google and Facebook have built huge businesses by promising that online ads are more effective and easily measured than traditional media, such as television, radio and print. This year the amount spent on internet advertising, globally and in America, is forecast to surpass television advertising for the first time (see chart). But a controversy at YouTube, an online-video site owned by Google, shows how digital advertising still has problems to sort out before it lives up to the dazzling sales pitch. + +A slew of advertisers, including stalwarts such as Coca-Cola, Walmart and General Motors, have announced plans to suspend usage of, or move ad spending away from, YouTube because ads (in some cases their own) were appearing alongside offensive content, including videos by jihadist and neo-Nazi groups. Google’s own brand has suffered: the damage to the firm’s sales could be as much as $1bn in 2017, or around 1% of its gross advertising revenue. Shares of its parent company, Alphabet, have fallen by around 3% owing to the controversy. + + + +It is not the first time that brands have fretted about where their ads appear. In 2013 Nissan drew headlines when it placed an ad alongside a video of a beheading on the website Forbez DVD. There have been other incidents. But never before have so many advertisers raised concerns about what they call brand “safety” all at once and staged such a dramatic boycott. + +The timing may not be coincidental. Television networks are gearing up for negotiations with advertisers as part of America’s “upfronts”, in which brands commit around 70% of their TV-ad budgets for the year. It is in their interest to encourage big brands to look critically at digital advertising, which has been trouncing nearly all the other categories. The furore over extreme content escalated after the Times, a London-based newspaper owned by Rupert Murdoch, whose empire also contains many television properties, ran a story in mid-March with the headline, “YouTube hate preachers share screens with household names”. Advertisers may also be hoping to negotiate better pricing on their future internet-ad buys by taking a strong stand on this issue, says Mike Henry of OpenSlate, which helps brands place ads on YouTube. + +Few can now do without ads that are bought “programmatically”, meaning in an automated fashion using algorithms. The technique allows brands to follow internet-goers wherever they spend time and direct ads specifically at them. “What’s strange is that everyone was so fascinated with targeting ads that they forgot to ask themselves the mundane question of what content they are appearing next to,” says Rich Raddon of Zefr, an ad-tech firm. + +In other ways, too, digital advertising is falling short. In September Facebook admitted that it had inflated the reported time consumers spent watching video advertisements, and since then has acknowledged further measurement snafus. All these issues have invited censure, including from Marc Pritchard, whose role as marketing chief of the consumer-goods giant Procter & Gamble makes him one of the overlords of advertising. “Surely if we can invent technology for driverless cars and virtual reality we can find a way to track and verify media accurately,” he said. + +Although advertisers may be frustrated with YouTube’s poor oversight of where ads appear, there is a limited supply of high-quality online video. YouTube is like a restaurant in a small town: the service may be slow and the quality of food unpredictable, but there are few alternatives, so the clientele sticks around. Today Google and Facebook control around three-fifths of spending on digital ads in America, and their share is only expected to rise. + +Google and Facebook might consider making concessions to advertisers. At the moment Google does not allow third parties, such as the firm Integral Ad Science, to filter or block inappropriate content on behalf of advertisers, even though these independent firms have the technological tools to do so. That could change if advertisers continue to exert pressure. + +Advertisers can monitor ad placement, too. There are tools for this: on YouTube and elsewhere on the internet, firms can select keywords so that they stay away from certain contexts. Banks can avoid videos and articles that mention foreclosure, for example, and carmakers can choose not to bid on ad space near articles about crashes. But only about 15% of advertisers are using this sort of tool, reckons Scott Knoll, the chief executive of Integral Ad Science. In the future more will probably turn to such solutions, and also pay for outside measurement to check if their ads are being seen. Technology has brought headaches for advertisers, but that won’t prevent them investing in more of it. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21719840-big-brands-protest-about-ads-next-offensive-content-youtube-highlights-problems-digital/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Fallout + +Westinghouse files for bankruptcy + + +The global nuclear-power industry is beset with problems + + + +Apr 1st 2017 | NEW YORK + + + + + +THERE are few more storied innovators than Westinghouse. Founded in 1886, it is the company that brought electricity to the masses. When you plug in your toaster or flip your light switch, you have George Westinghouse’s alternating-current system to thank. In the 21st century the firm seemed poised to unleash a new revolution in nuclear energy. Its AP1000 pressurised water reactor was supposed to make nuclear plants simpler and cheaper to build, helping to jump-start projects in America and around the world. + +But those nuclear ambitions have gone awry. On March 29th the firm filed for Chapter 11 bankruptcy in New York. Its troubles have been a running sore at Toshiba, its Japanese parent, a headache for its creditors, and the latest bad tidings for a nuclear industry beset with problems. + + + +Toshiba was triumphant in 2006 when it paid $5.4bn for Westinghouse after a bidding war, beating out General Electric (founded by George Westinghouse’s archrival, Thomas Edison). Around the same time, Southern and SCANA, two big utilities based in Georgia and South Carolina, respectively, chose the AP1000 design for new nuclear plants. + +But these American projects soon faced the problems that have long plagued nuclear construction. In Westinghouse’s bankruptcy filing, the company explains a dismal chain reaction. Unexpected new safety and other requirements from American regulators caused delays and additional costs. That sparked a fight between the utilities, Westinghouse and its construction contractor, a subsidiary of Chicago Bridge & Iron (CB&I), about who should bear them. The brawl exacerbated delays. + +In an attempt to push the projects forward, Westinghouse acquired CB&I’s subsidiary, then became mired in litigation over the terms of the deal. It also signed new contracts with consortia led by Southern and SCANA, agreeing to shoulder unanticipated costs. Those costs mounted. Construction continued swallowing more time and labour than Westinghouse had hoped. In February Toshiba announced a $6.1bn write-down for the two American projects. Stephen Byrd of Morgan Stanley, a bank, anticipates that the total costs of the plants, if completed, would be about twice Westinghouse’s original estimate. + +The nuclear business has imperilled Toshiba itself. The company’s health had improved in the aftermath of a huge accounting scandal in 2015, but its nuclear unit dragged it back down. Toshiba now appears desperate to shrink as a way to grow. It was eager for Westinghouse to file for bankruptcy before the end of its financial year. It also intends to sell its lucrative chip business. Shrinking might indeed help Toshiba focus on its strengths, as a specialist in the design and production of heavy machines such as turbines, coolers, motors and control systems. + +But the Westinghouse bankruptcy is unlikely to be neat. Southern and SCANA may go to court to seek payment from Toshiba: the Japanese company has guaranteed ¥650bn ($5.9bn) against the spiralling cost of the projects. Any suggestion that Toshiba is bilking the utilities would anger Donald Trump. The AP1000 projects’ future was recently discussed in a meeting of officials from America and Japan. + +The degree of diplomatic friction depends on what happens to the projects. Westinghouse expects to continue working on the reactors in Georgia and South Carolina as bankruptcy proceedings go on, but the utilities may abandon the plants or seek another firm to build them. There have been rumours that Korea Electric Power, a state-controlled utility, might take over, but Westinghouse’s steep losses may keep it away. “This has bankrupted Westinghouse,” says Mr Byrd. “Why would another firm step into that situation?” + +The future for other AP1000 reactors looks bleak. A plant in China is years behind schedule. In America, the troubles in Georgia and South Carolina may bolster support for more modest nuclear projects, says Tyson Smith, a nuclear-energy expert at Winston & Strawn, a law firm. On March 15th the country’s nuclear regulator said it would review an application for America’s first small modular nuclear reactor (SMR), from a company called NuScale, in Oregon. The SMR technology has been touted as a cheaper, easier way to build nuclear capacity. But it will have to compete with inexpensive natural gas, wind farms and solar plants. Those hoping for an American nuclear resurgence may have to wait a long time yet. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21719836-global-nuclear-power-industry-beset-problems-westinghouse-files-bankruptcy/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Schumpeter + +Masayoshi Son goes on a $100bn shopping spree + + +The risk for one of Japan’s greatest tech tycoons is his messianic streak + + + +Mar 30th 2017 + + + + + +IF YOU want to find a spectacular vision of the future, Silicon Valley is not the only place to look. In Tokyo Masayoshi Son, the boss of SoftBank, a Japanese telecoms group, is starting an investment fund worth $100bn which, he hopes, will make him the Warren Buffett of technology. “Masa” is no stranger to risky bets: SoftBank was an early investor in Alibaba, a Chinese e-commerce company, and has sunk $22bn in Sprint, a struggling American telecoms firm. Now he has been seized by the kind of Utopian fever that would make the Sage of Omaha choke on his Cherry Coke. + +Mr Son, who is 59, believes that the world will soon encounter what is known as the Singularity, the point at which artificial intelligence exceeds the human kind. The brains of people and machines will become enmeshed (see article). Every person will have over 1,000 devices linked by a seamless global network, with the data analysed by machines in the cloud. As well as smart glasses, people will wear smart shoes and every car and washing machine will link up to the web. This internet revolution, says Mr Son, will be more momentous than the first. + + + +He has begun making acquisitions. Last year he spent $31bn buying Britain’s ARM Holdings, which designs the chips in mobile devices (it will be owned jointly by SoftBank and the fund). He also invested a total of $2bn in OneWeb and Intelsat, two satellite-technology firms that aim to launch thousands of microsatellites to orbit the Earth providing high-speed internet access. Tech firms around the world are bracing for more swoops by Mr Son, who says his aim is to build a business empire lasting 300 years. What he doesn’t mention is that he also wants to prove beyond all doubt that his fortune is due to skill, not one lucky deal. + +Mr Son believes he has anticipated successive paradigm shifts in technology. The son of an ethnic-Korean pig farmer, whose childhood was spent in a shack in southern Japan, Masa wept joyfully when, as a teenager, he first saw a picture of a microchip. He learned programming while at the University of California, Berkeley, then in the 1980s sold software in Japan. He was an early investor in internet firms, buying a share of Yahoo in 1995 and the Alibaba stake in 1999. Later he invested in mobile telecoms, first in 2006 with his purchase of Vodafone’s Japanese mobile arm and then of Sprint in 2013. Now SoftBank is huge, with an enterprise value (its market value plus its net debt) of $193bn. + +Yet Mr Son’s career is still defined by Alibaba. In 1999 he was visited in Tokyo by Jack Ma and Joseph Tsai, co-founders of a fledgling website in Hangzhou. Mr Son tapped on a calculator as they haggled and agreed that SoftBank would buy 30% of the young firm for $20m. The deal was “based on my sense of smell”, Mr Son said later. Now Alibaba’s market value is $270bn, and, after selling some shares last year, SoftBank still owns 28%. + +About 95% of SoftBank’s market value is accounted for by the Alibaba stake, so the rest of what it does, from telecoms to venture capital, may be worth little, once debts are deducted. Mr Son says that SoftBank has made an internal rate of return of 43% on all its other investments, excluding Alibaba, but the basis of his calculations is unclear. There have been triumphs—SoftBank made $5bn buying and selling Supercell, a Finnish gaming firm, between 2013 and 2016. But the group has produced little cashflow, and Mr Son’s deals have left it with $110bn of net debt. + +So Mr Son has a minority investment in a great firm, but has yet to build one himself from scratch. And SoftBank’s poor finances are impeding his ambitions. Because his stake is only 19%, he cannot raise cash by selling shares without weakening his grip on the firm. He could sell the rest of the Alibaba stake, but appears reluctant to let go altogether. Or he could try to broker a merger of Sprint with T-Mobile, another American telecoms firm, allowing SoftBank to rid its balance-sheet of Sprint’s $31bn of net debt. Until now antitrust regulators have opposed a deal. But Mr Son hopes that the Trump administration will be more amenable. + +The alternative is partially to bypass SoftBank, which is what the new $100bn fund achieves. Mr Son will have more discretion over what to buy, free of grumbling public shareholders. Outside investors will give him huge firepower. Saudi Arabia’s public investment fund, for example, has promised to give him buckets of cash. The fund and its debts will be kept off SoftBank’s books. + +Masachism + +Investors in the new vehicle and owners of SoftBank shares should have three worries. First, while Mr Son’s ideas stand out for their intensity, they are not entirely original. Others in tech share his vision of ubiquitous, web-linked devices with their data crunched by machines, so the values of firms involved in these areas are sky-high; SoftBank paid 71 times earnings for ARM. Second, Mr Son can lose focus. Some of the startups he particularly admires, such as Uber and Airbnb, are only loosely related to his notion of the internet. Others are even more tangential. On March 20th SoftBank bought a $300m stake in WeWork, a trendy office-rental firm with a dizzying valuation. + +The third worry is governance. Mr Son’s mind skips from one obsession to the next. In 2014-15 he was briefly infatuated by India’s tech scene, for example, and appointed Nikesh Arora, an Indian-born former Google executive, as his heir apparent, only to ease him out a year later, in 2016. It is clear that one man with a messianic streak will dominate the fund as well as the running of SoftBank. Mr Son’s dual role also produces conflicts of interest: if there is a juicy deal, who benefits—the fund or the firm? + +For Mr Son, these are quibbles that will fade into irrelevance over his 300-year horizon. He has said that, looking back on his first six decades, he regrets that he “focused too much on the daily routine and didn’t really think big.” So far only 3% of his brainpower has been devoted to big investment decisions, he believes. Now more than half of his mental capacity will be directed at fulfilling his destiny. Masa is just getting started. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21719842-risk-one-japans-greatest-tech-tycoons-his-messianic-streak-masayoshi-son-goes/print + + + +上一项 文章 章节 下一项 + + + + + +Business 章节 Finance and ... + + + + + +Briefing + + +Chinese-American economic ties: The silk-silver axis + +Business 章节 Finance and ... + + + + + +文章 章节 下一项 + + + + + +The silk-silver axis + +Averting a Chinese-American trade war + + +The world’s most important bilateral economic relationship is flourishing—and in deep trouble + + + +Mar 30th 2017 | SHANGHAI + + + + + +IN 1784 the Empress of China set sail from New York, on the first American trade mission to China. Carrying ginseng, lead and woollen cloth, the merchants aboard dreamed of cracking open the vast Asian market. But the real profit, they found, came on their return, when they brought Chinese teas and porcelain to America. As other ships followed in its wake, the pattern became clear. Americans wanted more from China than Chinese wanted from America, and the difference was made up with a steady outflow of silver from America into China. The Empress had launched not just commercial ties between the two great countries but also an American deficit in its trade with China. + + + +The modern incarnation of this deficit is still driven by the flow of consumer goods, but nowadays electronic gadgets. In recent years it has reached a record size (see chart 1). When Xi Jinping, China’s president, meets Donald Trump—a meeting is reportedly planned in Florida early in April—the deficit will top the agenda. In his run to the White House, Mr Trump promised a combative stance against China on trade. Some expect America to slap punitive tariffs on Chinese goods, triggering an all-out trade war. Others think a grand bargain that defuses tensions is possible. + +Many American businesses, bruised in their dealings with China, cautiously welcome a harder line. For their part, Chinese businesses feel unjustly singled out. Both sides are nervous, conscious that the world’s most important economic relationship is also its most complex. America and China are bound together by cross-border flows of goods, cash, people and ideas that are bigger than ever. These ties have greatly benefited the two countries’ prosperity. A rupture would be severely damaging for both. + + + +The original sin, for Mr Trump’s most hawkish advisers, is the trade imbalance. Before China joined the World Trade Organisation (WTO) in 2001, China accounted for less than a quarter of America’s total trade deficit; over the past five years, it has made up two-thirds. Peter Navarro, head of Mr Trump’s new National Trade Council, sees the deficit as a drag on America’s economy. Close it, he argues, and America’s GDP will be bigger. And he sees a way to do so: take on China over its unfair trade practices, from currency meddling to export subsidies. In 2012 he released a documentary, “Death by China”, as a call to arms. + +Mr Navarro’s views rely on crude arithmetic that defies the most basic economic logic. In fact, big deficits often accompany fast growth. And it is misleading to focus on bilateral imbalances in an age of global supply chains. Counting the bits and pieces from other countries that go into “made in China” smartphones, fridges and televisions, China’s trade surplus with America is about a third smaller than officially reported. + +Yet the gap ought perhaps to be smaller still. American companies insist that, with a level playing field, they would be able to sell much more to China. Some of the obstacles in their way are obvious. Carmakers, for instance, face 25% import tariffs. More often, barriers are subtler. Medical-device makers cite onerous licensing procedures and seed firms lengthy approvals. + + + +Indeed, America had been adopting a firmer approach to China on trade long before the election. Barack Obama’s administration stepped up pressure through the WTO. Of America’s 25 formal WTO complaints filed after 2008, 16 were against China. The administration also initiated 99 anti-dumping and countervailing-duty investigations against China, more than against any other country (see chart 2). + +China sees a pattern of unfair treatment. For Mei Xinyu, a researcher at the commerce ministry, what is wrong with the bilateral relationship is obvious: “American protectionism”. America has to cure its own ills and building walls won’t help, he says. Most emblematic is America’s decision to withhold “market-economy status” from China, which allows higher duties to be put on Chinese imports. + +Chinese officials cite another example of unequal standards—the time-worn American complaint, made especially loudly by Mr Trump, that China fiddles its currency to cheapen its exports. China certainly does manage the yuan, but over the past decade it has let it appreciate by nearly two-fifths against a broad currency basket—more than any other big economy has. + +Left to its own devices, the trade relationship between China and America should become more balanced in time. As China’s middle class grows, its consumers are buying more from abroad. Chinese demand for American agricultural products, especially soyabeans, has boomed. China is already buying more services from America then vice versa. One of America’s biggest exports to China is education. The number of Chinese students in America has reached nearly 330,000—almost a third of all foreign students—and is up more than fivefold over the past decade. + +Battle lines + +But if Mr Trump carries out his most extreme threats and whacks a 45% across-the-board tariff on Chinese goods, trade flows between the two giants—the world’s biggest bilateral trading relationship—would shrivel. Collateral damage to the global economy would be immense. The very survival of the rules-based international trading system would be at stake. + +China would, in a conventional analysis, suffer more in a trade war. About a fifth of its exports go to America, equating to nearly 4% of Chinese GDP. Less than a tenth of American exports go to China, worth less than 1% of American GDP. But a fight would also hit America hard. No other country could easily replace China in making many of the products, from toys to textiles, that fill American shops. Consumers would face sharply higher prices. American companies that have used China as a production base would struggle to reconfigure their supply chains. If American firms brought factories back home, prices would rocket. Goldman Sachs, an investment bank, estimates that the cost of producing clothing would increase by 46% and smartphones by 37%. + + + +Moreover, China would retaliate. Even if America as a whole runs a deficit, it has industries and companies that increasingly rely on Chinese demand. Nearly half its fruit and seed exports go to China. China is in some months the world’s biggest market for iPhones. Semiconductor-makers such as Qualcomm and Broadcom derive most of their revenues from China (see chart 3). + +All this helps explain why Mr Trump has so far trod softly in confronting China. James McGregor, Greater China chairman of APCO Worldwide, a lobbying firm, says that American bosses have been streaming into Washington for meetings with the Trump team to appeal for calm and to teach them that “China is not a country to be toyed with.” But perhaps Mr Trump has merely been distracted by the rocky start to his domestic agenda and it is only a matter of time before he lashes out at China. If he does, though, he will soon learn that trade is not the only show in town. Investment gets much less attention but is also vital to the relationship. + +Start with a myth—that China can bankrupt the American government. Over the past decade, China has invested more than $1trn in Treasuries. At its peak, America owed more money to China than to anywhere else. Pundits fret that, were China to dump its bonds, American interest rates would shoot up and the dollar plummet. + +But that is to misunderstand the financial mechanics. The Federal Reserve has demonstrated that it can buy far more government bonds than any foreign or domestic holder can sell. China thus cannot dictate interest rates in America, much less push it into penury. And the volatility of the dollar is also a Chinese concern. Because Chinese companies borrowed heavily abroad, dollar strength has made their debts more costly in yuan terms. + +Financial exposure goes the other way, too. Back in 2015 the Fed was planning to embark on a series of interest-rate increases. In the end it managed to deliver its second rise only at the very end of 2016. Jitters over China’s economy had stayed its hand. American investors have learned that news out of China can wreak havoc on their portfolios. Anxiety about China has triggered two of the three most recent “risk-off” episodes in global markets, as captured by the VIX, a measure of stockmarket volatility, popularly known as the “fear gauge”. This is the crucial point: it is not that China has the financial upper hand over America, or vice versa; it is that they are increasingly joined at the hip. + +Mutually assured destruction + +And these are just the financial linkages, which remain limited by China’s capital controls. Look at the physical investment ties between China and America and the mutual vulnerabilities are even more glaring. According to official data, roughly 1% of the stock of American direct investment abroad (money spent on assets such as factories, warehouses and shops) is in China. But this misses much of the cash routed through the Cayman Islands or Hong Kong for accounting reasons. An analysis last year by the Rhodium Group, an American research firm, took a granular approach to calculate that the true stock of American foreign direct investment (FDI) in China built up from 1990 to 2015 was $228bn, three times the official figure. + +American companies initially lighted on China as a cheap manufacturing base; as costs there have risen, that wave of investment has tailed off. A new influx seeks to tap China’s consumer demand. In 2016 China was the leading emerging market into which American firms poured FDI. China’s booming middle class is forecast by McKinsey, a consultancy, to grow from just 6% of urban households in 2010 to over half of the total by 2020. + +For firms that have made it in China, the rewards have been immense. Through joint ventures with local partners, GM sells more cars, and makes more profits, in China than it does anywhere in the world. Over the next two decades, Boeing estimates, China will buy 6,000 new aeroplanes, becoming its first trillion-dollar market. Starbucks is opening new cafés in China at a pace of over one a day. On official estimates, some 1.6m people in China now work for American subsidiaries. + +But success stories of American companies in China will not exactly warm the hearts of Mr Trump’s band of economic nationalists. What they want is money invested in America, not more profits made abroad. Forget for a moment that this policy risks doing more harm than good (preventing Apple or GM from going big in China would hurt them financially). The more relevant point—the one likelier to sway Mr Trump—is that the bigger investment flows these days are from China into America. + + + +Chinese investment into America used to be tiny. No longer (see chart 4). Rhodium estimates that it leapt from about $16bn in 2015 to some $46bn in 2016, compared with $13bn invested by American firms in China. Chinese investments are already thought to support roughly 90,000 American jobs across several dozen states. The money is spread across virtually every area of the economy. Chinese companies have bought Hollywood production companies, car-parts- and appliance-makers, semiconductor firms and more. + +China is well aware that its investors can also convey a positive message. Witness Jack Ma’s meeting with Mr Trump, just before his inauguration. Mr Ma, founder of Alibaba, a Chinese e-commerce giant, boasted that his shopping portal would create 1m jobs in America, giving small businesses and farmers a platform to export to Asia. The promise was far-fetched (Mr Trump might appreciate that). But there was a kernel of truth: Chinese investors are only getting started in America. + +Were it just a question of money, these investment trends ought to be the clincher, giving America and China every reason to stay on each other’s good side. But investment cannot be divorced from power, and that poses complications. Most obvious are national-security concerns. Both China and America have become more active in restricting each other’s technology and blocking deals that they fear might compromise their security. + +But commercial competition casts an even bigger shadow. China and America are increasingly butting heads. “Made in China 2025”, an industrial plan unveiled in 2015, is indicative of how China is gunning for industries that America and other foreign countries have dominated. China aims to become a leader in ten strategic sectors, ranging from next-generation IT to agricultural machinery. + +Critics in America warn that China’s state-driven model for advancing in these industries will cause damage around the world. Their worry is that China will deploy much the same industrial policy that it has used in sectors from wind power to high-speed rail: pressure on foreign firms to share technology; protection of local firms; targets to phase out imports; and generous state funding. “This could lead not only to China taking over market share but, because of its scale, destroying entire business models,” says Scott Kennedy of the Centre for Strategic and International Studies, a think-tank in Washington, DC. + +Another casus belli + +How America might respond to this perceived threat remains hazy. A committee recommended to Congress last year a ban on all investment in America by China’s state-owned enterprises (SOEs)—a measure as likely to lead to a full-blown trade war as Mr Trump’s 45% tariff wall. A recent review of the semiconductor industry called for a stiffer response to China’s market distortions. Others argue that fears of “Made in China 2025” are overblown. Government interventions may work in industries such as solar power and railways, which are dominated by subsidies and public-sector procurement. But they have already been seen to fail in consumer industries such as carmaking. + +China’s government has tried to rebut critics of its industrial plan. The point, it says, is merely to give companies guidance about future trends. Meanwhile, Chinese firms, for their part, fear that obstacles in America are proliferating. He Fan, a prominent Chinese economist, says the feeling is that business in America is becoming more politicised. “You can only have long-term investment when the rules are clear,” he says. “Previously that was America’s strong point. Now it’s uncertain.” + +It’s alright, Ma, I’m only squeezing + + + +Easily lost amid the blaze of recriminations is the extent to which competition between China and America can also yield benefits. The two countries are already spurring each other to innovate. American venture capitalists are well embedded in the software cluster in Beijing and the hardware ecosystem in Shenzhen, a city in southern China. American private-equity firms are prominent in China, making bets on industries ranging from health care to energy. American multinationals used to build shiny R&D centres in Shanghai and Beijing to please officials, but did little original work in them. Now, firms ranging from industrial conglomerates like GE to biotech giants such as Amgen are doing some of their cutting-edge research in China. + +China’s most inventive firms are also investing heavily in America in search of talent and new patents. Just this week, Tencent, a tech giant, said it was spending $1.8bn to buy 5% of Tesla, a maker of electric cars. Huawei, Alibaba and Baidu are its near-neighbours in Silicon Valley. BGI, the world’s biggest genome-sequencing firm, is opening a laboratory in Seattle to be closer to the Gates foundation, a big client. Mindray, a medical-devices firm, has a couple of American R&D labs. Lenovo, the world’s biggest maker of personal computers, is inventing and manufacturing B2B products in North Carolina. + +One possibility is that, as these kinds of cross-border business operations become more widespread, the Chinese-American economic relationship will settle down. Competition will be welcomed as healthy, not feared as destructive. But it is likely to be a long time before that happens. It would help if the governments could see eye to eye—in particular, if they could agree on a long-stalled bilateral investment treaty; and if they could reach an understanding on trade before their disagreements threaten the WTO itself. + +Both outcomes, however, are highly unlikely. The diplomacy needed to navigate the shoals of their economic ties is in short supply. China’s success in low-end manufacturing has already caused a backlash in America. As Chinese firms take on companies at the heart of the American economy, the friction will surely increase. It is enough to make one nostalgic for the days when their business involved little more than swapping silver for silk. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21719772-worlds-most-important-bilateral-economic-relationship-flourishingand-deep/print + + + +文章 章节 下一项 + + + + + +Briefing 章节 Science and ... + + + + + +Finance and economics + + +Free exchange: Remember the mane + +Energy in Asia: Canary in the coal mine + +Buttonwood: Repent at leisure + +Equity research: Breaking up is hard to do + +Italy’s bad debts: Cleaning up + +Indonesia’s tax amnesty: A small price to pay + +The market for sand: A shore thing + +Briefing 章节 Science and ... + + + + + +文章 章节 下一项 + + + + + +Free exchange + +Will robots displace humans as motorised vehicles ousted horses? + + +Probably not, but humans have a lot to learn from the equine experience + + + +Apr 1st 2017 + + + + + +IN THE early 20th century the future seemed bright for horse employment. Within 50 years cars and tractors made short work of equine livelihoods. Some futurists see a cautionary tale for humanity in the fate of the horse: it was economically indispensable until it wasn’t. The common retort to such concerns is that humans are far more cognitively adaptable than beasts of burden. Yet as robots grow more nimble, humans look increasingly vulnerable. A new working paper concludes that, between 1990 and 2007, each industrial robot added per thousand workers reduced employment in America by nearly six workers. Humanity may not be sent out to pasture, but the parallel with horses is still uncomfortably close. + +Robots are just one small part of the technological wave squeezing people. The International Federation of Robotics defines industrial robots as machines that are automatically controlled and re-programmable; single-purpose equipment does not count. The worldwide population of such creatures is below 2m; America has slightly fewer than two robots per 1,000 workers (Europe has a bit more than two). But their numbers are growing, as is the range of tasks they can tackle, so findings of robot-driven job loss are worth taking seriously. + + + +The paper’s authors, Daron Acemoglu of the Massachusetts Institute of Technology (MIT) and Pascual Restrepo of Boston University, are careful to exclude confounding causes as best they can. Their results are not driven by a few robot-intensive regions or industries, and are distinct from the effect of trade with China, or offshoring in general. Increased robot density does not seem to raise employment among any group of workers, even those with university education. Since relatively few industrial robots are in use in the American economy, the total job loss from robotisation has been modest: between 360,000 and 670,000. By comparison, analysis published in 2016 found that trade with China between 1999 and 2011 may have left America with 2m fewer jobs than it would otherwise have had. Yet, if the China trade shock has largely run its course, the robot era is dawning. + +Economically speaking, this should not be a problem. Automation should yield savings to firms or consumers which can be spent on other goods or services. Labour liberated by technology should gravitate toward tasks and jobs in which humans retain an advantage. Yet that should also have been true of horses. The use of tractors in agriculture rose sharply from the 1910s to the 1950s, and horses were displaced in vast numbers. But some useful horse-work remained (as indeed it does today). The difficulty facing horses was in reallocating the huge numbers displaced by technology to places where they could still be of use. + +The market worked to ease the transition. As demand for traditional horse-work fell, so did horse prices, by about 80% between 1910 and 1950. This drop slowed the pace of mechanisation in agriculture, but only by a little. Even at lower costs, too few new niches appeared to absorb the workless ungulates. Lower prices eventually made it uneconomical for many owners to keep them. Horses, so to speak, left the labour force, in some cases through sale to meat or glue factories. As the numbers of working horses and mules in America fell from about 21m in 1918 to only 3m or so in 1960, the decline was mirrored in the overall horse population. + +The analogy with horses can clearly be taken too far. Yet the experience is instructive. Automation is reducing human wages; Messrs Acemoglu and Restrepo reckon that one additional industrial robot per thousand workers reduces wages across the economy by 0.5%. Real wage growth in many rich economies has been disappointing for much of the past two decades. Low wages are enabling some reallocation of workers. An overwhelming share of the growth in employment in rich economies over the past few decades has been in services, nearly half in low-paying fields like retailing and hospitality. Employment in such areas has been able to grow, in part, because of an abundance of cheap labour. + +Yet low pay leads to policies that complicate the labour-market adjustment. Instead of bumping off excess labour, rich economies provide some social support: unemployment benefits, social security or disability payments, and assistance with housing and food. When the jobs on offer are poor, that cushion, though meagre, can be enough to draw people out of the labour force into indolence—particularly if families offer extra help. + +The horses of instruction + +Horses might have fared better had savings from mechanisation stayed in rural areas. Instead, soaring agricultural productivity led to falling food prices, lining the pockets of urban workers with more appetite for a new suit (or car) than anything four-legged. Similarly, the financial returns to automation flow to profitable firms and their shareholders, who not only usually live apart from the factories being automated but who save at high rates, contributing to weak demand across the economy as a whole. Indeed, roughly half of job losses from robotisation (as from exposure to Chinese imports) are attributable to the knock-on effect from reduced demand rather than direct displacement. + +Today’s horses are not entirely without work. Some still find gainful employment; a few are very valuable indeed. For people to fare better, and retain more than a rump of work reserved for those of exceptional ability, they must prove a better match for clever machines than horses were for mechanical equipment. And societies should perhaps respond with more determination and care than horse-owners did a century ago. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business-and-finance/21719761-probably-not-humans-have-lot-learn-equine-experience-will-robots/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Canary in the coal mine + +Lacklustre power demand in Asia throws a cloud over coal + + +A surge in renewable energy is another threat to the black stuff’s future + + + +Apr 1st 2017 + + + + + +THE Hazelwood power station in Australia’s state of Victoria started generating electricity 52 years ago. The stark symbol of an era when coal was king, Hazelwood was one of Australia’s dirtiest: its fuel was the Latrobe valley’s brown coal, a bigger polluter than the black sort. The station was due finally to close on March 31st. Days earlier, chimney stacks were demolished at Munmorah, a black-coal station north of Sydney, already closed. Australia has shut ten coal-fired power stations over the past seven years, yet coal still generates about three-quarters of its electricity. + +This fits a pattern across much of Asia, which accounts for two-thirds of the world’s coal demand. The biggest economies besides Japan, which hopes to replace nuclear with “clean” coal, are either closing down old plants or rethinking plans to build new ones. This is casting a deepening cloud over the coal industry. + + + +Two reasons explain the looming overcapacity in countries ranging from China and India to Australia (South-East Asia remains hooked on coal). Firstly, electricity demand is stagnant, falling or growing less strongly than expected, which has put considerable financial strain on power plants burning coal. Second, countries are seeking alternative sources of power, especially renewables, to reduce pollution and curb carbon emissions. As the cost of renewables becomes more competitive with coal, it further blackens its future. + +Coal’s first headache, the falling energy intensity of economic growth (ie, less energy is needed to produce the same levels of growth), is a common feature in the rich world, as economies switch from manufacturing towards services, use more LED lighting and make appliances such as refrigerators and air-conditioners more energy-efficient. According to the International Energy Agency, a forecaster, Australia and Japan have among the rich world’s lowest levels of energy intensity. + +China and India are going the same way. Primary energy demand in China declined in 2015, the first fall in almost 20 years, largely reflecting a shift away from heavy manufacturing, as well as energy-efficiency gains. The same year, China’s coal demand plummeted by about 4%. + +For similar reasons, India’s growth in electricity demand, at around 5% a year, lags behind that of GDP as a whole, at about 7%. In both India and China, authorities have overestimated the growth in electricity consumption, procuring coal-fired power that is not used by the grid. The result is that coal plants in both countries are operating far below their potential capacity, says Tim Buckley of the Institute for Energy Economics and Financial Analysis, an environmental think-tank (see chart). + + + +Such wastage has deterred investment in new coal-fired plants. A report in March produced by, among others, CoalSwarm, an NGO, found that developers in China and India have recently put 68 gigawatts (GW) of planned coal-plant construction on hold, though there is still a construction pipeline of about 145GW and 50GW, respectively. India’s Central Electricity Authority sees no need to build more coal-burning plants during the next decade besides those already in the pipeline, because so many are underused. “Coal-based generation is becoming non-viable,” says E.A.S. Sarma, a former power secretary in the Indian government. + +That has big costs. About 240m Indians lack access to electricity, and as Arunabha Ghosh, head of the Council on Energy, Environment and Water, an Indian think-tank, points out, Indians’ power consumption is less than a third of the global average. He notes that part of the blame for sluggish demand is the dire financial state of India’s electricity-distribution companies, which lose money on every unit of power they supply, because of transmission losses and customers’ failure to pay. + +The government of Narendra Modi, the prime minister, is trying to fix the distribution companies’ problems. But in the meantime renewable energy prices are falling fast, making the investment case for coal even bleaker. An auction in February to provide 0.75GW of solar capacity in Madhya Pradesh, a state in central India, saw bids as low as 2.97 rupees (4.6 cents) per kilowatt hour, a third below the previous record in 2016. Developers say new coal-fired power plants would struggle to compete with that. The auction was particularly successful because the “solar park” is on land with a grid connection, and offers a more robust payment structure than in previous auctions. Mr Modi will need dozens more such parks to meet his goal of 100GW of solar capacity by 2022. This in turn will need a huge amount of financing. But there is no shortage of bidders. + +Meanwhile, the pace of solar installations in China is likely to slow, following a record 34GW last year, because the cost reductions are being matched by a drop in the subsidy in the feed-in-tariff that China pays to solar-power generators. Nonetheless, Bloomberg New Energy Finance, a consultancy, estimates that from 2016 the amount of new renewable-energy capacity in China is likely to have started exceeding new fossil-fuel plants. It expects the same to happen in India from 2018. + +Adding to competition for coal in Asia is liquefied natural gas (LNG), imports of which surged by 37% into China last year and by 30% into India, according to industry figures released this week. They partly reflect a surge in supply from Australia. + +Although Australian LNG may be welcome in Asia, and has benefited the Australian economy with investments of A$200bn ($150bn) in a decade, it is causing unexpected problems in electricity markets back home. That is because, after blackouts in South Australia last year, Australian states need more gas as they close coal-fired power stations but find much of it being siphoned off for export. + +Rod Sims, head of the Australian Competition and Consumer Commission, a regulator, says the boom in liquefying natural gas for export has “upended” the gas market on the east coast, where most people live. EnergyQuest, a consultancy, calculates that until three years ago, volumes of domestic and LNG production ran neck and neck. Last year LNG output rose by 56%, and is now more than twice the size of domestic production. Australia’s domestic gas prices, in turn, have risen to reflect export prices, which has inevitably driven up household energy bills. + +The shortages are not easy to replace. New South Wales and Victoria, the most populous states, have restricted or banned drilling for coal-seam gas because of environmental worries about hydraulic fracturing, or “fracking”. South Australia, like Queensland, has no such bans. Strike Energy, an Australian firm, is test-drilling for coal-seam gas in the Cooper Basin, an outback gas-reserve region. David Baker, its managing director, says its main target market is Adelaide, the state capital. But another could be Gladstone, a hub for LNG-exporters in Queensland. + +Until more gas becomes available, some are calling for governments to quarantine certain volumes of export gas for home consumption. Matt Canavan, the resources minister, admits Australia’s gas problems have kept him awake at night. Bucking the market by reserving gas, however, would cause an outcry. So, for that matter, would going back to coal. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21719826-surge-renewable-energy-another-threat-black-stuffs-future-lacklustre/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Buttonwood + +Stockmarkets give up some of their Trump bump + + +The president’s promises look less plausible; his threats more menacing + + + +Mar 30th 2017 + + + + + +HONEYMOONS don’t last for ever. Having been a reluctant bride to President Donald Trump when courted in the run-up to November’s election, the American stockmarket quickly melted into a mood of romantic euphoria. Shares rose by 12% between election day and March 1st (see chart). But in recent days, sentiment has dimmed. There is talk of the “Trump-disappointment trade”. + +For the markets to experience some kind of sell-off is hardly a surprise. The S&P 500 index had gone more than 100 days without a 1% decline, the longest such streak since 1995. And the setback should not be exaggerated. The S&P 500 remains well above its pre-election level, compared with the dollar, which has given up around half its gains. The ten-year Treasury-bond yield, which hit 2.62% on March 13th, has dropped back to 2.38%. + + + +The immediate cause of the retreat seemed to be the failure of Mr Trump to repeal his predecessor’s health-care bill. That logic was hardly a great advertisement for capitalism, implying that the fewer Americans had access to health insurance, the happier investors would be. But the broader rationale seemed to be that, if the Republicans could not meet this campaign promise, then they also would struggle to push through the tax cuts which investors were counting on to push up corporate profits and improve economic growth. A basket of shares of firms that pay the highest tax rates as a proportion of profits, compiled by Goldman Sachs, an investment bank, is now lower than it was before the election. + +On its own this change of mood made investors look naive. Mr Trump came to office as a political neophyte with a reputation for being sketchy on policy detail. His differences with the congressional Republican Party were made clear throughout the campaign. No one should have expected a smooth roll-out of policy. Nor is a lower corporate-tax rate a sure route to growth. Britain has cut its marginal rate from 28% to 20% since 2010, without sparking a runaway boom. + +In any case, given the lengthy negotiations needed to create a tax package, and the inevitable lag before the policy has an effect on the economy, it would probably be 2018 before the impact of a fiscal stimulus became clear. And if any pickup in growth is delayed, then the Federal Reserve may have less need to push interest rates up as rapidly, weakening the appeal of the dollar for international investors. The latest forecast from the tracking model of the Atlanta Fed suggests that first-quarter growth in America may have been only an annualised 1%. + +With analysts forecasting 12% growth in S&P 500 companies’ profits this year, in other words, there was scope for disappointment for the stockmarket. That was especially so since American shares are trading on a cyclically adjusted price-earnings ratio of 29, a level exceeded only in the booms of the late 1920s and 1990s. + +Globally, however, stockmarkets are not dependent on Mr Trump to push through his agenda. Their mood started to brighten last spring as concerns about “secular stagnation” and a hard landing for the Chinese economy began to dissipate. By the end of 2016 Asian exports were picking up, commodity prices were rebounding and growth forecasts for 2017 were being revised higher. + +So investors started the year in optimistic mood. A recent survey of fund managers by Absolute Strategy, a research firm, found that 74% expect global equities to produce better returns than government bonds over the next 12 months and 70% expect global profits to rise. + +Recent positive data have included the German Ifo survey of business confidence, which was its strongest since 2011; a rebound in euro-zone consumer confidence; and Chinese industrial profits, which were 31.5% higher in January and February than in the same period a year ago. Emerging markets have risen much faster than the S&P 500 this year, gaining 12%, and trade on an historic price-earnings ratio of less than 14, according to Société Générale, a French bank. + +So the markets might have been doing very well even if the presidential election had produced a different outcome. Indeed, the Trump agenda could well be more of a threat than a promise for international investors, particularly if the administration pursues a more protectionist line or makes a blunder in its approach to flashpoints with China, Iran or North Korea. Markets turned round so dramatically on the morning after Mr Trump’s election that investors may yet have cause to remember the old saying: “Marry in haste; repent at leisure.” + + + +Economist.com/blogs/buttonwood + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21719796-presidents-promises-look-less-plausible-his-threats-more-menacing-stockmarkets/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Breaking up is hard to do + +Banks’ equity-research operations are in decline + + +Unable to give their research away, they will struggle to find buyers for it + + + +Mar 30th 2017 + + + + + +EQUITY research, the business of providing analysis of companies’ financial performance, may be a stodgy industry but it is not a simple one. Regulators fret about the sector’s Byzantine payment structure: investment banks dominate the market, but do not charge for it. They dole it out free to clients in the hope of future trading business. The understandable fear is that this set-up produces conflicts. Banks may be wary of issuing reports critical of companies; fund managers may end up choosing banks because of their research rather than the efficiency of their brokerage services. New regulations will overturn this model entirely. + +MiFID 2, an ambitious set of European financial rules coming into effect next January, will force asset managers to disclose how much they spend on research. So banks will have to “unbundle” their services, billing clients for research and trading separately. Although the rules are being introduced by European regulators, banks across the world will have to change their pricing practices to comply. + + + +These rules will be hugely, and beneficially, disruptive to a grossly inefficient industry. At present, banks blast their clients’ inboxes with thousands of reports, only a fraction of which are read. The problem is that most research is not very useful—it is hard to come up with original insights about big companies when dozens of other researchers are trying to do the same. So when they are presented with a bill for it, many fund managers will balk at paying for research they ignore. + +The equity-research industry was already in trouble. Trading profits at banks have declined since the financial crisis, so they have had to cut costs. Estimates from Frost Consulting show that research budgets at major investment banks have fallen from a peak of $8.2bn in 2008 to $4bn in 2016 (see chart). Headcount seems to be falling, too. Coalition, a research firm, estimates that research jobs at banks have fallen by about 10% since 2012, roughly in line with the decline of front-office jobs as a whole. Moreover, the trend in the industry is towards increased use of “passive” investment funds that simply track a market index. So the demand for research services is in secular decline. + +Equity research will not disappear entirely, in part because the industry performs other functions. Surveys have shown that investors are less interested in researchers’ exact forecasts or analysis than in their general industry knowledge. Moreover, much of equity research is actually about “corporate access”, ie, connecting investors with company managers. Fielding phone calls and acting as chaperones may not be as glamorous as publishing market-moving reports. But they are at least labour-intensive activities. Top analysts will still be valued, as will those specialising in niche fields. Independent research firms will benefit. But fund managers will have to do more of their own analysis. And persuading investors to pay for mediocre research will be harder. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21719829-unable-give-their-research-away-they-will-struggle-find-buyers-it-banks/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Cleaning up + +The life and times of an Italian non-performing loan + + +The deep roots of Italy’s bad-debt problems + + + +Mar 30th 2017 | MILAN + + + + + +MARIO (not his real name) from the pretty Italian city of Vicenza opened an account at a local bank in 1992. It afforded him an overdraft of the equivalent of €10,000. He needed it to pay the bills of his wholesale textiles company. Over the years his firm’s cash problems worsened. In 2013, after Mario had exceeded his overdraft limit by €7,000 ($9,300), the bank gave him an unsecured loan of €50,000. + +The first repayment was due in January 2014, yet by June Mario had filed for voluntary bankruptcy. The bank—now owed €70,300—presented itself to the court as a creditor. It entered into an arrangement, but in December sold the loan for 5% of its book value to Banca IFIS, an Italian lender building a portfolio of soured debts. Banca IFIS employed an external debt collector and by the following April, Mario had repaid €17,000. Having made a tidy profit on its investment, Banca IFIS told the bankruptcy court the debt had been cleared. + + + +It seems puzzling that Mario was granted a loan after being overdrawn for so long. Andrea Clamer, head of Banca IFIS’s bad-loans division, says such mysteries are central to understanding Italy’s bad-loan mountain. Questionable lending practices, inefficient courts and a long recession all conspired to create €331bn-worth of “deteriorated” loans, including €197bn of non-performing loans (NPLs), by June of last year (see chart). At 21.4% of Italy’s total gross loans, that was over four times the ratio in 2008 and triple the EU average. + +ABI, the Italian banks’ association, reckons that 80% of the growth of NPLs can be attributed to the civil-justice system (by far the biggest single factor), sluggish economic growth (the next biggest) and taxation. On average a bankruptcy takes 7.4 years. Only one-quarter of cases are resolved in less than two years. Some last more than two decades. + +Bad loans have quadrupled in value since 2008, notes Andrea Mignanelli of Cerved, a data provider. But no bank has quadrupled their staff to manage them. Lenders have been loth to sell their loans. Many have them in their books at around 40% of their face value, whereas investors are prepared to pay around half that. Banks’ capital ratios are already thin; disposals would stretch them further. + +Government efforts to boost the market have flopped. GACS, a state-guarantee scheme for NPL-backed securities, has been used just once since its launch in February 2016. Atlante, a private bank-rescue fund set up at the government’s behest partly to kick-start a bad-debt market, has not raised as much capital as hoped. More happily, last year was the first since 2008 in which Italy’s total NPL exposure fell. ABI expects the share of existing loans turning bad to keep falling over the next two years. Last year the stock of bad loans stabilised; in 2017 more are likely to be sold. + +Under pressure from the European Central Bank to clean up their balance-sheets, banks are being forced to come up with detailed plans. In February UniCredit, Italy’s biggest bank, agreed a deal with Fortress and Pimco, two funds, to offload €17.7bn-worth of bad loans. Intesa Sanpaolo, the second-biggest, this month committed to reducing its stock of deteriorated credit by €15bn over three years. Monte dei Paschi di Siena, where a government rescue is under way, is due to unveil a new plan for its €27.8bn-worth of NPLs. + +Unsecured loans, like Mario’s, account for roughly half the total stock. Much of the rest is secured by property, the value of which crashed in the crisis. In 2014 Algebris, an asset manager, opened an office in Italy to specialise in property-backed bad loans. It has invested most of the €437m it raised for its first fund, and with property prices recovering a little, is now raising a second fund, of around €1bn. + +Some accuse the European authorities of having been too severe on Italian banks, which, given more time, might command better prices for their bad loans. On March 20th the ECB appeared to take note. Guidelines to banks again stressed the need to deal with duff loans, but accepted that it could take time. Meanwhile, bad-debt specialists can point to some successes. Credito Valtellinese, a midsized bank, sold its 40-person NPL-management division to Cerved in 2015. The next year collections on bad loans increased by 92%, thanks to a doubling in staff numbers, better IT systems and performance-related pay. Hardly rocket science, but more than Mario’s local bank could have achieved. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21719815-deep-roots-italys-bad-debt-problems-life-and-times-italian/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +A small price to pay + +Indonesia’s tax amnesty passes its deadline + + +It brought in a windfall, but has been criticised for letting evaders off lightly + + + +Mar 30th 2017 | JAKARTA + + + + + +LAST year Indonesia’s finance minister, Sri Mulyani Indrawati, invited chief executives, directors and shareholders from the country’s leading industries to banquets at her ministry. As they munched, she would give presentations setting out who among them had—and, by omission, who had not—signed up to the government’s tax amnesty. “This may be the most expensive dinner in your lifetime,” the 54-year-old economist recalls telling them. + +Indonesia’s tax amnesty, which began in July 2016, ended on March 31st. More than 800,000 evaders declared 4,700trn rupiah ($350bn) in assets previously hidden from the authorities. That is a staggering sum, equivalent to 40% of Indonesia’s GDP and 90% of the money supply, and revealing of the epic scale of tax-dodging. + + + +The willingness of tax cheats to come clean partly reflects the generous terms on offer. Assets declared in the first three months were taxed at just 2-4%, compared with the individual income-tax rate of up to 30%. Those declared in the next three months were taxed at 3-6%, and those in the final three months at 5-10%. The government collected additional revenue of 125trn rupiah, equivalent to less than 3% of the total assets declared. The OECD, a club of mostly rich countries, has criticised the amnesty for rewarding tax cheats. + +Maybe, but it was also one of the world’s most successful in terms of revenue raised. The money will help replenish government coffers at a time when revenues from commodities are still far below the levels in 2014, when prices for natural resources were at their highest. In recent years the government has cut spending to prevent its budget deficit from breaching a legal limit of 3% of GDP. This, in turn, is denting economic growth. Last year government spending shrank in real terms for the first time since the Asian crisis of the late 1990s; that is one reason why growth, at 5% in 2016, remains stubbornly below the government’s target of 7%. + +But beyond the immediate revenue windfall, the success of the amnesty depends on whether it marks a lasting upturn in tax receipts. Only 30m people out of a labour force of 118m are registered with the tax office and only 10m of them file a tax return regularly. At around 10% of GDP, Indonesia’s tax ratio is one of the lowest in South-East Asia (see chart) and compares with an average of 34% among OECD countries. The government hopes that the amnesty will add new names to the tax register and thus bring about a steady increase in the numbers paying the tax they owe. + + + +Ms Mulyani, praised for her fearless reforms as finance minister under the previous president, Susilo Bambang Yudhoyono, in 2005-10, says she aims to raise the tax ratio to 13% of GDP. Since returning to government in July 2016, after a stint at the World Bank in Washington, DC, she has set up a “reform team” at her ministry to improve procedures, introduce new technologies and recruit more auditors. + +In January Indonesia signed up to an OECD scheme known as the Common Reporting Standard. Signatories, including many of the havens where Indonesians traditionally stash their wealth, such as Singapore, have agreed to share information on foreign account-holders. Indonesia’s government is also pushing a law to make it easier for the tax office to probe domestic bank accounts. + +Ms Mulyani’s previous reformist stint as finance minister came to an end after a feud with a politically connected tycoon. This time, with the support of the current president, Joko Widodo, she seems determined to continue where she left off. “Pay tax and pay it properly,” she says. “This time we really mean it.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21719822-it-brought-windfall-has-been-criticised-letting-evaders/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +A shore thing + +An improbable global shortage: sand + + +Thanks to booming construction activity in Asia, sand is in high demand + + + +Mar 30th 2017 + + + + + +INDIA’S “sand mafia” is doing a roaring trade. The Times of India estimates that the illicit market for sand is worth around 150bn rupees ($2.3bn) a year; at one site in Tamil Nadu alone, 50,000 lorryloads are mined every day and smuggled to nearby states. Gangs around the country frequently turn to violence as they vie to continue cashing in on a building boom. + +Much of the modern global economy depends on sand. Most of it pours into the construction industry, where it is used to make concrete and asphalt. A smaller quantity of fine-grade sand is used to produce glass and electronics, and, particularly in America, to extract oil from shale in the fracking industry. No wonder, then, that sand and gravel are the most extracted materials in the world. A 2014 report by the United Nations Environment Programme (UNEP) estimates they account for up to 85% by weight of everything mined globally each year. + + + +With house-building in the West yet to recover fully from the 2007-08 crisis, Asia has been, by far, the main source of demand. Figures from the Freedonia Group, a market-research firm, suggest that, of the 13.7bn tonnes of sand mined worldwide for construction last year, 70% was used in Asia. Half was used in China alone, where the government estimates that it built 32.3m houses and 4.5m km (2.8m miles) of road between 2011 and 2015. + + + +Sand often makes up the very ground that is built on, too. By virtue of dumping vast quantities of sand into the sea, Singapore is now over 20% larger than it was when it became independent in 1965. China and Japan have reclaimed even greater swathes of land, and China has outraged global opinion by building artificial islands on disputed rocks in the South China Sea. Elsewhere, reclamation has been an unhappy necessity: the Maldives and Kiribati have had to counter rising sea levels by taking sand from smaller islands or the seabed to shore up larger ones. As sea levels rise further, and urban populations swell—the UN predicts a rise of almost 1bn by 2030—sand will be even more sought after. + +Sand may appear plentiful, but is in fact becoming scarce. Not all types are useful: desert sand is too fine for most commercial purposes. Reserves also need to be located near construction sites; as transport costs are high compared with the price, it is usually uneconomical to transport sand a long distance. That, though, does not stop countries with limited domestic resources (and deep pockets). Singapore and Qatar are big importers; the Burj Khalifa skyscraper in Dubai was built using Australian imports. + +Sand is being extracted at a far greater rate than that at which it is naturally replenished, and the depletion of existing reserves is damaging the environment. Dredging in rivers and seas pollutes natural habitats, affecting local fishing and farming industries. Mining in China’s Poyang Lake—which the UNEP reckons may be the world’s largest sand-extraction site—is thought to have lowered water levels. Beaches in Morocco and the Caribbean have been stripped of sand, lowering their capacity to absorb stormy weather. As a recent report on emerging environmental problems by a team of scientists, led by William Sutherland at the University of Cambridge, points out, those risks will only grow as sand-scarcity worsens. + +In the West such concerns have led to restrictions on where sand can be mined. In America, for example, mining it offshore or near large residential areas is restricted. Regulations are in place in many developing countries too. Thinning coastlines, and the disappearance of some islands altogether, led Indonesia and Malaysia to ban sand exports to Singapore. Myanmar banned sand mining on some beaches, and Cambodia and Vietnam placed restrictions on exports. + +Against the grain + +But the rules are not always enforced. Indian officials charged with monitoring mining tend to be intimidated by the “mafia”, alleges Sumaira Abdulali of Awaaz Foundation, a charity in Mumbai; even if gangs have permits, they get away with mining well above legal limits. The state makes little effort to track sand, so illegally mined grains can be traded relatively easily. The UNEP estimates that half of all sand used in construction and industry in Morocco comes from illegal coastal mining. The beaches, ironically, are being stripped to help build tourist infrastructure. In Cambodia charities allege that recorded exports of sand to Singapore have been systematically underreported to cover up illegal mining. (The Cambodian government responded in November by suspending all sand exports.) + +Substitutes for sand do exist. Mud can be used for reclamation, straw and wood to build houses, and crushed rock to make concrete. Asphalt and concrete can be recycled. Production processes will shift towards these alternatives as the price of sand rises, argues Freedonia’s Zoe Biller. In some rich countries that shift is already under way, encouraged by government policy. According to Britain’s Mineral Products Association, 28% of building materials used in Britain in 2014 had been recycled. European plans to recycle 75% of glass by 2025 should lower demand for industrial sand. Singapore plans to rely on Dutch expertise for its next reclamation project. Using a system of dykes and pumps, this will be less dependent on sand. + +Reduced demand from Singapore might discourage illegal mining in nearby countries. Rising prices will eventually force developing-country builders to explore alternatives to sand. But without better law enforcement, high sand prices also make illicit mining more lucrative. Despite the damaging consequences, the sand mafia will continue raking it in for a while. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21719797-thanks-booming-construction-activity-asia-sand-high-demand/print + + + +上一项 文章 章节 下一项 + + + + + +Finance and ... 章节 Books and arts + + + + + +Science and technology + + +Brains and computers: We can remember it for you wholesale + +Biomedical engineering: Moving moments + +Detecting chemical weapons: Laying a glove on it + +Global air pollution: Trading in mortality + +Bird brains and traffic accidents: Small is not beautiful + +Vaccines: Taking stock + +Finance and ... 章节 Books and arts + + + + + +文章 章节 下一项 + + + + + +The case for neural lace + +Elon Musk enters the world of brain-computer interfaces + + +Do human beings need to embrace brain implants to stay relevant? + + + +Mar 30th 2017 + + + + + +EVER since ENIAC, the first computer that could be operated by a single person, began flashing its ring counters in 1946, human beings and calculating machines have been on a steady march towards tighter integration. Computers entered homes in the 1980s, then migrated onto laps, into pockets and around wrists. In the laboratory, computation has found its way onto molars and into eyeballs. The logical conclusion of all this is that computers will, one day, enter the brain. + +This, at least, is the bet behind a company called Neuralink, just started by Elon Musk, a serial technological entrepreneur. Information about Neuralink is sparse, but trademark filings state that it will make invasive devices for treating or diagnosing neurological ailments. Mr Musk clearly has bigger plans, though. He has often tweeted cryptic messages referring to “neural lace”, a science-fictional concept invented by Iain M. Banks, a novelist, that is, in essence, a machine interface woven into the brain. + + + +Although devices that can read and write data to and from the brain as easily as they would to and from a computer remain firmly in the realm of imagination, that has not stopped neuroscientists (and, of course, Mr Musk) from indulging in some speculation. Theodore Berger of the University of Southern California, in Los Angeles, has proposed that brain implants might be used to store and retrieve memories. Dr Berger’s prosthesis would be intended to help those whose brains cannot form long-term memories because they are damaged. But if the idea worked, there seems little reason why those without damage should not and would not want something similar. Mr Musk himself, more ambitiously still, imagines an implant that would let the wearer tap directly into the internet, and all of the computational power available there. + +Of minds and melding + +Behind this suggestion lies Mr Musk’s argument, made repeatedly, that human beings need to embrace brain implants to stay relevant in a world which, he believes, will soon be dominated by artificial intelligence. Proposing the artificial augmentation of human intelligence as a response to a boom in artificial intelligence may seem a bit much. But Mr Musk’s new company is not alone. A firm called Kernel is following a similar path. + +To start with, Kernel’s engineers hope to build devices for the treatment of neurological conditions such as strokes and Alzheimer’s disease. Ultimately, however, they want to create cognition-enhancing implants that anyone might care to buy. Kernel was founded in October 2016 by Bryan Johnson, an entrepreneur who, like Mr Musk, got rich by processing payments online (PayPal, which Mr Musk helped found, bought Braintree, Mr Johnson’s company, in 2013). Mr Johnson put $100m of his own money into Kernel, stating that “unlocking our brain is the most significant and consequential opportunity in history.” + +In some ways, Mr Johnson and Mr Musk are merely the new boys in what is quite an old field. The first brain implants, carried out in the 1970s, were prosthetic visual systems, though they did not work well. Cochlear implants, to restore hearing, have done much better. Hundreds of thousands of people now have them—though, strictly speaking, they talk to auditory nerves rather than to the brain directly, which simplifies the task. For some people, the symptoms of Parkinson’s disease can be kept in check by electrodes the diameter of a strand of spaghetti inserted deep into the brain. And one of the latest ideas in the field is to read and interpret brain activity, in order to restore movement to the limbs of the paralysed (see article). + +In one important way, however, Kernel and Neuralink are different from previous efforts. Though aimed initially at medical applications, they also explicitly nod to the possible non-medical uses of this kind of implant technology. In February Mr Musk said that he thought “meaningful” interfaces between the brain and computation were five years away. The creation of Neuralink suggests that he, like Mr Johnson, is putting his money where his mouth is. + +Most neuroscientists would, it must be acknowledged, regard all this as heroically optimistic. In a review of the field, published in January in Nature Reviews Materials, Polina Anikeeva and her colleagues at the Massachusetts Institute of Technology (MIT) wrote that, although Moore’s Law and the miniaturisation of electronics have brought devices down to a size where their insertion into the brain can be considered, big challenges lie ahead. + +The brain’s complexity, and researchers’ present lack of understanding of how that organ’s component cells work together to do what they do, makes designing interfaces between brain and machine hard. But, even were it simple in principle, the rigid, silicon-based tools of modern computing do not mesh easily with the squishy soft-tissue of biology. Implants often generate scars around themselves. And the surgery needed to put them in place carries risks of its own. + +There may, though, be alternative approaches. One such is being tested by a group at Florida International University, in Miami, led by Sakhrat Khizroev. Dr Khizroev and his team use magnetoelectric particles so tiny that they can interact with the electric field generated by an individual nerve cell. The team inject these particles, tens of billions at a time, into a vein in a rat’s tail, then drag them into the animal’s brain using magnets. Each particle produces an electric field when stimulated by an external magnetic field. This may, in principle, permit a researcher to use such a particle to influence the electrical states of nearby nerve cells—and thus, in essence, reprogram them. How that would be done in practice, though, is obscure. + +Another approach, being pioneered by Jose Carmena of the University of California, Berkeley, and his colleagues, uses devices the size of a grain of rice to convert ultrasonic energy beamed towards them into electricity that can stimulate nerve or muscle cells. Ultrasound travels through the body, so can power and control such devices without wires. + +Both Dr Khizroev’s technique and Dr Carmena’s are less invasive than the current standard brain interface, a patch of needlelike electrodes known as a Utah array that is plugged into the brain’s surface. This is far too blunt an instrument to send any but the crudest signals into a brain. But, regardless of the precise approach taken to hardware, another problem the field faces is that no one understands the mechanism behind the natural equivalent of software—the way the brain encodes information. Such interfaces as do exist have to be trained, rather than instructed what to do. Instruction would be possible only if brain signals were properly understood. + +It is not yet clear which technological routes Mr Musk’s and Mr Johnson’s commercial efforts will take, though Kernel recently bought Kendall Research Systems, a spin-off from MIT that builds devices which use light, rather than electricity, to stimulate the brain. But the two firms’ shared underlying premise—that medical purposes might lead to more consumer-orientated applications—does seem a sensible way to do things. + +People understand that medical procedures can be risky. As long as it is done in good faith, they will tolerate experimentation on people that would be intolerable in non-medical circumstances. That will let Neuralink, Kernel and those that come along afterwards build up expertise that might be turned to more general effect in the future. + +As for Mr Musk himself, Neuralink brings to five the number of ambitious technology companies in which he is involved. The others are Tesla (electric cars, batteries and solar power), which this week attracted an investment from Tencent, a Chinese tech giant; SpaceX (rocketry); the Boring Company (tunnelling); and Hyperloop (vacuum trains). It is hard to discern the connections between these ideas. But, in Mr Musk’s mind, they are presumably already laced together. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21719774-do-human-beings-need-embrace-brain-implants-stay-relevant-elon-musk-enters/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Moving moments + +Analysing brain signals to let a patient control his arm + + +Implants and algorithms offer hope for the paralysed + + + +Apr 1st 2017 + + + + + +DURING a 250km (150-mile) bike ride for charity in Ohio, William Kochevar found himself cycling behind a post-office van when it pulled over to make deliveries. Distracted and tired, Mr Kochevar did not brake in time. The accident, in 2006, left him paralysed from the shoulders down. Now, with the help of electrodes that transmit signals from his brain to his muscles, he has been able to grasp a fork and feed himself for the first time in over a decade. The procedure that allowed Mr Kochevar to achieve the feat is reported in the Lancet this week. + +Bolu Ajiboye and Bob Kirsch, biomedical engineers at Case Western Reserve University, in Cleveland, used functional magnetic-resonance imaging to locate nerve cells responsible for arm movements in the left motor cortex of Mr Kochevar’s brain. The technique highlighted a patch of his brain to which the blood supply increased whenever Mr Kochevar imagined moving his right arm. The team then implanted at that spot two 4x4mm chips, known as Utah arrays, each armed with 96 tiny electrodes, to measure the electrical activity of the 100 or so nerve cells there. They also implanted 36 stimulating electrodes in the muscles of his right hand and arm. + + + +With the Utah arrays in place, Mr Kochevar was asked to imagine moving a virtual arm in a computer simulation, and, later, to imagine moving his own arm while it was being moved for him. The patterns of electrical activity from the nerve cells firing in Mr Kochevar’s brain were fed to a computer algorithm, which matched them to the motions of the virtual arm and later, his own arm. After this training, the algorithm was able to detect brain activity associated with Mr Kochevar’s intention to move his arm and then trigger the contraction of muscles needed to bring about the desired motion. + +Because Mr Kochevar had lost the nerves required to move many of his shoulder muscles, his arm movements were assisted by a motorised platform, which he also controlled remotely. Around a year after receiving the implants, he was able to grasp a coffee cup and drink from it with a straw. To feed himself took a further year of training. + +The technique Dr Ajiboye and Dr Kirsch employed to achieve all this, which is called functional electrical stimulation (FES), has been used in monkeys and has also permitted paralysed human patients to move a robotic arm. Last year a different group of researchers reported that the technique had allowed a paralysed man who was still able to move his elbow to reach and grasp objects. Mr Kochevar’s paralysis is more severe, however, and the motions he can perform with the aid of FES are more complex. + +Even so, there are hurdles to clear before FES can be used routinely. The electrodes implanted into the brain do not last more than a few years. More robust ones need to be developed before FES can be deployed widely. Several groups are working on that. Also, both the brain electrodes and the electrodes to the arm and hand are connected to the outside world by cables. Wireless connections would be better. Such a set-up was demonstrated last year in monkeys. With luck, people will not have to wait much longer to follow suit. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21719669-implants-and-algorithms-offer-hope-paralysed-analysing-brain-signals/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Laying a glove on it + +A simple device designed to detect chemical weapons + + +The wearer is warned of the presence of noxious substances + + + +Apr 1st 2017 + + + + + +NERVE agents such as sarin and VX can kill quickly in low doses. Kim Jong Nam (pictured), half brother of Kim Jong Il, North Korea’s leader, was recently murdered by having VX smeared on his face at Kuala Lumpur airport. Though the use of nerve agents is supposed to be banned by treaty, governments and terrorists have deployed them, and may do so again in the future. At the moment, there is no simple way for soldiers in the field, or inspectors looking for manufacturing and storage sites, to detect nerve agents. The electrochemical sensors involved are bulky and awkward to use. + +On civvy street, meanwhile, similar chemicals are employed as pesticides to ward off insects that might otherwise damage fruit and vegetable crops. If such crops are not thoroughly washed after picking, or have been overdosed in the first place, then they, too, may present a health hazard. Yet inspecting them to see if they are contaminated can also be a hassle. + + + +It would be better all round if people had suitable detection technology available at their fingertips. And Joseph Wang of the University of California, San Diego, reports in ACS Sensors that he has a system that achieves this quite literally. + +Sarin, VX and their kind are chemicals called organophosphorus compounds, which can be deactivated by an enzyme known as organophosphorus hydrolase. Existing nerve-agent detectors record changes induced by the presence of organophosphorus compounds in the electrical resistance of gels impregnated with this enzyme. Dr Wang’s trick is to miniaturise the process so that it fits on a glove. + +To make their device, he and his colleagues print electrodes made of silver and silver chloride, and of carbon, onto the index fingers of rubber gloves. These electrodes run from the knuckle to the fingertip, where they almost, but not quite, meet. The zone of near-meeting is coated with a layer of gel containing organophosphorus hydrolase. The gel connects the ends of the electrodes together, completing the circuit. The knuckle-ends of the electrodes, meanwhile, are designed to meet a special ring, worn over the glove, that both supplies them with current and transmits information on the strength of that current to a nearby mobile phone—setting off an alarm if the current varies in a way that indicates the enzyme is reacting with a nerve agent. + +To gather a residue sample from a surface, the glove’s thumb has a carbon disc printed onto it which the wearer rubs across a suspicious area. All he has to do then is press index finger and thumb together and, if the alarm goes off, he knows the surface in question is contaminated. + +Tests with organophosphorus compounds smeared on glass, wood, stainless steel and plastic, and also four types of fruit and vegetable, suggest the idea works in principle. If it works in the field (and if suitable alternative enzymes can be found), it might be extended to the detection of other chemicals of interest, such as gunshot residues, drugs and explosives. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21719775-wearer-warned-presence-noxious-substances-simple-device/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Global air pollution + +Airborne particles cause more than 3m early deaths a year + + +Rich countries export air pollution, and its associated mortality, as they import goods + + + +Mar 30th 2017 + + + + + +GOVERNMENTS fret over traffic and other local nuisances that create filthy air. But research just published in Nature by Zhang Qiang, of Tsinghua University in Beijing, and an international team including environmental economists, physicists and disease experts, suggests the problem has a global dimension, too. Dr Zhang’s analysis estimates that in 2007—the first year for which complete industrial, epidemiological and trade data were available when the team started work—more than 3m premature deaths around the world were caused by emissions of fine particulate matter (known as PM2.5, because the particles in question are less than 2.5 microns across). + +Of these, the team reckon just under an eighth were associated with pollutants released in a part of the world different from that in which the death occurred, thanks to transport of such particles from place to place by the wind. Almost twice as many (22% of the total) were a consequence of goods and services that were produced in one region (often poor) and then exported for consumption in another (often rich, and with more finicky environmental standards for its own manufacturers). + + + +In effect, such rich countries are exporting air pollution, and its associated deaths, as they import goods. As far as China is concerned, that phenomenon is probably abating. Chinese coal consumption has been on the wane since 2013, so premature deaths there from toxic air are now probably dropping. But other industrialising countries, such as India, may yet see an increase. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21719780-rich-countries-export-air-pollution-and-its-associated-mortality-they-import/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Bird brains and traffic accidents + +Small-brained birds get killed by cars + + +A new evolutionary pressure may be at work in the avian world + + + +Mar 30th 2017 + + + + + +NATURAL selection is a harsh interrogator at the best of times. But if you are a bird, it has an extra question, not asked so forcefully of animals that cannot fly: “is that extra gram of weight really necessary?” Contrary to the insult “bird-brained”, birds are not notably more stupid than mammals, but the pressure to keep organs light applies to the cerebrum as much as it does to anything else. + +For the past century, though, birds have faced a new enemy that might require them to get smarter: the motor car. These days, cars and other motorised vehicles kill around 250m birds a year. That sounds like a significant selective pressure, so Anders Moller, an evolutionary biologist at the University of Paris-Sud, in France, decided to find out whether it really was. + + + +Dr Moller’s hypothesis was that avoiding vehicles needs intelligence, and intelligence needs a big brain. The conclusion of this syllogism is that small-brained birds are more likely to be road-kill than large-brained birds are. To test this idea, though, he needed data on a lot of dead birds. + +That serendipity plays a part in science is undeniable. Fleming’s chance observation of Penicillium mould on bacterial plates led to antibiotics. Kekulé’s dream of carbon atoms dancing in rings led to his model of the structure of benzene. Dr Moller’s serendipity was to meet, 30 years ago, a taxidermist called Johannes Erritzoe. Mr Erritzoe has, during his career, exhaustively recorded details of the specimens that have passed through his hands. These details include the weights of the internal organs, and likely cause of death, of 3,521 bird specimens of 251 species. + +Since they met, Dr Moller and Mr Erritzoe have collaborated on many papers. This time, they asked whether there was a difference between the weights of the organs of birds killed by traffic and of those that had died of other causes. They found, as they report in Royal Society Open Science, that there was not—with a single exception. The smaller a bird’s brain, when controlled for its body size, the more likely it was to have been road-kill. Some 60% of the smallest-brained birds Mr Erritzoe handled had died this way. Among the largest-brained, death by traffic was unheard of. + +All this suggests a selective pressure on birds in parts of the world with lots of traffic to acquire bigger brains, even at the cost of the extra energy required to keep those brains airborne. It also leads to a prediction, in a field of science—evolutionary biology—that is rarely in a position to make them. This is that the average weight of bird brains may rise over coming decades. Whether anyone with Mr Erritzoe’s enthusiasm for data collection will provide the means to test that prediction is, though, a different question. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21719776-new-evolutionary-pressure-may-be-work-avian-world-small-brained-birds/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Taking stock + +Managing supplies of vaccines is a huge problem + + +New research asks how often vaccines are exposed to temperatures below the lower limit + + + +Mar 30th 2017 + + + + + +KEEP a tomato cool in a refrigerator and it will stay fresh far longer than it would at room temperature. Accidentally freeze it, though, and you will reduce it to a disgusting mush. + +A similar problem plagues the storage of vaccines. About six in ten of those procured by UNICEF, the UN’s children’s fund, must be stored at a temperature between 2°C and 8°C. Generally, the focus of efforts to do this is on the top end of the range, with the establishment of “cold chains”, the links of which are refrigerators on the journey from factory to clinic, to stop vaccines overheating. Less effort is put into making sure a vaccine never gets too cold. But a vial of vaccine that has been accidentally frozen, and then thawed, may lose its potency as surely as one that has been warmed up. + + + +A study published this week in Vaccine, by Celina Hanson of UNICEF and her colleagues, suggests that the overchilling of vaccines is alarmingly common. Dr Hanson and her team reviewed research that measured how often vaccines were exposed to temperatures below the lower limit. They combed through papers published between 2006 and 2015, and found 21 relevant studies conducted in 18 countries. Though not a representative global sweep, the studies in question covered both rich countries and poor ones, from several continents. Among the places they examined were America, China, India and a number of African states. + +Intriguingly, the problem of overchilling was worse in the rich world than the poor. The papers Dr Hanson looked at reported that, on average, 38% of vaccine shipments in rich countries and 19% of those in poor countries had experienced temperatures that were too low. Regardless of a country’s wealth, about a third of its vaccine-storage units, which ranged from small refrigerators to huge cold rooms, were chillier than was safe. + +Routine monitoring weeds out some frozen vaccines. Nurses in poor countries use a “shake and look” test to spot tell-tale crystals, for example. But the share of compromised vials that goes undetected and ends up in ineffective jabs is unknown. Studies that examine the consequences further down the line are rare, but those that exist suggest freezing matters. + +According to one such study, which was conducted in America and published in 2011, places with a higher proportion of refrigerators with temperatures below zero also had higher rates of pertussis (whooping cough). A ten-year-old piece of research from Mongolia, where temperatures in winter can be as low as -55°C, found that children vaccinated against hepatitis B in winter months were more than twice as likely to be diagnosed subsequently with that disease than were those vaccinated in other months. + +Another problem of vaccine distribution, “stock-outs”, is also the subject of a paper in this week’s Vaccine. Patrick Lydon of the World Health Organisation (WHO) and his colleagues analysed data from 194 countries that had been submitted to the WHO and UNICEF between 2011 and 2015. In an average year, a third of these countries had at least one vaccine out of stock at national level for a month or longer. Stock-outs were most common in sub-Saharan Africa, where bungled procurement and tracking of vaccines is common. But they were far from rare in Europe, as well. In an average year one European country in six reported a stock-out. + +Mr Lydon and his colleagues did not collect data on how many children missed jabs as a result of stock-outs, so the consequence of such laxity is unknown. But childhood vaccination is important. The WHO calculates that vaccines already prevent between 2m and 3m deaths a year, but that this figure would rise by a further 1.5m if all children received the recommended jabs. That careless handling and careless stock-management are making this goal harder to achieve is a scandal. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21719779-new-research-asks-how-often-vaccines-are-exposed-temperatures-below-lower/print + + + +上一项 文章 章节 下一项 + + + + + +Science and ... 章节 Obituary + + + + + +Books and arts + + +Faith and tradition in China: Pilgrims through this barren land + +Sexual selection: Gender fluidity + +New fiction: Heady stuff + +David Jones, painter-poet: Modernist man + +Classical music: An elegant primer + +Johnson: Everybody has their opinion + +Science and ... 章节 Obituary + + + + + +文章 章节 下一项 + + + + + +Tradition, resurrected + +A resurgence of religious faith is changing China + + +Buddhist, Daoist and Christian believers are adapting the rhythms of the past to modern life + + + +Mar 30th 2017 + + + + + +The Souls of China: The Return of Religion after Mao. By Ian Johnson. Pantheon; 455 pages; $30. Allen Lane; £25. + +HISTORICALLY in China, state and religion were always united, forming a spiritual centre of gravity. China was poor but its identity was clear, its vision for the future based upon its knowledge of the past. Communist revolutionaries saw these religious traditions as an impediment to progress and a reason why the country remained poor. So they set about destroying the entwined belief system of Confucianism, Daoism and Buddhism, and replaced it with the new trinity of Lenin, Marx and Mao. Only by doing so, they believed, could China be saved. + + + +When Mao died in 1976, belief in communism began to erode. Now, four decades on, his successors have found the absence of a belief system to be a problem. At least in Europe, the ebb of the Christian tide left a deeply rooted rule of law and a compassionate welfare state. Shorn of Dao and Mao, modern China has been left with a corrupt party state and a brutal, wild west capitalism. In a recent poll 88% of people said they believed that there was a moral decay and a lack of trust in society. + +This is part of a much bigger crisis of identity. The outside world sees a thrusting, confident new China, but many people (and party leaders) are still trying to work out what it means to be Chinese in the modern world. The order of human relationships has been damaged by socialist modernity. The nation’s feng shui has been rattled. As one historian put it: the Middle Kingdom has lost its middle. In a society without universal rules, many yearn for a new, or reconstituted, moral order. + +A sure sign of the confusion was the sight of China’s party chief, Xi Jinping, standing at Confucius’s birthplace in 2013 and paraphrasing the sage: “A state without virtue cannot flourish; a person without virtue cannot succeed.” Aware of the political implications of a society lacking virtue, Mr Xi has launched a campaign of national renewal based on revitalising China’s traditional values and melding them to the Communist Party. This is no small switch, since these are the same traditional values that the party spent 60 years trying to destroy. Mr Xi seemed to say that only if ancient beliefs are revitalised can China be saved. + +One change has been the arrival of serious spiritual competition in the form of Christianity. Long derided as a foreign religion, it has become Sinicised over decades and is now supported by the growing enthusiasm of the young, urban middle class, who see it as refreshing and socially engaged. Whereas 185m people consider themselves Buddhist and 173m say they engage in some Daoist practices, there are now as many as 80m Christians in China, many of whom like the faith’s links with the West and its commitment to social change—the very things the party abhors. + +This heady spiritual mix is the subject of Ian Johnson’s new book, “The Souls of China”. Mr Johnson has long delved into the Chinese soul, winning a Pulitzer prize in 2001 for his reporting in the Wall Street Journal on the party’s suppression of Falun Gong, a spiritual movement. He compares the religious revival with the Great Awakenings in America in the 18th and 19th centuries, when a stirring of popular Christian belief led to major social and political change. He believes the West, by focusing on the politics and economics of China, is missing the massive cultural shift of hundreds of millions of Chinese people turning to religious faith for answers. “We thought we were unhappy because we were poor,” says one interviewee. “But now a lot of us aren’t poor any more and yet we’re still unhappy.” + +The book presents a fascinating panorama: wealthy urbanites on Daoist pilgrimages and young Christian activists learning how to campaign against forced abortion. Mr Johnson is sceptical about the party’s top-down morality campaign. “A government that relies on fear cannot instil morality; it can only enforce behaviour,” he writes. Much more important, he feels, is the sense of bottom-up empowerment that faith often provides. The state will continue trying to co-opt religious groups it believes are safe, and to crush the ones it perceives as more dangerous, which means that traditional religions such as Buddhism and Daoism are likely to be the winners. + +Mr Johnson believes that faith can co-exist with the party but it will continue to be an uneasy truce, as more Chinese people decide how they want to live. The party wants believers’ morality without their activism, but is finding that the two are inseparable, especially for Christians. The sermons of Wang Yi, a house-church pastor in the city of Chengdu, epitomise the changes taking place across the country, perhaps because he presents a clear vision of the future that is neither the party narrative nor just a reversion to the past: “We are creating a Jerusalem,” he says. “This is the city on the hill.” The Daoists and the Buddhists have changed, too, adapting the rhythms of the past to a more modern beat. They have lost much of the old fatalism under which people accepted their lot, and they now have a vision of their own of a more moral, less brutal society, where relationships matter and people know how to live in harmony, even if they are poor. As one of the book’s protagonists, a Daoist undertaker and fortune-teller, says: “You create your own fate.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21719766-buddhist-daoist-and-christian-believers-are-adapting-rhythms-past-modern/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Nature v nurture + +The controversial biology of sexual selection + + +A new book takes aim at evolutionary determinism + + + +Apr 1st 2017 + + + + + +Testosterone Rex: Myths of Sex, Science and Society. By Cordelia Fine. W.W. Norton; 266 pages; $26.95. Icon; £14.99. + +BOYS like sticks and girls prefer dolls, or so the tidy evolutionary story goes. Because stone-age men hunted game and competed for mates, boys want to play rough, take risks and assert dominance. Because women mainly cared for babies, girls still hope to nurture. Given these hard-wired differences, it is only natural that it can sometimes seem that men are from Mars and women from Venus. + + + +In “Testosterone Rex” Cordelia Fine of the University of Melbourne takes aim at those who suggest that evolutionarily determined sex differences—and the power of testosterone—can explain why most CEOs are men and few physicists are women. She argues that essentialist presumptions that rationalise an unequal status quo are “particularly harmful to women”. + +Evolutionary determinists suggest that females are a resource that males fight over. A female’s reproductive output is limited by her physiology no matter how many mates she has. A male’s is limited by the number of females he can inseminate. Because of this, males are more likely to seek status, take risks and fight rivals in order to woo as many fertile partners as possible. Females either choose the winners, or the winners choose them, depending on the species. But tell this to the wildly promiscuous female Savanna baboon or the fiercely competitive female bush cricket. Ms Fine uses studies of behaviour from across the animal kingdom to argue that neither sex has a monopoly on competitiveness, promiscuity, choosiness or parental care. Females who sample widely tend to be more reproductively successful (which is why a lioness may mate up to 100 times a day with different lions during oestrus), and those who jockey for dominance are often rewarded with more food. + +Among humans, the conventional view is that men are programmed to act like Casanova. After all, a man can ejaculate 100 times in the time it takes a woman to complete a menstrual cycle. But Ms Fine argues that relentless male promiscuity has limited benefits. Because randomly timed sex will impregnate a healthy woman only around 3% of the time, she finds that a man would have to have sex with more than 130 women just to have a 90% chance of beating the fertility rate of a monogamous couple. This, she notes, may be one of the reasons why a majority of men—like women—say they would prefer to be in a sexually exclusive relationship. + +Ms Fine does not dispute that sexual selection has shaped brains and bodies, or that genes and hormones influence how animals think and behave. An ever-changing “mosaic” of features—some more common in females, others more common in males, some common in both—guides both men and women. But, she argues, people tend to overestimate these differences and underestimate the value of environmental factors, such as rearing conditions, ecological resources and social conditions: that is, the nurture side of the nature-nurture debate. She points to a recent study of young Chinese men and women playing a risk-taking game, which found that the women were every bit as bold as the men when they played privately, but they took fewer risks—and the men took more—when their games were observed by an attractive member of the opposite sex. Ms Fine suggests that a desire to appeal to the observer nudged the players to heed gender norms. + +Some neuroscientists speculate that sexual traits are vulnerable to environmental forces to ensure that animals can adapt to different habitats. This seems to be especially necessary for humans, who must learn how to cope in groups as diverse as matrilineal Arctic foragers and patrilineal tropical horticulturalists. + +In her zeal to challenge evolutionary determinists, however, Ms Fine takes a swipe at some straw men. Few serious theorists argue that male and female brains are categorically different, or that individuals are not influenced by environmental pressures. Parents who have both boys and girls may cock an eyebrow at the way she largely ignores studies of actual sex differences, preferring to blame much of gendered behaviour on socialisation. As for testosterone, only the most reductive observer would claim that absolute levels of the hormone “cause” behaviour, so it is not surprising when Ms Fine explains that its effects on brains and bodies is more nuanced. She also offers evidence that seems to undermine her point that testosterone does not necessarily make men more risky or competitive: apparently the testosterone levels of Wall Street traders go up as they make more money (a phenomenon known as the “winner effect”), which seems to spur them to take more risks. + +Despite this, Ms Fine’s is a provocative and often fascinating book. Armed with an array of studies on everything from rats to humans, she shows that adaptive traits can take different forms depending on the circumstances, and nothing is fixed. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21719767-new-book-takes-aim-evolutionary-determinism-controversial-biology-sexual/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Heady stuff + +Balli Kaur Jaswal has written a new type of erotic novel + + +Rooted in a Sikh community in London, social commentary and steamy scenes jostle for attention + + + +Mar 30th 2017 + + + + + +Erotic Stories for Punjabi Widows. By Balli Kaur Jaswal. HarperCollins; 309 pages; £14.99. To be published in America by William Morrow in June. + +EROTICA is a hot topic for publishers. Americans bought 28.5m romantic novels in print form in 2015. Romance Writers of America, a trade association, says the genre accounts for a third of all novels sold. Random House and Amazon have recently launched imprints to try to sate readers’ lust for steamy stories. HarperCollins paid a six-figure sum for one such titillating book at the London Book Fair in 2016. + + + +Balli Kaur Jaswal’s “Erotic Stories for Punjabi Widows”, the book in question, is not your usual lip-biting, troubled-billionaire fare. It follows Nikki, a university dropout and “fem fighter”, who signs up to teach a creative-writing course to older Sikh women in Southall, a London suburb with a sizeable Indian population. Unable to read or write in English, the widows turn to telling stories, reliving their most passionate moments or picturing what they “were never given in the first place”. Though they lack the necessary vocabulary—the stories are filled with references to “aubergines”, “cucumbers”, “sticks” and “lady pockets”—it quickly becomes clear that these supposedly conservative women do not lack imagination. + +Yet these stories, where lascivious ladies demand what they want from husbands and lovers of both sexes, chafe against the sensibilities of a community that still upholds a strict honour code. The Brothers, a group of bullish young men, “consider themselves Southall’s morality police”, even offering bounty-hunting services to families with wayward daughters. The unresolved deaths of Karina, Gulshan and Maya, three defiant young women, are the subject of knowing whispers and salacious rumours. While the widows delight in finding their voices, it becomes increasingly clear that some women have paid a heavy price for trying to be heard. + +“Erotic Stories for Punjabi Widows” balances darkness and light, social commentary and ecstatic escapism: it is a well-gauged equilibrium that keeps the sex writing from feeling monotonous, and reinvigorates the subplots of honour killings and arranged marriages. Ms Jaswal has written a funny and moving tale of desire and its discontents. It serves as a reminder that even the most traditional societies often come in 50 shades of grey. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21719769-rooted-sikh-community-london-social-commentary-and-steamy-scenes-jostle/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +An overdue biography + +Why the reputation of David Jones is ripe for reappraisal + + +The extraordinary life of an overlooked painter-poet + + + +Apr 1st 2017 + + + + + +David Jones: Engraver, Soldier, Painter, Poet. By Thomas Dilworth. Counterpoint; 432 pages; $39.50. Jonathan Cape; £25. + +THIS is a story of undeserved neglect, the first full telling of the life of a shy, awkward and generally poverty-stricken man who hid his light beneath a bushel and so neglected his appearance that he was often taken for a tramp. David Jones, who was born in 1895, was a poet and a painter; some regard him as the greatest painter-poet since William Blake. His achievements as a Modernist writer rank him alongside T.S. Eliot and James Joyce. + + + +Jones grew up in south London, the son of a printer’s overseer. His childhood was Dickensian, his schooling fitful and he was often sick. But his knowledge of scripture was prodigious and his reading wide-ranging. From a young age Jones became passionately attached to the idea of Wales (his father was Welsh), and the wrong that had been visited upon the Celts by the English. The death of Prince Llywelyn ap Gruffydd in 1282 not only put paid to the political identity of Wales; it would occupy the painter-poet’s thoughts for the rest of his life. Mining the myths of Wales would be central to his work. One of his greatest regrets was that, though he studied Welsh on and off for decades, he never quite mastered it. His Welshness was, as his biographer, Thomas Dilworth, writes, “an imaginative acquisition”. + +He went to art school at the age of 13, having already drawn a magnificent dancing bear when he was seven. In 1915, aged 19, he joined the Royal Welsh Fusiliers and was sent to the Somme. He spent 117 weeks at the front, a terrible experience which, when finally expressed in words more than two decades later, would result in “In Parenthesis”, one of the greatest poetic responses to the first world war. Remembering the conflict would be a disease of which he could never rid himself. + +Jones’s paintings and poetry appeared successively, not simultaneously. Whereas his poetry was usually dense and allusive, worked over again and again (and thus of great appeal to commentators), his paintings could be quickly made. When complete, they were diaphanous and airy, full of wondrous and immediate beauty, especially when he painted flowers at a window. There was a letting go about these works and a marvellous naivety. Jones’s religion—he converted to Catholicism in 1921, much to the horror of his parents—grounded and enriched him. For the painter-poet art was sacramental, a setting apart and a raising up. Nothing pleased him more than listening to Gregorian chant on his scratchy gramophone. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21719764-extraordinary-life-overlooked-painter-poet-why-reputation-david-jones/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +An elegant primer + +Classical music, made easy + + +How to distinguish Bach from Beethoven + + + +Mar 30th 2017 + + + + + +Language of the Spirit: An Introduction to Classical Music. By Jan Swafford.Basic; 321 pages; $28. + +JAN SWAFFORD’S new book, “Language of the Spirit”, is a self-guided tour. “When a piece [of music] or a composer grabs you, go out and look for more on your own,” he says. And he has plenty of suggestions to get you started on streaming services such as Spotify or YouTube. + + + +The “classical” genre on Spotify comes some way down the list, and classical buffs have been fretting for ages that audiences are getting greyer and smaller. Even so, many people have at least a passing acquaintance with some of the superstars of the classical repertoire: Beethoven’s Ninth Symphony, say, or Mozart’s “Eine kleine Nachtmusik”, or Handel’s “Messiah”. If that has made them wonder how to put these works into context, this introduction to classical music is just what they need. + +Mr Swafford is a music writer (who, among other things, has written a scholarly but highly readable biography of Beethoven) as well as a composer, and has been teaching music for decades, most recently at the Boston Conservatory. This book distils his experience of passing on his knowledge and experience to others, and making it enjoyable for them. + +Music has been part of human life almost from the outset: archaeological digs have turned up flutes at least 40,000 years old. But the sort of Western classical music this book covers did not really get going until monks in the 11th century AD found a way of writing it down, which made it possible to conceive and precisely re-enact long and complex pieces. + +The book starts at the beginning, with a section on music through the Middle Ages and the Renaissance, and then proceeds through the various periods—Baroque, Classical, Romantic, Modernist and beyond. Each period is introduced with a brief essay on the new and exciting things it brought, followed by individual essays on the great composers of that time. The plan is not particularly original, but the execution is. Thumbnail sketches of the composers bring them to life as individuals and as musicians, and explain how they relate to the artistic and political environment of their time. + +Reading about the classical giants one after the other, you begin to feel that their fame came at a high price. Many of them were child prodigies (Mozart being one of the best-known examples), who were mercilessly pushed to perform; most were plagued by money troubles and ill health throughout their lives; and few enjoyed satisfactory personal relationships. + +Musicologists generally agree about the brightest stars of the classical repertoire, and here they all are, above all Bach, Beethoven, Handel, Mozart and a raft of Romantics, from Schubert to Wagner. Mr Swafford also thinks a lot of Haydn and, being American himself, gives prominence to a number of American composers. When it comes to the 20th and 21st centuries, the names proliferate and judgment becomes more difficult, partly because “history has only begun to do its job of deciding who thrives and who fades”; and partly, he says, because media, and particularly online media, have given music a new kind of immortality. + +Between the stories of the composers, Mr Swafford slips in many interesting digressions. One is an excellent explanation of the difference between tonal music, based on scales and keys, and the atonal sort, which dispenses with such conventions. Another is an evaluation of the early-music movement (using historical instruments and performance) that “really came of age in the 1970s.” + +A third is about the complicated art and science of piano tuning. The interval between each note is determined by a mathematical ratio, and the 12 notes in an octave get you to a higher or lower version of the note you started on. But if you observe exactly the right distance between each note, you end up, for reasons that are still not clear, with an octave that sounds slightly out of tune, so the discrepancy has to be redistributed among all 12 notes. This “tempering” can be done in a variety of ways. + +All the while, Mr Swafford entertains as he informs. But in the end, music to him is a thing unto itself, “a language of the spirit—its essence can’t be captured in words.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21719765-how-distinguish-bach-beethoven-classical-music-made-easy/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Johnson + +English has a traditional solution to gender-neutral pronouns + + +In praise of singular “they” + + + +Apr 1st 2017 + + + + + +COPY editors are opinionated. Whether titles of books should be in italics or in inverted commas can divide them more decidedly than the Sharks and the Jets. So at a recent meeting of the American Copy Editors Society, the “Chicago Manual of Style” and the Associated Press (AP) stylebook, both widely followed, announced a change that sent waves through the audience. In AP’s wording, “They/them/their is acceptable in limited cases as a singular and-or gender-neutral pronoun, when alternative wording is overly awkward or clumsy.” + +English lacks an uncontroversial pronoun that lets you talk about a person of a generic or unknown gender—known as an “epicene” pronoun, from the Greek for “common to all” (genders). Some would say that “each president chooses his own cabinet” is epicene—but psychological research proves that the his calls to mind a man. (If you truly believe his is gender-neutral, try “Steve, Sally, Mary and Jane each had his hair cut today.”) + + + +Other languages face the problem in different guises. In French the possessives son, sa and ses do double duty as “his” and “her”. A chacun son opinion can be read as “Each has his opinion” or “Each has her opinion.” But French can’t avoid the issue entirely: Chaque président choisit son cabinet (“each president picks his cabinet”) uses a masculine noun for president, which the French traditionally consider epicene, for a generic or unknown president. But if the president is a woman, the title becomes the clearly feminine présidente. So “generic” titles like président do subtly indicate a man. + +Nearly always, if a language must choose one gender to be generic, it is the masculine. Banawá, spoken in Brazil, is an exception, but its speakers also happen to treat women and girls quite brutally, according to Dan Everett, a linguist who has studied them. Grammar is not destiny. + +The AP and Chicago (and the forthcoming edition of The Economist stylebook) open the door to a controversial—but surprisingly traditional—solution to the problem: “each president chooses their own cabinet”. Some people say it is illogical: each president is singular, and their is clearly plural. Efforts to use their instead of his are modern political correctness running roughshod over grammatical good sense. + +But that is wrong. Their can do double-duty just as your can for both singular and plural. You has a partly parallel history. First, it was the object form of ye for a plural: we-us, ye-you. Then it replaced ye: we-us, you-you. It was then used as a polite way to refer to a single person, much like the French vous. Then it started edging out the common way to refer to a single person, thou. From second-person-plural pronoun in the objective case to a singular in the nominative is a pretty big shift. Pressing they/their/them into service for a generic or unknown referent is actually less of a leap. + +Supporters of the epicene they argue that it is high time this was accepted, in a world aware of sex discrimination. But this is unlikely to convince traditionalists. A better argument is that the singular they is hardly a newfangled political invention. The Oxford English Dictionary’s first citation for a sex-neutral, indefinite they is from about 1375. (Singular you as a subject dates back only to 1405.) Singular they appears subsequently in an unbroken stream of high-quality sources from the King James Bible (“in lowlinesse of minde let each esteeme other better then themselues”) to the writings of Walter Bagehot, a former editor of The Economist (“Nobody fancies for a moment that they are reading about any thing beyond the pale of ordinary propriety”) to today. The American Dialect Society crowned singular they itsword of the year for 2015. + +The alternatives are worse. He or she quickly becomes wearisome on repetition. Alternating he and she is distracting. Inventing pronouns does not help: from hersh to ze, made-up gender-neutral pronouns have never taken off and probably never will. + +One alternative would be to make the referent plural: “Presidents choose their own cabinets.” This is usually the best thing to do. But there are times when a writer wants to conjure an individual, albeit a generic one. In such cases, the truly newfangled options have failed to gain widespread acceptance among editors and writers of quality. Singular, epicene they has not just modern gender equality but seven centuries of the finest literary tradition on its side. As usage disputes go, this should be an easy one. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21719768-praise-singular-they-english-has-traditional-solution-gender-neutral-pronouns/print + + + +上一项 文章 章节 下一项 + + + + + +Books and arts 章节 Economic and ... + + + + + +Obituary + + +Derek Walcott: Songs of the sea + +Books and arts 章节 Economic and ... + + + + + +文章 章节 下一项 + + + + + +Songs of the sea + +Obituary: Derek Walcott died on March 17th + + +The poet of the Caribbean was 87 + + + +Mar 30th 2017 + + + + + +OVER more than five decades of producing some of the 20th century’s best poetry, Derek Walcott found many local metaphors for his trade. He was a bent astronomer, tracing out the circle of time in the singeing stars above the mango trees; the careful stenciller of a flowered window frame, or the planer of a canoe; an egret stalking the reeds, his pen’s beak “plucking up wriggling insects/like nouns and gulping them”. + +Above all, though, he was a poet-mariner, a rusty-head sailor with sea-green eyes, “a red nigger who love the sea”, as locals said: red because he had Dutch, English and black in him, the inevitable mingling of voyagers to the Caribbean. All roads led to the sea, it was always visible; the roar of the surf was in his body, and its rhythm in the lines he wrote. Each dawn, after cigarette and coffee, he was called to his blue portable typewriter “like a fisherman walking towards the white noise/of paper, then in its hollow craft sets his oars.” His pen became a sea-dipping swift crossing and recrossing the waters, like memory, or a crab, “obliquity burrowing to surface”. Inevitably the hero of his greatest poem, “Omeros”, was a simple fisherman, Achille, who in a conscious echoing of Homer set his pirogue on the ocean and simply sailed away. His story was written in terza rima, flexible and ever-flowing. + + + +The sea was history: beneath it were the wrecked ships that had fought for the islands, British, Dutch and French, with their drowned sailors and drowned slaves, the women now manacled with cowrie shells. It floated Achille to Africa and Africa to the West, each prisoner carrying its rhythms but not its language to the other world, + +and what began dissolving + +was the fading sound of their tribal name for the rain, + +the bright sound for the sun, a hissing noun for the river, + +and always the word “never”, and never the word “again”. + + + +Yet Mr Walcott did not believe slavery should be dwelt on, like a chafing sore. He raged at it, but the sea erased everything, and the surf’s lines were ici pas ni un rien: what has been done is nothing, start again. + +His personal life knew the same flux: three wives, all treated badly, to his later grief; many liaisons. His loves too were expressed in sea-language: post coitum “the eight limbs loosen, like tentacles in water”; in the morning he would lie watching “the fall and rise/of suspiring linen, like a skiff at anchor”. He would cup a breast as he fondled a white stone from the beach. These propensities, noted when he was teaching in America in the 1980s and 1990s, cost him the chance to be, in 1999, Britain’s poet laureate and, ten years later, professor of poetry at Oxford. He was not concerned, for he did not want to drop his anchor long on any northern shore. + +The horned island + +The one point of fixity in his life was his home island of St Lucia, where the indigo horns of the Pitons rose to the sky, where the coppery sea-almonds shook in the wind and clay paths wound, through green bananas, to the villages of rusted galvanise; where all was bright and present-tense, all the time. St Lucia was the beautiful Helen the colonisers had fought over, reimagined as a black housemaid strolling the beach in a yellow dress, swinging a plastic sandal; who “dint take no shit/from white people”, and whose waist swayed like palms in the weather. + +There he had first found the “foreign machinery” of English literature: Dickens and Scott on the shelves at home, “The World’s Classics” in the barber’s shop, Kipling, Shakespeare and Milton at school, and imagined his own shadow falling on those distant, cobbled streets. There he began to write seriously at 11, a poem a day in an exercise book, and at 19 published his first collection, paid for by his mother. + +He was madly in love with English then, and knew that his calling was to be a great English poet. A great English playwright, too, perhaps; he wrote 80 or so plays, and set up theatre workshops in both Trinidad, his base for 20 years, and Boston. A London house, Cape, published his first book outside the West Indies in 1962. But he found an inevitable cleavage between these worlds: that in both hustling America and drizzling, hedge-bound England, with their strange snows and disorientating cities, he would always be an exile, patronised as “a Commonwealth writer” or, by some blacks, as a craven admirer of the Western canon. He strove not to forget his native patois of the babbling cedars, ground-doves and sea, or the astonishment of colour and light: a light that made him a painter, like his father, as well as a writer, and led him to consider the poet’s craft as a celebration and a prayer. + +He had travelled often and far, but concluded that poetry was best done within a perimeter of about 20 miles. The truest, simplest, potentially the greatest, lay close to home: in the red flares of the flame tree, the “leoparding light” of the forests, the gossip of café and rumshop, the thick-leaved breadfruit yards. And, most of all, in the ocean. Without it, he pushed his pen “through a thick nothing”; with it, he had a shining shield, a theatre, a light-sparkling hoard, a music, an untiring lover. The last line of “Omeros” was his own: “When he left the beach the sea was still going on.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/obituary/21719757-poet-caribbean-was-87-obituary-derek-walcott-died-march-17th/print + + + +文章 章节 下一项 + + + + + +Obituary 章节 + + + + + +Economic and financial indicators + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +World GDP + +Markets + +Obituary 章节 + + + + + +文章 章节 下一项 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21719771/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Output, prices and jobs + + + + +Mar 30th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21719789-output-prices-and-jobs/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Trade, exchange rates, budget balances and interest rates + + + + +Mar 30th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21719784-trade-exchange-rates-budget-balances-and-interest-rates/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The Economist commodity-price index + + + + +Mar 30th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21719785-economist-commodity-price-index/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +World GDP + + + + +Mar 30th 2017 + + + + + +The world economy grew by 2.8% in the last quarter of 2016 compared with a year earlier, according to our estimates. The contributors to global growth have shifted over the past two decades. China’s economy may be slowing—it expanded by less than 7% in the fourth quarter of 2016—but it still accounts for over two-fifths of global growth. America was the main propellor of the world economy 20 years ago, accounting for 30% of the total. It is now behind China and India in third place, contributing a mere 11%. Hong Kong was a bright spot in the fourth quarter of last year: growth in service exports helped the economy expand by 3.1% year on year, up from 2% in the previous quarter. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21719783-world-gdp/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Markets + + + + +Mar 30th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21719782-markets/print + + + +上一项 文章 章节 下一项 + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.04.08.txt b/homeworks/B20769/homework1/data2/2017.04.08.txt new file mode 100644 index 0000000..d799e64 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.04.08.txt @@ -0,0 +1,6390 @@ +2017-04-08 + +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +| Next section | Main menu | + +* * * + + + + + +The world this week + + +Politics this week [Thu, 06 Apr 16:55] + +Business this week [Thu, 06 Apr 16:55] + +KAL’s cartoon [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Politics this week + + +Apr 6th 2017 + + + + + +A chemical-weapons attack on a rebel-held town near the Syrian city of Idlib killed at least 85 civilians, the deadliest such assault in Syria’s long and bloody civil war since August 2013. Bashar al-Assad’s regime denied responsibility: only the Russians said they believed it. International condemnation came thick and fast, including at the UN Security Council. Donald Trump said Syria had crossed “many, many lines”, but did not say what, if anything, he would do. See article. + +Israel authorised the construction of the first new settlement in the West Bank for more than 20 years, following the earlier dismantling of a settlement site at Amona that was illegal under Israeli law. + + + +Standard & Poor’s cut South Africa’s debt to junk status for the first time since 2000 after President Jacob Zuma sacked the respected finance minister, Pravin Gordhan, and replaced him with a loyalist. The rand slumped. See here and here. + +An investigation into Mozambique’s irregular borrowing of millions of dollars has widened, with banks asked to provide information on accounts held by the former president, Armando Guebuza. Last year it emerged that the government had concealed nearly $1.4bn in borrowing. + +More mass graves were discovered in the Democratic Republic of Congo’s central Kasai province. The UN says they contain the bodies of as many as 400 people, including women and children, killed amid clashes between the army and a rebel group. + +Just another day in Venezuela + +Venezuela’s supreme court took over the powers of the legislature, which is controlled by the opposition to the socialist regime, and then reversed its decision. The national assembly remains neutered by the court’s earlier rulings; the Organisation of American States called on Venezuela to restore its full powers. Security forces fought protesters in Caracas with tear-gas, water cannons and pepper spray. See article. + +Close to 300 people died in landslides in the town of Mocoa in south-western Colombia. At least 400 people are still missing. + + + +Lenín Moreno narrowly won Ecuador’s presidential election, defeating Guillermo Lasso, a conservative former banker. Mr Moreno, a former vice-president, is the political heir of the current left-wing president, Rafael Correa, who greatly expanded social-welfare spending, and restricted press freedoms and the independence of the judiciary. Mr Lasso said the vote count was fraudulent. See article. + +Protesters set fire to Paraguay’s congress after the ruling Colorado Party set up a separate senate to enact laws that would allow the president, Horacio Cartes, to run for re-election. One person was killed by police. See article. + +Open to suggestions + +The king of Thailand promulgated the country’s 20th constitution since 1932. In theory, this paves the way for the restoration of civilian government after the military coup of 2014. But the ruling junta has yet to set a date for elections. + +Japan said its ambassador to South Korea would return to Seoul. He had been recalled three months ago amid a row about statues commemorating Korean women forced into prostitution by Japan during the second world war. + +North Korea tested a ballistic missile on the eve of a summit between Donald Trump and his Chinese counterpart, Xi Jinping, at which the two were expected to discuss how to curb North Korea’s nuclear programme. See article. + +A Chinese academic was allowed to return home to Australia after being barred from leaving China for more than a week. His treatment cast a shadow over a visit to Australia by China’s prime minister, Li Keqiang. + +A court in China sentenced two Chinese dissidents to prison for “inciting subversion” through their activism, which included expressing support for pro-democracy protests in Hong Kong. + +China announced plans to build a city in Hebei, the province surrounding Beijing, to ease pressure on the capital caused by its surging population. Businesses and universities will be encouraged to move to the “Xiongan New Area”, the proposed name of the development. Officials say it will be a “special zone”, of similar importance to the economic powerhouses of Pudong and Shenzhen. + +All about Steve + +Donald Trump removed Steve Bannon, his chief political adviser, from the National Security Council, two months after appointing him. Lieutenant-General H.R. McMaster, the new national security adviser, was said to be unhappy with the appointment. The director of national intelligence and the chairman of the joint chiefs of staff on the NSC, both of whom had their roles reduced by Mr Trump in January, were restored as full participants. See article. + +North Carolina’s legislature repealed a controversial law that required transgender people to use public lavatories according to the sex stated on their birth certificate. The repeal didn’t go far enough for some. A new bill forbids towns and cities from enacting similar statutes, but leaves an option open for the state Capitol to do so. + +Republicans in the Senate vowed to force a vote over the confirmation of Neil Gorsuch to the Supreme Court. Democrats said they had enough votes to block his appointment by a filibuster. See article. + +Terror on the train + + + +A bomb in the St Petersburg metro killed at least 14 people and injured more than 50 others. Russian authorities said it was a terrorist attack, and that a 22-year-old man from Kyrgyzstan had been the suicide-bomber. See article. + +Aleksandar Vucic won Serbia’s presidential election with 55% of the vote. Mr Vucic, who has been prime minister since 2014, is a former nationalist hardliner who is now an enthusiastic proponent of Serbia’s candidacy for the EU. + +Hungary’s government passed legislation that threatens to shut down the Central European University. It complains that the university, founded by George Soros, a philanthropist, offers degrees that are recognised abroad. This is apparently a bad thing. Thousands marched in Budapest to oppose the law. See article. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21720343-politics-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Business this week + + +Apr 8th 2017 + + + + + +In a highly unusual move, one of the presidents of the Federal Reserve’s 12 regional banks resigned abruptly following an investigation into information that was leaked to a financial analyst five years ago. Jeffrey Lacker had headed the Federal Reserve Bank of Richmond since 2004, a role that gave him a place on the Fed’s monetary policymaking committee. + +On the never-never again + + + +A warning was issued by the Bank of England about the expansion of consumer credit in Britain, notably the growth of unsecured loans and zero-interest offers. The central bank cautioned that although consumer credit makes up only 10% of bank lending, whereas mortgages account for 70%, the losses for banks in a downturn from consumer credit would be significantly greater. Last year’s stress tests found that banks were exposed to £18.5bn ($23.1bn) of risky consumer credit compared with £11.8bn for mortgages. + + + +Scotland’s economy shrank by 0.2% in the last quarter of 2016, a blow to the nation’s independence-minded government given that the United Kingdom as a whole grew by 0.7%. Scottish GDP rose by just 0.4% for the whole year; the UK recorded a 1.8% increase. Scotland’s finance minister blamed last June’s UK-wide referendum on leaving the European Union. + +The euro zone’s unemployment rate dropped to 9.5% in February, the lowest since May 2009. The Czech Republic and Germany had the lowest rates at 3.4% and 3.9%. Greece and Spain recorded the highest rates, at 23.1% and 18%. + +The $43bn takeover of Syngenta by ChemChina was cleared by the EU’s antitrust regulator, which said it was satisfied that the pair’s promise to sell some assets allayed concerns that the deal could reduce competition in the agribusiness industry. America’s Federal Trade Commission also approved the acquisition, the largest foreign takeover by a Chinese firm to date. + +Fox News came under more pressure after it was reported that one of its top stars, Bill O’Reilly, and the network paid $13m to five women to settle allegations of harassment. Some big advertisers, including Mitsubishi, pulled their business from his show. Last year the station’s CEO, Roger Ailes, resigned over similar complaints. Fox also faces lawsuits over claims of racial discrimination. + +Britain introduced a mandatory rule requiring private companies with more than 250 employees to report on their gender pay gap. Firms are now required to collect and disclose data on differences between the median and mean salaries of men and women. The gaps in each quartile of the pay scale are also to be reported. Some say the measure will do little to tackle the issue. Iceland has taken a tougher approach, unveiling a bill that would force firms to demonstrate that they provide equal pay to men and women, the first such stipulation in the world. + +India’s Supreme Court banned the sale of alcohol within 500 metres of motorways, a shock to the country’s hospitality industry. The court wants to clamp down on drink-driving, but its decision has affected tens of thousands of businesses, including restaurants and five-star resorts. See article. + +JAB Holding added to its American food-and-drink brand assets by agreeing to buy Panera Bread, a fast-growing bakery and coffee chain, for $7.5bn. JAB already owns Krispy Kreme Doughnuts and Peet’s Coffee & Tea in America as well as the Senseo and Douwe Egberts coffee brands in Europe, but Panera is the icing on the cake for its expansion plans. + +The share price of Ulker Biskuvi, a Turkish producer of biscuits and chocolate, fell sharply after it ran an April Fool’s advert that got entangled in Turkey’s febrile politics. The ad featured bizarre pranks, ending with the announcement that “now is the day of reckoning”, which government supporters, many of whom are suspicious of Ulker’s boss, interpreted as an attempt to stir tensions that have been simmering since last July’s coup attempt. + +Driven by success + + + +Tesla’s share price soared after it published bumper first-quarter sales figures for its electric cars. The company’s market capitalisation overtook that of 114-year-old Ford for the first time. Last year Tesla delivered 76,000 cars and Ford sold 6.7m vehicles, but it is Tesla that is racing ahead of Detroit in developing the cars of the future. See article. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21720348-business-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +KAL’s cartoon + + +Apr 6th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21720331-kals-cartoon/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Leaders + + +Computer security: The myth of cyber-security [Thu, 06 Apr 16:55] + +Chemical weapons in Syria: Russia’s poisonous client [Thu, 06 Apr 16:55] + +America and China: The valley and the delta [Thu, 06 Apr 16:55] + +South Africa: Dump Jacob Zuma [Thu, 06 Apr 16:55] + +Parking: Aparkalypse now [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Safety last + +How to manage the computer-security threat + + +The incentives for software firms to take security seriously are too weak + +Apr 8th 2017 + + + + + +COMPUTER security is a contradiction in terms. Consider the past year alone: cyberthieves stole $81m from the central bank of Bangladesh; the $4.8bn takeover of Yahoo, an internet firm, by Verizon, a telecoms firm, was nearly derailed by two enormous data breaches; and Russian hackers interfered in the American presidential election. + +Away from the headlines, a black market in computerised extortion, hacking-for-hire and stolen digital goods is booming. The problem is about to get worse. Computers increasingly deal not just with abstract data like credit-card details and databases, but also with the real world of physical objects and vulnerable human bodies. A modern car is a computer on wheels; an aeroplane is a computer with wings. The arrival of the “Internet of Things” will see computers baked into everything from road signs and MRI scanners to prosthetics and insulin pumps. There is little evidence that these gadgets will be any more trustworthy than their desktop counterparts. Hackers have already proved that they can take remote control of connected cars and pacemakers. + + + +It is tempting to believe that the security problem can be solved with yet more technical wizardry and a call for heightened vigilance. And it is certainly true that many firms still fail to take security seriously enough. That requires a kind of cultivated paranoia which does not come naturally to non-tech firms. Companies of all stripes should embrace initiatives like “bug bounty” programmes, whereby firms reward ethical hackers for discovering flaws so that they can be fixed before they are taken advantage of. + +But there is no way to make computers completely safe. Software is hugely complex. Across its products, Google must manage around 2bn lines of source code—errors are inevitable. The average program has 14 separate vulnerabilities, each of them a potential point of illicit entry. Such weaknesses are compounded by the history of the internet, in which security was an afterthought (see article). + +Leaving the windows open + +This is not a counsel of despair. The risk from fraud, car accidents and the weather can never be eliminated completely either. But societies have developed ways of managing such risk—from government regulation to the use of legal liability and insurance to create incentives for safer behaviour. + +Start with regulation. Governments’ first priority is to refrain from making the situation worse. Terrorist attacks, like the recent ones in St Petersburg and London, often spark calls for encryption to be weakened so that the security services can better monitor what individuals are up to. But it is impossible to weaken encryption for terrorists alone. The same protection that guards messaging programs like WhatsApp also guards bank transactions and online identities. Computer security is best served by encryption that is strong for everyone. + +The next priority is setting basic product regulations. A lack of expertise will always hamper the ability of users of computers to protect themselves. So governments should promote “public health” for computing. They could insist that internet-connected gizmos be updated with fixes when flaws are found. They could force users to change default usernames and passwords. Reporting laws, already in force in some American states, can oblige companies to disclose when they or their products are hacked. That encourages them to fix a problem instead of burying it. + +Go a bit slower and fix things + +But setting minimum standards still gets you only so far. Users’ failure to protect themselves is just one instance of the general problem with computer security—that the incentives to take it seriously are too weak. Often, the harm from hackers is not to the owner of a compromised device. Think of botnets, networks of computers, from desktops to routers to “smart” light bulbs, that are infected with malware and attack other targets. + +Most important, the software industry has for decades disclaimed liability for the harm when its products go wrong. Such an approach has its benefits. Silicon Valley’s fruitful “go fast and break things” style of innovation is possible only if firms have relatively free rein to put out new products while they still need perfecting. But this point will soon be moot. As computers spread to products covered by established liability arrangements, such as cars or domestic goods, the industry’s disclaimers will increasingly butt up against existing laws. + +Firms should recognise that, if the courts do not force the liability issue, public opinion will. Many computer-security experts draw comparisons to the American car industry in the 1960s, which had ignored safety for decades. In 1965 Ralph Nader published “Unsafe at Any Speed”, a bestselling book that exposed and excoriated the industry’s lax attitude. The following year the government came down hard with rules on seat belts, headrests and the like. Now imagine the clamour for legislation after the first child fatality involving self-driving cars. + +Fortunately, the small but growing market in cyber-security insurance offers a way to protect consumers while preserving the computing industry’s ability to innovate. A firm whose products do not work properly, or are repeatedly hacked, will find its premiums rising, prodding it to solve the problem. A firm that takes reasonable steps to make things safe, but which is compromised nevertheless, will have recourse to an insurance payout that will stop it from going bankrupt. It is here that some carve-outs from liability could perhaps be negotiated. Once again, there are precedents: when excessive claims against American light-aircraft firms threatened to bankrupt the industry in the 1980s, the government changed the law, limiting their liability for old products. + +One reason computer security is so bad today is that few people were taking it seriously yesterday. When the internet was new, that was forgivable. Now that the consequences are known, and the risks posed by bugs and hacking are large and growing, there is no excuse for repeating the mistake. But changing attitudes and behaviour will require economic tools, not just technical ones. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21720279-incentives-software-firms-take-security-seriously-are-too-weak-how-manage/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +A poisonous client + +Why Russia and Iran should ditch Bashar al-Assad + + +The longer they keep him in power, the more they will share his guilt for war crimes + +Apr 8th 2017 + + + + + +THE horror in Syria is never-ending. Its civil war, now entering a seventh year, has claimed about half a million lives, pushed 5m refugees out of the country and displaced millions more within it. Yet the chemical attack that killed at least 85 people in the rebel-held town of Khan Sheikhoun (see article) stands out as an act of infamy. In a murky conflict with few angels, it casts the spotlight on the worst perpetrator: the regime of Bashar al-Assad, backed by Russia and Iran. + +The footage of choking children suggests the use of a nerve agent, probably sarin. Its manufacture, storage and use as a weapon usually requires the wherewithal of a state. No militia in Syria—not even the jihadists of Islamic State (IS), who have used chlorine and mustard gas—is credibly reported to have used nerve agents on the battlefield. Israeli newspapers cite intelligence that the chemical air strike was ordered by the “highest levels” in Syria. Russia’s claim that the gas was released when a rebel arms dump was bombed is almost certainly a lie. As Mr Assad’s protector-in-chief, Russia’s president, Vladimir Putin, deserves to be singled out for opprobrium. + + + +A permanent stigma + +Often defied, the prohibition against chemical weapons is one of the oldest global agreements to make war less ugly. Even Russia, lately contemptuous of international norms, has every interest in preserving the anathema against such weapons. Imagine the terrorist bombing on the St Petersburg subway on April 3rd if it had involved poison gas. Chemical weapons are, by their nature, indiscriminate. They are of questionable value in warfare; organised armies can protect themselves from poison gases. But they are unparalleled instruments of terror against civilians, who have nowhere to hide. + +The taboo on poison gas should not obscure Mr Assad’s many other crimes—for which he deserves one day to face justice. And this is not the first time he has been accused of gassing his people. But the attack on Khan Sheikhoun crosses a line that Mr Assad himself has promised to respect. When it killed 1,400 people with sarin in 2013 in al-Ghouta, outside Damascus, his regime breached the “red line” set by Barack Obama. Mr Obama failed to order punitive strikes, and instead accepted a Russian deal whereby Syria would adopt the chemical weapons convention and surrender its stock of poison. + +At the time, that seemed a grave misjudgment—just how grave is now clear. The use of sarin in Khan Sheikhoun suggests that Syria hid some nerve agents, or produced them anew, violating its commitments. By using nerve gas again, Mr Assad is flouting a norm that the whole world accepts. + +With its deployment of air power to Syria in 2015, Russia saved Mr Assad, helped him to recover lost territory and scored a tactical victory over America. The West cannot now bomb Mr Assad without risking a clash with Russia. Donald Trump is right, but disingenuous, to blame the mess on Mr Obama’s weakness. Mr Trump himself opposed military action in 2013. As a candidate, he said that America should join Russia in bombing IS. As president, he says that he has now changed his mind on Syria; he should start by joining his ambassador to the UN in denouncing Russia. Right now, Mr Putin is no ally against jihadism, but a provoker of it. + +Perhaps Mr Assad is acting to demonstrate his impunity. Or perhaps he fears an imposed diplomatic deal. Either way Russia is permanently tainted by his war crimes. So is Iran, despite the fact that many Iranians still live with the effects of poison gases used on them by Iraq in the war of 1980-88. The longer Russia and Iran keep Mr Assad in power, the more they will share in his guilt. It is time for them to ditch their toxic ally. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21720280-longer-they-keep-him-power-more-they-will-share-his-guilt-war-crimes-why-russia/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The valley and the delta + +Trump and Xi have evidence at home that openness works + + +They both need to study it + +Apr 8th 2017 + + + + + +IT USED to be much easier to spot the difference between the presidents of America and China. One would argue for free markets and economic liberalism, the other for centralised control. One would endorse democracy and the rule of law, the other freedom from outside interference. As Donald Trump geared up to meet Xi Jinping for the first time this week, in a summit in Florida that was due to start after The Economist went to press, those differences have narrowed (and in some areas, such as climate change, the positions have flipped). + +This is partly a matter of style. Both Mr Trump and Mr Xi adhere to a personalised, “strongman” view of leadership. The American president is literally a brand; the Chinese are being encouraged to pledge personal fealty to Mr Xi (see article). But it is also a question of substance. Both men claim to be supporters of free trade but subscribe to a doctrine of economic nationalism. Chinese regulators use tariffs, antitrust laws and state media to target foreign firms; officials shovel subsidies at national champions; uncompetitive state-owned enterprises refuse to die. For his part, Mr Trump vows to get tough on Chinese imports and threatens blanket tariffs. He sees the world as a series of zero-sum games, in which countries with trade deficits lose and those with surpluses win (see article). + + + +Both leaders are suspicious of openness. Under Mr Xi, China is one of the most closed big societies on Earth. The Great Firewall censors the internet. Capital controls are designed to stop money flowing out. Investment restrictions impede the path of money coming in. America is built on different precepts entirely. But Mr Trump has isolationist instincts. He wants jobs, supply chains and technologies to be located within America. He sees migration as a threat to be managed, not an opportunity to be encouraged—this week he began to tighten up the processes for work visas. He, too, likes walls. + +Principles for reform design + +Such attitudes serve neither country well. For evidence of the merits of openness, both leaders need only look to the most dynamic parts of their economies. Silicon Valley is envied around the world for its agglomeration of talent, capital and ideas. It is also a hymn to cosmopolitanism. According to a study in 2016, immigrants founded or co-founded more than half of America’s unicorns—privately owned startups valued at more than $1bn. More than a third of the valley’s population is foreign-born, compared with a national average of 13%. + +But inside China, too, the case for openness has powerful backing. Exhibit A is the Pearl river delta (PRD), a megalopolis in southern China that comprises nine cities in Guangdong, as well as Hong Kong and Macau. As this week’s special report lays out, the PRD has been the beating heart of the China miracle. Thanks to the liberal economic reforms introduced into the PRD by Deng Xiaoping from 1980 onwards, a sliver of land with less than 1% of the mainland’s territory and 5% of its population produces 10% of its GDP. + +The PRD owes much of its success to the fact that it is overwhelmingly private: of more than 100 centrally controlled SOEs in China, only four are in this region. But its transformation also owes much to an embrace of foreign ideas and investment. The sleepy town of Shenzhen was designated a special economic zone in 1980; foreigners were actively encouraged to put money in. Shenzhen is now the Silicon Valley of global hardware startups, attracting investment from around the world; the delta accounts for a fifth of China’s foreign direct investment. There is little corruption or red tape involved in exporting goods or importing components; local officials toast foreign businessmen rather than try to shake them down. Hong Kong’s democracy is being stifled by the mainland government, but its economy is a conduit for global expertise and capital: mainland companies make up around half of the market capitalisation of the Hong Kong stock exchange. + +There is no equivalence between the American and Chinese economies. Capital, people and ideas still flow freely into and out of America; China’s relationships with the outside world are semi-permeable at best. But where once it was obvious that the leaders of America and China would embody these differences, now neither truly believes in openness. Mar-a-Lago may be where Mr Xi and Mr Trump meet, but they should not forget the lessons of the valley and the delta. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21720277-they-both-need-study-it-trump-and-xi-have-evidence-home-openness-works/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +783 reasons to go + +South Africa’s ruling party should dump Jacob Zuma + + +The markets and the unions agree: it’s time for a new broom + +Apr 8th 2017 + + + + + +“AMANDLA” (“power” in Zulu and Xhosa), comes the cry from the podium. “Ngawethu” (“to us”), the crowd roars back. The old chants that once rumbled from South Africa’s townships are again ringing out. But this time they are directed not at apartheid but against a reckless attempt by Jacob Zuma, a president who faces 783 charges of fraud and corruption, to tighten his grip on power and install a pliant successor. + +The protests were sparked by a cabinet reshuffle last week. Mr Zuma fired Pravin Gordhan and Mcebisi Jonas, the finance minister and his deputy. Both are well-regarded by investors and economists. They are credited with putting a lid on public debt and resisting the biggest of the president’s boondoggles, a plan to spend as much as 1trn rand ($73bn) building nuclear power plants that South Africa does not need and cannot afford (see article). This is not the first time Mr Zuma has tried to mount a hostile takeover of the Treasury. Last time, in 2015, the markets forced him to backtrack. On this occasion he seems determined to see it through. + + + +The new finance minister is a Zuma protégé. Malusi Gigaba plans “radical economic transformation” and to take back the Treasury from “orthodox economists [and] international investors”. In a country where, even by the narrowest definition, 27% of the workforce are jobless that might have struck a chord. Yet it has fooled hardly anyone. In a stunning move, the ruling party’s two main allies, the South African Communist Party and the Congress of South African Trade Unions, have called on Mr Zuma to resign. Both suspect him of wanting to loosen the controls that have kept the Treasury honest, even as corruption has flourished elsewhere in the government. + +Without Mr Gordhan’s vigilance, they fear that it will be easier for bigwigs to hand contracts to chums. An anti-corruption ombudsman found that this is exactly what happened at the state-owned commuter-rail company when its chairman was one Sfiso Buthelezi—who is the new deputy finance minister. Mr Gigaba’s record hardly inspires confidence either. As the minister for state enterprises, he told the electricity monopoly to buy coal only from black-owned firms; a process so mismanaged that it contributed to power cuts which knocked 1-2 percentage points off the national growth rate. + +Mandela weeps + +Another shock is looming. Standard & Poor’s has downgraded the government’s credit rating to junk for the first time since 2000. If another big credit-rating agency follows suit, its bonds may be removed from the main international indices. Investors such as pension funds that track these or are barred from owning junk would be obliged to sell. Interest rates would soar (they are already higher than those of Russian debt). The rand would plummet still further. South Africa’s tentative economic recovery would stall, depressing growth from its forecast level of about 1% this year and 2% in 2018. + +Mr Zuma is promoting loyalists to cement his grip on the ruling African National Congress (ANC), ahead of a party conference at the end of the year. Among other things, he wants it to pick a successor who will protect him from prosecution. His favoured candidate is his ex-wife, Nkosazana Dlamini-Zuma. The opposition Democratic Alliance (DA) would love to face her. They think another Zuma at the helm would cost the ANC millions of votes in national elections in 2019, accelerating its decline after the loss of three big cities last year. + +So ANC MPs should take heed. They will soon have to vote in parliament on a motion of no confidence in Mr Zuma called by the opposition. They have rejected similar motions before, in the name of party unity, and could do so again. But they should ask themselves: is Mr Zuma really the best torchbearer for the party of liberation? By ignoring court orders, he undermines the constitutional democracy for which ANC members once fought and died. His patronage machine, by deterring investment, impoverishes all South Africans, bar the well-connected. He is not just leading the country into an economic ditch, but also his party to electoral defeat. The ANC should do the rainbow nation a favour and dump Mr Zuma. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21720284-markets-and-unions-agree-its-time-new-broom-south-africas-ruling-party-should-dump/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Aparkalypse now + +The perilous politics of parking + + +The average car moves just 5% of the time. To improve cities, focus on the other 95% + +Apr 6th 2017 + + + + + +IN IRELAND people ask St Anthony to help them find parking spaces. In Chicago, if you shovel the snow from a space, it belongs to you. In Shanghai people beg their parents to reserve spaces by sitting in them. Everywhere parking is a big reason law-abiding people pay fines to the government and a cause of screaming rows between strangers. More important, it profoundly shapes cities—usually for the worse. + +Parking spaces seem innocuous, just a couple of lines painted on asphalt. Multiplied and mismanaged, though, they can create traffic jams, worsen air pollution and force cities to sprawl. The cost and availability of parking affects people’s commuting habits more than the rapid buses and light-rail lines that cities are so keen to build (see article). Next to other worthy policies like congestion-charging and road-tolling, parking is also easy to change. The fast-growing metropolises of Africa and Asia, especially, need to get it right, before they repeat the West’s debilitating mistakes. + + + +In many cities people can park on the street for nothing, or a pittance. In Boston most parking meters charge just $1.25 an hour; in Chennai the rate is 20 rupees (30 cents) a day. Because the number of people who would take advantage of such terrific deals, rather than pay a market rate to park in a garage, exceeds supply, drivers end up circling the block. Researchers have found that much traffic consists of drivers looking for spaces. The record is held by the German city of Freiburg—in one study 74% of cars were on the prowl. + +Having concluded that the chaos on their streets is the result of a shortage of parking spaces, many cities have set about creating more. Countries including Australia, China, India and the Philippines require developers to create parking spaces whenever they put up a new building. In America these schedules have become ludicrously exact. St Paul, in Minnesota, demands four spaces for every hole on a golf course and one space for every three nuns in a convent. It is because of these requirements that, in many office developments and shopping centres, more space is given over to cars than to people. + +Europeans often take a different approach to scarce parking, by reserving many spaces for residents who pay almost nothing. Around the Economist tower in London, parking costs £4.90 ($6.10) an hour—with the result that most of us cycle or join the public-transport crush. Locals, who are not obviously in need of charity, pay just £145 a year to park in the same streets. A public resource is being allocated highly inefficiently. + +That everybody is used to these arrangements does not mean they make sense. Flooding cities with parking works, in that finding a space becomes easier. But the overall cost is enormous. Because parking is so plentiful, it is free, and because it is free, people invariably overuse it. One study of Washington, DC, found that the availability of free parking is associated with a 97% chance somebody will drive to work alone. Generous parking requirements create asphalt deserts, sapping cities of vigour and beauty. The money and land wasted on car parks make life costlier for everyone, even those who do not drive. Parking adds 67% to the cost of building a shopping centre in Los Angeles—and a lot more if the spaces are underground. + +Cities should stop trying to increase the supply of parking and rigging the market in favour of homeowners. Instead, they should raise prices until the streets and the car parks are nearly, but not quite, full—and charge everybody. Residents will complain about the loss of their privileges. But if they live in an area of high demand, the revenues from the streets will be enormous. Local governments could spend the money on whatever they like, from beautiful gardens to security guards. + +Lovely Rita, meter maid + +Another reason to charge fully for parking is that it will speed a welcome transport revolution. If self-driving cars are eventually allowed to trundle around by themselves, picking up and dropping off person after person, they might render many car parks unnecessary. That would be wonderful. But this future will arrive more quickly if governments raise the price of parking. Autonomous vehicles will be nice for everyone, because they will let people get on with something worthwhile as they travel. But another big advantage is that they need not be parked—which is only a boon where parking costs money. + +Many Western cities have already been bent out of shape by excessive, poorly priced parking. But it is not too late for the African and Asian cities that could be this century’s great metropolises. In most, driving is not yet so widespread that motorists can dictate planning rules, and residents are not used to free parking. So roll out the meters and the wardens. Cities should be for people, not for stationary metal boxes. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21720281-average-car-moves-just-5-time-improve-cities-focus-other-95-perilous/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Letters + + +On Brexit and the European Union: Letters to the editor [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Letters + +Letters to the editor + + +On Brexit and the European Union + +Apr 6th 2017 + + + + + +Is Brexit unavoidable? + + + +Nearly everyone, including The Economist, seems to regard Brexit as inevitable (Special report on the future of the European Union, March 25th). The process that leads to Brexit has now been set in motion and the government insists that this is the point of no return. It assures us that it will negotiate a new relationship with the EU that gives us most of the benefits of the single market. If there is no deal, the government promises a bonanza of free-trade deals with the rest of the world. Parliament will be allowed a vote only to accept or reject the deal that is eventually negotiated. That choice is nothing but a sham. The real choices should be to accept the deal or withdraw the Notice to Leave, (but this has been ruled out). + +However, the divorce settlement may prove highly contentious and might even lead to a break-up before the main negotiations have begun. The 27 seem likely to refuse us the benefits of the single market. Our exporters will then face tariff and non-tariff barriers and costly delays through border checks. Service industries will not have passports, or rights through equivalence, to operate in the EU. If there is no deal, a free-trade bonanza will be a pipe-dream. + +Furthermore, what if stricter immigration curbs deprive the National Health Service of the nurses and doctors it needs and create a devastating shortage of workers in the building and hospitality trades? If a hard Brexit looms or, worse, if there is no deal, a further fall in the pound, increased inflation, a flood of firms emigrating and a serious reduction in our living standards are only too probable. + + + +None of this may happen. But if it does, Leave voters might decide that this was not what they voted for. A major change in the public mood might well spur into action the 80% of MPs who voted for Remain last June because they believed Brexit would be a disaster, but voted for Article 50 in March because they felt they had to obey the people’s will. They could well change their minds back again and force the government to give the final say to the people. + +In this time of unparalleled uncertainties, Brexit might not be inevitable after all. + +DICK TAVERNE + +House of Lords + +London + +With nauseating pomposity, The Economist dedicates an entire special report to offer solemn sensible British advice on how to “save Europe” from tearing itself apart, as if Jean-Claude Juncker and Donald Tusk are supposed to sit attentively and take notes. Speak for yourselves. Most of the British press has salivated over the EU’s demise for decades, yet it is still here. It is in fact the UK that has just voted to tear itself apart. Get your own house in order before lecturing others. The EU is doing just fine, thank you very much. + +ADAM JAN SADOWSKI + +London + + + +I was surprised that your otherwise comprehensive survey made no reference to the European Investment Bank, the world’s largest multilateral lending institution. If Britain leaves the EU it will cease to be a member and shareholder of the EIB. Since the EIB is limited to financing projects in the territory of its member states, Britain will cease to be eligible for EIB finance unless there is either a treaty change in its favour to enable it to maintain membership, or the bank’s governors agree unanimously to continue financing projects in Britain. A treaty change seems unlikely; a governors’ decision to allow continued lending in Britain would depend on the outcome of the Brexit talks. + +There is, therefore, a serious risk that Britain will be denied a major source of long-term, low-cost investment financing. Over the past eight years the EIB has committed €40bn ($43bn) to projects in the UK. At a time when Britain will desperately need to retain the confidence of external investors to promote economic growth and employment and to help finance its alarming current-account deficit, the loss of EIB finance could be another unintended but damaging consequence of the government’s hard Brexit policy. + +BRIAN UNWIN + +President of the European Investment Bank, 1993-2000 + +Dorking, Surrey + +You say that “the decision of a majority of voters in a large member country to leave is a huge indictment” of the EU. Had it been Germany or France, that may indeed be the case. But Britain never had its heart in the EU. It joined the European Economic Community in 1973, simply because the original six member countries were growing much faster when the UK was the sick man of Europe. Since then it has tried to disrupt the club on several occasions. + +ALI EL-AGRAA + +London + +In regard to the democratic deficit, one cause for the Brexit vote may have been the invisibility of our representatives in the European Parliament. At no time have our MEPs attempted to discuss issues with our Chamber of Trade. As our representatives they should have tried to keep in touch. + +JEREMY MARTINEAU + +Secretary + +Fishguard and Goodwick Chamber of Trade and Tourism + +Goodwick, Pembrokeshire + + + +Your proposed, flexible multi-tier system for the EU is spot-on. It should be extended to the euro. Younger people in southern Europe have suffered from high unemployment and increasing austerity, while super-efficient German industry has benefited enormously from selling its products and services to the rest of Europe at an artificially low exchange rate. + +The real solution is for European politicians to swallow their pride and break the euro, not back into its former constituent parts, but via a step whereby a German-led bloc adopts a new currency, the super-euro. Two currency tiers in Europe would re-establish some of the past flexibility of floating exchange rates, interest rates and fiscal policy on which all European countries, with their inherent different cultures, prospered side by side for 50 years prior to the adoption of the euro. + +JAMES HENRY + +Finance director + +Zennor Petroleum + +Guildford, Surrey + +There is a simple solution to the Brexit conundrum, one that will allow Britain to have its trade cake and eat it too: the UK need only become the 11th province of Canada. Canada and the EU recently concluded a trade agreement and the UK would accede to it as a Canadian province. It would also join NAFTA and enjoy liberal trade terms with the United States. + +Adjustments would be few and easy. Canada’s provinces have wide powers and by treaty the UK’s could be even broader. The queen would remain head of state. As a provincial flag, the Union flag would still be flown, with the Canadian flag a discreet presence on government buildings. As Hong Kong and Macau kept the dollar and pataca, so Britain could keep the pound. English would be an official language (though so would French). Such a move wouldn’t be unprecedented. Newfoundland left the UK and joined Canada in 1949. Time to think outside the box. + +TED STROLL + +San Jose, California + +* Surely the solution to the Brexit negotiations is very simple. My squash club has a membership fee of £25 ($31) per month for unlimited access, but non-members have to pay £10 per hour to play, which is good value for people who only want to play once a month. Britain will save £10bn by giving up membership of the EU, but it wants to continue to use some of the facilities. Why should the EU not welcome Britain to whatever facilities it wishes to be part of, at, say, £1bn per shot, for example: £1bn to be in the open-skies agreement; £1bn for visa-free travel; £1bn for Interpol? This could even form the basis of the multi-tier Europe so eloquently laid out in your special report. If non-members were willing to cough up to access the good parts of the EU, there would be more money available to improve the less good parts. + +PAUL SAUNDERSON + +Greenville, South Carolina + +* Letters appear online only + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/letters/21720265-brexit-and-european-union-letters-editor/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Briefing + + +Parking: Sacred spaces [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Parkageddon + +How to create traffic jams, pollution and urban sprawl + + +Don’t let people park for free + +Apr 8th 2017 | AMSTERDAM, BEIJING AND TOKYO + + + + + +EVEN if the new headquarters that Apple is creating in California does not prove to be “the best office building in the world”, as Steve Jobs boasted shortly before his death in 2011, it will be an astounding sight. The main building resembles a flying saucer with a hole in the middle. Through its large, gently curving windows, workers will eventually look out on a wood containing some 7,000 carefully chosen trees. It is as though a race of high-tech beings has landed on a pristine planet. + +And then, unfortunately, there’s the car park. For 14,000 workers, Apple is building almost 11,000 parking spaces. Many cars will be tucked under the main building, but most will cram into two enormous garages to the south. Tot up all the parking spaces and the lanes and ramps that will allow cars to reach them, and it is clear that Apple is allocating a vast area to stationary vehicles. In all, the new headquarters will contain 318,000 square metres of offices and laboratories. The car parks will occupy 325,000 square metres. + + + +Apple is building 11,000 parking spaces not because it wants to but because Cupertino, the suburban city where the new headquarters is located, demands it. Cupertino has a requirement for every building. A developer who wants to put up a block of flats, for example, must provide two parking spaces per apartment, one of which must be covered. For a fast-food restaurant, the city demands one space for every three seats; for a bowling alley, seven spaces per lane plus one for every worker. Cupertino’s neighbours have similar rules. With such a surfeit of parking, most of it free, it is little wonder that most people get around Silicon Valley by car, or that the area has such appalling traffic jams. + +Parking can seem like the most humdrum concern in the world. Even planners, who thrill to things like zoning and floor-area ratios, find it unglamorous. But parking influences the way cities look, and how people travel around them, more powerfully than almost anything else. Many cities try to make themselves more appealing by building cycle paths and tram lines or by erecting swaggering buildings by famous architects. If they do not also change their parking policies, such efforts amount to little more than window-dressing. There is a one-word answer to why the streets of Los Angeles look so different from those of London, and why neither city resembles Tokyo: parking. + +For as long as there have been cars, there has been a need to store them when they are not moving—which, these days, is about 95% of the time. Washington, DC, had a parking garage in 1907, before Ford produced its first Model T. But the most important innovation came in 1923, when Columbus, in Ohio, began to insist that builders of flats create parking spaces for the people who would live in them. “Parking minimums”, as these are known, gradually spread across America. Now, as the number of cars on the world’s roads continues to grow (see chart), they are spreading around the world. + + + +The codes that tell developers how much parking they must provide can be wonderfully revealing of local mores. In Las Vegas, “sex novelty shops” must have at least three spaces per 1,000 square feet (93 square metres) of floor space but “adult entertainment cabarets” at least ten for the same area. Singapore insists on one space for every 500 niches in a columbarium—a place where funerary urns are stored. Chennai’s city plan calls for one parking space for every 20 square metres of marriage hall. Perhaps unwisely, the city of Swan, in Australia, has parking minimums for taverns and wineries. + +Might as well do the white line + +Some developers are happy to supply parking spaces. Ryan Shear of Property Markets Group builds expensive flats in Miami, which are often bought by Latin Americans. He sometimes creates more spaces than the city requires, because his customers desire a safe place for their precious motors. But most developers create the number of parking spaces they are compelled to build and no more. In 2004 London abolished minimum parking requirements. Research by Zhan Guo of New York University shows that the amount of parking in new residential blocks promptly plunged, from an average of 1.1 spaces per flat to 0.6 spaces. The parking minimum had boosted supply far beyond what the market demanded. + +Water companies are not obliged to supply all the water that people would use if it were free, nor are power companies expected to provide all the free electricity that customers might want. But many cities try to provide enough spaces to meet the demand for free parking, even at peak times. Some base their parking minimums on the “Parking Generation Handbook”, a tome produced by the Institute of Transportation Engineers. This reports how many cars are found in the free car parks of synagogues, waterslide parks and so on when they are busiest. + +The harm caused begins with the obvious fact that parking takes up a lot of room. A typical space is 12-15 square metres; add the necessary access lanes and the space per car roughly doubles. For comparison, this summer The Economist will move into a building in central London where it is assumed each employee will have ten square metres of space. In cities, such as Kansas City (see map), where land is cheap, and surface parking the norm, central areas resemble asphalt oceans dotted with buildings. + + + +Kerb your enthusiasm + +The more spread out and car-oriented a city, as a result of enormous car parks, the less appealing walking and cycling become. Besides, if you know you can park free wherever you go, why not drive? The ever-growing supply of free parking in America is one reason why investments in public transport have coaxed so few people out of cars, says David King of Arizona State University. In 1990, 73% of Americans got to work by driving alone, according to the census. In 2014, after a ballyhooed urban revival and many expensive tram and rapid-bus projects, 76% drove. + +The rule of thumb in America is that multi-storey car parks cost about $25,000 per space and underground parking costs $35,000. Donald Shoup, an authority on parking economics, estimates that creating the minimum number of spaces adds 67% to the cost of a new shopping centre in Los Angeles if the car park is above ground and 93% if it is underground. Parking requirements can also make redevelopment impossible. Converting an old office building into flats generally means providing the parking spaces required for a new block of flats, which is likely to be difficult. The biggest cost of parking minimums may be the economic activity they prevent. + +Free parking is not, of course, really free. The costs of building the car parks, as well as cleaning, lighting, repairing and securing them, are passed on to the people who use the buildings to which they are attached. Restaurant meals and cinema tickets are more pricey; flats are more expensive; office workers are presumably paid less. Everybody pays, whether or not they drive. And that has an unfortunate distributional effect, because young people drive a little less than the middle-aged and the poor drive less than the rich. In America, 17% of blacks and 12% of Hispanics who lived in big cities usually took public transport to work in 2013, whereas 7% of whites did. Free parking represents a subsidy for older people that is paid disproportionately by the young and a subsidy for the wealthy that is paid by the poor. + +A few crowded American cities, including San Francisco, have abolished their parking minimums. So has one shrinking city—Buffalo, in New York state. But most of the country seems to be stuck with a hugely costly and damaging solution to the parking problem. And the American approach to parking is spreading to some of the world’s fastest-growing cities. + +In China, cars park everywhere—in marked spaces, in places where parking is specifically banned, in bicycle lanes, on pavements. In some cities, the fight for parking spaces has become so intense that people install metal barriers to which only they have the key, or persuade their parents to reserve spaces by sitting in them. Beijing’s streets are patrolled by orange-jacketed workers who, in theory, put slips of paper on car windows to mark when the vehicles arrive, and then collect money from drivers when they leave (they also assist novice drivers in the tricky art of parallel parking). In practice, the parking wardens give discounts to drivers who forgo receipts, then pocket the money. Some also make cash from illegal parking spaces. + +Beijing’s parking minimums were laid down in 2003, before driving took off, and are modest: just 0.3 spaces per flat in the city centre and 0.5 outside it. They are expected to rise in response to the growing chaos on the streets. Most Indian planners concur that the best way of ameliorating a shortage is to require more off-street parking, says Shreya Gadepalli of the Institute for Transportation and Development Policy, a think-tank. One reason, she suggests, is that so many of them studied at American universities. + +Whether in America or Asia, oceans of free parking might delay a transport revolution. When autonomous cars that are allowed to move with nobody inside them become widespread, demand for private cars could fall sharply. Starting in the morning, one car could take a child to school, a city worker to his office, a student to her lecture, party people to a club, and a security guard to his night shift, all more cheaply than taxis. Cars that now sit idle could become much more active, which would drastically change parking needs. + +Parking garages would still be needed in a driverless world, predicts Sean Behr, a Silicon Valley entrepreneur. Instead of storing vehicles for hours at a time, though, garages might become service centres where shared battery-powered cars could be cleaned, repaired and recharged before being sent back on the road. “We will need better facilities for a smaller number of vehicles,” he suggests. These garages need not be in city centres. In the slow hours of mid-morning and early afternoon, driverless cars could trundle to industrial estates in suburbia. Much of the area now allocated to cars in city centres could be turned into homes, offices or parks. + +Mr Shear is already building flats with drop-off and pick-up areas, to accommodate people who travel by Uber cars. In a radically driverless future, he could perhaps do away with many of his parking spaces. But only if consumers decide to forgo car ownership—and whether they do is connected to parking. Where spaces are expensive, shared vehicles that need not be parked are highly attractive. They are less attractive in cities where parking is plentiful and free, such as Miami. + +Unlike Africa and Asia, European streets are for the most part well-policed. Although some cities have parking requirements, these are seldom as extravagant as American ones, and have been progressively weakened. Several cities even have parking maximums, which restrict the amount of spaces. Huge buildings rise with hardly any provision for cars: the Shard in London has 95 storeys but just 48 spaces. Yet European cities are much kinder to cars than they usually admit. + +To ride in one of Amsterdam’s “scan cars” is to witness the epitome of Western parking enforcement. As it moves through the streets, clicking noises confirm that roof-mounted cameras are snapping the number plates of every parked car. If any vehicle has overstayed—which the system knows because Amsterdam’s parking meters are connected to a database, and drivers are required to enter their number plates when they pay—a second officer is alerted. He rides to the scene on a moped and issues a digital fine. Amsterdam’s parking officers describe their system as fair. They mean it is so ruthlessly efficient that it cannot be beaten. + +Just the ticket + +Amsterdam charges up to €5 ($5.30) an hour for parking on the street. Visitors can also park underneath office buildings or in large, clean park-and-ride garages run by the city. Drivers thus have many choices and the city raises a lot of money—€190m in 2015. Yet this diverse, market-based system covers only a small slice of parking in Amsterdam. Three-quarters of spaces on the streets of the city centre are occupied not by visitors or commuters but by residents. And the people of Amsterdam, who are so keen on pricing parking for others, would not dream of exposing themselves to market forces. + +Anybody who lives in a home without a dedicated space is entitled to buy a permit to park nearby for between €30 and €535 a year. This is a good deal and, not surprisingly, the number of takers in many districts exceeds the number of spaces. So Amsterdam has waiting lists for permits. The longest, in the Westerpark area, is 232 months long. To free more spaces, the city has begun to reimburse permit-holders part of the annual fee if they keep their cars in suburban garages. Take-up is encouraging—which suggests that, despite the long queues, many people do not prize the opportunity to park close to their homes. + +It’s a sign of the times in Kolkata + + + +A more obvious solution would be to charge more for permits. But that is politically fraught. Amsterdammers believe they have a right to park near their homes, explains Pieter Litjens, the deputy mayor in charge of transport. (They also believe they should be able to leave their bicycles absolutely anywhere for nothing, which is another headache.) So the queues for permits are likely to grow. Amsterdam expects to build 50,000 more homes before 2025, which will mean between 20,000 and 30,000 more cars. + +Even more than in America’s sprawling cities, car parking in Amsterdam is unsightly. “The canals are beautiful, and cars are parked along them all the time,” laments Mr Litjens. The city would love to sweep them away, but that would be unpopular. So in one district, De Pijp, a bold (and expensive) remedy is under way. Engineers have drained a canal and are digging an underground garage with 600 parking spaces into the marshy ground beneath. When the car park is finished and sealed, the canal will be refilled with water. The city will then abolish 273 parking spaces on the streets above. + +Other cities lauded for their excellent public transport and enthusiasm for market-based solutions to traffic problems also have a blind spot when it comes to residents’ parking. Much of inner London, for example, is covered with residents’ parking zones. The permits are often even cheaper than in Amsterdam: Kensington and Chelsea charges between £80 ($100) and £219 a year for the right to park anywhere in the borough and on the fringe of nearby Westminster. Visitors, on the other hand, must pay between £1.20 and £4.60 an hour. Given that the average home in Kensington and Chelsea sold for £1.9m last year, residents’ parking represents a gift to some of Britain’s richest people. + +Despite being the home of Lyft and Uber, two car-sharing services, San Francisco is similarly generous. It charges just $127 a year for residents’ permits. Unlike Amsterdam, though, San Francisco does not cap the number, and in some neighbourhoods one and a half are issued for every parking space. The result is a perpetual scrap for empty kerb. A survey in 2015 found that 53% of permit-holders had spent at least five minutes looking for a space at the end of their most recent trip, and 7% more than half an hour. + +As San Francisco’s infuriated drivers cruise around, they crowd the roads and pollute the air. This is a widespread hidden cost of under-priced street parking. Mr Shoup has estimated that cruising for spaces in Westwood village, in Los Angeles, amounts to 950,000 excess vehicle miles travelled per year. Westwood is tiny, with only 470 metered spaces. + +There is, however, one exception to the rule that residential parking must never be subjected to market forces. In the 1950s, when it was still far from rich, Japan began to require city-dwellers who did not have parking spaces in their buildings to purchase them. These days anybody who wishes to buy a car must first show a receipt for a space. He or she had better use it: any vehicle without one left on the roadside will be removed by the police in the middle of the night. + +Parking brake + +Freed of cars, the narrow residential streets of Tokyo are quieter than in other big cities. Every so often a courtyard or spare patch of land has been turned into a car park—some more expensive than others. Takaomi Kondoh, who works for a firm that manages buildings and car parks, explains that prices are usually higher close to transport hubs, because commuters compete for those spaces. Near the central station in Tama, a suburb, the going rate is ¥17,000 per month ($150). Ten minutes’ walk away it drops to ¥10,000. + +Once you become accustomed to the idea that city streets are only for driving and walking, and not for parking, it is difficult to imagine how it could possibly be otherwise. Mr Kondoh is so perplexed by an account of a British suburb, with its kerbside commons, that he asks for a diagram. Your correspondent tries to draw his own street, with large rectangles for houses, a line representing the kerb and small rectangles showing all the parked cars. The small rectangles take up a surprising amount of room. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21720269-dont-let-people-park-free-how-create-traffic-jams-pollution-and-urban-sprawl/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +United States + + +The economy: Eyes bigger than their wallets [Thu, 06 Apr 16:55] + +Donald Trump and the unions: A riveting relationship [Thu, 06 Apr 16:55] + +The Gorsuch nomination: Going nuclear [Thu, 06 Apr 16:55] + +Failing jails: Cruel and usual punishment [Thu, 06 Apr 16:55] + +Steve Bannon and the NSC: Axis of adults [Thu, 06 Apr 16:55] + +Biology in Alaska: Climate refugees [Thu, 06 Apr 16:55] + +Lexington: America’s forgotten war victory [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Eyes bigger than their wallets + +Consumers and firms see a Trump boom. Most forecasters do not + + +Economic indicators have rarely sent such mixed signals + +Apr 6th 2017 | WASHINGTON, DC + + + + + +IS AMERICA’S economy booming? Consumers seem to think so. Their confidence, as measured by the Conference Board, a research group, is at its highest since December 2000, when the dotcom bubble had not fully burst. Yet in both January and February this year, personal consumption fell. The signals from firms are no less mixed. Small-business confidence is so high that relying on this alone to predict annualised GDP growth in the first quarter leads to a staggering forecast of 7.1%, according to Goldman Sachs, a bank. Order books are swelling and jobs are plentiful, firms say. Yet industrial production has been flat since December, and banks have slowed business lending dramatically. Americans seem wildly enthusiastic about the economy, but it is not clear why. + +The surge in the so-called “soft” economic data, drawn from surveys, began when Donald Trump won the presidential election in November (see chart). It coincided with a boom in the stockmarket, up 10% since then, as investors began to salivate over the prospect of tax cuts and deregulation. Yet the “hard” economic data, which measure actual economic activity, have trundled along much as expected. The disparity has caused growth forecasts to fall out of sync. As The Economist went to press, a model at the Atlanta Federal Reserve put annualised growth in the year’s first quarter at 1.2%. A competing forecast at the New York Fed put the rate at 2.9%. + + + + + +It is tempting to discount strongly upbeat surveys as driven by politics. Owners of small businesses lean heavily Republican. Consumer confidence is up most among over-55s, who are also likely to have voted for Mr Trump. Most economists’ forecasts are closer to the number from Atlanta than the one from New York. Many of them are mindful of the fact that the economy has often seemed to sag in the first quarter of recent years. An attempt by government statisticians in 2015 to purge the growth data of seasonal factors may not have been a complete success. Most important, no tax cut or serious deregulation has happened yet. Instead the Republicans have failed to pass a promised health-care reform, which contained large tax cuts for the rich, on their first attempt. (It may soon reappear, but if it does, its passage, especially through the Senate, is far from certain.) There is reason to wonder whether the party is capable of overcoming the political squabbles that will inevitably accompany tax reform. + +Yet even if Mr Trump fails to overhaul the tax code completely, few doubt that Congress will pass a simple cut in rates for him to sign. And confidence in the economy may still prove self-fulfilling. Republicans have long held that replacing Barack Obama’s chilliness towards business with a warm embrace of commerce would lead to an investment boom (on this, they might cite the support of John Maynard Keynes, who wrote that businesses are “pathetically responsive to a kind word”). Although there was no sign of a recovery in investment in the fourth quarter of 2016, sales of capital goods, such as machinery, have picked up a bit this year. + +Whether that trend continues will reveal whether confidence is crystallising or dissipating. Some conservatives, impatient to trigger what they see as an inevitable surge in investment, want tax cuts, whenever they happen, to be backdated to the beginning of 2017. + +Retrospective tax changes are rarely a good idea. For the moment, Republicans should be encouraged that two sectors of the economy—housebuilding and manufacturing—have accelerated tangibly. That should please some of Mr Trump’s blue-collar supporters (see article). In February the trade deficit, which Mr Trump views, strangely, as a barometer for economic strength, was 4.5% lower than it was a year ago. A worldwide economic acceleration has helped this trade and manufacturing revival. The dollar has fallen back almost to where it was on the eve of Mr Trump’s election, making American goods cheaper in other countries. + +You’re up, then you’re down + +What if the surge in confidence proves fleeting? The stockmarket would surely sink. But it is not as if America was in a funk before Mr Trump won in November. The world economy—and financial markets—have been firming up since mid-2016, partly because of fiscal stimulus in China. America’s recent growth of about 2% has been enough to eat up much of the slack in the economy, as rising inflation shows. Much more productivity-boosting business investment would certainly be welcome, not least because Americans produced barely any more per hour worked in 2016 than they did a year earlier. But Mr Trump’s promise of 3.5-4% growth has never been a realistic goal, because America’s greying workforce imposes a lower speed limit on the economy than in the past. + +As that becomes more apparent, the economic elation may subside. If so, those who have been sceptical about soft data as they have heated up should remember to be equally unmoved as they cool down. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21720288-economic-indicators-have-rarely-sent-such-mixed-signals-consumers-and-firms-see-trump/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +A riveting relationship + +Donald Trump woos the labour unions + + +But they may not jump the way he wants + +Apr 6th 2017 | WASHINGTON, DC + + + + + +“DID you ever think you’d see a president who knows how much concrete and rebar you can lay down in a single day?” Addressing an annual gathering of North America’s Building Trades Unions, in Washington, DC, on April 4th, Donald Trump felt at home. The assembled union bosses, mostly burly white men squeezed into business suits but plumbers and pipe-fitters at heart, were like the men he learned his world view from, working on his father’s construction sites in Brooklyn and Queens. “I had the support”, he supposed, harking back to last year’s election, “of almost everybody in this room.” + +Manly guffaws and boos rippled around the auditorium. The building trades endorsed the president’s rival, Hillary Clinton, and most of its bosses voted for her. (“It’s arrogant of him to say we voted for him,” muttered a delegate from Ohio. “We didn’t.”) Yet Mr Trump had been invited in part because many of their members, charmed by his talk of protectionism, new infrastructure and jobs, did vote for him. Exit polls suggest he won 43% of voters from union households, the best result for a Republican since Ronald Reagan in 1984. And in a few midwestern states, he did even better: union voters in Ohio picked him by a 9% margin. + + + +Mr Trump has since tried buttering up some of the main union bosses, by inviting them to meetings at which he has reiterated his campaign pledges. “He intends to do the work on the issues he discussed during the campaigns,” Sean McGarvey, head of the building trades, told reporters after being summoned to the White House. “It was by far the best meeting I’ve had [in Washington].” If Mr Trump can sustain that enthusiasm, he could profoundly reorder American politics, not least because of the traditional importance of union activists and cash to his Democratic opponents. The federation of unions that includes the building trades, the AFL-CIO, donated around $16m to Democratic campaigns last year. The cautious support which some of its most powerful members are nonetheless giving Mr Trump’s economic agenda is, in addition, an intriguing way to measure its progress. + +Mr Trump’s success is built on a long-standing fissure within the labour movement—broadly speaking, between industrial and construction unions, whose members tend to be conservative and white, and the services and public-sector unions, whose members are more diverse. Reagan, and before him Richard Nixon, profited from the same division. Yet Mr Trump, unlike his Republican predecessors, is attempting this at a time when the electorate is feverishly polarised and the unions both depleted and assailed by his own party, all of which might be expected to make them more resistant to his charms. In 1980 20% of American workers belonged to a union; now 11% do. The slide is mostly for structural reasons, including the outsourcing and automation of unionised jobs in manufacturing. Yet it has been exacerbated by Republican efforts to reduce the unions’ power of collective bargaining, which in many states has been restricted to modest wage negotiations, and by the “right-to-work” laws introduced by Republican law-makers in 28 states. These allow non-unionised workers to enjoy union-negotiated benefits, creating an obvious free-rider problem. + +Such measures are intended to deprive the Democrats of support, and they are working. Forthcoming research by Alexander Hertel-Fernandez of Columbia University suggests that limits on collective bargaining, which are mainly aimed at public-sector unions, made government workers in Indiana and Wisconsin less likely to take part in political campaigns, or to vote. In a study of 111 border counties in Indiana, Michigan and Wisconsin, he also calculates that the right-to-work laws they introduced between 2012 and 2016 could account for two percentage points of Mrs Clinton’s underperformance in those states compared with Barack Obama in 2012. Given that Mr Trump’s victory in the electoral college was based on a combined total of 70,000 votes across Michigan, Pennsylvania and Wisconsin, that could have cost her the presidency. + +By attempting to woo union voters even as his party is attempting to smash the unions, Mr Trump, by design or otherwise, is placing an extraordinary burden on his populist agenda. If it does not live up to the hopes of union voters, they would have good reason to turn tail fast. Yet it is unclear, three months into his administration, whether Mr Trump’s economic policies will amount to much of what he promised. A draft outline of his administration’s plans for the North American Free-Trade Agreement, leaked to the Wall Street Journal, suggests it may envisage only modest changes to a pact he describes as “the worst trade deal, maybe ever”. His ambition to slash corporate taxes has been complicated by Republican opposition to a proposed border-adjustment tax that had been expected to pay for it. The spectre of an unfunded tax cut this conjures up makes it even harder to imagine the administration splurging hundreds of billions of dollars on new bridges and roads—the main hope of the building unions. + +Yet even if Mr Trump’s prospect of pulling off an enduring realignment are in doubt, his success with union voters has already forced their leaders to reconsider their political methods. A few minutes after the president concluded his speech to the builders, Richard Trumka, the AFL-CIO’s trenchant boss, with whom the president shares little more than a syllable, delivered a more revealing address in Washington. It was in part an attack on Mr Trump: “If you say you are with us and then attack us, you will fail.” But Mr Trumka also signalled that henceforth the Democrats would have to work much harder to win the unions’ support: “We will not be an ATM for any political party.” The shrinkage of organised labour may be terminal; but it will go down fighting. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21720303-they-may-not-jump-way-he-wants-donald-trump-woos-labour-unions/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Going nuclear + +Senate Republicans prepare to kill the filibuster + + +They will do anything to get Neil Gorsuch confirmed + +Apr 6th 2017 | NEW YORK + + + + + +ON APRIL 3rd, when the Senate Judiciary Committee approved Neil Gorsuch’s Supreme Court nomination by 11-9 along party lines, the proceedings took on an oddly funereal flavour. “It breaks my heart to find us in this position,” said Richard Durbin, a Democrat. A Republican, Lindsey Graham, said the Senate would be haunted by it, and that future court nominees would be “more ideological, not less”. In preparing to block Mr Trump’s first Supreme Court nominee, Patrick Leahy, a Democratic senator for 42 years, acknowledged that his party’s move might push the Republicans to upend a time-worn Senate tradition. But he suggested his party had no choice but to fight Mr Gorsuch’s nomination tooth and nail. + +The ill-fated tactic on everyone’s lips is the filibuster, a manoeuvre dating back to the 19th century whereby senators hold forth in debate for as long as they like to thwart a vote they expect to lose. In 1917, the body adopted a rule permitting filibusters to continue until two-thirds of senators opted to end debate and hold a vote; in 1975, following delays that almost derailed the Civil Rights Act of 1964, the Senate lowered the threshold to 60 votes. The gradual demise of the tradition continued in 2013, when, in the face of a Republican refusal to act on dozens of Barack Obama’s appointments, Democrats resorted to the so-called “nuclear option” to scrap the filibuster for executive branch and lower-court judicial nominations. Four years later the Republican majority leader, Mitch McConnell, is now signalling his willingness to end filibusters for Supreme Court nominations, too. Mr Gorsuch, he promised, “will be confirmed” by April 7th. + + + +Mr McConnell’s implicit threat to go nuclear again would make Supreme Court confirmations subject to a simple majority vote, leaving the filibuster intact (for the time being) only for legislation. At least 50 senators would need to go along with the rule change; in the event of a 50-50 split, Mike Pence, the vice-president, would break the tie. The majority leader is likely to get those votes, since the Republicans have a 52-48 edge and are eager to see Mr Gorsuch, a staunchly conservative, well-qualified appellate judge, in the late Antonin Scalia’s seat. But many in his party are uneasy about abandoning the filibuster. As one Republican member put it, “The Senate is getting ready to do a lot of damage to itself.” He added that Harry Reid “broke the rules” when, as Senate majority leader, he led the Democrats’ bid to curtail the filibuster in 2013. “Now we are moving to the McConnell era, where we break the rules.” + +The fallout, apart from a precipitous decline in Senate comity, could be greater polarisation of the Supreme Court. Both Mr Gorsuch and Merrick Garland, Barack Obama’s pick for Scalia’s seat, whom Republicans testily blocked for 293 days, were “boy-scout” nominees, according to that same Republican member: well-qualified picks deserving bipartisan support. With a new 51-vote threshold, he believes, “It won’t be a boy scout next time”: whichever party controls the White House will have every reason to tap a significantly more ideological nominee. + +Jeffrey Rosen, president of the National Constitution Centre in Philadelphia (a museum devoted to the study and celebration of America’s founding document), does not see the impending demise of the filibuster for Supreme Court justices as a radical move heralding “a new beginning”. Rather, it is the result of “the end of an era of bipartisan co-operation over nominations”. In the past, justices were often confirmed overwhelmingly (see chart). Abandoning the principle that Supreme Court justices should attract a supermajority of Senate support, though, entails considerable risks for both parties. + +Democrats, furious with the Republicans’ unprecedented move to deny Mr Garland a hearing and unhappy with Mr Gorsuch’s performance over his 20 hours of questioning, feel they are bound to force a nuclear showdown over Mr Trump’s bid to fill the “stolen seat”. But with three liberal and moderate justices getting on in years (Stephen Breyer is 78; Anthony Kennedy is 80; Ruth Bader Ginsburg is 84), there is a good chance Mr Trump will have at least one more seat to fill in the coming years. Inviting Mr McConnell to go nuclear now means no chance of blocking his next candidate, and perhaps encouraging Mr Trump to go for an ideological firebrand lacking Mr Gorsuch’s Ivy League résumé. The worry for Republicans looms a bit farther down the road. If they end up as the minority party after the midterm elections in 2018, Trump nominees could emerge being blocked by Democrats. + +For now, both parties are consumed by the politics of the moment. The Senate is poised to complete its transformation from a chamber of heightened reflection and statesmanship to a scaled-down version of the House of Representatives. Time will tell what this myopia brings. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21720309-they-will-do-anything-get-neil-gorsuch-confirmed-senate-republicans-prepare-kill/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Cruel and usual punishment + +The failing jails of Los Angeles County + + +Still overcrowded, and sometimes brutal + +Apr 6th 2017 | LOS ANGELES + + + + + +THE Los Angeles Sheriff’s Department patrols 4,000 square miles, oversees the largest jail system in America—and is in trouble. In February its eight “jail facilities” held an average of 17,362 men and women: more than the 15,300 inmates held in all 63 county jails in New York state. All but one of Los Angeles County’s facilities are overcrowded, and the system as a whole has 38% more prisoners than it is meant to house. In contrast, according to a report by the Bureau of Justice Statistics, in 2014 the average local American jail had room for 17% more prisoners. + +The words “jail” and “prison” are often used interchangeably, but they are different. Prisons are long-term facilities run by the state or the federal government. Jails are locally operated, and hold people serving short sentences or deemed too dangerous to release while they await trial. Overcrowding in Los Angeles County’s jails has long been a problem. It peaked in 1990, when high crime rates and longer sentences for drug offenders pushed the average daily inmate population to 22,000. Things were so chaotic that the sheriff’s department once took more than three weeks to notice that a murderer had escaped. + + + +The state prison population also swelled, partly because of tough laws. The infamous “three strikes” law, approved by Californian voters in 1994, gave sentences of 25 years to life to third-time felons. From 1982 to 2000 the state prison population increased fivefold. Although California scrambled to adapt, building 23 new prisons, in 2011 the Supreme Court upheld a lower-court ruling that state facilities were so crowded they constituted “cruel and unusual” punishment, in violation of the Eighth Amendment. The state was ordered to slash its prisoner population from 200% of its capacity, at the time of the lower-court ruling, to 137.5%. + +In response Jerry Brown, the governor, passed a law to divert those convicted of non-serious, non-violent and non-sex-related offences to county jails instead of state prison. The Los Angeles County jail population jumped by 20% between 2011 and 2012. It has since fallen slightly, partly because voters in 2014 approved a proposition which reduced the penalties for certain drug and property crimes. But the county is still under pressure. + +One way to reduce overcrowding would be to reform the state’s bail system. In March the Board of Supervisors, the governing body for the Los Angeles County, announced that it would review the county’s bail and pre-trial release policies. In the fourth quarter of 2016, 40% of inmates in county jails were awaiting trial. Some 21% of those had bail set between $500,000 and $1m—an unthinkable amount for most prisoners. At the state level, two Democratic lawmakers are pushing legislation to eliminate most cash bail, instead relying on empirical analysis of each defendant’s case to determine whether they should be released. Similar policies are already in place in Washington, DC. According to a report published in 2015 by the Public Policy Institute of California, a think-tank, California’s median monetary bail amount is five times the national figure. + +Eradicating the culture of brutality in the jails will be another formidable challenge. On March 15th Lee Baca, who led the sheriff’s department from 1998 to 2014, was convicted of obstructing a federal investigation into inmate abuse at Los Angeles County jails. Testifying in court in 2016, Paulino Juarez, a chaplain at the Men’s Central Jail in downtown Los Angeles, recalled walking the halls one day in 2009 to find three wardens kicking, kneeing and punching an inmate who appeared to be handcuffed. The battered man begged them to stop, but they continued until they noticed that Mr Juarez was there. In a citizens’ commission report produced in 2012 by the Board of Supervisors, the former captain of the Men’s Central Jail said that he began to worry about excessive force when he noticed that three guards had broken hands. It turned out that all had been hitting inmates, though one had hit the wall instead. + +Jim McDonnell, Mr Baca’s replacement, has worked hard to increase transparency in the jail system. On his watch, the department has installed hundreds of cameras throughout its jails. Perhaps as a result, the use of violence inside the lockups has declined, says Mark Anthony Johnson of Dignity and Power Now, a prisoner advocacy group. Recently Mr McDonnell tried to deliver a list of 300 officers accused of “moral turpitude”, such as tampering with evidence, using force unnecessarily or domestic violence, to the district attorney’s office, so that criminal defendants would be aware of it. He was blocked when the Association for Los Angeles Deputy Sheriffs, a union, sued over violation of privacy. The same thing happened when Mr McDonnell tried to provide in-depth data about shootings by officers. It is clear that the biggest obstacle to his reforms may be winning over his own department. + +“My hope is that Baca’s conviction was the last gasp of the old guard,” says Sharon Dolovich, a prison-law professor at the University of California, Los Angeles. “There couldn’t be a stronger rejection of the old way of doing things.” But when it comes to the sheriff’s department of Los Angeles County, hope is in short supply. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21720299-still-overcrowded-and-sometimes-brutal-failing-jails-los-angeles-county/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Axis of adults + +Steve Bannon is removed from the NSC + + +Donald Trump’s government turns slightly more ordinary + +Apr 6th 2017 | WASHINGTON, DC + + + + + +IT HAS been a rough few months for conventional wisdom in Washington, DC, but one old saw never lost its force: “Personnel is policy”. That being so, politicians and officials took note when a memorandum revealed that Steve Bannon, chief strategist to Donald Trump and an unblushing nationalist, has lost his guaranteed seat on the principals committee of the National Security Council (NSC), while two pillars of the foreign policy establishment—the chairman of the joint chiefs of staff and the director of national intelligence—were restored as permanent members. + +The capital has seethed for weeks with talk of palace intrigues at the White House, pitting Mr Bannon and his populist allies against a more polished, less hardline faction led by Mr Trump’s daughter Ivanka and her husband Jared Kushner, both of whom hold senior advisers’ posts. Insiders see something simpler and worth applauding. + + + +It was abnormal for Mr Bannon, a political strategist, to enjoy better NSC access than the country’s senior uniformed commander and top spook. Now that has been corrected. Mr Bannon himself, in a statement, downplayed his new, invitation-only access to the NSC, a powerful body charged with co-ordinating policies between the Pentagon, State Department, spy agencies and other arms of government, to ensure the president’s priorities are followed and delivered. Mr Bannon said that after losing its way during the Obama era, the NSC has been returned to its “proper function” by its boss since February, the national security adviser Lieutenant-General H.R. McMaster. + +Unnamed officials offered a further gloss when briefing the press, murmuring that Mr Bannon was put on the NSC “as a check” on Mr Trump’s first national security adviser, Michael Flynn, a former three-star general sacked for failing to disclose contacts with the Russian ambassador in Washington. With General McMaster in charge, Mr Bannon’s work on the NSC is done, it was suggested. + +David Rothkopf, who has written two books on the NSC, argues that General McMaster has in fact “outmanoeuvred” Mr Bannon, in a way that speaks of his growing clout. In a White House made soggy by poisonous leaking, it matters that the NSC shake-up was signed off by Mr Trump and enacted without fuss. Mr Trump has “empowered” his national security adviser, Mr Rothkopf concludes, for instance by allowing General McMaster, a brainy war hero, to bring such “mainstream professionals” onto the NSC staff as Fiona Hill, a tough, highly respected Russia expert. + +On Capitol Hill, senior figures already detect a more conventional bent to policy. Not long ago, when bigwigs met Team Trump, they heard alarming talk of grand bargains with Russia, perhaps exchanging concessions over Ukraine for help containing Iran and battling Islamic extremists in Syria. Such ideas have not survived Mr Flynn’s ejection, they say. Listen carefully, and people who want America to have a functioning NSC are giving two cautious cheers. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21720301-donald-trumps-government-turns-slightly-more-ordinary-steve-bannon-removed-nsc/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Climate refugees + +How Alaska is coping with global warming + + +Some flora and fauna may need to be moved around + +Apr 6th 2017 | SOLDOTNA + + + + + +JOHN MORTON, head biologist at the enormous Kenai National Wildlife Refuge in Alaska, recently drove a mechanical auger through two feet of lake ice, looking for an aquatic invader called elodea. To his dismay, he found it. Elodea is a popular aquarium plant that probably escaped into the wild when people dumped their fish tanks into lakes. It seems to spread on the floats of sea planes. Mr Morton’s agency recently spent more than half a million dollars eradicating the damaging weed in three of the Kenai refuge’s roughly 4,000 lakes. + +Biologists spend a good deal of time and money trying to knock back or exterminate invasive species. Britons bash rhododendrons; New Zealanders drop rat poison from helicopters; Americans and Canadians are trying (and mostly failing) to stop Asian carp from spreading. But global warming is confusing matters. Mr Morton now thinks that some plants and animals should be encouraged to move to new territory. + + + +In the past 60 years Alaska has warmed by 1.7°C—twice as much as the rest of the United States. In the Kenai National Wildlife Refuge, an 8,000-square-kilometre swathe of mountains, forests and lakes, the landscape is being transformed. Lakes are drying out, bogs are turning into forests and forests seem likely to give way to grassland. Entire habitats are moving northwards and towards higher altitudes. + +That is bad news for some animals, such as the mountain goat, whose alpine habitat is being invaded by trees. For others, it may be an opportunity. Kenai and other parts of Alaska are becoming more suitable for some species that do not yet live there. Mr Morton believes in picking and choosing new flora and fauna to colonise the changed landscape. “We’re expecting and wanting more species to move in,” he says. + +The Kenai refuge sits on a peninsula that is almost an island. It is connected to mainland Alaska in the north by a narrow strip of land and surrounded in every other direction by the Gulf of Alaska. That geographical isolation makes it hard for new species to find their way there, at least at the speed required by rapid climate change. Mr Morton suggests that bison, deer and lodgepole pine might be helped along—and might provide new hunting and Christmas tree-cutting opportunities for residents of the small towns bordering the refuge. + +America has an unhappy history with deliberately transplanted species. Starlings, which were introduced from Europe by Shakespeare-lovers because they are mentioned in “Henry IV, Part 1”, proved much too successful. So did mongooses and Asian carp. Mr Morton, who is gathering data to inform decisions about new introductions, is proposing to move species only within the American continent. Still, his fellow biologists are dubious. + +Whether assisted colonisation works will be known only if it is tried, and whether to try is really a philosophical question. Some biologists worry about introducing another destructive invader, and argue that people should avoid meddling with nature. Mr Morton’s response is that they already are: “The very climate isn’t natural any more.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21720306-some-flora-and-fauna-may-need-be-moved-around-how-alaska-coping-global-warming/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Lexington + +Lessons from the first world war + + +And why America should remember them now + +Apr 6th 2017 + + + + + +WHEN Calvin Coolidge dedicated a national memorial to the first world war—a 217-foot column flanked by stone sphinxes, towering above Kansas City, Missouri—newspapers called the crowd the largest addressed by an American president. The Liberty Memorial had much to teach the world about America, Coolidge told the throng, eight years after the war’s end. Privately built with donations from ordinary midwestern citizens, the sombre monument revealed a country unashamed of its growing wealth and global influence, but at the same time “not infatuated with any vision of empire”, the president declared. Soldiers of many races, tongues and homelands had come together as an American army, offering the world a great “lesson in democracy”, Coolidge went on. The nation’s “main responsibility is for America,” the Republican was careful to add. But alongside that ambivalence towards foreign entanglements, he offered a message of altruism and exceptionalism. As the youngest and most vigorous of the great powers, it was, he suggested, America’s calling to promote peace and the settling of disputes by reason, shunning the “primal” and “ruinous” hatreds of the Old World. “If the American spirit fails, what hope has the world?” he asked. + +A century after America declared war on Germany on April 6th 1917, eventually sending 2m men and women overseas, the Liberty Memorial remains a revealing place. It does not brag of victory. A stone frieze shows advancing riflemen but also depicts a soldier’s funeral—53,000 Americans died in combat, half during a few weeks of slaughter in 1918. It ends with men returning to farms and industry, their proper place. Today the memorial, like the war it remembers, is unknown to many Americans (though a fine museum there drew 206,000 visitors last year). Edwin Fountain, vice-chairman of a 12-member Centennial Commission established by Congress to counter that amnesia, suggests that the revolutionary war is America’s creation story, while the civil war offers a saga of sin and redemption and the second world war was a heroic quest. But for Americans, Mr Fountain says: “There isn’t a myth of world war one.” The commission’s chairman, Colonel Robert Dalessandro, drily adds that the second world war offers “better villains and bigger explosions”. + + + +It does not help that opinion soon soured against the first world war, notably as the Great Depression bit and primal hatreds gripped Europe once more, seeming to mock President Woodrow Wilson’s plea, as he braced his country for conflict in 1917, that America had to make the world “safe for democracy”. Wilson’s dying wish for America to join and lead a League of Nations was rejected by the Senate. Writing in 1935, Ernest Hemingway growled that: “We were fools to be sucked in once on a European war, and we should never be sucked in again.” Isolationist politicians and newspaper editors claimed that Britain had colluded with east-coast bankers and barons of industry to trick Americans into crossing the ocean, leaving the providential safety of the New World. The echoes in present-day politics are loud, down to the scorn for elites and the re-emergence of the isolationist battle-cry, “America First”. + +President Donald Trump is not a true isolationist. As the earlier America First movement gathered strength in 1939, Charles Lindbergh, a pilot-turned-demagogue, used national radio to urge Americans to harden their hearts against tales of Old World suffering and to shun war in Europe, judging national interests as coldly “as a surgeon with his knife”. Mr Trump is no tender-heart, but he is proving more willing than expected to project power. His generals have sent more troops to Iraq and Syria. He has made stern, if vague, threats that if China does not rein in North Korea, “We will.” What Mr Trump scorns is not war so much as altruism and talk of American exceptionalism. Asked about state-sponsored murders in Russia, he shot back: “You think our country’s so innocent?” After Syrian warplanes dropped chemical weapons on children this week, Mr Trump blamed the slaughter on Barack Obama’s past “weakness and irresolution”—before saying that the attack “crosses…many many lines”. Pressed on whether America still thinks President Bashar al-Assad of Syria should leave office, the White House has dodged, calling it “silly” to ignore “political realities”. + +No selfish ends to serve + +After 16 years of war without clear victories, Mr Trump sensed, correctly, that the next Republican president would do well to distance himself from Bush-era campaigns in Iraq and Afghanistan—though without seeming to tell voters from the conservative heartlands that their sons and daughters fought and died in vain. Mr Trump’s bleak genius was to tell America that it lost because it was too good: that troops were sent by foolish elites to create democracies in the Muslim world, when they should merely have killed terrorists, “taken the oil” and sought victory at all costs. + +That was clever politics, but a bad reading of history. Mr Trump is not the first president to lead a divided America. Once they had arrived in Europe in 1917, Irish-Americans from the “Fighting Sixty-Ninth”, a legendary National Guard regiment from New York, were so incensed to be issued with tunics sporting British brass buttons that they tore them “to ribbons”, according to their chaplain, Francis Duffy. But Duffy later wrote that he and his fellow “Fighting Irish” went to war alongside the British as volunteers against “the tyranny of the strong”, fighting for “the oppressed peoples of the Earth”. That was the voice of their adopted country. + +What Mr Trump misses is that, in past crises, altruism has helped to unite America and to make it strong, not weak. Today, it is true that public opinion has swung against nation-building abroad. It is also the case that an exceptional power was born in 1917, capable of great acts when convinced of the cause. Mr Trump can try to forget that history. He cannot erase it. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21720275-and-why-america-should-remember-them-now-lessons-first-world-war/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +The Americas + + +Venezuela: Undo that coup [Thu, 06 Apr 16:55] + +Ecuador: Correísmo barely hangs on [Thu, 06 Apr 16:55] + +The burning of congress in Paraguay: Re-election row [Thu, 06 Apr 16:55] + +Bello: Not so bad, perhaps [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Undo that coup + +The Venezuelan government’s abortive power grab + + +Fissures in the regime offer a bit of hope + +Apr 6th 2017 | CARACAS + + + + + +“THE world knows this is a dictatorship,” jeered masked students confronting a rank of national guardsmen on April 4th in Caracas. With tear-gas swirling around Avenida Libertador, one of the capital’s main streets, what had begun as a march to parliament became a stand-off between youths with stones and soldiers with machineguns. One placard bore the image of a military boot trampling a map of Venezuela. + +Protests against the authoritarian regime, which has ruled since 1999, are no rarity. In 2014, 43 people died on both sides in massive demonstrations. But this week’s confrontation felt both angrier and more hopeful than recent ones have been. That is because of a series of extraordinary events, which began on March 29th. + + + +Venezuela’s supreme court, which obeys the regime, started things off with a ruling that claimed for itself the powers of the opposition-controlled legislature. That was only the latest in a series of measures to kneecap the assembly after the opposition won elections in 2015. But the formal usurpation of its rightful powers provoked new outrage. Chile, Colombia and Peru withdrew their ambassadors. Luis Almagro, the secretary-general of the Organisation of American States (OAS), denounced what he called a “self-inflicted coup”. + +The second surprise occurred on March 31st, when Venezuela’s attorney-general, Luisa Ortega Díaz, a stalwart of the regime, joined in the condemnation. Delivering her annual address to government lawyers, an event carried live on television, she described the court’s decision as a “rupture” of the constitutional order. “We call for reflection so that the democratic path can be retaken,” she said. Hours later, Venezuela’s president, Nicolás Maduro, summoned the national defence council and ordered the supreme court to reverse the most contentious parts of its earlier announcement (exposing the court’s independence for the fiction it is). + +Both the public rift at the top, and the government’s ratchet away from dictatorship rather than towards it, are unprecedented. Some detect an elaborate ruse. International pressure on the regime had been mounting. The OAS held a debate on Venezuela’s deteriorating democracy earlier in March, over the objections of the government. What better way to shut up critics than to have the supreme court do something anti-democratic and then order it to change its mind? If that was the plan, it didn’t work. The OAS held a second debate after the U-turn. + +Taking on the Taliban + +More interesting, and more likely, is the possibility that the rifts within chavismo, the left-wing movement founded by the late Hugo Chávez, are real. They could eventually provide an opening for good-faith negotiations between elements of the government and the opposition. Ms Ortega is no softie; she is loathed by the opposition for jailing politicians. But she may have been trying to distance herself from factions in the regime that are even more extreme than she is, says Luis Vicente León, a pollster. + +The “Taliban”, as some chavistas refer to hardliners, include Diosdado Cabello, a former president of the national assembly, and Tareck El Aissami, Mr Maduro’s vice-president, who has been named a drug “kingpin” by the United States Treasury Department (an accusation he denies). Mr Cabello reportedly helped to draft the supreme-court ruling, and announced it on his television programme minutes after it was published. Ms Ortega’s dissent may be a sign that not all members of the regime are prepared to break irrevocably with democracy. According to the Wall Street Journal, the chief of the armed forces, Vladimir Padrino, also urged Mr Maduro to revise the supreme court’s ruling. + +If the regime cracks, the wretched state of the economy will be one cause (see article). Its economic mismanagement has led to severe shortages of food and medicine. Earnings from oil, almost the only source of hard currency, have been falling. The government dare not default on the country’s $110bn debt, lest creditors seize oil shipments. + +The need to pay debt spurred the supreme court’s power grab. This month the government and PDVSA, the state oil company, are due to make bond repayments of $2.8bn, which is more than a quarter of international reserves. The regime has been trying to raise cash through joint ventures, asset sales and other deals with foreign investors and governments, especially Russia’s. The national assembly has warned that such deals will be invalid without its approval. That threat held up a $440m loan from CAF, an international development bank based in Caracas, last month. Hence the supreme court’s assault on parliament, which gives Mr Maduro broad power to approve joint ventures in the hydrocarbon sector. That part of the ruling stands, though investors may not feel reassured. + +Encouraged by fissures in the regime, the opposition and some of Venezuela’s neighbours are pressing it to restore parliament’s powers in full, hold overdue regional elections and bring forward a presidential election scheduled for December 2018. The chavistas are not ready for that. If they lose, the opposition will “destroy them, and their families and their money”, says Mr León. Hardliners may need safe passage out of the country if democracy is to return. They would sooner destroy Venezuela than face destruction themselves. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21720334-fissures-regime-offer-bit-hope-venezuelan-governments-abortive-power-grab/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Correísmo hangs on + +What to expect from Ecuador’s new president + + +He has made lots of promises, but will struggle to keep them + +Apr 8th 2017 | QUITO + + + + + +IT WAS hardly a ringing endorsement. With nearly all the votes counted, Lenín Moreno, the political heir of Ecuador’s left-wing president, Rafael Correa, won the presidential election by barely more than two percentage points. That victory brings to an end a series of defeats for left-wing governments in Latin America. Mr Moreno will try to continue Mr Correa’s free-spending populism, but he will have less money and will exercise less power than his predecessor did during more than a decade in office. + +Mr Moreno’s narrow victory on April 2nd came after an ugly fight with Guillermo Lasso, a conservative former banker. Mr Moreno’s party, Alianza PAIS, unjustly attacked his rival as one of the authors of Ecuador’s financial crisis in 1999-2000. (Mr Lasso was briefly finance and economy minister at the time, but quit because he opposed Ecuador’s decision to default on its bonds.) Mr Lasso’s connection to Opus Dei, a conservative Catholic organisation, probably counted against him. + + + +One respected exit poll gave the edge to Mr Lasso, who has so far refused to concede. His supporters have been holding large demonstrations to demand a recount. But Mr Moreno’s victory seems likely to stand. Luis Almagro, secretary-general of the Organisation of American States, which had sent election monitors to Ecuador, acknowledged him as president-elect. + +Mr Moreno probably won in part because voters preferred his promises of expanded welfare to Mr Lasso’s offer to cut taxes and red tape. Mr Moreno, who was Mr Correa’s vice-president from 2007 to 2013, said he would continue his “21st-century socialism”, under which social-welfare spending doubled as a share of GDP between 2006 and 2012. Mr Moreno says he will treble a cash transfer to poor households, raise pensions, provide 100,000 subsidised houses a year and build 40 technical universities. Julian Assange, the founder of WikiLeaks, will remain a guest at Ecuador’s embassy in London for the foreseeable future. (Mr Lasso would have made him face rape charges in Sweden.) + +Hosting Mr Assange is easy, if perhaps trying; keeping the rest of Mr Moreno’s promises will be hard. A drop in oil prices since 2014 has pushed the economy into recession. Mr Correa compensated for lower government revenue by borrowing more. The cost of servicing Ecuador’s debt last year was 12.1% of GDP, up from 7.2% in 2007, the year Mr Correa took office. The country uses the dollar as its currency, which has hurt its competitiveness. Although Alianza PAIS, Mr Moreno’s party, has kept its majority in congress, its margin is smaller. + +Despite his alarming first name and his pledge to continue Mr Correa’s policies, Mr Moreno has a reputation as a pragmatist. Born in Nuevo Rocafuerte, a hamlet in the Amazon forest accessible only from the Napo river, he grew up in Quito, the capital, where he began his career in the tourist industry. He has been in a wheelchair since 1998, when muggers shot him. But his personality is sunny. He set up a foundation to promote “humour and happiness” and has published a book called “The World’s Best Jokes”. + +As Mr Correa’s vice-president, he portrayed himself as more tolerant and less power-hungry than his boss. He expressed misgivings about Mr Correa’s assaults on press freedom. After the United States Justice Department disclosed that Ecuadorean officials had taken at least $33.5m in bribes from Odebrecht, a Brazilian company, between 2007 and 2016, Mr Moreno promised to carry out “major surgery” to stop corruption with the help of the UN. That implicitly challenges Mr Correa in two ways: the president curbed the independence of the judiciary and denied that corruption was a serious problem. + +Mr Moreno’s promise to be a more liberal, corruption-fighting version of Mr Correa faces obstacles. One is his running mate, Jorge Glas, the current vice-president. He has been the target of numerous allegations of corruption, which he denies. He and his allies in congress are likely to resist a crackdown on graft. Another worry is about Mr Moreno’s health; he has refused to release his medical records. To carry on the popular bits of correísmo while discarding the bad ones, the new president will need plenty of energy. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/latin-america/21720172-he-has-made-lots-promises-will-struggle-keep-them-what-expect-ecuadors-new/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Congress in flames + +A row over re-election in Paraguay + + +The president wants the right to run again. Citizens violently disagree + +Apr 6th 2017 | ASUNCIÓN + + + + + +IT SHOULD have been a public-relations triumph. The annual meeting of the Inter-American Development Bank (IADB), held in Asunción from March 30th to April 2nd, was a chance to boast of landlocked Paraguay’s economic achievements. It is the world’s fourth-biggest exporter of soyabeans and number seven in beef. On the opening night the president, Horacio Cartes, unveiled the results of a national branding exercise: a logo of flora, lorries and silos in soothing blues and greens. + +A day later, Paraguay’s congress was in flames. Protesters were battling police and an opposition activist, Rodrigo Quintana, lay dead. Police had shot him in the back at the headquarters of the Liberal Party. + + + +The violence was triggered by Mr Cartes’s desire to run for re-election in 2018. The constitution of 1992 forbids presidents from serving more than one five-year term, a safeguard against dictatorship, under which Paraguay suffered from 1954 to 1989. Allies of Mr Cartes, a rich businessman, argue that Paraguay’s democracy no longer needs such swaddling. Besides, he is the only plausible presidential candidate from his right-wing Colorado Party, which has held power for all but five of the past 70 years (including during the dictatorship). + +On March 28th 25 senators from his party and others, including the left-wing Frente Guasú coalition of Fernando Lugo, a former president who may run again, proposed a constitutional amendment to allow re-election. When the senate’s speaker objected they, in effect, formed their own senate and passed the measure. + +This enraged many Paraguayans. They are offended less by re-election itself than by the attempt to evade the rules for amending that part of the constitution, which require a constituent assembly. The government thinks it is enough to ram the change through congress and hold a referendum. “We’re living in a dictatorship with the name of a democracy,” said Rocío Vera, an actress, at a vigil outside congress. + +On her side are less high-minded foes of Mr Cartes’s scheme. They include a crony-capitalist faction of the Colorado Party, which is angry that the president has invited foreigners to invest in agribusiness and bid for public works. Some fear that the beneficiary of re-election will be Mr Lugo, who was impeached in 2012, rather than Mr Cartes. The president has offended a once-friendly media mogul by buying up much of the press himself. + +Soon after the senate vote, protesters converged on congress, with rioters joining as night fell. A police cordon gave way, surrendering congress to arsonists. Mounted officers fired tear-gas. Police arrested 211 people, allegedly torturing some. + +Mr Cartes’s government is now trying to rescue its reputation. He has sacked the interior minister and chief of police, and convened a dialogue with opposition parties (which the Liberals refuse to attend). The government will accept the supreme court’s ruling on a legal challenge to the senate vote, promises Gustavo Leite, the trade and industry minister. + +Mr Cartes is likely to win in the end. The supreme court is packed with his allies. Barely 12 hours after congress burned, the finance ministry tweeted images of Santiago Peña, the minister, tangoing at the IADB meeting. The country’s leaders know how to charm foreign investors. Now they must regain the trust of Paraguayans. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21720337-president-wants-right-run-again-citizens-violently-disagree-row-over-re-election/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bello + +Mexico is growing less pessimistic about Donald Trump + + +That does not mean the country can relax + +Apr 6th 2017 + + + + + +IN THE anxious days before Donald Trump was inaugurated in January the outlook for Mexico seemed bleak indeed. Mexicans worried that the president-elect would do what he said: tear up or drastically revise the North American Free-Trade Agreement (NAFTA), build a wall on the United States’ southern border and deport millions of their countrymen. Between election day in November and mid-January the peso lost 15% of its value against the dollar. + +Now, 11 weeks into Mr Trump’s shambolic administration, the mood has lightened somewhat. Mexicans watch with mounting glee as judges block his executive orders. They are encouraged, too, by the impression that he cannot get bills through Congress and is hobbled by probes into connections between some of his advisers and Russia. + + + +Now they have reason to hope that Mr Trump’s protectionism will be less calamitous than feared. Wilbur Ross, the United States’ commerce secretary, talks of making a “very sensible” agreement with Mexico. A leaked draft letter to Congress by the acting trade representative, Stephen Vaughn, proposes updating NAFTA to make it more like the Trans-Pacific Partnership (TPP), an 11-country trade agreement from which Mr Trump withdrew. Peter Navarro, Mr Trump’s trade adviser, wants to create a “mutually beneficial regional powerhouse”, though his way of doing that could be disruptive. He would tighten rules of origin, which might make it hard for Mexico to get car parts from China to sell within NAFTA, for example. + +All this better-than-expected news from Washington has pushed the peso, which functions as a national mood ring, nearly back to its pre-election levels. That reduces the risk of higher inflation and interest rates. JPMorgan Chase, a bank, recently lifted its forecast for growth in Mexico this year from 1.3% to 2%. Outside the theatre of Mr Trump’s threats, real-world trade is doing well. Strong manufacturing growth in the United States is helping Mexican factories: Mexico’s non-oil exports grew 5.5% year-on-year in February. The boss of a maquiladora factory on the border says: “2017 is looking good.” + +It is still too early to conclude that some combination of Mr Trump’s incompetence and reasonableness among his trade negotiators will shield Mexico’s economy from his aggression. Congress has yet to confirm the United States’ trade representative, though here, too, the signals are mildly encouraging. Mr Trump’s nominee, Robert Lighthizer, is more likely to be a vigorous enforcer of trade rules than a shredder of the rule book. + +Stay scared + +More worrying, perhaps, is what the United States might do on tax. Paul Ryan, the Speaker of the House of Representatives, wants a 20% “border-adjustment tax” to pay for a cut in corporate-tax rates. Steve Bannon, the leading economic nationalist in the White House, is thought to support the idea. It is little comfort to Mexico that the tax would hurt all exporters to the United States, not just Mexicans. + +The fact is that Mexico remains uncomfortably exposed to Mr Trump’s whims and Mr Ryan’s tax plans. Although they may not carry out their worst threats, they have already done damage. Foreign investment is likely to be lower this year than in 2016. Higher inflation, the result of the peso’s slump and a rise in fuel prices ordered by the government, has hurt consumer spending, the main source of growth last year. GDP growth in 2017 is unlikely to match last year’s 2.3%. + +The government of Enrique Peña Nieto must not let down its guard, in part because the Trump scare is a spur to do things Mexico should be doing anyway. It is improving trade ties with more-distant partners, including China and the European Union. Minus the United States, the TPP could become a hub of future trade agreements. Mexico is making a case for NAFTA among Americans who would be hurt by Mr Trump’s protectionism, from maize growers in Iowa to consumers across the country. + +Most important, the Mexican government needs to do more to spread prosperity, raise productivity and strengthen the rule of law. Excessive red tape encourages many businesses to remain informal. The economy is still hobbled by poor infrastructure and criminality. This week the editor of El Norte, a newspaper in the border town of Juárez, said it would close down because journalism had become too dangerous. A reporter who had contributed to the paper was recently murdered in the nearby city of Chihuahua. If Mexico wants to be strong enough to cope with the Trump era, it must do something about such lawlessness. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21720332-does-not-mean-country-can-relax-mexico-growing-less-pessimistic-about-donald-trump/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Asia + + +North Korea: The land of lousy options [Thu, 06 Apr 16:55] + +Pacific secession movements: Palm-fringed indecision [Thu, 06 Apr 16:55] + +Islami Bank Bangladesh: Cheques and imbalances [Thu, 06 Apr 16:55] + +Government caprice in India: Bar wars [Thu, 06 Apr 16:55] + +Banyan: An Australia that can say no [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The land of lousy options + +America will find it hard to strike a deal to curb North Korea + + +Military action is a non-starter, too + +Apr 6th 2017 + + + + + +IT WAS with trademark braggadocio that Donald Trump told the Financial Times, just days before meeting his Chinese counterpart, Xi Jinping, that if China failed to “solve” the problem of North Korea’s nuclear programme, it was “totally” possible that America would do so alone. “China will either help us with North Korea, or they won’t,” said Mr Trump. “If they do, that will be very good for China, and if they don’t, it won’t be very good for anyone.” Mr Trump’s remarks came after the conclusion of a White House review of all the options available for dealing with what Barack Obama had warned would be the most urgent threat to national security under the new administration. + +The review, led by Mr Trump’s national security adviser, H.R. McMaster, has looked at everything from pre-emptive military action at one end of the scale to a continuation of Mr Obama’s policy of “strategic patience”. The latter amounted to some discreet disruption of North Korea’s missile launches through cyber-attacks and gentle cajoling of the Chinese to be a bit tougher over the implementation of various UN sanctions. Mr Obama does not claim to have had much success in changing North Korea’s behaviour. Victor Cha, a former American official now at the Centre for Strategic and International Studies, once dubbed it “the land of lousy options”. It remains so. + + + +The most recent addition to the UN’s sanctions was agreed on in November, two months after North Korea’s fifth nuclear test, its second of 2016. China has enforced them by restricting coal imports from its troublesome neighbour this year. As well as the nuclear tests, North Korea conducted 24 missile tests last year, including one successfully launched from a submarine. The tempo of testing has been maintained this year, with the latest launch on April 4th. Preparations also appear to be under way for a sixth nuclear test. Other demonstrations have suggested rapid progress in mastering important technologies, such as solid-fuel rocket motors (allowing quick launches); miniaturisation of warheads (to fit on top of a missile); and re-entry vehicles (to protect a warhead as it plummets through the earth’s atmosphere). + +How do you solve a problem like Korea? + +North Korea already has missiles that can hit targets anywhere in South Korea or Japan. Soon it will also be able to reach the big American base on Guam. Kim Jong Un, North Korea’s dictator, claimed in his new year address to be in the “final stages” of preparation for a test launch of an intercontinental ballistic missile (ICBM). John Schilling, a missile expert who writes for the website 38 North, reckons that with a warhead weighing around 400kg the North’s prototype KN-08 missile may be capable of reaching most of America’s West Coast. Most analysts think that at its present rate of progress, North Korea will have a working ICBM within four years, as well as up to 50 warheads. + +On a trip to East Asia last month, Rex Tillerson, America’s new secretary of state, declared that the time for strategic patience was over. In response to Mr Kim’s ICBM boast, Mr Trump boasted back in a tweet: “It won’t happen!” In the past, Mr Trump, who regards himself as a good negotiator, has suggested that he would be happy to eat hamburgers with Mr Kim in the White House, if that was what was needed to get a deal done to curb North Korea’s missile programme. Mr Trump has swung between sabre-rattling and talk of a grand bargain in part because neither is likely to be successful. + + + +The first option is a pre-emptive strike. An attack that targeted nuclear facilities only, assuming that they could all be found, would still leave intact North Korea’s 20,000 conventional rocket launchers, artillery pieces and heavy mortars. North Korea claims to be able to obliterate Seoul, the South Korean capital, with conventional weapons, turning it into a “sea of fire”. That is an exaggeration. Only a part of its formidable arsenal is in range of Seoul, a metropolis with more than 20m inhabitants. But by conservative estimates, about 130,000 people would die in the first two hours of a bombardment, with the fatality rate declining thereafter as batteries malfunctioned or were destroyed. + +However, if the attack and North Korea’s response escalated into full-scale war on the peninsula, as would be likely, millions could lose their lives. America would also probably have to provide a large occupation force in the war’s aftermath. This assumes that China would be prepared to sit on its hands while all this was going on, by no means a certainty. + +If a different military approach was adopted, in which the plan was to assemble a force sufficiently overwhelming to destroy Mr Kim’s war machine within a few days, the risks might be even greater. North Korea, seeing what was happening, would lash out, perhaps with its nuclear weapons, before the assault was ready to start. Mr Kim will have learned from the first Gulf war the risks of allowing America to attack at a time of its own choosing. + +The military option thus has nothing to recommend it as a means of resolving the problem, although it should stay on the table as a deterrent. The regime must know that to use, or even seriously threaten to use, its nuclear weapons would be an act of suicide. But the flipside is that Mr Kim also knows that military threats as a means of forcing him to give up his nuclear weapons programme are largely hollow. He correctly sees the bombs he is building as the best guarantee of the survival of his regime, along with its slave-labour camps and torture chambers. + +The heel’s still alive + +The same calculation renders the current sanctions ineffective. North Korea has known much greater hardship—hundreds of thousands of people starved to death in the 1990s—and there is no sign of sanctions fomenting enough discontent in elite circles to encourage a palace coup. Indeed, having purged anyone who could threaten his power, Mr Kim looks more secure than ever. (His uncle, for example, was executed with an anti-aircraft gun.) + +There are only two other ways of deflecting Mr Kim from his present course. One is to press China to make life so uncomfortable for the regime that it fears for its survival (the likely intention of Mr Trump’s talk of dealing with North Korea alone if necessary). The other is to offer Mr Kim some sort of deal. + +Mark Fitzpatrick of the International Institute for Strategic Studies, a think-tank, says that the chances of getting anywhere are low, but “we have to keep the door open for engagement,” if only because it may be the best way of winning Chinese support for tougher measures. South Korea’s probable new president, Moon Jae-in, will also need to show his supporters that the diplomatic track is still alive. + +Four more reasons to worry + + + +The initial objective, says Mr Fitzpatrick, should be to get Mr Kim to agree to a moratorium on missile testing and a freeze on plutonium and uranium enrichment at known nuclear sites, which could be verified through surveillance by satellites. In return, there might be some relaxation of sanctions. Another possible carrot would be negotiations on a peace treaty to end the Korean war formally. Mr Fitzpatrick argues that a proposal by the Chinese to end joint American-South Korean military exercises should not yet be considered, much less the withdrawal of American forces from the peninsula. But the hope would be that a little bargain, which would put on hold the development of an ICBM or, worse, submarine-launched missiles that would let North Korea retaliate even after an attack on its terrestrial missile launchers, could turn into a grander bargain leading to de-nuclearisation. + +Jonathan Pollack, a Korea specialist at the Brookings Institution, is sceptical. “What would talks achieve?” he asks. He thinks that all the evidence indicates that Mr Kim is set on his current path and has no interest in entering into negotiations—at least not until North Korea gains recognition as a de facto nuclear power. That leaves only increased pressure from China as a way to raise the costs of the nuclear programme and, with luck, slow it down. + +What Mr Trump appears to have in mind is demanding that China halt all financial transactions with North Korea. Anthony Ruggiero, a former Treasury official who advised American negotiators the last time there were talks with North Korea in 2005, argues that the new administration should target banks and other firms that help North Korea evade sanctions. Mr Ruggiero believes that America could levy swingeing fines on Chinese banks that facilitate trade with North Korea, just as it punished European banks that helped customers get around sanctions on Cuba, Iran and Sudan. The ultimate threat would be “secondary sanctions” that deny access to the American banking system, making it impossible to handle transactions denominated in dollars. + +Mr Obama made little use of secondary sanctions, for fear of provoking such ire that he damaged the wider economic and diplomatic relationship between America and China. That may be a prospect that troubles his successor rather less. + +But for all Mr Trump’s apparent confidence in unilateral American action, a strategy that enlists China rather than repels it is likely to be more effective. China, after all, still accounts for about 85% of North Korea’s trade with the outside world. It could cause Mr Kim’s regime extraordinary difficulties by shutting off the pipeline that supplies North Korea with oil, albeit with unpredictable and perhaps chaotic consequences. China also hosts many migrant workers from North Korea. + +Which is not to say that Mr Xi can bring Mr Kim to heel with a snap of his fingers, as Mr Trump seems to believe. He probably would if he could do so without triggering a collapse of the regime. If some combination of pressure and engagement continues to fail, containment and deterrence are all that is left. Mr Fitzpatrick says there is no reason to suppose that Mr Kim, who appears rational if exceedingly callous and violent, would invite the destruction of his regime by launching a nuclear attack. But accepting North Korea as a nuclear-armed state might drive South Korea to seek its own nuclear weapons, spurring further proliferation across the region. And North Korea is so opaque that the risk of a catastrophic miscalculation is high. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21720323-military-action-non-starter-too-america-will-find-it-hard-strike-deal-curb-north-korea/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Palm-fringed indecision + +Votes loom on the future of New Caledonia and Bougainville + + +The first Pacific island may choose to stay part of France, but the second could split from Papua New Guinea + +Apr 6th 2017 | WELLINGTON + + + + + +IT HAS been six years since the birth of the world’s youngest country, South Sudan, in 2011. It may soon have some younger siblings. The Pacific island of New Caledonia is due to hold a referendum on independence from France by November next year; Bougainville, 1,200 miles to the north (see map), is supposed to vote on separation from Papua New Guinea in 2019. The timing of the two referendums was fixed decades ago, to defuse long-festering conflicts. But the approach of the appointed time is raising tricky questions about how to word the question on the ballot, who should have the right to vote and what to do once the results are in. + + + +New Caledonia’s secessionist uprising ended in 1988 when leaders of the indigenous Kanaks and French loyalist politicians agreed to hold a vote on independence a decade later. When that deadline arrived, the two sides approved a further delay of 15-20 years. They also agreed to share power in the local government and to try to bring about an economic ré-équilibrage (rebalancing) to lift predominantly Kanak regions. + + + +New Caledonia has a population of 269,000. Kanaks account for 39%; Europeans for 27%; other Pacific or Asian ethnicities and people of mixed race make up the remainder. Most Kanaks are thought to lean towards independence; most Europeans, towards the status quo. The electoral roll for the referendum will not include those who arrived in the territory after 1998. That excludes many of the European métros who come and go from mainland France on short-term contracts. + +Even so, French nationalists such as Marine Le Pen, a leading contender in France’s presidential election, are keen for a quick vote and a straightforward question, in expectation of an emphatic defeat for the independence movement, which has never won a majority in elections for the local parliament. But some loyalist politicians, such as Pierre Frogier, a former “president” of the local government, would prefer a new accord deferring a vote again, for fear that Kanaks might resort to violence in the event of a “no”. Unrest in St Louis, a largely Kanak suburb to the east of the capital, Nouméa, has served to heighten those fears, and led to a bolstering of the police force in November. + +Bougainville’s population is similar in size to New Caledonia’s, but far poorer. The separatist war that ran from 1988 to 1997 claimed about 5,000 lives and led to the closure of a big copper mine run by Rio Tinto, an international mining group. A peace agreement in 2001 established an Autonomous Bougainville Government (ABG) and included a provision for a referendum to “include a choice of separate independence” by 2020. Some rebels spurned the peace talks, however, and held on to their guns. + +Papua New Guinea’s prime minister, Peter O’Neill, is adamant that he will not allow Bougainville to break away, and insists that the referendum will be non-binding. Yet in January his government collaborated with the ABG to set up a Bougainville Referendum Commission. Both sides have also agreed to hold the vote in June 2019. + +The ABG had been counting on reopening the closed copper mine to fund its future state, but Rio Tinto demurred last year. Other investors are wary, too, fearing renewed conflict. Without the mine, the ABG is reliant on the central government for the bulk of its revenue. But Papua New Guinea is facing a fiscal crisis and, despite the impending ballot, has trimmed spending on Bougainville. If, as expected, Bougainvilleans vote for independence, the island’s future is unlikely to be prosperous. + +Peace agreements that depend on delayed referendums enable both sides to imagine the future of their dreams, but only by putting off the day of reckoning. When that comes, as both Bougainville and New Caledonia are discovering, the advantages of an ambiguous status quo may seem greatly preferable to the dangers of a clear decision. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21720327-first-pacific-island-may-choose-stay-part-france-second-could-split-papua/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Cheques and imbalances + +The government initiates a coup at Bangladesh’s biggest bank + + +Board members receive a visit from military intelligence + +Apr 6th 2017 | DHAKA + + + + + +IT WAS an odd job for a spy agency. On the morning of January 5th military intelligence operatives phoned the chairman, a vice-chairman and the managing director of Islami Bank Bangladesh, picked them up from their homes and brought them to the agency’s headquarters, in Dhaka’s military cantonment. Polite officers presented the bankers with letters of resignation and asked them to sign. They did so. A few hours later the bank’s board, meeting under the noses of intelligence officers at a hotel owned by the army, selected their replacements. + +Islami Bank has been of interest to the government chiefly for its association with the Jamaat-e-Islami, Bangladesh’s biggest Islamist party. The bank is the country’s biggest (see chart), and operates in accordance with Islamic principles. Although the party only holds a minority stake in the bank, quiescent shareholders from Saudi Arabia and Kuwait had allowed it to appoint the top management. + + + +The Jamaat advocates an austere, Arabian form of Islam, which has never had much of a following in relatively liberal Bangladesh. It has never won more than 12% in a national election. It does not help that the party opposed Bangladesh’s separation from Pakistan in 1971. Its student wing was the main source of recruits for a notorious pro-Pakistani paramilitary body. A special court set up by the ruling Awami League party in 2010 convicted most of the Jamaat’s senior leadership of war crimes. Those found guilty were jailed or hanged. + +The trials destroyed the Jamaat as a political force, but its economic clout endured. Islami Bank accounts for a third of the assets of the Islamic banking industry. It has 12m depositors, 12,000 staff and a balance-sheet of $10bn. It handled more than a quarter of the $14bn Bangladeshi workers abroad sent home last year. Much lending in Bangladesh goes to those who know bankers or bribe them; Islami Bank appears to use more prudent criteria. + +The Awami League seems to have worried that the resources of the bank might be used to help revive the Jamaat. A charity tied to the Jamaat, Ibn Sina Trust, which is also a shareholder in the bank, has a staff of 6,000. It runs 19 hospitals, and many schools and professional colleges. The bank also has a charitable arm of its own; its bosses were also replaced in January. + +In recent months companies with ties to S Alam Group, a conglomerate based in Chittagong, Bangladesh’s second city, have built stakes in the bank, although the group denies any role in the shake-up. Senior staff from other banks in which the group holds stakes have been appointed to Islami Bank. The new chairman, Arastoo Khan, is seen as one of the country’s most effective bureaucrats, but has only recently turned his hand to banking. He declined to comment on the changes at the bank. But Ahsanul Alam, the new vice-chairman, says there is a risk that the management may open the “sluice gate” to political lending. Another board member says there have been changes in who is getting loans and how these loans are approved, with many of them going to borrowers from Chittagong. The central bank has chided the new management for violating proper procedures for loan disbursement. + +The shareholders from Saudi Arabia and Kuwait were kept in the dark about the boardroom coup, and complained bitterly about it. One of them, the Islamic Development Bank, based in Saudi Arabia, pointed out that it was only given three days’ notice of the board meeting in January, and therefore was not able to send anyone to attend it. It has questioned the rationale behind the changes, and pointed out that there was no proper recruitment process for the new managing director. It has also upbraided the government for suggesting that the foreign shareholders had endorsed the change of management, when in fact important decisions were being taken without their “knowledge or consent”. The government has assured foreign shareholders that it will not let politicians loot the bank. + +The nominally secular Awami League has built a formidable one-party state since it came to power in 2009. Western diplomats are jittery after recent suicide attacks. They fear that the repression of competitive politics is undermining the country’s long history of secularism and tolerance. No one expects the government to permit a meaningful electoral contest in 2019. The sense in the capital is that Sheikh Hasina, the prime minister, will do whatever it takes to remain in office. Like the former bosses of Islami Bank, Bangladeshis are being presented with a fait accompli. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21720326-board-members-receive-visit-military-intelligence-government-initiates-coup/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bar wars + +New rules on booze drive Indian businesses into a ditch + + +Which is a bit of a blow to tax revenue, too + +Apr 8th 2017 | DELHI + + + + + +WHAT is a bigger threat than war, civil unrest or natural disaster? For Indian businesses there is an obvious answer: government. Consider the past few months. In November the central government scrapped 86% of paper currency, pitching citizens into a mad scramble to find alternative ways to buy, sell and get paid. In March it slipped a new rule into the annual budget bill that frees taxmen to raid or seize any property at any time with no need to explain why. + +Sometimes it is particular industries that get bashed. Politicians keen to impress voters with their devotion to cows, for instance, are making life hard for producers of meat (meaning mostly buffalo), including exporters who earn India around $4bn a year. Some state governments turn a blind eye to vigilantes such as those who beat a (licensed) Muslim dairy farmer to death in Rajasthan last week; others have encouraged hyper-zealous “inspections”, followed by closures, of slaughterhouses. + + + +This week two bigger industries have found themselves hit by another bit of the government, India’s Supreme Court. Its judges not only upheld an earlier decision to deny licences to sell alcohol within 500 metres of a state or national highway; they also extended it from retail outlets to embrace any place serving alcohol, be it a bar, restaurant, hotel or club. In a country that suffers 400 traffic deaths a day, the need to curb drunk driving is clear. But this step by the court into the realm of rule-making, which in most countries is the job of legislators, has had jarring effects. + +To India’s liquor and hospitality industries, the shock has been cataclysmic. “Nationwide we are talking about closing 100,000 outlets and losing a million jobs,” says Dilip Datwani, a Mumbai hotel-owner and top executive in both regional and national hotel and restaurant associations. In the state of Maharashtra alone some 16,000 out of 26,000 licensed premises lie within 500 metres of a highway. This includes not just roadside booze shacks but some of India’s poshest hotels. Not only can they no longer sell alcohol; they must forfeit all the liquor they had in stock. + +“Being on the main road was a big plus, and now suddenly it’s a liability,” protests the owner of a resort south of Mumbai who reckons that alcohol sales make up around 10% of her revenues. “It’s not that drinking is the epicentre of the experience we offer, but if you can’t offer it clients will just go elsewhere.” Gallingly she, like many others in Maharashtra, had renewed her very costly annual alcohol licence hours before the court ruling rendered it void. Mr Datwani, for his part, notes that the highway by which one of his hotels stands was not designated “national” until a decade after he built it. + +This time, however, business owners have an unexpected ally: state governments. Many rely on liquor taxes for a big chunk of revenue. Estimates of their potential loss this year alone range from $15bn to $30bn. And so, while some liquor outlets are applying the ancient Indian science of jugaad (work-around), such as by diverting motorists to a rear entrance that happens to be more than 500 metres from the highway, governments are proving ingenious too. The favoured trick so far has been to change the signposts, so that state highways magically become district or municipal roads. Rajasthan, for instance, has already “denotified” 125km of state highway. As one tweet quipped, perhaps the rules should now read, “No road shall be classified as a highway within 500m of a bar.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21720325-which-bit-blow-tax-revenue-too-new-rules-booze-drive-indian-businesses-ditch/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Banyan + +An Australia that can say no to China + + +Having America as an ally and China as an economic mainstay is awkward + +Apr 6th 2017 + + + + + +IF THERE’S anything worse than running a huge trade deficit with China, it is, to judge by Australia’s incessant fretting, running a huge surplus. Australia’s was A$22bn ($17bn) last year—1.3% of GDP. China’s industrial revolution has long been fuelled by coal from Queensland and iron ore from Western Australia. But China wants ever more from Oz. Education, for instance: nearly 160,000 Chinese are studying in Australia. Food and drink is the next boom. Annual exports of beef will soon exceed A$1bn. Restaurants in Beijing and Shanghai can’t get enough Australian lobster. And sales of Australian wine to China were nearly A$500m in 2016, and growing by 50% a year. + +So what are Australians worried about? Their country has escaped recession for an astonishing 25 years, thanks chiefly to Chinese demand. And Australia never had a big manufacturing sector to be hollowed out by Chinese competition. Yet nervousness is growing that Australia is somehow beholden to China, a feeling exacerbated by China’s testy reaction whenever Australia does anything that displeases it. + + + +The testiness is especially acute when Australia appears to side with America, its closest ally since the second world war. Last July an international tribunal ruled against China’s sweeping territorial claims in the South China Sea. In response, Australia issued a bland statement emphasising the importance of a rules-based maritime order and expressing opposition to any action that might increase tensions. China reacted furiously. Global Times, a state newspaper, described Australia as an American toady “with an inglorious history”, not even a paper tiger but “a paper cat at best”. “Australia’s power,” it thundered, “means nothing compared to the security of China.” If Australia meddled, it would be “an ideal target for China to warn and strike”. + +Some Australian commentators seem to think that the best response to such bluster would be to take even greater care to avoid riling China. When Australian officials make anodyne statements of support for America or mild criticisms of China, they sometimes still earn worried rebukes at home. When the foreign minister, Julie Bishop, called last month for America to remain “the indispensable strategic power” in the region, it was gentle stuff—a reiteration of seven decades of settled policy. Hardly controversial, either, were her remarks in favour of a liberal international order: “While non-democracies such as China can thrive when participating in the present system, an essential pillar of our preferred order is democratic community.” Yet Geoff Raby, a former ambassador to Beijing, condemned the speech as “peculiar” and “odd” coming just before a visit to Australia by China’s prime minister, Li Keqiang. + +On occasion, the government itself seems equally eager not to offend. During Mr Li’s visit, authorities in China detained Feng Chongyi, a Chinese academic who lives in Australia and has criticised China’s persecution of human-rights lawyers. In public, at least, Mr Turnbull was shamefully silent over the case, even though the Australian media was in uproar. In fact, Mr Turnbull even tried to push ahead with a parliamentary vote to ratify an extradition treaty with China. A previous conservative government had concluded the treaty ten years ago. Chinese authorities had been piling on the pressure to ratify it. Ms Bishop kept defending the treaty doughtily, even as the predicament of Mr Feng drew attention to the glaring flaws in China’s legal system. + +But even if the government was keen to ingratiate itself with China by ratifying the treaty, Australia’s parliament was having none of it. A loose alliance of opposition parties and rebellious MPs from the ruling coalition indicated they would vote it down, forcing the government to call off the vote days after Mr Li’s departure. That is not the only time Australia has tied itself in knots over its dealings with China. Every time a Chinese firm tries to buy a big Australian business, be it a power company or a cattle station, the government hums and haws over whether the purchase should be blocked, with little consistency. + +China, of course, has few qualms about pushing Australia around. Some of those Chinese students, for instance, jump to the orders of the Chinese embassy when shows of patriotism are required. On university campuses they vociferously oppose anything deemed critical of the Communist Party. Rent-a-crowds materialise to denounce the Dalai Lama. Patriotic Chinese businesses have made donations to Australian politicians, apparently in the hope of securing a friendlier diplomatic stance. And China is not above using its commercial clout to punish countries that anger it, even if it rarely makes the threat explicit. South Korean firms doing business in China are currently suffering boycotts and bureaucratic persecution because their government had the cheek to allow the deployment of an American anti-missile system that the Chinese government is unhappy about. + +Standing up to China is made all the harder by doubts about the strength of America’s commitment to Australia in particular and Asia more broadly: Donald Trump is both unpredictable and sceptical of alliances (and he famously hung up testily during a recent call with Mr Turnbull). More than at any time since at least the second world war, Australia feels vulnerable. + +Too bloody wrong + +Yet just as it makes little sense any longer to subordinate Australian policy unquestioningly to America, it makes even less sense to fall in with all Chinese demands. Giving way to bullying, after all, only tends to encourage it. Allan Gyngell, a former intelligence chief and author of a new book on Australian foreign policy, “Fear of Abandonment”, does not think dealing with China needs to be “all that difficult”, so long as Australia is prepared to approach China “with clear eyes”. Wouldn’t it be nice, adds a former colleague of his, if Australia just said “no” to China from time to time, and made it clear that it was prepared to bear the cost? + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21720324-having-america-ally-and-china-economic-mainstay-awkward-australia-can-say-no/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +China + + +Xi Jinping: The loyal family [Thu, 06 Apr 16:55] + +Regional development: Building a megacity from scratch [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The loyal family + +Xi Jinping wants officials to declare allegiance to himself + + +Why is it so important to him? + +Apr 6th 2017 | BEIJING + + + + + +ALL politicians demand loyalty, but some politicians demand more loyalty than others. Xi Jinping, China’s president, is in the Napoleon class—Napoleon the pig, that is, who taught the creatures of George Orwell’s “Animal Farm” the slogan: “Comrade Napoleon is always right.” + +Over the past few months a parade of dignitaries has professed undying allegiance to Mr Xi and the Communist Party he leads. The trigger was a party decision in October to anoint Mr Xi as the “core” of the leadership. Soon afterwards, his six colleagues in the Politburo’s Standing Committee began laying on the flattery with a trowel. In March one of the committee’s members, Yu Zhengsheng, said Mr Xi’s status as core reflected “the fundamental interests of the party and people”. Such statements remind many observers of the adulation once accorded to Mao Zedong. Given that Mr Xi and many other leaders are “princelings” (sons of the first generation of Communist leaders), they also seem like the swearing of fealty to the king by medieval courtiers. + + + +The list of vociferously loyal subjects is long. Since the start of the year the country’s chief corruption investigators, the bosses of the state-security and cyber-security agencies and representatives of state-run media have all pledged “absolute loyalty” to Mr Xi. The president’s numerous promotions of high-ranking army officers have usually involved expressions of allegiance by those newly elevated. + +The displays of obsequiousness are different from those during a mini-cult of Xi early last year, when songs in praise of the president circulated widely online and state-controlled media began gushing about “Papa Xi” and his glamorous wife, Peng Liyuan (“Mama Peng”). On that occasion it was unclear whether Mr Xi himself approved. Within a few weeks, the media began toning down their Xi-loving language (though signs of public devotion still surface, such as during an international football match in January in the southern province of Guangxi—see picture). + +Hail, Xi + +Now that the subservience is being directed by the party’s highest institutions, it is evident Mr Xi is directly involved. The loyalty-swearing campaign is also different from past practice. In the late 1970s Deng Xiaoping, after taking over as China’s leader, forbade personality cults and sought to build up China’s institutions, emphasising “collective” decision-making. So did his successors, Jiang Zemin and Hu Jintao. Mr Xi’s less diffident approach was evident soon after he came to power in November 2012. His name appeared in the party’s flagship newspaper, People’s Daily, more than twice as often during his first 18 months as the party’s general secretary as did the names of his predecessors during the equivalent periods of their rule. + +Mr Xi may see some benefit in demanding loyalty at this juncture. He is widely seen as the most powerful Chinese leader since Mao. But he wants to make sure that his allies get the most important jobs in a reshuffle late this year after a five-yearly party congress. Demanding that party officials swear loyalty to him is a way of being doubly sure that he gets his way. + +But that is not all there is to it. There has been an increase in demands for obedience not only to Mr Xi himself but also to the party. In 2014 the president said loyalty to the organisation was the first requirement for national leaders. As Qiushi, the party’s main theoretical journal, put it: “There is no 99.9%. It is 100% pure and absolute loyalty and nothing less.” Such rhetoric reflects Mr Xi’s worries about the party’s authority and cohesion at a time of wrenching social and economic change. + +Even more than his predecessors, Mr Xi believes that a strong party is vital. When he took over, party discipline was slack: corruption was rife and officials routinely flouted orders. As recently as November Mr Xi said that, even among senior officials, “there are those whose conviction is not strong enough and who are not loyal to the party.” He argues that the Soviet Union collapsed because its rulers lost faith in themselves. Mr Xi is determined not to let that happen in China. + +Cracking down on disloyalty is partly aimed at turning the party into a more disciplined and effective instrument of control. This has involved suppressing intraparty debate. Last year the party reminded members that they must not criticise the central leadership’s decisions. Mr Xi has revived the practice of holding what are called “democratic life meetings”. At these, officials are supposed to reflect on how they can work more closely with national leaders. “Intensified central power will doubtless help the enforcement of reforms,” said Deng Maosheng, who runs the party’s central policy-research office. + +There is even a new drive to ensure that the party’s 88m members pay their dues, which range from 0.5% to 2% of post-tax salary (evasion is widespread). Mr Xi is insisting that such fees be handed over on time every month, and in person. This is, in effect, another loyalty test. Paying your dues “is a process of alerting yourself to the party’s spirit,” said an article in February in a newspaper published by the Central Commission for Discipline Inspection, the agency in charge of enforcing party rules. The party boss of Yunnan province berated his fellow Communists for failing to hand over the money as required. “Some people ask their secretaries to do it for them,” he said disgustedly. “It’s all wrong.” + +After years of rule-bending, some find it difficult to snap to attention. Officials in Beijing still bemoan a widespread tendency among party members to ignore its regulations. But there has been no open sign of resistance to the loyalty campaign—onerous though it sometimes is. In February the foreign minister, Wang Yi, indicated he would skip a meeting of the Group of 20 largest economies in order to attend a party session on loyalty. He decided to go to the G20 at the last minute, but only after receiving dispensation not to attend the party event. At around the same time, officials postponed a meeting of Japan’s and China’s ruling parties, apparently to avoid a clash with the loyalty gathering. + +Ever since the Communists took over in 1949, they have debated what kind of party they want. Mao distinguished between “reds” (good Communists) and “experts” (people who knew what they were talking about). Mao said he wanted reds. Deng put more faith in experts. Mr Xi seems to be shifting back. In January the party’s Central Organisation Department, which is in charge of personnel, told five government ministries to put “good political quality” at the top of the list of requirements for senior officials. It was much the same when Napoleon’s propagandist, Squealer, rebuked farmyard animals for praising the courage of Boxer, a cart horse. “Bravery is not enough,” said Squealer. “Loyalty and obedience are more important.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21720315-why-it-so-important-him-xi-jinping-wants-officials-declare-allegiance-himself/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Beijing’s new annex + +A plan to build a city from scratch that will dwarf New York + + +Will Xi Jinping’s dream come true? + +Apr 6th 2017 | SHANGHAI + + + + + +THROUGHOUT Chinese history, the dawn of new dynasties often involved moving the entire capital, imperial palace and all, to a new city. By those dynastic standards, Xi Jinping’s ambitions are modest. He simply wants to shift some of Beijing an hour’s drive to the south. But by the standards of modern urban development, his vision is grand indeed. All going well, the new area, known as Xiongan, will cover 2,000 square kilometres, nearly three times the size of New York City or Singapore. A “first-class international city”, as the planners put it, will rise from land that is home today to scrubby fields, a large lake and a series of drab towns. + +China, which sometimes opts for modesty in unveiling plans lest they fall flat, did not hold back on April 1st when it revealed those for the “Xiongan New Area” in Hebei province. An official statement described Xiongan’s development as a “strategy crucial for the next millennium”. It compared the project to the creation of China’s two most spectacular built-from-scratch urban expanses: Shenzhen, a metropolis next to Hong Kong, and Pudong, Shanghai’s glittering financial district. + + + +The point of Xiongan is to tame Beijing’s surging population, which has caused gridlock on its streets and exacerbated a chronic shortage of water. The capital has been trying for several years to encourage people to move out of its core districts. To make commuting easier, it has been improving transport links with nearby cities. By the end of 2017 the municipal government is due to relocate from the centre to Tongzhou, a suburb to the east. But Xiongan is the first entirely new city to feature in the effort. It is named after Xiong and Anxin, two counties in Hebei that will form the bulk of its territory along with a third county, Rongcheng—see map. + +Beijing will still serve as the capital. But businesses and universities unrelated to that function will be urged to move to Xiongan. Mr Xi wants the new city to have a “beautiful environment”, with high-tech industries and efficient transport. By the end of its first phase (time unspecified), it will cover 100 square kilometres, almost double the size of Manhattan. + +In China bedlam often ensues in the rush to build. There has already been a taste of this in Xiongan. Within hours of the announcement about the new city, speculators were flocking to the area’s existing property developments to buy up whatever was available. Highways leading to it were clogged with cars. Its housing prices tripled. To rein in the exuberance, the government ordered a halt to all property transactions in the new area. + +Jokes abound on social media about the wealth that Xiongan’s rural residents will soon enjoy (if officials forgo their common practice of seizing land for little compensation). One was a spoof ad, written as if by someone from the countryside whose marriage prospects now look bright: “Male, 53, two acres in Xiongan, seeking woman, 25 or younger, beautiful, preferably with study-abroad experience”. + +It would be unwise to bet all on Xiongan’s rise. Over the years China has tried to build numerous new cities, several of which have been costly failures. More than a decade ago the government declared that the Binhai New Area, a vast development in Tianjin, would be north China’s answer to Shenzhen and Pudong. It has never taken off. Another stillborn project was Caofeidian, an “eco-city” in the Bohai Gulf. Internet censors have been deleting any doubts that netizens have been raising about Xiongan. An article asking whether the new city would be the second Shenzhen or the second Caofeidian disappeared soon after it was published online. + +But Xiongan has a big thing going for it: the full backing of Mr Xi. News broadcasts showed the president touring the area and chairing a meeting about its development. So long as Mr Xi remains China’s leader—ie, at least for the next five years—building Xiongan will be a priority. + +Whether this is a good idea is another question. Taking Beijing as it exists today—a city of more than 20m people with 19 subway lines, dozens of universities, a large cluster of high-tech firms and umpteen road and rail connections to other large cities—and trying to make it work better might be more sensible. Yet given all of the capital’s urban maladies, the temptation to start with a clean slate is hard for planners to resist. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21720318-will-xi-jinpings-dream-come-true-plan-build-city-scratch-will-dwarf-new-york/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Middle East and Africa + + +South Africa: The president v the people [Thu, 06 Apr 16:55] + +Syria: Assad unleashes horror again [Thu, 06 Apr 16:55] + +The insurgency in Sinai: Terror and counter-terror [Thu, 06 Apr 16:55] + +The United Arab Emirates: The Gulf’s little Sparta [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Jacob Zuma v the people + +South Africa’s president is tottering + + +Jacob Zuma faces a revolt after replacing a scrupulous finance minister with a crony + +Apr 6th 2017 | JOHANNESBURG + + + + + +THE death of a struggle hero brought the great and good of South Africa together in mourning. Ahmed Kathrada, who was sentenced to life on Robben Island alongside Nelson Mandela, died on March 28th. His funeral at a Johannesburg cemetery drew former presidents, sitting cabinet ministers, the chief justice of the highest court and the leaders of the African National Congress (ANC). There was one conspicuous absence: Jacob Zuma. Instead, the man who had preceded him as South African president read from a letter in which Mr Kathrada, in a final act of resistance, called on Mr Zuma to resign. The crowd of mourners erupted in cheers. + +Such is the tenor of opposition to Mr Zuma, who has an approval rating of just 20% among urban South Africans (though higher among rural ones). Even those who backed him through countless scandals are now calling for him to quit. Their pleas have fallen on deaf ears, with the president growing ever more defiant. A day after the funeral, Mr Zuma reshuffled his cabinet, firing the respected finance minister, Pravin Gordhan, and his deputy, and replacing them with cronies. In doing so, Mr Zuma defied warnings from his own party and the markets. Mr Gordhan had kept a tight rein on spending and stood firm against corruption, while working doggedly to keep South Africa’s debt from being downgraded. As if to mock these concerns, Mr Zuma had ordered Mr Gordhan to return from Britain, where he was drumming up investment, to face the axe. The rand duly fell, and within days of the reshuffle S&P, a credit-rating agency, had cut South African debt to junk. Ministers with disastrous records, meanwhile, kept their jobs. + + + +Mr Zuma has crossed a line. For the first time, he is facing an open rebellion from within the ranks of the ANC as well as its official partners, the South African Communist Party (SACP) and the Congress of South African Trade Unions (COSATU). The SACP and COSATU have joined calls for him to step down. Some of the ANC’s most senior leaders are now speaking out against Mr Zuma, albeit cautiously. Among them is Cyril Ramaphosa, the deputy president, who wants to succeed Mr Zuma as president. Mr Ramaphosa, who had remained silent until now, condemned Mr Zuma’s flimflam excuse for the firing: an “intelligence report” alleging that Mr Gordhan’s unremarkable investor road trip was part of a “plot” to overthrow the president. + + + +Mr Zuma has also angered other ANC leaders over his failure to consult with them on the reshuffle, as party pratice dictates. Gwede Mantashe, the party’s secretary-general, worried that the list of new ministers had been compiled “somewhere else”. His concerns are reasonable: South Africa’s anti-corruption ombudsman last year called for a judicial inquiry into allegations that the Gupta brothers, tycoons and close friends of Mr Zuma, had exerted undue influence on cabinet appointments and government contracts. + +If the ANC fails to remove Mr Zuma, he may continue to control the party’s future. In December the ANC will choose its new leaders at a five-yearly elective conference. The winner is likely to become South Africa’s next president in 2019 (after a parliamentary election; MPs then choose the president). With a pliant new cabinet in place, Mr Zuma hopes to be in a stronger position than ever to ensure that his preferred successor, his ex-wife Nkosazana Dlamini-Zuma, takes over from him. + +Getting rid of Mr Zuma any earlier than that does not look easy. A shrewd operator, he has installed loyalists in key positions within South Africa’s police, prosecuting authority and state security apparatus. Mr Zuma was in charge of intelligence-gathering for the ANC while it was in exile, and has a long memory. His most vocal supporters have been the ANC women’s league, and its youth league, which he neutered by ousting its rabble-rousing former head, Julius Malema. In a show of support, the youth league held a stadium rally to celebrate the reshuffle. Susan Booysen, a politics professor at the University of the Witwatersrand and the author of several books about the ANC, expects Mr Zuma to dig his heels in hard. “He will be pulled down kicking and screaming,” she said. “This is a battle now for the soul of the party.” + +Civil-society groups have planned marches in protest through the streets of Johannesburg and Pretoria. Opposition parties are vowing to work together to remove Mr Zuma from office. Their best shot is through a no-confidence motion in parliament. For this to succeed, at least 50 ANC MPs would need to cross the floor. Many doubt that ANC members would support an opposition motion, even though the ruling party’s chief whip, Jackson Mthembu, is a critic of Mr Zuma. The president has easily survived several such votes, including one a year ago after South Africa’s highest court found that he had violated the constitution. + +Other observers, though, think the tipping point may be near. Parliament is on a break until the second week of May, and the delay may allow outrage over Mr Zuma’s shenanigans to subside. But opposition parties have written to the speaker, a Zuma loyalist, asking that she hold an urgent sitting; this is now set for April 18th. + +The other road to a Zuma exit seems even rockier. Under the ANC’s constitution, he could be made to step down by his party’s 104-member national executive committee. Such an internal “recall” felled a previous president, Thabo Mbeki, in 2008. But the ANC’s current national executive is said to be evenly divided between those allied to Mr Zuma and those opposed. The party is trying to keep the fight behind closed doors. With decisions taken by consensus, a move against Mr Zuma seems unlikely for now. + +Whether he stays or is forced out, Mr Zuma could split the party. This divide would be less factional than opportunistic, pitting those who are beholden to the president against those seeking to preserve the ANC’s old reputation for idealism. During the struggle days, people joined the party because of principles (such as non-racial democracy), regardless of personal cost, laments Sipho Pityana, an ANC stalwart who is now the chairman of AngloGold Ashanti, a mining firm. Mr Pityana has launched an anti-Zuma campaign called “Save South Africa”. He despairs that the ANC has become “open to opportunists” and that too many people use its power to gain “access to riches in society”. That is indeed why the ANC is losing popularity. It is unlikely to recover under Mr Zuma. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21720291-jacob-zuma-faces-revolt-after-replacing-scrupulous-finance-minister/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Syria’s latest atrocity + +Assad kills at least 85 with chemical weapons + + +A dictator defies the world + +Apr 8th 2017 | BEIRUT + + + + + +ON APRIL 4th a chemical attack struck the town of Khan Sheikhoun in Idlib, a province in northern Syria controlled by an alliance of rebel groups, including a powerful faction linked to al-Qaeda. At least 85 people, including 20 children, died, according to doctors and a Syrian monitoring group. The World Health Organisation said victims appeared to display symptoms that tally with the use of a deadly nerve agent such as sarin (as opposed to, say, a less powerful one such as chlorine). + +One boy was filmed suffocating on the ground, his chest heaving and his mouth opening and closing like a fish out of water. Photographs show dead children lined up in rows on the floor or piled in heaps in the back of a vehicle, their clothes ripped from them by rescuers who used hoses to try to wash the chemicals from their bodies. Other images show victims foaming from their mouths or writhing on the ground as they struggle for air. Hours after the attack began, witnesses say, regime warplanes circled back over the area and dropped bombs on a clinic treating survivors. + + + +After six years of war, international reaction to the attack followed a predictable pattern. The Syrian government swiftly denied dropping chemical weapons. Russia, its ally, said a Syrian air strike had hit a rebel-held weapons stockpile, releasing deadly chemicals into the air. Leaders in the West condemned the regime, but little more. Donald Trump declared that his view of Syria and its dictator had changed, but declined to say what he would do about it. + +If the West ends up doing little, it ought not to come as a surprise. When the Syrian government gassed to death more than 1,400 people on the outskirts of Damascus in August 2013 it seemed inevitable that America would respond by launching air strikes against the regime. One week after the attack—the deadliest use of chemical weapons since Saddam Hussein gassed Iraqi Kurds in 1988—John Kerry delivered one of his most bellicose speeches as secretary of state, arguing the case for American military action in Syria. “It matters if the world speaks out…and then nothing happens,” Mr Kerry said. + +Yet nothing, at least militarily, is just what happened. Instead, working with the Americans, the Russians brokered a deal that saw the Syrian regime supposedly dismantle its chemical-weapons programme. The Organisation for the Prohibition of Chemical Weapons (OPCW) destroyed about 1,200 tonnes of Syria’s chemical stockpile. Barack Obama hailed the deal as a triumph for diplomacy over force. + +Yet chemical attacks by regime forces continued, experts believe. Last year American and European officials began to voice growing fears that Damascus might have held onto nerve agents and other lethal toxins, in defiance of the deal cooked up by Mr Obama and Mr Putin. “Syria has engaged in a calculated campaign of intransigence and obfuscation, of deception, and of defiance,” Kenneth Ward, America’s representative to the OPCW, said in July. “We…remain very concerned that [chemical warfare agents]…have been illicitly retained by Syria.” + +All these fears seem to have been borne out. As part of the deal in 2013 to end Syria’s chemical-weapons programme, both America and Russia promised to punish the Syrian regime should it use chemical weapons again. Despite evidence of the regime’s repeated use of chlorine gas since then, neither side has honoured this promise, at least until now. In February Russia once again blocked efforts at the UN Security Council to sanction military and intelligence chiefs connected to the country’s chemical-weapons programme. A similar fate doubtless awaits the latest attempt by Britain, France and America at the Security Council. Hours after the attack, the three countries demanded a resolution ordering the Syrian government to hand over all flight logs, flight plans and the names of air-force commanders to international inspectors. Russia, however, called the resolution “unacceptable”. + +Barring a significant shift in American policy towards military action, the latest use of chemical weapons is unlikely to alter the war’s trajectory much. The rebels are weakening. They lost their enclave in the city of Aleppo, the opposition’s last big urban stronghold, in December. Pockets of resistance remain around Damascus, north of Homs city, and along the southern border with Jordan; but these areas grow ever more isolated. In Idlib an alliance led by a group linked to al-Qaeda has gained strength, allowing America to argue that there are few appropriate rebel partners left to work with on the ground. + +Indeed, now that Donald Trump is in charge, removing Mr Assad from power is no longer a stated aim of American policy in Syria. In recent weeks senior American officials said for the first time in public that they could live with Mr Assad as they concentrate on defeating Islamic State. Ironically, this approach would in fact be more likely to fuel further extremism in Syria, as other jihadist groups sought to take advantage of the vacuum that America’s political disengagement presented them with. It would also mean that, with Mr Assad at the helm, the Syrian regime continued to drop gas on its own people. There would be nothing to stop it. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/21720252-dictator-defies-world-bashar-al-assad-kills-least-72-chemical/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Still burning + +Egypt is failing to stop the insurgency in Sinai + + +The other front in the war against Islamic State + +Apr 6th 2017 | CAIRO + + + + + +ONLY nine days in, the Egyptian army claimed to have killed 415 militants in Operation “Right of the Martyr”, its campaign against jihadists in the Sinai peninsula that began in September 2015. Since then it has often boasted of killing dozens more in attacks; sometimes over 100. But in February the chief of military intelligence said the army had killed only around 500 in total since the operation began. + +The body-count is often cited by the armed forces as evidence of their success against the long-running insurgency, which flared up in 2013 after Abdel-Fattah al-Sisi, then a general, now president, toppled a democratically elected Islamist government. But the militants, many of whom pledged allegiance to Islamic State (IS), continue to torment the region. They have killed hundreds of soldiers and policemen, fired rockets into Israel and targeted Christian civilians. + + + +More and more, the army is fighting the militants outside their stronghold in the north. In February and March it conducted raids on hideouts in the desert of central Sinai. This month, after several failed attempts, it says it took the insurgents’ base in Jebel Halal, a mountainous area. Israel warns that IS has put up roadblocks in central Sinai to capture soldiers and tourists. + +The insurgents still sow fear in the north among Muslims, whom they force to obey Islamic strictures, and Christians, who suffered a series of murders in February and March. IS has vowed to kill more Christians, leading many to flee the area. Critics of the government say it has failed to protect them. In December the Coptic cathedral in Cairo was bombed by IS. + +Given the choice to evacuate northern Sinai three years ago, Mr Sisi says he instead chose to “act like a surgeon who uses his scalpel to extract the tumour without harming the rest of the body”. But residents describe scorched-earth tactics. “Once militants are in the area, the area must be razed,” says an Egyptian NGO worker in Sinai, describing the army’s mindset. It demolished thousands of homes in Rafah in 2015 to stop the smuggling of weapons and fighters from Gaza. + +The government has banned reporters from the region, but its actions are still scrutinised. Take its release of a video purporting to show a raid in January in which soldiers killed ten militants. Locals say the men, some of whom had been arrested months earlier, were shot in cold blood. The raid, they say, was staged. + +The government has long questioned the loyalty of Sinai’s residents, many of whom are Bedouin. They cannot join the army or police, or hold senior government posts. The region is poor. The insurgency was originally fuelled by such grievances. Now there is widespread contempt for both the government and the militants. + +The situation poses a challenge for Mr Sisi, who hopes to lure foreign investors and tourists back to Egypt. IS scared many of them away when it bombed a Russian airliner departing from the resort of Sharm el-Sheikh in 2015. Officials say the jihadists are linked to the Muslim Brotherhood, the avowedly peaceful Islamist group that Mr Sisi booted from power. They also claim that the situation is under control. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21720310-other-front-war-against-islamic-state-egypt-failing-stop/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Gulf’s “little Sparta” + +The ambitious United Arab Emirates + + +Driven by an energetic crown price, the UAE is building bases far beyond its borders + +Apr 6th 2017 | BERBERA + + + + + +TUCKED away behind rows of tin shacks and unkempt acacia trees, a cluster of tumbledown villas, mosques and a synagogue conjures up the grandeur of a port that once marked the southern tip of the Ottoman Empire. “Berbera is the true key of the Red Sea, the centre of east African traffic, and the only safe place for shipping upon the western Erythraean shore,” wrote Richard Burton, a British traveller, in 1855. “Occupation [by the British]…has been advised for many reasons.” + +After the British came the Russians and in the 1980s NASA, America’s space agency, which wanted its runway, one of Africa’s longest, as an emergency stop for its space shuttle. Now the United Arab Emirates (UAE) is Berbera’s latest arriviste. On March 1st DP World, a port operator based in Dubai, began working from Berbera’s beachside hotel. Officials put little Emirati flags on their desks, and refined plans to turn a harbour serving the breakaway republic of Somaliland into a gateway to the 100m people of one of Africa’s fastest-growing economies, Ethiopia. Three weeks later the UAE unveiled another deal for a 25-year lease of air and naval bases alongside. The agreement, rejoiced a Somaliland minister in the hotel café, amounted to the first economic recognition of his tiny republic. It would fill the government’s coffers, and bolster its fledgling army. Businessmen sat at his table discussing solar power stations, rocketing land prices and plans for a Kempinski hotel. + + + +Berbera is but the latest of a string of ports the UAE is acquiring along some of the world’s busiest shipping routes. From Dubai’s Jebel Ali, the Middle East’s largest port, it is extending its reach along the southern rim of Arabia, up the Horn of Africa to Eritrea (from where the UAE’S corvettes and a squadron of Mirage bombers wage war in Yemen), and on to Limassol and Benghazi in the Mediterranean. Fears that Iran or Sunni jihadists might get there first—particularly as the region’s Arab heavyweights, Saudi Arabia and Egypt, seem to flounder—propel the advance. + +“If we waited to prevent these threats at our borders, we might be overrun,” explains Ebtesam al-Ketbi, who heads a think-tank in Abu Dhabi. The UAE also worries that rivals might tempt trade away from Jebel Ali, awkwardly situated deep inside the Gulf. Rapid port expansion at Chabahar in Iran, Duqm in Oman and King Abdullah Economic City in Saudi Arabia all pose a challenge. + +But as the expansion accelerates, observers are asking whether the UAE is bent on “the pursuit of regional influence”, as Ms al-Ketbi puts it, for its own sake. Most analysts ascribe this push to Abu Dhabi’s 56-year-old crown prince, Muhammad bin Zayed. He is the deputy commander of the UAE’s armed forces, and the younger brother of the emir of Abu Dhabi, who is also the president of the UAE. + +On the prince’s watch, the UAE has gone from being a haven mindful of its own business into the Arab world’s most interventionist regime. Flush with petrodollars, he has turned the tiny country, whose seven component emirates have a combined population of almost 10m (only about 1m of whom are citizens), into the world’s third-largest importer of arms. He has recruited hundreds of mercenaries, and has even talked of colonising Mars. + +Hurricane Muhammad + +In 2014 he imposed military conscription on his pampered citizens, and sent dozens to their deaths in the Saudi-led campaign against Houthi rebels in Yemen. Before becoming America’s defence secretary, General James Mattis dubbed the UAE “little Sparta”. Join the dots of the ports it controls, and some even see the old Sultanate of Oman and Zanzibar, from which the emirates sprang, arising afresh. + +The UAE has won Berbera and Eritrea’s Asaab base by agreement, but elsewhere it applies force. In July 2015 it defied doubters, including the Saudis, by capturing Aden, once the British Empire’s busiest port. “They have the only [Arab] expeditionary capability in the region,” oozes a Western diplomat, fulsome in his praise of the UAE’s special forces, who mounted an amphibious landing to seize Aden from the Houthis. + +With the help of American SEALs, Emirati soldiers have since then taken the ports of Mukalla and Shihr, 500km (300 miles) east, and two Yemeni islands in the Bab al-Mandab strait, past which 4m barrels of oil pass every day. The crown prince has seen off Qatari interest in Socotra, a strategic Yemeni island, by sending aid (after a hurricane) and then construction companies, which a Western diplomat fancies may build an Emirati version of Diego Garcia, the Indian Ocean atoll where America has a large military base. While Saudi Arabia struggles to make gains in Yemen, Emirati-led troops earlier this year marched into Mokha port and are setting their sights on Hodeidah, Yemen’s largest port and the last major one outside Emirati control. + +The prince has also backed separatists in Somalia, helping to stand up both Puntland, by funding its Maritime Police Force, and Somaliland. And in Libya, he has sent military support to Field-Marshal Khalifa Haftar’s Libyan National Army, an autonomous force in the east of the country. To Turkey’s fury, the UAE opened an embassy in Cyprus last year and is involved in military exercises with Greece and Israel. + +But sceptics worry about the dangers of overreach and the potential for clashing with greater powers crowding into the Red Sea. On its western shores Israel, France and the United States already have big bases. China is building a port in Djibouti. Iranian generals look to establish their own naval bases on Yemen’s rebel-held coast. And though formally part of the same coalition in Yemen, some Saudi princes are looking askance at their ambitious junior partners. In February Saudi- and Emirati-backed forces fought each other over control of Aden’s airport. Saudi Arabia’s princes have also hosted Somalia’s president, who criticises the Emirates’ Berbera base as “unconstitutional”. Some wonder what the prince’s father and the UAE’s founder, Sheikh Zayed Al Nahayan, would have made of it all. “Be obedient to Allah and use your intelligence instead of resorting to arms,” he used to counsel when fellow Arabs went to war. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21720319-driven-energetic-crown-price-uae-building-bases-far-beyond-its/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Europe + + +A terrorist hits St Petersburg: Underground man [Thu, 06 Apr 16:55] + +Anti-gay violence in Chechnya: Republic of fear [Thu, 06 Apr 16:55] + +France’s disintegrating left: The crack-up [Thu, 06 Apr 16:55] + +Academic freedom in Hungary: Orban v intellectuals [Thu, 06 Apr 16:55] + +Turkey’s presidential power grab: The Kurdish card [Thu, 06 Apr 16:55] + +Charlemagne: Descending Mount Brexit [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Underground man + +Russian authorities have a suspect in the St Petersburg bombing + + +The terrorist is allegedly from Kyrgyzstan, but Islamist groups have yet to claim responsibility + +Apr 6th 2017 | MOSCOW + + + + + +THE oldest victim was 71 years old, the youngest just 18. One was a third-year university student described by a teacher as “pretty, smart, sweet and intelligent”. Another was a middle-aged mother known for sewing and selling elaborate dolls. They all entered the St Petersburg underground on the afternoon of April 3rd expecting to return home. + +An attacker had other plans. A bomb ripped through the third carriage of a train travelling beneath the city centre at around 2.40pm, leaving 14 dead and some 50 more wounded. “There was a bang, and dust,” said the train’s driver, Alexander Kaverin. Russian security officials say that the attacker left a second, larger explosive device at another station, though it did not detonate. That the bombing came as President Vladimir Putin (pictured) was visiting St Petersburg enhanced the symbolic significance of the first terrorist attack on a major Russian city in more than three years. + + + +Previous terrorist attacks on Russian transport infrastructure, such as the bombings of Moscow’s metro in 2004 and 2010, and its international airport in 2011, have been linked to insurgencies in the restive North Caucasus region. But this week’s tragedy appears to fit a different profile. Russian authorities say the chief suspect is Akbarzhon Jalilov, a 22-year-old from the city of Osh in southern Kyrgyzstan who had obtained Russian citizenship and lived in the country for the past six years. Investigators say that Mr Jalilov, an ethnic Uzbek, was spotted on security cameras and that his DNA was found on the second unexploded device. Body fragments found at the scene suggest that it was a suicide attack. Mr Jalilov’s parents arrived in St Petersburg on April 5th to speak to investigators and identify the body. + +The suspect’s origins highlight the terrorist threats percolating in Central Asia. Poverty, autocracy and restrictions on religious freedom have made citizens of the former Soviet republics susceptible to radicalisation. Thousands from Uzbekistan, Kyrgyzstan, Tajikistan and Kazakhstan are believed to have joined the so-called Islamic State (IS). (Thousands more IS volunteers come from Russia itself, mostly from the northern Caucasus.) They include the American-trained former head of Tajikistan’s OMON, an elite interior-ministry police unit. Central Asian nationals have been implicated in attacks on Istanbul’s airport in 2016 and a nightclub in the same city on New Year’s Eve. Many are reportedly radicalised while working at construction sites in Russia. Two days after the St Petersburg attack, Russian investigators said they had arrested six Central Asians in St Petersburg on suspicion of acting as recruiters for IS and Jabhat Fateh al-Sham, a jihadist group linked to al-Qaeda. + + + +As The Economist went to press, no group had claimed responsibility. But although the killer’s motives are unknown, the attack underlines the risks posed by Russian interventions in the Middle East. Since entering the Syrian war in support of President Bashar al-Assad, Russia has become a prime target for terrorist groups. IS has declared a holy war on Russia and pronounced the northern Caucasus a province of its would-be caliphate. In late 2015, shortly after claiming responsibility for the downing of a Russian airliner over Egypt’s Sinai peninsula, IS-affiliated propaganda outlets threatened a “sea of blood” inside Russia itself. + +Regardless of who was responsible, the bombing is unlikely to influence foreign policy. The foreign minister, Sergei Lavrov, called the notion that the attack was revenge for Russia’s actions in Syria “cynical and despicable”. The long list of terror attacks carried out in Russia over the past two decades have not dissuaded Moscow from pursuing ruthless policies in the northern Caucasus or the Middle East. Rather than raising questions about such policies, terror attacks are perceived as a demonstration of their righteousness, noted an editorial in Vedomosti, an influential business daily. On April 4th, the day after the St Petersburg bombing, reports of an attack with chemical weapons emerged in Syria, yet Moscow remained steadfast in its support for Mr Assad. + +Government critics fret that the fight against terrorism may be exploited to restrict civil liberties just weeks after the largest anti-government protests in years. Mr Putin, whose popularity is based on providing stability, has said little about the attack beyond offering condolences to the victims and promising a full investigation. But in the past, fighting terrorism has been used as an excuse to strengthen controls over online content and expand the power of the secret services. It also serves as a way to rally people around the flag. Pro-government forces across Russia have made plans for mass anti-terror marches. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21720305-terrorist-allegedly-kyrgyzstan-islamist-groups-have-yet-claim/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Republic of fear + +Reports emerge of Chechnya rounding up and killing gay people + + +Ramzan Kadyrov’s security forces are allegedly torturing suspected homosexuals in secret prisons + +Apr 6th 2017 | MOSCOW + + + + + +“THE youngest one was 16 years old, he’s from our village,” reads a post on VKontakte, a Russian social-networking site. “They recently brought him back, all beat up, just a bag of bones. They dumped him in the courtyard and said to kill him.” + +The post was by an anonymous user from Chechnya, on a group for closeted gay people from the Caucasus. It was one of the clearer indications of a brutal anti-gay campaign believed to be unfolding across the Chechen Republic. Earlier this week Novaya Gazeta, a Russian opposition newspaper, published a series of reports claiming that authorities had been detaining dozens of men in a secret prison “in connection with their nontraditional sexual orientation, or suspicion of such.” The paper wrote that two recent waves of crackdowns have seen more than 100 men arrested and at least three killed. + + + +“When the [electric] current is flowing and your body begins to shake, you stop thinking and begin to scream,” one survivor said. “You sit there the whole time and hear the cries of people being tortured.” + +The atrocities described in the articles have not been independently verified, but groups with experience in the region agree that something is happening. Human Rights Watch says the story is consistent with what they have heard from trusted informants. “The number of sources and the consistency of the stories leaves us with no doubt that these devastating developments have indeed occurred,” writes Tanya Lokshina, the group’s Russian programme director. Ekaterina Sokirianskaia of the International Crisis Group, an expert on the North Caucasus, has heard similar reports from her sources. A hotline set up for Chechens by the Russian LGBT-Network, a rights group, received more than ten calls in the two days following the first publication in Novaya Gazeta. + +The brazenness of the repression high-lights the extent to which Chechnya has become a fiefdom unto itself under its leader, Ramzan Kadyrov. Mr Kadyrov’s spokesman, Alvi Karimov, responded to Novaya Gazeta’s claims by denying that there are gay people in Chechnya at all: “If there were such people in Chechnya, the law-enforcement organs would not need to do anything with them because their relatives would have sent them to a place from which they could never return.” + +An intervention by Vladimir Putin, Russia’s president, might be the only thing that could sway the Chechen authorities to put a stop to the anti-gay violence. Yet the Kremlin depends on Mr Kadyrov to preserve stability in the volatile republic, and managing the Chechen leader has become a challenge in recent years. He commands his own security forces, numbering about 20,000 men. His republic follows its own hyper-traditional religious and social codes, largely beyond the reach of Russian law; Mr Kadyrov has voiced support for polygamy and honour killings. Discussion of homosexuality is taboo and most gay people remain deeply closeted. + +This makes reaching victims and documenting the crackdown especially difficult. “Information gets through with a delay,” says Igor Kochetkov of the Russian LGBT-Network, which has also begun organising evacuations from the region. The true extent of the brutality may go deeper than Novaya Gazeta describes. As Ms Sokirianskaia says, “We’ve only seen the tip of the iceberg.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21720298-ramzan-kadyrovs-security-forces-are-allegedly-torturing-suspected-homosexuals-secret/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +So gauche + +France’s presidential election is tearing its left apart + + +If Benoît Hamon finishes fifth, it could be the end of the Socialist Party as we know it + +Apr 6th 2017 | PARIS + + + + + +BACK in 2002, the French Socialists suffered such a stinging defeat at a presidential election that it gave birth to a new noun. Un 21 avril, referring to the date that their candidate, Lionel Jospin, was evicted in the first round, became a term used for any shock political elimination. Today, ahead of the first round of this year’s presidential election on April 23rd, the Socialists are bracing themselves not just for elimination from the run-off, but for a far greater humiliation, one which could call into question the party’s very survival. + +Current polls put Benoît Hamon, the Socialist candidate, in a dismal fifth place. He trails not only the nationalist Marine Le Pen, the liberal Emmanuel Macron, and the traditional right’s François Fillon. In the past fortnight, Mr Hamon has also been overtaken by a far-left firebrand, Jean-Luc Mélenchon (pictured), who promises a “citizens’ revolution”. A one-time Socialist now backed by the Communist Party, the fist-clenching 65-year-old has surged to 15%, against just 10% for Mr Hamon. This puts him only a couple of points behind Mr Fillon, and in a position—just possibly—to overtake the Gaullist candidate too. + + + +In the campaign’s second televised debate on April 4th, it was the wisecracking Mr Mélenchon who delivered the memorable lines. When Mr Fillon argued that industrial relations should be decentralised to firms, Mr Mélenchon snapped: “I am not in favour of one labour code per firm, just as I am not in favour of one highway code per road.” It was a difficult debate at which to shine. All 11 official candidates took part: the five front-runners plus six others, including a Ford factory worker, a Trotskyist high-school teacher, and a former shepherd. Each had a total of 17 minutes to speak, spread over three hours. In a poll, voters judged Mr Mélenchon the most convincing, followed by Mr Macron. + +In some ways, Mr Hamon’s disastrous campaign is surprising. An outsider, he seized the party’s primary in January with a handsome 59% of the vote, easing out a moderate former prime minister, Manuel Valls. His recent rally in Paris was packed. Backed by Thomas Piketty, an economist who worries about inequality, he has a programme which—though its finances do not add up—is based on creative thinking about the future of work and society in an era of automation. Mr Hamon promises, for instance, to bring in a universal basic income, which in time would pay out €750 ($800) a month to everyone, partly financed by a tax on robots. He promises a “desirable future”, in which consumerism, production and working hours are curbed, greenery flourishes and happiness, long scarce in France, breaks out everywhere. + +Yet as Matthieu Croissandeau of L’Obs, a left-wing magazine, put it, since Socialist primary voters “were convinced they would lose the presidential election…they chose an ideal rather than a programme of government.” The closer voting day gets, the less workable Mr Hamon’s ideas seem, even to some of his white-collar constituents. A poll suggested that only 7% of voters think Mr Hamon has “presidential stature”. Gilles Finchelstein of the Fondation Jean-Jaurès, a think-tank, argues that Socialist support has not collapsed: it is just not behind the party’s candidate. Fully 42% back Mr Macron; 15% support Mr Mélenchon. By positioning himself on the left of his party, Mr Hamon has scared off centrist voters, while failing to sound combative enough for those on the far left. + +Mr Hamon has lost the loyalty not just of Socialist voters, but of Socialist politicians. His protracted (and failed) efforts to do a deal with Mr Mélenchon exasperated the moderates. A former backbench rebel, he has refused to say anything nice about the past five years of Socialist government, dismaying ministers. Mr Valls and Jean-Yves Le Drian, the Socialist defence minister, have both thrown their support to Mr Macron. The upshot is a bitterly divided party. The Hamon camp called Mr Valls’s defection “pathetic” and “shameful”. It is a “very strange campaign”, says a Socialist parliamentarian loyal to Mr Hamon; party activists “don’t feel connected”. + +Mr Valls’s defection, says Guillaume Balas, a member of the Hamon team, implies “the death of the Socialist Party as conceived by (François) Mitterrand”. The party, which has supplied French presidents for half of the past 36 years, has long tried to bridge the differences between its moderates and its left wing. In the 1970s, Mitterrand managed to unify the left; he went on to serve as president for 14 years. Now, under the joint pressure of Mr Macron and Mr Mélenchon, old fractures are pulling it back apart. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21720300-if-beno-t-hamon-finishes-fifth-it-could-be-end-socialist-party-we-know-it-frances/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Orban v intellectuals + +Hungary passes a law to shut down a bothersome university + + +The ruling Fidesz party sees the Central European University as a breeding-ground for liberals + +Apr 8th 2017 | BUDAPEST + + + + + +WITH just 1,440 students, the Central European University (CEU) is one of Hungary’s smallest institutions of higher education, but it may be its most prestigious. Housed in a mix of grand historic and ultramodern buildings in central Budapest, it draws visiting professors from across Europe and America, and its graduates include many members of Hungary’s business and political elite. It was founded in 1991 by George Soros, a Hungarian-born billionaire, as part of his philanthropic effort to promote liberal democratic values in formerly communist countries. This annoys Viktor Orban, Hungary’s prime minister, and his ruling Fidesz party. On April 4th Mr Orban fast-tracked a law through parliament that could force CEU to close. + +The legislation requires foreign-accredited universities in Hungary to have a base in their home country. CEU, which is accredited in Hungary and the United States, would have to open an American campus by February 2018, which university officials say would be onerous and prohibitively expensive. They have asked Janos Ader, the president of Hungary, to veto the law, which they argue violates the constitutional guarantee of academic freedom. + + + +Fidesz has long viewed CEU as a stalking horse for the opposition (though its government has repeatedly recertified it). “The antipathy is not new,” says Eva Balogh of Hungarian Spectrum, an opposition blog. Mr Orban, who himself received a scholarship from Mr Soros to study in Britain in 1989, has accused CEU of “cheating” by offering degrees that are valid abroad (because heaven forbid that foreign countries should recognise a Hungarian degree). Zoltan Balog, the minister of human resources, said it was not in Hungary’s interest to “host experiments” which “aim at undermining the lawfully elected government”. + +Mr Orban, who vowed in 2014 to make Hungary an “illiberal state”, feels empowered both by the impotence of his domestic opposition and by the victory of Donald Trump. Fidesz is also preparing a crackdown on foreign-funded NGOs. “CEU is not an issue for the average Hungarian, but symbolically it’s very important,” says Tamas Boros of Policy Solutions, a think-tank in Budapest. “It shows that Orban can control everything in the country.” Government officials deny that the law targets CEU. It simply levels the playing field for all universities, said Zoltan Kovacs, a government spokesman (and CEU graduate). Another graduate, Ferenc Kumin, Hungary’s consul in New York, hosted a reception for the university as recently as March 16th. + +Two marches in Budapest this week drew tens of thousands of supporters of the university, who echoed its call for Mr Ader to veto the law. The university’s rector, Michael Ignatieff, a former leader of Canada’s Liberal party, vows that it will remain open one way or another. Mr Orban’s actions have infuriated academics around the world, and drew condemnation from Frank-Walter Steinmeier, the president of Germany. Members of the Hungarian Academy of Sciences have expressed their support for CEU. So has Tibor Navracsics, the EU’s education commissioner, who once served as Mr Orban’s minister of justice. + +Mr Orban may also have misjudged America’s mood. Although Donald Trump has sometimes embraced illiberal nationalism, the arbitrary closure of an American-accredited university will not be welcomed in Washington. David Kostelancik, the top-ranking American diplomat in Budapest, said his government was “disappointed” by the legislation. Some compromise may yet be found, says another Western diplomat: “There is not unanimity in the Hungarian government that this is a great idea.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21720308-ruling-fidesz-party-sees-central-european-university-breeding-ground/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Kurdish card + +To win more power, Turkey’s president needs his enemies’ votes + + +Kurds and nationalists are the key to whether Recep Tayyip Erdogan’s referendum succeeds + +Apr 6th 2017 | DIYARBAKIR + + + + + +WITH just over a week before a referendum on constitutional changes that would give him practically unchecked powers, Turkey’s president, Recep Tayyip Erdogan, ought to be coasting to victory. The media have been defanged. Critics, including members of his own party, are afraid to speak up. The secular opposition is tripping over its own shoelaces. Yet Mr Erdogan is not assured of a win on April 16th. Most polls show the “no” and “yes” sides too close to call. The outcome now hinges largely on two groups that have long been at each other’s throats: Kurds and nationalists. + +In Diyarbakir, the heart of the Kurdish southeast, battered over the past two years by fighting between insurgents from the Kurdistan Workers’ Party (PKK) and Turkish security forces, the referendum is not a burning question. “Kurds have no rights in the current constitution, and they have no rights in the new one,” says Sah Ismail Bedirhanoglu, a businessman. “People here lost homes, family members and jobs,” says Vahap Coskun, a professor at Dicle University. “There is no article in this constitution that will bring them peace.” + + + +Across Turkey, the “No” campaign has been hamstrung by restrictions and intimidation. In Diyarbakir, “Yes” billboards and banners depicting Mr Erdogan, who held a rally here on April 1st, crowd the avenues. “No” banners are nowhere to be seen. “When we put them up in front of our headquarters, the police take them down,” says Ziya Pir, an MP from the pro-Kurdish Peoples’ Democratic Party (HDP). More than campaign materials, the HDP is missing campaigners. Some 5,000 party officials, including 85 mayors and 13 parliamentarians, are jailed on terror charges. The crackdown went into overdrive since last July’s coup attempt against Mr Erdogan. Under emergency law, the authorities shut down many Kurdish radio stations and TV channels. More recently, they banned the Kurdish-language version of the HDP’s campaign song, “Say No”, claiming that it incited “hatred and enmity”. + +Some Kurds think Mr Erdogan, who presided over negotiations with the PKK before abandoning them in 2015, will restart the peace process if he gets what he wants. “Erdogan is our only hope,” says Hamza, a car dealer and “Yes” voter. Most Diyarbakir residents seem to think otherwise. “A vote for this constitution is a vote for yet more repression,” says one shopkeeper. But gauging the mood in the southeast is nearly impossible. Abdurrahman Kurt, a former MP from the ruling Justice and Development (AK) party, expects 60% of the region to vote for the new constitution. A recent poll puts the figure at just over 30%. + +Mr Erdogan has other reasons to be uneasy. The grand alliance of Islamists and nationalists that he knitted together after the coup seems to be fraying. The leadership of the main nationalist party, the MHP, has backed Mr Erdogan’s constitution. But many of its supporters have not. Durmus Yilmaz, a former central bank chairman and one of a pack of MHP parliamentarians who broke with the party last year, estimates that four out of five nationalist voters will vote “no” in the referendum. “The MHP grassroots have always favoured the parliamentary system,” he says. “And these amendments put all power in the hands of one man.” + +One thing that unites Kurds and nationalists, other than opposition to the new constitution, is anxiety about the aftermath of the vote. Some in the southeast hope a “Yes” might get Mr Erdogan to stop hounding opponents. Others fear it would give him licence to do so more ruthlessly. A “No” vote also entails risks. Denied the powers he craves, Mr Erdogan may resort to the tactics he used to win back a parliamentary majority in 2015: an onslaught against PKK strongholds, a war of words with Western countries and an early election. “No matter what happens,” says Serkar, a student in Diyarbakir, “the Kurds will probably end up paying the price.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21720304-kurds-and-nationalists-are-key-whether-recep-tayyip-erdogans-referendum-succeeds-win/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Charlemagne + +Theresa May is signalling a readiness to compromise on Brexit + + +As the logic of a deal becomes clear, Britain is starting to sound less defiant + +Apr 6th 2017 + + + + + +HUGO YOUNG, an author, alighted on Hobbesian metaphors to describe Britain’s negotiations, in the early 1970s, to join the then European Economic Community. But if accession was “nasty”, “occasionally brutish” and “indisputably long”, leaving the club may prove harder still. Last week Theresa May, Britain’s prime minister, praised the European Union effusively even as she triggered the process to leave it, beginning two years of withdrawal negotiations. But Donald Tusk, president of the European Council, captured the mood better, predicting “difficult, complex and sometimes even confrontational” talks. + +This week’s contretemps over Gibraltar was a depressing reminder that the strain of British jingoism unearthed by the vote to leave the EU last June remains alive. It will no doubt find fresh modes of expression as the Brexit talks unfold (see article). Expect other battles, too: the debate over Britain’s outstanding financial obligations to the EU seems almost guaranteed to end in tears. But none of this should obscure the broader trajectory of the past few weeks. Having marched her troops to the top of Mount Brexit since the referendum, Mrs May has begun quietly trotting them back down again. + + + +European negotiators note that a mood of realism has slowly settled on London as the remorseless logic of Brexit has taken hold. Mrs May’s insistence on imposing immigration controls after Brexit, for example, led inexorably to her acceptance that Britain would have to quit the EU’s single market and lose any say in making its laws. That has broadly neutralised an issue some had thought might be central to the negotiations. “We don’t want to write their [migration] rules,” says one Eurocrat. The draft negotiating guidelines circulated by Mr Tusk to Europe’s capitals last week make only passing mention of the single market’s “four freedoms”, and then simply to welcome Mrs May’s acknowledgment that they are not available à la carte. + +Reality has left other toothmarks. Gone are the empty threats to turn Britain into an offshore tax haven should the EU fail to offer satisfactory divorce terms. Mrs May now accepts that a trade deal with the EU cannot enter into force before Britain leaves (even if she clings to the fantasy that its full details may be worked out in advance). That means some sort of bridging arrangement will be needed, perhaps lasting two or three years, during which Mrs May has hinted that Britain could accept the rules of the single market, including the free movement of EU workers. + +This massacre of sacred cows has reassured Europe. Britain may have spent the nine months since the referendum strutting about and making a fool of itself. But better to get the peacocking out of the way before the actual negotiations open. EU officials are still preparing for a complete breakdown in talks, and for Britain to crash out of the EU in two years without a deal. But as they observe British rhetoric yielding to reality, some now proclaim themselves a little more optimistic. + +Indeed, talk to negotiators in Brussels, Berlin or Paris—still notably united—and you find concerns not so much about British perfidy or delusion, but over its readiness to conduct what David Davis, the Brexit minister, calls “the most complicated negotiation of modern times”. Take the rights of EU citizens living in Britain and vice versa. Here, there is no reason for a row: both sides want to minimise disruption for their immigrants. But the issue is extremely complex, from pension rules to the rights of third-country spouses to the enforceability of whatever rules are agreed on. One EU negotiator says that in normal times it would take a decade to untangle the threads. Work your way down the Brexit to-do list, and two years looks dauntingly brief. + +Hardest of all will be working out how to marry Britain’s demands for sovereignty with its trading needs. On this, the Europeans fear, the penny has not yet dropped in London. Mrs May now calls for a “deep and special partnership” with the EU. That implies a trade relationship that extends beyond goods to the services Britain likes to export, particularly the financial sort, and a means of ensuring that its standards and rules do not deviate from Europe’s. The deeper the trade deal, therefore, the more Britain must play by the EU’s rulebook and, perhaps, accept the de facto supervision of its courts. + +You don’t know what you’ve got ’til it’s gone + +The Europeans also stand to lose from a shallow trade deal. Their hope is that Britain will seek to converge with EU rules once the regulatory trade-offs become apparent. Should the talks proceed relatively smoothly, in time the two sides may find themselves building, law by law, institution by institution, a regime not dissimilar from the one they are preparing to dismantle. There are signs of this already. It is an “absurd” exercise, says an EU official. “We are reinventing many of the instruments we already have.” + +But Eurocrats also worry that a sensible posture abroad may force Mrs May into a showdown with hardliners at home. For now, she is riding high; her stout conversion to the Brexit cause (and the feebleness of her political foes) leaves her with plenty of political capital. But is she prepared to enter the next election, in 2020, accepting free movement from the EU, paying large sums into its budget and operating under the purview of its courts? Can she negotiate and defend a final deal that preserves so much of what the Leave campaign fought to destroy? + +Perhaps she can: ersatz sovereignty can be repackaged as the real thing, and immigration may decline helpfully as the EU economy recovers. The prime minister can argue that although Brexit will lose Britain any say over the rules that govern its commerce with the EU, it wins Britain the right to renegotiate its trade with the rest of the world. It is hard for Europeans to judge whether this will pacify the Brexiteers. Then again, it has always been hard for Europeans to see why Britain’s tortured attitude towards the EU should be their problem to solve. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21720307-logic-deal-becomes-clear-britain-starting-sound-less-defiant-theresa-may/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Britain + + +Brexit and the borders: The customs crunch [Thu, 06 Apr 16:55] + +Britain and the European Union: Rocky grievances [Thu, 06 Apr 16:55] + +Old friends and new allies: Shared values [Thu, 06 Apr 16:55] + +The current-account deficit: Balancing act [Thu, 06 Apr 16:55] + +Three-day weekends: Thank God it’s Thursday [Thu, 06 Apr 16:55] + +Education funding: Learning to count pennies [Thu, 06 Apr 16:55] + +Work v play: The Easter blues [Thu, 06 Apr 16:55] + +Funding for businesses: Into the valley of death [Thu, 06 Apr 16:55] + +Labour and anti-Semitism: Beyond their Ken [Thu, 06 Apr 16:55] + +Bagehot: The third man [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The customs crunch + +To see how trade may work after Brexit, visit Dover’s docks + + +While goods from the European Union pass through seamlessly, those from elsewhere face long waits + +Apr 6th 2017 | DOVER + + + + + +TO MOST Britons, the white cliffs of Dover are symbols of independence and defiance, especially against any prospect of invasion from the continent. But the clifftops also afford an excellent view of one of the great success stories of Britain’s more recent integration with Europe: Dover’s eastern docks. + +This is the centre of Britain’s seamless trade with the European Union. A long line of lorries snakes slowly but uninterruptedly around concrete concourses and onto the roll-on, roll-off ferries that make the short crossing to Calais. So smooth is the process that the port can handle 10,500 lorries a day. About £120bn ($150bn) of traded goods comes through Dover each year, 17% of Britain’s total. A few miles away at the Channel Tunnel, up to 6,000 more lorries arrive daily. Yet delays are rare because Britain’s membership of the EU’s single market and customs union mean there is almost no paperwork to hold things up. + + + +Soon that will change. In two years Britain is due to leave the EU—including its single market and customs union, Theresa May has said. The prime minister’s vision of a “hard Brexit” will mean the return of customs barriers in some form, and thus hold-ups at the ports. + +There are many benefits to the current, “frictionless” system, as Mrs May has accurately described it. One is that the ease of trade generates more trade: there has been a fourfold increase in the number of lorries coming in and out of Britain via Kent since customs barriers within the EU were abolished in 1992. Another is that British industry has used this reliable, round-the-clock delivery system to exploit “just-in-time manufacturing”, which allows carmakers, for instance, to dispense with expensive inventories and warehousing. Take the Mini, manufactured by BMW. Minis are essentially built to order, as each customer selects options for the trim and interior. The company plans production a week in advance, to the very hour that the different parts are scheduled to arrive. + +To see how things might work after Brexit, visit Dover’s western docks. This is where trucks from non-EU countries arrive to clear customs. About 500 come here daily, from the Dover ferries and the Channel Tunnel, and their clearance is rather less seamless. Drivers have to park and fill in a form at the freight clearance office. A computerised system known as the Customs Handling of Import and Export Freight (CHIEF) logs details automatically, indicating what the goods are and what the import duty might be, but it has to be checked. Even for lorries from countries with close trading relationships, like Switzerland, all this “can take anything from 20 minutes to an hour” from disembarking, says Tim Dixon of Motis, the firm that runs the operation. For countries operating under World Trade Organisation rules only, the process could take much longer. Ominously, the Motis office has a TV lounge, launderette and restaurant in case the drivers have to lie up for a bit. + +This glimpse into the future is the stuff of nightmares for British business. Just-in-time manufacturing windows could be just-missed; food importers and exporters could see their perishables wilt with the wait, especially as customs procedures might have to be repeated on the French side. Irish hauliers are particularly anxious, as 80% of Ireland’s road freight to Europe goes through the British mainland. Post-Brexit, they might have to clear customs four times. + +There is another headache. By coincidence, CHIEF is due to be replaced by a new system in March 2019, the due date for Brexit. Designed to cope with 60m customs declarations a year this will now have to cope with about 300m. The project already seems to be in trouble. In November the government customs service gave it a “green” rating, meaning all was tickety-boo. Yet in January it was rated “amber/red”, meaning it was “in doubt”, with “major risks”. Andrew Tyrie, the chairman of the House of Commons Treasury select committee, is ringing alarm bells. “The consequences of this project failing, or even being delayed, could be serious,” he warns. “Much trade could be lost.” + +Even if the new system does work, it will still require companies to input complex data, and often quickly. Businesses could outsource this sort of work to professionals, but whereas there were 125 such customs agents at Dover before 1992, there are only 24 left. All this will add to costs; even if Britain were to negotiate a good free-trade agreement with the EU, any deal would require customs formalities, says Michael Lux, who used to work on customs for the European Commission. The number of customs officials may have to double, he says. It might be possible to devise a system whereby lorries from “trusted trader” companies are waved through, but this does not take account of the fact that many will be carrying consignments from different sources. Furthermore, no fewer than 34 government agencies have the right to interdict traffic, a splendid recipe for bureaucratic hold-ups. + +So finely tuned is the operation at the western docks, and so heavy the weight of traffic, that the slightest glitch can cause lorries to stack up on the approach roads to Dover. And when French ferry operators went on strike during the summer of 2015, the M20 motorway turned into a lorry park, losing businesses £21m worth of stock that was ruined by the wait, according to the Road Haulage Association. If Mrs May continues her pursuit of a hard Brexit and the upgrade of Britain’s customs operation maintains its leisurely pace, the summer of 2019 could be more chaotic still. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720274-while-goods-european-union-pass-through-seamlessly-those-elsewhere-face-long/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Rocky grievances + +The spat over Gibraltar will be followed by other bilateral rows + + +From the Calais migrant camp to the Elgin marbles, Brexit gives European countries an opportunity to air grievances + +Apr 6th 2017 + + + + + +THAT only days after Theresa May kicked off Brexit negotiations a previous Tory leader, Michael Howard, invoked the Falklands war to save Gibraltar from Spain may have been a shock. That the future of Gibraltar would come up during Brexit should not have been. Spain always said it would raise the issue. More pointedly, Britain’s need to strike a new trade deal that is subject to unanimous approval gives other EU countries a chance to bring to the table any grievance they wish to air. + +The spat began when Donald Tusk, the president of the European Council, clumsily put in his draft Brexit guidelines a provision that any future trade deal would apply to Gibraltar only if Madrid agreed. Brexiteers squealed at what they saw as a Spanish bid to question Britain’s sovereignty—and Lord Howard brought up the Falklands. It is true that Spain has objected to British sovereignty over Gibraltar ever since it was conceded in the Treaty of Utrecht in 1713. It also has a gripe over Gibraltar airport, which is partly built on reclaimed land. Yet Madrid’s concerns now are not about sovereignty but about competition from Gibraltar’s low tax regime—concerns that other EU countries share because of fears that post-Brexit Britain could follow Gibraltar’s example. + + + +Rather than rage over the Rock, Brexiteers should prepare for other grievances to emerge. One is the 2003 Le Touquet treaty with France that puts British border controls in Calais. Charles Grant of the Centre for European Reform, a think-tank, notes that all three leading candidates in the French presidential election are promising to withdraw from this treaty, which is blamed in France for the migrant camps that have sprouted around Calais. That threatens to revert to the time when asylum-seekers were sent through the Channel Tunnel to set up camp in Dover instead. + +Another border row could come up in Ireland. In this case there is no bilateral dispute. Both London and Dublin say they are determined not to re-create a hard border between the Irish Republic and Northern Ireland, complete with customs controls. Yet the border is not just a bilateral matter: it will exist between a post-Brexit Britain and the EU. If all EU members must agree to bend the rules to avoid customs controls, any one of them may object. + +A third grievance may be Britain’s grip on the NATO position of deputy supreme allied commander in Europe. Britons have held this job, the most senior military position not occupied by an American, since 1951. But Malcolm Chalmers, deputy director of the RUSI think-tank in London, reports that as the EU’s role in security and defence has grown, some EU members are now arguing that, post-Brexit, the deputy post should go to one of their nationals, most likely a Frenchman. + +And then there are fish. Those will be a legitimate issue for multilateral Brexit negotiations. But fish can also become a big bilateral grievance, not least because they have a habit of not always staying within designated territorial waters. Mrs May has made clear that Britain will take back control of its fisheries. But several countries, notably Spain and France, have historical rights to fish in British waters, which they want to retain. Disputes over fisheries can become poisonous (remember Britain’s “cod wars” with Iceland in the 1970s). British fishermen also need full access to EU markets. The only place that has ever walked out of the European project before is Greenland, which voted to leave in 1982. It took three years to negotiate trading terms for its only export, fish. + +The list could be almost endless. Anglo-French rivalries have a long history. Some Cypriots and Maltese might recall colonial injustices. And Tina Fordham, a political analyst at Citi, is not alone in predicting that Greece will bring up the Elgin marbles, which all Greeks believe should be returned from the British Museum in London to the Acropolis Museum in Athens. Brexit gives other EU countries the best bargaining chip they may ever have. Not surprisingly, many will play it. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720276-calais-migrant-camp-elgin-marbles-brexit-gives-european-countries-opportunity/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Old friends and new allies + +Seeking trade deals, Britain strikes up some awkward friendships + + +Cutting deals with the likes of the Philippines cannot replace the EU market + +Apr 6th 2017 + + + + + +Ahead of Brexit, ministers are out hunting trade deals. Theresa May has just been to Jordan and Saudi Arabia, Philip Hammond to India, and Liam Fox to Indonesia, Malaysia and the Philippines, whose “shared values” with Britain he celebrated. President Rodrigo Duterte has encouraged his citizens to murder drug-dealers, something that is generally frowned upon in Britain. But Dr Fox is eager to improve the terms of trade with the Philippines, which accounts for fully 0.1% of British exports. Meanwhile exit negotiations continue with the EU, which takes 45%. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720273-cutting-deals-likes-philippines-cannot-replace-eu-market-seeking-trade-deals/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +A balancing act + +Britain’s current-account deficit is at its narrowest since 2011 + + +But the country is still vulnerable to a loss of confidence among foreign investors + +Apr 6th 2017 + + + + + +ALONG with rising consumer debt and weak public finances, the current-account deficit is one of the economy’s biggest vulnerabilities. Because Britain imports more than it exports, the deficit has averaged around 4% of GDP in the past decade, the highest level of any big, rich country. In late 2015 it widened to 6% of GDP. As a consequence this means that Britain is a large net borrower from abroad. Wonks have worried that with the Brexit process now under way, overseas investors will be less willing to lend to Britain and so send sterling crashing. + +So it was with a sigh of relief that economy watchers learnt that in the fourth quarter of 2016 Britain’s current-account deficit narrowed to around 2% of GDP, its lowest level since 2011. The reduction was partly thanks to an improvement in what Britons earn on their overseas investments. The pound is roughly one-tenth weaker than it was a year ago. So in sterling terms the returns on Britons’ foreign investments have jumped. It also helps that continental Europe, where Britons are heavily invested, has recently seen faster economic growth and hence returns on investments have been juicier. + + + +Trade is the other big factor behind the narrowing of the current-account deficit. Consistent with what economics textbooks would predict, following sterling’s tumble last June the trade deficit initially widened. British firms followed through with plans to buy imports even though their cost had risen. By contrast, exporters that price their products in sterling (as many as one-third do so) saw no immediate boost from the weaker pound. + +By the fourth quarter, however, the trade deficit had sharply narrowed, thanks partly to a rise in export volumes. Exporters have cut prices in order to lure in more consumers. Brompton, a London-based bicycle maker which exports 75-80% of its bikes, has reduced its prices in foreign markets by about 5%. Overseas sales of food and drink are up by a quarter on last year. In 2016 exports of single-malt whisky were worth £1bn ($1.2bn), the most ever. + +Ben Broadbent, a deputy governor of the Bank of England, suggested in a recent speech that British exporters currently find themselves in a “sweet spot” where they are competitive in international markets but have not had to deal with the changes to rules and regulations that are likely to accompany Britain’s exit from the European Union. Exporters are also benefiting from a cyclical upswing in the global economy, as are other open economies such as Ireland. + +The rise in exports has come at a useful time. Other parts of the British economy are starting to weaken: consumer spending is slowing and surveys from the Bank of England suggest that business investment will remain low. Yet it is still an open question whether the benefits from sterling’s depreciation, which accrue mainly to the 10% or so of British firms which export, outweigh the downsides: the higher inflation and reduced purchasing power caused by the weaker pound affect all Britons. + +Despite the shrinking of the current-account deficit, foreign investors will continue to exert huge influence over the economy. Britain has an almost entirely free market in corporate control; the stock of overseas investors’ assets in the country—including houses, factories and shares—equates to over 500% of GDP (though Britons have similarly sized investments overseas). Sterling could tumble if only a small proportion of holders of these assets sold up, says Samuel Tombs of Pantheon Macroeconomics, a consultancy. As the Brexit negotiations get under way, all the more reason for the government to remain in investors’ good books. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720283-country-still-vulnerable-loss-confidence-among-foreign-investors-britains/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Thank God it’s Thursday + +Britain’s Green Party proposes a three-day weekend + + +A shorter working week sounds appealing, but could be costly + +Apr 6th 2017 + + + + + +WITH the prospect of Easter and two bank holidays on the horizon, Britons have an embarrassment of long weekends to savour. For Caroline Lucas, the joint leader of the Green Party, that is not enough: she wants three-day weekends every week. On March 31st she announced at her party’s conference that the Greens were exploring such a policy, which could go in their manifesto in 2020. + +The Greens reckon that lopping a day off the working week would begin to redress the inequalities between men and women, since both paid and unpaid work might then be shared more evenly. People could do more of what they love (assuming that excludes their jobs) and would be less stressed. It would reduce Britain’s carbon footprint. And it could even boost the country’s productivity. + + + +Some evidence supports this. A paper published in 2014 by John Pencavel of Stanford University, looking at first-world-war munitions workers, shows that reducing working hours can be good for productivity. Between 2007 and 2011 the American state of Utah adjusted the working week for state employees, with longer days from Monday to Thursday, and Friday off. In ten months the shift saved the state $1.8m in energy costs. + +But the Greens would go further than simply redistributing working hours over four days: they suggest that people could work fewer hours overall. Since not everyone can afford to take a 20% pay cut, “wages must go up correspondingly”—courtesy of employers and the state—“to ensure no one loses out”. The 26m employed Britons earn on average £90 ($112) a day. Covering the shortfall would cost around £120bn a year, equivalent to the budget of the National Health Service. + +The Greens’ proposals encounter two problems. First, the theory. They argue that the reduced hours worked by some could be redistributed to others in order to lower underemployment. They thus fall prey to the “lump of labour fallacy”, the notion that there is a fixed amount of work to be done which can be shared out in different ways to create fewer or more jobs. In fact, if people worked fewer hours, demand would drop, and so fewer working hours would be on offer. + +Second, the cost. Increased productivity could cover some of the costs of paying a five-day wage for a four-day week, suggests Sarah Lyall of the New Economics Foundation, a think-tank. She points to a Glasgow marketing company that did just that, and experienced a 30% leap in productivity. But that is an astonishing increase to expect across the board. + +The Greens say they are in the early stages of exploring the idea and have not yet produced firm costings. It might be useful to do so before next month’s local elections. That leaves little time—but presumably the party’s policymakers will raise their productivity accordingly. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720285-shorter-working-week-sounds-appealing-could-be-costly-britains-green-party-proposes/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Learning to count pennies + +Talk of a school funding “crisis” is overblown + + +But schools face leaner times ahead + +Apr 8th 2017 + + + + + +THE warnings are becoming louder. In January schools in Cheshire suggested that they might have to move to a four-day week. In March a school in East Sussex asked parents to bring in their own loo roll. Teachers’ unions are outraged. Jeremy Corbyn, Labour’s leader, has raised school funding at every prime minister’s questions for a month, accusing the government of “betraying a generation”. It is planning the biggest cut to education spending in 30 years. + + + +Yet as Sir Michael Wilshaw, a former chief inspector of schools, has noted, England’s schools have enjoyed at least 20 years of “largesse”. The new proposals would only partially reverse whopping increases dished out in the early 2000s (see chart). And whereas most other public services have already been subject to swingeing austerity cuts, school spending was protected in real terms in 2010-15. + + + +The government has promised to maintain school spending in cash terms until 2020, which means that in real terms it will fall by 6.5%, according to the Institute for Fiscal Studies, a think-tank. For lots of schools that will be easily manageable, says Jonathan Simons, who was head of education in the prime minister’s strategy unit under Gordon Brown and David Cameron. Some will be able to make the necessary savings by doing things like renegotiating energy contracts, say, or economising on teacher training. + +Others will find it harder. Although overall school spending has had a generous run, the money has not been evenly dished out. Some schools have already had to trim their costs. They may now allow class sizes to creep up, cut support staff or ration school trips. British teachers already work long hours by international standards and recruiting new ones is difficult. The National Audit Office, a spending watchdog, has criticised the Department for Education for not providing clear enough advice to schools on how to deal with less money. + +To muddle the matter further, opposition to the cuts has merged with opposition to a planned reform of how the money is disbursed. The government hopes to introduce a new “national funding formula” in 2018-19. The current system for handing out funds is partly based on an old model in which local authorities set their own education budgets, which resulted in wide disparities. Thus, at one extreme, schools in Tower Hamlets, a poor London borough with steep rents, this year got £6,906 ($8,600) per pupil in basic funding, whereas at the other end of the spectrum those in comfortable Wokingham received £3,991. The new formula will level out some regional differences, while weighting for things like poverty and low attainment. The Education Policy Institute, another think-tank, says it is a “consistent and transparent” way to hand out the cash. + +But it may be bad politics. Mr Cameron is said to have called the formula his education secretary’s “plan to lose me the next general election”. Before him, a Labour government had made the funding system a bit fairer but shied away from a complete overhaul because of the strength of opposition from local councils. More than half of schools will benefit from the new formula, but all will probably lose out overall because of the funding cuts. Moreover, the winners will not benefit by quite as much as they had hoped, partly because of a cap the government has put in place to prevent anyone from losing too much. + +Plenty of people are cross, many of them in sensitive constituencies. MPs with London seats despair that the capital’s high-performing schools will lose money; Tories representing leafy shires moan that the boost to their schools is not big enough. Most expect the government to tweak the formula a bit when it responds to a consultation in the summer. But much extra cash is unlikely to be found for schools, despite the increasingly voluble protestations. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720316-schools-face-leaner-times-ahead-talk-school-funding-crisis-overblown/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Unhappy holidays + +When are children happiest? When at school, research suggests + + +The Easter holidays are the most miserable time of year + +Apr 8th 2017 + + + + + +ENGLISH schoolchildren enjoy 13 weeks of holiday a year. To jaded office workers (and perhaps the Green Party—see article) that may sound ideal. Indeed, few children complain that they spend too much time away from exams, homework and the possibility of detention. Yet a new research paper* suggests that maybe they should: for children are happier when at school than during the holidays. The Easter break, which begins this week at many schools, is the gloomiest time of the year. + +The analysis looks at data from the UK Household Longitudinal Study, which has tracked the ups and downs of 40,000 households since 2009. As children are surveyed at different times of the year, Gundi Knies, the author, is able to compare their cheeriness across the calendar. She finds that younger children are happier than teenagers, and that teenage girls are moodier than teenage boys. + + + +The data offer a clue as to what explains the holiday glumness. One possibility is that it is caused by a mild form of separation anxiety. Ms Knies notes that although children’s reported satisfaction with their family does not decline during the holidays, their satisfaction with their friends does. Distance may breed discontent. + +Another reason may be that, when not distracted by schoolwork, children spend more time in front of a screen, which research suggests makes them less happy. And many extra-curricular activities are suspended, which means less time playing football or hanging out at drama club. “Everyone needs something meaningful to fill their day,” says Ms Knies. Unemployed adults are less happy than their peers. Crucially, those children who were on holiday abroad would not have been surveyed, so the ones included in the study were those left hanging around at home. + +As for why Easter holidays are worst of all, one possible explanation jumps out: exams. The main ones tend to be in the summer term, so the Easter break is spent swotting up (or feeling guilty about not doing so). Steve Jackson, the head teacher of a school in Somerset, frets that the pressure piled on children by exams has “increased exponentially over the years”, to the extent that they may now be damaging to young people’s health. Foreign jaunts are more common in the summer; Christmas brings families together in the winter. Easter eggs, it seems, are insufficient compensation for the horrors of revision. + +* “Income effects on children’s life satisfaction: Longitudinal Evidence for England” by Gundi Knies of the University of Essex, Institute for Social and Economic Research Working Paper Series + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720321-easter-holidays-are-most-miserable-time-year-when-are-children-happiest-when/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Funding for businesses + +British tech firms suffer from impatient investors + + +The government eyes pension funds as a source of long-term capital + +Apr 6th 2017 + + + + + +LAST year 650,000 new companies were formed in Britain, a new record. London, in particular, now abounds with incubators and accelerators. But the country is much less good at finding the capital for firms to grow over the long term. High-growth companies provide a disproportionate number of new jobs, but too few of those startups transform into “scale-ups”. + +The Treasury has set up a review into this lack of “patient” capital. Its main aim is “to consider the availability of long-term finance for growing innovative firms looking to scale up”. Its panel of finance chiefs is chaired by Sir Damon Buffini, a former head of Permira, a private-equity company. They will soon be sending out a consultation document and are expected to report by the time of the chancellor of the exchequer’s budget in the autumn. + + + +The gap in funding concerns firms worth between £5m and £100m ($6m-125m), a range that has become known as the “valley of death”. Take tech, a sector in which companies often grow rapidly. Britain invested £2bn of venture capital in tech companies last year, slightly down on the year before. This is good by European standards, but modest by comparison with America, argues Tim Hames of the British Private Equity and Venture Capital Association. Overall, the American venture-capital sector raised $42bn worth of funds for investment last year. In Britain, five big banks set up a “Business Growth Fund” in 2011 to invest in scale-ups. Last year it funnelled £400m to 59 companies. This helps a bit, but cannot meet demand. The industry is “totally sub-scale”, says the head of the fund, Stephen Welton. + +Consequently, most fast-growing firms, particularly in tech, have to look overseas for cash. According to Octopus, an investment company, 60% of all funding rounds in Britain above £10m involve an American investor. Many sell out to an American behemoth rather than struggle on looking for investment; DeepMind, an artificial-intelligence company, was sold to Google in 2014 for £400m. + +Moreover, even when venture-capital funds do stump up big chunks of money, they usually plan to stay invested for just a decade or so, the last years of which are taken up with designing an exit strategy. Many high-growth industries, particularly the life sciences, could do with longer investment periods, of up to 30 years, says Mr Hames. + +Pension and life insurance funds will also come under scrutiny in the Treasury review. Pension funds, in particular, dwarf venture-capital funds but have historically invested very little of their money in risky companies, preferring bonds and blue-chip firms. George Osborne, the previous chancellor of the exchequer, had been pushing pension funds into making longer-term investments in infrastructure. They may now be encouraged to invest more in fast-growing companies. + +Some look enviously at Canada’s pension funds. Whereas Britain has many small funds—at least 300 in the public sector alone—the Canadian government has herded its funds into a few big ones, enabling them to pool their research and administrative resources to scale up their investments. The Ontario Teachers’ Pension Plan is one of the more successful. It has bought several British assets, such as Camelot, the company that operates the National Lottery, and City airport in London. + +Edmund Truell, a city financier, recommends a similar strategy of creating a handful of “pension superfunds”. He transformed the London Pension Fund Authority, which manages the pensions of about 50,000 current and former city employees, hooking it up with the Lancashire County Pension Fund to create a £10bn commonly managed scheme. He sold the portfolio of gilts, arguing that investing in housing and infrastructure were better long-term bets. + +One option would be to allow the pension funds to invest in venture-capital trusts. These currently reward private investors with tax relief. They could be extended beyond the present limit of £5m to accommodate larger sums from institutional investors, argues Chris Hulatt of Octopus. That would be one way to make the “valley of death” a tad less forbidding. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720320-government-eyes-pension-funds-source-long-term-capital-british-tech-firms-suffer/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Beyond their Ken + +Ken Livingstone’s case highlights Labour’s anti-Semitism problem + + +A problem that the party can’t seem to squash + +Apr 6th 2017 + + + + + +KEN LIVINGSTONE, a former mayor of London, has been suspended from the Labour Party for a second year over dubious remarks made in 2016, including that Hitler supported Zionism “before he went mad and ended up killing 6m Jews”. But to the outrage of many, he has not been expelled. Tom Watson, Labour’s deputy leader, says Mr Livingstone’s behaviour “discredits the party I love”. Ephraim Mirvis, Britain’s chief rabbi, says Labour has “failed the Jewish community”. One hundred Labour MPs have condemned the decision not to boot him out. + +The case has reignited a row over whether Labour is failing to deal with anti-Semitism in its ranks. Last year an inquiry into racism in the party by Shami Chakrabarti, a human-rights campaigner, found no evidence of such prejudice, prompting some criticism—which intensified when she was subsequently made a Labour peer. + + + +Labour was already expecting to do badly in local elections next month. Britain’s Jews number only 270,000 and are far less politically homogenous than those in America, say, who tend to vote Democrat. But the dithering of Jeremy Corbyn, Labour’s unpopular, far-left leader and a long-standing ally of Mr Livingstone, has done the party little good. Mr Livingstone continues to defend his remarks and has vowed to fight the suspension. Mr Corbyn has now criticised him for failing to apologise for the “deep offence” he has caused and says that there will be yet another investigation. That may not suffice. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720317-problem-party-cant-seem-squash-ken-livingstones-case-highlights-labours/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bagehot + +The shadow of Enoch Powell looms ever-larger over Britain + + +Europe and migration, the issues he put at the heart of his ideology, have come to define British politics + +Apr 6th 2017 + + + + + +IF THE history of the world is but the biography of great men, as Thomas Carlyle put it, the history of Britain since the 1960s is but the biography of two great men and one woman. As Labour home secretary from 1965-67, Roy Jenkins took the government out of the bedroom with a series of liberalising laws on divorce, homosexuality and censorship. As Tory prime minister from 1979-90 Margaret Thatcher unleashed the power of markets. The main job of their successors was to come to terms with these twin revolutions: Tony Blair converted Labour to Thatcherism and David Cameron converted the Tories to Jenkinsism. + +Before Brexit it looked as if that was it: the party that could produce the best synthesis of Thatcher and Jenkins would win. But today a third figure hovers over British politics: a man who was born in 1912—eight years before Jenkins and 13 before Thatcher—but whose influence seems to grow by the day. One of Enoch Powell’s most famous observations was that “all political lives, unless they are cut off in midstream at some happy juncture, end in failure.” His political life is enjoying a posthumous success. + + + +Powell put two issues at the heart of his politics: migration and Europe. He convulsed the country in 1968 when he declared in a speech in his native Birmingham that mass immigration would produce social breakdown—that “like the Roman, I seem to see the River Tiber foaming with much blood.” And he campaigned tirelessly against the European Economic Community. These two passions were united by his belief in the nation state. He thought that nations were the building blocks of society and that attempts to subvert them, through supranational engineering or global flows of people, would end in disaster. + +Powell didn’t have the same direct influence as Thatcher or Jenkins. Thatcher was prime minister for 11 tumultuous years. Jenkins lived his life at the centre of the establishment. Powell spent only 15 months of his 37-year political career in office, as minister for health; nothing of substance bears his name on the statute books. In his new book, “The Road to Somewhere”, David Goodhart, a liberal critic of multiculturalism who has been accused of “liberal Powellism”, thinks that his “rivers of blood” speech was doubly counter-productive: it toxified the discussion of immigration for a generation and set the bar to successful immigration too low (no rivers foaming with blood, no problem). + +Yet Brexit is soaked in the blood of Powellism. Some of the leading Brexiteers acknowledge their debt to Powell: Nigel Farage regards him as a political hero and says that the country would be better today if his words had been heeded. Powell lit the fire of Euroscepticism in 1970 and kept it burning, often alone, for decade upon decade. He provided the Eurosceptics with their favourite arguments: that Europe was a mortal threat to British sovereignty; that Britain’s future lay in going it alone, “her face towards the oceans and the continents of the world”; that the establishment had betrayed the British people into joining Europe, by selling a political project as an economic one, and would betray them again. History has also been on his side. David Shiels, of Wolfson College, Cambridge, points out that, in Powell’s time, the questions of immigration and Europe were distinct (the immigration that worried him was from the Commonwealth). Europe’s commitment to the free movement of people drove the two things together and gave Powellism its renewed power. + +Just as important as his arguments was his style. Powell was the first of the new generation of populists cropping up across the West, a worshipper of Nietzsche in his youth, a professor of classics by the age of 25 who nevertheless considered himself a true voice of the people. He believed that the British establishment had become fatally out of touch on the biggest questions facing the country and used his formidable charisma—insistent voice tinged with Brummie, hypnotic stare—to seduce his audiences. + +Powell’s errors were legion. He regarded British nationhood as a fixed entity rather than something that was constantly being reinvented. He underestimated the country’s ability to absorb foreigners. Some prominent Brexiteers, such as Priti Patel, who is now a cabinet minister, were the children of immigrants, and the most recent Tory to hold Powell’s old seat, Wolverhampton South West, was a Sikh, Paul Uppal. He combined a high-flown love of his own nation with a chilly indifference to other people’s nations. He didn’t pay enough attention to the fact that nationalism can easily turn rancid: on March 31st a 17-year-old asylum-seeker was beaten almost to death in London by a gang of youths. Nor did he recognise that it can easily become ridiculous: on April 2nd a former leader of the Conservative Party, Michael Howard, talked about going to war with Spain over Gibraltar. + +Filled with foreboding + +But he did recognise one big thing: that the prophets of globalisation and European integration erred badly if they thought that national loyalties would either melt away or become so anodyne that they didn’t matter. Britain’s political parties now need to come to terms with the Powell question of national identity in much the same way that they once had to come to terms with the Jenkins question (social liberalism) and the Thatcher question (economic liberalism). Those who fail to make the adjustment will be doomed to marginalisation. So far the Tories have taken to this more easily than Labour. Whereas Theresa May’s Toryism is rooted in provincial England, Labour’s two core constituencies—liberal intellectuals and manual workers—are at war with each other on national identity. + +The established parties need to deal with this problem not just because their success depends upon it but also because, if left to fester, untamed nationalism can be a powerfully destructive force. Powell was restrained by the power of the old British establishment and by his reverence for Parliament. Today’s pound-shop Powellites don’t suffer from any such restraints. + +Economist.com/blogs/bagehot + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720272-europe-and-migration-issues-he-put-heart-his-ideology-have-come-define-british/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +International + + +Health-care reform: Prescription for the future [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +A prescription for the future + +How hospitals could be rebuilt, better than before + + +Technology could revolutionise the way they work + +Apr 8th 2017 + + + + + +IN A nondescript part of Cleveland, in a room known as the bunker, a doctor, nurses and medical technicians gather to keep watch over 150 patients in special-care units and intensive-care beds. Their patients are scattered around the region, in clinics that have no specialists covering the night shift. On a wall of beeping screens the bunker team members track their charges��� vital signs. They can zoom in on any patient via a camera at the foot of each bed. “These here are PVCs [premature ventricular contractions]; they’re bad things,” says Jim Goldstein, a cardiac technician, pointing to a graph of a patient’s heartbeat. The PVCs are getting worse, warns a flashing light. It’s time to alert a nurse on the ground. + +Health-care providers such as the Cleveland Clinic, the big American hospital group that runs this remote intensive-care unit (ICU), are rethinking the way hospitals work. Today, hospitals are where patients go for consultations with specialists, and where specialists, with the help of medical technicians and pricey machinery, diagnose their ills. They are also the main setting for surgery and medical interventions such as chemotherapy; and where sick people go for monitoring and care. But high-speed internet, remote-monitoring technology and the crunching of vast amounts of data are about to change all that. In the coming years a big chunk of those activities—and nearly all the monitoring and care—could move elsewhere. + + + +Plenty of other institutions are trying to grab some of the work—and profits—that will be displaced, including primary-care groups, insurers and health-management organisations. And technology firms are already playing a bigger part in health care as phones become more powerful and patients take control of their own diagnosis and treatment. But the more far-sighted hospitals are hoping to remain at the centre of the health-care ecosystem, even as their role changes. + +“When I think of the hospital of the future, I think of a bunch of people sitting in a room full of screens and phones,” says Toby Cosgrove, the Cleveland Clinic’s head. In such a vision, a hospital would resemble an air-traffic control tower, from which medical teams would monitor patients near and far to a standard until recently only possible in an ICU. The institution itself would house only emergency cases and the priciest equipment. The only in-hospital consultations would be those requiring the expertise of several specialists working in a team. Patients inside the building would be cared for better. But fewer people would be admitted, as hospitals co-ordinated care remotely and led population-wide efforts to keep people well. + +Hospitals have already been reinvented several times. During the Middle Ages they were run by religious institutions and offered little more than shelter and palliative care for the poor, and a place to die. After the advent of modern medicine during the Enlightenment, ambitious institutions such as Westminster and Guy’s, in London, developed into complex organisations that combined care, treatment, research and education. Poor-relief moved elsewhere; smaller institutions closed or merged; doctors specialised and clustered in big cities; and nursing was professionalised under Florence Nightingale and her successors. + +Temples to healing + +The transformation in the coming decades will be as wrenching as any hospitals have yet seen. And health-care reform is always difficult, as is clear from a glance at Britain’s creaking National Health Service, France’s near-bankrupt system—or the interminable battles in America over the future of Obamacare. Fast-ageing populations and the rising cost of new treatments will further complicate the transition. But the need for change is pressing. In the past half-century the burden of disease in all but the poorest countries has shifted. Communicable diseases are no longer the big problem; now it is chronic ones related to unhealthy lifestyles and longer lifespans. The gap between populations’ health needs and the care offered by systems organised around hospitals has grown ever wider. + +Picturing what hospitals could be, if the various obstacles are overcome, means abandoning long-held assumptions about the delivery of care, the role of the patient and what makes a good doctor. The first is what should happen where. “A hospital can also be at home,” says Lord Ara Darzi, a surgeon and professor at Imperial College London, a university that runs teaching hospitals. Just as online banking made life more convenient for consumers and freed up branch staff for complex queries, online health care could mean fewer people need to come to hospitals to be cared for by them. Last year half of consultations offered by Kaiser Permanente, an integrated American health-care firm that runs many hospitals, were virtual, with medical professionals communicating with patients by phone, e-mail or videoconference. + +The main limitations today, says Kari Gali, a paediatric nurse-practitioner for the Cleveland Clinic who takes such video-calls, are that she cannot look into children’s ears or listen to their chests. As these and more sophisticated diagnostics, including blood tests and virtual imaging, become available remotely, more patients could receive hospital-quality care without leaving home. Gupta Strategists, a Dutch research company, reckons that around 45% of care now given in Dutch hospitals could be done better at home. + +Shifting almost all dialysis and chemotherapy out of hospitals is further off, but is on the way. And with better remote monitoring some chronically ill patients who now need to be in hospitals will be able to stay at home, only coming in when their conditions deteriorate. Moving care outside institutions will both save money and raise standards, by making patients more comfortable and reducing infection rates. + +Each to their own + +For all this to happen, primary care and home support will need to improve. Kaiser shows what such “integrated care” might look like. It offers a host of alternatives to a hospital visit, from its website to kiosks to urgent-care centres, which are cheaper, often more convenient for minor ailments and equipped to deal with disease management and prevention, and the social issues that increase ill-health. “If we get a hospitalisation of a diabetic patient in a coma, that’s a failure of our system,” says Bernard Tyson, Kaiser’s boss. He blames skewed financial incentives to have “heads in beds” for much over-hospitalisation. + +Banner Health, a large non-profit American health system, runs 28 hospitals and several specialised facilities across six states. Its Tele-ICU programme, for which Philips, a Dutch health technology firm, provides equipment, programming and software support, has its headquarters in Phoenix. It manages care for critically ill patients who may be thousands of miles away. Under its “intensive ambulatory care programme”, patients are helped to leave hospital earlier than is usual for their conditions. They remain under constant monitoring and care in their own homes, and can “beam in” by video to talk to a doctor or nurse at any time of day. After a pilot study with Philips, Banner Health thinks this telehealth programme could reduce admissions by nearly half, and cut costs by a third. + +For patients who must still be admitted to hospital, the experience could be much more convenient and pleasant. Hospitals could operate more like a cross between a modern airport and a swish hotel, with mobile check-in, self-service kiosks for blood and urine tests and the like, and updates on patients’ and relatives’ phones. For pre-planned visits an algorithm could decide which tests are needed before a patient leaves home. Some of these could be done in advance and the results streamed directly to patients’ electronic records. + + + +Health-care managers are already waking up to the fact that a patient’s environment affects outcomes such as recovery times and success rates. Some are aiming for pristine, white and clinical; others for pastels, seashells and classical music. The latter can all be found in Kaiser’s Manhattan Beach Medical Office, in Los Angeles, which is also planning yoga and cooking classes for patients. The new Karolinska University Hospital, in Stockholm, has SKr118m ($13.2m) worth of art and lots of glass to maximise light, both intended to aid healing. It will be much quieter and calmer than a typical city hospital, says Annika Tibell, the medical director; instead of flashing alarms and loudspeakers, staff will have discreet personal buzzers. Kaiser has switched from neonatal wards to private rooms in its new hospitals. All these may seem like luxuries, but patients who cannot sleep recover more slowly. Some hospitals have had acoustic levels at night of over 70 decibels, the equivalent of a nearby vacuum-cleaner. + +But the biggest upgrades to hospitals are needed behind the scenes. Johns Hopkins Hospital, in Baltimore, has built a NASA-inspired “command centre” to manage its patient flows. Surrounded by 22 beeping flat-screens, live video-streams and lots of phones, staff members wearing headsets orchestrate the 1,100-bed institution around the clock. GE Healthcare, a medical-technology firm, helped mix, filter and present data streams in new ways—even including information such as the weather. Bed-planning has gone from an art to a science with the help of programs that predict demand with great precision and warn when a crunch is approaching. The centre stays in touch with nearby institutions whose patients require its specialists’ input, but not to be physically present. The aim is to “maximise the number of patients with access to Hopkins’ expertise”, says Jim Scheulen, the director. + +In future, rather than checking patients’ vital signs only at intervals, or parking ICU-nurses next to beds, live data-streams from medical machines and wearable devices could flow straight to such command centres, where supercomputers could screen them for anything worth bringing to the attention of medical staff. Doctors in the command centre, or even in their own homes, could be at patients’ bedsides virtually with a swipe of a touchscreen. All this would not only make the hospital safer and more efficient; it would also give medical staff a more complete record of patients’ progress. + +In Kaiser’s Oakland Medical Centre, the nurses in the neonatal unit, among the most sensitive departments in any hospital, do not need to watch the babies as closely as they used to, because algorithms ping an alarm to their phones whenever there is something to worry about. The unit automatically goes into lockdown if anyone takes an infant, tagged with a bar code, to the exit. Soon Karolinska hospital will equip every patient with a vital-signs tracker. In the Cleveland Clinic’s recently opened Avon Hospital, sensors track whether staff have washed their hands before entering a patient room: lights flash on their badges if not. + +Cleared for landing + +A command centre could watch over patients not only in hospitals, but also at home. Wearable devices that track vital signs, contact lenses that monitor blood-sugar levels and smart-stitches that measure the pH level of fluid in wounds would all mean fewer patients in hospital for monitoring. When he speaks of how such remote monitoring could improve care for his leukaemia patients, the eyes of Matthew Kalaycio, an oncologist at the Cleveland Clinic, light up. If his phone warned him of a worrying change in a patient’s temperature, he could wake the patient with a call even before he felt anything and tell him to come to hospital or, if caught early enough, to take medication to resolve the problem at home. + +All this monitoring would bring two new risks: mass hypochondria, as patients obsessed over their data and flooded hospitals with requests for consultations; and alarm fatigue, in both patients and medics. The antidote would be an intelligent monitoring system combining all the different data-streams, filtering out the least relevant and alerting staff only when needed. A computer taught to recognise deviations from standard recovery would be able to alert medical staff to aberrations. For example, a pneumonia patient who does not shake off a fever after two days of antibiotics needs attention. Most others simply need to complete the course of drugs, and get some rest. + +Physician, heal thyself + +As well as enabling doctors to monitor patients more effectively, technology could also improve their skills, increase their reach—and, sometimes, take their jobs. Although hospital managers insist that technology would not replace staff, this is of course nonsense. Basic tasks, such as carting laundry around, are already being taken over by robots. Everyday care, such as keeping patients clean, could be next. Radiologists and pathologists, whose skills are primarily visual, are at risk of being elbowed aside by machines. + +Engineers at Imperial College London recently developed Deep Medic, a computer program that assesses scans of patients with head injuries for signs of brain trauma. Today, these are diagnosed by a doctor who pores over MRI scans. Deep Medic can do the job in seconds. Brain tumours could be next. Such diagnoses would be cheaper and more accurate than possible with the human eye. + +But mostly such technological advances would make doctors better, not replace them. The Cleveland Clinic is putting Watson, IBM’s robot that learns to reason as it is fed data, through medical school. It could soon join doctors on their rounds. University Hospital Marburg, in Germany, recently began using Watson to improve the diagnosis and treatment of rare diseases (one early success was to help trace mysterious stomach symptoms to water snails in a patient’s aquarium, leading to a diagnosis of bilharzia, a tropical disease). The smartphones in doctors’ pockets could replace the stethoscopes around their necks. Machines do not get emotional or tired, nor do they struggle to distinguish whether a newborn baby is blue (and thus in need of urgent intervention) or pink. + +The surgeon’s job, too, could be transformed. Today, the use of robots in the operating room is limited because they must be steered manually with a joystick. In future robots might be able to carry out some standard procedures such as hip replacements autonomously, with a surgeon getting things started and the robot doing the rest. With more complex operations, a supercomputer linked to a real-time virtual-reality (VR) machine could help walk surgeons through their operations. It could, for example, highlight where a tumour sits in the liver and warn a surgeon about impinging on an artery, just as a satnav warns of traffic jams ahead. + +Sricharan Chalikonda, a surgeon at the Cleveland Clinic, says he can imagine scrubbing up “full Robocop-style”, with a helmet with built-in VR goggles giving him fighter-pilot “super-vision” and gloves that give him “super-hands”. His team has already worked with 3D prints of patients’ organs; the next big leap would be to project live images, showing the blood flowing through them. Microsoft HoloLens, clever virtual-reality goggles, is already being used to teach students about anatomy; cadavers can be cut up, which is useful, but to observe biological processes such as circulation in action only a live or VR body will do. In the future, every big hospital could have a Star Trek-style holodeck where surgeons could plan and rehearse complex operations on a 3D projection of the patient. Advances in minuscule robotic tools could correct for the imperfections of the shaky, too-large human hand, allowing fewer and smaller cuts than keyhole surgery as it is currently practised. + +With quicker and less invasive treatments, recovery times would fall. Medical errors would become less frequent, as would the need for repeat operations. Surgeons in the control tower might, eventually, operate on patients all round the world. “I can totally see myself sitting here at my desk, guiding three operations in three different locations,” says Mr Chalikonda, as he leans back in his chair. + + + +As technology amplified the reach of each health-care professional, one useful consequence would be to ease a looming labour shortage. Without a big leap in productivity America alone will lack up to 90,000 doctors by 2025. And worldwide demand for health care is growing as lives—and that part of them lived in poor health—grow longer. The World Bank estimates that by 2030 the number of health-care workers will need to double, compared with 2013—an extra 40m workers globally. High rates of stress and burnout are already a problem in health care; if workloads continue to increase they will only rise further. But if medical staff are made more productive with the help of computers, monitoring devices and robots, they can be freed up to do the work that only humans can do, and helped to do it better and more happily. + +If full advantage is to be taken of new medical technologies, not only medical professionals, but patients, too, will have to take on a new role: more like co-pilot than passenger. Illegible charts at the end of the bed—literally out of patients’ reach—would be replaced by a constantly updated electronic health record accessible on any device, by doctor, nurse or patient. The Cleveland Clinic already streams patient records, including test results, to “MyChart”, a site and app through which patients can also contact their physicians. + +In many Kaiser hospitals, a flat-screen television on the wall gives patients information about their recovery and what they must do before they can go home. It may not be long before patients can be given access to the same sights and sounds as their doctors, for example by streaming the sound of a stethoscope to a headset or the view from an otoscope to a screen. Mr Tyson wants people to become as interested and engaged in their bodies as they are (or, at least, as he is) in their cars. He thinks that with the right technological and medical support they would be able to spot, and respond to, raised cholesterol as quickly as they would to low tyre pressure. + +The modern hospital is a great achievement. And, in some form, it is sure to survive. “There will always be hospitals where patients with complex needs go for multidisciplinary diagnosis and treatment by teams of specialists,” says John Deverill of GE. He predicts that separate facilities will spring up to provide common surgical interventions, such as joint replacements or cataract removals, to benefit from scale. And hospitals will also continue to be needed to treat emergency cases. + +Beam me better, Scotty + +The next iteration of the hospital, however, is tantalisingly within reach—and it is more the co-ordinating node in a network than a self-contained institution. “We have reached the peak of bringing patients to the healing centres—our hospitals,” says Samuel Smits of Gupta. “We are on the brink of bringing the healing to patients.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21720278-technology-could-revolutionise-way-they-work-how-hospitals-could-be-rebuilt-better/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Special report + + +The Pearl river delta: Jewel in the crown [Thu, 06 Apr 16:55] + +The lessons: A China that works [Thu, 06 Apr 16:55] + +Diversification: Asia makes, China takes [Thu, 06 Apr 16:55] + +Infrastructure: Come closer [Thu, 06 Apr 16:55] + +Hengqin: Macau writ large [Thu, 06 Apr 16:55] + +Automation: Robots in the rustbelt [Thu, 06 Apr 16:55] + +Innovation: Welcome to Silicon Delta [Thu, 06 Apr 16:55] + +Hong Kong and the mainland: The dragon head’s dilemma [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Special report + + + + + +Jewel in the crown + +What China can learn from the Pearl river delta + + +The Pearl river delta is China’s most dynamic, open and innovative region, says Vijay Vaitheeswaran. Can it show the way for the rest of the country? + +Apr 6th 2017 + + + + + +LIBERAL ECONOMICS MAY have gone out of fashion, but not before working miracles in some parts of the world. To witness one of them, visit the Luohu immigration-control point on Shenzhen’s border with Hong Kong, where some 80m crossings are made every year. Since Deng Xiaoping designated the mainland Chinese city as a special economic zone in 1980, putting out the welcome mat for foreign investment and encouraging private enterprise, trillions of dollars of trade and investment have flowed across this border. + +Forty years ago Shenzhen was a rural backwater. Today it is the most dynamic city of the Pearl river delta (PRD), China’s most innovative region. Rem Koolhaas, a Dutch architect who teaches at Harvard, called it the ultimate “generic city”—a place without legacy that can swiftly adapt and grow with the times. It is still doing that, but is now old enough to have a memory. + + + +Not far from the border crossing is Hubei, one of the city’s original communities. Old buildings in the neighbourhood are being demolished to make way for modern structures. “If we all get involved in this transformation, every family will benefit!” declares a giant banner. The authorities are offering compensation to villagers and local homeowners. + +“Many people consider this place a slum,” explains Mary Ann O’Donnell, an American expert on Shenzhen’s urban villages. It is indeed shabby compared with Nanshan, a wealthy high-tech neighbourhood nearby with an average income per person of over $50,000 a year. Yet even this humble place has benefited from globalisation. The homes here have proper walls and roofs, as well as electricity, running water and sewerage. Hubei is not heaven, but any slum-dweller in Caracas or Mumbai would love to live like this. + +Though the delta accounts for less than 1% of China’s territory and 5% of its population, it generates more than a tenth of its GDP and a quarter of its exports + +The PRD is home to nine mainland cities in the province of Guangdong, notably Shenzhen and Guangzhou (formerly Canton), as well as to China’s special administrative regions of Hong Kong and Macau (see map). The World Bank recently declared the PRD the world’s biggest megacity, surpassing Tokyo. With over 66m residents, it is more populous than Italy or, just, Britain. + + + +This modest-sized triangle of land and water near China’s southern fringe has one of the world’s most successful economies. Its GDP, at more than $1.2trn, is bigger than that of Indonesia, which has four times as many people. It has been growing at an average of 12% a year for the past decade. As a global trading power the region is outranked only by America and Germany. + +For China itself, the PRD is crucial. Though it accounts for less than 1% of the country’s territory and 5% of its population, it generates more than a tenth of its GDP and a quarter of its exports. It soaks up a fifth of China’s total foreign direct investment and has attracted over a trillion dollars-worth of FDI since 1980. Above all, it is a shining example of the China that works. + +None of this would have happened without free enterprise. For centuries this trading post was the country’s most globalised corner. The economic liberalisation of the 1980s and 1990s transformed the delta into China’s leading manufacturing and export hub. Now it is rapidly becoming one of the world’s most innovative clusters. + +Even so, this great workshop to the world is now facing a number of challenges. Rival economies in South-East Asia and elsewhere are becoming more competitive. FDI inflows are slowing. And as the whole of China is getting older and its labour force is shrinking, the flow of migrants into the region is drying up. The net inflow of migrants into Guangdong has fallen by nearly half since 2008, from 1.1m to just 600,000 last year. Over the same period the net outflow of workers from Hunan, a poor neighbouring province, dropped from 286,000 to barely 30,000. Rising competition and a shrinking workforce are national problems—but as the most open and market-oriented part of China, the delta is feeling the pain more than the rest of the country. + +This special report will ask whether the PRD can adapt to these harsh new realities and once again lead the rest of China by example. It will point to four powerful trends that should help make the delta fit for the future: diversification, integration, automation and innovation. + +Diversification is necessary for two reasons. As already noted, the cheap labour that once kept the delta’s manufacturing plants going is running out and wages are rocketing, so bosses are shifting some factories to places with lower labour costs. At the same time exporting to the West has become harder. Rich-world economies have grown little since the financial crisis nearly a decade ago, and both America and Europe are becoming more resistant to trade, so the delta’s manufacturers are redirecting some of their exports to the Chinese market instead. + +Governments and firms are also trying harder to integrate markets, investing in infrastructure that will make it easier to do business in the region. Unlike the Yangzi river delta cluster around Shanghai, which focuses on the domestic market, the PRD serves the world, so its infrastructure was designed mainly for exports. Its supply-chain firms are now developing new logistics systems to serve domestic demand. Automation plays a big part in this adjustment process. + +Alpha delta + +Most remarkably, a region once known for copycat products is emerging as a world-class cluster for innovation. Shenzhen, a city of migrants, has rapidly moved from sweatshops to advanced manufacturing, robotics and genomics. It is home to Huawei and Tencent, two of China’s most valuable and inventive multinationals. Even Apple, an American technology giant, is building a research and development centre there. + +Hong Kong, which this summer marks the 20th anniversary of its handover from Britain to China, is the perfect complement to innovative Shenzhen. Its commitment to free speech, the rule of law and international standards has made it a vibrant global financial centre. Cross-border financial flows between Guangdong and Hong Kong are an explicit part of the Closer Economic Partnership Arrangement, an accord between the mainland and Hong Kong that liberalises trade and investment in many goods and services. Hong Kong’s banking system and capital markets are in private hands, whereas their counterparts on the mainland are tightly controlled by the state. Hong Kong is also the leading offshore centre for trading the yuan and the conduit for much of the foreign investment by mainland firms. + +When the mainland’s economy emerged from the devastation wrought by Mao Zedong’s policies, it was the PRD that pointed the way to the future. Shenzhen’s entrepreneurs defied central planners and demonstrated the power of market forces. + +The mainland is now in difficulty again, with double-digit growth a distant memory. It is struggling with excessive public debt. Too much investment has gone into white-elephant projects and ghost cities. Failure to reform or kill bloated state-owned enterprises (SOEs) has created zombie companies. + +In contrast, the PRD’s economy is made up mostly of private companies. Of the more than 100 giant SOEs controlled directly by the central government, only four are based in this market-minded region. The delta’s nimble firms have long been exposed to brutal competition in global markets. Some have succumbed or moved to cheaper places, but many of those that remain are world class. The question is, can the delta continue to lead? + +Jewel in the crownMore in this special report: Jewel in the crown:What China can learn from the Pearl river delta + +A China that works:What the country can learn from the Pearl river delta + +Asia makes, China takes:The PRD is exporting jobs but producing more goods for the home market + +Come closer:The importance of better internal communications + +Macau writ large:A plan for Macau to team up with neighbouring Hengqin + +Robots in the rustbelt:The future lies in automation + +Welcome to Silicon Delta:Shenzhen is a hothouse of innovation + +The dragon head’s dilemma:Hong Kong’s tricky balancing act + + + + + +→ A China that works: What the country can learn from the Pearl river delta + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21720072-pearl-river-delta-chinas-most-dynamic-open-and-innovative-region-says-vijay/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Special report + + + + + +Jewel in the crown: A China that works + +What the country can learn from the Pearl river delta + + +The PRD shows what China could achieve by setting entrepreneurs free + +Apr 6th 2017 + + + + + +“THE PRD WAS always the first mover in China,” explains William Fung of Li & Fung. Hong Kong’s success, he reckons, owes much to its tendency to ignore Beijing’s diktats. And Shenzhen’s special economic zone did well because it operated as a freewheeling hub. By embracing globalisation and eschewing central planning, the cities of the PRD led the way for the country’s economic opening. + +As this special report has argued, the next economic revolution is now under way. New infrastructure, including high-speed rail links and the world’s longest sea bridge, is helping to stitch the region ever more closely together. Whereas some parts of China are dominated by state-owned enterprises, this region’s economy is made up almost entirely of private-sector firms. Slowing growth in world trade threatens all of China Inc, but the PRD’s nimble private firms tend to be more resilient than protected state-owned enterprises elsewhere on the mainland. + + + +Since these firms operate in competitive global markets, they are currently undergoing the unnerving process of Schumpeterian creative destruction. Some are moving away or closing down, but those that remain are growing stronger. They are scrambling to upgrade, investing in automation, robotics and advanced manufacturing techniques. A region once infamous for its copycats is producing some world-class innovators. + +The PRD is more open to the world and to the private sector than any other place on the mainland. Zhejiang, the province that is home to globally minded Alibaba, has about 33,000 foreign-invested firms, and Shanghai about 75,000, but Guangdong has over 110,000. In Liaoning, an industrial province in the north-east, SOEs account for about 31% of total industrial revenues, and in Shanghai for more than 36%, but in Guangdong the share is less than 14%. And the delta alone generates nearly half of the mainland’s high-quality international patent filings, leading China on innovation. + +Dragon, unshackled + +To catch a glimpse of the future of the PRD, head to the Lok Ma Chau Loop. This valuable parcel of land, at the border between Shenzhen and Hong Kong, was left undeveloped for years because the two cities were fighting over its ownership. In January they agreed to develop it jointly as an innovation and technology park. + +The best chance for the PRD’s economy of upgrading for the future lies in co-operation between the governments of the region. Xu Qin, Shenzhen’s former Communist Party secretary, sees the Loop deal as part of his city’s effort to strengthen co-operation with Hong Kong so it can become an international hub. Nicholas Yang, Hong Kong’s innovation secretary, reckons that since both cities have advanced economies based on services, they must work together “to get value from knowledge”. + +The Global Entrepreneurship Monitor, a respected annual report, pointed out in its latest issue in February that both cities have seen explosive growth in entrepreneurship in recent years even as it is declining elsewhere in China. The report argued that the two cities should build on their complementary strengths. Shenzhen has many swashbuckling startups and plenty of risk capital to back them, but they often lack global sophistication and management skills. Hong Kong is more conservative, but its cosmopolitan entrepreneurs are better at scaling, branding and going global. + +With more such collaboration between the two cities, they might form the nucleus of a new regional technology cluster, as recently proposed by Ma Huateng, Tencent’s influential boss (an idea subsequently endorsed by Li Keqiang, China’s prime minister). The creation of such a hub, said Mr Ma, would help China “preside over the global tech revolution of the future”. + +The delta can weather today’s storms if its pragmatic officials work more closely together across the board and continue to respect market forces. Earlier reforms in the region demonstrated the benefits of capitalism to the rest of China and exposed the folly of central planning. The remarkable entrepreneurs who built the delta’s economy can propel it forward. All that governments have to do is stay out of the way. + +Jewel in the crownMore in this special report: Jewel in the crown:What China can learn from the Pearl river delta + +A China that works:What the country can learn from the Pearl river delta + +Asia makes, China takes:The PRD is exporting jobs but producing more goods for the home market + +Come closer:The importance of better internal communications + +Macau writ large:A plan for Macau to team up with neighbouring Hengqin + +Robots in the rustbelt:The future lies in automation + +Welcome to Silicon Delta:Shenzhen is a hothouse of innovation + +The dragon head’s dilemma:Hong Kong’s tricky balancing act + + + + + +→ Asia makes, China takes: The PRD is exporting jobs but producing more goods for the home market + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21720074-prd-shows-what-china-could-achieve-setting-entrepreneurs-free-what-country-can/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Special report + + + + + +Jewel in the crown: Asia makes, China takes + +The PRD is exporting jobs but producing more goods for the home market + + +The delta’s factories are doing a U-turn + +Apr 6th 2017 + + + + + +“THE GREAT CONVERGENCE”, a recent book by Richard Baldwin, argues that throughout most of the industrial era the know-how and culture essential for high-end manufacturing remained cloistered in the factories of the rich world. That led to a divergence between the fortunes of the West and the rest. But once the cost of communications started plunging, after 1990, such knowledge flowed more freely. Western multinationals built world-class factories in remote places, unpacking and outsourcing their manufacturing operations and supply chains. + +China was one great beneficiary of this process. The developed world’s industrial knowledge and the PRD’s low wages created an unbeatable combination. Vast quantities of well-made but affordable goods were shipped from the delta’s factories to meet the seemingly insatiable appetites of the rich world. So the other great beneficiary of this axis of efficiency was the consumer in the West. + + + +Now the axis is looking wonky at both ends. Labour shortages and increases in minimum wages have pushed up manufacturing salaries by a factor of four in the past ten years (see chart). They are now considerably higher in China than in South-East Asia or India. At the same time the rich world’s appetite for imports from China has been kept in check by years of stagnation, and there are now fears that its enthusiasm for free trade may be waning. + +This problem faces industrial exporters across the mainland, but it is most acute in the delta. Hourly wages in Guangzhou are about a third higher than the national average. In response, the PRD’s resilient manufacturers are performing a neat pivot. They are shifting some of their manufacturing to cheaper regions nearby, and they are redirecting exports to the huge and growing mainland market. “China 2.0 has emerged,” declares Marshall Fisher of the Wharton Business School. Until about 2010, the region’s labour-intensive factories (which he dubs China 1.0) operated on labour-cost arbitrage. When wages shot up, many pundits predicted a bleak future for the delta, with factories decamping en masse to cheaper places in Asia. Instead, says Mr Fisher, the PRD’s companies diversified and adapted. + +It is worth noting that despite the recent difficulties, China Inc remains king of global manufacturing. Deloitte, a consultancy, quizzes over 500 chief executives round the globe every three years to rank countries on their manufacturing prowess. In the latest report, published last year, China came top, beating America, Germany and Japan, just as it had done in 2013 and 2010. + +Moreover, the delta has not been hollowed out, as some had predicted. Many firms have considered leaving, and those in highly labour-intensive industries (such as low-end textiles or shoes) have indeed left. But most firms have stayed, keeping the bulk of their operations in the delta but hedging their bets by investing in cheaper regions. Some have set up factories in cities in China’s interior, others in South-East Asia. + +Such investments typically form the spokes of a wheel still radiating from the PRD. George Yeo has his finger on the region’s pulse. He runs Hong Kong’s Kerry Logistics, a warehousing and transport firm with a big presence in the region. There is no evidence of a wholesale exodus, he says. His clients are adding factories in places like northern Vietnam from which goods can reach the delta within about a day. + +The PRD’s pragmatic diversification has created a resilient regional network of production, known as Factory Asia, which reinforces rather than undermines the region’s importance. The delta contains many industrial clusters, ranging from cars to lighting to electronics. The complex webs of suppliers, middlemen and skilled workers on which these ecosystems rely are unlikely to disappear from it in the foreseeable future. + +Tommi Laine-Ylijoki, who manages the supply chain for the consumer business at Huawei, a Chinese multinational based in Shenzhen, emphatically rejects the idea that rising costs might force him to shift manufacturing out of the PRD. He says he did look into moving inland, but found that the cost differential was only 20-30%—and his entire supplier base is in the delta. He also wants his factories and suppliers to be close to his R&D team because he believes that “collaborative manufacturing” promotes innovation. Huawei outsources the production of most smartphones, but keeps about a tenth in-house to maintain the “touch and feel” of mass manufacturing. Given the PRD’s outstanding logistics, manufacturing and supply chain, he says, “I can’t think of a better place to be in the world to do this.” + +A treasure at home + +The grand pedestrian promenade at the heart of Guangzhou feels like a modern homage to Barcelona’s Rambla. On one side rises a beautiful opera house designed by Zaha Hadid, on the other is a fine museum set in a building resembling a Chinese treasure box. A rainbow of lights on the elegant Canton Tower casts a shimmering reflection on the Pearl river nearby. + +It does not look like a grubby industrial city. Decades of growth have made this region wealthy. The delta owes its dynamism to legions of private companies, so this wealth has been widely spread. Guangdong has a huge middle class of avid consumers. Annual total retail sales in Guangzhou and Shenzhen are far bigger than in Hong Kong. The world’s highest-grossing outlet of Sam’s Club, an American retailer, is in Shenzhen. + +Alibaba, China’s biggest e-commerce firm, holds a giant online-shopping extravaganza, known as Singles’ Day, on November 11th every year. Last year customers spent a whopping 120bn yuan ($17bn) on its shopping sites during those 24 hours, more than Americans spend on their Black Friday and Cyber Monday shopping sprees combined. Usually Alibaba hosts the event in its home town of Hangzhou, but last year it moved the Singles’ Day gala (featuring Kobe Bryant, a basketball star, and lingerie supermodels from Victoria’s Secret) to Shenzhen. + +Guangdong spends more than any other province on Singles’ Day, but there was another reason to hold the event in the province, says Chris Tung, Alibaba’s chief marketing officer: his firm embraces globalisation and innovation, and Shenzhen “has always been at the forefront of China’s opening up to the world and represents the spirit of forward-looking innovation”. + +The pivot to domestic consumption may seem an obvious move for the delta’s factories, but foreign firms operating in the PRD, long fixated on export markets, were slow to respond to the rise of China’s middle classes. Now they are cottoning on. Factories in the delta with owners in Hong Kong are also switching from exports to the mainland market. + +Edwin Keh, an academic who previously worked as a senior procurement manager at America’s Walmart, offers an explanation: “We’ve created this global supply chain that is very efficient at making stuff in the East and consuming in the West…but now it’s pointed in the wrong direction.” The PRD’s shipping, transport and logistics are designed for the speedy delivery of manufactured goods from Shenzhen to Los Angeles, not Shenzhen to Xi’an. Fortunately, that is changing fast. + +Jewel in the crownMore in this special report: Jewel in the crown:What China can learn from the Pearl river delta + +A China that works:What the country can learn from the Pearl river delta + +Asia makes, China takes:The PRD is exporting jobs but producing more goods for the home market + +Come closer:The importance of better internal communications + +Macau writ large:A plan for Macau to team up with neighbouring Hengqin + +Robots in the rustbelt:The future lies in automation + +Welcome to Silicon Delta:Shenzhen is a hothouse of innovation + +The dragon head’s dilemma:Hong Kong’s tricky balancing act + + + + + +→ Come closer: The importance of better internal communications + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21720070-deltas-factories-are-doing-u-turn-prd-exporting-jobs-producing-more-goods/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Special report + + + + + +Jewel in the crown: Come closer + +The importance of better internal communications + + +Heavy spending on infrastructure is helping to integrate the region + +Apr 6th 2017 + + + + + +THE VIEW FROM Lovers’ Road in Zhuhai, a seaside promenade in a big city on the PRD’s less developed western flank, is breathtaking. A gentle mist rolls in, delighting mainland visitors more accustomed to toxic coal haze. The most expensive flats in town are now going up on the boulevard, but the premium price reflects more than just the ocean panorama. + +If you take a ferry to Hong Kong from the terminus nearby, a spectacular sight will soon come into view: the soaring pillars of the world’s longest sea-crossing bridge (pictured). It is part of a Y-shaped bridge-and-tunnel combination stretching over 40km (25 miles). Despite numerous technical and political snags, the Hong Kong-Zhuhai-Macau (HKZM) bridge is nearing completion. It will turn a four-hour car journey into a 45-minute jaunt. Its most transformative effect may be on tiny Macau, which has lacked the infrastructure needed to attract global mass-market tourism (see article). + + + +On a map of China the PRD looks small, but the delta’s land and water occupy over 40,000 square kilometres. It can take a long time to get from one side to the other. Planners now want to knit the region together more tightly. + + + +To be fair, the PRD already has better infrastructure than most developing countries (see map). Its cities are better built, more connected and greener than those elsewhere on the mainland, with an extensive road network and excellent harbours and airports. Taken together, the seaports in neighbouring Shenzhen and Hong Kong handle more containers than does Shanghai, the world’s busiest container port. Hong Kong has the world’s busiest cargo airport (see chart). + + + +In many parts of China, politicised infrastructure spending has led to a number of white-elephant projects, but not in the PRD. Bureaucrats in the rest of the country should learn from the delta’s sensible, market-oriented planners. The PRD is not overbuilt, so there is a good case for continuing such investment. + +Keep building + +The latest five-year plan for Guangdong, released in 2016, calls for the creation of a “one-hour transport circle” to link the main cities of the delta. The province is adding thousands of kilometres of new expressways. A big expansion of the intercity train network will add 1,350km of track. Guangdong’s officials have increased rail density from roughly 1km per 100 square kilometres in 2008 to 2.2km, but are aiming much higher. The subway systems in Guangzhou and Shenzhen, already among the world’s longest, are being expanded further. + +Guangzhou, the provincial capital, is particularly keen on more infrastructure investment. In an effort to make itself more attractive as a transit point for inland goods and grain, it has invested heavily to expand its deepwater port. It is also building a giant “aerotropolis”, a supply-chain hub and special economic zone around its airport, which will occupy over 100 square kilometres. A forthcoming high-speed rail link from Hong Kong to Guangzhou will cut the travel time by half, to 48 minutes. + +Every three years a group led by the Urban China Initiative (UCI), a think-tank, prepares a detailed report on the country’s urbanisation. It measures progress on 23 indicators, ranging from social welfare (employment, health care) and pollution (air, water, waste) to the built environment (public transport, green spaces) and resource utilisation (energy and water efficiency). In its latest assessment of urban sustainability, published in March, the PRD once again stood out. Shenzhen emerged as the clear winner out of 185 mainland Chinese cities, and Guangzhou and Zhuhai also made the top six. + +Another sign that the PRD is leading China in making smart infrastructure investments came with the publication in March of the “Chinese Cities of Opportunity” report by the China Development Research Foundation (CDRF), an official research body, and PwC, a consultancy. Using a different methodology from UCI to scrutinise 28 big Chinese cities, the authors conclude that Guangzhou and Shenzhen are the best mainland cities for “technological innovation and balanced development”. + +The most important investments in infrastructure today are going into transforming supply chains so that the delta’s erstwhile exporters can redirect their manufactures to the mainland. The Chinese term for logistics, translated literally, means “the flow of things”. Unfortunately, though exports from the PRD move extremely efficiently, the same is not true for the flow of goods inside China. The country spends over 14% of GDP on logistics, nearly twice as much as many advanced economies. Li Keqiang, China’s prime minister, has complained that it can cost more to ship goods within the mainland than from China to America. + +To Wuhan, not Washington + +William Fung, chairman of Li & Fung, a pioneering supply-chain firm based in Hong Kong, notes that factories throughout the delta that had been sending exports to the West for the past two decades are rearranging supply chains, rejigging logistics and tweaking product designs to cater to customers on the mainland. Local supply-chain firms are investing furiously in such things as last-mile distribution and fulfilment capabilities to help manufacturers sell at home. One example is Shenzhen’s SF Express, an ambitious delivery firm that pulled off a successful public flotation in February. It has outgrown its command centre at Shenzhen’s airport and is now building Asia’s largest air-freight hub in Ezhou, a city in the middle of China. + +The results are beginning to show. Exports as a share of Guangdong’s industrial output fell from 38% in 2000 to 27% in 2015. Mr Fung sums it up: “The next 30-year trend is consumption in China, and we’re jumping in.” + +Jewel in the crownMore in this special report: Jewel in the crown:What China can learn from the Pearl river delta + +A China that works:What the country can learn from the Pearl river delta + +Asia makes, China takes:The PRD is exporting jobs but producing more goods for the home market + +Come closer:The importance of better internal communications + +Macau writ large:A plan for Macau to team up with neighbouring Hengqin + +Robots in the rustbelt:The future lies in automation + +Welcome to Silicon Delta:Shenzhen is a hothouse of innovation + +The dragon head’s dilemma:Hong Kong’s tricky balancing act + + + + + +→ Macau writ large: A plan for Macau to team up with neighbouring Hengqin + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21720075-heavy-spending-infrastructure-helping-integrate-region-importance/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Special report + + + + + +Jewel in the crown: Macau writ large + +A plan for Macau to team up with neighbouring Hengqin + + +Opening the island up to many more tourists + +Apr 6th 2017 + + + + + +CAN MACAU KICK its addiction to gambling? The former Portuguese colony’s economy is dominated by casinos. Officials now want to diversify its business model to include entertainment and family attractions, as Las Vegas has done. The snag is that Macau has about 30 square kilometres of land. But a solution is, literally, within reach. + +Hengqin, an underdeveloped island about three times the size of Macau, is just 200 metres away. Part of the city of Zhuhai, it has been made into a special economic zone to help Macau diversify, offering more liberal investment rules and tax breaks. Money is also going into infrastructure such as direct access to the HKZM bridge. + + + +Niu Jing, a high-ranking party official in Hengqin, wants to see Macau and Hengqin develop together into a top-flight entertainment, culture and services cluster. He says that investments of 800bn-1trn yuan are planned over the next 20 years, of which 70% will come from the private sector. Chimelong Ocean Kingdom, a big theme park, has opened on Hengqin. A water-sports park is in the works. International schools, hospitals, restaurants and shows are being wooed. To attract more investment, officials have cut red tape. Visas will be offered on demand. Macau residents can drive to Hengqin without mainland licence plates, and Hong Kong residents can work on the island and still pay the territory’s low income taxes. + +Best of all, there is the Underground Great Wall—the local moniker for a massive tunnel, over 33km long, which contains all the utility pipes and cables needed for development. Electricity, heat, water, communications and waste from the entire island flow through it and are controlled centrally. Three cables (helpfully labelled “Public Security”, “Military Police” and “Island Surveillance”) carry the signals needed for the security forces to keep an eye on everything. + +Jewel in the crownMore in this special report: Jewel in the crown:What China can learn from the Pearl river delta + +A China that works:What the country can learn from the Pearl river delta + +Asia makes, China takes:The PRD is exporting jobs but producing more goods for the home market + +Come closer:The importance of better internal communications + +Macau writ large:A plan for Macau to team up with neighbouring Hengqin + +Robots in the rustbelt:The future lies in automation + +Welcome to Silicon Delta:Shenzhen is a hothouse of innovation + +The dragon head’s dilemma:Hong Kong’s tricky balancing act + + + + + +→ Robots in the rustbelt: The future lies in automation + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21720069-opening-island-up-many-more-tourists-plan-macau-team-up-neighbouring/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Special report + + + + + +Jewel in the crown: Robots in the rustbelt + +The future lies in automation + + +Factories are upgrading, but still lag far behind the rich world + +Apr 6th 2017 + + + + + +WONG CHAP WING, a native of Hong Kong, runs a factory in Dongguan, an industrial city north of Shenzhen. Hip Fai, his privately held firm, stamps metal parts for things like printers and copiers. The energetic septuagenarian started dye- and mould-making in 1966, and recalls a time when migrants were grateful for a job. “There are not enough technical workers now,” he complains. Young people turn up their noses at factory work. He used to pay 600 yuan a month, but now they demand 5,000. + +The future is not bright for workshops that cannot upgrade. Mr Wong looked into shifting to a cheaper location inland but decided that the savings were too small. He says that many low-end subcontractors in his area are closing down. Looking at the antiquated equipment and the throngs of workers in his factory, it seems this greasy and noisy place, too, may face extinction. + + + +Turn a corner, though, and you spot the future: a hybrid assembly line where shiny Japanese robots are mingling with human workers. Peter Guarraia of Bain, a consultancy, explains that the big global trend in factory automation is “co-bots”: robots designed to collaborate safely with workers. They will look out for people and can be programmed by line workers. + +Dongguan has an official policy of encouraging automation, part of a national strategy to upgrade manufacturing + +Mr Wong spent 200,000 yuan on each robot but expects to get his money back within three years because his reconfigured assembly line is much more productive. Looking back, “I could not imagine my factory full of robots,” he reflects. “I came here for the cheap labour.” + +Dongguan has an official policy of encouraging automation, and has set aside 200m yuan a year to help its factories eliminate jobs. This is part of a national strategy to upgrade manufacturing through automation. The governments of the PRD are leading the charge. Guangdong has pledged to spend 943bn yuan to boost the manufacture and adoption of robotics in the province. Guangzhou optimistically hopes to automate the jobs of four-fifths of the city’s industrial workforce by 2020. + +The productivity imperative + +The sprawling headquarters of Midea in Foshan, a city near Guangzhou, look as though that day has already come. The firm was started in 1968 with 5,000 yuan, operating from a workshop measuring just 20 square metres. He Xiangjian, the founder, and his team scrounged what they could from Mao’s tattered economy to make plastic bottle caps, glass bottles and rubber balls. Today Midea is a Fortune 500 company and one of the world’s biggest white-goods manufacturers, selling everything from internet-controlled kitchen appliances to smart washing machines. Mr He, who retains a controlling stake in the firm, is a multi-billionaire. Last year Midea gobbled up Kuka, a German robotics firm, in a deal worth nearly $5bn. It also has a joint venture with Yaskawa, a Japanese robotics outfit. It is spending 10bn yuan to develop robots, both to use in its own factories and to sell to others. + +There are two main reasons to think the delta’s factories need to upgrade. First, the level of automation in China remains low compared with some of its competitors. In 2015 the average for the country as a whole was fewer than 50 robots per 10,000 factory workers, compared with about 300 in Germany and Japan and more than 500 in South Korea (see chart). + + + +Second, China’s supply of cheap labour is running out, which is pushing up wages steeply. China’s low birth rate, exacerbated by its one-child policy (now revoked), has meant that the working-age population has already peaked and is set to shrink significantly in the next few decades. The mass migration of poor rural dwellers from interior provinces to the PRD is slowing, and without that influx of labour, growth targets will be harder to hit. + +As a consequence, China urgently needs to beef up its productivity. Over the two decades to 2016, labour productivity has risen by an average of 8.5% a year, but in the past three years this growth has slowed to less than 7% a year, and the absolute level remains low, at only 15-30% of that in OECD countries. + +Yet automation should be market-driven, not subsidy-induced, and there are signs of a bubble. Thanks to the official push for “indigenous innovation”, Chinese automation firms are often subsidised even if their technology is not up to scratch. + +In an era of rapid growth and cheap labour, Chinese bosses set up factories without much concern for efficiency or quality of tooling. If a problem arose, they would throw more men at the job rather than invest even in simple automation. Now many of them are uncritically replacing humans with hardware. AlixPartners, a consultancy, warns that China risks being “left behind as a failed low-cost-country-model economy”. + +Karel Eloot of McKinsey, a consultancy, reckons that most Chinese firms are not even bothering to adopt such global best practices as Six Sigma, which uses statistical methods to ensure quality, and lean manufacturing, which emphasises efficiency and waste reduction. By one estimate, such tools could boost productivity by 15-30%. Instead, many firms are deploying robots to automate their current inefficient ways of working. Mr Eloot would like to see more data, measurement and analysis on the shop floor, with the lessons integrated into work routines. + +That may sound too sophisticated, but the PRD’s firms are already showing the rest of China how to leapfrog on smart automation. Consider Ash Cloud’s factory in Shenzhen. This private company makes cheap plastic cases for mobile phones, each costing a few yuan. It sells about 35m of them a year, earning it about $35m in revenues. Although this is a brutally competitive niche, the firm’s profit margin is 10%. + +Fred Chen, its general manager, reveals his secret: “Most Chinese firms suffer from production losses, mistakes, scrap, communications and production errors, warehouse mismanagement and so on…our success is due to very good controls.” The firm’s genius is in its manufacturing management system. Every employee has access to it from scores of iPads found all over the factory. There are cameras and sensors everywhere. The iPads display in large type how much net revenue has been earned from each product during a given shift. + +A manager explains the advantages: “We have no information islands…radical transparency means no secrets, no turf battles.” Since everybody sees the data in real time, all can change plans on the fly. For Mr Chen the conclusion is obvious: “It is time for Chinese factories to change their management habits.” + +Jewel in the crownMore in this special report: Jewel in the crown:What China can learn from the Pearl river delta + +A China that works:What the country can learn from the Pearl river delta + +Asia makes, China takes:The PRD is exporting jobs but producing more goods for the home market + +Come closer:The importance of better internal communications + +Macau writ large:A plan for Macau to team up with neighbouring Hengqin + +Robots in the rustbelt:The future lies in automation + +Welcome to Silicon Delta:Shenzhen is a hothouse of innovation + +The dragon head’s dilemma:Hong Kong’s tricky balancing act + + + + + +→ Welcome to Silicon Delta: Shenzhen is a hothouse of innovation + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21720073-factories-are-upgrading-still-lag-far-behind-rich-world-future-lies/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Special report + + + + + +Jewel in the crown: Welcome to Silicon Delta + +Shenzhen is a hothouse of innovation + + +Copycats are out, innovators are in + +Apr 6th 2017 + + + + + +ON A RECENT weekend several hundred academics and lawyers gathered in a hotel ballroom in Shenzhen for a discussion on “Innovation, inclusion and order”, an event jointly organised by the law schools at Peking, Oxford and Stanford universities. Legal conferences can be soporific, especially in China, and a scholar from Beijing duly set the tone by asserting that “order is important in the market.” But one of the local speakers livened things up by delivering a surprisingly stout defence of disruptive innovation. Xu Youjun, vice-chairman of the Shenzhen division of the Chinese People’s Political Consultative Conference, a government advisory body, said Shenzhen owed its success not to the government or the Communist Party but to its policy of allowing people to go “beyond the planned economy”. + +The city imposes few limits on freedom of movement (though only a minority of its population has an official hukou, or household-registration certificate), is relaxed about employment contracts and does not discriminate against outsiders. “People are the greatest source of our growth,” Mr Xu concluded. The contrasting views of the boffin from Beijing and the local apparatchik help explain how disruptive entrepreneurs turned Shenzhen into one of the world’s most innovative cities. + + + +Between 1980 and 2016 Shenzhen’s GDP in real terms grew at an average annual rate of 22% and today stands at 2trn yuan. The city’s Nanshan district, home to about 125 listed firms with a combined market value of nearly $400bn, has a higher income per person than Hong Kong. Unlike Beijing, which has many top-flight universities, Shenzhen has only a handful of lacklustre institutions of higher learning; but so many graduates from all over China flock to the city that they make up a greater share of its population than do graduates in Beijing. + +Shenzhen spends over 4% of its GDP on research and development (R&D), double the mainland average; in Nanshan the share is over 6%. Most of the money comes from private firms. Companies in Shenzhen file more international patents (which are mostly high quality, unlike many of the domestic Chinese ones) than those in France or Britain (see chart). + +The official story attributes Shenzhen’s success to brave party leaders and far-sighted policies. Deng Xiaoping is lauded for liberalising the region’s economy. Later political leaders receive praise for investments in infrastructure that enabled rapid growth. That is an incomplete version of history. + +An incisive new book, “Learning from Shenzhen”, edited by Mary Ann O’Donnell, Winnie Wong and Jonathan Bach, reveals that many of the advances seen since the city was opened up in 1980 came disruptively from below. For example, early reformers pushed ahead with unauthorised investment deals with non-mainland companies and retroactively developed the legal framework needed to protect foreign firms. Time and again, grassroots innovators hit on better ways of doing things, even though strictly speaking they were not permitted. When their risk-taking proved successful, communist leaders typically took the credit. So the best way to study innovation in Shenzhen is to examine it through the eyes of its entrepreneurial firms. + +The common perception that China is incapable of innovation needs re-examining. According to a widely quoted study published earlier this decade, the value added on the mainland to Apple’s iPods (nearly all of which are assembled there) represents less than 5% of the total, reinforcing the stereotype of Chinese factories as low-end sweatshops. However, a more recent study by Britain’s University of Sussex and others for the European Commission concludes that the iPod example “is far from representative”. These researchers calculate that the average value China adds to its exports is 76% (the EU’s is 87%). The World Bank reaches similar conclusions. + +The PRD’s companies, which account for a huge chunk of China’s innovation, have been moving up the value chain. Local firms that used to rely entirely on imported know-how and parts have started to work on their own inventions and methods. Foreign firms that used to come to the delta to harness its brawn are now tapping into its brains as well. Today, Shenzhen is attracting many entrepreneurs keen to develop new ways of making things. The innovators are transforming the entire delta into an advanced manufacturing cluster. Many multinationals have a listening post in the city to stay close to the latest trends. + +Making it, better + +Foxconn, a Taiwanese contract manufacturer which employs over 1m workers on the mainland, is sometimes represented as a low-tech sweatshop; in fact, it holds international patents in areas ranging from electrical machinery to computing to audio-video technology. It is expanding its Shenzhen facility to support rapid prototyping by Apple’s new R&D centre in the city. Its joint venture with Japan’s Sharp is investing $8.8bn in Guangzhou to make advanced liquid-crystal displays. It is also developing industrial robotics in Shenzhen. + +BGI, formerly known as the Beijing Genomics Institute, moved to Shenzhen to get away from northern bureaucrats. Seven years ago it was declared a “DNA superpower” by Nature, a science journal, after it bought so many genome-sequencing machines that it ended up owning more than half the world’s total. It is due to go public shortly. + +Mindray, a devices firm with $1bn in global sales, is developing new technologies for ventilators, digital operating rooms and surgical robots. The firm’s experience of managing both American and Chinese researchers is revealing. Its researchers in Silicon Valley are not just tutoring their counterparts in Shenzhen, it turns out, but also learning from them. Cheng Minghe, the firm’s president, observes that Westerners produce high-quality research but take a long time over it, whereas the locals are better at speedy development of new kit. + +Huawei spends more on R&D than Apple does. The privately held Shenzhen firm made its name as a telecoms-equipment vendor, but is now a big force in smartphones and cloud computing too. Its revenues for 2016 are estimated at 520bn yuan, a 32% increase on a year earlier. It devotes an impressive 15% of its revenues and 82,000 of its 180,000 employees to R&D. + +Huawei is innovating as it is globalising. Dieter Ernst of the East-West Centre, an American think-tank, praises the company for creating a “global innovation network” of the sort that only Western multinational companies used to have, with more than two dozen R&D centres the world over and a number of collaborative hubs run with leading multinationals and universities. + +This has paid dividends. Huawei is one of the world’s most prolific generators of high-quality international patents. Along with Sweden’s Ericsson it is at the forefront of 5G, which will replace the current 4G networks for mobile telephony. Its narrow-band internet-of-things protocol, a cheap and low-energy way to connect machines to the cloud, was recently approved as a global standard. + +Another way Shenzhen is rewriting the rules is by embracing open innovation. In the West, corporate innovation has generally been a secretive, top-down affair. Many factories in the city started by making clever imitations of Western goods, which led foreigners to dismiss the locals as mere copycats. That was a mistake. David Li of Shenzhen’s Open Innovation Lab argues that the copycats have since morphed into a powerful ecosystem of collaborative, fast-learning suppliers and factories. “Anybody can come to Shenzhen with an idea and get it prototyped, tested, made and put on the market at a decent price,” he says. Silicon Valley is obsessed with rich-world problems, he thinks, but China’s open innovators work on affordable solutions for the masses on everything from health care to pollution to banking. + +Mr Li says the already frenetic pace of Chinese innovation is speeding up further. Dealmaking used to involve long banquets and vast quantities of baijiu, a local firewater. Now introductions are made at the flick of a finger on WeChat, a remarkable messaging and payments app with more than 800m users. As soon as a WeChat group is formed, there is little need for phone calls or meetings. Tencent, the internet and online-gaming giant that invented WeChat, is also based in Shenzhen. Worth some $250bn, it is one of Asia’s most valuable firms. Its snazzy and green new headquarters in Nanshan towers over a modern neighbourhood of startups, incubators and funky coffee shops. + +One of Shenzhen’s most daring startups, Royole, is expanding its output of an extraordinary product: the world’s thinnest foldable full-colour touchscreen display. Liu Zihong, a mainlander, earned his doctorate in electrical engineering at Stanford University, where he dreamt of radical new ways for machines and humans to interact. When he started Royole, he says, he knew it had to be based in Shenzhen. Getting from early-stage research to manufactured product would require a massive amount of what he calls integrated innovation: “Materials, process, device design, circuit design—all needed to be innovated…if you changed one material, you had to change the process.” His team had to develop entirely new materials and factory tools, including custom-built robots, to make his screens, accumulating over 600 patents along the way. He insists this could not have been done even in Silicon Valley, because California cannot match Shenzhen’s ecosystem of “makers”. + +With $280m in venture-capital investment, Royole is valued at $3bn. It is investing $1.8bn to build a heavily automated factory and integrated R&D complex which should propel sales past $3bn. But Mr Liu has even grander ambitions. He thinks his screens could be deployed more widely, in places such as cups, clothes, desks, even walls. “Last year the display industry was worth $150bn,” he says, “but flexible displays will double that.” + +Hacking the future + +Shenzhen has become the world capital for hardware entrepreneurs. Navi Cohen is the co-founder of Revols, a Canadian startup developing affordable, custom-fitted headphones. His firm raised a fortune on Kickstarter, a crowdfunding site. When it tried to develop its product in Montreal, it found things slow and expensive, so it moved to Shenzhen, where supplies were cheap and factories made prototypes quickly. It is now in production. + +Another promising startup that moved to Shenzhen is Wazer, an American firm. A conventional metal-cutting machine on a factory floor costs $100,000 or more. Shenzhen’s know-how helped Wazer perfect a way to cut any material precisely with pressurised water. Its desktop cutter costs about $5,000 and will disrupt the industry when it comes to market later this year. + +Revols and Wazer are among dozens of startups that have gone through a manufacturing boot camp run by Hax, a hardware “accelerator” based in Shenzhen’s Huaqiangbei, the world’s largest electronics-supplies market. Benjamin Joffe, a partner at Hax, reckons that Silicon Valley’s experience of hardware is “six to seven years out of date”. Big firms ranging from Johnson & Johnson, an American health-care firm, to Michelin, a French tyremaker, have entered into partnerships with Hax to get closer to these bright sparks. + +The most successful of Shenzhen’s recent startups is Da-Jiang Innovations (DJI), reportedly worth over $8bn, which makes affordable commercial drones. Frank Wang, the founder, and his 1,500-strong R&D team had to invent vital bits of the technology needed for its flying robotic cameras. The privately held firm commands over half of the global market for small civilian drones, and is purportedly planning to go public soon. It is now diversifying its offerings. Paul Xu, the head of DJI Enterprise Solutions, says it is aiming for business clients in fields ranging from agriculture and energy to public security. It is also considering a services-business model where users can rent airtime. + +Shenzhen has done more than any place on the mainland to debunk the outdated myth of “copycat China”, becoming the global hub of innovation in hardware and manufacturing. Its entrepreneurs are coming up with entirely new industries. It has been the driving force behind the upgrading that should help the PRD withstand competition. But what does its rise mean for Hong Kong, which has been the catalyst of investment and growth in the delta for decades? + +Jewel in the crownMore in this special report: Jewel in the crown:What China can learn from the Pearl river delta + +A China that works:What the country can learn from the Pearl river delta + +Asia makes, China takes:The PRD is exporting jobs but producing more goods for the home market + +Come closer:The importance of better internal communications + +Macau writ large:A plan for Macau to team up with neighbouring Hengqin + +Robots in the rustbelt:The future lies in automation + +Welcome to Silicon Delta:Shenzhen is a hothouse of innovation + +The dragon head’s dilemma:Hong Kong’s tricky balancing act + + + + + +→ The dragon head’s dilemma: Hong Kong’s tricky balancing act + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21720076-copycats-are-out-innovators-are-shenzhen-hothouse-innovation/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Special report + + + + + +Jewel in the crown: The dragon head’s dilemma + +Hong Kong’s tricky balancing act + + +The territory’s best future is to remain China’s superconnector + +Apr 6th 2017 + + + + + +ON THE OBSERVATION deck atop the Diwang building in Shenzhen you can see two large wax figures depicting Deng Xiaoping and Margaret Thatcher enjoying cups of tea. The two leaders negotiated the handover of Hong Kong to China, which eventually took place in 1997. At the time, Mrs Thatcher was criticised by some at home for relinquishing the empire’s last great colony to the communists (Prince Charles reportedly described China’s leaders as “appalling old waxworks”). The more obvious worry was that Hong Kong’s rule of law and its free-market economy would be crushed by the hard men in Beijing. + +The critics underestimated the Iron Lady. She got a deal that preserved much of what was good about old Hong Kong, and which has served the entire PRD well. Though China gained sovereignty over the territory, it promised to respect its governance for 50 years, a system that was dubbed “one country, two systems”. This has held up far better than had been predicted. + + + +But as the 20th anniversary of the handover on July 1st approaches, Hong Kong is wondering about its future. Many locals are unhappy about being ruled by the mainland, with some activists even calling for independence. Economic growth is sluggish. Twenty years ago Hong Kong’s economy accounted for 16% of the Chinese total, dwarfing the rest of the delta. Now it makes up barely 3% of China’s GDP and less than half of the PRD’s economic output. + +Anthony Yeh of the University of Hong Kong once described the city as the PRD’s roaring “dragon head”. As the delta’s main source of capital and provider of manufacturing and commercial services, the city was responsible for much of the region’s division of labour and globalisation. Now he worries that Hong Kong may become as irrelevant to the global economy as England’s once-mighty Liverpool. + +Decline is not inevitable, but Hong Kong is constrained by its political situation. It has no prospect of becoming independent, though its efforts to strengthen democracy and protect local laws and institutions from mainland interference have been well worthwhile. On the economic front, its role is that of a global connector for the delta, adapting and upgrading links to reflect the changing times. + +Hong Kong is a “highly complex, semi-permeable membrane” that modulates the impact of globalisation on the mainland, argues George Yeo, the boss of Kerry Logistics and a former trade minister of Singapore. “China doesn’t want to harmonise with the world completely, because it makes domestic governance difficult.” That is why Hong Kong remains vital to the future of both the PRD and China. + +For all the local anguish, it is worth remembering that Hong Kong is the freest economy on Earth. In February the Heritage Foundation, an American think-tank, published its latest ranking of economic freedom, based on factors ranging from property rights and absence of corruption to mobility of labour and capital. Hong Kong once again came top. + +The city’s commitment to international legal and accounting norms has made it a global financial centre. Its lawyers, accountants and investment bankers are able easily to connect foreigners with mainlanders. Mainland companies make up perhaps half the market capitalisation of the Hong Kong stock exchange. The city is the leading offshore centre for trading the yuan and the conduit for much of the foreign investment undertaken by mainland firms. + +Say it with culture + +Cultural offerings are not controlled by the Communist Party. That is a good thing in itself, but when combined with the city’s knack for making markets, it is also an economic asset. The territory is now a global trading hub for wine and art, even hosting its own version of the influential Art Basel show. + +The West Kowloon Cultural District, a massive arts centre now under construction, may be the world’s most ambitious cultural undertaking since the Centre Pompidou was built in Paris 40 years ago. It complements a design-focused complex being built in Shenzhen, which will house a collection curated by London’s Victoria & Albert Museum. “I see the PRD emerging as an art destination,” says the V&A’s Luisa Mengoni. + +This cultural dynamism makes Hong Kong attractive to global talent. Nicholas Yang, Hong Kong’s innovation secretary, notes that of the city’s nearly 2,000 startups, perhaps half were founded by foreigners. Visas are easy to get, English is widely spoken, there is little red tape and half the world’s population lives within no more than five hours’ flying time from the city’s airport. + +Still, pessimists and pettifoggers abound. For such folk, the dramatic rise of DJI, the drone multinational mentioned earlier in this special report, confirms that Shenzhen has eclipsed their city. Yet a closer look reveals a reassuring symbiosis. Frank Wang, DJI’s mainland-born founder, studied at the Hong Kong University of Science and Technology. Li Zexiang, his robotics professor there, was an early investor and now serves as the firm’s chairman. And when DJI wanted to let global travellers try its drones, it decided to open an “experience zone” at Hong Kong’s airport. + +The battle for freedom in Hong Kong could prove a bellweather of political change in China. Economic freedom has not so far brought political freedom on the mainland, but if it did, the PRD would in all probability be in the vanguard. Until the distant day when China unchains its economy, frees its currency and ungags its people, the two-way flow of people, capital and ideas through this semi-permeable membrane will continue to play an essential part in the delta’s future. + +Jewel in the crownMore in this special report: Jewel in the crown:What China can learn from the Pearl river delta + +A China that works:What the country can learn from the Pearl river delta + +Asia makes, China takes:The PRD is exporting jobs but producing more goods for the home market + +Come closer:The importance of better internal communications + +Macau writ large:A plan for Macau to team up with neighbouring Hengqin + +Robots in the rustbelt:The future lies in automation + +Welcome to Silicon Delta:Shenzhen is a hothouse of innovation + +The dragon head’s dilemma:Hong Kong’s tricky balancing act + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21720071-territorys-best-future-remain-chinas-superconnector-hong-kongs-tricky-balancing/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Business + + +Indian e-commerce: Delayed delivery [Thu, 06 Apr 16:55] + +Fox News: The $13m factor [Thu, 06 Apr 16:55] + +Pharmaceuticals: A world of pain [Thu, 06 Apr 16:55] + +Entrepreneurs in Africa: Hurdles for hubs [Thu, 06 Apr 16:55] + +Clothing companies: Green is the new black [Thu, 06 Apr 16:55] + +Oil and technology: Data drilling [Thu, 06 Apr 16:55] + +De La Rue: Swapping notes [Thu, 06 Apr 16:55] + +Tesla: Revving up, a bit [Thu, 06 Apr 16:55] + +Schumpeter: The anti-mogul [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Delayed delivery + +Growth at Indian internet consumer firms has stalled + + +They must fend off Amazon amid doubts about their business models + +Apr 6th 2017 | MUMBAI + + + + + +THE promise of virgin commercial territory up for grabs, startups vying to lure investors’ money even faster than they burn through it, and Amazon trying to capture all the spoils: the recent scramble for the Indian online consumer has had more than a whiff of the late-90s dotcom boom about it. The exuberance seemed justified. India is the world’s fastest-growing large economy, its consumers increasingly clutching smartphones and fattening wallets. Online shopping, worth just $1bn five years ago, seemed to be growing so fast that it would exceed $100bn by 2020. + +The boom has ended not with a pop, as in 2000, but a whimper. Online sales, after more than doubling in 2014 and nearly trebling in 2015, were nearly flat in 2016 (see chart). Analysts are scrambling to lower their forecasts. Given that total retail consumption in India grows by around 18% a year, and internet penetration went up by two-fifths last year, e-commerce if anything looks to be losing ground. + + + + + +That is sobering news for many. In the 18 months to December 2015, investors put $9bn into Indian startups, often at eye-popping valuations. Forrester, a research group, now reckons that the market will grow to $48bn by 2020. That may not be enough to sustain the five big general online retailers—Flipkart and Snapdeal, two established Indian firms that are trying to fend off Amazon, as well as a pair of smaller firms, Paytm and ShopClues. A long tail of niche firms peddles everything from taxi rides to cinema tickets. + +They all hope that 2016 will prove to have been a blip. Some factors that slowed sales growth may have been one-offs; some changes were in fact welcome. An unhealthy cycle had developed, whereby investors backed e-commerce firms that showed strong sales growth, which then used the cash to fund discounts needed to attract more customers, who were unprofitable but boosted sales growth, attracting new investors, and so on. + +According to RedSeer, a consultancy, by 2015 some 20-30% of all e-commerce sales were to middlemen who were buying heavily discounted merchandise from the big companies and selling it on nearer its full price, pocketing the difference. But a deluge of funding in 2015 turned to drought in 2016. Firms ceased subsidising unprofitable sales and concentrated on limiting their losses, which dented overall sales. + +The authorities also put a dampener on the market, by reiterating a year ago that e-commerce firms have to act mostly as matchmakers between buyers and sellers (as eBay does in most countries), not sell their own inventory. Companies already skirt the rule using subsidiaries, but it became harder to do so. The sudden “demonetisation” of large bank notes in November hurt online sales (around two-thirds of Indian buyers of goods online are paid with cash upon delivery). + +Not all online firms have been equally affected by the slowdown. By all accounts Amazon continued to grow; it now claims to be the market leader. Flipkart, which also claims to be the biggest Indian e-commerce firm, struggled in early 2016 amid mass departures of senior staff; it appears to have recovered somewhat since. Snapdeal, formerly beloved of investors, is now a distant third. SoftBank, a Japanese investor with a one-third stake, is reportedly seeking to sell it to Flipkart, even if that means investors getting less money back than the nearly $2bn they put in. + +Some observers are questioning whether the long-term promise of Indian e-commerce still holds. Increasingly, executives hint in private that the market is far smaller than their former marketing material suggested. “Most people talk about India being a 1.2bn consumer market. It’s not,” Ashish Hemrajani, founder of BookMyShow, a ticketing site, told a conference recently. Though smartphone usage is rising quickly, there are perhaps 200m-250m Indians with internet access and credit or debit cards, most of them in big cities. But only a proportion of this total is actually inclined to shop online. The number of active online shoppers reached 35m-40m in 2015, and has not grown much since then, says Arya Sen of Jefferies, a bank. + +The funding drought of 2016 seems to be easing. But so-called “down rounds”, in which companies accept investment based on valuations significantly below their peaks, are now the norm. Both Flipkart and Ola, a ride-hailing firm, are having to endure them. + +This duo have been at the vanguard of calls for protection from foreign competition. Sachin Bansal, a co-founder of Flipkart, has complained about unfair “capital dumping”, notably by Amazon, which has pledged $5bn to its Indian subsidiary. Both Amazon and Uber failed to crack China, and are hoping for redemption in India. They can deploy oodles of capital generated by non-Indian operations. Along with the top brass at Ola, Mr Bansal has pleaded with the government to follow the Chinese model of restricting foreign companies from operating in India. + +Such tactics are little more than “crying foul after playing the game”, says Radhika Aggarwal, ShopClues’ co-founder. Fears that Alibaba, a deep-pocketed Chinese rival, could gatecrash the market in earnest (it is currently a large investor in Paytm’s parent company) are rising. Rakuten, an aggressive Japanese e-commerce firm, is also said to be preparing to enter the market, which is still big enough to tempt. + +Cart game + +Needless to say, Flipkart and Ola still welcome foreign capital that goes into their own coffers. They certainly need it. The big Indian e-commerce firms are probably losing $2bn-2.5bn a year in total. Optimists hope the end of the funding froth will have kiboshed only firms with bad business plans. Even the large players are focusing on niches, such as fashion or groceries, that have fatter margins than gizmos such as smartphones (roughly half of all sales now), which are barely profitable. Amazon aside, the focus is on finding ways of making more money from existing customers rather than finding new ones. + +It also bodes well that founders have pointedly shifted their focus from sales to profits. The question is whether customers will buy as much online if they no longer receive a subsidy from venture capitalists every time they check out. The assumption used to be that the Indian e-commerce market had room for all firms to thrive. Now the consensus is that only the implosion of the weakest can lift returns so that investors become willing to pour in more money, allowing the Indian champions to take on the likes of Amazon. And if this year is no better than last, even that will be called into question. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21720330-they-must-fend-amazon-amid-doubts-about-their-business-models-growth-indian-internet/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The female factor + +Bill O’Reilly faces allegations of sexual harassment + + +Around 50 big advertisers have left “The O’Reilly Factor” + +Apr 6th 2017 | NEW YORK + + + + + +EVEN for Rupert Murdoch and Fox News, no strangers to controversy, the allegations against Bill O’Reilly present an extreme test. On April 1st the New York Times published an investigative report that described accusations of sexual harassment and other inappropriate behaviour from at least seven women against the presenter. He and the network, the paper said, have paid about $13m to five women since 2002 to settle cases where they alleged such behaviour. Mr O’Reilly denied the merits of the claims. + +The news came less than nine months after Roger Ailes, the network’s founding boss, stepped down following multiple sexual-harassment claims against him. This week around 50 advertisers left Mr O’Reilly’s programme, “The O’Reilly Factor”, among them several car brands, including Mercedes-Benz and Toyota’s Lexus, as well as GlaxoSmithKline, a drugs company. The National Organisation for Women has called for him to be fired. + + + +All eyes are on Mr Murdoch, who has been running Fox News himself since he pushed out his friend, Mr Ailes. Mr O’Reilly has probably been just as valuable to him. Long the most-watched presenter in cable news, his audience has surged higher still since the election of Donald Trump. His show is averaging 4m viewers a night this year (see chart), helping make Fox News the most-watched cable channel in America. Mr Trump this week spoke out in Mr O’Reilly’s defence. + + + +An advertiser revolt will hurt, but on its own it is unlikely to make Mr O’Reilly’s ouster inevitable. Buyers place ads across multiple programmes on a network; many ads will shift to other Fox News shows. Nor is advertising the biggest source of Fox News revenue. SNL Kagan, a research firm, estimates that Fox News will collect more than $900m in advertising revenue this year, but close to double that—$1.7bn—from fees paid by cable and satellite providers to carry the channel to 89m homes. An initial statement from 21st Century Fox, the parent company of Fox News, was supportive of Mr O’Reilly. The network recently renewed his contract. In a statement, Mr O’Reilly also stated that he is a vulnerable target of lawsuits seeking to harm him and Fox News. + +Yet the scandal is probing the limits of Mr O’Reilly’s worth. One executive with a big ad-buying agency in New York was at first sceptical of the impact of the scandal when there was no initial concern from clients, but noted a herd effect developing later to leave the programme (though not the network). Whether Mr Murdoch buckles under the pressure may also depend on his potential replacements for Mr O’Reilly. He has already replaced another departing star, Megyn Kelly (one of Mr Ailes’s accusers, and a target of Mr Trump), with Tucker Carlson, a conservative commentator who is doing very well. + +Any decision will involve Mr Murdoch’s sons—Lachlan, a co-executive chairman of the parent company with his father, and James, the CEO. They reportedly played a part in ousting Mr Ailes. But they have said nothing publicly this week and their views remain unclear. Much as the scandal is gauging the worth of Mr O’Reilly to Fox, it may also be a test of forces within the Murdoch family. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21720335-around-50-big-advertisers-have-left-oreilly-factor-bill-oreilly-faces-allegations-sexual/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +A world of pain + +Makers and distributors of opioid painkillers are under scrutiny + + +How pharma may have contributed to America’s opioid crisis + +Apr 6th 2017 | WASHINGTON, DC + + + + + +BETWEEN 1999 and 2014 sales of prescription opioid drugs almost quadrupled in America, an increase that came not simply in response to patient suffering but because more of the population are addicted to these powerful drugs. Such is the demand for them, Americans now consume four-fifths of the global supply. + +Growth on this scale has been profitable for some: OxyContin, a popular opioid made by Purdue Pharma, a drug company in Stamford, Connecticut, has made its manufacturer tens of billions of dollars (see chart). But more broadly it has spelled tragedy. Deaths from opioid use in America quadrupled over the same period. About 90 people die every day, according to the Centres for Disease Control and Prevention. + + + + + +That dissonance between corporate success and private pain has become a matter of public interest. On March 28th Senator Claire McCaskill, a Democrat from Missouri, said that she would investigate the role that pharma firms played in creating the opioid crisis. Through a committee that oversees issues of homeland security and government affairs, she has written to five makers of prescription painkillers—Purdue Pharma, Depomed, Janssen/Johnson & Johnson, Insys Therapeutics and Mylan. She is demanding internal corporate documents stretching back over five years. + +Ms McCaskill wants to know exactly how firms marketed their drugs and what they knew about the risks of addiction and abuse. In particular, she wants to find out if companies used calculated sales-and-marketing strategies that involved encouraging doctors to prescribe opioids for a wider category of causes of pain than they would otherwise have done and downplaying the risk of addiction. + +This is not the first time such questions have been raised. In a case in 2007, the parent company of Purdue Pharma and three current and former executives there pleaded guilty to criminal charges that they misled regulators, doctors and patients about OxyContin’s risk of addiction and potential for abuse. Purdue promoted the drug, which is long-acting, as posing a lower risk of abuse and addiction than shorter-acting painkillers—such as Percocet and Vicodin. The firm admitted it had made statements about its drug that were “inconsistent” with approved prescribing information. In other words, the firm had incorrectly told doctors that OxyContin was less prone to abuse than other opioid medicines. The firm agreed to pay $600m and the three executives paid $34.5m in fines. + +Ms McCaskill’s inquiry is not the only one drug firms face. The Department of Justice (DoJ) has alleged that kickbacks were offered to encourage drug prescriptions and also that, as a result, health insurers were defrauded. In December the DoJ arrested former senior staff at Insys Therapeutics on charges that they led a conspiracy to bribe doctors to unnecessarily prescribe patients a pain medication based on fentanyl (an opioid that is up to 50 times as powerful as heroin), defrauding the insurers who had to cover the drug’s cost. The Drug Enforcement Administration has also taken action against firms for failing to control the “diversion” of prescription drugs to illicit uses. Earlier this year McKesson, a San Francisco-based pharma distributor, agreed to pay $150m for failing to report suspiciously large orders of drugs. + +Increasingly, too, counties and cities are filing lawsuits against manufacturers for their role in the opioid epidemic. There may be further legal action against the firms that distribute opioid medicines, acting as intermediaries between pharma firms and pharmacies. Some have been named in lawsuits. + +Nora Volkow, director of the National Institute on Drug Abuse, says that pharma companies are not the only ones to blame for the opioid crisis. She points to well-meaning efforts to implement procedures to make sure that pain was not under-treated in hospitals. Direct-to-consumer advertising of opioids may also have encouraged overuse. Only America and New Zealand allow pharma firms to advertise drugs directly to patients. + +The scrutiny on the industry is nonetheless intensifying. The number of opioid prescriptions being given is no longer rising, and may be falling. The same cannot be said for drugs firms’ legal woes. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21720336-how-pharma-may-have-contributed-americas-opioid-crisis-makers-and-distributors-opioid/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Hurdles for hubs + +Encouraging African entrepreneurship + + +Only one incubator on the continent is profitable without grants + +Apr 6th 2017 | ADDIS ABABA + + + + + +“YOU are either part of the solution or part of the problem,” it says in painted letters on a wall. “Stay hungry, stay foolish,” says the wall opposite. An old rickshaw sits among beanbags and a vase of flowers rests on an ancient oil barrel in the corner. “We wanted the space to feel like Google,” says Eleni Gabre-Madhin, the founder of blueMoon, a new agribusiness incubator that opened in Addis Ababa in February, without a trace of irony. + +Incubators and their cousins, accelerators, provide hands-on training and mentoring, and often a physical space, to help early-stage business ideas develop. In Silicon Valley they find capital for startups and take a slice of equity in return for their services. Ms Gabre-Madhin says that blueMoon draws inspiration from Y Combinator, an American accelerator founded in 2005 whose investees include Dropbox and Airbnb. The new firm’s first cohort of startups will train at the office for four months, and it will give each a small cash injection in exchange for a 10% stake. + + + +That is a rarity in Africa’s startup scene. A simpler and more common model is for “tech hubs” to provide office space, some networking events and fast broadband internet. A recent survey counted over 300 such facilities on the continent. One of the first hubs was iHub in Nairobi, launched in 2010, which has an incubation arm focused on mobile technology, called m:lab. But m:lab, like many of its kind, is not a real incubator: it was founded with grant support from the World Bank and takes fees from, but not equity in, the companies that it nurtures. + +Becoming a proper incubator has proved tricky. Hypercube Hub in Zimbabwe closed in 2015 after operating for less than two years, having failed to find a sustainable business model. A seed fund and incubator based in Nairobi called 88mph closed in 2015 after struggling along for four years; its Nigerian spin-off, 440.NG, was discontinued after the first cohort graduated—the return on capital to the founder was insufficient. Only one genuine incubator, Raizcorp in South Africa, is profitable without grant funding. Almost all are waiting for their first big payout. + +Many incubators lack experienced mentors to guide young businesses. In a country like Ethiopia, home to few internationally successful businesses, finding qualified staff is a headache. Even in more sophisticated Nigeria, mentors can be substandard. Some actively harm young startups by, for example, pushing them into raising capital too early. + +Just as entrepreneurs need decent mentors, incubators need good entrepreneurs if they are to make any money. In Africa, says Nicolas Friederici of Oxford University, incubators have disappointed because they are a supply-side solution: there are still too few promising startups in need of their services. Many of the best entrepreneurs have already left for other places. + +When Michael Oluwagbemi set up Wennovation Hub in Lagos in 2011, he found he had to teach wannabe entrepreneurs how to write applications and design websites before he could even launch the formal incubation programme. “The incubator in Africa is basically a finishing school and four months of it is not enough,” he says. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21720344-only-one-incubator-continent-profitable-without-grants-encouraging-african/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Garb age + +Looking good can be extremely bad for the planet + + +Global clothing production doubled between 2000 and 2014 + +Apr 8th 2017 + + + + + +STYLE is supposedly for ever. But the garments needed to conjure up eternal chic are spending less time on shop racks and in homes than ever before. Global clothing production doubled between 2000 and 2014, as apparel firms’ operations became more efficient, their production cycles became quicker and fashionistas got more for their money. From just a few collections a year, fast-fashion brands such as Zara, owned by Spain’s Inditex, now offer more than 20; Sweden’s H&M manages up to 16. + +Dressing to impress has an environmental cost as well as a financial one. From the pesticides poured on cotton fields to the washes in which denim is dunked, making 1kg of fabric generates 23kg of greenhouse gases on average, according to estimates by McKinsey, a consultancy. Because consumers keep almost every type of apparel only half as long as they did 15 years ago, these inputs quickly go to waste. The latest worry is shoppers in the developing world, who have yet to buy as many clothes as rich-world consumers but are fast catching up (see chart). + + + + + +Most apparel companies know that sooner or later, consumers’ awareness of this subject will rise. That is a worry. Various furores in the 1990s and afterwards over the working conditions of people making goods for firms such as Nike, Walmart and Primark badly damaged brands. The clothing industry cannot afford to appear so ugly again. + +One obvious way in which firms can answer environmental concerns is to use renewable energy to power their facilities. Beyond that, they can cut back sharply on water and chemical use; and they can develop new materials and manufacturing processes that reduce inputs. + +The record in this regard is mixed. H&M was the largest buyer in the world of “better cotton” last year—that is, cotton produced under a scheme to eliminate the nastiest pesticides and encourage strict water management. It grows in 24 countries and represents about 12% of the 25m tonnes of cotton produced each year globally. Kirsten Brodde of Greenpeace also notes that H&M has eliminated toxic per- and polyfluorinated chemicals from its lines (which are used to make garments waterproof). Nike’s Flyknit method of weaving items, including trainers, reduces waste by 60% in comparison with cutting and sewing. Flyknit products have a large following: revenues from the line came to more than $1bn in the last fiscal year. + +But for many firms, research and development into new materials and methods is not a priority. Plenty do not measure their overall environmental impact. And introducing green collections can even carry a risk for brands, reckons Steven Swartz of McKinsey. It is possible that a shopper will move on from wearing a consciously green T-shirt to viewing other kinds of clothing as the trappings of planetary destruction. + +A handful of brands encourage customers to recycle old clothes by returning them to stores. But almost all apparel today is made of a mix of materials—very often including polyester. Separating them out is difficult and mechanical methods of recycling degrade fibres. Chemical methods are too expensive to be viable. Shipping second-hand clothes off to countries in Africa and Asia is also a bust. Even if local markets are large enough to absorb them, the poorer quality of polyester-mixed garbs means they do not survive long. + +More durable apparel could help. Tom Cridland, a British designer, creates men’s clothing that is designed to last three decades thanks to strong seams and special treatments to prevent shrinking. He expects revenues of $1m this year, but admits that his model will be hard to scale. Patagonia, a maker of climbing and hiking gear, sends vans to campuses to help students patch up jackets and trousers. It helps others with greenery, too. After discovering a type of material for wetsuits that, unlike neoprene, requires no oil to make, Patagonia shared the find with surfing brands such as Quiksilver. Such innovation is badly needed. Style may be forever but today’s model of clothing production is not. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business-and-finance/21720200-global-clothing-production-doubled-between-2000-and-2014-looking-good-can-be/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Data drilling + +Oil struggles to enter the digital age + + +Talk of the “digital oil rig” may be a bit premature + +Apr 6th 2017 + + + + + +IT SOUNDS like a spectacular feat of engineering. Employees of Royal Dutch Shell located in Calgary, Canada, recently drilled a well 6,200 miles (10,000km) away in Vaca Muerta, Argentina. In fact, the engineers of the Anglo-Dutch oil major were using computers to perform what they call “virtual drilling”, based on their knowledge of Fox Creek, a shale bed in Alberta, which has similar geological features to Argentina’s biggest shale deposit. They used real-time data sent from a rig in Vaca Muerta to design the well and control the speed and pressure of the drilling. On their second try, they completed the well for $5.4m, down from $15m a few years ago. “It’s the cheapest well we’ve drilled in Argentina,” says Ben van Beurden, Shell’s chief executive. + +Shell is not alone in deploying computer wizards alongside geologists in an attempt to lower costs in an era of moderate oil prices. The industry as a whole is waking up to the fact that digitisation and automation have transformed other industries, such as commerce and manufacturing, and that they have been left behind. Technology firms and consultancies are knocking on their doors peddling alluring concepts like the “digital oil rig” and the “oilfield of the future”. Some argue that the embrace of digital technologies could be the next big thing after the shale revolution that started to transform oil and gas production in America a decade ago. But this is an industry that embraces new technologies only in fits and starts. + + + +Once, Big Oil was at the forefront of digitisation, pioneering the use of 3-D seismic data and supercomputers to help find resources. But priorities changed, especially during the past decade when oil prices rose above $100 a barrel and the primary goal was to find more of it, whatever the cost. Whizzy new technology took second place. Ulrich Spiesshofer, chief executive of ABB, a Swedish-Swiss automation-technology company, says the oil industry puts to use in exploration activities barely 5% of the seismic data it has collected. During production of oil, less than 1% of data from an oil rig reaches the people making decisions, reckons McKinsey, a consultancy. + +It is the process of extracting oil and gas that is considered most ripe for digitisation and automation. Drilling often takes place miles below the surface in rock formations where drill bits and pipes can be broken or snagged, which halts activity for long periods. Baker Hughes, an oil-services firm, has recently developed what it calls the first automated drill bit, capable of self-adjusting depending on the nature of the rock. McKinsey says undersea robots are also being deployed to fix problems. + +Above the surface, efforts are under way to reduce the amount of people and plant on oil rigs, helping improve safety in a dangerous industry. James Aday, a veteran oil driller now at Wood Mackenzie, a consultancy, says that on the drilling platform itself, automation is not new. Others say that more rigs are being controlled semi-remotely; in the Gulf of Mexico, engineers in Houston use real-time data from oil rigs to make decisions, reducing the cost of shuttling them by helicopter to rigs. “The aim is to bring the data to the expert, not the expert to the data,” says Peter Zornio of Emerson, an automation firm. “There’s a huge incentive to get the people and the choppers off the platform.” + +Wider use of data, sensors and automation will produce new challenges for the industry. It will have to learn about cyber-security—oil rigs are critical infrastructure—and invest in ways to prevent theft of data. But digitisation may also attract millennials to replace an ageing workforce, where mass retirement is a looming threat. + +As to whether the workforce could shrink across the industry in the digital age, ultimately geologists and engineers believe technology will not put them out of a job, because producing oil is art as well as science. Nor will tech startups be likely to overcome the barriers to entry—such as high capital requirements—that protect incumbents. But they add to a sense, born out of the shale revolution, that innovation will make oil and gas more accessible and that the days when oil was considered a scarce resource are long gone. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21720338-talk-digital-oil-rig-may-be-bit-premature-oil-struggles-enter-digital-age/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Swapping notes + +De La Rue rethinks its strategy + + +Governments are striking hard bargains on what they pay for cash + +Apr 6th 2017 + + + + + +THOMAS DE LA RUE set up shop more than 200 years ago, printing newspapers, then playing cards and stamps. In 1860 a contract to print banknotes for Mauritius started a transformation. Today De La Rue is the largest commercial banknote and passport printer, involved in aspects of the production of currencies for 140 countries, and passports for over 40. + +The British firm’s chief executive, Martin Sutherland, is relatively relaxed about the much-heralded death of cash. Despite advances in payments technology, and a shift to cards in Europe, the total demand for cash has proven remarkably resilient. Transaction values are rising rapidly in emerging economies, where hard currency is still the norm. De La Rue expects world demand for banknotes to grow by 3-4% a year for the foreseeable future. + + + +But there are problems nonetheless. Even at the best of times, note production, which accounts for over 70% of the company’s revenues, is a volatile business. Contracts are lumpy. State-owned printers often call in commercial printers at short notice to manage spikes in demand, which are unpredictable. On top of that, national authorities are demanding better value. They are running cut-throat tendering processes rather than relying on existing relationships. Some are sourcing individual components—such as design, paper or security features—from multiple suppliers, rather than buying the entire package from a single provider. Others have gone still further: thanks to the Indian government’s “Make in India” campaign, for example, a former big customer of banknote paper is now making its own. + +The consequence of such trends has been falling prices and a build-up of excess capacity in the industry. De La Rue had to warn investors about its profits repeatedly in the years leading up to 2015 (since then, profits have exceeded expectations). + +The company’s answer has been to try to expand its offerings of technology-led security products. Cash itself is getting more secure: polymer banknotes use complex holographic images to guard against forgers. They are longer lasting, so need to be replaced less frequently, but command a higher price. In 2012 De La Rue became the second of only two companies to produce the plastic (Innovia, based in Britain, is the other) and has printed notes for several authorities, including, most recently, the Bank of England. Demand for the material is forecast to rise by 10% a year in the near future (a kerfuffle over traces of animal fat in the new notes seems likely to be resolved by using palm oil instead). + +De La Rue also expects demand for passports and for other security identification to grow. A significant proportion of the world’s population remains unrecorded—UNICEF estimates that a quarter of the world’s children under the age of five are unregistered, for example. But the market for physical tokens, broadly speaking, could consolidate over time, says John Nelson of Smithers Pira, a market-research firm. Driving licences, social-security documents and passports may be merged into a single ID. The market could even disappear altogether: from 2019 onwards the Australian government, for example, wants to speed up border checks by replacing passport control with biometric scans. + +De La Rue is responding to such threats by selling end-to-end services, not just physical products. It has new software packages that allow governments to manage the entire passport-issuing process, for example. It wants to help governments manage civil-registration data on births, marriages and deaths. + +The last prong of Mr Sutherland’s strategy is to apply the company’s anti-counterfeiting expertise to product authentication. The OECD estimates that the market for counterfeit goods was worth $461bn in 2013, with luxury goods, electronics and tobacco most likely to be faked. De La Rue currently sells secure stamps that help governments verify that the appropriate tax on, say, cigarettes, has been paid. Its labels are also used by Microsoft to track and verify software products. There should be room to expand. Mr Sutherland reckons that luxury brands, especially, will become good customers; some already authenticate their products. If so, money will not be the firm’s only cash cow. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21720342-governments-are-striking-hard-bargains-what-they-pay-cash-de-la-rue-rethinks-its-strategy/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Revving up, a bit + +Tesla increases deliveries of electric cars + + +The real test will be whether it can churn out its new Model 3 + +Apr 6th 2017 + + + + + +ELON MUSK, a Silicon Valley entrepreneur, has had two bits of good news recently about his various bets on new technology. SpaceX, his privately-held launch company, last month became the first successfully to reuse a rocket to put a satellite into orbit. And this week Tesla, his electric-car manufacturer, at last hit its production targets. + +Some analysts doubted Tesla would meet its goals after a series of production difficulties. But the carmaker said first-quarter deliveries were just over 25,000 vehicles, a record for the firm and a 69% increase over the same period in 2016. Some 13,450 were its sleek Model S saloons and about 11,550 were the firm’s new SUV, the Model X. This puts Tesla on track to produce the 50,000 vehicles it has promised to make in the first half of this year. That is good progress. But Tesla is going to have to crank production up by an awful lot more to make the 500,000 cars a year which Mr Musk wants to see pouring off the production line by 2018, let alone the 1m intended for just two years later. + + + +To reach those volumes, Tesla is counting on its forthcoming Model 3. Priced at around $35,000, the new car will cost around half that of the other two models. Due to begin production later this year, the Model 3 is supposed to take Tesla into the mass market, where it will face stiff competition from plug-in vehicles produced by existing mass manufacturers, including GM, Nissan and BMW. + +Bringing any new car to market burns cash, and Tesla has been busy raising funds. On March 24th Tencent, a Chinese internet giant that owns WeChat, a popular messaging service, paid $1.8bn for a 5% stake in Tesla. Tencent could help accelerate Tesla’s drive into the vast Chinese market, where some 28m cars were sold last year. With Donald Trump trying to dismantle some environmental standards in America, China seems likelier to push green technologies. It is already the world’s biggest market for electric cars; some 700,000 plug-in cars are expected to be sold there this year. But to compete against low-cost local brands, Tesla urgently needs to start churning out its cheaper car. + +Many investors are betting that Tesla can become a mass producer. This has pushed up the value of the firm’s shares, which have increased by 38% since the start of 2017. On April 3rd Tesla’s market capitalisation exceeded $48bn, overtaking Ford (at $45bn). Ford may not be as technologically glamorous but it is well-versed in mass-producing cars, having made 6.7m last year. An awful lot will be riding on the Model 3. If Tesla fails to hit future targets then a cashflow crisis may loom. Investors, though, will have an exit: the company’s brand and whizzy technology are easily valuable enough to drive the firm into the arms of a bigger manufacturer that can hit its numbers. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21720340-real-test-will-be-whether-it-can-churn-out-its-new-model-3/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Schumpeter + +Time Warner’s boss is the anti-mogul + + +Jeff Bewkes’s season finale—a sale to AT&T—serves investors well + +Apr 8th 2017 + + + + + +THERE is a hawk in Central Park that sometimes dismembers its prey on the balcony outside Jeff Bewkes’s office. Guts are splattered around in the kind of Darwinian spectacle that any self-respecting media baron should appreciate as he plots plans for future world domination. Mr Bewkes, however, only manages a laconic shrug when he mentions the feathered predator. + +The boss of Time Warner is an anti-mogul in more ways than one. In an industry long-dominated by imperious tycoons intent on amassing power—think of Rupert Murdoch, or Viacom’s Sumner Redstone in his heyday—Mr Bewkes has shrunk a content empire, not expanded it. He is about to sell it to AT&T for $109bn in the fifth-biggest takeover of all time. If the deal goes through shareholders will have made a 341% return during his tenure (including spin-offs and dividends), making Time Warner one of the best-performing big firms in America during that time. + + + +Beneath his laid-back surfer persona, Mr Bewkes has been ruthless but in the rational pursuit of his owners’ interests, not his own vanity. His tenure can be split into three parts—culling, defending and preparing to exit on a high. + +Back in 2000 Time Warner had become a corporate catastrophe after being bought by AOL, a web firm pumped up by the dotcom bubble. Upon taking charge in 2008 Mr Bewkes dusted off the lessons from the MBA he had picked up at Stanford University and his time spent at HBO, the group’s subscription video-on-demand service, where he was known for giving creative types space to invent hits such as “The Sopranos” and “Sex and the City”. He restructured the firm to focus it on its competitive advantage—visual content. In 2009 he spun off AOL. That year he also offloaded the cable distribution business, which hooked up too few homes to be able to compete. It was later bought by Charter, a rival. In 2014 he got rid of Time Inc, a magazine group. + +The core business that is left is one of the two greatest agglomerations of video content in the world, together with Disney’s library. HBO has 134m subscribers—in America they buy the service via pipes that are supplied by cable, telecommunications and satellite firms. Turner, another subsidiary, sells bundles of sports and TV shows to the pipe firms—its channels include CNN. Warner Brothers is Hollywood’s second-biggest studio. + +But the business model is deeply flawed. Conventional media firms are a cross between artists and merchants, who buy or create content and resell it with a large markup. Time Warner’s sales are 2.3 times the size of its content budget. It has no direct relationship with viewers, so cannot collect the customer data that are becoming central to most businesses. The bulk of its sales are from traditional sources: advertising and fees from pipe companies and cinema chains. + +Internet-based services, such as Netflix and Amazon Prime, are exploiting this shortcoming, bypassing the middlemen and selling content directly to customers. Netflix costs about $10 a month, compared with up to $100 for a cable-TV package. It collects copious data on its viewers in order to serve them better. A war is raging to make the best TV: over 400 original shows are made a year, about double the number half a decade ago. Meanwhile, people are spending more and more time on social media and YouTube. Americans aged 18-24 spend around half as much time watching live TV as they did in 2010. + +You might think that a firm such as Time Warner would have had its innards ripped out by now. But its share of the free cashflow that the content industry (defined broadly to include pipe firms, media groups and internet-platform firms such as Google and Amazon) generates has risen from 3% to 4% in the past five years. Mr Bewkes’s defence has had several elements. He has spent heavily on content, ploughing $12.5bn a year into shows such as “True Detective”. He has cranked up the prices he charges the pipe firms—fees paid by them rose by 12% last year—while improving the bundles of shows sold and making more films available on demand. Time Warner has been willing to sell content to the internet firms. And it has copied Netflix with a new internet service called HBO Now. It only has 2m users but is growing fast. + +Yet Mr Bewkes must know that, like the best shows, the TV business cannot carry on for ever—at least, not while maintaining its plump margins. The new entrants have deep pockets. And when Time Warner and other media firms raise the fees they charge the pipe firms, the latter pass this on to consumers. At some point the tolerance of American TV-watchers for being gouged by their cable firms must end. + +Time Warning + +AT&T has offered a stonking price, half of it in cash, far more than the lowball bid that Fox, Mr Murdoch’s firm, offered in 2014 and which Mr Bewkes sensibly rejected. It can give Time Warner a direct relationship with viewers. A mobile user watching a Warner film could be tracked and the data used to sell smart advertising. Antitrust regulators may insist that these data are made available to other content companies, lowering their value. Even so, the two firms argue that being under common ownership will still make sense because they can launch new services faster. Before the election Donald Trump, who regards CNN as “fake news”, slammed the deal as bad for consumers. But the signals from the government are more favourable of late. Wall Street’s arbitrageurs reckon the odds of it being approved this year are over 75%. + +For Mr Bewkes that will be a poignant moment. A creative powerhouse will pass into the hands of a regulated monolith that lays copper in the ground and has a quarter of a million staff, none of whom gets paid to discuss plot twists and dolly shots. Yet the truth is that traditional media moguls who cling on to their empires have yet to show that their business models can survive the internet. Inside Mr Bewkes’s office, as well as outside on its balcony, there is no room for syrupy sentimentality. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21720339-jeff-bewkess-season-finalea-sale-attserves-investors-well/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Finance and economics + + +Japan’s labour market: Wanted: stroppier employees [Thu, 06 Apr 16:55] + +Buttonwood: Top-heavy [Thu, 06 Apr 16:55] + +Trade: Back to the 1980s [Thu, 06 Apr 16:55] + +Brexit and the Irish economy: From farm to pharma [Thu, 06 Apr 16:55] + +Economic development: Shrink wrap [Thu, 06 Apr 16:55] + +Short-term lending: Principles and interest [Thu, 06 Apr 16:55] + +A Fed resignation: Lacking judgment [Thu, 06 Apr 16:55] + +Free exchange: Self-inflicted wounds [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Wanted: stroppier employees + +Japan’s labour market is tight. So why aren’t wages rising? + + +High employment is combined with undemanding workers + +Apr 6th 2017 | Tokyo + + + + + +TRIMLY DRESSED deliverymen, polite and punctual, are ubiquitous in Japan. So it was shocking to see one of them kicking his parcels and hurling his trolley outside a block of Tokyo flats after apparently finding no one at home. Captured on a camera phone last December, this incident of “parcel rage” went viral, forcing Sagawa Express, one of Japan’s biggest delivery companies, to say sorry to its customers. Many Japanese will have felt sympathy, though, for the video’s frazzled star. + +Over 10% of the country’s firms admit that some workers frequently put in more than 100 hours of overtime in a month. A manager at a nuclear plant in Fukui prefecture worked twice that long in February 2016 before killing himself two months later. The problem is especially acute in low-skilled service industries. Over the past two decades, e-commerce has vastly increased the number of parcels handled by firms like Sagawa. Last year, one employee committed suicide after being violently bullied by his boss. + + + +In a survey in 2015 by the Japan Institute of Labour Policy and Training, some workers blamed their own lack of ability for why they put in so many extra hours. Others dutifully replied that overtime was necessary to achieve satisfactory results. But the two most common responses were straightforward economics: lack of staff and extreme fluctuations in demand. + +Both of these forces are leaving their mark on Japan’s labour market. The number of people of working age (15-64 years old) has fallen by about 3.8m since December 2012, when Shinzo Abe, Japan’s prime minister, returned to power. But the number of people actually working has increased by 2.2m. Almost everybody seeking a job has one: unemployment fell to just 2.8% in February, the lowest rate since 1994. Demographic decline has collided with an upswing in labour demand. + +This combination should be highly inflationary. Scarce workers should be demanding higher wages, forcing firms to charge their customers higher prices. But pay and prices remain subdued. In their negotiations with employers, Japan’s labour unions have shown none of the aggression that the Sagawa delivery man inflicted on his parcels. Although base pay (excluding bonuses and overtime) has stopped falling in the past two years, it increased by only 0.2% in 2016. That has left inflation well below the 2% target pursued by the Bank of Japan (BoJ). + +Japan’s wages remain flat partly because strong demand has resulted in an increase in the supply of labour rather than its price. Japan now hosts more than 1m foreign workers, up from 680,000 in late 2012. More importantly, the number of women and elderly men in work has increased by more than 2m over that period. Some of these extra hands have been pushed into work by financial anxieties. But others are pulled by economic opportunity. Mr Akira, who guides traffic with an illuminated baton outside a Burger King in Tokyo, is one of the latter. Aged 73, he prefers to stay physically active by earning money from a job rather than paying money to a gym. With the extra yen, he can afford to take his wife on bus trips to hot springs in Nikko and Kusatsu. + +The rising share of part-timers in Japan’s workforce has also dragged down average pay gains. The aggregate compensation of all employees combined (which reflects employment gains and pay gains) increased by 2.3% in nominal terms last year, the fastest rate this century (see chart). + + + +Market forces do not affect large swathes of Japan’s workforce. The pay of full-time workers in big firms is not responsive to labour-market tightness, according to a study published by the BoJ. These beneficiaries of life-time employment do not fear layoffs in hard times and cannot expect pay rises in good. But these workers do demand higher pay to offset past inflation. So, if peripheral workers’ pay rises by enough to lift consumer prices a little, that will eventually result in stronger core wages, adding to inflationary momentum. + +To attract and retain workers, some firms are offering perks other than pay. They are allowing employees to settle in one place, rather than yanking them from one branch to another at short notice. The government is also encouraging people to clock off at 3pm on the last Friday of each month (so-called “Premium Friday”). Many unions are also bargaining for shorter workweeks. Last month Rengo, Japan’s leading union federation, reached a deal with the country’s largest business lobby to limit overtime to less than 100 hours a month in “busy” periods (and 45 hours at other times). The cap may be enshrined in legislation due later this year. + +Obstacles to a shorter workweek remain. An online survey suggested that fewer than 4% of Tokyo workers left work early on the first “Premium Friday” at the end of February. Legal overtime limits will also be hard to enforce. Matsuri Takahashi, a 24-year-old employee at Dentsu, an advertising company, leapt from the third floor of her dorm on Christmas Day 2015. She had put in more than 100 hours of overtime in a month, but her managers had encouraged her to fake her timesheets. + +Any new legislation might, however, send a signal that the old ways will no longer work, says Toko Shirakawa, a journalist who sat on a council appointed by the government to propose workplace reforms. Some parcel-delivery companies have reached the same conclusion. Yamato Transport, which runs a door-to-door service, said last month that it is slashing overtime and raising basic charges for the first time in 27 years. It is also setting up thousands of lockers at places like train stations where deliverymen can leave parcels if no one is at home. That should spare employees the hassle of a repeat visit, and save their packages from a good kicking. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21720282-high-employment-combined-undemanding-workers-japans-labour-market/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Buttonwood + +America’s disproportionate weight in global stockmarket indices + + +Japan dominated the index in the late 1980s. That didn’t end well + +Apr 8th 2017 + + + + + +THE aims of a stockmarket index are threefold. First, to reflect what is actually going on in the market; second, to create a benchmark against which professional fund managers can be judged; and third, to allow investors to assemble well-diversified, low-cost portfolios. On all three counts there are reasons to worry about the MSCI All-World Country Index, one of the most widely used gauges of the global stockmarket. + +That is because the American market has a weighting of 54% in the index, as high as it has ever been (it reached the same level in 2002). In other words, anyone using the index to monitor the market is seeing a picture heavily distorted by Wall Street. The relative performance of international fund managers against the index will largely depend on how much exposure to America they are willing to take on. Anyone buying a tracking fund is, in effect, making a big bet on the American market. Things are worse if investors track the MSCI World Index, which covers only developed markets. In that benchmark, America’s weight is 60.5%. + +There is nothing wrong with the way that MSCI calculates its indices; the weights reflect how America dominates global markets. And with world index funds having fees as low as 0.3% a year, they look a tempting option. But there are worrying parallels with the way that Japan dominated the index in the late 1980s. + +At its peak, the Japanese market was 44% of the MSCI index. That was far more than double the Asian economy’s share of global GDP (see chart). Investors were enthusiastic about Japanese multinationals like Toyota and Sony; the talk then was of the rest of the world needing to learn from the Japanese model. Japan’s companies were free from the threat of takeover and able to pursue long-term plans without worrying about short-term profits. + + + +The American stockmarket’s index weight is also more than double the country’s share of global GDP. The gap has widened since the start of the millennium, because America’s share of world GDP has been on a downward trend. Today’s investors are wildly enthusiastic about America’s all-conquering technology groups, such as Google, Facebook and Amazon. They, too, are either shielded from the threat of takeover by special shareholder structures or, in the case of Amazon, have persuaded investors that long-term growth is more important than short-term profits. Other countries only wish they could create technology giants with the same reach as one of America’s titans. + +Do such parallels mean that America is doomed to follow the same path as Japan, whose stockmarket weight steadily dwindled until it fell back in line with its contribution to global GDP? Not necessarily. China’s stockmarket weight is much smaller than its GDP share because its A-shares, mainly owned by domestic investors, are excluded by MSCI. In any case a country’s stockmarket is not an exact replica of its domestic economy; only around half of the profits made by S&P 500 companies are earned at home. + +Still, investors may grant a higher valuation to a country’s stockmarket because they perceive it to have attractive fundamentals. The American market is nothing like as highly valued as Japan’s was in the late 1980s, when sceptics were told that Western valuation methods did not work in Tokyo. But American companies trade on a multiple of 21 times last year’s earnings, compared with 18 for Europe, 17 for Japan and 14 for emerging markets. On a cyclically adjusted basis (averaging profits over ten years), the ratio of the American market to earnings is as high as it was in the bubble periods of the late 1920s and 1990s. And it is worth remembering that those corporate profits are still very high, relative to GDP, by historical standards. + +Perhaps all these things can be justified. America may have better prospects for economic growth than the rest of the developed world, not least because of its favourable demography. Its technology giants may be less vulnerable to competition than the Japanese multinationals of the late 1980s because they benefit from “network effects”, or natural monopolies. And profits may have shifted to a higher level in a world where trade unions are weak, the cost of capital is low and business is very mobile. + +Nevertheless, an investment in the MSCI indices is an implicit bet on three things: the importance of the American market; the valuation placed on American companies; and the robustness of profits’ share of American GDP. This is not the kind of lower-risk option those buying an index fund probably have in mind. + +Economist.com/blogs/buttonwood + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business-and-finance/21720134-japan-dominated-index-late-1980s-didnt-end-well-americas/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Back to the 1980s + +Donald Trump’s review of trade deficits is a blast from the past + + +President Trump might revive old trade policies + +Apr 6th 2017 + + + + + +“WE are in a trade war,” said Wilbur Ross, Donald Trump’s commerce secretary, on March 31st. That day Mr Trump duly loosed off a couple of warning shots, announcing two trade-related executive orders. (He forgot to sign them in the ceremony itself.) As tactics go, this was hardly shock and awe. Rather, it was supposed to suggest that nastier weaponry is on the way. + +The first executive order was aimed at making trade rulebreakers “face the consequences”. Some bits were vague: officials have 90 days to develop and implement a plan to combat customs violations. Others seemed trivial. The government has lost $2.3bn of revenue over 14 years from importers going bankrupt before paying duties; almost half of this relates to imports of fresh garlic and preserved mushrooms. + + + +The second executive order seemed more in keeping with Mr Trump’s (trade) warmongering. Officials have 90 days to produce an “omnibus” report, naming the trading partners with which America had a “significant” trade deficit in goods in 2016 and shaming them if the reasons for that deficit are “unfair”. Based on what it finds, Mr Trump promised to “take necessary and lawful action”. + +Top of the naughty list will be China, which accounts for almost half of America’s trade deficit in goods. Mr Ross already has his eyes on its state-owned enterprises, excess supply of steel and aluminium, and its barriers to American car exports. Academic economists agree that Chinese imports have cut the number of American manufacturing jobs. But it is still unclear what exactly the Trump administration will do about any abuses it finds. Indeed, until Robert Lighthizer, Mr Trump’s chosen trade representative, is confirmed, keeping Congress friendly means holding fire. + +For clues as to what might eventually transpire, however, note that Mr Lighthizer and Mr Ross are both veterans of trade battles with Japan in the 1980s. Then, surging car imports prompted union members to stage sledgehammer smashings of Japanese cars. American steelmakers complained about cheap steel imports, and the semiconductor industry moaned about an unfairly closed Japanese market. + +Then, as now, industry-wide tariffs and quotas fell foul of international trade commitments but safeguards, including anti-dumping and countervailing duties, were allowed if domestic industry could show it was being injured. The Trump administration seems keen to follow the latter course. On March 28th it announced an investigation into imports of Chinese aluminium foil. But there can be side-effects. In 1984 Ronald Reagan rejected a request from copper producers for protective duties because of the effect on producers of pots and pans. + +The Reagan administration favoured “voluntary export restraints”, whereby the Japanese government would promise to curb exports. These were politically easier than a duty, and more legal than a quota. A Japanese promise in 1981 to restrict car exports to America did lead to a temporary halt in their increase. But they too had unintended consequences: the restrictions boosted car prices by almost 40% in 1984, according to calculations by Robert Crandall at the Brookings Institution, a think-tank. Japanese exporters enjoyed fatter profit margins, too—hardly the intention. + +Export restraints are now illegal under the rules of the World Trade Organisation (WTO). In any case, for an internationally-traded commodity like steel, a bilateral deal would do nothing to help American producers if steel flows to other markets, depressing world prices. Reagan’s trade team negotiated with both Japan and the EU. Today, a bilateral deal with China alone might work politically but would probably falter economically. + +Squashing a trade deficit can involve curbing imports or boosting exports. Peter Navarro, director of the White House National Trade Council, appears to think that trade deals might involve persuading the other country to buy more American goods. Mr Ross has said that his first emphasis will be boosting American exports by removing trade barriers. + +The experience of the semiconductor industry could provide a guide. The 1980s disputes had more to do with how supply chains were set up than tariffs or regulations. Without a specific barrier to remove, the Reagan government negotiated a target of 20% for the foreign market share in the Japanese semiconductor market. + +The policy drew sharp criticism from economists who worried that this restriction on domestic Japanese companies would lower competition and raise prices. They worried too about the kinds of cronyism it might encourage if American industries worked out that they could lobby for other governments to be pushed into buying more of their stuff. + +In the event, foreign market share rose and even Douglas Irwin, a vocal critic of the policy, admits that in practice it was not the disaster he had feared. Ultimately, though, the policy ended, partly because the Japanese government hated poking small companies into buying more American semiconductors (some newspapers reported that Japanese companies dumped the semiconductors into Tokyo Bay), and partly because of the hypocrisy of America simultaneously pushing for economic liberalisation and managed trade. + +A deal to buy more American corn, wheat or planes might appeal to the Chinese. But the 1980s has one final lesson. During the first half of the decade, despite tough trade measures, the deficit surged because of loose fiscal policy and tight monetary policy. Amid talk of a fiscal splurge and the Federal Reserve raising rates, Mr Trump should take note. Winning a war means picking the right battles. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21720287-president-trump-might-revive-old-trade-policies-donald-trumps-review-trade/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Ireland and Brexit + +Ireland’s food industries would be worst hit by a hard Brexit + + +A tale of two economies + +Apr 6th 2017 | DUBLIN + + + + + +IN 1962 Tony O’Reilly, head of the Irish Dairy Board, had an idea that would help transform Ireland’s economy. He wanted to create a premium brand for Irish butter to break into the growing British market. The new product, named Kerrygold and backed with a large marketing budget, was sold in half-pound packs in a parchment wrapping so shoppers could inspect the butter’s quality. Its success was an inspiration to other exporters and changed perceptions of Irish business. + +Half a century on, the Irish economy has been transformed into a global trading hub. Some 90% of its exports are shipped by multinational companies. Many of these are American giants such as Intel, a chipmaker, and Pfizer, a drugs firm. But some are home-grown food firms, such as Kerry Group. Observers speak of a dual economy: a “modern” capital-intensive part, powered by foreign direct investment (FDI), usually from America; and a “traditional” jobs-intensive food business, which still looks to the British market. The prospect of Brexit is pulling these two parts of the economy in opposing directions. + + + +For decades Ireland has appealed to foreign companies as a low-tax, English-speaking entry point to Europe’s single market. Brexit, in effect, removes a big rival for such mobile capital. Since Britain voted to leave the EU, there has been a “significant increase in inquiries” from firms considering a move to Ireland, says Martin Shanahan, boss of IDA Ireland, the state development agency. Much interest comes from banks and insurance companies, worried that London-based subsidiaries will lose the right to sell financial services in other EU countries. But the IDA’s phone lines were already busy. Many tech firms have chosen Ireland for their European headquarters. LinkedIn, a professional-network site, has built an office for 1,500 staff, having started with three people in 2010. Huawei, a Chinese telecoms firm, already has three centres in Ireland. + +Ireland’s indigenous industries have correspondingly shrunk in importance. When sales of Kerrygold took off in the 1960s, almost three-quarters of Irish goods exports went to Britain. Now just 13% do, a share that rises to 17% including services (see chart). Yet many analysts reckon that the damage from Brexit to Ireland’s food exporters will swamp any positive impact on high-tech FDI. Ireland is just one link in a global-tech supply chain: only a fraction of the value added to exports originates there. In contrast, the local content of Ireland’s food exports to Britain is high: weighted by Irish jobs, Britain’s export share would be around a quarter, according to John FitzGerald and Patrick Honohan of Trinity College, Dublin. Half of Ireland’s farm exports go to Britain and some would face tariffs of almost 60% in the event of a “cliff-edge” Brexit, in which trade reverts to WTO rules. Ireland’s exporters to Europe rely on Britain as a land-bridge, because shipping goods to the continent is more troublesome than carrying them by lorry. A quarter of Ireland’s imports come from Britain, partly because British chains own supermarkets in Ireland. + +Brexit could thus be devastating to rural Ireland while boosting the sort of FDI that benefits its bigger cities, notably Dublin. Ireland is already so geared to the global business cycle that a country which a few years ago was suffering a brutal housing bust now faces housing shortages, as FDI and migrants flood back. + +Yet a soft Brexit would be welcome in both parts of Ireland’s dual economy. Dublin has always been more of a complement than a rival to the City of London, so it benefits from the latter’s global status. A gentler Brexit that allows for a continuation of tariff-free flows for a time after Britain leaves the EU will give time for Irish food producers to reorient to other European markets. That won’t be easy. Ireland would need to create a more distinctive brand for its beef, notes Dan O’Brien, of the Institute of International and European Affairs, and “try flogging Irish Cheddar cheese to the French”. The reassuring lesson of Kerrygold butter is that Ireland has adapted well in the past. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21720313-tale-two-economies-irelands-food-industries-would-be-worst-hit-hard/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Shrink wrap + +The history of growth should be all about recessions + + +Faster growth is not due to bigger booms, but to less shrinking + +Apr 8th 2017 + + + + + +“THROUGHOUT history, poverty is the normal condition of man,” wrote Robert Heinlein, a science-fiction writer. Until the 18th century, global GDP per person was stuck between $725 and $1,100, around the same income level as the World Bank’s current poverty line of $1.90 a day. But global income levels per person have since accelerated, from around $1,100 in 1800 to $3,600 in 1950, and over $10,000 today. + +Economists have long tried to explain this sudden surge in output. Most theories have focused on the factors driving long-term economic growth such as the quantity and productivity of labour and capital. But a new paper* takes a different tack: faster growth is not due to bigger booms, but to less shrinking in recessions. Stephen Broadberry of Oxford University and John Wallis of the University of Maryland have taken data for 18 countries in Europe and the New World, some from as far back as the 13th century. To their surprise, they found that growth during years of economic expansion has fallen in the recent era—from 3.88% between 1820 and 1870 to 3.06% since 1950—even though average growth across all years in those two periods increased from 1.4% to 2.55%. + + + +Instead, shorter and shallower slumps led to rising long-term growth. Output fell in a third of years between 1820 and 1870 but in only 12% of those since 1950. The rate of decline per recession year has fallen too, from 3% to 1.2%. + +So why have these “growth reversals” decreased in length and depth? In another paper** Messrs Broadberry and Wallis find that conventional explanations—such as demographic change or a sectoral shift from volatile agriculture to the more stable services sector—do not fully explain the shift. + +More important is the rise of the rule of law, enabling disputes to be settled by impartial courts. Before the modern era, elites would fight between themselves for the spoils of growth and send the economy back to square one through wars, corruption and the like. Respect for courts to resolve disputes prevents this from happening. With populist politicians challenging the authority of judges once again across the world, that is food for thought. + +* “Growing, Shrinking and Long Run Economic Performance: Historical Perspectives on Economic Development” by S. Broadberry and J. Wallis + +** “Shrink Theory: The Nature of Long Run and Short Run Economic Performance” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21720311-faster-growth-not-due-bigger-booms-less-shrinking-history/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Consumer loans + +Payday lending is declining + + +Regulators squeeze the industry + +Apr 8th 2017 + + + + + +IN MAY 2013 Gloria James borrowed $200 from Loan Till Payday, a lender near her home in Wilmington, Delaware. Rather than take out a one- or two-month loan for a $100 fee, as she had done several times before, she was offered a one-year loan that would set her back $1,620 in interest, equivalent to an annual rate of 838%. Ms James, a housekeeper making $12 an hour, agreed to the high-interest loan but quickly fell behind on her payments. After filing a lawsuit in federal court, a Delaware judge ruled that the loan in question was not only illegal but “unconscionable”. + +Her story is remarkably common. Americans who live pay cheque to pay cheque have few places to turn when they are in financial distress. Many rely on high-interest payday loans to stay afloat. But government efforts to crack down on the $40bn industry may be having an effect. + + + +Roughly 2.5m American households, about one in 50, use payday loans each year, according to government statistics. The typical loan is $350, lasts two weeks, and costs $15 for each $100 borrowed. Although payday loans are marketed as a source of short-term cash to be used in financial emergencies, they are often used to meet chronic budget shortfalls—in 2015 more borrowers in California took out ten payday loans than took out one. Critics say the industry dupes its vulnerable customers into paying high fees and interest rates. And yet surveys show its customers are mostly satisfied, because payday loans are easy and convenient. + +Regulation of payday lending in America has historically been the responsibility of states. Over a dozen use interest-rate caps to, in effect, ban payday loans. But lenders can get around these laws by registering as “credit service organisations”, relocating to other states, or even working with Native American tribes to claim sovereign immunity. + +At the federal level, Congress passed the Military Lending Act in 2006, capping loan rates to service members at 36%. More recently, the Department of Justice launched “Operation Choke Point”, an effort to press banks into severing ties with businesses at risk of money-laundering, payday lenders among them. But the real crackdown on payday lending could come if the Consumer Finance Protection Bureau (CFPB), a watchdog, implements new regulations on high-interest loans. The rules include underwriting standards and other restrictions designed to keep borrowers out of debt; the CFPB estimates that they could reduce payday-loan volumes by more than 80%. + +The threat of regulation may already have had an effect. The Centre for Financial Services Innovation, a non-profit group, reckons that payday-loan volumes have fallen by 18% since 2014; revenues have dropped by 30%. During the first nine months of 2016, lenders shut more than 500 stores and total employment in the industry fell by 3,600, or 3.5%. To avoid the new rules, lenders are shifting away from lump-sum payday loans toward instalment loans, which give borrowers more time to get back on their feet. + +It would be premature to celebrate the demise of payday lenders. The Trump administration is likely to block the CFPB’s new regulations. And even if the rules are pushed through, consumers may not be better off. Academic research on payday-lending regulation is mixed, with some studies showing benefits, others showing costs, and still others finding no consumer-welfare effects at all. A forthcoming paper by two economists at West Point concludes that the Military Lending Act yielded “no significant benefits to service members”. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21720297-regulators-squeeze-industry-payday-lending-declining/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Lacking judgment + +The president of the Richmond Fed resigns + + +Jeffrey Lacker admits to playing a role in the leak of confidential information + +Apr 6th 2017 | WASHINGTON, DC + + + + + +FOR almost five years inquiries have sought to establish how Medley Global Advisors, a research firm, revealed details of Federal Reserve minutes a day before they were publicly released in October 2012. On April 4th the saga took a sudden twist when Jeffrey Lacker, president of the Richmond Fed (and hence a member of the committee that sets interest rates), quit over the leak. + +Mr Lacker spoke to Medley the day before it published its note, in which it revealed that there was “intense debate” within the Fed over the third stage of its quantitative-easing programme, that the central bank was poised to buy more Treasury bonds at a later date, and that the Fed had mulled a promise not to raise interest rates until unemployment fell below 6.5%. (Both the bond-buying and the promise did later happen.) According to Mr Lacker, who was the meeting’s sole dissenter, when Medley mentioned confidential information on the call he “did not refuse or express his inability to comment and the interview continued”. This, he said, “could have been taken…as an acknowledgment or confirmation of the information.” + + + +During an internal review into the leak in 2012 Mr Lacker kept mum about the fact that Medley had raised confidential information on the call. He revealed all only in 2015, during an investigation by external bodies including the FBI. His resignation comes six months before he was due to retire anyway. His lawyer told the New York Times that “no charges will be brought and the investigation as to him is complete.” + +Because he ran a regional Fed, Mr Lacker’s exit does not add to the list of vacancies at the central bank which President Donald Trump has to fill. This includes one left by Daniel Tarullo, the de facto vice-chairman for bank supervision, who departed as planned on April 5th. Like all regional-bank presidents, Mr Lacker’s successor will be chosen by a board of directors, some of whom are appointed by private banks. (Campaigners have long said that this is one of several ways in which the Fed is too cosy with the financial industry.) + +The affair has been an embarrassment for the central bank, which has puzzled over how to reconcile its desire to talk to market participants with the need not to reveal confidential information. In 2011 it issued guidance urging rate-setters to avoid conversations that might appear to give any firm an inside edge. This seems to suggest that Mr Lacker should not have been on the phone with Medley in the first place. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21720302-jeffrey-lacker-admits-playing-role-leak-confidential-information/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Free exchange + +How Chávez and Maduro have impoverished Venezuela + + +Over the past year 74% of Venezuelans lost an average of 8.7kg in weight + +Apr 6th 2017 + + + + + +IT IS hard to convey the severity of Venezuela’s unfolding crisis. Its extent is astounding: the economy shrank by 10% last year, and will be 23% smaller than in 2013 by the end of this year, according to IMF forecasts. Inflation may exceed 1,600% this year. The human details are more poignant: over the past year around three-quarters of Venezuelans have lost weight, averaging 8.7kg per person, because of a scarcity of food. No war, foreign or civil, is to blame for this catastrophe. Venezuela did this to itself. And its woes are deepening, as the regime of President Nicolás Maduro lurches towards dictatorship. Fifty years ago, Venezuela was an example to the rest of Latin America, a relatively stable democracy and not much poorer than Britain. How did this tragedy occur? + +Venezuela’s economy is built on oil—its leaders boast it has the world’s largest proven reserves—and it is tempting to blame fickle crude prices for its woes. Oil accounts for more than 90% of Venezuelan exports. It helps to fund the government budget and provides the foreign exchange that the country needs to import consumer goods. Nearly everything of consequence in the economy, from toilet paper to trousers, is imported from abroad. + + + +As oil prices soared in the 2000s, Venezuela found itself awash in cash. In 2014 the boom ended. The volume of dollars flowing into the country tumbled, presenting the new government of Nicolás Maduro, who had taken over after Hugo Chávez’s death, with an unappetising menu of options. He could have allowed the currency, the bolívar, to tumble in value. Yet prices for imported goods would have soared as a result, the market’s way of curtailing Venezuelan demand for products it no longer had the dollars to afford. Soaring prices would have violated the egalitarian spirit of Venezuela’s Bolivarian government. + +More important, it would have made the new president unpopular. Instead, Mr Maduro kept the wildly overvalued official exchange rate and rationed imports by tightening the government’s control over access to hard currency. From early in the Chávez era, the government controlled the flow of dollars earned by the oil industry; importers had to prove they were trying to bring in something of value before being allowed to swap bolívars for greenbacks. Mr Maduro tightened the screws. + +The effect was not as intended. As the flow of imports dried up, prices rose. Mr Maduro tried price controls; supply either evaporated or moved to the black market in response. The government’s fiscal troubles added to the mess. With oil revenues slashed by half and the government deficit soaring, Mr Maduro might have opted to cut spending and broaden the tax base. But such measures must have looked like political poison to a freshly anointed president. Instead, Venezuela turned to the printing press to cover its bills. Devastatingly high inflation is further undermining the workings of the economy. + +So oil is merely a scapegoat in Venezuela’s tragedy. Economic dependence on oil is always fraught. Soaring oil prices place upward pressure on the exchange rate, leaving other, non-oil industries at a competitive disadvantage. That deepens an oil-exporting economy’s dependence on crude, worsening the pain when prices eventually fall. Governments of oil-exporting countries know this, and often try to mitigate the risk. When times are good, some use inflows of hard currency to build up foreign-exchange reserves, which can be drawn down later to cover foreign-currency obligations and import bills; Saudi Arabia holds reserves worth more than $500bn, for example. Others use oil profits to fill sovereign-wealth funds, which invest in a diversified portfolio in order to reduce the economy’s long-run exposure to petroleum. Norway’s fund, which is intended to help pay for state pensions, is worth nearly $900bn. + +Chávez had the good fortune to take office at the tail end of a two-decade swoon in oil prices, and to preside over a price surge. The money that came to Chávez, he spent. From 2000 to 2013, spending as a share of GDP rose from 28% to 40%: a much bigger rise than in Latin America’s other large economies. Spending crowded out growth in foreign-exchange reserves. In 2000 Venezuela had enough reserves to cover more than seven months of imports; that dropped to under three months by 2013 (over the same period Russia’s reserves grew from five months of import cover to ten, and Saudi Arabia’s from four months to 37). + +Why did Chávez not leave Venezuela better prepared for the inevitable crash? In his version of events, Venezuelans fared poorly during the long oil bust from 1979 to his ascent in 1999 not because crude was cheap but because capitalists robbed the people of their due. During his rule, Chávez increased public spending on social programmes and expanded subsidies for food and energy. Venezuelans felt the results, in higher incomes and improved standards of living. Chávez delivered, for a time. + +Yet this narrative was always false. Those in power always have a greater incentive to buy off political threats than to invest in projects that will only bear fruit over time, possibly after they have gone. In oil-rich economies, they also have the means. Chávez expropriated and redistributed wealth to weaken enemies and woo allies. In his careless economic management, he undercut the oil wealth that funded Venezuelan socialism. His assaults on private firms left the country short of the expertise and capital needed to develop its resources. In recent years it has produced less oil than China and a quarter of the output of Saudi Arabia. Venezuela ate its seed corn despite record harvests. + +Darkness drops again + +Venezuela was once the envy of Latin America, until a long stagnation in living standards brought a populist strongman to power. But popularity is hard to maintain. The greater the desperation of the populist, the greater the willingness to accept long-run risks in exchange for short-run pay-offs. Whether or not the populist survives to see it, the day of reckoning eventually arrives. And it is always the people that suffer most. + +Visit our Free exchange economics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21720289-over-past-year-74-venezuelans-lost-average-87kg-weight-how/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Science and technology + + +Computer security: Why everything is hackable [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Why everything is hackable + +Computer security is broken from top to bottom + + +As the consequences pile up, things are starting to improve + +Apr 8th 2017 + + + + + +OVER a couple of days in February, hundreds of thousands of point-of-sale printers in restaurants around the world began behaving strangely. Some churned out bizarre pictures of computers and giant robots signed, “with love from the hacker God himself”. Some informed their owners that, “YOUR PRINTER HAS BEEN PWND’D”. Some told them, “For the love of God, please close this port”. When the hacker God gave an interview to Motherboard, a technology website, he claimed to be a British secondary-school pupil by the name of “Stackoverflowin”. Annoyed by the parlous state of computer security, he had, he claimed, decided to perform a public service by demonstrating just how easy it was to seize control. + +Not all hackers are so public-spirited, and 2016 was a bonanza for those who are not. In February of that year cyber-crooks stole $81m directly from the central bank of Bangladesh—and would have got away with more were it not for a crucial typo. In August America’s National Security Agency (NSA) saw its own hacking tools leaked all over the internet by a group calling themselves the Shadow Brokers. (The CIA suffered a similar indignity this March.) In October a piece of software called Mirai was used to flood Dyn, an internet infrastructure company, with so much meaningless traffic that websites such as Twitter and Reddit were made inaccessible to many users. And the hacking of the Democratic National Committee’s e-mail servers and the subsequent leaking of embarrassing communications seems to have been part of an attempt to influence the outcome of the American elections. + + + +Away from matters of great scale and grand strategy, most hacking is either show-off vandalism or simply criminal. It is also increasingly easy. Obscure forums oil the trade in stolen credit-card details, sold in batches of thousands at a time. Data-dealers hawk “exploits”: flaws in code that allow malicious attackers to subvert systems. You can also buy “ransomware”, with which to encrypt photos and documents on victims’ computers before charging them for the key that will unscramble the data. So sophisticated are these facilitating markets that coding skills are now entirely optional. Botnets—flocks of compromised computers created by software like Mirai, which can then be used to flood websites with traffic, knocking them offline until a ransom is paid—can be rented by the hour. Just like a legitimate business, the bot-herders will, for a few dollars extra, provide technical support if anything goes wrong. + +The total cost of all this hacking is anyone’s guess (most small attacks, and many big ones, go unreported). But all agree it is likely to rise, because the scope for malice is about to expand remarkably. “We are building a world-sized robot,” says Bruce Schneier, a security analyst, in the shape of the “Internet of Things”. The IoT is a buzz-phrase used to describe the computerisation of everything from cars and electricity meters to children’s toys, medical devices and light bulbs. In 2015 a group of computer-security researchers demonstrated that it was possible to take remote control of certain Jeep cars. When the Mirai malware is used to build a botnet it seeks out devices such as video recorders and webcams; the botnet for fridges is just around the corner. + +Not OK, computer + +“The default assumption is that everything is vulnerable,” says Robert Watson, a computer scientist at the University of Cambridge. The reasons for this run deep. The vulnerabilities of computers stem from the basics of information technology, the culture of software development, the breakneck pace of online business growth, the economic incentives faced by computer firms and the divided interests of governments. The rising damage caused by computer insecurity is, however, beginning to spur companies, academics and governments into action. + +Modern computer chips are typically designed by one company, manufactured by another and then mounted on circuit boards built by third parties next to other chips from yet more firms. A further firm writes the lowest-level software necessary for the computer to function at all. The operating system that lets the machine run particular programs comes from someone else. The programs themselves from someone else again. A mistake at any stage, or in the links between any two stages, can leave the entire system faulty—or vulnerable to attack. + +It is not always easy to tell the difference. Peter Singer, a fellow at New America, a think-tank, tells the story of a manufacturing defect discovered in 2011 in some of the transistors which made up a chip used on American naval helicopters. Had the bug gone unspotted, it would have stopped those helicopters firing their missiles. The chips in question were, like most chips, made in China. The navy eventually concluded that the defect had been an accident, but not without giving serious thought to the idea it had been deliberate. + +Most hackers lack the resources to mess around with chip design and manufacture. But they do not need them. Software offers opportunities for subversion in profusion. In 2015 Rachel Potvin, an engineer at Google, said that the company as a whole managed around 2bn lines of code across its various products. Those programs, in turn, must run on operating systems that are themselves ever more complicated. Linux, a widely used operating system, clocked in at 20.3m lines in 2015. The latest version of Microsoft’s Windows operating system is thought to be around 50m lines long. Android, the most popular smartphone operating system, is 12m. + + + +Getting each of those lines to interact properly with the rest of the program they are in, and with whatever other pieces of software and hardware that program might need to talk to, is a task that no one can get right first time. An oft-cited estimate made by Steve McConnell, a programming guru, is that people writing source code—the instructions that are compiled, inside a machine, into executable programs—make between ten and 50 errors in every 1,000 lines. Careful checking at big software companies, he says, can push that down to 0.5 per 1,000 or so. But even this error rate implies thousands of bugs in a modern program, any one of which could offer the possibility of exploitation. “The attackers only have to find one weakness,” says Kathleen Fisher, a computer scientist at Tufts University in Massachusetts. “The defenders have to plug every single hole, including ones they don’t know about.” + +All that is needed is a way to get the computer to accept a set of commands that it should not. A mistake may mean there are outcomes of a particular command or sequence of commands that no one has foreseen. There may be ways of getting the computer to treat data as instructions—for both are represented inside the machine in the same form, as strings of digits. “Stackoverflowin”, the sobriquet chosen by the restaurant-printer hacker, refers to such a technique. If data “overflow” from a part of the system allocated for memory into a part where the machine expects instructions, they will be treated as a set of new instructions. (It is also possible to reverse the process and turn instructions into unexpected streams of data. In February researchers at Ben-Gurion University, in Israel, showed that they could get data out of a compromised computer by using the light that shows whether the hard drive is working to send those data to a watching drone.) + +Shutting down every risk of abuse in millions of lines of code before people start to use that code is nigh-on impossible. America’s Department of Defence (DoD), Mr Singer says, has found significant vulnerabilities in every weapon system it examined. Things are no better on civvie street. According to Trustwave, a security-research firm, in 2015 the average phone app had 14 vulnerabilities. + +Karma police + +All these programs sit on top of older technologies that are often based on ways of thinking which date back to a time when security was barely a concern at all. This is particularly true of the internet, originally a tool whereby academics shared research data. The first versions of the internet were policed mostly by consensus and etiquette, including a strong presumption against use for commercial gain. + +When Vint Cerf, one of the internet’s pioneers, talked about building encryption into it in the 1970s he says his efforts were blocked by America’s spies, who saw cryptography as a weapon for nation-states. Thus, rather than being secure from the beginning, the net needs a layer of additional software half a million lines long to keep things like credit-card details safe. New vulnerabilities and weaknesses in that layer are reported every year. + +The innocent foundations of many computer systems remain a source for concern. So does the innocence of many users. Send enough people an innocuous-looking e-mail that asks for passwords or contains what look like data, but is in fact a crafty set of instructions, and you have a good chance that someone will click on something that they should not have done. Try as network administrators might to instil good habits in their charges, if there are enough people to probe, the chances of trust, laziness or error letting a malefactor get in are pretty high. + +Good security cultures, both within software developers and between firms and their clients, take time to develop. This is one of the reasons to worry about the Internet of Things. “Some of the companies making smart light bulbs, say, or electricity meters, are not computing companies, culturally speaking,” says Graham Steel, who runs Cryptosense, a firm that carries out automated cryptographic analysis. A database belonging to Spiral Toys, a firm that sells internet-connected teddy bears through which toddlers can send messages to their parents, lay unprotected online for several days towards the end of 2016, allowing personal details and toddlers’ messages to be retrieved. + +Even in firms that are aware of the issues, such as car companies, nailing down security can be hard. “The big firms whose logos are on the cars you buy, they don’t really make cars,” points out Dr Fisher. “They assemble lots of components from smaller suppliers, and increasingly, each of those has code in it. It’s really hard for the car companies to get an overview of everything that’s going in.” + +On top of the effects of technology and culture there is a third fundamental cause of insecurity: the economic incentives of the computer business. Internet businesses, in particular, value growth above almost everything else, and time spent trying to write secure code is time not spent adding customers. “Ship it on Tuesday, fix the security problems next week—maybe” is the attitude, according to Ross Anderson, another computer-security expert at the University of Cambridge. + +The long licence agreements that users of software must accept (almost always without reading them) typically disclaim any liability on the part of a software firm if things go wrong—even when the software involved is specifically designed to protect computers against viruses and the like. Such disclaimers are not always enforceable everywhere. But courts in America, the world’s biggest software market, have generally been sympathetic. This impunity is one reason why the computing industry is so innovative and fast-moving. But the lack of legal recourse when a product proves vulnerable represents a significant cost to users. + +If customers find it hard to exert pressure on companies through the courts, you might expect governments to step in. But Dr Anderson points out that they suffer from contradictory incentives. Sometimes they want computer security to be strong, because hacking endangers both their citizens and their own operations. On the other hand, computers are espionage and surveillance tools, and easier to use as such if they are not completely secure. To this end, the NSA is widely believed to have built deliberate weaknesses into some of its favoured encryption technologies. + +Increasingly paranoid android + +The risk is that anyone else who discovers these weaknesses can do the same. In 2004 someone (no authority has said who) spent months listening to the mobile-phone calls of the upper echelons of the Greek government—including the prime minister, Costas Karamanlis—by subverting surveillance capabilities built into the kit Ericsson had supplied to Vodafone, the pertinent network operator. + +Some big companies, and also some governments, are now trying to solve security problems in a systematic way. Freelance bug-hunters can often claim bounties from firms whose software they find fault with. Microsoft vigorously nags customers to ditch outdated, less-secure versions of Windows in favour of newer ones, though with only limited success. In an attempt to squash as many bugs as possible, Google and Amazon are developing their own versions of standard encryption protocols, rewriting from top to bottom the code that keeps credit-card details and other tempting items secure. Amazon’s version has been released on an “open-source” basis, letting all comers look at the source code and suggest improvements. Open-source projects provide, in principle, a broad base of criticism and improvement. The approach only works well, though, if it attracts and retains a committed community of developers. + +More fundamental is work paid for by the Defence Advanced Research Projects Agency (DARPA), a bit of the DoD that was instrumental in the development of the internet. At the University of Cambridge, Dr Watson has been using this agency’s money to design CHERI, a new kind of chip that attempts to bake security into hardware, rather than software. One feature, he says, is that the chip manages its memory in a way that ensures data cannot be mistaken for instructions, thus defanging an entire category of vulnerabilities. CHERI also lets individual programs, and even bits of programs, run inside secure “sandboxes”, which limit their ability to affect other parts of the machine. So even if attackers obtain access to one part of the system, they cannot break out into the rest. + +Sandboxing is already used by operating systems, web browsers and so on. But writing sandboxing into software imposes performance penalties. Having a chip that instantiates the idea in hardware gets around that. “We can have a web browser where every part of a page—every image, every ad, the text, and so on—all run in their own little secure enclaves,” says Dr Watson. His team’s innovations, he believes, could be added fairly easily to the chips designed by ARM and Intel that power phones and laptops. + + + +Another DARPA project focuses on a technique called “formal methods”. This reduces computer programs to gigantic statements in formal logic. Mathematical theorem-proving tools can then be applied to show that a program behaves exactly as its designers want it to. Computer scientists have been exploring such approaches for years, says Dr Fisher, but it is only recently that cheap computing power and usable tools have let the results be applied to pieces of software big enough to be of practical interest. In 2013 Dr Fisher’s team developed formally verified flight-control software for a hobbyist drone. A team of attackers, despite being given full access to the drone’s source code, proved unable to find their way in. + +“It will be a long time before we’re using this stuff on something as complicated as a fully fledged operating system,” says Dr Fisher. But she points out that many of the riskiest computing applications need only simple programs. “Things like insulin pumps, car components, all kinds of IoT devices—those are things we could look at applying this to.” + +Most fundamental of all, though, is the way in which markets are changing. The ubiquity of cyber-attacks, and the seeming impossibility of preventing them, is persuading big companies to turn to an old remedy for such unavoidable risks: insurance. “The cyber-insurance market is worth something like $3bn-4bn a year,” says Jeremiah Grossman of SentinelOne, a company which sells protection against hacking (and which, unusually, offers a guarantee that its solutions work). “And it’s growing at 60% a year.” + +As the costs of insurance mount, companies may start to demand more from the software they are using to protect themselves, and as payouts rise, insurers will demand the software be used properly. That could be a virtuous alignment of interests. A report published in 2015 by PwC, a management consultancy, found that a third of American businesses have cyber-insurance cover of some kind, though it often offers only limited protection. + +But it is the issue of software-makers’ liability for their products that will prove most contentious. The precedents that lie behind it belong to an age when software was a business novelty—and when computers dealt mostly with abstract things like spreadsheets. In those days, the issue was less pressing. But in a world where software is everywhere, and computerised cars or medical devices can kill people directly, it cannot be ducked for ever. + +“The industry will fight any attempt to impose liability absolutely tooth and nail,” says Mr Grossman. On top of the usual resistance to regulations that impose costs, Silicon Valley’s companies often have a libertarian streak that goes with roots in the counterculture of the 1960s, bolstered by a self-serving belief that anything which slows innovation—defined rather narrowly—is an attack on the public good. Kenneth White, a cryptography researcher in Washington, DC, warns that if the government comes down too hard, the software business may end up looking like the pharmaceutical industry, where tough, ubiquitous regulation is one reason why the cost of developing a new drug is now close to a billion dollars. There is, then, a powerful incentive for the industry to clean up its act before the government cleans up for it. Too many more years like 2016, and that opportunity will vanish like the contents of a hacked bank account. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21720268-consequences-pile-up-things-are-starting-improve-computer-security/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Books and arts + + +Religion in America: The good-news bearers [Thu, 06 Apr 16:55] + +Markets: Evolving ideas [Thu, 06 Apr 16:55] + +Cognitive science: Mind meld [Thu, 06 Apr 16:55] + +Political manifestos: Time to smash the system [Thu, 06 Apr 16:55] + +French fiction: Yearning in the sandstorm [Thu, 06 Apr 16:55] + +Art festivals: Athens on display [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Christian soldiers + +How America’s evangelicals became a potent force + + +A new history of “the most American religious group”, from the Great Awakening to the Reagan coalition and beyond + +Apr 6th 2017 + + + + + +The Evangelicals: The Struggle to Shape America. By Frances FitzGerald. Simon & Schuster; 740 pages; $35. + +VISIT an evangelical church in America on a Sunday morning, and you are likely to be embraced, perhaps literally, by fellow worshippers, then impressed by the pastor’s scriptural exegesis. Depending on his text, and on the news, he may remind his flock that the devil walks among them, and of the risk—a perennial one for white evangelicals, as Frances FitzGerald’s timely and enlightening book makes clear—that depravity may turn God away from their country. Yet in November four out of five of these decorous, Bible-loving Christians voted for an adulterous reality-television star who has said he has never sought divine forgiveness. + + + +White evangelicals make up around a fifth of America’s population, yet four decades after they became a central feature of public life they continue to baffle their compatriots. “The Evangelicals” was written before Donald Trump’s victory, but it illuminates these contradictions. Ms FitzGerald, a Pulitzer prizewinning historian, shows how the rise of evangelical creeds, during the Great Awakenings of the 18th and 19th centuries, was itself a sort of populist revolt, by “a folk religion characterised by disdain for authority and tradition”. It was not only anti-elitist but anti-intellectual, “a religion of the heart, as opposed to the head”, in which puritanical harangues were leavened by the promise of a widely shared salvation and, after a born-again experience, a direct relationship with God. + +Spread, often, by untutored preachers using vernacular storytelling, this was an insurgent faith suited to the frontier. Today its adherents seem sceptical of religious tolerance, but initially they advocated it, so as to compete with established churches. Rival attitudes to that kind of activism—whether to withdraw from the secular world and patiently await the Rapture, or to engage in the hope of speeding it along—form one of the axes around which Ms FitzGerald’s narrative turns. The others include the tensions between the North and the evangelical heartland of the South, the argument over the fundamentalist belief in biblical inerrancy and the ongoing dispute over whether America should be a light unto the nations or an isolated refuge of piety. + +Ms FitzGerald explains how, along with these internal conflicts, urbanisation, war and immigration shaped the evangelical world, just as evangelicals, “the most American of religious groups”, helped to shape the nation. She concentrates, topically, on the rise of the evangelical right. Fundamentalism, she says, seemed to have been routed at the Scopes monkey trial of 1925, when William Jennings Bryan failed to defend the Bible’s literal truth, or so many bystanders reckoned. But it recovered in the general religious boom after the second world war, energised by celebrity revivalists, above all Billy Graham, and by the dizzying social advances of the following decades, which many pastors vehemently resisted. + +The presidential campaign of 1980, starring “a divorced former Hollywood actor who rarely attended church”, saw an alliance emerge between Jerry Falwell’s Moral Majority and the Republican Party; the relationship between the party and the Christian right has since wavered between passion and wariness, taking a toll on both sides. Falwell may be the book’s single most important character. He not only led white evangelicals into mainstream politics, Ms FitzGerald writes, but injected the evangelical mode of thinking with them. Waging “holy war” against secular humanism, he “introduced the fundamentalist sense of perpetual crisis, and of war between the forces of good and evil”. + +Falwell is also a good example of Ms FitzGerald’s method, and its success. This is a monumental study. Some of its detail—such as the varieties of religious experience that evangelical churches encompass, from Pentecostal charismatics and snake-handlers to the prosperity gospel—is gripping. Some of the theological rows, for example over the precise sequencing of the Apocalypse and the Second Coming, may weary lay readers. But the engines of her book, as of its subject, are the lives of leaders such as Falwell. His hard-living father, Carey Falwell, once killed an employee’s cat and fed it to him as squirrel stew, and threw a drunkard into a cage with a bear. + +Circuit-riding preachers, megachurch pastors, millionaire televangelists who traded on their audiences’ willingness to suspend disbelief: she sketches her characters in gory technicolour. She is droll about their chicanery and non-judgmental about their conspiracy theories, prophecies and prejudices. There are fanatics and entrepreneurs, like Pat Robertson, a broadcasting impresario who ran for president in 1988 under the half-familiar slogan, “Restore the Greatness of America Through Moral Strength”. There are charlatans who take to extreme lengths the presumption of forgiveness that is central to their faith’s structure and appeal. These are mercurial, self-invented, quintessentially American lives. + +False idols + +By the administration of George W. Bush, white evangelicals’ favourite president, their political agenda had narrowed. (Abortion, Ms FitzGerald notes, became a preoccupation only in the 1980s.) Partisanship intensified such that “Bill and Hillary Clinton were the Antichrist.” Many evangelicals have become wedded to a seemingly un-Christian social policy that “elevated opposition to higher taxes and [Barack] Obama’s health-care reform to the status of biblical absolutes”. The Supreme Court’s legalisation of gay marriage in 2015 was, for them, a calamity. Meanwhile, despite their egalitarian impulses, these congregations always had an authoritarian, patriarchal bent, the chain of command running from God to husbands and fathers. And so they, and America, arrived at Mr Trump. + +It is a shame that Ms FitzGerald excludes black evangelical churches, with all their struggles and heroism. As she says, “theirs is a different story,” but the two are intertwined—not only in the history of slavery and segregation, both defended by the Southern Baptists, the country’s biggest Protestant denomination (and probably most outsiders’ paradigmatic evangelical church). White and black evangelicals will converge in future as well: as she observes, white congregations are greying, so that, despite the nativism rife in many, their vitality will increasingly depend on attracting black and Hispanic members. + +She does examine the quieter, but burgeoning, Christian left, a movement that emerged in the 1960s, aiming to recapture the spirt of reform that marked earlier evangelical eras. Likewise she refers to the growing subset of thinkers and activists who are orthodox in theology but renounce the bankrupting compact with the Republican Party and the fixation on sexual morality. These groups, who care as much about life after birth as before it, and value justice in the sublunary world as well as salvation in the next, are evangelicals too. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21720263-new-history-most-american-religious-group-great-awakening-reagan/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Wild things + +The evolutionary element of markets + + +Andrew Lo’s theory of how economic actors mimic ecological ones + +Apr 6th 2017 + + + + + +Adaptive Markets: Financial Evolution at the Speed of Thought. By Andrew Lo. Princeton; 483 pages; $37.50 and £31.95. + +ECONOMISTS have been accused of “physics envy”, an obsession with constructing precise mathematical models instead of studying the real, messy, world. But a new book suggests that economists have been looking at the wrong science; they should have focused on biology. + + + +The idea stems from the school of “behavioural economics” which observes that humans are not the kind of hyper-rational calculating machines that some models rely on them to be. As a result, markets are not always “efficient”—accurately pricing all the available information. + +When Andrew Lo was a young academic, he presented a paper at a conference which showed that one of the key assumptions of the efficient market hypothesis was not borne out by the data. He was instantly told that he must have made a programming error; his results could not possibly be right. + +Mr Lo, who is now a professor at MIT, has spent much of his career battling to steer economics away from such narrow-minded thinking. His grand idea is the “adaptive markets hypothesis”. The actions of individuals are driven by intellectual short cuts—rules of thumb that they use to make decisions. If those decisions turn out badly, they adapt their behaviour and come up with a new rule to follow. + + + +The theory is bolstered by experiments that show how humans make decisions. Psychological quirks include an unwillingness to take losses and a tendency to make patterns out of random data. These traits may once have been useful in evolutionary terms (that rustle in the bushes might not be a predator, but better safe than sorry) but are less helpful when making financial decisions. + +Research has also shown what happens inside our brains when we make decisions. Winning money has the same effect on a brain as a cocaine addict getting a fix, while losing money has the same effect on risk-averse people as a nasty smell or pictures of bodily mutilation. Furthermore, it seems that emotion plays a significant part in gauging risks, and not always a negative one, acting as a “reward-and-punishment system that allows the brain to select an advantageous behaviour”. If we do not fear the consequences of failure, we may act irresponsibly, just as small children need to learn to be wary of cars before crossing the road. Studies of people with brain damage show that “when the ability to experience emotions is removed, human behaviour becomes less rational.” + +When we apply our behavioural quirks to the markets, the result is a kind of fast-track evolution in which investment strategies are tested in a fast-changing environment. Mr Lo describes the hedge-fund industry as the “Galapagos islands of finance”; many thousands have been set up but the extinction rate is very high. + +The theory may also explain why the economy can see long periods of stability followed by sudden crisis. Mr Lo writes that “Economic expansions and contractions are the consequences of individuals and institutions adapting to changing financial environments, and bubbles and crashes are the result when the change occurs too quickly.” + +The same process of adaptation occurs between the finance industry and its regulators, with the regulators always one evolutionary step behind the regulated. One answer, suggests Mr Lo, is to create a financial equivalent of America’s National Transportation Safety Board (NTSB). Because the NTSB is not itself a regulator, it feels able to criticise both transport companies and regulations; that makes its conclusions genuinely independent. + +Mr Lo makes a convincing argument and he also uses the book to lay out some interesting ideas—such as a huge, diversified fund that would invest in a range of potential cancer treatments. But while readers may nod their heads in agreement with the author, it is not clear what they should do next. The adaptive-markets theory does not really produce any testable propositions, or market-beating strategies. And regulators might benefit from his suggestions on monitoring financial risk but might still struggle to know what to do in response. Perhaps that is the point; evolution doesn’t have an end game in mind. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21720258-andrew-los-theory-how-economic-actors-mimic-ecological-ones-evolutionary-element/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Crowd force + +You’re not as smart as you think you are + + +Human cleverness arises from distributing knowledge between minds, making people think they know more than they do + +Apr 8th 2017 + + + + + +The Knowledge Illusion: Why We Never Think Alone. By Steven Sloman and Philip Fernbach. Riverhead; 296 pages; $28. Macmillan; £18.99. + +DO YOU know how a toilet works? What about a bicycle, or a zipper? Most people can provide half answers at best. They struggle to explain basic inventions, let alone more complex and abstract ones. Yet somehow, in spite of people’s ignorance, they created and navigate the modern world. A new book, “The Knowledge Illusion” sets out to tackle this apparent paradox: how can human thinking be so powerful, yet so shallow? + + + +Steven Sloman and Philip Fernbach, two cognitive scientists, draw on evolutionary theory and psychology. They argue that the mind has evolved to do the bare minimum that improves the fitness of its host. Because humans are a social species and evolved in the context of collaboration, wherever possible, abilities have been outsourced. As a result, people are individually rather limited thinkers and store little information in their own heads. Much knowledge is instead spread through the community—whose members do not often realise that this is the case. + +The authors call this the illusion of understanding, and they demonstrate it with a simple experiment. Subjects are asked to rate their understanding of something, then to write a detailed account of it, and finally to rate their understanding again. The self-assessments almost invariably drop. The authors see this effect everywhere, from toilets and bicycles to complex policy issues. The illusion exists, they argue, because humans evolved as part of a hive mind, and are so intuitively adept at co-operation that the lines between minds become blurred. Economists and psychologists talk about the “curse of knowledge”: people who know something have a hard time imagining someone else who does not. The illusion of knowledge works the other way round: people think they know something because others know it. + +The hive mind, with its seamless interdependence and expertise-sharing, once helped humans hunt mammoths and now sends them into space. But in politics it causes problems. Using a toilet without understanding it is harmless, but changing the health-care system without understanding it is not. Yet people often have strong opinions about issues they understand little about. And on social media, surrounded by like-minded friends and followers, opinions are reinforced and become more extreme. It is hard to reason with someone under the illusion that their beliefs are thought through, and simply presenting facts is unlikely to change beliefs when those beliefs are rooted in the values and groupthink of a community. + +The authors tentatively suggest that making people confront the illusion of understanding will temper their opinions, but this could have the opposite effect—people respond badly to feeling foolish. Messrs Sloman and Fernbach show how deep the problem runs, but are short on ideas to fix it. + +“The Knowledge Illusion” is at once both obvious and profound: the limitations of the mind are no surprise, but the problem is that people so rarely think about them. However, while the illusion certainly exists, its significance is overstated. The authors are Ptolemaic in their efforts to make it central to human psychology, when really the answer to their first question—how can human thought be so powerful, yet so shallow?—is the hive mind. Human ignorance is more fundamental and more consequential than the illusion of understanding. But still, the book profits from its timing. In the context of partisan bubbles and fake news, the authors bring a necessary shot of humility: be sceptical of your own knowledge, and the wisdom of your crowd. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21720262-human-cleverness-arises-distributing-knowledge-between-minds-making-people-think/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Manifesto man + +Douglas Carswell against the world + + +The independent MP bashes established parties, new radicals, big companies and leftist solutions + +Apr 6th 2017 + + + + + +Rebel: How to Overthrow the Emerging Oligarchy. By Douglas Carswell. Head of Zeus; 386 pages; £18.99. + +DOUGLAS CARSWELL is not playing around when he calls his book “Rebel”, with a clenched fist on the cover. An MP who abandoned the Conservatives for UKIP and has now left UKIP to become an independent, Mr Carswell is as angry with the ruling class as any street-fighting leftist. He is fond of quoting Thomas Piketty, and even admits to cheering when Jeremy Corbyn, a hard-line leftist, was elected leader of the Labour Party. + + + +Mr Carswell thinks that a new oligarchy is the biggest threat to the welfare of mankind. The MP for Clacton is best known as one of the leaders of the campaign to take Britain out of the European Union. But he regards the EU as simply one manifestation of a much bigger problem. Big companies are tightening their hold over the global economy. Established parties are rigging the political system in their own favour. And business and politics are becoming ever more intertwined as companies offer jobs to ex-politicians. Journalists snobbishly dismiss populism as proof that their fellow citizens are bigots rather than as evidence that they are waking up to the fact that the system is rigged. + +Yet Mr Carswell has no time for the leftist solution—enlisting the state to regulate capitalism and redistribute wealth. This will make the problem worse by killing markets (which are the source of human progress) and entrenching political elites (who are the source of decay). He argues instead that crony capitalism needs to be replaced by real capitalism and rigged markets by real markets. The best way to stop bankers from privatising profits and socialising losses is to force them to risk their own capital, perhaps by turning investment banks back into partnerships. The best way to prevent super-companies from consolidating their grip on society is to make it easier for new companies to grow (for example by reducing the length and scope of patents). Mr Carswell is particularly impassioned about breaking up what he sees as political cartels. In his view, established political parties serve the interests of the oligarchy rather than the people. Thankfully modern technology makes it easier for insurgents to start parties from nowhere: Mr Carswell likes to boast of doing for himself, often on his laptop, what the established parties spend millions of dollars failing to do. One video that he made, on the case for Brexit, has been seen by over 1.4m people. + +Mr Carswell concedes that many of the new radicals who have appeared in reaction to the oligarchy are a rum bunch: “the anti-oligarchs—and the chaos, confusion and redistribution of resources that they bring—will make the case for rule by a few.” The electronic revolution needs to be a permanent one not only to overthrow the status quo but to keep the new radicals from wrecking the revolution. + +Mr Carswell makes his case well. He is right that capitalism is going through a worrying period of concentration: the tech oligarchs now enjoy market shares not seen since the days of the robber barons. He is also right that today’s meritocratic elite is hard to stomach, convinced that it deserves everything it has, because it owes its position to merit, and is addicted to self-righteous posturing. He sees many of the new radicals as little better: one reason he joined UKIP was to keep Brexit from being dominated in the public mind by the clownish Nigel Farage. But he is wrong to think that people-power is the answer. There is a good reason that America’s Founding Fathers, whom Mr Carswell so admires, built up checks and balances to the will of the people: the people are often moved by short-term passions, swayed by demagogues, deceived by rumours. Crowds are often mad rather than wise. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21720261-independent-mp-bashes-established-parties-new-radicals-big-companies-and-leftist/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Orientalists reply + +Mathias Enard’s love song for the East + + +The Frenchman’s prizewinning novel is an epic wrangle over passion for a foreign culture + +Apr 8th 2017 + + + + + +Compass. By Mathias Enard. Translated by Charlotte Mandell. New Directions; 464 pages $26.95. Fitzcarraldo Editions; £14.99. + +“THE East is a career,” wrote Disraeli in his novel “Tancred”. Lately, the Western devotion to that compass-point has fallen into intellectual disrepute. Critics such as Edward Said (who took Disraeli’s axiom as an epigraph to his influential study, “Orientalism”) have indicted scholars and travellers as the outriders of a predatory imperialism in Asia and the Middle East. “Compass”, Mathias Enard’s epic wrangle over the meanings of a passion for the East, won the Prix Goncourt in 2015, has been long-listed for the Man Booker International prize, and has just been published in English. The novel offers both a celebration and interrogation of the Orientalist imagination. With its torrential erudition, Mr Enard’s insomniac monologue has inspired plaudits—and perplexity. “Desire for the Orient”, admits Mr Enard’s narrator, after citing Flaubert’s erotic escapades in Egypt, “is also a carnal desire.” + + + +Mr Enard, an Arabic and Persian specialist, makes his lover of the East, Franz Ritter, a thwarted musicologist in Vienna. Over one delirious night, struck down by a mysterious ailment, Franz remembers perilous research trips to Aleppo and Palmyra (today, his beloved sites are “burning or burnt” by civil war), and to revolutionary Tehran. He re-imagines the lives of Orient-struck writers such as Goethe and Heine, or intrepid voyagers such as Jane Digby and Lady Hester Stanhope. And he evokes Orientalism as “reverie”, as “lament”; as “a forever disappointing exploration”. + +Above all, Franz pines for his lost Sarah, a scholar from Paris who has adopted Buddhism and fled to Borneo. Like him, Sarah believes not in an archetypal West and East but in a two-way traffic of “sharing and continuity”. For all its sandstorm of scholarship, translated with tireless eloquence by Charlotte Mandell, “Compass” aches with that simple yearning. “Only love” of a person or a culture, thinks Franz under the stars of Syria, “opens us up to the other”. The narrator, whose wit sparkles beneath a burden of learning and loneliness, also tells us what happens when Said’s name crops up among his prickly band of Orientalists: “It was like invoking the Devil in a Carmelite convent.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21720259-frenchmans-prizewinning-novel-epic-wrangle-over-passion-foreign/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Connoisseurs or colonists? + +Documenta’s controversial stay in Athens + + +The five-yearly art exhibition, normally held only in Kassel, provokes excitement and accusations in Greece + +Apr 6th 2017 + + + + + +THE confluence of cutting-edge European art shows that take place in the same year only once every decade kicks off this month with the opening of the five-yearly Documenta exhibition. Usually sited only in Kassel, Documenta this year will start off on April 8th in Athens—the grimy but resilient survivor of an economic crisis that has already lasted nearly as long as America’s Great Depression—and get going in the German city only later, in June. (The other two big shows of the year are the Venice Biennale, which opens in May, and an exhibition of sculpture that will be unveiled in Münster in June.) + +Documenta will bring plenty of well-heeled tourists to Greece. It should also help the new state museum of contemporary art, known as EMST, the show’s main venue, carve out a space on Europe’s arts map. Other cash-strapped Greek museums will also get a boost from hosting Documenta’s works. And Katerina Koskina, EMST’s director, hopes that the attention will also bring attention to Greece’s contemporary-art scene. + + + +George Kaminis, the mayor of Athens, has made several public spaces available for performance-art pieces, which will dominate the first week of the exhibition, a nod at the growing popularity throughout the art world of audience participation. In Kotzia Square, flanked by elegant 19th-century buildings, Rasheed Araeen, a Pakistani artist, will invite people to share a meal under canopies inspired by a traditional Pakistani wedding tent. It will attract not only art-lovers but some of the more than 20,000 hard-pressed Athenians who eat at soup kitchens every day. And Mary Zygouri, a Greek artist, will show a film and stage a performance in Kokkinia, a left-wing industrial neighbourhood associated with Nazi executions of Greek resistance fighters. Ms Zygouri’s film will draw on one provocatively put on in 1979 by Maria Karavela at a memorial to the resistance. + +Some artists have tried to link the host cities. Marta Minujín, an Argentine artist, has gathered once-banned books in both Kassel and Athens to rebuild her “Parthenon of Books” (pictured), a work from 1983, in Kassel. A Greek airline will run regular flights between the two cities. But despite the best intentions, Documenta stirs mixed emotions in Athens. Yanis Varoufakis, the controversial former finance minister, calls it “disaster tourism”. Athenians complain of “colonial attitudes” shown by the organisers. “It’s hard to avoid the feeling Greece’s misery is being exploited by Documenta,” says a gallery owner. Fraught relations between Greece and Germany add to the tension. Alexis Tsipras, the left-wing prime minister, has moderated his anti-European rhetoric but to many Greeks, Germany is on a mission to throw the country out of the euro, however hard it tries to implement tough reforms demanded by creditors. Documenta’s advance guard says there will be plenty of good art on display, but only if it helps visitors reimagine the world around them will it have truly succeeded. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21720260-five-yearly-art-exhibition-normally-held-only-kassel-provokes-excitement-and/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Obituary + + +David Rockefeller: Tunnels of influence [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Tunnels of influence + +Obituary: David Rockefeller died on March 20th + + +The banker and philanthropist was 101 + +Apr 8th 2017 + + + + + +WHEREVER he went in the world—and in his 35 years at Chase Manhattan Bank, from 1946 to 1981, he ran up 5m air miles—David Rockefeller carried a small jar in his pocket. It was in case he found a beetle on the way. From the age of seven, partly from his own solitary, careful catching, partly from expeditions he sponsored, he built up a collection of 90,000 specimens from 2,000 species, carefully labelled and stored in airtight hardwood boxes at the 3,400-acre family place in Pocantico Hills. His preference was for wood-borers, leaf-cutters and tunnellers, whose industrious activity changed the world in ways few people saw. + +Networks, part-public, part hidden, were his speciality. As a Rockefeller, whose millions had bolstered Rockefeller University and the Rockefeller Centre and whose Picassos, Matisses and Cézannes filled the Museum of Modern Art, he was a fixture on the New York social, cultural and political scene. He did great things for the city, helping to revive Lower Manhattan and to build the World Trade Centre; while also holding its feet to the fire, during its bankruptcy in the mid-1970s, by demanding savage budget cuts and the sacking of thousands of workers. From his first job, as secretary to Fiorello La Guardia, every mayor of New York was drawn into his net. + + + +His gaze went much further, however. As an international banker, he strove to give Chase a presence in every corner of the world. Some regimes were risky, to be sure. Some were bloodstained. But if a loan could be carefully crafted and secured, it should be offered. At times, his dogged diplomacy made openings where State Department officials hardly dared to tread. He forged banking deals with Leonid Brezhnev in the Soviet Union and Zhou Enlai in China, as well as with more amenable leaders in every continent except Antarctica. For the sake of “balance” for Chase in the Middle East, he buttered up both Israel and the Arabs. Fidel Castro once bounded across a room, to his embarrassment, to shake his hand. + +Capitalism, American-style, was in his view a gift to the world as well as the grease of his career. The lure of profit created jobs and wealth, and empowered people, as no other system could. No one, therefore, should feel guilty about making money. Certainly “Senior” had not. The grand old man, John D., who sometimes shared his breakfast oatmeal with him, had felt no remorse about dominating the market when he ran Standard Oil. He made his millions but, as a good Baptist, gave away a tenth of it. Young David and his siblings, each heir to a trust containing $16m, were taught that great wealth conferred responsibility. He began by taking Thanksgiving baskets to the poor of New York, toiling up cabbage-reeking stairways with his liveried chauffeur by his side. + +Old-money manners + +He was often offered jobs in public service: treasury secretary, head of the Fed, ambassador to here and there. Both Republican and Democratic presidents asked him; as a moderate Republican of the old (now vanished) style, hating profligacy but with a social conscience, he might have served either. Yet his east-coast old-money manners, and his natural reserve, inclined him to be useful in the private sector. His discreet gathering of contacts had started in the war, when he was sent to Algiers to work for army intelligence: though of junior rank, he soon assembled a list of people who knew what was really going on. He also collected 131 beetles in his jars. + +At Chase, which he headed from 1969 to 1981, he continued the habit of covert operations. His early years there were difficult; he was not considered a “real banker”, had not been through their credit training programme and did not speak their language. Stymied at first in his efforts to expand overseas, but wishing to preserve civility and avoid confrontation, he set up semi-secret planning groups to steer the bank in that direction. A stumble in the mid-1970s saw a steep fall in earnings and a fat portfolio of non-performing loans. This was blamed on his internationalism; but for that he would never apologise. + +Far from it. He was proud to be part of the so-called “secret cabal” that wanted a more integrated global structure, with America at the head of it. This was both in the country’s interest, and its moral obligation. At the Council on Foreign Relations, at Bilderberg meetings, or on the Trilateral Commission which he founded in 1973, he relished discussing world affairs with people of equal quality and influence from North America, Europe and Asia. Their exclusiveness led many people to think these talking shops sinister, or an undisclosed tunnel to power. He found them just an invaluable way of linking the likeminded. + +In all these efforts, he hoped the Rockefeller name would push matters forward. He never thought it a hindrance, though he was sad to note that for a time his children disowned it. With that name he was more apt to get through to people on the telephone. And in order to make his calls, he had amassed a second collection after the Coleoptera at Pocantico Hills: a Rolodex containing 150,000 names, eventually electronic, but originally on cards with handwritten notes of date and place. It was so large that it had its own office, beside his, in the Rockefeller Centre. From that room, his networks crept out to span the world. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/obituary/21720201-banker-and-philanthropist-was-101-obituary-david-rockefeller-died-march-20th/print + + + + + +| Section Menu | Main Menu | + + + + + +| Main menu | Previous section | + +* * * + + + + + +Economic and financial indicators + + +Interactive indicators [Thu, 06 Apr 16:55] + +Output, prices and jobs [Thu, 06 Apr 16:55] + +Trade, exchange rates, budget balances and interest rates [Thu, 06 Apr 16:55] + +The Economist commodity-price index [Thu, 06 Apr 16:55] + +The Economist poll of forecasters, April averages [Thu, 06 Apr 16:55] + +Markets [Thu, 06 Apr 16:55] + + + + + +* * * + + + +| Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21720266/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Output, prices and jobs + + +Apr 8th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21720295-output-prices-and-jobs/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Trade, exchange rates, budget balances and interest rates + + +Apr 8th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21720290-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Economist commodity-price index + + +Apr 8th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21720292-economist-commodity-price-index/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Economist poll of forecasters, April averages + + +Apr 8th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21720293-economist-poll-forecasters-april-averages/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Markets + + +Apr 8th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21720294-markets/print + + + + + +| Section Menu | Main Menu | + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.04.15.txt b/homeworks/B20769/homework1/data2/2017.04.15.txt new file mode 100644 index 0000000..fcf5400 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.04.15.txt @@ -0,0 +1,5693 @@ +2017-04-15 + +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +| Next section | Main menu | + +* * * + + + + + +The world this week + + +Politics this week [Fri, 14 Apr 13:31] + +Business this week [Fri, 14 Apr 13:31] + +KAL’s cartoon [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Politics this week + + +Apr 12th 2017 + + + + + +America’s secretary of state, Rex Tillerson, went to Moscow where he urged the Russians to drop their support for the Assad regime in Syria. The talks came after America fired a barrage of cruise missiles at the Syrian air-force base that had launched a chemical attack that killed at least 85 civilians. The swift American response to Syria’s use of chemical weapons was a surprise, signalling a shift in the Trump administration’s hitherto stand-offish approach. But a meeting of G7 foreign ministers rejected new sanctions against Russia. + +Two bomb attacks at Christian churches in Egypt on Palm Sunday killed at least 44 people. Islamic State claimed responsibility. Egypt’s president declared a three-month state of emergency. + +America may approve the sale of warplanes to Nigeria to assist it in its fight against Boko Haram, a jihadist group. That would reverse America’s previous policy of withholding arms because of concerns about human-rights abuses by the Nigerian army. + +African migrants trying to reach Europe are being taken captive and sold in “slave markets” in Libya, the International Organisation for Migration has said, citing the testimony of victims. + +Hakainde Hichilema, the leader of the main opposition party in Zambia, was arrested on charges of treason. Mr Hichilema lost a presidential election in 2016 by a narrow margin in a poll that he claimed was rigged. + +Sabres are rattling + +China and South Korea agreed that sanctions on North Korea should be stiffened if it conducted another nuclear test. America dispatched what Donald Trump described as an “armada” to nearby waters. North Korea said it was ready to engage in “any mode of war desired” by the United States. + +A military court in Pakistan sentenced an alleged Indian spy to death. It claimed that Kulbhushan Jadhav, an Indian naval officer, had been fomenting terrorism in the state of Balochistan. + +Police and soldiers in the central Philippines clashed with suspected members of Abu Sayyaf, an Islamic terrorist group which normally operates in the south of the country. Five terrorists, three soldiers and a policeman were killed in the fighting. + + + +Judicial executions in 2016 dropped by more than a third against 2015, according to Amnesty. It counted at least 1,032 people who were put to death, down from 1,634. But China, reckoned to be by far the world’s most prolific executioner, was excluded from the tally, because it doesn’t divulge data on death sentences. And a government report suggested that Vietnam, which also keeps executions secret, has been carrying out far more of them than had been assumed. + +Security officials in Beijing announced that they would give rewards of up to 500,000 yuan ($72,400) for information about foreign spies. The capital’s residents were urged to call a hotline should they have any leads. + +The Communist Party chief of China’s southern province of Guangdong, Hu Chunhua, paid his first visit to the village of Wukan, which in recent years has grabbed nationwide attention with its demonstrations by villagers in support of grassroots democracy. In 2016 the authorities began cracking down on the unrest. Mr Hu’s trip was a sign that the party now feels back in control. + +The nuclear option + +Neil Gorsuch was sworn in as a justice on the Supreme Court. The Senate confirmed his nomination after the Republican leadership changed the rules. From now on a president’s appointments to the court will be confirmed by a simple majority, rather than the three-fifths majority required by a filibuster. + +Devin Nunes, the chairman of the House Intelligence Committee, stepped aside from its investigation into links between the Trump campaign and Russian officials. Mr Nunes had come under pressure for his ties to Team Trump. + +Revisionist history + +Marine Le Pen, the presidential candidate of France’s National Front, denied that France was responsible for a round-up of 13,000 Jews who were sent to Nazi concentration camps. She argued that the collaborationist Vichy regime did not represent France. French Jewish groups protested. Though French presidents have said similar things, Ms Le Pen leads a party with a history of outright Holocaust denial. See article. + +Valeriya Gontareva resigned as the governor of Ukraine’s central bank. Ms Gontareva has been credited with stabilising the economy after the Russian annexation of Crimea. She also closed 80 banks for their links to money laundering. But she had received death threats and said that the pressure was unbearable. + + + +In a presumed jihadist attack, a man stole a lorry in Stockholm and drove it into the front of a department store, killing four people. Police arrested an immigrant from Uzbekistan who admitted to committing a terrorist act at a court appearance. + +Keeping your opponents down + +The government of Venezuela banned Henrique Capriles, a state governor who belongs to the opposition, from running for office for 15 years, triggering large demonstrations in Caracas and other cities in which two people died. Mr Capriles nearly defeated the president, Nicolás Maduro, in an election in 2013. He won’t be able to run in the next one, due in 2018. + +A justice of Brazil’s supreme court approved investigations of eight members of Michel Temer’s presidential cabinet and more than 60 congressmen. The investigations are connected to the Petrobras scandal, in which contractors funnelled cash to politicians in return for padded contracts with the state-controlled firm. + +Labour unions in Argentina held a general strike in protest against the government’s austerity policy. Mauricio Macri, who became president in December 2015, is trying to undo the populist legacy of his predecessor, Cristina Fernández de Kirchner. + +America, Canada and Mexico are to bid together to host the football World Cup in 2026. Donald Trump, who wants to build a wall between America and Mexico, “encouraged” the idea, said Sunil Gulati, president of the United States’ soccer federation. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21720660-politics-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Business this week + + +Apr 12th 2017 + + + + + +The chief executive of Barclays, Jes Staley, was rapped for attempting to uncover the identity of a whistle-blower who had written anonymous letters raising concerns about a senior executive at the British bank. Regulators are investigating Mr Staley for breaking rules that protect whistle-blowers. The bank’s board has concluded that he “honestly, but mistakenly” believed his actions were permissible, but issued Mr Staley with a formal reprimand and said he would take a significant pay cut. + + + +A report for the board of Wells Fargo into the account mis-selling scandal that engulfed the American bank last year heavily criticised its former chief executive, John Stumpf, and its former head of retail banking. The report also blamed the bank’s decentralised management structure. + +Formal notice + +The Bank of England asked all firms with cross-border activities between Britain and the EU to detail their contingency plans following Brexit. Hoping to mitigate the risk to financial stability, Mark Carney, the bank’s governor, highlighted the fact that financial services are Britain’s most important export, with a trade surplus of £60bn ($75bn). + +Toshiba filed an unaudited version of its twice-delayed quarterly accounts, after failing to get auditors to approve the books. The troubled Japanese conglomerate issued a warning about its “ability to continue as a going concern”. Its nuclear power-plant business, Westinghouse, recently filed for bankruptcy. One way it hopes to survive is by selling its semiconductor division, which Foxconn, a Taiwanese electronics contract manufacturer, has reportedly offered to buy for $27bn. + +Tesla briefly overtook General Motors in terms of market capitalisation, meaning that for the first time, America’s most valuable carmaker was not based in Detroit. + + + +Britain’s annual inflation rate stood at a three-and-a-half year high of 2.3% in March. The weakness of the pound has put increasing pressure on the price of everyday goods and food; alcohol and clothing were the biggest contributors to last month’s figure. A drop in transport costs, notably air fares, offset other price rises. + +Trouble in store + +Whole Foods Market, the favoured supermarket of the organically minded, faced calls for a shake-up in its management. Jana Partners, an activist hedge fund, revealed that it had accumulated a 9% stake in Whole Foods, alongside a slate of individuals it may nominate to sit on the company’s board. Whole Foods was a pioneer of green retailing, inspiring many mainstream rivals to sell environmentally sound produce. + +Whole Foods was not the only company to face calls from an activist hedge fund to reform. BHP Billiton rejected a proposal from Elliott Advisers to restructure and spin off its American oil business, which Elliott wants the miner to do in order to increase shareholder value. In a busy week for Elliott it also put pressure on AkzoNobel to sack its chairman. Elliott wants the Dutch chemical company to enter talks with PPG, an American rival that is seeking to take it over. + +In an effort to placate investors after rejecting a takeover from Kraft Heinz, Unilever set out plans to restructure, which includes rethinking its dual legal structure and getting rid of its spreads business. + +A joint offer from Bain Capital and Cinven won the bidding process for Stada, a German drugmaker. The deal is worth around €5.3bn ($5.7bn), making it the biggest private-equity purchase of a European company in recent years. To secure their bid Bain and Cinven agreed to protections of Stada’s workers from forced redundancy and assured the status of its production sites. + +American employers added just 98,000 jobs to the payroll in March, half of what had been expected. + +Jaeger, a British fashion house and retailer, was put into bankruptcy protection. Founded in 1884, Jaeger flourished during the 1960s, but sales have withered as its customer base has grown older. + +Police in Mumbai arrested the alleged mastermind behind a scam in which call-centre operators posed as officials from America’s Internal Revenue Service and duped 15,000 Americans into paying unpaid taxes that they didn’t owe. Sagar Thakkar, AKA “Shaggy”, had fled to Dubai, but returned to India fearing that he would be handed over to America, where he faces charges, and the ire of swindled taxpayers. + +The unfriendly skies + +A video clip of a bloodied passenger being forcibly removed from a United Airlines flight because it was overbooked turned into a PR disaster. People used social media to complain that United should be beating the competition, not its customers. See article. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21720661-business-week/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +KAL’s cartoon + + +Apr 12th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21720655-kals-cartoon/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Leaders + + +A referendum in Turkey: The slide into dictatorship [Fri, 14 Apr 13:31] + +Syria: What next? [Fri, 14 Apr 13:31] + +Rural education in China: Separate and unequal [Fri, 14 Apr 13:31] + +Startups: Silicon pally [Fri, 14 Apr 13:31] + +Identity and privacy: Per Aadhaar ad astra? [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Turkey’s referendum + +Turkey is sliding into dictatorship + + +Recep Tayyip Erdogan is carrying out the harshest crackdown in decades. The West must not abandon Turkey + +Apr 15th 2017 + + + + + +TURKEY matters not just for its size, but also as a bellwether of the political forces shaping the world. For centuries it was the seat of a great empire. Today, as a frontier state, it must cope with the violence spewing out of war-ravaged Syria; it is a test case of whether democracy can be reconciled with political Islam; and it must navigate between Western liberalism and the authoritarian nationalism epitomised by Russia. In recent years under Recep Tayyip Erdogan, Turkey has gone backwards. This weekend it can begin to put that right. + +On April 16th Turks will vote in a referendum over whether to abandon their parliamentary system for an executive presidency. A Yes is likely, but far from certain. There is nothing wrong with a strong president, but Turkey’s new constitution goes too far. The country would end up with a 21st-century sultan minimally curbed by parliament (see Briefing). A Yes would condemn Turkey to the elected dictatorship of President Erdogan. A No might just let Turks constrain him. + + + +Authority figure + +After Mr Erdogan came to power in 2003, he and his AK party did a lot that was good. Encouraged by the IMF, he tamed inflation and ushered in economic growth. Encouraged by the EU, he tackled the cabal of military officers and bureaucrats in the “deep state”, strengthened civil liberties and talked peace with the Kurds. He also spoke up for working-class religious conservatives, who had been locked out of power for decades. + +But today Turkey is beset by problems. In the shadow of the Syrian civil war, jihadists and Kurdish militants are waging campaigns against the state. Last summer the army attempted a coup—probably organised by supporters of an American-based cleric, Fethullah Gulen, who had penetrated the bureaucracy, judiciary and army in their tens of thousands. The economy, once a strength, is growing slowly, plagued by cronyism, poor management and a collapse in tourism. + +Mr Erdogan argues that, to put this right, Turkey needs a new constitution that will generate political stability. He says that only a strong president can galvanise the state and see off its enemies. Naturally, he is talking about himself. + +The new constitution embodies the “illiberal democracy” of nationalists such as Viktor Orban of Hungary and Vladimir Putin of Russia, to whom Mr Erdogan is increasingly compared. On this view, election winners take all, constraints are obstacles to strong government and the ruling party has a right to subvert institutions, such as the judiciary and the press. + +Yet this kind of stability is hollow. The most successful democracies make a point of separating powers and slowing governments down. The guiding idea of the American constitution is to stop presidents from acting as if they were monarchs, by building in checks and balances. Even the British prime minister, untrammelled by a written constitution, has to submit herself to the courts, a merciless press and a weekly grilling in Parliament, broadcast live. + +Turkey is especially ill-suited to winner-takes-all government. It is divided between secular, religious and nationalist citizens, as well as Turks, Kurds, Alevis and a few remaining Greeks, Armenians and Jews. If the religious-conservative near-majority try to shut out everyone else, just as they were once shut out, Turkey will never be stable. + +But the most important argument against majoritarian politics is Mr Erdogan himself. Since the failed coup, he has been governing under a state of emergency that demonstrates how cruelly power can be abused. + +The state is entitled to protect its citizens, especially in the face of political violence. But Mr Erdogan has gone far beyond what is reasonable. Roughly 50,000 people have been arrested; 100,000 more have been sacked. Only a fraction of them were involved in the coup. Anyone Mr Erdogan sees as a threat is vulnerable: ordinary folk who went to a Gulenist school or saved with a Gulenist bank; academics, journalists and politicians who betray any sympathy for the Kurdish cause; anybody, including children, who mocks the president on social media. Whatever the result on April 16th, Mr Erdogan will remain in charge, free to use—and abuse—his emergency powers. + +During the campaign he accused the Germans and Dutch of “Nazi practices” for stopping his ministers from pitching for expatriate votes. EU voices want to suspend accession talks—which, in any case, are moribund. Before long, the talk may even turn to sanctions. Some in the West will point to Turkey’s experience to claim that Islam and democracy cannot coexist. But to give up on that idea would be to give up on Turkey itself. + +The fault is not so much with political Islam—many AK members and voters are uneasy with the new constitution. It is with Mr Erdogan and his inner circle. Although he is a religious man, he is better seen as an old-fashioned authoritarian than as a new-fangled Islamist. The distinction matters because AK, or an Islamist party like it, is bound to feature in Turkey’s democracy. Mr Erdogan, however, will one day leave the stage, taking his authoritarian instincts with him. + +Hold him close + +Hence the outside world should not give up on Turkey, but be patient. Partly, this is self-interest. As a NATO member and a regional power, Turkey is too important to cut adrift. It will play a vital part in any peace in Syria. Driving it into Russia’s arms makes no sense. Turkey has also been a conduit for refugees into the EU as well as vital in controlling their inflow. The refugee situation is in flux: the EU will need to keep talking to Turkey about how to cope with the resulting instability. + +Engagement is also in Turkey’s interests. The EU is its biggest trading partner. Contact with it bolsters the Western-leaning Turks who are likely to be Mr Erdogan’s most potent opposition. NATO membership can moderate the next generation of officers in its armed forces. Although Turkey will not join the EU for many years, if ever, a looser EU, with several classes of member or associate country, might one day find room for it. + +Turkey will remain pivotal after April 16th. If Mr Erdogan loses, Turkey will be a difficult ally with a difficult future. But if he wins, he will be able to govern as an elected dictator. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21720590-recep-tayyip-erdogan-carrying-out-harshest-crackdown-decades-west-must-not-abandon/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Wanted: a coherent Syria policy + +Donald Trump’s Syria strategy is confused + + +America should be planning for a de facto partition + +Apr 12th 2017 + + + + + +THERE are good reasons to cheer the missile attack ordered by Donald Trump on a Syrian air base on April 6th. It sent a message to Bashar al-Assad, Syria’s despot, that America would not tolerate his use of chemical weapons. It also showed that Mr Trump, despite many indications to the contrary, was prepared to act to uphold an international norm and to do so for humanitarian reasons: he was outraged by a nerve-gas attack that killed more than 80 people in the rebel enclave of Idlib. But one barrage doesn’t make a strategy. + +Before Mr Trump saw television pictures of poisoned children, he had said that getting rid of Mr Assad was no longer a goal of American policy, as it had been, at least notionally, under Barack Obama. In the week before the chemical attack, both the secretary of state, Rex Tillerson, and America’s UN ambassador, Nikki Haley, had confirmed that shift, thus possibly increasing Mr Assad’s sense of impunity. The priority for Mr Trump was the defeat of Islamic State (IS). Wider questions about Syria’s future would come later. + + + +Inevitably, those questions are now back to the fore. When military force is used, it is reasonable to ask: what next? Various members of the administration have tried to explain the thinking behind the missile strike (see article). Mr Tillerson, on his way to a G7 foreign ministers’ meeting in Italy, castigated the Russians for “incompetence” in failing to restrain their repulsive ally, but said that nothing else had changed. Ms Haley contradicted him, arguing that there could be no peace with Mr Assad still in power. H.R. McMaster, Mr Trump’s national security adviser, tried splitting the difference. Mr Trump himself was uncharacteristically reticent. Confusion reigns. + +What might Mr Trump now do about the Syrian regime’s continued use of other indiscriminate weapons against civilians, such as barrel bombs packed with scrap metal? Maybe nothing. But in Italy Mr Tillerson suddenly suggested a new policy of unlimited interventionism, saying: “We rededicate ourselves to holding to account any and all who commit crimes against the innocents anywhere in the world.” A few hours later Sean Spicer, the president’s press secretary, said: “If you gas a baby, if you put a barrel bomb into innocent people, I think you will see a response from this president.” Does that mean that Mr Trump now favours overthrowing Mr Assad? Surely not, for that would mean direct confrontation in the air with Russia and on the ground with Mr Assad’s other ally, Iran. + +Instead of confusing rhetoric, the administration should be preparing for the day, fast approaching, when IS in Syria has been thrown out of its “capital” in Raqqa by American-backed Kurdish and Arab forces. When the jihadists no longer hold significant territory, America should be prepared to lead international forces protecting mainly Sunni Arab and Kurdish areas in the east and north of the country from the Assad regime’s attempts to widen its area of control. The temporary de facto partition of Syria offers the best hope of a political settlement that ultimately leads to Mr Assad’s departure. Yet if Mr Trump is thinking about such a plan, there is no sign of it. + +Of Putin and predictability + +After the missile strike, any lingering notion that Mr Trump might strike a grand bargain with Russia over Syria is dead. The end of his bromance with Vladimir Putin is welcome—America’s interests and Russia’s are so at odds that it was always doomed to fail. However, it would be nice to think that Mr Trump was pursuing a coherent strategy abroad, rather than reacting to what he had just seen on Fox News. Unpredictability has its uses in foreign policy, but it is worrying that even Mr Trump’s closest aides have no idea what he will do next. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21720617-america-should-be-planning-de-facto-partition-donald-trumps-syria-strategy-confused/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Separate and unequal + +How Chinese schools discriminate against 65% of the population + + +Rural pupils are shut out of city schools and neglected in their villages. This is cruel and counterproductive + +Apr 12th 2017 + + + + + +LAST year some images went viral on the internet in China. They showed children descending an 800-metre (2,600-foot) rock face on rickety ladders made of vines, wood and rusty metal. Their destination: school. The photographer was told by a local official that “seven or eight” people had died after losing their grip. Yet the children did this regularly—there is no school at the top of the mountain in Sichuan province where they live. The photographs conveyed two striking aspects of life in the Chinese countryside: a hunger for education so strong that children will risk their lives for it, and a callous lack of government attention to the needs of rural students. + +In many ways, education in China is improving. Since 2000 the annual tally of students graduating from university has increased nearly eightfold, to more than 7.5m. But many rural students are neglected by China’s school system, and they are not the only ones. So, too, are the children of migrants who have moved to the cities from the countryside and poor students who want to go to senior high school. + + + +This is not only unfair; it is also counterproductive. China faces a demographic crunch: its workforce is shrinking and it can no longer depend on cheap, low-skilled migrant labour to power its growth. Its young—especially those with rural roots—need to become more skilled. That calls for better education. + +The government has not been completely blind to the need to ensure that rural people have enough schooling to work in factories, but it has shown little sense of urgency. The schoolchildren from Sichuan are a case in point. So perilous was their journey to school that officials arranged for them to board, like tens of millions of children in rural China. They travel back home only every few weeks. + +That may sound like progress. Since the population of young people in the countryside is falling so smaller schools are closing. Better to board than to trek for miles every day to one that is still open. But conditions at these boarding schools are often appalling (see article). Many children do not get enough to eat, which affects their health and their ability to learn. So poor is their nutrition that they are often shorter than their counterparts at day schools. + +And it is not just the boarders who suffer. In all kinds of education, rural children have less chance of doing well than their urban counterparts. Less than 10% of them go to senior high-school, compared with 70% of their peers in cities. That is because the government stacks the system against them. + +Everyone in China has to attend school for nine years—until the end of junior high school. But it was not until 2007 that all rural children could do so without paying. Like city dwellers, they still have to pay for senior high school. But their families tend to be much poorer, so few can afford it. And rural schools are far more rudimentary. Local governments are responsible for running them. If officials have tax revenue to spare, they see no point in doling it out in the countryside. How can you boost growth, they wonder, by spending money on villagers who will eventually move away? + +It is no better for the migrants once they are in the cities. China’s household-registration system, known as hukou, treats rural migrants as second-class citizens. Their children are often barred from state-funded urban schools. They must pay to send them to ramshackle private ones instead, which are often worse than rural state schools. Even there, children’s education is frequently disrupted: officials have forced many such places to close, citing safety and other concerns. + +Who’s blocking the schoolhouse door? + +People with rural hukou make up nearly 60% of the population. So it is vital that the system is scrapped. Everyone in China deserves the same access to public education, health care and other services. The central government must also do more to ensure that rural schools have enough money to teach and feed their pupils—basic education is too important to be left to ill-motivated local authorities. And it must give more financial support to the rural poor in order to help their children graduate from high school and enter university. + +People from the countryside are the unsung heroes of China’s economic rise. The migration of more than 200m of them into cities, where their labour is more productive than it is in the fields, has been the rocket fuel of the country’s spectacular growth. In China, as elsewhere, education is what will make society fairer, and ultimately wealthier. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21720602-rural-pupils-are-shut-out-city-schools-and-neglected-their-villages-cruel-and/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Women in technology + +Silicon Valley’s sexism problem + + +Venture capitalists are bright, clannish and almost exclusively male + +Apr 15th 2017 + + + + + +“BOOBER” is the nickname Travis Kalanick, the boss of Uber, used to describe the effect that the ride-hailing startup had on his attractiveness to the opposite sex. Mr Kalanick’s wisecrack seems to have been emblematic of a deeply macho culture. An investigation is under way into allegations from a former employee that Uber refuses to promote capable women or to take complaints about harassment seriously. The results are due to be released in the coming weeks. + +Uber is not the only technology star in the spotlight for its treatment of women. Google has been accused by America’s Department of Labour of paying female employees significantly less than male ones (see article). Google flatly denies the charge. But that technology in general, and Silicon Valley in particular, has a gender problem is not in doubt. A survey of 210 women in the valley found that 60% had experienced unwanted sexual advances and that two-thirds felt excluded from important social and networking opportunities. PayScale, a research firm, has found that only 21% of American tech executives are female (the figure in other industries is 36%). Women in tech are paid less than men, even after controlling for experience, education and responsibilities. + + + +Not all these problems can be laid at the door of Silicon Valley. Plenty of people are worried about the small number of girls taking science, technology, engineering and mathematics courses. Only 18% of bachelor’s degrees in computer science in America were awarded to women in 2013, down from 37% in 1985. Pay gaps are pervasive, too. + +But that shouldn’t let the valley off the hook. It prides itself on solving difficult problems and on being a meritocracy. Being as bad as everywhere else in its treatment of women falls disappointingly short. More to the point, the valley suffers from a distinctive form of sexism which is in its power to fix. + +Venture capitalists are the technology industry’s demigods. Through their cheques, connections and advice, they determine which startups succeed and which languish. They are bright, clannish and almost exclusively male. Only around 6% of partners at venture-capital firms are women, down from 10% in 1999. Less than 40% of the top 100 venture-capital firms have a female partner charged with investing. Many of the most highly regarded funds, including Benchmark and Andreessen Horowitz, have none. + +For a set of people who finance disruptive firms, venture capitalists are surprisingly averse to disrupting their own tried-and-tested way of doing things. They sit in small groups, meet entrepreneurs and repeat a single formula for investing whenever possible. John Doerr, who backed companies like Google, summed up his philosophy thus: “Invest in white male nerds who’ve dropped out of Harvard or Stanford.” + +Defenders of the valley have two retorts. One is that throwing stones at the most successful business cluster on Earth makes no sense. Market forces ensure that the best ideas win funding, irrespective of gender. The data suggest a different story. Only 7% of the founders of tech startups in America that raised $20m or more are women, according to recent research by Bloomberg. Yet nobody would argue that men make the best founders nine times out of ten. On average, firms founded by women obtain less funding ($77m) than those founded by men ($100m). The VC industry has been successful enough to ward off the pressure to change. That does not make it perfect. + +A second defence is that VCs rely on tight-knit relationships, in which trust is essential. Call this the “dinner with Mike Pence” gambit, after the American vice-president’s reported refusal to eat alone with a woman other than his wife. On this argument, any outsider, particularly one lacking a Y chromosome, is liable to upset the club’s precious dynamic. Venture capital is indeed a strange mix of capital and contacts, and peculiarly hard to industrialise as a result. But as a justification for sexism, clubbiness is an argument that is as old as it is thin. + +Y combinator, X chromosomes + +Plenty of studies show that diverse teams are more productive. Hiring more women in venture capital seems to increase the odds of finding and funding those elusive female entrepreneurs. Venture capitalists play a vital role in shaping the culture of startups: investors who value diversity are likelier to guide them away from the reputational and legal risks that beset offices full of “brogrammers”. Silicon Valley is a remarkable place. But it is time for the boy’s club to grow up. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21720621-venture-capitalists-are-bright-clannish-and-almost-exclusively-male-silicon-valleys-sexism/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Do you trust Modi with your data? + +India’s biometric identity scheme should not be compulsory + + +The BJP government should listen to people’s qualms about snooping + +Apr 15th 2017 + + + + + +WHAT would Gandhi have made of Aadhaar, the ambitious scheme to provide each of India’s 1.3bn residents with a unique, biometrically verifiable identification? There is much that might have impressed the great pacifist. Before Aadhaar’s launch in 2010, many Indians had no proof of identity that could be recognised across the sprawling, multilingual country; now 99% of adults do. A cheap, simple and accurate way to know who is who, it helps the state channel services, such as subsidies, to those who really need them, thwarting corruption and saving billions. Linked to bank accounts and mobile phones, the unique 12-digit numbers can be used for swift, easy transfers of money. In time, they should help hundreds of millions of Indians enter the formal, modern economy. + +Yet Gandhi might also have been alarmed. After all, he cut his political teeth resisting a scheme to impose identity passes on unwilling Indians. That was over a century ago, in South Africa. Aadhaar could scarcely be further removed in intent from colonial racism: it is designed to include and unite, not exclude. Still, many Indians worry that a programme billed as voluntary is increasingly, with little public debate, being made mandatory. This puts the whole project, and all its benefits, at risk of being struck down by the courts. And the government’s high-handed dismissal of concerns about its methods is stoking fears that it might misuse the data it has collected. + + + +In recent months the government of Narendra Modi, the prime minister, has made access to a dozen government programmes contingent on possession of an Aadhaar card (see article). In March it sneakily inserted into a fast-tracked budget bill a rule that requires taxpayers to link their tax number with Aadhaar. There is talk of adding such things as school lunches and the purchase of airline tickets to this list. In answer to a question in parliament about whether the state was, in effect, forcing citizens into the Aadhaar scheme, the reply from India’s minister of finance was blunt: “Yes, we are.” + +This would appear to contradict India’s Supreme Court. Its judges have yet to rule on a score of petitions aimed at stopping Aadhaar, but in the past two years the court has issued several statements asserting that the identity scheme should be voluntary—or at any rate that it should remain so until the court decides otherwise. Until it issues a binding opinion, the danger lingers that a pile of important government schemes could in future find themselves dangling in legal limbo. + +In theory, the law on Aadhaar passed last year by Mr Modi’s government includes stringent protections against the sharing of information; its rules allowing exceptions on grounds of national security, although vaguely worded, appear well intended. Sweden has required all citizens to have a national ID number since 1947—the year of India’s birth—with little trouble. Most Swedes consider the scheme, which is linked to tax, school, medical and other records, an immense convenience. + +Stockholm on the Ganges + +But India is not a tidy Nordic kingdom. Mr Modi’s government, with its strident nationalism and occasional recklessness—such as last year’s abrupt voiding of most of the paper currency in circulation—does not always inspire confidence that it will respect citizens’ rights and legal niceties. By sneaking the linkage between Aadhaar and tax into a budget bill, it raises concerns about intent: will the government stalk tax evaders, or perhaps enemies of the state, using ostensibly “fire-walled” Aadhaar data? Many Indians will remember that, following sectarian riots in the past, ruling parties were accused of using voter rolls to target victims. + +Mr Modi, who before taking office dismissed Aadhaar as a “political gimmick”, has been right to seize on its potential to transform India. It can bring more efficiency to government, convenience to citizens and savings to businesses that need to identify their customers. But for Aadhaar to fulfil its potential, Indians must trust that it will not be misused. Adopting coercive regulations, ignoring the Supreme Court’s qualms and dismissing critics peremptorily will achieve the opposite. As for the Supreme Court, it should stop dithering and make its views clear. Gandhi, a lawyer as well as an activist, would certainly have approved of that. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21720599-bjp-government-should-listen-peoples-qualms-about-snooping-indias-biometric-identity/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Letters + + +On Yemen, sex studies, India, Wales, Singapore, Poland, brains, April’s Fool: Letters to the editor [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Letters + +Letters to the editor + + +On Yemen, sex studies, India, Wales, Singapore, banks, Poland, brains, April’s Fool + +Apr 12th 2017 + + + + + +War in Yemen + + + +Regarding your article on Yemen (“Beggar thy neighbour”, March 25th), I want to make it clear that Saudi Arabia is leading an international coalition, with the full backing of the UN Security Council, to restore the country’s legitimate government. Saudi Arabia does not want to be at war in Yemen. But the alternative is to turn our back and allow it to become a lawless state in the hands of rebel groups and terrorists. + + + +We are doing everything in our power to mitigate the impact of the conflict on Yemeni civilians. We have provided more than $560m worth of humanitarian assistance, working with the UN and international NGOs to ensure aid is distributed to all parts of the country. The coalition is providing inspection-free access for aid ships from trusted organisations to Yemeni ports. Since April 2015 Yemen has received 4.9m tonnes of food aid and 37,200 tonnes of medical equipment. We are as concerned as anyone that the port of Hodeidah is a bottleneck for humanitarian supplies. We have called for Hodeidah to be placed under UN supervision, which would facilitate humanitarian flows and end the rebels’ use of the port for weapon smuggling and people trafficking. + +MAJOR GENERAL AHMAD ASIRI + +Coalition spokesman + +Riyadh, Saudi Arabia + +An author responds + +Parents who, after reading your review of my book “Testosterone Rex”, might “cock an eyebrow” at my supposed disregard of “studies of actual sex differences”, can uncock with confidence (“Gender fluidity”, April 1st). My book refers to over 70 such studies of humans, including four on children’s toy preferences. + +You also accused me of attacking some straw men: that the brains of males and females are categorically different; that individuals are uninfluenced by the environment; and that absolute levels of testosterone determine behaviour. In fact, my book wastes no space challenging such extreme views. It instead questions common, fundamental assumptions about the relations between sex, environment, brain and behaviour. It explains, for example, that an experience can eliminate or reverse a sex difference in the brain, that an environmental change can eliminate or reverse the expression of an adaptive behaviour, and that gender constructions modulate testosterone. + +CORDELIA FINE + +Professor of history and philosophy of science + +University of Melbourne + +He has his supporters + +You said that Yogi Adityanath, the new chief minister of Uttar Pradesh, has championed “reactionary Hindu causes” (“Agent orange”, March 25th). If you mean issues such as the illegal influx of Bangladeshis, jihadi terrorism and the collusion of extremists with politicians, then these are all legitimate concerns for Indians. + +KALPIT MANKIKAR + +Mumbai + +School report + + + +“Down in the valleys” (March 25th) gave a one-sided view of the Welsh government’s education reforms. I was rather surprised that you chose to quote a report from the OECD from three years ago, which led you to describe a “less sunny” outlook for education. You overlooked an OECD report published in February this year, which I commissioned, that reviews progress in some of the areas you highlighted. That report is considerably more positive and replaces its previous warning of “reform fatigue” with a commendation that the OECD had “witnessed progress in several policy areas and a shift… away from a piecemeal and short-term policy orientation towards one that is guided by a long-term vision.” They concluded that “the commitment to improving the teaching and learning in Wales’s schools is visible at all levels of the education system.” + +KIRSTY WILLIAMS, + +Education secretary in the Welsh government + +Cardiff + +The law in Singapore + +You imply that Amos Yee was prosecuted in Singapore for political dissent, and not for making vicious statements about Christians and Muslims (“No place for the crass”, April 1st). That is not true. In 2015 Mr Yee insulted Christians, saying Jesus Christ was “power hungry and malicious” and “full of bull”. In 2016 he said: “The Islamics seem to have lots of sand in their vaginas…But don’t mind them, they do after all follow a sky wizard and a paedophile prophet. What in the world is a ‘moderate Muslim’? A fucking hypocrite, that’s what!” + +The Economist may agree with the American judge that such bigotry is free speech. But Singapore does not countenance hate speech, because we have learnt from bitter experience how fragile our racial and religious harmony is. Several people have been prosecuted for engaging in such hate speech. + +Contrary to the suggestion in your article, Singapore’s laws on contempt do not prevent fair criticisms of court judgments, as the article itself demonstrates. Singapore’s court judgments, including on Mr Yee’s case, are reasoned and published, and can stand scrutiny by anyone, including The Economist. + +FOO CHI HSIA + +High Commissioner for Singapore + +London + +Open banking and data access + + + +Your leader on consumers’ access to their bank-account data (“Vaulting ambition,” March 25th) contends that American banks are lobbying “to keep their data monopoly intact.” Yet in reality, the Clearing House, a 163-year-old association of the largest American commercial banks, recently wrote to the Consumer Financial Protection Bureau asserting that they are in favour of opening up account-data access to third parties at a consumer’s request, as long as it is done effectively, clearly, securely and not, as is the case today, by asking people to share their banking user IDs and passwords with unvetted third and fourth parties which may indiscriminately harvest the data. + +At Citi, we are determined to empower our customers with data, which is why we have embarked on a path to “Open Banking”. A global Citi portal that provides app developers with a safe and easy way to access users’ data via application programming interfaces (APIs) and our recent investment in Plaid, a leading “data aggregator”, are just two examples. + +The global Fintech ecosystem holds huge promise for benefiting individuals and societies. Data is the blood that courses through its veins, and all participants have a duty to help it flow safely and freely. In this case at least, we’re not all the same old “bunch of bankers”. + +ANDRES WOLBERG-STOK + +Global Head of Policy, Citi Fintech + +Citi Global Consumer Bank + +New York + +Poles’ opinion + +The notion that the ruling Law and Justice party in Poland is paranoid is shared by many Poles all over the world (“Pyromaniac politics”, March 18th). But maybe that attitude is not entirely unjustified. As John le Carré wrote in “The Secret Pilgrim”: “I never understood why so many Poles have a soft spot for us. Our repeated betrayals of their country have always seemed to me so disgraceful that if I were Polish, I would spit on every passing British shadow, whether I had suffered under the Nazis or the Russians—the British in their time having abandoned the poor Poles to both.” + +ANDRZEJ DERKOWSKI + +Oakville, Canada + +Deep thought + + + +Plans by Elon Musk to integrate computers with our brains brought to mind “The Hitchhiker’s Guide to the Galaxy” (“We can remember it for you wholesale”, April 1st). Upon hearing that his brain might be replaced with an electronic one, Arthur Dent is insulted by the suggestion that it only needed basic programming and that no one would know the difference. Arthur protests: “I’d know the difference!” To which his interlocutor responds, “No, you wouldn’t, you’d be programmed not to.” + +SCOTT WRIGHT + +Wappingers Falls, New York + +Our foolish tax on efficiency + +After looking for papers on “facile externalities” in the Scandinavian Journal of Economics, I got suspicious of the inclusion of a middle initial in the author’s name, Danilov P. Rossi, in “Friction lovers” (April 1st). You seldom do that. I solved the anagram. But am I still a poisson d’avril? + +JOSE TUDON + +Chicago + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/letters/21720594-yemen-sex-studies-india-wales-singapore-banks-poland-brains-aprils-fool-letters/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Briefing + + +Turkey’s referendum: On the razor’s edge [Fri, 14 Apr 13:31] + +Remembering the coup: Brave “New Turkey” [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Turkey’s referendum + +The vote that will determine the fate of Turkey’s democracy + + +Turks are split over giving new powers to Recep Tayyip Erdogan. Be warned: he would use them without restraint + +Apr 15th 2017 | ISTANBUL + + + + + +IT IS hardly a fair contest. In the campaign for Turkey’s constitutional referendum, due on April 16th, the Yes side has harnessed the power of the state to crush the Noes. Selahattin Demirtas, co-leader of a pro-Kurdish party, was poised to become one of the main No voices but has ended up behind bars on trumped-up terror charges. He faces 142 years in prison. A Kurdish-language song calling for No has been banned. A study of 168.5 hours of campaign coverage on 17 national television channels at the start of March showed that Yes supporters got 90% of the airtime. The route from Sabiha Gokcen airport, outside Istanbul, has more than a dozen building-sized banners with an image of the president, Recep Tayyip Erdogan, or his prime minister extolling a Yes vote. Giant No banners are nowhere to be seen. + +Stacked as it is, the ballot could not be more consequential. Voters must decide whether to abandon a parliamentary system in favour of an executive presidency that would give the head of state complete power over the budget and the executive, and huge sway over the judiciary. MPs would have minimal powers of scrutiny. + + + +The result will help determine the fate of Mr Erdogan, who has governed since 2003—first as a reforming prime minister, but lately as a strongman president who has come to treat all opposition as a form of treason. A No would be a grave blow for Mr Erdogan. A Yes would root his power in the very foundations of the state. + +The fate of Turkey is at stake, too. Ever since Mr Erdogan took power, the country has been a test of what happens when democracy is put together with political Islam. Turkey was also an example of the benign influence of the European Union, which encouraged open markets and civil rights. Some years ago Mr Erdogan began to reject all that for nationalism and autocracy. Lately he has courted Russia and the Gulf monarchies. He would use a Yes as a popular endorsement of that illiberal path. + +Since Mr Erdogan has all the advantages, anything but a resounding victory ought to count as a defeat. At least 40% of the country—religious and conservative—will support him come what may. He chose the timing of the vote in the wake of a failed coup last summer, when most of Turkey had united behind him. He has attacked the EU, Turkey’s biggest market, in an attempt to stir up nationalist support. The authorities have nearly 50,000 people in detention, whom it calls coup-supporters and terrorists; it has sacked 100,000 more. Abetted by a captive, frightened judiciary, the police are rounding up anyone Mr Erdogan designates as an enemy. + + + +He has a healthy lead in the polls (see chart 1). Yet in the privacy of the polling booth, voters might deny Mr Erdogan his victory. Outside the ferry terminal in Uskudar on the Asian shore of the Bosporus, across the water from one of the sultans’ palaces, the AK party, co-founded and led by Mr Erdogan until he became president, has more workers handing out leaflets than there are punters willing to take them. The red and white tent of its nationalist allies blares out the peppery strains of Turkish bagpipes to Instanbulus who turn their shoulders and walk by. The country is uneasy, rocked by the failed coup and murderous bombing campaigns of jihadists and Kurdish separatists. Corruption, state interference and a collapse in tourism are weighing on the economy. + +Early in Mr Erdogan’s rule, Turkey made great progress towards democracy. But Turks who can remember the detentions and torture after the military coup in 1980 say that today’s are a throwback to those dark times. Workers inform on their colleagues, students on their professors, husbands on their wives. Some within AK—including, it is said, dissident party leaders—think that, this time, Mr Erdogan has gone too far. + +The district of Basaksehir, about 20km from the heart of Istanbul, helps explain the enduring popularity of Mr Erdogan and his party. A few decades ago such a place would have been a shanty town, put up by peasants who left the Anatolian countryside in their millions in search of work. Mr Erdogan and AK gave a voice to such “black” Turks, who suffered under the arrogant, secular “white” Turkish elite. Today, it is clean and well-appointed. Tidy apartment blocks tower alongside immaculate roads. Shops and cafés testify to a new affluence. To the visitor’s eye Basaksehir lacks character, perhaps, but to devout, working-class Turks it stands for dignity, self-respect and prosperity. + +It is easy to forget how abysmal the economy was in 2003 when Mr Erdogan came to power. The crisis of 2000-01, the third in a decade, caused collapses in the currency and GDP and led to the intervention of the IMF. Under the stewardship of the fund and with encouragement from the EU, Mr Erdogan’s government brought down inflation, which had briefly exceeded 100% in the early 1990s, and rescued the banks. Foreign investment soared. The country became Europe’s workshop. Thanks to their newfound stability, Turkish entrepreneurs grew rich. + +Change the system + +Mr Erdogan wants voters to believe that Sunday’s referendum is all about recovering this stability. Sitting in the AK office in Basaksehir, Mustafa Sentop, who helped draft the new constitution, argues that a man of Mr Erdogan’s calibre has accomplished things in power despite the system, not because of it. In its 94 years as a republic, Turkey has had 65 governments. Shadowy oligarchies have infiltrated the army and the bureaucracy in order to usurp elected politicians. There is a history of terrorism, plots and coups. “We will stop that,” Mr Sentop vows. + +Formally, the new constitution abolishes the prime minister’s office and divides power between parliament, which legislates, and the president, who acts. In practice, it enthrones the president as a term-limited sultan and parliament as his court. + +Mr Sentop points out that France and the United States have powerful presidents, too. But under the new constitution, unlike the Assemblée Nationale and Congress, the Turkish parliament will not control the details of spending or have a say over presidential appointments. Neither will it be able to subject the cabinet to questions, except in writing. Besides, in France and America the independence of the media and the courts is well-established. In Turkey Mr Erdogan has spent recent years turning them into his fiefs. + +The chances are that the president will dominate parliament politically, too. Because executive and legislative elections will coincide, unlike those in France and America, where they are not always aligned, the president and the parliamentary majority are likely to come from the same party. Turkey operates a list system, in which party leaders control who gets a seat. The new constitution allows Mr Erdogan to retain control of his party, giving him power to handpick parliamentary candidates. Those who challenge him would pay a high price. + +The reform has met strong criticism abroad. The Venice Commission, a panel of constitutional experts who advise the Council of Europe, calls it “a dangerous step backwards”, saying that the new constitution “lacks the necessary checks and balances to safeguard against becoming an authoritarian” regime. Human Rights Watch, an NGO, says that it poses “a huge threat to human rights, the rule of law and the country’s democratic future”. + +Within Turkey, however, voters’ perceptions are coloured by the terror attacks and the attempted coup. The outside world has failed to grasp just how besieged Turks feel. And that has strengthened Mr Erdogan. + +First came the spiral of terror and retribution. Early on, Mr Erdogan had been ready to make peace with the Kurds. Perhaps because his people had also suffered under Turkey’s secular governments, or because he stood to win votes among conservative Kurds, he offered new rights and a promise to resolve a 30-year war between security forces and the PKK, a Kurdish militia. Later he saw them as potential allies over the constitution. With their support, he would win his executive presidency and they would gain autonomy in the south-east, where they are in the majority. + +But peace talks with the PKK fell apart in 2015. Kurdish success fighting with the Americans against Islamic State (IS) in Syria raised their hopes of a homeland in Turkey. After Mr Demirtas told him in early 2015 that he would never get his new constitution, a furious Mr Erdogan disowned the peace process. When the PKK blamed him for a deadly IS bombing against pro-Kurdish activists and killed two Turkish policemen, Mr Erdogan launched an offensive against its bases in northern Iraq, accompanied by mass arrests. A spiral of PKK bombings against Turkish security forces and ruthless army reprisals rocked the south-east. Under pressure in Syria, IS continued unleashing its own suicide-bombers against Turkey. + +Guns and steel + +After the terrorism came the putsch. Most Turks thought they had consigned military coups to history. But on the night of July 15th last year rebel troops stationed tanks at Istanbul’s main airport, occupied Taksim Square and took up positions on the two bridges crossing the Bosporus. They put their top commanders under arrest. In the capital, Ankara, their jets bombed the parliament building and the grounds of the presidential palace. + +But within hours the coup collapsed. A squad attacked the hotel in Marmaris where Mr Erdogan had been on holiday—but he was already gone. In a remarkable display of people power, Turks poured onto the streets to defend civilian rule. + +Mr Erdogan has seized on the violence to whip up a frenzy of paranoia and nationalism. He has memorialised the bungled coup, in which almost 250 people died, as Turkey’s second war of independence—setting himself up as the equal of the republic’s founder, Mustafa Kemal Ataturk (see article). + +Behind the crude myth-making lies the paranoia—which has at least one foot in reality. The police, judiciary, intelligence services and, it turned out, army had all been penetrated by unknown thousands of the followers of Fetullah Gulen, a cleric living in self-imposed exile in America. + +The Gulenist movement is part self-help group, part secret society. Its 75-year-old head preaches a tolerant Sufi Islam. For many, affiliation was the route to a good education and upward mobility. In the old days, when to be devout was dangerous, it offered protection. But Gulenists continued to operate in the shadows through the 2000s, “like a Dan Brown novel”, says a journalist who, like most people in Turkey these days, will speak to the foreign press only on condition of anonymity, even though he is a supporter of AK. + +The Gulenists were organised in secret stand-alone cells, as if they were revolutionaries. They helped each other gain influence by rigging state exams and fixing promotions. In the government’s telling, those who infiltrated the army lay low for years, pretending to be secular, by drinking alcohol and letting their wives uncover their hair. + +If anyone should have grasped the threat, it was Mr Erdogan. When he first came to power the Gulenists provided the brains, he and his party the votes. Together they took on Turkey’s “deep state”. He used Gulenist prosecutors and judges to purge the army of secular officers—sometimes on thin or forged evidence. He stood by as the Gulenists destroyed their enemies in show trials or through smear campaigns in their newspapers and television stations. + +Inevitably Mr Erdogan and Mr Gulen turned on each other, using the methods that the deep state had once used against them. The details are murky, but the first blow may have been a Gulenist attempt to arrest Mr Erdogan’s intelligence chief in 2012. The two men became locked in a fight for survival after someone released taped conversations implicating Mr Erdogan and his family in corruption—which he strenuously denies. Having compiled a roster of suspected Gulenists in the army, Mr Erdogan was about to swoop. The plotters, joined by some secularists, struck first. + +Faced with an enemy within and separatists and terrorists without, Mr Erdogan had a duty to strike back, say AK politicians. “Nowhere in the world is supporting terrorism acceptable,” says Ravza Kavacki Kan, an MP for Istanbul. + +And so, in the name of democracy and the rule of law, Mr Erdogan unleashed a whirlwind. In the south-east, between July 2015 and the end of last year, several thousand people lost their lives—800 of them government forces. The fighting displaced hundreds of thousands. Entire districts were flattened by artillery and bulldozers because, the government says, they were booby-trapped. Politically, the crackdown paid off. Denied a majority in parliament in an election in June 2015, AK regained it five months later. The government has since expanded the crackdown, jailing thousands of Kurdish activists, including 13 MPs, and kicking out the mayors of over 80 towns, on the ground that they have ties to the PKK. + +Since the coup the police have arrested or sacked 168 generals—about half the total, among them many close to NATO—some for being too slow to come out in support of Mr Erdogan. The judiciary has lost 4,000 members. About 6,300 academics are out of a job or in jail, several hundred for signing an open letter objecting to the counter-insurgency campaign in the south-east. Roughly 160 media outlets have closed, many of them backers of Mr Gulen. Within six months of the coup, police had detained some 4,000 social-media users. And so it goes on. + +On the wrong side of the state + +Many people caught up in the mania did not deserve it. Much of the time, Mr Erdogan has acted under sweeping emergency powers. These are so broadly drafted that almost anyone can be detained. The authorities are quick to see guilt by association. Critics say that gives a foretaste of what a Yes vote would enable Mr Erdogan to do as president. + +Emine was a primary-school teacher who had savings with a Gulenist bank and belonged to a trade union with Gulenist connections. She was sacked by decree. Her neighbours are frightened of being seen with her. Her husband has been branded a traitor. Her children are being bullied and in therapy. She is taking anti-depressants. For support she meets other women who found themselves on the wrong side of the line—a statistician who tweeted her doubts about the coup, someone who went to a Gulenist school. Emine believes she has no future. “We have no power or jobs,” she says. “It is civil death.” + +AK loyalists talk of “crypto-Gulenists” and PKK terrorists hiding in plain sight. “There is no difference,” Mr Erdogan said last year, “between a terrorist with a gun and a bomb in his hand and those who use their work and pen to support terror.” MP, academic, author, journalist or the director of an NGO, “that person is a terrorist.” It looks as if the state is acting against individuals, rather than their crimes. On March 30th 21 journalists suspected of being Gulenists were acquitted. After an outcry by AK supporters all the journalists were re-arrested before they could leave prison, 13 of them on new charges of “attempting to overthrow” the government. The judges who heard the case were dismissed. + +For emergency use + +Safak Pavey, an opposition MP, argues that Mr Erdogan has weaponised his emergency powers. “The law is only being used against us,” she says, “not to provide justice for everyone. Foreign policy has been weaponised, too, perhaps because Mr Erdogan thinks the referendum result is in doubt. After Germany and the Netherlands refused to accept government ministers campaigning for a Yes among Turks in their countries, Mr Erdogan accused them of “Nazi practices”. The Dutch, he said, had murdered Muslims in Srebrenica during the Balkan wars. No matter that they were in fact UN peacekeepers who killed nobody. Mr Erdogan is calculating that, when Europeans hit back, patriotic Turks will rally to the flag. + +At the same time, Mr Erdogan is signalling that he is prepared to shift towards Russia. This may be a ploy to provoke the EU. But it also reflects how the army and the bureaucracy are increasingly in thrall to a “Eurasian” faction whose leaders spurn NATO and the West and look to a Turkish version of the nationalism that has served Vladimir Putin. Although Turkey shot down a Russian warplane on the Syrian border and Russia’s ambassador to Turkey was assassinated last year, military and intelligence co-operation between the two countries has never been so close. + +NATO is worried. So is the EU, which has struck a deal with Turkey over Syrian migrants and is mired in increasingly futile talks over Turkish membership. Under Mr Erdogan, an essential ally in a troubled region is drifting away. + +Given Mr Erdogan’s power today, what difference would victory in the referendum make? Optimists outside Turkey hope that it would inspire him to be conciliatory in an attempt to unite the country. But he is by nature a bully in a culture that admires displays of strength. More probably he would use the chance to move against the next lot of enemies. That may include the secular opposition as well as some bigwigs in his own party. + +Constitutionally, Mr Erdogan would be almost untouchable. As president, he would have two five-year terms (and, under some circumstances, a third). He and his allies in parliament would be able to appoint loyalists to the most senior judicial panels, immunising him and his family against prosecution should corruption allegations resurface. Some think he is grooming his son-in-law, the energy minister, as his heir. + + + +And yet, Mr Erdogan would face obstacles. The talented administrators of his early years have gone, replaced by yes-men and second-raters. Economic growth was 2.9% last year, half its rate in the early 2000s (see chart 2). GDP per head is stagnant. Without the anchors of the IMF and the EU, Turkey has gradually shifted away from the economic orthodoxy that worked so well in the past. Inflation is over 11%, the highest since 2008. + +Rather than returning to economic reform, the government is pinning its hopes for reviving the economy on a sovereign-wealth fund financed by state shareholdings and with up to $200bn to invest. But that is likely only to increase Mr Erdogan’s control over the economy, hardly a promising sign—and not just because of incompetence. In recent years cronyism, always a problem, has become steadily worse. + +A rare vote for no + + + +If Mr Erdogan is vulnerable anywhere it is here. Unlike Russia, with its oil, Turkey needs foreign exchange and investment. Corruption and political repression will drive them away—even as they eat up resources. Eventually the pain will fall on the merchants and business people who are the backbone of AK support. + +Already, there are signs that Mr Erdogan’s popularity is waning. “Chief”, a biopic eulogising his career, has proved a failure with critics and audiences. At a recent performance at 11am in the town of Izmit, the box office refused a cinema-goer a ticket: he would have been the only member of the audience. + +And if Mr Erdogan loses? The consequences of No are harder to predict. A defeat of any kind would be a humiliation. But Turkey would still be under emergency rule, giving the president vast power. + +A heavy defeat could embolden dissidents and reformists within AK to attempt to restrain Mr Erdogan. It would also encourage his opponents. After the repression, dissidents, the media and ordinary Turks would leap at the chance to speak out. “There is a wall of silence in this country,” says Selma Atabey, a former nurse and trade-union member, sacked after the coup. “A No in the referendum would help break it down.” + +Yes and No + +A narrow loss, however, might lead Mr Erdogan to take desperate measures. A master at manipulating conflict to his own advantage, he could engineer another clash with the Kurds. He could call an early election in the hope of winning a large majority. Some fear that his government could put forward another new constitution, with a few cosmetic amendments. This time, with a big enough majority, it would not need to go to a referendum. + +Whatever the result on April 16th, Turkey has entered a dark period. A vote for Yes would saddle the country with an elected dictator. A No would not save Turkish democracy. But it would let it live to fight another day. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21720611-turks-are-split-over-giving-new-powers-recep-tayyip-erdogan-be-warned-he-would-use-them/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Brave “New Turkey” + +The legacy of an attempted coup in Turkey + + +Exploiting a failed bid to topple the government + +Apr 15th 2017 | ISTANBUL + + + + + +AFTER months in hospital and several operations, Sabri Unal is beginning to regain the use of his right arm. On July 15th last year, alarmed by reports of an army coup, Mr Unal was injured in a forlorn attempt to block a pair of tanks roaring down an Istanbul avenue. When the first tank showed no signs of stopping, he dived between its tracks, avoiding death by a split second. When another approached moments later, he threw himself to the ground once again. That tank’s tracks mangled his arm. Asked what inspired him to take to the streets that night Mr Unal, a web programmer, offers a straightforward answer. “As long as I can remember,” he says, “I have been against coups everywhere.” + +The shock of the coup, the bloodiest in Turkey’s history, and the courage of thousands of people like Mr Unal who risked their lives to oppose it, has been overshadowed in the world beyond Turkey’s borders by the mass purges, detentions and reports of torture that followed it. In Turkey, it has been different. To legitimise President Recep Tayyip Erdogan’s draconian policies and to boost his attempt to bolster his powers through a new constitution, the memory and trauma of the coup have been nourished, politicised and consecrated. + + + +In Mr Erdogan’s hands, the coup has turned into the cornerstone of what the president and his supporters refer to as the “New Turkey”: a more religious, more anti-Western and less predictable incarnation of the republic founded by Kemal Ataturk over nine decades ago. Universities, parks, stadiums, swimming pools and other landmarks across the country, including the Bosporus bridge where soldiers fired on unarmed protesters, have been renamed after the coup and its victims. + +On the streets of most cities, billboards proclaiming that Turks will never succumb to putschists or terrorists mingle with banners calling for a Yes vote in the constitutional referendum. At the start of the school year, children across the country were made to watch a video that moved seamlessly between footage of the coup and images of Ottoman troops squaring off against Allied forces during the first world war. The education ministry has added a class on the events of July 15th 2016 to the curriculum. + +Mr Erdogan compares the coup to Turkey’s war of independence. His aides reach for even more creative historical parallels. July 15th was a “revolution” that will shape Turkey “just as much as 1789 influenced France and just as the Bolshevik revolution influenced Russia”, says Mehmet Ucum, a presidential adviser. The coup exposed and brought down the “antidemocratic structure” within the bureaucracy, Mr Ucum claims. The new constitution will help fill the vacuum, he insists. “We have to rebuild the state from the ground up.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21720616-exploiting-failed-bid-topple-government-legacy-attempted-coup-turkey/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +United States + + +Donald Trump’s foreign policy: On a whim and a prayer [Fri, 14 Apr 13:31] + +Modern warfare: Useful idiots, updated [Fri, 14 Apr 13:31] + +Trust forests: Elliott less [Fri, 14 Apr 13:31] + +St Louis: Millennials to the rescue [Fri, 14 Apr 13:31] + +Closing Rikers jail: Siren island [Fri, 14 Apr 13:31] + +Scandal in Alabama: And other parts [Fri, 14 Apr 13:31] + +Lexington: Trump v Trumpism [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +On a whim and a prayer + +Donald Trump’s foreign policy looks more normal than promised + + +With two big caveats + +Apr 15th 2017 | WASHINGTON, DC + + + + + +THE salvoes of cruise missiles Bill Clinton launched in August 1998, against a suspected chemical-weapons factory in Sudan and an al-Qaeda camp in Afghanistan, were considered by many American lawmakers to be ineffectual, or worse. Mr Clinton had admitted canoodling with Monica Lewinsky three days earlier—had he taken his cue from a recent Hollywood film, “Wag the Dog”, in which a fictional president invents a war to shift attention from a sex scandal? By contrast, the strikes Donald Trump launched on the Shayrat air base in Syria on April 6th, which were of similarly limited size and ambition—designed to make a point, not war—have been feted, on the left and right, as a well-judged action by a commander-in-chief who may be starting to find his feet. Hillary Clinton, Mr Trump’s defeated Democratic rival, said she would have acted similarly. “Donald Trump became president!” said Fareed Zakaria, a liberal pundit, on CNN. + +The contrasting responses to these strikes, almost two decades apart, illustrate the extent to which foreign policy is often judged more on its domestic political context than its prospects of success. Mr Clinton’s point, that the Islamist rulers in Kabul and Khartoum should stop succouring Osama bin Laden, and Mr Trump’s, that Bashar al-Assad should stop gassing his fellow Syrians, both justified military action. Visibly upset by television images of dead Syrian children, Mr Trump explained his salvo in a tone of admirable moral outrage. “Even beautiful babies were cruelly murdered in this very barbaric attack,” he said. “No child of God should ever suffer such horror.” Yet Mr Trump’s raid had two additional things going for it. + + + +First, the modest military action Mr Clinton preferred doesn’t look so bad compared with what followed. After George W. Bush’s costly wars, then Barack Obama’s failure to enforce a “red-line” warning against Mr Assad’s chemical weapons use, many Americans want to bloody the Syrian dictator’s nose, but not war. Second, there is indeed evidence that Mr Trump is adopting a more conventional foreign policy. And almost everyone who applauded his missile strike is desperately keen, given the president’s erstwhile indifference to America’s international standing and inattention to geopolitics, to encourage that orthodox drift. For the same reasons, however, they are liable to be disappointed. + +A call from HR + +The growing orthodoxy can be mainly attributed to the influence of Mr Trump’s impressive national-security team. At the National Security Council, H.R. McMaster has been cleaning shop following the enforced exit of his short-lived predecessor, Michael Flynn. A respected Russia analyst, Fiona Hill, has been hired. Mr McMaster’s deputy, K.T. McFarland, a former Fox News talking-head with scant qualifications for such an important role, is being eased off to an untaxing ambassadorship. James Mattis, the defence secretary, and Rex Tillerson, the secretary of state, are supportive of these changes; like Mr McMaster, they are experienced managers, with orthodox views and to varying degrees project an aura of authority, despite the fact that almost none of their subordinates, the political appointees upon whom cabinet chiefs depend, have been appointed. + +Their efforts have also been assisted by reality, which has tended to make Mr Trump’s erstwhile foreign-policy impulses appear untenable. Having argued that America’s interests were best served by leaving Mr Assad in place—and, for the same reason, having warned Barack Obama back in 2013 not to launch the missile strike that he now blames him for not launching—Mr Trump found the televised images of the Syrian dictator’s attack on Khan Sheikhoun too repugnant to ignore. Having refused to criticise Russia’s president, Vladimir Putin, whose authoritarian leadership Mr Trump admires, he is now digesting reports that the Russians had warning of the attack, then bombed the hospital to which its victims had been sent in an attempt to destroy the evidence. + +These pressures—able cabinet chiefs and a world less amenable to major foreign-policy revisions than Mr Trump supposed—will endure. So the drift to orthodoxy will probably continue, but with two equally important caveats. First, Mr Trump’s willingness to take and abruptly abandon radical positions, like the clubhouse commander-in-chief he resembles in all ways except one (he actually is the commander-in-chief), will still impinge on American foreign policy. An almost untrammelled preserve of the presidency, it tends to reflect the character of its incumbent more than any other branch of policymaking: under Mr Clinton, foreign policy was ingenious, but sometimes too tactical; under Mr Bush, it was well-meaning, but arrogant and rash; under Mr Obama, it was intellectually coherent, yet at times inflexible. Mr Trump’s foreign policy is also shaping up in his image. Well-judged though the missile strike was, it is astonishing that he could have conducted such a momentous policy about-turn in a matter of hours on the strength of a news report. + +Mr Trump’s able lieutenants will not be able to compensate fully for such presidential foibles—as has been apparent in the confused messages coming out of the administration on what the strike augurs for Mr Trump’s Syria policy and use of force. Mr Tillerson, having at first cautioned against thinking it augured anything, declared on April 10th that Mr Trump’s America would henceforth be an avenging angel for human rights: “We rededicate ourselves to holding to account any and all who commit crimes against the innocents anywhere in the world.” Sean Spicer, the White House spokesman, seconded that: “If you gas a baby, if you put a barrel bomb into innocent people, I think you will see a response from this president.” That did not sound very “America First”, the principle of narrow national interest Mr Trump preaches. Sure enough, Mr Spicer, who has had a middling week—to emphasise Mr Assad’s heinousness, he said that even Hitler didn’t “sink to using chemical weapons”, a bizarre claim—later issued a retraction. “Nothing has changed in our posture,” he clarified. “The president retains the option to act in Syria against the Assad regime whenever it is in the national interest”. Mr Trump, in short, reserves the right to do something, or nothing. + +The second big caveat to Mr Trump’s acceptance of reality concerns two areas where his views are both fixed and outside the bipartisan consensus that has generally defined foreign policy since the second world war. One is immigration, especially of Muslims, which Mr Trump wants to curb. The other, probably more important, is America’s terms of trade, which Mr Trump believes are grossly unfair. Here, too, there has been tentative reassurance. His immigration curbs have been blocked by the courts. The meeting Mr Trump held with Xi Jinping on April 6th and 7th appears to have been civil and anodyne. But it would be unwise to bank on Mr Trump jettisoning the only political views he has consistently held over decades. In the end, the couple of areas where the president has firm views seem likely to matter more than the many areas where he has none. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21720625-two-big-caveats-donald-trumps-foreign-policy-looks-more-normal-promised/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Useful idiots, updated + +How a pair of self-publicists wound up as apologists for Assad + + +The trail from Damascus to Alex Jones and Mike Cernovich + +Apr 15th 2017 + + + + + +A COUPLE of days after the chemical weapons attack in Syria, some Twitter users in America began sharing a theory: the pictures had been concocted as a pretext for launching a missile attack. The notion was endorsed by Alex Jones, who runs a website called Infowars, which has successfully spread the idea that the Sandy Hook school shooting in Connecticut was a hoax and that Hillary Clinton was involved in a paedophile ring run from a pizzeria in Washington, DC. Mr Jones was until recently a fervent supporter of Donald Trump. Campaigning last year, candidate Trump returned the favour: “Your reputation is amazing, I will not let you down,” Mr Trump said. Now, it seems, he has. + +The story of how Mr Jones fastened onto his Syria conspiracy has been pieced together by Ben Nimmo and Donara Barojan of the Atlantic Council, a think-tank. It begins in Syria, where a pro-Assad website published an article claiming that those who came to the aid of the attack’s victims were not wearing protective gloves, and therefore it must be a hoax. It also claimed that a TV station had inadvertently announced plans to cover the strike before it had taken place. This idea was then picked up by several websites, including the Centre for Research on Globalisation, a hub for conspiracy theories and fake stories. + + + +From there it was a short hop to American conspiracy sites, such as Mr Jones’s Infowars, which claimed the whole thing was a “false-flag” operation funded by George Soros. Mike Cernovich, another conspiracy theorist, took a similar line and spread the phrase #SyriaHoax. It was given a bump by computer programs used to boost stories on social media (one Twitter account used #SyriaHoax 155 times). A foreign government might have had a hand in this: the Senate has heard testimony that Russia used this technique to spread fake news stories during last year’s election. Since April 6th, #SyriaHoax has been used in 192,000 tweets—85% of which originated in the United States. The hashtag reached 13.6m Twitter users in a single hour according to Keyhole, a social-media analytics firm. And that is how some self-publicists, posing as American patriots, became apologists for the Assad regime, which drops poison gas on children. + +CORRECTION: An earlier version of this story said that Mike Cernovich has been praised by President Trump. That was wrong and has been removed. It was Donald Trump Jr. who said of Mr Cernovich, “in a long gone time of unbiased journalism he’d win the Pulitzer”. Sorry. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21720627-trail-damascus-alex-jones-and-mike-cernovich-how-pair-self-publicists/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +At loggerheads + +A tussle in Oregon raises concerns about handing land to states + + +What happens when trust forests no longer make money + +Apr 12th 2017 | SCOTTSBURG, OREGON + + + + + +DEEP in Oregon’s Elliott State Forest, past groves of 200-foot Douglas firs and bigleaf maple trees dripping with emerald green Spanish moss, Joe Metzler pulls over his Toyota truck and peeks over a precipitous slope covered in tree stumps for signs of elk. Mr Metzler, a retired coastguard rescue swimmer who looks a good deal younger than his 49 years, frequently hunts in the area. To make a clean kill with his bow and arrow, he sometimes camps out in the forest for a week. Then comes the really tough part: hauling 300lb of meat to his car, which is sometimes parked miles away. “It is not old man’s hunting,” he says gleefully. + +Soon Oregon may sell 82,500 acres, or most of what remains of the dense forest, to a timber company and a Native American tribe. The proposal would allow public access on half the land. But sportsmen, who can currently roam the forest mostly as they please, worry it will be hard to reach or unsuitable for hunting. Environmentalists fret protections for threatened species would be relaxed. + + + +The Elliott State Forest is not directly owned by the state; it is state trust land, which is required by Oregon’s constitution to produce profit for public schools. The Elliott does that through logging. State trust lands are common in the American West. They trace their roots to 1803, when Ohio joined the union and was given a grant of land to support public education. The practice was replicated throughout the process of state accession, and today there are approximately 46m acres of such lands, 85% of which lie west of the Rocky Mountains. + +Recently the Elliott State Forest has struggled to meet its financial responsibilities. A series of environmental lawsuits to protect threatened species such as Coho salmon, a Pacific fish, and marbled murrelet, a small sea bird, led to injunctions that crushed logging. Between 2012 and 2013 net revenues from timber in the forest plunged from $5.8m to -$3.3m. Oregon has since dithered between selling the forest and finding another way to compensate the trust. + +The potential sale comes at a moment of great angst about public lands and increased scrutiny of state stewardship. At the Republican National Convention last year, the party’s platform included a provision for the transfer of federal lands to the states. In January, prodded by Rob Bishop, a Republican congressman from Utah, Congress changed a key budget rule that will make it easier for such a transfer to take place. But not everyone wants it. States have far leaner budgets for land management than the federal government does. The fear that they will emphasise profit over access and conservation—or, worse, need to sell the lands they gain—has created eclectic political alliances. Nowhere is this clearer than in Oregon, where the potential sale of the Elliott State Forest has led conservative hunters and anglers to join tree-hugging environmentalists and Kate Brown, the Democratic governor, to oppose the sale. + +Several states have been successful at managing trust lands. Some of Arizona’s are close to Maricopa County, home to more than 60% of the state’s population; they make money by leasing and developing those lands. New Mexico’s trust lands are flush with oil; by exploiting them, the state raked in almost $500m in 2016. A report published in 2015 by the Property and Environment Research Centre, a think-tank, found that between 2009 and 2013 state trust lands in Montana, Arizona, Idaho and New Mexico returned $14.51 on every dollar spent, compared with 73 cents on every dollar spent by the US Forest Service and the Bureau of Land Management, the main stewards of federal land, which are not required to make a profit. But if state trust lands start to struggle financially, “it’s perilous. Things can go from bad to sale really quickly,” says Dean Finnerty, who works as a hunting and fishing guide in the Elliott State Forest. + +There is a precedent for such worries. According to the Wilderness Society, a conservation group, Idaho has shed 41% of its lands since statehood; 100,000 acres have been offloaded since 2000. Oregon has sold all but 780,000 acres of its original 3.4m. Selling 82,500 more would not only upset those who love the Elliott, but fuel a wider worry about what happens when public lands are handed to states. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21720662-what-happens-when-trust-forests-no-longer-make-money-tussle-oregon-raises-concerns/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Beyond Ferguson + +Millennials really like St Louis + + +In addition to the country’s highest murder rate, the city boasts a vibrant start-up scene + +Apr 12th 2017 | ST LOUIS + + + + + +A WALK from the history museum on the edge of St Louis’s verdant Forest Park, past grand faux-Tudor mansions on Lindell Boulevard, leads to the wealthy white neighbourhood of Central West End. Turn left on Euclid Avenue and you pass the Drunken Fish sushi restaurant, Golden Grocer Natural Foods, trendy espresso bars and Left Bank Books, displaying titles thoughtfully chosen by bibliophile shop assistants. Then these businesses suddenly stop, a block or so away from Delmar Boulevard. This is the city’s unofficial demarcation line. + +The area directly to the north of Delmar Boulevard is 99% black, according to Washington University and the University of St Louis. Boarded-up and crumbling houses, dollar shops and fried-chicken outlets dominate the picture. The median home value north of Delmar is a quarter of the value of houses south of Delmar. Only 5% of residents who are 25 or older north of Delmar have a bachelor’s degree, compared with 67% south of it. + + + +Situated on the banks of the majestic Mississippi on the boundary of Illinois and Missouri, St Louis is a border city still shaped by the racial attitudes of the old South and the property arrangements of the old north. During the decades of the great migration, when blacks from the rural South moved to cities in the north, it became one of America’s most segregated cities. St Louisians resorted to private racial covenants to prevent blacks from buying properties in white districts. “Shall St Louis be the slave master?” reads the caption of a handbill from 1916 on display at the Missouri History Museum; it shows a white man cracking a “negro-segregation” whip at a black mother and her three children to shoo them back to the slave quarters. Despite this and other efforts to persuade them, St Louisians voted overwhelmingly in favour of two ordinances that would prevent anyone buying a home in a neighbourhood with a population of more than 75% of another race. The Supreme Court struck them down in 1917, but they set the tone for race relations in the city for the following few decades. + +Some say the city’s apogee was in 1904, when it hosted the World’s Fair and the summer Olympics. At the time it was America’s fourth-largest city after New York, Chicago and Philadelphia; it had the second-oldest symphony orchestra, a grand opera house, one of the world’s largest and busiest railway terminals, one of its most popular urban parks and some of the country’s best breweries, bearing Germanic names such as Griesedieck or Winkelmeyer. Others argue that the decline started in the 1950s, when the city’s population peaked at 850,000 residents. It has been downhill ever since, with a trajectory familiar to many cities in the rustbelt: deindustrialisation and depopulation, as first whites and then middle-class blacks fled to the suburbs. + +Today St Louis is a shadow of its former self. With 188 murders last year, it had the highest murder rate per person in the country. Nearly all the suspects were black, as were their victims. In a city of only 315,000 residents these days, almost one-third live at or below the federal poverty level. Most of them are black. The city once renowned for its economic might and the talents of its offspring—from T.S. Eliot and Yogi Berra to Josephine Baker and Chuck Berry—is now more famous for the race riots in Ferguson, one of its suburbs. + +Traces of the once-great city are everywhere. Many multinationals still call St Louis their home, from Anheuser-Busch (beer) and Ralston Purina (pet food) to McDonnell Douglas (aerospace) and Monsanto (agrochemicals). St Louis is also the biggest centre of financial-services firms outside Manhattan, with companies such as Edward Jones and Stifel Financial. Yet many of the big firms have been gobbled up: Ralston Purina has been bought by Switzerland’s Nestlé, Boeing now owns McDonnell Douglas and Monsanto is in the process of merging with Germany’s Bayer. On April 5th JAB, a German conglomerate that owns Krispy Kreme Doughnuts and other food brands, announced it was taking over another St Louis success story, with the acquisition of Panera Bread, a bakery chain, for $7.5bn. + +St Louisians cringe every time one of their home-grown companies is taken over, as this tends to come with job cuts. Yet the creation of attractive takeover targets also shows the city’s knack for entrepreneurship, which endures. In 2002 Washington University, St Louis University and others teamed up to create the Cortex innovation community, built on industrial land between the two universities. Cortex is now home to about 325 companies, with names like CoFactor Genomics and Boundless, which have found a home in the Centre for Emerging Technologies, an incubator; the BioGenerator, an accelerator that works with startups for a short, intense time; TechShop, a workspace for prototyping; or another of the seven innovation centres. By next year the eighth office building will be added, along with a light-rail station connecting Cortex to the airport and a hotel. Last month Microsoft announced that it will move its regional headquarters into the new Cortex building next year. + +These efforts are showing hopeful results. Nearly 15,000 new college-educated millennials moved to St Louis between 2000 and 2014, according to the Pew Charitable Trust, which makes the city millennials’ fourth-most-popular destination, eclipsing both Chicago (11th) and Seattle (19th). In a report on the rise of innovation districts, the Brookings Institution, a think-tank, cited Cortex as one of the seven best examples. On April 11th and 12th Dennis Lower, the chief executive of Cortex, played host to 12 other mayors to parade these achievements. Until recently, no forward-looking mayor would have bothered to travel to St Louis for inspiration. + +Long-term success, however, requires this renaissance to include the northern part of the city. Here, too, there are some encouraging signs. Half the students at the Collegiate School of Medicine & Bioscience, a magnet high school attracting the best pupils in the area, which was developed by Cortex, are black. It is a start. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21720664-addition-countrys-highest-murder-rate-city-boasts-vibrant-start-up/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Closing Rikers Island + +The end for New York’s most famous jail + + +The plan to close Rikers Island reflects a wider improvement + +Apr 12th 2017 | NEW YORK + + + + + +KALIEF BROWDER was 16 years old when he was arrested for allegedly stealing a backpack. When his family could not pay bail, he was sent to Rikers Island, New York’s largest jail. There he spent around 800 days in solitary confinement; he was beaten by guards and other inmates and tried several times to kill himself. Because his hearings were delayed, he ended up spending three years on Rikers, all the while claiming his innocence. His case was dismissed in 2013 and he was released. But the damage had been done, and he eventually killed himself. His tale, not an unusual one, provoked a campaign to close the “torture island”, as inmates call it, altogether. Bill de Blasio, New York’s mayor, agrees. On March 31st he vowed to begin a ten-year process to shut it. + +Three-quarters of the roughly 9,400 people held in New York City’s jails have not been convicted of anything. Most are housed on Rikers. The place has become a warehouse for people too poor to post bail or suffering from addiction or mental-health problems (jails, unlike prisons, are locally operated and hold people serving short sentences or awaiting trial). Because of backlogs, many wait months for their day in court. Even a short stay behind bars can be very disruptive. It can mean loss of job, home and custody of children. + + + +Conditions on the island are brutal. In 2014 Preet Bharara, New York’s former federal attorney, found a systematic pattern of excessive force used by correction officers, creating a “culture of violence”. Many of its antiquated buildings lack air-conditioning, and sewage regularly backs up. Rats are everywhere. Transport of prisoners to and from the isolated island costs $31m a year, and visiting family members find it hard to get to. One former inmate said the living conditions were unfit for a human, “so I began to act inhuman”. A report issued by an independent commission on April 2nd called Rikers Island “a 19th-century solution to a 21st-century problem”. + +The good news is that New York may not need it. The city continues to cut crime; it has just had its safest first quarter on record. This means that fewer people are going to jail. The city’s daily jail population fell from more than 20,000 in 1991 to about 10,000 last year. To reduce it further, alternative sentencing and more bail reform will be needed to divert those accused of lesser crimes. And change will not happen overnight. “It took us 30 years to get into this mess,” says a reformer, “so it’s going to take a while for us to get out of it.” + +New York is not alone. Most of the 720,000 people sitting in the country’s 3,000 jails are awaiting trial. Nearly half a million of the detained cannot afford to post bail. Some states and municipalities are starting to change tactics. New Jersey’s Hudson County has seen a 25% drop in its jail population since bail reform was implemented on January 1st. The new state law allows nearly all non-violent defendants to be released without monetary bail pending trial. In February Maryland’s highest court ruled that people can’t be held in jail because they can’t afford bail. In November New Mexico voters passed a constitutional amendment prohibiting judges from jailing people because they can’t afford bail. District attorneys, judges and police in places such as Philadelphia and Spokane are working on alternatives to detention, using pre-trial risk assessments, supervised monitoring and citations instead of arrests. “It’s not just [Rikers] closure that’s exciting, it’s all the other stuff that goes with it,” says Cherise Fanno Burdeen of the Pretrial Justice Institute. + +The announcement was a risky move for Mr de Blasio, who is running for re-election this year. Closing Rikers and building new facilities will cost more than $10bn, and the city’s jail system is already expensive: taxpayers will pay $2.4bn in 2018 to support it. The commission reckons, however, that the closure will save New York City $1.3bn a year. + +The commission recommended that Rikers should be replaced with smaller jails near the city’s courthouses. But Mr de Blasio has had a hard enough time opening homeless shelters around the city. Convincing New Yorkers that a jail in their neighbourhood is a good thing might be even trickier. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21720666-plan-close-rikers-island-reflects-wider-improvement-end-new-yorks-most/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Sweet home + +Alabama politicians keep having to resign + + +The state has lost the leaders of all three branches of government in a matter of months + +Apr 12th 2017 | MONTGOMERY + + + + + +SHORTLY before Robert Bentley resigned as Alabama’s governor on April 10th, the television crews assembled outside the state capitol were joined by a group of visiting schoolchildren. Wisely their teachers hurried them along. “Cherchez la femme,” one passing tourist commented to another, astutely. For a year the governor had denied having an affair, despite the emergence of grubbily incriminating evidence, vowing to stay in his post. But after being booked into the Montgomery county jail, then pleading guilty to two campaign-finance misdemeanours, Mr Bentley returned to the capitol to announce that he had indeed quit. + +He hadn’t seemed the type: either to combust in disgrace, or to become governor in the first place. A dermatologist and—before his fall—a deacon of the First Baptist church in Tuscaloosa, Mr Bentley was almost 60 when he was first elected as a state representative in 2002. He did not appear destined for bigger things. But his grandfatherly demeanour and family values shtick, plus a crowded Republican field, helped him to the governorship in 2010; his devoted wife Dianne baked cookies for the campaign team. It was during that race that his life became entangled with that of Rebekah Mason, a married woman almost 30 years his junior whom he is said to have encountered in the Sunday-school class he taught. She worked as his press secretary, then in his administration and on his landslide re-election campaign in 2014. + + + +After the release last year of tapes in which, among other endearments, Mr Bentley rhapsodised about touching Ms Mason’s breasts, he insisted that they had not had a sexual relationship. The tapes, it has emerged, were recorded by Ms Bentley, who after 50 years of marriage divorced him in 2015. Their release set off an effort to impeach the governor—which, despite the state’s colourful political history, would have been a first. As part of that process, on April 7th the state House Judiciary Committee published a report by its special counsel, Jack Sharman. At a hearing on the morning of the resignation, Mr Sharman argued that although the racy details of the case were reminiscent of Bill Clinton’s, the governor’s bid to “advance his personal interests over those of the state”, and his “increasingly desperate conduct”, more closely resembled Richard Nixon’s. + +To facilitate his relationship with Ms Mason, alleged Mr Sharman, and then to conceal it, Mr Bentley misused state resources and personnel. Learning of the recordings before they became public, he is said to have become obsessed with tracking them down, deploying security officials to hunt for them and intimidate other staff members. He allegedly schemed to punish his wife’s assistant, Heather Hannah, whom he held responsible for the tapes, and smeared, then fired the state’s top lawman, once a close friend. + +The testimony that supported those accusations was excruciating. “Ray Charles could see what was going on,” one former aide said of the relationship. The governor’s children reportedly thought he might be suffering from dementia. He accidentally sent his wife a text message that said, “I love you Rebekah”. Ms Bentley was able to read other messages on an iPad that, unbeknown to the governor, was synchronised with his phone. “Poor Robert. Poor Rebekah,” he texted Ms Mason on one occasion. “Bless our hearts,” she replied. “And other parts.” Poor Ms Bentley. + +Dramatic as the hearing was, in the end it was moot. On April 5th the state ethics commission had said that its own, separate investigation had found “probable cause” to believe Mr Bentley broke the law, mostly in relation to campaign-finance violations that it unearthed during its inquiry. That and Mr Sharman’s findings turned the state’s Republican leaders against him. Meanwhile Mr Bentley’s lawyers were evidently hammering out a deal under which he pled guilty to the misdemeanours but will be spared further prosecution. Along with a suspended jail term, probation, community service and $7,000 in fines, he was required to resign immediately. + +Mr Bentley omitted to mention that detail in the sanctimonious statement he made in the old state house chamber, beneath a plaque commemorating Alabama’s secession in 1861. He had “not always made the right choices,” he said euphemistically. “He probably got off very, very easy,” said Ed Henry, a representative who filed the articles of impeachment. + +God’s armour + +In the oddly festive mood that upheavals can induce, the throng of journalists and politicos trooped across the capitol’s hallway to the old Senate chamber, where Kay Ivey, the lieutenant-governor, was hastily sworn in as Mr Bentley’s successor. A pastor asked God to “clothe her with spiritual armour”. She will need it. She is only the second female governor of a state reluctant to return women to high office. (The first was Lurleen Wallace, who in 1966 stood as a surrogate for her segregationist husband George and died after 16 months in the role.) Moreover she takes over at what, even by Alabama’s standards, is an excruciatingly embarrassing moment. + +Mr Bentley’s demise means the state has lost the leaders of all three branches of government in a matter of months. Last year Michael Hubbard was ousted as Speaker of the House after his conviction on ethics charges (he is appealing). Roy Moore was suspended as chief justice in a rumpus over his recalcitrant opposition to gay marriage. The reshuffle does not end there. After Jeff Sessions joined Donald Trump’s cabinet, it fell to Mr Bentley to nominate his successor in the Senate. He chose Luther Strange, the state’s attorney-general—whose office was investigating Mr Bentley. Three of Alabama’s past six governors have now faced criminal charges. + +Still, tawdry as it has been, the Bentley saga has its heroes, and its morals. According to her testimony, Mr Bentley told Ms Hannah, his wife’s assistant, that “people fall at my throne” and she had better “watch it”. She was undaunted. Confidants whom he allegedly tried to enlist to do his dirty work seem ultimately to have attempted to restrain him. + +The danger of alienating friends is one of the lessons of a debacle in which Mr Bentley, now 74 and not thought independently wealthy, has forfeited not just his wife, job and reputation but his retirement benefits. The others are familiar, too. Yet again the cover-up proved more damaging than the original peccadillo. Finally, as one Montgomery insider glumly summarises, “There is no fool like an old fool.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21720588-state-has-lost-leaders-all-three-branches-government-matter/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Lexington + +How to make sense of Trump v Trumpism + + +The struggle between the Bannon and Kushner factions is about more than dynasty + +Apr 12th 2017 + + + + + +PROXIMITY to power does not make Washington, DC, a kindly place. Like medieval peasants watching knights joust, the yokels and churls of the political village—lobbyists, consultants or (hold your nose) journalists—may nod and gawp at the mighty, but their hope is to see one grandee thwack another into the mud. + +These are, therefore, heady times in the nation’s capital. Two powerful men, Stephen Bannon, chief strategist to President Donald Trump, and Jared Kushner, a senior adviser, have been jousting for weeks, exchanging sword-swipes and lance-blows via leaks and briefings in the press. Still more blissfully for spectators, Mr Kushner is the president’s son-in-law: the boyish, dashing heir to a family of property tycoons and Democratic donors, and husband to Mr Trump’s daughter and trusted counsellor, Ivanka. His rival, Mr Bannon, is older and angrier: a grizzled champion of America First nationalism. + + + +This White House tourney is usually presented as a clash of partisan ideology or as a human melodrama. Some complaints from the Kushner camp certainly ring with dynastic alarm. The ultimate argument against Mr Bannon, one unnamed source told the Washington Post, is that his hardline, fire-up-the-faithful brand of politics “isn’t making ‘Dad’ look good”. For their part, Bannonites inside government and their cheerleaders in the conservative media like to paint Mr Kushner as a closet liberal, undercutting Mr Trump’s historic populist victory. Their ire also takes in Ivanka, as well as Gary Cohn, the president’s national economics adviser, and Dina Powell, a deputy national security adviser, both of them veterans of Goldman Sachs, a bank (to complicate matters, Mr Bannon also once worked for Goldman Sachs, but more recently earned notoriety as the rumpled, combative boss of Breitbart, a hard-right news outlet). + +When briefing against the Kushner faction, the Bannon camp uses such slurs as “the Democrats”, “the New Yorkers” or “the globalists”. Mr Kushner and his elegantly tailored friends are charged with being squeamish about immigration, too eager to see America play global policeman in Syria and peacemaker in the Middle East, and willing to give a hearing to Democratic experts on such subjects as health policy or climate change. Bannonites, Democrats and pundits have mocked Mr Kushner for the range of his responsibilities. The president’s son-in-law is charged with overseeing everything from Middle East peace to relations with Canada, Mexico and China, and reorganising the federal government using lessons from business. + +But to cast these fights as a clash between left and right, or even as palace intrigues, is to miss the whole story. The semi-public combat between Mr Bannon and Mr Kushner rests on an argument about something much larger: namely, the purpose of Mr Trump’s presidency itself. + +For Mr Bannon, the point of winning the 2016 election was to advance a cause, which history may in time call Trumpism. A former naval officer from a blue-collar family in Virginia, he spent years studying theories of how societies collapse. He has made several lurid, doomy films alleging that working families have been sold out by rootless, corrupt elites, who stood by and profited as immigrants flooded in. Other works lamented the collapse of Judaeo-Christian values in the American heartland. Mr Bannon saw before many others on the hard right that Mr Trump might not be a conventional conservative, but still “intuitively” grasped the power of economic populism. On joining the government as the president’s ideologue-in-chief, Mr Bannon pasted specific promises made in Trump campaign speeches on the walls of his West Wing office. Those promises cover everything from border security to global trade and an assault on regulations and the federal agencies that write them, through what Mr Bannon calls the “deconstruction of the administrative state”. Addressing conservatives in February, the strategist assured them that, whenever establishment types try to lure Mr Trump away from that radical agenda, “He’s like: ‘No, I promised the American people this, and this is the plan we’re going to execute on’.” + +During the election Mr Bannon bonded with Mr Kushner in their shared contempt for professional campaign consultants. To hear Mr Kushner describe it, the Trump campaign resembled a disruptive startup, full of tech whizzes with “nontraditional” backgrounds outside politics. Addressing New York business bosses in December, Mr Kushner explained how the campaign exposed him to the anger of Americans who feel ignored by their government. He realised that he lived in a “bubble” of elite opinions about such subjects as immigration or the environment. + +“I like Steve, but…” + +However, Mr Kushner differs in at least one important way from Mr Bannon. He acts as if the last election was a victory for a man called Trump, not a movement called Trumpism. Shortly after the election Mr Kushner told Forbes magazine that his father-in-law transcends party labels, with policies offering “a blend of what works, and eliminating what doesn’t work.” + +Both men entered the White House rooting for Mr Trump to prove critics wrong. But if Mr Trump prospers by breaking every campaign promise, Mr Bannon’s nationalist cause will have been betrayed. The strategist has survived until now by telling Mr Trump he can help him keep those pledges, shoring up his most loyal bases of support. Yet over time, history suggests that seeking to bind Mr Trump with his own words is a losing gambit. + +The logic of Mr Kushner’s family first pragmatism is simpler: Americans will thank Mr Trump if his policies improve their lives. For now both men offer the president possible paths to success. At some point their visions will prove incompatible—hence recent rumours, fuelled by Mr Trump, that Mr Bannon may be sacked. The prize being fought over is the president’s legacy. That is a contest not everyone can survive. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21720606-struggle-between-bannon-and-kushner-factions-about-more-dynasty-how-make/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +The Americas + + +Honduras: A double helping of Hernández? [Fri, 14 Apr 13:31] + +Canada: Blurring borders [Fri, 14 Apr 13:31] + +Chile: Going nowhere [Fri, 14 Apr 13:31] + +Brazilian letters: Bard of Belíndia [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +A double helping of Hernández? + +Eight years after a coup, a heated election in Honduras + + +The president’s bid for a second term alarms democrats + +Apr 12th 2017 | TEGUCIGALPA + + + + + +IN THE early hours of June 28th 2009 a unit of the Honduran army stormed the house of the president, Manuel Zelaya, disarmed his guard and spirited him onto a plane bound for Costa Rica. The army sent tanks onto the streets, silenced radio and television stations and cut off electricity and water to parts of Tegucigalpa, the capital. A fake letter of resignation from Mr Zelaya was read out to Honduras’s congress, which approved his ousting. It was Latin America’s last real coup. + +As a general election approaches in November, those events are uppermost in Hondurans’ minds. That is partly because Mr Zelaya has not gone away; his wife, Xiomara Castro, is a presidential candidate. More important, the current president, Juan Orlando Hernández, is breaking a taboo which Mr Zelaya was thrown out of office to protect: he is running for re-election. That, plus Mr Hernández’s authoritarian style, has made the main election issue the fate of democracy itself. + + + +The authors of the constitution, adopted in 1982, wanted to prevent would-be strongmen from entrenching themselves in power. Unambiguously, the document declares that anyone who has exercised “executive power” may not be president. An office-holder who merely advocates changing that provision “shall immediately” be dismissed. The white-hatted Mr Zelaya, whose soft spot for Venezuelan socialism terrified the Honduran elite, planned to hold a non-binding referendum on whether to convene a constituent assembly to change the constitution. Many thought he would use it to hang on to power indefinitely. That triggered his removal. + +Mr Hernández, whose Machiavellian talents would impress even the Florentine philosopher, did nothing so clumsy. He is a beneficiary of a suit brought by a former president, Rafael Callejas, who argued that the term limit violated his human rights. In April 2015 the supreme court ruled in the ex-president’s favour, suspending the constitutional ban on re-election. Mr Callejas is not running, but Mr Hernández is. + + + +He is a paradox. Credited with strengthening what had threatened to become a failed state, he is also reviled for stunting its development. He governs a country that serves as a conduit for much of the cocaine that enters the United States, and where police and politicians are enmeshed with drug-trafficking gangs. The son of Porfirio Lobo, Mr Hernández’s predecessor, has pleaded guilty to cocaine trafficking. More than 60% of Hondurans are poor. In 2013, the year before Mr Hernández took office, Honduras was still the most murderous country on earth. Its public finances were a mess: the budget deficit was 7.9% of GDP (see chart). Some 600,000 Hondurans, about 7% of the population, have moved to the United States. + +Mr Hernández, who was schooled in a military academy, brought a thwack of authority. At his inauguration ceremony he dramatically dispatched the army to take the field against criminals. “The party has ended,” he declared. The murder rate has fallen since the army took up positions in the country’s most violent barrios, helped by crime-prevention programmes financed by the United States. Mr Hernández has disrupted some drug-trafficking networks and shipped dozens of suspected drug lords to the United States for trial, earning the gratitude of both the Obama and Trump administrations. + +He steadied the government’s finances by raising the sales tax and cutting the wage bill. The poor are spared, Mr Hernández’s allies insist. Many benefit from Vida Mejor (Better Life), a programme that provides roofs, water filters and other goodies. Teachers have been disciplined: schoolchildren now spend 225 days a year in the classroom. With help from McKinsey, a consultancy, the government has hatched a plan to develop such industries as tourism, textiles and call centres. + +This record has bred more suspicion than goodwill. That is partly because Mr Hernández seems bent on controlling the institutions he purports to be strengthening. “We’re paying for security with the coin of freedom,” says Raúl Pineda, a political analyst who supports Mr Hernández’s National Party. + +The doubts begin with the president’s signature policy of sending the army to fight crime. Military units deter some violence, but after a drop the murder rate has stabilised at a high level. Most people still think insecurity is the biggest problem. The government plans to replace soldiers with a reformed police force, but that will take years. In the meantime, Mr Hernández is spreading the military mindset through his administration. He has deployed officers in all branches of government to serve as his “eyes and ears”, says Mr Pineda. + +The judiciary and the electoral commission are subservient to the president, he says. In a ranking of judicial systems by the World Justice Project, a pressure group, Honduras comes 92nd out of 113 countries on its measure of constraints on government powers. During Mr Lobo’s presidency the social-security system was defrauded of $300m; a small amount of money from firms linked to the scandal helped finance Mr Hernández’s campaign (without his knowledge, he says). That revelation triggered weekly torchlit protests and demands for his resignation in 2015. + +He sought to lower the temperature by inviting in an anti-corruption mission, MACCIH, under the auspices of the Organisation of American States. It has big ambitions: to help prosecutors investigate corruption, spur a cleanup of party financing and encourage judicial reform. A new investigation and prosecution unit specialising in corruption is to begin work next month. MACCIH helped win long jail sentences for the former head of the social-security institute. “We never had such a sentence before for corruption,” says its Peruvian chief, Juan Jiménez. + +But the group is encountering as much resistance as collaboration. It has clashed with congress over the implementation of the party-financing law and with the president and congress over the naming of magistrates to the government’s spending watchdog. MACCIH is being subjected to a “black campaign”, says Mr Jiménez. + +Now the trial of Mr Lobo’s son in New York threatens to damage Mr Hernández’s crime-fighting image. In March a courtroom heard a former member of Los Cachiros, a drug-trafficking gang, testify that he had met Mr Hernández’s brother, Tony. The purpose was to persuade the government to pay its debt to a company used by the gang to launder money. Tony Hernández denies the claim. + +The president’s re-election bid caps the list of grievances against him. He favours limiting presidents to two four-year terms, which is the practice in the United States. The opposition, which deems the entire project to be illegitimate, refuses to write that provision into law. If Mr Hernández wins the election, “it would validate the break with the constitution,” says Edmundo Orellana, a former defence minister and foreign minister. + +Although nearly two-thirds of Hondurans oppose re-election, Mr Hernández may well prevail. The coup fractured the country’s two-party system, in which the National Party took turns in power with the Liberals, whose ideology and programme differed little. The toppling of Mr Zelaya, a Liberal, split that party, with some factions backing the coup. Mr Zelaya’s supporters broke away to form Libre, which is putting up Ms Castro. + +She shares the anti-Hernández field with two more contenders: Salvador Nasralla, a flamboyant sports broadcaster, who is the nominee of the Anti-Corruption Party, and Luis Zelaya (no relation to Manuel), the Liberals’ candidate. Mr Zelaya, a soft-spoken university professor with no political experience, is running as much against the traditional system as against Mr Hernández. His Liberal Party is “the same” as the others, he confesses. He offers a programme of “social liberalism”, which includes such goals as fairer taxes, freedom of expression and education for all. But “no economic model works if you don’t have institutionality,” he says. + +His hopes of winning a one-round election may depend on unity within the opposition, which has not developed yet. Libre and the Anti-Corruption Party seem to be close to uniting behind Mr Nasralla. If Mr Zelaya were to join, he might head the coalition. But he says he will not accept a deal based on the customary sharing out of top jobs among party loyalists. Mr Zelaya thinks he can win anyway, as disenchanted voters unite behind him. But it would be unwise to bet against the crafty Mr Hernández winning one more four-year term—at least. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21720653-presidents-bid-second-term-alarms-democrats-eight-years-after-coup-heated/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Blurring borders + +Canada agrees on free trade with itself + + +But barriers will fall slowly + +Apr 12th 2017 | OTTAWA + + + + + +DOING business across Canada is not for the impatient. Its ten provinces and three territories see themselves as quasi-countries. They set standards and write laws with little regard for what their neighbours are doing. In Ontario petrol must be at least 5% ethanol; Manitoba insists on an 8.5% blend. Each province has its own ideas of how much grain dust people can be exposed to, and what sort of packages coffee creamer should come in. Ontario requires that toilets at construction sites be equipped with “open-front” seats; Alberta is toilet-seat neutral. If you buy booze in one province you had better drink it there. New Brunswick is pursuing a resident all the way to the Supreme Court for refusing to pay a fine of C$292.50 ($220) when he was caught bringing in beer and wine he had purchased in Quebec. Trade among provinces is less free than it is among the 28 members of the European Union. + +So politicians from the regions and federal government were in a self-congratulatory mood after they signed a “Canadian Free-Trade Agreement” on April 7th. Brad Duguid, Ontario’s economy minister, who hosted the gathering, pronounced the deal “a major leap forward”. The Canadian Federation of Independent Business presented each of the ministers with its Golden Scissors Award for cutting red tape. + + + +The main change on July 1st, when the accord takes effect, will be that firms can bid more easily for contracts with governments outside their home provinces. The provinces had little choice. A free-trade pact between Canada and the European Union is to take effect by mid-year. Without a change, European firms would have had more freedom to compete for provincial contracts than Canadian ones. The last big agreement to liberalise internal trade came in 1994, when the North American Free-Trade Agreement took effect. “We don’t do anything unless we’re forced to,” sighs a former federal trade minister. + +Other barriers will fall more slowly, if at all. The agreement includes a “negative list”, meaning that only sectors explicitly mentioned can be protected from inter-provincial competition. (Before, provinces did not have to say which sectors they were shielding.) But the negative list is long, filling 136 of the deal’s 329 pages. It includes the provincial liquor monopolies, the production of dairy, poultry and eggs and the processing of timber. It does not bring uniformity to the provinces’ proliferation of rules, either. + +The politicians promised to set up working groups to trim the list and reconcile regulations. There are plans to harmonise rules on selling recreational cannabis, which the federal government intends to legalise. Weed may thus cross boundaries more freely than booze, at least for a while. Some oddities may never go away. To register a standardbred horse in Quebec you must live in the province for 183 days. Ontario will still restrict licences to sell bullfrogs; Manitoban bullfrog-breeders are out of luck. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21720644-barriers-will-fall-slowly-canada-agrees-free-trade-itself/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Going nowhere + +Santiago’s transport system is sputtering + + +Commuters do not want to pay for bad service + +Apr 12th 2017 | SANTIAGO + + + + + +TRANSANTIAGO, the Chilean capital’s public-transport system, had its tenth birthday in February, but no one celebrated. Launched with much fanfare, the scheme was supposed to integrate bus and metro lines and speed up traffic. Smog-spewing yellow buses disappeared. Smart cards replaced cash. + +But Transantiago is sputtering. Fare evasion is rampant, journeys are getting slower and the state has spent billions of dollars to prop up private bus operators. Passengers sometimes wait ages at stops scrawled with graffiti with no inkling of when the next bus will arrive. Espacio Público, a think-tank, calls Transantiago Chile’s worst public-policy project since the country returned to democracy in 1990. + + + +Despite all that, Transantiago has brought some improvements. The number of fatal accidents has dropped sharply, as has pollution from exhaust fumes. The system’s 20,000 employees are now on formal contracts and have better working conditions than before. Because bus drivers no longer handle cash, the number of robberies has fallen. Compared with transport in many other Latin American cities, Santiago’s works pretty well. + +But it would be hard to persuade most commuters of that. The problems start with design. Planners laid some bus lanes directly over metro lines, so the two forms of transport compete rather than complementing each other. The city has hired too few inspectors to catch fare-dodgers and motorists who stray into bus lanes (though cameras are catching some of the errant cars). Sometimes buses are so crowded that even honest passengers have trouble reaching the card-swiper. + +Increasingly, passengers are less inclined to pay. Despite the subsidies, fares have risen by 40% since 2010, far faster than most prices. Bus journeys have slowed by 8% since 2012. For some, fare-dodging is a form of protest. Guillermo Muñoz, the metropolitan area’s director of public transport, admits that in some parts of the capital the service is “very bad”. Last month Chile’s transport minister resigned, in part to take responsibility for Transantiago’s failings. + +Espacio Público says one reason for the high subsidies is that too few companies operate the buses. The system began with 16 operators but dropouts and mergers have shrunk the number to seven. The largest firms operate 1,200 buses apiece. This makes them “too big to fail”, says Clemente Pérez of Espacio Público. Hence the subsidies to keep money-losing companies afloat. No company should have more than 10% of the market, Mr Pérez thinks. + +The city will have a chance to correct that next year, when contracts to operate bus lines are to expire. It is likely to encourage smaller and newer companies to enter the market. That might release money for improvements. The new transport minister, Paola Tapia, has created a task-force to help reduce fare-dodging and promised more money for inspectors. With luck, Transantiago could become a service that commuters are happy to pay for. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21720651-commuters-do-not-want-pay-bad-service-santiagos-transport-system-sputtering/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The man who coined “Belíndia” + +A Brazilian inflation fighter becomes immortal + + +The Academy of Letters elects a liberal economist + +Apr 12th 2017 | SÃO PAULO + + + + + +BRAZILIANS who remember the hyperinflationary 1980s cheered the news on April 7th that prices rose by just 4.57% in the year to March. Inflation has not come that close to the central bank’s target of 4.5% in seven years. In a fitting coincidence, on the same day one of the architects of the Real Plan, which tamed inflation in 1994, donned the gold-and-green livery of the “immortals”, as members of the Brazilian Academy of Letters are known. + +Edmar Bacha is just the third economist to join the august group, whose 40 lifetime appointments are reserved for towering intellectuals and the finest wordsmiths. His election last November (by members of the academy) was one of the most contentious in its 120-year history. It may also be a sign of the times. + + + +Besides wrestling with inflation, Mr Bacha was head of the statistics office and the state development bank. He later became an investment banker. He has a way with words. In “Fable for technocrats”, an essay published in 1974, he described Brazil as “Belíndia”, a tiny, rich Belgium surrounded by a vast, poor India. In “End of inflation in the kingdom of Lizarb”—where “everything is back to front”—he skewered the belief that rising prices cause fiscal deficits. + +Some doubt that Mr Bacha merits immortalisation. Novelists and poets on the academy argued that most of his dozen books are dry treatises. His liberal economics is anathema to humanists enamoured of Karl Marx. + +Still, he beat Eros Grau, a former supreme court justice (who has written erotic fiction). The unusually close vote (of 18 to 15) exposed a rift between the academy’s “culture wing” and its clutch of public servants, including two former presidents. In November a contest between a political scientist and a philosopher-poet ended in an unprecedented tie, forcing a new election with fresh candidates. João Almino, a writer and diplomat, got the open seat. + +Mr Bacha’s elevation may be a sign that economic liberalism is regaining ground. In March street protesters called for privatisation and deregulation, among other things. The government of Michel Temer may prove to be one of the most liberal that Brazil has ever had. The academy is also becoming harder-headed. Some immortals were reportedly keen to elect a former banker to oversee its investments. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21720652-academy-letters-elects-liberal-economist-brazilian-inflation-fighter-becomes-immortal/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Asia + + +Aadhaar: Digital dawn [Fri, 14 Apr 13:31] + +Methamphetamines in Australia: Ice storm [Fri, 14 Apr 13:31] + +A prison for foreigners in South Korea: Why the jailbirds sing [Fri, 14 Apr 13:31] + +Executions in Vietnam: Deathly silence [Fri, 14 Apr 13:31] + +Bullying in Japan: All against one [Fri, 14 Apr 13:31] + +Banyan: Trouble at the top [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Digital dawn + +India’s ID system is reshaping ties between state and citizens + + +As long as they have a mobile signal + +Apr 12th 2017 | SARGASAN + + + + + +IT TAKES a little over 90 seconds. At the government-subsidised ration shop in Sargasan, a village in Gujarat, Chandana Prajapati places her thumb on a fingerprint scanner. A list of the staples she and her family are entitled to this month appears on the shopkeeper’s computer: 10kg of rice, 25kg of wheat, some cooking oil, salt and sugar. The 55-year-old housewife has no cash nor credit card, but no matter. By tapping in an identifying number and presenting her thumb one more time, Mrs Prajapati authorises a payment of 271 rupees ($4.20) straight from her bank account. It is technical wizardry worthy of Stockholm or New York; yet outside buffaloes graze, a pot of water is coming to the boil on a pile of firewood and children scamper between mud-brick houses. + +Like most Indians, Mrs Prajapati would have struggled to identify herself to the authorities a few years ago, let alone to a faraway bank. But 99% of adults are now enrolled in Aadhaar, a scheme which has amassed the fingerprints and iris scans of over 1.1bn people since 2010. With her authorisation, any government body or private business can check whether her fingerprints or irises match those recorded against her unique 12-digit identifying number in its database. When it comes to identification, India has unexpectedly leapfrogged every country with the possible exception of Estonia, a tiddler with a penchant for innovation. + + + +Being visible to the state is assumed in rich countries, if only because the taxman insists on it. But India had no equivalent of a Social Security number, and less than half of all births are registered. Only a small minority are required to pay income taxes. Plenty of those entitled to government services, meanwhile, have not received them, because they have not been identified as eligible or because middlemen have stolen their share. At the same time, the benefits rolls are filled with fake beneficiaries, created by those seeking to palm undeserved rations of fertiliser, food or some other subsidised good. + +Ghosts v the machine + +Linking ration cards to an Aadhaar number, and thus to the biometric data tied to it, means a single person cannot have more than one and ghosts can have none. The original pitch to politicians—the scheme was adopted by the previous government, but has been embraced by Narendra Modi, the prime minister—was that Aadhaar would help make welfare more efficient. The potential gains are huge. One official estimate suggests that “leakage” in subsidy payments meant that only 27% of the money ended up in the right hands: not so much a leaky bucket as a sieve. + +Over 400,000 ghost children were struck off school rolls in just three states after schools were required to match their pupils to Aadhaar numbers to keep receiving state funds. By weeding out false claims, authorities say they have saved $8bn in two-and-a-half years; the annual central-government budget for subsidies is about $40bn. That may be an exaggeration, and critics say there are other ways to improve the administration of subsidies. But the savings clearly outstrip the roughly $1bn cost of deploying Aadhaar. + +Changing the mechanics of how a benefit is received is often just as important as the benefit itself. Development experts like the fact that, at least in theory, a villager can gain access to a subsidy in a distant city. This removes a big barrier to internal migration. A project to purge electoral lists found 800,000 fictitious voters in Punjab, a state of 30m. The authorities suspect that 30% of driving licences are fake, many of them duplicates to help drivers evade bans—a ruse that would be impossible if all licences were linked to Aadhaar. + +Indeed, the improvements in accuracy and efficiency are so enormous that the government now wants to use Aadhaar more broadly than originally advertised. Recent edicts propose to make it compulsory for everything from booking train tickets to owning a mobile phone. If implemented, these new uses would put paid to the notion that enrolling in Aadhaar is voluntary, which was the promise of its backers—led by Nandan Nilekani, an IT grandee who used to chair the agency that set up Aadhaar. This in a country with no overt privacy laws, let alone a tradition of handling sensitive data competently (many ministries’ websites contain spreadsheets teeming with Indians’ personal data). + +But Aadhaar is a poor way to build up an Orwellian panopticon, Mr Nilekani argues, given the wealth of information already available from telephone records, GPS data, bank statements and the like. A bigger problem may be the impracticalities of the system. Unlike reading an ID card, checking someone’s identity through Aadhaar requires an internet connection and, often, electricity. Ration-shop owners in out-of-the-way places are known to march their customers to the top of a hill, roof or tree—wherever a phone signal can be found—to check their identity. Even then, samples seem to show that roughly a third of authentications come back negative, an extraordinarily high failure rate for a technology that people rely on for necessities. The chafed fingers of manual labourers often cause problems, for example. + +Those high failure rates are just teething troubles linked to Aadhaar’s many new uses, says Ajay Bhushan Pandey, the head of the agency overseeing the scheme. Devices that scan irises (which offer more reliable readings) are becoming cheaper and should become the norm, he says. Already the Aadhaar database is being tapped 20m times a day, 20 times the rate of a year and a half ago. That thrills cheerleaders as much as it alarms critics. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21720609-long-they-have-mobile-signal-indias-id-system-reshaping-ties-between-state-and-citizens/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Ice storm + +Australia is flailing in the face of a meth epidemic + + +The addiction rate is the world’s highest + +Apr 12th 2017 | SYDNEY + + + + + +RARELY does a politician admit that his child is an addict. When Bob Hawke, a former prime minister, did so more than 30 years ago, many parents could identify with him: Australia was sliding towards a nasty heroin problem. Use of the opioid, which became popular during the Vietnam war, rose fourfold during the 1990s. By the end of the decade, almost 150,000 Aussies were shooting up regularly. As overdoses and blood-borne virus transmissions increased, wonks in Canberra devised a “Tough on Drugs” policy, which was more sensitive than it sounds. In addition to pursuing traffickers to curb supply, the government pumped money into education and treatment for addicts. Heroin use dropped by three-quarters. + +It has been replaced by methamphetamine, a stimulant which was dished out to pilots in the second world war. Over a quarter of a million Australians are thought to be using it. That constitutes the highest rate of addiction in the world (see chart). Researchers disagree about whether that figure is rising. Existing users are certainly consuming more of its strongest, crystalline form, known locally as “ice”. The share of meth-users on crystal rather than pills, powder or paste doubled to 50% between 2010 and 2013. In the state of Queensland, scientists testing sewage found a three- to fivefold increase in meth residue between 2009 and 2015, which might reflect rising purity. + + + +One jittery teenager at a rehab clinic in Sydney run by the Ted Noffs Foundation, a charity, attributes its popularity to accessibility. “It is so easy to get it’s not even funny,” he says. The small-time dealers he buys from make it at home. Most ice comes from China, however, where a thriving pharmaceutical industry underpins its production, according to John Coyne, a former intelligence official. Organised drug rings are attracted to Australia, where the street value of ice is over six times that in China. Huge trade flows between the two countries make it relatively easy to import the drug and repatriate the profits. + +Compared with other narcotics, or even with legal intoxicants, ice is cheap. By one count, Australia is the world’s second-most expensive country in which to drink, smoke and get high. Yet for around A$40 ($30), a hit of ice can last over half a day. “You feel like Superman,” the young addict says. This comes at a cost: ice can cause users to become paranoid, aggressive and even psychotic. It is now the most commonly used drug among those entering prison. Meth-related hospital admissions have quadrupled since 2010. + +Politicians know there is a problem, but have failed to respond as once they did. When heroin was rife, the government prioritised treatment and attempts to deter use through education. Theoretically it still does: following the recommendations of a National Ice Task Force, it allocated A$300m to reduce demand and help addicts last year. Over half that amount is going to local medical practices, which provide support to addicts. Yet critics complain that co-ordination is lacking. In the 1990s doctors, schools and police worked closely together against heroin, says Matt Noffs of the Ted Noffs Foundation. “We don’t see that now.” + +Like most European countries, Australia spends most of its counter-narcotics budget on enforcement. Yet consumers are more likely to be arrested than dealers, and police put more effort into seizing drugs than into unravelling the rings that smuggle them, Mr Coyne argues. Huge increases in arrests and seizures have had no lasting effect on the supply or price of ice. “Policing on its own won’t solve the problem,” laments Mick Palmer, a former federal police commissioner. “It’s like sticking your finger in a bucket of water.” + +Unfortunately, politicians find it increasingly hard to peddle “soft” responses to a drug considered the cause of much violence. In a recent election in Western Australia, both big parties pledged longer sentences for offenders, ignoring the fact that jails in the state were already overcrowded. Blunt policing has not worked, but it sells well. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21720595-addiction-rate-worlds-highest-australia-flailing-face-meth-epidemic/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Why the jailbirds sing + +Migrant workers in South Korea are often better off in prison + + +Poor foreigners are pampered behind bars, but scorned elsewhere + +Apr 12th 2017 | CHEONAN + + + + + +THE government of South Korea describes Cheonan prison, south of Seoul, as “the world’s first specialised foreigner correctional facility”. It must also be one of the most humane, with its gallery of softly lit art and its designated smile zones (for guards and inmates alike). There are sing-alongs to Korean pop music, language classes over hot tea and snacks, and a library stocked with over 5,000 foreign books. Foreign lawbreakers are usually sent to the prison, which opened in 2010 (and also houses 700 South Koreans, in a separate wing). Yet the inmates embarking on its “Good Morning Korea” programme of cultural education typically serve short sentences before being deported. + +Cheonan is the only prison in the country to offer halal food, as well as 30 minutes a day of TV programming in Chinese, English and Arabic (over two-thirds of the inmates are Chinese; Americans make up the second-largest group). Its wardens say they also hope the 600-odd prisoners, from 35 countries, can serve as “ambassadors for Korea” when they return home, armed with taekwondo philosophy and K-pop anthems. Some ex-convicts have left with business plans to set up as tour operators to the country. + + + +Cheonan is in part a reflection of South Korea’s growing acceptance of outsiders. More than 2m foreigners live in the country—a relatively small proportion of its population of 50m, but a huge increase compared with only a few years ago. The number of foreigners working in South Korea has risen more than thirtyfold since 2000, to over 600,000 last year. Of these, 221,000 were in the country on an employment-permit system that has, since 2004, allowed unskilled workers from 15 Asian countries to fill yearly quotas for dirty or dangerous low-paid jobs. They toil at tasks shunned by newly rich South Koreans, such as oil-drum cleaning or pig farming, in industries including agriculture, fisheries and construction. + +The thoughtful treatment foreigners receive in prison is harder to find outside it. Migrant workers, mainly from South-East Asia, are becoming a new underclass. In a government survey of female migrants in agriculture, two-thirds lived in makeshift housing such as container boxes or greenhouses (employers often withhold part of their wage in return for accommodation); over three-quarters were given fewer than two days off a month. In January two Cambodians in their 20s were reported to have died from cold and exhaustion. + +Another recent survey, by Amnesty International, suggests that four-fifths of migrant farm labourers are not paid for overtime, despite typically working 50 hours a month longer than their contracts require. Though all workers must sit a basic Korean-language test in their home countries to qualify for the visa, hardly any are equipped for the rural dialects they hear. Abuse from employers is common. Lawyers such as Go Jieun, part of a group that represents migrant workers free of charge, encourage them to record unfair treatment on their phones. + +Udaya Rai, a Nepali who heads South Korea’s migrant workers’ union, says little effort is made to protect migrants from exploitation or violence. Changing jobs requires employers’ permission. Police have been known to turn away migrants “with blood running down their faces”, he claims, telling them to resolve problems with their employers directly. Many are told that if they report abuse they may not receive their wages. Those who leave work to do so are sometimes reported by their employers for absconding, which can land them in one of the country’s three immigration detention centres, where they can be held without a warrant. + +Mr Rai says the biggest problem is that South Koreans still view the employment of migrants as a form of charity, rather than as a boon for the economy. It took the migrant workers’ union a decade to win official status, eventually conferred by the supreme court in 2015. The union represents illegal migrants too, who make up over one-tenth of foreigners in South Korea. Many of them have overstayed their visas while trying to claim unpaid wages. + +A warden at Cheonan says he hopes delinquents will leave the prison with “a more positive view of South Korean society”. Some migrant workers may need a stint behind bars to see it. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21720646-poor-foreigners-are-pampered-behind-bars-scorned-elsewhere-migrant-workers-south-korea-are/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Deathly silence + +Vietnam executes many more people than previously thought + + +It is the third-most-bloodthirsty country after China and Iran + +Apr 12th 2017 | HANOI + + + + + +IT IS hard to know how many people governments execute, as the most bloodthirsty regimes do not make the data public. Amnesty International, a pressure group, documented 1,032 executions in 2016, but believes the true number is much higher. The good news is that that figure represented a 37% drop from the previous year. Two countries, Benin and Nauru, abolished capital punishment, and others are moving towards abolition. In all, 141 countries have got rid of the death penalty in law or in practice. + +At least ten Asian countries resorted to capital punishment last year, however. China is believed to be the most frequent executioner, though the number of people killed, and for which crimes, remain closely guarded secrets. The Philippines looks poised to reintroduce capital punishment—and in practice the police administer it frequently, by shooting drug suspects without the nicety of a trial. + + + +Vietnam also shrouds capital punishment in secrecy. For years it was believed to execute just a few people a year. But a report from its Ministry of Public Security, published in the local media in February, said that 429 prisoners were executed between August 8th 2013 and June 30th 2016. That would make Vietnam the world’s third-most-prolific executioner, after China and Iran (see chart). + +Vietnam has also continued sentencing people to death at a rapid clip—63 in 2016 alone, according to Amnesty’s count, which it believes is incomplete. Most of these were for drug offences. + +Just two years ago a different course seemed likely. Vietnam abolished capital punishment for several crimes, including drug possession, producing or trading counterfeit food, and corruption—provided the accused returned 75% or more of the amount stolen. Even so, at least 681 people remain on death row. And while other countries hand out far more death sentences than they carry out, in Vietnam the gap seems to be alarmingly small. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21720645-it-third-most-bloodthirsty-country-after-china-and-iran-vietnam-executes-many-more-people/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Japanese education + +Why bullying in Japanese schools is especially traumatic + + +Evacuees from Fukushima are the latest to suffer torment in class + +Apr 12th 2017 | YOKOHAMA + + + + + +FIVE months after the tsunami that led to his family’s evacuation from Fukushima, the boy enrolled at a new school in Yokohama. His new classmates were pitiless. They called him “germ boy”. They stole his things. They punched and kicked him and threw him down the stairs; they took him to a “study” room and beat him some more. He was eight years old. + +The abuse went on for nearly three years before the bullies added extortion. In 2014 they told the boy to hand over any compensation his family may have received after their evacuation. His parents were in fact not eligible for any recompense, but relatives had lent them ¥1.5m ($13,000). They kept it in cash at home, fearful that they would again lose access to bank accounts. The boy gave all the money to his classmates. After the cash ran out he stopped going to school altogether. + + + +The boy, now 13, is one of hundreds of evacuees to have been bullied at school. And they are part of a broader problem. Bullying may or may not be more common in Japanese schools than elsewhere, but it is unusually intense when it happens. In 1986 a boy killed himself after classmates, egged on by the teacher, topped months of mental torture with a mock funeral. Since then, thousands of articles and hundreds of books have been written on the subject. Yet there is no sign that the bullies are laying off. In 2015 nine bullied pupils killed themselves, according to government figures. Suicide is the biggest cause of death for Japanese aged 10 to 19, and the first day of school the most common date for it. + +According to Mitsuru Taki of the Ministry of Education, bullying in other countries tends to involve two or three pupils picking on another. In Japan, in contrast, most cases involve a big portion of a class inflicting insistent psychological (and occasionally physical) torment on a single victim. “Bullies in Japan are not rotten apples,” he says. “It is a group phenomenon.” + +There are many reasons for this idiosyncratic form of bullying. “A characteristic of Japan is that you should not stand out,” argues the head teacher of a secondary school in Tokyo. “Pupils have to lead a collective life when they are at school,” adds Koju Matsubayashi, an official in the anti-bullying department at the ministry. Erika, an 18-year-old who left her school in Tokyo after being bullied, agrees. “I was told by teachers to adapt or quit, so I quit.” + +The way Japanese schools are organised adds to the pressure to conform. Children learn in a “homeroom”: teachers of different subjects come to them. School activities, such as cleaning, eating lunch and studying, are organised in groups. Pupils must often adhere to exact rules about their uniforms, hairstyles and grooming. Individuals who do not kuuki wo yomu (roughly translated as “read the vibes”) can be shunned by other members of the class. + +The Programme for International Student Assessment (PISA), a triennial test run by the OECD, a club mostly of rich countries, suggests that Japanese students are among the top performers academically. They also have among the lowest truancy rates. But they say they enjoy school less than nearly everyone else. Shoko Yoneyama of the University of Adelaide argues that Japanese schools are “dysfunctional communities”. + +Backing the bad guys + +Teachers rarely help. They are renowned for their pedagogical prowess, especially in maths. But most are not trained to spot bullying. There are few incentives to notice or deal with it, notes Kanae Doi of Human Rights Watch (HRW). Teachers who do not achieve harmony, she says, are seen as poor performers. One survey suggests that around 12% of teachers have taken part in bullying. A quarter of high schools allow corporal punishment. + +Since the 1980s various task-forces have tried to curb bullying. But the local school boards that interpret the national curriculum and hire teachers have neglected the problem. In the case of the boy from Fukushima, the school board in Yokohama for months tried to blame him for what had happened, suggesting he had handed over his family’s savings voluntarily, before changing its mind after much public criticism. + +An anti-bullying law passed in 2013 requires schools to report cases of bullying. It has led to a sharp rise in the number of known cases, from a few thousand a year to 224,450 in 2015. Yet there are suspiciously wide disparities between regions. In 2015 Kyoto prefecture reported 90.6 cases per 1,000 pupils; Saga prefecture, in southern Japan, recorded just 3.5. Mr Taki reckons that even Kyoto underestimates the scale of the abuse. + +The law has prodded teachers to report bullying but it has done little to change how they deal with the problem. Bullies are rarely punished: in 2014 there were 188,057 reported cases and just two suspensions. The law also assumes that conformity is the way to stop bullying. It says teachers should “cultivate recognition…among students that they are part of a group”. But some pupils are simply more likely to be victims and need protection—like evacuees. + +Or gay pupils. A report last year by HRW concluded that bullying of gay children in Japanese schools was “nearly ubiquitous”. It cited a survey by Yasuharu Hidaka of Takarazuka University that found that 44% of gay teenage boys were bullied. One told HRW that teachers said his sexuality broke the harmony of the school. Separate research by Mr Hidaka suggests that roughly one Japanese teacher in three thinks homosexuality is a mental illness. + +The government has said it will review its anti-bullying policies. But laws alone will not curb it. That requires policymakers and teachers to recognise that too much conformity plays a part. In November the 13-year-old from Fukushima issued a message for evacuees enduring similar ordeals. “It is painful,” he said through his parents, “but please do not choose to die.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21720643-evacuees-fukushima-are-latest-suffer-torment-class-why-bullying-japanese-schools/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Banyan + +Japanese ultranationalists’ devotion to the emperor is unrequited + + +A bit of a problem for flag-waving extremists + +Apr 12th 2017 | Tokyo + + + + + +THE Imperial Rescript on Education was issued on behalf of Emperor Meiji in October 1890. In 315 flowery characters, it urged his subjects to cultivate loyalty, filial piety and, above all, a readiness to dedicate their lives to the survival of the imperial house. Certified copies of the rescript were housed in small shrines to the imperial family in every school. Children committed the rescript to memory. It was a founding document for the notion of kokutai, a mystical state-forming bond between the divine emperor and his subjects. It was therefore the beginning of a road to indoctrination in which Japanese carried out orders in the name of the emperor—a road that led to militarism, total war and, ultimately, shattering defeat. It is no wonder, then, that kokutai, as a word, now jars as much as Lebensraum does in Germany. As for the imperial rescript, in 1948, three years after Japan’s surrender, the Diet revoked it. + +So what was the cabinet of Shinzo Abe, the current prime minister, doing in early April by allowing the use of the rescript in schools? The cabinet’s chief secretary, Yoshihide Suga, coyly noted that the government was hardly suggesting it should be the “sole foundation” of children’s education, as if critics of the policy were the fundamentalists. Nor, he said soothingly, was the government actively promoting its use in classrooms: that was up to teachers, and they should not contravene the constitution. + + + +Yet the move comes on the heels of a furore over Moritomo Gakuen, an ultranationalist group running a kindergarten. Videos show its infants bowing before photographs of the current emperor, Akihito, and his wife; singing martial songs; calling on grown-ups to protect disputed territories claimed by China, South Korea and Russia; and chanting anti-Chinese and anti-South Korean slogans. In Japan this is mainly a scandal because of the involvement of the prime minister’s wife, Akie Abe, who agreed to be honorary head of a primary school that Moritomo Gakuen is building in Osaka. She resigned from the post in late February, after it emerged that the school had acquired land from the local government at a heavily discounted price—the subject of an ongoing investigation. + +Kazutoshi Hando, a historian who was born in the early 1930s, can still recite the rescript by heart. It has good parts, he says: who can object to filial piety, getting along with your siblings or being close to your friends? But it also implies that good subjects must be prepared to die for the emperor. That runs entirely counter to the liberal constitution the American occupiers imposed on Japan in 1947. It denies the emperor’s divinity, describing the monarch as merely the symbol of the nation. Sovereignty is declared to reside firmly with the people. Mr Hando scorns those who back a revival of the rescript but fail to mention the implication that the emperor should return to power. + +Japan’s right-wingers and ultranationalists are a mixed bunch. On the streets of central Tokyo, thugs sweat at the wheels of “sound trucks” flying imperial flags and blaring out songs from the days of conquest. At Tokyo’s Yasukuni shrine, which deifies Japan’s war dead, fantasists strut about in the uniform of kamikaze pilots. Elsewhere, mousy self-taught “historians” sit in shabby cubby holes filled with papers “proving” all the wrongs and the lies committed against Japan, while revisionist commentators fulminate in cable-television studios with wobbly sets. + +One thing they all have in common is reverence for the emperor’s unbroken lineage—although believing him a descendant of the sun goddess requires flexible thinking. Perhaps that is why historical revisionism comes easily to these groups. They deny that Japan committed atrocities during the second world war, such as massacring civilians or forcing women into prostitution. + +There are opportunists in these movements, but perhaps most believe what they say. As Mr Hando says, “We in Japan have a habit of thinking that if something should not have happened, then it didn’t happen.” Two rabid revisionists sit in Mr Abe’s cabinet: the defence minister, Tomomi Inada, and Sanae Takaichi, the minister for internal affairs. Nippon Kaigi, a revisionist group dedicated to rewriting the pacifist constitution and restoring the emperor to a more central role, has 38,000 fee-paying members, including three-quarters of Mr Abe’s cabinet. + +Another thing the outfits have in common is a belief that a culture of guilt about the war and all those apologies to neighbours over wartime aggression have emasculated today’s Japanese. Tadae Takubo, Nippon Kaigi’s chairman, says its aim in pushing for “moral education” in schools and for a glossier interpretation of the war in textbooks is to “correct the pendulum” after seven decades of “brainwashing” by left-wing teachers, who object even to compulsory singing of the national anthem. + +The ultranationalists have made progress. The defence of the rescript by Mr Suga, no extremist himself, is a sop. Yet they have a grave problem: the very emperor they claim to revere. Akihito, who is 83, has spent his life reflecting on the tragedy of the war that his father, Hirohito, condoned or even encouraged. He has spent much of his time as emperor visiting battlefields, mourning the dead on all sides, not just Japan’s. + +Chrysanthemum groan + +His actions are a living rebuke to the nationalists. Leaders of Nippon Kaigi visibly twitch with consternation on learning that the emperor invites the likes of Mr Hando in for chats—they never manage to talk to him. Now the emperor is asking the Japanese people for permission to abdicate, since old age is making it hard to carry out his duties. That too offends the nationalists, since abdication supposedly breaks with over two millennia of immutable tradition. The emperor, says Yoichi Funabashi, one of Japan’s best-known liberal intellectuals, is immensely popular and commands respect: “He is in effect invincible.” The ultranationalists, deep down, know that they are not. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21720613-bit-problem-flag-waving-extremists-japanese-ultranationalists-devotion-emperor/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +China + + +Education in the countryside: A class apart [Fri, 14 Apr 13:31] + +Education in Hong Kong: Testing times [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +A class apart + +China’s grim rural boarding schools + + +Millions of children in the countryside attend wretched schools far from home + +Apr 12th 2017 | JIAOBA + + + + + +FRIDAY is a good day for eight-year-old Yang Zongtao. He will see his mother and baby sister after spending the week boarding at Jiaoba Central Primary School in Guizhou, a southern province and one of China’s poorest. He misses his mother “a bit”, he says stoically. But the walk from his home takes an hour, too long to undertake alone each day. So, like millions of pupils in China’s countryside, he remains at school all week (some stay longer). There are rural children who start boarding as early as the age of three. + +Educating rural people has long been a challenge. In the 1990s almost every village had a primary school or “teaching point”, where children aged between six and ten often attended class in a single room. But school enrolments began to fall because of plummeting birth rates and migration to cities. Local governments responded by closing underused village schools and pooling resources in larger ones such as Jiaoba’s. In 2001 it became national policy to merge schools this way. Between 2000 and 2015 nearly three-quarters of all rural primary schools, more than 300,000 of them, were shut. + + + +Because journeys to school are now longer on average—and are often costly, exhausting or dangerous (or a combination of these qualities)—many children now have no choice but to board. By 2010, the latest year for which data are available, around 10m primary schoolchildren in rural China were doing so—about 12% of students in that age group. Half of all secondary-school students in the countryside now board, too. + +There are two main types of boarding school in China. Some are privately run fee-paying ones for children of the urban elite. Pupils often attend such schools close to where they live (many parents believe that education is helped by separation from the distractions of family life). Far more common are rural schools such as Jiaoba Primary (pictured). These are state-run and government-funded. The idea behind the rural ones is that pupils will benefit from not having to commute, take part in household chores or toil in fields. Such schools are also supposed to offer better academic support for students than they can get at home: many older people in the countryside have little formal education. Another proclaimed benefit is that the schools can ensure poor students eat well and have their health properly monitored. + + + +But many rural schools are ill equipped for these tasks. In Guizhou, government spending per person on education in rural as well as urban areas is less than half the amount in Beijing, reckons Unicef, the UN agency for children. At Jiaoba’s primary school, where more than 100 children board (about one-tenth of the total), the head teacher admits that facilities are “poor”. He says that if a family can avoid sending a child to board, it will. The bare concrete walls of the eight-bed rooms are filthy; their windows have no curtains. Toothbrushes stand in lines of mugs on small tables, but there is nowhere to store other belongings—not that many of the children have personal possessions. There is no space in them to do homework. The dormitories are unheated, though it is extremely cold even in spring. + +Yet Jiaoba has better facilities than many other such schools, where children often have to share beds, and toilet blocks are far from dormitories. The government pays 1,000 yuan ($145) a year towards the cost of each child’s lodging, breakfast and supper at Jiaoba Primary (there is also a four-yuan subsidy per child per day for lunch). But elsewhere many parents have to foot the bill. Many schools do not even provide three meals a day, according to Stanford University’s Rural Education Action Programme. The fare often lacks much nutritional value, too. + +Not much food for thought + +Children in the Chinese countryside tend not to be as healthy as their urban counterparts. But those at rural boarding schools are even less robust. They are more likely to have intestinal worms and to be anaemic (which affects both academic accomplishment and health). Far more are unusually short for their age than non-boarders—a sign of poor nutrition. A study in 2009 in the northern province of Shaanxi found that rural children who boarded were on average 3cm shorter than those who did not. Many of the boarders may have been undernourished earlier in their lives. But their rate of stunting increased with age, suggesting that school was aggravating the problem. + +Teaching quality and facilities are sometimes better at the merged schools, but staff turnover is often high. The large size of classes can make teaching more difficult: at Jiaoba some of them have 75 children. Academically, boarders perform even worse than their peers who live at home. Last year a study of boarders in five provinces found they did less well than day pupils in tests of their language ability, memory and speed at problem-solving (there was little difference, however, in their abilities in maths). Students who begin their primary education in old-style village classrooms tend to do better than those who start in larger schools farther away, according to some findings. + +Boarders often suffer from a lack of supervision and emotional support. At Jiaoba, two elderly women stay in the dormitory building overnight. But teachers there admit that some students are “withdrawn”. Children who live at their schools are more prone to anxiety, depression and other mental-health problems. They are also vulnerable to sexual and other forms of abuse: a spate of such incidents has been reported at rural boarding schools in recent years; far more may go undetected. + +Since the merger policy was adopted, drop-out rates may have risen. In 2012 the National Audit Office found that the number of students who quit had more than doubled between 2006 and 2011 in 1,155 primary schools it investigated. That was a rare admission by a government body. The official drop-out rate for all primary schoolchildren in China was 0.2% in 2015, but researchers at Shaanxi Normal University reported a rate 20 times higher than that in a survey of 15,000 children aged 9 to 11 in the countryside. + +In recent decades China has seen rapid improvements in educational standards. The average number of years a Chinese child spends at school has doubled since 1980. The share of the labour force with any kind of higher education increased from 1.1% in 1980 to 12.5% in 2015. But these statistics often obscure how far rural children are left behind academically. Less than 10% of them go to senior high school, compared with 70% of children in cities. + +The government acknowledges that its efforts to concentrate resources in a smaller number of rural schools have not solved the problem, and have sometimes resulted in students having to live in poor conditions without adequate safeguards. In 2012 it ordered local authorities to stop “blindly” closing schools before ensuring that centralised ones are up to standard. But local governments have little incentive to spend more money, since any student who does well academically is certain to leave the countryside. Rural children will form the backbone of China’s future workforce. By failing them, the government is failing the country as a whole. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21720603-millions-children-countryside-attend-wretched-schools-far-home-chinas-grim-rural/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Testing times + +Hong Kong’s next leader wants to make life easier for pupils + + +Will it make her more popular than the current chief executive? + +Apr 12th 2017 | HONG KONG + + + + + +THE leader of Hong Kong, Leung Chung-ying, will not be widely missed when he steps down at the end of June, especially by the young. His five-year term has been dogged throughout by student-led protests. In 2012 thousands of high-school pupils demonstrated against what they saw as an effort to teach them to love the Chinese Communist Party (“national education”, as the government called it). Leaders of the campaign were back on the streets again two years later demanding full democracy. Their “Umbrella Movement” was the biggest act of civil disobedience in the territory’s history and spawned new groups demanding “self-determination” for Hong Kong. + +No wonder, then, that Carrie Lam, who was chosen in March to succeed Mr Leung, is trying to win over the territory’s youth. To be successful, she cannot be seen as another Mr Leung. That will be tricky. In her previous role as Hong Kong’s top civil servant, she had to implement his policies—and, by extension, those of the party in Beijing. Mrs Lam is widely remembered for her obduracy in a televised debate with student leaders during the Umbrella unrest (protesters watching her are pictured). As chief executive, Mrs Lam will still have no freedom to propose political reform unless China wants it. At a meeting in Beijing on April 11th with the president, Xi Jinping, she at least had the gumption to tell him (or so she later said) that “Hong Kong citizens passionately hope for more democracy.” China does not. + + + +Instead of dwelling on politics, Mrs Lam is trying to show concern for students’ welfare. Schools in Hong Kong produce admirable results. But academic pressures on pupils are enormous. Last year Mr Leung’s government commissioned a report on whether academic demands were to blame for a spate of student suicides. Many Hong Kongers were outraged by its finding that the suicides were not directly related to the education system. + +Unlike Mr Leung, who supported rigorous testing of students even at a very young age, Mrs Lam talks of a need to “reduce pressure” on them. She has taken aim at a particularly controversial scheme, supported by Mr Leung, for assessing the performance of primary schools. It involves testing pupils but not telling them their scores: the results are only used to grade the schools. It has resulted in heavy pressure on students. Last year, amid an outcry from parents, the government suspended one form of such tests. But it said it would introduce a new scheme this year that many parents fear will be little different. Mrs Lam wants the testing to be scrapped altogether. Mr Leung has curtly advised her that she cannot abolish it until his term ends. + +During her campaign to become chief executive, Mrs Lam promised to increase the annual budget for education by HK$5bn ($643m), or nearly 7%, noting that government spending on this was below the average in wealthy economies. She is widely expected to replace the unpopular education secretary, Eddie Ng. + +But Mrs Lam’s reforms will do little to ease older students’ political frustrations, including their resentment of the Communist Party’s insistence on “patriotism”. Last month the main advisory body to the parliament in Beijing urged its members from Hong Kong to visit schools in the territory to talk about “national conditions” (or the party’s achievements, as many in the territory interpret that phrase to mean). It said this would help to curb pro-independence sentiment in Hong Kong. More likely is that students will grumble even louder. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21720593-will-it-make-her-more-popular-current-chief-executive-hong-kongs-next-leader-wants/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Middle East and Africa + + +Shia militias: Who runs Iraq? [Fri, 14 Apr 13:31] + +The agony of Palm Sunday: Palm Sunday’s agony [Fri, 14 Apr 13:31] + +Cannabis laws: Puff, puff, prison [Fri, 14 Apr 13:31] + +Iran: Taking aim at the president [Fri, 14 Apr 13:31] + +South Africa: Highway, interrupted [Fri, 14 Apr 13:31] + +Universities in Africa: More can be less [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Who’s in charge? + +America and Iran are jostling for influence over Iraq + + +But no one knows what Donald Trump wants + +Apr 12th 2017 | BAGHDAD + + + + + +TO UNDERSTAND how mightily Iran once dominated Iraq, head to Ctesiphon, Persia’s old capital, just south of Baghdad. A millennium and a half old, its ruined palace still features the world’s largest unsupported brick arch. Until Arab armies seized it at the dawn of Islam, the city was twice the size of imperial Rome and the centre of a Sassanid empire that stretched from Egypt to the Hindu Kush. + +Few Iraqis seem eager to remember that history today. The Persian ruins lie behind rusting barbed wire, as if ties with Iran, past and present, were an embarrassment. Officially, Iran has only 95 military advisers in the country, compared with America’s force of some 5,800 soldiers, several vast military bases and control of the skies. (In reality, an adviser to the prime minister confides, Iran’s forces outnumber America’s at least five to one.) + + + +Iran’s hidden hand is everywhere. One UN official recounts how, after visiting a province near the Iranian border, she was surprised to be told that General Qassim Suleimani, the shadowy commander of the Quds Force, or foreign legion of Iran’s Revolutionary Guard Corps, had been there at the same time. “The Americans are more powerful,” says Hashim al-Hashemi, an Iraqi security analyst in Baghdad, “but the Iranians are more dangerous. They have penetrated every organ of state.” + + + +Their involvement in Iraq has been decades in the making. After Iran’s Islamic revolution in 1979, its ayatollahs recruited Shia exiles whom Saddam Hussein had expelled, and in the 1980s sent them into battle against Iraq. When America toppled Saddam Hussein in 2003, these Iran-leaning exiles headed back to Baghdad, filling the vacuum left by Saddam’s Baath party, which the Americans had banned. + +America’s withdrawal in 2011 and Islamic State’s routing of Iraq’s army three years later, seizing more than a third of the country, provided more opportunities. As the Sunni jihadists surged south, Shia militias declared a hashad, or “popular mobilisation”, drafting in tens of thousands of volunteers. With the help of arms from General Suleimani, they staved off the fall of Baghdad. Then, to “defend” the country, they seized effective control of much of what remained of it. + +The acquisitions continue. In March Asaib Ahl al-Haq, one of the largest militias, moved into the riverside palace of Sajjida, Saddam Hussein’s wife, in Adhamiya, a staunchly Sunni neighbourhood of Baghdad. Much of the rest of the capital is already divvied up between 100 or so other militias. Unlike most Iraqi Shias, who profess allegiance to Grand Ayatollah Ali Sistani, in the city of Najaf, many of the militia leaders say they follow Ayatollah Ali Khamenei, Iran’s Supreme Leader, instead. Their men are prone to patrolling Baghdad’s streets as religious police, much like Iran’s hated basijis. Their influence lay behind a countrywide alcohol ban last year. Several of the militias have political representatives in parliament, and for elections in 2018 may band together to form a decisive Iran-leaning bloc. Hadi al-Amari, the leader of Badr, the largest of the Shia armed groups (it claims 20,000 men), still gives orders in Persian, and is a friend of General Suleimani. He too follows Mr Khamenei, though he says that his men are free to choose. + +Iraqis first, then Shias? + +The practical benefits of adherence to Iran are, however, being tempered with a degree of Iraqi (and Arab) nationalism. Iraq, so Mr Amari says, is too multi-religious to adopt Iran’s system of Shia clerical rule. Other armed groups vow more emphatically to prevent Iran from launching a bid for control of Najaf when Mr Sistani dies. Having Americans around helps reduce dependence on their over-mighty neighbour. When America sent its forces back to Iraq to help with the fight against IS in 2014, most militias welcomed them. + +For the moment, too, the hashad brigades have complied with orders to hang back in the operation to retake Mosul in favour of special forces trained by and operating with American, not Iranian, advisers. They let Haider al-Abadi, Iraq’s prime minister and a man who leans much less towards Iran than his predecessor did, take the credit for battlefield gains. And in return for salaries and formal recognition of the hashad as part of the armed forces, their commanders say they will abide by government orders. They have taken down the billboards of Iran’s ayatollahs which loomed over Baghdad’s squares when popular mobilisation was launched. + +As they have pushed north beyond Shia heartlands, they have grown more inclusive, incorporating tens of thousands of Sunnis, Christians and Yazidis into the hashad. They have stood by as Mr Abadi, with American cajoling, adopted a more Arab, less Shia-revivalist, foreign policy. Resisting Iranian pressure for visa-free access to Iraq in November, officials turned back Najaf-bound pilgrims without permits, and welcomed the first-ever Saudi plane bringing Saudi Shias to the city. In February the Saudi foreign minister visited Baghdad for the first time in 27 years, and an Iraqi delegation has gone to Riyadh to negotiate restoring cross-border trade. + +Yet beyond the tactical alliance over Mosul, all sides are wondering how long the rapprochement will hold. Having rebuilt four big bases, America shows no sign of leaving Iraq; Mr Abadi’s men speak of “a multi-year presence”. On his return from a trip to Washington in March he unveiled plans for demobilising half the 100,000-plus hashad, and integrating what remains directly under army command. Concerned, Iran has sent a new ambassador to Baghdad, who happens to be a senior adviser to General Suleimani. Iranian propaganda videos are circulating, threatening renewed attacks on American bases. Some militias are again proclaiming anti-Americanism. “America’s occupation is accepted by the government, not the people,” says Qasim Musleh, who commands the Ali Akbar brigades based in the shrine city of Karbala. He sees Iran, not America, as Iraq’s ultimate guarantor of stability. Iraq, like Syria, is a theatre where Mr Trump badly needs a clear policy. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21720612-no-one-knows-what-donald-trump-wants-america-and-iran-are-jostling/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The agony of Palm Sunday + +Why Christians are leaving the Middle East + + +Twin bomb attacks kill at least 44 + +Apr 12th 2017 + + + + + +Islamic State claimed responsibility for two bomb attacks on Christian churches outside Cairo and in Alexandria, in which at least 44 people died. Such persecution is one reason why Christian populations across much of the Middle East continue to decline sharply. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21720620-twin-bomb-attacks-kill-least-44-why-christians-are-leaving-middle-east/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Inhale, go to jail + +Some Arab governments are rethinking harsh cannabis laws + + +Others use them to lock up restless young men + +Apr 12th 2017 | CAIRO + + + + + +“WHEN we think about our future, our dreams, we have nothing,” says a young man in Sidi Bouzid. Life in the Tunisian town that launched the Arab spring has barely changed since the country’s old dictator, Zine el-Abidine Ben Ali, was ousted in 2011. Unemployment is even higher nationally than before the uprising. Young people are worst-off, which helps explain why an alarming number join jihadist groups. The frustration drives others, including this young man, to use zatla, the local name for cannabis. + +Using cannabis in Tunisia, though, is risky. Under the country’s “Law 52”, anyone caught using or in possession of the drug receives a minimum sentence of one year in prison. Repeat offenders get up to five years. Judges have no discretion to consider the circumstances or to recommend other punishments. The young man says most of his friends have been locked up for getting high. + + + +So it goes in much of the Middle East and north Africa, where the law often lumps pot in with harder drugs. In many countries possession of a single joint can lead to jail. But some governments are acknowledging the harmful effects of their policies and thinking about reform. + +The region’s harsh laws date back to the 18th century, when a French army officer wrote that “the mass of [Egypt’s] male population is in a perpetual state of stupor!” Napoleon banned hashish in Egypt. More recent authoritarians have used drug laws as a way to keep young people in line (or in jail). Clerics provide cover, citing objections to intoxicants in the Koran. + +Despite the perpetual crackdown, cannabis is still widely used. Official statistics are murky, but tokers and dealers are easy to find in most countries. Part of the reason is that cannabis is produced nearby. Morocco is the world’s top supplier. Lebanon is another big producer. Cannabis from South Asia also passes through on its way to Europe. + +The combination of heavy use and harsh laws has resulted in overcrowded prisons. In Tunisia, for example, drug offenders make up about 28% of the prison population. Most are in for using cannabis. Upon release, their criminal record makes it nearly impossible to get a job. + +Tunisia is now rethinking its policies. A draft law would abolish prison terms for first- and second-time offenders caught with cannabis for personal use. Judges could impose alternative punishments on repeat offenders; more emphasis would be placed on treatment. The measure is vague and, say critics, could lead to more abuse. Anyway, it is stalled in parliament. But in March the national security council moved to keep some offenders out of jail. + +Elsewhere in the region there has been at least some movement towards decriminalisation. The cabinet in Israel, already a leader in medical-marijuana research, has approved a plan that would impose nothing more than a fine on those caught with small amounts of cannabis. Several other countries have harsh laws, but often look the other way. Iran, which shares a porous border with Afghanistan, has executed hundreds of drug dealers. But it largely ignores the growing popularity of pot. + +The Moroccan authorities look at the issue from the other direction. Though the government bans the production of cannabis, its growth is tolerated in the Rif, a northern region that supplies Europe. “Travel around in some areas and you see the plants all over the place,” says Tom Blickman of the Transnational Institute, a research group. Ironically, a draft law that would legalise cannabis production countrywide for medical and industrial uses has worried the region’s growers. They fear that rich landowners or the government, which would collect the entire crop, could push them out of business. + +Growers in the Rif may not like the proposal (which is also stalled), but the status quo is hardly better. Cannabis has not enriched them, as most of the profits go to traffickers—and corrupt officials. Nearly 50,000 growers have arrest warrants hanging over their heads, says Mr Blickman. Many pay bribes to avoid arrest. In other countries that tolerate cannabis, there is always the fear of a crackdown. Officials are not known for being fair. That is yet another reason why people turn to drugs. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21720598-others-use-them-lock-up-restless-young-men-some-arab-governments-are-rethinking/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Taking aim at Hassan Rohani + +The reformist president of Iran faces a tough re-election + + +Hardliners are cracking down on social media + +Apr 12th 2017 + + + + + +APPLICATIONS for the ticklish job of president of Iran opened this week, with more than 100 hopefuls vying to replace the incumbent, Hassan Rohani, a relative moderate, at the election on May 19th. The religious conservatives who loom so large in Iran are hoping they can unite around a single candidate, overcoming the divisions that doomed their prospects in 2013 and allowed Mr Rohani to win. + +Their preferred man is Ebrahim Raeisi, the newly appointed head of one of Iran’s most important and best-endowed shrines, Imam Reza in Mashhad. In addition to income from the shrine’s holdings, which include car factories, he is a protégé of the Supreme Leader, Ayatollah Ali Khamenei. But to Mr Raeisi’s probable consternation, on April 12th a divisive ultra-conservative former president, Mahmoud Ahmadinejad, also entered the race, despite orders from Mr Khamenei not to stand. This makes it more likely that the hardliners will again see their vote split. + + + +Still, the anti-Iranian rhetoric of Donald Trump, America’s president, is a big bonus for the anti-reformists, should they come together. After a nuclear deal between Iran and six major powers was concluded in 2015, Mr Rohani’s re-election had seemed assured. But the promised fruits from the lifting of UN sanctions (in return for Iran curbing its nuclear programme) have been slow to arrive. Far from encouraging investment in Iran, America has tightened some sanctions, and continues to prevent Iran from trading in dollars. + +With the army, Revolutionary Guards, judiciary and state television in their hands, as well as the power to approve candidates (which the Guardians Council they dominate has yet to do for the coming election), Mr Khamenei’s hardliners already wield huge power. They are now targeting social media, where pro-Rohani reformists have until now mostly operated freely. Last month masked goons arrested 12 administrators of popular social-media news channels. + +But the hardliners’ task is proving daunting. First in their sights is a phone app, Telegram, that enables encrypted messaging between users, and also offers uncensored news channels. It claims 20m Iranian users and thousands of Persian-language channels, some claiming over a million subscribers. Last year it helped the reformists get out the vote in parliamentary elections. Confounding the hardliners’ efforts to disqualify well-known reformist candidates, voters went to the polls armed with “lists of hope” of the lesser-knowns on their phones, and unseated the staunchest conservatives, some of Mr Khamenei’s relatives among them. No sooner had Mr Raeisi’s candidacy been announced than they began tarnishing his squeaky-clean image with claims that, as a 28-year-old prosecutor, he had sentenced hundreds of leftist political prisoners to death. + +Under a more reactionary government, censors might have banned Telegram. Mahmoud Ahmadinejad, the hardline former president, simply switched off the mobile network when protesters contested his 2009 re-election, and restricted internet bandwidth to such an extent that it took hours to access a page. Facebook and Twitter were banned. But Mr Rohani’s government has made censorship harder. It has boosted bandwidth a hundredfold, compared with 2009. And it has expanded mobile coverage from 39% to 99% of Iran, including to 27,000 villages which the hardliners hitherto considered strongholds. So Mr Rohani continues to get his message out. Recent signs of mild economic improvement may have given his continued support for Western engagement a boost, too. The hardliners will not have the campaign all their own way. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21720622-hardliners-are-cracking-down-social-media-reformist-president-iran-faces/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Highway interrupted + +Plans for a weirdly unfinished highway in Cape Town + + +A road to nowhere may finally reach an end + +Apr 12th 2017 | CAPE TOWN + + + + + +BETWEEN the ocean and the mountain, there’s the unfinished highway. It is an odd-looking landmark in a beautiful city: sections of elevated road left suspended in mid-air when construction stopped in the 1970s. Four decades later, the hulking slabs of concrete still end in precipitous drops. A glossy brochure of Cape Town film locations proclaims the cut-off highway “truly special”, with “great city views”. It makes an edgy backdrop for TV commercials and fashion shoots, and looms over an episode of the science-fiction series “Black Mirror”. + +This may soon come to an end. The unfinished highway could become part of a plan to help overcome a legacy of apartheid—while also easing traffic jams. + + + +Like other South African cities, Cape Town remains largely segregated, despite the advent of democracy in 1994. Under apartheid, black and mixed-race people were forced to live in the worst areas, far away from the whites and from work. Today they are free to live where they choose, but mostly cannot afford to live in the old “white” areas. Space in Cape Town’s downtown core and seaboard is limited, and homes are expensive. So the poor have to travel long distances on increasingly clogged roads. Brett Herron, a city councillor on the mayoral committee for transport, says that hard-up households in Cape Town spend on average 40% of their income on transport. + +There are various tales as to why the highway was never finished. Mr Herron says the city was simply waiting for future traffic volumes to require it. That time came long ago; but now the city says it cannot afford it. Instead, it is turning to private developers. To sweeten the deal, the city will give the winning developer six hectares of prime land alongside the road. The unfinished highway can be completed, knocked down or turned into something else entirely—a park, perhaps. But proposals must help reduce congestion, while incorporating cheap housing. + +Three-dimensional models of six designs—featuring urban gardens, cycle lanes and a promenade—went on display last month for public comment. The city wants construction to begin within the next few years. This is the first of five big projects being undertaken to improve public housing and transport. Patricia de Lille, Cape Town’s mayor, thinks finishing the highway is what people will remember her for. Film-makers may have to find a new apocalyptic location. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21720649-road-nowhere-may-finally-reach-end-plans-weirdly-unfinished-highway/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +More can be less + +African universities recruit too many students + + +Over-recruitment is a continent-wide problem + +Apr 12th 2017 | KAMPALA + + + + + +MAKERERE UNIVERSITY’S position, on a hilltop commanding a panoramic view of Kampala, is fitting for a place some call the “Harvard of Africa”. By many measures, it is the continent’s best college outside South Africa. But it was closed for two months from November by Uganda’s autocratic president, Yoweri Museveni, after a strike by lecturers over unpaid bonuses sparked student protests. + +Founded by the British to train local colonial administrators, Makerere has a reputation for educating the powerful. Tanzania’s founding president, Julius Nyerere, studied there. So did Kenya’s third leader, Mwai Kibaki, and the Democratic Republic of Congo’s current head of state, Joseph Kabila. The university went through a rough period between 1971 and 1979, when it felt compelled to make Idi Amin, a barely literate despot, its chancellor. Amin awarded himself a doctorate of law, despite neither studying much nor believing in the rule of law. But those dark days are past. Makerere’s researchers are now some of Africa’s most prolific, creating everything from low-cost sanitary pads to an electric car. Nonetheless the institution’s problems—too many students and too little money—are all too common across the continent. + + + +Makerere has more than doubled enrolment to nearly 40,000 in the past two decades. As government scholarships, most of them allocated by merit rather than need, have become scarcer, and strike-happy lecturers have demanded ever-higher wages (even though academics at public universities are some of Uganda’s best-paid workers), the university has tried to close the funding gap by admitting more fee-payers. But in real terms it spends almost a quarter less now than in 2007, even though the number of students has risen by 12% over the same period. + +Similar pressures are felt across sub-Saharan Africa, especially in the poorer countries. (South Africa’s university system is more advanced but faces other difficulties, including demands by militant students that fees be abolished altogether.) A World Bank study of 23 poorer African states found that enrolments at public and private universities had quadrupled between 1991 and 2006, while public spending on them rose by just 73%. + +Opening new public institutions to meet growing demand has not been problem-free, either. In 2000 Ethiopia had two public universities; by 2015 it had 29. “These are not universities, they’re shells,” says Paul O’Keefe, a researcher who has interviewed many Ethiopian academics, and heard stories of overcrowded classrooms, lecturers who have nothing more than undergraduate degrees themselves and government spies on campus. + +In those countries where higher education was liberalised after the cold war, private universities and colleges, often religious, have sprung up. Between 1990 and 2007 their number soared from 24 to more than 460 (the number of public universities meanwhile doubled to 200). But they often find themselves tied up in red tape. Gossy Ukanwoke tried to establish Nigeria’s first online-only university in 2012, but was forced by the government to acquire a campus. Beni American University has 450 executive-education students on-site, and has taught 8,200 online in the past two years. But it has struggled to attract investment to finish the facilities it needs before it can teach undergraduates. + +Many of these new institutions churn out cheaply taught business degrees. But some others are giving the better public institutions a run for their money. Kenya’s Daystar University is renowned for its communications courses (it also offers what it claims to be “the world’s first smartphone-based degree programme for teachers”). Strathmore, another private Nairobi university, focuses on specific areas, including intellectual-property law, disaster management and how to start a business. + +And some public institutions are upping their game. Internships are now mandatory at Uganda’s public universities. The University of Nairobi’s Fab Lab, part of a global initiative that provides access to machinery and online courses in how to use it, has spawned a number of startups. Open-source hardware has helped, says Kamau Gachigi, who runs the lab. He cites AB3D, which makes 3D printers based on free designs posted online by Adrian Bowyer, formerly of the University of Bath in Britain. Open-source software and websites such as Sci-Hub that make pricey academic journals free to read (albeit illegally in most jurisdictions), also help cash-strapped universities improve teaching and research. But even these welcome developments will not go far if African universities continue to admit more students than they can cope with. + +Africa needs more well-educated young people. But many of its young graduates have gained little more from their time at university than raised expectations. Swelling classes and stale courses mean they are generally ill-prepared for the few graduate jobs on offer. Young sub-Saharan Africans with degrees are three times as likely to be unemployed as their primary-school-educated peers, who are mostly absorbed by the informal sector. + +Donors willing to fund universities in Africa, rather than scholarships for African students to attend European and American universities, might improve local institutions—and help pay for expansion. The World Bank is planning to spend $290m by 2019 on 22 “centres of excellence” in areas such as climate change and poultry science, in seven west and central African countries. Other donors and African governments would do well to follow, and tie funding to teaching and research quality, rather than to student numbers. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21720648-over-recruitment-continent-wide-problem-african-universities-recruit-too-many/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Europe + + +France’s four-way election: A presidency up for grabs [Fri, 14 Apr 13:31] + +Russian meddling in Europe: Shadow puppets [Fri, 14 Apr 13:31] + +European elections: It’s not the economy, stupid [Fri, 14 Apr 13:31] + +Migrants in the Mediterranean: Merciless sea [Fri, 14 Apr 13:31] + +Charlemagne: Dark horizon [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Up for grabs + +France’s presidential election is a four-way race + + +Worst-case scenario: a run-off between Marine Le Pen and a Communist-backed firebrand + +Apr 15th 2017 | CHATEAUDUN + + + + + +PERCHED on a river bend in an unfashionable expanse of central France, Châteaudun is in many ways a typical French town. It boasts a 15th-century chateau, an unemployment rate of 10%, a fine main square shaded by plane trees and a Turkish kebab restaurant. This town of 13,000 inhabitants also happens to have a record of voting in line with the rest of the country. In 2007 locals backed the winner, Nicolas Sarkozy, on the right. In 2012 they voted for the victor, François Hollande, on the left. Today, as the first round of this year’s presidential election approaches on April 23rd, voters once again seem to reflect the national mood. + +“I’m perplexed,” says Bertrand, a pensioner shopping on the main square, who voted for Mr Sarkozy in 2012 but has yet to make up his mind this time. He thinks François Fillon, the centre-right candidate who is under investigation for abuse of the parliamentary payroll, may be “competent” but has behaved “disgracefully”. Bertrand’s wife Geneviève, a retired librarian carrying geraniums from the market, voted for Mr Hollande last time. But she dismisses the Socialist candidate, Benoît Hamon, as “Utopian”. She says she is tempted to vote for Jean-Luc Mélenchon, a 65-year-old Communist-backed firebrand, who vows to bring about a “citizens’ revolution”, take France out of NATO and impose a top income-tax rate of 100%. + + + +Candidates who promise to overturn the system have captured the imagination. Didier Renard, a retired construction worker, declares unabashedly that he will vote for Marine Le Pen, the candidate for the anti-immigrant National Front: “She’s the only one who will help people like us.” In a town that lost a big electronics factory a few years back, disillusion is marked. Nobody respects any of the candidates, says a woman running a fruit-and-vegetable stall: “People are totally fed up.” So much so, growls a man with tattoos enjoying a morning beer at a terrace café, that he refuses to vote. Alain Venot, Châteaudun’s centre-right mayor, who was first elected back in 1983, says that he usually has a good sense of how his town will vote, but not this time: “This is the most uncertain presidential election I have ever known.” + +This urge to back an insurgent matches national trends. In a matter of weeks, Mr Mélenchon, who has a big YouTube following and attracts voters to some rallies to watch his hologram beamed in live, has surged in some polls from fifth place to third, overtaking Mr Fillon. He trails only a few points behind Ms Le Pen and Emmanuel Macron, a pro-European liberal who founded his En Marche! party just a year ago. If these polls are right, candidates from non-traditional parties are set to capture the top three places. Guillaume Kasbarian, the En Marche! representative for the area around Châteaudun, says there is an edge for the candidate who sounds the most dégagiste—that is, the most eager to throw the bums out. + +Two elements make predicting the results especially precarious. One is turnout, which averages about 80% for presidential votes. Polls suggest that it might drop to as low as two-thirds this year, which could further damage traditional candidates and help Ms Le Pen. Equally unusual, only 60% of voters say they are sure of their choice, a figure that is highest among Ms Le Pen’s voters (76%) and low among those who back Mr Macron (55%). This not only hints at the fragility of Mr Macron’s vote. It also leaves a big chunk of volatile voters close to voting day, possibly ready to vote tactically depending on the final polls. Last-minute deciders, says Edouard Lecerf, of Kantar TNS-Sofres, a pollster, used to reflect the national averages; this time, they may not. + + + +Until recently, the odds were clearly on a run-off between Ms Le Pen and Mr Macron. A former Socialist economy minister under Mr Hollande, Mr Macron has reinvented himself as an insurrectionary leader, promising to break down old divisions between left and right and inject new life into politics. Indeed, at the Châteaudun weekend market, En Marche! was the only party out campaigning. Sophie Zeugin, an entrepreneur and volunteer, toted red, white and blue balloons and a basket of leaflets. Locals called the 39-year-old candidate “sympa” (nice). But one worried that he might be “an opportunist”. Another, testifying to the depth of a nation’s indecision, said she was hesitating between the campaign’s polar opposites: Mr Macron and Ms Le Pen. + +It may yet be that Mr Macron keeps his lead and makes it into the run-off. There, in all likelihood, he would meet—and beat—Ms Le Pen. But this election has begun to look like a four-horse race. No scenario can be ruled out, says Jérôme Fourquet of Ifop, a pollster. This includes the possibility that Mr Fillon makes a comeback, thanks to disillusioned voters who claim they will not vote for him but could change their minds on polling day. Or even what Mr Fourquet calls the “craziest” possibility: that Mr Mélenchon squeaks into the run-off. In 2002 Jean-Marie Le Pen, Ms Le Pen’s father, made it to the second round with just a half-point lead over the third-place candidate. + +The French have sprung electoral surprises before. They voted against a draft European constitution in 2005. In recent presidential primaries, on the right and the left, they kicked out the favourites, eliminating a former president (Nicolas Sarkozy) and two former prime ministers (Alain Juppé and Manuel Valls). This time, three-quarters of voters could be about to back a candidate who hails from neither of the two political groupings that have run France for the past 60 years. This has already been the most unorthodox French election ever, but even more improbable twists may be yet to come. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21720667-worst-case-scenario-run-between-marine-le-pen-and-communist-backed-firebrand-frances/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +RT’s RTs + +Europe is trying to keep Russia from influencing its elections + + +France and Germany fear propaganda and espionage favouring pro-Kremlin candidates + +Apr 12th 2017 | BERLIN AND PARIS + + + + + +IN AN influential article in 2013, Valery Gerasimov, chief of the Russian general staff, described a new doctrine (often termed “hybrid warfare”) involving “information conflict” alongside diplomacy and military force to achieve geopolitical aims. To Americans, the Russian-sponsored hacking and distribution of fake news during last year’s presidential election were a shocking example of this strategy. Yet there is little new about it. The Kremlin has been using spooks and shills to sway Western politics since the days of the Soviet Union. The difference now is that the rise of social media and of populist politics, on both the right and the left, have provided new tools and allies to work with. With France and Germany facing elections this year, Europe expects to be the next target of what the KGB used to call “active measures”. + +Russia has been trying to shape European politics for years, most visibly through old-fashioned propaganda. Two Kremlin-funded news organisations, Russia Today (RT) and Sputnik, launched French and German versions in 2014 and 2015. These pump out gloom about Europe, cheer about Russia and boosterism for pro-Russian populist parties. They sometimes lie. RT whipped up false tales about a Russian-German teenager, “Lisa”, supposedly raped by migrants in Berlin, in the hope of provoking anger among Germans of Russian origin at Angela Merkel’s refugee policies. Other reports insinuate or exaggerate. Sputnik has stirred rumours about the sexuality of Emmanuel Macron, a pro-NATO, pro-European Union candidate for the French presidency. It broadcasts rallies by PEGIDA, an anti-Islam movement, live and without commentary; the pro-EU “Pulse of Europe” marches receive no such publicity. + + + +On their own, RT and Sputnik have very limited reach in Europe. When their stories catch on, it is often because they are amplified online by networks of conspiracy-minded activists, Russian trolls and “botnets” (clusters of fake, automated social-media accounts). Ben Nimmo, an authority on online disinformation, says many of the Twitter accounts that most keenly share RT Français and Sputnik France stories are “almost certainly automated”, so frequent are their posts. Whether they are French or Russian is unclear. Testimonies by former employees tell of a “troll factory” in St Petersburg that churns out anti-Western stories, comments, “likes” and shareable media. + +A graver level of political intervention involves cyber-spying. In 2015 Fancy Bear, a Russian cyber-espionage group, broke into computers at the Bundestag in Berlin. They went on to target America’s Democratic Party, releasing hacked e-mails that damaged Hillary Clinton, the most anti-Kremlin candidate in the presidential race. In France that candidate is Mr Macron, and recently his campaign has also suffered hacks. “They said it clearly comes from Russia,” says a staffer, recalling a debriefing with French intelligence services. Stefan Meister, a Russia expert at the German Council on Foreign Relations, reckons targets should expect any embarrassing files to appear on WikiLeaks, a whistleblowing website that likes to embarrass the enemies of Vladimir Putin, Russia’s president. + +Other Russian measures involve old-fashioned ideological patronage. Last summer Vladimir Yakunin, an ally of Mr Putin, launched a pro-Russian think-tank in Berlin. Moscow supports Zem a Vek, a magazine that peddles conspiracy theories in Slovakia. The Kremlin-linked First Czech Russian Bank lent €9m ($9.5m) to the National Front of Marine Le Pen (pictured). Rumours of Russian cash for nationalist parties in Italy, Greece and Hungary are more tenuous. But Ms Le Pen, Matteo Salvini of Italy’s Northern League and Frauke Petry of Germany’s Alternative for Germany (AfD) have received profile-boosting invitations to Moscow. All are Eurosceptics who want to lift sanctions on Russia. + + + +The Kremlin’s objectives are clear. In France it wants a congenial president—Ms Le Pen or François Fillon, the centre-right candidate. In Germany it wants Angela Merkel gone, a strong AfD in the Bundestag and a government led by the Social Democrats, who are traditionally friendlier to Moscow. Either outcome might help loosen European sanctions and boost Russian economic interests, such as the proposed Nord Stream 2 gas pipeline. They would also serve Mr Putin’s goal of sowing division in the EU and NATO. + +“Active measures” are often ineffective. A recent claim promoted by Russian websites that Mrs Merkel had deliberately invited Islamic State into Germany got nowhere. Mr Macron brushed off the rumours about his private life. A Swedish version of Sputnik folded because of meagre interest. After the Lisa case, Germany made fighting disinformation a priority: on April 5th it published a draft law obliging publishers to nix such stories speedily. + +Elsewhere, too, Europeans are pushing back. There is no evidence that Russians have hacked Western voting machines, but ballots in the Dutch election in March were hand-counted, just in case. In February authorities quickly smacked down fake allegations of rape by German soldiers in Lithuania. Le Monde, a French newspaper, and Germany’s Green Party are among several institutions to have launched fact-checking initiatives. + +So Europeans should be wary, but not paranoid. Still, Americans have been fact-checking for longer than Europeans, and have hardly defeated fake news. If “information conflict” helps Russia-friendly candidates win elections, it will be because Europe’s bitter politics and anarchic media environment have prepared the ground. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21720665-france-and-germany-fear-propaganda-and-espionage-favouring-pro-kremlin-candidates-europe-trying/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +It’s not the economy, stupid + +European voters no longer care much about growth + + +A study finds no link between economic growth and incumbents’ re-election + +Apr 12th 2017 + + + + + +PUNDITS and political scientists don’t always agree. When it comes to predicting electoral outcomes, though, both tribes assume that the economy is the most reliable oracle. Numerous studies have found a strong correlation between GDP growth and voting behaviour. Whether or not those in power are responsible for the economy, it has been responsible for whether or not they get re-elected. + +A study by Ruth Dassonneville, now at the University of Montreal, and Michael Lewis-Beck of the University of Iowa makes the relationship clear. They examined economic performance and elections in 31 European countries from 1952 to 2013. After controlling for other factors, such as the number of parties in an election, a 1% increase in GDP was associated with an increase of nearly three-quarters of a percentage point in support for the incumbent government. + + + +But things are changing. Fewer voters now identify with particular parties, making elections more volatile. Since 2008, incumbent governments have lost on average seven percentage points of support between elections, up from three points in the 1980s. + +You might think that more voters shopping around between parties would increase the importance of objective measures such as economic performance. Instead, the opposite has occurred. Updating data provided by Ms Dassonneville and Mr Lewis-Beck, The Economist has carried out a cross-country analysis of post-war elections in Western Europe. Although there was a correlation between GDP growth and voter behaviour before the financial crisis, we could find none since then (see chart). + +Voters have become deeply hostile towards governing parties, who now lose support regardless of how well the economy is faring. Incumbent governments have lost votes between elections in 29 out of 35 elections since 2008. Seven years after the start of the euro crisis, European economies are at last recovering. But if governments think more money in voters’ pockets will keep them in power, they are in for a nasty surprise. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21720669-study-finds-no-link-between-economic-growth-and-incumbents-re-election-european-voters-no-longer/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Merciless sea + +The number of migrants crossing the Mediterranean keeps rising + + +So does the risk of death + +Apr 12th 2017 | ROME + + + + + +THE 16-year-old Gambian who was discovered by a Spanish naval ship as he clung to a fuel tank in open seas will doubtless be haunted by his experience for the rest of his days. But he was also exceptionally fortunate—the only survivor, by his account, among more than 140 people who left the Libyan port of Sabratha on a large rubber dinghy on March 26th or 27th. It began taking on water a few hours later, he told UN officials from his hospital bed on the Italian island of Lampedusa. + +Details of sinkings in the central Mediterranean are often sketchy and sometimes unconfirmed. The Libyan Red Crescent said no bodies had been found from the disaster the young Gambian reported. But it is clear from figures kept by international organisations that both the risks of setting out from Libya and the numbers reaching Europe are growing. + + + +According to the International Organisation for Migration, 24,513 people had landed in Italy this year by April 2nd. That was an increase of about 30% compared with the first three months of last year. Yet UNHCR, the UN refugee agency, calculates that the death rate per 100 arrivals climbed from 1.8 in 2015 to 3.4 in the first three months of 2017. One in 30 migrants in the central Mediterranean now dies en route. + +Carlotta Sami, UNHCR’s spokeswoman in Italy, lists several reasons why. The smugglers are not just sending the migrants to sea in dinghies, or rigid inflatable boats (RIBs), which were never intended for long-distance sea voyages, but in RIBs of progressively poorer quality. They are increasingly reluctant to supply their customers with satellite telephones to make contact with rescue services and report their positions. And, since last summer, they have taken to dispatching several vessels at a time. That makes it harder for NGOs and the ships of Operation Sophia, a European naval force operating off the Libyan coast, to rescue them all. + +Plans have been proposed to block the traffickers’ routes, which might deter migrants from assuming the appalling risks. The EU is training about 90 members of the Libyan coastguard, and Italy will soon return ten of the Libyans’ boats that were seized in 2011. Blocking the dinghies would stop not only economic migrants but also asylum-seekers fleeing war and persecution. It is hard to tell the two groups apart, but more than 40% of applicants for asylum in Italy are judged to deserve some form of humanitarian protection. + +The task is complicated by Libya’s messy civil war. The UN, America and Italy have sponsored a Tripoli-based Government of National Accord (GNA). But its authority is challenged by Khalifa Haftar, the commander of a self-styled Libyan National Army (LNA). He enjoys the backing of a rival administration in the east, and—more important—that of Moscow. + +On April 2nd the Italian government announced a parallel effort to interrupt the flow of migrants, enlisting the help of dozens of rival desert tribes to secure Libya’s southern frontier, which is 5,000km (3,100 miles) long. The Saharan borders have until now been a playground for smugglers of drugs, arms and people. The interior ministry said 60 tribal leaders had signed up to a 12-point deal, hammered out in several days of secret talks in Rome. + +Few details have been released of the agreement, which reportedly pledges investment in the area to create legitimate jobs for young people, and opens the way for “unified patrolling of the borders with Algeria, Niger and Chad”. Yet it remains uncertain who will do the patrolling. Nor is it clear how much common purpose can be found among the tribes. The Toubou peoples on Libya’s border with Chad, for example, have a history of conflict with neighbouring Arab tribes which are also supposedly backing the deal. But the area is crucial to reducing the number of migrants travelling across the Sahara. That voyage is every bit as risky as the one migrants are making across the Mediterranean. As the numbers make clear, the risk of death is not enough to stop them. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21720663-so-does-risk-death-number-migrants-crossing-mediterranean-keeps-rising/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Charlemagne + +The EU should plan for a Marine Le Pen presidency + + +A win for France’s National Front is unlikely, but potentially disastrous + +Apr 12th 2017 + + + + + +AS USUAL, the president’s first foreign trip is to the chancellery in Berlin. But the meeting with Angela Merkel does not go well. The two women instantly begin squabbling. Accused of breaking Europe’s rules on borders, Mrs Merkel fires back that her visitor has not done her homework: Germany has always acted lawfully. Fine, growls la présidente: if Mrs Merkel wants a war, she will get one. On her return to Paris the president orders the European Union flag removed from official buildings. Soon afterwards she calls, and wins, a referendum on France’s exit from the euro. The streets stir, stockmarkets swoon and Europe reels. + +This cheerful tale, as depicted in “La Présidente” by François Durpaire and Farid Boudjellal, a graphic novel that imagines Marine Le Pen’s first months as president of France, is not one the rest of Europe wants to hear. The continent’s mood is just starting to brighten. Economies are picking up, and the Islamophobes lost in the Dutch election. Brexit, Europeans think, will be a disaster only for the British. True, the looming cloud in France is hard to ignore: the first round of France’s presidential election is on April 23rd, with a run-off two weeks later, and Ms Le Pen leads most first-round opinion polls. But few seem to have thought seriously about the prospect of her winning, and many dismiss the idea. + + + +Confident Eurosaurs + +They have half a point. Ms Le Pen is unlikely to become president; France’s two-round system inoculates against extremist parties like her National Front. Polls find her losing the run-off by wide margins against all potential challengers. But like the meteor that wiped out Tyrannosaurus Rex, her victory would be a low-probability, high-impact event. Ms Le Pen aims to withdraw France from the euro, the EU’s passport-free Schengen area, and possibly the EU itself. The EU can cope with small troublemakers like Hungary or Greece. But to lose a large founding member would throw its future into question. Betting markets rate her chances between 20-25%; the Eurasia Group, a consultancy, puts them at nearly 40%. These are not numbers that should let Europe sleep easy. + +What should Europe expect from a Le Pen presidency? Markets would quail at her desire to quit the euro, which she describes as a “knife in the ribs” of the French economy for denying its exporters the benefits of competitive devaluation. One investor predicts that a Le Pen victory would see French and Italian spreads over German government bonds rise by 2% and the euro slump below parity with the dollar. (Something similar might be expected in the less likely event of a victory for Jean-Luc Mélenchon, a hard-left candidate making a late surge.) + +The mechanism for leaving the euro, says Ludovic de Danne, Ms Le Pen’s Europe adviser, would be a referendum on exiting the EU altogether. But that faces constitutional barriers, as Ms Le Pen cannot win a majority in legislative elections in June. Moreover, the polarising effect of her election may not leave her much political wriggle-room. French voters have little appetite for a collapse in the value of their assets, or the chaos of capital controls à la grecque that a promised “Frexit” would bring. With markets roiling, French banks under pressure and protesters filling the streets, Ms Le Pen might prefer to park the issue. There are signs of this already; her rhetoric on the euro has cooled in recent weeks. + +Tackling migration and security might look more tempting. Unlike Frexit, tightening borders, limiting immigration and cracking down on foreign “posted” workers are popular propositions. Last year 71% of French voters told IFOP, a pollster, that they wanted to scrap Schengen. But that would create as many problems as it solves. Alain Lamassoure, a French former Europe minister, notes that there are around 1,500 border crossings between France and Belgium alone; it is ludicrous to expect them all to be policed. Full withdrawal from Schengen might also mean losing access to EU police databases, which would be an odd way for Ms Le Pen to provide the security she has promised voters. + +She might therefore simply tighten existing controls, stepping up checks at airports, railway stations and land crossings. Ms Le Pen would also target foreign-owned firms employing cheap workers from eastern Europe. (Rare is the French politician who declines to pick on Polish plumbers or Romanian labourers.) Taxpayer-funded positions would, says Mr de Danne, be subject to “national preference”: ie, French jobs for French workers. Much of this breaches EU rules, but so what? If Brussels wants to pick a fight, Ms Le Pen would be delighted to oblige. + +Ms Le Pen’s approach to the EU may be to denude it of authority by endlessly probing its tolerance. Her promises—income- and corporate-tax cuts, a lower retirement age, more welfare spending—will shatter the euro-zone’s budget-deficit limits. She promises a tax on imports, and monetary financing of state spending by the central bank. The European Commission, which has long tolerated mild French profligacy, would be faced with an acute dilemma. If it allows France to flout the rules, the glue that holds the EU together melts; why should other countries stick by their commitments? If it cracks down, it feeds Ms Le Pen’s narrative that Brussels is thwarting the sovereign will of French voters. + +Germany would be left even further adrift. The Franco-German alliance, as Mrs Merkel reminds Ms Le Pen in “La Présidente”, has always driven the EU forwards. But no German chancellor could do business with Ms Le Pen. In real life, her first sally abroad would be not to Berlin but to a summit in Brussels, where she would seek to renegotiate France’s EU membership. It hardly matters if that goes nowhere, for Ms Le Pen’s victory alone would deprive the EU of the oxygen of French support. At best, this would leave it at a standstill. More likely, it would atrophy into a loose club propped up by hollow institutions unable to help governments find solutions to common problems, from trade to migration to climate change. That, more than anything, is why the prospect of la présidente should keep Europeans up at night. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21720589-win-frances-national-front-unlikely-potentially-disastrous-eu-should-plan/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Britain + + +Immigration: A portrait of Migrantland [Fri, 14 Apr 13:31] + +European Union citizenship: How to remain European [Fri, 14 Apr 13:31] + +En Vogue: Fashion journalism [Fri, 14 Apr 13:31] + +Christie’s: Death of a salesroom [Fri, 14 Apr 13:31] + +Universities as property developers: Bricks and mortar boards [Fri, 14 Apr 13:31] + +The Irish language: The lighting of a fire [Fri, 14 Apr 13:31] + +The death penalty: Tough love [Fri, 14 Apr 13:31] + +Bagehot: Time to learn some new tricks [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +A portrait of Migrantland + +Explaining Britain’s immigration paradox + + +Migration is good for the economy. So why are the places with the biggest influxes doing so badly? + +Apr 15th 2017 | REDDITCH + + + + + +“THE Golden Cross Welcomes you to Redditch!” The greeting, on the wall of a pub outside the town’s railway station, is valiant. But the dingy wire fence and mossy concrete beneath it let down the enthusiasm of the sign’s welcome. Redditch is struggling. In recent years, wages have fallen. It has also seen a rapid rise in the number of migrants, in particular those from eastern Europe. Perhaps linking these two phenomena, the people of Redditch voted 62:38 to leave the European Union in the referendum last June. + +Immigration is a boon for Britain. The 9m-odd foreign-born people living there bring with them skills and attitudes that make the country more productive. Younger and better educated than natives, immigrants pay more in tax than they use in the way of public services. For some institutions they are indispensable: perhaps 30% of doctors in Britain are non-British. + + + +Even so, Britain is unenthusiastic about immigration. Surveys find that roughly half of people would like it reduced “a lot” and fewer than 5% want it to go up. Many politicians interpret the vote for Brexit as a plea to reduce the number of new arrivals. Although the government has recently hinted that net migration may not fall by much after Britain leaves the EU, a group called Leave Means Leave, backed by two-dozen MPs, is calling for it to be slashed to a sixth of its current level. + +To understand this antipathy to immigration, we examined the ten local authorities that saw the largest proportional increase in foreign-born folk in the ten years from 2005 to 2015 (we excluded Northern Ireland, because of differences in its data). Whereas big cities such as London have the greatest share of immigrants among their populations, the places that have experienced the sharpest rises are mostly smaller towns, which until recently had seen little immigration (see map). + + + +Top of the list is Boston, in Lincolnshire, where in 2005-15 the number of foreign-born residents rose from about 1,000 to 16,000. In 2005 immigrants were about one in 50 of the local population. They are now one in four. All ten areas we looked at saw at least a doubling in the share of the population that was born outside Britain. + + + +These ten areas—call them Migrantland—voted about 60:40 in favour of leaving the EU, compared with 52:48 across Britain. Boston went for Brexit by 76:24, the highest margin of any local authority. And whereas it has often been noted that there was no link between the size of a place’s migrant population and local enthusiasm for Brexit (consider London, both cosmopolitan and heavily for Remain), we found some link between the increase in the number of migrants and the likelihood to vote Leave (see chart). London boroughs such as Hackney and Newham have welcomed large numbers of foreigners for centuries. People in those places have got used to newcomers, suggests Tony Travers of the London School of Economics. “But when your local population of migrants goes from 10% to 15% in a decade, that’s where you get the bite.” + +Jacqui Smith, a former MP for Redditch and Labour home secretary in 2007-09, sees his point. “I know there’s racism in London, but people have largely become used to diverse communities…The transitional impact in Redditch is much greater,” she says. Redditch has in recent years acquired a couple of Polish supermarkets. Those who are well-off, mobile and confident find those sorts of developments interesting—“You think, ‘I’ll be able to get some Polish sausage’,” says Ms Smith. But those who lack housing or work worry about what such changes represent. The staff at an employment agency in Redditch attest to such fears. Most of the workers they place in jobs are from eastern Europe. “They’re brilliant, we love them,” smiles one member of staff. But when locals come looking for work and see how many foreign names are on the agency’s register, there is some resentment, she says. + +The wrong place at the wrong time + +It is tempting to conclude that such attitudes are motivated by prejudice. Yet a closer look at the economy and public services in Migrantland makes clear that its residents have plenty to be angry about—even if the migrants are not the culprits. + +Places where living is cheap and jobs plentiful are attractive to newcomers. In 2005 the average house in Migrantland cost around £140,000 (then $255,000), compared with more than £150,000 across Britain. Unemployment was lower than average. Low-skill jobs blossomed. Migrantland seems to be more dependent on agriculture than the rest of the country. The big change in Boston, says Paul Gleeson, a local Labour councillor, is that previously-seasonal work, such as fruit- and veg-picking, has become permanent as technology and new crop varieties have lengthened the agricultural season. This means the people doing that work now live there permanently, too. Manufacturing centres are nearby: food processing, for instance, is a big employer in Boston and Mansfield. + +Given the nature of the jobs on offer, it is unsurprising that the new arrivals are often young and not particularly well educated or Anglophone. We estimate that whereas over 40% of the Poles living in London have a higher-education qualification, only about a quarter do in the East Midlands, where three of our ten areas are. One in 20 people in Boston cannot speak English well or at all, according to the 2011 census. Small wonder that integration is hard. Many landlords do not allow tenants to drink or smoke inside, so people sit out on benches, having a drink and a cigarette. “Because they’re young, not because they’re foreign, they might not put their tins in the bin,” says Mr Gleeson. + +What’s more, the places that have seen the greatest surges in migration have become poorer. In 2005-15 real wages in Migrantland fell by a tenth, much faster than the decline in the rest of Britain. On an “index of multiple deprivation”, a government measure that takes into account factors such as income, health and education, the area appears to have become relatively poorer over the past decade. + +Are the newcomers to blame? Immigration may have heightened competition for some jobs, pushing pay down. But the effect is small. A House of Lords report in 2008 suggested that every 1% increase in the ratio of immigrants to natives in the working-age population leads to a 0.5% fall in wages for the lowest 10% of earners (and a similar rise for the top 10%). Since Migrantland relies on low-paid work, it probably suffered more than most. + +But more powerful factors are at play. Because the area is disproportionately dependent on manufacturing, it has suffered from the industry’s decline. And since 2010 Conservative-led governments have slashed the number of civil servants, in a bid to right the public finances. The axe has fallen hard on the administrative jobs that are prevalent in unglamorous parts of the country. Migrantland’s public-sector jobs have disappeared 50% faster than those in Britain as a whole. In the Forest of Dean they have dropped by over a third. Meanwhile, cuts to working-age benefits have sucked away spending power. + +Even before austerity, it had long been the case that poor places had the most threadbare public services. Medical staff, for instance, prefer to live in prosperous areas. Our analysis suggests that Migrantland is relatively deprived of general practitioners. Doctors for the East Midlands are trained in Nottingham and Leicester, but fewer people want to study there than in London, for instance. After training there, half go elsewhere. In 2014 there were 12 places for trainee doctors in Boston; only four were filled. + +Follow the money + +What can be done? In places where public spending has not yet caught up with a rapidly enlarged population, the government could target extra funding in the short term. The previous Labour government ran a “migration impacts fund”, introduced by Ms Smith. She acknowledges that the amounts involved were small (the budget was just £35m per year) but argues that the point was to reassure people that the government understood fears that immigration can make things tough for a time. The current government has launched a similar initiative, though it is no better funded. + +And although Britons dislike immigration, they do not feel the same resentment towards immigrants themselves. Once they have been placed in jobs alongside each other, locals and migrants tend to rub along, says the Redditch recruitment agency. A music festival was recently held in the town to raise money for children’s hospital wards in Poland. Local Poles took part in the Holocaust commemoration this year, says Bill Hartnett, leader of the council. + +All that may be encouraging, but it does not provide a way to improve conditions in the left-behind places to which migrants have rushed. To many people, Brexit may appear to be just such a policy. They have been told a story that leaving the EU will make things better in their area, says Mr Gleeson. “It won’t.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720576-migration-good-economy-so-why-are-places-biggest-influxes-doing-so/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Citizens of nowhere + +Can Britons keep their EU citizenship after Brexit? + + +Though many would like to, it looks both legally and politically unlikely + +Apr 12th 2017 + + + + + +MOST of those who regret Britain’s decision to leave the European Union now accept that Brexit is going to happen. But many are still scrabbling for an escape hatch. The 1m-odd Britons living elsewhere in the EU hope to have their residency rights confirmed early during the negotiations. Anyone with an Irish grandparent can apply for Irish citizenship—and plenty of people are. Marriage to an EU national is another trick, as is buying Maltese or Cypriot citizenship (though the price is steep). + +The latest wheeze is to find a way to allow regretful Britons to retain their EU membership on an individual basis. Guy Verhofstadt, a former Belgian prime minister who is now the European Parliament’s point man for the Brexit negotiations, is promoting voluntary “associate EU citizenship” for Britons, an idea first put forward by a fellow MEP from Luxembourg, Charles Goerens. A paragraph in the parliament’s resolution on Brexit, adopted on April 5th, calls for some action to mitigate Britons’ loss of EU citizenship. + + + +The benefits of such citizenship include freedom to live, work and travel around the 28-country union, to vote in European elections, to have access to health care in other EU countries and to take part in Erasmus student exchanges. Mr Verhofstadt’s idea is that, after Brexit, individual Britons should be allowed to retain most of these benefits, possibly for an annual fee (though any suggestion that Britain might reciprocate would fall on deaf ears). + +Yet as Adrienne Yong of the University of Hertfordshire argues, EU citizenship is not something that can just be bought and sold. Article 20 of the EU treaty, which created the concept, also makes clear that EU citizenship is additional to, not in place of, national citizenship of a member state. This means that a treaty change would be needed to confer EU citizenship on any individual from a non-member country. Experience shows how hard it is to agree upon and ratify any such change. + +So a few remainers have hit on another plan, which is to challenge the government’s right to take away their EU citizenship. They cite the 2010 Rottmann case, in which the European Court of Justice (ECJ) ruled that a country (in this instance, Germany) could remove an individual’s EU citizenship only if its actions were “proportionate”. Some talk of using this precedent to justify pursuing a legal case against Brexit all the way to the ECJ. + +No doubt lawyers can be found to take the case (so far lawyers are doing well out of Brexit). Yet few believe it would succeed. Catherine Barnard, a Cambridge law professor who is a member of The UK in a Changing Europe academic network, says the Rottmann case is not a precedent, because it concerned an individual whose loss of German citizenship left him stateless, which Brexit will not do. Moreover, to rule that Brexit was disproportionate would undermine the whole purpose of Article 50 of the treaty, which allows countries to choose to leave the EU. + +Ms Barnard fears that loose talk of retaining EU citizenship will merely mean more disappointment for those opposed to Brexit. It might also irritate the government of Theresa May. Any notion of dual British/EU citizenship post-Brexit would raise questions over divided loyalty. Mrs May made her feelings clear last October, when she told her party conference: “If you believe you are a citizen of the world, you are a citizen of nowhere.” She is unlikely to welcome any plan for Britons to keep EU citizenship after Brexit. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720631-though-many-would-it-looks-both-legally-and-politically-unlikely-can-britons-keep-their/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +En Vogue + +Edward Enninful, a new editor for Vogue + + +Britain’s style bible gets a bit more daring + +Apr 12th 2017 + + + + + +Edward Enninful, named as the new editor of British Vogue on April 10th, fits the brief set out in the job advert for someone with a vision both global and digital. Born in Ghana and raised in London, the creative director of W magazine already has six times as many followers on Instagram as Alexandra Shulman, Vogue’s outgoing chief. The choice of Mr Enninful suggests that the trendsetting magazine, which has long focused on the print edition served to its mainly white, female readers, is becoming more daring. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720633-britains-style-bible-gets-bit-more-daring-edward-enninful-new-editor-vogue/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Death of a salesroom + +Christie’s auction house downsizes + + +The branch that sold Pelé’s jersey and Ian Fleming’s typewriter closes its doors + +Apr 12th 2017 + + + + + +THERE was only one place to bid for Ian Fleming’s typewriter, Pelé’s 1970 World Cup jersey or a meteorite that hit the Earth in 1803: Christie’s South Kensington. Opened in 1975, the auction rooms sold the quirkier, less expensive (and often more exciting) stuff that the main branch of the venerable auctioneer, in posh St James’s, eschewed. The young upstart could nonetheless do a roaring trade, getting £55,700 ($70,000) for the keyboard that gave life to James Bond, £157,750 for the Brazilian’s sweaty shirt and £25,300 for the lump of rock (with its fusion crust almost completely intact). They all beat their reserve prices by a mile. + +But that is all coming to an end. Christie’s South Kensington is set to close. It is the most significant casualty in a restructuring of Christie’s operations; there will also be fewer sales in its Amsterdam rooms. Altogether, about 250 people will lose their jobs, mainly in Britain and continental Europe, representing about 12% of Christie’s worldwide workforce. It represents a big upheaval in the art world. But it is necessary, argues Christie’s French owner, Groupe Artémis, a conglomerate owned by François Pinault, to adapt to a changing market. + + + +The most important trend shaping that market is the continuing shift in Christie’s clientele away from Europe. Last year 39% of the firm’s new customers were from the Americas and 19% from Asia, says its chief executive, Guillaume Cerutti. Thus, as Christie’s consolidates its operations onto one site in London, where James Christie founded the business in 1766, it is expanding further in China, where it is in the privileged position of being the only Western auction house with a licence to conduct sales on the mainland. Last October Christie’s opened its third office in China, in Beijing. It is also about to open a new showroom in Los Angeles. + +With the high costs of labour and property in London, it has also become hard to make much money on the cheaper items sold at Christie’s South Kensington branch. The £1m-5m range is the most profitable spot in the art market now. Sotheby’s, the great rival of Christie’s, sold its own lower-value London salesroom in Olympia in 2007. Christie’s hopes that much of the sort of stuff sold in South Kensington, such as wine, watches and photographs, can be auctioned online. Last year its online sales doubled, to £50m. + +But some fear that the closure will impoverish Christie’s in the long run, and possibly open up opportunities for Sotheby’s. A former head of Christie’s South Kensington, Anthony Coleridge, has written an open letter to Mr Pinault accusing him of destroying staff morale and damaging the Christie’s brand. And a lot of expertise could be lost. “South Kensington was where you tried things out, and brought it to St James’s if it matured,” says one Christie’s insider. The smaller auction room developed curatorial knowledge, pioneered sales and thus created markets—for toys, posters, fossils and more. “You have to create sales that are interesting to collectors, and they love the diversity of South Kensington.” + +Another eclectic collection, featuring meteorites, fossilised palm fronds, a demonstration apparatus for the coefficient of friction (“19th century, possibly German”), table globes and two three-rotor Enigma cipher machines are due to go under the hammer in South Kensington on April 27th. Catch it while you can. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720650-branch-sold-pel-s-jersey-and-ian-flemings-typewriter-closes-its-doors-christies-auction/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bricks and mortar boards + +Oxford University turns its hand to property development + + +The dons have an eye for modern architecture. Can they plan the city’s expansion too? + +Apr 12th 2017 | OXFORD + + + + + +TOURISTS in Oxford train their camera lenses on its centuries-old buildings. But the university is now perhaps Britain’s greatest client for contemporary architecture. Last year the six-strong shortlist for the Stirling Prize, the country’s main architectural award, featured two Oxford buildings: WilkinsonEyre’s thoughtful renovation of the New Bodleian Library, and the Blavatnik School of Government, a glitzy stack of jewellery boxes by Herzog and de Meuron. Last month the Royal Institute of British Architects commended two more university buildings: Wright and Wright’s innovative semi-submerged library extension for Magdalen College, and a pair of smart contemporary structures at Lincoln College by Stanton Williams. The former is tipped for this year’s Stirling shortlist. + +There is an irony to that. In 1971 the Queen’s College unveiled its Florey building, a terracotta-clad half-bowl of student flats. Its architect was James Stirling, who later gave his name to the prize. The building’s A-frame structure has often been imitated, but the building leaked and Stirling quarrelled with the dons, who wrote to colleagues at other colleges urging them not to employ him. Stirling was driven to test himself abroad, and for three decades little contemporary architecture of much quality was risked by the university. + + + +With the memory of the Florey foul-up fading, Oxford is again commissioning imaginative work. Not only that: like other universities, it is going beyond exotic libraries and dormitories with plans for housing and business space. + +Homes in Oxford are among the least affordable in Britain. The housing pinch is keenly felt by postdoctoral researchers, 4,500 of whom work in Oxford on short-term contracts with unspectacular pay. The university realised that these academic serfs, who form the backbone of its intellectual project, were spending huge amounts of their income on rent and that if it wanted to remain competitive it would have to find them more places to live. + +Though the university owns stonking amounts of land, co-ordinating development is hard because of the power wielded by the colleges in its loose federation. “It’s borderline anarchy, but then that is one of the glories of the place,” says William James, a professor of virology who doubles as the university’s head of planning. + +St John’s, the richest of the colleges with an endowment of nearly £500m ($620m), is about to submit a proposal for a development called Oxford North. Jonathan Kendall of Fletcher Priest, the practice behind the plan for 500 homes and 100,000 square metres of research facilities, says it has been designed with competition from foreign universities in mind. In a triangle of farmland between main roads, it is a cross between an American-style research park (showy low-rise buildings in a verdant landscape) and a British garden-city, in which work and home space are close together. The building type owes as much to “Cambridge, Massachusetts as it does to Cambridge,” says Mr Kendall. + +A separate proposal by the central university authority would create a canalside creative quarter on the site of an industrial estate at Osney Mead, to the west of the city, providing 600 homes for students and staff. Like Oxford North, it would include work-space for academics and startups. + +Building houses and offices for spin-off firms is something other universities are trying, too. This summer Cambridge will complete the first phase of a 3,000-home development. Such plans represent not just a new architectural approach but a commercial one, too. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720647-dons-have-eye-modern-architecture-can-they-plan-citys-expansion-too-oxford/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The lighting of a fire + +The role of the Irish language in Northern Ireland’s deadlock + + +Though less than 1% use it as their main language, cutbacks have rekindled enthusiasm for the Irish tongue + +Apr 12th 2017 | BELFAST + + + + + +UNTIL March 31st all seemed well at the four clubs in Belfast where youngsters can go after school to socialise, get local history lessons with a radical slant and sign up for hiking trips, all in Irish. Then Northern Ireland’s education authority announced that their latest annual bid for funding had failed, and the clubs closed their doors. Six days later, the authority’s offices were briefly and exuberantly taken over by scores of chattering children and young adults, brandishing a mix of newly minted social-media icons and venerable nationalist slogans. On April 11th the clubs were told that cash had been found after all and they vowed to reopen. + +This is a heady time to be a language activist in Northern Ireland. Belfast has been in political deadlock since the collapse of its power-sharing government in January, its parties looking unlikely to resolve their differences before an Easter deadline set by the government in London. As their negotiations have dragged on, the status of the Irish language has emerged as one of the most intractable and visibly contested issues at stake. + + + +That is partly because Sinn Fein, the biggest Irish-nationalist party, has made entrenching the language one of its terms for entering a new power-sharing deal. Its central demand, the passage of an Irish Language Act, has been opposed by its erstwhile partners, the Democratic Unionist Party (DUP). The other reason why language wars are warming up is that Irish-language supporters are tech-savvy and adept at exploiting heavy-handedness. + +The cycle of clumsiness and well-deployed ire escalated just before Christmas, when a DUP minister combined a terse festive greeting with news of the axing of a small bursary for people to hone language skills in remote Irish-speaking places. In reaction, a social-media campaign for the language took off: its symbol of a white circle on a red background popped up on thousands of Facebook and Twitter accounts. The funding was restored, but the collective indignation crackled on. + +Before a round of elections on March 2nd the DUP’s leader, Arlene Foster, threw oil on the fire by saying sarcastically that Polish deserved more support than Irish. Technically, she had a point: in 2011 Irish was only the fourth-most-common “main language” in Northern Ireland, after English, Polish and Lithuanian. Just 0.24% of the population use it as their principal tongue. But the census figures fail to capture the passion engendered by Irish, the revival of which has been a nationalist aspiration for 150 years. It enjoys official status in the Irish republic, while in Northern Ireland it has always been taught in Catholic schools and is now the sole teaching medium for 5,000 children and rising. About a tenth of the Northern Irish population claims “some ability” in the language. + +Although Sinn Fein is its loudest political advocate, the idea of an Irish Language Act has been endorsed by the non-sectarian Alliance and Green parties, and by some supporters of the union with Britain. Giving the language official status would bring Northern Ireland closer to Scotland and Wales, whose Celtic tongues already enjoy plenty of legal support, says Linda Ervine, who runs an Irish-language programme in a Protestant part of Belfast. She and other enthusiasts put the costs of an Act, allowing citizens to get access to services and read documents in Irish, at perhaps £4m ($5m) a year for the first five years. At a time of sharp budget cuts, that may seem steep to sceptics. + +The need for broad coalitions is emphasised by Conchur O’Muadaigh, who at 25 is a prime mover of Belfast’s Irish-language youth clubs. He says social-media campaigns, around issues rather than political parties, come naturally to his generation, as does the language of multiculturalism and respect for diversity in which language demands are framed. “But our biggest PR asset is the DUP,” he adds mischievously. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720659-though-less-1-use-it-their-main-language-cutbacks-have-rekindled-enthusiasm/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Tough love + +How abolishing the death penalty led to more convictions + + +The lesson from Victorian England is that juries convict more often when death is not an option + +Apr 12th 2017 + + + + + +THOUGH no one has been executed in Britain for over 50 years, until 1998 someone convicted of high treason or “piracy with violence” could in theory be put to death. The law is now clearly against capital punishment, but Britons are not. Fully one-third would like the death penalty to be brought back; the leader of the populist UK Independence Party has suggested a referendum on the matter. Yet research presented at this week’s Royal Economic Society conference suggests that if you really want to be tough on criminals, killing off capital punishment makes sense. + +Anna Bindler and Randi Hjalmarsson, both of the University of Gothenburg, examined over 200,000 cases from the Old Bailey criminal court in London from 1715 to 1900. During this period capital punishment was abolished for many offences, from counterfeiting money (in 1832) to robbery (in 1837). Making the necessary statistical controls, the authors looked at the change in the likelihood of conviction for offences that were no longer capital. + + + +The paper suggests that when capital punishment was an option, juries were often reluctant to convict at all. They may have felt it was a little rum to send someone to the gallows for stealing a cow, so they downgraded the charge or acquitted the defendant. The authors find that juries were particularly reluctant to convict women. + +Once death was off the table, however, jurors could convict with a clearer conscience. The paper finds that the abolition of capital punishment increased the chance of conviction for all crimes by around eight percentage points, with especially large effects for violent offences. The temporary halt of penal transportation during the American war of independence had a somewhat smaller effect on the likelihood to convict, suggesting that juries considered living in America to be a prospect slightly less awful than death. + +Past research has found that would-be criminals are more put off by an increased likelihood of conviction than they are by more severe sentences. If so, then getting rid of the most brutal punishments could make criminal-justice systems work better. If the third of Britons who would like the death penalty reintroduced got their way, the country might inadvertently end up letting more criminals walk free. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720656-lesson-victorian-england-juries-convict-more-often-when-death-not/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bagehot + +The Foreign Office needs to learn some new tricks + + +Boris Johnson embodies the weakness of Britain’s foreign policy + +Apr 12th 2017 + + + + + +BORIS JOHNSON’S most important week as foreign secretary started off badly and got worse. The Kremlin branded him America’s poodle for cancelling a trip to Russia at the last minute, supposedly under orders from America’s secretary of state, Rex Tillerson. Mr Johnson struck back by briefing the British press that, on the contrary, he was a decider and a doer, who, having “spoken to all the power players”, was demanding that Western nations draw up “very punitive sanctions” against the Syrian regime and its enablers. He then presented his plans for sanctions at the G7 meeting in Lucca, Italy, only to be given the cold shoulder. The final G7 communiqué didn’t mention sanctions at all. + +Mr Johnson was right to cancel his trip to Russia, which would have been the first by a British foreign secretary for five years. It is important that the West speak to Russia with one voice after the chemical attack in Syria, and that voice needs to be America’s. But he was wrong to react to a childish gibe by boasting about plans for sanctions without first clearing them with his G7 counterparts. His half-cocked diplomacy left Britain humiliated and the G7 divided. The problem with the foreign secretary is not that he is a poodle: poodles tend to be dependable and loyal. The problem is that he’s a disorganised narcissist. + + + +Mr Johnson was an odd choice for Britain’s chief diplomat. He made his career as a journalist entertaining Daily Telegraph readers with stories about horrible foreigners, particularly “Brussels bureaucrats” and their alleged obsession with the curvature of bananas. He was put into his current job because he can exercise influence in England’s Tory heartlands, not the world’s chancelleries. Mr Johnson’s real job is to sell the eventual Brexit settlement to Tory MPs and their foot soldiers in the shires. + +Yet the foreign secretary is in some ways an embodiment of what is wrong with Britain’s foreign policy: shambolic, distracted and driven by domestic considerations. The Foreign and Commonwealth Office is a shadow of its former glory when it administered a quarter of the world’s population from its magnificent palace next to Downing Street. Mr Johnson’s arrival was accompanied by a brutal dismemberment of the Foreign Office’s portfolio, with two of Mr Johnson’s fellow Brexiteers, Liam Fox and David Davis, put in charge of two new departments, for international trade and for exiting the EU. Mr Davis’s department, in particular, has sucked talent from the Foreign Office as bright people compete to be at the heart of decision-making. + +Margaret Thatcher loathed the Foreign Office because she thought it was full of upper-class eunuchs who believed in managing decline at home and sucking up to foreigners abroad. Tony Blair disliked it because he believed that it was full of stuffy imperialists who didn’t “get” multicultural Britain. The department has lost a succession of turf wars that have left it a hollow shell. Downing Street has annexed the most high-profile pieces of foreign policy—Mr Blair exercised almost total control over his ill-starred Iraq policy and the wider “war on terrorism”. The Treasury has ground its next-door neighbour by a twin process of starving it of funds and stealing some of its plum jobs. Britain’s previous ambassador to the EU, Sir Ivan Rogers, was a Treasury man who had never worked for the Foreign Office. The Department for International Development (DfID), which was created only in 1997, has grown into a monster that overshadows its aristocratic stepbrother. DfID is rolling in money because a legally mandated formula allocates it 0.7% of national income; meanwhile the Foreign Office must downsize or sell off its embassies. + +Its sidelining is a mistake for all sorts of reasons. Prime ministers tend to see foreign policy through the prism of domestic policy: David Cameron saw it through the prism of ridding the Tories of their image as a “nasty party”; Theresa May sees it through the prism of the Home Office and the problem of controlling migration. Prime ministers are also foreign-policy tourists, focusing on the big powers and set-piece events but ignoring the hard slog of cultivating relations with foreign leaders of every description, minor as well as great. DfID does valuable work providing aid and developing long-term good will. But professional diplomats have a unique ability to shape the fate of nations in turbulent times: think of Robin Renwick’s role, as ambassador to South Africa, in helping to persuade Nelson Mandela that his country’s future lay with free markets rather than state planning. + +A dog’s breakfast + +The biggest problem is that Britain now finds itself without a foreign policy. For decades its strategy has consisted of acting as a bridge between Europe and the United States while cultivating its global connections as a former imperial power. But last June 52% of British voters decided to blow up half the bridge, rendering the whole edifice rather pointless. Today Britain’s foreign policy consists of keeping as close as possible to a highly volatile American president while at the same time negotiating a divorce from the EU. In the short term this requires the ability to perform ideological somersaults at the bidding of America, while grinning through the divorce proceedings. Mr Johnson is well suited to both activities. In the longer term it involves rethinking Britain’s international role and reinforcing its relations across the world. That requires a revitalised and self-confident Foreign Office. + +There are a few signs of a revival. The Foreign Office has replaced Sir Ivan as ambassador to the EU with one of its own, Sir Tim Barrow. Some ambitious young diplomats are excited by the chance to reinvent Britain’s foreign policy for a new world. The foreign secretary should be thinking about more important things than silly gibes about poodles. If he wants to confound his critics, and earn a place in the history books rather than just the headlines, he needs to play for bigger stakes: reviving a great institution that has been needlessly traduced and giving it the space to build a new foreign policy from the rubble of Brexit. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21720630-boris-johnson-embodies-weakness-britains-foreign-policy-foreign-office-needs-learn/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +International + + +Disposing of nuclear waste: To the next ice age and beyond [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +To the next ice age and beyond + +How to dispose of nuclear waste + + +Finland shows the way with a project expected to span 100,000 years + +Apr 12th 2017 | OLKILUOTO + + + + + +A STEEP 5km ramp corkscrews down from the mouth of a tunnel (pictured above) into the bowels of the Earth. At the bottom, a yellow rig is drilling boreholes into the rock face, preparing it for blasting. The air is chilly, but within a few years, it may feel more like a Finnish sauna. Buried in holes in the floor will be copper canisters, 5.2 metres long, containing the remains of some of the world’s most radioactive nuclear waste. When the drilling is finished, in a century or so, 3,250 canisters each containing half a tonne of spent fuel will be buried in up to 70km of tunnels. Then the entire area will be sealed to make it safe for posterity. + +The hundred-year timescale already means this is a megaproject. But that is just the beginning. The radioactive isotopes of plutonium used in nuclear-power plants must be stored for tens of thousands of years before they are safe. Finland aims to isolate its stockpile in the Onkalo repository, a burial chamber beneath the small forested island of Olkiluoto, home to one of its two nuclear-power plants, for at least 100,000 years. + + + +In geological terms, that is a heartbeat; Finland’s bedrock is 1.9bn years old. But in human terms, 4,000 generations are almost inconceivable. As Mika Pohjonen, the managing director of Posiva, the utility-owned Finnish company overseeing the project, says, no one knows whether humans, creatures (or machines) will rule the Earth above by then—let alone whether they will be able to read today’s safety manuals. A hundred thousand years ago, Finland was under an ice sheet and Homo sapiens had not yet reached Europe. + +Posiva has commissioned studies on the possibility that in the intervening millennia the area could be inundated by rising seas caused by global warming, or buried beneath a few kilometres of ice once more. Scientists have studied Greenland as an analogue to ice-capped Finland. The firm’s assurance to future generations is that if, in tens of thousands of years, a future Finn digs a 400-metre-deep well and draws water contaminated with 21st-century nuclear waste, it will be safe to drink. + +But Posiva’s immediate priority is to create disposal caverns far enough from rock fissures and groundwater that Finland’s nuclear authorities allow it to start moving the canisters to their tomb in the early 2020s. “This is drilling with silk gloves on,” Mr Pohjonen says, as the machine pounds the rock with a deafening roar. “It has to be done gently.” + +Nuclear authorities around the world are watching with interest because in the past two years Finland has become the first country to license and start building a final repository for highly radioactive waste fuel from nuclear reactors. Experts at the International Atomic Energy Agency (IAEA), a global body, say other countries, such as Sweden and France, are close behind. In America, Donald Trump’s administration has included a budget request for $120m to restart construction of a high-level waste repository at Yucca Mountain in Nevada, chosen in 1987 but stalled since 2010. + +Delayed gratification + +The disposal of nuclear fuel is among the most intractable of infrastructure projects. And there are already 266,000 tonnes of it in storage around the world, about 70,000 tonnes more than there were a decade ago. As Markku Lehtonen, a Finnish academic at the University of Sussex, puts it, the costs are high; the benefits are about avoiding harm rather than adding value; and evaluation is not about assessing risk, but about dealing with “uncertainty, ambiguity and ignorance” over a protracted timescale. Not everyone is convinced that permanent disposal is urgent, either. Some argue that semi-cooled fuel could be kept in cement dry-storage casks, as much is in America, for generations until technologies are developed to handle it. A blue-ribbon commission in America in 2012 mentioned the benefits of keeping spent fuel in storage for a longer time in order to keep the options open. But it also said that final storage was essential. + +For all the countries committed to burial, Finland represents an overdue step in the right direction. It offers two lessons. The first is to find a relatively stable geological area, and reliable storage technology. The second is to build a broad consensus that the waste can be handled and disposed of responsibly. Like other Nordic success stories, it will be hard to replicate. “Finland has a kind of unique institutional context: a high trust in experts and representative democracy,” says Matti Kojo, of Finland’s Tampere University. “You cannot just copy a model from Finland.” + +Under solid ground + +The geological part, though the timespan is greatest, is probably the least tricky. Finland began the search for a site in 1983, shortly after it began generating nuclear power, and chose Olkiluoto after reviewing 100 areas. It has mapped faults and fissures in the bedrock, and sited the repository in a seismic “quiet zone”. It says it will avoid burying canisters close to potential pressure points, to minimise the danger that rock movements would crush or tear the canisters and cause radioactive leakage. Finland’s Radiation and Nuclear Safety Authority (STUK) called Posiva’s analysis of the bedrock and groundwater “state of the art”. + +Ismo Aaltonen, Posiva’s chief geologist, says that earthquakes cannot be ruled out, especially if the bedrock shifts upwards in the melting period after a future ice age. Olkiluoto is still rising as it rebounds from the pressure of the last one, which ended more than 10,000 years ago. Close to the repository’s entrance, he points to scratchmarks on the rocks—“footprints of the last ice age” left by the retreating ice cap. But whether in crystalline granite, as in Finland and Sweden, or clay, as in France, or volcanic rock, as in Yucca Mountain, nuclear experts are confident that deep geological disposal can be safe. “There is a great deal of evidence that we can find many sites in the world with adequate geological properties for the required safety,” says Stefan Mayer, a waste-disposal expert at the IAEA. + +Technology is the next hurdle. As well as 400-500 metres of bedrock between the canisters and the surface, there will be several man-made layers: steel, copper, water-absorbent bentonite clay around the canisters, and bentonite plugs sealing the caverns and, eventually, the access tunnel. + +A model in the visitor’s centre, with moving parts that replicate all this in miniature, makes the whole set-up look safer than Fort Knox. Posiva says it has modelled copper deposits in ancient rocks to assess the likelihood of corrosion. STUK, however, says it will need more study on the potential for the copper to deteriorate. Some academics, including Mr Kojo, are worried that the Finnish media have underplayed concerns about copper corrosion, compared with other countries with similar “multi-barrier” protection systems. + +The trickiest challenge, though, is to build broader societal consent. Finland appears to have succeeded by starting early and sticking to its timetable. The decision to find a site and start disposing of nuclear waste in the 2020s was taken 40 years ago. In 1994 its parliament banned the import and export of spent nuclear fuel, which increased the pressure to find a home-grown solution. Few other countries have demonstrated the same determination. The good news is that, because waste needs to be cooled in tanks for 30-50 years before being disposed of, emerging nuclear powerhouses such as China have time to prepare. + +Out of site, not out of mind + + + +Finns’ trust in their nuclear industry has remained high, despite accidents elsewhere, such as those at Chernobyl in 1986 and Fukushima in 2011. Finland’s four nuclear reactors operate at among the world’s highest utilisation rates, and supply 26% of its electricity. Its two nuclear utilities, TVO and Fortum, which co-own Posiva, are themselves part of an electricity system in which Finnish industries and many municipalities have a stake, bolstering public support. The Onkalo repository is situated next door to TVO’s two working Olkiluoto reactors, which means people nearby are—in the phrase of academics—“nuclearised”, that is, convinced of the benefits of nuclear power. Surveys suggest positive attitudes to nuclear power nationally exceed negative ones. + +Finns’ trust in government as a whole is high. Vesa Lakaniemi, the mayor of the 9,300-strong municipality of Eurajoki in which Olkiluoto lies (who once did a summer job at TVO), says it did not take much to persuade locals to support the site. Income from the nuclear industry gives them slightly lower taxes, good public services and a restored mansion for the elderly. They trust the waste will be handled safely and transparently. “It’s Finnish design. Finnish rock is solid rock. Regulation is strict everywhere in the world but Finnish people do these things very well,” he says. + +Faith in the future + +Some academics worry that Finland is taking waste disposal too much on faith. Any mishap could erode trust in an instant, as happened in Japan, another “high-trust” society, after the Fukushima disaster. TVO admits that negative attitudes towards nuclear power have risen as the construction of its third reactor at Olkiluoto has been plagued by delays, cost overruns and squabbles with the French-German contractors. The experience has shown that STUK tolerates no shortcuts, but some fear that its relationship with Posiva sometimes appears too close. Sweden and France have moved towards licensing repositories with far more criticism from NGOs and the media, suggesting more robust engagement. + +Other countries, including America and France, follow principles of reversibility or retrievability, meaning they can reverse the disposal process while it is under way or retrieve waste after burial, if technologies and social attitudes change. Finland’s model is more closed; it would take a huge amount of digging to recover the waste once it has been sealed. But analysts say there is no single correct approach. Britain, for instance, has done things by the book but still failed to find a place for a repository. + +Finally, there is the matter of cost. Finland’s nuclear-waste kitty, collected from the utilities, currently stands at €2.5bn ($2.7bn). By the time it is closed, the price is expected to be €3.5bn. That is reassuringly modest for a 100-year project, partly reflecting the fact that Finland’s nuclear industry, even when the planned total of five reactors are up and running, is relatively small. Other countries have higher costs, and less discipline. Yucca Mountain, for instance, was once estimated to cost $96bn to complete. In 2012 America had $27bn in its disposal fund, collected from ratepayers, none of which has gone towards nuclear-waste management. + +It may be hard to replicate Finland’s exact model, but its sense of responsibility is seen as an inspiration. When visiting the Finnish repository, authorities from elsewhere, be they American, Chinese, Australian, Japanese or British, learn that safeguarding the future is not just a question of seismology, technology, sociology and cash. It is also an ethical one. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21720591-finland-shows-way-project-expected-span-100000-years-how-dispose/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Business + + +Car mergers: Wheels in motion [Fri, 14 Apr 13:31] + +Women in tech: Bits and bias [Fri, 14 Apr 13:31] + +HNA Group: A Buddhist tycoon [Fri, 14 Apr 13:31] + +Algorithmic retailing: Automatic for the people [Fri, 14 Apr 13:31] + +United Airlines: Air rage [Fri, 14 Apr 13:31] + +Cloud computing and telecoms: Telecomulonimbus [Fri, 14 Apr 13:31] + +Schumpeter: Crony capitalism [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Wheels in motion + +Why carmakers need to get bigger + + +GM’s recent sale of Opel has revived talk of mega-mergers + +Apr 12th 2017 + + + + + +CARS are getting bigger. Motorists worldwide have for years been abandoning four-door saloons in favour of bulkier SUVs. Carmakers have become bigger, too. Four car firms now make around 10m vehicles a year in order to reap economies of scale, particularly in the mass-market bit of the business where profit margins can be painfully thin. + +Many executives also believe that size is the only protection against the technological upheaval sweeping the industry. But bulking up fast is easier said than done. Lots of different constituents have to be won over. And most car bosses are still reticent about taking the plunge on mergers because many have been catastrophes. Daimler’s acquisition of Chrysler in 1998, for example, was a notable disaster. The list of past crashes is lengthy. Indeed, one recent deal—General Motors’ sale of Opel, its European arm, to France’s PSA Group for €1.3bn ($1.4bn)—seems to go directly against the imperative to bulk up. + +In fact, that deal has had the effect of spurring more talk of consolidation. Speculation centred at first on a possible mega-merger between GM and Fiat Chrysler Automobiles (FCA), itself the result of a deal in 2014 (FCA’s chairman, John Elkann, sits on the board of The Economist’s parent company). The Italian-owned firm, which makes just under 5m vehicles a year, is run by Sergio Marchionne, who has been eyeing a merger with GM for years. With the American firm now discarding a loss-making European business, the theory goes, it could replace it with a profitable one—Fiat—and crunch together the two firms’ successful operations in America. + + + +Mary Barra, GM’s boss, has repeatedly rejected Mr Marchionne’s overtures; selling Opel is unlikely to have changed her mind. Some observers unkindly suggest that GM is in any case unable to handle three tasks at once, and that its aim in ridding itself of Opel was to concentrate on improving its operations in America and in China. Moreover, a lot of the synergies from a deal depended on combining Fiat and Opel in Europe. + +The rumour mill has since moved to Volkswagen. The German firm has long cast a covetous eye over bits of FCA. At an annual industry shindig in Geneva in March that coincided with the final sale of Opel, Mr Marchionne said he had “no doubt that at the relevant time Volkswagen may show up and have a chat”. He also suggested that PSA Group’s acquisition of the GM unit, which puts the French firm in second place in Europe, adds to the pressure on VW, the market leader, to bulk up further. VW’s campaign to conquer America, where its diesel-emissions scandal has undermined its weak position, would be strengthened with FCA in tow. FCA’s Ram trucks are hugely profitable in America and the Jeep brand is resurgent worldwide. The unrealised potential of Maserati and Alfa Romeo, alluring bywords for Italian style, is also attractive. + + + +A deal would, however, bring little benefit in Europe, where VW already has a big slice of the market and plenty of small cars on offer. With Seat, a Spanish division, struggling and its own brand said to be loss-making in the region, VW could well do without the trouble of integrating Fiat. FCA is also the only big car company that is lumbered with lots of debt (of just under €5bn), making it a less tempting target. + +Matthias Müller, VW’s chief executive, has not ruled out talks with FCA, and has indicated that the German group is more open to a merger than it used to be. But FCA is not the only option. An acquisition of Ford (which just suffered the humiliation of being overtaken in market capitalisation by Tesla, an electric-car firm founded in 2003) might also fit VW’s plans. Still, if VW is intent on leading the next round of industry consolidation, it will need to put “dieselgate” behind it. Though the German firm has paid $22bn in fines and compensation, the issue of who knew what and when is still unresolved. + +Whatever combination of firms might bring it about, the goal of creating a group that produces nearly 15m vehicles a year makes sense. Mr Marchionne’s oft-stated view is that the industry’s duplicated investment in kit such as near-identical engines and gear boxes is a waste of resources, and that much of the money would be better returned to shareholders. Other car bosses reckon the money should go on the technologies that will transform the industry: mobility services such as ride-sharing, electrification of the drivetrain and autonomous vehicles. Scale would allow car firms to spread the cost over more vehicles. + +One argument against full-scale mergers has been that loose alliances, such as that between Renault, a French car manufacturer, and Japan’s Nissan, can do the job by helping to pool development costs. The Renault-Nissan alliance has succeeded. After taking a controlling stake in Mitsubishi, a smaller Japanese carmaker, last year, the firm makes nearly 10m cars a year. + +An alliance works well for components and for individual platforms, the basic structure underpinning a car, where the aim is clear and specifications can be agreed on. An engine that might cost $1bn to develop, for example, can be easily split two or more ways. Yet alliances work far less well for broader technologies such as connectivity and autonomous vehicles. It is harder to specify a common goal for a product that could find its way into every vehicle the companies make. And it makes less sense to share futuristic technologies that may prove to be the differentiating factor for buyers of cars in the future. + +The arrival of new competitors such as Tesla, and deep-pocketed tech giants intent on disrupting the transport industry such as Google, Apple and Uber, make dealmaking an even more pressing need. “Everyone agrees on the rationale for big mergers, even if execution of deals has been extremely difficult up to now,” says an adviser to the industry. + +If car mega-mergers are to go ahead, however, and stand a better chance of success than past attempts, two conditions apply. First, the big stakeholders—governments, families and unions—will need to be convinced. Many carmakers, such as BMW, Fiat, Ford, Toyota, VW and others, have ties to families, which in some cases have blocking shareholdings. VW’s unions or France’s government, which has stakes in Renault and PSA, would oppose deals that could result in big domestic job losses. + +Second, transactions will need to do more than simply chase volume. A welcome new trend in the industry is to put greater emphasis on profitability. One of GM’s reasons for getting rid of Opel was to concentrate on profits rather than solely on how many cars it turns out, a decision that Tim Urquhart of IHS Markit, a research firm, calls “groundbreaking and brave”. + +A mega-merger would take similar courage, and car bosses tend to be conservative and risk-averse. But after over 100 years of selling cars powered by internal-combustion engines, the industry faces the huge wrench of adapting to a future of electrification and self-driving cars. Software and electronics are displacing mechanical parts as the most important components of a car. A business focused on selling objects will have to start offering ever more transport services. If carmakers do not take the plunge, an alternative is that one of the technology giants with big ambitions in mobility could try to buy, say, Ford, Tesla or PSA Group. For cash-rich firms like Apple or Google, the cost of such an acquisition would be pocket change. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21720658-gms-recent-sale-opel-has-revived-talk-mega-mergers-why-carmakers-need-get-bigger/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Bits and bias + +Google is accused of underpaying women + + +The allegation inflames a debate about sexism in Silicon Valley + +Apr 12th 2017 | SAN FRANCISCO + + + + + +GOOGLE has made a fortune by helping people dig up whatever information they seek. But in a court hearing on April 7th, America’s Department of Labour (DoL) accused the company behind the profitable search engine of burying the fact that it pays its female employees less than their male counterparts. The accusation of lower compensation for women forms part of a lawsuit by the DoL, which has asked Google to turn over detailed information on pay. The department has not released data to back its assertion, and Google denies the allegation. + +Whatever the outcome in court, the government’s recriminations risk marring Google’s image. Just three days earlier it had taken to Twitter to boast that it had “closed the gender pay gap globally”. That claim is now under suspicion. It is true that at Google’s parent company, Alphabet, several women hold high positions, including Ruth Porat, the chief financial officer, and Susan Wojcicki, who runs YouTube, an online-video business. But the important question is not only whether a few women get promoted but also how those in the middle and lower ranks fare. + + + +What figures there are paint a depressing picture about the status of women in technology. According to a one-off survey in 2015 called “Elephant in the Valley”, two-thirds of women in Silicon Valley feel excluded from key networking events, and three-fifths have experienced unwanted sexual advances. More than a quarter of American women in engineering, technology and science feel “stalled” in their careers, and a third say they are likely to quit their jobs within a year, according to the Centre for Talent Innovation, a think-tank. + +The marginalisation of women in tech became a prominent subject in 2015 during a sex-discrimination lawsuit brought by Ellen Pao, who had worked at a venture-capital firm, Kleiner Perkins (she lost the case). It has been back in the headlines since Susan Fowler, a former engineer at Uber, a ride-hailing firm, wrote a blog post in February saying that male supervisors had failed to promote women and that human resources had not taken complaints of sexism and harassment seriously. Uber has hired Eric Holder, America’s former attorney-general, to lead an investigation into the company’s handling of sexual harassment and workplace culture. The results are expected in the coming weeks. + + + +Some firms, including Uber, are now publishing annual reports describing the composition of their workforce, after they were criticised for not hiring more women and ethnic minorities. Well under half of tech companies’ employees are female (see chart). Despite attempts to hire more women, they have not shifted their female-staff shares by more than a few percentage points. + +Educational choices are part of the problem. In 2013, the most recent year for which data are available, only around 18% of computer-science graduates were women, half the proportion in 1985. Some suspect there is a “negative” network effect, and that the small share of women in the field discourages others from choosing it as a course of study. + +Retention is also difficult. A study in 2014 that tracked women in jobs related to science, technology, engineering and mathematics (STEM) found that half of women had left their professions after 12 years. By comparison, only a fifth of women who work in non-STEM fields leave within 30 years. Female entrepreneurs find it more difficult to secure funding from venture capitalists than their male counterparts do. Elizabeth Holmes, the founder of Theranos, a blood-testing firm which has run into trouble, attracted a lot of hype largely because she was so unusual. And female venture capitalists, who are more likely to fund startups run by women, are the rarest unicorns of all in Silicon Valley. + +Transparency about the composition of firms’ staff may help with hiring more women. But another place where transparency can make a big difference is pay. The secretive nature of compensation at tech firms, with employees being discouraged from telling their peers anything about their equity grants or cash bonuses, means that women do not know when they are being underpaid, says Pamela Sayad, a San Francisco-based lawyer who specialises in workplace discrimination. + +Some companies that have unearthed disparities, including Salesforce, a software firm, and Cisco, a networking company, have pledged millions of dollars to fill wage gaps. But absent disclosure, it can still be hard to see the pay differences in the first place. For years tech executives have talked up the importance of transparency and the power of data for decision-making. They should do a better job of practising what they preach. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21720672-allegation-inflames-debate-about-sexism-silicon-valley-google-accused-underpaying/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +A Buddhist tycoon + +China’s HNA Group goes on a global shopping spree + + +Its investments range from Hilton Worldwide to Deutsche Bank + +Apr 12th 2017 | SHANGHAI + + + + + +NOW it is a conglomerate with more than $100bn-worth of assets around the world. But HNA Group started life as a small local airline. Chen Feng, the Chinese company’s founder, led a coalition including private investors and the government of Hainan, a southern province, to launch Hainan Airlines in 1993. + +Despite some help from the local government, the upstart firm was an outsider then. The central government chose three big state-run airlines to receive favoured landing slots, lavish subsidies and other advantages. The scrappy Mr Chen was undeterred. With $25m in early funding from George Soros, an American billionaire, he carved out a profitable niche. + + + +Since then, HNA has grown quickly, mainly through acquisitions. It reported revenues of 600bn yuan ($90bn) last year. In 2016 it acquired a 25% stake in America’s Hilton Worldwide for $6.5bn and paid $10bn for the aircraft-leasing division of CIT Group, a New York-based financial firm. This week it bid nearly $1bn for Singapore’s CWT, a logistics company. + +Most deals have been in industries adjacent to its core business, such as travel, tourism and logistics. But some recent purchases have raised eyebrows for being more distant. It spent $6bn last year on Ingram Micro, an information-technology outfit based in California. Money has also gone into Deutsche Bank. It is rumoured to be bidding for Forbes, an American magazine. Some people suspect that these deals chime with China’s industrial policy more than HNA’s own corporate logic. + +Yet HNA is not a classic state-owned enterprise. The Hainan government retains a big stake in it, but HNA has traits that distinguish it from state-owned enterprises, which tend to be sclerotic and run by bureaucratic grey men. + +It has adopted professional management practices. Mr Chen has trained his employees in Six Sigma, a management method popularised by Jack Welch, a former boss of General Electric, to eliminate waste; and in a financial methodology that scrutinises investments for economic value added. Hainan Airlines is considered the best Chinese airline. Mr Chen, a Buddhist scholar, has also imprinted traditional Chinese philosophies onto the company’s culture. When it takes over a firm he leads new executives in a recitation of HNA’s core values, which include “love and devotion”. HNA typically does not fire the top brass at firms it acquires, nor does it force big lay-offs. + +Mr Chen certainly seems skilful at managing the Chinese authorities. HNA is presenting this week’s bid for CWT as part of President Xi Jinping’s “One Belt, One Road” geopolitical strategy, for example. It is clever to play the political card given that the state is tightening control of outbound investment, which could hamper the company’s style, notes a Chinese business expert. A clampdown on foreign deals by Chinese regulators, who are worried about capital outflows, has led to the cancellation of dozens of announced acquisitions by Chinese firms. + +But HNA is having no trouble getting the money and approval to do lots of big deals—it has spent over $40bn on acquisitions in the past three years. Indeed, Mr Chen appears to have the advantages of a state firm, including cheap access to capital, without the disadvantages, such as officials telling him how to run his company, says a seasoned China hand. In this, he reckons, HNA is becoming “a lot like Huawei”, a telecoms-equipment firm. Mr Chen should be flattered by the comparison to one of the country’s most successful multinationals. But he should also recall that a backlash against Huawei’s perceived closeness to China’s leadership led to its blacklisting by America’s government. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21720674-its-investments-range-hilton-worldwide-deutsche-bank-chinas-hna-group-goes-global/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Automatic for the people + +How Germany’s Otto uses artificial intelligence + + +The firm is using an algorithm designed for the CERN laboratory + +Apr 12th 2017 | HAMBURG + + + + + +A GLIMPSE into the future of retailing is available in a smallish office in Hamburg. From there, Otto, a German e-commerce merchant, is using artificial intelligence (AI) to improve its activities. The firm is already deploying the technology to make decisions at a scale, speed and accuracy that surpass the capabilities of its human employees. + +Big data and “machine learning” have been used in retailing for years, notably by Amazon, an e-commerce giant. The idea is to collect and analyse quantities of information to understand consumer tastes, recommend products to people and personalise websites for customers. Otto’s work stands out because it is already automating business decisions that go beyond customer management. The most important is trying to lower returns of products, which cost the firm millions of euros a year. + + + +Its conventional data analysis showed that customers were less likely to return merchandise if it arrived within two days. Anything longer spelled trouble: a customer might spot the product in a shop for one euro less and buy it, forcing Otto to forgo the sale and eat the shipping costs. + +But customers also dislike multiple shipments; they prefer to receive everything at once. Since Otto sells merchandise from other brands, and does not stock those goods itself, it is hard to avoid one of the two evils: shipping delays until all the orders are ready for fulfilment, or lots of boxes arriving at different times. + +The typical solution would be slightly better forecasting by humans of what customers are going to buy so that a few goods could be ordered ahead of time. Otto went further and created a system using the technology of Blue Yonder, a startup in which it holds a stake. A deep-learning algorithm, which was originally designed for particle-physics experiments at the CERN laboratory in Geneva, does the heavy lifting. It analyses around 3bn past transactions and 200 variables (such as past sales, searches on Otto’s site and weather information) to predict what customers will buy a week before they order. + +The AI system has proved so reliable—it predicts with 90% accuracy what will be sold within 30 days—that Otto allows it automatically to purchase around 200,000 items a month from third-party brands with no human intervention. It would be impossible for a person to scrutinise the variety of products, colours and sizes that the machine orders. Online retailing is a natural place for machine-learning technology, notes Nathan Benaich, an investor in AI. + +Overall, the surplus stock that Otto must hold has declined by a fifth. The new AI system has reduced product returns by more than 2m items a year. Customers get their items sooner, which improves retention over time, and the technology also benefits the environment, because fewer packages get dispatched to begin with, or sent back. + +The initiative suggests that an important role of AI in business may be simply to make existing processes work better. Otto did not fire anyone as a result of its new algorithmic approach: it hired more, instead. In many cases AI will not affect a firm’s overall headcount, but will perform tasks at a level of productivity that people could not achieve. Otto’s experience also underlines that ordinary companies can use AI, not just giants such as Amazon and Google, notes Dave Selinger, a retailing-technology expert and former data scientist at Amazon. The degree to which the company has yielded control to an algorithm, he says, is extremely unusual. But it may not be long before others catch up. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21720675-firm-using-algorithm-designed-cern-laboratory-how-germanys-otto-uses/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Air rage + +Police drag a man from a United Airlines plane + + +An ugly incident provokes a social-media storm + +Apr 15th 2017 + + + + + +UNITED AIRLINES urges travellers to “Fly the Friendly Skies”. The company makes no promises about its customer service before take-off. When, on April 9th, a traveller in Chicago refused to give up his seat on an overcrowded flight to Louisville, Kentucky, police yanked him into the aisle and dragged him by his hands along the floor, bleeding after he cut his head on an armrest. Horrified fellow passengers took videos on their phones and posted them to social media. + +The company’s initial response was possibly the worst bit of crisis-PR in history, noted one media commentator. As videos of the bloodied man quickly went viral, Oscar Munoz, the carrier’s boss, woodenly apologised for having to “re-accommodate” customers. In an internal letter to staff, Mr Munoz said crew had “no choice” in their action and blamed the flyer for not co-operating. + + + +Overbooking, which is common at many carriers, was not the problem. Rather, it was late-arriving, off-duty airline employees who needed seats at the last moment. The usual way of persuading paying passengers not to fly—offering lots of cash—did not work. Such bargains are best struck before boarding the plane. United, however, let passengers take their seats as it offered up to $1,000 to catch a later flight. When not enough travellers were tempted, rather than raising the price further, the crew selected four travellers for disembarkation. The man in question, a doctor aged 69 called David Dao, said he had patients to see the next day and refused to go. + +As the scene looped on the world’s news channels and Twitter feeds (one user, @Reflog_18, suggested the cabin layout for United below), Mr Munoz was derided for his apparent antipathy towards passengers. Before the man’s identity was known, his airline became the top-trending topic on Weibo, a Chinese microblog, as rumours swirled (erroneously) that the passenger had been singled out because he was Chinese. Amid calls for a boycott, United’s share price fell by nearly 4% on April 11th before recovering. That day Mr Munoz issued a fresh apology that was different in tone, saying of the forcibly removed customer that “no one should ever be mistreated this way”. He promised a review of company practices, including its partnerships with law enforcement. + + + +Investors are watching to see how quickly the social-media frenzy will subside. Many praise the way that Mr Munoz has run the company since his appointment in 2015. He has focused on costs and delivered pre-tax profit of $3.8bn in 2016, down by 9.5% on the previous year though ahead of analysts’ expectations. But Mr Munoz had promised to tackle the airline’s reputation for bad customer service. Here, he has hardly been a success. United has fallen to 68th place in the influential SKYTRAX airline ranking, one place ahead of Copa Airlines, Panama’s flag carrier. + +And scandal seems to follow the firm. In March it was accused of sexism for barring three girls wearing leggings from a flight: a ten-year-old had to put on a dress and the other two teenagers were left at the gate. They had not complied with dress codes for friends and family of employees. Such incidents highlight the gap between the stories firms tell about themselves and what consumers see. Not long before United put Mr Munoz’s initial statement about the bloodied passenger on Facebook, it had posted a picture of a company dog nuzzling a boy, part of a programme to make travel less stressful. Travellers will be telling a story about United for some time. It won’t be the one about the puppies. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business-and-finance/21720580-ugly-incident-provokes-social-media-storm-passenger-dragged-united-airlines/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Telecomulonimbus + +Cloudification will mean upheaval in telecoms + + +It will allow startups to challenge incumbent operators + +Apr 12th 2017 + + + + + +IN THE computing clouds, startups can set up new servers or acquire data storage with only a credit card and a few clicks of a mouse. Now imagine a world in which they could as quickly weave their own wireless network, perhaps to give users of a fleet of self-driving cars more bandwidth or to connect wireless sensors. + +As improbable as it sounds, this is the logical endpoint of a development that is picking up speed in the telecoms world. Networks are becoming as flexible as computing clouds: they are being turned into software and can be dialled up and down as needed. Such “cloudification”, as it is known, will probably create as much upheaval in the telecoms industry as it has done in information technology (IT). + + + +IT and telecoms differ in important respects. One is largely unregulated, the other overseen closely by government. Computing capacity is theoretically unlimited, unlike radio spectrum, which is hard to use efficiently. And telecoms networks are more deeply linked to the physical world. “You cannot turn radio towers into software,” says Bengt Nordstrom of Northstream, a consultancy. + +The data centres of big cloud-computing providers are packed with thousands of cheap servers, powered by standard processors. Telecoms networks, by contrast, are a collection of hundreds of different types of computers with specialised chips, each in charge of a different function, from text messaging to controlling antennae. It takes months, if not years, to set up a new service, let alone a new network. + +But powerful forces are pushing for change. On the technical side, the current way of building networks will hit a wall as traffic continues to grow rapidly. The next generation of wireless technologies, called 5G, requires more flexible networks. Yet the most important factor behind cloudification is economic, says Stéphane Téral of IHS Markit, a market-research firm. Mobile operators badly need to cut costs, as the smartphone boom ends in many places and prices of mobile-service plans fall. The shift was evident at the Mobile World Congress in Barcelona in February. Equipment-makers’ booths were plastered with diagrams depicting new technologies called NFV and SDN, which stand for “network-functions virtualisation” and “software-defined networks”. They turn specialised telecoms gear into software in a process called “virtualisation”. + +Many networks have already been virtualised at their “core”, the central high-capacity gear. But this is also starting to happen at the edges of networks—the antennae of a mobile network. These usually plug directly into nearby computers that control the radio signal. But some operators, such as SK Telecom in South Korea, have begun consolidating these “baseband units” in a central data centre. Alex Choi, SK Telecom’s chief technology officer, wants “radio” to become the fourth component of cloud computing, after computing, storage and networking. + +Spin me up, AT&T + +The carrier that has pushed cloudification furthest is AT&T, America’s largest operator. By the end of 2017 it wants to have more than half of its network virtualised. In areas where it has already upgraded its systems, it can now add to the network simply by downloading a piece of software. “Instead of sending a technician, we can just spin up a virtual machine,” says Andre Fuetsch, AT&T’s chief technology officer. + +Even more surprising for a firm with a reputation for caution, AT&T has released the program that manages the newly virtualised parts of its network as open-source software: the underlying recipe is now available free. If widely adopted, it will allow network operators to use cheaper off-the-shelf gear—much as the rise of Linux, an open-source operating system, led to the commoditisation of hardware in data centres a decade ago. + +If equipment-makers are worried about all this, they are not letting it show. Many parts of a network will not get virtualised, argues Marcus Weldon, chief technology officer of Nokia. And there will always be a need for specialised hardware, such as processors able to handle data packets at ever faster speeds. Still, Nokia and other telecoms-gear-makers will have to adapt. They will make less money from hardware and related maintenance services, which currently form a big chunk of their revenues. At the same time, they will have to beef up their software business. + +Cloudification may also create an opening for newcomers. Both Affirmed Networks and Mavenir, two American firms, for instance, are developing software to run networks on off-the-shelf servers. Affirmed already claims 50 customers. Mavenir wants to work with underdog operators “to bring the incumbents down”, says Pardeep Kohli, its chief executive. If the history of cloud computing is any guide, the telecoms world may also see the rise of new players in the mould of Amazon Web Services (AWS), the e-commerce giant’s fast-growing cloud-computing arm. + +According to John Delaney of IDC, a research firm, the big barrier to cloudification is likely to be spectrum, which newcomers will still have to buy. But a clever entrepreneur may find ways to combine assets—unlicensed spectrum, fibre networks, computing power—to provide cheap mobile connectivity. Startups such as FreedomPop and Republic Wireless already offer “Wi-Fi first” mobile services, which send calls and data via Wi-Fi hotspots, using the mobile network as backup. + +As the case of AWS shows, a potential Amazon Telecoms Services does not have to spring from the telecoms world. Amazon itself is a candidate. But carmakers, operators of power grids and internet giants such as Facebook could have a go: they are huge consumers of connectivity and have built networks. Facebook, for instance, is behind the Telecom Infra Project, another effort to open the network infrastructure. However things shake out, expect the telecoms world to become much more fluid in the coming years, just like IT before it. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21720670-it-will-allow-startups-challenge-incumbent-operators-cloudification-will-mean-upheaval/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Schumpeter + +The University of Chicago worries about a lack of competition + + +Its economists used to champion big firms, but the mood has shifted + +Apr 12th 2017 + + + + + +ONE sign that monopolies are a problem in America is that the University of Chicago has just held a summit on the threat that they may pose to the world’s biggest economy. Until recently, convening a conference supporting antitrust concerns in the Windy City was like holding a symposium on sobriety in New Orleans. In the 1970s economists from the “Chicago school” argued that big firms were not a threat to growth and prosperity. Their views went mainstream, which led courts and regulators to adopt a relaxed attitude towards antitrust laws for decades. + +But the mood is changing. There is an emerging consensus among economists that competition in the economy has weakened significantly. That is bad news: it means that incumbent firms may not need to innovate as much, and that inequality may increase if companies can hoard profits and spend less on investment and wages. It may yet be premature to talk about a new Chicago school, but investors and bosses should pay attention to the intellectual shift, which may change American business. + + + +The fear that big firms might come to dominate the economy and political life has its roots in the era of the robber barons of the 19th century. In 1911 the government broke up Standard Oil; until the 1960s regulators policed mergers with a big stick. But by the 1970s the economy was sputtering, and America Inc was losing ground to Japanese and European industry. Free-market scholars at the Chicago school argued that the pendulum had swung too far towards the state and antitrust action. + +They felt that regulators were intervening arbitrarily. Richard Posner, an academic who later became a judge, damningly wrote that they relied on “eclectic forays into sociology”, not hard analysis. Firms were being prevented from getting big enough to create economies of scale that could benefit consumers, argued backers of free markets. Well-run companies that naturally gained market share were being penalised for success. + +Over time the Chicago school’s ideas became so influential that the courts and the two antitrust regulators, the Department of Justice (DoJ) and the Federal Trade Commission (FTC), adopted a far more favourable approach to big business. Today Mr Posner, who is 78, jokes that he became a judge in 1981 expecting to specialise in monopoly cases, but regulators stopped bringing them to court. He remains a true believer in the laissez-faire approach. But at Chicago (and elsewhere) a younger generation of scholars, including Luigi Zingales and Raghuram Rajan, are worried that competition is not as vigorous as it used to be. + +What has changed? The facts. The pendulum has swung heavily in favour of incumbent businesses. Their profits are abnormally high relative to GDP. Those that make a high return on capital can sustain their returns for longer, suggesting that less creative destruction is taking place. The number of new, tiny firms being born is at its lowest level since the 1970s. + +Two explanations are plausible. One is successive waves of mergers. When you split the economy into its 900 or so different industries, two-thirds have become more concentrated since the 1990s. Regulators may also have been captured by incumbent firms, which get cosy treatment. American companies collectively spend $3bn a year on lobbying. In regulated industries that don’t face competition from imports—health care, airlines and telecommunications—prices are at least 50% higher than in other rich countries, and returns on capital are high. + +The technology industry’s expansion could exacerbate the problem. An analysis by The Economist in 2016 suggested that about half the pool of abnormally high profits is being earned by tech firms. The big five platform companies—Alphabet, Amazon, Apple, Facebook and Microsoft—earned $93bn last year and have high market shares, for instance in search and advertising. They are innovative but sometimes behave badly. They have bought 519 firms, often embryonic rivals, in the past decade, and may stifle them. The data they gather can lock customers into their products. They may also allow firms to exert their market power “vertically” up and down the supply chain—think of Amazon using information on what consumers buy to dominate the logistics business. Investors’ sky-high valuations for the platform firms suggest they will, in aggregate, roughly triple in size. + +If the summit showed that there is a consensus that competition has weakened, there was little agreement on how to respond. Pessimists abound. Many antitrust technocrats plead that they have little power: bodies like the DoJ and the FTC are not meant to run the economy, but instead to enforce a body of law through courts that have become friendlier to incumbents. Some radicals argue that the government is now so rotten that America is condemned to perpetual oligarchy and inequality. Political support for more competition is worryingly hard to find. Donald Trump has a cabinet of tycoons and likes to be chummy with bosses. The Republicans have become the party of incumbent firms, not of free markets or consumers. Too many Democrats, meanwhile, don’t trust markets and want the state to smother them in red tape, which hurts new entrants. + +Lessons from the old school + +What is needed is a three-pronged approach. A campaign to drum up public backing for competition might prod politicians to act: it was popular anger about monopolies in the 1890s that led to crucial reforms in the early 20th century. The technocrats have more power than they admit. Antitrust laws, such as the Sherman Act of 1890, give plenty of latitude. They must be braver. Lastly, scholars should learn from the first Chicago school. Its leading lights did not seek quick victories, but won the battle of ideas over years, their views percolating into politics, the courts and public opinion. America must rediscover the virtues of competition. With luck, in a couple of decades, it will seem embarrassing that anyone had to hold a conference to debate its relevance. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21720657-its-economists-used-champion-big-firms-mood-has-shifted-university-chicago/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Finance and economics + + +China’s banks: A sunny spell [Fri, 14 Apr 13:31] + +Buttonwood: Not barking yet [Fri, 14 Apr 13:31] + +The European Free Trade Association: L-EFTA behind [Fri, 14 Apr 13:31] + +Barclays: Staley stumbles [Fri, 14 Apr 13:31] + +Rural finance in Myanmar: A country mile [Fri, 14 Apr 13:31] + +Mobile money in Africa: Transfer market [Fri, 14 Apr 13:31] + +Depopulation in Germany: Fading echoes [Fri, 14 Apr 13:31] + +Free exchange: On balance [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +A sunny spell + +A new mood of optimism infects investors in China’s banks + + +But many believe that the underlying faultlines remain + +Apr 12th 2017 | SHANGHAI + + + + + +GUO SHUQING, China’s new banking regulator, knows the enormity of his task. China’s banking system, he observed last month, is worth more than $33trn. So it is bigger than any other country’s, and even than Europe’s as a whole. And he is well aware of the pitfalls left by a decade of breakneck lending growth. But if Mr Guo is nervous, he is hiding it. “All problems and contradictions will be resolved,” he says. + +Of course, a Chinese official can be expected to express confidence about Chinese banks. More surprising is that a small but growing number of analysts and investors seem to concur. Chinese bank shares are up by a quarter since early last year. One investment bank, Morgan Stanley, has declared that China’s lenders are “in a sweet spot”. Another, Goldman Sachs, has upgraded China to “overweight”—that is, recommending that clients buy Chinese shares—and is especially positive about the banks. Shanghai Financial News, a local newspaper, described the new mood around these giant institutions as the “return of the king”. The question is whether it will be a long, stable reign or a short-lived, turbulent one. + + + +The clearest positive for China’s banks has been an upturn in nominal economic growth. Real GDP growth (ie, accounting for inflation) is likely to be little changed in 2017 from last year’s 6.7%. But nominal growth is nearly 10% in yuan terms, up markedly over the past 12 months. Higher prices have led to stronger corporate revenues, particularly for indebted steel-producers and coalminers. This, in turn, has made it easier for them to repay loans. Chinese banks’ official bad-debt ratio, climbing since 2012, held steady last year at about 1.7%. Many analysts still think the real level of toxic loans is many times that (some estimate the ratio is as high as 19%), but the bleeding has clearly slowed. + +Meanwhile, banks have started to clean up their balance-sheets. In part, this has been through more write-offs of problem loans. Banks took losses on more than 500bn yuan ($75bn) of loans last year, a record, scrubbing them from their books and selling some to investors. With more credit going to infrastructure projects and to mortgages, which traditionally have been safe in China, loan portfolios are looking healthier. Richard Xu of Morgan Stanley reckons that high-risk credit will decline from about 6% of total credit in China today to less than 3% by 2020. + +There are also signs that China’s bloated state-owned banks are getting a little more efficient as they respond to competition from fintech companies. The four biggest banks, which account for nearly two-fifths of the industry’s assets, cut employees in 2016 for the first time in six years. Banks have been rolling out mobile apps to handle payment and investment transactions that used to be conducted in person. Overall costs of listed banks rose by just 0.6% last year, even as assets grew by 12%. + +All these good omens, however, may not mean China’s banks have really turned the corner. The beautification of their books has relied on financial engineering. Over the past three years the government has approved the creation of 35 asset-management companies (ie, “bad banks”). Jason Bedford of UBS, a Swiss bank, says that these companies, which buy delinquent loans from banks, often also finance themselves through bank loans. + +Debt-for-equity swaps are another form of financial engineering: instead of repaying loans, indebted companies can issue shares to third parties, which acquire the loans from banks. Yet the fine print shows that their equity functions like bonds: the companies must pay dividends and buy back shares if they miss revenue targets. Moreover, the parties holding the equity are funded in part by investment products sold off-balance-sheet by banks. The upshot is that, whether stashed in bad banks or converted into equity, the debt could yet bounce back into banks’ hands. + +The simple problem that underlies this complex restructuring activity is excessive lending growth. China’s total debt-to-GDP ratio has risen from less than 150% before 2008 to more than 260% today; in other economies, such increases have often presaged severe financial stress. Aware of the dangers, the Chinese government has made reducing debt a priority. It is taking baby steps towards that goal: thanks to faster nominal growth, China’s debt-to-GDP ratio will expand more slowly this year. But it will still expand. S&P Global, a rating agency, warned in March that this trajectory for Chinese banks is unsustainable. + +Efforts to curb borrowing are themselves emerging as a new risk. Over the past few months the central bank has raised banks’ short-term borrowing costs. That has been a shot across the bows of overextended lenders, especially mid-tier banks. These have been most aggressive in funding themselves with loans from other banks, rather than doing the painstaking work of building up bigger deposit bases. + +Already this tightening has led to volatility. In March the central bank made an emergency liquidity injection after small banks were reported to have missed interbank debt payments, suggesting that the basic gears of the financial system were starting to get gummed up. + + + +For many in the market, the cons in Chinese banking outweigh the pros. Bank shares have rallied since last year, but investors still price them just at about 80% of the reported value of their assets (see chart). In other words, they expect more bad news to come—if not this year, then soon enough. From his seat in the regulator’s office, Mr Guo has his work cut out: not just in controlling risks, but also in persuading the wider world that it still has China’s banks pegged wrong. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21720614-many-believe-underlying-faultlines-remain-new-mood-optimism/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Buttonwood + +The mysterious quiescence of the gold market + + +Why gold has not responded to geopolitical risk or reflation talk + +Apr 12th 2017 + + + + + +AMERICA has bombed Syria, and its relations with Russia have deteriorated. North Korea is developing a long-range nuclear missile, a development which Donald Trump has vowed to stop, unilaterally if necessary. There is talk of a “reflation trade”, with tax cuts in America pepping up global growth. + +All this ought to be good news for gold, the precious metal that usually gains at times of political uncertainty or rising inflation expectations. But as the chart shows, gold took a hit when Mr Trump was elected in November and is still well below its level of last July. As a watchdog, gold has failed to bark. + + + +Bullion enjoyed a ten-year bull market from 2001 to 2011, when it peaked at $1,898 an ounce. This long upward run was bolstered in its later stages by two developments: first, the use of quantitative easing (QE) by central banks, which gold bugs argued would inevitably lead to high inflation; and second by the euro crisis, which caused nervousness about the potential for a break-up of the single currency and about the safety of European banks. By 2013, however, euro-zone worries were fading and, despite QE, no inflation had been seen. The gold price fell sharply and has stayed in a narrow range since. + +Last year was a disappointing one for jewellery demand, with an annual survey by Thomson Reuters finding that jewellery fabrication fell by 38% in India (where it was hit by a new excise duty) and by 17% in China. The Chinese central bank was also a less enthusiastic gold-purchaser than before: net central-bank buying dropped to a seven-year low. + +The big change in the gold market since the turn of the millennium has been the rise of exchange-traded funds (ETFs), which have made it easy for investors to get exposure to the metal without worrying about storing it or insuring it. At the peak, gold ETFs held around 2,500 tonnes of gold, according to Citigroup, worth around $100bn at today’s prices. + +Gold ETFs were bought as a classic “momentum trade” by investors who try to make money by following trends. Once the price trend changed in 2013, such investors scrambled to get out of the metal. At the moment ETFs hold just 1,800 tonnes. + +The problem with gold is that there is no obvious valuation measure. The metal pays no real “earnings”. Although gold is seen as a hedge against inflation, it cannot be relied on to fulfil this function over the medium term; between 1980 and 2001, its price fell by more than 80% in real terms. + +The general rule is that gold is seen as an alternative currency to the dollar, so when the greenback does well, bullion does badly. But this also means that gold’s performance can look rather better in other, weaker currencies. Since the Brexit referendum, for example, bullion is up by 19% in sterling terms. Another factor is real interest rates. When they are high, the opportunity cost of holding gold is also high. Conversely, very low interest rates mean that there seems little to lose by holding gold. + +Those two factors explain why the “Trump trade” was initially not very good for gold. In the immediate aftermath of the election, investors hoped that tax cuts would revive the American economy; this would force the Federal Reserve to push up interest rates and that rate boost would drive the dollar higher. Neither prospect would be good for gold. + +But the Trump trade has lost momentum. The president’s failure to repeal Obamacare has raised doubts about the prospect of a tax-reform programme being passed by Congress. Gold has duly perked up a bit since the start of the year, and the price rose by 1.6% on April 11th. But, although inflation may be a bit higher, nothing suggests a return to the kind of double-digit rates seen in the 1970s, when gold enjoyed a spectacular price rise. + +Even so, the metal has not performed as well as it might have done, given the geopolitical headlines. Perhaps this is because Mr Trump has backed away from some of his pre-election threats—on trade with China, for example. The bombing in Syria may turn out to be a one-off, and his statements on North Korea could be “full of sound and fury, signifying nothing”. With the help of advisers such as Rex Tillerson, the secretary of state, and James Mattis, the defence secretary, Mr Trump may turn out to be a more conventional foreign-policy president than expected. + +So buying bullion is really a bet that things will go spectacularly wrong: that events escalate in the Middle East and North Korea or that central banks lose control of monetary policy. It could happen, of course, but it helps explain why gold bugs tend to be folks with a rather gloomy attitude towards life. + +Economist.com/blogs/buttonwood + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21720605-why-gold-has-not-responded-geopolitical-risk-or-reflation-talk-mysterious/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +L-EFTA behind + +The EFTA countries show how hard Brexit will be for Britain + + +Striking trade deals quickly is a bonus but what really matters is the quality of the deal + +Apr 12th 2017 | OSLO AND REYKJAVIK + + + + + +NORWAY offers much to envy. The food is tasty, public services are great and the people are impossibly good-looking. Its trade policy looks equally desirable. Though it trades heavily with the EU, Norway can also strike trade deals all over the world, either operating in concert with the three other members of the European Free Trade Association (Iceland, Liechtenstein and Switzerland) or on its own. Members of EFTA have dozens of deals, including two with China, with which the EU cannot even start negotiations. + +After it leaves the EU, Britain will look much like an EFTA country: a rich economy with close links to Europe, but also seeking trade deals elsewhere. It is superficially an attractive prospect. Yet EFTA’s half-in-half-out relationship with the EU hinders its trade as much as it helps. + + + +EFTA’s flexibility in trade stems from its odd relationship with the EU. Switzerland has a series of bilateral agreements, whereas Norway, Iceland and Liechtenstein are part of the single market through the European Economic Area (though with opt-outs for agriculture and fisheries). Crucially, however, all are outside the EU’s customs union, an agreement which regulates tariffs charged to third countries. This allows them to strike other trade deals. + +EFTA has made the most of this power. The group has 27 free-trade agreements in all corners of the world. They give its exporters access to around 900m consumers—impressive for a club which covers just 14m people. In addition, individual states have bilateral deals. Norway struggled to do a deal with China after the Nobel peace prize was awarded in 2010 to a jailed Chinese dissident. That did not stop Iceland from striking one. (China would like access to shipping routes through the Arctic as climate change melts the ice.) + +A recent paper from the European Parliament found that EFTA tends to make trade deals faster than the EU. South Korea’s talks with EFTA, for instance, took half as long as those with the EU. EFTA is speedy because it can agree on a common strategy faster than the EU, which has more countries to accommodate. + +Similarly, once outside the EU customs union, Britain may be able to reach faster deals. Donald Trump says he wants a trade agreement with Britain “very quickly”. However, EFTA’s experience offers cautionary lessons. Striking a trade deal quickly is a bonus; but what really matters is how good a deal it is. The parliament paper also notes that EFTA’s agreements have been “shallow” compared with the EU’s. + +Analysis of the Design of Trade Agreements Database, a project led by the World Trade Institute in Bern, backs up this claim. EFTA is not a big market: its partners are happy to make deals, but they are loth to spend too much time on the finer details. Nor will they make large concessions. The relatively low quality of the deals helps explain why EFTA’s free-trade agreements still account for only about a tenth of its members’ trade. + +Britain is a much bigger market than EFTA. But it will still be in a far weaker negotiating position outside the EU than as part of the single market. Moreover, EFTA also shows that, besides offering uncertain benefits, an independent trade policy brings large costs. Being outside the EU customs union is an irritant for many firms. Goods moving from EFTA to an EU member undergo “rules of origin” checks, to ensure that the exporter is not avoiding EU tariffs. Karen Helene Ulltveit-Moe of Oslo University says that to avoid cumbersome checks many Norwegian firms simply relocate to Sweden. The idea of going it alone in international trade negotiations may be more appealing than the reality. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21720626-striking-trade-deals-quickly-bonus-what-really-matters-quality/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Staley stumbles + +The boss of scandal-plagued Barclays gets into trouble himself + + +New scandals are easy to create, old ones hard to forget + +Apr 12th 2017 + + + + + +IN HIS first 17 months running Barclays, Jes Staley seemed scarcely to put a foot wrong. The American has narrowed the British lender’s ambitions, to focus on retail business at home, corporate and investment banking on both sides of the Atlantic, and credit cards. He is pulling Barclays out of Africa, after a century, and has sped up its retreat from other markets. He has also poached several folk from JPMorgan Chase, where he spent 34 years and ran the investment bank. + +On April 10th it emerged that Mr Staley had clumsily planted a boot out of bounds. Last June Barclays’ board and an executive received anonymous letters about a “senior employee” hired earlier in 2016. These, say the bank, raised concerns “of a personal nature” about this person and Mr Staley’s role in dealing with the matter “at a previous employer” (presumably JPMorgan Chase). + + + +Mr Staley, seeing the letters as “an unfair personal attack” on the newcomer, asked Barclays’ security team to find out who had written them, but was told that this should not be done. In July he inquired whether the matter was resolved—and formed the “honestly held, but mistaken” belief that he was now free to identify one of the authors. He set security on the trail again. This time they called in American law-enforcement officials, but failed to unmask the writer. + +Both boss and bank are up before the beak: regulators are examining Mr Staley’s conduct and Barclays’ treatment of whistle-blowers. Barclays will reprimand Mr Staley in writing and cut last year’s bonus of £1.3m ($1.6m). By how much depends on the regulators’ findings. + +After the financial crisis Barclays’ reputation took a battering. Mr Staley and his predecessor, Antony Jenkins, have tried to repair it. But new troubles are easily born, and old ones die hard. In 2012 Barclays was fined £290m for rigging LIBOR, a key interest rate; four of its traders were later jailed. On April 10th the BBC stirred bad memories, with fresh allegations about the scandal and questioning whether the whole truth had emerged in a parliamentary inquiry. Regulators are also examining Barclays’ raising of capital from Qatar in 2008. + +It may not comfort Mr Staley that others had an even worse start to the week. Wells Fargo, America’s third-biggest bank by assets, castigated John Stumpf, its former boss, for tolerating sales practices that led to the opening of 2m-odd ghost accounts, for which Wells was fined $185m last year. Wells is reclaiming $69m from Mr Stumpf and $67m from Carrie Tolstedt, ex-head of its consumer bank. How was your Monday? + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21720623-new-scandals-are-easy-create-old-ones-hard-forget-boss/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +A country mile + +Rescuing Myanmar’s farmers from the debt trap + + +With microfinance in its infancy, hopes still depend on a lumbering state bank + +Apr 12th 2017 | DALA TOWNSHIP, YANGON + + + + + +WHEN Myo Than was a young man, his family had 12 hectares of farmland in Dala, a rural township just across the river from Yangon, Myanmar’s biggest city. His mother sold most of it after his father died. Mr Myo Than grows rice on what’s left, but water shortages mean he reaps just one harvest each year. He borrows money from the Myanmar Agricultural Development Bank (MADB)���1.5m kyats ($1,100) this year, at an annual rate of 8%—to cover planting costs. But rice is a low-return crop. To repay the bank he borrows from local moneylenders at a rate of around 4% each month. Mr Myo Than owes them $7,300. He has given his land deeds to a moneylender as security. + +Mr Myo Than’s predicament is not unusual: poor crop returns and usurious loan terms have kept Myanmar’s farmers trapped in poverty and debt. Around 60% of Myanmar’s population are engaged in agriculture. Most are poor, and farm small plots of land using age-old manual techniques. Farmers scythe rice fields; water buffaloes pull wooden ploughs; hay-laden bullock-carts trundle down narrow roads. + + + +Many farmers borrow to cover planting costs, buy equipment or purchase land, and repay after the harvest. Under the junta that isolated Myanmar for decades, farmers had to borrow from the MADB, which was permitted only to make small loans for rice seed, rarely for periods of longer than a year. This hampered farmers in two ways. First, the small loan size sent them to informal moneylenders. Second, it prevented them from diversifying into higher-yield crops. + +Slowly, things are improving. Aung San Suu Kyi, the country’s de facto leader since last year, has made rural development a priority. The core of her support is in the rural heartlands of the country’s ethnic-Burman majority; her voters are counting on her to improve their lives. New laws on microfinance have increased the range of lenders available to farmers. According to Curtis Slover of LIFT, an anti-poverty NGO, microfinance, where it is available, has overtaken private moneylenders as the main source of credit. He cautions that only around 2.5m of Myanmar’s 54.7m people so far have access to microcredit. Many, however, even among the rural poor, have mobile phones. A wave of mobile-money ventures has streamed into Myanmar. The World Bank is piloting a programme that uses mobile-network data and crop-suitability mapping to arrange seasonal loans using mobile money. + +But cash will remain king of the countryside for a long time, and the MADB’s reach (223 branches) means it has no rivals. Getting it into shape is essential. On March 1st a loan agreement signed with the government by JICA, Japan’s overseas aid agency, included ¥15.1bn ($137m) for the MADB, for onlending and to build capacity at the bank. The priority, says Sean Turnell, an Australian economist who advises Miss Suu Kyi’s government, is to figure out what the bank’s financial condition really is. + +That may prove a challenge. The MADB lacks real-time financial reporting and still runs on paper ledgers. Every season it must check millions of written loan-application forms against similar lists of defaults. Chasing down defaulters requires travelling to remote villages. Funds from JICA and the World Bank should help drag the bank closer to the modern era, but getting it functional and effective—to say nothing of competitive—may take a generation. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21720632-microfinance-its-infancy-hopes-still-depend-lumbering-state/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Transfer market + +A different approach to mobile money in Africa + + +A startup takes on the banks and mobile operators + +Apr 12th 2017 | LUSAKA + + + + + +WITH her phone in one hand and a live chicken in the other, Brenda Deeomba comes for her money. Her husband is a builder in Lusaka, the Zambian capital, and sends his wages home through Zoona, a money-transfer company. She receives them at a roadside booth in Chongwe, a nearby town, using a PIN number sent to her phone. It is a safe way to get the money, says Ms Deeomba, above muffled squawks. + +Money-transfer businesses are proliferating in Africa. But Zoona is unusual. Unlike M-PESA, the best-known, in Kenya, it is not run by a phone company. Nor is it owned by a bank. Instead, Zoona has built a business from scratch. It processed $200m in transactions last year and bubbles with ambition: Mike Quinn, its (Canadian) chief executive, talks of reaching 1bn customers. + + + +Zoona was founded in Zambia in 2009 by two brothers, Brad and Brett Magrath. As a startup, they were at a disadvantage, having to recruit their own agents. Zoona did so by seeing them as its core customers, giving them credit and training to set up their own franchises. Some are impressively successful. In central Lusaka, Misozi Mkandawire presides over an empire of kiosks. She started with Zoona while at college. Her profits can now reach 50,000 kwacha ($5,200) a month. That is exceptional. Last year the average agent made $548 in monthly commission, before costs. Globally, nearly half of mobile-money agents have not processed a transaction for a month; 97% of Zoona agents do so every day. + +The right location helps. Zoona puts its lime-green booths in canny places, like markets, bus stations and even a hospital. They are often flanked by booths for Airtel and MTN, two phone companies offering similar services. Zoona is not the cheapest—the sender pays about 10% on small transactions—but competes on coverage and reliability: for example, ensuring its agents have enough float to cash large amounts. + +Last year Zoona raised $15m from investors. Its outlets now dot streets in Malawi and Mozambique, and it has plans for the Democratic Republic of Congo. Such “third-party” operators are also thriving elsewhere: Wari, in Senegal, is not just competing with phone companies, but buying one. In most places mobile giants and a few banks still dominate, but maybe not for ever. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21720624-startup-takes-banks-and-mobile-operators-different-approach-mobile/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Fading echoes + +East Germany’s population is shrinking + + +The rest of the country, and large swathes of Europe, will face similar problems in future + +Apr 15th 2017 | BITTERFELD-WOLFEN + + + + + +WERE it not for the graffiti on abandoned buildings, Bitterfeld-Wolfen, two towns north of Leipzig joined as one in 2007, would seem devoid of young people. Pharmacies, physiotherapy surgeries and shops selling garden gnomes line the sleepy streets. In its heyday the place had a booming chemical industry. Today “the air is much cleaner and we can finally hang out laundry,” says an elderly local out on a morning stroll. “But many jobs were lost and so few children are left.” He points out a building that was once a school; today it is one of many care homes. + +Despite an influx of 1.2m refugees over the past two years, Germany’s population faces near-irreversible decline. According to predictions from the UN in 2015, two in five Germans will be over 60 by 2050 and Europe’s oldest country will have shrunk to 75m from 82m. Since the 1970s, more Germans have been dying than are born. Fewer births and longer lives are a problem for most rich countries. But the consequences are more acute for Germany, where birth rates are lower than in Britain and France. + +If Germany is a warning for others, its eastern part is a warning for its west. If it were still a country, East Germany would be the oldest in the world. Nearly 30 years after unification the region still suffers the aftershock from the fall of the Berlin Wall in 1989, when millions—mostly young, mostly women—fled for the west. Those who remained had record-low birth rates. “Kids not born in the ’90s, also didn’t have kids in the 2010s. It’s the echo of the echo,” says Frank Swiaczny from the Federal Institute for Population Research, a think-tank in Wiesbaden. The east’s population will shrink from 12.5m in 2016 to 8.7m by 2060, according to government statistics. Saxony-Anhalt, the state to which Bitterfeld-Wolfen belongs, is ahead of the curve. + + + +Berlin used to pay little attention to the area. But regional decline has already had a political effect. In a state election in March 2016, a populist party, the AfD, came first in Bitterfeld and second in Wolfen. Such places will matter in a federal election in September, which is expected to be tight. Bitterfeld-Wolfen has seen its population plummet from 75,000 in 1989 to 40,500 today. Even after administrators tore down blocks of flats, and cut floors off others, skeletal remains of buildings still await the wrecking ball. Nearly one building in five is empty. A grand Stalinist-era construction, once the town’s cultural palace, now stands deserted. Two-thirds of kindergartens and over half the schools have closed since 1990. The number of pupils finishing secondary school has fallen by half. Employers struggle to fill vacancies. + +Apprentices—especially in service industries—are hard to find. The one booming industry, care, is desperate for more geriatricians, nurses and trainees. To help fill the gap, the local Euro-Schulen, a training institute, has turned to Vietnam. Having studied German in Hanoi, 16 young apprentices started this month, with 20 more expected soon. Nearby Dessau is setting up a similar arrangement with China. + +Germany has long relied on migrants to make up for low fertility rates. Unusually high migration in recent years has more than offset the shrinkage of the native-born population. But the EU countries that have traditionally provided the migrants, such as Poland, are also ageing. Migrant flows will slow; competition for labour will increase. And Olga Pötzsch, from the Federal Statistical Office, argues that Germany will need far more migrants to stop population decline, which is predicted to accelerate from 2020. + + + +Uwe Schulze, a senior local official, says that refugees are not filling the labour shortage. Of the 2,600-odd asylum-seekers who arrived in the area in 2015 and 2016, fewer than a third are now registered as “capable of working” and only 40 are fully employed. From his wood-panelled office in a neoclassical building that once housed one of Europe’s largest colour-film makers, Armin Schenk, Bitterfeld-Wolfen’s mayor, says the problems are mostly to do with language, qualifications and uncertainty about asylum. Asked whether Afghans and Syrians could join the same programme as the Vietnamese, Liane Michaelis, from Euro-Schulen, forcefully shakes her head, citing educational, religious and ethical barriers for care jobs. She adds that “those who do have the right papers leave quickly”. According to the OECD, about half of asylum-seekers who started off in eastern Germany in the past moved to places such as Hamburg once they secured their permit. + +With the odds seemingly stacked against it, Bitterfeld-Wolfen is at least trying. On a whirlwind tour of the town, Mr Schenk shows how the old coal mine was turned into a lake with a new marina and a promenade. He repeats the town’s mantra: “It’s all about offering good-quality life and leisure.” A brochure shows pictures of smiling children, yachts and tennis. Bitterfeld-Wolfen, it reads, is “one of the youngest cities in Germany”. But even if such marketing did stem departures (and in 2015, for the first time, inward migration slightly exceeded the outflow) the town is still shrinking; more than twice as many die each year as are born. + +Across many parts of rural Europe mayors struggle with similar problems, wondering when to turn their school into a care home. By 2050 Greece, Italy, Poland, Portugal and Spain—which, unlike Germany, have all suffered net brain-drains—will be older than Germany by median age and will have shrunk substantially, according to the UN. Ageing and emigration are likely further to dampen growth in central and southern European countries, says the IMF. It calculates that by 2030 GDP per person in several countries may be 3-4% lower than it would have been without emigration. + +Where Bitterfeld-Wolfen goes… + +In Germany, however, the consequences are particularly acute. With a strong economy and a tight labour market, some employers already struggle to fill vacancies. BCG, a consultancy, predicts that by 2030 the country will be short of between 5m and 7m workers. The triple shock of a smaller workforce, increased social spending and the likely dampening effect of an older workforce on innovation and productivity will drag down future growth, predicts Oliver Holtemöller of the Leipzig Institute for Economic Research. These effects are stronger in the east, he adds. Productivity is 20% lower than in the west; the ageing population and continuing migration to the west will make economic convergence even less likely. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21720578-rest-country-and-large-swathes-europe-will-face-similar-problems/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Free exchange + +Why the Federal Reserve should keep its balance-sheet large + + +An abundance of money enhances economic efficiency and financial stability + +Apr 12th 2017 + + + + + +HOW much money should exist? The Federal Reserve must soon confront this deep question. The Fed has signalled that towards the end of 2017 it will probably begin to unwind quantitative easing (QE), the purchase of financial assets using newly created bank reserves. The central bank’s balance-sheet swelled from about $900bn on the eve of the financial crisis to about $4.5trn by 2015 as it bought mortgage-backed securities and government debt (see chart). If and when the Fed shrinks its balance-sheet, it will also retire the new money it created. + +Economists such as Milton Friedman popularised the study of the quantity of money in the 1960s and 1970s. By the financial crisis, however, the subject had gone out of fashion. The interest rate, it was agreed, was what mattered for the economy. The Fed varied the supply of bank reserves, but only to keep rates in the market for interbank loans where it wanted them to be. + + + +The Fed’s injection of emergency liquidity into financial markets in 2008, however, sent interest rates tumbling. To regain control, it started paying interest on excess reserves (ie, those reserves in excess of those required by regulation). Because banks should not lend for less than what the Fed offers, the new policy set a floor under rates in the interbank market. This held even as the Fed created still more liquidity with QE. + +The new system means the Fed can vary the amount of money—for example, to provide emergency liquidity—without worrying about the effect on interest rates. Maintaining the set-up, as the Fed has hinted it might, means keeping banks saturated with reserves. Ricardo Reis of the London School of Economics estimates that doing so currently requires about $1trn of reserves. Add Mr Reis’s estimate to the roughly $1.5trn of currency now in circulation and you get a minimum balance-sheet size of $2.5trn, much greater than before the crisis. And that is before you consider the benefits of having still more money available. + +In 1969 Friedman pointed out that holding money is costly. It means forgoing the risk-free return an investor can make by buying government bonds. Yet because people need money for transactions, everyone must pay this cost (deposits in current accounts rarely earn as much as bonds). Only if the return on money is somehow made equal to that of bonds does the inefficiency disappear. One way of making this happen is to create deflation, ie, to let money rise in value over time. Another is to make money bear interest. That is tricky with cash, but it is exactly what the Fed does when it pays interest on bank reserves. + +The utility of interest-bearing money shows up in financial markets, where demand for money-like instruments is rampant. A paper by Robin Greenwood, Samuel Hanson and Jeremy Stein, all of Harvard, finds that such is the appetite for one-week Treasury bills that from 1983 to 2009 they yielded, on average, 72 basis points (hundredths of a percentage point) less than six-month bills (for comparison, the difference in yield today between a five-year Treasury and a ten-year one is below 50 basis points). + +This poses a problem. The authors argue that when there is not enough money, the private sector steps in, by issuing very short-term debt like asset-backed commercial paper. Unfortunately, such instruments can cause crises. A run on money-market funds, which had gorged on short-term private debt, was central to the meltdown in financial markets in late 2008. After one infamously “broke the buck” by lowering its share price to less than a dollar, the government guaranteed all such funds. + +Follow the money + +More money, then, can increase financial stability as well as economic efficiency. Set against these benefits are the costs of the Fed’s intervention in—or perhaps distortion of—financial markets. The goal of QE was to provide only a temporary economic boost. How, exactly, it did so is uncertain; on a strict reading of economic theory, it should not have worked. Yet the evidence suggests that QE brought down long-term bond yields (perhaps by signalling that policy would be loose for a long time). With the Fed now raising short-term rates, shouldn’t it nudge long-term rates up, too? + +Perhaps. Yet it may be possible to do so without shrinking the balance-sheet, and hence without retiring any money. About a quarter of the Fed’s Treasuries mature in more than a decade (see chart). The Fed could swap these for shorter-term securities, reversing an earlier policy dubbed “Operation Twist”. At the same time, it could replace its portfolio of mortgage-backed securities—which it has no good reason to hang on to—with more Treasuries. + +Maintaining a large balance-sheet may seem radical—until you consider a possible next step. Friedman wrote mainly about consumers’ need for money, not banks’. Why not let individuals and firms open accounts at the Fed, and also reap the benefits of interest-bearing money? Doing so would swell the Fed’s balance-sheet, but eliminate still more inefficiencies. For example, it would encourage firms to hold more money, reducing the need for zealous cash-management strategies such as delaying payments to suppliers. As with QE, such a policy should not be inflationary, so long as the Fed maintained control of interest rates. + +The idea is similar to one with its own name: narrow banking, which calls for all consumer deposits to be backed by safe government debt, rather than illiquid long-term loans. Narrow banking has a long history of appealing to economic luminaries, including Friedman, because it seems to end the problem of bank runs. Critics say that, by depriving banks of a source of cheap funds, narrow banking would starve the economy of credit. Supporters reply that the central bank could always lower interest rates or buy more assets to compensate. + +Such a profound change to finance is not on the horizon. But the Fed may keep its balance-sheet significantly larger than it was before the crisis, even if it partly unwinds QE. Given the benefits of abundant money, that would be cause for cheer. + +Visit our Free exchange economics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21720601-abundance-money-enhances-economic-efficiency-and-financial-stability-why/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Science and technology + + +Marine biology: Mapping the mesopelagic [Fri, 14 Apr 13:31] + +Icebreakers: Making waves [Fri, 14 Apr 13:31] + +High-security locks: Forging the unforgeable [Fri, 14 Apr 13:31] + +Gut microbes and the brain: Bad medicine [Fri, 14 Apr 13:31] + +The science of shoelaces: A knotty problem [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +Marine biology + +The mesopelagic: Cinderella of the oceans + + +One of the least-understood parts of the sea is also one of the most important + +Apr 12th 2017 | Woods Hole + + + + + +FEW have heard of the mesopelagic. It is a layer of the ocean, a few hundred metres below the surface, where little light penetrates, so algae do not live. But it is home to animals in abundance. There are bristlemouths: finger-sized fish with gaping maws that sport arrays of needle-like teeth. They number in the quadrillions, and may be the most numerous vertebrates on Earth. There are appendicularians: free-swimming relatives of sea-squirts a few millimetres across. They build gelatinous houses several times their body-size, to filter food from the water. There are dragonfish (pictured). They have luminescent spotlamps which project beams of red light that they can see, but their prey cannot. There are even squid and swordfish—creatures at least familiar from the fishmonger’s slab. + +And soon there will be nets. Having pillaged shallower waters, the world’s fishing powers are looking to the mesopelagic as a new frontier. The UN’s Food and Agriculture Organisation reported in 2002 that the fish-meal and fish-oil industries would need to exploit this part of the ocean in order to feed fish farms. In the past nine months Norway has issued 46 new licences for vessels to fish there. In September the government of Sindh, a province that is home to most of Pakistan’s fishing fleet, issued a draft policy on licensing mesopelagic fishing in its waters. And at the North Atlantic Seafood Forum, held in March, in Bergen, Norway’s principal port, the session about fishing the mesopelagic was entitled “the Big Apple”. + + + +On the face of things, biting that apple seems a good idea. The mesopelagic is home to 10bn tonnes of animals. Cropping a mere 1% of this each year would double the landed catch of the ocean’s fisheries. Most of this catch would probably not appeal to human palates. But fish farmers and meal merchants would lap it up. + +The mesopelagic also, however, acts as a carbon pump. Every year it pulls between 5bn and 12bn tonnes of that element out of the surface waters and into the depths, where there is a vast reservoir of the stuff. Though currents which well up from that reservoir return a similar amount of carbon to the shallows, this cycle still plays an important role as a counterbalance to man-made global warming. + +Deep waters + +To try to understand the mesopelagic better, the Woods Hole Oceanographic Institute (WHOI) in Massachusetts, NASA, America’s space agency, and Norway’s Institute of Marine Research are all embarking on projects to study it. As ecosystems go, it is an odd one. Its inhabitants are in a state of perpetual migration, rising to the surface at night to feed, then returning to depths of between 200 metres and 1km at dawn, to escape predation. It is this migration, the biggest in the world, that drives the carbon pump. The nocturnal feasting consumes prodigious amounts of that climate-changing element in the form of small, planktonic creatures. Then, during the day, the feasters release part of what they have consumed as faeces. Some of them also die. These faeces and bodies fall through the water column as what is known as marine snow, and accumulate at the bottom. Without mesopelagic predators, far more plankton would die in the surface waters, their bodily carbon returned rapidly to the atmosphere. The vast harmless reservoir of carbon in the depths would thus be a little smaller; the damaging burden of atmospheric carbon a good bit greater. + +Until now, the only sensible way to probe mesopelagic activity has been by sonar. This is, indeed, how the zone was discovered, in 1942, by an American anti-submarine research project. From their earliest days such soundings suggested a lot of creatures live in the mesopelagic. They are sufficiently abundant that the equipment then available saw the zone as a “false bottom”, beneath which sonar could not penetrate and submarines might thus hide. But it was subsequent probing by a Spanish expedition, the Malaspina circumnavigation in 2010, which came up with the current 10bn-tonne estimate and showed just how big a part of Earth’s biosphere the mesopelagic actually is. + +Sonar is still important for investigating the zone. Norway, which has long paid attention to the sustainability of its fishing operations, will launch the third incarnation of Dr. Fridtjof Nansen, the flagship of its marine-research fleet, in May, with an explicit focus on mapping and understanding mesopelagic life using the most advanced civilian sonar available. But sonar can see only so much. WHOI’s goal is to study the zone using robots, which the institute’s engineers are now constructing. + +The largest of these planned devices is called Deep See. It is a sensor-packed underwater sled weighing about 700kg. One of WHOI’s research vessels will tow Deep See through the mesopelagic, gathering wide-angle camera footage and environmental data. When the probe spots something, a second robot will swim down from the research vessel to explore. + +This second device, Mesobot, weighs 75kg and is shaped like a bar of soap. Unlike Deep See, Mesobot will run untethered. It is designed to hang in the water column and observe mesopelagic life for extended periods, in particular by using high-definition cameras to track animals up and down during their daily migration. WHOI’s roboticists are paying special attention to Mesobot’s thrusters, ensuring that they do not disturb the life the probe is trying to video. It will be the first time that the behaviour of mesopelagic animals has been recorded in a natural setting. Mesobot will also have a special sieve for capturing organisms in a way that preserves them from the disruptive pressure change associated with surfacing. + +WHOI’s third type of mesopelagic robot will be disposable probes called Snowclops. These will sink through the water column, measuring the amount of marine snow at various depths. On its way down, snow is a potential source of food for other animals. Recording its fate at different levels is thus crucial to understanding how the carbon pump works. + +Combining data from these three types of robots will paint a more accurate picture of life in the mesopelagic, and thus of its importance to matters climatic. In collaboration with NASA, WHOI also hopes to find variables that are observable by satellite and that correlate with the health of the mesopelagic and the size of its carbon flux. The principal satellite involved here, if it can survive the Trump administration’s budget proposal to cut its funding to zero, will be PACE (short for Plankton, Aerosol, Cloud, ocean Ecosystem). This is scheduled for launch in 2022. Though PACE will not be able to see directly into the mesopelagic, it will be able to measure, from the spectrum of light reflected from the ocean, things like rates of plankton consumption. + +The forthcoming decade should, then, serve to start answering the question of how much fishing of the mesopelagic can be undertaken without disrupting it—and with it, its role in climate regulation. Once the fleets start hauling in their catches, the temptation will be to collect more and more. History shows that such piscatorial free-for-alls usually end badly. In the case of the mesopelagic, though, regulators will start with a clean slate, and thus a rare opportunity to agree in advance a way of stopping that happening. Whether they will take it is another matter. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21720618-one-least-understood-parts-sea-also-one-most-important/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Icebreakers + +The quickest way to break the ice is by submarine + + +Russian researchers investigate new ways to make waves + +Apr 12th 2017 + + + + + +ARCTIC sea-ice is melting. For many that is a source of alarm. But for others, the ice is still not melting fast enough. They would like to give it a helping hand. Clear lanes through the Arctic ocean would permit commercial and naval shipping to travel quickly between the Atlantic and the Pacific. These lanes might also assist the search for oil and gas. + +The Russian authorities seem particularly keen on the idea. Last year they launched Arktika, the first of three giant, new nuclear-powered icebreakers intended to help open such routes. But some people think this approach—bludgeoning through the ice with what is, in essence, an armour-plated knife—is old-fashioned. They believe the job could be done faster and more elegantly using a piece of physics called flexural gravity-wave resonance. If they are right, the icebreakers of tomorrow might be submarines. + + + +Resonance icebreaking was discovered in 1974 by Canada’s coast guard, when it began using icebreaking hovercraft able to operate in waters too shallow for conventional icebreakers. At low speeds, these craft work much as icebreaking ships do, by forcing sections of pack-ice in front of their bows to rise up and detach themselves from the main sheet. When travelling above 20kph, though, they cause oscillations, known as flexural gravity waves, in the ice sheet they have passed over. At the correct speed of passage these waves hit a resonant frequency—increasing in amplitude as the critical speed is maintained until, at an amplitude dependent on the thickness of the sheet, that sheet will crack up and disintegrate, leaving a navigable passage behind. + +For things like freeing river mouths of ice, this approach can work well. But hovercraft skirts are easily damaged by ridged ice (the sort that forms when previously broken ice refreezes), so the vehicles cannot be used in places that require frequent clearance. Also, resonance-breaking by hovercraft does not work for ice sheets more than about a metre thick. + +That limit is, however, no constraint on the thinking of researchers led by Viktor Kozin of the Komsomolsk-on-Amur State Technical University, in Russia. Dr Kozin and his team have been investigating resonance icebreaking since the 1990s. But, instead of hovercraft, they use submarines. + +Dr Kozin’s original research was on ways to permit naval submarines to surface safely and quickly through ice, the previous method having been simply to rise until contact was made with the ice sheet and then increase buoyancy until the ice cracked (as an American vessel is pictured doing above). That, though, is slow and can damage the boat. Dr Kozin found that the bow wave from a submarine travelling close to the surface pushes the ice sheet upwards, making flexural gravity waves in it, which cause it to break up. + +Follow-up studies by Dr Kozin and his pupil, Vitaliy Zemlyak, who is now at the Sholem-Aleichem Priamursky State University in Birobidzhan, indicate that a submarine travelling 30 metres below the ice can break a sheet one metre thick. At 20 metres it could break ice two metres thick. And it can do it quickly. Comparable data are not available for Arktika, but America’s heavy icebreaker, Polar Star, can break a channel through two-metre ice at a rate of three knots. A submarine could force such a passage ten times as fast. + +Dr Kozin and Dr Zemlyak have also found that the area of ice broken can be increased greatly by using two submarines moving together on parallel courses, and they are now looking at increasing the pressure exerted on the ice still further, by adding wedges, spoilers and vortex generators to a submarine, or even installing an impeller, a giant propeller mounted horizontally. Experiments on these ideas will start next winter. + +Building new submarines to act as icebreakers would be a huge investment. But here, Russia may have a short cut. It tends to retire its naval submarines faster than America does. At the moment such boats are normally consigned to the scrapyard. Turning them into icebreakers to open up the Arctic might give them a second life. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21720608-russian-researchers-investigate-new-ways-make-waves-quickest-way-break/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Locksmithing + +A 3D-printed key that can’t be copied + + +New technology for high-security locks + +Apr 12th 2017 + + + + + +KEYS have been around for a long time. The earliest, made from wood, date back 4,000 years, to the ancient Egyptians. The Romans improved them a bit by making them from metal. But there, more or less, they have stayed. Electronic card-keys aside, a key is still, basically, a piece of metal sporting a series of grooves, teeth and indentations which, when inserted into a keyway, line up to move pins and levers to lock or unlock a mechanism. + +Such keys are made with conventional manufacturing techniques, such as cutting and stamping. But now there is a new way, in the form of 3D printing, to craft metal objects. And keys are about to succumb to it, to the great benefit of keyholders. + + + +A 3D printer works by melting together layers of material that are added successively to the object being created. It can thus make something from the inside out, as it were, by printing intricate internal features and then covering them with a solid layer. Features shielded from view are extremely difficult to copy, let alone reproduce using normal machine tools. What better way to reinvent the key, reckoned Alejandro Ojeda, a mechanical engineer who at the time was studying at the Swiss Federal Institute of Technology, in Zurich, than to 3D-print it in this way. + +What prompted his interest is how simple it is to copy most keys: a few minutes at a local key shop will usually suffice. And copying is getting easier. It is now possible to take a picture of a key with a smartphone and turn the image into a computer file that can be used to make a replica with the aid of a cheap, hobbyist 3D printer. The resulting duplicate will probably be printed in plastic, and thus lack durability. But it is likely to be good enough to work at least once—and once might be enough. + +Dr Ojeda’s answer is the Stealth Key (pictured). This is printed in titanium, one of the toughest of metals. Its teeth are hidden under a pair of narrow ledges, making it unscannable. But when inserted into the lock the teeth can operate the mechanism. + +To bring the Stealth Key to market, Dr Ojeda teamed up with Felix Reinert, an expert on 3D-printing metal, to found a firm called UrbanAlps. Jiri Holda, a lock designer, joined them to help devise a keymaking process that employs an industrial 3D-printing system called selective laser melting (SLM). This is currently used to make high-strength components for jet engines and gas turbines. Indeed, it was these uses, which also involve printing a lot of concealed detail, that gave Dr Ojeda his key-printing idea in the first place. + +SLM, as its name suggests, uses a laser to fuse the layers of metallic powder of which the object being printed is made. It is good at its job, but slow. It takes only seconds to cut a conventional key, but making a Stealth Key can occupy the best part of a day. UrbanAlps’ SLM machine does, however, print 850 of them at a time—each, naturally, different from the others. + +Stealth keys are not cheap. A pair, together with a lock mechanism (made the conventional way), cost about $200. But UrbanAlps’ founders hope the added security they bring will make them attractive—probably to industrial customers to start with, and to the general public as padlocks. They do have a downside, though. If you lose one, getting a replacement will involve a security check, because only UrbanAlps has the digital-design file for the original. And a duplicate will take another day in the 3D printer. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21720619-new-technology-high-security-locks-3d-printed-key-cant-be-copied/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Gut microbes and the brain + +Penicillin changes the behaviour of young mice + + +Low doses of antibiotic affect behaviour similarly to high doses + +Apr 12th 2017 + + + + + +THE symbiosis between human beings and the bacteria dwelling in their guts is a delicate thing. When it works well, both sides benefit. The bugs get a comfy home. The hosts get help with their digestion, making more food available than otherwise would be. If relations are upset, though, bad consequences may flow. Both obesity and malnutrition can be exacerbated by the wrong gut bacteria. Illnesses such as asthma and eczema are linked to a lack of certain bugs from an infant’s intestines. And there is evidence, from experiments on mice, that an absence of gut flora affects the development of the brain. Such absence weakens the blood-brain barrier, which normally helps to keep foreign material out of that organ. It also seems to make animals less sociable than would otherwise be expected. + +The experiments which show these brain and behavioural changes have, though, either been done on mice raised in sterile conditions or on ones that have had their alimentary bacterial ecosystems “nuked” with antibiotics in high dose—far higher, pro rata, than would be administered to a human for medical reasons. The next stage is to test whether anything similar happens to mice fed more realistic doses of antibiotics. And this is what Sophie Leclercq of McMaster University, in Hamilton, Ontario, has now done. + + + +Dr Leclercq and her colleagues, who have just published their results in Nature Communications, laced the drinking water of some pregnant female mice with medically appropriate levels of penicillin, starting a week before those females were due to give birth, and carrying on three weeks after birth, to the point where their offspring were weaned (penicillin is known to be transferred from mother to pup in milk). One group of mothers-to-be had only the antibiotic added to their water. A second had a bacterium called Lactobacillus rhamnosus, a so-called probiotic that has been demonstrated experimentally to be good for the intestinal health of mice, added as well. A third group of expectant mothers were given their drinking water unadulterated. Twenty-five pups were born to mothers in the first group, 19 to the second and 28 to the third. + +Six weeks post partum, the researchers tested the sociability of the various offspring by putting them, one at a time, for ten minutes, into a small, Y-shaped tunnel with two chambers at the ends. One chamber contained another mouse, of the same sex as the experimental animal, held in a small wire cage. The second contained an empty cage. + +The team found that, when released into this apparatus, the offspring of mothers exposed only to penicillin preferred to be alone. They spent more time in the empty chamber (four and a half minutes, on average) than in the chamber containing another mouse (three and three-quarter minutes). Those born of mothers exposed neither to penicillin nor to Lactobacillus showed the reverse pattern, averaging only three and a half minutes in the empty chamber and almost five in the chamber that gave them company. Those mice born of mothers given both penicillin and Lactobacillus fell between these extremes, averaging a bit under four and a half minutes in the chamber that gave them company, and three and three-quarters in the empty one. In all cases there was no significant difference between the sexes. + +Dr Leclercq got similar results when she tested the preferences of her mice for social novelty. She did this by letting them choose, in the tunnel, between a new mouse and the one they had already met. She found those exposed to penicillin alone less interested in the new mouse than those exposed to both penicillin and Lactobacillus, or to neither. + +She also found that exposure to penicillin alone made male mice more aggressive. She arranged for males in the experiment to be threatened by an unfamiliar male belonging to a strain known for being big and hostile. Males born of mothers given unadulterated drinking water all quickly assumed a submissive posture when confronted with such a stranger. Half of the males born of mothers treated with the antibiotic did not, however, submit. Indeed, they fought back even though they were clearly outmatched—as did a fifth of the males whose mothers had been treated simultaneously with the antibiotic and Lactobacillus. + +All these results are in line with the hypothesis that low doses of antibiotic affect behaviour similarly to high doses. So, when Dr Leclercq and her colleagues killed and examined their animals shortly after the behavioural tests, they expected to see permeable blood-brain barriers in the mice exposed to penicillin. But they did not. They actually saw the reverse: the blood-brain barriers of mice exposed solely to penicillin were far less permeable than those of the other two groups. + +What is going on—and, in particular, what relationship (if any) exists between the effects of gut flora on the blood-brain barrier and on behaviour—remains to be seen. But Dr Leclercq and her colleagues have demonstrated that medically relevant doses of penicillin, even when administered via the mother rather than directly, can have palpable effects on young mice. Whether the same applies to young people, just before or after birth, is surely a matter worth investigating. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21720600-low-doses-antibiotic-affect-behaviour-similarly-high-doses-penicillin/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The science of shoelaces + +How shoelaces come undone + + +Three Californian engineers have found out the answer to a knotty problem + +Apr 15th 2017 + + + + + +ENGINEERING brings great benefit to humanity, from aircraft to bicycles and from bridges to computer chips. It has, though, had difficulty creating a shoelace that does not accidentally come loose. At least in part, this is because no one has truly understood why shoelaces come undone in the first place. But that crucial gap in human knowledge has just been plugged. As they report in the Proceedings of the Royal Society, Christopher Daily-Diamond, Christine Gregg and Oliver O’Reilly, a group of engineers at the University of California, Berkeley, have now worked out the mechanics of shoelace-bow disintegration. + +A shoelace bow is a type of slip knot that has, at its core, a reef knot. Like conventional reef knots, bows can be mistied as “granny” knots, which come undone more easily than a true reef does. But even a shoelace bow with a true reef at its core will fail eventually, and have to be retied. + + + +Walking involves two mechanical processes, both of which might be expected to exert forces on a shoelace bow. One is the forward and back movement of the leg. The other is the impact of the shoe itself hitting the ground. Preliminary experiments carried out by Mr Daily-Diamond, Ms Gregg and Dr O’Reilly showed that neither of these alone is enough to persuade a bow to unravel. Both are needed. So they had to devise experiments which could measure and record what was going on while someone was actually walking. + +The “someone” in question was Ms Gregg, who endured numerous sessions on a treadmill so that the behaviour of her shoelaces could be monitored. Using cameras, and also tiny accelerometers attached to the laces, the researchers realised that two things are important. One is how the act of walking deforms the reef at the centre of a bow. The other is how the different inertial forces on the straight-ended and looped extremities of the bow conspire to pull the lace though the reef in the way a wearer would when taking a shoe off. + +The first thing which happens during walking is that the reef itself is loosened by the inertial forces of the lace ends pulling on it. This occurs as a walker’s foot moves first forward and then backward as it hits the ground during a stride. Immediately after that, the shock of impact distorts the reef still further. The combination of pull and distortion loosens the reef’s grip on the lace, permitting it to slip. + +In principle, the lace could slip either way, giving an equal chance of the bow eventually undoing completely or turning into a non-slip knot of the sort that long fingernails are needed to deal with. In practice, the former is far more common. The reason turns out to be that the free ends of the bow can swing farther than the looped ends do. The extra inertial force this causes favours slippage in the direction of the longer of the free ends. To start with, the effect is small. But as the free end in question continues to elongate, the disparity in inertial force gets bigger—and, eventually, only two or three strides are needed to take a shoe from being apparently securely tied to being untied. + +Probably, nothing can be done about this differential elongation. But it might be possible to use the insights Mr Daily-Diamond, Ms Gregg and Dr O’Reilly have provided to create laces that restrict the distortion of the reef at a bow’s centre, and thus slow the whole process down. Regardless of any practical benefit, though, the three researchers, are surely contenders for an Ignobel prize. That award is made every year for work which “first makes you laugh, and then makes you think”. Their study of laces looks like a shoo-in. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21720610-three-californian-engineers-have-found-out-answer-knotty-problem-how/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Books and arts + + +Refugees: The forgotten millions [Fri, 14 Apr 13:31] + +A very Victorian marriage: To have and to hold [Fri, 14 Apr 13:31] + +New fiction: The animal within [Fri, 14 Apr 13:31] + +Damien Hirst: From the heart of the sea [Fri, 14 Apr 13:31] + +Johnson: Gender bender [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +The forgotten millions + +How to improve prospects for refugees + + +Growing up in a refugee camp means little education and no jobs + +Apr 15th 2017 + + + + + +Refuge: Transforming a Broken Refugee System. By Alexander Betts and Paul Collier. Allen Lane; 265 pages; £20. To be published in America by OUP in September. + +THE European migration crisis of 2015 quickly turned into a morality play. Liberals lined railway platforms to welcome refugees, while their nativist foes warned of chaos and terrorism. Lost in the row were the millions of refugees who stayed in the developing world, unwilling or unable to journey to richer countries. The boats disgorging Syrians and Afghans onto Greek islands delivered one of the most serious emergencies the European Union has ever known. But according to a new book, they were a sideshow. + + + +The starting point of “Refuge” by Alexander Betts and Paul Collier, a refugee expert and a development economist, is the plight of the 86% of refugees who live in poor countries. The outlook for most is grim. Although the number of people displaced by conflict or persecution (including those forced to flee inside their own countries) is at a post-war high of 65m, more salient is the length of their exile: about half the world’s refugees have endured their status for more than five years. + +Take Syria’s civil war, six years old with no end in sight. Most of the 4m Syrian refugees languishing in neighbouring Turkey, Jordan and Lebanon cannot return home. But they struggle to find decent work or educate their children in the towns and cities to which most have flocked (the small numbers in camps have even fewer options). Any visitor to places like the Bekaa valley in Lebanon will quickly see the hopelessness that sets in when refugees are denied a stake in their own future. + +The UN’s refugee body (UNHCR) has a legal mandate to help, but it is chronically underfunded and increasingly irrelevant. Under the prevailing “care and maintenance” model, the UNHCR and its partner agencies act as surrogate states, keeping refugees in limbo for years. That suits rich countries, which pay to keep refugees away, and allays the economic and security fears of their hosts. But it creates lost generations—the third generation of Somali refugees in the vast Dadaab agglomeration in Kenya (pictured) now numbers 10,000—and does nothing for the refugees who are not in camps. The big argument of “Refuge” is that refugees should be given jobs rather than coddled as victims, and that governments should harness the forces of globalisation and capitalism to help. + +The authors’ Eureka moment came in Jordan in 2015, when they were shown a low-tax “special economic zone” (of the sort popular in parts of Asia) near Zaatari, a refugee camp. The camp “reeked of lives on hold”, while the zone needed workers. The answer seemed obvious: alongside nationals, refugees should be put to work. Done well, the authors argue hopefully, this approach can align the interests of refugees, donors and host countries. To test their ideas Messrs Betts and Collier have helped establish a pilot scheme in Jordan, with help from Western governments (the EU has offered trade concessions) and companies like Asda, a British supermarket, which uses suppliers that hire refugees in the zone. Results so far are mixed, although it is early days. Different solutions can be found for other countries. In some parts of Africa, for example, refugees can be given arable land to farm; Uganda has found success with this approach. When peace returns at home, refugees can return. If it doesn’t, after a set period they should be allowed to naturalise. + +Where does the West fit in? The authors slam Angela Merkel, Germany’s chancellor, for triggering huge movements of refugees and migrants to Europe by relaxing entry rules for Syrians in August 2015. The charge is unfair. Mrs Merkel’s decision was as much consequence as cause: the exodus was well under way by the summer. A striking claim that Germany’s decisions “may have” intensified the violence in Syria is presented without evidence. + +The authors are on steadier ground when they note the high price of European generosity. Sweden, for example, has diverted half its foreign-aid budget to pay for refugees at home; thus the world’s poorest are in effect subsidising their more fortunate brethren in Sweden’s expensive asylum system. The drain has lost Syria its brightest, crimping its chances of post-conflict recovery. Rather than argue for rich countries to take in ever more refugees, the authors urge them to offer political and economic help to “havens” like Jordan and Kenya, including financial incentives for firms to invest. + +This will unsettle those who despair at Europe’s inability to handle a refugee influx of 1m when its poorer neighbours cope with far higher numbers. Perhaps a bigger problem is that “Refuge” provides no guide on how to handle today’s mixed flows of economic migrants and refugees. Unlike many advocacy groups, the authors are careful (and right) to distinguish the two. But the people smugglers in Libya who haul Eritreans onto boats together with Nigerians and Bangladeshis do not, creating headaches for European governments. + +“Refuge” suffers from poor editing; it is wearyingly repetitive and dotted with errors (Mrs Merkel has not, for example, imposed a cap on refugees). A few eyebrows will also be raised at the claim that Europe’s refugee flows were responsible for Britain’s vote to leave the EU. But this should not detract from the humanity of a book that places the long-term needs of the world’s refugees at its heart. “Refuge” is the first comprehensive attempt in years to rethink from first principles a system hidebound by old thinking and hand-wringing. Its ideas demand a hearing. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21720615-growing-up-refugee-camp-means-little-education-and-no-jobs-how-improve-prospects/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +To have and to hold + +The marriage of Thomas and Jane Carlyle + + +And its legacy to the Victorian world of letters + +Apr 12th 2017 + + + + + +Jane Welsh Carlyle and Her Victorian World: A Story of Love, Work, Friendship, and Marriage. By Kathy Chamberlain.Duckworth Overlook; 398 pages; $37.50 and £25. + +“SOME kind of angel married to some kind of god!” So seemed Jane Welsh Carlyle and her husband, Thomas, to a friend in 1845. Her wit and his fame—as the author of “The French Revolution” (1837) and “On Heroes, Hero-Worship and the Heroic in History” (1841), among other books—had shot them into the literary firmament. Poets, novelists, philosophers and revolutionaries all beat a path to their door in Cheyne Row, Chelsea. + + + +But the image was a fantasy. Thomas was a curmudgeon, a “self-tortured, aggravating mystery of a man” as Kathy Chamberlain writes in her new book, and a prize chauvinist besides. “The Man should rule in the house and not the Woman,” he warned his bride-to-be. But Jane was a born ironist with “a genius”, she said later, “for not being ruled!” No angel then, but fun. One friend saw dinner guests seated beside her “in incessant fits of laughter!”, and her letters echo her talk—mocking, self-mocking, mercurial, “splashing off whatever is on my mind”, in Jane’s words. + +Letters are the stuff of this engaging book. Though the marriage was not happy (Ms Chamberlain is wary of tales that it was unconsummated), Thomas and Jane wrote constantly whenever separated—curiously in need of each other, the author observes, and “attuned…to each other’s words”. Wisely, Ms Chamberlain focuses on a few interesting years, 1843 to 1849, a time of revolution. Her book is crowded with people and stories—overcrowded even, and a little rough at the edges. But one persistent and fascinating thread is Jane’s search for what she called her “I-ity”, her “self-subsisting and alas! self-seeking Me”. Sometimes it was a craving for confirmation; she glowed after a visit from Alfred Lord Tennyson to “talk with me! by myself me!” Sometimes it was a longing for a mission, a purpose. + +Above all, it was her need to write. She knew her worth. When Thomas praised her “charming bits of Letters”, she flew at him: “as if I were some nice little Child writing…to its God papa…let us hear no more of my bits of Letters”. She was after bigger fish—authenticity, “as it flies”, she wrote. Chiding a cousin for her reserve, she demanded “the real transcript of your mind at the moment”: “if a sadness, or a longing, or a perplexity, or a bedeviledness falls on you…then down with it on paper—tho’ only six lines or six words”. + +Jane never published. She could cope with the “transcript” only in private; couldn’t even write it down, she said, if there was anyone else in the room. A draft novel by two friends shocked her precisely by its authenticity: by the “exposure of their whole minds naked as before the fall”. With one brief exception, the thought of publication froze her own attempts at formal writing. But then there was always someone in the room—Thomas’s heroes gazing from the shelves, high among them the writer himself, “The Hero as Man of Letters”, hailed by him as “our most important modern person”. No wonder she kept her head down. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21720597-and-its-legacy-victorian-world-letters-marriage-thomas-and-jane-carlyle/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Foxy fiction + +Paula Cocozza’s debut novel answers the call of the wild + + +Exposing the animal within + +Apr 15th 2017 + + + + + +How to be Human. By Paula Cocozza.Hutchinson; 308 pages; £12.99. To be published in America by Metropolitan in May. + +IN A patch of east London, somewhere between the urban and the wild, a love triangle emerges—between a woman, her ex-boyfriend and a fox. This is the premise of “How to be Human”, a debut novel by Paula Cocozza, a British journalist. It is a thrilling psychodrama that twists and turns with the residents of a few houses and their adjacent woods. + + + +Mary, the story’s protagonist, has broken up with Mark, her domineering fiancé, but their destructive relationship has sucked her life dry. Then a fox arrives in her unkempt garden; at first he is a pest and then a friend. He brings her “gifts”, which she finds increasingly full of meaning: a pair of boxer shorts, a gardening glove, an egg. Everything normal in her life starts to slip, but she has something far more valuable, “her fox”. + +As with other works that cross the bestial line—the horse fixation in Peter Shaffer’s “Equus” or “The Goat or Who Is Sylvia?” by Edward Albee—this is a disturbing narrative about sanity and obsession. But Ms Cocozza makes a further point about the supposed civility of humans. Are people’s urban lives natural? She brilliantly captures a sense of Hitchcockian, curtain-twitching intensity as Mary and her terraced neighbours struggle to escape each other. While Mary, through the wall, hears Michelle’s sobs, induced by postnatal depression, Michelle lashes out at Mary, “You think I haven’t seen you… creeping around at night.” + +In pleasant contrast to this claustrophobic human world comes that of the book’s vulpine star, known as “Red”, “Flight”, “Sunset” or “Fox”. In lyrical, disjointed prose Ms Cocozza describes how he naps, eats beetles and scents the neighbourhood; spraying, wiping, squeezing, twisting and dropping his “amazing smell cloud”. He conducts himself in a far more refined manner than the humans, who get drunk, become abusive, throw things and try to control one another. + +Mary embraces the freedom of the feral; but as her walk to the wilder side progresses, it becomes unclear whether this is the cure she needs or if things are spiralling dangerously out of control. Like the scent of a fox, truth and fact in “How to Be Human” start to evaporate. What is left behind is a pervasive sense that beneath the veneer of civility, something wilder is always lurking. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21720604-exposing-animal-within-paula-cocozzas-debut-novel-answers-call-wild/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Barnacles and all + +Damien Hirst’s new art is exquisitely crafted + + +Collectors should be wary; his art is easy to buy, but hard to sell + +Apr 15th 2017 | VENICE + + + + + +AN OBSESSIVE art collector, Cif Amotan II, loads a ship, the Apistos, with treasures for a temple to the sun. But the ship is wrecked at sea. And the treasures? Forgotten, until recently, when they were rediscovered, retrieved, restored and put on show. That is the conceit behind Damien Hirst’s new exhibition, “Treasures from the Wreck of the Unbelievable”, a fantastical adventure across Venice at Palazzo Grassi and Punta della Dogana, the landmark galleries created by François Pinault, a French billionaire who made his money from luxury goods. + +Just inside the main entrance of Palazzo Grassi a huge bronze head grimaces on the floor. Beside it, dominating the atrium, is an 18m-tall headless demon adorned with worms and sea plants. The rest of this part of the show is more domestic in scale, reflecting the building’s history as a luxurious mansion: intricate silver objets d’art; pharaonic busts in marble and granite; a sculpture of Mr Hirst himself as the mythical collector. By contrast, the works in the Punta della Dogana, the city’s former customs house, are bigger: room-sized sculptures of warriors covered in coral, a darkened gallery filled with gold in glittering glass cases. Think Tomb Raider-meets-the Metropolitan Museum of Art. + +Despite the story about the shipwreck, these artworks were actually made in Mr Hirst’s studios in Britain and by highly trained European craftsmen, and deposited in the Indian Ocean—off Mozambique, it is believed—where they were filmed being lifted out of the sand. Excerpts and stills from the film are shown in both venues. + + + +Other than a small and much-derided exhibition of his paintings, “Treasures” is Mr Hirst’s first significant show of new work since 2008, when his market fell dramatically in the wake of an extended two-day auction at Sotheby’s that coincided with the start of the financial crash. The art world—which will soon descend en masse for the Venice Biennale—has been alive with speculation that the exhibition will mark a return to critical and commercial form. The show, which continues until December 3rd, is Hollywood-epic in scale, 190 sculptures in 50 rooms—and it’s all for sale. + +When he became well known, in the 1990s, Mr Hirst could do no wrong, creating the works that would make him famous: spot paintings, medicine cabinets and animals in formaldehyde. In the 2000s he defined the booming art market. In 2007 a pill cabinet sold for $19.2m, making him the most expensive living artist at auction. + +For a long time Mr Hirst had followed art-market convention, selling his new work discreetly through his main dealers, Jay Jopling and Larry Gagosian, in an arrangement known as the “primary market”. Auctions, which are part of the “secondary market”, resell old work rather than fresh work that has never been sold before. Artists make their money from the primary market, but they earn nothing from secondary-market sales other than the tiny percentage that comes from droit de suite, or “artists’ resale rights”. + +In 2008, Mr Hirst broke all the rules. He took over Sotheby’s London headquarters for “Beautiful Inside My Head Forever”, a two-day auction of 244 new works that fetched $201m, most of which, after fees and expenses, went to him. Some critics were virulent; others thought it commercially astute and conceptually brilliant. + + + +Yet Mr Hirst has never repeated the exercise. That may be because, even after nearly a decade, the art market is still trying to digest the Sotheby’s sale. Very few works from the “Beautiful” auction have come back onto the market, and those that have have not done well. In March, a spin-skull painting from the auction was resold at auction for £449,000 ($545,565), just two-thirds of the sterling price it made in 2008 (and less than half the dollar price). + +Collectors who don’t need to sell are holding on to their works, and the Hirst auction market has shrunk considerably. In 2008, the year of the Sotheby’s sale, $223.3m-worth of Hirst work was sold at auction; a year later, with the onset of the financial crisis, volume had slumped to $14.6m. The artist’s auction sales in 2016 were lower than in 2009. + +Mr Hirst, meanwhile, has continued to flourish. In a rare admission, White Cube, Mr Hirst’s London gallery, revealed in 2013 that worldwide sales of his new work the year before had come to $110m. Most artists split primary sales equally with their galleries; but Mr Hirst has negotiating power and it is likely he retains more than 50% of any sale, perhaps as much as 75%. The average value of Mr Hirst’s auction sales has been relatively consistent since 2009, at just over $17m a year, according to ArtTactic, a specialist research firm. If his primary-market sales in 2012 were similarly consistent, then Mr Hirst has been making plenty of money. Which is lucky, because he has certainly been spending it. + +The Venice show may be the most ambitious exhibition ever mounted by an artist. Mr Hirst says the work cost him more than £50m to make, and Mr Pinault has paid several million more to exhibit it. Mr Hirst clearly is not short of cash. In 2014 he bought a mansion in Regent’s Park, north London, for almost £40m. He has spent years renovating a large historic house, Toddington Manor, in Gloucestershire. He runs large studio operations and has a world-class art collection of more than 3,000 works. In 2015 he opened a £25m London gallery with 25 staff, to show his collection to the public free of charge. + +Early visitors to the Venice show, mostly critics and the press, were divided in their reactions. The Guardian called it a “titanic return to form”, the Times “a wreck… [that] should be dumped at sea”. Francesco Bonami, a respected curator, says: “There is the art world and beyond that another universe, the real world, where people love his work. I know [this show] will be a huge public success.” Mr Hirst enjoys household recognition, which may explain why the Daily Mail, a British tabloid newspaper with little interest in art, sent a team of people to cover the opening. He makes and sells thousands of inexpensive prints, making his work accessible to almost all, and his retrospective at Tate Modern in 2012 was one of the museum’s most popular shows. + +Meanwhile Mr Hirst’s dealers have been offering sculptures from the show for between $500,000 and $5m. Many pieces, totalling tens of millions of dollars, are already believed to have sold. If true, then Mr Hirst’s loyal collectors have already cast their ballot on the show, critical approval or no. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21720607-collectors-should-be-wary-his-art-easy-buy-hard-sell-damien-hirsts-new-art/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Johnson + +French is getting tied up in knots over gender and power + + +Many feel that titles such as le ministre and le président should be feminised + +Apr 15th 2017 + + + + + +LANGUAGES often force awkward choices. In English, you can say “someone left his umbrella” and risk annoying some women, or “someone left their umbrella” and risk alienating some grammar sticklers. In French, son parapluie can mean either “his” or “her” umbrella. + +But this hardly means there are no problems with gender, sex and politics in France. The French language requires a gender for every single noun and adjective: not only men and women, bulls and cows, but also tables and chairs, rocks and bricks. (The French for “gender” is genre, which also means “class” or “type”, as it does in English.) A noun’s gender rarely has anything to do with its real-world qualities: there’s not much feminine about la table, or anything macho about le chapeau (hat). + + + +But it happens that titles of powerful people, unlike the genders of hats and tables, are not random: it’s le ministre, le général, le chef d’état (head of state), le sénateur, le magistrat. A pattern emerges: whereas a few “generic” words are feminine (like la personne), all these powerful titles are masculine. A generic president is le président, masculine, perhaps subtly nudging French-speakers to think of presidents as men. Only if a woman becomes the actual president—as Marine Le Pen, of the National Front hopes to do in the French elections which begin on April 23rd—does the title become la présidente. + +The traditional use of the masculine as generic has rubbed various French people the wrong way. In 1984, the government called upon the French Academy to look into the question of feminising certain titles. The academy, the official guardian of the language since 1635, replied with, in effect, a refusal. Titles that were originally grammatically masculine should not be given feminine versions; “unintended consequences” could result. Grammatical gender only occasionally corresponds with biological sex, the academicians argued. They seemed to think they had the impeccably feminist position. A woman is just as capable as a man of being le président. (La présidente, say some traditionalists going further, is the wife of the president. This was certainly the case a century ago, but today’s first lady in France is known as the première dame.) + +Various bodies pressed on, ignoring the academy, which has no powers of enforcement. In 1998 the National Assembly ruled that titles relevant to its various officers and functions should be feminised, such as la deputée and la présidente. In 2014, a deputy from the centre-right, Julien Aubert, sided with the academy against the chamber’s rules, and repeatedly referred to the presiding officer, Sandrine Mazetier from the opposing Socialist Party, as madame le président, mixing the feminine personal title and the masculine job title. Ms Mazetier, as she had the right to do under the chamber’s rules, fined him a quarter of his monthly salary, and a debate ensued under headlines like “When ridicule kills feminism” and “Should the French Academy be dissolved?” + +The problem cannot be entirely avoided. The academy rightly notes that in the plural, the masculine has always covered the feminine too, and writing for example tous ceux (all those who), using masculine forms, has rarely attracted much attention; the masculine is “unmarked”, meaning it carries no special meaning, whereas the feminine is “marked”, or specifically female. Writing toutes celles et tous ceux over and over would fill French with even more lumbering awkwardness than repeated “he or she” does in English, given the number of words it would affect in French. Words like “voters” and “members” could become the shorter, but typographically ugly and unpronounceable électeurs/trices or adhérent(e)s. + +For now, mainstream French opinion is converging on a compromise between practical solutions on one hand and the French Academy’s traditionalism on the other. The masculine is generic, especially for plurals: no need for électeurs/trices. But titles may be feminised when doing so is grammatically simple and logical, as it usually is. And those who want to be known by them deserve that courtesy. + +Ms Le Pen would hardly be a perfect tribune for feminism as France’s head of state. She has posed as a defender of women’s rights, but largely in opposition to the presumed antifeminist attitudes of the Muslims she would like to keep out of France. Many French voters, according to polls, would like to see her keep her current job title—présidente indeed, but only of her own party. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21720587-many-feel-titles-such-le-ministre-and-le-pr-sident-should-be-feminised-french/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next section | Main menu | Previous section | + +* * * + + + + + +Obituary + + +Adrian Coles: A prickly business [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Next section | Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +A prickly business + +Obituary: Adrian Coles died on March 23rd + + +The champion of Britain’s hedgehogs was 86 + +Apr 12th 2017 + + + + + +“FROM Clee to heaven the beacon burns,” runs the opening line of A.E. Housman’s “A Shropshire Lad”. The Clee hills, rising to 1,700 feet, are the highest points in the county. From there, across green slopes scoured and scattered with ruins of old quarry buildings, the view south opens over the valley of the Teme to the blue hills of Herefordshire and Worcestershire. + +To the slopes clings Clee Hill village which, until it closed, had Shropshire’s highest pub (called “The Kremlin” because, via the radar aerials on the hill, its juke box could pick up Radio Moscow). The sole hostelry is now the Golden Cross, where the regular beer is Hobsons Twisted Spire and visitors can play, on ancient battered equipment, quoits and pitch-penny. A bakery and post office stand along the main A 4117, which is not very main here. In fact, because it crosses common land, at two points it is spanned by a cattle grid. + + + +Several other cattle grids lie around Clee Hill, and it was one of those that led Adrian Coles to hedgehogs. At the time, indeed for 40 years, he was the local county councillor. The job mostly involved meetings about schools, social services, flytipping and the like; as well as keeping an eye on village greens, commons and roads. Its high point came when, as “Father of the Council”, he sat beside the queen at lunch and proposed the loyal toast. Its turning point came in 1982, when his small daughter ran in to tell him that a hedgehog was stuck under the cattle grid at the end of the drive. (“I didn’t choose hedgehogs,” he said later; “I had hedgehogs thrust upon me.”) With cautious sticks and an egg-pan he got it out, his first close encounter; and realised he had stumbled on a general problem. There were probably hedgehogs stuck under cattle grids all over Britain. + +His solution was to build a little corner ramp, made of concrete or wood and at an angle of 20°, up which a hedgehog could scramble. He then persuaded the council (he was in the right job) to install them in county grids. They are now compulsory on public roads across the country. + +Major Coles found himself getting exercised about hedgehogs. Their numbers were falling so fast that they were almost on the edge of extinction. Pesticides poisoned them, and cars squashed them. (Most Britons have seen only that two-dimensional sort.) The fencing and paving of suburban gardens stopped them foraging for food. And yet they were such good chaps, useful creatures, eating the slugs and woodlice no gardener wanted. Their doughtiness, as they rolled up into a ball to face their enemies, was something he, as a career army officer, could only admire. He held nothing against them, except the actual difficulty of picking them up. + +He had tapped into a national affection which was already there. If Britain had a favourite wild animal, it was probably not the fox, gallant but verminous, or the hare, magical but moonstruck, but the bright-eyed pointy-nosed hedgehog, suddenly appearing on lawns at dusk like the head of an old brush. The creature had been immortalised by Beatrix Potter in her tale of Mrs Tiggy-Winkle, the tiny laundress who stole (but only to wash and starch them till they shone) the handkerchiefs of little girls. + +Hot-water bottle and box + +As Major Coles warmed to the task his garden was invaded, soon containing more hedgehogs per acre than any other spot in Britain. His next step was to found a society, for which he also designed a tie. It grew fast. When at 85 he retired from running it, the British Hedgehog Preservation Society had more than 11,000 members. These included 700 “carers” who would provide an injured hedgehog with a hot-water bottle and a warm box, or put the small pink feet in splints. Major Coles talked regularly on the BBC, advised vets and lobbied Parliament. During droughts he would send a general letter to newspapers, urging people to put out water and cat food. + +He fought other successful campaigns, including getting household appliances sold with sealed plugs, and worked hard for many charities; but for this one he was famous. Letters would arrive from abroad addressed to “Major Hedgehog, England”. A grand moment came in 2014, when an exhibit called “Hedgehog Street” won a gold medal at the Royal Horticultural Society’s show at Hampton Court. It displayed three suburban gardens laid out as he recommended, with lush vegetation and five-inch-square gaps in their fences, for hedgehogs to get through. Major Coles, now widowed and living at the Royal Hospital Chelsea, presided in his scarlet pensioner’s coat with his service medals, and with a camera-shy hedgehog in his lap. + +Lower-key, but just as satisfactory, was the celebration at the Golden Cross in Clee Hill in 2012 to mark the BHPS’s 30th anniversary. The pub had renamed itself “The Cross Hedgehog” for the occasion. Hobsons had brewed a new ale, “Old Prickly”, and the village bakery supplied spiky loaves of bread. The head of the BHPS had to admit that numbers were still falling, by 25% in the past decade. But the rate of decline had slowed; a network was now in place to help, and the hedgehog’s place in British hearts and minds seemed assured. With that cheering thought, many a glass of Old Prickly was raised to Major Coles, and to the movement he had started with his egg-pan and his sticks. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/obituary/21720592-champion-britains-hedgehogs-was-86-obituary-adrian-coles-died-march-23rd/print + + + + + +| Section Menu | Main Menu | + + + + + +| Main menu | Previous section | + +* * * + + + + + +Economic and financial indicators + + +Interactive indicators [Fri, 14 Apr 13:31] + +Output, prices and jobs [Fri, 14 Apr 13:31] + +Trade, exchange rates, budget balances and interest rates [Fri, 14 Apr 13:31] + +The Economist commodity-price index [Fri, 14 Apr 13:31] + +Renewable energy [Fri, 14 Apr 13:31] + +Markets [Fri, 14 Apr 13:31] + + + + + +* * * + + + +| Main menu | Previous section | + + + + + +| Next | Section Menu | Main Menu | + +* * * + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21720639/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Output, prices and jobs + + +Apr 15th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21720637-output-prices-and-jobs/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Trade, exchange rates, budget balances and interest rates + + +Apr 15th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21720638-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +The Economist commodity-price index + + +Apr 15th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21720654-economist-commodity-price-index/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Renewable energy + + +Apr 15th 2017 + + + + + +New investment in renewable energy globally fell by 23% last year, to $241.6bn. The fall is partly the result of an investment slowdown in China and Japan, after a huge increase in wind and solar capacity that was financed in 2015. But lower capital costs are also responsible: in dollar terms, solar photovoltaics, onshore wind and offshore wind are at least 10% cheaper per megawatt than they were in 2015. Global installed capacity of wind, solar and other renewables rose by a record 11 gigawatts (GW), to 138.5GW, in 2016. The costs of generating these renewables are now comparable with fossil-fuel plants. But their future remains vulnerable to policy changes and to slowing growth in electricity demand. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21720640-renewable-energy/print + + + + + +| Section Menu | Main Menu | + + + + + +| Next | Section Menu | Main Menu | Previous | + +* * * + + + + + +Markets + + +Apr 15th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21720641-markets/print + + + + + +| Section Menu | Main Menu | + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.04.22.txt b/homeworks/B20769/homework1/data2/2017.04.22.txt new file mode 100644 index 0000000..fb9a8ad --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.04.22.txt @@ -0,0 +1,4051 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Politics this week + + + +Apr 20th 2017 + +Theresa May surprised her opponents—and her own cabinet—by calling a snap general election in Britain for June 8th. Since becoming prime minister in the wake of David Cameron’s defeat in the Brexit referendum last summer, Mrs May has consistently ruled out fresh elections. But she now wants her own mandate in order to end “division” in Parliament over the negotiations to leave the European Union. Opinion polls give her Conservative Party a 20-point lead, though the electorate is in an irascible mood. See here and here. + +George Osborne, one of the most powerful politicians in Britain until the Brexit vote, decided to quit as an MP. The former chancellor of the exchequer had been criticised for trying to stay in Parliament while taking up a new job as editor of a newspaper. + +Voters in Turkey narrowly approved, by 51% to 49%, a new constitution that hands sweeping new powers to the president and abolishes the job of prime minister. Recep Tayyip Erdogan says he needs the powers to deal with the instability and terrorism that have beset Turkey, but his opponents fear he will now feel emboldened to extend his political crackdown. See article. + +Police in France arrested two Islamist extremists for allegedly planning terrorist attacks in the run-up to the first round of the presidential election on April 23rd. Three leading candidates, Emmanuel Macron, Marine Le Pen and François Fillon, had been warned of the risk of an attack. More than 50,000 security personnel will be deployed for the election, mostly at polling stations. + +A country in turmoil + +Two students and a member of the national guard were killed during mass anti-government demonstrations in Venezuela. The opposition blamed armed supporters of the government for the students’ deaths. + +Paraguay’s president, Horacio Cartes, dropped his plan to change the country’s constitution to allow him to seek re-election. In March people protesting against his scheme set fire to Congress. + +Javier Duarte, a former governor of the Mexican state of Veracruz, was arrested at a hotel in Guatemala. He had disappeared in October, accused of corruption and involvement in organised crime. The nabbing of Mr Duarte follows the arrest in Italy of Tomás Yarrington, a former governor of Tamaulipas, who has been charged with bank fraud, money laundering and drug smuggling. He had been on the run for nearly five years. See article. + +The government of Canada proposed a bill to legalise the recreational use of cannabis. Under the plan, people will be allowed to possess up to 30 grams of pot and will be able to buy it from licensed retailers or grow up to four marijuana plants at home. The law would set a minimum age of 18 for buying weed. + +Bigotry wins + + + +Anies Baswedan, a former minister of education, won the race to become Jakarta’s next governor. He defeated the incumbent, Basuki Tjahaja Purnama, a Christian of Chinese descent, after a row about religion came to dominate the campaign. See article. + +India’s Supreme Court said three senior figures in the ruling Bharatiya Janata Party should stand trial for their part in the violent demolition of a mosque in Ayodhya in 1992. + +America used the biggest conventional bomb in its arsenal against fighters for Islamic State sheltering in tunnels in eastern Afghanistan. The Massive Ordnance Air Blast, or “Mother Of All Bombs”, as the media quickly dubbed it, weighs 10 tonnes. + +China said Interpol had issued an international request for the arrest of a Chinese property tycoon, Guo Wengui. Officials gave no details. The businessman is believed to have angered the Chinese authorities with interviews he had given abroad about high-level corruption in China. + +The chief regulator of China’s insurance industry, Xiang Junbo, was dismissed for “serious violation” of Communist Party discipline. Such language often means a suspect has been accused of corruption. + +Security measures + +Ethiopia extended a state of emergency it declared in October last year amid protests against the government. Meanwhile a government-affiliated human-rights organisation said that 669 people have been killed in violence and protests since November 2015. + +Uganda withdrew its forces from the Central African Republic and called off a long hunt for Joseph Kony and his rebel Lord’s Resistance Army, a brutal group that forcibly recruits children as soldiers. + +Donald Trump ordered a review of the nuclear deal with Iran, whereby most international sanctions on the country were rescinded in return for it dismantling much of its nuclear programme. + +At least 65 children were among more than 120 people killed in a bomb attack on buses carrying residents from besieged Syrian towns as part of an agreed evacuation. + +The government of Zimbabwe ordered banks to accept livestock as collateral for loans and schools to accept goats as payment amid a deepening economic and currency crisis. A shortage of American dollars has forced the government to print its own version, known as “bond notes”, to ease a cash crunch. + +The killing factory + +Arkansas’s rush to execute eight death-row inmates within 11 days ran into trouble in various courts, including the Supreme Court. The state faces legal challenges to its reasoning that it needs to carry out the executions before the expiry date on its stock of a controversial sedative used in lethal injections. See article. + +Police in Fresno, a city in central California, said that a black man who shot dead three white people was motivated by racial hatred. The man shouted “God is great” in Arabic as he was arrested, but the police do not believe his was a terrorist act. + + + +A Democrat came first in a special election for a congressional district in the Atlanta suburbs that has been held by the Republicans since the 1970s and had once been represented by Newt Gingrich. Jon Ossoff took just under 50% of the vote, so he faces a run-off against Karen Handel, a Republican. Democrats think they can take the seat. Mr Ossoff’s campaign theme is “Make Trump Furious”. + + + + + +Business this week + +Apr 20th 2017 + +America’s big banks reported robust earnings for the first quarter. Morgan Stanley’s net profit soared by 70% compared with the same three months last year, to $1.9bn, and Bank of America’s was up by 40%, to $4.9bn. Those banks, along with Citigroup, benefited from increased trading in bonds, currencies and commodities. But Goldman Sachs, the bank most associated with such activity, had a flat quarter in bond trading. Its elevated profit of $2.2bn did not stop investors from sending its share price down by 5%. + +The gamble + +Theresa May’s decision to call a snap election in Britain pushed the pound above $1.28, its highest level since September, as markets speculated that a bigger majority in Parliament would give a Conservative government room to negotiate a softer Brexit. The FTSE 100 dropped by 2.5%. A stronger pound hits the foreign revenues of the multinationals that dominate the index. + +With attention focused on the snap election, the British government admitted that it may have to sell its remaining majority stake in Royal Bank of Scotland at a loss to the taxpayer. RBS was bailed out during the financial crisis, when the government bought shares at £5.02 ($6.40). After nine consecutive years of huge losses its shares are now worth less than half that. + +China’s economy had a strong start to the year. GDP expanded by 6.9% in the first quarter compared with the same period in 2016, the best performance in 18 months. Industrial output rose by a mighty 7.6%. The economy continued its “rebalancing”, with consumption accounting for a much larger proportion of growth. + +The IMF slightly raised its forecast for growth in the world economy this year, to 3.5%. Among the richest economies, Britain saw the biggest upward revision to its GDP, which is now expected to increase by 2%. See article. + +Shinzo Abe, Japan’s prime minister, nominated candidates to replace two members of the Bank of Japan’s policy committee who have regularly held back from endorsing stimulus measures. If the two candidates are approved by Parliament Mr Abe will have selected all nine members of the central bank’s board. See article. + +Dropping the anchor + +Fox News decided that Bill O’Reilly, the channel’s biggest star, should not return to work after it reviewed allegations that he had sexually harassed several women. The claims had prompted a number of big advertisers to pull their business from Fox. + +Donald Trump signed an order that aims to restrict outsourcing companies’ ability to use the H1-B employment-visa programme to bring their staff to America. Mr Trump believes that foreign workers are getting jobs that should go to Americans and he wants more of the visas to be given to immigrants with greater skills. But his order avoided the tougher language on H1-Bs that he has previously used. In Australia, Malcolm Turnbull, the prime minister, sounded a similar note, saying that his government would abolish its 457 visa programme for temporary foreign workers because they take jobs that should go to Australians. + +Fending off a hostile-takeover approach from an American rival, AkzoNobel proposed a plan to separate its chemical division from its paints business, which includes the Dulux brand. The chemical division would either be sold or listed separately. See article. + + + +Volkswagen reported a quarterly operating profit of €4.4bn ($4.7bn), which was well above market expectations. The carmaker benefited from a surge in sales at its core VW brand as well as cost-cutting. It is revamping its range as it tries to put the emissions-cheating scandal behind it. The sense of a fresh start was underlined recently when it emerged that Ferdinand Piëch, the long-time driving force behind the company, had sold most of his stake in the group. + +Police in London arrested Vijay Mallya, as part of the process of hearing the Indian government’s request to extradite the entrepreneur. Once known as the King of the Good Times, Mr Mallya left India last year as banks piled on the pressure over debts racked up by Kingfisher Airlines, which collapsed in 2012. The Indian government accuses him of fraud. Mr Mallya denies absconding. He has been placed on bail in London; extraditing him to India could take years. + +Passenger numbers + +United Airlines’ customers may not have been delighted to hear that its revenue increased to $8.4bn in the first quarter. The opening paragraph of United’s earnings statement acknowledged the furore surrounding the violent removal of a passenger from a flight after he was bumped to make way for staff, describing it as “a humbling experience”. + + + + + +KAL's cartoon + + + +Apr 20th 2017 + + + + + +Leaders + + + + +North Korea: Handle with extreme care + +The French election: Time to decide + +Islam in Indonesia: The rise of intolerance + +Airlines in America: Whack-a-passenger + +Corporate-bond markets: Broken dealers + +Britain’s election: Game change + + + + + +North Korea + +How to deal with the world’s most dangerous regime + +Donald Trump grapples with his trickiest task + + + +Apr 22nd 2017 + +NORTH KOREA can be as confusing as it is alarming. It is a hereditary Marxist monarchy. It has the world’s youngest supreme leader and also its oldest. The reigning tyrant, Kim Jong Un, is in his 30s; and his grandfather, Kim Il Sung, is the “eternal president” despite having died in 1994. To celebrate grandpa Kim’s birthday on April 15th, his grandson ordered warplanes to fly past in a formation spelling out his age: 105. He also ordered a gigantic parade, with goose-stepping soldiers and missiles on trucks. A male-voice choir belted out “Peace is guaranteed by our arms”, even as the regime threatens to rain nuclear destruction on its enemies and is building a missile designed to reach the continental United States. + +Dealing with the bellicose junior god-king will be one of Donald Trump’s trickiest tasks. It will also be the first big test of how he handles relations with China, which are shifting as the rising superpower challenges the Pax Americana in Asia (see our special report). There are no good options, but arriving at the least-bad ones will require understanding both the regime and the Asian geopolitical jigsaw into which it fits. It will also require patience. Ominously, Mr Trump says he has little when it comes to North Korea, and his vice-president, Mike Pence, says that “all options” are on the table. + +Wanting to do something quickly is emotionally appealing. North Korea is a vile, blood-drenched dictatorship where any hint of disloyalty is punishable by gulag or death. Mr Kim has children imprisoned for their parents’ thought-crimes and his own relatives murdered on a whim. The prospect of such a man threatening Los Angeles is harrowing. Yet a pre-emptive strike on North Korea would be reckless beyond belief (see article). Its nuclear devices are hidden, possibly deep underground. Its missiles are dispersed on mobile launchers. Tokyo is just across the Sea of Japan. Seoul, the capital of peaceful, capitalist South Korea, is only a few miles from the border. Northern artillery and conventional missiles could devastate it; a conflict could rapidly turn nuclear and kill millions. + +Mr Trump cannot possibly want to start a war. His military actions in Syria and Afghanistan suggest that he is more cautious than his bluster makes him sound. But even creating the impression that he might strike first is dangerous. If Mr Kim were to believe that an American attack is imminent, he might order his own pre-emptive nuclear attack, with disastrous consequences. So Mr Trump should cool his rhetoric immediately. + +Dealmaker, meet deal-breaker + +For all his eccentricities, Mr Kim is behaving rationally. He watched Muammar Qadaffi of Libya give up his nuclear programme in return for better relations with the West—and end up dead. He sees his nuclear arsenal as a guarantee that his regime, and he, will survive. (Though it would be suicidal for him to use it.) Mr Trump can do little to change his mind. Economic sanctions that harm his people will not spoil his lunch. Cyber-attacks, which may account for the failure of some recent missile launches, can slow but not stop him. America can solve the Korean conundrum only with China’s help. + +China has leverage over Mr Kim. It accounts for 85% of North Korea’s foreign trade and could shut off its oil supply. But its interests are not the same as America’s. North Korea is its ally. China’s leaders do not like the Kim regime, but they do not wish to see it collapse and North Korea reunite, German-style, with the democratic South. That, China fears, would mean the loss of a valuable buffer. There are 28,500 American troops stationed in the South; China does not want them on its border. + +To contain North Korea—and to conduct a successful foreign policy more broadly—Mr Trump has to learn how to talk to China. His instinct is to do deals. Last week he tweeted that he told Xi Jinping, China’s president, that “a trade deal with the US will be far better for them if they solve the North Korean problem!” Later he explained that his decision not to label China a currency manipulator, as he had threatened, was a quid pro quo for China helping out over North Korea. Dropping the currency threat was the right policy, but Mr Trump’s transactional approach to diplomacy is exactly the wrong one. + +China would love to carve up the world bilaterally into spheres of influence, with the great powers dominating their regions and trading favours elsewhere. America has long been the guardian of something different: a rules-based order that applies to every country, big or small, and which has underpinned the relative peace and remarkable growth of the world since 1945. That Mr Trump appears to scorn this rules-based global order is worrying. The world would become a more dangerous place if America started letting China break the rules (for example, in the South China Sea) in exchange for help to resolve whichever issue happens to be in the news. A better response to China’s rise would be for America to strengthen the rules-based order and invite China to join it more actively. Alas, Mr Trump is unlikely to do this. + +So the best hope is that he or his diplomats persuade China that it is in its own interest to curb North Korea. And the way to do this is to talk about North Korea itself, not the yuan or American steel jobs. + +Three generations of Kims are enough + +China does not gain if North Korea destabilises East Asia, or starts a regional arms race that leads Japan and South Korea to build their own nuclear weapons. Mr Trump should reassure his allies in Tokyo and Seoul that they remain under Uncle Sam’s protection. But he should also deal with China’s concerns. To that end, he could make it clear that freezing and then rolling back the North’s nuclear programme is his goal rather than regime change. He could also guarantee that, were the North to collapse into the arms of the South, America would keep its troops south of the current north-south boundary. China hates to admit that the Kim dynasty might not last, but it is rash not to plan for that possibility. + +The crucial message for Mr Kim as for his predecessors is that, if the North were to use its nukes, the regime would be obliterated. In the long run, reunification is inevitable and desirable. Meanwhile, the junior god-king can be deterred. + + + + + +The French election + +A consequential choice for France—and an uncertain one + +As the French go the polls, they are angry and divided + + + +Apr 22nd 2017 + +FRANCE is not just deeply unhappy, it is at war with itself. The first round of the presidential election, on April 23rd, could send any two of four candidates into a run-off on May 7th. They range from the odious right to the vicious left, with two pro-market reformers in the middle. Seldom has a European democracy been so torn between progress and disaster. + +After votes for Brexit, Donald Trump and, last week in Turkey, for a constitution that cements Recep Tayyip Erdogan’s power (see article), the battle over liberal internationalism has moved to the cradle of the Enlightenment. The fate of France is not all that is at stake. The European Union will stall if one of its driving forces is in chaos or hostile. It may even fail, wrecking the organising principle of an entire continent. + +Outright victory on May 7th for Marine Le Pen, on the far right, or Jean-Luc Mélenchon, on the hard left, would be a catastrophe. On that count alone, either of the two pro-market candidates would be a blessing. But choosing between them involves a trade-off and a gamble (see Briefing). Emmanuel Macron is untested and lacks the support of an established party; François Fillon is a social conservative tarnished by scandal. On balance, we would support Mr Macron. + +Un coup de rouge + +Whoever is president will inherit a discontented country. Unemployment has been stuck above 10% since 2012; for young people, it is still above 20%. The economy is growing slowly and does not yield enough tax to pay for the public services that voters believe are their right. Racial and religious tensions run high, exacerbated by jihadist attacks. Dislike of the EU is even stronger than it was in pre-referendum Britain. + +France used to be governed by a cadre of brainy officials, who enjoyed privileges and power to match. But that contract is dead. The approval rating of today’s president was at one point as low as 4%. The people believe that the elite has failed. + +Ms Le Pen and Mr Mélenchon echo their fury. In their own ways, both hold out the promise of a return to an idealised past when the state was generous and life more secure. They say that protectionism can make France richer; that less involvement with NATO and more with Russia would make it safer; that by renegotiating or leaving the EU it can prosper; and that earlier retirement and more welfare would increase solidarity. All this would make France only weaker and more indebted. + +To such incoherence, they add their own kind of venom. Ms Le Pen would put a moratorium on immigration. She says the French state bore no guilt for the detention and deportation of Jews from a Paris velodrome in the second world war. Mr Mélenchon would raise taxes on those earning more than €400,000 ($430,000) a year to 100% and join a “Bolivarian Alliance” with Cuba and Venezuela. + +Instead of strife in the Elysée, France needs a president to carry through reform. Unlike most EU countries, it has never taken genuinely painful steps to free the labour market, trim the state and tighten benefits. Its labour code is longer than the Bible. Measured against GDP, government spending is higher than Sweden’s. It has its share of world-class firms, but its public unions are world-class, too—in seeing off change. + +Mr Fillon thinks he can break this impasse with shock therapy. He wants to cut 500,000 jobs from the civil service and €100bn from public spending. He would end the 35-hour work week, raise the retirement age by three years, to 65, and junk 95% of the labour code. An avowed fan of Britain’s former prime minister, Margaret Thatcher, in a country where she is loathed, he is pro-business. As important, he has the stomach for the protracted fights that reform will surely demand. + +Unfortunately, his claim to lead France through divisive change has been weakened by his own misconduct. One of those protracted fights has been over the €900,000 in parliamentary salaries that he got the state to pay his wife and two of his children, allegedly for doing nothing. In this he is not alone among French politicians, but he is running for president on a ticket of unimpeachable probity. Mr Fillon is asking his compatriots to make sacrifices and to sign up to a new social contract when he himself embodies the arrogance of the old one. + +Mr Macron is untainted, if only because he is a political outsider. He has never held elected office, though he was the appointed economy minister in the present government. His plans are less bold than Mr Fillon’s, cutting only 120,000 public jobs and €60bn in spending, but an independent study rates them as equally free-market. Mr Macron is pro-business, but more subtle about it. Instead of abolishing the 35-hour week, he would help companies work around it. Rather than raise the retirement age, he would unify the country’s 35 pension schemes, eventually doing more to enhance labour mobility. + +Mr Macron is more outward-looking, too. He backs recent EU free-trade deals that Mr Fillon rejects. He is more likely to be able to work with Germany to strengthen the governance of the euro. He is socially liberal, whereas his opponent, close to Roman Catholic traditionalists, opposed gay marriage and wants to limit gay adoption. Mr Fillon would impose immigration quotas and end sanctions against Russia; Mr Macron exhorts the French to live up to their values. + +Macron the mould-breaker + +The worry is that Mr Macron will not get his reforms through the legislature. Though En Marche!, the party he founded, will run in every constituency in elections to the National Assembly in June, it will struggle to win a majority, unlike Mr Fillon’s Republicans. But do not write off his political skills. In rallies and on TV he has more than held his own. En Marche! is barely a year old, but it has 250,000 members—more than twice as many as the Socialists. + +His critics say Mr Macron is wishy-washy. But he is the only candidate who has made a full-blooded case for the open society and economy this newspaper believes in. That takes courage—the courage to step outside France’s party system, to defend complex arguments against polarising sound bites and to stand for optimism in an age of identity politics. That is a message all democracies need to hear. + + + + + +The rise of intolerance + +Indonesia has been mercifully resistant to extremism—until now + +A local election shows how the unscrupulous can manipulate religion to win office + + + +Apr 20th 2017 + +FIRST came the fake news: a doctored video, making it look as if the governor of Jakarta, an ethnic-Chinese Christian, was disparaging the Koran. Next, mass protests flooding the city centre with outraged Muslims. Then came blasphemy charges that the police, under public pressure, eventually lodged against Basuki Tjahaja Purnama, usually known as Ahok. Before long a seemingly pedestrian election became a referendum on the role of Islam in Indonesian politics. Was it permissible for a Christian to hold the second-most prominent elected office in an overwhelmingly Muslim country? + +On April 19th voters delivered their verdict: no. Ahok, once the clear front-runner, had won the first round of the election, in February, by a slim three percentage points. But supporters of the eliminated candidate appear to have plumped for Ahok’s remaining rival, Anies Baswedan, who won the second round by 58% to 42% (see article). Although Mr Baswedan praised Ahok in his victory speech, he had openly wooed the chauvinist vote during the campaign, for instance by joining rabble-rousing clerics for dawn prayers before a vituperative anti-Ahok rally. Plainly, the outcome is a defeat for tolerance, in a country that prides itself on it. + +It is easy to forget, but Indonesia, not Egypt or Iran, much less Saudi Arabia, is the world’s most populous Muslim country. There are far more Muslims in South and South-East Asia than there are in the Middle East. And Muslims in Asia are traditionally much less doctrinaire than Middle Easterners. + +Indonesia is a case in point: many local Muslims follow practices that would cause riots in Arabia, making offerings to saints and spirits, say, or worshipping at shrines shared with Hindus and Buddhists. Indonesia’s biggest Islamic organisation is Nahdlatul Ulama (NU), which embraces folksy forms of Islam and explicitly campaigns against extremism. Its wisecracking former leader, Abdurrahman Wahid, was the first president to be elected—albeit by parliament, not by popular vote—after the overthrow of Suharto, Indonesia’s dictator of 32 years. The next president was Megawati Sukarnoputri, a woman. No avowedly religious party has ever received more than 8% of the vote in parliamentary elections. + +The call from Arabia + +And yet for decades less tolerant forms of Islam have been seeping into the country. In fact, NU was founded in 1926 to resist the growing influence of puritanical Arabian preachers. To this day Gulf Arabs fund lots of mosques. Rabble-rousers are able to turn out big crowds to protest against perceived insults to Islam. The agitators portray traditional Indonesian Islam as rural and backward, implying that educated city-dwellers should follow a purer form of the religion. Politicians, even otherwise reasonable ones like Mr Baswedan, seldom resist the urge to cloak themselves in piety. + +Joko Widodo, Indonesia’s president and Ahok’s predecessor as Jakarta’s governor, supported his embattled protégé in the election. But he was careful to be respectful of the protesters, meeting their leaders and offering only veiled criticism of their conduct. Local mores, it is often said, demand such reticence. But the other side felt no such obligation, brandishing signs with slogans like “Burn Christians, Jail Ahok”. + +The governor’s race has given unscrupulous politicians a simple blueprint for winning office: stir up religious fervour by decrying real or invented insults to Islam. The opposition is likely to resort to such tactics in the next presidential election, due in 2019. If Mr Joko wants to keep his job, and preserve Indonesia’s plural society, he needs to speak out forcefully against zealotry, not treat it with kid gloves. + + + + + +Whack-a-passenger + +A lack of competition explains the flaws in American aviation + +Americans are treated abysmally by their airlines. They should look to Europe for lessons + +Apr 20th 2017 + + + +DECADES ago travelling by air in America was a glamorous affair. Today it signals delays, discomfort, extra charges and the threat of violence. A video of a passenger being forcibly dragged from a United Airlines flight on April 9th, after too few people volunteered to give up their seats, has sparked an outpouring of complaints about flying in America. Passengers are right to moan. America’s airlines really do compare badly with foreign ones. European carriers are the best point of reference. + +Air fares are higher per seat mile in America than in Europe. When costs fall, consumers in America fail to enjoy the benefits. The global price of jet fuel—one of the biggest costs for airlines—has fallen by half since 2014. That triggered a fare war between European carriers, but in America ticket prices have hardly budged. Airlines in North America posted a profit of $22.40 per passenger last year; in Europe the figure was $7.84. + +Standards of service are also worse. Only one operator based in America can be found in the world’s 30 best carriers, as rated by Skytrax, an aviation website, compared with nine from Europe. When Ryanair, currently Europe’s largest and cheapest airline, cut service to the bone, it began to lose customers and money. That prompted it to perform a U-turn and be “nicer” to customers, in order to protect its market share from rivals like easyJet, Wizz Air and Norwegian. + +This happy combination of low fares and reasonable service has a simple explanation: competition. American policymakers have presided over a wave of mergers in the past few years. The biggest four carriers in America between them now control 80% of the market, compared with just 48% a decade ago. Warren Buffett, a man who knows an oligopoly when he sees one, bought nearly $10bn-worth of airline stock in 2016. In Europe, where the top four carriers have around 45% of the market, policymakers have got three things right. + +First, European regulators have tried harder to preserve competition between existing carriers. The EU has been willing to block mergers, such as a proposed tie-up between Ryanair and Aer Lingus, and to prevent airlines from building monopoly positions at airports. Not so in America: at 40 of its 100 biggest hubs, a single carrier now accounts for more than half of capacity. That pushes up prices. The merger of American and US Airways in 2013 increased American’s market share at Philadelphia’s airport to 77%. Fares rose from 4% below the national average in 2013 to 11% above after the merger. + +Second, Europe has made it easier for foreigners to boost competition by entering new markets. There are no ownership limits at all between European countries; and the EU lets airlines with a non-EU owner that has a stake of up to 49% fly anywhere within the bloc. America caps foreign ownership at 25%. Foreign joint ventures, such as Virgin America (which was acquired by Alaska Air Group last year) struggle to take off. + +Third, Europe has also encouraged competition between different airports and their main operators. Breaking up the ownership of London’s biggest three airports has saved passengers £420m ($628m) in fares since 2009, according to ICF International, a consultancy. In contrast, most American cities have only one airport, many of them publicly owned. + +Dogfighters + +Some of Europe’s advantages are hard to replicate. Distances between big cities are shorter, making road and rail transport serious rivals. Yet that is all the more reason for America to promote competition in the sky. America’s regulators should loosen the cap on foreign ownership, take away slots from incumbents and promote the use of secondary airports to give new entrants a leg-up. If that doesn’t yield dividends, regulators should consider breaking up the big airlines. Allowing competition to wither was a huge mistake. It should be rectified. + + + + + +Broken dealers + +Corporate-bond markets need a reboot + +As banks pull back, automation should be welcomed + +Apr 20th 2017 + + + +STOCKMARKETS are the public face of finance; indices like the S&P 500 are widely reported proxies for economic health. But they are dwarfed by the corporate-bond markets. In 2016 American equity issuance amounted to just under $200bn; for corporate bonds the total was $1.5trn. + +The market for corporate debt is not just vast, at $50trn globally, it has also been growing fast as a result of ultra-cheap borrowing. Issuance in America has risen by half over the past five years. Yet despite its importance as a source of financing for companies, the corporate-bond market is shockingly archaic. Even basic price data are hard to come by. Whereas stocks can be traded at the click of a button, buying and selling corporate bonds often requires a phone call to a trading desk at an investment bank. This method of trading still accounts for over 80% of volume in America. Processes are correspondingly slow: 8% of trades in Europe fail to settle in the allotted two days. + +Such inefficiencies partly reflect the particularities of bond markets. An individual firm may have one or two types of shares, but issue dozens of bonds that differ by maturity, date and seniority in its capital structure. Any given bond is thus traded only rarely. In the past, banks made markets by holding an inventory of bonds on their balance-sheet until a buyer came along. Those electronic platforms that do exist have largely stuck to this dealer-based model: under “request for quote” systems that account for almost 95% of electronic trading, dealers are still the only ones with the power to provide a quote and to buy or sell (see article). + +But this system is creaking. Tougher capital regulations implemented after the financial crisis sought to discourage banks from holding bonds. Trading desks now hold just 1% of all bonds, down from 2.4% as recently as 2007. Average trade sizes have also fallen. Demand from central banks, in places where corporate-bond purchases were part of quantitative-easing (QE) programmes, may have obscured the extent to which marketmakers have pulled back. As QE unwinds, shortfalls in liquidity may become apparent. + +Restoring the banks to their market-making role by relaxing capital rules is no answer. If trouble strikes, it is better for banks to be out of harm’s way. Instead, corporate-bond markets need to learn from equities and help buyers and sellers to meet and trade. Regulators can do their bit by requiring prices to be reported for completed transactions, as incoming European rules will from early 2018, and as America has in a more limited fashion since 2002. But the market is also showing the way. A new technology known as “all-to-all” trading allows one institutional investor in a network to trade bonds with any other. There are also systems to help dealers keep track of inquiries across time, turning them from risk-takers into matchmakers. + +Entering the electronic age + +These innovations will not suit everyone. The automation of equity markets has cut the earnings of brokers; an end to those chummy phone calls will do the same in the bond markets. But investors can only gain from an environment where it is easier and cheaper to buy and sell bonds. Issuers will also benefit from markets that can smooth out turbulence rather than turn it into a full-scale panic and, in normal times, from a lower cost of capital. The corporate-bond market will never be as simple or liquid as the stockmarket. But it can still learn lessons from its higher-profile cousin. + + + + + +Britain goes to the polls + +Why an election offers the chance of a better Brexit + +Theresa May hopes for a landslide victory + + + +Apr 22nd 2017 + +FOR an event that was supposed to settle a big political question once and for all, last year’s referendum on Britain’s membership of the European Union has proved spectacularly disruptive. First it did for the government of David Cameron, who had called it expecting a win for Remain. Then it provoked renewed calls for separation in Scotland and Northern Ireland, which opposed Brexit. Now Theresa May, who entered Downing Street only last summer, has called a snap general election for June 8th, having previously insisted that such a course would cause further “instability”. Britons are facing their third national poll in two years. + +Mrs May says the election is necessary to protect the Brexit process from mischievous opposition parties that plan to derail it. That is nonsense: although most MPs, including her own, campaigned to Remain, they have dutifully upheld the referendum result in Parliament. Surely more important in the prime minister’s calculation are the opinion polls that show her Conservative Party more than 20 percentage points ahead of the Labour opposition, which is hamstrung by its ineffectual leader, Jeremy Corbyn (see article). Elections are inherently hard to predict—this one could be treated by voters as a poll about everything from the railways to the National Health Service. But, with Mr Corbyn clinging on and the economy yet to feel the smack of Brexit, Mrs May has a chance to increase her working majority of 17 to perhaps more than 100. + +For the 48% of voters who, like this newspaper, opposed Brexit, this may look ominous. Mrs May is aiming for a “hard” exit, needlessly taking Britain out of the EU’s single market so she can clamp down on immigration, which would do more harm still. The election looks likely to strengthen her hand. In fact, it offers an opportunity for those who believe in a more open, liberal Britain. A bigger majority would leave Mrs May freer to strike sensible compromises with the EU. And the election provides a chance to give liberals of all political stripes a louder voice in the debate that will dominate the next few years. The outcome could be a less damaging Brexit. + +June, the making of May + +From a prime minister who has made several U-turns in her nine months in power, this one was dramatic. Only last month her official spokesman insisted: “There is not going to be a general election.” But it is a reversal that might mean fewer U-turns in future. Mrs May will draw up her own manifesto, rather than being half-bound by the promises of her predecessor, which forced her into the embarrassing withdrawal of part of last month’s budget. If the polls are correct, she will have enough MPs to push through unpopular but necessary solutions to problems such as the housing shortage and the funding crisis in social care, which she has so far approached only timidly. With a proper mandate and some clout in Parliament, the prime minister would have the chance to shake off the “Theresa Maybe” nickname that we gave her earlier this year. + +Nowhere does that matter more than with Brexit. Having triggered Article 50 last month, Britain and the rest of the EU have two years to negotiate a deal. Almost nobody thinks that offers enough time. After March 2019, unless both sides agree on some sort of transition, Britain will crash ruinously out of the union. Until a new regime is sorted out over a number of years, Britain will be able to sell into its most important market only under World Trade Organisation rules. + +The election makes this less likely. Although Mrs May has sometimes threatened to leave without any agreement, saying “no deal is better than a bad deal”, she has lately accepted the need for a transition arrangement after Brexit. With a larger majority she can more easily stand up to her ultra-Eurosceptic backbenchers, some of whom seem actively to want Britain to crash out. That explains why the pound rose this week. + +The election also buys Mrs May time. Holding a vote this year means that she need not face the polls again until 2022, three years after Britain’s formal exit from the EU. Avoiding the pressure of an imminent contest at home will further strengthen her against the headbanging fringe of her own party and the right-wing press, which screams treachery at any hint of the compromises needed to secure a deal with the EU. + +Maybe not + +Just what use Mrs May makes of that freedom depends upon her own preferences for Brexit—which are still not entirely clear even if she sounds tough. Her record is neither rabidly pro (in the referendum she was a reluctant Remainer) nor instinctively against (see Bagehot). Crucially, though, to the extent that the hard Brexiteers are pushed to the margins, other voices will be able to enter the debate. + +In Parliament the election will end the odd situation in which MPs have been bound both by the wishes of their constituents in the previous election and also by the referendum. The next parliament’s MPs will have a mandate to stand up for whatever they advocate on the stump, be it hard Brexit, soft Brexit or complete Breversal. + +The Liberal Democrats, reduced to just eight seats at the last election, are the most pro-EU force in British politics. Their resurgence—and the likely collapse of the vote for the pro-Brexit UK Independence Party—would increase the ranks of Remainers in Parliament, and encourage the Conservatives to choose Eurosensible candidates in marginal seats. Last year Zac Goldsmith, a prominent Tory Leaver, was ejected by the Lib Dems in a by-election. Tories fighting seats in Remain-voting areas such as London and the university towns may have to soften their line on Brexit if they are to avoid a similar fate. + +The debate outside Parliament will matter more, too. Since the referendum those advocating a soft Brexit have been shouted down as anti-democratic. All that changes with the news of an election. Businesses, lobby groups and, of course, private citizens have a chance to make the case for a soft Brexit both during the campaign and after it, during the long months of negotiation to follow. The battle over Brexit was fought last summer. The battle to define what form it should take is far from over. + + + + + +Letters + + + + +On trade, horses, legal aid, science, pronouns, United Airlines: Letters to the editor + + + + + +Letters + +Letters to the editor + +On trade, horses, legal aid, science, pronouns, United Airlines + +Apr 20th 2017 + +Deal or no deal? + + + +Most sensible people would agree that after all this time together in the European Union single market, London and Brussels should try to preserve as much preferential treatment as possible by entering into a high-quality free-trade agreement, and not revert to trade only on WTO terms if there is no deal. But how bad would no deal be? + +“A race against time” (April 1st) gave the impression that reverting to trade on WTO terms would be damaging to Britain, citing tariffs on exports to the EU of 10% on cars, 15% on food and 36% on dairy products. But if this looks bad for Britain, it is much worse for the remaining EU members. + +In January this year, Britain exported £1.5bn-worth ($1.9bn) of vehicles to other EU countries, but imported £3.6bn-worth of vehicles from these other members. When we add the pound’s more than 10% depreciation since the Brexit vote, the WTO-based tariff protection for cars is, in effect, eliminated on British exports but doubled on those from other EU members to Britain. + +As for food and agriculture, in January, British exports of all categories of food and agricultural goods amounted to just 6.3% of all British exports to the EU. In that month alone, Britain had a trade deficit of £1.4bn in its agricultural trade with the EU. + +Surely, if there are sensible people in Brussels, they will recognise that it is very much in their interests to join Theresa May in arguing for the negotiation of a high-quality free-trade deal concurrently with other Brexit negotiations. + +ANDREW STOLER + +Former deputy director-general of the World Trade Organisation + +Adelaide, Australia + + + + + +Taking on the neighsayers + +The place of the horse in the economy and society did indeed vanish quickly (Free exchange, April 1st). But horses can’t vote. We can. The comparison of humans to horses being displaced by technology raises the question of just how democracies will cope with the disruption of jobs by automation. We have already seen the rise of virulent, sometimes revanchist politicians, promising to bring back jobs. What will happen when human labour is squeezed further? + + + +There are solutions to an economy where full employment is either impossible or more unstable than it has been since the Industrial Revolution. These solutions, such as a universal basic income, or universal national service, or shifting tax to passive income rather than wages and salaries, will take substantial changes in government. How fortunate that we, unlike equine labourers, have the means to expand our freedoms and choose our response to the growing potential of machines. + +EVAN PRESTON + +Programme director + +Fair Share Education Fund + +Washington, DC + +The number of robots may be increasing, but it is still humans who decide how many there will be, and the work they do. The limits of robot capabilities can be demonstrated by a simple test: just give one a shovel and ask it to muck out a stable, having first determined whether there is a horse in residence, what mood it is in and how to persuade Dobbin not to kick R2-D2’s digital derrière. + +MALCOM HARKER + +Seattle + + + + + +The scales of justice + +Fees for employment tribunals are not the only barrier to enforcing employment rights in Britain (“Justice in an age of austerity”, April 1st). In 2013 legal aid was withdrawn from many areas of law other than discrimination cases, including employment-law advice and representation. Fewer legal-advice centres are able to provide a service for their vulnerable clients, and many continue to face cuts in funding. The economic cost of unresolved legal problems however can be enormous. The government is promising a review of cuts to legal aid and a consultation paper next year on legal support. Action to improve access to justice is urgently needed. + +MARTIN BARNES + +Chief executive + +LawWorks + +London + + + + + +Waste of papers + +The notion that scientific journals are slowing progress is an opinion that is increasingly articulated by scientists themselves (“Time’s up”, March 25th). As an editor and reviewer of research articles, I see the problem differently. Many of us assume that the publication of research is to inform accurately, and in the instance of clinical research, to improve the health of people. But many clinical-research papers submitted for review are on the march to irrelevance. These articles are scientifically sound, well-designed, utilise the best biomedical advances and employ the most sophisticated statistical programmes. The problem is that too many of them are not relevant to the readership of the journals. If the claim is correct that most clinical research is false and most of it not useful, then the risk of trying to fix the wrong target is that it will foster the proliferation of more false and non-useful research, but do so more quickly. + +ARTHUR AMMANN + +San Rafael, California + + + +How do you fund an international journal that is open access? I edit a journal, and there are costs that have to be covered for editing (most authors are not native English speakers), translation (authors can submit papers in French, Spanish or Portuguese) and the management of the submissions process. We also have to cover the costs of a policy that provides free subscriptions to institutions in poorer countries. If I have to fund this journal from payments made by authors, I would lose most of my most insightful (and influential) writers. + +DAVID SATTERTHWAITE + +Editor + +Environment and Urbanisation + +London + + + + + +Is they right? + +I was delighted to read Johnson’s column on trying to find a gender-neutral pronoun (April 1st). As he said, the Oxford English Dictionary’s first use of a sex-neutral, indefinite “they” was about 1375. For some mysterious reason, school marms and style manuals decided that the epicene “they” was ungrammatical. As a result, people began saying truly ungrammatical sentences such as “Everybody likes pizza, doesn’t he or she” in an attempt to sound correct. They failed. + +I wrote about this subject in an essay that appeared in American Speech in 1982. + +GEORGE JOCHNOWITZ + +Professor emeritus of linguistics + +College of Staten Island, CUNY + +New York + +* As the American Copy Editors Society stoke this debate, I would propose “o” for the epicene pronoun to replace he and she. It has all the advantages of “they,” you discuss, and some more. It has the brevity of I and, as such, a poetic resonance with it. I can go with they, but I goes best with “o”. It saves ink and digital space—a likely astronomical gain over time. Finally, some 190 million people, all native Bengali speakers, will get to speak a word they already use. And, for full disclosure, since after moving to New York, I find myself using my mother tongue in stores and in taxis more frequently than I did since leaving Kolkata as a college student, it will be of some advantage to me. + +KAUSHIK BASU + +Professor of economics + +Cornell Universiy + +Ithaca, New York + +A bumpy flight + + + +On September 26th 2015 you published a letter of mine, in which I speculated that the new United Airlines’ CEO’s prior experience as a railroad executive would serve him well when squeezing passengers into planes like cattle cars. How prescient I must have been. Looks like the same experience applies to squeezing people out of planes (“Air rage”, April 15th). + +PETER PRASTHOFER + +The Woodlands, Texas + +* Letter appears online only + + + + + +Briefing + + + + +The French election: La lutte + + + + + +The first round + +This French election is unprecedented in all sorts of ways + +High stakes and a close race + + + +Apr 22nd 2017 | ANGERS, PARIS AND STRASBOURG + +THE local co-ordinator, Bruno Studer, turns up on a bicycle, his front basket stuffed with leaflets. On a tree-lined Strasbourg square he, Georges and Florent—a high-school teacher, a medical student and an auditor—huddle over a printout from Google maps. They tick off the streets already trodden, divide up those still to go, and head out for another evening of door-to-door canvassing. With over 3,000 local members, the team has organised 50 political meetings in the area over the past four months, and distributed 150,000 manifestos and flyers. “We’ve shown we can do a lot with very little,” says Mr Studer. + + + +This cheerful trio is part of the army of enthusiastic local volunteers behind En Marche! (“On the Move!”), the movement founded a year ago by Emmanuel Macron, a 39-year-old former Socialist economy minister and one-time investment banker. In their T-shirts emblazoned with the movement’s handwritten logo and bearing festive balloons, they have helped, street by street, to achieve something remarkable: turning a rank outsider once dismissed as a traitor, an upstart, or a dreamer, into someone who could quite plausibly soon be the president. Four days before the first round of France’s presidential election on April 23rd, the polls put Mr Macron, who has never been elected to anything, at the head of the field. The race is very close (see chart 1). But if the first round does indeed go well for him, Mr Macron’s chances in the head-to-head second round on May 7th seem pretty good + +Since the Fifth Republic was set up by Charles de Gaulle in 1958, no independent candidate without electoral experience has come anything like this close to the French presidency. When Valéry Giscard d’Estaing set up a new party, the Independent Republicans, in 1966, it took him eight more years to become president—by which time he had been in parliament, off and on, for almost two decades. Mr Macron’s experience is limited to two years as a staffer to François Hollande, the incumbent Socialist president, and two years as an appointed minister. + +His rise is made all the more extraordinary by the fact that his sunny outlook seems singularly ill-suited to the sullen, angry mood that his main competitors seek to capitalise on. In the 1990s his unapologetically optimistic, market-minded internationalism would have seemed unexceptional; in the 2010s hearing him stir crowds with praise for Europe and openness seems both brave and incongruous. + +But if he is more upbeat than his populist competitors on many subjects, Mr Macron shares one crucial bit of ras-le-bol (fed-up-ness) with France’s voters: he has had enough of the established political groupings that have dominated the Fifth Republic. As a minister he spent nearly 200 hours in parliamentary commissions and debates trying to convince deputies of the merits of his draft law to deregulate Sunday trading, the notary profession, coach transport and other protected industries. He came away convinced that centre-leaning deputies from the left and right might have backed his bill, but party machines tied their hands. + +Less than a year after a watered-down version of the bill was finally forced through the assembly, Mr Macron launched En Marche! in his home town of Amiens, in the Somme region of northern France. The idea, he declared, was to “unblock” France, build cross-party support for reform among those willing to forego party dogma, and bring fresh faces and new thinking into politics. Few paid much heed; the country has a minor history of liberals and centrists who come to naught. Until September last year, no polling group even investigated his potential as an independent candidate. + +But as the campaign heated up the established parties of left and right did their deprecator a big favour. For the first time they both held primaries open to the general public, and both ended up picking a candidate that suited the more radical elements of their respective bases. Benoît Hamon, a Socialist former backbench rebel, sits to the left of his party. François Fillon, a former prime minister, is on the conservative Roman Catholic right of the Republicans. That opened an unusually wide space in the unfashionable political centre for Mr Macron. + +Abandoning the centre did not make the established parties popular with the extremes. Those on the hard and far right have stood by Marine Le Pen of the National Front. Those on the left have in the past few weeks rallied to Jean-Luc Mélenchon, a fist-clenching admirer of Venezuela’s Hugo Chávez. Add to this the fact that Mr Hamon has run a campaign too pallid to give him a shot at the second round and Mr Fillon has been damaged by scandal—his use of the parliamentary payroll to remunerate his wife and two of his children is now under judicial investigation—and you have an unprecedented collapse in support for the groupings that have run France over the past 60 years. + +Three-quarters of voters are telling pollsters that they may back a candidate from neither of the established parties. Fully half of them say they could vote for Mr Mélenchon, Ms Le Pen, or one of the minor fringe candidates—a cause of deep concern for other European countries, since both Mr Mélenchon and Ms Le Pen want, in effect, to break up the EU. + + + +Ms Le Pen, Mr Macron, Mr Fillon and Mr Mélenchon all have a shot at getting through Sunday’s first round. The Economist has built a model based on polling from this and past years to rate their subsequent chances (see chart 2). It offers good news to the mainstream candidates, bad news to those on the extremes. Mr Macron, if he makes it through, appears a strong favourite; whoever she meets in the second round, Ms Le Pen looks highly likely to lose. + +It should be noted, though, that in past elections the main candidates tended to have established parties and the range of views was narrower. This may limit the old data’s predictive value: a lead in the polls that gave, say, a 90% chance of victory in the past may not do so this time round. Jérôme Fourquet of Ifop, a pollster, speaks for many seasoned observers of French politics when he says nothing can be ruled out—even Ms Le Pen v Mr Mélenchon. + +Tax inspectors and peasants + +With 250,000 members En Marche! is now more than twice the size of the ruling Socialist Party. Mr Macron’s supporters tend to be well educated, metropolitan—the Uber-using classes—and happy. Fully 72% call themselves “optimistic”, next to just 29% of those who back Ms Le Pen, who was consistently ahead in the polls earlier in the campaign. “It’s the first time that a candidate is offering something different, something positive,” says a retired tax inspector at a Macron rally in Angers, a cathedral town in western France. But Mr Macron’s support extends beyond the urban well-to-do. At a dairy farm in nearby Mayenne, where village shops shut at lunchtime and mud clings to his city shoes, he draws curious locals as if to a prize breed. “All the other candidates live off politics,” says Patrick Pervis, who calls himself a paysan (peasant). “But Macron hasn’t been in politics; he knows the world of work.” + +Mr Macron sleeps little, reads a lot, lingers with dinner guests until late, and has an uncanny ability to give the person he is speaking to, whether a disgruntled farmer or a visiting entrepreneur, the feeling that he is actually interested in what they have to say. Early in the campaign he used his sense of humour to brush aside a rumour, long circulating in Paris, that he was having a secret gay affair: it must have been his “hologram”, he joked, nodding to a campaign tool used by one of his rivals. He has gathered an eclectic mix of supporters including François Bayrou, a many-time presidential candidate who tried and failed to build popular support for his own centrist politics; Alain Madelin, a liberal ex-finance minister; Daniel Cohn-Bendit, a 1968 rebel-turned-Green politician; and Manuel Valls, a Socialist ex-prime minister who was beaten by Mr Hamon in his party’s primary. + +While Mr Macron is trying to mobilise the France that still waves Europe’s flag at rallies, two other candidates are harnessing the howl of rage against it, and the political establishment more generally. Ms Le Pen campaigns against Europe and the euro, as well as immigration and “Islamism”, with the slogan “In the name of the people”. Mr Mélenchon calls Europe “the dictatorship of banks” and campaigns with the slogan “The force of the people”. While not explicitly in favour of “Frexit”, as Ms Le Pen is, he talks of breaking Europe’s rules and taking back power in a way that the EU—and, particularly, Germany—would be unable to stomach, raising the possibility of France being thrown out of the club it founded (“Frejection”?). + +Mr Fillon is not as much of a Europhile as Mr Macron. And he sides with Ms Le Pen and Mr Mélenchon in favouring closer ties with Vladimir Putin’s Russia. On Syrian refugees Mr Mélenchon and Mr Macron stand together, urging France to be more welcoming; Mr Fillon and Ms Le Pen would keep the door shut. The two on the right were against the legalisation of gay marriage in 2013, with Mr Macron and Mr Mélenchon in favour. The only two candidates with no position in common are Mr Macron and Ms Le Pen. + +In general, though, there are two world views in competition. One is a broadly pro-European, business-friendly approach, embodied by Mr Macron and Mr Fillon. They recognise the need to keep France open and shrink and adapt its state; at the moment public-sector spending is 57% of GDP, higher than any other euro-zone country bar Finland. The other is a protectionist, high-spending, anti-market Euroscepticism, pushed in its left-wing, anti-American version by Mr Mélenchon, and in its xenophobic, anti-immigration brand by Ms Le Pen. Génération Libre, a liberal think-tank, gives Mr Fillon and Mr Macron a 60% “liberal” rating: all the other candidates get less than 34%. + +Mr Macron and Mr Fillon agree on a basic premise: that, over the past ten years, France has lost economic ground to Germany that it must regain. Its GDP has grown more slowly. Its unemployment rate, at 10%, is more than twice as high. And its government budget, which Germany balances, has been in deficit since 1975. + +To set this right they offer variations on reformist themes, promising to free up enterprise, lighten the weight of the state, encourage job creation, reward risk and improve education. Mr Fillon talks a more ambitious game, especially when it comes to shrinking the state. He vows to end the 35-hour week, slash the 3,000-page labour code to just 150 pages, abolish the annual levy on property and financial assets over €1.3m, cut 500,000 civil-service jobs (about 9% of the total) and reduce public spending by €100 billion over his five-year term. + +Mr Macron’s plans are more modest: he proposes to cut 120,000 public-sector jobs and cut €60 billion from annual spending. Rather than removing the 35-hour working week, Mr Macron wants to weaken it by devolving negotiations over working time to firms. Rather than abolishing the wealth tax, he wants to limit its effect by applying it only to property. Overall, Mr Fillon vows to reduce the state’s spending to 50% of GDP by 2022; Mr Macron to 52%. + +“What this economy needs is urgent measures, and a clear signal on day one,” argues Henri de Castries, formerly head of AXA, an insurer, and part of Mr Fillon’s inner circle. Mr Macron prefers a progressive approach, based less on the immediate tightening of existing rules than on a longer-term rethink of the state. “A five-year term cannot consist of six months of brutal reform followed by U-turns,” argues Jean Pisani-Ferry, his economic adviser. + +A good example of the two candidates’ differences is pension reform. Mr Fillon wants to raise the retirement age from 62 years to 65. Mr Macron would keep it as it is and concentrate on a longer term but, he claims, deeper reform which the Fillon team sees as unrealistic: unifying France’s anemone-like pension system, made up of 35 different public regimes, into a single structure with universal transparent rules. He says providing people with the security they need to move from job to job would give the economy a long-term boost. + +Given France’s pesky tendency to resist change, even after voting for it, a key question is whether either candidate would be able to put his plans into practice. The tweedy Mr Fillon, who lives in a grand manor house complete with a chapel and a horse, would be the more polarising figure, likely to provoke strikes and street protests—though his team insists that, if he can resist the popular outrage at the salaries he has paid to his family, he can face down the streets on matters of policy, too. If elected he would stand a decent chance of securing a majority at the parliamentary elections to be held in June. + +The same cannot be said for sure about Mr Macron. He claims he can secure a majority, promising that En Marche! will put up candidates in all 577 constituencies; half, he says, will be new recruits to politics—the party has already received some 14,000 applications—and half will be deputies and local councillors who will leave their old parties. In reality he may well need to seek a cross-party coalition in order to govern. This is an idea alien to national French politics, although, as Benjamin Griveaux, a co-founder of En Marche!, points out, it is fairly familiar at other levels. Gérard Collomb, a Macron-supporting Socialist who runs the city of Lyon, for instance, is backed by an alliance reaching from the left to the centre-right. + +This election campaign, however, has not been about contrasting rival versions of reformist economic policy and the likelihood of their practical implementation. With 11 candidates it has at times felt more like reality television. Comic one-liners, memorable slogans and clips of blunders have dominated social media. When Mr Fillon argued during a debate that industrial relations should be decentralised to firms, the quick-witted Mr Mélenchon retorted: “I’m not in favour of one labour code per firm, just as I am not in favour of one highway code per road.” + +This mood has seemed to play into the hands of those with binary messages, notably Ms Le Pen (no to Europe; yes to France) and Mr Mélenchon (quit NATO; end war on Russia). Mr Macron has found himself the victim of merciless satire over his neither-left-nor-right politics, giving rise to the hashtag #EnMêmeTemps (#AtTheSameTime) as a dig at his perceived ambiguity. “You’ve spoken for seven minutes, and I have no idea what you said,” Ms Le Pen told him during one debate. “Every time you talk, you say a bit of this, a bit of that, and never decide.” + +It is the 65-year-old Mr Mélenchon, a former Trotskyist, who has emerged as the campaign’s revelation, using technology to make his old-school socialism hip in a campaign modelled on that of Bernie Sanders in last year’s American primaries. Mr Mélenchon’s YouTube channel has a huge following; the beaming “hologram” through which he addresses rallies from a distance has been a hit with the crowds as well as a source of quips for other candidates. He has also launched a popular online video game, Fiscal Kombat, which features his character shaking down men in suits to empty cash from their pockets. + +A former Socialist senator, Mr Mélenchon is in some ways an odd sort of revolutionary. He confesses to a fondness for quinoa salads, and owns a big flat in Paris as well as a country pad. Yet in a country with a romantic fascination for revolutionary talk, his pugnacious style and crowd-pleasing promises carry a nostalgic appeal. As well as promising to bust the EU’s deficit rules by spending an extra €170 billion of public money over five years and to pull France out of NATO, the Communist-backed candidate vows to share work by moving to a four-day week and to bring in a top tax rate of 100% for those earning over €400,000. He has a particular weakness for Latin American dictators, and plans to join the “Bolivarian” alliance, alongside Venezuela and Cuba; “France”, he says, “is not a Western country.” + +That he can be a remotely serious contender for the presidency shows the depths of the country’s political disillusion, particularly among the young. Youth unemployment of 25% marks France off from Britain, where younger voters sided with the establishment on Brexit. In France Mr Mélenchon and Ms Le Pen have been the preferred candidates of the under 25s, though polls now show Ms Le Pen losing ground and Mr Macron rising fast. + +Battlefield memories + +In judging the choices before them, first-time voters have no personal basis for comparison. Those running the mainstream candidates’ campaigns, though, do—and as a result feel a deep sense of historic responsibility. Already the faint possibility of a run-off between Mr Mélenchon and Ms Le Pen has prompted a nervous widening of market spreads between French and German bonds. In the more likely scenarios where one or other of them faces either Mr Macron or Mr Fillon and loses, the victor would have a weakened mandate for reform, owing his victory as much to those voting to keep out a populist alternative as to support for his own policies. Though no recent polls have shown Ms Le Pen beating any of the other candidates in the second round, one has suggested that Mr Mélenchon might beat Mr Fillon. + +Back in Strasbourg, where En Marche! volunteers are clambering up stairwells and knocking on doors, the campaigns’ rival aspirations carry particular symbolism. The city lies in Alsace, a borderland scarred—like the Somme—by war between Germany and France; Mr Studer’s grandfathers fought on opposite sides. Pro-European feeling here has deep roots. Yet just 50km away, in the village of Monswiller, over 1,000 locals recently turned out to hear Ms Le Pen, chanting what has become her supporters’ xenophobic battle cry, “On est chez nous” (“This is our home”). It is a chilling reminder that, if Mr Macron wins, he will not only make history. He will also need to heal, and reform, a country that history has deeply divided. + + + + + +United States + + + + +The death penalty: And then there were none + +Politics: Ossoff’s face-off + +The border barrier: Backs to the wall + +Immigrants and deficits: Neither burdens nor saviours + +Post office v pooches: Leash the hounds + +Health-care costs: An arm and a leg + +Population change: Out of the frozen north + +Lexington: Divided by a common border + + + + + +Crime and punishment in America + +Arkansas fails to break an execution speed record + +It will keep trying. But the death penalty is in trouble + + + +Apr 20th 2017 | VARNER, ARKANSAS + +IT WAS 11.15pm at the Cummins Unit, the facility on the Arkansas plains where death sentences are supposed to be carried out, and the clock was ticking. Not in the usual way, however: rather than the condemned man, Don Davis, seeking an emergency stay, on April 17th the state was asking the Supreme Court in Washington, DC, to lift one. The death warrant would expire at midnight; if it did, Arkansas might be unable to dispatch Mr Davis for the foreseeable future. That is because its supply of a drug it intended to use in a run of eight back-to-back lethal injections—a glut of executions unprecedented in the modern era—will soon expire, too. + +The journalists who had been ushered through the electric fences, then past the watch towers and the incongruous rose garden, drew lots to decide who would serve as witnesses. It was unclear whether there was still time for a legal kill. Finally, at a quarter to midnight, the justices declined to lift the stay. Increasingly and chaotically, a gruesome plan that, had it been realised, might have suggested a revival of America’s death penalty, has come instead to seem further evidence of its anachronism. + +Arkansas has an unhappy history of multiple executions: in 1923 a man was taken from his coffin and put back in the electric chair after he was found still to be breathing. Nonetheless, in February Asa Hutchinson, the state’s governor, scheduled eight executions in an 11-day period, two each on four nights, beginning with Mr Davis and Bruce Ward, another convicted murderer. That would have been more than the rest of the country has performed so far this year, and almost half of last year’s national total of 20, which was the lowest since 1991 (see chart). No state has executed two people on the same day since 2000. Arkansas has not executed anyone at all since 2005. + + + +Mr Hutchinson’s haste avowedly stemmed from the trouble that his state, like others, has faced in carrying out legal injections, which had seemed a reassuringly hygienic method, just as the electric chair once did. Because of European export bans and the reluctance of domestic pharmaceutical firms to be involved, states have struggled to obtain the drugs they need. Arkansas is among those to have resorted to unusual shifts, such as importing a batch from a pharmacy run from the back of a driving school in London. Like other states, it has passed rules to cloak its procurement, which, as elsewhere, led to more litigation and delays. The supply it finally secured of midazolam, a sedative, is supposed to be administered by the end of April. When a legal opening arose, Mr Hutchinson issued his warrants. + +Quite apart from the oddity of arranging deaths on the basis of a use-by date, midazolam is controversial. Critics say it does not always numb the pain caused by the other drugs, which prevent breathing and stop the heart; it came into fashion only after preferable anaesthetics were withdrawn. It has been implicated in a series of excruciatingly botched procedures, including one in Arizona in which Dale Baich, a public defender, saw his client take nearly two hours to die. It was “by far the most difficult to watch” of the 12 lethal injections Mr Baich has attended. Several states have renounced midazolam; a federal court in Ohio recently blocked its use (though the Supreme Court has permitted it). On April 15th a federal court stayed all the Arkansas executions on the grounds that midazolam might indeed lead to unconstitutional “cruel and unusual” punishment. + +That order was reversed on appeal on the afternoon before Mr Davis and Mr Ward were meant to die—the judges ruling, in effect, that their colleague was too squeamish about the risk of pain. Still, this bout of litigation over lethal-injection cocktails was important because of the role of drug companies, two of which filed objections to the use of products apparently procured through middlemen. In separate actions in a county court, McKesson, a distributor, accused Arkansas of obtaining a drug through deception. The original judge in that case granted a restraining order, then lay down on a mock gurney at a protest outside the governor’s mansion; he now faces disciplinary action. + +In the end Mr Davis—pictured, top left—was saved by different considerations. The Arkansas Supreme Court issued a stay until the federal one hears a forthcoming case concerning the right of defendants to enlist independent mental-health experts. Mr Ward was covered both by that and a separate ruling regarding his competence to be executed (he hallucinates about dogs at the end of his bed). A third man, Jason McGehee, slated to die on April 27th, won a stay after the parole board recommended clemency. + +So many ways to live + +“Our country does not participate in mass executions,” lawyers for the men maintained. They may be right. The Arkansas eight are dwindling. Those remaining have likewise been convicted of heinous crimes. On the other hand, say their lawyers, they too can muster mitigating factors: childhood abuse, mental disability, lousy representation at their trials. As The Economist went to press, Stacey Johnson, whose execution was to be on April 20th, had earned a stay to allow him to pursue DNA testing. After yet another ruling, McKesson’s complaint offered hope to Ledell Lee, who shared Mr Johnson’s death date and, like him, protests his innocence. + +Arkansas’s officials harrumph about justice being thwarted. But even if, in some cases, they prevail, the rigmarole has shown that there are many sound reasons not to execute someone. Along with the myriad legal objections, it has highlighted the costs to those charged with overseeing the process. A group of former prison officials warned the governor that his eight-kill scheme would impose “unnecessary stress and trauma” on staff at the Cummins Unit and increase the risk of a botch. The state reportedly struggled to find enough citizen witnesses; the prisons chief is said to have solicited volunteers at a Rotary Club event. The waning enthusiasm for the death penalty of another group of laymen—juries—is a big factor in its decline. + +Mr Davis spent April 17th in a cell opposite the death chamber. He had been there before, in fact, on another occasion when his demise was forestalled at the 11th hour. In the gathering execution-night mood—part hospital vigil, part crime scene—he was served a last meal, that ghoulish ritual. The state gave up its bid to do away with Mr Ward earlier in the evening, but relatives of both men’s victims were at the prison. They were put “through hell”, said Mr Hutchinson’s spokesman, after the Supreme Court ruled and the clock ticked down. No doubt. + + + + + +Jon Ossoff’s campaign + +The Democrats fall just short in Georgia + +They could yet prevail in June + + + +Apr 22nd 2017 | SANDY SPRINGS + +“NO RUN-OFF”, exhorted a sign at Jon Ossoff’s campaign office in Sandy Springs. As it turned out, in the special election for Georgia’s sixth congressional district on April 18th—for a seat vacated by Tom Price, now Donald Trump’s health secretary—the Democrat fell just short of the 50% needed to avoid a second round. Mr Trump thus narrowly escaped an ominous rebuke in the sort of place Democrats hope to flip in elections next year. + +Mr Ossoff was a somewhat unlikely face for the resistance. Just 30 years old, he has managed a short stint as an investigative film-maker and a longer one as a congressional aide. Yet, with 48% of the vote, he almost seized what has been safe Republican territory since the 1970s. He was propelled by three big factors, not all of which will apply elsewhere. + +First, Republican voters in the district—a stretch of mostly well-heeled, white and well-educated Atlanta suburbs—were never wild about Mr Trump. He only just prevailed there in November, whereas Mr Price, and Mitt Romney in 2012, won it thumpingly. That left the Republicans in the race ambivalent about how tightly to embrace him; the most devoted of them fared badly. And—second—there were lots of Republicans in the race: 11 in what was an open contest. They split their vote and spent a lot of time attacking each other. + +Third, Mr Ossoff was buoyed by an astonishing surge of donations—he raised more than $8m, mostly from elsewhere in America—and by legions of volunteers. A group of women waving “Vote your Ossoff!” signs in Dunwoody said that they had been shaken out of political timidity by Mr Trump’s antics and the women’s march in Washington. Mr Ossoff, one claimed, is “wise beyond his years.” + +The man himself tried both to channel the anti-Trump indignation and to insist that local issues mattered, too. For his part the president criticised Mr Ossoff on Twitter and in a robocall to voters. “Glad to be of help!”, he tweeted, as Mr Ossoff fell short. Possibly the millions of dollars’ worth of attack adverts funded by outside Republican groups had more impact. Mr Ossoff was variously portrayed as a stooge of Democratic bigwigs, an associate of terrorists (his company has worked for Al Jazeera) and wearing a Han Solo costume at college. “I threaten the entrenched special interests,” he explains. + +The question now is whether he can prevail against a unified Republican front. His opponent on June 20th will be Karen Handel, a former Georgia secretary of state and failed candidate for governor and the Senate. Moreover, can Democrats who do not benefit from the zany dynamics of his campaign hope for the same momentum, especially when the first shock of Mr Trump’s rise wears off? “We are changing the world,” Mr Ossoff told supporters on election night. We shall see. + + + + + +What the locals think + +Not so hot on the border wall + +That could spell trouble for Donald Trump + +Apr 20th 2017 | OTAY MESA + +WILLIAM, a tractor-trailer driver, leans against his navy blue truck and stares across the highway to the crowded hills of Tijuana. He voted for Donald Trump, but roundly opposes the president’s plans for a new border wall. “People will find a way around any wall. And it’s going to be you and me paying for it,” he warns, as NPR, a public-radio station, streams from his radio. His attitude, which is surprisingly widespread along the border, hints at trouble for the president. + +On April 10th the customs and border protection agency announced that it will test prototypes of Donald Trump’s proposed wall somewhere in the Otay Mesa area after it chooses finalists this summer. A barricade covered in solar panels, a wall topped by a monorail and an obstacle course in which one of the barriers is a 100-foot ditch full of nuclear waste are just some of the hundreds of proposals the department will choose from. + +Otay Mesa is a natural place to test a wall (which is unlikely to be so whimsical), suggests Eric Frost, who directs the homeland-security graduate programme at San Diego State University. The border crossing is one of the county’s busiest but Otay Mesa still has enough open land for new construction. “The prototypes need to interact with real people and real cars and real trucks. It doesn’t make sense to build them in the middle of the desert,” he says. + +The trouble is that Otay Mesa is Democrat territory: the congressional district in which it lies voted overwhelmingly for Hillary Clinton. Nationally, only 8% of Democrats support a new border wall, compared with 74% of Republicans, according to the Pew Research Centre, a think-tank. Moreover, Republicans who live close to Mexico seem less keen on a wall than Republicans farther from the border. Locals are used to the sight of immigrants working at undesirable jobs, explains Silvia Lopez, a registered Republican who sells insurance in an Otay Mesa strip mall. Like other border-dwellers, she knows something that other Americans often forget: “We already have a wall.” + +California’s lieutenant-governor, Gavin Newsom, has hinted that California’s powerful environmental laws could stymie building. Obstruction could spread. Of the 22 counties in California, Arizona, New Mexico and Texas that share a border with Mexico, 14 voted for Mrs Clinton last November (see map). + + + +At least the federal government owns a lot of land in southernmost California. In Arizona, a large stretch of the border belongs to the Tohono O’odham, a Native American tribe. In Texas, which has far less fencing than America’s other border states, most border land is in state or private hands. The Trump administration would have to use eminent domain to acquire any private lands—a lengthy process that involves negotiations, value appraisals and, often, lawsuits. Time, perhaps, for Mr Trump to demonstrate his vaunted deal-making skills. + + + + + +Neither burdens nor saviours + +Immigration cannot plug the hole in America’s budget + +Supporting an ageing population would require more high-skilled immigration than is feasible + + + +Apr 20th 2017 | WASHINGTON, DC + +ON APRIL 12th almost 1,500 economists of varied political hues wrote to Donald Trump, urging him to consider the advantages of immigration. The benefits to America “far outweigh” the costs, they explained. Not only are immigrants often skilled (especially in the sciences) and entrepreneurial, they also tend to be young. As the baby-boom generation enters retirement, a demographic counterweight will come in handy. + +Mr Trump, who did not win the presidency by listening to economists, proceeded to order a review of high-skilled visas on April 18th. The order is vague; his language was not. “We’re going to defend our workers, protect our jobs and finally put America first,” he said. On this issue the wonks can stand firm: highly educated immigrants are indisputably good for America. Still, they should not claim too much. As a treatment for America’s long-term budgetary malaise, immigration is probably more of a painkiller than a cure. + + + +The effects of immigration are hard to calculate, for three reasons. The first concerns timing. Were it not for immigrants and their children, the working-age population would be shrinking (see chart 1). More workers means the cost of supporting retirees is spread over more people. But these new taxpayers will eventually retire and claim benefits themselves. By 2050 nearly a third of the foreign-born population is expected to be over 65. + +A second difficulty is that the costs and benefits of immigration fall on different levels of government. Workers pay federal taxes, but get comparably little back from the central government until they retire. In the interim, state governments pay to educate their children, at an average cost of $11,000 a year per child. + +Consider a related issue—the effect of legalising illegal immigrants already in America. The immigration reform that passed the Senate in 2013, only to fail in the House of Representatives, would have reduced deficits by 0.1% of GDP in its first decade and 0.2% of GDP in its second, according to official estimates. That bill would have provided a path to citizenship for illegal immigrants, which would have made them eligible for social security after ten years of work. Yet the cost of these pension promises was largely invisible, and even the short-term estimates covered only the federal budget. The Heritage Foundation, a conservative think-tank, claims that the full cost of a so-called “amnesty”—ignoring other parts of the reform—is $5.3trn over 50 years, assuming no future changes to entitlement spending. + +The final problem is the number of fiddly assumptions needed to work out the fiscal contribution of anyone, let alone immigrants. How, for instance, should analysts treat spending on public goods, such as defence? This need not rise with population, but in practice it tends to. At what rate should they discount the tax payments of immigrants’ descendants? How might taxation and spending change in future? + + + +A large panel of economists, convened by the National Academies, has tried to untangle this mess. Last September they estimated the fiscal impact of immigrants over 75 years, under different sets of assumptions. One scenario is shown in chart 2. It ignores public goods and assumes that taxes and spending grow at the same rate as productivity. It shows that, like natives, immigrants tend to benefit the treasury only if they are well-educated. The net contribution of an immigrant with a bachelor’s degree is worth over $200,000 now. A thinly educated immigrant costs $115,000. + +Broadly, immigrants to America are less educated than natives. In recent years, 21% had less than a high-school education, compared with 7% of American-born folk. This brings down their estimated fiscal contribution over 75 years to $92,000 each (under the given assumptions). If all immigrants, rather than only recent ones, are counted, the number turns negative. + +Might low-skilled immigrants instead contribute to the coffers by having plenty of children? Immigrants have a fertility rate (the number of children per women) of 2.3, compared with 1.9 among natives. Their children are more socially mobile, which also helps. Partly as a result, a 25-year-old immigrant is almost always a better bet for the public purse than a 25-year-old native with a comparable education. + +Yet immigrants’ social mobility is still low in absolute terms. Children of foreign-born parents who did not finish high school are thought to have less than a one-in-fifteen chance of graduating from college. The descendants of low-skilled immigrants are likely to remain a fiscal drag. + +Even on the rosiest assumptions, much more immigration than is feasible would be needed to support the greying native population. The most generous model values the likely net fiscal contributions of a graduate immigrant of working age, and of his or her descendants, at a little over $500,000 over 75 years. A rough calculation suggests that almost 40m such immigrants would need to arrive immediately in order to fill the hole caused by social-security payments and hospital visits for the over-65s. They would have to be followed by 36m more by 2047—arrivals that are already baked into budgetary forecasts. Migration on such a scale seemed unlikely even before the immigrant-bashing Mr Trump came along. + +Whether they come as immigrants or as babies, new arrivals cannot change the fact that America promises more in benefits to its residents than it takes from them in taxes. Highly skilled migrants help the public finances—more so, probably, than comparably educated natives. But they cannot provide much of an escape from the coming fiscal squeeze. + + + + + +Dogs and postmen + +For posties, online shopping has an unpleasant bite + +Roll on drone delivery + + + +Apr 20th 2017 | NEW YORK + +CHISELLED in granite on a post office in Manhattan is the United States Postal Service’s unofficial motto: “Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds.” Dogs sometimes do, though. The number of canine attacks on postal workers has climbed from 5,581 in 2013 to 6,755 in 2016. Most attacks occur in cities, where postal workers often walk to make deliveries. Los Angeles has the worst record, with 80 dog attacks last year, followed by Houston with 62. + +Thanks to e-mail, online banking and the like, the postal service delivers many fewer letters than it used to. The volume of first-class mail it handles has dropped from 91bn items in 2008 to 61bn in 2016. But internet shopping has led to a jump in parcel deliveries—up from 3.3bn to 5.2bn in the same period. Posties with parcels often knock on doors, which gives the dogs an opportunity. + +Following a rise in canine attacks in 2015, the post office launched an app on postal workers’ hand-held scanners that warns of dogs at certain houses. Owners of repeat offenders are told to pick up post at a nearby post office. If a loose dog plagues a postman, delivery to an entire neighbourhood can be suspended. Carriers are also trained to use their satchels as barriers and carry pepper spray. Some carry dog biscuits to distract aggressive and hungry mutts. + +Dog attacks cost the postal service $2.8m in medical compensation and other expenses last year, up from $1.2m in 2011. Half of the attacks in 2016 required medical treatment or time off from the mail route. The postal service has asked customers to put dogs in a different room before opening the door. But the danger is unlikely to disappear. Another reason to hope that Amazon can make drone deliveries work—though those drones could be worth a nibble, too. + + + + + +Obamacare and after + +Even with insurance, American medical care can be ruinous + +An arm and a leg for treatment + + + +Apr 20th 2017 + +ALTHOUGH Donald Trump occasionally pokes it in the ribs, the fight seems to have gone out of the Republican effort to reform America’s health-care system. That is a shame, not because the first attempt at reform was well-judged, but because the system badly needs attention. Seven years after Obamacare became law, health care remains ruinously expensive. + +Even as the number of people without insurance has fallen, the proportion of Americans who struggle to pay for treatment has hardly budged. In February of this year, 29% of people said they or a family member had struggled to pay a medical bill, according to a poll by the Kaiser Family Foundation; in March 2010, 30% said the same thing. About 60% of the strugglers in the latest poll had used up most or all of their savings; nearly three-quarters had cut back spending on food, clothes and basic household items. + +Strikingly, 30% of people with health insurance reported struggling—not much lower than the 41% without insurance who did so (retired people, who are covered by a government scheme, fared better: only 20% said they struggled). One reason is that insurers have been passing on more medical charges to patients. A typical insurance plan has a long list of things for which patients must pay a share. In high-deductible plans, which are increasingly popular, families must pay at least $2,600 before any insurance kicks in. Last year a quarter of employers, through whom most Americans get health insurance, offered only high-deductible plans. Some two-fifths plan to do so in the next three years. + +Insurance can be alarmingly patchy. A surgeon who stitches up a patient rushed to the emergency room may not be covered by the patient’s health insurance, even when the procedure takes place at a hospital where a stay would be covered. A survey in 2015 found that a third of Americans with private insurance had received such surprise bills, often from an anaesthetist or another doctor. + +Patients often do not help themselves even when they can. Only half of Americans have tried to find out what they would be charged before seeking care, according to a recent survey by Public Agenda, a think-tank. Most people think, wrongly, that all doctors and hospitals charge about the same. + +In the public’s defence, health plans are opaque and complicated. Many people do not know what type of plan they have because so many have cryptic names, says Larry Levitt at the Kaiser Family Foundation. Working out costs in advance is so tricky that the University of New Hampshire has started offering education on health-care literacy. David Schleifer, who led the Public Agenda survey, says the task can be mind-boggling. To find out the cost of a hernia operation, he had to peruse the list on the insurer’s website, call the hospital to ask about the specific billing codes for the procedure and then call the insurer to check the patient’s payment for those codes. Those who lack his nous must hope that their health holds. + + + + + +Snow belt to sun belt + +Migration southward and westward is picking up again + +Why Chicagoans are leaving in droves + + + +Apr 20th 2017 | CHICAGO + + + + + +Lexington + +America and Canada, divided by a common border + +Two towns on either side of the border treat refugees very differently + + + +Apr 22nd 2017 + +A MILE of water divides the American village of Morristown from its Canadian neighbour, Brockville. Their economies were once closely linked, with small factories on each bank of the St Lawrence river producing patent medicines such as Dr Morse’s Indian Root Pills and Dr Williams’ Pink Pills for Pale People. Old folk remember winters when the river froze, and trees jammed into the ice marked a path to Canada. Both towns are conservative. The elected town supervisor of Morristown, Frank Putnam, a Republican, is especially exercised by welfare spending in his county, a struggling tract of upstate New York sustained by dairy farms, summer tourism and two state prisons. + +Now a debate with worldwide resonance has revealed differences between the two settlements. In common with cities across Canada, Brockville has volunteered to host Syrian refugees. Residents, church groups and civic leaders are raising about $25,000 in private funds to sponsor each family for a year. Across the St Lawrence, by contrast, Mr Putnam is sure that the cost of receiving refugees would cause “alarm” in Morristown. He supports President Donald Trump’s attempts to halt refugee arrivals from Syria and impose “extreme vetting” on other travellers. Mr Trump wants a “time-out” to fine-tune security, says Mr Putnam, in private life a salesman for Cowsmopolitan, a magazine for dairy farmers: “Where’s the dirtiness in doing that?” + +Brockville is in southernmost Canada, a busily affluent region, Morristown in northernmost New York, an area in long-term decline. These diverging economic fortunes give people “a different outlook”, suggests Mr Putnam. Morristown is not invariably hostile to outsiders, he insists: nearby farms employ Central Americans in jobs that “entitled” locals shun. But many resent being taxed to pay for welfare for less assiduous folk. The terror attacks of September 2001 also left a mark. The border patrol often erects road blocks on the highway; river security can be “extreme”. Canada has been “pretty unscathed” by terrorism, he says, whereas America is “a little gun-shy.” + +Yet attitudes to refugees seem too visceral to be explained by economics or recent history alone. An hour down the road from Morristown, in Watertown, reverberations continue from a council meeting last October at which speakers outlined an economic and moral case for welcoming refugees. The council member behind that discussion, Teresa Macaluso, has been accused in local blogs of wanting to import terrorists. Constituents telephoned to thunder: “We look after our own.” At the next meeting, a local shouted about Muslims raping women and beheading people. + +The counties around Morristown and Watertown voted decisively for Mr Trump. “People believe in Trump’s rhetoric that refugees are bad,” Ms Macaluso sighs—even though, she says, nearby cities such as Utica have benefited from refugees buying abandoned houses and starting businesses. Ms Macaluso, a retired nurse, is braced for a backlash at her next election in November. If she loses, “So be it.” + +Ms Macaluso has allies. The Roman Catholic diocese that covers Morristown and Watertown has called for compassionate immigration laws and is about to twin with a Maronite diocese in Latakia, Syria, offering support to Christians trying to survive there. Father Steven Murray, pastor of Holy Family Church, believes that Watertown will receive refugees one day. “In the present climate,” though, he believes the State Department would not grant the required certification to a refugee committee. + +Father Murray, who grew up in the American border town of Ogdensburg, near Morristown, argues that Canada has always been more open. Go back to the 19th and early 20th centuries, when upstate New York boomed and, he says: “We didn’t want the Irish here, then they didn’t want the Italians here.” + +In Canada Brockville’s mayor, David Henderson, agrees that security has changed the river: he remembers windsurfing to America as a teenager to buy illicit beers. He also suspects that a big terror attack could shake the broad consensus that has seen over 40,000 Syrians welcomed to Canada since November 2015, about a third of them privately sponsored. Even now, perhaps a fifth of his residents are “uncomfortable” with refugees: he works hard to deal with concerns and rumours. But, crucially, his city of 22,000 people, 95% of them whites of European descent, knows that without new families it will shrink. + +The North America that never staged a revolution + +Canadians are relatively trusting of the state, adds Jacqueline Schoemaker Holmes, head of “Refugees for Brockville”, an umbrella group for private sponsors. A poll in March found that 41% of Canadians think that recent flows of asylum-seekers across the snowy border from America will make their country less safe—a trend that may yet threaten the vocally pro-refugee stance taken by the prime minister, Justin Trudeau. But to a striking degree, Ms Schoemaker Holmes suggests, Canadians have “faith in their government” to ensure that refugees are given a haven and are properly vetted. Americans seem more “individualistic”. + +Brockville’s newest refugee, an engineer from Damascus, arrived in February with his wife and three children. He asks not to be named to protect family still in Syria. The “majority” of Brockvillians have been friendly, he says. He hopes to start a business with Ahmad Khadra, an old friend from Syria who emigrated to Canada in 1995. Though Canada will offer welfare payments to refugees who do not find work, Brockville’s Muslims are anxious that newcomers find jobs. Some refugees have “less than zero education”, concedes Mr Khadra, so parents struggle. But their children are thriving at school; he is sure they will go on to be productive citizens. Mr Khadra thinks Canadian-American differences go back to the War of Independence: only one country chose a revolution. His adopted country is “more civilised, I’m sorry,” he apologises. Spoken like a Canadian. + + + + + +The Americas + + + + +Corruption in Latin America (1): Fachin victims + +Corruption in Latin America (2): The long arm of the policía + +Argentine history: Two shades of blue + +Bello: Chile in a Spanish mirror + + + + + +Fachin victims + +New Brazilian corruption probes and their consequences + +Despite a mounting scandal, the government soldiers on + + + +Apr 20th 2017 | SÃO PAULO + +THE latest revelations of wrongdoing in high places struck Brazil with the force of a Netflix release: they are riveting, but so far have left the real world undisturbed. On April 12th Edson Fachin, the supreme-court justice who is overseeing a vast probe into corruption centred on Petrobras, the state-controlled oil company, authorised prosecutors to investigate eight government ministers, 24 senators, 39 deputies in the lower house of congress and three state governors. He sent dozens of cases to lower courts; they will now consider whether to launch new criminal inquiries into nine more state governors and three former presidents. All the big political parties and most front-runners in next year’s presidential election have been tarnished (see chart). + + + +This fresh scourging of the political class comes at an awkward time. Brazil’s worst recession on record has not ended. Michel Temer, who became president last year after the impeachment of his predecessor, Dilma Rousseff, hopes to stabilise the economy by enacting reforms. His approval rating is a dismal 20%; that of his government is ten points lower. Yet the storm of scandal has yet to capsize reforms or sink hopes of an economic recovery. The value of Brazil’s currency, bonds and the index of the main stock exchange weakened after Mr Fachin’s revelations, but only briefly. The extensive new inquiries “had largely been priced in”, says Cláudio Couto, a political scientist at Fundação Getulio Vargas, a university in São Paulo. + +One reason for that is that Mr Fachin’s targets are only being investigated, not indicted. He based his decision on statements by 78 former executives of Odebrecht, a big construction firm, who testified as part of plea bargains with prosecutors. One testified that Odebrecht funnelled $3.3bn to politicians between 2006 and 2014, the equivalent of 80% of its net profits over the period. Most of this money came from padded contracts awarded to the company by state-controlled entities, including Petrobras. (Odebrecht has admitted to bribing officials in 11 other Latin American and African countries.) + +The testimony disclosed by Mr Fachin, and analysed by Brazilian journalists, reveals how much money the politicians allegedly received, to enrich themselves, their parties or both. Guido Mantega, a former finance minister from Ms Rousseff’s Workers’ Party (PT), reportedly got 93m reais ($30m). Aécio Neves, a senator (and potential presidential candidate) from the Party of Brazilian Social Democracy (PSDB), part of Mr Temer’s coalition, allegedly received 65.5m reais. Everyone on Mr Fachin’s list denies wrongdoing. Odebrecht witnesses claim that Mr Temer himself was present at meetings where illegal campaign donations were discussed, which he denies. He is immune from prosecution for any crime he might have committed before he became president. + +Mr Temer is striving to project an air of normality. The disclosures, he says, are “staggering”, but “we have to move ahead”. He has said he will only dismiss cabinet ministers who are formally charged. Although the supreme court has given Mr Fachin extra manpower to deal with the massive caseload, that may take months. The compromised cabinet has some breathing room. + +Congress, too, is trying to conduct politics as usual. Most members of Mr Temer’s centrist coalition, including his Party of the Brazilian Democratic Movement (PMDB), see economy-strengthening reforms as the only way to regain credibility with voters. The reforms themselves are not popular. Plans to liberalise labour laws, for example by deregulating working hours, are not a vote-winner. Still less is a proposal to fix the ruinously expensive pension system, Mr Temer’s most important policy. Trade unions linked to the PT, which is as mired in scandal as government parties, have called a general strike against pension reform on April 28th. + +Nervous congressmen have forced Mr Temer to compromise. He has agreed to set a lower minimum pension age for women than he had planned (62, rather than 65) and to ease transition rules for men and women. This reduces the prospective savings from pension reform by 170bn reais over ten years. Even so, it should still save the government a substantial 630bn reais over that period. If it goes through, women will retire ten years later than they do now on average. That is probably enough to reassure the central bank, which has been cutting interest rates, mainly in response to lower inflation. Without the prospect of savings on pensions, the central bank might reduce rates more slowly, which would hurt the economy. + +Mr Temer is fortunate that voters are feeling cynical rather than fired up. There are no plans to repeat the big anti-corruption protests that helped topple Ms Rousseff last year. Disclosure of Mr Fachin’s list has reassured Brazilians that the dragnet is going ahead without interference. + +Any attempt by congress to change that would revive the outrage, warns João Castro Neves of Eurasia Group, a political consultancy. Earlier this year the legislature tried to give its members amnesty for taking undeclared campaign donations, but backed down in the face of popular opposition. The uneasy political calm could also end if congressmen start testifying against one another, or if investigations turn into indictments. Mr Temer has so far kept reforms moving forward and the scandal-plagued government afloat. His job is getting harder all the time. + + + + + +The long arm of the policía + +The arrest of two fugitive Mexican governors + +Their flight was embarrassing. Their capture is a good sign + + + +Apr 20th 2017 | MEXICO CITY + +ONE of the odder pieces of evidence turned up by investigations of Javier Duarte, a former governor of the state of Veracruz, was an exercise book with his wife’s scrawl. “Sí merezco abundancia” (“Yes I deserve wealth”), she had written, over and over. During six years in charge of the state on the Gulf of Mexico, Mr Duarte allegedly did his best to acquire it. He was arrested at a resort in Guatemala on April 15th, after six months on the run. Five days earlier Tomás Yarrington, an ex-governor of the northern state of Tamaulipas, was nabbed in Florence, Italy. He had been eluding justice for five years. + +The two fugitive governors are both former members of the Institutional Revolutionary Party (PRI), to which Mexico’s president, Enrique Peña Nieto, belongs. The attorney-general has investigated at least 11 state governors since 2010, nine of them from the PRI. Mr Peña once praised Mr Duarte and two other tainted governors as exemplars of the PRI’s “new generation”. This does its image no good ahead of an election in June in the State of Mexico, Mr Peña’s political home. The outcome will be a harbinger of next year’s presidential election (in which Mr Peña cannot run again). The governors’ arrest is a sign that the country is cracking down on corruption, though not yet hard enough. + +Veracruz under Mr Duarte became “a state of terror”, according to the International Crisis Group, an NGO. At least 17 journalists were killed during his administration, from 2010 to 2016. He is being investigated on suspicion of having moved 233m pesos ($12m) of public money into ghost companies. Mr Duarte’s successor alleges that state hospitals administered fake cancer drugs to children during his rule. In 2016 the PRI lost control of the state for the first time in more than 80 years. Mr Duarte resigned in October, two months before the end of his term, and disappeared by the time an arrest warrant was issued a few days later. + +Mr Yarrington, who governed Tamaulipas from 1999 to 2005, has been charged with collaborating with the Gulf Cartel, a drug gang. According to the Wall Street Journal, the state’s government provided bodyguards for him even as he was on the run from federal charges. + +Such crookedness is an old problem. “Corruption is not a disagreeable characteristic of the Mexican political system: it is the system,” wrote Gabriel Zaid, an essayist, 30 years ago. At state level it may have got worse. When Mr Zaid was writing Mexican presidents (all of them priistas) removed governors almost at will. With the arrival of democracy in the 1990s power was dispersed and the president’s influence waned. In 2000 Vicente Fox of the National Action Party became the first non-PRI president in seven decades, but faced governors who were mostly from the former ruling party. To win their co-operation he sent more money and gave them licence to behave more or less as they wished. His successors have continued that practice. + +The arrests of Messrs Duarte and Yarrington suggest that tolerance is waning. A freedom-of-information law (in force since 2003), social media and more assertiveness by the press and civil society have made it harder for politicians to get away with wrongdoing. The federal government faces the most scrutiny, but the demand for accountability is spreading to the states. A new “anti-corruption system” is supposed to police all levels of government, by co-ordinating corruption-fighting agencies and strengthening the federal auditor, among other things. It has yet to make a difference. Mr Peña no doubt hopes that voters will remember his party for chasing wrongdoers rather than advancing their careers. + + + + + +Two shades of blue + +A row over the colours in Argentina’s flag + +Putting the vex in vexillology + +Apr 20th 2017 | BUENOS AIRES + + + +ARGENTINA’S national colours are instantly recognisable. The flag’s sky-blue stripes and golden sun adorn everything from football shirts to fridge magnets. A huge monument in Rosario, a port city, marks the site where Manuel Belgrano, a founding father, raised the first flag in 1812. On the anniversary of his death, June 20th, schoolchildren pledge to honour the “white and sky-blue” colours. + +But are they saluting the right shade of blue? A study published in a recent edition of Chemistry Select, a peer-reviewed journal, suggests not. Researchers at Argentina’s scientific research council (CONICET) and Brazil’s Federal University of Juiz de Fora examined silk threads from what is thought to be the oldest surviving flag, the enormous but faded San Francisco flag. The shocking discovery: its blue was ultramarine, a much darker pigment. + +This is about more than just getting the tint right. Years of civil war followed Argentina’s independence from Spain in 1816. The Federalists, led by Juan Manuel de Rosas, a bloodstained autocrat, fought for decentralised government with strong provinces under dark-blue colours. The Unitarians, who wanted a strong central government in Buenos Aires, rallied to the lighter shade. The dark-hued Federalists ruled from 1831 to 1852 but were eventually defeated by the sky-blue Unitarians. The colour war has never really ended. “These two visions of the country still persist,” says Francisco Gregoric, a vexillologist. + +After the Unitarians’ triumph, most Argentines assumed that Belgrano’s flag must have been light blue, despite his reluctance to back the faction. That belief was shaken when researchers took a close look at the San Francisco flag, which they say was made in Europe in 1814. Though it has been bleached by age and by dust stirred up by decades of sugar-cane harvests, scientists used chemical analysis, X-rays and spectroscopy to determine that the pigment in its blue stripes was made from lapis lazuli, which produces the darker shade. + +Carlos Della Védova, a researcher at CONICET, says the findings apply only to the San Francisco flag (which, unlike modern ones, does not bear the 32-pointed “sun of May”). Still, he thinks, Belgrano’s original was probably the same colour as that of the San Francisco flag. The newer flag was a gift to the Temple of San Francisco, a school in the northern province of Tucumán, from Bernabé Aráoz, a comrade-in-arms of Belgrano. Mr Della Védova doubts the two soldiers took different views of hue. “Aráoz was aware of Belgrano’s ideas about the flag,” he says. + +Some historians detect in the colour shift a sneaky attempt to rehabilitate De Rosas’s reputation. Juan Pablo Bustos Thames, author of a book about the San Francisco flag and owner of a full-scale (sky-blue) replica, says the scientists ignored contemporary documents that attest to a lighter colour. Manuel Belgrano, a descendant of the independence hero, says it is unthinkable that his ancestor would have favoured ultramarine. “There’s no doubt about the colour”, he told Clarín, a newspaper. + +Whatever the truth, Argentines will not soon wave ultramarine flags. In 2002 IRAM, the national standard-setting agency, confirmed the lighter colour by specifying its co-ordinates in the Lab colour system. It also set out how thick the stripes should be and how the sun should look. A decree in 2010 by the then-president, Cristina Fernández de Kirchner, enshrined those standards in law. Argentines are not about to change their stripes, whatever the chemists say. + + + + + +Bello + +Chile in a Spanish mirror + +Transatlantic lessons for Michelle Bachelet’s heirs + + + +Apr 20th 2017 + +A LONG dictatorship ended in a negotiated transition to democracy. The centre-left took office with a moderate programme, reassured the right by pursuing pro-market economic policies, added better social provision and reconnected the country to the world. Power later switched to the right, which persuaded the country that it had become democratic. Then the centre-left returned, this time as a new generation critical of the compromises of the transition. It veered further left but faced economic difficulties. + +Spain? Yes. But Chile, too. Since the dictatorships of Generals Franco and Pinochet, politics in the two countries has run along uncannily parallel tracks, with Chile lagging Spain by ten to 15 years. In Spain, Felipe González, the Socialist prime minister in 1982-96, laid the foundations of democracy, combining liberal economic reforms with a new welfare state and leading the country into Europe. When José María Aznar of the conservative People’s Party (PP) took over, he continued many of Mr González’s policies. Then the Socialists returned under José Luis Rodríguez Zapatero, who confronted the right through progressive social reforms (such as abortion and gay marriage) and by approving a Law of Historical Memory, an implicit criticism of the amnesty agreed during the transition. + +Spain’s transition served as an example for democrats in Chile, where the centre-left Concertación coalition governed in the mould of Mr González from 1990 onwards (though with a more timid increase in public spending and welfare provision). In 2010, with Pinochet dead and discredited by his indictment for human-rights abuses by a Spanish judge, Sebastián Piñera, a billionaire businessman, won power for the centre-right. Like Mr Aznar, he followed policies similar to his predecessor’s. Then in 2014 Michelle Bachelet, who in her first term governed for the Concertación as a moderate, came back determined, like Mr Zapatero, to shake up the transition settlement, though in a different way. She has tried to push through reforms of tax, education, labour, pensions and the electoral system, as well as a new constitution, with the aim of replacing “the model” bequeathed by the dictatorship. One of her allies called this deploying a “retroexcavadora” (backhoe loader) against this legacy. + +In Spain, Mr Zapatero’s government was overwhelmed by the euro crisis, which spawned Podemos, a new far-left party. The crisis, and then the left’s divisions, have delivered successive election victories for Mariano Rajoy and the PP. Chile has not suffered anything as dramatic. But the economy has grown sluggishly since 2014, partly because of the uncertainty caused by Ms Bachelet’s reforms, many of which have been clumsily handled. + +Does the Chilean centre-left, now called the New Majority, face a Spanish future of division and defeat? The main credential of its likely candidate in a presidential election in November, Alejandro Guillier, is his past as a television anchorman. Although a senator since 2014, he comes over as a new face who is not part of a political class that, as in Spain, has been discredited by scandals. His ideas seem vague: he has both presented himself as a moderate and called for “rupture” with the present. Some on the centre-left call him a populist. Above all, he seems to stand for a continuation of Ms Bachelet’s model-breaking approach. + +That may not help him. She is unpopular. Mr Guillier may also face rivals within the New Majority: the Christian Democrats may run their own candidate. A stronger far-left, akin to Podemos, has emerged from student protests in 2011. + +With seven months to go, the election is still open, but it looks like Mr Piñera’s to lose. That seems to be the view of Ricardo Lagos, the most successful of the Concertación presidents. At the age of 79, he sought the support of the Socialist Party only to be snubbed in favour of Mr Guillier. In announcing his withdrawal this month he warned of the “strategic dispersion” of progressive forces” and a “conservative…restoration that could last many years”. + +In Chile, as in Spain, the transition ushered in the most successful period in the country’s history, with greater prosperity and social progress. In both cases the centre-left began to go astray when it ceased to believe in its own success. That is not to deny that both countries have now moved on, and that both have new problems that need solving. Chile needs better public services and environmental regulation, less abuse by monopolies and a less unequal society. That amounts to improving “the model” rather than replacing it on ideological grounds. The job may well fall to Mr Piñera. + + + + + +Asia + + + + +North Korea: Strategic confusion + +The race for governor of Jakarta: Division in diversity + +A lynching in Pakistan: Places of darkness + +Vietnamese naval diplomacy: Dock and cover + +Authoritarianism in Japan: Nabbing imaginary terrorists + +Banyan: Canaries in the coal fumes + + + + + +Strategic confusion + +America first frightens South Korea, then tries to reassure it + +Military action against the North may or may not be on the table, and an aircraft-carrier may or may not be at hand + + + +Apr 22nd 2017 | SEOUL + +MUCH of the language used by Mike Pence, America’s vice-president, on his three-day trip to South Korea this week was familiar: America stands “shoulder-to-shoulder” with South Korea in an alliance that is a “linchpin” for peace, he said; its commitment to its ally is “ironclad”. The partnership, Mr Pence insisted, will be stronger under Donald Trump than under his predecessor, Barack Obama. + +The vice-president’s trip provided a little reassurance to South Korean officials, who have been feeling queasy about Mr Trump’s pronouncements. He once threatened to bring home the 28,000-odd American troops that have been stationed in South Korea for decades to guard against a North Korean attack. More recently Mr Trump seemed to be contemplating a pre-emptive strike on North Korea, prompting a frenzy of speculation in the South Korean media about whether he was serious. The local press is now worrying about “Korea passing”—the idea that America and China will strike a deal on North Korea without consulting the South. + +Unease spiked on April 9th as reports emerged that an American flotilla led by the USS Carl Vinson, an aircraft-carrier, had been ordered to sail north from Singapore, instead of proceeding with a scheduled trip to Australia. “North Korea”, “aircraft-carrier” and “Carl Vinson” promptly appeared in the top ten queries on Naver, South Korea’s most popular search engine. Mr Trump’s typically grandiose claim that he was “sending an armada” to nearby waters added to local fears of an April crisis for the Korean peninsula. + +Tensions were already high because the month is full of the sort of patriotic holidays that North Korea has in the past marked with tests of missiles or nuclear devices. On April 13th, in the first televised debate ahead of South Korea’s presidential election next month, candidates were asked how they would respond to a pre-emptive American strike on North Korea. In Japan the prime minister’s security council discussed plans to evacuate its 60,000-odd citizens from South Korea. + +All at sea + +Yet it later emerged that on April 15th, as North Korea marked the 105th anniversary of the birth of its founder, Kim Il Sung, the Carl Vinson had in fact been in Indonesian waters, over 3,000 miles from the Korean peninsula. The revelation added to mounting confusion about American intentions in the region: the day before NBC, an American news outlet, had reported that Mr Trump was prepared to attack if a nuclear test seemed imminent. The White House quickly denied the report. + +In the end, North Korea marked the holiday with the launch of a missile that exploded soon after take-off (although preparations near a nuclear site suggest an atomic test may still be imminent). At a celebratory parade, the regime also showed off what appeared to be two new canister launchers for intercontinental ballistic missiles. It has said it is on the verge of perfecting a missile that can threaten the continental United States, although most experts believe this is an exaggeration. Han Song Ryol, North Korea’s deputy foreign minister, promised “all-out war”, including a pre-emptive nuclear strike, if America threatened North Korea. + +An American attack has always seemed unlikely, given the destruction a rekindling of war on the peninsula would inevitably cause. Some estimates put casualties in greater Seoul, South Korea’s capital, as high as 130,000 within the first two hours of combat, even assuming that only conventional weapons are used. North Korea would also suffer devastating losses. + +Mr Pence (pictured) promised “seamless co-operation” and “watertight collaboration” with whichever candidate wins South Korea’s election—and all of them would fiercely oppose a pre-emptive strike. But the two liberal front-runners have recently been striking a more hawkish tone: both seem to be coming around to the deployment of a missile-defence system known as THAAD (Terminal High-Altitude Area Defence) which was first agreed to under Mr Obama, and which they had previously pledged to review. + +American officials, including Mr Pence this week, have made it clear that the policy of “strategic patience” favoured by the Obama administration in dealing with North Korea is ending. But it is not clear what will replace it. Mr Pence noted while in Seoul that “the world had witnessed the strength” of Mr Trump’s punitive strike in Syria and his use of a massive bomb in Afghanistan, and suggested that North Korea would “do well not to test his resolve”. + +Yet the previous day H.R. McMaster, Mr Trump’s national security adviser, had said that all actions should be undertaken “short of military options”. These are said to include a global ban on North Korea’s state airline, Air Koryo, as well as the blacklisting of Chinese firms doing business with sanctioned entities by getting banks to stop dealing with them—“secondary sanctions” that Mr Obama authorised last year, but used only timidly. Mr Trump said on Twitter that he offered China commercial inducements, and would not label it a currency manipulator, because it was helping with North Korea. + +If Mr Trump’s new policy is to sow confusion and roil the region, in short, it is working well. Otherwise, it’s a mess. + + + + + +Division in diversity + +A tense election threatens Indonesia’s religious tolerance + +Hardline Muslim agitators help to defeat the Christian incumbent + + + +Apr 22nd 2017 | JAKARTA + +THE mood in Jakarta was jittery in the days leading up to its gubernatorial election on April 19th. Around 64,000 police, soldiers and other security personnel were deployed to keep the peace. At least one policeman guarded every one of the 13,000-odd polling stations. + +Islamist agitators implied the incumbent governor, Basuki Tjahaja Purnama, known as Ahok, was planning to steal the election, and threatened to flood the city with supporters to safeguard the vote. They accused Ahok, who is both Christian and of Chinese ancestry, of “Christianising” Jakarta because, to some paranoid minds, a mosque built by the city government resembles a cross. A Facebook user claimed the gang rape and murder of Ahok’s supporters would not be sinful. + +Anxious ethnic-Chinese, in turn, shared posts warning that the election of Ahok’s rival, Anies Baswedan, would lead to the forcible imposition of Islamic law. “People are saying, ‘Behave yourself, or we’ll make another May 1998,’” said one Chinese Christian Jakartan—referring to the month when deadly pogroms against Chinese broke out across the city. + +The head of Nahdlatul Ulama, Indonesia’s biggest Muslim social organisation, with 60m members, appeared hand-in-hand with leaders of Indonesia’s five other officially recognised faiths to appeal for unity and peace. Joko Widodo, Indonesia’s president, universally known as Jokowi, voiced support for “the principle of live and let live, as well as unity in diversity” (the latter phrase being Indonesia’s national motto). Banners urging “A safe and peaceful election” and proclaiming “We are all brothers” flapped above intersections all around the city. + +In the end, the election passed off peacefully. Unofficial counts showed Mr Baswedan, Jokowi’s former minister for education, easily beat Ahok, with around 58% of the vote—a far wider margin of victory than opinion polls had predicted. Ahok had won an automatic promotion from vice-governor to governor when Jokowi, his predecessor, was elected president. He would have been the first Chinese Christian to win the job in an election. In the end, however, a row about religion upended his campaign. + +Ahok had been popular, having waged war on Jakarta’s corrupt and idle bureaucrats and laboured manfully to improve its infrastructure. His election seemed secure. But early in the campaign he gave a speech in which he urged voters not to heed those who used a particular verse from the Koran to argue that Muslims should not vote for Christians. Hardline Islamists, who had attacked Ahok for his race and religion since he became governor in 2014, edited the speech to make it sound as if he was criticising the Koran. The doctored video, disseminated widely on social media, succeeded in creating the desired uproar. + +The agitators organised massive anti-Ahok rallies. In November prosecutors charged Ahok with blasphemy. The charge may be tendentious, but the potential penalty is severe: up to five years in prison. For nearly six months Ahok has spent every Tuesday in court, with conviction a genuine threat: very few of those charged with blasphemy are acquitted. + +Mr Baswedan, a politician as slippery and accommodating as Ahok is blunt and forceful, spied an opening. On January 1st he spoke at the headquarters of the thuggish Islam Defenders Front (FPI), a vigilante group. Mr Baswedan denies pandering to radicals: he says he visited just to “answer questions”, and to quell rumours that he is a Shia (most Indonesian Muslims are Sunni; Shias have been prosecuted as “deviants”). But he said nothing to counter FPI’s vituperative attacks on Ahok, and later joined its rabble-rousing leader, Rizieq Shihab, for prayers before a big anti-Ahok rally. The iconography of Mr Baswedan’s campaign was also clear: throughout the campaign he sported a black peci—a cap worn by pious Javanese. + +In the wake of his victory, Mr Baswedan made all the right noises, pledging to defend diversity. But he celebrated in the company of Mr Shihab, once again. His victory undoubtedly strengthens the hardliners who backed him. Marcus Mietzner of the Australian National University worries that the chauvinists have demonstrated “the capacity to shift a small but decisive segment of swing voters their way.” What is more, he adds, “it demonstrates that militant Islamists have become more organised, established better connections with…elite networks, and have found ways of building alliances with mainstream politicians.” + +That will alarm Jokowi. Mr Baswedan had the backing of Prabowo Subianto, whom Jokowi defeated in 2014 and who is widely expected to challenge him again at the next presidential election, in 2019. Sandiaga Uno, Mr Baswedan’s running-mate, says Mr Prabowo insisted that he and Mr Baswedan sign “a binding agreement” to stay in their new jobs for a full term, in effect excluding them from the next presidential election. But the governorship was a springboard to the presidency for Jokowi, and Mr Prabowo may yet tap one of the pair as his running-mate. + +Mr Baswedan is not about to impose Islamic law in Jakarta. But hardline forces certainly helped him win. That genie is not easily returned to the bottle. + + + + + +Places of darkness + +A “blasphemy killing” at a university shocks Pakistan + +The violence is a sign of rising intolerance on campuses + + + +Apr 20th 2017 | ISLAMABAD + +IN THE room of Mashal Khan, a student at Abdul Wali Khan University in Mardan, a dusty town in north-west Pakistan, the late occupant’s handwriting is on almost every surface. Some of his scribblings in felt-tip pen are banal (“You beauty”) or crude (“Get your burger-flipping ass outta here”). But many hint at an idealistic and fiercely independent young mind: “Freedom is the right of every individual” and “Be crazy, curious and mad!” These were injunctions that Mr Khan, a journalism student, upheld—and that got him killed. + +On April 13th Mr Khan was pulled from the room by a crowd of fellow students. The violence that followed, partially recorded on a mobile phone, was staggeringly brutal. The attackers shot Mr Khan twice, dragged his corpse through hallways, beat it with planks and stripped it naked. + +Earlier in the day a fellow journalism student had accused Mr Khan of blasphemy. That allegation appears to have triggered the attack. The penalty for blasphemy under Pakistani law is death. But it is increasingly common that vigilantes take the law into their own hands before courts get involved. At least 65 people have been murdered by mobs for allegedly insulting Islam since 1990. As often in such cases, there was no evidence against Mr Khan, apart from the claims of the classmate who denounced him, Wajahat, a disgruntled young man with a fondness for the blood-curdling rhetoric of Islamist televangelists. + +Mr Khan’s murder was the first mob blasphemy killing in Khyber Pakhtunkhwa province. It was also the first blasphemy killing at a university. Before this, the most horrific such attack had involved villagers who burned a Christian couple in a brick kiln in 2014. That well-off and literate young men were responsible for Mr Khan’s murder troubles many Pakistanis. Dawn, a liberal newspaper, lamented that a “cancer” afflicting Pakistan had even reached a place where “minds are supposed to be enlightened”. + +Allegations of blasphemy are often made by those with other grievances against the accused: the charge can be used as an excuse to knock off a business rival or someone who causes the accuser trouble. Three days before Mr Khan’s death, he had alleged that some members of the university’s staff were corrupt. Several of them, who have links with the Awami National Party, a secular Pushtun group which controls the university, have been arrested in connection with Mr Khan’s death. + +The participation of so many students in Mr Khan’s murder is a sign of growing religious intolerance on campuses. Pakistan’s Islamist parties have been fanning the flames of it: since the assassination in 2011 of Salman Taseer, a governor of Punjab who had pushed for reform of blasphemy laws, support for the current ones appears only to have grown. + +Student organisations sympathetic to the Islamists have taken up the cause. They often wield the threat of a blasphemy allegation in order to browbeat university departments into scrapping courses in music or comparative religion. A liberal lecturer at Bahauddin Zakariya University in the city of Multan was accused of blasphemy in 2013 by Islamist undergraduates; he remains in jail. His first lawyer was assassinated by unknown assailants. + +Alarmingly, it took two days for the prime minister, Nawaz Sharif, to condemn Mr Khan’s murder. He has helped to stoke hysteria about blasphemy himself: a few weeks ago he ordered police to hunt for blasphemous content on social media. In the eyes of Huma Yusuf, a columnist, blasphemy-related violence is now a more intractable problem in Pakistan than terrorism. A campaign against militant groups has sharply reduced deaths from terrorism. But, as Ms Yusuf notes: “You can’t use the same tactics with the entire population.” What is needed is better teaching in schools, religious and secular alike, about the evils of vigilante justice; a government that is far quicker to condemn it; and, crucially, legal change. Bringing any of that about will be hard: cases like Mr Khan’s show all too clearly the perils involved. + + + + + +Dock and cover + +Vietnam uses an old naval base to make new friends + +Cam Ranh Bay is welcoming American warships again + + + +Apr 20th 2017 | CAM RANH BAY + +NEAR the point where Vietnam bulges deepest into the South China Sea lies Cam Ranh Bay, perhaps the finest natural deepwater harbour in South-East Asia. France based a fleet there in colonial times. Russian ships made use of it in the Russo-Japanese war, Japanese ones during the second world war and American ones during the Vietnam war. + +After the American withdrawal and communist triumph, the government of the newly reunited Vietnam leased the naval base to the Soviet Union. Russia gave up the facility in 2002. Today it is Russian tourists who flock to Cam Ranh International Airport, with its American-built airstrip, on their way to the beaches of nearby Nha Trang. + +These days Vietnam ostensibly follows a policy of “Three Nos”: no military alliances, no foreign bases and no joining with another country to fight a third. Nonetheless, adjacent to the Vietnamese naval base at Cam Ranh is a facility that receives foreign military vessels. In theory it is a purely commercial venture, open to the ships of any country willing to pay for the maintenance and refuelling it provides. But it also serves a strategic purpose: sending a defiant message to a resurgent and expansionist China by allowing Vietnam to strengthen military ties with an increasingly diverse group of countries. + +Anti-Chinese sentiment runs deep among ordinary Vietnamese. Vietnam fought wars against both America and China in the 1970s. But these days Americans, by and large, are received with affection, whereas many Vietnamese remain convinced that China still has territorial designs on their country. + +In 2014 China sent an oil rig to a disputed part of the South China Sea, sparking anti-Chinese riots in Vietnam. Since then both sides have been careful not to stoke tensions. China has called off the drilling; Vietnam has made mollifying noises about solving disputes bilaterally, as China prefers. But for Vietnam, the underlying problem is unchanged: how does a small, poor country defend itself against a bigger, richer one? + +The Philippines, under Rodrigo Duterte, has pioneered one approach: apparent capitulation. In exchange for massive investment in infrastructure, Mr Duterte has decided not to press China over their territorial dispute. Vietnam, using Cam Ranh Bay, is trying something else: diversification. Since the foreign-vessel facility opened a year ago, it has received 19 ships from 10 countries. China and America tie for the most visits, at three each. But every other visit save one has come from countries that have shown some form of opposition to China’s expansive maritime claims, including France and Japan. Vietnam appears to be reminding China of just how many friends and suitors it has—and just how well it can look after their warships. + + + + + +Nabbing imaginary terrorists + +A new bill reveals the Japanese government’s authoritarian streak + +The ruling party says it’s fighting crime; the opposition says it’s squeezing civil liberties + + + +Apr 20th 2017 | TOKYO + +FOR several weeks Japan’s Diet has been debating a law that would punish people who plan to commit crimes. The government says the conspiracy bill will protect the nation from terrorism. In a country where crime has fallen to a record low (a single fatal shooting was recorded for the whole of 2015) and where the last big terrorist attack was more than 20 years ago, that justification sounds feeble to many. + +Japan’s federation of bar associations questions whether the police need more powers. It says they can use existing laws to pursue criminal conspiracies. Critics of the ruling Liberal Democratic Party (LDP) suspect ulterior motives. “The need for a new law is very small but the dangers of having the law are enormous,” says Takeshi Shina of the Democratic Party, the main opposition. Passage of the bill, he argues, will lead to an erosion of personal liberty: “The government is far more passionate about the freedom of the state to act than about protecting the constitutional rights of the individual.” + +To be fair, the LDP, which has dominated Japanese politics for 60 years, has never hidden its authoritarian streak. It wants to do away with the liberal constitution imposed by Japan’s American occupiers in 1947. It dislikes the way the document renounces war, diminishes the status of the emperor and makes ringing declarations about the inviolability of fundamental human rights. + +A draft of an alternative constitution endorsed by the LDP tosses out these ideas and replaces them with duties to the state. The national anthem and flag must be respected. Rights come with “responsibilities and obligations” and citizens “must comply with the public interest and public order”. Freedom of speech can be restricted if it impedes that. Most alarmingly, says Lawrence Repeta of Meiji University, the prime minister would be empowered to declare a national emergency under “an extremely broad and undefined range of potential circumstances”. Mr Repeta considers the document a blueprint for the abolition of Japan’s liberal democracy. + +Privately, some LDP politicians accept that the draft, written by hardliners while the party was briefly in the political wilderness, goes too far. “Nobody takes it seriously,” says Tsuneo Watanabe of the Sasakawa Peace Foundation, a think-tank. If the party really intended to sell the draft to voters, he says, it would have produced a more appealing document. The LDP’s tilt rightwards since returning to power in 2012, however, suggests that the draft increasingly influences public policy. + +Last year a UN special rapporteur criticised the government of Shinzo Abe for trying to intimidate the media by making a pointed reference to its power to shut down “biased” television channels under the law that regulates broadcasting. In 2013 the LDP pushed through a law that allows the government to declare all kinds of information state secrets, in spite of strong public opposition and noisy protests by journalists, lawyers and scholars. In theory, the law will help deepen co-operation on security between Japan and America, which had complained about a series of leaks of sensitive information. In practice, it has raised fears that seeking or revealing data about perfectly legitimate subjects, such as the extent of contamination from the Fukushima nuclear disaster, could be construed as criminal activity. + +Few in the LDP want to return to the past, insists Yoshimasa Hayashi, an LDP MP, although he does concede that some want to tug it “too far right.” Still, he supports the conspiracy law, which he says will help keep the Tokyo Olympics in 2020 safe. The LDP’s dominance of both chambers of the Diet means the law will probably pass without trouble. It is the lack of a strong opposition that should most worry ordinary Japanese, says Mr Shina. The LDP may not be too worried about constraints on the power of the state, but in a healthy democracy, someone should be. + + + + + +Banyan + +What the trials of migratory birds say about Asia’s development + +Exterminate first, ask questions later + + + +Apr 20th 2017 + +KATHERINE LEUNG was hunting for birds—black-tailed godwits to be precise. Armed with a wide net, she stood at dusk amid the Mai Po Marshes, a wide expanse of mudflats, mangroves and shrimp ponds on Hong Kong’s border with mainland China, trying to nab a couple of birds as they came to roost after feeding. In her pocket were two tiny and expensive radio transmitters. An employee of the World Wide Fund for Nature (WWF), which manages Mai Po, she was hoping to affix them to the backs of two godwits heading north for the summer. By the time she gave up, at midnight, she had not caught any godwits, but she had snared three gorgeous greater painted snipe. She had also spotted an eagle owl out hunting and a leopard cat prowling nearby. She will be hunting herself again soon, as the godwits’ twice-yearly transit reaches its peak. + +Astonishingly little is known about the godwits that arrive at Mai Po in full breeding plumage at this time of year—neither where exactly in the warmer parts of Asia they have wintered nor where, in the far north, they will breed. Most of the world’s migratory waterbirds barrel up and down one of eight big north-south “flyways”. The East Asian-Australasian Flyway, along which Mai Po is located, is the most rich in species. This spring 50m waterbirds will move from their winter homes in South-East Asia, Australia and New Zealand to their breeding grounds in Russia, Mongolia, northern China, the Korean peninsula, Japan and even Alaska. They rely on intertidal flats like those at Mai Po, teeming with nourishing molluscs, worms and crustaceans, as well as plants, to supply the food that fuels their journeys. + +Of the eight big flyways, the East Asian-Australasian is also the one displaying the sharpest decline in the number of birds. Of its 155-odd waterbird species, at least 24 are now globally threatened. They include the diminutive spoon-billed sandpiper, a wader whose numbers are down to fewer than 200 pairs. + +Transiting one of the world’s most dynamic industrial regions is clearly taking a toll. Asia’s migratory waterbirds face immense pressures, from hunting, pollution, ingested plastic and competition from aquaculture. But the biggest disaster is the destruction of coastal way-stations like Mai Po. Since 1950 China has lost over half its coastal wetlands to “reclamation”. According to the International Union for Conservation of Nature (IUCN), the Yellow sea, into which the Yellow river flows, has lost over 35% of intertidal habitat since the early 1980s. An especially destructive moment was the run-up to the Beijing Olympics of 2008, for which a lot of heavy industry was moved from the capital to the coast. + +Xianji Wen, who, like Ms Leung, works for the WWF, describes the Yellow sea as a “bottleneck” for the whole flyway: so many waders pass through it that the loss of habitat there is particularly consequential. Four-fifths of Asia’s red knots, having wintered in Australasia, stop on their way north at one spot, Luannan, east of Beijing. The bar-tailed godwit flies non-stop from New Zealand to the Yellow sea—over 6,000km. After recovering there, the species flies non-stop again to its breeding grounds in the extreme north of Russia. + +Populations of both species have crashed by over a third, probably because of coastal development. On the eastern side of the Yellow sea in South Korea, a huge reclamation scheme involving the world’s longest dyke destroyed Saemangeum, a 400 square kilometre tidal estuary. The 330,000 shorebirds that used to use the area did not move to other staging sites—there is a limit to how many birds even rich mudflats can support. Most simply died. In 2010 the IUCN reclassified the great knot from a species of “least concern” to “vulnerable”, thanks largely to that dyke. It might also prove the death knell of the spoon-billed sandpiper. The reclamation scheme, meanwhile, is doing far less for the local economy than its backers promised it would. + +There is a silver lining, however. The vast middle class created by the region’s breakneck growth is becoming interested in conservation. Hong Kong has long had plenty of birdwatchers, and schoolchildren throng Mai Po’s education centre. In Taiwan a conservation movement was spawned by another critically endangered species, the black-faced spoonbill. In the 1980s its numbers fell to fewer than 300. It bred on a few islands at the western end of the Korean peninsula’s demilitarised zone and wintered at three sites: Mai Po, the Red river delta in Vietnam and Chiku in Taiwan. Taiwanese bird lovers first secured an end to hunting at Chiku and then, in 2000, fought off plans for a steel refinery. The spoonbill population has since grown to around 3,800—proof that it is possible to rescue species from the verge of extinction. + +Binoculars to the rescue + +In China several hundred birdwatchers gather for the spring migration by the Yellow Sea near the North Korean border. And Mr Wen says that local governments in China increasingly take pride in the acclaim they win for conservation schemes—several work with the WWF. A year ago China and New Zealand even signed an agreement—an “air bridge” between the two countries—to protect the habitat of the bar-tailed godwits, whose annual departure, Maori mythology holds, is for the homeland of the ancestors who first colonised New Zealand. + +South Korea’s conservation movement is feeble. But the government of North Korea, by failing to develop the country, has inadvertently preserved a greater share of valuable waterbird habitats. It recently agreed to designate one as a protected site under the “Ramsar” international convention on wetlands—a rare instance of North Korea being drawn into international co-operation. Some even hope this innocuous step may prove habit-forming, paving the way for co-operation on trickier issues. After all, 30 years ago, Chinese and Russian conservationists helped thaw frosty relations between their two countries. Asia’s beleaguered waterbirds might be diplomatic as well as zoological treasures. + + + + + +China + + + + +Climate change: No cooling + +Bicycle sharing: The return of pedal power + + + + + +No cooling + +Trump’s indifference to climate change has not changed China’s view + +Once a foot-dragger, it now wants to lead + + + +Apr 20th 2017 | BEIJING + +RESIDENTS have found something else to blame for the toxic smog that envelops many Chinese cities for much of the year. Until recently the culprits that were usually fingered were the obvious ones: emissions from coal-fired power plants, exhaust fumes from cars and dust from building sites. This year, however, reports began to appear in state-run media that climate change is now reckoned to be a factor, too. Chinese scientists say that in eastern China global warming is resulting in less rain and wind to clear the pollutants. The government’s weather bureau illustrated its online account of the discovery with a picture of zombie-looking figures in hazmat suits shrouded by haze. + +America’s president, Donald Trump, may have little interest in climate change: Wilbur Ross, his commerce secretary, said the subject was “not a major part of the discussion” when Mr Trump met his Chinese counterpart, Xi Jinping, at Mar-a-Lago, Florida, earlier this month. But in China the government, and increasingly the public, see it as a real danger, responsible for rising sea levels that threaten coastal cities as well as for aggravating droughts in the north, floods in the south and, as it now turns out, the omnipresent smog. Some people wonder whether Mr Trump’s indifference might reduce China’s willingness to take action against climate change. Why bother if the second-biggest emitter of greenhouse gases appears to have lost faith in the cause? Fortunately, there is no sign that China, the biggest emitter, is wavering. + +There was a time when it might have. Less than a decade ago China was dragging its feet, believing that the West was trying to use climate change as an excuse to impose policies that would harm China’s economy. In 2009 China’s intransigence was one of the main reasons why UN-led climate-change talks in Copenhagen failed to make much progress. But by the time of the UN’s climate-change conference in Paris in 2015, much had changed. Li Shuo, a Beijing-based policy adviser for Greenpeace, says China was one of the “major driving forces” behind the consensus that was forged at the meeting. + +For China’s leaders, the reasons why they changed their minds remain just as valid today. Officials still worry about the huge build-up of debt and damage to the environment that have accompanied years of breakneck growth (citizens’ complaints about polluted air, water and soil have been fuelling social unrest). The government now wants the economy to be less reliant on manufacturing that requires a lot of polluting energy, and less driven by massive investment in construction. This will involve using less coal, which in turn will help clear the air as well as reduce climate-changing emissions of carbon. + +The government is spooked by an accumulation of research showing just how vulnerable the country is to damage caused by climate change. A study published in 2013 by the World Bank and the OECD concluded that economic losses in Guangzhou, in southern China, would be greater than in any other city in the world. In 2015 the government’s chief meteorologist warned of “serious threats” to China’s rivers, food supplies and infrastructure as a result of global warming, which he said had been greater than the global average. + +China sees diplomatic benefit, too, in hanging tough on climate change. It talks of the “soft power” it won by pushing for the agreement in Paris. Shortly before Mr Trump’s inauguration in January, Mr Xi told a gathering of the world’s elite in Davos, Switzerland, that all signatories should stick to the Paris accord “instead of walking away from it”—a poke at Mr Trump that his audience applauded. Also that month China’s climate envoy, Xie Zhenhua, ventured that his country was “capable of taking a leadership role in combating global climate change.” China is reluctant to stick its neck out in negotiations on global warming, but it enjoys the kudos of leading by example. + +Chinese officials are blessed by the absence of a domestic lobby that questions climate change and its causes. “People generally see the urgency” of the problem, says Mr Li of Greenpeace, a lobby group. But there are powerful vested interests that resist carbon-cutting measures. Take the steel industry. It is heavily polluting and a huge consumer of coal-produced energy. The central government says it wants to cut steel production, but some local authorities have been ignoring its orders, partly because of the risk of protests by laid-off workers. Output of the metal still exceeds domestic demand by about one-seventh, or 100m tonnes a year. + + + +But the government is succeeding in cutting the use of coal, which provides around 70% of China’s electricity. In 2016 coal consumption dropped by 4.7%, the third successive year of decline (see chart). Many experts now believe it reached its peak in 2013, several years before even the most optimistic of them had been predicting. Greenpeace forecasts that this year will be China’s fourth successive one with flat or falling emissions of carbon dioxide. + +China also hopes to profit from developing green technology that it can sell globally. It is investing huge sums in it. In January it announced plans to spend 2.5trn yuan ($360bn) by 2020 on new generating capacity using renewable or low-carbon sources, including solar, wind, hydroelectric and nuclear plants. It says this will create 13m jobs and mean that half of the new capacity built between 2016 and 2020 will be renewable or nuclear (although China’s record in attaching wind and solar farms to the grid has been less impressive than its rapid building of them). + +The country is eager to experiment with other ways of reducing greenhouse gases. Later this year it plans to launch a nationwide carbon-trading scheme, mainly for heavy industries. It is also mulling the introduction of a carbon tax. The public will cheer: less carbon spewed into the air should mean less smog. “We will make our skies blue again,” pledged the prime minister, Li Keqiang, last month. He is mindful of potential unrest if China doesn’t. His resolve might help the planet, too. + + + + + +The return of pedal power + +In China, bikes are back + +Some officials wish they weren’t + + + +Apr 20th 2017 | BEIJING + +A MAN pedals a brand-new, orange and silver bicycle to his office door. He dismounts in the middle of the pavement, flicks down the kickstand and disappears inside. A woman approaches and waves her smartphone over a QR code near the rear mudguard. The lock snaps open and off she rides. These days, China’s once bicycle-clogged streets are choked with cars. But some urbanites are getting back on two (motorless) wheels, lured by the ease of using shared “dockless” bikes controlled by high-tech gadgetry. + +For years, bike-sharing schemes have been common in big cities around the world, including in China. Examples include Paris’s Vélib and London’s Santander Cycles (“Boris bikes”). But these require customers to return the bicycles to docking stations. In China, a more user-friendly approach is spreading rapidly. It involves bikes that can be paid for using a smartphone and left anywhere. GPS tracking enables them to be located with a mobile app. A ride typically costs only one yuan ($0.15) on a sleek-framed bike in an eye-catching colour. + +The first such service was launched in June 2015 by a startup called Ofo. The company now has around 2.5m yellow-framed bikes in more than 50 cities in China. Its main rival, Mobike, which started up only a year ago, says it has “several million” of its orange-wheeled bikes spread across a similar area. Bluegogo has half a million bikes in six Chinese cities. It plans to add a new city every two weeks. + +Several other companies are piling in, as are investors who believe the firms have global potential. Bluegogo was the first to launch overseas, in San Francisco in February. Ofo has recently started services in Singapore and San Diego, California. It was due to launch another one in Cambridge, England, as The Economist went to press. Mobike, too, is operating in Singapore and is eyeing other markets. + +The dockless system is prone to abuse. Some riders hide the bikes in or near their homes to prevent others from using them. Another trick involves photographing a bike’s QR code and then scratching it off to stop others from scanning it. With the stored image, the rider can then monopolise the machine. But customers caught misbehaving can have points deducted from their accounts, making it more expensive for them to rent the bikes. + +A bigger problem for the new firms is persuading people to use bikes instead of cars. Thirty years ago, 63% of Beijingers pedalled to work. Now only 12% do. Many people think that cycling is only for the poor. A dating-show contestant famously quipped in 2010 that she would “rather cry in a BMW than smile on a bike.” + +Cycling is also dangerous. About 40% of road accidents involve bicycles, according to a report in 2013. (Many bike lanes have been eliminated to make room for cars.) Some city authorities accuse the bike-sharing firms of causing congestion. This month the southern city of Shenzhen ordered limits on the number of shared bikes. Other cities, including Shanghai and Beijing, are considering similar measures. + +But Chinese leaders like the services—they represent the kind of green innovation that China says it wants. In January the prime minister, Li Keqiang, told Mobike’s co-founder that her business model was “a revolution”. Not, presumably, the kind that Mao led, but one that would have made the chairman feel at home with its profusion of two-wheelers. + + + + + +Middle East and Africa + + + + +Africa’s slums: The great urban racket + +Namibia’s economy: Will it be NEEEFcapped? + +Algeria: Stability or stagnation? + +Gaza: Hamas divided + +Islam’s changing fashions: Don’t say sexy + + + + + +The great urban racket + +Exploitation and short-sightedness in Africa’s slums + +Making slums less exploitative may be Africa’s biggest challenge + + + +Apr 20th 2017 | NAIROBI + +STANDING on a muddy patch of grass in Mathare, a district in the eastern part of Nairobi, Kevin surveys his handiwork. From an electricity pylon, a thick bundle of crudely twisted wire hangs down into a tin-roofed shack. From there it spreads to a dozen more. Single wires run perilously at eye level over open sewers, powering bare light-bulbs, kettles and blaring speakers. In exchange for a connection, Kevin and six of his friends collect 200 shillings per month each (about $2) from about a hundred shacks in his corner of the slum. To protect the business, the gang pays off police officers and intimidates the competition. The connections, Kevin insists, are cheaper than official ones, and safer too. The rotting body of a fried rat near one of the lines suggests otherwise. + +So goes the provision of public services in Nairobi’s poorest districts. These warrens of shacks and crudely built apartment blocks are home to 40% of the city’s population, according to one recent World Bank survey (others put the figure even higher). As the city’s population has exploded—from a third of a million at independence in 1963 to over 4m now—so too have the slums. Across Africa, they are the primary way by which hundreds of thousands of people have escaped even greater poverty in the countryside. By 2030, half of Africa’s population will live in cities, up from a third in 2010. According to the UN, two-thirds of that growth will take place in slums. Between 1990 and 2014, the continent’s slum population more than doubled, to some 200m people. Finding ways to improve slums will be one of the most pressing problems of the 21st century for African governments. + +There for a reason + +Slums grow because they provide something poor people need: affordable housing near to work, schools and public transport. Perversely, for such a poor continent, African cities tend to be sprawling and car-dependent. From Lusaka to Lagos, suburban housing estates and shopping malls, seemingly transplanted from Houston or Atlanta, are springing up at the edge of cities. But the vast majority of Africans cannot afford cars. In Nairobi slums are among the very few places close to jobs where it is possible to go shopping, watch a film and get a street-side meal, all without having to get into a vehicle. + + + +The need to be near jobs helps explain why slums often sit next to staggering wealth. In Nairobi Mathare is wedged between Eastleigh, a bustling Somali commercial hub, and Muthaiga, a luxurious country club popular with white Kenyans. Alexandra in Johannesburg, a township of tin shacks, is at the edge of Sandton, the city’s poshest office district. In Lagos, a megacity where two-thirds of people live in slums, Makoko, a collection of shacks built on stilts in the lagoon, sits under the city’s Third Mainland Bridge, across from which new office buildings rent for vast sums. + +Africa’s slums are full of enterprising people. But they are also deeply dysfunctional places, where much of the population lives in a Hobbesian world of exploitation. It is not just electricity that is provided by violent cartels; so is water, rubbish collection and security. The state scarcely enters: in most slums, health care and education are provided privately or by charities, if at all. Diseases such as cholera and HIV are rife. There is often little in the way of a legal system to protect property rights. Instead, well-connected landlords make fortunes renting tiny patches of land to people who have nowhere else to go. + +And slums are violent. In Nairobi the cartels fight vicious turf wars with each other. Some, like the Mungiki, a Kikuyu mafia, are organised on ethnic lines. In Lagos slums like Makoko are run by local chiefs called “baales”, who dress like mob bosses and expect tributes from residents. Cops are unwilling to go in, except occasionally to extract bribes or to shoot a suspect. Politicians do enter: an abundance of unemployed young men are easy recruits to gangs raised to intimidate opponents. + +Perversely, slums are also expensive. In Mathare options range from a shared space in a wooden shack on top of an open sewer with no water or electricity for 700 shillings per month ($7) to a relatively clean room in a compound with a light bulb and a shared outside toilet, for 3,000. That may seem cheap, but slum landlords are doing much the same as Western consumer businesses do in Africa: packaging their product up in tiny enough bites for the poor to afford it. And just as a hundred tiny sachets of washing powder cost more than a single large box, so too with land. According to Jacqueline Klopp, a researcher at Columbia University, per square foot of land rented, Nairobi’s slum residents could well pay higher rents than some of the city’s wealthy expatriate workers. + +Why can’t slums be cleared? African governments often see slums as an eyesore and would like to do just that. In Nigeria the Lagos state government has become notorious for waking up slum-dwellers on the most valuable patches of land with bulldozers. When the government wants the land, people are simply kicked off and expected to find new homes. In Kigali, Rwanda’s spotlessly clean capital, taxi drivers point out patches of neat grass where slums have been torn up. Less authoritarian governments, such as Kenya’s, have tried to “upgrade” slums in situ by building newer, better housing. + +Yet when slums are demolished, other ones become more crowded. And new housing is often too expensive or isolated from services for slum residents to benefit. In Kibera, another Nairobi slum where the government has built smart apartments nearby, they are lived in by middle-class newcomers. Those few residents who were upgraded preferred to sublet their new homes. + +According to Sumila Gulyani, a World Bank researcher, slums tend to improve when their residents have an incentive and the money to invest. If people either own their property, or rent for long periods, they spend more on improvements and take care of their surroundings. Over time, that can produce better areas. The problem with many African slums, she says, is that people rarely live in one place for more than a few years. While they are there, the money they make is extracted from them by landlords and cartels, who have little incentive to invest. In many cases, improvements—such as proper piped water—brought in by well-meaning outsiders are vandalised by the cartels. + +If government treated slums as real city districts they might improve. In Mathare there is some reason to be hopeful. Though shacks still predominate, some taller buildings have been going up, with more space. In his shack, Crispin Adero, a 20-year-old construction worker, has plastered the walls with posters of Manchester City football players. Music plays from a television connection to a satellite tuner. A ladder leads to an upstairs room, which Mr Adero shares with his wife. He built it himself, having made a deal with his landlord to share the costs. Life, says Mr Adero, “is OK.” But not everyone has such luck. And outside, sewage still runs in the street. + + + + + +Will the economy be NEEEFcapped? + +Namibia’s president is flirting with racial quotas + +Such policies did not work out well in Zimbabwe + + + +Apr 22nd 2017 | WINDHOEK + +HAGE GEINGOB is in a bind. After years of perkiness, Namibia’s economic growth rate shrank from more than 5% in 2015 to a dismal 0.1% last year—and may now have stalled completely. But though President Geingob is an avowed friend of the market and seeks foreign investors, populists within his ruling South West Africa People’s Organisation (SWAPO) are calling for measures that would hobble the economy still more, by implementing a draft bill known as the National Equitable Economic Empowerment Framework (NEEEF). It would knee the business class in the groin, especially the white part of it, which still drives the economy. + +Under NEEEF, all businesses, however small, would have to be at least 25%-owned by “previously disadvantaged persons”, broadly meaning black Namibians. No company would be allowed to “allot, issue, or register the transfer of any portion of its ownership…to a person that is not previously disadvantaged or to a domestic or foreign enterprise owned by a person that is not previously disadvantaged”. At least half of all company boards and management would have to be black, too. + +If NEEEF were enacted, it would probably be abused by ruling-party bigwigs to grab stakes in other people’s businesses in the name of uplifting the previously disadvantaged, as has happened in Zimbabwe and South Africa. Many white-owned businesses would close, and foreign investors would shy away. So Mr Geingob, hitherto more pragmatic and business-minded than his two presidential predecessors, seems loth to go ahead with the bill, first put forward in 2015. But a souring political mood has revived talk of NEEEF. He has also spoken recently of expropriating white-owned land, albeit with fair compensation, another recipe for clobbering productivity. His prime minister, egged on by the country’s first president, Sam Nujoma, who still hankers after the socialism espoused during SWAPO’s long years in exile, is said to be a NEEEFer. + +Calls for black empowerment resonate because, although Namibia is deemed a middle-income country with bountiful reserves of minerals (in particular diamonds and uranium), a tiny population (2.3m) and a prosperous if small black middle class, it is also one of the world’s most unequal. Poverty is rife. Some 40% of the population still live in shacks. The unemployment rate, some reckon, is at least 40%. + +Mr Geingob was elected in 2014 with a whopping 87% of the vote. Yet he is sounding unusually twitchy in the run-up to a party congress later in the year, at which he is likely to be re-elected as party leader, but may find a new vice-president breathing down his neck. + + + +Aged 75, he hails from a minority group, the Damara, numbering barely 7% of the population, whereas power in SWAPO has in the past been held mainly by the Ovambo, who account for half of Namibians. Many still look to the wily, ruthless 87-year-old Mr Nujoma, who ran the party as a fief for 45 years until his official retirement in 2005. + +One reason for the economy’s sickness is the collapse of the building industry, which relied on a string of big government-funded projects that can no longer be afforded. A class of rich black businessmen, known as “tenderpreneurs”, invariably well-connected to SWAPO, has benefited hugely from NEEEF-like contracts. This is causing resentment in the densely populated slums of Windhoek, the capital. + +While a chunk of the SWAPO old guard regards Mr Geingob with suspicion, another wing backs a self-styled revolutionary faction calling for “affirmative repositioning”. One of its leaders, Job Amupanda, a bearded 29-year-old university lecturer, espouses “Fanonian Marxism with Namibian characteristics”, admires Julius Malema’s Economic Freedom Fighters in South Africa and Robert Mugabe in Zimbabwe. He also calls for the expropriation of land. “We want urban land for our youth and if we don’t get it we’ll take it,” he says. + +Mr Geingob will probably, for the moment, fend off his rivals. But it is unclear whether, in doing so, he will feel obliged to make populist concessions along the lines of NEEEF. Most reckon he won’t. If he did, he might buy himself time, yet send Namibia’s economy further down the drain. + + + + + +Arab politics + +Stability or stagnation in Algeria? + +Algerians see little reason to vote in the coming general election + + + +Apr 20th 2017 | CAIRO + +THE secretive cabal of power brokers who run Algeria face many challenges. The economic, political and military elite, known collectively as le pouvoir (“the power”), must cure the ailing economy, defeat jihadists and deal with troublesome neighbours, such as Libya and Mali. At times they must also reassure the public that Abdelaziz Bouteflika, Algeria’s elderly president, is still alive. + +Mr Bouteflika, who is 80, has ruled Algeria—alongside le pouvoir—since 1999, when he was tapped by the army to be president. But he has suffered at least one stroke in recent years and looks to be in poor health. In February he cancelled a meeting with Angela Merkel, Germany’s chancellor, leading to speculation that he was dead. To dispel such rumours the government releases footage of Mr Bouteflika at work. In the videos, he stares blankly at papers or the camera, while his ministers act impressed. + +The president may no longer be of sound mind, but his continuing presence says a lot about the state of politics in Algeria, which will hold a general election on May 4th. Much of the population and, more importantly, le pouvoir, cling to Mr Bouteflika, who led the country out of a brutal civil war that raged for most of the 1990s. Since the fighting stopped, Algeria has avoided the turmoil that plagues its neighbours. Even in his weakened state, Mr Bouteflika is seen as a stabilising force. + +To keep things steady, says the government, voters must show up for the coming poll. “We have to vote massively to reinforce political and security stability in the country and offer support for President Bouteflika,” said Djamel Ould Abbas, head of the National Liberation Front (FLN), the president’s party, at a rally this month. The FLN’s allies have played up the army’s fight against Islamist extremists and a potential economic crisis to mobilise voters. + +Despite the government’s best efforts, turnout for the vote may be even lower than in 2012, when only 43% bothered to cast ballots. Some 12,000 candidates will compete for 462 seats, but many Algerians assume that the polls are fixed and that the FLN and its allies will win by a wide margin. The party has dominated parliament since Algeria gained independence from France in 1962. When Islamists won an election in 1991, the army annulled the result, leading to civil war. + +Revisions to the constitution, passed in 2016, ostensibly give the legislature more power, but it has continued to act as a rubber stamp for the government’s policies. Many of this year’s candidates have connections to le pouvoir. Several opposition parties are boycotting the election. The press has been told to ignore them. Many of the parties that do participate will probably win—or be granted—some seats, as the government hopes to gain broad political support for its austerity measures. + +Algeria’s economy grew by 4% last year, but it has been hit hard by the low price of oil and gas. Revenues from fuel exports, which pay for 60% of the government’s budget, have fallen by nearly half since 2014. In response, the government has cut spending by 14% this year, after a 9% reduction last year. It has increased the price of subsidised fuel and electricity, raised taxes and frozen public-sector hiring. Still, the government ran a budget deficit of 12% of GDP last year, while its foreign reserves dropped to $114bn, from $196bn in 2014. + +As the cost of living rises, Algerians are growing angry. Inflation was 7.6% in February, with subsidy cuts and import restrictions pushing up the price of staples such as food. The unemployment rate sits above 10%; young people have few prospects. The government, so accustomed to buying stability with generous handouts, has failed to prepare Algeria for the hard times. + +The economy is too dependent on oil and gas and still too centralised. Foreign energy companies are keen to invest, but complain of too much red tape. Corruption is a big problem. Indeed, some of the candidates running for parliament seek immunity from prosecution, which is one of the perks of office. + +Still, Algerians appear to be reluctant to challenge the government in a significant way. A more serious threat to stability may come when Mr Bouteflika dies. In recent years he and his allies have purged le pouvoir of independent figures and consolidated more power in the presidency. There appears to be little agreement over who should succeed him, which is perhaps another reason why he has nominally been left in charge. Algerian politics have long been murky. But for a country that prizes stability, it might help to have stronger and more transparent institutions. A capable parliament would be a start. + + + + + +Hamas divided + +Signs of tension within the Palestinian group that runs Gaza + +Moves to improve relations with Israel run into trouble from the hardliners + + + +Apr 20th 2017 | GAZA CITY + +AT DAWN earlier this month three men were led to the gallows in Gaza, the first executions for nearly a year. Hamas, the Islamist group that controls the strip, had earlier offered clemency to Palestinians who collaborate with Israel—promising that the “doors of repentance” would be open if they confessed. That was the carrot. The hangings were the stick. + +These are tense times in Gaza, after the assassination on March 24th of Mazen Fuqaha, one of Hamas’ military commanders. A native of the West Bank, he was arrested in 2002 for his role in a suicide bombing in Israel, then freed in a prisoner swap in 2011 in return for a captured Israeli soldier, Gilad Shalit. He died in his garage after an afternoon outing with his family, shot four times with a silenced pistol. It was a professional job. The gunmen collected their shell casings and disabled a nearby security camera. Hamas was quick to blame Israel. + +The men hanged as collaborators with Israel probably had nothing to do with it: all three were arrested long before Mr Fuqaha’s death. But their hasty executions, after years languishing in prison, were a sign of how badly the hit had rattled Hamas. The group imposed a partial closure at Erez, the sole pedestrian crossing with Israel. It was meant to stop accomplices from fleeing; but it also blocked sick Palestinians from travelling for medical treatment. Fishermen were barred from going out on the water, hurting an industry that supports thousands of Gazan families. + +All of this comes at a difficult time. Hamas is in the middle of its first leadership change in more than a decade, with its veteran head, Khaled Meshal, expected to step down later this year. After four ruinous wars against Israel, there are signs that it wants a policy change as well. The group is debating a major revision of its founding charter of 1988. Some in the politburo want Hamas to accept a Palestinian state along the pre-1967 borders—implicitly acknowledging Israel’s existence—and dump the worst anti-Semitic language from the original. Others appear wedded to confrontation with the Jewish state. + +No one expects a handshake with Binyamin Netanyahu. But Israeli officials think the changes are a sign that part of the political wing is open to a long-term truce that would avoid another conflict. “What interests me is not what they’re doing, but the fact that they feel the need to do it,” says one intelligence official. + +Hamas has also begun to mend its strained relationship with Egypt, which has long accused the group of aiding Islamist militants in Sinai. Cairo imposed a military blockade on the strip after Hamas seized power there in 2007: Rafah, the sole border crossing accessible to most Gazans, was open for just 48 days last year. But in February Egypt opened it to commercial traffic, allowing trucks to cross for the first time. This came after Hamas promised to stop treating wounded jihadists in Gaza. + +Yet Hamas’s military wing depends on smuggling tunnels controlled by the same jihadists to replenish its arsenal. In the wake of Mr Fuqaha’s assassination, they have begun rattling the sabre at Israel. Billboards with his likeness have gone up around the strip: “Challenge accepted,” reads one, in Arabic and Hebrew. The group also released a video threatening to kill senior Israeli army officials. For now, their only retaliation has been against other Palestinians. But the uneasy ceasefire that ended the last war is looking fragile. + + + + + +Don’t say sexy + +The pitfalls of Islamic fashion + +In search of mainstream markets, Muslim textile designers are pushing the boundaries of sharia compliance + + + +Apr 20th 2017 + +ISLAMIC fashion websites can be pretty drab. KhaleejiAbaya.com, an outlet based in Teesside, North England, plies its selection of faceless black coverings under the somewhat overstated slogan “effortlessly elegant”. Alongside, its website carries a health warning on the “dangers of al-tabarruj”, the impermissible exposure of beauty. Defying such prudishness, leading Muslim designers recently took part in London Fashion Week, a global showcase of threads, to prove that what they called “Modest Fashion” could be as sleek as a bedtime story from a Thousand and One Nights. + +The organisers avoided the word sexy, since that would be un-Islamic, explained one. But their models on the catwalk wore make-up, nail-polish, and figure-hugging costumes. Some had veils, though these tended to slip from their heads as they strutted to techno beats. Abayas were embellished with leather straps, transforming nun-like uniforms, said the publicity, into “edgy urban wear perfect for warrior princesses”. Nearby, cosmetics companies plied alcohol-free perfume and lipsticks free of animal fat, which made the products halal, though still viewed by some clerics as not sharia-compliant for being flirtatious. + +Islamic fashion could be big business. Worldwide, Muslims spend close to $300bn a year on clothes and shoes, only a bit less than America does, though only a fraction goes on fashion. In Western countries, at least, observant Muslim, Jewish or Christian women who want to cover their flesh often mix-and-match from collections which care little for modesty. That could change. Earlier this year, Debenhams, a British department store, began running an Islamic line. Tommy Hilfiger and Mango, two high-street outlets, have both launched Ramadan collections for Middle Eastern clientele. An Islamic modelling agency called Under Wraps has launched in America. Cities from Basra to Auckland host Muslim fashion shows. And since Saudi Arabia, the Muslim world’s most conservative state, began letting women add dashes of colour to their black abayas, design has mushroomed. + +Yet as they push to enter the mainstream, Muslim fashionistas are struggling to balance the demands of Islamic law with those of a style-driven market. One Saudi woman, who leads a secular life in London, found it hypocritical. “They are wearing pyjamas, as if they are dressed for going to bed,” she sniffed. “Modesty make-up is a contradiction in terms.” Another questioned why the addition of headscarf made tight jeans “Islamic”. There is, it seems, a way to go. + + + + + +Europe + + + + +Turkey’s constitutional referendum: Erdogan the maleficent + +Protests in French Guiana: Failure to launch + +McJobs: The tempest + +Energy in Ireland: Bog down, wind up + +Charlemagne: In the shadow of Willy Brandt + + + + + +One-man show + +Recep Tayyip Erdogan gets the power he has long wanted—at a cost + +Turkey votes Yes to a radical overhaul of the state + + + +Apr 22nd 2017 | ISTANBUL + +IT WAS a vote that turned out to be as controversial as it was hotly contested. Even before all of the ballots had been counted, Recep Tayyip Erdogan, Turkey’s president, stepped in front of a crowd of supporters in Istanbul and proclaimed victory. “My nation stood upright and undivided,” he said, referring to the referendum on a constitution that will give him new, virtually unchecked powers. “April 16th was a victory for all of Turkey.” + +Yet it was hardly the win Mr Erdogan had expected. The Yes camp, which the president headed, limped away with just 51.4% of the vote. The opposition accused the country’s electoral authority of foul play. Outside observers charged the government with stacking the odds in its favour. Anti-government demonstrations broke out in a number of Turkish cities. The country awoke the following morning more divided than ever. + +The new constitution will bring about the most radical overhaul of the state since 1923, when it went from being an imperial Islamic power to a secular republic under Kemal Ataturk, the founder of modern Turkey. After fresh elections in 2019, Mr Erdogan will rule uncontested, appointing senior officials, judges and members of his own cabinet, with little oversight by an expanded but weakened parliament. The office of prime minister will cease to exist. + +Yet the constitution is already mired in controversy. The main opposition, the secular Republican People’s party (CHP), has asked for the referendum results to be annulled. A last-minute decision by the country’s electoral board to accept unstamped ballot papers created the risk of mass fraud, the CHP said. Claims of vote-rigging, especially in the Kurdish southeast, have been pouring in. In a scathing assessment, observers from the Organisation for Security and Co-operation in Europe (OSCE), an intergovernmental body, said the board’s move had “undermined an important safeguard and contradicted the law”. A state of emergency imposed shortly after an attempted coup in July, accompanied by nearly 50,000 arrests and a climate of intimidation and nationalist hysteria, was hardly the proper setting for a referendum on systemic changes. “Voters were not provided with impartial information about key aspects of the reform and limitations on fundamental freedoms had a negative effect,” the OSCE said. + +There is next to no chance of a recount. The electoral board rejected the opposition’s appeal on April 19th, but promised to look into individual allegations of fraud. (Official results are expected towards the end of April.) Mr Erdogan asked foreign observers to keep their concerns to themselves. “We don’t care about the opinions of ‘Hans’ or ‘George’,” he said. His prime minister added: “The people’s decision is clear and the result is a Yes.” + +The allegations will haunt Mr Erdogan for years, leaving the country even more polarised than before. Mr Erdogan might be “the most unassailable Turkish leader since Ataturk but this legitimacy issue will hang over his head,” says Soner Cagaptay, a fellow at the Washington Institute. + +International reaction has been muted. Other than Donald Trump’s America, which joined model democracies such as Russia, Sudan, Hungary and Djibouti in congratulating Mr Erdogan, no leader of a big Western country has welcomed the vote. Britain, Germany and the EU called instead for dialogue and an impartial inquiry. Mr Erdogan did not appear particularly keen to rebuild bridges with Europe: on the day of the vote, he pledged once again to do his part to reinstate the death penalty, which would threaten the membership of Turkey in the Council of Europe and torpedo its already comatose accession talks with the EU. + +One-man show + +Supporters of the new constitution say it will improve decision-making by concentrating power in Mr Erdogan’s hands, precluding unwieldy political coalitions and neutralising powerful unelected officials. “From now on, it’s the people who are going to rule Turkey,” says Ufuk, a young Yes voter relaxing outside a polling booth. + +Opponents say it will transform the government, already dominated by Mr Erdogan, into an authoritarian regime. “This is the beginning of one-man rule,” says Ali Bayramoglu, a columnist who used to be sympathetic to the ruling Justice and Development (AK) party. After he said earlier this month that he would oppose the new constitution, Mr Bayramoglu was assaulted by AK supporters at a polling station on the day of the vote. + +Some of the changes will come into effect immediately. An impartiality clause that required the president to sever links with any political party (which he flouted) will expire. Mr Erdogan is expected formally to rejoin AK as soon as official results are announced this week. Within a month, the country’s most influential judicial body, the council of judges and prosecutors, will shrink and move from a system of election by peers to one of appointment by parliament and the president. + +Mr Erdogan’s initial comments suggest he will disregard the slim margin of victory and portray the referendum as a sign of support for his crackdown. The day after the vote, his government extended the state of emergency until July 19th. Two days after that, police arrested some 38 people accused of participating in protests. + +Turkey is saddled with a constitution opposed by nearly half of all voters in a referendum tainted by fraud claims and held under conditions that made open debate impossible. Mr Erdogan has the powers he has long coveted. They come at the cost of tension at home and isolation abroad. + + + + + +Failure to launch + +French Guiana, in South America, seeks more autonomy from France + +Protests in the second-poorest of France’s overseas departments enter their fifth week + + + +Apr 20th 2017 | CAYENNE, FRENCH GUIANA + +OF ALL the voters fuming about neglect by out-of-touch politicians in distant Paris, the people of French Guiana have perhaps the strongest case. It is the second-poorest of France’s five overseas departments (DOMs). The unemployment rate, at over 20%, is more than double that of the mainland. Some 40% live in poverty. The murder rate is the highest in France. + +The department is entering its fifth week of a general strike. Thousands of Guianese have taken to the streets to protest against high living costs, lack of jobs and crime. The demonstrations started on March 20th, when workers from Endel-Engie, an engineering firm, and EDF, the local energy utility, blocked roads outside the coastal city of Kourou to prevent the launch of a rocket from the Guiana Space Centre, which is based near the city. + +The space centre is the main launching pad for the European Space Agency, owing to Guinea’s location close to the equator (to take advantage of the earth’s spin) and by an ocean (to reduce the chances that a botched launch will rain debris on people’s heads). It is also a symbol of the mainland’s apathy: a few miles down the road from Kourou “some people still have no running water or electricity,” says Antoine Louis-Alexandre, a protester. + +Guiana’s troubles are not new. A former slave and penal colony, it was designated as an overseas department in 1946, giving it the same political status as mainland departments. But inequalities have persisted between the DOMs and mainland France. + +Guiana is rich in natural resources, including gold, offshore oil and France’s largest forest. But its economy is moribund. It is dependent on imports from mainland France and Europe. In 2015 it exported €138.6m ($148.4m) worth of goods, compared with €1.2bn of imports. Even wood is imported, despite a lush rainforest in its back yard, which is a protected green zone that allows France to offset its carbon emissions. A high import tax on anything that arrives by sea means Guianese people pay higher prices. Food products are 45% more expensive than on the mainland. + +The department’s infrastructure is appalling. Two main roads connect the principal towns along the coast but in the interior people travel by canoe. Its schools are in crisis, with dilapidated buildings and over-sized classes. One in two Guianese leave school with no diploma. + +Moreover, its population has tripled since 1985. Partly this is to do with migration. Guiana is better off than its South American neighbours. Unguarded Amazonian borders led to a surge of newcomers from Brazil and Suriname in the 1980s and 1990s. The birth rate has also soared. Today, 43% of the population is under 20. Almost half of those under 25 have no jobs. + +Its status as part of the European Union also makes it a convenient transit zone for traffickers moving cocaine from South America into Europe. The number of Guianese caught with drugs in Cayenne’s airport doubled between 2014 and 2016, to 371. Crime rates are correspondingly high. + +The government in Paris has taken note, offering €1bn in emergency funds to pay for policing and improvements to hospitals and schools. Protest leaders demanded a further €2.1bn. They also want immunity for those involved in road blockades. But most of all they want change: “The DOMs need greater autonomy and a system that is adapted to local conditions,” says Gabriel Serville, one of Guiana’s deputies. Otherwise, protesters are clear: standing in front of a crowd in Cayenne and pointing at the French flag this month, one declared, “If they can’t treat us like French citizens, like they treat French citizens elsewhere, we’ll tear it down.” + + + + + +The tempest + +Workers in southern Europe are stuck in lousy jobs + +Segmented labour markets have scarred young jobseekers + + + +Apr 20th 2017 | ATHENS, MADRID AND NAPLES + +EMA ZELIKOVITCH, a 24-year-old philosophy graduate in Madrid, takes a deep breath before listing the jobs she has held over the past few years. While at university she worked as a dance teacher, waitress, street fund-raiser for NGOs, call-centre operator and greeter at political conferences for Podemos, a far-left party. Since graduating she has juggled jobs at two restaurants, but one recently sacked her. Every job was on a temporary, or “fixed-term���, contract. And while some paid her a living wage, none came with a path to promotion. + + + +Dead-end, fixed-term jobs have haunted southern Europe for decades. In 2015 over half of employed 15-to-29 year olds in Spain were on temporary contracts, compared to two-fifths in Italy and just under a quarter in Greece; the average across the European Union is 14% (see chart 1). + +More flexible northern countries tend to protect the worker rather than the job, allowing their economies to adjust more quickly to shocks and technological change. In the south, half-baked attempts at labour reforms contributed to the problem: governments made it easier to hire and fire new workers, but were wary of touching highly protected “insiders”. This created a two-tier labour market, with the lower tier populated by a young precariat. + +Such segmentation means that the most vulnerable workers before the crisis were hit hardest during it. In Spain, as the crash hit the construction sector, temporary contracts as a share of the total fell, from 32% in 2007 to 25% in 2009. Those with the fewest employment rights were the first to go. + +Now, while unemployment in the euro zone is edging downwards, southern European labour markets are lopsided. Youth unemployment is still painfully high, at 35% in Italy, and over 40% in Spain and Greece. And employers seem no more keen to make permanent hires. In Spain, Italy and Greece, the share of employees on temporary contracts between the ages of 15 and 29 rose by at least three percentage points between 2012 and 2015. + +These economies’ inability to increase the number of permanent contracts has stored up problems. The churn of temporary workers crimps productivity growth. In Spain, the cost of making an employee permanent is so large that firms “rotate people instead”, says Marcel Jansen of the Autonomous University of Madrid. A quarter of temporary contracts in Spain last for one month or less. Employers have little incentive to train up a worker they think will leave soon anyway. And such short spells hardly give workers time to develop skills on the job. + + + +Faced with the lower wages that tend to accompany temporary work, many young people turn to the black market, either working cash-in-hand or not declaring freelance work commissioned by firms abroad. In Naples, 30-year-old Giuseppe is officially unemployed but occasionally works for cash in a factory. He dreams of going abroad, perhaps to England; currently he lives at home with his mother. + +Others are doing more than dreaming: between 350,000 and 420,000 Greeks have left the country since 2008, from newly qualified doctors to hairdressers. “We’ve gone back to the 1950s when my grandparents left to work in a German factory,” says Aristotelis, a 28-year-old Greek doctor who is planning to move to Hamburg to become a surgeon. In the southern Spanish region of Andalusia, where unemployment rates are among the highest in Europe at 30%, many young people wish they could stay. “It’s a really good place to live, with nice people and close to the sea,” says Miguel, a 19-year-old studying business management. But he sees no future in Spain. + +To their credit, policymakers have been trying to tug the tiers of employment together. In 2012 Spain introduced a labour reform which, along with introducing more wage flexibility, cut severance payments for permanent employees and introduced subsidies for companies hiring new full-time workers. In Greece attempts have been made since 2010 to loosen collective-bargaining agreements. In Italy, after much wrangling, the former prime minister, Matteo Renzi, passed a “Jobs Act” in 2014 which attempts to increase the number of permanent workers with temporary tax breaks while also making it easier to fire full-time workers. + +So far, the reforms have not altered the trend towards temporary contracts, though caution by employers amid a weak recovery makes this unsurprising. + +Many politicians lack ambition to go further. In Spain only one party—Ciudadanos (Citizens), a new liberal party—is pushing for further labour reform to reduce the number of temporary contracts. Without more progress, the young will vote with their feet. + + + + + +Bog down, wind up + +Ireland is ditching peat for energy from wind + +The island nation aims to become a net exporter of electricity + + + +Apr 22nd 2017 | CONNEMARA + +PEAT has a lot to recommend it. It imparts a delicious flavour to whiskey. It emits an agreeable aroma when burned. It is a cheap source of energy; at its simplest it involves no more than digging by hand. Ireland, which has bogs full of the stuff, uses it for 6% of its energy. + +But peat is also one of the dirtiest fuels available, emitting 23% more carbon dioxide than coal. Ireland is unusual among developed countries in burning it for energy on an industrial scale. A geological precursor to coal, it has been used on the island for at least 1,000 years. But it may at last be on its way out as Ireland turns to another energy source of which it has unlimited quantities: wind. + +Galway Wind Park, in the remote, soggy hills of Connemara facing the Atlantic Ocean, will be Ireland’s largest wind farm when it is completed this summer, generating 169MW of power at peak capacity, or about 3% of Ireland’s average needs. Some turbines are already generating electricity. It is only the latest development in Irish wind power, which has tripled in the last decade to more than 3GW of capacity. The renewable resource now provides a quarter of the electricity Ireland consumes every year. Eirgrid, a state-owned company which manages the grid in both Northern Ireland and the Republic, says much more wind capacity is in the planning stages. + +Wind is difficult to manage because it is unpredictable, even on the blustery shores of western Ireland. Since wind turbines do not turn consistently, the grid must be carefully tuned to keep it stable. One way around this is to export excess power that takes the grid beyond the point of stability. This is the trick used by Denmark, amongst others, whose grid is linked to those of Germany, Sweden and Norway. + +Ireland already has two connections to Britain. At night, these cables provide hundreds of megawatts of Irish wind power to its neighbour. Eirgrid is planning a cable to continental Europe. A report from SEAI, Ireland’s energy authority, suggests that the island could generate enough wind electricity to match domestic demand by 2030, with more left over to export. That would be good timing. Bord na Móna, the body responsible for developing Ireland’s peatlands, has said it will stop extracting peat for electricity by the same year. + + + + + +Charlemagne + +Martin Schulz wants to emulate his “idol”. It won’t be easy + +The Social Democratic candidate for chancellor of Germany takes inspiration from Willy Brandt + + + +Apr 22nd 2017 + +WHEN Martin Schulz entered the village hall in Nunkirchen on March 24th, in the hilly German state of Saarland, the cheer nearly blew the roof off. To a beery crowd of villagers and party activists, the candidate for Germany’s centre-left Social Democrats (SPD), who hopes to replace Angela Merkel as chancellor, was introduced as a near-messiah: “the man who made politics in Germany interesting again, who has reinstated the SPD’s self-belief, who has put social justice back on the agenda, who will be our next chancellor!” As he ascended the stage a hush fell. The bells of the church next door began to peal: “I didn’t ask for that!”, he insisted. + +His speech quickly transcended the borders of Saarland, which was about to elect a new government. Mr Schulz ruminated on Europe; cracked folksy jokes; solemnly intoned about Germany’s historical burden; cast his family, neighbours and acquaintances from the campaign trail as characters in a compendium of parables about the country. He lingered on Willy Brandt, the SPD chancellor of West Germany from 1969 to 1974, who had once spoken in the very same hall. In reverential tones Mr Schulz recalled his 20-year-old self receiving a book as a prize from the great man. “I still have that book,” he said, eyes a-glisten. + +This was the peak of what Germans call the Schulz-Effekt. It started on January 24th, when Sigmar Gabriel, then-leader of the SPD, unexpectedly handed the reins to his charismatic comrade, the outgoing president of the European Parliament. The new face worked wonders. Having long languished in the polls, the SPD suddenly shot up by ten points. It drew level with Mrs Merkel’s centre-right alliance of the Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), with which the SPD rules in coalition. Euphoria gripped the party. Then, two days after Mr Schulz’s speech, the SPD returned a mediocre result in the Saarland election. It has since fallen back in national polls; Mrs Merkel is once again the most popular prospective chancellor. Can the Schulz-Effekt be revived? + +In trying to answer that question, it helps to contemplate the man Mr Schulz calls his “idol”. A half-metre-high bronze statue of Brandt stands in his office. He has described the 1972 election, the first in which the SPD won more seats than the CDU/CSU alliance, as “the moment of my politicisation”. He quotes Brandt religiously and encourages comparisons. + +There are indeed similarities. Like Brandt in 1969, Mr Schulz leads an SPD that is tired of being the junior partner in a grand coalition, yet struggling, at a time of economic boom, to usurp a long-dominant CDU/CSU. Like Brandt, a one-time mayor of isolated West Berlin, the former European Parliament president is an outsider in German federal politics. And like Brandt he is blunt, approachable, emotional, idealistically European in outlook and palpably hungry for power. + +Their political strategies are alike, too. Brandt’s campaign was hyper-personal, known as the “Willy Election”; Mr Schulz orates under banners proclaiming “Time for Martin” and in front of crowds chanting his first name. By focusing on things like schools (saying that he will offer voters “fee-free education from nursery to university”) he wants to emulate his idol’s path to power: an alliance spanning the working-class SPD, the liberal Free Democratic Party (FDP) and the intellectual left (in Brandt’s day the peace movement, today the Green Party). In 1969 the laboratory of this coalition was the new SPD-FDP government in the state of North Rhine-Westphalia. Today the equivalent is the SPD-FDP-Green coalition in Rhineland-Palatinate, which has already introduced fee-free education. + +So far, so Schulz-Effekt. But his problems have to do with the differences between then and now. Brandt had the benefit of three years as vice-chancellor in the lead-up to 1969. Mr Schulz, by contrast, is unfamiliar with Germany, having been away since 1994. He is frantically swotting. A recent interview in which he claimed 40%, not the correct 14%, of young Germans are on short-term contracts cost him credibility. Meanwhile, where Brandt’s time in Berlin berating the communist East burnished his reputation, Mr Schulz’s support for euro-zone debt-sharing is a political liability. Jens Spahn, a rising CDU star, brands him a better friend to Greek communists than to German taxpayers. + +2017 is not 1969 + +The biggest difference has to do with coalitions. In Brandt’s day there were just four parties in the Bundestag. He became chancellor by forming an SPD-FDP coalition, condemning the larger CDU/CSU to opposition. In the next Bundestag there will probably be seven parties, complicating the arithmetic. Mr Schulz could seek another grand coalition with Mrs Merkel’s centre-right CDU/CSU. But his party has long suffered in this arrangement. Promoting yet another alliance between the two would thus only help Mrs Merkel. So Mr Schulz is going for a coalition with the FDP and the Greens. But his putative liberal partners are not keen and polls put this grouping well short of a majority. + +That leaves a coalition with the Greens and the socialist Die Linke (the Left), which descends from the Communist party that ran East Germany. Unlike previous SPD candidates for chancellor, Mr Schulz refuses to rule out such a coalition. But Die Linke’s anti-NATO views make it politically toxic. Talk of an SPD-Left government in Saarland, for example, appears to have raised turnout among CDU/CSU voters and contributed to the SPD’s defeat. + +There is a historical irony here. Brandt dreamed of reunification and as chancellor warmed relations with East Germany. In the long term his vision came true. But this ultimately created a force in Die Linke that now hoovers up social-democratic votes in the east, is electorally toxic in the west, and without which the SPD may not be able to build a left-of-centre coalition. The legacy of his hero weighs heavily on Mr Schulz. + + + + + +Britain + + + + +A snap election: Back into battle + +The class of 2017: One of us? + +The Liberal Democrats: A Brexit bounce + +The opposition: Hard work for Labour + +The election in Scotland: Mountains to climb + +Northern Ireland: A blow upon a bruise + +The economic background: Ride the wave + +Bagehot: Theresa May, Tory of Tories + + + + + +Back into battle + +A snap election stuns everybody—including Theresa May’s cabinet + +A bigger majority would improve the government’s position at home and, especially, abroad + + + +Apr 20th 2017 + +ONE thing is certain about the British general election: Theresa May didn’t call it for the reason she claimed. Standing in front of 10 Downing Street on April 18th the prime minister said she had no choice but to call a poll because “the country is coming together but Westminster is not”. In fact, the country remains deeply divided—more than 40% of Britons still think that Brexit was a mistake—whereas the biggest opposition party, Labour, has sided with Mrs May in accepting “the will of the people” as expressed in the referendum. + + + +The reason she called the election is simple: she thinks she can win big. Jeremy Corbyn, who combines ideological extremism with political incompetence, has led Labour to a near-record slump in popularity. The party is deeply divided between its pro-Brexit working-class heartlands and its anti-Brexit metropolitan annexe. The Conservatives have maintained close to a 20-point lead in opinion polls over Labour for months. Only 14% of Britons say they would choose Mr Corbyn as prime minister over Mrs May. The Tories’ lead among working class “C2DE” voters is almost as great as among rich ABC1s (see chart). + +The Liberal Democrats have a strong message—we’re the party of the 48% who voted to Remain—but a weak leader in Tim Farron. The UK Independence Party has imploded. And the Scottish Nationalists have peaked, winning 56 of Scotland’s 59 constituencies in the last election and now suffering from the inevitable disappointments of having to run a country. On April 19th the Times quoted polling data suggesting that Mrs May could win the election with a majority of more than 100 seats. + +That would enhance her freedom to negotiate Brexit. Her current working majority of 17 gives leverage to hardline Brexiteers who might vote against any deal that involved sacrificing control over migration or paying an exit fee to leave Europe. A bigger majority would give her the freedom to compromise with the European Union and get the deal through Parliament. + +It would enhance her authority in other ways, too. It would give her a personal mandate while releasing her from the strictures of David Cameron’s 2015 manifesto, which has already caused her to retract a proposed tax increase. And the new generation of Tory MPs will have fought the election with Mrs May as the commander-in-chief and will see their futures in terms of keeping her happy (see article). + +Just as important, victory would extend her time in Downing Street until 2022. The Tory high command had been increasingly worried about the fact that the Fixed-term Parliaments Act would force her to call an election in 2020. This might have given the EU a negotiating lever: Mrs May would have had to rush to reach a deal before the British election cycle started. It would also have reduced the amount of time she had to sell her Brexit deal to the country. Now she may have three years between producing a deal and facing voters. + +Why did such an obvious decision take Britain by surprise? Cabinet members were reported to be “stunned” when they learned of her opinion a few minutes before she informed the country. The question had been debated for months in Tory circles. In March William Hague, a former party leader, launched a trial balloon in a newspaper article calling for an early election. Enthusiasm halted when a poll by Sir Lynton Crosby, the Tories’ election guru, showed the party losing seats in the south to the Lib Dems. + +There are, in fact, several reasons against calling an election. The obvious one is that Mrs May repeatedly said that she wouldn’t. The second is that waiting until 2020 would bring some big advantages: the chance to keep Mr Corbyn in office longer and the likelihood of bagging 20 more seats following boundary changes. + +The Tories worried about overriding the Fixed-term Parliaments Act, which requires a two-thirds majority of MPs. A wily Labour leader might have forced them to pass a vote of no confidence in their own government in order to hold a general election; Mr Corbyn simply went along with her. They also worried about election fatigue. A country that is used to voting every five years will, by June 8th, have gone to the polls three times in two years. + +All elections are risky. The press will want drama; the Lib Dems might provide it by picking up seats in Remain territory such as London and the south-west (see article). John Curtice of Strathclyde University warns that Mrs May’s hopes of a three-figure majority will melt if her lead is cut from 20 points to ten or below. In 2015 a seven-point lead over Labour translated to a majority of only 12. He adds that many Labour MPs have very large majorities. + +Yet the Tories look like hounds baying for blood and the Labour Party like frightened foxes. Half a dozen Labour MPs have already declared that they won’t fight the election and more are disassociating themselves from their leader. + +The Conservatives will present the election as a chance and a choice. It will be a chance to give Mrs May the authority to negotiate in Brussels (she will talk a great deal about the need for this authority and very little about what her negotiating position will be). And it will be a choice between Mrs May and Mr Corbyn. Hitherto the Tories have been soft on Labour’s leader because they regard him as an asset. Over the next seven weeks they will unload filing cabinets full of documents about his friendly relations with the IRA, Hamas, Hugo Chávez and others who are not well thought of in middle England. The pro-Brexit press is egging them on: “Crush the saboteurs”, urged the Daily Mail’s front page after Mrs May called the election. + +Yet her gamble makes a softer Brexit more likely. The pound surged to a sixth-month high on news of the election. Mrs May will talk a great deal over the coming weeks about needing the authority to negotiate with the EU. She is just as interested in getting the clout to negotiate with the 30-40 hardliners in her party who have used a succession of slim Tory majorities to exercise undue and malign influence on British politics. The saboteurs who end up being crushed might not be the ones that the Daily Mail is thinking of. + + + + + +One of us? + +Tories elected in June will not cause Theresa May much grief + +Theresa May needs a cushion of moderate MPs to dilute the influence of ultra-Brexiteers + + + +Apr 22nd 2017 + +WITH the Conservatives far ahead in the polls, Theresa May’s parliamentary party is likely to swell after the election. As well as winning seats from Labour, the Tories will need to replace a handful of their own MPs who are stepping down, such as George Osborne, a former chancellor. If the polls pan out, around 100 new Conservative MPs might soon be taking the oath of allegiance to the Crown. + +Mrs May hopes that this will provide her with a cushion of moderate MPs to dilute the influence of the three-dozen or so ultra-Brexiteers on her backbenches, making it easier for her to compromise in the Brexit negotiations. But will the new MPs be hard or soft Brexiteers? + +It is partly a question of which seats are up for grabs. In the 100 constituencies where the Conservatives need the smallest swing in order to win, support for Brexit is similar to that in the country as a whole. Around a third of them delivered majorities for Remain. That calls for Tory candidates who are not too hardline on Brexit. In places like the Labour marginal of Brentford and Isleworth in south-west London (fourth on the Tory hit list) local Conservatives say they consider a candidate’s support for “social justice” to be as important as anything else. A Tory official in Ealing Central and Acton, another Remain-backing London constituency that is second on the hit list, wants a “Tory with a heart”. + +The tight timetable should help Mrs May to choose sympathetic candidates. Normally, local Conservative associations spend months carefully choosing their parliamentary candidate. Activists tend to be to the right of the parliamentary party, and most would dearly love to choose hard-Brexit candidates. Garry Heath, a member of the Wycombe Conservative Association, wrote on the ConservativeHome blog that the Tories should “purge our party and deselect the Remainers”. + +Yet with the election only seven weeks away, there is little time for local parties to scour the land for suitable hardliners. Conservative Central Office is expected to step in and present local associations with a shortlist of candidates. These lists will reflect Mrs May’s politics; in turn, the candidates will be loyal to her if elected. + +The easiest option in many cases will be simply to reselect the candidate who stood in the 2015 election. Back then, most of the party’s leadership was in favour of Remaining, albeit reluctantly. Whatever happens, it looks as if Mrs May’s prospective new MPs are unlikely to give her too much trouble. + + + + + +A Brexit bounce? + +The Lib Dems will focus on one issue: Europe + +Their campaign will benefit from a rapidly growing party membership + + + +Apr 20th 2017 | BRISTOL + +CAMPAIGNING as a Liberal Democrat in the 2015 general election was not a happy experience, says Stephen Williams, a former minister for local government. The party was disliked for propping up the Conservatives in a coalition government in 2010-15 and for reneging on a pledge not to raise university tuition fees. It scraped just 8% of the vote, down from 23% in 2010. “At times I felt like the most hated man in Bristol,” Mr Williams sighs. + +Now, though, things are looking brighter for the Lib Dems. Last year no party campaigned to remain in the European Union so vehemently. And now, none is likely to benefit so much from the vote to Leave. The party’s noisy opposition to the government’s proposed “hard Brexit” has helped it to notch up some spectacular swings in council and parliamentary elections since the referendum (see chart). Meanwhile, it faces only weak competition for left-leaning voters from Labour, which is under catastrophically bad management (see article). + +So the Lib Dems are optimistic about their chances on June 8th. All 48 seats they lost in 2015 will be “in play”, reckons Rob Ford of the University of Manchester. A 10% swing to the Lib Dems would see them pick up 40 seats, 25 of them from the Conservatives. They are unlikely to do quite that well—partly because eight of those seats are held by the Scottish National Party, whose vote is likely to hold up, and partly because the Liberals’ organisation is still relatively weak after successive local electoral drubbings. But Lib Dem watchers guess the party could pick up more than 20 new seats. Popular former MPs including Vince Cable, a former business secretary, and Simon Hughes, a former justice minister, have said they will seek to win back their old constituencies. Nick Clegg, a former party leader and deputy prime minister, has confirmed he will stand again. + + + +Even before the EU referendum, strategists had talked of building a reliable “core vote” among internationalist young urbanites. That job has now become a good deal easier. Advertising the Lib Dems’ support for a “soft Brexit” is an obvious way to attract the 48% who voted to Remain. In Bristol, where Mr Williams is running for the new post of mayor of the West of England, he misses few opportunities to remind voters of the Lib Dems’ position on Europe. At City Hall he tells a crowd of ethnic-minority businessfolk that Indian-British relations are “going to be even more important if we go over the Brexit cliff.” Tory pollsters fret that a Liberal raid on Remain voters might eat into the government’s expected majority, with London and the south-west of England, the Lib Dems’ historical stronghold, particularly vulnerable. + +The party’s position on Brexit has also helped it to win back protest voters, who abandoned the party when it got into bed with the Conservatives in 2010. Mark Pack, a Lib Dem strategist, notes that support for close relations with the EU is now the “anti-establishment position”. According to a recent poll by Opinium, only a third of voters now think that the party was wrong to have entered into coalition with the Tories. Meanwhile, its appeal seems to go beyond Europhiles: since the referendum the party has picked up more council seats in Leave-voting areas than Remain ones. + +With just nine MPs, the Lib Dems have so far struggled to gain a hearing. Some reckon that part of the reason why they have yet to see much of an uptick in the polls is because most voters pay little attention to the party until they are forced to by an election. The lacklustre leadership of Tim Farron has not helped. He recently got some attention, but only by refusing to say whether he thought gay sex was a sin (he later clarified that he thinks homosexuality is not). Polling suggests that voters think he is doing no better a job than Jeremy Corbyn, Labour’s unpopular leader. + +But there is cause for optimism on both fronts. The party’s profile will rise during the campaign; the fact that it is the most strident anti-Brexit party will attract television cameras, says Mr Ford. Even if the party’s national polling does not pick up, it will pour resources into marginal seats, while other parties will have to campaign across the country. Moreover, what the Lib Dems lack in leadership, they increasingly make up for with boots on the ground. The party claims that its membership has doubled since the 2015 general election, to more than 90,000. Opposition to a “hard Brexit” provides them with a cause worth fighting for. + + + + + +Love for Labour’s lost + +The Tories face feeble opposition in the June election + +Labour’s supporters worry that the only uncertain question in the election is the scale of their defeat + + + +Apr 22nd 2017 + +WHICH year will turn out to be the comparison? Will it be 1983, when Labour won just 209 seats under Michael Foot? Could it look more like 1935, when it secured 154? Or might the party confound pollsters, and the government, and improve its current tally of 229? The party trails the Conservatives by 20-odd points, so its prospects look dim. + +Labour’s fate in June depends on the behaviour of its past supporters. Less than half of those who voted Labour in 2015 would still do so, according to polls by YouGov. Instead 10% would vote for the Liberal Democrats, 7% for the Conservatives and 24% say they do not know. Another 4% say they will not vote at all. + +Labour has captured some support from the Green Party, youngsters and those who have not voted before. But the voters it has lost are old, working class and—crucially—dependable. In return, says Marcus Roberts of YouGov, it has gained unreliable voters with no history of supporting Labour or indeed turning out at all. + +The party faces myriad threats. According to YouGov’s analysis, any constituency where Labour has a lead of less than 14% over the Tories would turn blue. Fifty-six of Labour’s 229 seats qualify. Meanwhile the Liberal Democrats will be eyeing hungrily those such as Cambridge, where Daniel Zeichner, the Labour MP, has a majority of just 599 and which voted overwhelmingly against Brexit. + +Theresa May put Brexit and the question of leadership at the centre of her call for an election, knowing that both are weaknesses for Labour. Voters still don’t know where the party stands on Brexit. That uncertainty comes from the impossibility of devising a policy that satisfies both Labour’s metropolitan Remain voters and its working-class Leavers in northern England and the Midlands. As for leadership, even among habitual Labour voters, fewer than half want to send Jeremy Corbyn to Downing Street. + +Labour’s hopes rest on changing the subject from Brexit to matters on which it is stronger, such as the National Health Service, housing and schools. The NHS, in particular, is an area where it is still more trusted than the Tories. A predicted defeat for Labour in a by-election in Stoke Central in February failed to materialise, after voters seemed less interested in Brexit than in domestic matters. The collapse of the populist UK Independence Party will help Labour in its working-class heartlands. + +Nonetheless, many of Mr Corbyn’s own MPs are unenthusiastic. John Woodcock, who represents Barrow and Furness and has a majority of just 795, said in a video to his constituents on April 19th that although he would be seeking re-election, he could not endorse Mr Corbyn as prime minister. Others are quitting. Alan Johnson, a former Labour home secretary and Gisela Stuart are among those who have said they will not stand. + +In the absence of a popular leader, Labour MPs will have to campaign locally and individually. But building personal brands takes time, and that is in short supply. Just as after the Iraq war some Labour MPs distanced themselves from Tony Blair (who may this time campaign with the Liberal Democrats against Brexit), Labour candidates may try to avoid Mr Corbyn. He might make that easy for them. Labour sources reckon he will run this election like his leadership campaign, travelling to safe seats represented by friendly MPs and holding big rallies in front of adoring crowds. He will avoid talking about the EU as far as possible, leaving the difficult work of coming up with a position on it to Sir Keir Starmer, his Brexit spokesman. + +Some are already pondering what Mr Corbyn would do in the event of a defeat. Most leaders would resign, but Mr Corbyn may not. He is determined to lower the level of parliamentary support required by would-be leadership candidates before their names can go on the ballot sent to members. They currently need the signatures of 15% of MPs; Mr Corbyn would like to cut it to 5%, to ensure that a left-wing candidate can replace him when he steps down. If he clings on to push that through, Labour’s agony may be prolonged. + + + + + +Mountains to climb + +The Tories will struggle to budge the SNP in Scotland + +Most of the nationalists MPs are sitting on hefty majorities + + + +Apr 20th 2017 | EDINBURGH + +INDEPENDENCE, not Brexit, will dominate the election campaign north of the border. Although Theresa May has tried to frame the vote in England as a chance to strengthen her negotiating mandate in Brussels, the best chance that her Conservatives and other unionist parties have of unseating the dominant Scottish National Party is to play on fears that a strong showing by the SNP would speed Scotland’s exit from Britain. + +On the face of it, things might look tricky for the nationalists. Having scored a stunning victory in 2015, winning 50% of the vote and all but three of Scotland’s 59 seats at Westminster, the SNP has little to gain and much to lose. And a year after it won a third term in power in the devolved Scottish government, there is plenty for voters to complain about. Health-service standards are slipping. The once-excellent Scottish education system has slid below that of England in international rankings. Meanwhile the Scottish economy contracted by 0.2% in the last quarter of 2016 and may soon tip into recession. Scottish ministers blamed the fall on Brexit—but Britain’s economy expanded by 0.7% in the same quarter, and by 1.8% over the calendar year compared with Scottish yearly growth of just 0.4%. + + + +Yet the Conservatives and other pro-union parties are unlikely to unseat more than a handful of the nationalists’ MPs. The SNP’s strongest defence is not its policy platform, but simple arithmetic. The size of most of its MPs’ majorities is crushing: in only six of the 56 seats that it won in 2015 did it have a lead of less than ten percentage points over its nearest rival (see chart). The Conservatives hope at least to take the seat of Berwickshire, Roxburgh and Selkirk, which would require only a 0.3% swing. A few others may fall. But in most of its seats, mainly former Labour turf, the SNP looks unassailable for now. + +The unionist parties intend to chip away at the nationalists’ lead by focusing on independence. The SNP’s leader, Nicola Sturgeon, has pronounced the Brexit vote a “material change in circumstances” justifying a second independence referendum, aiming to overturn the 2014 ballot in which 55% rejected breaking from Britain. Because preparing for this ballot is one of the few pieces of significant government legislation the Scottish Parliament has approved in the past year, opponents accuse her of obsessing about break-up rather than mending public services. They hope that the campaign will flush out more of the SNP’s independence plans, such as what Scotland’s currency would be. + +Ms Sturgeon, by contrast, is determined to make the election a campaign against Mrs May’s “hardest possible Brexit”, meaning “more austerity and deeper cuts”. But Brexit presents problems for her party, too. A prominent nationalist MSP, Alex Neil, has revealed that he was among half a dozen of the party’s MSPs who voted to Leave, defying the party’s policy to seek EU membership. This reflects divisions in the party’s supporters: about a third of those who voted for independence are reckoned to have voted for Brexit. Ms Sturgeon may feel compelled to de-couple independence from EU membership by promising separate referendums on each. + +The Scottish Conservatives look best placed to gain. Their leader, Ruth Davidson, secured an increase in the Scottish Tory vote from 14% in 2011 to 22% last year in Scottish parliamentary elections. That was its greatest share since 1992 and enough to displace Labour as Scotland’s second party and the official opposition. She will hope to build on that in June. But the scale of the SNP’s lead in most of its seats means that Ms Davidson, a Thai kick-boxer, will need to conjure some extraordinary moves if she is to dent Ms Sturgeon’s independence ambitions. + + + + + +A blow upon a bruise + +Another bitter election will not help Northern Ireland’s talks + +Negotiating will take second place to campaigning, at least until June 8th + + + +Apr 20th 2017 | BELFAST + +WHEREAS the June vote is likely to shore up Theresa May’s position in Westminster, the poll could cause considerable damage to her government’s efforts to make progress in Northern Ireland. + +Talks between the two main parties, the Democratic Unionists (DUP) and Sinn Fein, have been dragging on for weeks with the aim of putting back together a power-sharing agreement which broke down in January. So far the talks have shown an exasperated public only that unionists and republicans are capable of talking almost indefinitely without offering meaningful concessions. + +Mrs May’s inexperienced Northern Ireland secretary, James Brokenshire, had called an Easter pause to the talks in the faint hope that the two sides might return to the table in a more constructive mood. Instead, the parties will between now and June 8th be locked in hand-to-hand electoral combat for Northern Ireland’s 18 Westminster seats. + +A less conducive atmosphere for achieving compromise is hard to imagine. Elections to the Assembly on March 2nd were bitter. A low point came when the DUP’s leader, Arlene Foster, likened republicans to crocodiles. The thought of the two sides once again battering each other has caused dismay. The British government insists that the talks can go on and that “the prospect of a forthcoming UK general election does not change this approach”. + +Among those clearly peeved by Mrs May’s announcement is the Irish foreign minister, Charles Flanagan, whose government was already mightily vexed by the Brexit project. He warned: “All of the parties will now be competing in a general election and mindsets will inevitably shift to campaign mode.” + +Nor is the atmosphere likely to be much more favourable after June 8th, since by then the Orange parading season, in which protestant marching bands commemorate the walloping of Catholics in long-ago battles, will be under way. The general rule is that little political business can be done when the bands are on the streets, due to heightened communal tensions. + +Much credibility has already drained from the Assembly, and there is a danger that months more deadlock might mean the idea of devolution could run into the sand. A telling indicator of this is that the public has practically ceased to lodge formal complaints about the Assembly—not because confidence in the system is growing but because it has plummeted. According to the Assembly’s standards watchdog, Douglas Bain, a striking drop in complaints in the past year was due in large part to lack of confidence: “No right-minded person could seriously believe” that it was because politicians were “behaving better”, he said. + +Brexit played little part in elections to the Assembly on March 2nd. It is more likely to be a backdrop in this contest than a central issue, since most electors cast their vote in accordance with patterns established decades ago. The DUP characterises the election as a chance to vote for the union with Britain, whereas Sinn Fein describes it as “an opportunity to oppose Brexit and reject Tory cuts and austerity.” + +Rival unionist parties are likely to sink some of their differences and form voting pacts aimed at halting recent advances made by Sinn Fein, which last month came within barely 1,000 votes of becoming the biggest party in the Assembly. The election is “a golden opportunity to bounce back”, the DUP says. The Orange Order, an influential protestant group, has given its blessing to pacts. + +Even if the unionists are able to increase their share of Northern Ireland’s MPs, which currently stands at 11, they face the prospect of having less influence in Westminster. With her current working majority of 17, Mrs May values the support of Northern Ireland’s unionists (the republicans don’t take their seats in the British Parliament, on principle). But if she increases her majority by as much as expected, they will matter to her far less. + + + + + +Ride the wave + +A strong economy will help Theresa May in June’s election + +But real wages, already below their pre-crisis peak, are starting to fall once again + + + +Apr 20th 2017 + +SINCE last June’s referendum the British economy has beaten almost all forecasts. Most wonks expected that the vote for Brexit would immediately tip the economy into recession. In fact in 2016 it grew faster than that of any other G7 country—and growth was faster in the six months following the referendum than in the six months preceding it. In February the employment rate among 16- to 64-year-olds reached nearly 75%, its joint-highest level since records began in 1971. Theresa May will be able to point to a strong economy in the run-up to the June election. + +A few factors explain the economy’s outperformance since the referendum. Household consumption spending, which makes up some two-thirds of GDP, has remained buoyant. Consumer confidence is solid: perhaps unsurprisingly, Leave voters are bullish, surveys suggest. Even for Remainers, Brexit remains vague and some way off, so they see little reason to cut back on spending yet. Some Britons have even brought forward purchases, apparently loading up on foreign goods before the weak pound—down by over a tenth since June 23rd—causes prices to rise. + +Business investment, meanwhile, has not suffered as much as feared. The expectation was that the vote for Brexit would lead to tighter financial conditions. But thanks to speedy action by the Bank of England to relax credit, firms’ funding costs have fallen slightly since the referendum, increasing the expected returns on capital spending. Investment did stagnate in the fourth quarter of 2016 but is still up on the year before. + +Bosses’ willingness to invest is also because many are optimistic about their future. The weak pound has made their wares more competitive to foreign buyers. Exports of manufactured goods were up by over a tenth in the fourth quarter of 2016 compared with the year before. Exports of services rose by less; Britain’s financial-services and legal firms compete on quality, rather than on price. Nonetheless the current-account deficit, a measure of what Britain imports over what it exports, fell from 5.3% of GDP to 2.4% of GDP in the fourth quarter of 2016. + +The run of good economic news comes at a crucial time for Mrs May. An incumbent government’s fortunes at an election mirror those of the wider economy. A recent study by Jonathon Clegg, then of Oxford University, looked at general elections in post-war Britain. It suggests that a rise in household disposable income in the year of an election significantly increases the vote share of the incumbent party. Recently, Britons’ real disposable household income has been rising at an annual rate of around 2%. + +That bodes well for Mrs May but the new government, which she is likely to lead, will take shape just as things turn for the worse. The Conservatives have pledged that public debt as a share of GDP will fall from 2020. To this end, in 2018 they plan a reduction in the budget deficit, adjusted for the economic cycle, of around 1% of GDP. This is a very tight squeeze by historical standards, and something similar is pencilled in for 2019. There is little to suggest that a new Conservative government would change its fiscal plans. + +The biggest worry for the economy, however, is Britons’ pay. Earlier this month official statistics showed that real wages, which are still below their pre-crisis peak, have started to fall once again. For this, thank the price inflation caused by the pound’s tumble. In February consumer-price inflation hit 2.3%, compared with a year-on-year rise in nominal wages of 1.9%. + +The pay squeeze is only going to intensify. Inflation could rise to 3.5% by the end of this year, according to Samuel Tombs of Pantheon Macroeconomics, a consultancy. As Britons’ purchasing power falls, the biggest engine of growth will stutter (indeed, the latest figures on retail sales are concerning). And to fend off the inflationary threat the Bank of England may be forced to raise interest rates, crimping investment and consumption further. Whereas Mrs May might soon be in a much stronger position, the same cannot be said of the economy. + + + + + +Bagehot + +Theresa May’s vision for Britain comes into focus + +The cautious, promise-keeping plodder turns out to be no such thing + + + +Apr 22nd 2017 + +BEFORE her bolt-from-the-blue announcement that she was calling a general election, most Britons had Theresa May down as an honest plodder: a safe pair of hands who kept her promises and did her homework. She trod water in the Home Office for six years while David Cameron’s inner circle got on with the job of reforming the country. She became prime minister only because the Tory party was desperate for somebody who could unite pro- and anti-Brexit factions after Mr Cameron’s resignation following the referendum. Mrs May’s greatest qualification for the job was that she took a lukewarm position, as a reluctant Remainer, on the most important issue of her time—hardly Churchill on appeasement or Thatcher on the unions. + +Yet Mrs May has scrambled her reputation as well as electrifying British politics. A safe pair of hands? Some pollsters had advised Tory high-command not to risk an election on the grounds 48% of the country wants to stay in the European Union and Tory voters (particularly in the south) might scatter to the winds. A promise-keeper? Mrs May had made a clear pledge not to hold a general election before her time was up. A second-division politician? Calling an election was the sort of high-risk, high-reward manoeuvre that could allow her to stamp her authority on the country and her name in the history books. + +Mrs May was a more ambitious politician than the political class realised. The Tory modernisers who surrounded David Cameron had eyes only for each other: would George (Osborne) replace David or would Boris (Johnson) pip him to the post? Mrs May was too dull to be bothered with. But she always had thoughts above her station. As a sixth-former she announced that she wanted to be Britain’s first woman prime minister. She trailed the idea of running for party leader when Michael Howard stood down in 2005. She spent her time in the Home Office building a reputation as a competent administrator and waiting for the shine to come off Mr Cameron’s modernisation project. + +Mrs May turned out to be ruthless as well as ambitious. On becoming prime minister she summoned Mr Osborne for a chat. He wanted to stay on as chancellor of the exchequer but told friends that he was willing to be foreign secretary. She sacked him with a flea in his ear about promising more than he delivered, and followed up by sacking almost all the rest of Mr Cameron’s cronies. She rules her cabinet with a rod of iron with the enthusiastic help of her longtime aides, Nick Timothy and Fiona Hill, and has happily applied that rod to two of the most senior members of the cabinet: the chancellor of the exchequer, Philip Hammond, and the foreign secretary, Mr Johnson. + +Mrs May is not an ideas woman—she didn’t have any interest in engaging with such Cameron-era clever clogs as Michael Gove and Mr Osborne. But she nevertheless has a sense of what sort of country she wants. Her Britain is the Britain of the provincial Tory heartlands: a Britain of solid values and rooted certainties, hard work and upward mobility, a Britain where people try to get ahead but also have time for the less fortunate. + +Mr Cameron was never really at home with the Tory middle classes. In some ways he was too grand: the Old Etonian married into the aristocracy and has taken to shooting in his retirement. In other ways he was too metropolitan: he didn’t want to have to apologise for his party to the liberal elites of London or New York. For Mrs May, the middling folk are her people. She was brought up in the Cotswolds, the daughter of a Church of England vicar, and still takes her Anglicanism seriously. She shinned her way up the greasy pole from her local grammar school to Oxford and from minor jobs in local politics to the highest office in the land. At Oxford, the Cameroons went to grand colleges and joined the Bullingdon, a posh, boorish dining club. Both were mainly off-limits to women; Mrs May made do with a dowdier college and relaxed by watching “The Goodies”, a particularly dire comedy. The Cameroons became special advisers to ministers before being parachuted into safe seats. Mrs May didn’t get her seat, albeit the plum one of Maidenhead, until she was 40. Her purge of the Cameron gang was a vicious bit of class politics: a grammar-school girl who had been patronised by a bunch of public-school toffs plunging in the knife with skill and relish. + +The emerging Mayism + +Mrs May didn’t come to office like Thatcher with a well-worked out ideology, or like Mr Cameron with a long-cherished “project”. But her provincial prejudices are beginning to cohere into a political doctrine: an updated version of the one-nation Toryism which dominated the party before Thatcher pulverised it. Mrs May is much more willing to contemplate intervention in the market than her predecessors: she wants to make takeovers more difficult and has even talked about putting workers on boards. Mr Timothy, her guru, is an admirer of Joseph Chamberlain, a Victorian “people’s Tory” who led the campaign against free trade. Mrs May is also much more worried about social atomisation than has been the fashion in her party. Whereas Thatcher championed liberal markets and Mr Cameron championed liberal morals, Mrs May wants to rebuild communities that have been battered by social change. Her disdain for “citizens of nowhere” is not just a political ploy: she seriously thinks that Britain needs more provincial certainties as an antidote to rootless cosmopolitanism. + +The winds are blowing strongly in Mrs May’s direction. Labour is in chaos. The Liberal Democrats are hampered by weak leadership. The Scottish National Party is losing momentum: Mrs May would relish the chance of heading off Scottish independence by picking up a few seats north of the border. But these are uncertain and volatile times: just look at the French election. And even if Mrs May enhances her majority in June, as looks likely, this apostle of one-nation Toryism will still be presiding over a deeply divided country. + + + + + +International + + + + +Neglected tropical diseases: Winning the endgame + + + + + +Winning the endgame + +A global attack on long-neglected tropical diseases is succeeding + +Donors and drug firms are co-operating to defeat ancient plagues + + + +Apr 20th 2017 | GENEVA + +THE story begins with a mosquito bite. As the bloodsucker feeds on a human, in some parts of the world there is the chance it will transmit the larvae of worms which cause a disease called lymphatic filariasis (sometimes known as elephantiasis). After many such bites, the larvae develop into thin microscopic worms which invade the host’s lymphatic system, where they grow into adult worms. During their seven-year lives these worms damage the lymphatic system, and cause infections that lead to blockages, swelling and fevers. + +Upendo Mwingira, a programme manager at the ministry of health in Tanzania, sees patients with grossly swollen legs that are painful and disabling. Male victims can develop scrotums so large that they can descend to the knees. Their enlarged limbs may smell foul, as they become prone to infections. They may be shunned by their communities and often believe that their sickness is a punishment for some past misdeed. “Imagine how stigmatising it is,” says Ms Mwingira. + +Globally, about 120m people are infected with lymphatic filariasis, of whom about a third are disfigured or incapacitated. And this terrifying condition is just one of a Pandora’s box of horrors that have long afflicted humans in the warm, wet places of the world. Evidence of some of them is found in mummified Egyptians; others are recorded in the Bible and the Talmud, and the writings of ancient scholars such as Hippocrates. Modern science has established that they are transmitted by parasitic worms, bacteria, viruses, protozoans and fungi. + +Some have names that may be unfamiliar. Buruli ulcer, Chagas disease, guinea-worm disease, leishmaniasis, river blindness, trachoma and yaws are some of the 18 now collectively referred to as “neglected tropical diseases” (NTDs). Between them they affect more than a billion people, most of them poor, with blindness, immobility, disfigurement and often great pain. The resulting disabilities keep sufferers mired in poverty; that poverty is also what allows the diseases to thrive. + +Yet for some decades a remarkable and mostly unsung assault on NTDs has been gathering pace. In the past five years it has coalesced into a well-organised and well-funded plan that is cutting transmission and pushing the number of new infections to previously unimaginable lows. There is more than Pandora’s hope at the bottom of the box: humanity is now capable of driving many NTDs out of existence by 2030. The question is whether it will. + +David Molyneux, a parasitologist with the Liverpool School of Tropical Medicine, has been working on tropical diseases since 1965. What struck him in those early days was that it was possible to do great good with simple remedies that were already available. In the 1950s and 1960s, China eliminated lymphatic filariasis by adding an anti-parasitic drug to table salt. For sleeping sickness, surveillance and “vector control” (such as spraying with insecticide and setting insect traps) were highly effective. Insecticides were also known to work against other diseases. + +The benefits went far beyond the direct elimination of the suffering caused by these conditions’ symptoms. As fewer people were rendered disabled, more could work. Dr Molyneux says it is now thought that one of the reasons Japan and South Korea developed so fast after the second world war is that both ran major deworming programmes in schools. + +Using the tools to hand + +The turning-point for NTDs came with the discovery of the drug ivermectin in the 1970s. Merck, a pharmaceutical firm that is known as MSD outside America, developed it for parasitic infections in animals. William Campbell, one of the firm’s parasitologists, thought it might be effective against the parasite that caused river blindness, which is endemic in parts of Africa and Latin America, and in Yemen. In its early stages river blindness causes rashes and severe itching; later, it progressively damages the retina. Mr Campbell urged his bosses to see if the drug would work. + +The first human trial of ivermectin for river blindness was in Senegal in 1981, in patients who had the early stages of the disease but no damage to their eyes. Together with several more trials, it showed that ivermectin was safe in humans and highly effective at killing the disease vector in its larval state. But Merck had a problem: there was no market for it. Those who needed ivermectin were too poor to buy it. So the firm did something remarkable: it made an open-ended commitment to give away as much of the drug as necessary, starting in 1987, with the ultimate goal of eliminating river blindness entirely. In the following decade it donated 100m doses. + +Yet a miracle cure was not enough. The biggest obstacle to tackling river blindness, and other NTDs, turned out to be getting the drug to those who needed it. That was too complicated for any one company on its own. Painstaking and costly logistical efforts were required to get treatments to remote areas. Prevalences had to be mapped, and, for some of the diseases, individual patients diagnosed. Since most of the affected areas lacked health-care workers, some had to be trained. The stigma and disability faced by sufferers meant that many were hidden within their communities; they had to be found and persuaded to accept treatment. And after all that, surveillance and follow-ups were required to stop diseases making a comeback. + +Troubles shared + +Partnerships started to emerge between countries where NTDs were endemic. International institutions such as the World Bank and World Health Organisation (WHO) teamed up with donor governments and charities. By 1999 the Gates Foundation, a charity set up by Bill and Melinda Gates, was funding work in lymphatic filariasis and schistosomiasis, a debilitating ailment caused by a parasitic worm transmitted by freshwater snails. + +By then the long-running effort to eradicate guinea worm led by the Carter Centre, a foundation set up by Jimmy Carter in 1982, had gained pace. The worm’s larvae are ingested in dirty water and grow internally to as long as a metre; they emerge, agonisingly, through the skin over several weeks. The only treatment for an established case, even now, is to speed up this expulsion by gradually winding the worm’s emerging body on a stick. But public-information campaigns about the need to filter drinking water and keep sufferers away from water sources, where they might pass on the infection, have brought new cases down from an estimated 3.5m a year globally in 1986, when eradication efforts started, to 25 last year. + + + +Other drug firms, including GSK, Pfizer and Novartis, started to donate medicines on a large scale for other conditions. These included albendazole, another anti-parasitic for lymphatic filariasis; azithromycin, an antibiotic that works against trachoma (a bacterial infection that can cause blindness); and a combination of drugs for leprosy (another bacterial infection, which leads to skin lesions and nerve damage). Yet these disjointed initiatives added up to less than what was needed. In an article in 2004 in the Lancet, a medical journal, Dr Molyneux argued that these diseases were unfairly neglected in comparison with tuberculosis, malaria and HIV/AIDS, which were the subject of well-funded global programmes. Experience in a range of countries showed that these diseases could be controlled, he reminded his readers—and doing so brought dividends besides the relief of great suffering. + +For example, the control of river blindness in west Africa has been described by the World Bank as one of the most cost-effective ways to reduce premature death and disability in poor countries. Each dollar spent on the control of lymphatic filariasis in China, or Chagas disease in Brazil, has been estimated to produce benefits of $15 and $17 respectively, by reducing spending on treatment and cutting the number of prematurely curtailed working lives. Some disease-control programmes had built logistics for distributing drugs from scratch, which could be used for other public-health efforts, and had strengthened national health systems more broadly. + +By the turn of the millennium the common features of a group of tropical diseases were increasingly recognised by public-health experts, donors and the WHO. They were diseases of poverty but also causes of poverty. They caused disability and made it harder to absorb nutrients in food; reduced school attendance, thus condemning children to a life of grunt work; and trapped families in poverty when breadwinners were too sick to work or farm. Though prevention and treatment methods varied, there was clear potential for combining attempts to control or even eradicate them. Some required the suppression of vectors such as flies and mosquitoes, for example by spraying insecticides or distributing bednets. Some could be tackled by dosing entire communities with cheap, safe drugs; others by identifying and managing individual cases over extended periods. And most could be greatly reduced by providing safe drinking water, sanitation and information about hygiene. + +Gateway to success + +The Gates Foundation has helped a lot. In 2010 Mr Gates and Tachi Yamada, who leads the foundation’s global health programme, invited the bosses of a group of drug companies to tell them what could be done to tackle the field’s greatest challenges. The firms said that they wanted help to deliver the free drugs that they were offering. At around the same time the WHO created a detailed plan for controlling each of the NTDs. + +Finally, the stage was set for an ambitious global coalition. Margaret Chan, the director-general of the WHO, and Mr Gates were able to rally charities, NGOs, big donors (such as the governments of America, Britain and the United Arab Emirates) and, crucially, 13 drug firms. Many, including Merck KGaA, Johnson & Johnson and Gilead, had been donating treatments for years. Others, including Eisai, a Japanese firm, were new to the fight. Together, they declared themselves ready to give away drugs worth billions of dollars each year. In 2012 the group signed the “London Declaration” which promised to control, eliminate or eradicate ten NTDs by the end of the decade. + +Five would be controlled with mass drug administration: lymphatic filariasis, river blindness, schistosomiasis, trachoma and diseases caused by helminths (parasitic worms such as hookworm and roundworm) that spend part of their lifecycles in soil. Tackling the rest, including sleeping sickness and Chagas disease—both parasitic diseases transmitted by insect bites—would require the identification and treatment of infected individuals. + + + +Lymphatic filariasis, soon to be history + +Since the signing of the London declaration, the alliance against NTDs has developed into the largest and most successful public-health initiative in history. The number of people at risk globally from NTDs has fallen by 20%. Most of Latin America has eliminated river blindness. The number of new cases of leprosy has declined in eight of the past nine years. In the past year eight countries eliminated lymphatic filariasis. The number of cases of sleeping sickness is at its lowest in 75 years, and eradication is now thought possible. In 2015, 1.5bn treatment doses were donated by drug firms, and almost a billion people received them—an increase of more than a third since 2012. + +Critics of foreign aid often charge that it weakens the countries that receive it, by undermining their economies and governance. But support for tackling NTDs, and other health problems, has shown quite the opposite effect. It removes an obstacle that stops abjectly poor people bettering themselves. And, like efforts to control malaria, tuberculosis and HIV/AIDS, it improves public-health systems and disease surveillance. As countries become more organised they can often combine their programmes. The excellent results are persuading some recipient countries to chip in: a quarter of programmes on NTDs in the Democratic Republic of Congo, for example, are now locally funded, up from none in 2011. Aid given to set up the infrastructure needed to tackle polio in Nigeria meant that the country was better placed to fight Ebola when that disease emerged. + +To elimination and beyond + +It is tempting to extrapolate, and predict that all 18 NTDs will be consigned to history. Progress might even speed up: new diagnostic tools and treatments are on their way. The Gates Foundation is paying for final trials of a triple-drug therapy for lymphatic filariasis that clears the parasite from infected people’s bodies far more effectively than current treatments. When they are completed later this year, India might be able to get rid of the disease in just a couple of years, and other countries could quickly follow. + +Mr Gates thinks that it should also be possible to get visceral leishmaniasis, a parasitic disease that destroys the internal organs, down to tiny numbers of new infections in Asia. (To public-health aficionados, “eliminating” a disease means making it rare, rather than completely eradicating it.) By 2030 he hopes to see just 170m people globally at risk of NTDs, down from 1.7bn now. For that to happen drug companies will need to remain strongly committed; that means making sure they receive “well-deserved” credit, he says. + +But what worries some, including the authors of the WHO’s latest report on NTDs, published on April 19th at a summit in Geneva to evaluate progress and gather new donations, is the endgame. “Sometimes the last mile is the hardest,” says Ken Gustavsen, who runs corporate responsibility for Merck. As efforts to control a disease are successful, the sense of urgency fades, making it hard to maintain the political momentum. Tackling some of the NTDs requires long-term commitment. Chagas will have to be tracked into the remote reaches of the Amazon basin; diminished concern about canine rabies is already weakening attempts to eradicate it in Latin America. A campaign in 1952-64 against yaws, a bacterial infection that attacks skin, bone and cartilage, provides an object lesson. As cases became fewer, funding and attention shifted away, and in the 1970s the disease rebounded. + +There are fears that something similar could happen with guinea-worm disease. Its imminent demise has been declared prematurely several times in recent years. Last year’s tally of 25 reported cases was slightly higher than the figure for 2015. Fortunately, it can be transmitted only if an infected person enters drinking water around the time when a worm is leaving the body, meaning the disease would be slow to bounce back, unlike, say, polio, which is passed on through fecal matter and could quickly return from near-extinction if eradication efforts were to slacken. + +But wiping out guinea-worm disease, as the London declaration envisages, and controlling or eliminating the other NTDs, will take continued focus—and plenty more money. A big worry is whether the governments that fund much drug distribution, chief among them America’s and Britain’s, will continue to do so. This week the British government said it would double spending on NTDs over the next five years, to £360m ($460m). But the department responsible for aid was reluctant to provide a spokesman to discuss the programme. And a turn to insularity in many rich countries means foreign aid is increasingly criticised. British newspapers have become strikingly hostile towards it, arguing that most is squandered, and that even if it were not, the money is needed to cut poverty at home. The Daily Mail, one of the most splenetic, frequently splashes stories of wasted aid on its front page (often blaming the European Union). It is campaigning for Britain’s government to abandon a pledge, passed into law in 2015, to earmark 0.7% of GDP for foreign aid. + +In America Donald Trump’s administration has said it wants to slash the budget of the state department, the part of government responsible for most foreign-aid spending. Mr Gates, who recently met Mr Trump, remarks that it is unlikely Congress will allow drastic cuts. But even a modest trimming of American spending on NTDs would be worrisome, if it discouraged spending by other governments. + +Private donors could fill part of the gap, but not all. Plenty find the cause appealing, says Ellen Agler of the END Fund, which co-ordinates philanthropy for NTDs with those of governments and international organisations: “The clear return on investment is so powerful, and the timeline is so short.” Since the fund was set up in 2012 it has treated more than 140m people at risk in 26 countries, and raised more than $75m from individuals, corporate foundations and philanthropic groups. Its donors bring more than their money, says Ms Agler: they strengthen oversight, and provide private-sector problem-solving skills—and sometimes local contacts and logistical support. + +The effort to defeat NTDs produces plenty of heart-warming stories. In Tanzania Ms Mwingira talks about men with lymphatic filariasis who have received surgery to reduce the size of their genitals and can return to normal life, marry and have children. Kofi Nyarko, a former leprosy patient who lives in Ghana, says he would be dead without treatment. It came too late to save his hands from deformity; they are twisted and rigid. But he has been able to achieve his dream of becoming a special-needs teacher. + +Where charity begins + +It is worth recalling the motivation for Merck’s original decision, back in 1987, to donate ivermectin for river blindness, says Mr Gustavsen. There was no economic rationale: the firm’s scientists simply felt it was the right thing to do. Having discovered the drug, and established that it worked against a disease that caused awful suffering, neglecting to use it would have been “incredibly demoralising”, he says. That sense of moral purpose must not weaken if the global coalition against NTDs is finally to prevail. + + + + + +Special report + + + + +America and China: Disorder under heaven + +Pax Americana: An archipelago of empire + +America in the Pacific: The American lake + +Pax Sinica: The travails of a regional hegemon + +Asian neighbours: When elephants fight + +The risk of conflict: Avoiding the trap + + + + + +Special report + +Disorder under heaven + +America and China’s strategic relationship + +After seven decades of hegemony in Asia, America now has to accommodate an increasingly powerful China, says Dominic Ziegler. Can Donald Trump’s administration manage that? + + + +Apr 22nd 2017 + +THE LAST TIME China considered itself as powerful as it does today, Abraham Lincoln was in the White House. At that time, and against the mounting evidence of Western depredations, the emperor still clung to the age-old belief that China ruled all under heaven, a world order unto itself. It never had allies in the Western sense, just nations that paid tribute to it in exchange for trade. Both China and “the outside countries”, he wrote to Lincoln, constitute “one family, without any distinction”. + +Today, after a century and a half that encompassed Western imperial occupation, republican turmoil, the plunder of warlords, Japanese invasion, civil war, revolutionary upheaval and, more recently, phenomenal economic growth, China has resumed its own sense of being a great power. It has done so in a very different world: one led by America. For three-quarters of a century, America has been the hegemon in East Asia, China’s historical backyard. + +But now China is indisputably back. New towers have transformed the skylines of even its farthest-flung cities. An ultra-modern network of bullet trains has, in a few short years, shrunk a continent-sized country. China’s new power rests on a 20-fold increase in economic output since the late 1970s, when pragmatic leaders set in train market-led reforms. Over the same period the number of Chinese people living in extreme poverty, as defined by the World Bank, has fallen to 80m, a tenth of what it used to be. China is the world’s biggest trading nation and its second-biggest economy after America. There is hardly a country in the world to which it does not matter, either as a source of consumer goods or as a destination for commodities, capital goods and investment. + +On all these counts, China wants—and deserves—a greater role in East Asia and in the global order. America has to make room for it. But the task will require wisdom and a subtle balance of firmness and finesse on both sides. A first indication of what to expect was on display at a summit between Xi Jinping and Donald Trump on April 6th and 7th at Mar-a-Lago, the American president’s Florida golfing resort. Though little of substance was discussed, Mr Trump hailed the bilateral relationship as “outstanding” and Mr Xi declared there were “a thousand reasons to get the China-US relationship right”. Neither mentioned the cruise-missile strike America had just launched against a Syrian air base. Nor was there any talk of imminently imposing tariffs. + +For all the superficial bonhomie at the summit, the two countries see things very differently. China’s system of politics, both bureaucratic and authoritarian, has helped economic development at home, but is alien to American notions of democracy. American policymakers have traditionally seen liberal democratic values and an emphasis on human rights as factors that legitimise and strengthen the international order. Chinese policymakers see them as Western conspiracies to foster the kind of colour revolutions that brought down authoritarian former Soviet regimes, and might attempt to do the same in China. + +Chinese strategists consider the country’s rapidly modernising armed forces as essential for protecting the sea lanes on which its prosperity and security depend. They think a powerful navy is needed to keep potential adversaries from China’s shores and stop them from grabbing Chinese-occupied islands. They also suspect that America’s massive military presence in the Asia-Pacific region is designed to check China’s rise. + + + +American strategists, by contrast, say their country must keep a presence in the region because Chinese hard power unsettles America’s friends in East and South-East Asia. In the past few years China has challenged Japan over the Japanese-controlled Senkaku Islands (which the Chinese call the Diaoyu Islands), and carried out extensive construction works to build bases and runways on disputed rocks and reefs in the South China Sea. Those American strategists suspect China of wanting to turn the vast sea into a Chinese lake; and, more broadly, of seeking dominance in East Asia and overturning the existing order. + +A rock and a hard place + +America has long sought to prevent any one power having hegemony in Asia, whereas China wants to keep potential adversaries far from its shores. Somehow, they have to find a way of accommodating each other’s overarching goals, as Henry Kissinger explains in his classic book on statecraft, “World Order”. Peace hangs on the outcome. + +That peace cannot be taken for granted. In much of East Asia, history is unfinished business. Taiwan, to which the Nationalist losers in China’s civil war fled in 1949, is a thriving and peaceful democracy. Yet China’s Communist Party sees its sacred mission as bringing Taiwan back into the motherland’s fold, and reserves the right to use force to do so. American guardianship of the island is meant to ensure that China never dares. But as Chinese might grows and American commitment appears to wane, the room for miscalculation grows. Soon after his election Mr Trump even seemed to be calling into question America’s endorsement of the “one-China policy”—China’s insistence on the polite fiction that Taiwan is part of China. + +A potentially more imminent flashpoint in the region is the Korean peninsula, divided since the end of the second world war. North Korea, ruled by a family mafia now in its third generation, has a broken economy and an ill-trained army. But it has poured money into nuclear programmes that threaten South Korea, unnerve Japan and before long will also pose a threat to America. North Korea exasperates China’s leaders, yet they feel they must show solidarity to a former ally against America in the bloody war North Korea launched in 1950. China would rather have a nuclear North Korea under Kim Jong Un than a failed state sending millions of desperate refugees across the Chinese border. Above all, it is troubled by the idea of a unified, democratic Korea with American troops next door. At Mar-a-Lago, Mr Trump asked Mr Xi for ideas to deal with the threat from North Korea, but his missile strike in Syria made it clear that America might act alone against the North. Handling Mr Kim’s belligerence—and the regime’s eventual demise—will be a huge test of great-power co-operation. + + + +Yet conflict between China and America is not inevitable. Both sides want to avoid it and can adjust accordingly. It helps that habits of co-operation have become established over four decades of Chinese market reforms, which could not have happened without American security guaranteeing China’s external environment. Theirs is the world’s most important bilateral economic relationship today, with combined annual trade adding up to $600bn and investment in each other’s economies totalling around $350bn. + +China has no missionary zeal or ambitions to export revolution, nor indeed any grave ideological misgivings about the current order, which it resents chiefly because it does not have a greater say in running it. Ensuring more of a role appears to be the chief mission of Mr Xi, China’s paramount leader since 2012. He has accrued more authority to himself than any leader since the late Deng Xiaoping, and is now gingerly putting forward a model for greater global leadership which party theorists are starting to call the “China solution”. At one level, this is about practical matters, such as investing in Central Asia to reduce poverty. At another, it is about opposing American dominance. China, Mr Xi told a conference in February, should “guide international security” towards a “more just and rational new world order”. That kind of language is redolent of the old imperial Chinese virtues. But whereas China’s previous experience of power was of ruling all under heaven, it now has to accept being merely one great power among several. America, for its part, has never had any experience of ceding as much influence and authority as it may have to do to China in future. + +An already fraught relationship has become more so with Mr Trump’s election as president. For seven decades America’s grand strategy has rested upon three pillars: open trade, strong alliances and the promotion of human rights and democratic values. It is not clear to America’s friends in Asia to what extent Mr Trump, with his disdain for diplomatic process, a protectionist streak and a narrow “America first” definition of the national interest, is prepared to uphold those three pillars. As Michael Fullilove, head of the Lowy Institute, a think-tank in Sydney, puts it, Mr Trump is “an unbeliever in the global liberal order and a sceptic of alliances. And he has a crush on authoritarians.” + +Mr Trump’s victory came as a huge shock to China’s leaders. They hate unpredictability and would have much preferred Hillary Clinton, the devil they knew. It also came at an inconvenient time for the Chinese. Mr Xi is focusing on a crucial five-yearly Communist Party congress later this year. He appears set on consolidating his grip on power, against a backdrop of an unsettling credit bubble and economic growth that has slowed sharply from a peak of 10% a year to just 6.5%. + +For the most part, China has concealed its alarm over Mr Trump behind studied caution. “When you see 10,000 changes around you,” Chinese leaders told Kevin Rudd, an Australian former prime minister and China hand, citing one of their language’s countless proverbs, “ensure you yourself don’t change.” China’s leaders have decided to wait and see. But behind the scenes they have been trying hard to influence Mr Trump, working mainly through his son-in-law, Jared Kushner, a property developer with Chinese ties. + +The Chinese also soon grasped the new president’s transactional approach, prompting them to dispatch Jack Ma, the boss of Alibaba, an e-commerce giant, to meet him. He promised that his firm would generate 1m jobs in America. Soon afterwards trademark applications to protect the Trump brand in China that had languished in the courts for years were suddenly granted. Cause and effect are impossible to disentangle, but Mr Trump has certainly toned down his pre-election anti-China rhetoric. + +Looking into the abyss + +Yet deep, abiding uncertainties about the two countries’ relationship remain, not least over trade, which for three decades has underpinned relations between the two countries. Mr Trump appears to view trade not as mutually beneficial to all parties but as a zero-sum game, and gives short shrift to the post-war multilateral trading system. One of the first things he did after coming to office was to cancel the Trans-Pacific Partnership (TPP), a free-trade agreement among 12 countries in the Asia-Pacific region (though not China)—a big blow to America’s economic role in Asia. + + + +More broadly, the world view of some of Mr Trump’s advisers encompasses a Manichean expectation of conflict. They claim that China is so set on strategic rivalry with America that military conflict is inevitable, and argue that the best way to protect the national interest is to spend more money on the armed forces and less on diplomacy. Such people do not have a monopoly on the internal debate about America’s strategic relationship with China, any more than they do on trade. As this special report went to press, an alternative approach to trade, involving a robust multilateralism, was gaining favour. Meanwhile James Mattis, the defence secretary, on his first trip to Asia in early February urged care when challenging Chinese construction in the South China Sea with military force, and emphasised the primacy of diplomacy over military action in resolving differences. + +Mr Mattis, a well-rounded former general, is what Washington’s seasoned hands call one of the administration’s “grown-ups”, but there are precious few of them. The secretary of state, Rex Tillerson, a former oil boss, was counted among them, though question marks have since been raised about his Asia diplomacy. And although every new administration takes time to fill vacant posts, the gaps in the Trump foreign-policy team, especially on the Asia desks, are alarming. Among other things, almost all the Republican party’s seasoned Asia hands, who during the Obama years were working in think-tanks, universities or the private sector, swore before the election that they would never serve under a President Trump. Some have since swallowed their pride and moved closer to the new administration, but Mr Trump’s henchmen have long memories when it comes to criticism of their boss. + +Many observers still hope that, once an unusually chaotic new administration sorts itself out, it will revert to a policy that flows recognisably from America’s seven decades of experience in Asia. But that is far from certain. Some of the administration’s leading members hold seemingly irreconcilable views on American policy in Asia. Perhaps that reflects broader American disagreement about global roles and responsibilities. Yet the president himself seems unaware of the lack of any comprehensive strategy in Asia, and that problem may persist. A Republican Asia hand who served under both Ronald Reagan and George H.W. Bush explains that “I don’t get a sense of a learning curve with Trump. So I don’t expect things to get any better.” + +Amid all this uncertainty about Mr Trump’s policy in Asia, the two chief risks for the region appear almost contradictory. The first is that, after an initial honeymoon with Chinese leaders, an increasingly aggressive stand by the new administration raises Chinese hackles while failing to reassure America’s Asian friends. The second is that American policy in Asia becomes half-hearted and disengaged, again unsettling Asian friends and perhaps emboldening China. The consequences in either case might be similar—shifting power dynamics that require rapid adjustments, risking instability and even regional turmoil. Hope for the best, but prepare for disorder under heaven. + +Disorder under heavenMore in this special report: + + + +Disorder under heaven:America and China’s strategic relationship + +An archipelago of empire:America’s seven-decade history as Asia’s indispensable power + +The American lake:A brief history of America in the Pacific + +The travails of a regional hegemon:China’s battle for influence in its region + +When elephants fight:How China’s Asian neighbours survive great-power rivalry + +Avoiding the trap:What America and China must do to head off a clash + + + +→ An archipelago of empire: America’s seven-decade history as Asia’s indispensable power + + + + + +Special report + +Disorder under heaven: An archipelago of empire + +America’s seven-decade history as Asia’s indispensable power + +Pax Americana + + + +Apr 20th 2017 + +THE POINT IS obvious but no less extraordinary for that: even though America is not of Asia, it has been the region’s hegemon for more than seven decades. Any change in its posture under Donald Trump might not be much noticed at home, but its implications in the region would be quickly felt. + +America’s presence draws its justification, as Rana Mitter of Oxford university puts it, from the sacrifices made by American troops to recover the region from Japan during the second world war. Only North Korea challenges America’s claim to a legitimate presence there, and even in its hate-spewing rhetoric you can detect an admiration for the Americans. + +The hard element of American power is embodied in the United States Pacific Command (PACOM), based in Hawaii and watching over what it calls the Indo-Asia-Pacific: a region from the Arabian Gulf in the west to the Galapagos Islands in the east, from northern Japan to the Southern Ocean, extending to 100m square miles (260m square kilometres) and 14 time zones. Power takes the form of military bases and listening posts strung out across the Pacific and Indian Oceans, from Alaska to South Korea to Australia to Diego Garcia. + +As for East Asia, the Seventh Fleet, perhaps the world’s most powerful fighting unit, with over 60 ships, 140 aircraft and 40,000 sailors and marines, is based in Yokosuka, south of Tokyo. One-fifth of Okinawa, the main island of Japan’s southernmost archipelago, is given over to American forces. For the 28,500 American troops in South Korea, the demilitarised zone at the border with North Korea is the world’s last cold-war tripwire: one move across it by Kim Jong Un’s forces would meet with instant retribution. + +Bruce Cumings of the University of Chicago refers to American power as a globe-girdling “archipelago of empire”, with most of America’s 800 bases in or near the Pacific. In Okinawa the American outposts have a whiff of strained cross-cultural relations about them: young, bored off-duty servicemen in customised pick-ups cruising the mall road, forlorn bars run by “Mama-san”, marriage counselling promoted on the forces’ television station. Yet supported by a huge and sophisticated defence industry back home, the archipelago still packs a punch. Last September the PACOM commander, Admiral Harry Harris, talking about American military hardware, boasted that “everything that’s new and cool is coming to the region,” including a new Zumwalt class of stealth destroyer straight out of “Star Trek”—and a Captain James Kirk as its commander to boot. + +Extraordinary, too, how little changed is the structure of American power laid down for the region at the end of the war by General Douglas MacArthur, acting like an imperial viceroy. From the outset, Japan, South Korea and Taiwan—or at first, Chiang Kai-shek and his Kuomintang or Nationalists—became America’s main East Asian allies. Australia and New Zealand were the staunch English-speaking friends. All remain America’s key partners today. British, French, Portuguese and Dutch empires have crumbled. The Soviet Union has gone. Of the original threats in the region, only North Korea’s remains, and American forces are still there to contain it. Yet not just on the Korean peninsula but across Asia, America remains the indispensable power, a linchpin for regional stability, democracy and free trade. + +East Asia’s stunning development path owed much to the nature of American power and of the region’s structure of alliances, producing economic successes that have never been matched elsewhere. The United States not only guaranteed the security of Japan, South Korea and Taiwan, allowing them to focus on economic development; it also provided them with the incalculable advantages of technical assistance, educational exchanges and nearly unfettered access to America’s vast markets. Crucially, it did not, at least initially, insist that these countries open their own markets in return. + +Japan was the first to take off as its people swapped military uniforms for sarariman suits in pursuit of single-minded economic reconstruction. South Korea and Taiwan followed. They threw everything into building competitive export-oriented manufacturing bases, shutting foreign competitors out of their markets. Through what later came to be known as “financial repression”, they used capital controls, cheap exchange rates and subsidised loans to channel money into corporate investment and state infrastructure. By 1967 Japan was the world’s second-biggest economy. Only then did Japan’s partially closed markets become a growing bone of contention in America. + +Arthur Kroeber, an expert on the Chinese economy (and a former contributor to The Economist), points out that American power profoundly shaped these East Asian allies in another respect: the nature of their politics. Over time, the need for their patron’s approval forced them to adopt democratically accountable political systems. Japan’s was foisted on it by its American occupiers. On Taiwan, Chiang Kai-shek’s son, Chiang Ching-kuo, started moving the island towards representative politics in the 1980s in response to the shock of America normalising its relations with Communist China. In South Korea, America put up with military dictatorship during the cold war, but probably would not have tolerated it after the fall of the Berlin Wall. As it happened, protests leading up to the 1988 Olympics in Seoul ushered in the restoration of civil liberties and direct presidential elections. Today all three countries are among Asia’s staunchest democracies. + +The Chinese policeman + +What was not expected at the outset was China’s withdrawal from the post-war Asian order. During the war Chiang Kai-shek’s Kuomintang forces had not defeated the Japanese, but for eight long years they had bravely tied down Japanese armies in China, at the cost of 14m Chinese dead. That made China an American ally and a victor. Franklin Roosevelt wanted it to take its place as a sovereign power, one of the world’s “four policemen”, as he put it. He, Chiang Kai-shek and Winston Churchill had met in Cairo in 1943 to make this happen. What no one had counted on was that China’s Communists under Mao Zedong would use the Nationalists’ war exhaustion and growing popular disenchantment to rekindle a smouldering civil war in which they swept to victory in 1949. The following year, far from being an ally, China was fighting against America on the Korean peninsula (where Mao’s own son was killed in battle). It took two decades for China to come out of its shell when America’s then president, Richard Nixon, paid a visit to Beijing. + +The ground for China’s opening to America was prepared by a rupture in its relations with the Soviet Union in 1960. For over four decades it has been an unambiguous beneficiary of the American order. Without America to keep its neighbourhood secure and underpin open markets, China could not have reaped such gains from the market-led reforms it launched in the late 1970s. It benefited from being geographically close to the economic dynamism and the distribution networks of the East Asian tigers. Lacking the American allies’ access to Western markets, management and technology, China threw itself open to foreign investment—a remarkably pragmatic surrender of economic sovereignty. But now that China has become richer and more powerful, its aspirations to regional leadership and even hegemony are growing stronger. After all, it, too, won the war. + +Disorder under heavenMore in this special report: + + + +Disorder under heaven:America and China’s strategic relationship + +An archipelago of empire:America’s seven-decade history as Asia’s indispensable power + +The American lake:A brief history of America in the Pacific + +The travails of a regional hegemon:China’s battle for influence in its region + +When elephants fight:How China’s Asian neighbours survive great-power rivalry + +Avoiding the trap:What America and China must do to head off a clash + + + +→ The American lake: A brief history of America in the Pacific + + + + + +Special report + +Disorder under heaven: The American lake + +A brief history of America in the Pacific + +How Manifest Destiny pushed west into the sea + +Apr 20th 2017 + +FOR MOST OF its history, America has been isolationist. Those who now worry about it turning away from its ideals of free trade and an internationalist outlook may forget how recent they are, born out of cold-war necessity. By contrast, America’s much older sense of its own exceptionalism was nurtured by turning consciously west, away from European monarchy, class and conflict. It was a “westering” people to whom the novus ordo seclorum imprinted on every dollar bill applied. They first crossed the vast North American continent, and when they ran out of land, Manifest Destiny took to the sea, unrolling an expanding American frontier across the Pacific. + +The discovery of gold in California in 1848 changed everything. Not only was the gold rush the first of California’s many booms; it shifted global perspectives, spurring Karl Marx to start work on “Das Kapital” and rekindling hopes of long-distance commerce across the Pacific. American traders set off by sea, accompanied by missionaries, guano miners, planters and expeditionary forces. By the end of the 19th century the theories of Alfred Thayer Mahan, a great naval strategist who argued for decisive American sea power, had taken hold. Colonies, protectorates and incorporated territories soon followed. + +Hawaii, with its superb port, Pearl Harbour, was the first Pacific territory to come under American sway; the kingdom was eventually annexed in 1898. That same year American forces seized the Philippines as part of a jingoistic war with Spain that had begun in Havana. After an easy victory over the Spanish in Manila, the Americans found themselves fighting a counter-insurgency against Filipinos seeking their own republic. The president of the day, William McKinley, was at a loss to know what to do with the new Philippine territories. But while praying for guidance one sleepless night, it came to him that America’s mission was to “uplift and civilise and Christianise”. + +McKinley had stumbled into empire with “no more backbone than a chocolate éclair”, as Theodore Roosevelt, a fan of muscular imperialism, put it. The muscular school soon took charge. “Benevolent assimilation” would supposedly raise Filipinos to a higher plane. The generals in the Philippine campaign had nearly all earned their spurs fighting native Americans. In the tropics they applied the same genocidal techniques of terror, atrocities and native reservations. In three years of fighting, between 200,000 and 700,000 men, women and children died as a consequence of American brutality. + +After early victories, the campaign turned into quicksand (with haunting echoes in Vietnam, Afghanistan and Iraq). In the southern Philippines, American troops were fighting Muslim insurgents long after the rest of the archipelago had been pacified—and American special forces are still in Mindanao today. + +The American violence, and decades of condescending racism that followed, go some way towards explaining a vein of anti-Americanism that resurfaces from time to time in a country that also admires America. The two emotions live in the same Philippine breast, says Malcolm Cook of the Institute of Southeast Asian Studies in Singapore. The ill-feeling was evident in the early 1990s, when the senate voted to eject American forces from Philippine bases; and, more recently, in President Rodrigo Duterte’s sudden pivot to China last year, and in his labelling of President Barack Obama as a “son of a bitch”. + +Most Americans are blithely unaware of the back story, viewing Mr Duterte’s behaviour as astonishing ingratitude towards an ally that, until Philippine independence in 1946, had tried to pour its protégé’s society into an American mould, and that had remained a close friend since. But near-ignorance about the essentially imperialising mission that brought America to the region in the first place hardly helps an understanding of its position in Asia today. One lesson is that the case for a continued American presence in Asia has to be constantly remade. + +Disorder under heavenMore in this special report: + + + +Disorder under heaven:America and China’s strategic relationship + +An archipelago of empire:America’s seven-decade history as Asia’s indispensable power + +The American lake:A brief history of America in the Pacific + +The travails of a regional hegemon:China’s battle for influence in its region + +When elephants fight:How China’s Asian neighbours survive great-power rivalry + +Avoiding the trap:What America and China must do to head off a clash + + + +→ The travails of a regional hegemon: China’s battle for influence in its region + + + + + +Special report + +Disorder under heaven: The travails of a regional hegemon + +China’s battle for influence in its region + +The country’s status among its neighbours is not keeping up with its growing powers + + + +Apr 20th 2017 + +ONCE, HAINAN WAS an alien, pestilential land, beyond the edge of civilisation, to which mandarins who had fallen foul of the emperor were banished. Today China’s island province in the far south is being rebranded as the country’s own tropical paradise. Hainan can also be viewed as emblematic of much of what “China’s rise”, a much-used if often ill-defined phrase, actually means. + +A decade ago, when this correspondent first visited the place, cars crept along muddy, potholed roads. Today an expressway whisks travellers from the top to the bottom of the 33,900-square-kilometre island in under four hours—or 82 minutes by bullet train. In the old days the town of Wenchang in Hainan’s north-east was famous for its poached chicken. Today it is famous for a state-of-the-art satellite and spacecraft launch site. + +Down the coast, in the middle of a manicured plain, is a convention complex in which China’s leaders each spring host the Boao Forum, often described as Asia’s Davos. The talk is all about “mutual respect”, “win-win” relationships and “common destiny” in Asia. But the billions of dollars for initiatives in the region, including for much-needed infrastructure, come predominantly from China. And the staging of the forum seems designed to convey a sense that Asian leaders and foreign dignitaries are paying tribute to the rulers of a benign imperium. + +It is meant to inspire awe, and so too are the luxury hotels going up along the huge half-moon beach outside Sanya in Hainan’s far south. The scale of these resorts dwarfs those in Hawaii or Florida. The subliminal message from Hainan is that “anything you can do, China can do better—and bigger.” + +But Hainan also reveals a harder side to Chinese power. Hidden around a headland in Sanya is the Yulin naval base. Enormous caverns have been cut, Bond-style, into the mountainside, big enough to hide 20 ballistic-missile submarines. The harbour is deep enough for aircraft-carriers (at present China has only one of those, but plans to build more). + +Sanya is the point in China closest to the edge of the continental shelf and the deeps of the South China Sea. Its strategic importance is obvious. More than half the world’s merchant tonnage passes through the South China Sea. The Malacca Strait takes three times as much tanker traffic as the Suez Canal and 15 times as much as the Panama Canal. China’s sweeping maritime claims—though based on no recognised legal norms, and disputed by neighbours—encompass almost the entire sea. + +China wants to be viewed with wonder and respect but, as it grows stronger and more powerful, it as often unsettles as it reassures + +Over the past three years China has used a rapidly expanding navy and coastguard to enforce its claims to reefs and rocks far out at sea. It has employed dredging fleets to build artificial islands and runways on them. This official policy is backed by unofficial force. In Tanmen, a gritty harbour next to Boao, large trawlers act as a “people’s maritime militia”. They have chased Philippine and Vietnamese fishermen from disputed grounds, poached in neighbours’ exclusive economic zones and, with officialdom turning a blind eye, ravaged the South China Sea’s reefs, destroying the coral to get at rare, slow-growing giant clams for which China’s nouveaux riches pay fortunes. + +All this unnerves China’s neighbours (of which more later). Hainan is a microcosm of a wider problem: China wants to be viewed with wonder and respect but, as it grows stronger and more powerful, it as often unsettles as it reassures. + +No one said for ever + +When Deng Xiaoping counselled his compatriots to “lie low and bide your time”, none of them thought he meant for ever. Indeed, it was not long after his death in 1997 that China’s presence increasingly made itself felt abroad. First, the government began to encourage state companies to invest around the world, especially in the mineral resources needed for the country’s growing industrial surge. After a slow start, such investment now runs at about $80bn a year. + +A sharp turn in foreign-policy activism, however, came with Mr Xi’s rise to power five years ago. The new territorial assertiveness is part of it. But so, too, is a charm offensive, using economic power as a tool of reassurance. + +In 2014 Mr Xi brought together several regional infrastructure initiatives under the rubric of “One Belt, One Road”. The “belt”, confusingly, is a “New Silk Road”: a set of roads, railways and power projects aiming to tie China’s western regions more closely to Central Asia and eventually to Europe. In January, with much fanfare, a Chinese freight service travelled this route all the way from Yiwu, in Zhejiang province, to London. (It took 18 days, with the freight having to change train several times because of different rail gauges, laying bare how much of a work in progress the belt is.) The “road” part of the rubric, equally confusingly, is a “Maritime Silk Road” intended to link China’s landlocked south-west to South-East Asia, the Indian Ocean and beyond. + +Part of the idea is to drum up business for Chinese engineering firms that are facing a sharp slowdown and overcapacity at home. But in the main the Silk Road strategies are presented as Mr Xi’s gift to a region in need of infrastructure—the foreign dimension of his “China dream” of a rise to pre-eminence. To finance these projects, a “Silk Road Fund” under the central bank was set up, along with the New Development Bank and Mr Xi’s new multilateral institution, the Asian Infrastructure Investment Bank (AIIB), with a combined authorised capital of $240bn. + +“One Belt, One Road” resonates with the historical notion of bringing barbarians under the Chinese heaven. But to many Americans, the Silk Road initiatives, and the AIIB in particular, smack of a powerful new order in the making in which China rather than the United States will call the shots. Barack Obama’s administration urged allies not to join the AIIB. Japan heeded the call; Australia, Britain and South Korea ignored it. + +It is easy to overstate the importance of such Chinese initiatives. Arthur Kroeber, in his book “China’s Economy: What Everyone Needs to Know”, reckons that the headline figures for the authorised capital of China’s new financial institutions greatly exaggerate their firepower. The actual combined capital base may be just $40bn-50bn by the early 2020s. That is, admittedly, about the size of the World Bank. But the value of that institution lies less in the money it disburses than in its deep technical and intellectual resources. China’s new institutions cannot draw on anything comparable. + +The Silk Road strategy appears to involve extending China’s utilitarian domestic model for infrastructure (under which locals affected by large-scale development are barely consulted) to the wider world. That would be risky. Some Chinese experts worry about an investment frenzy, including from local-level state enterprises with little experience of operating abroad. “Provinces, cities: they all want to go abroad. There is disorder,” says Ding Yifan of the State Council’s Development Research Centre in Beijing. Other researchers in Beijing warn that little thought has been given to the political risks and security concerns involved in putting Chinese projects and workers in brittle countries in Central Asia, or in the $50bn China-Pakistan Economic Corridor, a set of infrastructure projects in Pakistan launched by the two governments amid much publicity in 2015. + +Andrew Small, an expert on China-Pakistan relations at the German Marshall Fund, in a recent article warned of the shortcomings of the approach. One of them is lack of transparency. Even Pakistan’s central-bank governor says he does not understand where all the trumpeted money is coming from and how it is being spent. Another is insufficient regard for grassroots support and for the social impact of projects. Chinese leaders do not need to pay much heed to this at home, but in a poor and insurgency-torn region such as Balochistan it could be explosive. “Chinese officials still lack the instinct to take measures of this sort,” Mr Small concludes. + +Searching for soft power + +In their open-handed approach to China’s periphery, Mr Xi and his fellow leaders have America in mind. They hope that countries brought into China’s developmental embrace will feel less willing to remain part of the American-led order of regional security. Yet buying power is not that simple. Closeness to local elites can stir popular hostility. In Myanmar in 2011 resentment of China’s outsized commercial activities, and the small number of generals benefiting from them, influenced even the military regime, leading the president, Thein Sein, to halt construction of a huge dam the Chinese were building. A weakened junta subsequently ceded much of its power to a democratically elected government. Chinese influence in the country has not recovered. + +In Sri Lanka, from the mid-2000s China bet everything on the then president, Mahinda Rajapaksa, and his family. But murky Chinese loans and investments contributed to Mr Rajapaksa’s unexpected failure to be re-elected in early 2015, which came as a shock to China. In Malaysia, China recently helped with a multi-billion-dollar bail-out of a heavily indebted state investment vehicle, 1MDB. That got the prime minister, Najib Razak, out of a pickle, but many Malaysians do not want to see their country in hock to China, and Mr Najib’s troubles may not be over yet. + +Evelyn Goh of the Australian National University says China has two blind spots in its dealings with smaller neighbours. The first is that it struggles to recognise what she calls their “autonomous agency”, ascribing any behaviour it dislikes to malign American influence. The second, more broadly, is its failure to understand that its aggressive behaviour, such as in the South China Sea, undermines its development diplomacy. That dissonance between its growing power and its lagging status risks adding to the sum of Chinese dissatisfactions. + +Disorder under heavenMore in this special report: + + + +Disorder under heaven:America and China’s strategic relationship + +An archipelago of empire:America’s seven-decade history as Asia’s indispensable power + +The American lake:A brief history of America in the Pacific + +The travails of a regional hegemon:China’s battle for influence in its region + +When elephants fight:How China’s Asian neighbours survive great-power rivalry + +Avoiding the trap:What America and China must do to head off a clash + + + +→ When elephants fight: How China’s Asian neighbours survive great-power rivalry + + + + + +Special report + +Disorder under heaven: When elephants fight + +How China’s Asian neighbours survive great-power rivalry + +Smaller Asian countries are adept at being everyone’s friend, but the job is getting harder + +Apr 20th 2017 + +FOUR YEARS AGO, after Xi Jinping and Barack Obama had embarked on a “new type of great-power relationship” at a Californian ranch called Sunnylands, the world was soon speculating about a new “G2” or a “Chimerica”; after all, the two leaders’ economies were joined at the hip. Yet China’s Asian neighbours felt uncomfortable. “When elephants mate,” says a South-East Asian diplomat, “we ants get trampled.” “But when elephants fight,” an Australian strategist retorts, “the ants get trampled even more.” + +Outside China, every Asian country bar North Korea welcomes America’s presence in the region and wants it to remain. Asians value American security, along with the clear rules underpinning post-war prosperity that the security has allowed to be upheld. Asians also value their economic relations with China, but they fear that the alternative to an open American order is a hierarchical Chinese one. Given China’s open ambitions, and its closed authoritarian political system at home, it would be a very different world. + +Countries in the region, a Singaporean ambassador explains, “don’t want to choose: it gives you more room to play.” Preserving maximum sovereignty is an overarching goal for most of them. But it is getting harder for them to hedge their bets. Chinese counterparts, says the ambassador, insist that the Asian bifurcation, of relying on America for security and China for prosperity, should not be allowed to persist. + +Japan, the region’s second-biggest power, is least troubled by any need to choose: under its prime minister, Shinzo Abe, it has thrown itself firmly into its alliance with America. That is partly because of the growing threat to Japan posed by a nuclear, warlike North Korea under Kim Jong Un. But Mr Abe has also helped convince his people that both the economic and the security threats from China are existential. In words and actions, China has frequently been hostile towards his country (whose incomplete acknowledgment of its second-world-war record has not helped). Mr Abe’s political dominance in Japan owes much to his willingness to articulate the China challenge. In his view, this has to be countered with strong regional military, diplomatic and economic alliances, led by America. + + + +It was an immense disappointment to Mr Abe that almost as soon as Mr Trump took office, he dumped the Trans-Pacific Partnership (TPP), a 12-country grouping including Australia, Japan, Malaysia, New Zealand, Singapore and Vietnam that had over several years put together a “gold-standard” free-trade pact for the Asia-Pacific region. Mr Trump claimed that the deal sold American businesses and workers down the river. Its partners retort that America got everything it asked for in the negotiations, such as longer patent protection for drugs and stronger intellectual-property rights. All the painful adjustments that TPP entailed were to be made by smaller members. + +Given that Mr Trump was so willing to abandon the economic dimension of America’s commitment to the region, Mr Abe was acutely aware of the risk that he might dump the military dimension too. After all, during the presidential campaign Mr Trump had lambasted Japan and South Korea for supposedly free-riding on America’s security commitment to them. Some 54,000 American servicemen and their families are stationed in Japan and 28,500 in South Korea. Mr Trump had said both countries should do more for their own defence and contribute more to the upkeep of American forces. He even threatened withdrawal. He also suggested that Japan and South Korea could develop their own nuclear weapons. Considering the implications for those countries, and for the febrile region as a whole, it was an astounding proposal. + +Mr Abe, in a nimble bit of diplomacy, made sure he was the first foreign leader to go to America to congratulate the president-elect on his victory. Mr Trump visibly warmed to him, and later invited him back to his Florida golf resort, Mar-a-Lago, for a weekend of man-hugs and an unsettling 19-second power handshake. + +Mr Abe is a nationalist with dreams of a Japan unshackled from American tutelage, but right now he needs a strong alliance. He pressed all the right buttons with Mr Trump, talking up the potential for Japanese investment in America and pointing out that his government is stretching the country’s pacifist constitution (which the Americans imposed after the second world war) to allow more scope for Japan’s Self-Defence Forces to come to the aid of allies. He also made clear that Japan already bears much of America’s defence burden, paying for about 75% of the American military presence in Japan—any more, a regional diplomat jokes, and Japan would be shelling out for American soldiers’ wages, almost turning them into mercenaries. + +Mr Abe’s efforts did not stop Mr Trump from pulling the plug on the TPP, but Japanese officials are still pleased with their recent diplomacy. Even North Korea’s test launch of a missile that landed in the Sea of Japan while Mr Abe was in Florida worked to his advantage: Mr Trump declared that Japan and America were standing shoulder to shoulder. The Japanese diplomats also came away with insights about how to tutor an American president unfamiliar with Asian priorities. They say that he can concentrate on only one thing at a time, and reckon that educating him will be an open-ended pursuit. + +When luck runs out + +The neighbour most troubled by Mr Trump’s presidency may be Australia, a long-standing, staunch American ally. The first telephone call after the American election between the Australian prime minister, Malcolm Turnbull, and Mr Trump (the contents of which were leaked by someone in the White House) was a disaster. + +Australia had struck a deal with the previous American administration under which America would resettle a small number of asylum-seekers currently in dismal camps in Nauru and Papua New Guinea. But this was news to Mr Trump, who accused Australia of wanting to export the “next Boston bombers” and told Mr Turnbull (himself no shrinking violet) that his was “the worst call by far” of all the conversations he had had with world leaders that day. He then hung up. + +The incident has set Australian policymakers and strategists talking about re-examining the relationship with America. The two countries have had their disagreements before, says James Curran, a historian at the University of Sydney, but they have not been aired in public like this since Richard Nixon. When that president got cross with Gough Whitlam, the independent-minded Australian prime minister at the time, he put Australia on his “shit list”. + +Policymakers reckon that Australia now faces the biggest shift in its strategic position since the end of the second world war. Its economy is heavily dependent on Chinese purchases of iron ore and coal, but it has “subcontracted its entire strategic role to Washington”, says Hugh White of the Australian National University. Many strategists want Australia to be less slavish in its relations with America, while praying that Mr Trump will prove a more reliable partner. + +Mr White goes further, arguing that Australia must prepare for a China-led future. Yet that argument meets resistance at a time when China appears increasingly bent on driving a wedge between Australia and America. On a visit to Australia in March, the prime minister, Li Keqiang, dangled the prospect of closer economic ties, but also warned Australia against a “cold-war mentality” and taking sides between China and America. + +Given Australia’s strategic position between the Indian and Pacific Oceans, the country’s strategists expect its waters to be increasingly frequented, and even contested, by the Chinese navy. The chief debate in foreign and defence policy now revolves around not allowing China to push Australia around. But the central paradox remains: to maintain a strong defence policy, Australia needs a strong economy—and for that it needs strong trade ties with its chief potential adversary. + +South-East Asia’s people have lived close to big powers for centuries and learned to hedge their bets. In sum, such hedging denies China an entirely free hand to act as it wishes. Japan’s growing investment and diplomatic activities in South-East Asia, for example, increase smaller countries’ options. Indeed, the balance of power in Asia is determined not just by the struggle for primacy between America and China but also by the interplay of lesser powers: Japan and South Korea in North-East Asia; and Vietnam, Singapore, Indonesia and even India (increasingly looking eastwards) in South-East Asia. But America still needs to be part of the picture. + +President Rodrigo Duterte of the Philippines on a state visit to Beijing last October tried to mend relations damaged by a case the Philippines had brought before an international tribunal at The Hague, contesting China’s South China Sea claims. “I announce my separation from the United States,” he told his delighted hosts. “America has lost now. I’ve realigned myself in your ideological flow.” Mr Duterte loudly called for American troops to leave the Philippines and for joint military exercises to end. China rewarded him with new markets and lavish dollops of aid. Oddly, though, it turns out that the Philippines’ annual bilateral drills with America are due to take place as usual this year. There is even talk that Japan might join them. + +China big, Vietnam small + +Danang airport, a big American base during the Vietnam war, mainly serves Chinese tourists these days. Many of them are shuttled to the Crowne Plaza, a hulking hotel on the city’s crescent-shaped beach flanking the South China Sea. They like to play blackjack in the casino, where the croupiers conduct their games in Mandarin. + +About a quarter of Vietnam’s 10m or so visitors a year are Chinese, more than any other nationality. Though locals in Danang grumble about the rudeness of Chinese gamblers, “we welcome everyone,” says a Danang official, with a stiff smile. Many Vietnamese regard China with wariness. Even the state-controlled media run critical stories about Chinese investors buying up large quantities of land near Danang. They also carry reports of fishermen from Danang and nearby central provinces being detained by Chinese patrol vessels when they fish near disputed reefs and islands in the South China Sea. The Vietnamese are still indignant over China’s seizure in 1974 of the Paracel islands, which contain the largest of the sea’s disputed islands and rocks. + +Yet they are also well aware that China is their country’s largest trading partner, as well as overwhelmingly more powerful than little Vietnam. That became painfully evident in 2014 when, in a provocative gesture, a state-owned Chinese company towed an oil-exploration rigs to a point south of the Paracels and about 120 nautical miles (220km) from central Vietnam’s coast—well within the country’s exclusive economic zone. Some Vietnamese fishing vessels steamed out to the rig in protest, only to be rammed, and in one case sunk, by a far larger Chinese fleet. The incident sparked riots in industrial zones in Vietnam in which protesters targeted foreign businesses and Chinese workers. Several people died. When China issued a travel warning to its citizens, tourism in Danang collapsed. + +The Vietnamese respond to such vexations the way they have always done: they strike compromises. Le Khai, who has fished in the South China Sea for four decades, runs a gnarled finger through the sand to make two circles of vastly different sizes. “China is very big, Vietnam very small,” he says. So he does not take his fishing boat too far into disputed waters, although he insists that the Paracels are Vietnamese. Farther down the coastal road, the owner of a souvenir shop says that nine-tenths of his customers are Chinese tourists. For him, Vietnam’s maritime claims are indisputable, but they do not pay the bills. + +Disorder under heavenMore in this special report: + + + +Disorder under heaven:America and China’s strategic relationship + +An archipelago of empire:America’s seven-decade history as Asia’s indispensable power + +The American lake:A brief history of America in the Pacific + +The travails of a regional hegemon:China’s battle for influence in its region + +When elephants fight:How China’s Asian neighbours survive great-power rivalry + +Avoiding the trap:What America and China must do to head off a clash + + + +→ Avoiding the trap: What America and China must do to head off a clash + + + + + +Special report + +Disorder under heaven: Avoiding the trap + +What America and China must do to head off a clash + +The best hope is a balance of restraint, force and legitimacy + + + +Apr 20th 2017 + +A MUCH-DISCUSSED recent study led by Graham Allison of Harvard university highlighted the dangers looming when a rising power challenges a ruling one, as when Athens challenged Sparta in ancient Greece. A rising power gains a growing sense of its entitlement and importance, often fed by past grievances and slights. This makes the established power feel insecure and all the more determined to defend the status quo. “When a rising power is threatening to displace a ruling power,” Mr Allison writes, “standard crises that would otherwise be contained, like the assassination of an archduke in 1914, can initiate a cascade of reactions that, in turn, produce outcomes none of the parties would otherwise have chosen.” This is the Thucydides Trap, named after the Athenian historian who first pointed to it. The Harvard study concluded that in 12 out of the 16 historical cases in the past 500 years that it examined, the outcome was war. + +It may be a consolation that both Xi Jinping and Shinzo Abe have mentioned the Thucydides Trap as a cautionary comment on Chinese-American rivalry. But the leader of the status-quo power in Asia, Donald Trump, almost boasts about his ignorance of history. Besides, even when the protagonists are forewarned, there is still great scope for getting it wrong. It is a feature of the trap that defensive behaviour by one party—such as China’s building airstrips and the like on reefs in the South China Sea—is seen as aggression by the other. + +In the Harvard study, when war was avoided it was thanks only to “huge, painful adjustments in attitudes and actions on the part not just of the challenger but also the challenged”. At the heart of this must be efforts to establish durable patterns of co-operation. For America and China, two areas are likely to be key: trade and North Korea. + +Trade and the problems of access to China’s vast market cause the West understandable frustration. Two decades ago foreign businesses were cheerleaders for China to become part of the world economy (it eventually joined the World Trade Organisation in 2001). Today the mood among foreign businesses in China has turned to disenchantment. + +Tariffs on China’s imports of goods are low, but in an economy dominated by state giants, outsiders are shut out of too many sectors, including government procurement. In industries which the Chinese government considers sensitive, the obstacles are written or unwritten rules. In other areas, such as cloud computing, Western companies fear to tread, because they are worried about the safety of proprietary technology or data. China’s latest initiative, “Made in China 2025”, is a blueprint for creating national champions in advanced manufacturing, promising government subsidies and investment in ten “strategic” industries. Other countries have similar plans. The difference is that foreign companies are not so shut out of them. + +These are legitimate grievances, but the best hope of dealing with them is for America to pursue them vigorously within the multilateral system. If the United States were to go outside the framework of the WTO, or even shut access to its own markets, it would risk immense harm both to the bilateral relationship and to the global trading order. + +The pace of North Korea’s missile and nuclear development appears to be quickening + +North Korea raises even bigger challenges. The pace of its missile and nuclear development appears to be quickening. Last year Kim Jong Un’s regime launched a missile from a submarine, a first. In early March it test-fired a cluster of rockets in preparation, it said, for attacking American bases in Japan. Later that month, in another first, it conducted a comprehensive test of a first-stage rocket for an intercontinental ballistic missile. A sixth nuclear test is thought to be in the works. + +China, like America, wants North Korea to abandon its nuclear programme. At the UN it has signed up to an American-led sanctions regime against the North. It has a tangled history with its small, snarling neighbour. Officially the two countries are still allies, but China is furious about the North’s truculence. Still, it displays an astonishing inability to see things from anyone else’s point of view. In particular, it has thundered against South Korea’s plans to install an American anti-missile system, Terminal High Altitude Area Defence (THAAD), designed to shoot down attacking North Korean missiles, claiming that the system’s radar will allow America to look deep into its own defences. It has organised consumer boycotts of South Korean goods and entertainment to punish its neighbour. That sends an unnerving message to the region: that its relatively petty issues trump real concerns over the North Korean threat. + +A better approach would be to share concerns over North Korea and work together on contingency plans. That requires wisdom and patience. The same goes for the broader relationship between China and America, which in Henry Kissinger’s words requires “a subtle balance of restraint, force and legitimacy”. A balance of power defined primarily in military terms will, he insists, “shade into confrontation”. If the Thucydides Trap is to be avoided, the search for partnership has to begin. The meeting between Mr Trump and Mr Xi at Mar-a-Lago earlier this month was a start. But it will come to nothing unless co-operation is put at the heart of relations between the two countries. + +Something to build on + + + +A rich basis for such co-operation is already in place (see chart), and perhaps widely underappreciated. Almost half of all foreign buyers of American property are Chinese, as are one-third of the nearly 1m foreign students in America. China can trace one-third of its GDP to foreign investment, much of it American. And Starbucks opens a new branch in China every 15 hours. A large part of the world wants America’s president both to understand and care about such things. + +Yet China’s likely trajectory in the coming years will make co-operation harder, not easier. Mr Xi’s rule is proving more authoritarian than that of his predecessors, resources continue to be poured into military spending, and a slowdown in China’s debt-fuelled economy may render politics more brittle and make an ugly jingoism a tempting diversion. + +Many Americans will question why their country should cede ground. It would certainly be wrong to retreat in the face of threats of force. In other areas, however, if China seems willing to shoulder responsibilities, America should respond. For instance, rather than allow China to nurture resentment at being shut out of running Western-led institutions such as the IMF and the World Bank, why not offer to incorporate China’s new Asian Infrastructure Investment Bank into the global institutional order? + +That is where the wisdom comes in. China must show it too, by acknowledging that Asia wants the American presence to continue, and that its own security and prosperity also depend on it. Above all, both America and China need to remember that the alternative to co-operation is confrontation. + +Disorder under heavenMore in this special report: + + + +Disorder under heaven:America and China’s strategic relationship + +An archipelago of empire:America’s seven-decade history as Asia’s indispensable power + +The American lake:A brief history of America in the Pacific + +The travails of a regional hegemon:China’s battle for influence in its region + +When elephants fight:How China’s Asian neighbours survive great-power rivalry + +Avoiding the trap:What America and China must do to head off a clash + + + + + +Business + + + + +China’s internet giants: Three kingdoms, two empires + +AkzoNobel: The varnished truth + +Donald Trump and tourism: Keep out + +Recreational vehicles: On the road + +Fast food in Japan: Feeling sandwiched + +Internet regulation: Reload + +Schumpeter: Life in the public eye + + + + + +Three kingdoms, two empires + +China’s internet giants go global + +Tencent is leading the acquisition spree, with Alibaba a close second + + + +Apr 20th 2017 | SHANGHAI + +THERE was a time, not that long ago, when China’s big internet companies were dismissed by investors in Silicon Valley as marginal firms with a tendency to copy Western products. Not any more. Today they are monsters with increasingly hefty international ambitions. + +Alibaba, China’s biggest e-commerce group, handles more transactions each year than do eBay and Amazon combined. Jack Ma, its chairman, pledges to serve 2bn consumers around the world within 20 years. Tencent, which specialises in online games and social media, is now the world’s tenth most valuable public firm, worth some $275bn. Pony Ma (no relation), its chairman, wants China to “preside over the global tech revolution of the future”. But as the two firms become global forces, the third member of China’s “BAT” trio of internet giants, Baidu, an online-search firm that came to dominate the mainland market after Google left the country to avoid censorship, is lagging behind. + +All three firms differ from their Western peers in important ways. First, Western companies usually prefer to focus on a few core areas, whereas Chinese internet firms typically try to do everything from cloud computing to digital payments. When this works, as with Tencent’s wildly successful app, WeChat, the results can be impressive. + +Second, with the exception of political censorship, the internet sector in China is lightly regulated. Facebook, Apple and Google, in contrast, face increasing scrutiny. Chinese internet firms can achieve market domination of a sort that would attract close attention in other markets. + +The third difference is that they can succeed on a rapid and massive scale because the state-dominated economy is so inefficient. Often there is not even a physical infrastructure to leapfrog—so-called third-tier cities, for example, often lack big retail centres. Nationwide there is one shopping mall per 1.2m people. + +A huge home market has not stopped the trio from fighting bloody turf wars among each other. The outcome to this battle is rapidly becoming clear. Tencent and Alibaba are surging ahead; a series of own goals has left Baidu far behind. The common jibe about Baidu among local experts is that it is becoming the Yahoo of China, a once-dominant search giant that sank owing to a lack of innovation and a series of management blunders. + +Its revenue growth fell to 6.3% in 2016, down from 35% in 2015 and 54% in 2014. The firm gets some nine-tenths of its revenues from online ads, but this income is plunging as marketers redirect spending from search ads on Baidu to social-media networks like WeChat and mobile-commerce platforms run by Alibaba. Meanwhile, Baidu is burning cash trying to keep its various big bets on artificial intelligence (AI), online video, virtual and augmented-reality technologies, and “online to offline” (O2O) services going. One of China’s most respected business consultants is pessimistic about its future: “There is very little chance they’ll be relevant in five years.” + + + +Of the other two giants, Tencent is probably the most fearsome. It already has higher revenues and profits than Alibaba (see chart). Its value is set to climb as it ramps up advertising on WeChat (provided that does not provoke a backlash from users). Its main weapon against Alibaba is its stake in JD.com, the country’s second-biggest e-commerce firm, led by Richard Liu, one of China’s most aggressive and successful serial entrepreneurs. + +JD.com has adopted an expensive “asset-heavy” business model akin to Amazon’s in America. Thus far, its vast investments in warehouses, logistics and couriers have not come anywhere near toppling Alibaba. But last year the company saw its revenues rise to $37.5bn, up from $28bn the previous year. Its share of China’s business-to-consumer market rose to 25% in 2016, up from 18% at the end of 2014. If Mr Liu’s investments in infrastructure start to pay off, much of Alibaba’s future domestic growth could be at risk. + +That threat may explain why Mr Ma is not content with Alibaba’s overall 70% share of the local e-commerce market. In 2016 it spent $1bn to win control of Lazada, South-East Asia’s biggest e-commerce firm. In March Lazada launched a new service for Singaporeans directly to shop on Taobao, one of Alibaba’s two domestic e-commerce platforms (the other is Tmall). + +Mr Ma last year persuaded the G20 summit of leading countries to endorse his proposal for an “electronic world trade platform” (eWTP), to make it easier for small businesses to trade across borders. Last month Alibaba launched a “digital free-trade zone” as part of the initiative, in Malaysia. This public-private partnership, which involves simplifying both logistics and payments, will help small merchants. + +Mr Ma’s chief weapon for going global, however, is Ant Financial, which was spun out of Alibaba before the latter’s $25bn flotation in 2014 in New York. In China the unit offers services ranging from online banking to investment products; it even runs the mainland’s first proper consumer credit-scoring agency, Sesame Credit, which uses big data to work out the creditworthiness of punters. Ant already has more than 450m customers in China and is going overseas with gusto. + +It has investments in local online-payments firms in Thailand, the Philippines, Singapore and South Korea. In America Ant is in a frenzied bidding and lobbying war with Euronet, an American rival, to buy MoneyGram International, a money-transfer firm. On April 17th Ant raised its initial offer for MoneyGram by over a third to $1.2bn, topping Euronet’s bid. + +Tencent is also making bold acquisitions abroad. A consortium that it led spent $8.6bn to acquire Finland’s Supercell last year, a deal that turned Tencent into the world’s biggest purveyor of online games. Together with Taiwan’s Foxconn, a contract-manufacturing giant, the firm invested $175m last year into Hike Messenger, an Indian messaging app akin to America’s WhatsApp. It was also an early investor in America’s Snapchat, another popular messaging app, whose parent company Snap went public in March. + + + +One reason for these purchases is that Tencent’s earlier efforts to promote WeChat abroad (including a splashy advertising campaign in Europe featuring Lionel Messi, a footballer) flopped. Established social networks such as Facebook and WhatsApp proved too entrenched to dislodge. They also did some copying of their own: once they adopted some of WeChat’s innovations, Western consumers had little reason to switch to the Chinese network. + +Such investments have been in Tencent’s core areas, away from turf occupied by Alibaba and Baidu. Sometimes, the trio end up co-operating, if not by design. All three BAT firms are backers of Didi Chuxing, a ride-hailing firm with global pretensions of its own. But in other ways their domestic war is spilling into foreign markets. + +India is one such battleground. This month, together with eBay and Microsoft, Tencent invested $1.4bn into Flipkart, a leading Indian online retailer. Alibaba and Ant together are reported to have invested nearly $900m in Paytm, India’s top online-payments firm; in February, Paytm launched an e-commerce portal akin to Alibaba’s Tmall to take on Flipkart and Amazon in India. + +Elsewhere, Tencent unveiled a service last month that will allow firms in Europe to use WeChat to sell on the mainland. This will let them sell directly into China, avoiding red tape. Tencent also recently invested $1.8bn in America’s Tesla, a pioneer in electric and autonomous vehicles. That is a particular challenge to Baidu, which is betting its future on machine learning and AI. + +Baidu’s push abroad is mainly a way to get access to talent in these fields. The firm has just started its first recruiting campaign at top American universities, including Stanford University and the Massachusetts Institute of Technology. It has a respected AI laboratory in Silicon Valley, despite the recent departure of Andrew Ng, an AI expert. But Baidu does not have the same firepower as Alibaba and Tencent. It tried but has failed to conquer foreign markets such as Japan with its search engine. This week it opened up its self-driving technology to rivals, as Tesla did in 2014, but it has a long way to go before it makes an impact in autonomous driving. + +Grandiose BAT statements about global aims should be taken with a pinch of salt. It would be an error to neglect the profitable domestic market. Goldman Sachs, an investment bank, reckons that China’s online retail market will more than double in size by 2020, to $1.7trn. As Duncan Clark, author of a recent book on Alibaba, points out, whatever headlines Mr Ma and other internet bosses make with their overseas ventures, “it takes a lot to get away from the sheer gravity of China.” But at home and abroad, one thing is clear: China’s internet titans cannot be ignored. + + + + + +The varnished truth + +AkzoNobel makes unrealistic promises about growth + +A nasty transatlantic takeover battle gets worse + + + +Apr 20th 2017 | PARIS + +THE future for AkzoNobel is dazzling—if you believe Ton Büchner, its chief executive. The boss of the Dutch paint-and-coatings firm reported a solid set of quarterly earnings on April 19th, then promised a new era of rapid growth and investments. Shareholders are to get lavish dividends this year. The firm will break up its ungainly conglomerate structure. A speciality-chemicals part of the business will be sold or listed separately next year. + +Mr Büchner has no choice but to talk things up, if he is to justify rebuffing two recent takeover offers from a similar-sized American rival, PPG. Its latest bid, of €22.5bn ($24bn) in cash and shares, represented a 40% premium over Akzo’s market value before the first bid. An activist fund, Elliott Management, which has a 3% stake in Akzo, is pushing other shareholders to demand discussion of the bid. + +Akzo’s promises were welcome. But like a newly opened tin of paint, they made some heads spin. After years of eking out smallish gains mostly through cost-cutting, the firm is suddenly to boom. Akzo had previously forecast that returns on sales would be 11% by 2018, already well over its average of less than 9% since 2008; now the CEO promises a rate of 14% by 2020. The firm, which had revenues of €14.2bn in 2016, has emerged from a difficult period. It bought Britain’s Imperial Chemical Industries (ICI), the owner of Dulux paint and other products, a decade ago, absorbing it as Europe fell into a slump. The group’s recovery since looks solid, but not of the sort to match Mr Büchner’s bold targets. “It is a huge stretch, it looks really tough,” is the verdict of Jeremy Redenius of Sanford C. Bernstein, a research firm. + +PPG’s chief executive, Michael McGarry, this week wrote an open letter explaining that merging the two strongest firms in many markets for paints and coatings makes sense, given consolidation in the wider chemicals sector. The European Commission cleared the merger of Dow Chemical and DuPont in March, to create a firm worth $130bn. Though Akzo and PPG have some overlapping businesses, notably in Britain and France, antitrust risks should be manageable. + +A third PPG offer is likely in the near future. That Mr Büchner is now talking about numbers is an improvement on his initial talk of “cultural” differences between firms and his complaints that Mr McGarry’s approach, during the recent Dutch election, was tactless. But rising nationalism among Dutch politicians and voters could indeed help with fending off a takeover, says Ron Meyer of TIAS business school in Tilburg. A political outcry helped to scotch Kraft Heinz’s recent pursuit of Unilever, a bigger part-Dutch conglomerate. A foreign bid for the privatised Dutch postal service was also repelled last year. + +PPG has talked of doing a deal by June. So far relations have been cordial, but Akzo’s managers dislike Elliott’s aggression, such as its call for the sacking of the chairman of the supervisory board. Elliott this week dismissed the strategic review as “incomplete” and threatened to use the Dutch courts if Akzo turned down its request for a special shareholder meeting to oust the chairman. Akzo has some protection if things turn hostile, notably an independent foundation that appoints board directors, which may mean a legal battle. + +If so, Mr Büchner might well appeal to Dutch nationalist sentiment. Yet doing so is risky. Akzo brags of a swashbuckling history, back to 1792, of growing with acquisitions, many abroad. Shunning foreigners now would look hypocritical and short-sighted. Mr Büchner seems painted into a corner: either he will be held to unrealistic promises, or he will give way to PPG. + + + + + +Keep out + +How Donald Trump affects America’s tourist business + +The industry’s lobby group wants him publicly to reassure foreign visitors + +Apr 22nd 2017 | NEW YORK + + + +TRUMP Tower, in midtown Manhattan, has become a modern-day Mount Vernon. Tourists have long visited George Washington’s homestead. Now they venture through Trump Tower’s brass doors to ogle the decor—“it’s so gold,” said a German teenager standing near the lobby’s waterfall on a recent afternoon—or buy souvenirs. The Choi family, visiting from South Korea, wandered the marble expanse with their new “Make America Great” hats (three for $50). + +The question for America’s hoteliers and airlines is whether such visitors are just anomalies. A strong dollar is one reason for foreigners to avoid visiting America. Donald Trump may prove another, suggests a growing collection of data. Yet measuring the precise impact of Mr Trump’s presidency on travel is difficult. In addition to the currency effect, many trips currently being taken to America were booked before his election. Marriott, a big hotel company, reported an overall increase, compared with a year earlier, in foreign bookings in America in February. + +But Arne Sorenson, Marriott’s boss, has voiced concern about a potential slump in tourism. In February, ForwardKeys, a travel-data firm, reported that in the week after Mr Trump first tried to ban travel from seven Muslim-majority countries, international bookings dropped by 6.5% against the same period in 2016. Hopper, a travel app, found that average daily searches for flights to America have declined in 99 countries since Mr Trump tried to issue his travel ban, compared with the last weeks of Barack Obama’s term. Russia is one of the few places where demand has risen (see chart). Tourism Economics, a forecaster, expects 2m fewer foreign visits to America this year, a 1% drop from 2016. Without Mr Trump it had expected a 3% jump. + +Some sort of fall-off would be unsurprising. On March 6th Mr Trump issued a new, revised travel ban from six Muslim-majority countries. The measure is mired in litigation, but that does not give visitors from the affected countries much comfort. On March 17th Rex Tillerson, the secretary of state, gave broad instructions for consular officials to identify “populations warranting increased scrutiny” and adjust visa-processing accordingly. Such vetting would cover a much broader swathe of the globe than the ban. Then officials barred on-board laptops for travellers from some airports in the Middle East and north Africa. (Britain issued a similar prohibition.) + +The laptop ban has simply prompted some business travellers who work in the Middle East to book flights with a layover in Europe so that they can use laptops onboard, says Greeley Koch of the Association of Corporate Travel Executives. But closer scrutiny of visa applications will probably lead to delays and fewer visas. Tourists who oppose Mr Trump’s policies may go elsewhere. This week Emirates, an airline based in Dubai, said it would reduce flights to five American cities from May, owing to lower demand. + +The industry has been here before. International tourism in America slumped by around 3% each year from 2000 to 2006. Most analysts blame not only the attacks of 2001 but stricter visa rules and anti-American sentiment abroad. Countries that had the dimmest view of America, according to surveys during that period, tended to see drops in travellers there, says Adam Sacks of Tourism Economics. “We are facing a potential rerun,” he says. Dara Khosrowshahi, head of Expedia, an online booking site, has noted that American hotels and airlines are already cutting prices in an attempt to lure travellers. + +America’s main tourism lobby group is now urging Mr Trump, who presumably has some sympathy with other hoteliers, to emphasise that the country continues to welcome foreign visitors despite all the new security measures. The tourism agency for New York city, NYC & Company, is trying to counteract negative rhetoric from Washington, DC with advertisements in Britain, Germany, Mexico and Spain. + +In the capital itself, any loss of visitors from abroad may be offset by a surge in angry American ones. After dates were finalised for a women’s march to protest Mr Trump’s inauguration, hotel bookings spiked. Elliott Ferguson, head of the city’s tourism group, expects a similar surge for this year’s Pride Parade, on June 10th. + + + + + +On the road + +New types of driver embrace the recreational vehicle + +RV sales in America are at a 40-year high + + + +Apr 20th 2017 | NEW YORK + +EARLY spring is the main selling season for recreational vehicles (RVs) and the phone on Tom Troiano’s desk has been ringing incessantly. The owner of Continental RV, a dealership in Farmingdale, a village on Long Island, Mr Troiano is on track to sell more RVs this year than in any other since the early 2000s. Buoyed by cheap financing, rising wages and inexpensive gas, travellers are once again splurging on big-ticket camper vans. + +RVs are a quintessentially American invention: more than two-thirds are made in the United States. Nationally, sales surged to 430,000 units last year, a 40-year high. At the inexpensive end they sell for as little as $5,000 for a caravan; deluxe versions cost up to $1m and are typically equipped with a bedroom, kitchen and bathroom that are bigger than in many European flats. The share prices of Thor Industries, the biggest RV-manufacturer in America, and Winnebago, the third-largest, have risen by 43% and 17%, respectively, in the past year. + +That is a big change. During the 2008-09 recession, notes Mr Troiano, RV dealerships everywhere closed down, leaving his shop among the very few left serving the New York metropolitan area. The current rebound is mostly owing to the economy’s recovery, but it also springs from the fact that new types of customer are embracing the lifestyle. + +A decade ago the average age of an RV-owner was 49, and over 90% were white, says Kevin Broom of the Recreational Vehicle Industry Association (RVIA), an industry body. That didn’t bode well for the future. But stereotypes are being dented. Anecdotal reports suggest that ethnic minorities now make up around a sixth of all new customers, says Mr Broom. The fastest-growing customer demographic is 35- to 44-year-olds. Another boost comes from affluent immigrants, who are keen to experience long, self-planned road trips in America. Mr Troiano’s most recent big sale was to a rich Asian family. + +The industry hopes that its poor record with foreign sales—last year less than 1% of RVs produced domestically were shipped to foreign markets (excluding Canada)—may improve, too. China’s government, for example, has pledged to build 2,000 campgrounds by 2020, up from an estimated 300 today, in a bid to promote domestic tourism, particularly to remote rural regions. Chinese firms such as Yutong Bus make RVs, but not of the quality that many Chinese want. The country imported 1,000 vehicles last year, over half of them American. + +RV manufacturers are also marketing the notion that their motor homes can be commercial as well as leisure vehicles. They can allow travelling salesmen, businessmen and university-admissions officers to save on food and hotel costs, for example, when they hit the road trying to recruit prospective new clients and students. The office, as well as home, can be wherever you park it. + + + + + +Feeling sandwiched + +Fast-food chains in Japan + +Burger and buckwheat-noodle joints alike find it hard to raise prices + + + +Apr 20th 2017 | TOKYO + +SHIMMERING spreads of raw fish sashimi, succulent beef from massaged cows, and, for a decade, the capital with the most Michelin-starred restaurants: few nations rival Japan for fine dining. Its fast-food scene has also thrived for centuries. From the 1700s bowls of cold soba noodles, made from buckwheat, were cycled to wealthy clients on towering trays. Sushi began to glide past customers in 1958, when the first conveyor belt was installed. In 1970 its first homegrown hamburger chain opened, a year before McDonald’s entered the market. + +Fast-food chains continued to be a rare bright spot for Japan during its two-decade-long economic slump. Since 2008 the size of the market has increased from $35bn to $45bn (those figures include convenience stores, or konbini); that of restaurants has declined every year in that period. But fast food is now being squeezed: by a combination of higher wages and still-tepid consumption, and by foreign rivals winning over more Japanese stomachs. + +Tomoaki Ikeda, president of Yudetaro, a soba chain in the greater Tokyo metropolitan area, says that after a decade of budget dining, Japanese expect everyday food to be cheap. Once, plumping for their cheapest bowl of noodles, priced at ¥320 ($3), was considered a little shameful, he says; now it is their best-selling dish. It is having to pay staff more: a wage increase last year of 0.5% was the biggest since 2010. Yet a survey by Shinsei Bank, a lender, suggests salarymen still spent on average only ¥587 on a workday lunch last year. Yudetaro’s healthiest options, which appeal to its mostly middle-aged male customers, are usually also its cheapest (like most fast-food joints in Japan, Yudetaro lists the kilo-calorie count for each dish). + +Many in the industry fret that a hike in Japan’s consumption, or value–added, tax, planned for 2019, which may not apply to food sold at konbini, will make chains even less attractive as they try to raise prices. Konbini offer everything from cheap egg-salad sandwiches to rice lunch-boxes that can be reheated and eaten in-store. According to Euromonitor, a market-research firm, 7-Eleven, one of Japan’s three biggest konbini, accounts for over a third of the fast-food market alone by value. + +To lure back customers, chains are homing in on service. Yudetaro now fries its tempura to order at its standing stalls, often in train stations; at outlets, it has replaced bar counters with tables and seats. MOS Burger, a local chain that opened in the 1970s, has sent staff new quality guidelines, from how to slice tomatoes to the temperature of the water in which the lettuce is dipped before serving (4°C). + +MOS Burger’s winning recipe has been to offer healthy, localised versions of the American hamburger: it serves, for example, thick slices of tomato and heaps of lettuce in its burgers. Since 1987 it has sold a rice-burger variant that swaps out bread halves for seared rice cakes, and since 2004 a lettuce-burger (lettuce-for-buns). It also lets franchisees around the country pitch ideas for new burgers, adding a couple a year to its nationwide menu from the few hundred suggested (in 2016, one was a lotus-root-and-chicken burger). + +Recently foreign rivals have been beefing up their offerings too, including MOS’s arch-rival, Makku—McDonald’s Japan. It had been buffeted by food-safety scandals, but had its first sales increase in 2015 after six years of decline. Takao Shigemori, a food analyst in Tokyo, says the American chain—now with 3,000 outlets—has been revamping its menu to appeal to Japanese customers. This month it introduced three new beef burgers, on Asian-style steamed buns, one with teriyaki sauce. + +Still, foreign firms remain laggards in other ways, says Mr Shigemori. Since 1997 MOS Burger has displayed on boards in each outlet the names of the farmers who grew the lettuce or tomatoes being served in the store that day. At Yudetaro outlets, customers can watch the soba noodles being cut and boiled. Unlike at other chains, the firm does not do deliveries as it did in its early days, because it wants its noodles always to be eaten at their very freshest. Its hope is that this way, the company will keep delivering. + + + + + +Reload + +Another debate about net neutrality is brewing + +The new head of the Federal Communications Commission is expected to unwind Obama-era rules on the internet + + + +Apr 20th 2017 + +THE details around network neutrality, the principle that internet-service providers (ISPs) must treat all sorts of web traffic equally, can be mind-numbingly abstruse. But they fuel passion, nonetheless. After Tom Wheeler, a former chairman of America’s Federal Communications Commission (FCC), proposed unpopular net-neutrality rules in late 2014, for instance, protesters blocked his driveway, forcing him to walk to work. Their action was meant to illustrate the threat of big ISPs erecting toll-booths and other choke-points that would relegate less well-off consumers to digital slow lanes. + +Now it is the turn of Ajit Pai (pictured), Mr Wheeler’s successor, to stir the hornets’ nest. In the coming days Mr Pai is expected to unveil a proposal for new rules on net neutrality. His plan is anticipated to be a testament both to his deregulatory agenda and to the big ISPs’ lobbying power. It would essentially take the FCC out of the equation when it comes to policing the smooth running of the internet. + +Because of the protests in 2014 and because of a court decision that year suggesting that the FCC needed the jurisdiction to be able to mandate net-neutrality rules, Mr Wheeler reclassified internet access as a “telecommunications service” to be under Title II of the Telecommunications Act, meaning that ISPs are regulated as utilities. It is this change that Mr Pai has vowed to undo: he considers the FCC’s new dominion over ISPs as regulatory overkill. + +Mr Pai does support general rules to protect net neutrality. Like other advocates of the principle, he credits these for the internet’s innovativeness. But he believes that light-touch regulation is enough. Once ISPs are no longer classed as telecommunications services he wants them to commit to net neutrality in their terms of service. This commitment would (in theory) be enforced by a different agency, the Federal Trade Commission (FTC), which has the authority to go after firms if they fail to live up to promises they make to customers. + +Yet the ISPs’ commitments would, at bottom, be voluntary, as critics such as Chris Lewis of Public Knowledge, an advocacy group, note. ISPs could refuse to make promises on net neutrality, or abandon them down the line. If they did break promises, it is unclear how vigorously the FTC would go after them. It has less expertise in network engineering, for example, so is much less well equipped to enforce the rules. And Mr Pai may risk going too far even for his own comfort on net neutrality. If he reclassifies internet access, he finds himself in the same situation Mr Wheeler was in: the FCC then has limited authority to intervene should things go wrong. + +The logical answer to this legal conundrum would be for Congress to add a statute on net neutrality to the Telecommunications Act, which predates the rise of the internet. That is unlikely, given other legislative priorities such as health care and corporate tax, but in a less partisan universe, Republicans and Democrats would have little problem finding common ground on the subject, says Kevin Werbach of Wharton, a business school at the University of Pennsylvania. + +Such a compromise would also be in tune with how the debate about net neutrality has evolved. Although they oppose internet access being regulated under Title II, most ISPs, including big ones such as AT&T and Verizon, have made their peace with net neutrality. The current rules have had no discernible negative impact on the companies, notes Mr Werbach. Investment in broadband networks may have fallen, as critics of the strict net-neutrality rules predicted, but such swings are common in the telecoms industry and there is no conclusive evidence that net neutrality is to blame for the fall. + +Will Mr Pai’s plans trigger widespread protests similar to those in 2014? Mr Lewis of Public Knowledge expects that resistance will be stronger still, but others are not so sure. Although big internet firms such as Google, Netflix, Amazon and others have come out against his expected proposals, their opposition seems less determined than it was three years ago. Netflix, one of the fiercest defenders of net neutrality, says it is now big enough to stand up for itself. Activists, for their part, may already be weary from fighting Mr Trump’s government on other fronts. + + + + + +Schumpeter + +Why the decline in listed American firms matters + +Company founders are reluctant to go public and takeovers are soaring + + + +Apr 20th 2017 + +LAST month Schumpeter attended an event at the New York Stock Exchange held in honour of Brian Chesky, the co-founder of Airbnb, a room-sharing website that private investors value at $31bn. Glittering tables were laid out not far from where George Washington was inaugurated in 1789. The well-heeled members of the Economic Club of New York watched as Thomas Farley, the NYSE’s president, hailed Airbnb as an exemplar of American enterprise. Mr Chesky recounted his journey from sleeping on couches in San Francisco to being a billionaire. His mum, a former social worker, looked on. Only one thing was missing. When Mr Chesky was asked if he would list Airbnb on the NYSE, he hesitated. He said there was no pressing need. + +Airbnb is not alone. A big trend in American business is the collapse in the number of listed companies. There were 7,322 in 1996; today there are 3,671. It is important not to confuse this with a shrinking of the stockmarket: the value of listed firms has risen from 105% of GDP in 1996 to 136% now. But a smaller number of older, bigger firms dominate bourses. The average listed firm has a lifespan of 18 years, up from 12 years two decades ago, and is worth four times more. The number of companies doing initial public offerings (IPOs), meanwhile, has fallen from 300 a year on average in the two decades to 2000 to about 100 a year since. Many highly-valued startups, including Lyft, a ride-sharing firm, and Pinterest, a photo-sharing site, stay private for longer. + +A new paper by Michael Mauboussin, who works for Credit Suisse, a bank, and teaches at Columbia Business School in New York, explains why this matters. Consider the first reason behind the slump in the number of listed firms: the IPO drought. Although the total population of companies in America has been steady, their propensity to list their shares has roughly halved. Fear of red tape is one reason (although the decline predates the Sarbanes-Oxley Act of 2002, which tightened disclosure rules and which bosses hate). Many founders also believe that private markets are better at allowing them a long-term perspective. + +As for companies’ hunger for capital, many need less to spend on assets such as plant and equipment as the economy becomes more technology-intensive. Private markets, meanwhile, have become more sophisticated at supplying the funds they do require. Many big, mainstream fund managers, such as Fidelity and T. Rowe Price, are investing in unicorns, meaning private firms that are worth over $1bn, of which there are now roughly 100. + +Airbnb exemplifies the trend. It is almost a decade old but unlisted. Amazon was three years old in 1997 when it floated. Airbnb has raised billions from private markets and has 26 external investors. It will make gross operating profits of $450m this year, according to a new book, “The Airbnb Story” by Leigh Gallagher, so doesn’t need piles of new cash. At its fund-raising round last autumn, employees were able to sell around $200m of shares, which does away with another reason for firms to do an IPO. + +Exits from the stockmarket by established firms—the second factor behind listed firms’ shrinking ranks—are growing in number. About a third of departures are involuntary, as companies get too small to qualify for public markets or go bust. The rest are due to takeovers. Some firms get bought by private-equity funds but most get taken over by other corporations, usually listed ones. Decades of lax antitrust enforcement mean that most industries have grown more concentrated. Bosses and consultants often argue that takeovers are evidence that capitalism has become more competitive. In fact it is evidence of the opposite: that more of the economy is controlled by large firms. + +Perhaps the number of listed firms will stop falling. This year several trendy companies have floated, including Snap, a social-media firm, and Canada Goose, a maker of expensive winter coats beloved of Manhattanites. If the euphoria over tech firms fades somewhat it may become harder for unicorns to raise money privately. Continued decline in the number of listed firms would be bad news. It would be a symptom of the oligopolisation of the economy, which will harm growth in the long run. + +Fewer listed firms also undermines the notion of shareholder democracy. Mr Mauboussin notes that 40 years ago a pension fund could get full exposure to the economy by owning the S&P 500 index and betting on a venture-capital fund to capture returns from startups. Now a fund needs to make lots of investments in private firms and in opaque vehicles that generate fees for bankers and advisers. Ordinary Americans without connections are meanwhile unable directly to own shares in new companies that are active in the fastest-growing parts of the economy. + +Unicorns don’t have to meet public-company standards on accounting and disclosure, so it is expensive to monitor them properly. Some money managers don’t bother. There has already been one blow-up among the unicorns, Theranos, a blood-testing company whose products didn’t work. And without the close scrutiny that comes with being public, other firms appear trapped in a permanent adolescence of erratic management. Uber, a transport firm that is losing money and whose boss, Travis Kalanick, is scandal-prone, is a case in point. + +Time to grow up + +The fact that fewer companies control the economy is a question for antitrust regulators. Whether young firms list their shares is entirely up to their owners. Some tech tycoons including Elon Musk, the boss of Tesla, an electric-car company and Jeff Bezos of Amazon have mastered the art of running public firms on long-term horizons. Mr Chesky says that Mr Bezos has pointed out to him that a company must be “robust” to survive once it is public. Achieving that might be seen as a chore. But it can also be an incentive to improve performance and corporate culture. The hope is that Mr Chesky is up to the task, and that the next time he visits the NYSE, he’ll be there to ring the bell. + + + + + +Finance and economics + + + + +Corporate-bond markets: Click to trade + +Buttonwood: Voting with their wallets + +Sugar in the EU: A sweet deal + +American banks: Happy returns + +World Economic Outlook: Hope springs + +Paying for infrastructure: Private matters + +Crossrail: The skeleton crew + +Free exchange: Donaldson’s difficult idea + + + + + +Click to trade + +Digitisation shakes up corporate-bond markets + +Greater automation promises more liquidity for investors + + + +Apr 20th 2017 + +JUST a few decades ago, an asset manager wanting to trade shares, bonds or derivatives almost always had to call up the trading desk at a big investment bank. Today shares and many derivatives can be traded with a few simple clicks (or even in fully automated fashion, using algorithms). But buying and selling bonds, especially corporate bonds, is still an old-fashioned business. Over four-fifths of trading in American corporate bonds still takes place with a dealer, usually over the phone. Yet digitisation is at last beginning to change the structure of bond markets: witness the announcement on April 11th by Tradeweb, an electronic-trading platform, that it is to offer “all-to-all” trading in European corporate bonds, ie, a system in which any market participant can trade with any other. + +Electronic bond-trading is not in itself new. Tradeweb’s platform, initially limited to trading of American Treasuries, was unveiled in 1998. Around half of Treasuries, and nearly 60% of European government bonds, are now traded electronically, reckons Greenwich Associates, a consultancy. But for corporate bonds, progress has been slower: only 25% of global trading volume in investment-grade bonds, and merely 13% of that in high-yield ones, is electronic. The market is huge—with over $50trn outstanding globally, and over $1.5trn-worth issued last year in America alone. But corporate bonds vary in maturity, issue date and in where they stand in the issuer’s hierarchy of debt. Unlike, say, most sovereign debt, it is traded only rarely; 90% of all corporate bonds change hands fewer than five times a year. The shares of a company, by contrast, usually come in at most two types (common and preferred), and are traded frequently on centralised exchanges. + +The traditional way of matching buyers and sellers has been for dealers to take on the risk. They name a price, buy bonds and hold them in their inventory until a buyer emerges. This explains why personal relationships still matter so much in the bond market. The model is deeply entrenched: even most electronic platforms have adopted it, in the form of “request for quote” (RFQ) systems, where dealers have the exclusive right to quote prices. But when dealers are unwilling to hold onto bonds, as many have been since the financial crisis, because of tighter capital requirements, then such systems offer no more help than phone trading. Some bonds trade so rarely that a sell- or buy-query may elicit no responses at all. + +One new source of liquidity has come from exchange-traded funds (ETFs). Shares in bond ETFs, like those composed of equities, track indices, allowing investors access to a basket of bonds. But the impact for bonds is more significant, because bonds are otherwise traded so rarely. Indeed, bond ETFs are more liquid than the assets the funds own. But ETFs still need dealers: the institutional investors that create and redeem ETF shares have so far had to rely either on voice-trading or RFQ systems. + +All-to-all trading, by contrast, has the potential to change bond-market dynamics more fundamentally. Pioneered in 2012 by MarketAxess, the second-largest bond-trading platform after Bloomberg, it allows any user of a network to trade with another directly, whether asset manager or dealer. Asset managers, who provide 39% of the liquidity in MarketAxess’s all-to-all system, are thus in direct competition with dealers (who provide 29%). As Richard Schiffman of MarketAxess puts it, all-to-all makes it possible for asset managers to move from being price-takers (having to accept dealer quotes) towards being price-makers (setting their own prices). + +We’re all dealers now + +Momentum is gathering as all-to-all catches on with other platforms, too. Smaller ones, such as Liquidnet and Trumid, already offer it. But Tradeweb’s announcement this month carries particular weight because it is a sizeable force—the third-largest in the market, thus leaving only Bloomberg, the market leader, with no all-to-all offering as yet. At MarketAxess, the new system already represents 16% of trading volume in American investment-grade corporate bonds, and fully 34% of that in American high-yield bonds. + +Some argue that even all-to-all systems, let alone RFQ, do not tackle one big difficulty: that buyers and sellers are not always present at the same time. Algomi, a bond-market data firm, seeks to match buyers and sellers across time. Its interface for dealers allows traders easily to keep track of inquiries into a particular bond; it also suggests similar bonds if that one is not available. For investors, the company provides data on trading activity in particular bonds. And for trades where a dealer cannot match buyers and sellers, it has, in partnership with Euronext, an exchange provider, set up a trading venue for corporate bonds that will link up dealers in its network. So dealers should be able to graduate from risk-taking to matchmaking. + +Another factor that will change the structure of the bond market is regulation. From January 2018 MiFID 2, a wide-ranging European financial-market regulation, will require market participants to report the prices and approximate volumes of all completed bond transactions—an unprecedented level of detail (earlier American rules required more limited price disclosure). Such transparency is expected to weaken dealers’ market power. The sheer complexity of this undertaking will also push more trading onto electronic platforms, which are busy embedding automatic reporting. + +Amid all this change are tantalising hints of another potentially transformative trend: full automation. Tradeweb has already introduced a number of protocols that allow the preprogramming of a series of trades: eg, selling one bond and buying another with the proceeds; or arranging currency hedging. MarketAxess has even seen expressions of interest from hedge funds wishing to trade bonds using algorithms. Such moves have brought a lot more liquidity (and volatility) to other markets. In the sleepier world of corporate bonds, the impact could be far-reaching. + + + + + +Buttonwood + +Markets worry more about political turmoil than autocracy + +The response to Turkey’s referendum result is the latest example + +Apr 22nd 2017 + + + +THE VICTORY of Recep Tayyip Erdogan, Turkey’s president, in a referendum on April 16th is seen by many observers as a worrying step on the road to autocracy. The vote handed Mr Erdogan far-reaching new powers. But the Turkish lira, government bonds and stockmarket all gained ground as the results came in. + +It was a reminder that the relationship between markets and democracy is not rock-solid. Like an errant husband, investors may proclaim their fidelity to democracy but are not averse to seeing someone else on the side. + +In Turkey investors may have feared turmoil if Mr Erdogan’s proposal had been defeated. It is an old, but fairly reliable, rule that investors dislike uncertainty. And the early years of Mr Erdogan’s tenure, when he was seen as a liberalising democrat, saw rapid economic growth; his transformation into an emerging autocrat has not put investors off. Since he took office, the Istanbul market has gained 760% (see chart). + +An authoritarian government can provide certainty, at least in the short term. In 1922, when Mussolini took power in Italy, its equity market returned 29% and its government bonds 18%, according to Mike Staunton of the London Business School. Hitler’s accession in 1933 saw German shares return 14% and bonds 15%. True, Wall Street did even better that year under Franklin Roosevelt but still—even then, Hitler was clearly a dangerous extremist. + +The world’s most developed economies tend to be democracies, and to be more open to trade and foreign investment. But as China has demonstrated, it is certainly possible to generate rapid economic growth without a democratic system. China’s stockmarket (along with Hong Kong’s) has been among the best-performing bourses this millennium. + +Go back in time 100 years and investors would have been pretty suspicious of democratic governments. The pre-1914 world was dominated by governments with restricted voter franchises, in which currencies were tied to the gold standard, in part to protect the creditor classes from the ravages of inflation. The arrival of mass democracy after 1918 was followed by a boom in the 1920s but then by the Depression, stockmarket collapse and abandonment of the gold standard. + +Democracies can enact policies that are not market-friendly; the interests of ordinary voters and international investors are not always aligned. If voters support trade tariffs, nationalisation or higher taxes on firms and top earners, then both stockmarkets and currencies are likely to suffer. + +The great bull market of the 1980s and 1990s, on the other hand, coincided with political moves to reduce regulations, lower taxes and let capital flow freely across borders. After the fall of the Berlin Wall, many former Communist countries privatised state-owned companies and opened domestic stockmarkets. In many countries, investors could be relatively relaxed about which party took office; economic reforms were pushed through by Bill Clinton, Gerhard Schröder and Tony Blair, all politicians from the centre-left. + +But the background has changed again. There are remarkable similarities between the election in America and the referendums in Britain and Turkey. In all three, the electorate was bitterly divided and the margin of victory was narrow (Donald Trump lost the popular vote but won the electoral college). In all three, the victorious side drew its support from rural areas and small towns, and was opposed by voters in the big cities. And in all three cases, it has ignored the narrowness of the majority and has argued it has a mandate for radical policy change. + +Democracies work best when there is a modicum of consensus and voters are willing to accept defeat for their own side as legitimate. But that is harder when the ideological divisions are sharp and electoral systems produce “winner takes all” results. In France, for example, voters may yet be faced with a choice in the second round between a candidate from the extreme right and one from the extreme left. + +This is likely to result in more radical political changes, of the type that markets do find unsettling. The general drift is towards more authoritarian, more nationalistic policies that appeal to voters whose living standards have stagnated. That process can create a chain reaction; nationalist policies in one country can provoke an adverse reaction in its neighbours and trading partners. Investors may believe that some of these authoritarian leaders will deliver policies they like in the short run—tax cuts, for example. But in the long run, this is a development that ought to concern them greatly. + +Economist.com/blogs/buttonwood + + + + + +A sweet deal + +Unshackling Europe’s sugar producers + +Europe is liberalising its sugar regime, but its beet producers will still be at odds with its cane refiners + + + +Apr 22nd 2017 + +IN A rickety warehouse on the banks of London’s Thames sit mountains of caramel-coloured raw cane-sugar. For centuries the sweet stuff has come across the seas to Tate & Lyle Sugars’ dockside factory, to be refined into the white stuff. Cane accounts for four-fifths of global sugar production, but only one-fifth of Europe’s. Most of the continent’s sugar is made from beet, thanks to a technique developed in the Napoleonic wars, when an English blockade hit French cane-sugar imports. + +No surprise, then, that the sugar-beet industry has been well guarded by Europe’s Common Agricultural Policy. But in recent years the EU has reformed its system of quotas and subsidies to lower food prices and enhance its farmers’ competitiveness; production quotas for milk were dismantled in 2015, for example. Now it is sugar’s turn. From October this year, the EU will abolish its minimum price and production quota for beet. Its complex restrictions on sugar imports will remain, however, as will its income support for farmers. + +The beet sector has already been restructured in anticipation. EU compensation schemes have facilitated the closure of factories and a decline in the number of beet growers propped up by state support. Thanks to improved seeding technology, beet yields have been rising, says Kona Haque from ED&F Man, a commodities-trading house. This is particularly true of the “beet belt”, which runs through parts of Britain, France and Germany. Ms Haque expects production to rise by over 17% this year, barring unfavourable weather. + +The abolition of support for beet also means that the EU may well become a net exporter of sugar for the first time in over ten years. (Once processed, sugar from beet is indistinguishable from white cane-sugar.) A cap on exports was imposed in 2005, when the World Trade Organisation ruled in favour of a complaint from Brazil, Australia and Thailand that EU support gave its exports an unfair advantage. Refined white-sugar exports could nearly double to 2.6m tonnes a year once support is removed, says Claudiu Covrig from S&P Global Platts, a provider of commodity-market information. But they are unlikely to return soon to the peak of 7m tonnes seen before the WTO ruling, since that would require big investment in export infrastructure. European exporters will face more competition, too: former customers in places such as the Middle East and northern Africa set up their own cane-sugar refineries when EU exports dried up. + +How much production and exports increase will depend on world prices. As the beet industry restructured, the EU sugar price fell from more than €700 ($742) a tonne in 2013 to around €500 in early 2017, close to the world sugar price. As the sector becomes less protected, it seems likely that Europe’s prices will more closely track the volatile world sugar price. That could affect farmers’ decisions to grow beet. Sharp price falls would deter them from sowing beet altogether. + +The deregulation does not mean that cane and beet are on an even footing in Europe, says Gerald Mason at Tate & Lyle Sugars. Cane continues to be hamstrung by import restrictions. A system of tariffs and quotas makes trade with the most efficient low-cost producers, such as Brazil and Mexico, prohibitively expensive. + +African, Caribbean and Pacific cane producers will continue to receive preferential access to the European market. But many are inefficient, high-cost producers and are uncompetitive now that European sugar prices have fallen. The solution is for them to diversify. Some countries will cope better than others. Mauritius and Belize, for example, are using cane to produce speciality sugars, ethanol and electricity. African producers, such as Zambia and Malawi, could export to regional markets. But a recent report for the European Commission found that some Caribbean producers such as Guyana and Jamaica have diversified little, even though exports to Europe are expected to fall drastically, + +Nine EU members have cane refineries, which will find their margins squeezed as white-sugar prices fall but imported raw-sugar costs stay high. Tate & Lyle Sugars ran a €25m loss in the year to September 2015, for which it blames import restrictions. This is why the company came out in favour of a British departure from the EU: Mr Mason views Brexit as a “golden opportunity” to establish rules that treat cane and beet as equals in the British market. Beet producers have a different notion of fairness: for them, a level playing-field is one that takes into account the state support other producers receive. Precisely how the British government will keep both sides sweet is anyone’s guess. + + + + + +Happy returns + +America’s big banks have an encouraging first quarter + +Uncertainty over the future of regulation still clouds the outlook + +Apr 20th 2017 + + + +WHAT a difference a year makes. When America’s big banks reported first-quarter earnings for 2016, the mood was glum. The Federal Reserve was proving tardier than hoped in raising interest rates, which held down lending margins. Jitters about the world economy meant rotten results for investment-banking units, in what is usually their best season of the year. Regulators added to the misery: last April the Fed rejected the “living wills”—plans for liquidating lenders that get into trouble—of five of the six largest banks. + +This spring bankers are happier. Business perked up last year after that dismal start. Donald Trump’s election in November, accompanied by promises to ginger up the American economy, cut corporate taxes and roll back regulation of finance, gave banks’ shares a lift (see chart). The Fed raised rates in December and again in March and is likely to keep increasing them. And 2017’s first-quarter results have, mostly, seen an improvement—though the cheer was not evenly shared. + +“Wall Street activities have performed better than Main Street ones,” says Mike Mayo, an independent bank analyst. Revenues from capital-market businesses at the five biggest Wall Street firms, Mr Mayo calculates, rose by an average of one-fifth in the first quarter of the year, compared with a year earlier. + +Underwriting and fixed-income trading were buoyant; equity trading and advice were flattish. Morgan Stanley, the last big bank to report, was arguably the star turn. On April 19th it said its fixed-income revenues had almost doubled, to $1.7bn, apparently vindicating a thorough overhaul of the division early last year. The firm’s net income rose by 70%, to $1.9bn. + +The previous day Goldman Sachs had disappointed analysts, although its net income was twice as high as a year before. Its fixed-income, currency and commodities revenues were flat, also at $1.7bn. It also lagged behind the field in equities. Volatility in the foreign-exchange, crude-oil and equity markets was subdued: hedge funds (on which Goldman’s trading business is more reliant than its rivals) were consequently less active. Even so, admitted Goldman’s Martin Chavez, “we didn’t navigate the market well”. + +Business on Main Street was more sluggish. Bank loans grew in the first quarter by just 0.7% at an annualised rate, according to the Fed, the slowest for almost six years. Commercial and industrial lending shrank for the first time since late 2010. Residential-mortgage lending also declined. But widening interest margins helped some banks, as loan rates went up faster than funding costs: Bank of America’s spread rose by 18 basis points from the previous quarter and JPMorgan Chase’s by ten. + +In such a quarter Wells Fargo, the least dependent of the big six on investment banking, was perhaps the least likely to shine. Its net income, at $5.5bn, was virtually unchanged from a year before and a shade up from the fourth quarter. A quarterly increase in commercial lending was outweighed by a decline in consumer loans, mainly mortgages. + +But Wells has other worries. It is still recovering from last September’s revelation that it had opened more than 2m ghost accounts. It hopes that a scathing report this month by outside consultants, the dismissal of several executives and the clawing back from them of $180m in pay and shares will help it to recover customers’ trust. It has some way to go: the number of current (checking) accounts opened in March was up by 7% from February, but 35% lower than a year before. Institutional Shareholder Services, a firm which advises investors, has recommended voting to replace most of Wells’s board at the annual meeting on April 25th. + +Wells’s woes notwithstanding, banks ought to be able to look ahead in good heart. Rates are likely to rise further, America’s economy is in good shape and Wall Street firms stand to gain as Europe picks up too. But a cheerful year is by no means assured. Mr Trump’s tax-cutting plans are not yet formed and the future of bank regulation is still unclear. Hence the stalling, in recent weeks, of the rally in banks’ shares. + +Bankers have argued that it is high time red tape was cut: lending, they say, is being held back. Mr Trump is due to appoint several regulators who may lift their burden. But his chief economic adviser, Gary Cohn, formerly at Goldman Sachs, has mused vaguely about a “21st-century version” of the Glass-Steagall act, the Depression-era law that separated commercial and investment banking, repealed only in 1999. With no details, bank bosses were coy in earnings calls with analysts, but “Glass” and “Steagall” are not soothing words. + + + + + +Hope springs + +The IMF nudges up its forecast for global growth + +In recent years the fund’s forecasts have proved over-optimistic + +Apr 22nd 2017 + + + +APRIL is the cruellest month, breeding lilacs out of the dead land, and, in Washington, chirpy forecasts from the IMF that often prove a bit too chirpy. On April 18th the fund released its semi-annual World Economic Outlook (WEO), raising its forecast for global growth in 2017 to 3.5%. + +Growth forecasts for the emerging world have not changed. The IMF’s global optimism is based instead on hopes of increased growth in the rich world. The fund takes a rosy view of the American economy, citing both high levels of consumer confidence and Donald Trump’s plans for more government spending. In Britain the IMF now reckons GDP will grow by 2.0% in 2017, up from earlier estimates of 1.5% (issued in January) and 1.1% (last October). The IMF has also raised its forecasts for Japan and the euro area. + +Snipers point out that IMF forecasts have been far from perfect. Some glitches are excusable. In the spring of 1990, it predicted that Kuwait’s economy would grow by 0.8% that year. It actually fell by 26%. The IMF’s model did not allow for an Iraqi invasion. But other errors are less easily explained: between 1990 and 2007, the IMF’s spring forecasts underestimated global growth in 13 of the 18 years, in large part because it failed to foresee the spectacular rise of China. + +Since the financial crisis, however, the IMF has had to revise down its forecasts over time every year since 2010 (see chart). The fund’s spring forecasts for the coming year have turned out to be over-optimistic in the past three years. + +Christine Lagarde, the IMF’s boss, recently conceded that economic growth in the past six years has been “disappointing”, but held firm in her belief that the world economy was turning. Hence the positive revision to its global GDP forecast—albeit by just a tenth of a percentage point. + +The global economy may still falter for a number of reasons. Ms Lagarde worries the rich world will suffer “self-inflicted wounds” from poor policy choices, notably on trade. Political uncertainty abounds. Just hours before the IMF released the WEO came the surprising news of an imminent election in Britain. The known unknowns hardly help, either. Mr Trump’s fiscal policies, for example, are far from firm plans—Maurice Obstfeld, the IMF’s chief economist, calls them “a work in progress”. + + + + + +Infra dig + +How and when to use private money in infrastructure projects + +Public-private partnerships: their promise and their pitfalls + + + +Apr 20th 2017 + +WHEN the Indiana Toll Road was opened in 1956, there were eight pairs of travel plazas, or rest stops, along the 156-mile (250km) stretch linking Chicago to Ohio and points eastward. As cars became faster and less thirsty, travellers had less reason to stop regularly for petrol or snacks. Three of the travel plazas closed in the 1970s. Restaurants shuttered, even if offered free rent. The remaining plazas, dwindling in number, fell into disrepair. The abiding memory some road users had of Indiana was of grubby toilets along the toll road. + +Those rest-stops are at last getting a makeover. IFM, an Australian infrastructure fund, is investing $34m in the toll-road’s plazas, part of a $200m-plus upgrade. Half of the road’s length, with 57 bridges, is being resurfaced, using a treatment known as “crack-and-feed”, which lasts longer than simply patching the top. IFM, which acquired a 66-year lease on the road in a $5.8bn deal in 2015, says a private-sector operator has the right incentives to invest for the long term. Fewer tyre blowouts mean less gridlock, more road users and more revenue. + +Politicians across the spectrum agree on the need to upgrade America’s crumbling roads and bridges. President Donald Trump has promised a $1trn infrastructure package. His commerce secretary, Wilbur Ross, is keen to involve the private sector. His vice-president, Mike Pence, was governor of Indiana when the toll-road upgrade was announced. It was not a smooth ride. The 2006 legislation to sell the road barely passed: concerns had been raised that a private owner would cut corners on maintenance and service. Then a plan to levy tolls on a new road built with the privatisation proceeds failed. The debt-heavy consortium which first acquired the Indiana toll road went bust (IFM subsequently bought it). The tale shows the promise of private-public partnership, or PPP, in infrastructure—but also the perils. + + + +Linking public-sector need with private-sector capital ought to be a perfect match. Around $2.5trn is spent worldwide each year on roads, railways, ports, sewers, telecoms systems and other infrastructure, but that is still short of the roughly $3.3trn required each year from now until 2030, according to McKinsey Global Institute, a think-tank. The average national shortfall is 0.4% of GDP (see chart). When public finances start to creak, capital spending is often the first thing to go. + +Meanwhile, the pitiful yields on government bonds, plus longer lifespans, mean pension funds are desperate for fairly safe assets that offer a stable, inflation-plus return to provide the income they have promised to the retired. The steady, fee-based revenue generated by airports, toll roads, seaports and utilities seems ideal. Asset managers, such as the Ottawa Teachers Pension Fund, have built up know-how in infrastructure investment. Others put money to work through specialist fund managers, such as IFM. These have raised more than $260bn over the past decade, including $47bn last year (see chart). + + + +PPP thus promises to deal with a host of shortages: of infrastructure; of fiscal space; of long-lived and safe securities; and of aggregate demand and jobs. If it is done correctly, the public users of infrastructure gain from the innovation and efficiency of private-sector firms. But the shortish history of PPP is littered with examples where private provision did not live up to its promises. Problems fall broadly into three categories: the behavioural barriers that turn off consumers; political interests that often turn projects sour; and the difficulty of finding financial and incentive structures that align the interests of all parties. + +Start with public opposition. Anxieties about privatising essential services are present in all countries but tellingly are not always consistent. Britain seems fairly relaxed about private water companies but is cool on privately run toll roads. In contrast, private toll roads are a feature of Australian life but water privatisation remains controversial. A lot depends on what the public has become used to. It is typically more comfortable with the private ownership of telecoms and electricity assets, which is established, than with highways. Yet cable and power networks are at least as critical as roads, perhaps more so. + +Whatever the logic, a touchy public makes for jumpy politicians. A change of administration can often kill a project or drain public support for it. For instance, last year legislators in North Carolina voted down a PPP toll-road project agreed in 2014. It is now under independent review. The East-West link, a PPP toll way in Melbourne, Australia, was cancelled after public opposition. Politicians’ desire for quick results is also at odds with the detailed preparation and long gestation period needed for good infrastructure projects. “Everyone wants to cut the ribbon,” says Kyle Mangini of IFM. “But the political cycle is four to five years while the infrastructure cycle is five to ten years.” Public support for private infrastructure can, however, be built up. Industry experts rave about the “Australian model”, for instance, in which proceeds from privatisations of ports and roads go towards new hospitals, schools and so on. + +That leaves the third substantial difficulty, of getting the financial structure of PPP deals right, so that taxpayers, politicians, banks and fund managers are all content. The first need is to work out whether, and how, private capital will provide benefits that public finance cannot. Too often, the main reason for a government to bring in private capital is a bad one: to follow fiscal rules that cap public borrowing or debt. “If the starting-point is to keep a commitment off the public-sector balance-sheet, it’s hard to negotiate a good deal,” says Andy Rose of the Global Infrastructure Investor Association. + +The right way is to allocate risk where it can best be managed. Governments can borrow cheaply. The cost of private capital is higher. Commercial incentives often make private companies better at pushing construction and operating costs down while keeping users happy with the service. PPP typically works best when there is a stream of revenue from fees, road tolls, airport charges or utility bills. It works less well where returns need to be enhanced by a public subsidy, the terms of which are liable to change. And it works badly wherever there are risks that private capital cannot gauge or reasonably bear, such as cost overruns due to delays in regulatory clearance or to “tail risks” which the state simply cannot lay off, such as nuclear decommissioning. Politicians might see PPP as a way of pushing all risks onto private contractors. But the wise ones shun such deals. + +There is a spectrum of procurement options. At one end are projects financed from taxes. For instance, last year Los Angeles voted to raise its local sales tax by 0.5% to pay for infrastructure. At the other end are private projects, such as London Gateway, a deepwater port on the Thames built by DP World, a Dubai-based port operator. In between lie privatised utilities that are subject to public regulation; or concessions where a private operator is asked to build, say, a hospital or airport terminal and then operate or manage it for a fixed period in return for the revenue it generates or an agreed fee. Crossrail, a massive project in London (pictured on previous page), is an example of another sort of hybrid, where the asset is built by the private sector, but ownership remains public (see box). The right procurement model depends on the individual project, says Mr Rose. Ultimately, however, the taxpayer pays, whether in taxes, fares, tolls or bills. + +The PPP model, though more established in Australia, Britain and Canada, is slowly gaining adherents in America. One example is the new terminal at La Guardia airport in New York. Will Mr Trump’s infrastructure plans give PPP a big push? The only specific detail that seems to be agreed on is a tax credit for equity investors. But a shortfall of private capital is not the main bottleneck, says the head of the PPP infrastructure business at a big construction firm. Rather, pots of money are chasing a paucity of projects that are ready and fit for private-sector participation. + +A lot of groundwork, such as environmental studies and detailed risk-assessments, are needed before a private company will bid on a project. One reason Canada and Australia have a good record on infrastructure is that they have agencies dedicated to grooming projects. It is far harder to get projects going in America, where contractors must deal with a plethora of regulators in different departments, both federal and local. Streamlining planning and permits is painstaking work. Does Mr Trump have the patience for it? + + + + + +The skeleton crew + +Managing financial risk on London’s massive Crossrail project + +Other cities seek lessons on financing big infrastructure investments + + + +Apr 20th 2017 + +THE eastbound platform on the Elizabeth line at Farringdon Station in central London is 30 metres below ground. Its length is as striking as its depth. At more than 200 metres, it is almost twice as long as the typical platform on the Tube. When service begins in December 2018, it will increase rail capacity in central London by 10%, thanks to the longer trains. Travellers nearest to the terminal stations at Reading and Heathrow, to the west of the city, and Shenfield and Abbey Wood, to the east, have a shot at the acme of commuter luxury: a seat. + +Crossrail, as the £14.8bn ($19bn) infrastructure project is known, is on track to deliver other small miracles. With 85% of the work completed, the project is on-budget and on-time, in spite of its size and complexity. The programme required ten new stations, some with passenger tunnels linking them to existing Tube lines. The Elizabeth line itself will snake through 13 miles (21km) of twinned tunnels, including a section under the Thames. Tunnelling is a risky business. You never can tell if you’ll run into a hold-up. The Crossrail dig has yielded 10,000 items of interest to archaeologists. At Farringdon the diggers found 25 skeletons, the remains of victims of the 14th-century Black Death. But there were no immovable objects. + +In fact, big surprises were rare. For a project this complex, a lot of preparation (“de-risking” in the jargon) is needed before private contractors can be confident they won’t encounter big obstacles, and can price a bid sensibly. Once contracts were awarded, it was up to project managers to keep to the timetable. Unexpected delays, such as slow delivery of fittings, are managed in three ways, says Mujahid Khalid, who is in charge at Farringdon. A “float” of unallocated time can be drawn upon; other tasks can be brought forward; and, as a last resort, the number of shifts can be increased. + +The ground has to be prepared for the six floors of offices and shops to be built over the new station. Such “over-site” developments are part of the project’s financing. Indeed London’s businesses are stumping up £4.1bn in a variety of ways for Crossrail. With hindsight, the sponsors might have considered charging for tours of the Farringdon site by visitors from cities seeking lessons for their own metro systems. + +It would not be the only unorthodox initiative. The tunnels needed eight bespoke boring machines. Four dug their way back to surface and were sold back to Herrenknecht, the German manufacturer. Four (two running eastward and two westward) reached the ends of their lines beneath Farringdon. Stripped of valuable kit for recycling, the remains were left there: strange skeletons for 28th-century archaeologists to pore over. + + + + + +Free exchange + +A trade economist wins the John Bates Clark medal + +The law of comparative advantage at 200: still winning prizes + + + +Apr 20th 2017 + +IN 1853 the government of India, then directed by Britain’s East India Company, began construction of a vast rail network, continued by the British Raj, established in 1858. At the time, most inland transport in India was hauled by draught animals: with carts where roads existed and were passable; packed on animals’ backs when they were not, which was often. Moving goods across the great expanse of the subcontinent was costly and painfully slow. That changed with the arrival of the railway. Between 1853 and 1930 more than 67,000km (42,000 miles) of rail was laid across India, providing transport that was fast, cheap and reliable. A bullock could carry a pack 30km a day; an engine could haul freight 600km over the rails in the same time. + +Working out the impact of this took Dave Donaldson (a PhD candidate at the London School of Economics when he started trying) nearly a decade. He dug through mountains of yellowed colonial-era records that had never before been collated and digitised. He found that eight different kinds of salt were sold across India, each sourced from just one region: this quirk allowed him to use local differences in the price of salt to calculate transport costs. He painstakingly plotted water, road and rail routes to work out how to ship from any place in India to any other most cheaply. He found that the introduction of the railway dramatically reduced costs and increased trade. Connecting to it led to significant increases in real local annual incomes: of about 16%. That compares with an increase in real income across India as a whole of just 22% between 1870 and 1930. The railway was a big deal. + +This month the American Economic Association (AEA) chose to honour Mr Donaldson, now at Stanford University, with the John Bates Clark medal, which is awarded annually to a leading economist under the age of 40. He is a deserving winner: his paper on the railroads of the Raj is a particular marvel. But the AEA’s decision is particularly apt given Mr Donaldson’s focus on trade and, more narrowly, on comparative advantage. This counter-intuitive idea was first set out by David Ricardo, a great British political economist, in a book published on April 19th 1817: 200 years ago this week. It is fundamental to Ricardo’s argument that trade is not a zero-sum affair but creates opportunities for mutual gain. Mr Donaldson’s work provides an opportunity to reflect on precisely what that means. + +An isolated community has to do everything for itself. It must grow whatever cotton it wants, however poorly suited the local land and climate. But, as it comes into contact with other places, it can stop doing the things it is especially bad at relative to people elsewhere. Instead, it can focus on things where it is comparatively more productive, and trade some of what it is good at making for whatever else it needs. This process can make everyone better off, even when one community is worse at doing everything than its trading partners. By specialising in the task at which it is least bad, the unlucky community frees other places to focus on what they are best at. Through trade everyone can obtain more of everything than they could produce for themselves. + +Economists labour to explain comparative advantage—“Ricardo’s difficult idea”, as Paul Krugman, an American economist, once put it. They often use simplified examples, such as the classroom staple of a desert island with only two inhabitants, who can either both gather coconuts and fish or specialise in one pursuit and then trade. Ricardo himself used an example with just two goods: English cloth and Portuguese wine. + +Mr Donaldson, in another paper, written with Arnaud Costinot of the Massachusetts Institute of Technology, is more ambitious. At a very fine level of geographic detail, the UN’s Food and Agriculture Organisation produces estimates of how productive different kinds of land are at producing different crops. That allows the authors to work out patterns of comparative advantage in agriculture across American counties. Using historical data on what counties produced and when, and on wholesale crop prices, the authors calculate the benefits of economic integration. They are big. Between 1880 and 1920, for instance, their work suggests that integration lifted real output per worker by 79%. Between 1880 and 1997, integration added as much to American agricultural output as did growth in its productivity. + +After two centuries, the theory of comparative advantage can seem lacking in relevance. It relies on bedrock economic assumptions, like flexible labour markets, which look increasingly questionable. Economists have theoretical windows other than comparative advantage through which to examine trade. And most people are no longer engaged in the production of basic commodities; trade increasingly involves parts and components rather than finished goods. The age in which one person weaves cloth and the other makes wine is long past. + +All together now + +Yet Mr Donaldson’s work is a refreshing reminder of important truths. Trade is not just something countries do, but is the product of increased interaction between communities of all sorts: be they American counties or Indian provinces or neighbourhoods in a great metropolis. Expanding the possibilities for trade need not take messy corporatist agreements; new technologies can do it, too. Investments—in railways, say, or shared industrial standards or new housing in big cities—that lower barriers to trade increase the size of the market within which exchanges take place. + +Finally, the promise of expanded trade is that people can stop doing things at which they are comparatively hopeless: sparing them frustration or indeed privation. Markets cannot always deliver this possibility on their own, any more than India’s railways were the work of an invisible hand. But they have a (comparative) advantage over isolationism. + +Visit our Free exchange economics blog + + + + + +Science and technology + + + + +Cloning voices: You took the words right out of my mouth + +Clearing landmines: Illuminating the target + +The price of secrecy: Weighing heavy on the soul + +Inebriation: Frat-boy crayfish + + + + + +Cloning voices + +Imitating people’s speech patterns precisely could bring trouble + +You took the words right out of my mouth + + + +Apr 20th 2017 + +UTTER 160 or so French or English phrases into a phone app developed by CandyVoice, a new Parisian company, and the app’s software will reassemble tiny slices of those sounds to enunciate, in a plausible simulacrum of your own dulcet tones, whatever typed words it is subsequently fed. In effect, the app has cloned your voice. The result still sounds a little synthetic but CandyVoice’s boss, Jean-Luc Crébouw, reckons advances in the firm’s algorithms will render it increasingly natural. Similar software for English and four widely spoken Indian languages, developed under the name of Festvox, by Carnegie Mellon University’s Language Technologies Institute, is also available. And Baidu, a Chinese internet giant, says it has software that needs only 50 sentences to simulate a person’s voice. + +Until recently, voice cloning—or voice banking, as it was then known—was a bespoke industry which served those at risk of losing the power of speech to cancer or surgery. Creating a synthetic copy of a voice was a lengthy and pricey process. It meant recording many phrases, each spoken many times, with different emotional emphases and in different contexts (statement, question, command and so forth), in order to cover all possible pronunciations. Acapela Group, a Belgian voice-banking company, charges €3,000 ($3,200) for a process that requires eight hours of recording. Other firms charge more and require a speaker to spend days in a sound studio. + +Not any more. Software exists that can store slivers of recorded speech a mere five milliseconds long, each annotated with a precise pitch. These can be shuffled together to make new words, and tweaked individually so that they fit harmoniously into their new sonic homes. This is much cheaper than conventional voice banking, and permits novel uses to be developed. With little effort, a wife can lend her voice to her blind husband’s screen-reading software. A boss can give his to workplace robots. A Facebook user can listen to a post apparently read aloud by its author. Parents often away on business can personalise their children’s wirelessly connected talking toys. And so on. At least, that is the vision of Gershon Silbert, boss of VivoText, a voice-cloning firm in Tel Aviv. + +Words to the wise + +Next year VivoText plans to release an app that lets users select the emphasis, speed and level of happiness or sadness with which individual words and phrases are produced. Mr Silbert refers to the emotive quality of the human voice as “the ultimate instrument”. Yet this power also troubles him. VivoText licenses its software to Hasbro, an American toymaker keen to sell increasingly interactive playthings. Hasbro is aware, Mr Silbert notes, that without safeguards a prankster might, for example, type curses on his mother’s smartphone in order to see a younger sibling burst into tears on hearing them spoken by a toy using mum’s voice. + +More troubling, any voice—including that of a stranger—can be cloned if decent recordings are available on YouTube or elsewhere. Researchers at the University of Alabama, Birmingham, led by Nitesh Saxena, were able to use Festvox to clone voices based on only five minutes of speech retrieved online. When tested against voice-biometrics software like that used by many banks to block unauthorised access to accounts, more than 80% of the fake voices tricked the computer. Alan Black, one of Festvox’s developers, reckons systems that rely on voice-ID software are now “deeply, fundamentally insecure”. + +And, lest people get smug about the inferiority of machines, humans have proved only a little harder to fool than software is. Dr Saxena and his colleagues asked volunteers if a voice sample belonged to a person whose real speech they had just listened to for about 90 seconds. The volunteers recognised cloned speech as such only half the time (ie, no better than chance). The upshot, according to George Papcun, an expert witness paid to detect faked recordings produced as evidence in court, is the emergence of a technology with “enormous potential value for disinformation”. Dr Papcun, who previously worked as a speech-synthesis scientist at Los Alamos National Laboratory, a weapons establishment in New Mexico, ponders on things like the ability to clone an enemy leader’s voice in wartime. + +As might be expected, countermeasures to sniff out such deception are being developed. Nuance Communications, a maker of voice-activated software, is working on algorithms that detect tiny skips in frequency at the points where slices of speech are stuck together. Adobe, best known as the maker of Photoshop, an image-editing software suite, says that it may encode digital watermarks into speech fabricated by a voice-cloning feature called VoCo it is developing. Such wizardry may help computers flag up suspicious speech. Even so, it is easy to imagine the mayhem that might be created in a world which makes it easy to put authentic-sounding words into the mouths of adversaries—be they colleagues or heads of state. + + + + + +The germ of an idea + +Using fluorescent bacteria to find landmines + +A new way to clear minefields + + + +Apr 20th 2017 + +BATTLEFIELDS strewn with mines are one of the nastiest legacies of war. They ensure that, long after a conflict has ceased, people continue to be killed and maimed by its aftermath. In 1999, the year the Ottawa Mine Ban Treaty came into force, there were more than 9,000 such casualties, most of them civilians. Though this number had fallen below 4,000 by 2014 it is, according to the Landmine and Cluster Munition Monitor, an international research group, rising again as a consequence of conflicts in Libya, Syria, Ukraine and Yemen. + +These days most mines have cases made from plastic. Only the firing mechanisms include any metal. That means mines are hard to find with metal detectors. Many ingenious ways to locate and destroy them have been developed, ranging from armour-plated machines that flail the land, via robots equipped with ground-penetrating radar, to specially trained rats that can smell the explosives a mine contains. Such methods have, though, met with mixed success—and can also be expensive. Flails, for instance, scatter shrapnel and explosive residue around a minefield, making it hard to confirm that no undetonated devices remain. Minehunting rats, meanwhile, cost around $8,000 each to train. Often, therefore, mine detection boils down to rows of nervous people wearing blast-resistant clothing and creeping laboriously across a field, prodding the ground ahead to check for buried objects. + +Shimshon Belkin, Aharon Agranat and Amos Nussinovitch of the Hebrew University of Jerusalem reckon they have a better approach. They have created a form of Escherichia coli, a bacterium widely studied by geneticists, that synthesises a fluorescent protein in response to traces of vapour given off by a mine’s explosives. As they report in Nature Biotechnology, they have now tested their invention’s effectiveness as a mine-hunter. + +To turn their bacteria into a mine-detection system, they encapsulated them in beads of alginate, a material derived from seaweed that is permeable to vapours from explosives. They then scattered the beads across an area in which real mines had been buried and left them for a day, to give the vapours from the mines time to stimulate fluorescent-protein production in those beads that had landed above mines. That done, they used a laser to scan the field from a distance. The laser beam stimulated any fluorescent protein it hit to light up, indicating the location of a mine. + +The result was a qualified success. The mines being sought had been buried either in one of two sorts of sand or in garden soil. The bugs detected all six sand-covered mines, and also places where flakes of explosive had been buried uncased, but were not fooled by an explosive-free dummy buried in the same material. They did not, though, detect either of the mines buried in garden soil, or flakes of explosive so buried. Whether this was because the researchers had not allowed enough time for vapour evaporating from the explosives to penetrate the soil (they had buried the targets only five days before the tests) or because those vapours cannot penetrate such soil well enough for the bacteria to detect them is a subject for a further test. + +Even if it can be used only in sand, though, the approach Drs Belkin, Agranat and Nussinovitch have come up with may be useful. They hope to turn it into a working mine-detection system within three years. They think they can improve the bugs’ sensitivity to vapours from explosives and plan to test other ways of encapsulating and dispersing them. For safety’s sake, the E. coli they use are engineered not to be pathogenic. They also require a special nutrient, contained within the bead. Once this is exhausted the bugs die rapidly. + +Besides improving their bacteria, the group would also like to speed up the laser-scanning system, so that it can cover the ground faster. What they use at the moment could be operated from a vehicle, but if it were made compact and light enough, it might also be mounted on a light aircraft or drone. If all that can be done, the world may, at last, have a cheap and effective mine-detection system. + + + + + +The price of secrecy + +Having secrets is not a problem. Thinking about them is + +Weighing heavy on the soul + + + +Apr 20th 2017 + +KEEPING a secret is hard work, as both common sense and past studies confirm. Omitting pertinent information from a conversation, or even intentionally misleading an interlocutor, requires nimble thinking. How much of a burden, though, is merely possessing a secret, rather than trying to defend it against a nosy questioner? The catharsis that often accompanies confessing guilty secrets suggests it may be quite large. But, until now, no one has examined the matter scientifically. + +In a study just published in the Journal of Personality and Social Psychology, Michael Slepian of Columbia University, in New York, attempts to correct that omission. He and his colleagues presented a set of volunteers with a list of 38 sorts of things surveys suggest people commonly keep secret about themselves. Examples included infidelity, theft, poor performance at work, sexual orientation, having undergone an abortion and drug taking. Some of Dr Slepian’s volunteers participated over the internet. Some, recruited in New York’s biggest public space, Central Park, participated face to face. All remained anonymous—and, within statistical limits, both groups responded identically. + +Dr Slepian and his team asked the volunteers whether, for each item on the list of potential secrets, they had never had the experience in question (and therefore had nothing to hide); had had it, but had not kept it secret; had had it, kept it secret for a while, but then let it out; had had it and kept it secret from some people but not from others; or had had it, kept it secret from everyone, and continued to do so. + +For each secret that a participant currently kept, the researchers asked how often that participant found himself actively having to conceal it during conversations, and also how often he thought about it when not in the presence of someone from whom he was keeping it. They also asked participants to choose, on a 13-point scale of well-being, whether keeping a given secret had made life better or worse, with a “+6” indicating very much better, a “-6” indicating very much worse and a zero indicating that keeping the secret had no effect. They also asked a series of questions that let them construct an index of a volunteer’s health. + +All told, the team found that 97% of participants kept at least one of the 38 types of secret in question, that the average person kept 13 secrets and that it was typical for people to have five that they had never disclosed to anyone else. The secret most often sequestered from the whole world was having sexual thoughts about someone other than an established romantic partner. This was followed closely by actual sexual relations with such a person. The researchers also discovered that people reported pondering their secrets privately about twice as often as they chose to conceal them from others—though there was much variation. + +It was this private pondering, rather than the actual possession of a secret, that seemed crucial to health and well-being. People who reported thinking about their secrets less often than once a week over the course of the previous month had an average health index of 66 out of 100, compared with 49 for those who thought about their secrets every day. Similarly, those who thought little about their secrets had well-being scores close to zero, while those who thought about them a lot scored -2. + +The types and numbers of secrets kept by members of these two contrasting groups, those who thought regularly about their secrets and those who did not, were not materially different. That their reactions to those secrets differed is therefore puzzling. Dr Slepian favours psychological explanations for the damage secrets do, such as the idea that they sometimes concern unresolved issues, which thus intrude on thinking. But that neither explains the different responses nor gets to the heart of the matter. If keeping secrets is beneficial—which, presumably, it often is—evolution might have been expected to have weeded out those who suffer as a consequence of doing so. + +Perhaps such weeding is a work in progress, for deep secrecy of the sort people engage in becomes both possible and necessary only once language has come into being, and language is, itself, a recent evolutionary phenomenon. In the meantime, at least one human organisation has worked out how to benefit from the burden imposed by secrecy. The Roman Catholic sacrament of penance and reconciliation, commonly called confession, is a perfect response. It offers to lift that burden in a procedure that, though not cost free to the confessor is, itself, completely secret. + + + + + +Frat-boy crustaceans + +Crayfish may help researchers understand drunkenness + +What happens when you get a crayfish wrecked + + + +Apr 22nd 2017 + +HUMANS are not the only species to enjoy a snifter. Myriad experiments on other animals, from rats and monkeys to bees and fruit flies, show that they also get drunk, will seek out alcohol given the opportunity and may even develop a dependence on the stuff. But alcohol promotes conviviality as well as drunkenness, and that relationship is less well explored. In particular, there are few studies of whether the link is reciprocal—whether conviviality, or at least a sociable environment, affects susceptibility to alcohol. This question has, however, now been looked into. In a paper just published in Experimental Biology, Matthew Swierzbinski, Andrew Lazarchik and Jens Herberholz of the University of Maryland have shown that a sociable upbringing does indeed increase sensitivity to alcohol. At least, it does if you are a crayfish. + +The three researchers’ purpose in studying drunken crayfish is to understand better how alcohol induces behavioural changes. Most recreational drugs, from cocaine and heroin to nicotine and caffeine, have well-understood effects on known receptor molecules in brain cells. That is not, though, true of ethanol, as the type of alcohol which gets people drunk is known to chemists. Ethanol’s underlying molecular mechanisms are poorly understood. But one thing which is known is that crayfish are affected by the same concentrations of the stuff as those that affect humans. Since crayfish also have large, easy-to-study nerve cells that can be examined for clues as to ethanol’s molecular mechanisms, Mr Swierzbinski, Mr Lazarchik and Dr Herberholz are using them to try to track those mechanisms down. + +Their latest experiment involved 102 of the crustaceans that had each been kept for between seven and ten days in the company of several dozen others, and a further 63 that had been raised in isolation for similar amounts of time. Each crayfish was then transferred individually to a tank containing a solution of ethanol in water, and videoed for three hours to record what happened next. + +As might be expected, those animals put into the most concentrated solution, 5.8% by volume, the strength of a potent beer, got pretty drunk. First, they started walking around on tiptoes. Then, they began flicking their tails and doing somersaults (see picture). Finally, the most inebriated ended up lying on their backs, kicking their legs in the air—or, rather, in the water. + +Crayfish put in weaker solutions, a half or a tenth as concentrated, behaved similarly, but got there more slowly—and, in the case of those in the weakest solution, often managed to avoid the leg-kicking stage altogether. Crayfish, in other words, behave much like a bunch of roisterers out on the town of a Saturday night. + +Crucially, though, when the researchers examined the videos in detail, to record what happened when, they found that, regardless of alcohol concentration, animals that had spent the previous few days in company got drunk about 25% faster than those that had been kept in solitary confinement. They therefore suspect that society makes whatever receptor molecules it is that interact with ethanol more plentiful in crayfish nervous systems than they otherwise would be. The next stage is to compare nerve cells from social and solitary animals, to try to work out what those receptor molecules might be—and then, if they can be so identified, to see if what is true in crayfish is also true in people. + + + + + +Books and arts + + + + +New fiction: Cleaning up + +Dos Passos and Hemingway: The winds of war + +Studying wine: Learn how to smell + +New fiction: Argentinian eco-horror + +“The Handmaid’s Tale”: Under his eye + + + + + +Fiction about Pakistan + +Nadeem Aslam shows how to make great literature out of despotism + +Too much political exposition can be the death of fiction. Not so here + + + +Apr 22nd 2017 + +The Golden Legend. By Nadeem Aslam. Knopf; 319 pages; $27.95. Faber & Faber; £16.99. + +THERE are two versions of how Pakistan got its name, both true. The original is the more prosaic. Choudhary Rahmat Ali, a Punjabi Muslim nationalist, invented it from the putative state’s component parts: the first letters of Punjab, Afghan province (now Khyber Pakhtunkhwa), Kashmir, Sindh and the final letters of Balochistan. The second, more beloved version, is that it is the product of two words in Urdu and Persian: stan and pak, which together mean “land of the pure”. + +Pakistan has been trying to live up to the latter version from its birth. At partition it was cleansed of most Sikhs and Hindus. Starting in the 1950s, its increasingly strident constitutions swept away the secularism imagined by the nation’s founder, Muhammad Ali Jinnah. In the 1980s blasphemy laws were dusted off and spruced up. They are now shiny with overuse. The most recent campaign of decontamination comes from the jihadists who would purge Pakistan of its Shias and Sufis. In a remarkable new novel Nadeem Aslam pours cold water over these efforts, dousing the very notion of purity itself. + +Set in Zamana (Lahore in all but name) the novel begins on the Grand Trunk Road. Nargis and her husband Massud, both architects, form part of a human chain carefully transferring books containing the names of Allah or Muhammad within them from a library to new premises. The process is inefficient, but any other mode of transport, it is thought, might risk contact with uncleanliness. Massud handles books from the Abbasid period, from Moorish Spain and 17th-century Holland. A car stops at a traffic light in front of him. A motorbike pulls up alongside. A gun is drawn. Shots ring out. Massud is killed in the crossfire. The book in Massud’s hands as he dies is a work by his father, a 987-page meditation on the mingling of civilisations, which until then had disappeared. + +In the very first chapter, Mr Aslam lays out, as in a manifesto, his pervading themes: intercultural exchange, piety, purity, violence. Mr Aslam, whose family fled persecution in Pakistan when he was 14 and settled in Britain, has returned to these themes repeatedly in his previous works. In “The Golden Legend”, which came out in Britain in January and is now being published in America, he distils them into a work of quiet rage and searing beauty. + +The man who fired the gun turns out to be an American diplomat. After Massud’s death an officer from Pakistan’s military intelligence agency visits Nargis. She is persuaded, eventually, to forgive the foreigner, which under Sharia law would allow him to go free. The persuasion takes the form of requests, then commands, then violence, inflicted both upon her and her precious copy of Massud’s father’s book. The intelligence man cuts it to shreds. + +Nargis is supported during this period by Helen, the teenage daughter of a Christian couple who worked as housekeepers for the architects. Helen’s father, Lily, a widower, is having an affair with Aysha, the daughter of the neighbourhood’s Muslim cleric, who also happens to be widowed. The pair try to keep their relationship secret; they know that Christians in Pakistan are jailed “for drinking water from a Muslim’s glass”. But news of it is broadcast over the mosque’s loudspeakers. A dozen Christians are killed in the massacre that follows. Lily disappears. Nargis, Helen, and a young Kashmiri man, Imran, who had been visiting them, flee to an abandoned mosque on an uninhabited island in the river that runs by the city. + +“The Golden Legend” is extravagant with imagery and elaborate with metaphor, but it is never in danger of collapsing under the weight of its prose; it is held up by the solidity of real life. The shooting at the start of the novel is a direct reference to an incident in 2011 involving a CIA contractor in Lahore. An account of an attack at a Sufi shrine includes details of how policemen carried away the heads of the suicide bombers from an attack in 2010. A chapter about a Catholic bishop is inspired by a scantly remembered event from 1998. Even the description of graffiti on Kashmiri walls—“Indian dogs go home”—is accurate. + +Offsetting the hatred and bleakness are the luminous main characters: Nargis, Helen and Imran, for whom history, culture and religion are not circumscribed by hard boundaries. Painstakingly, they restore Massud’s father’s book, now thicker by half thanks to the golden thread they use to stitch it back together. Yet it is telling that they must go to an island to escape Zamana, which translates as “the world” or “the era”. The setting of “The Golden Legend” may be Pakistan, but the closing of minds and hearts it laments is universal. + +It is on the island that Helen reflects on everything that has passed through their land over the centuries: “And so it was that there was no absolute purity anywhere on the planet. The Land of the Pure did not exist.” It is a lesson lost on those who would aspire to make one. + + + + + +Literary friendship + +Dos Passos and Hemingway, a friendship forged in the fire of war + +Pairing the two writers and their wars + + + +Apr 22nd 2017 + +The Ambulance Drivers: Hemingway, Dos Passos, and a Friendship Made and Lost in War. By James McGrath Morris. Da Capo Press; 312 pages; $27. + +ERNEST HEMINGWAY liked chasing after death. Given the chance to drive an ambulance in the first world war, he exulted: “Oh, Boy!!! I’m glad I’m in it.” Not everyone was so eager. John Dos Passos, a fellow writer, was also an ambulance driver in the Great War. But he called it “slavery”, a “tragic digression”. If the two men held opposing views on war, they were both also made by it. Conflict sculpted their relationship—and their writing. + +In “The Ambulance Drivers” James McGrath Morris pairs the two writers and their wars. The combination makes sense. Hemingway and Dos Passos “held front-row seats…on the killing fields of Europe,” the author explains. War bound these two very different men together. Dos Passos was “shy and bookish”. Hemingway anything but that: he swore and womanised his way from Paris to Havana. Dos Passos “grew up” in the trenches, and although he was the older by just three years, he admired Hemingway. Mr Morris follows their friendship through the 1920s and 1930s: from bohemian Paris to languid days off the Florida coast. + +War shaped their politics, too. Dos Passos was jolted by the “tragedy” of what he witnessed in France and Italy. “Three Soldiers”, the war novel he published in 1921, saw off any idea that war was glorious. Dos Passos was a stern socialist who “wanted to write about war to end it,” explains Mr Morris. Hemingway was unmoved. War made him a cynic. For him, “literature could capture the experience, not change it,” says Mr Morris. + +This difference came out in their prose. Hemingway jabbed out phrases, to pen “the truest sentence that you know”. Dos Passos experimented with modernism instead. He stuck words together (“rainseething” was one) and quoted song lyrics. The result is a howl against the “decadence” of modern capitalism. These passages of literary analysis do not impede the pleasure of the book. They float, as Mr Morris tugs the reader into the boozy, bitchy world of his protagonists. Famous friends bustle in and out. Zelda and F. Scott Fitzgerald host Dos Passos for lunch, then get drunk and insult an estate agent. A hoard of private letters illuminate the characters’ inner lives. + +If “The Ambulance Drivers” is as readable as a novel, there is also the occasional slip. Mr Morris alludes to things without explaining them. Who are the Bersaglieri? What is a thobe? The author does not say. Dos Passos’s Madeiran-Portuguese heritage is first mentioned casually deep into the book. A few mistakes jar, too. “A Farewell to Arms” features the Battle of Caporetto, not “Caporetta”. + +But these are niggles. Mr Morris does a fine job of conjuring his characters. Their second conflict, the Spanish civil war, would be their last. By the mid-1930s, Hemingway felt “envy and growing resentment” towards his friend, Mr Morris writes. Dos Passos, though poor, was loved by critics. Spain broke Hemingway. He disowned his friend, and accused him of fascism. This was typical of his cruel type of selfishness. “Hemingway destroyed every friendship, every love affair,” concludes Mr Morris. They died without reconciling, which is a pity. As this sad, vivid book shows, they had much in common. + + + + + +Studying wine + +The first lesson in wine appreciation is learning to smell + +A writer's oenological discoveries + + + +Apr 22nd 2017 + +Cork Dork. By Bianca Bosker. Penguin; 329 pages; $17. + +FOR a subject that purports to be an arcane niche, the milieu of obsessive sommeliers has attracted much media attention recently. First came “Somm”, a documentary released in 2012 about four students preparing for the gruelling Master Sommelier (MS) exam. Its success spawned both “Uncorked”, a reality-television show that shadows a new crop of budding MS candidates, and a feature-length sequel called “Into the Bottle”, profiling winemakers. Now this select fraternity of (mostly male) service professionals has come in for literary star treatment as well. In “Cork Dork” Bianca Bosker, a technology journalist by trade, chronicles her immersive year-long quest to join the club, and the transformation it wrought on her senses and psyche. + +Readers who have yet to watch any instalment of the “Somm” or “Uncorked” series will find Ms Bosker a skilled guide as she escorts them on her journey through many of the weirder crannies of the wine-consumption world. (Farmers and winemakers, save for the industrial “masstige” producers in California, are conspicuously absent.) + +Her tale duly features fermented grape juice lofting her protagonists into manic ecstasy or plunging them into the depths of despair. One sommelier compares Pinotage to the torture technique in which “you get a tyre, douse it in gasoline, stick it around someone’s neck, and light it on fire”. It profiles scientists who study the physiology of taste and smell, including a German who conducts regular experiments on human bodies and occasionally needs to transport them. He recalls one cadaver he had to dissect with a “Black and Decker” saw. It recounts horror stories of unruly diners, such as the one about the man who told a black waitress in New York to calm down because her president was in office, and of arrogant judges at sommelier competitions: one sought to unsettle a candidate by using his finger to probe the depths of his right nostril while ordering. + +However, even such grand cru-quality anecdotes are unlikely to surprise the portion of Ms Bosker’s audience that has already been indoctrinated into sommelier subculture. (Morgan Harris, the author’s “wine fairy godmother” and the book’s main character, is also featured in “Uncorked”.) Although the author is a lively portraitist, “Cork Dork” is essentially structured as a travelogue: she would very much like to qualify as a certified sommelier (and ultimately does), but the fate of her career hardly hangs in the balance. That leaves it bereft of the plot, suspense and occasional conflict that made the original “Somm” so gripping. + +In lieu of drama, “Cork Dork” offers two notable virtues. First, it is an outstanding beginner’s primer on wine. Shoehorned into the narrative are comprehensive profiles of the flavours and aromas of the most prevalent grape varieties and how they vary by region and maturity. It also gives a breakdown of the principal components of a wine and a guide to recognising and distinguishing them. Ms Bosker intersperses her vignettes with these lessons so deftly that you are likely to miss them if you fail to take notes. But a diligent reader will emerge with the same degree of knowledge that you would expect from an introductory wine course. + +Second, Ms Bosker offers a payload for knowledgeable and passionate wine lovers—the “cork dorks” of the title. Its concluding chapters constitute an extended ode to oenological mastery as a path to heightened consciousness: once you learn how to smell, it doesn’t stop at wine. + +Ms Bosker now regularly complements her visual perception of the world with an olfactory one: on a road trip through California, “San Rafael smelled like sweet-and-sour chicken; Larkspur like potatoes cooking with rosemary…I smelled the salty brine of sea air mixed with a thick, soapy perfume of detergent and garlic even before I saw the signs for San Francisco. It was then that I realised I’d driven the whole way without turning on the radio.” + + + + + +Argentinan Fiction + +Samanta Schweblin’s blistering debut novel + +“Fever Dream” is suspenseful eco-horror + + + +Apr 22nd 2017 + +Fever Dream. By Samanta Schweblin. Translated by Megan McDowell. Riverhead Books; 192 pages; $25. Oneworld; £12.99. + +THIS small debut novel packs a mighty, and lingering, punch. In “Fever Dream” Samanta Schweblin (pictured), an Argentinian short-story writer based in Berlin, wraps contemporary nightmares, both private and public, into a compact, but explosive, package. Ms Schweblin delivers a skin-prickling masterclass in dread and suspense. Sentence by sinister sentence, she instils and then intensifies “a terrifying feeling of doom”. + +In rural Argentina, a frightened holidaymaker named Amanda lies dying in a clinic. David, the son of a local woman called Carla, interrogates the delirious patient about the events that have led her into this place of “danger and madness”. Amanda, in turn, recounts conversations with Carla that reveal, in fragments, a terrible tale. And what has become of Nina, Amanda’s daughter, whom her mother so fearfully kept within “rescue distance”? Convulsed by doubt and pain, she torments herself: “Was I a bad mother? Is it something I caused?” + +In whispered snatches, the reader is told of poisonings and contaminations, of children hideously harmed, a blighted community and “something small and invisible that has ruined everything”. Around this double dialogue, perspectives shift and blur. Reality shimmers like the summer haze over the chemically enhanced green of the surrounding soya fields. No “rescue distance”, the reader learns, can ever be small enough for safety. As David says (or, perhaps, as Amanda hallucinates him saying): “Whatever has cursed this town for the past ten years is now inside me.” + +With virtuoso skill, well served in Megan McDowell’s finely textured translation, Ms Schweblin fuses a study in maternal anxiety with an ecological horror story. She refracts both strands through the eerie prism of her narrative, almost as if Henry James had scripted a disaster movie about toxic agribusiness. The author has linked her “motionless scourge” to the pesticide-blasted prairies of Argentina. And then there is the abyss of a mother’s anguish. “My head”, Carla recalls, “was a tangled mess of guilt and terror.” As Ms Schweblin lands her punch, so will the reader’s be. + + + + + +Dystopian television + +A masterful adaptation of “The Handmaid’s Tale” + +Timing and skill breathe new life into Margaret Atwood’s novel + + + +Apr 20th 2017 + +THE most nightmarish dystopian worlds are both familiar and incongruous, existing on the peripheries of possibility. A prime example is “The Handmaid’s Tale”, written in 1985 and now a ten-part television series which will be released on Hulu from April 26th. + +In it an American society is ruled by a theocratic dictatorship. Women are stripped of their jobs—bank accounts and property are handed over to their husbands or male next-of-kin—and forbidden from reading. They are recategorised under the new regime: women who can bear children become “handmaids”, made to conceive the babies of high-ranking military personnel whose wives are barren. Infertile women, dissidents and lesbians are sent to die farming toxic land. + +Ms Atwood’s book is brought terrifyingly to life by a star-studded cast, which includes Elisabeth Moss (of “Mad Men”), Samira Wiley (“Orange is the New Black”), Alexis Bledel (“Gilmore Girls”) and Joseph Fiennes (“Shakespeare in Love”). Most alterations to the plot, such as making the regime more brutal—the command “if thine right eye offends thee, pluck it out” is literally enforced upon one rebellious handmaiden—make the mood more tense and the characters’ quiet obedience more understandable. The decision to open with June (later known as Offred, played with muted horror by Ms Moss) attempting to flee the country with her husband and young daughter pays off: the viewer is immediately concerned with her plight. Jumping between her life before and after the regime, the series slowly pieces together the person June once was and the freedoms she used to enjoy. + +With women’s reproductive rights at the centre of its narrative, the series has been praised for its timeliness. Ms Moss has said that the cast and crew “never wanted to show to be this relevant”. But as the Trump administration continues to cut funding and roll back family-planning services, it is easy to hear echoes of its rhetoric on the screen. + +Yet “The Handmaid’s Tale” is searing because so many women have no more control over their own bodies today than they did in 1985. What rights they have earned are subject to the whims and political persuasions of men in power. If Ms Atwood’s tale feels nightmarish it is precisely because it is enduringly, and maddeningly, familiar. + + + + + +Obituary + + + + +Yevgeny Yevtushenko: More than a poet + + + + + +More than a poet + +Obituary: Yevgeny Yevtushenko died on April 1st + +The Russian poet was 83 + + + +Apr 20th 2017 + +BABI YAR was the site of the most notorious massacre of the Holocaust. But when Yevgeny Yevtushenko visited the ravine outside Kiev in 1961, he found no monument there to the nearly 34,000 victims, just lorries dumping piles of stinking rubbish. He hurried away and wrote a poem, decrying not only the Nazi executioners but also Soviet anti-Semitism and the amnesia it fostered. + +The leaders of the tavern mob are raging + +And they stink of vodka and onions. + +Kicked aside by a boot, I lie helpless. + +In vain I plead with the brutes + +As voices roar: + +“Kill the Jews! Save Russia!” + +It was brave, heartfelt—and well-timed. Nikita Khrushchev’s thaw was breaking over the Soviet Union, and the previously unsayable was being said. Dmitri Shostakovich set “Babi Yar” to the opening movement of his 13th Symphony. Shamefaced Soviet Ukrainian bureaucrats closed the tip and put up a modest memorial. + +To his fans, the episode epitomised the Yevtushenko they adored: an idealist who spoke for his generation, a man whose humanism transcended the cold war. They flocked in their tens of thousands to his readings of his own and other writers’ work, making him the rock-star poet of his age; “Babi Yar”, declaimed with elaborate intonation and vigorous hand gestures, was a particular hit. His output was prodigious. His poetry books sold in their millions, a privilege few Russian poets enjoyed. There were novels and films too. + +His technique was honed and immaculate; as a teenager, he searched for an unused rhyme for every Russian word. The results might lack subtlety, but never impact. Even his critic Joseph Brodsky, a great Russian poet forced into exile, said he knew hundreds of Mr Yevtushenko’s lines by heart. They were simple, even staccato, dealing with fresh, forthright ideas—love and longing, memory and forgetting, pride and shame—delivered with utter self-confidence and transparent enjoyment. The secret, he said, was “in bridging the gap/Between the word and our hearts”. + +Performance poet + +Charming (notably and insistently to women), inquisitive and quick-tongued, he seemed a world away from the grey, stolid Soviet cultural establishment. He was no golden child of the literary nomenklatura, but rather a genuine product of communist meritocracy, born in Siberia in a family savaged by Stalinist purges, who scrabbled his way to stardom by penning verses for a sports newspaper. + +The cultural commissars preferred to keep such popular, restless talents in a gilded cage, rather than banishing or jailing them. Only the greatest resisted that embrace. He was not one of them. + +It helped that his style fitted unproblematically into the Soviet poetical canon. Its content reflected the lively, even troublesome, spirit of the post-Stalinist 1950s and 1960s, but even that could be tolerated, within limits, especially as that toleration proved that the Soviet system was not as monolithic as its critics claimed. + +It all made him an easy target for those who thought his real-world stances should match the lofty ideals of his poetry. In 1987 Brodsky resigned from the American Academy in protest at Mr Yevtushenko’s honorary membership, complaining: “He throws stones only in directions that are officially sanctioned and approved.” Two decades earlier, a campaign in Britain stymied his election to the Oxford poetry professorship. + +The critics had a point. He bemoaned the Soviet system’s imperfections while mounting rose-tinted defences of its achievements and wince-making attacks on the West. He baffled students in New York when he defended a scandalous prosecution by asking: “How would you react if one of your writers published a book in Europe under an assumed name?” + +His celebrity gave him clout, when he chose to use it. He chided Khrushchev for his U-turn against cultural freedom and defended some victims of persecution, including, in the 1960s, Brodsky—but not Boris Pasternak, whose “Dr Zhivago”, he said, was not worth publishing. He lamented the Soviet-led invasion of Czechoslovakia in 1968. But these protests were within the system, not against it. Other writers, such as Alexander Solzhenitsyn, focused discontent; he acted as its safety valve. His worst punishments were expulsion from university for praising an anti-Stalinist novel, or media scoldings by hardliners. After publishing an unsanctioned autobiography abroad, he apologised grovelingly for his “irreparable mistake”. While he was enjoying the fruits of fame, political prisoners were dying in labour camps. + +Despite his peacock dress sense and penchant for self-promotion, he was a self-deprecating man who claimed no great bravery, let alone genius. One of his novels dismissed his own work as a phase to be grown out of. His admirers might overstate his merits; he did not. + +After 1991 his star waned. Post-Soviet Russia lost its taste for performance poetry. He spent much of his time teaching, in the congenial but unglamorous University of Tulsa, Oklahoma. One of his later poems mourned the Czech philosopher-playwright Vaclav Havel, ending: “Who will tell us what to do next?” Some of his counterparts needed nobody to tell them. + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Japan + +Markets + + + + + +Output, prices and jobs + +Apr 22nd 2017 + + + + + +Trade, exchange rates, budget balances and interest rates + +Apr 22nd 2017 + + + + + +The Economist commodity-price index + +Apr 22nd 2017 + + + + + +Japan + +Apr 22nd 2017 + + + + + +Markets + +Apr 22nd 2017 + + + + + +Table of Contents + +The Economist + +The world this week + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + +North Korea: Handle with extreme care + + + + + +The French election: Time to decide + + + + + +Islam in Indonesia: The rise of intolerance + + + + + +Airlines in America: Whack-a-passenger + + + + + +Corporate-bond markets: Broken dealers + + + + + +Britain’s election: Game change + + + + + +Letters + +On trade, horses, legal aid, science, pronouns, United Airlines: Letters to the editor + + + + + +Briefing + +The French election: La lutte + + + + + +United States + +The death penalty: And then there were none + + + + + +Politics: Ossoff’s face-off + + + + + +The border barrier: Backs to the wall + + + + + +Immigrants and deficits: Neither burdens nor saviours + + + + + +Post office v pooches: Leash the hounds + + + + + +Health-care costs: An arm and a leg + + + + + +Population change: Out of the frozen north + + + + + +Lexington: Divided by a common border + + + + + +The Americas + +Corruption in Latin America (1): Fachin victims + + + + + +Corruption in Latin America (2): The long arm of the policía + + + + + +Argentine history: Two shades of blue + + + + + +Bello: Chile in a Spanish mirror + + + + + +Asia + +North Korea: Strategic confusion + + + + + +The race for governor of Jakarta: Division in diversity + + + + + +A lynching in Pakistan: Places of darkness + + + + + +Vietnamese naval diplomacy: Dock and cover + + + + + +Authoritarianism in Japan: Nabbing imaginary terrorists + + + + + +Banyan: Canaries in the coal fumes + + + + + +China + +Climate change: No cooling + + + + + +Bicycle sharing: The return of pedal power + + + + + +Middle East and Africa + +Africa’s slums: The great urban racket + + + + + +Namibia’s economy: Will it be NEEEFcapped? + + + + + +Algeria: Stability or stagnation? + + + + + +Gaza: Hamas divided + + + + + +Islam’s changing fashions: Don’t say sexy + + + + + +Europe + +Turkey’s constitutional referendum: Erdogan the maleficent + + + + + +Protests in French Guiana: Failure to launch + + + + + +McJobs: The tempest + + + + + +Energy in Ireland: Bog down, wind up + + + + + +Charlemagne: In the shadow of Willy Brandt + + + + + +Britain + +A snap election: Back into battle + + + + + +The class of 2017: One of us? + + + + + +The Liberal Democrats: A Brexit bounce + + + + + +The opposition: Hard work for Labour + + + + + +The election in Scotland: Mountains to climb + + + + + +Northern Ireland: A blow upon a bruise + + + + + +The economic background: Ride the wave + + + + + +Bagehot: Theresa May, Tory of Tories + + + + + +International + +Neglected tropical diseases: Winning the endgame + + + + + +Special report + +America and China: Disorder under heaven + + + + + +Pax Americana: An archipelago of empire + + + + + +America in the Pacific: The American lake + + + + + +Pax Sinica: The travails of a regional hegemon + + + + + +Asian neighbours: When elephants fight + + + + + +The risk of conflict: Avoiding the trap + + + + + +Business + +China’s internet giants: Three kingdoms, two empires + + + + + +AkzoNobel: The varnished truth + + + + + +Donald Trump and tourism: Keep out + + + + + +Recreational vehicles: On the road + + + + + +Fast food in Japan: Feeling sandwiched + + + + + +Internet regulation: Reload + + + + + +Schumpeter: Life in the public eye + + + + + +Finance and economics + +Corporate-bond markets: Click to trade + + + + + +Buttonwood: Voting with their wallets + + + + + +Sugar in the EU: A sweet deal + + + + + +American banks: Happy returns + + + + + +World Economic Outlook: Hope springs + + + + + +Paying for infrastructure: Private matters + + + + + +Crossrail: The skeleton crew + + + + + +Free exchange: Donaldson’s difficult idea + + + + + +Science and technology + +Cloning voices: You took the words right out of my mouth + + + + + +Clearing landmines: Illuminating the target + + + + + +The price of secrecy: Weighing heavy on the soul + + + + + +Inebriation: Frat-boy crayfish + + + + + +Books and arts + +New fiction: Cleaning up + + + + + +Dos Passos and Hemingway: The winds of war + + + + + +Studying wine: Learn how to smell + + + + + +New fiction: Argentinian eco-horror + + + + + +“The Handmaid’s Tale”: Under his eye + + + + + +Obituary + +Yevgeny Yevtushenko: More than a poet + + + + + +Economic and financial indicators + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +Japan + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.04.29.txt b/homeworks/B20769/homework1/data2/2017.04.29.txt new file mode 100644 index 0000000..ac26c4a --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.04.29.txt @@ -0,0 +1,5852 @@ +[Fri, 28 Apr 2017] + +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Briefing + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +| 下一章 | 主菜单 | + +* * * + + + + + +The world this week + + +react-text: 396 • /react-text react-text: 397 Politics this week /react-text [Fri, 28 Apr 08:52] + +react-text: 400 • /react-text react-text: 401 Business this week /react-text [Fri, 28 Apr 08:52] + +react-text: 404 • /react-text react-text: 405 KAL's cartoon /react-text [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Politics this week + + +Apr 27th 2017 + + + + + +Emmanuel Macron topped the first round of the presidential election in France and will meet Marine Le Pen in a run-off on May 7th. Markets were buoyed by Mr Macron’s performance: opinion polls put the former economy minister well ahead of his nationalist rival. A few days before the vote a policeman was killed by an Islamist on the Champs Élysées in Paris. See article. + +Turkey broadened its purge of people in public positions who the government claims belong to the movement allegedly behind last year’s failed coup. Some 1,000 people, mostly police officers, were arrested, and another 2,200 were being sought. Another 9,000 police were suspended from duty. + +Power surge + +A court in South Africa knocked back the government’s plan to spend as much as 1trn rand ($76bn) building nuclear power stations with help from Russia in a deal that critics say the country cannot afford. The courts ruled that an agreement signed with Russia was unconstitutional as it was not approved by parliament. + + + +America started to withdraw its soldiers from the Central African Republic where they had been assisting in the fight against the Lord’s Resistance Army, a rebel group notorious for using child soldiers that was formed in Uganda but later fled across the border. + +The leader of the main opposition party in Zambia, Hakainde Hichilema, appeared in court. Mr Hichilema, who has been repeatedly arrested by the government since narrowly losing an election in August 2016, was charged with treason after his motorcade failed to halt as it was being passed by one containing Zambia’s president, Edgar Lungu. + +Israel’s prime minister, Binyamin Netanyahu, snubbed Germany’s foreign minister, refusing to meet him during a trip to Jerusalem because he had visited two human-rights groups that Mr Netanyahu views as hostile. + +Iran’s Guardian Council ruled that Mahmoud Ahmadinejad, a former president, is ineligible to run in this year’s presidential election. + +And on, and on… + + + +More deaths during protests in Venezuela meant that at least 29 people have died in nearly a month of demonstrations for and against the country’s authoritarian regime. They began after the supreme court usurped the powers of the legislature, which is controlled by the opposition, and continued even though the court changed its mind. Opposition politicians blamed some of the deaths on paramilitary groups. Venezuela said it will withdraw from the Organisation of American States, which has criticised its regime for crushing democracy. See article. + +A gang of about 50 men raided a security firm in the Paraguayan city of Ciudad del Este. After killing a police officer, they reportedly made off with millions of dollars. Some crossed the reservoir at the Itaipu hydroelectric dam to Brazil, where three robbers were killed in a shoot-out. + +America levied duties averaging 20% on imports of softwood lumber from Canada. America claims that Canada subsidises the lumber by charging too little to firms that harvest the trees, which are mostly grown on public land. Donald Trump called Canada’s protection for its dairy farmers “a disgrace”. But he also said that America would not pull out of NAFTA and would instead seek to renegotiate the free-trade agreement. See article. + +Don’t hold your breath + +Donald Trump laid out a wide-ranging tax-reform plan, the centrepiece of which is slashing corporation tax from 35% to 15%. Months of negotiations lie ahead with Congress, especially over the effect on future budget deficits. See article. + +The threat of a government shutdown seemed to be averted when Mr Trump backed away from insisting that funding for the wall he wants to build along the Mexican border should be included in a spending bill that will keep the government running until September 30th. + +Arkansas began executing the eight prisoners it wants to put to death before a batch of a drug used in lethal injections reaches its expiry date. Two inmates were executed on the same evening. + +An 18-year-old youth in Israel with American and Israeli citizenship was charged with making hoax bomb threats to Jewish centres in America. The threats sparked a furore earlier this year, which many people blamed on Mr Trump’s supporters among the alt-right. + +Bolder + +Taliban insurgents killed 140 soldiers in an assault on an Afghan army base. It was the deadliest attack on a military facility in Afghanistan since the toppling of the Taliban government in 2001. + +India ordered telecoms firms to block the use of social networks in the state of Kashmir, which has been paralysed by violent protests that the security services have been attempting to quell by force. + +America began installing THAAD, an anti-missile system, in South Korea, despite local protests and objections from China. See article. + +Yameen Rasheed, an outspoken blogger in the Maldives, was murdered. He had been leading a campaign to locate an abducted journalist who had written about the nexus between politics, criminals and Islamic extremism. + +A Chinese court sentenced an American woman to three-and-a-half years in prison for spying. Sandy Phan-Gillis was detained in 2015 during a business trip. As she has already spent time in detention, she could be released early. + +China launched its first domestically made aircraft-carrier. The ship will undergo extensive tests before being put into service. Meanwhile, China’s first cargo spacecraft docked successfully with an orbiting space lab. It aims to build a manned space station by 2022. + +The Tories’ purple patch + + + +Britain’s political parties hit the trail in the first week of election campaigning. The governing Conservative Party capitalised on its position on Brexit. Labour’s leader, Jeremy Corbyn, claimed his party could win. But rather than his fairy tale, the polls tell a sorry tale for Labour, showing it lagging far behind the Tories. The UK Independence Party has also slumped. UKIP’s leader said he will not put up candidates in some seats where a pro-Brexit candidate can oust a pro-Remain one. See article. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21721439-politics-week/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Business this week + + +Apr 27th 2017 + + + + + +Credit Suisse announced plans to sell SFr4bn-worth ($4bn) of new shares, two years after it raised SFr6bn in a similar share issue. The Swiss bank reported a better-than-expected profit for the first quarter, a boost for management. Last year Credit Suisse made a substantial loss, prompting a shareholder revolt over the pay of its chief executive and chairman. See article. + +The farrago at Wells Fargo + + + +Irate shareholders disrupted the annual meeting at Wells Fargo, peppering board members with questions about what they knew and when about a scandal in which fake accounts were created by staff under pressure to beat targets. All the bank’s directors were re-elected at the meeting, but the chairman, Stephen Sanger, received only 56% support. He promised that the “clear message of dissatisfaction” had got through. + +The British government at last recovered all the money it spent bailing out Lloyds Banking Group during the financial crisis, mostly by selling tranches of the shares it had bought but also because of hefty dividends it received after Lloyds returned to financial health. The bank doubled its pre-tax profit in the first quarter to £1.3bn ($1.6bn) and lifted its outlook for the year. + +The European Commission confirmed that Greece recorded a primary budget surplus (which excludes debt repayments) of 4.2% of GDP last year. That was the country’s first such surplus in 21 years, but the IMF reckons Greece is not out of the woods yet. + +SNCF, the French state-owned rail company, joined a consortium that includes Stagecoach and Virgin Trains to bid for the contract to operate trains on the proposed High Speed 2 link that will run between London and the north of England. SNCF will have a 30% stake in the joint venture. + +United Airlines published a report into the case of a passenger who was violently removed from a plane because he refused to give up his seat after being bumped. United said it will reduce overbookings on certain flights, increase the amount for voluntarily giving up a seat to $10,000 and give staff more training in how to calm tense situations. + +The dizzy heights + + + +The NASDAQ stockmarket index closed above the 6,000 mark for the first time. It breached 5,000 during the dotcom boom in 2000. After that bubble burst it didn’t hit 5,000 again until March 2015. The biggest companies on the NASDAQ in 2000 were Microsoft, Cisco and Intel; today they are Apple, Google and Microsoft. The tech-heavy index has outperformed the S&P 500 so far this year. A post-election rally in the share prices of banks and industrial companies has wavered and investors are instead piling into high-growth tech firms. + +Facing up to criticisms that it is not doing enough to tackle the problem, Google decided to change the algorithm on its search engine in order to give less prominence to “fake news” and other “low-quality” content. Google and social-media sites such as Facebook were lambasted last year for hosting hoax news articles during the US election. + +LafargeHolcim said that Eric Olsen would resign as chief executive following an independent internal report into the cement-maker’s decision to keep a factory operating in Syria during the early years of the civil war. The report’s summary acknowledged that Lafarge had paid off armed groups to keep workers safe and the plant open. But the firm says Mr Olsen “was not responsible” for the scandal. See article. + +PPG, an American chemical company, again raised its takeover offer for AkzoNobel, a Dutch maker of paints which owns the Dulux brand. Akzo has repeatedly spurned PPG’s approaches, to the chagrin of some investors. This week it roundly rejected a call by an activist hedge fund to hold a meeting of shareholders to discuss sacking the chairman. + +Bernard Arnault simplified his holdings in LVMH and Christian Dior by unveiling a complex transaction to buy out investors in the latter. The deal is worth around €12bn ($13bn). The luxury-goods business has picked up recently. But rather than make new purchases, Mr Arnault wants to consolidate his LVMH empire. + +Brought to heel + +Famous for its stilettos and a favourite of Princess Diana, Jimmy Choo put itself up for sale following a run of bad results. The shoemaker is 70%-owned by JAB Holding, an investment firm that is focusing its business on building a coffee-retail empire. + +For the first time in 130 years, Britain’s electricity network generated power over a full day without having to use coal. The linchpin of the Industrial Revolution, coal now fuels only around 10% of Britain’s electricity generation as coal-fired power stations are gradually phased out. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21721432-business-week/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +KAL's cartoon + + +Apr 27th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21721434-kals-cartoon/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Leaders + + +How to have a better death: End-of-life care [Fri, 28 Apr 08:52] + +Under audit: Donald Trump’s tax plan [Fri, 28 Apr 08:52] + +Waive hello: The nuclear deal with Iran [Fri, 28 Apr 08:52] + +Polar bare: The Arctic [Fri, 28 Apr 08:52] + +The wars of independence: Central banks [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +End-of-life care + +How to have a better death + + +Death is inevitable. A bad death is not + +Apr 29th 2017 + + + + + +IN 1662 a London haberdasher with an eye for numbers published the first quantitative account of death. John Graunt tallied causes such as “the King’s Evil”, a tubercular disease believed to be cured by the monarch’s touch. Others seem uncanny, even poetic. In 1632, 15 Londoners “made away themselves”, 11 died of “grief” and a pair fell to “lethargy”. + +Graunt’s book is a glimpse of the suddenness and terror of death before modern medicine. It came early, too: until the 20th century the average human lived about as long as a chimpanzee. Today science and economic growth mean that no land mammal lives longer. Yet an unintended consequence has been to turn dying into a medical experience. + + + +How, when and where death happens has changed over the past century. As late as 1990 half of deaths worldwide were caused by chronic diseases; in 2015 the share was two-thirds. Most deaths in rich countries follow years of uneven deterioration. Roughly two-thirds happen in a hospital or nursing home. They often come after a crescendo of desperate treatment. Nearly a third of Americans who die after 65 will have spent time in an intensive-care unit in their final three months of life. Almost a fifth undergo surgery in their last month. + +Such zealous intervention can be agonising for all concerned (see article). Cancer patients who die in hospital typically experience more pain, stress and depression than similar patients who die in a hospice or at home. Their families are more likely to argue with doctors and each other, to suffer from post-traumatic stress disorder and to feel prolonged grief. + +What matters + +Most important, these medicalised deaths do not seem to be what people want. Polls, including one carried out in four large countries by the Kaiser Family Foundation, an American think-tank, and The Economist, find that most people in good health hope that, when the time comes, they will die at home. And few, when asked about their hopes for their final days, say that their priority is to live as long as possible. Rather, they want to die free from pain, at peace, and surrounded by loved ones for whom they are not a burden. + +Some deaths are unavoidably miserable. Not everyone will be in a condition to toast death’s imminence with champagne, as Anton Chekhov did. What people say they will want while they are well may change as the end nears (one reason why doctors are sceptical about the instructions set out in “living wills”). Dying at home is less appealing if all the medical kit is at the hospital. A treatment that is unbearable in the imagination can seem like the lesser of two evils when the alternative is death. Some patients will want to fight until all hope is lost. + +But too often patients receive drastic treatment in spite of their dying wishes—by default, when doctors do “everything possible”, as they have been trained to, without talking through people’s preferences or ensuring that the prognosis is clearly understood. Just a third of American patients with terminal cancer are asked about their goals at the end of life, for example whether they wish to attend a special event, such as a grandchild’s wedding, even if that means leaving hospital and risking an earlier death. In many other countries, the share is even lower. Most oncologists, who see a lot of dying patients, say that they have never been taught how to talk to them. + +This newspaper has called for the legalisation of doctor-assisted dying, so that mentally fit, terminally ill patients can be helped to end their lives if that is their wish. But the right to die is just one part of better care at the end of life. The evidence suggests that most people want this option, but that few would, in the end, choose to exercise it. To give people the death they say they want, medicine should take some simple steps. + +More palliative care is needed. This neglected branch of medicine deals with the relief of pain and other symptoms, such as breathlessness, as well as counselling for the terminally ill. Until recently it was often dismissed as barely medicine at all: mere tea and sympathy when all hope has gone. Even in Britain, where the hospice movement began, access to palliative care is patchy. Recent studies have shown how wrongheaded that is. Providing it earlier in the course of advanced cancer alongside the usual treatments turns out not only to reduce suffering, but to prolong life, too. + +Most doctors enter medicine to help people delay death, not to talk about its inevitability. But talk they must. A good start would be the wider use of the “Serious Illness Conversation Guide” drawn up by Atul Gawande, a surgeon and author. It is a short questionnaire designed to find out what terminally ill patients know about their condition and to understand what their goals are as the end nears. Early research suggests it encourages more, earlier conversations and reduces suffering. + +These changes should be part of a broad shift in the way health-care systems deal with serious illness. Much care for the chronically ill needs to move out of hospitals altogether. That would mean some health-care funding being diverted to social support. The financial incentives for doctors and hospitals need to change, too. They are typically paid by insurers and governments to do things to patients, not to try to prevent disease or to make patients comfortable. Medicare, America’s public health scheme for the over-65s, has recently started paying doctors for in-depth conversations with terminally ill patients; other national health-care systems, and insurers, should follow. Cost is not an obstacle, since informed, engaged patients will be less likely to want pointless procedures. Fewer doctors may be sued, as poor communication is a common theme in malpractice claims. + +One last thing before I go + +Most people feel dread when they contemplate their mortality. As death has been hidden away in hospitals and nursing homes, it has become less familiar and harder to talk about. Politicians are scared to bring up end-of-life care in case they are accused of setting up “death panels”. But honest and open conversations with the dying should be as much a part of modern medicine as prescribing drugs or fixing broken bones. A better death means a better life, right until the end. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21721371-death-inevitable-bad-death-not-how-have-better-death/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Under audit + +Assessing Donald Trump’s plans for tax reform + + +The administration’s tax plan does not match its laudable rhetoric + +Apr 27th 2017 + + + + + +AMERICA’S tax system is a disaster. It is a self-defeating combination of fairly high tax rates and generous exemptions that mean little money is actually raised. It is mind-bogglingly complex: the income-tax code is so knotty that America has as many tax preparers per 1,000 people as Indonesia has doctors. It distorts behaviour: American firms have at least $1trn-worth of cash stashed abroad to avoid the taxman. + +Change is hard, but not impossible. In 1986 Ronald Reagan and lawmakers from both parties proved that, with sufficient patience, persistence and willingness to compromise, it can happen. Their bill slashed tax rates while broadening the tax base so much that no revenue was lost. In fact, the money raised from corporations rose after Reagan signed the bill. This newspaper would cheer heartily if the set of principles unveiled by the Trump administration on April 26th marked the first steps towards meaningful tax reform. + + + +The White House is making many of the right noises. It promises simplification by, say, reducing seven personal income-tax brackets to three and getting rid of some of the deductions that distort behaviour and add complexity. It pledges tax relief for middle-income earners by doubling the income-tax threshold. It plans to replace America’s extraterritorial approach, whereby foreign profits are subject to American taxes when they are repatriated, with a more sensible territorial one. Much of this is welcome. Alas, Mr Trump’s tax plan is just an opening gambit. There are many reasons to doubt that America will end up with a Reaganite outcome. + +To see why, consider corporate tax first. The Trump team wants to cut the corporate-tax rate to 15% from 35% today. But its claim to pay for the cuts with a sustained rise in economic growth is fanciful. The plan does not include the lucrative border-adjustment provision sought by House Republicans. Instead, in addition to the promise of faster growth, it relies on a one-off tax on repatriated foreign profits and the abolition of deductions. The trouble is that some gaping loopholes have already been protected and others are likely to open up. + +Take, for example, Mr Trump’s desire to extend the 15% rate to individuals who run small firms (see article). This would cause high-earners to masquerade as firms in order to benefit from a lower rate. The administration thinks it can stop this, but history suggests otherwise. A failure to keep taxes for individuals and small firms the same was one of the mistakes of the 1986 tax reform; it contributed to the number of “S-corporations” growing by almost 500% between 1980 and 2002. More recently Kansas tried something a bit like Mr Trump’s proposal at a state level. It led to a surge in avoidance. + +Despite the doubling of the income-tax threshold, the proposed changes to personal tax contain a lot that is regressive. This week’s outline includes big giveaways that benefit only the rich. The top rate of income tax would fall from 39.6% to 35%. The alternative minimum tax, which makes avoidance harder, would be scrapped. So too the estate tax, a change benefiting only those leaving more than $5.5m to their heirs. + +Over to you + +As just the opening round in a negotiation, this week’s announcement could yet lead to something decent. To achieve sensible, long-lasting reform, Mr Trump needs the support of some Democrats in the Senate. In a best case that would lead the administration to think harder about how to make the plan revenue-neutral and to spread the benefits of lower taxes to the middle class. The danger is that it leads somewhere else entirely: a tax cut that principally benefits the rich and that is paid for with more borrowing. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21721378-administrations-tax-plan-does-not-match-its-laudable-rhetoric-assessing-donald-trumps-plans/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Nuclear weapons + +Why Trump should not ditch the deal with Iran + + +With only weeks to decide, confusion reigns + +Apr 27th 2017 + + + + + +TIME is running out for Donald Trump to make up his mind about the Iran nuclear deal of 2015. Before May 17th President Trump must decide whether to continue Barack Obama’s suspension of nuclear-related sanctions—Iran’s reward for constraining its nuclear programme. If Mr Trump does not issue a waiver, sanctions will snap back. The other signatories to the deal will see America as the aggressor. Unless Iran goes on to violate the deal flagrantly, they will not follow suit. The chances are that Iran would then slowly crank its programme up again. That would be a terrible outcome. + +The Joint Comprehensive Plan of Action (JCPOA), as the deal is known, has got Iran to mothball most of its uranium-enrichment centrifuges and redesign its nuclear reactor at Arak to produce much less plutonium. Before the JCPOA, Iran was just a few months away from being able to make an atom bomb; that has been pushed back to a few years. + + + +Mr Trump’s words suggest that he thinks the agreement is already dead. What Mr Obama saw as his greatest foreign-policy achievement, his successor has branded “one of the worst deals I’ve ever seen”. + +However, the reality is more ambiguous. Rex Tillerson, America’s secretary of state, sent a letter to Congress on April 18th declaring that Iran has complied with the terms of the nuclear deal—a judgment confirmed by James Mattis, the secretary of defence, on a visit to Israel, Iran’s implacable enemy. Iranian compliance is good news. But, strangely, the State Department website buried it under the headline “Iran continues to sponsor terrorism”. Next, calling the deal flawed, Mr Tillerson said that the National Security Council would undertake a 90-day review to decide whether to maintain the suspension of the sanctions. And Mr Trump himself said that Iran had “broken the spirit of the agreement”. Asked whether America would still honour it, he said: “It’s possible that we won’t.” + +Mr Tillerson complains that the deal only delays Iran from becoming a nuclear power and that its regional aggression is unrestrained. He is right. Yet the deal intentionally separated the nuclear programme from regional security because lumping the two together would have created stalemate. Some valuable provisions of the agreement, such as highly intrusive monitoring of Iran’s nuclear activities by international weapons inspectors, are permanent. Besides, the alternative is war. + +Critics are also right to say that the idea that Iran might moderate with time is optimistic. But it is no less optimistic than tearing the deal up in the hope of somehow getting something better. Mr Trump may reckon that by sounding tough he will win tweaks to the deal that he can claim as revolutionary. But that is a dangerous game. The Iranian presidential election comes two days after the waiver deadline on May 17th. If Mr Trump demurs, the chances of a hardline candidate winning will be greatly improved. Republicans in Congress are also spoiling to impose new sanctions on Iran. If the hardliners on both sides triumph, the deal’s fate will be sealed. + +Tough and self-defeating + +Refusing to issue the waiver would also undermine America’s foreign-policy goals in Asia. Mr Tillerson compared the Iran deal to past failures to curb North Korea’s nuclear programme. In fact, the JCPOA reflects the lessons learned from those failures by building in extremely detailed requirements. If America hastily rips up the Iranian deal when Iran is compliant it would destroy any chance of one with North Korea. + +Mr Trump can issue the waiver pending completion of the review of the nuclear deal. If that helps him find a way back from his campaign rhetoric, it will have served a purpose. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21721381-only-weeks-decide-confusion-reigns-why-trump-should-not-ditch-deal-iran/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Climate change + +The Arctic as it is known today is almost certainly gone + + +On current trends, the Arctic will be ice-free in summer by 2040 + +Apr 29th 2017 + + + + + +THOSE who doubt the power of human beings to change Earth’s climate should look to the Arctic, and shiver. There is no need to pore over records of temperatures and atmospheric carbon-dioxide concentrations. The process is starkly visible in the shrinkage of the ice that covers the Arctic ocean. In the past 30 years, the minimum coverage of summer ice has fallen by half; its volume has fallen by three-quarters. On current trends, the Arctic ocean will be largely ice-free in summer by 2040. + + + +Climate-change sceptics will shrug. Some may even celebrate: an ice-free Arctic ocean promises a shortcut for shipping between the Pacific coast of Asia and the Atlantic coasts of Europe and the Americas, and the possibility of prospecting for perhaps a fifth of the planet’s undiscovered supplies of oil and natural gas. Such reactions are profoundly misguided. Never mind that the low price of oil and gas means searching for them in the Arctic is no longer worthwhile. Or that the much-vaunted sea passages are likely to carry only a trickle of trade. The right response is fear. The Arctic is not merely a bellwether of matters climatic, but an actor in them (see pages Briefing). + + + +The current period of global warming that Earth is undergoing is caused by certain gases in the atmosphere, notably carbon dioxide. These admit heat, in the form of sunlight, but block its radiation back into space, in the form of longer-wavelength infra-red. That traps heat in the air, the water and the land. More carbon dioxide equals more warming—a simple equation. Except it is not simple. A number of feedback loops complicate matters. Some dampen warming down; some speed it up. Two in the Arctic may speed it up quite a lot. + +One is that seawater is much darker than ice. It absorbs heat rather than reflecting it back into space. That melts more ice, which leaves more seawater exposed, which melts more ice. And so on. This helps explain why the Arctic is warming faster than the rest of the planet. The deal on climate change made in Paris in 2015 is meant to stop Earth’s surface temperature rising by more than 2°C above pre-industrial levels. In the unlikely event that it is fully implemented, winter temperatures over the Arctic ocean will still warm by between 5° and 9°C compared with their 1986-2005 average. + +The second feedback loop concerns not the water but the land. In the Arctic much of this is permafrost. That frozen soil locks up a lot of organic material. If the permafrost melts its organic contents can escape as a result of fire or decay, in the form of carbon dioxide or methane (which is a more potent greenhouse gas than CO2. This will speed up global warming directly—and the soot from the fires, when it settles on the ice, will darken it and thus speed its melting still more. + +Dead habitat walking + +A warming Arctic could have malevolent effects. The world’s winds are driven in large part by the temperature difference between the poles and the tropics. If the Arctic heats faster than the tropics, this difference will decrease and wind speeds will slow—as they have done, in the northern hemisphere, by between 5 and 15% in the past 30 years. Less wind might sound desirable. It is not. One consequence is erratic behaviour of the northern jet stream, a circumpolar current, the oscillations of which sometimes bring cold air south and warm air north. More exaggerated oscillations would spell blizzards and heatwaves in unexpected places at unexpected times. + +Ocean currents, too, may slow. The melting of Arctic ice dilutes salt water moving north from the tropics. That makes it less dense, and thus less inclined to sink for the return journey in the ocean depths. This slowing of circulation will tug at currents around the world, with effects on everything from the Indian monsoon to the pattern of El Niño in the Pacific ocean. + +The scariest possibility of all is that something happens to the ice cap covering Greenland. This contains about 10% of the world’s fresh water. If bits of it melted, or just broke free to float in the water, sea levels could rise by a lot more than today’s projection of 74cm by the end of the century. At the moment, the risk of this happening is hard to assess because data are difficult to gather. But loss of ice from Greenland is accelerating. + +What to do about all this is a different question. Even if the Paris agreement is stuck to scrupulously, the amount of carbon dioxide already in the atmosphere, together with that which will be added, looks bound eventually to make summer Arctic sea ice a thing of the past. Some talk of geoengineering—for example, spraying sulphates into the polar air to reflect sunlight back into space, or using salt to seed the creation of sunlight-blocking clouds. Such ideas would have unknown side-effects, but they are worth testing in pilot studies. + +The hard truth, however, is that the Arctic as it is known today is almost certainly gone. Efforts to mitigate global warming by cutting emissions remain essential. But the state of the Arctic shows that humans cannot simply undo climate change. They will have to adapt to it. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21721379-current-trends-arctic-will-be-ice-free-summer-2040-arctic-it-known-today/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +The wars of independence + +How to preserve the benefits of central-bank autonomy + + +Twenty years after the Bank of England was given independence, the powers of central banks are in the spotlight + +Apr 27th 2017 + + + + + +ON MAY 6th 1997 Gordon Brown, freshly installed as Britain’s chancellor of the exchequer, announced that he was giving the Bank of England the responsibility for setting interest rates. The bank would be charged with meeting an inflation target set by the government. + +The move was hailed as a political masterstroke. It gave substance to the new Labour government’s claims to economic competence. Long-term borrowing costs fell sharply. The pound soared. The bank’s governor, Eddie George, was delighted. But joy was not unconfined. Within weeks Mr Brown, wary of an over-mighty central bank, stripped it of its responsibilities for bank regulation and public-debt management. + + + +Twenty years on, some fear that central banks have become too powerful. The Bank of England is back in charge of bank regulation. The European Central Bank (ECB) has added that job in the euro zone to a host of others it has picked up since the financial crisis. The Dodd-Frank act of 2010 gave America’s Federal Reserve authority to ensure financial stability. Central banks have acquired more tools to go with their extra tasks. But they have also come in for louder criticism. The Bank of England was bashed for its assessment of Brexit. The ECB’s quantitative-easing (QE) programme has been challenged in Germany’s courts. A bill in Congress calls for the Fed’s decisions to be audited. Savers moan about low interest rates. + +The case for central-bank independence is as powerful as it was two decades ago. Interest rates need to be changed well before they will affect inflation. Politicians are loth to be pre-emptive. An independent central bank is more likely to act promptly to head off inflation—and this trustworthiness also affords it freedom to cut interest rates when recession looms. + +Yet the critics should not be ignored. The history of central banks shows that their power can ebb and flow (see Briefing). Two of America’s central banks folded before the Fed was established; Lyndon Johnson and Richard Nixon were not averse to bullying Fed chairmen into keeping interest rates low. + +In addition, the financial crisis of 2008 forced central banks to make controversial decisions, in part because many governments were unable or unwilling to act themselves. They rightly put their resources at risk to bail out banks and keep credit markets working. To counter the bust that followed took a long period of near-zero interest rates and schemes such as QE. But the uneven effects on individuals of this newer sort of monetary policy were stark. One of the more reliable effects of QE was to raise share prices, favouring the well-off. Low rates are a salve to the indebted but hit deposit-holders. + +Trade-offs of this kind are not new. The task of choosing how many jobs to sacrifice in order to hit an inflation target sooner rather than later is highly political. Yet there are ways in which central-bank powers might be circumscribed without hurting the bit of their autonomy that matters. + +One is to follow the British model, in which the government sets an inflation target for the central bank to follow. Society’s preferences over the “right” rate of inflation are not settled. It may sometimes be necessary to change the target. When low real interest rates are required, for example, it may make sense to aim higher on inflation. That is a decision for elected politicians. Ideally, this target should be symmetrical, meaning that inflation below the target is as undesirable as that above it. Otherwise, rate-setters who favour lower inflation have licence to indulge their preferences. + +The old lady sings the blues + +Preserving the legitimacy of independent central banks also relies on the actions of central bankers themselves. It is not possible to make the setting of interest rates perfectly neutral or to free central banking from all residue of politics. But wise central bankers would limit their public comments to their own bailiwick. It is fine to point out that a looser fiscal stance would imply higher interest rates; but it is not obvious what is gained when a central banker directly criticises, or endorses, a specific tax plan or spending policy. Straying onto broader policy issues, as Mark Carney, of the Bank of England, has on climate change and Raghuram Rajan, of the Reserve Bank of India, did about religious tolerance, is likely to irk politicians and squander influence better saved for the bank’s main tasks. + +The benefits of central-bank autonomy far outweigh the costs, just as they did in 1997. The friction between politicians and bankers cannot simply be wished away. To keep the critics at bay, central bankers must be accountable for the powers delegated to them, and disciplined in their exercise. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21721380-twenty-years-after-bank-england-was-given-independence-powers-central-banks-are/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Letters + + +Letters to the editor: On British diplomacy, Brazil, cyber-crime, India, parking [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Letters + +Letters to the editor + + +On British diplomacy, Brazil, cyber-crime, India, parking + +Apr 27th 2017 + + + + + +The diplomatic front + +Bagehot is correct: Britain needs a reinvigorated foreign policy led by a stronger Foreign Office (April 15th). The world is full of new uncertainties, not least Brexit and the election of President Donald Trump. The British are conflicted about what they want. For many the Brexit vote was about reducing our exposure to the world. If Britain expects a place at international top tables, we will need to be clear what we bring to the party. + + + +That will not be achieved with Potemkin diplomacy. Fortunately, Britain still spends a lot on international action, but only a fraction of it on diplomacy, less than on pensioners’ winter fuel allowance. Of every £1,000 of public spending, over £33 goes on defence, £12 on foreign aid and £2 on the Foreign Office. + +Seven government departments now handle aspects of international policy. That includes the departments for aid, trade, defence, finance, interior (migration) and leaving the EU. To avoid fragmentation, the Foreign Office should co-ordinate international policy, as the Treasury does domestic economic policy. On Bagehot’s question about who is the best person to lead this, I plead the Fifth. + +SIMON FRASER + +Permanent under-secretary from 2010 to 2015 + +Foreign and Commonwealth Office + +London + +* Brexit didn’t reduce Britain’s foreign policy to rubble; it was the rubble of Britain’s foreign policy that led to Brexit. David Cameron’s “renegotiation” finally revealed the near total impotence of British diplomats in Brussels. That was a defining, cardinal failure of British foreign policy. + +As for the post-Brexit Britain, surely any diplomat worth their salt would relish the challenges and opportunities ahead, now that Britain is able to pursue its own, independent foreign policy. + +PHIL RADFORD + +Sydney + + + +Brazil’s academy awards + +Your account of the closeness of my election to the Brazilian Academy of Letters as reflecting a dispute between “the culture wing” and a supposed “public servants’ clutch” in the academy was inaccurate (“Bard of Belíndia”, April 15th). The vote is secret, but in my own calculations, out of the 18 votes I received, nine were from the strictly “literary” members and nine were from other culture representatives (such as journalists and historians). The vote was tight because my opponent, Eros Grau, had already been a candidate to the academy on another occasion, when he obtained ten votes. Everyone expected him to surpass that mark this time. The only question was if he would reach the 17 votes needed to win. Fortunately for me, that didn’t happen. + +EDMAR BACHA + +Rio de Janeiro + + + + + +Guarding the cyber-gates + +There is an additional problem to the ones you mentioned in overcoming barriers to make computers more secure (“The myth of cyber-security”, April 8th). When companies such as Apple suffer a hack (like the iCloud leak in 2014), they will investigate why the attack was successful and how similar incidents might be prevented. But they are not inclined to share their findings with rivals, such as Google or Microsoft. So even if one company works out how to defend itself against a particular threat, its peers and their customers remain at risk. The industry’s giants are fighting their own fires but not helping others to extinguish theirs. + +Our digital culture is also a problem, as it sees cyber-security as an individual pursuit, much like building a wall around your property. To make any headway, we need to start viewing the enemies of our enemy as our friends. Barack Obama signed an order in 2015 promoting information sharing and analysis centres to encourage intra-industry collaboration. That’s a good start. But the private sector must take a less gladiatorial approach and routinely share security information with peers, including competitors. + +TONI GIDWANI + +Director of research operations + +ThreatConnect + +Arlington, Virginia + +* Although the market and the technical community have addressed many challenges in the internet, governments should address some areas of market failure. Not only in the internet of things, but also in network operator practices. Internet-service providers have few incentives to ensure that their modems, routers and so on are deployed or maintained properly. The failure to maintain best practice management of four risk indicators alone means that an ISP can pollute the internet as a whole, exploited by botnet and distributed denial of service attacks. + +Our data show that the potential attack capacity of the existing polluted network devices is five times larger than the biggest DDoS attacks to date. The failure to address this negative externality places governments, enterprises, financial institutions and consumers at greater risk. Regulators should utilise network risk data to engage ISPs to adopt better device deployment processes and operational decisions and encourage the adoption by network operators of the Mutually Agreed Norms for Routing Security. + +PAUL TWOMEY + +Chairman + +CyberGreen Institute + +New York + + + +Death on the roads + +Regarding drunk driving in India (“Bar wars”, April 8th), I live in a student town and accidents from drunk driving are common, yet I have never seen a breathalyser in my life, nor have I heard anyone say that they had to take a test. The Community Against Drunken Driving estimates that 70% of all road deaths in India are caused by drunk drivers, with the figure running between 44% and 67% in smaller cities. + +The Supreme Court would not have had to take its decision to ban alcohol near highways if the legislature had put enough police on the ground to catch the offenders. With sales of more than 2.5m cars and 15m bikes every year, state governments will do their best to circumvent the court ruling. Indians have a reputation for policy jugaad; that figure of 400 traffic deaths a day looks set to go up. + +RAJESH KAMATH + +Assistant professor + +Department of Public Health + +Manipal University Manipal, India + + + + + +They paved paradise + + + + Managing parking space for vehicles is important, but it is ultimately only treating the symptom of car congestion (“Sacred spaces”, April 8th). Cars are used in a doubly inefficient way. They run for only 50 minutes in every 24 hours and carry just over a single passenger on average. If capacity could be doubled and the number of cars reduced accordingly, parking would no longer be an issue. + +The answer is ride sharing. We ran simulations based on data from Lisbon, in which buses and cars were replaced by different types of shared vehicles. The results were striking. A very similar level of service was provided with less than 5% of the current car fleet. The need for street parking disappeared. We are running the same simulation for other cities, among them Auckland, Dublin and Helsinki. + +Self-driving vehicles, by contrast, are not in themselves the solution. They are likely to increase car use because those who can’t drive now, will. They also reduce the incentives for sharing. So although parking space should become less of a problem with self-driving vehicles, city streets themselves might come to resemble parking lots. + +JOSÉ VIEGAS + +Secretary-general + +International Transport Forum + +Paris + +I would be more likely to join a carpool or take public transport if I knew that my fellow co-workers and I were going into and out of the office at the same time. The erosion of the traditional eight-hour work day is one reason why people don’t share rides. We don’t know exactly when we’ll be heading home at the end of the day. + +TOD COLBY + +Orlando, Florida + + + +“Aparkalypse now” (April 8th) overlooked the importance of parking to employment and job creation. The private car lubricates the job market. In south-east England outside London, anyone with a car has access to a huge job market, with a radius of about 40 miles. Without it, he has access only to his home town and trains to London. To work its magic, the car needs to be able to park, and the parking must be affordable. + +KENNETH GRUNDEY + +High Wycombe, Buckinghamshire + +Praying to St Anthony may work for some when trying to find parking. Others ensure a slot by filling spaces with fake fire hydrants that they conveniently keep in their cars. + +JURGEN PAPE + +Granville, Ohio + +* Letter appears online only + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/letters/21721352-british-diplomacy-brazil-cyber-crime-india-parking-letters-editor/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Briefing + + +Skating on thin ice: The Arctic [Fri, 28 Apr 08:52] + +A thaw point: Sea levels and storms [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Skating on thin ice + +The thawing Arctic threatens an environmental catastrophe + + +Commercial opportunities are vastly outweighed by damage to the climate + +Apr 27th 2017 | KIRKENES, TROMSO and WASHINGTON, DC + + + + + +“DUE to the global warming, please keep the Snowhotel door closed” reads a sign at the entrance to what appears to be a giant white mound near Kirkenes, close to Norway’s Arctic border with Russia. The owners want to preserve the frozen friezes of unicorns, reindeer and butterflies that adorn its walls. Patches of translucence in the ceilings of the hotel’s 25 icy rooms suggest the warmth outside is winning. Artificial snow helps build the structure anew each November and it usually disappears before May. The season has shortened in recent years, says one employee; the cold comes later than before. + +The Snowhotel’s lengthening off-season is a small sign of an immense transformation in the Arctic, where the environment is changing more rapidly than in the rest of the world. Little can be done to keep its white wastes intact. A great thaw is inevitable as the climate responds to an accumulation of carbon emissions in the atmosphere. International efforts to limit global warming will at best slow the changes, perhaps making the consequences merely terrible rather than catastrophic. + + + +“The Paris agreement will not save the Arctic as it is today,” says Lars-Otto Reiersen, executive secretary of the group behind the latest edition of “Snow, Water, Ice, Permafrost in the Arctic” (SWIPA), a report produced under the auspices of the Arctic Council, a scientific-policy club for the eight countries with territory in the Arctic Circle), as well as observers including China and India. + +Atmospheric concentration of carbon dioxide has now reached 400 parts per million (ppm), up from 280ppm three centuries ago; the Earth is on average 1ºC hotter than in pre-industrial times. Although 190-odd countries signed up to limit warming to “well below” 2ºC above pre-industrial temperatures in Paris in 2015, pledges for mitigating action are likely to see temperatures increase by around 3ºC—assuming countries stick to their promises. But different parts of the world warm at different rates. Even if the Paris agreement is implemented in full, the Arctic will warm by between 5ºC and 9ºC above the 1986-2005 average over the Arctic ocean in winter. + + + +The thaw is happening far faster than once expected. Over the past three decades the area of sea ice in the Arctic has fallen by more than half and its volume has plummeted by three-quarters (see map). SWIPA estimates that the Arctic will be free of sea ice in the summer by 2040. Scientists previously suggested this would not occur until 2070. The thickness of ice in the central Arctic ocean declined by 65% between 1975 and 2012; record lows in the maximum extent of Arctic sea ice occurred in March. + + + +The most worrying changes are happening in Greenland, which lost an average of 375bn tonnes of ice per year between 2011 and 2014—almost twice the rate at which it disappeared between 2003 and 2008 (see chart). This is the equivalent of over 400 massive icebergs measuring 1km on each side disappearing each year. The shrinkage is all the more perturbing because its dynamics are not well understood. Working out what is going on in, around and underneath a supposedly frigid ice sheet is crucial to understanding how it will respond to further warming and the implications of its demise for rising global sea levels (see article). + +Cold, hard facts + +The Arctic has been warming at twice the rate of the rest of the world for decades because of feedback loops that have reduced the albedo effect, a measure of the way Earth reflects heat. Unlike the rest of the planet the polar regions release more heat into space than they absorb, in effect cooling the planet, because sunlight is reflected by ice and snow. When it is replaced by water or dark ground, more heat is retained. That is precisely what is happening in the Arctic’s defrosting landscape. + +At sea, much Arctic ice once lingered throughout one year and into the next. In 1985 about 45% of ice was older (and thus thicker) but by 2016 that amount had fallen by half. Huge expanses of ice now melt and refreeze over the year. Older ice tends to be jagged. When it melts, pools form between tough ridges, allowing some heat to reflect. Newly formed ice lets meltwater spread more evenly across its glassy surface. This reduces reflectivity still further. + +As the land in the Arctic warms and once permanently frozen ground unfreezes, greenhouse gases are released. The dead plants and animals in Arctic permafrost hold about half the world’s carbon stored in soil. As this organic matter thaws it decays, releasing carbon dioxide and methane, another powerful greenhouse gas, and insulating the planet still further. Unfrozen tundra is also tinder for fires. Shorter snowy periods mean fire seasons will lengthen. In Alaska and parts of America’s West, the average length of the fire season has already jumped from 50 days in the 1970s to 125 now. + +Changes in the environment are affecting the numbers and types of creatures that can live there, too. Arctic waters are increasingly full of life. The edge of the ice shelf is a feast for many species due to ice algae and phytoplankton that appear there at the end of winter. But decreasing ice may lead to mismatches between the timing of reproductive cycles in creatures such as shrimp and the availability of plankton. As water warms, larvae hatch earlier. Any impact on the populations of tiny crustaceans will affect other creatures higher up the food chain—cod, seals and polar bears—which need fat sources in their diet. + +At the same time, new mouths are coming to feed. Zooplankton from southerly waters have moved north at a rate of 200km a decade as the ocean has warmed. Bigger fish have followed their dinner northward. This sounds like welcome news for hardy fishermen. But it is unclear whether the Arctic can sustain the new arrivals. They will compete with, and perhaps eat, specialised species dependent on the ice shelf’s edge for food. + +Some experts also argue that fresh water from melting ice in the Barents Sea will curb the growth of the nutrients its inhabitants need. “It is all extremely uncertain, and depends on ocean-circulation patterns,” says Michaela Aschan, a fisheries professor from the University of Tromso. + +Amid all this bad news about the state of the Arctic, the business opportunities associated with warming were supposed to cheer at least a few. The Arctic is an ocean covered in ice, ringed by land (whereas the Antarctic is a lump of land covered in ice, ringed by ocean). The eight Arctic countries have interests in shipping, fishing and drilling in the region. But finding profits amid the thaw is tough. Prospects look bleaker in many industries than they did five years ago as the risks are better understood. + +The Arctic contains more than a fifth of the world’s untapped hydrocarbon resources. But in the North American Arctic offshore drilling was banned in December almost everywhere to protect ecosystems (although Donald Trump may reverse the moratorium). Elsewhere, low prices and the difficulties of operating in the Arctic’s dangerous waters now repel big firms attracted to the region back when oil fetched over $100 a barrel. + +In a stunning about-turn, Shell ended operations in the Chukchi Sea in 2015 after spending $7bn on exploration there. It says it did not find enough oil to justify continuing. Russian firms, such as Rosneft, are proving hardier. They have fewer opportunities to invest elsewhere, after all, and Russia needs the money. Low oil prices have taken a toll on an economy which relies on the Arctic for a fifth of GDP and a fifth of exports. + +The shipping industry is another for which Arctic promise has drifted away. In theory shipping firms should benefit from access to a more open seaway. Using it to sail from northern Europe to north-east Asia can cut the length of voyages by two-fifths compared with travelling via the Suez Canal. But an expected shipping boom has not materialised. In 2012 only 1m tonnes of goods were shipped through the northern passage, a paltry level of activity yet one not achieved since. + +Some like it cold + + + +Even in the summer months the Arctic ocean is stormy, making timely delivery of goods impossible to guarantee. Drifting ice also poses a danger. Ships must be strengthened to withstand it, adding to construction costs. And a lack of coastal infrastructure, such as deepwater ports, means that spills of the heavy fuel oil that powers most vessels could wreak havoc on both ecosystems and reputations, because clean-up missions would have to set out from much farther away and would take much longer to be effective. + +Breaking the ice + +A new Polar Code from the International Maritime Organisation, which regulates shipping, came into force at the beginning of the year to try to address some of these concerns. It bans sewage discharges in polar waters and ones of oily mixtures. America and Canada, among others, want to go further. For one thing, they want a ban on heavy fuel-oil (as there is in the Antarctic, which has various special protections). + +Mining firms, interested in metals such as copper, are eyeing up the Arctic. But most firms do not have the experience to negotiate with indigenous groups over projects on their land (about one in ten people in the region is from such a group). And many of the inhabitants oppose development anyway. In Norway the Sami parliament, which represents Sami people from across the country, is wary. Jon Petter Gintal, who deals with international affairs at the parliament, says blighting the landscape would be foolish. Tourists, keen to see rugged natural beauty, may sustain the Arctic economy in future decades as traditional livelihoods, such a reindeer herding, prove harder to maintain. + +Even if outsiders’ commercial interest in the Arctic is cooling the region’s population of around 4m people has little choice but to adapt to the changing climate. Northern Norway is the most densely populated area but Russia, which accounts for half of the Arctic coastline and has a fleet of nuclear submarines based at Murmansk, is the country keenest to extend its influence. Russia eventually wants ten new search-and-rescue stations along its shoreline. Five are open already. Russia is also aiming to boost its military presence by reopening Soviet military bases. + +Despite tensions over Russian belligerence elsewhere in the world, its aspirations in the north have so far given little cause for concern. Locals in Kirkenes laugh about their neighbours: “They come across here all the time to shop. They like the nappies, they say they are better quality,” explains one businessman. Oystein Bo, Norway’s defence minister, is more guarded: “Russia is as interested as we are at keeping the Arctic a region of stability,” he says. But if Russia decides to wield its power more forcefully this will only add to the problems in the Arctic. + +Nothing, however, looms larger than the potential for environmental calamity. The question of thawing is rising up the list of priorities both of countries with territory in the region and those farther afield. Sticking to the Paris agreement could, eventually, stabilise temperatures. But more radical measures may be needed given that countries are unlikely to keep within the limits set in Paris. + +A change in the weather + +One possibility for cooling the pole is geoengineering, the deliberate modification of the climate to reduce warming. Pumping sulphate aerosols into the Arctic stratosphere from high-flying aircraft could be one way to blot out a bit of the sun. Such an approach would cool Arctic summers but have little effect in winter because there would be no sunlight to reflect. Injecting salt crystals into clouds over the Arctic ocean, to enhance their reflectivity, might also encourage some cooling, though the helpfulness of this type of intervention is highly speculative. + +Either way the gap between theory and practice is enormous and ethically fraught. Even if such ways to cool the planet could be managed on the vast scale necessary, other unwelcome outcomes cannot be discounted. When volcanoes release vast amounts of aerosols and sulphates into the air, they damage the ozone layer—might the same be true for geoengineering? If polar ice returned thanks to judicious management of solar radiation, water and weather cycles in the tropics might be altered if sulphates were released in just one hemisphere. And the ocean’s chemistry would continue to change as concentrations of greenhouse gases in the atmosphere rise. If they ever happen at all, negotiations over large-scale geoengineering would be long and arduous. + +Climate change has at least brought the Arctic fresh attention from world leaders. Xi Jinping, China’s president, stopped in nearby Anchorage on his recent return from America. Barack Obama became the first sitting American president to visit the Arctic. In May a ministerial meeting of the Arctic Council, at which America will hand over the chairmanship to Finland for its two-year stint, offers an opportunity for Rex Tillerson, America’s secretary of state, to set the new administration’s policy for the region. To ensure political and commercial stability in a defrosting Arctic, and to limit the harm caused by and to the warming pole, countries need to pay it far greater attention. The danger is that it is already too late. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21721364-commercial-opportunities-are-vastly-outweighed-damage-climate-thawing-arctic/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +A thaw point + +As the Arctic melts the world’s weather suffers + + +And sea levels rise + +Apr 27th 2017 + + + + + +SHRINKING Arctic ice is sure to have unwelcome effects elsewhere on the planet. But what, precisely? Glaciologists and meteorologists are working furiously to understand two particularly complex issues that may cause huge upheavals: the stability of the Greenland ice sheet and its potential contribution to rising sea levels; and extreme weather elsewhere in the world that might result from the demise of the Arctic’s white wastes. + +Since the 1970s the Arctic has been the main cause of rising sea levels around the world. Over two-thirds of the Arctic’s contribution derives from ice loss from Greenland, according to the latest SWIPA report. But little is known about how Greenland’s vast ice sheet will react to future warming. + + + +The dynamics of outlet glaciers and ice streams as they flow—ever faster—into the Arctic ocean, how pressurised meltwater combines with soft sediments to lubricate the bed of Greenland’s ice sheet, and the impact of increased darkening across the ice sheet’s surface are all poorly understood, says Alun Hubbard, a glaciologist at the University of Tromso. “Greenland is a large, sleeping giant being prodded by many different processes on all sides,” he explains. + +Getting to grips with what is going on will be tough. Fieldwork on Greenland’s remote ice sheet is expensive and logistically taxing. But what is known now is frightening enough. Even if current emissions remain stable, the consensus is that global sea levels will rise by 74cm by the end of the century. Vast coastal cities such as Rotterdam, New York and Mumbai will suffer. + +These may still be among the luckier ones: governments are more likely to pay to protect expensive property than poor rural settlements. Some villages in Alaska need relocating already. Receding sea ice has exposed coastlines to erosion from waves. But federal, state and local authorities are squabbling over how to do it and who should pay, even on this small scale. + +Floods of icy meltwater will change the weather, too. By altering the salinity and temperature of different parts of the sea, circulation patterns both within the Arctic ocean and, consequently, in the atmosphere will change. That will affect weather and climate phenomena, such as India’s monsoon season, thousands of miles to the south. Scientists agree as much. Where they differ is on just how large the effect will be and which processes are involved. + +Extreme cold snaps pose a particular puzzle in this regard. Changes to wind patterns can bring cooler weather farther south, which could help explain frigid conditions in north-eastern America in recent winters. But these wind shifts have to be large enough to cancel out more general background warming stemming from the loss of sea ice, says James Screen of the University of Exeter. “In north-west Europe, it seems that these two effects of melting sea ice roughly balance out,” he says. But climatic imbalances from Arctic melting could prove far more harmful elsewhere in the world. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21721365-and-sea-levels-rise-arctic-melts-worlds-weather-suffers/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +United States + + +A tradition traduced: American diplomacy [Fri, 28 Apr 08:52] + +Promises, promises: Donald Trump’s first 100 days [Fri, 28 Apr 08:52] + +All change: In pursuit of WikiLeaks [Fri, 28 Apr 08:52] + +Leaving a bad taste: Minimum wages [Fri, 28 Apr 08:52] + +The wounds of Whiteclay: Pine Ridge’s alcohol epidemic [Fri, 28 Apr 08:52] + +Rhett Butler’s resting place: Art and history [Fri, 28 Apr 08:52] + +City of cars: Transport in Los Angeles [Fri, 28 Apr 08:52] + +John Kasich’s lament: Lexington [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Ben Franklin’s heirs + +Neglecting the State Department does real damage + + +America has a proud and effecive tradition of diplomacy. It is being traduced + +Apr 29th 2017 | WASHINGTON, DC + + + + + +FEW Americans would have known it, but on New Year’s Eve their diplomats probably prevented scores of killings in central Africa, and perhaps a war. President Joseph Kabila, Congo’s long-stay autocrat, had refused to leave power, as he was obliged to do. Angry protesters were taking to the streets of Kinshasa and Mr Kabila’s troops buckling up to see them there. Yet through a combination of adroit negotiating and the high-minded pushiness that comes with representing a values-based superpower, Tom Perriello, the State Department’s then special envoy for the Great Lakes, and John Kerry, the then secretary of state, helped persuade Mr Kabila to back down. The resulting deal, brokered by the Catholic church, committed Mr Kabila to a power-sharing arrangement and retirement later this year. That would represent the first-ever peaceful transition in Congo. But it probably won’t happen. + +Three weeks later, Donald Trump became president and the State Department’s 100-odd political appointees, including Mr Kerry and Mr Perriello, shipped out. That is normal in American transitions. But the most senior career diplomats were also pushed out, which is not. And only Mr Kerry has so far been replaced, by Rex Tillerson, a well-regarded former boss of Exxon Mobil. He had no ambition to be secretary of state—or knew he was being interviewed for the job—until Mr Trump offered it to him. Now installed as the voice of American foreign policy, he has maintained, notwithstanding his undoubted qualities, an oilman’s aversion to public scrutiny. He rarely speaks to journalists or visits American embassies on his trips abroad. He appears absorbed by the ticklish task of arranging a 31% cut in his department’s budget, which Mr Trump will shortly propose to Congress. + + + +The vacant positions—in effect, almost the State Department’s entire decision-making staff of under-secretaries, assistant secretaries and ambassadors—are being covered by mid-ranking civil servants, who lack the authority, or understanding of the administration’s plans, to take the initiative. America’s diplomatic operation is idling at best. A sense of demoralisation—described in interviews with a dozen serving and former diplomats—permeates it. “I went to a policy planning meeting the other day and we spent half the time talking about someone’s bad back,” says a diplomat. “We’ve never been so bereft of leadership,” says another. A third predicts a wave of resignations. + +Ben Franklin’s heirs + +To allies, the fallout from this neglect is less obvious. American diplomacy has become more passive than bungling. The American ambassador is still the most powerful foreign diplomat in just about any country, says a senior European politician. Still, there are costs to the administration’s mismanagement of the State Department, including, for example, in Congo. After America went quiet on him, Mr Kabila sabotaged the power-sharing agreement, renewing the prospect of violence. + +The scale of the assault Mr Trump has launched on the State Department is unprecedented, yet consistent with a decades-old trend. The National Security Council, which has swollen from a staff of 20 in the late 1960s to over 400 under Barack Obama, has supplanted it as the primary instrument of foreign-policymaking. Spending on diplomacy has been slashed in relative terms; in 1950, when American diplomats were overseeing the reconstruction of Europe and a propaganda war against the Soviet Union, it was half that of the defence budget; now, at less than 1% of the federal budget, it is only a tenth as large. This diminution is in part the result of large forces, including globalisation and communications technology. Most federal agencies, including the Treasury and the Department of Homeland Security, now communicate with their foreign counterparts directly, not, as they once did, through diplomats. “Foreign policy has become an all-government affair—every department is doing diplomacy and it’s not clear that the State Department is the most influential,” says Jeremy Shapiro, a former State Department adviser now at the European Council on Foreign Relations. The result is a diplomatic cadre in reduced circumstances and exposed to political attack—yet which still performs, as Mr Perriello’s brief triumph in Congo illustrates, important feats that no other agency can. + +The department’s Republican critics accuse it of behaving like a liberal think-tank, wont to lobby for exciting foreign interests, instead of pursuing America’s. “The biggest problem with American diplomats is clientitis—they go native,” says a former ambassador. Yet that view, though indisputably valid at times, takes little account of the slow-moving and densely political nature of much of the department’s work. There are few straightforward “America First” wins in diplomacy. And if more focused agencies such as the CIA and defence department, specialists in catching terrorists and dropping bombs, are easier to explain, they are also frequently prone to short-termism and error. It is doubtful that either could have prevailed with Mr Kabila; it would not have occurred to them to try. Yet such diplomatic efforts also have security implications for America. As James Mattis, the defence secretary, once noted while admonishing Congress: “If you don’t fund the State Department fully, then I need to buy more ammunition.” + +The objective should be to preserve the State Department’s distinctive strengths, while tailoring it to its altered circumstances. A report last year by the Heritage Foundation, a conservative think-tank, included useful recommendations on how this might be attempted. To avoid duplication, it suggested trimming the department’s 68 special envoys and advisers. To obtain better value for money, it proposed a review of State’s contributions to multilateral agencies, an exercise that led Britain to cut its support for four UN agencies. To counter some of the damaging effects of the internet, it recommended increasing public diplomacy—which the State Department could do with in America, as well as abroad, to counter its poor standing compared with the country’s lionised soldiers. To streamline top-level decision-making, Heritage also suggested eliminating one of the department’s two deputy posts, the deputy secretary for management and resources. Even diplomats who disagree with these suggestions consider them broadly reasonable. While speaking up for the value of the deputy secretary position, Heather Higginbottom, who until recently occupied it, conceded: “But these things happen and it wouldn’t be the biggest loss.” Yet this sort of sensible institutional reform is not what the Trump administration appears to have in mind. + +It needs money to fund a promised $54bn increase in defence spending, and sees the State Department budget as one of the few places it can get it. It appears scarcely to have considered the consequences of its intended raid. “This is a hard-power budget, not a soft-power budget,” was the most Mick Mulvaney, the director of the Office of Management and Budget, had to offer. That is precisely the knuckleheaded trade-off Mr Mattis advised against—a point since reiterated by over 120 retired generals and admirals, who have urged the administration to rethink. + +Mr Tillerson, who seems hardly to have resisted the proposed cut, has also said little about how he would implement it. His advisers are said to be using the Heritage recommendations as a guide, however, which suggests a lot of top-level job cuts are in the offing. There is also an expectation that unfavoured departments dealing with climate change policy, and perhaps human rights, will be axed or amalgamated. A related plan, leaked to Foreign Policy, envisages cutting aid to developing countries by a third. It would also shrink America’s overseas aid agency, USAID, and roll it into the State Department. + +Congress is unlikely to approve such drastic measures. Lindsey Graham, a Republican senator prominent in foreign affairs, describes Mr Trump’s budget proposals as “dead on arrival”. Even so, says a well-placed Republican aide, there is an expectation on Capitol Hill that aid and diplomatic spending will take a cut. Meanwhile the running down of America’s diplomacy, a great tradition which brought France into the War of Independence and helped build the international system after the second world war, continues. + +One of the Trump administration’s better ideas was to reduce the power of the NSC, in order to bolster the inter-agency policymaking process, and thereby the agencies themselves. In the case of the defence department, whose vastness and military spine make it less vulnerable to traumatic transitions, this seems to be happening. Mr Mattis is getting high marks for pushing decision-making down to lower levels. But the State Department, having hardly anyone in place to represent it forcefully in the inter-agency process and little clarity on what the government’s foreign policy is, is ceding even more power to the NSC. It is an astonishingly careless way to treat an institution that, whatever its weaknesses, America needs. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21721386-america-has-proud-and-effecive-tradition-diplomacy-it-being-traduced-neglecting/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Loathe him, love him + +Donald Trump’s first 100 days + + +Not many pledges kept, but his supporters don’t care + +Apr 27th 2017 + + + + + +AT A rally in Gettysburg, Pennsylvania last October, Donald Trump presented his “100-day action plan”, a long list of goals to reform government. Achieving these was always a tall order, and the president has certainly kept busy. He is expected to sign 30 executive orders by the end of his first 100 days in office (see chart), more than any other president since Harry Truman. + +True to his word, he has withdrawn America from the Trans-Pacific Partnership, a trade pact, appointed a conservative Supreme Court justice and authorised the building of the Keystone oil pipeline. The president even seems intent on building his border wall with Mexico, although the financing is still hazy. Mexico, he now claims, will pay for the barrier “at a later date…in some form”. + + + +But plenty of promises remain unfulfilled. Mr Trump has declined to label China a currency manipulator. His attempt to ban travellers from several Muslim-majority countries has twice been thwarted by the courts. His plan to “repeal and replace Obamacare” never made it to a vote in Congress, though another attempt may be imminent. + +According to the Partnership for Public Service, a non-profit, Mr Trump has nominated just 58 key executive-branch officials who require Senate approval. In the first 100 days of his presidency, Barack Obama nominated 190. The State Department is understaffed (see article); the Council of Economic Advisers sits empty. + +Presidents tend to start their tenures with high approval ratings that tail off over time. Mr Trump’s are already in the dumps, the worst start of any post-war president. But a closer examination of the polls reveals another story: America is now bitterly divided across party lines. Mr Trump’s approval among Republicans sits at a Reaganesque 85%. As long as he can maintain the support of his base, and assuming the economy accelerates as expected, the opinions of his many detractors may not matter. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21721397-not-many-pledges-kept-his-supporters-dont-care-donald-trumps-first-100-days/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Another Trump U-turn + +In pursuit of WikiLeaks + + +He liked leaks better when he was a candidate + +Apr 27th 2017 + + + + + +THE hypocrisy is breathtaking. But it looks as if the Trump administration really is going after WikiLeaks and Julian Assange, the self-styled transparency campaigner who runs it from the Ecuadorean embassy in London, where he has been holed up for five years evading extradition to Sweden to face a rape allegation. + +As a candidate, Donald Trump said he loved WikiLeaks for helping his campaign by publishing embarrassing e-mails from the Democratic National Committee, hacked by the Russians. Now he is in the White House, he views leaks less indulgently. On April 20th the attorney-general, Jeff Sessions, declared that the arrest of Mr Assange had become “a priority”. He added: “We are going to step up our efforts, and are already stepping up our efforts, on all leaks.” The Department of Justice is said to be preparing charges against Mr Assange. + + + +In a speech made a few days before Mr Sessions’s announcement, the director of the CIA, Mike Pompeo, excoriated WikiLeaks as “a non-state hostile intelligence service often abetted by state actors like Russia”. Mr Pompeo’s wrath had been incurred after the release by Mr Assange’s outfit of information about some of the CIA’s surveillance tools. Mr Pompeo, like his boss, had previously been a WikiLeaks fan, regularly tweeting its revelations last summer to attack Hillary Clinton. + +Even if Mr Pompeo’s designation of WikiLeaks is accurate—and Susan Hennessey, managing editor of the Lawfare blog, thinks it may be—it may not provide a path to prosecution. But Ms Hennessey says an indictment might be possible under the Espionage Act, or laws governing theft of government property and computer abuse. + +Chelsea Manning, the army intelligence analyst jailed for providing WikiLeaks with a huge dump of classified material in 2010, was indicted under all three laws, though her sentence was commuted by Barack Obama before he left office. It appears that Mr Assange may have both incited Mr Manning (as he then was) to commit his crimes, and helped to facilitate them. If so, says Ms Hennessey, it might be fairly easy in purely legal terms to bring a conspiracy charge against Mr Assange. + +This raises the question of why the Obama administration, not known for its tolerance of leaks, decided to stay its hand when it came to Mr Assange. The reason was the difficulty of distinguishing WikiLeaks’ activities from investigative journalism, which is protected by the bit of the First Amendment covering freedom of the press. Mr Obama was far from convinced that WikiLeaks and Mr Assange did merit such protection, but was troubled about where a prosecution might go politically. + +Mr Trump’s intense hostility towards the “mainstream media”, for what he perceives as its bias against him, means that he is unlikely to feel any such compunction. The overlap between what WikiLeaks and traditional media organisations do has also become increasingly blurred. News outlets such as the New York Times and the Washington Post have introduced SecureDrop, which describes itself as “an open-source whistleblower submission system that media organisations can use to securely accept documents from and communicate with anonymous sources.” + +Given that both newspapers published the best bits of the material WikiLeaks ran from the DNC hack, it must be assumed that if Russian intelligence agents had opted to provide it to them via SecureDrop, they would happily have used it. They know that if they do not publish such material, there are plenty of rivals who will. + +Ms Hennessey argues that there is still a vital difference between WikiLeaks and, say, the New York Times. The Times edits and checks; its motives are different; it is not linked to hostile intelligence agencies. Such distinctions may not trouble Mr Sessions but, as Mr Trump has found, the courts do not always do his bidding. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21721396-he-liked-leaks-better-when-he-was-candidate-pursuit-wikileaks/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Leaving a bad taste + +Higher minimum wages may make bad restaurants close + + +But do job opportunities vanish, too? + +Apr 29th 2017 | WASHINGTON, DC + + + + + +WITH Republicans in charge in Washington, the federal minimum wage is unlikely to alter soon. But debate over the impact of local pay floors is as hot as ever. Little wonder: 18 states and 22 cities and counties raised their minimum wages at the start of 2017, according to the National Employment Law Project, a campaign group. Left-wing activists have for years pushed politicians to guarantee minimum pay of $15 an hour, more than twice the federal minimum of $7.25, which last went up in 2009. + +A new working paper by Dara Lee Luca of Mathematica Policy Research and Michael Luca of Harvard Business School looks at the impact of higher minimum wages from a new angle. Traditionally, scholars have focused on whether or not minimum wages reduce employment. But the Lucas asked something else: does it force firms out of business? In particular, they looked at the restaurant industry—about half of minimum-wage workers toil over food—in the San Francisco Bay Area, which contains 15 of the 41 cities and counties that have changed their minimum wages since 2012. Their analysis relies on data from Yelp, a restaurant-review app favoured by millennials. + + + + + +The Lucas found that a restaurant has, on average, a one-in-250 chance of closing in any given month. Whether or not the odds change when the minimum wage rises seems to depend on the quality of the eatery—or at least, on its Yelp rating. Restaurants with a coveted five-star score are barely affected; but less impressive joints are suddenly more likely to close (see chart). Restaurants with a middling rating are about 14% more likely to shut down when the minimum wage goes up by a dollar. (The authors also show that rating is distinct from price—in other words, a glorious but cheap takeaway has less to worry about than sellers of pricey but tasteless fare). + +The result can be spun multiple ways. If those scholars who say that overall restaurant employment is unaffected by higher minimum wages are right, the implication of the new paper is that pay floors somehow force up the quality of restaurants. So long as one minimum-wage worker is much like another, a laid-off waiter will be able to find a new job somewhere serving better grub. + +If those scholars are wrong, however, then the new paper supports what sceptics have said all along: that higher minimum wages, by threatening the viability of some firms, dent employment opportunities for the low-skilled. That should be food for thought. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21721389-do-job-opportunities-vanish-too-higher-minimum-wages-may-make-bad-restaurants-close/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +The wounds of Whiteclay + +An alcoholism epidemic among the Lakota Sioux + + +Will revoking liquor licences make any difference? + +Apr 27th 2017 | CHICAGO + + + + + +THE Pine Ridge Indian reservation in South Dakota, the site of the battle of Wounded Knee, contains one of the poorest counties in America; and every one of its residents is affected, in some way, by alcoholism. So says Robert Brave Heart senior, one of the leaders of Red Cloud, a private Catholic school founded in 1888 by Jesuits at the request of Red Cloud, a chief of the Oglala Lakota, the tribe of Crazy Horse. Most of his people, says Mr Brave Heart, cannot drink alcohol in moderation. He thinks he is one of them. After bad experiences with booze as a teenager, he has not touched alcohol for 40 years. + +Alcohol has been banned in Pine Ridge since 1889, except for a few months in the 1970s. Yet two-thirds of adults on the reservation are alcoholics; alcohol-fuelled domestic violence is rampant; and one in four babies born on the reservation is irreversibly damaged by fetal-alcohol syndrome, a range of neurological defects caused by mothers drinking alcohol during pregnancy. + + + +One of the main sources of alcohol for the reservation’s residents is Whiteclay, a tiny hamlet of 11 residents just a short walk away across the state line in Nebraska. Whiteclay, which has no school and no grocery shop, seems to exist solely to sell booze. On April 19th Nebraska’s state liquor board voted to revoke the licences of Whiteclay’s four liquor stores, which are due to expire on April 30th. They argued that the town is not well enough policed: reason enough to revoke a licence. A lawyer for the shops said at once that his clients would appeal. + +Activists such as Frank LaMere, a member of the Winnebago tribe, who has fought for 22 years to shut down the shops, are jubilant about the state board’s decision. They argue that the shops have been making immoral profits from the misery of vulnerable residents of the reservation. Last year the shops sold an astonishing 3.6m cans of beer, or seven cans per minute, almost all to the Lakota Sioux. + +Yet Mr Brave Heart and others are sceptical about the licence revocation. They say those who want to drink will simply drive to get their booze farther afield, which will increase both the already high number of fatal drunk-driving car crashes, and bootlegging. “Alcoholism is a social and spiritual problem,” says Mr Brave Heart. It cannot be reversed with the stroke of a pen. + +Patty Pansing Brooks, a Democratic state senator from Nebraska, is the author of the bill creating the Whiteclay public health emergency task-force, which unanimously passed the unicameral statehouse on April 24th. She agrees that it will take more than prohibition to help the alcoholics in Pine Ridge. Ms Pansing Brooks wants a substation of the Nebraska state patrol set up in Whiteclay, as well as demolition of abandoned buildings where crime and trafficking are rife. She also wants to create a detox centre with a job-training programme, and promote economic development by giving residents access to wireless broadband. She says she feels a duty to do something because of her state’s complicity in destroying the tribe. + +Her efforts are backed by Tom Brewer, Nebraska’s first Native-American state senator, who grew up on the Pine Ridge reservation. As a staunch Republican, he is at the other end of the political spectrum, but the two senators are united in their outrage at what is happening in Pine Ridge. More than half—perhaps 80%—of its adults are unemployed. About half live below the federal poverty line. Almost one-third are homeless. Men die, on average, at 47 and women at 55. Almost half the population older than 40 is diabetic. The infant mortality rate is triple the national average, the suicide rate of teenagers is more than double and obesity is an even bigger problem than in the rest of the Midwest. + +Students of journalism at the University of Nebraska, Lincoln recently produced a wide-ranging report on the impact of the liquor shops on the reservation. It was called “The Wounds of Whiteclay: Nebraska’s Shameful Legacy”. Those wounds will take a long time to heal, if they ever do. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21721394-will-revoking-liquor-licences-make-any-difference-alcoholism-epidemic-among-lakota/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Rhett Butler’s resting place + +A new way to remember the civil war + + +Atlanta reinstates a controversial painting + +Apr 27th 2017 | ATLANTA + + + + + +BEFORE there were IMAX cinemas, there were panoramas. Typically around 400 feet long and 50 feet high, the immersive paintings toured America in the last decades of the 19th century, sometimes accompanied by 3-D dioramas. They weren’t meant to last, and when ticket sales dwindled, most were discarded like old fairground rides. Only two made in their heyday can still be seen in the country. One is at (and of) Gettysburg; the other, known as the Atlanta cyclorama, encapsulates the problems involved in commemorating the civil war—and a possible solution. + +The cyclorama was made by a team of German artists in Milwaukee in the mid-1880s: photographs of their workshop reveal a lubricating beer supply and a patriotic pin-up of Kaiser Wilhelm I. The subject was the Battle of Atlanta, a crucial Union victory, specifically the afternoon of July 22nd 1864. Many midwestern soldiers fought there. The picture was intended profitably to celebrate northern heroism. + + + +When the cyclorama made its way south—first to Chattanooga and then, in 1892, to Atlanta itself—its meaning was reversed. An impresario recoloured the uniforms of captured Confederates to make them look like routed Yankees. In line with the region’s mythology, which even today can make it seem that the South won every battle but lost on a technicality, advertisements declared it the ���Only Confederate Victory ever Painted.” In time the behemoth was donated to the city, and from 1921 it was housed in a purpose-built hall next to the zoo. After Clark Gable visited in 1939, for the premiere of “Gone With The Wind”, a Rhett Butler figurine was added to the diorama, reputedly at his suggestion. + +Understandably, the facility’s upkeep was not a financial priority for some black politicians, who from the 1970s ran the city administration. Unease about where and how to remember the war and its aftermath has only intensified. On April 24th—marked, in some states, as Confederate Memorial Day—a monument to a post-war insurrection by white supremacists was taken down in New Orleans. The workers wore face-masks and flak jackets because of the risk of reprisals. + +Sheffield Hale, a proud, thoughtful white southerner who runs the Atlanta History Centre, advocates a middle way between rejection and misinformed embrace of civil-war memorabilia. His museum has leased the cyclorama from the city, recently winching its rolled-up, six-tonne bulk through a hole in the roof of its old home and installing it in a bespoke rotunda. It will be displayed there, Mr Hale says, “as an artefact, rather than a moonlight-and-magnolias attraction”. The exhibition will present it not as a shrine but as a palimpsest, as full of meaning as it is of bloodshed, with explanations not only of the battle but of the painting’s own past—including the long stretch in which white and black viewing hours were segregated. + +At present the cyclorama is partly obscured by scaffolding. Two lost chunks will be replaced, along with a missing slice of sky. The original, hyperbolic shape will be restored, as will Rhett Butler. When the work is finished next year a therapeutic approach to studying history will be set in train, and a near-extinct art form will be revived. So might a once-popular Atlanta pastime: purporting to recognise people amid the thousands of fighting, writhing, dying figures captured in oils. (Only one, a Union steward, is black.) + +Not long ago Mr Hale discovered that an ancestor, Arthur Hale, fought in the battle with an Alabama infantry unit, as did his brother Farish. Standing in front of the canvas, Mr Hale points to a skirmish taking place in what is now a smart part of town. Farish was killed in it; great-great-granddaddy Arthur later married his brother’s widow, making that day “my reason for being here”. “It’s very personal,” adds Mr Hale, as southern history tends to be. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21721384-atlanta-reinstates-controversial-painting-new-way-remember-civil-war/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +City of cars + +Paying for public transport in Los Angeles + + +The money’s there, but so are political barriers + +Apr 27th 2017 | LOS ANGELES + + + + + +WHEN the Los Angeles transit authority extended a railway to link the city’s towering downtown to Santa Monica, a swanky seaside neighbourhood, last May, Angelenos rushed to experience it as if to glimpse a celebrity. For six decades, there had been no rail connection from the centre to the Westside beaches. So exciting was the concept that queues formed at 9.30am to catch the first train at noon. + +A year later Los Angeles is gearing up to build a rail link to the traffic-strangled International Airport, introduce new rapid-transit bus routes and extend subway lines, among other things. The ventures will be financed by money from Measure M, a ballot proposal passed handsomely last November to increase the sales tax by half a cent to pay for public transport. Growing congestion and reduced state and federal funding have spurred other cities to do the same: voters in Atlanta and Seattle also passed transit referendums in November. But they are dwarfed by the Los Angeles measure, which is expected to come into effect in July and collect a whopping $120bn for transport over the next 40 years. + + + +It is not before time. Los Angeles County’s population has grown fast over the past few decades, making awful traffic worse. According to the Texas A&M Transportation Institute, a research group, residents of Los Angeles and nearby Anaheim spent a cruel average of 80 hours in jams in 2014, up from 58 hours in 1985. A study in 2016 by Inrix, a traffic-analytic firm, found that Los Angeles had the worst traffic in the world. One campaign ad for Measure M seductively promised to reduce daily time spent snarled up by 15%. + +Some experts are sceptical, however. Measure M is the fourth sales-tax increase for financing public transport to be approved by county voters in the past 40 years. Reviews of the previous efforts are mixed. Despite the introduction of eight new railways and bus routes since 1990, passenger numbers on public transport have declined since their peak in 1985, when subsidies expired that kept bus fares artificially low. That year 497m journeys were made on Los Angeles County’s bus and rail system. In 2016 the figure was 416m—although, in the intervening years, the county’s population had grown by 2m. According to data from the Census Bureau, in 2015 83% of workers in Los Angeles drove to work alone or in carpools, while less than 7% used public transport. + +Ethan Elkind, a law professor and author of “Railtown: The Fight for the Los Angeles Metro Rail and the Future of the City”, points out that passenger numbers on public transport have been declining nationwide. He adds that some new rail extensions financed by a sales-tax measure passed in 2008 have not yet started operation. But James Moore, who directs the transportation-engineering programme at the University of Southern California, is more pessimistic. He believes politics has inspired the county to invest too much in rail while ignoring buses. Buses, he believes, are a much more cost-effective way to move people around sprawling Los Angeles, which is largely zoned for single-family housing rather than the dense clusters that might encourage rail travel. + +On two points there is broad consensus. First, if Measure M is to get results, zoning around transport corridors needs to allow for denser development. Second, the Los Angeles transit authority needs to take the politically risky step of favouring public-transport passengers, who are often poor (71% of them are Latino) over car drivers, who are more numerous and generally wealthier. A good example of the present bias is that the long-awaited railway from downtown to the Pacific stops for red lights, to let cars pass. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21721387-moneys-there-so-are-political-barriers-paying-public-transport-los-angeles/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Lexington + +John Kasich’s lament + + +Musings of a vanquished Republican moderate + +Apr 27th 2017 + + + + + +WHEN historians look back at the earthquake that shook American politics in 2016, two books deserve recognition as important early warnings. The first, “Bowling Alone” by Robert Putnam, was published way back in 2000. With the prescience of a ranch-hound growling at a far-off tremor, Mr Putnam, a political scientist, reported that Americans were living increasingly solitary lives, slumped in front of televisions or surfing the internet, rather than competing in bowling leagues or volunteering for such civic groups as the Knights of Columbus. + +The second book, clanging like a ranch-bell as the first tremors arrived, was “The Big Sort: Why The Clustering of Like-Minded America is Tearing Us Apart” by Bill Bishop. Published in 2008, this reported that when Americans emerge, blinking, from their TV dens they increasingly inhabit communities which share their partisan, religious or cultural views. In the presidential election of 1976, some 27% of Americans lived in “landslide counties” which Jimmy Carter either won or lost by at least 20 percentage points. By 2004, when George Bush narrowly won re-election, 48% of counties saw landslides. + + + +Now comes a third book which seeks, in effect, to synthesise the lessons of the first two. It is written by John Kasich, the Republican governor of Ohio and the last presidential primary contender to concede defeat as Donald Trump seized his party’s nomination. The new work, “Two Paths: America Divided or United”, reflects Mr Kasich’s image as a folksy blue-collar conservative with a conscience. It could be summarised in a single, faith-tinged injunction: “Love your neighbour.” + +The 24-hour news cycle being what it is, the book has mostly been parsed for clues as to whether Mr Kasich might run for president in 2020, especially if Mr Trump does not seek a second term. Mr Kasich, a former congressman and Fox News TV host, has coyly told interviewers: “You don’t close the door on anything.” In truth, Mr Kasich has probably had his moment. He won one state in the presidential primaries, his own. Many Republicans cannot abide the way he casts hardline opponents as unChristian—Mr Kasich likes to say that when politicians die, St Peter will ask what they did for the poor, not how they shrank government. + +Still, Mr Kasich’s book matters, in part as a reassuringly human account of life at the epicentre of a political quake. He describes taking part in presidential-primary debates in which rivals “wallowed in the mud, lied, called each other liars, and disparaged each other’s character.” Up under the TV lights, he reports, “It was just nuts.” He sounds equally human when watching rivals endorse Mr Trump, a man they had previously called “utterly amoral” and a “cancer” on conservatism. Mr Kasich, normally a gruff sort, tactfully calls this surrender “surprising”. + +Alas, “Two Paths” matters even more because it fails in its stated aim: to show how America can be united. The son of a postman from small town in Pennsylvania, Mr Kasich frets that Americans have “fallen out of the habit of caring for one another”, instead living with their heads down and expecting far-off government leaders to solve such problems as the opiate addictions ravaging Middle America. To explain why democracy feels gridlocked, Mr Kasich points to partisans who now consume political news like a “hobby”, and who use primary elections to punish legislators who cross party lines. + +The problem is that solving the “Bowling Alone” crisis, even if it can be done, may not fix the “Big Sort” problem. When Americans debate such issues as government welfare, it is not enough for them to love their neighbours. The larger challenge is to love compatriots who are not their neighbours. When polled on such issues as immigration, gun rights, climate change or welfare for the poor, Trump-voting rural America and Democratic-leaning cities and inner suburbs sound like two different countries. Worse, the two Americas increasingly do not know or like each other—a divide made worse by Mr Trump, who depicts cities as hellholes of dysfunction, stalked by murderous immigrants. + +In an interview, Mr Kasich’s solution is to talk about questions of “common humanity” that trouble all Americans: he cites children who arrive hungry at school, drug addiction and human trafficking. He wants to see more voluntary civic actions, like mentoring young people, donating to food banks, or shaming employers into keeping jobs in America. + +Civic-minded, but segregated + +In the meantime, gulfs grow wider. In 2016, fully 60% of voters lived in landslide counties that went for Mr Trump or Hillary Clinton by a 20-point margin. Damagingly for Mr Kasich’s love-conquers-all thesis, any reporter who covered last year’s election can also testify that Mr Trump’s divisive rhetoric created a powerful sense of community among his followers. It is true that Trump rallies were darkly angry festivals of fear-mongering about The Other. But seen another way, enthusiastic citizens were swept up in a common cause as rarely before. In their “Make America Great Again” hats and “Trump That Bitch” T-shirts, the faithful were not bowling alone. Today the left is seeing a wave of civic activism and energy, inspired by rage and disgust at President Trump. + +Pushed on this paradox, Mr Kasich is honest enough to say that America faces a “cultural problem” that will not be solved overnight. Political parties see profit in gerrymandering districts to make them super-safe, he sighs. The media saw profit in covering Mr Trump’s worst excesses. He chides religious leaders in the “faith business” for sowing divisions. Remarkably, he criticises the public too, who “want to be reinforced in their beliefs”, and so choose to inhabit partisan bubbles and forward fake news items without compunction. Fixing America is “on us”, writes Mr Kasich, urging citizens to take more responsibility and shun strongmen vowing to solve all problems. But what happens when there is no American “us” any more? To that, he offers no answer. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21721391-musings-vanquished-republican-moderate-john-kasichs-lament/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +The Americas + + +Food fight: Canada and the United States [Fri, 28 Apr 08:52] + +Rotten tomatoes: Venezuela [Fri, 28 Apr 08:52] + +Tree-muffled praças: Brazil’s environment [Fri, 28 Apr 08:52] + +The great re-election debate: Bello [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Food fight + +Donald Trump takes aim at Canada + + +Attacks on dairy farmers and loggers are the opening shots in a bigger confrontation over trade + +Apr 29th 2017 | OTTAWA + + + + + +“CANADA, what they’ve done to our dairy-farm workers, it’s a disgrace,” snapped Donald Trump from the Oval Office on April 20th. Mr Trump had just heard complaints from American producers of ultra-filtered milk, used to make cheese and yogurt, who said they were shut out of the regulated Canadian market after a change in the rules. “We will not stand for this,” Mr Trump tweeted a few days later. Ron Versteeg, who along with his brother milks 120 Holstein cows at their farm near Ottawa, does not seem perturbed. “That’s the US-Canada relationship,” he says affably. “They take a dig, we take a dig.” + +Canada’s prime minister, Justin Trudeau, has tried to sound equally unruffled since the United States elected its protectionist president last November. He had grounds for confidence. While Mr Trump encouraged voters to blame their grievances on Mexico, the third partner in the North American Free-Trade Agreement (NAFTA), he was much gentler towards the United States’ northern neighbour. The situation with Canada is “much less severe” than with Mexico, he told Mr Trudeau during a visit to Washington in February. The trade relationship just needs “tweaking”. + + + +Mr Trump’s tweaks are starting to feel like kicks. Alongside dairy farmers, he put loggers and energy producers on his Canadian enemies list and launched an investigation of imported steel, of which Canada is the biggest single supplier (see article). On April 24th the United States’ Commerce Department imposed preliminary duties averaging 20% on imports of Canadian softwood lumber, used to build houses. Two days later newspapers reported that Mr Trump was about to sign an order to withdraw from NAFTA. After hurried telephone calls with Mr Trudeau and Mexico’s president, Enrique Peña Nieto, he dropped that plan, at least for now. + +But the threat remains, and Canada is vulnerable. The United States and Canada traded $635bn-worth of goods and services last year. Three-quarters of Canada’s goods exports went to the United States. Its access to the American market helped attract C$37bn ($27bn) of net foreign investment in 2016. The reconstruction of trade barriers would put all that in jeopardy. The Canadian dollar weakened after Mr Trump fired off his salvoes. Stephen Poloz, the governor of the central bank, told a committee of the Canadian Senate in April that American protectionism is the biggest threat to the economy. + +Mad cow disease + +In fact, some of Mr Trump’s targets are well chosen. His swipe at dairy farmers is in part an attack on Canada’s absurdly complex system of “supply management”, which matches production to demand and limits imports through quotas and tariffs. What hurt American farmers was a deal struck by Canadian farmers and regulators to allow a new lower price for products that compete with ultra-filtered milk. Similar rules protect egg and poultry producers. Mr Trudeau points out that the United States has a surplus of more than $400m in dairy trade with Canada. That does not make supply management defensible. + +Mr Trump has less justification for attacking foreign steelmakers. The rights and wrongs of the softwood-lumber dispute, which dates back to 1982, are murkier. American loggers have long complained that their Canadian competitors pay too little to harvest trees, which grow mostly on public land. The two countries have struck temporary deals, the last of which expired in October 2015, without resolving the underlying disagreement. The United States has used tariffs before to force Canada to cap exports. + +These long-running irritants are now part of the much bigger confrontation triggered by Mr Trump’s determination to renegotiate NAFTA. No one in Canada (or Mexico) knows just what the United States will demand. In March the acting United States trade representative sent a vaguely worded draft letter to Congress with 40 ideas for revising the agreement. They include eliminating NAFTA’s dispute-settlement mechanism, which has not been as tough on lumber subsidies and other Canadian practices as the United States wants, and making it easier for public agencies in the United States to buy American. Mr Trump’s mixed signals on scrapping NAFTA add to the confusion. + +Some Canadians yearn for a tougher line from Mr Trudeau. “When you’re dealing with a bully, at some point you have to stop backing up,” admonished Thomas Mulcair, leader of the opposition New Democratic Party. + + + +Mr Trudeau would rather charm the Trump administration than confront it. Ministerial visits have multiplied since the inauguration. Mr Trudeau has joined Ivanka Trump, the First Daughter, at a Broadway show and at a meeting of a newly created bilateral women’s group. He promises “a thoughtful, fact-based conversation” on trade. Millions of American jobs depend on trade with Canada, he notes. Canada was the biggest buyer of American goods last year. The car industry straddles the border (see chart). + +Canada (along with Mexico) will no doubt point out that the United States is no free-market paragon. Though it does not have supply management for dairy products, it subsidises maize and cotton seed, which go into animal feed. “We know all their tricks,” says Mr Versteeg. + +Canada is bracing for the possibility that Mr Trump may carry out his most aggressive threats. One response is to diversify trade away from the United States, but that will be hard, given that it is the world’s largest economy and on Canada’s doorstep. Pierre Trudeau, Justin’s father, who was prime minister (with a short break) from 1968 to 1984, tried to reduce American economic and cultural influence. But Canada is more dependent on trade with the United States now than it was then. + +It hopes that new trade accords will change that. An agreement with the European Union is due to take effect this year; Canada is holding exploratory talks with China and India. It may join a revived Trans-Pacific Partnership, an 11-country pact from which the United States withdrew when Mr Trump took office. But freer trade with far-flung countries cannot make up for bad ties with Canada’s neighbour. + +Whatever happens, Mr Versteeg is confident that his government will stand up for dairy farmers, a small but influential group in Ontario and Quebec. He likens Mr Trump to a hockey player who repeatedly pokes an injured opponent’s sore spot. “They’re just going to tap it every chance they get.” He thinks Canada will skate through the pain, as it always has. But Mr Trump may have changed the game. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21721416-attacks-dairy-farmers-and-loggers-are-opening-shots-bigger-confrontation-over/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Rotten tomatoes + +The declining quality of Venezuela’s propaganda + + +The president tries to come across as cuddly. It isn’t working + +Apr 27th 2017 | CARACAS + + + + + +IN WEEKS of almost daily protests, opponents of Venezuela’s authoritarian regime have found different ways to express their anger. They have held raucous banner-waving marches, a silent demonstration and a sit-in on Caracas’s main roads. At least 29 people have died since March in the worst unrest in three years. Many of these were killed by armed gangs that support the government, called colectivos. The protests persist because the government has made life intolerable: shortages of food and medicine are acute, the murder rate is probably the world’s highest and democracy has been extinguished. + +But all is well in the world of Nicolás Maduro, the country’s much-loathed president. While chaos engulfs Venezuela’s cities, his social-media team has been seeking to humanise the dictator with video vignettes that emphasise his homespun origins and simple wisdom. In one video, posted on his Facebook page, he rhapsodises on the innocence of childhood as he perches awkwardly on a playground swing. In another, he admires a panorama of an apparently tranquil Caracas from the safety of a cable-car gondola. Sometimes he takes to the wheel of his car with his wife, Cilia Flores, sitting glumly beside him; this is an occasion to reminisce about his early career as a bus driver. + + + +The social-media stream is an addition to the information arsenal of chavismo, the leftist movement founded by the late Hugo Chávez and carried on with less elan by Mr Maduro. Its main weapon was, and remains, state control of television, which repeats endlessly the risible claim that Venezuela is a victim of an economic war. Broadcasts by the president can last as long as a double-feature. Lacking Chávez’s charisma, Mr Maduro hopes to come across as cuddly in his up-close-and-personal videos (and a salsa show on radio). + +Venezuelans are not beguiled. The films show a falta de respeto (lack of respect), many say. “I think he actually enjoys laughing at us,” says Daniel Torres, an engineering student. + +Venezuelans are especially annoyed by a video of the president, resplendent in a white tracksuit, playing catch with Diosdado Cabello, the thuggish former president of the national assembly. “A democratic game, a constitutional game,” sniggers Mr Cabello. He helped plan many of the government’s assaults on democracy, including a botched attempt in March to transfer the powers of the legislature, now controlled by the opposition, to the supreme court, which takes orders from the government. “We are working,” promises Mr Maduro, as he tosses the ball back to his partner in misrule. + +For Alberto Barrera Tyszka, an essayist, the video shows the “decadence” of chavismo. The images of frolicking well-fed politicians are an insult to the “poverty of Venezuelans”, most of whom have lost weight over the past two years, he has written. One of Mr Maduro’s clips shows him driving through a poor neighbourhood of Caracas to show off the apparent cheerfulness of the locals. A wall scrawled with the words, “Maduro, murderer of students”, is clearly visible as he drives past, but not to the oblivious president. Chavistas used to be good at propaganda. Now they cannot even get that right. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21721407-president-tries-come-across-cuddly-it-isnt-working-declining-quality/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Tree-muffled praças + +São Paulo’s mayor tries to make the city greener + + +Planting trees in a concrete jungle + +Apr 27th 2017 | SÃO PAULO + + + + + +THE phrase “concrete jungle” might have been coined for São Paulo. Brazil’s megalopolis has 2.6 square metres (28 square feet) of green space for each of its 11m inhabitants, a tenth as much as New York and a fifth of what the World Health Organisation recommends. As with wealth, greenery is unequally distributed. Rich central districts, many with jardim (garden) in their names, have more trees than residents. In Itaim Paulista, on the poor eastern periphery, there is one for every 17 people. + +João Doria, the mayor since January, wants more foliage. In March he inaugurated the first section of what will become the world’s biggest “green corridor”. The “vertical gardens”, sprouting from wall-mounted pockets made from felt, will stretch for 3.5km (2.2 miles) down Avenida 23 de Maio, a congested ten-lane road in the city’s centre. They are expected to absorb as much carbon dioxide as 3,300 trees. + + + +In elections last year Mr Doria, a marketing tycoon, defeated a left-wing mayor, Fernando Haddad, who was fond of cycle lanes but did little to make the city greener. Under his administration, spending on the environment fell from 1.4% of the budget to 0.3%. Public parks and nurseries fell into disrepair after Mr Haddad allowed maintenance contracts to expire last August. His mayoralty was “depressing”, says Ricardo Cardim, a landscape architect who runs a blog called “São Paulo Trees”. + +He is optimistic about Mr Doria. The centre-right mayor named Gilberto Natalini, a member of the Green Party, as the city’s environment secretary and boosted his budget by a third, to 200m reais ($62m). Mr Doria revived moribund partnerships with the state government to clean storm drains and line them with vegetation. + +With money tight because of Brazil’s recession, Mr Doria is enlisting his fellow businessmen to spread the vegetation. One group promised to give 1m saplings, which would more than double the number of trees on the streets. Mr Doria is badgering two developers to allow a plot they own in a rundown part of the city centre to become a park in return for land elsewhere. He wants private firms to maintain the city’s 107 parks, perhaps in exchange for displaying their corporate logos. On April 24th he invited Arnold Schwarzenegger to São Paulo to arm-twist American companies into backing green projects. Mr Doria may be hoping that paulistanos will someday hail him as the Germinator. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21721424-planting-trees-concrete-jungle-s-o-paulos-mayor-tries-make-city-greener/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Bello + +Latin America’s great re-election debate + + +Relaxing term limits has been bad for democracy + +Apr 27th 2017 + + + + + +IF YOU need a pretext for a political climbdown in Latin America, they don’t come much better than a plea from the pope. That was the excuse that Horacio Cartes, Paraguay’s president, used to drop his plan to run for a second consecutive term in 2018, which required changing the constitution. He was inspired to desist, he wrote to the archbishop of Asunción this month, by Pope Francis’s call for peace and dialogue. An attempt to ram the change through congress had provoked a riot in which the parliament building was set on fire. + +After ten days of hesitation, during which Mr Cartes’s Colorado Party failed to withdraw the amendment, on April 26th congress voted unanimously to reject it. But Paraguay’s decision will not quiet debate across Latin America about whether or not to allow presidential re-election. + + + +When in the 1970s and 1980s Latin America emerged from a period of dictatorship, its politicians were keen to place limits on executive power. Most countries either barred presidents from seeking re-election, or allowed them to do so only after waiting out at least one term. + +Since then, there has been a gathering trend in the region to relax term limits. Five countries, including Brazil and Argentina, now allow a second consecutive term, while seven allow non-consecutive re-election. In Venezuela Hugo Chávez won a referendum to abolish term limits altogether; Ecuador’s congress agreed to do so from 2021. In Nicaragua and in Honduras courts have abolished term limits by ruling that barring re-election violates constitutional freedoms—a questionable route to making such a fundamental change to the rules of democracy. + +Those who favour re-election argue that it makes presidents more accountable, that it offers voters the chance of keeping a president if they so wish and that it offers political and thus economic stability. Yet the costs of relaxing term limits are becoming ever clearer. Most obviously, Venezuela and Nicaragua are now in effect dictatorships. Elsewhere, there are more subtle ill-effects from allowing even one chance to run for re-election. + +The first is that in practice incumbents have an unfair advantage. Of the 23 who ran for re-election since the mid-1980s, only two (Daniel Ortega in Nicaragua in 1990 and Hipólito Mejía in the Dominican Republic in 2004) lost. Incumbents may benefit from a preference for the devil you know. But weak checks and balances probably matter more. Presidents may abuse public resources and interfere with electoral authorities. + +Javier Corrales and Michael Penfold, two political scientists, looked at 125 elections in 18 Latin American countries between 1953 and 2012. They found that being an incumbent widened the advantage over the nearest rival by an average of 11.2% of the vote. They also found that a 1% increase in public spending in the election year expanded the margin of victory by 1.3 percentage points. That can make all the difference: Dilma Rousseff raised primary public spending (ie, before interest payments) in Brazil by 6% in real terms in 2014 and won an ill-fated second term by a margin of just 3.3 percentage points. + +Former presidents who run again after an interval, as 38 did between 1998 and 2006, are less assured of victory. But they act as bed-blockers, preventing political renewal. That matters. Surveys find increasing voter disillusion with the political establishment in many countries. + +Relaxing term limits coincided in part with the commodity boom, which brought faster economic growth to many Latin American countries. Endowed with extra revenues that enabled them to fulfil campaign promises, presidents tended to be popular. That is no longer the case. So Latin America may revert to its historical norm of weak presidents (and move back to tighter term limits). Latin American countries employ the unusual and awkward combination of a directly elected president and a legislature chosen by proportional representation. As a result, the president’s supporters often make up a minority in a multiparty congress. That has increased the risk that a president will be impeached—as eight, including Ms Rousseff, have been since 1992. + +Yet as democracy takes root in most Latin American countries, presidents and opposition-dominated legislatures have often managed to get along. A bigger risk, as Juan Pablo Luna and Alberto Vergara, two other political scientists, point out, is that political parties become less good at channelling the demands of rapidly changing societies. Allowing re-election is likely to exacerbate that problem. Latin American countries should think long and hard before doing so. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21721427-relaxing-term-limits-has-been-bad-democracy-latin-americas-great-re-election-debate/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Asia + + +Defeats, defections and disorganisation: Indian politics [Fri, 28 Apr 08:52] + +The vanishing liberal: Politics in Australia [Fri, 28 Apr 08:52] + +Forget North Korea: Human rights in South Korea [Fri, 28 Apr 08:52] + +Cleaning up: 1MDB [Fri, 28 Apr 08:52] + +THAAD vibes: Banyan [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Defeats, defections and disorganisation + +Why India’s opposition is nearly irrelevant + + +The BJP chalks up yet another electoral victory + +Apr 28th 2017 | DELHI + + + + + +TWO years ago voters in Delhi, the Indian capital, whistled a warning to prime minister Narendra Modi. It was less than a year since he had led his Bharatiya Janata Party (BJP) to power in a sweeping general-election triumph. Yet suddenly, at the very seat of the national government, a puny upstart party running a shoestring anti-corruption campaign had nabbed no fewer than 67 of the 70 seats in the city’s main legislature. The BJP had captured a paltry three. Could it be that Mr Modi’s vaunted electoral juggernaut was not invincible after all? + +This was certainly what the critics of the Hindu-nationalist BJP hoped. Yet in test after test since then, from obscure by-elections to the campaign for the state assembly in Uttar Pradesh, with a population of 220m, the party has surged relentlessly ahead. In addition to the national government, the BJP and its allies now control 17 out of India’s 31 state legislatures, together representing more than 60% of the country’s people (see chart). At a recent party rally in the eastern state of Odisha, Amit Shah, the BJP’s grizzled master strategist, actually evoked the Jagannath Temple, a local landmark that inspired the word juggernaut, as he vowed the party would capture every state “from panchayat [village council] to parliament”. + + + + + +Not surprisingly, it is now among the opposition that alarms are sounding. The latest bell, again in Delhi, rang on April 26th as results emerged of voting at another level of local government, the city’s three municipal “corporations”. The BJP won more than two-thirds of seats. The feisty upstart of 2015, the Aam Aadmi or “common man” party (AAP), was left sputtering that someone must have tampered with the voting machines. + +That is unlikely. The Election Commission of India, which is responsible for the gadgets, enjoys a reputation for probity rare among the country’s public institutions. This is not to say that the BJP does not play rough in the contact sport that is Indian politics. On the contrary, Mr Modi’s party is tenacious and aggressive. Delhi’s AAP government, for instance, has found itself hamstrung by varied forms of obstruction from the BJP-led central government, not to mention by scores of spurious lawsuits and repeated police raids and investigations. Many AAP supporters seem to have understood the message: like it or not, the underdog is not a party that can “get stuff done”. + +Totting up the recent losses of India’s opposition, however, it is clear that they themselves must also bear much of the blame. At every turn they have been not just outmuscled, but outwitted by the BJP. Worse, all too often India’s opposition parties have scored own-goals, whether by way of corruption scandals, messy defections, internal squabbles or simply the failure to recognise that unless they join forces, the BJP will indeed run them over. “We’d been working on the assumption that Modi will be a shoo-in in 2019,” says a foreign diplomat, “Now we’re wondering if he won’t be in 2024.” + +Aside from the AAP, the party with the most egg on its face is Congress, the oldest and long the grandest of parties in India. For decades following independence in 1947 Congress, like the BJP today, dominated politics at every level. It remains the only party aside from the BJP with a nationwide presence; the two parties’ multiple rivals are all regional or local political forces. But after years of slow slippage, Congress’s grasp seems in many parts of the country to have relaxed entirely. It currently controls just six state legislatures, only two of them in sizeable states. In recent elections it has frequently trailed a distant third or worse. With astonishing regularity Indian newspapers report stories of Congress grandees abandoning the party, all too often to join the BJP. + +Over the past year alone Congress has lost control of six states, four of them—Arunachal Pradesh, Assam, Goa and Manipur—because local party leaders switched sides. In the last two, they abandoned Congress even though it had just won state elections: the rival BJP simply moved faster to form a government, luring defectors with promises of cabinet posts even as Congress’s leadership in Delhi dithered over how to dole out offices. In the mountainous state of Arunachal Pradesh last year, 43 Congress deputies defected en masse to join a new, BJP-allied party. In Assam, rebellious younger Congress leaders helped swing voters to the BJP, which they joined after complaints about the ageing local Congress boss fell on deaf ears. + +Many have blamed Congress’s woes on the lingering hold of the Gandhi dynasty. Its current figurehead, Rahul Gandhi (pictured, third from the right, with his mother, Sonia), is the son, grandson and great-grandson of previous prime ministers. Yet semi-feudal family politics afflicts many of India’s parties. A nasty spat in the reigning Yadav family weakened the previous ruling party in Uttar Pradesh, paving the way for the BJP’s crushing victory in the state assembly elections. The ruling party in the southern state of Tamil Nadu is currently embroiled in succession issues; the leadership of its main local rival is also a family affair. + +A related opposition handicap is its emphasis on personality over principle. In some cases this has left parties floundering for relevance once their exalted leader dies. It has also opened some to the charge that they are mere vote-getting machines that do not stand for anything. The Trinamool Congress of West Bengal, a state ruled with an iron fist by the party’s founder, Mamata Banerjee, is based on an insubstantial mix of populism and Bengali pride. In the southern states of Kerala and Tamil Nadu, power has for decades alternated between two parties with very similar ideologies. + +On all these scales the BJP stands out as different. True, it has built a cult of personality around Mr Modi. Along with other top leaders in the party who spent long apprenticeships as “volunteers” with Hindu nationalist groups before entering politics, however, the prime minister remains a celibate bachelor; there will not be a Modi dynasty. Like it or not, too, his party does stand for something: the BJP believes that for India to be strong it must abandon the elitist secular socialism of the Congress years and embrace a less inclusive, more “authentic” Hindu identity. + +But above all, India’s ruling party enjoys unmatched discipline and organising power. A disappointed Aam Aadmi supporter in the prosperous Delhi district of Vasant Vihar says they didn’t put up a single flag or poster. By contrast neat, polite BJP workers went door-to-door, ringing his bell three times. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21721370-bjp-chalks-up-yet-another-electoral-victory-why-indias-opposition-nearly-irrelevant/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +The vanishing liberal + +Australia’s prime minister is not the man he used to be + + +Malcolm Turnbull used to champion immigration. Now it’s “Australia first” + +Apr 27th 2017 | SYDNEY + + + + + +MALCOLM TURNBULL had always seemed to be what Australians call a “small-l liberal”. Unlike many in the Liberal Party, which despite its name is Australia’s main conservative force, he was a defender of progressive causes. In 1986, as a lawyer, he successfully challenged a bid by the British government to prevent the publication in Australia of the memoir of a former British spy. He led the failed campaign in 1999 for Australia to become a republic. And unlike his fellow Liberal and predecessor as prime minister, Tony Abbott, he has no doubts about global warming. + +Yet since becoming prime minister two years ago, Mr Turnbull seems to have jettisoned many of his small-l views. The most obvious reversal concerns immigration. In 2013, when a government led by Labor, now the main opposition party, sought to curb temporary work visas, known as 457s, Mr Turnbull called the visas the “heart of skilled migration”; he dismissed as “chauvinistic rhetoric” claims that they robbed Australians of jobs. Yet Mr Turnbull recently announced sharp restrictions on 457s: most recipients will no longer be able to apply for permanent residency, and the number of eligible professions has been cut by a third (actors, biochemists, detectives, metallurgists and web developers are among those who need no longer apply). To oblige immigrants to learn “Australian values”, the government wants to add questions on topics like child marriage, domestic violence and female circumcision to the test they must take before they become citizens. Mr Turnbull described all this as “standing up for Australian jobs and Australian values”. The sudden blast of “Australia First” rhetoric has left many asking what Mr Turnbull really stands for. + + + +When he led a rebellion among Liberal MPs to unseat Mr Abbott, Mr Turnbull promised “ideas that will excite the Australian people”. He said he would “attract the world’s best innovative talent to Australia”. He encouraged Australians to embrace a “national culture” of risk-taking. At first, the government’s opinion-poll ratings soared, having tanked under the unpopular Mr Abbott. But after an election in July, Mr Turnbull clings to power with a majority of just one in the lower house of parliament and a minority in the upper house. + +Mr Turnbull’s straitened circumstances seem to have left him wary of exciting ideas and averse to risk-taking. He depends on the parliamentary support of Mr Abbott (still an MP) and the right wing of the party, which is constantly sniping at him. Perhaps as a result, he has abandoned all sorts of positions that used to distinguish him from Mr Abbott. He used to advocate a market-driven mechanism obliging polluters to cut emissions of greenhouse gases. Now he has embraced Mr Abbott’s much criticised alternative: an A$2.5bn ($1.8bn) public fund to pay businesses to curb emissions. By the same token, he used to argue that parliament should legalise gay marriage; now he wants to hold a plebiscite first, just as Mr Abbott proposed. + +Mr Turnbull’s U-turns make some wonder if he ever stood for much besides winning power. Norman Abjorensen, a political historian at the Australian National University, thinks the Liberal Party has a “narrative problem”: it appears to be in “steady retreat from the political centre that once looked like Turnbull’s home-ground advantage.” At any rate, its polls have slipped—it now trails the Labor Party. + +Australia’s three previous prime ministers—Kevin Rudd and Julia Gillard of the Labor Party, and Mr Abbott—all lost power when their MPs decided to replace them, in the hope of improving their electoral prospects. (Mr Rudd also lost an election, after a second stint in office.) Voters have grown dismayed at such shenanigans, but Mr Abjorensen still wonders if Liberal MPs are disgruntled enough that “time might already have run out for Malcolm Turnbull”. Tony Burke, a Labor MP, says Mr Turnbull has become the protagonist of the same sort of “Shakespearean tragedy” that consumed his predecessors: “I watched it unfold and we’re watching it unfold again.” For now, the main thing keeping Mr Turnbull in office may be the lack of a plausible replacement. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21721369-malcolm-turnbull-used-champion-immigration-now-its-australia-first-australias-prime-minister/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +“Disgraceful conduct” + +South Korea’s presidential election fuels a row about gay rights + + +The army is accused of trying to weed out gay soldiers + +Apr 27th 2017 | SEOUL + + + + + +“IT IS 2017. Moon Jae-in just opposed homosexuality,” thundered the headline of a newspaper following a live television debate among South Korea’s presidential candidates. Gay sex is legal in South Korea, but stigmatised. Mr Moon, a former human-rights lawyer and the liberal candidate, who leads the polling for the election on May 9th, had just confirmed that he disapproved of it. + +Mr Moon’s statement caused a stir on social media, but his view is not that unusual. Of the five main presidential candidates, only Shim Sang-jung of the Justice Party, the only woman running, has expressed support for gay rights. A decade ago a bill outlawing discrimination on various grounds foundered because sexual orientation was one of them. MPs have blocked it twice more since then. Last week representatives of Mr Moon and three rivals attended a “Protestant Public Policy Forum”; all made statements against gay rights, in keeping with the stance of many of South Korea’s influential churches. + + + +The denunciations come on the heels of a report from an NGO called the Military Human Rights Centre of Korea, which claims that the army is “hunting down” gay soldiers. The Military Criminal Act bans soldiers, most of whom are conscripts, from engaging in gay sex, which it labels “disgraceful conduct”, punishable by imprisonment of up to two years. At least 32 soldiers are being investigated and one has been charged. That, the report claims, is because the army is actively seeking to weed out gay soldiers. The report alleges that it obliged gay soldiers to reveal the names of gay comrades, combed their mobile phones for leads and even mounted sting operations using gay dating apps—all of which appear to be against the army’s regulations and may also be illegal. + +The army protests that the claims are untrue and that it has not broken the law. Its ban on gay sex, it says, is designed to conserve a “wholesome lifestyle” for soldiers. Han Ga-ram, a human-rights lawyer, says the measure is tantamount to criminalising homosexuality. Activists say it violates the constitution’s guarantee of equal treatment for all citizens. They have challenged it in the constitutional court three times since 2002, to no avail. A fourth complaint is on its way through the courts. + +Judges, generals and politicians may be unbending, but public opinion is shifting. Between 2010 and 2014, support for same-sex marriage doubled among respondents in their 20s and 30s; almost three-quarters in their 20s saw gay rights as a human-rights issue. Mr Han says that South Koreans are “less afraid of speaking out” since months of protests led to the impeachment in March of Park Geun-hye, the president, prompting the current election. + +Posters have appeared on the walls of universities in Seoul, the capital, calling for the release of the gay soldiers, with the slogan: “Take me away too”. Protesters waving rainbow flags and calling for Mr Moon to apologise disrupted one of his campaign events this week (see picture). In the end, he did, but half-heartedly, saying he should not have been judgmental, but standing by his opposition to greater gay rights. Activists have taken to Gwanghwamun Square, in central Seoul, where, only recently, Mr Moon joined the rallies against Ms Park, presenting himself as a figure of change. Angry banners there now demand of him: “Do you oppose me?” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21721410-army-accused-trying-weed-out-gay-soldiers-south-koreas-presidential-election-fuels/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Cleaning up + +Malaysia and Abu Dhabi strike a deal over 1MDB + + +A mammoth financial scandal is being brushed under the carpet + +Apr 27th 2017 | SINGAPORE + + + + + +FOR the past year 1MDB—a Malaysian state investment firm at the heart of one of the world’s biggest financial scandals—has been locked in dispute with IPIC, a sovereign-wealth fund from the oil-rich emirate of Abu Dhabi, with which it was once chummy. Terse statements released on April 24th suggest the pair are finally making up. 1MDB has agreed to pay IPIC $1.2bn, reportedly to settle a complaint that it reneged on the terms of a bail-out IPIC provided in 2015. The two companies have also agreed to enter into “good-faith discussions” about other disputed payments, which may total as much as $3.5bn. + +Past dealings between 1MDB and IPIC are a focus for investigators hunting huge sums that have gone missing from the Malaysian state-owned company since its founding in 2009. In 2012 IPIC offered to guarantee loans that 1MDB needed to acquire two power firms. But IPIC said last year that it had never received collateral and other monies supposedly due to it under this deal. Instead 1MDB appears to have wired payments to an account held by an unrelated shell company registered in the British Virgin Islands, which had adopted a name similar to that of one of IPIC’s subsidiaries. + + + +Last July investigators at America’s Justice Department said they thought that this ruse had allowed conspirators to liberate more than $1.3bn from 1MDB’s coffers (opposition politicians in Malaysia maintain that the sum lost is in fact far greater). America alleges that former officials from both IPIC and 1MDB benefited from the swindle. They also claim that more than $200m of the missing money went to an account controlled by Riza Aziz—the stepson of Najib Razak, Malaysia’s prime minister—and that $30m went to Mr Najib himself. (Both deny wrongdoing.) + +That 1MDB and IPIC are beginning to bury the hatchet is probably a relief for bigwigs implicated in the affair, even if many humbler Malaysians are wondering how the billion-or-so dollars immediately due to IPIC will be found. Although investigations are continuing in America, Switzerland and Singapore, the authorities in Malaysia itself have charged no one in connection with any of 1MDB’s dubious dealings. Mr Najib fired an attorney-general looking into the scandal; the successor Mr Najib appointed concluded that $681m paid to Mr Najib in 2013 was a donation from foreign royalty, not in any way related to 1MDB. + +Many voters in rural seats either do not understand the affair or do not care about it. It is rumoured that the prime minister will call a general election later this year, in the hope of benefiting from the opposition’s interminable squabbling. As things stand, he will probably clean up. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21721411-mammoth-financial-scandal-being-brushed-under-carpet-malaysia-and-abu-dhabi-strike-deal/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Banyan + +China’s bullying is backfiring in South Korea’s presidential race + + +Their hostility is making the front-runner more hawkish + +Apr 29th 2017 + + + + + +ANY excuse for a party. On April 25th North Korea celebrated the 85th anniversary of the founding of its glorious army. Ten days before its young despot, Kim Jong Un, had marked the 105th birthday of his grandfather, Kim Il Sung, the country’s founder, with a vast military parade. Mr Kim loves fireworks, too. He set off a ballistic missile in honour of his grandpa, though it fizzled on launch. Rumours of a nuclear test still hang in the air. Of North Korea’s five underground blasts to date, the young Mr Kim, in power since 2011, is responsible for three. + +Mr Kim’s growing nuclear ambitions have agitated Donald Trump. This week America’s president called both his Chinese counterpart, Xi Jinping, and Japan’s prime minister, Shinzo Abe, to discuss them. He also summoned the entire Senate to the White House for a briefing on the subject. And an American aircraft-carrier, the USS Carl Vinson, has finally shown up for reassuring annual drills with South Korea, after an embarrassing incident in which American officials claimed it was on its way to the Korean peninsula when in fact it was going in the other direction. + + + +Heaven knows South Korea needs the reassurance. For all the mutual intimidation between North Korea and America, the North is probably still a couple of years away from being able to attack the American mainland; the North’s promise to make a “super-mighty pre-emptive strike” against the Carl Vinson is bluster. South Korea, in contrast, has long faced an existential threat from North Korea’s 20,000 artillery pieces and 1m-strong army. The North’s growing nuclear capability compounds the danger. Just because Seoul in spring, with its bustling craft markets and festive air, is a cheerful place does not mean the threat is imaginary. Seoulites have simply learned to live under it. + +Among South Korean policymakers, the unease is palpable. It hardly helps that the country is in limbo after the impeachment in March of the president, Park Geun-hye. A presidential election will take place on May 9th. Meanwhile, only part of the unease is generated by the North. Mixed signals from America have unsettled as much as they have reassured. + +Yes, the vice-president, Mike Pence, recently glared across the demilitarised zone in solidarity with South Koreans. He also declared that “all options were on the table” in dealing with the North. Yet, in a later interview with the Washington Post, he rejected the idea of direct negotiations of the sort that have brought North Korea to the table in the past. Such negotiations were in keeping with South Korea’s long attempt at engagement with the North, which for the decade after 1998 was known as the “sunshine policy”. + +Mr Pence acknowledged that if America will not talk to North Korea, and if the North will not give up its nukes, then American military action in the form of a pre-emptive strike becomes more likely. For South Korea, that carries horrendous implications of a retaliatory attack. It was no comfort when Senator Lindsey Graham, one of the more thoughtful voices in Washington, said that a war in those circumstances “would be terrible”, but would at least be “over there” rather than “here”. Strategists in Seoul talk of “uncertainty to the East”—meaning America. + +They also refer to “uncertainty to the West”, meaning China. As they see it, America has not helped there either. Mr Pence describes the Trump approach as “not engagement with North Korea, but renewed and more vigorous engagement with North Korea’s principal economic partner”—ie, China. Mr Trump wants Mr Xi to deliver a breakthrough with the North, by applying ever more pressure until it abandons its nukes. + +Yet South Koreans point out two problems. First, the American approach misconstrues China’s aim, which is not to bring Mr Kim’s regime to its knees but just to get America and the North to talk to each other. Second, it fails to acknowledge China’s ugly bullying of South Korea in the wake of the country’s decision last year to approve an American missile-defence system known as THAAD, which is designed to shoot down incoming North Korean missiles. China claims the system threatens its own security—the radar might see into Chinese territory. To South Koreans, this proves how China elevates its solipsistic and woolly concerns over a threat to the South’s very existence. + +Suddenly, it’s become a security election + +In protest at THAAD, the Chinese authorities have also encouraged a boycott of South Korean consumer goods and discouraged Chinese tour groups from visiting the South. Chinese hackers have been assaulting South Korean government websites. + +Such bullying has gone down badly. South Koreans used to admire China. But now, for the first time, opinion polls suggest they hold it in lower esteem than Japan, which colonised Korea and with which Seoul still bickers endlessly about the extent of colonial abuses. + +Meanwhile, North Korean and Chinese bullying are helping shape the presidential race. The longtime front-runner, Moon Jae-in, a dovish progressive, promoted the sunshine policy in a former administration. He used to say he was willing to visit Pyongyang before Washington if elected president. Such talk is heard no more. Mr Moon still favours engagement, including reopening the Kaesong industrial zone, which brings together South Korean capital and North Korean workers. But he has come around to THAAD, to which he sounded hostile at first, and about which many South Koreans still have their doubts. + +Indeed, the whole race is becoming more hawkish. Mr Moon remains the front-runner, but Ahn Cheol-soo, a doctor and former software entrepreneur, has gained rapidly in the polls. He has attacked Mr Moon for being soft on the North, including over Kaesong. Whoever wins, it looks as if Mr Xi’s and Mr Kim’s hostility will earn them the government they deserve in South Korea: one less inclined to humour them. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21721372-their-hostility-making-front-runner-more-hawkish-chinas-bullying-backfiring-south/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +China + + +Stumbling along the last mile: Poverty [Fri, 28 Apr 08:52] + +Fox and hounds: Corruption [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +The last, toughest mile + +China’s new approach to beating poverty + + +After decades of success, things are getting harder + +Apr 29th 2017 | MINNING + + + + + +MOST of Tian Shuang’s relatives are herding goats in the barren hills of Ningxia province, one of the poorest parts of western China. But last year Mr Tian came down to Minning, a small town in the valley, when the local government, as part of an anti-poverty programme, gave him a job growing mushrooms and ornamental plants in a commercial nursery garden. His name, address and income (20,000 yuan a year, or $2,900—six times the minimum wage) are written on a board by its greenhouse door. + +Mr Tian’s name is also pinned up on the walls of the town hall, along with those of 409 other people in the area who, without help, would be living below the local poverty line of 3,200 yuan a year (this is about 40% above the national minimum, but still not enough to buy meat more than once a week, or to spend on new clothes). The town lists the problems and requirements of each of its poor people. Thirty-seven are poor because of health problems; 77—including some of Mr Tian’s relatives—live in isolated, inhospitable areas; 95 are physically handicapped, and so on. Also listed is the help given by the government to each person, such as the provision of work, a solar generator or a cow. + + + +Minning is a model town. Its poverty-alleviation scheme was set up by Xi Jinping, China’s president, between 1999 and 2002 when he was governor of Fujian, a wealthy province in the south. (Fujian is twinned with Ningxia as part of a national attempt to spread expertise and money from rich to poor areas.) The system that Minning pioneered is now spreading throughout China. It focuses on poor individuals, and on drawing up specific plans for each, rather than merely helping poor places to develop in the hope that wealth will trickle down to the poorest. Other countries are trying this, too, but China is one of the few developing nations with a bureaucracy big enough and bossy enough to do it well. + + + +China has been a hero of the world’s poverty-reduction efforts. It has eradicated poverty in cities (by its definition, at least) and reduced the number of rural people below the official poverty line of 2,300 yuan a year at 2010 prices from 775m in 1980 to 43m in 2016 (see chart). Its aim now is to have no one under the line by 2020. + +Two years ago Mr Xi set this as one of the main jobs of his presidency. He calls it “the baseline task for building a moderately prosperous society” (which the Communist Party wants to create by its 100th birthday in 2021). Politically, poverty reduction matters because, as one party member says, unless China solves the problem of income inequality, the party’s legitimacy will be questioned. The party owes its power to a revolt fuelled by the miseries of the countryside. It does not want to be accused of failing to fulfil its mandate to eliminate them. + +But the last stage of poverty reduction will be the most difficult. China’s success so far has been based largely on economic growth, which has generated jobs for the able-bodied. The final stage will be costly and complicated because many of the remaining poor are people who, because of physical or mental disabilities, cannot hold down jobs. A recent government survey found that 46% of China’s poor were poor because of their health. + +Targeting individuals will help. By 2014 the government had compiled a “poverty-household registry” of every person and household below the poverty line. The following year it said a personalised poverty-alleviation plan must be drawn up for everyone included. The Philippines and Mexico also have such registries—they can help with monitoring the status of the poor, identifying their needs and (in theory) preventing waste and corruption. + +There are signs that China’s is indeed improving its main form of poor relief, which is called “subsistence guarantee”, or dibao. The dibao programme has been notoriously inefficient. Many households that qualify for payments do not receive them because of corruption and bureaucratic failings. A survey by the World Bank found that between 2007 and 2009 just 10% of those that did get the dibao had household incomes below the poverty line (ie, 90% did not qualify for the handouts they were getting). The system is also corrupt. In 2015 an official in Henan province was found to have 267 bank deposit books in the names of extremely poor people, from which he had misappropriated 500,000 yuan of welfare payments. + +But this may be changing. Poor people are getting more job training, as in Minning. There has been a crackdown on corruption. Ben Westmore of the OECD, a club mostly of rich countries, recently trawled through household data from five provinces collected by researchers at Peking University. He found that in 2014 about a third of rural households receiving dibao paymentswere below the poverty line—not good, but better than 10%. In Guangdong province in the south, an early starter in its focus on individual needs, more than half of recipients were below the line. + +Still, there is a long way to go: most poor households still do not get dibao money. In the sample studied by Mr Westmore, three-quarters of them did not. It hardly helps that the poverty registry and dibao data are kept by different government departments; the two are not linked. + +The dibao programme, though financed largely by the national government, is administered locally. This means local areas may set their own poverty lines and benefits. Some thresholds are far below the national minimum, and payments are barely enough to live on. Total dibao spending peaked in 2013 and has been falling since then—partly because governments are getting stingier. China spends a mere 0.2% of GDP on the dibao system, far below comparable programmes elsewhere. Indonesia’s poverty relief costs 0.5% of GDP. + +Worse, some poor people are not even included in the registry. In a village of 100 poor households in Shanxi province, only ten families are in it—friends of the party boss. If the registry is flawed, poverty relief is all the more likely to be flawed too. + +All these efforts are aimed only at extreme poverty in the countryside. The government claims the urban kind does not exist, ie, that no one in cities has less than 2,300 yuan a year. But that minimum is too low for cities, where living costs are higher. Using more realistic thresholds, Mr Westmore found that urban poverty was actually higher than rural poverty in four of the five provinces covered by the data he used. + +At current rates of reduction (more than 10m fewer people annually in extreme poverty), Mr Xi should be able meet his target by 2020. It will be hailed as a great achievement. But huge government effort will still be needed to help the worse-off. It will not be the end of poverty in China. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21721393-after-decades-success-things-are-getting-harder-chinas-new-approach-beating-poverty/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Fox and hounds + +A Chinese tycoon’s allegations are stinging the Communist Party + + +The party is fighting back + +Apr 27th 2017 | BEIJING + + + + + +IN CHINA, tycoons are often privy to murky secrets. Their dealings inevitably bring them into close contact with officialdom—they know whose palms can be greased, and who the real power-brokers are in the shadowy world of Communist Party politics. They are careful, however, not to speak out: an angry politician can easily destroy a business and have a person jailed. No wonder, then, that many Chinese have been transfixed by the claims made by a self-exiled property magnate, Guo Wengui, in a recent series of tell-all interviews and tweets—and that the party is trying hard to discredit him. + +The unproven allegations by Mr Guo, who is also known as Miles Kwok, reach to the pinnacle of the party. He has accused security officials of corruption and claimed that the son of a former leader is hiding his shareholding in a large brokerage firm. Most shockingly, Mr Guo says a relative of a current leader has been “trotting the globe on a plane worth billions of yuan and playing around with women”—in spite of the party’s long-running campaign to curb profligacy among the elite, and to rein in corruption. + + + +Chinese leaders are clearly rattled. The Foreign Ministry said last week that Interpol, an international body for police co-operation, had issued a “red notice” to members that Mr Guo is a wanted man. He has reportedly been accused by China of bribing a spy chief, Ma Jian (who has been dismissed and is now in custody). A video, purporting to show Mr Ma admitting to wrongdoing and denouncing Mr Guo, has circulated on the internet in recent days, apparently with official blessing. Mr Guo has denied bribing Mr Ma. He says eight members of his own family have been detained and that 120bn yuan ($17bn) of his assets have been frozen. Several executives from his property company have been detained by police. + +Mr Guo’s outburst comes at a sensitive time for the president, Xi Jinping, who is preparing for a party congress late this year—a hugely important opportunity for him to install his allies into the most important jobs. He does not want his efforts to be impeded by anything that could undermine his authority. This is evident from China’s stepped-up efforts to gag critics and “enemies of the state”. It seems prepared to use any means: in February Xiao Jianhua, a Chinese tycoon who made his fortune through ties to party leaders, was kidnapped in Hong Kong and taken to the mainland, where he is being held by police. Between 2014 and 2016, in an operation called “Fox Hunt”, China secured the repatriation of more than 2,500 “fugitives”. Many were from countries with which it has no formal extradition treaty. + +Mr Guo professes to be unfazed by Interpol’s notice (he appears to spend much of his time in America, and likes to tweet pictures of himself looking fit—see picture). Many people in China are certainly undeterred by the government’s efforts to block news about him—Mr Guo’s allegations are widely known. Freeweibo.com, a website that automatically monitors censorship of Weibo, a Twitter-like service, shows that Mr Guo’s name is the most searched-for term on the social-media platform. If he keeps on talking, it will be hard for Mr Xi to knock it down the rankings. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21721385-party-fighting-back-chinese-tycoons-allegations-are-stinging-communist-party/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Middle East and Africa + + +The smell of burnt rubber: Saudi Arabia [Fri, 28 Apr 08:52] + +Atomised: Yemen [Fri, 28 Apr 08:52] + +Condoms v conservatives: Birth control in Nigeria [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +The smell of burnt rubber + +Saudi Arabia’s young prince U-turns on reform + + +Cuts to pay and perks for government workers are abruptly reversed + +Apr 27th 2017 + + + + + +EVEN at the height of the Arab spring the Saudi regime had few domestic opponents. At their best they mustered a few hundred protesters to gather for a “day of rage” in March 2011 outside the interior ministry demanding a freely elected parliament and a constitutional monarchy. Many of its organisers were later jailed; but fear is only part of the reason for absence of protest. In a kingdom which acts like a (heavily armed) charity doling out cradle-to-coffin welfare, few see a reason to upset the felafel stand. Two-thirds of Saudi Arabia’s 21m citizens are employed by the government and expect annual pay rises whether working or not. + +Confronted with vast deficits after the oil price collapsed in 2014, the king’s favoured son, Muhammad bin Salman (pictured centre), set out to change all that. The 31-year-old, who serves as deputy crown prince, defence minister and head of the committee that runs the economy, is widely considered to be Saudi Arabia’s de facto ruler, given the great age (81) of his father. His ministers called civil servants lazy and not only unveiled a transformation plan with austerity measures, but actually began implementing them. The slashing of housing, vacation and sickness allowances last September reduced some salaries by a third. Utility bills rose as subsidies fell. + + + +This was not popular. If they had to tighten their belts, many muttered, why shouldn’t the prince himself, who reportedly paid half a billion dollars for a yacht in 2015? Activists on social media compared him to Gamal Mubarak, the ravenous son of the deposed Egyptian president. The prince’s primacy, already dented by the bloody mess that his intervention in next-door Yemen’s war has become, seemed in danger of being weakened. + +On April 22nd the government performed a screeching U-turn, restoring most of the perks and bonuses enjoyed by all those government employees. By reducing the grumbling, Prince Muhammad may hope to regain the middle-class support he needs to bolster his position against opposition from senior princes who would rather that the king’s nephew and crown prince, Muhammad bin Nayaf, succeeds Salman when the time comes. + + + +A wave of royal appointments, decreed the same day as the restoration of perks, further shifts the balance in the young prince’s favour. His younger full brother, Prince Khalid, becomes ambassador to America, the kingdom’s most important diplomatic post, helping cement Muhammad bin Salman’s ties to the Trump administration. Muhammad bin Nayef enjoys the confidence of America’s spooks, but under Mr Trump they have been losing influence to the Pentagon. Critics might bemoan Prince Khalid’s youth (28) and inexperience; but at least he is a fighter pilot. + +Formally, the crown prince retains control of internal security, but by creating a new National Security Centre that answers directly to him, King Salman appears to be reducing his powers. So too does the promotion of Major-General Ahmed Asiri, the defence ministry spokesman, who becomes deputy head of intelligence. Some Saudi watchers speculate that King Salman might soon formally proclaim Muhammad bin Salman crown prince, and pension off Muhammad bin Nayef. + +Might anyone stop him? In 1964 the Al Sauds deposed King Saud because of personal excesses and poor management. But the family took almost seven years to agree to do it, and is far larger and less wieldy now. Backbiting could grow, not least over the young prince’s readiness to cash in the family silver. Claims by analysts that he personally overvalued the Saudi oil company, Aramco, a fraction of which he intends to float next year, by at least $500bn, may be aimed at undermining confidence in his economic competence. But ultimately the family remains loth to do anything that might compromise the absolute monarchy, on which all their perks depend. + +More concerning is the possibility that necessary reforms are being sacrificed for the prince’s personal ambition. A host of financiers, led by the IMF, had cheered his Vision 2030, announced last year and aimed at cutting the public sector and preparing the kingdom for an age after oil. “The Gulf can’t do austerity measures,” fumed a veteran investment banker, after the kingdom announced the reversal. Despite a rise in the oil price to above $50, the budget remains deeply in deficit. Restoring the allowances will add a further $13bn to a shortfall already projected at $86bn, 12% of GDP. The government insists its finances are improving, but bankers say that capital is leaving the kingdom. The search for second passports by those who are fed up and want to leave is increasing. Growth is less than 1%, the lowest for almost four years. Admirers who once praised the prince now wonder whether his vision is to change the kingdom, or just his title. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21721405-cuts-pay-and-perks-government-workers-are-abruptly-reversed-saudi-arabias/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +A report from Aden + +In its third year of war, Yemen risks fragmentation + + +The president has no country to rule + +Apr 27th 2017 | ADEN AND MUKALLA + + + + + +FROM the balcony of his hilltop palace, the governor, Major-General Ahmad bin Bourek, surveys Mukalla, the port and capital of Yemen’s largest province, Hadramawt. It is not yet his kingdom. But to mark the first anniversary of the expulsion of al-Qaeda, the jihadist group that seized the city in 2015, he declared a public holiday and hosted thousands of grandees at a conference at which he pushed his demand for autonomy. Flunkeys distribute badges with his portrait, hang banners proclaiming him leader along the city’s highways and organise military parades. Backed by the United Arab Emirates (UAE), which last April wrested back control of the port in an assault by land and sea, he sees a new political map of Yemen emerging from two years of war. “We can’t wait for them to liberate the rest of the country,” he says. “If the conflict lasts much longer, Yemen will split into duwailat (principalities).” + +If so, it would be reverting to type. For 139 years, the British avoided the north and nannied 14 bickering sheikhdoms across southern Yemen. When the British Empire withdrew, socialists in the south formed their own republic, and proceeded to make it a crime even to communicate with northerners. South Yemen united with the more populous, tribal and rugged North Yemen only when the Soviet Union collapsed, leaving the south bereft of an external backer. After 27 years of forced but tempestuous marriage, its politicians have now latched onto the UAE, looking for separation again. + + + +Taking on responsibility for the south as part of the Saudi-led coalition to take Yemen from northern Houthi rebel forces, the UAE has established at least six operating bases across southern Yemen. While the Saudis bombed from the air, the Emiratis put thousands of troops on the ground, trained perhaps 30,000 Yemeni fighters in and out of the country to fight the Houthis and al-Qaeda and pumped $2bn into projects designed to revive a battered and neglected land. “Southerners will never again be governed by Sana’a [Yemen’s capital in the north],” says Reyad Yassin, a former foreign minister and Yemen’s ambassador to Paris, on a visit to the UAE. Even the bottled water is called “South”. + +United in resentment of the north, southerners agree on little else. Formally, President Abd Rabbo Mansour Hadi, a general from the southern province of Abyan, rules over all the territories the coalition has recovered. Yet signs of his power are almost as hard to find in the south as in the rebel-held north. The odd poster bearing his image is strung from lampposts too high to tear down. Checkpoints fly the former South Yemen flag, not that of a united Yemen Mr Hadi professes to govern. + +Mr Hadi still controls the country’s central bank, and hoards some 400bn Yemeni riyals (about $1.6bn) he recently had printed in Russia. But local governors find ways to diversify. Frustrated at Mr Hadi’s reluctance to hand over Hadramawt’s share of Yemen’s oil revenues, its governor—like his al-Qaeda predecessors—levies duties at Mukalla port. Surcharges on fuel imports for distribution countrywide, including to Sana’a where the rebels hold sway, he says, raise $16m a month. He threatens to declare independence if Mr Hadi refuses to grant him devolved powers by September. + +Welcome to Aden + + + +For Mr Hadi, Aden, 550km (350 miles) west, is an even more urgent challenge. In the early summer of 2015, the Emirati presidential guard and their Yemeni protégés drove out northern rebels who had taken most of the city four months earlier. But the turf wars unleashed by liberation have dampened the celebrations. Mr Hadi’s son now inhabits the presidential palace in Aden (Mr Hadi himself spends most of his time in Saudi Arabia), but in the rest of the city the governor, Aidarus al-Zoubaidi, has asserted control. Much of the police force he has raised comes from his home province of Dali, north of Aden, whose tribesmen massacred Mr Hadi’s Abayan tribe in 1986. “I override the president for the benefit of the city,” Mr Zoubaidi explains. + +Back to the bad days + +Amid the ruins, old vendettas have resurfaced. Over 3,700 people have been killed in the battles for Aden since 2015, say local doctors. In contrast to Mukalla’s well-swept streets and whitewashed walls, rubbish and graffiti abound. Marginalised under northern rule since 1990, Aden had long found solace in nostalgia. It recalled colonial times when it was the Arab world’s premier port, with its first refinery; or the Soviet era when it had beach parties, and northern practices like qat-chewing, the veil and polygamy were banned. + +The Emiratis have attempted to give the city a facelift, but while schoolgirls welcome their new computers and freshly painted classrooms, they worry about getting to school safely: kidnappings, night-time gunfire and explosions cause their trepidation. The presidential palace should be Aden’s safest place, not its most frightening, says Kholoud Mousa, a 19-year-old whose school lies below. + +Southern secessionists maintain what order there is. Young men bristling with guns careen in pickups along pavements. Some officials now feel confident enough to move around Aden without bodyguards. But although the South Yemen flag is more common, al-Qaeda’s ensign also appears on alley walls. Soon after the Emiratis restored Aden’s national library, extremists blew it up. The previous governor was assassinated. The current one has survived multiple attempts. + +Yemen’s riyal has slumped against the dollar. Prices continue to rise. Mothers from poorer suburbs nurse shrivelled bundles in hospitals. Malnourishment was a fact of life before the war, but eight children have starved to death in Aden’s hospitals so far this year, against 11 all of last. Despite over $100m worth of Emirati investment in generators, blackouts have increased. Power cuts last most of the day because Mr Hadi refuses to pay for the fuel. + +“He wants to stymie my efforts to deliver,” says the governor, who accuses the president of recruiting al-Qaeda fighters lest their cold war heat up. At the airport, the governor’s and the president’s men have already come to blows. + +The Emiratis are beginning to tire of their bickering wards. Officials who hoped that Aden would be a model for the rest of Yemen now fear that leaving the south on autopilot might only condemn the country to instability. And that might engulf the whole Arabian peninsula. Thousands of fighters they have trained have gone AWOL (after collecting their pay). Motivating recruits to push north is an uphill task even with the payment of bonuses. Those who were happy to fight for their own homes seem unenthused about fighting for somebody else’s. + +“Why should we stand up another failed South Sudan?” asks an Emirati analyst. “If you want to stabilise an area, the first thing you put right is the governance,” says a former British diplomat in Yemen. That, clearly, has yet to happen. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21721401-president-has-no-country-rule-its-third-year-war-yemen-risks/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Condoms v conservatives + +The problems of family planning in Nigeria + + +Faith and tradition favour high fertility. Education pulls the other way + +Apr 29th 2017 | KADUNA + + + + + +NOT everyone thinks birth control is a blessing. Boko Haram, a jihadist group that terrorises north-eastern Nigeria, deems artificial contraception to be a product of infidel learning, and therefore forbidden. Its ideologues also believe that females should avoid school, marry early (sometimes while still children) and have lots of babies. In the dwindling areas the jihadists control, women have no choice. + +Even outside those areas, contraception is controversial. Boko Haram’s ideology didn’t spring from nowhere. Many Nigerian Muslims believe that pills and condoms are part of a Western plot to stop Muslims from multiplying. And in poor, rural areas centuries of experience have taught people that having lots of children makes economic sense. They can be put to work in the fields, they will provide for their parents in old age and, given high rates of infant mortality, if you don’t have several you may end up with none. + + + +So the government in Kaduna, a majority-Muslim state north of the capital, Abuja, does not encourage people to have fewer children. That would be politically toxic. But it does offer free contraception, and suggest that women might wish to pause between pregnancies. It also promotes girls’ education—something that has caused fertility rates to fall more or less everywhere it has been tried. As recently as 2008, women in Kaduna expected to have 6.3 babies each over a lifetime. By 2013 this had fallen to 4.1, well below the national average of 5.7 that year. + +When Alheri Yusuf first heard about family planning from a relative, she hesitated. “I thought she didn’t want me to give my husband more children,” says the 33-year-old mother of four, as she waits for a contraceptive hormonal injection at a hospital in Kaduna. Then she realised that spacing her children would give her time to recover from childbirth. + +No one knows how many Nigerians there are. The World Bank says there were 182m in 2015, but this estimate is based on the 2006 census, which was probably inflated (politicians typically exaggerate the count to grab more parliamentary seats and government money for their regions). Most observers agree, though, that Nigeria’s population is growing at a cracking 3% a year. Many Nigerians see this as a source of national pride and strength. But the economy ought to grow faster than the population, and last year it actually shrank, thanks to cheap oil. + +To be prosperous as well as populous, Nigeria needs to educate its people better. This would also curb population growth, since well-schooled women tend to have fewer babies. In a sparse classroom in the city of Zaria, 15 adolescent girls swathed in white hijabs learn about reproduction, financial literacy and how to say no. The course is run by a local NGO and paid for by the UN Population Fund. The girls say they want fewer children than when they started the sessions in September, so that they can educate them well. + +Most girls in the programme will finish secondary school and delay childbirth (previous cohorts wed an average of 2.5 years later than peers). In places where female literacy has improved, child marriage and maternal mortality have duly fallen. + +Within Nigerian Islam, a debate rages between modernisers and obscurantists. The former may be winning. Lamido Sanusi, the Emir of Kano and a senior Muslim leader, has spoken out against child marriage, and proposes a legal minimum age (there is currently none) of 18. Yusuf Ali, a cleric who joined a debate convened by the emir, married his first wife when she was 14 and he was 26. But Mr Ali, who has four wives and 38 children, now thinks girls should marry “above the age of 15”. He also favours family planning, so long as couples use withdrawal rather than modern contraception. He even agrees that girls should go to school. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21721325-faith-and-tradition-favour-high-fertility-education-pulls-other-way/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Europe + + +The happy gambler: France’s presidential election [Fri, 28 Apr 08:52] + +How she could have Trumped: If France were America [Fri, 28 Apr 08:52] + +Badgering the Witnesses: Religious repression in Russia [Fri, 28 Apr 08:52] + +The natural front: Millennial viniculture [Fri, 28 Apr 08:52] + +Mutinies within mutinies: Which Alternative for Germany? [Fri, 28 Apr 08:52] + +Illiberalism lives: Charlemagne [Fri, 28 Apr 08:52] + +react-text: 540 • /react-text react-text: 541 Award: Tom Nuttall /react-text [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +The happy gambler + +Win or lose, Emmanuel Macron has altered French politics + + +His race against Marine Le Pen for the presidency has marginalised the traditional parties + +Apr 29th 2017 | PARIS + + + + + +THREE years ago, he was largely unknown to the public. Today he is a step away from becoming France’s president. Emmanuel Macron’s remarkable rise from obscurity to favourite for the presidential election on May 7th carries symbolic value well beyond his homeland. If he defeats Marine Le Pen of the National Front (FN), as polls suggest he will, the country will have shown the rest of the world not only that it can favour youth over seniority, and optimism over fear, but that pro-European liberalism can still triumph over populism and nationalism. + +A former Socialist economy minister and one-time investment banker, the 39-year-old Mr Macron topped first-round voting on April 23rd with 24%. Ms Le Pen came a close second, with 21%. The pair, neither of whom comes from an established mainstream party, knocked out candidates from both of the two political groupings that have held the French presidency for the past 60 years. François Fillon, a former prime minister who ran for the Gaullist Republican party, came third on 20%. Benoît Hamon, the Socialists’ candidate and a former backbench rebel, sank to a dismal fifth place, on 6%. Despite a late surge, the Communist-backed Jean-Luc Mélenchon was narrowly held to fourth place, on 19.6%. + + + +Mr Macron’s achievement defied all the rules. His tone on results night looked prematurely victorious. But those who joined him when he set up his political movement, En Marche!, a year ago appeared almost stunned this week. For months, his campaign has been low-cost, and sometimes chaotic. His headquarters, filled with young people in sweatshirts and take-away food boxes, has felt more like a startup than a slick political machine. Nevertheless, in the end he secured nearly as many votes as the Socialists and Republicans put together. + + + +Yet Mr Macron’s score was also the lowest for a leading first-round candidate since 2002. The results revealed a deeply fractured country. Mr Macron won over voters in thriving big cities, where warehouses have been converted into tech hubs and cars are viewed as a menace. He came top in Paris (with 35%, against 5% for Ms Le Pen), Rennes (32% to 7%), Bordeaux (31% to 7%) and Lyon (30% to 9%). His support was evenly spread across all age groups. It correlated with greater income, optimism and education (see chart). This is the France that feels at ease with Mr Macron, a zealous pro-European who wants to reinforce ties with Germany, keep France part of the global trading system, support the transatlantic alliance and build cross-party support between left and right to “unblock” the economy. + +By contrast, nearly half of all voters backed one of the anti-system candidates: Ms Le Pen, Mr Mélenchon or one of several mostly far-left contenders. Ms Le Pen topped voting in both the FN’s southern strongholds and a broad swathe of the French rust belt, in the north and east, as well as in rural and semi-rural areas that have lost jobs, shops and services. Her support encircles big cities, often in villages and suburbs as yet untouched by immigration. Ms Le Pen lost her hold on the under-25-year-olds, who preferred Mr Mélenchon, but remains the favourite candidate for working-class voters, capturing 37% of their support, next to 16% for Mr Macron. + +This is the France des oubliés (“of the forgotten”), as Ms Le Pen puts it. Campaigning under the slogan “In the name of the people”, she vows to hold a referendum on taking France out of the European Union, and thus the euro. She wants to introduce protectionist trade barriers, tax firms that hire foreigners, strengthen ties with Vladimir Putin’s Russia, close the borders to immigration and strip jihadist suspects with dual citizenship of their French nationality. In many ways, Mr Macron is her ideal opponent. She calls him a “globalist”, a rootless citizen, the candidate of banks and finance and “the system”, supported by the beau monde of Paris. + +Early polling suggests that Mr Macron will beat Ms Le Pen by about 60% to 40%, as voters come together to keep the FN out. Mr Fillon and Mr Hamon both said that they will vote for Mr Macron to defeat Ms Le Pen. So did Nicolas Sarkozy, a Republican ex-president; Alain Juppé, a Republican ex-prime minister; and François Hollande, the Socialist president—though Mr Mélenchon left his intentions ambiguous. Yet the polling gap is likely to narrow. This week, Ms Le Pen stepped aside temporarily as head of the FN to try to reach out beyond her party base. Nearly a third of Mr Fillon’s voters and 9% of Mr Mélenchon’s say they will back her. On the far left, Mr Macron is considered toxic. The choice, claim some, is between a banker and a fascist. An anti-Macron campaign, in favour of abstention, was circulating this week on social media, under the hashtag #SansMoiLe7Mai (“without me on May 7th”). + + + +To bridge such divides, Mr Macron needs to find a way of speaking to those who do not share his optimism about the benign nature of globalisation. His manifesto contains strong ideas on reforming lifelong learning and retraining, for example, and on shrinking class sizes in weak schools. But such promises will not bring back jobs and factories in the short run. Mr Macron also argues that technological innovation—including “gig economy” firms such as Uber—can reduce ethnic discrimination in the banlieues. The most common business registered in 2015-16 in such areas north of Paris was taxi-driving. But many voters fear robots will put them out of a job. At a campaign stop this week in his home town of Amiens, in northern France, Mr Macron was greeted with jeering and whistling by factory workers angry at its threatened closure. “Macron is just the continuation of Hollande,” said one, who said he would vote for Ms Le Pen. + +The election could presage a break-up of the old party system. “You reap what you sow,” said Manuel Valls, a Socialist former prime minister, who rejected his own party’s candidate as too left-wing. One estimate suggests that the Socialists could lose 75% of their seats at legislative elections in June. He and fellow Socialist moderates have to decide whether to try to claim back the party’s leadership, or to campaign for En Marche!. Mr Macron, who thinks he can get a majority, promises to put up candidates in each of France’s 577 constituencies, half of them political novices. But this involves complex calculations. Will Mr Valls, for instance, really stand as an En Marche! candidate? If not, will En Marche! really field a candidate against him? + +On the centre-right, there is consternation, too. After five years of Socialist government, many conservatives thought this election theirs by right. En Marche! claims some are ready to defect to Mr Macron. But many still hope that they can score well at the parliamentary vote before negotiating with him. Bruno Le Maire, a Republican former Europe minister, said he would be prepared to work in a Macron government if no party secured a majority. Others are hostile. Laurent Wauquiez, a regional Republican president, ruled out backing Mr Macron, arguing that he did not “want the FN to be the only opposition in France”. + +As the two candidates enter the final lap, each can reasonably claim a part in changing the face of French politics. Ms Le Pen secured 7.7m votes, 1.3m more than at the first round in 2012, and a big jump from the 4.8m her father got in 2002. When he made it into the run-off, he scored only 18%. That she might well more than double that on May 7th is a reflection of her success in turning the FN into a fixed feature of the French party system. Even if she loses, Ms Le Pen has had an outsized influence over this campaign. + +As for Mr Macron, he has already pulled off a historic feat. Last summer, he was a rank outsider, whose hopes of running defied all French rules about the way presidential candidacies are slow-cooked over the years. Now, the man with a dream, a gamble and a heavy dose of luck appears well placed to become the youngest-ever president of France’s Fifth Republic. After that, the hard part begins. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21721398-his-race-against-marine-le-pen-presidency-has-marginalised-traditional-parties-win-or/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +How Marine could have Trumped + +If France used America’s system, Marine Le Pen might have won + + +A French electoral college would favour sparsely populated, nationalist-voting areas + +Apr 29th 2017 + + + + + +MARINE LE PEN’S second-place finish behind Emmanuel Macron has been hailed as a sign that the global wave of populist nationalism which Donald Trump rode to victory is receding. But if France used America’s system for electing presidents, Ms Le Pen might have won. In America’s electoral college, every state gets one vote for each of its senators and members of the House of Representatives. Imagine that France’s 18 regions were treated as states. Each would have two senators, and they would divide 157 House members according to population (with each region guaranteed at least one). Like Hillary Clinton, the cosmopolitan Mr Macron won the most-populous urban regions, such as the one around Paris. But like Mr Trump, Ms Le Pen won more of the rural regions, which an electoral college would favour. Mr Macron and Ms Le Pen would have ended up with 90 electoral votes each. Under the American system, if no candidate gets a majority, the House of Representatives picks the president, with each state getting one vote. Ms Le Pen won eight regions to Mr Macron’s six, and came higher in three of the other four, so she could well have triumphed. The difference between a populist tide and a centrist resurgence may come down to the electoral system. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21721399-french-electoral-college-would-favour-sparsely-populated-nationalist-voting-areas-if-france/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Badgering the Witnesses + +Russia bans the Jehovah’s Witnesses, just as the Soviet Union did + + +The Russian Orthodox church does not like competition + +Apr 27th 2017 | MOSCOW + + + + + +WHEN the KGB men came to his family flat, they split up Yaroslav Sivulsky and his parents into separate rooms. Mr Sivulsky, then a young boy in the Soviet Union, watched as agents searched their belongings for “banned literature”. His grandparents had been exiled to Siberia for belonging to the Jehovah’s Witnesses, a Christian denomination founded in America in the 19th century; his parents had kept the faith alive in their home. + +Now Mr Sivulsky and the 175,000 other Jehovah’s Witnesses in Russia face the prospect of returning to an underground existence. On April 20th, the Russian Supreme Court outlawed the group’s activities, declaring it an “extremist” organisation. “It’s all happening again,” says Mr Sivulsky. “Back then they came after us for ideological reasons, and now because our faith is not of the ‘right kind’.” + + + +The ruling puts the group, whose members preach non-violence and refuse to serve in the military, on the same legal footing as several neo-Nazi groups. Lawyers from the Russian Ministry of Justice argued that they pose a threat to “public order and public security”. The group’s property and assets are set to be seized. Any organised religious activity will be considered illegal, with violators facing steep fines and even potential prison sentences. If implemented, the decision would be “by far the most severe blow to religious freedom in Russia since the end of the Soviet Union”, argues Geraldine Fagan, author of “Believing in Russia: Religious Policy after Communism”. + +The ruling is a testament to the growing influence of the Russian Orthodox church, especially of a radical wing who see the Jehovah’s Witnesses as a dangerous sect that deviates from the official version of Christianity. The court’s decision marks the culmination of a long and concerted campaign. Experts trace the latest wave of troubles back to 2009, when Orthodox activists and local authorities began aggressively pursuing members and congregations. Regional courts steadily added Jehovah’s Witnesses literature to lists of banned extremist works, often on absurd premises. (One pamphlet was flagged for a line criticising the Russian Orthodox church. It was a citation from Tolstoy, whose works are not exactly banned in Russia.) The group’s refusal to participate in militaristic state rituals further fuelled suspicion. “The campaign dovetails with the drive for greater security, unity and patriotism,” says Ms Fagan. “Otherness and dissent are seen as threats.” + +The Orthodox church’s complaints found support among Russia’s security services, which see the Brooklyn-headquartered Jehovah’s Witnesses as a nest of pernicious foreign influence. Valery Malevany, the vice president of a security service veterans’ group, suggested that Jehovah’s Witnesses and other Christian groups were “financed by Western special services” in order to carry out “sabotage” and “intelligence work”. Vitaly Milonov, an ultra-conservative MP, said Western governments were using the group to further their goal of “destroying our country through spiritual and moray decay”. Roman Lunkin of the Centre for the Study of Religion and Society at the Russian Academy of Sciences sees the crusade as part of “a wave of suspicion and fear regarding the West”. In recent years, Russia’s courts have declared more than 140 non-governmental organisations “foreign agents” for receiving money from abroad. “Now it has come to religion,” says Mr Lunkin. + +It is not clear whether the decision portends a wider crackdown or will remain an isolated incident. The Jehovah’s Witnesses came under attack in part because they presented an easy target, argues Mr Lunkin. Members do not vote, are staunchly pacifist, and enjoy little support among a population that bristles at their door-to-door proselytising and unfamiliar theology. But the ruling is unlikely to cause believers to lose faith. “Who are we supposed to listen to now?” Mr Sivulsky muses. “The unjust decision of the court, or God?” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21721395-russian-orthodox-church-does-not-competition-russia-bans-jehovahs-witnesses-just/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Hipster plonk + +What’s behind the fad for “natural” wine? + + +Overtones of youthful rebellion and a hint of pseudoscience + +Apr 27th 2017 + + + + + +AT “Rawduck”, a restaurant in London’s trendy Hackney neighbourhood, clients crowd around communal tables under dim lights, inspecting a menu of delights such as charred purple sprouting broccoli, shaved yellow courgette and goat’s curd. Along with food, the venue offers classes in pickling vegetables and making kombucha (a Japanese fermented tea). The greatest emphasis is on the wine list, all of it billed as “natural” or organic. But on this front, though the venue strives for eccentricity, it is part of a much larger trend. + +The craze for “natural” wine started in France in the 1990s, recalls Bertrand Celce, a wine blogger. A small group of bacchanalians started opening offbeat organic wine bars across Paris. Now the city boasts hundreds, with many others elsewhere in France. Since the mid-2000s they have spread across Europe and to parts of America. “Raw”, a London-based wine fair which started in 2012, has now opened in Berlin, Vienna and New York; this November, it will have its first show in Los Angeles. Well-heeled restaurants such as Claridge’s in London have also started to stock the stuff, which is made not just in France but also in Italy, Austria, Slovakia and elsewhere. + + + +Wines labelled “organic” must abide by European Union standards to be certified. “Natural” wines are even fussier: they are grown and harvested organically, but have no additives at all. (“Organic” wine can have up to 50, such as dry yeast or tannins, sniff natural oenophiles.) The “natural” designation, however, is completely unregulated. Some natural winemakers claim that herbal tea protects their vines against diseases. Most crush their grapes with their bare feet, because that is how it was done in the good old days; others keep wine in amphorae. A few are influenced by the “biodynamic” teachings of Rudolf Steiner, an Austrian who thought that astrological forces influence crops. Others simply like the taste, which ranges from cider-like juice to something resembling conventional wine, but with a trendier label and a bigger price tag. + +Some of this mirrors the fads for craft beer and new kinds of gin, says Jancis Robinson, a wine writer. Young people, especially hip urban types who tend to prefer gluten-free and organic food, are particularly keen. According to a survey in 2015 from Nielsen, a research firm, nearly two-thirds of those aged between 21 and 34 who drink wine several times a year said they were interested in natural wine, compared with only a minority of those over 44. “The young French want to be surprised,” says Sylvie Augereau, a writer and winemaker in the Loire Valley. “Old people want to have the same taste every year,” she sighs. + +An anti-establishment mood has taken root in Europe’s vineyards. The rebels may be a small minority, but they are affecting the rest of the industry: older winemakers are playing around with the “natural” techniques, says Ms Robinson, blurring the boundary between establishment and upstart. As with insurgent politics, so too with plonk. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21721383-overtones-youthful-rebellion-and-hint-pseudoscience-whats-behind-fad-natural-wine/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Mutinies within mutinies + +The Alternative for Germany decides to remain a protest party + + +Right-wing rivals topple party leader Frauke Petry + +Apr 27th 2017 | COLOGNE + + + + + +HISTORY has a way of repeating itself. In 2013 a group of anti-euro intellectuals led by Bernd Lucke, an economist, formed the right-wing Alternative for Germany (AfD) party. Two years later he was ousted by Frauke Petry, an erstwhile ally, who led the party to a series of sensational results in state elections by angrily opposing Angela Merkel’s refugee policies. But in recent months, as the refugee crisis has moved off the headlines, the AfD’s poll numbers have slumped into single digits. On April 22nd it was Ms Petry’s turn to be shunted aside, at the party’s conference in Cologne. Her nemesis: Alexander Gauland, a traditionalist with the grand air of a British aristocrat, who had helped her defenestrate the moderate Mr Lucke. + +This was more complicated than a rightward lurch. Three groups have dominated the AfD since Mr Lucke’s fall, each led by two main figures. The events of Cologne saw control of the party shift decisively within this sextet. + + + +One could call the first group the Power-Seekers: Ms Petry and Marcus Pretzell, her husband and one of the AfD’s members of the European Parliament. Impressed by Marine Le Pen, France’s nationalist presidential candidate, they want to combine shrill politics (Ms Petry has said border guards should use arms against illegal immigrants) with a sharper, more disciplined image, a rejection of overt racism and eventual participation in government coalitions in Germany’s states. + + + +Second are the Populists: Mr Gauland, for decades a doyen of the centre-right CDU, and Jörg Meuthen, a Thatcherite economist who has shared the chairmanship of the party with Ms Petry since her coup in 2015. They have been joined by Alice Weidel, a former Goldman Sachs banker selected alongside Mr Gauland to lead the AfD’s campaign for the general election in September. Few in this group really rate Ms Le Pen; Mr Meuthen told this newspaper he might even prefer Emmanuel Macron, her liberal rival. Yet in order to whip up the cheers of the AfD’s grassroots, they merrily bluster about Muslims (the party’s electoral programme declares Islam un-German) and evil elites. “You have to move people,” explained Mr Meuthen half-apologetically after his own tub-thumbing speech in Cologne. + +Third are the True Believers: André Poggenburg and Björn Höcke, the AfD’s ultra-nationalist leaders in the states of Saxony-Anhalt and Thuringia. They are backed by the party’s large hardline base in the poorer, formerly communist east of Germany, and hence by the vast majority of its elected representatives. Both the Power-Seekers and the Populists find the True Believers’ views ugly or even racist; but they are politically indispensable. + +In 2015 the three gangs collaborated to defeat Mr Lucke. But they fractured in Cologne, after months of infighting over Ms Petry’s attempted expulsion of Mr Höcke. (He had criticised Germany’s culture of Holocaust remembrance.) The Populists co-opted the True Believers to oust the Power-Seekers, whose plan to detoxify the party they see as centralist and heavy-handed. Delegates threw out Ms Petry’s strategy and her bid to write anti-racism into the party’s charter. They cheered the Populists’ old tunes about feckless foreigners to the rafters. It would be easy to see this as the beginning of the end for the party, a suicidal rejection of respectability in favour of fringe zealotry. + +But that diagnosis may be premature. “The party’s poll performance is not closely linked with its actual behaviour,” observes Timo Lochocki, an expert on the AfD at the German Marshall Fund of the United States. He argues that voters have priced in its excesses and dodgy characters, and that it will very probably clear the 5% hurdle needed to enter the Bundestag, Germany’s lower house. Its MPs there may be inexperienced and unruly, he adds; but if Germany’s centre-right and centre-left parties form another Grand Coalition government like the current one, yet more right-wing voters fed up with Mrs Merkel may move towards the AfD. Chaotic, divided and beyond the pale to most voters, the party may yet find a permanent, if peripheral, place in German politics. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21721388-right-wing-rivals-topple-party-leader-frauke-petry-alternative-germany-decides-remain/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Charlemagne + +Europhiles happy about France should worry about Poland + + +In Europe’s illiberal east, populist nationalism is alive and well + +Apr 27th 2017 + + + + + +IT IS crucial to keep Siemiatycze pretty, says Piotr Siniakowicz, the mayor, himself resplendent in bright-blue suit and silk pocket-square. The border with Belarus is a hop and a skip away, so this small town in eastern Poland may mark visitors’ first encounter with the European Union. Siemiatycze brims with well-maintained nursery schools and a gleaming sports centre, thanks to EU funds lavished on the region since Poland joined in 2004. Remittances from thousands of émigrés in Belgium have poured into handsome houses, and businesses depend on those who return for holidays: Siemiatycze, beams Mr Siniakowicz, boasts 50 hair salons. Not bad for a town of 15,000. + +Yet despite all this, the nationalist-conservative Law and Justice (PiS) party took 38% of the vote here in 2015. A similar score nationwide won it a majority in parliament. Since then, PiS has set about dismantling Poland’s institutional checks and balances, alarming Polish liberals and startling the rest of the EU. + + + +So amid Europe’s relief at Emmanuel Macron’s win in the first round of France’s presidential election on April 23rd, spare a thought for places like Siemiatycze. The unashamedly pro-European Mr Macron will almost certainly defeat Marine Le Pen in their May 7th run-off. But though the threat of populist nationalism may be receding in France, further east it is a daily reality. + +East is east + +The EU’s most pressing clash with illiberalism among its members is not in Poland but in Hungary, whose prime minister, Viktor Orban, has been testing the club’s tolerance for years. This week the European Commission took his government to task for a law that could shut down the Central European University, a prestigious institute founded in Budapest in 1991 by George Soros, an investor and philanthropist. Hungary’s grim treatment of asylum-seekers, a clear violation of EU law, is also in Brussels’s sights. + +Mr Orban, at least, engages with Europe; this week he sparred with the European Parliament over the higher-education law. But his Polish counterpart, Jaroslaw Kaczynski, broods in Warsaw, rarely meeting other leaders. Mr Kaczynski holds no public office, but as head of PiS he micromanages the government. In March he directed the prime minister, Beata Szydlo, to block the reappointment of his nemesis Donald Tusk, Poland’s prime minister until 2014, as president of the European Council. It was a humiliating failure: all 27 other leaders, including Mr Orban, backed Mr Tusk. + +The episode was of a piece with Poland’s growing diplomatic drift. Some in Brussels want to strip Poland of its EU voting rights (the so-called nuclear option). That may never happen, but this week governments agreed for the first time to discuss Poland’s trespasses. The Poles have alienated Germany and France; an alliance of interests with Britain has been rendered moot by Brexit. Even the Czech Republic and Slovakia would rather hug Germany close than join Messrs Kaczynski and Orban, their supposed allies in the “Visegrad” group, on the naughty step. + +There are halting signs that the government is reining in its diplomatic excesses, perhaps because Mr Tusk’s Civic Platform party has begun troubling PiS in polls. But the domestic agenda is more aggressive than ever. Mr Kaczynski wants to subordinate judges to parliament, weaken local government, “repolonise” local media owned by German investors, reinvent the school system and possibly purge the diplomatic service. State agencies have lost expertise as senior civil servants are canned. Public media outlets, never a paragon of objectivity, have been reduced to propaganda organs. PiS’s supporters say its critics employ double standards: Mr Tusk was no angel, and other countries have politicians appoint judges, too. But Poland is tumbling down independent global indices of political and press freedom. + +This presents a test for the EU’s claim to be more than a glorified free-trade club. Optimists say they can ride it out until voters turf PiS from office at the next election, in late 2019. But Mr Kaczynski’s assaults on Poland’s institutions will take years for any successor to fix. Nor will there be an immediate end to the culture wars stoked by PiS, which have seen opposition politicians denounced as traitors and religious fanatics picket a liberal newspaper to exorcise it of demonic influence. A recent paper for the Batory Foundation, a Polish think-tank, argues that Poles’ strong support for EU membership may disguise a deep well of potential scepticism about its direction. Poland’s government follows God, says Elzbieta, a retiree strolling on Siemiatycze’s central square. So why is the EU fighting it? + +One casualty of the scrap may be those juicy European subsidies. During Ms Szydlo’s attempt to unseat Mr Tusk, François Hollande, France’s outgoing president, snapped that Poland might have the principles, but the EU held the structural funds. You often hear such threats in Brussels and Berlin these days, notably over the refusal of Hungary and Poland to accept refugees. Talks on the EU’s next budget begin next year. As Mr Siniakowicz notes, “The worsening of relations with the EU is bad for people here.” + +But punishment can take quieter forms. A win by Mr Macron will strengthen the EU’s resolve, and may revive the Franco-German co-operation that has often powered it. Fresh energy might be devoted to further integration of the euro zone (which includes neither Hungary or Poland), and spread to areas such as defence and asylum. Already Brussels is siding with France in imposing rules that reduce eastern Europeans’ wage advantages when they work in the west. + +All this threatens to harden the divide between “core” and “peripheral” Europe, and turn Poland’s isolation into an ever-greater handicap. Germany, and Angela Merkel in particular, will be reluctant to abandon the Poles. But Mr Macron will have less patience, and the escapades of the illiberal easterners could push others to his side of the debate. Poland will not leave the EU. But some in the EU are increasingly eager to leave Poland behind. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21721392-europes-illiberal-east-populist-nationalism-alive-and-well-europhiles-happy-about-france/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Award: Tom Nuttall + + +Apr 27th 2017 + + + + + +Award: Tom Nuttall, our Brussels correspondent, has won the 2017 Evens Prize for European Journalism, awarded for making the European project easier to understand. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21721390-award-tom-nuttall/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Britain + + +In search of lost issues: The battleground [Fri, 28 Apr 08:52] + +Requiem for losers?: Tactical voting [Fri, 28 Apr 08:52] + +The ground war: Activists and not-so-activists [Fri, 28 Apr 08:52] + +Kippers for breakfast: Consolidation on the right [Fri, 28 Apr 08:52] + +Speakers’ Corner: The campaigns [Fri, 28 Apr 08:52] + +One, two, miss a few...: Counting migrants [Fri, 28 Apr 08:52] + +Switcheroo: Energy prices [Fri, 28 Apr 08:52] + +Min to the max: Low pay [Fri, 28 Apr 08:52] + +The other election: Bagehot [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +In search of lost issues + +Theresa May claims this is a Brexit election. It isn’t + + +But nor is it about much else besides leadership + +Apr 27th 2017 + + + + + +A GENERAL election, it is said, must be about issues. The 1964 election was about 13 wasted Tory years and Harold Wilson’s promised “white heat of technology”. Edward Heath’s first 1974 election was over who ruled: the government or the unions (the answer was the unions, it turned out). In 1979 Margaret Thatcher promised to restore Britain’s lost economic clout. Eighteen years on, Tony Blair touted “cool Britannia” and social modernity. + +Theresa May claims that Brexit is the main issue in her snap election on June 8th. Most opposition parties seem to agree. Although Labour’s leader, Jeremy Corbyn, wants to talk about almost anything else, his Brexit spokesman, Sir Keir Starmer, declared this week that the election offered “a choice of two visions of Brexit”. The Liberal Democrats under Tim Farron hope to win 20-30 more seats mainly by promising the 48% who voted Remain the chance of a second referendum. + + + +In a way the claim that Brexit should be central is a truism, for it is bound to be the biggest task for the next government. Yet in a broader sense, the idea that this election is about Brexit must be false. Last June voters decided, by a 52-48% margin, to leave the European Union. Pollsters find little sign that they have changed their mind, nor much demand for a second referendum. A survey by BritainThinks, a Labour-leaning think-tank, finds 67% of Britons actively favour or reluctantly accept Brexit. + +If not Brexit, what is the election really about? Plenty of issues are emerging, with the agenda often, perhaps surprisingly, being set by Labour, not the Tories. Labour wants to focus on the economy, inequality, austerity and public-spending cuts to education and the National Health Service. This week, for instance, the party proposed large pay rises for NHS workers. One instinctive Tory response was to make security an issue, on the grounds that an anti-nuclear Mr Corbyn can never be trusted on defence. The UK Independence Party, having won the Brexit vote but not yet found a role, seems obsessed with banning the burqa and sharia law. + +The strong, silent type + +Mrs May ought to be vulnerable on at least some of these issues. The economy has held up well since last June, but it is starting to slow. Public services are under extreme pressure. Education cuts are biting. The social-care system is fraying. And the NHS seems in dire straits, with waiting times for hospital beds and doctors’ appointments rising. Yet the reply of the Tories to all such concerns is becoming wearyingly pat: that what really matters is having the strongest leader to negotiate the best Brexit deal in Brussels, protect the economy and thereby make public services more affordable. + +Indeed, it sometimes seems as if Mrs May’s response to any policy concern, including Brexit, has reverted to a single answer: strong leadership. That is partly because, as Tim Bale, a politics professor at Queen Mary, University of London, and historian of the Tory party, puts it: “Leadership has become increasingly important in political contests, particularly in this election.” But it is also because the polls show that voters trust Mrs May more than any of her rivals. + +As well as applying to the Tories’ traditionally strong areas of security and the economy, this is clearly the case with Brexit. One reason is that, although Mrs May has been tight-lipped, the Tory position on the EU is more united and less complicated than that of other parties. + +Mrs May is pursuing a hard Brexit that prioritises control of migration and escaping the European Court of Justice, implying departure from the single market and, almost certainly, the customs union. The Lib Dems say they respect the referendum result and would negotiate a soft Brexit—before offering a second referendum on whether to take it or leave it. As for Labour, despite Sir Keir’s promise to tear up Mrs May’s plans and put more emphasis on economics, the party’s version of Brexit remains obscure, not least because Mr Corbyn is ambivalent over migration. + +Even on the public services, long an area of relative Tory weakness, Mrs May does well with voters. Labour has historically nearly always been ahead of the Tories on the NHS, which is why the party tried once again to make it a central issue this week. But a recent YouGov poll finds that, when voters are asked whom they most trust actually to run the NHS, Mrs May again outranks Mr Corbyn. + +In effect, Mrs May’s election pitch so far is not about policies at all. She is instead asking voters whom they would rather have running Brexit talks and everything else. And she knows that on this question she beats the Labour, Lib Dem and UKIP leaders hands down. Partly for this reason, she is likely to continue to be vague not just over her Brexit goals but over such issues as tax, national-insurance contributions and the “triple lock” that supports state pensions. It seems likely that the Tory manifesto will strip away firm commitments from the 2015 version, replacing them with abstract pledges of strength and stability. + +If she wins a big enough majority with this approach, Mrs May will find it easier to face down both soft Remainers and hardline Brexiteers in her party. It is less clear that her negotiating position will be stronger in Brussels, where it is domestic vulnerability that often allows leaders to extract concessions from their colleagues. + +At home, a shortage of meaningful election promises to which she can later be held would put Mrs May in a freer position than any recent predecessor to do whatever she chooses when it comes to policy—for good or ill. + +For rolling coverage of the election campaign, check out our new British politics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721400-nor-it-about-much-else-besides-leadership-theresa-may-claims-brexit-election-it/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Requiem for losers? + +Efforts to organise mass tactical voting hit a mathematical wall + + +Brexit may swing voters and a few seats, but formal campaigns to organise the Remain vote face problems + +Apr 27th 2017 + + + + + +IN THE general election of 1997 the Conservatives in Enfield Southgate, a north London seat, suffered what became known as the Portillo moment. A young, unknown Labour candidate, Stephen Twigg, overturned the 15,000 majority of Michael Portillo, a Tory cabinet minister. Tactical voting played a big part, as Liberal Democrats supported Mr Twigg while Labour voters elsewhere backed Lib Dems. + +The constituency has been back in Tory hands since 2005. With a majority of 4,750, it is not a knife-edge marginal seat. But the fact that its MP, David Burrowes, voted to leave the EU while nearly two-thirds of his constituents voted to remain means it is seen by some as ripe for another upset. Remainers want to unseat pro-Brexit MPs like Mr Burrowes in order to argue for a softer version of Brexit, or even its reversal. Tony Blair, a former Labour prime minister, said on April 24th that voters should forget party allegiances and back Remainer candidates. Will voters take his lead? + + + +Tactical voters have consistently made up around 8% of the electorate in British elections since 1992, according to Stephen Fisher of Oxford University. Several groups have recently formed with the aim of increasing that proportion. Mr Blair is part of one of the new alliances, Open Britain, the successor organisation to the Remain campaign. Gina Miller, whose Supreme Court challenge forced the government to hold a parliamentary vote on triggering Brexit, has launched Best for Britain, which has a similar goal. Another group, the Progressive Alliance, is aiming to unite left-leaning parties to topple Tories. + +The parties themselves are reluctant to make formal pacts. But they may pedal softly in seats where a like-minded candidate from another party is the clear front-runner. The Lib Dems will not field a candidate in Brighton Pavilion, to give the Greens a clear run. The UK Independence Party will not run in some seats held by Brexiteer Tories. + +In Scotland the Conservatives are courting tactical votes from those who do not want a second independence referendum, as proposed by the dominant Scottish National Party. A recent poll suggested the Scottish Tories could win as many as a dozen of the 59 seats in Scotland, where they currently have only one. + +In Northern Ireland the Ulster Unionists are standing aside in three constituencies to help the Democratic Unionists defeat republican challengers. The SDLP, a moderate nationalist party, is considering a pact with Sinn Fein, whose past links to violence once made it untouchable. The SDLP’s leader, Colum Eastwood, says he wants a non-sectarian deal between anti-Brexit parties. + +None of these tactical efforts is likely to change the election’s outcome. “This is a Tory juggernaut,” says David Cowling of King’s College London. “The idea that any of these alliances can change that is pure fantasy.” Of the 330 seats won by the Conservatives in 2015, even a perfectly co-ordinated combination of Labour, Lib Dem and Green votes would have defeated the Tories in only 41 of them, he says. And with polls showing a swing of up to 9% from Labour to the Tories since 2015, some of the seats on the alliances’ target lists may no longer be marginal. + +Mr Blair says that the question of Brexit should be foremost. It will undoubtedly sway some voters and swing a few seats. But Mr Cowling believes the former prime minister is just the kind of urban liberal who did not see Brexit coming and mistakenly thinks this election is a re-run of the referendum. The various alliances’ proposals are “a requiem for losers”, Mr Cowling says. “The British people have moved on.” Three middle-aged ladies out shopping in Enfield agree. “Even my kids, who voted Remain, are voting Tory,” says one. Brexit is seen as a done deal. “What even is a hard Brexit?” asks her friend. + +For rolling coverage of the election campaign, check out our new British politics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721402-brexit-may-swing-voters-and-few-seats-formal-campaigns-organise-remain-vote-face/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Activists and not-so-activists + +Which political party has the most committed members? + + +As party leaders fight for the airwaves, their troops pound the ground + +Apr 27th 2017 + + + + + +As party leaders fight for the airwaves, armies of activists are pounding the ground. Whose are the most energetic? Research from the 2015 election suggests left-wingers are the loudest and proudest. Members of the leftist Scottish National Party and Greens are the most likely to share party material online. Lefties also like displaying posters, which Conservatives seem sheepish about. But when it comes to hard graft, the right-wingers come out in force. Tories are the most willing to canvass voters on their doorsteps and like delivering leaflets. (Greens, true to their beliefs, don’t seem to print many.) Members of the right-wing UK Independence Party are big on public rallies. The differences may be down to age: the web-savvy Greens and Scottish Nationalists are, on average, a good decade younger than the Tories and UKIPers who campaign the old-fashioned way. + +For rolling coverage of the election campaign, check out our new British politics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721403-party-leaders-fight-airwaves-their-troops-pound-ground-which-political-party-has/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Kippers for breakfast + +Who benefits from UKIP’s collapse? + + +The UK Independence Party is toast. The Conservatives are tucking in + +Apr 27th 2017 | BLACKPOOL + + + + + +WITH the faded grandeur of the Blackpool Tower jutting from the horizon down the street, Norman Hughes, a retired fireman, considers his options. He normally votes for the UK Independence Party (UKIP), but doing so this time would only “take a vote from the Tories, which might mess up Brexit.” Instead, he says he will support Theresa May, although he is suspicious that she may soften the government’s approach to negotiating Britain’s exit from the European Union. But better to risk a softer Brexit than to vote for UKIP, which might let in Jeremy Corbyn’s Labour Party. That would be “disastrous”. + +In 2013 when David Cameron, then prime minister, promised a referendum on whether to leave the EU, he did so partly to stem the flow of Tory supporters to UKIP. Although the plebiscite did not turn out as Mr Cameron hoped, his defeat may have succeeded in disarming the threat posed to his party by the populist right, at least for now. In 2013 nearly a fifth of voters said they would back UKIP. Today the party’s support is in single figures, and falling. + + + +Few senior Kippers have much hope that it can be turned around quickly. For proof, look to the recent decisions taken by the party’s high-flyers. On March 25th Douglas Carswell, UKIP’s sole MP, left the party; on April 20th Nigel Farage, the party’s former leader, said he would not stand; as The Economist went to press Paul Nuttall, the current leader, had yet to finish dithering about whether to contest a seat. Local organisers are flocking to the Tories and funding is scarce. Even when on the up, UKIP struggled to concentrate its resources in particular seats, as required by Britain’s first-past-the-post voting system. + +Which competitor will benefit from UKIP’s slump? Although the party’s voters are a mixed bag, says Richard Hayton of the University of Leeds, the biggest group is former Tories who were motivated to switch parties by antipathy to Europe. Now that Mrs May seeks to take Britain out of the EU, many will return to the Conservatives. UKIP has no seats to lose, but its collapse could have a big impact on the other parties’ fortunes. + +Take Blackpool South. In 2015 Labour won the seat with 42% of the vote, eight points ahead of the Tories. UKIP picked up 17%. This year Peter Anthony, the Conservative candidate and a part-time hotel-lounge crooner, thinks he is in with a chance. That is partly because of the weakness of Labour. (“I wouldn’t vote for Labour with Jeremy Corbyn,” says Peter Harvey, a pensioner having a mid-morning smoke outside the George pub and hotel. “I just don’t like the bloke.”) But the Tories’ confidence also reflects the faltering appeal of UKIP. + + + +As a Brexiteer in a seat where seven in ten voted to Leave, Mr Anthony believes he is well placed to gain former UKIP voters who want to keep Labour out. “It’s a two-horse race this time around,” he says. “I really do think I’ll nail it.” Some Labour politicians fret that, for former supporters, voting UKIP has served as a “gateway drug” to voting Tory, which was once seen as beyond the pale. Surveys suggest that perhaps half of those who voted for UKIP in 2015 will plump for the Conservatives this time, with very few returning to Labour. If true, that could swing more than two dozen seats in the Tories’ favour, mainly in the north and midlands (see chart). UKIP’s collapse could also hand the Tories a majority in Wales for the first time in more than a century. + +On April 24th in a cramped conference room in a Westminster hotel, UKIP launched a euphemistically titled “integration agenda”. Measures included a ban on the burqa, annual gynaecological examinations of girls considered at risk of genital mutilation and a crackdown on sharia courts. Peter Whittle, the party’s deputy leader, argued that “the biggest issues of our time are cultural”. In truth, Mrs May’s steadfast opposition to high levels of immigration, backing for Brexit and support for selective grammar schools has left the party with little else. Small wonder that its voters are returning to the Tories. + +For rolling coverage of the election campaign, check out our new British politics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721422-uk-independence-party-toast-conservatives-are-tucking-who-benefits-ukips/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Speakers’ Corner + +Quotes from the campaign trail + + +The most memorable lines from the first week of Britain’s snap election campaign + +Apr 27th 2017 + + + + + +Ringing endorsement + +“Eject the Tories—elect a Labour government! Reject austerity, privatisation and imperialist war! Leave the EU single market and NATO!” + +The Communist Party announces that it will field no candidates for the first time since 1920, in order to back Jeremy Corbyn’s Labour. Morning Star + +Brexit means... + +“Search me.” + +Lord Mandelson, a Labour peer, when asked to explain his party’s position on Brexit. BBC + + + +Great expectations + +“The opinion polls were wrong in the 2015 general election, they were wrong in the referendum, and Jeremy Corbyn himself has said that he was a 200-to-one outsider for the Labour leadership in 2015—and look where that got him.” + +Theresa May plays down predictions of a landslide for her Tory party + +Four days’ less labour + +“After seven years of painful austerity, our workers deserve a break.” + +Jeremy Corbyn announces that a Labour government would introduce four new public holidays, on the days of the patron saints of England, Scotland, Wales and Northern Ireland + +No sex please, we’re Liberals + +“In America it appears that you have to invent a faith in order to be seen to be a serious candidate for anything. And in this country, maybe it appears that you have to pretend you haven’t got one.” + +Tim Farron, the Lib Dem leader and a Christian, at last says he does not consider gay sex a sin. ITV + +Be the change that you wish to see + +“It is a bit like the Gandhi thing—first they laugh at you, then they attack you, and then you win.” + +Paul Nuttall, leader of UKIP, which has made it to the first stage. Express & Star + +Less golf, more guillotine + +“I would re-open public toilets. I would abolish golf courses because they are an environmental threat and a threat to the safety of people...And I want the death penalty to be re-enacted. It doesn’t necessarily have to be hanging. You could have the guillotine.” + +Gisela Allen, a UKIP candidate, sets out her stall. Clydebank Post + +Warming on the idea + +“It is a price con...He cannot control global gas prices...It is a cynical ploy.” + +David Cameron rubbishes Labour’s plan to freeze energy prices in 2013. The Tories now have a very similar policy + +For rolling coverage of the election campaign, check out our new British politics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721406-most-memorable-lines-first-week-britains-snap-election-campaign-quotes/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +One, two, miss a few... + +Britain’s net migration figure is surprisingly dodgy + + +One of the hottest numbers in British politics is based on a tourism survey that began in the 1960s + +Apr 27th 2017 + + + + + +IF INSANITY is doing the same thing over and over again and expecting different results, British politicians’ repeated promises on immigration might well be judged to be mad. In 2010 David Cameron vowed to reduce net migration (immigration minus emigration) to the tens of thousands. Theresa May, his home secretary and now successor as prime minister, has intimated that she will stick to this target in her Tory party’s manifesto for the forthcoming election. So far the promise has proved impossible to keep. Last year net migration was 273,000, even higher than in 2010. + +Debate over immigration and how best to control it has become no less feverish since Britain’s vote to leave the European Union. Yet given how politicised the net migration figure has become, the data behind it are surprisingly unreliable. + + + +The statistic is based on the International Passenger Survey. The IPS dates back to 1961, when the government established a travel and tourism survey to gather information about the movement of people. It was not designed to be the basis for measuring immigration but has since become so because Britain does not ask migrants to register after their arrival. + +Between 6am and 10pm officials at ports and airports ask travellers questions about themselves, their destination and the purpose of their entry. Between 700,000 and 800,000 interviews are conducted a year (in 2015 foreigners made more than 36m trips to Britain). The data for the net migration figures are extrapolated from 4,000-5,000 interviews of people identified as long-term international migrants. The UK Statistics Authority admits that the margins of uncertainty are wide. + +Britain is rare in using this kind of survey to count migrants, says Carlos Vargas-Silva of the Migration Observatory at the University of Oxford. In the EU, Cyprus is the only other country to do so. Countries such as America use household surveys. In 2015 Britain introduced a form of exit controls using information provided by airlines. But since it is not connected to the Home Office’s data on visas, it is no help in calculating levels of immigration, points out Mr Vargas-Silva. + +Recently debate has focused on whether to remove foreign students from the overall figure, something Mrs May is apparently resisting. Those in favour argue that since overseas students stay only temporarily, are of little concern to the public (even those who want to reduce immigration substantially are relaxed about students, surveys show) and bring particularly clear economic benefits, they should be treated separately from other migrants. + +That is all true, but taking students out of the migration calculations might not change the net figure much. It is increasingly difficult for them to stay in Britain after their studies; the government abolished post-study work visas in 2012. There is little evidence that many stay on illegally. That suggests the inflow and outflow should roughly balance out, meaning there would be little impact on the net migration figure if they were removed from it. + +The IPS is particularly inaccurate when looking at subsets of migrants, such as students, since the sample size is even smaller. Alternatives to the current measure, such as household surveys, would be more reliable. Determining more accurately how many foreigners arrive in and leave Britain might be a good start to deciding immigration policy—and maybe even coming up with a more sensible one. + +For rolling coverage of the election campaign, check out our new British politics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721429-one-hottest-numbers-british-politics-based-tourism-survey-began/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Switcheroo + +The perils of capping energy prices + + +The Tories poach a bad idea off Labour + +Apr 27th 2017 + + + + + +WHEN Ed Miliband committed Labour in 2013 to freezing Britain’s energy prices, David Cameron, who was prime minister at the time, accused him of wanting to live in a “Marxist universe”. Less than four years later, the threat to rig energy prices has resurfaced in this election. This time the aspiring Marxist is Mr Cameron’s Tory successor, Theresa May. + +On April 23rd the government said that setting a price ceiling for the large majority of gas and electricity customers on the highest tariffs would be part of the Conservative manifesto, which is due out on May 8th. It insisted that such a cap was different from Mr Miliband’s freeze because it would be administered by the regulator, Ofgem, and would be flexible. Analysts, however, said that in practice there would be little difference. Both approaches risk a return to heavy-handed regulation of the energy market, reminiscent of the 1970s. + + + +The fact that the two biggest parties now see eye-to-eye on the need for intervention in energy markets partly reflects an unpopular surge in domestic electricity bills this year. But it also suggests the market is deeply flawed. In most industries, from airlines to coffee shops, customers are rewarded for loyalty. Yet in the energy industry the most “sticky” clients are penalised with tariffs substantially higher than those offered to new customers. + +Last year the Competition and Markets Authority (CMA), Britain’s antitrust agency, concluded that 70% of customers of the Big Six energy suppliers—Centrica, SSE, Scottish Power, Npower, E.ON and EDF—had failed to switch from the highest standard variable tariffs (SVTs). On average, in 2011-15 they paid 11% more for their electricity than those on other tariffs. By milking those inactive customers, who are mostly poor, under-educated and elderly, the suppliers boosted their profitability. The CMA found no collusion among the Big Six. But their business model encourages them, as one Tory MP puts it, to treat their longest-serving customers as “chumps”. This exacerbates distrust of the industry. + +For all its concerns, the CMA refrained from ordering a price cap for people on SVTs, except the poorest, who are on prepayment meters. It said rigging prices risked stifling competition from firms challenging the Big Six with cheaper fixed-rate tariffs, as well as reducing people’s incentives to switch. + +Mrs May’s price cap would ignore those conclusions. It would put politicians back at centre-stage in energy markets, making policy more unpredictable. There are more nuanced ways of lowering default tariffs while preserving competition, and more effective ways to nudge people onto new tariffs. One of the CMA’s main recommendations—that companies should have access to information on customers stuck on an SVT for more than three years so that they can offer them better deals—may work. The key is to preserve choice. + +Encouraging people to look after their own best interests is surprisingly complex. But having politicians do it for them is not the answer. + +For rolling coverage of the election campaign, check out our new British politics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721435-tories-poach-bad-idea-labour-perils-capping-energy-prices/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Min to the max + +A £10 minimum wage is not the best way to help low earners + + +Middle-income households would benefit more than the poorest, and jobs would be at risk + +Apr 27th 2017 | MINEHEAD + + + + + +MOST Britons have not had a decent pay rise in years, but the people of West Somerset have done better than most. Since introducing the “national living wage” last April the government has increased minimum hourly pay for the over-25s from £6.70 ($8.60) to £7.50, a steep rise by historical standards. By 2020 it is due to reach about £9. A fifth of employees in West Somerset are paid the minimum, a greater share than in any other local authority (and compared with just one in 20 in London). Butlins, a holiday resort there, is recruiting heavily, and many of its vacancies—from kitchen porter to lifeguard—offer the minimum rate. Last year average pay in West Somerset rose by 5%. + +Jeremy Corbyn, the leader of the Labour Party, wants to give low earners another pay rise. In its manifesto Labour is expected to pledge to introduce a £10 hourly minimum by 2020. That would probably give Britain the highest wage floor of any big, rich country. Could the labour market handle it? + + + +The worry is that unemployment would rise as low-skilled jobs would become untenable. Indeed, that seems to have happened recently in America (see article). Yet British-economy watchers have been surprised time and again: since the minimum wage was introduced by a Labour government in 1999, increases have not caused joblessness to rise by much. As the chart suggests, low-paid workers have benefited. Even those earning above the minimum have enjoyed better pay. “After [the minimum wage] went up, it was snapping at my heels, so I asked for a raise,” says Harriet, a council administrator in West Somerset. She got one. + + + +At a vintage shop selling starchy napkins and Victorian marmalade jars, the owner says her bottom line has not been affected much by the minimum wage so far. Alex de Mendoza of the local chamber of commerce says that few local firms complain about it (they are more concerned about business rates). Some have cut their employees’ perks in order to save on costs; the owner of one local café offers fewer free lunches to her staff. Not many seem to have responded by laying off their workers. West Somerset’s unemployment rate is just 3%. The job centre looks deserted. + +How much more can firms afford to pay? Under the current government’s plans the minimum wage will continue rising, from about 55% of median earnings at the moment to 60% in 2020. Official forecasts suggest that this could ultimately cost around 100,000 jobs, equivalent to a rise in the unemployment rate of around 0.3 percentage points. Those forecasts imply that Mr Corbyn’s proposal could cost about the same amount again. The upshot would be that Britain’s economy would look more like those of other rich countries, most of which have recently had higher unemployment than Britain, but also higher wage growth. + +The competition between Labour and the Tories over minimum-wage levels ignores a better way to help the poor. The Labour governments of Tony Blair and Gordon Brown boosted in-work benefits such as tax credits (wage top-ups for the low-paid). The Conservatives are now cutting them with zest. Unlike higher minimum wages, tax credits do not threaten jobs, since their cost is borne by taxpayers rather than employers. + +And increases in the minimum wage help poor families less than is commonly supposed. Many low-paid folk are second earners in middle-income families (think the mum with a part-time cleaning job), whereas many of the poorest households do not work at all. The government’s existing plans to raise the minimum wage are already expected to benefit households in the seventh income decile (ie, nearer the richest) by three times as much as those in the bottom decile. Mr Corbyn’s pledge to help low earners is welcome, but there are better ways to do it than with a £10 minimum wage. + +For rolling coverage of the election campaign, check out our new British politics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721433-middle-income-households-would-benefit-more-poorest-and-jobs-would-be-risk-10/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Bagehot + +Bring on the mayors + + +A cohort of powerful new mayors will do more to change the country than most of the MPs elected in June + +Apr 27th 2017 + + + + + +IN PREPARING to take over as Bagehot, your columnist immersed himself in Anthony Trollope’s novels. He was particularly struck by a passage in “Can You Forgive Her?”. As he walks for the first time through the gate reserved for members of Parliament, one of Trollope’s characters is overawed by the majesty of the place. The passageways echo with the glory of centuries. The House of Commons is the “fullest fountain of advancing civilisation”. There is no greater honour available to an Englishman than to put the letters “MP” after his name. + +There are few people today who share that view. Yet the British are still obsessed by general elections. On May 4th millions of Britons will engage in one of the most important political innovations in recent decades, electing six powerful new regional mayors. The regions up for grabs include Britain’s second- and third-biggest cities, Birmingham and Manchester. But Theresa May’s decision to announce a general election the following month has fixated the nation’s attention on Westminster. + + + +This is understandable. Britain is the most centralised rich country in the world after tiny New Zealand. London is the world’s most outsized capital city, sucking life out of the rest of the country. But Westminster is beginning to lose its monopoly of political talent and political innovation. The mayors’ elections on May 4th may say as much about the future of British politics as the general election on June 8th. + +A career in Westminster is no longer as attractive as it used to be. Salaries have stagnated compared with other top-flight jobs. And the career structure is odd. British political life is characterised by long political cycles: the Tories were in power for four terms after 1979 and Labour for three terms after 1997. It will take a long time for Labour to dig itself out of its current hole. This means that MPs on the “wrong” side might spend more than a decade twiddling their thumbs in opposition. Even those who pick the winning team can have a bumpy time: they might be lucky in their early years, taken up by a patron and dropped into a big job, only to fizzle in mid-career. Ed Balls, a shadow chancellor, lost his seat aged 48 and was reduced to competing (with some success) on “Strictly Come Dancing”, a televised dance competition. + +The job of running a big city-region now provides an appealing alternative to staying in Westminster, for established MPs, or starting off there, for outsiders. Andy Burnham, a long-standing Manchester MP, is a safe bet to become Labour mayor of the city. Andy Street, a former head of the John Lewis retail chain, is hoping to create an upset as the Tories’ candidate for mayor of the West Midlands (which includes several Black Country towns as well as Birmingham). Haltingly, Britain is becoming more like America, with several different centres of power and several greasy poles to the top. + +Britain has previously gone through the motions of handing power to the provinces only for central government to grab it back. Most dramatically Margaret Thatcher presided over a decade of centralisation after the decentralisation of the 1970s. There are some worrying auguries. The biggest champion of elected mayors, George Osborne, is retiring from British politics. For a while Mrs May, no fan of Mr Osborne, banned officials from even mentioning the “Northern Powerhouse” that he had talked up. The new mayors will control only about 5% of their local tax base, compared with 50% in New York, say. + +There are nevertheless reasons for thinking that it will be different this time. The new mayors will run entire regions rather than just local authorities. This means that they are more than glorified city councillors. They will be directly elected, making them accountable to voters and giving them the soft power that comes from having far larger constituencies than any MP—including the prime minister, who is chosen only by his or her party. London’s mayor was elected with more than a million votes. + +The experience of London has been positive. The capital’s mayors have expanded their powers while remaining broadly popular. The proportion of Londoners voting in mayoral elections has increased from 34% in 2000, when the first one was held, to 46% in 2016. Far from ending your Westminster career, being mayor of London can boost it. Boris Johnson is now foreign secretary. Sadiq Khan, his successor, is burnishing his chances of becoming Labour leader by running one of the world’s great cities rather than marching to disaster next to Jeremy Corbyn. The new crop of mayors is part of a global movement which boasts such figures as Michael Bloomberg, a former mayor of New York, and Park Won-soon, the mayor of Seoul. There is even talk of establishing a worldwide parliament of mayors. + +The centre cannot hold + +This is all to the good. Britain is the prisoner of a cult of centralised government that was created in the age of mass production but is increasingly irrelevant in the age of tailoring and customisation. This cult is killing innovation. A striking proportion of the most interesting policy experiments, in everything from giving schools more freedom to using smartphones to co-ordinate ride-sharing, have come from American mayors. Centralisation is also alienating people from their government. + +Mr Burnham expresses some regrets about leaving the House of Commons. Life there can be thrilling. But he also waxes lyrical about the prospect of running Manchester if he is elected: while Parliament is overwhelmed by Brexit he will be able to try out new ideas (for example, about developing “property banks” to end rough sleeping) and also reconnect politics with the people. The Brexit vote was an expression of anger about a political establishment that had lost touch. Britain should respond by cutting the House of Commons down to size and handing power back to the regions. A country needs more than one fountain of advancing civilisation. + +Economist.com/blogs/bagehot + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721377-cohort-powerful-new-mayors-will-do-more-change-country-most-mps-elected/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +International + + +Mending mortality: End-of-life care [Fri, 28 Apr 08:52] + +Death wishes: End-of-life care [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +End-of-life care + +A better way to care for the dying + + +How the medical profession is starting to move beyond fighting death to easing it + +Apr 29th 2017 | TOKYO + + + + + +A STROLL from Todoroki station, at the kink of a path lined with cherry trees, lies a small wooden temple. A baby Buddha sits on the sill. The residents of the Tokyo suburb ask the infant for pin pin korori. It is a wish for two things. The first is a long, spry life. The second is a quick and painless death. + +Just part of this wish is likely to be granted. The paradox of modern medicine is that people are living longer, and yet doing so with more disease. Death is rarely either quick or painless. Often it is traumatic. As the end nears, people tend to have goals that matter more than eking out every last second. But too few are asked what matters most to them. In the rich world most people die in a hospital or nursing home, often after pointless, aggressive treatment. Many die alone, confused and in pain. + + + +The distress is largely unnecessary. Fortunately medicine is beginning to take a more thoughtful approach to people with terminal illness. Reformers are overhauling how end-of-life care is delivered and improving communication between doctors and patients. The changes mean that patients will experience less pain and suffering. And they will have more control over their lives, right up until the end. + +Many aspects of death changed during the 20th century. One was when it happens. The average lifespan increased by more over the past four generations than over the previous 8,000. In 1900 global life expectancy at birth was about 32 years, little more than at the dawn of agriculture. It is now 71.8 years. In large part that is a result of lower infant and child mortality; a century ago about a third of children died before their fifth birthday. But it is also because adults live longer. Today a 50-year-old Englishman can expect to live for another 33 years, 13 more than in 1900. + +The chance of an adult dying was once largely unrelated to age; infections were indiscriminate. Michel de Montaigne, a French essayist who died in 1592, wrote that death in old age was “rare, singular and extraordinary”. Now, says Katherine Sleeman of King’s College London, death mostly comes by stealth. She estimates that in Britain only a fifth of deaths are sudden, for example in a car crash. Another fifth follow a swift decline, as with some cancer patients, who stay fairly active until their final few weeks. But three-fifths come after years of relapse and recovery. They involve a “slow, progressive deterioration of function”, Dr Sleeman says. + +People in rich countries can spend eight to ten years seriously ill at the end of life. Chronic illness is rising in poorer countries, too. In 2015 it accounted for more than three-quarters of premature mortality in China, according to the Global Burden of Disease, a survey. In 1990 the share was just a half. The World Health Organisation (WHO) predicts that rates of cancer and heart disease in Sub-Saharan Africa will more than double by 2030. + +A side-effect of progress, however, has been what Atul Gawande, a surgeon and author, calls “the experiment of making mortality a medical experience”. A century ago most deaths were at home. Now, according to a survey of 45 rich countries by the WHO, fewer than a third are. Death also used to be egalitarian, says Haider Warraich of Duke University Medical Centre and the author of “Modern Death”. Income did not much affect when or where people died. Today poor people in rich countries are more likely than their better-off compatriots to die in hospital. + +No dying fall + +Many deaths are preceded by a surge of treatment, often pointless. A survey of doctors in Japan found that 90% expected that patients with tubes inserted into their windpipes would never recover. Yet a fifth of patients who die in the country’s hospitals have been intubated. An eighth of Americans with terminal cancer receive chemotherapy in their final fortnight, despite it offering no benefit at such a late stage. Nearly a third of elderly Americans undergo surgery during their final year; 8% do so in their last week. + +The way health care is funded encourages over-treatment. Hospitals are paid for doing things to people, not for preventing pain. And not only patients, but those who love them, suffer. Many people who may need intubation or artificial ventilation are not in a condition to indicate consent. An American study found that in about half of cases involving decisions about the withdrawal of treatment there is conflict between family and doctors. A third of relatives of patients in intensive-care units (ICUs) report symptoms of post-traumatic stress disorder. + +Many people will want to “rage, rage against the dying of the light”, as the poet Dylan Thomas put it. Others will have particular events they want to attend: a grandchild’s graduation, say. But the medical crescendo often occurs by default, not as a result of personal choice based on a clearly understood prognosis. + +The huge gap between what people want from end-of-life care and what they are likely to get is visible in a survey conducted by The Economist in partnership with the Kaiser Family Foundation, an American health-care think-tank. Representative samples of people in four large countries with differing demographics, religious traditions and levels of development (America, Brazil, Italy and Japan) were asked a set of questions about dying and end-of-life care. Most had lost close friends or family in the previous five years. + +In all four countries the majority of people said they hoped to die at home (see chart 1). But fewer said they expected to do so—and even fewer said that their deceased loved ones had. Apart from in Brazil, only small shares said that extending life as long as possible was more important than dying without pain, discomfort and stress (see article). Other research suggests that wish, too, is increasingly unlikely to be granted. One study found that between 1998 and 2010 the shares of Americans experiencing confusion, depression and pain in their final year all increased. + + + +What healthy people think they will want when they are mortally ill may well change when that moment comes. “Life becomes mighty precious when there is not a lot left,” says Diane Meier, a geriatrician at Mount Sinai Hospital in New York. It is common, for example, to hate the idea of a feeding tube but grudgingly accept one when the alternative is death. + +Words I never thought to speak + +Yet the gap between what people hope for and what they get cannot be explained away so easily. Dying people’s wishes are often unknown or ignored. Among those involved in making decisions about a loved one’s end-of-life care, more than a third in Italy, Japan and Brazil said they did not know what their friend or family member wanted. Either they never asked, or only thought to do so too late. A Japanese woman who cared for her mother, an Alzheimer’s patient, says she regrets that “once the door closed there was no way of knowing what she wanted.” + +And sometimes, even when relatives know a loved one’s wishes, they cannot make sure they are granted. Between 12% and 24% of those who had lost someone close to them said that the patient’s wishes had not been carried out. Between 25% and 38% said that friends or family had experienced needless pain. Across the whole survey most people rated the quality of end-of-life care as “fair” or “poor”. + +End-of-life care can resemble a “conspiracy of silence”, says Robert Fine of Baylor Scott & White Health, a Texan health-care provider. In our survey majorities in all four countries said that death is a subject which is generally avoided. An obvious reason is that death is feared. “In every calm and reasonable person there is a hidden second person scared witless about death,” says the narrator of a Philip Roth novel. One school of psychology—“terror management theory”—holds that fear of death is the source of everything distinctively human, from phobias to religion. + +But death was once what Philippe Ariès, a French historian, called a “public ceremony”, where friends and family gathered. Now, changing family structures mean the elderly and dying are more isolated from younger people, who are therefore less likely to witness death up close, or to find a suitable moment to talk about its approach. Just 10% of Europeans aged over 80 live with their families; half live alone. By 2020, 40% of Americans are expected to die alone in nursing homes. + +In Japan, where survey respondents were most likely to say that not being a financial burden was a primary consideration, daughters are abandoning their traditional caring role. That has given rise to institutions such as the House of Hope, a hospice in east Tokyo that looks after people who are too poor for hospital care and too alone to die at home. A decade ago Hisako Yanagida, 88, lost her husband, with whom she had sung in a traditional Japanese troupe. Now her sight is going but she can still make out the faded pictures of the two of them on her wall. She tries not to think about death: “There is no point.” + +But the chief responsibility for the failures of end-of-life care lies with medicine. The relationship between doctors and seriously ill patients is one of “mutual suspicion”, says Naoki Ikegami of St Luke’s International University, in Tokyo. A decade ago it was common for Japanese doctors to withhold cancer diagnoses. Today they are more honest, but still insensitive. One Japanese woman recalls her oncologist saying that if her chemotherapy made her bald, it would not be a big deal. + +And doctors commonly overestimate how long the terminally ill will live, making it more likely that they will duck frank conversations, or recommend drastic treatments that have little chance of success. One international review of prognoses of patients who die within two months suggests that seriously ill people live on average little more than half as long as their doctors suggested they would. Another study found that, for patients who died within four weeks of receiving a prognosis, doctors had predicted the date to within a week in just a quarter of cases. Mostly, they had erred on the side of optimism. + +Doctors often neglect palliative care, which involves giving opioids for pain, treating breathlessness and counselling patients. (The name comes from the Latin palliare, as in “to cloak” pain.) A typical question is “What is important to you now?” It does not seek to cure. As a result, “it is seen as what you do when you give up on a patient,” sighs Dr Ikegami. It receives just 0.2% of the funding for cancer research in Britain and 1% in America. + +Breaking the taboo + +What studies there have been show the cost of this neglect. Since 2009 several randomised controlled trials have looked at what happens when patients with advanced cancer are given palliative care alongside standard treatment, such as chemotherapy. In each, the group receiving palliative care had lower rates of depression; and in all but one study, patients in that group were less likely to report pain. + + + +Remarkably, in three trials the patients receiving palliative care lived longer, even though the quantity of conventional treatment they opted to receive was lower. (The other two trials showed no difference.) In one study their median survival was a year, compared with nine months for the group receiving only ordinary treatment. A review in 2016 of cases where palliative care was used instead of standard treatment found that even when it was the only care given, it did not seem to shorten life. + +The reason for the results is unclear, and the research has mostly been on cancer patients. Those receiving palliative care spend less time in hospital, so may contract fewer infections. But some researchers think that the explanation is psychological: that through counselling they reduce depression, which is linked to earlier death. “A conversation can be more powerful than technology,” says Dr Sleeman. + +At St Luke’s hospital in Tokyo, Yuki Asano supports the argument. Ever the executive, the 76-year-old slides his business card across the tray of his bed. The former boss of a brewery company (and 7th dan in kendo, a Japanese martial art) is riddled with cancer. He stopped chemotherapy last year. The care at one of Japan’s few dedicated palliative centres has helped him feel ready for death. “I achieved everything I wanted in life,” he says. “Now I am waiting for the awards ceremony.” + +But few of the 56m or so people who die each year receive good end-of-life care. A report published in 2015 by the Economist Intelligence Unit, our sister company, assessed the “quality of death” in 80 countries. Only Austria and America, the EIU found, had the capacity to ensure that at least half the patients for whom palliative care was suitable received it. + +Many countries promise public access to palliative care but do not pay for it. Spain has passed two laws to ensure palliative care is available but in reality, just a quarter of patients can get it. Though the hospice movement, dedicated to providing high-quality care to dying patients, started in Britain in the 1960s, only about a fifth of the country’s hospitals provide access to palliative care every day of the week. + +The way health-care providers are funded often sidelines palliative care. In Japan hospital doctors receive no payment from insurers for talking to patients about end-of-life options. In America hospitals suck up a big share of spending, even though the seriously ill are often better treated elsewhere. Nine in ten emergency visits are because of escalations in symptoms, such as breathlessness; most of these patients could be treated better, faster and more cheaply at home. Medicare, the public-health scheme for the elderly, does not generally cover spells in nursing homes. + +Slowly, however, countries are reforming. In 2014 the WHO recommended integrating palliative care with health systems. Some developing countries, including Ecuador, Mongolia and Sri Lanka, are beginning to do so. In America some insurers are realising that what would be better for patients would be better for them, too. In 2015 Medicare announced that it would pay for conversations about end-of-life care between doctors and patients. + +“Talking almost always helps and yet we don’t talk,” says Susan Block of Harvard Medical School. To improve end-of-life care, she says, “every doctor needs to be an expert in communicating.” American oncologists, for example, need to have an average of 35 conversations per month about end-of-life care. In a study of patients with congestive heart failure, doctors rarely followed up after a patient expressed a fear of death. Nearly three-quarters of nephrologists were never taught how to tell patients they are dying. A common cause of burnout among doctors is an inability to talk with patients about death. + +To fill this gap Ariadne Labs, a research group founded by Dr Gawande, has launched the “Serious Illness Conversation Guide”. It is a straightforward checklist of the topics doctors should be sure to talk about with their terminally ill patients. They should start by asking what patients understand about their conditions, check how much each wants to know, offer an honest prognosis, and ask about their goals and the trade-offs each is willing to make. + +Early results from a trial of the guide at the Dana-Farber Cancer Institute in Boston suggest it led to doctors having more and earlier conversations. Patients reported less anxiety. Tension between doctors and families was eased. The scheme is being expanded; in February Baylor Scott & White became the first big provider to use it for all its staff. England’s National Health Service is trying it out in Clatterbridge, near Liverpool. Japan is retraining its oncologists in how to talk about death. + +In America advance directives and living wills, documents that spell out the treatment people want if they become incapacitated, have become more popular over the past few decades. In our survey 51% of Americans over 65 had written down their end-of-life wishes. Yet such documents cannot cover all the possibilities that may arise as the end nears. Doctors worry that patients may have changed their minds. In one study just 43% of people who had written living wills wanted the same treatment course two years later. + + + +Living wills are rare outside America (see chart 2). But there is a broader cultural shift. More than 4,400 “death cafés”, where people eat cake and talk about mortality, have sprung up. They discuss books such as “When Breath Becomes Air”, by the late Paul Kalanithi, a neurosurgeon, and the documentary “Extremis”, which is set in an intensive-care unit and offers a more honest account of hospital care than in popular TV shows. In Japan “ending notebooks” are now available, to record messages and instructions for relatives. + +Here at the end of all things + +In 2010 Ellen Goodman, an American author, founded the Conversation Project, which started with people gathering to share stories of the “good deaths” and “bad deaths” experienced by their loved ones. It publishes guides like those from Ariadne Labs, but for use by people without medical training. Laurie Kay, an 80-something from Boston, recently told her husband and daughter that what mattered to her was dignity. She wants to look good: her nails should be painted. Her views may change, she says, but “having opened the conversation now we can reopen it later.” + +Experiences of death are being shared online. Dying Matters is a popular forum. In 2013 Scott Simon, a journalist, tweeted from his mother’s bedside as she died (“Heart rate dropping. Heart dropping”, read one tweet). Kate Granger, an English geriatrician who died of cancer last year, planned to tweet during her final days using the tag #deathbedlive. She did not quite manage it, but a tweet she prepared was sent posthumously: “TY all for being part of my life. Pls look after my amazing hubby @PointonChris (Ps - Don’t let him spend all his money on a Range Rover) xx”. + +Bringing death “within the pale of conversation” is needed to overhaul end-of-life care, argues Dr Warraich. Yet the “death positive” movement is not an excuse for medicine to remain stuck in its ways. Death will remain terrifying for many people. Unless the way health care is organised changes, most people will continue to suffer unnecessarily at the end. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21721375-how-medical-profession-starting-move-beyond-fighting-death-easing-it-better/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Last wishes + +What people most want in their final months + + +Our survey of what matters most at life’s end + +Apr 29th 2017 | SÃO PAULO + + + + + +AFTER his stroke Maria’s father could no longer speak. But with his daughter reciting the words next to him, he could still pray. His final days brought a lot of pain but Maria believes that at the end, as he clasped her hand, he was at peace. When she thinks about her own priorities for her death, “being at peace spiritually” is top of the list. + +It is a sentiment shared by fellow Brazilians, according to a survey conducted jointly by The Economist and the Kaiser Family Foundation, an American non-profit focused on health. Fully 88% thought that being at peace spiritually at the end was “extremely” or “very important” (see chart). In America and Japan not burdening families with the costs of care was the highest-ranked priority, cited as extremely important by 54% and 59% respectively. (The Japanese may be worrying about the cost of funerals, which can easily reach ¥3m, or $27,000.) A third of Italians emphasised having loved ones around them. Brazil was the only country where more people said they would put extending life ahead of reducing pain and stress than the other way around. + + + +Religion accounts for some of these differences. There are more Catholics in Brazil than any other country. Many have presumably been influenced by their church’s long insistence that life should be extended whenever possible, even by heroic measures. In court battles in America and elsewhere, when families have sought to have feeding tubes removed from relatives who are in a persistent vegetative state, the church has often been opposed (though it now condemns only active measures to hasten death, rather than patients’ decisions to reject treatment, or death that is hastened by pain relief). Eighty-three per cent of Brazilians said that religion played a “major role” in their thinking about end-of-life care, against 50% of people in America and 46% in Italy. + +In Japan, just 13% said that religion played a major role in their thinking. In other surveys most Japanese report that they are atheists or have no formal religious affiliation. But the idea of “spiritual peace” is nonetheless important in Japan—it is ranked second for what matters close to death. + +The relative weights people place on extending life, and easing death, are also shaped by the quality of care available, and perceptions of what they will personally receive. Ninety per cent of Brazilians rated their health-care system as “fair/poor”, compared with 54-61% in the other three countries. Though their constitution guarantees comprehensive, free health care for all, it falls far short of that ideal. Even before a crippling recession that has already lasted three years, care was often precarious. More recently, cash-strapped hospitals in big cities, including Rio de Janeiro, have seen patients die in corridors. + +In America, Italy and Japan people with degrees were most likely to say that too much emphasis is placed on extending life towards its end, as opposed to alleviating suffering. Better-educated people were also more likely to say patients and families should play a bigger role in decisions about end-of-life care. + +Almost half of black Americans, and nearly as many Latinos, said that health care placed too little emphasis on preventing death, compared with just 28% of white Americans. Other research has found that minorities are more likely to die in hospital than white Americans. Richer Americans are more likely to die at home or in a hospice than those on lower incomes. All of which suggests a bitter irony: those who most need hospital care may receive it only when it is too late. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21721374-our-survey-what-matters-most-lifes-end-what-people-most-want-their-final-months/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Business + + +Sofas and surveillance: The office of tomorrow [Fri, 28 Apr 08:52] + +Cutting the tangle: Corporate tax reform in America [Fri, 28 Apr 08:52] + +High in the sky: Flying cars [Fri, 28 Apr 08:52] + +In a fix: LafargeHolcim and Syria [Fri, 28 Apr 08:52] + +A spring in their step: French business [Fri, 28 Apr 08:52] + +Bend it like Baba: Patanjali [Fri, 28 Apr 08:52] + +Government Inc: Schumpeter [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Sofas and surveillance + +Technology firms and the office of the future + + +Their eccentric buildings offer clues about how people will work + +Apr 29th 2017 | SAN FRANCISCO + + + + + +FROM the 62nd floor of Salesforce Tower, 920 feet above the ground, San Francisco’s monuments look piddling. The Bay Bridge, Coit Tower and Palace of Fine Arts are dwarfed by the steel-and-glass headquarters that will house the software company when it is completed later this year. Subtle it is not. Salesforce plans to put on a light show every night; its new building will be visible from up to 30 miles away. + +It is not the only technology company erecting a shrine to itself. Apple’s employees have just begun moving into their new headquarters in Cupertino, some 70 kilometres away, which was conceived by the firm’s late founder, Steve Jobs. The four-storey, circular building looks like the dial of an iPod (or a doughnut) and is the same size as the Pentagon. At a price tag of around $5bn, it will be the most expensive corporate headquarters ever constructed. Apple applied all its product perfectionism to it: the guidelines for the wood used inside it reportedly ran to 30 pages. + + + +Throughout San Francisco and Silicon Valley, cash-rich technology firms have built or are erecting bold, futuristic headquarters that convey their brands to employees and customers. Another example is Uber, a ride-hailing company, which is hoping to recast its reputation for secrecy and rugged competitiveness by designing an entirely see-through head office. It is expected to have some interior areas, as well as a park, that will be open to the public. + +The exteriors of the new buildings will attract most attention, but it is their interiors that should be watched more closely. The very newest buildings, such as Apple’s, are mostly still under wraps, but they are expected to be highly innovative in their internal layout. Some of that is because of fierce competition within the tech industry for the best engineering and other talent: firms are particularly keen to come up with attractive, productive environments. But these new office spaces will also signal how work is likely to evolve. Technology companies have already changed the way people behave in offices beyond their own industry, as a result of e-mail, online search and collaboration tools such as Slack. They are doing the same for physical spaces. + +The big idea championed by the industry is the concept of working in various spaces around an office rather than at a fixed workstation. Other industries have experimented with “activity-based working”, but tech is ahead. Employees may still have an assigned desk but they are not expected to be there, and they routinely go to different places to do various tasks. There are “libraries” where they can work quietly, as well as coffee shops, cafés and outdoor spaces for meetings and phone calls. The top two floors of Salesforce Tower, for example, will be used not as corner offices for executives but as an airy lounge for employees, where they can work communally and gaze out at the views over a latté. + +A fluid working environment is meant to allow for more chance encounters, which could spur new ideas and spark unexpected collaborations. Facebook’s central building is the world’s largest open-plan office, designed to encourage employees to bump into one another in its common spaces and in a nine-acre rooftop garden. Communal areas are meant to be casual and alluring. John Schoettler, head of real estate at Amazon, says he aims to make them into “living-room-like spaces”. For offices to feel like home, it helps to hire a designer with expertise in residential real-estate, says Elizabeth Pinkham of Salesforce. In common areas at the firm’s offices, there are TVs, couches and bookshelves. Framed photos of a few employees add to the effect. + +The new “working at home” + +For those who scoff at the creative benefits of being surrounded by pictures of Colin from accounts, there are more tangible payoffs. The lack of fixed workstations shrinks the amount of expensive real estate given to employees without leaving them feeling too squeezed. Tech firms devote around 14 square metres to each employee, around a quarter less than other industries, according to Randy Howder at Gensler, a design firm. Young workers are thought to be more productive in these varied environments, which are reminiscent of the way people study and live at university. One drawback, however, is that finding colleagues can be difficult. Employees need to locate each other through text messages and messaging apps. + +Collaborative spaces can also expose generational tensions, says Louise Mozingo, an architecture professor at the University of California, Berkeley. Tech firms’ elderly employees (otherwise known as the over-40s) can struggle to adjust to moving around during the day and to the frequent disruptions that come from large, open-plan offices. Many of Facebook’s employees do not like their office because it is noisy, and some Apple employees are hesitant to move into their new building for the same reason. Plenty also balk at the massive distances they will need to walk. + +That may not be the only thing to cause employees concern. Tech firms are increasingly keen to use their own products in their headquarters. Jensen Huang, the chief executive of Nvidia, a chipmaking firm whose graphics processing units are widely used in artificial-intelligence programmes, says his firm plans to introduce facial recognition for entry into its new headquarters, due to open later this year. + +Nvidia will also install cameras to recognise what food people are taking from the cafeteria and charge them accordingly, eliminating the need for a queue and cashier. A self-driving shuttle will eventually zip between its various buildings. And Nvidia’s own AI will monitor when employees arrive and leave, with the ostensible aim of adjusting the building’s heating and cooling systems. + +The data that firms can collect on their employees’ whereabouts and activities are bound to become ever more detailed. Another way of keeping tabs on people is through company-issued mobile phones. “Every employee has their own tracking device,” observes Mr Howder at Gensler. “Technology firms will sooner or later take advantage of that.” + +Few of them are willing to share details of their future plans because of concerns about employees’ privacy. However, some of their contractors signal what sort of innovations may be in the pipeline. Office-furniture makers, for example, are experimenting with putting sensors in desks and chairs, so that firms will be better able to monitor when workers are there. + +Such data could be anonymised to allay privacy concerns. They could also save electricity or help people find an empty room to hold a meeting. But it is not hard to imagine how such data could create a culture of surveillance, where employees feel constantly monitored. “Technology firms could be an indicator of what will happen with privacy in offices more generally,” says David Benjamin of Autodesk, a company that sells software to architects, among other clients. + +Silent discos and Bedouin tents + +A less controversial trend is for unusual office interiors. These can distinguish companies in the minds of their employees, act as a recruiting tool and also give staff a reason to come into the office rather than work from home. For companies that do not ship a physical product, such offices can serve as important daily reminders of culture and purpose. + +Last year LinkedIn, a professional social network, for example, opened a new building in San Francisco that is full of space set aside for networking, and that includes a “silent disco”, where people can dance to music with headphones on. Instead of offering generic meeting rooms with portentous names, Airbnb, a tech firm that lets people rent out their homes, has designed each of its meeting spaces after one of its rental listings, such as a Bedouin tent from Morocco. It also has a meeting room (pictured above) that is an exact replica of the rental apartment where the founders lived when they came up with the idea for Airbnb. Every detail, including the statue of Jesus in red velvet on top of the fireplace, is accurate, says Joe Gebbia, one of the company’s founders. + +Nvidia is obsessed with triangles, the basic element of computer graphics used to create lifelike scenes in video games and movies. Its new headquarters, which cost $370m, is shaped like one (see picture), and its interior is full of them. Everything, from the skylights to the benches in the lobby, is triangular. “At this point I’m kind of over the triangle shape, because we took that theme and beat it to death,” admits John O’Brien, the company’s head of real estate, who pointedly vetoed a colleague’s recent suggestion to offer triangle-shaped water bottles in the cafeteria. + +Three sides to every storey + + + +Such workspaces remind staff that they are choosing not just an employer but a way of life. In the tech bubble of the late 1990s companies disrupted the workplace by offering foosball tables, nap pods, blow-up castles and free lunches. Now the emphasis is on amenities that help employees save time. Larger firms, including Facebook, Alphabet and LinkedIn, offer their staff something akin to the services used by the extremely wealthy, helping employees to find places to live, adopt pets and the like. Some large tech groups offer on-site health care. + +The effect of all this is that the typical office at a technology firm is becoming a prosperous, self-contained village. Employees have fewer reasons than ever to leave. With the spare cash they can throw at their employees, tech giants have vastly raised the bar for other kinds of company, which also want to recruit clever engineers and techies for their projects. + +Other industries would be wise to take time to watch how tech firms are structuring their work environments. There is certainly a chance of a backlash against those that use their products to watch employees too closely. Workers may like free lunches and other perks associated with the tech business, but probably not enough to surrender their privacy entirely. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21721423-their-eccentric-buildings-offer-clues-about-how-people-will-work-technology-firms-and-office/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Cutting the tangle + +Steven Mnuchin gets started on tax reform but there is more to do + + +The proposed cuts may overly favour owners of “distorporations” + +Apr 27th 2017 | NEW YORK + + + + + +OF THE things that investors and bosses have come to like about Donald Trump, the most important is his promise to redraw America’s knackered corporate-tax system. On April 26th Steven Mnuchin, the treasury secretary, laid out a guide for reform. After weeks of anticipation, Wall Street will be relieved. The thrust of the plan is just what business folk want—a simpler system, with lower bills. But whether it helps the wider economy and ordinary citizens remains to be seen. And Mr Trump will have to push the reforms through a bitterly divided Congress. + +The actual tax rate America’s businesses pay in aggregate, of 20-25%, is much lower than the high, headline federal tax rate, of 35%. But in the home of free enterprise the taxman’s treatment of business is a muddle. There are three distortions. First, the treatment of overseas profits. Unlike most countries America taxes them when they are remitted back home, at high rates. The result is that American firms refuse to repatriate all their earnings, and collectively stash some $1trn of cash abroad. + + + +The second distortion is that loopholes encourage firms to change their legal status from ordinary “C-Corporations” into more exotic legal forms, including S-Corps (private firms with under 100 shareholders), partnerships, real-estate investment trusts and sole-proprietorships. Usually these hybrid forms do not pay tax at the corporate level. Instead the recipients of their profits—individuals or other legal entities—pay income tax. The number of these “distorporations” has become astonishingly large. They make up 31m of America’s 33m businesses and range from mom-and-pop firms to plutocrats’ hedge funds. They account for half of all profits, up from a fifth in 1980. + +Third, as in many countries, the tax code encourages firms to borrow rather than raise equity, as interest is tax-deductible. That led some to pile on debt before the financial crisis, and means some industries, including private equity and property, are addicted to borrowing. This month the IMF warned about corporate debt. + +Mr Mnuchin’s tax plan touches on two of the three problems. America will move to a “territorial” tax system, in which profits are taxed by the country they are earned in. It will also allow firms to bring home their stash of profits at a rate well below the statutory 35%. Most of the profits hoarded abroad are owned by technology and pharmaceutical giants that are unlikely to start an investment binge at home. Still, the plan will raise some revenue and make running global firms simpler. + +Next, the treasury secretary wants to cut the rate of tax paid by all firms to 15%—regardless of their legal status and size. This will cut tax bills, boosting overall corporate profits by, perhaps, $230bn, or 10%. And it should reduce the incentive for ordinary C-corps (which in aggregate pay an actual rate of about 30%) to metamorphose into more complex and opaque legal forms. + +Mr Mnuchin did not say anything about limiting the amount of interest that companies can deduct against their profits. Still it is possible that the administration will pursue this since it increases the base of profits that is taxed, raising revenue to pay for the headline tax-rate cut. + +Will the plan fly? One problem is the cost of the business tax cuts: a rough estimate is 1% of GDP a year, offset partly by a one-off gain from the repatriation of offshore cash. The other difficulty is whether it favours the wealthy too much. There are 24m sole-proprietorships, many of them small family firms. But they already pay a low rate of about 15%. Instead, tax cuts could help distorporations owned by tycoons, including Mr Trump’s own firm. Mr Mnuchin’s plan is a decent start. But if he wants support from Congress and from the public, he must do more to show that it is about unleashing the energy of America Inc, not borrowing to help the rich. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21721426-proposed-cuts-may-overly-favour-owners-distorporations-steven-mnuchin-gets-started-tax/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +High in the sky + +Small flying “cars” come a bit closer to reality + + +A German firm completes a test, and Uber promises a prototype by 2020 + +Apr 29th 2017 | DALLAS + + + + + +“YOU may smile, but it will come,” said Henry Ford in 1940, predicting the arrival of a machine that was part-automobile and part-aeroplane. For decades flying cars have obsessed technologists but eluded their mastery. Finally there is reason to believe. Several firms have offered hope that flying people in small pods for short trips might become a reality in the next decade. These are not cars, as most are not fit to drive on land, but rather small vehicles, which can rise and land vertically, like quiet helicopters. + +A prototype of a small electric plane that is capable of flying up to 300 kilometres per hour, made by Lilium, a German startup, completed a successful test over Bavaria on April 20th. Lilium is starting work on a five-seat vehicle and hopes to offer a ride-hailing service. Another German company, e-volo, has been testing a flying vehicle for several years. It recently showed off the second version of its electric Volocopter (pictured), which could be certified for flight as soon as next year. + + + +There are at least a dozen firms experimenting with making small flying vehicles in different guises, including Airbus, an aerospace giant, in partnership with Italdesign Giugiaro, a division of Volkswagen, a carmaker. Many plan to have a certified pilot in command at the beginning and then move on to an autonomous set-up when regulations allow. Motorcycle-type vehicles, which you sit astride, are also in the works. + +No matter which manufacturer is quickest to gain velocity, Uber, a ride-hailing firm, aims to be at the centre of things. On April 25th it held an event in Dallas to announce its plan to offer a service where people can hail an electric “vertical takeoff and landing” vehicle and ride it quickly to destinations that would otherwise take hours in heavy traffic. Uber does not want to build these aircraft or landing pads itself, just as it does not own its own cars. Instead, it plans to collaborate with other companies. But Jeff Holden, Uber’s chief product officer, does not exclude the possibility that the firm may at the outset own some aircraft, which he estimates will cost around $1m each. + +The firm plans to have a prototype of its service ready by 2020. It will launch it first in Dallas and in Dubai, both cities where the authorities have deep aviation expertise and where people commute long distances. The firm rather optimistically promises that the cost per aerial mile for passengers will be roughly that of its low-cost car service, UberX. + +There is plenty for manufacturers and services like Uber to overcome beyond gravity. For battery-powered models, range is limited and the charging rate remains slow. Manufacturers will need to ensure that vehicles can take off and land quietly, if this new form of transport is to stand a chance in cities. How to oversee and license the new aircraft, which are subject to much tougher rules than cars, will be a subject of intense debate among rule-makers, who tend to move slowly and are just getting to grips with drones. Drivers of flying vehicles are also likely to require a pilot’s licence, albeit perhaps a simplified “sports” licence. The journey ahead will be a long one. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21721339-german-firm-completes-test-and-uber-promises-prototype-2020-small-flying-cars-come/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +In a fix + +A giant cement firm may have unwittingly funded Islamic State + + +The boss of LafargeHolcim resigns over a scandal in Syria + +Apr 29th 2017 | PARIS + + + + + +KEEPING cool in the heat of war is not easy. That might help explain why LafargeHolcim, a French-Swiss cement-maker, blundered so badly while running operations in Syria as fighting raged. On April 24th the firm said that its chief executive, Eric Olsen, will go, a casualty of a growing scandal over its activities in the country. + +The board of the world’s biggest cement producer stated only last month that Mr Olsen was not responsible for, nor aware of, wrongdoing by the firm in Syria. But public pressure has been increasing, notably after Jean-Luc Mélenchon, a left-wing candidate in France’s presidential election, attacked the firm and its “damned cement” in a television debate on April 4th. François Fillon, a pro-business rival, agreed the firm should be punished if allegations against it proved to be true. + + + +At issue is the activity of Lafarge before the firm’s merger with its Swiss rival, Holcim, in 2015. In 2010 Lafarge had built a cement factory of 240 workers for $680m near Kobane, a north Syrian town. Operations there continued until 2014, long after the violence began in 2011. The firm evacuated foreigners in 2012; local workers fled in September 2014 as Islamic State (IS) fighters seized the plant. + +It looks extraordinary that managers hung on for so long after other foreign firms fled Syria—most did so soon after violence flared. Lafarge is accused of paying, via third parties, local armed groups, including some designated as terrorists, to keep the plant open and its staff secure. A report last year in Le Monde, a French paper, said the firm might unwittingly have funded IS. + +LafargeHolcim said then that it “completely rejects the concept of financing of designated terrorist groups”. But in March this year, after an internal independent inquiry into possible dealings with armed groups, its board said the investigation had found that measures taken by staff had been “unacceptable” and described “significant errors of judgment” which contravened the firm’s code of conduct. Senior managers, not only local staff, knew “violations of Lafarge’s established standards” were likely. In March the firm said that Bruno Lafont, CEO of Lafarge before the merger and now co-chairman of the merged firm, will not seek re-election. + +Evidence of exactly what happened in Syria is piling up. A Norwegian security officer at the plant for two years to 2013 has given details in a book of how he visited local militants to exchange information, “creating alliances” to cope with a power vacuum. France’s economy ministry filed a complaint with prosecutors in September 2016 and legal proceedings are ongoing. + +LafargeHolcim’s troubles do not end there. The company has also attracted criticism from Emmanuel Macron, one of the two candidates in the second round of the election (see article), and from other French politicians for saying it was ready to supply cement for Donald Trump’s planned wall along America’s border with Mexico. The giant firm’s market value is stuck at 15% below its level in July 2015, when it began trading, as it struggles to cut costs and generate earnings. The company doubtless hopes that Mr Olsen’s resignation will help to put at least one of its headaches behind it. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21721437-boss-lafargeholcim-resigns-over-scandal-syria-giant-cement-firm-may-have/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +A spring in their step + +French businesses relish the prospect of President Macron + + +His greatest service to French companies would be keeping out Marine Le Pen + +Apr 29th 2017 | PARIS + + + + + +THE likely election of Emmanuel Macron as France’s president, in a run-off vote on May 7th, has corporate leaders in a state of high anticipation. French politicians with business experience rarely prosper. It is nearly half a century since Georges Pompidou won office in 1969 on the back of a private-sector career partly at Rothschild, an investment bank. The sitting president, François Hollande, roused voters in 2012 by declaring that his “true enemy” was the world of finance. Mr Macron’s own stint at Rothschild, advising on mergers from 2008 to 2012, included handling a $12bn acquisition of a unit of Pfizer, a pharma firm, by Nestlé, a consumer-goods giant. + +Markets rose and bond yields fell after Mr Macron won the first round on April 23rd. His second-round opponent, Marine Le Pen of the far right, dismays business—one investor admits re-registering his firm as European rather than French, the better to shift headquarters were she to win. But Mr Macron is favourite. + + + +A chief of a big firm headquartered in Paris speaks of new optimism for France’s economy if Mr Macron wins. Business indicators are improving; measures of corporate confidence in particular have been ticking up for a while (see chart). A survey by IHS Markit, on April 21st, showed the tenth consecutive monthly increase in private firms’ activity. French purchasing managers clock in as markedly more bullish than German ones. The economy has been showing modest vim: GDP figures for the first quarter, out on April 28th, are expected to register year-on-year growth of 1.3%, up from 1.1% in the previous quarter. + + + +Mr Macron would cut corporation tax and public spending (though less than one rival, François Fillon, promised) and simplify a messy, expensive pensions system. Just as important for business, he promises to build on his previous efforts during a stint as economy minister to ease rigid labour markets that keep unemployment high. Caps on severance pay to fired employees and limits to legal processes that can reverse lay-offs are a priority for firms. Though Mr Macron has said he would not touch France’s 35-hour working week, brought in by the Socialists in 2000-02, he wants a German-style approach to labour relations, letting individual companies negotiate directly with unions, rather than accept national bargains. That would lessen the influence of national, often militant, unions on more moderate local ones. + +Beyond that, his plans to cut France’s high tax burden (the state spends 57% of GDP, more than any other big rich country) also cheers businesspeople and investors. Changes could be designed to send capital to smaller firms, such as the tech startups Mr Macron has championed in the past. Though he would not scrap France’s wealth tax, he would exclude financial assets from it. By also capping taxes on capital gains, he would make it more attractive to invest in local firms, reckons Ross McInnes, chairman of Safran, a big aeronautical and defence firm. “Family-owned and startup businesses can really benefit.” + +A worry for business as well as for Mr Macron’s supporters is that as a political outsider he may find it hard to get things done in office. His movement, En Marche! (“On the Move!”), may not secure a majority at the parliamentary elections to be held in June. Yet he is a vastly happier prospect than Ms Le Pen. Her populist wishlist includes talk of getting France out of the euro and imposing import taxes to discourage trade. The greatest service that Mr Macron can provide to corporate France, in other words, would be keeping her out. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21721436-his-greatest-service-french-companies-would-be-keeping-out-marine-le-pen-french-businesses/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Bend it like Baba + +India's Patanjali takes on Western consumer-goods firms + + +Baba Ramdev has spearheaded a billion-dollar juggernaut + +Apr 29th 2017 | MUMBAI + + + + + +EXECUTIVES at firms selling consumer staples like to think of themselves as “marketing gurus”. But how many could actually contort themselves into the lotus position, let alone attempt a headstand? Such feats are nothing for the top brass at Patanjali, an Indian purveyor of toothpaste, cooking oil, herbal concoctions and much else. Fronted by a bona fide guru, the firm’s marketing strategy—play up the benefits of natural products, then paint foreign multinationals as latter-day imperialists—delivers over $1bn in annual sales, up tenfold in four years. Having dismissed the firm as a fad, the likes of Colgate-Palmolive and Unilever are emulating it. + +Baba Ramdev (pictured), an ascetic yogi who is the public face of the brand, makes for an unconventional capitalist symbol. But with Acharya Balkrishna, a devotee of his who serves as the firm’s boss and majority-owner, he has built a consumer-goods powerhouse that is vying with the business-school graduates at the multinationals. Starting out two decades ago as an apothecary of traditional Ayurvedic potions, Patanjali has expanded into personal care, home products, packaged food and more. Mr Ramdev’s beard and saffron robes are among India’s most widely seen corporate emblems. + + + +Marketing textbooks suggest the firm should have stumbled a while back. Whereas multinationals such as Procter & Gamble spend heavily to advertise dozens of sub-brands, Patanjali grew by word of mouth and sells everything from detergent to cornflakes and hair oil under its own name. Established players outsource their manufacturing and sell through shops owned by third parties; Patanjali has its own plants and has built a network of thousands of exclusive, franchised stores across India. Its head office in Haridwar, in the foothills of the Himalayas, is not in a place consultants would recommend. + +Nor would they have predicted the success of its formula—good quality and value plus indignant nationalism. Newspaper ads beseech customers to shake off the yoke of multinational firms in the way their forebears resisted Britain’s East India Company. A dash of cow urine in a handful of products, including soap and floor cleaner, burnishes its Hindu credentials. + +Patanjali’s rise coincides with the arrival in office of Narendra Modi, India’s yoga-loving prime minister, in 2014 (Mr Ramdev appeared at his political rallies). Its rhetoric is the business counterpart to the Modi government’s Hindu-first chauvinism. Opposition politicians have complained that Patanjali has enjoyed low prices for land in deals with state governments that are run by politicians allied to Mr Modi. + +The company is able to offer customers good value partly because it spends only 2-3% of revenues on advertising (consumer firms typically spend 12-18%). For many of its products, its modern plants use much the same machinery and inputs as its rivals, but cheaper staff. Lower costs mean operating margins of over 20% in its last published accounts (the firm is unlisted, and says it plans to stay that way), beating global firms. + +Soul trader + + + +Multinational and local rivals at first behaved as if Patanjali did not exist. But after its herbal toothpaste won a dedicated following, in 2015 Colgate launched an offering aimed at Patanjali, the first time in its nearly eight decades in India that it had marketed an explicitly local product. Unilever has a range of Ayurvedic shampoos. Nestlé added 25 products across food categories to ward off the beaming guru, but Patanjali is still coming close to matching its sales (see chart). + +Patanjali’s latest push is into food staples such as cooking oil and flour. There it will take market share from unbranded small-scale rivals rather than multinationals, which steer clear of such low-margin business. More products look likely to get the bearded yogi’s seal of approval. A line of purposely frumpy jeans for women is in the works; restaurants may be, too. + +Sceptics think the company is as big as it can get without becoming more like the multinationals it decries. It is starting to use some of their methods. Patanjali is distributing more of its products outside its own shop network. It is reportedly outsourcing more of its manufacturing, too. It is increasing its spending on advertising. Mr Balkrishna has considered expanding abroad. + +The firm may also face fiercer domestic competition in future. Other spiritual leaders have noted Patanjali’s success. Sri Sri Ravi Shankar, a guru with a big following among the urban middle classes who rivals Mr Ramdev for Mr Modi’s affections, is branching out from Ayurveda into food and personal care. Gurmeet Ram Rahim Singh, a self-proclaimed saint who packs out huge stadiums singing his techno hit “Love Charger”, is now in business too, selling more than 400 products. Others will follow. It does not take a marketing guru to figure out how easily followers can be turned into shoppers. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21721440-baba-ramdev-has-spearheaded-billion-dollar-juggernaut-indias-patanjali-takes-western/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Schumpeter + +A Form 10-K for America’s government + + +A new website treats the state as if it were a company + +Apr 27th 2017 + + + + + +WHEN he was running Microsoft, Steve Ballmer was famous for his energy. In a legendary clip of a company meeting that has received almost a million hits on YouTube, he charges onto the stage and launches into his “monkey dance”, before roaring into a microphone: “I love this company!” Mr Ballmer stood down from the software giant in 2014 and has new outlets for his drive. One is the LA Clippers, a basketball team he bought for $2bn. The other could not be more different: a project to create a Form 10-K, a type of corporate report, for America’s dysfunctional government. That is more revolutionary than it sounds. + +In most walks of life, 10-K denotes a long-distance run or a sum of money. In the investment world it refers to the report that American regulators force all listed companies to publish once a year. Investors have a near-religious reverence for 10-Ks. They are the global gold standard of corporate disclosure: 300 or so warts-and-all pages that contain a firm’s financial accounts and describe its objectives, conflicts of interests, governance, risks and flaws. Fund managers scour the documents to ensure that firms’ executives are not fibbing. Bosses study their competitors’ forms. + + + +Mr Ballmer’s aim is for his 10-K on the government to contain everything citizens need to know “without hyperbole and without omission”, as he puts it. This may appear an eccentric ambition, but in an era of fake news and partisan division many Americans have shown themselves to be hungry for objective information. Mr Ballmer published the nation’s first 10-K on a new website, USAfacts.org, that was launched on April 18th. It is already wildly popular, receiving 2.6m page views on its first day. + +Treating the government like a company has obvious limitations. Firms exist to maximise profits within the law. The job of governments is to maximise the overall welfare of citizens within financial constraints. Governments can tax, and print money, so they can borrow far more. Companies’ governance is child’s play compared with running a nation. The government faces many more risks than firms do. Pages 51-54 of the new national 10-K list as dangers riots, war with a powerful adversary and also the fact that “human behaviour cannot be fully regulated or controlled”. + +Yet there are benefits to looking at Leviathan as you would a firm. A 10-K requires that all activities are “consolidated” together in one place, whereas the government issues millions of documents—GDP accounts, budget documents, crime reports—that rarely cohere and are often gibberish to voters. Mr Ballmer’s 10-K aggregates every branch of the state, from Alaska’s local governments to the Federal Reserve. It splits the total into four operating divisions, based on the constitution. Each division has its own finances and key performance indicators, as at a company. + +The numbers show that, as you might expect, the government is hugely complex, with about 100,000 bodies. Its $5trn of revenues are 11 times greater than Walmart’s, the world’s biggest firm by sales. The state’s main costs are transfer payments, such as welfare and wages for government employees. Viewed as a firm it has a profit margin of minus 3%, compared with 8% for the aggregate of firms in the S&P 500 index. Even leaving aside education, it invests more in the future than firms. R&D and capital expenditures together take up 12% of revenue, compared with 8% for the S&P 500. But its debts are a whopping 289% of sales (tax revenues) versus 77% for the S&P 500. + +An investor considering Leviathan Inc would certainly look askance at its record. Performance over the past decade has been “a mixture of stagnation, progression towards, and retreat from, achievement of our constitutional objectives”, says the 10-K. And its prospects are dim. As Social Security and health-care costs rise, the deficit and debt levels will deteriorate, even threatening the government’s status as a going concern by around 2046. + +Governance is poor. The country is not managed using a coherent taxonomy. So, for example, the House of Representatives, the Senate and the White House each split the job of running America into roughly 20 operating divisions. But their categories are different, meaning crossed wires and insufficient accountability. Investors detest firms with “related-party transactions”, in which executives receive money from customers, the firm or counterparties on top of their compensation package. Page 152 of Leviathan Inc’s 10-K reveals a troublingly high level of such related-party transactions in the form of political funding (much from cash-rich companies as well as from individual donors). + +I love this country + +The idea that charismatic businesspeople can save the government from itself is a recurring theme in American politics. In 1909 Franklin MacVeagh, the treasury secretary, promised to run the government on a business basis. Ross Perot, a businessman, ran for president twice using the same logic. Donald Trump is the latest adherent to this view. He has filled his cabinet with swaggering tycoons, such as Wilbur Ross, the commerce secretary, hoping they can knock heads together harder than career politicians can. + +Economists and policy wonks tend to dismiss the idea that government can learn much from business. That seems odd. Certainly, boardroom bravado is not the answer to America’s problems. But Mr Ballmer draws on a business tradition different from that of Mr Trump—its habit of clever, rational analysis. + +A curious fact about America is that, while its government has gradually slid into gridlock and ill-repute, its companies have become more globally dominant than at any point, probably, in history. Of the world’s 20 most-valuable firms, 14 are American (including, still, Microsoft). They are ruthlessly effective about meeting their objectives of greater market power and profits. If you want to find a reliance on facts, cold rationality and coherent, purposeful organisation in America, look to its firms rather than to its media or its politicians. The 10-K will appear every year. It should be read widely. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21721428-new-website-treats-state-if-it-were-company-form-10-k-americas-government/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Briefing + + +Battle of three centuries: The history of central banks [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +The battle of three centuries + +The history of central banks + + +Contemporary criticisms of central banks echo debates from times past + +Apr 27th 2017 + + + + + +TWENTY years ago next month, the British government gave the Bank of England the freedom to set interest rates. That decision was part of a trend that made central bankers the most powerful financial actors on the planet, not only setting rates but also buying trillions of dollars’ worth of assets, targeting exchange rates and managing the economic cycle. + +Although central banks have great independence now, the tide could turn again. Central bankers across the world have been criticised for overstepping their brief, having opined about broader issues (the Reserve Bank of India’s Raghuram Rajan on religious tolerance, the Bank of England’s Mark Carney on climate change). In some countries the fundamentals of monetary policy are under attack: Recep Tayyip Erdogan, the president of Turkey, has berated his central bank because of his belief that higher interest rates cause inflation. And central banks have been widely slated for propping up the financial sector, and denting savers’ incomes, in the wake of the financial crisis of 2007-08. + + + +Such debate is almost as old as central banking itself. Over more than 300 years, the power of central banks has ebbed and flowed as governments have by turns enhanced and restricted their responsibilities in response to economic necessity and intellectual fashion. Governments have asked central banks to pursue several goals at once: stabilising currencies; fighting inflation; safeguarding the financial system; co-ordinating policy with other countries; and reviving economies. + +These goals are complex and not always complementary; it makes sense to put experts in charge. That said, the actions needed to attain them have political consequences, dragging central banks into the democratic debate. In the early decades after American independence, two central banks were founded and folded before the Federal Reserve was established in 1913. Central banks’ part in the Depression of the 1930s, the inflationary era of the 1960s and 1970s and the credit bubble in the early 2000s all came under attack. + +Bankers to the government + +The first central banks were created to enhance the financial power of governments. The pioneer was the Sveriges Riksbank, set up as a tool of Swedish financial management in 1668 (the celebration of its tercentenary included the creation of the Nobel prize in economics). But the template was set by the Bank of England, established in 1694 by William III, ruler of both Britain and the Netherlands, in the midst of a war against France. In return for a loan to the crown, the bank gained the right to issue banknotes. Monarchs had always been prone to default—and had the power to prevent creditors from enforcing their rights. But William depended on the support of Parliament, which reflected the interests of those who financed the central bank. The creation of the bank reassured creditors and made it easier and cheaper for the government to borrow. + +No one at the time expected these central banks to evolve into the all-powerful institutions of today. But a hint of what was to come lay in the infamous schemes of John Law in France from 1716 to 1720. He persuaded the regent (the king, Louis XV, was an infant) to allow him to establish a national bank, and to decree that all taxes and revenues be paid in its notes. The idea was to relieve the pressure on the indebted monarchy. The bank then assumed the national debt; investors were persuaded to swap the bonds for shares in the Mississippi company, which would exploit France’s American possessions. + +One of the earliest speculative manias ensued: the word “millionaire” was coined as the Mississippi shares soared in price. But there were no profits to be had from the colonies and when Law’s schemes collapsed, French citizens developed an enduring suspicion of high finance and paper money. Despite this failure, Law was on to something. + +Paper money was a more useful medium of exchange than gold or silver, particularly for large amounts. Private banks might issue notes but they were less trustworthy than those printed by a national bank, backed by a government with tax-raising powers. Because paper money was a handier medium of exchange, people had more chance to trade; and as economic activity grew, government finances improved. Governments also noticed that issuing money for more than its intrinsic value was a nice little earner. + +Alexander Hamilton, America’s first treasury secretary, admired Britain’s financial system. Finances were chaotic in the aftermath of independence: America’s first currency, the Continental, was afflicted by hyperinflation. Hamilton believed that a reformed financial structure, including a central bank, would create a stable currency and a lower cost of debt, making it easier for the economy to flourish. + +His opponents argued that the bank would be too powerful and would act on behalf of northern creditors. In “Hamilton”, a hit hip-hop musical, the Thomas Jefferson character declares: “But Hamilton forgets/His plan would have the government assume state’s debts/Now, place your bets as to who that benefits/The very seat of government where Hamilton sits.” + +Central banking was one of the great controversies of the new republic’s first half-century. Hamilton’s bank lasted 20 years, until its charter was allowed to lapse in 1811. A second bank was set up in 1816, but it too was resented by many. Andrew Jackson, a populist president, vetoed the renewal of its charter in 1836. + +Good as gold + +A suspicion that central banks were likely to favour creditors over debtors was not foolish. Britain had moved onto the gold standard, by accident, after the Royal Mint set the value of gold, relative to silver, higher than it was abroad at around the turn of the 18th century, and silver flowed overseas. Since Bank of England notes could be exchanged on demand for gold, the bank was in effect committed to maintaining the value of its notes relative to the metal. + +By extension, this meant the bank was committed to the stability of sterling as a currency. In turn, the real value of creditors’ assets (bonds and loans) was maintained; on the other side, borrowers had no prospect of seeing debts inflated away. + +Gold convertibility was suspended during the Napoleonic wars: government debt and inflation soared. Parliament restored it in 1819, although only by forcing a period of deflation and recession. For the rest of the century, the bank maintained the gold standard with the result that prices barely budged over the long term. But the corollary was that the bank had to raise interest rates to attract foreign capital whenever its gold reserves started to fall. In effect, this loaded the burden of economic adjustment onto workers, through lower wages or higher unemployment. The order of priorities was hardly a surprise when voting was limited to men of property. It was a fine time to be a rentier. + +The 19th century saw the emergence of another responsibility for central banks: managing crises. Capitalism has always been plagued by financial panics in which lenders lose confidence in the creditworthiness of private banks. Trade suffered at these moments as merchants lacked the ability to fund their purchases. In the panic of 1825 the British economy was described as being “within twenty-four hours of a state of barter.” After this crisis, the convention was established that the Bank of England act as “lender of last resort”. Walter Bagehot, an editor of The Economist, defined this doctrine in his book “Lombard Street”, published in 1873: the central bank should lend freely to solvent banks, which could provide collateral, at high rates. + +The idea was not universally accepted; a former governor of the Bank of England called it “the most mischievous doctrine ever breathed in the monetary or banking world”. It also involved a potential conflict with a central bank’s other roles. Lending in a crisis meant expanding the money supply. But what if that coincided with a need to restrict the money supply in order to safeguard the currency? + +As other countries industrialised in the 19th century, they copied aspects of the British model, including a central bank and the gold standard. That was the pattern in Germany after its unification in 1871. + +America was eventually tipped into accepting another central bank by the financial panic of 1907, which was resolved only by the financial acumen of John Pierpont Morgan, the country’s leading banker. It seemed rational to create a lender of last resort that did not depend on one man. Getting a central bank through Congress meant assuaging the old fears of the “eastern money power”. Hence the Fed’s unwieldy structure of regional, privately owned banks and a central, politically appointed board. + + + +Ironically, no sooner had the Fed been created than the global financial structure was shattered by the first world war. Before 1914 central banks had co-operated to keep exchange rates stable. But war placed domestic needs well ahead of any international commitments. No central bank was willing to see gold leave the country and end up in enemy vaults. The Bank of England suspended the right of individuals to convert their notes into bullion; it has never been fully reinstated. In most countries, the war was largely financed by borrowing: central banks resumed their original role as financing arms of governments, and drummed up investor demand for war debt. Monetary expansion and rapid inflation followed. + +Interwar failure + +Reconstructing an international financial system after the war was complicated by the reparations imposed on Germany and by the debts owed to America by the allies. It was hard to co-ordinate policy amid squabbling over repayment schedules. When France and Belgium occupied the Ruhr in 1923 after Germany failed to make payments, the German central bank, the Reichsbank, increased its money-printing, unleashing hyperinflation. Germans have been wary of inflation and central-bank activism ever since. + +The mark eventually stabilised and central banks tried to put a version of the gold standard back together. But two things hampered them. First, gold reserves were unevenly distributed, with America and France owning the lion’s share. Britain and Germany, which were less well endowed, were very vulnerable. + +Second, European countries had become mass democracies, which made the austere policies needed to stabilise a currency in a crisis harder to push through. The political costs were too great. In Britain the Labour government fell in 1931 when it refused to enact benefit cuts demanded by the Bank of England. Its successor left the gold standard. In Germany Heinrich Brüning, chancellor from 1930 to 1932, slashed spending to deal with the country’s foreign debts but the resulting slump only paved the way for Adolf Hitler. + +America was by then the most powerful economy, and the Fed the centrepiece of the interwar financial system (see chart 1). The central bank struggled to balance domestic and international duties. A rate cut in 1927 was designed to make life easier for the Bank of England, which was struggling to hold on to the gold peg it had readopted in 1925. But the cut was criticised for fuelling speculation on Wall Street. The Fed started tightening again in 1928 as the stockmarket kept booming. It may have overdone it. + + + +If central banks struggled to cope in the 1920s, they did even worse in the 1930s. Fixated on exchange rates and inflation, they allowed the money supply to contract sharply. Between 1929 and 1933, 11,000 of America’s 25,000 banks disappeared, taking with them customers’ deposits and a source of lending for farms and firms. The Fed also tightened policy prematurely in 1937, creating another recession. + +During the second world war central banks resumed their role from the first: keeping interest rates low and ensuring that governments could borrow to finance military spending. After the war, it became clear that politicians had no desire to see monetary policy tighten again. The result in America was a running battle between presidents and Fed chairmen. Harry Truman pressed William McChesney Martin, who ran the Fed from 1951 to 1970, to keep rates low despite the inflationary consequences of the Korean war. Martin refused. After Truman left office in 1953, he passed Martin in the street and uttered just one word: “Traitor.” + +Lyndon Johnson was more forceful. He summoned Martin to his Texas ranch and bellowed: “Boys are dying in Vietnam and Bill Martin doesn’t care.” Typically, Richard Nixon took the bullying furthest, leaking a false story that Arthur Burns, Martin’s successor, was demanding a 50% pay rise. Attacked by the press, Burns retreated from his desire to raise interest rates. + +In many other countries, finance ministries played the dominant role in deciding on interest rates, leaving central banks responsible for financial stability and maintaining exchange rates, which were fixed under the Bretton Woods regime. But like the gold standard, the system depended on governments’ willingness to subordinate domestic priorities to the exchange rate. By 1971 Nixon was unwilling to bear this cost and the Bretton Woods system collapsed. Currencies floated, inflation took off and worse still, many countries suffered high unemployment at the same time. + +This crisis gave central banks the chance to develop the powers they hold today. Politicians had shown they could not be trusted with monetary discipline: they worried that tightening policy to head off inflation would alienate voters. Milton Friedman, a Chicago economist and Nobel laureate, led an intellectual shift in favour of free markets and controlling the growth of the money supply to keep inflation low. This “monetarist” approach was pursued by Paul Volcker, appointed to head the Fed in 1979. He raised interest rates so steeply that he prompted a recession and doomed Jimmy Carter’s presidential re-election bid in 1980. Farmers protested outside the Fed in Washington, DC; car dealers sent coffins containing the keys of unsold cars. But by the mid-1980s the inflationary spiral seemed to have been broken. + +The rise to power + +In the wake of Mr Volcker’s success, other countries moved towards making central banks more independent, starting with New Zealand in 1989. Britain and Japan followed suit. The European Central Bank (ECB) was independent from its birth in the 1990s, following the example of Germany’s Bundesbank. Many central bankers were asked to target inflation, and left to get on with the job. For a long while, this approach seemed to work perfectly. The period of low inflation and stable economies in the 1990s and early 2000s were known as the “Great Moderation”. Alan Greenspan, Mr Volcker’s successor, was dubbed the “maestro”. Rather than bully him, presidents sought his approbation for their policies. + +Nevertheless, the seeds were being sown for today’s attacks on central banks. In the early 1980s financial markets began a long bull run as inflation fell. When markets wobbled, as they did on “Black Monday” in October 1987, the Fed was quick to slash rates. It was trying to avoid the mistakes of the 1930s, when it had been too slow to respond to financial distress. But over time the markets seemed to rely on the Fed stepping in to rescue them—a bet nicknamed the “Greenspan put”, after an option strategy that protects investors from losses. Critics said that central bankers were encouraging speculation. + +However, there was no sign that the rapid rise in asset prices was having an effect on consumer inflation. Raising interest rates to deter stockmarket speculation might inflict damage on the wider economy. And although central banks were supposed to ensure overall financial stability, supervision of individual banks was not always in their hands: the Fed shared responsibility with an alphabet soup of other agencies, for example. + + + +When the credit bubble finally burst in 2007 and 2008, central banks were forced to take extraordinary measures: pushing rates down to zero (or even below) and creating money to buy bonds and crush long-term yields (quantitative easing, or QE: see chart 2). As governments tightened fiscal policy from 2010 onwards, it sometimes seemed that central banks were left to revive the global economy alone. + +Their response to the crisis has called forth old criticisms. In an echo of Jefferson and Jackson, QE has been attacked for bailing out the banks rather than the heartland economy, for favouring Wall Street rather than Main Street. Some Republicans want the Fed to make policy by following set rules: they deem QE a form of printing money. The ECB has been criticised both for favouring northern European creditors over southern European debtors and for cosseting southern spendthrifts. + +And central banks are still left struggling to cope with their many responsibilities. As watchdogs of financial stability, they want banks to have more capital. As guardians of the economy, many would like to see more lending. The two roles are not always easily reconciled. + +Perhaps the most cutting criticism they face is that, despite their technocratic expertise, central banks have been repeatedly surprised. They failed to anticipate the collapse of 2007-08 or the euro zone’s debt crisis. The Bank of England’s forecasts of the economic impact of Brexit have so far been wrong. It is hard to justify handing power to unelected technocrats if they fall down on the job. + +All of which leaves the future of central banks uncertain. The independence granted them by politicians is not guaranteed. Politicians rely on them in a crisis; when economies recover they chafe at the constraints central banks impose. If history teaches anything, it is that central banks cannot take their powers for granted. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21721354-contemporary-criticisms-central-banks-echo-debates-times-past-history-central/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Finance and economics + + +All at sea: Trade policy [Fri, 28 Apr 08:52] + +Striking when the iron is cold: Steel tariffs [Fri, 28 Apr 08:52] + +Thiam’s tweak: Credit Suisse [Fri, 28 Apr 08:52] + +Jumping the shark: Buttonwood [Fri, 28 Apr 08:52] + +Coining it: Crowdfunding [Fri, 28 Apr 08:52] + +Minor threat: Free exchange [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Trade policy + +The Trump administration starts to turn up the heat on trade + + +Hopes that the protectionist candidate would mellow in office are fading + +Apr 27th 2017 + + + + + +“WELL, I’m mostly there on most items,” said Donald Trump of his 100-day plan. As far as trade policy is concerned, his self-assessment would indeed be true—if tweets and executive orders ratcheting up tensions in a growing number of trade disputes constituted progress. + +However, although Mr Trump has withdrawn America from the Trans-Pacific Partnership (TPP), a 12-country trade deal, he has neither labelled China a currency manipulator nor made progress in renegotiating the North American Free-Trade Agreement (NAFTA). On April 26th his administration denied reports that it was poised to trigger America’s withdrawal from the agreement. No new “America-first” trade deals have emerged, and his trade-related executive orders have requested reports or investigations. Mr Trump has created more work for pencil-pushers than for exporters. + + + +The slow pace might reflect the obvious ideological infighting within his team, a desire for evidence before acting or the realisation that Congress, which sees trade policy as within its remit, must be kept on side. Congress officially delegates responsibility for trade to the United States Trade Representative. But it has yet to confirm Robert Lighthizer, Mr Trump’s pick for the job. Another reason for delay is that other priorities have intervened. Seeking China’s help over North Korea’s nuclear programme, for example, Mr Trump has explicitly used American trade concessions as an inducement. + +Mr Trump has done enough, however, to prod America’s trading partners into action. Both the Canadian and Mexican governments have been busily strengthening trade ties elsewhere. Mexican officials say they have stepped up efforts to finish a trade deal with the EU by the end of the year. They also report that Mr Trump’s threats have swayed private-sector opinion: business now understands that Mexican negotiators will have a stronger hand in talks with America if they can credibly threaten to import wheat and corn from Brazil or Argentina. So it now backs the government’s courtship of Brazil. + +The EU has seen its proposed trade deal with America plunged into the deep freeze. So its trade commissioner, Cecilia Malmström, has trumpeted trade talks with Japan and the ASEAN countries of South-East Asia, as well as with Australia, New Zealand and Chile. If Mr Trump does not want to party, goes the implicit threat, others do. Mr Trump may even have eased Ms Malmström’s job by making anti-trade sentiment less cool and fashionable, particularly in Germany. She claimed on March 29th that “there has never been a more important time to defend the global, rules-based system.” + +With Mr Trump seemingly hostile to America’s traditional role as promoter of that rules-based system, the Japanese are also keen to fill the gap. Shinzo Abe, Japan’s prime minister, had called the TPP “meaningless” without America, but his government is now trying to salvage it. Too much time, effort and political capital had been invested in TPP to give it up without a fight. And the advanced trade rules TPP imposed are too valuable to waste. Japanese officials are busy garnering support to revive the deal. In time, its economic and strategic benefits might even lure America back. A distant dream, though some joke that renaming the deal the Trump Pacific Partnership might do the trick. + +The travails of the TPP had been expected to invigorate the other big trade deal in Asia and the Pacific, the Regional Comprehensive Economic Partnership (RCEP). That does not involve America, and is seen as a chance for the Chinese government to show regional leadership. Although the pace of talks picked up after Mr Trump’s election, progress remains glacial. Mari Pangestu, a former Indonesian trade minister, says that some of the seven TPP members who are also in RCEP would like to see some elements moved across. “But at this point in the negotiations it’s probably best to focus on what is already on the table.” + +Steel yourself + +Even were he interested in new multilateral trade deals, Mr Trump would find his authority constrained. On NAFTA, a drastic action such as triggering withdrawal would be his prerogative. But in any renegotiation, he will be partly beholden to Congress. On trade disputes, however, more is at stake, and there is more cause for alarm at the damage Mr Trump’s trigger-happy approach might wreak. + +Since 1995 the World Trade Organisation (WTO) has been the main arbiter of international trade disputes. But on April 19th Mr Trump’s administration seemed to take matters into its own hands, starting an investigation into whether steel imports are a threat to national security (see article). A similar probe into aluminium imports was announced this week. America has also imposed duties averaging 20% on imports of Canadian lumber (see article). + +Wilbur Ross, the commerce secretary, will oversee the investigations. He cites the improbable worry that cheap metal imports are undermining America’s skills base and its ability to mount a rapid military build-up if needed. Current steel policy, a slew of 152 narrow tariffs on various products, are too easy to circumvent. He is considering broader measures. His department has 270 days to assess the problem and recommend action. Mr Trump said he expected results within 30 to 50 days. + +Fans of the rules-based system are aghast. Chad Bown, a trade expert at the Peterson Institute for International Economics, a think-tank, describes the Trade Expansion Act, the law from 1962 the Trump administration has invoked, as the “nuclear option”, adding that “it calls the whole rules-based system into question.” The act, sparse on details, gives the president huge discretion. WTO rules bar countries from slapping tariffs on randomly, but make an exception for national security. James Bacchus, a former chief judge for the WTO (and a former congressman), comments that “no one knows what it means and no one wants to know what it means.” He says it could be a “Pandora’s box”, used to justify any type of trade restriction. + +Mr Bacchus worries that if America looks for excuses to violate trade rules, other countries will too. “WTO law only succeeds if those who are bound by it engage in mutual self-restraint. We Americans should be the first to show self-restraint.” Mr Trump has relinquished America’s role of stewardship of the global rules-based system. The question is whether the system will survive such a loss. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21721409-hopes-protectionist-candidate-would-mellow-office-are-fading-trump/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Striking when the iron is cold + +Protecting American steel from imports makes no sense + + +Far from saving jobs, it will destroy them + +Apr 27th 2017 + + + + + +AS AN example of all that is wrong with Donald Trump’s view of trade, the probe he has ordered into the steel industry is particularly hard to beat. If it results, as seems to be the plan, in blanket punitive tariffs slapped on steel imports, the consequences would be dire: the American economy would be hurt by a rise in the price of an essential material; it would invite retaliation that would cost American jobs, not save them; and the underlying problem—massive global steel overcapacity—would persist. + +For Trumpists, steel is an emblem of their country’s descent from greatness. Ever since the 1960s, when production peaked at 168m tonnes a year, the industry has been in decline. Today it makes half as much as 50 years ago and employs just a third of the workers. Steelmakers have long blamed foreign rivals for their woes and lobbied hard for protection. So Mr Trump is not the first president to try to shield the industry from foreign competition. In the 1980s Ronald Reagan signed a series of agreements to limit imports. In 2002 George W. Bush imposed tariffs of up to 30%. Back then the bogeymen were steelmakers in Europe and Japan; now it is China, where a glut of steel has squashed prices. + + + +Cheap steel, however, is a boon to many producers as well as to consumers. Higher prices would hit firms that use the metal, such as carmakers. Mr Bush’s tariffs, for instance, are estimated to have cost 200,000 jobs in these industries—more than the 145,000 Americans employed in steelmaking today. + +Moreover, the big threat to steelmakers’ jobs comes not from trade but technology. In the Reagan era 80% of the metal was made in the traditional way: converting iron ore and coke into pig iron in a blast furnace, before turning this into steel. Only a third is made in this way today. Scrap metal is replacing new pig iron. Smaller electric-arc furnaces are more efficient, thanks in large part to cheaper electricity, and can compete on quality and cost with blast furnaces. Methods that use shale gas instead of coal to make iron for steelmaking are also replacing pig iron. Thanks to such advances, labour productivity in steelmaking has increased fivefold since the 1980s, according to the American Iron and Steel Institute, a trade association. Tariffs will not bring lost jobs back. + + + +Nor would they solve the underlying problem in global steel markets, which is the huge excess steel capacity in China. Indeed, they could be counterproductive in their effects. Existing trade-protection measures have successfully diverted Chinese steel to other markets. In 2016 Chinese steel made up just 4% of American steel imports, compared with 27% from Mexico and Canada combined and 23% from the European Union (see chart). A tariff that was imposed on imports from other countries would risk splitting a potential alliance between America and the rest of the world against China. + +If a blanket tariff were to spark a wider trade war, the irony is that the biggest losers would include modern American steelmakers. At last they are becoming competitive abroad again. If Mr Trump really wants to boost American steel, free trade would be a much better bet. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21721413-far-saving-jobs-it-will-destroy-them-protecting-american-steel-imports/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Thiam’s tweak + +Credit Suisse unveils another change of course + + +After a good first quarter, Europe’s most troubled banks are looking healthier + +Apr 27th 2017 + + + + + +EUROPE’S most troubled big banks may at last be on the road to recovery. Not only is economic growth perking up; uncomfortable decisions, put off too long, are also being taken. In recent months UniCredit, Italy’s largest lender, has written down bad debt by €8.1bn ($8.7bn) and tapped shareholders for €13bn. Deutsche Bank, Germany’s biggest, has raised €8bn in equity and decided to keep a retail business it had hoped to sell. On April 27th it reported first-quarter net income of €575m, up from €236m a year earlier, although revenue fell. + +Like Deutsche, Credit Suisse is freer to make plans after a recent settlement with American authorities over mis-selling mortgage-backed securities before the financial crisis. On April 26th Switzerland’s second-biggest bank reported first-quarter net income of SFr596m ($594m), far better than forecast, reversing a SFr302m loss a year before. Along with most of Wall Street, which published earnings earlier in the month, and Deutsche it benefited from a good quarter for fixed-income trading. It expects to wind up a unit in which it has dumped unwanted assets by the end of 2018, a year ahead of schedule. + + + +Credit Suisse’s chief executive, Tidjane Thiam, has also ditched a plan to float 20-30% of the group’s Swiss universal bank—part of a scheme, conceived in 2015, to raise SFr9bn-11bn of capital. He now intends to bring in SFr4bn through a rights issue. (Share sales in 2015 raised SFr6bn.) + +Shareholders had never been keen on the flotation, which would have diluted their returns from the division that contributes most to Credit Suisse’s profits. A climb in the share price, by more than 50% since July, has made a rights issue more attractive. The issue will lift Credit Suisse’s ratio of common equity to risk-weighted assets (a key gauge of banks’ strength) from 11.7% to 13.4%. That boosts it from a middling position among its European peers, but still leaves it behind Deutsche and UBS, its bigger Swiss neighbour. + +Mr Thiam claimed the quarterly figures endorsed a strategic shift towards Asia which he announced 18 months ago. He considers the region’s newly rich to be ideal clients for a bank which can meet the needs of both their businesses and their families. Credit Suisse’s Asian division, like the Swiss universal bank, provides wealth management and investment banking locally. Functional divisions serve the rest of the world. To many, this structure looks lopsided. Mr Thiam is sure that it is working. The Asian wealth-management business saw profits rise by two-thirds in the year to the first quarter. The region’s markets business tumbled into loss, but Mr Thiam insists that a change of management will help turn it around. + +All this should placate shareholders, who have had plenty to grumble about—and whom Mr Thiam faces at the annual meeting on April 28th. This month he and other executives gave up 40% of their latest bonuses, which had been criticised by advisers to institutional investors. The bosses had hit their targets, but the bank lost money in 2015 and 2016. Better luck this year. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21721419-after-good-first-quarter-europes-most-troubled-banks-are-looking/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Buttonwood + +Exchange-traded funds become too specialised + + +One even invests in the shares of ETF providers + +Apr 27th 2017 + + + + + +THERE comes a time when every financial innovation is taken a bit too far—when, in television terms, it “jumps the shark” and sacrifices plausibility in search of popularity. That may have happened in the exchange-traded fund (ETF) industry. The latest ETF to be launched is a fund that invests in the shares of ETF providers. + +The notion has a certain logic. The ETF industry has been growing fast, thanks to its ability to offer investors a diversified portfolio at low cost. The assets under management in these funds passed $3trn last year, up from $715bn in 2008. Some investors might well want to take advantage of that rapid expansion. + + + +But by no stretch of the imagination would this be a well-diversified portfolio; it would be a focused bet on the financial sector. And many of the companies in the portfolio, such as BlackRock, a huge fund manager, and NASDAQ, a stock exchange, are involved in a lot more than just ETFs. Even if the ETF industry keeps growing, the bet could still go wrong. + +The new fund (with the catchy title of the ETF Industry Exposure and Financial Services ETF) is just the latest example of the industry’s drive to specialisation. The earliest ETFs bought diversified portfolios that track indices such as the S&P 500. But there are now some 1,338 specialist funds worldwide, with $434bn in assets, according to ETFGI, a research firm. + +Some of these specialist funds are based on industries, such as energy or media. They appeal to investors who believe an industry will outperform, but who do not want to pin their hopes on an individual company. But others are pretty obscure: an ETF that invests in founder-run companies, with just $3.1m in assets, for example; or another which buys shares in companies based near Nashville, Tennessee, with $8.5m. A recent fund was launched to back companies involved in the cannabis industry. + +Heady stuff. But the more specialised the fund, the fewer companies it has to invest in. So these funds will probably be more volatile and less liquid—not the ideal home for the savings of small investors. + +The financial industry has been down this road before. In the early 2000s Britain suffered a crisis in the investment-trust sector. Like ETFs, investment trusts are managed portfolios that are traded on the stockmarket; they have been around since the 19th century. But a craze developed for so-called split-capital trusts, which had different classes of shares; some received all the income from the fund, others all the capital growth. These shares had some tax advantages and were snapped up by small investors. However, some split-capital trusts only invested in the shares of other trusts. When problems emerged in some funds, they rippled right through the asset class, eventually requiring nearly £200m ($258m) to be paid out in compensation. + +A similar pattern emerged, on a much bigger scale, with mortgage-backed securities (MBS) in America. The idea of issuing a bond, backed by mortgage payments, dates back to the 19th century, but the residential MBS market took off in the 1980s. The market jumped the shark only in the early 2000s, with the rapid growth of vehicles known as collateralised debt obligations (CDOs) that grouped mortgage-backed bonds together, giving different investors different rights over the assets and cash flows of the portfolio. Doubts over the creditworthiness of these securities in 2007 triggered the financial crisis. + +The ETF sector has not yet reached the extremes attained by split-capital trusts or CDOs. By and large, funds do not invest directly in other ETFs; although there are a few “leveraged” ETFs, where losses and gains are magnified, they represent only 1% of the industry’s assets. + +Still, there are signs that rapid flows into some ETFs can lead to price distortions. A rush of money into gold funds in recent years has caused the VanEck Junior Gold Miners ETF to be the largest investor in two-thirds of the 54 companies it owns, according to Factset, a data provider. The fund’s assets grew by more than half, to reach $5.4bn, between January 1st and April 17th. The rush was accelerated by another fund which made a leveraged bet on the performance of the VanEck ETF. + +The danger is of a feedback effect: as the fund pours money into the smaller companies in its portfolio, their prices rise, attracting more money into the ETF. But should investors change their mind and want to withdraw their money, there could be a sharp fall in these mining shares. VanEck is allowing the fund to invest in larger companies in an attempt to solve the problem. But the more the ETF industry specialises, the more often such difficulties are going to arise. + +Economist.com/blogs/buttonwood + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21721414-one-even-invests-shares-etf-providers-exchange-traded-funds-become-too/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Undertakings of great advantage + +The market in Initial Coin Offerings risks becoming a bubble + + +But it may also spawn valuable innovations + +Apr 27th 2017 + + + + + +WOULD you care to invest in Gnosis, a prediction market where users can bet on outcomes of events such as elections? Or in ZrCoin, a project to produce zirconium dioxide, used to make heat-resistant alloys? How about an “immersive reality experience” called “Back to Earth”? + +These are just three of a new wave of what are called Initial Coin Offerings (ICOs). Nearly $250m has already been invested in such offerings, of which $107m alone has flowed in this year, according to Smith+Crown, a research firm. But it was in April that ICOs, or “token sales”, as insiders prefer to call them, really took off. On April 24th Gnosis collected more than $12m in under 15 minutes, valuing the project, in theory, at nearly $300m. + + + +ICO “coins” are essentially digital coupons, tokens issued on an indelible distributed ledger, or blockchain, of the kind that underpins bitcoin, a crypto-currency. That means they can easily be traded, although unlike shares they do not confer ownership rights. Instead, they often serve as the currency for the project they finance: to pay users for a correct prediction, as does Gnosis; or for the content users contribute. Investors hope that successful projects will cause tokens’ value to rise. + +In a way, bitcoin was the first ICO—except that instead of putting money in directly, investors had to buy computing gear to “mine” (ie, mint cryptographically) the tokens. Bitcoin inspired hundreds of variations—“alt-coins”. But these involved the tricky business of creating a new blockchain. Today most issuers simply write a “smart contract” on Ethereum, a rival blockchain. This piece of code then automatically creates tokens when it receives “ether”, the coin of the Ethereum realm. Issuers typically publish a “white paper” (a prospectus of sorts) and market their undertaking on social media. + +As Gnosis shows, such offerings can sell out quickly. The crypto-currency cognoscenti made a lot of money investing in bitcoin and other tokens and have cash to invest (as The Economist went to press, the value of all ether in circulation was nearly $5bn). Less popular projects offer incentives for buying early or a lot. “Back to Earth”, whose ICO launched on April 26th, wants to raise 750 bitcoin (almost $1m) by selling StarCredits. Investors who buy coins worth 0.75 bitcoin or more get a special “Golden Ticket”, entitling them to special content and, later on, free StarCredits. + +But the claims in white papers are mostly unaudited. ZrCoin plans to build a factory in Russia to extract zirconium from industrial waste; cameras on the site are supposed to let investors monitor progress. ZrCoins are backed by the zirconium to be produced. But as in many ICOs, it is unclear why the funds are not raised in conventional ways. And since most ICOs have no link to any particular jurisdiction, it is hard to see what investors could do if issuers abscond with their money. Often they have immediate access to the funds raised. + +Even ICO fans fret that an offering will blow up, as did Mt. Gox, an early bitcoin exchange, in 2014. But the market is showing signs of maturing, says Matt Chwierut of Smith+Crown. More ICOs now use escrow accounts, which makes it harder to take the money and run. Blockchain Capital, a venture-capital firm, has just raised $10m, but it sold its coins in America only to “accredited” investors. On May 1st Adel, an incubator for blockchain projects, will launch one of the first ICOs to comply with anti-money-laundering and know-your-customer rules. Otonomos, which helps firms incorporate, is planning to offer a service giving ICOs a legal home. + +Regulators will have to decide how to deal with ICOs. Peter Van Valkenburgh of Coin Centre, a think-tank, argues that if the tokens are mainly used as currencies, they should not be classified as securities. But in March the Ontario Securities Commission warned that issuers may need to meet legal requirements, such as registration and filing an official prospectus. This may be hard to enforce: blockchains know no borders and some ICOs, including Gnosis’s, are created expressly to avoid regulations. + +America’s Securities and Exchange Commission has not said anything yet. Insiders worry it will come down too hard on ICOs, stymying innovation. Albert Wenger of Union Square Ventures, another venture-capital firm, argues that ICOs help finance projects that today remain unfunded, in particular “protocols”—code enabling computer systems to work together. One example is Storj, a service for decentralised file storage, which has issued tokens on bitcoin’s blockchain. Subscribers use the currency to pay for file storage, but can also earn it by contributing storage to the network. They hope such services might one day replace the big centralised ones that dominate the internet. Imagine Facebook had issued a token, says Olaf Carlson-Wee of Polychain Capital, a hedge fund that invests in ICOs. Users could be paid for their posts and thereby share in the firm’s wealth. + +Forever blowing + +Still, before ICOs fulfil this promise, they may well have to endure a cycle of boom and bust. Some liken the ICO craze to the South Sea bubble in the early 18th century in Britain, when promoters raised funds for companies promising the “transmutation of quicksilver into a malleable fine metal” or a “wheel for perpetual motion”. Prices soon fell, in particular after Parliament in 1720 passed the “Bubble Act” to rein in “undertakings of great advantage”. But the sorry episode was a step toward some rather useful innovations: the modern joint-stock company, for example. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21721425-it-may-also-spawn-valuable-innovations-market-initial-coin-offerings/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Free exchange + +The threat of war can bring much-needed investment + + +Whereas at times of peace, governments grow complacent + +Apr 27th 2017 + + + + + +PONDER the dire state of infrastructure in America and some other advanced economies, and their governments’ fecklessness boggles the mind. Time was when they were able to make badly needed investments; the roads and the universities were a priority. What changed? Not for nothing do pundits cite the hustling governments of China and Singapore as evidence that liberal democracies are no longer fit for purpose. But democracy is not the problem; rather, governments may lack motivation in what is, despite appearances, an unusually peaceful world. + +War is hell; the less of it the better. Yet it has also been a near-constant feature of human history, and a constant stimulus to political evolution. Defence is a textbook example of a public good. Security benefits all residents of a country, and cannot be denied to citizens who prefer not to pay for it. There is little incentive for private forces to provide defence—unless by doing so they can take over the right to extract compensation from the society they protect. Throughout history, the legitimate government is the one that can best defend its people. + + + +As populations have grown and technology has advanced, the job of defending societies has become more complex. That, in turn, has spurred the proliferation of government responsibilities. Research by Nicola Gennaioli and Hans-Joachim Voth suggests that the growing financial demands of warfare after 1500 helped drive the formation of large, strong nation-states in Europe. The rising cost of war meant that keeping a state secure required a powerful, centralised government capable of raising large sums of money—through tax, or via modern, central bank-tended financial systems. Their work draws on research by Timothy Besley and Torsten Persson, who reckon state power built to improve defence can yield better economic policy; the capacity to use the tax system to transfer wealth directly, for instance, means society relies less on inefficient sorts of redistribution. + +Military competition has long given states an interest in technological progress. But the industrial revolution and the era of total war led to dramatic changes in the reach of the state. America’s federal government was slow to get involved in the education of its young people, a matter it left to state and local governments. That changed in 1958, when Dwight Eisenhower signed a law committing roughly $1bn (more than $8bn in 2017 dollars) to improving education in science, mathematics and foreign languages, and to providing new federal loan assistance to university students. The law, the “National Defence Education Act”, was a response to the launch of Sputnik and fears that America risked losing its technological lead over the Soviet Union, a critical matter of national security in the era of the nuclear-tipped ICBM. + +America’s experience was representative. Mr Persson, in work with Philippe Aghion and Dorothée Rouzet, examined investments in primary education across countries over the past 150 years. They found that substantial investments tend to be made at times of sharpening military rivalries or in response to recent wars, and that democratic governments are especially given to answering strategic threats with investments in schooling. + +Education was not the only beneficiary. Both DARPA (an American defence-research agency responsible for the creation of the early internet, among other things) and NASA date to Eisenhower-era efforts to foster new technologies with potential strategic applications. So does the law to which America owes its expansive highway network. In the 20th century it became clear that maintaining a strategic edge required a strong, industrialised economy and a highly skilled workforce. When confronted with vulnerability, governments responded. + +Despite interminable warfare in Afghanistan and the Middle East, conflicts and battle deaths have dropped since the 1990s; and the end of the cold war removed the most serious potential source of global conflict. No tears need be shed over that; besides the toll in human suffering, wars impose huge economic costs. New research by Stephen Broadberry and John Wallis finds that long-run economic advance has less to do with higher growth rates than with reduced frequency and severity of episodes of economic contraction (fighting fewer wars, for example). + +Yet in the absence of acute security threats politics in many countries may have become less effective. Good economic reasons argue for investing in public goods, and for building fiscal capacity and a social safety net. But in most societies, preferences for a particular level of infrastructure investment vary far more than views of what constitutes adequate national security. Disagreements can rule out all but the easiest political bargains. + +Fight plan + +Must societies choose between existential military fear and functional government? Not necessarily. Countries could get smaller. In their book “The Size of Nations”, Alberto Alesina and Enrico Spolaore note that safety in numbers (ie, bigger military budgets) comes at a cost: big countries tend to be more heterogeneous politically, making it harder to satisfy voters. If a country faces fewer security threats, it pays to be smaller, with a more like-minded population. But breaking up countries can itself spark new conflicts. A non-military threat such as climate change could provide an incentive to co-operate. But reduced emissions to tackle climate change represent a global public good. Without global co-ordination, deadbeat countries have an incentive to free-ride on the helpful steps taken by other governments. + +A peaceful world with inadequate infrastructure is preferable to one at constant risk of war but with pothole-free highways. The risk is that political frustration empowers nationalist leaders and inflames geopolitical tensions—and that governments resort to the bad, old-fashioned ways of resolving them. + +Visit our Free exchange economics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21721418-whereas-times-peace-governments-grow-complacent-threat-war-can-bring/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Science and technology + + +Pre-prehistoric man: The peopling of the Americas [Fri, 28 Apr 08:52] + +Stream slip: Cyber-security [Fri, 28 Apr 08:52] + +Moth-eaten: Waste disposal [Fri, 28 Apr 08:52] + +The ultimate grow-bag: An artificial womb [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Peopling of the New World + +The first humans in America may not have been Homo sapiens + + +Pre-prehistoric man + +Apr 29th 2017 + + + + + +WHEN did the first human beings arrive in the Americas? Though there are arguments about the details, the consensus is that it was around 15,000 years ago, when retreating glaciers at the end of the last ice age permitted travellers from Asia to cross what is now the Bering strait but was then dry land. + +This makes sense. The evidence suggests that, recent migrants from Africa and their progeny aside, people now alive in Asia, Australia, Europe and the Americas are descended from a handful of Africans who left the continent of their birth about 70,000 years ago. This fits nicely with the conventional date for America’s colonisation, by giving time for the heirs of these African émigrés to make it to eastern Asia, ready for the hop to the New World when conditions permitted. + + + +What, then, to make of a discovery, reported in this week’s Nature, by Thomas Deméré of the San Diego Natural History Museum and his colleagues? They have just dated an archaeological site found in California in 1992, which seems to be a place where human beings used stone tools to dismember a mastodon, a now-extinct type of elephant. Unfortunately for existing theories, the age Dr Deméré and his associates have come up with for this site is 130,000 years—a time when Homo sapiens was confined to Africa. + +The Cerutti mastodon site, as the place is known, is near San Diego. It is named after its discoverer, Richard Cerutti, who is one of Dr Deméré’s co-authors on the paper. It contained a lone mastodon skeleton and five large cobblestones. The whole area appears to have been buried more or less intact by sediment from a stream. The cobbles are far larger than any other stones in the sediment. Marks they bear, and fragments found nearby that seem to have flaked off them, suggest they have been used as tools. + +Two of the tools seem to have been anvils, and three hammerstones. Their purpose, judging from the condition of many of the mastodon’s bones, which have been shattered in ways that suggest they have been hit hard and deliberately, and fragments of which (such as the two detached femur heads pictured above) are clustered around the putative anvils, was to break those bones. This might have been done to extract the nutritious marrow inside, or to use the bone-fragments themselves to make further tools. Indeed, Dr Deméré and his colleagues have conducted experiments on a modern elephant skeleton that help confirm this interpretation. + +All of this was interesting 15 years ago, when the site was discovered. The stone tools found are similar to those used over 1m years ago in Africa, by Homo erectus, an ancestor of Homo sapiens, and dissimilar to the precisely crafted tools of the Clovis culture typical of other early-human discoveries in North America, a fact which has long been a source of speculation about the true nature of the Cerutti mastodon site. Unfortunately, no organic material remains in the bones, so they cannot be radiocarbon-dated. + +It is this lack of a reliable date which the new paper addresses. A second attempt, made a few years ago using a method called optically stimulated luminescence to examine some of the site’s sediment, hinted that it was at least 60,000 years old. Dr Deméré and his colleagues therefore brought a third technique, uranium-thorium dating, to bear on the matter. They used this to date fragments from several of the mastodon’s bones. All agreed it had died about 130,700 years ago, give or take 9,400 years. If the cobbles at the site really are stone tools, then, the history of America’s colonisation by early man will have to be rewritten. + +A mammoth conclusion + +There were indeed human beings outside Africa 130,000 years ago, but they were not Homo sapiens. Europe was populated by Neanderthal man, Homo neanderthalensis. Parts of Asia were inhabited by a recently discovered (and, as-yet not formally named) species called the Denisovans. Fossils of Homo erectus are known from China, Indonesia, India and Georgia—and though most of these remains are clearly older than 130,000 years, some researchers believe the species was still around then. On top of all these widespread species, moreover, the island of Flores, also in Indonesia, was home to a type of dwarf human, Homo floresiensis, only a little after the period in question. + +The date Dr Deméré has come up with is propitious, too. It coincides with the last interglacial warm period before the present one—a time when a crossing from Asia to America would not have been blocked by sky-high walls of ice. That the arrival of modern man in the New World was anticipated by more than 100,000 years, by an earlier species, is by no means unlikely. + +Concluding that the Cerutti mastodon site was a butcher’s shop does, though, depend on the five cobblestones in question actually being tools. By itself, a 130,000-year-old skeleton proves nothing. Dr Deméré’s arguments that the fragmentation patterns of the mastodon’s bones and the ways those bones are gathered around the putative anvils both indicate deliberation, and that the flakes from the cobbles were caused by hammerstones hitting those anvils, are persuasive, but not probative. Settling the matter would require some bones from early humans themselves to turn up. + +These findings do, however, shine a spotlight on claims of greater antiquity than 15,000 years that have been made in the past for a few other sites in the Americas, notably the Calico Hills, also in California, and Pedra Furada, in Brazil. Nothing unarguably as old as the Cerutti mastodon skeleton has yet been unearthed in these places, but the dating of that skeleton should prompt renewed investigation, and also a search for other possible sites. + +As to the fate of any pre-aboriginal Americans, that would be pure speculation. Suffice to say that the Neanderthals, the Denisovans and the “hobbits” of Flores did not long outlast the arrival of Homo sapiens in their respective necks of the woods. Any cousins these species did have in the Americas would be unlikely to have fared better. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21721346-pre-prehistoric-man-first-humans-america-may-not-have-been-homo-sapiens/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Cyber-security + +Spyware that can identify what films you are watching + + +A better way for Big Brother to look over your shoulder + +Apr 27th 2017 | Washington, DC + + + + + +REMEMBER that racy film you probably should not have enjoyed on Netflix last weekend? Eran Tromer’s algorithms can tell what it was. Although videos streamed from services such as Netflix, Amazon and YouTube are encrypted in various ways to ensure privacy, all have one thing in common: they leak information. Dr Tromer, of Tel Aviv university, his colleague Roei Schuster and Vitaly Shmatikov of Cornell have worked out how those leaks can identify the film you are watching—even if they cannot directly observe the stream of bits delivering it, or obtain access to the device on which you are watching it. + +Videos streamed over the internet are usually transmitted using a standard called MPEG-DASH. This chops a data stream up into segments that are then encrypted and fetched one at a time by the machine playing the video. The result is an on-off, “bursty” pattern of data arrival. But not all segments are equal. One depicting the mating habits of sloths will contain less information than another showing a car chase. Streaming services use something called variable bit-rate (VBR) compression to take advantage of this. Amorous-sloth segments are compressed to a greater degree than those involving car chases, reducing the overall amount of data that must be transmitted. That means segments of the same duration (in seconds) have different sizes (in bytes). The resulting pattern forms a video fingerprint. + + + +Dr Tromer’s method recognises this fingerprint by comparing it with a pre-assembled library of such prints that a snooper has made from videos the viewership of which he might want to follow. The detection algorithm involved is a version of a program called a neural network, a type of software adept at signal-recognition tasks. Once trained, Dr Tromer’s neural network can identify films with up to 99% accuracy, based on a fingerprint between one and five minutes long. + +The cleverest part, though, is that, unlike other efforts to exploit leaky video streams, it does not actually need direct access to the stream itself, or even to the device the video is being shown on. By planting a small amount of JavaScript code in a web browser on a personal computer or smartphone that is merely attached to the same Wi-Fi network as the viewer’s device, the film being watched can be identified with almost the same accuracy. + +Web browsers confine JavaScript—which is ubiquitous in web pages and advertisements, and runs automatically—to a “sandbox” supposed to prevent it from collecting private information. JavaScript code can, however, still communicate with the computer server that sent it—and this is enough for Dr Tromer. It enables his implant to flood the entire Wi-Fi network with random data, creating congestion. The result is that a video stream feeding another device on the network will create bursty delays in the JavaScript’s communications with its own server. Measuring these is enough for the spyware to be able to identify the film being watched. + +Such information can reveal a lot about a viewer’s personality, preferences, politics and so forth. As Dr Tromer notes, by being able to monitor this, “I can show personalised ads based on your viewing habits, adjust your insurance premiums or send in the Spanish Inquisition.” That last suggestion, tongue-in-cheek though it may be, is the most troubling. Censors using his technique could spot and block the viewing of things they disapproved of, no matter how highly encrypted those things were. + +At the moment, there is no practical way to derail such attacks. Eliminating VBR would increase network congestion, bringing data-buffers into play to deal with information overflow and underflow. That would translate, for viewers, into the resurrection of buffering messages, now largely a thing of the past. + +In most countries, placing this sort of spyware on a machine without permission would be illegal. But its ability to spy remotely might get around that. Also, blanket permissions associated with installing new software, carelessly agreed to, might see it arrive on clueless users’ machines within the letter, if not the spirit of the law. Mind how you go, then. And watch what you watch. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21721356-better-way-big-brother-look-over-your-shoulder-spyware-can-identify/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Moth-eaten + +Plastic-eating caterpillars could save the planet + + +An escape from a shopping bag triggers an idea + +Apr 29th 2017 + + + + + +MOST scientific research follows a logical progression, with one experiment following up on the findings of another. Every now and then, however, serendipity plays a part. Such is the case with a paper just published in Current Biology, which reveals to the world a moth capable of chewing up plastic. + +The experiment behind the paper was inspired when Federica Bertocchini, an amateur beekeeper who is also a biologist at Cantabria University, in Spain, noticed caterpillars chewing holes through the wax in some of her hives and lapping up the honey. To identify them, she took some home in a plastic shopping bag. But when, a few hours later, she got around to looking at her captives she found the bag was full of holes and the caterpillars were roaming around her house. + + + +After rounding them up, she identified them as larvae of the greater wax moth, a well-known pest of bee hives. On considering their escape from their shopping-bag prison, though, she wondered whether they might somehow be put to work as garbage-disposal agents. + +Past attempts to use living organisms to get rid of plastics have not gone well. Even the most promising species, a bacterium called Nocardia asteroides, takes more than six months to obliterate a film of plastic a mere half millimetre thick. Judging by the job they had done on her bag, Dr Bertocchini suspected wax-moth caterpillars would perform much better than that. + +To test this idea, she teamed up with Paolo Bombelli and Christopher Howe, two biochemists at Cambridge University. Dr Bombelli and Dr Howe pointed out that, like beeswax, many plastics are held together by methylene bridges (structures that consist of one carbon and two hydrogen atoms, with the carbon also linked to two other atoms). Few organisms have enzymes that can break such bridges, which is why these plastics are not normally biodegradable. The team suspected wax moths had cracked the problem. + +One of the most persistent constituents of rubbish dumps is polyethylene, which is composed entirely of methylene bridges linked to one another. So it was on polyethylene that the trio concentrated. When they put wax-moth caterpillars onto the sort of film it had taken Nocardia asteroides half a year to deal with, they found that holes appeared in it within 40 minutes. + +On closer examination, Dr Bertocchini and her colleagues discovered that their caterpillars each ate an average of 2.2 holes, three millimetres across, every hour, in the plastic film. A follow-up test found that a caterpillar took about 12 hours to consume a milligram of shopping bag. Such bags weigh about three grams, so 100 larvae might, if they spent half their lives eating, consume one in a month. + +Whether releasing wax moths on the world’s surplus plastic really is sensible is not yet clear. For one thing, it has not been established whether the caterpillars gain nutritional value from the plastics they eat, as well as being able to digest them. If they do not, their lives as garbage-disposal operatives are likely to be short—and, even if they do, they will need other nutrients to thrive and grow. Another question is the composition of their faeces. If these turn out to be toxic, then there will be little point in pursuing the matter. Regardless of this, though, the discovery that wax-moth larvae can eat plastic is intriguing. Even if the moths themselves are not the answer to the problem of plastic waste, some other animal out there might be. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21721328-escape-shopping-bag-triggers-idea-plastic-eating-caterpillars-could/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +The ultimate grow-bag + +How to build an artificial womb + + +To save children born prematurely, a man-made uterus would help + +Apr 27th 2017 + + + + + +THESE days, in rich countries, premature birth is the main cause of infant mortality. A baby born at 23 weeks—just over half way through a normal pregnancy—has a fighting chance of survival. But underdeveloped lungs struggle to cope with breathing air. External pumps used to circulate blood impose potentially fatal stresses on tiny hearts. Those that do pull through are often left with lifelong problems that range from brain damage to blindness. In a paper just published in Nature Communications, a team of doctors at the Children’s Hospital of Philadelphia, led by Alan Flake, describe an artificial womb that, they hope, could improve things dramatically, boosting the survival rate of the most premature babies while reducing the chance of lasting disabilities. + +The device, which looks a bit like a high-tech jiffy bag, is designed to mimic a real womb as closely as possible (see picture above, of a fetus after 28 days in the artificial womb). The fetus—a lamb in the team’s trials—is surrounded in a substitute for the amniotic fluid that keeps the animal’s lungs filled with liquid in a real uterus. Once the fetus is placed inside the bag it is sealed, to prevent germs entering. The cannulas which carry blood away to be recharged with oxygen and nutrients are inserted into the animal’s umbilical cord, and the tubing in the oxygen-exchange system is short, which lets the researchers dispense with pumps entirely. Instead, they rely on the animal’s own heart to push blood around the system. + + + +The results are impressive. The artificial womb kept premature lambs alive for four weeks, which is longer than any previous attempt. (The researchers say they could have carried on for longer still, had their trial protocols not forbidden it.) The lambs developed normally, growing wool and moving around as they would in a natural womb. When Dr Flake’s team subsequently dissected them, they found no evidence of the strokes that sometimes afflict premature babies in conventional incubators. + +The aim is to produce a system that could help human babies born at 23 weeks, which is currently the lower limit of viability (between a third and half of such babies survive, and even that requires heroic efforts). It will be a while, though, before the technology arrives in hospitals. For one thing, the parallels between sheep and people are not perfect. Human fetuses at a similar stage of gestation are only about a third of the size of lambs, so the equipment will have to be shrunk commensurately. And any procedure applied to such delicate patients will require a lot of proving before regulators give the go-ahead. Treating mothers at risk of premature birth with steroids, for instance, helps prepare their babies’ lungs for breathing air, and is now routine. But it took more than 20 years of tests and research before that discovery was deemed robust enough to make its way into hospitals. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21721355-save-children-born-prematurely-man-made-uterus-would-help-how-build/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Books and arts + + +Fanning the flames: The Reformation in England [Fri, 28 Apr 08:52] + +Brexit blues: Britain and the European Union [Fri, 28 Apr 08:52] + +To have and to hold: Sheryl Sandberg on grief [Fri, 28 Apr 08:52] + +High anxiety: Fiction from Denmark [Fri, 28 Apr 08:52] + +A hymn to the republic: The Museum of the American Revolution [Fri, 28 Apr 08:52] + +Word for word: Johnson [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Laying down the law + +The English were surprisingly divided about the break with Rome + + +Ending Catholicism in England and introducing the Reformation was a messy and conflicted process + +Apr 29th 2017 + + + + + +Heretics and Believers: A History of the English Reformation. By Peter Marshall. Yale University Press; 652 pages; £30. To be published in America in June, $40. + +JUST a day after the English Book of Common Prayer was first used in Sampford Courtenay, Devon, on Whitsunday in 1549, an angry mob appeared at the church door. They demanded that the elderly rector reconsider using the new liturgy. Somewhat sheepishly, one imagines, he decided to don his popish vestments and revert to saying the Latin mass. + + + +That village protest was the first of a series of English uprisings in Norfolk, Oxfordshire and the south-west, which led to perhaps 10,000 deaths as King Edward VI’s regime suppressed dissent. It would be a mistake to think that the English Reformation was mostly peaceful, with beheadings and burnings confined to a small and fervent elite. + +The historiography of Tudor England usually focuses on the monarchs’ Reformation: how the state imposed religious change on the nation. Shelves groan with royal histories, but new accounts of how the ordinary English felt, objected to and imbibed it all are much more scarce. On the 500th anniversary of Martin Luther’s Reformation, Peter Marshall has written a fine history of a momentous time as seen from the bottom up, drawing on a wide range of primary sources and his evident scholarship. + +Mr Marshall has two contentions. First, that the English did not meekly comply with religious change. In the cities they were enthused by it, but many others resisted, especially in the rural and conservative north and west of the country. Second, that though royal supremacy was the aim, the state ultimately lost control as Christian pluralism flowered. In places the King’s majesty was questioned, as some began to think afresh about monarchy and church government. England ended with a less united religion than it had at the start of the 16th century. + +The central story will be familiar. Henry VIII wanted to cut financial and legal ties to the Catholic church, in order to achieve national sovereignty and marry whom he liked. He was keen to shut down monasteries, rivals to kingly power for nearly 1,000 years, but he was never a zealous advocate of radical new ideas, about the meaning of the communion service, for example. + +Henry’s attempts to please opposing court factions left England with a vague, incoherent set of tenets for a church without a pope, thinks Mr Marshall. Confusion about the national religion led more people to define and investigate their faith for themselves. Under Henry’s children, Edward VI and Mary, state zealotry fuelled outrage and enthusiasm. Edward’s ministers set out to destroy idolatry in church, including saints’ paintings, church silver, inappropriate altars and glitzy vestments. Mary returned sovereignty to Rome and launched a campaign of burning heretics. + +In St Paul’s Cathedral hung a rood, a grand figure of Christ on the cross, the centre of the medieval churchgoer’s attention and piety, which provided a political bellwether through these years. The rood was ordered to come down under Edward. It crashed to the floor, killing two labourers beneath: perhaps not a great omen. The rood was ordered up again in Mary’s reign. A man rose from his pew to deliver a mocking encomium to “your Mastership”, the ascendant rood. It soon came down again under Elizabeth I. + +What became known as the Elizabethan settlement—a return to Protestantism—far from settled the matter. The queen’s bishops wanted to go further than Edward VI; some in England wished to ban bishops altogether, looking to John Calvin in Geneva for inspiration. Elizabeth’s bishops despaired of her liking for icons and vestments, but defended her nonetheless. + +Mr Marshall provides convincing evidence that Catholicism survived well into Elizabeth’s reign. At least 800 clergymen were deprived or removed themselves for reasons of conscience, including as many as a quarter of the clergy in one diocese, Rochester, that is not far from Canterbury. Only 21 out of 90 senior clergy in northern England assented to the settlement, and 36 openly disagreed. Dissent among middle-ranking clergy was even higher. Of those not removed by the 1559 flu epidemic, fewer than half wished to continue. + +A rebellion reckoned to be 7,000-strong in favour of the pope in 1569 was brutally suppressed. Many followers of the old religion simply conformed and dissembled. It is hard to understand how the people coped through these years. Tombs were vandalised; vicars protested at funerals. One village curate was known to shave his Protestant beard every time a change in religion was rumoured. However the English survived the Reformation, they did so as a nation divided. + +Whig histories typically focus on the progress that the state and evangelicals made in forging a Church of England: a history of the winners. Mr Marshall’s contribution is a riveting account of the losers as well, the English zealots and cynics who wanted a better world or an unchanging one. The resulting story is of a Henrician supremacy that failed and an Elizabethan unity that never was. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21721362-ending-catholicism-england-and-introducing-reformation-was-messy-and-conflicted/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Britain and the European Union + + +Explaining Britain’s vote to leave the EU + + + + + +A book that makes a rare attempt to use survey data to find some answers + + + + + +Cold shoulder + + + + + +Brexit: Why Britain Voted to Leave the European Union. By Harold Clarke, Matthew Goodwin and Paul Whiteley.Cambridge University Press; 256 pages; £15.99 and $19.99. + +THERE are many theories about why Britons voted last June to leave the European Union. They include hostility to immigration, dislike of Brussels bureaucrats, worries about sovereignty, an anti-elite mood, the discontent of those left behind by globalisation, a long history of Euroscepticism and a stridently anti-EU press. Yet analysis of hard survey data is rare. The great virtue of “Brexit: Why Britain Voted to Leave the European Union”, by three academics, is that it is based on detailed regression analyses of panel surveys carried out both before and after the vote. + + + +Using data as opposed to hunches yields interesting results, even if many confirm conventional wisdom. One concerns who mostly voted for Brexit. The answer is old people, non-graduates and those from lower social grades. Although members of the UK Independence Party (UKIP), founded to take Britain out, tend to be male, there was no gender bias. Nor were Brexit voters necessarily poor: many were in the home counties and south as well as the less well-off north and east. + +A second is the importance of immigration. When David Cameron promised a referendum in his speech at Bloomberg in January 2013, he made no reference to this. Even many Tories who, unlike Mr Cameron, campaigned for Brexit stressed regaining sovereignty, not reducing the numbers coming into the country. But the authors put more credence on the goal of Nigel Farage, UKIP’s then leader: to make people see migration and Europe as the same. + +Indeed, a third conclusion is the central role of UKIP and Mr Farage. It was the rise of UKIP, more than his own restive backbenchers, that drove Mr Cameron to offer the referendum. And far from causing damage, splits within the Leave campaign may even have helped. Mr Farage could appeal to those once dismissed by Mr Cameron as “fruitcakes, loonies and closet racists”, while Boris Johnson and Michael Gove, two leading Tory Brexiteers, could win over the more globally minded. + +Yet Brexit did not prevail just because Leavers outfought Remainers. More important were what this book calls baked-in views, built up over years of criticism of the EU. When Mr Cameron came back from Brussels in February 2016 to campaign to Remain, his credibility was weakened by his previous attacks. Even armed with dire warnings of the costs of Brexit (so-called “Project Fear”), it proved impossible to persuade voters—partly because many who believed Project Fear consciously decided to give priority to curbing migration. Remainers never tried to make a serious case in favour of immigration. + +More controversially, the authors argue that there may turn out not to be large costs from Brexit. They note that, for most countries (including Britain), EU membership has not had much impact: accession to the club has more often than not been followed by slower growth. Yet this is not convincing. Nobody knows what would have happened had the country not joined. And most economists, including those at the impartial Bank of England, reckon that membership has made Britain more competitive, raising growth. + +What may be true is that other policy choices matter more than being in the world’s largest trading block. That notion chimes with the different economic performance of EU countries. Broadly, Germany and the Scandinavians have done well, whereas France and the Mediterranean countries have not. On this basis, a post-Brexit Britain could prosper—so long as it follows good pro-growth policies. As an ill-tempered election in June draws near, however, that proviso is worrying. + + + +This article appeared in the Books and arts section of the print edition under the headline “Brexit blues” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21721358-book-makes-rare-attempt-use-survey-data-find-some-answers-explaining/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +To have and to hold + +Sheryl Sandberg on grief + + +A Silicon Valley heroine explains how to make something out of a sense of nothingness + +Apr 27th 2017 + + + + + +Option B: Facing Adversity, Building Resilience and Finding Joy. By Sheryl Sandberg and Adam Grant. Knopf; 240 pages; $25.95. W.H. Allen; £16.99. + +IN 2013 Sheryl Sandberg became famous, thanks to “Lean In”, her book about how women can control their own fate if they “lean in” to opportunities. But in 2015, the senior Facebook executive was reminded that you can lean in and still fail to control the direction of your life. While on holiday in Mexico, her husband, Dave Goldberg, suffered from a heart arrhythmia, fell off a treadmill and died. + + + +Ms Sandberg shares a great deal of herself and what she has learned since in “Option B”, which she has written with Adam Grant, a professor of psychology and management at the University of Pennsylvania’s Wharton School and author of “Originals”, a business book about “out-of-the-box” thinking. “Option B” takes its name from an anecdote in which Ms Sandberg tells a friend that she does not want to take part in a parent-child activity without Goldberg; with option A not available, she has to choose the second-best option. + +At its core “Option B” is a self-help book for those who have been felled by despair. People who have not experienced tragedy often distance themselves from mourners, uncertain of what to say or how to act. But what mourners want is for others to recognise their pain, not hide from it. This book is a guide both for those who have directly suffered loss and for those who are close to people who have. Its optimistic thesis is that adversity can change people for the better. They can “bounce forward” after a tragedy and become more resilient. + +Ms Sandberg tracks how her behaviour and perceptions of life changed when she lost her husband. She acknowledges that she was too simplistic in her earlier book, telling women looking to excel professionally that they should share household chores with their husbands. Many women are single mothers, who raise children alone without a partner. Ms Sandberg realised this when she found herself suddenly on her own, albeit with vastly more resources than most. + +The most provocative chapter is about widowhood and dating after losing a spouse. Women are judged harshly for finding another partner. Among the middle-aged, more than half of men are in a romantic relationship a year after losing their spouse, compared with only 7% of women. Ms Sandberg experienced at first hand the guilt and stigma that accompany contemplating moving forward, although she was fortunate to have support from Goldberg’s mother and brother. + +The author is admirably and chillingly honest in the details she shares about the aftermath of Goldberg’s death. She describes the “primal screams” of her children, when she tells them their father is dead, and how her mother slept in her bed for a month, holding her as she cried each night. Recounting these stories takes courage, especially for a businesswoman who always appears highly scripted in her public statements. + +“Option B” will be helpful for many mourners. But two things hold it back. Although the book has two authors, Ms Sandberg narrates in the first person and Mr Grant is referred to in the third. It feels unbalanced. Indeed, Mr Grant does not really appear until about a quarter of the way through the book, and the reader may be left wondering whose voice is really telling this story. Corporate self-promotion also sneaks into the book’s pages, where it does not belong, with mentions of Facebook’s power to connect grievers and make the world better. In the end an online social network can never really lift someone’s fog of grief; it needs time, strength and a willingness to believe that, against the odds, something good can one day emerge from the bad. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21721360-silicon-valley-heroine-explains-how-make-something-out-sense/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Fiction from Denmark + +Dorthe Nors’s novel is a magnificent exploration of anxiety + + +“Mirror, Shoulder, Signal” introduces a writer who is both funny and brave + +Apr 29th 2017 + + + + + +Mirror, Shoulder, Signal. By Dorthe Nors. Translated by Misha Hoekstra. Pushkin Press; 188 pages; £10.99. + +SONJA, the heroine of “Mirror, Shoulder, Signal”, is single and perplexed, and has reached the age when “everything that’s supposed to get easier in life persists in being complicated”. Dorthe Nors (pictured) wraps bittersweet recollections of Sonja’s girlhood on a farm in Jutland and her lonely, “oddball” youth around her driving lessons through the Copenhagen suburbs. + + + +Shortlisted for this year’s Man Booker International prize, this sly, deadpan Danish novel steers its mischievous comedy of character and manners over a “viscid underworld of sorrow”. Always the outsider, Sonja evokes her smugly well-adjusted sister Kate, once a “barn-dance femme fatale” and now also a caring super-mum; Ellen, a massage-therapist; and a psychologist chum called Molly. All are overconfident interpreters of a reality that Sonja “was never able to explain”. There are also glimpses of a vanished lover, “Paul the Ex”. + +If the present baffles, the past consoles. Sonja sees memories in visions of swans in flight, of rustling rye-fields in Jutland and in the “vast, eerie, and capricious” wilderness of Loenborg Heath. Sonja thinks that she resembles her mother: both gifted with “rich, expansive inner worlds” but, as women, “not completely fine-tuned”. + +With its endearingly maverick heroine, Ms Nors’s novel delivers a bracing antidote to the cult of hygge—which has smothered Denmark’s global image under a hand-knitted jumper of sentimental bonhomie. Misha Hoekstra, the translator, smartly matches Sonja’s erratic course: gawky one moment; graceful the next. + +Ms Nors, meanwhile, deals a vicious, blow to another Nordic stereotype. Sonja earns her living translating a Swedish crime writer, Gosta Svensson, an idolised star of noir who tends in his books to leave “mutilated women and children…rotting everywhere on Scandinavian public land”. His latest chart-topper has wowed the critics as “a harrowing read about human trafficking”. Ms Nors, in contrast, turns her gridlocked human traffic into a transport of delight. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21721359-mirror-shoulder-signal-introduces-writer-who-both-funny-and-brave/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Hymn to the republic + +The Museum of the American Revolution + + +A new museum re-examines the birth of America + +Apr 27th 2017 | PHILADELPHIA + + + + + +FOR people who pride themselves on keeping their eyes on the future, Americans often seem mired in their own history. Here the past is never safely buried, but is continually exhumed to shape and reshape the present. Political battles are waged through contested narratives that have been centuries in the making. + +The new Museum of the American Revolution in Philadelphia, which is only two streets from Independence Hall, the nation’s birthplace, will help shape people’s understanding of the founding struggle for many years to come. David McCullough, a Pulitzer prize-winning historian and long-time champion of the project, believes it will serve as an exemplar for an age sorely in need of a moral compass. He hopes that learning more about those who were engaged in the desperate struggle for liberty—in particular the example of George Washington—will inspire current and future generations. “Character, it’s what counts most of all. [That is] what’s taught in the story of the revolution,” he says. + + + +The museum tries hard to break down the barriers that separate the 18th century from today. Its handsome new classical brick-clad building engages in friendly dialogue with the historical buildings around it. Inside, the conversation between old and new is amped up a couple of decibels. On one side are Revolutionary-era artefacts, including weapons of war like a musket commissioned by Washington from a Philadelphia gunsmith, as well as everyday objects and political texts, including a page from the Pennsylvania Evening Post of July 6th 1776, with the first published text of the Declaration of Independence. + +Fleshing out these stories are tableaux with life-size mannequins that recreate telling moments: the toppling of a statue of King George in New York; a meeting of the leaders of the Oneida Indian Nation as they debate whether to join the colonists’ struggle. The story of the nation’s founding springs to life in an atmosphere that more closely resembles a theme park than a traditional archive. In one gallery visitors are thrown into the heart of the action through a multimedia restaging of the Battle of Brandywine, complete with fog machine and ground-shaking effects. + +One thing is clear: this is not your grandfather’s museum, either in the story it tells or in the way it tells it. Scott Stephenson, head of collections, exhibitions and programming, says he does not want to present history as a pious sermon but as “a richer, messier tale”. This messier tale exposes the hypocrisy of people who fought in the name of liberty while denying it to others. The stirring rhetoric of the Declaration of Independence can ring a bit hollow as visitors contemplate shackles small enough to bind the limbs of the youngest slaves. + +Still, there is plenty that is uplifting on display as well: stories of heroic sacrifice, including harrowing tales of the bitter winter at Valley Forge or of scrappy Minutemen facing off against hardened veterans at Lexington and Concord. The museum celebrates high ideals that were not always lived up to in practice but that paved the way for future advances in human rights. + +The way that history and its symbols are so often the subject of a struggle is captured here by the saga of the museum’s star attraction: Washington’s headquarters tent, which served as the general’s mobile home throughout most of the war. Passed down through the family of Washington’s widow, the tent came into the possession of Mary Custis Lee, the wife of Robert E. Lee who commanded the army that attempted, in the 1860s, to tear apart the nation that Washington had worked so hard to stitch together. + +When General Lee’s Virginia home was overrun by Union soldiers, the tent was brought back to the capital and put on display to serve as a patriotic rallying-point. Forty years later it was returned to the family, and later sold to raise money to support the widows of Confederate veterans. Now, treated as a sacred relic, Washington’s wartime headquarters forms the centrepiece of a new museum dedicated to the continuing American argument over the meaning of its past. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21721361-new-museum-re-examines-birth-america-museum-american-revolution/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Johnson + +Translation platforms cannot replace humans + + +But they are still astonishingly useful + +Apr 29th 2017 + + + + + +ARAB newspapers have a reputation, partly deserved, for tamely taking the official line. On any given day, for example, you might read that “a source close to the Iranian Foreign Ministry told Al-Hayat that ‘Tehran will continue to abide by the terms of the nuclear agreement as long as the other side does the same.’” But the exceptional thing about this unexceptional story is that, thanks to Google, English-speaking readers can now read this in the Arab papers themselves. + +In the past few months free online translators have suddenly got much better. This may come as a surprise to those who have tried to make use of them in the past. But in November Google unveiled a new version of Translate. The old version, called “phrase-based” machine translation, worked on hunks of a sentence separately, with an output that was usually choppy and often inaccurate. + + + +The new system still makes mistakes, but these are now relatively rare, where once they were ubiquitous. It uses an artificial neural network, linking digital “neurons” in several layers, each one feeding its output to the next layer, in an approach that is loosely modelled on the human brain. Neural-translation systems, like the phrase-based systems before them, are first “trained” by huge volumes of text translated by humans. But the neural version takes each word, and uses the surrounding context to turn it into a kind of abstract digital representation. It then tries to find the closest matching representation in the target language, based on what it has learned before. Neural translation handles long sentences much better than previous versions did. + +The new Google Translate began by translating eight languages to and from English, most of them European. It is much easier for machines (and humans) to translate between closely related languages. But Google has also extended its neural engine to languages like Chinese (included in the first batch) and, more recently, to Arabic, Hebrew, Russian and Vietnamese, an exciting leap forward for these languages that are both important and difficult. On April 25th Google extended neural translation to nine Indian languages. Microsoft also has a neural system for several hard languages. + +Google Translate does still occasionally garble sentences. The introduction to a Haaretz story in Hebrew had text that Google translated as: “According to the results of the truth in the first round of the presidential elections, Macaron and Le Pen went to the second round on May 7. In third place are Francois Peyon of the Right and Jean-Luc of Lanschon on the far left.” If you don’t know what this is about, it is nigh on useless. But if you know that it is about the French election, you can see that the engine has badly translated “samples of the official results” as “results of the truth”. It has also given odd transliterations for (Emmanuel) Macron and (François) Fillon (P and F can be the same letter in Hebrew). And it has done something particularly funny with Jean-Luc Mélenchon’s surname. “Me-” can mean “of” in Hebrew. The system is “dumb”, having no way of knowing that Mr Mélenchon is a French politician. It has merely been trained on lots of text previously translated from Hebrew to English. + +Such fairly predictable errors should gradually be winnowed out as the programmers improve the system. But some “mistakes” from neural-translation systems can seem mysterious. Users have found that typing in random characters in languages such as Thai, for example, results in Google producing oddly surreal “translations” like: “There are six sparks in the sky, each with six spheres. The sphere of the sphere is the sphere of the sphere.” + +Although this might put a few postmodern poets out of work, neural-translation systems aren’t ready to replace humans any time soon. Literature requires far too supple an understanding of the author’s intentions and culture for machines to do the job. And for critical work—technical, financial or legal, say—small mistakes (of which even the best systems still produce plenty) are unacceptable; a human will at the very least have to be at the wheel to vet and edit the output of automatic systems. + +Online translating is of great benefit to the globally curious. Many people long to see what other cultures are reading and talking about, but have no time to learn the languages. Though still finding its feet, the new generation of translation software dangles the promise of being able to do just that. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21721357-they-are-still-astonishingly-useful-translation-platforms-cannot-replace-humans/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Obituary + + +Ancient as the hills: Emma Morano [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Ancient as the hills + +Obituary: Emma Morano died on April 15th + + +The oldest person in the world was 117 + +Apr 27th 2017 + + + + + +THOSE who live to be very old are never previously famous. Few in the world know them, and they know almost nothing of the world. Emma Morano had never been to Rome, let alone abroad. Her world was Pallanza-Verbania on the shores of Lake Maggiore in northern Italy, stretching to Varallo Sesia in the hills, where she had family. The fading photographs she would lay out, on a lace cloth, for reporters showed herself and her siblings enjoying lunch outside, posing in Pallanza’s main square and on the lakeside promenade, all within a stroll of the tiny flat, down an alley by the church of San Leonardo, where she still lived. For her last 15 years, though she could walk, she did not leave it. + +The very old tend not to have led glamorous lives. They work deep in the fabric of the everyday. Miss Morano’s job, from the age of 13 to 55, was in Maioni’s jute factory, sewing sacks for potatoes. After that, she worked for 20 years as a dinner lady at a local college. The young Emma wondered sometimes, since she had a lovely voice—a voice that would stop men in their tracks when she sang “Parlami d’amore, Mariu” from the window—about a musical career. But the thought wasn’t serious, and she contented herself with listening to Claudio Villa’s popular songs on the radio, a device first dreamed up in the year she was born. + + + +Visitors often marvelled at the events she had lived through: not least the tumultuous history of Italy from monarchy, through fascism, to republic. But much of the time her head had been down, sewing sacks. She remembered Victor Emmanuel III, and the queen too. But the second decade of the 20th century was vivid mostly for slipping out of the house to go dancing, and for birch-stick beatings on her legs when her mother caught her. The first war was memorable only because her fidanzato, Augusto, was called up and did not return. When his letters stopped she assumed he was dead, and never learned, because no one told her, that he had left town for a steelworks in Milan. + +Similarly, the rise of fascism was overshadowed by growing violence in her own house. She recalled the constant black-shirt parades. But far worse was the abuse from Giovanni, the man she had married in 1926 after he had threatened to kill her otherwise. She dreaded marrying him, but could not escape; he was “from the lake” too, living in the same courtyard, and both sets of parents pressed her. In 1937 she had a little son; he lived from January till August. The next year she kicked Giovanni out, and they separated. Divorce was not yet legal, and separation itself was rare. This made her a pioneer, she felt. + +When researchers called, puzzling over her longevity, she told them that a single life definitely helped. She refused to let anyone dominate her, including the manager of the jute factory, who completely lost his head over her and proposed running away together—that, in the days when lowly female workers did not dare answer back to superiors. And her determination played a part, too. It showed in the large baby photograph she kept in the kitchen: bold dark eyes, a fierce little chin, her amulet askew on her neck. It was just as evident in middle age, when she prided herself on working hard to pay for things she wanted, like her hand-carved bedroom suite; and at 112, when she still manoeuvred heavy copper pans on the stove and put down newspaper to save her floors from muddy feet. + +Food for longevity + +The family genes were good, with several members living to advanced old age. But as a girl she was often ill. The doctor diagnosed anemia and advised a move to the lakeshore, from which she did not move again. He also told her to eat three eggs a day, two of them raw: a diet she kept to for almost a century, usually scooping them up with biscotti from a bowl. For lunch she had pasta with raw minced meat, for supper a glass of milk. At night she would raid the biscotti and the large tin of gianduiotti, local hazelnut chocolates, that sat on the sideboard. Last came her home-spiked grappa, infused in a wide-necked jar with seven sage leaves, herbs and a few grapes, and taken in spoonfuls every day. + +This diet, doctors said, broke all the rules. Its only virtues were simplicity and long, long regularity. Those same virtues applied to her life as a whole. It had three pillars: family, self-sufficiency, and faith. Her flat was a shrine to them all. Glass-bead rosaries were draped over framed photographs of her parents, brothers and sisters, and the Holy Family presided above her bed. The Madonna and child watched over her bedside table, where she kept the anti-ageing cream she faithfully smoothed on each night. She liked to watch Mass on Channel Four, since it was shorter than the RAI one; she had not lost her impish streak. As for death, “quand la vegn, la vegn”, and her prized collection of chiming clocks ticked her way towards it. + +On May 12th 2016 fame and glamour arrived together, as she became the world’s oldest person. Officials rained certificates on her. The gas company thanked her for her loyalty, and the mayor for her services to tourism. On her 117th birthday a huge cake came, and a team from RAI; at the party in her flat she sang “Parlami d’amore, Mariu” again, though she was cross that her voice had gone. “My word,” she told a neighbour, “I’m as old as the hills!” The hills she had never been beyond. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/obituary/21721353-oldest-person-world-was-117-obituary-emma-morano-died-april-15th/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 主菜单 | 上一章 | + +* * * + + + + + +Economic and financial indicators + + +react-text: 670 • /react-text react-text: 671 Interactive indicators /react-text [Fri, 28 Apr 08:52] + +react-text: 674 • /react-text react-text: 675 Output, prices and jobs /react-text [Fri, 28 Apr 08:52] + +react-text: 678 • /react-text react-text: 679 Trade, exchange rates, budget balances and interest rates /react-text [Fri, 28 Apr 08:52] + +react-text: 682 • /react-text react-text: 683 The Economist commodity-price index /react-text [Fri, 28 Apr 08:52] + +react-text: 686 • /react-text react-text: 687 Health-care spending /react-text [Fri, 28 Apr 08:52] + +react-text: 690 • /react-text react-text: 691 Markets /react-text [Fri, 28 Apr 08:52] + + + + + +* * * + + + +| 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21721408/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Output, prices and jobs + + +Apr 29th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21721412-output-prices-and-jobs/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Trade, exchange rates, budget balances and interest rates + + +Apr 29th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21721415-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +The Economist commodity-price index + + +Apr 29th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21721420-economist-commodity-price-index/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Health-care spending + + +Apr 29th 2017 + + + + + +Global spending on health care per person will more than double by 2040, according to a study in the Lancet, a medical journal. This increase will be driven principally by rising expenditure in upper-middle-income countries. Spending per person in China is projected to rise by more than 700% by 2040. At the bottom end of the scale, Somalia will spend only $42 per person in 2040. Cuba has a world-class health-care system; in 2014 96% of spending was accounted for by the government. In Singapore the government accounted for less than half of total spending. The state also bears little of the burden in Bangladesh, where personal out-of-pocket payments account for two-thirds of expenditure. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21721417-health-care-spending/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Markets + + +Apr 29th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21721366-markets/print + + + + + +| 章节菜单 | 主菜单 | + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.05.06.txt b/homeworks/B20769/homework1/data2/2017.05.06.txt new file mode 100644 index 0000000..e727c58 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.05.06.txt @@ -0,0 +1,4441 @@ +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Special report + +Business + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +The world this week + + + + +Politics this week + +Business this week + +KAL's cartoon + + + + + +Politics this week + + + +May 4th 2017 + +The president of the Palestinian Authority, Mahmoud Abbas, visited the White House to meet Donald Trump. On peace between Israel and the Palestinians, Mr Trump said “we will get it done”, but offered no specifics. See article. + +Russia announced a proposal to create “safe zones” in Syria. But it reserves the right to attack “terrorists” in them. + +Members of South Africa’s main federation of trades unions booed President Jacob Zuma off a stage when he tried to speak at a rally, a sign of his growing unpopularity. Several other senior figures in the ruling African National Congress were similarly denied the opportunity to speak at other meetings of union members around the country. + +The number of pirate attacks off the west coast of Africa almost doubled in 2016, according to a new report by Oceans Beyond Piracy. The report comes amid an uptick in attacks on ships around the Horn of Africa, an area that had been free of pirates for several years. + +The first contingent of what will become a 4,000 strong UN “regional protection force” arrived in South Sudan to bolster a peacekeeping mission there. The new troops will have an expanded mandate to use force to protect civilians, which was authorised by the UN last year after fighting between the government and a rebel group killed hundreds of people. + +Pope Francis visited Egypt, defying the dangers posed by Islamic State to visit a Coptic church bombed by the terrorist group last month. + +The great thinker + +An official newspaper in China published a speech by the chief of staff to the president, Xi Jinping, saying his boss’s political philosophy formed a “complete theoretical system”. The official’s remarks appeared to signal that revisions to the Communist Party’s charter, expected later this year, will include a tribute to Mr Xi’s contributions to Communist ideology. + +China deported an American businesswoman who had recently been sentenced to three-and-a-half years in prison for spying. Sandy Phan-Gillis returned to her home in the United States. + +Donald Trump said he would be “honoured” to meet Kim Jong Un, North Korea’s bloodstained dictator, in the right circumstances. He also invited Rodrigo Duterte, the president of the Philippines, to the White House, despite Mr Duterte’s extrajudicial killing of drugs suspects that has claimed more than 7,000 lives. + +Shinzo Abe, Japan’s prime minister, said he would try to amend his country’s pacifist constitution by 2020 to clarify the status of the Self-Defence Forces, Japan’s armed services in all but name. See article. + +The leader of the free world + + + +Angela Merkel, the chancellor of Germany, visited Russia, where she raised concerns with Vladimir Putin, the Russian president, about human rights, particularly the recent persecution of gay men in Chechnya, a semi-autonomous republic. Mrs Merkel also criticised restrictions on the freedom of assembly, the arrest of anti-government protesters and a recent ban on Jehovah’s Witnesses. Meanwhile unknown assailants doused Alexei Navalny, Russia’s leading opposition politician, with a green dye and acid, causing him to lose much of the sight in his right eye. + +Bohuslav Sobotka, the prime minister of the Czech Republic, unexpectedly declared that he would ask the president to accept the resignation of his government over unexplained dealings by the finance minister, Andrej Babis. Mr Babis belongs to a different party to Mr Sobotka’s centre-left social democrats and is his main political rival ahead of a general election, which is due to be held in October. + +Greece secured a deal with its creditors that will allow it to receive the next tranche of funds from its bail-out agreement. Finance ministers in the euro zone will meet on May 22nd to discuss its terms. + +Everyone’s a winner! + +A $1.1 trillion spending bill, running at 1,665 pages, was hammered out by Democrats and Republicans on Capitol Hill in order to avoid a government shutdown. Both parties claimed that the legislation reflected their priorities. The Democrats maintained that they had thwarted funding for Donald Trump’s wall along the border with Mexico; the Republicans pointed to more money for defence. + +Republicans in the House of Representatives made another effort to push their health-care bill. A reworked version makes it easier for states to withdraw from parts of Obamacare, which pleased conservatives. More money was made available for insurance to cover people with pre-existing conditions, one part of Obamacare that has proved popular with voters. + +Puerto Rico filed for court protection to shelter it from its creditors after failing to reach an agreement on restructuring $73bn in debt. Though not technically a bankruptcy, it still represents the biggest failure of a local government under American law, far larger than Detroit’s in 2013. + +Rewriting the rules + +Venezuela’s president, Nicolás Maduro, issued a decree to convene a constituent assembly, which would write a new constitution. The opposition said the manoeuvre is intended to entrench the power of the dictatorial regime. More than 30 people have died in weeks of protests against the government. + + + +Trade unions called Brazil’s first general strike in 21 years to protest against the government’s plans to reduce spending on pensions and liberalise labour laws. The strike disrupted business and traffic in several cities, including São Paulo and Brasília, the capital. + +Multiple complications + +Brexit hogged the election limelight in Britain, as news leaked of a fraught dinner between Theresa May, the prime minister, and Jean-Claude Juncker, the European Commission president. He reportedly claimed that Mrs May is living “in another galaxy”; she responded that the “bureaucrats of Brussels” were meddling in the election. Labour faced its own embarrassments. Diane Abbott, the shadow home secretary, fluffed her sums trying to put a price on Labour’s pledge to hire an additional 10,000 police officers. It appeared at one point that she thought it would cost only a few coppers. + + + + + +Business this week + +May 6th 2017 + + + +Apple chalked up a net profit of $11bn for the three months ending April 1st, a solid 5% rise compared with the same quarter last year. But it also reported a dip in sales of the iPhone, caused in part by another limp performance in China, where revenue fell by 14%. Consumers may be delaying updating their device in anticipation of a new model in September. Apple’s cash reserves ballooned to $257bn in the quarter. + +Following a spate of incidents where users posted videos of murders and suicides, Facebook said it would recruit another 3,000 people to screen for harmful images in addition to the 4,500 it already employs to do that job. Reporting its quarterly earnings, the social network said it had almost reached 2bn monthly users. Revenue soared in the first quarter, to $8bn. + +A regulatory filing revealed that HNA, an acquisitive Chinese conglomerate, has become the biggest shareholder in Deutsche Bank, holding a stake of almost 10%. HNA had reported an initial stake of 3% only in February. + +Miami vice + +In a closely watched case, America’s Supreme Court ruled that the city of Miami does have the right to sue Bank of America and Wells Fargo for allegedly discriminating against blacks and Hispanics by selling them risky mortgages. Miami argues that the mortgages led to a rise in foreclosures, subsequently hitting its proceeds from property taxes. The court decided that under the law in question, Miami has the legal standing of an “aggrieved” person. But it also sent the case back to the appeals court with an order to apply a much tougher standard when assessing damages. + +Buoyed by higher oil prices, the world’s big oil companies reported better-than-expected results for the first quarter. Exxon Mobil made a headline profit of $4bn, up by 120% from the same three months last year. And BP nearly tripled its earnings, to $1.5bn. It expects to fork out another $5bn this year in payments related to the Deepwater Horizon disaster of 2010, and another $2bn next year. + +Serendipity + +Infosys, an Indian IT services company that does most of its business in the United States, announced that it would hire 10,000 American workers over the next two years as it opens four new technology and innovation hubs. Last month Infosys was one of the companies mentioned by the White House when it laid out plans to reform the H1-B employment-visa programme, which it claims is abused by foreign firms bringing in cheap workers. Perhaps by chance, one of the new tech hubs will be built in Indiana, the home state of Mike Pence, the vice-president. + +The euro zone’s GDP grew at an annualised rate of around 2% in the first quarter. American GDP rose by 0.7% in the same period, the weakest pace since early 2014. + +America’s weak economic growth at the start of the year played a part in the Federal Reserve’s decision to keep interest rates on hold. But with wages growing at a fast clip and the unemployment rate at a ten-year low, the central bank is still on course to raise rates twice more this year. + +Britain’s economy meanwhile slowed significantly in the first three months of the year, expanding by 1.2% at an annualised rate. But manufacturing grew in April at the fastest pace in more than three years, according to a respected purchasing managers’ index. + +Airbnb reached a settlement with San Francisco over a law that fined it for every person renting out their home through the website who had not registered with the city. Airbnb and other home-share sites will now check data on hosts and remove listings that fail to comply with the rules. The case was one of the biggest obstacles standing in the way of Airbnb’s ambition to launch a stockmarket IPO. + +For the second time in a decade, Alitalia filed for bankruptcy protection after workers rejected the cuts needed to underpin a capitalisation plan. The airline has been a perennial problem for Italy’s government, which has ruled out a rescue. Alitalia will work out a restructuring plan while it is under special administration, from which it may emerge as a much smaller carrier. + +The fast and the furious + +Scene: A room in Los Angeles. It is 1am. The contract between 12,000 television and film script writers and Hollywood studios expired an hour ago. Clearly agitated, the writers have voted for strike action if no deal is forthcoming. White vans stand ready to take volunteers to picket lines. Suddenly, studio executives agree to most demands, including contributing more to the writers’ health plan [fade to jubilant union leaders]. Possible sequel: the contract between actors and the studios expires on June 30th. + + + + + +KAL's cartoon + + + +May 4th 2017 + + + + + +Leaders + + + + +Regulating the data economy: The world’s most valuable resource + +Brexit and Britain’s election: Strong, stable—and short on detail + +France’s election: Don’t discount Marine Le Pen + +South Korea: Moon mission? + +Synthetic biology: Breaking free from cells + + + + + +Regulating the internet giants + +The world’s most valuable resource is no longer oil, but data + +The data economy demands a new approach to antitrust rules + + + +May 6th 2017 + +A NEW commodity spawns a lucrative, fast-growing industry, prompting antitrust regulators to step in to restrain those who control its flow. A century ago, the resource in question was oil. Now similar concerns are being raised by the giants that deal in data, the oil of the digital era. These titans—Alphabet (Google’s parent company), Amazon, Apple, Facebook and Microsoft—look unstoppable. They are the five most valuable listed firms in the world. Their profits are surging: they collectively racked up over $25bn in net profit in the first quarter of 2017. Amazon captures half of all dollars spent online in America. Google and Facebook accounted for almost all the revenue growth in digital advertising in America last year. + +Such dominance has prompted calls for the tech giants to be broken up, as Standard Oil was in the early 20th century. This newspaper has argued against such drastic action in the past. Size alone is not a crime. The giants’ success has benefited consumers. Few want to live without Google’s search engine, Amazon’s one-day delivery or Facebook’s newsfeed. Nor do these firms raise the alarm when standard antitrust tests are applied. Far from gouging consumers, many of their services are free (users pay, in effect, by handing over yet more data). Take account of offline rivals, and their market shares look less worrying. And the emergence of upstarts like Snapchat suggests that new entrants can still make waves. + +But there is cause for concern. Internet companies’ control of data gives them enormous power. Old ways of thinking about competition, devised in the era of oil, look outdated in what has come to be called the “data economy” (see Briefing). A new approach is needed. + +Quantity has a quality all its own + +What has changed? Smartphones and the internet have made data abundant, ubiquitous and far more valuable. Whether you are going for a run, watching TV or even just sitting in traffic, virtually every activity creates a digital trace—more raw material for the data distilleries. As devices from watches to cars connect to the internet, the volume is increasing: some estimate that a self-driving car will generate 100 gigabytes per second. Meanwhile, artificial-intelligence (AI) techniques such as machine learning extract more value from data. Algorithms can predict when a customer is ready to buy, a jet-engine needs servicing or a person is at risk of a disease. Industrial giants such as GE and Siemens now sell themselves as data firms. + +This abundance of data changes the nature of competition. Technology giants have always benefited from network effects: the more users Facebook signs up, the more attractive signing up becomes for others. With data there are extra network effects. By collecting more data, a firm has more scope to improve its products, which attracts more users, generating even more data, and so on. The more data Tesla gathers from its self-driving cars, the better it can make them at driving themselves—part of the reason the firm, which sold only 25,000 cars in the first quarter, is now worth more than GM, which sold 2.3m. Vast pools of data can thus act as protective moats. + +Access to data also protects companies from rivals in another way. The case for being sanguine about competition in the tech industry rests on the potential for incumbents to be blindsided by a startup in a garage or an unexpected technological shift. But both are less likely in the data age. The giants’ surveillance systems span the entire economy: Google can see what people search for, Facebook what they share, Amazon what they buy. They own app stores and operating systems, and rent out computing power to startups. They have a “God’s eye view” of activities in their own markets and beyond. They can see when a new product or service gains traction, allowing them to copy it or simply buy the upstart before it becomes too great a threat. Many think Facebook’s $22bn purchase in 2014 of WhatsApp, a messaging app with fewer than 60 employees, falls into this category of “shoot-out acquisitions” that eliminate potential rivals. By providing barriers to entry and early-warning systems, data can stifle competition. + +Who ya gonna call, trustbusters? + +The nature of data makes the antitrust remedies of the past less useful. Breaking up a firm like Google into five Googlets would not stop network effects from reasserting themselves: in time, one of them would become dominant again. A radical rethink is required—and as the outlines of a new approach start to become apparent, two ideas stand out. + +The first is that antitrust authorities need to move from the industrial era into the 21st century. When considering a merger, for example, they have traditionally used size to determine when to intervene. They now need to take into account the extent of firms’ data assets when assessing the impact of deals. The purchase price could also be a signal that an incumbent is buying a nascent threat. On these measures, Facebook’s willingness to pay so much for WhatsApp, which had no revenue to speak of, would have raised red flags. Trustbusters must also become more data-savvy in their analysis of market dynamics, for example by using simulations to hunt for algorithms colluding over prices or to determine how best to promote competition (see Free exchange). + +The second principle is to loosen the grip that providers of online services have over data and give more control to those who supply them. More transparency would help: companies could be forced to reveal to consumers what information they hold and how much money they make from it. Governments could encourage the emergence of new services by opening up more of their own data vaults or managing crucial parts of the data economy as public infrastructure, as India does with its digital-identity system, Aadhaar. They could also mandate the sharing of certain kinds of data, with users’ consent—an approach Europe is taking in financial services by requiring banks to make customers’ data accessible to third parties. + +Rebooting antitrust for the information age will not be easy. It will entail new risks: more data sharing, for instance, could threaten privacy. But if governments don’t want a data economy dominated by a few giants, they will need to act soon. + + + + + +Brexit and Britain’s election + +Theresa May’s pitch is strong, stable—and short on detail + +In Brussels and at home, the prime minister is being worryingly vague + + + +May 4th 2017 + +ON MAY 3rd Theresa May gave what began as a speech to mark the start of the general-election campaign and ended up sounding more like a declaration of war. “Threats against Britain have been issued by European politicians and officials,” she warned. “All of these acts have been deliberately timed to affect the result of the general election.” + +That is doubtful. But if this week’s war of words between Britain’s prime minister and the European Union does affect the vote, it will be in her favour. Mrs May’s Conservatives were already the racing favourites to win a big majority against a feeble Labour opposition. A frosty exchange with foreigners over Brexit will only reinforce the image of strength that she has been trying to project to voters. The snag, for Britain and the EU alike, is that the needless deterioration in relations will worsen the chances of the two parties signing a good—or perhaps any—Brexit deal (see article). + +The episode is doubly worrying for Britons because it seems to exemplify Mrs May’s approach to the election campaign. Rather than explain in detail what she wants from Brexit, as the European side did this week, she has given little away, instead simply urging voters to trust her to get the best possible deal. It is a similar story on domestic matters. The weakness of Labour and its hapless leader, Jeremy Corbyn, have persuaded the prime minister to turn the campaign into a contest about leadership and little else. + +With a lead of nearly 20 percentage points, Mrs May might calculate that she has more to lose than to gain by committing herself to detailed policies. She even seems reluctant to risk much interaction with voters. Last weekend she held a closed event in a hall in a remote Scottish woodland. Previously she attended a rally at a company in Leeds, whose employees tweeted that they had been sent home before things kicked off. Cornish journalists were shut in a room and forbidden from filming her on a visit to a factory. Mrs May has refused to take part in televised debates; nowadays Britain is rare among democracies in not having them as a matter of course. + +This tight-lipped campaign is troubling. The Conservative Party’s catchphrase of “strong and stable leadership” is already wearing thin, though there is more than a month to go. Its position on everything from Brexit to the National Health Service seems to be simply that Mrs May is the leader who will do the best job. The EU spat was more of the same: the episode was treated as just another reason to ask voters to strengthen her hand in Brussels by giving her a bigger majority. Never mind the details; put your faith in the negotiator. + +Power in need of a plan + +A bigger majority would indeed improve Mrs May’s position, chiefly by allowing her to ignore the wackiest of her own Europhobe backbenchers, some of whom actually want a “no deal” outcome. But an essential part of strong and stable leadership is explaining what you are going to do with it. Britain deserves a proper debate about the trade-offs involved in its grand bargain with the EU. The government’s reply—that such a discussion would give away its secret negotiating position—betrays its lack of experience cutting such deals. A successful outcome is likeliest when both sides lay out their objectives clearly. In any case, this week’s episode bears out what those with experience of the EU have long been telling Mrs May: that private talks with Brussels immediately leak. + +The party manifestos will be published soon. Mrs May has already shown plenty of steel. Britons must hope that she has more ideas up her sleeve than she has so far let on, on Brexit and much else. + + + + + +Vote for the banker. It’s important + +Le Pen has not lost yet. French voters should unite against her + +Emmanuel Macron will probably win. But a catastrophic upset is possible + + + +May 4th 2017 + +PUNDITS are already looking beyond the French presidential run-off that will take place on May 7th. Emmanuel Macron, the young liberal favourite, is 20 points ahead in the polls. Talk has turned to the obstacles he might face in office. The party he founded, En Marche! (“On the Move!”), will probably not win a majority in the legislature. How, they ask, will he handle the delicate task of coalition-building in a country where old certainties are going up in flames like rum on a banane flambée? + +Steady on. Mr Macron has not won yet. And if voters take it for granted that he will, he might not. Betting on politics is banned in France, but foreign bookmakers give his populist, nationalist opponent, Marine Le Pen, a one-in-six chance of victory—the same odds as Russian roulette. The reason is that Ms Le Pen’s supporters will all turn out in force, so if the other side is apathetic and abstains in large numbers, she could win. French people cannot afford to be complacent about this election, or indifferent to the choices on offer (see article). + +Though his manifesto lacks detail, Mr Macron offers reform, realism and a chance of a more dynamic France. He would loosen the job-killing labour code, trim the gargantuan state a little, reboot Franco-German chumminess and strengthen the institutions that hold the euro zone together. + +Ms Le Pen, by contrast, offers bigotry mixed with make-believe. Vote for her, she suggests, and the state will shower you with goodies, paid for largely by being less generous to immigrants. She promises earlier retirement, bigger pensions, a short working week, tax cuts and a top-notch hospital on your doorstep. In her belief that French people can prosper by working less and consuming more public services (although government already spends 56% of GDP), she has much in common with Jean-Luc Mélenchon, the far-left candidate who won a fifth of the vote in the first round last month. Her flyers stress this point, hoping to poach his supporters or persuade them to stay at home rather than vote for Mr Macron. Ms Le Pen is also reaching out to mainstream conservatives. To woo followers of François Fillon, a former prime minister who also won a fifth of the vote in the first round, she has borrowed some of his lines about France’s unique place in the universe and downplayed some of her more alarming policies, such as quitting the euro and perhaps the European Union itself. + +To voters of all stripes, she promises protection. Against the possibility of being laid off, if they have jobs. Against foreign competition. Against crime: she would add 40,000 prison beds, put 15,000 more cops on the street and let them shoot first if they feel threatened. Against terrorism: she would close mosques suspected of radicalism and deport foreigners suspected of jihadist ties. And against having unfamiliar neighbours: she would cut net migration from around 65,000 people a year to 10,000. She contrasts her own patriotic platform (“Choose France”) with the rootless cosmopolitanism of her opponent, a former Rothschild banker. Echoing an old barb from President François Hollande, she says that “the enemy of the French people is still the world of finance, but this time he has a name, he has a face, he has a party.” + +This is powerful stuff. Ms Le Pen stirs deeper passions than Mr Macron. And even among voters repelled by her party’s xenophobic baggage, there is an alarming ambivalence. Many far-leftists talk of a choice between “plague and cholera”, and urge abstention. “There is no hierarchy of unacceptability between Le Pen and Macron. Between xenophobia and bowing to banks,” declared Emmanuel Todd, a public intellectual. + +Vote for the banker. It’s important + +If enough voters swallow such sophistry, Ms Le Pen could prevail. Her promised handouts would not materialise, since France is already perilously indebted and her scheme to print francs again would spark a financial crisis. Her bid to protect French jobs would lead to more unemployment. Her plan to shut out foreign goods and ideas would make France poorer and less productive. But the division that she fosters and exploits will endure, even if she loses. Nearly half of voters in the first round backed anti-EU candidates. French Muslims and non-Muslims are far from reaching a modus vivendi. And Ms Le Pen will be back in 2022. French voters should give Mr Macron a thumping majority, and a mandate to address the malaise that makes his opponent’s demagoguery so popular. + + + + + +Saviour Moon? + +How South Korea’s next president can cheer up his unhappy country + +Politics has not kept pace with social change + + + +May 4th 2017 + +LAST year millions of South Koreans took to the streets to secure the impeachment of Park Geun-hye, their conservative president. She is now behind bars; her trial, on charges of corruption and abuse of power, began this week. On May 9th the country will pick a new president in a snap election. The winner looks almost certain to be Moon Jae-in, the liberal whom Ms Park defeated at the last election in 2012. + +The scandal tested South Korea’s young, raucous democracy—and it passed. No one was killed. The often cautious press vigorously pursued the allegations that Ms Park had divulged state secrets to a confidante and colluded with her in extorting large sums from private firms. Legislators, including many from Ms Park’s own party, voted convincingly to impeach her. The constitutional court unanimously upheld their decision. + +South Korea, in contrast with its northern neighbour, is an inspiration to many. In 1970 less than half of South Koreans went to secondary school; now they are more likely to graduate from university than people in any other country. In five decades GDP per person has risen 20-fold, to nearly $40,000 (adjusted for the local cost of living). In a single generation, the country went from beggar to donor, showing that rapid growth and democracy can go hand in hand. Its economy remained turbo-charged throughout its transition away from military rule in the 1980s and 1990s. Its recent record of holding a sitting government to account is an example to all. + +Yet there is a nagging sense that politics has not kept up with social change. South Koreans are increasingly disillusioned (see article). Like disgruntled voters elsewhere, they feel that their political system is not working for them. Growth is faltering. Unemployment is surging, especially among the young. And even those who have jobs feel that there is one set of rules for the elite and another, harsher one for the masses. + +Tormented Seoul + +Ms Park’s removal has brought some comfort to the disenchanted. She was out of touch, surrounding herself with yes-men. Her chief-of-staff had helped to draft the martial law that underpinned the regime of her father, Park Chung-hee, a military strongman who ran South Korea for 18 years until he was assassinated in 1979. Now her nemesis, Mr Moon, has promised a less imperious governing style. He says that, if elected, he will not live or work in the presidential mansion, the Blue House. Ahn Cheol-soo, another liberal candidate, says he would shrink the president’s office and work more closely with his ministers. But South Koreans want their institutions to be more responsive, so more change will be needed. + +One way to curb the “imperial presidency” would be constitutional reform. At the moment presidents hire and fire prime ministers chiefly in the hope of boosting their own political standing. They have little incentive to heed voters, because only one five-year term is allowed. Most leave office with rock-bottom approval ratings and mired in scandal. To force leaders to pay more attention to the public, South Korea should allow two-term presidencies and give more power to the national assembly. That would require a two-thirds majority of MPs and a national referendum—but it could help mend the rift between citizens and their government. + +Political parties need to shape up, too. Four-fifths of South Koreans do not feel that their MP represents them properly. Parties constantly split and coalesce around new presidential candidates. The two main ones have changed their names 14 and ten times respectively since 1948, making it hard for voters to keep up. With a powerful national assembly parties might represent sets of ideas, rather than serve as vehicles for individual ambition. The media could help, too, by holding all politicians more fiercely to account, as they did Ms Park. + +The anti-Park protests have allowed long-ignored voices to be heard. Before the vote on impeachment, some 929,000 citizens wrote to their MPs—an unheard-of engagement with politics. A culture of impunity within corporate and political circles is being eroded, too. Lee Jae-yong, the boss of Samsung, the country’s biggest conglomerate, is behind bars for allegedly bribing Ms Park. (He denies it.) That is a striking change: his father, who remains Samsung’s chairman, was convicted of graft in 2008 but received a presidential pardon. + +Outrage at Ms Park has united South Koreans previously divided by ideology. The liberal, dovish Mr Moon has gone out of his way to court conservative and hawkish voters. If he wins, he has a chance to write the next chapter of the South Korean miracle. The rest of the world should wish him well, for South Korea matters. If, one day, the odious northern regime collapses, the South will have to pick up the pieces. + + + + + +Breaking down the walls + +The remarkable promise of cell-free biology + +New technologies could deliver the benefits of nature without the hassle of life + + + +May 4th 2017 + +LIVING creatures are jolly useful. Farmers rear animals and then harvest their flesh, eggs and milk for humans to eat. Drug companies genetically engineer animal cells and grow them in vats, so they can churn out drugs to treat disease. There is a catch, however. It is hard work to corral cells and higher organisms to do humans’ bidding. + +There may be a better way. Cell-free biology, an idea first proposed about a century ago, is at last having its coming-out party. The technique involves extracting the protein-making machinery from living cells. Cell walls, useless molecules and the organism’s own DNA are all thrown away. By adding doses of new DNA to the resultant gloop, proteins can then be made to order (see article). This month, in California, a 1,000-litre vat of cellular machinery belonging to a company called Sutro Biopharma will start churning out components of a cancer drug, which will go through tests with the Food and Drug Administration, America’s medical regulator, next year. It will be the first commercial product made in this way. Other firms are working on similar techniques to produce everything from plastics to pesticides. Cell-free biology could also help those trying to produce artificial meat without relying on animals. + +It is still early days, and the commercial viability of these techniques has yet to be proved. Synthetic biology smacks to many of “playing God”: regulators will have a big say in how quickly the technology is adopted. But divorcing biological production from living things makes sense, for three reasons. + +The first is efficiency. Living organisms are shaped by evolution to survive and reproduce. That wastes energy. Consider insulin, which used to be harvested from pig carcasses, and these days is made in vats of genetically modified yeast or bacteria. Those bacteria (and their porcine predecessors) use valuable nutrients to build a host of other proteins besides insulin which are vital for their own survival but worthless to humans. With cell-free biology, more of those nutrients could be turned into the end-product that is being produced. + +Living creatures are also irritatingly fragile. Genetically engineered bacteria can be used, for instance, to make a fuel called isobutenol. But it is a solvent, and kills the bacteria before they can make very much. A cell-free system is more robust. Or consider Genzyme, the maker of Cerezyme and Fabrazyme, drugs for treating rare genetic disorders, which are produced in vats of hamster-ovary cells. In 2009 production was stopped for more than a month after these delicate cells caught a viral disease. That shutdown cost hundreds of millions of dollars. But because cell-free production systems are not alive, they cannot fall ill. + +The second benefit of cell-free biology is that it has the potential to avoid some of the social and environmental drawbacks associated with relying on living organisms. Growing corn (maize) as a feedstock to make ethanol occupies land that could otherwise be used for growing food, for example. Livestock farming takes up about a quarter of the planet’s ice-free land and contributes to climate change. Generating fuel or food in vats could be an attractive alternative. + + + +A cultural shift + +The third reason is ethical. Animals have a capacity for suffering that the cellular machinery from which they are built does not. Modern technology has replaced many natural products with synthetic alternatives. But humans still rely on animals for food, fabrics and a few medicines. Snake farms, crude and expensive, produce antivenom. Factory farming of pigs, chickens and cows has many opponents. Animals’ skins and coats, used to make leather and fur, are often the most valuable part of their farmed carcasses. You do not have to be a vegetarian or an animal-rights activist to welcome the possibility of making such products in more humane ways. + +There are many pitfalls on the road from the laboratory to mass production. But cell-free biology should be cheered on. Humans will always need the bounty that nature provides, whether in the form of nutrients, drugs or chemicals. But they may not always need living things to produce them. + + + + + +Letters + + + + +On Japan, public land, Germany, North Korea, India, knots, “The Goodies”: Letters to the editor + + + + + +Letters + +Letters to the editor + +On Japan, public land, Germany, aviation, North Korea, India, knots, the Goodies + +May 4th 2017 + + + +Japan’s new law on terror + +“Nabbing imaginary terrorists” (April 22nd) raised concerns over personal liberty in Japan, including a new law that would punish people who plan to commit terrorism and organised crime. While several criticisms in the article deserve refuting, allow me to focus on the new law. + +In 2000, the UN adopted a convention against transnational organised crime which has 187 parties including G7 countries and both Belgium and Sweden, which have recently suffered terrorist attacks. Although Japan signed the convention, the lack of necessary domestic laws prevent us from co-operating with other countries. This law will eliminate those loopholes and enable Japan to contribute towards preventing organised crime and terrorism, which are genuine concerns for us as we prepare to host the Rugby World Cup and Olympic and Paralympic Games. + +Regarding civil liberties, the government has carefully drafted the bill to clarify crimes covered under the new law so that groups conducting legitimate activities will not be punished. + +NORIO MARUYAMA + +Press secretary + +Ministry of Foreign Affairs + +Tokyo + + + + + +State freeloaders + +Your article on public land in the United States quoted a finding that state trust lands agencies return $14.51 for every dollar spent, compared with 73 cents on every dollar spent by federal forest and land agencies (“Elliott less”, April 15th). However, these estimates do not account for the freeriding behaviour of state trust lands. + +Departments of agriculture at the state level provide pro bono range-management expertise for grazing lands held by state trust lands. The bulk of wildfire suppression and mitigation costs are incurred by the US Forest Service, regardless of who manages the land. Finally, state trust lands often have a mission of maximising revenue, which stands in contrast to the mandate federal agencies must follow that land has multiple uses. + +A better accounting of land-management costs is in order. Any government entity can look profitable if it is allowed to book revenues while pushing its costs onto other agencies. + +PROFESSOR PAUL JAKUS + +Department of Applied Economics + +Utah State University + +Logan, Utah + + + + + +German productivity + +Your analysis of the shrinking population in the former East Germany made for a depressing read, but one which myself and many other economists predicted (“Fading echoes”, April 15th). The article concluded that productivity in the former East Germany is 20% lower than in West Germany. That is a two-folded example of both a problem and a solution. The problem was that at the time of unification, West German unions forced wage parity on their less productive East German workers, driving unemployment up and migration westward. The warped solution is that as more people leave the country, and providing output remains constant, the likelier it is that productivity levels will finally converge. + +WILL PAGE + +London + + + + + +The Wright time + +* Your article identifies that competition and collective legislation in aviation in Europe has brought many benefits, but there are still issues with the way European airlines treat consumers (“Whack-a-passenger”, April 22nd). A passenger survey released this week shows that European passengers face widespread delays and luggage problems. 24% of reported EU flights were delayed, 5% of flights were cancelled and 9% had luggage lost, damaged or delayed. Airlines are also failing to meet their obligations to compensate consumers. In fact, in cases of a delay of three hours or more only 25% of people were reimbursed. These results were echoed elsewhere in the world according to the survey where there is even less legislation to hold airlines to account. + +Whilst the news has recently focused on extreme examples of passenger rights violation, the low level failures, delays and uncertainties that blight people’s experience of air travel get less attention. Now is the time for airlines to recognise their responsibilities to the people who travel with them with across the globe, to hold their hands up when things go wrong and to compensate people accordingly. + +Amanda Long, Director General, Consumers International + +Luisa Crisigiovanni, Secretary General, Altroconsumo + +Vagn Jelsøe, Deputy Executive Director, Danish Consumer Council + +Ana Tapadinhas, General-Director, DECO + +Ileana Izverniceanu, Spokesperson, OCU + + + + + +Hit North Korea in the wallet + +Jonathan Pollack is right to be sceptical about negotiating with North Korea (“The land of lousy options, April 8th). No one tried harder than Bill Clinton in the 1990s to negotiate a stop to Pyongyang’s nuclear-weapons programme. He provided lots of inducements: a light-water reactor to solve the North’s power-generation problems, free monthly bunker-oil deliveries, lifting its terrorist designation and ending financial sanctions against the Kims’ family bank in Macau. Yet the North’s weapons programme continued. + +Those limited banking sanctions were the most personal and the most galling to the then leader, Kim Jong Il. That suggests that your proposal of swingeing financial sanctions on the North and on any bank dealing with it will have the most effect. North Korea’s backer, China, will hurt. But it would be better to face that problem in Sino-American relations now than later. It would also show China that the United States still retains the clout to do grave damage to China’s economy and its vaulting ambitions in the region, even if it is reluctant to face down China’s preposterous claims in the South China Sea. + +PETER ROWE + +Australian ambassador to South and North Korea, 2006-09 + +Sydney + + + + + +Mind your language + +The real difficulty for e-commerce in India is the language problem (“Delayed delivery”, April 6th). Most e-commerce companies primarily use English on their customer interface. Yet none of India’s top 20 channels or print titles are in English. E-commerce thus limits itself to 100m people through English rather than the language of 1.2bn potential users. The market for English-speaking Indians is saturated. It is surprising that the investors in these firms never asked the question about using the vernacular. If Flipkart had launched in Russia it would have been given a Russian name and a Russian-language website. + +TEJESH SRIVASTAV + +Delhi + + + + + +Knot a problem + +While the research into the causes of a shoelace coming undone is undoubtedly a valuable scientific effort, there is a very simple solution that just requires the common sense of a five-year-old (“A knotty problem”, April 15th). Tie a stopper knot at the end of each lace. + +BILL MACRAE + +Red Deer, Canada + +This research should definitely win an Ig Nobel prize. All you have to do is double-tie the knot and it lasts all day even if you are hiking several miles. Job done. + +HILARY POTTS + +London + +You broached a topic close to my heart. But I think perhaps by focusing on the mechanical-geometric aspects of the shoe-tie-unwind problem, the research team has missed a pragmatic point. It has been my observation in recent years that the cords from headphones are increasingly able to generate knots of Gordian propensity within seconds of being left to their own devices. + +I believe the materials scientists already have the answer. Were all shoelaces made from headphone cord, and vice versa, life would be measurably freer from stress. + +NICHOLAS WARD + +Vienna + + + +* You say that engineering “has had difficulty creating a shoelace that does not accidentally come loose” and give us tips on how they should be knotted. As any of your older readers will confirm, this is a relatively recent problem, and one of our own making. Shoelaces used to be made of cotton, jute, or hemp. A bow once tied did not come undone and did not require a double knot. Modern shoelaces are made of synthetic fibers, which tend to maintain their shape (springiness) and are generally more slippery and are thus more prone to coming undone than those made from traditional fibers. So it’s not the knots, it’s the fibres that thwart us. + +MAURICE McGREGOR + +Montreal + + + + + +Goody goody yum yum + +I cannot allow Bagehot’s peremptory traducing of “The Goodies” to go unchallenged (April 22nd). Many enjoyed the TV show during the 1970s and the comedy had some topical content. Who can forget the sight of an Icelandic gunboat patrolling the Serpentine in London at the time of the cod wars? I look forward to a balanced analysis of the process of disentanglement from the common fisheries policy. + +RICHARD ABLETT + +Bridlington, East Yorkshire + +* Letters appear online only + + + + + +Briefing + + + + +The data economy: Fuel of the future + + + + + +Fuel of the future + +Data is giving rise to a new economy + +How is it shaping up? + + + +May 6th 2017 + +AN OIL refinery is an industrial cathedral, a place of power, drama and dark recesses: ornate cracking towers its gothic pinnacles, flaring gas its stained glass, the stench of hydrocarbons its heady incense. Data centres, in contrast, offer a less obvious spectacle: windowless grey buildings that boast no height or ornament, they seem to stretch to infinity. + +Yet the two have much in common. For one thing, both are stuffed with pipes. In refineries these collect petrol, propane and other components of crude oil, which have been separated by heat. In big data centres they transport air to cool tens of thousands of computers which extract value—patterns, predictions and other insights—from raw digital information. + +Both also fulfil the same role: producing crucial feedstocks for the world economy. Whether cars, plastics or many drugs—without the components of crude, much of modern life would not exist. The distillations of data centres, for their part, power all kinds of online services and, increasingly, the real world as devices become more and more connected. + +Data are to this century what oil was to the last one: a driver of growth and change. Flows of data have created new infrastructure, new businesses, new monopolies, new politics and—crucially—new economics. Digital information is unlike any previous resource; it is extracted, refined, valued, bought and sold in different ways. It changes the rules for markets and it demands new approaches from regulators. Many a battle will be fought over who should own, and benefit from, data. + + + +There is an awful lot to scrap over. IDC, a market-research firm, predicts that the “digital universe” (the data created and copied every year) will reach 180 zettabytes (180 followed by 21 zeros) in 2025 (see chart). Pumping it all through a broadband internet connection would take over 450m years. To speed the transfer into its data centres, Amazon, an e-commerce giant with a fast-growing cloud-computing arm, uses trucks pulling shipping containers each packed with storage devices holding 100 petabytes (a mere 15 zeros). To ingest it all, firms are speedily building data refineries. In 2016 Amazon, Alphabet and Microsoft together racked up nearly $32bn in capital expenditure and capital leases, up by 22% from the previous year, according to the Wall Street Journal. + +The quality of data has changed, too. They are no longer mainly stocks of digital information—databases of names and other well-defined personal data, such as age, sex and income. The new economy is more about analysing rapid real-time flows of often unstructured data: the streams of photos and videos generated by users of social networks, the reams of information produced by commuters on their way to work, the flood of data from hundreds of sensors in a jet engine. + +From subway trains and wind turbines to toilet seats and toasters—all sorts of devices are becoming sources of data. The world will bristle with connected sensors, so that people will leave a digital trail wherever they go, even if they are not connected to the internet. As Paul Sonderegger, a big-data strategist at Oracle, a software-maker, puts it: “Data will be the ultimate externality: we will generate them whatever we do.” + +It is what you know + +Most important, the value of data is increasing. Facebook and Google initially used the data they collected from users to target advertising better. But in recent years they have discovered that data can be turned into any number of artificial-intelligence (AI) or “cognitive” services, some of which will generate new sources of revenue. These services include translation, visual recognition and assessing someone’s personality by sifting through their writings—all of which can be sold to other firms to use in their own products. + +Although signs of the data economy are everywhere, its shape is only now becoming clear. And it would look pretty familiar to J.R. Ewing. There are the data majors, a growing number of wildcatters and plenty of other firms trying to get a piece of the action. All are out to exploit a powerful economic engine called the “data-network effect”—using data to attract more users, who then generate more data, which help to improve services, which attracts more users. + +The majors pump from the most bountiful reservoirs. The more users write comments, “like” posts and otherwise engage with Facebook, for example, the more it learns about those users and the better targeted the ads on newsfeeds become. Similarly, the more people search on Google, the better its search results turn out. + +These firms are always looking for new wells of information. Facebook gets its users to train some of its algorithms, for instance when they upload and tag pictures of friends. This explains why its computers can now recognise hundreds of millions of people with 98% accuracy. Google’s digital butler, called “Assistant”, gets better at performing tasks and answering questions the more it is used. + +Uber, for its part, is best known for its cheap taxi rides. But if the firm is worth an estimated $68bn, it is in part because it owns the biggest pool of data about supply (drivers) and demand (passengers) for personal transportation. Similarly, for most people Tesla is a maker of fancy electric cars. But its latest models collect mountains of data, which allow the firm to optimise its self-driving algorithms and then update the software accordingly. By the end of last year, the firm had gathered 1.3bn miles-worth of driving data—orders of magnitude more than Waymo, Alphabet’s self-driving-car division. + +“Data-driven” startups are the wildcatters of the new economy: they prospect for digital oil, extract it and turn it into clever new services, from analysing X-rays and CAT scans to determining where to spray herbicide on a field. Nexar, an Israeli startup, has devised a clever way to use drivers as data sources. Its app turns their smartphones into dashcams that tag footage of their travels via actions they normally perform. If many unexpectedly hit the brake at the same spot on the road, this signals a pothole or another obstacle. As compensation for using Nexar’s app, drivers get a free dashcam and services, such as a detailed report if they have an accident. The firm’s goal is to offer all sorts of services that help drivers avoid accidents—and for which they, or their insurers, will pay. One such is alerts about potholes or when a car around a blind corner suddenly stops. + +Non-tech firms are trying to sink digital wells, too. GE, for instance, has developed an “operating system for the industrial internet”, called Predix, to help customers control their machinery. Predix is also a data-collection system: it pools data from devices it is connected to, mixes these with other data, and then trains algorithms that can help improve the operations of a power plant, when to maintain a jet engine before it breaks down and the like. + +As in oil markets, bigger data firms keep taking over smaller ones (see table). But another aspect of the data economy would look strange to dealers in black gold. Oil is the world’s most traded commodity by value. Data, by contrast, are hardly traded at all, at least not for money. That is a far cry from what many had in mind when they talked about data as a “new asset class”, as the World Economic Forum (WEF), the Davos conference-organiser-cum-think-tank, did in a report published in 2011. The data economy, that term suggests, will consist of thriving markets for bits and bytes. But as it stands, it is mostly a collection of independent silos. + + + +Keep it to yourself + +This absence of markets is the result of the same factors that have given rise to firms. All sorts of “transaction costs” on markets—searching for information, negotiating deals, enforcing contracts and so on—make it simpler and more efficient simply to bring these activities in-house. Likewise, it is often more profitable to generate and use data inside a company than to buy and sell them on an open market. + +Their abundance notwithstanding, flows of data are not a commodity: each stream of information is different, in terms of timeliness, for example, or how complete it may be. This lack of “fungibility”, in economic lingo, makes it difficult for buyers to find a specific set of data and to put a price on it: the value of each sort is hard to compare with other data. There is a disincentive to trade as each side will worry that it is getting the short end of the stick. + +Researchers have only just begun to develop pricing methodologies, something Gartner, a consultancy, calls “infonomics”. One of its pioneers, Jim Short of the University of California in San Diego, studies cases where a decision has been made about how much data are worth. One such involves a subsidiary of Caesars Entertainment, a gambling group, that filed for bankruptcy in 2015. Its most valuable asset, at $1bn, was determined to be the data it is said to hold on the 45m customers who had joined the company’s customer-loyalty programme over the previous 17 years. + +The pricing difficulty is an important reason why one firm might find it simpler to buy another, even if it is mainly interested in data. This was the case in 2015 when IBM reportedly spent $2bn on the Weather Company, to get its hands on mountains of weather data as well as the infrastructure to collect them. Another fudge is barter deals: parts of Britain’s National Health Service and DeepMind, Alphabet’s AI division, have agreed to swap access to anonymous patient data for medical insights extracted from them. + +The fact that digital information, unlike oil, is also “non-rivalrous”, meaning that it can be copied and used by more than one person (or algorithm) at a time, creates further complications. It means that data can easily be used for other purposes than those agreed. And it adds to the confusion about who owns data (in the case of an autonomous car, it could be the carmaker, the supplier of the sensors, the passenger and, in time, if self-driving cars become self-owning ones, the vehicle itself). + +“Trading data is tedious,” says Alexander Linden of Gartner. As a result, data deals are often bilateral and ad hoc. They are not for the fainthearted: data contracts often run over dozens of pages of dense legalese, with language specifying allowed uses and how data are to be protected. A senior executive of a big bank recently told Mr Linden that he has better things to do than sign off on such documents—even if the data have great value. + +In the case of personal data, things are even more tricky. “A regulated national information market could allow personal information to be bought and sold, conferring on the seller the right to determine how much information is divulged,” Kenneth Laudon of New York University wrote in an influential article entitled “Markets and Privacy” in 1996. More recently, the WEF proposed the concept of a data bank account. A person’s data, it suggested, should “reside in an account where it would be controlled, managed, exchanged and accounted for”. + +The idea seems elegant, but neither a market nor data accounts have materialised yet. The problem is the opposite to that with corporate data: people give personal data away too readily in return for “free” services. The terms of trade have become the norm almost by accident, says Glen Weyl, an economist at Microsoft Research. After the dotcom bubble burst in the early 2000s, firms badly needed a way to make money. Gathering data for targeted advertising was the quickest fix. Only recently have they realised that data could be turned into any number of AI services. + +Slave to the algorithm + +Whether this makes the trade of data for free services an unfair exchange largely depends on the source of the value of the these services: the data or the algorithms that crunch them? Data, argues Hal Varian, Google’s chief economist, exhibit “decreasing returns to scale”, meaning that each additional piece of data is somewhat less valuable and at some point collecting more does not add anything. What matters more, he says, is the quality of the algorithms that crunch the data and the talent a firm has hired to develop them. Google’s success “is about recipes, not ingredients.” + +That may have been true in the early days of online search but seems wrong in the brave new world of AI. Algorithms are increasingly self-teaching—the more and the fresher data they are fed, the better. And marginal returns from data may actually go up as applications multiply, says Mr Weyl. After a ride-hailing firm has collected enough data to offer one service—real-time traffic information, say—more data may not add much value. But if it keeps collecting data, at some point it may be able to offer more services, such as route planning. + +Such debates, as well as the lack of a thriving trade in data, may be teething problems. It took decades for well-functioning markets for oil to emerge. Ironically, it was Standard Oil, the monopoly created by John D. Rockefeller in the late-19th century, that speeded things up: it helped create the technology and—the firm’s name was its programme—the standards that made it possible for the new resource to be traded. + +Markets have long existed for personal data that are of high value or easy to standardise. So-called “data brokers” do a swift trade in certain types of data. In other areas, markets, or something akin to them, are starting to develop. Oracle, which dominates the market for corporate databases, for example, is developing what amounts to an exchange for data assets. It wants its customers to trade data, combine them with sets provided by Oracle and extract insights—all in the safe environment of the firm’s computing cloud, where it can make sure, among other things, that information is not misused. Cognitive Logic, a startup, has come up with a similar product, but leaves the data in separate IT systems. + +Other young firms hope to give consumers more of a stake in their data. Citizenme allows users to pull all their online information together in one place and earn a small fee if they share it with brands. Datacoup, another startup, is selling insights from personal data and passing on part of the proceeds to its users. + + + +So far none of these efforts has really taken off; those focusing on personal data in particular may never do so. By now consumers and online giants are locked in an awkward embrace. People do not know how much their data are worth, nor do they really want to deal with the hassle of managing them, says Alessandro Acquisti of Carnegie Mellon University. But they are also showing symptoms of what is called “learned helplessness”: terms and conditions for services are often impenetrable and users have no choice than to accept them (smartphone apps quit immediately if one does not tap on “I agree”). + +For their part, online firms have become dependent on the drug of free data: they have no interest in fundamentally changing the deal with their users. Paying for data and building expensive systems to track contributions would make data refiners much less profitable. + +Data would not be the only important resource which is not widely traded; witness radio spectrum and water rights. But for data this is likely to create inefficiencies, argues Mr Weyl. If digital information lacks a price, valuable data may never be generated. And if data remain stuck in silos, much value may never get extracted. The big data refineries have no monopoly on innovation; other firms may be better placed to find ways to exploit information. + +The dearth of data markets will also make it more difficult to solve knotty policy problems. Three stand out: antitrust, privacy and social equality. The most pressing one, arguably, is antitrust—as was the case with oil. In 1911 America’s Supreme Court upheld a lower-court ruling to break up Standard Oil, which then controlled around 90% of oil refining in the country. + +Some are already calling for a similar break-up of the likes of Google, including Jonathan Taplin of the University of Southern California in his new book “Move Fast and Break Things”. But such a radical remedy would not really solve the problem. A break-up would be highly disruptive and slow down innovation. It is likely that a Googlet or a Babyface would quickly become dominant again. + +Yet calls for action are growing. The “super-platforms” wield too much power, says Ariel Ezrachi of the University of Oxford, who recently published a book entitled “Virtual Competition” with Maurice Stucke of the University of Tennessee. With many more and fresher data than others, he argues, they can quickly detect competitive threats. Their deep pockets allow them to buy startups that could one day become rivals. They can also manipulate the markets they host by, for example, having their algorithms quickly react so that competitors have no chance of gaining customers by lowering prices (see Free exchange). “The invisible hand is becoming a digital one,” says Mr Ezrachi. + +Beware the digital hand + +At a minimum, trustbusters have to sharpen their tools for the digital age. The European Commission did not block the merger of Facebook and WhatsApp. It argued that although these were operating the two largest text-messaging services, there were plenty of others around and that the deal would also not add to Facebook’s data hoard because WhatsApp did not collect much information about its users. But Facebook was buying a firm that it feared might evolve into a serious rival. It had built an alternative “social graph”, the network of connections between friends, which is Facebook’s most valuable asset. During the approval process of the merger Facebook had pledged that it would not merge the two user-bases, but started doing so last year, which has led the commission to threaten it with fines. + +The frustration with Facebook helps explain why some countries in Europe have already started to upgrade competition laws. In Germany legislation is winding through parliament which would allow the Federal Cartel Office to intervene in cases in which network effects and data assets play a role. The agency has already taken a special interest in the data economy. It has launched an investigation into whether Facebook is abusing its dominant position to impose certain privacy policies. Andreas Mundt, its president, wants to do more: “Can we further optimise our investigation techniques? How can we better integrate dynamic effects into our analyses?” + +A good general rule for regulators is to be as inventive as the companies they keep an eye on. In a recent paper Messrs Ezrachi and Stucke proposed that antitrust authorities should operate what they call “tacit collusion incubators”. To find out whether pricing algorithms manipulate markets or even collude, regulators should run simulations on their own computers. + +Another idea is to promote alternatives to centralised piles of data. Governments could give away more of the data they collect, creating opportunities for smaller firms. They could also support “data co-operatives”. In Switzerland a project called Midata collects health data from patients, who can then decide whether they want them to be included in research projects. + +Distributing the data + +For some crucial classes of data, sharing may even need to be made mandatory. Ben Thompson, who publishes Stratechery, a newsletter, recently suggested that dominant social networks should be required to allow access to their social graphs. Instagram, a photo-sharing service which has also been swallowed by Facebook, got off the ground by having new users import the list of their followers from Twitter. “Social networks have long since made this impossible, making it that much more difficult for competitors to arise,” Mr Thompson points out. + +Mandatory data sharing is not unheard of: Germany requires insurers jointly to maintain a set of statistics, including on car accidents, which smaller firms would not be able to compile on their own. The European Union’s new General Data Protection Regulation (GDPR), which will start to apply in May 2018, requires online services to make it easy for customers to transfer their information to other providers and even competitors. + +But “data portability”, as well as data sharing, highlights the second policy problem: the tension between data markets and privacy. If personal data are traded or shared they are more likely to leak. To reduce this risk, the GDPR strengthens people’s control over their data: it requires that firms get explicit consent for how they use data. Fines for violations will be steep: up to 4% of global revenues or €20m ($22m). + + + +Such rules will be hard to enforce in a world in which streams of data are mixed and matched. And there is another tension between tighter data protection and more competition: not only have big companies greater means to comply with pricey privacy regulation, it also allows them to control data more tightly. + +In time new technology, which goes beyond simple, easy-to-undo anonymisation, may ease such tensions. Bitmark, another startup, uses the same “blockchain” technology behind bitcoin, a digital currency, to keep track of who has accessed data. But legal innovation will be needed too, says Viktor Mayer-Schönberger of the University of Oxford. He and other data experts argue that not only the collection of data should be regulated but its use. Just as foodmakers are barred from using certain ingredients, online firms could be prohibited from using certain data or using them in such a way that could cause harm to an individual. This, he argues, would shift responsibility toward data collectors and data users who should be held accountable for how they manage data rather than relying on obtaining individual consent. + +Such “use-based” regulation would be just as hard to police as the conventional rules of notice and consent which currently govern what data are collected and how they are used. It is also likely to worsen what some see as the third big challenge of the data economy in its current form: that some will benefit far more than others, both socially and geographically. + +For personal data, at least, the current model seems barely sustainable. As data become more valuable and the data economy grows in importance, data refineries will make all the money. Those who generate the data may balk at an unequal exchange that only sees them getting free services. The first to point this out was Jaron Lanier, who also works for Microsoft Research, in his book “Who Owns the Future?”, published in 2014. + +Mr Weyl, who collaborates with Mr Lanier and is writing a book about renewing liberal economics with Eric Posner of the University of Chicago, advances another version of this argument: ultimately, AI services are not provided by algorithms but by the people who generate the raw material. “Data is labour,” says Mr Weyl, who is working on a system to measure the value of individual data contributions to create a basis for a fairer exchange. + +Data workers of the world, unite! + +The problem, says Mr Weyl, is getting people to understand that their data have value and that they are due some compensation. “We need some sort of digital labour movement,” he says. It will take even more convincing to get the “siren servers”, as Mr Lanier calls the data giants, to change their ways, as they benefit handsomely from the status quo. + +A more equal geographic distribution of the value extracted from data may be even more difficult to achieve. Currently, most big data refineries are based in America or are controlled by American firms. As the data economy progresses, this also hardly seems sustainable. Past skirmishes between America and Europe over privacy give a taste of things to come. In China draft regulations require firms to store all “critical data” they collect on servers based in the country. Conflicts over control of oil have scarred the world for decades. No one yet worries that wars will be fought over data. But the data economy has the same potential for confrontation. + + + + + +United States + + + + +Health care: Political self-amputation + +Innovative cities: Night time turned into day + +Immigration enforcement: Cities under siege + +The law in Texas: No refuge + +The Supreme Court: Man in the middle + +Transport in New York: On the wrong track + +School vouchers: Going public + +Lexington: Constant foe, fickle friend + + + + + +Health-care reform + +Republicans sign up for political pain + +Even if the health bill passes the House, it will probably be rewritten in the Senate + + + +May 6th 2017 + +THROUGH the troubled seven-year history of the Affordable Care Act, Barack Obama’s health-care law, most Americans have agreed on one thing. They like the provision which ensures that people with pre-existing medical conditions can buy health insurance at the same price as everyone else. Even when more than half of Americans disapproved of “Obamacare”, more than four in five supported this bit of it. That simple political fact explains why the latest Republican attempt to rewrite the health-care law, which seemed likely to come to a vote in the House of Representatives soon after The Economist went to press, is probably doomed. + +When the Republicans who control the House tried to reform Obamacare in March, their bill did not even make it to a vote. The fatal blow was struck by the Freedom Caucus, a group of deeply conservative legislators, who thought the bill left too much of Obamacare intact. In particular it changed, rather than abolished, subsidies for those buying health insurance for themselves (instead of getting it from an employer, as most Americans do). Obamacare’s subsidies are targeted at low- and middle-earners. The Republican plan, by contrast, offered help to everyone; its universal tax credits varied only with age. Hardline conservatives recoiled at a “new entitlement programme”. + +This time round, the Freedom Caucus is on board. The universal tax credits remain in the bill, with the result that many low-earners, particularly the old, would see their bills soar if it passes (see chart). Critics have instead been placated by a change that gives states more freedom to regulate insurance markets as they see fit. For example, they could shorten the list of “essential benefits” that insurers must cover without ever limiting the amount they pay out. + + + +States could also gut protections for those with pre-existing conditions. To do so, they would need to promise to provide some other safety net. For example, they could create a “high-risk pool”, in which the sick could buy coverage that is directly subsidised (yet probably more expensive). Such mechanisms have been woefully underfunded in the past. In 2011 Florida’s high-risk pool contained only 200 people. + +Paul Ryan, the Speaker of the House, says that no insurer could turn customers away because of their health. In a strict sense, then, the rule remains intact. Yet states could allow insurers to charge the sick prohibitively high prices, and the healthy attractively low ones, when selling to those who had failed to maintain coverage in the past. Discouraging people from waiting until they fall ill before they buy insurance is not a bad idea. But this provision could unravel the market, argues Matthew Fiedler of the Brookings Institution, a think-tank. Healthy people would be keen to have their fitness taken into account when shopping for a plan. So they might let their coverage lapse to escape the communal pool of buyers. With healthy people siphoning themselves off, premiums for the sick would soar. + +Such loopholes can be closed. Yet they demonstrate the fragility of insurance markets, in which details matter enormously. Another problem is that Republicans hope eventually to allow sales of insurance across state lines to increase competition. If healthy people across the country can buy insurance from whichever state makes it easiest to charge them lower prices, insurers in more regulated states will be left with only sick customers. + +The threat to health care for the vulnerable has stoked opposition among moderate Republicans. Even congressmen who tried to repeal Obamacare when its author was still in office, such as Fred Upton of Michigan, have wavered. Mr Upton said that he could not support the bill without more protection for those with pre-existing conditions, only to change his mind after a little more money was forthcoming. + +If the reform bill scrapes through the House, its prospects in the Senate (which is also, barely, controlled by Republicans) look dubious. That was true even before the latest amendment, because the bill would pare back Medicaid—health insurance for the poor. Obamacare expanded Medicaid in compliant states. Unwinding this policy accounts for more than half of the 24m rise in the ranks of the uninsured that was projected to occur by 2026 under the original version of the bill. Republican senators from states which expanded Medicaid will not want to deprive their constituents of health insurance. + +If, as seems likely, the health-care bill is rewritten by the Senate, conservatives in the House may abandon ship yet again. Republicans will have voted against a popular policy, to no end. It is the political equivalent of bloodletting. + + + + + +Tulsa’s finances + +How one American city is coping with a broken state budget + +Philanthropy helps, but it’s still painful + + + +May 4th 2017 | TULSA + +DAN ZIELINSKI, director of the planetarium at Jenks High School in Oklahoma, whizzes through his greatest hits. First he projects onto its dome a 3D image of a human heart; next comes the Sistine Chapel, then the solar system. The planetarium is an impressive asset for a high school, as is its aquatic centre, with an Olympic-size pool and grandstand seating. But there is a hitch, says Bonnie Rogers of Jenks Public Schools: filling the new buildings with teachers is much harder than erecting them. + +At once bountiful and hard-pressed, the school district covers a well-heeled suburb of Tulsa and spans the Arkansas river to take in part of the city proper. The financial paradox has a simple explanation. The shiny facilities were paid for by municipal bonds, but teachers are financed by the state, and similar top-ups for their salaries are not allowed. In Oklahoma, state education funding has withered: since the crash of 2008 spending per pupil has been slashed by 27% in real terms, the biggest fall in America. Some districts run only four days of classes a week. Teachers earn much more across the border in Texas. The area is an extreme case of a wider trend, in which cities and their residents find ways to cope with miserly state governments. + +In Oklahoma, the squeeze is extreme. Cuts to income taxes, generous incentives for fracking companies and low oil prices have choked revenues. Overall, this year’s state budget is 15% lower than that of 2009; Medicaid and welfare have been pinched along with schools, as have state troopers, whose mileage is now circumscribed. Mary Fallin, the governor, acknowledges that something has to give. She wants to expand the tax base and raise rates on fuel and cigarettes. But the Republican-controlled legislature has yet to agree on a fix. The state’s voters are not helping: in a referendum last year they rejected a plan to add a percentage point to the sales tax to boost education spending. Gene Perry of the Oklahoma Policy Institute notes that rugged ideology is not the only obstacle. The state constitution specifies that revenue measures must be approved by 75% of both legislative chambers—requiring some bipartisan agreement—or by the people. + +As G.T. Bynum, Tulsa’s new, babyfaced mayor, laments, his scope for manoeuvre is just as narrow. Oklahoma sets tight limits on cities’ use of property taxes, leaving them reliant on sales taxes. That is a volatile source of revenue—the dependence can lead, for instance, to police officers being laid off during a recession—and one now undermined by online shopping. Mr Bynum’s cousin and grandfather were also mayors of Tulsa, as, in the frontier years of 1899-90, was a great-great-grandfather: the six-shooter he carried is in a cabinet in Mr Bynum’s office. Not long afterwards Tulsa became the “oil capital of the world”, memorialising its glory in skyscrapers. Mr Bynum wants to revive the clout lost in the oil and telecoms busts. + +Fiscal constraints make that tricky. Still, the state legislature is considering a change that would let cities raise property taxes to help pay for policing. Meanwhile Tulsa is making the best of a tough predicament through bond issues (like those in Jenks and other cities), as well as a sales-tax increase which, unlike the statewide proposal, was approved by local residents last year, when Mr Bynum was still a city councilman. As with other successful local referendums, it helped that the initiative came with concrete details about where the extra cash would go: on public transport, the police, and investments in museums and other public facilities. By the time of the vote, smiles Mr Bynum, “everyone was sick of hearing about it”. + +The miniature culture wars fought between cities and states—such as North Carolina’s tussle with Charlotte over its anti-discrimination rules—are well known. The financial tensions between them are quieter but as important. “Money is usually the main problem,” says Larry Jones of the United States Conference of Mayors, and especially divisive in lean times. + +In this stand-off Tulsa, like other American former boomtowns, benefits from the afterglow of industrial wealth. Several times its tycoons have ridden to its rescue: to supply its water, to build a bridge to connect it with oilfields, and to buy the land for its airport. These days country-music stars live in some of the oil barons’ grand villas but, by way of compensation for the economic pendulum, the paternalism lives on. “Philanthropy is an industry here in Tulsa,” says Mr Bynum. + +The George Kaiser Family Foundation, for example, has renovated several blocks in the city centre, and set up a diversion scheme for female prisoners and an early-years education programme. It has contributed $200m for a new 100-acre park on the river, while raising the same amount from other donors. Riding around the muddy construction site, Jeff Stava, the project’s boss, points to where the splash zone, skate park and giant adventure playground will be, and the stretch of water where perching pelicans will soon be ousted by rafts and kayaks. After the huge growth of the 20th century, but a tentative start to this one—the population is stagnating at around 400,000—the aim is to make Tulsa a place professionals will move to. The city is stumping up the money for a footbridge near the park. + + + + + +Trump’s executive orders + +How much do sanctuary cities stand to lose? + +Probably not much. They are jittery all the same + + + +May 4th 2017 | CHICAGO + +HOLDING signs saying “Amnistia para Latinos!” and “My dreams are not illegal”, protesters gathered in a park on Chicago’s mostly Latino West Side on May 1st. Chris Kennedy, who is running for governor of Illinois next year, joined the crowd, as did Dick Durbin, a Democratic senator. Seeking to reassure his audience, Mr Durbin noted that a spending bill now in Congress stipulates “not one penny” for a new border wall, no new officers for Immigration and Customs Enforcement (ICE), which pursues illegal immigrants, and “no penalty for sanctuary cities like Chicago”. + +Illegal immigrants and their defenders are both fearful and perplexed. In January Donald Trump signed an executive order for “enhancing public safety in the interior of the United States”. This threatens to pull federal funding from cities and counties that fail to help the federal government deport illegal immigrants. For a city like Chicago, which is beyond broke, that could spell disaster. But it is not at all clear how much money is at stake. + +Police and mayors in some 300 cities and counties turned to sanctuary policies for pragmatic reasons. They fear that if officers alert immigration agents when undocumented migrants are booked into their cells—even for fingerprinting after being caught driving without a licence—then immigrants will cease contact with officials of all kinds. Opponents retort that sanctuary policies protect foreign criminals from deportation, and gleefully recount crimes committed by released immigrants. + +Rahm Emanuel, Chicago’s mayor, and Toni Preckwinkle, president of the Cook County board, insist they will stand firm. Illinois has introduced a bill restricting co-operation with federal immigration officials—as have California, Maryland, Nevada and New York. Yet in the past three months at least 33 mostly Republican states have introduced or passed laws requiring local police to comply with ICE requests to hold a soon-to-be-released inmate for a further 48 hours to work out whether he can be deported, according to Muzaffar Chishti at the Migration Policy Institute, a think-tank. Miami-Dade was one of the first to retreat, ditching its sanctuary policies in February. Texas has passed the toughest anti-sanctuary bill in the country (see next article). + +When pleading the government’s case in April before William Orrick, a district judge in San Francisco, government lawyers argued that the order would affect only federal funds for policing. If so, the financial harm to cities like Chicago would be slight. Mr Chishti estimates that Cook County risks losing just $2m in federal funding, and all of California only $18m. If all federal funds are affected, the loss would be huge: the Better Government Association, a watchdog in Chicago, has estimated that the city alone would lose a whopping $3.6bn this year. + +On April 25th Judge Orrick ruled that the president had overstepped his powers by tying federal funds to the enforcement of immigration law. Mr Trump will almost certainly appeal, and the case is likely to go to the Supreme Court. Mr Trump could win with the narrow interpretation of his order, which will make little difference to the finances of sanctuary cities. + +Above the noise of grinding legal gears, though, there is a chorus of alarm from illegal immigrants and officials who deal with them. At a school in California’s Central Valley only 75 out of 200 pupils turned up the day after a recent ICE raid in the community, says Lena Graber at the Immigrant Legal Resource Centre. Their parents feared they would be next. + + + + + +Sanctuary cities + +Will Texas go the way of California? + +In voting for a clampdown on illegal immigrants, Republicans seem to be wishing for it + +May 4th 2017 | AUSTIN + +JOE STRAUS, the Speaker of the Texas House, asked his colleagues to show respect for each other, and a sense of civility, while debating a bill that would ban sanctuary cities. Eddie Lucio III, a Democrat, put the point a bit differently. Republicans control the legislature by 95 seats to 55; still, Mr Lucio warned, they should proceed with caution: “We are very emotionally charged. Do not mess with us today.” + +So much for that. Early on April 27th, after a fraught debate, the Texas House approved a remarkably stringent bill. SB4 will penalise local officials who fail to co-operate with federal immigration authorities by allowing police to inquire into the legal status of people who are merely detained (even in traffic stops), rather than arrested. Amendments that would have created exemptions for nurseries and women’s shelters were struck down. It is perhaps the most sweeping measure of its kind since 2010, when Arizona passed a measure that came to be known as the “Show Me Your Papers” law. Republicans in Texas may come to regret their achievement. + +The state’s governor, Greg Abbott, had made a ban on sanctuary cities one of his priorities for the legislative session that began in January. Polls have found that roughly half of Texans—and a large majority of Republicans—are in favour of the idea. SB4 sailed through the Texas Senate in February, despite opposition from companies, police chiefs and civil-rights advocates. Republican leaders in the House had retooled the bill in committee hearings in order to address some of the worries raised. But their efforts at moderation were thwarted during the floor debate, after right-wing Republicans offered an amendment expanding the measure’s scope. + +Art Acevedo, Houston’s police chief, has argued that SB4 will discourage illegal immigrants from reporting crimes and will undermine his authority to direct his force to focus on dangerous criminals. Opponents of the law are already preparing to challenge the measure in court (Arizona’s law was gradually rendered almost toothless). But the political damage may linger. + +Republicans in Texas have mostly avoided antagonising Latinos, who account for 40% of the population. In 1994, after California approved Proposition 187, which aimed to bar illegal immigrants from access to public services, George W. Bush, then governor-elect of Texas, said: “I am opposed to not educating or providing social services to people who are in our state.” His successor, Rick Perry, was similarly sceptical about Arizona’s law. + + + +Supporters of SB4 doubt that it will nudge many Latinos to vote Democratic. The experience of California, where the Hispanic vote swung firmly Democratic around 1994, suggests they may be wrong (see chart). Texas is a Republican state in part because the local party has won more support from Latino voters there than elsewhere. Those voters, however, have supported Republicans who supported them. If the party has changed, they might change their minds, too. + + + + + +Man in the middle + +Chief Justice Roberts leans to the left + +Could he emerge as the court’s new swing vote? + + + +May 4th 2017 | NEW YORK + +ON MAY 1st John Roberts, America’s conservative chief justice, listed left to form a rare majority with the Supreme Court’s four liberal members. Cities may have grounds to sue, the quintet said, when banks make predatory loans to racial minorities. The timing, for some, was suggestive. With Neil Gorsuch now in Antonin Scalia’s old chair and retirement rumours flying about Anthony Kennedy, the 80-year-old perennial swing justice who has spent nearly three decades on the bench, could Chief Justice Roberts be emerging as the court’s new median vote? + +The chief, who runs hearings with an amiable professionalism from the middle seat on the bench, may indeed find himself in the ideological centre of the court—perhaps with the left-leaning Stephen Breyer, who wrote the predatory-loans ruling—if Justice Kennedy hangs up his robe. But he has been rehearsing for this part for some time. In 2012 he infuriated the right by voting to save Obamacare from its first legal assault. He came to the health-care law’s rescue again three years later, this time with Justice Kennedy in tow. Also in 2015, he abandoned his conservative colleagues to uphold campaign-finance rules in judicial elections. His revealing opinion in that case, Williams-Yulee v Florida Bar, traded on a distinction between jurists and legislators: “Judges are not politicians,” he insisted, “even when they come to the bench by way of the ballot.” + +Keeping the judiciary fair in the eyes of the public has long been a priority for the chief justice. During his 2005 confirmation hearings he compared a judge’s job to a baseball umpire’s, calling balls and strikes. In 2014 he decried the partisan stain the judicial nomination process left on the court, and last year he lamented that Americans fail to appreciate that the court is “different from the political branches of government”. He sharpened his tone after the Senate upended its filibuster rules to seat Justice Gorsuch: “The new justice is not a Republican and not a Democrat,” he said in April. “He is a member of the Supreme Court. But it’s hard for people to understand when they see the process that leads up to it.” + +A wider look at Chief Justice Roberts’s record does not suggest even-handedness. His votes striking down spending limits by outside groups in political campaigns, gutting the Voting Rights Act and forbidding school-desegregation plans—as well as votes against gay marriage and in favour of abortion restrictions—show him reliably conservative on most issues. His leftward lean in the cities ruling may have been influenced by the threat of a 4-4 split, something he much dislikes, since only eight justices were considering that case. But in one of the most politicised eras of the Supreme Court’s history, the chief seems keen to tamp down public perceptions that the court, too, is bitterly partisan. + + + + + +On the wrong track + +New York’s railways are in terrible shape + +That will affect the regional economy + + + +May 4th 2017 | NEW YORK + +ON MARCH 24th an Amtrak train derailed in New York’s Penn station, hitting a regional commuter-line train. The resulting delay affected 250,000 passengers on the Long Island Railroad (LIRR) and New Jersey Transit, commuter lines which share Amtrak’s tunnels and tracks in and around Penn Station. Ten days later another Amtrak train derailed, this time taking out a set of points and eight of Penn station’s 21 tracks. The delays and cancellations lasted a week. Then on April 14th, just as the Easter weekend began, a New Jersey Transit train got stuck for three hours in an approach tunnel. This caused long delays on the Northeast Corridor (NEC) the busiest passenger railway line in the country. On the same day a false report of gunfire at Penn triggered a stampede in which 16 were hurt. New York’s tabloids now call America’s dingy, claustrophobic and busiest railway terminus “Pain Station”. + +The station’s 600,000 daily users will soon feel more pain. Amtrak, which owns and operates the station, tracks and tunnels, said last month that it will need to shut down tracks to do repairs. These will take place over 44 days, mainly weekdays, in the summer. The Partnership for New York City, which represents large companies, estimates that every hour of delay to commuters from Long Island and New Jersey costs Manhattan employers $14.5m. The Northeast Corridor Commission, created by Congress, estimates that every day the NEC is out of service costs $100m in lost economic activity. + +Yet repairs are badly needed. The two tunnels under the Hudson river, which serve the station and the main NEC arteries, are a century old and move with the tides. Like the rest of the network, they suffer from over-use and chronic under-investment. Damage caused by Hurricane Sandy in 2012 has not yet been repaired. Another storm, a tunnel crack or a high-speed derailment would be catastrophic. Richard Barone of the Regional Plan Association, a think-tank, puts it bluntly: “We’re operating on borrowed time.” + +The NEC is, however, the only part of Amtrak that turns a profit. Amtrak is an odd entity, a commercial service which has its board appointed by the president and receives funding from Congress. Since the funding comes annually, Amtrak struggles to have a multi-year capital plan. With a repairs backlog estimated at $28bn, and tunnels and track needing upgrades all over the region, it cannot do much beyond basic maintenance. Congress is said to be increasing Amtrak funding to $1.5bn this year, $105m more than last year. That is pretty small beer where railway tunnels under rivers are concerned. + +The proposed Gateway tunnel, a new $24bn rail link between Newark, New Jersey and New York City under the Hudson river, would help to ease pressure on the network. Last year the federal government agreed to split the cost with New York, New Jersey and Amtrak. But little federal money has been spotted yet. + +Meanwhile, the subway is still operating on a 1930s signal system; Eastside Access, a plan to bring some LIRR riders to Grand Central station, is delayed; the bus terminal needs a complete overhaul; the area’s three major airports are at capacity. But getting big projects built in New York is a costly, lengthy enterprise thanks, in part, to expensive labour and over-regulation. The Second Avenue subway, the first new line in decades, cost $5.5bn for four miles of track and three new stations. + + + + + +Going public + +Private schools are doing worse in Washington, DC + +Should you spend your voucher on one? + + + +May 4th 2017 + +IMAGINE you are a poor parent in Washington, DC. You assumed you would send your child to a public school. But you have been offered a voucher worth up to $12,000 towards tuition at a private one. Should you use it? + +Until recently the evidence suggested that you should. In 2004 Congress created the DC Opportunity Scholarship Programme, the first school-voucher scheme directly subsidised by the federal government (states and charities subsidise many others). Since then up to 2,000 families a year have been handed vouchers to attend private school after winning lotteries. In 2010 a study found that 82% of pupils offered a voucher went on to graduate from high school, compared with 70% of similar peers who attended public schools. + +Studies of Milwaukee, which introduced vouchers in 1990, have found similar effects on graduation rates. A 2015 study of a privately funded programme in New York found that blacks who received vouchers had higher rates of college enrolment. In Vermont the value of a house is higher if it is in an area that offers school vouchers, suggesting that parents will pay to become eligible for them. + +Yet evidence is piling up on the other side. In the past two years studies of Louisiana and Ohio have found that pupils using a voucher did worse on state tests than peers at public schools. A recent literature review concluded that “the effects of vouchers have been disappointing relative to early views on their promise”. + +On April 27th another study put the boot in. The Institute of Education Sciences, the research arm of the Department of Education, analysed the results of children in Washington, DC’s scheme between 2012 and 2014. It found that, on average, pupils who attended private school had lower maths scores at the end of their first year than those who did not. + +Children often take time to adjust to new schools. Still, the results seem disappointing for advocates of school vouchers, a group that includes many Republican governors and Betsy DeVos, Donald Trump’s education secretary. + +They nevertheless suggest that other education reforms are working. The relatively lacklustre performance of private schools in Washington, DC reflects improvement in public schools. A decade ago Adrian Fenty, then the mayor, took away powers from the city’s elected board of education and installed a new schools chancellor, Michelle Rhee. + +She began to hold teachers at traditional public schools accountable for pupils’ performance. The worst were fired and the best earned bonuses and pay rises. The city also encouraged the growth of independently-run public schools, known as charter schools. In 2015-16, 45% of pupils in public schools in the city were at charters, up from 24% a decade previously. + +Meanwhile private schools, many of which are attached to churches, have struggled. In America as a whole, the Catholic ones have swapped nuns for professional teachers and have been hit financially as dioceses have paid compensation for historical sexual-abuse cases. Competition from charter schools has suppressed enrolment, too. Good statistics are lacking, but the Urban Institute, a think-tank based in Washington, estimates that the number of pupils aged between five and 17 in private schools may have dropped by two-thirds between 1999 and 2014. + +To survive, several Catholic schools in Washington have shed their religious affiliation and converted to charter schools, thereby adding pupils to the public rolls. Overall enrolment in public schools has increased since 2008-09, from 70,919 pupils to 87,344 in 2015-16. Most of that growth was a result of swelling attendance at charter schools, but traditional public schools expanded, too. + +Between 2011 and 2015 traditional public schools in Washington made larger gains in the National Assessment of Educational Progress, a nationwide set of tests, than those in any other large city. Pupils at charters tend to score even higher on citywide tests than those at other public schools. Gentrification is one reason for the increased scores, notes Matthew Chingos of the Urban Institute. But his research also shows that the gains are larger than demographics alone would suggest. + +The latest study indicates that, at least initially, vouchers are only as effective as the schools they allow children to attend. But it does not undermine the argument for competition, since the pressure from charters is one reason why public schools have improved. A parent with a voucher may increasingly think twice about using it. That is a good choice to have. + + + + + +Lexington + +America’s allies are figuring out Donald Trump + +They are not coming to happy conclusions + + + +May 4th 2017 + +ONE question about Donald Trump obsesses foreign governments more than any other: will this president, who campaigned as an “America First” insurgent, continue to trample norms in office? Strikingly often, foes and friends answer this in different ways. + +Such hostile or rival powers as China, Russia or Iran increasingly find that Mr Trump’s policies resemble those pursued by his predecessors. Candidate Trump called China a trade cheat, bent on “rape” of the American economy. President Trump now calls that country’s leader, Xi Jinping, a “highly respected” and indispensable partner in efforts to curb North Korea’s nuclear ambitions—a position not far from that adopted by Barack Obama, and George W. Bush before him. Trump aides no longer talk about a grand bargain with Russia, offering President Vladimir Putin a free hand in Ukraine in exchange for iron-fisted support in the fight against Islamic State: a loud advocate for such a deal, Michael Flynn, the president’s first national security adviser, was fired for lying about contacts with Russian envoys. Nor has Mr Trump torn up an Obama-era deal to freeze Iran’s nuclear programme, although he calls it a “disaster”. Instead he seems minded to buttress it with sanctions targeting Iranian misconduct in other fields: a policy that Hillary Clinton favoured. + +Often, Mr Trump’s worldview has not so much evolved as collided with reality. That process is welcomed in such friendly capitals as Berlin, which Lexington visited last week. Yet maintaining amicable ties with this president still feels anything but straightforward. Official Berlin is glad that Mr Trump takes a more conventional view of America’s interests than it once feared. There is less confidence that he respects the values underpinning the rules-based, Western-led international order. Germans are dismayed by Mr Trump’s tolerance for authoritarian strongmen, from the Turkish president, Recep Tayyip Erdogan, to the president of the Philippines, Rodrigo Duterte (whose blood-soaked campaign against drug-dealers earned him Mr Trump’s praise on April 29th and a White House invitation). The mood in official Berlin is best described as relief mixed with real sadness. + +The German chancellor, Angela Merkel, prepared meticulously for her first meeting with Mr Trump on March 17th. Mrs Merkel has spent a career handling swaggering men, from German political rivals to Mr Putin. Her aim was not to befriend Mr Trump, who as a candidate called her refugee policies “insane”, but to suggest where he might be misjudging America’s interests. Team Merkel knew that Peter Navarro, a senior White House trade adviser, holds that Germany’s success as an exporter to America is explained by manipulation of the European single currency and by cunning Teutonic negotiators who outsmarted Mr Obama and previous presidents. Mr Trump favours bilateral trade pacts, believing that America suffers when many countries cram into one negotiating room. Mrs Merkel duly explained that Germany does not negotiate trade pacts or control its currency, ceding authority on both fronts to the European Union. If Mr Trump wants trade talks with just two players, it is the EU that offers that opportunity, Mrs Merkel told him. + +Trump aides have warned that their boss does not respond well to detail-heavy briefings, preferring stirring stories, pictures and maps. Mrs Merkel brought a group of company bosses and apprentices to talk about vocational education. Turning to the agenda of a G20 summit to be held in July, she engaged Mr Trump and his daughter, Ivanka, on the dire risks posed by global pandemics and antibiotic resistance. Mrs Merkel invited Ms Trump to speak at a women’s summit in Berlin. (That visit saw the First Daughter hissed by some in the audience when she called her father a champion for families.) + +In common with other foreign visitors to the Trump White House, Mrs Merkel found the president a good listener, perhaps because much of what he was hearing seemed new to him. Allies have begun taking advantage of this trait, conferring before visits to reinforce such messages as the need to negotiate with Russia warily and from a position of strength. Surprisingly wonky subjects pique Mr Trump’s interest: the Danish prime minister, Lars Lokke Rasmussen, told him how wind power has helped Denmark reduce its carbon emissions while strengthening its economy. Allies have begun giving much thought to crafting policy wins that Mr Trump can call his own. + +When a president does not think America exceptional + +Still, public antipathy towards Mr Trump runs deep, which raises the costs of doing business with him. Mrs Merkel, for instance, saw the case for increased German defence spending long before Mr Trump demanded that her government pay what he claimed it “owes” to America in NATO contributions. As soon as Mr Trump made defence spending sound so personal, selling an increase to Germans became harder. Perceptions will be hard to change. As Norbert Röttgen, chairman of the foreign-affairs committee of the German parliament and a member of Mrs Merkel’s Christian Democratic Party, laments, “Even if Donald Trump turns back to a more normal foreign policy, he will remain a provocative figure in German eyes.” A Social Democrat on that committee, Dagmar Freitag, is unsure that Germany and Mr Trump “share common values”, making relations “more fragile”. + +German leftists who dislike or distrust America face a different puzzle, notes Boris Vormann of the Free University in Berlin. Such sceptics have traditionally raged at the hypocrisy of American claims to moral superiority. Mr Trump makes no such claims, leaving anti-Americans oddly bereft, too. + +Even Mr Trump’s mercurial nature plays differently with friends and foes. It can be helpful to surprise adversaries. Unpredictability is harder for friends to love. But allies know now that Mr Trump is not about to change—nor sees why he should. + + + + + +The Americas + + + + +Venezuela: It’s up to the army + +Cannabis in Uruguay: Chemists v criminals + +Canada: Parles-tu québécois? + +Bello: Can the centre hold? + + + + + +No butter, but lots of guns + +The armed forces will decide the fate of Venezuela’s regime + +People power counts for less + + + +May 4th 2017 | CARACAS + +BEFORE Nicolás Maduro, Venezuela’s president, delivered his second May Day address, spelling out plans for a new constitution, he paused to acknowledge some VIP guests. A dozen generals, in full ceremonial uniform, were in the audience. He asked them to stand and be applauded. + +It was a telling moment. Mr Maduro is facing the biggest threat to his rule since he took office in 2013. Four-fifths of the “pueblo” he claims to represent want him to stand down. Street protests, provoked by shortages of food and the regime’s thuggery, erupt daily and are sometimes massive. The economy is in such an appalling state, and inflation is so high, that Venezuelans greeted a rise of 60% in the minimum wage on May 1st with shrugs of “so what?” A political shift to the centre-right in several of Venezuela’s neighbours makes Mr Maduro’s “Bolivarian” socialist regime look ever more isolated. + +But, for the president, none of that may matter. His future will be decided by the armed forces, not directly by the people. If they withdraw support from his beleaguered regime, change will come soon. If not, hunger and repression will continue. + +So far, there is little sign of dissent in the top ranks. Vladimir Padrino López, the head of the armed forces and minister of defence, hailed Mr Maduro’s call for a new constitution as “a clear demonstration of democratic will”. With that, he endorsed the latest stage in the president’s progressive dismantling of democracy. + +The constitution Mr Maduro wants to replace is the handiwork of Hugo Chávez, his political mentor, who died in 2013. The 500 members of the constituent assembly that will convene to write it will have almost absolute power while they deliberate. Half will be appointed. The rest will be selected by “people’s committees” similar to communist soviets. The whole process is intended to pre-empt other meaningful political activity. It will distract attention from the regime’s subversion of the existing constitution. It has carried this out by, for example, depriving the opposition-controlled legislature of its rightful powers. + +All eyes turn to the men in green + +The opposition is increasingly directing its appeals to the armed forces, or to factions within them. Julio Borges, the legislature’s president, says it is time for the men in green to “break their silence”. Henrique Capriles, a potential challenger to Mr Maduro who has been banned from seeking office for 15 years, asked ordinary soldiers to consider whether they want to “share the fate” of the doomed ruling party. + +The army is not the regime’s only prop. The National Guard fires tear-gas at and wields truncheons against demonstrators; informal gangs called colectivos enforce submission to the regime in neighbourhoods and are responsible for many of the 33 deaths in protests over the past month. Mr Maduro wants to provide a half-million guns to an expanded “national militia”, a sort of home guard. + +But the armed forces, though constitutionally required to be apolitical, are the final arbiters of power. Chavismo, the movement that guides the regime, has been military-led since its inception. Chávez began his career in politics as a left-wing commander who attempted a coup in 1992 (and won a presidential election six years later). Officers or former officers run 11 of the 32 ministries; 11 of the 23 state governors are retired officers. Mr Maduro has been a prolific producer of generals. On one day last year he promoted 195 officers to that rank, bringing their number to more than 2,000. The United States somehow gets by with no more than 900 generals. + +The Venezuelan top brass are not a monolithic group. There are “diverse” factions, both between and within branches of the armed forces, says Rocío San Miguel, a lawyer and defence specialist. A group of “originals” fought alongside Chávez in 1992. They include Diosdado Cabello, a former president of the legislature and still-influential hardliner. An overlapping clique helps drug-trafficking gangs through its control of ports and airports. A bigger group of non-ideological “opportunists” dabbles in that and other businesses. + +These divisions matter less than the generals’ shared interest in the regime’s survival. Most profit handsomely from Mr Maduro’s chaotic rule. Some have access to dollars at the ridiculously cheap price in bolívares set by the government. The army is in charge of the lucrative business of food distribution, a recipe for abuse. + +The lower ranks are less happy, though they are better housed than most Venezuelans and some profit from sidelines such as smuggling. According to Caracas Chronicles Political Risk Report, a journal with sources in the armed forces, DCI, an agency that snoops on the barracks, has been hearing of “deepening disaffection”, especially in the army’s middle ranks, since February, before the latest protests began. Much of this appears linked “with mid-ranking officers barely bothering to suppress their contempt for a general staff it perceives as corrupt”, it reported. In April three lieutenants posted a video saying they rejected Mr Maduro as commander-in-chief. They sought asylum in Colombia. + +Raúl Baduel, a jailed former defence minister, has become an icon for dissenters. They share a 14-second recording in which he says he is in prison because he spurned “the scoundrels and criminals …who give you orders”. Junior soldiers, and their families, share the privations that drive Venezuelans onto the streets in protest. They are angry. But that does not mean that they will stop following orders. + + + + + +Chemists v criminals + +Uruguayan pharmacies will start selling cannabis + +Will they drive street dealers out of business? + + + +May 4th 2017 | MONTEVIDEO + +ON THE outskirts of Libertad, a small town an hour’s drive from Montevideo, barbed wire and guard towers surround a ten-hectare plot of state-owned land. Inside, greenhouses shelter thousands of marijuana plants. These belong to ICC and Simbiosys, the two firms licensed by Uruguay’s government to grow cannabis for recreational use. Uruguayans will soon be able to sample their product. Since May 2nd they have been able to register at the post office as prospective customers for the corporate weed, which will be sold through pharmacies from July. + +That will be the last and most important stage of a long process. In 2013 the senate voted to legalise marijuana and regulate its production and sale, making Uruguay the first country to do so. (Canada proposed a bill to legalise cannabis for recreational use on April 13th.) Uruguay’s goal is to stamp out the black market, controlled mainly by Paraguayan smugglers, without encouraging more consumption. Registered Uruguayans (but not visitors) will be able to get the drug in one of three ways. They can grow up to six plants at home; join a club, where 45 members can cultivate as many as 99 plants; or buy it in pharmacies. All consumers are restricted to 40g (1.4 ounces) a month, enough to roll a joint or two a day. About 10% of adults smoke at least once a year. + +More than 6,600 people have already registered to grow cannabis at home; 51 clubs have opened. But Uruguayan officials expect pharmacies to be the biggest retailers, and are counting on them to drive illegal dealers out of business. They will start out selling weed in 5g packets, with the concentration of THC, the active ingredient, capped at 15%. With a price of $1.30 a gram, store-bought marijuana will be cheaper than what is available on the street. The quality will be better, says Milton Romani, who oversaw the law’s implementation until last July. Street cannabis can contain 52 toxins; pharmacies will sell purer weed. The government sought advice on potency from regular smokers. “They are the ones who know about this stuff,” laughs Mr Romani. + +Strait-laced pharmacists, used to selling remedies for aching joints, are nervous about supplying the makings of joints. “They would prefer not to stock a recreational drug,” says Alejandro Antalich, vice-president of the Centre for Uruguayan Pharmacies, a trade association. “It’s a conscientious objection.” Some fear being dragged into competition with drug gangs. So far, just 30 of the country’s 1,000 pharmacies have signed up. The interior ministry is installing alarms connected to police stations to reassure them. + +Cannabis clubs have no such qualms. They can grow a wider variety of plants than pharmacies are allowed to sell, with no limits on THC. They see themselves as catering to aficionados. “It’s the equivalent of comparing a bottle of wine with a box of wine,” says Marco Algorta, a grower at the 420 Cannabis Club in Montevideo. “The clubs sell excellent wine.” His worry is that 99 plants are not enough to supply members with their full entitlement. He wants permission to grow more. + +Even then, clubs and home growers will cater to a niche market. The pharmacies’ business will build slowly. The 30 outlets that have signed up cover much of the country. But their corporate suppliers are allowed to grow just four tonnes a year. That is 15% of what Uruguayans smoke. If the country is to drive pushers off the streets, pharmacies will have to sell a lot more weed alongside the dental floss. + + + + + +Parles-tu québécois? + +Culture shock for French immigrants—in French Canada + +Mutual incomprehension takes newcomers by surprise + + + +May 4th 2017 | MONTREAL + +ON A chilly spring evening about 40 French immigrants gathered in the ornate bar of L’Union Française, a social club in downtown Montreal, for what amounted to a group-therapy session. Their dreams of starting a new life in Canada were not working out the way they had imagined. Employers did not welcome them, locals were at once friendly and aloof, the winters were awful. Cécile Lazartigues-Chartier, the group leader, counselled immersion in the culture, networking and winter sports. “Remember,” she advised, “you are immigrants.” + +That is not as obvious as it sounds. France ceded most of its North American possessions, including Quebec, to the British in 1763. But French people who settle in the French-speaking province regard it as a rough outpost of empire, or so some Quebeckers grumble. “We are cultured and educated, and they don’t see that,” complains one. Fred Fresh, a French singer who moved to Montreal’s trendy Le Plateau district in 2011, listed his neighbours’ grievances in a song, Y’a trop de Français sur le Plateau (There are too many French in Le Plateau): pushing up rents, smoking smelly cigarettes and seducing women. “My neighbourhood feels like it’s occupied by all these snobs,” he sings, channelling what he takes to be the attitude of native-born Quebeckers. + +Despite such laments, more French folk are coming. Jobs are scarce and politics is fraught in France; Quebec promises opportunity and stability. In 2015 France sent more migrants than any other country; in 2016 only Syrian refugees outnumbered them. Nearly 70,000 French citizens are registered at the consulate in Montreal, double the number of a decade ago. + +Surprisingly, some stumble on the language. Quebeckers have retained more ancient French, and adopted more English sentence structure, than have their European cousins. The local expression “chauffer le char” (“to drive the car”) means “heat up the chariot” to the French. + +A bigger shock is the Canadians’ promiscuous use of “tu”, the familiar form of “you”, which French people reserve for intimates (vous is for acquaintances and people on higher rungs of hierarchy). French people who stick to vous appear haughty to Quebeckers. The Europeans are in turn confused by tutoyer-ing Canadians, who seem to be signalling openness to a friendship or business relationship, which then often does not happen. “Some people never get used to it,” says Jonathan Chodjaï, a French consultant who has lived in Montreal for 18 years. + +While European business relationships start cold and then warm up, in Quebec the sequence is reversed, he says. He tells clients to think of the French as coconuts, with hard shells and soft insides, and Quebeckers as soft peaches with hard cores. + +Some French migrants seek to synthesise the two cultures. Jérôme Ferrer, a restaurateur, has added foie gras, lobster and mushroom cream sauce to poutine, a local confection of chips, cheese curds and gravy. Mamie Clafoutis, a chain of bakeries owned by two Frenchmen, marks the start of the maple-tree tapping season in early spring by baking cake in a syrup tin. + +It takes time for newcomers to accept that they have swapped not just countries but cultures. “If you go to Australia or the States, you know it’s a different culture,” said a recent immigrant in the therapy group. It took him a while to recognise that Quebeckers are North Americans, not Europeans. Once French people understand that, things get easier, says Marie-Claude Ducas, a Montrealer who has worked with them in the media industry, a profession that attracts many. “They can be very good employees—the ones who realise they are immigrants,” she says. + + + + + +Bello + +Can Colombia’s centre hold? + +To make peace stick, the government needs to do better + + + +May 4th 2017 + +ON MAY 3rd a delegation from the United Nations Security Council arrived in Colombia for a two-day inspection of the implementation of last year’s peace agreement between the government of Juan Manuel Santos and the FARC guerrillas. “They are coming because it is the only success story that the UN has in the whole world at the moment,” crowed Mr Santos. That is not how many Colombians see it. A long-standing gap between the upbeat view of outsiders, symbolised in the award of the Nobel peace prize to Mr Santos, and disgruntlement at home has widened to a chasm. With a presidential election scheduled for May 2018, that is worrying. + +The discontent starts with the peace agreement itself, which punishes FARC leaders who confess to terrorist crimes with “restrictions on liberty” (but not jail) and grants their new political party ten seats in congress. The accord was narrowly rejected in a plebiscite in October. After some hasty tweaking, the undeterred Mr Santos secured its approval in congress. + +By June 1st the UN is supposed to remove from collection points weapons turned in by 6,500 guerrillas (plus 3,500 associated urban militia members) and the fighters should begin civilian life. But the FARC stalled while they haggled over the specifications for the camps where ex-guerrillas are to live temporarily. The government has been slow to build the 26 camps, many in impossibly remote areas. Sergio Jaramillo, the government’s peace commissioner, insists that the deadline for the removal of personal arms of the rank-and-file will still be met. Destruction of some 900 arms dumps will take longer. And the FARC have passed to the Red Cross only 70 or so of hundreds of child soldiers. All this means that Colombians find it hard to understand why 60 FARC leaders already have a licence to roam the country, popping up at events in universities or at the Bogotá book fair with an arrogant message of political victory. + +The peace agreements run to 310 dense pages. Implementing them requires a huge effort of political and bureaucratic co-ordination, ranging from setting up a special “peace tribunal” to approving a new land law and, perhaps, an electoral reform. To be credible, the tribunal must be independent and tough-minded. Securing peace on the ground means maintaining security, strengthening justice, undertaking public works and cracking down on rapidly expanding coca plantations (which supply the drug trade) in former FARC areas. + +Mr Santos, a patrician who lacks the popular touch, has never been loved, notes Fernando Cepeda, a political scientist and former minister. One poll gives him an approval rating of just 16%, making him less popular even than Venezuela’s incompetent tyrant, Nicolás Maduro. He has proved to be a poor manager, with a penchant for creating rival and overlapping fiefs in the executive. Squabbling among officials adds to the sense that the government is not up to managing the aftermath of conflict. The main hope lies with Óscar Naranjo, a former police chief, whom Mr Santos has named as his vice-president with a brief to take charge of this. + +Mr Santos has also had bad luck, some of which he helped to create. The fall in the oil price punched a hole in public finances, filled only by unpopular tax rises. The economy is weak; the central bank has cut its forecast for growth this year to 1.8%. Businesses are delaying investment because of political uncertainty. The president has faced unremitting opposition to the peace agreement from Álvaro Uribe, his predecessor. Mr Santos has been hurt by revelations that his campaign received undeclared money from Odebrecht, a Brazilian construction firm notorious for corrupt practices (though so did Mr Uribe’s candidate). The ELN, a smaller guerrilla group, and organised-crime gangs still pose a threat to security. + +Delays and problems in implementing the peace deal were inevitable: Colombia is not Switzerland. What makes them dangerous is the political context. By acting together, Colombia’s politicians have transformed a country that was close to being a failed state 20 years ago into one with a potentially bright future. Now the political establishment is discredited and divided. “What kept it together was the guerrillas,” says Mr Cepeda. “The consensus is broken.” + +This leaves the election wide open. Unless the national mood improves, a run-off between a far-right uribista and Gustavo Petro, a maverick far-leftist, is possible. Both would pose risks for peace. Mr Santos’s government has a year to persuade Colombians that outsiders are right to hail the peace accord and highlight their country’s progress rather than its problems. + + + + + +Asia + + + + +South Korean politics: Post-Park life + +Japanese politics: On the offensive + +Timor-Leste: Wake up and sell the coffee + +Food in Pakistan: Stepping up to the plate + +Banyan: Back from the dead + + + + + +Post-Park life + +The revolution that ousted South Korea’s president is unfinished + +The next leader will have to tackle a deep popular disillusion with politics + + + +May 4th 2017 | GWANGJU + +ON A balmy Saturday afternoon, crowds cluster around an election van on the busiest shopping street in Gwangju. Jaunty white-gloved women, dressed in the blue of the liberal Minjoo party, have just performed a mincing dance number. Moon Jae-in (pictured), the party’s candidate, has come to rally the citizens of the south-western city ten days before the presidential election on May 9th. + +The Korean pop music blasted from speakers outside gleaming shopfronts makes the streets pulsate. As recently as 1980, they shook because of the tanks rumbling down them. Paratroopers crushed an uprising in the city against Chun Doo-hwan, who had seized power in a coup after the assassination of Park Chung-hee, another military dictator. Hundreds of Gwangju’s citizens were killed. + +Seven years later there was another uprising against Mr Chun’s rule—this one successful. Millions flooded the streets of Seoul, the capital, and other big cities to protest over the death of a student at the hands of the strongman’s torturers. A struggle that had once been the preserve of student activists and labour unions spread to housewives and the “necktie brigade” of salarymen, who came out of their offices to demonstrate. After a crippling war with North Korea and nearly three decades of authoritarian rule, South Koreans at last secured the direct and free presidential election they had been demanding. A country that was already a model of development, having sprouted huge carmaking and shipbuilding industries that were the envy of Asia, was now proving that breakneck industrialisation and democracy could complement each other—an inspiration to political activists everywhere. + +Back to the barricades + +Thirty years on, dogged South Korean protesters have turned the country’s politics upside down once again. Mass demonstrations spurred the National Assembly to impeach the president, Park Geun-hye, paving the way for the impending election. The immediate cause of the protests was Ms Park’s abuse of power: she shared state secrets with an old friend and colluded with her to extort money from big companies. But the scandal aroused such passion—several marches in Seoul attracted as many as 1m people—because it seemed emblematic of a broader concern, with parallels all around the world: that the system is rigged in favour of the elite, and that politicians seem incapable of responding to the grievances of ordinary people. + +On the face of things, ordinary people have got their way. Politicians at first pooh-poohed the demonstrations. One MP scoffed that the candles the protesters carried could be snuffed out by a gust of wind; in response, the marchers brought electric lights instead. (In Gwangju some resorted to flaming torches.) As the protests grew into the biggest since 1987, politicians began to take notice. In the end, the National Assembly voted to impeach Ms Park by the hefty margin of 234 to 56. Many MPs from her Saenuri party voted against her. The eight justices of the constitutional court unanimously upheld the assembly’s decision, even though two of them had been appointed by Ms Park. + +Both Ms Park and the friend at the centre of the scandal are now in jail while on trial over it. Lee Jae-yong, the boss of Samsung, South Korea’s biggest company, is behind bars too, accused of giving money to organisations controlled by Ms Park’s friend in return for government support for a controversial restructuring at the conglomerate. (He denies the charges.) Mr Moon, who has promised to stamp out cronyism, leads the presidential race. + +Yet the massive protests were about much more than bringing Ms Park to book. A sense of injustice had been simmering for years. Young South Koreans are deeply anxious. The number of graduates out of a job, or who have given up looking for one, recently exceeded 3.5m out of a total of roughly 14m. An educational rat-race and intense competition for socially respected jobs, concentrated in the biggest conglomerates, makes life for teens and 20-somethings stressful. Long hours and low pay make lesser jobs a grind too. + +Young Koreans have for some time been known as the sam-po or three-renunciation generation, since they have neither the time nor the resources for dating, marriage or children. More recently the term has evolved to o-po (five renunciations, adding housing and skill-building) and even chil-po (seven, adding hobbies and hope), as young people complain that they must give up ever more just to earn a living. They have nicknamed the country the “hellish kingdom”. + +Their disillusion is compounded by the knowledge that those with money and connections can evade the rat-race. In parallel surveys in 44 countries conducted by the Pew Research Centre, a think-tank, South Korea was the only place where the most commonly cited path to success in life was knowing the right people. The friend of Ms Park at the centre of the scandal, Choi Soon-sil, is alleged to have used some of the money she extracted from big companies to pay for her daughter’s competitive horse-riding. She is also said to have induced a prestigious university to change its admissions criteria to make skill at dressage a plus, to ensure that her daughter won a place. These claims sent ordinary families undergoing exam hell into a fury. The supposedly equitable admissions process for universities is one of the few ways that South Koreans from humble backgrounds can get ahead. + +Ms Park won the presidency in 2012 thanks to older voters who remembered with fondness the regime of her father, Park Chung-hee, South Korea’s military dictator from 1961 to 1979. He is credited with initiating the country’s dizzying economic ascent: since 1960 its annual GDP per person fattened by a factor of 20, to almost $40,000, after adjusting for inflation and the local cost of living (see chart). + + + +Park may be gone but resentment lingers + +Many in this conservative, older generation view demands for social and political change as a messy, worrying distraction from the existential threat that North Korea continues to pose. But their children, born in the 1960s (and known as the 386ers, after Intel’s then-widely-used microchip), balk at the authoritarianism that Park justified on the grounds of national security. They formed their new, liberal ideology in stark opposition to it. + +Today South Korea’s youth are pushing a third narrative: despite development and democratisation, they feel that they are living in Daehan Mangguk, the Failed State of Korea, a play on South Korea’s official name, Daehan Minguk, the Republic of Korea. According to Pew’s surveys, 20-something South Koreans are the only youngsters who are more pessimistic about their future income than their parents are on their behalf. Economic growth, after all, has slowed markedly of late. Only two young South Koreans in ten are satisfied with the direction of their country, compared with four in ten of those aged 50 and over—and that despite the fact that rates among the elderly of both poverty and suicide are the highest in the rich world. + +Black marks + +Ms Park seemed to have no feel whatsoever for the public sense of disillusion. She ruled the country like a queen, isolated from voters. She seldom gave interviews or press conferences, and often holed herself up in the presidential mansion, the Blue House. Her chief-of-staff, Kim Ki-choon, was her father’s former spy chief. He is now on trial for orchestrating a blacklist under Ms Park of 10,000 artists deemed anti-government or left-leaning. The government withheld funding from exhibitions, films and performances involving anyone on the list. + +Another incident that fuelled public ire was the sinking in 2014 of the Sewol, a passenger ferry. Hundreds of schoolchildren died because of a botched rescue; the captain was among the first to abandon ship. Ms Park was absent for much of the crisis, and has yet to explain fully her whereabouts that day. The trust of the young in the state’s ability to protect them fell from 47% before the accident to 8%, according to a poll conducted four months later. + +All this has sharpened a sense that the gains of 1987 have not been built on. Kim Soon-heung of the Korea Social Research Centre, a think-tank in Gwangju, says the transformation to a fully fledged democracy has been delayed; compared with the country’s breakneck industrialisation, its democratisation has slowed. Many fear a comedown after the heady success of the protests. Some draw parallels with 1987, when a split in the pro-democracy movement allowed another general and former coup leader, Roh Tae-woo, to win the presidency with only 37% of the vote. + +Mr Moon is no Mr Roh. Though certainly a familiar face—he narrowly lost to Ms Park in 2012—he has promised voters “regime change” after almost a decade of conservative rule, including the rooting out of elite corruption. He has led national polls for four months, garnering around 40% support in the run-up to the one-round election. Another liberal, Ahn Cheol-soo, a software tycoon who also ran in the previous race, is in second place, with around half Mr Moon’s support. The leading conservative, Hong Joon-pyo, has climbed in the polls, but still garners less than 20%. + +At Mr Moon’s rally in Gwangju, Minjoo activists promised to carry forward the “spirit of May 18th”, a reference to the date of Gwangju’s uprising in 1980. He has made vague promises about amending the constitution to reduce the powers of the presidency and thus limit the scope for abuses like Ms Park’s. + +The “imperial presidency” is indeed a problem, says Lee Sook-jong, a professor of public administration at Sungkyunkwan University in Seoul. The ruling party typically dominates all positions within government; the president names the heads of most agencies or has a strong say in their appointment. Yet Ms Lee notes that despite such vast powers, presidents often become lame ducks early on, because they are limited to a single five-year term—a safeguard from 1987 intended to prevent a return to authoritarianism. + + + +Park may be gone but resentment lingers + +Parties, meanwhile, are constantly mutating to stay in power. Since the republic was founded in 1948, the main liberal party has changed its name 14 times and splintered 11 times; its conservative counterpart has fared little better, with ten name-swaps and ten fractures. The endless manoeuvring makes it impossible to pursue a concerted legislative agenda—and hard for voters to keep track. Citizens do not feel that their MPs represent them, which is perhaps why they channel their anger at the president. Only 9% trust the legislature; four-fifths say the previous parliament did a bad job, too. Ms Park dismissed the National Assembly as “vegetative”. + +Others point to a lack of diversity in the media, which are bad at articulating public demands. The mainstream press is dominated by “Cho-joong-dong”, a triumvirate of conservative newspapers that toes the state line and self-censors on contentious nationalist issues. All three are controlled by rich families. In its World Press Freedom Index, Reporters without Borders placed South Korea in 70th position last year, below Haiti and Malawi. + +Yet signs of change are sprouting. South Koreans were taken by surprise when the most conservative of the three big newspapers, Chosun Ilbo, was among the outlets that broke the news of Ms Park’s wrongdoings last autumn. In March the ministry of culture said it would put up a bill to guarantee artists’ rights and create an independent watchdog. It will provide 8.5bn won ($7.5m) to revive projects starved of funding because of the blacklist. + +Mr Moon, too, has been doing his bit to defy expectations. To many, he represents the old-school dovish liberalism of those who fought for democracy in the 1980s; as he spoke in Gwangju, a huge banner was unfurled above the crowd with pictures of two crusading liberal presidents, Roh Moo-hyun and Kim Dae-jung, whose legacy he promises to uphold. But he also says he wants to win the election not just in his party’s stronghold around Gwangju, but in the conservative heartlands of the south-east as well, where he officially launched his campaign. He has made much of his military service, and abandoned his most dovish stances regarding North Korea, to appeal to nervous hawkish voters. + +South Koreans, meanwhile, are growing more comfortable with speaking out. In the 1980s many parents discouraged their children from joining anti-government demonstrations, which often turned violent, leading to mass arrests. This time they went together, sometimes with grandparents in tow. Protesters handed flowers to riot police. Crowds sang along to celebrity performances, snacking from food stalls set up for the occasion. Jeong Moon-young of The May 18 Memorial Foundation, an NGO in Gwangju, says that young people want to have fun while demanding change. + +In a country with such stark generational splits, Mr Jeong says the protests against Ms Park should be celebrated as a rare “meeting of memory and ages”. On the weekend of Mr Moon’s rally, a group of young South Koreans gathered on the other side of Gwangju, at Chonnam University, where the protests of 1980 began. They were commemorating Park Seung-hee, a former student. She set herself on fire in 1991 to challenge continuing police violence under President Roh. But no tears were shed; instead, students staged a play in which her stand inspired a modern-day student to join the protests against Ms Park. An audience of classmates and parents cheered the newly minted protester on. + + + + + +On the offensive + +Shinzo Abe sets a date for revising Japan’s pacifist constitution + +Voters are up in arms about the idea + + + +May 4th 2017 | TOKYO + +ALL this week, crowds have been waiting in hushed lines to view a yellowing document on display at the National Archives in Tokyo. For many, Japan’s war-renouncing constitution, written by an occupying army during a few sweltering days in 1946, is something of a sacred text. But Japan’s prime minister, Shinzo Abe, has made little secret of his desire to amend it. He chose the 70th anniversary of its entry into force, on May 3rd, to announce that he would try to secure changes to it by 2020, when Tokyo hosts the Olympics. That will require the approval of both houses of the Diet, along with popular assent through a referendum. The inevitably contentious debate will consume a huge amount of political energy over the next three years, possibly at the expense of Mr Abe’s already flagging economic reforms. + +Mr Abe wants to end questions about the legality and appropriate use of Japan’s not-quite army, the Self-Defence Forces (SDF), by amending Article 9, the constitution’s iconic pacifist clause. This prohibits Japan from maintaining land, sea or air forces, which sits a little awkwardly with the SDF’s 250,000-odd servicemen, 1,600 aircraft and a fleet boasting four large helicopter-carriers. It also leads to endless debates about whether it is legitimate for Japan to participate in international peacekeeping missions, for example. + +Many in Mr Abe’s Liberal Democratic Party (LDP) have long viewed Article 9 as a humiliation, imposed by the victorious Americans. After all, says Keiji Furuya, a politician, the party was born in 1955 with the explicit aim of amending the constitution. Mr Abe’s grandfather, Nobusuke Kishi, tried hard to revise it while he was prime minister in the 1950s. (He failed.) + +Mr Abe has started his campaign on a forceful note. “Those members of the public who think of the constitution as an immortal tome are now a small minority,” he told his supporters. He has some reason to be confident: his ruling coalition has a hefty parliamentary majority and, with the help of like-minded parties, commands two-thirds of both houses—the required strength needed to call a referendum. North Korea’s frequent missile tests are helping to make his case for him. + +Yet there is ample room for miscalculation. A new poll by NHK, Japan’s state broadcaster, finds that just 25% of the public want Article 9 rewritten, with 57% opposed. Support for constitutional change peaked over a decade ago; young people, in particular, have grown wary of foreign entanglements, says Eiji Oguma, a sociologist. Mr Abe himself concedes that the economy is a bigger concern for most voters. By pursuing unfinished family business too eagerly, he may end up delaying its completion yet again. + + + + + +Wake up and sell the coffee + +Timor-Leste’s big-spending leaders are squandering its savings + +Costly projects pile up as petrodollars dwindle + + + +May 4th 2017 | DILI + +COFFEE trees loom over a village in the hills above Dili, the capital of Timor-Leste. Though their fruit has provided income for decades, Alarico Soares De Cruz, the local headman, says the pickings are gradually growing slimmer. Some of the trees are 40 years old, he explains, and ought to be pruned or completely replanted. But doing so would mean sacrificing the next couple of harvests, and no one is eager for that. + +This month marks 15 years since Timor-Leste—a former Portuguese colony, once known as East Timor—regained its independence after a quarter-century of oppressive Indonesian rule. In that time its leaders have stitched together a relatively stable democracy and brought electricity to its remote hamlets. But they have struggled to reduce widespread poverty among the 1m-odd Timorese, or to revive ailing farms. With reserves of oil and gas dwindling, the government is ploughing the country’s savings into grand development schemes. But some fear they could lead to ruin. A general election in July provides a chance to change direction, but voters seem unlikely to seize it. + + + +Timor-Leste has pocketed more than $18bn from Bayu-Undan, its biggest oil and gas field, since its first wells were sunk in 2004. But this income looks set to vanish entirely by 2023, as the field runs dry (see chart). Although a sovereign-wealth fund worth around $16bn will provide a cushion, the government has been dipping deep into this capital lately to fund investments. Last year La’o Hamutuk, a dogged local think-tank, warned that at present spending rates the cash pile could evaporate within ten years. + +A handful of industries could sustain Timor in the lean years ahead. The most obvious is agriculture. The coffee business provides some income to about a third of all households; coffee is the country’s only significant export apart from oil. Yet the government reckons that around a third of the country’s coffee trees are unproductive, withered by age and neglect; others yield only a fraction of what should be achievable. Coffee farmers are producing only about a quarter of the quantities that were shipped during the industry’s colonial heyday. + +Another opportunity is to draw in more tourists. A survey published in 2014 by the Asia Foundation, a charity, found that foreigners—mostly diplomats, development workers and their guests—were spending about as much on leisure as the country was earning from exporting its coffee. Timor has pristine reefs, unspoilt hillsides and a compelling national story. Peeling away even a tiny fraction of the 4m holidaymakers who visit nearby Bali each year could make a big difference to the country’s fortunes. + +The government is trying to foster both industries. After some missteps Timor’s tourism ministry has cooked up a natty logo and a flashy website. International outfits such as the Asian Development Bank are working to help boost coffee production; some Timorese beans are sold in Starbucks. Fernando Santana of the agriculture ministry says it plans to use a mixture of education and incentives to help farmers rejuvenate some 500 hectares of coffee plants this year. + +The problem is that the government is devoting more time and money to a few risky mega-projects than to these worthy but dull schemes. A new port, the country’s first public-private partnership, is being built west of Dili. It may gradually cheapen imports but will not immediately boost Timor’s home-grown industries. A bigger concern is whether the government will see a return on the hundreds of millions of dollars it is ploughing into a special economic zone (SEZ) in Oecusse, an exclave tucked into the Indonesian half of the island of Timor, for which the business plan remains worryingly vague. + +Perhaps the most alarming expense is a corridor of oil refining and exporting facilities being planned just as Timor’s reserves are running dry. Spread along the country’s south coast—perhaps for no other reason than to give several places a share in the supposed income—these installations are to be connected by a gleaming and costly new motorway which will bypass existing towns and villages. + +The idea is that this new complex will be used, in part, to process the output of Greater Sunrise, a gas field found in contested waters south of Timor which has lain untapped since its discovery in the 1970s. The Timorese government claims that a treaty in 2006, in which it agreed to split the field’s revenues equally with Australia, is unfair; after a lengthy standoff, the two countries agreed in January to renegotiate it. But piping the field’s bounty to new plants in Timor is likely to be vastly more expensive than using existing Australian infrastructure. And even if Timor-Leste gets most of what it wants from the negotiations, the revenue from Greater Sunrise will only delay the economic reckoning by a few years. + +It’s not the economy, stupid! + +These issues played only a minor role during campaigning for the presidential election, which was held in March. Since 2015 Timor has been run by a coalition comprising its two largest parties, Fretilin and CNRT. The candidate they backed, Francisco Guterres, won easily enough to avoid a second round. Though the media are free and fairly diverse, Timor’s poorly educated voters have little grounding in economic matters and broad faith in a generation of leaders seen to have delivered the country from Indonesian occupation. Having witnessed violence as recently as 2006, when competing political factions engaged in lethal skirmishes, Timorese are generally happy that the bigwigs appear to be getting along. + +The worry is that this apathy will last beyond parliamentary elections in July, leaving Timor-Leste bereft of meaningful opposition at a critical juncture. Some useful friction could perhaps come from a new party led by Taur Matan Ruak, the outgoing president who, towards the end of his time in office, began to question the government’s schemes. The poll in March produced one surprise: voters in Oecusse, site of the woolly but expensive SEZ, chose not to back the government’s man. But although these may be indications of an eventual realignment, the chance of an upset in the near term looks small. + +Old hands in Dili remain hopeful that Timor’s leaders can find a face-saving way to change course. A foreign businessman says that so far this year ministers have been preoccupied with campaigning; in a few months that will change. It is a good sign that Timorese granted scholarships to study abroad are generally choosing to come back home to work. Half of Timorese are under 17 years old, and they will eventually need jobs. As scores of women gather for noisy aerobics classes on Dili’s waterfront—their backs turned to a rosy twilight—the unrest of the past seems a distant memory. But if the economy crashes, it could easily return. + + + + + +Stepping up to the plate + +A Pakistani province starts taking food safety seriously + +Slaving over a hot tandoor—in a hairnet + + + +May 4th 2017 | LAHORE + +SOMETHING catches the eye on Anarkali Food Street in Lahore, the capital of Punjab province. Bakers are pulling nan bread out of a tandoor oven, just as they did when the 200-year-old bazaar was founded. One detail, however, is strikingly contemporary: synthetic paper hairnets, in a vivid shade of green. “We are worried about the food inspector,” explains Muhammad Aslam, as he wraps dough around a stone. + +The feared scrutineers belong to the Punjab Food Authority (PFA), the first agency of its kind in Pakistan. Founded in 2011, it has its work cut out: some restaurants use rancid cooking oil, keep raw chicken on the floor or try to pass off donkey as beef. Such a scandal is the state of hygiene in Pakistan’s restaurants that television shows about crime often feature exposés of particularly abhorrent eateries, using jerky footage from hand-held cameras. + +The PFA’s new chief, Noorul Amin Mengal, says it cannot hope to keep tabs on all Punjab’s food outlets. On April 17th he proposed that restaurant customers conduct their own food inspections, using a smartphone app produced by the PFA. But restaurants will be hostile to such intrusion: most of them do not welcome visitors to their kitchens. Your correspondent asked to enter several in Lahore, in both down-at-heel establishments and ritzy ones, and was barred each time. + +Pakistan’s government, however, is keen on food inspections. In the past two months it has approved an expansion of the PFA’s operations from cities to rural areas, and signed off on the creation of equivalent agencies in the province of Sindh and in Islamabad, the capital. + +A fomer PFA official, Ayesha Mumtaz, made it wildly popular. In just over a year at the agency, she ordered almost 3,000 restaurants to close until they had made improvements, and arrested close to 400 people for selling dodgy fare. She transformed the food culture of Lahore, says Yasmin Khan, a restaurant-owner. Lookalikes of the so-called “fearless lady” used to send the kebab-hawkers on Anarkali Food Street running for cover. + +Mrs Mumtaz has 61,000 fans on Facebook; the central-government minister responsible for food safety has barely 4,000. But she made enemies in the food business and among politicians connected with it. She was removed from her post in October, after allegations of corruption involving her driver surfaced. Since then, Lahoris say, there has been a lull in inspections. + +The fear Mrs Mumtaz inspired still keeps some food-sellers on their toes. “If Ayesha Mumtaz wasn’t so strict, I wouldn’t be wearing this glove,” says a cupcake-salesman who had not realised that she had been replaced. But as temperatures rise and inspections wane, others are already abandoning their bothersome hygienic garb. + + + + + +Banyan + +Can TPP go ahead without America? + +The Pacific trade pact would still benefit the other 11 members + + + +May 4th 2017 + +WHEN, three days after his inauguration, Donald Trump pulled America out of the Trans-Pacific Partnership (TPP), a 12-country free-trade deal that his predecessor, Barack Obama, wanted to be his legacy in Asia, it was the fulfilment of a campaign promise. “Great thing for the American worker, what we just did,” he said, as he signed away new markets for American carmakers, farmers and drugs companies, along with the prospect of over 100,000 new American jobs. + +Among the other 11 members, the shock was not just over the new president’s hostility to America’s historical role as promoter of an open, rules-based trading order, of which the Asia-Pacific region has been the greatest beneficiary. Without the United States, which accounted for three-fifths of the bloc’s combined GDP, TPP was, in the words of the Japanese prime minister, Shinzo Abe, “meaningless”. After all the sweat and political capital expended in crafting the agreement, which was signed in late 2015 but which only Japan has ratified, TPP was, nearly everyone agreed, now fit only to be buried. + +Revival meeting + +What a difference three months make. This week in Toronto, the surviving members—Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam—met to discuss how to move the partnership forward without America. At the end of May, they will meet again for a more substantive gathering in Hanoi. There, bet on TPP confounding the undertakers and rising from the dead. + +That may seem strange. After all, although Mr Trump convinced himself that TPP was lousy for America, it was the other members who had to make most of the “concessions” in terms of opening markets. They did so because the American market is a huge prize. (Their own tariffs are bad for consumers, too, but this never seems to matter politically.) Some, including Japan, also saw TPP as a mark of America’s strategic commitment to the region in the face of a rising China. So they promised to lower barriers, open their service industries to investment and competition, strengthen patent protection and tighten environmental standards. It really was, as its boosters said, a “gold-standard” deal. + +Yet Deborah Elms of the Asian Trade Centre, a trade-advisory group in Singapore, says the remaining 11 members’ gains from TPP would still be large even without America (as are the forgone gains for America in several sectors including food and services). The gains apply even to the poorest member, Vietnam, whose garment and footwear industries, underpinned by cheap labour, would benefit from access to the markets of the other rich members. For instance, Ms Elms points out, Australia has a 9.5% tariff on swimwear. Assuming every beach-lover owns three or four costumes, Australia alone represents a big potential market for Vietnamese bikinis and budgie-smugglers. Some aspects of implementing an agreement without America might even prove easier. One example: communist Vietnam was forced to agree to a “side letter” with America insisting on higher labour standards, including allowing verifiably independent trade unions. After America’s withdrawal, this uncomfortable obligation falls away. + +Yet most countries have been shy about being seen to take the lead in reviving the TPP—with all respect to tiny New Zealand, always an unabashed champion of open trade. For several members, including Singapore, Malaysia and Vietnam, a chief concern is for a revived club not to be seen as an affront to China. For Japan, in contrast, that is precisely the point—though it will never admit it in public. Its bigger concern, given its reliance on American security, is not to be seen as anti-Trump. + +Here, Mr Abe’s tour of the golf courses at Mar-a-Lago with the American president in February paid dividends. Their joint statement afterwards referred to Japan “continuing to advance regional progress on the basis of existing initiatives”. In other words, Mr Trump gave his blessing for Japan to try to keep TPP going. The Hanoi gathering is a Japanese initiative. Most other members, once reassured that a revived TPP will be structured as neither anti-China nor anti-Trump, seem ready to follow. + +Another set of multilateral negotiations is under way to liberalise trade in Asia: the Regional Comprehensive Economic Partnership, or RCEP. Some mistakenly call it a China-led initiative, and are suspicious of it as a consequence. In fact, as Bilahari Kausikan, a Singaporean ambassador-at-large, underlines, it is led by the ten-member Association of Southeast Asian Nations (ASEAN) and is intended to meld existing free-trade agreements that ASEAN has with six other countries. One of the countries is indeed China. But four others—Japan, South Korea, Australia and New Zealand—are American allies, while the sixth, India, as Mr Kausikan puts it, is “hardly a Chinese stooge”. + +Others think there is scope for TPP and RCEP to come closer or even merge, given their seven shared members. But RCEP is far from a gold standard. TPP would open up all services to all members. RCEP negotiations, by contrast, take place at a snail’s pace, from a low base. It was seen as a breakthrough, Ms Elms points out, when ASEAN’s members agreed among themselves to allow foreign competition in the market for food deliveries by bicycle. + +Meanwhile, much needs to be done before TPP rises again. Not least, the surviving team of 11 needs to find a form of words to deal with the fact that the agreement of 2015 speaks of 12 members. A provisional fix ought to be possible, however. And for some, one incentive is the hope that a future administration in Washington, aware of the damage Mr Trump’s withdrawal has done to American credibility, will interest itself again in Asian trade. For now, as the 11 prepare to give it a go, they can console themselves with the thought that had it not been for American pressure during the original negotiations, there would be no agreement to revive now. + + + + + +China + + + + +The new silk route (1): All aboard the belt-and-road express + +The new silk route (2): One belt, one roadblock + + + + + +The belt-and-road express + +China faces resistance to a cherished theme of its foreign policy + +Silk routes are not always as appealing as they sound + + + +May 4th 2017 | BEIJING + +ON APRIL 10th a freight train pulled out of Barking station in London carrying Scotch whisky, baby milk and engineering equipment. It arrived in Yiwu in eastern China (see map) nearly three weeks later, completing the second-longest round-trip train journey ever made (after Yiwu to Madrid and back, a record set in 2014). It lopped around a month off the time of a sea journey from Britain to China. + + + +A day after the train’s departure, a less ballyhooed but potentially more significant event took place in the port of Kyaukphyu in Myanmar. Workers started transferring oil from a tanker into a new pipeline that runs from the Burmese port north to Kunming, the capital of Yunnan province in south-western China. The pipeline bypasses the Malacca Strait, through which 80% of Chinese oil imports are shipped. Eventually, energy supplies to Chongqing, the largest city in the west of China, will no longer be vulnerable to political disruption in the strait. + +Both events show that Xi Jinping’s “Belt and Road Initiative”, a central feature of the Chinese president’s foreign policy, is establishing what generals like to call facts on the ground. By financing around $150bn of infrastructure spending a year in countries to China’s south and west (along the old Silk Road), Mr Xi hopes to create new markets for Chinese firms and new spheres of influence for his government. + +The president is preparing to host a lavish party in Beijing to celebrate the project—the Belt and Road Forum, as the event is known. On May 14th and 15th leaders from 28 or so countries will join the festivities, including Russia’s Vladimir Putin and Myanmar’s de facto leader, Aung San Suu Kyi. Mr Xi will use the gathering to project his country’s self-confidence and his own as a global leader. But looks can deceive. In reality, Mr Xi faces a backlash against his project. At the forum, he will try to reassure his partners that he is not attempting to stuff their mouths with gold. + +Not so fast + +The scheme is running into three linked problems. First, it is unclear what its priorities are, or who is running it. “We haven’t really come up with a specific goal,” says Zou Tongxuan of Beijing International Studies University. Every province has its own belt-and-road investment plan. So do hundreds of state-owned firms. The government’s strong backing has helped to get many projects up and running faster than might have happened otherwise (Mr Xi first began to talk about the idea only in 2013). But no one is in day-to-day charge, so thousands of financially dubious schemes have the imprimatur of a belt-and-road project. And the overweening behaviour of Chinese companies in some countries where they operate has stoked fears in some places of an over-mighty China. + +The different names given to the project reflect China’s struggle to make it sound palatable to foreigners. Mr Xi first talked about a “Silk Road economic belt”. That was uncontroversial, but to expand its geographical scope a new term was devised: Yidai Yilu, or One [land] Belt, One [maritime] Road. That sounded ugly in English and, officials realised, risked implying that it was all about a big Chinese plan: they wanted the venture to be seen as a co-operative one. So they came up with the anodyne-sounding belt-and-road translation (despite the unfortunate acronym it produces for the forum: BARF). + +A second problem is finding enough profitable projects to match the vaulting ambition of the scheme, which aims to create a Eurasian trading bloc rivalling the American-dominated transatlantic area. It is not certain, for example, how successful the London-Yiwu rail line will be, given that (though faster) it is more than twice as costly as shipping. The Chinese hope to export their expertise in building high-speed rail. But China’s speedy construction of thousands of kilometres of it at home depended on cheap labour and the power to evict anyone who got in the way. That may be hard to replicate. + +Belt-and-road projects are failing already. In Kara-Balta in Kyrgyzstan, Zhongda China Petrol, a state-owned company, built a big oil refinery—then found it could not buy enough crude oil to run it at more than 6% of capacity. The country’s deputy prime minister called the plant’s construction “ridiculous”; locals are protesting against its environmental impact. + +China hopes the belt and road will bring others into its orbit, including Afghanistan, Pakistan, Iraq, Syria and Ukraine. But these countries are not exactly champions in the World Bank’s ease-of-doing-business league. According to Tom Miller of Gavekal, a consultancy, the Chinese think they will lose 80% of their money in Pakistan, 50% in Myanmar and 30% in Central Asia. Perhaps they can afford this, but it would be a costly success. + +Third, locals in some countries are angry about what they view as China’s heavy-handedness. In parts of Asia, democratic politics have been challenging China’s commonly used approach to deal-making—cosying up to unsavoury regimes. This had begun before Mr Xi devised the belt-and-road scheme. In 2011 Myanmar suspended work on a vast Chinese-financed dam at Myitsone, to popular acclaim. In Sri Lanka, the government elected in 2015 has been engaged in endless wrangling with China over the building of a Chinese-invested port in the home town of the country’s autocratic former president. In January protests against China’s plans there turned violent. + +Even in Pakistan, one of China’s closest friends in Asia, Mr Xi has been forced to abandon his usual mantra of “non-interference” in others’ internal affairs. Late last year China openly appealed to Pakistan’s opposition politicians not to resist construction of the China-Pakistan Economic Corridor, a part of the belt that links Xinjiang, China’s westernmost province, with Gwadar on the Indian Ocean. Pakistan deploys a force of around 10,000 soldiers to guard the corridor against militant attacks. + +The problem is partly one of scale: China is so vast that belt-and-road countries fear being overwhelmed by it. Loans from one bank, China Eximbank, for example, account for a third of Kyrgyzstan’s foreign debt. Yunnan is one of China’s poorer provinces. Yet its economy is still four times bigger than that of its more populous neighbour, Myanmar. Countries both long for and dread Chinese investment. + +China is trying to change its ways. NGOs in South-East Asia say that Chinese firms, which had previously treated local critics with disdain, have started to take their concerns more seriously. Chinese banks are asking international institutions—sovereign-wealth funds, pension funds and so on—to join them in lending to belt-and-road projects, in the hope that this will help ensure higher standards. At the forthcoming forum, China is likely to emphasise links between the belt-and-road programme and other infrastructure projects that have been launched independently of it, such as a new transport network around Baku in Azerbaijan. The aim will be to show that Mr Xi’s project is not a threat. But this will be another minor adjustment of wording. The belt-and-road express has left the station. China is merely trying to improve the on-board service. + + + + + +The bullies of Urumqi + +The extraordinary ways in which China humiliates Muslims + +Bans on “abnormal” beards and even the name “Muhammad” + + + +May 4th 2017 | BEIJING + +CHINESE officials describe the far western province of Xinjiang as a “core area” in the vast swathe of territory covered by the country’s grandiose “Belt and Road Initiative” to boost economic ties with Central Asia and regions beyond. They hope that wealth generated by the scheme will help to make Xinjiang more stable—for years it has been plagued by separatist violence which China says is being fed by global jihadism. But the authorities are not waiting. In recent months they have intensified their efforts to stifle the Islamic identity of Xinjiang’s ethnic Uighurs, fearful that any public display of their religious belief could morph into militancy. + +Xinjiang’s 10m Uighurs (nearly half of its population) have long been used to heavy-handed curbs: a ban on unauthorised pilgrimages to Mecca, orders to students not to fast during Ramadan, tough restrictions on Islamic garb (women with face-covering veils are sometimes not allowed on buses), no entry to many mosques for people under 18, and so on. + +But since he took over last August as Xinjiang’s Communist Party chief, Chen Quanguo has launched even harsher measures—pleased, apparently, by his crushing of dissent in Tibet where he previously served as leader. As in Tibet, many Xinjiang residents have been told to hand their passports to police and seek permission to travel abroad. In one part of Xinjiang all vehicles have been ordered to install satellite tracking-devices. There have been several shows of what officials call “thunderous power”, involving thousands of paramilitary troops parading through streets. + +Last month, new rules came into effect that banned “abnormal” beards (such as the one worn by the man pictured in front of the main mosque in Kashgar in south-western Xinjiang). They also called on transport workers to report women wearing face veils or full-body coverings to the police, and prohibited “naming of children to exaggerate religious fervour”. A leaked list of banned names includes Muhammad, Mecca and Saddam. Parents may not be able to obtain vital household-registration papers for children with unapproved names, meaning they could be denied free schooling and health care. + +Residents have also been asked to spy on each other. In Urumqi, the region’s capital, locals can report security threats via a new mobile app. People living in Altay in northern Xinjiang have been promised rewards of up to 5m yuan ($720,000) for tip-offs that help capture militants—over 200 times the local income per person. + +Across Xinjiang residents have been asked to inform the authorities of any religious activities, including weddings and circumcisions. The government is also testing its own people’s loyalty. In March an official in Hotan in southern Xinjiang was demoted for “timidity” in “fighting against religious extremism” because he chose not to smoke in front of a group of mullahs. + +Mr Chen is widely rumoured to be a contender for a seat in the ruling Politburo in a reshuffle due late this year. Displays of toughness may help to ingratiate him with China’s president, Xi Jinping, who has called for “a great wall of iron” to safeguard Xinjiang. Spending on security in Xinjiang was nearly 20% higher in 2016 than the year before. Adverts for security-related jobs there increased more than threefold last year, reckon James Leibold of La Trobe University and Adrian Zenz of the European School of Culture and Theology at Korntal, Germany. + +Uighurs have been blamed for several recent attacks in Xinjiang. In one of them in February, in the southern prefecture of Hotan, three knife-wielding men killed five people and injured several others before being shot dead by police (local reports suggested the violence occurred after a Uighur family was punished for holding a prayer session at home). Officials may be congratulating themselves on the success of their tactics; reported large-scale attacks by Uighurs inside and outside Xinjiang have abated in the past 18 months. Yet as in Tibet, intrusive surveillance and curbs on cultural expression have fuelled people’s desperation. “A community is like a fruit,” says a Uighur driver from Kashgar. “Squash it too hard and it will burst.” + + + + + +Middle East and Africa + + + + +A cotton boll’s journey: From shrub to shirt to shelf + +South Africa: Bury him, praise yourself + +Egypt: Judgment day + +America, Israel and the Palestinians: Movement, but any change? + +The state of Arab men: Down and out in Cairo and Beirut + + + + + +From shrub to shirt to shelf + +The journey of an African cotton boll + +Will manufacturing in Africa ever take off? + + + +May 4th 2017 | KASESE + +HUNDREDS of bright blue T-shirts with the slogan “smile” pass down a row of tables where they are inspected, folded, bagged and tagged. From here they will embark on an arduous journey of more than 1,000km (600 miles). A lorry will haul them from Kampala, Uganda’s capital, across Kenya to the port of Mombasa. A week later they will be loaded onto a ship for Hamburg, Germany. There they will be sold for €10 ($11) each by Bonprix, part of a family-owned mail-order firm with sales of $13bn a year. + +These shirts began as cotton bolls in fields on the equator in the far west of Uganda, where the red-earth plains turn upwards into the Rwenzori mountains. Their odyssey reveals much about Africa’s manufacturing potential. By following in the footsteps of China and Bangladesh, which began their industrial revolutions with textiles, Africa could in theory create millions of jobs. But as the T-shirts’ travels also illustrate, it will not be easy. + +Several African countries have tried in the past to become tailors and cloth-makers to the world. Nigeria’s northern cities of Kaduna and Kano were once home to textile mills that employed 350,000 people. Yet these factories are now rusting, and employ perhaps a tenth of that number. + +This mirrors a wider trend. In 1990 African countries accounted for about 9% of the developing world’s manufacturing output. By 2014 that share had slumped to 4%. As the world’s labour-intensive jobs left the rich world for countries with lower wages, Africa lost out to Asia because of bad governance, political instability and poor infrastructure. Another shift of similar proportions now seems in the offing as China grows richer. But there are some signs that, this time, Africa might catch the wave of industrialisation. + +In the shade of a large tree just a few kilometres from Uganda’s border with the Democratic Republic of Congo, a group of farmers have gathered to discuss their bumper cotton crop and the obstacles they had to overcome to grow it. Elephants sometimes rampage out of a nearby game reserve and trample the neat rows of cotton, they complain. They plant barriers of chili peppers and keep beehives to keep the jumbos out. + +Markets are even less predictable than pachyderms. All the farmers at this meeting are tenants who rent small plots. “When the price of cotton goes up, so does the rent we pay,” says one woman bitterly. African farmers, who use ox-drawn ploughs and pick cotton by hand, are competing against vast mechanised farms in Texas that still receive subsidies. About 80% of Uganda’s cotton is exported, but because its fields are far inland and the cotton has to travel over rutted roads past rapacious officials, the price these farmers receive is only 60-70% of the international benchmark for delivery to Asia, a lower share than goes to American farmers. + +Yet the Ugandan farmers’ income is rising because of two changes further along the chain between shrub and shirt. One occurs at the ginnery, where huge clumps of seed-studded fluff are shovelled into gigantic machines that clean and comb them. At the entrance, two officials of the government’s Cotton Development Organisation diligently record each sale in order to tax it. The money goes back into buying good seeds and pesticides that are then given to farmers. New seeds introduced from Zimbabwe last year produce bolls that yield about a third more usable cotton than the old variety. + +Better farming techniques also help. Western Uganda Cotton Company (WUCC), a ginnery with British shareholders, is trying to get more of the fluffy stuff by training farmers about when to weed and how to space out the seeds as they plant. Those who follow these instructions have seen their yields double to about 600kg an acre (twice as much as farmers in America manage—a testament to Uganda’s fertile soil). “I will double my cotton planting next year,” says Joshua, a middle-aged man. But farmers face huge hurdles in doing so, even though there is plenty of land available. One says that after setting aside money for her children’s school fees she will have enough left to rent only a single acre again next year. Borrowing is not an option. Bank loans are too expensive and cheap ones from government agencies are wrapped in red tape. + +Although Uganda still exports most of its cotton, the bags of lint emerging from WUCC’s ginnery are trucked to Fine Spinners Uganda, a factory in Kampala that turns them into clothing. Because the factory is so close to the fields, the cotton it buys costs much less than it would in Asia, giving it a small advantage over competitors from places such as Bangladesh, the world’s second-largest clothing exporter. + +In this plant employees gingerly open the bales of lint and feed the cotton into an assortment of machines that first spin it into yarn, then knit it into cloth and dye it. Then the fabric follows an orderly procession past long lines of work stations where it is cut and then stitched back together. Colourful designs are printed onto the finished shirts. Some will be flown out to California to be sold by EDUN, a clothing brand started by Ali Hewson, an Irish businesswoman, and Bono, her rock-star husband. Others are for sale in a local market that has been squeezed by imports of second-hand clothing. The rest are destined for Europe, where they will have to compete on price with imports from Asia. + +Uganda’s main advantages, for the moment, are cheap cotton and labour, and preferential access to American and European markets. When exporting to the rich world “Africa has an 18-35% duty advantage over any other continent”, says Nick Earlham, a shareholder in WUCC and in Fine Spinners. “It’s very competitive.” + +Textile workers in Kampala earn about $85 a month, compared with $150 in Kenya and $108 in Vietnam, never mind up to $700 in China. But these savings are offset by problems in almost every other sphere. Power cuts keep plunging the factory into darkness, and an erratic supply of steam to the dyeing machines makes it hard to ensure that each batch of fabric looks alike. + +In a cramped meeting room alongside the factory, executives of Bonprix visiting from Europe make their unhappiness clear. Their inspectors in Hamburg are discovering more defects than they would like, and one big shipment of T-shirts will be unexpectedly late. “What would happen if this item was on the cover of our catalogues?” one asks. + +Yet for all the tough talk, Bonprix is placing orders at higher prices than it might pay elsewhere and offering technical help to nurture an industry which it hopes will, in time, become competitive. As its rivals look to countries such as Vietnam and Bangladesh, which are starting to replace China as big suppliers of clothing, Bonprix is already seeking out the countries that will, in turn, replace them. “East Africa has a lot of potential to develop a strong textile and garment industry,” says Rien Jansen of Bonprix. As Asia grows richer, its pool of cheap labour will eventually run dry—and Africa is next in line. + + + +In turning to Africa, the company is helping to generate what may become a huge wave of exports. After years of stagnation, east Africa’s clothing industry has more than doubled its exports since 2009 (see first chart). Dirk Willem te Velde of the Overseas Development Institute, a British think-tank, reckons that this is not only because of rising wages in Asia and preferential access to markets. As important, he argues, are investor-friendly government policies, as well as improvements in infrastructure that have cut transport costs. + +These are starting to reverse the factors that held Africa back during the previous big shift in the global economy. But unless Africa’s leaders keep improving governance, investing in skills and developing infrastructure, as well as opening up to foreign investment, they may miss out on the next wave of industrialisation, too. Robots are not yet much good at fiddly sewing jobs on floppy fabric; less than 0.1% of the world’s industrial robots are in the clothing trade. But they will improve. + + + + + +I come to bury him, not to praise myself + +Why South African politicians campaign at funerals + +Within the ruling party, campaigning is banned. But eulogies are not + + + +May 4th 2017 | JOHANNESBURG + +TO BECOME a leader of South Africa’s ruling party takes a talent for speaking sideways. The African National Congress (ANC) forbids open campaigning for leadership positions, a holdover from more secretive times as an underground resistance movement. Instead, during ANC election years such as this one, politicians turn up at a succession of Sunday church services, memorial lectures and funerals of party stalwarts to give thinly disguised stump speeches. The trick is saying enough, but not too much, since flagrant campaigning can mean disciplinary action. + +The outdated rules will be challenged at an ANC policy conference in late June. But for now, ahead of a five-yearly leadership vote in December, where Jacob Zuma will be replaced as party president (though his term as the country’s president lasts until 2019), covert campaigning persists. + +The queen of the non-campaign event is Nkosazana Dlamini-Zuma, a former head of the African Union who hopes to succeed her ex-husband. She pops up at everything from an “Israeli Apartheid Week” lecture in the mining-belt city of Rustenburg to the opening of a megachurch in Thokoza township. Though jobless at present, Ms Dlamini-Zuma travels under the guard of a VIP protection unit. “It involves a humongous convoy. The aim is to make her look presidential,” says Ralph Mathekga, a political analyst and the author of “When Zuma Goes”. She is a dull speaker, but the ANC women’s-league leader nonetheless likened her to Jesus, saying she was “both a lion and a lamb”. + +Her presumed main rival for Mr Zuma’s job is the deputy president, Cyril Ramaphosa. He is said to have “launched” his campaign last month in the Eastern Cape, where he segued a tribute to Chris Hani, an anti-apartheid leader murdered in 1993, into a jab at Mr Zuma. He complained about “the politics of patronage” and speculated that Hani must be wondering, “Why are we messing up this country?” + +Mr Ramaphosa is not explicitly running for the top job, but an unofficial website devoted to him has a snappy slogan (“Build. Renew. Unite.”) and a slick logo, “CR17”, suggesting his initials and campaign year. Another new website promotes the achievements of Ms Dlamini-Zuma, coyly without saying why. + + + + + +Judgment day + +Sisi takes on Egypt’s judiciary + +The latest effort to muzzle independent bodies + + + +May 4th 2017 | CAIRO + +THOUGH it presented no evidence, the Egyptian government wasted little time in blaming the Muslim Brotherhood for the car bomb that killed Hisham Barakat, the prosecutor general, in June 2015. Abdel-Fattah al-Sisi, Egypt’s president, naturally concurred—he had, after all, booted the Brotherhood from power—but he also had harsh words for the judicial system. “The arm of justice is being chained by the law,” said Mr Sisi at the time. He did not mean this as a compliment. Long appeals delay executions, he grumbled. (Much of the Brotherhood’s leadership sits on death row.) As the president left Mr Barakat’s funeral, he dressed down a crowd of judges, saying: “No courts should work this way.” + +Most Egyptian judges come from the country’s elite and are “fundamentally pro-regime and fundamentally conservative”, says Nathan Brown of George Washington University. Some took to issuing mass death sentences to hundreds of Brotherhood members after the group was forcibly removed from power. But the president has nonetheless appeared vexed by the judiciary’s protracted procedures, its semblance of independence and its occasional checks on his power. The Court of Cassation, one of Egypt’s highest, has voided capital convictions for members of the Brotherhood obtained with evidence exclusively from (often uncorroborated) national-security investigations. In January the highest administrative court upheld a decision rejecting Mr Sisi’s unpopular effort to transfer two islands in the Red Sea back to Saudi Arabia. + +Fed up, Mr Sisi is now trying to neuter the courts, with the help of a pliant parliament. As attention was fixed on Pope Francis’s first visit to Egypt, the president ratified a bill on April 27th that gives him the power to appoint the chief judges of the highest courts. Until now, even under Egypt’s past strongmen, the courts had selected their own chiefs, usually by seniority. Under the new law, Mr Sisi will choose one judge from a list of three which the courts in question must submit. Chief judges have nearly complete power to assign cases and control budgets. + +Many Egyptians are outraged. “Judges have their own will, and they will impose it through the rule of law,” said Mohamed Mansour, the head of the Judges’ Club. Some have threatened to strike. Members of Egypt’s State Council say that they will not supervise the next parliamentary elections. The Supreme Constitutional Court could even reject the law altogether, setting up a showdown with the president. + +Defenders of the bill argue that the government needs more powers to fight terrorism. Trying suspects takes “five or ten years”, which allows them to “give orders from their cells”, Mr Sisi complains. But under the state of emergency, declared after two church bombings in April, Mr Sisi already has the power to try civilians in special courts which he runs. Egyptians who are found guilty in these proceedings cannot appeal. + +Mr Sisi’s real motive may be to block the promotion of judges who irritatingly rule againt him. Yehia al-Dakroury, who had been expected to become chief judge of the State Council in July, ruled against the president’s handover of the islands. Anas Omara, who was next in line to lead the Court of Cassation, revoked the Brothers’ death sentences (he would also have chaired the electoral commission). + +During his three years in office Mr Sisi has dismantled most checks on his power. Protests are banned. Harsh laws limit the activities of NGOs. Critical media outlets have been shut down and muckraking journalists locked up. Even al-Azhar University, the Islamic world’s most prestigious centre of learning, has come under pressure. Another bill in parliament threatens to impose greater government control over that already tame institution. + +Judges in Egypt persevered after Gamal Abdel Nasser, Egypt’s old dictator, purged nearly 200 in 1969. They extracted concessions during the 30-year reign of Hosni Mubarak, such as the power to supervise elections. But in Mr Sisi they may have encountered their stiffest challenge yet. + + + + + +Movement, but how much change? + +The Palestinian president visits the White House + +While Hamas moderates its founding charter + + + +May 6th 2017 | TEL AVIV + +IT WAS a dramatic final act for Khaled Meshal, soon to be the ex-leader of Hamas, the Islamist movement that rules the Gaza Strip and hopes one day to run all of biblical Palestine. After months of speculation he unveiled a policy document meant to amend (though not replace) the militant group’s founding charter of 1988. Most strikingly, it endorses the creation of a Palestinian state in just the West Bank and Gaza. As such, it moves a bit closer to the “two-state solution” that has been the aim of American-led peace talks for more than two decades. Hamas has never accepted it. But now, it says, Palestinian statehood is a “formula of national consensus”, although it still thinks that peace with Israel is anathema. The document is also notable for what it does not say. The anti-Semitic language of the charter of 1988 is not repeated. Nor is the declaration that Hamas is a “wing of the Muslim Brotherhood”. + +Good reasons for scepticism remain. The same document also declares that “no part of the land of Palestine shall be compromised or conceded.” As Mr Meshal prepares to step down, a hardliner, Yahya Sinwar, has risen to the group’s number two spot as part of a reshuffle. And Hamas’s military wing continues to restock its arsenal ahead of a possible war with Israel, which would be its fourth in ten years. A spokesman for Binyamin Netanyahu, Israel’s prime minister, calls the charter an effort to “deceive the world”. + +Perhaps more important than the document’s content were its timing and motivation. Hamas’s comparatively moderate politburo is vying for power with a belligerent military wing. And the document came out hours before Mahmoud Abbas, the overall Palestinian leader, whose nationalist Fatah faction lost Gaza to Hamas in 2007, landed in Washington for his first meeting with America’s president, Donald Trump (see picture). Mr Abbas has long vowed to regain control of both parts of a would-be Palestinian state, striking a series of abortive “unity” pacts meant to end the schism. The new document was in part aimed at stealing his thunder. + +Mr Abbas’s visit to the White House on May 3rd was remarkably cordial, given the pro-Israel platform on which Mr Trump ran. The property mogul has decided he wants to make what he calls the “ultimate deal.” He did not affirm his support for a two-state solution, an omission which disappointed the Palestinians. But his optimism was unmistakable. “Maybe [it’s] not as difficult as people have thought over the years,” he told Mr Abbas as they sat down to lunch. + +Like his three predecessors, he will soon discover otherwise. The first step is simply bringing both sides back to the table for the first round of direct talks since 2014. But the deeply unpopular Palestinian leader is unlikely to accept an Israeli and American demand that he first stop paying salaries to the families of jailed and dead Palestinian terrorists. Prisoners are always a resonant issue in Palestinian society—especially now, with about 1,000 of them on a mass hunger strike (organised by his chief rival) to demand better conditions. Nor can Israel’s right-wing coalition offer a settlement freeze in the occupied territories as a carrot to the Palestinians. + +In the short term, Mr Trump will therefore focus on bolstering the anaemic economy in the West Bank, where the official unemployment rate stands at 18%. This closely mirrors Mr Netanyahu’s strategy of “economic peace,” which has brought neither growth nor calm. The Americans also want both sides to open a quiet back channel, to talk away from the spotlight. The last time they tried this, in Barack Obama’s second term, Mr Abbas eventually disavowed everything his envoy agreed to. + + + + + +Down and out in Cairo and Beirut + +The sorry state of Arab men + +They are clinging to the patriarchy for comfort + + + +May 4th 2017 | CAIRO + +AHMED, who lives in Cairo, allows his wife to work. “At first, I insisted she stay at home, but she was able to raise the kids and care for the house and still have time to go to work,” he says. Still, he doesn’t seem too impressed. “Of course, as a man, I’m the main provider for the family. I believe women just cannot do that.” + +Ahmed’s outlook is widely shared throughout the region, where men dominate households, parliaments and offices. Chauvinist attitudes are reflected in laws that treat women as second-class citizens. A new survey by the UN and Promundo, an advocacy group, examines Arab men’s views on male-female relations. (One of the authors, Shereen El Feki, used to write for The Economist.) It finds that around 90% of men in Egypt believe that they should have the final say on household decisions, and that women should do most of the chores. + +So far, so predictable. But the survey sheds new light on the struggles of Arab men in the four countries studied (Egypt, Lebanon, Morocco and Palestine) and how they hinder progress towards equality. At least two-thirds of these men report high levels of fear for the safety and well-being of their families. In Egypt and Palestine most men say they are stressed or depressed because of a lack of work or income. Women feel even worse, but for Arab men the result is a “crisis of masculinity”, the study finds. + +Far from relaxing their patriarchal attitudes, Arab men are clinging to them. In every country except Lebanon, younger men’s views on gender roles do not differ substantially from those of older men. There may be several reasons for this, but the study suggests that the struggle of young Arab men to find work, afford marriage and achieve the status of financial provider may be producing a backlash against assertive women. In other words, male chauvinism may be fuelled by a sense of weakness, not strength. + +Another explanation is that a general climate of religious conservatism makes men suspicious of newfangled liberties. Muslim legal scholars promote a notion of qiwamah (guardianship) that gives men authority over women. In conservative countries, such as Saudi Arabia, this is official policy. But the attitude persists even in relatively liberal parts of the Arab world, such as Morocco, where 77% of men believe it is their duty to exercise guardianship over female relatives (see chart). + + + +In such an atmosphere, violence and harassment are common. In the four countries surveyed, 10% to 45% of men who have ever been married admitted to having beaten their wives. Between 31% and 64% of men admitted that they had harassed women in the street. Fewer than half of Moroccan men think marital rape should be criminalised; most expect their wives to have sex on demand. Some 70% of Egyptian men still approve of female genital mutilation (FGM). + +Well over half of Egyptian women also say they approve of FGM. In fact, Arab women espouse many of the same views as men. In Egypt and Palestine, over half of men and women say that if a woman is raped, she should marry her rapist. In at least three of the countries, more women than men say that women who dress provocatively deserve to be harassed. Most of the women surveyed say they support the idea of male guardianship. + +Activists have tried hard to encourage Arab women to assert themselves. They have made little effort, however, to soften men’s attitudes. This is changing. ABAAD in Lebanon is one of several NGOs in the region confronting the rigid norms of manhood; it uses awareness campaigns and psychological counselling. The study’s authors see an opening in men’s relatively liberal attitudes towards fatherhood and women in the workplace. They also want to stop the thrashing of boys at home and in schools, which makes them more likely to harm women later on. + +Studies suggest that greater equality would make Arab countries richer as well as fairer—liberated women earn more. Yet although some biased laws have changed, official support has been grudging. “We don’t have a Justin Trudeau in the Arab region yet,” says Dr El Feki, referring to Canada’s hunky feminist prime minister. But Lebanon recently appointed its first-ever women’s affairs minister—a man. + + + + + +Europe + + + + +France’s presidential election: The rage against Macron + +German politics: Angie’s army + +Turkey and Russia cosy up: Brothers in arms + +The Eurovision song contest: War music + +Housing in Russia: A new kind of revolution + +Charlemagne: The parable of Amiens + + + + + +The most consequential election of 2017 + +Even if defeated, Marine Le Pen has changed French politics + +France is more divided than ever + + + +May 4th 2017 | VILLEPINTE + +AS FAMILY outings go, it was unorthodox. No fewer than 20 members of all ages travelled from Normandy to a soulless exhibition hall 20km (12 miles) north of Paris, to watch the nationalist Marine Le Pen take the stage for her last big campaign rally. The youngest in the troop was seven; there were several teenaged girls with pony-tails. But the family seemed thrilled. “For 30 years, politicians have ruined this country,” said Bernard, an uncle in the clan, who works in funeral insurance: “They tell us that we’re racist, but that’s nonsense. She’s the one who’s got concrete ideas to get us out of this chaos.” + +Ahead of the run-off vote for the French presidential election on May 7th, Ms Le Pen trails her liberal opponent, Emmanuel Macron, by a hefty 20 points. But she has not given up the fight. On May 3rd she lashed out at Mr Macron in a televised debate against the 39-year-old one-time banker, casting the election as a referendum on globalisation and finance. She accused the former economy minister of being the candidate of “the system”, “Uberisation of society”, and “savage globalisation”. + +In an echo of a campaign line used by François Hollande, the Socialist president, in 2012, Ms Le Pen told flag-waving supporters in Villepinte: “Today, the enemy of the French people is still the world of finance, but this time he has a name, he has a face, he has a party, he is presenting his candidacy and everyone dreams of him being elected: he is called Emmanuel Macron.” + +It is a message that chimes with a big chunk of the electorate in a fractured country. Big cities and college-educated voters favour Mr Macron and his pro-European, business-friendly politics, while struggling smaller towns and rural parts lean to the protectionist, anti-immigration Eurosceptism of Ms Le Pen. Even some of those who recoil at her xenophobia turn out to loathe the world of finance even more. “Neither banker, nor racist” read a banner at a protest rally in Paris. Jean-Luc Mélenchon, a Communist-backed candidate who came a close fourth, refused to call for a vote for Mr Macron against Ms Le Pen. Fully 65% of his supporters said that they would abstain or spoil their ballot papers. + +Ms Le Pen has made some gains. She secured the first national alliance in the 45-year history of her party, the National Front (FN), hooking up with Nicolas Dupont-Aignan, a right-wing Eurosceptic who scored nearly 5% of the vote in the first round. Ms Le Pen, who won 21%, has also tried to broaden her base by reaching out to the mainstream right (with its older voters) and the far left (with its younger ones). She lifted a stirring passage on regional identity from a speech by François Fillon, the defeated centre-right candidate, which her aides insisted was a “wink” at his electorate. Her team made an appeal on social media to Mr Mélenchon’s “unsubmissive” voters too, pointing to their shared positions such as distrust of NATO and desire for retirement at the age of 60. + +Perhaps most striking, Ms Le Pen softened her position on the euro. Her vow to quit the single currency has long divided the FN: those around Florian Philippot, her lieutenant, consider it a centrepiece; those close to Marion Maréchal-Le Pen, her niece and an FN deputy, see it as a distraction. But it has turned into a liability for her run-off campaign. Older voters in particular worry that a currency devaluation could slash their pensions and savings. So Ms Le Pen has fudged the issue, with a muddled plan for parallel currencies instead. At a FN souvenir stand in Villepinte, offering such delights as pendants and earrings featuring Ms Le Pen’s blue-rose emblem, Anne-Claire, an off-duty police official, agrees: “The euro isn’t what matters; Marine is about defending the values of France.” + +Nonetheless, it will be extremely difficult for Ms Le Pen to make up the gap between her and Mr Macron in the remaining days. No poll has put her remotely close to winning a majority. She gets over 50% in only one region, Provence-Alpes-Côte d’Azur, the FN’s southern stronghold. In Brittany and greater Paris, her score drops to 31%. It would take a historic upset at this point for her to keep Mr Macron from the presidency. A loss for Ms Le Pen would be a symbolic defeat of the forces of nationalism and populism that have gained ground in parts of Europe. It could also put internal pressure on her leadership. “If she gets much less than 40%, the party will consider it a disappointment,” says Cas Mudde, a scholar of extremism. + + + +Yet it would be a mistake all the same to understate Ms Le Pen’s achievement. With a first-round score of 7.7m votes, she has already set a historic record for the FN (see chart). In 2002, when her father, Jean-Marie Le Pen, also made it into the presidential run-off, there were demonstrations across the country and his opponent, Jacques Chirac, swept up 82% of the vote. This time, the streets have been mostly quiet, and she looks set to double his score. Mr Macron may well be safely elected on May 7th. But he will inherit a deeply divided country. + + + + + +Angie’s army + +Two German state elections suggest a boost for Angela Merkel + +For now, her Christian Democrat party has the momentum + +May 4th 2017 | DÜSSELDORF + + + +PERHAPS it was the impeccably proletarian setting: a vast former coal mine in the industrial Ruhr. Or perhaps it was the 1,500-strong crowd chanting “Martin! Martin! Martin!” Or perhaps it was the sound system blaring the upbeat 1990 hit “I’ve got the power”. But for some reason Martin Schulz, the Social Democratic (SPD) candidate for Germany’s chancellorship, got carried away and said something rash at his early-April rally in Essen. If the SPD won the state election here in North-Rhine Westphalia on May 14th, he proclaimed, it would go on to become “the strongest force in Germany” and eject Angela Merkel at the general election in September. + +The Essen rally coincided with the so-called Schulz-Effekt, the surge in support for the SPD following Mr Schulz’s coronation as party leader in March, which saw it draw almost level with Mrs Merkel’s Christian Democrats (CDU) for the first time in five years. Its poll numbers in North-Rhine Westphalia, Germany’s industrial heartland and most populous state, and Schleswig-Holstein, its northernmost state which votes on May 7th, had also jumped (see chart). + +The SPD has run both for over 20 of the past 30 years. Its premiers are popular and seem relatable: Hannelore Kraft in North-Rhine Westphalia is known as “Landesmutter”, or mother of the state; Thorsten Albig in Schleswig-Holstein could pass for a schoolteacher. In both Düsseldorf and Kiel the party governs with the Greens, its favourite coalition partners. Back in early April it seemed elections in both states would give the SPD a morale-boosting shove into the national campaign. + +But since then the Schulz-Effekt has cooled. The party has fallen back below 30% nationally. The most likely outcome in the North-Rhine Westphalia is an SPD-CDU grand coalition, led by whichever emerges as the largest. In Schleswig-Holstein the CDU is now ahead and might oust the SPD in favour of a coalition with the Greens and the liberal FDP. + +Germany’s 16 state governments run everything from schools and police forces to motorways and health systems; their leaders are big figures in their own right. So the suggestion that state elections are mere tests for federal politics “implies that voters do not know what they are voting on,” argues Manfred Güllner, founder of the Forsa polling agency. He notes that the CDU’s grim defeat at the last election in North-Rhine Westphalia, in 2012, came a year before voters in the state resoundingly backed Mrs Merkel in a federal election. + +These voters also have reasons to give the SPD a kick. Even party insiders admit that North-Rhine Westphalia is a mess. It has the worst traffic jams and the highest level of child poverty in Germany, and the highest unemployment rate outside the former-communist east. It was here that hundreds of women were sexually assaulted in Cologne on New Year’s Eve in 2015. It was here that Anis Amri, the Tunisian immigrant who drove a truck through a Berlin Christmas market in December, slipped between gaps in the asylum system. Bild-Zeitung, Germany’s main tabloid, branded it “The Greece of Germany”. + +Schleswig-Holstein is less troubled. One study claims it is the happiest part of the country. Mr Albig’s steady government is a relief in a state previously plagued by drama (one of his predecessors was found dead in a bathtub in Geneva). But Daniel Günther, his CDU rival, has plenty of material to work with: slow autobahn improvements, unreliable rural internet, and above-average unemployment. + +Picking apart state issues and national personalities is tricky. Mr Schulz has campaigned extensively in both states. He lives in North-Rhine Westphalia, used to be mayor of a small town there and is a proud Rhinelander. Senior Christian Democrats and Social Democrats from across the country have converged on the two states; Mrs Merkel alone will have made eight visits to North-Rhine Westphalia by the election. “If we don’t hold both it’s really bad news,” admits one senior SPD figure. + +The results of the two elections will affect the morale of the two parties. A few weeks ago the Schulz-Effekt was energising the SPD and roiling the CDU; some of Mrs Merkel’s MPs were even quietly opining that she was past it. All that has changed as the polls have turned, and will change even more if North-Rhine Westphalia and Schleswig-Holstein confirm the trend. There is almost half a year to go until Germany’s election. But for now, Mrs Merkel has the momentum. + + + + + +Brothers in arms + +Turkey and Russia cosy up over missiles + +Their friendship should worry NATO + + + +May 4th 2017 + +THE attempt to find some common ground over Syria dominated the talks on May 3rd between Recep Tayyip Erdogan and Vladimir Putin. But the meeting between the Turkish and Russian presidents also touched on another subject of concern to Turkey’s NATO allies. A deal has been agreed in principle for Russia to sell Turkey its potent S-400 long-range air-defence system. A price has yet to be agreed. But as both strongmen have shown with their steady reconciliation over the past year, enough political will can make most plans lift off. + +At a time when tensions between NATO and Russia are at their highest since the cold war, the purchase, if it goes ahead, will be seen as a calculated snub to the alliance. It will also confirm the impression of recent years that Mr Erdogan is happy for Turkey to become, in effect, a semi-detached member of NATO. + +Turkey first began pushing NATO’s buttons in this way when it announced its intention in 2013 to acquire a Chinese air- and missile-defence system instead of American or European kit. By doing so, Turkey was flouting European Union and American weapons sanctions against China. It would also have meant buying a system that could not be integrated into NATO’s wider missile-defence shield without allowing the Chinese to delve into Western military technology. Turkey gave its reasons for preferring China’s offer as the lower price (about $3.4bn) and better terms on the transfer of intellectual property (IP). + +Building up the capabilities of its fast-growing indigenous defence industry has become a priority for Mr Erdogan. Two years ago he declared that Turkey planned to “eliminate external dependency on defence equipment supply” by 2023, and that it wanted to be involved in the design and production of any new defence equipment before then. + +What caused Turkey to drop the deal with China later that year is not clear, but the decision was made around the time of the G20 summit in Antalya in southern Turkey. A combination of diplomatic carrots and sticks probably played a part. Douglas Barrie, a military aerospace expert at the International Institute for Strategic Studies in London, thinks that the Chinese may have been unable to hand over the technological know-how Turkey wanted, because much of the IP of their system, based on the S-300, is owned by Russia. + +The assumption then was that Turkey would go with MEADS (medium extended air defence system), a joint venture between Lockheed Martin, an American defence company, and MBDA, a European missile consortium. But in April Fikri Isik, Turkey’s defence minister, said that “NATO member countries have not come up with an offer that is financially effective” and that talks with Russia to buy the S-400 were now at a final stage. + +The S-400 is one of the best air-defence systems currently made. But Mr Isik accepts that Turkey will not try to integrate it with NATO’s infrastructure. That makes it “a sub-optimal system”, thinks Mr Barrie. Given that the S-400 is also expensive, Turkey’s eagerness to buy it must be because it believes it is getting enough knowledge about the technology it wants and because Mr Erdogan likes demonstrating that he need not bow to the West. + +Russia will also benefit from the deal, as the world’s second-biggest arms exporter. China and India, until recently two of its best customers, are ramping up their own production. Russia badly needs new markets for its weapons—and Mr Putin also enjoys thumbing his nose at NATO. + + + + + +War music + +Another Eurovision song contest, another diplomatic crisis + +What happens when cheesy pop meets politics + + + +May 4th 2017 + +ODDLY for a pop show that is meant to be apolitical, the Eurovision song contest causes a fission of fury nearly every year. In 2014 Conchita Wurst, a bearded drag queen from Austria, won the annual festival of kitsch, leading to calls in Russia and Belarus for Ms Wurst’s song not to be transmitted and accusations that the show was a “hotbed of sodomy”. Last year Ukraine won the contest with “1944”, a song about the deportation of Crimean Tatars under Stalin sung by Jamala, herself an ethnic Crimean Tatar. This infuriated the Russian government, which had invaded and annexed Crimea in 2014. + +This year yet another squabble is brewing among the latex and glitter. Ukraine is hosting the contest, which will be held on May 13th. Channel One, Russia’s main broadcaster, has put up as Russia’s representative Yulia Samoilova, a 28-year-old wheelchair-bound singer (pictured). Ms Samoilova performed in Crimea in 2015; this means she falls foul of Ukraine’s travel ban on prominent Russians who have either been to Crimea since the annexation or who openly support their government’s policy there. Shortly after she was selected, the Ukrainian security service announced that she would not be allowed in. + +Eurovision’s organiser, the European Broadcasting Union, criticised Ukraine’s decision as undermining “the integrity and non-political nature” of the show. It suggested that Ms Samoilova might perform remotely or that Russia might choose another contestant. Channel One refused, of course; a bully’s taunt stings less if retracted. Ms Samoilova will now perform in Sevastopol, the main city in Crimea, on the day of the semi-final, and Russia will not take part in the contest. + + + +The squabble plays well in Russia. It lets Vladimir Putin’s state media portray Ukraine as a country run by horrid nationalists who are mean to people in wheelchairs. (Rather than, say, a country that dislikes being dismembered by its stronger neighbour.) + +It helps Ukraine’s government, too, distracting public attention from its failure to fulfil the promises of the Maidan Revolution of 2014, which triggered the war. Complaining about Russia can be an excuse not to pursue difficult reforms, such as tackling corruption, says Balázs Jarábik of the Carnegie Endowment for International Peace, a think-tank. + +Problems were already afoot at the Eurovision party in Ukraine, which had hoped to host an “austerity” show (costing only $16m, compared with Denmark’s $61m extravaganza in 2014 and Azerbaijan’s $76m bash in 2012). But costs have spiralled. In November the head of the newly-independent public broadcaster quit, accusing the government of chipping away at his budget for the bash. As with so much in Russia and Ukraine, television drama overshadows reality. + + + + + +A new kind of revolution + +Russians rebel against plans to tear down their homes + +Even apolitical Muscovites are up in arms + + + +May 4th 2017 | MOSCOW + +WITH its tree-lined boulevards Moscow’s Bogorodskoye district is an island of calm in the clattering metropolis. Dmitri Pankov and Natalia Yakutova moved in a year ago, seeking fresh air for their young daughter and a place close to Mr Pankov’s mother. The ample greenery and accessible transport also attracted Igor Popov, who bought a flat several years ago in one of the Soviet-era apartment blocks typical of the area. “You can hear the birds chirp,” he grins. Late one evening in April they gathered with several dozen others to discuss how to save their beloved neighbourhood—not from creeping crime, but from the wrecking balls of city hall. + +Earlier this year Moscow city authorities unveiled plans to demolish as many as 8,000 buildings and move up to 1.6m residents from ageing low-rise apartment blocks known as khrushchevki. The ambitious urban makeover could touch some 25m square metres of housing, cost at least 3.5 trillion roubles ($61bn), and run for more than 20 years. The plan is the brainchild of Moscow’s mayor, Sergei Sobyanin, and comes with the blessing of President Vladimir Putin. For some residents, it means a chance to ditch dilapidated housing. Others fear being thrown out of their homes, and are furious at the prospect. + +On May 2nd the mayor’s office published a list of 4,566 buildings, home to some 1m people, that will be up for demolition. Owners and some tenants have been asked to vote: if two-thirds approve or abstain the building will go and its residents will be moved. Ballots must be cast by June 15th, even though a final version of the programme has yet to be presented. + +For now the outlines of the plan can be found in a draft bill that passed a first reading on April 20th. Residents will receive replacement apartments of equal size, rather than equal value. Those who refuse would face eviction, with no possibility to appeal against the decision in court. And although Mr Sobyanin has promised to resettle residents within their current districts, many stretch for miles. Some people worry about being separated from family members; others that their commutes to work will lengthen. Such inconveniences may seem small. But they are the stuff of which daily routines are built; the invisible scaffolding that structures urban life. + +Khrushchevki have been central to Russian cities since the 1950s, when Nikita Khrushchev, the leader of the Soviet Union, pushed the construction of prefabricated apartments to deal with a fast-growing population and a housing crisis. The new flats gave ordinary people private spaces for the first time, instead of communal apartments that housed several families at once. By Khrushchev’s death in 1971, more than 125m lived in the buildings. Most were not meant to last more than 25 years (by then, presumably, the bright communist future would have dawned). + +Without snooping neighbours to fear, dissidents gathered to swap samizdat, imbibe unsanctioned art and discuss politics. As a result these apartments helped to plant the seeds of a new middle class which, 30 years later, would come to undermine the Soviet system. Yet the khrushchevki would acquire a less flattering nickname: khruschoby, a neologism that combines the Russian word for slums. They often have thin walls, low ceilings, creaky utilities and cramped corridors. + +Improving living standards should not be controversial: under a plan initiated by Mr Sobyanin’s predecessor, around 1,700 khrushchevki came down. Many residents want to leave. But the recent plans have been introduced in a characteristically top-down fashion; for their critics, they smack of an assault on property rights and a handout for real-estate developers. Since becoming mayor in 2010, Mr Sobyanin has imposed wide-reaching changes to the city’s infrastructure, often with little regard for local opinion. Some projects are popular; others, like rooting up pavements, have left many Moscovites peeved, though not quite enough to protest. + +Mr Sobyanin’s proposals to tear up housing have made some snap. Residents are handing out flyers and lobbying local apparatchiks. Neighbours who had never spoken before are banding together. A “Muscovites Against the Demolition” group on Facebook has nearly 20,000 members. Dozens of neighbourhood-specific groups have popped up. A protest is planned for May 14th; thousands have already said they will attend. + +Rooms of their own + +At one gathering between local officials and residents in Moscow in April, frustration rang out from across the political spectrum. Nikita Lazarev, a 29 year-old engineer, questioned the quality of the construction in the new buildings. Though he has not voted in more than a decade, he plans to cast a ballot in the presidential elections of 2018 against Mr Putin, and for the opposition leader Alexei Navalny, whose anti-corruption rallies drew tens of thousands across the country in March. (This week Mr Navalny lost 80% of the vision in his right eye after attackers doused his face with dye and acid, an act he blames on the Kremlin.) + +Not far from Mr Lazarev stood an elderly woman railing against the officials speaking on stage. “I’m the owner, I bought the apartment, and they’re telling me I have to give it up!” Svetlana, who used to work in city hall, is no liberal. She yearns for the days of Stalin, when “we were united and strong.” Yet she cannot fathom losing her home, where “there are nightingales and squirrels all around.” The only solution, she declares, is to take to the streets and resist. + + + + + +Charlemagne + +What Emmanuel Macron’s home town says about him + +The French presidential favourite was shaped by Amiens, the place he outgrew + + + +May 4th 2017 + +WHEN history recounts the remarkable rise of Emmanuel Macron, it might start and end in the town of Amiens. On the big-skied plains of the Somme, amid the woods and the fields of yellow rape that cover former bloody battlefields, this redbrick working-class city is the French presidential candidate’s hometown. With its soaring 13th-century cathedral, and charmless rebuilt central drag, Amiens is arresting both for its splendour and its banality. It is the place that shaped Mr Macron, and the town he fled. It was also the setting for a fraught encounter in the campaign’s closing days, which revealed much about the man who could soon be the next, and youngest-ever, president of France. + +It was as a pupil at a private Jesuit school in Amiens, aptly named Providence, that Mr Macron met the drama teacher, Brigitte Auzière, fully 24 years his senior, who later became his wife. The bond alarmed his parents, both provincial doctors, who sent him to finish his schooling in Paris instead. The bookish student was at first in awe at the brilliance of the capital’s brightest. But he quickly learned the codes of the French elite, winning a place at the Ecole Nationale d’Administration—whose alumni include three of the five past presidents—and with it access to the power-brokers in Paris. + +If Mr Macron outgrew Amiens, it was through a desire, as he puts it, “to choose my own life”. What underlies his single-mindedness is a “quest for liberty”, says Marc Ferracci, his best man and an economist on his team. Mr Macron defied convention with his marriage. He later sought financial independence by working as an investment banker at Rothschild. As economy minister under the Socialist president, François Hollande, he was an outspoken critic of the 35-hour working week. Just a year ago, Mr Macron flouted rules by launching his own political movement, En Marche! (“On the Move!”), as a rival to both the Socialist Party he once belonged to, and the president he served. The gamble was immense; so was the freedom it secured him. + +When the French select their president on May 7th, Amiens is set to back its most famous son. In first-round voting he came top there, scoring four points above his national result. Yet the town’s gritty industrial vulnerability also makes it an awkward home turf for the candidate whom Marine Le Pen, his nationalist opponent, pillories as the champion of “savage globalisation”, “arrogant finance” and the rootless elite. Its unemployment rate, at 12%, is above the national average. In recent years Amiens has lost a mattress factory and a tyre plant. Now the Whirlpool factory, where 286 workers make tumble-dryers, is closing too, with production moving to lower-cost Poland. The town’s troubles, in short, put Mr Macron’s pro-European creed of open borders and corporate freedom sorely to the test. + +So it was not until last week that Mr Macron at last made a campaign stop in Amiens. It began dismally. As he sat down with union leaders in a meeting room in the town centre, Ms Le Pen staged an ambush. Turning up unannounced at the Whirlpool factory gate on the outskirts, she claimed to be supporting “the workers” while Mr Macron was defending “the oligarchy”. His team hastily scheduled a campaign stop at the factory that afternoon. It was a brave decision. As plumes of black smoke rose from burning tyres, unionists in fluorescent jackets awaited his arrival in a hostile, muscular block. The acrid stink of charred rubber hung in the air. “We don’t expect anything of Macron, he’s just the continuation of Hollande,” declared Jean Santerre, a worker at the factory for 23 years. He said that he and his colleagues will vote for Ms Le Pen, because she will “shut the borders” and stop foreigners taking French jobs. + +Sure enough, when the besuited Mr Macron stepped from his car, he was jeered. His security team trailed his black car all the way down the narrow lane leading to the picket line, just in case. Yet for nearly an hour the candidate waded into the edgy crowd, taking on the abuse, arguing his case, and refusing to make empty promises. Non, he said, he could not outlaw factory closures. Non, shutting the border would not help France in the long run. Retraining would be improved; buy-out options would be examined. By the time Mr Macron drove off, Mr Santerre and his friends had not changed their minds. But calm had returned, and with it a certain respect for his efforts. + +No fear + +The Amiens moment may not shift votes. It was Ms Le Pen’s selfies with smiling workers that grabbed the headlines. Yet it offered a telling insight. Although 60% say they will vote for Mr Macron, only 37% think he has presidential stature. He has often appeared more ambiguous than decisive, more charming than tough. Even in France, which treats public intellectuals like national treasures, his erudite vocabulary and measured reasoning are mocked. At rallies, he drowns his audience with abstract nouns; when he finally told an anecdote on stage in Paris this week, it was about a philosopher. Perhaps the only thing that his detractors and admirers agree on is that Mr Macron is “dans la séduction”. Dinner guests and factory workers alike are left with the impression that he has listened, and valued the argument. + +If there are reservations about Mr Macron’s ability to lead, they concern his untested political resolve. Faced with a fractured country, restless unions and a potentially unstable parliament after legislative elections in June, would he have what it takes to stave off, or withstand, revolt? “He is fearless,” says a team member, pointing to the way that he, a newcomer to elections, has swept aside political veterans and is now dictating terms to them. In 2012 Mr Hollande also visited a factory, a steelworks, during his campaign. He vowed to rescue it, failed while in office, and political disillusion ensued. Mr Macron’s gutsier approach in Amiens may not be what wins him the presidency. But it suggests how he might exercise it. + + + + + +Britain + + + + +The European Union and the election: When Brussels spouts + +Explosive appointment: Election art + +Euratom: The nuclear cliff-edge + +The campaigns: Speakers’ Corner + +London and the election: Another country + +The productivity puzzle: Eggs in one basket + +Prisons: Chinks of light + +The elderly vote: Grey to blue + +Bagehot: One nation under May + + + + + +The European Union and the election + +A nasty spat erupts between Britain and the EU + +A leak about a testy dinner in London triggers a political war of words across the channel + + + +May 4th 2017 | BRUSSELS AND LONDON + +IT HAS become sadly common for foreign powers to be accused of intervening in elections. But usually it is Russia or China that is said to be involved. That Theresa May should this week have accused unnamed European politicians and officials of deliberately seeking to affect the result of the election on June 8th is more shocking. In fact she may benefit from a sudden outburst of bad blood between Britain and its European Union partners—but it risks souring the Brexit negotiations. + +It was not meant to be like this in late March, when the prime minister invoked Article 50, the EU mechanism for withdrawal. Her letter was well received, partly because her earlier mantra that “no deal is better than a bad deal” was replaced by hopes for a new “deep and special partnership”. She also hinted at the need for a transition at the end of the two-year period set by Article 50. On April 29th the EU’s 27 other heads of government duly approved political guidelines for Michel Barnier, the European Commission’s Brexit negotiator. His more detailed draft mandate, circulated this week, will be rubber-stamped on May 22nd and formal talks should begin soon after Britain’s election. + +The souring of the mood came after the Frankfurter Allgemeine Sonntagszeitung (FAZ), a German newspaper, published a colourful account of an apparently disastrous dinner date between Mrs May and Jean-Claude Juncker, the commission’s president, in London on April 26th. Like brawling boxers at a weigh-in, the two sides have since been unable to restrain themselves from a premature scrap. + +British critics complained that the commission’s promises to be transparent over Brexit hardly justified a leak of a private meeting. (Many blamed Martin Selmayr, Mr Juncker’s combative chief of staff.) Yet the story suggested the prime minister is struggling to master her brief. She reportedly said a deal allowing her, as home secretary in 2014, to opt into selective EU security and judicial measures could serve as a template for Brexit. To Brussels, this implies a failure to see that Britain will be negotiating as a third country, not an EU member. “Mrs May still appears to be in cherry-picking mode,” says John Kerr, a former British ambassador to the EU. + +The commission was irritated by Mrs May’s refusal to accept a rejigging of the current EU budget, citing “purdah” rules that bar such decisions during election campaigns. “FULL PURDAH RECIPROCITY,” Mr Selmayr tweeted, suspending informal talks. Mr Barnier’s draft mandate includes demands from the 27 that could push the gross “Brexit bill” (obligations the EU thinks Britain has incurred) as high as €80bn-100bn ($87bn-109bn), according to the Financial Times (the net bill would be lower). This week the commission also started efforts to shift the clearing of euro-denominated financial instruments away from London. + +Such heavy-handed tactics may just underline Mrs May’s main pitch to British voters: that only she has the strength to take on the grasping Eurocrats. This week she repeated her “no deal” mantra and her quip from last July that Mr Juncker would be the next to learn that she is a “bloody difficult woman”. In fact, it is not the commission but other EU governments that may be the most awkward. The guidelines agreed on April 29th were tightened during talks among the 27, and the higher bill reflects demands that Britain should shell out for EU farm subsidies until 2020, as well as being denied a share in assets like buildings. Spanish sensitivities on Gibraltar and a mention of Irish unification are also reflected in the negotiating texts. + + + +Mrs May still seems to want parallel talks over the divorce and over a subsequent trade deal with the EU. But the guidelines say that discussions on trade, as well as on any transition, must wait until the 27 governments agree that “sufficient progress” (a phrase that will now be endlessly parsed) has been made on withdrawal talks. This is unlikely to happen until October or even later, making it still less likely that a trade deal can be done within the two years of Article 50. Yet the 27, hitherto united, may not hold together on the sequencing. Those with extensive trade links with Britain, such as the Dutch (see chart), already fret that the divorce talks may get bogged down. + +They have reason to worry. The debate over the Brexit bill will be fierce, but so may talks over the rights of the 3.2m EU citizens living in Britain, and the 1.2m Britons in the EU. The EU seeks a settlement covering everything from employment, eligibility for health care and benefits, the status of non-EU spouses, university tuition fees, pension transferability and more—as well as a legal underpinning for an agreement (the EU will insist on the European Court of Justice, a red line for Brexiteers). Nothing irritates Eurocrats more than the apparent British belief that details can be settled by what one calls a “flowery declaration”. The British are anyway expected to apply their own tougher rules for non-EU spouses to EU citizens in Britain. + +A mix of pre-negotiation swagger and the election was bound to raise the temperature. Brexiteer buffoonery or European intransigence could kill the talks; the FAZ report claims that Mr Juncker’s “entourage” puts the chances of a deal at less than 50%. There are concerns about two common views in London. One is the idea that Mrs May can get a good deal only by threatening to walk out, something her advisers fault her predecessor, David Cameron, for not doing in his renegotiation last year. The other is that she can ignore Brussels and merely talk to the German and French leaders. Both views are seen in Brussels as delusional, for they overestimate what is an inherently weak bargaining position. + +Yet in the end Mrs May and her fellow leaders all want a deal. They understand that the logic of negotiation can lead governments into surprising concessions. The EU may be right in thinking that Mrs May has not grasped her own weakness, but that does not mean it will reject all compromises. Expect more huffing and puffing, at least until June 8th. Only after that will the fight truly begin. + + + + + +An explosive appointment + +This year’s election artist will be unlike any other + +Cornelia Parker will liven up a dull contest + + + +May 4th 2017 + +Many were bemused by the announcement on May 1st that Cornelia Parker was to be the official artist of the 2017 general election. Not as a comment on her credentials—she is widely considered one of Britain’s most exciting contemporary artists—but to discover that such a post exists. Its previous holders have created figurative works using oil, ink and photography to record the four general elections since 2001. Ms Parker is likely to be more inventive. She is using an Instagram account (@electionartist2017) to offer an eclectic commentary: the inaugural image, captioned “The election contenders”, shows a group of waving garden gnomes. She is best known for her conceptual work with sculpture and installation, including detonated sheds, cut-up shotguns and squashed instruments. A perfect fit for the explosive modern moment. + +View a gallery of past British election artwork at Economist.com/electionart + + + + + +The nuclear cliff-edge + +What if Britain crashes out of Euratom? + +The Brexit-related decision on atomic energy could cause chaos + + + +May 4th 2017 + +THE government’s stand-off with Brussels is less than a week old but already one aspect of the Brexit divorce is causing severe collywobbles in Britain: withdrawal from the European Atomic Energy Community (Euratom), which oversees the EU’s nuclear industry. A cross-party committee of MPs, as well as the industry itself, said this week that an abrupt departure in two years’ time could be disastrous. It is also a real possibility. + +Euratom, started in 1957, provides safeguards for trade in nuclear materials, ensuring they are not diverted to rogue regimes. It encompasses the EU’s single market, but also agreements with suppliers of uranium, such as Australia, Canada and Kazakhstan. Moreover it provides legal underpinning for a global supply chain of nuclear technology and services. + +If Britain crashes out of Euratom in 2019 without substitute arrangements in place, within a matter of weeks it could find itself unable to replenish its uranium stockpiles. It would be unable to carry out maintenance on reactors using American and Japanese technology, and be forced to halt construction of Hinkley Point C, a new reactor being built by France’s EDF that will rely on foreign firms for up to 36% of its inputs. + +It could also provoke an abrupt skills shortage. The nuclear industry is renowned for its globe-trotting workers and Euratom enshrines their ability to move freely across borders. Britain’s nuclear industry relies on imported welders, steel fixers and pipe fitters. It would take time to develop such skills domestically. + +The MPs described Theresa May’s Brexit-related decision to quit Euratom in January as an “unfortunate, and perhaps unforeseen” consequence of her choice to leave the jurisdiction of the European Court of Justice, on which it depends. They urged her to delay departure. + +The government has sought to reassure the industry that it understands the risks. After all, nuclear power generates a fifth of British electricity, and there are £60bn ($78bn) of new investments planned. + +But it has just two years to replace the infrastructure, equipment, skilled personnel and processes that Euratom has provided in Britain to safeguard the nuclear industry. Only when these are in place can it start negotiating its own nuclear co-operation agreements with other countries. That is not an impossible task, but there is no guarantee it will succeed either. + + + + + +Speakers’ Corner + +Quotes from the campaign trail + +The most memorable lines from the second week of Britain’s snap election campaign + + + +May 4th 2017 + +On message + +Interviewer: “One very quick question: do you know what a mugwump is?” + +Theresa May: “What I recognise is that what we need in this country is strong and stable leadership.” + +Nothing can shake the prime minister from her campaign catchphrase. Radio Derby + +Off message + +“The problem comes when the election campaign amounts to no more than a slogan. If you ask for a blank cheque, don’t be surprised if later it bounces.” + +The London Evening Standard needles Mrs May on the day that George Osborne, a Tory ex-chancellor, takes over as editor + + + +Mixed message + +“I’m a bit of a Eurosceptic.” + +Tim Farron, leader of the Lib Dems, who hope to pick up Remainers’ votes. BBC + +Cop out + +“Well, um...if we recruit the 10,000 policemen and women over a four-year period, we believe it will be about £300,000...Ha ha, no. I mean, sorry...They will, it will cost about, about £80m...The additional cost in year one, when we anticipate recruiting about 250,000 policemen, will be £64.3m.” + +Diane Abbott, the shadow home secretary, muddles Labour’s plans for the police. LBC + +Dubious company + +“United, we can win...This is our chance. Take it, brothers and sisters!” + +John McDonnell, the shadow chancellor, speaks at a May Day rally, where he was pictured alongside flags of the Syrian regime and the Communist Party + +Anti-social media + +“Any #Brexit deal requires a strong & stable understanding of the complex issues involved. The clock is ticking—it’s time to get real.”Guy Verhofstadt, the European Parliament’s point man for Brexit, ribs Mrs May on Twitter + +Bloody foreigners + +“I was described by one of my colleagues as a bloody difficult woman. And I said at the time the next person to find that out will be Jean-Claude Juncker.” + +Theresa May responds to reports that the European Commission’s president felt “ten times more sceptical” about Brexit after a dinner at Downing Street. BBC + +U what? + +“I just don’t think he’s got that fire in him to lead the UKIP party…I must say he’s the wrong bloke to be leader.” + +Brian Whitmore, UKIP’s candidate for mayor of Doncaster, comments on Paul Nuttall, his party boss. JUS News + + + + + +Another country + +London has long bucked national electoral trends. Will it again? + +Opposition parties in the capital are hoping to escape the Tory juggernaut + +May 4th 2017 + + + +JUST as London turned out to be an island of Remain in a sea of Brexit in last year’s referendum on EU membership, so the capital could buck the national trend again on June 8th. Labour certainly hopes so. For most of the past half-century, and especially since Tony Blair’s landslide victory in 1997, Labour has polled better in the capital than elsewhere in the country (see chart). In 2015, despite being almost wiped out in Scotland and losing seats in the rest of England, Labour gained seven MPs in London, increasing their tally to 45 out of 73. + +This year, whereas the Tories have a commanding lead in the national polls, in London Labour is holding its own, at least according to a YouGov survey taken just before the election was called. As Tony Travers of the London School of Economics argues, among Labour MPs with marginal constituencies, those in London “probably have the best chance of hanging on to their seat in the country.” + +That comes back to the referendum. In much of England, pro-Remain Labour MPs will find themselves out of kilter with their pro-Brexit constituents, and probably out of a job. In the capital, this works in reverse. Take Hammersmith, on the western fringes of inner London. Its Labour MP, Andy Slaughter, is defending a majority of 6,518. Given the big Tory lead in the national polls, this sort of majority should be vulnerable, but in Hammersmith Mr Slaughter could well hang on. His Remain credentials are impeccable, having defied the party leadership to vote against the triggering of Article 50, and he will exploit this record for all it is worth in a constituency that voted 70% for Remain. + +The pro-EU Liberal Democrats also hope to make hay with London’s disgruntled Remainers. In 2015 the Lib Dems suffered a rout in the capital, losing all but one of the six MPs they had there. The heavyweights who lost last time—including former cabinet ministers Vince Cable and Ed Davy, as well as Simon Hughes, a former deputy leader—now have a chance of returning to Parliament. + +Sarah Olney should also see off the challenge in Richmond from Zac Goldsmith, a former Conservative MP and ardent Brexiteer from whom she nabbed the seat in a by-election in December. Marcus Gibson, co-ordinating the campaign for the Lib Dems, says they will be flooding these target seats with volunteers, fighting them like by-elections, in which the party tends to do well. + +All the same, it would be surprising if some of those Labour MPs who squeezed in last time did not go down on June 8th. Rupa Huq in Ealing Central and Acton, Ruth Cadbury in Brentford and Isleworth, and Wes Streeting in Ilford North all have majorities of under 1,000. They will suffer from the unpopularity of their leader, Jeremy Corbyn, who polls badly in the capital despite being a London MP himself. + +Many Labour MPs will thus run local campaigns, distancing themselves from their leader. Sadiq Khan, the Labour mayor, will play a more prominent role in their leaflets. He is more popular than Mr Corbyn and, as Ms Cadbury points out, holds an office from which he can actually “deliver to voters” on issues like air quality, affordable housing and policing. + +Ms Huq is getting a hand from the Green Party. It is not fielding a candidate in Ealing, to give her the best chance of fending off the Tories. Ms Cadbury is hoping to get the same deal from the Greens in Brentford. That could yield a vital 2,000 votes. But the Tories might gain even more from the collapse of the UK Independence Party. Its candidate in Brentford in 2015 now supports the Conservatives, as may many former UKIP voters. In that case, the Tory juggernaut might roar through London, too. + + + + + +Eggs in one basket + +Take away finance, and Britain's FDI figures collapse + +Foreign investors do less to boost productivity than commonly supposed + +May 6th 2017 + + + +HERE is a riddle. Britain, for now at least, is loved by foreign investors. The stock of inward foreign direct investment (FDI) in Britain’s assets and shares is larger than anywhere except America and Hong Kong. In the past decade overseas investors have splurged some £600bn ($772bn), equivalent to a third of British GDP, to acquire over 2,000 British firms. The textbooks say that foreign investments make a country more productive. The new arrivals should bring with them cutting-edge capital assets and best-practice management. So why over the past decade has Britain’s productivity barely improved? + +The question matters for all Britons. If productivity growth is low, then wage growth will be too. Many factors determine Britain’s weak productivity growth, including creaky infrastructure. But new official data suggest that foreign investors are doing a lot less to improve the economy than commonly assumed. + +The figures classify FDI flows into around 100 industries. In 2015 financial services accounted for an astonishing 95% of net inflows. This could include, for instance, foreign funding for Britain’s burgeoning financial-technology sector. Finance was unusually dominant in 2015, though even in 2012-14 the industry made up around 60% of the net figure. + +Remove financial services, and overall in 2015 a tiny amount of net foreign investment flowed into Britain—a few billion pounds at best. Many industries saw “negative inflows”, suggesting that foreigners were actually disinvesting, selling assets they had acquired back to British firms, for instance. In 2015 they pulled around £20bn from the oil-and-gas sector. Perhaps £1.5bn drained from manufacturing. Finance aside, investors seem to see few profitable opportunities in Britain. + +What foreign investment does flow into the “real” economy may make surprisingly little difference. Much of it seems to be about one big company horizontally acquiring another, perhaps with the aim of eliminating overlapping marketing costs (such as in the Kraft-Cadbury deal of 2010) or of acquiring a trophy asset (such as the Tata-Corus steelmaker deal of 2007). A chunk of investment in Britain, meanwhile, is a statistical by-product of big firms moving headquarters for tax purposes rather than anything meaningful. + +As Britain begins the process of leaving the EU, interest from foreign investors is only likely to shrink. If so, the prospects for the kind of foreign investment that lifts productivity will start to look even gloomier. + + + + + +Chinks of light + +When TED talks came to a British prison + +Small prison reforms are encouraging but also highlight the lack of big change in the sector + + + +May 4th 2017 | LEICESTER + +SOARING performances of songs from “Cats” and “Les Misérables” are unusual fare for a prison. But on May 3rd an inmate at Leicester prison brought an audience to their feet with his renditions. The recital was part of a TEDx conference, a popular lecture series that had never before been held in a British jail. In the midst of a prisons crisis, with violence against inmates and officers at record levels and crippling staff shortages, the event is an encouraging example of smaller efforts to improve conditions. + +On a stage covered in prisoners’ art, inmates thundered the words of Shakespeare. An officer recited his own poetry: “I could tell you tales that would make you laugh...tales that would turn your stomach, tales that would break your heart,” he intoned. Organising the event was a logistical nightmare, says Phil Novis, the governor at HMP Leicester. But the enthusiasm of all involved suggests it was worth it. + +Two other initiatives have provoked cautious optimism. First, the announcement that the first specialist wing for Islamist extremists will open this summer at HMP Frankland in County Durham, a high-security prison. Currently prisoners deemed liable to radicalise others can be placed in segregation—effectively solitary confinement—or they can be put in “close supervision centres”. Such centres are designed for ordinarily dangerous prisoners and may be unsuitable for extremists. Questions remain about how people will be placed in the new unit and how they will get out of it, says Andrew Neilson of the Howard League, but such wings may help in dealing with a thorny issue. + +The second is the launch of Unlocked, a graduate recruitment scheme for prison officers. After a summer training school, in September around 60 graduates will be put to work in establishments in London and the south-east for two years. It is not a fast-track scheme, Natasha Porter, the head of the organisation, is careful to stress. Participants will get the same pay and conditions as anyone else starting out in the prison service. But they will receive ongoing training and mentoring. + +Some may stay no longer than two years. But Ms Porter argues that this is one of the scheme’s strengths. Unlike other public services, prisons are largely invisible. Those who go from the scheme to careers in the private sector may be more willing to employ ex-offenders. Those who become policy wonks will understand how prisons work. + +Laudable as such initiatives are, they will hardly solve the broader crisis. With politicians consumed by the election, talk of prison reform has faded. The problems have not. “We have to commit to reform and work together,” says one inmate at Leicester, “because at the end of the day we have to share the same society.” + + + + + +Grey to blue + +Britain’s generational divide has never been wider + +As many as seven in ten pensioners will vote Tory. How did the Conservatives lock up the elderly vote? + + + +May 4th 2017 | DOWNHAM MARKET + +DOWNHAM MARKET, a town of 10,000 souls perched on the edge of Norfolk’s Fenland, is quiet on an overcast bank-holiday Monday, save for a few shopping pensioners. The town is dotted with civic organisations, including a lawn-bowling club, churches and a Conservative association. In its southern neighbourhood around 60% of the population is over the age of 65, making it the oldest of England’s 7,500 or so electoral wards. Not coincidentally, it is deep blue territory. + +Linda Jackson, a retired nurse, spots some admirable qualities in Jeremy Corbyn, Labour’s leader. “He’s got an allotment, so he’s obviously a good man,” she chuckles. But although she is a longtime Labour supporter she does not plan to vote for him: “He doesn’t seem to be able to lead his party, let alone the country.” Instead she is considering a vote for the “competent” Theresa May. + +Ms Jackson is not alone. Although the elderly have long leant Conservative, in recent years their support for the Tories has become entrenched. In general elections from the 1980s to the 2000s, pensioners were around one-third more likely to vote Conservative than were 18- to 24-year-olds. By 2015 they were two-thirds more likely to do so. If the opinion polls are right, as many as seven out of ten voters aged 65 or over will go with the Tories in the general election on June 8th. + +A small uptick in Labour’s popularity among the youngest explains some of the generational divergence. But it is tiny compared with the surge in the Conservatives’ popularity among elderly voters. The Tories will be pleased with their side of the bargain. Britain’s population is ageing. At the moment three in ten Britons are over 60; by 2030 it will be four in ten. And the grey-haired are more likely than youngsters to vote, making them a prized constituency for any party. + + + +Why have oldies embraced the Tories? Many of those who once voted for other parties, as Ms Jackson did, have enjoyed a big improvement in living standards under the Conservatives, who have been in power since 2010. Poverty among the elderly recently fell to its lowest level since records began in 1961. The average incomes of retired households are now higher than those of working ones, once housing costs are accounted for. Small wonder that they want to keep the status quo. + +Their improved lot is in part thanks to structural economic changes. More “retired” people are supplementing their pension with work on the side and many have benefited from Britain’s property boom. Yet elderly folk have also been coddled by the Conservatives—most obviously by the “triple lock” on the state pension, which David Cameron, Mrs May’s predecessor, implemented in 2011. It ensures that pensions rise in line with whichever is highest: inflation, earnings or 2.5%. Mr Cameron also lifted the inheritance-tax threshold for those wishing to pass on houses to their children and ruled out a “mansion tax” on those with pricey homes. + +The shift of the elderly towards the Tories has been turbocharged under Mrs May. Asked who would make the best prime minister, 86% of over-65s endorse her, compared with just 9% for Mr Corbyn after don’t-knows are excluded, according to YouGov. The newish prime minister has courted the elderly, with policies that hark back to the good old days (including a plan to revive selective grammar schools) and endorsements of traditional values (she attacked the National Trust, a conservation charity, for organising an egg-hunt that supposedly failed to give sufficient mention to Easter). In Downham Market, locals compare her favourably to Margaret Thatcher. Her middle-class background is part of the appeal: Robert, an upholsterer, notes that unlike Mr Cameron she wasn’t born with a “golden spoon” in her mouth. + +Most important, since last June’s referendum Mrs May, who backed Remain, has become a devoted convert to the cause of Brexit, which she interprets as a mandate to cut immigration. Older voters were Brexit’s strongest backers, with six out of ten pensioners voting to Leave. After the plebiscite support for the Conservatives among over-65s rose from 47% to 56%, according to Ipsos-MORI. The referendum also precipitated the collapse of the UK Independence Party, many of whose elderly supporters have returned to the Tory fold. + +Mr Corbyn has contributed. As bunting embroidered with the flag of St George flutters overhead in Downham Market’s central square, Geoffrey, a pensioner, complains about the Labour leader’s scruffiness when attending a Remembrance Sunday ceremony in 2015. “He should have behaved better than that,” he says, “so he shan’t be having my vote.” Another expresses dismay about Mr Corbyn’s opposition to the renewal of the Trident nuclear-weapons system. His conciliatory attitude towards the IRA may also repel voters old enough to remember its campaign of terrorism. + +Issues such as these could provide cover for Mrs May if, as she has hinted, she drops her party’s commitment to the pensions “triple lock”. Mr Corbyn came out in favour of keeping the policy in November, but apparently in vain: since then there has been no sign of increased support for him among Britain’s grey voters. + + + + + +Bagehot + +Established political parties are crumbling. Why not the Tories? + +The forces that are disrupting politics everywhere from America to Greece seem to be making Britain’s Conservatives stronger + + + +May 4th 2017 + +DISRUPTION seems to be the rule in politics as well as in business. Economic churn is promoting discontent with the status quo while technological innovation is making life easier for upstarts. The result is that long-established political parties such as France’s Socialists and Greece’s Pasok have crumbled, while insurgents have come from nowhere to form governments (in the case of Greece’s Syriza) or shake things up (like Italy’s Five Star Movement). Neither of France’s main parties has a candidate in the final round of the election on May 7th. In America Donald Trump has mounted a hostile takeover of the Republican Party. + +Yet in Britain the world’s oldest political party is marching to an easy victory in the general election. The country has endured a decade of stagnation and austerity. Its public services are strained to breaking point. The Brexit referendum delivered the biggest shock to the political establishment since Suez and divided Britain down the middle. Yet the only question that troubles psephologists is whether the Tories will get a “small” majority of 30 or so or a blowout of more than 100. + +Since Benjamin Disraeli pronounced that his Conservatives were a national party or else “nothing”, the Tories have tried to appeal to every class and region. Lord Salisbury put the union with Ireland at the heart of his politics. Tory prime ministers from Stanley Baldwin to Margaret Thatcher presented themselves as champions of a “property-owning democracy” against Labour’s divisive class politics. David Cameron tried to detoxify his party’s brand and sell it to sexual and ethnic minorities. Now Theresa May has a good chance of rising to Disraeli’s challenge by delivering Tory gains in almost every corner of the country. + +The Conservatives are advancing in the Celtic fringe. They have been virtually irrelevant in Wales since the 1850s, derided as the party of coal- and steel-owners and English snobbery. Now the Welsh Political Barometer, an opinion poll, puts the Tories on 40% and on course to win 21 seats to Labour’s 15. In 2015 triumphant Scottish Nationalists boasted that Scotland had more pandas (two) than Tory MPs (one). Now polls show the Tories winning up to 12 seats as they hoover up votes from Scots who want to preserve the union, while Labour is left with none. + +The Tories are almost certain to expand their gains among ethnic minorities. Loyalty to Labour is in long-term decline: in 1997-2014 the percentage of Indian voters identifying with Labour fell from 77% to 45%, while among Pakistanis it fell from 79% to 54%. In 2015 the Conservatives won more than 1m ethnic minority votes and outpolled Labour among Hindus and Sikhs. The Tories still have fewer minority MPs than Labour (17 compared with 23 in the 2015 intake) but the party is changing. Mrs May’s cabinet has two non-white members, Priti Patel and Sajid Javid, and the party’s rising stars include Kwasi Kwarteng and Rishi Sunak. + +Mrs May is determined to extend the Tory advance to the “just about managing”. If David Cameron was obsessed with winning over middle-class Britons who were disillusioned with Tony Blair, Mrs May’s obsession is courting struggling Britons who have been taken for granted by Labour for decades and who may at last have been shaken free from their old loyalties by the twin shocks of Brexit and Corbynism. The Conservatives will campaign hard in Labour’s old industrial strongholds of the West Midlands and the north. + +One of the central questions of Mayology—the science of trying to understand Britain’s enigmatic new prime minister—is whether she wants to take her party to the right or to the left. The answer is that she wants to do both. She is expanding rightward by pursuing a “hard Brexit” and promising to control immigration. She looks like someone who can deliver the smack of firm government and enjoy it. But she is also expanding leftward by promising to reignite industrial policy, discipline greedy bosses and keep spending at least 0.7% of GDP on foreign aid. + +How are the Conservatives strengthening their position at a time when other established parties are crumbling? Luck plays a part. Labour is in the grip of a hard-left faction that combines repugnant politics with extreme incompetence. This week saw John McDonnell, the shadow chancellor, appearing at a May Day rally framed by Syrian and Communist Party flags and Diane Abbot, the shadow home secretary, flubbing an interview about policing. The first-past-the-post system squeezes out other rivals. + +The Conservative Party went through its own near-death experience during the 13 years of New Labour dominance. Even in its current parlous state the Labour Party leads the Tories among those under about 35. The biggest danger for the long-term health of the Conservatives is that they will become the party of “generational haves”, ignoring young people who cannot get onto the property ladder and are weighed down with student debt. + +Mother Theresa + +Yet the Tories have survived as one of Britain’s two big parties longer than any other. Even at their most feeble they were not as weak as the Corbynised Labour Party. They have a genius for burnishing their brand. They don’t go in for trashing their predecessors to the same extent that Mr Blair did to Old Labour and Mr Corbyn’s gang is now doing to Mr Blair. They also have a knack for muddling through: the Tories have been riven over Europe since the 1980s, yet seem to have survived the earthquake of the referendum. Above all they have a skill for adjusting to social change and external shocks. The party of the landed aristocracy succeeded in absorbing not just factory owners but enough factory workers to stay competitive in the age of mass production. + +The biggest challenge to established parties at the moment is populism that is rooted in anger at remote elites and economic stagnation. The Conservative Party bears a good share of the responsibility for this. Yet it shows every sign of not only riding out this challenge but using it to extend and entrench its power. + + + + + +International + + + + +Aid and the private sector: Doing good, doing well + + + + + +Doing good and doing well + +A growing share of aid is spent by private firms, not charities + +But they need to diversify + + + +May 4th 2017 + +“THE gold rush is on!” That is how a cable from the American ambassador to Haiti described the descent of foreign firms upon Port-au-Prince in early 2010. An earthquake had flattened the city and killed hundreds of thousands. But a deluge of aid presented an opportunity. The message, released by WikiLeaks, noted that AshBritt, a Florida-based disaster-recovery firm, was trying to sell a scheme to restore government buildings, and that other firms were also pitching proposals in a “veritable free-for-all”. + +During the following two years $6bn in aid flooded into a country of 10m people, for everything from rebuilding homes to supporting pro-American political parties. Of $500m or so in aid contracts from the American agency for international development (USAID), roughly 70% passed through the hands of private companies. + +Haiti is one example of a trend. Though not all countries break down aid spending according to the type of contractor used, data from those that do suggest that a growing share of aid is funnelled, not through charities or non-profit foundations, but through consultancies and other private-sector contractors that profit from the work. Nearly a quarter of USAID spending in 2016 went to for-profit firms, a share that was two-thirds higher than in 2008. Britain’s Department for International Development (DfID) counts its spending slightly differently: in 2015-16, 22% of bilateral spending (as opposed to money that it paid to multilateral organisations such as the UN) went to contractors, most of them for-profit companies, up from 12% five years earlier. + +Typically, firms win aid contracts at auction, rather than receiving grants, as charities do. Some have become global players. Chemonics, an American firm founded in 1975, is active in 70 countries. In 2015 it won a contract for health-care services with USAID worth up to $10.5bn over eight years. Cardno, an Australian firm, won 17% of the country’s contracts last year, worth A$945m ($709m). + +One reason for the shift towards the private sector is the changing nature of aid. A smaller share now is made up of traditional projects, such as building schools or handing out food parcels, and more is “technical assistance”, for example to streamline a country’s tax code and strengthen tax collection, or to set up an insurance scheme to help farmers when crops fail. Private firms may be best-placed to advise on, or even run, these schemes. + +Another reason is that even as aid budgets have grown, governments have sought to make aid departments smaller and more nimble. Both USAID and DfID have around the same number of employees now as they did when their budgets were just half as large in real terms. As aid agencies struggle to manage contracts, they have turned to the private sector. + +Surprisingly little research has been done on the impact of this shift. That is partly because the oversight of aid is often poor. Think-tanks are still trying to work out where all the Haitian disaster-relief funding ended up, for example. And private-sector involvement can further obscure the picture, because the winners of bids may use a host of subcontractors, or insist that some information is kept confidential for commercial reasons. + +What is known, though, is that for-profit and non-profit groups work differently. A non-profit body typically has large bureaus in the countries where it works, or forms long-standing partnerships with local charities that do. It will consider whether a proposed project fits with its charitable purpose, and whether it has suitable in-house expertise; only then will it decide whether to bid. Firms, by contrast, tend to have fewer staff, and to rely on subcontractors and freelance experts who can be flown in for as long as a project lasts. Tim Midgley of Saferworld, a charity, argues that this model means that firms may be less likely to understand local cultures, build relationships with governments and monitor long-term results. But it can also be more flexible, with firms matching expertise and staffing to each contract. + +Cool aid + +To shed light on the shift towards private-sector aid delivery, The Economist has analysed 4,500 subcontracts from USAID worth more than $25,000 each. (All were granted since 2010. Those for which data were not available were excluded.) A third went to for-profit firms, and the rest to charities, NGOs or other governments. For contracts where a firm was the primary contractor, on average 41% of subcontracts went to other firms; when the primary contractor was a non-profit organisation, just 27% did. Around two-fifths of all subcontractors were based in America, although most aid work is done abroad. And four-fifths of them worked with just one primary contractor, suggesting that aid work is carried out largely by stable consortia, rather than shifting alliances. + +Not just aid budgets but contracts are growing bigger, says Raj Kumar of Devex, an aid-focused news organisation. One consequence is that only large bidders can stomach the risks. Together with the high cost of preparing bids—as much as $100,000—this has led to market concentration. In Britain ten firms snap up half of all contracts (or lead consortia that do). The top ten account for around the same share of USAID contracts, a much higher share than for other government departments. In Australia they account for 70%. + +The sector is consolidating further, as firms seek to expand the number of countries where they have the expertise to bid for contracts, and to run them. Between 2007 and 2015 Tetra Tech, an American firm, bought ARD and DPK, two aid consultancies; Coffey International, an Australian engineering firm; and a handful of smaller Canadian consultancies. Australia’s GRM International merged with America’s Futures Group and later became part of Palladium International, a permanent consortium of six aid firms. + +A smaller firm’s best chance to pick up some of this work is to join a consortium led by a larger firm. But it risks becoming mere “bid candy”, as a recent investigation by a British parliamentary committee into DfID’s use of contractors put it, with its expertise used to win a contract, after which the lead contractor keeps the work in-house. The committee also concluded that DfID focused too much on evaluating bids rather than results. + +Other people’s money + +Some worry that firms motivated by profit rather than altruism may be careless in their spending, or even steal. Though wrongdoing by charities is hardly unknown, some high-profile scandals have fuelled such fears. In recent years Louis Berger Group, one of USAID’s largest contractors, has been found guilty of several cases of bribery and fraud. Its former boss, Derish Wolff, was found guilty of conspiracy to defraud USAID by faking timesheets, fined $4.5m and sentenced to a year’s home confinement. The firm agreed to repay $69m. + +Last year the Mail on Sunday, a British tabloid, published e-mails suggesting that the beneficiaries of aid projects run by Adam Smith International, one of DfID’s biggest contractors, had been threatened with the loss of funding if they refused to write it glowing testimonials. Parliamentarians inquired further, and in February said that the firm had indeed sought inappropriately to influence their probe of DfID’s contractors. The firm has since been restructured and four senior executives have stepped down. + + + +Terms and conditions apply + +A specific concern is that, like many firms that rely on government contracts, private aid contractors may be prone to revolving-door hiring. Our analysis of data from LinkedIn, a social network, shows that, at six of America’s ten biggest aid contractors, about 5% of listed staff name USAID as their previous employer, a higher share than for any other former workplace. The agency was one of the most common ex-employers at the other four. No wrongdoing may have resulted. But the risks are evident at Adam Smith International, which turned out to have sought to win bids by using proprietary information shared by a former DfID employee who went on to work for the firm. + +Another claim is that private firms may skim too much cream from their contracts. Without access to commercial information this is hard to evaluate; however, private firms do seem to pay higher salaries than charities to their top executives. We compared firms that won USAID contracts in the past eight years with data from USAspending, a state website that lists expenditures and the pay of senior staff at some government contractors. Information about wages was available for 135 for-profit firms. For comparison we looked at figures for 346 similar-sized American charities from CauseIQ, a data company. The bosses of the private firms earn on average more than $500,000 a year—more than twice as much as their non-profit peers. + +A separate study published in 2014 by Marieke Huysentruyt, then at the London School of Economics, examined 457 DfID contracts from 1999 to 2003. She found that, when controlling for the type of contract, the total personnel costs proposed by non-profit firms were on average just two-fifths those proposed by private firms. What is more, the contracts won by for-profit outfits were more likely to bust their budgets and miss deadlines. + +All this suggests that donor governments should improve their bidding procedures and contract management. In the meantime, aid contractors have responded to bad publicity by lobbying harder. In 2016 a group of British aid contractors set up the Centre for Development Results to represent their views and counter unfavourable headlines. In 2011 American contractors started the Council of International Development Companies, which joined forces with an older group dubbed the “Bombay Club” after the Indian restaurant where it first met. It lobbies federal politicians, arguing against aid dollars being given directly to foreign organisations and governments, which would risk cutting its members out. + +A more immediate threat to the sector is that aid budgets might fall. President Donald Trump wants to reduce American aid by 28%. Australia’s government started cutting in 2011. Britain’s government has reaffirmed its commitment to spending 0.7% of gross national income on aid—a target long suggested by the UN which Britain is the first big country to meet. Nonetheless, calls to abandon it are growing ever louder. + +How to be the change + +One way to keep going during leaner times is to bid not only for contracts, but for grants—that is, to do some aid work at cost, without making a profit from it. When USAID funding reached a plateau in 2008, following years of fast growth, a few firms started bidding for more such grants. Take Abt Associates, a firm set up in 1965 that does research and implements aid programmes in nearly 50 countries. In 2008 17% of its revenue from USAID came in the form of grants; by 2016 that share was 31%. + +Another opportunity, says Mr Kumar, is to work directly for the governments of countries that have long been aid recipients. Some have started to fund programmes similar to those paid for by donors, such as improving the way their health-care systems are administered. A third option is to expand into the fledgling “corporate-aid” sector. This strand of development work involves multinationals building capacity in poor countries, not principally for philanthropic reasons, but to benefit their businesses. Starbucks, for instance, is training coffee farmers in Rwanda and Ethiopia. Private aid contractors may be well placed to act as consultants to firms keen on such projects, or as brokers between them and local partners. + +One estimate puts the total value to firms of such “aid-like” work in developing countries at around $20bn a year, a figure that is expected to rise. Having built their businesses on contracts with Western governments, private aid firms may need to diversify if they are to continue to thrive. + + + + + +Special report + + + + +International banking: Ten years on + +A brief history of the crisis: When the music stopped + +European banks: Sheep and goats + +American banks: After Dodd-Frank + +International regulation: Bother over Basel + +Financial technology: Friends or foes? + +Recruitment: The millennial problem + +The next crisis: How safe are banks? + + + + + +Special report + +Ten years on + +A decade after the financial crisis, how are the world’s banks doing? + +Though the effects of the financial crisis in 2007-08 are still reverberating, banks are learning to live with their new environment, writes Patrick Lane. But are they really safer now? + + + +May 4th 2017 + +THE ELECTION OF Donald Trump as America’s 45th president dismayed most of New York; Mr Trump’s home city had voted overwhelmingly for another local candidate, Hillary Clinton. But Wall Street cheered. Between polling day on November 8th and March 1st, the S&P 500 sub-index of American banks’ share prices soared by 34%; finance was the fastest-rising sector in a fast-rising market. At the time of the election just two of the six biggest banks, JPMorgan Chase and Wells Fargo, could boast market capitalisations that exceeded the net book value of their assets. Now all but Bank of America and Citigroup are in that happy position. + +Banks’ shares were already on the up, largely because markets expected the Federal Reserve to raise interest rates after a long pause. It obliged in December and March, with three more rises expected this year. That should enable banks to widen the margin between their borrowing and lending rates from 60-year lows. Mr Trump’s victory added an extra boost by promising to lift America’s economic growth rate. He wants to cut taxes on companies, which would fatten banks’ profits directly as well as benefiting their customers. He has also pledged to loosen bank regulation, the industry’s biggest gripe, declaring on the campaign trail that he would “do a big number” on the Dodd-Frank Wall Street Reform and Consumer Protection Act, which overhauled financial regulation after the crisis. + +So have the banks at last put the crisis behind them? This special report will argue that many of them are in much better shape than they were a decade ago, but the gains are not evenly spread and have further to go. That is particularly true in Europe, where the banks’ recovery has been distinctly patchy. The STOXX Europe 600 index of bank share prices is still down by two-thirds from the peak it reached ten years ago this month. European lenders’ returns on equity average just 5.8%. + +America’s banks are significantly stronger. In investment banking, they are beating European rivals hollow. They are no longer having to fork out billions in legal bills for the sins of the past, and they are at last making a better return for their shareholders. Mike Mayo, an independent bank analyst, expects their return on tangible equity soon to exceed their cost of capital (which he, like most banks, puts at 10%) for the first time since the crisis. + +But financial crises cast long shadows, and even in America banks are not back in full sun yet. Despite the initial Trump rally, the S&P 500 banks index is still about 30% below the peak it reached in February 2007 (see chart). Debates about revising America’s post-crisis regulation are only just beginning. And the biggest question of all has not gone away: are banks—and taxpayers—now safe enough? + + + +Plenty of Americans, including many who voted for Mr Trump, are still suspicious of big banks. The crisis left a good number of them (though few bankers) conspicuously poorer, and resentment easily bubbles up again. Last September Wells Fargo, which had breezed through the crisis, admitted that over the past five years it opened more than 2m ghost deposit and credit-card accounts for customers who had not asked for them. The gain to Wells was tiny, and the fine of $185m was relatively modest. But the scandal cost John Stumpf, the chief executive, and some senior staff their jobs, as well as $180m in forfeited pay and shares. Wells has been fighting a public-relations battle ever since, and mostly losing. + +This report will take stock of the banking industry, chiefly in America and Europe, a decade after the precipitous fall from grace of banks on both sides of the Atlantic (see article). The origins of the crisis lay in global macroeconomic imbalances as well as in failures of the financial system’s management and supervision: a surfeit of savings in China and other surplus economies was financing an American borrowing and property binge. American and European banks, economies and taxpayers bore the brunt. + +Banks in other parts of the world, by and large, fared far better. In Australia and Canada, returns on equity stayed in double figures throughout. It helped that Australia has just four big banks and Canada five, which all but rules out domestic takeovers and keeps margins high. As commodity prices have sagged recently, so has profitability in both countries, but last year Australia’s lenders returned 13.7% on equity and Canada’s 14.1%, results that banks elsewhere can only envy. + + + +Japan’s biggest banks, which had been reckless adventurers in the heady 1980s and 1990s, did not remain wholly unscathed. Mizuho suffered most, writing down about ¥700bn ($6.8bn). The Japanese were able to pick through Western debris for acquisitions to supplement meagre returns at home. Some chose more wisely than others: MUFG’s stake in Morgan Stanley was a bargain, whereas Nomura’s purchase of Lehman Brothers’ European business proved a burden. Chinese lenders were mostly bystanders at the time, remaining focused on their domestic market. + +The seven consequences of apocalypse + +Ask bankers what has changed most in their industry in the past decade, and top of their list will be regulation. A light touch has been replaced by close oversight, including “stress tests” of banks’ ability to withstand crises, which some see as the biggest change in the banking landscape. Before the crisis, says the chief financial officer of an international bank, his firm (and others like it) carried out internal stress tests, for which it collected a few thousand data points. When his bank’s main supervisor started conducting tests after the crisis, the number of data points leapt to the hundreds of thousands. It is now in the low millions, and still rising. The number of people working directly on “controls” at JPMorgan Chase, America’s biggest bank, jumped from 24,000 in 2011 (the year after the Dodd-Frank act, the biggest reform to financial regulation since the 1930s) to 43,000 in 2015. That works out at one employee in six. + +The second big change is far more demanding capital requirements, together with new rules for leverage and liquidity. Bankers and supervisors agree that the crisis exposed banks’ equity cushions as dangerously thin. For too many, leverage was the path first to profit and then to ruin. Revised international rules, known as Basel 3 (still a work in progress), have forced banks to bulk up, adding equity and convertible debt to their balance-sheets. The idea is that a big bank should be able to absorb the worst conceivable blow without taking down other institutions or needing to be rescued. Between 2011 and mid-2016 the world’s 30 “globally systemically important” banks boosted their common equity by around €1trn ($1.3trn), mostly through retained earnings, says the Bank for International Settlements in Basel. + +Third, returns on equity have been lower than before the crisis. In part, that is a natural consequence of a bigger equity base. But the fallout from the crisis has also squeezed returns in another way. Central banks first pushed interest rates to ultra-low levels and then followed up with enormous purchases of government bonds and other assets. This was partly intended to help banks, by making funding cheaper and boosting economies. But low rates and flat yield curves compress interest margins and hence profits. + +Balance-sheets have been stuffed with cash, deposited at central banks and earning next to nothing. According to Oliver Wyman, a consulting firm, the share of cash in American banks’ balance-sheets jumped from 3% before the crisis to a peak of 20% in 2014. As the world economy is at last reviving after several false starts, earnings may pick up in Europe as well as in America. + +Sweat your assets + +Fourth, sluggish revenues, combined with the competing demands of supervisors and shareholders, have forced banks to screw down their costs and to think much harder about how best to use scarce resources. “If I’m going to get a good return on a high amount of capital, I’d better focus on what I’m good at,” says Jim Cowles, Citigroup’s boss in Europe, the Middle East and Africa. Citi, which under Sandy Weill in the late 1990s had become a sprawling financial supermarket, selling everything from investment-banking services to insurance, has retreated to become chiefly a corporate and investment bank, much as it had been in the 1970s and 1980s. Its bosses emphasise its “network”, a presence in nearly 100 countries that multinationals’ treasurers can count on. It once also had retail banks in 50 countries, many of them second-string. That total is now down to 19. + +Such retreat from marginal businesses has also meant fewer jobs and lower bonuses, even if bankers’ pay is still the envy of most. That has brought about a fifth change: banks have become less attractive employers for high-powered graduates. “The brightest people no longer want to go to banks but to Citadel [a hedge-fund firm],” laments a senior banker. Some millennials, he adds, are drawn to technology companies instead. Others “don’t want to deal with business at all”. That is because of a sixth change: the financial sector’s reputation was trashed by the crisis. One scandal followed another as the story of the go-go years unfolded: providing mortgages to people who could not afford them; mis-selling securities built upon such loans; selling expensive and often useless payment-protection insurance; fixing Libor, a key interest rate; rigging the foreign-exchange market; and much more. + +Seventh and last, financial technology is becoming ever more important. That may be better news for banks than it sounds, despite the creakiness of some of their computer systems. Plenty of financial startups are trying to muscle in on their business, but in a highly regulated industry heavyweight incumbents are harder to usurp than booksellers or taxi drivers. As a result, there is a good chance of banks and technology companies forming mutually beneficial partnerships to improve services to their customers rather than fighting each other. + +Ten years onMore in this special report: + + + +Ten years on:A decade after the financial crisis, how are the world’s banks doing? + +When the music stopped:How the 2007-08 crisis unfolded + +Sheep and goats:American banks have recovered well, but many European ones are still struggling + +After Dodd-Frank:American banks think they are over-regulated + +Bother over Basel:Basel 3, an international capital-adequacy standard, is unloved but much needed + +Financial technology:How banks are dealing with technology companies + +The millennial problem:Banks are finding it harder to attract young recruits + +How safe are banks?:Another crisis one day cannot be ruled out + + + +→ When the music stopped: How the 2007-08 crisis unfolded + + + + + +Special report + +Ten years on: When the music stopped + +How the 2007-08 crisis unfolded + +A brief history + + + +May 4th 2017 + +EXACTLY TEN YEARS ago, on May 6th 2007, ABN AMRO rejected a $24.5bn bid by three European rivals for LaSalle, a Chicago bank which the Dutch lender had owned since 1979. The previous month Britain’s Royal Bank of Scotland (RBS), Spain’s Santander and Belgium’s Fortis had offered €72.2bn (then $98bn), almost all in cash, for the whole of ABN AMRO. By October that year RBS and its partners had won their prize, minus LaSalle, in what is still banking’s biggest takeover. When ABN AMRO was carved up, RBS briefly enjoyed the glory of being the world’s largest bank by assets. + +A giddy party was in full swing. “As long as the music is playing,” Chuck Prince, then boss of Citigroup, told the Financial Times in a quip that became notorious, “you’ve got to get up and dance.” But the tunes were already off-key. American house prices, driven skyward by low interest rates and rash lending to “subprime” borrowers (people with poor or non-existent credit histories) had peaked a year earlier. In February 2007 Britain’s HSBC shocked markets by raising its bad-debt provisions to $10.5bn, $1.8bn more than analysts had expected, because of failing American subprime mortgages. During that summer two hedge funds run by Bear Stearns, an investment bank, collapsed after losing money on soured subprime investments. + +As banks started to worry about exposure to subprime lending and the piles of complicated derivatives connected to it, credit markets began to seize up, causing BNP Paribas, a French bank, to suspend withdrawals from three funds in August. The following month Northern Rock, a British mortgage lender that had funded its rapid expansion in the flighty wholesale markets, asked the Bank of England for liquidity support. Depositors queued round the block to retrieve their money. In November 2007 the music stopped even for Mr Prince: he resigned. That quarter Citi took subprime-related write-downs of $18.1bn. + +The euphoric frenzy came to a total halt with Lehman Brothers’ implosion in September 2008. The mergers of that period, unlike the opulent, record-breaking deal of 2007, were hasty, embarrassed dashes to the altar. JPMorgan Chase saved Bear Stearns in March 2008 when Bear’s failure became inevitable. After Lehman’s collapse, JPMorgan took over Washington Mutual, which had become America’s seventh-biggest bank on the back of the housing boom. Bank of America absorbed Countrywide, another over-eager housing lender, and then Merrill Lynch. Japan’s MUFG bought 20% of Morgan Stanley. Wells Fargo snapped up Wachovia, America’s fourth-biggest bank. + +After its moment in the sun, RBS would have followed Lehman into oblivion but for a £45bn ($78bn) bail-out from the British government. Today, after nine years of losses, it remains in state ownership. Fortis was rescued by the governments of Belgium, Luxembourg and the Netherlands and dismembered. Santander played its hand far better. It emerged from the crisis without a single quarter of losses, and remains the euro zone’s most valuable bank. + +Ten years onMore in this special report: + + + +Ten years on:A decade after the financial crisis, how are the world’s banks doing? + +When the music stopped:How the 2007-08 crisis unfolded + +Sheep and goats:American banks have recovered well, but many European ones are still struggling + +After Dodd-Frank:American banks think they are over-regulated + +Bother over Basel:Basel 3, an international capital-adequacy standard, is unloved but much needed + +Financial technology:How banks are dealing with technology companies + +The millennial problem:Banks are finding it harder to attract young recruits + +How safe are banks?:Another crisis one day cannot be ruled out + + + +→ Sheep and goats: American banks have recovered well, but many European ones are still struggling + + + + + +Special report + +Ten years on: Sheep and goats + +American banks have recovered well, but many European ones are still struggling + +Most European banks were slow off the mark after the crisis + + + +May 4th 2017 + +“THE SHORT ANSWER is Hank Paulson,” snorts a European banker. “They got TARPed.” The question had been why America’s banks recovered so much faster than Europe’s from the debacle of ten years ago. Within days of Lehman’s demise in 2008 Mr Paulson, then America’s treasury secretary, forced the banks, as well as AIG, a giant insurer, and other companies to take equity injections from the federal government, whether they needed and wanted them or not. + +TARP, the Troubled Asset Relief Programme, at first earmarked around $700bn for companies in difficulty. That was later cut to $475bn, of which $245bn was pumped into banks. With interest and dividends, the banks eventually repaid $275bn, having replaced public money with private funding. In 2014 the government sold its last shares in a TARP bank: Ally Financial, formerly the financial wing of General Motors. + +The recapitalisation of Europe’s banks has been as gradual as that of America’s was swift, and in dribs and drabs of tens of billions a year rather than in one big splurge (see chart). It is still continuing. So far this year Deutsche Bank and UniCredit, the biggest lenders in Germany and Italy respectively, have raised €21bn in new equity. + + + +European banks could have done a lot more sooner. Hyun Song Shin, of the Bank for International Settlements, calculates that between 2007 and 2015, 90 euro-zone banks retained €348bn of their earnings and paid €223bn in dividends. Had they kept the lot, they would have been able to stuff 64% more into their equity cushions. Because stronger banks tend to lend more, Mr Shin adds, profits, earnings and capital would have been that much higher if they had done so. + +Nicolas Véron, of Bruegel, a Brussels think-tank, and the Peterson Institute for International Economics in Washington, DC, contrasts Mr Paulson’s “tough love” favourably with the reaction to the financial crisis of national supervisors in Europe. Authorities in the euro area were too concerned with protecting national champions from embarrassment, he says, “a story very much of forbearance and denial”. British and Swiss regulators were quicker than their counterparts in the euro zone, bailing out Lloyds, Northern Rock, RBS and UBS, even if British taxpayers paid a “scandalously high price” to save RBS. + +Stress tests by European authorities were sometimes way off the mark. For example, they gave Ireland’s banking system a clean bill of health in 2010, just before it collapsed, and in 2011 allowed Dexia, a Franco-Belgian bank, to pass with flying colours just a few months before it was caught by exposure to Greek sovereign debt and bailed out by the governments of Belgium, France and Luxembourg. + +The authorities eventually got their act together. Spain’s banking system, for instance, is much the stronger for a consolidation eventually co-ordinated by the state, although weak spots remain. Several cajas (local savings banks) clobbered by the country’s property bust were folded into more robust institutions. A grand total of 55 banks has been reduced to 14. Several leading lenders—Santander, BBVA, Caixa and Sabadell—have also expanded abroad. + +Unlike America, the euro zone did have a second crisis to deal with, which posed a threat to its very survival; and it was only in response to the euro crisis that a common banking supervisor was created within the European Central Bank. The Single Supervisory Mechanism (SSM) has been up and running for just two-and-a-half years. It directly supervises the euro area’s 126 most important banks (the biggest in the zone, plus those critical to national economies, big or small), a group that accounts for 80% of the area’s banking assets. Oversight of the remaining 3,200 lenders is delegated to national authorities. + +A union of sorts + +Europe’s “banking union”, of which the SSM is a central element, remains incomplete, partly because German politicians balk at a plan to insure deposits across the euro zone. Rules on banking supervision, moreover, are still inconsistently applied. “We need regulations, not directives,” says Danièle Nouy, the head of the SSM. (Her point is that European Union regulations are adopted automatically by member states, whereas directives require implementation by national parliaments.) The directive translating Basel 3 into EU law contained more than 160 national options. A single capital market is also still far off. + +These days European supervisors’ most pressing problem is Italy. Bad debts that seemed manageable back in 2007 grew into a mountain, reaching €360bn (at gross value) by 2015 as Italy’s economy failed to grow, borrowers ran into trouble and banks and supervisors procrastinated. Jean-Pierre Mustier, the newish French boss of UniCredit, is knocking the biggest bank into shape, writing down bad debt by €8.1bn, selling assets and raising €13bn in equity. Intesa Sanpaolo, the next-biggest, has been in decent shape for some time. But the fourth-largest, Banca Monte dei Paschi di Siena, is pinned down by its bad debts and awaiting state aid for the third time within a few years. Banca Populare di Vicenza and Veneto Banca, two smaller banks that plan to merge, are also seeking a bail-out. + +The SSM wants to be sure that the banks will at last be well capitalised. In December it told Monte dei Paschi that it would need €8.8bn, but has since deemed it solvent. However, bail-outs must be approved by the European Commission, which oversees recently tightened state-aid rules to discourage continuing calls on taxpayers. + +The state-aid rules say that junior bondholders as well as shareholders should be “bailed in”—ie, wiped out—if a bank has to be rescued. But in Italy many retail customers bought bank bonds believing them to be as safe as deposits. The Italian authorities are desperate to find a way of compensating them that satisfies the commission. A bail-in at smaller banks in late 2015 caused political uproar and resulted in at least one suicide. Precedent suggests that a solution should be possible; holders of similar Spanish bank bonds were compensated for falling victim to “mis-selling”. + +But European banks’ plight stems from more than just being slow to recapitalise and sort out bad loans. Some countries, notably Italy and Germany, have too many banks and branches for all of them to flourish. A long period of ultra-low interest rates has flattened margins. German banks, which rely on interest for three-quarters of their income, the highest proportion in any OECD country, have been squealing almost as loudly as savers. A paper recently published by the Bundesbank forecasts that, if rates remain constant, a mere 20% of lenders will earn their cost of capital (estimated at 8%) by 2020; last year 60% did. + +Thomas Olsen of Bain, a firm of consultants, argues that before the crisis, and even for several years afterwards, banks everywhere “didn’t really have different strategies”. Tight regulation had traditionally limited their scope for experimentation, but in the helter-skelter years leading up to 2007-08 banks grew indiscriminately, spreading into as many countries and areas of business as they could. After the fall, “they didn’t have a strategy then, either: they were just firefighting.” As the dust settled, they had to decide what strategy to adopt and how to put it into effect—often by retreating from unprofitable markets and activities. + +Too many European banks have been slow to dust themselves off. Some at least went into the crisis with robust business models—and therefore did not need a thorough shake-up. Santander, which had built retail and commercial banking businesses in a number of countries, from Chile to Britain, was well placed to withstand the storm, even though its homeland took a battering. It is the euro zone’s biggest bank by market value and has made money in every quarter since at least the late 1950s. Like many banks, it has had to turn to shareholders to boost capital, raising €7.5bn in January 2015. Its share price is just a shade below net book value. By European standards it is doing fine. + +Contrast that with Deutsche Bank. This used to be a slightly staid institution, serving Germany’s biggest companies at home and abroad and looking after well-off retail customers; but long before the crisis it had ventured far from that model, choosing the buccaneering life of international investment banking and trading. By 2007 it was leveraged to the hilt, with equity amounting to only 2% of total liabilities, one-third of the ratio at Santander. The crisis dealt it a heavy blow. + +Not quite über alles + +Deutsche is the biggest bank in Europe’s biggest economy and has not needed state aid, but it has had to turn to shareholders three times in seven years, tapping them for a total of more than €20bn. Despite a rally since last September, its shares have beeen trading at only two-fifths of book value. This January it concluded a $7.2bn settlement with America’s Department of Justice (DOJ), which had accused it of mis-selling residential mortgage-backed securities in the wild pre-crisis days of 2005-07. (Some other European banks have yet to settle; American offenders have already paid hefty penalties.) The bill was less than feared: initially the DoJ had demanded $14bn, and only $3.1bn of the settlement has to be paid in cash. + +Now this is out of the way, Deutsche may at last have arrived at an enduring strategy. In March John Cryan, its chief executive since 2015, decided to keep Postbank, a retail operation he had previously intended to sell, shoring up Deutsche’s deposit base in Germany. To boost its ratio of equity to risk-weighted assets, a key regulatory measure of resilience, Deutsche has instead raised another slug of equity, €8bn-worth, and is selling part of its asset-management division. It is also reorganising its investment bank and has said that in future it intends to concentrate on serving multinationals. + +Credit Suisse also took its time, changing tack dramatically in 2015. Its then-new chief executive, Tidjane Thiam, an ex-insurer, tilted the business towards Asia, seeing newly rich Chinese as ideal clients for a Swiss bank. He also cut investment-banking jobs and proposed a partial sale of the Swiss domestic business. Investors were unconvinced. In April he ditched that sale and announced a share issue. + +Some European countries, notably Italy and Germany, have too many banks and branches for all of them to flourish + +Others caught out by the crisis were quicker to narrow their ambitions. One was UBS, which was bailed out by the Swiss government in 2008. Mr Cryan, then the bank’s chief financial officer, helped turn it around. In 2011 it decided to concentrate more on wealth management worldwide and on its Swiss universal bank, and to cut back on investment banking. That meant missing out on a good year for fixed-income businesses in 2016, but over time it should involve fewer downs as well as ups. + +All in all, European banks have fallen behind their American counterparts. In investment banking, where they compete head-to-head, the gap is worryingly wide. Part of the reason is that the Americans’ domestic market recovered sooner and more strongly from the crisis. According to Dealogic, a research firm, America yielded 48% of global investment-banking revenue in 2016, up from 41% in 2007 (and only 34% in 2009, its weakest year). Asia’s share also grew, but Europe’s shrank to 22% in 2016 from 36% in 2007. + +American banks were naturally best placed to take advantage of growth at home, where they rule the roost. Asian (mainly Japanese and Chinese) investment banks, plus Morgan Stanley, thanks to MUFG’s stake in the American firm, lead the way in their home region. But European firms have also lost ground to the Americans on their own continent. The Americans fill four of the first five slots in Dealogic’s European regional league table. Only Deutsche prevented a clean sweep, coming third. + +Leading the field both at home and abroad, you might suppose that America’s big banks had little to complain about. Even so they are restive, insisting that they got over the crisis years ago but are still being held back by a thicket of regulation. Donald Trump said he would cut through it all. But how? + + + +Ten years onMore in this special report: + + + +Ten years on:A decade after the financial crisis, how are the world’s banks doing? + +When the music stopped:How the 2007-08 crisis unfolded + +Sheep and goats:American banks have recovered well, but many European ones are still struggling + +After Dodd-Frank:American banks think they are over-regulated + +Bother over Basel:Basel 3, an international capital-adequacy standard, is unloved but much needed + +Financial technology:How banks are dealing with technology companies + +The millennial problem:Banks are finding it harder to attract young recruits + +How safe are banks?:Another crisis one day cannot be ruled out + + + +→ After Dodd-Frank: American banks think they are over-regulated + + + + + +Special report + +Ten years on: After Dodd-Frank + +American banks think they are over-regulated + +Time to loosen the reins, say America’s banks. Not so fast, say regulators + + + +May 4th 2017 + +“LEFT TO OUR own devices,” said Lloyd Blankfein, boss of Goldman Sachs, in February, “we wouldn’t hold as much capital as we are holding.” He is not alone. “It is clear that the banks have too much capital,” wrote Jamie Dimon of JPMorgan Chase, America’s biggest bank by assets, in a letter to shareholders last month. + +American banks, both big and small, are chafing. Since 2009 the 33 banks deemed to be “systemically important”, which are subject to stress tests by the Federal Reserve, have added $700bn in common equity. The eight banks considered to be of global systemic importance (G-SIBs, in banking parlance) must meet not only the capital and leverage requirements agreed on by international supervisors after the crisis (see article) but also additional surcharges levied by the Fed. Among other changes, Mr Dimon wants this “gold-plating” to go. + +Perhaps most irritating to the banks are the Fed’s annual stress tests, estimating how much equity would be burned up in a hypothetical crisis. The Fed may also limit banks’ dividends and share repurchases if it finds they do not have enough capital in the worst scenario. Banks are given plenty of information about the imaginary catastrophe—but not about the models the Fed uses in the tests. It is hard, they mutter, to hit a moving target in the dark. The Fed, however, does not want banks to arrange their balance-sheets merely to meet the test. Daniel Tarullo, the designer of the Fed’s stress-test apparatus, who stepped down as a governor last month, said in a farewell speech that the tests needed refining but that they had to adapt to new risks, and that publishing models would “result in less protection for the financial system”. + +Bankers freely admit that they had too little equity before the crisis. Now they say they have too much. Mr Dimon points out that under the worst scenario in the Fed’s stress test last year, the 33 banks’ hypothetical losses amounted to $195bn. That is bound to be an overstatement: the test assumes that each and every bank will be the worst affected. But it still amounts to less than 10% of their combined loss-absorbing resources. They are now required to hold so much capital, Mr Dimon writes, that lending and the American economy are being held back. + +The banks grumble about a surfeit of rules as well as of capital. The Fed’s first stress tests predated, by a year, the Dodd-Frank act of 2010, which recast American financial regulation. The law runs to 848 pages. It abolished one watchdog but created two more, the Consumer Financial Protection Bureau (CFPB) and the Financial Stability Oversight Council, which is made up of the heads of regulatory agencies and is chaired by the treasury secretary. It laid out procedures for dealing with bankruptcy of systemically important banks, using public money if need be. In all it imposed 390 requirements for which regulators had to come up with new rules. According to Gabriel Rosenberg of Davis Polk, a law firm, only 279 have been finalised. Banks moan that the regulation of mortgages—more than half of which are now originated by non-banks—is especially fiendish. + +The Dodd-Frank act has thickened the “spaghetti soup” + +Complaints about red tape extend far beyond Wall Street. America has a total of around 5,900 banks, all but 100-odd of which hold assets of less than $10bn, a category dubbed “community” banks; indeed, more than 5,000 of them hold less than $1bn. Community banks, like their bigger peers, say regulation is costing them too much and restricting lending. + +Community banks have plenty of other problems as well. They lack scale; their risks are locally concentrated; and they face competition not only from bigger banks but also from online lenders. Already one-fifth of small businesses—the community banks’ staple—look to online lenders when seeking a loan. Small banks have been in decline for decades (see chart). Stephen Cecchetti, of Brandeis University, and Kim Schoenholtz, of New York University’s Stern School of Business, point out that this downward trend did not accelerate after Dodd-Frank. + + + +Still, extra regulation has not helped. Karen Mills of Harvard Business School, a former head of the federal government’s Small Business Administration, says that Dodd-Frank has thickened the “spaghetti soup”. In particular, community banks’ ability to make loans of under $150,000 has been weakened. Although they are exempt from many of the regulations governing large institutions, such as supervisory stress tests, the fixed costs of regulation weigh more heavily on smaller lenders. “Bank presidents are really thinking about regulation more than serving customers,” says Hester Peirce, of the Mercatus Centre at George Mason University in Washington, DC. + +Do a big number + +If Hillary Clinton had been elected president last November, bankers’ best hope for regulation might have been more of the same. Mr Trump, by contrast, has promised to “do a big number” (meaning a radical cutback) on the Dodd-Frank act. No one knows how big. All Mr Trump has done so far is to issue an executive order listing seven unobjectionable principles for financial regulation (sample: “foster economic growth and vibrant financial markets through more rigorous regulatory impact analysis”) and to instruct the treasury secretary to assess by early June whether existing laws can deliver these objectives. A separate proclamation has paved the way for easing rules on financial advisers’ duties to their clients. + +Nothing much is likely to happen soon, although ideas are in the air. Gary Cohn, Mr Trump’s chief economic adviser, has mused about a “21st-century version” of the Glass-Steagall act, a Depression-era law, repealed in 1999, that forced the separation of commercial and investment banking. Separately, Republicans in the House of Representatives have said that they want to pass a bill to replace Dodd-Frank by the summer. But the new administration wanted to concentrate on replacing Barack Obama’s health-care law (over which it came a cropper) and on reforming taxes. And although Mr Trump has a treasury secretary in place, Steven Mnuchin, other jobs in the department that require approval by the Senate, plus many that do not, have not yet been filled. + +Passing new legislation may anyway be tricky. Although the Republicans have majorities in both the House and the Senate, they lack the 60 votes needed to break a filibuster (debating a bill for so long that it runs out of time) in the upper house. Persuading eight Democrats to join them appears a tall order for anything that looks like a sop to Wall Street, but some sound keen on Mr Cohn’s Glass-Steagall idea. Budgetary measures can be passed with a simple majority. That may allow Republicans to restrict funding for (and perhaps restructure) the CFPB, which is financed through the Fed rather than directly by Congress, or perhaps to gut Dodd-Frank’s bankruptcy procedure. + +There may be broad agreement on some areas. One is that small banks’ burden should be eased, for instance via complete exemption from the Volcker rule, which bans banks from trading most securities for their own profit, and from owning private-equity and hedge funds, and which was aimed at big institutions. It helps that community banks have plenty of congressional clout. Another is that the threshold of $50bn in assets for designating a bank as systemically important, and so subject to detailed stress-testing, is too low. The smallest are no systemic threat, and the limit discourages otherwise sensible mergers that would push banks above it. The Fed has already eased some requirements for smaller systemic banks. + +It should also be possible to loosen the reins without new laws. Dodd-Frank gives regulators a fair amount of discretion, and Mr Trump will be able to choose a number of new ones. Most important (and possibly imminent) is a replacement for Mr Tarullo, long a thorn in the banks’ sides, to oversee financial stability at the Fed. Two other slots at the central bank are vacant. Thomas Curry’s term as the Comptroller of the Currency, who oversees national banks, ended on April 9th. And in November Martin Gruenberg’s term as chairman of the Federal Deposit Insurance Corporation (FDIC) is due to run out. + +Jeb Hensarling, chairman of the House Financial Services Committee, intends to revive legislation that he proposed last year. At the core of his Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs) act is indeed a choice: banks can opt to maintain a leverage ratio, of equity to total liabilities, of 10%, in return for exemption from such burdens as minimum ratios of equity to risk-weighted assets laid down in international banking standards, “living wills” setting out how they could be wound up if they went bust, and those pesky stress tests. With enough equity, the theory goes, a failing bank would be no risk to the taxpayer and so could be left in peace. If it overreached, only its shareholders would suffer. + +A book published in March by academics at the Stern School and NYU’s law school, “Regulating Wall Street: CHOICE Act vs Dodd-Frank”, compares the two acts, section by section. It argues that Dodd-Frank has made the American financial system safer, both since the crisis and relative to those of other large countries; but its many pages and associated rules have not got to the heart of systemic risk, and are more burdensome than necessary. So does CHOICE represent an improvement? + +Start with a tick in its favour. The Volcker rule, the NYU team concludes, could go. It is supposed to stop banks using deposits insured by taxpayers to fund risky proprietary trading. But it was not such trading that caused the crisis, and the rule does not reduce risk enough to justify the burden of compliance. Banks complain that they must send reams of data to regulators daily to show that they are complying. They say that if the rule were scrapped they would not reopen proprietary trading desks anyway. A separate study, by consultants at Oliver Wyman, finds that the Volcker rule and similar regulations in Europe may have harmed liquidity in some important markets, including repos, which provide short-term funding, corporate bonds and commercial mortgage-backed securities, because banks now hold much less of such stuff on their balance-sheets. + +Neither Dodd-Frank nor CHOICE, says the NYU team, tackles important flaws in American regulation. The country has lots of different watchdogs, and who oversees what depends on a company’s legal form rather than its economic function. Its property and mortgage markets are distorted by Fannie Mae and Freddie Mac, which guarantee almost all housing loans. Both laws leave these problems untouched. + +CHOICE’s central bargain—10% leverage in return for less regulation—may make sense for smaller, non-systemic banks. For the bigger ones, it looks like a bad deal both for the banks themselves and for the wider economy. Eliminating stress tests for systemically important banks, argue the NYU authors, “could be catastrophic”. One of them, Philipp Schnabl, says the point is not how much capital banks have in normal times but how much they have in hand when trouble arrives. And because leverage ratios treat all assets as equally risky, banks may have an incentive to increase risk—and hence, they hope, returns—while keeping the ratio constant. You need risk-weighting too. + +Moreover, measuring leverage is not as simple as it looks. American accounting principles, known as GAAP, allow banks to offset derivative exposures on the asset and liability sides of their balance-sheets. International standards, or IFRS, restrict this possibility, because the liabilities will still exist in bankruptcy. Balance-sheets are therefore smaller, and leverage ratios larger, under GAAP than under IFRS. + +This matters. Thomas Hoenig, vice-chairman of the FDIC, is no fan of regulatory risk-weighting. He thinks it is fine for banks to use it internally, but not for supervisors to decide priorities for them, pointing out that “I cannot predict the future.” So he also favours leverage ratios of at least 10%—but for all banks, and on the IFRS measure. In December, America’s eight G-SIBs had a combined leverage ratio of 8.2% under GAAP but only 6.3% under IFRS. In the 2008 crisis, Mr Hoenig notes, their losses amounted to 6% of tangible assets. + +Disentangling risk + +He recently put more flesh on his proposals. Dodd-Frank was “well-intended”, he says, but its “many and complicated” regulations are too burdensome for all banks, especially small ones. For the largest ones, he thinks, the law has “served to enshrine too big to fail”. He suggests that big banks should split commercial and investment banking into separately capitalised and managed subsidiaries, each capable of entering bankruptcy without public support. The FDIC would insure deposits in the commercial subsidiary (as before), which would be subject to a leverage ratio of at least 10%; the investment-banking arm’s requirement would be based on risk, but should be no less than that of stand-alone broker-dealers today (8.4%). In return, big banks could be freed from a whole array of regulations, including stress tests and living wills. The idea, Mr Hoenig notes, is similar to the “ring-fencing” of retail banks in Britain, due in 2019. (Mr Cohn could also be thinking along these lines.) + +Others say that 10%, however you measure it, is not enough. In “The Bankers’ New Clothes”, published in 2013, Anat Admati of Stanford and Martin Hellwig of the Max Planck Institute for Research on Collective Goods proposed a minimum of 20%. The Federal Reserve Bank of Minneapolis estimated last year that Dodd-Frank had cut the chance that big American banks would need another public bail-out at least once in the next 100 years only from 84% to 67%. To reduce the probability to 9%, it proposed the equivalent of a leverage ratio of 15%. Banks that fell short after five years would see the bar raised, eventually to 24%. + +Underlying all this is a divergence between what suits a big bank and what suits the economy as a whole. Unsupervised, banks are likely to issue too little capital, because they do not take into account the effect of a systemic crisis on other banks or on the economy as a whole. That is why the biggest face more demanding capital rules and stress tests. The alternative is to force them to have so much equity on their balance-sheets that they can fail without bringing down the lot. Mr Dimon argues that the banks have already passed that point: “Essentially, too big to fail has been solved—taxpayers will not pay if a bank fails.” The question now is whether Mr Trump appoints supervisors who agree with Mr Dimon. + +Ten years onMore in this special report: + + + +Ten years on:A decade after the financial crisis, how are the world’s banks doing? + +When the music stopped:How the 2007-08 crisis unfolded + +Sheep and goats:American banks have recovered well, but many European ones are still struggling + +After Dodd-Frank:American banks think they are over-regulated + +Bother over Basel:Basel 3, an international capital-adequacy standard, is unloved but much needed + +Financial technology:How banks are dealing with technology companies + +The millennial problem:Banks are finding it harder to attract young recruits + +How safe are banks?:Another crisis one day cannot be ruled out + + + +→ Bother over Basel: Basel 3, an international capital-adequacy standard, is unloved but much needed + + + + + +Special report + +Ten years on: Bother over Basel + +Basel 3, an international capital-adequacy standard, is unloved but much needed + +International bank regulation is grinding towards completion—or possibly to a halt + + + +May 4th 2017 + +BY THE END of last year bank supervisors were supposed to have agreed on revisions to Basel 3, the international capital and liquidity standards devised after the financial crisis, which would then be all but complete. That did not happen, chiefly because some European authorities balked at the prospect of yet higher capital demands for the banks in their charge. Officials close to discussions at the Basel Committee on Banking Supervision, which draws up the standards, are still confident that agreement will eventually be reached. But further delay seems inevitable, if only because Donald Trump has yet to choose the American officials needed to complete the talks. And even if a deal is done, there are signs that the trend towards international regulation that gathered pace after the financial crisis may be going into reverse. “Post-crisis, there was a consensus for a global set of rules,” says Huw van Steenis of Schroders, a British fund-management firm. “That consensus has now broken.” + +The crisis revealed that many banks had too little capital to absorb losses, were funded with too much debt and not enough equity, and were prone to illiquidity. Basel 2, the previous set of standards, completed in 2004, had required banks to maintain a minimum ratio of “tier-1” capital (equity plus qualifying debt) to risk-weighted assets (RWAs), with the weights determined either by banks’ own models or by a standardised approach. This had proved inadequate. Moreover, though Europe had adopted Basel 2 wholesale, American supervisors had applied it to just a dozen internationally active banks, fearing (with good cause) that Basel 2 would allow lenders to maintain dangerously low levels of equity. For the rest, they preferred to watch a simple leverage ratio, of equity to unweighted assets. + +Basel 3, agreed on in 2010, was accepted on both sides of the Atlantic (and in many other countries). Its many and detailed provisions are being phased in gradually and have been reviewed and adjusted several times. The standards are far stricter than the previous ones in several ways, starting with tighter definitions of both tier-1 capital and RWAs. The equity component of tier-1 capital (common equity tier-1, or CET1) must amount to at least 4.5% of RWAs. Total tier-1 capital must be at least 6%. Stuart Graham of Autonomous, a research firm, reckons that the new rules in effect lopped around three percentage points from CET1 ratios. On top of this Basel 3 stipulated a “capital-conservation buffer” of 2.5% of RWAs and a “countercyclical buffer” of up to 2.5%, set by national regulators and intended to cool overheating. Both must be made up of equity (see chart). + + + +Of G-SIBs and TLACs + +The 30 institutions considered to be globally systemically important banks, or G-SIBs, incur an equity surcharge, ranging from 1% to 2.5% of RWAs. All these requirements will increase year by year until 2019. G-SIBs from rich countries must also have a “total loss-absorbing capacity”, or TLAC, comprising equity and convertible debt, of 16% of RWAs by 2019 and 18% by 2022. The handful of G-SIBs from emerging economies will have longer. The idea is that should they fail, they can be automatically recapitalised by bailing in investors, without troubling taxpayers. + +Basel 3 also introduced a minimum leverage ratio, an idea European regulators resisted at first. Tier-1 capital must be at least 3% of assets, and more for G-SIBs. To deal with worries about liquidity, Basel 3 also requires banks to have enough high-quality liquid assets to withstand a month of outflows under stress and maintain sufficient “stable” funding, such as equity, long-term debt and retail deposits. + +All this has meant that banks have become much better capitalised. Both CET1 and leverage ratios have climbed (see chart). Virtually all of the 100 big international banks and 110 others covered in the Basel committee’s latest monitoring report are keeping up with the Basel 3 standards. + + + +A few tasks have not yet been tackled, such as whether the risk-weights of sovereign bonds should be raised. The latest kerfuffle stems from the committee’s attempts to bring more consistency to banks’ internal calculations of RWAs and to narrow the gap with the standardised approach, which typically yields higher RWAs and hence lower capital ratios. In 2013 the committee asked 32 lenders to work out CET1 ratios for the same hypothetical credit portfolio. The highest figure was four percentage points above the lowest. + +That, the committee decided, was too much, so it proposed changes to close the gap, including minimum values for important parameters in internal models (such as the probability that certain types of loan will go bad). Most controversially, it suggested an overall “output floor”—a lower limit for the sum of RWAs—of between 60% and 90% of the number reached via the standardised method. If a bank’s internal model yielded a figure below the floor, the floor would be used instead. + +The changes would have little if any effect on American banks, but some European (and Asian) lenders would see their RWAs and hence their minimum capital requirements go up. Unfair, said the Europeans: the changes, in effect, penalised them for keeping on their balance-sheets assets such as residential mortgages and loans to big companies, which American lenders are less likely to have. Not at all, retorted the Americans, who still mistrust risk-weighting: you should have put your houses in order sooner, as we did. + +Officials say that pretty much all the disagreements have been sorted out except, crucially, for the output floor. But for now there is no one to talk to on the American side; and the isolationist mood among some Republicans may work against a deal. In a letter to Janet Yellen, the Fed’s chairman, in January, Patrick McHenry, vice-chairman of the House Financial Services Committee, said it was “unacceptable” that the Fed “continues negotiating international regulatory standards for financial institutions among global bureaucrats in foreign lands without transparency, accountability or the authority to do so”. In other words, stay out of Basel until you get new orders. + +Would it matter if there were no deal? Politically, very much so: it would be one sign among many (in trade, security and elsewhere) that global co-operation can no longer be taken for granted. In practical terms, perhaps not so much. Apart from this point, Basel 3 is largely done; most banks use the standardised approach anyway. But failure may give some European banks an excuse to put off adding extra equity or reducing risks. + +Perhaps delay may be no bad thing: given more time, European economies and banks should become stronger, making agreement easier. And once a new American team is in place, a way forward may emerge. Mr Trump’s nationalist streak could even help. Given that the proposals scarcely affect American banks but may burden foreign competitors, an agreement could widen the lead the Americans already enjoy over their rivals. On the European side, some fierce critics have softened their tone. Recently Andreas Dombret, a Bundesbank official who had opposed the output floor outright, moderated his stance to “any output floor should not be too high.” + +Stronger non-American banks are also keen for a deal. Bankers are annoyed about the delay over completing Basel 3, because delay means uncertainty. “Do you ever want to stop?” sighs one banker, reeling off a list of changes to regulation over the past few years. Even if signed off tomorrow, the amendments would not take full effect until the mid-2020s. + +Beware a new transatlantic divide + +A change in American supervision along the lines proposed by Mr Hensarling or Mr Hoenig would pull America back towards a system of supervision based primarily on minimum leverage and away from the CET1 ratio and the Basel liquidity constraints, as well as dismantling much of America’s domestic regulatory apparatus. If Mr Hensarling’s bill became law and the big banks rejected the option of a 10% leverage ratio in exchange for regulatory relief, something resembling the old transatlantic divide in supervision could emerge: Basel standards for the big American banks and all European ones; domestic, leverage-based supervision for smaller American lenders. + +Smaller banks tend not to operate outside their home countries. What worries international banks more is that domestic supervisors are tightening requirements for foreign lenders on their turf. If a parent bank abroad gets into trouble, they do not want capital to be siphoned away from a local subsidiary to prop up the parent; and if the subsidiary stumbles, they want to be sure it has enough equity of its own so it can be allowed to fail without imposing on local taxpayers. Since last July foreign banks in America have had to create separately capitalised “intermediate holding companies” for their local subsidiaries. In November Valdis Dombrovskis, the European Union’s commissioner for financial services, proposed something similar for the EU. The details have not yet been worked out, but he wants G-SIBs in the EU to maintain enough loss-absorbing capacity locally to permit orderly bankruptcy. + +Even cautious banks worry that supervisors may trap capital that could be better deployed elsewhere + +Britain’s departure from the EU, scheduled for 2019, may give the ratchet another turn. Banks in the EU have “passports” that allow them to serve the entire union from any member state, without local branches or subsidiaries. Most have chosen London as their base. After Brexit, London-based banks will lose their passports. No one yet knows which operations and how many jobs will move away, but regulators in France and Germany, say, may insist that hubs in Paris and Frankfurt are separately capitalised. + +Some banks, such as HSBC and Santander, have long capitalised subsidiaries in different places separately. And it is not hard to understand why national supervisors might insist that others do the same: a little sand in the wheels of globalised financial institutions may be a good thing. Nonetheless, even cautious banks worry that supervisors may trap capital that could be better deployed elsewhere. The effect would be to raise lenders’ minimum capital requirements even further. + +“If you have a very fragmented approach to banking regulation,” says David Strachan, a British ex-supervisor who is now working for Deloitte, a consulting firm, “the cost this imposes on banks trying to operate globally is material.” If some countries lose confidence in supervisors elsewhere in the world, ring-fencing may increase. If others follow the lead of America and Europe in asking for intermediate holding companies, “then it becomes quite damaging.” + +Even cautious banks worry that supervisors may trap capital that could be better deployed elsewhere + + + +Ten years onMore in this special report: + + + +Ten years on:A decade after the financial crisis, how are the world’s banks doing? + +When the music stopped:How the 2007-08 crisis unfolded + +Sheep and goats:American banks have recovered well, but many European ones are still struggling + +After Dodd-Frank:American banks think they are over-regulated + +Bother over Basel:Basel 3, an international capital-adequacy standard, is unloved but much needed + +Financial technology:How banks are dealing with technology companies + +The millennial problem:Banks are finding it harder to attract young recruits + +How safe are banks?:Another crisis one day cannot be ruled out + + + +→ Financial technology: How banks are dealing with technology companies + + + + + +Special report + +Ten years on: Financial technology + +How banks are dealing with technology companies + +The relationship is becoming increasingly collaborative + + + +May 4th 2017 + +IN JUNE 2007 a banker, or anyone else with $499 to spare, could try a novel distraction from work: Apple’s first iPhone had just gone on sale. In October 2008, after Lehman’s fall, another technological innovation was more quietly unveiled. A paper published online under the name of Satoshi Nakamoto described and advocated a form of electronic cash which people could send to one another without going through discredited banks. It was called bitcoin. + +As banks have adapted to the crisis and its aftermath with varying degrees of success, the rest of the world has not stood still. Smartphones and, less visibly, cloud computing have transformed people’s daily lives—and hence their use of money. Consumers expect to be able to use the powerful computers in their palms to pay for goods or move cash around as easily as they can tweet, stream videos or share photos with friends. Corporate customers are equally demanding. Yet banks’ information-technology systems are a curious mixture of the old and rickety and the sleek and modern. Malevolent hackers continually probe for weaknesses as banks are striving to stay ahead. + +And if they don’t? Bitcoin embodied an anti-establishment, libertarian threat to banks: that upstart technologists might disrupt them as Amazon has disrupted bricks-and-mortar retailers and Uber cabbies. So far that has not happened, to the chagrin of ambitious financial-technology (fintech) startups and the relief of many bankers. New competitors have made some inroads, but—in Western countries, at least—they are finding that collaboration is a likelier path to success than a full-on fight. Moreover, far from being usurped by bitcoin, banks are eager to turn blockchain, the technology on which it is based, to their own ends. Again, co-operation with technology companies, and sometimes with other banks, is the order of the day. + +To be sure, a gang of newcomers have muscled their way into their domains. Peer-to-peer or marketplace lenders, such as Lending Club and SoFi in America, or Funding Circle and RateSetter in Britain, connect people and companies that want to borrow with those that have money to lend, promising both sides keener rates. Britain’s MarketInvoice allows small companies to borrow against receivables immediately, rather than turn to a bank or wait for bills to be paid. Digital banks such as N26 in Germany, Tinkoff Bank in Russia and an array of British hopefuls are challenging incumbents. + +But banks are not easily displaced. Peer-to-peer lending, for instance, has grown rapidly, but still amounted to just $19bn on America’s biggest platforms and £3.8bn in Britain last year, according to AltFi Data, an analytics company. And some marketplaces now involve banks. Lex Sokolin, director of fintech strategy at Autonomous, a research firm, argues that music—one of the first industries to be attacked by digital revolutionaries—was fairly easily disrupted. Retailing was a little harder, but customers got used to not handling books, cameras and clothes before buying. Finance and health care, he says, are much more difficult. People are rarely inspired by financial products, says Mr Sokolin, which makes it costly to build a brand. It is easier to team up with those who already have the customers. + +Banks command resources that small startups can only dream of: last year JPMorgan Chase spent over $9.5bn on technology, including $3bn on new initiatives. As well as economies of scale, they enjoy the advantage of incumbency in a heavily regulated industry. Entrants have to apply for banking licences, hire compliance staff and so forth, the costs of which weigh more heavily on smaller firms. Even tech giants, which are moving into finance and may enjoy more trust from younger customers than banks do, could be deterred. Apple, Google and Samsung all have apps allowing people to pay shopkeepers from smartphones, and Amazon offers loans to businesses selling on its platform, but may not want to be supervised as closely as banks are now. + +In the West, regulation is opening up more of the field to fintechs, both large and small. A revised European Union directive on payment services, known as PSD2, allows third parties to offer more convenient ways of paying online or to consolidate information from different accounts (with the holder’s permission) so that people can keep track of their finances. America has no equivalent, but the Office of the Comptroller of the Currency, which oversees national banks, has proposed giving special licences to fintechs. + +How China does it + +China’s digital behemoths worry less about such things. Companies like Ant Financial, the financial arm of Alibaba, an e-commerce giant, and JD.com, another online marketplace, have masses of data about those who buy and sell on their platforms. They know their spending habits and how much cash they can spare, so an easy next step is to offer them small loans. Big Chinese banks in any case neglect consumers and small businesses, so customers feel no loyalty towards incumbent lenders. Regulators have also been willing to let online companies shift into finance. No wonder that Asia accounts for the bulk of investment in fintech (see chart). + + + +Wherever they are, even small fintechs have at least two advantages over bigger rivals. First, they are nimble, writing and rewriting code, testing and retesting products, discarding what doesn’t work and improving what does. Better, an online mortgage-broker in New York, updates its products “20 or 30 times a day”, says Erik Bernhardsson, the company’s chief technology officer. Banks might do so “every six months”. Second, fintechs attract bright, mainly young people whom banks might have hoped to get to work for them (see article). Plenty of them used to. Joseph Lubin, the founder of ConsenSys, a blockchain company in Brooklyn, came from Goldman Sachs; Andrew Keys, the head of business development, was previously an analyst at UBS; and other colleagues used to work at Bank of America, Deutsche Bank and HSBC. + +A profitable symbiosis + +All this fosters co-operation between banks and fintech companies. Fintechs gain access to banks’ scale and customers. Banks can exploit fintechs’ expertise in programming and in analysing mountains of data. Co-operation may also lessen (but not eliminate) the danger that banks are reduced to dumb utilities, maintaining basic systems on which others make money from fancy new products. Application programming interfaces, or APIs—routines that connect two lots of software—are taking symbiosis a stage further. Small businesses, say, might use accounting software, created by a fintech, through a bank’s online platform. + +Banks (and central banks) have invited startups to develop products in controlled environments such as in-house labs and accelerator programmes. That can lead to more formal arrangements. Bipin Sahni, head of research and development in Wells Fargo’s innovation group, says 11 young firms have gone through his bank’s six-month programme since 2014. Being based in San Francisco, Mr Sahni adds, “we see more interesting companies than a bank sitting in other parts of the United States.” + +For fintechs, symbiosis need not mean minnowhood. Stripe, a San Francisco firm, processes mobile and online payments on companies’ behalf, linking them to card networks (and through them, banks) in much the same way as bricks-and-mortar retailers and offering them additional software tools. It was valued at $9.2bn in November, when it last raised money. Patrick Collison, who founded Stripe with his brother John in 2010, explains that from the beginning the plan had been to work with credit- and debit-card networks. “It was always clear there was no viable independent strategy,” he says. + +Some fintechs allow lenders to reach customers they might otherwise miss—for instance, by improving underwriting. Better funds mortgage applicants with capital from more than 20 investors, including Fannie Mae and most of America’s big banks, letting its software decide which of the investors’ underwriting criteria suit the borrower best. + +Chinese internet giants, too, are using smaller fintechs. Douglas Merrill of ZestFinance in Los Angeles says that Baidu, a search-engine titan that has a stake in his firm, increased approval rates for its small-loans programme by 150% without a rise in losses; ZestFinance’s software crunches reams of messy data, allowing less obviously creditworthy people to borrow. A big American credit-card issuer, Mr Merrill adds, has cut annual losses by “a nine-figure number”; a carmaker has reduced credit losses by more than 20%. + +Adam Ludwin of Chain, another blockchain company, calls examples like these, in which new and better products are connected to banks’ own infrastructure, “top-down fintech”. “They do what financial institutions should have done, but do it more quickly.” Blockchain, by contrast, he calls “bottom-up”: new infrastructure, either within banks or shared among them. + +Blockchain enthusiasts stress that its potential stretches far beyond finance. In essence, a blockchain is an immutable shared record known as a distributed ledger. It might list transactions, payments or simply owners of money, land, shares or other assets. All parties have their own copies, which are updated instantly once changes are agreed on. That makes it lightning-fast by comparison with traditional transactions. Transfers between American banks, for example, can take three days. International transfers, which may involve several banks, can take even longer, and senders do not always know how much recipients will get after banks have taken their cut. Settlement of securities trades can be held up because one bank’s record of who sold what to whom, when and for how much may differ from another’s. A blockchain permits just one version of the truth, holding out the promise of huge savings in back offices. “Blockchain reduces the cost of trust,” says Mr Lubin of ConsenSys. + +Chain reaction + +Banks, central banks, regulators, exchanges and technology companies both large and small are working on a host of projects using blockchain. Collaborative efforts abound, including Hyperledger, run by the Linux Foundation, a non-profit group that promotes open-source software, and backed by IBM; R3, a consortium involving several banks; and the Enterprise Ethereum Alliance (EEA), the newest such group, which includes Microsoft and ConsenSys, as well as an array of banks. Among Chain’s projects is a payment-settlement system for VISA, a credit-card network, which is due to go live this year. Another hopeful, Ripple, has payments partnerships with several banks, including Santander. Digital Asset is developing a clearing-and-settlement system for the Australian stock exchange. + +This mix reflects different ideas about which version of blockchain will work best. The EEA is building private, secure blockchains with technology repurposed from an open, public network, based on ethereum, another blockchain platform, which its creators believe will be the next generation of the internet. Others think blockchains will be more specialised. Ryan Zagone, Ripple’s head of regulatory relations, likens bitcoin to the Model T Ford: since that first appeared, carmakers have produced vehicles in many shapes and sizes for specific uses. Blockchain, he thinks, will follow the same pattern. + +This technology is still in its infancy, but with plenty of applications in the pipeline, banks should soon start to learn whether, and in what form, it lives up to its promise. Until then they have little choice but to pursue it. They are under pressure from supervisors and shareholders to reduce costs, and from clients to work better and faster. The eventual gains will probably flow to customers rather than producers, because that is usually the way with leaps in technology. But the banks know that it is better to be first than to bring up the rear. + +Ten years onMore in this special report: + + + +Ten years on:A decade after the financial crisis, how are the world’s banks doing? + +When the music stopped:How the 2007-08 crisis unfolded + +Sheep and goats:American banks have recovered well, but many European ones are still struggling + +After Dodd-Frank:American banks think they are over-regulated + +Bother over Basel:Basel 3, an international capital-adequacy standard, is unloved but much needed + +Financial technology:How banks are dealing with technology companies + +The millennial problem:Banks are finding it harder to attract young recruits + +How safe are banks?:Another crisis one day cannot be ruled out + + + +→ The millennial problem: Banks are finding it harder to attract young recruits + + + + + +Special report + +Ten years on: The millennial problem + +Banks are finding it harder to attract young recruits + +Millennials are getting pickier + + + +May 4th 2017 + +“FIST BUMP, MAN.” That was how a young employee at Bank of America Merrill Lynch expressed his approval after a presentation to staff, recalls Diego De Giorgi, head of investment banking there. The boss obliged. After a recent “town hall” meeting he got an e-mail from a second-year analyst who wanted to discuss some ideas. Mr De Giorgi duly invited him and a few of his peers for a chat. + +Today’s recruits to big banks have different priorities from the newcomers of a decade or two ago. These days a presentation to university students might be followed by half an hour of questions about the bank’s corporate social responsibility programme, as well as the more obvious ones about pay and promotion prospects. + +Those presentations attract significantly fewer people than they did at the height of the banking boom. An event at a top American business school before the bust, says a bank boss, would need an overflow room. Now, he jokes, bank staff outnumber potential recruits. + +In fact, finance, along with consulting, remains the top destination for graduates of America’s leading business schools (see chart). But it is a lot less popular than it was; at MIT’s Sloan School, for example, it shrank from 31% of the total in 2006 to 15% last year, and at Columbia from 55% to 37%. Conversely, technology has leapt from 12% to 33% at Stanford and doubled its share at other schools. Within finance, investment banks are still the biggest recruiters, but hedge funds, venture capital and private equity have gained ground. + + + +Banks also need fewer people in absolute terms. Trading operations have been cut back, and a difficult decade has increased pressure to cut costs. Some bankers say that recruiting ambitious youngsters is not that hard; banks still pay well, and plenty still want to join. Keeping them is a different matter. After two or three years some itch to try their hand at tech, private-equity firms or hedge funds. “Millennials are much more likely to come and go than to pursue a one-firm career,” notes the chief executive of an international bank. + +“There was a view that this was cyclical,” says Ray McGuire, global head of corporate and investment banking at Citigroup. “I think it’s more secular.” So his bank and others are trying to make themselves more attractive to 20-somethings. At Citi, for instance, new investment-banking analysts can defer starting their jobs for a year to work at a non-profit organisation at 60% of their proposed pay. Back in the office, too, banks promise less spreadsheet drudgery, as well as faster promotion for outstanding performers. The Wall Street convention, says Mr McGuire, was to advance people “almost in lockstep”; now they are more likely to move up “when they are ready”. + +Fashions in the job market are fickle; tech also attracted lots of graduates during the dotcom bubble before falling back, and could lose its shine once more. But for now banks will have to scramble to get and keep the brightest and best. + +Ten years onMore in this special report: + + + +Ten years on:A decade after the financial crisis, how are the world’s banks doing? + +When the music stopped:How the 2007-08 crisis unfolded + +Sheep and goats:American banks have recovered well, but many European ones are still struggling + +After Dodd-Frank:American banks think they are over-regulated + +Bother over Basel:Basel 3, an international capital-adequacy standard, is unloved but much needed + +Financial technology:How banks are dealing with technology companies + +The millennial problem:Banks are finding it harder to attract young recruits + +How safe are banks?:Another crisis one day cannot be ruled out + + + +→ How safe are banks?: Another crisis one day cannot be ruled out + + + + + +Special report + +Ten years on: How safe are banks? + +Another crisis one day cannot be ruled out + +But recent changes have hade it less likely + + + +May 4th 2017 + +IN 1992 SWEDEN nationalised (and subsequently merged) two banks: Gota Bank and Nordbanken, which was already mostly owned by the state. As in America 15 years later, property prices had first boomed and then plunged, bringing banks down with them. In 2001 Nordbanken was combined with Danish, Norwegian and Finnish lenders to create Nordea, the region’s biggest bank. It was not until September 2013 that the Swedish government sold its last shares in Nordea, finally drawing a line under a crisis by then 20 years in the past. + +Banking crises leave deep and lasting scars on economies and societies. The one of 2007-08 was the biggest and worst since the 1930s, so the recovery was bound to take time. In a study published in 2014 of 100 financial crises going back to the 1890s, Carmen Reinhart and Kenneth Rogoff, two Harvard economists, found that real income per person took an average of eight years to return to pre-crisis levels. They identified 12 countries where systemic crises began in 2007-08, of which seven have so far clambered back at least to their starting-point. + +Economic growth in America restarted in 2009 and has continued ever since, in one of the longest periods of expansion since the second world war. Unemployment has dropped to 4.7%. But growth has been unusually slow, averaging just 2.1% a year. The economy recovered its pre-crisis level of GDP per person only in 2013. Many Americans feel that prosperity is something that happens to other people—such as those who work on Wall Street. + +Banking crises also have a habit of turning private debts into public ones: when banks are overwhelmed by foolish borrowing and lending, governments step in. America’s ratio of debt to GDP rose by about half between 2007 and 2011, though it has since steadied. Greece’s, Ireland’s and Spain’s went up even more. Although some have declined in the past couple of years, the countries’ ratios are still far above pre-crisis levels (see chart). + + + +Central banks’ balance-sheets and interest rates also still bear the imprint of the crisis, not least because monetary rather than fiscal policy has been the principal, even sole, means of post-crisis macroeconomic support. Even if the Fed raises its main interest rate by another three-quarters of a percentage point this year, as most forecasters expect, that will still leave it lower than it was when Lehman collapsed. The European Central Bank, which cut its benchmark rate to zero just over a year ago, is still accumulating bonds, albeit more slowly. + +The effects of the crisis are not just seen in the dry economic data; they are felt in the gut as well. Among the many and complex causes of the populism that carried Mr Trump to the White House and will take Britain out of the European Union is resentment of ill-defined “elites”: well-off, educated, at ease with globalisation and doing nicely from it, while ordinary folk struggle to make ends meet. Related to that is anger at the crisis, its consequences, the bail-outs of the banks—and the knowledge that bankers still earn bucketloads. + +There is nothing new in that. Economic crises always have political consequences, which loop back into economic policy for decades to come. Germany’s twin fears of inflation and fiscal fecklessness, which arguably have held back recovery in the euro zone after the 2007-08 crisis, have roots in a series of 20th-century economic calamities, dating back to the hyperinflation of the 1920s. America’s Fed was founded in 1913 in response to a severe crisis in 1907; the country’s perennial arguments over the proper role of a central bank, and indeed the need for one at all, started when the First Bank of the United States was set up in 1791. + +Crises often prompt an overhaul of regulations, in the hope of avoiding a repeat performance. Much of the complicated apparatus of American financial regulation today—the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, Fannie Mae—was erected after the catastrophic banking collapse of 1933. The Office of the Comptroller of the Currency was a product of the civil war. No one knows whether the Dodd-Frank act will survive Mr Trump’s promised assault or whether the latest version of the Basel capital-adequacy standards will be completed. But whatever the outcome, the arguments arising from the 2007-08 crisis are likely to carry on for years yet. + +Wait for it + +No one knows, either, when or where the next crisis will strike, but it seems certain that another one will come along some time, somewhere. In “This Time Is Different”, a book published in 2009, Ms Reinhart and Mr Rogoff wrote that banking crises are “an equal-opportunity menace”—as common, over the long sweep of history, in rich countries as in emerging markets. Giddy build-ups of debt are a warning sign. In the past couple of years, China, scene of another credit-fuelled property boom, has looked like the most vulnerable big economy. + +Are the West’s banks safe for now? Bankers’ recent grumbles about capital requirements and the burden of supervision have caused some to worry that bad old habits may be returning. Those grumbles have different causes on either side of the Atlantic. America’s banks think they are strong enough to have their harnesses loosened, whereas some European ones moan that regulation is slowing down their recovery. But for both those groups the memory of ten years ago is still fresh enough to instil great caution. + +Banks are never wholly safe, but they probably shouldn’t be. Capitalism, after all, thrives on risk. The best preparation for catastrophe is a thick equity cushion, and banks are certainly better upholstered than they were a decade ago. Still, with hindsight it is hard to imagine how they could have done much worse. + +Ten years onMore in this special report: + + + +Ten years on:A decade after the financial crisis, how are the world’s banks doing? + +When the music stopped:How the 2007-08 crisis unfolded + +Sheep and goats:American banks have recovered well, but many European ones are still struggling + +After Dodd-Frank:American banks think they are over-regulated + +Bother over Basel:Basel 3, an international capital-adequacy standard, is unloved but much needed + +Financial technology:How banks are dealing with technology companies + +The millennial problem:Banks are finding it harder to attract young recruits + +How safe are banks?:Another crisis one day cannot be ruled out + + + + + +Business + + + + +Sports on TV: Still the champion? + +Alphabet v Uber: No brakes + +The pharma industry: Hard to swallow + +Ride-hailing in Saudi Arabia: Taken for a ride + +Animal waste: Burning the fat + +The newspaper business: Metamorphosis + +Street food: Rules of the road + +Schumpeter: From great to good + + + + + +Still the champion? + +ESPN is losing subscribers but it is still Disney’s cash machine + +Sports fans are producing their own bootleg highlights + + + + + +FOR a sports addict, a visit to ESPN’s 123-acre campus is like mainlining the product. In an industrial workspace connected by an array of cables and satellite dishes to live feeds from all over the world, employees of the channel crowd around monitors at 80 desks and watch games. + +This is the world’s nerve-centre for highlights. The feeds show almost every sporting event that might be of interest, from cricket tests in India to football matches in Brazil to baseball games in Florida. ESPN’s staff watch everything so that viewers don’t have to, digitally tagging more than 1,000 of the day’s best plays to turn them into consumable clips on TVs, browsers and smartphones. + + + +The campus embodies Disney’s hopes for the brand—the technology inside it has been expensively upgraded in recent years. The channel offers live sporting events, continuous sports news, game highlights and conversations about sport. By dominating televised sport, ESPN generates some $4bn in cash for its parent each year, over two-fifths of Disney’s profits. + + + + + +The problem, however, is that ever-fewer people are tuning in. The number of American homes paying to get ESPN has declined by more than 12m from a peak of 100m in 2011 (see chart). ESPN is not alone: consumers are broadly abandoning costly cable packages for online services from Netflix, Amazon and Hulu. + +In the households that are still connected to ESPN, residents are watching less. Figures from Nielsen, which tracks TV viewership, show big declines in American audiences over this decade both for big sporting events and, especially, for news-and-highlight shows. The early-evening edition of SportsCenter, ESPN’s flagship show since 1979 and a touchstone of American sports culture in the 1990s, has lost almost half of its audience in the demographic segment of men aged 18 to 49, which is coveted by advertisers. These viewers make up 46% of the show’s audience (itself 77% male). + +One reason is that viewers are sharing highlights using phones. ESPN makes many of these clips, but sports leagues and other networks also produce them. Fans film plenty of their own, capturing snippets from games they watch on their devices and posting them on social media. Some post clips of their TV sets at home; it is not uncommon to see Lionel Messi’s latest wonder-goal in such bootleg fashion. + +In a cruel twist, however, the cost of rights to live games has shot up even though sport is attracting fewer viewers. That is because the decline in ratings for scripted dramas and comedies on cable has been still more calamitous. Viewers at home are watching their favourite shows on catch-up instead of when they air originally, or they are watching such entertainment on Netflix-like services. Networks and advertisers see live sports as one of the few examples of “appointment viewing” that still draws substantial audiences. + +Some former employees at ESPN reckon that the network has taken this reasoning to the extreme and paid way over the odds for sports rights, including $1.9bn a year for 17 regular-season National Football League (NFL) games plus highlight rights, and over $600m a year for eight post-season college football games. The next time sports contracts are up—the NFL is due in 2021—they are expected to get even more expensive. Cash-rich tech firms want sport to enhance their internet services: Amazon recently agreed to pay $50m for the right to offer ten NFL games on its Prime video service. + +As a result, an empire that has been expanding almost continuously since 1979, when ESPN was just a few men and a transponder, looks shaky. In 2017 its operating profit will probably be lower than last year’s. Some experts believe that profits will fall by a lot more over time. In April ESPN laid off about 100 people, including well-known journalists and on-air talent. Bob Iger, Disney’s boss, admits that the pay-TV system is “definitely challenged”. + +That is why John Skipper, ESPN’s president, is improving the company’s digital services. Yet an ESPN-branded subscription streaming service, due to start later this year, has not allayed fears much; some worry it will speed the decline of cable TV without improving ESPN’s bottom line. The pace of “cord-cutting” caught the firm by surprise, critics say. “The question for me is, how much of this should they have seen coming?” says James Andrew Miller, author of a book on the network. + +One argument is that ESPN misjudged the readiness of competitors to overpay for sports rights and, because of that, overpaid for them itself. If it had not splurged, it could have demanded smaller increases in its hefty subscriber fees in exchange for cable providers guaranteeing to sell more cable packages that include ESPN. + +In the short term there is little cause for worry. Thanks largely to the high “affiliate” fees ESPN collects from pay-TV operators, its profits should start growing again from 2018. For the next five years at least, it should continue to be Disney’s cash cow. But after that, the rights’ costs will ratchet up again after deals expire. And the high affiliate fees look ever more precarious. + +In 2011 ESPN was paid less than $5 per subscriber per month. This year it is being paid $7.86, according to Kagan, a research firm—meaning it collects $2.3bn more despite having 12m fewer subscribers. No other basic-cable channel commands even $2 a month from pay-TV operators, and most charge far less than a dollar. ESPN has been able to charge so much because it is crucially important to distributors as a “must-have” cable channel. But the high cost could be driving some pay-TV customers away. And if the fees were ever to go down, investors would run screaming. + +That will be a growing concern as consumers turn to new, skinny bundles of TV channels being offered over the internet at low prices. YouTube recently announced it will be selling a live TV service, joining several other services offering TV packages for as little as $20-40 a month (a typical monthly cable bill in America is about $80-100). ESPN is being offered in almost all of these packages so far, which Mr Iger sees as a sign of the network’s resilience. ESPN gets paid at least the same fee, of $7.86 per subscriber, on the internet services. Mr Iger believes that as consumers continue to opt for cheaper packages of channels, it will be non-sports channels that will be left out. + +Yet this is not a forgone conclusion. Recently some cable networks, including AMC, are said to have begun discussing an ultra-cheap non-sports bundle. Disney will fight that—it has commitments from pay-TV operators that ESPN must be included in a certain percentage of cable packages—but it portends a struggle over ESPN’s place in the future TV landscape. + +At its headquarters, it is clear that the network is taking these challenges seriously. In an effort to retain viewers, ESPN is turning to shows driven more by personalities than by sports highlights. Examples include a revamp of its early-evening edition of SportsCenter, called SC6, with two bantering presenters. + +Eventually Disney may have to be bolder still. ESPN could be marketed one day as a standalone internet service. Mr Iger says he thinks it can, if need be, become a “Netflix for sports”. Such an offering would have far fewer subscribers than it has now via cable, and thus would have to be much more expensive than Netflix—probably $20 or $30 a month. + +Underestimating ESPN has been a mistake in the past. Its inception was a struggle; investors, lenders and commentators doubted the prospects of an all-sports network. In 1996, when Disney bought its 80% of ESPN as part of its purchase of ABC, a broadcast network, the sports network was an afterthought. Now, however awkwardly it sits with film studios, franchises and theme parks, its place in the Disney firmament is secure. ESPN may have muscled its way into many homes that no longer wish to pay for it, but a sizeable, hard core of fans is unlikely to kick the habit. + +This article appeared in the Business section of the print edition under the headline “Still the champion?” + + + + + +No brakes + +Alphabet’s case against Uber + +A lawsuit about self-driving cars shows Silicon Valley’s complicated ties + + + +May 4th 2017 | SAN FRANCISCO + +PURLOINED documents, duplicitous employees and conflicted loyalties. The race to dominate the field of self-driving cars is in its early stages, but is already full of intrigue. On May 3rd a packed courtroom watched lawyers tussle during a hearing on a lawsuit that could affect the future of autonomous-vehicle technology. + +On one side is Waymo, the self-driving car unit owned by Google’s parent company, Alphabet. It has accused Uber, a ride-hailing firm, of using stolen technology to develop its autonomous-driving capabilities. The origin of the dispute was a deal last summer when Uber spent $680m to buy Otto, a self-driving lorry firm. Anthony Levandowski, who had worked at Alphabet for ten years and played a big role in its self-driving efforts, had co-founded the startup, which was just seven months old when Uber bought it. + +Before leaving Alphabet to start Otto, Waymo claims, Mr Levandowski illegally downloaded around 14,000 computer files that contained proprietary information about its lidar technology. Lidar uses lasers to scan a vehicle’s surroundings and is essential for many self-driving systems. Mr Levandowski has not directly addressed many of Waymo’s allegations. He has invoked the Fifth Amendment to avoid making statements that could be self-incriminating. The government could choose to bring criminal charges in the months ahead, and Mr Levandowski has hired his own civil and criminal defence lawyers. + +Uber, for its part, has firmly rejected the allegations, and says that its lidar is different from Waymo’s. It had been working on autonomous cars well before it bought Otto, it points out. But the very fact of the lawsuit comes at a bad time for Uber, which is under fire for having a rough-and-tumble culture that values winning at all costs. The lawsuit may also have hurt Uber’s ability to recruit employees to help develop its autonomous efforts. Because of it, no one knows which technologies the firm will be able to use. + +As a result, the outcome could affect the landscape for autonomous-vehicle technology. Alphabet has been working on self-driving cars since 2009 but now faces lots of competition. It has watched established carmakers and younger rivals accelerate their efforts. Uber has been scrambling to develop autonomous capabilities lest another company come up with a cheaper ride-hailing service using self-driving cars. A federal judge was expected to decide whether to grant Waymo’s request for an injunction as The Economist went to press. Such an outcome could bar Uber from using its lidar technology until the case goes to trial in October. + +As well as revealing cut-throat competition over self-driving car technology, the case draws attention to how intertwined rivals often are in Silicon Valley. Alphabet is one of Uber’s largest shareholders. Its venture-capital arm, Google Ventures, made a $250m investment in Uber in 2013. Until last year David Drummond, Alphabet’s chief legal officer, sat on Uber’s board. + +Firms allow star employees to develop complex loyalties, too. It has emerged in legal documents that at Alphabet, Mr Levandowski had two self-driving startups on the side. Alphabet dealt with this by quietly buying the firms for a reported total of $50m, presumably wanting to keep him and to stop rivals acquiring his startups. + +Uber last month demoted Mr Levandowski so that he no longer leads the company’s autonomous initiatives. The future of ferrying things and people about will rely on self-driving technology. Uber’s acquisition of Otto seemed a far-sighted bet not long ago. But now it looks like Uber’s riskiest decision yet. + + + + + +Hard to swallow + +Cancer drugs are getting better and dearer + +AstraZeneca’s Imfinzi costs $180,000 for a year’s treatment + + + +May 4th 2017 + +THE debate in rich countries about the high price of drugs is a furious and frustrating one. The controversy is already having an impact on spending on drugs, suggest new figures from the QuintilesIMS Institute, a research firm. The rate of growth in spending on prescription medicines in America fell to 4.8% in 2016, less than half the average rate of the previous two years (after adjusting for discounts and rebates). Michael Levesque of Moody’s, a rating agency, reckons that pressure over pricing is contributing to a deceleration in earnings growth at pharma firms. Public scrutiny constrains their flexibility over what they can charge and allows payers to get tougher. + +In one area, however, earnings are expected to keep rising: cancer. Oncology is the industry’s bright spot, says Mr Levesque. The grim fact is that two-fifths of people can now expect to get cancer in their lifetime because of rising longevity. This is one of the reasons why the number of new cancer drugs has expanded by more than 60% over the past decade. The late-phase pipeline of new medicines contains more than 600 cancer treatments. New cancer drugs are being approved more quickly. + +More are arriving all the time. On May 1st, America’s Food and Drug Administration approved durvalumab (trademarked Imfinzi), a drug from AstraZeneca, a British firm, which treats cancer of the bladder. Imfinzi, which has a wholesale price of $180,000 for treatment lasting a year, joins a growing crowd of medicines known as “checkpoint inhibitors”, designed to work on a key molecular target that helps the body’s own immune system to fight cancer. Merck of America has pembrolizumab (Keytruda); Bristol-Myers Squibb has nivolumab (Opdivo); and Switzerland’s Roche has atezolizumab (Tecentriq). + +These checkpoint inhibitors are expected to account for much of the growth in spending on cancer medicines. Merck, in particular, has done well with Keytruda. A sense of the value of the new drugs came when Opdivo failed a key clinical trial in August last year. The market value of Bristol-Myers Squibb fell by 16%, and its shares have been in the doldrums since. + +Handsome prices for cancer drugs are far less pleasing for governments, insurers and patients. Even five years ago, most newly-approved treatments had gross annual prices of more than $100,000. But the pressure on budgets has worsened with the new generation of more expensive immuno-oncology drugs, and could become more severe still if they are found to work best in combination with each other. + +Making a mistake over which cancer drugs to use can be extremely costly for a payer, as illustrated by a disastrous recent attempt by Britain’s government to increase access to new cancer drugs by creating a special fund in 2010. By the time it closed in 2016, £1.27bn ($1.83bn) had been spent, mostly on drugs that were later shown to be ineffective for the conditions they were tried on. + +Some think a better approach would be to try drugs out on patients and for payers to pay a price based on how well they work, an approach known as “value-based pricing”. That would mean collecting a great deal of data from patients, which would be far from straightforward. + +Some companies, such as Genentech, a biotech company owned by Roche, are trying to do just this, as are some payers including American health insurers. But however reassuring it is to know that money is going on drugs that are proven to work, it does not solve the broader problem of affordability. + + + + + +Taken for a ride + +Saudi women are a captive market for Uber and Careem + +Ride-hailing thrives in Saudi Arabia + + + +May 4th 2017 + +NASHMIAH Alenzy, a doctor in Saudi Arabia’s conservative Qassim region, uses ride-hailing apps at least two or three times a week, and sometimes every day, to get to work or to run errands. Before she started using these apps last year, every journey needed to be planned well in advance as she negotiated getting a lift with her husband, her brother, or a private driver. + +Barred from driving in a country with non-existent public transport, Saudi women are a profitable prospect for ride-hailing companies. Careem, a firm valued at $1bn that is based in Dubai and operates across the Middle East, north Africa and South Asia, set up shop in 2013. Uber followed in 2014. Both see the Saudi market as one of the most lucrative in the region. Around four-fifths of their respective customers are women. + +Both firms are directly backed by the Saudi state. In response to falling oil revenues, the government’s “Vision 2030” programme seeks to diversify its sources of income. In June last year its sovereign-wealth fund ploughed $3.5bn into Uber; and in December Saudi Telecom, which is controlled by the same fund, took a 10% stake in Careem. + +If the motives for these investments are chiefly financial, the two firms also fit the government’s social goals. Both help (male) participation in the gig economy, in line with an aim to push more Saudis into the private sector, which is currently dominated by expatriates. Unemployment is high, particularly for the young. Around two-thirds of those in work are employed in the cushy public sector. Last year the Ministry of Transport decided that only Saudi drivers could be licensed to use their own cars for ride-hailing. Foreigners must be employed directly by taxi firms. + +Ride-hailing services also help with the government’s stated aim of boosting women’s labour-market activity. Only 1.9m out of 13.1m Saudi women participate in the workforce. One barrier to work is a lack of mobility; ride-hailing apps mean that more women—at least, those with credit cards and smartphones—can take up work or run their own businesses. Uber, under fire in its home market for its macho culture, has a better story to tell in the Gulf. + +Saudi Arabia’s embrace of ride-hailing also exposes a contradiction. Because of pressure from Wahhabi clerics, women are not allowed to drive or to mix with men outside their family. Yet the state is actively encouraging them to spend time alone with total strangers, something that makes conservatives uncomfortable. + +Some women are annoyed for different reasons. The state ensures that women are dependent on men to get around, says Hatoon al Fassi, an academic, and is now profiting from that dependence. Despite her qualms, Dr al Fassi often has little choice but to use the Uber app herself. So long as women cannot take the wheel themselves, ride-hailing companies will be firmly in the driver’s seat. + + + + + +Burning the fat + +Neste uses animal waste to make a cleaner form of diesel + +The Finnish refiner is turning slaughterhouses into oil wells + + + +May 4th 2017 | PORVOO + +IN ALDOUS HUXLEY’S “Brave New World”, the human corpses in Slough Crematorium are turned into a phosphorous-based fertiliser. “Fine to think we can go on being socially useful even after we’re dead,” a character enthuses. + +An engineer at Neste, a Finnish oil company, wryly echoes that observation while showing visitors around a novel diesel refinery in Porvoo, an industrial town 50km (31 miles) east of Helsinki. But the sickly-smelling brown gloop fed into the town’s pre-treatment plant has nothing to do with humans. It is made from the rendered fat of slaughtered cattle and pigs, transported by tankers in heated vats to stop it congealing. No reindeer, either. “Too lean,” he says. + +In a triumph of the “circular economy”, Neste has found a way to make transport fuel more sustainable. After heating and filtering the gunk, what is left of it is mixed with hydrogen in a refinery, producing diesel-like hydrocarbons that are then tailored so that they can be poured straight into the tanks of everything from cars to passenger jets. “You could put this in your VW diesel and drive off,” says Joshua Stone of Barclays, a bank. + +Since BP, a British firm, made its attempt to go “Beyond Petroleum” in the 2000s, many oil companies have sought to become greener. But few have taken a more idiosyncratic route than Neste, which is part-owned by the Finnish state. In the past decade it has invested €1.42bn ($1.55bn) in “biorefineries” in Porvoo, Singapore and Rotterdam. These process animal waste and recycled cooking fat into renewable diesel, a cleaner form of the fuel than that which, since the scandal at Volkswagen, has tainted the car industry. It is also a more sustainable alternative than the biofuels made from food crops. Neste has become the world’s biggest producer. + +For years, Neste’s diversification away from fossil fuels terrified investors. “They really didn’t believe us,” says Matti Lievonen, its chief executive. But since 2013, when its operating profit from renewable diesel turned positive for the first time, to last year, when it reached €469m, its shares have outperformed other refiners. A few competitors, such as Valero, an American refiner, Total of France and Eni of Italy, also produce renewable diesel, but Neste’s 2.6m-tonne capacity dwarfs theirs. + +The preference for renewable diesel over other biofuels is because it can be “dropped” straight into a tank with no blending. Neste says its products generate less carbon dioxide, nitrogen oxides and particulates than fossil diesel, which is why California, a clean-energy pioneer, is its biggest market. Renewable diesel is more expensive than its traditional counterpart, however, so it relies on clean-energy mandates, fuel standards and tax credits for growth. Demand is thus subject to the whims of regulators, which can fluctuate. + +Most intriguing is Neste’s impact on slaughterhouses globally. Ryan Standard of The Jacobsen, an American journal that tracks the trade in animal fats, says that anticipated global demand from Neste and its smaller American rival, Diamond Green Diesel, is likely to account for the equivalent of almost half the tallow, lard, white grease, poultry fat, used cooking oil and other Dickensian-sounding waste products produced in America. That may put an upper limit on the supply of raw materials, meaning renewable diesel will always remain a niche product. + +Yet Neste still sees ample room for growth, as restrictions on cars using fossil diesel increase, and fuel-guzzling heavy vehicles and jet aircraft strive for lower emissions. Petri Lehmus, its head of research and development, says the firm is exploring new potential feedstocks such as forest residues and algae. However successful it is, Neste will never become the next Saudi Aramco. But what it lacks in natural resources, it will strive to make up for in human ingenuity. + + + + + +Metamorphosis + +Axel Springer’s digital transformation + +From heavyweight newspapers to price-comparison websites + + + +May 4th 2017 | BERLIN + +VISITING the top floor of Axel Springer’s tower in Berlin is like travelling back to a lost age. The German publisher’s Journalisten Club is a suite of wood-panelled rooms filled with antique books, leather armchairs and classical paintings. “It is a symbol,” says Mattias Döpfner, the publisher’s chief executive. + +Whether it still makes sense as a symbol is unclear, for Axel Springer’s business has shifted rapidly away from print media (though it still owns Bild and Die Welt, two leading German dailies) towards an array of digital businesses. In 2000 it had almost no digital revenue; by the end of last year over 72% of its operating profit came from digital activities. Profits have increased by 37% over the past decade, from €434m ($473m) in 2006 to €596m last year. + +Four years ago Axel Springer sold off several newspapers and magazines, including the Hamburger Abendblatt and the Berliner Morgenpost, for $1.2bn. In 2015 it nearly bought the Financial Times, a British paper with a strong online presence but lost out to Japan’s Nikkei, which paid a whopping £844m ($1.1bn). Shareholders were said to be relieved. + +The list of Axel Springer’s digital acquisitions, meanwhile, stretches to over 150 in the past decade. StepStone, Germany’s most-visited site for jobseekers, for example, is one of several popular classified-ad platforms it owns, for everything from second-hand cars and holiday rentals to jobs and real estate. It has the world’s most lucrative collection of such ads. Another big business is Idealo, a popular price-comparison site with tips for thrifty housewives. + +Its recent foreign acquisitions include Business Insider, a digital-only news site known for clickbaity headlines and for features like “Coolest people under 40 in Silicon Valley”, and eMarketer, a New York-based publisher of digital-market data. Last year Axel Springer joined forces with South Korea’s Samsung to start Upday, a mobile-news service that combines algorithms with human editors to provide users with personalised news streams. + +The company’s tower in Berlin overlooks its startup accelerator, a joint venture with Plug and Play, a Silicon Valley-based firm that helped companies such as Google and PayPal early on. It is meant to give the firm an early look at up-and-coming disrupters, which it then either buys or keeps a close eye on. Of late Axel Springer has also started making direct, early-stage investments in small American startups such as Thrillist.com, a lifestyle site for young men. It has taken tiny stakes in giants too: in Airbnb, a home-sharing site, and in April, in Uber, a ride-hailing firm. + +This web of investments causes some awkwardness. Neil Thurman, a media professor at Ludwig-Maximilians-Universität in Munich, says that Axel Springer needs to be highly transparent in how it reports on companies. The group’s newspapers often include disclaimers in articles disclosing its financial interests but some articles neglect to do this, he notes. + +Axel Springer’s bid for the Financial Times underlined an enduring appetite for conventional journalism, and in January the group launched Fussball Bild, a new, print-only sports newspaper, Germany’s very first sports daily. But at the majority of its print publications, circulations are still in steady decline. Bild’s average daily circulation halved between 2006 and 2016, from 3.8m to 1.9m. By investing in digital classifieds and advertising Axel Springer has bought itself time to try and save its traditional news business, argues Katja Riefler, a media analyst. If they help with that hard task, the startups might even get invited to the Journalisten Club. + + + + + +The burghers rise up + +America’s food-truck revolution stalls in some cities + +Chicago and New York try to protect bricks-and-mortar restaurants + + + +May 4th 2017 + +IT WAS in 2008 that an out-of-work chef named Roy Choi began selling $2 Korean barbecue tacos from a roaming kitchen on wheels, tweeting to customers as he drove the streets of Los Angeles. Mr Choi’s gourmet food truck has since inspired a reality-TV programme and a hit Hollywood film, and helped jumpstart a $1.2bn industry. + +Within the food industry, the food-truck business, built on unique dishes, low prices and clever use of social media, is the fastest-growing segment. Restaurants fret about an army of trucks stealing customers but such concerns are unwarranted. According to the Bureau of Labour Statistics, counties that have experienced higher growth in mobile-food services have also had quicker growth in their restaurant and catering businesses. + +Although many cities have treated food trucks as a fad, a nuisance, or a threat to existing businesses, others have actively promoted them. Portland, Oregon, known for its vibrant culinary scene, has had small food carts on its streets for decades. After a study in 2008 by researchers at Portland State University concluded that the carts benefited residents, the city began encouraging the use of vacant land for food-truck clusters or “pods”. Today, Food Carts Portland, a website, reckons the city has over 500 carts and trucks. + + + +Yet government figures suggest the revolution has stalled in several of the country’s biggest cities (see chart). The sector is subject to a patchwork of state and local regulations. In few places are these stricter than in Chicago. Influenced by a powerful restaurant industry, the city prohibits food trucks from setting up shop within 200 feet of a bricks-and-mortar eatery or from parking in any one location for more than two hours. Vendors are required to carry GPS devices that record their whereabouts every five minutes, on pain of heavy fines. Such restrictions have stifled the industry’s growth. Despite being home to more than 7,000 restaurants and 144 craft breweries, Chicago has just 70 licensed food trucks. + +The Windy City may be the least food-truck-friendly place in America but New York and Boston are little better. In Boston vendors must compete for space on public roads at specified places and times through an annual lottery. In New York a vendor must obtain a two-year government permit, which requires sitting through a 15-year waiting list or shelling out as much as $25,000 to rent one on the black market. Adam Sobel, owner of Cinnamon Snail, a popular vegan food truck, shut down his operations in 2015 because of rising costs. “You kind of have to be crazy to have a food truck in New York,” he says. + +Fortunately, truck operators can drive to more welcoming cities, such as Minneapolis and Philadelphia. Once there, and no matter how cosy they get with policymakers, truck owners still want to cultivate their underdog image. “It used to be the restaurants and their chefs that had all the power,” says Han Hwang, the chef and owner of Portland’s Kim Jong Grillin’. “Now it’s the people. That’s the revolution that’s happening right now.” + + + + + +Schumpeter + +Harvard Business School risks going from great to good + +A confidential memorandum of warning to its senior faculty + + + +May 4th 2017 + +YOU will all be aware that a book has just been published about our institution, Harvard Business School (HBS). Entitled “The Golden Passport”, by Duff McDonald, it makes a number of unflattering claims about the school’s ethics and its purpose. While often unbalanced, it is likely to galvanise hostility to HBS both inside Harvard University, of which we are a part, and among the public. This memorandum, circulated only to the most senior faculty members, assesses HBS’s strategic position. + +Our school has been among the country’s most influential institutions since its foundation in 1908. Our forebears helped build America’s economy in the early 20th century and helped win the second world war. HBS educates less than 1% of American MBA students but case studies written by our faculty are used at business schools around the world. Our alumni fill the corridors of elite firms such as McKinsey. Many bosses of big American companies studied here. Even in Silicon Valley, where we are relatively weak, about a tenth of “unicorns”—private startups worth over $1bn—have one of our tribe as a founder. + +We have a business model that monetises the Harvard brand through four revenue streams. About $127m, or 17%, of sales come from MBA tuition fees. Our case-study method, in which students learn from real business situations, is popular. But it is only one reason why they are willing to pay headline fees of $71,635 a year. Like parents of pupils at Britain’s elite private schools, they are buying social standing as well as access to an alumni network that will dramatically raise their odds of getting high-paying jobs. + +A further 23% of sales comes from our executive-education operation, which sells short courses to mid-career executives. They get a modest amount of mental stimulation and the right to call themselves Harvard alumni. We get $176m a year in return. Our publishing arm sells case studies to other universities and publishes books and a magazine; that brings in 29% of our revenues. The remaining 31% comes chiefly from wealthy businessmen in the form of donations. Some of them may well be under the impression that they gain influence over what we teach. + +We have had a fantastic run of it, with sales growing at a compound annual rate of 8% in the past decade, above the university’s rate of 5% and outperforming the median firm in the S&P 500 index. Our balance-sheet is strong, with $3.2bn of endowment funds (run by the university’s management company) and $1.6bn of other assets, including our campus. You have all benefited handsomely; we pay out a higher share of our income in compensation than Goldman Sachs does. It may look like poor cost control, with expenses rising at a 7% annual rate, but it also means we live up to our legal status as a non-profit organisation. After deducting capital expenditure, the school makes a modest loss. + +However, we face three strategic problems. First, conflicts of interest—let’s be honest here—that have become glaring. We grant companies a veto over case studies written about them. We permit our faculty to be paid, for example, through consulting gigs, by firms they teach about. We do case studies on some of our big donors. It is likely that this compromises our objectivity. + +Second, we face ever more competition to our claim to intellectual leadership. Important business thinkers such as Michael Porter and Clayton Christensen are still on staff, but a new generation of superstars has not yet caught fire. The authors of the most influential recent business book, “The Second Machine Age”, work across the Charles river at the Massachusetts Institute of Technology. As the tech industry expands, its chief alma mater, Stanford University, is growing ever more powerful. + +Last, we may perpetuate inequality, a relevant subject at the moment. We have worked to make our intake of students more diverse. But even after the financial aid that we give to some, we have ramped up our effective MBA fees by 31% over the past five years. Relative to the median salary our graduates earn in their first year at work, our fees are twice as costly as they were in 1986. It doesn’t take much to see our network as a form of cronyism. + +Left unaddressed these weaknesses could compromise our business model. If HBS is more about cash and contacts than ideas, bright people may eventually go elsewhere. Other schools may stop buying our case studies if they doubt their objectivity. We are part of Harvard University, but our already uneasy relationship with it could deteriorate. We benefit from an implicit subsidy because we can use the Harvard brand while operating at arm’s length. In return they benefit from our alumni, who often donate to the university as well as to HBS. But the university has, at least notionally, the power to overhaul our management. + +The Boston Business School Inc + +Our school, led by Nitin Nohria, dean since 2010, has made important reforms. We have tightened disclosure rules on conflicts of interest. Students must spend time in emerging markets. We have tried to signal that our interests go beyond shareholder value by publishing essays criticising it. Yet deeper changes are needed if we are to maintain our competitive position. One course is to reduce the influence of big money and fully eliminate conflicts. Our dependence on big donors’ generosity would have to fall and, by implication, we would have to be less extravagant. + +If you have a good thing going, though, why stop? An alternative is to follow the advice of Alfred Chandler, a theorist at HBS between 1970-89, who taught that structure must reflect strategy. HBS would cut loose from Harvard and acknowledge its tacit commercial status. If we trimmed costs to their level five years ago and were valued on the S&P 500’s price-earnings multiple, HBS would be worth $5bn. The university would get a huge special dividend with which to pay for more scholarships for underprivileged applicants. We would be subject to the forces of accountability and transparency that we have always argued maximise performance. We look forward to your feedback. + + + + + +Finance and economics + + + + +Chinese investors: The Buffetts of China + +Buttonwood: Cape Fear + +Government debt: Taking the ultra-long view + +Puerto Rico’s finances: To be resolved + +Illegal-wildlife trade: On the horns + +Car finance in America and Britain: Subprime, anyone? + +The euro-area economy: Speeding up + +Free exchange: Algorithms and antitrust + + + + + +The Buffetts of China + +Warren Buffett has many fans in China but few true followers + +China’s wild-east stockmarkets are more suited to cowboys than to Oracles from Omaha + + + +May 6th 2017 | Shanghai + +AS THE second-richest person in the world, and with a half-century record of investing success, Warren Buffett is a household name worldwide. But in China, he is something more: a celebrity. In March a special edition of Cherry Coke, featuring a cartoon image of the 86-year-old investor, hit Chinese shop shelves (Mr Buffett not only loves the sugary beverage; he is Coke’s largest shareholder). On May 6th thousands of Chinese investors will descend on Omaha for the annual meeting of Berkshire Hathaway, his holding company, and many more will tune into a live-stream of the event. Mandarin is the only foreign language into which the proceedings will be simultaneously translated. Those who miss the broadcast can pick up one of the hundreds of Chinese books about his approach to minting money. + +Mr Buffett’s stature in China stems partly from good timing. China’s modern stockmarket was launched in 1990. Just as neophyte investors grappled with earnings reports and trend lines, the Oracle of Omaha’s reputation as the world’s best stock-picker was blossoming. Compared with the regular booms and busts of the Chinese stockmarket, the steady returns of Berkshire Hathaway are beguiling. For Chinese investors who do make it big, there are few greater accolades than to be dubbed the “Warren Buffett of China”. This title has been conferred on or claimed by no fewer than ten tycoons. + +But they might want to think twice. In the Chinese context, declarations of Buffett-like investment abilities have, over the past couple of years, proved less a badge of honour than a warning sign. In rapid succession his putative disciples have run into trouble. One was jailed for manipulating the stockmarket. A second has been held incommunicado in custody for months. A third was hauled in as part of a government investigation. + +This chasm between the veneration for Mr Buffett and the travails of those who supposedly model themselves on him points to the messy reality of Chinese finance. Investors are becoming more sophisticated, with professional fund managers, once marginalised, playing a bigger role in the country’s markets. Mr Buffett is held up as the gold standard of value investing, respected for his long-term view in selecting stocks. But when they get down to business, many Chinese investors still opt for hard-driving, debt-laden, risky approaches; they are products of a stockmarket that is not yet three decades old and an economy that during that time has seen few serious downturns. + +Consider the two investors most often likened to him. One is Guo Guangchang, chairman of Fosun, a conglomerate with interests from mining to tourism. There is a superficial similarity between Fosun and Berkshire Hathaway in that both partly pay for their investments by selling insurance. But the contrasts are just as striking. Over the past decade Berkshire Hathaway has been able to finance more than four-fifths of its investments with cashflow from its operations; Fosun’s cashflow has covered less than a quarter of its investments. The result has been a much higher reliance on debt for the Chinese firm. + +Another Chinese investor described as applying the “Warren Buffett model” is Wu Xiaohui of Anbang. Anbang’s insurance business has surged over the past five years, with its assets reaching 1.9trn yuan ($286bn) in 2016, more than triple their 2012 level. Anbang, like Berkshire Hathaway, has financed most of its investments with revenues from selling insurance. But unlike Mr Buffett’s stable business, Mr Wu has relied on the sales of short-term, high-yielding insurance policies, tantamount to a hidden form of debt. + +These Chinese Buffetts now face a stiff test. The government appears at last to be serious about cleaning up financial markets after a decade of runaway debt growth. Regulators have repeatedly promised to rein in credit issuance, only to back down when the economy has slowed. In recent months, though, they seem to be mounting a more sustained onslaught. Xi Jinping, China’s powerful president, has declared that the focus of financial policy should be on limiting risks. The securities regulator has vowed to catch the “giant crocodiles” feasting on the savings of ordinary investors. And the banking regulator has unleashed what the local press has called a “tightening storm”, choking off cashflows to shadow banks. + +The risk to Chinese investors is twofold. The first is political. The state is closing in on those it suspects of illegality. Xu Xiang and Xiao Jianhua, managers of secretive investment companies, won accolades as Chinese Buffetts for no reason other than their good returns. Both are now in detention: Mr Xu was jailed for manipulating the stockmarket; Mr Xiao is being held as part of a corruption investigation. + +The second risk is financial. In clamping down on debt, regulators’ targets are the debt-laden investments favoured by China’s insurance upstarts. Both Fosun and Anbang have had to call off foreign deals in the past year. On May 3rd Anbang said it would sue Caixin, a business magazine, over allegations of financial irregularities. + + + +Lost in all the hype about these supposed Buffetts of China is that there are in fact companies which have been more Buffett-like: big, boring, mainly state-owned insurers. Hewing to official rules, they have been more cautious about using debt. Benefiting from China’s growth, their performance (measured by book values per share, Mr Buffett’s preferred gauge) has topped Berkshire Hathaway’s over the past decade, albeit with more ups and downs (see chart). They also share one other trait with Mr Buffett, who is famed for his humility. They have not boasted about their success. + + + + + +Buttonwood + +Investors are both bullish and skittish about share prices + +American share valuations are higher now than on the eve of the financial crisis + +May 4th 2017 + + + +TEN years ago this month investors were pretty confident. True, there were signs that problems in the American housing market would mean trouble for mortgage lenders. But most people agreed with Ben Bernanke, the Federal Reserve chairman, that “the impact on the broader economy…seems likely to be contained.” The IMF had just reported that “overall risks to the outlook seem less threatening than six months ago.” + +That was reflected in market valuations. In May 2007 the cyclically-adjusted price-earnings ratio (CAPE), a measure that averages profits over ten years, was 27.6 for American equities (see chart). That ratio turned out to be the peak for the cycle. As the problems at Bear Stearns, Lehman Brothers and others emerged, and as the world was gripped by recession, share prices plunged. By March 2009 the CAPE had fallen by more than half. + +Central banks then kicked into action, slashing interest rates and buying assets via quantitative easing (QE). The stockmarkets recovered rapidly and the S&P 500 is now more than 50% higher than it was ten years ago. And the American stockmarket’s CAPE, at 29.2, is also higher than it was back then. + +Investors might worry about equity valuations but what are their alternatives? A decade ago, the ten-year Treasury-bond yield was around 4.8%; now it is 2.3%. The Fed may have started to raise rates but the return on cash is still pitiful in nominal terms and negative in real (ie, after inflation) terms. + +But at least the return on cash and bonds (held to maturity) is fixed in nominal terms. Investors have already suffered two big bear markets in equities this millennium. On each occasion, their losses in percentage terms were in the double digits. What might trigger another collapse? + +There is no law that says the CAPE has to return to its long-run average of 16.7; indeed, the ratio’s mean over the past 30 years has been 24.5. Even in the depths of the 2008-09 crisis, the ratio only fell below the long-run average for ten months. + +When investors accept a high CAPE for shares, they are confident about the ability of companies to maintain, and increase, their profits. One reason why the American market has powered ahead since the election of Donald Trump is that investors expect cuts to the tax rate on corporate profits, allowing more of those profits to be passed on to shareholders. + +As Jeremy Grantham of GMO, a fund-management group, points out, there does seem to have been a step change in the level of American profits, as a proportion of both sales and GDP, since 1996. The corollary has been a lower share of GDP for labour, one factor behind voter discontent. + +Mr Grantham suggests two forces behind the higher profits: enhanced monopoly power for American companies; and low real interest rates, which have allowed firms to operate with more debt. Both suggest there is something wrong about the way capitalism is currently working. If profit margins are high, then more capital ought to be ploughed into businesses until investment-led competition drives margins back down; that has not happened. And low real interest rates reflect, in part, the extraordinary measures taken by central banks to revive developed economies after the financial crisis. + +The conventional threats to the equity market are twofold: a sharp rise in interest rates, which would hit indebted individuals and companies; or a decline into recession, which would dent profits. Neither looks imminent at the moment, which helps explain why Wall Street keeps hitting record highs. + +But there are other ways that profit margins could be hit. Protectionist policies could disrupt the free flow of goods, services and people across borders. A credit crisis could emerge elsewhere in the world—in China, for example, where debt has been growing rapidly. Flashpoints in the Middle East or on the Korean peninsula could spark war. + +Investors are not as complacent as they seemed a decade ago. In a poll conducted by Bank of America Merrill Lynch, a net 32% of global fund managers think shares are overvalued. Despite that, however, a net 40% have higher-than-normal holdings in shares. + +In other words, investors are managing to be simultaneously bullish and skittish. By a large majority, fund managers expect global growth and corporate profits to be strong over the next 12 months; but they also know such expectations are already fully reflected in share prices. All will be well provided there are no shocks. But history suggests shocks have a nasty habit of occurring. + +Economist.com/blogs/buttonwood + + + + + +Taking the ultra-long view + +America’s Treasury ponders issuing 40-, 50- or 100-year bonds + +But locking in today’s low interest rates for decades may not save the taxpayer money + +May 4th 2017 | NEW YORK + + + +HOW can governments borrow most cheaply? The answer matters hugely for taxpayers. Take America: it has $14trn in outstanding national debt, fully three-quarters of GDP. Interest payments alone are expected to reach $280bn this fiscal year—ie, more than three times the combined budgets of the Departments of Education, Labour and Commerce. + +The problem largely comes down to deciding how much long, medium and short-dated debt to sell. Almost every country issues a combination of these maturities. In the current low interest-rate environment, however, many argue that governments should sell proportionately more long-dated bonds to make sure they are able to pay historically low rates for many decades to come, thereby saving taxpayers money in the long run. + +Some countries have already ploughed ahead. In recent years Britain, Canada and Italy have sold 50-year bonds; Mexico, Belgium and Ireland have issued 100-year debt. The latest country to flirt with the idea is America: last month the Treasury sent out a survey to bond-dealers to gauge market appetite for 40-, 50- and 100-year bonds. On May 3rd officials said that Steve Mnuchin, the treasury secretary, had set up an internal working group to take a look at ultra-long bonds. Mr Mnuchin has expressed the view that they could “absolutely” make sense. + +Not everyone agrees, including, it seems, the private-sector financiers who make up the Treasury’s own borrowing advisory committee, which met this week. Long-term rates are at historic lows but short-term rates are even lower. The weighted average maturity (WAM) of outstanding Treasury debt is 5.7 years, and the effective interest rate paid on the total pile of debt is 2.03%. The yield on 30-year Treasuries is 3%, so selling even longer-dated debt will raise the overall cost. Even a 0.1 percentage-point rise would add roughly $14bn to the taxpayer’s burden. + +Moreover, ultra-long bonds would be cost-effective in the long run only if short- and medium-term interest rates eventually exceed the levels of long-term rates today. Otherwise governments could simply roll over short-term debt. Issuing very long-term debt is, in effect, like paying for insurance against future interest-rate rises. + +So whether ultra-long bonds would save taxpayers money depends on future inflation and growth. Higher levels of each would probably push up short- and medium-term interest rates. But this is not inevitable. Alex Gurevich of HonTe Investments, a California-based fund-management firm, says interest rates in America are more likely to remain at current levels than to revert to the mean seen in the late 20th century. If Mr Gurevich is right, ultra-long bonds sold today may, ironically, lock in higher rates for longer. + +Finally, the demand for ultra-long government bonds is unpredictable. Institutional investors with long-term liabilities, such as pension funds and insurance companies, may be happy with 30-year bonds, which most countries already sell, or may opt for higher-yielding long-dated corporate bonds, such as those issued by Caterpillar, an American construction-equipment company. Sales of ultra-long government bonds, despite fanfare, have so far been one-off events and do not provide much of a guide. Low demand would in turn send yields higher, raising government debt-servicing costs. + +In some countries, such as Britain, interest rates on long-term debt are not much higher—or are even lower—than on shorter-term borrowing. For them, borrowing at ultra-long maturities is likely to be cheaper than medium-term debt, so it makes sense to replace some mid-length bonds with ultra-long ones, says Niso Abuaf of Samuel A. Ramirez & Company, a New York brokerage. This helps to explain why the WAM of British sovereign debt is unusually long, at 14.9 years (see chart). + +Ultra-long debt is also very attractive to governments such as Mexico’s, which have a recent history of fiscal profligacy and high inflation, yet are able, while investors still trust them, to borrow for the long term very cheaply. In America, however, where Treasury bonds serve not just to raise funds but to set global benchmarks, the calculation is a trickier one. + + + + + +To be resolved + +Puerto Rico declares bankruptcy at last + +The island’s debts will now bring a protracted legal battle + + + +May 6th 2017 | WASHINGTON, DC + +THE government of Puerto Rico said in 2015 that the island could not pay its debts. Yet it was only on May 3rd that it kicked off the biggest bankruptcy case in America’s history. Public-sector debts total almost $74bn (around 100% of GNP). The drawn-out fiscal crisis has both imperilled Puerto Rico’s economy and upended the island’s politics. + +Something akin to bankruptcy is possible only because of a federal law passed in 2016. Until then, the island’s legal status as a territory afforded it no escape from its debts (were Puerto Rico a state, its public utilities could have declared bankruptcy). The law established a “financial oversight board”, appointed in Washington, with the task of reaching a deal with bondholders. But it also allowed for bankruptcy-like proceedings should negotiations fail. + +A two-thirds majority of bondholders would have forced all of them to accept a reduction in the value of their debt. Yet agreement was always unlikely. Puerto Rica’s constitution says payments to holders of so-called “general obligation” bonds have priority over all other expenditure. But another group of creditors have first dibs on revenue from the sales tax. Clearing up this ambiguity seems to require a court battle. Both sets of creditors recently rejected an offer of 50 cents on the dollar. + +In the meantime, Puerto Rico is in dire straits. The government’s latest fiscal plan, approved by the oversight board in March, seeks to balance the budget over three years. Doing so requires austerity cuts worth about 10% of GNP by 2020. The latest federal-budget deal bought a little time with more money for the island’s Medicaid programme, which provides health insurance for the poor (in Puerto Rico, about half the population). The cash was not enough to dissuade striking anti-austerity protesters from filling the streets on May 1st, disrupting public transport and forcing many firms to close for the day. + +Because Puerto Ricans are American citizens, the island’s taxpayers can escape austerity by fleeing to the mainland, leaving fewer people to pay off the debt. The population is more than 8% smaller than in 2010. The economy has been in recession almost continuously since 2006. Unsurprisingly, the island’s politics are in flux. Ricardo Rosselló, the governor since January, promises a referendum on statehood for the island in June. A poll in March showed 57% support for the proposition; some of its opponents want a boycott of the vote. + +However the island votes, and although the 2016 Republican election platform backed statehood, the proposal is unlikely to pass muster in Washington. It would almost certainly put two more Democrats in the Senate. But, at least from Puerto Rico’s perspective, the arguments against statehood are getting weaker. Traditionally, its opponents have said that Puerto Ricans have the best of both worlds: they use the dollar, get American passports, but keep Washington at arm’s length. With the oversight board in place, that claim looks a lot less convincing. + + + + + +On the horns + +Might legalising the rhino-horn trade actually help the rhino? + +Just as likely, it would spur demand, further endangering the creature + + + +May 4th 2017 + +A DEAD rhino, with a bloody stump in place of its horn, means different things. For the species it is the danger of imminent extinction; for wildlife-lovers it is barbarism; for law-enforcers it is failure. For its poachers it means income; the horn will be exported illegally to fetch tens of thousands of dollars. For economists, it means market forces are at work. + +South Africa is in the throes of a poaching epidemic. Official figures show poachers killed 1,054 rhinos in 2016, up from just 13 in 2007. In Kruger National Park, home to the world’s largest rhino population, numbers are dropping despite a fall in recorded poaching incidents. Tom Milliken of TRAFFIC, a wildlife-trade monitoring network, worries that poachers have become better at hiding the carcasses. + +The problem is international. The rhino-horn supply-chain sprawls from South Africa, home to nearly three-quarters of the world’s rhinos, to Asia, and in particular to Vietnam, where rhino horn is coveted as medicine, prescribed for fevers, alcohol dependency and even cancer. + +Prohibitionists call for better law-enforcement. Demand for rhino horn in China, they point out, fell sharply after the government banned its use in 1993. In the rhino’s homelands, they say, extra patrols, fences and harsher penalties have helped curb poaching in the past couple of years. + +But some argue the trade ban might actually be making the problem worse. Restricted supply pushes up prices and pulls in poachers. Private rhino-ranchers argue that if they could sell their stocks of horn, they could undercut the illegal trade. Some already chop off their rhinos’ horns to make them worthless to poachers. Unlike elephant ivory, rhino horn grows back after a few years. Michael Knight, who chairs a specialist group on rhinos at the International Union for Conservation of Nature, an NGO, worries that, if rhino-horn sales remain illegal, ranchers will switch to cattle. They bear the cost of security. Poachers make the money. + +But by seeming to normalise rhino-horn use, legalisation might boost demand along with supply. Prohibitionists worry that any attempt to lower prices would both bring in more customers, leaving incentives to poach unchanged, and make it far easier to launder illegal, poached horn. + +For them, the best form of conservation is to cut demand. A new study, requested by the Vietnamese and South African governments and overseen by the International Trade Centre, an independent arm of the WTO and the UN, provides information on where that demand comes from. Thanks to contacts in the traditional-medicine business, the academic researchers who conducted the study interviewed rhino-horn users. Disproportionately, these were well-off older men. None used it as an aphrodisiac. And nothing suggested any stigma in using it: if anything, illegality enhanced the product’s exclusivity and hence their willingness to pay. Asked how their demand would respond to price, users confirmed that cheaper horn would increase usage. + +But if legalisation is risky, so is maintaining the ban. The study finds a hard-core user base of around 30% of rhino-horn users, who want the stuff regardless of the penalties. So long as doctors prescribe it demand will be difficult to eradicate. Douglas MacMillan, an author of the study, is sceptical that information campaigns persuade many people to shun it. Vietnam has already seen vigorous initiatives pointing out that rhino horn is the chemical equivalent of human hair and toenails. + +Changes in the law may yield more evidence. On March 30th South Africa’s constitutional court overturned the ban on domestic trade. Now, if they have the right permit, people can trade rhino horn, but not export it. TRAFFIC’s Mr Milliken worries that this will lead to the worst of all worlds. Allowing some legal trade while the authorities are not properly enforcing the ban on illegal trade will muddy already murky waters. Once out of the country, legal and illegal horn will be all but indistinguishable. So users in Vietnam will have cheaper supplies; the illegal dealers still in control of the export trade will pocket the profits; and rhinos will keep falling to the poachers’ bullets. + + + + + +Subprime, anyone? + +Worries mount about car finance in America and Britain + +But comparisons with the subprime financial crisis are overblown + +May 4th 2017 | LONDON AND NEW YORK + +THOUSANDS of second-hand cars, ranging from dented clunkers to Bentleys, glisten under the evening floodlights at Major World, a car dealership in Queens, a borough of New York. “Business has been good,” says a crisply-dressed salesman, scurrying between prospective customers. Almost everyone who wants to buy a car at Major World can get approved for a loan, he explains, regardless of their credit score, or lack of one: when banks turn buyers down, the dealership offers them its own in-house financing. + +In both America and Britain new-car sales reached record levels last year (2.7m cars in Britain and 17.5m in America), as did second-hand-car sales in Britain. So too did car loans: £31.6bn ($42.8bn) in Britain and $565bn in America. Even folk with poor credit records (“subprime” borrowers) have been able to find financing. So some are asking whether this latest credit boom might have sown the seeds of a new crisis. + +In America worries have centred on rising delinquencies in subprime asset-backed securities (ABSs) based on car loans. Bundling car-loan repayments into ABSs to sell on to investors represents an important source of financing, particularly for non-bank lenders. Cumulative net losses on subprime car-loan ABSs issued in 2015 are at levels not seen since 2008—over 6% after only 15 months. + +Some hear echoes of the financial crisis. Yet any comparison with the subprime mortgage-backed securities that brought down the world’s financial system a decade ago is a stretch. True, subprime lending makes up an even bigger share of car loans (21.1%) than it did of mortgages in 2006 (13.6%, compared with just 3.6% in 2016). But the car-loan market is tiny compared with the $2.8trn in mortgages issued in America in 2006. And whereas three-quarters of subprime mortgages were securitised, spreading the risks far and wide, only a fifth of subprime car loans are turned into ABSs. So far, subprime car-loan ABSs have avoided downgrades. + +In Britain the comparison with 2006 is even harder to sustain. Data are fuzzier than in America because standardised credit scores are not used for car loans, but the Finance and Leasing Association (FLA), an industry body, reckons that subprime loans make up only about 3% of outstanding British car debt. Rondeep Barua of Bank of America Merrill Lynch says that the British market shows no immediate signs of stress; delinquencies have not increased, for instance. + +Some have expressed worries about the potential mis-selling of personal contract plans (PCP), a hybrid form of lending, between a loan and a lease, that makes up four-fifths of all British car loans. But, as Adrian Dally of the FLA points out, PCPs have accounted for a majority of new car loans in Britain for a decade without leading to serious problems. + +Even without a crisis, however, the boom in car lending is bound to create some worries. PCP borrowers in Britain have a lease-like option allowing them to return their cars after three years, so a glut of second-hand cars could depress prices. In America second-hand-car prices have already hit a six-year low, contributing to the low recovery rates on subprime loans. American lenders have also had to moderate their treatment of defaulters after alleged violations of debt-collection practices. To smooth repossessions, Major World insists that recipients of its in-house loans have a GPS tracker always on in their cars, so they can easily be traced. + +Certain lenders which have heavy exposures to subprime borrowers are showing some signs of stress. For example, Santander Consumer USA, the American car-lending arm of a Spanish bank, has cut back sharply on making new loans and bolstered its reserves. + +In Britain the surge in car-dealership finance has prompted the Financial Conduct Authority, a regulator, to raise concerns about irresponsible lending. Any problems with car lending would be cause for concern if they signalled broader troubles with consumer credit. The Bank of England has expressed worry about the breakneck pace of expansion in British consumer borrowing, which was growing at an annual rate of 10.9% last November, the smartest clip since 2005, fuelled by car finance, credit cards and personal loans. + +In America analysts at UBS, a bank, have seen delinquency rates on subprime unsecured loans and credit-card balances start to rise (albeit from a low base), and poor performance start to spread from subprime car loans to more creditworthy borrowers. Subprime car loans may not bring down the system on their own, but regulators are all too well aware of the dangers if too many households find they have borrowed too much. + + + + + +Speeding up + +Euro-area GDP growth outpaces America’s + +But first-quarter figures probably overstate the gap between the two economies + + + +May 6th 2017 + +THE appeal of GDP is that it offers, or seems to, a summary statistic of how well an economy is doing. On that basis, the euro-area economy is in fine fettle; indeed, it is improving at a faster rate than America’s. Figures released on May 3rd show that GDP in the currency zone rose by 0.5% in the first quarter of 2017, an annualised rate of around 2%. That is quite a bit faster than the annualised 0.7% rate reported for America’s GDP. + +These figures probably overstate the gap between the two economies. In recent years, first-quarter estimates of GDP growth in America have later been revised upwards substantially. Still, the euro-zone economy is clearly picking up speed, even as America’s goes through a soft spot. A jump in car sales in March saw Europe as a whole overtake America as the world’s second-largest market (behind China). Euro-zone manufacturing grew at its fastest pace for six years in April, according to the purchasing managers’ index, a closely watched gauge of economic activity. The corresponding index for America fell. + +The good news is not confined to manufacturers. The European Commission’s economic-sentiment index, based on surveys of service industries, manufacturers, builders and consumers in the euro zone, rose to its highest level for a decade in April. The bloc’s extra pep is in large part because its recovery from recession is at a much earlier stage than America’s. There is more pent-up consumer demand to accommodate and more spare capacity in businesses to meet it. There is a lot of catching up to do. The unemployment rate is 9.5% compared with 4.5% in America. + +Differences in monetary policy in Europe and America reflect the different stages of recovery. The Federal Reserve has started (slowly) to raise interest rates. In contrast, the European Central Bank (ECB) has kept its foot to the floor. At the conclusion of its monthly monetary-policy meeting on April 27th, the ECB kept its main interest rate at zero and the rate it pays on bank reserves at -0.4%. It also left unaltered the pace at which the ECB is purchasing bonds, €60bn ($66bn) a month until at least the end of the year. Mario Draghi, the ECB’s boss, did not give any hint that policy might be tightened soon. Although he acknowledged that risks of economic faltering had “further diminished”, Mr Draghi insisted that underlying inflation in the euro zone was still unduly low. + +He still has much to fret about, including China’s management of its debt mountain and Donald Trump’s protectionist threats. Elections in Europe may throw up an obstacle to growth, if not in France than perhaps in Mr Draghi’s native Italy. And despite an agreement reached this week between the Greek government and its creditors on reforms it must undertake, that saga will continue to haunt the euro zone. But, at the very least, amid these anxieties, the economy is gaining strength. + +Correction (May 3rd): A previous version of this piece said that the euro-zone unemployment rate was 9.4% and America's was 4.7%. In fact the figures are 9.5% and 4.5%. This has been amended. + + + + + +Free exchange + +Price-bots can collude against consumers + +Trustbusters might have to fight algorithms with algorithms + + + +May 6th 2017 + +MARTHA’S VINEYARD, an island off the coast of Massachusetts, is a favourite summer retreat for well-to-do Americans. A few years ago, visitors noticed that petrol prices were considerably higher than in nearby Cape Cod. Even those with deep pockets hate to be ripped off. A price-fixing suit was brought against four of the island’s petrol stations. The judges found no evidence of a conspiracy to raise prices, but they did note that the market was conducive to “tacit collusion” between retailers. In such circumstances, rival firms tend to come to an implicit understanding that boosts profits at the expense of consumers. + +No one went to jail. Whereas explicit collusion over prices is illegal, tacit collusion is not—though trustbusters attempt to forestall it by, for instance, blocking mergers that leave markets at the mercy of a handful of suppliers. But what if the conditions that foster such tacit collusion were to become widespread? A recent book* by Ariel Ezrachi and Maurice Stucke, two experts on competition policy, argues this is all too likely. As more and more purchases are made online, sellers rely increasingly on sophisticated algorithms to set prices. And algorithmic pricing, they argue, is a recipe for tacit collusion of the kind found on Martha’s Vineyard. + +Consider the conditions that allow for tacit collusion. First, the market is concentrated and hard for others to enter. The petrol stations on the Vineyard were cut off from the mainland. Second, prices are transparent in a way that renders any attempt to steal business by lowering prices self-defeating. A price cut posted outside one petrol station will soon be matched by the others. And if one station raises prices, it can always cut them again if the others do not follow. Third, the product is a small-ticket and frequent purchase, such as petrol. Markets for such items are especially prone to tacit collusion, because the potential profits from “cheating” on an unspoken deal, before others can respond, are small. + +Now imagine what happens when prices are set by computer software. In principle, the launch of, say, a smartphone app that compares prices at petrol stations ought to be a boon to consumers. It saves them the bother of driving around for the best price. But such an app also makes it easy for retailers to monitor and match each others’ prices. Any one retailer would have little incentive to cut prices, since robo-sellers would respond at once to ensure that any advantage is fleeting. The rapid reaction afforded by algorithmic pricing means sellers can co-ordinate price rises more quickly. Price-bots can test the market, going over many rounds of price changes, without any one supplier being at risk of losing customers. Companies might need only seconds, and not days, to settle on a higher price, note Messrs Ezrachi and Stucke. + +Their concerns have empirical backing. In a new paper**, the authors outline three case studies where well-intentioned efforts to help consumers compare prices backfired. In one such instance, the profit margins of petrol stations in Chile rose by 10% following the introduction of a regulation that required pump prices to be displayed promptly on a government website. This case underlines how mindful trustbusters must be about unintended consequences. The legal headache for them in such cases is establishing sinister intent. An algorithm set up to mimic the prices of rival price-bots is carrying out a strategy that any firm might reasonably follow if it wants to survive in a fast-moving market. Online sellers’ growing use of self-teaching algorithms powered by artificial intelligence makes it even harder for trustbusters to point the finger. A cabal of AI-enhanced price-bots might plausibly hatch a method of colluding that even their handlers could not understand, let alone be held fully responsible for. + +Since legal challenges are tricky, argue Messrs Ezrachi and Stucke, it might be better to direct efforts at finding ways to subvert collusion. Trustbusters could start by testing price-bots in a “collusion incubator” to see how market conditions might be tweaked to make a price-fixing deal less likely or less stable. A “maverick” firm, with different incentives to the incumbents, might have a lasting impact; an algorithm programmed to build market share, for instance, might help break an informal cartel. + +Regulators might also explore whether bots that are forced to deal directly with consumers—say, through an app that sends an automatic request to retailers when a petrol tank needs filling—could be enticed to undercut rivals. Or they might test to see if imposing speed limits on responses to changes in rivals’ prices hampers collusion. It may be that batching purchases into bulky orders might thwart a collusive pay-off by making it more profitable for robo-sellers to undercut rivals. + +Never knowingly undersold + +The way online markets work calls for new tools and unfamiliar tactics. But remedies have to be carefully tested and calibrated—a fix for one problem might give rise to new ones. For instance, the more consumers are pushed to deal directly with price-bots (to thwart the transparency that allows rival sellers to collude), the more the algorithms will learn about the characteristics of individual customers. That opens the door to prices tailored to each customer’s willingness to pay, a profitable strategy for sellers. + +Still, there is one old-school policy to lean on: merger control. There is growing evidence in old-economy America that trustbusters have been lax in blocking tie-ups between firms. A market with many and diverse competitors, human or algorithmic, is less likely to reach an effortless, cosy consensus about what is the “right” price for sellers, and the wrong price for consumers. + +* “Virtual Competition: the Promise and Perils of the Algorithm-driven Economy”, Harvard University Press (2016) + +** “Two Artificial Neural Networks Meet in an Online Hub and Change the Future (of Competition, Market Dynamics and Society)” (April 2017) + +Visit our Free exchange economics blog + + + + + +Science and technology + + + + +Biotechnology: Primordial gloop + +The fight against AIDS: Safer sex + +Pollutants: Fatal attraction + +Conservation: Big is beautiful + + + + + +Biotechnology + +Cell-free biotech will make for better products + +A new type of biological engineering should speed up innovation + + + +May 6th 2017 + +THE stuff of life comes wrapped in tiny bags called cells. Inside are DNA molecules that carry the instructions for how to run the cell, to make it grow, and to cause it, ultimately, to divide into two cells, if that is to be its fate. Messages made of a slightly different molecule, RNA, carry these instructions to molecular machines called ribosomes. A ribosome’s job is to read the RNA messages and translate them into proteins, the workhorse molecules of cells. Those proteins then supervise and execute the running, the growing and the dividing. + +It is a system that has worked well over the 4bn years that life has existed on Earth. To some biotechnologists, though, the cell is old hat. They approve of the machinery of DNA, RNA, ribosomes and proteins, which can be engineered to make useful chemicals, ranging from drugs to the building-blocks of plastics. But they want to get rid of the bags that contain it, retaining only the part of the protoplasmic “gloop” inside a cell needed to do their bidding. + +In this way they hope to control, far more precisely than is possible by conventional genetic engineering (or even by improved methods of gene modification, such as CRISPR-Cas9, that are now being developed) which genes are translated by the ribosomes—and thus what products are churned out. Equally important, cell-free biotechnology of this sort means no biochemical effort is wasted on running, growing or dividing any actual cells. The initial intention is to create a quicker way of finding the best genes for making a particular product. In the end, those working in the field aspire to the idea that cell-free production will equal mass production. + +Processing power + +A typical recipe for making cell-free protoplasmic gloop is this. Take four litres of culture containing E. coli (a gut bacterium favoured by genetic engineers). Split the bacterial cells open by forcing them through a tiny valve at pressure, thus shredding their membranes and DNA, and liberating the ribosomes. Incubate the resulting mixture at 37°C for an hour, to activate enzymes called exonucleases that will eat up the fragmented DNA. Centrifuge, to separate the scraps of cell membrane and other detritus from the gloop that contains ribosomes. Dialyse to remove unwanted ions. Then stir in amino acids (the building blocks of proteins), sugar and an energy-carrying molecule called adenosine triphosphate (ATP) to power the process. Finally, add a pinch of new DNA to taste, to instruct the gloop which proteins it is supposed to produce. + +This particular recipe is the one used by Synvitrobio of Berkeley, California, a firm founded by Zachary Sun and Richard Murray of the California Institute of Technology and George Church of Harvard University. Other recipes, with different starting organisms, are possible. Yeast works, as does Streptomyces, another bacterium. Cells from tobacco plants or the ovaries of Chinese hamsters are also good places to begin. But all such formulae are variations on the theme of isolating a cell’s protein-making machinery in a free-floating suspension. + +Synvitrobio’s engineers have built a robotic system to mix the final stage of their recipe. This robot parcels the purified protoplasm into an array of 384 tiny test tubes, each with a volume of a few millionths of a litre. It then drops some DNA molecules into each tube and the gloop gets to work on the process of turning the information in those molecules into proteins. Currently, the system can handle eight DNA sequences per test tube, meaning 3,072 proteins can be processed in parallel. The sequences can be up to 10,000 genetic “letters” long—enough to encode almost any protein you care to mention. + +At present, Synvitrobio is using its system to test DNA sequences (or, rather, the resulting proteins) to see if they might be worth investigating as antibiotic drugs. Such drugs work by binding to a biologically important molecule and changing that molecule’s characteristics in some way that is detrimental to the organism of which it is part. To look for this binding, each mini test tube is also supplied with some of the target molecules, each attached to a “reporter” molecule that emits a flash of light if binding takes place. + +Tubes which flash brightly indicate that one or more of the DNA sequences therein are worth a second glance. Synvitrobio’s technique is thus able to screen potential drugs at a rate limited only by the availability of new DNA sequences. Since synthesising new sequences on demand is now a routine technology, that means the world’s gene libraries can be plundered for likely candidates, and the best of these then tweaked mercilessly until something good enough for the job turns up. Inserting such sequences into the genomes of organisms is far more time-consuming than simply dropping them in some gloop. + +At the moment, that is the point when Synvitrobio passes the newly discovered molecule on, for a suitable cut of the proceeds, to someone who can turn it out in bulk by the conventional technique of pasting the relevant gene into appropriate cells, and breeding these cells in fermentation tanks similar to those used for brewing beer. This is because it is expensive to produce cell-free protoplasm in the volumes required to manufacture antibiotics for sale. A few firms are, however, doing so for drugs that can command high prices. + +One such is Sutro Biopharma, based near San Francisco. It uses a cell-free system to create antibodies for the treatment of cancer. In April, Sutro announced it had employed its system to make STRO-001, an antibody that inhibits tumour growth. The firm plans to start trials of STRO-001 in 2018. Cell-free production of the antibodies for that trial is about to begin. + +Antibodies are specialised proteins, so once Sutro’s system has identified the best candidate for the job, all that is required is to seed the gloop with the DNA which encodes that candidate. Other firms, though, hope to go further than this, by devising manufacturing systems that put together entire metabolic pathways for the production of chemicals other than proteins. These, as in a natural metabolic pathway, consist of a series of enzymes (another type of specialised protein) that catalyse a sequence of chemical changes, gradually converting one molecule into another. + +Genomatica, an established biotechnology firm based in San Diego, is experimenting with a cell-free system which produces 1,4-butanediol in this way from simple sugars. 1,4-butanediol is a small molecule that is used to make polymers such as Lycra. Generally, it is cheaper to manufacture molecules of this size using chemistry, rather than biology, but 1,4-butanediol is an exception. It is already made for industry with the aid of genetically modified E. coli. Genomatica’s system churns out the enzymes involved in this synthesis, creating an entire cell-free metabolic pathway—and one in which all the sugar is devoted to making the target chemical, rather than a percentage of it being creamed off to run a cell’s other biochemical processes. The firm has not yet put the system to commercial use, but has high hopes for it. + +GreenLight Biosciences, a firm in Medford, Massachusetts, proposes to use its own cell-free system, also based on E. coli, to produce industrial quantities of an undigestible analogue of ribose, a naturally occurring sugar, for use in zero-calorie beverages. The company says it has already got its process to the point where it can make thousands of litres of solution of this sugar at a time. GreenLight is also working on cell-free systems that will generate industrial quantities of specially designed RNA molecules that interfere with the development of insect larvae, and can thus be used as pesticides. Currently, such RNA costs $5,000 per kilogram to produce. GreenLight thinks that by scaling the process up it can reduce this to between $50 and $100. + +Whether cell-free biotechnology will be able to displace fermentation by genetically modified organisms as a routine way of making chemicals remains to be seen. Fermentation is a tried and trusted technique, used by humans since the invention of beer around 12,000 years ago. But the idea of stripping molecular biology down to its bare essentials has an efficiency about it which suggests that, for some applications at least, the utility of the biological cell may have run its course. + + + + + +The fight against AIDS + +How to protect women against both HIV and pregnancy + +A newly-developed vaginal ring releases small doses of drugs over a three-month period + + + +May 4th 2017 + +PLENTY of progress has been made in the fight against AIDS. Deaths peaked in 2005, at around 2m people. By 2015 that number had fallen to 1.1m. One big reason is that, of the 36.7m people currently infected with HIV, 18.2m are taking antiretroviral drugs that can hold the virus back for decades. Their number has risen more than twentyfold since the turn of the century. + +But not all the statistics are so encouraging. Around 1.9m adults contracted HIV in 2015. That number has hardly budged since 2010. The great bulk of those infections, about 1.3m in 2015, happen in sub-Saharan Africa. They happen more often to women than to men: 58% of HIV-infected people in the region are female. Women between 15 and 24 are infected at almost eight times the rate of men of the same age. + +There are several reasons why women contract HIV more often than men. Some are biological: women have a higher chance of contracting HIV from a given act of unprotected sex than men do. But cultural factors matter too, especially in poor countries. As in other aspects of society, it is often men who call the shots in the bedroom. Even if a woman wants a sexual partner to use a condom, she may struggle to convince him to do so. + +On May 3rd, a charity called the International Partnership for Microbicides (IPM) announced a clinical trial that it hopes could help the situation. It has developed a small silicone ring designed to be inserted into the vagina, from where, for the next three months, it releases steady doses of dapivirine and levonorgestrel. The first of those is an anti-HIV drug. The second is a contraceptive. + +IPM’s device builds on a previous model that contains only dapivirine. Two big clinical trials of that device concluded in 2016 and showed it could reduce the risk of catching HIV by about a third. That may not sound particularly impressive. But Zeda Rosenberg, IPM’s founder, says this number almost certainly represents only a floor on the treatment’s effectiveness. “We know from the trial results that not all the women used the ring consistently,” she says. Those that did will, she thinks, have enjoyed substantially better protection. + +Combining an anti-HIV drug with a contraceptive may give women a reason to use the product more faithfully. Dr Rosenberg points out that in societies that expect women to be demure or chaste, those who take steps to protect themselves from HIV can often face stigma, since others may assume they are engaging in risky behaviour. But no such stigma applies to contraception. In any case, the ring is small and unobtrusive enough that women can wear it without their partners’ knowledge. + +The first trial is designed only to demonstrate that the ring is safe, and will be conducted in America. Later tests will check how well it works, though the fact that the dapivirine-only ring has already passed similar tests should speed that process. IPM hopes to have the first batch of dual-purpose rings ready for shipping by 2020. If there is demand, it might even offer the rings for sale in the rich world, in the hope that the cash so generated could cross-subsidise production for poor countries where the need is greatest. + + + + + +Fatal attraction + +The link between pollution and heart disease + +An experiment suggests pollutants build up in arterial plaques + + + +May 4th 2017 + +WHY air pollution causes lung disease is obvious. Why it also causes heart disease is, though, a conundrum. One suggestion is that tiny particles of soot migrate through the lungs, into the bloodstream and thence to the walls of blood vessels, where they cause damage. Until now, this has remained hypothetical. But a study published in ACS Nano, by Mark Miller of Edinburgh University, suggests not only that it is correct, but also that those particles are specifically carried to parts of blood vessels where they will do maximum damage—the arterial plaques associated with cardiovascular disease. + +One reason the particle-migration hypothesis has proved hard to confirm is that it is tricky to follow soot around the body. Soot is made of carbon, and that element, when finely divided and at low concentration, is difficult to isolate in biological material. Instead, Dr Miller and his colleagues used soot-sized particles of gold for their experiments. These are easy to detect, even at low concentrations, by means such as mass spectroscopy and Raman spectroscopy. Also, gold is chemically inert and therefore unlikely to be toxic. This is important, because some of Dr Miller’s experimental animals were people. + +The first group of these human guinea pigs were 14 healthy men. Each was asked to exercise for two hours while inhaling air containing particles of gold. Dr Miller and his colleagues then monitored the volunteers’ blood and urine for 24 hours, and again three months later. + +As expected, none of the volunteers showed signs of gold in their blood or urine before their exposure to the particles. All but two, however, did so 24 hours later. This proved that tiny particles can indeed migrate from the lungs into the circulation. Moreover, at the three-month recheck, the concentrations of gold in their bodily fluids remained more or less unchanged. Gold, once breathed in, is retained. + +This experiment did not, however, tell Dr Miller where the particles were going and how they (or, rather, their carbon equivalents) can cause heart problems. He and his colleagues suspected that the culprits were immune-system cells called macrophages. These exist to engulf foreign bodies, such as bacteria, and would thus be quite capable of swallowing small particles of carbon or gold. They are also involved in inflammatory responses, which are helpful when short-lived (such as in reaction to a wound) but threatening when chronic (as in the inflammation associated with arterial plaques). Dr Miller and his colleagues thus wondered if their particles were being carried specifically to those plaques by macrophages. + +Preliminary experiments on mice genetically engineered to be prone to vascular disease suggested they were. Dr Miller made these animals breathe in gold particles twice a week for five weeks. Then, a day after the final exposure, he killed and dissected them. He found that a given mouse’s diseased arteries contained five times as much gold as its healthy ones did. + +To see if something similar is true in people, the team then recruited three further volunteers. In this case, those signed up were the opposite of healthy. They were patients with plaque-clogged arteries, who were at risk of suffering a stroke. This particular trio were asked to breathe in the gold dust 24 hours before they underwent surgery intended to clear their plaques and unblock their constricted vessels. Dr Miller and his colleagues were thus able to examine the extracted plaques for the presence of gold—which they found, as by now they expected to, in abundance. + +It remains to be determined whether particles of carbon behave in the same way as particles of gold. But, given carbon’s high chemical reactivity compared with gold’s, it is a fair bet that macrophages will be even more likely to notice and swallow it. So, though Dr Miller’s work does not point towards a better treatment for pollution-induced cardiovascular disease, it does add weight to the arguments of those who worry about levels of air pollution. + + + + + +Conservation + +Tourists really do seem to help to preserve wild animals + +Who best protects megafauna? + +May 6th 2017 + + + +WHICH countries have the best wildlife-conservation records? That was the question posed by a group of biologists led by Peter Lindsey of the University of Pretoria, in South Africa. Their conclusions, just published in Global Ecology and Conservation and summarised in the map below, suggest one determinant is the economic value of wildlife to a country, with nature-tourism destinations in east, central and southern Africa, led by Botswana, dominating the list of high performers. + +The team looked at megafauna, defined as terrestrial mammals weighing 15kg or more as adults, if carnivores, or 100kg or more, if herbivores or omnivores. For each of 152 countries examined, they constructed a megafauna-conservation index composed of three elements. The first was, for every relevant species, the fraction of the country it inhabited. The second was the percentage of megafauna habitat which had legal protection. The third was the percentage of GDP a country devoted to conservation. + +Besides the safari belt, America, Canada and Scandinavia, excluding Denmark, scored well (though, as the researchers note, “the financial contribution to predator conservation in Norway probably includes funds aimed at keeping predator population as low as possible, which hardly qualifies as conservation”). So did Bhutan, which came fourth. Low scorers included Britain and China (both densely populated, so lacking natural habitat), and, more surprisingly, Australia. + + + + + +Books and arts + + + + +Theatre: All the world’s a stage + +Islamic state: Children of jihad + +The revival of cities: Back from the brink + +Collecting: Calling all art lovers + +Fiction from Congo: Africa’s Samuel Beckett + +Tribeca film festival: An offering you can’t refuse + +Clarification: Option B + + + + + +The London stage + +How to run the National Theatre + +Nicholas Hytner’s captivating memoir of his years as the theatre’s artistic director + + + +May 4th 2017 + +Balancing Acts: Behind the Scenes at the National Theatre. By Nicholas Hytner. Jonathan Cape; 314 pages; £20. To be published in America by Knopf in November. + +THEATRE directors are often judged to be gushing and self-important. Sir Nicholas Hytner is an exception. “Balancing Acts”, his memoir of his tenure as artistic director of the National Theatre (NT) between 2003 and 2015, is a masterclass in creative leadership. It is as instructive about the challenges and compromises of running a large organisation as it is about the process of putting on plays that change lives. + +The NT was founded in 1963 under Laurence Olivier. When Sir Nicholas took over the organisation, which comprises three auditoriums of differing sizes, it had a reputation for unadventurous repertoire, pricey tickets and an ageing and conservative audience. Public funding accounted for 40% of its annual income of £37m ($47.8m). He was determined to discern what a national theatre should be and for whom; he had no interest in keeping it for an exclusive club. Among other considerations—balancing old plays and new, serious and irreverent, plays that look out as well as in—he wanted to expand audiences and give everyone a “really good time”. + +By the time he left, Sir Nicholas had overseen the staging of 100 plays and established many of the features that people now take for granted, among them cheap tickets and live-cinema relays. He had also helped to produce some of modern theatre’s triumphs: “War Horse”, “One Man, Two Guvnors”, “The History Boys”, “His Dark Materials” and “The Curious Incident of the Dog in the Night-Time”. Annual turnover in 2015 had climbed to £117m, of which just 15% came from the public purse. + +Sir Nicholas’s prose is crisp and convincing, like his direction. He is candid about his limitations. (The NT produced few turkeys on his watch, but he answers for the ones it did.) Writing with unsentimental honesty, he ascribes to his many collaborators on the South Bank a brilliance that he denies himself. If much of the success of the NT under his directorship “is the result of grand larceny”, he writes, “I stole from the best.” His praise for actors is precise and specific. He offers insights into the technique and working practice of many cast members. He admires Ralph Fiennes for his “speed of thought, his vocal penetration and his ability to work through the text to an underlying emotional truth”. Dame Helen Mirren knows “when to allow laughter as an escape valve”. The result is an evocation of backstage life that is as engrossing as it is entertaining. If you happened to see the productions in question, they are vividly resurrected by the revelations of how they were put together. If you missed them, the regret is all the keener. + +As a director, Sir Nicholas likes to begin with the text, but he soon encourages his actors to get up on their feet and physically inhabit a play. “I don’t like a rehearsal studio to feel like a seminar room,” he insists. The fifth artistic director of the NT, he was the fourth to study English at Cambridge University (only Olivier managed without). For the most part, he wears his considerable intelligence lightly. His descriptions of developing new work with Alan Bennett, Sir David Hare, Sir Tom Stoppard and Mike Leigh are incisive. Of Mr Bennett, he says: “I sometimes think that he deliberately buries clues in his first drafts. The director has to sniff out the good stuff, like a pig hunting truffles.” Only when recalling his terrific 2013 production of “Othello” does he lose his balance, indulging in a longish episode of over-satisfied literary criticism which, even if it did arise from an actor’s observation in the rehearsal room, feels out of place. Elsewhere the memoir is leavened with waspish wit: Sir Nicholas’s ear for comedy is as sharply attuned for the page as the stage. + +Britain sits somewhere in the middle of the spectrum when it comes to public subsidies for the arts. If it does not have the generous private philanthropic culture and tax incentives that exist in America, it is not continental Europe either, where theatres are often still financed almost entirely by governments and can get away with scorn for public taste. Along with the Royal Shakespeare Company and the Royal Opera House, the NT is one of Britain’s most prominent centrally funded arts organisations. Sir Nicholas, who has also been successful on Broadway and on film, never loses sight of the responsibility that comes with accepting several million pounds of public cash. + +Nor does he let people forget what becomes possible with it. “If the enemies of arts subsidy had seen two actors walking in a circle with cardboard boxes on their heads pretending to be horses at the taxpayer’s expense,” he recalls of an early workshop of “War Horse”, “they would have had a field day.” It is inconceivable that a commercial producer would have taken a risk on “War Horse” and the puppets that were used to bring to life Michael Morpurgo’s children’s classic about the first world war. But after the play opened in 2007 it went on to run in the West End for seven years and then in New York, Toronto, Berlin, Amsterdam, Beijing, Cape Town and beyond, and also toured across America and Australia. It won five Tony awards and, by the time it closed in London last year, had played to more than 7m people. It also returned more than £30m to the NT’s coffers. + +A new British tour begins in the autumn, but Sir Nicholas will probably be too busy to catch it. His next project will be a 900-seat playhouse, along the Thames from the NT, which opens in October and will be the first big new commercial theatre to open in London since the 1930s. Its inaugural season looks irresistible. At 60, he appears to be merely getting started. “What’s past”, as Antonio says in Shakespeare’s “The Tempest”, “is prologue.” + + + + + +Children of jihad + +The long birth of Islamic state + +The motives and methods of Islamist violence + + + +May 4th 2017 + +Jihad and Death: The Global Appeal of Islamic State. By Olivier Roy. Translated by Cynthia Schoch. Hurst; 130 pages; £15.99. To be published in America by OUP in July. + +Al-Qaeda’s Revenge: The 2004 Madrid Train Bombings. By Fernando Reinares. Woodrow Wilson Centre Press/Columbia University Press; 231 pages; $50 and £42. + +AFTER every act of Islamist violence, investigators are faced with two maddening questions. What turns some Muslims into terrorists? And do they act alone or as part of a wider network? More than 20 years after the jihadist phenomenon first appeared, the answers remain elusive. + +Olivier Roy’s new book, “Jihad and Death”, asks why young European Muslims are drawn to Islamic State (IS) and why the West is so terrified of it. Mr Roy, a French authority on Islamism, regards IS as the monstrously inflated product of its own propaganda; it is, he says, first and foremost a death cult. Despite Islam’s injunction against suicide, it persuades Muslims to fight and die under the banner of a chimerical Islamic caliphate. Why, then, should such a nihilistic message be so appealing? Mr Roy’s answer is that IS has successfully marketed itself to the children of modern youth culture. Its recruits know little about Islam; they like alcohol, rap music, martial arts and violent American films. Many have spent time in prison. In their eyes, IS is heroic and glamorous. + +However, Mr Roy rejects the notion that these young people are simply brainwashed. “They do not become radicals because they have misread the texts or because they have been manipulated,” he declares. “They are radicals because they choose to be.” He believes IS’s strongest weapon is people’s fear of it; in reality it is a waning force, whose dystopian project is doomed to fail. All this is a stimulating counterblast to much conventional thinking. But is Mr Roy right to dismiss the relevance of the West’s actions—its policy on Palestine and its disastrous intervention in Iraq in 2003—as a radicalising factor? The issue is manipulated and distorted in the jihadists’ propaganda. But it is central to their narrative, and, if groundless, why should it have such potency? + +In “Al-Qaeda’s Revenge” Fernando Reinares, a Spanish specialist on terrorism, shifts the focus from ideology to organisation, examining the links between individual jihadists and wider networks. On March 11th 2004, when ten bombs went off on commuter trains in Madrid, killing 191 people, the Spanish government was quick to blame ETA, the Basque separatist group. But this idea was soon discredited, and since then experts have tended to regard the bombings as the work of local Islamists with little or no connection to outside groups. + +Now Mr Reinares has dispelled this theory, too. Subjecting the attack to minute forensic scrutiny, he identifies a coalition of three distinct elements. Al-Qaeda had established a cell in Spain a full decade earlier. After the attacks on the twin towers in New York—which the Madrid cell helped co-ordinate—the Spanish authorities cracked down, arresting most of the cell’s members. But a remnant evaded capture, vowing revenge. The second component comprised Moroccan and Algerian jihadists who had taken refuge in Spain. The third was a gang of young Moroccans living in and around Madrid and engaged in drugs and petty crime—just the sort of delinquents depicted by Mr Roy. Once radicalised (often in jail), they used their underworld contacts to obtain the dynamite used in the bombings. In the bizarre world of jihadism, an act of holy war was financed with drug money. + +The aftermath was as important as the attacks themselves. Spain was deeply polarised. In elections three days later, voters threw out the government, accusing it of lying to them about the bombings. The incoming government withdrew Spanish troops from Iraq, giving the jihadists a propaganda coup, even though, as Mr Reinares makes clear, the attacks had been planned long before Iraq was invaded. Spain’s wounds, he says, have taken more than a decade to heal. + +The general reader will find “Al-Qaeda’s Revenge” heavy going. But it is an impressive piece of research, the implications of which stretch well beyond a single event more than a dozen years ago. It is chilling to discover the extent to which the bombers’ connections criss-crossed Europe—from London (where Abu Qatada, a radical imam, served as their godfather) to Milan (where one of their senior figures took refuge) to Molenbeek (the Brussels district which achieved infamy after the Paris attacks of November 2015). But the exact role of al-Qaeda’s external leaders is harder to establish. They certainly had links to the Madrid group, as Mr Reinares amply demonstrates. Less clear is whether, as he argues, they actually ordered and supervised the operation. The vagueness of that little word, “links”, is likely to perplex investigators for a long time to come. + + + + + +Architecture and the 21st-century city + +How to bring cities back from the brink + +“The Age of Spectacle” is a story of revival + + + +May 4th 2017 + +The Age of Spectacle: Adventures in Architecture and the 21st-Century City. By Tom Dyckhoff. Random House; 378 pages; £20. + +IN 1977 the state of New York hired Milton Glaser, a graphic designer, to help improve its image. Undoubtedly, it needed a lift. Wealth had been escaping New York City for years. Manufacturing had fled to cheaper sites and crime had filled the gaps. Mr Glaser’s simple I ♥ NY logo marked the beginning of an economic and social revival so dramatic that Ed Koch, the mayor, was able to declare: “We’re not catering to the poor any more…there are four other boroughs they can live in. They don’t have to live in Manhattan.” + +“The Age of Spectacle” by Tom Dyckhoff, a British architecture critic, is the story of the transformation of cities from the dense manufacturing hubs of the early 20th century to the consumerist meccas they are today. He begins with Jane Jacobs and Ruth Glass, two social scientists who spotted that middle-class youngsters in 1960s London were refusing to move to the suburbs as their parents had done. This was driven both by the “stifling conformism” of life on the outskirts, and, according to Raphael Samuel, a historian, by a love of “values inherent to the dense, historic city, whether its aesthetic form, its layers of history, its ability to somehow encourage neighbourliness or its sheer excitement.” Mr Dyckhoff notes the casual manner in which Ms Glass defines this behaviour as “gentrification”, identifying a movement which he believes became “the most significant force in Western cities in the second half of the 20th century”. + +Gentrification might have proved a passing fad, had it not been for favourable government policy and economic trends. The author identifies the role of restoration grants and right-to-buy schemes in cementing the movement. But he is also good at deconstructing the myths that surround gentrification: “Nothing did the job better of simultaneously rooting you, distinguishing you, emancipating you, investing your money in something safe, but risky enough to stimulate dinner-party conversation—and displaying it for all the world to see—than buying a shabby little warehouse or townhouse downtown, and getting the builders in.” From this point onwards, housing was given a wider purpose than providing shelter; it had to reflect its owners’ identity and make them money. + +As cities began to compete more aggressively for investment and employment, they were forced to distinguish themselves. This, according to Mr Dyckhoff, was what lay behind the wave of grandiosity in public architecture, his age of spectacle. But it is also here that his argument loses focus. He marvels at the Guggenheim Museum in Bilbao designed by Frank Gehry, puzzles at Zaha Hadid’s MAXXI gallery in Rome and is alienated by Rem Koolhaas’s CCTV building in Beijing. It is not clear if he believes that the movement to create eye-popping buildings in public spaces is a good thing, or if it depends on the architectural merit of each construction. He is wearied by contemporary bridges that insist on the function of crossing becoming an experience. “No bridge can sit there quietly, keeping itself to itself. It has to be interesting.” Mr Dyckhoff seems to be afflicted by what Mr Koolhaas calls the “Dubai icon paradox”: “When everything looks so wildly different, it ends up looking all the same.” + +He has a sharper vision of where architecture is heading. He notes the challenge of working with heavy, permanent materials in a digital age defined by speed and agility. In response, architecture has gone on “a crash diet, losing kilograms, countless tonnes”; interiors have been stripped back in order to cater to every potential occupant; a building’s skin has become more important than ever. In Munich Mr Dyckhoff visits Jacques Herzog and Pierre de Meuron’s football stadium. Clad in partly translucent plastic blisters embedded with strips of light, “the entire façade glow[s] like a low-resolution TV set, bearing the team colours.” Here he sees a building that transcends its weightiness to communicate to its users, and finally finds a thrill in the experience. + + + + + +Calling all art lovers + +The pitfalls of investing in art + +And how to avoid being duped + + + +May 4th 2017 + +Art Collecting Today: Market Insights for Everyone Passionate about Art. By Doug Woodham. Allworth Press; 193 pages; $24.99. + +IF IT’S Tuesday, this must be Belgium. If it’s the second week of May it must be Venice. At least, it is every other year. On May 13th the art world descends on the Adriatic port for the biennial global artfest that turns the city into a parallel universe of the imagination. Among the hundreds of thousands of visitors will be Venice Biennale first-timers, all of them keen to learn how to tell their Hirst from their Hodgkin, the Giardini from the Giudecca. + +These neophytes could do worse than take along “Art Collecting Today” by Doug Woodham, Christie’s former president of the Americas, an economist who says he likes to collect “drawings by artists associated with minimalism, conceptualism and land art”. The latest in Allworth’s series on the nuts and bolts of the art world, Mr Woodham’s book is an elegant, amusing and perceptive guide to a market that is (often) long on hocus-pocus and short on transparency. + +Divided into eight clearly written chapters, it explores how the art market really works. Mr Woodham explains why buying art is easy and selling much harder; why Christie’s and Sotheby’s, the main auction houses in the West, are more similar than they think; why there is such a curious relationship between auction houses and private galleries; why the markets for artists such as Amedeo Modigliani, Yayoi Kusama and René Magritte are all very different; and why art-buyers can fall foul of unintended consequences, including spats over cultural property, endangered species and taxes. + +Art is more than just another asset class, which is why some of the book’s finest anecdotes appear in special sections called “Avoiding the Scoundrel’s Corner—parts 1, 2 and 3”. Mr Woodham uses real examples to show exactly how collectors have let themselves be done over in the past. Don’t be a dupe. + + + + + +Fiction from Congo + +The latest work from Africa’s Samuel Beckett + +Why Alain Mabanckou is a novelist to watch + + + +May 4th 2017 + +Black Moses. By Alain Mabanckou. Translated by Helen Stevenson. Serpent’s Tail; 199 pages; £12.99. To be published in America by the New Press in June. + +HOW wonderfully typical of an Alain Mabanckou character to fall sick because of a syntactic error. After the few ups and many downs of life as a friendless orphan in the Republic of Congo, Little Pepper, the narrator of “Black Moses”, sinks into delirium. Taken to a Paris-trained psychologist, he insists: “I’m ill because of my adverbials.” Adrift from “time, place or manner”, he cannot “complete the action expressed by the verb”. + +Language and literature bestow both blessings and curses on the picaresque heroes in Mr Mabanckou’s novels of his central African homeland. The formal elegance of French opens doors of opportunity. Its weight can also tether these grandchildren of empire to feelings of inadequacy, snared “like a snail caught in the spiral of its own slime”. “Black Moses” exhibits all the charm, warmth and verbal brio that have won the author of “Broken Glass” and “African Psycho” so many admirers—and the informal title of Africa’s Samuel Beckett. Helen Stevenson, his translator, again shakes Mr Mabanckou’s cocktail of sophistication and simplicity into richly idiomatic English. + +Yet this lost boy’s journey through the port of Pointe-Noire, the author’s birthplace, also counts the cost of growing up in a post-colonial society that was still half-convinced that “anything white was superior, everything black was doomed”. Little Pepper—nicknamed for how he used chili powder to take his revenge on bullies in the orphanage—goes in search of a family, and a voice. Papa Moupelo, the kindly priest who first called him Moses, is ousted by a careerist director (“an emperor with no clothes”), who grovels to a new Marxist regime in Brazzaville, the capital. The regime’s political jargon, gleefully parodied, imposes another phoney lingo. + +Life outside, as a streetwise scamp around the docks, proves even harsher. Only “Madam Fiat 500”, the brothel-keeper, and her girls offer the lad a “little adoptive family”. As his suffering deepens, nothing can unshackle “the chains of ill fortune”. The glamour of grammar endures, though. A fellow-inmate tries to move a comma in Little Pepper’s testimony, “which I wanted to keep just where it was”. For the wretched of the Earth, the language of power can be the most potent sorcery of all. + + + + + +An offering you can’t refuse + +“The Godfather” 45 years on + +In an era where film festivals compete with each other and with Netflix for attention, Tribeca won this year by making itself the godfather of all gatherings for movie fans + + + +May 4th 2017 | NEW YORK + +THE lights go down, and the familiar orchestral score begins playing at Radio City Music Hall. A crowd of more than 5,000 people cheers wildly, many furtively taking out their smartphones to snap photographs of the title sequence. The atmosphere is electric, the audience noisily saluting famous moments they have seen many times before. Outside, it may be a warm spring Saturday afternoon in New York. But inside, “The Godfather” and “The Godfather II” are playing on a giant screen, and afterwards the director, Francis Ford Coppola, and the surviving stars of the films will appear together on stage. This is too big to miss. + +In the age of Netflix and the iPhone, when any form of entertainment or distraction is a notification away, it is no mean feat to hold people’s attention. The Tribeca film festival managed it a few times this year, including two sell-out events at Radio City Music Hall: the Godfather event and the opening night, when Aretha Franklin led a concert to mark the premiere of “The Soundtrack of Our Lives”, a documentary about Clive Davis, a legendary music producer. On April 28th, the evening before the Godfather event, more than 2,500 people filled the Beacon theatre on the Upper West Side to watch “Reservoir Dogs” on a 35mm print owned by the film’s director, Quentin Tarantino, who appeared onstage with the cast after the screening. + +Tribeca is by far the youngest of the leading festivals. Established in 2002, after the September 11th 2001 attacks, it lacks the venerable history of Venice, Cannes, Berlin or Edinburgh, and it cannot supplant Sundance as a mecca for indie film-makers. But Tribeca has two things going for it: its co-founder, Robert De Niro (a star of “Godfather II”), and its site, New York City (also a star of the Godfather films). + +This year Andrew Essex, the chief executive of Tribeca Enterprises, was determined to make use of both those strengths to put on events that created a sense of FOMO (“fear of missing out”). Without headline-grabbing appeal, festivals risk losing their lustre, if not their relevance. This year at Sundance Al Gore, the former vice-president, took to the stage to speak after the premiere of “An Inconvenient Sequel: Truth to Power”, a documentary on his environmental advocacy. Later this month the Cannes film festival will feature a special screening of the first two episodes of the new season of “Twin Peaks”, a TV show made by David Lynch. (There are risks as well to overpromising; on April 28th the Fyre festival, a supposedly high-end concert event in the Bahamas, failed spectacularly, leaving angry audience members desperate to evacuate the island almost as soon as they had arrived.) + +By comparison with its more venerated peers, Tribeca’s slate of events was impressive (if not necessarily its films; Sundance and Cannes still get more entries that cause a buzz). In all more than 150,000 people attended the festival’s offerings, an increase over last year; nearly 4m more watched along on Facebook Live. + +Half of that online audience tuned in for the finale on April 29th, the Godfather panel. Mr De Niro and Mr Coppola were joined on stage by Al Pacino, Robert Duvall, James Caan, Talia Shire and Diane Keaton. For 80 minutes, they traded stories about the films. Some were familiar to fans—like Marlon Brando’s “screen test” at his home, when he transformed himself into Don Corleone in front of Mr Coppola, or the decision by Mr Coppola to add a scene showing Luca Brasi, the hit man, nervously rehearsing his lines before meeting the Godfather, since the man playing the role, Lenny Montana, had trouble with his lines (he was an actual mob tough, not an actor). Others were affecting, like Mr Pacino reminiscing about walking every day from the Upper West Side down to Greenwich Village, thinking about how to play the part of Michael Corleone. Other stories felt like fun insider gossip, as when Mr Pacino and Ms Keaton got “so loaded” one night, and an anxious Mr Pacino announced: “It’s over. This is the worst film ever made.” The audience lapped it up, laughing approvingly. + + + + + +Clarification: Option B + +May 4th 2017 + +Further to our review last week of “Option B” by Sheryl Sandberg (“To have and to hold”), we would like to make clear that her husband, Dave Goldberg, suffered from a heart arrhythmia while on an exercise machine, and died suddenly. + + + + + +Obituary + + + + +Albert Freedman: That’s entertainment + + + + + +That’s entertainment + +Obituary: Albert Freedman died on April 11th + +The chief player in the quiz-show scandal of the 1950s was 95 + + + +May 4th 2017 + +THERE was no doubt who sponsored “Twenty One”, the NBC quiz showAlbert Freedman took over in 1956. The word “Geritol” appeared above the stage and on the lectern of the host, Jack Barry. Barry gave “America’s number-one tonic” a plug at the start, and in the intermission up popped the salesman like a conjurer from the curtains, cradling that familiar brown bottle and promising that if you felt weak and run-down, Geritol would vitaminise your tired blood in a matter of days. + +So when the boss of Geritol complained that “Twenty One” too was tired, and threatened to take it off the air, Mr Freedman was recruited to save it. Briefly put, he had to get rid of Herb Stempel, an expressionless, awkward nerd from Queens who, with his extraordinary memory, just kept on winning, and find someone more sympathetic to replace him; someone exciting. That was the purpose of this shiny new medium, television, after all. It offered spectacle, showmanship, illusion, escape; it carried, like those Geritol commercials and the ever-smiling blondes who decorated the sets, a whiff of the fairground. And Mr Freedman, at 34, having said yes, was on his way to contriving the biggest American scandal of the 1950s. + +Content as he was producing his own quiz show, “Tic-Tac-Dough”, he did not want to switch. But with his background in variety TV, on the Pinky Lee and Groucho Marx shows, and with his “eighth sense” for good contestants, he knew what was needed. And what he needed appeared. In a fluke of history, a touch of fate or God, he met Charles Van Doren at a party in the Village. Mr Van Doren was not only charming and bright but turned out to be electrifying on screen. The show, once he joined it, piled on viewers, so that 50m were watching on the night, December 5th 1956, when Mr Stempel was at last kicked off. + +The fact that Mr Van Doren had been coached was something only he and Mr Freedman knew for sure. The contestant—once the beans had been spilled, in 1958, by Mr Stempel and others—bitterly regretted his behaviour. Mr Freedman didn’t. Control—the words “fixed” or “rigged” never crossed his lips—was common in quiz shows, which were hugely popular then. CBS’s “The $64,000 Question” was controlled, as was “Tic-Tac-Dough”. Producers and viewers both thought, “So what?” You needed drama, suspense. You had to spike the rivalry between the contestants with more ties, more dropping behind and pulling ahead. Simply to have two dummies in earphones proving they knew science was unbelieveably boring. By giving Mr Van Doren the questions in advance—not the answers, Mr Freedman insisted—he “assumed he knew how to play it” to catch Mr Stempel up and, with luck, out. + +The rest was advice on performance, which any director would give. It was like Shakespeare, he told the literary Mr Van Doren: just entertainment. He instructed him to pause more, look worried, “forget” things and return to them. If he felt queasy about this, though he had no reason to, he should consider what good publicity he was giving to teachers like himself. Mr Stempel, who was also coached by a co-producer, acted the unlikeable robot, dabbing his sweaty brow in the torrid isolation booth. Mr Van Doren’s role was to “make it natural” and “make it real”: more real. + +The result was great television. For that, Mr Freedman would not apologise. “Twenty One” made millions of viewers at home very happy. Contestants won a lot of money. The show changed their lives. It inspired middle America to buy television sets as never before. The shame in his view was that its success, and Mr Van Doren’s celebrity, also ended the years of innocence. Television became a phenomenon so powerful that, in his own now-loaded words, it was out of control. The press attacked it as a hated rival, and the authorities started snooping; so though his shows had broken no laws (there being none in force), he was hauled before a grand jury, lied to it, recanted, and narrowly escaped a perjury rap. His TV career was over, after that. He moved to London to work for European Penthouse and assorted sex publications: another area, he said defensively, full of misplaced guilt and ignorance. + +Acts of generosity + +The moment he revisited most wistfully was meeting Mr Van Doren at that party. If he hadn’t gone—and liked him, and suggested that he could pep up his pitiful salary by a couple of thousand by coming on the show—he would never have got into trouble. For that act of generosity, worth $129,000 by the end, Mr Van Doren should have thanked him. In fact, all humanity should have thanked him for entertaining them. Instead, to gather by the film “Quiz Show” of 1994, his control of “Twenty One” had started a moral rot that led inexorably to Vietnam, Watergate, and lies and corruption on a national scale. + +He resented that, almost as much as he loathed the invasion of television by Hollywood glitz, violence and wild unreality. Looking back to the quiz shows with their simple format, basic staging and ordinary people in sober discussion of books or history, he felt that a better, more straightforward era had disappeared, and mourned it. Surely all he had done was give “Twenty One” a dose of Geritol (“You’ll feel better in seven days, or your money back!”) as the sponsor recommended? + + + + + +Economic and financial indicators + + + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +The Economist poll of forecasters, May averages + +Markets + + + + + +Output, prices and jobs + +May 6th 2017 + + + + + +Trade, exchange rates, budget balances and interest rates + +May 6th 2017 + + + + + +The Economist commodity-price index + +May 6th 2017 + + + + + +The Economist poll of forecasters, May averages + +May 6th 2017 + + + + + +Markets + +May 6th 2017 + + + + + +Table of Contents + +The Economist + +The world this week + +Politics this week + + + + + +Business this week + + + + + +KAL's cartoon + + + + + +Leaders + +Regulating the data economy: The world’s most valuable resource + + + + + +Brexit and Britain’s election: Strong, stable—and short on detail + + + + + +France’s election: Don’t discount Marine Le Pen + + + + + +South Korea: Moon mission? + + + + + +Synthetic biology: Breaking free from cells + + + + + +Letters + +On Japan, public land, Germany, North Korea, India, knots, “The Goodies”: Letters to the editor + + + + + +Briefing + +The data economy: Fuel of the future + + + + + +United States + +Health care: Political self-amputation + + + + + +Innovative cities: Night time turned into day + + + + + +Immigration enforcement: Cities under siege + + + + + +The law in Texas: No refuge + + + + + +The Supreme Court: Man in the middle + + + + + +Transport in New York: On the wrong track + + + + + +School vouchers: Going public + + + + + +Lexington: Constant foe, fickle friend + + + + + +The Americas + +Venezuela: It’s up to the army + + + + + +Cannabis in Uruguay: Chemists v criminals + + + + + +Canada: Parles-tu québécois? + + + + + +Bello: Can the centre hold? + + + + + +Asia + +South Korean politics: Post-Park life + + + + + +Japanese politics: On the offensive + + + + + +Timor-Leste: Wake up and sell the coffee + + + + + +Food in Pakistan: Stepping up to the plate + + + + + +Banyan: Back from the dead + + + + + +China + +The new silk route (1): All aboard the belt-and-road express + + + + + +The new silk route (2): One belt, one roadblock + + + + + +Middle East and Africa + +A cotton boll’s journey: From shrub to shirt to shelf + + + + + +South Africa: Bury him, praise yourself + + + + + +Egypt: Judgment day + + + + + +America, Israel and the Palestinians: Movement, but any change? + + + + + +The state of Arab men: Down and out in Cairo and Beirut + + + + + +Europe + +France’s presidential election: The rage against Macron + + + + + +German politics: Angie’s army + + + + + +Turkey and Russia cosy up: Brothers in arms + + + + + +The Eurovision song contest: War music + + + + + +Housing in Russia: A new kind of revolution + + + + + +Charlemagne: The parable of Amiens + + + + + +Britain + +The European Union and the election: When Brussels spouts + + + + + +Explosive appointment: Election art + + + + + +Euratom: The nuclear cliff-edge + + + + + +The campaigns: Speakers’ Corner + + + + + +London and the election: Another country + + + + + +The productivity puzzle: Eggs in one basket + + + + + +Prisons: Chinks of light + + + + + +The elderly vote: Grey to blue + + + + + +Bagehot: One nation under May + + + + + +International + +Aid and the private sector: Doing good, doing well + + + + + +Special report + +International banking: Ten years on + + + + + +A brief history of the crisis: When the music stopped + + + + + +European banks: Sheep and goats + + + + + +American banks: After Dodd-Frank + + + + + +International regulation: Bother over Basel + + + + + +Financial technology: Friends or foes? + + + + + +Recruitment: The millennial problem + + + + + +The next crisis: How safe are banks? + + + + + +Business + +Sports on TV: Still the champion? + + + + + +Alphabet v Uber: No brakes + + + + + +The pharma industry: Hard to swallow + + + + + +Ride-hailing in Saudi Arabia: Taken for a ride + + + + + +Animal waste: Burning the fat + + + + + +The newspaper business: Metamorphosis + + + + + +Street food: Rules of the road + + + + + +Schumpeter: From great to good + + + + + +Finance and economics + +Chinese investors: The Buffetts of China + + + + + +Buttonwood: Cape Fear + + + + + +Government debt: Taking the ultra-long view + + + + + +Puerto Rico’s finances: To be resolved + + + + + +Illegal-wildlife trade: On the horns + + + + + +Car finance in America and Britain: Subprime, anyone? + + + + + +The euro-area economy: Speeding up + + + + + +Free exchange: Algorithms and antitrust + + + + + +Science and technology + +Biotechnology: Primordial gloop + + + + + +The fight against AIDS: Safer sex + + + + + +Pollutants: Fatal attraction + + + + + +Conservation: Big is beautiful + + + + + +Books and arts + +Theatre: All the world’s a stage + + + + + +Islamic state: Children of jihad + + + + + +The revival of cities: Back from the brink + + + + + +Collecting: Calling all art lovers + + + + + +Fiction from Congo: Africa’s Samuel Beckett + + + + + +Tribeca film festival: An offering you can’t refuse + + + + + +Clarification: Option B + + + + + +Obituary + +Albert Freedman: That’s entertainment + + + + + +Economic and financial indicators + +Interactive indicators + + + + + +Output, prices and jobs + + + + + +Trade, exchange rates, budget balances and interest rates + + + + + +The Economist commodity-price index + + + + + +The Economist poll of forecasters, May averages + + + + + +Markets + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.05.13.txt b/homeworks/B20769/homework1/data2/2017.05.13.txt new file mode 100644 index 0000000..5ca6c5b --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.05.13.txt @@ -0,0 +1,5742 @@ +[Fri, 12 May 2017] + +The world this week + +Leaders + +Letters + +Briefing + +United States + +The Americas + +Asia + +China + +Middle East and Africa + +Europe + +Britain + +International + +Business + +Briefing + +Finance and economics + +Science and technology + +Books and arts + +Obituary + +Economic and financial indicators + + + + + +| 下一章 | 主菜单 | + +* * * + + + + + +The world this week + + +Politics this week [Fri, 12 May 07:08] + +Business this week [Fri, 12 May 07:08] + +KAL's cartoon [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Politics this week + + +May 11th 2017 + + + + + +James Comey was sacked as director of the FBI by Donald Trump, taking Washington, and Mr Comey, completely by surprise. Mr Trump acted on the advice of the attorney-general, Jeff Sessions, who decided that Mr Comey had botched the FBI’s probe into Hillary Clinton’s private e-mails last year. At the time Mr Trump had praised Mr Comey, but that was before he started investigating links between the Trump campaign and Russia. Democrats, and others, called for the appointment of a special prosecutor. See article. + +Sergey Lavrov, Russia’s foreign minister, visited the White House for the first time since Mr Trump’s election. Their meeting in the Oval Office was private, except for the presence of a photographer from TASS, the Russian news agency. + +Mr Trump urged the Senate not to “let the American people down”, after the House of Representatives passed a health-care bill that dismantles large parts of Obamacare. Fearful of a potential public backlash about the removal of some of the popular elements of Obamacare, such as insurance for pre-existing conditions, senators are in no hurry to pass the bill and may end up drafting their own legislation. + +Friends and enemies + +America said it would send arms to the YPG, a Kurdish militia group operating in northern Syria, so it could fight more effectively against Islamic State. Turkey denounced the move, because it considers the group to be an offshoot of the Turkish Kurdish party, the PKK, which both it and America regard as a terrorist organisation. + +A Russian plan for four “de-escalation zones” in Syria came into effect. Fighting has continued in the areas, but at a lower level. Rebels seeking to topple the regime of President Bashar al-Assad refused to sign the agreement. + +Tunisia’s president sent the army to protect the country’s phosphate, gas and oil facilities after protests that threatened to disrupt them broke out in the south of the country. + + + +In Nigeria 82 of the 276 girls kidnapped three years ago by Boko Haram, a jihadist group, were released. Several imprisoned militants were handed over in exchange. More than 113 of the girls are still thought to be missing. + +Moon shines + +South Koreans elected Moon Jae-in as president by a wide margin in a crowded field. Mr Moon, a former leader of the liberal Minjoo party, has promised a more emollient approach to North Korea, putting him at odds with America’s policy under Donald Trump. See article. + +Mr Trump’s advisers submitted a plan to deploy an extra 5,000 soldiers in Afghanistan. Afghan government forces have been losing ground to Taliban insurgents since NATO began scaling back its mission in the country in 2011. + +A court in Indonesia sentenced Basuki Tjahaja Purnama, the outgoing governor of Jakarta, to two years’ imprisonment for blasphemy. He had criticised people who invoke the Koran to argue that Muslims should never vote for a Christian like him. In Aceh, a semi-autonomous region, a sharia court sentenced two gay men to 100 lashes. See article. + +A Chinese human-rights lawyer, Xie Yang, pleaded guilty to inciting subversion. At his trial, he also denied reports that he had been tortured by police. Mr Xie was arrested in 2015 during a sweeping crackdown on legal activists. + +Socialist realism + +Venezuela’s health ministry reported that maternal mortality jumped by 65% in 2016 and that the number of infant deaths rose by 30%. It also said that the number of cases of malaria was up by 76%. The ministry had not reported health data in two years. Venezuela is suffering from shortages of food and medicines. + +The ELN, a guerrilla group, kidnapped eight people in Chocó Department in western Colombia but later released them. Juan Manuel Santos, the president, attributed their release to pressure from the security forces. The government has been negotiating a peace agreement with the ELN since February. + +Perry Christie lost his bid for re-election as prime minister of the Bahamas in a surprising landslide victory for the opposition Free National Movement party. Hubert Minnis, the new prime minister, campaigned against alleged corruption in Mr Christie’s Progressive Liberals. + +Christy Clark was re-elected as premier of British Columbia, a province in western Canada, but initial results suggest that her Liberal Party may not have won a majority and will need the support of the Green Party. + +A harbinger + +Britain’s local elections, held on May 4th, delivered a sizeable increase in the number of council seats held by the ruling Conservative Party. Gaining 563 seats and taking control of 11 councils, the Tories romped home at the expense of the opposition Labour Party and Liberal Democrats. Now that it has achieved its aim of Brexit the UK Independence Party was almost wiped out, as its supporters switched to the Tories. It was a thumping result for the party, but projections based on the results imply that the Tories’ current opinion-poll lead may be overstated when it comes to the general election on June 8th. See article. + +The youth of today + + + +Emmanuel Macron won the run-off in the French presidential election with 66% of the vote, beating the nationalist, Marine Le Pen. The 39-year-old former economy minister had never run for office before and was not regarded as a contender a year ago. His victory was a particular relief to the EU. Yet Ms Le Pen nearly doubled the share of the vote that her father achieved in 2002. See here and here. + +More than 200 migrants drowned off the coast of Libya, adding to the 1,300 people who had already died or disappeared in the Mediterranean this year. Meanwhile, the European Court of Justice began hearing a case brought by Hungary and Slovakia against the EU’s relocation of migrants based on quotas. + +Angela Merkel, the German chancellor, received a further, and unexpected, boost, when her Christian Democratic Union party won decisively in a state election in Schleswig-Holstein. It was the second consecutive loss for Mrs Merkel’s current coalition partners, the Social Democrats, after another state, Saarland, voted for the CDU in March. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21721971-politics-week/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Business this week + + +May 11th 2017 + + + + + +AkzoNobel, a Dutch maker of paints and coatings, rejected a third informal takeover offer, worth €26.9bn ($28.8bn), from PPG, an American rival. That prompted Elliott Advisors, a hedge fund with a 3% stake in Akzo, to start legal proceedings to force the company to call an extraordinary meeting of shareholders, at which Elliott will try to oust Akzo’s chairman. Elliott wants Akzo at least to talk to PPG, arguing that its decision not to is a “flagrant breach” of its fiduciary duties. But Akzo is governed by a foundation that makes it almost impossible for shareholders to turf out the board. + + + +Whole Foods replaced its chairman and chief financial officer, a month after an activist hedge-fund revealed that it had accumulated a 9% stake in the retailer and called for a shake-up in management. The company named several new people to the board, including the founder of Panera Breads, a rising bakery chain. + +Rapped on the knuckles + +Jes Staley, the chief executive of Barclays, was confronted by angry shareholders at the British bank’s annual general meeting over his attempt to unmask an internal whistleblower. Mr Staley has been reprimanded by the board over his lapse of judgment, but the chairman, John McFarlane, gave him his full support at the AGM, promising that Mr Staley has learned his lesson. + +Commerzbank reported net income of €217m ($231m) for the first quarter. That was better than the profit it made in the equivalent period last year, mostly because of an improvement in the division that handles unwanted assets. Germany’s second-biggest lender described Europe’s negative interest rates as a “burden” that hampers its fortunes. + +Mario Draghi defended negative rates in a speech to the legislative assembly in the Netherlands. It was a rare trip to a national parliament by the president of the European Central Bank. Along with their German counterparts, Dutch politicians have been the most vocal critics of the ECB’s monetary stimulus, which, they say, helps profligate countries in the euro zone at the expense of banks and savers in more frugal ones. + + + +A rally in Greek government debt continued, with the yield on the benchmark ten-year bond falling to 5.5%, the lowest since its debt restructuring in 2012. The government recently agreed to a series of reforms in order to unlock the latest tranche of loans under the rescue package agreed with international creditors. + +The European Bank for Reconstruction and Development flatly rejected a plea by Russia to end its freeze on investment in the country, which was introduced as a result of the conflict in Ukraine in 2014. The EBRD was created in 1991 to help post-Soviet countries make the transition to democracy. Russia claims the ban on investment is affecting the whole economy and breaches EBRD rules. + +Oil prices recouped some of their recent losses. After falling by 6% in the space of a week to a five-month low, Brent crude rose to over $50 a barrel. Prices were boosted in part by comments from the Russian and Saudi energy ministers about the possibility of extending a deal that cuts oil production. + +Appealing Apple + +Apple’s market capitalisation rose to over $800bn for the first time. The company’s share price is up by 32% since the start of the year, buoyed in part by renewed investor interest in the tech industry amid doubts that boosts to the banking and manufacturing sectors promised by Donald Trump will come to fruition. The tech-heavy NASDAQ stockmarket index reached another high this week. + +The first quarterly earnings report from Snap since it became a publicly listed company failed to impress. The social network made a net loss of $2.2bn, but investors homed in on signs that the rate at which new users sign up is slowing: it had 166m daily users in the first quarter, up by 5% from the previous quarter. + +In a deal that consolidates its already tight grip on local broadcasting in America, Sinclair, which owns 173 television stations, agreed to buy Tribune Media, which owns 42, including WGN America, a national network based in Chicago. The Federal Communications Commission recently relaxed the rules on the ownership of local stations. Some think the $3.9bn deal will concentrate too much power in one broadcaster. + +You couldn’t make it up + +Bill Clinton is to make a foray into fiction by writing a novel with the help of James Patterson, a bestselling author. Unusually, the book will be sold by the two publishers that represent Messrs Clinton and Patterson. Titled “The President is Missing” it is due in the shops next year. Whether it will be as wild as the real-life intrigue in the White House remains to be seen. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21721970-business-week/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +KAL's cartoon + + +May 11th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21721974-kals-cartoon/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Leaders + + +The United States: Courting trouble [Fri, 12 May 07:08] + +The sacking of James Comey: You’re fired! [Fri, 12 May 07:08] + +India’s economy: State of disrepair [Fri, 12 May 07:08] + +Surrogacy: The gift of life [Fri, 12 May 07:08] + +Governing France: Macron’s mission [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Courting trouble + +Why Trumponomics won’t make America great again + + +The impulsiveness and shallowness of America’s president threaten the economy as well as the rule of law + +May 13th 2017 + + + + + +DONALD TRUMP rules over Washington as if he were a king and the White House his court. His displays of dominance, his need to be the centre of attention and his impetuousness have a whiff of Henry VIII about them. Fortified by his belief that his extraordinary route to power is proof of the collective mediocrity of Congress, the bureaucracy and the media, he attacks any person and any idea standing in his way. + +Just how much trouble that can cause was on sensational display this week, with his sacking of James Comey—only the second director of the FBI to have been kicked out. Mr Comey has made mistakes and Mr Trump was within his rights. But the president has succeeded only in drawing attention to questions about his links to Russia and his contempt for the norms designed to hold would-be kings in check. + + + +Just as dangerous, and no less important to ordinary Americans, however, is Mr Trump’s plan for the economy. It treats orthodoxy, accuracy and consistency as if they were simply to be negotiated away in a series of earth-shattering deals. Although Trumponomics could stoke a mini-boom, it, too, poses dangers to America and the world. + +Trumponomics 101 + +In an interview with this newspaper, the president gave his most extensive description yet of what he wants for the economy (see article). His target is to ensure that more Americans have well-paid jobs by raising the growth rate. His advisers talk of 3% GDP growth—a full percentage point higher than what most economists believe is today’s sustainable pace. + +In Mr Trump’s mind the most important path to better jobs and faster growth is through fairer trade deals. Though he claims he is a free-trader, provided the rules are fair, his outlook is squarely that of an economic nationalist. Trade is fair when trade flows are balanced. Firms should be rewarded for investing at home and punished for investing abroad. + +The second and third strands of Trumponomics, tax cuts and deregulation, will encourage that domestic investment. Lower taxes and fewer rules will fire up entrepreneurs, leading to faster growth and better jobs. This is standard supply-side economics, but to see Trumponomics as a rehash of Republican orthodoxy is a mistake—and not only because its economic nationalism is a departure for a party that has championed free trade. + +The real difference is that Trumponomics (unlike, say, Reaganomics) is not an economic doctrine at all. It is best seen as a set of proposals put together by businessmen courtiers for their king. Mr Trump has listened to scores of executives, but there are barely any economists in the White House. His approach to the economy is born of a mindset where deals have winners and losers and where canny negotiators confound abstract principles. Call it boardroom capitalism. + +That Trumponomics is a business wishlist helps explain why critics on the left have laid into its poor distributional consequences, fiscal indiscipline and potential cronyism. And it makes clear why businessmen and investors have been enthusiastic, seeing it as a shot in the arm for those who take risks and seek profits. Stockmarkets are close to record highs and indices of business confidence have soared. + +In the short term that confidence could prove self-fulfilling. America can bully Canada and Mexico into renegotiating NAFTA. For all their sermons about fiscal prudence, Republicans in Congress are unlikely to deny Mr Trump a tax cut. Stimulus and rule-slashing may lead to faster growth. And with inflation still quiescent, the Federal Reserve might not choke that growth with sharply higher interest rates. + +Unleashing pent-up energy would be welcome, but Mr Trump’s agenda comes with two dangers. The economic assumptions implicit in it are internally inconsistent. And they are based on a picture of America’s economy that is decades out of date. + +Contrary to the Trump team’s assertions, there is little evidence that either the global trading system or individual trade deals have been systematically biased against America (see article). Instead, America’s trade deficit—Mr Trump’s main gauge of the unfairness of trade deals—is better understood as the gap between how much Americans save and how much they invest (see article). The fine print of trade deals is all but irrelevant. Textbooks predict that Mr Trump’s plans to boost domestic investment will probably lead to larger trade deficits, as it did in the Reagan boom of the 1980s. If so, Mr Trump will either need to abandon his measure of fair trade or, more damagingly, try to curb deficits by using protectionist tariffs that will hurt growth and sow mistrust around the world. + +A deeper problem is that Trumponomics draws on a blinkered view of America’s economy. Mr Trump and his advisers are obsessed with the effect of trade on manufacturing jobs, even though manufacturing employs only 8.5% of America’s workers and accounts for only 12% of GDP. Service industries barely seem to register. This blinds Trumponomics to today’s biggest economic worry: the turbulence being created by new technologies. Yet technology, not trade, is ravaging American retailing, an industry that employs more people than manufacturing (see article). And economic nationalism will speed automation: firms unable to outsource jobs to Mexico will stay competitive by investing in machines at home. Productivity and profits may rise, but this may not help the less-skilled factory workers who Mr Trump claims are his priority. + +The bite behind the bark + +Trumponomics is a poor recipe for long-term prosperity. America will end up more indebted and more unequal. It will neglect the real issues, such as how to retrain hardworking people whose skills are becoming redundant. Worse, when the contradictions become apparent, Mr Trump’s economic nationalism may become fiercer, leading to backlashes in other countries—further stoking anger in America. Even if it produces a short-lived burst of growth, Trumponomics offers no lasting remedy for America’s economic ills. It may yet pave the way for something worse. + +A complete transcript of The Economist’s interview with Mr Trump is available here + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21721904-impulsiveness-and-shallowness-americas-president-threaten-economy-well-rule/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Russia and the Trump campaign + +After Comey’s dismissal, it’s time for a commission + + +An independent inquiry into what happened during the election is the only way to clear the air + +May 11th 2017 + + + + + +IT MUST have seemed like a good idea at the time. Why not get rid of an irksomely independent FBI director, who was making trouble for Donald Trump’s White House, by exploiting his mishandling of Hillary Clinton’s e-mails? After all, Mrs Clinton believes that James Comey cost her the presidency with a letter informing Congress in October that he was reopening the investigation into her use of a private e-mail server. Surely Democrats would be glad to see the back of him. + +Mr Trump has the power to sack Mr Comey. But nobody will be fooled by the quasi-prosecutorial memo drawn up by the deputy attorney-general, Rod Rosenstein, at the president’s request. If the trouble were Mr Comey’s handling of Mrs Clinton’s e-mails, he could have been sacked four months ago. Indeed, Mr Trump had praised Mr Comey’s October letter, saying it had taken “a lot of guts”. + + + +That leaves two interpretations (see page 41). Either Mr Comey was dismissed in an effort to undermine an investigation into collusion between members of Mr Trump’s campaign and Russians trying to subvert the election. Or Mr Trump got rid of him in a fit of pique. Maybe Mr Comey was just too big for his boots, too unwilling to take the president’s paranoid notions seriously—say, by failing to credit his idea that Barack Obama had ordered a wiretap of Trump Tower. Either way, the sacking of Mr Comey reflects terribly on Mr Trump. + +There is as yet no proof that aides close to Mr Trump were conspiring with Russian intelligence agents. But officials and the president’s toadies in Congress, such as Devin Nunes, chairman of the House Intelligence Committee, have behaved as if there was something to hide. Mr Nunes had to withdraw from his committee’s investigation after appearing desperate to do the bidding of the White House. The attorney-general, Jeff Sessions, who gave misleading testimony about his contacts with Russia’s ambassador, has similarly recused himself. Mike Flynn had to quit as national security adviser after lying about his dealings with the Russians. Mr Comey’s defenestration just as he was asking Mr Rosenstein for more resources to look into Russia only fuels suspicions of a cover-up. + +If Mr Trump is lashing out at an uppity underling, that too is a bad sign. It suggests the president does not respect the vital principle of an independent, non-political FBI—which, for all his faults, Mr Comey represented. Taken with the contempt Mr Trump has shown for judges who challenge his executive orders, America’s system of checks and balances is under stress. + +Some, including Chuck Schumer, the Senate’s top Democrat, have called for an independent counsel to continue the investigation. But there is a problem. It would be the now-compromised Mr Rosenstein who would be responsible for making the appointment and for oversight of what followed. + +Country first + +Congress must now uphold constitutional norms. Any successor to Mr Comey nominated by the president must face the most rigorous examination of their impartiality. But that will not be enough. What is needed is either an independent commission, along the lines of the one set up to inquire into the events leading up to September 11th 2001, or a bipartisan select committee to investigate the Russia allegations. Neither would have prosecutorial powers, but they could have substantial investigatory resources and be able to subpoena witnesses. There is no reason why prosecutions could not follow once they had reported. Principled Senate Republicans, such as Richard Burr, Ben Sasse and John McCain, are troubled by what the removal of Mr Comey portends. It is high time for them and others to put their country before their party. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21721917-independent-inquiry-what-happened-during-election-only-way-clear/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +State of disrepair + +India needs to curb borrowing by profligate state governments + + +That means tackling the implicit central-government guarantee of their debts + +May 11th 2017 + + + + + +ANY amount of parental scrimping and saving is futile if the children run amok with the family credit card. For years, the government of India has tightened its belt, cutting its annual budget deficit from 5% of GDP in 2013 to nearer 3% now. But its parsimony has been matched by the profligacy of India’s 29 states. They have spent nearly all the money saved, leaving the country’s public finances no better off. + +The central government has only itself to blame. By implicitly guaranteeing bonds issued by states, and forcing banks to invest their depositors’ money in them, it has unwittingly created the conditions for a future fiscal debacle (see page 73). India can change course cheaply now—or expensively later. + + + +India’s states used to be the epitome of fiscal rectitude. It was the central government that wrecked India’s credit score—its bonds are rated BBB-, one notch above “junk”. But stagnating revenues and higher spending have pushed the states’ combined deficits to their highest in 13 years. They now spend more than the central government—and not always wisely. Civil servants are in line for whopping pay rises. The new chief minister of Uttar Pradesh, a state with some 220m people, wants to waive the repayment of loans to farmers, a ruinous policy, which if copied elsewhere, would increase the combined federal and state deficit by 2% of GDP. + +Usually, politicians would be deterred from such largesse by bond-market vigilantes, who would make wild borrowing unaffordable. But in India state bonds are issued by the central bank and carry an implicit central-government guarantee. Much as Portugal or Greece overborrowed a decade ago, when they were paying almost the same interest rate as Germany (it did not end well), so Indian states have access to the same cheap financing regardless of the condition of their books. + +Indian states are meant to keep their budget deficits below 3% of GDP. But this rule is often trumped by political expediency. Worse, states have a captive market for their debt: Indian banks have to redirect a fifth of their deposits into buying central- or state-government bonds. Authorities also lean on public pension funds and insurance companies to buy state bonds. With financing so abundant, why balance the books? + +Financial crises often start with borrowers who have overextended themselves because their lenders assume someone will bail them out. India should act now to prevent a future crash by imposing more discipline on state borrowing, and by pressing markets to discriminate between states with sustainable finances and those on the path to bankruptcy. + +Once a central-government guarantee is assumed, however, persuading investors that it does not exist is never easy. One option would be to say explicitly that state bond issues are not guaranteed. Unfortunately, the political costs of not bailing out a struggling state are such that a promise never to intervene lacks credibility. Another tack would be to make the guarantee explicit but limited, up to an authorised threshold; that might inject enough political plausibility to make any additional borrowing more expensive. Simpler still, states could be forced to pay the central government for a guarantee, with the least creditworthy paying most. + +Crowding out + +More fundamentally, India’s banks and pension funds should have much greater freedom to pick investments. As well as the deposit requirements, the authorities routinely nudge public pension funds and insurers to invest in specific bonds. Giving investors more choice over where to put their cash, and forcing states to borrow on the strength of their own balance-sheets, would cause some fiscal tightening. But the reckoning will be bigger and messier if states keep living beyond their means. It is time to signal that they bear responsibility for their own borrowing, and to end the perverse incentives that encourage them to dig themselves ever deeper into debt. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21721911-means-tackling-implicit-central-government-guarantee-their-debts-india-needs-curb/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +The gift of life + +Carrying a child for someone else should be celebrated—and paid + + +Restrictive rules are in neither the surrogate’s interests, nor the baby’s + +May 13th 2017 + + + + + +THE earliest known description of surrogacy is an ugly biblical story: in Genesis, the childless Sara sends her husband to bed with her maidservant, Hagar, and takes the child as her own. It is this exploitative version of surrogacy that still shapes attitudes and laws today. Many countries ban it outright, convinced that the surrogate is bound to be harmed, no matter whether she consents. Others allow it, but ban payment. Except in a few places, including Greece, Ukraine and a few American states, the commissioning parents have no legal standing before the birth; even if the child is genetically theirs, the surrogate can change her mind and keep the baby. Several developing countries popular with foreigners in need of a surrogate have started to turn them away. + +These restrictions are harmful. By pushing surrogacy to the legal fringes, they make it both more dangerous and more costly, and create legal uncertainty for all, especially the newborn baby who may be deemed parentless and taken into care. Instead, giving the gift of parenthood to those who cannot have it should be celebrated—and regulated sensibly. + + + +Getting surrogacy right matters more than ever, since demand is rising (see article). That is partly because fewer children are available for adoption, and partly because ideas about what constitutes a family have become more liberal. Surrogates used to be sought out only by heterosexual couples, and only when the woman had a medical problem that meant she could not carry a baby. But the spread of gay marriage has been followed by a rise in male couples turning to surrogates to complete their newly recognised families. And just as more women are becoming single parents with the help of sperm donation, more men are seeking to do so through surrogates. + +The modern version of surrogacy is nothing like the tale of Sara and Hagar. Nowadays, surrogates rarely carry babies who are genetically related to them, instead using embryos created in vitro with eggs and sperm from the commissioning parents, or from donors. They almost never change their minds about handing over the baby. On the rare occasions that a deal fails, it is because the commissioning parents pull out. + +A modern surrogacy law should recognise those intending to form a family as the legal parents. To protect the surrogate, it should demand that she obtain a doctor’s all-clear and enjoy good medical care. And to avoid disputes, both parties should sign a detailed contract that can be enforced in the courts, setting out in advance what they will do if the fetus is disabled, the surrogate falls ill or the commissioning parents break up. + +Emotional labour + +Laws should also let the surrogate be paid. Women who become surrogates generally take great satisfaction in helping someone become a parent. But plenty of jobs offer rewards beyond money, and no one suggests they should therefore be done for nothing. The fact that a surrogate in India or Nepal can earn the equivalent of ten years’ wages by carrying a child for a rich foreigner is a consequence of global inequality, not its cause. Banning commercial surrogacy will not change that. + +Better to regulate it properly, and insist that parents returning home with a child born to a surrogate abroad can prove that their babies have been obtained legally and fairly. Becoming a parent should be a joy, not an offence. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21721914-restrictive-rules-are-neither-surrogates-interests-nor-babys-carrying-child/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +The chosen one + +France’s new president promises openness and reform from the centre + + +The challenge is immense. But Emmanuel Macron deserves to succeed + +May 13th 2017 + + + + + +ON MAY 14th, as Emmanuel Macron takes up his duties in the Elysée Palace, spare a thought for what he has already achieved. To become head of state he created a new political movement and bested five former prime ministers and presidents. His victory saved France and Europe from the catastrophe of Marine Le Pen and her far-right National Front. At a time when democracies are being dragged to the extremes by doubt and pessimism, he has argued from the centre that his country must be open to change, because change brings progress. + +But spare a thought also for the difficult road ahead (see article). Mr Macron has started well, with a sober acceptance speech that evoked unity rather than triumphalism. Yet this is the first time he has been elected to public office. He begins alone in the Elysée, without the backing of any of the established parties. He trounced Ms Le Pen. But if you count abstentions, blank ballots and votes cast chiefly to keep her out, only a fifth of the electorate positively embraced his brand of new politics. Each of the past three French presidents has promised reform—and then crumpled in the face of popular resistance. Left-wing demonstrations against the new president in Paris this week hint at the struggle to come. + + + +Much is at stake. The challenge from Ms Le Pen did not begin with this election and it will not end with her defeat. If Mr Macron now presides over five more years of slow growth and high unemployment, it will strengthen the far right and the hard left, which together got almost half the first-round vote. To put France beyond their reach, he needs to carry through vigorous economic reform. And for that, he needs first to impose his vision on French politics. + +Best foot forward + +The next few weeks will be crucial. As president, Mr Macron can force through a certain amount of change by decree. But to secure thoroughgoing, lasting and legitimate reform he needs the backing of the legislature. Hence in the elections for the National Assembly in a little over a month’s time his party, renamed this week as La République en Marche! (LRM), or “The Republic on the Move!”, needs to win a big block of seats. + +That is a tall order. The party is just over a year old. This is its first election. Half its candidates for the assembly’s 577 seats have, like Mr Macron, never held elected office. Its local knowledge and tactical nous are untested. There is only a slim chance of LRM winning an overall majority. + +More probably, Mr Macron will have to preside over a minority government, or form a coalition, dragging him and his party into horse-trading. Having set himself up as a new sort of leader, above party politics, this could tarnish him in the eyes of his supporters, distort his priorities and limit his achievements. To minimise that, this newspaper urges French voters to complete their rejection of Ms Le Pen by backing LRM and giving Mr Macron a chance to put his programme into action. + +Even if he controls the assembly, Mr Macron will face France’s most potent source of resistance—street protests and strikes. That is what happened in 1995, when Jacques Chirac, at the beginning of his first term as president, waged a battle to reform the economy. After he failed, Mr Chirac abandoned reform for his remaining decade in office. France is still living with the consequences. + +If Mr Macron too has only one chance at reform, his focus should be on the joblessness that has robbed the French of hope and which feeds Ms Le Pen’s arguments that citizens are being failed by a greedy, ineffectual elite. The unemployment rate is close to 10%; for those under 25, it has been above 20% since 2009. Firms are reluctant to hire new employees because firing them is time-consuming and expensive. The 35-hour week, a thick wedge of taxes on employment and union-dominated sectoral bargaining all put firms off creating jobs. Reform needs to loosen these knots. + +However, although the economics is straightforward, the politics is toxic. Each reform, much as it benefits a jobseeker, makes someone already in work less secure. + +Mr Macron therefore needs to be ambitious and swift. Ambitious because you can be sure that the left and the unions will fight even small reforms as hard as large ones: if Mr Macron is to rally ordinary citizens against organised labour, he needs to make the fight worthwhile. And swift because, if reform is to succeed, now is as good a time as he will ever get. He is flush with victory. His party will start with the benefit of novelty. He can offer stimulus through apprenticeships and tax cuts. Most of all, he will be acting at a point in the cycle when France’s economy is growing—faster, indeed, than at any time since a brief post-crisis rebound in 2010. Labour-market reform takes years to bear fruit. Growth will buy him time. + +Speed and ambition have the further advantage of changing the country’s position in Europe. France has lost the trust of Germany, which has taken to treating it as the junior partner in the EU. Germany is unwilling to relax further the fiscal rules governing the single currency or to strengthen its governance because, understandably, it fears that it will end up paying the bill (see Charlemagne). Yet failure in France would be a deeper threat to Germany, and to Europe as a whole. France is hindered both by austerity and by the euro’s shaky foundations. For Germany to begin to think differently, and cut France some slack, Mr Macron must first convince the government in Berlin that he is in control and determined to reform his country. + +Macron prudential + +Over the past two decades, France has become used to being the butt of criticism—for its economy, its racial divisions and its resistance to change. Suddenly, under Mr Macron, it is in the limelight. And it is enjoying it. + +There is a real danger that he fails—how could there not be when he is so untested? But, as the remarkable Mr Macron takes office, another future is visible: one in which he unleashes the creativity and ingenuity of the French, and sets an example for drawbridge-down democrats across the EU and lays to rest the drawbridge-up fears of his nativist opponents. That is a future this newspaper would welcome. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21721919-challenge-immense-emmanuel-macron-deserves-succeed-frances-new-president-promises/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Letters + + +On bonds, birds, sea levels, central banks, quantum computing, split infinitives: Letters to the editor [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Letters + +Letters to the editor + + +On bonds, birds, central banks, split infinitives, and more + +May 11th 2017 + + + + + +The SeLFIES model + +“Taking the ultra-long view” (May 6th) overlooked other critical reasons for governments to issue ultra-long debt beyond locking-in their financing costs. With life expectancy increasing, pension funds and annuity-writing insurance companies require longer-maturing bonds to hedge their obligations. The looming crisis in defined-contribution pension plans, and the need to fund infrastructure, requires novel alternatives to traditional debt models. + + + +Currently, there is no truly safe, low-cost, liquid instrument tailored for retirees. But governments could issue an innovative, “safe” ultra-long bond instrument, which we call “SeLFIES” (Standard of Living indexed, Forward-starting, Income-only Securities). These proposed bonds start paying investors upon retirement, and pay coupons-only for a period equal to the average life expectancy at retirement (for example, American bonds would pay for 20 years). Unlike Treasury-Inflation Protected Securities that are solely focused on inflation, SeLFIES are indexed to aggregate consumption per person, covering both the risk of inflation and the risk of standard-of-living improvements. SeLFIES are designed to pay people when they need it and how they need it, and they greatly simplify retirement investing. They also give governments a natural hedge of revenues against the bonds (through VATs) and allow this to be a vehicle to fund infrastructure. + +The looming global retirement crisis needs to be addressed. The longer governments wait, the higher the cost to them and the taxpayer. SeLFIES ensure retirement security, and the government is a natural issuer. + +ROBERT MERTON + +Professor of finance + +MIT Sloan School of Management + +Cambridge, Massachusetts + + + +ARUN MURALIDHAR + +Adjunct professor of finance + +George Washington University + +Washington, DC + + + + + +On a wing, and a prayer + + + +Banyan is right to bemoan the collapse in the numbers of migratory shorebirds using the East Asian-Australasian Flyway because of reclamation around the shores of the Yellow Sea (April 22nd). But there have recently been some extremely positive signs. The Chinese government has created several new reserves and has just started the process of getting the UN to declare 14 important roosting areas along the Yellow Sea as World Heritage sites. South Korea is working to do the same for the tidal flats of its south-west region. And North Korea is also showing increased interest in conservation. In an age when international co-operation is waning, it is worth celebrating the fact that so many countries are working together to save the amazing birds that link us. + +By the way, bar-tailed godwits fly to New Zealand directly from Alaska. That is a non-stop flight of 12,000km in around nine days, the longest recorded flight by any bird, during which they lose half their body-weight. That’s a feat that surely merits a bit of help. + +JIM EAGLES + +Editor + +Pukorokoro Miranda Naturalists’ Trust News + +Auckland + + + + + +Water, water everywhere + +What happens in the Arctic doesn’t stay in the Arctic, as you recognise (“Polar bare”, April 29th). What we have seen to date is just the tip of the iceberg. The rising sea level, centimetre by centimetre, is inexorably moving shorelines, laying waste to infrastructure and wreaking havoc on property values. Around the world, too many are failing to plan for the foreseeable consequences. + +The sea is rising, at least a metre within the lifetime of today’s youth and perhaps over three metres if climate mitigation is not pursued aggressively. After 5,000 years of stability, we need to develop long-term pragmatic plans to cope with the disruption. This means investing to adapt our infrastructure, from bridge heights to water treatment facilities to public transport. + +The cold reality is that adapting to a rising sea is now largely decoupled from reducing greenhouse gases. Decreasing the heat input will eventually slow the ice melting and the sea rising, but even a switch to 100% renewable energy won’t stop it. We have passed the tipping point. + +ROBERT CORELL + +Chair + +International Sea Level Institute + +Berkeley, California + + + + + +A pioneering central bank + +Your leader on central bank independence referred to “the British model, in which the government sets an inflation target for the central bank to follow” (“The wars of independence”, April 29th). It should be more accurately termed “the New Zealand model”. + +New Zealand’s central bank was not only the first to adopt formally an inflation target in 1988, it was also the first to combine explicit political involvement in the choice of the inflation target with complete instrument independence in delivering that target. + +This model, of explicit political involvement in setting the target with full independence over the monetary policy needed to deliver it, was initiated in 1990 in New Zealand, and subsequently copied in Canada, Australia, Sweden and Britain. + +Allowing explicit and public political involvement in the choice of the target inflation rate, while leaving the central bank totally independent about how to deliver it, would reduce a lot of the strain between politicians and central banks. It is very hard for the government to criticise a central bank for having policy too tight if inflation is within the inflation target, and is projected to remain so. + +DON BRASH + +Governor of the Reserve Bank of New Zealand from 1988 to 2002 + +Auckland + + + +* Your briefing offers an excellent helicopter tour of the ebbs and flows of central bank independence (“Battle of three centuries”, April 29th). But independence is not a goal in itself; the question is how to best prevent governments from engaging in inflationary finance for political reasons. There are two ways to do that. + +First, to constrain governments by fixing the exchange rate. This is why fixed exchange rate regimes have been so common: but they have collapsed as the growth of capital flows over time have turned them into straitjackets. Second, to adopt central bank independence. That became fashionable in the 1990s, largely because it was a key element of European monetary union and thus of the Maastricht treaty, and because the widespread introduction of inflation targeting required central banks to have the power to set interest rates as they saw fit. + + + +However, these issues are moot if monetary policy, for whatever reason, is not subject to political influence. Germany and Switzerland are prime examples. But so is Singapore, where inflation has averaged 1.7% since 1982, and in Hong Kong, where the currency board has rigorously fixed the exchange rate since 1983. + + + +STEFAN GERLACH + +Former Deputy Governor of the Central Bank of Ireland from 2011 to 2015 + +Zurich + + + + + +Quantum leaps + +You attributed the theoretical idea of a quantum computer to Richard Feynman and you called David Deutsch the father of quantum computing (Technology Quarterly, March 11th). Both made very valuable fundamental contributions, but the founder of quantum computing is Paul Benioff of Argonne National Laboratory, whom you did not mention. Starting in 1980, Dr Benioff published three papers which showed that quantum computing is possible in principle and gave an example of how that could be done. Feynman’s variant came later, and it advanced the field enormously because of its greater simplicity and practicality. Dr Deutsch’s contribution introduced a way in which certain problems could be solved incomparably faster by a quantum computer than by a classical one. But both were enhancements of Dr Benioff’s pioneering work. + +MURRAY PESHKIN + +Emeritus senior physicist + +Argonne National Laboratory + +Argonne, Illinois + + + + + +Helping hands + +* Kudos for conflating Emmanuel Macron’s putative battle cry, “Vote for the banker. It’s important,” with Edwin Edwards’s adopted slogan during his 1991 gubernatorial campaign in Louisiana, “Vote for the crook. It’s important.” (“Don’t discount Marine Le Pen”, May 6th) . While the latter had more panache than the former, both candidates prevailed against racist right wing opponents—David Duke in Mr Edwards’s case. No doubt les deux vainqueurs both savored their triumphs and shared Gallic roots. + + + +JAY DONAHUE + +Melrose, Massachusetts + + + +Infinitive jest + +The Economist seems increasingly to prefer actively to write in a way destined consistently to irritate and jar; presumably, so as clearly to demonstrate its commitment consistently to avoid splitting the infinitive (The Economist 2017, passim). + +PAUL DOXEY + +London + +* Letters appear online only + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/letters/21721885-bonds-birds-central-banks-split-infinitives-and-more-letters-editor/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Briefing + + +Trumponomics: Home-cooked policies [Fri, 12 May 07:08] + +In his own words: What he wants [Fri, 12 May 07:08] + +The Trump trilemma: You can’t always get what you want [Fri, 12 May 07:08] + +Reassessing global trade: Make his day [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Trumponomics + +Cooking up an economic policy + + +Donald Trump’s economic strategy is unimaginative and incoherent + +May 13th 2017 | WASHINGTON, DC + + + + + +“IF YOU want to test a man’s character, give him power.” To those sitting across the Resolute desk from Donald Trump, Abraham Lincoln’s dictum was less than reassuring. In his first interview with The Economist since taking office, which was dedicated to economic policy and took place five days before the sacking of FBI director James Comey (see article), Mr Trump already seemed altered by the world’s most powerful job. The easy charm he displayed in his comfortable den on the 26th floor of Trump Tower when interviewed during last year’s campaign had acquired a harder edge. The contrast then visible between solicitous private Trump and public Trump, the intolerant demagogue of his rallies, was a bit less dramatic. Perhaps his advisers—including Gary Cohn and Steve Mnuchin, both of whom were in attendance in the Oval Office, and Jared Kushner, Reince Priebus, and Vice-President Mike Pence, who drifted in for parts of the interview—are succeeding in their effort to keep the freewheeling president to a more precise schedule. When it comes to the president’s economic policy agenda, however, it seems only one voice counts: Mr Trump’s. + +Is there such a thing, we asked the president at the outset, as “Trumponomics?” He nodded. “It really has to do with self-respect as a nation. It has to do with trade deals that have to be fair.” + + + +That is an unusual priority for a Republican president, but not for Mr Trump. The president has argued opposing sides of most issues over the years. But in his belief that America’s trade arrangements favour the rest of the world he has shown rare constancy. That makes Mr Trump’s apparent lack of interest in the details of the trade arrangements he fulminates against all the more astonishing. At one point he ascribed the faults he finds with the North American Free-Trade Agreement (NAFTA) to American officials being in a perpetual minority on its five-member arbitration panel: “The judges are three Canadian and two American. We always lose!” But an American majority on any given panel is as likely as a Canadian one. + +His feelings about the failure of America’s trade regime (see article) show how opportunism and gut feeling tend to guide Mr Trump’s thinking. For almost half a century, he has sold himself a master negotiator. Rubbishing the government’s dealmaking record (which he, disdainful of geopolitics, reduces to the zero-sum terms of a property transaction) is part of that shtick. He is not merely cynical, however. An outsider who clung to memories of his father’s building sites in New York’s outer boroughs long after he made it in Manhattan, Mr Trump appears not merely to understand, but to share, the unfocused resentment of globalisation, and its hoity-toity champions, harboured by many working-class Americans. + +The result is an emotional and self-regarding critique of America’s imperfect but precious trade architecture that appears largely waterproofed against economic reality. Having been recently persuaded not to withdraw America from NAFTA—a bombshell he had planned to drop on the 100th day of his presidency, April 29th—Mr Trump now promises a dramatic renegotiation of its terms: “Big isn’t a good enough word. Massive!” + +Among Mr Trump’s economic advisers, perhaps only Peter Navarro, an economist with oddball views, and Stephen Bannon, the chief strategist, are outright protectionists. Most are nothing of the sort. Mr Mnuchin, the treasury secretary, and Mr Cohn, the chief economic adviser, are former investment bankers and members of a White House faction led by Mr Kushner, the president’s son-in-law, known as the globalists. So it is a sign of the issue’s importance to Mr Trump that all his advisers nonetheless speak of trade in Trumpian terms. “I used to be all for free trade and globalisation,” says an ostensible globalist. “I’ve undergone a metamorphosis.” Kafka, eat your heart out. + +Notwithstanding the president’s concern for national pride, the main aim of Trumponomics is to boost economic growth. On the trail, Mr Trump sometimes promised an annual growth rate of 5%; his administration has embraced a more modest, though perhaps almost as unachievable, target of 3%. This makes Mr Trump’s ambition to mess with America’s trade arrangements all the more obviously self-defeating. A restrictive revision of NAFTA, an agreement that has boosted trade between America and Mexico tenfold, would dampen growth. + +Toothsome morsels + +Trumponomics’ other main elements are familiar supply-side tools. The most important, deregulation and tax reform, have been Republican staples since the Reagan era (see timeline). They are much needed; but they also need to be done well. There are reckonedto be 1.1m federal rules, up from 400,000 in 1970. Mr Trump has signed an order decreeing that federal agencies must scrap two for every new one they issue, which is laudable. He has also appointed as director of the Environmental Protection Agency a climate-change sceptic, Scott Pruitt, who appears not to believe in regulating industrial pollution, which is not. “I’ve cut massive regulations, and we’ve just started,” Mr Trump says. + + + +The tax code, similarly, is so tangled that America has more tax preparers—over 1m, according to a project at George Washington University—than it has police and firefighters combined. The president promises to restore sanity by reducing income-tax rates and cutting corporate-tax rates to 15% while scrapping some of the myriad deductions to help pay for it. “We want to keep it as simple as possible,” he says. + +A fourth element, infrastructure investment, is more associated with the Democrats, and equally desirable. Mr Trump and his advisers have promised anywhere between $550m and a trillion dollars to make America’s “roads, bridges, airports, transit systems and ports…the envy of the world”. A fifth ambition, to enforce or reform immigration rules, is rarely spoken of by him or his team as an economic policy. But if Mr Trump’s promises in this area are credible, it should be. He has launched a crackdown on illegal border crossings and also made it easier to deport undocumented workers without criminal records—a category that describes around half of America’s farm workers. Again, Mr Trump’s economic nationalism and his promises of redoubled growth are at odds. + +Trumponomics, despite some tasty ingredients, is guilty of worse than incoherence. It also suggests a dismal lack of attention to the real causes of the economic disruption imposing itself on Mr Trump’s unhappy supporters. Automation has cost many more manufacturing jobs than competition with China. The winds of change blowing through retailing will remove far more relatively low-skilled jobs than threats aimed at Mexico could ever bring back (see article). + +Mr Trump never mentions the retraining that millions of mid-career Americans will soon need. He appears to have given no thought to which new industries might replace those lost jobs. Nowhere in his programme is there consideration of the changes to welfare that a more fitfully employed workforce may require. Eyeing the past, not the future, he fetishises manufacturing jobs, which employ only 8.5% of American workers, and coal mining, though the solar industry employs two-and-a-half times as many people. Growth is good; but Trumponomics is otherwise a threadbare, retrograde and unbalanced response to America’s economic needs. + + + +Where is this heading? The S&P500 has gained 12% since Mr Trump’s election, suggesting that investors believe his promises of growth and discount his crazier rhetoric. In recent weeks he has seemed to vindicate that confidence, preferring to moderate his views than pay a price for them. He was persuaded not to withdraw from NAFTA after his agriculture secretary, Sonny Perdue, presented him with a map showing that many of the resultant job losses would be in states that voted for him. Where once he railed against legal, as well as illegal, immigration, he appears to have been persuaded of the economic damage restricting the influx would do. Asked whether he still meant to curb legal immigration, he protested: “No, no, no, no!...I want people to come in legally...We also want farm workers to be able to come in...We like those people a lot.” + +Bitter aftertaste + +Yet this drift to pragmatism should not be relied on. On trade, especially, Mr Trump has deeply held views, sweeping powers, a history of intemperance and a portfolio of promises he thinks he should keep. The fact that he has not yet fired the self-styled custodian of those campaign promises, Mr Bannon, who is at war with the president’s treasured son-in-law, Mr Kushner, is emblematic of that bind. + +Another reason for caution is that Mr Trump is losing control over those parts of his economic agenda, including tax reform and infrastructure spending, where he is largely reliant on Congress. Given how little of anything gets done on the Hill these days, this looks like another check on the president—one for which his own behaviour is additionally to blame. To pass ambitious tax or infrastructure bills would require support from the Democrats. Yet the president rarely misses an opportunity to insult the opposition party, including his predecessor, Barack Obama, whose health-care reform and regulatory legacy he is trying to dismantle. It is thus hard to imagine the Democrats voting for anything in Mr Trump’s agenda—and there are limits, the president concedes, to his willingness to persuade them to. Would he, for example, release his tax returns, as the Democrats have demanded, if they made that the price of their support for tax reform? He would not: “I think that would be unfair to the deal. It would be disrespectful of the importance of this deal.” + +The result looks likely to be no serious infrastructure plan and tax cuts which will be temporary and unfunded—the sort that Republicans, when in power, tend to settle for, and to which Mr Trump already appears resigned. Where once he claimed to see bubbles in the economy, he now says that a dose of stimulus is what it needs. If Mr Trump’s past brittleness under pressure is a guide, such setbacks, far from cowing him, could spur him to bolder action in fields where he sees less constraint. + +The extent of his rule-cutting already looks unprecedented. If Mr Bannon has his way, it will put paid not merely to outworn regulations, but to whole arms of the federal bureaucracy, perhaps including the EPA. Whether he succeeds in that will probably be determined by the courts. How far the administration acts on Mr Trump’s trade agenda is harder to predict, though likelier to define it. + +Perhaps Mr Trump will continue to restrain himself in this regard. As the pressures of office mount, so the reasons to avoid a damaging trade war will multiply. China might offer more help against North Korea; or Mexico some sort of face-saving distraction from the border-wall Mr Trump has promised but is struggling to build. Don’t bet on it, though. Mr Trump is a showman as well as a pragmatist. His hostility to trade is unfeigned. And his administration, as the sacking of Mr Comey might suggest, could yet find itself in such a hole that a trade war looks like a welcome distraction. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21721937-donald-trumps-economic-strategy-unimaginative-and-incoherent-cooking-up-economic-policy/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Trump in his own words + +What the president wants + + +Excerpts from our interview with Donald Trump + +May 13th 2017 | WASHINGTON, DC + + + + + +Trump: We have nations where…they’ll get as much as 100% of a tax or a tariff for a certain product and for the same product we get nothing, okay? It’s very unfair. + +*** + + + +Trump: I have a very good relationship with Justin [Trudeau, the Canadian prime minister] and a very good relationship with the president of Mexico. And I was going to terminate NAFTA last week, I was all set, meaning the six-month termination. I was going to send them a letter, then after six months, it’s gone. But the word got out, they called [...] it was an amazing thing. + +*** + +The Economist: It sounds like you’re imagining a pretty big renegotiation of NAFTA. What would a fair NAFTA look like? + +Trump: “Big” isn’t a good enough word. Massive. + +*** + +The Economist: What about legal immigration? Do you want to cut the number of immigrants? + +Trump: [...] I want to go to a merit-based system. Actually two countries that have very strong systems are Australia and Canada. And I like those systems very much. + +*** + +The Economist: The biggest winners from this tax cut, right now, look as though they will be the very wealthiest Americans. + +Trump: Well, I don’t believe that. Because they’re losing all of their deductions, I can tell you. + +*** + +The Economist: But beyond that it’s okay if the tax plan increases the deficit? + +Trump: It is okay, because it won’t increase it for long. You may have two years where you’ll… you understand the expression “prime the pump”? [...] We’re the highest-taxed nation in the world. Have you heard that expression before, for this particular type of an event? + +The Economist: “Priming the pump?” + +Trump: Yeah, have you heard it? + +The Economist: Yes. + +Trump: Have you heard that expression used before? Because I haven’t heard it. I mean, I just…I came up with it a couple of days ago and I thought it was good. + +A complete transcript of The Economist’s interview with Mr Trump is available here + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21721934-excerpts-our-interview-donald-trump-what-president-wants/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +The Trump trilemma + +The contradiction at the heart of Trumponomics + + +You can’t have tax cuts, an investment boom and a smaller trade deficit + +May 13th 2017 | WASHINGTON, DC + + + + + +THE currents of trade, President Donald Trump accepts, will ebb and flow: “Sometimes they can be up and sometimes we can be up,” he said in an interview with The Economist on May 4th. A long-term trade deficit, though—such as that between America and Mexico, which ran to $56bn in 2016—is bad. Bad because it shows that a poor trade deal has been made (see article); bad because money is being thrown away. Achieving more balanced trade, Mr Trump and his team say, will, along with cutting taxes and encouraging more business investment, create jobs and boost growth. + +Unfortunately the three proposed pillars of this new prosperity are incompatible. When Americans import more than they sell abroad, foreigners accumulate dollars. Rather than sit on that cash, they invest it in dollar-denominated assets. It is as if container ships arrived at American ports to deliver furniture, computers and cars, and departed filled with American stocks and bonds. Over time, those assets yield returns in the form of interest, dividends and capital gains. For instance, American taxpayers must pay interest to Japanese holders of Treasury bonds. + + + +To the extent that trade deficits thus represent borrowing from abroad, there is some truth to the idea that they could erode American wealth. But that is to ignore a crucial point about the debt incurred: it comes cheap. America has run current-account deficits—which are substantially driven by the balance of trade—almost every year since 1982. As a result, foreigners own American assets worth $8.1trn more than the assets Americans own overseas, a difference equivalent to 43% of America’s GDP. + +Despite this, America still takes in more income from its investments abroad than it pays out. In 2016 the balance totalled 1% of GDP. This unlikely profit partly results from the “exorbitant privilege” that comes with issuing the dollar, the world’s principal reserve currency. Foreigners, particularly banks and governments, have a large appetite for dollar-denominated assets (they want those returning container ships full). That in turn makes it cheaper for Americans to raise funds. + +Viewing the trade deficit as cheap borrowing exposes the tension at the heart of Trumponomics. If they are to do without the foreign capital they currently import, thus closing the trade deficit, Americans must save more. Yet rather than squirrelling away its money, Mr Trump wants the private sector to go on a spending-and-investment spree, spurred on by deficit-financed tax cuts. “We have to prime the pump,” he says, quite the Keynesian. + +It is by no means certain that the thus-primed pump will provide growth on the scale he wants. But history illustrates the likely effect on the trade deficit. In 1981 Ronald Reagan’s tax cuts sent the federal government’s deficit soaring, from 2.5% of GDP in 1981 to 4.9% in 1986. The current account lurched into deficit almost simultaneously. Following this experience, the notion of “twin deficits”—in government borrowing and trade—became popular. + +The next decade showed that there was a third factor to consider: firms and households matter, too. As the economy grew rapidly in the late 1990s, the government budget approached balance, yet the current-account deficit grew. This time, it was the private sector, giddy with fast growth and a booming stockmarket, running up debts (see chart 1). In 2000 firms’ net borrowing reached almost 5% of GDP; households barely saved at all. + + + +Total net borrowing by the government, firms and consumers will determine the current account under Mr Trump, too. If the administration increases the budget deficit or sparks more private investment—such as the $1trn spending on infrastructure that it hopes to unleash—the trade deficit will almost certainly rise. + +Who is lending to whom does not much matter for long-term economic growth. Far more important is that the funds are invested productively. To that end, the administration wants to grease the supply side of the economy, thereby increasing the rate of productivity growth, which has been slow since the mid-2000s. This is the motivation behind Mr Trump’s deregulatory agenda. + +The 3% economic growth targeted by Steve Mnuchin, the treasury secretary, would be ambitious under any circumstances. It is particularly so now because it must be achieved as the population ages and growth in the labour force slows. Between 2014 and 2024, the adult population will grow by nearly 9%, but the ranks of the over-65s will swell by almost 38%. + +A two-legged stool + +The Committee for a Responsible Federal Budget, a think-tank, reckons that total-factor-productivity growth of 2.3% is needed for growth to hit 3% in the face of this demographic headwind. Such rapid productivity growth has not been achieved over any ten-year period since at least 1949 (see chart 2). A productivity boom on this scale would also probably widen the trade deficit, at least temporarily, for two reasons. + + + +First, it would make America a stark outlier, because the productivity slowdown is global. From 2005 to 2015, GDP per hour worked grew by an average of just 0.9% a year in the OECD, a group of mostly rich countries, compared with 1% in America. Were American capital and workers suddenly to become much more productive than those elsewhere, foreign investors would covet American assets even more than they do today. Their purchases would push up the value of the dollar, encouraging imports and squeezing exports. If productivity gains were concentrated in sectors benefiting from deregulation, such as financial services or energy production, the dollar appreciation would disproportionately hurt manufacturing workers. + +The second reason why productivity gains might widen the trade deficit is that consumers, anticipating strong wage growth, would probably reduce their saving for a while, in effect spending some of their fatter pay-packets before the relevant paydays dawn. Such a drop in saving associated with an increase in productivity contributed to the current-account deficit in the late 1990s. + +There is a possible escape from the Trump trilemma. American firms have an estimated $2.5trn of cash parked abroad—money that the president wants them to bring home and invest. One survey from 2011 found that 54% of this cash was held in foreign currencies. Repatriating it would probably cause the dollar to rise, worsening the trade deficit. + +Yet if the president removes the underlying incentive to book profits overseas in the first place—America’s high corporate-tax rate—the deficit might appear to improve. Firms would no longer try to make it seem as if production happened abroad through dodges like moving intellectual property around. With lower taxes in America accountants might shift “production” back home, improving the trade balance. Economists at Bank of America Merrill Lynch have calculated that this could improve the reported trade deficit by as much as half. Such an improvement, though, would be mainly cosmetic. + +The world economy has endless moving parts, many of which could conspire to make Trumponomics seem like a success or a failure. But economic logic and past experience dictate that government deficits and investment booms drive trade deficits up. Sooner or later, Mr Trump must confront this fact. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21721936-you-cant-have-tax-cuts-investment-boom-and-smaller-trade-deficit-contradiction/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Make his day + +What Donald Trump means by fair trade + + +The idea of reciprocity animates the White House’s view of trade + +May 13th 2017 + + + + + +DONALD TRUMP claims to like free, fair and smart trade. It is precisely for that reason, he says, that he doesn’t like the rules under which America trades: “I’m not sure that we have any good trade deals.” The current dispensation allows imports to eviscerate American employment and unfair barriers abroad to stymie American exporters. Time to even things up; time to move towards reciprocity. + +Mr Trump is hardly the first president to complain about trade deals. Barack Obama criticised the North American Free-Trade Agreement (NAFTA) during his campaign to be president, then negotiated an upgrade while in office, the doomed Trans-Pacific Partnership. Mr Trump’s plans for a huge renegotiation of NAFTA are arguably an escalation rather than an absolute departure. The depth of his suspicions of the World Trade Organisation (WTO) looks like a fundamental shift. + + + +The WTO is a pact with 163 other countries, setting out tariff commitments and offering a forum to settle trade disputes. There are three discernible reasons for the Trump administration’s dislike of it. The first is that 77% of America’s trade deficit stems from trade with countries that trade with America under WTO rules. The second is that America’s tariff commitments under the WTO are indeed lower than other countries’. In 2015 America applied an average tariff of 3.5%, compared with 4.0% for Japan, 5.1% for the EU and 9.9% for China. (The highest average, 34%, belongs to the Bahamas.) That sort of thing is pretty hard to square with Mr Trump’s vision of reciprocity. And the third is a suspicion that WTO rules prevent America from cutting “good” deals with other countries. + +America’s trade deficit is a poor indicator of the success of the WTO. In June 2016 the United States International Trade Commission, an independent American agency, assessed current and past research on the benefits of membership; the evidence suggested that it boosts trade flows between 50% and 100%. That means bigger markets for American exporters and cheaper stuff for shoppers, as well as healthy competition. + +The issue of non-reciprocal access is more complex. The WTO works according to the “most-favoured nation” principle introduced to American trade policy by Franklin Roosevelt in 1934. The idea is that if a country reduces a tariff imposed on goods from another country, it will do the same for all the other partners in the trade deal. The principle was supposed to make cutting deals easier: when signing a deal, trade partners could feel safe that they were not about to be undercut by a slightly lower tariff elsewhere. It was also meant to avoid the resurgence of anything like Britain’s exclusionary policy of “Imperial preference”, which had been used to carve out trade blocs in a way that kept America out. + +When Roosevelt was crafting this policy, tariffs were eye-wateringly high. In the second half of the 20th century, tariffs were reduced with the aim of luring other countries away from the influence of communism. The most-favoured-nation principle meant that, as the WTO expanded, some new entrants could benefit from trade liberalisation without doing much tariff-cutting themselves—what trade economists call the latecomer’s advantage. When China formally entered the WTO in 2001, it could benefit from tariffs between the EU and America that had been haggled downwards for decades. + +The WTO’s most-favoured-nation principle means that America cannot raise its tariffs against countries that impose high tariffs on it, as Wilbur Ross, Mr Trump’s commerce secretary, has suggested it logically should. And it does indeed leave America with fewer concessions to offer when striking new deals. + +There are real drawbacks to the current multilateral trading system. The WTO system of settling disputes is slow; getting new rounds of tariff cuts through seems practically impossible. But these drawbacks are quite unlike the restraints it places on the sort of muscular reciprocation Mr Trump’s team contemplates. Those restraints are not failures: they are part of the point of the pact. + +In the best case, the threat of a reciprocal tax or tariff might force another country or countries to lower their tariffs. Perhaps Mr Trump could squeeze the tariff on car imports to China, currently 25%, down to the level on car imports in America, currently 2.5%, on the back of a credible threat to abandon the WTO. It could work to clamp down on common gripes about, for example, China’s habit of dumping its excess capacity on global markets. The Trump administration is currently mulling over whether imports of steel and aluminium are a threat to national security, for example. + +Over the edge + +But there is a limit to the stress that the WTO can take. The system is designed to put up with disputes; if one country breaks the rules, then others can retaliate, but only by enough to compensate them for the damage. It is not designed to deal with disregard for the norms on which it is based, including the most-favoured-nation principle, spreading from one very big economy to the world at large. If other countries interpret Mr Trump’s trade policy as abandonment of the WTO, all hell could break loose. By trashing such norms, the world could descend into the sort of tit-for-tat trade war that Roosevelt was trying to fix. If Mr Trump’s foreign relations degenerate into acrimonious protectionism, then American shoppers and workers will lose. What constrains America now constrains other countries, too. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21721935-idea-reciprocity-animates-white-houses-view-trade-what-donald-trump-means-fair/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +United States + + +The sacking of James Comey: Biting the hand that made him [Fri, 12 May 07:08] + +Special prosecutors: Starry night [Fri, 12 May 07:08] + +Opioids: A selective scourge [Fri, 12 May 07:08] + +Lexington: Palace whispers [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Biting the hand that made him + +The sacking of James Comey + + +Was Donald Trump being incompetent, or malign? + +May 13th 2017 | WASHINGTON, DC + + + + + +WHEN the FBI director first learned of his sacking by Donald Trump, after news of it flashed up on television screens at an event he happened to be attending in Los Angeles, he thought it was a joke. That sentence can be confidently bequeathed to future historians of the 45th president. It points to the central, crazy conundrum of Mr Trump’s administration, the answer to which could determine either the future of the republic, or something much less than that. Is the administration chaotic and unworthy of its place in a mighty tradition, but more farcical than corrupting—a madcap approximation of government by a reality-television star? Or is Mr Trump, who has just become the first president since Richard Nixon to fire a man who was leading a formal investigation into his associates, and perhaps himself, a threat to American democracy? + +The Democrats naturally suspect the worst. Even before Mr Comey’s sacking, they were demanding that Congress’s Republican leaders should launch a special investigation into the subject of his probe—Russia’s efforts to swing last year’s election for Mr Trump—to safeguard it against political meddling. It emerged that Mr Comey’s inquiries had led him to the peculiar closeness to Russia of two of Mr Trump’s sometime advisers, Roger Stone, a libertarian gadfly, and Paul Manafort, formerly the president’s campaign chief. The FBI director was also said to have requested more resources for the investigation. His firing therefore “raises profound questions about whether the White House is brazenly interfering in a criminal matter”, said Adam Schiff, a Democratic congressman and leading light in a separate investigation into the Russia allegations in the House of Representatives. + + + +A handful of Republican senators, including Richard Burr (who is leading a separate Senate investigation into Russian meddling), John McCain and Ben Sasse, appear to sympathise. Sacking Mr Comey—who now has no party registration, but was a Republican when Barack Obama appointed him—in the thick of such an important investigation seemed hard to justify, they said. Unless, they might have added, Mr Trump had something to hide from him. Mr Comey, noted Mr Burr, had been “more forthcoming with information” than any of his predecessors. + +If the president nominates one of his stooges, such as Rudy Giuliani or Chris Christie, to replace Mr Comey, that opposition will grow. Such a nominee would struggle to win Senate confirmation. Alternatively, the president will have to name a worthier replacement—and risk that new director taking up where Mr Comey left off with redoubled gusto. Either way, if Mr Trump’s intention was to shut down the Russian intrigue, he has probably failed. + +To give the president the benefit of the doubt, it is just about conceivable that he failed to appreciate what a big deal sacking Mr Comey would be. Seemingly immune to the norms that have constrained most of his predecessors—including Nixon, who took far greater pains to hide his ethical shortcomings—Mr Trump is steadily redefining the extent to which politics is the art of getting away with it. And Mr Comey, four years into a ten-year term, was so hated by Democrats that the president perhaps banked on his removal stirring little serious opposition. He had already fired as many senior figures as most presidents get through in a term, including the acting attorney-general, Sally Yates, and his first national security adviser, Mike Flynn. The former, among several affronts to the administration, had noted that Mr Flynn was secretly in cahoots with the Russian ambassador; the latter was sacked after journalists rumbled that story. + +Mr Comey’s unpopularity on the left stemmed from his decision to inform Congress, 11 days before the general election last November, that he was reopening an investigation into an already raked-over and, as it turned out, overblown scandal concerning Hillary Clinton’s e-mail arrangements as secretary of state. He did not, it later transpired, at the same time see fit to inform Congress of the FBI’s concurrent counter-espionage investigation into members of the Trump campaign. + +This intervention may have cost Mrs Clinton the presidency. Her five-point lead in the polls promptly tumbled to two points—the margin of her eventual victory in the popular vote. That did not to prevent Mr Trump, thanks to electoral-college arithmetic, squeaking to victory. The unconvincing defence of his actions Mr Comey has since offered, including in testimony to Congress on May 3rd, has only highlighted how misjudged they were. A recent admission that, despite his clear conscience, a notion that he might have influenced the election made him feel “mildly nauseous” was additionally irritating. + +Mr Trump claims to have axed Mr Comey in part because of this error. That is incredible. Never one to look a gift-horse in the mouth, the president had formerly praised Mr Comey’s “guts” in going after Mrs Clinton (though he criticised him for not pressing charges against her). The least-troubling alternative interpretation is that he had simply wearied of an FBI director whose independent-mindedness he has seemed increasingly to resent, including, but not only, over his dogged pursuit of the Russia investigation. + +Alternatively Mr Trump’s doubters are right, and he is in real fear of the FBI probe. His notice letter to Mr Comey—hand-delivered to the FBI director’s desk, in a nice Trumpian touch, by the president’s former bodyguard—strained to allay that impression. “While I greatly appreciate you informing me, on three separate occasions, that I am not under investigation, I nevertheless concur with the judgment of the Department of Justice that you are not able to effectively lead the bureau,” Mr Trump wrote. It read almost like a cry for help. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21721965-was-donald-trump-being-incompetent-or-malign-sacking-james-comey/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Starry night + +How to probe the Trump campaign’s Russian links? + + +Each way has appreciable flaws + +May 11th 2017 | ATLANTA + + + + + +FOR many Americans, the term “special prosecutor” invokes the spectre of Kenneth Starr, whose long pursuit of the Clintons led eventually to Bill’s impeachment. The analogy points to two big objections faced by those who urge the appointment of a similar figure now. First, such inquiries can seem interminable, punitive and biased; second, the office that Mr Starr once occupied no longer exists. + +Even before the dismissal of James Comey, who oversaw the FBI’s probe into links between Donald Trump’s campaign and Russia, many Democrats were dissatisfied with the various inquiries already in train. Since Mr Comey went, two solutions have been energetically pressed. One is a special or independent prosecutor. Under a law passed after the Watergate scandal, to boost the credibility of those scrutinising the executive, appointments such as Mr Starr’s were made by a panel of judges; the prosecutors had the authority to bring charges. Quite often they did not. Nevertheless, both political parties came to believe that the arrangement invested too much power in one person, who could use it to wage a remorseless campaign. “People have short memories,” observes Josh Blackman, of South Texas College of Law, of the yen for a similar fix today. + + + +The relevant law expired in 1999. The option now is for a special counsel to be appointed by the attorney-general, or, in this case, his deputy—since Jeff Sessions has recused himself from all Russia-related decisions after misleading senators about his contacts with the Russian ambassador. Unhappily, Rod Rosenstein, Mr Sessions’s deputy and so the man who would take charge of such an appointment, was also involved in Mr Comey’s removal. Having installed a special counsel, Mr Rosenstein could fire him. Moreover, after Mr Comey’s dismissal, supposedly at Mr Sessions’s recommendation, the attorney-general’s own recusal seems less convincing. + +John Barrett of St John’s University in New York, who worked for the independent counsel in the Iran-Contra affair of the 1980s, points out that the terms of an appointment could give a prosecutor broad investigative clout. There would be an almighty stink if he were dismissed without good cause, as there was when Richard Nixon ordered the firing of Archibald Cox, the special counsel looking into Watergate. That said, Mr Trump’s brutal treatment of Mr Comey suggests that the president might be willing to hold his nose. + +The alternative is for Congress to establish either a bipartisan committee comprised of its members—a variant favoured by Senator John McCain—or an independent commission made up of outside experts. The Church Committee, which looked into intelligence skulduggery in the 1970s, was in the former category; the commission that examined the terrorist attacks of September 11th 2001 fell into the latter. + +The danger is that partisanship might forestall either idea entirely. It has already undermined the House Intelligence Committee’s inquiry, which was almost capsized by the antics of Devin Nunes, its chairman. He has recused himself too, but a hearing of a Senate judiciary subcommittee this week underscored the problem. Told that the White House ignored warnings about the (now former) national security adviser, Mike Flynn, being vulnerable to blackmail, Ted Cruz chose to ask about Hillary Clinton’s e-mails. + +Still, there are signs that some Republicans are coming round. A congressional panel would be fraught and slow but, especially if the FBI’s work is now shelved, it might be the best way to unearth the truth. Otherwise, hope rests on a combination of two things Mr Trump hates: a robust press, and leaks. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21721959-each-way-has-appreciable-flaws-how-probe-trump-campaigns-russian-links/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +A selective scourge + +Inside the opioid epidemic + + +Deaths from the drugs say more about markets than about white despair + +May 11th 2017 | LOS ANGELES + + + + + +THEY have America in a deadly grip. In 2015, the most recent year for which full statistics are available, 33,091 Americans died from opioid overdoses, according to the Centres for Disease Control—almost three times the number who perished in 2002. Nearly as many Americans were killed by opioids in 2015 as were killed by guns (36,132) or in car crashes (35,092). In the state of Maryland, which releases more timely figures, drug-overdose deaths were 62% higher in the first nine months of 2016 than a year earlier. + +The opioid epidemic is quite unlike past drug plagues. Deaths are highest in the Midwest and north-east, among middle-aged men, and among whites. Some of the worst-affected counties are rural. In 2013 a 40-year-old woman walked into a chemist’s shop in the tiny settlement of Pineville, West Virginia, pulled out a gun, and demanded pills. Don Cook, a captain in the local sheriff’s department, says he continues to nab many people for illegally trading prescription painkillers. + + + +The epidemic is, in short, concentrated in Donald Trump’s America. (Commendably, Mr Trump raised the danger of opioids on the campaign trail; sadly, he has done little since becoming president beyond setting up a commission.) It has even been argued that the opioid epidemic and the Trump vote in 2016 are branches of the same tree. Anne Case and Angus Deaton, both economists at Princeton University, roll opioid deaths together with alcohol poisonings and suicides into a measure they call “deaths of despair”. White working-class folk feel particular anguish, they explain, having suffered wrenching economic and social change. + +As an explanation for the broad trend, that might be right. Looked at more closely, though, the terrifying rise in opioid deaths in the past few years seems to have less to do with white working-class despair and more to do with changing drug markets. Distinct criminal networks and local drug cultures largely explain why some parts of America are suffering more than others. + +Opioids can be divided into three broad groups. First, and most notorious, are legitimate painkillers such as OxyContin. Heavily prescribed from the 1990s, some of these pills were abused by people who defeated their slow-release mechanisms by crushing and then snorting or injecting them. The second group consists of powerful synthetic opioids such as fentanyl and carfentanil. These have legitimate medical uses, but are often manufactured illicitly and smuggled into America. The third opioid is heroin, derived from opium poppies, almost all of it illegally. + +Until about 2010 the rise in opioid deaths was driven by the abuse of legitimate painkillers, which are sometimes called “semi-synthetic” because they are derived from plants. In the past few years, though, heroin and synthetic opioids have become bigger threats (see chart 1). Some addicts have moved from one class of opioid to another. The Drug Enforcement Administration (DEA) estimates that almost four out of five new heroin users previously abused prescription drugs. + +OxyContin pills can no longer be crushed as easily, and doctors have become more wary of prescribing powerful painkillers. As a result, between 2012 and 2016 opioid prescriptions fell by 12%. Heroin can be cheaper and easier to obtain. According to one narcotics officer in New Hampshire, a 30-milligram prescription pain pill sells for $30 on the street. A whole gram of heroin can be had for $60-80. + + + +Fentanyl is cheaper still. It is often made in Chinese laboratories and smuggled into America; some traffickers obtain it through the dark web, an obscure corner of the internet. Fentanyl is usually added to heroin to make it more potent or is made into pills, which can resemble prescription painkillers. Because it is such a powerful drug—at least 50 times stronger than heroin—the smuggling is easy and the potential profits are huge. One DEA official has explained that a kilogram of fentanyl from China costs about $3,000-5,000 and can be stretched into $1.5m in revenue in America. By comparison, a kilogram of heroin purchased for $6,000 translates to $80,000 on the street. + +Yet not all addicts make the switch from one kind of opioid to another. In West Virginia, Mr Cook hardly ever encounters heroin—perhaps, he suggests, because no major highway runs through his patch. Whereas the death rate from prescription painkillers is more or less the same in America’s four regions, deaths from heroin and synthetic opioids are high in the Midwest and north-east, middling in the South and low in the West (see chart 2). All eight states where police agencies reported 500 or more encounters with fentanyl in 2015 are east of the Mississippi river. + +“Once a drug gets into a population, it’s very hard to get it out,” explains Peter Reuter, a drugs specialist at the University of Maryland. “But if it doesn’t get started, it doesn’t get started.” It is never entirely clear why a drug catches on in one place but not another. There is, however, a possible explanation for why heroin and synthetic opioids have not yet taken off in western states: the heroin market is different. + +Although most heroin enters America from Mexico, there are really two trafficking routes. Addicts west of the Mississippi mostly use Mexican brown-powder or black-tar heroin, which is sticky and viscous, whereas eastern users favour Colombian white-powder heroin. According to the DEA, in 2014 over 90% of samples classified as South American heroin were seized east of the Mississippi, while 97% of Mexican heroin was purchased to the west. The line is blurring—Mexicans are pushing into the white-powder trade, and black tar is creeping east—but it still exists. + +White-powder heroin looks much like a crushed pain pill, making it comparatively easy to switch from one to the other. It is also fairly easy to mix white-powder heroin with a powder such as fentanyl. Black tar is more distinct and harder to lace with other substances because of its stickiness and colour; mixing in white powder can put buyers off. “The lore on the street is: the lighter in colour brown-powder or black-tar heroin is, the less heroin it has,” says Jane Maxwell, a researcher at the University of Texas at Austin. + +The West’s distinctive heroin market has probably deterred many painkiller addicts from trying the drug, and has kept synthetic opioids at bay. Outbreaks have occurred, though. In just two weeks in 2016, 52 people overdosed and 14 ultimately died near Sacramento, in California, after taking counterfeit hydrocodone pills laced with fentanyl. In New Mexico, fentanyl disguised as black-market oxycodone is thought to have killed 20 people last year. This is a rare case where one should pray that America stays divided. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21721960-deaths-drugs-say-more-about-markets-about-white-despair-inside-opioid/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Lexington + +Palace whispers in the court of King Donald + + +Senators are beginning to despair + +May 13th 2017 + + + + + +IT IS too soon to know whether Donald Trump’s sudden, regal dismissal of the FBI director—“Off with his head!”—will trigger a constitutional crisis. Much depends on who is appointed to succeed James Comey, and on the fate of FBI probes into Russian meddling in the election of 2016. + +It is not too soon to make a more general observation. Less than four months into the reign of King Donald, his impetuous ways are making it more likely that his presidency will be a failure, with few large achievements to its name. That is not journalistic snark but a statement of fact, based on warnings from prominent Republicans and Democrats, notably in the Senate. + + + +The 100 members of the Senate have a touchy relationship with every president. They are grandees, with a keen sense of superiority over the toiling hacks who serve in the House of Representatives and the here-today-gone-tomorrow political appointees who run the executive branch. Senators are treated as princes when they travel overseas, briefed by grizzled American generals and treated to tea by local potentates. In their dreams, election campaigns might still involve addressing crowds from the flag-draped caboose of a private train. Small wonder, then, that senators often resent the still-grander life of a president. Yet their dismay over Mr Trump sounds different. + +As the Trump era began, Democratic senators recalled how this populist president had scorned both parties on the campaign trail, and wondered whether he might seek new, bipartisan coalitions to help hard-pressed working Americans. Democrats would muse, off the record, about the terms they would demand for supporting policies like a vast infrastructure programme. Perhaps, for example, they might seek union wage rates for workers building Mr Trump’s new airports and bridges. Republican senators worried, privately, about the same thing from the other side. They fretted that their new president would strike bargains with the new Democratic leader in the Senate, the canny, deal-cutting Charles Schumer of New York. To comfort themselves, Republicans imagined Mr Trump as a sort of salesman-CEO, selling comprehensive tax reform and deregulation to the masses while delegating day-to-day government to conventional conservatives such as his vice-president, Mike Pence. + +Not any more. Increasingly the mood among Senate Republicans is a mixture of incredulity and gloom, as each political success (the confirmation of Neil Gorsuch as a Supreme Court justice, deftly handled cruise-missile strikes on Syria) is followed by a momentum-killing outburst from the president. + +Some cast Mr Trump’s woes as a crisis of messaging and of White House staff discipline. At a recent lunch for Senate Republicans , Senator Mitch McConnell of Kentucky, the owl-like majority leader, scolded Mr Pence over a Trump tweet that suggested a government shutdown might be a nifty idea. You don’t believe that, we don’t believe that, and that sort of tweet only makes our lives harder, Mr McConnell reportedly told the vice-president. Prominent Republicans and Democrats have offered Mr Trump the same advice: find a chief of staff in the ferocious mould of James Baker, chief enforcer in the White Houses of Ronald Reagan and George H.W. Bush. Some senators have still more specific counsel to offer. They urge Mr Trump to create a domestic policy team that apes the professionalism of his national security team. They praise his second national security adviser, Lieutenant-General H.R. McMaster, for turning around a group left in chaos by his ill-starred predecessor, Mike Flynn, and hail the way that his defence secretary, James Mattis, works with the secretary of state, Rex Tillerson. Not only do the chieftains of the Pentagon and State Department meet on their own at least once a week for breakfast to share their thinking, when recommending policies they try to present the president with a single option. + +In their darker moments, though, some grandees on Capitol Hill wonder if what ails this presidency goes beyond unwise tweeting or the lack of a gatekeeper who can shield Mr Trump from what one Republican describes as “people filling his head with stupid”. It has become a commonplace, especially on the right, to accuse the press of exaggerating palace intrigues in Trump World. If only that were true. In fact, powerful folk in Washington routinely describe Mr Trump in shockingly dismissive terms. He is compared to an easily distracted child who must be kept “on task”. Foreign allies talk of a president on a learning curve. Senior Republicans call him out of his depth. Bigwigs call the president a surprisingly good listener. But they also call him easily flattered. They think him capable of doing “cheap deals” with such powers as China, after a summit at which President Xi Jinping dazzled Mr Trump with talk of how, to an ancient power like his, 1776 feels like yesterday. + +The royal touch + +Official Washington is realising that the real problem is not that Mr Trump hears competing advice from warring White House factions—a fierily nationalist camp led by his chief strategist, Stephen Bannon, and a pragmatic group led by his son-in-law, Jared Kushner. Those factions persist because they each represent an authentic part of Mr Trump’s worldview. He is by deep conviction a nationalist with a grievance, convinced that America has let others take advantage for too long. If he is sometimes more or less confrontational, it is a matter of tactics, not belief. + +At the root of each fresh crisis lies Mr Trump’s character. If he were a king in velvet and ermine that would matter less. But he is an American president. To get his appointees confirmed, budgets passed, and reforms agreed, Mr Trump needs Congress, and notably a Senate in which his party enjoys the slimmest of majorities, and he has ever-fewer admirers. Party loyalty may save him from a revolution. But, startlingly early on, his own colleagues are starting to wonder what King Donald is for. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21721903-senators-are-beginning-despair-palace-whispers-court-king-donald/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +The Americas + + +Gangs in Mexico: Crime’s new geography [Fri, 12 May 07:08] + +Bello: Venezuela is not an island [Fri, 12 May 07:08] + +Cuba: Cash for clunkers [Fri, 12 May 07:08] + +Argentina’s dirty war: Short sentences [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Crime’s new geography + +Why murder in Mexico is rising again + + +Gangs get smaller, and diversify + +May 11th 2017 | SAN SALVADOR HUIXCOLOTLA + + + + + +ON A Monday afternoon cars queue up to enter the wholesale market outside San Salvador Huixcolotla, a town in the state of Puebla, in south-central Mexico. Two shabbily dressed young men warily eye the number plates and drivers. When your correspondent identified himself as a journalist, they lifted their T-shirts over their faces and brusquely ordered him to leave. They do not want inquisitive outsiders. That is because, alongside produce from nearby farms, the market sells stolen petrol. One of the sentries sported a length of petrol-siphoning hose as a hatband. + +Fuel theft is increasing in Mexico, and Puebla is its focal point. Thieves drill into the pipeline that passes through the state—where it is more accessible than in neighbouring states—install a tap and drain the liquid. They sell it off the backs of trucks on roadsides and in markets like the one near San Salvador Huixcolotla. The price is around seven pesos (37 cents) a litre, less than half what it costs in petrol stations. + + + +This enterprise is the most important new form of organised crime in Mexico, says Eduardo Guerrero, a security consultant. Though it does not match drug-trafficking for violence and cashflow, it is growing fast and unsettling investors in energy, one of the country’s most important industries. In 2006 the pipeline network operated by Pemex, the national oil company, had 213 illegal taps. Last year that number jumped to more than 6,800. The thefts cost the company 30bn pesos in lost sales and repair bills last year. + +The rise is caused in part by the government’s decision late last year to raise the price of petrol, which had been subsidised. It has transformed Puebla, where a quarter of the thefts took place, and Guanajuato from relatively peaceful states into moderately violent ones (see map). In the first three months of 2017 Puebla had 185 murders, 50% more than during the same period in 2011, the last peak of killings. On May 3rd this year at least ten people, including four soldiers, died in the town of Palmarito, 20km (12 miles) from San Salvador Huixcolotla, in a clash between the army and illegal tappers. Since then, more soldiers have arrived. “Today we have a problem that is out of control,” says Carlos Ignacio Mier Bañuelos, a state congressman whose district has many petrol thefts. + + + +Fuel thievery is emblematic of a new pattern of crime. Mexico’s most violent year of recent times was 2011, at the height of a war on drugs waged by the then-president, Felipe Calderón. As drug gangs battled security forces—and each other for control of trafficking routes into the United States—the northern states were Mexico’s killing fields. That year Mexico had 22,852 murders. The number subsided under Mr Calderón’s successor, Enrique Peña Nieto, who de-escalated the drug war. + +But the killing is now back to its worst levels. If the year continues as it has begun, the number of murders in 2017 will be the highest yet. There were 6% more homicides in the first three months of 2017 than during the same period in 2011. But the distribution of violence is changing. As northern gang wars wind down, smaller-scale battles are erupting in the south. + +One reason for this is the change in the way gangs operate, brought about by the drugs war. Police targeted their bosses, often successfully. Leaderless gangs do not disappear. Instead, lower-level gangsters fight for control or leave to form their own groups, leading to a violent reordering of the organised-crime hierarchy. The re-arrest last year of Joaquín “El Chapo” Guzmán, the boss of the Sinaloa gang, six months after his escape from prison, triggered conflicts within the group. The gang also clashed with rivals seeking to exploit its weakness, notably the Jalisco New Generation gang, with which it fought in the port of Manzanillo and elsewhere. + +The smaller gangs lack the manpower and management skills to run full-scale drug operations. They concentrate on distributing drugs locally and on such crimes as kidnapping and extortion. Both have increased by around 20% Mexico-wide between the first three months of 2016 and the same period this year. Fuel theft also suits downsized gangs. Mr Mier says that in his area of Puebla the business is run by three gangs in two towns just 20km apart. + +Other reasons for the spike in murders include a rise in opium production to feed growing American demand and the election last year of 12 new state governors, who brought in new and less experienced police chiefs. A new criminal-justice system is supposed to make trials fairer, but in its early stages it has freed many suspects who should have been jailed, says Alejandro Hope, a security analyst. The violence feeds on itself: killings lead to vendettas. + +The show of military force in Palmarito, ordered by the federal government, suggests that neither the state nor the federal law-enforcement authorities know how to deal with the new sort of violence. “The army doesn’t act with intelligence or strategy,” says Mr Mier, “only violence.” It will soon leave, he predicts, letting the pipe-tappers return to work. + +The odds are that the upsurge of violence will not soon be contained. The federal government has found no strategy to replace Mr Calderón’s discredited war on drugs, apart from sporadic military deployments. Many state and local police forces lack the professionalism to curb violent crime. Municipal police, some of whom collaborate with criminals, are not trusted. Law-enforcement officials at all levels need more data and a better understanding of why violence happens where it does, says Ernesto López Portillo of the Institute for Security and Democracy, a think-tank. + +With 18 months left in office, Mr Peña is unlikely to begin any bold crime-fighting programmes. But petrol thievery is not the hardest problem to solve. “Pemex knows where it is happening,” notes Mr Guerrero. That gives the police a place to start. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21721973-gangs-get-smaller-and-diversify-why-murder-mexico-rising-again/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Bello + +Venezuela’s crisis spills over + + +Latin America wakes up to its biggest headache + +May 11th 2017 + + + + + +YOU find them driving taxis in Buenos Aires, working as waiters in Panama or selling arepas (corn bread) in Madrid. The number of Venezuelans fleeing hunger, repression and crime in their ruptured country grows by the day. For years, Latin American governments kept quiet as first Hugo Chávez and then his successor, Nicolás Maduro, hollowed out Venezuela’s democracy. Now their economic bungling and Mr Maduro’s increasingly harsh rule are causing a humanitarian crisis that the region can no longer ignore. At last, it is not. + +Colombia and Brazil bear the brunt of the Venezuelan exodus. By one unofficial estimate, more than 1m Venezuelans now live in Colombia, though many have dual nationality. Colombian mayors have started blaming the migrants for unemployment and crime. Last year more than 7,600 Venezuelans sought care at hospitals in the Brazilian state of Roraima, straining facilities and supplies of medicine, according to Human Rights Watch, a pressure group. This week the mayor of Manaus in the state of Amazonas declared an emergency after hundreds of Venezuelans turned up. + + + +The flood of refugees is one factor galvanising the region’s governments. The other is Mr Maduro’s descent into dictatorship. This accelerated in March when the puppet supreme court decreed, in effect, the abolition of the opposition-controlled legislature. Although partially reversed, this sparked continuing protests. Mr Maduro announced plans to arm a militia and, this month, to convoke a handpicked assembly to rewrite Chávez’s constitution of 1999. He is using military courts against protesters. + +In response, 14 governments, including those of Argentina, Brazil and Mexico, have united to demand a timetable for elections, the recognition of the legislature and the freeing of political prisoners. On April 26th, 19 of the 34 members of the Organisation of American States (OAS), a regional body, voted to convene a meeting of foreign ministers to discuss Venezuela. Getting his retaliation in first, Mr Maduro said that Venezuela would leave the OAS. + +He retains the support of 25% of the population and of the security forces (some from ideological conviction, others because of perks or corruption). His recent actions suggest that he plans to turn Venezuela into an autarkic dictatorship in the mould of Fidel Castro’s Cuba. + +That would not be easy. Unlike Cuba, Venezuela is not an impregnable island and it has a democratic culture. Mr Maduro’s actions are opening up fissures in his chavista movement. Three army lieutenants have sought asylum in Colombia. The attorney-general, several retired generals and former ministers criticised the judicial coup against the legislature. “The government is losing control,” Miguel Rodríguez Torres, who was Mr Maduro’s interior minister, told the Wall Street Journal this week. He warned of “anarchy on the streets”. + +This opens up scope—and a need—for diplomacy to help broker a return to democracy. But who could lead that effort? “Dialogue” became a dirty word for the opposition after Mr Maduro last year exploited talks organised by the South American Union (Unasur) and the Vatican to gain time. + +Behind the scenes, several overlapping initiatives are under way. Argentina has replaced Venezuela in chairing Unasur. The tenure of Ernesto Samper, a chavista sympathiser, as its secretary-general has ended. At a meeting in Quito on May 23rd, Unasur’s foreign ministers may choose as his replacement José Octavio Bordón, a well-connected Argentine diplomat and former politician. + +Several presidents are talking about setting up an ad hoc group of countries of the kind that negotiated an end to the Central American civil wars of the 1980s. They would like to get the UN involved, but António Guterres, its new secretary-general, has been cautious. The group might have to include Cuba and the United States, which both have interests in Venezuela. Although Donald Trump’s administration may impose unilateral sanctions on Venezuelan officials (it has already done so against the vice-president, Tareck El Aissami), it would be wiser to join a co-ordinated regional effort. + +Any negotiation would have to involve an amnesty. That would be anathema to many in the opposition, who want to see the regime’s leaders on trial for murder and corruption. But the opposition lacks the strength to bring Mr Maduro down. Perhaps the army will do that job, but this is neither certain nor necessarily desirable. Sooner or later, both sides may have to return to the negotiating table—or watch as ever more Venezuelans take the road to exile. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21721944-latin-america-wakes-up-its-biggest-headache-venezuelas-crisis-spills-over/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Cash for clunkers + +Cuba’s crazy used-car market + + +Why it behaves like the prime-property market + +May 11th 2017 | HAVANA + + + + + +MULTIMARCAS, a car dealership on the outskirts of Havana, is not a conventional showroom. On a recent visit it contained one salesman and, despite the promise of variety in its name, just one car: a 2014-model Kia Picanto with no miles on its odometer. The price would cause the most spendthrift American or European to blanch: 68,000 Cuban convertible pesos (or CUC, each of which is worth a dollar). That is seven times what a Kia Rio, a similar car, of that age would cost in the United States, though you would be hard-pressed to find one that had not been driven. + +It is not just virgin vehicles that are startlingly expensive. A Chinese Geely, listed in Revolico, a Cuban version of Craigslist, with “only 93,000km” (58,000 miles) on the clock, goes for 43,000 CUC. A used 2012 Hyundai Accent costs 67,000 CUC. + + + +Cuba is famous for classic Cadillacs and Chevys that whisk tourists around, but Cubans would rather drive such banal automobiles as Korean Kias and French Peugeots, which are more comfortable and burn less fuel. Cuba may be the only country where the value of ordinary cars rises over time, even though they age quickly on the potholed roads. That is because demand is soaring while the supply is not. + +Cuba’s communists have a complicated history with personal transport. After the revolution in 1959 they banned almost all purchases of cars (but let existing owners keep theirs). The government gave cars to artists, athletes and star workers. High-ranking employees could use the official fleet and buy vehicles upon retirement at a discount. Petrol was almost free. + +Cuba’s hesitant opening of its economy allowed the car market a bit more freedom. Since 2013 individuals have been able to buy and sell used cars without official permission. New cars can only be sold in government-owned dealerships like Multimarcas. The island’s spotty internet access makes it hard for buyers to compare prices. Many find vehicles by word of mouth and through Revolico, used by individual sellers and wildcat dealers. Cubans download it via the paquete, a portable hard drive delivered by courier weekly to their houses. + +The rate of car ownership, 20 per 1,000 people, is one of the world’s lowest. The government keeps a lid on imports. It has allowed in 2,000 cars a year for the past five years. But its cautious economic liberalisation has stoked demand. A new class of entrepreneurs, called cuentapropistas, is eager to buy, as are Cubans with cash from relatives abroad. So in the market cars behave more like prime property, whose supply is restricted, than depreciating machines. One dealer says he has bought and sold two cars in the past year for a profit of 20,000 CUC, far more than his 25 CUC-a-month salary from the state. He prefers not to know much about the buyers: they probably do not declare their money. + +A cuentapropista couple in Havana bought a 2011-model European saloon for 30,000 CUC four years ago and sold it for 45,000 CUC; they traded up to a used SUV for 100,000 CUC. “We could have got many BMWs for the same price in the United States,” says the wife. Another habanero sold a house to buy a 25-year-old VW Golf for 10,000 CUC. In ten years its value has doubled. “I could sell it for a couple of thousand more if it had air conditioning,” he says. A retired engineer bought a 1980s-model Russian Lada from his state company in 2000 for 160 CUC, and sold it last year for nearly 100 times the price. + +Cubans realise how crazy the market is. Prices are so high, jokes Pánfilo, a comedian, on government-controlled television, that the Peugeot lion “covers its face with its paws”. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21721969-why-it-behaves-prime-property-market-cubas-crazy-used-car-market/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Short sentences + +A clash over how to punish the crimes of Argentina’s dictatorship + + +Politicians challenge the supreme court + +May 11th 2017 | BUENOS AIRES + + + + + +MORE than 40 years have passed since Argentina’s generals seized power. They kidnapped, tortured and killed thousands of Argentines whom they saw as a threat to western civilisation. Democracy was restored in 1983, but many perpetrators of those crimes have never been punished. Of the 2,780 people who have been charged with human-rights violations since 2006, just 750 have been found guilty. + +Now, some Argentines fear, even that incomplete justice is being weakened. On May 3rd the country’s supreme court made a decision that could free as many as 248 prisoners. The case relates to Luis Muiña, who in 2011 was sentenced to 13 years in prison for the kidnap and torture of five people in 1976. The court ruled that, under Argentina’s “two-for-one” law, some of the time he had spent on remand should reduce his sentence by double that amount of time. This cut it by eight years. His release on parole in April was thus legal. + + + +Since democracy was restored, politics has dictated how the crimes of Argentina’s “dirty war” are treated. A truth commission established that at least 8,960 people had been murdered. After military uprisings against the democratic government of Raúl Alfonsín in the late 1980s, the government introduced amnesty laws and pardons to placate the army. Under the populist presidencies of Néstor Kirchner and his wife, Cristina Fernández de Kirchner, from 2003 to 2015, the state threw its weight behind trial and punishment. + +The government of Mauricio Macri, Argentina’s president since December 2015, says it is returning to the principle that independent courts, not politicians, should administer justice. Its critics doubt that. They see the centre-right president as soft on dictatorship. In December he suggested that Remembrance Day, which commemorates the coup every March 24th, could be observed on the nearest Monday to raise productivity. Human-rights activists point out that Mr Macri appointed two of the three judges who set Mr Muiña free. + +Stung by the criticism, his coalition joined forces with the opposition in the senate on May 10th to pass, unanimously, a law stating that two-for-one should not apply to crimes against humanity. That may prompt the supreme court to rule differently on similar cases. How it decides matters as much as what it decides. Judicial independence is as important as punishing the dictators’ henchmen. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21721975-politicians-challenge-supreme-court-clash-over-how-punish-crimes-argentinas/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Asia + + +South Korean politics: From dissident to president [Fri, 12 May 07:08] + +The war in Afghanistan: About-face [Fri, 12 May 07:08] + +Pluralism in Indonesia: Sent down [Fri, 12 May 07:08] + +House prices in Australia: Shuttered dreams [Fri, 12 May 07:08] + +Commemorating Shivaji: The highest praise [Fri, 12 May 07:08] + +Banyan: The still small voice [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +From dissident to president + +Moon Jae-in easily wins South Korea’s presidential election + + +Governing the country will be harder + +May 13th 2017 | SEOUL + + + + + +HE WAS imprisoned for months for protesting, as a student, against the dictatorship of Park Chung-hee in the 1970s. But it was mass demonstrations against the late strongman’s daughter, Park Geun-hye, that brought Moon Jae-in to the presidency. On May 9th South Koreans chose the former dissident as their new president, after the constitutional court prompted a snap election by removing Ms Park from office. Mr Moon, who was sworn in as soon as the votes had been counted, is South Korea’s first left-of-centre president in almost a decade. He won 41% of the vote in a field of 13 candidates. His 17 percentage-point lead over the runner-up, a conservative, is the biggest winning margin ever in a South Korean presidential election. + +Mr Moon’s victory was no surprise: he had led the polls for four months. Support for his liberal Minjoo party hit a record during the campaign, which reaped the benefits of South Koreans’ bitter disappointment with Ms Park, a conservative, who was elected in 2012. Parliament impeached her in December, following revelations that she had divulged state secrets to a friend, let her meddle in policy and colluded with her to extort bribes from big companies. Ms Park is now in jail, while a trial related to those charges proceeds. Over 77% of citizens voted in the election, the highest turnout in 20 years. (Ms Park, in her cell, chose not to.) + + + +Kim Hyung-jun, a young father who took his toddler to a polling station in central Seoul on May 9th, said that he was voting to create a better society for his daughter: one “where everyone begins at the same line”, not where “the rich and powerful have a head start”. Expectations are high for Mr Moon, who can serve only a single five-year term, to see through the reforms that he has promised. One is to root out the corruption that results from close links between government and big business, in order to make society fairer. That has struck a chord with disenchanted young people in particular: over half of voters in their 20s and 30s cast their ballot for him, according to exit polls. + +Committees to the rescue + +Mr Moon plans to set up a “truth committee” on the presidential scandal. Another promise is to help youngsters get jobs, which many think are unobtainable without the right connections. He has established a job-creation committee, and says he will generate more than 800,000 jobs, mainly in the public sector, a third of which will be reserved for the young. + +The new president grew up poor. His parents are refugees from Hungnam, a North Korean port evacuated in 1950 shortly after the start of the Korean war. He began his political career as chief-of-staff to the late Roh Moo-hyun, a liberal president in office from 2003 to 2008, with whom he had set up a law firm in the 1980s to take on human-rights cases. Mr Moon then ran for the presidency himself in 2012, and narrowly lost to Ms Park in a two-way race. + +The challenges he faces are formidable. Donald Trump has stoked tensions with the North, even as he has said that the South should pay for an American missile-defence system, known as THAAD, intended to thwart a northern attack. Mr Moon says he wants to review the deal that led to THAAD’s deployment. He has also said he would go to Pyongyang to seek better ties with the North if the circumstances were right, suggesting that he will revive the old liberal policy of “sunshine” towards the North, which involved great emollience and lashings of aid. + +But since those days North Korea has tested five nuclear devices and scores of missiles, while ramping up its threats. Scott Snyder of the Council on Foreign Relations, an American think-tank, says that resolutions passed by the UN Security Council prevent the sort of economic deals struck when Mr Moon worked under Roh. Mr Moon has adopted a less doveish tone than his liberal predecessors. And Mr Trump has said that he too would consider meeting Kim Jong Un, the North’s dictatorial leader. + +Relations with China and Japan are also fraught. The Chinese government is unhappy about the deployment of THAAD, and has encouraged a boycott of South Korean goods. Japan, meanwhile, resents the apparent rekindling of anti-Japanese protests tied to its conduct during the second world war. But simply having a president at all, after five rudderless months, may help dampen these rows. + +At home, Mr Moon also faces difficult negotiations: Minjoo does not hold a majority in parliament, and the next elections do not take place until 2020. It may rejoin forces with the People’s Party, a centrist group that split from it last year. But the splittists support THAAD and oppose Mr Moon’s plan to reopen the Kaesong industrial complex on the border with North Korea, a sunshine initiative that Ms Park shut. + +In his inaugural speech, Mr Moon said that opposition parties were “his partners in running the country”. He wants every region to be represented in his government, and says he will share more power with his cabinet. He also has woolly plans to set up an appointment system that takes public opinion into account in some way. + +Nor are voters of one mind, despite Mr Moon’s resounding win. Hong Joon-pyo, the candidate of Ms Park’s former party, had a remarkably strong showing, winning 24%. A “resentful pocket” of conservatives, says Shin Gi-wook of Stanford University, has formed around Mr Hong. He has referred to civic organisations, many of which led protests against Ms Park, as “thieving bastards”; his campaign slogan promised a South Korea free of “pro-North leftists”. This old-school conservatism still resonates, particularly in Gyeongsang—an eastern region that has long been a conservative stronghold—and with the elderly: half of those over 60 voted for Mr Hong. + +On his first day in office, Mr Moon spoke to the heads of all four opposition parties. In his victory speech, he promised to be a “president for all”. Fulfilling that ambition is likely to be his hardest task. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21721868-governing-country-will-be-harder-moon-jae-easily-wins-south-koreas-presidential-election/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +About-face + +America is on the verge of sending more troops to Afghanistan + + +But more than manpower is needed to defeat the Taliban insurgency + +May 11th 2017 + + + + + +IN FEBRUARY the commander of the 15,000 American and NATO forces in Afghanistan, General John Nicholson, asked for reinforcements. Within a few days Donald Trump is expected to provide them. His military and foreign-policy advisers have come up with a plan to send up to 5,000 more troops, both special forces and trainers to advise the Afghan army. The rest of NATO, too, will be expected to come up with additional troops. + +All this marks a reversal of Barack Obama’s policy, which was to pull nearly all the remaining American troops out of Afghanistan. In the end, faced with a rapidly deteriorating security situation, he backed off a bit, leaving 8,400 American soldiers and around 6,500 from other NATO countries. It was not enough, General Nicholson told Congress. The Taliban insurgency is making steady territorial gains and the Afghan army and police are suffering an unsustainable number of casualties. Sounding as upbeat as he could, he described it as a “stalemate”. + + + +That was generous. The proportion of the country reckoned to be under uncontested government control fell from 72% to 57% during the 12 months to November last year. Since then, as part of a review of the administration’s Afghan strategy, Mr Trump’s national security adviser, H.R. McMaster, and his defence secretary, Jim Mattis, have travelled to Afghanistan. So too, it is believed, has the director of the CIA, Mike Pompeo. Both General McMaster and Mr Mattis (a former general who served as head of the regional command encompassing both Afghanistan and Iraq until being pushed into early retirement by Mr Obama in 2013) know Afghanistan well. Neither would have been comfortable with Mr Obama’s habit of setting rigid timetables for troop withdrawals unrelated to conditions on the ground, or with the speed with which the NATO force, which had over 130,000 troops in 2011, was cut. + +As well as calling for an increase in troop levels, the review also recommends allowing trainers to work at the sharp end with Afghan combat troops, rather than at the command level. Such trainers are far more useful than those restricted to barracks, but the risk of casualties rises. The generals also want to give American commanders in Afghanistan more flexibility in the way they provide air support for their Afghan allies. Mr Obama relaxed the rules last year, but not enough to allow the use of air power for offensive operations. One reason for the increase in special forces is that they will be needed to spot targets from forward positions. The new plan will not set any deadlines for force reductions and may also give commanders some latitude to call on additional resources if they prove necessary. + +There is no doubt that the new plan is needed to check the Taliban’s momentum. But on its own, it is unlikely to be enough to force the Taliban to the negotiating table. Getting the divided and dysfunctional Afghan government to do more to fight corruption is another crucial step. Most important, argues Bruce Riedel, a former CIA officer now at the Brookings Institution, a think-tank in Washington, will be a concerted attempt to change neighbouring Pakistan���s behaviour. As long as Pakistan’s “deep state” continues to see the Taliban as a strategic asset and to provide it with sanctuary and material support, it will have no incentive to negotiate. Given the failure of Mr Obama’s policy of bribing and cajoling Pakistan into becoming more co-operative, it would not be surprising if the new administration tries something different. + +General McMaster has recruited Lisa Curtis from the Heritage Foundation, another think-tank, to be the White House’s adviser on South and Central Asia. In February Ms Curtis co-wrote a report calling for a range of measures aimed at ending Pakistan’s ambivalence towards terrorism. These would include ending its status as a “major non-NATO ally”; making military aid contingent on the strength of its action against all terrorist groups and stepping up unilateral military action, such as drone strikes, against the Taliban on Pakistani territory. It may not just be America’s policy towards Afghanistan that is on the brink of a big revision. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21721964-more-manpower-needed-defeat-taliban-insurgency-america-verge-sending/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Sent down + +An unfair trial leaves Chinese Indonesians feeling vulnerable + + +Basuki Tjahaja Purnama, Jakarta’s governor, is jailed for two years + +May 11th 2017 | JAKARTA + + + + + +OUTSIDE the courthouse there were cries of “Allahu akbar”. Inside, a panel of five judges had just handed Basuki Tjahaja Purnama, the governor of Jakarta, a two-year prison sentence for blasphemy. The verdict delighted the Muslim activists who have rallied against Mr Basuki for months, derailing his campaign for another term. But for his fellow Indonesians of Chinese descent, it is an all too predictable injustice. As Maggie Tiojakin, a 37-year-old Chinese-Indonesian writer, puts it, “For most of us minorities this was expected. And it further confirms our fears that for as long as we live here, we will have to look over our shoulders.” + +Chinese began settling in the islands that today make up Indonesia centuries ago. Many worked as merchants or traders, placing them in a position similar to that of Jews in medieval Europe: necessary, but often resented and persecuted. But others were miners or indentured labourers. Suharto, Indonesia’s longtime dictator, reportedly helped spread the canard that they comprised 3% of the country’s population, but controlled 70% of its economy—a wild overstatement on both counts. A recent study estimates that Chinese-Indonesians rank 18th among Indonesia’s 600-odd ethnic groups, with 2.8m people; they make up around 1.2% of the population. And although they account for a disproportionate share of the country’s billionaires, most Chinese-Indonesians are not rich. + + + +Chinese-Indonesians, suspected as a group of having communist sympathies, were the victims of pogroms in the 1960s. Suharto, who rose to power at the time, adopted a policy of forced assimilation, obliging them to adopt Indonesian names, withdrawing Confucianism’s status as one of the country’s officially recognised religions and forbidding the teaching of Chinese. Ironically, he also boosted Chinese-Indonesians’ economic standing by barring them from government service, thereby pushing them into the private sector. The riots that triggered his resignation in 1998 targeted Chinese-Indonesians, killing around 1,100 people and destroying Chinese businesses. + +Since Suharto’s downfall, things have improved. Confucianism’s status has been restored, teaching Chinese is now legal and Chinese New Year is a national holiday. The cabinets of successive presidents have featured Chinese-Indonesian ministers, often in prominent economic jobs. And a few Chinese-Indonesian politicians have emerged. Mr Basuki, better known as Ahok, first won election in 2005 as regent (district chief) in his home district of East Belitung, where roughly a tenth of the population is Chinese. He also served in Indonesia’s house of representatives before winning the post of deputy governor of Jakarta as the running-mate of Joko Widodo, or Jokowi, who is now Indonesia’s president. (Ahok became governor without an election when Jokowi was elected president.) His rise seemed to suggest that being a Chinese Christian was not a political handicap in a country where 90% of the population is Muslim and 95% of indigenous descent. + +But Ahok’s failed campaign for a fresh term as governor tested that premise. It was hard to detect any insult to Islam in the speech for which he was taken to task by Islamist agitators, yet prosecutors charged him and the court convicted him. Indeed, the judges gave him a harsher sentence than prosecutors had requested. + +His political rivals, meanwhile, showed no compunction about taking advantage of this travesty: the victorious candidate for governor, Anies Baswedan, took to campaigning in the white shirt and black skullcap of a pious Javanese Muslim. On election day two elderly Chinese voters in Glodok, Jakarta’s Chinatown, admitted that they feared once again becoming the target of rioters. Another prominent Chinese-Indonesian said he worried that Mr Baswedan’s victory heralded the first step toward imposing Islamic law. + +Ahok’s sentence has reinforced such fears. Some worry Chinese will withdraw again from politics. Ms Tiojakin says she does not know “a single Chinese-Indonesian who does not in some way believe that 1998 [could] repeat itself”. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21721967-basuki-tjahaja-purnama-jakartas-governor-jailed-two-years-unfair-trial-leaves-chinese/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Shuttered dreams + +Buoyant prices mean ever fewer Australians can buy a house + + +This week’s budget offers little comfort for the “smashed avocado” generation + +May 11th 2017 | SYDNEY + + + + + +ABOUT 100 people gathered recently for the auction of a semi-detached bungalow in Dulwich Hill, a formerly working-class suburb about 10km from the centre of Sydney, Australia’s biggest city. The rundown property was 100 years old, with two bedrooms, peeling paint and no inside toilet. Bidding started at A$1.1m ($810,000). About seven minutes later, it sold for almost A$1.5m to a man who expects to spend even more on it: one of his adult children will live in it “after improvements”. Shad Hassen, the auctioneer, calls the sale a “cracking result”. A few hours earlier he had sold a converted community hall nearby with “work-live possibilities” for an even more eye-watering A$2.7m. + +House prices in Sydney have soared by almost a fifth in the past year alone; the median is now about A$1.1m. One recent study ranks it the second-most expensive housing market in the world relative to local incomes, after Hong Kong. In Australia as a whole prices have quadrupled in nominal terms over the past 20 years, and risen by two-and-a-half times after accounting for inflation—on a par with Britain, and far more than in America. As a result, the former Australian norm of home-ownership is fading. The share of 35- to 44-year-olds who own a home has fallen from three-quarters 26 years ago to less than two-thirds. + + + +Prices are rising in part because borrowing is so cheap. The Reserve Bank of Australia (RBA), the central bank, has kept its interest rate at 1.5%, a record low, since August. But a bigger cause is the steady rise in Australia’s population, which is growing by 350,000 a year. Immigration accounts for half of that. New dwellings are not being built fast enough to meet the extra demand. The relentless price rises, in turn, have lured speculators, whose enthusiasm compounds the problem. About 40% of new mortgages go to investors, rather than owner-occupiers. Philip Lowe, the head of the RBA, calls such loans a “financial amplifier”, further boosting prices. + + + +Millennials are outraged by how unaffordable houses have become. When Bernard Salt, a partner with KPMG, an accounting firm, suggested in a newspaper column last year that young buyers simply needed to cut back on breakfasts at fancy cafés to afford their deposit, he was pilloried. Would-be homeowners, it was pointed out, would have to forgo 5,000 servings of “smashed avocado with crumbled feta on five-grain toasted bread”—48 years’ worth of overpriced weekend breakfasts—simply to raise a 10% deposit on a typical house in Sydney. + +Malcolm Turnbull’s conservative federal government made “housing affordability” a feature of its budget on May 9th. It ignored calls to abolish “negative gearing”, a tax break that allows investors to deduct from their overall income any losses they make letting out a mortgaged property. This makes investing in property in expectation of capital gains all the more alluring. Fear of annoying such investors may have played a part in the government’s decision, but self-interest may have, too. A recent analysis by the Australian Broadcasting Corporation found that about half of Australia’s 226 federal parliamentarians own investment properties. + +Instead the government says it will seek to boost supply. It announced plans to work with the states to make more land available for housing, starting with some surplus army land in Melbourne. It will fine foreign investors who leave dwellings empty for more than six months. And it will spend billions on urban transport, arguing that this will put more homes within plausible reach of city-centre jobs. + +In one respect, the property boom has been a huge economic boon, helping to perk up investment despite an abrupt crash in commodity prices which has caused new oil and mining projects to dry up. But the property market could succumb to problems of its own. The heads of both the Treasury in Canberra and the Australian Securities and Investments Commission, a corporate regulator, have warned of a housing bubble. The Grattan Institute, a think-tank, says household debt has reached a record 190% of annual after-tax income, a rise of 12 percentage points since 2015 (see chart). The Australian Prudential Regulation Authority, a financial supervisor, has sought to cool things down. It wants banks to make no more than 10% of their housing loans to investors, and to cut back on “interest-only” mortgages, which do not require any principal to be repaid until the end of the borrowing period. + +The central bank frets about an “environment of heightened risks” caused by the surge in debt linked to housing. Mr Lowe worries that debt is rendering Australia’s economy “less resilient to future shocks”. He is quick to note that there is little sign of stress at the moment, and other economists maintain that Australians are culturally averse to defaulting on their mortgages. But a rise in interest rates or unemployment, or a fall in housing prices, could nonetheless prove disastrous. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21721961-weeks-budget-offers-little-comfort-smashed-avocado-generation-buoyant-prices-mean-ever/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +High praise + +Mumbai plans the world’s tallest statue + + +But it won’t come cheap + +May 13th 2017 | MUMBAI + + + + + +IT MAY have named the airport, the main railway station, a big road, a park, a museum, a theatre and at least six traffic intersections after him, but Mumbai has not done enough to commemorate Shivaji, a swashbuckling warrior prince who founded a local kingdom in the 17th century. The obvious solution, according to all the big political parties in the state of Maharashtra, of which Mumbai is the capital, is to build an absolutely enormous statue of him on an artificial island in the ocean near the city. + +When this idea was first cooked up, in 2004, the statue was planned to be 98 metres tall, to top the Statue of Liberty, which is a mere 93 metres. But then the neighbouring state of Gujarat decided to build a 182-metre figure of Vallabhbhai Patel, an independence hero. Maharashtra’s government resolved to make the statue of Shivaji the tallest in the world, at 192 metres. Alas, it turns out there is a Buddha in China that is 208 metres high. So now Maharashtra’s government is aiming for 210 metres (see chart). + + + +The budget for the project is growing, too. It has risen from 1bn rupees ($16m) to 36bn—or so the government hopes. But when it recently issued a tender for the first phase of the project (excluding an amphitheatre and a few other bits and bobs), with a projected budget of 25bn rupees, the lowest bid came in at 38bn. + + + +The state’s debt, meanwhile, is 3.7trn rupees. The sum budgeted for the statue is seven times what Maharashtra spends on building and maintaining rural roads each year, or, for the historically minded, enough to restore 300 forts around the state, including several built by Shivaji, according to IndiaSpend, a data-journalism website. Environmentalists and fishermen, meanwhile, complain that the project will harm local fish stocks. + +But resisting a tribute to Shivaji in Maharashtra is the political equivalent of spitting on babies. If there are opponents of the scheme in the state assembly, they are keeping quiet. Narendra Modi, the prime minister, is a fan. He laid an underwater foundation stone in December. Earlier this year he unveiled a giant statue of the god Shiva in the southern state of Tamil Nadu. It was he, in fact, who broke ground for the statue in Gujarat, when he was chief minister of the state. It may not be long before someone—a stonemason, perhaps—decides to erect a gargantuan statue of him. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21721869-it-wont-come-cheap-mumbai-plans-worlds-tallest-statue/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Banyan + +Church v state in the Philippines’ war on drugs + + +The state is winning + +May 11th 2017 + + + + + +DORO SUASIN was cheerful and couldn’t hurt a fly, say his neighbours in Pil-homes, a slum near Manila’s airport. He also occasionally used shabu (methamphetamine). Late one night two masked men, presumably policemen, barged into his shack and shot Mr Suasin in the head in front of his wife and children. On another night men burst in on a single mother and shabu-user living nearby as she breast-fed her baby. They told her to put the baby down. Then they shot her too. + +In the neighbouring slum of Seaside Coast, in the shadow of the elevated expressway to the airport (upscale property developers do not have the lock on boosterish names), Carlo Robante, with his thick shock of hair, was a fixture at the jeepney stop outside the KFC branch. He worked as a “barker”, loading passengers on to the jeepneys, the Filipino answer to a minibus. He was also a small-time shabu dealer. On a recent evening, two men on motorcycles pulled up. One of them shot Mr Robante in the head, then both drove off. Crime-scene officers drew a chalk line around the body, but no one bothered to interview his family. + + + +President Rodrigo Duterte’s war on drugs has killed perhaps 9,000 Filipinos. About 2,000 were alleged drug users or dealers shot while supposedly resisting arrest. Most of the rest were murdered by unknown assailants, often assumed to be policemen or their lackeys, and rumoured to be paid $100 or more a hit. Extra-judicial killings are so common they are referred to by a jaunty acronym—EJKs. Mr Duterte often appears to condone or even encourage them, painting addicts and dealers as vermin. He lashes out at anyone who criticises his stance and sees no hypocrisy in his admission that he himself has abused painkillers. To put things in context, extra-judicial killings during Mr Duterte’s ten months in office have been three times more numerous than they were during Ferdinand Marcos’s nine years of martial law. + +Mr Duterte remains wildly popular. On the streets the strong perception is that drugs are becoming much less of a problem. But Social Weather Stations, a research institute, reports that 78% of Filipinos say they are “very worried” or “somewhat worried” that they or someone they know will fall victim to an extra-judicial killing. A gap appears to be opening between the top of Philippine society and the hardscrabble bottom. The lower the social stratum, the greater the concern over the killings, despite the president’s claim to govern on behalf of the poor. That is because the poor are more likely to be victims. + +In Pil-homes and Seaside Coast, fear has replaced a previously reflexive optimism as families are shattered and communities feel under siege. Mr Suasin’s widow sent her children to relatives in the countryside before vanishing in search of work. Mr Robante’s 12-year-old son watched the motorcyclists as they pulled up to his father. Now mute and emaciated, he is ill and traumatised—giving up his course of antibiotics for pneumonia because the family had no money. “I voted for Duterte,” says a resident, “but now it’s time for regrets.” + +A couple of miles north is the National Shrine of Our Mother of Perpetual Help, a large and teeming Catholic church run by the Redemptorists, an order ministering to the poor. Father Bonifacio Flordeliza reads from John’s gospel, chapter 10: “He that entereth not by the door into the sheepfold, but climbeth up some other way, the same is a thief and a robber…” In his sermon he lays into Mr Duterte: “Do we see compassion, do we see respect? He has no concern for life. ‘I will kill you if you do not do what I want’, he says…Do we see the good shepherd? That is the challenge for us all. What are we doing? What are we doing to protect? No more victims. No more extra-judicial killings.” + +The Redemptorists have emerged as a point of opposition to Mr Duterte. One priest, Amado Picardal, has been trying to call the president to account for extra-judicial killings since the 1990s, during his long tenure as mayor of the city of Davao. During Lent the order mounted a photographic exhibition of recent murders, earning abuse from Mr Duterte. It gives sanctuary both to those who fear they might be the assassins’ next target, and to members of death squads who worry about the repercussions of bowing out. The order also helps victims’ families to pay for funerals. + +The church hierarchy has been slower to speak out, but is finding its voice at last. In February the Catholic Bishops’ Conference of the Philippines condemned Mr Duterte’s “reign of terror”. At the end of April the Archbishop of Manila, Cardinal Luis Antonio Tagle, of whom the Redemptorist priests are critical, broke his silence about the violence. + +A Catholic “Caravan for Life” is making its way from Mr Duterte’s home turf, on the southern island of Mindanao, to Manila. It aims to rally opposition not just to the killings, but also to the death penalty, which Mr Duterte wants to reintroduce. The church also opposes the president’s unconscionable bid to lower the legal age of criminal responsibility from 15 to nine. + +There’s nothing like Cardinal Sin + +That is all admirable. Yet at a time when the political opposition is divided and self-serving, few expect the church to fill the breach. Not even its own leaders think it has the moral authority it had in 1986, during the People Power Revolution, when Cardinal Jaime Sin was able to call upon Filipinos to take to the streets to protect the leaders of the army, who had broken with Marcos. + +Catholic Filipinos still worship in droves. But the church is not their first stop for political or moral guidance. It is often at odds with ordinary folk, such as in its dogged opposition in 2012 to a law which guaranteed universal access to contraception and sex education. And when Cardinal Tagle spoke out against vigilante killings, he took pains to say abortion was equally repugnant. As for Mr Duterte, he says the church is “full of shit”, accusing priests of womanising and leading indulgent lives. “He knows”, Father Picardal admits, “how to hit us below the belt.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21721907-state-winning-church-v-state-philippines-war-drugs/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +China + + +Health care: Shod, but still shoddy [Fri, 12 May 07:08] + +Internal migration: A sorry tale [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Shod, but still shoddy + +China needs many more primary-care doctors + + +But memories of barefoot ones put some people off seeing them + +May 11th 2017 | BEIJING + + + + + +QUEUES at Chinese hospitals are legendary. The acutely sick jostle with the elderly and frail even before gates open, desperate for a coveted appointment to see a doctor. Scalpers hawk waiting tickets to those rich or desperate enough to jump the line. The ordeal that patients often endure is partly the result of a shortage of staff and medical facilities. But it is also due to a bigger problem. Many people who seek medical help in China bypass general practitioners and go straight to hospital-based specialists. In a country once famed for its readily accessible “barefoot doctors”, primary care is in tatters. + +Even in its heyday under Mao Zedong, such care was rudimentary—the barefoot variety were not doctors at all, just farmers with a modicum of training. Economic reforms launched in the late 1970s caused the system to collapse. Money dried up for rural services. In the cities, many state-owned enterprises were closed, and with them the medical services on which urban residents often relied for basic treatment. It was not until 2009, amid rising public anger over the soaring cost of seeing a doctor and the difficulty of arranging consultations, that the government began sweeping reforms. Goals included making health care cheaper for patients, and reviving local clinics as their first port of call. + + + +The reforms succeeded in boosting the amount that patients could claim on their medical-insurance policies (some 95% of Chinese are enrolled in government-subsidised schemes). They have also resulted in greater funding for community health centres. In 2015 there were around 189,000 general practitioners (GPs). The government aims to have 300,000 by 2020. But there would still be only 0.2 family doctors for every 1,000 people (compared with 0.14 today—see chart). That is far fewer than in many Western countries. + +It is not just long waiting-times at hospitals that necessitate more clinics. People are living far longer now than they did when the Communists took over in 1949: life expectancy at birth is 76 today, compared with 36 then. People from Shanghai live as long as the average person in Japan and Switzerland. Since 1991, maternal mortality has fallen by over 70%. A growing share of medical cases involve chronic conditions rather than acute illnesses or injuries. GPs are often better able to provide basic and regular treatment for chronic ailments. The country is also ageing rapidly. By 2030 nearly a quarter of the population will be aged 60 or over, compared with less than one-seventh today. More family doctors will be needed to manage their routine needs and visit the housebound. + + + +But setting up a GP system is proving a huge challenge, for two main reasons. The first is the way the health-care system works financially. Hospitals and clinics rely heavily on revenue they generate from patients through markups on medicine and other treatments. The government has curbed a once-common practice of overcharging patients for medicines. But doctors still commission needless scans and other tests in order to make more money. + +Community health centres are unable to offer the range of cash-generating treatments that are available at hospitals. So they struggle to make enough money to attract and retain good staff. Most medical students prefer jobs in hospitals, where a doctor earns about 80,000 yuan ($11,600) a year on average—a paltry sum for someone so qualified, but better than the 50,000 yuan earned by the average GP. Hospital doctors have far more opportunities to earn substantial kickbacks—try seeing a good specialist in China without offering a fat “red envelope”. + +As a result, many of those who train as GPs never work as one. Most medical degrees do not even bother teaching general practice. That leaves 650m Chinese without access to a GP, reckon Dan Wu and Tai Pong Lam of the University of Hong Kong. The shortage is particularly acute in poor and rural areas. The number of family doctors per 1,000 people is nearly twice as high on the wealthy coast as it is in western and central China. + +The second main difficulty is that many ordinary Chinese are disdainful of primary-care facilities, even those with fully qualified GPs. This is partly because GPs are not authorised to prescribe as wide a range of drugs as hospitals can, so patients prefer to go straight to what they regard as the best source. There is also a deep mistrust of local clinics. The facilities often lack fully qualified physicians, reminding many people of barefoot-doctor days. Chinese prefer to see university-educated experts in facilities with all the mod cons. + +Patients have few financial incentives to consult GPs. Even those who have insurance still have to meet 30-40% of their outpatient costs with their own money. Many prefer to pay for a single appointment with a specialist rather than see a GP and risk being referred to a second person, doubling their expenditure. Since the cost of hospital appointments and procedures is similar to charges levied at community centres, seeing a GP offers little price advantage. + +The government’s efforts to improve the system have been piecemeal and half-hearted. Primary-care workers are now guaranteed a higher basic income, but are given less freedom to make extra money by charging patients for services and prescriptions. This has helped clinicians in poor areas, but in richer ones, where prescribing treatments had been more lucrative, it has left many staff worse off—particularly when they have to see more patients for no extra pay. + +It would help if the government were to further reduce the pay gap between GPs and specialists. It is encouraging GPs to earn more money by seeing more patients and thus increase revenue from consultation fees. In big cities such as Beijing and Shanghai patients are being urged to sign contracts with their clinics in which they pledge to use them for referrals to specialists. In April the capital’s government raised consultation fees at hospitals, hoping to encourage people to go to community centres instead. Fearing a backlash, it has also pledged to reduce the cost to patients of drugs and tests. + +Despite the government’s reforms, underuse of primary care has actually worsened. In 2013, the latest year for which data are available, GPs saw a third more patients than in 2009. But use of health-care facilities increased so much during that time that the share of visits to primary-care doctors fell from 63% of cases to 59% (the World Health Organisation says it should be higher than 80%, ideally). For poor rural households, health care has become even less affordable. And public anger has shown no sign of abating. Every year thousands of doctors are attacked in China—despite the police stations that have been opened in 85% of large-scale hospitals. It is not a healthy system. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21721948-memories-barefoot-ones-put-some-people-seeing-them-china-needs-many-more-primary-care/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +A sorry tale + +A migrant worker’s story of her travails is a huge hit in China + + +But urban snobbery towards such people will be hard to change + +May 11th 2017 | PICUN + + + + + +NATIVES of China’s capital find it all too easy to ignore the millions of people who have moved to the city from the countryside. The newcomers live on building sites, or in windowless rooms in the basements of apartment blocks. Many of them rent cramped accommodation in ramshackle “migrant villages” on the city’s edges. Beijing-born residents often treat the outsiders with scorn, blaming them for much of the city’s crime and its pockets of squalor. It is usually only when the “peasant workers” flock back to their home towns to celebrate the lunar new year that Beijingers grudgingly admit the migrants are essential—for a grim few weeks the city is bereft of delivery boys, street vendors and domestic helpers. + +Recently, however, one such worker has caused a national stir with an autobiographical work circulated online. The 7,000-character essay, titled “I am Fan Yusu”, describes the hardships of Ms Fan (pictured): the deprivations of her rural childhood; her hand-to-mouth urban existence after she left home at the age of 20; and her marriage to an abusive and alcoholic man whom she eventually abandoned. Since then, she has looked after their two daughters alone. + + + +Few city-born Chinese would be surprised by such a story. What has captured their imagination is Ms Fan’s ambition and determination, as well as her literary passion and flair—migrants from the countryside are often regarded as uncultured bumpkins. Within days, her essay had been viewed millions of times. She has become such a celebrity in China that she appears to have gone into hiding to escape local reporters who have been searching for her. + +As a girl, Ms Fan devoured Chinese literature as well as novels in translation such as “Oliver Twist” and “Robinson Crusoe”. For the past few years she has lived in Picun, a migrant settlement on the outskirts of Beijing. There she has used the little time off she has from her job as a nanny to write essays and poetry. The widely held stereotype has it that China’s migrants leave their rural lives behind for one reason only: to earn more money than they could in their villages. Readers of Ms Fan’s account discovered that some have a bigger dream—of intellectual improvement. “I couldn’t bear to stay in the countryside viewing the sky from the bottom of a well, so I went to Beijing,” wrote Ms Fan, who is 44. + +That this could be a surprise is a sign of pervasive urban snobbery. Tens of thousands of people have posted comments on Ms Fan’s essay, many expressing sympathy with her travails and praising her writing. Many others, however, have not been able to resist nitpicking over her style, as if trying to prove that someone from the countryside who did not complete high school could ever write truly polished prose. One blogger called the essay “a bowl of coarse rice”. + +Urbanites’ usual disregard for rural migrants is evident in Picun, which is home not only to Ms Fan and more than 20,000 other people from the countryside, but also to the capital’s only museum that pays tribute to the migrants’ contributions to city life. The privately run institution is small and receives very few visitors—a pity, given how it reinforces Ms Fan’s story (she has taken part in a writers’ workshop there). The exhibits make clear that the migrants routinely suffer from dangerous work conditions, the withholding of wages and state-imposed barriers in their access to housing, education and health care. + +Migrants from the countryside numbered 282m at the end of last year, 4m more than in 2015 (an increase in just one year equivalent to the population of Los Angeles). The hardships portrayed in the museum and in Ms Fan’s writings are shared by nearly all of them. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21721955-urban-snobbery-towards-such-people-will-be-hard-change-migrant-workers-story-her/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Middle East and Africa + + +Iran: Rouhani under fire [Fri, 12 May 07:08] + +Egypt’s economy: Opening for business [Fri, 12 May 07:08] + +Israel: The generals retreat [Fri, 12 May 07:08] + +Egypt’s zoos: No place for animals [Fri, 12 May 07:08] + +Namibia and Germany: Salt in old wounds [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Rouhani on the ropes + +Iran prepares to choose a new president + + +The election is a battle between isolationists and globalists + +May 11th 2017 + + + + + +EVERY four years, Iran’s theocracy plays at electing a president. Pre-approved candidates take part in a process designed to give the system a mandate while, at the same time, preventing anyone acquiring a power base that might challenge Ayatollah Ali Khamenei, Iran’s supreme leader for the past 28 years. At the most recent election, in 2013, Mr Khamenei’s men barred Akbar Hashemi Rafsanjani from competing for a third term. This time, Mahmoud Ahmadinejad, another would-be third-timer, was disqualified, along with 1,629 other candidates, including all 137 women. + +That leaves six competing in the election, with the first round taking place on May 19th. Hassan Rouhani, a clergyman and the incumbent, is the predictable, if plodding, front-runner. Since 1981 all Iran’s presidents have served two terms, and in last year’s parliamentary elections his allies did well. His rivals hardly look threatening. Eshaq Jahangiri, the vice-president, and Mostafa Hashemitaba, a former Olympic Committee head, are reckoned to be on the ballot only so that the reformists can have equal airtime with their three conservative rivals. Both are expected to drop out before election day. + + + +Of the conservatives, Muhammad Baqer Qalibaf is a gruff former general and current mayor of Tehran whom Mr Rouhani soundly defeated in 2013. Mostafa Mir-Salim is a former culture minister who never left much of a mark. The third, a cleric, Ebrahim Raisi, looks robotic in front of the cameras. + +But the month-long campaign is not running as expected. Although he has stopped short of an endorsement, Mr Khamenei increasingly voices the hardliners’ agenda. In public addresses, he attacks Mr Rouhani’s government for disregarding the plight of the poor and seeking to build bridges with the old enemy, America. Simultaneously he has helped Mr Raisi, a protégé, to build his base. Last year he appointed him to head the country’s largest shrine and biggest bonyad, or clerical conglomerate, and has turned a blind eye as Mr Raisi uses its funds on his campaign. The country’s main clerical body has endorsed him, though he has no ministerial experience. His black turban, betokening descent from the Prophet Muhammad, wins him traditionalist support. + + + +The conservatives have successfully attacked on the economy, too, where Mr Rouhani has looked weak. Instead of the $50bn of foreign investment Mr Rouhani promised it would arrive in the first year after signing Iran’s nuclear deal with global powers, he has so far brought in next to nothing. Although he succeeded in lifting UN sanctions, American ones remain, in effect blocking any international bank that trades in dollars from financing business with Iran. The big oil firms still steer clear of a country with one of the world’s largest reserves of oil and gas combined. Without American waivers, explains Patrick Pouyanne, chief executive of Total, a French oil giant, “we’ll not be able to work in Iran.” Under President Donald Trump, these are far from a given. + +Starved of foreign financing, Mr Rouhani’s modernisation programme has floundered. Unemployment has actually risen since the nuclear deal. Almost twice as many students graduate from university each year as the country has jobs to offer. Mr Rouhani can point to GDP growth last year of 6.5%, as oil sales, freed from UN sanctions, almost doubled. But to balance past excesses he has been obliged to restrict government cash subsidies. + +Capitalising on a popular longing for the years of plenty a decade ago, the hardliners mock Mr Rouhani’s neo-liberals as the government of the ashraf, or elite, which, as under the former shah, lords it over the mostazafin, or downtrodden. Despite his huge bonyad, Mr Raisi describes himself as a fellow victim. Like the Prophet Muhammad, he was an orphan, and, he says, “felt the pain of poverty”. His campaign video contrasts the squalor of Iran’s slums with the luxurious malls frequented by Mr Rouhani’s supporters. The hardliners promise the unemployed new monthly benefits and mass public works to create jobs. The election, say Iran’s commentators, is turning into a class war, pitting pre-revolutionary values against revolutionary ones. + +A bruised Mr Rouhani has finally started to fight back. He accuses hardliners of planning to segregate pavements, forcing men to walk on one side, women on the other. He chastises Mr Raisi as an executioner, harking back to his past as a revolutionary judge who sentenced hundreds to death. But his enemies’ attacks have taken their toll. In 2013 Mr Rouhani narrowly avoided a run-off, scraping 50.7% of the vote. This time he could be forced into a humiliating second round on May 26th. The last time that happened, in 2005, hardliners united to bring Mr Ahmadinejad to power. “If there’s a run-off,” says a seasoned foreign observer in Tehran, “Mr Rouhani will lose.” + +His supporters say doomsday would result. Isolationists would celebrate by closing what investors had hyped as the biggest market opening since the collapse of the Berlin Wall. The reformers who entered Mr Rouhani’s administration would be purged. Mr Qalibaf, who as head of Tehran’s police at the turn of the millennium crushed student protests, could lead the charge. “Sanctions and confrontation”, says Mr Rouhani, “would come back.” + +The hardliners are no less alarmist. A victory by Mr Rouhani would unleash America’s economic power on Iran, together with its “defective, destructive, and corrupt Western lifestyle”, in Mr Khamenei’s words. Mr Trump’s rhetoric helps make the hardliners’ case. On the day Iran goes to the polls, Mr Trump begins the first foreign trip of his presidency in Saudi Arabia, whose de facto leader, Muhammad bin Salman, this month vowed to start “the battle in Iran”. + +Both sides exaggerate. After all, the supreme leader has the final say on all government policy. And all candidates have vowed to honour the nuclear deal. Though he may take issue with them, Mr Rouhani did nothing to reduce the clout of the bonyads, the Revolutionary Guards or the judges who recently ordered his campaign headquarters in Mashhad, Iran’s second city, to close. But Mr Khamenei would rather avoid another showdown with an emboldened and combative man, as Iranian presidents in their second term tend to be. If Mr Rouhani is to win, the supreme leader would prefer him to emerge chastened from a campaign pummelling. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21721941-election-battle-between-isolationists-and-globalists-iran-prepares/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Pyramid schemes + +Egypt passes a long-promised investment law + + +But it is no cure-all for the country’s economic ills + +May 11th 2017 | CAIRO + + + + + +EVERY week thousands of Egyptians cram past a narrow, tightly guarded doorway at Uber’s offices a few blocks from Tahrir Square and wait in a small room. Nearly 2,000 of them are signing up as new drivers every week 40% of them previously unemployed. Nearby, Uber’s growing customer-service centre employs 250 locals. The company is earmarking more than $50m to expand operations in Cairo alone. + +For Egypt, whose economy relies on aid to stay afloat, such influxes of foreign investment ought to be welcomed. But it does not always seem so. It took six months for Uber’s licensing paperwork to come through, even with a lot of string-pulling. After a year of haggling with nine government ministries, a proper ride-sharing law is unlikely to emerge from parliament any time soon. But Egypt, which ranks a dismal 122nd place on the World Bank’s ease-of-doing-business index, hopes to reform its ways. On May 7th it finally passed an investment law, more than two years overdue, designed to lure foreign investors back. But don’t cheer too soon. + + + +The new law pledges to reduce red tape and offers enticing tax incentives. Instead of a hellish process to obtain permits, often requiring the blessing of more than 70 government agencies, a one-stop shop will manage all the paperwork. Any requests not dealt with within 60 days will be automatically approved. Companies setting up in underdeveloped areas or special sectors can get between 30% and 70% off their tax bills for seven years. The new law also brings back private-sector “free zones”, areas exempt from taxes and customs duties. + +But reform in Egypt tends to be easy to promise and much harder to deliver. Once the bill becomes law, the administrative details are expected to take many more months to iron out. Duelling ministries will have to settle competing claims on the land that will be made available at discounted rates to investing firms. Low-level bureaucrats, eager to preserve both their importance and, sadly, their bribes, could also gum up the works. Past incarnations of the one-stop shop issued only some of the required permits, often leaving companies in a state of semi-legality, says Amr Adly of the Carnegie Middle East Centre, a think-tank. + +The bill’s lavish tax breaks may not play well politically when the government is facing a budget deficit of 10% of GDP. It has been forced to impose spending cuts, notably to fuel and bread subsidies. + +To be sure, Egypt is, in other ways, making the right noises to show it is open for business. The cabinet approved the country’s first-ever bankruptcy law in January. Recent improvements to industrial licensing are supposed to reduce waiting times from a lethargic average of 634 days to a brisk month. + +The most important reforms needed to attract investors were made six months ago, when the government, as part of a $12bn deal with the IMF, finally floated the pound. With Egypt released from artificially inflated exchange rates, foreign cash is starting to come back. The relaxation of constraints on capital movement have assuaged the fears of companies looking to repatriate profits. The risk of large-scale political unrest, which spooked investors during the country’s tumultuous years, now appears much lower. + +But until now, clogged-up bureaucracy has remained a significant problem for investors keen to profit from Egypt’s cheap labour and large customer base. Big multinational companies like AXA, a French insurance company, and Kellogg’s, an American food giant, have taken to sidestepping licensing requirements by buying domestic firms and expanding them. + +Abdel-Fattah al-Sisi, the country’s president, first announced his investment reforms at a glitzy conference on economic development at Sharm el-Sheikh in March 2015. Little has gone well since then. Many of the deals pledged at the conference never materialised. An IMF bail-out was needed to rescue the economy. Egypt hopes that its new investment law will be something to shout about after all that hooplah. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21721940-it-no-cure-all-countrys-economic-ills-egypt-passes-long-promised/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +The generals make way + +Businessmen start to replace soldiers as Israel’s political heroes + + +The top brass are in retreat + +May 13th 2017 | JERUSALEM + + + + + +UNDER the slogan “The Leftists are coming back”, Erel Margalit, a member of parliament, last month launched his campaign to lead Israel’s Labour Party. The message focused on security: how Israel’s “leftists” had built the Jewish state, its security forces and its nuclear capabilities. + +But Mr Margalit is not a former member of the security establishment, one of the generations of retired Israeli generals who once made the easy transition to politics. As the founder of Jerusalem Venture Partners, he was a central figure in the Israeli venture-capital sector, which helped to finance the thousands of tech startups that have revolutionised the country’s economy over the past two decades. + + + +He is one of a handful of high-tech entrepreneurs now vying for national leadership. The group includes Jerusalem’s mayor, Nir Barkat, who entered local politics after a successful career as an investor in technology companies and is planning his own bid for the leadership of the ruling Likud Party. Another tech man with prime-ministerial ambitions is the leader of Jewish Home, Naftali Bennett, who founded one successful software firm and ran another before entering politics. + +For over half a century, the Israel Defence Forces’ high command was a breeding-ground for political leaders. The first of dozens of retired generals to enter politics was Moshe Dayan, less than two years out of uniform, in 1959: he went on to serve as defence minister and foreign minister. Since then, 11 of the 20 former chiefs of staff of the Israeli army have gone on to serve in the Knesset. Most reached senior cabinet positions; two, Yitzhak Rabin and Ehud Barak, became prime ministers. + +But Israeli politics has changed dramatically. The main parties’ leaders and candidate lists are no longer decided in smoke-filled rooms, but in party-wide primaries. Senior officers, used to commanding soldiers who carry out their orders unquestioningly, are ill-equipped for the media circus and patient lobbying that these days accompany political advancement. A number of popular generals who have left military service in recent years and were expected to become political stars have remained outside the fray. For a year now, and for the first time in nearly six decades, not a single ex-chief of staff sits in the Knesset. Only one retired general serves in cabinet; just two more sit on the back benches. + +“The army is still an admired institution in today’s Israeli society, but it’s no longer immune from public scrutiny,” says Yagil Levy, an expert on Israel’s military-political relationship at the Open University. “This has scratched the generals’ image,” Mr Levy adds, “and the high-tech entrepreneurs are now the shining Israeli success story. It could be their moment.” They have independent sources of income to finance glitzy primary campaigns. But they also have a lot to lose. “We succeeded in business by detaching ourselves from the old establishment and learning a new way of doing things. Going into politics means taking on that establishment again,” says Mr Margalit. Only a few have braved the waters so far. If more did, it might promote new thinking about economic problems, such as poor labour-participation rates; and political problems, such as the deadlock over the occupied territories. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21721866-top-brass-are-retreat-businessmen-start-replace-soldiers-israels/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +No place for animals + +The sad state of Egypt’s zoos + + +In the zoos and on the streets, animals in Egypt have it tough + +May 11th 2017 | GIZA ZOO + + + + + +CAN giraffes commit suicide? The Giza zoo found itself facing that unusual question in 2013, when a baby giraffe called Roqa reportedly took its own life after being harassed by visitors. Officials denied the story, claiming that Roqa inadvertently hanged herself after getting tangled in wire. Still, the state of Egyptian zoos is such that reports of suicidal ungulates do not seem too far-fetched. + +Shortly before Roqa died, three bears were killed at the same zoo in what officials called an ursine “riot”. It was later discovered that the bears had been sedated by keepers and had fallen to their deaths. At Alexandria’s zoo, two men entered the monkey enclosure in 2015 and beat the animals with sticks, as a crowd of onlookers laughed. The men then ate the monkeys’ bananas and left. + + + +Such stories abound, but much of the bad press is nonsense, says Hamed Abdul Dayem, a spokesman for the ministry of agriculture, which oversees the zoos. He claims that they have improved their infrastructure and increased their animal populations by 40% in the past few years. + +To be sure, some improvements have been made. But the zoos are underfunded and often rely on private donations. Moreover, what Mr Dayem cites as progress, others see as a problem. Critics have long complained that there are too many animals in too little space at the Giza zoo, considered world-class when it opened in 1891. Some enclosures have hardly changed since then. Overbred lions sit in Victorian-era cages, with little space to roam. Poorly paid keepers poke them until they roar. If still not entertained, visitors can hold the cubs, for a small fee. Critics say the conditions at other Egyptian zoos are worse. “The good thing is that you will not find many animals there,” says Dina Zulfikar, a member of the committee that supervises the zoos. Ms Zulfikar says officials do not know how to treat wild animals. She notes that some have locked up migratory birds, which are often fitted with tracking devices, on suspicion of spying. + +Outside the zoos, the situation is little better. Stray cats and dogs roam the streets and are often subject to abuse: the care of animals, it seems, is just not a priority. According to its website, the Giza zoo is meant to “stimulate love” for animals. But there is little proof it is working. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21721910-zoos-and-streets-animals-egypt-have-it-tough-sad-state/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Salt in old wounds + +What Germany owes Namibia + + +Saying sorry for atrocities a century ago has so far made matters worse + +May 11th 2017 | OTAVI AND WINDHOEK + + + + + +ON OCTOBER 2nd 1904 General Lothar von Trotha issued what is now notorious as “the extermination order” to wipe out the Herero tribe in what was then German South West Africa, now Namibia. “Within the German borders every Herero, with or without a gun, with or without cattle, will be shot,” his edict read. During the next few months it was just about carried out. Probably four-fifths of the Herero people, women and children included, perished one way or another, though the survivors’ descendants now number 200,000-plus in a total Namibian population, scattered across a vast and mainly arid land, of 2.3m. The smaller Nama tribe, which also rose up against the Germans, was sorely afflicted too, losing perhaps a third of its people, in prison camps or in the desert into which they had been chased. + +A variety of German politicians have since acknowledged their country’s burden of guilt, even uttering the dread word “genocide”, especially in the wake of the centenary in 2004. But recent negotiations between the two countries’ governments over how to settle the matter, the wording of an apology and material compensation are becoming fraught. Namibia’s 16,000 or so ethnic Germans, still prominent if not as dominant as they once were in business and farming, are twitchy. + + + +The matter is becoming even more messy because, while the German and Namibian governments set about negotiation, some prominent Herero and Nama figures say they should be directly and separately involved���and have embarked on a class-action case in New York under the Alien Tort Statute, which lets a person of any nationality sue in an American court for violations of international law, such as genocide and expropriation of property without compensation. + +The main force behind the New York case, Vekuii Rukoro, a former Namibian attorney-general, demands that any compensation should go directly to the Herero and Nama peoples, whereas the Namibian government, dominated by the far more numerous Ovambo people in northern Namibia, who were barely touched by the wars of 1904-07 and lost no land, says it should be handled by the government on behalf of all Namibians. The Namibian government’s amiable chief negotiator, Zedekia Ngavirue, himself a Nama, has been castigated by some of Mr Rukoro’s team as a sell-out. “Tribalism is rearing its ugly head,” says the finance minister, who happens to be an ethnic German. + +The German government says it cannot be sued in court for crimes committed more than a century ago because the UN’s genocide convention was signed only in 1948. “Bullshit,” says Jürgen Zimmerer, a Hamburg historian who backs the genocide claim and says the German government is making a mess of things. “They think only like lawyers, not about the moral and political question.” + +“None of the then existing laws was broken,” says a senior German official. “Maybe that’s morally unsatisfactory but it’s the legal position,” he adds. Indeed, German officialdom still makes elaborate semantic contortions to avoid a flat-out acceptance of the G-word, presumably pending a final accord between the two governments. Above all, Germany is determined to avert legal liability for reparations of the sort it accepted for the Jewish Holocaust in an agreement in 1952, while stressing that it is ready to raise the level of every sort of development aid to Namibia, to which it already gives far more per head than it does to any other country in the world. + +Our African Heimat + +Meanwhile, Namibia’s ethnic Germans are keeping their heads down, wary of recrimination over the distant past. “The German government does not represent us; we are Namibians,” says a local businessman. Very few of today’s German-speakers are, in any event, descended from the Schutztruppe (literally, “protection force”), the colonial soldiers who slaughtered the Herero and Nama in 1904-07. + +All the same, few are happy to use the G-word, let alone accept its accuracy. “We grew up with talk of the colonial wars, the Herero uprising,” says a veteran writer on the Allgemeine Zeitung, Namibia’s German-language daily. “We don’t use the blanket term genocide.” + +Namibian Germans often echo Hinrich Schneider-Waterberg, an 85-year-old farmer who has made a second career as a historian bent on rejecting the genocide charge (and who owns the land where a crucial battle between the Germans and the Herero took place). He contends that the Herero started the killing; that German civilians suffered atrocities, too; that the extermination order was soon rescinded in Berlin; that the number of Herero deaths is exaggerated; and that those of the Nama in prison camps were not intentional, thus not genocidal. These points are dismissed by most historians in Germany as “denialist”. + +Burgert Brand, the jovial bishop of the branch of the Lutheran church to which most white Namibian German-speakers belong, acknowledges a German burden of guilt but shrinks at comparison with the Holocaust; some historians in Mr Zimmerer’s camp trace a direct link back to the earlier crimes and racial attitudes of 1904. “It is very frustrating for us bridge-builders, who must start again from scratch,” says the bishop. + +Many Namibian Germans are nervous lest the argument over reparations spill over into calls for their farms to be confiscated, as Robert Mugabe has done in Zimbabwe. Werner von Maltzahn, a 69-year-old farmer, recalls how his grandfather, a Prussian baron who settled in the same arid spot in 1913, had to start all over again when the British army requisitioned his cattle in 1915. “Maybe I should ask the English for compensation,” he jokes. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21721918-saying-sorry-atrocities-century-ago-has-so-far-made-matters-worse-what/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Europe + + +President Macron: Marchons, marchons! [Fri, 12 May 07:08] + +Polling errors: Hit or miss [Fri, 12 May 07:08] + +Muckraking in Malta: Shady island [Fri, 12 May 07:08] + +English in the EU: Lingua franca [Fri, 12 May 07:08] + +The new Europhiles: Who loves EU, baby [Fri, 12 May 07:08] + +Charlemagne: Gathering steam [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Le défi + +Emmanuel Macron’s quest to reform France + + +His presidential campaign was a long shot. His next challenge may be even harder + +May 13th 2017 + + + + + +THIRTEEN months ago, a young government minister climbed on to a platform in a small meeting hall in his home town of Amiens, in northern France. There was no bass beat to pump up the audience, no spotlights or flags. Alone with his microphone, Emmanuel Macron announced that he was launching a new political movement, to be called En Marche! (“On the Move!”). He wanted it to put an end to the stale political divide between left and right, repair confidence and unblock France. The idea was “a bit mad”, he admitted: “I don’t know if it will succeed.” + +At the time, says an aide, the idea was mainly to shape public debate. No poll then even tested Mr Macron’s presidential chances. He had never run for office. His hopes of building a political movement capable of taking on the existing party machines looked like a fantasy. Two months later, François Hollande, the Socialist president, told two reporters dismissively that his economy minister’s project was “an adventure with no future”. + + + +Yet on May 7th, a mere six months after Mr Macron formally declared that he would run for office, the French elected the 39-year-old liberal to be their next president, with a resounding 66% of the vote. His victory over his run-off opponent, the far-right nationalist Marine Le Pen, was unambiguous, and carried a message that resonated well beyond France. It was an emphatic demonstration that it is possible to fashion a pro-European centrist response to populism and nationalism, and win. + +On election night, framed by an arch of the historic Louvre Palace, Mr Macron took his first solitary steps as president-elect, accompanied by Beethoven’s “Ode to Joy”, the European Union’s adopted anthem. He told a crowd of flag-waving supporters that the task was “immense”, but that he would restore “hope and confidence” to France. In a melancholic country, battered by recent terrorist attacks, Mr Macron seemed to embody the triumph of optimism. “Everybody told us it was impossible,” he declared. “But they didn’t know France.” + +To understand how Mr Macron might confront the challenges in his path, it is useful to trace his route to power and the ideas that shaped him along the way. His ascent to the Elysée Palace has defied all the rules of France’s Fifth Republic, established by Charles de Gaulle in 1958 after the chronic instability of the previous regime. Since then, the French have preferred presidents who bear serial electoral battle scars. François Mitterrand, a Socialist, and Jacques Chirac, a Gaullist, were both elected at their third try. Mr Hollande and his predecessor, Nicolas Sarkozy, spent many years as parliamentary deputies. + +Mr Macron, by contrast, has bypassed all the usual routes, leaving former presidents and prime ministers in his wake. He was helped by a good dose of luck, deciding to run at a time when the Socialists and Republicans both adopted party primaries. Each threw up a candidate more in tune with his party’s extreme than the centre, thus opening up space in between. The Republicans’ nominee, François Fillon, who was at first favoured to win the presidency, tumbled in the polls after a parliamentary-payroll scandal broke. In some ways, Mr Macron’s audacious bid for the top job was in tune with de Gaulle, who conceived the directly elected presidency in 1965 as a way to return politics from the parties to the people. + +Yet Mr Macron was not simply lucky; he created his own opportunities. He quit government last summer in time to put distance between himself and the unpopular Mr Hollande. He announced his presidential bid before the sitting president had decided whether to seek re-election, thus squeezing Mr Hollande’s options. Mr Macron displayed fearsome self-belief, a good grasp of the prevailing mood of disillusion, and a canny understanding of both the political forces in France and the disruptive possibilities of the internet. “There are moments of great acceleration of history,” he said earlier this year, “and I think that we are living through one of them.” + +The thinking + +Shortly before dawn on February 15th 2015, the National Assembly wrapped up an all-night sitting. As economy minister, Mr Macron had spent the previous two weeks in the chamber trying to convince deputies of the merits of his draft bill to deregulate shopping hours and protected professions. In total, he devoted 18 hours to pleading his case. It might have worked, a number of deputies from both major parties told him, had party bosses not tied their hands. This was the moment, says Benjamin Griveaux, a co-founder of En Marche!, that he realised that “internal party tensions were unsustainable.” To get France moving, a political realignment was needed. + +As Mr Macron was increasingly side-lined within government for his outspokenness, he began to work out how to do it. “He doesn’t come to politics through power structures, but through ideas,” says Jacques Delpla, an economist at the Toulouse School of Economics who worked with him on an economic committee in 2007. A philosophy graduate who spent much time as minister hanging out with the tech startup crowd, Mr Macron thought hard about how the state needs to adapt to the future world of work, and how the party system needs to change to make this happen. + +Mr Macron’s underlying thesis is that the European welfare state’s model of collective rights, grounded in unions and permanent employees, is an anachronism in an increasingly freelance workplace. Such rights apply to ever-fewer workers; those who enjoy them tend to “job-squat” for fear of losing benefits, and they discourage companies from hiring. The model needs to shift to one based on individual rights, so as to protect workers rather than jobs and encourage job creation. The French left, with its romanticised history of collective struggle, is particularly ill-suited to this fight. But on both sides, party machines exist mainly to defend vested interests. “The biggest challenges facing this country and Europe—geopolitical threats and terrorism, the digital economy, the environment—are not those that have structured the left and the right,” he told The Economist last year. + +Tired confrontational politics, Mr Macron argued, was also hampering the project of shaping a “progressive” political bulwark against populism. Born in a provincial family of doctors, the young Mr Macron was on an internship in Nigeria in 2002, while studying at the elite Ecole Nationale d’Administration (ENA), when Ms Le Pen’s father, Jean-Marie Le Pen, took the far-right National Front (FN) into the presidential election’s run-off round (he lost to Mr Chirac). French parties failed to draw the lessons from that shock, he wrote in “Révolution”, a book published last year, and have been “sleepwalking” ever since. + +Instead of trying to combat the FN’s ideas, Mr Macron concluded, politicians had focused on shutting them out of power. In 2007 Mr Sarkozy kept Mr Le Pen out of the run-off, but only by seizing hold of identity politics to court FN voters. For its part, the left resorted to scaremongering. Instead, the French needed to hear the unfashionable case for something positive: an open, tolerant, pro-European society, based on supporting private enterprise rather than crushing it, and creating paths out of poverty for globalisation’s victims. + + + +During the campaign, Mr Macron hammered this point home, refusing to make facile promises he knew he could not keep. At one tense point, the candidate took his argument to a hostile, FN-supporting picket line at a factory in Amiens. He achieved the improbable exploit of getting supporters to wave European flags, as they did at his last rally, in the medieval town of Albi, in the south-west. “We don’t want France to be shut off,” said Pauline, a law student there: “We want to be part of Europe.” In an explosive televised debate that exposed her weakness, Ms Le Pen accused Mr Macron of being the candidate of “savage globalisation”; he retorted that she was the “high priestess of fear”. + +Nobody doubted Mr Macron’s intellectual capacities. His penchant for theoretical abstraction and erudite vocabulary was mocked during the campaign; one phrase he used during the TV debate, poudre de perlimpinpin (“snake oil”), was comically remixed as a YouTube video. It was far less obvious, though, that Mr Macron would be able to convert his thinking into an electoral war machine able to torpedo French party politics. His presidential bid resembled a political version of the startups he got to know so well: high-risk, low-budget, capable of total disruption but also total failure. The chaotic culture at En Marche! often felt like a startup, too. Out went the ministerial limousine, neckties and French bureaucratese; in came second-class train travel, sweatshirts and irritating Franglais terms like “un helper”. + +The doing + +Many political veterans sneered. But En Marche! benefited from an unusual combination of a forceful personality at the top, around whom all decisions turned, and a decentralised and enthusiastic grass-roots organisation, trusted to dream up events, and get on with leafleting and door-knocking. Sporting T-shirts emblazoned with the handwritten En Marche! logo, these volunteers became the fresh local faces of a new movement that nobody could quite believe was taking off. In 13 months, it signed up over 300,000 members, more than twice as many as the entire Socialist Party. + +If Mr Macron sought to blast apart the political structures blocking France, his assault was, all the same, not that of a pure outsider. After graduating from ENA, which has trained three of the past five presidents, he shed his provincialism and used his charm to gain access to the networks of the Paris elite. After a spell as an investment banker, he was a staffer to Mr Hollande for two years. With little need for sleep, and a habit of lingering late with dinner guests, he has an uncommon flair for making people feel he is interested in them. “Macron”, says one former colleague, “is a networking machine.” + +Such links helped to open wallets as well as doors. With strict French rules capping individual donations at €7,500 ($8,200) per donor, and no advance public subsidy, Mr Macron cast his net wide, collecting donations of €10 online as well as bigger cheques at parquet-floored dinner parties in Paris. Today, those backing him come from overlapping circles. Many on Mr Macron’s campaign team are young former advisers from the economy ministry. Thinkers include Jean Pisani-Ferry, an economist who co-ordinated his campaign programme, and Marc Ferracci, a liberal labour-market economist. Business supporters include Xavier Niel, a start-up billionaire, and Stéphane Boujnah, head of Euronext, a securities exchange. + +The incoming president has some parliamentary support, too, mostly from early Socialist defectors such as Richard Ferrand, a deputy from Brittany, and Gérard Collomb, a senator and mayor of Lyon. He has also attracted centrists such as François Bayrou, Jean-Louis Borloo and Sylvie Goulard, a member of the European Parliament. The question is whether, at legislative elections in June, he can build this thin base into a stable governing majority. The French constitution grants the president huge power, but he still needs the backing of parliament to pass laws. + +Joie de Louvre + + + +This support is crucial to Mr Macron’s programme. Some of his plans are reformist: lowering corporate tax over five years from 33% to 25%; unifying the country’s 35 public pension systems; cutting public spending from 57% of GDP to 52%; and trimming 120,000 civil-service jobs. Others are costly but uncontroversial, such as shrinking primary-school classes in underperforming schools. Yet his flagship legislation, to loosen the labour market, could be explosive. + +Its objective is to give firms far greater say in organising working time and pay, granting employees the right to hold a referendum if their unions resist. He wants to cap redundancy payments awarded in labour courts. And he plans to take the unemployment-benefit system and the €30bn training budget, both financed and jointly run by unions and employers, out of their hands. This would let the government tighten benefit rules, and focus training on those out of work rather than the system’s insiders. Mr Macron knows that with the unemployment rate at 10% (and 25% for those under 25), the economy must create jobs, or populism will prosper. + +Assembly needed + +Mr Macron’s team insists that the élan of his presidential victory will help to secure him a majority, and refuses to talk about coalitions. En Marche! will field candidates in each of the 577 constituencies, under a new name, La République en Marche! (The Republic on the Move!). Half of these, to be unveiled on May 11th, will be newcomers to politics: businessmen, teachers, sports organisers and the like. Other politicians could defect to the new grouping. The Socialist Party is starting to bleed deputies. Manuel Valls, until recently prime minister, described his party as “dead”, and announced that he would stand instead for En Marche!—if it would have him. One projection suggests the Socialists could lose 75% of their seats. + +Matters are more complicated for the Republicans. Many deputies feel that they were robbed of their “turn” at the presidency, after five years under a Socialist, and are in no mood to co-operate. “Macron was primarily elected by default,” huffs one. François Baroin, a former finance minister leading the Republicans’ parliamentary campaign, wants to build a strong opposition in order to curb Mr Macron’s power. Others are less sure. Bruno Le Maire, a former Europe minister, says that he could back a majority under Mr Macron. + +The greatest coup would be to peel away a symbolic Republican figure as prime minister, as a way of balancing Mr Macron’s big ex-Socialist contingent. Targets include Xavier Bertrand, a regional president, or even Edouard Philippe, a young deputy close to Alain Juppé, a centre-right former prime minister. Each would have to take a huge political gamble, but could unlock further defections from the centre-right. An alternative would be an existing supporter, such as Ms Goulard, a fluent English- and German-speaker who has a reputation as a smart negotiator. An announcement is expected on May 15th, the day after Mr Macron’s inauguration. + +In the coming days, Mr Macron will begin to take in what he has achieved, but also the burden of the task ahead. He has won a historic victory, but some voters on the far left and the centre-right backed him only to keep out Ms Le Pen. He will need to speak to the 11m voters who backed her, as well as the record 4m who cast blank or spoiled votes in protest at both. Many of these angry voters are from small towns and rural parts that have lost jobs and services, and see no benign side to the forces of globalisation that Mr Macron defends. Ms Le Pen’s FN currently has only two parliamentary deputies, one of them her niece, Marion Maréchal-Le Pen, who announced this week that she was stepping down from politics; but it will have many more in June. The far-left party headed by Jean-Luc Mélenchon’s will also try to make life difficult for the president they regard as the spokesman of global finance. + +The management of change in France, though, is usually less about parliamentary arithmetic than public order. The street is the theatre of choice for French protest, and it has repeatedly defeated efforts by governments of the left and the right to loosen labour laws over the past 20 years. Only last year, Mr Valls had to force through by decree an enfeebled version of his labour reforms, after trade unions, notably the Confédération Générale du Travail (CGT), organised blockades of oil depots, refineries and transport, and demonstrators took to the streets. + +In Albi last week, outside a bottle factory, a muscular group of unionists loitering in the car park awaiting Mr Macron’s visit were sceptical. “If he tries to bring in flexibility, we’ll be in the street,” declared Cyril Cereza, wearing the CGT’s red-and-yellow jacket. These were supporters of Mr Mélenchon, with no sympathy for the banker from Paris. But when Mr Macron arrived and spoke with them, he was firm. “It’s not the CGT that’s going to run the country,” he declared afterwards. The president-elect is “ready for his Thatcher moment”, argues Mathieu Laine, a liberal intellectual and businessman, and friend of Mr Macron’s. Mr Ferracci, who was best man at Mr Macron’s wedding, says that he has “an incredible capacity to resist, including physical”. Less generous pundits worry that he is a novice with no idea of what is about to hit him. + +Mr Macron has already entered history. He inherits not only a divided country, but the heavy weight of expectations. The French at times seem to indulge their ennui as an emblem of national identity. Philosophical doubt, and the impossibility of the ideal, form part of the national character. But in recent years pessimism and negativity have taken on a destructive edge. Michel Houellebecq, a French novelist known for his own nihilism, put it well this week when he said that Mr Macron represented “group therapy” for the nation: a sort of collective self-medicated optimism. France, which is still living under a state of emergency, badly needs such a dose. The task is demanding, and the chances of instant recovery do not look too promising. Then again, neither did the election of the remarkable Mr Macron. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21721942-his-presidential-campaign-was-long-shot-his-next-challenge-may-be-even-harder-emmanuel-macrons/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Miss underestimated + +How polls undercount centrists, not populists + + +The polling error in the French election was bigger than in the Brexit referendum + +May 13th 2017 + + + + + +MARINE LE PEN trailed Emmanuel Macron in run-off polls by around 20 percentage points for the entire campaign. Nonetheless, punters and pundits, humbled by populist surprises in Britain and America, gave her a meaningful chance of winning. At first glance, Mr Macron’s landslide seems a win for pollsters. In fact, they underestimated his support by four points—a larger error than in Britain’s Brexit vote or Donald Trump’s election. Because the error reinforced the expected result rather than upending it, it has drawn less attention. It may reflect voters who abandoned Ms Le Pen the day before the election, when polls were banned, following her weak debate and a plagiarism scandal. But the French run-off further undermines the notion that pollsters miss “shy populists”. Nate Silver, a data journalist, notes that nationalists have fallen short of polling averages in the last six European elections. Shy globalists, anyone? + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21721943-polling-error-french-election-was-bigger-brexit-referendum-how-polls/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Shady island + +Corruption allegations trouble tiny Malta + + +A blogger alleges a $1m payoff from Azerbaijan + +May 11th 2017 + + + + + +EVERY six months, one of the European Union’s member countries gets to take its turn as president of its council of ministers, chairing meetings in Brussels, negotiating with the European Parliament and so on. For the union’s smaller members, this is both an honour and an onerous obligation, requiring the government’s full attention. So it is surprising to find the EU’s tiniest state, Malta, which is in the middle of its stint as president, plunged into an early election campaign. “Suddenly, it’s panic stations and they seem to have completely forgotten the European presidency,” says Daphne Caruana Galizia, an anti-government blogger. + +Malta’s prime minister, Joseph Muscat, has given his island steady economic growth (5% last year), record-low unemployment and its first budget surplus in 35 years. Small wonder that his Labour Party is favoured to win. However, Mr Muscat called the vote, scheduled for June 3rd, after a stream of corruption allegations stemming from the release last year of the so-called Panama Papers: more than 11m files belonging to one of the world’s biggest offshore law firms, Mossack Fonseca. + + + +None of the claims—many of them made by Ms Caruana Galizia—directly involves Mr Muscat. But the most recent concerns his wife, Michelle Muscat, allegedly the beneficial owner of a company which was paid more than $1m by a firm belonging to Leyla Aliyeva, the daughter of the president of Azerbaijan. Mr Muscat’s spokesman calls this “an outright lie”. Azerbaijan has important links to Malta, including a long-term agreement to supply gas, and the Aliyev family is said to have used Malta for financial transactions. Azerbaijan’s links to European institutions are already under scrutiny in Milan, where a prosecutor is investigating allegations that it paid a €2m ($2.2m) bribe to an Italian member of the parliamentary assembly of the Council of Europe, which is a separate body from the EU. + +Mr Muscat has asked the courts to appoint a magistrate to investigate the accusation against his wife. “My duty, however, is not just to protect myself but also to safeguard my country,” he said while announcing the election, “and I will not tolerate a situation where jobs are lost because of uncertainty.” He also vowed to sue Ms Caruana Galizia, who says she has already received more than 20 writs issued by various members of the government or people close to it. + +The government’s reaction has arguably been every bit as worrying as the claims made against it. In February, a minister secured a warrant to freeze Ms Caruana Galizia’s bank account after she claimed that he had been seen in a German brothel. He denies it. Days later, the government tabled a bill to force Maltese news websites like Ms Caruana Galizia’s to register with the authorities; after protests, that provision was withdrawn. + +Ken Mifsud Bonnici, a legal adviser to the European Commission, wrote that Malta was facing a “veritable collapse of the rule of law”. At the root of the problem, he argued, was a constitution (bequeathed by Britain, Malta’s former colonial ruler) that hands vast powers to the executive, without the checks normal in a democracy. For example, only the police, who answer to political authorities, have the power to initiate investigations, “so police investigations against the government or without its consent are impossible”. On May 7th, the Sunday Times of Malta reported that the island’s financial watchdog had told the police it had a “reasonable suspicion” that the prime minister’s right-hand man, Keith Schembri, had been involved in money-laundering. Yet the claim, which Mr Schembri denies, was not investigated, the paper said. + +Does any of this matter beyond little Malta? If Mr Mifsud Bonnici is right, it does: whichever party is in office, the island could be used by dubious interests as a private back door into the EU. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21721922-blogger-alleges-1m-payoff-azerbaijan-corruption-allegations-trouble-tiny-malta/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Lingua franca + +Britain is leaving the EU, but its language will stay + + +Despite Jean-Claude Juncker’s joke, Anglophones should rest easy + +May 13th 2017 + + + + + +“SLOWLY but surely, English is losing importance,” quipped Jean-Claude Juncker, the president of the European Commission, before switching to French for a speech on May 5th. Is this true? Not really, and it seems not to have been intended as seriously as easily offended British headline-writers took it. After all, Mr Juncker, who is known for going off-script in speeches, delivered his barb in English, and the audience laughed. + +In any case, speakers of la langue de Shakespeare have little to worry about. The European Union has 24 official languages, three of them considered “working languages”: French, German and English. Eurocrats are polyglots, often able to speak all three tongues, plus another of their own. Mr Juncker may be right that in the halls of the EU’s institutions, English will be heard somewhat less after Brexit, simply because of the exodus of a big group of Anglophones. But English is not just British: it is also an official language in Ireland and Malta. More important, the three enlargements of the EU since 2004 have decisively shifted the balance in Brussels from French towards English. There is no consensus for going back, still less for switching to German. + + + +Besides, English is putting down deep roots among ordinary people on the continent. For all of France’s notorious linguistic nationalism, it is telling that François Hollande, the outgoing president, was mocked on Le Petit Journal, a news and entertainment show, for his ropey English. Emmanuel Macron, a generation younger, is fluent. Fully 66% of EU citizens speak another language, a number that is growing steadily. Eurostat, the EU’s statistics agency, does not break those figures down by language spoken, but it is easy to extrapolate from what is studied in schools. Among students at lower secondary level outside Britain, 97% are learning English. Only 34% are studying French and 23% German. In primary school 79% of students are already learning English, against just 4% for French. Some countries, such as Denmark, begin English in the very first year. + +A language increases in value with the number of people able to speak it, so tongues that are valuable tend to become more so over time. And language knowledge takes a long time to acquire; societies do not quickly change the languages they speak. The trend of English in Europe began well before the vote for Brexit and is unlikely to dissipate, even “slowly but surely”. Mr Juncker might better have said that although Britain, unfortunately, is exiting the EU, its former partners will always remember the linguistic gift it is leaving behind. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21721861-despite-jean-claude-junckers-joke-anglophones-should-rest-easy-britain-leaving-eu-its/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Who loves EU, baby + +Europe’s anti-nationalist backlash + + +Young, educated Europeans are starting to show their affection for the EU + +May 11th 2017 | BERLIN + + + + + +“AU NOM de l’amitié” (“In the name of friendship”), proclaimed banners at the weekly Pulse of Europe demonstration in a Berlin square, a week before France’s presidential election. Edith Piaf songs burbled from giant speakers. Amid a sea of blue-and-yellow European Union flags, the 1,500 marchers gushed about the European project. “I love Europe, it’s my home,” said Oli. “I want my children and grandchildren to experience, study and travel in Europe,” added Sabine, who was attending her fifth Pulse of Europe event. Then they all belted out the “Ode to Joy”, the EU’s official anthem. + +There is nothing novel about support for the EU. In most European countries the political mainstream backs the union and spouts nice words about continental collaboration. But lately something different has been going on: a surge, in certain quarters, of emotional, flag-waving, integrationist Europhilia. The Pulse of Europe, which started in Frankfurt in November and now holds regular rallies in some 120 cities across the continent, is one manifestation. Another is the success of a number of emphatically pro-European political outfits, the most striking example being Emmanuel Macron’s victory in France. + + + +Such political groups fall into three categories. The first consists of Mr Macron and Alexander van der Bellen, the former Green leader who became Austria’s president in January. Both triumphed in two-round electoral systems in which the mainstream centre-right and centre-left candidates were knocked out, leaving a nationalist (Marine Le Pen in France, Norbert Hofer in Austria) to face a pro-European liberal. Neither Mr Macron nor Mr Van der Bellen won an unambiguous mandate; many of their voters simply opposed the far-right alternative. But both are part of “a steadily building trend of election victories for the idea of Europe”, says Josef Lentsch, a political scientist in Vienna. + +Second, in parliamentary systems pro-European parties have been making gains. At the Dutch election in March the two big winners were the liberal-federalist D66 party and GreenLeft, which rose from 8% to 12% and 2% to 9% respectively. “Being overtly pro-EU is no longer something to be ashamed of,” says Michiel van Hulten of the London School of Economics. + +Finland’s most emphatically pro-EU party, the Green League, rose from its usual score of around 8% to 12% in local elections last month. In Sweden, the liberal Centre Party, which has recently sharpened its anti-nationalist identity, is polling near 12%, double its result in the last election. In Britain the Liberal Democrats have enjoyed a modest revival as anti-Brexiteers, moving into double digits in polls. Both Poland and Spain have spawned new parties that wear their pro-Europeanism on their sleeve: Nowoczesna, which soared last year before being consumed by scandal; and Ciudadanos, which has hit new poll highs of 17% in recent weeks. + +Third are extra-parliamentary campaign groups. Apart from Pulse of Europe, other movements have brought flag-waving pro-Europeans into the streets: in protests against the forced closure of the Central European University in Hungary; in rallies against the Eurosceptic government in Poland; and in the anti-Brexit movement in Britain. + +Who is gravitating to this sort of politics? Supporters are often young, urban and well educated—the political wing of the “Erasmus generation” of cross-border European students. In Austria, for example, 58% of those aged under 29 backed Mr Van der Bellen. But Mr Macron’s vote was evenly spread across age groups, and the Pulse of Europe crowds are similarly multi-generational. Ciudadanos voters are more likely to have degrees than supporters of any other Spanish party. In the Dutch election, if only university polling stations had counted, D66 and GreenLeft would have had a majority. + +The new Europhilia is partly a backlash against the wave of nationalism evinced in the Brexit vote and Donald Trump’s victory in America. There is also anger at mainstream parties who adopt nationalist and populist positions. In Sweden the Centre Party has pointedly attacked the centre-right Moderates for flirting with the far right. Mr Macron has attacked his own former party, the Socialists, for caving in to nationalist proposals to revoke the French citizenship of dual citizens convicted of terrorism. Jesse Klaver of GreenLeft urges fellow politicians: “Be pro-European…You can stop populism.” + +Asked about their success, Guillaume Liegey, one of the early brains behind Mr Macron’s campaign, and Martin Radjaby, Mr Van der Bellen’s campaign manager, offer similar recipes: sophisticated targeting of voters, door-to-door campaigning and a progressive sort of patriotism. Indeed, the Europhiles have learned some lessons from their populist nemeses. Like Ms Le Pen and Mr Hofer, they have adopted techniques from their counterparts in other countries, and ratcheted up pressure on mainstream parties to back their positions. + +Even if small Europhile groups do not win elections, they can influence bigger parties. In Poland the Civic Platform (PO) party has moved into space opened up by Nowoczesna, adopting the EU as a symbol of opposition to the government. When Donald Tusk, European Council president and former PO leader, arrived in Warsaw on April 19th he was greeted at the train station by crowds brandishing EU flags. Martin Schulz, the centre-left candidate for German chancellor, has aligned himself with the Pulse of Europe movement. One lesson of Europe’s populist wave is that small but emphatic groups can change the agenda. Along with Mr Macron’s win, that should give Europhiles hope. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21721915-young-educated-europeans-are-starting-show-their-affection-eu-europes-anti-nationalist/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Charlemagne + +Can Emmanuel Macron revive the Franco-German relationship? + + +Getting Europe back to speed will be no easy task + +May 11th 2017 + + + + + +LIKE all the best clichés, the notion that the European Union is driven by a Franco-German “locomotive” is grounded in truth. From the founding of the European Coal and Steel Community to the creation of the euro, almost all the signature projects of post-war Europe have emerged from Paris and Berlin. The compromises forged between two former foes with competing political and economic visions have proved powerful enough to bring much of the rest of the continent along with them. Lately, though, the French part of the engine has run out of steam, and the European train has been idling. Can Emmanuel Macron, the young reformer who won France’s presidency wrapped in the EU flag, shunt it back on to the rails? + +The grandest of Mr Macron’s many ideas involve fixing what he calls the “half-pregnancy” of Europe’s single currency. He wants intra-euro-zone transfers and investment, funded from a common budget and administered by fresh institutions like a finance ministry and parliament. But Germany has long looked askance at such gouvernement économique. As the two countries’ economic performance has diverged, it has become ever harder for French ideas to find an audience in Berlin. In 2012 Mr Macron’s newly minted predecessor (and former boss), François Hollande, took his anti-austerity campaign pledge to Angela Merkel and returned to Paris with a flea in his ear. Soon enough he was executing endless U-turns. He leaves office on May 14th with historically low approval ratings, an example of what not to do. + + + +Mr Macron can expect a better hearing on his own visit to Berlin, due later this month. On two ground-softening trips to Germany earlier this year, he promised to tackle problems at home before making demands of his neighbours. “I propose to restore the credibility of France in the eyes of the Germans,” he said in March. “We need it because the future of Europe is at stake.” His priorities chime with time-worn German gripes: reinvigorating France’s hidebound labour market (joblessness stands at 10%, well over twice the German rate) and shrinking its bloated state. + +Mr Macron’s campaign vows to shake up the more torpid parts of France’s economy secured him a mandate to reform. But Germans have seen countless such French planscome and go. For all Mr Macron’s fresh-faced appeal, he will have his work cut out in a country that is in a decidedly surly mood. The parliament that emerges after next month’s legislative elections may not be eager to help the new president impose his will on France. + +It is just as well that Mr Macron will face distractions at home, for Germany is gearing up for its own election in September, and events in France have begun to colour the campaign. Senior figures in Mrs Merkel’s Christian Democratic Union (CDU), such as Wolfgang Schäuble, the flinty finance minister, have already dismissed Mr Macron’s euro-zone proposals. But their Social Democrat (SPD) coalition partners, backed by parts of the press, like Mr Macron’s ideas to boost Europe’s (and Germany’s) woeful investment rate. A strong SPD showing in September might mean Mr Macron’s proposals find friendlier ears in Berlin. + +But the hype surrounding Mr Macron’s extraordinary campaign has too quickly spilled into grand talk of a reinvention of the euro zone. There is little appetite anywhere in Europe for the treaty changes that a major currency revamp would require. In Berlin it is not only the coming election that stays politicians’ hands. Many Germans think their contributions to euro-zone bail-outs over the years have shown plenty of solidarity already. Mr Schäuble’s finance ministry bitterly resists anything that smacks of a “transfer union” or debt mutualisation. It will be hard enough for France to win German support on smaller matters, such as completing the EU’s banking union. “I’m sceptical about institutional proposals,” says Norbert Röttgen, a senior MP for the CDU . “I’d concentrate on practical steps that yield results.” + +Similar noises emerge from some voices close to Mr Macron. “Our first priority is to be pragmatic,” says Sylvie Goulard, a French MEP tipped for a top job when the new president names his government next week. “Can you really explain to an unemployed man that it’s time to change the euro-zone structure?” Both Mr Röttgen and Ms Goulard speak of deepening co-operation on security matters; some German officials acknowledge that broadening the conversation to defence might be the only way for them to move, eventually, on economics. Expect also joint proposals on advancing the EU’s digital single market, one of Mr Macron’s stated priorities for Europe. + +All hail Emmangela + +A renewed Franco-German partnership would leave Europe better placed to handle future crises. But it would also help relieve Germany of the burden of hegemony. Its officials are weary of explaining that they have no wish to lead alone (suggestions that Donald Trump’s election left Mrs Merkel the ruler of the free world elicit universal eye-rolls in Berlin). With Italy flailing, Britain Brexiting and Poland in the grip of illiberal democracy, a restoration of the bond with France would come at an auspicious time for Germany. It would also weaken resistance in other EU countries that have grown resentful of its dominance. + +That is good news for Germany—but Mr Macron may in time call Berlin’s bluff. Germany has long said it will consent to reform in the euro zone if other countries get their houses in order first. That is precisely what Mr Macron has promised to do. In rejecting the far-right, anti-EU Marine Le Pen in favour of a pro-European dedicated to restoring his country’s self-confidence and renewing ties with Germany, French voters could have been following a script written across the Rhine. That leaves Germany with a stake in Mr Macron’s success, but also the obligation to give his ideas a hearing. Some of them will be uncomfortable. But if a little German self-examination is the price of Mr Macron’s victory, Europe will be all the better for it. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21721913-getting-europe-back-speed-will-be-no-easy-task-can-emmanuel-macron-revive-franco-german/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Britain + + +Scotland: Uniting the clans [Fri, 12 May 07:08] + +Welsh politics: Independents’ day [Fri, 12 May 07:08] + +Election predictions: Landslide dreaming [Fri, 12 May 07:08] + +The campaigns: Speakers’ Corner [Fri, 12 May 07:08] + +The Liberal Democrats: Going west [Fri, 12 May 07:08] + +Scottish drinking: A dram-atic fall [Fri, 12 May 07:08] + +Winemaking: On ice [Fri, 12 May 07:08] + +Bagehot: The Marxist moment [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Uniting the clans + +Independence and Brexit have realigned Scots behind the Tories + + +The twin referendums have shaken up the electorate. The Conservatives are making the most of it + +May 11th 2017 | STONEHAVEN + + + + + +ON THE High Street in Stonehaven, a town just south of Aberdeen, David Kelly checks no one can hear him. “What do I think of the Conservatives?” whispers the 72-year-old. “I love them. They’re the only option around these days.” + +In recent years even hushed ardour for the Tories has been rare in Scotland. But on June 8th the party could win its highest share of the Scottish vote in a general election since 1979. It more than doubled its tally of council seats in local elections on May 4th, finishing second to the Scottish National Party (SNP). Polls suggest that next month up to 30% of Scottish voters could opt for the Conservatives. + + + +It would be a triumph for a party that in the general election of 2015 won a single Scottish seat and just 15% of the vote. But in the aftermath of the referendum on independence in 2014, seismic shifts are everyday stuff. A Conservative resurgence is the latest effect of that plebiscite. It may yet determine whether there is a second one. + +The revival has been a long time coming. From the 1920s to the late 1950s, the Unionist Party was the dominant force in Scottish politics. It stood for Empire, Protestantism and the United Kingdom. But as secularism spread and imperial Britain faded, support for the Scottish Conservatives, as the party became after it was absorbed into the British Tories in 1965, shrank. Tabloids portrayed Tories as pheasant-shooting, anglicised toffs. In 1955 the Unionist Party and its allies won half the vote. In October 1974 the Scottish Conservatives won less than a quarter. + +Margaret Thatcher lost the party more votes, as most Scots felt they had not consented to her economic policies. Support for devolution grew, paving the way for the opening of the Scottish Parliament in 1999, which in turn expedited the rise of the SNP. + +Conservative decline changed the electoral geography. Forerunners of the Liberal Democrats picked up seats in the Highlands and islands. In the north-east voters swapped the Tories for the SNP. But Labour was the main beneficiary of Conservative woes, winning the most Scottish votes in every general election from 1964 to 2010. + + + +The independence referendum of 2014 changed all that. In the general election of 2015 Labour was reduced from 41 seats to only one, as supporters of independence coalesced around the SNP. + +Now opponents of independence are coming together, in a few places to the benefit of the Lib Dems, but mostly around the Tories. Most of the party’s gains in polls have come from unionists fleeing Labour, which also opposes independence but with less conviction. In this month’s local elections the Tories won 25% of first-preference votes, up from 13% in 2012; Labour dropped from 31% to 21%. In Stonehaven Roy Skene, an oil engineer, explains that he “doesn’t see what good independence would do”, adding that he can no longer trust Labour to resist the SNP. + +Ruth Davidson (pictured) has made it easier for Labour émigrés. The leader of the Scottish Conservatives embodies her party’s traditions (she is a Christian, a staunch unionist and served in the Territorial Army) and transcends them (she is gay, socially liberal and does not own a castle). + +The SNP remains pre-eminent but has slipped in the polls. In the local elections it did badly where it will be vulnerable to the Tories on June 8th. In four areas of the north-east—Aberdeenshire, Angus, Moray, and Perth and Kinross—the SNP’s share of the vote fell by 8-12 percentage points. + +One likely reason for this pattern is the EU referendum. Scotland voted 62-38 to Remain. In no council area was there a majority for Leave. But Moray came closest, with 49.9%. Three of the five most Eurosceptic areas were in the north-east. Leave voters are thought to account for most of the drop in support for the SNP, which backed Remain. Most are defecting to the Tories. + +On the ground the SNP is nervous. Its Aberdeenshire candidates have rushed out a plan to open a railway line. In Moray, where Angus Robertson, the party’s leader in Westminster, is under threat from the Tories, the pro-independence Greens have stood down to help his chances. + +The SNP’s support in Scotland’s central belt means it will still have the vast majority of seats after June 8th. But the shifts suggest that Nicola Sturgeon, the party’s leader, has misjudged the effects of the EU referendum. Expecting it to boost support for independence, she has called for a second plebiscite on secession. In fact, the net effect of the EU vote has been nil (see chart). Some Remainers who voted No to independence in 2014 would now vote Yes, seeing secession from Britain as a way back into the EU. But a similar number of Leavers who voted Yes in 2014 have switched to No, in order to protect Brexit. One Aberdeenshire fisherman says he voted for independence to get a better deal on EU fishing quotas, but now prefers Brexit, which he hopes will mean no quotas at all. + + + +The SNP believes it has demography on its side; less than a third of Scots aged over 70 voted for independence. The party also expects frustration with the union to grow after Brexit actually happens, in 2019. And for all Ms Davidson’s ribald congeniality, she still has work to do to convince Scots that she could become first minister. + +Fortunately for her, that is a problem for the next Scottish election, in 2021. For now, after a decade of huge advances the SNP is set to take a small step back. Support for independence remains steady. But the zeal of the past few years is abating. At the Waterfront Café in Stonehaven, Patricia Speirs worries that “the timing for independence has been and gone”. The local economy is struggling. Her friends are voting Conservative. “It’s very sad,” she says. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721923-twin-referendums-have-shaken-up-electorate-conservatives-are-making-most/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Independents’ day + +How independent candidates became Wales’s main local opposition + + +Frustration with Labour and antipathy towards every other party has given a boost to free agents + +May 11th 2017 | MERTHYR TYDFIL + + + + + +A BEAMING Tanya Skinner still can’t quite believe it. In local elections on May 4th she scooped enough votes in her ward to topple the head of the Labour council in Merthyr Tydfil in south Wales. She has become an instant local celebrity. + +The result was embarrassing for Labour. Merthyr is virtually synonymous with the party; Keir Hardie, Labour’s founder, was the local MP. Ms Skinner’s victory contributed to Labour’s losing control of the council. + + + +Her result also showed that independent politics continues to flourish in Wales, in contrast to most of Britain, where parties dominate. Ms Skinner and 15 other successful independent candidates will run Merthyr council, barring an upset in three more seats that are due to be contested in June. Independents also gained control of the nearby council of Blaenau Gwent, another former Labour stronghold, once represented in Parliament by Aneurin Bevan, the architect of the National Health Service, and Michael Foot, a former Labour leader. In all, independents won 322 of the 1,159 seats that were contested in Wales, second only to Labour and well ahead of a resurgent Conservative Party, which won 184. In England, where 2,370 seats were contested, independents won just 162. + +Independents have historically done well at a local level in Wales, especially in rural and western areas such as Pembrokeshire, where independents retained control of the council on May 4th. They campaign squarely on local issues, and although they rarely combine to form durable political blocs, they do vote as coalitions on some policies. + +Independents have been given a recent boost by Labour’s unpopularity. Such is the loyalty to Labour in large swathes of Wales that even if people want to give it a bloody nose, they are “never quite desperate enough to fall in love with another party,” says Roger Scully, a political scientist at Cardiff University. Instead, they vote for candidates who belong to no party. + +Ms Skinner, who describes herself as a socialist, joined Labour to support its leader, Jeremy Corbyn, but was turned off the Merthyr branch by what she calls the “old boys’ club” that runs it. Lisa Mytton, an independent who is now vying to lead the Merthyr council, also testifies to her strong Labour background. About half of Merthyr’s independents are ex-Labour supporters who were put off at one time or another by its local machine. + +The profusion of independents also owes something to the animosity towards the Tories in Wales. The loss of jobs in the local coalmining and steelmaking industries in the 1980s is intimately associated with Margaret Thatcher. Thus, as one Tory official concedes, the party has an image problem. Some independents in rural Powys, for instance, are conservative by inclination but won’t use the party label. + +The official Tory party put up a record 628 candidates in Wales on May 4th. But still, logistically the party barely operates in many parts. Even this time, with the party buoyant in the national polls, it did not compete much in places like Merthyr. + +In some places the lack of competition is unhealthy. Almost 100 candidates, 7% of the total, were returned unopposed. The first-past-the-post voting system makes it especially hard for challengers to break through (Scotland, by contrast, uses a form of proportional representation, which helps small parties). Wales’s many independents enliven its democracy, but they are also a symptom of its sickliness. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721921-frustration-labour-and-antipathy-towards-every-other-party-has-given-boost-free/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Reading the electoral runes + +Predictions of a Tory landslide may be premature + + +Spectacular polls and local election results will not necessarily translate to a vast majority + +May 13th 2017 + + + + + +THE local elections on May 4th were good for Theresa May and bad for everyone else. The Conservatives recorded the best performance of any party in national government for over 40 years, gaining a net 563 seats and winning control of 11 councils, as well as new mayoralties in the West Midlands and Tees Valley. Labour did badly, with net losses of 382 seats and seven councils, although at least the party convincingly won the mayors’ races in Liverpool and Manchester. The Liberal Democrats lost a net 42 seats. And the UK Independence Party (UKIP) was almost wiped out, losing 145 seats and ending up with but one lonely new councillor. + +Based on these results John Curtice of Strathclyde University projects national vote shares of 38% for the Tories, 27% for Labour, 18% for the Lib Dems and 5% for UKIP. These shares are much closer than the latest opinion polls, which give the Conservatives a whopping lead of as much as 20 points. Looking at the local results and the poll numbers, some pundits reckon Mrs May is heading for a landslide victory on June 8th, with a majority in Parliament of 140 seats or more. + + + +Yet some pollsters are more cautious. Anthony Wells of YouGov warns against reading across from local to general elections. When both are held on the same day, as in 2015 and 2010, fully a quarter of voters split tickets between parties. In 1983 and 1987, the two previous occasions when a June general election followed local contests in May, the results were very different (though in both these cases the Tories actually did better nationally). Bitter experience shows that opinion polls have often proved unreliable. + + + +There are some specific factors in Mrs May’s favour, however. Matthew Goodwin of Kent University highlights UKIP’s collapse, which may give her an extra 30-40 seats. Even when UKIP’s voters came originally from Labour, they are now overwhelmingly switching to the Tories (though this pattern is stronger in southern than northern England). Then there is the leadership issue. Mrs May is much more popular than her party, which is why she now uses the label “Theresa May’s team” in place of the Conservatives. In contrast, both Labour’s Jeremy Corbyn and the Liberal Democrats’ Tim Farron are even less popular than their parties. + +Yet there are still reasons to doubt predictions of a May landslide. Mr Curtice points out that the local elections were mostly in rural shires that voted Leave in last June’s Brexit referendum. Looking only at the more urban mayoral elections, he finds almost no swing to the Tories since 2015. He says Labour has picked up a point or two since the election campaign began. And he adds that, on the current unreformed constituency boundaries, the Tories need a large poll lead merely to eke out a tiny majority; it takes a very large lead to win a bigger one. Nor is there a threshold above which a Tory majority suddenly turns into a landslide. + +The truth is that, even with Mr Corbyn as leader, Labour is likely to retain a substantial number of safe seats, as will the Scottish Nationalists north of the border. The electoral arithmetic makes it very hard for Mrs May to get to a 140-plus majority. That could be a problem for her. For one thing, talk of a landslide may increase abstentions by bored voters. And with expectations so high, winning a majority of 50 seats or so would be a victory that might feel oddly like a draw. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721976-spectacular-polls-and-local-election-results-will-not-necessarily-translate-vast/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Speakers’ Corner + +Quotes from the campaign trail + + +The most memorable lines from the third week of Britain’s snap election campaign + +May 13th 2017 + + + + + +Back by popular demand + +“I was elected leader of this party and I’ll stay leader of this party.” + +Jeremy Corbyn plans to hang on at the helm of Labour even if he loses the election. BuzzFeed + +The C-word + +“Every vote for me and my team will strengthen my hand.” + +References to the Conservative Party have vanished from Theresa May’s speeches, which now refer only to her “team” + +Coalition of the unwilling + +“If Labour and Lib Dems came together with us we would have a chance at least of getting rid of a Tory.” + +Caroline Lucas, the Green Party co-leader, optimistically asks other opposition parties to back the Greens in the Isle of Wight. BBC + +The only way is up + +“One thing we know is we can’t lose seats. We have no seats.” + +Patrick O’Flynn, a UKIP MEP, looks on the bright side. BBC + +Battle of the sexes + +“There’s boy jobs and girl jobs, you see.” + +Britain’s second female prime minister shares a surprising view of the labour market during a joint interview with her husband, Philip. BBC + +Manifest mistake + +“It’s not ideal, but on the plus side we’re all talking about the Labour Party.” + +Andrew Gwynne, Labour’s election co-ordinator, on the leak of the party’s draft manifesto, which includes plans to renationalise industries, scrap university fees and raise spending on health and social care, courtesy of higher taxes on companies and high earners. BBC + +The real Smith Shady + +“He opens his mouth but the words don’t come out / + +He’s choking now / + +Everybody’s joking now / + +The clock’s run out.” + +Iain Duncan Smith, a former Tory leader, unexpectedly delivers a rap by Eminem to describe a Labour opponent. ITV + +Foxy lady + +“As it happens, personally I have always been in favour of fox hunting.” + +Mrs May, town-dweller and vicar’s daughter, reveals a sudden enthusiasm for rural animal-killing + +Red in tooth and claw + +“It’s not the size of the dog in the fight, it’s the size of the fight in the dog.” + +Ruth Davidson reckons her Scottish Conservatives will take a bite out of the SNP. Daily Telegraph + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721972-most-memorable-lines-third-week-britains-snap-election-campaign-quotes/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Going West + +The Lib Dems’ Europhile message won’t help them in the south-west + + +Many voters have not forgiven the party for going into government with the Tories + +May 11th 2017 | BATH AND WADEBRIDGE + + + + + +“WE WANT our country back,” demands a voter during a doorstep visit by Ben Howlett, the Conservative MP for Bath. The constituent complains about hearing too many foreign voices in Britain: “We don’t need them round here.” The Tories can count on his vote next month, he assures Mr Howlett. That is unsurprising, given the party’s promise to curb immigration. What is perhaps stranger is that in 2015, the same constituent voted for the leftish, internationalist Liberal Democrats. + +If local politics rarely conforms to expectations, seldom does it diverge as drastically as in south-west England. The region is poor, its residents are old and it is home to few big towns. Elsewhere, that might translate into Tory landslides. But until recently the area was something of a stronghold of the Lib Dems. + + + +Their success was partly an accident of history. In the 19th century Devon and Cornwall were home to large numbers of Protestant nonconformists, who sympathised with Liberal demands for tolerance and legal equality. The lack of big cities stymied the growth of trade unions, and thus the Labour Party. Distance from London, self-sufficiency and a strong regional identity promote an “independence of thought” which aligns with the Liberal Democrats, suggests Dan Rogerson, a former government minister and the party’s candidate in North Cornwall. Once the Lib Dems had a foothold, they clung on with ferocious campaigning on local issues. In 2010 the party won 15 seats in the region. + +But it lost them all in 2015, mainly to the Conservatives (see map). The wipeout was part of a national collapse by the Lib Dems, whose voters didn’t like its record in coalition with the Tories in 2010-15. Winning back the south-west in the general election in June is crucial to the Lib Dems’ hopes of revival. Tim Farron, the party’s leader, was campaigning in the region this week, zipping around looking for voters on a hovercraft aptly emblazoned with the words “Search & Rescue”. Can he get the south-west back on board? + + + +In Wadebridge, a small town where the River Camel meets its estuary, Julie Woodbridge explains that although she normally votes Green, she will plump for the Lib Dems this time. It will be a tactical vote: “I don’t want the hard, horrible Brexit that Queen May will bring,” she harrumphs. The Lib Dems have put the EU at the centre of their national campaign, courting the 48% of voters who backed Remain by promising a second referendum on whatever deal is eventually struck with Brussels. + +There is a snag. Estimates suggest that only 12 of the 55 constituencies in the south-west voted to Remain—and only three of the 15 seats previously held by the Lib Dems did so. Moreover, candidates of all stripes say that Brexit is not a hot topic on the doorstep. Aside from “a few dyed-in-the-wool people with EU flags in the window”, most want to talk about public services or local issues instead, reports Mr Howlett, a moderate Remainer who says he will hold Mrs May’s “feet to the fire” over Brexit. So far the Lib Dems do not seem to be attracting enough Remainers from other parties to overcome the pro-Brexit majority, who are uniting behind the Tories. + +That is not the only problem. In North Cornwall, an erstwhile Lib Dem seat of rolling hills and seaside villages, memories of the coalition are fresh. Spencer Magill, a bookseller, says he will probably vote for Labour, since the Lib Dems “betrayed lots of people around here who voted for them as the anti-Tory option”. The Lib Dems will gain some moderate voters from Labour, but probably lose almost as many lefties who like Jeremy Corbyn’s radicalism. + +Meanwhile Tory Remainers seem to be sticking with the party. Voters who sought to stay in the EU not out of Europhilia but for fear of disruption are unlikely to want to overturn the referendum, notes David Cutts of the University of Birmingham. In Bath, which voted heavily to Remain, the Lib Dems’ latest leaflet does not even mention Europe, focusing instead on the threat to public services posed by a Conservative landslide. “Party allegiances are quite hard to crack,” says Wera Hobhouse, the Liberal Democrat candidate in Bath. “It takes quite a lot to convince someone to abandon their old family.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721962-many-voters-have-not-forgiven-party-going-government-tories-lib-dems/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +A dram-atic fall + +How Scotland kicked its drink problem + + +Many fewer Scots are dying of alcohol, thanks to changes in the population and government efforts + +May 11th 2017 | GLASGOW + + + + + +ON A Monday night the Grove, a pub in Glasgow’s West End, is quiet. A small bevy of old-timers clutch pints around the bar. The barmen are surprised to hear that fewer of their countrymen are dying of drink. Has the quality of the booze got better, wonders one: “Less rotgut?” Probably not: the pub’s menu includes a wine called “I ♥ Chardonnay”. But changes in the population and efforts by the government mean that alcohol is indeed killing many fewer Scots. + +Scotland has a drink problem. It has long suffered from much higher rates of alcohol-related death—in the form of illnesses such as liver disease—than the rest of Britain. But since the early 2000s the number of deaths north of the border has plunged, bringing Scotland within spitting (or perhaps vomiting) distance of its neighbours (see chart). + + + +The initial decline may have been caused by a cohort effect: the result of the death of a generation of men who were badly affected by the decline of heavy industry and who drank excessively. In addition, disposable incomes among the poorest Scots—who are more likely than the rich to die of drink, even if they booze no more than them—fell. With less money to spend on alcohol, the numbers dying of drink should fall faster. + +Since 2008 the Scottish government has focused in earnest on the booze problem. Last year it won the first European Award for Reducing Alcohol Harm. Scotland was the first country to introduce a national programme of “alcohol brief interventions”—training medics to have short, structured, non-confrontational conversations about people’s drinking habits which have proved to be an effective way of reducing consumption. Between 2008-09 and 2014-15 half a million such chats took place, reaching almost half of those deemed to have a problem. + +Decisions to grant alcohol licences in Scotland must consider the impact on public health, which is not required in England and Wales. In 2011 multi-buy promotions on booze were banned in shops. In 2014 the government lowered the alcohol limit for drivers from 80mg per 100ml of blood—among the laxest in Europe—to 50mg. Drink-driving deaths are not counted in the total, but Katherine Brown of the Institute of Alcohol Studies says that she is hearing that people are drinking less as a result. “It’s not one for the road, it’s none for the road,” quips one Glasgow drinker, echoing a local campaign. + +Recently the decline in deaths has stalled. Those worried about Scotland’s boozing are counting on a government win against the Scotch Whisky Association in the Supreme Court this summer, which would allow it to introduce a 50p ($0.65) minimum price per unit of alcohol (equivalent to about half a pint of beer). That would transform the market, says Niamh Fitzgerald of the University of Stirling. Evidence from Canada suggests that minimum prices can reduce alcohol-related deaths almost immediately. Even so, delays in imposing the rule mean that inflation is slowly eroding the effectiveness of the 50p minimum. It is too early for a celebratory toast. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721958-many-fewer-scots-are-dying-alcohol-thanks-changes-population-and-government/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +On ice + +The worst frost in decades knocks British winemakers off course + + +Yet the long-term outlook remains rosy + +May 11th 2017 | ABERGAVENNY + + + + + +IN THE valleys of south Wales, among grazing sheep and roads lined with cow parsley, something unusual is happening. Robb Merchant is producing wine. Good wine, too. A rosé from White Castle Vineyard, near Abergavenny, won bronze at the UK Vineyards Association awards. The sparkling white, meanwhile, is light, floral and good with foie gras. + +In the past decade the hectarage of planted vines across Britain has more than doubled. Vineyards are popping up as far north as Yorkshire. French champagne houses are buying up bits of southern England. But the industry faces its toughest challenge yet. A recent frost has hit hard. Frazer Thompson of Chapel Down winery in Kent says he has not seen April frosts so widespread in 20 years. Like many others Mr Merchant lit fires at night to warm up the air, yet many of his vines were damaged. At some vineyards production could be down by 80% or more. + + + +In winter, grapevines can survive temperatures of -20°C, says Chris Foss, manager of the Wine Division at Plumpton College in Sussex. But by spring the vines have begun to bud, so they are more vulnerable to the cold. + +And the recent frosts have been unusually nasty. Britain normally sees “radiation” or “inversion” frosts, where the ground chills only the air just above it, says Mr Foss. But recent weeks have seen “advection” frosts, after freezing air has blown in from the Arctic. This makes the fire-lighting strategy less effective; after the cold air has warmed, it is simply replaced with more cold air. + +Shoppers will feel the frost’s chill only from 2018, when this year’s grapes have been turned into wine. It may be especially hard to find still wines, which are often made from a single year’s vintage. British winemakers worry that if they send fewer bottles to market that year, retailers will doubt the reliability of supply and so will offer them less shelf space in subsequent years. + +Yet the long-term outlook remains rosy. Because of global warming, spring frosts are less common than they were. And, says Mr Foss, the climate in eastern England is now remarkably similar to that of the Champagne region in the 20th century. Like a bottle of fine Welsh red, Britain’s wine industry is likely to improve with age. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721957-yet-long-term-outlook-remains-rosy-worst-frost-decades-knocks-british-winemakers/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Bagehot + +Labour is right—Karl Marx has a lot to teach today’s politicians + + +The shadow chancellor's comment provoked scorn. Yet Marx becomes more relevant by the day + +May 11th 2017 + + + + + +AN UNOFFICIAL rule of British elections holds that you don’t mention big thinkers. On May 7th John McDonnell, the shadow chancellor, broke this rule by mentioning not just any old big thinker but Karl Marx. “I believe there’s a lot to learn from reading ‘Capital’,” he declared. The next day Jeremy Corbyn, the Labour Party leader, described Marx as “a great economist”. + +This produced jubilation on the right. The Daily Telegraph dismissed Messrs McDonnell and Corbyn as “the Marx brothers”. The Daily Mail reminded its readers of the murderous history of communism. David Gauke, a Conservative minister, warned that “Labour’s Marxist leadership” was planning to turn Britain into a “hard-left experiment”. He added for good measure that Marx’s thinking is “nonsensical”. + + + +Yet Mr McDonnell is right: there is an enormous amount to learn from Marx. Indeed, much of what Marx said seems to become more relevant by the day. The essence of his argument is that the capitalist class consists not of wealth creators but of rent seekers—people who are skilled at expropriating other people’s work and presenting it as their own. Marx was blind to the importance of entrepreneurs in creating something from nothing. He ignored the role of managers in improving productivity. But a glance at British business confirms that there is a lot of rent seeking going on. In 1980 the bosses of the 100 biggest listed firms earned 25 times more than a typical employee. In 2016 they earned 130 times more. Their swollen salaries come with fat pensions, private health-care and golden hellos and goodbyes. + +The justification for this bonanza is that you get what you pay for: companies claim they hire chief executives on the open market and pay them according to their performance. But the evidence is brutal. Most CEOs are company men, who work their way up through the ranks, rather than free agents. In 2000-08 the FTSE all-share index fell by 30% but the pay for the bosses running those firms rose 80%. J.K. Galbraith once said that “the salary of the chief executive officer of the large corporation is not market reward for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.” Corporate Britain is more subtle: CEOs sit on each other’s boards and engage in an elaborate exchange of such gestures. + +The political system is no less rife with rent-seeking. Politicians routinely cash in on their life of public service by transforming themselves from gamekeepers into poachers when they retire, lobbying departments they once ran, offering advice to companies they once regulated and producing platitudinous speeches for exorbitant amounts of money. Tony Blair became rich in his retirement by offering advice to bankers and third-world dictators. George Osborne, a former chancellor, is also cashing in: he makes more than £650,000 ($840,000) for working for BlackRock investment managers one day a week, earns many tens of thousands for speeches and edits a London newspaper, the Evening Standard. + +Marx predicted that capitalism would become more concentrated as it advanced. The number of listed companies has declined at a time when profits are close to their highest levels ever. Concentration is particularly pronounced in the most advanced sectors of the economy. Google controls 85% of Britain’s search-engine traffic. Marx was also right that capitalism would be increasingly dominated by finance, which would become increasingly reckless and crisis-prone. + +What about his most famous prediction—that capitalism inevitably produces immiseration for the poor even as it produces super-profits for the rich? “Immiseration” is too strong a word to describe the condition of the poor in a country with a welfare state and a minimum wage. Yet many trends are worrying. Average wages are still below their level before the financial crisis in 2008 and are not expected to exceed it for several years. The rise of the Uber economy threatens to turn millions of people into casual workers who eat only what they can kill. + +Full Marx + +The problem with Marx is not that his analysis is nonsensical, as Mr Gauke maintains, but that his solution was far worse than the disease. And the problem with Messrs Corbyn and McDonnell is not that they have learned something from Marx but they haven’t learned anything from the past hundred years of history. Mr McDonnell is a fan not just of Marx but also of Lenin and Trotsky. Mr Corbyn described Fidel Castro as a “champion of social justice”. A leaked draft of the Labour manifesto resurrects defunct plans to renationalise industries and extend collective bargaining. + +The Tory party is heading for a substantial victory in large part because Labour’s leaders are so unreconstructed. But it would be a mistake for the Conservatives to ignore the lessons of the master himself. As Trotsky once put it, “You may not be interested in the dialectic, but the dialectic is interested in you.” The financial crisis suggested that the economic system is worryingly fragile. The vote for Brexit suggested that millions of people are profoundly unhappy with the status quo. + +The genius of the British system has always been to reform in order to prevent social breakdown. This means doing more than just engaging in silly gestures such as fixing energy prices, as the Conservatives proposed this week (silly because this will suppress investment and lead eventually to higher prices). It means preventing monopolies from forming: Britain’s antitrust rules need to be updated for an age where information is the most valuable resource and network effects convey huge advantages. It means ending the CEO salary racket, not least by giving more power to shareholders. It means thinking seriously about the casualisation of work. And it means closing the revolving door between politics and business. The best way to save yourself from being Marx’s next victim is to start taking him seriously. + +Economist.com/blogs/bagehot + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21721916-shadow-chancellors-comment-provoked-scorn-yet-marx-becomes-more-relevant-day-labour/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +International + + +Surrogacy: Help wanted [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Help wanted + +As demand for surrogacy soars, more countries are trying to ban it + + +Many feminists and religious leaders regard it as exploitation + +May 11th 2017 + + + + + +NATALIE SMITH was born without a uterus. But her ovaries work normally, which means that, with the help of in vitro fertilisation (IVF) and a “gestational surrogate”—a woman willing to carry a baby for someone else—she and her husband were able to have children genetically related to both of them. In 2009 they became parents to twins, carried by Jenny French, who has since had babies for two other couples. Ms French was motivated by her own experience of infertility between her first and second children. The experience created a lasting link: she has stayed friends with the family she helped to complete and is godmother to the twins. + +Ms Smith was lucky to live in Britain, one of just a handful of jurisdictions where surrogacy is governed by clear (though restrictive) rules. In some other European countries, it is illegal. American laws vary from state to state, all the way from complete bans to granting parental rights to the intended parents, rather than the woman who carries the baby. In most of the rest of the world, until recently, surrogacy has been unregulated, leaving all concerned in a legal vacuum. The variation in laws—and costs—has created a global surrogacy trade rife with complications and pitfalls. + + + +Now many of the developing countries whose low costs and lack of legal restrictions had made them popular surrogacy destinations are trying to end the business. Thailand barred foreigners from paying for surrogacy in 2015. Nepal banned it, even when unpaid, later that year. India, where surrogacy had been a booming business for more than a decade, suddenly barred foreign clients a few months later. A bill before its parliament would allow only unpaid surrogacy by close relatives. + +These new laws were intended to protect surrogates from exploitation. These poor and often illiterate women could earn an amount equivalent to ten years’ wages for a single pregnancy. Governments feared that some did not understand the contracts they were signing. Unscrupulous clinics often placed multiple embryos in their wombs with the aim of making pregnancy more likely, without making the risks clear. Some overused Caesarean sections and neglected post-partum care. + +But rather than ending the trade, tighter rules are simply moving it elsewhere. Three years before it ended surrogacy for foreign clients, India had banned it for gay men. Indian agencies responded by relocating to Nepal, Thailand and Cambodia, flying out frozen embryos that were awaiting wombs, and women who were already pregnant to give birth. Now, in the wake of further bans, the business is shifting to Greece, Laos and Ukraine, says Sam Everingham of Families Through Surrogacy, an Australian charity. Several African countries are becoming more popular; Indian women seeking to be surrogates are going to Kenya. Far from their families and friends, and unable to speak the local language, they are more vulnerable to exploitation and abuse. + +Baby or bust + +The problem for those who would regulate surrogacy out of existence is that demand is strong, and rising fast. Though the number of children born globally each year through surrogacy is unknown, at least 2,200 were born in America in 2014, more than twice as many as in 2007. Britain registered nearly 400 in 2016, eight times as many as in 2007. One large Indian clinic popular with foreigners claimed to have delivered more than 1,000 babies between 2004 and 2015. + +In times gone by a woman who, like Ms Smith, was unable to carry a baby might have adopted. But nowadays, fewer babies are put up for adoption. And gay couples, who can marry in a growing number of countries, are increasingly turning to surrogacy. Some single men are also seeking surrogates, just as single women may turn to sperm banks when Mr Right does not appear. Advances in fertility treatment make all this possible, and mean that surrogates are now rarely related to the babies they carry. If the intended mother has no eggs of her own, or if the baby is going to a single man or a gay couple, IVF can be done with donated eggs instead. + +The first formal surrogacy contract was drawn up in 1976 in America. Ten years later “Baby M”, intended for a couple in New York, made headlines when the surrogate changed her mind and sued—unsuccessfully—for custody of the child, who was genetically hers and had been conceived by artificial insemination using the commissioning father’s sperm. The furore led to bans in New York and several other states. The popular image shaped then has stuck: surrogates are widely viewed as likely to form, and then struggle to break, a maternal bond with the babies they carry, just like women whose difficult circumstances lead them to give up their newborns for adoption. + +Fertility rights + +In fact, recent studies show that it is extremely rare for a surrogate to change her mind and seek to keep the baby. Surrogacy UK, a British charity, says that there have been no such cases among the nearly 180 births it has helped to arrange since its founding in 2002. “You never think the baby is yours,” says Michelle Green, a British mother of two and a surrogate of twins born in 2015. She is now on to a second surrogacy, and says she is proud to have given children to someone who would otherwise have been unable to be a parent. + +On the rare occasions when problems do arise, it is almost always in the opposite direction: commissioning parents who decide they no longer want the baby. In Canada, which has regulated surrogacy since 2004, five such cases are known to have occurred, says Sally Rhoads-Heinrich, who runs Surrogacy in Canada Online, a referral and consultation service. The main reason for pulling out was divorce. But in no case did the surrogate keep the child: they were all given up for adoption. + +Surrogacies in rich countries now usually involve mediators who pre-screen and counsel both sides to ensure they are well prepared and in agreement about what to do if anything goes wrong. In Australia, both sides must receive professional counselling and legal advice beforehand. In Britain the intended parents are vetted by social workers before they can take the baby home. Surrogacy UK encourages both parties to get to know each other for at least three months before trying to conceive. They are guided through 15 pages of questions, such as whether they would have the pregnancy terminated if the fetus has severe defects. Disagreement on anything major serves as a warning not to go ahead. + +Even where surrogacy is legal, restrictive rules prompt many would-be parents to go abroad. Britons travel to evade a ban on surrogacy for single people, and for couples who need both donor eggs and donor sperm to conceive. (In a rare example of liberalisation, Britain’s government is considering getting rid of these restrictions.) Israel and some parts of Australia allow it only for heterosexual couples. Three-quarters of the nearly 300 babies born to surrogates in Nepal in 2014-15 were handed over to Israeli and Australian citizens. And nearly everywhere that it is legal, paying anything more than pregnancy- and birth-related expenses is banned (a few American states, Ukraine and Georgia are exceptions). That crimps supply. Some places, including Britain, are so worried about anything akin to a market in babies that they ban advertising, meaning that would-be parents and surrogates struggle to find each other. + +Where payment is allowed, by contrast, agencies can arrange the whole business without delay—including for foreigners. Diane Hinson of Creative Family Connections, an agency in America, says that about a third of her clients come from Europe. And would-be parents willing to look farther afield can often save a lot of money. Surrogacy in the American states where payment is allowed usually costs more than $100,000; in Laos or Ukraine the cost falls by two-thirds. + + + +When they bring their babies home, though, they may find themselves in a legal tangle. Britain has drawn up guidelines for people who commission surrogacy abroad. But even if all their documents are in order it will take at least six months for them to be recognised as parents in Britain, says Louisa Ghevaert, a lawyer in London. Ms Rhoads-Heinrich says that her agency’s Canadian clients celebrate the arrival of their children like any other parents, sharing the news on social media and throwing baby showers. But her clients from France, Germany, Italy and Switzerland, where surrogacy is banned, keep quiet, terrified that they will face opprobrium or even have their babies taken away. + +Some babies born through cross-border surrogacy have been stuck without any citizenship, or without parents who are legally recognised in the country where they are being raised. Courts across Europe are increasingly being presented with cases where a strict interpretation of the law would mean babies being taken from their genetic parents and sent to an orphanage. In 2015 an Italian court ruled that a child born to a surrogate in Ukraine and brought to Italy should be put up for adoption. But judges are starting to grant parental rights to commissioning parents in such cases, on the ground that it is in the children’s best interests. Decisions to the contrary have recently been overturned by appeal courts and the European Court of Human Rights. + +All this has spurred debate about legalisation. In Sweden, which has no laws governing surrogacy, the National Council on Medical Ethics said in 2013 that it should be permitted under certain conditions. These included a close relationship between the surrogate and the intended parents; no genetic link between the surrogate and the baby; counselling and vetting of the intended parents; and a guarantee that the children would be told how they came into the world. + +But last year a commission charged with advising the Swedish government said that surrogacy should never be allowed. It recommended that Swedes should be discouraged from seeking it abroad, by publicising the legal complications that might stop them bringing their children home. There were two main concerns, says Eva Wendel Rosberg, the author of the commission’s report. The first was the lack of research on how those born through surrogacy will feel about their origins. The second was that it is impossible to be sure that the surrogate has made a truly uncoerced decision. Even those who carry babies for relatives, she says, may be pressured by family expectations. + +Pregnant pause + +In many places, a coalition of rarely aligned religious conservatives and left-wing feminists fiercely opposes any relaxation of the rules. The Catholic church describes surrogacy as a “failure to meet the obligations of maternal love, of conjugal fidelity and of responsible motherhood”. Many feminists feel that it casts women as mere baby-vessels for hire. In 2015 the European Parliament described it as “reproductive exploitation” that “undermines the human dignity” of women. But recent history suggests that banning surrogacy will not end it, merely move it elsewhere. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21721926-many-feminists-and-religious-leaders-regard-it-exploitation-demand-surrogacy/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Business + + +Aviation: Missed connection [Fri, 12 May 07:08] + +Property investment: Citizen Kushner [Fri, 12 May 07:08] + +Sinclair Broadcast: A signal event [Fri, 12 May 07:08] + +Business advice: Corporate insurgency [Fri, 12 May 07:08] + +A tale of two tech hubs: Silicon Valley North [Fri, 12 May 07:08] + +Schumpeter: Active measures [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Missed connection + +The super-connector airlines face a world of troubles + + +Aviation’s most successful business model is under strain + +May 13th 2017 + + + + + +WHEN a video of a passenger being dragged off a United Airlines flight went viral last month, the American carrier’s Middle Eastern rivals were quick to mock its customer service. Qatar Airways updated its smartphone app to say it “doesn’t support drag and drop”. The ribbing was justified. Over a decade of expansion, Qatar Airways, along with Emirates of Dubai, the world’s largest airline by international passenger miles travelled, and Etihad Airways of Abu Dhabi, wowed customers with superior service and better-value fares. + +Passengers joined them in droves, abandoning hub airports in America and Europe as well as the airlines that use them. Over the past decade the big three Gulf carriers and Turkish Airlines trebled their passenger numbers, to 155m in 2015 (see chart). They went a long way to dominating long-haul routes between Europe and Asia. Most international airlines rely on travellers going from or to their home countries, but customers of the four “super-connectors”, as they are known, mostly just change planes at the carriers’ hub airports en route to somewhere else. + + + +A slowing of this spectacular growth was at some point inevitable. But it has been exacerbated by several things. First, the airlines have been deeply affected by the halving of the oil price since 2014, which has reduced their customers’ spending power and sharply cut demand for air travel from the Middle East itself. In particular, energy companies, responsible for 29% of GDP in the Gulf states, are slashing travel in business class, the most profitable cabin in airlines’ fleets. + +Second, geography has turned sharply against them. When Sir Tim Clark, president of Emirates, helped Dubai’s government to set up the airline in 1985, he was quick to spot that a third of the world’s population lives within four hours’ flight of Dubai, and two-thirds within eight. “They were in the right place at the right time,” says Andrew Charlton of Aviation Advocacy, a consultancy. “But now they’ve been caught in the wrong place at the wrong time.” A series of terror attacks in the region and a coup in Turkey last July has prompted many passengers to shun airports in the Middle East and to go elsewhere to change planes. The latest figure (from March) for capacity utilisation for Middle Eastern airlines was just 73%, the lowest since 2006 and worse than at the height of the financial crisis in 2008-09. + + + +The third, and latest, blow has been a set of travel restrictions introduced by the Trump administration. Since January Mr Trump has made efforts to ban the citizens of several Middle Eastern countries from entering America. Despite various legal challenges, those efforts have hit inbound traffic. In March America also banned electronic devices larger than a smartphone, chiefly laptops, from the cabins of planes flying between eight Middle Eastern countries and its own airports (Britain also introduced similar restrictions). The issuance of entry visas to America has been cut and security vetting increased. + +After the first travel ban, demand fell by 35% on Emirates’ American routes. The banning of laptops has had an even worse effect on the Gulf carriers. Many passengers, particularly accountants, consultants and lawyers who are paid by the hour, are now choosing to fly via European hubs on other airlines, says Greeley Koch of the Association of Corporate Travel Executives, a trade group. The airlines have started lending their own devices to business-class passengers, but demand is still tumbling. In April Emirates cut flights to America by a fifth, a severe reversal after three years of rapid expansion there. For a network airline a drop in demand from one destination means falls on all the routes that connect with them. + +Even Sir Tim, normally upbeat, admits that it has been a “testing” time. Emirates said on May 11th that airline profits fell by 82% in the past year. Results for Etihad, expected this month, are likely to make grimmer reading. In March Turkish revealed its first annual loss since its privatision in 2004. Qatar, meanwhile, is still growing, partly because the government is able to support it. Its alliance with IAG, owner of British Airways, in which Qatar has a 20% stake, also means that it is still seeing increases in passengers originating from London and then flying on to Asian countries. + +Etihad is worst-placed. It has pushed out its CEO, James Hogan, and is in the midst of a strategy overhaul. Its move to invest in European airlines, including Italy’s national carrier, Alitalia, and Germany’s Air Berlin, has been disastrous. Last week, Alitalia, of which it owns 49%, declared bankruptcy. The week before Air Berlin, in which it has a 30% stake, announced a record loss of €667m ($739m) for 2016. Etihad failed to understand the differences between doing business in the Middle East and in Europe, where, for example, there are trade unions, says Gerald Wissel of Airborne Consulting in Hamburg. + +Abu Dhabi’s inability to afford more subsidies, given a low oil price, means that radical options are on the table, including closing down Etihad and even seeking a merger with Emirates. But its rival is not keen on such a course, because using two hub airports would be hugely complex. + +Before such drastic moves become necessary, it is possible that the commercial pressure may ease. Airline passengers are starting to realise that recent terror attacks are not actually occurring on board planes, says Mehmet Nane, CEO of Pegasus, a Turkish low-cost carrier. Many are returning to Middle Eastern airlines, he claims. Mr Trump’s travel restrictions may not be permanent. Alternatively, if his administration extends the laptop ban to include inbound flights from Europe, a step it is reportedly considering, the attractiveness of Gulf airlines relative to European carriers will improve. + +Yet the breakneck growth of the recent past is unlikely to resume. Two new aircraft—the Boeing 787 and the Airbus A350—make it profitable to carry smaller numbers of passengers over long-haul routes. Secondary cities half a world away from each other can increasingly sustain direct connections. That eliminates the need to change planes in the Middle East. Big legacy carriers, in addition to long-haul, low-cost pioneers such as Norwegian and AirAsia X, are buying these planes in huge numbers. The fact that Airbus has 750 outstanding orders for its A350, compared with just 107 for the A380s that Emirates flies, shows where airlines think the future of aviation is heading. But before they celebrate their diminished force, they should thank the super-connectors for showing them how to raise their game. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21721956-aviations-most-successful-business-model-under-strain-super-connector-airlines-face/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Citizen Kushner + +Donald Trump’s family and a controversial visa scheme + + +EB-5 visas come under scrutiny + +May 11th 2017 | NEW YORK + + + + + +THE events seemed inconspicuous enough: presentations in smart hotels in Beijing and Shanghai seeking investors for luxury American apartments. The details might have gone unnoticed had not a journalist from the Washington Post heard about the event’s star attraction. But these days the surname “Kushner” is like a magnet. It quickly emerged that Nicole Meyer, sister of Jared Kushner, Donald Trump’s son-in-law and senior adviser, spoke in her pitch on May 6th to prospective investors about her powerful brother. One slide (pictured) that was shown to the audience included a photo of Mr Trump himself. + +The affair underlined potential conflicts of interest surrounding Mr Trump’s family members and their businesses. Mr Kushner is not directly involved in the family firm. But Kushner Companies later apologised if Ms Meyer’s name-dropping “was in any way interpreted as an attempt to lure investors”. + + + +The episode also shone a spotlight on a controversial American visa programme known as EB-5. The property firm, which is based in New Jersey, wants to raise $150m from foreigners to help fund the construction of apartments in the same state. The money is to be directed through intermediaries into the EB-5 programme. (Although the investor pitch had been planned months in advance, the presentation came just a day after Mr Trump signed a law that extended the programme until the end of September.) + +Created in 1990 with the aim of stimulating the economy, EB-5 visas allow a path to citizenship for investors and their families if they can demonstrate that the deployment of $1m of their capital creates ten full-time jobs. The threshold falls to $500,000 in “targeted employment areas” (TEAs) where the jobless rate is 50% above the national average. The visas were little used for years. That was until property developers, starved of capital during the financial crisis, managed to convince the scheme’s regulator that they should include “construction activity” jobs in their employment calculations. + +Since then EB-5 visas have become a cheap source of finance for property developers. Investors, whose priority is usually citizenship rather than a financial reward, have shown themselves willing to accept returns of less than 1%. After intermediaries have taken their cut, the cost of capital to developers is typically 4-6%, about two thirds lower than conventional sources of finance for the industry, according to Gary Friedland, a real-estate expert at New York University. Kushner Companies will save $30m-40m by financing 15% of its new property with EB-5 visas, he estimates. + +Much of the controversy around the visas is about the designation of TEAs, which is done by states. By stretching the definition of these areas, states are able to designate nearly every investment as falling within a TEA: the unemployment rate surrounding the proposed Kushner property, for example, is a mere 4%. This lowers the investment threshold and attracts more capital. Bills have been introduced to reform the programme but have failed. + +Over the past three years 87% of the annual quota of 10,000 EB-5 visas has been snapped up by Chinese investors. Much of the money has gone to just two states, New York and California. The Chinese, who may not want a big return but do want their principal back, are attracted to big-name developers in big cities. + +This is the second occasion in as many months that the subject of EB-5 visas has arisen in connection with Kushner Companies. In March there were reports that it was seeking investment from Anbang Insurance Group, a Chinese company that owns the Waldorf Astoria in Manhattan. Alongside Anbang’s equity investment, Kushner Companies was said to seek EB-5 financing that would have gone to the property group’s flagship building on Fifth Avenue. The deal was denied by Anbang and fell through. + +Others have already been done. One New Jersey skyscraper was built by Kushner Properties in 2016 with the help of around $50m of EB-5 financing. It is adorned with the president’s name. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21721951-eb-5-visas-come-under-scrutiny-donald-trumps-family-and-controversial-visa-scheme/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +A signal event + +Sinclair Broadcast buys Tribune Media + + +America’s media regulator aids the consolidation of TV stations + +May 13th 2017 | NEW YORK + + + + + +AT A time when ever fewer people are watching television, it may seem improbable that the owners of local TV stations in America want to expand their empires. It turns out that they can hardly wait. On May 8th, just 18 days after a change in federal rules made the deal possible, Sinclair Broadcast Group announced that it would buy Tribune Media in a transaction worth $6.6bn, beating out interest from others including 21st Century Fox, which is owned by Rupert Murdoch. Sinclair will become America’s dominant owner of local TV stations. + +The deal signals a broader interest in expanding what has been a surprisingly decent business in recent years. In America local TV stations tend to affiliate themselves with a national broadcast network, transmitting its content, including live sports. In exchange the stations make substantial payments. Despite falling viewership of network TV, the economics of local-station ownership have remained robust for two reasons. + + + +First is the resilience of local TV advertising, especially in election years, says Mark Fratrik of BIA/Kelsey, a media consultancy. The ability of small TV stations to reach specific areas for local political races has proved difficult to match. + +Second, TV stations have tapped a new vein of cash: retransmission fees, the payments they command from cable- and satellite-TV providers for their consent to retransmit their local broadcast-signal feeds to pay-TV subscribers. Such fees were tiny a decade ago, but Sinclair helped lead an industry charge to lift them. BIA/Kelsey estimates that stations collected $6.8bn in retransmission fees last year, or nearly a quarter of their $28bn of revenues. + +Bigger is better for TV-station groups. Sinclair, which will have more than 200 stations after the deal, will have even more leverage to extract high retransmission fees from pay-TV operators. It will also be in a better position to demand lower payments to broadcast networks for their content. + +The rule change on April 20th from the Federal Communications Commission (FCC), led by Donald Trump’s appointee as chairman, Ajit Pai, was crucial. For many TV stations, a change to the FCC’s calculation method lowered the number of households that they are deemed to reach. Even under the new rule, the combined Sinclair and Tribune business covers about 45% of households, which is over the current federal limit of 39%. Many believe Mr Pai will raise that cap. + +Sinclair’s acquisition raised concerns among some media watchdogs and leftleaning commentators not just because of worries over concentrated ownership—most other TV-station groups reach less than 20% of American households—but also because of who the owner is. David Smith, the group’s executive chairman, is a conservative ally of Mr Trump who, critics say, puts his stations in the service of Republican causes. In December Jared Kushner, Mr Trump’s son-in-law and adviser, boasted that he had struck a deal with the firm to broadcast interviews with the president on its affiliates (Sinclair denied giving Mr Trump special treatment). + +Liberals may not be the only ones with reason to worry. Sinclair’s deal gives it clout to push pay-TV operators to add another all-news channel, perhaps one of its own. It already owns a news channel in Washington, DC. A new conservative news channel would challenge Mr Murdoch’s Fox News, which is in turmoil after a series of allegations about sexual harassment and racial discrimination. Even as Mr Smith’s empire grows, he could sense another opportunity to expand. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21721966-americas-media-regulator-aids-consolidation-tv-stations-sinclair-broadcast-buys-tribune/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Corporate insurgency + +Management lessons from an American general + + +Stanley McChrystal advises blue-chip firms to give junior staff more power + +May 11th 2017 | HELSINKI + + + + + +STANLEY MCCHRYSTAL’S voice is hoarse as he addresses a packed arena in Helsinki. His audience, mostly businessmen in dark suits, is rapt. The American former general tells thrilling battlefield stories of leading the Joint Special Operations Command in Iraq, which captured Saddam Hussein and killed Abu Musab al-Zarqawi, al-Qaeda’s local chief. He explains how his outfit adapted against an unexpectedly difficult enemy. A change in management style let his group go from conducting a handful of raids each month to hundreds, achieving better results against insurgents. + +Neither America’s occupation of Iraq nor Mr McChrystal’s military career ended well. He went on to lead Western forces in Afghanistan, but stood down in 2010 after falling out with his political bosses. He reinvented himself as a management consultant. His McChrystal Group employs 65 people. It draws on its founder’s experience hunting insurgents to advise businesses, including on Wall Street, on corporate culture. + + + +What insight does an old soldier offer? Mr McChrystal is an apostle of devolved responsibility, or letting junior employees know and do more. One convert is his host in Helsinki: Reaktor, a 17-year-old firm of 400 staff, mostly coders, with a side-interest in launching satellites. An employee, Mikko Olkkonen, explains that “we have no hierarchy, no bosses, no targets, no quarters.” It heeds Mr McChrystal’s approach: firms can adapt in complex competitive environments, he argues, only if information is shared and teams of capable staff—not just the boss—can take decisions. It also helps greatly with recruiting to say that junior staff will have clout early in their careers. + +A variety of big firms are listening. Mr McChrystal sits on the board of JetBlue Airways and of an American subsidiary of Siemens, a German engineering company. His firm advises Barrick Gold, a Canadian miner; Under Armour, a sportswear brand; a large bank; and several hospitals. Any assignment begins with “discovery” by an intelligence analyst who previously assessed the organisational structure of al-Qaeda. She works out who takes decisions inside companies. The reality usually differs from formal organisation charts. + +“The management ideas I believe in are not revolutionary, but I came at it from a different experience,” says the ex-general. He says firms should break apart “silos” and get employees talking. Mr McChrystal’s advice on devolved power has its limits—no army, after all, has done away with hierarchies entirely, and even decentralised al-Qaeda was weakened by removing its leaders. It is hard to know how much his big corporate clients use the approach in pursuing sales and markets. But hearing an ex-general disparage hierarchies so forcefully thrills employees. Even as a Reaktor staffer explained in Helsinki that Finns rarely idolise heroes, the crowd sent Mr McChrystal off with an excited ovation. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21721954-stanley-mcchrystal-advises-blue-chip-firms-give-junior-staff-more-power-management-lessons/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Silicon Valley North + +How America’s two tech hubs are converging + + +More than ever, Seattle and Silicon Valley are joined at the hip + +May 11th 2017 | SEATTLE + + + + + +WOULD your region care to be the next Silicon Valley? In most of the world’s technology hubs, local leaders scramble to say “yes”. But ask the question in and around Seattle, the other big tech cluster on America’s west coast, and more often than not the answer is “no”—followed by explanations of why the city and its surrounds are different from the San Francisco Bay Area. The truth may be more complex: in recent years the Seattle area has become a complement to the valley. Some even argue that the two regions, though 800 miles (1,300km) apart, are becoming one. + +They have similar roots, notes Margaret O’Mara, a historian at the University of Washington (UW). Each grew rapidly during a gold rush in the 19th century. Later both benefited from military spending. Silicon Valley ultimately focused on producing small things, including microprocessors, and Seattle on bigger ones, such as aeroplanes (Boeing was for decades the city’s economic anchor). This difference in dimension persists. The valley has plenty of giant firms, but its focus is mainly on startups and smartphones. In contrast, Seattle is still more of a company town, with Amazon and Microsoft, both builders of big data centres, looming large. + + + +That, and the fact that Seattle and its suburbs are less than a fifth the size of Silicon Valley, has created a different business culture. In Seattle, for example, job-hopping is less common, as is swapping full-time employment for the uncertain life of an entrepreneur. Seattle has spawned firms such as Avvo, an online marketplace for legal services, and Zillow, a real-estate site, but the startup scene is underdeveloped. UW is a good gauge: it now has one of America’s best computer-science departments but produces nowhere near as many new firms as Stanford University. + +Local politics differ, too. Seattleites don’t want their city to become like San Francisco, which is dominated by affluent, techie types. Their city council has just approved a new programme requiring property developers to include cheap units in their projects or to pay a fee. The aim is to ensure that Seattle remains America’s second-most economically integrated city (as defined by RedFin, a data provider). San Francisco ranks 14th. “In the playground parents don’t just talk about the next big thing,” says Ed Lazowska, a professor of computer science at UW. + +That is one reason, besides nature’s attractions, cheaper housing and no state income tax, why exhausted Valleyites flock north. “You get better quality of life for half the cost,” says Simon Crosby, co-founder of Bromium, a computer-security firm, who has made the move from California. Bromium is based in Cupertino, also the home of Apple, and he regularly takes the “nerd bird”, as flights between the two tech clusters are called (they are full of geeks who live in Seattle and work in the valley). Venture capitalists often make the two-hour commute, too. Most money invested in Seattle startups comes from California; the north-western city only has a handful of VC firms, such as Ignition Partners and the Madrona Venture Group. + +Another link between the two cities is cloud computing. Most startups in and around San Francisco run their business on Amazon Web Services, the e-commerce giant’s cloud-computing platform. Its momentum is such that some in Silicon Valley have started to fret that it will one day become as dominant as Windows, the operating system made by Microsoft, once was. + +For now it is Seattle that is more worried about being dominated by its neighbour to the south. The city hosts nearly 90 engineering offices that firms have opened to find new talent to hire. A third have a Californian parent. John Cook, who co-founded GeekWire, which covers the local tech industry, argued recently that, although the new offices add to Seattle’s tech scene, they had taken “a lot of oxygen” out of the startup ecosystem by hoovering up highly qualified staff. That triggered a debate about the disadvantages of outside investment. Other effects of tech migration are equally contentious: home values have increased by a tenth in the past 12 months, according to Zillow. + +Complaints about being overrun by Californians have a long tradition in Seattle, but the risk that the area becomes a Silicon Valley overflow zone preoccupies many. “We have to choose to remain different,” says Tren Griffin, a Microsoft veteran. Chris DeVore, an angel investor who runs the Seattle branch of Techstars, a chain of accelerators, says more needs to be done to grow local startups. “Microsoft and Amazon were a bit of an accident,” he says. + +Regardless, Seattle and Silicon Valley are now joined at the hip. The best approach is to make that connection as efficient as possible, says Rich Barton, a serial entrepreneur. He not only started Zillow and Expedia, a giant online travel site, among other Seattle firms, but is a partner at Benchmark, a leading VC firm in the valley. Rather than relying on flights, which are often delayed or cancelled due to bad weather, he says, someone should build a high-speed rail line. Together, he quips, that old west-coast dream, popular again after the election of Donald Trump, would be within reach: “We could form our own country and secede.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21721950-more-ever-seattle-and-silicon-valley-are-joined-hip-how-americas-two-tech-hubs-are/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Schumpeter + +A boss’s guide to fending off an activist attack + + +Activist funds have moved on from being the gobby bad boys of markets + +May 11th 2017 + + + + + +MODERN bosses are a resilient bunch who can handle everything from Twitter storms to takeovers. But one thing drives many of them berserk: activist hedge funds, which buy stakes in companies and lobby for change. Last month Klaus Kleinfeld, the boss of Arconic, an industrial firm, succumbed to a bout of “activist apoplexy”. He sent a confidential letter to Paul Singer, head of Elliott Management, a fund that was trying to oust him. Its mysterious references to parties during the 2006 football World Cup in Germany and to a feather headdress seemed to be a threat to expose details about Mr Singer’s personal life. Mr Kleinfeld, who had spent over a decade running big listed firms including Siemens and Alcoa, resigned when his board found out. + +Bosses feel that they are being stalked by activists. Elliott is now in a confrontation with Akzo Nobel, a Dutch chemicals firm that is using a poison pill to resist a takeover by PPG, an American rival. Since 2010, on average, 8% of the firms in the S&P 500 index have faced an attack each year, according to Activist Insight, a research firm. And whereas they were once the gobby bad boys of capital markets, activists have got cleverer and harder to ignore. + + + +Consider Daniel Loeb, of Third Point, a $16bn fund that on April 27th demanded a break-up of Honeywell, an industrial firm. In the 1990s and 2000s, he was known for leaving messages in web chatrooms under the name “Mr Pink”. One of his “letters of mass destruction” advised a boss to retire to the Hamptons to “hobnob with your fellow socialites”. Today Mr Loeb makes his case in a more sophisticated way, with detailed analysis of firms. + +Instead of getting angry, CEOs need to get even. Schumpeter has put together a battle drill on how to cope with activists. It has four elements: know the enemy; prepare for them to attack; smother them with sincerity; and make concessions if you have to. Start with understanding activists, who play a useful role. As money flows into low-cost index funds, the job of scrutinising firms is being outsourced to a few dozen specialist vehicles. These analyse firms and seek the backing of the “lazy” money. A small fund with a good idea can win support to oust a big firm’s board. + +Activist funds also have weaknesses. Their bosses are often vain and impatient. To impress their own investors, they need to be seen to influence the running of big firms. They imagine they have superior strategic insights, articulated in long white papers. But often their proposals are banal demands for share buy-backs, which do not alter a firm’s underlying value. + +Preparing for the possibility of an activist attack is essential. As well as running the firm properly, that means getting closer to your other shareholders. Even companies under no obvious threat do this. For example, in 2016 and early 2017 members of Bank of America’s board of directors met or spoke by phone with investors representing 29% of the bank’s shareholder base. + +When activists make their move, CEOs must be seen to take them seriously. General Motors (GM) has just given a masterclass in the patient neutering of a flawed proposal. David Einhorn, of Greenlight Capital, wants it to create a new type of share paying high dividends. GM’s top management spoke with him ten times, and its board discussed the proposal three times, before rejecting it on March 28th. Even the most powerful bosses engage. In 2013 Tim Cook, Apple’s CEO, endured a dinner with Carl Icahn, an irascible raider who made his name in the 1980s. “We had a commonality, we know the technology world,” Mr Icahn graciously allowed. Apple ignored his call for a $50bn share buy-back. + +When the activist is partly right, however, this must be acknowledged. BHP Billiton, a giant mining firm, faces a triple-pronged critique from Elliott. On April 12th BHP rightly dismissed two of its demands—a call to alter its dual listing in Sydney and London and the usual demand for a share buy-back. But it may be more flexible about the third request, to spin off its shale-energy business, which has few synergies with the group. By showing an open mind the firm has removed the sting from the attack. + +If an agitator’s critique is broadly correct, a CEO must make concessions. Ideally this means flattering the activist’s ego while not giving him much influence. When DuPont agreed to merge with Dow Chemical in 2015, it gave advance notice to Nelson Peltz, who runs Trian, an activist fund, and secured his blessing. On March 22nd General Electric, which is struggling to increase profits, said that after talks with Trian, it had set new targets for cost cuts and tweaked its bonus scheme for its boss, Jeff Immelt. + +The ultimate concession is to give activists representation on the board in return for keeping schtum. Letting Wall Street-sized egos loose inside companies does not always go well. As a director of Blockbuster in 2005-10, for example, Mr Icahn refused to honour an agreement on the CEO’s compensation and made confrontational late-night phone calls. When Mr Loeb was a director of Yahoo in 2012-13 he clashed with its chief executive, Marissa Mayer, in a way that did not help the company. A better approach is to let activists appoint independent directors, who are supposed to represent all shareholders, not just their own agenda. + +Grin and bear it + +Adhering to the drill does not prevent all trouble. Mr Kleinfeld made mistakes—he never met Mr Singer, for example. But in 2016 his firm did appoint three independent directors with Elliott’s approval and that didn’t stop the hedge fund from resuming its attacks later. What ultimately did for Mr Kleinfeld was that his company had performed poorly for a long time. + +The converse is also true. Well-managed firms should be able to defend themselves; they may even benefit from the new age of activism, which obliges managers to refine their strategies, boards to be on the ball and firms to stay close to all of their shareholders. The main cost is that activists can chew up endless hours of a CEO’s time. Still, that is better than blowing your top and ending your career in a moment of madness. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21721953-activist-funds-have-moved-being-gobby-bad-boys-markets-bosss-guide-fending/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Briefing + + +American retailing: Sorry, we’re closed [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Sorry, we’re closed + +The decline of established American retailing threatens jobs + + +A love affair with shopping has gone online + +May 13th 2017 | New York + + + + + +IT DOESN’T look like much but Staten Island Mall is optimism in a cement box. Like all such retail spaces the temperature is carefully calibrated. Bland pop music wafts down beige halls. Its biggest tenants are America’s unholy trinity of struggling retailers: Macy’s, J.C. Penney and Sears, all of which are closing stores. This mall, however, is undergoing a rebirth. + +Gangs of builders are hard at work on a 235,000-square-foot expansion, adding nearly a fifth to the current floor space. This will house more shops, a new cinema and restaurants. In the old part of the mall, struggling tenants are making way for new ones. Sears will soon occupy just a quarter of its former space; two European discounters, Primark and Lidl, are taking its place. GGP, a real estate investment trust (REIT) that owns the mall, reckons that the $231m it is pumping into the expansion will bring healthy returns by 2019. “Good real estate wins,” says Sandeep Mathrani, GGP’s boss. It helps that the mall is the only one on a populous island. + + + +Elsewhere, the future of American shopping looks in much worse shape. The Shoppes at Buckland Hills near Hartford, Connecticut, is also owned by GGP but there are no big plans to invest here. The car park is almost empty. It is unclear if the branches of J.C. Penney, Macy’s or Sears in the mall will remain open or, if they shut down, whether new tenants will replace them. The mall faces relentless competition both from e-commerce and other shops nearby. An assistant sits patiently at a cash register, waiting for customers. “Day by day,” he sighs, “it gets worse.” + +Mall adjustment + +Therein lies the problem for America’s retailers. Not every mall or shop is dying. For now, store-occupancy rates are healthy. Nor have consumers stopped shopping. But they are spending money in new ways to the benefit of other businesses, such as restaurants, hotels and e-retailers, in particular Amazon. As a result, a giant established industry is descending into crisis. + +Last year about 4,000 shops closed their doors for good. In 2017 more than twice that number may shut, says Credit Suisse, a bank. Consumer confidence is strong and unemployment is at its lowest level in a decade, yet S&P Global Ratings expects retailing defaults this year to surpass those in 2009 when the economy was in the depths of a recession. + +The most important question is how far and how fast the industry might sink. This has implications not only for retailers and retail-property companies but also the financial firms that have given them money, from banks to life-insurance companies. The total amount of capital, both debt and equity, supporting American retailing (excluding Amazon) now exceeds $2.5trn, according to The Economist’s tally. + +The turmoil may also engulf millions of workers. The retailing industry employs 15.9m people, accounting for one in nine American jobs. The workforce has expanded by about 1m since 2012, yet a reversal looks inevitable. Since January the industry has shed 50,000 jobs, with more lay-offs sure to come. Mr Mathrani reckons that, for shopping centres to match demand, 30% of space should close permanently. In one particularly gloomy scenario, all retail property would shrink by as much. If staff dropped by the same proportion, 4.8m would be at risk of the sack—around half the number of American jobs lost during the financial crisis. Eventually, even more may be laid off, as remaining stores cut costs through automation. + +Our examination of property data from CBRE, a brokerage, suggests that some cities with fewer shops per person, such as New York and Seattle, may fare better, but that few parts of the country will be untouched. Retailing accounts for at least one in ten jobs in every American state. Not since the decline of manufacturing began in the 1980s has an industry with so many workers faced such a profound shift. + +These trends are not confined to America. Department stores in Japan are closing their doors. The Japan Department Stores Association estimates that national sales at such shops were worth ¥8.9trn ($63bn) in 2000, but fell to ¥6.2trn in 2015. Across the world, 192m retailing jobs are threatened by automation, according to estimates by the Eurasia Group, a consulting firm. However the change is particularly dramatic in America because, until very recently, the country’s retailing industry had enjoyed such astounding growth. + +Over the course of the 20th century retailers first built glistening downtown emporiums, and then expanded from main streets and city centres to the suburbs. Malls were conceived in the 1950s by Victor Gruen, an Austrian immigrant, as a new enclosed version of a town square. Sam Walton built his first Walmart in Rogers, Arkansas, in 1962 and would soon open big box after big box, each store making up in value for what it lacked in charm. The company’s annual revenues still outstrip those of any other listed firm in the world. + +The pace of development has ensured that America is now packed with stores. The country has about five times as many shopping centres per person as Britain. Retailing accounts for 31% of all commercial property, according to Cushman & Wakefield, a brokerage, the equivalent of more than 150,000 football fields. + +The shop-building boom brought with it plenty of jobs. As other sectors that had once thrived swiftly waned, retailing employment remained stable, at least until recently. Foreign workers may make goods but American cashiers still sell them. Retailing jobs surpassed those in manufacturing 15 years ago and now exceed them by 28%. Wages may be low for salespeople—$13 an hour on average. Nevertheless, a job in retailing is a reliable way for those with little training to earn money. Just 20% of shopworkers have a university degree. + +Americans’ changing shopping habits threaten all this. Consumers are spending more on eating out, holidays and, to their chagrin, health care. They are spending less on clothes, typically the main offering of department stores and malls. When shoppers do buy a dress or jacket, they want a bargain, an attitude spawned in the recession and ingrained in the years since. + +Although that has eaten away at sales for many traditional retailers, it has helped others such as Inditex’s Zara, a fast-fashion behemoth, and TJ Maxx and Ross, which sell last season’s designer styles at a discount. Such shifts in fortune would not have been enough to trouble the industry in the past. Shoppers have always ensured the survival of the fittest: ailing shops inevitably made way for more popular ones and consumers gained. But the rapid ascent of e-commerce, on top of these other trends, changes the game. + +The share of retail shopping done online jumped from 5.1% in 2011 to 8.3% last year. That figure disguises the damage e-commerce has done to specific parts of retailing (see chart 1). Two-thirds of books, music and films are now purchased online, as well as over two-fifths of office supplies and toys, according to Cowen and Company, a financial-services firm. For years retailers assumed that Americans would still prefer to buy clothes and shoes in a shop rather than from a website—consumers would surely want to feel the texture of a frock’s fabric, for example, and ensure a good fit. But a growing number of shoppers are happy to do without and shop from home. About a quarter of clothes and accessories are now bought online. + + + +Amazon has both benefited from this shift and accelerated it, setting new standards for choice and service—in 30 American cities, members of its subscription service, Prime, can receive goods within two hours, at no extra cost. The harder retailers try to keep up, the less profitable they become. Spending on shipping and digital infrastructure chomps at margins even as retailers’ online sales cannibalise those from their stores. For every percentage-point increase in their share of e-commerce sales, a retailer’s margins shrink by about half a point, according to estimates by Morgan Stanley, a bank. And still Amazon races ahead. Last year it accounted for over half of all new online spending in America. + +The result is that America’s rich landscape of shops now looks like a dangerous glut. Since the start of 2016 Macy’s has announced that it is closing 140 shops. J.C. Penney said in March that it would shut 138. More closures are sure to come. Department stores’ floor space has contracted by 11.5% since 2006, but sales have shrunk more than twice as fast, according to Green Street Advisors, a real-estate research firm (see chart 2). To reach the inflation-adjusted sales productivity of 2006, at least another 800 department stores would need to close, reckons D.J. Busch at Green Street. + + + +Even that might not solve retailers’ problems. Shutting unproductive stores is fraught with peril: shops risk losing their customers to competitors, both online and off. Karen Hoguet, Macy’s chief financial officer, has noted that when a chain closes a store in a particular area, online sales in that region often drop, too. + +Department stores are not alone in their woes. Private-equity firms were once able to boost profits at a middling retailer by hiring new managers and untangling supply chains. The Shoppes at Buckland Hills features a parade of private-equity bets: Claire’s, owned by Apollo, rue21 (Apax) and Gymboree (Bain Capital). All have too few shoppers and too much debt. If that continues they may go the way of Payless Shoe Source, owned by Blum and Golden Gate Capital, which declared bankruptcy last month. + +Trouble in store + +Taken together, these changes plague a growing number of retailing properties. Small strip malls—lines of stores united by a car park—have fared better, says Garrick Brown of Cushman & Wakefield, thanks to their mix of shops and restaurants as well as dry cleaners, dentists and other services. But high streets in towns and cities, malls and larger strip malls, where chain stores proliferate, are under pressure. + +Malls, which account for 8% of America’s retailing space, are particularly vulnerable. When a department store leaves a mall, other tenants are often allowed to renegotiate or end their leases. So if a big store closes, the prospect that fewer shoppers will visit makes it more likely that others will abandon the mall, too. Ailing malls might seem like good news for nearby competitors but they should not feel too smug. Struggling malls, in an effort to fill vacant spaces, are wooing businesses that now occupy larger strip malls, such as grocery chains and discounters. It is unclear if there are enough of these to go round. + +The upheavals of the retailing industry give good reason for worry to a growing list of companies, investors and workers. The threat to retailers and the property companies that serve them is clear. American retailers (excluding Amazon) have a market value of about $1.6trn. The best-managed ones, such as Walmart and TJX, which owns TJ Maxx, look robust. But some of that $1.6trn will vanish, despite efforts to close weak stores and improve those that remain. + +The share prices of the two biggest retailing REITs, Simon Property Group and GGP, have already plunged by about a quarter since July. They are now investing in their best malls, seeking to replace sickly retailers with popular new ones. “We actually view this to be the biggest upside in our business,” says Mr Mathrani. They have also tried to protect themselves from the worst performers. Simon spun off its weakest malls into a separate firm in 2014. GGP did the same in 2012. Those spin-offs are now discarding their most rotten malls. + +Beyond retailers and REITs, it is less clear where the brunt of the travails will be felt. The sale of bad malls has shifted that problem to a variety of private investors. The ownership of strip malls and free-standing stores is fragmented, making it hard to work out who would be damaged as the decline of retailing quickens. + +Talking shop + +The picture for debt is equally muddy. Bank of America is unusual in that it discloses its exposure to retailing: about $50bn, equivalent to more than a quarter of its core capital. No comprehensive tally of retailing-property debt exists. According to Morgan Stanley, most loans last year came from regional banks, commercial mortgage-backed securities (bonds backed by cash flows from commercial property), national banks and insurers. The Economist’s examination of data from Bloomberg, the Mortgage Bankers Association and TreppAnalytics, a firm which tracks commercial mortgage-backed securities, suggests that the combined debt of retailing companies and retailing property is roughly $1trn. However the market’s opacity means that the impact of any losses is hard to predict. + +The effect on the 15.9m people who work in retailing is obvious, and already visible. Clothing, office-supplies and department stores have seen some of the heaviest job losses. Some jobs, such as selling groceries, are safer—slim margins and the logistical challenge of delivering perishable, bruisable food means most shoppers still buy in stores. The Economist has calculated what might happen to retailing workers (excluding those who work in car and fuel sales), if e-commerce grows as Cowen expects. Assuming that employment in stores rises or falls with changes in those stores’ sales, and that labour productivity improves at historical rates, retailing jobs could shrink by 12%, or 1.5m jobs, by 2022. If e-commerce’s share of sales is 50% greater than what Cowen expects, employment could fall by 17% (see chart 3). + + + +Even these assumptions may be rosy. Retailing jobs are threatened not just as companies close shops but as the remaining ones try to beef up their profitability. Lowering labour costs can take many forms. In a recent study, LEK, a consultancy, pointed to Aldi, a German grocer, which has taken simple steps such as requiring shoppers to pack their own bags. Kroger, an American supermarket chain, has invested in an automated system to regulate and report refrigerator temperatures, so staff do not have to track them manually. Amazon is testing digital tools that allow shoppers to pick up goods in a store and leave without stopping at a cashier. + +The boom in e-commerce is sometimes touted as an alternative for shop workers facing the chop. Indeed, e-commerce and warehouse jobs are a growing share of the workforce: they are now equivalent to 10.1% of retailing employment, up from 8% a decade ago. Amazon is hiring at a furious pace. In January the firm said it would add 100,000 workers in America by July 2018. These cheery figures may not offer much comfort in the long term. At its current pace, by July 2018 retailing will have shed three times as many jobs as Amazon is due to create. + +Trends in job advertisements also offer only fleeting solace. Listings scoured by Burning Glass, a job-analytics firm, initially suggest a positive trend: from 2014 to 2016 the total number of vacancies in traditional retailing dropped, but this was offset by postings for e-commerce, warehousing and tech jobs in retailing. Yet the skills required for retailing’s new jobs differ from those needed for old ones. Burning Glass found that 78% of e-commerce postings want applicants with a university degree, compared with just 12% in traditional retailing. Even warehouse positions demand more training: 53% of jobs in automated warehouses also require a degree. + +Checking out for good + + + +Couriers need less training to ferry goods to customers’ doors. Their ranks have grown to 655,000 workers last year. But that is a tiny sliver of the total retailing workforce. Retailing workers might switch to the companies that are taking over empty stores, including restaurants, beauty salons and health clinics. But it is as improbable that such firms will replace all of America’s boarded-up shops as that they will offer jobs to every former shop worker, particularly those without training. + +Bye-bye buy, buy + +Nowhere has escaped these changes. Even in Manhattan, rents have fallen in some trendy shopping areas. But the shifts will be uneven. Mr Busch of Green Street notes that malls and other stores in areas with wealthy, educated residents will perform better. More vulnerable are places where the supply of shops overwhelms demand. Since 2000 the construction of strip malls has increased even as the population has declined in several rustbelt cities, including Cleveland, Detroit and Pittsburgh. Just as many factory workers in those cities had to find new jobs, so too will shop workers. + +Take Saginaw, an old industrial city in Michigan that has seen its population ebb. It has the country’s sixth-highest concentration of retailing workers. That may change. A publicly traded REIT called CBL recently sold Saginaw’s Fashion Square Mall to a private buyer. Morningstar Credit Ratings thinks the mall’s loan is likely to default when it matures in 2022. Alder Hill, a hedge fund that has bet against mall loans, calls Fashion Square a “melting ice cube that will likely be run to maximise cashflow” before its owner walks away. + +This slow melt has so far attracted little attention from politicians, despite jobs in retailing outnumbering those in coal mining, which has caught the political eye, by a factor of 300. The most substantial policy idea that will affect retailing will probably not become law. That’s just as well. Congressional Republicans’ tax plans include a border-adjustment tax, which retailers say would raise the price of imports, thereby crunching margins or forcing price increases. Any other intervention seems unlikely. Americans, so used to visiting shops packed with enticing goods, may have to get used to many more empty ones. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21721900-love-affair-shopping-has-gone-online-decline-established-american-retailing/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Finance and economics + + +India’s economy: Pumping the country dry [Fri, 12 May 07:08] + +Buttonwood: The big squeeze [Fri, 12 May 07:08] + +Clearing-houses and Brexit: Clearing out [Fri, 12 May 07:08] + +Africa’s economy: Dispensing with informalities [Fri, 12 May 07:08] + +China’s economy as television soap: In the name of GDP [Fri, 12 May 07:08] + +Crowd-sourcing hedge funds: The wisdom of the herd [Fri, 12 May 07:08] + +Free exchange: Embrace the contradictions [Fri, 12 May 07:08] + +2017 Marjorie Deane internship [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +In a state + +India needs to curb a borrowing spree by its state governments + + +Savings in the central-government budget are more than offset by splurging by the states + +May 11th 2017 | MUMBAI + + + + + +WHICH Indian state sounds more likely to repay a loan: Bihar, the country’s poorest, with a budget deficit of nearly 6% of its state GDP last year and a hole in its finances after it banned alcohol sales; or Gujarat, a relatively prosperous coastal region with a deficit nearer to 2%? According to bond markets at least, both are equally good credits, and so pay the same interest rate. As welcome as such mispricing might be to the Bihari authorities, it is brewing trouble for the rest of the Indian economy. + +The borrowing habits of Bihar, Gujarat, and India’s 27 other states used to be below the radar of all but the pointiest financial eggheads. The indebtedness of India, and its annual budget deficits—both high by emerging-market standards—could largely be blamed on the profligacy of the central government in Delhi. But an explosion in the net amounts borrowed by states over the past decade (see chart), from 154bn rupees in 2006 ($3.5bn then) to an estimated 3.9trn in the fiscal year just ended ($60.4bn now), means they now require nearly as much funding as the centre. + + + +The shift in financial gravity from Delhi to the states is fraught with problems. For one, there is a data vacuum: state-budget documents are compiled, if at all, by central authorities after over a year’s delay. And though the central government has done its utmost to pare the country’s budget deficit, mindful that interest payments guzzle up around a third of central-government tax revenue, state chief ministers have spent much of the saving. That has left the combined state- and central-government budget shortfall at the same level (see chart)—and India’s credit-rating stuck just one notch above “junk” territory. + + + +Investors are lending money to all the states at the same rate for good reason: the central government, through much nudging, winking and head-shaking, has indicated it will look after them if the states default. It also compels publicly owned banks, pension funds and insurance companies to pile in. So states’ chief ministers have every incentive to binge on the artificially cheap debt; a 3% annual deficit cap is waived as often as it is enforced. + +Some states are running deficits because of sagging revenues. A handful plan to copy Bihar’s prohibition, although booze brings in over a quarter of some states’ income. The sudden “demonetisation” of the economy in November stalled construction, and so stamp-duty receipts. Increased central-government transfers have made up only part of the shortfall. + +Runaway expenditure has a bigger impact. Not all the spending is wasteful: states have sensibly restructured the debts of power-distribution companies, an expensive but worthwhile exercise. But much is politically indulgent. Most of the new outlay is about current expenditure rather than on growth-enhancing capital investment, says Pranjul Bhandari of HSBC, a bank. A pay rise to central-government civil servants is expected to be matched by states. Some spending is outright populist, notably the waiver of repayment of loans to farmers recently enacted in Uttar Pradesh, the biggest state, at a cost of over 2.5% of its GDP. Worryingly, other states are contemplating this, raising the risk of what Ms Bhandari calls “competitive populism”. + +The states’ profligacy pushes up the interest rates the central government has to pay, because of the risk it will have to bail out a wayward state. But it has a wider impact. In India capital is scarce, and foreign inflows restricted, so states compete with companies and consumers hoping to borrow from the same sources. Because states’ bonds are less liquid than the central government’s, they pay a slight premium to attract investors. That used to be around 0.4 percentage points, but has swollen to just under 1 percentage point recently. + +Sajjid Chinoy of JPMorgan Chase, a bank, says that increase has in turn affected how much it costs companies to issue bonds. Why lend to a company such as Tata or Reliance or to a homebuyer at 1% over what the central government pays to borrow, if lending to any state government yields the same and bears an implicit guarantee from Delhi? + +Companies rely predominantly on bank finance. But banks are undercapitalised, their equity cushions wiped out by rash lending. By hogging the money investors such as pension funds and insurance firms could be investing in companies, states have made it harder for those companies to move away from bank borrowing to bond issuance. That in turn makes it more likely that the government, which owns most of the banks that do most of the lending, will have to inject more capital into them, so worsening the deficit in yet another way. + +Crunching data from disparate states, Mr Chinoy says state borrowing rose by a whopping 32% in the year to March 2017, after a 25% rise in the previous year. Even in a fast-growing economy, that is enough to set nerves jangling. To convince states to enact a nationwide goods-and-services tax from July, the central government has committed to guarantee the revenues received by states for five years. If only it had struck a deal to limit their spending instead. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21721908-savings-central-government-budget-are-more-offset-splurging/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Buttonwood + +The investment- management industry faces a big squeeze + + +It is likely to lead to further consolidation + +May 11th 2017 + + + + + +MAKING money yourself from investing other people’s has been a good business for over a century. Asset managers established a key principle early on: they could charge an ad valorem fee on the amount they oversee. So when markets go up, their fees go up. + +But as the title of a recent London Business School conference indicated, investment management is “an industry in disruption”. Abhijit Rawal of PwC, a consultancy, described the sector’s problems as the “four Rs”: returns are low; revenues are being squeezed; regulations are being tightened; and the robots are coming to take away business. + + + +Plenty of potential for growth remains, as workers save for retirement. But the industry faces the same sort of cut-throat competition that technology has caused elsewhere. The oldest challenge comes from index trackers, funds that try simply to match the performance of a benchmark like the S&P 500. It took many decades for such “passive” funds to become widely accepted, but they are rapidly gaining market share. Vanguard, a big passive manager, received more than half of all global fund inflows last year. + +Big tracker funds can drive down fees through economies of scale. The expense ratio for Vanguard’s S&P tracker is just 0.04% of its assets. The average active American equity fund, which tries to beat the index, charges 0.8%. Such fund managers may claim they can outperform the market but in practice few do so consistently. Over the 15 years to the end of December 2016, less than 8% of American equity funds managed that feat. As an old quip has it, “you make your money working in active management but invest the proceeds passively.” + +Some managers think they can beat the market by backing certain types of company: those that look cheap on valuation measures such as asset value or dividend yield, say. But even here technology is eroding the case for active management. Computer programs can select stocks on the basis of such criteria at low cost. These “smart beta” funds are gaining ground. The result is that average fees are being dragged down across the industry. According to the Investment Company Institute, a group that represents fund managers, the average expense ratio of American equity mutual funds, weighted by assets, fell from 0.99% in 2000 to 0.68% in 2015. + +One reason why high-cost funds have survived for so long is the way that savings products are sold. Many retail investors rely on brokers to advise them; these brokers are often paid commissions or fees by fund managers. These are then passed on to clients in the form of higher management fees. Passive funds do not offer such inducements, so they used not to get recommended. But regulators have been cracking down on such arrangements: Britain stopped these payments in 2013. Trackers have made strong gains since then. + +A new disruptive element is the arrival of “robo-advisers”, which offer investors low-cost, diversified portfolios based on their aims and risk profiles. These are popular with younger investors, who are used to buying products online. + +Another challenge for fund managers is a change in the corporate-pensions market. Fewer companies are offering defined-benefit (DB) pensions, which are linked to a worker’s salary; new employees now have a defined-contribution (DC) pension, the benefits of which are not guaranteed. Employers offering DB pensions need to generate a high return to keep contributions down, so many tend to use specialised “boutique” managers. But DC plans often offer a default fund, chosen by most employees; these usually employ a more limited range of fund managers. The market tends to be concentrated in the hands of big fund-management groups and insurance companies, which can handle the administration of the scheme as well as the investing. + +The result is that the industry seems bound to consolidate. A spate of recent mergers of big fund managers has included one between Henderson, an Anglo-Australian firm, and Janus, an American one. There is plenty of scope for the sector to thrive, if it adapts. It seems likely that retiring baby-boomers will rely more on their own resources, and less on the state, and those assets will need managing. Many investors will opt for multi-asset funds, which own equities and bonds; these are less vulnerable to index-tracking because there is no obvious benchmark. And plenty of people will want the reassurance of speaking to a human being, rather than rely on robo-advice. The challenge for fund managers will be to provide it all at a reasonable cost. + +Economist.com/blogs/buttonwood + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21721905-it-likely-lead-further-consolidation-investment-management-industry/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Clearing out + +The EU ponders moving euro clearing from London after Brexit + + +Tens of thousands of jobs are at stake in Britain + +May 11th 2017 + + + + + +BREXIT has thrust a mundane, if crucial, bit of financial-market plumbing into the spotlight: the clearing of financial instruments. Clearing-houses sit in the middle of a securities or derivatives transaction, and ensure that deals are honoured even if one counterparty goes bust. In November a study commissioned by the London Stock Exchange (LSE) warned that if euro clearing was forced out of the City, 83,000 British jobs could be lost, and a further 232,000 affected. On May 4th the European Commission said it was looking into new rules for euro-denominated clearing. One option is relocation from London, an idea greeted in the City with a mixture of incredulity, disdain and fear. + +In the wake of the financial crisis, the G20 group of big economies made it mandatory to settle most simple derivatives trades through clearing-houses. By 2016, 62% of the notional $544trn global over-the-counter derivatives market was settled in this way. Globally, London handles 37% of foreign-exchange derivatives and 39% of interest-rate derivatives, including three-quarters of those in euros (see chart). So unsurprisingly, it also dominates clearing. LCH, a clearing-house that is part of the LSE, clears over 50% of all interest-rate swaps across all currencies. Around 75% of those in euros are cleared in London. + + + +But centralising clearing concentrates risk: the failure of a clearing-house would be disastrous. So clearing-houses require collateral from the counterparties using them, and must submit to close supervision. The European Central Bank has long worried that it has no direct control over euro-denominated clearing outside the euro area, yet any problems would embroil banks and payment systems within it. In 2015 it lost a court case against Britain over its attempt to force clearing to move. Many jurisdictions, the EU included, limit their financial institutions’ access to foreign clearing-houses. The European Securities and Markets Authority (ESMA) lets European firms use clearing-houses only in countries it has deemed “equivalent”, ie, America and a dozen others. + +Brexit necessitates a new arrangement. The City has mostly been focused on obtaining “equivalence”. But the commission argues the systemic importance of British clearing-houses for the euro area may well require new, stricter oversight. So it is assessing two other options. “Enhanced supervision”—favoured by ESMA—would mean adopting the American model, in which clearing-houses that deal directly with American clients, such as the LCH, are also supervised by the American regulator. But the other option—forced relocation—has gained the support of many senior EU policymakers. Barney Reynolds of Shearman & Sterling, a law firm, insists it would not amount to much: the most the EU could do is to compel European banks to use EU-based clearing-houses. Since firms based in the EU outside Britain account for only 7% of cleared euro-denominated interest-rate derivatives at LCH, the impact could be modest for London. LCH itself claims the result would be a larger euro-denominated market outside the EU and a smaller, less-liquid euro-area market. + +Since America tolerates 97% of dollar interest-rate swaps being cleared in London, it seems perverse for the EU to shift euro clearing. But Simon Puleston Jones of FIA, an industry body, points out that America is comfortable because its regime allows its regulators much greater oversight. If Brexit turns acrimonious and precludes a moderate change such as enhanced supervision, Europeans may seek blunter instruments. It is not just Brexiteers who want to take back control. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21721949-tens-thousands-jobs-are-stake-britain-eu-ponders-moving-euro/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +A lighter shade of grey + +Africa’s informal economy is receding faster than Latin America’s + + +But the shadow economy still equivalent to about 40% of GDP + +May 11th 2017 + + + + + +COMMON to all men, according to Adam Smith, is “the propensity to truck, barter and exchange”. Less common is a willingness to report all of this enterprise to the authorities (which have a propensity to register, regulate and tax). South Africa’s spaza shops (convenience stores often run from people’s homes), Kenya’s jua kali (a Swahili term referring to the “hot sun” under which craftsmen traditionally made and sold their wares) or Senegal’s tight-knit networks of Mouride street peddlers—all contribute to the informal economy. This shadow economy, which includes unregistered enterprises and off-the-books activity by registered firms, is difficult to measure, almost by definition. But this week the IMF released new estimates of its size. + +The fund’s economists inferred the size of the informal economy indirectly, based on more visible indicators that either cause informality (heavy taxes, high unemployment and patchy rule of law) or follow from it. The consequences include suspiciously low numbers of people officially working or seeking work, and a heightened demand for currency, since informal firms operate mostly in cash. The IMF also tracks a gauge of activity that is hard to conceal: the brightness of a country’s lights at night, as recorded by weather satellites. + + + +According to their results, the informal economy is equivalent to almost 40% of GDP in the average country of sub-Saharan Africa. That is a big number, but not as large as it was in the 1990s (almost 45%). Indeed Africa’s rate of informality may now be lower than Latin America’s. (The African average masks a wide range, from under 25% of GDP in Mauritius and South Africa to about 65% in Nigeria.) + +Some policymakers see informal enterprises as parasitical, profiting at the expense of more scrupulous rivals who heed regulations and pay taxes. Others see them as aspirational, embodying the poor’s entrepreneurial spirit and ambitions for the future. Often, these businesses are neither. They are just the employer of last resort for people with few other options. In sub-Saharan Africa, about a third of those starting a business are doing so out of necessity not inclination, a higher percentage than in other emerging economies. Many join the shadow economy to escape destitution, not regulation or proletarianisation. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21721947-shadow-economy-still-equivalent-about-40-gdp-africas-informal/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +In the name of GDP + +In China, a TV soap on corruption attracts a mass following + + +And one character—an official obsessed with GDP growth—becomes a cult hero + +May 13th 2017 | SHANGHAI + + + + + +RARELY has a Chinese city boss had more fans than Li Dakang, the earnest, driven Communist Party chief of Jingzhou. “I want development, I want speed and I want GDP,” he recently intoned. “But I want it to be modern GDP, GDP that comes without pollution.” Over the past month tens of millions have tuned in to watch him strive to fulfil these promises. On their smartphones, they share images of the heavy-eyed man with an easy smile, quoting his words and cheering him on. His policies have even been immortalised in a musical tribute, “The GDP Song”. + +Li Dakang is not real, nor is Jingzhou. They exist only on “In the Name of the People”, a wildly popular 55-part television series about China’s battle against graft. Since its first broadcast in March, the show has attracted attention for its depiction of official corruption, unusual in the context of Chinese censorship. Less noted is the insight it has offered into a range of China’s economic problems—not just in its storyline but in the viewing public’s reaction. + + + +The show touches on economic topics often too hot for the Chinese media to handle. Factory workers clash with police after a bankruptcy wipes out their company shares. A senior leader’s child amasses big stakes in local firms for his family. A small-business owner ends up in hock to loan sharks. Local bankers demand “consulting fees” when extending loans, pocketing the cash. (So realistic is this portrayal that the Chinese press reports that Guo Shuqing, the country’s most senior banking regulator, pointed to the show in a warning to banks at a recent meeting.) + +The most consistent economic storyline is Li’s relentless pursuit of growth and the problems this narrow focus brings. He himself seems clean, but turns a blind eye to corruption around him. His insistence on moving quickly causes real harm. As a young official, a frenzied drive to build a country road leads to a village chief’s death. Later in his career, his hasty decision to bulldoze a factory sparks a protest in which more than 30 people are injured. + +This sorry record seems grounds to object to Li. Instead, this flawed figure is by far the show’s most beloved, more so than the dedicated, upright officials who lead the party’s anti-graft battle. Online merchants, a good bellwether of trends, have started selling versions of the sleeveless jumper and tea Thermos that he favours. The internet memes doing the rounds—for instance, a pledge to “defend GDP” for Li’s sake—are partly in jest but do reveal support for public servants in his mould. + +Why is Li Dakang so liked? In part because, warts and all, he is more believable than the saintly officials seeking to snuff out corruption. But there is more to it. Even when Li makes mistakes, his obsession with growth is very well received. Cautious, clean officials who err on the side of inaction are seen in a much less flattering light. In recent years China has started to emphasise policy goals other than GDP, from promoting culture to protecting the environment. Li Dakang-mania shows there are limits to this shift, and not just because of the government. Fast growth is still immensely popular. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21721902-and-one-characteran-official-obsessed-gdp-growthbecomes-cult-hero-china/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +The wisdom of the herd + +A new sort of hedge fund relies on crowd-sourcing + + +Amateur coders write algorithms to compete for funds + +May 11th 2017 + + + + + +“QUANT” hedge funds have long been seen as the nerdy vanguard of finance. Firms such as Renaissance Technologies, Two Sigma and Man AHL, each of which manages tens of billions of dollars, hire talented mathematicians and physicists to sit in their airy offices and develop trading algorithms. But what if such talent could be harnessed without the hassle of an expensive and time-consuming recruitment process? That is the proposition Quantopian, a hedge fund and online crowd-sourcing platform founded in 2011, is testing. Anyone can learn to build trading algorithms on its platform. The most successful are then picked to manage money. Last month the firm announced it had made its first allocations of funds to 15 algorithms it had selected. + +Quantopian would appear to have one striking advantage over its competitors: sheer weight of numbers. The difficulty of hiring and a desire for secrecy limit even big quant funds to a full-time research staff in the low hundreds (Man AHL, for instance, has 120). Quantopian boasts 120,000 members on its platform. + + + +These are amateurs, however, not full-time employees. John Fawcett, Quantopian’s CEO, says many sign up to learn how to apply algorithms to trading; they usually already have experience in coding and modelling in domains outside finance. Few will have their algorithms selected, an honour that comes with a licensing fee of 10% of net profits . The rest can at least use their algorithms to trade their own money. + +Mr Fawcett plans both to allocate funds to more algorithms, and to increase allocations to those already picked. There is no dearth of capital. Steve Cohen, a big-name investor who survived an insider-trading scandal at his previous hedge fund, provided some of Quantopian’s venture-capital funding and has pledged up to $250m to promising algorithms on the platform. The firm intends to launch a fund open to other investors this year. + +Quantopian-like models have the potential to bring the gig economy to high finance. Most people on its platform hold full-time jobs or are students, earning some income on the side. At least one quant hedge fund has already bet on the trend. WorldQuant’s WebSim platform, like Quantopian’s, offers access to financial data and a way to test ideas, though it is geared towards more basic research. The best performers on WebSim can become paid part-time research consultants, of whom there are now close to 500, nearly as many as WorldQuant’s full-time staff. + +It is still early to judge Quantopian’s allocations (ranging from $100,000 to $3m per algorithm) by their financial return. As a pioneer, it has no obvious comparators. Some algorithms at Quantiacs, a competitor with only around 6,000 members on its platform, have generated up to 40% returns in the past year, but that is with small allocations of capital (Quantiacs has yet to manage outside assets). So the real test for the crowd-sourcers lies ahead: will a deeper talent pool mean better performance, even when serious money is involved? + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21721946-amateur-coders-write-algorithms-compete-funds-new-sort-hedge-fund/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Free exchange + +William Baumol, a great economist, died on May 4th + + +A prolific writer and originator of the idea of “cost disease”, he was 95 + +May 11th 2017 + + + + + +ON MAY 4th William Baumol, one of the great economists of the 20th century, died. Mr Baumol, who kept working into his 90s, published more than 500 papers across a dazzling array of topics; his best-known work, describing “cost disease”, was essentially a side-project. He was a scholar whose stray thought on a sleepless night could change how people see the world. + +Mr Baumol was born in the South Bronx, attended New York public schools and took an undergraduate degree at the College of the City of New York. Shaped by his family’s left-wing views, in high school he read Karl Marx, which kindled an interest in economics. He did his PhD at the London School of Economics; he defended his dissertation “over whiskies and sodas at the Reform Club”. He spent most of his long career at Princeton University. He had long been on the shortlist for a Nobel prize; sadly, death means he cannot receive one. + + + +His contributions will endure, however. Mr Baumol’s primary intellectual focus was the entrepreneur, whose role was badly neglected by prevailing economic theories. This, he reckoned, was an intolerable omission. The difference between rich countries and poor ones rests on differences in their use of technology, he argued, and it is through enterprising individuals and firms that innovations go from the drawing-board to active use across an economy. Business theories, he lamented, inevitably treated people as automatons, rather than potential revolutionaries. + +Mr Baumol did better, casting entrepreneurs as crafty strivers dedicated to raising their personal status, who plot their course in life based on the incentives they face. Policy determines whether that means climbing the bureaucracy or founding Microsoft. + +He helped move economics beyond the narrow ideal of perfect competition by introducing the idea of contestable markets, in which competitive pressure comes from the worry that rivals will swoop in to vie for a market if incumbents are anything other than ruthlessly efficient. Perfectly contestable markets should be just as efficient as perfectly competitive ones, even if only a handful of firms dominate a business. His framework gave economists a way to model what they previously could not: why some industries have lots of firms and others have just a few. Firms should enter the market until all are operating at the most efficient scale (so they cannot cut costs by selling more or fewer units). He was not preaching the Panglossian infallibility of markets. Rather, he helped economists understand why some industries might be more concentrated than others—and when oligopoly is a consequence of corporate chicanery rather than market efficiencies. + +Yet Mr Baumol will be remembered best for his cost disease. Its origin was unlikely: a commission to help those promoting the arts understand the financial struggles that cultural organisations faced. A report co-written with William Bowen closed with a simple but striking observation. Workers in the arts compete in the same national labour market as those in factories. As rising productivity in manufacturing lifts the wages of factory workers, arts organisations must pay their staff more to keep them from quitting to make widgets. But rising wages in the arts are not matched, as in manufacturing, by corresponding productivity growth: performing a piece by Schubert took the same time and the same number of musicians in the 20th century as it did in the 19th. Thus rising costs and stagnant productivity create increasing pressure over time to raise ticket prices, or take in more donations, or produce less art. The analysis bore relevance outside the arts, he quickly realised. Technological progress in some industries implies that in services with relatively low rates of productivity growth—like health care, education and government—swelling costs will outstrip growth in productivity. Costlier public services are a necessary side-effect of long-run growth. + +Cost disease is a powerful but frequently misunderstood concept. Sectors in the low-productivity bucket are not necessarily doomed to remain there. In future, new technologies could allow fewer teachers or doctors to serve many more students and patients. Nor must cost disease always entail a crisis of affordability. The wage increases driving it are a side-effect of productivity gains elsewhere, which make the economy richer. Trouble results, Mr Baumol pointed out, when rising spending creates political pressure for cutbacks, leading to needless deterioration in the quality of services. Whereas cost-saving efficiencies are both possible and welcome, budget cuts premised on the notion that the share of spending on, say, education should remain flat hinder rather than help the economy. Indeed, if stagnant services complement an economy’s high-flying sectors (plying tech firms with educated workers, for example), then rising employment in stagnant areas raises rather than lowers overall productivity growth. + +Cost disease also provides a vision of a world of large-scale automation. As machines become better at doing things, the human role in generating faster productivity growth will converge towards zero. At that point, so long as society expects everyone to work, all spending in the economy will go towards services for which it is crucial that productivity not grow, in order to provide jobs for everyone. Society could seemingly be both characterised by technological abundance and paralysed by cost disease. + +Practising theorist + +Mr Baumol revelled in such contradictions. In the 1990s he tackled trade, and found that in the presence of economies of scale, production could get stuck in the “wrong” place—a country with an underlying comparative advantage might still fail to dislodge production from incumbent exporters. He relished hard questions, and was happy to find that a hunch of his proved mistaken on closer scrutiny. Probing, pragmatic and humble intellects are all too rare in economics. They are now scarcer still. + +Visit our Free exchange economics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21721906-prolific-writer-and-originator-idea-cost-disease-he-was-95-william/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +2017 Marjorie Deane internship + + +May 11th 2017 + + + + + +Internship The Economist invites applications for the 2017 Marjorie Deane internship. Paid for by the Marjorie Deane Financial Journalism Foundation, the award is designed to provide work experience for a promising journalist or would-be journalist, who will spend three months at The Economist writing about economics and finance. Applicants are asked to write a covering letter and an original article of no more than 500 words suitable for publication in the Finance and economics section. Applications should be sent to deaneintern@economist.com by June 2nd. For more information, please visit www.marjoriedeane.com. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21721968-2017-marjorie-deane-internship/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Science and technology + + +Artificial intelligence: Shall we play a game? [Fri, 12 May 07:08] + +New materials: The lotus position [Fri, 12 May 07:08] + +Musical instruments: Debranding [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Artificial intelligence + +Why AI researchers like video games + + +Games help them understand reality + +May 11th 2017 + + + + + +LAST year Artur Filipowicz, a computer scientist at Princeton University, had a stop-sign problem. Dr Filipowicz is teaching cars how to see and interpret the world, with a view to them being able to drive themselves around unaided. One quality they will need is an ability to recognise stop signs. To that end, he was trying to train an appropriate algorithm. Such training meant showing this algorithm (or, rather, the computer running it) lots of pictures of lots of stop signs in lots of different circumstances: old signs and new signs; clean signs and dirty signs; signs partly obscured by lorries or buildings; signs in sunny places, in rainy places and in foggy ones; signs in the day, at dusk and at night. + +Obtaining all these images from photo libraries would have been hard. Going out into the world and shooting them in person would have been tedious. Instead, Dr Filipowicz turned to “Grand Theft Auto V”, the most recent release of a well-known series of video games. “Grand Theft Auto V” is controversial because of its realistic portrayal of crime and violence—but from Dr Filipowicz’s point of view it was ideal, because it also features realistic stop signs. By tinkering with the game’s software, he persuaded it to spit out thousands of pictures of these signs, in all sorts of situations, for his algorithm to digest. + + + +Dr Filipowicz’s stop signs are one instance of the fondness that students of artificial intelligence (AI, of which machine vision is an example) have for video games. There are several reasons for this popularity. Some people, such as Dr Filipowicz, use games as training grounds for the real world. Others, observing that different games require different cognitive skills, think games can help them understand how the problem of intelligence may be broken down into smaller, more manageable chunks. Others still, building on these two observations, think games can help them develop a proper theory of artificial (and perhaps even natural) intelligence. + +Learner driver + +For all of this to happen, though, the games themselves have first to be tweaked so that they can be played directly by another computer program, rather than by a human being watching the action on a screen. “Grand Theft Auto V”, for instance, can be turned from a source of pictures of road signs into a driving simulator for autonomous vehicles by bolting onto it a piece of software called “Deep Drive”. This lets the driving and navigation programs of such vehicles take control—a cheaper and safer way of testing driving software than letting it loose on roads. + +Games companies are beginning to understand this. In June 2015, for instance, Microsoft started Project Malmo, an AI-development platform based on a popular “world-building” game called “Minecraft” that it had recently purchased. In November 2016 Activision Blizzard, owners of “Starcraft II”, a science-fiction strategy game in which players build and command human and alien armies, announced something similar in collaboration with DeepMind, an AI firm owned by Alphabet, Google’s holding company. + +The following month, with the permission of the owners involved, a privately financed research group in San Francisco, called OpenAI, released “Universe”. This is a piece of software, free for all to use, which features hundreds of games presented in ways that mean they can be played directly by appropriate programs. The offerings in “Universe” range from bestselling, big-budget titles such as “Portal 2” (a physics-based puzzle game) to cheap-and-cheerful web games like “Bubble Hit Pony Parade” and “James the Space Zebra”. + +One of Microsoft’s hopes in starting Project Malmo was to teach AI software to collaborate with people. To this end, Katja Hofman, the project’s head, is trying to use “Minecraft” to create an advanced personal assistant. Her goal is software that can anticipate what its human operator wants, and help him achieve it. “Minecraft”, which is simpler than the real world but still complicated enough to be interesting, makes the perfect testing-ground. Dr Hofman and her colleagues are, for instance, using it to try to teach a computer to work out that it must co-operate with a human player in order to catch a virtual pig. Since the machine is incapable of understanding written instructions, it must learn co-operation purely by watching the actions of its human confrères in the game. + + + +Acting as training wheels for the real world is not, however, the only thing video games can do for AI. The fact that different games require different talents helps researchers chop up the problem of intelligence. In 2015 DeepMind released a paper describing how its researchers had trained an artificial neural network—a program based loosely on the structure of a biological brain—to play dozens of different games released in the 1970s and 1980s by Atari, a pioneering video-games company. + +Some games proved harder than others for the network to master. “Breakout”, which is a bit like a single-player version of tennis, was easy. The objective is to smash floating blocks by hitting them with a bouncing ball. A player can do one of two things: move the “racket” left or move it right. Failure is punished instantly (missing the ball costs a life). Similarly, success is instantly rewarded (each smashed block adds to the score). This combination of simplicity and immediate feedback suited DeepMind’s neural network, which learnt to play “Breakout” so well that it reached scores more than ten times those a professional human games-tester can manage. + +Other games were less straightforward. In “Montezuma’s Revenge” the goal is to retrieve treasure buried deep inside a danger-filled pyramid. To do this players must first achieve lots of sub-goals, such as finding keys to open doors. Feedback is less immediate than in “Breakout”—for instance, a key that turns up in one area might open a door in another, far away. And the ultimate reward, reaching the treasure, is the consequence of thousands of previous actions. This meant that the network found it hard to connect cause and effect. In contrast to its virtuoso performance at “Breakout”, it was able to make almost no headway at all with “Montezuma’s Revenge”. + +Since then, DeepMind’s researchers have tweaked their algorithms to make the system more curious about things, by giving it bigger rewards for exploration and experimentation. This makes it more likely to stumble across good strategies which have payouts that are not immediately apparent. That approach is not limit to mastering skills in a virtual world—it can be applied to the real one, as well. DeepMind’s algorithms have, for instance, been put to use in Google’s data centres, where they have developed ways to cut energy use by 40%. Indeed, it is possible to view tasks like that as games in themselves. To cut energy use in a data centre, a network can tweak things like coolant-pump settings and load distributions while keeping an eye on energy use. The lower it can get the “score”, the better it is doing. + +Embodiments of truth + +At the moment, repurposing a games-playing program to run a data centre’s energy budget really is like teaching it a new game from scratch. That is because DeepMind’s original neural network could learn to play only one game at a time. In order to understand “Breakout”, for example, it would have to forget everything it knew about “Space Invaders”. Such amnesia is in the nature of artificial neural networks—and is something that distinguishes them from real brains. They learn by system-wide adjustments of the strengths of the connections between the virtual neurons of which they are composed. Change the task to be learned, and the old web of connections will gradually be overwritten. Now, however, as they describe in a paper published in March, DeepMind’s programmers have worked out how to overcome this and let a network master many games at once, in the way that a real brain can. That is a step towards transfer learning—the ability to put to use in one context patterns of behaviour learned in another—which is a hot topic in AI research. + +Like displaying curiosity and delaying rewards, transferring learning from one task to another is something humans do effortlessly but machines struggle to manage. Here again, games are playing an important role in research. For example, Julian Togelius of New York University has organised a challenge called the General Video Game AI Competition. Entrants must create a single program that can play, with reasonable competence, ten different video games that neither it nor its programmers have come across. This requires the software to master many skills—planning, exploration, decision-making and so on—and apply them to problems it has not previously encountered. + +Even when transfer learning is mastered, though, constructing useful artificial intelligence will remain a piecemeal activity. What researchers would really like is an underlying theory of how to do so systematically. One candidate to be such a theory, called embodied cognition, argues that, instead of trying to design intelligence into a program from the beginning, it needs to be learned entirely from experience. + +Dr Hofman, in particular, backs this approach. She reckons video games are perfect platforms on which to explore the idea. Previous attempts to study embodied cognition, carried out in the 1980s, involved fitting robots with sensors and letting them learn, by running around and bumping into things, how the real world works. Researchers back then did have some success with this approach, but they ran into problems scaling their experiments up. As David Silver, who works at DeepMind, observes: “Robots have gears and wheels and motors, and all sorts of fiddly things like that. You end up spending a lot of time doing maintenance work.” + +Play up, play up and play the game + +Video games can streamline this process. A virtual robot in a virtual world is weightless. It has no moving parts, so needs no maintenance. Adjusting it to change its specifications does not require breaking out the spanners and taking it to bits. A few strokes on a keyboard will suffice. + +Its environment can be altered easily, too. Rerouting a maze no longer means welding sheets of metal together or gluing plastic walls. And a computer can run thousands of such simulations at a time, allowing legions of virtual robots to try tasks again and again, learning with each attempt. That kind of large-scale testing, which permits the learning process itself to be monitored and understood, is simply not practical using real machines. + +The important thing, according to Demis Hassabis, DeepMind’s founder, is to make sure the virtual robot cannot cheat. It must navigate using only the information its virtual sensors can gather. There can be no peeking behind the scenes of the simulation. If such a robot wants to learn its way around the danger-filled pyramid in “Montezuma’s Revenge”, or the fictional city of Los Santos in “Grand Theft Auto”, it must work out where it is and what is happening from what it can “see”, not by asking the computer which is running the game to give it co-ordinates. This is the approach DeepMind takes when it teaches programs to play video games. + +Studying embodied cognition in this way is a logical conclusion of the games-playing approach to AI. It seems an appropriate one. Watch the young of any intelligent creature, from dogs to humans, and you will see them building up something that looks suspiciously like embodied cognition by playing. Evolution did not have the assistance of computers when it arrived at this process. But the fundamental point of such activity, in both the artificial and the natural worlds, is to prepare players for the biggest game of all—reality. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21721890-games-help-them-understand-reality-why-ai-researchers-video-games/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +The lotus position + +A self-repairing surface that stays clean and dry + + +What do you get when you cross a lotus and a lizard? + +May 11th 2017 + + + + + +THE repulsive powers of lotus leaves are the stuff of legend. Water sprayed onto them forms instantly into silvery beads (see picture) and rolls right off again—carrying any dirt on the leaf’s surface with it. + +The physics behind this impressive and beautiful phenomenon is well understood. Lotus leaves repel water because they are covered with minuscule waxy nodules that stop water molecules bonding with a leaf’s surface tissues, meaning those molecules bond with each other instead. That arrangement has been replicated in several man-made materials. Unfortunately, these are easily damaged by abrasion—and, not being alive, cannot regrow and repair themselves. They are thus hard to commercialise, which is a pity, because the self-cleaning, self-drying surfaces they create could be of great value. A technique just described in Langmuir by Jürgen Rühe of the University of Freiburg, in Germany, may, however, fix this problem by giving lotus-like materials the ability to regenerate when damaged. + + + +Dr Rühe’s approach is to mimic a second living organism—this time an animal, the lizard. As lizards grow, their scales do not grow with them. Instead, old scales are shed and replaced from below by new ones. Dr Rühe theorised that it might likewise be possible to create a stack of lotus-like layers that would flake off when damaged, revealing a pristine surface beneath. + +Lotus-like man-made materials belong to a class known as nanograsses—so called because, under an electron microscope, they resemble lawns. Dr Rühe’s nanograsses have water-repellent “blades” attached to thin sheets of silicon. The task he set himself was to create a stack of these that could tell when the one at the top was compromised so badly that it needed to be replaced, and then replace it automatically. + +He conceived of doing this by gluing the layers of the stack together with a water-soluble material. He reasoned that, as the top layer got worn, and water began leaking through it, this glue would start to dissolve. A small amount of damage would do no harm. But enough would weaken the glue to the point where the uppermost nanograss lawn flaked off, and the next one down took over. + +Testing this idea out using an appropriate glue (a special water-soluble polymer), he found that it worked. When he scratched the top of such a stack with a scalpel and exposed it to water, it did, indeed, come loose and fall off as the water seeped into the underlying glue. Such an arrangement will not, of course, last for ever. Eventually, it will run out of layers. But if the idea can be applied to industrial practice, then long-lived, self-cleaning surfaces may at last become routine. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21721889-what-do-you-get-when-you-cross-lotus-and-lizard-self-repairing-surface/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Musical instruments + +Modern violins are better than 300-year-old ones + + +So say concert-goers in New York and Paris + +May 11th 2017 + + + + + +FOR a work of art by a genius, $16m might not seem an outrageous price. And that is what is believed to have been paid, in 2012, for the Vieuxtemps Guarneri—a violin made in the 18th century, in Cremona, Italy, which thus became the most expensive fiddle in the world. The Vieuxtemps’s owner remains anonymous, but he or she has made it available for life to Anne Akiko Meyers, an American violinist pictured playing it. + +Violins crafted by members of the Guarneri family and their Cremonese contemporaries, the Stradivari and the Amati, regularly fetch millions, because players like Ms Meyers value them so highly. But a violin is not, by itself, a work of art. It is, rather, a means of creating one—in other words, a piece of technology. An instrument. And for an instrument to be worth that much, it had better be the best in its class. + + + +Unfortunately for the shades of Cremona’s master luthiers, evidence is growing that their wares, though once unquestionably the best, are so no longer. Past studies by Claudia Fritz of the University of Paris VI, and Joseph Curtin, a violin-maker in Michigan, have shown that professional players wearing goggles to stop them seeing their instruments clearly cannot tell between Cremonese and well-made modern violins—and generally prefer the sound of the latter. The pair’s latest paper, just published in the Proceedings of the National Academy of Sciences, suggests the same is true of audiences. + +In experiments in concert halls in Paris and New York, Dr Fritz and Mr Curtin matched pairs of instruments, one old and one new, against each other in a series of tests, some solo and some with orchestral accompaniment. They used the goggle technique to stop players knowing what they were playing, and employed a special screen, transparent to sound, to hide player and instrument from the audience, which consisted of musicians, critics, composers and so on. + +In both places these experts agreed that the new violins projected sound better than the old ones did. Moreover, though only the New York audience was asked, its members preferred the music of the new violins to that of the old ones—even though, like the players, they could not actually tell which was which. + +That any of this will persuade people like Ms Meyers to abandon Cremona seems unlikely. For them it is part of the brand. But for aspiring players who cannot afford millions, Dr Fritz’s and Mr Curtin’s work is surely food for thought. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21721891-so-say-concert-goers-new-york-and-paris-modern-violins-are-better/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Books and arts + + +Fabled places: The dream beyond the desert [Fri, 12 May 07:08] + +The maths of life: Mr Big [Fri, 12 May 07:08] + +Memoirs: Neurosurgeon, reveal thyself [Fri, 12 May 07:08] + +Johnson: Hit and misspeak [Fri, 12 May 07:08] + +Britain’s Olympic athletes: What price victory? [Fri, 12 May 07:08] + +Art and artists in Africa: The next big thing [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +No-go zone + +The long quest for Timbuktu, and the race to save its treasures + + +Europeans long dreamed of reaching the fabled city across the Sahara, which remains shrouded in myth + +May 11th 2017 + + + + + +The Storied City: The Quest for Timbuktu and the Fantastic Mission to Save its Past. By Charlie English. Riverhead; 416 pages; $28. Published in Britain as The Book Smugglers of Timbuktu; William Collins; £20 + +TOMBUT. Tenbuch. Tombouctou. Timbuktu. The names called to Europe from out across the Sahara, never quite certain. Was it a New Jerusalem? An African Carthage? A Moorish Florence? Nobody knew: explorer after explorer had tried to reach it, to send word back to Europe of this fabled city on the Niger river, but until well into the 19th century every attempt had ended in death or failure. Perched on the outer reaches of European knowledge, Timbuktu powerfully captured what Edward Said, a Palestinian-American scholar, called the “Orientalist” imagination. For centuries, myth was piled upon myth. + + + +In “The Storied City”, Charlie English, a veteran journalist for the Guardian, traces how the European idea of Timbuktu took shape through the “West’s centuries-long struggle to find, conquer and understand the city”. Cut off from Christian Europe following the Muslim conquests in the seventh and eighth centuries, Timbuktu’s sheer remoteness at the far end of the Saharan caravan trails meant that first-hand accounts were non-existent. Explorers dreaming of Africa’s El Dorado, with prizes and wealth for doing so waiting back home, yearned to remedy this. + +Leo Africanus, a north African traveller of obscure origin, put Timbuktu on Europe’s intellectual map with “Descriptions of Africa”, a florid account of his journey from what is now Tunisia to the gold-trading kingdoms of west Africa. His mid-16th-century portrait of a city of gold and enlightenment echoed down the centuries. Mungo Park, a Scottish explorer, published “Travels in the Interior Districts of Africa” in 1799. A bestseller, it made Timbuktu the talk of literary Europe, but Park never reached the city. A little-known Scottish soldier, Major Alexander Gordon Laing, finally entered in 1826: he later left a cryptic note that revealed little, before disappearing into the desert. René Caillié, a reclusive Frenchman, proclaimed himself ready to share Laing’s fate: “Dead or alive: it shall be mine.” But Caillié went on to become the first European explorer to return from the city alive, in 1828. + +Other detailed accounts began to emerge, describing a city less fantastical than many Europeans had imagined. But the myth of Timbuktu proved resilient. Into the 20th century it remained a source of fascination to scholars enraptured by the gilded legend of its libraries and unrivalled learning. + +The reality, inevitably, was more mundane. To be sure, an influential Moorish trading town had sat at the juncture of the world’s largest desert and west Africa’s longest river since at least the 12th century. Until the discovery of the Americas it lay at the heart of a region that produced two-thirds of all the Mediterranean’s gold. The settlement was an important asset for a succession of empires: Mali, Songhai, Morocco. It was an exceptionally (though not uniquely) sophisticated society from at least the mid-14th century, rich with literature, madrasas and thousands of students. Timbuktu’s most distinctive feature, though, was its many private libraries, the work of the city’s scholars, drawn from its wealthiest families. It was in these libraries that the famous manuscripts—vast numbers of mainly religious texts but also secular works such as poetry, novellas and works of science—were deposited, and carefully conserved, over the centuries. + +Running alongside Mr English’s lively telling of the quest for Timbuktu is a thrilling account of a more recent story: the daring evacuation of hundreds of thousands of Timbuktu’s manuscripts by its librarians during the jihadist occupation in 2012. The threat that the jihadists posed to the city’s inheritance was often foreshadowed over the preceding centuries, from the Moroccan invasion in the late 16th century, which led to killings, expulsions and looting, to the French conquest at the end of the 19th. The French and the jihadists, though utterly different in every other way, both saw a once-great city that could be restored to glory only through their occupation. + +Mr English tells the new and the older tales in parallel. The evacuation of Timbuktu’s manuscripts has been recounted by others in many newspaper articles and another recent book. But the history of European exploration is a compelling enough subject in its own right, and much less well-known. The two stories illuminate each other, but somewhat obliquely. It is nonetheless a brilliant device. + +This is because Mr English concludes by casting a degree of doubt on the story of the evacuation. It is, he suggests, a “modern-day folktale”, the jihadi threat to the manuscripts slightly exaggerated, their number and value a tad inflated. But this, he argues, is in keeping with a long tradition. Timbuktu’s story has always been told and re-told: a tapestry of half-truths and almost-truths shaped by outsiders and Timbuktiens alike. The city’s history, he says, exists in “perpetual motion, swinging back and forth between competing poles of myth and reality”. No wonder people like Mr English keep writing about it. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21721892-europeans-long-dreamed-reaching-fabled-city-across-sahara-which-remains/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Number-crunching + +The hidden maths of organisms, cities and companies + + +Non-linear scaling explains everything from the productivity of cities to the safe dosage for LSD + +May 11th 2017 + + + + + +Scale: The Universal Laws of Growth, Innovation, Sustainability, and the Pace of Life, in Organisms, Cities, Economies, and Companies. By Geoffrey West. Penguin Press; 479 pages; $30. Weidenfeld & Nicholson; £25. + +GEOFFREY WEST is the restless sort. He has spent much of his career as a theoretical physicist, working at the Los Alamos National Laboratory in New Mexico. After a while he became fascinated by biology, then cities and companies. He is interested in all sorts of things, from Isambard Kingdom Brunel’s ship designs to Ingmar Bergman’s films. When he says that he drives his wife nuts, you believe him. + + + +On one level, “Scale” is a book about Mr West’s peculiar career path. But on another, it is about the hidden mathematical patterns underlying life, cities and commerce. Many things that appear unrelated are actually linked, he says. The size of an animal is related to the speed of its metabolism and its lifespan. If you know the population of a city and what country it is in, you can predict fairly accurately how many petrol stations it has and how many patents its citizens produce. Mr West even suggests that the mice and the metropolises are linked. + +To take an odd example: how much LSD should you give to an elephant, should you feel minded to do such an irresponsible thing? The answer is not the 297 milligrams that was injected into a poor pachyderm called Tusko in 1962, leading shortly to his death. The researchers came up with that amount by extrapolating from research on cats. They had simply scaled up a feline acid dose to account for the greater mass, without accounting for the fact that safe dosages for drugs do not quite double with a doubling in mass, and other factors also play a role. Extrapolate this over the many multiples of mass an elephant has over a cat, and Tusko should have had a few milligrams, not several hundred. + +Non-linear scaling relationships such as these fascinate Mr West. “Underlying the daunting complexity of the natural world lies a surprising simplicity, regularity and unity when viewed through the coarse-grained lens of scale,” he writes. In other words: do not get too distracted by what animals and plants look like, or how they have evolved. Just look at fundamental properties like their size and weight. These tend to obey mathematical laws. + +Cities, he suggests, are a little like giant organisms. They often grow in the same exponential way. A map of lorry journeys looks a bit like a network of blood vessels. Cities also scale non-linearly. A city that is twice as populous as another does not have twice as much infrastructure and twice as much productivity. It has a bit less infrastructure than you would expect, and a bit more productivity per head (as well as more crime). Just as an elephant is a more efficient animal than a cat, big cities are more efficient than small ones. That is why people are drawn to them. + +Having charted these patterns, Mr West is not quite sure what to make of them. He suggests that urban planners should think of themselves as facilitators of fundamental natural processes. But how, exactly, should they do that? Like many urbanists, Mr West admires Jane Jacobs, who believed that cities such as her beloved New York should be left to evolve naturally rather than being tweaked by meddlesome planners. In fact New York is one of the world’s most rigorously planned cities. Its grid pattern was laid down when the city was just a small settlement on Manhattan’s southern tip. + +Mr West is an entertaining, chatty guide to the things that interest him. That is mostly to the good, although the chattiness does mean that “Scale” suffers from a problem of scale. A ruthless editor could have excised at least a quarter of the words and created a tighter, more compelling book. Size is not always everything. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21721895-non-linear-scaling-explains-everything-productivity-cities-safe-dosage/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Inside his head + +The making of a neurosurgeon + + +David Marsh describes how he came to love operating on patients’ brains + +May 11th 2017 + + + + + +Admissions: A Life in Brain Surgery. By Henry Marsh. Weidenfeld & Nicolson; 271 pages; £16.99. To be published in America by Thomas Dunne in October; $26.99. + +ILLNESS, wrote Susan Sontag, is “the night-side of life”. In his bestselling 2014 memoir, “Do No Harm”, Henry Marsh, a neurosurgeon, gave an elegant account of his role as a gatekeeper of this night-side, an “underworld of suffering”. In “Admissions” he returns to the same territory, but also covers his life before and after the heart of his career. + + + +The book starts at the ignominious end of Mr Marsh’s time in Britain’s National Health Service (NHS). Ground down, as he tells it, by bureaucrats and needless regulations, Mr Marsh sends his resignation letter. His final operation is tricky, but a success. The next day he finds his patient has had an unnecessary nasogastric tube inserted. He asks the nurse to remove it but, without the paperwork, the nurse refuses. Mr Marsh snaps. He tweaks the nurse’s nose, shouts “I hate your guts!”, and storms off. He later, sheepishly, returns to apologise. The telling episode shows both Mr Marsh’s disarmingly frank storytelling and his querulous, warty sort of heroism. He is, in spite of himself, hugely likeable. + +After 40 years in the NHS, Mr Marsh fears falling idle and useless. So he keeps busy, and he writes. In Nepal and Ukraine he helps former colleagues in their clinics. Every day people appear with tumours bigger than any he had ever seen in Britain. The suffering is overwhelming, the surgery almost pointless. Here his reflections on death and dying equal those in Atul Gawande’s excellent “Being Mortal”. And every few chapters he returns to Oxford, where he has begun renovating a lock-keeper’s cottage near his childhood home. This brings him back to his youth, from swimming lessons to first loves, his time at Oxford University, and a brief stay as a patient in a psychiatric hospital. The effect is of a rather wayward Bildungsroman of his path to becoming a neurosurgeon. + +It was the privileged insights into neurosurgery which made “Do No Harm” such a remarkable book. “Admissions”, to some extent, offers more of the same. Mr Marsh describes neurosurgeons as a tribe, isolated by the terrible responsibility of their job. There is the decision of whether to operate, which involves great uncertainty. And there is the risk of neurosurgery itself, where the smallest mistake can blind, paralyse or kill someone. But Mr Marsh describes it as a sort of addiction, where the huge responsibility is part of the thrill. “Like all surgeons all I want to do is operate.” As soon as he makes the first incision, he finds a “fierce and happy concentration”. His writing is at its vivid best in the “muted drama of the theatre”, with “the bleeping of the anaesthetic monitors, the sighing of the ventilator” and “the sucker slurping obscenely” as he removes a tumour from someone’s brain. + +There are, though, fewer such moments in Mr Marsh’s new book. Those expecting a second “Do No Harm” will be surprised, but not disappointed. “Admissions” is more about the man than the surgeon, but it is excellent in its own right. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21721896-david-marsh-describes-how-he-came-love-operating-patients-brains-making/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Johnson + +“I misspoke”, a weaselly phrase + + +Among the many excuses public figures make when they screw up, “I misspoke” is among the worst + +May 11th 2017 + + + + + +JORDAN EDWARDS, a black 15-year-old, was in the passenger seat of a car at a house party in Balch Springs, near Dallas, when he was shot and killed by a policeman with a rifle. The policeman’s boss later told reporters that the car had been driving “aggressively” backwards towards the officer. But after reviewing body-camera footage, it came to light that the car had been heading away from, not towards the officer. The police chief’s retraction? “I misspoke.” + +More recently Diane Abbott, the British shadow home secretary, was being interviewed about her Labour Party’s plans to add 10,000 new police officers to Britain’s streets. She first gave the interviewer a cost of “about £300,000” ($388,000). Given a chance to correct this sum (£300 per officer), she changed it to £80m. Asked if this figure wasn’t also rather low, she went on to say that Labour would be recruiting 25,000 officers a year for four years, then 250,000, then 2,250, and accused the host of producing the 250,000 figure. It was an epic disaster. Her excuse? “I misspoke.” + + + +Geoffrey Nunberg, a linguist, distinguishes two kinds of speech mistakes: “typos” and “thinkos”. Typos are ubiquitous and listeners hardly notice many of them. Thinkos go deeper; they betray that the speaker might actually not know something. If someone says the capital of Italy is Florence, that’s probably a true thinko, unless the person is an expert in Italy who just happened to be thinking about a forthcoming holiday in Florence. But when people are caught in a thinko, they are often tempted by the “misspoke” explanation—it’s hard to prove them wrong, after all, if they say they knew the right thing but just accidentally said the wrong one. It could happen to anybody. + +But the Balch Springs police chief and Ms Abbott went beyond thinkos. The first—to give the most charitable possible explanation—was telling a nationwide news audience, in the wake of a horrible tragedy, something he did not really know. This was a time for prudence, for saying as little as possible until the facts were in. But it seems that he trusted an officer’s verbal account of the story, and told that false story to the world. The true retraction should have been not “I misspoke”, but “I told you all what I wanted to be true, on completely insufficient evidence. I screwed up terribly, and I’m sorry.” + +Ms Abbott’s explanation was that she had done seven interviews that day, of which the train-wreck was the last. She genuinely misspoke when she said £300,000, obviously—such a sum is trivial in national budgeting. But the jumble of numbers that followed, some of them plausible, some of them ridiculous, and her repeated stumbling and backtracking, could only be the product of a tired, stressed and hastily prepared politician having a very bad moment. An honest, self-deprecating, account—“That was awful. Pour me a drink”—would have earned her a lot of credit. Everyone has terrible days. But she insisted on pretending that the whole thing was akin to a mere typo. + +Kellyanne Conway, an adviser to Donald Trump, “misspoke one word” when she referred to a “Bowling Green massacre”, a supposed terrorist attack. That one little misspoken word was “massacre”—nothing of the sort took place in Bowling Green, Kentucky. Tarun Vijay, an Indian politician, said that Indians were not racist, given that they live with “black” South Indians; he, too, reached for “I misspoke”, clarifying that he merely meant that India is a country of many colours. But at least he, unlike Ms Abbott or Ms Conway, delivered a proper apology. + +Public figures’ claims of “misspeaking” are inherently suspicious. Most people don’t need to point out a mere typo: these are usually obvious in the moment, and forgiven without explanation. It seems far more common that claims of misspeaking are a kind of bait-and-switch, swapping a major sin—lying, being indefensibly clueless or saying something offensive—for a minor one, a claim of having tripped over the tongue as over a carelessly tied shoelace. + +In April, Mr Trump’s press secretary, Sean Spicer, said that not even Hitler had used chemical weapons on his own people. He later apologised—and in an article about the flap in The Hill, a reporter accidentally misidentified Mr Spicer: “When asked to clarify those comments, Hitler misspoke again by saying Hitler did not use gas against his country’s people.” The mistake was online for about 20 minutes before being corrected. Talk about a typo. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21721897-among-many-excuses-public-figures-make-when-they-screw-up-i-misspoke-among/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Cash for gold + +The making of British Olympic success + + +Big money and ideas from musicians, soldiers and private-equity gurus are behind major medal hauls + +May 11th 2017 + + + + + +The Talent Lab: The Secret to Finding, Creating and Sustaining Success. By Owen Slot with Simon Timson and Chelsea Warr. Ebury Press; 304 pages; £20. + +IT SEEMS hardly an auspicious time to release a book on Britain’s Olympic success. Numerous scandals—accusations of bullying, sexism and failure to keep proper records of drugs—are engulfing British Cycling, a symbol of national glory. Yet the transformation of Britain’s performance in the Olympics remains a remarkable tale. In 1996, Britain’s “team of shame” came 36th in the medal table, below Algeria, Ireland and North Korea. At the London games of 2012, Team GB (as the United Kingdom’s squad is officially known) won 65 medals, up from 15 in 1996. Britain performed even better in Rio last year, winning 27 golds and 67 medals in all, finishing second, above China, in the overall medal table, defying the trend of host nations’ sliding down the tables in the following games. + + + +These hauls have been a triumph for detailed and ambitious planning, as Owen Slot, a sports writer for the Times, explains in an engaging book. Huge spikes in cash have helped. Across Olympic and Paralympic sports, UK Sport, Britain’s funding body, spent £69m ($89m) on Sydney 2000 but almost £350m on Rio 2016. Yet cash alone cannot explain all of Team GB’s success: for the 2012 games, South Korea and Japan spent over three times more than Britain and had worse returns. + +UK Sport adopts the mindset of an investor seeking the best returns wherever they can be found. The model has been unashamedly ruthless, concentrating on disciplines with the best medal prospects while ditching also-rans. Even among the sports that do receive funding, cash is diverted to a tiny coterie of elite athletes: the £21m allocated to swimming before Rio was focused on nine “Golden Children”. Before Rio 2016, Liam Tancock, Britain’s best male swimmer of recent times, lost his funding largely because he would turn 31 before the games—past his prime. + +Mr Slot’s attention to detail turns up some fascinating facts. East German-style national talent-scouting programmes were created, producing Olympic medallists from those who had never previously played the sport—in the process debunking a widespread notion that 10,000 hours are needed to achieve excellence in a skill. Coaches were hooked up to heart-rate-variance monitors, to understand how to manage their stress levels better, and Team GB’s managers analysed the optimal way to coach athletes of different sexes. Teams engaged parents about the best techniques for nurturing high-performance athletes. The British Olympic Association made its first reconnaissance mission to Brazil, to find ideal hotels and training facilities, six years before Rio 2016. + +UK Sport has borrowed from a wide array of fields in pursuit of an edge. Music schools and military special forces were asked for advice on spotting talent and performing under pressure, and an expert in turning around flagging businesses, borrowed from a private-equity firm, helped improve British shooting’s meagre performance. Mr Slot’s book is written in conjunction with Simon Timson and Chelsea Warr, two of Team GB’s directors of performance, who contribute a brief summary of lessons after each chapter. Their input is double-edged: it ensures that the book provides an unrivalled look inside UK Sport’s medal-factory, but may also keep Mr Slot from tackling some subjects with complete independence. + +The increased investment in the Olympics and the subsequent bonanza of medals, may have given Britain a reason to hold its head high. But success for the elite has come at a time of falling sports participation in Britain, with the decline greatest among the poor. For all the successes, the question lurking beneath this book is an uncomfortable one. In an era of austerity and impoverished grassroots sport, has the price of these medals been too great? + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21721893-big-money-and-ideas-musicians-soldiers-and-private-equity-gurus-are-behind-major/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +From Porto-Novo to Paris + +Africa, contemporary art’s new hot-spot + + +Artists from the continent display a bright streak of edgy and playful work in the French capital + +May 11th 2017 | PARIS + + + + + +BEFORE the first world war the most exciting artists were French; in the 1990s they were Chinese. Now the hot new place for contemporary art is Africa. Visitors to the opening of the Venice Biennale on May 13th can go to a Nigerian pavilion for the first time; three days later Sotheby’s will inaugurate its first auction of African contemporary art. At the end of September Jochen Zeitz, a German businessman, will open the long-awaited Zeitz MOCAA, which Thomas Heatherwick, a British designer, has been creating for him in a disused grain silo on the waterfront in Cape Town. Those too impatient to wait should make haste, meanwhile, to Paris, where the Fondation Louis Vuitton (FLV) in the Bois de Boulogne has unveiled two of the most vivid exhibitions of African artists that the city has ever seen. + +For the first exhibition, “Être Là” (“Being There”), Suzanne Pagé, FLV’s artistic director, has selected 16 artists from South Africa. Much of what they have made for the show is creepy, frightening and aggressive. That is not unexpected given that this is the work of a generation grown increasingly frustrated at the country’s inability to live up to its post-apartheid promise. + + + +The second show, “Les Initiés” (“The Insiders”), is more surprising. Drawn from a collection built up by Jean Pigozzi, heir to the Simca motoring fortune, it starts in 1989, when the communist proxy wars in Africa were coming to an end and technology, in the form of mobile phones and internet banking, was but a step away from giving Africans greater control over their daily lives. It blends humour and inventiveness, in the form of witty masks made from randomly collected domestic objects by Romuald Hazoumé from Benin, an artist whose work David Bowie collected; sculptures of bright, idealised cities by Bodys Isek Kingelez of the Democratic Republic of Congo; magical works made with porcupine quills by John Goba from Sierra Leone; and hilarious face masks, such as “Oba 2007” (pictured), made by Calixte Dakpogan, also from Benin, out of beads, pens, nail-clippers and synthetic coloured hair which he has found on his walks through his hometown of Porto-Novo. Here, energy and adventurousness are matched only by imagination, belying any notion that Africa is a dark continent. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21721894-artists-continent-display-bright-streak-edgy-and-playful-work-french/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一章 | 主菜单 | 上一章 | + +* * * + + + + + +Obituary + + +Ueli Steck: Highest, fastest [Fri, 12 May 07:08] + + + + + +* * * + + + +| 下一章 | 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +Highest, fastest + +Obituary: Ueli Steck died on April 30th + + +The speed-soloing alpinist was 40 + +May 11th 2017 + + + + + +THE most terrifying thing that happened to Ueli Steck was not the moment an avalanche caught him on Annapurna, the tenth-highest mountain in the world, and almost knocked him off. Nor was it the time when—perhaps because, on the same mountain, a rock hit his helmet—he found himself in an instant 300 metres below, concussed and bruised all over. Each event caused him to wonder whether he liked risky climbing too much. But as one of the best alpinists of his generation, and often the fastest, he did not wonder long. + +No, the most frightening episode occurred in April 2013, when he found himself under attack by a crowd of rock-throwing sherpas at Base Camp II on Everest. That was the moment he thought he might die, a thought he had not had before. The sherpas were angry because, as they fixed the safety ropes above the camp, he and two others had ignored the rule to keep the mountain clear of climbers and had come up past them. He had no wish to be disrespectful. But since he made no use of safety ropes, why shouldn’t he go up? + + + +He had a problem with people on mountains. Off the slopes he could be gregarious and funny; on them, he became so intensely focused that he could not bear distraction. He climbed light, with just four carabiners, an ice-pick, crampons on his boots, a coiled rope for rappelling on descents, and his own-brand titanium Swiss Army knife with a large file and bolthead wrench. To rely on any more gear was only half-doing the climb. He went up cleanly, leaving only his footprints. Supplementary oxygen he scorned as “false air” and “bottled doping”; he never used it. + +Naturally, he preferred to climb alone. Trodden tracks deterred him, and he would wait until fresh snow obscured a route in order to work out his own. After his marriage, he promised his wife he would not do solo climbs; but somehow the right partner did not appear, or gave up, and he had to go on by himself. On his first expedition, at 12 above his home in Emmental with an old mountaineer, he was given the lead from the start; consequently, he fretted to see anyone ahead of him. + +Nor did he want help. On his first ascent of Everest in 2012 he insisted that his guide, Tenji Sherpa, was a partner, not an assistant. He wanted to be called “Dai”, brother, not “Sir”. He made the breakfast tea and they ate together, cornflakes or barley tsampa, as the sun came up. This was both a courtesy and a statement of self-reliance. Pretty soon, as usual, he peeled off and made for the summit alone. + +The worst aspect of other climbers was that they held him back. Not for him “the brotherhood of the rope”. Speed was of the essence. In his own Alps he had shattered records: the north face of the Eiger, a 1,800-metre ice-wall, climbed in 3:54 hours, then 2:47; the north face of the Grandes Jorasses, 1,200 metres, never climbed by him before, in 2:21; the north face of the Matterhorn in 1:56. He would set two stopwatches and race off, running when he could, or hurling in his ice-pick and hauling himself up after. These feats earned him the nickname “the Swiss machine”, which he hated. He was not a robot, more a cat or a spider, moving easily and with absolute long-armed precision on the sheerest, iciest rocks. + +He argued that it was simply safer to climb fast, not to linger on high mountains where the cold or the weather might kill you. But he also came to enjoy speed-climbing for its own sake. His training regime bordered on craziness: 1,200 workouts a year, his routine run three laps up 2,000 vertical metres. Focus, focus, all the time. He had to make sure that every muscle was pulling; that way, he would know how long he could cling to an ice-nub, or work an overhang. On that first Everest climb he had seethed because, without extra oxygen, he was overtaken by alpinists who had it. His slowness was unbearable. He didn’t just need to be better than other people, but better than himself. + +Speed proved harder in the Himalayas than in the Alps. His best time, though the avalanche wrecked his attempt to record it, was on Annapurna’s south face in 2013: 7,219 metres up and down alone in 28 hours (the next party took the usual eight days). He returned this April to plan another ascent of Everest with a traverse to Lhotse, the world’s fourth-highest peak, by a route not tried before. He fell to his death while climbing Nuptse first; he was going to go with Tenji Sherpa but, again, was alone. He felt “super-ready”; why wait? + +The endless challenge + +In his speed and daring, he was unusual among climbers. In his attitude to high mountains, he was not. There was no rhapsodising. At the top of Everest it was his success that was “beautiful”, not the view, which he found “familiar”. Mountains challenged him, so he took up the challenge, again and again, to prove himself. + +So too did Min Bahadur Sherchan, a Nepalese who, on May 6th, died at the Everest base camp. He was 85, and planned to become the oldest person to reach the summit. He had set the record in 2008, at 76; a Japanese had broken it five years later. This was his fourth attempt to regain it. Mr Sherchan had several aims in mind, including promoting peace and inspiring the old. But he had no ambition to break anyone else’s record, he said; just his own. This was between the mountain, and him. It might have been Ueli Steck speaking. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/obituary/21721886-speed-soloing-alpinist-was-40-obituary-ueli-steck-died-april-30th/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 主菜单 | 上一章 | + +* * * + + + + + +Economic and financial indicators + + +Interactive indicators [Fri, 12 May 07:08] + +Output, prices and jobs [Fri, 12 May 07:08] + +Trade, exchange rates, budget balances and interest rates [Fri, 12 May 07:08] + +Commodity prices [Fri, 12 May 07:08] + +The Economist commodity-price index [Fri, 12 May 07:08] + +Markets [Fri, 12 May 07:08] + + + + + +* * * + + + +| 主菜单 | 上一章 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | + +* * * + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21721925/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Output, prices and jobs + + +May 13th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21721899-output-prices-and-jobs/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Trade, exchange rates, budget balances and interest rates + + +May 13th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21721927-trade-exchange-rates-budget-balances-and-interest-rates/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Commodity prices + + +May 13th 2017 + + + + + +The price of cocoa has plummeted by 36% since the start of 2016, to just under $2 per kilogram. Oversupply is partly to blame: farmers in Ivory Coast, which accounts for around 40% of world supply, are forecast to increase production by 20% in the current crop year; in Nigeria production is likely to rise by 15%. Tea prices have been volatile. A spike in January can partly be explained by a drought in east Africa. Rising demand from countries in the Middle East should continue to support the market this year. Coffee prices have risen modestly since the start of 2016. The value of robusta beans in particular has been shored up by declining levels of production in Brazil and Vietnam. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21721924-commodity-prices/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +The Economist commodity-price index + + +May 13th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21721928-economist-commodity-price-index/print + + + + + +| 章节菜单 | 主菜单 | + + + + + +| 下一项 | 章节菜单 | 主菜单 | 上一项 | + +* * * + + + + + +Markets + + +May 13th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21721929-markets/print + + + + + +| 章节菜单 | 主菜单 | + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.05.20.txt b/homeworks/B20769/homework1/data2/2017.05.20.txt new file mode 100644 index 0000000..249e87f --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.05.20.txt @@ -0,0 +1,6122 @@ +星期六, 五月 20, 2017 + + + + +The world this week 3 + +Leaders 5 + +Letters 1 + +Briefing 1 + +United States 7 + +The Americas 4 + +Asia 5 + +China 3 + +Middle East and Africa 5 + +Europe 6 + +Britain 8 + +International 1 + +Special report 7 + +Business 10 + +Finance and economics 9 + +Science and technology 5 + +Books and arts 6 + +Obituary 1 + +Economic and financial indicators 6 + + + + + +章节 Leaders + + + + + +The world this week + + +Politics this week + +Business this week + +KAL's cartoon + +章节 Leaders + + + + + +文章 章节 下一项 + + + + + +Politics this week + + +May 18th 2017 + + + + + +America’s Justice Department unexpectedly appointed Robert Mueller as a special counsel to investigate claims about Russian links to the Trump administration. Mr Mueller is a former head of the FBI. He was appointed to lead the Russian investigation by Rod Rosenstein, the deputy attorney-general; Jeff Sessions, the attorney-general, has recused himself from the matter because of his previous meetings with the Russian ambassador. See article. + +Meanwhile, the chairman of the House Oversight Committee asked the FBI to hand over all documents related to meetings between the president and James Comey, who has been sacked by Donald Trump as director of the bureau. This followed reports that Mr Trump had asked Mr Comey to drop an investigation into Russian contacts. + +In yet more White House intrigue, Donald Trump reportedly let slip highly sensitive information to the Russian foreign minister at their meeting in the Oval Office. The reports claimed the president revealed details about intelligence gathered by Israel regarding an Islamic State plot. + +The impeachment trail + +O Globo, a Brazilian newspaper, reported that the country’s president, Michel Temer, had been taped encouraging payments to silence a politician who had been convicted of bribe-taking. The tape recorded a meeting between Mr Temer and Joesley Batista, whose family controls JBS, the world’s largest beef exporter. The opposition called for Mr Temer’s impeachment. He has denied that he endorsed the payment of hush money. + +Javier Valdez, a journalist who investigated drug-trafficking gangs in Mexico, was shot dead by unknown attackers. So far this year at least four journalists have been murdered in Mexico for their reporting. + +A judge in Argentina charged Hebe de Bonafini, the head of Mothers of Plaza de Mayo, a group that campaigns for justice for the victims of the country’s dictatorship of the 1970s and 1980s, with misappropriating public money. She denies wrongdoing. The group of mothers marches every Thursday to commemorate their disappeared children. + +The misfit + +The European Parliament backed a resolution calling for sanctions on the Hungarian government in response to its harsh treatment of refugees and its attempt to close the Central European University in Budapest. The parliament urged Brussels to trigger Article 7, the “nuclear option”, which would suspend Hungary’s voting rights in the council. + + + +Shortly after his inauguration as president of France, Emmanuel Macron went to Berlin for talks with Angela Merkel, the German chancellor. German politicians are divided over how to respond to Mr Macron’s calls for closer integration in the euro zone. Meanwhile, Mr Macron appointed Édouard Philippe, the centre-right mayor of Le Havre, as his prime minister. See article. + +Mrs Merkel’s Christian Democrats won another German state election, this time in North Rhine-Westphalia. It was the third surprise consecutive defeat for the Social Democrats. + +Ireland’s prime minister, Enda Kenny, resigned, fulfilling a promise he made in February. Mr Kenny, who had governed since 2011, was seen to have mishandled a scandal in the national police force. His party, Fine Gael, will elect a new leader by June 2nd. + +Recep Tayyip Erdogan, the president of Turkey, visited the White House. Donald Trump brushed aside concerns about Mr Erdogan’s crackdown on political opponents, while Mr Erdogan’s bodyguards brawled with protesters outside the Turkish ambassador’s residence. + +Unbuckling the belt + +China’s president, Xi Jinping, presided over a meeting in Beijing of leaders from 29 countries to discuss his plans for huge investments in infrastructure, energy and other projects as part of his “Belt and Road Initiative”. Mr Xi said the scheme would bring about a “golden age” of globalisation. + +North Korea tested a new type of missile, which reached an altitude of over 2,000km before falling into the Sea of Japan. Reaching such a height constitutes a technical breakthrough for the country’s missile programme. + +Containment field + +Three people died and 19 patients were suspected to have contracted Ebola in the Democratic Republic of Congo. A previous epidemic of the virus in west Africa from 2013 to 2016 killed more than 11,000 people. + +Some 8,400 soldiers in Ivory Coast mutinied, demanding that the government pay them money they say they are owed. One person was killed in stray fire before the government agreed to pay up. It was the second mutiny in the country since January. See article. + +Clashes between rival militias for control of Bangassou, a diamond-mining town in the Central African Republic, left at least 115 people dead, according to the Red Cross. Gunmen also attacked a UN base in the town. + +Tunisia extended a state of emergency for another month, arguing it is needed to fight terrorism. The declaration, which has already been in force since November 2015, gives additional powers to the police that activists say are used to suppress legal political activities. See article. + +Manifesto destiny + +Britain’s political parties released their election manifestos. The Conservative one contained the expected rhetoric on Brexit and also kept a pledge to reduce net migration to under 100,000 (a target the Tories have missed since 2010) and a promise to deal with the spiralling cost of social care. Labour’s offering, which Jeremy Corbyn, the party’s leader, said was fully costed, had tax rises and nationalisation at its heart; a sharp move to the left compared with the party under Tony Blair. See article. + + + +The leaking of Labour’s manifesto before its official launch did no apparent damage to its standing in the polls. After declining consistently before the election was announced, Labour is again scoring over 30% on average, pre-Brexit referendum territory for the party. That will be of little comfort to Mr Corbyn, however, as the Tories still enjoy a 16-point lead. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21722228-politics-week/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Business this week + + +May 18th 2017 + + + + + +A piece of malicious software known as WannaCry spread across the internet, infecting 300,000 computers worldwide and causing disruption to Britain’s National Health Service, Russia’s interior ministry and various companies. The malware, which demands a payment in bitcoin to make it disappear, exploits a flaw in an outdated Microsoft operating system that was first discovered by America’s National Security Agency and then leaked online by a group calling itself “Shadow Brokers”. + +Like a rolling Stone + + + +Twitter announced that Biz Stone is returning to work as a mentor guiding its culture. Mr Stone was one of the founders of the social network and along with Jack Dorsey, the chief executive, holds the patent to “tweeting”. He left in 2011 to pursue other interests. Twitter’s share price has risen by 12% since the start of the year, as investors bet that a noticeable increase in the number of daily users will generate higher revenues. + +Vodafone reported a €6.1bn ($6.7bn) annual net loss for the year ending March 31st. Much of that was because of a write-down of its business in India, which was hammered by cut-throat competition in the country’s telecoms market from the entry of Reliance’s Jio. + +In a blow to Volkswagen’s hopes of turning a corner on the emissions-cheating affair, prosecutors in Germany added Matthias Müller, VW’s chief executive, to their list of suspects in an investigation into whether information about the scandal was held back from markets. The chairman of the supervisory board and other executives are also being investigated. + +Ford announced that it is cutting 1,400 non-assembly-line jobs, mostly in Asia and North America. Job cuts are a sensitive issue in the American car industry. After enduring the wrath of a Donald Trump tweetstorm for moving factories abroad, Ford earlier this year pledged to create more jobs in Michigan. + +The British government sold its small remaining stake in Lloyds Banking Group, returning the bank fully to the private sector after a bail-out in 2008-09. Lloyds reckons the Treasury has received a £900m ($1.2bn) return on the £20.3bn of taxpayers’ money that was ploughed into it. The government still holds a large stake in Royal Bank of Scotland. See article. + +Moody’s struck a deal to buy Bureau van Dijk, a Dutch provider of business data on 220m companies, for $3.3bn. That prompted Standard & Poor’s, a credit-rating rival, to lower its outlook on Moody’s from stable to negative because the acquisition will be funded by new debt. + +Workers’ wages in Britain fell further behind inflation. New figures showed that average weekly earnings rose by 2.1%. Consumer prices in April increased by 2.7%, up sharply from 2.3%. Higher electricity and gas bills helped fuel inflation, but the main factor was a spike in air fares (the Easter break fell in April). The unemployment rate dropped to 4.6%; the last time it was this low was 1975. + +The late timing of Easter was one explanation behind easyJet’s pre-tax loss of £236m ($293m) for the six months ending March 31st. But the British low-cost airline was hit harder by the fall in the pound following last June’s vote to leave the EU. Its share price plunged by 7%. + +Advance Australia fair + +Emphasising its Australian roots, BHP Billiton rebranded itself as BHP, dropping the British “Billiton” part of its name. The move came in response to a push from Elliott, an activist hedge fund, for the mining giant to end its dual Anglo-Australian structure and move its sole listing to London. Elliott gave up on that demand this week, but still wants BHP to spin off its oil business in America. + +Atlantia, a toll-road operator in Italy that also manages Rome’s two airports, launched an unsolicited bid for Abertis, a toll-road operator based in Spain with contracts in a dozen other countries. One potential barrier to the deal, which is worth €16bn ($18bn), could be opposition from Criteria, an investment group that is the biggest shareholder in Abertis. + +Don’t hold your breath + +In a closely watched judgment that could affect the course of the Brexit negotiations, the European Court of Justice ruled that the EU’s member states must vote on two aspects of a free-trade agreement with Singapore before it becomes legal. However, the court also said that the EU had “exclusive competence” in areas such as foreign investment and intellectual-property rights, which it could negotiate without seeking ratification from national parliaments. Brexiteers saw that as potentially smoothing the path of a trade pact between Britain and the EU, though the comparatively less complex deal with Singapore took three years to conclude, and has been awaiting approval since 2013. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21722226-business-week/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +KAL's cartoon + + +May 18th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21722221-kals-cartoon/print + + + +上一项 文章 章节 下一项 + + + + + +The world this week 章节 Letters + + + + + +Leaders + + +The legacy of the six-day war of 1967: Why Israel needs a Palestinian state + +The Trump presidency: Wise counsel + +The WannaCry attack: The worm that turned + +Fentanyl: The latest scourge + +Racial preferences in Malaysia: Deformative action + +The world this week 章节 Letters + + + + + +文章 章节 下一项 + + + + + +The legacy of the six-day war + +Why Israel needs a Palestinian state + + +More than ever, land for peace also means land for democracy + +May 20th 2017 + + + + + +THE victory of Israel over the Arab armies that encircled it in 1967 was so swift and absolute that, many Jews thought, the divine hand must have tipped the scales. Before the six-day war Israel had feared another Holocaust; thereafter it became an empire of sorts. Awestruck, the Jews took the holy sites of Jerusalem and the places of their biblical stories. But the land came with many Palestinians whom Israel could neither expel nor absorb. Was Providence smiling on Israel, or testing it? + +For the past 50 years, Israel has tried to have it both ways: taking the land by planting Jewish settlements on it; and keeping the Palestinians unenfranchised under military occupation, denied either their own state or political equality within Israel (see our special report in this issue). Palestinians have damaged their cause through decades of indiscriminate violence. Yet their dispossession is a reproach to Israel, which is by far the stronger party and claims to be a model democracy. + + + +Israel’s “temporary” occupation has endured for half a century. The peace process that created “interim” Palestinian autonomy, due to last just five years before a final deal, has dragged on for more than 20. A Palestinian state is long overdue. Rather than resist it, Israel should be the foremost champion of the future Palestine that will be its neighbour. This is not because the intractable conflict is the worst in the Middle East or, as many once thought, the central cause of regional instability: the carnage of the civil wars in Syria, Iraq and elsewhere disproves such notions. The reason Israel must let the Palestinian people go is to preserve its own democracy. + +The Trump card + +Unexpectedly, there may be a new opportunity to make peace: Donald Trump wants to secure “the ultimate deal” and is due to visit the Holy Land on May 22nd, during his first foreign trip. The Israeli prime minister, Binyamin Netanyahu, appears as nervous as the Palestinian president, Mahmoud Abbas, seems upbeat. Mr Trump has, rightly, urged Israel to curb settlement-building. Israel wants him to keep his promise to move the American embassy to Jerusalem. He should hold off until he is ready to go really big: recognise Palestine at the same time and open a second embassy in Jerusalem to talk to it. + +The outlines of peace are well known. Palestinians would accept the Jewish state born from the war of 1947-48 (made up of about three-quarters of the British mandate of Palestine). In return, Israel would allow the creation of a Palestinian state in the remaining lands it occupied in 1967 (about one-quarter). Parcels could be swapped to take in the main settlements, and Jerusalem would have to be shared. Palestinian refugees would return mostly to their new state, not Israel. + +The fact that such a deal is familiar does not make it likely. Mr Netanyahu and Mr Abbas will probably string out the process—and try to ensure the other gets blamed for failure. Distracted by scandals, Mr Trump may lose interest; Mr Netanyahu may lose power (he faces several police investigations); and Mr Abbas may die (he is 82 and a smoker). The limbo of semi-war and semi-peace is, sadly, a tolerable option for both. + +Nevertheless, the creation of a Palestinian state is the second half of the world’s promise, still unredeemed, to split British-era Palestine into a Jewish and an Arab state. Since the six-day war, Israel has been willing to swap land for peace, notably when it returned Sinai to Egypt in 1982. But the conquests of East Jerusalem, the West Bank and the Gaza Strip were different. They lie at the heart of Israelis’ and Palestinians’ rival histories, and add the intransigence of religion to a nationalist conflict. Early Zionist leaders accepted partition grudgingly; Arab ones tragically rejected it outright. In 1988 the Palestine Liberation Organisation accepted a state on part of the land, but Israeli leaders resisted the idea until 2000. Mr Netanyahu himself spoke of a (limited) Palestinian state only in 2009. + +Another reason for the failure to get two states is violence. Extremists on both sides set out to destroy the Oslo accords of 1993, the first step to a deal. The Palestinian uprising in 2000-05 was searing. Wars after Israel’s unilateral withdrawal from Lebanon in 2000 and Gaza in 2005 made everything worse. As blood flowed, the vital ingredient of peace—trust—died. + +Most Israelis are in no rush to try offering land for peace again. Their security has improved, the economy is booming and Arab states are courting Israel for intelligence on terrorists and an alliance against Iran. The Palestinians are weak and divided, and might not be able to make a deal. Mr Abbas, though moderate, is unpopular; and he lost Gaza to his Islamist rivals, Hamas. What if Hamas also takes over the West Bank? + +All this makes for a dangerous complacency: that, although the conflict cannot be solved, it can be managed indefinitely. Yet the never-ending subjugation of Palestinians will erode Israel’s standing abroad and damage its democracy at home. Its politics are turning towards ethno-religious chauvinism, seeking to marginalise Arabs and Jewish leftists, including human-rights groups. The government objected even to a novel about a Jewish-Arab love affair. As Israel grows wealthier, the immiseration of Palestinians becomes more disturbing. Its predicament grows more acute as the number of Palestinians between the Jordan river and the Mediterranean catches up with that of Jews. Israel cannot hold on to all of the “Land of Israel”, keep its predominantly Jewish identity and remain a proper democracy. To save democracy, and prevent a slide to racism or even apartheid, it has to give up the occupied lands. + +Co-operation, not collaboration + +Thus, if Mr Abbas’s Palestinian Authority (PA) is weak, then Israel needs to build it up, not undermine it. Without progress to a state, the PA cannot maintain security co-operation with Israel for ever; nor can it regain its credibility. Israel should let Palestinians move more freely and remove all barriers to their goods (a freer market would make Israel richer, too). It should let the PA expand beyond its ink-spots. Israel should voluntarily halt all settlements, at least beyond its security barrier. + +Israel is too strong for a Palestinian state to threaten its existence. In fact, such a state is vital to its future. Only when Palestine is born will Israel complete the victory of 1967. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21722162-more-ever-land-peace-also-means-land-democracy-why-israel-needs-palestinian-state/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +A special prosecutor + +The right way to clear up doubts about Trump and Russia + + +And the only way to command public trust + +May 18th 2017 + + + + + +A SHORT but strikingly powerful phrase—“in the public interest”—underpinned the welcome announcement, on May 17th, that a former FBI chief, Robert Mueller (pictured), is to serve as a special counsel investigating Russian meddling in last year’s presidential election and whether members of Donald Trump’s campaign colluded in that attack on democracy. + +Mr Mueller was appointed by the deputy attorney-general, Rod Rosenstein, who explained that he was acting to ensure the American people have “full confidence” that their nation is grounded in the rule of law, without regard to partisan politics. It says something about the perils of this moment that Mr Rosenstein, a career prosecutor, needed to spell out that reasoning. Still, after weeks of inappropriate and suspicious behaviour by Mr Trump and his aides, shameful foot-dragging by Republican leaders in Congress and, at times, premature hysteria from Democrats, no probe led by politicians or partisan appointees can enjoy the trust of a divided country. + + + +This being America in 2017, pundits and elected officials instantly began parsing the partisan consequences of Mr Mueller’s appointment. It is a disaster for Mr Trump and his team, who must now “lawyer up” and brace for months of questions about what they knew and when they knew it. In the short term, it takes some heat off Republican leaders in Congress, who no longer have the main responsibility for the investigation. Trump supporters, egged on by conservative media hosts, rage that the “deep state” is mounting a coup against their president. Democrats cannot conceal their glee. + +But the power of Mr Rosenstein’s decision lies in his appeal to the public at large, and to Americans’ shared interest in answering questions about a bitter election and its aftermath. The appointment of Mr Mueller feels like a validation of the very idea of impartial justice. + +It is the result of an extraordinary series of misdeeds and follies. Mr Rosenstein was left to act because his boss, Jeff Sessions, the attorney-general and a ferocious Trump partisan, had to recuse himself after offering the Senate misleading testimony about his contacts with the Russian government in the campaign. Mr Trump’s national security adviser, Mike Flynn, had to resign after lying to the vice-president about his own contacts with the Russians. Public confidence that Russia will be held to account is fragile because Mr Trump fired the man in charge of federal probes into that meddling, the director of the FBI, James Comey. Mr Rosenstein’s credibility was on the line after White House aides tried to claim that the firing of Mr Comey was his idea (until Mr Trump took the credit). A final straw came when the New York Times reported, on May 16th, that Mr Comey had kept notes of a February conversation in which Mr Trump spoke to him about ending his investigations into Mr Flynn—which comes close to obstructing justice. + +Cleaning up + +A single, grubby thread runs through this: when Mr Trump and his close associates are accused of furtive or illegal acts, their instinct is to obfuscate, cry “fake news” or search for scapegoats. By appointing a counsel with the reputation of Mr Mueller, outside the normal chain of political command, Mr Rosenstein has held himself to a higher standard. + +Mr Mueller has borne weighty burdens before: he took office as FBI director under George W. Bush one week before the terrorist attacks of September 2001 and, over 12 years, earned respect from Republicans and Democrats alike. It is to be hoped that he can keep the trust of the American public, even as partisan accusations fly. He was hired to represent the public’s interests, rather than those of any faction. That is a start. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21722170-and-only-way-command-public-trust-right-way-clear-up-doubts-about-trump-and-russia/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The worm that turned + +The WannaCry attack reveals the risks of a computerised world + + +The good news is that there are ways to fix things + +May 18th 2017 + + + + + +IT SOUNDS like a Hollywood disaster film. A group of hackers use a stolen cyber-weapon to try to extort money from people worldwide. The attack cripples hospitals, causing ambulances to be diverted and operations to be cancelled. Then a lone security researcher stumbles across a way to halt the bug in its tracks. Yet that is exactly what happened last week when a piece of ransomware called WannaCry, which infects computers running outdated versions of Microsoft’s Windows operating system, hit not just Britain’s National Health Service (NHS) but Russia’s interior ministry, Chinese universities, Germany’s state railways and plenty more besides. + +It could have been much worse. WannaCry does not seem to have been a deliberate attack on hospitals, but a criminal money-making scheme in which the NHS was collateral damage (see article). Indeed, as malicious programs go, WannaCry is not even in the premier league: although it has a nasty payload, it had compromised only about 300,000 computers and raised an estimated $80,000 as The Economist went to press. Earlier nasties, such as Conficker and SoBig, infected millions of machines. Even so, the incident rammed home two unpleasant truths about the computerised world. + + + +The first is that the speed, scalability and efficiency of computers are a curse as well as a blessing. Digital data are weightless, easy to replicate, and can be sent around the world in milliseconds. That is welcome if those data are useful, but not if they are malicious. Modern software can contain millions of lines of code. Ensuring that no bugs slip through is almost impossible. A single vulnerability can affect thousands or millions of machines, and the internet gives a single individual the power to compromise them all at once. By comparison, paper files are heavy, cumbersome and awkward to work with. But at least a couple of crooks thousands of miles away cannot cause them all to vanish simultaneously. If WannaCry can cause so much random damage, imagine what might be done if hospitals were targeted deliberately. + +The second unpleasant truth is that opportunities for mischief will only grow. More things will become vulnerable as computers find their way into everything from cars and pacemakers to fridges and electricity grids. The ransomware of tomorrow might lock you out of your car rather than your files. Cyber-attacks like WannaCry may seem like low-probability, high-impact risks. But the parlous state of computer security and the computerisation of the world risk turning such attacks into high-probability, high-impact events. + +Fortunately, there are ways to minimise the danger. Product regulation can force the makers of internet-connected gizmos to include simple security features, such as the ability to update their programs with patches if a vulnerability turns up. Software-makers routinely disclaim liability for defects in their products. Changing that would not eliminate bugs entirely, but it would encourage software firms to try harder. It would also encourage them to provide better support for their customers (although there will come a point at which it is unreasonable to expect Microsoft and others to keep maintaining old programs). The insurance industry can also put pressure on computer users: just as home-insurance policies will not pay out if a burglar gets in through an open door, so individuals should be held liable if they do not follow basic digital hygiene, such as keeping their software up to date. + +WannaCry or WannaSpy? + +Governments face tough questions, too. The method WannaCry uses to spread was discovered years ago by the National Security Agency (NSA), America’s electronic-spying outfit. Along with several other cyber-weapons, the technique was stolen, then leaked onto the internet in March. Only after the theft did the NSA inform Microsoft of the flaw, leading the firm to rush out a fix. Microsoft has accused the NSA of losing control of the digital equivalent of a cruise missile, and demanded that, in future, spies disclose any bugs as they find them, so that software firms can fix them and keep everybody safe. + +This is another example of the double-edged nature of computing. Given the rising costs of insecure computers, there is a strong case for spooks to share vulnerabilities with software firms when they find them. Some argue that fixing flaws in programs will make it harder for the intelligence services to spy on organised criminals and terrorists. But they have other means to infiltrate hostile networks and monitor devices besides exploiting flaws in widely used software. When computers are ubiquitous, security is too important not to fix. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21722185-good-news-there-are-ways-fix-things-wannacry-attack-reveals-risks/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The latest scourge + +Fentanyl is the next wave of America’s opioid crisis + + +Criminalisation is not the right way to approach it or other drugs + +May 18th 2017 + + + + + +THE roadside billboards in some American towns do not advertise fast-food chains or home insurance. Instead, they tell people what to do in case of a drug overdose. Deaths in America from opioids, pain-relieving drugs that include both prescription painkillers such as OxyContin and illegal ones such as heroin, have almost quadrupled over the past two decades. In some states the share of babies who are born with withdrawal symptoms has increased by 300% since 1999; at least 8,000 were born suffering from them in 2013. Each day 91 Americans die from an opioid overdose. + +Much of this catastrophe stems from the over-prescription of legal painkillers. In 2015 some 650,000 prescriptions were handed out on an average day. But when prescriptions end, addicts sometimes turn to illicit substances. The latest one that worries experts is a synthetic opioid called fentanyl, which is around 50 times more potent than heroin and 100 times more powerful than morphine. Most of the fentanyl making its way to America has been made, often legally, in factories in China before being shipped to criminal networks in Mexico and Canada and then smuggled over the border. Thousands of Americans have died from using fentanyl since 2013. + + + +In the face of such numbers, it is always tempting to reach for the comfort blanket of prohibition. The Trump administration is taking a hawkish line on drugs of all kinds. Jeff Sessions, the attorney-general, opposes the legalisation of cannabis. On May 12th he appeared to reverse years of sensible policy that sought to reduce punishment for non-violent drug crimes by instructing prosecutors to pursue the “most serious, readily provable” offences. Efforts are being made to restrict synthetics. In March the government in China, under pressure from America and the UN, agreed to make four variants of fentanyl illegal. Yet such plans will do little to stop the opioid crisis or to curb the threat from fentanyl. + +Available with next-day delivery + +That is partly because the crisis is too far advanced for criminalisation to work as a deterrent. The country has at least 2m opioid addicts. They need treatment and safer places to take drugs. The health-care bill passed by the House of Representatives this month heads in the opposite direction. Its proposals would cut spending and reduce access to medicines. + +But prohibition is futile for more profound reasons, too. An iron law of drugs markets, whether for painkilling opioids or recreational highs, is that demand creates supply and just as much as vice versa. Fentanyl is particularly attractive to criminals. Because it is so potent, with only 2mg of the stuff enough to cause an overdose, it is easy to hide in letters and small packages that are sent by post. The rewards are enormous: 1kg of fentanyl costs around $4,000 to buy from China and yields profits of $1.6m on the streets. By contrast, 1kg of heroin costs around $6,000 but is worth a few hundred thousand dollars. + +Fentanyl, and its variants, are among hundreds of new synthetic drugs that have flooded the illicit-drugs market over the past decade (see article). New drugs have been emerging at the rate of one a week; in 2012-17, 20 new fentanyl analogues appeared. A market this protean cannot be erased. Crack down in China, and laboratories will appear in Mexico; already some have opened there. Ban one substance, and another will appear. Whack every mole, as Britain has attempted with a law that prohibits any new drug that has a psychoactive effect, and substances get pushed from shops to the internet. + +Banning drugs is not just ineffective, it is also counterproductive. Fentanyl is a nasty substance, but prohibiting all illicit drugs, whether they are new or established, prevents the research that could distinguish between those which are more and less harmful. It also leads to topsy-turvy outcomes. Marijuana, which cannot lead to overdoses and which can be used as an effective pain-relief medicine, is classified by the federal authorities in America as a more dangerous drug than fentanyl, which is used in very controlled doses by cancer patients and abused fatally across the country. + +It takes guts to legalise drugs when so many are dying from them. But it is better that addicts take safe doses of familiar substances under sanitary conditions than for them to risk their lives enriching criminals. Switzerland followed the legalisation path after a heroin epidemic in the 1980s, treating drugs as a public-health problem. Since then drug-taking and drug-related deaths have fallen. America should follow suit. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21722189-criminalisation-not-right-way-approach-it-or-other-drugs-fentanyl-next-wave/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Deformative action + +Malaysia’s system of racial preferences should be scrapped + + +Income-based benefits would work much better + +May 18th 2017 + + + + + +WHAT government would not like to reduce racial disparities and promote ethnic harmony? The tricky part is knowing how. One country that claims to have found a way is Malaysia. Since 1971 it has given preferential treatment in everything from education to investing to bumiputeras—people of indigenous descent, who are two-thirds of the population but poorer than their ethnic-Chinese and -Indian compatriots. + +On the face of things, this system of affirmative action has been a success (see article). The gap in income between Malays (the biggest bumiputera group) and Chinese- and Indian-Malaysians has narrowed dramatically. Just as important, there has been no repeat of the bloody race riots of 1969, when Malay mobs burned Chinese shops in Kuala Lumpur, prompting the adoption of the policy. And the economy—typically an instant victim of heavy-handed government attempts at redistribution—has grown healthily. + + + +Small wonder that some see Malaysia as a model. South African politicians cited it when adopting their plan for “Black Economic Empowerment” in the early 2000s. More recently Indonesian activists have been talking about instituting something similar there. Malaysia, meanwhile, keeps renewing the policy, which was originally supposed to end in 1991. Just last month Najib Razak, the prime minister (pictured), launched the latest iteration: the catchily named Bumiputera Economic Transformation Roadmap (BETR) 2.0, which, among other things, will steer a greater share of government contracts to bumiputera businesses. + +Money for old rope + +Yet the results of Malaysia’s affirmative-action schemes are not quite what they seem. Malays in neighbouring Singapore, which abjures racial preferences, have seen their incomes grow just as fast as those of Malays in Malaysia. That is largely because the Singaporean economy has grown faster than Malaysia’s, which may in turn be a product of its more efficient and less meddling bureaucracy. Singapore, too, has been free from race riots since 1969. + +If the benefits of cosseting bumiputeras are not as clear as they first appear, the costs, alas, are all too obvious. As schools, universities and the bureaucracy have become less meritocratic, Chinese and Indians have abandoned them, studying in private institutions and working in the private sector instead. Many have left the country altogether, in a brain drain that saps economic growth. + +Steering so many benefits to Malays—developers are even obliged to give them discounts on new houses—has created a culture of entitlement and dependency. Malays have stopped thinking of affirmative action as a temporary device to diminish inequality. As descendants of Malaysia’s first settlers, they now consider it a right. + +The result is that a system intended to quell ethnic tensions has entrenched them. Many poorer Malays vote reflexively for UMNO, the Malay party that introduced affirmative action in the 1970s and has dominated government since then, for fear that another party might take away their privileges. With these votes in the bag, UMNO’s leaders can get away with jaw-dropping abuses, such as the continuing scandal at 1MDB, a development agency that mislaid several billion dollars, much of which ended up in officials’ pockets, according to American investigators. Minorities, in turn, overwhelmingly support parties that advocate less discrimination against them. + +The ambition to improve the lot of Malaysia’s neediest citizens is a worthy one. But defining them by race is a mistake. It allows a disproportionate amount of the benefits of affirmative action to accrue to well-off Malays, who can afford to buy the shares set aside for them at IPOs, for example, or to bid for the government contracts Mr Najib is reserving for them. It would be much more efficient, and less poisonous to race relations, to provide benefits based on income. Most recipients would still be Malays. And defusing the issue should pave the way for more nuanced and constructive politics. Perhaps that is why UMNO has resisted the idea for so long. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21722177-income-based-benefits-would-work-much-better-malaysias-system-racial-preferences-should-be/print + + + +上一项 文章 章节 下一项 + + + + + +Leaders 章节 Briefing + + + + + +Letters + + +On dying, money supply, Puerto Rico, James Comey, Britain: Letters to the editor + +Leaders 章节 Briefing + + + + + +文章 章节 下一项 + + + + + +Letters + +Letters to the editor + + +On dying, Puerto Rico, James Comey and more + +May 18th 2017 + + + + + + Shuffling off this mortal coil + +You imply that doctors lack the training to deal with end-of-life care (“Mending mortality”, April 29th). In my experience it is much more common for patients to fail to communicate what they want to their family members, who, when a patient becomes incapacitated, have to make the critical decisions. It is these family members who implore the doctors and the hospital to do everything possible to save their loved one, with whom they’ve never had a frank conversation about how they would like their final moments to play out. + +DR JASON MITCHELL + +Assistant professor + +Emory University School of Medicine + +Atlanta + +The problem with palliative care is a financial one. Doctors who specialise in this area have no highly billable procedures to offer, so expanding their numbers is a loss for hospitals. Until we can successfully reassign cost value, this essential branch of medicine is unlikely to expand. No group of doctors more completely achieves the goal of helping patients than those who focus on ameliorating the symptoms of the dying. + +DR BRANDON SMAGLO + +Assistant professor + +Baylor College of Medicine + +Houston + + + +As you point out, the way health care is organised needs to change. In Britain almost half of people spend their final days in a hospital bed, yet the vast majority say they would prefer to be cared for in their own home or in a hospice. + +Hospice UK is seeking to change the way people are supported at the end of life with a new project part-funded by NHS England. It will identify ways in which hospice-led services could better support dying people and ensure they are cared for in the place of their choice, either in a hospice, or in their home supported by a hospice. + +This could reduce the number of people dying unnecessarily in hospital by 50,000 every year and significantly ease pressures on the overstretched NHS. It has great potential to transform care for the dying and ensure that more people have “a good death” in the place they prefer. + +LORD HOWARD OF LYMPNE + +Chair + +Hospice UK + +London + + + +As a neurologist who has cared for many dying people I applaud most of your suggestions on end-of-life care. Legalised assisted-suicide, however, decreases the incentive for hospice care (it is easier to kill them) and contributes to the misery of the dying person, who ends up feeling like a dispensable burden. + +Furthermore, in America one of the main reasons for medical heroics at the end of life is that they are “free”: insurance companies and the government pay for expensive critical care. More financial individual responsibility for health-care expenses would lessen the costs while improving end-of-life care. + +DR JOSEPH MASDEU + +Houston + + + +* Many studies have shown that the use of psychedelic compounds, such as psilocybin, can reduce or eliminate anxiety and depression at the end of life. Using these compounds, in a short structured context of psychotherapy, allows people to connect their lives and deaths in comfortable, often mystical ways. Combined with legal aid in dying, people and their loved ones suffer less and achieve compassion and dignity in dying. + +DR GENE TINELLI + +Associate professor + +Department of Psychiatry and Behavioural Science + +Upstate Medical University + +Syracuse, New York + + + + + +The money go round + +The Free exchange column of April 15th stated that Milton Friedman’s study of the quantity theory of money (the rate of growth in the money supply) “Had gone out of fashion” by the time the financial crisis came around in 2008. Instead, you said, “The interest rate… was what mattered for the economy.” Milton was alive until 2006 and I know of no time when he and other monetarists, including the late Professor Allan Meltzer at Carnegie Mellon, believed that the money-supply growth rate was less important, and that interest rates are instead what should be focused on. + +Money-supply growth became less of a subject because of the greater difficulty in measuring it. When I was a student under Friedman, there was M1, M2, all the way up to about M8. The problem was that a number of different instruments became the equivalent of money, and therefore it was hard to measure the right measure of money-supply growth. + +Furthermore, the injection of liquidity by the Federal Reserve during the economic crisis should not have resulted in a difficult situation. The way out of this is really quite simple. If the excess reserves being held by banks were permitted to be used in the economy, and thus increased the money supply substantially, you can be sure that inflationary expectations would return and interest rates would go skyward. But, that does not have to happen. The Fed can keep these excess reserves illiquid by paying a sufficient rate of interest on them and restricting the use of these tactics. + +JOEL STERN + +Chairman and chief executive + +Stern Value Management + +New York + + + + + +What’s good for Puerto Rico + +The American government’s legal impediment to taxing source income in Puerto Rico is still the island’s cornerstone for attracting foreign investment and the basis for its “best of both worlds” mantra (“To be resolved”, May 6th). The American dollar, passport and federal legal framework in a Caribbean Latin island are the other elements of the formula. Washington has not relinquished its oversight authority over Puerto Rico since 1898. Now it is blatantly doing so through an oversight board with superseding powers over local elected officials. + +The governor’s tunnel vision on an unattainable political status—becoming the 51st state—would end this competitive edge. This is dangerous for the badly needed productivity recovery and growth, without which the island’s debt restructuring will fall comically short of being an adequate solution to the crisis. Numerous drug firms that keep their principal place of operations in Puerto Rico are still convinced, but they would be less so if their gains became subject to Uncle Sam’s grasp. + +JAVIER INCLÁN + +San Juan, Puerto Rico + + + + + +Spending a penny + +Many moons ago Lyndon Johnson was widely quoted as justifying his unwillingness to sack J. Edgar Hoover as the head of the FBI, on the ground that “it’s probably better to have him inside the tent pissing out, than outside the tent pissing in.” Fast forward to 2017 and Donald Trump, confronted with an only sporadically incontinent director of the FBI, suddenly decides to dismiss him at a moment’s notice (“Biting the hand that made him”, May 13th). Following that defenestration, James Comey is now well and truly outside the tent. In these new circumstances, he can, one assumes, fairly be excused for responding to calls of nature as and when they arise. + +NICHOLAS MACCABE + +Zurich + + + + + +Britain left out in the cold + +Ted Stroll suggested that Britain should become a new province of Canada after Brexit (Letters, April 6th). There are additional benefits to doing this. Britain would have access both to the boat-building technology of the Inuits and to the oil sands in Alberta. In this way it could have its kayak and heat it. + +TOM MURPHY + +Montivilliers, France + +* Letters appear online only + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/letters/21722151-dying-puerto-rico-james-comey-and-more-letters-editor/print + + + +文章 章节 下一项 + + + + + +Letters 章节 United States + + + + + +Briefing + + +Synthetic drugs: Expanding universe + +Letters 章节 United States + + + + + +文章 章节 下一项 + + + + + +Exploration and desperation + +The expanding universe of synthetic drugs + + +From “legal highs” to fentanyl, there are more drugs on offer than ever before + +May 18th 2017 | AMSTERDAM + + + + + +INSIDE a brightly lit shop in Amsterdam half a dozen people inspect the wares. Alongside the bongs, vibrators and heart-shaped key rings in its glass displays are rows of small silver packets emblazoned with names such as “Herbal Speed”, “Trip E” and “Liquid Bliss”. Four capsules of “Space Trips” will “take you to the moon and back” for €12.50 ($13.30). There are 160 coffee shops in this city where marijuana can be bought and smoked perfectly legally. But as these shiny packets bear witness, there is also a thriving market for “legal highs”, synthetic alternatives to drugs such as ecstasy or cocaine. + +Humans have always sought to intoxicate themselves. For millennia they had only what could be reasonably easily coaxed from poppies, grapes, mushrooms and the like to help them in their endeavours. In the 19th century chemistry allowed the chemical compounds that had made such things worth seeking out to be purified and marketed. New drugs from the laboratory, such as ether and nitrous oxide, found a role in “laughing gas” parties and “ether frolics” well before they were pressed into medical service as anaesthetics. + + + +The 20th century saw new drugs created from scratch: amphetamines, barbiturates, benzodiazepines and more. It also saw a far more spirited, if often fruitless, policing of the line between drugs-as-medicine and drugs-of-choice—a line that was in many cases drawn according to the sort of people who chose to use the drug, rather than any essential danger it posed. These prohibitions rarely improved public health or public order; but they did encourage some of those who served the markets on the wrong side of the line to investigate the potential of molecules similar to those in existing drugs but not yet subject to any sanction. + +As the 21st century took off, so did the sale of these new drugs. At the turn of the century the UN Office on Drugs and Crime (UNODC) recognised only a handful of “new psychoactive substances” in use around the world. By 2008 the number was up to 26; by 2014 it was 452; in a UNODC report to be published this summer the total is expected to reach 700. Most do not stick around, appearing on the streets or in the head shops where drug paraphernalia is sold only for a few months; but 80 or so have spent years on the market. Never before has there been such an array of pills, gases and liquids available for people to swallow, inhale or inject. + +New compounds such as those in that Amsterdam shop make up only a very small fraction of the global drugs trade. But in their profusion, in the way that they blur the distinctions between the legal and the illegal, and in the unintended consequences that can follow when one sort of high is traded for another, they offer a window into its future. + +It is easier to set up a clandestine laboratory, or even a fully fledged pharmaceutical factory, than ever before. As a result the world now has an innovative infrastructure capable of developing synthetic variations on established druggy themes with ease, whether it is to circumvent laws on ecstasy in Europe or to meet the rocketing demand for opioids in America. + +Bigger bangs + +Almost all these new drugs are intended to replicate the effects of older stimulants, hallucinogens, depressants and the like. Yet their changed molecular structures mean that their effects are different—sometimes subtly so, sometimes dramatically and dangerously so. Some of them, in some circumstances, may well offer real as well as legal benefits with respect to the originals: a more enjoyable high, say, or a milder portfolio of side-effects. But two drugs which, in molecular theory, look quite similar can differ a lot in practice—with one more addictive, say, or easier to overdose on. + +At the moment illicit manufacturers and drug-dealers do not know how people will react to the drug until it hits the market, and the full impact may not become visible for a long time afterwards. It is hard to see how to reduce the harm which can be done, let alone maximise possible benefits, in a world where prohibition remains a default, but ineffective, response to many broad categories of drug. + +As the market for new psychoactives took off in the 2000s, the main selling point was that very prohibition: legal highs could be sold openly in head shops (which boomed as a result). According to Fiona Measham, a drug specialist at Durham University, the new highs were particularly appealing to 30-something professionals, such as teachers, who would lose their jobs if found with illegal substances. + +In some places a new spirit of experimentation emerged, particularly among “psychonauts”, mostly educated young men, excited by the chance to ingest new substances and discuss their explorations with others. Earth, the pseudonymous co-founder of Erowid, an encyclopedic online resource on drugs and their effects, sees it as a modern-day equivalent of “Amazonian residents tasting the bark of various trees in combination with the leaves of every plant to test their effects.” In the 2010s the rise of the “dark web”, which can be accessed through encrypted browsers such as Tor, made the new synthetic drugs pretty easy to purchase even after the authorities got around to prohibiting them. + +One result of this experimentation is that a handful of new drugs have been found to be just as good, if not preferable, to older illicit substances. Take mephedrone (4-methylmethcathinone), which became popular among European clubbers in the mid-2000s. Ecstasy (MDMA) was in short supply at the time, recalls Tibor Brunt at Trimbos, a drug-research centre in Utrecht, and what was available was of poor quality; mephedrone and 4-FA (4-fluoroamphetamine, another clubbing drug) were legal ways to fill the gap. According to a 2016 study from the Autonomous University of Barcelona, mephedrone users report “euphoria, stimulation, alertness, empathy, sociability, talkativeness, intensification of sensory experiences and light sexual arousal”, which makes it sound pretty much indistinguishable from MDMA. + +At first the new drugs were often passed off as MDMA, but they soon came to be sold for what they were and their merits—for mephedrone, a shorter high and a more mellow comedown—appreciated. According to a 2014 paper by Mr Brunt and his colleagues, once 4-FA had become established 77% of users took it for its effects, not because of its legal status. This suggests that even though, this April, it became illegal in the Netherlands, it will still be widely taken, just as MDMA is. + +Not many new psychoactives, though, earn a place in the market through merit-based competition. The origins of synthetic cannabinoids, which target the same aspect of brain chemistry as THC, the main active compound in marijuana, and fentanyl, an opioid, date back to the late 1950s and early 1960s, when the pharmaceutical industry was looking for new medicines of all sorts. Fentanyls found a niche in pain management; the early synthetic cannabinoids had “such a mind-blowing effect”, recalls David Nutt of Imperial College London, that the companies never took them to market. Today both are widely abused as more available, and more potent, substitutes for other drugs. + +Synthetic cannabinoids sold in Europe and America as “Spice”, “K2” and “Black Mamba”, among other names, are mostly produced in China; in some cases their synthesis is perfectly legal. They are then shipped to Europe and America in the form of powders; there they are mixed with solvents and applied to dried leaves—tobacco, marshmallow and tomato are popular. + +Successive attempts to crack down on them by governments have led producers to tinker with the molecular structures ever more, removing them ever further from THC. This makes them a far more heterogeneous group of drugs. According to Oliver Sutcliffe, a chemist at Manchester Metropolitan University, four different synthetic cannabinoids appeared in Manchester over a period of five weeks earlier this year, with the concentration of the active component in different batches varying by a factor of ten. But the drugs all looked identical. + +The effects of these synthetic cannabinoids can be very different from those of ordinary cannabis. Some users start stumbling around zombie-like after taking them, though these catatonic effects typically wear off after 20 minutes or so. Some other effects—though not necessarily the high—can last a lot longer than those of cannabis, says Paul Dargan, a toxicologist at Guy’s and St Thomas’ Hospital in London. The drugs can cause convulsions; some have led to cardiac arrest. Unpleasant withdrawal symptoms are common. + + + +Unsurprisingly, this is not very appealing to people with access to alternatives. In Amsterdam few of the head shops selling “legal” or “herbal” alternatives to ecstasy and stimulants find it worth their while to sell synthetic cannabinoids. A 2015 report from the Drug Policy Alliance, an NGO based in New York, found that arrests for synthetic cannabis in Colorado dropped by half when stores selling legal marijuana opened in 2014. + +But synthetic cannabinoids do have their selling points. They are often strong; they are often cheap; and they don’t show up in urine tests. A listing on the dark web for “Dank Tobacco Spice” boasts that users can get high “in front of the police the Boss Your Mom The Judge Probation and Parole Officers and never get detected”. Synthetic-cannabinoid use is rife in those American homeless shelters in which urine samples are mandatory. They are also by far the most widely used drugs in British prisons, where a spate of recent riots has been linked to them. One person who works in those jails says that when he smells cannabis being smoked behind bars he immediately feels more at ease; not only will the inmates be less aggressive, but any symptoms will be far more predictable. + +Dark matter + +The rise of fentanyl followed a similar, but more deadly, trajectory. Illicit fentanyl first started to appear in the 1980s, according to Michael Evans-Brown of the European Monitoring Centre for Drugs and Drug Addiction in Lisbon. It was soon linked to a spate of deaths, and disappeared. Over the past five years, though, fentanyl and a range of relatives and lookalikes have made a comeback. Aggressively marketed pharmaceuticals such as OxyContin have led to an epidemic of opioid addiction in America, and those addicted sometimes turn to illegal opioids as an alternative to highly priced and sometimes strictly policed medical ones. As well as heroin, they can now get hold of as many as 30 variants of fentanyl (of which only 19 are controlled substances under federal law). + +Fentanyl is powerful—50 to 100 times stronger than morphine. Some of its relatives are more potent yet. “If you are buying this for resale and selling it on as fentanyl I advise you cut this to ensure you do not harm your clients,” says a dark-web seller of one called carfentamil, and he is not kidding: a single gram of the stuff can make tens of thousands of doses, according to Mr Evans-Brown. + +Such concentrated oomph means that lucrative quantities can be shipped in very small packages. In March an investigative report by the Globe and Mail, a Canadian newspaper, revealed that fentanyl was being shipped in from China inside silica-desiccant packets packaged with urine-test kits. Because the packets weighed less than 30 grams, Canadian border guards were not allowed to open them without getting the permission of the recipient. + +Potency not only makes smuggling easier: it makes dealing more profitable. According to an official from America’s Drug Enforcement Administration, quoted in the House of Representatives earlier this year, a kilo of heroin can be purchased for roughly $6,000 and sold wholesale for $80,000 before fetching a few hundred thousand dollars on the street. The price for a kilo of fentanyl might be $3,500-5,000; stretched out into 16-24kg of product it might be worth $1.6m. + +The potency makes overdosing very easy, and fentanyl overdoses are harder to treat than those of other opioids. In 2015 over 9,000 people in America died from a synthetic opioid overdose. In Ohio, one of the worst-affected states, fully 62% of those who recently died from a heroin or fentanyl overdose had been prescribed at least one opioid painkiller in the previous seven years. + +The response of rich-world authorities has mostly been more bans. Initially governments outlawed one substance after another, playing a game of whack-a-mole with producers, who would add molecular tweak after molecular tweak. “We have created a hydra phenomenon,” says Kenneth Tupper, of the British Columbia Centre on Substance Abuse. “You cut off the head of the beast and eight more pop up.” + +As a result, broader laws have also been put in place. In 2010 Ireland introduced a blanket ban. In America the Synthetic Drug Abuse Prevention Act of 2012 banned “cannabimimetic agents”, as defined by the effects they have on the brain. Last year Britain passed a sweeping piece of legislation which outlaws anything that has “psychoactive effects”—altered perceptions of time and space; hallucinations; changes in alertness; enhanced empathy; drowsiness—along the lines of those provided by older illicit drugs. + +These broader bans have not worked much better. In Ireland head shops closed down but the use of these drugs did not: according to a Eurobarometer survey, some 22% of those aged between 15 and 24 had taken a new synthetic drug in 2014, compared with 16% in 2011. In British prisons the price of Spice and its variants has actually come down since the ban was put in place, defying the rules of the market, according to one person who works in them. Some bans may have done real harm. A 2016 report from the Beckley Foundation, a British research and lobby group, suggests that the government’s addition of mephedrone to the schedule of controlled substances in 2010 may have led to a brief rise in deaths from cocaine. + +Light and darkness + +An alternative approach is to try and stamp out the drugs at their source. In 2015 China regulated 116 synthetic drugs, including several fentanyl derivatives; in March this year it added four more to its list. Yet in the same year the UNODC found that over a hundred new drugs had been synthesised. And suppressing fentanyl in China may just push it elsewhere: drug cartels in Mexico have incentives to try and find scientists to synthesise these drugs, considering the profit margins. American politicians also talk of clamping down on international post in order to try to detect these drugs more effectively; but it is doubtful that this will catch all of the fentanyl making its way into the country, especially as it can be carried on people rather than in parcels. Such a policy is more likely to lead to ever more inventive ways for dealers to smuggle it in, and to increase the incentives for discovering variations that are as potent as possible. + + + +A more enlightened response would be to explore the possibility that some of these drugs might, in some settings, be comparatively benign, and that if that is the case then making them more easily available might make sense. New Zealand—where, given the distance from other drug markets, new synthetics are particularly popular—looked at such an approach in 2013 with a plan to regulate, rather than to simply prohibit, some new drugs. The rules allowed manufacturers of new psychoactive substances to apply for permits; if after a year-long clinical trial their drugs were found to be “low risk”, they would be allowed to sell them to people over the age of 18. Yet this soon fell foul of other legal problems, with an anti-vivisection society successfully lobbying to ensure that the drugs in question, unlike those intended for medical use, could not be tested on animals. Robbed of ways of demonstrating a compound’s safety, the plan stalled. + +In theory, the profusion of new drugs, and of psychonauts willing to try them, offers an opportunity to rethink various aspects of drug policy. The wheat could be sorted from chaff, drugs with lower risks distinguished from those with higher risks, compounds with possible medicinal merit singled out for further development. In practice, though, as long as prohibition dominates the responses, the opportunities for new knowledge will be scarce—perhaps more so than ever. Mr Nutt, a former British government adviser and a critic of current policy, complains that the sweeping British ban has made the study of psychoactive substances harder. It also means that academic research groups may find that drugs in their laboratories which were previously perfectly legal have become illegal, further hindering research. + +The boom in synthetic drugs has given consumers more choice; some of its products may be genuine improvements on their predecessors in some settings. But it has also provided dangerous and poorly understood products to people who are often already marginalised. A willingness to re-examine current policies would reap dividends. At present, though, the new substances add to the confusions and contradictions of the old system—which, in the case of American federal law, treats the fentanyl which is killing thousands as less of an issue than marijuana. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21722164-legal-highs-fentanyl-there-are-more-drugs-offer-ever-expanding/print + + + +文章 章节 下一项 + + + + + +Briefing 章节 The Americas + + + + + +United States + + +Donald Trump and the law: Deep breath, America + +President Trump’s travels: What could possibly go wrong? + +Western politics: A lady called Montana + +Prisoners and jobs: Going straight + +Illinois’s troubles: The Midwest’s basket case + +George Soros: Public Enemy Number 1 + +Lexington: Donald Trump, man of God + +Briefing 章节 The Americas + + + + + +文章 章节 下一项 + + + + + +Deep breath, America + +Donald Trump and the law + + +A special counsel will lead an independent probe into the Russia allegations + +May 20th 2017 | WASHINGTON, DC + + + + + +“THERE’S frankly no need for a special prosecutor,” the White House spokesman, Sean Spicer, told journalists on May 15th. He was responding to concerns about the independence of investigations into Russia’s efforts to influence the election last November, with alleged assistance from members of Donald Trump’s campaign team. Yet on May 17th the Justice Department announced that it had exercised its prerogative to appoint just such an independent investigator. The main Russia probe, run by the FBI, will be handed to a respected former FBI director, Robert Mueller (pictured), in the role of special counsel. He will be empowered to run the investigation, and press charges, as he sees fit. + +This is a terrible blow for Mr Trump. The president has said Russian spies did not meddle in the election, though America’s intelligence agencies say they did, and that there was no collusion between his advisers and the Russians. He has called the FBI investigation a “taxpayer-funded charade”. He has also been accused of trying to influence it. On May 16th the New York Times reported that the president had advised his then FBI director, James Comey, to lay off Michael Flynn, the former national security adviser, after sacking him for having surreptitious conversations with Russia’s ambassador and lying about them. The investigation Mr Trump has thus sought to rubbish and perhaps divert will now be formidable. Even if he has nothing to hide from it, this is deeply humiliating. + + + +Mr Mueller, who ran the FBI for 12 years until 2013, having been hired by George W. Bush and retained by Barack Obama, is admired by both parties. He will be free to redesign and run the FBI probe, and will have ample resources to do so. In theory, he will be answerable to Jeff Sessions, the attorney-general, yet the fact that Mr Sessions has recused himself from playing any role in the Russian investigation—after he was also revealed to have kept weirdly shtum about meetings with the same Russian diplomat, Sergey Kislyak—is an additional guarantee of Mr Mueller’s independence. For the same reason, the decision to appoint Mr Mueller was taken not by Mr Sessions, a Trump loyalist, but by his deputy, Rod Rosenstein. The White House was not informed of this development until just before it was made public. + +Mr Rosenstein’s decision is a clear victory for America’s checks and balances. But Mr Trump and his advisers should blame themselves, not the system, for this. By hiring Mr Flynn, despite multiple indications that he was unfit for a senior government position, Mr Trump ensured his fledgling administration became instantly embroiled in a new round of Russia-related scandal. Because he failed to disclose his meetings with Mr Kislyak, Mr Sessions was forced to cede control of the FBI investigation to Mr Rosenstein. By allegedly leaning on Mr Comey—“I hope you can let this go,” the president is reported to have told him, in reference to Mr Flynn’s misdemeanour—and then, on May 9th, sacking him, Mr Trump may have blundered most seriously of all, in sight of an assiduous witness. Mr Comey is reported to have kept a careful record of all his chats with the president. + +As they contemplate the gravity of Mr Trump’s troubles, even Republicans are tempted to recall the last time a Republican president was disgraced and chased from office. The president’s scandals are of a “Watergate size and scale”, said Senator John McCain of Arizona. Yet there is a big difference between Richard Nixon’s disgrace and fall in 1973-74 and now, which makes it all but certain that Mr Trump is in no danger of imminent impeachment. Then, the Democrats controlled Congress, wherein lies the power to impeach. Now, the Republicans do—and no Congress has ever moved to dislodge a president of the same party as its majority tribe. Sure enough, despite the more anxious comments being made about Mr Trump by a dozen or so Republicans, including Mr McCain, most are silent. + +Electoral logic explains that. Though Mr Trump has the worst ratings of any new president on record—less than 40% of Americans approve of him—most Republican voters are still with him. With a nervous eye to the mid-term elections due next year, most Republicans therefore consider attacking the president to be electorally suicidal. + +This may change. If Mr Mueller turns up something seriously incriminating for the president, even the most timorous Republicans may abandon him. If the Democrats capture the House of Representatives next year, as they may, it is also likely that they would vote to impeach Mr Trump; though he would in that case probably be saved by the Senate, as Bill Clinton was in 1999. In the meantime, however, a likelier outcome of his rule-breaking is less dramatic, but nonetheless horrendous for America. + +With Congress descending into partisan rowing about Mr Trump, there is already little prospect of Democrats and Republicans co-operating on legislation. There is at best a vanishing prospect of Republican congressmen, who no longer fear the president as they once did even if they will not condemn him, co-operating among themselves to carry through his agenda. Instead of remaking America with bold initiatives, Mr Trump faces a prospect of doing little of anything. The S&P500 fell by almost 2% on May 17th as investors mulled that dismally familiar prospect. + +The dismay Americans felt at their governing system’s previous round of tribalism and dysfunction fuelled the rise of Mr Trump. There is no reason to suppose this cycle will lead to anything better. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21722161-special-counsel-will-lead-independent-probe-russia-allegations/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Nervous hosts prepare to flatter an unpredictable guest + +President Trump’s travels + + +What could possibly go wrong? + +May 18th 2017 + + + + + +DONALD TRUMP departs for his first trip abroad as president on May 19th. He may be happy to leave Washington, but the cloud he is under will travel with him. And while every preparation has been made to ensure nothing will go awry, there is every reason to fear it will. Mr Trump’s boasting to Russian officials about the “great intel” he had on a plot by Islamic State (IS) underlines just how hazardous this excursion is. His shocking indiscretion seems to have sprung largely from a desire to impress his visitors. + +There has been comforting talk of a foreign-policy “firewall”, thanks to the influence of the so-called “axis of adults”: the defence secretary, Jim Mattis, the secretary of state, Rex Tillerson and the national security adviser, H. R. McMaster. The result has been a supposedly traditional Republican foreign policy emerging, distant from Mr Trump’s campaign rhetoric. + + + +Mr Trump has declared that NATO is not obsolete after all. East Asian allies have been reassured that America still stands with them. Mr Trump appears to be seeking a co-operative relationship with China after a schmooze-fest with Xi Jinping at Mar-a-Lago. The special counsel’s investigations into collusion between Moscow and members of the Trump campaign team have scotched notions of a deal with Russia to end Ukraine-related sanctions. + +However, the president’s reluctance or inability to absorb even single-page briefing papers, combined with his impulsive and narcissistic personality, mean that nothing can be taken for granted. Aides, cabinet officers and senior congressional Republicans despair of him learning on the job or abandoning ways that put the administration on a continual rollercoaster of embarrassment and denial. + +The first leg of a trip that will take in Saudi Arabia, Israel, the Vatican, a NATO summit in Brussels and a G7 meeting in Sicily should be the easiest bit. After the Obama years, when the Gulf Arabs felt insulted by a president who cosied up to Iran to get his nuclear deal and preached to them on human rights, Mr Trump can expect from the Saudis all the love and admiration he feels is his due. + +Jon Alterman, a Middle East expert at the Centre for Strategic and International Studies, says the Saudis are “tremendously relieved” about Mr Trump’s election. They will allow him to revel in his ability as a dealmaker. A huge arms deal, perhaps worth $100bn, will be signed and the Saudis will pledge to invest at least $40bn in American infrastructure. Mr Trump will offer American technical know-how to help the deputy crown prince, Mohammad bin Salman (who has become a buddy of Mr Trump’s son-in-law, Jared Kushner), to realise his “Vision 2030” plan to transform the Saudi economy. There will also be plenty of tough talk on the need to work together to destroy IS, constrain Iran and counter violent extremism (ie, the Muslim Brotherhood). More surprising is the possibility that normalising relations with Israel could be waved as a carrot to get Mr Trump excited about brokering a peace deal with the Palestinians. + +Two areas give scope for disagreement. One is Yemen. On a recent visit to the kingdom, Mr Mattis promised more support for the Saudis’ campaign against Iranian-backed Houthi rebels —but only if they develop a coherent political strategy for ending the war. A second issue may go unmentioned. Saudi Arabia was left off the list of Muslim countries targeted by Mr Trump’s stalled travel ban. Yet many Saudis are angry on behalf of their co-religionists, and at least 100,000 Saudis are studying in America. His hosts will try to prevent the local press from asking awkward questions. + +Despite reports that the intelligence Mr Trump carelessly shared with his Russian visitors came from Israel, he will be warmly received there. Binyamin Netanyahu, the prime minister, loathed Barack Obama. His concern will be to keep Mr Trump from saying anything that disturbs the status quo he is so attached to (see our special report). Mr Trump will reaffirm America’s commitment to maintaining Israel’s military edge and issue a strong statement about keeping Iran in its box. But Mr Netanyahu wants to restrict any talk of a deal with the Palestinians, which Mr Trump casts himself as being uniquely able to deliver, to vague generalities. + +Candidate Trump promised to move the American embassy to Jerusalem and showed no interest in limiting settlement-building on the occupied West Bank. But President Trump has adopted positions less favourable to the Israeli right. He is unlikely to deliver Obama-style lectures about settlements, but there is nervousness about what he might say and how he might say it. Kenneth Pollack of the Brookings Institution, a think-tank, advises watching out for how Mr Trump, “with no idea what the script is”, deals with the “unrestrained” Israeli media probing for differences between him and Mr Netanyahu. + +If diligent preparation guarantees success, Mr Trump’s NATO visit should go swimmingly. The alliance’s secretary-general, Jens Stoltenberg, has decided that the way to deal with a problem like Mr Trump is flattery. Rather than correct the president when he ignorantly scorned NATO for ignoring terrorism (14 years fighting in Afghanistan suggests otherwise), Mr Stoltenberg has emphasised new counter-terrorism initiatives, suggesting that Mr Trump has influenced the alliance’s thinking. + +Similarly, although NATO members began to boost defence spending after the Wales summit in 2014 in response to Russian aggression, Mr Stoltenberg is happy to let Mr Trump claim credit for cajoling them. He hopes his reward will be an unequivocal statement of support for Article 5, which commits NATO members to regard an attack on one as an attack on all. + +Jonathan Eyal of RUSI, a London-based think-tank, says the opening of NATO’s new headquarters will be a useful symbol of “NATO 2.0”. But nobody can predict how Mr Trump will behave among 27 other heads of government. Presidents usually wear their first-among-equals status lightly. “They are expected to be on top of their brief, cool and empathetic—everything Mr Trump is not,” says Mr Eyal. “Things could go horribly wrong.” + +The same applies to the G7 meeting in Taormina, although Mr Trump may deal better with a smaller group of leaders. But as Kori Schake, a former Republican national-security official who signed a “Never Trump” letter, has pointed out, the paradox of this president is that it is America’s closest allies who most fear him—in part because he rejects the normative Western values that bind them together, and in part because of his sheer unpredictability. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21722178-what-could-possibly-go-wrong-president-trumps-travels/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +A lady called Montana + +Curious electioneering in Big Sky Country + + +Less a litmus-test of Trump, than of itself + +May 18th 2017 | BOZEMAN + + + + + +ON A recent evening Rob Quist ambled into a bar in Bozeman dressed in a Stetson and black jeans. He cleared his throat and recited a rhyme he had composed. “Montana…She’s slow to grant her favours to come-lately, newer faces./To long-time suitors, she reveals her hidden, secret places./She lives in big-time splendour; she’s the heart of the golden West./And all manner of wondrous creatures live and suckle at her breast.” + +The occasion was not a beer-and-poetry night but a congressional campaign rally. On May 25th Mr Quist, a country-and-western singer and fourth-generation Montanan, will compete as a Democrat in a special election for Montana’s sole congressional seat, vacated when Representative Ryan Zinke was appointed secretary of the interior. Republicans have held the seat since 1996. But the polls, few as they are, suggest that Mr Quist is closing the gap with his opponent, businessman Greg Gianforte, a “newer face” originally from New Jersey who lost the race to become Montana’s governor last November. + + + +Neither man has much political experience. Mr Quist has spent the past decades performing music and poetry—sometimes, as his opponent relishes pointing out, at nudist resorts. Mr Gianforte is best known for starting a successful technology business and for his support of Bible-literalist causes. He chaired the board of a school in Bozeman that teaches evolution as “one of several theories of existence”, and has donated to a dinosaur museum in Glendive which claims that the earth is around 6,000 years old and that dinosaurs stomped about on Noah’s ark. + +A strong showing in April in another special election, for a Republican-held seat in Georgia, has excited Democrats. Montana’s contest is being similarly interpreted as a litmus test of Mr Trump’s unpopularity. But this election may say more about Montana’s curious brand of politics than about national trends. + +In November Montanans handed Mr Trump a landslide victory over Hillary Clinton while at the same time voting for Steve Bullock, the incumbent Democratic governor, over Mr Gianforte. Although the state has backed Republicans for president and for Congress since 1996, since 1911 at least one of its senators has always been a Democrat. In an office decorated with family photos, football helmets and paintings of Montana landscapes, Mr Bullock wonders whether Montana’s emptiness partly explains the state’s erratic voting tendencies. “We have 1m people spread out over a huge territory. There’s a sense of individualism, but also a recognition that you have to take care of your neighbour.” + +Dale Martin, a historian at Montana State University, says Montanans, like most states of the Rocky Mountain West, have long had an ambivalent relationship with the federal government: libertarian by instinct, but reliant on federal subsidies for highways, mining and agriculture. According to The Tax Foundation, a think-tank, federal aid accounted for 39% of general revenue in 2014, making it the fourth-most-dependent state in the country. + +Both candidates are trying to walk a difficult line. At an event in Butte, a run-down mining town, Mr Gianforte castigated federal overreach while cheering the idea that “public lands remain in public hands”. (His campaign for governor failed partly because of stories that he had sued to block public access to a fishing river in front of his Bozeman estate.) At his bar-room rally, Mr Quist championed liberal causes like reproductive rights, universal health care and economic equality. But to prove his gun-friendliness, he also taped a campaign advertisement in which he shoots at a TV screen playing an attack ad against him. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21722186-less-litmus-test-trump-itself-curious-electioneering-big-sky-country/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Going straight + +Prisoners and the job market + + +Should employers know about criminal records? + +May 20th 2017 | NEW YORK + + + + + +DION got his first paying job at 14—which would be admirable, except that he was selling crack cocaine. He spent much of his early adulthood bouncing between prison and the streets of Yonkers, in New York state. Then, a few months out of one four-year spell behind bars, he discovered Greyston bakery. Founded by a Jewish engineer-turned-Buddhist monk, Greyston practices “non-judgment”. To get a job, people need only provide their names and telephone numbers, and turn up on time when a vacancy arises. + +Most companies are far more discerning, particularly when it comes to people like Dion. Perhaps half of America’s private-sector employers ask job applicants to declare their criminal records, and two-thirds routinely run checks before taking people on. They see it as necessary due diligence. Unfortunately, checks that individual firms believe to be prudent are collectively bad for the 7m Americans who have spent time in prison and the 70m with a criminal record—numbers that may increase if Jeff Sessions, the hardline attorney-general, pushes through tougher sentencing rules. Keeping convicts away from jobs may also be harming America. + + + +Nearly half of all ex-prisoners re-offend within their first year of release—a share that might be lower if more found honest work. The Centre for Employment Opportunities, a charity, places former convicts in 75-day work programmes. Participants are paid daily and receive help to find permanent jobs. A randomised controlled trial in which 977 former prisoners who came through the charity’s doors either received the full complement of services or very few suggested that the intervention cuts reoffending by 19 percentage points. + +In an effort to force employers to change, 26 state and 150 municipal legislatures have adopted “ban the box” legislation that removes declarations of criminal history from job-application forms. On April 1st an executive order by Barack Obama’s administration came into effect, banning the box for all federal jobs, amounting to 250,000 jobs a year. + +Don’t point + +Banning the box may, however, have unfortunate consequences. Two American academics, Amanda Agan and Sonja Starr, have studied the effect of bans in New Jersey and New York. They created dummy job applicants with typically black names like Jermaine and Malcolm, and tracked how employers responded to those beside dummy applicants with typically white names, such as Cody and Scott. They found that whereas black men with invented criminal histories received more responses from companies after the change in the law, black men without criminal histories received fewer. Presumably, some employers began to interpret black-sounding names as a signal of criminality. + +Two things might, however, persuade employers to change their minds. First, negligent-hiring lawsuits—in which a firm is sued for employing someone who commits a crime at work—are terrifying but rare. Second, it is just possible that former convicts might be more productive than the other candidates who apply for a particular job. + +Jennifer Hickes Lundquist and Eiko Strader from the University of Massachusetts, along with Devah Pager of Harvard University, tracked the performance of 8,000 former felons who entered the American army after passing a screening process in the years between 2002 and 2009. They find that the ex-cons were slightly more likely to be undisciplined but were also promoted unusually quickly. Is that just a quirk of military culture? It would be worth finding out. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21722187-should-employers-know-about-criminal-records-prisoners-and-job-market/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The Midwest’s basket case + +Who should run Illinois? + + +A clutch of Democrats are eager to replace the governor + +May 18th 2017 | CHICAGO + + + + + +IN THE two and a half years since he was elected governor of Illinois, Bruce Rauner has met the media as little as possible. Recently, though, he has seemed more eager to communicate. In February he started to take questions from listeners once a month on WBEZ, the local public-radio station. On May 9th he appeared on Facebook Live with his wife, and last month he went on an impromptu tour of the state, visiting businesses and restaurants. + +Mr Rauner is one of the most vulnerable Republican governors in the country. A poll in March by the Paul Simon Public Policy Institute of Southern Illinois University found that 58% of those surveyed disapproved of the job he is doing. The fiscal mess he inherited is now so acute that, according to chatter on the bond markets, Illinois could go bust like Puerto Rico. The state’s debt stands at $210.4bn; Moody’s, Fitch and Standard & Poor’s all put its credit rating just two notches away from junk. + + + +The main reason for this state of affairs is that the governor and the legislature, which is controlled by Democrats, have failed for two years to agree on a budget. Mr Rauner wants the state House of Representatives to pass his anti-union, pro-business proposals before he agrees to the tax increases and spending cuts needed to balance the books. Mike Madigan, the Speaker of the House and boss of the state’s Democrats, insists his party cannot accept such a radical agenda. On May 9th the Civic Federation, a right-leaning watchdog, sharply criticised Mr Rauner for the lack of detail in his budget proposals, for including an operating deficit of at least $4.6bn and for allowing unpaid bills to rise to nearly $20bn. + +While the governor struggles, an unusually high number of Democrats have already said they mean to run for his job in November next year. J.B. Pritzker, a hotel magnate, and Chris Kennedy, a businessman and son of Robert Kennedy, an icon of liberal Democrats, have already thrown their hats in the ring. So have Ameya Pawar, a progressive Chicago alderman, Daniel Biss, a state senator, and Bob Daiber, the only candidate from downstate Illinois, who is superintendent of schools for Madison County. Scott Drury, a state representative, says he is thinking about it. + +Mr Pritzker and Mr Kennedy both have deep pockets. They can match Mr Rauner, who was boss of a private-equity company before he ran for office, and who put $50m in a campaign fund last December even though he has not formally said that he will seek re-election. Mr Pritzker is even richer than the governor; Mr Kennedy’s name alone gives him access to plenty of funds. Neither man has ever held political office, so neither could be accused of being controlled by the deeply unpopular Mr Madigan, widely considered the godfather of Illinois politics, whose main focus is to get his minions re-elected. + +Even so, says Christopher Mooney of the Institute of Government and Public Affairs in Urbana, it is not inconceivable that a less well funded candidate, such as Mr Pawar or Mr Biss, might win the Democratic primary next March. Mr Pawar makes a persuasive pitch to progressives, promising a “new deal” with more funding for public schools, universal child care, legalised pot, big investments in infrastructure and reform of the criminal-justice system. He points out that he is the only person of colour in the race in a state where, by 2020, most children will be either from a minority or mixed-race. And he promises to fix Illinois’s abysmal finances with a progressive income tax and the elimination of tax loopholes for companies. + +Mr Rauner is unlikely to have a rival on the Republican side. His popularity could recover in the next 18 months if he manages to end the budget crisis. He is a capable campaigner with powerful backers, notably Ken Griffin, a hedge-fund billionaire, and Richard Uihlein, a conservative businessman from the Chicago suburbs. + +At their Facebook Live session, Mr Rauner and his wife sat at a wooden table, beer glasses in hand, and talked about fly fishing, sunflowers and strawberry milkshake. Not all viewers were impressed. On screen one online comment flashed repeatedly: “Pass a budget!” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21722180-clutch-democrats-are-eager-replace-governor-who-should-run-illinois/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Public Enemy Number 1 + +George Soros runs the gauntlet + + +Attacked by politicians from Washington to Skopje + +May 18th 2017 | NEW YORK + + + + + +IN “MASQUERADE”, Tivadar Soros’s memoir of Nazi-occupied Budapest, he describes how he procured false IDs for fellow Jews, including his 14-year-old son George. The elder Soros’s approach to the forgeries is enlightening. With wealthy clients, he “asked for whatever the market would bear”. From the desperate he made nothing: “I felt that I was just a little responsible for everyone.” George posed as the godson of an official who conducted inventories of confiscated Jewish estates. “Without risks,” his father says of a time when each day was a life-or-death gamble, “there’s no life.” + +An appetite for risk made George Soros a billionaire, but also made him enemies, as has his congenital philanthropy. In recent months these resentments have reached a new, alarming pitch. Two strands of criticism, in America and abroad, seem to have fused, a confluence epitomised by a pair of obscure letters sent by Republican politicians. A group of senators wrote to Rex Tillerson, the secretary of state, and a clutch of congressmen to the comptroller-general, taking aim at the same detail: the role of USAID, America’s foreign-aid agency, in Macedonia, specifically its collaboration with the local arm of Mr Soros’s Open Society Foundations (OSF). + + + +Mr Soros has supported democratic reform in central and eastern Europe since he distributed photocopiers among activists in the 1980s. His programmes avowedly promote free media, fair elections and clean government, rather than opposition parties, but local autocrats often miss the distinction. The Kremlin, which blamed Mr Soros for peaceful uprisings in Russia’s ex-Soviet neighbours in the 2000s, kicked his affiliate out in 2015. Belarus and Uzbekistan have also given him the push. + +A name to conjure with + +As Russia revives its influence in Europe, antipathy to Mr Soros is redoubling: in Romania, Poland and especially Macedonia, where, amid a political crisis and allegations of graft and vote-rigging against a former prime minister, a “Stop Operation Soros” movement was launched. Meanwhile Viktor Orban—prime minister of Mr Soros’s native Hungary and himself a recipient of a Soros-funded scholarship—reviles his benefactor’s “transnational empire”. Hungary’s parliament passed a law that might close Central European University, which was founded by Mr Soros in 1991. Another pending law could be used against his foundation. + +His political views and hefty donations have led to vitriol in America as well. Denunciations of George W. Bush and the Iraq war made him a bogeyman among right-wing fulminators and conspiracy theorists. His support for Hillary Clinton and disparagement of Donald Trump—an “impostor” and “would-be dictator”—have reinvigorated his assailants. Recently he has developed a controversial sideline in local prosecutorial races, from Louisiana to Illinois, betting that reformist prosecutors can help change the criminal-justice system. Sometimes the candidates he backs seem as baffled by his interest as their rivals, but 12 out of his 15 picks have won. + +Still, even if they disliked his influence at home, mainstream American politicians of both parties have mostly endorsed his foreign goals. Now the distinction is crumbling, as the Macedonian letter shows. It is a bizarre intervention: American politicians are in effect aligning themselves with a far-away, scandal-plagued party that is also backed by Russia, and which has allies who have resorted to violence, while disparaging their own government and, of course, Mr Soros. They have got their facts wrong, too: USAID has never funded Mr Soros’s outfit in neighbouring Albania, as the senators alleged. In the scheme of the agency’s budget and the Foundations’, the sums involved are tiny. + +In any case, Mr Soros’s infamy from the bayous to the Balkans is odd. He is certainly no saint. Some of his wealth comes from currency speculation, as when, short-selling the pound in 1992, he “broke the Bank of England”. He has a French conviction for insider trading in 1988. Yet he has given billions to worthy causes. Michael Vachon, a longtime adviser, points out that Mr Soros derives no personal benefit from his advocacy of, say, the rights of Roma or the abolition of the death penalty. In politics, Mr Vachon says, unlike many big-time donors he “is always lobbying for a public purpose, never for private gain”. Often he promotes policies, as on tax, that could cost him. + +Canary in the global mine + +In part his predicament is an indicator of authoritarianism’s advances. As Radek Sikorski, a former Polish foreign minister, puts it, Mr Soros “has been a consistent advocate of the liberal order, and the liberal order is itself under attack”. European regimes may see an opening in the ascendancy of Mr Trump, who is sceptical of exporting democratic ideals (and whose own campaign demonised Mr Soros). For their part, some in Congress may see him as a tool as much as a target, their real aim being to discredit overseas aid. + +Whatever the causes, as Soros-bashing spreads—the idea of his global meddling gaining a meretricious credibility with repetition—so do other troubling views. One is the cynical claim that peaceful protesters, whether against Mr Trump’s policies or corruption in Romania, take to the streets only if they are bribed: usually, run the calumnies from Bucharest to Washington, by Mr Soros. “If we’d paid all the protesters they say we have,” jokes Laura Silber of OSF, “we’d be bankrupt many times over. It’s an insult to people standing up for their beliefs.” Second, ever-more supposedly democratic leaders are relying on external adversaries to bolster their positions, confecting them if necessary. + +Finally, there is the particular kind of foe that Mr Soros is made to embody. Portrayals of him as an octopus, or, as in a Hungarian billboard, as a puppet-master, inevitably recall the last century’s anti-Semitic propaganda. Some such echoes may be accidental, the conspiracists unconsciously defaulting to ancient tropes, but they are striking. In a tweet praising Mr Orban, for example, Steve King, a Republican congressman, called Mr Soros a “Marxist billionaire”. That chimes with the old slur against Jews whereby, as Tivadar Soros says in his book, “at one and the same time they held in their hands…the Western capitalist countries and Russian Bolshevism.” “He survived the Nazis,” Mr Vachon says of Mr Soros’s current situation, “and he takes a long view.” No doubt, but in some ways this must be depressingly familiar. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21722176-attacked-politicians-washington-skopje-george-soros-runs-gauntlet/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Lexington + +Why evangelicals love Donald Trump + + +The secret lies in the prosperity gospel + +May 18th 2017 + + + + + +MANY titles bestowed on Donald Trump—from president to commander-in-chief—are hard for non-supporters to digest. But the honorific that most puzzles the world, perhaps, is that bestowed by American conservatives who praise the swaggering, thrice-married tycoon as a man of God. + +Expect that gulf of perception to grow still wider as Mr Trump embarks on his first presidential trip overseas on May 19th. Sceptics remember Candidate Trump stoking sectarian rage on the campaign trail. They remember a man who proposed a complete ban on Muslim arrivals and scorned Pope Francis as a Mexican “pawn” for questioning his immigration plans. Yet now White House aides call President Trump a leader bent on uniting the great faiths, who will bring a “message of tolerance and of hope to billions” during stops in Saudi Arabia, Israel and Rome. + + + +Sceptics have long suspected that conservative Christians—and above all white evangelical Protestants, who are among his most loyal backers—are embracing the president for a mix of reasons, including worldly politics and tribal loyalties. Opponents assume that is why pious followers overlook such Trumpian sins as pride, wrath and bearing false witness (or fibbing, to use a layman’s term). They note that when Jerry Falwell junior, head of Liberty University, a Christian college, called Mr Trump a “dream president”, he listed achievements that straddle the realms of God and man, from his appointment of a conservative Supreme Court justice, Neil Gorsuch, to his vocal support for Israel. + +Some political scientists sound more like anthropologists than theologians when they dissect Mr Trump’s success with whites who call themselves evangelical Protestants and attend church regularly—fully 80% of whom told a recent survey by the Pew Research Centre that they approve of his job performance. Those scholars note that for many whites, notably in small towns and rural areas, adhering to traditional Bible values and embracing a personal relationship with Jesus Christ—to use one common definition of evangelical faith—is another way of saying “I am an upstanding citizen”. Seen that way, piety is hard to untangle from other markers of conservative identity, from gun ownership to feeling the country is going to the dogs. + +Still, it is a mistake to seek purely secular explanations for Mr Trump’s bond with religious conservatives. For one thing, the president’s rhetoric is steeped in time-worn stories about a Christian nation under siege. He is the latest in a long line of politicians to cast believers as a faithful remnant, under attack from the sneering forces of modernity. More specifically, Mr Trump’s language is filled with echoes of a much-mocked but potent American religious movement with millions of followers, known by such labels as “positive thinking” or the “prosperity gospel”. + +To historians of religion, like Kate Bowler of Duke University, when Mr Trump speaks of spiritual matters his words fairly ring with the cadences of prosperity preachers. In an address to graduating students at Liberty University on May 13th, Mr Trump promised his audience a “totally brilliant future”, and said that his presidency is “going along very, very well”. He ascribed both happy observations to “major help from God”. Lots of believers credit God for success, but Mr Trump went further. He described an America in which winners make their own dreams come true. He hailed a 98-year-old in the audience whose death by the age of 40 had been predicted by experts. He praised strivers who speak hopes aloud, ignoring doubters, and growled: “Nothing is easier or more pathetic than being a critic.” + +That boosterism would sit happily in a sermon by preachers like Joel Osteen, routinely watched by television audiences of 7m, or Creflo Dollar, the Rolls-Royce-owning pastor of an Atlanta megachurch with 30,000 members. This is no accident. As Ms Bowler explained this month at the Faith Angle Forum, a twice-yearly conference about the interplay of politics and religion, as a young man Mr Trump attended a New York church led by Norman Vincent Peale, a “positive thinker” who also officiated at his first marriage. A prosperity preacher, Paula White, spoke at Mr Trump’s inauguration, despite grumbles about her hard-sell techniques, with worshippers prodded to make such “demon-slaying, abundance-bringing” donations as $229, chosen to honour I Chronicles 22:9, with its talk of Solomon earning respite from “enemies on every side”. + +Favoured by the Almighty + +Prosperity preachers are often dismissed by mainstream theologians as pompadoured hucksters (think Oral Roberts, a pioneering televangelist) or as near-heretics, for suggesting that believers can achieve God-like powers over their own health and wealth. But they reflect a Trumpian worldview. “Blessed”, a book about the prosperity gospel by Ms Bowler, describes the fine line between telling boastful untruths and “positive confession”, by which a bankrupt might thank God for an imaginary gusher of money, or a deathly ill congregant might insist that she is already cured, in the belief that naming a desire will bring it about. Like the Trump family, megachurch pastors and their immaculately groomed wives and children are held up as models of divine favour: winners who have found the rungs of an invisible ladder to success. Prosperity ministries revere celebrity—a Los Angeles church gave Jesus his own star, evoking the ones on Hollywood’s Walk of Fame. The movement has deep roots, stretching back to 19th-century touring mesmerists and Pentecostal healers, and to the Depression-era pastor whose version of Psalm 23 began: “The Lord is my Banker, My Credit is Good.” + +Not every prosperity worshipper is a Trump voter, not least because many are black. But the movement’s influence on the religious right is hefty, and growing. It is a theology for self-made men who scorn the idea of luck. God gives him “confidence”, the president bragged last year. That is a very American creed. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21722172-secret-lies-prosperity-gospel-why-evangelicals-love-donald-trump/print + + + +上一项 文章 章节 下一项 + + + + + +United States 章节 Asia + + + + + +The Americas + + +Colombia: Winning the peace + +Brazilian politics: A very meaty scandal + +Reporter, poet, RIP: A journalist slain + +Bello: Ecuador waits for Lenín + +United States 章节 Asia + + + + + +文章 章节 下一项 + + + + + +Winning the peace + +Deadline pressure for Colombia’s peace agreement + + +Delays in implementing the accord are worrying, but not fatal + +May 18th 2017 | LA PAZ, CESAR DEPARTMENT + + + + + +THE Tierra Grata encampment in the foothills of the Perijá mountains overlooks vast cattle ranches around the city of Valledupar. If the FARC guerrillas were still waging war on the government of Colombia, it would be the perfect spot from which to dominate this north-eastern area. But the 160 members of the FARC’s 41st and 19th fronts who occupy the hillside camp spent a recent Sunday preparing not for battle but for a football tournament with teams from nearby towns. They are among nearly 7,000 guerrillas in 26 camps across the country who are waiting to disarm and become civilians under a peace deal, ratified last December, that ends the group’s 52-year-long war against the state. + +But even as the FARC footballers warmed up, there were signs that not everything was going to plan. The camp is still under construction, which should have finished last year. The FARC’s ammunition and 7,000 firearms should have been deposited in shipping containers secured by the UN by the end of April. But by May 5th the UN had collected just 1,000 weapons. It has asked for extra time to take control of 900 caches of arms and explosives hidden in jungles and mountains. The original deadline for explosives was the end of January. Colombia’s president, Juan Manuel Santos, is considering the request. “One more month, or six more months—after a war of 52 years, is it really important?” he asked in a radio interview. + + + +The biggest deadline is the end of May, which Colombians call “D plus 180” because that many days have passed since the accord took effect. By then the FARC should cease to exist as an armed group, and its adherents should be certified as civilians and thus free to leave the camps. All that is unlikely to happen on time. + +The missed deadlines are a warning signal for a peace agreement that still faces formidable critics. The opposition, led by Álvaro Uribe, a former president, remains implacable in its hostility. Voters elect a new congress next March and a new president in May. The FARC are supposed to take part: they have been guaranteed five seats in the Senate and the same number in the lower house. Mr Santos, who cannot run again, must prove to voters by then that the peace process is working. + +So far, the FARC and the government are not allowing delays to endanger the peace. The bilateral ceasefire agreed last August has held, with minor violations. An estimated 3-5% of FARC fighters have refused to move into the camps. The FARC have handed over 86 child soldiers to the Red Cross, though it is unclear how many there are in total. More than 80,000 growers of coca, the raw material of cocaine, have joined a crop-substitution programme; the FARC had controlled much of that trade. + +Nonetheless, the group’s leaders fear for the future. Although the peace accord requires the government to provide protection, in April two FARC guerrillas and five relatives of FARC members were murdered in four separate incidents, according toCERAC, a group that monitors conflict. It is not clear who is responsible. The government acknowledges that during this year 14 social leaders who backed the peace deal or defied organised-crime groups have been killed. Human-rights groups say the number is far higher. This has revived memories of an abortive attempt to achieve peace in the 1980s, during which thousands of leftists were killed. + +Armed and anxious + +Congress has passed a law granting amnesty to FARC fighters, who have committed crimes ranging from drug-trafficking to murder. But courts have delayed releasing from prisons some 2,000 FARC members. Surveys to identify the skills and aspirations of guerrillas in the camps, a first step towards integrating them into civilian life, have been delayed, in part by disputes between the FARC and the government over what questions to ask. + +The FARC’s biggest worry, though, is that the next government will be less committed to the peace agreement than the current one is. Mr Uribe and his supporters say the accord does not punish the FARC sufficiently, and object to the political role it concedes to the ex-insurgents. Fernando Londoño Hoyos, a leader of Mr Uribe’s Democratic Centre Party, says his party will rip the agreement “to shreds” if it takes control of Congress and the presidency. Seeing that danger, Mr Santos pushed through the legislature a constitutional reform that would make that impossible. It obliges the next three presidents to uphold the letter and spirit of the accords. But the constitutional court has two months to decide whether the language passes muster. + +These uncertainties have made the FARC slow to surrender their weapons. They want to disarm, says Jesús Emilio Carvajalino, a member of the ruling secretariat, better known by his nom de guerre, Andrés París. The group, which has scheduled a convention in August, cannot become a normal political party until that happens. “The weapons are an inconvenience,” says Mr París. But the FARC have delayed disarming as a way to tell the government, “Keep to your side of the deal.” + +That feeds unease among Colombians, who already detest the FARC, which became increasingly brutal and avaricious as the war went on. Many fear that the peace deal is encouraging new forms of lawlessness. Coca-growing has surged; farmers are planting the shrub in order to pocket payments for ripping it up again. The government has sent 68,000 troops to take control of territory vacated by the FARC. Even so, a variety of outlaw forces, including the ELN, a smaller leftist group, and organised-crime gangs, are moving in. Despite Mr Santos’s assurances, some worry that the FARC’s weapons caches will fall into their hands. Just 38% of Colombians think implementation of the peace accord is going well, compared with 51% in December, according to a Gallup poll. + +Disarmament delays and the coca surge are also causing consternation in the United States. Its Congress has approved $450m requested by Barack Obama to support implementation of the peace accord this year. But aid beyond that will depend on convincing Donald Trump that the peace deal is not a licence to produce narcotics or leave insurgents in possession of their weapons. Mr Santos was due to meet Mr Trump in Washington on May 18th. + +Despite the suspicions on both sides, Colombian officials say it is still possible that the FARC will hand over their firearms by the D-plus-180 deadline. If that happens, the government can claim that the FARC at long last have ceased to be a threat, even if other deadlines are missed. And the FARC can then turn their attention to winning with ballots the power they failed to seize with bullets. + +In San José de Oriente, a farming town with a population of 11,000 close to the Tierra Grata transition camp, people say they are already enjoying the benefits of peace. Jorge Eliécer Pérez, a local leader, says that at the height of the conflict in the early 2000s the FARC killed 100 people in the town, including his stepdaughter. “Even with the pain and resentment I feel, it’s better to have them there, demobilising, than up there, in the mountains, ready to attack and feeling our knees shaking every time we knew they were close,” he says. The peace process may be messy, but it is already bringing blessings. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21722244-delays-implementing-accord-are-worrying-not-fatal-deadline-pressure-colombias/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +A very meaty scandal + +Leaked recordings are trouble for Michel Temer + + +Newspaper revelations put Brazil’s reforms at risk + +May 20th 2017 | SÃO PAULO + + + + + +UNTIL now, Brazil’s president, Michel Temer, has personally avoided the scandals that have engulfed his administration. The supreme court has authorised investigations into eight members of his cabinet, as well as 24 senators and 39 lower-house deputies for allegations related to the vast scandal centred on Petrobras, the state-controlled oil company. However, the president was not a target of the inquiries. And no one had suggested that he had committed any crimes during his term of office, which could lead to impeachment. + +That changed with sickening suddenness on May 17th, when O Globo, a newspaper, reported that Mr Temer had been caught on tape endorsing the payment of hush money to a politician convicted of taking bribes. According to the newspaper, in March the president met Joesley Batista, a businessman whose family controls JBS, the world’s biggest beef exporter. The firm is being investigated over accusations of paying kickbacks to Eduardo Cunha, a former speaker of the lower house of Congress who is serving a 15-year sentence for his role in the Petrobras scandal. Mr Batista reportedly told Mr Temer that he had been paying Mr Cunha to stay quiet. Mr Temer allegedly responded, “You need to keep that up, OK?” The tapes are now part of evidence collected in a plea-bargain deal that Mr Batista has struck with prosecutors. + + + +The tapes also reportedly record Mr Temer advising Mr Batista to contact a congressman from his Party of the Brazilian Democratic Movement to resolve a problem for the company that owns JBS. The congressman then received 500,000 reais ($159,000) sent by Mr Batista, an event that was caught on film. The tapes were part of an elaborate investigation by police in co-operation with Mr Batista and his brother, Wesley, which involved placing tracking chips into bags of cash. + +Mr Temer fiercely denies the reports. His office issued a statement saying that he had indeed met Mr Batista, but had “never solicited payments to obtain the silence” of Mr Cunha. It said there was “no discussion that would compromise the conduct of the president”. + +But the reports have thrown Brazil into turmoil. Immediately after they were published the opposition filed a motion for impeachment in congress. “The government’s backbone has been broken,” declared Alessandro Molon, a leftist congressman who is its author. Hundreds of protesters took to the streets in several cities after the news broke, demanding a fresh election. The real slumped after O Globo’s report, as did an index that tracks Brazil’s stockmarket. + +The markets’ worry is that the scandal will derail the vital economic reforms that Mr Temer introduced after he took over as president from Dilma Rousseff, who was impeached last August. He has already pushed through a constitutional amendment to freeze government spending in real terms for 20 years. He is now pushing for an overhaul of the country’s unaffordable pension system, without which the spending freeze will be meaningless, and of its rigid labour laws. + +Neither reform is popular. But, by holding out the prospect that Brazil will at last control its unsustainable public debt and improve its labour market, they have helped to restore confidence to an economy that remains mired in its worst-ever recession. Inflation has fallen from double-digit rates to below the central bank’s target of 4.5%, allowing interest rates to fall. Unemployment may at last have stopped rising. Real wages may no longer be falling. The Globo revelations will delay the reforms, if they do not stop them altogether. + +It is far too soon to expect Mr Temer to be forced out of office. A motion to impeach him must be accepted by the speaker of the lower house, Rodrigo Maia, a staunch presidential ally. It would then have to pass with two-thirds majorities through both houses of Congress, where Mr Temer still has strong backing. The constitution rules out a fresh election. When a president leaves office with less than two years left in a term and has no vice-president to succeed him, Congress, not the voters, chooses the next president. Mr Temer has 19 months left to serve. + +All this is scant comfort to Brazilians who hoped that Mr Temer would succeed in reforming the economy before handing over to an elected successor. His approval rating, already a dismal 20%, is sure to sink. Unless he can clear his name quickly, the political atmosphere will become more toxic. The consequences of O Globo’s revelations are incalculable, but they are certainly not good. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21722243-newspaper-revelations-put-brazils-reforms-risk-leaked-recordings-are-trouble-michel-temer/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Reporter, poet, RIP + +A journalist slain + + +May 18th 2017 + + + + + +At least four Mexican journalists have been killed this year for their reporting, according to the Committee to Protect Journalists (CPJ). Since 2007 66 have died violently. On May 15th unknown assassins murdered one of the finest, Javier Valdez, in the state of Sinaloa. Mr Valdez was a co-founder of Ríodoce, a weekly publication that covers corruption and the bloody wars between drug-trafficking gangs. The CPJ says he “combined the grit of the most battle-hardened reporter with the elegiac soul of a 19th-century Romantic poet”. The death toll is so high that earlier this month the attorney-general’s office replaced the chief of its division for “crimes against freedom of expression”. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21722242-journalist-slain/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Bello + +Ecuador waits for Lenín Moreno + + +Will the new president be less authoritarian than his predecessor? + +May 18th 2017 + + + + + +IN A burst of hyperbole and historical confusion, Rafael Correa compared the run-off election in Ecuador last month to “the battle of Stalingrad” in which his left-wing government was “fighting against the global right wing”. Yet the outcome was far from the rout achieved on the Russian steppes: rather, Mr Correa’s candidate, Lenín Moreno, achieved a narrow victory, by 51% to 49% over Guillermo Lasso, a conservative banker. Even so, the result interrupted the recent ebbing of the “pink tide” in South America that has seen several electoral victories for the centre-right. + +The prospects for Mr Moreno’s presidency, which begins on May 24th, are unusually uncertain. His first task is to establish his legitimacy in practice. Some in the opposition question his victory. The electoral authority’s computers briefly shut down with Mr Lasso in an early lead. The police raided Cedatos, Ecuador’s most reliable polling firm, confiscating its computers, after it published an exit poll giving Mr Lasso victory. The government-controlled electoral authority refused Mr Lasso’s demand for a full recount. Nevertheless, the region’s governments were swift to congratulate Mr Moreno. Preoccupied by Venezuela, the last thing they want is another conflict. + + + +Mr Moreno owed his victory mainly to Mr Correa’s achievements over more than a decade in power. Helped by the high price of oil for much of his tenure, he brought stability to a country that had seen eight presidents, three coups and a currency collapse in the previous 11 years. He invested in new roads, hospitals and social assistance, while also boosting public employment. The poverty rate fell from 40% in 2006 to 23% last year. He used his popularity to create an elected autocracy. Under his notorious communications law, the media have faced stiff fines when they have published articles the president considers defamatory and—even more outrageously—when they have not published articles he thinks they should. + +In the end Mr Correa overreached. He failed to save any of his petro-windfall. As oil revenue fell, and public spending with it, the economy has been contracting for almost two years. The president lost the urban middle classes when he tried to raise taxes. A more united opposition might easily have won the presidential election. Mr Correa’s Alianza PAIS (Country Alliance) party received only 39% of the vote in February’s legislative election, though it won 74 of the 137 seats in the National Assembly thanks to gerrymandering. + +All this means that Mr Moreno has a difficult inheritance. The most important question for Ecuador, so far unanswered, is whether he is his own man, or merely Mr Correa’s stooge. And if he is independent, what kind of politician is he? In a wheelchair since he was mugged in 1998, Mr Moreno was Mr Correa’s vice-president from 2007 to 2013. He is more conciliatory than his combustible predecessor. He has friends in the private sector, but also among left-wingers who fell out with Mr Correa. Which of these two groups he favours will become clearer once he announces his cabinet. + +Whatever his preferences, his actions are likely to be constrained by Ecuador’s difficult circumstances. The fiscal deficit has averaged 5% of GDP since 2013. Because the country uses the dollar as its currency, it cannot print money. It has plugged the gap partly through issuing international bonds, but investors are now demanding an interest rate of around 10%. + +Last month Mr Moreno received Yanis Varoufakis, a leftist former Greek finance minister and now a well-paid star of the speaker circuit, who urged on him the virtues of paying suppliers and public workers with electronic money. Mr Correa enacted laws to allow this. But any attempt to use them to finance the deficit risks triggering a run on banks and capital flight, as savers might fear that their money would not be returned in dollars. Dollarisation is popular, though. Mr Moreno’s choices may thus come down to cutting spending with an IMF agreement or without one. Neither is politically palatable. + +Ecuador is not Venezuela, thanks partly to its dollarisation and to the independence of the armed forces. But neither does it enjoy vigorous checks and balances. Mr Moreno does not criticise Mr Correa’s “21st-century socialism”, a term copied from Hugo Chávez, but he says its time has passed. “Now a new time is coming,” he promises, marked by dialogue and tolerance. He has made a vague promise to reform the communications law. + +Mr Correa plans to move to Belgium, his wife’s home country. Left to his own devices, Mr Moreno might engineer a soft landing for Ecuador, both economically and politically. Will he be allowed to? + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21722241-will-new-president-be-less-authoritarian-his-predecessor-ecuador-waits-len-n/print + + + +上一项 文章 章节 下一项 + + + + + +The Americas 章节 China + + + + + +Asia + + +Racial preferences in Malaysia: Malays on the march + +Law enforcement in Japan: Petty officers + +Lèse-majesté in Thailand: Don’t mention the crop top + +Shark attacks in Australia: Fatal shore + +Pensions in Taiwan: Superannuated + +The Americas 章节 China + + + + + +文章 章节 下一项 + + + + + +Malays on the march + +Race-based affirmative action is failing poor Malaysians + + +The government reserves even mobile-phone stalls for people of indigenous descent + +May 18th 2017 | KUALA LUMPUR + + + + + +THERE is something odd about MARA Digital, a cluster of stalls selling laptops, mobiles and other gizmos on the second floor of a shopping centre in Kuala Lumpur, Malaysia’s multicultural capital. No ethnic-Chinese or -Indian entrepreneurs are allowed to do business here. Spots in the market are reserved for Malays, the country’s majority race. The year-old venue was set up with subsidies from the government, which insists that its experiment in segregated shop-holding has been a big success. It has already launched an offshoot in Shah Alam, a nearby city, and talks of opening at least five more branches this year. + +This project is just one recent outcome of racially discriminatory policies which have shaped Malaysian society for more than 50 years. Schemes favouring Malays were once deemed essential to improve the lot of Malaysia’s least wealthy racial group; these days they are widely thought to help mostly the well-off within that group, while failing the poor and aggravating ethnic tensions. Yet affirmative action persists because it is a reliable vote-winner for the United Malays National Organisation (UMNO), the Malay party that has dominated government since independence. Malays are more than half of the population, so their views carry weight. + + + +Last month UMNO launched a fresh batch of race-based giveaways. Harried by claims that it allowed billions to be looted from 1MDB, a state investment firm, and preparing for an election that may be called this year, the party looks disinclined to consider reform. + +Affirmative action in Malaysia began shortly after the departure in the 1950s of British colonial administrators, who had opened the cities to immigrant merchants and labourers from India and China but largely preferred to keep Malays toiling in the fields. The practice accelerated after 1969, when a race riot in the capital killed scores. (Most of the victims were Chinese.) The New Economic Policy (NEP) of 1971 had two goals: to reduce absolute poverty across all races, and to boost in particular the prospects of Malays, whose average income at the time was roughly half that of their Chinese compatriots. + +A temporary eternity + +Although the NEP’s authors believed affirmative action would be needed for only 20 years, the practice has continued ever since, as such “temporary” policies typically have in other countries. Malaysia’s bumiputeras, which means “sons of the soil” and which refers both to Malays and to a number of indigenous groups deemed deserving of a leg-up, have accumulated a panoply of privileges. Some of these are enshrined in legislation; others are left unwritten. These include quotas for places at public universities; preferment for government jobs; discounts on property purchases and access to a reserved slice of public share offerings. + +Since the NEP’s inception Malaysia’s economy has grown enormously. Its people are now the third-richest in South-East Asia, behind only Singapore and oil-soaked Brunei. Affirmative action has helped to narrow the difference between the incomes of Malays and other races. But pro-bumiputera schemes are almost never means-tested, so their benefits have accrued disproportionately to already wealthy urbanites, allowing poverty among the neediest Malays to persist. + +Meanwhile the lure of the public sector—which was expanded to create more posts for bumiputeras, and in which Malays are now vastly over-represented—has sapped entrepreneurial vigour among Malays, as has a welter of grants and soft loans for bumiputera firms. Race-based entry criteria have lowered standards at Malaysia’s public universities; so has the flight of non-bumiputera academics who sense that promotions are no longer linked to merit. These days Chinese and Indians largely end up studying in private institutions or abroad, in effect segregating tertiary education. Many of those who leave the country do not return. + +None of this is lost on the ruling party. For some years UMNO was split between hardline supporters of affirmative action (like the demonstrators pictured above) and moderates dismayed by the distortions it has brought. In an unusually candid paper published in 2010, the new government of Najib Razak, the prime minister, admitted that affirmative action had created an “entitlement culture and rentier behaviour”. It mooted swapping race-based policies for action intended to lift the incomes of Malaysia’s poorest 40%, regardless of ethnicity. Yet within months that suggestion was quietly abandoned. + +Since then the party’s thinkers have grown more risk-averse. UMNO almost fell from power at a general election in 2013, when minority voters abandoned its coalition partners. Since early 2015 it has been trying to distract attention from the theft of billions of dollars from 1MDB (American investigators allege that $681m of the state firm’s money was paid to the prime minister, a charge Mr Najib denies). Neither of these near-death experiences appears to have prompted much soul-searching. Instead the party is trying to preserve support among Malay voters by reinforcing pro-Malay policies and by building bridges with PAS, an Islamist opposition party that is growing more extreme. + +Optimists argue that the government has not completely abandoned reform. An efficiency drive has called attention to the public sector’s bloated state, even if the material gains from the effort are unclear. And whereas UMNO’s leaders once boasted of their desire to create Malay millionaires, recent schemes are more likely to aid small and medium-sized firms. But this is all rather modest—particularly when ugly racial rhetoric is on the rise. + +Malaysia’s failing system of race-based preferences will probably not attract the criticism it deserves in the run-up to the next general election, which Mr Najib may call later this year and which he is likely to win. Opposition parties are keen to show poor rural Malays that UMNO’s policies have shortchanged them, but tend not to openly bash the notion of race-based affirmative action. Egged on by bigots, some Malays have come to see their economic privileges as a right earned by their ancestors when they first settled the territory, not as a temporary leg-up. Meritocracy and the distribution of benefits based on need remain distant prospects. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21722208-government-reserves-even-mobile-phone-stalls-people-indigenous-descent-race-based/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Petty officers + +As crime dries up, Japan’s police hunt for things to do + + +There was just one fatal shooting in the whole of 2015 + +May 18th 2017 | TOKYO + + + + + +THE stake-out lasted a week, but it paid off in the end. The tireless police of Kagoshima, a sleepy city in the far south of the country, watched the unlocked car day and night. It was parked outside a supermarket, and contained a case of malt beer. Finally, a passing middle-aged man decided to help himself. Five policemen instantly pounced, nabbing one of the city’s few remaining law-breakers. + +Japan’s cluttered streets are not always pretty but they are remarkably safe. Crime rates have been falling for 13 years. The murder rate of 0.3 per 100,000 people is among the lowest in the world; in America it is almost 4 (see chart). A single gun slaying was recorded for the whole of 2015. Even yakuza gangsters, once a potent criminal force, have been weakened by tougher laws and old age. + + + +Yet, far from being pensioned off, the police are growing in numbers: beat cops, known colloquially as omawari-san (Mr Walk-around), are a fixture in most neighbourhoods. Japan has over 259,000 uniformed officers—15,000 more than a decade ago, when crime rates were far higher. The ratio of officers to population is very high, especially in Tokyo, home to the world’s biggest metropolitan police force—a quarter bigger than the one protecting New York. + +This means plenty of attention for crimes that would be considered too petty to investigate elsewhere, such as the theft of a bicycle or the possession of a tiny amount of drugs. One woman describes how five officers crowded into her cramped apartment after she reported her knickers being swiped from a clothesline. A small army of detectives was assigned last year to apprehend a group of 22 people who had been growing marijuana for their personal use only and smoking it in deserted rural spots. + +In fact, as the police run out of things to do, they are becoming more inventive about what constitutes a crime, says Kanako Takayama of Kyoto University. In one recent case, she says, they arrested a group of people who had shared the cost of renting a car, deeming the arrangement an illegal taxi. Some prefectures have begun prosecuting people who ride their bicycles through red lights. + +In 2015 a man was arrested for scribbling Adolf Hitler moustaches onto posters of Shinzo Abe, the prime minister. Ms Takayama says detectives have started appearing without permission on university campuses, to monitor “troublesome” students. One reason why police are going after cyclists may be to make up for the steady fall in driving offences. (Both drivers and cyclists can avoid fines by signing up for remedial training at certified driving schools, which are often staffed by retired officers, notes Colin Jones of Doshisha University.) Fifteen years ago police in Hokkaido, in Japan’s sparsely populated north, conspired with yakuza gangsters to smuggle guns into the country so they could meet quotas for finding them. + +The hunt for things to do may sometimes be beneficial. The number of reported cases of children being abused at home has almost doubled since 2010, despite the declining birth rate. That suggests the police are increasingly intervening in the domestic sphere, which they used to avoid. + +Even critics of Japan’s justice system accept that it gets a lot right. Rates of recidivism are low and a great deal of effort is made to keep young offenders out of the prison system; police work with parents to keep young people on the straight and narrow. Adults are incarcerated at a far lower rate than in most rich countries: 45 per 100,000, compared with 146 in Britain and 666 in the United States. + +Yet the police are oddly inefficient. Even though there are so many officers and so few crimes, they solve less than 30% of them. Confessions, often made under duress, form the basis of most criminal prosecutions. The courts dismissed the case of the beer thief in Kagoshima, despite all the work that went into it. Japan is almost crime-free not thanks to the police, says Yoshihiro Yasuda, a campaigning lawyer, but because people police themselves. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21722216-there-was-just-one-fatal-shooting-whole-2015-crime-dries-up-japans-police-hunt/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Don’t mention the crop top + +Thailand’s junta intensifies its hunt for critics of the monarchy + + +Just because legendary monarchs may never have existed doesn’t mean you can insult them + +May 18th 2017 | BANGKOK + + + + + +THE only historical record of Queen Chammathewi, the legendary founder of the Thai city of Lamphun, comes from a fanciful 15th-century chronicle written on palm leaves in an ancient liturgical language. It describes how, some time in the seventh century, she came to a spot that the Buddha had supposedly visited centuries before. With the help of a Buddhist ascetic, she conjured a city out of the jungle, subjugated the natives and begat not one, but two royal dynasties. + +There is no proof that the queen (pictured) ever really existed, and she definitely falls outside the scope of Thailand’s law on lèse-majesté, which bars criticism only of the reigning king, queen, heir apparent and regent. But Thais should not feel they can say whatever they want about her. So, at least, a provincial court implied last month when it convicted a local of disseminating false or illegal material online for posting a lascivious comment about her on Facebook. + + + +Thailand has always treated its royals with exaggerated respect, periodically clapping people deemed to have insulted the king behind bars. But some thought the death of the long-reigning King Bhumibol in October and the accession of the less revered Vajiralongkorn might curb the monarchists’ excesses. Instead, it seems to have spurred them on. The military junta that runs the country is enforcing the draconian and anachronistic lèse-majesté law with greater relish than its predecessors. + +At least 105 people have been detained or are serving prison sentences for lèse-majesté, compared with just five under the elected government the junta overthrew in 2014. Many of them posted critical comments about the royal family on social media; some simply shared or “liked” such comments. Other arrests have been on even pettier grounds. Jatupat Boonpattararaksa, a student activist, is on trial for sharing a profile of King Vajiralongkorn published by the BBC’s Thai service. Police have warned that those agitating for his release could themselves face charges. A well-known academic, Sulak Sivaraksa, remains under investigation for several instances of lèse-majesté, including questioning whether a 16th-century battle involving a Thai king really took place. + +This month security forces arrested Prawet Prapanukul, a human-rights lawyer best known for defending lèse-majesté suspects. He risks a record 150 years in jail if convicted of all ten counts of lèse-majesté he faces. Several recent sentences for insulting royals have exceeded 50 years; the standard for murder is 15-20 years. + +The government is also pushing YouTube and Facebook, as well as local internet firms, to remove content deemed critical of the monarchy. The junta demanded that Facebook block 131 “illicit” pages by May 16th or be blocked itself in Thailand. In the end it let the deadline slide, but it is still passing on court orders to oblige Facebook to take down the offending posts. It says Facebook is co-operating. One blocked post shows the king, who spends most of his time in Germany, strolling through a mall in a yellow “crop top” that reveals elaborate tattoos. + +Exiled critics of the monarchy and their foreign defenders are also in the junta’s sights. In April it issued an order prohibiting Thais from interacting on social media with a trio of prominent dissidents abroad, including the one who posted the video of the king. It fiercely protested the decision of South Korea’s 18 May Foundation, named in honour of an uprising that was crushed by the army, to award its annual human-rights prize to Mr Jatupat. + +Thai kings have a long history of fostering democratic reform, but the army does not seem so protective of that. Last month a brass plaque in Bangkok that commemorated the king’s acceptance of constitutional government in 1932 mysteriously disappeared. Prayuth Chan-ocha, the leader of the junta, has scolded Netiwit Chotiphatphaisal, a student activist, for campaigning against a tradition whereby students at Thailand’s grandest university prostrate themselves in front of a statue of its eponymous founder, King Chulalongkorn. Never mind that King Chulalongkorn himself abolished prostration in 1873. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21722229-just-because-legendary-monarchs-may-never-have-existed-doesnt-mean-you-can-insult-them-thailands/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Fatal shore + +Australians debate how to avoid shark attacks + + +Public opinion favours deterrence over culling the fearsome fish + +May 18th 2017 | PERTH + + + + + +MANY Australians dislike their country’s reputation as a hotbed of deadly creatures, but it is a brave surfer who has never felt a prickle of anxiety at what lurks beneath the surf. Laeticia Brouwer, a teenager who was recently killed by a shark in Western Australia, was the state’s third such fatality in under a year, and the 14th nationwide since 2012. Her death has reignited a debate over how to deter attacks in a country that may have lost a prime minister to one (though it is more likely that Harold Holt, who vanished while swimming in 1967, simply drowned). + +Certain endangered species of shark, including the great white, have been protected in Australia since the 1990s. Swimmers and surfers worry that their numbers are rising: the rate of unprovoked attacks doubled between that decade and the 10 years to 2015. Responsibility probably lies with a growing human population, but “any fisherman will tell you that they see more sharks than before,” says Neddy Van Dyck, a surfer and spear-fisherman formerly based in Esperance, where Ms Brouwer was killed. “It’s a risk I consider every time I go into the ocean.” + + + +States can seek exemptions to the law protecting sharks, and sometimes grow vengeful after heavily publicised attacks. In 2014 Western Australia caught and killed 68 sharks measuring more than three metres using baited hooks known as “drum-lines”. But this time the state government, now in the hands of the Labor Party, plans instead to subsidise purchases of personal deterrent devices which emit electromagnetic waves thought to ward off sharks. Their efficacy is debatable, but so is that of more lethal methods. Because fatalities are relatively uncommon, it is hard to prove the usefulness of drum-lines or nets around beaches (see picture). Conservationists hate these because they snag other, sometimes endangered, sea-life far more often than sharks. + +Australians, who spend ever longer in the water, seem to take a similar view. In a recent survey of shark-afflicted parts of Western Australia, Christopher Neff of the University of Sydney was surprised to find that 75% of the population preferred cuddly tactics such as aerial patrols. A national research agency has tagged over 200 white sharks in an effort to monitor and predict their movements. New South Wales is trying out “smart” drum-lines which notify officials when they catch an animal, allowing it to be towed and released before it perishes on the line. “In the end, we all need to take personal responsibility for going in the water,” Mr Van Dyck says. + + + +The “harsh reality” is that locals will always face a “very small” risk of being attacked, said Western Australia’s premier, Mark McGowan, after Ms Brouwer’s death. In fact, the risk is infinitesimal. The same number of people died in attacks last year as in 1950, when the population was a third of its current size. Better emergency services mean that the vast majority of today’s victims survive. Sharks may cause politicians to thrash about, but Australians run about the same risk of being killed by a bee or wasp (see chart). + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21722219-public-opinion-favours-deterrence-over-culling-fearsome-fish-australians-debate-how-avoid/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Superannuated + +Taking on Taiwan’s ruinous and partisan pension system + + +Pensioners hate the cuts; young people don’t think they go far enough + +May 18th 2017 | TAIPEI + + + + + +THE protests outside parliament got so ferocious that the 2,000 policemen defending the building barricaded it with barbed wire. That was soon festooned with angry placards. Inside, opposition politicians sought to disrupt parliamentary business: they seized the podium, and brawls broke out. In Taiwan, as everywhere else, reining in expensive pensions is not easy. But Tsai Ing-wen, the president, seems determined to press on. The current system, she said last month, is on “the brink of bankruptcy”. + +The government’s liabilities have swelled to almost NT$18trn ($597bn), nine times its total annual expenditures. That is divided among funds for different professions, in which contributions from current workers help to finance payments to pensioners. The fund for civil servants is projected to go bust by 2031; the one for teachers by 2030; the one for private-sector workers in 2027; and the one for the armed forces in 2020. + + + +The root of the crisis lies in Taiwan’s rapidly declining birth rate and growing longevity, which means that there are fewer workers to support the swelling ranks of the old. In 2015 Taiwanese women were projected to have just 1.2 children on average over the course of their lives, even as life expectancy passed 80 for the first time. A government study found that in 1996 there were nine working people for each pensioner. The ratio fell to six to one in 2015 and will be less than three to one by 2031. Sluggish economic growth and stagnant government revenues provide no way out. + +Politics has made matters worse. When the Kuomintang party (KMT) fled to Taiwan in 1949, having lost China’s civil war, it filled the army and public service with mainlanders and provided them with generous pensions. Native Taiwanese worked mainly in the private sector. Taiwan began to democratise in 1987, but the KMT continued to dominate parliament until last year, thanks in part to strong support from the public sector, whose expensive pensions it continued to defend. Over 450,000 retired teachers, soldiers and bureaucrats receive an annual payment of 18% of the lump sum they built up in their pension account before 1995—a commitment that cost the government NT$78bn last year, or 4% of its spending. Benefits are not quite so generous for those who have retired more recently, but civil servants can still stop work with lavish benefits at 55. + +Ms Tsai and her Democratic Progressive Party want to reduce the 18% payout to 6% over six years, subject to a minimum payment to protect poorer pensioners from poverty. They also want to cut monthly pension payments for other civil servants and teachers while raising the retirement age to 65. In addition, the president has pledged to inject an extra NT$20bn a year into the private-sector fund, which is much less generous. All this, the government reckons, will extend the life of Taiwan’s pension funds by just 10 to 15 years or so. + +Lin Wan-i, the minister in charge of these reforms, says young people want even more sweeping changes. They worry that there will not be a pension for them by the time they retire. Moreover, they consider the huge payouts to the old unfair. Taiwanese workers earn about NT$39,500 a month on average. A typical monthly salary for a new university graduate is just NT$22,000. But retired high-school teachers receive a whopping average pension of NT$68,340 a month. + +But pensioners see Ms Tsai’s plans as a breach of trust. More than 100,000 people demonstrated against the reforms last year. The most dogged protesters have set up a camp outside parliament. And there is the delicate matter of reforming military pensions at a time of heightened tensions with China. Ms Tsai has not yet announced her plans for that, but Mr Lin says any changes will be less drastic. + +A poll by TVBS, a local broadcaster, found that 61% of Taiwanese supported pension reform in principle, though 46% were unhappy with the government’s handling of it. Ms Tsai can console herself with two thoughts. First, the fact that young and old alike are angry suggests she may be striking a fair compromise. Better still, the KMT is in too much disarray to take advantage of all the indignation. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21722225-pensioners-hate-cuts-young-people-dont-think-they-go-far-enough-taking-taiwans-ruinous-and/print + + + +上一项 文章 章节 下一项 + + + + + +Asia 章节 Middle East and ... + + + + + +China + + +Third-tier cities: The glitter of bronze + +Urban development: Hollowed-out hutong + +Banyan: Gliding towards the congress + +Asia 章节 Middle East and ... + + + + + +文章 章节 下一项 + + + + + +The glitter of bronze + +China’s mid-sized cities are enjoying a property boom + + +It is speculative, but not crazy + +May 20th 2017 | WUHU + + + + + +FOR years Wuhu, a city (pictured) in the poor central province of Anhui, was on the front line of a national effort to reduce a glut of unsold homes. New property developments stretched into the haze along the Yangzi river on the town’s western edge. But buyers were scarce: although Anhui has a population about the size of Italy’s, many of its people have long preferred to work in richer parts of the country. Officials in Wuhu tried to entice locals to buy homes, offering tax breaks. At one point they even promised to subsidise the cost, an act of desperation that made Wuhu an emblem of China’s real-estate woes. + +Since early 2016, however, the city’s property prices have soared by more than 30%. Earlier this month the city sharply changed tack, introducing measures to curb speculation. For example, it required that buyers of new homes wait at least two years before selling. Developers were ordered to set prices within predetermined ranges. The city also vowed to expand the land available for development. The glut of unsold homes is, in other words, no more. A shortage is the new concern. + + + +The striking improvement in Wuhu’s property market has echoes around the country. It is one of the 60 or so cities deemed to be “third tier”. The designation refers not just to their political ranking and size (medium by China’s standards, with populations of roughly 1m-3m); until recently it also summed up prevailing sentiment about their prospects. Analysts and investors have generally been positive about China’s first-tier megacities (Beijing, Shanghai, Shenzhen and Guangzhou) and its second-tier giants, especially those in good locations such as Hangzhou in the east and Foshan in the south. But there was less enthusiasm for cities ranked in the third tier and below. They were seen as suffering from weak industrial bases, flimsy social services and a steady brain-drain as their most educated residents left for more exciting places. + +Yet a rally in China’s property market, which began in its big cities in 2015, is filtering down to these also-rans. Housing prices in third-tier cities are up by 7% over the past year on average, and by much more in the best performers (see chart). Their markets have remained hot this year, even while their bigger peers have cooled off. This has helped to reduce the stock of unsold homes. The amount of housing for sale has fallen almost continuously for the past 14 months, the longest sustained decline since records began in 2001. + + + +That would seem to be unambiguously good news. But a closer look at third-tier cities suggests caution is in order. Speculation has played a large role in their new-found prominence. Capital controls, progressively tightened over the past two years, have trapped cash in the country. After a stockmarket collapse in 2015, housing became the most appealing asset—all the more so when, to boost the economy, the government began encouraging state-run banks to increase their mortgage lending to homebuyers. After a run-up in prices in big cities, investors looked to smaller markets for bargains. + +Recent government efforts to douse the fervour in big cities had a similar effect. When Hefei, Anhui’s capital, started restricting purchases last year, buyers rushed elsewhere, including to Wuhu. Li Guochang, head of a property-research institute in Anhui, estimates that people from outside Wuhu account for more than a quarter of purchases this year, up from the normal level of about a tenth. There are now roughly 20% more homes owned in Wuhu than there are households in the city, he says. As he puts it: “This doesn’t seem very healthy.” + +Nevertheless, it is too easy to treat the rally in third-tier cities as froth. Owner-occupiers make up a majority of the market. Many are locals who have the means to move to nicer homes, tired of the shabby six-floor walk-ups that still dominate many old city-centres. As for speculators, they might just know a thing or two. It has been striking that the price surge in third-tier cities has not been evenly spread around China, but rather concentrated in markets that have better locations. Places that fall within the gravitational pull of the most prosperous cities, particularly in the east and south, have fared the best. But thanks to better infrastructure links, there are many more locations that can be defined as good. Wuhu used to be a backwater. Today it is less than three hours from Shanghai by high-speed rail. In the north and west of China, well away from its glittering coast, housing prices are about the same as they were five years ago. + +Homeward bound + +A cascade of development has also changed the economies of mid-sized cities. As land prices and wages have risen along the coast, companies have moved inland. Wuhu, for example, now boasts numerous robotics firms. Population flows are changing, too. Anhui is one of the main sources of the migrants who staff factories and work on construction sites around the country. But its permanent population has risen by 1.7m since 2014, buoyed by the return of some of its migrant workers. + +Similar reversals are also occurring in two other big out-migration provinces: Sichuan in the south-west and Hunan, Anhui’s neighbour. Some migrants are returning because of old age—the government restricts their access to health care and other benefits in places other than where they were born (to control prices, some cities have recently limited their ability to buy homes, too). Others are lured by an improvement in job opportunities. A teacher at a vocational college in Wuhu says most of his students now stay put. + +The central government wants to promote this trend: it believes it will help it achieve its goal of curbing the growth of the biggest cities. Shanghai’s population has nearly doubled since 1990, to 24m. Between now and 2040, the city is aiming for a maximum of 1m more residents. Smaller cities, meanwhile, are being encouraged to attract outsiders. Some, such as Wuhu, offer special grants to university graduates who choose to live in them. + +China’s campaign to control city sizes may end up causing economic harm, placing artificial limits on the most productive urban centres. It is also deeply unfair to migrants from the countryside who have toiled for years in big cities but who have little hope of settling down permanently in them (see article). But Wuhu and its third-tier brethren are not complaining: the restrictions, loathed by so many, are helping to give them life. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21722201-it-speculative-not-crazy-chinas-mid-sized-cities-are-enjoying-property-boom/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Hollowed-out hutong + +The wider meaning of change in a Beijing alleyway + + +It is not for the public good + +May 18th 2017 | BEIJING + + + + + +SALARY ALLEY runs from the National Art Gallery to Dongsi North Street in downtown Beijing. It is one of the city’s surviving hutong (alleyways) from the pre-Communist period—a lane of single-story houses, grey brick walls and upturned eaves. It is also a microcosm of changes ripping through China’s cities. + +Salary Alley is poor. Large houses have been subdivided into warrens. Few have kitchens or bathrooms, so the lane is lined with public bathrooms and restaurants which are cheaper than eating at home. The hutong boasts ten eateries, four public bathrooms, nine grocery or hardware shops, a pet hospital, brothel, barbershop, four-star hotel, pool hall and a community-police headquarters. Jane Jacobs, an American urban theorist who extolled the varied life of mixed-use streets, would have loved it. + + + +About five years ago, Salary Alley started to gentrify. It already had one of the best Vietnamese restaurants in Beijing. Now it acquired a luxury sushi house, a couple of bars, and—sure harbinger of middle-class demand—a dainty coffee-shop. But recently it has suffered something more like degentrification. Gentrification means protecting old buildings and attracting new businesses, often at the expense of old residents who can no longer afford to live there. Salary Alley is seeing new businesses shut down, buildings torn up and new arrivals, not old residents, forced out. + +The process began last summer when government-hired builders tore off shop fronts (windows, signs, even roofs), plastered over the gaps and went home, leaving the lane looking as if it was being demolished, rather than renewed. Since then, in the name of returning the hutong to its pre-Communist appearance, windows have been bricked up, glass doors replaced, commercial signs removed and houses refaced with old-style “bricks”—actually tiles made to look like them. Fake bricks are commonly used in Chinese renovations (see picture of a painted-on kind in a recent makeover in Shanghai). A flea market close to Salary Alley was shut and the stallholders—mostly migrants from the central province of Hunan—sent home. + +Three of the alley’s restaurants have also been closed. All of the shopkeepers say business has suffered. The street entrance to one corner store has been bricked up; customers must climb three steps to place their order at a high window. If you want a cold drink, the owner gives you a photograph of the inside of the fridge so you can see what he has. + +The government says it wants to correct architectural violations, brick up entrances that do not comply with building codes and buy back land so it can be renovated and sold. Those motivations sound reasonable. But they are not the real ones. + +One of the government’s motives is to squeeze out migrants, a brutal tactic in its campaign to control the capital’s size. On Salary Alley, most shopkeepers are from the coastal province of Shandong. Like the market traders from Hunan, they are vulnerable. “If the government lets us do business, we will do business,” says one fatalistically. “If not, we will return home.” + +The government says it needs to repair the alleyways, many of which are indeed dilapidated. Yet on Salary Alley, most of the buildings being “protected” were rebuilt after 1980, while the few ancient ones are mouldering away. Building fake brick walls hardly counts as beautification. “I like variety,” says a shop owner. “For the government uniformity is beautiful.” + +This year the city’s government says it will wall up or tear down 16,000 unlicensed shops and extensions. Not only are these illegal but also dangerous, it argues. Yet a microbrewery near Salary Alley was shut despite being up to date with all its paperwork—because it was in the way of another piece of city-mandated reconstruction. A local bar owner complains that his establishment passed inspections for years—until one day everything was mysteriously declared to be illegal. He is shuttering it. + +China’s capital says it wants to be a global city. That will require allowing its street life to flourish as it does in New York or London. The government seems to have decided that greater control is needed. Salary Alley is suffering the chill. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21722202-it-not-public-good-wider-meaning-change-beijing-alleyway/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Banyan + +Xi Jinping is enjoying a “belt-and-road” glow + + +It will do little to strengthen his hand at home + +May 18th 2017 + + + + + +IN A set piece of imperial pomp, power and benevolence for which the Chinese capital seems designed, the leaders of more than two dozen countries, plus envoys from fourscore more, gathered in Beijing last weekend—in awe of Xi Jinping. At his much ballyhooed “Belt and Road Forum”, the Chinese leader laid out what was intended to look like a new global economic order: Chinese-led investment in railways, roads, bridges, ports and other infrastructure that would transform 60-odd countries to China’s south, west (along the old Silk Road) and as far away as Africa. No immodesty was spared as Mr Xi promised Chinese guidance and more than $100bn of Chinese money to create what he called a “big family of harmonious coexistence”. + +Strength, poise, harmony: China’s leaders set great store by the display of such virtues. If Mr Xi were a bird, he would be a swan. But though the waters of Chinese politics on which Mr Xi glides look smooth, in reality they are dark and troubled. + + + +Swan’s tale + +Every now and then come hints of furious paddling beneath the surface. The belt-and-road initiative is a case in point. It was devised by Mr Xi partly as a desperate attempt to find a solution to the crippling overcapacity that exists at home among state-owned infrastructure and other firms. But he appears uncertain what exactly the vast and amorphous scheme should involve, or how to persuade foreigners to sign up to it (thin attendance by European leaders was noted at the gathering). Many of its projects look financially dubious. + +For the rest of the year Mr Xi is likely to be distracted by his biggest priority: putting his stamp on a five-yearly party congress, the 19th since the Communist Party’s founding in 1921, which is expected to be held late in the year. Mr Xi came to power in 2012, yet the current Central Committee, comprising about 350 members of the country’s political elite, is not of his own making. It was chosen (as convention dictates) by his predecessors. + +Foreigners who have spent time with the Chinese leader suggest he has an almost messianic desire to save his party. Mr Xi, whose late father was a comrade of Mao Zedong’s, nourishes a nostalgic sense of the 1950s being a golden era, when the party was supposedly driven by zeal, purity and purpose (never mind the murderous violence that killed millions). Today he sees its pervasive cynicism, self-interest and corruption as threats not only to the country’s economic transformation, but to the survival of the party itself. Hence his unprecedented campaign to tighten discipline, which has felled over 100 senior leaders and tens of thousands of lesser ones. Since Mr Xi cannot conceive of any other body running the country, to save the party is to save China. + +Mr Xi’s chance, in the coming months of fierce if (to outsiders) invisible horse-trading, is to stuff the Central Committee with allies. At the congress, five of the seven members of the Politburo’s Standing Committee—the elite’s inner sanctum—are expected to retire. This will give Mr Xi an opportunity to install his own successors. And the event will allow him to burnish his image—there is speculation that delegates might honour him by calling his musings “Xi Jinping Thought” (making him the first named leader since Mao to have thought with a capital T). The congress may also offer hints about whether Mr Xi intends to break the unwritten rule that Politburo members retire at 68 (he is currently 63) and stay on beyond 2022, when he would be expected to retire as general secretary were he to stick to the usual ten-year term. As it is, conventional wisdom holds that within a supposedly “collective” leadership Mr Xi’s power greatly surpasses that of his two immediate predecessors, Hu Jintao and Jiang Zemin, and approaches that of Deng Xiaoping or even of Mao. + +Yet the way Mr Xi is wielding his power suggests that he still sees huge challenges to it. Take his swingeing crackdown on lawyers who defend dissidents and the like. They argue for little more than that China should live up to international civil-rights agreements it has signed and to the protections promised in its own constitution. But the trials of some have ended in verdicts of subverting state power and heavy sentences. This month one prominent lawyer, Xie Yang, was released on bail in the central city of Changsha, but only after retracting accusations of being tortured by police. The retraction looks odd, and Mr Xie remains under heavy surveillance. Mr Xi is taking no chances. + +Elsewhere are clues that the anti-corruption campaign is getting fiercer, and perhaps even more personal. In January Xiao Jianhua, a billionaire businessman with links to the political elite, including, it is thought, to Mr Xi’s family, was kidnapped from his hotel in Hong Kong—presumably by mainland agents. He was spirited out of the territory to an unknown fate. + +The Chinese authorities are also waging a bitter campaign against another billionaire, Guo Wengui, who, from self-imposed exile, has been making lurid accusations of corruption at the top of the party. Mr Guo may be no angel—one former state-security chief has confessed to making wire taps, freezing assets and intimidating journalists on Mr Guo’s behalf, to help bring down rivals. But whatever the facts of this murky saga, the implication is of collusion between dodgy businessmen and venal officials—state power put to the service, perhaps on a massive scale, of private gain. A lot is at stake for many potential targets of Mr Xi’s anti-corruption drive. Some may be pushing back by encouraging Mr Guo to point fingers at people close to Mr Xi. + +It all contributes to a febrile mood—as do rumours of Jiang Zemin’s poor health (retired leaders cast a long shadow; their deaths can shift political balances). Mr Xi is likely to succeed in promoting his protégés. But he may not feel secure enough to do what many observers believe he would like: to rip up the party’s unwritten rules and keep himself in power indefinitely. Breaking the norms of collective leadership may be beyond him. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21722179-it-will-do-little-strengthen-his-hand-home-xi-jinping-enjoying-belt-and-road-glow/print + + + +上一项 文章 章节 下一项 + + + + + +China 章节 Europe + + + + + +Middle East and Africa + + +South Africa: Boo-er war + +Race and class: Blurring the rainbow + +Ivory Coast: Moneygrubbing mutineers + +Human rights in the Middle East: Hack me if you can + +Corruption in Tunisia: To forgive is divine + +China 章节 Europe + + + + + +文章 章节 下一项 + + + + + +Another Zuma or another party? + +The struggle to succeed South Africa’s president heats up + + +As the ruling ANC wonders who will replace Jacob Zuma, the country wonders what will replace the ANC + +May 18th 2017 | JOHANNESBURG + + + + + +IN THE twilight of his unpopular presidency, Jacob Zuma has to vet his crowds carefully. Almost wherever he speaks, he risks a clamour of boos and jeers, many from members of his own party, the African National Congress (ANC). A rally organised by the country’s main trade union federation, which is formally allied with the ANC, should have been a perfect opportunity for him to drone on about the party’s achievements since ending white-minority rule in 1994. But he never got the chance to speak; union members shouted him down. Two of his closest supporters were also heckled at May Day rallies in different cities on the same day. Unionised workers, who in past elections made up most of the activists going door-to-door to canvas for the ANC, are turning against a tainted president, and against a party that excuses his many scandals. + +Mr Zuma’s second and final term of office still has two years to run. Yet the race to succeed him is already on. A lot rests on this transition. It could determine whether the country’s democratic institutions are revived, or whether South Africa descends further into a swamp of corruption and stagnation. “They are demanding bribes to get anything done,” laments one businessman, adding that it was not nearly as bad under previous ANC presidents. + + + +Many people assume that the ANC will win a majority of the national vote in 2019 and that the party leader will therefore be the next president. That party leader will be picked at a congress in December. Mr Zuma hopes to anoint a successor who will shield him from the 783 charges of fraud, corruption and racketeering he faces, which predate his presidency. He is backing his ex-wife, Nkosazana Dlamini-Zuma, a former head of the African Union. + +Her main opponent is Cyril Ramaphosa, Mr Zuma’s deputy and a former trade-union boss turned tycoon (the two are pictured either side of Mr Zuma). Mr Ramaphosa is capable and rails against corruption. He has backed a call by Thuli Madonsela, a former public protector, for a judicial inquiry into allegations that Mr Zuma’s rich friends have unduly influenced cabinet appointments and state contracts. Pravin Gordhan, a popular finance minister fired by Mr Zuma, has spoken in favour of Mr Ramaphosa. So too have both of the ANC’s allies, the South African Communist Party and the Congress of South African Trade Unions. + +That said, Mr Ramaphosa may not win over enough delegates at the party congress. Many have benefited from the looting of state resources that has proliferated during Mr Zuma’s presidency. Mr Ramaphosa has complained about car boots full of cash being used to buy support. A survey by Rand Merchant Bank (RMB) predicts that Ms Dlamini-Zuma will be the next leader of the ANC. + +However, it is not only ANC grandees who will vote. So, in the general election, will ordinary South Africans. Some party members fear that in 2019, for the first time, Africa’s oldest liberation movement will fail to win a majority. The party, which won 62% of the vote in 2014, has lost its lustre under Mr Zuma. + +Last year it lost power in several of South Africa’s biggest cities. Municipal IQ, a research firm that has analysed the results of local elections in 2011 and 2016, when support for the ANC slumped from 62% to 54%, reckons it could fall below 50% nationally in 2019. RMB’s survey found a “meaningful probability” that the ANC would lose power. + +Many in the ANC are nervous. Discussion documents released ahead of a party policy conference that will be held from late June fret about “internal squabbles, money politics, corruption and poor performance in government”, and even “the hollowing out of the capacity of the democratic state”. Zweli Mkhize, the ANC’s treasurer, accepts that the ANC “needs to put its house in order”. However Mr Mkhize, like many other senior figures in the ANC, is unwilling to criticise Mr Zuma openly. + +He’s still the boss + +This deference is partly due to tradition—during the ANC’s many years in exile, internal dissent was stifled—but also because potential rebels are afraid. Mr Zuma wields immense formal powers. As president, he can sack cabinet ministers. And Mr Zuma remains the boss of the ANC, which can kick MPs out of parliament by expelling them from the party if they break ranks on a big vote. + +However, a case before the Constitutional Court may weaken Mr Zuma’s hold. Opposition parties have asked the court to allow MPs to cast secret votes in a motion of no-confidence. Mr Zuma has already survived four no-confidence votes and two motions for impeachment because of his iron grip on the party. But secrecy might make ANC MPs braver. And only a quarter of them would have to side with the opposition to kick Mr Zuma out. + +However, even if Mr Zuma and his cronies are on their way out, they can still do enormous harm. Take the case of Brian Molefe, who just a few months ago was forced to resign as head of Eskom, the state-owned electricity monopoly, after the public protector found he had a “cosy relationship” with pals of the president who had won big contracts from the utility. This week he was reappointed to the post to push through Mr Zuma’s plan to spend as much as 1trn rand ($76bn) on Russian nuclear power plants that will not help at all with South Africa’s immediate energy needs. “The ANC is simply incapable of reforming itself,” says Mzukisi Qobo of the University of Johannesburg, a co-author of “The Fall of the ANC: What Next?” “We are in for a rough ride.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21722197-ruling-anc-wonders-who-will-replace-jacob-zuma-country-wonders-what/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Blurring the rainbow + +South Africa’s inequality is no longer about race + + +Democracy has brought wealth, but only to a few + +May 20th 2017 | SOWETO + + + + + +IN KLIPTOWN, an old neighbourhood of Soweto, a group of perhaps 30 men stand in a huddle shouting at cars. One drags a large plastic barrier into the road, while a couple of others pour fuel into old tyres to make burning barricades. It is the sort of protest that disrupts life in or around Johannesburg every few days. What the men want is simple, explains Bongani Godfrey Ndaba, a 37-year-old with a thick mat of hair: a better standard of living. + +Most live across a railway line from the road they are blocking, in a warren of crumbling old brick “matchbox” houses and newer tin shacks. Mr Ndaba points out the rubbish that litters the entrance to the neighbourhood, and the mucky water that pours down the muddy streets. “The rich get richer; the poor get nothing,” he says. “There are just empty promises.” As he speaks, the boom of tear-gas grenades comes from the road, indicating that the police have arrived. + + + +Witness such a scene, a few minutes’ drive away from where the Soweto uprising of 1976 started, and it would be easy to believe that not much has changed in South Africa since the end of apartheid. Among 154 countries surveyed by the World Bank, the country has the highest (meaning worst) Gini coefficient, a measure of inequality. That is probably not quite right: it is hard to believe that Angola, a kleptocratic petro-state, is really more egalitarian. But it cannot be far off. Nor, at 0.63, has the figure changed much over the years. Most black South Africans are still poor, and most income still flows to a small elite. Yet despite appearances, things are not the same as in 1994. The biggest difference is that now a rather large part of the economic elite is black. + +In absolute terms, the poorest have not in fact done too badly. As the economy grew from 1994 to around 2009, GDP per person increased considerably, as did employment. As a result, living standards jumped. From 2001 to 2015, the share of the population living in LSM 1-3 (the three bottom tiers of a ten-point scale of living standards) shrank from almost 40% to 10%. Since 1996 the number of people living in proper houses has more than doubled; the numbers with access to lavatories and electricity have grown by even more. + +Racial disparities in living standards have also narrowed. In 2004 whites, who are 8% of the population, made up 86% of those in the top bracket of living standards. By 2015 that share had fallen to 49%. Blacks made up 30%. That is partly because more blacks have been able to move into government jobs, which often pay well. But business and education have opened up, too. One survey of firms found that whereas in 1996 blacks made up just 8% of company executives, by 2015 they made up 41%. Before the end of apartheid, South African universities produced 44 white engineering graduates for every black one; by 2014, there were two blacks for every white. + +Even so, overall inequality has not fallen. Imraan Valodia of the University of the Witwatersrand says one reason is that economic growth has generally benefited the best-educated. “Those with skills–the upper middle classes–did very well.” As big South African firms re-entered the global economy after the end of apartheid, and global firms moved to South Africa, room at the top became available for the black middle class. But it did not create as much opportunity for less-educated people or in areas far from big cities, which were kept going with redistributive spending. Between 2001 and 2015, the number of social grants given to the poor increased from 4m to almost 17m. Some 10.6m people receive such grants—more than the number who have formal jobs. + +The fortunes of both rich and poor can improve together only when the economy is growing quickly, says Frans Cronje of the Institute of Race Relations, a think-tank. Sadly, growth has stagnated since the beginning of the economic crisis in 2009, and seems unlikely to pick up soon. Jacob Zuma, the president, has taken to speaking about the need for land redistribution. Malusi Gigaba, his new finance minister, is a loud proponent of “radical economic transformation” to make the country more equal, much to the consternation of investors. Yet many South Africans suspect that the real agenda is to direct more resources not to the poor but to the political elite. That policy has only one egalitarian conclusion: a country in which the whole country is poorer. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21722155-democracy-has-brought-wealth-only-few/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Rebel. Cash in. Repeat + +Mutineers have been bought off again in Ivory Coast + + +Danegeld did not keep the Vikings away, either + +May 18th 2017 | BOUAKÉ + + + + + +AS STRIKES go, this one was resolved remarkably quickly and with an unusually one-sided result. The reason, quite simply, is that these strikers had guns. Just days after some 8,400 mutinous soldiers marched out of their barracks in Ivory Coast, shooting in the air and blockading roads, the government had caved in, paying each of them 5m CFA francs ($8,400) and promising to give them another 2m before the end of June. But not before one person had been killed by stray gunfire. + +This was the second mutiny by soldiers in the country this year. In January disgruntled troops, many of them former rebels who had fought in a civil war in 2011, took to the streets claiming they had been underpaid ever since the end of that conflict. The president, Alassane Ouattara, who was helped into power by the rebels in 2011 after his predecessor, Laurent Gbagbo, tried to steal an election, quickly acceded to their demands. The first mutiny ended with an immediate payment of 5m CFA francs and a promise of 7m more. “If [the government] respects us, they won’t hear from us,” one mutineer, a lean, muscular 34-year-old, told your correspondent in Bouaké between the two uprisings. “We are victims.” + + + +Yet it was a dispute over the promised bounty that sparked the latest mutiny. On May 11th a spokesman for the mutineers said on state television that they were no longer demanding the rest of the money. Yet he did not speak for his fellows, who quickly took up arms again and blocked roads including one to Bouaké, the country’s second-largest city. This time Mr Ouattara, a former economist at the IMF, dispatched loyal army units to end the mutiny by force. But after a brief stand-off he decided once again to pay the rebels instead. + +Yet the government can ill-afford the total bill of 101bn CFA. On May 10th it announced a 54bn CFA budget cut in response to a fall in the price of cocoa, which accounts for more than 40% of exports. And the first uprising has already sparked demands from others. Ivory Coast’s 200,000 civil servants walked out for three weeks in January, claiming they were owed 196bn CFA in unpaid wages, an issue which has yet to be resolved. Several thousand former rebels who were demobilised in 2011 have said they want their share too; many still have weapons. + + + +The mutiny takes the shine off Ivory Coast’s recent successes. After years of economic stagnation and two civil wars (the first started in 2002), the economy had been rebounding, with growth of about 8% a year. Inflation has been subdued, helped by the stability of the CFA, which is pegged to the euro and backed by the French treasury. Foreign investors have flocked to the country. Heineken recently built a €150m ($167m) brewery in what its enthusiastic local boss, Alexander Koch, says was a record 13 months. “The middle class is a reality,” says Laureen Kouassi-Olsson of Amethis, a private equity firm. “Five years ago consumption relied on expats.” + +The economic boom has been driven by infrastructure investment that has largely been concentrated in the commercial capital, Abidjan. Little wealth has trickled down. Between 2008 and 2015 the proportion of the population who are poor fell by just 2.6 percentage points, to 46.3%. + +Mr Ouattara, who is due to stand down in 2020, had promised to cut poverty in half before then. His failure to make such rapid progress is already raising questions over his succession. The opposition party of the deposed president is divided. A moderate faction wants to contest the elections; hardliners want to boycott them until Mr Gbagbo is released by the International Criminal Court, where he is standing trial on charges relating to violence after the elections in 2010. Among the contenders from the ruling coalition are the current prime minister, Amadou Coulibaly, a Ouattara ally, and the president of the National Assembly, Guillaume Soro, who led the rebels during the civil war. + +If Ivory Coast has a peaceful succession it could regain the status it had in the 1970s as an economic powerhouse. But to do so it will have to strengthen state institutions and bring former rebels under control. It will not cut poverty or cement its democracy if it keeps getting held hostage by men with guns. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21722207-danegeld-did-not-keep-vikings-away-either-mutineers-have-been-bought/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Hack me if you can + +How governments in the Middle East snoop on human-rights activists + + +Phishing for dissidents + +May 18th 2017 | CAIRO + + + + + +ONLY a few hours after Azza Soliman, an Egyptian feminist, was arrested in December her colleagues received an e-mail supposedly containing her arrest warrant. It was a sham—slickly designed bait to lure them into handing over their passwords. The messages, sent while Ms Soliman was still being interrogated by police, were probably the work of the state security services. Researchers have documented nearly 100 similar hacking attempts to gain information from some of the country’s most prominent NGOs and journalists. + +The subterfuge in Egypt is indicative of a wider trend. Governments across the Middle East are turning to hackers to target bothersome activists and intercept or block their encrypted communications. + + + +A text message sent last year to Ahmed Mansoor, a human-rights advocate in the United Arab Emirates (UAE), shows the extent of the effort. It promised “new secrets” about tortured prisoners, if he clicked on the link. Instead, Mr Mansoor forwarded the message to cyber-security researchers at Citizen Lab, a Canadian research institute. They recognised the link as one associated with the NSO Group, an Israeli company that sells spyware to governments. Behind it lay three “zero-day” vulnerabilities—previously unknown software flaws—that allowed hackers to take control of an iPhone to turn it into the ultimate spy tool. Nothing like it had ever been seen before. Citizen Lab reckons the cyberweapon may have cost as much as $1m. + +Many states in the region don’t know how to spy on their citizens’ computers or phones, so a lucrative industry has emerged to satisfy their needs. Hacking Team, a company in Milan that sells spying software, was itself hacked in 2015. Leaked documents showed that it had contracts with Morocco, the UAE and Egypt. FinFisher, a spyware program sold by a German company, has been detected in many countries with poor human-rights records such as Egypt, Saudi Arabia and Turkey. And last year Bahrain posted a tender for a “national website filtering solution”. It was won by Netsweeper, a Canadian company, for $1.2m. Although national security is the professed motive for these purchases, the spyware is often used to snoop on dissidents. Mr Mansoor, the UAE activist, has had the triple misfortune of being targeted by spyware from Hacking Team, FinFisher and NSO Group. + +In turn activists in the region are using encrypted services for browsing and messaging. Messages from these services are hard to crack, so governments are looking for ways to circumvent or block them. Telegram, an encrypted messaging application, has nearly 20m users in Iran. The authorities there have asked the company to move its servers inside the country, where they may be monitored more easily. And access to Tor, an anonymous browser, was systematically disrupted in Egypt last year. In December, Signal, a secure messaging application used by activists, was cut off in Egypt and the UAE. Since President Abdel-Fattah al-Sisi declared a state of emergency in Egypt in April, technology experts have noted disruptions to other popular, and encrypted, communication tools such as FaceTime, WhatsApp and Skype. + +Yet some companies also make life hard for government snoops. The developers of Signal, for example, quickly pushed out a fix that made its internet traffic indistinguishable from requests to Google servers. To shut down Signal the government would also have to block access to Google. + +Not all the spooks are adept at using their new spyware. Some have admitted privately to losing control of their systems, says one Egyptian cyber-security expert. “There are no skilled cooks in the kitchen,” he says. “Cowboy users” sometimes inadvertently leave clues about the spyware they are using. + +Still, the proliferation of spying tools means that even half-competent spooks can have a chilling effect. Some activists discuss sensitive matters only in person, with phones turned off and placed in another room. “The space available for expressing opinions is slowly narrowing,” warns Gamal Eid, the director of a human-rights organisation whose e-mail account was among those attacked. When one Egyptian freelance journalist awoke one morning to an alarming message from Google that “government-backed attackers may be trying to steal your password”, she panicked and cleared her laptop of everything that could be considered “inappropriate opposition”. Among the files she deleted were articles she had written, including her drafts. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21722204-phishing-dissidents-how-governments-middle-east-snoop-human-rights/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +To forgive is divine + +Tunisians wonder whether to let powerful crooks off the hook + + +The elite say yes. The masses say you’ve got to be kidding + +May 18th 2017 | CAIRO + + + + + +SHOUTING “no to forgiveness” may sound awfully cruel. But on May 13th thousands of Tunisians marched through Tunis, the capital, waving banners with that slogan. They were protesting an “economic reconciliation” bill that would give amnesty to businessmen and officials accused of graft during the rule of Zine el-Abidine Ben Ali, the former president. The staggering corruption of his regime was one of the sparks of a revolution that forced Mr Ben Ali from office six years ago and ignited the Arab spring. + +The new protesters say they are defending the spirit of the revolution. But Tunisia’s leaders say the bill is needed to spur investment in an ailing economy. It would let businessmen and bribe-trousering officials secretly declare their ill-gotten gains and repay them to the state. It is hoped that businessmen who do not fear arrest would start investing. Officials, meanwhile, are stalling approvals to apply pressure on the government to grant the amnesty. + + + +The government hopes that it will recover billions of dollars under the law. It could certainly use the money to plug a budget deficit of 5.9% of GDP this year. And even after borrowing billions of dollars from the IMF, the state is struggling to pay its employees each month. Youssef Chahed, the prime minister, has proposed sweeping austerity measures, such as firing civil servants, raising taxes and suspending investment in infrastructure. + +The thrift has not gone down well with Tunisians, who are already suffering from an unemployment rate of about 15%. In the country’s neglected interior protesters demanding jobs and a share of their region’s oil revenues have blocked roads, halting oil and phosphate production. In response, Beji Caid Essebsi, the president, has deployed soldiers to guard industrial sites, warning that Tunisia’s “democratic path has become threatened”. + +Most MPs think that some form of amnesty will help the economy, but—as with much of his agenda—Mr Chahed has not yet mustered the votes to pass the draft law. It remains stuck in parliament, where it has been for two years. To pass it the government needs the backing of Ennahda, the biggest party in parliament and a coalition partner of Mr Chahed’s Nidaa Tounes party. Ennahda wants amendments to ensure that the law does not undermine the work of the Truth and Dignity Commission, which is examining the sins of the old regime. The current bill would “sabotage” that effort, says Human Rights Watch, a pressure group based in New York. + +Critics fear that forgiving corruption will encourage more of it. Whereas Mr Ben Ali and his family benefited from the lion’s share of pre-revolutionary graft, the filching has become “democratised”, says Lotfi Zitoun of Ennahda. The old elite from Tunis and the coast still do well out of their government connections. But a new class of crooked businessmen, with ties to current leaders, has emerged since the revolution. In the interior merchants have prospered from smuggling and trading in contraband. They have money to invest but cannot get credit and government permits, which are guarded by the old elite. + +The bill does little to address the problems that make corruption so prevalent, says Issandr El Amrani of the International Crisis Group. In a new report, the think-tank recommends several reforms. First, the government should boost funding for the anti-corruption authority. Simplifying administrative procedures would reduce opportunities for backhanders. Influence-peddling could be curtailed by a legal framework for lobbying and transparency over party finances. + +But that may not be enough. Members of the old elite are reluctant to give up their advantage. Businessmen from the interior, relegated to the informal economy, see the state as a predatory hindrance. Corruption and regionalism have left the public bitter and distrustful of the state. Fixing all this may require something like a national economic dialogue, similar to the political one that kept Tunisia’s democracy on track in 2013, says Mr Amrani. More reconciliation is needed, not less. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21722196-elite-say-yes-masses-say-youve-got-be-kidding-tunisians-wonder-whether/print + + + +上一项 文章 章节 下一项 + + + + + +Middle East and ... 章节 Britain + + + + + +Europe + + +Spain’s fractured left: Cracking under pressure + +Roman monuments: Gladiator fight + +Purging Turkey’s judiciary: Empty benches + +France’s new government: Appointed with care + +Extremism in the Bundeswehr: Asylum sneaker + +Charlemagne: Turning people Swedish + +Middle East and ... 章节 Britain + + + + + +文章 章节 下一项 + + + + + +Left v far left + +Spain’s Socialist primary is a battle for the left’s future + + +The party faithful are under pressure from Podemos, and divided among themselves + +May 20th 2017 | ZARAGOZA + + + + + +ON THE morning of May 7th about 300 members of Spain’s Socialist Workers’ Party (PSOE) gathered in a conference hall on the site of Zaragoza’s international exhibition of 2008, across the river Ebro from the city centre. The bleak expo park with its abandoned cable car has seen better days. So has the PSOE. The party faithful were gathered to listen to Susana Díaz (pictured), the narrow favourite in a primary to elect the Socialists’ leader on May 21st. Her message, delivered in an Andalucian accent and the crescendos of an old-fashioned tub-thumper, was that she alone could unite her party “so that the PSOE becomes an alternative government again”. + +That will be no small task. After governing Spain for 22 of the 29 years to 2011, the Socialists have lost the past three general elections. Unlucky enough to find themselves in power, under José Luis Rodríguez Zapatero, when Spain’s housing and credit bubble burst in 2008, they were obliged to take unpopular measures. Since then, the PSOE has lost almost half its voters to the upstarts of Podemos, a far-left party formed out of the anti-austerity protest movement known as the indignados. + + + +The Socialists now face a bitter internal feud. Its outcome will not just affect the battle for supremacy on the Spanish left; it may determine whether or not the minority government of Mariano Rajoy and his conservative People’s Party (PP) will last. + + + +Ms Díaz is only 42, yet as the president of the regional government in Andalucía, the Socialists’ last great bastion, she represents the party establishment and its traditional working-class base (her father is a plumber). She was once expected to win easily: she has the backing of nearly all the party’s grandees. Her chief opponent is the PSOE’s previous leader, Pedro Sánchez, who was ousted in October. He has mounted a strong bid to reclaim his job by appealing to rank-and-file members. + +Party of crisis + +The puzzle for the Socialists is how to regenerate themselves in the shadow of Podemos. The new radical party has won over middle-class young people in the big cities, whose expectations of ease and prosperity were dashed by the financial crisis. Apart from its bitterness at Mr Zapatero’s economic squeeze, this generation thinks the PSOE has become too comfortable with power. “The Spanish left is split in two sociologically and ideologically,” says Manuel Arias Maldonado, a political scientist at the University of Málaga. + +“Social democracy in the 21st century means a very competitive economy and very redistributive public spending,” says Ignacio Urquizu, a PSOE deputy who supports Ms Díaz. Some in Podemos, by contrast, want an indiscriminate spending binge and a European version of the Kirchners’ Argentina. Nevertheless, many people in both parties are struggling to define a new social contract for a globalised economy. More than policy, what differentiates them is the PSOE’s sense of responsibility towards Spain’s restored democracy and Podemos’s populist contempt for it. + +“The rational thing would be an agreement between the two forces,” notes Xavier Domenèch, who leads the Catalan affiliate of Podemos. But “underlying tensions” prevent this, he adds. It may take several years of political trench warfare to determine which is the senior partner. Demography helps Podemos: the audience for Ms Díaz in Zaragoza was mainly middle-aged or older. “I think we are in a new world,” says Mr Domenèch. “The economic crisis has put in question institutions that were very worn-out,” including the PSOE. + +The insurgents argue that a more radical left can win disillusioned voters over, but they have little evidence. At the last election, in June 2016, Pablo Iglesias, Podemos’s leader, allied his party with the United Left, the former Communist Party. The alliance secured 1.1m fewer votes than its constituent parts had managed in the election the previous December, and failed to overtake the PSOE. At a party congress in February, Mr Iglesias sidelined his more moderate deputy, Iñigo Errejón. He seems determined to retreat to the hard left and the politics of permanent protest. + +Meanwhile, Spain’s economy has been recovering vigorously (see chart). Though Spaniards are still worried about unemployment and corruption, as the crisis recedes fewer are indignados. “I think Podemos is a party of the crisis, rather than an expression of the crises of parties,” says Mr Arias. That should offer an opportunity to the Socialists—if they can recover from their leadership battle. + + + +Mr Sánchez claims to be further left than Ms Díaz. In his campaign he has gestured both to Catalan nationalism (Spain should recognise that it is a “plurinational” country, he says) and to Podemos (pledging to collaborate with other “progressive forces”). Yet the differences between the two “are not really ideological”, according to a former secretary-general of the party. Indeed, Ms Díaz’s support was decisive in electing Mr Sánchez as the party leader in 2014, running as an economic liberal. + +Rather, the battle is over power and over the party’s future identity. In the manner of Jeremy Corbyn, the hard-left leader of Britain’s Labour Party, Mr Sánchez promises to give power over all decisions to the members, while Ms Díaz defends the PSOE’s traditional system of letting elected leaders choose its policies. Mr Sánchez has certainly been the more intransigent of the two: after leading the Socialists to electoral defeat in June 2016, he insisted on opposing Mr Rajoy’s investiture as prime minister. Since that would have triggered a third election in a year, at which the Socialists seemed certain to lose further ground, Ms Díaz and other party barons ousted Mr Sánchez and allowed Mr Rajoy to form a minority government. + +Mr Sánchez has campaigned by attacking this decision, saying it makes the PSOE complicit in the PP’s corruption scandals. Ms Díaz replies that it was his leadership that reduced the party to just 85 of the 350 seats in the Cortes (parliament). “Pedro, your problem is you,” she said this week. + +Spain’s Socialists are not the only European social-democratic party that is struggling to put a shine back on a tarnished brand. Their counterparts in France and the Netherlands are doing even worse. “The main task for the PSOE is to accept that it’s in a very difficult situation and act with patience,” says Mr Arias. “It needs a young leader who can enthuse the rank-and-file and create a [post-crisis] ideology.” Neither of the main contenders in the primary fits that bill. If Mr Sánchez wins, Mr Rajoy may engineer a fresh election to press his advantage. Even if Ms Díaz triumphs, she faces a battle to put the party back together again. Either way, as elsewhere in Europe, the clear winner from the left’s divisions and introspection is the centre-right. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21722165-party-faithful-are-under-pressure-podemos-and-divided-among-themselves-spains-socialist/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Gladiatorial politics + +Two Italian parties are fighting over the Colosseum + + +The Democrats and the Five Star Movement clash over a new plan to cope with tourism + +May 18th 2017 | ROME + + + + + +THE view from the roof of Rome’s city hall makes others seem inconsequential. Just a turn of the head is sufficient to take in Trajan’s Column, the Forums, the Colosseum, the Palatine Hill and the Circus Maximus—all set against a backdrop of the blue-grey Apennine mountains. This may be the world’s greatest, and most beautiful, open-air museum. But in the past few weeks it has become a battleground too, involving two parties with different visions of how to cope with the burgeoning number of tourists clamouring to see Italy’s cultural riches. + +On one side, wielding a mighty sword, is the centre-left Democratic Party (PD) and its former leader, Dario Franceschini, the arts and heritage minister in the coalition government of Paolo Gentiloni. On the other, waving a net and trident, is the mayor of Rome, Virginia Raggi of the populist Five Star Movement (M5S). In January Mr Franceschini set up an Archaeological Park of the Colosseum, which comprises the great arena itself and most of the nearby ruins, including the Roman Forum. He has advertised for a park director, and appointed experts to sift through the 84 applications and make a choice by June 30th. Under the new arrangement, a second body separate from the park will manage the capital’s remaining state-owned monuments, museums and excavation sites (except some of the more important ones, whose managers will be given the chance to run their own affairs—and the less welcome task of finding much of their own revenue). Last month, however, this extensive reorganisation was cast into doubt when Ms Raggi appealed to the courts to block it. + + + +Partly, it is a row over cash. The Colosseum is easily Italy’s highest-earning monument. In 2016 it drew 6.4m visitors and notched up ticket sales of €44.4m ($49.5m), more than the Uffizi Gallery in Florence and the ruins of Pompeii combined. Until now, a fifth of the proceeds from the Colosseum have been distributed to less profitable heritage sites. The government spends the rest on cultural sites in Rome. Mr Franceschini insists that nothing will change under the new system: 20% of the revenue will still go to less popular sites, but the new park will keep half of it, and 30% will be spent in the rest of the capital. But Ms Raggi’s deputy, Luca Bergamo, who is responsible for the council’s heritage strategy, argues that the wording of the government’s decree would allow it to spend part of the 50% earmarked for the new park elsewhere. Mr Franceschini calls this a lie. + +Politics plays a part: an election is due by next May. After years of treading on the PD’s heels, the M5S overtook it in the polls earlier this year and is still narrowly ahead. Mr Bergamo’s counter-proposal is for a joint body including both the government and the city council to administer all of Rome’s cultural patrimony. Though the council already manages a substantial part, including the Imperial Forums, his idea would doubtless increase its powers. + +We, who are about to sell tickets + +But the M5S’s objections to Mr Franceschini’s designs go beyond power and money. The Archaeological Park of the Colosseum is the final piece in a plan the minister has been shaping since 2014: a decentralised structure for the administration of Italy’s cultural heritage. The goal is to curb the powers of the heritage ministry’s regional satraps, known as soprintendenti, and grant more freedom to the directors of big museums and archaeological sites. Their brief is to make them more modern and lucrative. The results have been spectacular: receipts at sites managed by the state have risen by almost a third since Mr Franceschini took over in 2014. + +Mr Bergamo, however, argues that applying this policy to Rome would mean that resources and attention are focused on a few already well-known sights. He says this will place further burdens on the city’s overcrowded centre. The unified management body he proposes would be charged with doing the opposite: spreading tourism more evenly so that visitors are drawn away to some of Rome’s less-visited treasures, such as the Baths of Caracalla, the city’s rich medieval architectural sites or the magnificent yet sadly neglected Aurelian Walls. + +The battle for the Colosseum may be mostly about money and politics, but Mr Bergamo has a point. While the morning view from city hall’s roof is magnificent, the reality of the streets below can be gruelling. In the nearby Piazza di Venezia, parties of Chinese tourists, selfie sticks in hand, throng the pavements, ready for the latest assault on the ruins of the old imperial capital. The eternal city girds itself as best it can. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21722205-democrats-and-five-star-movement-clash-over-new-plan-cope-tourism-two-italian/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Empty benches in Istanbul + +Turkey’s purges are crippling its justice system + + +President Erdogan’s drive for power includes putting judges under his thumb + +May 20th 2017 | ISTANBUL + + + + + +WERE he to return to Turkey in the near future, Celal Kalkanoglu (not his real name) would have to do so in handcuffs. “They will arrest me as soon as I land at the airport,” says the judge. On July 16th of last year, the day after an army faction attempted a coup against Recep Tayyip Erdogan, the president, Mr Kalkanoglu’s name appeared on a long list of officials to be dismissed and arrested. With the judge having left Turkey, the authorities went after his family. Some of his relatives were sacked from government jobs, he says, and barred from leaving the country. + +More than 4,000 Turkish judges and prosecutors, a quarter of the total, have been dismissed by decree since last summer, mostly because of alleged links to the Gulenists, a secretive Islamic movement accused of leading the coup. The vast majority, including two members of the constitutional court, are in prison. Only a fraction have heard formal charges. Mr Kalkanoglu, who denies any affiliation with the Gulenists, says the government has used the coup as an excuse to step up a purge of the judiciary that began in late 2013, after a corruption scandal implicated cabinet ministers. “I have been blacklisted since 2014,” he says. Mr Erdogan describes the corruption claims as a Gulenist plot. + + + +Don’t mention the purges + +On May 16th Mr Erdogan had a friendly meeting in Washington with Donald Trump. As Turkish security guards beat Armenian and Kurdish protesters elsewhere in the city, Mr Erdogan asked Mr Trump to extradite Fethullah Gulen, the elderly cleric who runs the movement and has lived in Pennsylvania since 1999. The two leaders also discussed Syria, where Turkey is angry about America’s move to arm Kurdish militias fighting against Islamic State. No agreement was reached on either subject, but Mr Trump praised Turkey’s efforts in the fight against terrorism. He said nothing about Mr Erdogan’s increasingly autocratic rule, or about the crackdown that is hollowing out the rule of law in his country. + +In the past, members of Mr Gulen’s movement took over parts of the judiciary and abused their power with the government’s blessing. In the late 2000s the Gulenists worked with Mr Erdogan’s Justice and Development (AK) party to sideline secular opponents, staging show trials that jailed hundreds of army officers, often on the basis of forged evidence. Many of the jurists now under arrest helped carry out that earlier wave of purges, says Mehmet Gun, head of Better Justice, a non-governmental group. + +Yet Mr Erdogan’s new purge is even more extensive. A climate of paranoia has taken hold of the courts. Judges and prosecutors are constantly looking over their shoulders, says Metin Feyzioglu, head of the Union of Turkish Bar Associations. “Justice is now vested in a judge’s personal bravery,” he says. Those who defy Mr Erdogan pay a high price. When one court decided to release 21 journalists accused of Gulenist sympathies from pre-trial detention earlier this spring, three of its judges were suspended. Their ruling was overturned within 24 hours. + +Things are not about to get better. Under a new constitution, adopted by the thinnest of margins in a referendum in April marred by allegations of fraud, members of top judicial panels will no longer be elected by their peers but appointed by Mr Erdogan and parliament, which is controlled by the AK party. The old system allowed groups like the Gulenists to flourish. The new one places the judiciary under Mr Erdogan’s thumb. According to one opposition lawmaker, out of 900 recently appointed judges, 800 have AK links. “As long as elections to top positions are not tied to objective rules, depoliticising the judiciary will be impossible,” says Hasim Kilic, a chief justice at Turkey’s constitutional court until 2015. + +Meanwhile, cases related to the crackdown, under which some 50,000 people have been arrested and more than 110,000 fired, are flooding in. The constitutional court has received 75,000 applications for redress since the attempted coup last July, but has declined to hear any case related to the state of emergency. Instead, the judiciary seems to have other priorities. In late April a Turkish court blocked access to Wikipedia because some of its posts suggested that the government had supported jihadists in Syria. Two weeks earlier a prosecutor wildly accused several American officials, including a senator, a former CIA chief and a former prosecutor, of involvement in the coup. Perhaps Mr Erdogan’s warm new relations with Mr Trump will allow his magistrates to give that investigation a rest. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21722200-president-erdogans-drive-power-includes-putting-judges-under-his-thumb-turkeys-purges-are/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Oui, ministre + +Emmanuel Macron appoints a post-partisan government + + +A month ahead of legislative elections, France’s president anchors himself in the centre + +May 18th 2017 | PARIS + + + + + +IN THE first test of his promise to bridge the party divide, Emmanuel Macron has appointed a government marked by political balance, novelty and competence. A day after his inauguration on May 14th, France’s president named as prime minister Edouard Philippe, the centre-right mayor of Le Havre, to counterbalance his own roots on the left. Two days later, he unveiled a post-partisan team of ministers that mixes left and right, old and new. + +The appointment of Mr Philippe was a coup of sorts. A year ago, when the 39-year-old Mr Macron launched his political movement, En Marche! (“On the Move!”), he vowed to “unblock” France by ending the confrontational division between left and right. Yet in reality, the bulk of his supporters came from the left or the centre. The Republicans, who want to form a solid block in parliament after legislative elections on June 11th and 18th, proved largely immune to Mr Macron’s charms. + + + +Mr Philippe, however, succumbed. A former right-hand man to Alain Juppé, a centre-right ex-prime minister who came second in the Republicans’ presidential primary last year, Mr Philippe once said that he nonetheless shares “90%” of Mr Macron’s thinking. Like the new president, he was educated at the high-flying Ecole Nationale d’Administration. But, largely unknown to the public, he comes across less as a product of the elite than a fresh face. Born in provincial Normandy and with no ministerial experience, the 46-year-old Mr Philippe in this sense fits Mr Macron’s promise to renew political life. + +Mr Philippe has already helped to unlock further defections from the Republicans. Among them are Bruno Le Maire, a former Europe minister, who will head the finance ministry, and Gérald Darmanin, the young Republican mayor of Tourcoing, who becomes budget minister. All three men were instantly evicted from their party. Polls suggest that Mr Macron’s movement, rebaptised La République en Marche! (“The Republic on the Move!”), could be the biggest party in June, but may fall short of a majority. The centre-right flavour to Mr Macron’s new team could help to win him votes from that side. + +A former Socialist economy minister, the new president has not neglected the left. Jean-Yves Le Drian, the outgoing Socialist defence minister, becomes foreign minister; Gérard Collomb, the Socialist mayor of Lyon, goes to the interior. From the centre, Sylvie Goulard, a German-speaking centrist member of the European Parliament, becomes defence minister, and the government’s most senior woman. François Bayrou, another centrist and political veteran, goes to justice. The team is pragmatic, pro-European, friendly to Germany and financially conservative. + +Mr Macron has also brought in political outsiders with expertise. These include Agnès Buzyn, a haematologist, who becomes health minister; Muriel Pénicaud, a former executive at Danone, a food company, as labour minister; Jean-Michel Blanquer, head of ESSEC, a business school, who gets education; and Nicolas Hulot, a green campaigner, as environment minister. + +In the past, France has had mixed experience with ministers from outside politics. The grubby compromises and political manoeuvring that government involves do not always suit the merely competent. Nor is it obvious that all of the new team will be able to put tribal instincts behind them. They have less than a month before parliamentary elections in which to persuade those not naturally drawn to Mr Macron to support his cross-party vision in the national interest, rather than obstruct it for partisan gain. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21722203-month-ahead-legislative-elections-frances-president-anchors-himself-centre-emmanuel/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +A wolf in refugees’ clothing + +The soldier who allegedly plotted to kill Germany’s ex-president + + +His arrest triggers a search for extremists in the ranks + +May 18th 2017 | BERLIN + + + + + +IN JANUARY a maintenance worker at Vienna Airport found a loaded 7.65 calibre pistol in the pipe of a public toilet. He told the Austrian police, who put the toilet under surveillance. A month later they arrested a man who appeared to be searching for the gun. He turned out to be a lieutenant in the Bundeswehr, the German army, who claimed he had drunkenly found the weapon in some bushes and had hidden it in a panic. But investigations suggested something much darker. + +“Franco A”, as he is known, had allegedly been living a double life. He served in the 291 Light Infantry Battalion at a base in eastern France. In his time off, he lived at a refugee centre in Bavaria, masquerading as David Benjamin, a Syrian asylum seeker driven from his home by Islamic State. According to press reports he was an extremist planning false-flag terror attacks, including the assassinations of Germany’s ex-president and its justice minister. The saga has exposed failings at all levels of the German state. The instructors at Franco A’s French military academy had rejected his thesis for its far-right content and advised his German superiors to dismiss him. A search of his barracks revealed posters glorifying Hitler’s Wehrmacht, a swastika etched onto a gun case and handbooks on bomb-making and guerrilla warfare, as well as a stash of guns, rocket launchers and half a million rounds of ammunition. His Bavarian interviewers had not checked whether “David Benjamin” spoke more than a few phrases of Arabic. + + + +These were not isolated oversights. “The far-right element in the Bundeswehr has strong roots among neo-Nazi radicals and their ideology,” says Hajo Funke, an expert on extremism in Germany. Icons and songs from the Hitler years live on in pockets of the army. A study in 2007 put the proportion of far-right soldiers at 13%. On May 17th, Ursula von der Leyen, the defence minister, told MPs that further barrack searches had uncovered 41 items of Nazi memorabilia. Asylum authorities have revisited hundreds of applications like that of “David Benjamin” and have reportedly found serious mistakes in 10-15% of them. + +Ms von der Leyen has paid the price. Long considered a likely successor to Angela Merkel, she has been attacked from both political sides. This is unfair to a defence minister who has fought to modernise the Bundeswehr and has moved fast to erase the last reminders of the 1940s (for example, by removing the names of Wehrmacht officers from over 20 barracks). It seems strange to respond to problems in the army by castigating a minister who is taking them on. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21722195-his-arrest-triggers-search-extremists-ranks-soldier-who-allegedly-plotted-kill/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Charlemagne + +Sweden is trying to turn people Swedish + + +The world’s greatest welcomers of refugees must work out how to assimilate them + +May 18th 2017 + + + + + +NASTEHO WEHELIYE sits on one side of a semi-segregated cafeteria (men-only to the right of the counter; mixed to the left) in Tensta, a migrant-heavy suburb of Stockholm. Like many Somalis, she is an enterprising soul. So it is hardly surprising to hear her lament the high taxes and hiring costs of the homeland she adopted as a young asylum-seeker 27 years ago. As she wrings her henna-stained hands at the thought of the regulations that have stymied her two attempts to open shops in the Swedish capital, the café owner parks himself at a neighbouring table in an ill-disguised effort to eavesdrop. + +The biggest local problems are housing and unemployment, says Ms Weheliye. These challenges have acquired fresh urgency as Sweden confronts the massive task of integrating its latest wave of refugees. In 2015, 163,000 asylum-seekers, mostly Syrians, Afghans and Iraqis, reached the country. Relative to Sweden’s population of 10m, this was the largest influx ever recorded by the OECD, a club of mostly rich countries. Not all will stay; last year two-fifths of asylum claims were rejected. But the rest will need homes, schools and jobs. + + + +Tensta shows why that will be hard. In recent decades waves of migrants and refugees have filled its high-rises after native Swedes upped sticks for better areas. Today Tensta is one of 53 parts of Sweden that the police deem “vulnerable” (ie, crime-ridden). Unemployment is substantially higher than the national rate of 6.6%. Development schemes have eased tensions, says Ditte Westin, a local official and former policewoman who has known the area for 20 years. But a quick tour of the neighbourhood, under the deafening sound of a police helicopter, reveals some of its scars, from open drug-dealing to a basketball court that, Ms Westin jokes, is used mainly by kids fooling around on motorbikes. + +Just 6% of Swedes live in areas like Tensta, according to Tino Sanandaji, an economist, but 26% of residents with a non-Western immigrant background do. Their troubles are milder than those of some American inner cities or French banlieues, but hard to swallow for a society that prides itself on order. To avoid deepening segregation, ministers know they must act now, as the asylum system churns through the new claimants. A new law obliges all 290 of Sweden’s municipalities to accept refugees, but as they can go where they like once their claim is granted, clustering is hard to avoid. A housing shortage, particularly in Stockholm, aggravates the problem. + +Finding work for refugees is another tough nut to crack. Fully 95% of new jobs in Sweden require at least a secondary education; one-third of recent refugees, most of them women, have less than nine years’ schooling. High wage settlements, agreed between unions and employers, make it hard for unproductive workers to find jobs. The employment gap between low-skilled migrants and natives, nearly 20 percentage points in 2012, is a persistent feature of the labour market. And the concentration of refugees among Sweden’s immigrants presents a challenge that will only have been sharpened by the recent influx. + +Immigration also shoulders some of the blame for a decline in education standards (as measured by PISA scores) and a growth in inequality—admittedly to levels that remain the envy of less cohesive societies. Successful, high-trust countries like Sweden are vulnerable to this sort of difficulty: they may be happy to welcome outsiders, but can be harder to penetrate than looser, more informal places. It is hard to create an inclusive national identity under such circumstances. All seven of Ms Weheliye’s children were born in Sweden, she says, but few of them feel Swedish. + +All this prompts a harsher criticism: that its wealth has allowed Sweden to prop up an ethnic underclass sequestered in invisible suburbs. Alert to the concern, business groups and some politicians argue for a disruption of Sweden’s wage-setting model to encourage a fresh wave of lower-paid service-sector jobs; flexible America, they note, is good at putting unskilled migrants to work. But sceptics fear this would entrench an ethnically stratified labour market. Better to focus on teaching refugees skills and Swedish, and hurry them into better-paid jobs, they say. The debate is likely to dominate next year’s election campaign. + +Sverige, vart ska du? + +Beyond the policies lies a more nebulous question: what sort of country does Sweden want to be? The old consensus has broken down, perhaps for good. A country that defined itself through the welcome it extended to outsiders is now consumed by the task of managing those who came. Border controls imposed in 2015 remain in place, and there is no appetite to return to the open-door policy of the past. “We want to help as many people as we can,” says Morgan Johansson, the migration minister. “But there are limits.” Such thoughts once approached heresy in Sweden. + +One casualty is the cordon sanitaire around the Sweden Democrats, a rabble-rousing anti-immigrant party of the sort disrupting politics across Europe. In January the centre-right Moderate Party said it would work with the Sweden Democrats in certain circumstances. The move led to a sharp drop in the Moderates’ popularity, but it will be hard for mainstream parties to lock out the populists for ever. The Sweden Democrats nabbed 13% of the vote in 2014, forcing the Social Democrats to assemble a minority government, and polls now give them around 20%. + +The situation is hardly hopeless. Swedish firms are desperate for workers, and the influx of young newcomers will help in a greying society. Tightened borders have bought the government precious time. And the troubles of areas like Tensta have been exaggerated by outsiders with an anti-immigrant agenda. The question is whether Sweden can work out how to extend the benefits of the successful society it has built to those it has invited to join. The aim is laudable, but just now the odds look long. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21722167-worlds-greatest-welcomers-refugees-must-work-out-how-assimilate-them-sweden-trying/print + + + +上一项 文章 章节 下一项 + + + + + +Europe 章节 International + + + + + +Britain + + +Election manifestos: The state is back + +Immigration: A promise worth breaking + +Education and social mobility: Old school + +Tax: Let me tell you how it will be + +Social care: A death tax by another name + +Nationalising industries: Ministers as managers + +The campaigns: Speakers’ Corner + +Bagehot: Labour is unfit even to lose + +Europe 章节 International + + + + + +文章 章节 下一项 + + + + + +Election manifestos + +In Britain, the state is back + + +The three main parties are proposing very different policies. Yet they have a common thread: a more intrusive role for government + +May 20th 2017 + + + + + +AS THE old saw has it, nobody reads party manifestos. Most voters have made up their minds, and undecideds choose on the basis of leadership, not election pledges. Yet manifestos matter, for two reasons. One is that they count in government, especially when, as now, there is no majority in the House of Lords (by convention, the Lords do not oppose manifesto commitments). The other is that manifestos are a guide to parties’ philosophy. + +The first impression from this week’s Labour, Liberal Democrat and Conservative manifestos (the third emerged as we went to press) is of clear blue water. Labour is proposing big spending increases, financed mainly by sharp rises in taxes on companies and the rich (defined as earning above £80,000, or $104,000, a year). The Tories are more frugal, though they are dumping their commitment not to raise income tax and national insurance contributions; they are also alone in not guaranteeing the “triple lock” for state pensions. The Lib Dems are in the middle: more spending than the Tories, less than Labour. + + + +Policy differences exist also over education, health and social care (for which the Tories propose to make the rich elderly pay more), as well as on Britain’s exit from the European Union. Here Labour makes its priority the economy and jobs. The Tories’ emphasis is on controlling immigration and escaping the European Court of Justice. And the central plank of the Lib Dem manifesto is a second referendum on a Brexit deal, with continuing EU membership as a clear alternative. In this election, in short, voters can hardly complain that they do not face genuine choices. + +Yet, beyond the headlines, what emerges more strikingly are the common themes. One is the absence of much mention of the budget deficit. Torsten Bell of the Resolution Foundation, a think-tank, points out that in 2010 and 2015 this was the central issue; as the deficit has fallen, so has its political salience. Yet given the risks associated with Brexit, and fears of a possible future recession or another market crash, a continuing large deficit and a public debt of 90% of GDP ought to be of greater concern than they are. + +A second is how little appetite there is for cutting taxes, rolling back regulation and lightening burdens on business. All three parties seem, instead, to want to increase the state’s role in the economy. None of the three leaders seems to be a true economic liberal, including the nominally liberal Tim Farron. They appear to share the notion that markets need more curbs, not more freedoms. As one observer puts it, this week’s manifestos show that all have, to some degree, reverted to a pre-Thatcher way of thinking about the economy and free markets. + +This is most obvious in the case of Jeremy Corbyn, Labour’s leader. His manifesto does not just propose a lot more spending, but also an extensive programme of renationalisation, including Royal Mail, the railways and the water companies. For all Labour’s insistence on fiscal responsibility, there is little sign of how to pay for all this: a current budget balance is not a budget balance, and there are good reasons to question the revenues likely to be generated from higher income and corporate taxes. Labour also proposes new rights for workers and trade unions and measures to curb top salaries, including an “excessive pay levy” on companies that have very highly paid staff. + +This is the most left-wing manifesto that Labour has proposed since Michael Foot’s notorious “longest suicide note” of 1983, even if many details are less loony than then: no import or capital controls, for instance. Oddly for a leader whose main interest is foreign affairs, Mr Corbyn is strikingly moderate in this area. His manifesto pledges to maintain the nuclear deterrent, supports NATO and promises to stick to the target of spending 2% of GDP on defence, all policies that contradict what Mr Corbyn himself has stood for in the past. + +Yet it is Theresa May’s manifesto that is most interesting, and not just because she is on course for victory on June 8th. For it reveals a Tory leader whose instincts are more interventionist than any predecessor since Edward Heath in 1965-75. To deal with complaints about energy prices, she joins Labour in proposing price caps. She promises a new generation of council houses, although she is cagey about how to finance it. She also backs a higher minimum wage, albeit smaller than Labour’s. + +Mrs May is promising not just to retain all EU rights for workers after Brexit, but to add to them. Her manifesto includes several digs at business, including demands for more transparency on executive pay and some form of worker representation on boards. As Paul Johnson of the Institute for Fiscal Studies, another think-tank, notes, the biggest example of her interference in the market concerns immigration (see next story). She restates the target of cutting the net figure below 100,000, from almost three times that today, and she makes clear that the cost of policing lower EU migration must fall on employers. + +In part what Mrs May is doing is merely tactical. On Brexit and immigration, she wants to mop up voters who formerly backed the UK Independence Party. On social and employment policies, she hopes to steal Labour moderates. Judging by the polls, she is doing well on both fronts. Yet her manifesto also reveals a new Tory paternalism, no longer aiming to reduce the reach of the state but instead pursuing an interventionist strategy. + +What is oddest about this is not its break from the past, but its timing in relation to Brexit. Mrs May is pursuing a “hard” Brexit that involves leaving the EU’s single market. If business is to thrive and new investment to be attracted in the uncertain world that this will create, a more logical move would be to reduce intervention, cut red tape and lower taxes. To choose this moment to move closer to a continental European model of more regulated markets is not just perverse but risky. No wonder business is lukewarm about Mrs May’s manifesto—and about its own prospects in a post-Brexit Britain. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722213-three-main-parties-are-proposing-very-different-policies-yet-they-have-common-thread/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +A promise worth breaking + +The Tories’ plan to slash immigration would harm the economy + + +Cutting net migration to the tens of thousands would deprive Britain of valuable workers + +May 20th 2017 + + + + + +THE uncertainty created by Brexit makes it hard to draw up concrete policies in many areas. But Britain’s imminent departure from the European Union has changed the context for one issue in particular: immigration. Labour’s manifesto is cautiously vague, promising “fair rules” and reasonable management. But Theresa May has reiterated one long-running Conservative promise: to bring net migration (immigration minus emigration) to below 100,000 a year. This commitment, and the party’s ongoing failure to fulfil it, has hurt the Tories in the past. That makes their dogged adherence to it all the stranger. + +David Cameron introduced the pledge in 2010 in an effort to win an election. The ploy worked—but he got nowhere near meeting the target. Mrs May is only slightly more likely to succeed. Until now the Conservatives have been able to blame the EU, whose rules on free movement mean that much immigration to Britain is beyond the control of the government. After Brexit, cutting migration from Europe will be possible. But even if Britain banned all immigration from the EU—which would be ruinous—net migration would remain above 100,000 (see chart). + + + +Cutting the numbers from the rest of the world has proved difficult. Recent court rulings mean that tightening the restrictions on family visas and refugees will be tricky. Mrs May now plans to charge firms higher fees for hiring skilled foreigners. Not only would this hurt businesses, it would make it harder to secure post-Brexit trade deals. India, for example, has already made clear that any trade agreement would have to include some concessions on migration. + +Why stick to this foolish target? Rob Ford of the University of Manchester suggests three reasons. First, Mrs May might worry that abandoning the commitment could jeopardise her chances of hoovering up the votes of one-time supporters of the anti-immigration UK Independence Party. Second, voters do not trust the government when it comes to immigration (two-thirds think it unlikely that the Tories would reduce net migration by very much). The prime minister may worry that, implausible as her goal seems, dropping it would erode that trust still further. Third, Mrs May has invested time and labour in the issue, having grappled with it for six years as home secretary. + +A fourth possibility is that she envisages a deep post-Brexit recession, which would cause immigration to dry up. + +The target might be fudged. Tailored visa programmes for particular industries could exclude crowds of migrants from the figures, if they were rejigged to look only at long-term stayers. Four-fifths of Britons would be happy for doctors from the EU to be given special visas, according to an Ipsos MORI poll. (Only two-fifths would award them to bankers.) But with the government apparently unwilling to discount foreign students from the statistics, despite the public’s affection for them, carve-outs for particular industries seem unlikely. + +If the prime minister fails on her pledge, trust in her and her government could erode. Mrs May’s claims to have got the best Brexit deal might be met with scepticism from Brexiteers, many of whom see reducing migration as the main reason for leaving the EU. Disappointed former UKIP voters could even be seduced by nastier political forces. + +Yet the graver danger is that Mrs May succeeds. The economic damage would be considerable, not least in the impact on the public finances. The current migration flow works in Britain’s favour. The country exports expensive pensioners and imports mostly young, healthy, taxpaying foreigners. The government’s fiscal watchdog reckons that by the mid-2060s, with net migration of around 100,000 public debt would be about 30 percentage points higher as a proportion of GDP than if that number were 200,000. Of all the prime minister’s promises, Britons must hope that her vow to cut immigration is one she is willing to break. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722210-cutting-net-migration-tens-thousands-would-deprive-britain-valuable-workers/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Back to school + +Two nostalgic education policies that could harm social mobility + + +The Tories’ bad idea to bring back grammar schools is matched by Labour’s bad idea to scrap tuition fees + +May 18th 2017 + + + + + +THERESA MAY and Jeremy Corbyn do not have much in common. Yet both are offering education policies focused on improving the chances of children from poor families. Mr Corbyn’s Labour Party manifesto includes a promise to abolish tuition fees, levied by most universities at £9,000 ($11,600) a year. Mrs May plans to introduce new grammar schools, which are allowed to select pupils at 11 on the basis of scholarly talent. + +Both policies will win votes: polls suggest that people quite like grammar schools and greatly dislike tuition fees. That is partly because both ideas hark back to a post-war golden age of social mobility, in which bright, poor children could take the 11-plus entrance exam to win entry to a good school, before proceeding to a free university and, later, a career in business, government or science. + + + +Yet, in truth, the post-war years of upward mobility had more to do with the changing structure of the labour market than educational institutions. And the evidence suggests that both policies will probably fail to improve social mobility. + +Take fees first. The Labour manifesto argues that there “is a real fear that students are being priced out of university education”, but provides flimsy evidence to support the claim. Although, as it notes, the number of students has fallen this year, that reflects a fall in the 18-year-old population, Brexit’s deterrence of foreign applicants and the abolition of bursaries for those on nursing and midwifery courses. The reality is that the gap in higher education attendance between rich and poor students has narrowed since the government tripled the amount that universities were allowed to charge in 2012. + +Shifting funding from the state to students enabled the government to remove limits on the numbers universities could admit. The resulting increase particularly benefited poor students. In Scotland, where tuition is free and a cap on student numbers remains, the growth in university attendance in deprived areas has been slower. In England loans are available to pay for tuition and are paid back only once a graduate earns more than £21,000 a year. Since outstanding debts are forgotten after 30 years, almost three-quarters of graduates will probably never fully repay their loan. Thus the abolition of tuition fees would mostly benefit high earners. The Institute for Fiscal Studies, a think-tank, estimates the policy would cost £8bn a year. + +Likewise, children from well-off families are the main beneficiaries of Britain’s 163 existing grammar schools. According to research published last year by the Education Policy Institute, another think-tank, children at grammars score one-third of a grade higher in each of their GCSE exams, which are taken at 16, than do those at comprehensive schools. Yet few poor children pass the entrance tests: just 2.5% of children at existing grammars receive free school meals (a proxy for poverty), compared with 8.9% at nearby state schools. And those at comprehensive schools near grammars do worse than their peers elsewhere, partly because grammars attract the best teachers. + +There are ways to increase the number of poor pupils at grammar schools: from creating entrance tests that are harder to prepare for to mandating a certain number of places for children on free school meals. But those children who failed to make the cut would still do worse than they would under a comprehensive system. Studies have demonstrated that selection at 11 does not improve overall results: it merely changes the distribution of good grades. + +Both Mrs May and Mr Corbyn say that a desire to improve social mobility lies at the heart of their education policies. In fact, they risk doing just the opposite. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722215-tories-bad-idea-bring-back-grammar-schools-matched-labours-bad-idea-scrap-tuition/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Let me tell you how it will be + +Whoever wins the next election, taxes are likely to go up + + +The tax burden will soon be at its highest level since the mid-1980s + +May 18th 2017 + + + + + +TO FINANCE the many costly promises in its manifesto the Labour Party would need to increase taxes significantly. It has promised a steep rise in corporation tax and a higher rate of income tax for those earning more than £80,000 ($104,000) a year. The Liberal Democrats want to add one percentage point to each band of income tax to pay for extra spending on health care. + +The Conservatives, by contrast, like to portray themselves as the party of low taxes. On the campaign trail Theresa May has talked of her low-tax “instinct”. But she has left the door open to higher taxes, in contrast to her party’s promise in 2015 not to increase income tax, VAT or national insurance contributions (a payroll tax which Philip Hammond, the chancellor of the exchequer, is keen to raise). + + + +Regardless of the parties’ manifestos, a look at Britain’s accounts makes one thing clear: whoever wins on June 8th and whatever promises they make now, in the coming years the tax burden is likely to rise to its highest level in decades. + +When the Conservatives came to power in coalition with the Lib Dems in 2010, the government was running a budget deficit worth 10% of GDP. As ministers went about reducing the deficit in the parliament of 2010-15, most of the adjustment was borne by cuts to public spending rather than by tax rises (see chart). + +A number of departments, such as health, education and international development, have been largely spared the axe. But others, such as work-and-pensions and transport, saw real-terms cuts of more than a third in 2010-16. Real spending on public services has fallen by 10% since 2009-10, the longest and biggest fall in spending on record. This brought the budget deficit down to 4% of GDP in 2015-16. + +Departments can make efficiency improvements up to a point, but eventually ever-smaller budgets make it difficult to provide core services. From prisons to the National Health Service, measures of performance started to go south from around 2014, according to a recent report from the Institute for Government, a think-tank. The rate of child poverty, which fell during the 2000s, is now rising sharply, in part because of big cuts in working-age benefits. + +Since the election in 2015 the government has subtly adopted a new approach to austerity: less emphasis on spending cuts, more on tax rises. In the average budget or autumn statement since then, the government has called for tax rises four times as big as the average in the parliament of 2010-15. Granted, the personal allowance for income tax has risen. The headline rate of corporation tax has been cut. Yet increases in less-noticed charges such as environmental taxes, stamp duty (a levy on property transactions) and insurance-premium tax (levied on everything from holiday to vehicle insurance) have more than compensated. + +Mr Hammond is fast gaining a reputation as a tax-grabber. In his first budget in March the chancellor pencilled in a reduction in the tax-free allowance for dividend income from £5,000 to £2,000. He also proposed an increase in the national-insurance contributions paid by the self-employed—though this was hastily, and embarrassingly, withdrawn after an outcry from newspapers and Tory backbenchers. + +In all, following recent revisions to official economic forecasts, it is now expected that in 2018-19 the tax burden, expressed as a percentage of GDP, will be at its highest level since the mid-1980s. Mrs May’s “instinct” may well be to lower taxes, but she cannot help being bound by Britain’s unforgiving fiscal arithmetic. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722220-tax-burden-will-soon-be-its-highest-level-mid-1980s-whoever-wins-next/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +There goes the inheritance + +The Tories’ social care plan is a death tax by another name + + +Much of the cost of social care would be passed on to the children + +May 18th 2017 + + + + + +AS BRITONS get older and iller, somebody has to pay more to look after them. Yet recent cuts in local-authority spending on social care have turned this into a huge problem for the National Health Service. Inadequate social care has led to bed-blocking in hospitals by elderly patients. Theresa May’s Tory manifesto commendably seeks to tackle this problem. But in doing so it will create winners and, more awkwardly, losers. + +Under today’s policy in England the state pays the social-care costs only of old people with assets of less than £23,250 ($30,000). For those in a care home, the £23,250 limit includes the value of their house; for those being looked after at home, it does not. The Tories plan to raise the asset ceiling to £100,000, paid for in part by means-testing the winter-fuel payment, a quaintly named welfare benefit for elderly folk. But the ceiling will now include the value of the home, no matter where care is provided. The manifesto promises not to force people to sell their properties while they (or their partners) are alive. Instead their social-care costs will be recouped on death. + + + +The raising of the asset ceiling will help a lot of people, including most notably those already receiving residential social care. But including the value of homes for all, at a time when the average house price in England is £230,000, will hit many more. When Labour first proposed a similar scheme in 2010, the Tories dismissed it as a “death tax”. Now, as so often with Mrs May’s manifesto proposals, she has brazenly purloined their idea. + +Supporters of the plan argue that it is only fair to get the wealthy elderly to pay for more of their own care, even if the bill is deferred. Mrs May will also be praised for being prepared to shift the balance of public policy away from favouring the old against the young. Means-testing of the winter-fuel payment and scrapping the “triple lock” that guarantees the value of the state pension will be seen as evidence that the Tories now feel confident enough no longer to indulge a group that overwhelmingly votes for them. + +Yet there will be plenty of critics of the plan. It inverts the proposal first put forward in the Dilnot report in 2011, which suggested putting a cap of £35,000 on all social-care costs, above which the state would pick up the bill. The Tories had accepted this idea but put the ceiling up to £72,000. The idea was, in effect, to pool the risks of high social-care costs across the whole population. Sir Andrew Dilnot hoped this would encourage a private market for social-care insurance. But without a cap on social-care costs, that seems unlikely. Sir Andrew said this week that he was “very disappointed” in the Tories’ plan and that a majority of people receiving care would be worse off. + +The new policy at least tries to deal with the mounting crisis in the social-care system and relieve pressure on the NHS. But it does so by passing the cost on to the children of parents who happen to be sickest or most in need, rather than spreading the burden. A fairer way of doing that, and capturing some of the windfall gains from rising property prices, would have been to increase inheritance tax for all. But that would surely have cost the Tories the votes of many of their strongest supporters. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722224-much-cost-social-care-would-be-passed-children-tories-social-care-plan/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Ministers as managers + +Nationalisation’s high short-term price and higher long-term cost + + +The bill for buying back the mail, rail, water and energy industries would be dwarfed by the cost of state inefficiency + +May 18th 2017 + + + + + +LABOUR’S manifesto is as long as it is ambitious. Over 123 pages of sometimes dense prose, the party promises to “upgrade” the economy and “transform our energy systems”. This would involve the nationalisation of the water system, the energy-supply network, Royal Mail and the railways. Britain’s infrastructure is indeed due for an upgrade. But Labour’s plans would be costly—both in the short and long term. + +The first challenge would be to move privately held firms back into public ownership. The government might ultimately need to fork out over £60bn ($78bn) for the water industry, a similar amount for National Grid (which runs electricity- and gas-transmission networks) and £5bn or so for Royal Mail. Borrowing such large amounts would put upward pressure on government-bond yields, which would ripple through the economy into mortgages and corporate-borrowing costs. + + + +Nationalising the railways, by contrast, might not be especially costly. Network Rail, which manages the track, is already in public hands. The train companies have time-limited franchises. Once these have expired, the government could take back control at little cost. However, many of the franchises do not expire until the 2020s. And if the operating companies knew that they had no chance of holding on to them, they would surely curtail investment. + +More costly than the initial price of buying back these industries would be the long-term damage done to them by placing them back under public management. National ownership in the past was characterised by chronic underinvestment and inefficiency. A paper from the World Bank pointed out that investment flooded into Britain’s water industry after it was privatised in 1989. Even on the railways, which passengers readily complain about, satisfaction is higher than in most of Europe. + +Yet Britain’s utilities are far from perfect. On international rankings of infrastructure quality the country has slipped in recent years. Energy firms take advantage of consumers’ unwillingness to switch supplier, by charging steep prices to their most loyal customers. Water bills have risen sharply in real terms since privatisation, in part to pay for higher investment. + +A number of factors make Britain’s utilities work less well than they could. The current system, where a “super-regulator” (the Competition and Markets Authority) shares competences with sectoral regulators (such as Ofgem and Ofwat), creates confusion. Regulations are complex; utility firms hire senior staff less for their ability to think creatively and more because they can navigate the rules. + +There is a need for fresh thinking on how to solve these problems. But Labour has simply exhumed policies that were buried decades ago for the good reason that they did not work. The party’s leader, Jeremy Corbyn, is often described as a radical. In fact his programme is in many ways a conservative manifesto. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722218-bill-buying-back-mail-rail-water-and-energy-industries-would-be-dwarfed-cost/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Speakers’ Corner + +Quotes from the campaign trail + + +The most memorable lines from the fourth week of Britain’s snap election campaign + +May 18th 2017 + + + + + +Boy jobs and girl jobs + +“We have a dishwasher...As in a machine.” + +Theresa May seems anxious to avoid the impression she employs a migrant worker in her kitchen. Sunday Times + +Managing expectations + +“I don’t see Labour winning…Ibelieve that if Labour can hold on to 200 seats or so it will be a successful campaign.” + +Len McCluskey, leader of the Unite trade union and prominent supporter of Jeremy Corbyn, paints what would be the worst result for Labour since 1935 in brighter colours. Politico + +Ambushed + +“The fat cats keep the money and us lot get nothing.” + +Kathy Mohan, who wants her Disability Living Allowance back, confronts Theresa May on a walkabout in Abingdon. 5News + +For the many policies, not the few + +“We will prohibit the third-party sale of puppies…We will protect our bees.” + +Labour’s manifesto tackles the hard issues + +Weedy proposal + +“Controlling the potency and taking the trade away from criminals makes sense.” + +Norman Lamb, the Lib Dem health spokesman, sets out plans to legalise pot + +Women’s Lib + +“Abortion is wrong. Society has to climb down from the position that says there is nothing objectionable about abortion before a certain time. If abortion is wrong, it is wrong at any time.” + +Tim Farron, the Lib Dem leader, in a recently unearthed interview from 2007. Mr Farron says he is pro-choice. War Cry + +Tittle-tattle + +“We have worked together over the years—many years. Longer than we would care to identify.” + +Asked if the free-marketeer chancellor, Philip Hammond, would keep his job after the election, Theresa May equivocates + +Bad company + +“I’m not going to judge you on going to a reception with Assad and I don’t think people should judge Jeremy [for] trying to talk to people who might be open to a settlement in Northern Ireland.” + +Emily Thornberry, the shadow foreign secretary, reminds Sir Michael Fallon that Jeremy Corbyn is not the only person to have met some dodgy characters. BBC + +Will you still need me + +“I think 68, as they say, is too late.” + +Jeremy Corbyn argues for a lower retirement age. His critics might agree: Mr Corbyn will turn 68 himself next week + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722209-most-memorable-lines-fourth-week-britains-snap-election-campaign-quotes/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Bagehot + +Labour is unfit even to lose + + +Jeremy Corbyn’s party is in no shape to form an effective opposition to the Tories + +May 18th 2017 + + + + + +THE aim of British elections is not only to produce a government. It is also to produce a plausible opposition. Its task is to provide a check on Britain’s overmighty executive, a voice for the losers in the ruthless first-past-the-post electoral system and, by holding ministers to account for shoddy legislation and bad behaviour, to act as a spur to good government. A vigorous opposition is all the more important at a time when Britain is embarking on a revolution in its relations with the European Union on the basis of a narrow result in a single referendum. + +Alas, the chance of a robust opposition emerging from this miserable election campaign is vanishingly slim. The Labour Party is not so much an organised political group as a battlefield between two rival ones: Jeremy Corbyn’s gang of far-left zealots and the parliamentary party of moderates. Until recently the moderates hoped that Mr Corbyn would do the honourable thing if he leads Labour to defeat and resign, leaving them to embark on the laborious work of rebuilding their party. Now it looks as if that is the last thing on Mr Corbyn’s narrow mind. He is busy shoring up his base by campaigning in safe seats and redefining “success” as getting the same share of the vote that his predecessor, Ed Miliband, got in 2015. His aim may be to survive until Labour’s annual conference in late September so that he can introduce a vital change in the rules for selecting his successor, reducing the proportion of MPs and MEPs needed to nominate a candidate from 15% of the parliamentary party to 5%. This would not only increase the chances of Labour’s next leader being another hard-leftist but also help to shift control of the party from the MPs to the grassroots. + + + +If Mr Corbyn stays on, the issue facing the Labour moderates will be the timing of the bloodbath. Should they wait for the party conference in September to try to dethrone the left, or strike quickly and form a separate parliamentary party after the election? Some plotters point out that they are well prepared for the conference, with lots of sensible delegates. Others argue that the far left is too entrenched and that immediate action is necessary. There is talk of a hundred Labour MPs forming a separate parliamentary Labour Party after the election. One thing is clear: holding the Conservative government to account will be a secondary concern. If Labour splits, then Theresa May will be confronted with two warring opposition parties; if it holds together until September, she will face a divided party obsessed with allotting blame for its election defeat and fighting leadership battles. + +Even if Mr Corbyn resigns it will be a long time before Labour is fit for opposition. The party will spend time finding a new leader. Possible left-wing successors include Rebecca Long-Bailey and Clive Lewis; in the centre, Yvette Cooper and Chuka Umunna are expected to stand. Sir Keir Starmer, Labour’s Brexit spokesman, and Tom Watson, the deputy leader, may also run. Whoever wins will hardly have an embarrassment of talent to call on in forming an opposition. The parliamentary party is dominated by courtiers to Tony Blair or Gordon Brown who have spent their lives in politics (such as Ms Cooper) and members of political dynasties (like Stephen Kinnock and Hilary Benn). + +The wilderness years have deprived Labour of bright sparks. Some high-flyers such as Tristram Hunt have abandoned political careers and others have decided not to embark on them. The party has also been deprived of ideas. The battle between moderates and extremists has been so all-consuming that neither faction has done much fresh thinking. This week’s manifesto is an uneasy compromise between Ed Miliband’s policies and Mr Corbyn’s. Mr Blair’s Labour Party held John Major’s Conservatives to account because it had a self-confident leadership replete with new ideas. Whatever happens after the election, it will be years before Labour is again in that position. + +What about the other opposition forces? The second-biggest is likely to be the Scottish National Party which, by its nature, is uninterested in much of the government’s business in the rest of Britain. (The SNP is bad for the art of opposition because it simultaneously entrenches one-party-rule north of the border and deprives Labour of seats and talent.) The Liberal Democrats will not win enough seats to act as an alternative opposition, and may be engaged in a leadership struggle of their own given Tim Farron’s mediocre performance. Lord Ashdown, a former Lib Dem leader, is among those promoting a “progressive alliance” of anti-Tory forces. But forming alliances is difficult even when the parties involved are not in chaos. And the Labour Party is too large and proud to compromise its identity by forming anything other than the loosest of pacts. The great problem with Labour is that it is too weak to win an election but too strong to cede the position of the official opposition. + +Strong and unstable government + +The enfeeblement of the parliamentary opposition is already generating talk about extra-parliamentary resistance. On the far left, groups such as Momentum argue that the “real” opposition must come from the streets. On the moderate left there is talk of the BBC stepping in to fill the void, or the Supreme Court or even European institutions. These ideas are noxious: the far-left version of extra-parliamentary opposition would turn Britain into the Weimar Republic and the soft-left version would politicise institutions whose authority lies in being above politics. + +Yet it is easy to see why so many people are entertaining them in the face of Tory hegemony. The late Lord Hailsham, a Tory grandee, wrote that the danger of the British constitution is “elective dictatorship”. Parties that win majorities have no restraint on their powers other than the ones that the opposition can conjure up. Thanks to Labour’s civil war and the fragmentation of the other parties, Britain is about to engage in a period of revolutionary upheaval without the safeguard of an opposition. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722214-jeremy-corbyns-party-no-shape-form-effective-opposition-tories-labour-unfit/print + + + +上一项 文章 章节 下一项 + + + + + +Britain 章节 Special report + + + + + +International + + +Making government work: When nudge comes to shove + +Britain 章节 Special report + + + + + +文章 章节 下一项 + + + + + +Nudge comes to shove + +Policymakers around the world are embracing behavioural science + + +An experimental, iterative, data-driven approach is gaining ground + +May 18th 2017 + + + + + +IN 2013 thousands of school pupils in England received a letter from a student named Ben at the University of Bristol. The recipients had just gained good marks in their GCSEs, exams normally taken at age 16. But they attended schools where few pupils progressed to university at age 18, and those that did were likely to go to their nearest one. That suggested the schools were poor at nurturing aspiration. In his letter Ben explained that employers cared about the reputation of the university a job applicant has attended. He pointed out that top universities can be a cheaper option for poorer pupils, because they give more financial aid. He added that he had not known these facts at the recipient’s age. + +The letters had the effect that was hoped for. A study published in March found that after leaving school, the students who received both Ben’s letter and another, similar one some months later were more likely to be at a prestigious university than those who received just one of the letters, and more likely again than those who received none. For each extra student in a better university, the initiative cost just £45 ($58), much less than universities’ own attempts to broaden their intake. And the approach was less heavy-handed than imposing quotas for poorer pupils, an option previous governments had considered. The education department is considering rolling out the scheme. + + + +The trial was run by the Behavioural Insights Team (BIT), a company spun out of the British government in 2014 and which remains in part publicly owned. BIT has pioneered the use of psychology to help policymakers change behaviour through “nudges” rather than taxes or laws. That approach is spreading, as governments from Australia to Qatar, and bodies such as the UN and World Bank, follow. + +Mind over matter + +When BIT was set up, in 2010, the very idea provoked objections. Some critics feared that nudges would do little good, and that their effects would fade over time. Others warned that governments were straying perilously close to mass manipulation. More recently, some of the findings on which the behavioural sciences rest have been questioned, as researchers in many fields have sought to replicate famous results, and failed. + +By and large those doubts have been allayed. Even if specific results turn out to be mistaken, an experimental, iterative, data-driven approach to policymaking is gaining ground in many places, not just in dedicated units, but throughout government. + +Nudging is hardly new. “In Genesis, Satan nudged, and Eve did too,” writes Cass Sunstein of Harvard University. From the middle of the 20th century psychologists such as Stanley Milgram and Philip Zimbardo showed how sensitive humans are to social pressure. Daniel Kahneman and Amos Tversky described the mental shortcuts and biases that influence decision-making. Dale Carnegie and Robert Cialdini wrote popular books on persuasion. Firms, especially in technology, retail and advertising, used behavioural science to shape brand perception and customer behaviour—and, ultimately, to sell more stuff. + +But governments’ use of psychological insights to achieve policy goals was occasional and unsystematic. According to David Halpern, the boss of BIT, as far as policymakers were concerned, psychology was “the sickly sibling to economics”. That began to change after Mr Sunstein and Richard Thaler, an economist, published “Nudge”, in 2008. The book attacked the assumption of rational decision-making inherent in most economic models and showed how “choice architecture”, or context, could be changed to “nudge” people to make better choices. + +In 2009 Barack Obama appointed Mr Sunstein as head of the White House’s Office of Information and Regulatory Affairs. The following year Mr Thaler advised Britain’s government when it established BIT, which quickly became known as the “nudge unit”. If BIT did not save the government at least ten times its running cost (£500,000 a year), it was to be shut down after two years. + +Not only did BIT stay open, saving about 20 times its running cost, but it marked the start of a global trend. Now many governments are turning to nudges to save money and do better. In 2014 the White House opened the Social and Behavioural Sciences Team. A report that year by Mark Whitehead of Aberystwyth University counted 51 countries in which “centrally directed policy initiatives” were influenced by behavioural sciences. Non-profit organisations such as Ideas42, set up in 2008 at Harvard University, help run dozens of nudge-style trials and programmes around the world. In 2015 the World Bank set up a group that is now applying behavioural sciences in 52 poor countries. The UN is turning to nudging to help hit the “sustainable development goals”, a list of targets it has set for 2030. + +Not all these schemes involve a dedicated nudge unit. Many draw on initiatives that predate BIT. But all use similar insights from behavioural psychology to design and test policy tweaks. These are summed up in EAST, a mnemonic devised by BIT: in order to change behaviour, make good choices easy, attractive, social and timely. + +Heading EAST + +One of the best-known nudges is to set the desired outcome as the default. For example, enrolling all workers in a company pension scheme, and requiring them to opt out if they do not wish to be members, greatly increases savings rates compared with when non-membership is the default. The power of making things easy was also demonstrated by a trial in 2012, in which the forms used by poor Americans to apply to university were pre-filled with data from tax returns. That raised the likelihood that they would go to university by a quarter. Nudges that involve making the desired choice more attractive, or at least more obvious, range from making the wording on letters about late payment of taxes more emphatic to placing healthy food at eye level in canteens. + +Among the most effective nudges are “social” ones: those that communicate norms or draw on people’s networks. A scheme tested in Guatemala with help from the World Bank and BIT tweaked the wording of letters sent to people and firms who had failed to submit tax returns the previous year. The letters that framed non-payment as an active choice, or noted that paying up is more common than evasion, cut the number of non-payers in the following year and increased the average sum paid. And a trial involving diabetes shows that it matters to nudge at the right moment. In 2014 Hamad Medical Corporation, a health-care provider in Qatar, raised take-up rates for diabetes screening by offering it during Ramadan. That meant most Qataris were fasting, so the need to do so before the test imposed no extra burden. + +Owain Service, BIT’s managing director, says it was initially accused of “tinkering at the margins”. But nudging is now being brought to bear on bigger, harder, problems. One is making public bodies more representative of those they serve. American police forces have long struggled to recruit from ethnic minorities; many worry that their failure to do so harms community relations and makes it tougher for officers to do their job. Many attempts have been made to improve matters, without much success. But BIT’s North America team helped the police force in Chattanooga, Tennessee, to test various versions of job ads. Those emphasising the challenge of the job or the career benefits attracted many more black and Hispanic applicants than those emphasising the impact of the work on the community or the opportunity to serve. + +Of particular interest in aid and development are recent efforts to use nudges to tackle corruption. The World Bank has been involved in several trials, for example one in Nigeria to improve record-keeping in health clinics, thereby making it less likely that money will be stolen. It has found that giving health workers who keep good records certificates that they can display in their clinics makes a worthwhile difference. Another promising area involves motivating people to refuse bribes. Anti-corruption policies generally rely on punishment. But behavioural insights suggest harnessing social norms, for example by publicly celebrating those who stay clean. + + + +Far from being fleeting, as had been feared, at least some nudges have been shown to form lasting habits. Todd Rogers of Harvard University found that asking prospective voters just once to note down exactly when they were going to vote not only increased turnout in an imminent election, but also in subsequent ones. The Guatemalans who received the letters that worked best to encourage taxpaying the following year turned out to be more likely to pay up the year after, too. + +Technology is increasing the impact of behavioural techniques. Several British departments employ data scientists who can run speedy trials of letters and leaflets, much as media companies learn what works online by “A/B testing” content, serving one version to half their audience and another to the rest to see which one is more viewed, liked and shared. + +Brain gain + +Many of the early critics of nudge techniques regarded them as infantilising, or even a type of government mind control. “Nanny is alive and well in Westminster” ran the headline of a newspaper article about the nudge unit in 2011; the author went on to deride the unit’s “Orwellian overtones”. Many worried about the idea of bureaucrats being given free rein to shape behaviour by imperceptibly tweaking government communications and environmental cues. + +Even the proponents acknowledge the risks. “Hitler nudged, so did Stalin,” writes Mr Sunstein. Laws in some American states that have suppressed black people’s votes, such as those passed by North Carolina in 2013, look remarkably like nefarious nudges, from limiting the types of IDs that can be used for registration to banning out-of-precinct voting. All made voting less easy, attractive, social and timely—and disproportionately cut the number of black people voting. + +North Carolina’s laws were struck down on appeal last year, in a nice demonstration of the need for checks and balances when it comes to nudging, as with all other policy action. And all governments nudge whether they have a dedicated unit for doing it, Mr Sunstein points out, and whether or not they mean to. There is no purely neutral way of presenting choices, so why not try to choose the one that results in the best outcomes? As long as that choice is made in a transparent manner, and is subject to democratically elected politicians, nudging offers policymakers an alternative to both the nanny state and the unintelligent one; a middle way that he describes as “libertarian paternalism”. + +A “replication crisis”, in which scientists in many fields have repeated published experiments and failed to find the same results, has hit particularly hard in the behavioural sciences, with some much-cited findings now open to question. But the approach taken by nudge units and their kind already incorporates the remedy. It has nudged policymakers towards a new way of thinking about policy that involves trial and error, and step-by-step improvement. The theories of behavioural science can only suggest which nudges to try; it is for policymakers to find out which ones work. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21722163-experimental-iterative-data-driven-approach-gaining-ground-policymakers-around/print + + + +文章 章节 下一项 + + + + + +International 章节 Business + + + + + +Special report + + +Half a century after the 1967 war: Six days of war, 50 years of occupation + +Post-1967 borders: Peace, or in pieces? + +Politics: Right v far right + +Military service: The army’s new elite + +The economy: Startup nation or left-behind nation? + +Palestine: A sorry state + +One state or two?: The ultimate deal + +International 章节 Business + + + + + +文章 章节 下一项 + + + +Special report + + + + + +Six days of war, 50 years of occupation + +Israel still occupies Palestinian land 50 years after its six-day war + + +Israel has become powerful and rich, but has not found peace with the Palestinians—nor with itself, says Anton La Guardia + +May 20th 2017 + + + + + +IN THE BEGINNING they destroyed Egypt’s air force on the ground and knocked out the planes of Jordan, Iraq and Syria. That was Monday. Then they broke Egypt’s massive defences in Sinai. That was Tuesday. Next, they took the old city of Jerusalem and prayed. That was Wednesday. Then they reached the Suez Canal. That was Thursday. They ascended the Golan Heights. That was Friday. Then they took the peaks overlooking the plain of Damascus. In the evening the world declared a ceasefire. That was Saturday. And on the seventh day the soldiers of Israel rested. + +In just six days of fighting in June 1967, Israel created a new Middle East. So swift and sudden was its victory over the encircling Arab armies that some saw the hand of God. Many had feared another Holocaust. Instead Israel became the greatest power in the region. Naomi Shemer’s anthem, “Jerusalem of Gold”, acquired new lines after the war: “We have returned to the cisterns/To the market and to the market-place/A shofar [ram’s horn] calls out on the Temple Mount in the Old City.” + + + +This is a year of big anniversaries in Israel: 120 years since the First Zionist Congress in Basel; 100 years since the Balfour Declaration promised the Jews a national home; and 70 years since the UN proposed to partition Palestine into a Jewish and an Arab state. But the commemoration of the half-century since the six-day war will be the most intense. + +This special report will examine the legacy of that conflict. The territories that Israel captured are the defining issue of its politics and its relations with the world; they are also at the heart of Palestinian dreams of independence. The six-day war was the last unalloyed military victory for Israel, and the start of a transition from existential wars against Arab states, which it always won, to enervating campaigns against non-state militias which it could never wipe out. The threat of invasion across its borders has vanished, but the violence within them is unceasing. + +In 1967 Western arms decisively beat Soviet ones. As America allied itself firmly with Israel, cold-war divisions overlaid the Arab-Israeli conflict. And when Charles de Gaulle switched sides to align France with the Arabs in 1968, in effect banning weapons sales to Israel (notably of Mirage jets), he unwittingly laid the foundation for Israel’s flourishing high-tech industry. These days it is France that buys drones from Israel. + +The embattled refuge for the Jews became a mini-empire, ruling over millions of Palestinians. It was, in many ways, an improvised conquest, “The Accidental Empire” (the title of a book by Gershom Gorenberg), but one which has endured. The war awakened Palestinian irredentism and Israeli zealotry, and added the intractable power of religion to the forces of nationalism. The wall that divided Jerusalem has gone, but Israel has erected many more barriers that atomise Palestinian society. Israelis have grown rich, which makes the misery of Palestinians all the more disturbing. In uniting the ancient land of Israel, the victory has divided Israel’s people and coarsened its democracy. + + + +Shotgun wedding + +That heady June day in 1967 when Levi Eshkol, then Israel’s prime minister, heard news of the capture of Jerusalem, he told party colleagues: “We’ve been given a good dowry, but it comes with a bride we don’t like.” His words proved more prescient than he imagined. + +Old Israeli soldiers still tell their stories of the war day by day, hill by hill. Reuven Gal was a platoon commander in the Jerusalem Brigade, a unit of reservists from the city who fought within earshot of their homes. After a battle to control the UN headquarters the previous day, Mr Gal recalls advancing at dawn on June 7th towards Jordanian trenches on the hill of Jebel Abu Ghneim. To his relief the position had been abandoned. As his men rested, he heard the radio signal from Motta Gur, commander of the paratroopers who had entered the walled city: “Har habayit beyadeinu” (the Temple Mount is in our hands). All around him, hardened soldiers wept at the news. + +After the war, Israelis loved to hike in the ancient hills, rediscovering Hebron, Eli, Shiloh and more; for Mr Gal, Jews “became drunk” with euphoria at taking the lands of their biblical ancestry. And he thought that after such a defeat the Arabs would have to sue for peace. He breaks into a song from the time: “Tomorrow, when the army take off their uniforms/All this will come tomorrow, if not today/And if not tomorrow, then the next day.” + +But peace did not come. Every generation of Israelis must still put on the uniform and prepare to fight. Mr Gal became the army’s chief psychologist and later a senior national-security official. “Little did we know what this military victory would bring,” he reflects. “The celebrations were the beginning of the tragedy of the occupation. It has had a tremendous impact on our morality, democracy, the souls of our children and the purity of arms [the morality of the use of force].” + +Palestinians, for their part, talk of their dismay at how Jordanian troops gave up Jerusalem’s Old City with barely a fight, and of their surprise at discovering that the armoured vehicles rumbling into the city were not Iraqi reinforcements but Israeli. On the edge of the Jewish Quarter of the walled city, Abu Munir al-Mughrabi lives in a small one-bedroom flat that is a makeshift museum to the loss of Arab Jerusalem. On his wall of pictures of the city, one shows him as a 25-year-old in a suit, standing amid the rubble of his neighbourhood, the Mughrabi Quarter. It was demolished by Israel immediately after the capture of the Old City, turning the alleyway in front of the Western Wall, the most important place of Jewish prayer, into the wide plaza it is today. He holds up his hand-drawn map of the vanished buildings and a list of the 138 families that were cleared out. + + + +Abu Munir had been in Amman when the war broke out. He slipped back across the border to reach Jerusalem just as his home was being torn down. For a time he smuggled people to and from Jordan. He also smuggled weapons for Fatah, then a rising militant movement, and spent time in jail. + +His story illustrates a change of mindset by Palestinians. In the war of 1947-48, when Israel was established, Palestinians fled or were pushed out en masse. Hundreds of villages were destroyed. By contrast, in 1967 most stayed on. “We were lucky that we were defeated so fast and so massively,” says Ali Jarbawi, now a professor of political science at Birzeit, a Palestinian university in the West Bank. “Israel did not have time to kick us out.” + +There were also some unexpected benefits: Palestinians from the West Bank, which had been annexed by Jordan, renewed ties with Palestinians from Haifa and Jaffa, which had been part of Israel after 1948; and from Gaza, which had been occupied by Egypt. “The Palestinian national feeling re-emerged because of the occupation,” says Mr Jarbawi. + +That sentiment burst forth with the first Palestinian intifada, or “shaking off”, in 1987. Until then the Palestinians under Israeli rule had remained mostly placid, while the Palestine Liberation Organisation (PLO), dedicated to the removal of Israel by force, conducted cross-border attacks from abroad. The armed struggle was, for the most part, a failure. The PLO lost a civil war against King Hussein of Jordan in 1970; embarked on a campaign of international terrorism, including the massacre of Israeli athletes at the Munich Olympics of 1972; helped to precipitate the civil war in Lebanon in 1975; and was evicted to Tunis after Israel’s invasion of 1982. + +By contrast, the intifada was marked mainly by stone-throwing clashes. It dashed the illusion that Israel could hold on to the occupied territories at little cost. The Oslo accords of 1993 established an autonomous Palestinian Authority under Yasser Arafat, the PLO leader, who returned triumphantly in July 1994. Extremists on both sides set out to destroy the deal with unprecedented violence. A Jewish settler killed 29 Palestinians at prayer in Hebron in 1994. Hamas and Islamic Jihad, both Islamist factions, embarked on a campaign of suicide-bombings. In 1995 a right-wing Jew murdered the prime minister, Yitzhak Rabin. + +The second intifada, precipitated by the failure of peace talks at Camp David in 2000, involved guns and bombs. Mr Arafat often seemed to tolerate, or even encourage, the militants. Unilateral Israeli withdrawals from Lebanon in 2000, and from Gaza in 2005 (after Arafat’s death), did not bring peace either: Israel fought repeated wars against Hamas and Hizbullah (a Lebanese Shia militia), both of which fired numerous rockets at Israel. + +The decades of the “peace process” brought much process and little peace. For Israelis, land for peace became land for suicide-bombs and rockets + +The decades of the “peace process” brought much process and little peace. For Israelis, land for peace became land for suicide-bombs and rockets. “Most people feel that the occupation is no longer our fault,” says Yossi Klein Halevi of the Shalom Hartman Institute, a think-tank. “I came out of the first intifada as a Labour voter. But the second intifada moved me to the right.” + +For most Palestinians, the Oslo deal brought a worse occupation: more bloodshed, internal division, loss of land to settlers and territorial fragmentation. Palestinians these days live as refugees in the Arab world; in an open prison in the Gaza Strip run by Hamas; in a patchwork of isolated autonomous enclaves in the West Bank run by the nationalist Fatah faction; as neglected “residents” of Israel in Jerusalem; and as second-class citizens struggling for equality in Israel’s pre-1967 borders. + +The chaos in the Middle East since the Arab uprisings of 2011 has hardened Israel’s conviction that it is too risky to give up more land: what if Hamas or Islamic State (IS) took over the hills of the West Bank overlooking Israel’s most populated areas? Israel came close to returning the Golan Heights in peace talks with Syria. Now that militias such as Hizbullah, al-Qaeda and IS have implanted themselves on the frontier, many Israelis are grateful that the negotiations failed. For their part, the Palestinian feel their cause has been forsaken by Arabs that once held it dear. + +Pollsters say that opposition to the idea of peace based on the creation of a Palestinian state alongside Israel is strongest among the young of both sides, those aged 18-24. Their parents may have known a time with no internal barriers and cordial if unequal relations between Arabs and Jews. These days most young Israelis and Palestinians have little contact. + +Life in Israel, safe behind the security wall and the mental one that says “there is no partner for peace”, is more comfortable than it has been for most of the country’s short life. Security has improved, for now. The economy is booming. And even as its politics turns more chauvinistic, its society is opening up in other ways. Arab citizens of Israel, who lived under martial law until 1966, are becoming more integrated economically. In Jerusalem, some Jews and Arabs challenge each other at backgammon and dance the Palestinian dabke. Israeli music is rediscovering the rhythms and tones of the Orient. The army welcomes women and gays, despite objections by some rabbis. The old conflicts over sabbath observance are, for the most part, a thing of the past. Even in Jerusalem, islands of secularism have emerged. + +Visit the beaches or the pulsating bars of Tel Aviv, eating non-kosher Thai prawns, discussing the latest algorithm and watching the handsome youth drift by, and you might imagine yourself in California. Fifty years after 1967, it has become too easy for Israel to forget that, just a short drive away, the grinding occupation of Palestinians has become all but permanent. + +Six days of war, 50 years of occupationMore in this special report:Six days of war, 50 years of occupation:Israel still occupies Palestinian land 50 years after its six-day war + +Peace, or in pieces?:How the 1967 war changed the shape of Israel + +Right v far right:Politics in Israel no longer offers much of a choice + +The army’s new elite:Israel’s army is recruiting ever more ultra-Orthodox officers + +Startup nation or left-behind nation?:Israel’s economy is a study in contrasts + +A sorry state:The half-life on an occupied Palestine + +The ultimate deal:One state or two? + + + + + +→ Peace, or in pieces?: How the 1967 war changed the shape of Israel + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21722033-israel-has-become-powerful-and-rich-has-not-found-peace-palestiniansnor/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + +Special report + + + + + +Six days of war, 50 years of occupation: Peace, or in pieces? + +How the 1967 war changed the shape of Israel + + +A guide to the ABC of the conflict + +May 18th 2017 + + + + + +THE SIX-DAY WAR increased Israel’s territory threefold. The “borders of Auschwitz” were gone; the vulnerable nine-mile narrow waist acquired a thick cuirass with the mountains of the West Bank. Israel soon annexed East Jerusalem with some surrounding land; it did the same with the Golan Heights in 1981. Elsewhere, it left the status of the occupied territories undefined, waiting for a peace that never came even as Jews settled there. + +After the Yom Kippur war of 1973, when Israel was caught off-guard by Egypt and Syria, America mediated a limited “disengagement” in Sinai and the Golan. In 1979 Israel agreed to give back all of Sinai under a peace treaty with Egypt. + + + +The Oslo accord of 1993 set out a five-year period of Palestinian autonomy in the West Bank and the Gaza Strip. It left the hardest issues—borders, settlements, Jerusalem and Palestinian refugees—to be sorted out later. The interim arrangements created a crazy quilt of territories: in Area A, the main Palestinian cities, the Palestinian Authority was given full civil and security control; in Area B, mostly taking in Palestinian villages, it had civil-affairs and some law-and-order powers, but Israel retained ultimate security control; in Area C, the biggest zone, encompassing settlements, access roads, nature reserves and so on, Israel kept full control (see map). + + + +With the second intifada, Israel in effect turned Area A into Area B. It frequently conducts raids to arrest suspected militants. It entirely withdrew its troops and settlers from the Gaza Strip in 2005, maintaining a fence and buffer zone on the border and controlling the skies and the seas. + +Israel’s separation barrier in the West Bank, a series of walls and fences, often runs close to the pre-1967 border. But it cuts deep salients into the West Bank to take in blocks of settlements and a swathe of territory around Jerusalem. This encircles the majority of settlers, who live mostly in towns close to Israel’s main cities. But it has severed Arab areas of East Jerusalem from their natural hinterland in the West Bank, and has greatly hampered movement between the northern and southern parts of the West Bank. It has also created several isolated Palestinian pockets: parts of the West Bank are enclosed within the barriers, and some Palestinian neighbourhoods of Jerusalem are cut off. + +Nearly 2m Palestinians live in the Gaza Strip and almost 3m in the patchwork of autonomous zones in the West Bank, where they are mixed with around 385,000 Jewish settlers. East Jerusalem has about 320,000 Palestinians and about 210,000 Jews. Within the old pre-1967 border, the “Green Line”, there are more than 6m Jews and 1.5m Palestinians with Israeli citizenship. + +Between the Jordan river and the Mediterranean, the overall number of Palestinians has more or less caught up with the number of Jews: about 6.5m for each. Palestinian statisticians say Arabs will equal Jews by the end of the year; Israeli demographers reckon the high birth rate among the ultra-Orthodox will keep Jews just ahead. + +Six days of war, 50 years of occupationMore in this special report:Six days of war, 50 years of occupation:Israel still occupies Palestinian land 50 years after its six-day war + +Peace, or in pieces?:How the 1967 war changed the shape of Israel + +Right v far right:Politics in Israel no longer offers much of a choice + +The army’s new elite:Israel’s army is recruiting ever more ultra-Orthodox officers + +Startup nation or left-behind nation?:Israel’s economy is a study in contrasts + +A sorry state:The half-life on an occupied Palestine + +The ultimate deal:One state or two? + + + + + +→ Right v far right: Politics in Israel no longer offers much of a choice + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21722032-guide-abc-conflict-how-1967-war-changed-shape-israel/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + +Special report + + + + + +Six days of war, 50 years of occupation: Right v far right + +Politics in Israel no longer offers much of a choice + + +Israel’s politicians promote religion and intolerance + +May 18th 2017 + + + + + +THE SIGN AT the entrance is clear: “According to Torah Law entering the Temple Mount area is strictly forbidden due to the holiness of the site.” Rabbinical tradition holds that Jews may not set foot on any part of the esplanade atop Jerusalem’s holiest site. Once the location of the Jewish temple, which was destroyed by the Romans in 70AD, the area has for centuries been a Muslim compound comprising the al-Aqsa Mosque and the golden Dome of the Rock. Because the location of the Holy of Holies (the inner sanctum of the former temple) is unknown, say the rabbis, ritually impure Jews might accidentally enter and defile it. These days Jews mostly pray outside, at the base of the retaining wall, known as the Western Wall, or Kotel. + +Nonetheless, Jewish zealots venture into the al-Aqsa compound almost every day, ostensibly as tourists. The police let them jump the queue of foreigners and form a protective cordon as they perambulate the Dome of the Rock, amid curses from Muslim worshippers. Sometimes they stand silently, gazing at it longingly. They are filmed by the police, who are supposed to ensure that they do not attempt to pray. One trick is to address God while pretending to speak on a mobile phone. + + + +The activists maintain that their holiest place is not down below and outside, at the Western Wall, but above and within the great enclosure (see picture). They demand the right to pray there after centuries of exclusion. “The Western Wall is a refugee camp for Jews,” declares one campaigner. Besides, he says, the Holy of Holies is under the golden dome, which covers a rock where tradition says Abraham prepared to sacrifice Isaac (or Ishmael, according to Muslim lore). Rabbi Yehudah Glick, a Likud member of the Knesset (parliament), who was wounded by a Palestinian gunman in 2014, dismisses the prohibition on Jews entering the Temple Mount. As the campaign gathers support, he predicts, traditionalist rabbis will be forced to bow before the popular will. Had they not once opposed Zionism itself? + +Rabbi Glick casts the campaign for prayer rights as a matter of religious freedom. But it has been spurred by politics, as a response to the Camp David talks in 2000, when the status of Jerusalem’s holy places was negotiated over for the first time; establishing the right of Jews to pray on the Temple Mount would reinforce Israel’s claim to sovereignty over the site. + +Layers of complexity + + + +For Palestinians, the intrusion of Jewish activists into the al-Aqsa compound is all of a piece with the creeping “Judaisation” of Jerusalem. All around al-Aqsa, they lament, right-wing Jews financed by foreign donors are buying up Arab houses above while conducting archaeological digs below. + +Holy sites are the powder kegs of the conflict, imbuing the nationalist dispute with religious fervour. A row over the Kotel in 1929 led to deadly anti-Jewish riots across British-ruled Palestine. A visit to the Temple Mount in 2000 by Ariel Sharon, then the Likud party leader, lit the fuse of the second Palestinian intifada. And the increasingly frequent prayer visits helped launch the current wave of stabbings and car-rammings by Palestinians. + +Weaponising prayer + +To understand the danger of politicised piety, consider Hebron, Jerusalem’s “older sister” and site of the Cave of the Patriarchs (which Muslims call the Ibrahimi Mosque), where the Bible says Abraham bought a burial-place for his family. Both the Kotel and the Hebron site feature massive stone blocks from the time of Herod the Great. After the war of 1967 Jews gained the right to pray in the cave complex for the first time in 700 years. They also moved into buildings nearby to restore a Jewish community that had been massacred and evicted in 1929. Where Jewish settlers go, the Israeli state usually follows. The friction in Hebron has caused much bloodshed on all sides. After a massacre of Muslim worshippers in the Cave of the Patriarchs by a settler in 1994, Israeli authorities partitioned the site, and later the city. + +It was in Hebron in March 2016 that an army medic, Sergeant Elor Azaria, killed a Palestinian lying on the ground, even though he had already been wounded and incapacitated after trying to stab Israeli soldiers. Mr Azaria shot the man not in the heat of the moment but 11 minutes after the stabbing—and was caught on video. The army’s high command demanded exemplary punishment, but populist politicians agitated for an acquittal or, once the soldier was convicted of manslaughter, a pardon. Strikingly, the prime minister, Binyamin Netanyahu, took the side of the pardon-seekers. + +The Azaria affair says much about the chauvinism that suffuses Israeli public life. Politics is no longer a contest of right against left but of right against far right. Israel has become more ethno-nationalist and less universalist; more Jewish and less Israeli. Mr Netanyahu, once regarded as a demagogue, often looks like a moderate next to many of his cabinet members. + +Right-wingers have sought to marginalise Arab parties in the Knesset and hamper leftists and liberals. The Knesset is pushing laws on everything from reducing the volume of Muslim calls to prayer to forcing the disclosure of money given by foreign governments to NGOs (which often support human rights and other liberal causes) and giving immigration authorities greater power to ban BDS (boycott, divestment and sanctions against Israel) activists from entering Israel. The government has inveighed against what it calls the “activist” Supreme Court (which it deems too liberal) and against the media. + +Outside parliament, things can turn uglier still. The ultras of the Beitar Jerusalem football club, La Familia, sing racist chants and are frequently involved in violence, not least when they pour out of matches to look for Arabs to beat up. The team has never had an Arab player. “I am a racist,” says one member. “That’s what La Familia means: the Jewish family.” A related group, Lehava, campaigns rowdily against miscegenation. All this might be dismissed as fringe activity, except that Beitar Jerusalem is much beloved of Likud ministers, and the government gives money to groups close to Lehava that seek to “save” Jewish women from Muslims. It has also objected to a book featuring love between Arabs and Jews. + +Ehud Barak, a former Labour prime minister, talks of “budding fascism”. Older Likud members, from Moshe Arens, a former defence minister, to President Reuven Rivlin, and even some of the settlers’ father figures, find the crass racism disturbing, but these days they are sidelined. “Likud was hawkish, but was liberal and democratic. It has been transformed,” says Moshe Halbertal, a professor of Jewish philosophy at the Hebrew University in Jerusalem. “For ultranationalists, the enemy is within—NGOs, the minorities, the courts.” + +Labour’s love lost + +The drift to illiberalism is also a symptom of the weakness of the Labour party, damaged by decades of post-Oslo violence. The party is in perpetual turmoil: it has gone through 11 leaders since 1994, whereas Likud has had just two. In Israel’s strange parliamentary arithmetic, Labour cannot form a coalition with Arab parties, which hold 13 seats, lest it be accused of treachery. + +Counter-intuitively, perhaps, there is a fear on the right that the settlement project is failing. Settlers account for a minority of the West Bank’s population, and have not managed to convince most Israelis of their case for permanently annexing the West Bank. By casting their movement largely in religious terms, they have lost much of secular Israel. Mr Netanyahu has confined the building of settlements to the main blocks on the borders of the West Bank. And people remember that Ariel Sharon, a previous Likud prime minister, pulled out the settlers from Gaza, proving that settlement is reversible. + +“We are bigger, but we are not as influential as we used to be,” says Israel Harel, a veteran of the settler movement. He regrets that settlers did not push immediately for the annexation of the West Bank. These days he would make do with the absorption of just Area C, handing areas A and B to Jordan (a deal that would not be accepted by either Jordan or the Palestinians). “I am not so concerned about security and more concerned about what happens in Israel. This issue divides us. It creates hate and chauvinism. I don’t want Israel to become hell.” + +Six days of war, 50 years of occupationMore in this special report:Six days of war, 50 years of occupation:Israel still occupies Palestinian land 50 years after its six-day war + +Peace, or in pieces?:How the 1967 war changed the shape of Israel + +Right v far right:Politics in Israel no longer offers much of a choice + +The army’s new elite:Israel’s army is recruiting ever more ultra-Orthodox officers + +Startup nation or left-behind nation?:Israel’s economy is a study in contrasts + +A sorry state:The half-life on an occupied Palestine + +The ultimate deal:One state or two? + + + + + +→ The army’s new elite: Israel’s army is recruiting ever more ultra-Orthodox officers + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21722031-israels-politicians-promote-religion-and-intolerance-politics-israel-no-longer-offers/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + +Special report + + + + + +Six days of war, 50 years of occupation: The army’s new elite + +Israel’s army is recruiting ever more ultra-Orthodox officers + + +Religious soldiers are replacing kibbutzniks. Does it matter? + +May 20th 2017 + + + + + +ARMY INDUCTION DAY feels like a graduation party. Family and friends gather. The kids leave home to become the defenders of the Jewish state. The gun is passed from father to son. On the day the paratroopers are being signed up at Bakum, the main recruitment centre of the Israel Defence Forces (IDF), young men dance in a circle to the beat of a drum, singing “Don’t be afraid, Israel.” All in the cheerful band wear the knitted skullcaps of the national-religious movement, having studied at a religious military academy in the settlement of Eli. + +Religious Zionists have largely taken over the ideological fire of the secular kibbutz movement, which built socialist collective farms in the early years of the state. Now it is the boys from the yeshivas (Jewish seminaries) who seek to settle the land and become army officers. If the army is a microcosm of Israeli society, then its top units may be the harbingers of Israel’s future elite. The paratroopers form a sort of military aristocracy. Eight of the 15 IDF chiefs of staff since 1967 have worn the red beret and boots, and several became prominent politicians. + + + +National-religious Jews, who account for about 10% of the population, make up about 40% of junior and mid-level infantry officers. Many secular Israelis worry that, through this group, religious settlers will take over the army. “They are very devoted. They are great soldiers, ready to sacrifice. But they bring a certain ambiguity about who is the final source of authority,” says Ehud Barak, a former chief of staff and one-time prime minister. + +The evidence so far is ambiguous. The army’s removal of settlers from Gaza, and latterly from outposts in the West Bank, has passed off with few instances of insubordination. Moreover, the network of hesder yeshivas (which mix religious studies with military service) and religious pre-service military academies is often intended less to create a new national-religious elite than to keep youngsters from leaving religious life. + +The IDF wants to expand the number of full-timers, both to maximise front-line combat troops and to reduce the burden on reservists. The influx of women is rising by the year, increasingly to guard the borders. So is the recruitment of the ultra-Orthodox, usually allocated to sex-segregated units. As it happens, the IDF is also one of the world’s most gay-friendly armies. + +Rabbis who object to the recruitment of religious women, or of ultra-Orthodox men, are fighting a losing battle. Besides, rabbinical authority is breaking down as Israelis’ religious beliefs become more variegated and personalised, says Tomer Persico of the Shalom Hartman Institute. “The army changes religious soldiers as much as religious soldiers change the army.” + +Is the IDF the most moral army in the world, as many claim? There must be doubts. Breaking the Silence, a group of reservists who bear witness to what they have seen and had to do while in uniform, tell many disturbing stories, from the petty humiliation of Palestinians to actions that might count as war crimes. Despite accusations of treason aimed at the group, its mere existence attests to the strength of Israeli democracy. + +In an age of asymmetric warfare against militias rather than states, the IDF produces few obvious military heroes. Generals have become less prominent in politics these days even as other elites, such as startup entrepreneurs, are on the rise. The IDF remains a great melting pot, turning Jews from the four corners of the world into Israelis. But there are fears that army service may yet become a force for social division. Those hand-picked to join the tech-savvy units, such as the signals-intelligence Unit 8200, are likely to find highly paid jobs in the high-tech world. The infantry manning the checkpoints could find themselves left behind. + +Six days of war, 50 years of occupationMore in this special report:Six days of war, 50 years of occupation:Israel still occupies Palestinian land 50 years after its six-day war + +Peace, or in pieces?:How the 1967 war changed the shape of Israel + +Right v far right:Politics in Israel no longer offers much of a choice + +The army’s new elite:Israel’s army is recruiting ever more ultra-Orthodox officers + +Startup nation or left-behind nation?:Israel’s economy is a study in contrasts + +A sorry state:The half-life on an occupied Palestine + +The ultimate deal:One state or two? + + + + + +→ Startup nation or left-behind nation?: Israel’s economy is a study in contrasts + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21722038-religious-soldiers-are-replacing-kibbutzniks-does-it-matter-israels-army-recruiting/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + +Special report + + + + + +Six days of war, 50 years of occupation: Startup nation or left-behind nation? + +Israel’s economy is a study in contrasts + + +Dazzling high-tech firms divert attention from a serious productivity problem + +May 18th 2017 + + + + + +IN A PATCH of desert until recently frequented only by passing camels, workers in a computer lab examine new “smart” appliances: a slow cooker on one bench, a security camera on another, a smoke detector on a third. Millions of devices that incorporate mini-computers are being connected to the internet. But as well as convenience, the “internet of things” offers cyber-criminals many new vulnerabilities to exploit. “If I were an attacker, I would never hide in your PC,” says Oleg Brodt, director of research and development at Cyber@BGU, the cyber-security research centre run by Ben Gurion University in Beersheva. “I would try to hide in your smoke detector or door alarm, because nobody bothers to protect them.” + +The centre has shown how wearable devices can be used to eavesdrop on corporate networks. It has also demonstrated the multitude of ways in which even supposedly ultra-secure computer systems not connected to the internet can be hacked. These include exploiting FM radio waves emitted by video cards, the blinking of LED lights or even the pattern of heat signatures. + + + +The Israeli government wants to turn Beersheva, a comparatively poor southern city, into one of the world’s prime cyber-security centres, attracting multinationals to work with startups in an incubator (established by JVP, an Israeli venture-capital fund) and with the university’s computer-science department. More important, the army’s signals-intelligence Unit 8200 and other tech-savvy branches are due to relocate to Beersheva in the coming years, providing a flow of young and capable veterans to boost the industry. Alumni of Unit 8200 have already seeded much of Israel’s high-tech industry. + +Israel attracts about 15% of the world’s venture-capital investment in cyber-security. It is part of Israel’s booming “startup-nation” economy, the most dynamic innovation ecosystem outside America. Direct flights now connect San Francisco to Tel Aviv. Other high-tech areas look promising, too, among them agricultural and water technology (building on Israel’s expertise in desert farming), digital health services and financial technology. + +The biggest buzz is over driverless cars. Boosters think that Israel can help produce their brains—computer vision, lidar (laser scanning), artificial intelligence and cyber-security—leaving the engines and the metal-bashing to others. Intel, a giant maker of computer chips, has recently bought Mobileye, which makes driver-assistance systems, for $15.3bn. + +All this marks a remarkable change from the 1980s, when Israel was on the brink of financial collapse. Its near-defeat in the Yom Kippur war had caused it to push defence spending to an extraordinary 30% of GDP in 1975. By 1984 public debt had reached nearly 300% of GDP and hyperinflation peaked at 450% a year. + + + +In the past decade the economy has grown at about 4% a year. The unemployment rate is 4.3%, a record low. The labour-force participation rate has risen. A country with few natural resources plans to export gas to Europe from its offshore fields, and is selling water to Jordan as water desalination gathers pace. Public debt has come down to 62% of GDP, the current account is in surplus and foreign-currency reserves are high. All significant transactions were once reckoned in dollars; the worry now is the strength of the shekel, which has appreciated by 13% against a basket of currencies in two years. The central bank periodically intervenes in foreign-exchange markets to hammer it down. + +Israel has not had a recession (defined as two consecutive quarters of falling output) since the height of the second intifada. The Israeli economy “is inoculated to a large extent” from wars in Gaza and Lebanon, says Eugene Kandel, a former economic adviser to the government and director of Startup Nation Central, a non-profit group that links global firms with local startups. + +It is easy to be dazzled by Israel’s high-tech firms. In fact, the country has two separate economies. The dynamic, globalised startup nation accounts for only about a tenth of employment, whereas nine in ten Israelis work in something more akin to a left-behind nation that is inefficient and protected from competition. Poverty rates in Israel are among the highest in the rich world, for two main reasons: the ultra-Orthodox often live on public subsidies to pursue a life of Talmudic studies; and Arab citizens struggle to achieve equality. + +Float like a Zeppelin + +Mr Kandel talks of the high-tech industry as a Zeppelin floating above the rest of the economy and only loosely connected to it. This raises two fears. One is that the Zeppelin will drift away if the regulatory, political or security environment deteriorates. The other is that it will fail to lift the rest of the economy. The answer, Mr Kandel thinks, is for startups to grow into big firms in their own right, instead of selling up to companies like Google. Even if the buyers leave their R&D centres in Israel, only so many people can become high-end developers. Larger companies would hire more lawyers, accountants and the like. + +For a country with many highly educated people, Israel scores poorly in the Programme for International Student Assessment (PISA), a test of the science, maths and reading skills of 15-year-olds from across the world run by the OECD, a rich-world think-tank. Even after stripping out the dire results of Israeli Arabs, the results of Hebrew-speakers were still mediocre—and would look even worse except that ultra-Orthodox Jews do not take the test. “PISA does not matter to the startup economy,” explains Mr Kandel. “It matters to the rest of the economy. We need solid PISA results to be able to adopt innovation, not necessarily to create innovation.” + +Naftali Bennett, the education minister, is trying to nudge students into taking more demanding maths courses. He also wants to improve the standard of teacher-training colleges, although strong unions make it hard to align pay with performance, let alone sack bad teachers. He argues that the real secret of Israel’s startup economy is not the educational system but rather the culture of entrepreneurialism, rooted in self-reliance inculcated in young Israelis in the army and youth groups. + +Dan Ben-David, of Tel Aviv University and the Shoresh Institute, a think-tank, sees things differently: “The IDF is an army, not a school.” He reckons that Israel’s real existential threat is poor productivity, not terrorism or external dangers: “We can’t stay like this for another 30 or 40 years. Sooner or later there will be a crisis.” + +He divides Israel’s economic development into two distinct periods. One was the era of catch-up growth leading to the Yom Kippur war in 1973, when Israel’s productivity converged with that of the G7 countries; thereafter it diverged again. Israel’s strong growth of recent years, he says, is due mainly to a rise in the number of workers, not in productivity. Israel’s population is growing fast, and cuts to welfare benefits have pushed more people, particularly ultra-Orthodox women, into work. + +According to Mr Ben-David, Israel has chronically underinvested in education and infrastructure because resources have been spent on subsidies for ultra-Orthodox yeshivas and Jewish settlements. And the split-economy problem is likely to worsen. Ultra-Orthodox Jews (about 7% of the Israeli population) and Arabs (approximately 21%) have higher fertility rates than other groups; together they are projected to make up half of the Israeli population within about 40 years, Without big changes, average participation rates and productivity will drop. + +By throttling back public spending, Binyamin Netanyahu may have left Israel with too little fiscal leeway to invest in public goods and alleviate poverty. As the country has shed its socialist heritage, government spending has fallen from a hefty 80% of GDP in 1980 to below 40%, low by rich-world standards. + +Israel also scores poorly on the OECD’s measures of restrictiveness in product markets and services. Oligopolies and monopolies abound, and over the past decade the country’s position in the World Bank’s ease-of-doing-business index has slid from 26th to 52nd. This has meant low wages and high prices. The cost of living is about 20% higher than in Spain and 30% higher than in South Korea. Kosher certification makes food more expensive, and the panoply of quotas, tariffs, regulatory barriers and guaranteed agricultural prices has piled on extra costs. Strikingly, a country that has produced globally popular taxi and navigation apps does not allow Uber to offer its cheap car-for-hire services because of resistance from the taxi lobby. Bottlenecks in construction and land allocation have driven up the price of housing, especially in Tel Aviv. + +Occupation economics + +Try to use a mobile-phone app in the West Bank or Gaza and it soon becomes apparent that the Palestinian territories, with 5m people, are in economic oblivion. Palestinian operators have not yet been able to set up 3G services, despite repeated promises; Palestinians with Israeli phones have to get close to settlements to use their services. Navigation apps like Google Maps and Waze offer skimpy information: they cannot find a route between big Palestinian cities—say, Ramallah and Nablus—but offer directions between small Jewish settlements near both. + +The economic disparities are striking. With GDP per person at $35,700 a year in 2015, Israel’s standard of living is much the same as France’s. For the West Bank the figure stands at $3,700, akin to Egypt’s; for Gaza it is about $1,700, similar to Congo-Brazzaville’s. In real terms, Gazans are about 25% poorer today than they were at the time of the Oslo accords. + +Israel’s security barrier is, to a large extent, also a one-way protectionist barrier. The Palestinian market is fully exposed to Israeli goods, but Palestinian products struggle to get out. Strawberry farmers in Gaza, working less than a kilometre from the border fence, say they cannot export to Israel and only rarely to the West Bank. In the main, Palestinians are treated as a source of cheap, and disposable, labour. + +“We have no economic policy. Everything is tied to the political situation,” says Mohammad Shtayyeh, president of the Palestinian Economic Council for Development & Reconstruction, which co-ordinates aid from donors. The Palestinian economy depends on the earnings of workers in Israel and the settlements, customs remittances from Israel and donations from the West and the Arab world. All these are subject to sharp fluctuations over which Palestinians have little control. Palestinian areas, Mr Shtayyeh notes, operate with three foreign currencies: the Israeli shekel, the Jordanian dinar and the American dollar. + +There is no lack of entrepreneurship among Palestinians. The new city of Rawabi, rising on a hill north of Ramallah, is as ambitious as any government-built Jewish settlement, yet is a private project part-funded with investments from Qatar. It will count 6,000 units, ranging from homes for middle-class Palestinians to holiday flats for Israeli Arabs; and have amenities from classy global clothing chains to an amphitheatre and the Middle East’s longest zipwire. The project has encountered countless impediments, but families have started to move in. + +Rawabi will include space for Palestinian startups seeking to work with Israeli and global firms. “We don’t have to do a lot to attract them. They are already next door to us,” says Bashar al-Masri, the businessman who conceived the city. Gazing west from Rawabi, the Tel Aviv skyline appears starkly against the gleaming Mediterranean. Few Palestinians can hope to visit it. But there are no checkpoints on fibre-optic cables; against the odds, a startup industry may yet appear in the failing startup state that is Palestine. + +Six days of war, 50 years of occupationMore in this special report:Six days of war, 50 years of occupation:Israel still occupies Palestinian land 50 years after its six-day war + +Peace, or in pieces?:How the 1967 war changed the shape of Israel + +Right v far right:Politics in Israel no longer offers much of a choice + +The army’s new elite:Israel’s army is recruiting ever more ultra-Orthodox officers + +Startup nation or left-behind nation?:Israel’s economy is a study in contrasts + +A sorry state:The half-life on an occupied Palestine + +The ultimate deal:One state or two? + + + + + +→ A sorry state: The half-life on an occupied Palestine + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21722037-dazzling-high-tech-firms-divert-attention-serious-productivity-problem-israels/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + +Special report + + + + + +Six days of war, 50 years of occupation: A sorry state + +The half-life on an occupied Palestine + + +There is no end in sight to the occupation + +May 20th 2017 + + + + + +ISRAEL, THE PALESTINIAN AUTHORITY and Hamas may be bitter rivals, but they all agree on one thing: the Erez border crossing between Gaza and Israel, for the lucky few allowed to use it, is a prime opportunity to recruit spies. At the Israeli terminal a poster showing a handshake offers the “Chance of Your Lifetime” to Palestinians willing to provide information on militants. Beyond a buffer zone, at the PA and Hamas posts, murals warn Palestinians against betraying the homeland. + +Erez marks one of the world’s strangest frontiers, separating the lush fields of Israeli kibbutzim from the free-fire zones, rubble and chaos of Gaza—a territory that is neither a state, nor an autonomous domain of the PA, nor even a fully occupied territory after Israel pulled out in 2005. Instead it is a large detention camp, guarded from without by Israeli forces (and by Egyptian troops), and from within by Hamas, the strongest of the armed gangs, which pushed out the PA in 2007. The PA’s border post provides a convenient buffer between Israel and Hamas. + + + +The façade of the Israeli terminal masks a surreal automated facility. No Israeli is in sight as Palestinians emerging from Gaza make their way through remote-controlled gates and scanners. Commands are barked through distorted tannoys, or made with obscure hand signals from behind the blast-proof window of a control room high above. + +Since the Israelis left, Israel and Hamas have engaged in four major rounds of fighting and endless smaller clashes. Everybody expects another war, though few seem to want it. The Shujaiya neighbourhood, pounded to rubble in 2014, is being rebuilt with scarce materials from charitable donations or, for those who can afford it, the black market. The liveliest bit of Gaza’s economy is the recycling of war rubble. Electricity is intermittent, and clean water is in short supply. + +Majed al-Heisso, a father of six, makes a living from occasional but dangerous work tilling fields nearby. In the game of Gazan roulette, those recognised by Israeli spotters as regular farmers are allowed to work land close to Israel’s buffer zone; others risk being shot. Hamas is keeping a ceasefire, but struggles to stop smaller Salafist factions from using places like Shujaiya to launch rockets at Israel. Residents flee to escape Israeli retaliatory fire. “There is firing every day. I want it to end. We don’t want any more wars. The children have nightmares every day,” says Mr Heisso. “The militants fire rockets, get paid and have happy lives. We are the victims.” + +There is growing talk in Israel of relieving the economic siege of Gaza, including proposals to build a port on an offshore island (controlled by Israel). One reason is to avoid a return to war. Another is ideological: by treating Gaza as if it were a Palestinian state, Israeli right-wingers think they might more easily fend off pressure for territorial concessions in the West Bank. + +This all feeds Hamas’s conviction that violence is the only language that Israel understands. “Gaza was liberated by resistance,��� says Mahmoud Zahhar, a senior Hamas political figure who has lost two sons in the fighting and whose house has been bombed four times. By contrast, he says, the Palestinian Authority’s security co-operation with Israel in the West Bank has led only to the expansion of settlements. + +Movement but no progress + +Yet Hamas, too, is under pressure. On May 1st it issued a new policy paper that updates, but does not abolish, its founding charter of 1988. It drops the crudest anti-Semitic passages and accepts the creation of a Palestinian state in just the West Bank and Gaza as a “formula of national consensus”. Yet Hamas is no convert to a two-state solution; it remains committed to the “full and complete liberation of Palestine”, if necessary by “resistance and jihad”. Its vision of a Palestinian state is maximalist and, like Gaza, in permanent conflict with Israel. For Mr Zahhar, “Israel is a foreign body,” although Hamas could talk to it about humanitarian issues: bird flu, say, or the exchange of prisoners. + +For Israel, the document is a non-starter. By distancing Hamas from the Muslim Brotherhood, it signals accommodation with Egypt, which has eased the closure of the Rafah crossing. And it seeks to appeal to militant factions of Fatah as the Palestinian Authority squeezes Gaza, cutting salaries to Palestinian civil servants and throttling subsidies for fuel and electricity. The timing matters: it came as the Hamas politburo named a new leader, Ismail Haniyah, the former head of Hamas in Gaza; and as Mahmoud Abbas, president of the Palestinian Authority, prepares for a possible resumption of peace talks with Israel (see article). + +In his capital of Ramallah in the West Bank, Mr Abbas, who is 82, is treated with indifference by Israel and contempt by many Palestinians. Life in Ramallah may be easier than in Gaza, but corruption in the PA rankles, as does the erosion of democracy. Mr Abbas is in the 13th year of his four-year term. Potential rivals are circling. Mr Abbas’s lieutenants think a two-state deal is still feasible. “We are in the last 15 minutes,” declares Jibril Rajoub, a former head of internal security in the West Bank (now head of the Palestinian Olympic Committee) and a potential a successor. The world is “fed up” with Israel’s occupation, he says, and Donald Trump may provide an unexpected breakthrough. “He said America first, not Israel first.” + +Cars can take more than an hour to get through Kalandia into Jerusalem. The passage for those on foot looks like a cattle pen + +Such claims are met with guffaws on the streets. “A Palestinian state? That’s just a movie. Things were much better before the Palestinian Authority came here,” says Khalil Abu Ibrahim, a fruit-and-vegetable seller who has set up in a prime spot: next to the captive clientele of the gridlocked roundabout at Kalandia checkpoint, in the shadow of a smoke-charred Israeli watchtower. Those allowed to cross Kalandia by car can take more than an hour. The passage for those on foot looks like a cattle pen. Israel could do much more to make the crossing less awful—more lanes for cars, more staff to process travellers, more effort to clean up the place—without endangering its security. Here Israel’s talk about the eternal unity of Jerusalem is exposed as hypocrisy. The wall cuts off areas that are formally part of the city, forming twilight zones for East Jerusalem’s Palestinians where housing is cheaper but public services are neglected. + +Arij, a student, picks her way past the fetid rubbish by the wall as she returns to East Jerusalem from Birzeit University, a commute of two-and-a-half hours each way. She does not speak Hebrew, so could not go to an Israeli university. “I don’t know any Jews. I am not ready to make friends with them,” she says. Most Israelis are not interested either. The Arabic that they are usually taught is a pidgin designed for places like Kalandia, with phrases in the imperative: “Jib al-hawiya”(give me your ID). + +Six days of war, 50 years of occupationMore in this special report:Six days of war, 50 years of occupation:Israel still occupies Palestinian land 50 years after its six-day war + +Peace, or in pieces?:How the 1967 war changed the shape of Israel + +Right v far right:Politics in Israel no longer offers much of a choice + +The army’s new elite:Israel’s army is recruiting ever more ultra-Orthodox officers + +Startup nation or left-behind nation?:Israel’s economy is a study in contrasts + +A sorry state:The half-life on an occupied Palestine + +The ultimate deal:One state or two? + + + + + +→ The ultimate deal: One state or two? + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21722035-there-no-end-sight-occupation-half-life-occupied-palestine/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + +Special report + + + + + +Six days of war, 50 years of occupation: The ultimate deal + +One state or two? + + +Israel’s dangerous drift to chauvinism may make a solution ever harder to find + +May 18th 2017 + + + + + +IN A COUNTRY of larger-than-life leaders—founding fathers, warriors and peacemakers—it is easy to forget how long Binyamin Netanyahu has been around for. Having served as prime minister for 11 years—three years in the 1990s and eight years in his current stint—he is Israel’s second-longest holder of that office after David Ben-Gurion. He is on first-name terms with the world’s leaders. But what has he achieved? + +On the big questions of war and peace, not much. He has won no big battles and secured no big peace agreements. Instead he has managed the conflict and avoided big disasters, which is no small feat. He has waged two wars against Hamas in Gaza, fending off calls for a full reinvasion. In the West Bank, the Palestinian Authority co-operates on security. Hizbullah, the Lebanese Shia militia, is too busy in Syria to risk a second front with Israel, and its paymaster, Iran, is some years away from being able to make a nuclear bomb. + + + +Above all, Mr Netanyahu stayed out of the war in Syria, restricting himself to bombing suspected Hizbullah arms convoys, retaliating against any fire from Syria and offering medical treatment to wounded civilians and fighters. Not for Mr Netanyahu the misadventures of Israel’s invasion of Lebanon in 1982. + +On the peace side of the ledger, Mr Netanyahu was the first Likud prime minister to give up land to the Palestinians, pulling out of most of Hebron in 1997. He accepted the principle of a Palestinian state in 2009, albeit a demilitarised one (a “state minus”, he now calls it). In practice he has made no progress on peace, even under a moderate Palestinian leader, Mahmoud Abbas. The international campaign for boycott, divestment and sanctions (BDS) against Israel, modelled on the boycott movements against apartheid, is noisier but remains small for now. + +There is more to Mr Netanyahu’s immobility than mere caution or, as his critics contend, cowardice. As a Revisionist Zionist, Mr Netanyahu is a believer in the “iron wall” doctrine of the movement’s founder, Vladimir Jabotinsky, who wrote in 1923 that Zionists could never reach a voluntary agreement with Arabs on sharing the land; the Arabs would yield to Jews only “when there is no longer any hope of getting rid of us, because they can make no breach in the iron wall”. + +For Mr Netanyahu, the iron wall starts with a strong economy, for which he can claim credit. He tells visitors that the Palestinians are a non-issue; they should instead focus on the exciting new industries that Israel is building. A strong economy, in turn, allows Israel to maintain a powerful army, thanks to which many Arab states have either made peace, like Egypt and Jordan, or forged a de facto alliance with Israel against Iran, like the Gulf states. With top-rate intelligence services, Israel gathers valuable information that helps to build relationships far and wide. + +The election of Donald Trump, Mr Netanyahu thinks, gives Israel the American ally he has always wanted. Hitherto he has had to contend with Democratic presidents, Bill Clinton and Barack Obama, who pushed him to make concessions to Palestinians. Israeli officials revile Mr Obama, in particular, for pursuing an all-or-nothing deal with the Palestinians that produced nothing; and, in the meltdown of the Middle East, for recklessly treating the now-fallen Egyptian dictator, Hosni Mubarak, as the bad guy, and the Iranian president, Hassan Rouhani, as the good guy. Mr Netanyahu tried, and failed, to use Congress to stop Mr Obama’s nuclear deal with Iran. + +In his last days in office Mr Obama repaid Mr Netanyahu by declining to block a UN Security Council resolution declaring that settlement-building in all the occupied territories of 1967, including East Jerusalem, “has no legal validity and constitutes a flagrant violation under international law”. + +Though few American Jews voted for Mr Trump, and many worry about the anti-Semitism of some of his devotees, Mr Netanyahu embraced him: “We do not have a greater friend than President Trump.” Yet having set himself against Mr Obama, and now cleaving to Mr Trump, Mr Netanyahu risks turning support for Israel into a partisan issue in American politics. + +A proto-Trump + +In his hatred of the media and his antipathy to the courts and the liberal establishment, Mr Netanyahu looks like a more intellectual version of Mr Trump before his time. + +Many settlers thought Mr Trump would allow Israel to build freely in the West Bank, burying the prospect of a Palestinian state for good. His ambassador to Israel, David Friedman, is a donor to the settlement of Beit El. Right-wingers pushed a “Regularisation Bill” through the Knesset that would retrospectively legalise (under Israeli law) scores of settlements and outposts built on private Palestinian land. The government announced plans for the first new settlement in more than two decades. + +But settlers’ disappointment in Mr Trump is growing. He told Mr Netanyahu to “hold back on settlements for a little bit”, and has not so far followed through on his promise to move the American embassy to Jerusalem. Increasingly, Mr Trump seems to be serious about pursuing what he calls the “ultimate deal” of Israeli-Palestinian peace. He will visit Jerusalem on his maiden foreign trip. Granted, he has been vague about Palestinian statehood. He did not mention it when he hosted Mr Abbas at the White House earlier this month, but he had the Palestinian flag placed alongside the Stars and Stripes. “Now, Mr President, with you we have hope,” Mr Abbas told him in English. + +To a degree, Mr Netanyahu needs America’s restraining hand, and the process of talks, to head off pressure from foreign governments, human-rights groups, BDS campaigners and his own right-wing ministers. Citing the need to keep Mr Trump on side, Mr Netanyahu resisted calls for the annexation of the settlement of Maaleh Adumim. For Mr Abbas, meanwhile, America’s interest helps restore his centrality to the Palestinian cause. + +Can Mr Trump, as he suggests, prove the pessimists wrong? Both sides seem to fear his unpredictability. His air strikes against Syria last month, after a chemical attack by government forces on a rebel-held town, give America a bit of purchase. They were welcomed by Israel and Saudi Arabia, which had both been alarmed by the weakening of America’s presence in the region. + +Suspended animation + +That said, there are good reasons to think that neither Mr Abbas nor Mr Netanyahu will be able or willing to reach a final agreement. The compromises may prove too painful for either man to risk facing down his respective hardliners. Mr Abbas does not even control the Gaza Strip. Mr Netanyahu thinks Arab countries, now friendlier to Israel, will exert pressure on Mr Abbas to moderate his demands. The region can help a deal along, certainly, but there is no hope that it will impose peace on Palestinians in the absence of an Israeli commitment to real statehood. So both men are likely to play a long game, searching for the opportunity to blame the other for eventual failure. + +In any case, Mr Netanyahu may have more immediate concerns at home, where he is under formal investigation by police in several cases of suspected corruption. These include allegations that Mr Netanyahu received cigars, champagne and other gifts from wealthy supporters; connived with a media baron to obtain favourable coverage; and that his personal lawyer was involved in a dodgy defence contract with a German firm. Mr Netanyahu denies any wrongdoing. If the police recommend charges, he may be forced to call early elections or step down. But as Israel’s canniest politician, he should not be written off yet. + +One gauge of a leader’s influence is the extent to which he has forced others to change their position. The late Yitzhak Rabin forced Likud successors to accept the principle of Palestinian independence. Oddly, Mr Netanyahu claims to be more left-wing than Mr Rabin, who never talked of a Palestinian state. + +In his way Mr Netanyahu, too, has reshaped Israeli politics. He has dragged those who would like to replace him as prime minister into the limbo of no peace and no war, no Palestinian state and no full annexation. The Labour leader, Yitzhak Herzog, has set out a plan to begin talks on a final agreement only after a ten-year period without violence or incitement. Yair Lapid, leader of the centrist Yesh Atid party, proposes a gradual process of “separation”, lasting 15-20 years. Naftali Bennett, leader of Jewish Home, the main settler party, does not seek the annexation of the whole West Bank; he wants to take over only Area C, which has lots of settlements and few Palestinians. Clearly none of them thinks peace is at hand; yet none wants to rule directly over millions of restive Palestinians. + +Some wonder whether the world, having tried and failed for so long to achieve peace, is pushing a fundamentally flawed idea in its pursuit of the two-state model. Given the extensive Jewish settlement in the West Bank, it may impossible anyway. Yet the idea of peace based on a Palestinian state on most of the land that Israel captured in 1967, in exchange for recognition of, and peace with, the Jewish state established in Palestine after 1948, is likely to persist. One reason is history. The partition of British-ruled Palestine into two states, proposed in various forms since 1937, produced a Jewish state but left the promise of a Palestinian Arab state unredeemed. Another reason is demography. In the “battle of the womb”, as some Palestinians call it, the Arab population has drawn roughly level with the Jewish one. + +Israel cannot at the same time have all of the “Land of Israel”, a predominantly Jewish state and full democracy. Most Israelis (and many Palestinians) cannot conceive of a one-state model with equal rights for all Arabs and Jews. In reality, a one-state model means that some or all of the Palestinians would be disenfranchised. So, in the end, two states still looks like the least bad option to most Israelis and Palestinians. The trouble is, both sides intensely distrust each other. That plays to Mr Netanyahu’s instinct to do little and play for time. He thinks that his iron-wall strategy will strengthen Israel. + +Yet prolonging the limbo brings dangers, too. One is that it will provoke a future Palestinian uprising—which Israel can no doubt suppress, at a cost. Another is that, when Mahmoud Abbas dies, it will be hard to find a Palestinian leader able to sign a historic compromise with Zionism. The endless occupation of the Palestinians, and the relentless encroachment on the land of their future state, corrodes Israel’s standing abroad and its democracy within. Ultimately, if it does not give Palestinians independence, Israel risks being cast as a racist or apartheid state. Fifty years after the six-day war, forget about land for peace: the issue is land for democracy. + +Six days of war, 50 years of occupationMore in this special report:Six days of war, 50 years of occupation:Israel still occupies Palestinian land 50 years after its six-day war + +Peace, or in pieces?:How the 1967 war changed the shape of Israel + +Right v far right:Politics in Israel no longer offers much of a choice + +The army’s new elite:Israel’s army is recruiting ever more ultra-Orthodox officers + +Startup nation or left-behind nation?:Israel’s economy is a study in contrasts + +A sorry state:The half-life on an occupied Palestine + +The ultimate deal:One state or two? + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/special-report/21722034-israels-dangerous-drift-chauvinism-may-make-solution-ever-harder-find-one-state-or/print + + + +上一项 文章 章节 下一项 + + + + + +Special report 章节 Finance and ... + + + + + +Business + + +Consumer products: Is Coke it? + +Airline security: Carry on working + +BHP: From Broken Hill to break up + +Apple in China: App wars + +Veolia: The survivor + +Corporate lobbying: Doorway to profit + +Music formats: Vinyl gets its groove back + +Toshiba’s chip blues: Blue-chip chip blues + +Indian cinema: Routine update + +Schumpeter: Good chemistry + +Special report 章节 Finance and ... + + + + + +文章 章节 下一项 + + + + + +Is Coke it? + +Coca-Cola’s new boss tries to move beyond its core product + + +More governments see its sugar-laden products as a scourge + +May 18th 2017 | ATLANTA + + + + + +FEW companies are as defined by a single product as Coca-Cola. The firm has sold the sweet dark soda since 1886. At its headquarters in Atlanta, archives house the advertisements that sowed Coke in the world’s consciousness: posters urging consumers to “Have a Coke and a Smile”; Norman Rockwell’s 1935 painting of a boy fishing, Coke bottle in hand; a Coca-Cola record with tunes sung by Ray Charles, Aretha Franklin and The Who; advertisements with a red-coated, bearded Santa Claus—it was Coca-Cola that popularised the image of Santa in the 20th century. + +Today Coca-Cola has $42bn in revenue and is available “within an arm’s reach of desire”, as the firm puts it, in every country but Cuba and North Korea. Its distribution is so broad, its marketing so expert that the Gates Foundation has urged vaccine campaigns to mimic its strategy. The question for James Quincey, an insider who took over as CEO this month, is whether Coca-Cola can move beyond Coke. + + + +The company is under pressure. A growing number of governments see its main product as not an icon but a scourge, and have introduced soda taxes. Coca-Cola must adapt as shoppers switch to buying more online. Meanwhile, investors want its 24% profit margin to expand. Jorge Paulo Lemann, the founder of 3G, a private-equity firm that is stalking the consumer-goods industry, has quipped that he could run Coca-Cola with 200 staff. + +Efficiency measures are already being taken, including a plan, expanded last month, to save $3.8bn by 2019. Selling off Coke’s vast network of bottlers—together, Coca-Cola and its many bottlers amount to the world’s biggest consumer company—could mean revenue plunging by more than $7bn this year. The idea is that the firm will become more agile and profitable as a result. + +But the most important and risky shift is Coca-Cola’s effort to diversify. “The company has outgrown its core brand,” Mr Quincey said in February. Until 1955 the company sold only Coca-Cola, either in soda fountains or in small bottles. Its soda strategy thereafter might be summarised as Coca-Cola squared: the company sold more, bigger containers of Coca-Cola and other fizzy products like it, such as Sprite and Fanta. The greater the volume of soda that bottlers sold, the more money they made. Managers within Coca-Cola were rewarded for boosting volumes, too. The result is impressive. Last year Coca-Cola accounted for about half of all soda drunk around the world, according to Euromonitor, a research firm. + + + +However, in many countries the market for fizzy drinks looks increasingly flat. In America the consumption of soda per person peaked in the late 1990s, at nearly 53 gallons per person, and has since declined to about 75% of that level. Last year volumes of Diet Coke, once seen as a fix for more health-conscious consumers, dropped by 4.3%, according to Beverage Digest, as shoppers grew wary of artificial sweeteners. Volumes of bottled water in America exceeded those of carbonated soft drinks for the first time in 2016. Soda-makers must deal with restless governments. France, Norway and the American cities of Philadelphia and Berkeley are among those with taxes on sweet drinks. Britain will introduce its own tax next year. + +Muhtar Kent, the CEO who preceded Mr Quincey, began to address these problems. The company is reducing sugar in some sodas, though not in original Coca-Cola. It has also invested in other types of drinks. For instance Coca-Cola recently bought AdeS, a soy drink, from Unilever, an Anglo-Dutch conglomerate. It is also developing products internally, such as Gold Peak iced tea, whose annual sales now exceed $1bn. + +Mr Quincey wants to speed the growth of such new offerings, as well as to bolster the firm’s existing products. “The direction of travel is clear,” he says. “If we are truly doing our jobs, we will have a broader portfolio.” In his prior roles Mr Quincey expanded its range of products, for example through the acquisitions of Innocent, a British maker of “smoothie” fruit drinks, and Jugos del Valle, a Mexican juice company. Nevertheless, soda still accounts for 70% of Coca-Cola’s volume. That is down from nearly 90% in 2000 but still an extremely high share. PepsiCo, Coca-Cola’s chief rival, has long had a more diversified portfolio of drinks and snacks. + +A business unit called Venturing & Emerging Brands, or VEB, is trying to find other promising new drinks. In a VEB conference room in Atlanta, shelves are stacked with bottles touting everything from fermented drinks and coconut water to hemp iced tea and an “aloe vera drink with pulp”. Most are not Coca-Cola brands, but the company is keeping a close eye on them. “There is a tremendous amount of innovation and entry into our market,” says Mr Quincey. + +VEB acts as a sort of venture-capital firm and incubator. Sometimes it takes a stake in an external venture-capital firm, which enables Coca-Cola to make indirect investments in young brands. In other instances the unit backs a company directly and then helps it in areas such as sourcing and distribution. For example, in 2015 it invested in Suja Life, a maker of “cold-pressured” juice—and increasingly Suja’s “Master Cleanse” is, for better or worse, within an arm’s reach of desire. VEB is now due to expand to Asia. + +There are risks. Marketing has been Coca-Cola’s strength and whether that magic will keep its old oomph when sprinkled across dozens of brands remains to be seen. Traditional soda is usually more profitable than alternatives, says Ali Dibadj of Sanford C. Bernstein, a research firm, largely because healthier brands’ ingredients cost more. Bottled water has seen greater growth than any other drink, but it has particularly slim margins. Coca-Cola insists that it can broaden its portfolio, profitably, by focusing on premium drinks: for instance the company’s “smartwater” brand is enriched with electrolytes. + +As for the firm’s traditional products, Coca-Cola is seeking higher volumes in young markets and higher profits in old ones. To propel growth in India, for example, it has developed a new bottle to keep its soda fizzy despite long and bumpy journeys. And in developed markets, where volumes are stable at best, Coca-Cola is making bubbly drinks more profitable through a mixture of higher prices and smaller packages. + +From investors’ point of view, the firm’s strategy is strongly reminiscent of the way in which Big Tobacco has coped with the stigmatisation of its unhealthy legacy product. To be sure, even Coca-Cola’s most sugary drinks are like leafy kale compared with cigarettes. Yet like tobacco firms investing in e-cigarettes and lifting the cost of packs to consumers, Coca-Cola is diversifying into healthier beverages and raising prices for its traditional drinks. The resemblance to tobacco, says Mr Dibadj, is what makes the firm such a compelling investment right now—though not one that the company’s new boss or its legions of accomplished marketers are likely to tout. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722231-more-governments-see-its-sugar-laden-products-scourge-coca-colas-new-boss-tries-move/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Carry on working + +Airlines have dodged a wider ban on electronic devices + + +Restricting laptops on transatlantic flights would have badly damaged traffic + +May 18th 2017 + + + + + +THE fear that business travellers on transatlantic flights might have to stop working on spreadsheets and read a good book instead had been palpable. In recent weeks, agents at America’s Department of Homeland Security had been hinting to the media that a ban on large electronic devices in the cabins of flights between Europe and America was likely. After a meeting on May 17th in Brussels, between American and EU officials, however, reports suggest that threat has been averted. Airlines will be rejoicing if so. + +America had been expected to announce that all electronic gadgets larger than a smartphone, such as tablets and laptops, would henceforth have to be put in hold luggage. The Trump administration (along with Britain) had already imposed similar restrictions on flights from some Middle Eastern countries in March. It seemed security officials had got wind of a specific terrorist threat, possibly involving Islamic State (IS), and perhaps similar to an attack perpetrated on a Somalian jet in 2016. Then, a terrorist blew a hole in the side of an airliner using a small bomb concealed in a laptop placed against the cabin wall. (The terrorist got his timing wrong, detonated too early, and was sucked to his doom; no one else was seriously hurt.) + + + +The reason for the apparent change of mind was unclear as The Economist went to press. Airlines had complained that alternative security options, such as enhanced screening of passengers and their carry-on luggage, had not been fully explored. They also warned of the dangers of storing more lithium batteries in the hold. Such batteries, which are used in most electronic devices, have on occasion combusted and brought down commercial aircraft, including a UPS cargo plane in 2010. A controversy over whether Donald Trump gave classified information about the risk of IS using laptops against aircraft to Russia’s foreign minister, Sergei Lavrov, last week, may also have had an impact on the debate, and helped airlines to avoid a wider ban for now. + +They have good reason to worry about the possibility. The transatlantic market is hugely important on both sides of the pond. Around 31m people flew from Europe to America last year, reckons IATA, an airline industry group. Business travellers, who rely on staying productive while in the air, would have been the most reluctant to fly laptop-free. In any case, executives are often forbidden to put company computers in the hold for fear of theft or loss of sensitive information. Business- and first-class seats account for only 13% of transatlantic passengers but provide half the revenue. Following the ban in the Middle East, Emirates, a Dubai-based carrier, cut flights to America by a fifth (flyers were also put off by a strong dollar and worries about potential immigration difficulties). + +If executives could not work on planes, it might cost the industries they work for around $655m in lost productivity, calculates IATA, based on an assumption that half of business-class passengers will lose five hours’ working time per flight. Research from Oxford Economics, a forecasting outfit, found that in Britain a 1% increase in business travel is associated with a £400m ($518m) boost to trade. John Kelly, America’s homeland-security secretary, had suggestions for business executives and families on how to cope with a laptop ban: read a book or magazine or, heaven forfend, talk to the kids. Such tactics may not now be needed. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722223-restricting-laptops-transatlantic-flights-would-have-badly-damaged-traffic-airlines-have/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +From Broken Hill to break up + +BHP reconsiders its foray into US shale + + +The world’s biggest miner is under pressure to slim down + +May 18th 2017 + + + + + +THE hills from which Broken Hill in New South Wales got their name no longer exist. They have been mined away since, 134 years ago, a sheep herder discovered what would become one of the world’s biggest silver mines. BHP, the world’s largest miner, whose name dates back to when it was called the Broken Hill Proprietary, is also under the pickaxe, wielded by feisty activists. This week its boss, Andrew Mackenzie, conceded that he is reconsidering its foray into American shale oil. Even in business meetings these days, he needs a hard hat. + +On May 16th, shortly before he took to the stage at a prominent mining-industry shindig in Barcelona, Elliott, the activist fund in question, lobbed its second clod in less than two months. In a statement it accused the company of a “do-nothing” response to its previous missive demanding a full-scale overhaul of the group. Mischievously, it played on BHP’s “Think Big” rebranding effort launched a day earlier, challenging management to “Think Big” about its proposal. + + + +Aspects of Elliott’s campaign are, in fact, banal and not worth much thought at all. It wants BHP to increase share buy-backs, which offer no boost to long-term growth prospects. It also cherry-picks time periods to give an exaggerated impression of how badly BHP’s shares have performed compared with its Anglo-Australian counterpart, Rio Tinto. Yet on two points, it has hit home: the company’s disastrous diversification into American shale oil; and its dual listing in London and Sydney. + +On the first point, Mr Mackenzie has given ground. In answer to a question in Barcelona, he said the shale business, which BHP bought for $20bn in 2011, is not one where it intends further expansion. In fact, if there are any potential buyers for its assets, “we would be more than happy to talk turkey with them,” he said. Elliott is urging BHP to launch a review of its entire petroleum business in America, Australia and elsewhere. Eventually it wants them sold or spun off. + +But Elliott has also softened. Partly in response to an angry reaction from the Australian government, it dropped its recommendation that BHP incorporates in London as part of efforts to simplify its dual-listing structure. It would now accept a sole Australian domicile. BHP thinks that is tricky, but analysts reckon it should give the matter more thought. + +Ultimately, BHP’s greatest vulnerability has come from grafting a subpar oil business onto one of the world’s most successful mining firms. It argues that the combination helps smooth out the boom-bust cycle, because oil and metals should behave differently. Evidence from the recent slump suggests they have suffered more or less equally, though. + +Another firm’s experience suggests separation may be better than combination. South32, a firm created from the demerger of some of BHP’s unfashionable mining assets in 2015, has gone from strength to strength. But shrinkage was not what Mr Mackenzie had in mind when launching the “Think Big” ad campaign. Not for nothing has The Australian, a newspaper, referred to the testy stand-off as “the Elliott in the room”. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722198-worlds-biggest-miner-under-pressure-slim-down-bhp-reconsiders-its-foray-us-shale/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +App wars + +Tencent takes on Apple in China + + +WeChat launches “mini-programmes”; Apple bans tipping + +May 18th 2017 | SHANGHAI + + + + + +IN MOST of the world, the success of Apple’s “walled garden” of proprietary software has two elements. First, its attractive services: users tend to be addicted to its iTunes music shop and iBooks store. Second, the complexities involved in switching from an iPhone to another device without losing music files or having to re-download apps. + +Neither factor works as well in China. There, many of Apple’s services have not taken off. The American giant missed the boat on music sales in the country, reckons Matthew Brennan of China Channel, a technology consultancy. Its sales of books are blocked by the government. + + + +In addition, few would disagree that its messaging service is a flop and that Apple Pay, its mobile-payment offering, is irrelevant—its market share on the mainland is only 1%. A “genius” employee at an Apple store in Shanghai admits sheepishly that “iCloud doesn’t work very well in China.” + +And switching is a doddle in China, observes Ben Thompson of Stratechery, an industry newsletter. Nearly everyone uses WeChat, an app made by Tencent, one of China’s three big internet giants, for everything from social media to payments. Through WeChat it is easy to transfer photos, messages, contacts and payments history maintained on that app from one device to another. + +No wonder that Apple’s retention rate among iPhone users, which tops 80% in America and Britain, is only 50% in China. That does not bode well for a key market. Apple’s revenues in greater China have nearly doubled since 2013, to $48.5bn in 2016, thanks in part to its mainland app store. App Annie, a research firm, reckons it is the world’s biggest Apple app store, as measured by revenue. But Apple’s results for the first quarter of the year showed total sales falling by some 14% in greater China compared with a year ago, the fifth consecutive quarter of decline. Canalys, a market-research firm, estimates that shipments of iPhones on the mainland plunged by a quarter in the first quarter. + +Hostilities have now broken out with Tencent. The two had co-existed happily: since richer Chinese prefer iPhones to Android phones, these devices are where WeChat made much of its money. But earlier this year, WeChat launched “mini-programmes,” a form of lightweight app that operates independently of Apple’s app store and robs it of revenues. + +Apple, meanwhile, had disliked but tolerated WeChat’s practice of allowing users to reward generators of content (for example, opinion columns) with small tips. These bypass Apple’s own payments mechanism. On April 19th Apple obliged WeChat to shut down tipping. + +Another front in the fighting is that the American firm’s mainland app store accepts Alipay, a payment service from China’s Alibaba, but not WeChat’s payment offering. Broadly, WeChat is going from being a social-media platform (akin to Facebook and WhatsApp rolled into one) to becoming a mobile-operating system, putting it on a collision course with Apple. “There is a war going on,” says Mr Brennan. + +Who will win such a clash of titans? Rumours are swirling among tech experts about what might happen next. Apple is trying to fortify its position. It is investing heavily in its large network of stores and research labs on the mainland; and it plans to include China in the first wave of countries in which its highly anticipated new iPhone will be launched later this year. But Apple is on the defensive, whereas Tencent is firmly on the attack. + +Mr Brennan speculates that Tencent might even launch a WeChat phone, which would make Tencent’s offering completely independent of the iPhone. Anywhere else in the world, it would be foolish to go up against the Californian giant. In China, though, the native firm may have the advantage. As Connie Chan of Andreessen Horowitz, an investment fund in Silicon Valley, puts it: “Loyalty is much, much stronger to WeChat than to Apple in China.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722212-wechat-launches-mini-programmes-apple-bans-tipping-tencent-takes-apple-china/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The survivor + +Antoine Frérot is overhauling France’s water-and-waste champion + + +Reducing the influence of the state has helped Veolia + +May 18th 2017 | PARIS + + + + + +WALK along Sugar Road in Aubervilliers, north-east of Paris, and it is obvious how a formerly scruffy area is gentrifying. New office blocks, a shopping mall and bistros have appeared in recent years, filling spaces left after wrecking balls flattened warehouses. Along a canal previously used by barges, commuter ferries deliver workers from richer parts of the city. A district long known for slums, cheap housing and support for the Communist Party is becoming a business hub—Chanel, a fashion firm, as well as several film producers and studios, have moved in and big banks are expected next. + +The district’s centrepiece is a U-shaped glass block, the headquarters of Veolia, the world’s largest water-and-waste group. The building opened in January, after the firm moved out of central Paris to save costs and concentrate 2,000 of its 163,000 staff in one spot. Moving to a rehabilitated area carries symbolism for Veolia, which is experiencing its own recovery after years of gloom. + + + +“In the past seven years we have transformed,” says Antoine Frérot, CEO since 2009. Change was sorely needed. Veolia (previously called Vivendi Environnement) had been lumbered with excessive debt under Jean-Marie Messier, a flamboyant former media mogul; its value collapsed after the financial crisis of 2008-09. Mr Frérot has overseen a painful recovery plan based on cutting costs (staff numbers have fallen by half), and slashing dangerously high debt by 50%, to €8bn ($8.9bn). He has also survived two coup attempts—one, in 2012, orchestrated by Henri Proglio, Mr Messier’s successor as CEO, and another, in 2014, by Groupe Dassault, a maker of fighter jets, and then the second-biggest shareholder. + +Mr Frérot has lessened Veolia’s traditional over-reliance on doing business with municipalities, especially in France, and sought out more contracts from industry. Industrial clients, which provided a modest one-fifth of revenues when he took over, will soon be as valuable as the government kind, he says. Much new growth in Europe is likely to come from contracts in handling “difficult” industrial waste, ranging from dismantling retired oil rigs, trains and planes to the storage and processing of asbestos, pharmaceutical by-products or carbon dioxide. Another opportunity lies in contracts to take apart nuclear-power stations, notably in Germany, and eventually in France (where ageing plants are scheduled to begin closing in the 2020s), and to manage spent nuclear waste once the plants have shut. + +Veolia’s changing focus has coincided with a loosening of ties to the French state, which last year cut its holding in the firm almost by half, to 4.6%. The sale stirred no controversy and the country’s new and centrist president, Emmanuel Macron, could next opt for full privatisation. Mr Frérot would prefer to keep some state involvement. He calls it a badge of honour that helps his firm to win contracts abroad. + +Those foreign contracts have helped Veolia most of all. Its results for the first quarter confirmed that the French market is of diminishing importance: the domestic market today accounts for only one-fifth of Veolia’s business, down from two-fifths in 2010. Revenue growth in the rest of Europe was a more buoyant 7%; beyond Europe it reached 12%. + +Distant prospects will continue to entice. Environmental laws in Europe and America are already fairly strict: that limits the room for growth there. But the desire of authorities in emerging markets to take action against pollution has the potential to create new markets. A new law last year in China, for example, restricting release of waste water from factories, should lift demand for Veolia’s services. + +Mr Frérot hopes to stay at Veolia beyond his current term, which ends in 2018. He admits that his firm still faces headwinds, such as the possibility that some European municipalities may return water services to public control. But his reputation as someone who can clear up a corporate mess is well established. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722230-reducing-influence-state-has-helped-veolia-antoine-fr-rot-overhauling-frances/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Doorway to profit + +When bosses visit the White House, their firms make more money + + +White House visitor logs help show that lobbying pays + +May 18th 2017 | NEW YORK + + + + + +DONALD TRUMP will not follow his predecessor’s policy of releasing visitor logs for the White House. A working paper from the National Bureau of Economic Research by Jeffrey Brown and Jiekun Huang, both of the University of Illinois at Urbana-Champaign, shows what a loss that is. + +They study records from Barack Obama’s administration that identify 2,286 meetings between senior executives of firms in the S&P 1500 and White House officials over a seven-year period to December 2015. The most frequent visitors were the heads of Honeywell, a conglomerate (30 trips); General Electric, another conglomerate (22); and Xerox, an office-equipment firm (21). + + + +The study shows that a visit to the White House boosts company performance. The shares of firms whose executives secure such meetings tend to outperform those of industry peers: by 0.33% and 0.78% ten and 60 trading days, respectively, after the meetings. The more senior the host, the more pronounced the ensuing share-price outperformance: meetings with the president yield the biggest “positive abnormal returns”. + +The authors suggest several reasons for this, though they stop short of proving causation. In the very short run, investors cheer news of the meetings, especially those that are widely reported and photographed. Their hopes that good will follow from the meetings are often vindicated. Compared with others in the same industry, firms with political access win more government procurement contracts. This generates on average an extra $34m in profits in the 12 months after an initial meeting. + +They may also benefit from more regulatory relief. The authors point to reporting in the Wall Street Journal from 2015 that Google executives’ frequent visits to the White House under Mr Obama may have factored in a decision by the Federal Trade Commission to drop its antitrust investigation into the internet giant. Whatever the explanation, it pays to spend time at the seat of power. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722217-white-house-visitor-logs-help-show-lobbying-pays-when-bosses-visit-white-house-their/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Vinyl gets its groove back + +Hunger for vinyl means a chronic shortage of pressing machines + + +Only two firms still make the lacquer discs used in mastering + +May 18th 2017 + + + + + +FOR young hipsters and middle-aged sentimentalists alike, the resurgence of vinyl is cause for celebration. Since 2010 sales of vinyl records in America have tripled. Britain’s vinyl industry saw its biggest gains for 25 years in 2016. Big supermarkets are extending the amount of space that they allocate to the discs and even the turntables that twirl them have found a place on Amazon’s best-seller lists. + +Meeting this demand has been tricky. Vinyl accounted for 76% of total album sales in 1973; by 1994 this had dropped to 1.5% as compact discs (CDs) took over. By then the bulk of the world’s vinyl-pressing plants had closed and most of their cumbersome machines had gone to the scrapyard. Only a very few plants that could diversify into new areas of printing and production stayed open. But they did so without any further investment in vinyl, so the few machines that kept on producing often date back to the 1960s. + + + +GZ Media, a Czech firm that is the biggest manufacturer of vinyl (it makes around 60% of all vinyl records), went from churning out over 13m records in 1987 to a low of 200,000 in 1993. Requests for vinyl began flooding in again about a decade ago; it is now working around the clock and will produce 24m vinyl discs in 2017. + +Although vinyl is still only a tiny fraction of the global music market, big orders from record labels have swamped the few pressing plants left and caused delays in production. GZ Media has kept on top of orders by building, from 2014 on, updated versions of its older pressing machines. Others are also ramping up. More than a dozen new pressing plants have cropped up across North America, Europe and beyond in the past couple of years. + +A chronic shortage of machines is the chief headache. Reports of people racing across the world to get their hands on an old machine have become common. That in turn is spurring investment in new options. Nordso Records, based in Copenhagen’s Nordhaven district, which opened its plant last year, opted for a new pressing-machine design from Newbilt, a German startup. Newbilt have sold 25 of their products across Europe for up to €500,000 ($554,000) each, including all parts. They are manual, so an operator needs to oversee each stage of the process; they churn out 400 records a day if operating flat out. + +On a more industrial scale, Viryl Technologies is a Canadian startup that started building new machines in 2015. One eight-hour shift presses 1,200 records. Plants across North America, Europe and Asia have already installed them. + +Startups, which also provide machine servicing, see further room for innovation in the mastering process, or the transferral of the recording to a master disc from which all subsequent copies will be derived. One method involves cutting the grooves onto a lacquer disc, but only two companies in the world manufacture these discs (one of them is run by an old Japanese couple in Tokyo) and they too are in short supply. A second technique uses a copper-plated disc that is easier to come by but is again hampered by the limited number of machines that can cut the disc: of the 25 that still exist, GZ Media owns four. + +Last year, Rebeat Digital, an Austrian company, filed a patent for a “high-definition vinyl” mastering technology. This produces a computer-generated image of the music before blasting it onto a lacquer master disc with a laser (rather than a spinning stylus). They reckon this slashes the time needed to produce the master disc by 60%. But audiophiles are still sceptical about the sound quality of vinyl records produced in this way. + +Even if vinyl’s fashionability fades a bit, servicing the remaining few machines and supplying parts should keep the cash flowing for the startups. And the format is unlikely to disappear entirely, as once seemed possible. Many fans buy the liquorice-black discs from Spotify, a music-streaming service, after it started in 2014 allowing artists to sell merchandise, including vinyl, from their profile pages. Another promising sign that there are more hipsters than ageing purists involved is that about half of all those who buy an album on vinyl have listened to it before, online. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722232-only-two-firms-still-make-lacquer-discs-used-mastering-hunger-vinyl-means-chronic/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +From blue-chip to chip blues + +Embattled Toshiba tries to sell its flash-memory unit + + +Japan’s government wants to fend off Asian potential buyers + +May 18th 2017 + + + + + +ONCE an electronics and nuclear-power empire that was the pride of corporate Japan, Toshiba is threatened with a stockmarket delisting. It missed a deadline to file its annual results, on May 15th, for the third time this year. In earnings estimates (auditors are refusing to sign off on its results), it warned of a loss close to ¥1trn ($9bn) for the financial year that ended in March. That is the steepest loss on record for a Japanese manufacturer. + +To make things worse, Western Digital, an American joint-venture partner in its semiconductor unit, last week took legal action to block Toshiba’s plan to shed their flash-memory business. The case could drag on, but Toshiba needs a sale. That would help cover a write-down of billions of dollars from Westinghouse Electric, its bankrupt American nuclear-power unit. + + + +The group’s chip business accounted for almost one-fifth of revenue in the nine months to December 2016; together, Toshiba and SanDisk, a subsidiary of Western Digital, which jointly operate plants in Japan, come second only to Samsung Electronics of South Korea, the world’s biggest maker of NAND chips (see chart). These chips are used in everything from smartphones and video-game consoles to data centres. The broader business is sizzling: semiconductors are expected to bring in $386bn in worldwide revenue this year, up by 12% from 2016, says Gartner, a market-research firm. Though Toshiba has not said how much of the newly formed spin-off of its memory business it wants to sell, it hopes to gain at least ¥2trn from the sale: a vital injection of cash, since it is blocked from raising money on the stockmarket after a huge accounting bungle in 2015. + +Now it is pushing ahead with a second round of bids (the first ended in March). Its boss said this week that Western Digital’s charge, that Toshiba was violating its agreement, was “groundless”. Ten bidders are said to have entered the fray for the NAND unit, including chipmakers, tech firms and private-equity firms. Foxconn of Taiwan, a smartphone assembler, has reportedly considered offering $27bn. SK Hynix of South Korea and Broadcom of America, both chipmakers, are also in the running. + +The Asian bidders may need to contend with an outbreak of economic nationalism in Tokyo. To lose the NAND technology, invented by Toshiba in the 1980s, would be a blow, and the administration of Shinzo Abe, the prime minister, is reportedly loth to see another corporate jewel handed to an Asian competitor. Last year, the Innovation Network Corporation of Japan (INCJ), a government-backed fund, tried and failed to buy Sharp, an electronics giant: Foxconn bought it instead. + +The INCJ is expected to enter the second round of bids in partnership with KKR, an American private-equity firm. The government has said it will scrutinise offers by foreign firms for reasons of national security. Some reports suggest it has offered to the INCJ a guarantee of up to ¥900bn on the bank loans that it would need. Still, the government would prefer not to use muscle, says Nicholas Benes of the Board Director Training Institute of Japan, since his reform plans involve the country being open to most foreign investors. + +Pressure to strike a deal with Western Digital and make the sale will mount. Investors are worrying about more financial fudges being uncovered at the group, says Daiju Aoki of UBS. The firm has been on the watch list of the Tokyo Stock Exchange for 20 months: that is one step short of a delisting, which will happen automatically if it ends the financial year, in March 2018, still with negative shareholder equity in its accounts. A date to commit to memory. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722233-japans-government-wants-fend-asian-potential-buyers-embattled-toshiba-tries-sell-its/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Routine update + +Shuffle off, Bollywood: it’s time for Tollywood and Kollywood + + +“Baahubali 2: The Conclusion” is putting film-making in southern India on the map + +May 18th 2017 | MUMBAI + + + + + +ALL you need for a movie is a girl, a gun, lots of singing, melodrama and never-ending dance sequences. Or so a big chunk of the Indian audience believes. But Bollywood, the cosmopolitan Hindi-language film hub that is the spiritual home of the song-and-dance routine, has been bested by an upstart rival. “Baahubali 2: The Conclusion”, a fantasy epic shot mainly in two southern Indian languages, has smashed the country’s box-office records. Once in Bollywood’s shadow, the likes of Kollywood and Tollywood are coming into their own. + +India puts out around 1,500-2,000 films a year, according to industry estimates, more than anywhere else in the world. Hindi fare of the sort Bollywood cranks out from Mumbai makes up less than a fifth of that, but accounts for 43% of national box-office takings, which are worth around $2bn. That leaves a long tail of regional films, which must split around $1bn across 1,000-plus releases shot in 20 different languages. With an average take of well below $1m, few emerge from obscurity. + + + +“Baahubali 2” certainly has. A “Lord of the Rings”-style adventure heavy on computer graphics and bulging muscles (the title-character’s name translates as “the one with strong arms”), it is the first Indian film to break through the 10bn rupee ($156m) mark for worldwide box-office takings. That is a respectable performance even by international standards. It is now in its fourth week in the top ten biggest grossers in America. + +Such numbers are not typical of either Kollywood (the Tamil-language industry in Tamil Nadu, which is based in a neighbourhood of Chennai called Kodambakkam) or Tollywood (which makes Telugu films in nearby Telangana), which both claim “Baahubali 2” as their own. Provincial cinema is known for artier fare, where costs are low and returns steady. + +Yet southern India is fertile territory for film-makers. Its 260m inhabitants are richer than the national average, and prefer content in regional languages to Hindi, Bollywood’s lingua franca. Ageing cinemas bulge to breaking-point: audiences turn into cheering spectators and drown out the dialogues. Living superstars have temples named after them; fans bathe huge garlanded cut-outs of actors with milk to pray for their film’s success. Pre-screening rituals include burning camphor inside a sliced pumpkin before smashing it near the big screen to bring good luck. It is unsurprising that five of Tamil Nadu’s eight chief ministers have been film stars or scriptwriters. + +By contrast Bollywood is seen by many as being in a bit of a funk, having recycled the same handful of stars on one too many occasions. The past two years have seen many expensive flops. Because regional cinema has no actors with so much nationwide recognition, scriptwriters work harder to craft compelling stories—the best of which increasingly get remade in Hindi. “The two south Indian film industries will soon overtake Bollywood,” says Shibasish Sarkar of Reliance Entertainment, a big non-Hindi producer. They already have a combined 36% at the box office. “Baahubali 3”, anyone? + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722222-baahubali-2-conclusion-putting-film-making-southern-india-map-shuffle/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Schumpeter + +Dow Chemical shows how American industrials and globalisation mix + + +It has also managed to maintain the share of cash going to labour + +May 20th 2017 + + + + + +WHAT does it take for an American industrial champion to succeed in an age of globalisation and impatient investors? Some observers argue that it has become impossible. The world is just too nasty and unfair, they bleat. Perhaps they should take a look at Dow Chemical, a firm born in Michigan in 1897 that has hustled hard enough to be at the top of its industry 120 years later. + +When Dow completes its planned $130bn merger with DuPont, a longtime rival, probably at the end of this year, it will become the largest chemical company in the world by sales. This new colossus will keep changing—in 2018-19 the plan is for it to split into three specialised firms. “New Dow” will focus on selling chemicals to the automotive, construction and packaging industries. The other two smaller companies will concentrate mainly on the agricultural and electronics industries. + + + +This is a good moment, before the three-way split, to take stock. Being in the chemicals business is like swimming in a vat of sulphuric acid. Of the industry’s 20 largest firms in 1996 only four remain in the ranking today. Some were dissolved, such as ICI, a British company. There has been one spectacular bankruptcy in recent memory, with LyondellBasell defaulting on $24bn of debt in 2009. It is unlikely to be the last. + +The industry is brutal. Its customers have consolidated and boosted their bargaining power in the past 20 years. Consumer-goods and car firms, for example, have completed mergers worth $16trn. The prices of its raw materials, oil and gas, gyrate. It is capital-intensive: a “cracker”, or petrochemical plant, costs $2bn or more and takes years to build. And private firms must compete with state-owned ones from China and the Middle East, which have access to subsidised credit and raw materials. + +That was the landscape when Dow’s boss, Andrew Liveris, took over in 2004. Since then the firm has made big mistakes. After the financial crisis, in 2009, it had to cut its dividend (for the first time in 97 years) after mismanaging its finances. But three initiatives have kept its underlying business competitive. + +First, Dow has ruthlessly shuffled its portfolio, ditching less profitable businesses, including its century-old chlorine operation, and buying specialised ones that have barriers to entry. When it is formed, New Dow will have $50bn of sales, and will have bought and sold businesses with $40bn of sales since 2004. + +Second, Dow has made an effort to think hard about customers as well as chemistry. It reorganised around categories of client, and boosted research and development (R&D) in order to conjure up new ways to help them. For the automotive industry, for example, Dow used to supply rubber and polystyrene. Now it sells carmakers expensive sound-absorbing foam. Each year 5,000 products are launched, double the number of a decade ago. + +The third step was to invest heavily in plant to lower costs. Dow has sunk $8bn into complexes in the Mexican Gulf coast that have access to cheap shale gas. And it has invested about $4bn in a joint venture in Saudi Arabia with Aramco, the state oil firm, that can take advantage of Aramco’s access to low-cost oil. + +Some of Dow’s shareholders have been just as intractable as its industry. In 2014 Third Point, an activist fund, attacked it, calling for it to break itself up. Dow gave it two board seats out of a total of 13. Since then, with Third Point holding a gun to its head, Dow has produced steady earnings and sped up its reinvention. Mr Liveris says he learned to have a “dual horizon”, with one eye on the one-to-two-year perspective of the stockmarket and the other on the longer time periods—a decade or more—that it takes for a cracker or R&D project to wash its face. + +Stay paranoid + +Investors can see the results of Dow’s struggle. Gross margins have risen. Return on capital is low, partly because it overspent on acquisitions. But as the Mexican Gulf and Saudi projects come on stream over the next two years, profits are expected to increase, notes Hassan Ahmed of Alembic Global, a research firm. After the merger with DuPont, Dow’s return should rise above 15%, putting it in the industry’s first quartile. Its shares have kept pace with the S&P 500 index in the past decade and are valued on a higher multiple of free cashflow than Alphabet, Google’s parent. + +Dow also shows that success can be good for employees as well as shareholders. Largely due to the purchase and sale of different businesses, staff turnover has been high: a third joined in the past five years. But the number of employees has risen by over a fifth since 1996, to 56,000, about half of them in America. + +Another measure to look at is the “labour share”, or the proportion of the firm’s gross cashflow that is spent on wages, as opposed to reinvestment or giving shareholders dividends and buy-backs. Across American business the share of cashflow that goes to labour has declined markedly. At Dow it has remained flat, at about 50% since 1996. In absolute terms its salary bill has soared (see chart). + +If there is a grumble about the example that Dow sets, it is that consumers may lose from consolidation. Firms may be able to jack up prices. Still, this risk is biggest in agricultural chemicals, rather than the industrial ones that New Dow will specialise in. Antitrust regulators will probably allow the Dow-DuPont deal. + +Chemical firms can never rest easy. Car sales are flagging in America, which could hurt demand. China’s two giants, ChemChina and Sinochem, may soon merge and could eventually threaten their more sophisticated Western rivals. The cycle is not dead: a spike in gas prices, relative to oil prices, could hurt Dow’s margins. But the chemical industry’s capital base has grown by only 1% a year for the past half-decade: firms are being disciplined about adding new capacity. And Western ones have learned to keep adapting. The lesson from Dow is that American industrial companies can prosper in a system of open borders and capital flows. It isn’t easy but it is possible. Mr Liveris leads President Trump’s advisory council on manufacturing. He should pass on the message. + + + +Clarification (May 18th 2017). This article has been changed to make clear that the high turnover in staff at Dow Chemical in the last five years was largely the result of the company buying and selling businesses, not staff resigning. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722211-it-has-also-managed-maintain-share-cash-going-labour-dow-chemical-shows-how/print + + + +上一项 文章 章节 下一项 + + + + + +Business 章节 Science and ... + + + + + +Finance and economics + + +OPEC policy: Know thy enemy + +Buttonwood: All quiet on the risky front + +Lloyds Banking Group: Horse sense + +Crowd-funding startups: Placing trades + +Investing in coins: Old money + +Crypto-currencies: New money + +America’s new trade representative: The negotiator + +Accounting rules for insurers: Comparing like with like + +Free exchange: A political economy + +Business 章节 Science and ... + + + + + +文章 章节 下一项 + + + + + +Know thy enemy + +The markets frustrate OPEC’s efforts to push up oil prices + + +The cartel is fighting not just shale producers but the futures market + +May 18th 2017 + + + + + +BORROWING three words from Mario Draghi, the central banker who helped save the euro zone, Khalid al-Falih, Saudi Arabia’s energy minister, and his Russian counterpart, Alexander Novak, on May 15th promised to do “whatever it takes” to curb the glut in the global oil markets. Ahead of a May 25th meeting of OPEC, the oil producers’ cartel, they promised to extend cuts agreed last year by nine months, to March 2018, pushing oil prices up sharply, to around $50 a barrel. But to make the rally last, a more apt three-word phrase might be: “know thy enemy”. + +In two and a half years of flip-flopping over how to deal with tumbling oil prices, OPEC has been consistent in one respect. It has underestimated the ability of shale-oil producers in America—its nemesis in the sheikhs-versus-shale battle—to use more efficient financial techniques to weather the storm of lower prices. A lifeline for American producers has been their ability to use capital markets to raise money, and to use futures and options markets to hedge against perilously low prices by selling future production at prices set by these markets. Only recently has the cartel woken up to the effectiveness of this strategy. It is not clear that it has found the solution. + + + +The most obvious challenge shale producers have posed to OPEC this decade is the use of hydraulic fracturing, or fracking, to drill oil quickly and cheaply in places previously thought uneconomic. Once OPEC woke up to this in 2014, it started to flood the world with oil to drive high-cost competitors out of business (damaging its members’ own fortunes to boot). + +But it overlooked a more subtle change. Fracking is a more predictable business than the old wildcatter model of pouring money into holes in the ground, hoping a gusher will generate a huge pay-off. As John Saucer of Mobius Risk Group, an advisory firm, says, shale has made oil production more like a manufacturing business than a high-rolling commodity one. + +That has made it easier to secure financing to raise production, enabling producers to spend well in excess of their cashflows. Mr Saucer says the backers of the most efficient shale firms include private-equity and pension-fund investors who demand juicy but reliable returns. They are more likely to hedge production to protect those returns than to gamble on the “home run” of the oil price doubling to $100 a barrel. “Their hedging is very systematic and transparent,” he says. “They don’t mess around with commodity speculation.” + +Data from America’s Commodity Futures Trading Commission, a regulatory body, bear out the shift. They show that energy and other non-financial firms trade the equivalent of more than 1bn barrels-worth of futures contracts in West Texas Intermediate (WTI), more than double the level of five years ago and representing almost a quarter of the market compared with 16% in 2012. Many of these are hedges, though Mr Saucer says the data only reflect part of the total, excluding bilateral deals with big banks and energy merchants. + +OPEC and non-OPEC producers unwittingly exacerbated the hedging activity by inflating output late last year even as they decided to cut production from January 1st. The conflicting policies helped depress the spot price relative to the price of WTI futures, preserving an upwardly sloping futures curve known as “contango”. This made it more attractive for shale producers to sell forward their future production, enabling them to raise output. + +That higher shale output will persist is borne out by a surge in the number of drilling rigs, which shows no signs of ebbing. The Energy Information Administration, an American government agency, reckons that by next year the United States will be producing 10m barrels of oil a day, above its recent high in April 2015. That would put it on a par with Russia and Saudi Arabia. Shale producers will have gained market share at their expense. + +In response, the frustrated interventionists appear now to have set out to put the futures curve into “backwardation”, in which short-term prices are higher than long-term ones. The aim is to discourage the stockpiling of crude, as well as the habit of hedging. But success is not guaranteed. + +The International Energy Agency, a forecasting body, said this week that, even if the OPEC/non-OPEC cuts are formally extended on May 25th, more work would need to be done in the second half of this year to cut inventories of crude to their five-year average, which is the stated goal of Messrs al-Falih and Novak. It also noted that Libya and Nigeria, two OPEC members not subject to the cuts because of difficult domestic circumstances, have sharply raised production recently, perhaps undercutting the efforts of their peers. + + + +Moreover, global demand this year has been weaker than expected. In a report this week, Roland Berger, a consultancy, argued that rich-country oil demand has peaked, and that, as developing countries such as China and India industrialise, they will use oil more efficiently than did their developed-world counterparts (see chart). All this raises doubts about how far the oil price can climb. + +Eventually, shale producers will have their comeuppance. Labour and equipment shortages will push up drilling costs. Higher interest rates will dampen investor enthusiasm. “Irrational exuberance” may lead them to produce so much that prices collapse. But for now, Saudi Arabia seems to be leading OPEC into a war it cannot win. As Pierre Lacaze, of LCMCommodities, a research firm, memorably puts it, it has taken “a knife to a gunfight”. Worse, it has wounded mostly itself. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722182-cartel-fighting-not-just-shale-producers-futures-market-markets/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Buttonwood + +The markets are quiet. Too quiet? + + +The low level of a popular measure of volatility causes alarm + +May 20th 2017 + + + + + +HAN SOLO, a hero from the Star Wars movies, has a habit of saying, at tense moments, “I have a bad feeling about this.” Many commentators are echoing this sentiment after a recent fall in the Volatility Index, or Vix, below ten. Their fears deepened on May 17th, when the Vix lurched above 15 and American stockmarkets had their worst day in eight months. Incessant turmoil in the White House at last seemed to take its toll. + +A low Vix reading is usually seen as a sign of investor complacency. The previous two occasions on which the index fell below ten were in 1993 and early 2007 (see chart). One preceded the bond market sell-off of 1994 and the other occurred just before the first stages of the credit crisis. + + + +The value of the Vix relates to the cost of insuring against asset-price movements via the options market. An option gives the purchaser the right, but not the obligation, to buy (a call) or sell (a put) an asset at a given price before a given date. In return, like anyone buying insurance, the purchaser pays a premium. + +The price of this premium is set by supply and demand, reflecting the views of the purchaser and the person who sells, or writes, the option. A number of factors determines its size. One is the relationship between the market price and the exercise price; if the market price is $10, then the right to buy the asset at $5 must cost at least $5. Another is the length of the options contract; the longer the time period, the greater the chance that prices will move enough to make the option worth exercising and the higher the premium. + +Volatility is also very important. If an asset is doubling and halving in price every other day, an option is much more likely to be exercised than if its price barely moves from one trading session to the next. No one knows what future volatility will be. But if investors are keen to insure against rapid market movements, then premiums will rise. This “implied volatility” is the number captured by the Vix. + +As Eric Lonergan of M&G, a fund-management group, points out, the biggest influence on implied volatility tends to be how markets have behaved in the recent past (“realised” volatility). If the markets have been very quiet, then investors will not be willing to pay to insure against market movements, and implied volatility will be low. And markets have been very subdued of late. In early May the S&P 500 moved less than 0.2% in ten out of 11 trading days, the least volatile period since 1927. + +Some see volatility as an asset class to be traded in its own right. You can buy or sell the Vix in the futures market or via an exchange-traded fund, or through a “variance swap” with a bank, in which one counterparty gets paid realised and the other implied volatility. There are also a couple of quirks that traders try to exploit. The first is that more people want to protect themselves against a big crash than against a small dip in prices. So the implied volatility of extreme options (covering, say, a 10% price fall) tends to be a lot higher than that of ones nearer the market price. Andrew Sheets of Morgan Stanley calls this a “risk premium” payable to option sellers who take the other side of the crash risk. + +Another quirk is that the implied volatility tends to be higher than the realised volatility. So selling options tends to be profitable a lot of the time; you are selling fire insurance for $10 a year when claims are only $8. This sounds too good to be true and there is, of course, a catch. As the chart shows, volatility can suddenly spike; when it does, people exercise their options, leaving those who wrote them exposed to a big loss. + +Has such a spike started? The temptation is to buy lots of options while the price is low. But this can be a frustrating strategy. Mr Sheets says that, when volatility was at such subdued levels in the past, it remained low for a further two or three months. Option buyers can lose a lot of money waiting for prices to rise. + +Many are surprised that the stockmarket has been so quiet, given the tightening of monetary policy by the Federal Reserve, and the many political worries. Sushil Wadhwani, a fund manager, thinks that many investors were bearish before Donald Trump’s election in November and were caught out by the sudden rally in equities; they are reluctant to be wrong-footed again. They may also hope that, if the market wobbles, the Fed will help by not pushing up interest rates further. + +Investors may also think that political worries come and go but the global economy and corporate profits are rebounding. If things do go wrong, and volatility continues to spike, somebody will be left with the bill. Unlike Mr Solo, traders cannot all escape in the Millennium Falcon. + +Economist.com/blogs/buttonwood + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722181-low-level-popular-measure-volatility-causes-alarm-markets-are/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Horse sense + +The British government sells its last shares in Lloyds bank + + +But it still owns 71.3% of RBS, the other big bank rescued in 2008 + +May 20th 2017 + + + + + +IN OCTOBER 2008, amid post-Lehman pandemonium, Britain’s Treasury said it would pump £37bn (then $64.4bn) into three big banks: £20bn into the stricken Royal Bank of Scotland (RBS); the rest into Lloyds TSB and HBOS, a sickly rival that ministers had cajoled Lloyds into buying. After rights issues in 2009, in all the state paid £20.3bn for 43.4% of the merged Lloyds Banking Group. On May 17th Lloyds said the last state shares had been sold. + +The government has recouped £21.2bn, including £400m-plus in dividends, since it started to unload its stake in 2013. The return may sound slim, but had big lenders imploded the costs of the financial crisis would surely have been far greater even than they were. (Not surprisingly, anyone holding Lloyds TSB or HBOS shares since before the crisis has made a heavy loss.) + + + +The group is Britain’s biggest retail bank. Its brands—Lloyds Bank, with its “black horse” logo, Halifax and Bank of Scotland—boast around one-fifth of both retail deposits and mortgages. Its share of small-business loans, where RBS leads the field, has climbed from 13% in 2010 to 19% last year. Under António Horta Osório, its chief executive since 2011, it has become slimmer and fitter. Some £200bn of bad loans, chiefly inherited from HBOS, have been run off. Wholesale funding, which in 2010 amounted to £298bn, 30% of liabilities, has been cut by nearly two-thirds. + +Mr Horta Osório quit most foreign ventures—today 97% of Lloyds’ business is in Britain—and others including St James’s Place, a wealth manager. The European Union forced the sale of TSB, a brand acquired in the 1990s, as a condition of approving its state aid. It is not retreating everywhere: it expects the purchase of the British business of MBNA, a credit-card firm, from Bank of America to boost its share of that market from 15% to 26%. + +To screw down costs Mr Horta Osório also stripped out three layers of management and placed budgets for travel, advertising and so forth under group-wide rather than divisional control. Like other banks, Lloyds is also closing branches. The workforce, 98,000-strong in 2011, will be down to around 70,000 this year (8,000 of the leavers went to TSB). Mortgage approvals and account opening have been made slicker. At 47.1%, the bank’s cost-income ratio is well below the European average. + +The stain of past sin has not yet been washed away: Lloyds has set aside £17.4bn, more than any other British bank, to compensate customers for mis-selling payment-protection insurance (PPI) with loans. Separately, in February six people, including a manager at an HBOS branch in Reading, in southern England, were jailed for a £245m fraud, predating the takeover, that ruined several small businesses. Lloyds has provided £100m for compensation and commissioned external reviews of how much it should pay, and how the mess was handled. + +These costs will fade: Lloyds hopes to make no more PPI provisions and regulators have set a deadline for complaints of August 2019. But they have weighed on earnings. Lloyds returned 8.8% on tangible equity in the first quarter. Stripped of provisions for bad behaviour and restructuring, the figure was a sparkling 15.1%. + +Analysts like what they see. The bet on Britain has worked so far. Interest margins in the first quarter were wider than expected. Lloyds’ ratio of equity to risk-weighted assets, a key gauge of resilience, is a robust 14.3%, although the MBNA deal will dent this a little. If Lloyds meets its earnings targets and other plans, estimates Jason Napier of UBS, a bank, its dividend yield could be a healthy 8.2% this year. + +Compare Lloyds with the other, bigger, bank rescued that tempestuous autumn. All told the state injected £45bn into RBS. After nine years of losses it still owns 71.3%, with scant prospect of getting its money back. Despite recent improvement—notably, a profit in the first quarter—RBS still has many woes. It faces fines in America for mis-selling mortgage-backed securities before the crisis. It is yet to meet its state-aid obligations, for which the EU is considering a new plan. And it is being sued by shareholders claiming to have been misled before a rights issue in 2008: next month Fred Goodwin, the boss who led RBS to disaster, is due to appear in court. Lloyds, alas, is less than half the story. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722173-it-still-owns-713-rbs-other-big-bank-rescued-2008-british/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Placing trades + +A British firm plans a secondary market for crowd-funded shares + + +An obstacle to crowd-funding is that investors have to wait so long to sell their shares + +May 20th 2017 + + + + + +EVERYONE would like a piece of the next Google or Facebook. But the big venture-capital (VC) firms do not usually raise money from small investors. And some entrepreneurs complain that it is hard to get noticed by the hotshots in the VC industry. Hence the enthusiasm for crowd-funding, where small investors can buy a stake in startup companies. + +Seedrs, a British crowd-funding firm, was set up in 2012, and has backed 500 firms so far, raising a total of £210m ($271m) from more than 200,000 users. But there are two big problems with crowd-funding. First, it is risky: most startups fail. Second, investments tend to be illiquid—shareholders have to wait for a takeover or a stockmarket flotation to recoup their investment. + + + +Seedrs is trying to solve the illiquidity problem by setting up a secondary market, where buyers and sellers can exchange shares. The new market will start operating this summer, and will allow trading for a week every month, starting on the first Tuesday. The price at which investors can deal will be set by Seedrs itself, based on a valuation mechanism in line with industry guidelines. But there are some restrictions: only current investors in a firm will be allowed to buy shares. And, to the extent that investors make a profit on a sale, Seedrs takes a 7.5% cut of the gains. + +Crowd-funding might be even more attractive if investors could at a click assemble a diversified portfolio of small stakes in 20-30 companies rather than just one—just as those who put money into peer-to-peer lending can spread their risk across a range of borrowers. The next challenge will be to build on early efforts to offer the same to investors in shares: ie, mutual funds for crowd-funded startups. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business-and-finance/21722133-obstacle-crowd-funding-investors-have-wait-so-long-sell-their/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Old money + +Numismatics—acquiring old coins—outperforms other investments + + +A once shady market aspires to respectability + +May 18th 2017 | NEW YORK + + + + + +BEHIND the heavily fortified door of Stack’s Bowers, a gallery of rare coins in New York, smiling salesmen show off their precious wares neatly displayed in pristine glass cabinets. To the untutored eye, it looks like pocket change. Numismatists, who study the history and art of old money, see well-preserved coins as aesthetic masterpieces worth many times their face value. At an auction organised by Stack’s Bowers on March 31st, an American cent from 1793 (pictured) sold for $940,000, becoming the costliest penny ever. + +An index of tangible alternative asset classes compiled by Knight Frank, a consultancy, shows that returns on rare coins over ten years to the end of 2016 were 195%, easily beating art (139%), stamps (133%), furniture (-31%) and the S&P 500 index (58%). Coins are more portable than paintings or furniture, and boast a higher value-to-volume ratio. Stamps may be lighter, but, come doomsday, cannot be melted down. + + + +The rare-coin market, however, has long had a reputational problem. What distinguishes a highly valuable coin—lustre, sharpness of detail, toning and friction-wear—is imperceptible to the untrained eye. So shady coin-dealers for decades successfully duped investors into paying top dollar for non-premium or even counterfeit coins. + +The market’s wild-west days ended in 1986 when the first independent coin certifier, the Professional Coin Grading Service (PCGS), based in California, established itself as an authority on authenticity and quality. Grading each coin on a one to 70 scale, PCGS gave the market transparency, boosting investor confidence and sales volumes. Today, global sales of rare coins are estimated at $5bn-8bn a year, with 85% of the market in America. So important has third-party grading become that almost all rare coins sold at auction these days have been graded and sealed in stickered plastic by either PCGS or its main rival, Numismatic Guaranty Corporation (NGC), which is based in Florida. + +Some blame the grading system itself for the eye-watering returns. Investors cling to the assigned grade: even a one-point boost can double or even triple a coin’s retail price. An 1884 silver dollar from the San Francisco mint, for instance, sells for $19,500 at the 62 grade but surges to $65,000 at 63. + +The grading process is subjective: the evaluation criteria include “eye appeal”. Scott Travers, a coin dealer in New York, says investors sometimes resubmit the same coin ten or 20 times to the same company in hope of an upgrade. All this led to a steady “grade inflation”, that has been cheered along by investors. But in the long term, a sustained rise by simple fiat in the number of high-grade coins will surely depress prices. Already, a new type of “grader of graders” has emerged, hoping to instil some discipline by rating the consistency of the two primary graders. Next: graders of graders of graders? + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722234-once-shady-market-aspires-respectability-numismaticsacquiring-old/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +New kids on the blockchain + +A surge in the value of crypto-currencies provokes alarm + + +Bitcoin is far from the only game in town + +May 18th 2017 + + + + + +IT IS hard to predict when bubbles will pop, in particular when they are nested within each other. It helps to keep this image in mind when considering one of the biggest surges in asset values of recent years: the market value of all the world’s crypto-currencies has trebled since the beginning of the year, and is now worth more than $60bn (see chart). + +Bitcoin is the best known of these currencies, especially after hackers this month instructed victims to pay ransoms in the anonymous digital cash in order to get their computer files decrypted. Not that many bitcoins exist: there are about 16.3m of them, with only 1,800 new ones minted every day. But growing demand has pushed bitcoin’s price to a record recent high of about $1,830, up from $450 a year ago. + + + +Problems abide. Earlier this year some of the biggest exchanges, such as Bitfinex, experienced problems with their correspondent banks and were unable to pay out real-world currencies to account-holders. To get their money out, they had to buy bitcoin and exchange them elsewhere. Yet the market is becoming more mature: institutional investors, from family offices to hedge funds, have become more comfortable with crypto-currencies, says Mike Komaransky of Cumberland Mining, which arranges over-the-counter trades. Other factors driving demand include fluctuations of China’s yuan, the French elections and, in a small way, the ransomware attack (when The Economist went to press, only about $80,000 had been sent to the bitcoin accounts held by the hackers). + +Counter-intuitively, bitcoin’s biggest weakness—the system’s limited capacity—has also increased demand for crypto-currencies. Its developers have argued for years about how to expand the system, which can only handle seven transactions per second, compared with thousands on conventional payment services. Even before worries surfaced that the currency could split in two over the disagreement, bitcoin holders started to diversify into some of the many other crypto-currencies, or “alt.coins”, to emerge in recent years. CoinMarketCap, a website, lists more than 800, from ArcticCoin, an obscure Russian currency, to ZCoin, which boasts added privacy. The latest beneficiary is Ripple, which saw its market value explode from $2bn early this month to over $13bn. Ethereum, which issues “ether”, has jumped from $700m in January to $8.6bn. + +Ethereum’s surge in turn helped inflate another bubble. Feeling richer, holders of ether started investing in what have come to be called initial coin offerings. Startups sell “tokens”, sub-currencies of sorts, which exist on top of Ethereum. A total of 38 such ICOs have already been launched this year, raising more than $150m, according to Smith+Crown, a research firm. This has lured even more money into crypto-currencies. Some of the gains have found their way back into bitcoin and alt.coins. Trading between crypto-currencies has grown tenfold to $2bn on average a day, says Erik Voorhees, the founder of ShapeShift, a crypto-to-crypto exchange. + +The question is not if but when the market will turn. Even crypto-aficionados may run for the exits should bitcoin bifurcate or if one of the ICOs, which are completely unregulated, goes badly wrong—if issuers, for example, abscond with the money. Prices will also suffer should regulators start clamping down on such offerings. + +On the other hand, although it is now easy to buy crypto-currencies for real cash, selling big amounts can be hard—as the woes of Bitfinex and others show. This makes sudden outflows unlikely. And the price surges have shown how the crypto-currency system is no longer just about bitcoin. Although it is still the biggest kid on the blockchain and functions, in effect, as a crypto-reserve currency, it now makes up under half the combined market capitalisation of all crypto-currencies. Come a crash, they may not all fall. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722235-bitcoin-far-only-game-town-surge-value-crypto-currencies/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The negotiator + +America’s trade policy has a new face, Robert Lighthizer + + +The new US Trade representative plays by his own rules + +May 18th 2017 + + + + + +AS IS well known, Donald Trump wants the press to focus not on what he calls “fake” news about himself, but on his administration’s achievements. On May 12th he helpfully tweeted an example: “China just agreed that the US will be allowed to sell beef, and other major products, into China once again. This is REAL news!” + +His first trade deal was real, if short of the “Herculean accomplishment” touted by his commerce secretary, Wilbur Ross. It promised American credit-rating agencies, payment companies and beef exporters new access to the Chinese market, and set a deadline for progress, of July 16th. + + + +Parts of the deal lack detail, so it may yet disappoint. China has been offering since 2006 to open its market to American beef, but with hefty restrictions. The World Trade Organisation (WTO) had already ruled that China’s restrictions on foreign payment-card companies broke its rules. And the Chinese incumbent is so entrenched that American cards may still struggle to compete. + +Maybe Mr Trump picked the wrong “real” news. More important for his trade agenda was the Senate’s confirmation on May 11th of Robert Lighthizer as the new United States Trade Representative (USTR). He will matter much more for economic relations with China than a hasty mini-deal. And now that he is in place, renegotiation of the North American Free-Trade Agreement (NAFTA) can begin. + +Even those who disagree with Mr Lighthizer admit that he is clever and charming. He has experience of bilateral trade negotiations from his time as Ronald Reagan’s deputy USTR. And, unusually within this administration, he knows how to work with other departments and Congress. “Everybody in the Washington trade bar wanted him confirmed because they wanted competence,” says Alan Wolff, of the National Foreign Trade Council, a business lobby. + +For those alarmed by Mr Trump’s protectionist bent, Mr Lighthizer’s competence is scant comfort. His is the forensic version of Mr Trump’s economic nationalism, which sees China as a mercantilist military threat, enabled by America’s free-trade policies. His deep knowledge of the WTO, which codifies America’s trade relationship with China, means he knows the organisation’s weaknesses. He can see, for example, that it is poorly equipped to deal with China’s state-infused economy, which breeds industrial overcapacity. + +Mr Lighthizer combines an encyclopedic knowledge of global trade rules with a willingness to flout them if they do not serve America’s interests. In 2010 he wrote that “an unthinking, simplistic and slavish dedication to the mantra of ‘WTO-consistency’…makes very little sense.” + +At least he seems more interested in bending the existing rules to suit America than in blowing the whole system up. His success will depend on how others respond. He may need to reassure the many in the WTO suspicious of him, remembering for example a speech he gave in 2001, in which, admitting he had no evidence, he suggested that jurors on WTO panels might be “crooked”. But like his boss, Mr Lighthizer may be less interested in mending fences than in building walls. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722227-new-us-trade-representative-plays-his-own-rules-americas-trade-policy-has/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Comparing like with like + +Insurers get a new global accounting regime + + +The rules will change how profits are reported, giving investors greater transparency + +May 18th 2017 + + + + + +LISTED firms in over 120 countries, including all large economies bar America, issue financial statements according to international financial reporting standards (IFRS) set by the International Accounting Standards Board (IASB). One industry, however, has been in practice free to keep using divergent national standards: insurance. That, too, is about to change. IFRS 17, issued on May 18th and coming into force in 2021, is the first standard for insurers to require consistent accounting across all countries using IASB rules (ie, again excluding America). + +It has a wide gulf to bridge. In one example, looking at identical financial results reported under two countries’ standards, revenue differed by a quarter and net income by nearly two-fifths. Some places, such as the EU, require insurers to use updated discount rates to value future cashflows. Others, including America and many parts of Asia, allow the use of historical discount rates and assumptions valid at the time the policy was issued (perhaps decades ago for some policies, such as life insurance). + + + +The new standard imposes a consistent, global approach using current discount rates. Insurance companies will be comparable across countries; and multinational insurers will be forced to consolidate balance-sheets using the same approach throughout. The standard also requires profits to be smoothed out over time rather than accounted for at once, and clearly distinguishes between underwriting profits and investment returns. Optimists hope that, since investors will be better able to assess insurers, the new rules might lower their cost of capital. + +But implementation is daunting. Several large insurers reckon that the costs will run into the hundreds of millions of dollars. Tom Stoddard of Aviva, a British insurer, is sceptical that any windfall for his firm or its shareholders will be as big as advertised. He fears the costs may well outweigh the benefits. + +Francesco Nagari of Deloitte, an accounting firm, points out that most iterations of IFRS for other industries have involved gradual reform, whereas IFRS 17 attempts an ambitious one-time “jump” on a scale not seen before. The change is certainly expected to be enormous. And who knows what surprises might lurk on insurers’ revised balance-sheets? + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722236-rules-will-change-how-profits-are-reported-giving-investors-greater/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Free exchange + +A new anthology of essays reconsiders Thomas Piketty’s “Capital” + + +The book explores arguments left undeveloped in Mr Piketty’s masterwork + +May 18th 2017 + + + + + +“A MODERN Marx” was how The Economist described Thomas Piketty three years ago, when he was well on his way to selling more than 2m copies of “Capital in the Twenty-First Century”. It was meant as a compliment, mostly: as advice to take the analysis seriously, yet to treat the policy recommendations with caution. The book’s striking warning, of the creeping dominance of the very wealthy, looks as relevant as ever: as Donald Trump’s heirs mind his business empire, he works to repeal inheritance tax. But “Capital” changed the agenda of academic economics far less than it seemed it might. A new volume of essays reflecting on Mr Piketty’s book, published this month, prods economists to do better. It is not clear they can. + +“After Piketty: The Agenda for Economics and Inequality”, edited by Heather Boushey, Bradford DeLong and Marshall Steinbaum, is a book by economists, for economists. In that it resembles “Capital” itself. Before he was an unlikely cultural icon, Mr Piketty was a respected empirical economist. He was best known as one of a group of scholars, among them Emmanuel Saez and Anthony Atkinson, who used tax data to track long-run inequality. In “Capital” these data became the basis for an ambitious theory of capitalism. Mr Piketty argued that wealth naturally accumulates and concentrates, so that familial riches are ever more critical to determining an individual’s success or failure in life. The extravagant inequality of the Gilded Age could return if no preventive action is taken. + + + +Mr Piketty chose to compress his sweeping narrative into a compact economic model backed up by a few simple equations. The mathematical expression at the heart of his book is little more complicated than an emoji: r > g. It says that the rate of return on capital, r, has historically been greater than g, the growth rate of the economy. Why does this matter? It means, first, that the ratio of an economy’s wealth to its output tends to rise, which increases the relative economic power of wealth in society. Second, because the distribution of wealth is usually less equal than the distribution of income, faster growth in wealth than in GDP means a steady increase in inequality. Third, it implies that income from capital will grow as a share of income (and income from labour will fall). So being born rich (or marrying well) becomes a surer route to success than working hard or starting a firm. It is a recipe for social stagnation, and perhaps crisis. + +Yet, despite its 700-odd pages, “Capital” gave important details short shrift. “After Piketty” takes these lacunae in turn, pointing out, essay by essay, how Mr Piketty might have devoted more space to the role of human capital and technological change, the structure of the firm and the rise in outsourcing, sexual inequality, geography and so on. Gareth Jones, for example, argues that in “Capital” geographical divisions are treated as “container[s] for data”—that is, the areas within which various statistical agencies do their work—rather than as arenas with changeable boundaries within which the rough-and-tumble tussle between labour and capital plays out. + +Most economists have focused on Mr Piketty’s model. They question the parameters needed to make it behave as Mr Piketty reckoned it would. “After Piketty” includes an example of the genre, by Devesh Raval. As wealth accumulates, economists reckon the return on capital should fall; society has less use for the hundredth factory or server than the first. As it does, capitalists will seek new, profitable ways to deploy their wealth: by investing in machines that can replace labour, for instance. If firms are relatively good at using their growing piles of capital to replace labour—if, in the language of economics, the elasticity of substitution of capital for labour is greater than one—then wealth can pile up, as Mr Piketty suggests. If, instead, the return falls a lot as markets struggle to put capital into action, then r will decline towards g, and the ratio of wealth to GDP will eventually stabilise. Mr Raval echoes many other economists in pointing out that most estimates of the elasticity of substitution find it to be less than one. + +In economics, this passes for a damning critique. Yet the argument treats the elasticity of substitution as a meaningful parameter in a well-behaved economy. It may not be. In the most incisive essay in “After Piketty”, Suresh Naidu describes a “domesticated Piketty” who communicates in the language of economics and whose argument hinges on things like the elasticity of substitution. Yet in “Capital” there is also a “wild Piketty” who pays attention to social norms, political institutions and the exercise of raw power. He suggests that r > g is not a theory to be disproved but a historical fact to be explained. And he suggests that the wealthy use their influence to shape laws and society in order to guarantee themselves a better return on their wealth. + +Do they? The record of the past 40 years is suggestive. Top tax rates have fallen, financial regulation has weakened (at least before the crisis of 2007-08) and companies have found it easier to reduce their obligations to workers. Economists often praise such moves as enhancing efficiency. Yet, somewhat awkwardly, this history is also consistent with a story in which the wealthy seek to protect their returns at the expense of labour. A focus on efficiency is unobjectionable in a world in which political and institutional stability can be taken for granted, much less so in a world in which it cannot. + +What is to be done? + +Politics is “everywhere and nowhere” in Mr Piketty’s book, as Elisabeth Jacobs notes in her essay. What “After Piketty” reveals is the message lurking within all the undeveloped arguments in “Capital” about politics and ideology. It is that economists set themselves too easy, too useless a task if they can describe how capitalism works only when politics is unchanging. + +Visit our Free exchange economics blog + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722166-book-explores-arguments-left-undeveloped-mr-pikettys-masterwork-new/print + + + +上一项 文章 章节 下一项 + + + + + +Finance and ... 章节 Books and arts + + + + + +Science and technology + + +Cyber-crime: Electronic bandits + +Cyber-security: The exploits of bug hunters + +Solar power: Does light equal enlightenment? + +Clean water: Parsing gas + +The value of old egg collections: Evolutionary warblings + +Finance and ... 章节 Books and arts + + + + + +文章 章节 下一项 + + + + + +Cyber-crime + +WannaCry should make people treat cyber-crime seriously + + +It has been neglected for too long + +May 20th 2017 + + + + + +IN 1933 Britain’s parliament was considering the Banditry bill—the government’s response to a crime wave. The problem was that criminals were using a newfangled invention, the motor car, to carry out robberies faster than the police could respond. The bill’s proposed answer to these “smash-and-grab” raids was to create new powers to search cars and to construct road blocks. + +In the end, the Banditry bill was not enacted. Its powers were too controversial. But the problem did not go away; what the bill proposed was eventually permitted, and now seems normal. Since then, the technology of theft has not stood still. Indeed, just as in the 1930s, it remains one step ahead of the authorities. + + + +On May 12th, for instance, security companies noticed that a piece of malicious software known as WannaCry was spreading across the internet, first in Britain and Spain, and then around the world. It would reach 230,000 computers in 48 hours, an unprecedented scale of infection according to Europol, Europe’s international police agency. WannaCry rendered useless some of the computers that help run Britain’s National Health Service (NHS), causing ambulances to be diverted and shutting down non-emergency services. It also nabbed machines at Telefónica, Spain’s biggest telecommunications company; at Hainan, a Chinese airline; and even in Russia’s interior ministry. + +Malicious software (“malware”, for short) is designed to infect and damage computers. Sometimes, especially if the creators are youngsters flexing their programming muscles, it is written for the sheer hell of it. Sometimes, it is the work of governments, designed to harm the interests of rivals or enemies. Usually, though, it is written for profit. This seems to have been the case for WannaCry, the modus operandi of which is to encrypt a victim’s files and demand payment to reverse that encryption—a common technique, known as ransomware. What makes the WannaCry attack special is its scale and the high-profile nature of its victims. That public profile has led to the asking of questions similar to those which resulted in the Banditry bill. + +Bugging out + +WannaCry is a combination of two kinds of malware. One, known as a worm, is designed to spread from computer to computer. The other, delivered by the worm, is the encrypting ransomware itself. It is this combination that has made WannaCry so threatening. Ransomware is usually delivered one user at a time, via spoof e-mails which tempt the recipient to click on a link or attachment that then downloads and activates the software. In this case, a single click was able to infect an entire network. + +The outbreak was terminated not by official action but by vigilantism. The malware had its head lopped off by a security consultant who goes by the pseudonym “MalwareTech”—for not everyone in the complex ecosystem of computer hacking is a bad guy. MalwareTech discovered that every time a copy of WannaCry runs, it pings out onto the internet a request for a response from a non-existent web address. This behaviour is intended to check that the copy in question is truly out in the wild, and is not being examined in a “sandbox”, a closed piece of software in which security researchers can dissect digital bugs to learn their secrets. + +Sandboxes simulate access to the entire internet, to persuade the malware under examination to run at full capacity and reveal its secrets. That means responding to all pings in the way a real responder would. So, if a ping returns from the non-existent address, the program can deduce it is in a sandbox, shut itself down, and thus retain its secrets. MalwareTech worked out the web address in question, registered and activated it, and thus convinced every copy of WannaCry that it was in a sandbox and so should shut up shop. + +All credit, then, to MalwareTech. But the simplicity of stifling WannaCry suggests the whole thing was a bit of a botched job—as does the apparent business model of its creators. Professional ransomware operations come with fully operational call centres in which real people answer calls from distressed owners of infected machines in order to walk them through the process of getting their files back (and paying the ransom, of course). + +WannaCry has none of these. It simply asked for payment, into a particular account, of a sum in bitcoin, an electronic currency. Moreover, Check Point, a computer-security consultancy in Israel, has shown that WannaCry’s encryption software is so badly assembled that decrypting a user’s data after payment has been made is practically impossible. Properly organised ransomware criminals, alive to the advantages of repeat business, usually do unencrypt the hostage data once the money has been paid. + +“This is not a serious organised crime gang,” Ross Anderson, professor of computer security at Cambridge University, says of the entity behind WannaCry. “It’s some kid in a basement in São Paulo or Bucharest or Aberystwyth. If he has any sense, he will smash his hard drive and burn the shards in a bonfire, and never cash in the bitcoin he’s been sent, because there are about 30 nation states that would like a chat with him.” + +In contrast to its encryption software, however, WannaCry’s worm, which spread it so fast, is a sophisticated piece of coding. That is because it reuses software stolen several months ago from America’s National Security Agency (NSA), and released online by a hacking group known as the “Shadow Brokers”. The stolen software exploits a vulnerability that the NSA discovered in a piece of Microsoft’s Windows operating system known as the Server Message Block, which handles networking between computers. This bug, which first appeared in Windows XP, in 2001, has stuck around in all subsequent versions. How long the NSA had known about it, and kept it secret, is unclear. + +Computers manage their connections to one another through a series of ports, normally 1,024 of them. Each is assigned a specific sort of task, and can be opened and closed as needed. Port 25, for instance, is designated for sending e-mail. The vulnerability discovered by the NSA lets WannaCry spread from machine to machine, as long as those machines have port 445 left open. On home computers’ internet connections, and on astutely managed institutional networks, port 445 is usually kept firmly shut. Exactly how many left it open, and fell victim to WannaCry, has yet to be determined. + +Software underbelly + +Despite the flurry of headlines, WannaCry is not the worst malware infection the world has seen. Other worms—Conficker, MyDoom, ILOVEYOU—caused billions of dollars of damage in the 2000s. But Bruce Schneier, a noted independent security expert, points out that people seem to have a fundamental disregard for security. They frequently prefer to risk the long-term costs of ignoring it rather than pay actual cash for it in the present. + +Here, perhaps, the headlines around WannaCry may do some good. Managers in organisations like the NHS know that there will be no second chances for them in this area. If there is another successful attack, heads will roll. WannaCry’s fame has also drawn attention to criminals’ normal business of attacking targets that can be relied on to pay up quickly and quietly. Often, these are indeed hospitals. But not the hospitals of an entire country. This is not publicity those criminals will welcome. + +That said, the activities of malware criminals do indeed resemble those of Britain’s 1930s smash-and-grab gangsters in that they take advantage of getaway speeds offered by new technology—speeds with which the authorities have not yet caught up. Criminals can, in effect, retreat at the velocity of light, to a safe jurisdiction that is near-impossible to discover anyway. If they are to be stopped, someone will have to devise modern-day electronic equivalents of road blocks and search warrants. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21722158-it-has-been-neglected-too-long-wannacry-should-make-people-treat-cyber-crime/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Cyber-security + +The exploits of bug hunters + + +Trading in software flaws is a booming business + +May 18th 2017 + + + + + +TO HELP shield their products from ransomware like the recent worldwide WannaCry attack, most big software-makers pay “bug bounties” to those who report vulnerabilities in their products that need to be patched. Payouts of up to $20,000 are common. Google’s bounties reach $200,000, says Billy Rios, a former member of that firm’s award panel. This may sound like good money for finding a programming oversight, but it is actually “ridiculously low” according to Chaouki Bekrar, boss of Zerodium, a firm in Washington, DC, that is a dealer in “exploits”, as programs which take advantage of vulnerabilities are known. + +Last September Zerodium’s payment rates for exploits that hack iPhones tripled, from $500,000 to $1.5m. Yuriy Gurkin, the boss of Gleg, an exploit-broker in Moscow, tells a similar story. Mundane exploits for web browsers, which might, a few years ago, have fetched $5,000 or so, are now, he says, worth “several dozen thousand”. Unsurprisingly, Zerodium and Gleg are not alone in the market. Philippe Langlois, head of P1 Security, a Parisian firm, reckons there are more than 200 exploit brokers in the world. + + + +Such brokers buy exploits from freelance hackers, who make a profitable hobby out of searching for vulnerabilities. They then sell them to those who can use them. Some, Zerodium and Gleg among them, are perfectly respectable, and choosy about whom they deal with (Zerodium says it declines more sales than it makes). Government agencies in America and western Europe, in particular, are eager customers. Others are less scrupulous. For example, e-mails posted to WikiLeaks in 2015 show that Hacking Team, a Milanese broker, sold exploits to Bahrain, Egypt, Morocco, Russia, Saudi Arabia, Sudan and the United Arab Emirates, none of which has a sparkling record of democracy and freedom. + +Exploits are also sold in shadowy online markets, where customers are often out-and-out criminals. At some point, no doubt, WannaCry changed hands this way. Nor is that lack of doubt rhetorical, for monitoring activity in the nether parts of the web can, and in this case did, offer omens of trouble to come. + +Just as someone will sell you an exploit, so someone else will sell you a warning. One such is CYR3CON, in Phoenix, Arizona. This firm produces reports of possible threats, based on the results of its software sifting automatically through the online writings, in 15 languages, of hackers involved in the field. + +On April 15th, a month before WannaCry began freezing data on Windows-based computers, CYR3CON’s software picked up chatter about exploits designed for just that task. Eleven days later, it highlighted exchanges about one such exploit that had been installed but not yet activated on more than 62,000 computers. Many were in medical facilities that had previously paid up “without unnecessary conversations”. Forewarned, those who had been using CYR3CON’s services could take precautions. Others were not so fortunate. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21722157-trading-software-flaws-booming-business-exploits-bug-hunters/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Solar power + +Cheap illumination’s benefits in remote areas may be limited + + +Does light equal enlightenment? + +May 20th 2017 + + + + + +FOR sunny places not connected to the electricity grid, the falling price of solar panels and LED lighting promises a bright future. No more smoky, lung-damaging kerosene lamps. Greater security and safety. More ways to connect with the world—even if that involves only something as simple as being able to charge a mobile phone. And, above all, the chance to work or study into the evening and thus improve both a family’s immediate economic circumstances and its children’s future prospects. It is a tale of hope. But as a study just published in Science Advances, by Michaël Aklin of the University of Pittsburgh and his colleagues, shows, these potentially glowing benefits can in some cases amount to not very much at all. + +More than 1bn people around the world have no access to electricity. Providing them with off-grid solar power is something almost all development experts agree is A Good Thing. Yet the evidence for how beneficial it really is was largely observational. Off-grid solar has not been put through the rigours of a large, randomised, controlled trial, of the sort that scientific researchers like to use to test relationships between cause and effect. To fix this oversight, Dr Aklin set about organising just such an experiment. + + + +He and his colleagues teamed up with Mera Gao Power (MGP), one of India’s providers of solar-power systems. Their volunteers lived in small villages, all of which lacked electricity, in the Barabanki district of Uttar Pradesh, a state in northern India. Of the 81 villages in the study, 41 were left alone, to act as controls. In the other 40, MGP offered to install a basic, solar-powered minigrid service provided that at least ten households per village subscribed 100 rupees (about $1.70) each a month to be connected to it. That sum represents about 2% of a typical household’s expenditure. Those that signed up then had their homes fitted with two bright LED lights and a mobile-phone charging-point. + +Connection to a minigrid brought some advantages. Households using solar power in this way cut their consumption of unsubsidised kerosene by a fifth—though, because a limited supply of kerosene is subsidised by the government in this part of Uttar Pradesh, the actual sum saved amounted to about 48 rupees per month, only half of the cost of the (unsubsidised) grid connection. When it came to social benefits from the use of solar power, though, Dr Aklin and his colleagues found little or no evidence of their existence. People did not work longer hours, did not start new businesses and did not study more. Overall, in this case at least, the researchers concluded that solar power had few measurable effects. + +This certainly was not what had been hoped for. Dr Aklin conjectures that the explanation may lie with the relatively paltry nature of what was offered, which amounted to an hour or two’s extra lighting per day. That is a fair observation, but bigger, more complex systems that would make substantially larger amounts of solar power available would probably be too expensive for villagers in this area. + +What would make a big difference, says Dr Aklin, are better batteries that can garner more of the sun’s bounty in the first place. “If batteries were cheaper and could store more power,” he observes, “off-grid companies could offer larger systems that enable rural households to run appliances and machinery.” That, rather than a bit of light in the evening, might really promote economic activity. + +As it happens, the cost and performance of batteries is steadily improving, not least because of the development of electric cars. And even if new batteries remain too expensive for use in village solar systems, perhaps second-hand ones that are no longer up to the job of providing the oomph for vehicles will be able to help power villages instead. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21722156-does-light-equal-enlightenment-cheap-illuminations-benefits-remote-areas-may/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Clean water + +A way to make water potable using carbon dioxide + + +Let’s hear it for diffusiophoresis + +May 18th 2017 + + + + + +THE world’s thirst for clean drinking water is vast and growing. It is also unslaked, particularly in poor countries. The World Health Organisation estimates that more than 660m people rely on what it calls “unimproved” water sources. A quarter of this is untreated surface water. Moreover, even water that has undergone at least some treatment may not be potable. Across the planet, 1.8bn human beings drink water contaminated with faeces. All this polluted water spreads diseases such as cholera, dysentery and typhoid. Every year, more than half a million people die from waterborne diarrhoea alone. As they describe in a paper in Nature Communications, however, Howard Stone of Princeton University and his colleagues have an idea for a new and cheap way to clean water up by mixing it with a substance normally regarded as a pollutant in its own right—carbon dioxide. + +There are many existing ways to make water safe to drink, but each has drawbacks. The first step is usually sedimentation: store the stuff in ponds and let as much of the muck as possible drop out under the influence of gravity. But that cannot cleanse water of minuscule, buoyant particles, including many bacteria and viruses, which will not settle. These have to be removed by a second process: filtration. + + + +Filtering water may be done through porous membranes, but that requires pressure, and thus needs costly pumps. Also, the membranes foul quickly, so require frequent replacement. Filtration through beds of sand needs no membranes, but does need chemicals called flocculants to persuade pollutants to coagulate, so that they can be caught by the filter. An alternative, “slow sand” filtration, employs the layers of algae and bacteria that develop on wet sand grains to remove pollutants. It thus requires fewer chemicals. Slow-sand filters must, though, be refurbished regularly. And both sorts of sand filtration miss up to 10% of harmful bacteria. + +Dr Stone’s alternative is to abandon the idea of filtration altogether. Instead, he plans to apply a phenomenon called diffusiophoresis to the problem. When CO2 and water meet at the liquid’s surface they react to make carbonic acid. This is a solution of hydrogen ions, which are positively charged, and bicarbonate ions, which are negative. The newborn ions then diffuse away from the surface and into the main body of the water. That creates a gradient of ionic concentration perpendicular to the surface. Dr Stone’s insight was that, because the gravity-resistant particles which need to be removed almost always have either positive or negative static-electric charges on their surfaces, their interaction with an ion gradient of this sort, which is itself composed of charged particles, could be used to move them around. + +He and his colleagues therefore created an experimental apparatus through which a channel of water flowed in parallel with two channels of gas, one on either side of it, separated from the water channel by gas-permeable membranes. One of the gas channels carried CO2. The other carried air. CO2 thus dissolved into the water on one side of the stream, and out again on the other side, entering the airstream and keeping the gradient constant. + +As the team hoped, this arrangement caused suspended particles with positive surface charges to concentrate towards the CO2 side of the water stream, and those with negative surface charges to concentrate towards the air side, leaving the centre of the stream more or less particle-free. In a working system it would simply be a question of splitting the water stream into three as it left the processor, with the two outer branches being recycled and the inner one tapped and piped to consumers. + +Dr Stone’s apparatus removed all but 0.0005% of the target particles. And it used less than a thousandth as much energy to do so as membrane filtration would have required. A full-scale version would not need additional chemicals beyond the CO2. And it should, Dr Stone thinks, be easy to maintain. + +As to the necessary CO2, he imagines this would come from power stations and other industrial processes, such as cement-making, that produce the gas in large quantities as exhaust. This would restrict diffusiophoretic water plants to industrial cities—but, since such cities are huge sources of demand, that is hardly a problem. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21722159-lets-hear-it-diffusiophoresis-way-make-water-potable-using-carbon-dioxide/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The value of old egg collections + +How the eggshell got its spots + + +Evolutionary warblings + +May 18th 2017 + + + + + +COLLECTING wild birds’ eggs is a hobby, once popular, that is frowned on today. In some countries, it is illegal. That, though, makes past collections the more valuable. And one of them, assembled by the splendidly named John Colebrook-Robjent and bequeathed by him, in 2008, to the Natural History Museum’s outpost at Tring, north-west of London, has recently been pressed into service. Its job was to answer questions about the arms races that go on between some birds and the nest parasites (cuckoos and so forth) that attempt to trick them into raising the parasites’ young. + +That this behaviour causes parasites’ eggs to evolve to look like those of their hosts, and the hosts’ eggs to evolve not to look like those of parasites, is well established. But Eleanor Caves of Cambridge University and her colleagues wondered if there was more to it. They noted that some nest parasites have sub-groups, known as races, which specialise on different hosts, even in places where these races overlap. One such place is Zambia, the land Colebrook-Robjent adopted after he had been seconded there from Britain, to serve in its army. + + + +In this case, as they report in the Proceedings of the Royal Society, the researchers suspected that a second evolutionary pressure would be at work—to avoid laying eggs that look like those of a different host species, so as to evade the attentions of parasite races that specialise on that species. Employing Colebrook-Robjent’s collection, they studied the eggs of Zambian warblers. Some of these were laid by species parasitised by birds called cuckoo finches and some by species not so parasitised. For each egg, they measured its precise spectral colour, and also five aspects of its patterning, such as the contrast between markings and background, and the proportion of its surface that was covered by markings. + +Using a statistical technique called discriminant function analysis, they used these data to measure how closely eggs resembled one another. As predicted, the eggs of different parasitised species looked far more distinct than did those from different unparasitised species. They could more easily be seen as belonging to the species in question. This, in turn, would be expected to encourage the eggs of different cuckoo-finch races to resemble those of their hosts more closely—which examination of cuckoo-finch eggs in the collection confirmed was true. + +Such an arrangement does, however, take time to emerge, as another part of the collection demonstrated. The eggs of a group of weaver-bird species parasitised by diederik cuckoos proved hard to tell apart—as did those of the cuckoos. These weaver birds are, however, closely related, and may be newly separated species. Come back in a few hundred thousand years, and their eggs could be as distinct as warblers’. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21722160-evolutionary-warblings-how-eggshell-got-its-spots/print + + + +上一项 文章 章节 下一项 + + + + + +Science and ... 章节 Obituary + + + + + +Books and arts + + +Contemporary art: Stitch-up + +Financial crises: Secret agents + +A memoir of Africa: Love and adventure + +Essays from Australia: The bard of the beach-front + +Fiction: The coast of Utopia + +Corrections: "Mr Big" and "Hit and misspeak" + +Science and ... 章节 Obituary + + + + + +文章 章节 下一项 + + + + + +The Venice Biennale + +Contemporary art gets a conscience + + +Why the most important event in the international art calender is being called the “hippy” Biennale + +May 20th 2017 | VENICE + + + + + +IN A disused medieval rope factory in Venice a canvas swag and reels of coloured thread hang from the ceiling. Various visitors, mostly women, perch on stools around it, stitching on items they have taken from their pockets and their handbags. Others wait to join in. This is a work of art by David Medalla, a 75-year-old artist from the Philippines. It is “participatory”, like many of the pieces around it. In art circles this means it is about the creativity of everyone rather than the genius of the individual; the use of domestic materials and techniques confers dignity on work that is mostly done by women and low-tech labour. + +The Venice Biennale, which opened on May 13th, is the most important event in the international art calendar. It was founded in 1895, initially to champion living Italian artists, and, apart from interruptions during the first and second world wars, it has taken place ever since. The inauguration of the first national pavilion, Belgium’s, in 1907, turned the Biennale into the art equivalent of a world fair; 86 countries now have an official display. + + + +Part of what gives the Venice Biennale its energy is that no single entity controls either the art or how it is funded. The city provides the showcase, the artists the show. National institutions, such as the British Council, do their bit. But more is needed. Although the Biennale’s own art-sales office was closed in 1968, international galleries, private collectors and wealthy donors are all involved—sometimes working closely together, sometimes not. + +The Biennale can make stars of artists and curators. Robert Rauschenberg’s pre-eminence (and the sign that the balance of power in the post-war art world had shifted from Paris to New York) was confirmed in 1964 when he became the first American to win the main prize, the Golden Lion. Harald Szeemann, the Swiss art historian who directed the Biennale’s central exhibition in 1999 and 2001, marked the rise of the “supercurator”. Those judged to have their fingers on the zeitgeist are keenly studied by curators and dealers alike. + +This year’s Biennale may well be the biggest ever. Christine Macel, chief curator of the Pompidou Centre in Paris, has spread the work of 120 artists over two huge spaces for the central exhibition. In addition to the national pavilions, 45 other shows are dotted around the city, some very big. The Gallerie dell’Accademia has hung 75 works by Philip Guston, an American artist, who died in 1980. His near contemporary, Mark Tobey, has a show of 70 works at the Peggy Guggenheim Collection and Damien Hirst, a British artist, is showing over 200 works in the François Pinault Foundation’s two galleries. + +In contrast with the fierce anti-capitalism of the 2015 Biennale, Venice this year is awash with social conscience. Spain, the Netherlands, Israel, Iraq, Tunisia, Australia, Taiwan, Poland, the “stateless” NSK Pavilion and the Diaspora Pavilion are among the many exhibitions dealing with social issues, from housing to migration. + +This trend is most visible in Ms Macel���s “Viva Arte Viva” (“Long live living art”). Some works celebrate indigenous peoples, others ecology and women’s sexuality from a feminist point of view; there is a lot of knotting, knitting, felt and other fabric (pictured). Macramé was also spotted. Much is inspired by collaboration and communities, refugees and fears about rising nationalism. Ms Macel has sought out artists from the margins, many of them forgotten, older or dead. Most are barely known. Over 100 of the 120 she has selected have never displayed in the Biennale’s main exhibition before. + +Ms Macel says her show is a reaction to “individualism and indifference”. She is more interested in artists who want to change the world than in the stars favoured by the art market. The exhibition is only 30 minutes’ walk, but a million miles away in intention, from Damien Hirst’s luxuriously presented “Treasures from the Wreck of the Unbelievable”, where all the works—in silver, gold, precious stones, marble, malachite and bronze—are for sale at prices that range from $500,000 to $5m. + +For some visitors, such as Patrizia Sandretto Re Rebaudengo, an energetic collector with her own art foundation in Turin, “Viva Arte Viva” is a “generous and Utopian” exhibition. Others have been less kind, dubbing it the “hippy Biennale”. It is clearly a corrective to the slick, clever and sometimes cynical work made by the likes of Mr Hirst and sold by the big commercial galleries. The trouble is that a lot of it feels preachy and flat. It is hard to take seriously a film in which Anna Halprin, a 96-year-old American artist, leads troupes of followers in a “healing” dance, an action to “reclaim” Mount Tamalpais near San Francisco where several women were murdered in the late 1970s and early 1980s. + +Olafur Eliasson, a well-known Icelandic artist, has bused in refugees from the mainland to provide (unpaid) help to make small lanterns for his ecological Green Light Project. The public is invited to work with the migrants, since it takes two to make each lamp. Another work, a huge crocheted tent by Ernesto Neto, is a collaboration with the Amazonian Huni Kuin people, who perform occasional rituals before visitors who sit cross-legged within. These works, which emphasise collaboration and co-operation, are well intentioned, but the exhibition is so crowded that, instead of participating, most viewers just shuffle past, as if at a human zoo. + +Art of the menace + + + +The most successful pieces pack an emotional punch. In the German pavilion, which won the top prize for best national presentation, Anne Imhof has installed a slippery glass floor a few feet above ground level, which is lit a brilliant white (pictured). Visitors step gingerly across, looking down at bits of dirty cotton wool, phone cables, amplifiers, hospital sinks, broken eggs and unsettling brown stains. Then performers (young, black-clad and androgynous) begin to move under the floor. It is disturbing to feel you are walking over your fellow human beings while outside pairs of Dobermans are held in large metal cages. The meaning of the piece is elusive, but its menace is palpable and hard to forget. + +In the American pavilion melancholy blackish-purple works by Mark Bradford, an African-American artist, refer obliquely to slavery and the migration crisis. Mr Bradford, an eloquent advocate, is also actively engaged in social projects in his native Los Angeles and in a women’s prison in Venice, but he says that this “is about working with people long term” and “listening and signing the cheques for what they want”, not about “co-opting people” into his own artistic practice. + +In the Swiss pavilion a slow film shows an 81-year-old man telling the story of his mother, Flora Mayo, as a young artist. In the late 1920s she collaborated with the young Alberto Giacometti, who was also her lover. But she has barely been mentioned since except for a short, derogatory entry in James Lord’s admired (and admiring) biography of the Swiss artist which was published in 1985. The film’s underlying message is about how women are often written out of history; but what makes it powerful is that it is an elegy to time passing, to the sadness of wasted talent and the pain endured within families. + +Meanwhile, in the South African pavilion, Candice Breitz filmed two Hollywood stars, Julianne Moore and Alec Baldwin, acting out real statements from refugees: a woman locked in a smuggler’s truck, a man fleeing charges of heresy, another terrified of being outed as gay. It is uncomfortable to hear the normally jocular Mr Baldwin saying with sincerity: “I really admire actors for the work you do,” and “Thank you, Alec, for taking part in this project.” Yet honest visitors admitted to be more fascinated by the highly emotive edited performances of the Hollywood stars than by the rather dull videos of the real refugees which are revealed in a second gallery. + +By the time the Biennale closes in late November, more than 500,000 visitors will have made their way through it. Many can be expected to be just as liberal or international in their outlook as those who were invited for the preview week and treated as VIPs. The problem is that so many idealistic artists, even in this curated gathering, produce work that is simplistic and visually unexciting. + +That may partly explain why some visitors still cleave to work that is glossy and glamorous, and fail to understand why more and more people find its moneyed character distasteful. The objects most commonly sewn on to Mr Medalla’s “A Stitch in Time” were business cards, not the meaningful embellishments the artist intended. Meanwhile, staff preparing a lavish party for François Pinault, an art collector, a major investor in luxury-goods firms, a backer of Mr Hirst’s show and the owner of Christie’s auction house, became anxious lest the 50 lemon trees brought in to decorate the venue looked less than fruitful. Orders were given for hundreds of plump extra lemons to be hand-tied to their branches. Despite the glasses raised to art and idealism at Venice, nothing illustrated the contrast between the rich and poor, the VIPs and the artists than the sight the next day of so many of those lemons, discarded and bobbing in the lagoon around San Giorgio Maggiore. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21722149-why-most-important-event-international-art-calender-being-called-hippy/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Financial crises + +Predicting our economic future + + +A new book argues that economists have misunderstood the financial system + +May 18th 2017 + + + + + +The End of Theory: Financial Crises, the Failure of Economics and the Sweep of Human Interaction By Richard Bookstaber. Princeton University Press; 240 pages; $29.95 and £24.95. + +AS QUEEN ELIZABETH II famously once pointed out, most economists failed to predict the crisis of 2007-08. In a lecture to the American Economic Association in 2003, Robert Lucas argued that macroeconomics had succeeded in so far as the “central problem of depression prevention has been solved, for all practical purposes”. Yet within five years the world faced its worst crisis since the 1930s. + + + +In his new book, “The End of Theory”, Richard Bookstaber approaches the issue from a different direction, as someone who has managed risk at leading investment banks and hedge funds. He believes that “traditional economic theory, bound by its own methods and structure, is not up to the task” of predicting crises. + +The author argues that the economy is subject to four important phenomena that make traditional economic models useless. The first are “emergent phenomena”. The sum of human interactions can produce unexpected results that are not related to the intentions of the indivuals involved, just as traffic on a motorway can bunch, or crowds can suddenly stampede. The second phenomenon is “non-ergodicity”. An ergodic process follows the same rule every time. If you roll traditional dice, the odds of getting a three will always be one in six. But in the world of human interactions, probabilities constantly change. A linked phenomenon is known as “radical uncertainty”; people do not know the range, or the probability, of future outcomes. The fourth is “computational irreducibility”; the future is so complex, and the effect of human interactions so unfathomable, that people cannot possibly create models to anticipate the outcome. + +Mr Bookstaber is also keen on the concept developed by George Soros, a hedge- fund manager, of “reflexivity”—the idea that observations and beliefs about the state of the economy change behaviour, and those changes in behaviour affect the economy. For example, a belief that house prices will always go up makes buyers willing to pay high prices for homes, and banks more willing to lend; the resulting enthusiasm among debtors and creditors duly pushes house prices higher. + +What people must do, Mr Bookstaber argues, is embrace the complexity and understand the way the system operates. There are several different types of agents in the financial system, each with their own motivations; some of these (banks in particular) play multiple roles. The way each agent behaves in any given situation may differ depending on the liquidity in the market, and the extent to which it is using borrowed money to finance its activities. The crisis of 2007-08 was the result of indebted institutions operating in an illiquid market. + +Watching what markets do in normal times is thus of little help in understanding how they will operate in a crisis. As the author writes: “Measuring relatively small transactions does not give us much insight, just as watching snowshoe hares scurry across a frozen lake gives no indication of whether the ice will support a man.” He takes readers through a step-by-step explanation of the crisis of 2007-08, showing the gradual infection of the system as the different agents followed their own goals. + +The analysis is top-notch, and anyone who wants to understand the workings of the financial system will benefit from reading this book. But those looking for a quick fix will be disappointed. Mr Bookstaber says there is no specific model to deal with crises. Instead, he is describing a process—an intellectual approach to understanding the system. + +Furthermore, although the author gives a kicking to mainstream economics in general, his analysis focuses entirely on the financial sector. The problems that bedevil economists (inflation, unemployment, productivity) do not feature. The challenge facing traditional economists is to incorporate Mr Bookstaber’s insights into their forecasts. A daunting task. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21722150-new-book-argues-economists-have-misunderstood-financial-system-predicting-our/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Love and adventure + +A memoir of Africa + + +How the east Africa bureau chief of the New York Times was shaped by the continent he covers + +May 18th 2017 + + + + + +Love, Africa: A Memoir of Romance, War, and Survival. By Jeffrey Gettleman. Harper; 336 pages; $27.99. To be published in Britain in June; £18.99. + +“JUST remember, let’s not get too ‘ooga-booga’ out there.” So warned one of Jeffrey Gettleman’s bosses in 2006, shortly before he flew off to take over as east Africa bureau chief of the New York Times. When Mr Gettleman looked confused, the man patiently explained: “You know, the stereotypes, the platitudes, Africa as primitive and violent.” Soon after he got to Nairobi, a seasoned Africa hand sat Mr Gettleman down and over a long lunch offered his own advice. “Whatever you do, Jeff…don’t forget the ‘ooga-booga’. It’s what makes Africa Africa.” + + + +The term “ooga-booga” sounds a little outlandish to anyone seriously covering Africa. But the dilemma facing Mr Gettleman—how to pique the interest of Western readers in a part of the world where history has invariably been portrayed as dark, without simply reinforcing their prejudices—is one that is all too familiar to most who write about the continent. + +With this uneasy tug-of-war in mind, Mr Gettleman embarked on a decade of reporting on a region, large parts of it torn by conflict, that was to earn him a Pulitzer prize in 2012. His reporting took him to areas where people were being killed, raped or starved. “I felt irresponsible sinking time into a lighter story when I knew that one short plane trip away, people were being slaughtered,” he muses in his book. “A story in our pages really does have the power to put pressure on governments to adjust their policies or the United Nations to send in more peacekeepers.” + +Sadly, however, there is little sense of that higher purpose in this book, which places the author at the centre of all the dramatic events occurring around him, interweaving them with a love story. His posting to Baghdad early on in the American occupation offers few insights into a conflict that still reverberates through the Middle East. Instead Mr Gettleman talks about the electrifying sex he had with a photographer while cheating on the woman he was later to marry. His recounting of a trip deep into the Ogaden region of Ethiopia with a rebel army reveals hardly anything about the conflict. Instead you learn about the spat Mr Gettleman was having with his wife. His visits to the Democratic Republic of Congo say little more about the place than that many women were raped there. Mr Gettleman seems less concerned about what he has seen than about the decision by one of his editors in New York to cut from his copy the lurid descriptions of a group of women being forced to eat a fetus freshly killed by members of a rebel group. Despite his intention not to get too “ooga-booga” when writing about Africa, that is exactly where he ends up. + +Yet for all that one may not learn much about Africa from this book, Mr Gettleman’s writing certainly zips along. His tales, whether of madcap antics such as nearly getting arrested for illegally climbing Mt Kilimanjaro as a student to being arrested years later for sneaking into the Ogaden, convey a vivid sense of a place where anything seems possible. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21722147-how-east-africa-bureau-chief-new-york-times-was-shaped-continent-he/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The bard of the beach-front + +Tim Winton’s Australian memoir + + +And what it reveals about the painful truths behind his fiction + +May 18th 2017 + + + + + +The Boy Behind the Curtain: Notes from an Australian Life. By Tim Winton. Picador; 300 pages; £16.99. + +AUSTRALIA has no shortage of celebrated novelists. The best among them have often written about the distant past. Peter Carey twice won the Man Booker prize for fiction, both times for stories of the colonial era. Richard Flanagan and Thomas Keneally received the same award for tales about the second world war. But few Australians have chronicled contemporary small-town life as thoughtfully as Tim Winton. His writing is to Western Australia’s coastline what Thomas Hardy’s was to the valleys of Wessex. + + + +“The Boy Behind the Curtain” is not Mr Winton’s first memoir: he described the places that shaped his life in “Land’s Edge” (1993) and “Island Home” (2015). But his new book is his most personal, showing how forcefully the undercurrent of his own experiences flows through his fiction. As a teenager he was a “bright young oik” straining against his humble working-class roots, just like Bruce Pike, the narrator of “Breath” (2008). Bruce, trapped in a coastal town of loggers and farmers, escapes into the worlds of Jack London, Ernest Hemingway and Herman Melville. Luther Fox, a hillbilly fisherman in “Dirt Music” (2001), entertains himself with John Keats and Joseph Conrad. Mr Winton, who grew up in Albany, a port 250 miles (402km) from Perth, delved into the theology of Dietrich Bonhoeffer and Karl Barth. Though proud of his earnest community, he wonders whether any of his churchgoing companions “had read even a page of Tolstoy”. + +Like Bruce, Mr Winton was raised by loving parents but driven to seeking thrills. The titular curtain is the one from which the 13-year-old author would point his father’s (unloaded) rifle at passers-by, violating years of safety lessons. He gratefully recalls that he discovered writing as a more potent channel for his restlessness. The happiness of his home life was constantly threatened. Mr Winton’s father was a traffic cop who was traumatised by the number of times he had whispered reassurances to dying teenage drivers. He was nearly killed in a hit-and-run when his son was five, spending days in a coma; the author himself was hospitalised after a car crash at the age of 18. Even in the most stable households, Mr Winton learned, “everything you know and see is fragile”. Little wonder that Luther’s entire family is killed in a road accident, and Bruce’s father by an errant beam at the sawmill. + +Mr Winton’s new book is at its best when the author is telling his own story, such as the struggle with the Bible-thumping of the local church, which exhausted him with its literalism but also taught him “the beauty and power of language”. He has a distinctively Aussie idiom. Choir practice resembles football players on “a gallop around the paddock”. A question about the soul poses “a real googly”. Surfing is another profound influence on his writing: dancing on the crest of the ocean “unlocked the artist” in him. Composing a novel is like waiting for a wave of inspiration between lulls. At times his prose echoes Melville’s, with thunderous adjectives crashing onto one another while the verbs churn the sentences along. At others it has Hemingway’s sparseness and bravado: “We talked about skill and courage and luck—we shared all that, and in time we surfed to fool with death,” runs a sentence in “Breath”. + +Dotted between his memories are essays about Australia’s ills. Mr Winton makes a few gibes at the well-meaning but uppity folks in Melbourne and Sydney and has an obvious disdain for journalists. But he is articulate about his country’s abuse of Aborigines and asylum-seekers, its toxic attitude to the lower middle class and its sluggishness in protecting its environment. His paeans to conservation and the poor are heartfelt. This, after all, is a man who paddles among endangered sharks and grew up in the hard country of the west. His book will resonate with readers in Australia—but should be enjoyed by those elsewhere, too. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21722148-and-what-it-reveals-about-painful-truths-behind-his-fiction-tim-wintons-australian/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +John Burnside’s fiction + +Set in the future, John Burnside outlines a Utopian vision + + +An island where everything is shared and the natural order always takes priority over human scheming + +May 18th 2017 + + + + + +Havergey. By John Burnside. Little Toller; 167 pages; $23 and £12. + +LIKE the narrator of “News from Nowhere”, the novel that William Morris brought out in 1890, the protagonist of “Havergey”, John Burnside’s monograph, goes to sleep in 2017 and wakes to find himself in a futuristic community. Everything there is shared, and the natural order is always judged to be more important than human schemes. + + + +A catastrophic series of plagues, known as “The Dark Time” or “The Collapse”, has reduced the global population from over 8bn to fewer than 2bn. Much of the world is “overrun with free pollutants and marauders”. But on Havergey, an island off the coast of Scotland, a small Utopian society has formed. Confined to a cabin known as “Quarantine”, Mr Burnside’s protagonist John—who travels to the future in a contraption made to look like a blue police box and called Tardis B—is given a series of documents that reveal the history of the island and its inhabitants, and help him understand the anarchic principles on which the community is based. + +The premise sounds like a post-apocalyptic sci-fi novel, but Mr Burnside is more interested in exposition than plot and characterisation. “Individual stories didn’t matter, it was the ideas that mattered,” one of his characters says in an aside that might be describing the book itself. The fictional premise is a scaffold on which the author hangs his theories about how to create an ecological and economic Utopian society. + +Havergey’s citizens believe that “there is no human order that could be preferred to the natural order”—for which they use the Chinese word tao, meaning path, key or principle. To this end, they meditate daily, outlaw the concept of individual ownership and try to maintain an ever-shifting balance with nature in the understanding that “Utopia is bound to be relative” and “only the moment is perfect.” + +As they describe the island gradually returning to its wild state, a process they call the “Chernobyl Effect”, Mr Burnside’s characters condemn the damage done to the planet by the “Machine People”, as modern civilisation is known. Much of the humour in the book is derived from a futuristic perspective on some of mankind’s cultural idiosyncrasies, from sitting “in dark rooms watching a little box in the corner for hours on end” to paying people to make music that all sounds the same. + +Mr Burnside raises some interesting moral questions as he explores the idea of a society governed by principles of honour and community, where killing is sometimes “the only way”. Short of a catastrophic epidemic, however, his vision will remain elusive. “Overpopulation was not a sexy subject,” John says, reflecting on why nothing was done to curb it. Mr Burnside’s sci-fi approach may be what is needed to get people talking. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21722146-island-where-everything-shared-and-natural-order-always-takes-priority-over/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Corrections: "Mr Big" and "Hit and misspeak" + + +May 18th 2017 + + + + + +In our review of Geoffrey West’s “Scale” (“Mr Big”, May 13th) the picture of Cairo was miscaptioned as Lagos in some editions. And in “Hit and misspeak” we described the cost of Labour’s fictional £300,000 policing plan as £300 per officer. That should have been £30. Sorry. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21722152-corrections-mr-big-and-hit-and-misspeak/print + + + +上一项 文章 章节 下一项 + + + + + +Books and arts 章节 Economic and ... + + + + + +Obituary + + +Miriam Rodríguez Martínez: A voice for the missing + +Books and arts 章节 Economic and ... + + + + + +文章 章节 下一项 + + + + + +A voice for the missing + +Obituary: Miriam Rodríguez Martínez died on May 10th + + +The campaigner for Mexico’s disappeared was 50 + +May 20th 2017 + + + + + +THE narcos who infested San Fernando, in Tamaulipas state in north-eastern Mexico, did not always trouble to bury their victims. They left them by the side of Highway 101, a road some people said was the most dangerous in the country. Or they took them to some abandoned ranch in the rolling hills round the town, shot them and piled them up in one room. They did that in 2010 with 72 migrants from Central America, pulling them off their buses as they tried to travel to the United States. + +Sometimes, though, the killers would hide their victims. Over several months in 2011 the police found 47 mass graves outside town with 193 bodies, probably bus passengers. And more graves could turn up anywhere, in the hard, stony ground among the thorn bushes. You could tell they were there because a bad smell hung around, or the ground was sunken or disturbed. Or you might spot a piece of bone. Miriam Rodríguez knew such signs well, because in 2014 she found, in just such a place, what remained of her daughter. + + + +No officials had helped her. Frankly, in Tamaulipas, it was useless to ask them. The police and the state people were often hand-in-glove with the narcos. If not, they were helpless in the face of all the violence. Between 2006 and 2016, with war breaking out between the Zetas and the Gulf cartel over control of the main drugs route to the United States, 5,563 people disappeared in Tamaulipas. After the massacre of 2011 (everyone in town called it “the massacre”), it took a year for police to identify just 34 bodies. When Karen was abducted in 2012, just 14, just a child, Miriam refused to wait. She had the time and the money to find her and track her killers down, though it took two years. + +Up till then, she had lived with the lawlessness as everyone else in San Fernando had. In the early 2000s the narcos had been around, but not too bad. If they came to the municipal market in the Plaza Hidalgo, where she ran her belts-and-bags business, they even paid for what they took. But the showy processions of SUVs with tinted windows, cruising slowly through town, became more menacing. Then the Zetas, the most brutal of the drug gangs, began to take people. The randomness was terrifying. Why, for example, did they drag away three women from the taco place beside the highway where they gave you two beers for the price of one? Why kill 193 people who had just been on the bus to Reynosa or who knew where? After that, people began to leave town; perhaps 10,000 left. Those who stayed hardly dared go out, and the shops were trashed anyway. The federal government sent the army in, and that helped, but not enough, or Karen would not have gone. + +From that day in 2012, Miriam’s life changed. It became a mission. She had always been strong, full of energy, a hard worker. Now her singlehanded efforts got 16 narcos charged for Karen’s abuction and 13 sent to jail. Day after day she went to the courts to make sure they stayed there. She also began to campaign on behalf of all San Fernando’s families with relatives who were missing. She set up two organisations for the desaparecidos, arranged Mothers’ Marches through town, supported the families, drew up a list of 800 victims to make a database, and hounded officials at every level of government. + +Nothing and no one could shut her up. No se andaba por las ramas, said her friends; she didn’t beat about the bush. In a country where violence cowed too many people and journalists were killed for their reporting, she talked, and talked. Under her elegant jackets, her chunky earrings and glittery fake nails, she was a tigress. She carried a gun, too, in case any of the Zetas tried it on with her. They had once seized her husband, bundling him out of his work and into a car, but she had roared after them in hers and called in the army to arrest them. + +Possibly she was too loud. She had other causes, too, such as complaining about outsiders renting space in the market, keeping locals out. At one point in her campaign for the disappeared, fed up with officials doing nothing, she appealed to the UN and the Inter-American Commission on Human Rights. In March she went eagerly to Texas to join an international procession of protest against Donald Trump’s immigration policies. It was called the Caravana contra el Miedo, against fear. She liked that. + +Unanswered calls + +She did want protection at home, though. She had a right to it, as she told any official who would listen. In March came the news of a massive break-out from the main state jail, 29 narcos, among them two she had put there for taking Karen. At that point she closed her business, not wanting the Zetas to track her to it, and by April she was sure that one day they would kill her. One policeman said he was on call for her; she rang him 30 times one day around four in the morning, testing, but got no answer. The police claimed to patrol past her house three times a day; she never saw them. + +Mother’s Day, May 10th in Mexico, was a date to be treated with tamales in bed and serenades. She had two other children to spoil her, though no Karen, for whom she had done her best. Her day ended when, at about 10.30pm, a hustling band of Zetas called her out of the house. If they had waited a second, she would have told them exactly what she thought of them. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/obituary/21722139-campaigner-mexicos-disappeared-was-50-obituary-miriam-rodr-guez-mart-nez-died-may/print + + + +文章 章节 下一项 + + + + + +Obituary 章节 + + + + + +Economic and financial indicators + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Output gaps + +Markets + +Obituary 章节 + + + + + +文章 章节 下一项 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21722153/print + + + +文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Output, prices and jobs + + +May 20th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21722190-output-prices-and-jobs/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Trade, exchange rates, budget balances and interest rates + + +May 20th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21722183-trade-exchange-rates-budget-balances-and-interest-rates/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +The Economist commodity-price index + + +May 20th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21722175-economist-commodity-price-index/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Output gaps + + +May 20th 2017 + + + + + +The output gap measures how far away an economy is from its full potential, a sweet spot defined as the level of output consistent with stable inflation and full employment. Countries with positive output gaps tend to experience accelerating inflation, indicating economic growth may soon slow. The IMF thinks that many central and eastern European countries may have closed their output gaps this year (although it also warns that estimating these gaps precisely is tricky). In Romania, a 16% rise in the minimum wage is likely to lift domestic demand; inflation should also start to pick up. Policymakers in Bosnia and Ukraine, which still have big negative output gaps, will surely look on in envy. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21722184-output-gaps/print + + + +上一项 文章 章节 下一项 + + + + + +上一项 文章 章节 下一项 + + + + + +Markets + + +May 20th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21722188-markets/print + + + +上一项 文章 章节 下一项 + + + + + diff --git a/homeworks/B20769/homework1/data2/2017.05.27.txt b/homeworks/B20769/homework1/data2/2017.05.27.txt new file mode 100644 index 0000000..2a35f95 --- /dev/null +++ b/homeworks/B20769/homework1/data2/2017.05.27.txt @@ -0,0 +1,5375 @@ +Friday, May 26, 2017 + + + + +The world this week 3 + +Leaders 5 + +Letters 1 + +Briefing 1 + +United States 5 + +The Americas 4 + +Asia 5 + +China 3 + +Middle East and Africa 6 + +Europe 6 + +Britain 8 + +International 2 + +Business 7 + +Finance and economics 10 + +Science and technology 5 + +Books and arts 6 + +Obituary 1 + +Economic and financial indicators 6 + + + + + +節 Leaders + + + + + +The world this week + + +Business this week + +KAL's cartoon + +Politics this week + +節 Leaders + + + + + +文章 節 下一個 + + + + + +Business this week + + +May 25th 2017 + + + + + +Following several profit warnings and a 10% slide in its share price this year, Ford appointed a new chief executive. Jim Hackett, who ran the carmaker’s unit for autonomous vehicles and ride-sharing, replaces Mark Fields, who was CEO for three years. The speed of Mr Fields’s departure surprised those who thought he was doing a reasonable job in a fast-changing market. Bill Ford, the chairman, described Mr Hackett as a “visionary” who will steer Ford towards a future of self-driving and electric cars. See article. + +A budding flower + +Geely, a Chinese carmaker and owner of the Volvo car brand, said it was buying a 51% stake in Lotus, a British sports-car manufacturer, as part of a deal through which it will obtain a minority stake in Proton of Malaysia. Geely hopes to harness Lotus’s technology. Its Eco Elise project, for example, develops materials that help to lower emissions in its cars. + +America’s Justice Department stepped up the pressure on Fiat Chrysler Automobiles (whose chairman sits on the board of The Economist’s parent company). The department filed a civil lawsuit accusing the carmaker of not telling regulators that 104,000 diesel cars had been equipped with software which helped vehicles to violate emissions standards. Fiat Chrysler denied any wrongdoing and said it had been working with the Environmental Protection Agency for months to resolve the issue and would defend itself against any claims that it “engaged in a deliberate scheme” to install the devices. + +The Trump administration admitted that it could not legally stop the new “fiduciary rule” from coming into force next month. The rule was passed by Barack Obama and requires anyone giving pensions advice to act in the “best interest” of a client. The investment industry believes this will lead to more lawsuits. In February Donald Trump ordered a review. + + + + + +Euro vision + +The European Commission said that Portugal was no longer subject to its measures for managing excessive debt, because the country’s budget deficit fell to 2% of GDP last year, well below the ceiling of 3% set in the EU’s stability and growth pact. Portugal exited its bail-out programme in 2014. + +SoftBank announced that it had raised a whopping $93bn so far for its new technology-investment fund. The Japanese conglomerate will base the fund’s operations in London, from where it will invest in artificial intelligence, robotics and the “internet of things”. One of Saudi Arabia’s sovereign-wealth funds pledged up to $45bn to the venture and a holding company for the government of Abu Dhabi put in $15bn. Apple, Qualcomm and other tech giants have also made commitments. See article. + +A trial to hear claims that shareholders at Royal Bank of Scotland were misled about the state of the bank’s finances before a £12bn ($24bn in 2008) rights issue during the financial crisis was adjourned until next month. The judge delayed the trial because the parties are close to a settlement. + +IKEA named a new chief executive. Jesper Brodin is a former assistant to the furniture retailer’s founder, Ingvar Kamprad. He will take over a restructured IKEA focusing on sales; the firm’s design, supply and production activities were transferred to Inter IKEA Group last August. + +Taking markets by surprise, Moody’s downgraded China’s sovereign credit-rating by a notch, contending that the government was proceeding too slowly to rebalance the economy and reduce the build-up of debt. Any far-reaching financial measures in China are unlikely to be announced before a Communist Party Congress later this year. The government says that Moody’s has underestimated its commitment to reform. + +Looking for a white knight + +Once Asia’s biggest trader of commodities, Noble Group endured another rocky week, after S&P Global cut its credit rating, which already carried “junk” status, and warned that the company might default on its debt. Its shares plunged by 28% on the Singapore exchange before they were suspended. Noble hopes to find a “strategic partner”, which may be its only means of survival. See article. + +Glencore, a commodities and mining giant, made an unsolicited offer for Bunge, which traces its history back to 1818 and is one of the world’s biggest agribusiness concerns. + +In the latest move towards consolidation in the chemical industry, Huntsman, which is based in Texas, agreed to a $20bn merger with Clariant, a Swiss rival. Huntsman is controlled by a prominent Mormon family (Jon Huntsman junior, a former presidential candidate, is a son of the founder). In 1974 it invented the “clamshell” container for McDonald’s Big Macs. See article. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21722699-business-week/print + + + +文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +KAL's cartoon + + +May 25th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21722689-kals-cartoon/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Politics this week + + +May 25th 2017 + + + + + +An Islamist suicide-bomber killed 22 people and left more than 60 injured in Manchester, Britain’s third-largest city. It was the country’s bloodiest terror attack since 2005. The bomb was detonated in the foyer of a venue staging a pop concert; children were among the victims. Police think the bomber was part of a jihadist network and arrested several people. The threat level from terrorism was raised to “critical”, the first time it has reached this highest category since 2007. See article. + +The Conservative Party reversed a headline policy less than a week after publishing the proposal in its election manifesto. A shake-up in social care had quickly been dubbed the “dementia tax”. Fearing a backlash from older voters, Theresa May, the prime minister, sought to “clarify” the policy, but the U-turn was clear. The situation rekindled memories of the “bedroom tax”, another policy felled by a catchy nickname. See article. + +Seven months after he was ousted by his own members, Pedro Sánchez was unexpectedly re-elected leader of Spain’s main opposition Socialist Party. He must now reinvigorate a party that has lost almost half its support to the far-left Podemos. + + + +More than 20 artists decided to boycott the National Festival of Polish Song in Opole, one of Poland’s top music festivals, following reports that a singer had been barred from appearing because she had taken part in protests against the government. The event now faces cancellation for the first time since 1982, when the country languished under communist-imposed martial law. + +The people have spoken! + +Iran’s moderate reformist president, Hassan Rouhani, was re-elected with a solid 57% of the vote. Only candidates vetted by a committee of 12 Islamic clerics were permitted to run. See article. + +The authorities in Bahrain violently broke up a sit-in by supporters of a prominent Shia cleric. Five people were reported by the government to have been killed, and 286 were arrested. + +Eight security officers in Kenya were killed near the border with Somalia when the vehicles they were travelling in detonated explosive devices. Al Shabab, a Somali jihadist group, claimed responsibility. + +Tedros Adhanom, a former health minister from Ethiopia, was elected as the new head of the World Health Organisation. He is the first African to hold the post. + +The Democratic Republic of Congo is to test a vaccine in its efforts to contain an outbreak of Ebola that has so far killed four people. Around 40 people are suspected to have been infected by the virus. + +American gothic + + + +Donald Trump made his first trip abroad as president. He received a warm welcome in Saudi Arabia, where he strongly condemned Iran, the Saudis’ arch-rival in the region, and signed a $110bn arms deal. Israel also embraced Mr Trump, seeing his visit as a reset in relations following a tetchy eight years during Barack Obama’s tenure. Mr Trump’s whirlwind tour took him to the Vatican to meet the pope and to Brussels for talks with the EU and NATO. See article. + +James Comey, whose sacking by Mr Trump as director of the FBI has sparked a political storm, agreed to testify to Congress. He will give his testimony after meeting Robert Mueller, the special counsel investigating alleged links between the Trump campaign and Russia. But Michael Flynn, Mr Trump’s first national-security adviser, invoked the Fifth Amendment when he declined to appear before a Senate committee. + +A close election for Montana’s sole seat in the House of Representatives took an unexpected last-minute twist when Greg Gianforte, the Republican candidate, allegedly “bodyslammed” a journalist who asked him a question about health care. Mr Gianforte has been charged with a misdemeanour assault. + +A landslide buried a swathe of California’s scenic Pacific Coast Highway along Big Sur. A 12-mile section of the road will be closed for months. + +An unhappy record + +Venezuela’s chief prosecutor said that 55 people had died in the latest series of protests against the government. About half were killed by government forces. That exceeds the 43 who died in a wave of protests in 2014. One man was set on fire. + +Brazil’s president, Michel Temer, dropped his request for the supreme court to suspend an investigation into allegations that he obstructed justice. The inquiry is based in part on a tape recording in which the president appears to endorse the payment of hush money to a politician serving jail time. His lawyers want the investigation to continue to clear his name. Federal troops were deployed to Brasília, the capital, after protesters demanding Mr Temer’s resignation set fire to a government building. See article. + +Lenín Moreno was sworn in as Ecuador’s president. He promised to follow the socialist path of his predecessor, Rafael Correa, but also to engage more with the private sector. + +Quelling an insurrection + +The president of the Philippines, Rodrigo Duterte, declared martial law in the southern island of Mindanao following clashes between Islamist separatists and the army. The militants took over schools and burned a church in the city of Marawi. Mr Duterte said they had also beheaded a local police chief. See article. + +North Korea conducted its second missile test within a week. The Pukguksong-2 missile flew 500km before falling into the Pacific. + +Two gay men each received 83 lashes of the cane in Aceh, a semi-autonomous province in Indonesia that enforces Islamic law. It was the first time the punishment had been levelled against homosexuals in the province; people have been caned previously for drinking alcohol and gambling. A cheering crowd watched the beatings. + + + +Supporters of gay rights in Taiwan hailed a decision by the constitutional court in favour of same-sex marriage, ruling there was “no rational basis” for it to be banned. The legislature has two years to either legalise gay marriage or introduce civil partnerships. If it does neither, gay couples will be able to wed under the court’s ruling. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/world-week/21722691-politics-week/print + + + +上一個 文章 節 下一個 + + + + + +The world this week 節 Letters + + + + + +Leaders + + +The marine world: Deep trouble + +The Manchester bombing: Almost is never enough + +Brazil: The Temer tape + +Tech unicorns: Not the enemy + +Reforming prisons: Jail break + +The world this week 節 Letters + + + + + +文章 節 下一個 + + + + + +Deep trouble + +How to improve the health of the ocean + + +The ocean sustains humanity. Humanity treats it with contempt + +May 27th 2017 + + + + + +EARTH is poorly named. The ocean covers almost three-quarters of the planet. It is divided into five basins: the Pacific, the Atlantic, the Indian, the Arctic and the Southern oceans. Were all the planet’s water placed over the United States, it would form a column of liquid 132km tall. The ocean provides 3bn people with almost a fifth of their protein (making fish a bigger source of the stuff than beef). Fishing and aquaculture assure the livelihoods of one in ten of the world’s people. Climate and weather systems depend on the temperature patterns of the ocean and its interactions with the atmosphere. If anything ought to be too big to fail, it is the ocean. + +Humans have long assumed that the ocean’s size allowed them to put anything they wanted into it and to take anything they wanted out. Changing temperatures and chemistry, overfishing and pollution have stressed its ecosystems for decades. The ocean stores more than nine-tenths of the heat trapped on Earth by greenhouse-gas emissions. Coral reefs are suffering as a result; scientists expect almost all corals to be gone by 2050. + + + +By the middle of the century the ocean could contain more plastic than fish by weight. Ground down into tiny pieces, it is eaten by fish and then by people, with uncertain effects on human health. Appetite for fish grows nevertheless: almost 90% of stocks are fished either at or beyond their sustainable limits (see Briefing). The ocean nurtures humanity. Humanity treats it with contempt. + +Depths plumbed + +Such self-destructive behaviour demands explanation. Three reasons for it stand out. One is geography. The bulk of the ocean is beyond the horizon and below the waterline. The damage being done to its health is visible in a few liminal places—the Great Barrier Reef, say, or the oyster farms of Washington state. But for the most part, the sea is out of sight and out of mind. It is telling that there is only a single fleeting reference to the ocean in the Paris agreement on climate change. + +A second problem is governance. The ocean is subject to a patchwork of laws and agreements. Enforcement is hard and incentives are often misaligned. Waters outside national jurisdictions—the high seas—are a global commons. Without defined property rights or a community invested in their upkeep, the interests of individual actors in exploiting such areas win out over the collective interest in husbanding them. Fish are particularly tricky because they move. Why observe quotas if you think your neighbour can haul in catches with impunity? + +Third, the ocean is a victim of other, bigger processes. The emission of greenhouse gases into the atmosphere is changing the marine environment along with the rest of the planet. The ocean has warmed by 0.7°C since the 19th century, damaging corals and encouraging organisms to migrate towards the poles in search of cooler waters. Greater concentrations of carbon dioxide in the water are making it more acidic. That tends to harm creatures such as crabs and oysters, whose calcium carbonate shells suffer as marine chemistry alters. + +Some of these problems are easier to deal with than others. “Ocean blindness” can be cured by access to information. And indeed, improvements in computing power, satellite imaging and drones are bringing the ocean into better view than ever before. Work is under way to map the sea floor in detail using sonar technology. On the surface, aquatic drones can get to remote, stormy places at a far smaller cost than manned vessels. From above, ocean-colour radiometry is improving understanding of how phytoplankton, simple organisms that support marine food chains, move and thrive. Tiny satellites, weighing 1-10kg, are enhancing scrutiny of fishing vessels. + +Transparency can also mitigate the second difficulty, of ocean governance. More scientific data ought to improve the oversight of nascent industries. As sea-floor soundings proliferate, the supervision of deep-sea mining, which is overseen by the International Seabed Authority in areas beyond national jurisdiction, should get better. More data and analysis also make it easier to police existing agreements. Satellite monitoring can provide clues to illegal fishing activity: craft that switch off their tracking devices when they approach a marine protected area excite suspicion, for example. Such data make it easier to enforce codes like the Port State Measures Agreement, which requires foreign vessels to submit to inspections at any port of call and requires port states to share information on any suspected wrongdoing they find. + +Clearer information may also help align incentives and allow private capital to reward good behaviour. Insurance firms, for instance, have an incentive to ask for more data on fishing vessels; if ships switch off their tracking systems, the chances of collisions rise, and so do premiums. Greater traceability gives consumers who are concerned about fish a way to press seafood firms into behaving responsibly. + +Sunk costs + +Thanks to technology, the ocean’s expanse and remoteness are becoming less formidable—and less of an excuse for inaction. A UN meeting on the ocean next month in New York is a sign that policymakers are paying more attention to the state of the marine realm. But superior information does not solve the fundamental problem of allocating and enforcing property rights and responsibilities for the high seas. And the effectiveness of incentives to take care of the ocean varies. Commercial pay-offs from giving fish stocks time to recover, for example, are large and well-documented; but the rewards that accrue from removing plastic from the high seas are unclear. + +Above all, better measurement of global warming’s effect on the ocean does not make a solution any easier. The Paris agreement is the single best hope for protecting the ocean and its resources. But America is not strongly committed to the deal; it may even pull out. And the limits agreed on in Paris will not prevent sea levels from rising and corals from bleaching. Indeed, unless they are drastically strengthened, both problems risk getting much worse. Mankind is increasingly able to see the damage it is doing to the ocean. Whether it can stop it is another question. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21722647-ocean-sustains-humanity-humanity-treats-it-contempt-how-improve-health/print + + + +文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +The Manchester bombing + +Don’t give the jihadists what they want + + +Britain should ignore siren calls to lock up and tag people it suspects of becoming radicals + +May 27th 2017 + + + + + +TERRORISTS often set out to slaughter the innocent. But none could be more innocent than eight-year-old Saffie Roussos (pictured). She was one of the children, most of them teenagers, who flocked to see Ariana Grande give a concert in Manchester on May 22nd. After the show, a suicide-bomber detonated a device packed with metal nuts and bolts, injuring over 60 and killing 22, including Saffie. As with the school massacres in Beslan in Russia in 2004 and Peshawar in Pakistan in 2014, the aim was to strike people where they are most vulnerable—as parents and grandparents and uncles and aunts. It succeeded. + +For Britain, which had been spared deadly bomb blasts since the attacks in London in 2005, this was proof of how hard it is to foil every plot every time (see article). For the world, which suffers attacks continually, it raises once again the question of how to stop people who are determined to kill. + + + +You’ll never know + +The motives of the bomber, a 22-year-old Libyan Briton called Salman Abedi, may never be clear. Some have suggested that Ms Grande, a confident, sexually liberated woman who inspires teenage girls, stood for everything jihadists despise. When Islamic State (IS) is in retreat in its base in Syria and Iraq, and is struggling in Libya amid civil war and oppression (see article), perhaps the attack was a show of strength. + +But there is a third possibility. IS has said that it wants to force sympathetic Muslims out of a “greyzone” in which they do not fully embrace the jihadists’ “caliphate” because they still feel loyalty to the country where they live. If so, IS can use extreme violence to provoke an official clampdown and to feed the indiscriminate suspicion of Muslims. With repeated attacks in France over the past two years and horrific cruelty this week, IS may be trying to trigger an anti-Muslim backlash that it can exploit to drive sympathisers into its arms. + +The reaction in Britain to the Manchester bombing is a good way to thwart IS’s plans. A ritual has grown up after terrorist attacks that includes vigils, memorials and testimonials. It lets people express their collective grief in a secular society. It also gives Muslim groups a chance to distance themselves in public from jihadists and for other civic leaders to say that the threat from IS does not come from Islam in general. That sends a signal to Muslims and non-Muslims that now, of all times, they must be tolerant. It is precisely what IS does not want to hear. + +Yet if IS succeeds in staging repeated attacks in Britain, this consensus will be at risk—as in France, which is under a state of emergency. Even now, some commentators are calling for terrorist suspects to be locked up or electronically tagged. That would be a mistake. To punish suspects who face no criminal charges would illegally single out Muslims from any other group. IS would have precisely the recruiting message it wants. + +In the past 20 months the intelligence services have busted at least 12 plots. They are not asking for new powers. The government has put aside money for more staff. With this attack, as any other, there have been mistakes and missed leads. The security services must learn from them. + +But the focus should also be on stopping sympathisers being drawn into IS’s orbit. In Britain that is the job of Prevent, a government scheme to counter radicalisation of all kinds. Propaganda is scrubbed from social media and counter-propaganda put in its place. Teachers are trained to spot would-be jihadists. Prevent is not perfect. It has been criticised as heavy-handed and vague. But the scheme has cut the numbers of young people going to the Middle East to fight. Now more than ever, when another British-born Muslim has struck his homeland, it needs refining and strengthening. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21722645-britain-should-ignore-siren-calls-lock-up-and-tag-people-it-suspects-becoming-radicals-dont/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +The Temer tape + +How to cope with Brazil’s political crisis + + +Who is president matters less than the continuation of economic and political reforms + +May 25th 2017 + + + + + +WHEN Michel Temer took over as Brazil’s president from Dilma Rousseff, who was impeached last August, no one saw him as a clean break from the grubby past. Members of both his Party of the Brazilian Democratic Movement and Ms Rousseff’s Workers’ Party are being investigated or have been convicted in the Lava Jato (Car Wash) probes into scandals centred on Petrobras, the state-run energy company. The difference is that Mr Temer, a more adept politician than Ms Rousseff, is pushing through vital economic reforms that she failed to advance. That is why new accusations of wrongdoing by the president are unsurprising but bad for Brazil. + +It is unclear whether Mr Temer has committed any crimes. The new allegations come from Joesley Batista, a meat mogul, who was being pursued by prosecutors in several corruption cases (see article). Angling for a plea bargain, Mr Batista wired himself up for a late-night meeting with the president. He has produced a tape in which Mr Temer appears to endorse the payment of hush money to a convicted politician and to hear without objection Mr Batista’s tales of obstructing justice. In separate testimony a subordinate claimed that Mr Temer had received bribes; a confidant of Mr Temer was filmed with a bag stuffed with 500,000 reais ($153,000). + + + +It is too soon to demand Mr Temer’s resignation. He insists that the tape was doctored. In return for incriminating the president, Mr Batista was let off with a fine of 110m reais, which still leaves him a billionaire. Mr Temer proclaims his innocence and demands that the supreme court, which oversees investigations of politicians, should complete its inquiries rapidly. + +But the allegations have already wounded his presidency and the country. Since word of Mr Batista’s tape came out the stockmarket has fallen by 7%. For all his flaws, Mr Temer was making progress on reforms that Brazil desperately needs. The economy is beginning to recover from its worst recession on record; inflation and interest rates are falling. Mr Temer is encouraging recovery by reforming the pension system, which will otherwise crush the economy with debt. He is trying to liberalise labour laws modelled on those of Benito Mussolini. Lava Jato’s latest blast will delay the reforms, if not wreck them. + +If he stays, Mr Temer will have a much harder time getting them through congress. But his departure—which could happen through resignation, impeachment or a decision by the electoral tribunal to annul the latest election for having been financed with illicit money—might not solve the problem. Barring a new poll, which can happen only through a constitutional amendment, his successor would be appointed by congress. Many of its prominent members are under investigation. It will not be easy to fill the presidency with a top-tier politician who is untainted and commands public support. + +Augean, but not stable + +Whether Mr Temer stays or goes, the best that Brazil can hope for now is a weak president who can finish what he started in the remainder of the current mandate, which runs to the end of next year. In addition to the pension and labour measures, this would include a start on political reform, which could result in the election of less corrupt politicians in 2018. A national vote threshold, for example, would stop rent-a-parties from entering congress. Brazil is going through a wrenching political and economic renewal. Its leaders, however enfeebled by scandal, must persevere with that vital work. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21722643-who-president-matters-less-continuation-economic-and-political-reforms-how-cope/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Not the enemy + +The advantages of public markets for unicorns and their investors + + +Closer scrutiny, more liquidity and stronger defence against reputational risk + +May 25th 2017 + + + + + +THE public markets in America are much less crowded than they once were. Twenty years ago America was home to 8,000 listed domestic firms; now the total is close to 4,000. In 2016, 74 firms made their stockmarket debut, compared with 600 two decades ago. This winnowing is unwelcome. Merger activity, which reduces the number of listed firms, is damaging competition. Overregulation, which deters younger firms from floating, deprives ordinary investors of opportunities to benefit from America’s corporate successes. + +Less obvious is why the firms themselves, or their investors, should care. Companies that once had to go public to raise capital can happily fund themselves in private markets with money from sovereign-wealth funds and institutional investors. Unicorns, privately held tech startups with valuations exceeding $1bn, are common. Cash keeps pouring into the industry. This week Saudi Arabia promised up to $45bn to a $93bn technology fund run by SoftBank, a Japanese technology conglomerate (see article). Given a choice between red tape and freedom of manoeuvre, between quarterly earnings calls and long-term strategy, wouldn’t anyone in their right mind steer clear of the public markets? Actually, no. + + + +Take the argument that staying private lets unicorns operate more freely. The transparency that accompanies a public listing has its own benefits. Closer oversight might have more quickly rooted out problems at Theranos, a blood-testing startup whose $9bn valuation crumbled because of defects in its products. The rigmarole of public filings and quarterly calls might inject more sobriety into the brash culture of Uber, a ride-hailing firm. Astute startups like Slack, an online messaging firm, and Airbnb, a home-sharing site (see article), have deliberately taken on some of the accoutrements of listed firms, from regular audits to respected CFOs. + +As for the costs saved by staying private, some are being transferred from firms to investors. Public companies bear the expense of the detailed reporting and formal governance processes needed to keep outside investors in touch. Unicorns may be under a weaker spotlight, but their investors still carry out due diligence and market valuations, which they pay for themselves. The savings of private ownership can be illusory. + +Even if the public and private markets are converging, clear differences remain. Private markets are developing new ways for startups’ employees, the most valuable resource in techland, to cash in their shares. But public markets are far more liquid: that is one reason why Spotify, a music-streaming unicorn, is flirting with the idea of a direct listing, whereby a firm gets a ticker without raising any new capital. + +Private markets have slowly opened up to a wider pool of investors, mutual funds among them. But the inclusive nature of public markets offers better protection against reputational damage. That is because technology firms are changing the way societies and economies work. For firms that are at the centre of public-policy debates, a broad base of shareholders, able both to benefit from firms’ success and to question their activities, looks better than one dominated by plutocrats. + +Stock answers + +Public markets are also behaving more like private ones, by enabling founders to retain an iron grip even when they list. Snap, the parent company of Snapchat, sold shares in March but gave up no voting rights. That bothers advocates of shareholder democracy. But it weakens an argument entrepreneurs often make against floating (even as investors acquire a useful ability to divest positions easily or to sell shares short). + +Public markets are not perfect. But for unicorns to think of them as somewhere to steer clear of for as long as possible is wrong-headed. That is even truer of their investors. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21722646-closer-scrutiny-more-liquidity-and-stronger-defence-against-reputational-risk-advantages/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Jail break + +America’s prisons are failing. Here’s how to make them work + + +A lot is known about how to reform prisoners. Far too little is done + +May 27th 2017 + + + + + +SHIRLEY SCHMITT is no one’s idea of a dangerous criminal. She lived quietly on a farm in Iowa, raising horses and a daughter, until her husband died in 2006. Depressed and suffering from chronic pain, she started using methamphetamine. Unable to afford her habit, she and a group of friends started to make the drug, for their own personal use. She was arrested in 2012, underwent drug treatment, and has been sober ever since. She has never sold drugs for profit, but federal mandatory minimum rules, along with previous convictions for drug possession and livestock neglect, forced the judge to sentence her to ten years in prison. Each year she serves will cost taxpayers roughly $30,000—enough to pay the fees for three struggling students at the University of Iowa. When she gets out she could be old enough to draw a pension. + +Barack Obama tried to reduce the number of absurdly long prison sentences in America. His attorney-general, Eric Holder, told federal prosecutors to avoid seeking the maximum penalties for non-violent drug offenders. This reform caused a modest reduction in the number of federal prisoners (who are about 10% of the total). Donald Trump’s attorney-general, Jeff Sessions, has just torn it up. This month he ordered prosecutors to aim for the harshest punishments the law allows, calling his new crusade against drug dealers “moral and just”. It is neither. + + + +More is not always better + +Prisons are an essential tool to keep society safe. A burglar who is locked up cannot break into your home. A mugger may leave you alone if he thinks that robbing you means jail. Without the threat of a cell to keep them in check, the strong and selfish would prey on the weak, as they do in countries where the state is too feeble to run a proper justice system. + +But as with many good things, more is not always better (see article). The first people any rational society locks up are the most dangerous criminals, such as murderers and rapists. The more people a country imprisons, the less dangerous each additional prisoner is likely to be. At some point, the costs of incarceration start to outweigh the benefits. Prisons are expensive—cells must be built, guards hired, prisoners fed. The inmate, while confined, is unlikely to work, support his family or pay tax. Money spent on prisons cannot be spent on other things that might reduce crime more, such as hiring extra police or improving pre-school in rough neighbourhoods. And—crucially—locking up minor offenders can make them more dangerous, since they learn felonious habits from the hard cases they meet inside. + +America passed the point of negative returns long ago. Its incarceration rate rose fivefold between 1970 and 2008. Relative to its population, it now locks up seven times as many people as France, 11 times as many as the Netherlands and 15 times as many as Japan. It imprisons people for things that should not be crimes (drug possession, prostitution, unintentionally violating incomprehensible regulations) and imposes breathtakingly harsh penalties for minor offences. Under “three strikes” rules, petty thieves have been jailed for life. + +A ten-year sentence costs ten times as much as a one-year sentence, but is nowhere near ten times as effective a deterrent. Criminals do not think ten years into the future. If they did, they would take up some other line of work. One study found that each extra year in prison raises the risk of reoffending by six percentage points. Also, because mass incarceration breaks up families and renders many ex-convicts unemployable, it has raised the American poverty rate by an estimated 20%. Many states, including Mr Sessions’s home, Alabama, have decided that enough is enough. Between 2010 and 2015 America’s incarceration rate fell by 8%. Far from leading to a surge in crime, this was accompanied by a 15% drop. + +America is an outlier, but plenty of countries fail to use prison intelligently. There is ample evidence of what works. Reserve prison for the worst offenders. Divert the less scary ones to drug treatment, community service and other penalties that do not mean severing ties with work, family and normality. A good place to start would be with most of the 2.6m prisoners in the world—a quarter of the total—who are still awaiting trial. For a fraction of the cost of locking them up, they could be fitted with GPS-enabled ankle bracelets that monitor where they are and whether they are taking drugs. + +Tagging can also be used as an alternative to locking up convicts—a “prison without walls”, to quote Mark Kleiman of New York University, who estimates that as many as half of America’s prisoners could usefully be released and tagged. A study in Argentina finds that low-risk prisoners who are tagged instead of being incarcerated are less likely to reoffend, probably because they remain among normal folk instead of sitting idly in a cage with sociopaths. + +Justice systems could do far more to rehabilitate prisoners, too. Cognitive behavioural therapy—counselling prisoners on how to avoid the places, people and situations that prompt them to commit crimes—can reduce recidivism by 10-30%, and is especially useful in dealing with young offenders. It is also cheap—a rounding error in the $80 billion a year that America spends on incarceration and probation. Yet, by one estimate, only 5% of American prisoners have access to it. + +The road to rehabilitation + +Ex-convicts who find a job and a place to stay are less likely to return to crime. In Norway prisoners can start their new jobs 18 months before they are released. In America there are 27,000 state licensing rules keeping felons out of jobs such as barber and roofer. Norway has a lower recidivism rate than America, despite locking up only its worst criminals, who are more likely to reoffend. Some American states, meanwhile, do much better than others. Oregon, which insists that programmes to reform felons are measured for effectiveness, has a recidivism rate less than half as high as California’s. Appeals to make prisons more humane often fall on deaf ears; voters detest criminals. But they detest crime more, so politicians should not be afraid to embrace proven ways to make prison less of a school of crime and more of a path back to productive citizenship. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/leaders/21722642-lot-known-about-how-reform-prisoners-far-too-little-done-americas-prisons-are/print + + + +上一個 文章 節 下一個 + + + + + +Leaders 節 Briefing + + + + + +Letters + + +On data, France, Poland, Theresa May, Silicon Valley, Donald Trump: Letters to the editor + +Leaders 節 Briefing + + + + + +文章 節 下一個 + + + + + +Letters + +Letters to the editor + + +On data, France, Poland and more + +May 25th 2017 + + + + + +Data driven + +You are right to focus on the role of data as the central reason for the growing power of the internet giants (“The world’s most valuable resource”, May 6th). Part of the reason for this is the lax attitude in America on data protection. This has allowed not only huge concentrations of economic power (now transformed into political power) but also rocketing levels of data breaches, financial fraud and identity theft. + + + +Giant companies capture markets in the internet economy through non-price mechanisms. Value is found not in the sale of a product to a customer, but the extraction of personal data from the individual and its repurposing for advertising. There is little internet users can do to make meaningful choices. They are the commodity. Markets, in the traditional sense, do not exist. + +But your proposal to share data more widely seems flawed. Startups would be handicapped by the advantages of scale held by the internet incumbents. And more data means more data breaches and more financial fraud. A better way would be to minimise data collection and diminish the advantages of the data giants. Meaningful data protection in the United States should be a top priority for those concerned not only about privacy, but also economic competition. + +MARC ROTENBERG + +President + +Electronic Privacy Information Centre + +Washington, DC + +Global surveys tell us that consumers do not understand how their data is collected and used, so the idea that they can drive competition in the digital world doesn’t really add up. Consumers are hampered by a lack of understandable, comparable information and by difficulties transferring their data or content. There is clearly a need for better data portability, meaningful transparency and new intermediary services, but we need more work to ensure that these ideas offer consumers real choice. + +AMANDA LONG + +Director-general + +Consumers International + +London + + + +We will maximise economic gain if we move towards more openly shared data under appropriate ethical frameworks, rather than competing data silos. Think of data as an open public good rather than a private asset. This increases innovation and reduces the transaction costs associated with trading data. It encourages competition in algorithms and services rather than silos and hoarding. + +Data is not the new oil. It is the new light. It is most valuable when open and shared. + +MARK PARSONS + +Secretary-general + +Research Data Alliance + +Boulder, Colorado + +Property rights are fundamental to the exchange of value through trade. In the physical world we have long-established means of determining ownership of assets. During the first 20 years of the digital economy it has been difficult to assign and protect ownership of digital assets to people. A commonly recognised digital identity infrastructure is required if fair value distribution is to be achieved. In its recent report, “Principles on Identification”, the World Bank proposed a framework that would be a good starting point. + +DAVID RENNIE + +Windsor, Berkshire + + + +* I applaud The Economist for concluding that data is quickly becoming “The world’s most valuable resource”, and I found your arguments for tougher antitrust regulation of big tech and their vast data to be sound. As someone who works in the data field I have thought similarly in the past, but feel that the missing link in unlocking data’s potential is not more regulations—it is more training. + +Data science is more a practice than a job, and like most life skills, it pays to start learning sound analysis methods early. In the not so distant future, taking advantage of data will be the new normal to succeed, whether it be at a startup, at an established company, or something at home. + + + +It is exciting to see this career path generating interest, to see more high school students studying basic coding and the industry sharing resources at no cost or contributing to open-source development. It is a good trend, but I would like to see more academia and corporate collaboration to ensure that the benefits of the data economy are equally available to all. + + + +GLEB DROBKOV + +Data Scientist, JP Morgan + +New York + + + + + +A macrocosm of Macron + +You said of Emmanuel Macron’s victory in France, that if you count abstentions, blank ballots and votes cast to keep Marine Le Pen out, “only a fifth of the electorate positively embraced his brand of new politics” (“Macron’s mission, May 13th). But as this was an election with two rounds, your comment could be true of every presidential ballot in the Fifth Republic. In the past there have always been people voting for the elected president mainly to keep the other candidate out. Based on his support from total registered voters, Mr Macron has been “better” elected than Valéry Giscard d’Estaing in 1974 and François Mitterrand in 1988. + +Mr Macron’s true vulnerability does not come from the number of people who voted for him but from the fact that within a context of political polarisation (around immigration and globalisation) his majority is heterogeneous. And as you pointed out, he lacks the support of an established party machine. + +PHILIPPE ALTUZARRA + +Paris + + + + + +Populist but capable + +I read with interest Charlemagne’s take on populist nationalism in Poland (April 29th). Black-and-white snapshots can make a pretty picture, but they also distort reality. For example, Poland’s economy will grow at close to 4% this year. The budget deficit is under control, monetary policy is made responsibly and unemployment, at around 5%, is the lowest on record. The government has improved tax compliance, lifted the minimum wage and introduced a new child cash transfer, which has reduced inequality and almost eliminated extreme poverty. + +Jaroslaw Kaczynski, the de facto head of state, may have contempt for institutions, is anti-European and disregards the two-thirds of Poles who do not support him. But his “populist” economic policies are the ones that the global liberal elites talk a lot about, but do little to implement. + +MARCIN PIATKOWSKI + +Cambridge, Massachusetts + + + + + +In her wobbly week… + +Theresa May’s endlessly repeated mantra is that she provides Britain with “strong and stable” leadership (Bagehot, May 6th). Strong and stable are characteristics I would welcome in a chair or a bookcase. + +For someone leading this country into complex Brexit negotiations I would prefer flexibility, insight, intelligence and knowledge. + +CHRIS PEARCE + +Bristol + + + + + +A small pool + +“Silicon pally” (April 15th) made a strong point about the pervasiveness of sexism in the tech industry. But if, as your article states, only 18% of bachelor degrees in computer sciences are awarded to women, then it hardly seems just to condemn the industry on the ground that it is mostly male. + +PIETRO VALENTINO CALCAGNI + +Zurich + + + + + +I’m Henry the Eighth I am + + + + I think Donald Trump might summon your comparison of him to Henry VIII as evidence of a witch-hunt (“Courting trouble”, May 13th). There are differences. King Donald has a Congress to oversee his decisions, whereas Henry Tudor ruled by divine right. Mr Trump’s second wife did not give him cause to behead her. Nor is it conceivable that the irreligious Donald I will expel the pope’s Catholic church. + +Perhaps a better comparison, and of greater concern in these centenary years remembering the first world war, would be a reincarnation of Kaiser Wilhelm Trump, blundering us all into another war “to end all wars”. + +COLIN LENDON + +Canberra, Australia + +* Letters appear online only + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/letters/21722605-data-france-poland-and-more-letters-editor/print + + + +文章 節 下一個 + + + + + +Letters 節 United States + + + + + +Briefing + + +Ocean fishing: All the fish in the sea + +Letters 節 United States + + + + + +文章 節 下一個 + + + + + +Improving the ocean + +Getting serious about overfishing + + +The oceans face dire threats. Better regulated fisheries would help + +May 27th 2017 | PLYMOUTH + + + + + +EVEN the names at Sutton Harbour give it away. While the pleasure boats, including Windfall and Felicity, gleam in the sunshine, the light warms rust on the decks of craft such as Pisces. The fishing industry is struggling to stay afloat in Plymouth, a port in Devon. Locals grumble about regulation, fuel costs and the dearth of crew. Revenues are stagnant and the facilities ageing. But if times are tough for the fishers, they may be tougher for the fish. + +The world currently consumes more fish per person than ever before—about 20 kilos a year. But almost all the recent gains in production have been down to farmed fish. Aquaculture has grown remarkably in the past decades, especially in China; in 2014 it accounted for half of all the fish people ate. But that does not mean that the pressure on the open seas has eased. + + + +In 2013, the most recent year for which full data are available, 32% of the world’s fish stocks were being exploited beyond their sustainable limit, up from 10% in the 1970s, according to the UN’s Food and Agriculture Organisation. The amount of fish caught at sea has been pretty much flat for the past three decades, but the share of the world’s fish stocks that are being plundered unsustainably has continued to increase (see chart 1). + +Overfishing is not the only problem. Pollution, notably fertiliser run-off, damages a lot of marine ecosystems. There are estimated to be 5trn bits of plastic in the ocean, with over 8m tonnes of the stuff added every year. By the middle of the century the sea could contain more plastic than fish by weight, according to research done for the Ellen MacArthur Foundation. + + + +Not all the harm comes directly from the land; some comes via the sky. Carbon dioxide accumulating in the atmosphere has so far raised the world’s average sea-surface temperature by about 0.7ºC. This has effects at depth; when seas warm up they become more stratified, making it harder for nutrients in the waters below to rise to where they are most needed by fish and plankton. Given this, it might seem fortunate that the ocean absorbs a fair bit of that carbon dioxide, thus reducing the warming. But doing so changes the ocean’s chemistry, making it more acidic. This is a particular problem for creatures with calcium-carbonate shells—which includes not just crabs and oysters but quite a lot of larvae, too. Acidification makes carbonates more likely to dissolve. + +It is hard to grasp the scale of such planetary changes, and impossible to say how much damage they will do. That is the way of things with the ocean; it is vast and human horizons are close. That something so immense could be put at risk just by people leading their daily lives seems inconceivable. But as with the atmosphere and the surface of the continents—where humans now move more sediments than the natural processes of erosion—the fact that something is vast does not mean humans cannot have profound impacts on it. + +For the sake of the hundreds of millions of people who depend on the ocean for livelihoods or sustenance, as well as for the sake of the ocean itself, these human impacts need to be reined in. There are signs that, where fishing is concerned, this may be coming about, not least because monitoring what goes on over the horizon is becoming ever easier. But there is a great deal left to do. + +Losing Nemo + +Overfishing is bad for fish; it is also, in the long run, bad for those seeking to catch them. The goal of sound management is to have a stock that is harvested at the same rate that it replenishes itself—which might typically be a stock about half the size of what would be there if there were no fishing at all. If fishers take more than this “maximum sustainable yield”—as they do in many fisheries today—then in the long run they will get less out of the resource than they could, quite possibly imperilling its future. If stocks were allowed to rise back up far enough for the world’s fisheries to reach their maximum sustainable yield, the industry would increase production by 16.5m tonnes—about a fifth of the current total—and bring in an extra $32bn a year. + +Good management could in principle get the stocks back up through the use of quotas, property rights and other constraints on untrammelled exploitation. Quotas and similar controls have worked well in some cases. In American waters 16% of stocks were overfished in 2015, down from 25% in 2000. But they have drawbacks. Because they want to land the largest fish they can find, fishers throw back undersized specimens, which often die as a result. And because fish mix, species caught by accident are thrown back if a fisher has no quota for them. + +Quotas are also often badly set. Regulators and politicians pander too much to powerful fishing interests, according to Rainer Froese of the Helmholtz Centre for Ocean Research in Kiel, Germany. Lobbies, which often benefit from the importance of fishing to specific places, push for short-term profit over long-term sustainability. “They harvest the apples by cutting the tree branches,” says Mr Froese. + +The problem is exacerbated by a lack of evidence, which makes overly permissive quota-setting easier. More investment in research and monitoring could help. But in developing countries, where the need is often dire, there are frequently no resources to meet that need, and in many rich countries fishing is not a big enough industry to make such research a national priority. “We are not good value for the taxpayer, but how can you have an island nation without a fishing fleet?” asks Pete Bromley, a former fisherman who is now master of Sutton Harbour. + +Aquaculture boosters might answer that fleets are simply no longer needed. But farmed fish, particularly salmon and their ilk, are fed on smaller fish that themselves are caught at sea. Insects or algae might provide alternative fodder, but the companies involved are slow to embrace such novelties, according to Ari Jadwin of AquaSelect, which provides advice to Chinese fish farms. One issue, he says, is that Chinese consumers are not moved by sustainability arguments. But he thinks that concerns over food safety will lead to better practices in the long run. + +Those struggling to make money from early mornings in stormy seas worry more about business in the next year than in the next fifty. “Climate change isn’t happening next month. At the moment we’ve got to hang on to what we’ve got,” says Mr Bromley. But worrying trends are already visible. As equatorial seas warm up, many plankton species are extending their range towards the poles by hundreds of kilometres a decade; where they lead, fish will follow. + +Moving somewhere cooler might seem a simple thing; but temperature is not all that matters to fish, and so there can be trade-offs involved. The flounders off the coast of Britain like water that is both relatively shallow and fairly cool, says Martin Genner from the University of Bristol. With water temperatures around the south of the country 1.5ºC higher than they used to be, the flounders have headed north—but there the waters are deeper, which suits them less well. Fish may also need particular types of food at particular times in their life cycles, such as when their larvae hatch. If predators and prey respond to warming by heading to different places, or by speeding up or slowing down their breeding at different paces, such needs will go unmet. But how much, and where, food webs will be thus disrupted is hard to say. Few of the models seeking to predict how climate change will affect fish consider ecological interactions between species. + +Fixed assets + +Not everything in the sea can move to waters new with the flick of a fin. Coral reefs, for example, are rather stuck. Although they cover less than a thousandth of the world’s sea floors, they support a quarter of known marine species—and through them millions of people who rely on fishing and tourism for their livelihoods. As oceans warm, corals risk “bleaching”—losing their colourful algal symbionts—because the algae involved can only survive in a slim range of temperatures. Without their algae, which photosynthesise, the corals lose their source of energy. + +There have been three global bleaching episodes since 1998, worsened by El Niño events that heat up the tropical Pacific. The one that started in 2014, and is still going on, has been the longest and most damaging; more than 70% of the world’s coral reefs have been harmed by it. Australia’s Great Barrier Reef, worth $4.6bn each year to nearby Queensland alone, has been particularly badly affected. “Five or ten years ago, most of the discussion about coral reefs was over how they would look by the end of century,” says Rusty Brainard, a coral expert at America’s National Oceanic and Atmospheric Administration. “Now the talk is of whether coral reefs will survive as we know them to 2050 or even 2030.” + +Acidification makes the picture worse. Though it is hard to distinguish the effects of chemistry from the other problems that beset reefs, it seems a fair bet that an environment where calcium carbonate is more likely to dissolve will not be good for them. A study published last year by researchers at the Carnegie Institution for Science made the point clearly by running de-acidified water over a reef; the corals perked up nicely. Doing the same for all the world’s reefs, though, is hardly an option. + + + +Faced with chronic problems and hard-to-quantify future crises, the sea’s resources need to be looked after better by all those—countries, consumers, companies and fishers—with a stake in their survival. + +Much of that needs to be done in national jurisdictions. Though overfishing means that many fleets now head farther from home than before, about 90% of the catch is from the “exclusive economic zones” (EEZs) that countries are entitled to claim out to as far as 200 nautical miles (370km) from their shores. What counts as a shore, and a claim, though, can be disputed: China’s assertion of fishing rights in the South China Sea, which contains a tenth of the global fish catch, sets its neighbours on edge (though it is hardly the only thing that does). Russia, America and other Arctic states argue over new access to fish stocks in the melting north. + +Though what goes on in EEZs is largely a sovereign matter, there are some levers available to outsiders. The World Trade Organisation (WTO) hopes to introduce new rules on fishing subsidies at its next ministerial jamboree in December. These come to $30bn a year, with seven in every ten dollars handed out by comfortably-off countries. The WTO first started discussions on fishing subsidies back in 2001; Pascal Lamy, formerly its director-general, says a great deal of effort has gone into working out which subsidies are contributing to harmful fishing practices. The reckoning now is about 60% of them do so. + +China, which gets far more fish from its EEZ than any other country does from theirs (as well as fishing, by agreement, the EEZs of other countries), seems open to action on subsidies if some unrelated anti-dumping measures are loosened. But how to bring poor countries on board remains a thorny issue. Although coastal African states want change, many inland ones fret over the higher cost of fish. “The whole point is to make fish more expensive,” explains Mr Lamy, “so as to internalise the cost of environmental depletion.” Sensible stewardship, but not necessarily an easy sell in countries where fish from elsewhere are a cheap source of protein for the poor. + +Establishing more protected areas both within EEZs and on the high seas beyond would be another way to help, particularly if they were to contain “no-take” zones where fishing is completely barred. Such zones provide breathing spaces, or breeding spaces, in which stocks can recover. Crow White from California Polytechnic State University and Christopher Costello from the University of California, Santa Barbara have calculated that if such an approach was taken to its extreme and the high seas were closed to fishing, then yields elsewhere could rise by 30%, with fisheries’ profits doubling because fish closer to shore become cheaper to catch. + + + +The countries that dominate fishing in international waters (see chart 2) would never stomach such a ban; they prefer the often inadequate regulation offered by regional fisheries-management organisations. But even in these regimes, temporary and rolling closures have been tested. In the Antarctic permanent ones have proved successful. + +Spotting boats that misbehave on the high seas (or indeed in EEZs) is getting easier. The International Maritime Organisation (IMO) requires ships over 300 tonnes to have an Automatic Identification System (AIS), a radio transmitter which tells anyone in the vicinity the boat’s position, speed and identity so as to avoid collisions. “In the vicinity”, though, now includes “up above”; various satellites can use AIS transmissions to track ships. Spire, an American startup, is building up a constellation of tiny spacecraft with which it hopes to log 10m AIS transmissions every day by the end of this year. + +Global Fishing Watch, an online platform created by Google, Oceana, a marine charity, and Sky Truth, which uses satellite data to further environmental causes, is a keen user of AIS transmissions. They do not just let it locate fishing vessels; they let it take a good guess as to what they are doing (boats long-lining for tuna, for example, zigzag distinctively). The platform currently follows 60,000 vessels responsible for 50-60% of the world’s catch, according to Brian Sullivan from Google. Indonesia is planning to use the platform to make public data that it gathers through “vessel monitoring systems”—information which can reveal more about what is actually happening on-board than AIS location data do, and as a result is often jealously guarded. The more other countries follow suit, the better the picture will be. + +The Port State Measures Agreement, which came into force in 2016, means that if such monitoring leads a country to suspect that a foreign vessel is doing something dodgy, it does not have to go out and inspect it in order to take action. The agreement’s clever construction means that poor countries without much by way of navy or coastguard can deny a suspicious foreign vessel entry to their ports and pass its details on to other countries that might have the wherewithal to check it out. + +Big ocean, big impact + + + +Companies can act, as well as countries. Food suppliers and retailers such as Costco, Sodexo and Walmart are trying to combat poor fishing practices through a body called the Seafood Task Force. The idea is to ensure that supply chains are what they purport to be and that labour conditions in the industry are up to snuff with an eye to fixing problems before they become scandals. And insurers are interested in the sort of monitoring Global Fishing Watch does: ships that turn their AIS off increase the risk of collisions; they may attract bigger premiums or have their policies revoked. + +Investors currently have little information on how their choice of investment affects marine life. Fish Tracker, a not-for-profit firm, aims to put that right. It is looking at the risks posed by unsustainable fishing in the same way that climate activists have studied the risks of fossil-fuel investments in order to warn off investors. Mark Campanale, the initiative’s founder, says that at the most basic level investors need to understand that if one boat catches one fish, ten boats will not catch ten. To that end the outfit is analysing information covering 300 fishing companies with a market capitalisation of $530bn to calculate the unacknowledged downsides imposed by environmental limits. + +None of this can drive change effectively, though, without the support of fishers. Including them in the design of regulatory regimes can bolster scientific analysis and reduce political tensions; by bringing them into the process it also deepens their understanding of sustainable practice. “It would be unacceptable for farmers to go through an educational system without understanding crop yields and the need to manage the land for future generations,” says Jim Masters of Fishing into the Future, a charity. “But there are no equivalent opportunities for fishermen.” For the sake of the fish, there should be. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/briefing/21722629-oceans-face-dire-threats-better-regulated-fisheries-would-help-getting-serious-about/print + + + +文章 節 下一個 + + + + + +Briefing 節 The Americas + + + + + +United States + + +Reforming health care: First, do some harm + +The Russia investigation: Each to his own + +The budget: Zero sums + +Immigration’s forgotten history: Moses in the Ozarks + +Lexington: The impeachment delusion + +Briefing 節 The Americas + + + + + +文章 節 下一個 + + + + + +First, do some harm + +Before Republicans replace Obamacare, the White House is killing it + + +Eighteen million Americans buy insurance on the individual market. It may collapse + +May 25th 2017 | WASHINGTON, DC + + + + + +WHETHER or not their bid to reform health care succeeds, Republicans think Barack Obama’s Affordable Care Act will founder. For years, critics of the law have said that its health-insurance markets will enter a “death spiral” in which rising premiums drive out healthy buyers, forcing premiums higher still. “Obamacare is absolutely dead” President Donald Trump told The Economist on May 4th. + +If he is right, calamity looms. Eighteen million Americans buy insurance for themselves, rather than through an employer; it is this part of the insurance market that looks wobbly. Mr Trump thinks its collapse would force Democrats to join his reform effort. And he is putting his money where his mouth is. Indeed, his administration is part of the problem. + + + +Insurers raised premiums in the individual market by an average of 22% in 2017. They had been caught out by the poor health of enrollees on Obamacare’s “exchanges”, websites that serve a little over half of the market, and that offer subsidies to low- and middle-income buyers. Nobody was sure who would sign up to the exchanges. So the law was supposed to confiscate profits if insurers priced too high, and pay compensation if they priced too low. But when insurers made losses, Republicans in Congress blocked the “bail-out”. Adding to firms’ woes, the “individual mandate”, a requirement that everyone buys insurance if they can afford it, or pays a fine, has been easy to dodge. + + + +Things were meant to improve in 2018. The Congressional Budget Office (CBO) said in March that the market was stable. Standard & Poor’s, a credit-rating agency, expects insurers to come close to breaking even this year. Yet in the first places to disclose insurers’ plans for 2018, which must be approved by regulators, premiums are shooting up again (see chart). In four of six cases, the rise is greater than in 2017. In Maryland, insurers want to raise premiums by almost 45%. + +Obamacare benefits from an automatic brake against any death spiral. Above a cap, the government picks up the tab for the 9m buyers who receive subsidies, shielding them from higher premiums. But subsidies are no use if there is nobody selling insurance to begin with. Insurer exits have already left about a third of counties with only one seller. In April it briefly looked as if 16 counties around Knoxville, Tennessee, would have no insurers in 2018, until BlueCross BlueShield of Tennessee agreed to step in. Many states will face similarly precarious situations, especially in rural areas. On May 24th Blue KC announced that it was leaving the Kansas and Missouri exchanges, potentially leaving 25 counties with no insurer. + +Who is to blame? The Trump administration’s approach to the markets has vacillated. On his first day in office, Mr Trump ordered agencies to use what legal power they have to dismantle Obamacare. In response, the tax authorities weakened the individual mandate. But in April the health department penned rules designed to shore up the market. For example, it shortened the annual period during which the exchanges are open for business, thereby making it harder for people to wait until they fall ill before signing up. + +Now the sabotage seems to be back on. At issue are subsidies for so-called “cost-sharing”. Obamacare requires insurers to lower out-of-pocket costs, like deductibles and co-payments, for the poorest buyers. The Treasury is supposed to foot the bill (which will total $7bn this year). Yet Mr Trump has for months threatened to withhold the cash, even describing it as “ransom money”. Politico reports that he told advisers that he wants to cut off the cash. + +The risk of this happening is destabilising the market. The Kaiser Family Foundation, a think-tank, estimates that without the payments, premiums would need to rise by 19% (before accounting for any other factors). Because insurers have to set their prices for 2018 now, before they know if the payments will be made, they are either raising premiums to avoid being caught out later, or giving up and quitting the troubled markets altogether. + +It does not help that cost sharing subsidies are also the subject of a legal battle. In 2016 a federal court ruled them unconstitutional, after the House of Representatives sued to stop them. The judgment was stayed, pending an appeal that the Trump administration has now inherited. On May 22nd both sides were, for the second time, granted a three-month pause in proceedings. That is of little help to insurers, many of whom must decide on premiums for 2018 by June 21st. If the uncertainty persists until then, it is likely that many more counties will be left without any insurers. + +However much damage is done, it is unlikely to force Democrats to negotiate over a new bill. On May 24th the CBO projected that the health bill approved by the House of Representatives, and soon to be considered by the Senate, would result in 23m fewer Americans having health insurance in 2026, mainly because of cuts to Medicaid, health insurance for the poor. That will be difficult for many Senate Republicans, let alone Democrats, to stomach. Before the “something terrific” that the president promised as a replacement for Obamacare arrives, he may kill a market where 18m Americans buy health insurance. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21722640-eighteen-million-americans-buy-insurance-individual-market-it-may-collapse/print + + + +文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +The Russia investigations + +Congressional hearings on election meddling grind on + + +Meanwhile, Sean Hannity and Newt Gingrich counter accusations of a conspiracy with a conspiracy theory + +May 25th 2017 | WASHINGTON, DC + + + + + +“IT SHOULD be clear to everyone that Russia brazenly interfered in our 2016 presidential election process.” So declared John Brennan, former director of the CIA, at a hearing of the House Intelligence Committee on May 23rd, adding that he had seen intelligence of “contacts and interactions between Russian officials and US persons involved in the Trump campaign,” leaving him with “unresolved questions” about whether Russian spooks successfully recruited American helpers. He remembered a warning telephone call he made in August 2016 to the head of Russia’s spy service, the FSB, urging his opposite number to remember that, regardless of their political affiliation, “American voters would be outraged by any Russian attempt to interfere in the election.” + +It is rare to hear a spy chief sound insufficiently cynical about the world, but Mr Brennan managed it. Both his premises turn out to be wrong. To hear a shifting cast of Republicans in Congress, conservative media stars and Trump allies tell it, it is not remotely clear that Russia interfered in the election. Polling shows most Republicans and Democrats hold irreconcilable views on something that the former head of the CIA asserts is a settled fact. + + + +Some of the loudest voices in conservative media, including Sean Hannity of Fox News and Newt Gingrich, the former speaker of the House, have peddled a conspiracy theory that the hacking of Democratic Party e-mails during the election might have been the work of a young staffer at the Democratic National Committee, Seth Rich, who was later murdered in what the police suspect was a botched robbery. + +Mr Hannity and Mr Gingrich speculated that Mr Rich might have been the victim of a political assassination, citing, among other things, a report by Fox News, which was later retracted. Mr Rich’s parents published an appeal in the Washington Post for people to stop spreading inventions about their son, calling this “unspeakably cruel”. That is a fact on which all should be able to agree. Yet once circulated, conspiracy theories are notoriously hard to knock down. In that sense, Mr Hannity and Mr Gingrich have already done their work. + +Some solid points may be grasped amid the murk. There is a bipartisan desire to hear more from Michael Flynn, the former general who briefly served as Mr Trump’s first national security adviser, notably about his contacts with Russian officials. Mr Flynn refused one subpoena from the Senate intelligence committee, pleading his right to avoid self-incrimination. That prompted fresh Senate subpoenas aimed at consultancy businesses that he founded. House subpoenas may be next. If nothing else, lawyers will be busy. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21722637-meanwhile-sean-hannity-and-newt-gingrich-counter-accusations-conspiracy/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Zero sums + +The White House’s budget goes from unrealistic to innumerate + + +Different parts of the administration contradict each other on economic policy + +May 25th 2017 | WASHINGTON, DC + + + + + +THE Budget Act of 1921 requires the president to propose a budget, but Congress holds the power of the purse. Since Mick Mulvaney, the budget director, sketched out the Trump administration’s proposal in February, it has been clear that lawmakers would end up rewriting it. Mr Mulvaney wants immediate deep cuts across government that are unpalatable even to many Republicans. The fleshed-out version of the budget, released on May 23rd, features a new promise: to eliminate the budget deficit within ten years. + +The president wants to leave Medicare, health insurance for the old, and Social Security (public pensions) untouched. As a result, achieving budget balance requires an unimaginably deep cut to so-called “non-defence discretionary” spending, which includes things like education, scientific research and diplomacy. This part of the budget would shrink by 41%, after adjusting for inflation, according to the Centre for Budget and Policy Priorities, a left-leaning think-tank. That greatly exceeds the deepest cut the administration had already proposed for 2018, of about one-third, to the State Department. + + + +Entitlement programmes for working-age people would be slashed. Federal funding for Medicaid, health insurance for the poor, would eventually fall by nearly half (a greater cut than in the House Republicans’ health-care bill). The budget for Supplemental Nutrition Assistance, which helps the destitute buy food, shrinks by a quarter, as part of the burden of supporting the poor is shifted to the states. + +Yet even all this would be insufficient to eliminate the budget deficit, which is forecast to swell to 5% of GDP by 2027 under current law (because of increasing spending on the aged). To get the budget to balance, Mr Mulvaney also assumes the economy will grow by 3%, a target that will be difficult to reach in the demographic headwinds. Fast growth fills the government’s coffers by about $2trn over a decade. + +The problem is that Steve Mnuchin, the treasury secretary, has already banked that $2trn to pay for the tax cuts that are supposed to spark the 3% growth in the first place. Another contradiction is that the budget predicts growing revenue from the estate (inheritance) tax, which it promises to abolish. It is one thing for the executive and legislature to disagree. But the Trump administration has produced a blueprint that contradicts itself. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21722638-different-parts-administration-contradict-each-other-economic-policy-white/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Moses in the Ozarks + +The parable of Italians in the South + + +Migration, race, a charismatic priest and lots of cannelloni + +May 25th 2017 | LAKE VILLAGE AND TONTITOWN, ARKANSAS + + + + + +THE cellar is flooded and Chris Ranalli worries about snakes. From the safety of the back door, he points out the sturdy walls—two feet thick, as if to withstand Mediterranean earthquakes—and the elegantly vaulted ceilings. “They lived in the top two storeys and made wine in the basement,” explains Mr Ranalli, who now tends the 100-year-old vineyard adjacent to the house. The view from the road is anomalous: framed by Catawba trees, the façade combines northern Italian architecture and Ozark stone, seeming to belong as much to the Apennines as Arkansas. + +This house tells a story that is both familiar and extraordinary, as the exploits of immigrants to America tend to be. It is a tale of struggle and success, of awful but commonplace suffering, villainy and heroes, including a dauntless priest who, like a latter-day Moses, led his flock to a new life in the mountains. It epitomises the variety behind the strip-mall, fast-food sameness of small-town America, but also the loss that can be a bittersweet corollary of progress. And, like the house itself—standing but decrepit—it is only half-remembered, the sort of amnesia that helps to explain attitudes to immigration today. + + + +The house was built a century ago by Adriano Morsani, a stonemason from central Italy. He is captured in old photos as a moustachioed patriarch, beside a wife in a smart hat and children squinting into the sun. But the story is quintessentially American. It begins on the floodplain of the Mississippi, close to Arkansas’s border with Louisiana, in the turmoil after the civil war. + +Today the fields enclosed by the Mississippi and the horseshoe of Lake Chicot are punctuated by grain bins, plus a few labourers’ dwellings guarded by bored dogs. The lakeshore is lined with idyllic homes with pretty jetties and private boats. A hundred years ago, when this was still the Sunnyside plantation, the villas had not been built; nor had the suspension bridge that, near one of the narrow openings between lake and river, now links Arkansas with Mississippi. The water that almost encircles the fantastically fertile, sandy-loam soil made it a natural prison camp. + +In 1861 Sunnyside was among the largest, richest plantations in Arkansas. It was owned by Elisha Worthington, who scandalised white society by recognising two children he fathered by a slave. After the war, as cotton prices plunged, it belonged to John Calhoun, namesake and descendant of the southern ideologue, and then to Austin Corbin: a robber-baron financier and railroad speculator, who, as a founding member of the American Society for the Suppression of the Jews, barred them from the hotel he built on Coney Island. Corbin installed a steamboat and a small railway, but, like many southern landowners, struggled to find labour. He experimented with convicts, then hit on an alternative: Italians. + +The levee wasn’t dry + +Like many people-traffickers, then and now, Corbin had a man on the inside. His was Don Emanuele Ruspoli, the mayor of Rome, who recruited workers from Le Marche, Emilia-Romagna and the Veneto. The first batch—98 families—sailed from Genoa on the Chateau Yquem, a reputedly rancid steamship that arrived in New Orleans in November 1895. The families clutched contracts showing that each had bought a tract of land, on credit to be repaid in cotton crops. After a four-day journey up the river to Sunnyside, they quickly realised that they had been misled. + +“The first year, 125 people died,” says Libby Borgognoni, a magnetic 81-year-old whose in-laws came over on the Chateau Yquem (her grandfather arrived later, after drawing the shortest straw of his family’s six sons). Hot, humid and swarming with mosquitoes, Sunnyside was fecund but deadly. Today you can drive on a gravel road on top of the levee between the fields and the Mississippi, the wide, eddying river and glacial tugboats on one side, cotton on the other, red-winged blackbirds darting between them. When the Italians arrived, the barrier was lower, and floods were common. The drinking water was filthy; yellow fever and malaria were rife. Climbing into his hunting truck, Tom Fava, another local Italian-American, helps to find the disused cemetery where the victims lie. It is hard by Whiskey Chute, a stream named after a cargo of whiskey scuttled by brigands during a fire-fight. + +Many of the millions of Italians who moved to America in that period, mostly to industrial cities in the north, suffered. But rarely like this. Heat and disease were the worst of it, but Corbin’s terms were onerous too. The Italians spoke little English; many were illiterate. But they could see that the land had been wildly overpriced. And while many were farmers, Mrs Borgognoni admits “they knew zip about cotton”. Anti-Italian and anti-Catholic prejudice swirled: 11 Italians had been lynched in New Orleans in 1891. Mrs Borgognoni recalls that, well into the 1930s, locals would roll the car windows down and holler “Dago!” at Italian children. + +In 1896, six months after the first Italians landed, Corbin died in a buggy accident near his exotic hunting lodge in New Hampshire (he was said to have startled the horses by opening a parasol). Still, a second boatload left Genoa for Ellis Island in December. Another Italian also made the trip from New York that year. Pietro Bandini grew up in Forli, joined the Jesuits and was sent as a missionary to Montana’s Native Americans. Later he moved to New York to minister to put-upon Italians. For those at Sunnyside, he was a redeemer. + +Bandini protested against the conditions. Legend tells that, when he was rebuffed, he told his acolytes to wait while he scouted a better environment. During his absence he arranged to buy land in the prairies west of Springdale, near what was then Indian Territory and is now Oklahoma. In early 1898, 40 families junked their contracts and followed him northwards. + +Precisely how they got from the Delta to the Ozarks, then a more arduous journey than it is today, is a matter of dispute. “They walked,” insists Charlotte Piazza, whose Italian-born father-in-law was in the original caravan. Some brought livestock, paying their way by doing odd jobs at Catholic churches along the route and hunting for food. Rebecca Howard, a historian at Lone Star College in Texas, thinks some travelled part of the way by train. Ms Howard’s great-great grandmother, Rosa Pianalto, buried a child at sea during the crossing on the Chateau Yquem and her husband shortly afterwards. She was remarried and pregnant for the Sunnyside exodus. + +Towards the promised land + +They would have set out, initially, across the big-skied plain of southern Arkansas. The road that crosses it today runs through Dermott, a hamlet with giant pecan and fireworks stores and an outsize “Gospel Singing Shed”, then skirts the site of an internment camp for Japanese-Americans and the state’s death-row prison. They would have crossed the brown Arkansas river at still-skyscraperless Little Rock, before turning west into its valley, where the land begins to undulate. Some Cherokee, Chickasaw and Choctaw Indians had followed that route on the “Trail of Tears”; it passes through forests and pastures and beside timber yards, lakes and creeks. They might have gulped as they approached Fort Smith, now a picturesque tourist town, then a frontier outpost renowned for a subterranean prison known as “hell on the border”. + +The railway from Van Buren to Springdale, which some probably rode on, is now used for tourist excursions, plunging into the Ozarks through mountain villages that grew up around what was formerly a commercial line. The chug across the Boston Mountains, the most rugged section of the Ozarks, with sheer cliffs and elevated trestles, must have seemed a dizzying lunge into another unknown future. At the same time, says Mr Ranalli, the winemaker, the cooler, higher landscape and temperate plateaus “felt like coming home”. + + + +A list of the pioneers is etched on a monument outside the town hall of Tontitown, the name they chose in honour of Henri de Tonti, a 17th-century Italian explorer. There were fewer mosquitoes but, to begin with, life remained hard. They lived in abandoned log cabins while they cleared the land, stuffing the cracks with linen to keep out drafts; Morsani, the stonemason, his brother and their five children shared a barn with several other families. They survived on pasta, polenta and wild rabbits. The men went to work on railways or in mines until the crops came in. Women took jobs as housekeepers in Eureka Springs. The locals were hostile: the Italians’ first church was set alight, reportedly with Bandini inside. He survived to warn the barrackers that his compatriots were handy with firearms. (The second church was lost to a tornado.) + +Tontitown prospered, largely through his ingenuity. “It was almost like he was a saint,” says Mr Ranalli of Bandini’s reputation. He was the new town’s teacher, bandleader and first mayor, as well as its priest. He negotiated to bring in a railway spur. He imported vines: the soil is poorer than in the Delta, Mr Ranalli says, but the drainage better suited to grapes. He was honoured by the pope and Italy’s queen mother. + +When Edmondo Mayor des Planches, the Italian ambassador, visited in 1905, Tontitown was thriving. Its residents were “happy, contented, prosperous”, des Planches wrote. “Italy, the place of their birth, was their mother, while America was their wife. They have reverence for the former, but love for the latter.” Photos in Tontitown’s historical museum capture his welcome, Stars-and-Stripes and Italian tricolours waving as he is escorted along dirt roads by locals dressed to the nines. + +Bandini died in 1917, but Tontitown’s success outlived him. During prohibition, says Mrs Piazza, one of the museum’s founders, people hid wine barrels in basements and vineyards. The bars on the windows of the Morsanis’ cellar were added to comply with post-repeal rules, Mr Ranalli says. When he was a child, in the 1960s, there were still a few old-timers who spoke only Italian. They had realised the American dream, and their own: from poverty in Italy, via devastation in the Delta, to a life in which many families lived on streets that bore their names—Morsani and Ranalli Avenues, Piazza and Pianalto Roads. + +That, for its citizens, is the moral of Tontitown’s story. Their pride is justified. But the travails of the Italians in Arkansas resonate in darker ways, too. + +Ambassador des Planches also visited Sunnyside on his southern jaunt. The scene was much less salubrious. Three cotton factors from Mississippi leased the plantation from Corbin’s heirs, using illegal methods to import more Italians. These transplants found themselves trapped by debts: for the cost of travel (their own to America and their cotton’s to market); for ginning fees and doctor’s fees; for the necessities they were obliged to buy at exorbitant prices from the company store, all accruing interest at 10%. Some fled; some who were caught, says Mrs Borgognoni, “were taken back by the sheriff in chains”. + +Over the river, across the lake + +The ambassador complained, and in 1907 the Department of Justice dispatched Mary Grace Quackenbos, an intrepid investigator. Leroy Percy, one of the proprietors, tried to subdue her with both southern gallantry and bullying. Her papers were stolen from her hotel room. An assistant was given three months on a chain gang for trespassing. Nevertheless Quackenbos recommended charges of peonage, or illegal debt servitude. They were never pursued: it helped that Percy had joined Theodore Roosevelt for the famous hunt on which the president inspired the Teddy Bear by declining to kill one. (Percy wound up in the Senate, where he served on an immigration commission.) + +Italian migration to the region dried up, and many of the Sunnyside families dispersed across the Delta, joining small Italian communities that had sprung up on either side of the river, along the Gulf coast, down in Louisiana’s sugar-cane territory and up to Tennessee. Clarksdale, Friars Point, Indianola: their destinations evoke a better-known Delta culture, the blues lore of Muddy Waters, Robert Johnson and B.B. King. Across the river from the plantation, in the part of Greenville known as Little Italy, there is still an Italian club, where members gather to play bocce in pits overlooked by miniature bleachers. On the Arkansas side, at what was once New Gascony, an overgrown Catholic cemetery lies at the end of a dusty track, surrounded by soyabean and cornfields (see picture). All that is left of the flood-ravaged settlement, says a farmer, are a few houses beyond the bayou. The fading Fratesi and Mancini headstones stand like hieroglyphs of a lost civilisation. + +A lost civilisation + + + +Some Sunnysiders, however, simply hopped across the water to Lake Village—today a seemingly typical Delta town, wedged between the nondescript highway and Lake Chicot and bisected by a railway track, beside which squats a cotton gin. Our Lady of the Lake church, and the museum Mrs Borgognoni oversees in its old rectory, reveal its nuances. All the Italian locals once made prosciutto, lonza and salsiccia, she remembers; “church was the biggest thing in the world.” As a child she picked possum grapes in the sloughs and levees to make wine in the cellar of her double-shotgun house. Squirrels were cooked in fornos, or brick ovens. There was a hog roast on the fourth of July and a celebratory spaghetti dinner in March. People played accordions and mandolins, which some think contributed to the blues. + +If the cultures of Italians and blacks in the Delta overlap, so did their experiences. “We ate together, we played together, we worked in the field together, we sang together,” says Mrs Borgognoni. “It was a different world.” Paul Canonici, a former priest and author of “Delta Italians”, a charming collage of family histories, remembers, as a child, peering through the windows of a black church at ecstatic worshippers, and watching black baptisms in the bayou. (In the mid-1920s Klansmen besieged his family home in Boyle, Mississippi, shooting the dog.) Italians, after all, were a marginal solution to the problem of labour in the inhumane conditions of the Deep South. Not just during slavery, but in the brutal ruses deployed after emancipation, from convict-leasing to the debt-trap of sharecropping, most victims were black. + +The Italians’ story, in fact, is a sort of shadow version of African-Americans’, the hardship milder and the ending sweeter. That they escaped the prejudice they first aroused was in part because their skin was acceptably white. As Ms Howard, the historian with Tontitown roots, notes, they could enlist external allies—the Catholic church, even the Italian government—that their black neighbours lacked. The Italians, in truth, are a blip in the grim saga of plantation agriculture, if an enlightening one. + +If the story of the Morsani house shows that aspects of slavery lingered on, it is also a reminder that what is often thought of as a modern-day kind—based on debt and intimidation—is far from new. And it discloses the mechanism by which some such ordeals come, selectively and misleadingly, to be redescribed as triumphs. + +Consider that church-burning in Tontitown. In early accounts it seems that bigoted white locals were responsible. Later, after the Italians were embraced, the culprits changed; now they were Native Americans, who had ridden over from Indian Territory. Through such collective editing, a small part of America’s jagged prehistory is sealed and separated from the trials of immigrants today. Always known to be patriotic and thrifty, the Italians, in this retelling, were different. It isn’t only them. Along with corn bins, cotton gins and Baptist churches, the Arkansas plains, like much of rural America, are littered with places that hint at a hazy cosmopolitan past: Moscow, Dumas, Hamburg. + +Forgive and forget + +“Have they forgotten how we got here?” asks Paul Colvin, Tontitown’s mayor, of today’s xenophobes. Some people have. Mr Colvin, the first mayor with no Italian connection, himself personifies a wider change, at once routine in immigrant communities and poignant. Even as they cooked the old recipes, the settlers hurried to assimilate, learning English and signing up for military duty. Their descendants married americanos and moved away. Each generation remembers less. Meanwhile, says Mr Colvin, “small towns are getting swallowed by the big towns”, as Walmart and other large employers turn places like Tontitown into dormitory suburbs. Land prices are rising; people are selling up, outsiders replacing them. + +Tontitown still holds an annual grape festival, which once marked the grape harvest and by tradition includes a feast of the signature dish, spaghetti and fried chicken. But Mr Ranalli’s is the only commercial vineyard left. “There’s very few full-blooded Italians that still live in this town,” he says. Not many people care about their heritage any more, agrees his daughter Heather, who runs a winery that sells his fine wine. “It’s dying out, and that’s the truth,” says Mrs Piazza, glumly. + +Cannelloni on the shore of Lake Chicot + + + +Down in Lake Village, says Mr Fava, the good Samaritan with the hunting truck, “the guys who were slaves are now the farmers.” Much of what was once Sunnyside is now owned by Italian-Americans, as are many of the posh homes on the lake, with their fleet of ride-on lawnmowers, as families return to the land from which their forebears fled. As often happened in distant enclaves in pre-internet days, the Italianness ossified—the dialect baffling actual Italians when they interacted with Lake Villagers—then withered, like Tontitown’s. The brick ovens and wine cellars are gone. Much of the old cemetery was ploughed over, the gravestones and crosses allegedly tossed into Whiskey Chute among the half-submerged cypress trees and nesting egrets. The priest at Our Lady of the Lake is a genial Nigerian missionary, Theo Okpara. Does he speak the language? “Nada,” replies Father Okpara, who ministers to more Hispanics than Italians. + +Like the shell of the Morsani house, though, some traces remain. Regina’s lakeside pasta shop continues to sell old-style muffalettas, cannelloni and parmigiana, as well as homemade pasta—“real thin, the way you like ’em”, says a non-Italian customer. And Mrs Borgognoni still recalls the songs she learned, aged six, picking cotton beside her grandmother. Her life had been hard, but, says her granddaughter, “when she was happy she would lift her skirt and dance the saltarello.” + +One of the songs, Mrs Borgognoni says, is about a young Italian soldier whose wife dies when he is away on duty; he returns to kiss her for a final time. The tune is sad but beautiful. She closes her eyes and sings. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21722683-migration-race-charismatic-priest-and-lots-cannelloni-parable-italians/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +The impeachment delusion + +Schemes to topple the president quickly would hurt the country + + +Donald Trump’s opponents risk splintering the democratic order they wish to save + +May 25th 2017 + + + + + +AMERICA has elected a man of frightening impatience as president. That is no reason for Donald Trump’s opponents to copy him. Four months into the Trump presidency his sternest critics seem ready to tear the country apart, just to see him gone. Democrats and activists on the left, including members of Congress, are already calling for his impeachment. They revel in leaks that batter the White House almost nightly and yearn for the wheels of justice to spin as fast. Their goal is a speeded-up Watergate, fit for an on-demand age. On the Trump-sceptic right pundits call the president a tyrannical “child upon the throne”. Some see the 25th Amendment to the constitution as a shortcut to adult supervision—just as soon as the vice-president, cabinet and a two-thirds majority in Congress agree that Mr Trump is “unable to discharge the powers and duties of his office”. + +Leave aside, for one moment, the legal and political hurdles that could delay the impeachment or dismissal of Mr Trump for years, if not for ever. If opponents did somehow succeed in toppling him before most Americans are ready to endorse such a step, they risk splintering the same democratic order that they want to save. It is not enough to point to opinion polls that show public approval of the president slipping each week. Though pro-Trump sentiment is softening, the proportion of the country that is implacably opposed to him still falls some way short of a majority. A revealing poll taken in mid-May by YouGov—the CBS News 2017 Nation Tracker—found that 40% of Americans are convinced opponents of Mr Trump, while 19% of respondents are unwavering supporters and 22% will continue to back him if he delivers what they want. The final 19% would reconsider their dislike of Mr Trump if he “does a good job”. The poll contains a further ominous note: when the president is criticised, 79% of his supporters also hear an attack on “people like me”. + + + +This is not to argue against investigating whether Mr Trump or his aides colluded with Russia, a hostile foreign power. If the president is guilty of high crimes, he must face the consequences. But impatient foes want him gone now, before millions of Americans have even started paying attention to Russian headlines. Rush this, and half the country may think their president has been stolen from them. America is not just more tribal than it was during Watergate: conservatives have spent years training their side to distrust anything the press says. + +Still some Trump opponents would not wait. They say the president is a menace now, and see no merit in delaying the moment when his voters finally grasp that they are a demagogue’s dupes. Here is an alternative suggestion: take a deep breath, avoid hinting that Trump supporters are stupid, and let them work out for themselves that he is not very good at his job. + +Happily, there are recent, real-world examples of patience working, and snarling populists losing office by outstaying their welcome. One of the most instructive involves Joe Arpaio, a law-and-order showman defeated last year as he sought his seventh term as elected sheriff of Maricopa County—a sprawling, sun-baked tract of Arizona that includes the city of Phoenix and is home to nearly 4m people. A concise explanation of Mr Arpaio’s defeat is that locals grew weary of his distracting antics, even if the sheriff was a star of conservative talk radio and TV. + +Mr Arpaio, who styled himself “Sheriff Joe” and “America’s Toughest Sheriff”, was an authoritarian impresario. He housed county prisoners outdoors in tents, even as temperatures reached 145°F (63°C), made them wear pink underwear and put them in chain gangs. He recruited a posse of volunteer sheriff’s deputies, who sport police uniforms and roar about in patrol cars. When that felt old, in 2011 Mr Arpaio assigned a five-member “cold-case posse”, financed by conservatives across the country, to investigate whether Barack Obama had faked evidence of his birth in America. While lesser rivals acquired military hardware from the Pentagon, Mr Arpaio secured a tank (actually a self-propelled howitzer). He made the action film star Steven Seagal a posse member and let him drive that tank through a local man’s garden wall in search of illegal cockfighting. Sheriff Joe’s fans cheered when he ordered immigration sweeps that targeted people who appeared to be non-white or Hispanic. He was an early Trump backer, declaring: “Everything that I believe in, he believes in.” + +Hey Joe + +By 2016 many conservatives had stopped chortling. County taxpayers had by then paid tens of millions of dollars in legal fees and settlements for lawsuits against the sheriff’s department, including for prisoner deaths. Mr Arpaio faced charges for criminal contempt, after allegedly defying court rulings to stop racial profiling. The Pentagon asked for its hardware back after several weapons were lost. Amid this dysfunction a veteran Phoenix police sergeant, Paul Penzone, ran for sheriff as a Democrat and won. He did not call Arpaio supporters bigots. He told them that their money had been squandered and that law enforcement had suffered. That back-to-work message won Mr Penzone 158,000 more votes than Hillary Clinton received in Maricopa County, as he picked up support from Republicans who were either embarrassed by Mr Arpaio, or decided that he was a blowhard who bored them. Sheriff Joe’s gimmicks “weren’t doing it for him any more”, summarises David Berman, a political scientist at Arizona State University. At some point, “people say, can you do the job?” + +As for Mr Trump, some will stick by him regardless. But others may conclude that the president is a do-nothing blowhard in his turn. That might open a path for a problem-solving Democrat to defeat the president in 2020. If Mr Trump’s poll numbers are bad enough Republican grandees might offer to carve his face on Mt Rushmore, if he retires without seeking a second term. Making Mr Trump a martyr could tear the country in two. Letting voters tire of him might be the least-bad outcome. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/united-states/21722639-donald-trumps-opponents-risk-splintering-democratic-order-they-wish-save-schemes/print + + + +上一個 文章 節 下一個 + + + + + +United States 節 Asia + + + + + +The Americas + + +Brazil’s political crisis (1): Dangling man + +Brazil’s political crisis (2): The fabulous Batista boys + +A Canadian culture war: Cross-fertilisation or theft? + +Bello: Welcome back, Argentina + +United States 節 Asia + + + + + +文章 節 下一個 + + + + + +Dangling man + +The fate of Brazil’s president hangs in the balance + + +Michel Temer is in serious trouble. But he has reserves of strength + +May 27th 2017 | BOA VISTA + + + + + +“IF THEY want, let them bring me down!” So declared Brazil’s president, Michel Temer, in a newspaper interview on May 22nd. He is the second president in the space of a year who is fighting to stay in office in the face of allegations of wrongdoing and dismal poll ratings. His predecessor, Dilma Rousseff, was impeached in 2016 on a technical violation of public-accounting law. The allegations against Mr Temer are far graver, but his chances of remaining president may be brighter. Whether he stays or goes, the accusations against him are momentous. The blow to his prestige and influence will delay, and might destroy, vital reforms to Brazil’s economy, which is only beginning to emerge from its worst-ever recession. + +Mr Temer’s woes began on May 17th when O Globo, a newspaper, reported that, on a tape recorded by Joesley Batista, a billionaire businessman, he is heard endorsing payment of hush money to a politician jailed for his role in the Petrobras scandal. This originally centred on the state-run oil company but has expanded beyond it. In a related sting, police filmed Rodrigo Loures, a congressman from Mr Temer’s Party of the Brazilian Democratic Movement (PMDB) and formerly his right-hand man, accepting a bag with 500,000 reais ($153,000) in cash. Mr Temer solicited millions in irregular payments, claimed Mr Batista and a subordinate. + + + +Mr Temer has protested his innocence in speeches and interviews. He portrays himself as the victim of a “perfect crime” committed by Mr Batista, who framed him in exchange for near-total immunity from prosecution (see article). Mr Temer’s fate is in the hands of the courts, his allies in congress and public opinion, any one of which could bring him down. The evidence against him is shocking but inconclusive. Mr Temer has strengths that his hapless predecessor did not. + +Trashing the tape + +Edson Fachin, a judge on the supreme court, which tries sitting politicians, has authorised the attorney-general to open a criminal investigation into Mr Temer, Mr Loures and Aécio Neves, a senator from the centre-right Party of Brazilian Social Democracy (PSDB), who was caught in another Batista-related sting. Formal charges may be filed soon. Mr Temer’s lawyers contend that the tape is “worthless”. Their study of it turned up 70 “discontinuities”, which may suggest tampering. Mr Fachin has ordered a forensic examination. + +Lawyers will poke holes in other evidence, including the plea-bargain testimony by Mr Batista and his brother, Wesley, co-owners of JBS, a giant meat exporter. Some of the Batistas’ allegations refer to wrongdoing that took place before Mr Temer became president. In such cases, he has immunity. But legal niceties will not help if he cannot scrub off the mud he apparently spattered on himself. When Joesley Batista boasts on the tape of having two judges and a prosecutor in his pocket, Mr Temer merely murmurs, “great, great”. + +The political calculus of his allies in congress could be as important as the weight of the evidence, and will partly depend on it. His most important friend is Rodrigo Maia, the speaker of the lower house, who has signalled that he will shelve the dozen impeachment motions that have been filed so far. Two medium-sized parties have quit the PMDB-led coalition, but their ministers have clung on to their cabinet posts. The PSDB, the biggest coalition partner, seems unsure what to do. + +They are hesitant in part because Mr Temer has no clear successor (he was Ms Rousseff’s vice-president, but does not himself have a deputy). Mr Maia will take over temporarily if Mr Temer is impeached or indicted. If he leaves office definitively, congress will have 30 days to choose a successor to serve the rest of his term, which ends at the end of next year. + +That person would carry the stigma of election by a congress mired in corruption. Any politician with the skill to pilot reforms through the legislature is, like Mr Maia, already under investigation, or soon could be. Other potential successors are Cármen Lúcia, the respected chief justice of the supreme court, and Henrique Meirelles, the finance minister, who has the nous to serve as president. But Ms Lúcia is not a politician and Mr Meirelles was chairman of J&F, the Batistas’ holding company. Nelson Jobim, a former minister, worked for BTG, a bank whose founder was arrested in the Petrobras affair. + +Unlike Ms Rousseff, Mr Temer is not loathed by the elite. Bosses know they have a big stake in the continuation of his policies, especially an overhaul of pensions and a reform of rigid labour laws. These should encourage interest rates, already falling, to come down further, and lift employment. Mr Meirelles now concedes that the reforms will be delayed. The stockmarket plunged and trading was suspended after the disclosure of the Batista tape. On May 22nd S&P warned that it might downgrade Brazil’s credit rating. + +Mr Temer also arouses less passion than Ms Rousseff did among middle-class voters. Protests in 2015 and 2016 by prosperous urbanites, galvanised by anger over the Petrobras scandal, helped drive her out of office. Those people are reluctant to join left-wingers in lambasting Mr Temer and his pro-market reforms. Turnout at anti-Temer protests on May 21st was low. Participation may wane after protesters set a ministry ablaze in Brasília on May 24th. + +The final arbiter of Mr Temer’s future may turn out to be the electoral tribunal. Much of the money sloshing around from Petrobras, JBS and others may have financed the election of Ms Rousseff and Mr Temer in 2014. On June 6th the tribunal will begin deliberations on whether to annul the results. Until last week, analysts doubted that it would risk instability by doing that. But its politically savvy judges may now believe that Mr Temer’s continuation in office is the greater threat. The PSDB is reportedly trying to make its decision easier by brokering an agreement on a successor to Mr Temer. Speculation focuses on Mr Jobim and Tasso Jereissati, a sensible PSDB senator from the state of Ceará. + +Mr Temer could slow things down by appealing against the tribunal’s ruling. But if his allies turn against him, his defiance could crumble. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21722695-michel-temer-serious-trouble-he-has-reserves-strength-fate-brazils/print + + + +文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Rough cuts + +Brazil’s fabulous Batista boys + + +The meat-mongers whose testimony could end Michel Temer’s presidency + +May 25th 2017 | BOA VISTA + + + + + +JOSÉ BATISTA SOBRINHO helped build Brasília. In 1957 his meat business supplied canteens that fed workers constructing Brazil’s modernist capital. Now his two youngest sons, Wesley and Joesley, are bringing the place down. As the bosses of the company their father founded, renamed JBS in his honour, they are at the centre of a scandal that may force a president out of office for the second time in a year (see article). + +JBS is the world’s biggest beef exporter. Its revenues rose from 3.9bn reais ($1.8bn) in 2006 to 170bn reais last year, helped by China’s appetite and Brazil’s enthusiasm for national champions. From 2007 to 2015 the development bank, BNDES, injected into Batista enterprises more than 8bn reais in capital and loans. Most of it was to help JBS buy rivals, including American brands like Swift and Pilgrim’s Pride. J&F, the family’s holding company, has diversified into non-meat businesses, including Havaianas, which makes fashionable flip-flops. + + + +As JBS was buying up rivals, the Batistas were buying politicians. The company’s declared campaign donations swelled from 20m reais in 2006 to nearly 400m reais in the election in 2014; in that contest it gave more than any other firm. In the past decade the brothers have bankrolled 1,829 candidates; their largesse helped elect a third of the current congress. Little of it was legal. The Batistas have confessed that almost all the declared cash, plus millions paid under the table, was bribes to politicians specifically to further J&F’s interests. + +In the past year the Batistas’ firms have faced five criminal investigations. The latest probes J&F’s dealings with BNDES, which provided finance at the behest of paid-off politicians. + +To save their enterprises, and themselves, the brothers approached prosecutors investigating the metastasising bribery scandal centred on Petrobras, the state-run energy company. The bargain they struck was their niftiest deal yet. In exchange for providing evidence of wrongdoing by major political figures—including, possibly, President Michel Temer—they secured near-total immunity. Unlike Marcelo Odebrecht, boss of a construction firm at the heart of the Petrobras allegations, neither Batista will spend a day in jail or under house arrest. Free to leave Brazil, Joesley has already moved to his posh New York flat with his wife, a former television presenter, and their child. He and Wesley each agreed to pay fines of 110m reais, which leaves them both billionaires. + +The meat-mongers are not completely off the hook. JBS may face bribery probes and lawsuits from holders of the company’s securities in the United States. Brazil’s markets watchdog is looking into possible insider trading. In the weeks before May 17th, when details of their explosive testimonies leaked to the press, the Batistas sold more than 300m reais’ worth of JBS shares and bought dollars. The shares have lost a third of their value since then; the dollar jumped by 7% on the next day. The brothers and their firms deny allegations of insider trading. Apparently, they are blessed with their father’s foresight. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21722696-meat-mongers-whose-testimony-could-end-michel-temers-presidency-brazils-fabulous-batista/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Cross-fertilisation or theft? + +Canada’s war over “cultural appropriation” + + +Writers on the wrong side of a debate lose their jobs + +May 25th 2017 | OTTAWA + + + + + +ANYONE, anywhere “should be encouraged to imagine other peoples, other cultures, other identities”, wrote Hal Niedzviecki in the spring issue of Write, an obscure Canadian literary magazine. For that apparently innocuous observation, he lost his job as the publication’s editor. Mr Niedzviecki was defending “cultural appropriation”, the use by artists and writers of motifs and ideas from other cultures. He suggested an “appropriation prize” for creators who carry out such cross-cultural raids. In a special issue of the magazine dedicated to indigenous writers, that was offensive, his critics said. + +Mr Niedzviecki’s supporters were also made to suffer. A journalist at the Canadian Broadcasting Corporation was demoted after he offered on Twitter to help finance the prize. The editor of Walrus, a better-known magazine, decried “political correctness, tokenism and hypersensitivity” in cultural and academic bodies. After a social-media backlash he, too, resigned. In April a gallery shut an exhibit of the work of Amanda PL, a painter inspired by the style of Norval Morriseau, an indigenous artist. + + + +Mr Niedzviecki has reopened an old debate. Cross-fertilisation is fundamental to the creative process. This article, for example, is written in Roman letters and uses Arabic numerals. However, many indigenous Canadian intellectuals demand extra sensitivity. Some particularly object to white people borrowing (or “stealing”) elements of their culture. + +For some, such borrowing evokes memories of centuries of domination by the British and “white settlers”, who took the land of indigenous peoples, tried to force them to assimilate through residential schools and excluded them from mainstream cultural life. Members of indigenous “First Nations” were not allowed to vote until 1960 unless they renounced their Indian status. Robert Jago, an indigenous writer, says that cultural appropriation leads to “the hypersexualised view” of indigenous women, the myth of the drunken Indian and the “football-mascot-inspired stereotype of the violent warrior”. + +The argument is now raging on talk shows, in newspapers and especially on social media. Some think it has been inflamed by Donald Trump, who encourages Americans who object to political correctness to say so. “This is the first and probably not the last intrusion” of Trumpian attitudes into Canada’s cultural debate, says Conrad Brunk, co-author of a book on cultural appropriation. Canada’s indigenous peoples, for their part, have also become more assertive. “We’re in a new paradigm” because of social media, says Jesse Wente, an Ojibwe from the Serpent River First Nation, borrowing words from Latin, Greek and English. “We don’t have to occupy chairs in mainstream news media to have our voices heard.” + +That is welcome, but the silencing of other voices is not. The hounding of journalists from their jobs chills free speech. Politely, Mr Niedzviecki admits that his defence of cultural appropriation was “a bit tone deaf”. But he should not apologise too much. He provoked a debate on an important and many-sided issue. Canada prides itself on its diversity of peoples. A diversity of ideas matters, too. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21722692-writers-wrong-side-debate-lose-their-jobs-canadas-war-over-cultural-appropriation/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Welcome back + +Argentina’s new, honest inflation statistics + + +The end of bogus accounting + +May 25th 2017 + + + + + +SOME readers of The Economist may be numbed by statistics. To many others, they are the water of cognitive life. Each week at the back of this newspaper we publish official data on 42 of the largest economies in the world—with one exception. Five years ago we stopped publishing the inflation figure for Argentina produced by the government of President Cristina Fernández de Kirchner because we, and many others, thought it was bogus. We substituted an inflation number drawn up by PriceStats, an international data service. A year later the IMF followed our lead, formally censuring Argentina for “inaccuracy” in its data. + +This week we are delighted to resume publication of the official inflation number for Argentina. One of the first things that Mauricio Macri did after he was elected as the country’s president in November 2015, defeating Ms Fernández’s candidate, was to restore the professional independence of INDEC, the statistical office. He charged it with drawing up a new, accurate inflation index. This month marks a year since this index was launched. It shows that inflation in greater Buenos Aires in the 12 months to April was 27.5%. That figure is uncomfortably high, but refreshingly honest. Under Ms Fernández, INDEC found that inflation in 2008-13 averaged about 10% a year, between a third and half of private estimates. Under pressure from the IMF, INDEC raised its estimate to 24% in 2014, but private calculations were higher still. + + + +High inflation was part of the scenery in Latin America until the 1990s. That was in large part a consequence of inequality and populist politics. Small but powerful economic elites resisted tax increases, so governments resorted to printing money to fulfil their campaign promises to the working and middle classes. The rulers relied on “money illusion”: that wage earners would notice their rising nominal salaries rather than the erosion of their purchasing power. High inflation discouraged saving and contributed to inequality—the rich could more easily hedge against it than the poor. + +Taming inflation by cutting fiscal deficits and opening economies to trade and competition was an important achievement of the much-derided Washington Consensus in Latin America. A simple cross-country average of inflation in the region fell from 1,206% in 1989 to 4.8% in 2006. But as left-wing and populist governments returned in the 2000s, inflation rose again in Venezuela, Argentina and even in Brazil. What was notable about Ms Fernández was her apparent attempt to deny it by publishing hogwash statistics. At the same time, she threw up protective trade barriers, ran large unfinanced fiscal deficits (despite enacting big tax increases) in the midst of a commodity windfall and subsidised energy and transport tariffs to the tune of 4% of GDP. + +Mr Macri has had swifter success in restoring the integrity of Argentina’s statistics than he has had in correcting the other economic distortions that Ms Fernández bequeathed him. The new official index broadly agrees with the many private ones that have sprung up. INDEC will launch a national index in July. + +No longer concealed, inflation is proving stubborn. The central bank, whose independence has also been restored under Federico Sturzenegger, its new governor, set a target of 12-17% this year. It is not going to meet it. After tumbling in the second half of last year, inflation has crept up this year. That is partly because the government has raised electricity and gas tariffs, and partly because wage settlements by the powerful trade unions are averaging around 20%. + +The bank is doing its best to hit the target: it raised its benchmark interest rate last month (from 24.75% to 26.25%) even though economic growth is still slow. Mr Macri is engaged in a juggling act. He wants to reduce the fiscal deficit (which he is financing with foreign loans), but withdrawing Ms Fernández’s subsidies means price rises in the short term. He wants to get inflation down but needs the economy to be growing faster before an important mid-term election in October, which his government cannot afford to lose. Having initially opted for a swift economic adjustment, this year he has adopted a more gradual approach. + +Argentines can reasonably disagree over whether Mr Macri is making the right choices. But at least they are not being kept in the dark about the real state of the economy. Many appear to appreciate being treated as adults: tens of thousands of people took part last month in a semi-spontaneous demonstration to support the government. Low inflation is good policy. An honest inflation index is a democratic right. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/americas/21722694-end-bogus-accounting-argentinas-new-honest-inflation-statistics/print + + + +上一個 文章 節 下一個 + + + + + +The Americas 節 China + + + + + +Asia + + +India’s Kashmir problem: Talking to the enemy + +The South China Sea: Shoals apart + +Insurgency in the Philippines: Marauding in Marawi + +Post-tsunami reconstruction in Japan: Repopulating Fukushima + +Banyan: The shrinking monarchy + +The Americas 節 China + + + + + +文章 節 下一個 + + + + + +Talking to the enemy + +India’s Kashmir problem is getting worse + + +Shunning separatists will not make it better + +May 25th 2017 | SRINAGAR + + + + + +HAVING suffered a severe beating, Farooq Dar was tied up on a spare tyre attached to the front bumper of an armoured jeep. Indian soldiers claimed he had been throwing stones. Mr Dar was driven in agony through villages south of Srinagar, the largest city in the Indian state of Jammu & Kashmir. The soldiers reckoned the sight of him would deter others from throwing stones at their patrol. + +Footage of Mr Dar’s ordeal on April 9th circulated widely online, fuelling anger among inhabitants of the Kashmir valley, the Muslim-dominated part of the state to which Srinagar belongs (see map). The soldiers had been deployed to prevent unrest during a by-election that was held around the city for the national parliament. So bitter is the enmity felt by many Kashmiris in the valley towards the Indian government that only 7% of eligible voters cast ballots. Mr Dar, a weaver, says he was one of the few who did and that he did not throw anything at soldiers. + + + +The Indian government is fumbling in so far as it is trying to tame a rebellious mood that has swept the valley in recent months. In late April it tried to win respite by imposing a month-long block on social media and mobile-phone data services (useful for uploading videos). On May 22nd, as the month reached its end, the army fanned the flames by announcing an award for the officer who had tied Mr Dar to the jeep. The commendation was not explicitly for that act, but for “sustained efforts in counter-insurgency operations”. Kashmiris saw this as another insult by a Hindu-led government in Delhi, which most of them regard as hostile to their religion and from which many would like independence. As if to confirm their view, Indian television called the officer a hero for using Mr Dar as a “human shield”. + +The recent unrest has been of a different kind from the insurgency that previously plagued the state. In the 1990s and 2000s Pakistan, which like India claims all of Kashmir north and south of the “line of control” between the two countries, sent in armed jihadists to aid their fellow Muslims. India responded with a brutal campaign to pacify its only Muslim-majority state. Fighting left some 40,000 dead, by conservative estimates. Skirmishing across the line continues to this day, but in the valley guerrilla warfare has abated. Since last July the unrest has involved hundreds of protests, triggered by the killing of a guerrilla leader by security forces. In April, after a clash between soldiers and students, the unrest spread to campuses. Now many of the protesters are middle-class, with uniforms and satchels. + + + +The central government has compounded the problem by refusing to differentiate between the new type of demonstrator and the guerrillas. It has responded to protests with extreme violence: last summer and autumn security forces dispersed unruly crowds by firing shotguns at them, blinding or killing dozens of people. More recently they have refrained from using such weapons, but they have revived aggressive searches of a kind not seen since the height of the insurgency. + +There are still guerrillas in the valley, but a few hundred compared with several thousand before. Most are young men who have stolen rifles and gone to hide in the forested hillsides, where they broadcast their defiance on social media and occasionally die in firefights with soldiers. They enjoy sympathy in parts of the valley, especially in the south, where an estimated 20,000 turned out to march at the funeral for the slain insurgent. + +The central government is right to worry about such shows of support. But it is wrong to regard calls for azaadi (independence) as tantamount to violence. Those who throw stones at soldiers (often in response to aggression by the army) are routinely described as “militants”. Indian media report, with flimsy evidence, that Pakistan pays protesters 500 rupees ($8) per projectile hurled. By conflating the two kinds of unrest, the government limits its options for dealing with the less deadly kind. On May 21st Jitendra Singh, a central-government minister, said his colleagues would like to meet “stakeholders” in the state. But the government will not talk to any group that supports independence for Kashmir. That rules out the only one that enjoys broad support in the valley: the Hurriyat conference, a coalition of about 30 parties that want separation from India by peaceful means. + +Support for the separatist cause has grown since 2014, when Narendra Modi took over as prime minister after a sweeping victory by his Hindu-nationalist Bharatiya Janata Party (BJP) in national elections. In those polls, many Kashmiris voted for the Peoples Democratic Party (PDP), an independence-leaning group which the central government could just about bring itself to talk to because its demands were not too explicit. The PDP won a majority in the Kashmir valley, but to the dismay of its supporters it formed a coalition with the BJP, which had won handsomely in Hindu-dominated Jammu. As a result, many of the PDP’s voters turned their back to the parties recognised by India. + +Haseeb Drabu, a founder of the PDP who is the finance minister in Srinagar, defends his party’s decision to join forces with the BJP. He says no one was in a better position than Mr Modi to bring peace to Kashmir. But the assurances given to Mr Drabu by the BJP, including that the government would talk to the Hurriyat and other pro-independence parties, have been cast aside amid the growing unrest. + +The government in Delhi should enter talks with separatist groups before their supporters become too enraged to countenance any discussions. Anger in Srinagar is already all-pervasive. On May 15th a delegation from India’s college-accrediting body paid a visit to Sri Pratap College, the most prestigious centre of higher education in Srinagar. Minutes before, students had clashed with the army; they were still scrambling to escape when the delegates arrived. The visitors had to pick their way through broken bricks and twisted bars of steel, with tear gas wafting around them. The protesters were not from Sri Pratap, the principal insisted, but from a scruffier place. Still, in a graduate lounge, post-doctoral students from Sri Pratap were only too eager to express admiration for the protesters, and contempt for India. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21722666-shunning-separatists-will-not-make-it-better-indias-kashmir-problem-getting-worse/print + + + +文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Shoals apart + +China and ASEAN declare progress in the South China Sea + + +But a new agreement is less than it seems + +May 25th 2017 | SINGAPORE + + + + + +TO CALL negotiations between China and the ten-country Association of South-East Asian Nations (ASEAN) over rival claims in the South China Sea “drawn out” would be a gross understatement. At the centre of the matter is an unsquareable circle: the competing claims of China and several South-East Asian countries. Nobody wants to go to war; nobody wants to be accused of backing down. + +Still, at a meeting of senior Chinese and ASEAN officials on May 18th, something happened: the two sides agreed on a “framework” for a code of conduct. An official from Singapore (which currently co-ordinates ASEAN-China relations) called the agreement a sign of “steady progress”. + + + +ASEAN members called for a legally binding code of conduct as far back as 1996. In 2002, ASEAN and China signed a “declaration of conduct”, which recognised that a fully fledged code would be nice to have; it also committed both sides to peaceful dispute resolution and “self-restraint” in doing anything that could “escalate disputes [or] affect peace and stability”. + +Since then, code-of-conduct negotiations have proceeded glacially. And in 2013 China embarked on a vast effort to build up seven reefs and rocks into islands suited for military use (see picture). Last July, after China received an unfavourable ruling on its maritime claims in a case brought by the Philippines to a tribunal in The Hague, China agreed to expedite the talks. + + + +The draft framework will be presented to ASEAN and Chinese foreign ministers at a conference in August. This will then form the basis for the thorny negotiations to follow. The text has not (yet) been leaked. But its most salient feature may be what it appears to lack: any hint of enforcement mechanisms or consequences for violations. China has long rejected a legally binding agreement—or indeed any arrangement that could limit its actions in the South China Sea. + +The result, explains Ian Storey, of the ISEAS-Yusof Ishak Institute, a think-tank in Singapore, is a framework “that makes China look co-operative…without having to do anything that might constrain its freedom of action”. ASEAN, meanwhile, gets the appearance of progress. “The ASEAN secretariat is a bureaucracy, and bureaucrats like process,” explains Mr Storey. + +But a toothless agreement need not augur further Chinese aggression. And why should it? Under Rodrigo Duterte the Philippines has turned from China’s chief regional rival into an ally. The two countries recently reiterated their desire in principle for joint exploration for resources, something Manila had resisted for fear it would validate China’s expansionary claims. Other countries seem resigned, in fact if not in principle, to its island-building. + +On May 24th America carried out its first freedom-of-navigation operation (sending warships through international waters) since the election of Donald Trump. But he seems less willing than his predecessor to enforce a rules-based order; his transactional mercantilism will reassure China. Extended talks on a code of conduct probably mean that China will be free to consolidate its gains with minimal interference from rivals near or far. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21722659-new-agreement-less-it-seems-china-and-asean-declare-progress-south-china-sea/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Marauding in Marawi + +Rodrigo Duterte has declared martial law in the southern Philippines + + +To some, his move recalls a dictatorial past + +May 25th 2017 | MANILA + + + + + +RODRIGO DUTERTE, the Philippine president, declared martial law in Mindanao, the southern homeland of his country’s Muslim minority, after fighting broke out in the streets of the largely Muslim city of Marawi. Gunmen from one jihadist group fought back when the security forces attempted to capture the leader of another such group. Whatever the consequences in lawless Mindanao, for many Filipinos the imposition of martial law was an eerie reminder of a similar declaration in 1972 by the country’s then president, Ferdinand Marcos, that began a decade of ruinous dictatorship. + +The defence minister, Delfin Lorenzana, said troops and police had raided a hideout in Marawi to arrest Isnilon Hapilon, the leader of a branch of the Abu Sayyaf, an armed group that pledges allegiance to IS. To their surprise, security forces met resistance from about 100 armed members of another group, called Maute, which also claims IS links. In the ensuing battle, thousands of civilians fled Marawi. Maute seized a jail, freeing more than 100 inmates, as well as a hospital, the city hall and parts of a university campus—many of which were burned. As The Economist went to press, at least 21 people were reported killed. Mr Hapilon remains at large. + + + +Mr Duterte declared martial law while on a state visit to Moscow, which he cut short to restore order at home. His spokesman said martial law would remain in effect across Mindanao for 60 days. Mr Duterte himself said later that it might last for a year, and he mused about expanding it across the country. If he wants to extend it he will face little opposition in Congress, where he has a majority. Mr Lorenzana said that martial law would give security forces the power to restrict people’s movement and conduct searches without a court order. Mr Duterte also suspended habeas corpus. + +The harm inflicted by the security forces after Marcos declared martial law countrywide is scorched into the memories of many Filipinos. Mr Duterte has often seemed to crave similar power: he has mused about declaring martial law as part of his murderous anti-drug campaign, and to deal with long-running insurgencies in other parts of Mindanao. He deepened public concerns when he said, on his way home from Moscow: “To my countrymen who have experienced martial law, it would not be any different from what President Marcos did. I’d be harsh.” + +Marcos’s brutality failed to pacify the south. And the complicated situation in Mindanao, Mr Duterte’s home region, may yet stay his hand. The Abu Sayyaf and the Maute groups are just two of many armed factions in the region. There are Islamists, Muslim separatists, communists, private posses belonging to local politicians, feuding tribes and gangs of common criminals. The categories are not mutually exclusive. + +The principal groups are the Moro Islamic Liberation Front (MILF) and the communists. The once-separatist MILF has accepted autonomy instead of independence for mainly Muslim areas. It is holding fire while it waits for its peace agreement with the government to take effect. The communists and the government are talking peace but still fighting, if only half-heartedly. + +The danger is that heavy-handedness by soldiers and police under martial law may upset this quasi-peace in Mindanao. And, like a similar raid in 2015 that left 44 Philippine police dead, the fighting in Marawi seems to stem from security forces’ failure to assess intelligence they have received. Martial law will do nothing to solve such problems. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21722670-some-his-move-recalls-dictatorial-past-rodrigo-duterte-has-declared-martial-law/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Nuclear fugitives return + +The struggle to repopulate Fukushima + + +The government pushes villagers back to the homes they left + +May 25th 2017 | Six years after the nuclear disaster, Japan is pushing villagers back to the homes they left + + + + + +FROM his desk, the mayor of Iitate, Norio Kanno, can see the beloved patchwork of forests, hills and rice paddies that he has governed for over two decades. A book in the lobby of his office calls it one of Japan’s most beautiful places, a centre of organic farming. The reality outside mocks that description. The fields are mostly bald, shorn of vegetation in a Herculean attempt to remove the radioactive fallout that settled six years ago. There is not a cow or farmer in sight. Tractors sit idle in the fields. The local schools are empty. + +Iitate, a cluster of hamlets spread over 230 square kilometres, was hit by a quirk of the weather. After the accident at the Fukushima Dai-ichi nuclear power plant, 45km (28 miles) away, which suffered meltdowns after a tsunami in 2011, wind carried radioactive particles that fell in rain and snow on a single night. Belatedly, the government ordered the evacuation of the 6,000 villagers. Now it says it is safe to return. With great fanfare, all but the still heavily contaminated south of Iitate—the hamlet of Nagadoro—was reopened on March 31st (see map). + + + +The only part of the village that looks busy, however, is the home for the elderly. Locals say a few hundred people, at most, have returned, predominantly the retired. Mr Kanno will not reveal how many “because it gives the impression that we are forcing people to live here, which we don’t intend to do.” Yet many evacuees now face a stark choice: return to Iitate, or lose part of the compensation that has helped sustain them elsewhere. + +Last month this dilemma was expressed with unusual clarity by Masahiro Imamura, the minister in charge of reconstruction from the disaster. Pressed by a reporter, Mr Imamura said it was the evacuees’ “own responsibility, their own choice” whether or not to return. The comment touched a nerve. “It’s economic blackmail,” says Nobuyoshi Ito, a local farmer. Mr Imamura has since resigned. + + + +Nobody wants Fukushima mentioned in the same breath as Chernobyl. Almost three decades after the world’s worst nuclear accident, life there is still frozen in time, a snapshot of the mid-1980s Soviet Union, complete with posters of Lenin on school walls. By contrast, about ¥200m ($1.8m) per household has been spent decontaminating Iitate, helping to reduce radiation in many areas to well under 20 millisievert per year (the typical limit for nuclear-industry workers). But the clean-up extends to only 20 metres around each house, and most of the village is forested mountains. In windy weather, radioactive caesium is blown back onto the fields and homes. + +Nevertheless, Mr Kanno says it is time to cut monthly compensation payments which, in his view, encourage dependence. In 2012 Iitate’s became the first local authority in Fukushima prefecture to set a date for ending evacuation. The mayor pledged that year to revive the village in five years, a promise he has kept. A new sports ground, convenience store and noodle restaurant have opened. A clinic operates twice a week. + +All that is missing is people. Less than 30% of Iitate’s former residents want to return. (In Nagadoro, over half said they would never go back.) Many have used earlier lump-sum payments to build lives elsewhere. Before the disaster struck, the village had already lost a third of its population since 1970 as young folk moved to the cities—a process that has hollowed out many a furusato, or home town. + +Families left behind quarrel about whether to leave or stay, says Yoshitomo Shigihara, a villager. “Some try to feel out whether others are receiving benefits, what they are getting or how much they have received in compensation. It’s very stressful to talk to anyone in Iitate.” Some wanted to move the entire village to one of the country’s many depopulated areas but Mr Kanno would not hear of it. In trying to save the village, says Mr Ito, the mayor may be destroying it for good. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21722671-government-pushes-villagers-back-homes-they-left-struggle-repopulate-fukushima/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Banyan + +Japan’s incredible shrinking monarchy + + +If a woman cannot inherit the Chrysanthemum Throne, perhaps no one will + +May 25th 2017 + + + + + +DEATH through overwork is considered to be such a feature of the workplace in Japan that there is a word for it: karoshi. For the Japanese emperor, karoshi, or at least death in service, has to date been mandatory, since no provision exists in the Imperial House Law, which governs the monarchy, for voluntary retirement. That might seem a bit unfair on Emperor Akihito, an 83-year-old who has had prostate cancer and heart-bypass surgery. Yet when the cabinet of Shinzo Abe, the prime minister, approved a bill last week to allow for the emperor’s abdication—just this once, mind you—Japanese ultranationalists were incandescent. They aggressively revere the emperor, regardless of his wishes. And Mr Abe, they said, was playing with sacred tradition. + +Ten months ago, in a televised statement, Akihito hinted at his wish to step down. Age and declining health, he said, were taking their toll and making it hard to perform his official duties to the full. Those duties, he made it clear, were not only ceremonial but involved connecting deeply with ordinary Japanese. + + + +The country’s post-war constitution stipulates that the emperor is no god-king above the law, as he was before the country’s defeat in 1945. Rather, he is “the symbol of the state…deriving his position from the will of the people” in whom, explicitly, sovereignty now lies. Since even before acceding to the throne on the death of his father, Hirohito, in 1989, Akihito and his common-born wife, Michiko, have shown a desire to bring the monarchy down to the level of ordinary folk, sometimes literally—for instance, kneeling on the ground as they console victims of Japan’s frequent natural disasters. In last year’s statement, the emperor said that understanding what was expected from him as the symbol of the state involved nurturing “an awareness of being with the people”. Hence his criss-crossings of Japan, even to the remotest places, were “important acts” for him. + +Ultranationalists are disdainful of such abasements. (Akihito is said to have been offended when conservative scholars last year said he should just stick to praying and carrying out Shinto rituals.) Worse, in their eyes, is how Akihito has sought forgiveness from neighbours and former enemies for Japan’s wartime actions. The nationalists deny that Japan was an aggressor or committed atrocities; they say Japanese were the victims, including of nuclear bombing. They cheer that, after the war, Japan’s American occupiers and political elite rebranded Hirohito, who was complicit in Japanese militarism, as a paragon of pacifism. + +Akihito’s immense popularity shows that the hardline nationalists, though influential, are in a minority. A more open, accessible imperial family has transformed the monarchy’s appeal after the aloofness of Hirohito—even if it will be a while yet before the royals bicycle to the supermarket like Scandinavian ones. And so a groundswell of sympathy greeted Akihito’s request to be allowed to retire (he suggested he could also spare the country onerous official mourning duties when he eventually did pop off). Mr Abe, an arch-conservative himself on matters of the imperial family, could hardly object. After cabinet approval, the Diet is likely to pass an abdication law next month. Akihito is thought likely to pass the Chrysanthemum Throne to his son, the 57-year-old crown prince, Naruhito, in late 2018. + +Naruhito would become, supposedly, the throne’s 126th occupant—though if you believe that an unbroken imperial line goes back to the birth of Emperor Jimmu (descended from the Sun Goddess) on February 11th 660BC, there is also a strong case to be made for pixies. But immediately another problem looms: a dearth of future candidates in a male-only imperial succession. + +As if to underline how the imperial family is shrinking, just like the population as a whole, last week Naruhito’s eldest niece, 25-year-old Princess Mako, announced that she wanted to marry a non-royal. The Imperial House Law rules that a woman who marries a commoner must leave the royal family. Still, she will get a bonus payment thought to be more than $1m. This will leave the imperial family with just 18 members, 13 of whom are women. Akihito has four male heirs: Naruhito; Naruhito’s younger brother, Prince Akishino; Akishino’s ten-year-old son, Prince Hisahito; and Akihito’s surviving brother, 81-year-old Prince Masahito. A lot, in other words, is riding on little Hisahito to replenish the stud book. What if it turns out that girls are not his thing? + +It’s no man’s world any more + +In terms of solutions to the shrinking pool, the traditionalists are of no use. They insist on no deviation from the tradition of an unbroken male bloodline—in their view, as Kenneth Ruoff, head of Japan studies at Portland State University, puts it, if the male bloodline ceases then Japan ceases. Their occasional suggestion of a return to concubines (Akihito’s grandfather was born to one) is intended seriously but is a joke. + +Something will have to give. It nearly did a dozen years ago. At that time, no potential heir to Naruhito seemed likely, and the then prime minister, Junichiro Koizumi, was getting ready to introduce legislation to allow women to reign, as well as succession down the female line. Though four-fifths of Japanese polled were fine with the idea, an opposing minority was vocal. But on the unexpected news that Akishino’s wife, Kiko, was pregnant more than a decade since last giving birth, the legislation was hurriedly shelved. A few months later Hisahito saved the day. + +The opposition Democratic Party wants to revive the idea of allowing female royals to establish collateral branches of the imperial family after they marry. To fend that off, Mr Abe’s Liberal Democratic Party looks ready to propose a sop—allowing married women to carry out some official imperial duties. That is no solution, however, to the problem of the incredible shrinking monarchy. Mr Abe has shown himself all in favour of women, except on the throne. But at some point the royalists will have to concede—or be responsible for a republic. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/asia/21722665-if-woman-cannot-inherit-chrysanthemum-throne-perhaps-no-one-will-japans-incredible-shrinking/print + + + +上一個 文章 節 下一個 + + + + + +Asia 節 Middle East and ... + + + + + +China + + +Provincial politics: A hand up for Xi’s people + +Espionage: Spy kids + +Dolphins: Pink and imperilled + +Asia 節 Middle East and ... + + + + + +文章 節 下一個 + + + + + +Xi’s landslide + +A provincial shuffle shows the power of China’s president + + +Xi Jinping is filling top posts with allies—to what end? + +May 25th 2017 | BEIJING + + + + + +IMAGINE an American election in which two-thirds of the senators and three-quarters of the state governors up for re-election are defeated. It would be a landside to end all landslides. (When Ronald Reagan won 98% of the electoral-college votes in the presidential election of 1984, only four Senate seats changed hands out of 33 races). Yet this is the level of turnover happening now at the provincial level in China, without the democracy: ballot papers dropped ceremoniously into large red boxes create a mere semblance of it. + +Since the start of 2016 China’s president, Xi Jinping, has replaced 20 of the Communist Party’s 31 provincial secretaries, as the most powerful leaders at that level are known. He has also shuffled 27 of the provincial governorships (governors are second-in-command). For local leaders, April was the cruellest month: ten jobs changed hands. By the autumn, almost every province will have felt the effects—including Hong Kong, where a new leader was named in March. (That process, too, was hardly democratic.) + + + +Party secretaries and governors normally serve for five years, so in any one year you would expect a dozen or so to retire or change jobs. The number tends to rise towards the middle of a national leader’s ten-year term of office—a point at which wide-ranging shuffles normally take place at every level. Mr Xi is at that stage of his tenure (assuming he follows convention and steps down as general secretary in 2022). But the scale of his recent shake-up has been unusual. Between January 2006 and May 2007—the comparable midway period in the rule of his predecessor, Hu Jintao—12 party secretaries and 11 governors were replaced, only half the number shifted during the past 16 months. + +Some recent changes have been related to the incumbents’ age: 12 of those replaced, including the party secretaries of nine provinces, were about 65 years old, when senior officials normally retire. Two of the leaders were dismissed for alleged corruption: the governor of Sichuan in the south-west, and the party boss in Tianjin, a city near Beijing with provincial status. As often happens, seven governors replaced their departing party chiefs. + +Total control + +So 21 of the changes were to some extent required by age, criminality or term limit (though Mr Xi presumably had some influence both over the anti-corruption charges and the promotion of governors). That leaves 25 changes which seem to have been made at Mr Xi’s discretion. Why would he want to move so many people? + +The answer relates to a national party congress, which is due to be held in the second half of 2017. Such meetings happen every five years. They are a little like an American presidential election, in that they change the elite that makes up the national government. The congress will appoint a new Central Committee of around 370 people including provincial and national leaders. Like an American election, it will involve infighting and score-settling. + +Mr Xi’s appointments in the provinces help him directly and indirectly. Almost all the party chiefs and governors will become members of the Central Committee, if they are not already. The more who owe their power to Mr Xi, the better for him. Unlike his predecessor, Mr Xi was not the head of an established political faction when he took over as general secretary in 2012, so he had to create his own. The new provincial leaders help him do that. + + + +They also play an important role in preparations for the congress, including the choosing of more than 2,000 delegates and setting the agenda—the meeting will discuss a state-of-the-nation report by Mr Xi and adopt revisions to the party’s charter. With his provincial appointments, Mr Xi is putting in place those who can ensure that the right people attend the congress, say the right things and vote the right way. + +Just because Mr Xi has promoted someone does not necessarily mean he or she is a close ally. Chinese politics is riven by factions, and Mr Xi sometimes has to make appointments to appease rivals or for other reasons. The choice of the new governor of Inner Mongolia, for example, looks like a case of buttering up a powerful local family. Bu Xiaolin, the person in question, is the daughter and grand-daughter of previous heads of the provincial government. + +With the retirement of the party chief of the coastal province of Zhejiang, Xia Baolong, Mr Xi has also lost a powerful ally in the regions. Mr Xia stepped down in April after a career that included a spell as deputy to Mr Xi when he was the province’s party chief between 2002 and 2007. Overall, though, Mr Xi has gained a lot. Two of the new party secretaries held high office in Shanghai when he led the party there in 2007-08. Three of them, as well as two of the new mayors of provincial cities, worked with him in Zhejiang. Others with ties to him from the same period have different senior posts, such as the president of Baosteel, a large state-owned firm. They are likely to get promotions at the congress or soon after. + +Analysts are divided in their assessment of what Mr Xi hopes to achieve at the meeting and the extent to which he will get his way (some believe he would like to lay the groundwork for extending his rule beyond 2022). But the churn of provincial bosses has shown that Mr Xi enjoys growing influence within a powerful tier of the leadership. This must make it more likely that he will emerge even stronger. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21722662-xi-jinping-filling-top-posts-alliesto-what-end-provincial-shuffle-shows-power/print + + + +文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Spy kids + +In China, even schoolchildren are told to catch spies + + +But the public has a big appetite for leaked secrets + +May 25th 2017 | BEIJING + + + + + +CHINA’s government regards spy-catching as a game for everyone. In April the municipal government of Beijing started offering rewards of up to 500,000 yuan ($70,000) for finding one. It called on citizens to be on their guard against agents attempting to “infiltrate, subvert, split or sabotage China”. Also last month, an official publishing house produced new books for primary-school children to mark the country’s second “National Security Education Day”. They included fun games such as “Find the spy”. State media said this was part of an effort to mobilise students of all ages as “a huge counter-spy force”. + +It is not known whether this approach has secured important leads. But in recent days official newspapers have been crowing about a reported victory for China’s counter-intelligence efforts. On May 20th the New York Times said that between 2010 and 2012 China had uncovered a network of some 20 agents, planted deep within China’s bureaucracy, who had been feeding information to the CIA. This was said to have been one of the biggest such breaches in recent decades. The newspaper said some of the agents had been killed, including one who was shot in front of his colleagues as a warning. + + + +Xi Jinping, who took over as China’s leader in 2012, appears even more obsessed than his recent predecessors with catching spies, stemming leaks and crushing subversives. He has introduced tough new laws on national security and made himself overlord of the security agencies. + +A fear of losing secrets may in part explain Mr Xi’s eagerness to secure the return of thousands of officials and politically connected businesspeople who have moved abroad, many of them to avoid charges of graft. Some such as Ling Wancheng, the brother of a former chief-of-staff to Hu Jintao, an ex-president, are familiar with the party’s inner workings. Mr Ling has denied reports that he has divulged nuclear secrets and information about China’s leaders to America’s spies. + +Last month China said Interpol, an international police co-operation body, had issued a notice to its members that Guo Wengui, a Chinese businessman in self-imposed exile, was wanted in China for corruption. Mr Guo has been broadcasting almost daily reports on YouTube of high-level intrigue in China (information that the party considers top secret). Many Chinese netizens, far from abhorring his leaks, appear to relish them—if, that is, they are able to dodge the hyperactive censors. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21722668-public-has-big-appetite-leaked-secrets-china-even-schoolchildren-are-told/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Pink and imperilled + +Megaprojects threaten Hong Kong’s iconic dolphins + + +China gives them a hard time, too + +May 25th 2017 | HONG KONG + + + + + +“THE dolphin is clever, cute, kind, active and inoffensive. Exactly the character of Hong Kong.” So said a local member of a committee appointed by China to oversee the end of British rule over Hong Kong in 1997. The body had decided that the pink dolphin, a rare type sometimes seen cavorting in the territory’s harbour, would be a mascot of the handover festivities. Since then, however, the animal’s fate has not been an encouraging portent of the territory’s post-colonial progress. Hong Kong’s dolphins are in perilous decline. + +They belong to a type of dolphin that lives off China’s shores called sousa chinensis, or the Chinese White (though they are grey when born and pinkish as adults). They prefer the brackish water of estuaries, where they are threatened by fishing and water-polluting factories. In Hong Kong there is a different danger: the relentless building of megastructures, including one of the world’s longest bridges. Before the British left they built an airport on 938 hectares (2,300 acres) of reclaimed land: a new runway is planned that will require 650 more. + + + +Such work appears to be driving the dolphins farther away. In a survey conducted in 2003, scientists spotted 188 dolphins around Lantau island, the animal’s main habitat in Hong Kong and the site of the airport. In 2015 they saw just 65. Experts are not convinced that the animals are safer when they move elsewhere along China’s coast. In 2010 there were thought to be 2,500 dolphins in the Pearl river delta (which includes Hong Kong)—the largest known group. But their numbers there are falling by around 2.5% annually, say scientists at the University of Hong Kong. + +The government of Hong Kong appears half-hearted about protecting them. An official website promoting Lantau’s attractions uses pictures of the wrong species. Janet Walker of Hong Kong Dolphinwatch, which runs dolphin-spotting tours, complains that other boats sometimes ignore a code of conduct requiring them to keep away from the animals. The government, she says, are not keen on stricter enforcement. + +Officials have pledged to open more “marine parks” where dolphin-threatening activities will be banned. But one that is planned around the airport will not open until 2023, when the new runway is due to open. Samuel Hung, who runs a government-funded study of the dolphins, says there is “no way” the animals will tolerate the disruption caused by the runway’s construction. + +On July 1st Hong Kong will mark 20 years of Chinese rule. On the harbour-front, a sign promoting a celebratory event features a bright pink, winking dolphin and a blue-coloured friend. If the government wants to make use of delphinoid imagery in another 20 years, it will be embarrassing if none is left. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/china/21722667-china-gives-them-hard-time-too-megaprojects-threaten-hong-kongs-iconic-dolphins/print + + + +上一個 文章 節 下一個 + + + + + +China 節 Europe + + + + + +Middle East and Africa + + +Donald Trump visits the Middle East: Mission not accomplished + +Iran’s election: Triumph of the liberals + +Islamic State in Libya: Down but not out + +Kenya: The last dance + +Eritrea and migration: The road less taken + +Writer wanted + +China 節 Europe + + + + + +文章 節 下一個 + + + + + +The president’s first foreign trip + +What did Donald Trump achieve in the Middle East? + + +Not much, but the Saudi and Israeli governments are delighted + +May 25th 2017 | JERUSALEM AND RIYADH + + + + + +AS DONALD TRUMP set off on his first foreign trip since taking office, to the world’s most unstable and dangerous region, some observers were worried. As it turned out, though, the Middle Eastern leg of Mr Trump’s nine-day maiden voyage was one of the less tumultuous periods of his presidency so far. Nonetheless, with a further tilt towards Saudi Arabia and the Sunnis, and against Iran and the Shias, the president has increased, not smoothed, the tensions that so bedevil the area. + +In Riyadh, where he arrived on May 20th, Mr Trump attempted to reset his relationship with the Muslim world, strained by his own Islamophobic rhetoric. “I think Islam hates us,” he said last year, after calling for a blanket ban on Muslims entering America. But in a speech on May 21st he declared that the fight against extremism is “a battle between good and evil”, not “between different faiths”. Blaming most of the region’s problems on terrorism, he urged his audience of Sunni Muslim leaders to “drive out” extremists. “Drive them out,” he repeated, five times. + + + +The message went down well. The audience, consisting mostly of autocrats and dictators, spouted gushers of flattery. “You are a unique personality that is capable of doing the impossible,” said Abdel-Fattah al-Sisi, Egypt’s president. “I agree,” said Mr Trump, whose mood may have been lifted by the gigantic portraits of himself that his hosts had put up all around Riyadh. He made clear that, unlike his predecessor, he would not press Arab leaders on such matters as human rights, so long as they see eye to eye with him on security and commerce. “We are not here to lecture,” he said. + +Mr Trump announced the sale of military equipment worth $110bn to Saudi Arabia, the opening of a new centre in Riyadh to combat extremist ideology and another that will target terrorist financing. Yet behind the smiles, there is tension. The kingdom, which Mr Trump once called “the world’s biggest funder of terrorism”, has spent billions of dollars spreading its ultra-conservative brand of Islam. Some say that Mr Trump’s strategy is short-sighted. Arab autocrats offer stability, “but only by brutal suppression of dissidents, whose resentment ultimately helps breed more terrorists”, says Mustafa Akyol of Wellesley College in America. + +Though he pleased his hosts, Mr Trump also inflamed sectarian tensions by blaming their rival, Iran, for most of the Middle East’s problems. “From Lebanon to Iraq to Yemen, Iran funds, arms and trains terrorists, militias and other extremist groups that spread destruction and chaos across the region,” said the president. Much of that criticism is warranted, but the fact remains that most of the jihadists in the Middle East are Sunni, not Shia. Moreover, as Mr Trump arrived in Riyadh, Iranians re-elected Hassan Rouhani, a relative moderate, as their president. “Iran—fresh from real elections—attacked by [Mr Trump] in that bastion of democracy & moderation,” wrote Iran’s foreign minister on Twitter, referring to Saudi Arabia. + +In many ways, Mr Trump’s trip to Riyadh reflected an attempt to break with the foreign policy of Barack Obama, who in 2015 struck a deal with Mr Rouhani’s Iran to curb Iran’s nuclear programme in exchange for the lifting of sanctions. The realignment upset the Saudis, who gave Mr Obama a cool welcome on his last trip to the kingdom. By contrast, Mr Trump was greeted by King Salman with lavish pageantry involving dancing, swords and a mysterious glowing globe (pictured). + +In practice, though, less has so far changed that it might seem. Mr Trump has not yet ripped up the nuclear deal, which he once called the “worst deal in history”, but which his administration says Iran is honouring. Just before he arrived, he extended a waiver on (separate) sanctions on Iran. And, like Mr Obama, he said he would avoid “sudden interventions” in the region. Many of the arms sales celebrated by Mr Trump had actually been negotiated under his predecessor. Mr Obama, though, had put much of the package on hold, fearing that American arms would be used to kill civilians in Yemen and might accelerate the arms race with Iran. + +Is that all there is? + +Mr Trump then moved on, arriving in Israel on May 22nd. Even before his inauguration, he had spoken of his desire, as a master negotiator, to deliver what he calls the “ultimate deal”—peace between Israel and the Palestinians. However, he supplied no detail as to how this might be achieved. Not once during his trip did he mention in public the “two-state solution”, under which Israel and Palestine would recognise each other as sovereign entities. + +He said nothing about Israel’s settlement-building in the occupied West Bank, nor about its iron control over the lives of Palestinians there and in the beleaguered Gaza Strip. In Bethlehem Mr Trump lectured Mahmoud Abbas, the president of the Palestinian Authority, that “peace can never take root in an environment where violence is tolerated, funded and even rewarded.” In his speeches in Jerusalem he made do with vague platitudes about how “both Israelis and Palestinians seek lives of hope for their children.” + +Israeli and American officials insisted that in closed talks the president had insisted that he is serious about making peace. But for now at least, he seems to be content with letting the two sides work out the details for themselves. Many observers, perhaps naively, had expected some sign of increased pressure on Israel to make compromises. Mr Trump gave no hint of that. + +The president did make one concession to the Palestinians, which will have come as a disappointment to the more hawkish elements in the ruling coalition. He pointedly ignored requests to recognise implicitly Israeli sovereignty over the eastern part of Jerusalem, captured 50 years ago next month. Israeli officials were not invited to join him on a visit to the Church of the Holy Sepulchre and the Western Wall in Jerusalem’s Old City. Neither did he show any indication of being ready to fulfil a campaign promise to move America’s embassy from Tel Aviv to Jerusalem. + +Still, there was plenty in Mr Trump’s statements, during a visit that lasted little more than 24 hours, that was music to Mr Netanyahu’s ears. He extolled “the unbreakable spirit” and “the accomplishments of the Jewish people”; and spoke of Israel and America’s “shared values”. He promised that while “Iran’s leaders routinely call for Israel’s destruction—not with Donald J. Trump. Believe me.” + +Going off-script in one of his speeches, Mr Trump contrasted his support for Israel with the previous administration’s coolness, saying it was a “big, big, beautiful difference”. During Mr Obama’s presidency, despite his rocky personal relationship with Mr Netanyahu and their deep disagreement over the Iran deal, Israel enjoyed unprecedented levels of American military aid and intelligence-sharing. But the Obama administration also worked tirelessly to push forward the diplomatic process with the Palestinians, without result. The lavish praise and unspecific promises of Mr Trump probably mean that Mr Netanyahu can now give his heels a rest from digging in. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21722632-not-much-saudi-and-israeli-governments-are-delighted-what-did-donald/print + + + +文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Rouhani’s return + +The triumph of Iran’s liberals + + +Iranians voted for rapprochement with the West. But the ayatollahs and Donald Trump may have other plans + +May 25th 2017 + + + + + +WHILE the leader of the free world bopped with sword-waving Arab princes and denounced the ancient Persian enemy, Iranian voters on the other side of the Gulf danced for detente. Men and women packed the streets countrywide, revelling most of the night. They were celebrating the re-election of President Hassan Rouhani. They cheered his vision of opening Iran to the West and his success in trouncing Iran’s isolationists and hardliners, championed by Ebrahim Raisi, who mustered only 38% of the vote on May 19th against Mr Rouhani’s 57%. In local elections on the same day, the hardliners were beaten in all Tehran’s 21 seats. + +Defeat is growing familiar to the hardliners. The last time they won was in the parliamentary election of 2012, and that they owed to a mass boycott by reformists. This time the hardliners campaigned particularly hard because they sensed they were not only picking a president, but also, perhaps, the next supreme leader (a more powerful post). The incumbent, Ayatollah Ali Khamenei, is 77. This presidential election may be his last. Formally, the Assembly of Experts selects a successor from among its 88 Muslim scholars. But the last time it did so, in 1989, it picked the then president. “The vote isn’t just about four years of presidency,” says a confidant of Mr Khamenei. “It’s about Iran’s future for 40 years.” Mr Khamenei is said to favour Mr Raisi as his successor; this will be harder to pull off following his drubbing. + + + +Overcoming past divisions, the hardliners united behind a single candidate. They packed rallies with the basij, their youth militia, and brandished Hizbullah flags aloft. Mr Rouhani got out the vote by sounding more liberal. In the last days of the campaign he tongue-lashed the religious zealots. He needed a hefty majority, he told voters, to promote civil liberties and to hold to account the Revolutionary Guard, the judiciary, the state media, powerful clerical charities and all who “shame freedom”. Iran’s pious conservatives, he said, have “only executed and jailed, cut out tongues and sewed mouths shut.” This message won people over. He captured more votes than any previous president (if you ignore the rigged contest in 2009), almost 5m more than he won in 2013. + +Can Mr Rouhani now fulfil his promises? Within hours of his victory, reformists whom the authorities had detained in the run-up to the election were released. His advisers also predict that he will appoint his first female minister, and perhaps even the Islamic Republic’s first-ever Sunni one. More radical change as well, they say, could be coming. Certainly, Mr Khamenei might have been happier had Mr Rouhani won by a less convincing margin. + +But if Mr Rouhani seeks to rise beyond the presidency, he will also need the deep state’s support. Having renewed his popular mandate by playing the radical, Mr Rouhani is too wily a politician not to revert to acting the clerical stalwart. Advisers are already citing his credentials: deputy commander of the army in the Iran-Iraq war, secretary of the national security council for 16 years and, as president, its chief for four. In one of his first post-election addresses, he called for Iran to test-launch more missiles. Perhaps the hardliners’ best hope is Donald Trump. Nothing helps them like a real enemy. They remember how, six months after the re-election of another reformist, Muhammad Khatami, America’s then president, George W. Bush, pronounced Iran a member of the “axis of evil”. That triggered a confrontation which helped lead, in 2005, to the election of Mahmoud Ahmadinejad, an undoubted hardliner. Mr Trump, visiting Saudi Arabia and Israel, has promised confrontation and “beautiful military equipment” for Iran’s regional rivals. American financial sanctions on global investment, too, keep the hardliners from fretting too much about an imminent influx of Western competition and soft power. God willing, they say, the economy might flop; battles might resurrect the Great Satan; and four years hence they will recover power. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21722641-iranians-voted-rapprochement-west-ayatollahs-and-donald/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Down but not out + +How Islamic State clings on in Libya + + +The jihadists have retreated to the desert, where they are a potent threat + +May 27th 2017 | RIYADH + + + + + +LIKE their comrades in Iraq and Syria, the jihadists of Islamic State (IS) in Libya were in retreat earlier this year. Their branch, considered the most lethal outside the Levant, was pushed out of Sirte, its coastal stronghold, in December and hit hard by American bombers in January. The blows seemed to dispel the idea that, as the core of its “caliphate” crumbled, Libya might serve as a fallback base for IS. + +But although the jihadists are down in Libya, they are not out. And they may have international reach. Many of the fighters have regrouped in a swathe of desert valleys and rocky hills south-east of Tripoli. British police are probing links between Salman Abedi, the suicide-bomber who murdered 22 people at a concert in Manchester on May 22nd, and IS, which claimed responsibility for the attack. Mr Abedi was in Libya recently; his brother and father were arrested in Tripoli on May 24th. The militia holding them says the brother is a member of IS and was planning an attack on Tripoli. + + + +Chaos has been the norm in Libya since the uprising that toppled Muammar Qaddafi in 2011. Myriad armed groups, loosely aligned with rival governments in the east and west, vie for power. A UN-backed peace deal, signed by some of the adversaries in 2015, has failed to unite the country or create an effective state under the “government of national accord” (GNA). IS has fed on the chaos—and added to it, lately by attacking water pipelines and pumping stations. + + + +There are thought to be around 500 IS fighters operating in Libya, not the thousands estimated before their recent setbacks. But there are perhaps 3,000 jihadists of all types. In a sign of how fluid things are, IS is now said to be receiving support from local al-Qaeda fighters, despite feuding between the groups’ leaders abroad. In Libya they operate in the same areas. Fighters move back and forth between them. “I can well imagine that they are co-operating on logistics and sharing information,” says Wolfgang Pusztai, a former Austrian defence attaché to Libya. + +The terrain in the south makes it difficult to attack IS from the ground, say GNA officials, who oversaw the retaking of Sirte. But there are problems with air strikes too—the jihadists stopped travelling in large numbers after American bombers killed more than 80 of them in one set of strikes in January. Now they move in small groups along unpatrolled roads. The GNA says it is keeping tabs on them from a base near Bani Walid, while America is watching from the air. It has been flying surveillance drones over Libya from bases in Tunisia since last summer, and it is building a new drone base in Niger. + +Neighbours worry that their own militants will find inspiration and training in Libya—and then return home. Chad closed its border with Libya in January, fearing an influx of jihadists. (It has since reopened one crossing.) Algeria has opened a new air base to guard its frontiers. Tunisia, which has suffered several attacks by jihadists, has built a 200km (125-mile) earth wall along its border with Libya. But even so, IS maintains cells near Sabratha, in the west, to help its fighters get in and out. + +Europe, only some 400km away, is eyeing the situation with concern. The chaos has made Libya the main point of entry to Europe for African migrants. Despite more patrols, some 50,000 migrants are thought to have reached Italy by boat so far this year, over 40% more than in the same period last year. Some believe the smuggling business helps to finance terrorism—and that jihadists may be among those making the trip. + +For now IS and its allies are keeping a low profile in Libya, if not elsewhere, as they try to rebuild their strength. Meanwhile, hopes of a settlement to the conflict look dim. The chaos is likely to continue, giving the jihadists an opportunity to reassert themselves at home. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21722630-jihadists-have-retreated-desert-where-they-are-potent-threat-how/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +The last dance + +Work begins on Africa’s tallest building + + +Does the start of Africa’s tallest building signal the end of Kenya’s boom? + +May 25th 2017 | NAIROBI + + + + + +COULD Nairobi, Kenya’s traffic-clogged capital, be the next Dubai? Two large Dubai-based investors, Hass Petroleum and White Lotus, seem to think so. On May 23rd they formally started construction of what they claim will be Africa’s tallest building. Out of a vast hole in the ground in Upper Hill, a neighbourhood full of government offices, will rise two towers, the taller some 300 metres high and named “The Pinnacle”. (For comparison, the Burj Khalifa in Dubai, the world’s tallest building, is 828 metres high). One will contain a hotel; the other, some 150 swanky apartments (or “residences”). A helipad will jut out of the roof of the taller tower, allowing the truly plutocratic to be whisked in over the traffic jams from the airport. + +The investment is a fillip for Kenya. Much of Africa is in economic trouble. In 2016, according to the IMF, annual GDP growth across the continent sank to just 1.4%, the lowest rate in 20 years. Yet Kenya, which depends less on oil and mining than most African countries, has kept growing. Its economy probably expanded by 6% in 2016. Much of that came from projects such as the Pinnacle, a $220m investment. Nairobi’s skyline is dotted with cranes; new suburban housing estates are flourishing at the edge of the city. However, not everyone is confident that it can last. + + + +For most of the past decade, investing in property in Nairobi has been extraordinarily lucrative. “Ten years ago, anything, honestly anything, would sell out,” says Sakina Hassanali of Hass Consult, a property agency unconnected to Hass Petroleum. House prices have more than doubled since then, despite a flood of new apartment blocks and housing estates. As well as foreign investors, the boom has been underpinned by investment from wealthy Kenyans. Faced with an illiquid stock exchange and precarious banks, they have preferred to put their money into property. Scammers have got in on the frenzy, selling land they do not own, or off-plan apartments which are then built shoddily or not at all. + +Yet the property boom is now slowing. “Prime” residential rents fell by 6% in 2016, according to Knight Frank, another property firm. In some corners of Nairobi half-built houses have sat for months with no progress. It is not clear that there are enough Kenyans who can afford to rent them. Most forecasters expect economic growth to slow, because of uncertainty about the Kenyan general election in August. Investment in infrastructure has helped to fuel the economy, but this could tail off after the election. + +Could the construction of Africa’s tallest building turn out to be the last dance of the party? When asked who will live in his firm’s new “residences”, Abdinasir Hassan, the chairman of Hass Petroleum, points to “the large number of expatriates” working for NGOs in Nairobi. He also thinks that Nairobi will become a new financial hub for Africa. Yet few NGO workers are lavishly paid—and none is likely to need a helipad. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21722664-does-start-africas-tallest-building-signal-end-kenyas-boom-work/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +The road less taken + +Migration from Eritrea slows + + +Young people fleeing indefinite military service are encountering more obstacles on the route through Sudan + +May 25th 2017 | KHARTOUM + + + + + +IN JERIF, a district of Khartoum, young Eritreans listen to Tigrinya pop music in dimly lit restaurants, or watch football at an oppressively hot community centre supported by their government. They are mostly male, and almost all have fled compulsory, indefinite military service on behalf of their despotic government. Most are working, or waiting for relatives to send money, so they can leave for Europe. + +But the lads in Jerif will find their journey harder than their predecessors did. The number of Eritreans successfully completing each stage of the trip across the Sahara and the Mediterranean via Sudan appears to have declined in recent years. Border crossings fell by almost two-thirds to 9,000 between 2010 and 2016, according to the UNHCR, the UN’s refugee agency (the real figures will be far higher, however: plenty of Eritreans get into Sudan undetected). A smuggler says he sent 150 migrants from Khartoum to Libya and Egypt last year, down from 300-400 in 2014 and 2015. And 21,000 Eritreans made it to Europe in 2016, down from more than 39,000 the previous year when they were the largest group of migrants arriving in Italy. + + + +European governments have realised that voters are fed up with people fleeing war and poverty across the Mediterranean. European Union money has persuaded transit countries from Turkey to Niger to curb the flow. Eritreans are also deterred by the risk of being kidnapped near the dangerous Eritrea-Sudan border. + +Still, trafficking in the border region has not stopped. Digin, a soft-spoken 18-year-old, says he was chained up for 42 days by his kidnappers, after escaping from an Eritrean military training camp. After his family paid a ransom he was driven to Shagarab, a refugee camp close to the border. + +Only a third of the Eritreans whom the UNHCR records crossing into Sudan will register as refugees. And within a few months, four-fifths of those will have sneaked out of Shagarab to meet a car that will take them to Khartoum. There they will meet a samsara (smuggler) who arranges the onward journey, once the migrants have the money. + + + +The Libyan border with Sudan, in turn, is not as porous as it was. In the past year hundreds of Eritreans and Ethiopians have been caught by Sudan’s Rapid Support Forces (RSF), a group made up of the militia formerly known as the janjaweed that inflicted genocide on black Africans in Darfur in the mid-2000s. The captured Eritreans were deported. “The road to Libya is still working,” says a smuggler. “But it’s very dangerous.” + +Eritreans are increasingly avoiding Libya, which is racked by civil war. Going via Egypt, usually by car and then train, does not guarantee success either. Meron Estefanos, a Swedish-Eritrean activist who tries to help captured Eritreans, says she now receives more calls from relatives of people imprisoned in Egypt, than from those kidnapped by gangs in Libya. + +Others are heading north from Sudan, among them Sudanese themselves, especially Darfuris; the children of Eritreans who fled the war with Ethiopia in the 1990s; and Ethiopians. The EU is spending at least €115m in Sudan, mainly on things like education and nutrition, to try to give would-be migrants reasons to stay. EU officials say the funds, which started being approved in April 2016, will be handled by international agencies. One says they are “discussing” not “negotiating” with a government whose president of 28 years, Omar al-Bashir, is wanted by the International Criminal Court for allegedly ordering the slaughter in Darfur. But the arrests by the RSF, and recent round-ups of long-term Eritrean residents in Khartoum, suggest that the regime wants to show that it can curtail migration. + +As long as the repressive Eritrean and Sudanese governments remain in power, people will try to get to Europe, however perilous the odyssey. Some women reportedly take contraception, expecting to be raped. Others learn parts of the Koran in case they are kidnapped by Islamic State in Libya. But many have stayed in Sudan long enough to see loved ones disappear in the desert or drown in the Mediterranean, and are loth to leave. If they were allowed to study and work, rather than being arrested, fewer would risk the onward trek. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21722660-young-people-fleeing-indefinite-military-service-are-encountering-more-obstacles/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Writer wanted + + +May 25th 2017 + + + + + +Writer wanted: The Economist is looking for a writer to cover the Arab world, based in Cairo. Candidates should send a CV, a cover letter and a 600-word original article that could run in our Middle East and Africa section to cairocorrespondent@economist.com. Deadline for entries is 23rd June. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/middle-east-and-africa/21722631-writer-wanted/print + + + +上一個 文章 節 下一個 + + + + + +Middle East and ... 節 Britain + + + + + +Europe + + +Ukraine’s stalemate: Theatre of war + +Fighting corruption in Ukraine: Harsh medicine + +Greece’s debt odyssey: No relief + +Czech politics: Paper tiger + +Optimism in France: Yes, oui can + +Charlemagne: The terrible trio + +Middle East and ... 節 Britain + + + + + +文章 節 下一個 + + + + + +Stalemate + +Ukraine and Russia are both trapped by the war in Donbas + + +The Minsk-2 peace agreement is a sham, but neither side can pull out + +May 25th 2017 | SLOVIANSK + + + + + +ON APRIL 12TH 2014 Igor Girkin, a former Russian military officer also known as “Strelkov” (“Shooter”), sneaked across the border into Ukraine’s Donbas region with a few dozen men and took control of the small town of Sloviansk, igniting Europe’s bloodiest war since the 1990s. To create the impression of strength, Mr Girkin, an aficionado of historical battlefield re-enactments, masqueraded as a member of Russia’s special forces, and had his men drive two armoured personnel carriers around every night to simulate a large build-up. In fact, his army never exceeded 600 men, mainly Cossacks and war-hungry opportunists like himself. + +Having just lost Crimea and lacking a functioning government or military command after the Maidan revolution, Ukraine was stunned. As Russia massed its forces on the border with Ukraine, most observers (and participants such as Mr Girkin) expected a swift invasion followed by annexation. Instead, the Kremlin created an ersatz civil war, absurdly portraying the Kiev government as a “fascist” regime and the separatists as freedom fighters. As the Ukrainian army moved in to try to retake Donbas, Mr Girkin and his fighters took up positions in a psychiatric hospital on the outskirts of Sloviansk, using its patients as human shields. + + + +Today, the ruined psychiatric hospital, resembling a scene out of the battle of Stalingrad, is a symbol of the madness of an essentially theatrical conflict that has cost 10,000 lives and displaced more than 1.7m people. Yet officially, Russia and Ukraine are not at war. They maintain diplomatic relations and trade with each other. Ukraine has euphemistically designated the conflict zone an area of “anti-terrorist operations” (ATO). Most of the people caught up in the war do not care who started it, or what they call it. + +“I am against everyone,” says Lyudmila Prikhodko, who lives in a restored building among the hospital’s ruins. (The names of civilians in the conflict zone have been changed.) An engineer, Ms Prikhodko was forced to flee Donetsk after refusing to support the self-proclaimed Donetsk People’s Republic (DNR). She feels equally alienated from Russia and Ukraine. “DNR treats people like me as enemies. Ukraine sees us as potential separatists.” + +A nation divided + +On paper, there is no border between the two parts of Ukraine. In practice, there are several frontier control points, manned by border guards and customs officials and crossed by those who live in the separatist territories but must work, receive pensions or handle bureaucratic problems on the Ukrainian side. Andrei Borisov, a smuggler who carries food, cigarettes and pesticides from Ukrainian territory across the line of control, says everyone is in on the business: customs officers, local officials and separatists on the other side. + +During the day, while the Mayorsk crossing is open, things are relatively quiet. When it closes and darkness falls, the two sides start firing mortars at each other, while people living in no-man’s land take shelter in their houses. In the morning they come out to inspect their vegetable plots, dotted with craters, and collect their harvest of potatoes and shrapnel. + +In nearby Avdiivka, one of the flashpoints a few months ago, the firing is more intense. Four civilians were recently killed. Alexander Samarsky, a commander of the Ukrainian army’s 72nd Brigade, says the main purpose of this seemingly pointless pounding is the need for the separatists to boost morale and keep soldiers active and disciplined. The same applies to his troops, who have been stationed here without rotation for over seven months. The army is in much better shape than it was three years ago, but drinking and drugs have become enough of a problem for Kiev to send in the national guard, a militarised police force. Without being asked, two national guardsmen take out a smartphone and display a video of drunken army officers having their bootleg liquor and bags of white powder confiscated. + +The two guardsmen’s own story is compelling. Three years ago, at the Maidan demonstration, they were on opposite sides of the barricade: one, a militarised police officer from Kharkiv, was called in to defend the presidential administration; the other, from Kiev, was a student protester. Today they man one post. Yet such solidarity is uncommon among civilians. Most of the local population in Avdiivka, according to Mr Samarsky, are not on his side. Russian television continues to broadcast there, and absurdly, despite the daily shelling, most of the locals blame Ukraine rather than Russia for their misery. + +Petro Poroshenko, Ukraine’s president, seems more worried about losing the loyalty of pro-Ukrainian fighters than he is about winning hearts and minds in the east. Instead of campaigning for the support of local Russian-speakers, the government is imposing quotas on the use of Russian on Ukrainian channels and banning the import of Russian-language books. Mr Poroshenko’s position may be weaker than it seems. In February, a small group of Ukrainian irregulars and volunteers blocked railway traffic across the line of control, halting freight between the separatist territories and the rest of Ukraine. Mr Poroshenko opposed the blockade, but its slogan, “No trade in blood”, caught on. Support for the blockade soared from 7% to over 50%, according to polls. + +Unable to beat them, the government joined them, imposing a trade and energy blockade on the occupied territories. This disturbed the situation in Donetsk. The separatists responded by seizing control of all of the coal mines and steel and chemical plants owned by Rinat Akhmetov, Ukraine’s richest oligarch. Mr Akhmetov was not only the biggest employer in the occupied territories but also their greatest benefactor, providing up to 400,000 humanitarian food parcels per month to the elderly and those in need. The parcels have now been stopped by the separatists, and Mr Akhmetov’s 56,000 well-paid miners and workers have lost their income. + +When Mr Akhmetov’s workers attempted to protest, they were met with a mixture of threats and bribes by the separatists and their Russian backers. The miners’ protests would have destroyed the illusion the Russians have tried to create of a model Soviet-era proletarian city. The half-empty city has been kept spotless, the lawns mowed and pavements swept clean. Oksana Mironova, who lives in Donetsk and manages a medium-sized business on the Ukrainian side, says the separatists are trying to introduce the symbols and attributes of a state and create an impression of permanence. Yet it remains a gangster-run territory: “They put on lipstick but forgot to wash their necks.” + +Unable to offer much of a future, the separatists are cultivating the symbols of the Soviet past. On May 11th, they marked the third anniversary of their “republic” with a Soviet-style march. A voice boomed from loudspeakers: “We greet this day with joy and pride for a glorious past and in confidence for a peaceful and happy future.” Workers with balloons and Soviet flags marched in columns along Lenin Prospect. Yet keeping up a Soviet veneer may not be easy without jobs, particularly as industrial production plummets. + +However disillusioned most people in Donetsk feel with the “Russian spring”, few believe that the territory could ever be reincorporated into Ukraine. But it is not just Ukraine and Russia that have been engaged in a game of make-believe. So has the West, whose leaders continue to endorse the Minsk-2 ceasefire agreement, while privately admitting that it is dead. + +From the time Minsk-2 was signed two years ago, it was designed to mask an effective defeat of the Ukrainian army by Russian forces. The agreement calls for Russia to return control over its border and over the separatist territories to Ukraine, something it will never do. Ukraine, meanwhile, lacks the military power or Western support to take it by force. America has refused to arm Ukraine with lethal weapons, let alone fight on its side. Some Western politicians argue that it would be more honest and productive to pronounce Minsk-2 dead and enforce the current line of division between the separatists and the rest of Ukraine with an armed peacekeeping force. Ukraine, the argument goes, would lose only a swatch of land which it does not control anyway. And it would prevent the rest of the country from being frozen in a permanent state of war. + +The problem is that too many parties in this conflict have an interest in keeping up the charade. This includes both Mr Poroshenko and Vladimir Putin, Russia’s president. Both have rejected any talk of changing the Minsk-2 agreement, as this would undermine their credibility. Yet neither is interested in taking formal responsibility for Donbas. Mr Poroshenko’s legitimacy rests almost entirely on the fight against Russia, and he has no interest in letting Donbas vote in the presidental elections in 2019. The Kremlin does not want either to pay for Donbas or to limit its options in meddling in the rest of Ukraine. + +Yet leaving things as they are does not mean they will stay this way. As Mr Girkin said recently: “sooner or later [Russia] will have to face either a victory or a defeat. A military confrontation is inevitable.” His ideal outcome would be a resurrection of Novorossiya, the historic Russian term for the eastern parts of Ukraine, as part of a new state comprising Russia, Ukraine and Belarus. This may seem like a delusion. But then so did his first raid on the hospital in Sloviansk three years ago. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21722677-minsk-2-peace-agreement-sham-neither-side-can-pull-out-ukraine-and-russia-are-both/print + + + +文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Harsh medicine + +Ukraine is struggling with corruption, sometimes successfully + + +The war against graft is as hard as the one against Russia + +May 25th 2017 | KIEV + + + + + +UKRAINE is fighting two wars. One is near its eastern border, where it faces Russian aggression. The other is at its core, where it is wrestling with some of the worst corruption of any post-Soviet state. The war against corruption is only starting, and the fighting is carried out office by office, ministry by ministry. + +Naftogaz, a state oil and gas firm which once epitomised the country’s misgovernment, has been cleaned up. Some of the most powerful oligarchs have been squeezed. One of the main sources of corruption that feeds the system, state procurement, has been slowly overhauled, producing some positive results. + + + +In 2016 the health ministry launched a four-year programme to outsource procurement of medicines to international agencies. In the past, bureaucrats allied with suppliers to inflate prices. With one of Europe’s fastest-growing HIV epidemics and many other health emergencies, this was a burden Ukraine could not afford. Patients of Ukraine, an NGO, has estimated that 1,600 Ukrainians die daily from the resulting lack of medicine. + +The health ministry contracted Crown Agents, a British-based development agency, and two United Nations bodies to buy medicines on its behalf. Their year has not been easy, with red tape causing delays. But when the first year’s results came back in December, they showed a 38% saving compared with 2015, without compromising on the quality of the drugs. Whereas before two or three suppliers dominated supply, Crown Agents have brought in almost 30, thus defeating the tricks previously used to corner the market. + +Alexandra Ustinova of Patients of Ukraine mischievously suggested that Crown Agents had been “lucky” to win the oncology contract, since it included the drugs whose prices had previously been most inflated by corruption. But she acknowledged the agency’s success in cutting costs, along with that of the UNDP, which saved $4m out of $39m assigned to buy medicines for HIV, tuberculosis and other infectious diseases. + +The auditor of Crown Agents’ figures, Prashant Yadav of the University of Michigan, said it was hard to say how much of the savings were from curbing corruption, and how much from being more competent than the bureaucrats who used to be in charge. But they were high. “We would expect to see savings like this in very small markets, in Africa,” he said. “A decade ago.” + +This may be a small victory, but the fight against corruption is rarely won by tanks. As the fighting intensifies, the corrupt system is starting to push back. Some politicians are even attempting to tarnish the name of one of the country’s most respected anti-corruption organisations, the Anti-corruption Action Centre (AntAC). The group has received grants from Western donors, and pushed to create an anti-corruption prosecutor’s office, making itself plenty of enemies in the process. Alexander Martynenko, the head of Interfax Ukraine, a news agency, says AntAC’s foes, unable to ban it, are trying to discredit it in the eyes of its sponsors and cut it off from funding sources. In such a campaign, disinformation is the ammunition of choice. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21722682-war-against-graft-hard-one-against-russia-ukraine-struggling-corruption/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Debt odyssey + +Greece meets creditors’ demands but gets no relief + + +Alexis Tsipras’s government gets caught in a fight between Germany and the IMF + +May 25th 2017 | ATHENS AND BRUSSELS + + + + + +MAKIS, a gym instructor, counted himself lucky three years ago to land a job in the public sector. The 28-year-old works as a groundsman at a sports complex in Glyfada, a seaside suburb of Athens. Hired on a temporary contract, he expected to make a smooth transition to a permanent post in local government. But times are changing. Greece’s state audit council, which normally rubber-stamps official decisions, unexpectedly ruled this month that municipal employees should be dismissed when their contracts expire. + +“That’s it for me, I’ll have to leave and find a job abroad like everyone else,” Makis says, gesturing towards his colleagues: a phalanx of state employees, from rubbish collectors to computer technicians. They are outside Athens’s city hall, protesting against the audit council’s decision. + +More upheaval is on the way. On May 18th parliament approved a new package of reforms demanded by the European Union and the IMF, Greece’s bail-out creditors. Sunday shopping will be extended outside tourist areas, despite objections by small retailers claiming they will be driven out of business by large stores that can afford to hire the extra staff required. “We lobbied the politicians successfully for years to stop this happening, but the game is over,” said Panos, who owns a hardware shop in central Athens. + +Passing the measures was supposed to unlock bail-out funds from Greece’s creditors, which the government needs to avoid defaulting on bond payments of around €7bn ($7.9bn) in July. But a long-running squabble between Germany and the IMF has complicated matters. The fund declined to join Greece’s current bail-out, its third, when it was signed in 2015. Now Wolfgang Schäuble, Germany’s finance minister, says Germany will not agree to disburse any more bail-out money without the IMF’s participation in the programme—which is needed, he thinks, to counter the softies in the European Commission. Mr Schäuble has the backing of some other euro-zone governments. + +Not a fan of austerity + + + +But the IMF believes that the Europeans’ projections for the Greek economy are too rosy, and that Greece’s debt will be unsustainable unless it gets further deferments on paying it back. Mr Schäuble is wary of granting such debt relief just months before Germany’s election in September. So despite having met its creditors’ conditions, Greece is stuck in the middle of their row. A meeting in Brussels on May 22nd failed to resolve the dispute. Officials on all sides are confident a deal will be struck in June. + +Critics of Alexis Tsipras, Greece’s prime minister and leader of the left-wing Syriza party, say his government has signed up to another five years of austerity without securing the debt relief promised by creditors in return. Worse, he is accused of betraying his own voters. Whereas last year’s round of tax increases hit the middle class hardest, the new measures will shrink the incomes of poor Greeks. Pensions have been cut a dozen times since 2010; another 18% will be lopped off in 2019. The tax-free allowance on incomes will be slashed in 2020 to bring Greece in line with its euro-zone partners. (More than half of Greeks pay no income tax at all, compared with 8% for the euro zone as a whole.) + + + +When Syriza swept to power in 2015, Mr Tsipras promised to end austerity and restore social benefits cut by previous governments. Yet his failure to do so has prompted few strikes and street protests, compared with reforms by earlier governments. One reason is that trade unions, which include many Syriza supporters, have been reluctant to defy their fellow leftists. But after seven years of recession ordinary Greeks seem resigned to getting by on less. “It’s hard to face the fact that your pension’s getting smaller, but what to do?” shrugs Constantina, a retired teacher. + +Syriza officials accept that voters will punish Mr Tsipras at the next election, due in 2019. The conservative New Democracy party, led by Kyriakos Mitsotakis, a staunch reformist, holds a double-digit lead over Syriza in opinion polls. Some Syriza members have even suggested that the prime minister should call an early election and enjoy a spell in opposition, stirring up trouble for the conservatives while they struggle to implement tough policies already agreed upon with the EU and IMF. + +Mr Tsipras’s strategy is not as Machiavellian, say party insiders. With the economy forecast to grow by 1.8% this year and 2.4% in 2018, he is betting that Greece can attract enough investment to make a dent in unemployment, still the highest in the EU at around 23%. If Syriza can win back enough votes to prevent a conservative landslide at the 2019 election, its 42-year-old leader’s future still looks bright. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21722675-alexis-tsiprass-government-gets-caught-fight-between-germany-and-imf-greece-meets/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Paper tiger + +The billionaire who will probably be the next Czech prime minister + + +It is hard to campaign against a newspaper owner + +May 25th 2017 | PRAGUE + + + + + +BACK when newspapers were king, Charles Brownson, an American congressman, used to say that one should never quarrel with anyone who buys ink by the barrel. The principle still stands, and it is making life difficult for opponents of Andrej Babis, a billionaire media magnate who until this week served as Czech finance minister. With a general election set for October, Mr Babis’s ANO party seems unassailable, polling at 33.5% against 16% for the second-place Social Democrats. + +On May 2nd Bohuslav Sobotka, the prime minister, threatened to resign unless the country’s president fired Mr Babis over a questionable tax break he received in 2013. Mr Sobotka, a Social Democrat, hoped the attention to Mr Babis’s finances would stop his own party’s headlong slide. The finance minister eventually agreed to step down. But more Czechs blamed Mr Sobotka for the clash than Mr Babis, and it seems ever more likely that he will win. + + + +That election is one of two in the next eight months that are pivotal to the Czech Republic’s direction. The second is in January, when Milos Zeman, the pro-Russian president, is up for re-election. As the westernmost former Soviet-bloc state, the Czech Republic straddles Europe’s growing divide over liberal, pluralistic values, which Poland and Hungary are challenging. Mr Babis, a pro-business centrist with no affection for Russia, has little in common ideologically with Mr Zeman, an economic leftist. But both men have expressed disdain for political dialogue and democratic checks and balances. Mr Sobotka calls them the “power tandem”, and pledges to resist their populist wave. + + + +Mr Babis is a centrist who contends he can manage the country as he did his business empire. He is popular with many Czechs, but others treat him with suspicion. He accumulated vast wealth from his agrochemical conglomerate, Agrofert, which produces more than a third of the country’s bread. His political rise coincided with his purchase of the newspapers. In February, a new law forced him to place his business holdings in a trust. Mr Babis insists he does not abuse his business or media ties for political gain. But he has been damaged by audio recordings, leaked earlier this month, in which he and a journalist discuss how to leak documents to discredit his political opponents. + +More damaging has been the news of his tax break. In 2013 Mr Babis purchased bonds in his former company worth 1.5bn koruna ($63.5m), sneaking through a loophole just as it was about to close. The deal would bring him $2.2m in tax savings this year. Mr Babis says he will donate his gains to charity, and claims the prime minister’s aspersions about the deal are lies. + +In any case, the bickering has mainly weakened Mr Sobotka and Mr Zeman. The prime minister backed down from his threat to resign, and Mr Zeman at first declined his request to fire Mr Babis. He then subjected Mr Sobotka to a humiliating dressing-down on national television. Surveys show that Czechs find Mr Zeman’s behaviour unpresidential. Mr Zeman, a former head of the Social Democrats, once had many allies in the party, but Mr Sobotka now says it may run its own candidate for president against him. + +On May 24th Mr Babis stepped down, and was replaced by Ivan Pilny, an ANO deputy and the former head of Microsoft’s Czech division. But Mr Sobotka’s haphazard politicking has mostly damaged himself. Increasingly, Czechs are talking more about government dysfunction than about Mr Babis’s business dealings. He calls himself an outsider; being pushed out of government will only help him to sell that story. Owning a couple of newspapers will not hurt, either. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21722688-it-hard-campaign-against-newspaper-owner-billionaire-who-will-probably-be-next/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Yes, oui can + +The land of morosité and ennui is embracing life coaches + + +Under President Macron, France is flirting with optimism + +May 25th 2017 | PARIS + + + + + +THE French like to think of themselves as a miserable lot. Voltaire taught them that optimism is for the naive. Jean-Paul Sartre made ennui chic. Best-selling French psychology books include such titles as “Too Intelligent to be Happy”. Polls consistently rank the French among the world’s most despondent. Fully 85% earlier this year said that their country was heading in the wrong direction, compared with 61% of Britons and 51% of Americans. The Anglo-Saxon world hosts a blossoming trade of life coaches, self-help writers, motivational speakers and happiness researchers—what might be called the “optimism industry”. In France, it has had trouble gaining a foothold. + +Now, it seems, upbeat thinking is à la mode. During his election campaign, Emmanuel Macron, the new president, was the candidate of “la positive attitude”, said Damon Mayaffre, a linguistics researcher. Favourite words he used in his campaign speeches included hope, future, dream and youth. Even the name Mr Macron gave his political movement, En Marche! (“On the Move!”), conjures up motion and can-do enthusiasm; its jaunty exclamation mark jars with the traditional Gallic pout. + + + +“What is very new is a different state of mind at national level, and this can be felt at an individual level too,” says Philippe Moret, a coach and founder of Attitudes Positives, a consultancy. The idea is that a more optimistic approach at the top could help coax France more broadly out of its morosité. Even before Mr Macron’s election, some sensed the changing mood. “What is positive psychology?” asked Cosmopolitan, a women’s magazine, last month. It went on to tell readers of the “science of happiness” and its “revolutionary” potential. + +Optimism in France could be good for growth. Business confidence in May already showed signs of recovery. The composite IHS Markit index indicated the strongest monthly growth in France for six years. Rising confidence might also help those who have toiled for years in the optimism industry, against the odds. One such initiative is Sparknews, which promotes positive reporting. Another is the Positive Economy Forum, a yearly meeting designed to promote a “positive society”. It is the brainchild of Jacques Attali, a one-time mentor to Mr Macron who also advised François Mitterrand, a former president. The forum happens to take place in Le Havre, a town in Normandy whose outgoing mayor, Edouard Philippe, is Mr Macron’s new prime minister. Perhaps the French will take the power of positive thinking seriously, now that positive thinking is in power. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21722676-under-president-macron-france-flirting-optimism-land-morosit-and-ennui/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Charlemagne + +How Trump, Putin and Erdogan unsettle the EU + + +Liberal values and the rule of law meet capricious populism + +May 25th 2017 + + + + + +THE mood is brighter in Europe these days. It has not, admittedly, taken much to lift the spirits: reckless extremists came second, not first, in elections in Austria, the Netherlands and France; economic growth has accelerated beyond a snail’s pace; and Brexit, though probably disastrous for Britain, may not be catastrophic for Europe. Still, even the return of normality is a relief for a continent that has spent the past few years battling crises. + +But if Europeans have at last started to feel better about themselves, the world outside looks ever-more menacing. The cherished European values of liberalism and respect for human rights are being challenged by a cohort of unpredictable leaders who seem not to prize or understand them. This is unsettling for the European Union, a slow-moving club founded on reverence for the rule of law. For Europeans the shift is embodied in three presidents whose capricious impulses are shaping and constraining their foreign policy: Donald Trump, Vladimir Putin and Recep Tayyip Erdogan. + + + +Take Mr Trump first. Europeans’ fears about the American president have partly eased since he took office. Mr Trump used to enjoy egging on anti-EU politicians like Nigel Farage and Marine Le Pen. However, after meeting various European leaders, he has largely stopped doing so. In February Mike Pence, the vice-president, reassured Eurocrats that America was not bent on destroying the EU. European officials, after visits to Washington, express optimism that some of Mr Trump’s more outlandish courtiers, such as Peter Navarro, a trade adviser who thinks America’s deficits threaten its security, have lost the president’s ear. + +But Europeans are far from comfortable. “We have no idea where [the Americans] are on so many issues,” says a diplomat in Brussels, where Mr Trump was arriving for an EU meeting and NATO summit as The Economist went to press. That meeting was to be followed by a two-day summit of the G7 in Sicily. In the run-up to these encounters the Europeans hunted for clarity on America’s intentions, especially on climate and trade. During the campaign, Mr Trump vowed to withdraw from the Paris climate accord; he has neither reaffirmed nor revoked that pledge. (Alert to his “America first” approach to diplomacy, the Europeans have drawn up lists of American jobs that depend on clean energy.) The Americans have been reluctant to sign up to boilerplate language, in the G7 communiqué, on the importance of global trade. + +If Mr Trump provokes questions for Europeans, Mr Putin challenges their assumptions. His Crimean land grab upset the post-cold war order, and his troops wreak havoc in Ukraine’s east. Weakness may limit the scale of what Mr Putin can accomplish. But Russia’s ongoing decline gives him a reason to act now rather than wait to disrupt pro-European reforms in countries that he sees as within his sphere of influence (although, happily, the EU has at last granted Ukrainians the right to visa-free travel). Inside the EU Mr Putin and his proxies meddle in elections and sponsor rabble-rousing parties and fake NGOs. Some governments have set up disinformation units to counter Russian propaganda. + +Mr Erdogan is an even trickier customer. Turkey is a NATO ally and a candidate for accession to the EU. Its intelligence can help Europeans fight terrorism; it hosts millions of refugees who might otherwise seek sanctuary in Europe. But the president is impossible for Europeans to deal with. He compares European governments who bar him from campaigning on their territory to Nazis, and threatens to dump migrants on Bulgaria and Greece if he does not get his way. His domestic purges have nearly destroyed Turkish democracy. Some Europeans, including the Austrian government, want to end Turkey’s accession talks. (Others quietly hope Mr Erdogan will end them himself.) + +Dealing with any one of this trio would be hard. Together they make for a tetchy neighbourhood. Uncertainty over America’s approach to Russia, for example, magnifies the threat from Mr Putin. Fears that Mr Trump might seek a grand bargain with the Kremlin have faded, but German officials cannot count on the co-operation over Ukraine that they enjoyed in Barack Obama’s day. Relations among the three are unpredictable, too. In the past 18 months Turkey has shot down a Russian plane, a Russian ambassador has been murdered in Ankara, Russia has slapped sanctions on Turkey and the two countries have made friends again. + +Combine the difficulties with Russia and Turkey with question-marks over America’s commitment to their security, and Europeans are left with an acute sense of “geopolitical loneliness”, in the words of Jan Techau of the American Academy in Berlin, a think-tank. This also unsettles neighbouring regions in which the EU is used to exerting influence. The vacuum is felt in the ex-Soviet states, where American support was once a given, but also in the Western Balkans, a dangerously unstable zone in the heart of Europe where America, Russia and Turkey all vie for influence. + +Alone in a world so cold + +Some take a rosier view. European diplomats like to say that Mr Trump’s election and Brexit have fostered a newfound sense of cohesion in Europe. Surveys indeed find support for EU membership growing in most countries, and this week the Pew Research Centre issued similar findings for NATO. + +But it is a fragile sort of unity, grounded not in confidence but in fear of the outside world. At a recent meeting EU trade council meeting, one diplomat notes with glee, the old splits between free-traders and protectionists had gone; all were united behind protective anti-dumping measures. The waves of migrants that poured into Europe from Turkey in 2015-16 saw a scramble to close borders. And it is the threat from Mr Putin, more than any scolding tweets from Mr Trump, that have spooked European governments into raising defence spending. The terrible trio are casting long shadows. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/europe/21722651-liberal-values-and-rule-law-meet-capricious-populism-how-trump-putin-and-erdogan-unsettle/print + + + +上一個 文章 節 下一個 + + + + + +Europe 節 International + + + + + +Britain + + +Terrorism: After the bomb, the hunt + +Social care: The four-day manifesto + +Human rights and Europe: Opting to Remain + +The election in Northern Ireland: Alliance seeks a third way + +Voting: Turn on, tune in, turn out? + +Online campaigning: A fresh canvass + +The campaigns: Speakers’ Corner + +Bagehot: The two Theresas + +Europe 節 International + + + + + +文章 節 下一個 + + + + + +After the atrocity, the investigation + +The hunt is on for the Manchester bomber’s accomplices + + +It seems that Salman Abedi did not act alone—and his fellow plotters could strike again + +May 27th 2017 | MANCHESTER + + + + + +“WE WON’T take defeat and we don’t want your pity,” roared Tony Walsh, a local poet, at a vigil in Manchester on May 23rd for the 22 people, some of them children, who were murdered in a suicide-bomb attack in the city the previous evening. Muslim charities were present as Sikhs gave out free drinks to the crowd, whose members held placards with slogans such as “Hate does not resolve Hate”. It was a conscious display of unity in the face of Britain’s deadliest terrorist attack since July 7th 2005. + +As Mancunians took to the streets, counter-terrorism officers were unpicking the origins of the plot. Lately they have worried about self-radicalised “lone wolf” attackers. In March Khalid Masood, a British convert to Islam, murdered five people in Westminster using only a rental car and a kitchen knife. But it seems that Salman Abedi, a British-born 22-year-old of Libyan stock who detonated the bomb at the Manchester Arena, was not acting alone. + + + +That prompted Theresa May to raise the terrorist threat assessment to its highest, “critical” level for the first time in ten years, indicating that an attack may be “imminent”. The prime minister’s announcement triggered the deployment of nearly 1,000 troops, whose job is to secure sites such as the Houses of Parliament and thus free up police. Amber Rudd, the home secretary, said the measure was temporary and would be kept under “constant review”. Britain does not want to go down the same road as France, which imposed a state of emergency after terrorist attacks in Paris in November 2015 and has been stuck with it ever since. This week the new president, Emmanuel Macron, called for it to be extended for a further six months. + +Mrs May cited “a possibility we cannot ignore that there is a wider group of individuals linked to this attack.” By May 25th eight men had been arrested in Britain, including Mr Abedi’s elder brother, Ismael. His younger brother, Hashem, and father, Ramadan, were detained in Libya by a local militia on May 24th. Mr Abedi himself had recently returned from Libya, where he may have been trained by jihadist groups linked to Islamic State (IS) or al-Qaeda (see article). He was also reportedly in Germany days before the attack. + +Police in Manchester have concluded that the explosive device he used was the design of a skilled bomb-maker, too valuable to expend on a suicide mission. It had a back-up means of detonation and seems to have been similar in design to those used by two IS-inspired suicide-bombers in Brussels last year. + +That much is known because photographs of the bomb’s bloodied fragments were leaked to the New York Times, presumably by American intelligence services. They were published hours after Ms Rudd had criticised the “irritating” leak of Mr Abedi’s identity by American officials. Manchester police have reportedly suspended their sharing of information with American counterparts. Mrs May was due to confront Donald Trump about the matter at a NATO meeting on May 25th. He may use the affair to bolster his own critique of his intelligence service’s leakiness. + +Mr Abedi may also have received instructions about which event to attack. The selection of a pop concert has echoes of the Bataclan massacre in Paris. It has become standard for IS to target large venues hosting events that symbolise what it regards as Western decadence. In a statement claiming responsibility, it referred to “the shameless concert arena” and described the teenage fans of Ariana Grande as “Crusaders”. + +Ms Rudd has said that Mr Abedi was known “up to a point” by MI5, the domestic security service. His friends reportedly warned the authorities about him five years ago; a relative is said to have repeated the concerns. But like Masood, the Westminster killer, he had been regarded as a low-risk, peripheral figure. + +Some will question why he was allowed to travel to Libya. Under rules introduced in 2013, a person’s passport can be confiscated on the basis of their “past, present or proposed activities, actual or suspected”. It is a power that Mrs May, home secretary at the time, said should be used sparingly. The reason it was not used in this instance owes more to the difficulty MI5 has in keeping tabs on up to 3,000 people whom it regards as religious extremists. + +The security services are well funded (18 months ago they received the money to take on 1,900 employees, a 15% increase in staffing). But 24-hour surveillance is so labour-intensive that only about 10% of the 500 suspects of real concern can be constantly monitored. Even then, there are strict rules about how long such an operation can be conducted if it yields nothing. + +Terrorism in Britain is less deadly than in the decades when the Irish Republican Army (IRA) was active (see chart ). Still, in the 18 months to March this year at least 12 terrorist plots were disrupted, according to Dominic Grieve, who chairs the parliamentary Intelligence and Security Committee. More have followed. + + + +Counter-terrorism officers have long worried about the danger posed by Britons returning from Syria, where about 800 went to wage jihad. Many have been killed, but about half are estimated to have returned. If the quickening tempo of plots is any indication, some are trained and hardened fighters with the skills and motivation to carry out attacks at home. + +There is no evidence yet that the Manchester attack was timed to disrupt the election on June 8th. Britain has no big far-right party that might benefit from a backlash against Muslims. The clownish English Defence League staged a small demonstration near the Manchester Arena, but its members were shouted down by an angry shopper and moved on by police. + +That is not to say there will be no impact on the election. Mrs May’s response was noticeably more sure-footed than her recent manifesto launch (see Bagehot). By contrast Labour’s leader, Jeremy Corbyn, has attended events in support of the IRA and described members of Hamas and Hizbullah as “friends”. Polls had shown the Tories’ lead narrowing. It is not cynical to suggest that the return of terrorism will remind voters why they like Mrs May. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722697-it-seems-salman-abedi-did-not-act-aloneand-his-fellow-plotters-could-strike-again-hunt/print + + + +文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +The four-day manifesto + +A magnificent U-turn raises questions about Tory competence + + +A signature promise on social care lasted only four days. What else is half-baked? + +May 25th 2017 + + + + + +“NOTHING has changed. Nothing has changed!” insisted Theresa May. But it had. Four days after the launch of the Conservatives’ manifesto on May 18th, the prime minister reversed its signature policy, a proposed reform of the funding system for social care for the elderly, which had come to be known as the “dementia tax”. Mrs May insisted that the change was merely a clarification. But Sir David Butler, a nonagenarian psephologist at Oxford University, noted on Twitter that in the 20 general-election campaigns he has followed, “I can’t remember a U-turn on this scale.” The about-face is welcome, but leaves the social-care system underfunded and has fed a growing perception that the manifesto was not thought through. + +The Tories’ original plan was to introduce a new funding formula for social care, whereby an elderly person would on their death be liable for all of their care costs, until only £100,000 ($130,000) of their estate remained. (The state would cover any further costs.) That is higher than the existing threshold, but includes the value of the person’s home, which the existing means-test does not for most people. + + + +The policy was not expected to raise much money, but it was progressive: wealthy oldies would end up contributing most. It earned its unfortunate nickname because it introduced a big dollop of blind luck. A sprightly person who died suddenly might be able to pass on millions, since their care costs would be zero. Someone unlucky enough to endure a long illness with complex, expensive needs could lose everything except £100,000. For a government that has resisted raising inheritance tax, this was a strange inconsistency. + +Mrs May’s emergency “clarification” helps fend off criticism of a health lottery. The new plan adopts the recommendation of a review in 2011 by Sir Andrew Dilnot to introduce a cap on how much a person pays for care. (The manifesto had dismissed his proposals as “mostly benefit[ing] a small number of wealthier people”.) Sir Andrew suggested a cap of around £40,000 in today’s prices. Mrs May has not specified a level. + +The higher the cap, the less the state will have to fork out. Sir Andrew’s proposal might have cost about £2bn a year. George Osborne, the previous chancellor, had promised to implement a £72,000 cap from 2020, at a cost of around half that. In an era of squeezed public spending the temptation will be to raise the cap to an even higher level. + +The introduction of a cap not only protects the unlucky few from exorbitant care costs. It also limits the liabilities of private insurers, making it more attractive for them to cover social care. At present, the market for social-care insurance is tiny. If it were to develop, elderly folk would worry less about funding their care costs out of their estate. + +Yet there is reason to be sceptical that such a market will bloom. British insurance companies have watched American firms get their fingers burnt as conditions like dementia have become more common. Despite the ageing population, by 2014 sales of long-term care insurance in America were two-thirds lower than they had been in the early 2000s. It is also an open question whether, under the new rules, elderly Britons would be all that interested in private insurance. With the cost of care to be capped and no one needing to pay anything until they die, would many bother taking out a policy? + +Following the tweak, the Conservatives’ plan for social care looks similar to what was already legislated for before the manifesto was launched, points out Sir Andrew: a cap on costs, plus a means test. This does little to address the funding shortfall faced by social care. Between 2009 and 2019, funding per person is expected to shrink by around 5% in real terms. + +The social-care proposal is not the only part of the manifesto which looks a bit half-baked. There is no detail on the extent of proposed cuts to winter-fuel allowance, which are supposed to fund social care. The manifesto is silent on plans for income tax (most people suspect that increases are on the way). And there is no acknowledgment that the pledge to cut net migration by nearly two-thirds would have big fiscal costs. It is a blank cheque from a party in little doubt that the public will sign it. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722700-signature-promise-social-care-lasted-only-four-days-what-else-half-baked-magnificent/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Right idea + +The Tories wisely defer plans to fiddle with human-rights laws + + +Britain will remain a signatory to the European Convention on Human Rights—for now, at least + +May 25th 2017 + + + + + +DEVOUT Brexiteers cling to various articles of faith: curtailing freedom of movement, ending the flow of payments into the European Union’s budget and escaping the shackles of European law. The position of the Conservatives on those first two points may have satisfied most ardent Leavers. But on the last, the Tories’ manifesto may prove disappointing in one respect. The party has ruled out replacing the Human Rights Act (HRA) while the process of Brexit is under way and will scrutinise Britain’s human-rights laws only once it is finished. Britain will remain a signatory to the European Convention on Human Rights (ECHR) during the next parliament. + +The Tories have long disliked the HRA, passed by a Labour government in 1998. It incorporated the ECHR, which Britain signed (and helped to draft) more than half a century ago, into British law. Several judgments by the European Court of Human Rights, including one that Britain’s ban on prisoners voting was unlawful, have upset them. As home secretary, Theresa May criticised the court’s insistence that Abu Qatada, accused of terrorism, should not be deported to Jordan without guarantees that neither he nor those giving evidence in his trial would be tortured. Before the Brexit referendum she said she wanted to Remain in the EU but pull out of the ECHR. + + + +In fact, by allowing Britons to appeal to British courts about human-rights violations, the act made it more likely that such cases would be dealt with domestically. Previously Britons pursuing human-rights cases had to go to the European Court of Human Rights in Strasbourg. Even now, the court cannot force Britain to change its laws; prisoners do not have the vote despite the court’s ruling more than a decade ago. And Mrs May was eventually able to send Mr Qatada packing. + +The Conservative Party is no keener on the legislation today than it has ever been. But faced with the tortuous task of negotiating Brexit, the prospect of adding to that burden the complexities of withdrawing from the ECHR and rewriting Britain’s human-rights law might seem one task too many. The convention and the court exist independently of the EU, so the prime minister’s hard line on Brexit does not necessarily mean abandoning them. + +Even if the Tories decide to do away with the act in future, the influence of the convention and the European court might remain greater than Eurosceptics would hope. “Compliance with European human-rights standards—those set out in the ECHR—will be a precondition to any trade agreement with the EU, so I see no real prospect of Britain leaving the ECHR,” says Philippe Sands, a law professor at University College London. “That reality is now reflected in the Conservative manifesto.” + +Other moves support the view that the government will tolerate some continued influence by European judges. Since the vote last June to leave the EU, Britain has confirmed it will ratify a new European patent system, including a patent court which will be subject to the European Court of Justice (the court of the EU). + +And some of the convention rights, such as the right not to be tortured, have become more firmly rooted in English common law (which is based on precedent, not statute). Judges would be at liberty, though not obliged, to consider principles from the Human Rights Act to be part of common law even if it were repealed. However, the point of the HRA was to make human rights real, not theoretical, and to enable people to access them in the courts and everyday life, argues Sanchita Hosali of the British Institute of Human Rights. Legislation is still necessary for people to pursue such claims. + +Even if the practical impact of Britain’s withdrawal were mitigated, the message sent would be bad. Only one European country does not recognise the European Court of Human Rights: Belarus. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722693-britain-will-remain-signatory-european-convention-human-rightsfor-now-least/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +A third way + +A Northern Irish party seeks a path between sectarianism + + +Naomi Long of the Alliance Party hopes to get a foothold in the June election + +May 25th 2017 | BELFAST + + + + + +ELECTIONS in Northern Ireland can sometimes seem little more than vast sectarian headcounts, with ancient rivalries between unionists and nationalists taking precedence over all else. This time competition is particularly keen, after a regional election in March which saw the main nationalist party, Sinn Fein, come within an ace of toppling its main unionist rival as the biggest party. + +Yet amid the fierce battle between the two camps, a non-sectarian party is hoping to capture one of Northern Ireland’s 18 parliamentary seats on June 8th. The leader of the Alliance Party, Naomi Long, is the favourite to win the constituency of East Belfast, which she held for a single term in 2010-15. Her distinctive brand of combative politeness has earned her the nickname of the “ginger ninja”. + + + +Alliance has stood for moderation and co-operation since the early 1970s but, squeezed between the two big tribes, it has never quite reached 10% of the vote. Perhaps the real surprise is not that it has not blossomed into a major power, but that it has survived at all. Now, however, it is enjoying a modest revival in a place notorious for aversion to compromise. + +It is neutral about the question of the Irish border, saying in common with the governments of Britain and the Irish Republic that the present arrangement should be changed only if there is evidence of demand for it. In practice most of its members favour the status quo. + +Born and bred in her mostly Protestant constituency, in the shadow of its now almost inactive shipyard, Ms Long took a degree in engineering. Politics initially repelled her: “All I saw were men in grey suits shouting at each other on the television,” she says. (One thing that has changed: three of the five largest Northern Irish parties are now led by women.) + +Her commitment to a third way has not been easy, nor without physical danger. Four years ago she was the target of death threats from hardline unionists, who angrily objected to Alliance’s support for reducing the flying of the union flag at Belfast City Hall. A police car on watch at her office was petrol-bombed by hooded men; some of the party’s other offices were attacked and damaged. + +Things have calmed down since the days when mobs congregated outside her office to hurl abuse her way. But the episode meant she lost her Westminster seat in 2015, when various unionist parties joined forces to ensure her defeat. + +Now, however, she is the favourite to regain the seat, because the rival unionist parties have not been able to agree on a pact. In the present campaign, she reports, the intensity and anger is much reduced. “We still get local pockets of hostility occasionally,” Ms Long says, “but it’s one or two people rather than a general outcry.” + +She is keen to restore the devolved assembly at Stormont, which has been out of action since the latest falling-out between nationalist and unionist leaders in January. Devolution is “absolutely critical”, Ms Long declares. “I would hope that we will be moving more rapidly towards politics that is not always defined along orange and green lines.” Maybe ginger ones? + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722687-naomi-long-alliance-party-hopes-get-foothold-june-election-northern-irish/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Bored in Britain + +Election fatigue and a predictable race may suppress turnout + + +If many people stay at home, the effect will be felt in future elections, too + +May 25th 2017 + + + + + +THESE are exciting times for political journalists. For everyone else they are wearying. It is only two years since the most recent general election and less than 12 months since the Brexit referendum. Much of the country had local elections earlier this month. Scotland and Wales elected their regional parliaments less than a year ago; Scots had previously voted on independence. The poor Northern Irish have had to elect their regional assembly twice in little more than a year. Who will have the energy to turn out for the general election on June 8th? + +Frequent votes are known to depress turnout. An analysis by Colin Rallings and others at Plymouth University of nearly 4,000 local-government by-elections between 1983 and 1999 found that the less time had elapsed since the previous election, the lower the turnout. A more recent study in Germany drew the same conclusion. + + + +People are also more likely to stay at home when the race looks uncompetitive. A meta-analysis of 52 studies on election turnout by Benny Geys of the Free University of Brussels found that 36 of them established a relationship between the closeness of the race and the strength of turnout. Next month’s contest does not fare well in this category, either: although Labour has recently caught up a bit, Theresa May’s Tories are a good ten points clear in most polls. The last time an election was so predictable, in 2001 (when Tony Blair steamrollered William Hague), turnout slumped. + +This year may yet surprise. The Brexit referendum attracted a healthy turnout of 72%, with 3m more votes than the most recent general election. It may be that those new voters are still engaged. And although the race is not close, there is plenty of variety in the parties’ manifestos. Labour is running on its most left-wing platform in decades; the Tories are gunning for a hard Brexit; the Liberal Democrats want to reverse it altogether. The usual complaint that “they’re all the same” does not apply. + +Whatever the turnout, it will affect future elections, too. One of the strongest determinants of a person’s likelihood to vote is whether they voted in the previous election. The trough of 2001, when turnout plunged by 12 percentage points, is one from which Britain is still recovering. If the combination of fatigue and predictability lead to a low turnout next month, the effects may be felt for years. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722686-if-many-people-stay-home-effect-will-be-felt-future-elections-too-election-fatigue/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +A fresh canvass + +How online campaigning is influencing Britain’s election + + +Social media allow parties to target voters with tailored messages—and cat videos + +May 25th 2017 + + + + + +SUMATRA ROAD, in north-west London, is a heavily canvassed street. It lies in the marginal constituency of Hampstead and Kilburn, which Labour won in 2015 by little more than 1,000 votes, and is a convenient half-hour Tube journey from Parliament. Its residents are used to spending the weeks before elections traipsing to and from their front doors to receive petitions from politicians of all stripes. + +This year a different sort of campaign is being waged, away from this corridor of red-brick terraces. Digital electioneering, in which political parties buy adverts that target users of social media, was first used on a large scale in Barack Obama’s 2008 presidential bid. Since then it has grown. Dominic Cummings, who was campaign director for Vote Leave ahead of the Brexit referendum, has said that 98% of the campaign’s money was spent on digital advertising. Labour aims to spend £1m ($1.3m) on it in this year’s election, having been outspent by the Tories last time. Most of the ads are placed with Facebook; some are bought on YouTube, owned by Google. + + + +Political ads can be targeted with high precision using the personal data held by social networks, allowing canvassers to pick and choose whom they talk to: parents, pensioners or Economist readers. Best for Britain, which is campaigning for the country to stay in the European Union, has sent an ad to people aged 20-31 who live in the constituencies of Birmingham Yardley, Wimbledon and South West Norfolk. The public appears wary of this kind of digital canvassing. In a survey of American voters in 2012, 85% said they would be angry if they found out that “Facebook was sending me ads for political candidates based on my profile information”—which it does. + +“A good deal of the anxiety and fear is down to opacity,” says Martin Moore, director of the Centre for the Study of Media, Communication and Power at King’s College London. “It would be much easier to apply election principles and laws if we knew what was being communicated, to whom, and how much it cost.” Elizabeth Denham, Britain’s information commissioner, who enforces data-protection rules, announced on May 17th that she would open an investigation into the use of data analytics for political purposes. + +How sinister is it really? Sam Jeffers, who runs a digital marketing consultancy called The Shop and has advised the Labour Party, is sceptical. He points out that even large companies are not very good at targeted, data-driven advertising—as anyone who has been chased around the internet by the spectre of a fridge they bought the previous week can attest. “Big companies are spending hundreds of millions a year on their marketing and aren’t doing it very well,” says Mr Jeffers. Why would political parties be able to do it any better? “You’re expecting organisations on a month’s notice with £1m to do things that are persuasive and accurate,” he says. + +Beyond the invasive profiling, there are other features of online canvassing that have got people worried. The first is that online messages can be sent farther and faster than in the offline world. “The web is frictionless,” says Kate Klonick of Yale Law School, who has spent the past year studying how free speech, including political campaigning, works on Facebook. + +And unlike conventional political ads and leaflets, online messages can be tailored to each recipient. They are thus harder to inspect—especially because the largest platforms on the web, including Facebook and YouTube, do not work with third-party researchers or journalists who want to observe political parties’ campaign messaging. Unlike Sumatra Road, which any politician or hack can plod in search of votes or stories, Facebook is a maze of virtual streets in which parties can campaign with little scrutiny. + +Precise demographic targeting has upsides. Digital canvassing offers a way to send people information relevant to them: before the deadline for registering to vote on May 22nd, Labour sent young people videos (featuring cats) urging them to sign up. Targeting like this could help to raise interest in politics at a time when turnout is low. It can, however, be used to achieve the opposite effect. Donald Trump’s strategists admitted to using targeted online adverts to demoralise supporters of Hillary Clinton into not voting. An animation entitled “Hillary Thinks African-Americans are Super Predators” was sent to groups of black voters via Facebook, calculated to prevent them from turning out. “Only the people we want to see it, see it,” Brad Parscale, Mr Trump’s digital canvasser, told Bloomberg at the time. + +As targeted advertising makes it possible for parties to offer different things to different voters, there is a risk that they will make promises that are mutually inconsistent. Conflicting promises can be easily masked from different groups. This may blind voters to the compromises of politics, eventually eroding trust. Finer targeting may also be a problem in light of research from America which shows that targeted messaging has led to more extreme party positions regarding religion. + +The Electoral Commission, which regulates campaigns in Britain, requires details of campaign spending to be kept, but does not require the content of online or offline messaging to be recorded. (When asked, the Conservatives did not show The Economist any of the digital ads they had sent, nor the logic behind their targeting. Labour provided a small sample.) A few third parties are on the case. Mr Jeffers has built a piece of software called Who Targets Me that offers to monitor the social media feeds of concerned voters. + +On Sumatra Road, political signs and posters decorate gardens and windows. The public displays of political loyalty, and the canvassing done in the open, are in contrast to the battery of private messages that are simultaneously reaching residents via their computers and smartphones. As Britons go to the polls, each has been the recipient of a sometimes widely contrasting series of political messages. In future, victory will belong to whichever party can master the art of waging tens of millions of minutely personalised campaigns. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722690-social-media-allow-parties-target-voters-tailored-messagesand-cat-videos-how-online/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Speakers’ Corner + +Quotes from the campaign trail + + +The most memorable lines from the fifth week of Britain’s snap election campaign + +May 25th 2017 + + + + + +Stormzy in a teacup + +“Yes I do, thank you.” + +Jeremy Corbyn reassures the BBC that he really does like grime music, after garnering further support from artists of the genre + +Look after pennies... + +“Less than 7p per pupil.” + +The amount allocated for the school breakfasts that the Conservatives have promised will replace free lunches, on the basis of the £60m ($78m) they said the policy would cost. Schools Week + +...and pounds look after themselves + +“The money we save on the winter-fuel payments going to Mick Jagger and Bernie Ecclestone...will be better spent on the social-care system.” + +Damian Green, the work and pensions secretary, unveils the Conservatives’ “soak the rich” approach to fiscal policy. BBC + +The special relationship + +“The British police have been very clear that they want to control the flow of information in order to protect operational integrity…So it is irritating if it gets released from other sources and I have been very clear with our friends that that should not happen again.” + +Amber Rudd, the home secretary, after American intelligence sources leaked details of the Manchester bombing. BBC + +Trumped + +“Evil losers.” + +Donald Trump’s take on the terrorists + +Twitter twit + +“@clairenursey Sorry I was wrong about Twitter rumours. Entirely right that your voice is heard.” + +Joanna Cherry, the Scottish National Party’s spokeswoman on justice, apologises to a nurse who in a televised debate had argued with Nicola Sturgeon, the SNP’s leader. The SNP had falsely accused her of being married to a Tory councillor + +Facebook facepalm + +“What has happened in Manchester is awful and my thoughts are with the families. However I can’t help thinking this is wonderful timing for Theresa May.” + +Debbie Hicks, the vice-chairman of the Labour Party in Stroud, was suspended for her comment a day after the terrorist attack. Stroud News & Journal + +Inverted pyramid of piffle + +“You lied to us, Boris, you lied about the money!” + +Boris Johnson, the foreign secretary, is confronted by an angry voter in Cornwall. The Leave campaign in the Brexit referendum promised an extra £350m a week for the NHS if Britain left the EU. CornwallLive + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722698-most-memorable-lines-fifth-week-britains-snap-election-campaign-quotes/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Bagehot + +The two Theresa Mays + + +Two prime ministers were on display this week—one thoroughly competent, the other less so + +May 25th 2017 + + + + + +THERESA MAY struck the right tone in the aftermath of the bombing in Manchester. She delivered two businesslike addresses to the nation, the first expressing an appropriate mixture of outrage at the atrocity and pride in the response, the second announcing the decision to raise the threat level to “critical” and deploy troops on the streets. She chaired two emergency meetings of ministers and officials and then travelled north. The prime minister was the personification of keep-calm-and-carry-on. + +Yet just the day before the bombing a very different Theresa May had been on display. She performed an embarrassing U-turn on her party’s policy on social care for the elderly and then tried to pretend that the U was a straight line. This is perhaps the first time that a party leader has dumped a central manifesto promise before a general election. She then gave a disastrous interview to Andrew Neil on the BBC which revealed holes in her understanding not just of basic economics but also of her own manifesto’s commitments. Far from “strong and stable”, the phrase repeated endlessly in her campaign, the prime minister looked “weak and wobbly”, as one journalist put it. + + + +Anybody can have a bad week. Mr Neil is a tenacious attack dog: few continental leaders are subjected to this level of public interrogation. It is better for politicians to withdraw flawed policies than to keep defending them. But there is a limit to the number of excuses that one can make for someone who is not only seeking the highest office in the country but is also presenting herself as uniquely qualified to negotiate a divorce settlement with Europe that could shape the country for a generation. + +The manifesto meltdown and the Neil kebabbing revealed three worrying things about Mrs May. The first concerns her management style, which is to rely on a small group of advisers, refuse to consult and make big decisions on the fly. The second concerns her knowledge. Mr Neil’s interview reinforces the established impression that she knows precious little about business and economics. The third is that these two reinforce each other: the further she moves into unfamiliar territory, the more dysfunctional her approach becomes. + +Mrs May perfected her style during six grinding years at the Home Office. She became the empress of her brief. Both friends and enemies describe her as a dogged worker with almost no small talk. She relied on two ferociously loyal special advisers, Nick Timothy and Fiona Hill. She fought her corner against cabinet colleagues who either dismissed her as a dullard or, as she stuck around for years, feared her as a rival. + +This approach brought significant successes. Mrs May showed civil servants who was boss—no mean achievement in a huge and lethargic bureaucracy—and took on vested interests such as the police. But it also produced significant failures. She ignored appeals by her cabinet colleagues to relax a clampdown on foreign students, despite the damage that her policy was doing to higher education, an area where Britain excels. + +It is hardly surprising that Mrs May applied the formula that had kept her on top of the Home Office for so long when she became prime minister. She installed Mr Timothy and Ms Hill as her co-chiefs of staff and centralised control of all decision-making. But on her new territory, much larger and less familiar, the ratio of failures to successes has worsened. The best leaders bring together people with different strengths. Mrs May’s team brings together people with exactly the same weaknesses. Two vulnerabilities are particularly worrying: a profound ignorance of economics (Mrs May hasn’t had to soil her hands with any business-related subjects since she briefly worked at the Bank of England in 1977-83) and a preoccupation with internal party politics. Mr Timothy in particular is obsessed with refashioning the Tories as a more blue-collar party. Issues with far-reaching economic consequences, such as migration, are too often treated as problems of law and order or opportunities to reposition the party. + +The dangers of this approach were apparent in Mrs May’s U-turn over social care. The Tory party’s manifesto tried to tackle two of Britain’s biggest problems—the rising cost of looking after elderly people and the concentration of wealth in the hands of the old—with an audacious suggestion: why not get oldsters to fund more of the costs of care themselves? But it ignored crucial details such as putting a cap on costs. Looking after someone with dementia can wipe out even a prosperous family. Sir Andrew Dilnot has discussed this subject in an exhaustive government report on social care. Cabinet ministers such as Jeremy Hunt, the health secretary, have grappled with the problem for years. But apparently Mr Timothy added the half-baked proposal without running it past the cabinet or digesting Sir Andrew’s findings. + +May the best May win + +This is part of a worrying pattern: consulting too narrowly, riding roughshod over opposition and then backtracking ignominiously or carrying on regardless. Two months ago Mrs May abandoned a budget proposal to raise national insurance contributions for self-employed workers because she and her team had failed to spot that it clashed with one of David Cameron’s manifesto commitments. She remains obsessed by reducing annual net migration to “tens of thousands” (from a current level of about 250,000) despite the fact that none of her cabinet colleagues, let alone independent experts, think it achievable. + +The difference between a successful politician and an also-ran is not how they respond to success but how they respond to failure. Successful ones treat it as a chance to up their game. Also-rans alternate between stubbornness and retreat without bothering to pause for reflection. Mrs May should treat the manifesto meltdown as a warning and an opportunity: a warning of what will happen if she continues with business as usual, and an opportunity to shake up her inner circle and broaden her thinking. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/britain/21722681-two-prime-ministers-were-display-weekone-thoroughly-competent-other-less-so-two/print + + + +上一個 文章 節 下一個 + + + + + +Britain 節 Business + + + + + +International + + +Prisons: Turning villains into neighbours + +Women in prison: Girls, incarcerated + +Britain 節 Business + + + + + +文章 節 下一個 + + + + + +Prisons + +Too many prisons make bad people worse. There is a better way + + +The world can learn from how Norway treats its offenders + +May 27th 2017 | BASTOY, NORWAY AND INDIAN SPRINGS, NEVADA + + + + + +“DO YOU want a coffee?” It is a chilly morning on the ferry to Bastoy, an island prison in Norway. Two burly ferrymen greet a visiting journalist with a hot drink. Asked if they work for a local ferry company, they reply: “No, we are prisoners.” One is serving 14 years for attempted murder. The other, nine years for “drugs and violence”. The ferry is moored and there is no one around. Either man could easily make a run for it. But neither does. Hardly anyone tries to escape from Bastoy. + +It has been called the “world’s nicest prison”, but this misses the point. The rooms are pleasant enough. The inmates can wander where they like on the island, go cross-country skiing in the winter and fish in the summer. So long as they keep it tidy they can enjoy the beach (see picture). Yet what is most unusual about Bastoy is not that it treats prisoners like human beings, but that it treats them like adults. + + + +Prisons in other parts of the world try to stop inmates from laying hands on any piece of metal that could be shaped into a weapon. Bastoy prisoners walk around with hammers, axes and chainsaws. They chop down trees for furniture, grow vegetables and raise livestock. They used to slaughter cows but Norwegian health and safety laws make this uneconomical unless done on an industrial scale. + +In short, the prisoners are expected to look after themselves. If they do not tend the forest, it will cover the island, notes Tom Eberhardt, the governor. If they do not tend the fields, the crops will die. + +Inmates do not start their sentences at Bastoy. They must do time in a conventional lockup and apply to be transferred, having convinced the authorities that they wish to reform. In a normal prison, inmates are spoon-fed, notes Mr Eberhardt. “They take only three or four decisions a day, such as when to go to the toilet.” At Bastoy they make nearly as many decisions as they would if they were free. By teaching the inmates responsibility, Bastoy aims to “create good neighbours”. + +Norway has the lowest reoffending rate in Scandinavia: two years after release, only 20% of prisoners have been reconvicted. By contrast, a study of 29 American states found a recidivism rate nearly twice as high. This is despite the fact that Norway reserves prison for hard cases, who would normally be more likely to reoffend. Its incarceration rate, at 74 per 100,000 people, is about a tenth of America’s. + +Visiting Americans find the atmosphere at Bastoy shocking. Why is security so lax? Where are the lethal electric fences and the guards with shotguns? At a prison in Indian Springs, Nevada, your correspondent was advised not to wear blue because that was the colour of the prison uniform. It was unlikely that there would be trouble, the press officer explained, but if there was you would not want an armed guard to mistake you for a rioting inmate. + +Nelson Mandela once observed that: “No one truly knows a nation until one has been inside its jails.” This article makes a different argument: that although they have improved in recent decades, the world’s prisons are nowhere near as effective as they should be at curbing crime or reducing harm to society. Far too many fit the description of Douglas Hurd, a former British home secretary, who said that: “Prison is an expensive way of making bad people worse.” + +What ails the jails + +There are at least 10.3m people behind bars worldwide, according to Roy Walmsley of the Institute for Criminal Policy Research, a think-tank. This is a snapshot—many more pass through each year and yet more are on parole or probation. The global total excludes countries such as North Korea and Eritrea, which have big gulags but publish no data. It also undercounts the number in China, which has not recently revealed how many of its people are locked up awaiting trial. + +Since 2000 the number of prisoners in the world has risen by 20%, a little above population growth of 18%. The trend masks a frenzy of regional change. South America, South-East Asia and the Middle East have seen sharp increases in prisoner numbers (145%, 75% and 75%). In Europe numbers have fallen by 21%. Over the same period, crime has fallen worldwide. + +Many jails are hellish; sometimes deliberately so. In Syrian prisons, dissidents are beaten, given electric shocks, crushed in a folding board called the “flying carpet” and hanged in their thousands after two-minute “trials”. More commonly, prisons are vile because they are overcrowded and ill-managed, so the nastier inmates (and guards) can do what they please. + +At some Brazilian lockups, for example, heavily outnumbered guards patrol the perimeter and allow gang bosses to impose order within. Convicts are free to run their drug empires by mobile phone. In the first two weeks of 2017, as rival gangs fought for supremacy, at least 125 inmates were killed in riots in Brazil. At one prison in Manaus, severed heads and limbs were stacked on the floor. + +Worldwide, overcrowding is the norm. Prisons cost money to build, after all, and there are few votes to be won by making life easier for criminals. In 58% of the 198 countries for which there are data, prisons are more than 100% full, says the latest annual Global Prison Trends report from Penal Reform International, a think-tank. Some 40% of countries were above 120% capacity; 26% were above 150%. + + + +America locks up far more people than any other rich country (see chart 1). Yet the recent trend has been towards leniency. The proportion of American adults behind bars fell from a peak of 1 in 100 in 2008 to 1 in 115 in 2015. Several states have tried to find alternatives to incarceration for non-violent criminals, partly to save money and partly because they have concluded that locking up too many people for too long does little for public safety. “Kentucky prisons were full of people we’re mad at, not people we’re afraid of,” says John Tilley, the secretary of justice in Kentucky. + +On the straight and narrow + +Donald Trump’s attorney-general, Jeff Sessions, wants to make America more punitive again. This month he ordered federal prosecutors to seek maximum sentences for drug offenders. Although federal inmates are less than a tenth of the total in America, Mr Sessions shows that advocates of old-fashioned “tough-on-crime” policies are still powerful. + +One reason for locking people up is to punish them. Victims of crime, especially, may be comforted by the knowledge that their tormentors are suffering. In a poll in crime-racked Brazil, 57% of people agreed that “a good criminal is a dead criminal.” + +But for many people the aim of incarceration is to reduce the harm caused by criminals. Prisons can do this in three ways. First, they restrain: a thug behind bars cannot break into your house. Second, they deter: the prospect of being locked up makes potential wrongdoers think twice. Third, they reform: under state supervision, a criminal can be taught better habits. + +On the first count, most prisons succeed, but at a cost. The mass incarceration of certain groups of men, such as black Americans, can tear apart families and communities. And many criminals are kept locked up long past the age at which they cease to pose much of a risk to the public. Violence is a young man’s vice; there are not many middle-aged muggers. + +On the second count, deterrence, prisons are necessary unless we want to bring back flogging. But sentences need not be as long as they are in many countries, especially America. Criminals have short time horizons—a ten-year sentence only deters them slightly more than a one-year sentence, though it costs ten times as much. To deter would-be criminals, what matters most is not the severity of the penalty but the certainty and swiftness with which it is imposed. Criminals restrain themselves only if they think they will be caught and punished. Steven Levitt, an economist, estimates that in America $1 spent on police is at least 20% more effective in preventing crime than $1 spent on prisons. + +Even when the police are effective, criminals are often undeterred. They are typically impulsive and opportunistic, picking fights because they are angry and grabbing loot because it is visible. Which is why rehabilitation is so important: nearly all inmates will eventually be released, and it is far better for everyone if they do not go back to their old ways. + + + +The countries that lock up the fewest people tend to be either liberal (Sweden, Finland) or too poor to build many prisons (see chart 2). In the Central African Republic, the incarceration rate is only 16 per 100,000. (By one estimate half the inmates are serving time for witchcraft.) + +Reserving prison for the worst offenders has hefty benefits. First, it saves money. In America, for example, incarcerating a federal convict costs eight times as much as putting the same convict on probation. Second, it avoids mixing minor offenders with more hardened criminals, who will teach them bad habits. “The low-level guys don’t tend to rub off on the higher-level prisoners. It goes the other way,” says Ron Gordon of the Utah Commission on Criminal and Juvenile Justice, a state body. + +Modern electronic tags are cheap and effective. In a recent study Rafael Di Tella of Harvard University and Ernesto Schargrodsky of Torcuato Di Tella University compared the effects of electronic tagging versus prison for alleged offenders in Buenos Aires. Earlier research had failed to deal with the fact that criminals who are tagged are less likely to reoffend than the more dangerous ones who are locked up. The authors found a way round this. Alleged criminals in Argentina are assigned randomly to judges for pre-trial hearings. Liberal judges are reluctant to hold them in the country’s awful jails, so they often order them to be tagged. So-called mano dura (tough hand) judges prefer to lock them up. The researchers observed what happened to similar offenders under different regimes. Only 13% of those who were tagged were later rearrested; for those sent to prison the figure was 22%. + +Prison break + +Some criminals are so dangerous that they need to be locked up. But nearly all will one day be released. Consider Tore (not his real name), an inmate at Bastoy. He spent his 20s selling drugs, drinking and partying. One day, when he was high on methamphetamine and had not slept for three days, he attacked two friends with a knife, over nothing—some expensive clothes. He was arrested, charged and got into another fight while awaiting trial. He was eventually given a 14-year sentence for three attempted murders and intending to sell several kilos of hash. + +For the first couple of years inside a closed prison, he was furious and blamed “everyone else” for his plight, he says. But then he took a course with a counsellor who had lived “the same life”. She talked to him about his regret for what he had done, and persuaded him that he could never touch alcohol again. It took many months. “It was like freedom,” he recalls. + +At Bastoy he took a carpentry exam. He will probably be released in three years. On that day, he expects to have a job. Bastoy inmates can start working outside 18 months before they are released—the aim is to ensure that every ex-prisoner has a roof, an income and something to do. (In America some prisoners are released after long sentences with little more than clothes and a bus fare.) Eventually Tore plans to set up his own carpentry business. + +Inmate, you’ll have to wait + + + +Prisons around the world use a variety of tools to prevent recidivism. It is fiendishly hard to disentangle what influences a convict’s future behaviour, but Adam Gelb of the Pew Charitable Trusts, a think-tank, lays out some principles which have been shown to work. + +First, identify the inmates who are most likely to reoffend. Some good predictors of this cannot be changed, such as a troubled family background and previous criminal history. Age is also crucial—some 68% of federal prisoners in America who are released before the age of 21 are rearrested within 8 years; for the over-60s, it is only 16%. Other risk factors are more malleable. Poor impulse control, substance abuse and the habit of picking anti-social friends can all respond to treatment. + +Rehabilitation programmes that focus on factors other than crime, such as creative abilities, physical conditioning and self-esteem do not reduce criminal behaviour, argues Edward Latessa of the University of Cincinnati. Boot camps are especially ineffective: they foster aggression and bond criminals together. + +Oliver Bueno, a former drug-dealer, agrees. “I came out worse,” he recalls of his time in a juvenile boot camp in Nevada. “You got beat up all the time by staff,” he says, adding that the guards were “ex-military, hillbillies and real racists”. He describes having his head shaved and being constantly shouted at. “The abuse got me more and more angry, hating authority,” he says. After his release, he went straight back to gangbanging, selling drugs and getting into fights over trivial slights. Shortly before his next arrest, he says, “I had a gun in [another man’s] face and I don’t even remember what it was about.” + +Perhaps the best tool is cognitive behavioural therapy (CBT). This is not about sitting in a circle and sharing one’s inner demons. It is about helping people to understand the “triggers”—people, places and things—that prompt them to offend. The counsellor nudges the offender towards minimising negative influences and maximising positive ones. For example, “If you get together with your friend Tom on payday and go crazy, maybe you should avoid Tom on payday,” says Mr Gelb. Counsellors should not argue or hector, but show that they are listening and praise offenders for acting responsibly. + +Norway uses CBT a lot—Tore benefited from it. America uses it spottily. A study of over 500 programmes in American prisons, jails and probation agencies by Faye Taxman of George Mason University found that only 20% involved CBT and only about 5% of individuals were likely to have access to it. Done well, it can reduce recidivism by 10-30%. A meta-analysis of 50 CBT programmes in America by Thomas Feucht and Tammy Holt for the National Institute of Justice, a government body, found that 74% were effective or promising. They worked best with juvenile offenders and worst with wife-beaters. There was mixed evidence for the effect on sex offenders, who are hard to reform. + +The great escape + +Mr Bueno, the former drug-dealer, says he was reformed not by anything he learned in prison, but by Hope for Prisoners, a charity—and God. When he left his cell for the final time, he went back to his old friends and was “walking back down the same old paths”. Then his girlfriend (now wife) suggested he go and listen to Jon Ponder, an armed robber-turned-preacher, who teaches ex-convicts to take responsibility for their lives. Mr Bueno exults that he has joined “the most powerful gang in the world—God’s gang”. Tore, in Norway, has a more secular view of reform: “I just want to be a normal person and pay tax.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21722654-world-can-learn-how-norway-treats-its-offenders-too-many-prisons-make-bad-people/print + + + +文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Girls, incarcerated + +More women are being put behind bars. Fewer should be + + +Female convicts are less violent and more likely to have stolen to support children + +May 25th 2017 | COATLÁN DEL RÍO + + + + + +ONE of Mexico’s newest prisons allows inmates to receive a conjugal visit every week. The rooms set aside for these visits at Coatlán del Río have clean beds, showers and toilets. Any married inmate can use them, as can same-sex couples, if they tied the knot in a Mexican state where gay marriage is allowed. + +Alas, the conjugal rooms are barely used. This is a women’s prison and their menfolk are a bit unreliable. “Women in prison are often abandoned,” says an experienced guard at the prison. Of the 1,400 inmates, how many receive regular conjugal visits? “Only one,” she sighs. Another inmate was sentenced for smuggling drugs to her husband in a different jail. He was released and promptly found another woman, says the guard. + + + +Serious criminals are nearly all male, which is why less than 10% of the world’s prisoners are women. But the number of female prisoners has soared by 50% since 2000. This is worrying. Women in prison are far less likely than men to have committed violent crimes, and more likely to have broken the law to support their families. In Indonesia and the Philippines, more than 90% of female prisoners have been charged with drug offences. In Ireland, 80% are jailed for non-payment of fines. Most Kenyans prosecuted for brewing illicit alcohol are women, perhaps because it is a crime that can be committed without leaving the children home alone. In Afghanistan, half the women in prison are there for “moral” crimes such as eloping. + +Locking up parents harms children; and female prisoners are much more likely to be custodial parents. Coatlán del Río tries to keep mothers and small children together. It has a playground and a children’s library. Costa Rica recently tweaked its laws to make it harder to lock up women who smuggle drugs to jailed lovers or steal to support their hungry children. Punishments such as home arrest and electronic tagging hurt their children less. + +The guard at Coatlán del Río, who has worked in male and female prisons, describes the difference. Male prisoners look for bits of wire to make weapons and stab each other, she says. “Women look for wire to curl their eyelashes.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/international/21722655-female-convicts-are-less-violent-and-more-likely-have-stolen-support-children-more/print + + + +上一個 文章 節 下一個 + + + + + +International 節 Finance and ... + + + + + +Business + + +Airbnb: A different breed of unicorn + +Ford: Can he Hackett? + +SoftBank: A vision of $93bn + +Netflix: Curtain call + +Collectables: Sole trading + +The chemicals industry: Chain reaction + +Schumpeter: General Eclectic + +International 節 Finance and ... + + + + + +文章 節 下一個 + + + + + +A unicorn apart + +Among private tech firms, Airbnb has pursued a distinct strategy + + +Its culture is cohesive and its finances disciplined + +May 27th 2017 | SAN FRANCISCO + + + + + +UNTIL recently “Uber envy” afflicted many top executives at Airbnb, a platform for booking overnight stays in other people’s homes. So admits a big investor in the firm. The two companies often raised money at the same time, and the ride-hailing giant reliably received more cash and closer attention. Uber is America’s most valuable private technology firm, with a valuation of close to $70bn at last count; Airbnb is still in second place with a value of around $30bn. But with Uber facing a series of setbacks, including allegations of intellectual-property theft, departures by senior executives and a consumer boycott, jealousy in Airbnb’s hallways has largely evaporated. + + + +It helps that the firm is on a tear. Last year 80m people booked stays on Airbnb, double the number in 2015 (see chart). It now plans to expand into other bits of the market for accommodation, including luxury trips and business travel. New products, such as bespoke city tours, are in the works. + + + +The firm’s ultimate aim is to evolve from being a platform for overnight stays into a comprehensive travel company, capturing an ever-greater share of tourists’ spending. In 2017 it may notch up as much as $2.8bn in sales, up by around 65% from a year earlier; forecasts suggest it could reach $8.5bn in revenues by 2020. An IPO may be in the offing, yet pitfalls also lie in wait. Chief among these is regulation, ensuring guests’ safety and, increasingly, the need to fend off rivals such as Priceline, a fearsomely efficient online travel-booking company. + +Airbnb’s founders started as complete outsiders to the hospitality business and indeed, to commerce. Brian Chesky, its 35-year-old chief executive, had no previous business experience or technical expertise. Instead, he and one of his co-founders, Joe Gebbia, had studied design at Rhode Island School of Design before teaming up with a software engineer, Nathan Blecharczyk, to launch what was then called AirBed and Breakfast, with the aim of renting out air mattresses in apartments. They were so untutored in investing that when an early adviser suggested raising money from small investors known as “angels”, Mr Chesky thought people in Silicon Valley believed in celestial beings. + +Both Airbnb and Uber—America’s two most valuable “unicorns”, private startups worth over $1bn—operate platforms without owning the underlying rooms and cars that are being used; both take a cut from every transaction. Airbnb charges both guests (6-12% of total rental fees) and hosts (around 3% of their total earnings from the site). A particular feature of Airbnb’s model is that its rental listings are usually not available on the websites of any of its competitors, because hosts tend to be loyal. So while Uber is locked in a fierce competition with rivals in most markets for customers and drivers, and has chosen to subsidise journeys to avoid losing market share, Airbnb has no need to pay up to keep hosts and users. + +An attention to costs that is uncommon in the startup world is also paying off handsomely. In 2015 Airbnb hired as its chief financial officer Laurence Tosi, who had previously done the same job at Blackstone, a private-equity firm. He is regarded as the adult supervision. Airbnb reportedly achieved profitability for the first time in the second half of 2016 and will make money in 2017. It has raised $3bn and spent only around $300m of it (Uber is said to have lost $2.8bn in 2016 alone). + +Rental health + +Airbnb’s founders were early to recognise the importance of a strong, benign culture. (Uber, meanwhile, is under fire for its hard-charging practices.) Until 2013 the founders interviewed every job applicant, and today anyone who is hired still has to pass a “core values” interview, where they are judged not on their CV but on how they fit into the firm’s sensibility. This ensures that people have a sense of mission, even if some of the firm’s peppy idealism sounds naive to jaded journalists. Asked whether Airbnb is a technology or a travel company, Vlad Loktev, its director of product, looks cautious. “We’re more of a community company,” he says. + +What of the future? Given its financial results, Mr Chesky maintains that “we don’t need to raise any more money ever again.” But the hiring of Mr Tosi and the push for financial discipline suggests the firm does want to go public, perhaps as soon as 2018. If so, Airbnb would come under scrutiny as never before. + +Investors note that, although at first the website attracted cost-conscious millennials looking for a more authentic travel experience, growth now depends on broadening its base. Business travellers are one target. Airbnb has made it easier for firms to place roving employees in hosts’ rooms instead of in hotels. It has set up partnerships with companies, such as Hyundai, a carmaker, and Domino’s Pizza, a food chain, to make it easier to find rooms that are suitable for their employees, whose chief needs are wireless internet, a desk and 24-hour check-in. Employees from 250,000 companies now regularly book travel on Airbnb. + +The firm also wants to appeal to wealthy globe-trotters. In February Airbnb bought a holiday rental site, Luxury Retreats, for around $300m. This brings it a portfolio of expensive properties, many of which are rented for thousands of dollars a night. Bringing in more of the mass market will meanwhile require regular additions of new, mid-range inventory. Airbnb must decide how much to favour quantity of listings, which will help it become an automatic place for people to look for accommodation, over quality. + +Either way, the rivalry between Airbnb and hotels will surely intensify. An analysis by Morgan Stanley, a bank, suggests that the number of overnight stays in Airbnb accommodation will reach 6% of all hotel nights in America and Europe by 2018, up from 4% in 2016. The chief impact upon hotels so far has been to stop them raising rates. Airbnb brings a supply of available rooms to market whenever there is demand, a blow to hotels that used to be able to charge dizzying prices at peak times. + +You can’t handle the roof + +Lobbying by the hotel industry has contributed to Airbnb’s most obvious challenge, which is regulation. Opposition to the firm is fierce in many big cities, especially those with limited affordable housing, where residents blame Airbnb for taking apartments off the market. Several cities that could supply large profits, including Berlin, Barcelona and New York, have imposed rules that make offering short-term rentals difficult. New York, which is Airbnb’s third-largest market, has banned short-term rentals in apartment buildings for less than 30 days, unless a host is present. Berlin has passed a de facto ban, by requiring a permit if someone wants to rent more than half of their apartment on a short-term basis and levying hefty fines for violations. + +Airbnb has now opted for a new, more conciliatory approach, notes Leigh Gallagher, author of a book, “The Airbnb Story”. In Amsterdam and London it has agreed to police its listings to ensure they comply with local laws on the number of days a year each unit can be rented. Yet many investors worry that more restrictive laws will dampen its prospects. + +A second, ever-present risk is safety. The platform functions because people trust that user photos and blind reviews will help root out bad actors. It faced a crisis in 2011 when Airbnb guests trashed a host’s apartment and she blogged about the experience. Airbnb responded by offering insurance to all hosts of up to $1m in damages. There remains the possibility of a dramatic breach in personal security, which could spook hosts and users. + +The third threat is growing competition. Airbnb was not the first firm to pursue the concept of alternatives to hotels, but it was the first to become a global success. That has drawn the attention of others. In many markets, including China and Europe, Airbnb faces competition from local firms, as well as from established global players. In 2015 Expedia, an online-travel website, bought HomeAway, an Airbnb rival, for a hefty $3.9bn. + +But Airbnb’s most fearsome competitor is Priceline, which owns Booking.com and is considered one of the best-managed internet companies in the world. Priceline has been speedily adding alternative accommodation. Mr Chesky insists that “there is fundamentally not a lot of overlap between what they’re offering and what we’re offering”, because Priceline is working mostly with property-management companies that “look more like hotels”. But this will be less true over time. Priceline is too astute to let Airbnb win a category worth owning without a challenge. + +The travel industry is a large prize to share. Globally, people spend around $700bn a year on travel accommodation, according to Euromonitor International, a research firm. With rising incomes and smaller families globally, travel is ever more popular. Many more people than first thought have been willing to forgo hotel luxuries such as gyms and concierges to get the proper feel of a place. That suggests that alternative accommodation will not be a fringe activity for the young, but a mainstream part of the travel business. + +In any case, Airbnb’s aspirations do not end there. It has created an innovation and design lab, called Samara, with the ambition of creating a new kind of travel offering. Last autumn Airbnb started selling “experiences”, which are customised activities that travellers can book, including special meals, tours and exercise programmes, typically arranged by Airbnb hosts. Your correspondent booked a bicycle tour of San Francisco’s Mission neighbourhood. The tour was enjoyable and included a visit to a secret bookstore, Bolerium Books, where works are arranged not by author but by social movement. But for $100, excluding lunch, the price seems even steeper than San Francisco’s hills. There are plenty of other firms offering tours and things to do. + +There have also been murmurs that Airbnb will move into flights. Finding online flight options for travellers is a painfully low-margin business. Companies like Priceline and Expedia make the bulk of their revenue from hotels. But that is not the model Airbnb wants to embrace anyway, says Mr Blecharczyk, who declines to share more details on what Airbnb’s approach to air travel might look like. “If we’re going to do something, we should try to do it differently,” he says. + +It is possible that Airbnb’s best idea will be its first one. It will be up to the firm and one day, perhaps, to its public shareholders to decide whether it is worth pursuing new, ancillary opportunities, when there is still so much to win in the market for travel accommodation. In chasing after a new dream before the first one is realised, Airbnb does bear one resemblance to its Silicon Valley peers. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722653-its-culture-cohesive-and-its-finances-disciplined-among-private-tech-firms-airbnb-has/print + + + +文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Can he Hackett? + +An abrupt change at the top at Ford + + +Switching bosses is a sign of an uncertain future + +May 27th 2017 + + + + + +THE abrupt departure of Ford’s boss, Mark Fields, which the firm announced on May 22nd, has two explanations. Investors had become restive at its performance, particularly in the past year. But Mr Fields was also perceived to lack the drive of Alan Mulally, the man he succeeded. In replacing him with Jim Hackett (pictured), who ran an office-furniture company before joining Ford’s board in 2013 and more recently led the firm’s mobility unit, Ford hopes to conquer current problems and shore up its future strategy. + +Ford’s shares have declined by nearly 40% since Mr Fields took over (see chart). Though it made record profits in 2015 and had strong results in 2016, investors reckoned a booming North American market, on which it relies for nearly two-thirds of revenues, would slow. They also disliked the fact that Mr Fields had to invest heavily in new technologies. Ford suffered the ignominy of its market capitalisation being surpassed by Tesla, a maker of electric cars which turns out a fraction of the 6.6m vehicles that roll off Ford production lines each year. Being slammed for running a declining firm and for hurting profits by investing in the future was a no-win situation. + + + +Despite his relative lack of experience in the carmaking business, Ford presented Mr Hackett as the “transformational leader” to “re-energise” the firm. After running Ford Smart Mobility, a unit overseeing driverless cars and other new technologies, Mr Hackett may combine an insider’s feel and, like Mr Mulally, an outsider’s ability to challenge the status quo. He promises to speed decision-making, cut bureaucracy and, less convincingly, to add a dose of “fun” at Ford. + +Adjustment is required across the industry. Selling services will present a huge challenge to firms hitherto geared to selling cars. New competition from tech firms such as Google, Apple and Tesla has instilled a sense of panic among all carmakers as they grapple with new technology. + + + +Nonetheless, Ford is under pressure to catch up with its rivals and to communicate better. GM recently launched the Bolt, a cheapish electric car, and has been commended for far-sighted investments in Lyft, a ride-hailing service, and Cruise Automation, a self-driving startup. Ford’s plans for electrification are far less advanced, and a recent investment of $1bn in Argo, another self-driving startup, was criticised as too pricey. Mr Hackett will leave the job of managing external relations to the smooth-talking Bill Ford, the company’s chairman and a member of the family that still controls the carmaker. + +As well as casting an eye to the future, Mr Hackett will have to face Ford’s present ills. There is not much he can do about its lack of scale compared with the industry’s big hitters. Few carmakers are ready to risk the big mergers that would address the industry’s overcapacity. Nor can he do much to improve a brand that lacks cachet. Ford’s foreign operations have weak returns. GM has been more aggressive: selling its European operations and shutting down in India and South Africa. To tackle overcapacity Ford recently said it would cut its global salaried workforce by a tenth, but that may not be enough to stem losses in India and other emerging markets. A dependence on America will prove troublesome, as the market seems to have peaked. + +Another task will be to set up a successor to steer the company in a few years’ time, when new technologies will have become an even more important part of Ford’s business. Jim Farley, Ford’s European boss, and Joe Hinrichs, in charge of the Americas, will take more senior roles, both in Detroit, to be groomed. If Mr Hackett can ensure that the next change at the top occurs at a more measured pace, that will be something. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722661-switching-bosses-sign-uncertain-future-abrupt-change-top-ford/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Here comes the Son + +Masayoshi Son and Saudi Arabia launch a monster technology fund + + +The Vision Fund will invest $93bn within five years + +May 25th 2017 + + + + + +“I HAVEN’T accomplished anything I can be proud of in my 60 years on Earth,” Masayoshi Son, the boss of SoftBank, a Japanese telecoms group, recently confided. Now he has enough money to make a dent in the universe: on May 20th SoftBank and Saudi Arabia’s Public Investment Fund (PIF), along with smaller investors including Apple and Sharp, launched the world’s largest technology-investment fund, worth nearly $100bn. How will Mr Son and his team deploy these riches? + +He has a vision to match his vehicle. Within 30 years, he predicts, the world will be populated by billions of robots, many of them more intelligent than humans. Several of SoftBank’s recent acquisitions, most of which are expected to be part of the fund’s portfolio, should be seen in this light. ARM, a British chip firm acquired for a whopping $32bn last year, will design the brains for the robots. OneWeb, a satellite startup in which SoftBank acquired a 40% stake for $1bn in December, will connect them. Nvidia, another chip-design firm, in which SoftBank has bought a big stake, reportedly of $4bn, is meant to provide processors for artificial-intelligence services. + + + +The fund’s investment team, which will eventually number 100, has another dozen deals in the pipeline. These will be followed by a further 40 or so, although not all of them will fit neatly into Mr Son’s vision (biotech investments will be considered, for instance). Deal sizes will range between $500m and $3bn, although another ARM-sized acquisition is a possibility, too. The fund has five years to invest its money and will run for a maximum of 14 years. + +Making so many investments in the fast-moving tech world would be challenging in any circumstances. Another complexity is the influence likely to be exerted by the PIF, which has promised up to $45bn for the fund; Saudi Arabia seems to see it as a means to further its plans to diversify the economy (though insiders deny reports that the PIF has a veto right). Then there is Mr Son’s promise to Donald Trump to invest $50bn in America and create 50,000 jobs. Potential conflicts of interest have to be managed, too: SoftBank itself will invest $28bn in the fund, $8.2bn of that in the form of a stake in ARM, with the rest of ARM remaining in SoftBank’s hands. + +Other tech investors look at the fund with a mix of scepticism and greed. Many think SoftBank lacks a successful record in tech investing, excluding an early stake in Alibaba, a Chinese internet giant. “You don’t get into investing with no real experience and want to deploy $100bn,” scoffs an executive at one of Silicon Valley’s most illustrious venture-capital firms. But Mr Son’s fund, which is bigger than all investments of American venture-capital firms in 2016 combined, could help solve their “unicorn” problem: how to unload profitably the many private tech startups worth more than $1bn. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722674-vision-fund-will-invest-93bn-within-five-years-masayoshi-son-and-saudi-arabia-launch/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Curtain call + +Netflix still gets booed at Cannes + + +Its disregard for cinemas hurts France’s protection of arty films + +May 25th 2017 | CANNES + + + + + +THE rise of Netflix has been greeted frostily by some of the old guard at the Cannes film festival, where the American streaming giant’s disregard for releasing films in cinemas wins it few friends. It looked a bit more at home on May 21st, as the lights went up at the Louis Lumière theatre. The stars of its own film, “The Meyerowitz Stories (New and Selected)”, a comedy drama, accepted a standing ovation from the audience. Ted Sarandos, Netflix’s head of content, stood alongside Dustin Hoffman, Ben Stiller and other cast members. Festival-goers jostled for a word with him at a swanky after-party. + +This is the first year that Netflix has been admitted into the festival’s competition, with two films, “The Meyerowitz Stories” and “Okja”, directed by Bong Joon-ho of South Korea. Still, cries of protest from French film-industry executives prompted Thierry Frémaux, the festival director, to declare that, in future, only films guaranteed a theatrical release in France can qualify for the top Palme d’Or prize. Pedro Almodóvar, a film director and president of the jury, groused that he could not imagine a winner that could be seen only on small screens. During a press screening of “Okja”, Netflix’s logo was met by a smattering of boos. + + + +The controversy turns, appropriately enough for the French, on an existential question: if a film is never shown in cinemas, is it still a film? Netflix’s run at Cannes this year suggests that the majority of film types, at least, answer with a resounding “yes”. Independent film financiers, producers, directors and actors, including local ones, regard Mr Sarandos as, in effect, a Hollywood studio chief—but one who stakes big money on independent film. + +Therein lies the rub. In this age of Marvel superhero sequels and Harry Potter spin-offs, indie films struggle for customers. The median return on a low-budget film at the American box office is 45 cents on the dollar. With 100m subscribers globally, Netflix uses different maths to justify investments, including whether a film works for a specific segment of customers. And it has a lot of cash. Netflix will spend more than $7bn on content this year. + +Critics lament that no one will see Netflix’s films in a cinema. (Amazon, its big rival in streaming video, has decided to support cinema-first distribution; and Netflix itself does occasionally put films in cinemas in a few countries.) The criticism is especially political in France, the birthplace of film. Whereas Netflix has a business model that can finance less commercial, arty films, France’s government heavily subsidises such production. It imposes a “culture tax” on cinemas and broadcasters and also obliges TV networks to invest in film-making. Another part of the system is a three-year delay between a film’s release in theatres and its availability over internet services, which protects cinemas and physical-media formats. + +That delay was the sticking-point between Netflix and Cannes. Mr Sarandos says Netflix tried and failed to obtain a waiver so that its festival entries could appear in cinemas briefly. No matter. Despite Mr Frémaux���s ruling, Mr Sarandos expects to be back competing at Cannes. It will be hard for the festival’s film buffs to keep resisting Mr Stiller’s argument: that while he wants to see movies in cinemas, “studios aren’t making the movies Ted’s making.” + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722702-its-disregard-cinemas-hurts-frances-protection-arty-films-netflix-still-gets-booed/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Sole trading + +The market for rare trainers + + +Sneakerheads can launch initial public offerings on new stock exchanges + +May 25th 2017 | NEW YORK + + + + + +WHEN Marty McFly donned his self-lacing Nike trainers in the distant future of 2015, he really should have kept them in the box. Almost 30 years on from “Back to the Future II”, Nike’s real-life version, released in 2016, is the most expensive training shoe on the planet, with an average resale price of $32,275. These rarest of shoes (only 89 pairs were made) are at the apex of a resale market that has been carefully nurtured by Nike and other trainer titans since the late 1980s. + +Every Saturday morning across America, queues of “sneakerheads” form outside trainer shops. Many are adding to their hundred-pair collections, but the rest are seeking shoes to sell in the secondary market. As brands try to strike a balance between generating instant revenue and restricting supply (which creates demand, and more revenue later), the secondary trade thrives. In America it is worth an estimated $1.5bn a year, a tenth of the trainer industry’s value. + + + +By announcing small runs, without restocks, brands build huge excitement around specific lines. One man epitomises the importance of limited releases for the big firms. Since Kanye West switched allegiance from Nike to Adidas in 2013, Adidas’s share of the resale market has risen from less than 1% to 33%, and its share price has doubled. His latest shoe, around 100,000 pairs of which were released in April, is selling for more than double the retail price. The hype has not been without its problems. Black-Friday-style chaos in the shops has become so common that brands have taken steps to calm shoppers, instructing retailers to move trainer releases from midnight to early morning. + +A combination of eBay, social media and online markets has helped move the secondary market off the street. EBay pioneered collectible-trainer resales online in the late 1990s and accounts for a third of the market, but is now less dominant, partly due to an epidemic of counterfeiting. Twitter and Instagram, where consumers scroll through feeds and interact directly with sellers, are the latest boosts to the secondary market. Annual sales directly through Instagram have been estimated at $200m in America. + +“Stockmarkets” for box-fresh shoes have also sprung up, offering anti-counterfeiting services from professional sneakerheads. These function like traditional exchanges, with sellers setting a price and bidders making offers, except that when a sale takes place the trainers are shipped via companies for verification. StockX, founded in February 2016, hosts more than 100,000 trainer portfolios and expects sales volume to pass $100m this year. GOAT, a marketplace app started in 2015, claims 1.5m members. + +There are big sums to be made. Josh Luber, co-founder of StockX, says that each trainer’s appearance on the markets is akin to an initial purchase offering: “The sneakers’ value is immediately realised and people make a lot of money from that initial pop.” A portfolio of ten popular pairs on StockX, all released in the past six months, would have yielded a return on investment of almost $7,500, or 280%. Time to go short? + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722673-sneakerheads-can-launch-initial-public-offerings-new-stock-exchanges-market-rare/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Chain reaction + +Why companies in the chemicals industry are mixing + + +To farmers’ chagrin, deal mania has seized chemicals suppliers + +May 25th 2017 + + + + + +AS SPRING arrives, the hills of Languedoc in southern France turn green with the leaves of grapevines. This is helped along by chemicals—lots of them, confides a winemaker based near the town of Thuir in the Pyrenees. In their absence, vineyards would need natural fertilisers and to be weeded by hand, both costly. French farmers use more chemicals than anyone else in Europe: 65,000 tonnes of pesticides alone each year. + +Even the smallest of vine-growers has an interest in a series of takeovers proposed between their chemicals suppliers. After a decade without any big deals, since 2015 three mega-mergers, collectively worth around $240bn, have been proposed. When they were first announced, many doubted that regulators would allow the mergers because of competition worries. If all three proceed, as now seems likely, four companies will produce 70% of the world’s pesticides instead of six today. + + + +The first mega-merger, announced in December 2015, was between Dow Chemical and DuPont, the world’s fourth and fifth most valuable chemicals firms, in a $130bn deal. It was the largest-ever tie-up in the industry, and triggered other liaisons. Within a year Bayer, a German agrichemicals giant, agreed to merge with Monsanto, an American seedmaker, in a deal worth $66bn; and ChemChina, a Chinese giant, offered $43bn in cash for Syngenta, a Swiss biotech firm. ChemChina plans to merge with a local rival, Sinochem, to create a firm with revenues of $100bn or so. + +Dealmaking has now spread from agrichemicals to the rest of the industry, particularly to “specialty” firms that make chemicals for niche uses. On May 22nd Clariant and Huntsman, whose products include additives for pesticides, agreed a $14bn merger of equals. Bigger still is the latest bid by PPG of America, a specialty maker of paints and coatings, for AkzoNobel of the Netherlands, a rival which owns Dulux paint. On May 24th, Praxair and Linde, two industrial-gas firms, agreed the terms of a merger of equals worth $70bn. + +The main impetus has been a dramatic slowdown in the growth of demand across all types of chemicals, says P.J. Juvekar of Citigroup, a bank. In the 2000s sales expanded at a rate of 6-7% a year, but last year the industry grew by just 2%, with demand from China very weak. Executives are hoping to use scale to cut costs. + +The soaring cost of developing and testing new chemicals is another factor, says Kurt Bock, CEO of BASF, a German chemicals giant. The average cost of developing a new active substance has shot up from $150m in 1995 to over $500m in Europe today; most of that goes on testing for safety. Over the same period, the number of potential compounds that have to be synthesised and tested for each new substance, in case they are harmful, has risen from 50,000 to over 140,000, a process that can take as long as a decade. To account for longer and more costly development cycles, firms need enough financial heft to be able to have more projects on the go. + +More stringent regulation throughout the EU has reduced the number of pesticides farmers are permitted to use, from nearly 1,000 in the early 1990s to around 400 today, notes Robert de Graeff of the European Landowners’ Organisation, a trade group. If greater scale means that firms feel able to invest the larger sums of money needed to develop new products, his members would approve. + +But farmers are also fearful. They don’t want to become overdependent on a set of seeds and chemicals made by a single firm. All three of the mega-mergers are between one firm focused on seeds and another on agrichemicals. Many farmers are worried this will mean they will be forced to use pesticides made by the same firm that produces the seeds they buy. Roger Johnson, president of America’s National Farmers Union, says that his members don’t like any of the mergers. More consolidation may also mean that chemical firms can charge higher prices, he fears, and face less pressure to develop new products. + +But all the deals should pass regulators. The EU has signed off on the Dow-DuPont and ChemChina-Syngenta deals; it is now almost certain that the deals will go through, says Mr Juvekar. Bayer is in talks with regulators about Monsanto; analysts again reckon that a deal will proceed. + +Regulators’ relaxed stance is likely to stimulate still more activity. The ease with which ChemChina’s purchase of Syngenta was approved may embolden more Chinese firms to go for Western chemical companies in the future. The current series of deals—though huge—looks like the start of a bigger wave, says Florian Budde of McKinsey, a consultancy. Farmers are likely to have more to worry about. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722701-farmers-chagrin-deal-mania-has-seized-chemicals-suppliers-why-companies-chemicals/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Schumpeter + +Jeff Immelt’s record shows the pitfalls of capital allocation + + +Amid a whirlwind of dealmaking, GE’s returns lag + +May 25th 2017 + + + + + +BOSSES come in all shapes and sizes. One way to categorise them is to split them into two types: polishers and pickers. Polishers put their energy into products, improving and reimagining their design and production in a quest for perfection. Long after Apple had become one of the planet’s most valuable firms, its boss, Steve Jobs (who died in 2011), obsessed over “the finish on a piece of metal, the curve of the head of a screw, the shade of blue on a box”, writes his biographer, Walter Isaacson. + +Pickers, by contrast, are capital allocators, who stand back and decide unsentimentally how the firm should deploy resources. An example of this approach is Jeff Immelt, who runs General Electric (GE), the world’s most valuable industrial firm. Mr Immelt’s record since taking over in 2001 shows that capital allocation is far harder than you might think. + + + +Most chief executives would say they are more pickers than polishers. The task of creating the iPhone, devising a new drug or honing a manufacturing process is best left to geniuses such as Mr Jobs or to internal experts. By contrast capital allocation happens to a CEO, like it or not. Consider a firm that reinvests 10% of its net worth every year. By their tenth year in charge the CEO’s choices about deploying cash—including a decision to just sleepwalk—will explain 60% of the firm’s book value. + +Taking firm control of the process makes obvious sense. In the 1970s the logic of starving lousy businesses and feeding good ones was spread by management-consulting firms. BCG told firms to split portfolios into four buckets: cash cows worth milking, stars, dogs that should be shot and question-marks. Today the consultancy reckons that businesses shift between the buckets twice as fast as they did in the 1990s. + +Mr Immelt has remade GE partly because he had a tricky inheritance. GE’s shares were overvalued, its earnings were inflated by gains from its pension scheme, and it had overexpanded its financial arm, which later blew up during the banking crisis. He has globalised GE: 57% of sales now come from abroad, up from 29% in 2001. And he has loosened up its culture. Its old head office, in Connecticut, sat amid suburbs and golf courses. Its new digs in Boston are next to an art institute. + +But the main legacy of Mr Immelt will be as a capital allocator. He has shrunk or sold businesses that are mature or under margin pressure, such as plastics and kitchen appliances, or where GE has no advantage, such as media. He has killed off most of its financial arm. And he has bought in areas with promising growth stories where tech is becoming more important, such as aviation, power systems and medical devices. The scale of change has been huge. Outside the financial arm, looking just at industrial operations, since 2001 GE has traded businesses worth $126bn, or 167% of the capital employed in its industrial divisions. Counting capital expenditures, too, Mr Immelt has redirected resources worth a colossal 227% of GE’s capital base. + +The results are less impressive than you might expect. Annual free cashflow from GE’s industrial business was around $10bn in 2001 and the figure has not risen even as its capital employed has increased from below $30bn to $75bn (see chart). Cash returns on capital have fallen to about 12%. Partly reflecting this, GE’s shares have lagged behind the S&P 500 index over most periods. + + + +Why does a logical strategy, methodically implemented by competent people, not succeed better? Active capital allocation carries a danger: it can be procyclical, magnifying the swings in sentiment that most industries face. Businesses that are performing well often have profits that are at cyclical highs and that are valued at inflated levels. As Warren Buffett puts it, “What is smart at one price is dumb at another.” + +In “The Outsiders”, a cult business book, William Thorndike studies eight bosses whose firms on average have outpaced the S&P 500 by a factor of 20. They may have been obsessed with capital allocation, but they bought into deeply unfashionable things, from decrepit cable-TV networks in rural America (John Malone at TCI), to the makers of Twinkies (Bill Stiritz at Ralston Purina). Bucking accepted wisdom is, however, extraordinarily hard for CEOs of big, iconic firms, who must built a consensus among executives, directors and shareholders. + +Spit and polish + +The cost of churning capital in predictable ways can be significant. Schumpeter estimates that GE has paid a multiple of 13 times gross operating profits for the businesses it has bought and got 9 times for those it sold. Some nine-tenths of its industrial capital is now comprised of goodwill, or the premium that a firm paid above book value for its acquisitions. A company’s capital expenditure can also be procyclical. For example, in 2010-14 GE ramped up investment in its oil and gas business, at a point when energy prices were high, then cut back after they slumped in 2015. + +For businesses in aggregate, and their investors, churning portfolios brings some benefits. Firms must respond to changes in customer tastes and technology. They may be able to boost their market shares for some products, allowing them to raise prices. But it seems unlikely that hyperactive capital allocation greatly enhances wealth overall. Deals are often a zero-sum game. It is impossible for every firm to own only outperforming businesses. And the fees lawyers and bankers charge are a tax on corporate activity that corrodes value. + +For Mr Immelt the jury is still out. GE’s profits are rising even as its cash flows stall, as it books the gains it expects to make on long-term infrastructure projects and servicing contracts. It has launched a new jet engine, called Leap, and is investing heavily in Predix, an open data platform that it hopes will become an operating base for a host of industrial digital applications. And it is buying new assets at the bottom of the cycle, with a planned merger of its energy business with Baker Hughes, an oil-services firm. Mr Immelt will probably retire soon. His successor will surely come under pressure to undertake another massive reshuffle of what GE owns. Far better now to polish what it has. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/business/21722663-amid-whirlwind-dealmaking-ges-returns-lag-jeff-immelts-record-shows-pitfalls/print + + + +上一個 文章 節 下一個 + + + + + +Business 節 Science and ... + + + + + +Finance and economics + + +Stockpicking: Quants and the quirks + +Buttonwood: Bumper buy-backs + +Africa-EU trade: Blown off course + +Noble Group: Damsel in distress + +Foreign-exchange trading: Be good, or else + +Tax evasion: An ORSome wheeze + +The bitcoin bubble: One bitcoin is worth twice as much as an ounce of gold + +Machine-learning in finance: Unshackled algorithms + +Free exchange: Looking east + +Internship + +Business 節 Science and ... + + + + + +文章 節 下一個 + + + + + +Quants and the quirks + +Is efficient-market theory becoming more efficient? + + +Theory is changing traders’ behaviour. And vice versa + +May 27th 2017 + + + + + +BUILD a better mousetrap, the saying goes, and the world will beat a path to your door. Find a way to beat the stockmarket and they will construct a high-speed railway. As investors try to achieve this goal, they draw on the work of academics. But in doing so, they are both changing the markets and the way academics understand them. + +The idea that financial markets are “efficient” became widespread among academics in the 1960s and 1970s. The hypothesis stated that all information relevant to an asset’s value would instantly be reflected in the price; little point, therefore, in trading on the basis of such data. What would move the price would be future information (news) which, by definition, could not be known in advance. Share prices would follow a “random walk”. Indeed, a book called “A Random Walk Down Wall Street” became a bestseller. + + + +The idea helped inspire the creation of index-trackers—funds that simply buy all the shares in a benchmark like the S&P 500. From small beginnings in the 1970s, trackers have been steadily gaining market share. They command around 20% of all assets under management today. + +But the efficient-market hypothesis has repeatedly been challenged. When the American stockmarket fell by 23% in a single day in October 1987, it was hard to find a reason why investors should have changed their assumptions so rapidly and substantially about the fair value of equities. Robert Shiller of Yale won a Nobel prize in economics for work showing that the overall stockmarket was far more volatile than it should be if traders were adequately forecasting the fundamental data: the cashflows received by investors. + +Another example of theory and practice parting company is in the foreign-exchange market. When Sushil Wadhwani left a hedge fund to join the Bank of England’s monetary policy committee (MPC) in 1999, he was taken aback by the way the bank forecast currency movements. The bank relied on a theory called “uncovered-interest parity”, which states that the interest-rate differential between two countries reflects the expected change in exchange rates. In effect, this meant that the forward rate in the currency market was the best predictor of exchange-rate movements. + +Mr Wadhwani was surprised by this approach, since he knew many people who used the “carry trade”, ie, borrowing money in a low-yielding currency and investing in a higher-yielding one. If the bank was right, such a trade should be unprofitable. After some debate, the bank agreed on a classic British compromise: it forecast the currency would move half the distance implied by forward rates. + +Many who work in finance still believe they can beat the market. After all, there was a potential flaw at the heart of the efficient-market theory. For information to be reflected in prices, there had to be trading. But why would people trade if their efforts were doomed to be unprofitable? + +One notion, says Antti Ilmanen, a former academic who now works for AQR, a fund-management company, is that markets are “efficiently inefficient”. In other words, the average Joe has no hope of beating the market. But if you devote enough capital and computer power to the effort, you can succeed. + +That helps explain the rise of the quantitative investors, or “quants”, who attempt to exploit anomalies—quirks that cannot be explained by the efficient-market hypothesis. One example is the momentum effect: shares that have outperformed the market in the recent past continue to do so. Another is the “low-volatility” effect: shares that move less violently than the market produce better risk-adjusted returns than theory predicts. + +A new breed of funds, known in the jargon as “smart beta”, have emerged to exploit these anomalies. In a sense these funds are simply trying to mimic, in a systematic way, the methods used by traditional fund managers who interview executives and pore over balance-sheets in an attempt to pick outperforming stocks. + +Whether these funds will prosper depends on why the anomalies have been profitable in the past. There are three possibilities. The first is that the anomalies are statistical quirks; interrogate the data for long enough and you may find that stocks outperform on wet Mondays in April. That does not mean they will continue to do so. + +The second possibility is that the excess returns are compensation for risk. Smaller companies can deliver outsize returns but their shares are less liquid, and thus more difficult to sell when you need to; the firms are also more likely to go bust. Two academics, Eugene Fama and Kenneth French, have argued that most anomalies can be explained by three factors: a company’s size; its price relative to its assets (the value effect); and its volatility. + +The third possibility is that the returns reflect some quirk of behaviour. The outsize returns of momentum stocks may have been because investors were slow to realise that a company’s fortunes had improved. But behaviour can change; Mr Wadhwani says share prices are moving more on the day of earnings announcements, relative to subsequent days, than they were 20 years ago. In other words, investors are reacting faster. The carry trade is also less profitable than it used to be. Mr Ilmanen says it is likely that returns from smart-beta factors will be lower, now that the strategies are more popular. + +If markets are changing, so too are the academics who study them. Many modern research papers focus on anomalies or on behavioural quirks that might cause investors to make apparently irrational decisions. The adaptive-markets hypothesis, devised by Andrew Lo of the Massachusetts Institute of Technology, suggests that the market develops in a manner akin to evolution. Traders and fund managers pursue strategies they believe will be profitable; those that are successful keep going; those that lose money, drop out. + + + +The results can be dramatic. In August 2007 there was a “quant quake” as computerised strategies briefly stopped working; the suspicion was that one manager was offloading his positions after taking losses in the mortgage market. The episode hinted at a danger of the quant approach: if computers are all churning over the same data, they may be buying the same shares. At the moment American growth stocks, such as technology companies, are as expensive, relative to global value stocks, as they were during the dotcom bubble (see chart). What if the trend changes? No mathematical formula, however clever, can find a buyer for a trader’s positions when everyone is panicking. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722669-theory-changing-traders-behaviour-and-vice-versa-efficient-market-theory/print + + + +文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Buttonwood + +To forecast share returns, count buy-backs as well as dividends + + +That also reveals a better match between stockmarket performance and economic growth + +May 25th 2017 + + + + + +WHAT is the point of buying shares? Ultimately investors must hope that the cash they receive from the company will offer an attractive long-term return. + +Over the long run, reinvested dividends rather than capital gains have comprised the vast bulk of returns. But since the 1980s American firms have increasingly used share buy-backs, which have tax advantages for some investors. Buy-backs have been higher than dividend payments in eight of the past ten years. + + + +In a buy-back, investors receive cash for a proportion of their holdings. A new paper* in the Financial Analysts Journal argues that adding this to dividend receipts to calculate a total payout yield gives a better estimate of future returns than the dividend yield alone. It also reveals a much better match between stockmarket performance and overall economic growth. + +Using data going back to 1871, the authors find that the average dividend yield has been 4.5% and the total payout yield 4.89%. Since 1970 the dividend yield has dropped to 3.03%, but the total payout yield has averaged 4.26%. Looked at on that basis, the overall income return from shares has been not that far below historical levels. + +The return from shares can be broken down into three components: the initial income yield; growth in the income stream; and any change in valuation. (If shares become more expensive, the yield will fall. Say the dividend is $6 and the share price is $100, the initial yield will be 6%. If the shares rise to $120, the yield will fall to 5% but the investors will have made a capital gain.) + +Over the long run, changes in valuation levels do not make much difference to the return. What has driven stockmarket returns in recent decades is that total payouts have grown faster than before. The growth rate since 1871 has been 2.05%; since 1970, it has been 3.44%. That is probably because of strong corporate profits, which recently hit a post-1945 high as a proportion of America’s GDP. + +An obvious apparent difference between dividends and buy-backs is that every shareholder gets the dividend but not all of them tend to take part in a buy-back. But theory suggests investors should gain from a share buy-back even if they do not take part. The buy-back will reduce the number of shares in issue, giving existing investors a proportionately larger claim on the profits and assets of the company. + +Over time, buy-backs are offset by the shares companies issue to make acquisitions and honour executive share-option schemes. In the half century since 1970 new share issuance has exceeded buy-backs. But in the ten years to 2014, on average, buy-backs have predominated. + +The authors also experiment with using the total payout yield as a yardstick of whether stocks are dear or cheap. By averaging the yield over ten years, they work out the cyclically-adjusted total yield (CATY) and compare it with the cyclically-adjusted price-earnings ratio (CAPE), which averages corporate profits. They find that CATY is at least as good as CAPE in predicting market movements. + + + +As for the link with economic growth, it is often hard to find a short-term correlation between this and stockmarket performance, which tends to be much more volatile. But the authors found that, over the very long run, growth in the aggregate payout from American equities has matched that of the country’s GDP (see chart), and payout-per-share growth has matched that of GDP per head. + +There is no guarantee that this relationship will continue. Payouts lagged a long way behind GDP in the second half of the 20th century, and have only caught up because of the surge in buy-backs. And the stockmarket is much more international than it used to be; almost half the revenues of S&P 500 companies come from outside America. + +Focusing on total payouts allows the authors to be a bit more optimistic in their forecasts of future returns than the traditional dividend-based approach would suggest. Historically, total payouts have grown by around 1.67% per year, compared with 1.46% for dividends alone. Combine that with the current payout yield and you get an expected future real return of 5.1%, compared with just 3.6% if dividends alone are used. Whether even that return, however, would be enough to meet defined-benefit pension promises, particularly those made to their workers by state and local governments in America, is another question. + +* “The Long-Run Drivers of Stock Returns: Total Payouts and the Real Economy” by Philip Straehl and Roger Ibbotson + +Economist.com/blogs/buttonwood + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722634-also-reveals-better-match-between-stockmarket-performance-and-economic/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Blown off course + +A trade deal between the EU and east Africa is in trouble + + +The EU’s push for new trade deals in Africa, the Caribbean and the Pacific faces headwinds + +May 25th 2017 | KAMPALA + + + + + +THE winds that waft along the Swahili coast change direction with the seasons, a boon to traders in times past. Shifts in the political winds are harder to predict. Last July a proposed trade deal between five countries of the East African Community (EAC) and the EU was thrown into disarray when Tanzania backed out at the last minute. An EAC summit, scheduled for months ago, was meant to find a way forward. Held at last on May 20th in Dar es Salaam, after many postponements, only two presidents showed up. The deal is in the doldrums. + +The pact is one of seven “Economic Partnership Agreements” (EPAs) the EU wants to sign with regional groups in Africa, the Caribbean and the Pacific. The first was agreed with the Caribbean in 2008; southern Africa followed suit last year. But progress in west Africa has also stalled, with Nigeria raising objections. The EPAs were promoted as a new breed of trade deal, and were supposed to bring development and regional co-operation. So far they have brought neither. + + + +Negotiations on EPAs began in 2002. Under previous conventions, the EU gave favourable market access to African, Caribbean and Pacific countries, most of them former colonies. That fell foul of World Trade Organisation rules. Hence the idea of EPAs: reciprocal deals, requiring both parties to open their markets. + +Two obstacles have to be surmounted. First, EPAs overlap with existing trade arrangements. The poorest countries, like Tanzania, already enjoy duty-free and quota-free access to the EU under an initiative called “Everything But Arms”. That could one day be withdrawn, but at present they see little to gain by opening their markets. + +Second, countries within the same region face different incentives. Take Kenya, richer than Tanzania and not eligible for Everything But Arms. It ratified the EPA last year and needs others to do so for the deal to come into force. It recalls the pain of 2014, when the EU briefly slapped tariffs on its exports, such as cut flowers, and is frustrated by Tanzanian foot-dragging. + +A more profound question is whether EPAs really are good for development. African manufacturers worry about European competition: nascent industries are “prone to being overrun” by imports, warns Segun Ajayi-Kadir of the Manufacturers Association of Nigeria, which lobbies against the west African deal. EU officials point out that slashing tariffs will help manufacturing by making imported machinery cheaper. African markets would open gradually, and some sectors are excluded. Details vary, but EPAs typically liberalise about 80% of imports over 20 years. Many of those goods already enter duty-free. + +The EPAs would make it harder (though not impossible) for countries to use certain kinds of industrial policy, such as export taxes. The EU does not think such policies do much good anyway. But some governments do, and do not want their hands tied. They fear that promised safeguards, such as an “infant industry” clause, to protect some domestic businesses, would be hard to invoke. They will also lose tariff revenues, an important source of income in countries where other taxes are tricky to raise. It all adds up to a “form of colonialism”, fumes John Magufuli, Tanzania’s interventionist president. + +Economic evidence is mixed. Although models typically find trade gains on both sides, it is European exporters that would be the biggest winners. Within Africa, gains would mostly accrue to better-off countries in sectors such as sugar, meat and dairy (rather than to manufacturing industry). Their extra sales to the EU would come partly at the expense of trade with African partners, says David Luke of the UN Economic Commission for Africa. + +Ultimately “it’s about politics”, argues San Bilal of the European Centre for Development Policy Management, a think-tank. The EPAs are mired in regional rivalries, he notes, against a backdrop of global trade uncertainty after the Brexit vote and Donald Trump’s election. The next step for the east African deal is a quixotic mission to Brussels with Yoweri Museveni, the Ugandan president, at the helm. Don’t expect the trade winds to start blowing. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722684-eus-push-new-trade-deals-africa-caribbean-and-pacific-faces/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Damsel in distress + +Noble Group, a big Asian commodities trader, is teetering + + +White knights are so far lying low + +May 25th 2017 | SINGAPORE + + + + + +THE difficulties facing Noble Group, a beleaguered Hong Kong commodities trader, are multiplying. On May 23rd the firm was forced to suspend trading of its shares in Singapore after their value slumped by more than 28% in half an hour. The panicked selling came after S&P Global, a ratings agency, warned that Noble was at risk of defaulting on large debt repayments that are due within the next 12 months. Investors were also rattled by reports from Reuters and the Financial Times suggesting that Sinochem, a Chinese conglomerate at one time tipped to take a stake in Noble, had lost interest in a deal. + +Founded in 1986 by Richard Elman, a former scrap-metal merchant from London, Noble grew from an initial investment of $100,000 to be worth more than $10bn at its peak in 2010. But investors took fright in 2015 when a previously unknown group called Iceberg Research began publishing reports questioning Noble’s accounting practices (Noble has vigorously defended its book-keeping, and said a disgruntled former employee was behind the criticism). This controversy only made it tougher for the group to weather a global slump in commodity prices: over a calamitous two-year period the company has shed more than 90% of its value (see chart). + + + +Of late, however, Noble had appeared to be making some progress towards recovery. It has been narrowing its focus to oil and coal, and selling off interests in agricultural trading and in power, among other sectors. After losing $1.7bn in 2015, the company swung to a small profit last year. But this optimism faded rapidly in early May, when Noble forecast a first-quarter loss of $130m—blamed largely on ill-judged coal trades—and warned that it might not return to profitability until 2019. Since then, ratings agencies—Moody’s and Fitch, as well as S&P Global—have all cut Noble’s credit rating, already classed as junk. + +Noble’s share price tumbled further when trading of its stock restarted on May 24th before recovering to finish the day down by 8%. But the drama has drawn more attention to negotiations over a $2bn credit facility which the group needs to finance its operations, and which has to be renewed or replaced at the end of June. The speculation is that Noble’s first-quarter losses have been scaring banks away. + +Mervin Song, an analyst at DBS Vickers, guesses that Noble’s lenders will choose to “kick the can down the road”. But, says Margaret Yang of CMC Markets, a brokerage, in the longer term the group needs to find a “white knight” investor to take a stake. Noble has been looking for a saviour, and in a statement to the market on May 24th said that discussions with “various potential strategic parties” were in progress. It did not identify any of them; nor has it ever commented directly on talk of a tie-up with Sinochem. Sealing a deal is presumably the highest priority for the group���s new chairman, Paul Brough, a well-regarded troubleshooter who replaced Mr Elman on May 11th and is reviewing the company’s options. He may not have long to find an answer. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722672-white-knights-are-so-far-lying-low-noble-group-big-asian-commodities-trader/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Be good, or else + +A new code aims to clean up the foreign-exchange market + + +A new regulatory code relies mainly on peer pressure + +May 25th 2017 + + + + + +FINANCIAL-MARKET traders have earned a pretty shocking reputation in recent years. From manipulating LIBOR, a benchmark interest rate, to rigging the daily fix of foreign-exchange (FX) rates, traders have shown themselves ready not just to stretch the rules, but to collude in outright illegality. + +A global code of conduct for the FX market, unveiled on May 25th, aims to put things on a sounder footing. Drawn up over the past two years by a coalition of central bankers, known as the FX Working Group (FXWG), and supported by a panel of industry participants, the code’s 55 principles lay down international standards on a range of practices, from the handling of confidential information to the pricing and settlement of deals. + + + +Such standards seem long overdue in the massive FX market. Roughly $5trn is traded every day (see chart). Many companies, pension funds and money managers depend on banks to hedge their exposure to currency fluctuations. Yet in the past traders colluded with one another in internet chat rooms, secretly swapping client data in order to rig the widely used WM/Reuters benchmark exchange rates. Some were caught and fired. Banks such as Citigroup, HSBC, JPMorgan Chase, Royal Bank of Scotland and UBS paid billions of dollars in fines. + +The FX market has always been lightly regulated, but many countries do have codes of conduct, usually drafted by the central bank in consultation with market participants. Often, however, the codes were defective: they missed areas vulnerable to malpractice; and were rarely updated, scantily enforced and widely flouted. + +The new code starts with some advantages. It will supersede the national codes, and provide a single global set of principles, with adherence closely monitored by a newly formed committee of central bankers and trading institutions. It is also designed to reflect current market practice, with clear guidelines on communication between participants and on trade-execution practices—two areas of weakness highlighted by the scandal. + +Managers of FX traders will now be enjoined to limit access to confidential information, and to ensure that clear guidance has been given on approved channels of communication. Greater disclosure is also demanded on how orders are processed, so that clients will never lose oversight and control of their trades. + +The code will, however, be voluntary. Guy Debelle of the Reserve Bank of Australia, who led the drafting, reckons that to write binding rules for a global market would have been more convoluted and less effective. Principles, he argues, are harder to exploit or ignore than rules. + +Alongside the code itself, the FXWG has developed a blueprint for adoption, which makes those active in the market responsible for embedding the code in their day-to-day operations. Central banks have committed themselves to leading by example, by implementing the code for their own FX activities. Consideration is being given to maintaining public registers of those who have signed up. “I wouldn’t underestimate the impact of peer pressure in improving behaviour,” says Mr Debelle. + +Given the painfully low level of trust in foreign-exchange and other financial markets, central bankers are adamant that codes like these must not be ignored or allowed to become outdated. The new global FX committee will monitor the success of the project and consider the case for further updates. + +But the incentives for adherence do not seem compelling. Whether the code actually prevents market malfeasance will be determined by the many institutions, large and small, that trade FX each day. And, as the market has proved in the past, it is important not to underestimate the power of peer pressure to worsen behaviour as well as improve it. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722680-new-regulatory-code-relies-mainly-peer-pressure-new-code-aims-clean-up/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +An ORSome wheeze + +How becoming a Hong Kong pensioner can save you tax + + +An increasingly popular loophole in the global tax-compliance regime + +May 25th 2017 + + + + + +THE global war on tax evasion rumbles on. What began as an American onslaught, with the Foreign Account Tax Compliance Act (FATCA) of 2010, has been joined by more than 100 countries through an initiative called the Common Reporting Standard (CRS). Under this, governments will exchange tax information on their financial firms’ clients on a regular, “automatic” basis, without having to be asked for it, starting this year. Holdouts such as Panama, the Bahamas and Lebanon have, one by one, been frogmarched into line. + +But tax-dodgers and their advisers are enterprising sorts, eager to clamber through the smallest loophole—and gaps in the CRS there are. One involves becoming a pensioner in Hong Kong. + + + +The territory, home to a big financial centre, has a type of pension known as an ORS (for Occupational Retirement Scheme). The beauty of ORS from a tax evader’s point of view is that anyone can get one and they are not caught in the CRS net. A German or Australian with money to hide can set up a Hong Kong shell company, appoint himself as its director, with a local employment contract, and sign up with a trust company that provides an ORS. He can throw in cash, property or other assets, oversee the account himself, retire as soon or as far in the future as he likes, and then take out as much or as little as he chooses, whenever he wants. An ORS, in short, is like a flexible bank account. + +The arrangement falls outside the CRS and FATCA because the Hong Kong authorities classify ORS as “low risk” from a tax-evasion standpoint, meaning those running them are “non-reporting financial institutions” under both standards. Not surprisingly, some financial firms are hawking them enthusiastically to foreigners. A brochure from Legacy Trust, a Hong Kong-based firm, presents the ORS as “arguably the most tax-efficient pension structure available to high net-worth individuals”. It also suggests that Hong Kong’s status as a respectable financial centre, not on any international tax blacklist, confers “legitimacy” on ORS. Legacy Trust did not respond to a request for comment. + +Tax experts say private-banking circles are abuzz with talk of ORS, with hundreds of rich clients looking to move money into them as the date approaches for CRS compliance. “I’ve met people with $50m, $100m even, including from the Chinese mainland, looking to do this,” says one. “No one knows how much they’re shifting. It has to be a lot.” Asked whether Hong Kong’s tax authority is aware of this, he says: “It’s either acquiescence or ignorance on their part. Either way, not good.” + +The Financial Services and Treasury Bureau, the Hong Kong government department responsible for international tax matters, says it has weighed the risks posed by the schemes and considers it “justifiable” to include their managers as non-reporting institutions. As of March 31st, there were 4,522 ORS registered. The pensions regulator declines to say whether the number has been growing. + +The OECD, which administers the CRS, says it is aware of several supposedly kosher investment schemes that may be anything but, including ORS. It says it is in discussions with Hong Kong, though it will not be drawn on when the loophole might be closed. Earlier this month, the OECD launched a portal where whistle-blowers can anonymously report schemes designed to circumvent its tax-transparency standard; they can even upload documents, such as marketing materials. The OECD says products in its sights include pensions, insurance and citizenship-for-sale schemes, known euphemistically in the trade as “investment migration” products. Tips are already flowing in, it says. + +But the biggest hole in the CRS is not a product, nor Hong Kong. It is America. It gets all the information it needs from other countries through its heavy-handed application of FATCA, and therefore sees no need to sign up to the CRS. So it is in the unique position of being able to take a lot, give little, and continue getting away with it. Not surprisingly, lots of tainted foreign cash is believed to have flowed into American banks, trusts and shell companies in recent years. Schemes such as ORS may provide tax-dodging opportunities for a while yet, but American non-participation is, as one OECD official puts it, “the elephant in the room”. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722679-increasingly-popular-loophole-global-tax-compliance-regime-how-becoming/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Bitcoin booms + +One bitcoin is worth twice as much as an ounce of gold + + +Crypto-currencies keep on soaring + +May 25th 2017 + + + + + +Fans of bitcoin, a crypto-currency, have long called it digital gold. Now this sounds like an insult: continuing its stellar rise, and adding more than 30% to its value in just a week, one bitcoin is worth more than $2,600, over twice as much as an ounce of gold. As The Economist went to press all bitcoins in circulation were worth over $43bn. A sum of $1,000 invested in bitcoins in 2010 would now be worth nearly $36m. Other crypto-currencies are also marching upward: together this week they were worth $87bn. But if the history of gold is any guide, what goes up will come down—and then go up again. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722678-crypto-currencies-keep-soaring-one-bitcoin-worth-twice-much-ounce/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Unshackled algorithms + +Machine-learning promises to shake up large swathes of finance + + +In fields from trading to credit assessment to fraud prevention, machine-learning is advancing + +May 25th 2017 + + + + + +MACHINE-LEARNING is beginning to shake up finance. A subset of artificial intelligence (AI) that excels at finding patterns and making predictions, it used to be the preserve of technology firms. The financial industry has jumped on the bandwagon. To cite just a few examples, “heads of machine-learning” can be found at PwC, a consultancy and auditing firm, at JP Morgan Chase, a large bank, and at Man GLG, a hedge-fund manager. From 2019, anyone seeking to become a “chartered financial analyst”, a sought-after distinction in the industry, will need AI expertise to pass his exams. + +Despite the scepticism of many, including, surprisingly, some “quant” hedge funds that specialise in algorithm-based trading, machine-learning is poised to have a big impact. Innovative fintech firms and a few nimble incumbents have started applying the technique to everything from fraud protection to finding new trading strategies—promising to up-end not just the humdrum drudgery of the back-office, but the more glamorous stuff up-front. + + + +Machine-learning is already much used for tasks such as compliance, risk management and fraud prevention. Intelligent Voice, a British firm, sells its machine-learning-driven speech-transcription tool to large banks to monitor traders’ phone calls for signs of wrongdoing, such as insider trading. Other specialists, like Xcelerit or Kinetica, offer banks and investment firms near-real-time tracking of their risk exposures, allowing them to monitor their capital requirements at all times. + +Machine-learning excels in spotting unusual patterns of transactions, which can indicate fraud. Firms ranging from startups such as Feedzai (for payments) or Shift Technology (for insurance) to behemoths such as IBM are offering such services. Some are developing the skills in-house. Monzo, a British banking startup, built a model quick enough to stop would-be fraudsters from completing a transaction, bringing the fraud rate on its pre-paid cards down from 0.85% in June 2016 to less than 0.1% by January 2017. + +Natural-language processing, where AI-based systems are unleashed on text, is starting to have a big impact in document-heavy parts of finance. In June 2016 JPMorgan Chase deployed software that can sift through 12,000 commercial-loan contracts in seconds, compared with the 360,000 hours it used to take lawyers and loan officers to review the contracts. + +Machine-learning is also good at automating financial decisions, whether assessing creditworthiness or eligibility for an insurance policy. Zest Finance has been in the business of automated credit-scoring since its founding in 2009. Earlier this year it rolled out a machine-learning underwriting tool to help lenders make credit decisions, even for people with little conventional credit-scoring information. It sifts through vast amounts of data, such as people’s payment history or how they interact with a lender’s website. Lemonade, a tech-savvy insurance startup, is using machine-learning both to sell insurance policies and to manage claims. + +Perhaps the newest frontier for machine-learning is in trading, where it is used both to crunch market data and to select and trade portfolios of securities. The quantitative-investment strategies division at Goldman Sachs uses language processing driven by machine-learning to go through thousands of analysts’ reports on companies. It compiles an aggregate “sentiment score” based on the balance of positive to negative words. This score is then used to help pick stocks. Goldman has also invested in Kensho, a startup that uses machine-learning to predict how events like natural disasters will affect market prices, based on data on similar events. + +Quantifiable progress + +Quant hedge funds, both new and old, are piling in. Castle Ridge Asset Management, a Toronto-based upstart, has achieved annual average returns of 32% since its founding in 2013. It uses a sophisticated machine-learning system, like those used to model evolutionary biology, to make investment decisions. It is so sensitive, claims the firm’s chief executive, Adrian de Valois-Franklin, that it picked up 24 acquisitions before they were even announced (because of telltale signals suggesting a small amount of insider trading). Man AHL, meanwhile, a well-established $18.8bn quant fund provider, has been conducting research into machine-learning for trading purposes since 2009, and using it as one of the techniques to manage client money since 2014. + +So it seems odd that some prominent quant funds are machine-learning sceptics. Martin Lueck of Aspect Capital finds the technique overrated, saying his firm has found only limited useful applications for it. David Siegel, co-founder of Two Sigma, a quant behemoth, and David Harding of Winton Capital, have also argued that the techniques are overhyped. + +In other fields, however, machine-learning has game-changing potential. There is no reason to expect finance to be different. According to Jonathan Masci of Quantenstein, a machine-learning fund manager, years of work on rules-based approaches in computer vision—telling a computer how to recognise a nose, say—were swiftly eclipsed in 2012 by machine-learning processes that allowed computers to “learn” what a nose looked like from perusing millions of nasal pin-ups. Similarly, says Mr Masci, a machine-learning algorithm ought to beat conventional trading strategies based on rules set by humans. + +The real vulnerability may in any case lie outside trading. Many quant funds depend on human researchers to sift through data and build algorithms. These posts could be replaced by better-performing machines. For all their professed scepticism, Two Sigma and its peers are busy recruiting machine-learning specialists. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722685-fields-trading-credit-assessment-fraud-prevention-machine-learning/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Free exchange + +What the German economic model can teach Emmanuel Macron + + +And how hard it will be for France to replicate Germany’s transformation + +May 27th 2017 + + + + + +IT IS heartening that the euro area has a knack for surviving near-fatal crises. Yet confidence in the durability of the single currency might be stronger if it suffered fewer of them. Europe dodged its latest bullet on May 7th in France, when Emmanuel Macron, a liberal-minded (by local standards) upstart centrist, defeated Marine Le Pen for the presidency. Even so, an avowed nationalist and Eurosceptic captured 34% of the vote, leaving Mr Macron with five years to assuage widespread frustration with the economic status quo. An obvious model lies just across the Rhine, where the unemployment rate—below 4%, down from over 11% in 2005—is testimony to the potential for swift, dramatic change. Yet Germany’s performance will not be easy to duplicate. + +It would be unfair to call France the sick man of Europe; half the continent is wheezing or limping. Yet there is certainly room for French improvement. Real output per person has barely risen in the past decade. Government spending stands at 57% of GDP, outstripping the tax take; France’s budget deficit, at 3.4% of GDP, is among the largest in the euro area’s core. The biggest worry, however, is the labour market. The unemployment rate, now 10.1%, is stubbornly high. Nearly a quarter of French young adults are unemployed. Worklessness, especially among young people, is a source of rising social tension and a corrosive force in French politics. Mr Macron must perform the German trick—from labour-market morass to miracle—in half the time it took Germany. + + + +How did the Germans manage it? The popular narrative of the German turnaround begins with the “Hartz reforms”—named after Peter Hartz, who ran the commission that formulated them—enacted from 2003 to 2005. Germany’s structural unemployment rate had risen steadily from the early 1970s. Each recession added workers to the jobless rolls who subsequently never left. The Hartz reforms overhauled job training and placement programmes and reduced barriers to part-time work. Most important, they transformed a wildly generous system of unemployment and welfare payments, which allowed some workers to collect indefinite benefits equivalent to about half their previous salary, into one which paid fixed amounts for a limited time. The reforms inspired intense opposition and, in 2005, cost Gerhard Schröder the chancellorship (it passed to one Angela Merkel). Yet the pain appears to have been worth it. German leaders are certainly not slow to evangelise about the benefits of reform. + + + +Mr Macron, however, should be careful about mimicking German reforms too slavishly. The groundwork for Germany’s miracle was laid well before the Hartz reforms, in response to unique circumstances. German reunification in 1990 placed great fiscal strain on the economy. And the collapse of Soviet power gave Germany’s eastern neighbours—economies with skilled but low-cost workforces and close historical relationships with Germany—better access to Western markets. Conditions seemed ideal for a swift industrial decline. That prospect spooked German workers into docility. Wage contracts became increasingly localised (helped by the absence of the national wage floors imposed in France) and strike action was rarer than in France or Italy. Union membership dropped; the share of workers covered by industry-level wage agreements fell from 75% in 1995 to 56% in 2008. + +As a result, from the early 1990s labour costs for German firms fell sharply relative to those in other economies (see left-hand chart). Low labour costs reduced the incentive for firms to shift production abroad and boosted the competitiveness of German exports. (Flexibility also shielded the German labour market during the Great Recession, when a sharp fall in GDP barely affected the unemployment rate.) The same political economy that allowed lower German labour costs probably enabled the passage of the Hartz reforms. Yet it made its own, independent contribution to rising German employment. + +The Macron environment + +Nor can the global context be ignored. In the 2000s the world economy grew at an average annual pace of around 4%, despite the Great Recession. China, which bought much of the industrial equipment manufactured in Germany, grew especially rapidly. Booming global trade amplified the benefits to Germany of rising competitiveness. And German labour costs were falling while those of its European neighbours were flat or rising. Now, the global outlook for output and trade is far murkier. And much of the euro-area periphery is also trying to lower labour costs and boost competitiveness. The Hartz reforms certainly succeeded in pushing some workers back into the labour force and into work; one analysis suggests they reduced Germany’s structural unemployment rate by 1.4 percentage points, for instance. But other shifts in the economy were just as critical to the German turnaround. + +Moreover, change in Germany’s labour market was not a story of improvement across the board. Growth in employment soared, but growth in total hours worked did not. To a great extent, Germany redistributed working hours rather than created new ones. Though wages for the better-paid climbed rapidly, especially in manufacturing, they fell for the lowest-paid. So income inequality in Germany, on some measures, has followed a remarkably American trajectory (see right-hand chart). Increased employment in France is a worthy goal; but to make it the sole priority may have unpleasant consequences for some. + +The new president seems to understand that danger. Though the details of his programme have yet to be unveiled, they are likely to include reforms to French labour law and efforts to deepen French trade relations with Europe, in addition to more Hartz-like measures. But a successful French turnaround will necessarily look different from Germany’s. If Mr Macron hews too closely to what the Germans believe to have been the secret of their success, France’s disenfranchised may end up feeling even more alienated. If so, the euro zone may suffer another existential crisis, this time possibly terminal. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722635-and-how-hard-it-will-be-france-replicate-germanys-transformation-what/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Internship + + +May 25th 2017 + + + + + +The Economist invites applications for the 2017 Marjorie Deane internship. Paid for by the Marjorie Deane Financial Journalism Foundation, the award is designed to provide work experience for a promising journalist or would-be journalist, who will spend three months at The Economist writing about economics and finance. To apply, write a covering letter and an original article of no more than 500 words suitable for publication in the Finance and economics section. Applications should be sent by June 2nd to deaneintern@economist.com. For more information, please visit www.marjoriedeane.com. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/finance-and-economics/21722636-internship/print + + + +上一個 文章 節 下一個 + + + + + +Finance and ... 節 Books and arts + + + + + +Science and technology + + +Aviation: The towers vanish + +Sexual competition: Careful where you put that thing + +Fingerprints for paper: Shining a light + +Synthetic biology: Lights, bacteria, action + +High-tech weaponry: Follow the leader + +Finance and ... 節 Books and arts + + + + + +文章 節 下一個 + + + + + +Aviation + +Airports switch to “virtual” control towers + + +Remote centres using video replace airfield edifices + +May 25th 2017 + + + + + +THE 67-metre-tall control tower that opened at San Francisco International Airport in October is a stylish structure that cost $120m. It is supposed to resemble a beacon of the sort used in ancient times to guide ships safely to harbour. Those in the know might be forgiven for wondering if the new control tower is less a beacon than a white elephant. Elsewhere, airport managers are starting to abandon the panopticons that have dominated airfields for decades in favour of remote-controlled versions that promise to be cheaper and safer. Instead, they are housed in ordinary low-rise buildings, in some cases hundreds of kilometres away from the facility they are monitoring. + +These remote control towers receive a live video feed from cameras positioned around an airfield. The images are stitched together by computer and displayed on screens (as pictured above) to create a virtual view of the runways and taxiways being monitored. In some cases the screens surround the air-traffic controllers, creating a 360° image. Separate screens can be used to display different airfields, because some remote towers will control flights in and out of a number of airports. + + + +The first airport to deploy a virtual control tower was the one that serves Ornskoldsvik, in northern Sweden, which is used by about 80,000 passengers a year. In April 2015 the conventional tower at this airport was closed. The controllers moved to a remote tower at Sundsvall, some 130km to the south, that had been built by LFV, Sweden’s air-navigation agency, and Saab, a Swedish technology firm. Last year, this tower also began monitoring flights at its local airport, Sundsvall-Timra. Next year it will start looking after those at Linkoping City Airport, in southern Sweden, too. + +Cleared for landing + +On the other side of the Scandinavian Mountains, Norway has even more ambitious plans than Sweden. Kongsberg, a local firm, and Indra, a Spanish one, are consolidating control of 15 small airports in the country’s north into a remote tower at Bodo, just above the Arctic Circle. Many of Norway’s airports serve isolated settlements and operate a handful of flights a day—hardly enough to justify a full-time tower service. The new centre is expected, eventually, to handle aircraft movements at 32 of the 45 airfields run by Avinor, Norway’s state-owned airport operator. + +Remote towers are planned in a number of other countries. In 2019 NATS, Britain’s air-traffic management company, will replace the control tower at London City Airport with a remote service operating at NATS’s air-traffic control centre 145km away. Saab, meanwhile, has been testing the idea in several places outside Sweden. One is Australia, where video from the airport at Alice Springs, in the middle of the country, has been transmitted to air-traffic controllers in Adelaide, 1,500km away on the south coast. + +Nor will remote towers be restricted to small airports. Searidge Technologies, a Canadian company, has done trials at far larger ones in Budapest and Milan. Some big airports are expected to experiment with remote towers as back-ups to their existing towers before making the switch. Indra recently tested a virtual “contingency” control tower for use in emergencies at Girona Airport, which serves Costa Brava, one of Spain’s top holiday destinations. + +Sometimes, remote towers will not serve as replacements for ones on site. Rather, they will be the first “tower” the airport in question has ever seen. Such is the case for Leesburg airport in Virginia, just outside Washington, DC, which looks likely to be the first airport in America to get a remote control tower. At non-controlled airports like Leesburg (which is used mainly by executive jets), pilots are responsible for take-offs and landings. They do this by flying established patterns on approach, communicating their intentions on a common radio frequency—and keeping their eyes peeled. A remote control tower of the sort Leesburg is testing should relieve pilots of those burdens. + +Chocks away! + +Efficiency and safety are the driving forces behind the use of remote towers. They offer the prospect of substantial savings as airports no longer need to build and maintain expensive tall structures. Operating costs should also fall, if air-traffic controllers are shared between a number of airports. Such savings should particularly help little-used airfields, which would pay for control-tower services only when needed. In Norway’s case, the overall cost of air-traffic services at the airports involved is expected fall by 30-40%. That ought, in turn, to mean lower fees for airlines and—less certain, this—cheaper fares for passengers. + +Safety should improve, as well. At night or in bad weather, on-the-spot controllers may not be able to see much of the airport, even from their lofty vantage point. Remote towers can provide a greatly enhanced view, says Gonzalo Gavín, Indra’s European programme director, because they rely on a variety of cameras. + +Some of these cameras capture a panoramic scene. Others are distributed on poles around the airfield (and are thus able to look into what would otherwise be blind spots). Some can be panned and zoomed—the digital equivalent of a controller reaching for a pair of binoculars. And exotica such as infrared cameras can capture images created by temperature differences, so could detect, for instance, an animal straying onto a runway at night. + +Other sensors can be used, too, including laser rangefinders that measure accurately how far an approaching aircraft is from the runway. Images and additional information can be superimposed on the screens, and sound can be piped in as well. As in physical towers, controllers will continue to have radar screens and radios to communicate with pilots. + +Nervous flyers will, no doubt, worry about a systems failure. To guard against this, remote towers have high levels of redundancy, with backup equipment such as dual power supplies and additional pathways for data networks. In case of a radio breakdown, controllers in a physical tower communicate with pilots using red, green and white flashes from a signal gun. The digital equivalent duplicates this by remotely controlling signal guns placed on the airfield’s camera poles. + +No system, however robustly designed, is completely secure. Physical control towers can suffer failures, too. With a network of remote towers, it might be possible for another to take over. But if the lights really did go out, a number of fall-back measures would be implemented: take-offs would be halted, controllers would divert flights to other airports and call for a greater separation between aircraft, a number of which might still land using the procedures for airports without control towers. + +Some air-traffic controllers are more concerned that having to look after several airports from a single remote tower could prove difficult in “human performance terms” (ie, trying to concentrate on what is happening at more than one location). At first, the extra airports added to a remote tower are likely to be lightly used ones, so that experience can be gained. But the flight path seems set. Along with the engineer in the cockpit, smoking in the cabin, courteous attendants and plenty of legroom, the control tower looks like becoming a relic of aviation’s past. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21722618-remote-centres-using-video-replace-airfield-edifices-airports-switch-virtual/print + + + +文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Competition between the sexes + +Male and female beetles fight over penis spines + + +Evolution can select traits that are good for individuals, but bad for the species as a whole + +May 25th 2017 + + + + + +ANTAGONISM is built into the nature of sexual reproduction itself. Members of each sex try to maximise their own reproductive fitness, which is a combination of the quality and the quantity of offspring they are able to raise to the point where those offspring can themselves reproduce. If conflict between males and females is part and parcel of reproduction, some still have it much tougher than others. Spare a thought, in particular, for the females of the cowpea seed beetle. + +Males of this species have penises armed with sharp spikes. These can do serious damage to a female’s reproductive tract. And all in the name of male procreative success, for previous research has shown (though the precise mechanism remains obscure) that male cowpea seed beetles with longer penile spines have greater mating success than those with short ones. + + + +Evolutionary theory predicts that it would be in the interests of females to fight back, by evolving countermeasures. And they seem to have done so, by evolving thicker tract sheaths. But the details have not been studied until now. That has just been corrected by Liam Dougherty of the University of Western Australia and his colleagues. Their paper, published in the Proceedings of the Royal Society, looked at 13 populations of cowpea seed beetles from around the world and showed how reproductive-tract-thickness and two other defensive measures varied with the size of the local males’ armaments. It also showed that the cowpea seed beetle’s spiked penises, and the females’ responses to them (or, rather, the stretches of DNA that underlie these phenomena), are an excellent example of what Richard Dawkins, an evolutionary biologist, called “selfish genes”. For while such traits are good for the individual beetles that carry them, they appear to be bad for the health of the species as a whole. + +Cowpea seed beetles are widely studied animals because they are important pests of stored pulses. They are found on every continent except Antarctica (Dr Dougherty’s experimental subjects were derived from Africa, Asia and North and South America), and are believed to have been spread around the world from their west African home by human travellers and traders. Hence, any differences between local populations must be the result of recent evolution. + +Dr Dougherty and his colleagues first used a technique called micro-CT X-ray scanning, a miniaturised version of medical body-scanning, to measure the thickness of the reproductive tracts of females from each of the populations under study. They also measured the levels in a beetle’s haemolymph (a fluid that performs in insects a similar function to that performed in mammals by blood) of an enzyme called phenoloxidase, which helps repair wounds. And, as a third measure of self-protection, they measured female haemolymph’s microbicidal potency by watching its effect on bacteria in a Petri dish. + +For the males, the team measured the length of both the ventral and the dorsal spikes of the penis, and also the amount of damage, measured as scar tissue a day after intercourse, that males of a particular population inflicted on the reproductive tracts of females. (They used this as a proxy for the forcefulness of a male’s advances.) They then looked for correlations between male offensive measures and female defensive ones. + +They attacked the data with two different statistical techniques, looking for correlations between the males’ characteristics and the female ones. Both types of statistics indicated that the correlations were strong. Only in the case of ventral penile spines did they fail to suggest that it was the size of the male traits which was responsible for driving the evolution of the size of the female ones. + +On top of all this, Dr Dougherty and his team also found that the populations with the most highly developed female defences were those that had shown the lowest population-growth rates in a previous experiment. Since the beetles had been supplied with abundant food, the presumption had been that the growth rates then observed were governed by female fecundity. In light of the latest results, that suggests females in those populations were diverting scarce physiological resources from producing eggs to defending themselves against male sexual aggression—and thus slowing the growth of the population as a whole. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21722621-evolution-can-select-traits-are-good-individuals-bad-species/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Secure paper + +Using light to fingerprint paper + + +A digital camera and some clever maths could help could cut down on fraud + +May 25th 2017 + + + + + +A PIECE of paper is a complicated product. Trees are felled, stripped of their bark, chipped, mashed, and then mixed with water and churned into pulp. That pulp is washed and refined, before being beaten to a finer slush. Laid out flat, drained of water, then squeezed between large rollers, the slush at last becomes one large, long sheet of paper. + +All those machinations introduce a great deal of randomness to the arrangement of fibres within an individual piece of paper. In an article due to be published in Transactions on Privacy and Security, Ehsan Toreini, a security expert at the University of Newcastle, and his colleagues, describe a way to turn that randomness into a “fingerprint” that is unique to any given sheet of paper. (In security jargon a fingerprint is any unique, identifying pattern, not just one from a finger). That could, they hope, help to cut down on fraud. + + + +The researchers are not the first to realise that paper might be fingerprintable. In 2005 a team from Imperial College London used a laser to scan the surface of a sheet of paper from four different angles, using the intensity of the reflected light as proxy for surface structure. In 2009 scientists at Princeton University used an off-the-shelf scanner to construct a unique, three-dimensional model of the surface. + +Dr Toreini’s technique starts by shining a light through a piece of paper from the back. A carefully-measured box is printed on the backlit paper, to ensure it can be aligned properly. Instead of lasers or scanners, a picture is taken with an ordinary digital camera. The next step is to apply a processing tool called a Gabor filter to the resulting image, which analyses how frequently certain patterns appear and where, spitting out two long numbers that are a mathematical description of the paper’s texture. It is these numbers that serve as the fingerprint. + +Using an ordinary digital camera keeps things simple, and therefore quick and cheap. Both the Princeton and Imperial methods require scanning a sheet of paper several times; the new technique requires only a single image and can be done in just over a second. + +At the same time, by backlighting the paper, the researchers can take their picture through the entire depth of the paper, rather than just relying on the patterns on its surface. Capturing that extra information gives a more detailed description of the paper’s structure, and makes the technique much harder to fool. A determined fraudster might be able to rearrange the pattern of fibres on a piece of paper’s surface. Doing it through the whole sheet is much trickier. For the same reason, the technique is much more resistant to the sort of day-to-day wear and tear that could alter the paper’s surface. + +Fingerprinting paper is just one example of a more general trend of using the randomness inherent in manufacturing to generate unique identifiers for individual objects. Intrinsic ID, a Dutch firm, uses an analogous process for silicon memory chips. Slight and unavoidable variations in the tiny circuits inside such chips means that running electricity through one can generate a unique fingerprint in essentially the same way that light does for paper. The firm’s technology is already used in American bank cards. + +The biggest advantage of such techniques is there is no need to bolt complicated security features on top of existing products. More than 100 countries issue passports containing radio-frequency identification chips, for instance. Dr Toreini’s technique could keep passports secure with a lot less fuss. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21722619-digital-camera-and-some-clever-maths-could-help-could-cut-down-fraud-using/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Synthetic biology + +“Disco bacteria” could churn out drugs and useful chemicals + + +Coloured light can be used to control how genetically-engineered organisms behave + +May 25th 2017 + + + + + +THE central idea of synthetic biology is that living cells can be programmed in the same way that computers can, in order to make them do things and produce compounds that their natural counterparts do not. As with computers, though, scientists need a way to control their creations. To date, that has been done with chemical signals. In a paper published in Nature Chemical Biology, Christopher Voigt, a biologist at the Massachusetts Institute of Technology, describes an alternative. Instead of chemicals, he and his colleagues demonstrate how to control customised cells with coloured light. + +Engineering cells to respond to light is not a new idea. The general approach is called optogenetics, and it has become a popular technique for controlling nerve cells in neuroscience. But Dr Voigt is not interested in nerve cells. In 2005 he altered four genes in a strain of Escherichia coli bacteria, which gave the creatures the ability to respond to light and darkness by becoming lighter or darker in colour themselves. The state of the art has advanced since then. This time Dr Voigt wanted to see if he could give his bacterial charges—which normally live in the human gut, and therefore rarely see light of any sort—the ability to sense colour. + + + +That meant tinkering with 18 different genes containing more than 46,000 base pairs of DNA. These changes persuaded the cells to build three different kinds of light sensors that are similar in structure to the photoreceptors found in plants and algae. These sensors allow their owners to track things like the time of day and the seasons, and to plan their reproduction accordingly. One sensor, for instance, harvested from a type of algae, switches on when struck by light with a wavelength of 535 nanometres (which humans would perceive as green) and then off again when exposed to light of a longer, redder wavelength. Other sensors responded to light at the blue and red ends of the visible spectrum. + +Those photoreceptors, in turn, control the expression of certain bacterial genes. For demonstration purposes, Dr Voigt’s prototype E. coli have been designed to produce enzymes that cause the bacteria to become the same colour as the light being shone upon them. So, if a plate of the bacteria is struck by a beam of green light, the plate becomes green. If a plate has an image composed of red, green and blue projected upon it, the plate will reproduce the projection (see picture). + +Such artistry is the tip of the iceberg: the light sensors could be used to control genes that make all sorts of different chemicals. Scientists have toyed with the idea of using vats of genetically altered bacteria to produce things like artificial sweeteners or drugs. But getting the chemistry right requires that the bugs execute several chemical reactions in exactly the right sequence. Doing that with chemicals is expensive, and fiddly, since the chemicals take time to circulate around the vat. Dr Voigt imagines instead vats fitted with coloured lights that wink on and off in sequence. It would look, he jokes, a bit like a bacterial disco. Such single-celled revellers could yet be the future of chemical manufacturing. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21722617-coloured-light-can-be-used-control-how-genetically-engineered-organisms/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +High-tech weaponry + +How to build cheaper smart weapons + + +Flocks of dumb weapons could take orders from a clever one + +May 25th 2017 + + + + + +ON APRIL 7th a salvo of missiles fired by American warships in the Mediterranean scored direct hits on several Syrian aircraft shelters from hundreds of miles away, demonstrating once more the effectiveness of precision, or “smart”, weapons. At $1.3m apiece such missiles are usually reserved for important targets like parked aircraft. They are too pricey to be expended on lightly armed insurgents. (As George Bush junior once memorably put it, he was not prepared to “fire a $2m missile at a $10 empty tent and hit a camel in the butt”.) + +Frank Fresconi, who works at the Army Research Laboratory’s Aeromechanics and Flight Control Group, in Maryland, hopes to change that. He is working on something called the Collaborative Cooperative Engagement (CCOE) programme, which hopes to provide the advantages of smart weapons at a fraction of the cost. A new generation of cut-price precision munitions could change the way America’s army wages war, for despite being the world’s most technologically advanced and generously funded force, it still employs a great deal of cheap, dumb, unguided weapons. + + + +The idea is to link an individual smart munition with a flock of dumber, cheaper companions. The smart round uses its sophisticated sensors to find targets, and passes data to its less able comrades. The smart weapon handles all of the tricky navigation and target identification; its companions just have to work out where they are in relation to their master, and then go where they are told. Data are passed between them in brief radio chirps. + +Dr Fresconi is not making a specific missile. Rather, he and his team are developing the electronic building blocks needed to assemble a wide range of different weapons. The results might be fired from a mortar, from a cannon, from a rocket launcher mounted on a lorry, or from the sort of weapon an individual solider might carry. In each case, a shell or rocket would release a swarm of submunitions. Under the guidance of the master weapon, these might disperse to attack individual enemy foxholes, or work together to hit a single target like a tank or a bunker simultaneously. + +Precision guidance brings advantages besides a higher hit rate. There is less risk of accidentally killing innocent bystanders. No ammunition is wasted blowing up things that are not the target. By eliminating waste, Dr Fresconi reckons that a smart artillery round might get away with using a warhead one tenth the size of an unguided one for the same destructive effect. + +The biggest challenge is navigation. Many existing smart weapons use GPS, which relies on signals from satellites that may be jammed by a sophisticated opponent. Others use laser guidance, which demands a soldier be close enough to the target that he can highlight it with a laser designator. The new architecture will avoid both those drawbacks by using optical techniques: guiding itself by spotting landmarks, and recognising targets visually. Dr Fresconi says the inspiration for the optical sensors came from the commercial world, where facial-recognition systems are used by everyone from Facebook to shops, policemen and airports. + +The trick is to pack the necessary hardware into a few cubic centimetres, and to deal with the high speeds at which shells and missiles travel. Rather than having several seconds to scan their targets at leisure, as airport systems do, missiles will need to scan, recognise and act in milliseconds. And once the targets have been found, the weapons will need to be able to turn sharply at high speed. To do that, the team is fitting them with fins that deploy after launch, and pondering using sideways-facing rockets to give them even more agility. + +All this wizardry must work not only when a munition has been “soft launched”—dropped from a helicopter or a drone, in other words—but also when it has been fired out of a cannon or launched by a rocket. That will subject the electronics to extremely high g-forces, as they are accelerated to several times the speed of sound in milliseconds, or spun at thousands of revolutions per second when fired from rifled artillery barrels. + +In recent tests a flock of multiple projectiles successfully navigated together. However, full realisation of the technology will take at least a decade to mature. The plan is to start big and scale down. CCOE will roll out gradually, says Dr Fresconi, with successive generations getting smarter and fitting into ever-smaller weapons. + +As those weapons reach the battlefield, they will enable the use of new tactics. The manoeuvring munitions can carry out what the Army calls counter-defilade fire—hitting a sniper hiding behind a wall, for example, or troops concealed in trenches. Dr Fresconi also talks about “hyper precision” and being able to home in on a target’s weakest spot, or striking simultaneously at a precise point for maximum effect. And the munitions will afford a new capability for engaging dispersed targets. These might be enemy foot soldiers scattered over a wide area—or, in future, a swarm of hostile incoming drones. One missile full of Collaborative Cooperative munitions might hit the lot. + +Finally, the new development could signal the end of indiscriminate artillery fire. By replacing dumb shells with smart ones, a barrage landing on a town would be more likely to hit only military targets, while—so the researchers hope—leaving civilians unharmed. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/science-and-technology/21722620-flocks-dumb-weapons-could-take-orders-clever-one-how-build-cheaper/print + + + +上一個 文章 節 下一個 + + + + + +Science and ... 節 Obituary + + + + + +Books and arts + + +Information technology: Truth, all the truth—and statistics + +The future of globalisation: Negative reaction + +Disease in history: One hundred million dead + +Johnson: Translators’ blues + +Fiction: A gleam in the darkness + +Television: The next chapter on the screen + +Science and ... 節 Obituary + + + + + +文章 節 下一個 + + + + + +Truth and statistics + +How to find out what people really think + + +Data mining is becoming more and more precise + +May 25th 2017 + + + + + +Everybody Lies: Big Data, New Data, and What the Internet Can Tell Us About Who We Really Are. By Seth Stephens-Davidowitz. Dey Street; 288 pages; $27.99. To be published in Britain by Bloomsbury in July; £20. + +TO MANY people Big Data is less shiny than it was a year ago. After Hillary Clinton’s defeat at the hands of Donald Trump, her vaunted analytics team took much of the blame for failing to spot warnings in the midwestern states that cost her the presidency. But according to research by Seth Stephens-Davidowitz, a former data scientist at Google, Mrs Clinton’s real mistake was not to rely too much on newfangled statistics, but rather too little. + + + +Mrs Clinton used the finest number-crunchers. But their calculations still relied largely on traditional sources, such as voter files and polls. In contrast, Mr Stephens-Davidowitz turned to a novel form of data: Google searches. In particular, he counted the frequency of queries for the word “nigger”, America’s most toxic racial slur. Contrary to the popular perception that overt racism is limited to the South, the numbers showed comparatively high interest in the term across the Midwest and the rustbelt relative to the rest of the country. In the Republican primaries in 2016 that variable outperformed all others in predicting which geographic areas would support Mr Trump over his intraparty rivals. Had Mrs Clinton’s team made better use of such information, they might have concluded, before it was too late, that the foundations of her “blue firewall” were cracking. + +This is just one of the striking findings in “Everybody Lies”, a whirlwind tour of the modern human psyche using search data as its guide. Some of the book’s discoveries reaffirm conventional wisdom, like the concentration of queries about do-it-yourself abortions and about men who are confused about their sexual orientation in America’s socially conservative South. Some turn it on its head: although rags-to-riches narratives are widespread in basketball, the data show that growing up in poverty actually reduces a boy’s chances of making the National Basketball Association—perhaps because poor children are less likely to grow tall enough to play in it. Some results are both disturbing and perplexing, such as the prevalence of searches on pornographic sites for videos depicting sexual violence against women, and the fact that women themselves seek out these scenes at least twice as often as men do. Other results are just weird: why are adult men in India so eager to have their wives breastfeed them? + +The empirical findings in “Everybody Lies” are so intriguing that the book would be a page-turner even if it were structured as a mere laundry list. But Mr Stephens-Davidowitz also puts forward a deft argument: the web will revolutionise social science just as the microscope and telescope transformed the natural sciences. + +Modern microeconomics, sociology, political science and quantitative psychology all depend to a large extent on surveys of at most a few thousand respondents. In contrast, he says, there are “four unique powers of Big Data”: it provides new sources of information, such as pornographic searches; it captures what people actually do or think, rather than what they choose to tell pollsters; it enables researchers to home in on and compare demographic or geographic subsets; and it allows for speedy randomised controlled trials that demonstrate not just correlation but causality. As a result, he predicts, “the days of academics devoting months to recruiting a small number of undergraduates to perform a single test will come to an end.” In their place, “the social and behavioural sciences are most definitely going to scale,” and the conclusions researchers will be able to reach are “the stuff of science, not pseudoscience”. + +Mr Stephens-Davidowitz is not just any knee-jerk cheerleader for the Big Data revolution. He devotes ample space both to the ways that quantitative findings can lead decision-makers astray, and to the risk that the nearly omniscient owners of such data sets may find ways to abuse them. If liking motorcycles turns out to predict a lower IQ, he asks, should employers be allowed to reject job applicants who admit to liking motorcycles? As a result, he calls for extreme caution in extending the use of Big Data from large groups of people to making decisions about individuals. On the whole, however, the author is an optimist. As a result of improvements in information technology, he writes, humans will “be able to learn a lot more” about themselves “in a lot less time”. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21722612-data-mining-becoming-more-and-more-precise-how-find-out-what-people-really-think/print + + + +文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Globalisation + +An economist’s bleak view of the future of globalisation + + +Global co-operation is collapsing just when it is most needed + +May 25th 2017 + + + + + +Grave New World: The End of Globalisation, the Return of History. By Stephen King. Yale University Press; 290 pages; $30 and £20. + +GLOBALISATION is not new. In the late 19th century capital moved freely across the world and goods crossed national borders (despite tariffs) with the help of cheap transport. People, too, migrated across the oceans on a proportionately far bigger scale than they do today. All that came to a dramatic end with the outbreak of the first world war. + + + +Trade did not recover its share of world GDP until the 1960s. But after the Berlin Wall fell in 1989, it became tempting to believe in a kind of “Whig theory of globalisation” with economies growing ever more linked thanks to the internet and the spread of liberal capitalism. Perhaps the world is due for another change of trend. That is the view of Stephen King, an economist at HSBC, which, as it happens, is one of the most global of banks. + +In “Grave New World” Mr King argues that economic progress that reaches beyond borders is not “an inescapable truth”. Technology may have boosted globalisation until now, but it may not do so in future. Companies may decide to replace cheap labour in the developing world with robots at home, causing global supply chains to collapse. The internet has also increased inequality within economies, as skilled workers have reaped the most benefits, creating a division between the “haves” and the “have nots”. + +A resurgence in migration has also caused a political backlash, on both economic and cultural grounds. Populist politicians have gained voters, and even power in some countries. And there may be even greater migrant flows to come, as Africa’s population grows and its citizens seek to escape from failed states, or the consequences of climate change, and to enhance their economic opportunities. The developed world may place more restrictions on inflows, as America did in the early 20th century, barring both Asians and those who could not pass a literacy test. + +Geopolitical shifts will also make a difference. After 1945, America was globalisation’s leading architect and its main sponsor. But its authority is now being challenged on a number of fronts. China is asserting itself in the Pacific; Russia is doing so in eastern Europe and the Middle East. Western Europe no longer backs America on all issues and takes a sharply different view from Donald Trump on climate change. The election of Mr Trump proves that domestic voters have wearied of the country’s global responsibilities and want to put “America first”. + +The result, says Mr King, is that “co-operative arrangements between nation states will be increasingly hard to come by. Conflict—at least in the economic sphere—will become ever more frequent.” The cancellation by Mr Trump of the Trans-Pacific Partnership (a trade agreement with Asia) and the failure to agree on the Doha round of global tariff reductions are cases in point. National governments are turning their backs on global institutions and focusing on their domestic interests. + +So what is the answer? The irony is that likely solutions require international co-operation, the very thing that populism makes more difficult. Mr King looks at ideas such as breaking up the euro, a global organisation to reconcile capital flows between countries or even a borderless world and concludes they either will be insufficient or are unlikely to happen. + +The author ends with a mock campaign speech from a Ms Trump in 2044, which looks back at the collapse of the EU and America’s withdrawal from NATO. For an optimistic economist, it is a surprisingly bleak way to end a well-written and thought-provoking book. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21722614-global-co-operation-collapsing-just-when-it-most-needed-economists-bleak-view/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +100m dead + +The deadliest disease in history + + +A new book looks at the global impact of the Spanish Flu + +May 25th 2017 + + + + + +Pale Rider: The Spanish Flu of 1918 and How it Changed the World. By Laura Spinney. Jonathan Cape; 282 pages; £20. To be published in America by PublicAffairs in September; $28. + +BY EARLY 1920, nearly two years after the end of the first world war and the first outbreak of Spanish flu, the disease had killed as many as 100m people— more than both world wars combined. Yet few would name it as the biggest disaster of the 20th century. Some call it the “forgotten flu”. Almost a century on, “Pale Rider”, a scientific and historic account of Spanish flu, addresses this collective amnesia. + + + +Influenza, like all viruses, is a parasite. Laura Spinney traces its long shadow over human history; records are patchy and uncertain, but Hippocrates’s “Cough of Perinthus” in 412BC may be its first written description. Influenza-shaped footprints can be traced down the centuries: the epidemic that struck during Rome’s siege of Syracuse in 212BC; the febris italica that plagued Charlemagne’s troops in the ninth century. The word “influenza” started being used towards the end of the Middle Ages from the Italian for “influence”—the influence of the stars. That was the state of knowledge then; in some ways at the start of the 20th century it was little better. + +Ms Spinney, an occasional contributor to The Economist, recreates the world that Spanish flu came into. At the beginning of the 20th century science was on the rise. Scientists had switched miasma theory of disease for germ theory: they understood that many diseases were caused not by “bad airs”, but by microscopic organisms like bacteria. This led to improvements in hygiene and sanitation, as well as the development of vaccines. But viruses were almost unknown. The magnification of optical microscopes was too weak to show them up. People could spot bacteria, but not viruses, which are smaller than the wavelength of visible light. Until the electron microscope was invented in the 1930s, influenza was, like the Higgs boson before 2012, a theoretical entity: its existence was deduced from its effects. In the face of such uncertainty, public faith in medicine wavered. People reverted to superstition: sugar lumps soaked in kerosene, and aromatic fires to clear “miasmas”. + +Even so, Spanish flu was exceptionally deadly—about 25 times more so than seasonal flu. No one fully understands why. Ms Spinney ties the virulence of Spanish flu to its genetic irregularities and does a good job of explaining containment strategies through epidemiology. She draws on contemporary research, too, including the recent controversy about recreating the strain responsible for the pandemic. Ms Spinney is sanguine about the risks of such experiments: influenza appears to have all the ingredients for another catastrophic pandemic and scientists, using caution, should probably do all they can to learn more about it. + +Perhaps the most valuable aspect of this book, though, is its global perspective, tracing the course of the disease in Brazil, India, South Africa and Australia, among other places. In Europe and North America the first world war killed more than Spanish flu; everywhere else the reverse is true. Yet most narratives focus on the West, and only partly because that is where the best records are. Ms Spinney’s book goes some way to redress the balance. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21722613-new-book-looks-global-impact-spanish-flu-deadliest-disease-history/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Johnson + +Why translators have the blues + + +A profession under pressure + +May 27th 2017 + + + + + +TRANSLATION can be lonely work, which may well be why most translators choose the career out of interest, not because they crave attention. Until recently, a decent translator could expect a steady, tidy living, too. But the industry is undergoing a wrenching change that will make life hard for the timid. + +Most translators are freelancers, and with the rise of the internet a good translator could live in Kentucky and work for Swiss banks. But going online has resulted in fierce global competition that has put enormous downward pressure on prices. Translators can either hustle hard for more or better-paid work—which means spending less time translating—or choose an agency that fights for the work for them, but which also takes a cut. + + + +The alternative to schmoozing oneself or working with an agency is to market one’s skills in online marketplaces. But these display the most relentless price pressure of all: fees as low as $13-15 per 1,000 words translated are not unknown. Traditionally, something more like $50 has been the low end, with literary translation at around $120, and high-end work at $250. Buyers who know little about foreign languages and quality will, in online markets, shop almost purely on price. + +To these pressures comes another: the rise in higher-quality machine translation. Just a year ago, machine translation still produced reliably rocky results: both inaccurate as to content, and often unreadable too. Both have improved dramatically with translation engines based on so-called deep neural networks. Those who offer rock-bottom prices for translation are almost certainly using translation software, and then giving it a quick edit for accuracy and readability. By and large, the big translation agencies are excited about technology and the possibilities of scale it offers them. What worries the translators themselves, though, is that the future may lie in nothing more intellectually pleasing than this kind of clean-up. + +Like all incumbents, those affected are not happy. To avoid being “the coffee-bean pickers of the future”, one veteran counsels improving specialist knowledge and writing skills to get high-end work. But not all can do that. Translators in the bulk and middle markets will inevitably be doing more editing, or will be squeezed out. + +What will the rest be doing? For one, literary translation is under no threat. Sales of translated fiction rose by more than 600% in Britain between 2001 and 2015, and have been growing strongly in America too, with big authors like Elena Ferrante conditioning readers in those countries to look beyond their borders for good books. Nobody thinks a novel can be translated by a machine. In Roy Jacobsen’s “Unseen”, which is on the shortlist for the 2017 Man Booker International Prize (MBIP), the original dialectal island Norwegian has been deftly rendered by Don Bartlett and Don Shaw into a kind of English that carries the same flavour: “Hvur bitty it is!” (“How small it is!”). The MBIP recognises that translation is, in effect, a kind of writing by sharing the prize money equally between author and translators. + +Most work is in commercial translation, but that is a kind of writing too. Executives sometimes reject a translation of a speech or a letter because it doesn’t look enough like their original. But a good translator needs to rethink a text, rewording important pieces, breaking up or merging sentences, and so on. Translation software can be accurate, but it translates sentence-by-sentence. Since languages have different rhythms and different expectations for what counts as a good sentence, that approach can result in a mess. So it is often best simply to rewrite after thinking about the intended meaning. + +Another market is “transcreation”, in which a translator—often in advertising—is expected to rethink a message, making sure that the version in the new language has the right cultural references, jokes and suchlike to recreate the impact, without the wording, of the original. In this case, the “transcreator” is even more of a writer than most translators. + +Translation is hardly alone in being shaken up by technology. The legal industry, accounting and many other venerable professions are seeing repeatable knowledge work done passably by machines. The translators of the future need not only language and writing skills. They must, like the partners at a law or accounting firm, gain clients’ trust and learn their minds in order to do truly good work. The loners of the field, in other words, may find it hard going. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21722609-profession-under-pressure-why-translators-have-blues/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Fiction about the second world war + +Rachel Seiffert shines a new light on the holocaust + + +“A Boy in Winter” focuses on the particulars + +May 25th 2017 + + + + + +A Boy in Winter. By Rachel Seiffert. Virago; 237 pages; £14.99. To be published in America by Pantheon in August; $25.95. + +HALFWAY through Rachel Seiffert’s new novel, when the SS death squad starts shooting, most readers will shudder. They all know, they think, what is coming: not just a gruesome depiction of the Nazis’ murderous campaign against European Jews, but the Holocaust narrative itself, by now a well-stocked shelf. It is a mark of Ms Seiffert’s gifts that her slender tale, “A Boy in Winter”, upends these expectations. + + + +Here, Ms Seiffert, a British writer of German-Australian origins, returns to the subject of “The Dark Room”, her bestselling first book. As before, she focuses on the small and particular to evoke this largest of historical crimes. + +In November 1941 a Ukranian town is the site of both a brutal roundup of the Jewish population and the building of a highway for the 1,000-year Reich. The attack and its aftermath are described by a tight cast: the Jewish parents whose sons escape; Yasia, the Ukranian farmgirl who hides them; her boyfriend Mykola, a Red Army deserter pressed into German service; and Pohl, a conscience-stricken German engineer overseeing construction of the road. + +From the first scene the story is a close study of moral choice, immersed in its equally intense setting: wet, cold, early winter in the inhospitable eastern swampland. When Yasia runs into the two young escapees, Yankel and Momik, she faces the most fundamental of human dilemmas: whether to risk herself to protect the young and vulnerable. Pohl, an engineer, too must choose. But the author wisely avoids the cliché of the “good German” in this novel of subtle surprises. + +Ms Seiffert’s prose is not showy, but graceful and precise. The misery of the dank streets is relieved by flashes of light and humanity: a bunch of sweet apples, Pohl’s letters to his wife, the hand-carved figures Momik plays with. Pohl’s highway, completed, “stretches ever onwards, as though unending, meeting the rise of the land—perhaps even the curve of the Earth”. + +Most literature of the “third generation” after the war explores the impact on its descendants. Ms Seiffert’s fictions are different: they inhabit the events themselves. Yet from all too familiar horror they swerve into the unexpected, into a new story—a gleam in the darkness that readers haven’t seen before. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/books-and-arts/21722611-boy-winter-focuses-particulars-rachel-seiffert-shines-new-light/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Twin Peaks: the next chapter + +David Lynch’s “Twin Peaks” is back after 26 years + + +The return of one of the boldest experiments in television + +May 27th 2017 + + + + + +IT HAS been over a quarter of a century since the twisted world of “Twin Peaks” was first seen. Part surrealist murder mystery, part small-town soap opera, there had never been anything like it on network television. With a languid pace and meandering plotline, it was challenging viewing that was thought not to appeal to audiences back then. Yet it was one of the most popular series of 1990. + +In the years since, shows from “The X-Files” and “True Detective” to “Stranger Things” have tipped a cap to “Twin Peaks” both for daring and vision. So expectations for the third season of “Twin Peaks”, which began on Showtime on May 21st, have been high. The show’s creators, David Lynch and Mark Frost, are back, and so is much of the original cast. The second season ended with a cliffhanger, as Laura Palmer, the murdered prom queen played by Sheryl Lee, told Dale Cooper, an FBI agent, (Kyle MacLachlan, pictured): “I’ll see you again in 25 years.” That same scene opens the new drama, but otherwise the world of “Twin Peaks” has moved on. The first iteration revolved around the mystery of who killed Laura. Now the drama rests on whether Cooper, trapped in the Red Room, can break free. + + + +The structure and range of the new “Twin Peaks” is more ambitious. Set in various American cities and in the town of Twin Peaks on the Pacific north-west coast, the action unspools across multiple narratives. In New York a young man has been hired by an anonymous billionaire to watch a spooky glass box, to “see if anything appears”. When a librarian is murdered in South Dakota, police find her dismembered head has been placed onto a man’s marbled and bloated corpse. Meanwhile, in Twin Peaks, the Log Lady calls Deputy Chief Hawk with an urgent message: he must find something that is missing. In the netherworld that is the Red Room Cooper has an encounter with a talking tree. It is not at all clear how these unconnected scenes fit together. + +With a roster of more than 200 characters, audiences are likely to find “Twin Peaks” bewildering at first. Familiar themes soon surface, however. Mr Lynch is fascinated by the duality of human nature. People, he thinks, have a light and a dark side, a calm exterior masking a murky inner world. Agent Cooper, a coffee-loving Eagle Scout, has been replaced by a murderous doppelganger in a leather jacket with long, lank hair reminiscent of Bob, Laura’s killer. Twin Peaks is a town imbued with a neighbourly American wholesomeness, yet teenagers go missing and evil spirits lurk in the woods close by. + +When it first aired, in 1990, “Twin Peaks” gained a whopping “33 share”, meaning that a third of American televisions then on were tuned in to the show. When it was cancelled a year later, its share had fallen to 9%—viewers dropped off when executives at ABC, the network, insisted that the identity of the killer should be revealed. For the revival, Mr Lynch hopes to avoid such concessions. He directs all 18 episodes, which bodes well for those who enjoy his dark, idiosyncratic ideas. It may not be easy viewing, but “Twin Peaks” remains one of boldest experiments on television. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/culture/21722607-return-one-boldest-experiments-television-after-26-years-david-lynchs-tv/print + + + +上一個 文章 節 下一個 + + + + + +Books and arts 節 Economic and ... + + + + + +Obituary + + +Roger Ailes: The man for the message + +Books and arts 節 Economic and ... + + + + + +文章 節 下一個 + + + + + +The man for the message + +Obituary: Roger Ailes died on May 18th + + +The founder of Fox News was 77 + +May 27th 2017 + + + + + +STROLLING down a corridor in a high-security jail in 1981, where he was directing an interview, Roger Ailes suddenly bumped chests with Charles Manson. America’s most notorious killer looked mean and wiry, like a dangerous ferret. Mr Ailes, in his own telling, met his gaze calmly. “Mr Manson,” he said, “I’m in charge of this interview. I’d like you to come with me.” And Manson did so, head lowered. + +The founder of Fox News seldom had a confrontation he wasn’t ready for, and his life was full of them. Everyone was out to get him, but they wouldn’t win. He would. Liberal elitists, jargon-spouting intellectuals and anyone who got up in the morning blaming America for the world’s ills would soon hear from him, and how. If somebody got in his face, he’d get in their face. + + + +Fox did not come to be the number-one cable-news network in America for fully 15 years, squashing Ted Turner’s CNN like a bug, by parading grey talking heads offering serious analysis. On Fox News the screen flashed up constant alerts, loud whooshing heralded big stories, hot blonde anchors beamed through layers of lip gloss and commentators bawled at each other. It was a show; his show. He picked men to be pugnacious and women for nice breasts and sexy stockings. News and entertainment might be separate domains, but he intended to walk right up to the line and plant his foot on it. + +“Fair and balanced” was his motto. To those who thought Fox lacked either virtue, he replied that his single channel was giving America’s legions of conservatives what CNN, NBC, CBS, ABC and MSNBC already offered liberals. “Balance” was how he persuaded Rupert Murdoch, CEO of News Corporation, to launch the network in 1996 with $1bn and a free hand. His viewers were not moron rednecks, as the liberal media thought. They were ordinary Joes who worked hard, loved America, supported the armed forces, didn’t care about feminism or polluted rivers, thought depending on federal handouts was a sin, and didn’t live in New York. Good people, like those he had known growing up in a blue-collar family in Ohio, a weakly, haemophiliac boy who nonetheless wanted to be a combat pilot, and liked a fight. + +He was proud of those credentials. Proud, too, that he had come up the hard way, getting into student radio to pay for college and then slaving at a TV station in Cleveland, fetching sandwiches for the star guests on “The Mike Douglas Show”. It was through this show (which he eventually ran, getting it syndicated in 180 cities) that he met Richard Nixon and found fame as someone who knew, as few did then, the power of the small screen. To Nixon he explained in 1967 that TV was no gimmick, but could make or break politicians. He also told this uneasy, “somewhat weird” man how the medium could flatter him. + +Mr Ailes’s rules for selling a TV message were simple. His book, “You are the Message”, spelled it out. Play to your strengths. Don’t pick defence. Say what you want to say. Be emotional, not intellectual; keep to themes, avoid details. These lessons he taught Ronald Reagan in 1984 for his second debate with Walter Mondale; Reagan won the election. So did several others whom Mr Ailes advised to parade their dear old mothers, or their dancing skills, rather than prove their fitness for the Senate. + +This was the attitude he brought to Fox. Its personalities were striking, because viewers would decide in seven seconds whether or not to watch. The debates were punchy and graphic, because viewers tired of arguments in a minute. Fox stressed themes, not facts, tugged heartstrings and banged drums for America’s wars. It pushed conspiracies, from Benghazi to Obama-is-a-Muslim, which the New York Times, that “cesspool of bias”, barely mentioned. And, like him, it was often angry. + +Some called him the most dangerous man in the country, filling 2m heads a night with flaming garbage. (These were mostly elderly, male, white heads; 40% of Trump voters relied on him for their news.) “Here comes the most powerful man in America,” said Barack Obama once, as he lumbered up. He liked that, and relished how other channels copied him; cable, he said presciently in 2003, was “beginning to change the agenda of what is news”. But he still believed he was balancing that news, not skewing it. He recruited Democrats for Fox, too. He gave Obama grief, but also gave Bush grief. In the past he had interviewed Malcolm X several times, and a portrait of FDR hung in his library. + +Under siege + +Not many (save Zev Chafets, his biographer) knew that. Mr Ailes liked both privacy and secrecy. In his New York office, behind a stout wooden door with the blinds drawn, he obsessively checked Fox’s standings against CNN, his “holy war”. On the wall was a picture of Washington’s camp at Valley Forge; like his hero, he too was under siege. Enemies were all around. By 2016 they were also emerging from within Fox, in the shape of women employees suing him for groping and propositioning. “If you want to play with the big boys, you have to lay with the big boys,” one claimed he told her. + +He said it was all made up, but it marked the end of his time at Fox and the end, too, of his power. Suddenly, he was the one backing down and unprepared. This reversal of roles was death in itself. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/obituary/21722539-founder-fox-news-was-77-obituary-roger-ailes-died-may-18th/print + + + +文章 節 下一個 + + + + + +Obituary 節 + + + + + +Economic and financial indicators + + +Interactive indicators + +Output, prices and jobs + +Trade, exchange rates, budget balances and interest rates + +The Economist commodity-price index + +Africa + +Obituary 節 + + + + + +文章 節 下一個 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/node/21722633/print + + + +文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Output, prices and jobs + + +May 27th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21722623-output-prices-and-jobs/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Trade, exchange rates, budget balances and interest rates + + +Other markets + +May 27th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21722624-other-markets-trade-exchange-rates-budget-balances-and-interest-rates/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +The Economist commodity-price index + + +May 27th 2017 + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21722625-economist-commodity-price-index/print + + + +上一個 文章 節 下一個 + + + + + +上一個 文章 節 下一個 + + + + + +Africa + + +May 27th 2017 + + + + + +External financial flows into Africa came to a total of $178bn in 2016, according to the OECD, down from $183bn the year before. This was largely driven by a 60% fall in the value of inflows of portfolio investments. In 2015 these made up 9% of external inflows; in 2016 they accounted for only 4%. Global shocks mean investors have been buying fewer developing-country assets. Inflows of official development assistance and remittances also fell. But foreign direct investment in Africa increased by 10%. Countries in the Middle East and Asia are becoming a source of cash for greenfield projects. Total external inflows are expected to increase slightly this year, partly due to a projected rise in remittances. + + + + + +* * * + + + +This article was downloaded by calibre from https://www.economist.com/news/economic-and-financial-indicators/21722626-africa/print + + + +上一個 文章 節 下一個 + + + + + diff --git a/homeworks/B20769/homework1/data2/8000-words.txt b/homeworks/B20769/homework1/data2/8000-words.txt new file mode 100644 index 0000000..cf543f3 --- /dev/null +++ b/homeworks/B20769/homework1/data2/8000-words.txt @@ -0,0 +1,7989 @@ +abandon v.抛弃，放弃 +abandonment n.放弃 +abbreviation n.缩写 +abeyance n.缓办，中止 +abide v.遵守 +ability n.能力 +able adj.有能力的，能干的 +abnormal adj.反常的，变态的 +aboard adv.船(车)上 +abolish v.废除，取消 +abolition n.废除，取消 +abortion n.流产 +abortive adj.无效果的，失败的 +about prep.关于，大约 +above prep.在...之上，高于 +above-mentioned adj.上述的 +abreast adv.并肩，并列 +abridge v.省略，摘要 +abroad adv.国外，海外 +abrogate v.取消，废除 +abrogation n.取消，废除 +abrupt adj.突然的，生硬的 +abruptly adv.突然地 +absence n.缺席，缺乏 +absent adj.缺席的，不存在 +absent-minded adj.心不在焉的 +absolute adj.完全的，绝对的 +absolutely adv.绝对，完全 +absorb v.吸收，专心于 +absorption n.吸收，专注 +abstract adj.抽象的，难懂的 +abstraction n.抽象，提取 +absurd adj.荒唐的 +absurdity n.荒唐(事) +abundance n.丰富，大量 +abundant adj.丰富的，充裕的 +abuse v.滥用，谩骂 +abasement n.滥用 +academic adj.学院的，学术的 +academy n.学院，研究院 +accede v.同意 +accelerate v.加速，加快 +acceleration v.加速，促进 +accent n.腔调 v.重读 +accept v.接受，同意 +acceptable adj.可接受的，合意的 +acceptance n.接受，承兑 +access n.接近，入口 +accessible adj.可接近的 +accessory n.附件，装饰品 +accident n.事故，意外之事 +accidental adj.意外的，偶然的 +accidentally adv.偶尔，附带 +accommodate v.提供便利，拆借 +accommodation n.便利，通融 +accompaniment n.伴侣，伴奏 +accompany v.伴随，伴奏 +accomplish v.完成，达到 +accomplishment n.成就 +accord v.符合，协调 +accordance n.按照，与...一致 +according adj.按照，据...说 +accordingly adj.相应地，从而 +account n.账目 v.说明 +accountant n.会计(师) +accounting n.会计学 +accrue v.产生，发生 +accrued adj.增值的，应计的 +accumulate v.积累，积蓄 +accumulation n.积累 +accumulative adj.积累的 +accuracy n.准确(性) +accurate adj.准确的，精密的 +accurately adj.准确地 +accusation n.控告 +accuse v.告发，指责 +accustom v.使...习惯于 +ache v.觉得疼 n.疼痛 +aching adj.疼痛的 +achieve v.完成，实现 +achievement n.完成，成就 +acid n.酸 +acknowledge v.承认，鸣谢 +acknowledgment n.承认，鸣谢，回执 +acquaint n.使熟悉，相识 +acquaintance n.熟悉人，相识 +acquaintant adj.熟悉的 +acquire v.求得，获得 +acquisition n.获得 +acre n.英亩 +acrobat n.杂技演员 +acrobatics n.杂技 +across prep.横越 adv.横穿 +act n.行为，法令 v.表演 +action n.行为，行动 +activate v.使活跃，开动 +active adj.活跃的，积极的 +actively adv.积极地，活跃地 +activity n.活动 +actor n.男演员 +actress n.女演员 +actual adj.现实的，实际的 +actuality n.实际 +actually adv.实际上，居然 +acute adj.剧烈的，敏锐的 +a.d. (缩)公元 +ad n.(缩)广告 +adapt v.使适应，改编 +adaptation n.适应 +add v.增添，加，补充 +addition n.增加，附加物 +additional adj.增加的，附加的 +additive adj.附加的 n.添加剂 +address n.地址 v.致词 +adequate adj.足够的，恰当的 +adequately adv.恰当地 +adhere v.粘附，坚持 +adhesive n.粘合剂 +adjacent adj.邻近的 +adjective n.形容词 +adjoin v.毗连 +adjust v.调整，修整 +adjustable adj.可调整的 +adjustment n.调整 +administer v.管理 +administration n.行政管理，管理机关 +administrative adj.行政管理的 +admirable adj.可钦佩的 +admiration n.羡慕，钦佩 +admire v.钦佩，赞美 +admission n.准入，承认 +admit v.承认，接纳 +admittedly adv.明白地 +adolescence n.青春期 +adolescent adj.青春期的 +adopt v.采用，采纳 +adoption n.采用 +adore v.崇拜，敬慕 +adorn v.装饰，佩带 +adornment n.装饰(品) +adult n.成年人 adj.成年的 +advance n.,v.前进 +advanced adj.先进的，发达的 +advantage n.优点，优势 +advantageous adj.有利的，有用的 +adventure n.冒险，惊险活动 +adventurous adj.冒险的 +adverb n.副词 +adverbial adj.副词的 +adversary adj.敌手，对手 +adverse v.逆的，相反的 +adversity n.逆境，不幸 +advertise v.登广告，推销 +advertising adj.广告的 +advertisement n.广告 +advice n.忠告，意见 +advisable adj.适当的，可行的 +advise v.劝告，通知 +adviser n.顾问 +advocate v.拥护，提倡 +aerial adj.天空的，航空的 +aeroplane n.飞机 +affair n.事件，事情 +affect v.影响，改变 +affection n.友爱，爱慕 +affectionate adj.充满感情的 +affiliate n.分号(公司) +affirm v.断言，肯定 +affirmation n.确定，确认 +affirmative adj.肯定的 +afford v.买得起，经受得起 +affordable adj.买得起的 +afloat adj.航行中的 +aforesaid adj.上述的 +afraid adj.害怕的，恐怕 +africa n.非洲 +african adj.非洲的 n.非洲人 +after prep.在...后 +afternoon n.下午 +afterward adv.后来 +again adv.再，又 +against prep.反对，对着 +age n.年龄，时代 +agency n.代理，代理处 +agent n.代理人，试剂 +aggravate v.加重，恶化 +aggravation n.加重，恶化 +aggregate v.,n.,adj.合计(的) +aggregation n.总计，集合 +aggression n.侵略 +aggressive adj.侵略的，进取的 +aggressor n.侵略者 +agitate v.鼓动 +agitation n.鼓动，不安 +ago adv....以前 +agonize v.使痛苦 +agony n.苦恼，痛苦 +agree v.同意，一致认为 +agreeable adj.惬意的，易相处的 +agreeably adv.欣然，依照 +agreed adj.商定的 +agreement n.一致，协议 +agricultural adj.农业的 +agriculture n.农业 +ahead adv.在...前 +aid n.,v.援助，救护 +aids n.(缩)艾滋病 +ailment n.疾病 +aim n.目的 v.旨在，指向 +aimless adj.无目的的 +air n.空气，气派 +aircraft n.航空器 +airline n.航线，航空公司 +airliner n.定期航班 +airmail n.航空邮件 +airplane n.飞机 +airport n.机场 +airway n.航线 +aisle n.过道，走廊 +ajar adv.半开的 +alarm n.惊慌，警报 +alarming adj.警告的 +alas int.唉，哎呀 +album n.相册，地图册 +alcohol n.酒精 +alcoholic adj.含酒精的 +alcoholism n.嗜酒者，酒鬼 +ale n.淡啤酒 +alert adj.警惕的，灵活的 +algebra n.代数 +alien adj.异国的，异样的 +alienate v.疏远，转让，挪用 +alienation n.异化 +alignment n.对准，准线 +alike adj.相象的 +alive adj.活着的，有生命的 +all adj.所有的 n.一切 +allergic adj.过敏的，变态的 +allergy n.反感，过敏 +alliance n.联合，同盟 +allied adj.同盟的 +allocate v.分配 +allocation n.分配 +allot v.分配，配给 +allotment n.分配，份额 +allow v.允许，许可 +allowance n.补助，津贴 +alloy n.合金 +ally n.同盟者 v.结盟 +almost adv.几乎，差不多 +alone adj.单独的，仅仅 +along prep.沿着 adv.一起 +alongside prep.在...旁边 +aloud adv.大声地 +alphabet n.字母表 +also adv.也 +alter v.改变，变动 +alternate v.轮流，交替 +alternation n.改变，变更 +alternative n.,v.两者取一 +although conj.虽然 +altitude n.高度 +altogether adv.全部地，总共 +aluminum n.铝 +always adv.总是，始终 +a.m. (缩)上午 +amateur adj.业余的 +amaze v.使惊叹 +amazement n.惊奇，诧异 +ambassador n.大使 +ambient adj.周围的，包围着的 +ambiguity n.歧义性，意义不明处 +ambiguous adj.模棱两可的 +ambition n.抱负，野心 +ambitious adj.雄心勃勃的 +ambulance n.救护车 +amend v.修改，更正 +amendment n.修改(通知书) +amends n.赔偿 +america n.美国，美洲 +american adj.美国的 n.美国人 +amiable adj.和蔼的，亲切的 +amicable adj.友好的，和睦的 +amid prep.在...之间 +ammunition n.弹药 +among prep.在...之中 +amount n.数量，总数 v.合计 +ampere n.【电】安培 +ample adj.宽大的，充裕的 +amplification n.放大 +amplifier n.放大器，扩音机 +amplify v.详述，放大 +amuse v.逗乐，给娱乐 +amusement n.娱乐，乐趣 +analogue n.模拟，类似物 +analogy n.类似，类推 +analysis n.分析，分解 +analytical adj.分析的，解析的 +analyze v.分析，分解 +ancestor n.祖先，祖宗 +anchor n.锚 v.停泊 +ancient adj.古老的，古代的 +and conj.和，与，而 +anecdote n.轶事，轶闻 +angel n.天命，安琪儿 +anger n.生气，愤怒 +angle n.角，角度 +angry adj.生气的，愤怒的 +angular adj.角状的 +animal n.动物 +animate v.使有活力，激活 +animation n.生气，生机 +ankle n.踝，踝骨 +annex n.附录，附件 +anniversary n.周年纪念日 +announce v.宣布，通报 +announcement n.通知 +announcer n.播音员 +annoy v.烦扰，使生气 +annoyance n.烦恼，麻烦事 +annual adj.每年的，年度的 +annually adv.每年，年年 +another pron.,prep.另一个 +answer n.答案 v.答复 +ant n.蚂蚁 +antagonism n.对立，敌对 +antagonist n.对手，敌手 +antarctic adj.南极的 +antibiotic adj.抗菌的 +antecedent n.触角，天线 +anticipate v.期望，预料 +anticipation n.期望，预料 +antique adj.古老的 n.古玩 +antonym n.反义词 +antonymous adj.反义的 +anxiety n.焦虑，担心 +anxious adj.焦急的，切盼的 +anxiously adv.焦急地，急切地 +any adj.任何，一些 +anybody pron.任何人 +anyhow adv.无论如何 +anyone pron.无论谁 +anything pron.无论什么 +anyway adv.不管怎样 +anywhere adv.无论何地 +apart adv.分离，隔开 +apartment n.套房，公寓 +ape n.猿猴 +apologize v.道歉 +apology n.道歉 +apparatus n.仪器，设备 +apparent adj.明显的，表面上的 +apparently adj.显然，似乎 +appeal v.,n.呼吁，上诉 +appealing adj.有吸引力的 +appear v.出现，好象 +appearance n.出现，外表 +appendix n.附录，盲肠 +appetite n.食欲，欲望 +applaud v.称赞，拍手喝彩 +applause n.喝彩，欢呼 +apple n.苹果 +appliance n.用具，器械 +applicable adj.生动的，适用的 +applicant n.申请人 +application n.申请，应用 +apply v.应用，申请 +appoint v.任命，约定 +appointment n.任命，约会 +appreciable adj.可看到的 +appreciably adv.相当大地 +appreciate v.欣赏，感激 +appreciation n.欣赏，感激 +appreciative adj.感激的 +apprentice n.学校 +apprize v.通知 +approach v.接近 n.途径 +appropriate adj.恰当的 v.拨给 +approval n.同意，批准 +approve v.赞成，批准 +approximate adj.,v.近似，约略 +approximately adv.近乎，大约 +approximation n.近似值 +april n.四月 +apt adj.恰当的，易于..的 +aptitude n.才智，天资 +arab n.阿拉伯 +arabian n.阿拉伯人，阿拉伯语 +arabic adj.阿拉伯的 +arbitrary adj.专横的，任意的 +arbitrate v.仲裁 +arbitration n.仲裁 +arbitrator n.仲裁员 +arc n.弧 +arch n.拱门，弓形 +archaeologist n.考古学家 +archaeology n.考古学 +architect n.建筑师 +architecture n.建筑学 +arctic adj.北极的 +ardent adj.热心的，强烈的 +arduous adj.艰巨的，努力的 +area n.地区，面积，领域 +arena n.竞技场 +argue v.争论，辩论 +argument n.争论，论点 +arise v.起来，出现 +aristocracy n.贵族阶层 +aristocrat n.贵族 +aristocratic adj.贵族的 +arithmetic n.算术 +arm n.手臂，扶手 v.武装 +arms n.武器 +armchair n.手扶椅 +armour n.盔甲，装甲 +army n.军队，陆军 +around adv.在周围，大约 +arouse v.唤醒，唤起 +arrange v.整理，安排 +arrangement n.安排，计划 +array v.装扮，排列 +arrear n.欠款 +arrest v.逮捕，吸引 +arrival n.到达，到货 +arrive v.到达，达到 +arrogance n.傲慢 +arrogant adj.傲慢的 +arrogantly adv.傲慢地 +arrow n.箭，箭头 +art n.艺术，技艺 +article n.文章，物品，冠词 +artificial adj.人造的，假的 +artist n.艺术家 +artistic n.艺术的 +as adv.一样 prep.作为 +ascend v.登，上升 +ascertain v.查明，弄清 +ascribe v.归于 +asean n.(缩)东盟 +ash n.灰，灰烬 +ashamed adj.惭愧的，羞耻的 +ashore adv.在岸上，上岸 +ashtray n.烟灰缸 +asia n.亚洲 +asian adj.亚洲的 n.亚洲人 +aside adv.在旁边，搁在一边 +ask v.问，要求，邀请 +asleep adj.睡着的 +aspect n.容貌，方面 +aspirin n.阿斯匹林 +ass n.驴，愚蠢的人 +assassinate v.暗杀 +assassination n.暗杀 +assassinator n.暗杀者 +assault v.袭击，攻击 +assemble v.集合，装配 +assembly n.集合，装配 +assert v.断言，宣称 +assertion n.断言 +assess v.评定，估价 +assessment n.估值，评价 +assign v.分配，指定 +assignment n.任务，作业 +assist v.协助 +assistance n.协助，辅助 +assistant n.助手 +associate v.联想 adv.副的 +associated adj.联合的 +association n.协会，合营 +associative adj.联想的 +assorted adj.各种各样的 +assortment n.花色品种 +assume v.假定，担任 +assumption n.假定，假装 +assurance n.自信，保证 +assure v.使..放心，向..保证 +assured adj.感到放心的 +astonish v.使惊讶 +astonishment n.惊讶 +astound v.使惊讶 +astray adv.(信件)遗失、误传 +astronaut n.宇宙飞行员 +astronomer n.天文学家 +astronomical adj.天文学的 +astronomy n.天文学 +at prep.在，处于，以 +athlete n.田径运动员 +athletic adj.田径的 +atlantic n.,adj.大西洋(的) +atlas n.地图集 +atmosphere n.大气，气氛 +atmospheric adj.大气的，空气的 +atom n.原子，微粒 +atomic adj.原子的，原子能的 +attach v.附着于，依恋 +attachment n.依附，附件，爱慕 +attack v.,n.进攻，侵袭 +attain v.赢得，到达 +attempt v.,n.尝试，企图 +attend v.出席，照顾 +attendance n.出勤(率)，出席 +attendant n.随从，服务员 +attention n.注意，关心 +attentive adj.注意的，关心的 +attentively adv.关心地 +attic n.阁楼 +attitude n.态度，看法 +attorney n.辩护律师 +attract v.吸引，引力 +attraction adj.有吸引力的 +attributable adj.归于...的 +attribute v.属于 n.属性 +attribution n.属于 +attributive adj.定语的，属性的 +auction n.拍卖 +audience n.听众，观众 +auditorium n.礼堂 +august n.八月 +aunt n.伯(婶、姨、姑)母 +aural adj.听觉的，耳的 +auspice n.赞助，主办 +australia n.澳大利亚 +australian adj.澳大利亚的 +author n.作者，创造者 +authority n.权力，权威 +authorization n.授权 +authorize v.授权，批准 +autobiography n.自传 +automate v.自动化 +automatic adj.自动的 +automation n.自动化 +automobile n.汽车 +autonomous adj.自治的 +autonomy n.自治 +autumn n.秋天 +auxiliary adj.辅助的，补助的 +avail v.帮助，有用 n.效用 +availability n.可用性，可供货 +available adj.可得到的 +avenge v.报复 +avenue n.林荫道，途径 +average adj.平均的 n.平均数 +averagely adv.平均 +aviation n.航空 +avoid v.避免，逃避 +await v.等候，等待 +awake v.醒来,醒悟 adj.醒的 +awaken adj.醒着的 +award v.授予 n.奖，奖品 +aware adj.知道的，意识到的 +away adv.去，远离，在远处 +awe n.威惧 +awesome adj.可怕的 +awful adj.令人畏惧的 +awfully adv.可怕地，非常 +awkward adj.笨拙的，不熟练的 +awkwardly adv.笨拙地 +awkwardness n.笨拙 +ax n.斧子 +axial adj.轴的，轴向的 +axis n.轴，轴线，轴心 +axle n.(轮)轴 +baby n.婴儿，年龄最小的人 +baby-sit v.(替人)看护小孩 +baby-sitter n.看护小孩的人 +bachelor n.单身汉，学士 +back n.背 adj.背后的 +backbone n.脊梁骨 +backdate v.回溯 +background n.背景，经历 +backing n.倒退，支持物 +backlog n.未交付的订货 +backward adv.向后，逆 +backwardness n.落后(状态) +bacon n.咸肉，熏肉 +bacterium n.细菌 +bad adj.坏的，低劣的 +badge n.徽章 +badly adv.坏，非常，严重地 +badminton n.羽毛球 +baffle v.困扰，难倒 +bag n.袋子，提包 +baggage n.行李 +baggy adj.袋状的 +bait n.饵，诱饵 +bake v.烤，烘 +baker n.面包师 +bakery n.面包店 +balance n.平衡，天平，余额 +balcony n.阳台 +bald adj.秃的 +ball n.球，球状物，舞会 +ballet n.芭蕾舞 +balloon n.气球 +ballooning n.热气球飞行运动 +ball-point pen n.圆珠笔 +ballroom n.舞厅 +bamboo n.竹 +bamboo-shoot n.竹笋 +banana n.香蕉 +band n.乐队，带子 v.联合 +bandage n.绷带 +bandit n.盗匪，歹徒 +bang n.,v.砰的一响 +bank n.岸，银行 +banker n.银行家 +banking n.银行业务、金融业 +bankrupt n.,v.,adj.破产 +banner n.旗帜，横幅 +banquet n.宴会 +bar n.棒，杆，酒吧 +barber n.理发师 +bare adj.裸的，直率的 +barely adv.赤裸裸地 +bargain n.交易，便宜货 +barge n.驳船 +bark n.狗吠，树皮 v.吠 +barn n.谷仓，牲口棚 +barometer n.晴雨表，标记 +baron n.男爵 +baroness n.男爵夫人，女男爵 +barrel n.桶，枪(炮)管 +barren adj.不育的，贫瘠的 +barrier n.障碍，壁垒 +barter n.易货贸易 +base n.基础，基地 v.基于 +baseball n.棒球 +basement n.地下室，地窖 +basic adj.基本的，基础的 +basically adv.基本上，主要地 +basin n.盆，盆地 +basis n.基础，根据 +basket n.篮子，筐 +basketball n.篮球 +bat n.球拍，蝙蝠 v.击打 +bath n.洗澡，浴室 +bathe v.洗澡，冲洗 +bathroom n.浴室，洗手间 +batter v.打击 +battery n.电池 +battle n.战斗，战役 +bay n.海湾，湾 +bazaar n.集市 +b.c. (缩)公元前 +be v.是，存在 +beach n.海滩，湖滨 +bead n.有孔小珠 +beak n.鸟嘴 +beam n.梁，射线 v.发光 +bean n.豆子 +bear v.负担，忍受，生育 +bearing n.举止，意义，轴承 +bearish adj.熊市的 +beast n.野兽，牲畜 +beat v.打，击败 n.击打 +beautiful adj.美丽的，绝妙的 +beauty n.美，美女 +because conj.因为，由于 +become v.变成 +bed n.床，河床，苗圃 +bedroom n.卧室 +bee n.蜜蜂 +beef n.牛肉 +beer n.啤酒 +beetle n.甲虫 +before prep.在...前面 +beforehand adv.事先，预先 +beg v.乞讨，恳求 +beggar n.乞丐 +begin v.开始，着手进行 +beginner n.初学者 +beginning n.开端，起点 +behalf n.代表 +behave v.行为，举动 +behavior n.行为，举止 +behind prep.在...后面 +behindhand adj.落后，事后 +being n.生物，存在 +belief n.信仰，信心 +believe v.相信，认为 +bell n.钟，铃 +belly n.肚子 +belong v.属于 +beloved adj.敬爱的 n.爱人 +below adj.,prep.在...下面 +belt n.带，腰带 +bench n.长凳，工作台 +bend v.弯曲，俯身 n.拐弯 +beneath prep.在...之下 +beneficial adj.有益的，有利的 +beneficiary n.受益者 +benefit n.益处，利益 +benevolence n.慈悲，捐助 +benevolent adj.乐善好施的 +bent adj.弯曲的 +berry n.浆果 +beside prep.在...之旁 +besides adj.而且 prep...之外 +best adj.最好的 +best-seller n.畅销书(货) +best-selling adj.畅销的 +bestow v.赠给，授予 +bet n.,v.打赌 +betray v.背叛，泄露 +betrayal n.背叛，暴露 +better adj.更好的 adv.较好 +better-off adj.经济情况较好的 +between prep.在两者之间 +beverage n.饮料 +beware v.当心 +bewilder v.迷惑，茫然 +beyond prep.在...那边，超出 +bias n.偏好 +bible n.圣经 +bicycle n.自行车 +bid n.,v.报价，投标 +bidding n.投标 +big adj.大的，重大的 +bike n.自行车 +bill n.帐单，议案，钞票 +billion n.十亿 +bind v.捆绑，约束 +binding n.装订 +biographer n.传记记者 +biography n.传记 +biologist n.生物学家 +biology n.生物学 +bird n.鸟 +birth n.出生，创始 +birthday n.生日，诞辰 +birthplace n.出生地 +biscuit n.饼干 +bishop n.主教 +bit n.小片，一点 +bite n.,v.咬，叮 n.一口 +bitter adj.苦的，痛苦的 +bitterly adv.惨痛地，辛酸地 +bitterness n.苦味，苦难 +b/l n.(缩)提单 +black adj.黑的 n.黑色 +blackboard n.黑板 +blacksmith n.铁匠 +blade n.刀刃，叶片 +blame v.责备 n.过失 +blank adj.空白的 n.空格 +blanket n.毛毯 +blast n.阵风 v.爆炸 +blaze n.火光，光亮 +bleach v.漂白，变白 +bleed v.出血，流血 +blend v.混合，掺混 +bless v.保佑，祝福 +blessing n.祝福 +blind adj.瞎的 v.使失明 +blink adj.眨眼，闪烁 +block n.大块，街区，障碍物 +blockage n.封锁 +blond adj.金发的 +blood n.血，血统 +bloody adj.流血的，残忍的 +bloom n.花 v.开花 +blossom n.(果树的)花 +blot n.污迹 +blouse n.女衫 +blow v.吹，吹掉，刮风 +blue adj.蓝色的，忧郁的 +blunder n.大错 +blunt adj.钝的，生硬的 +blush v.脸红，害臊 +blushy adj.害羞的 +board n.木板，伙食，董事会 +boarding n.伙食 +boast v.夸口，以...而自豪 +boat n.小船，艇 +body n.身体，尸体，团体 +bodyguard n.保镖 +boil v.沸腾，煮沸 +boiler n.锅炉 +boiling adj.沸腾的 +bold adj.大胆的 +boldness n.胆略 +bolt n.螺检，插销 v.闩门 +bomb n.炸弹 v.轰炸 +bomber n.轰炸机 +bona fide adj.真诚的，无欺的 +bond n.束缚，联结，债券 +bonded adj.保税的 +bone n.骨，骨骼 +bony adj.骨头的 +bonus n.红利 +book n.书 v.预订(票) +booking adj.定货 +booklet n.小册子 +bookcase n.书橱 +bookshelf n.书架 +bookstore n.书店 +boom v.隆隆响，兴旺，繁荣 +booming adj.兴旺的，繁荣的 +boost v.抬高，促进 +boot n.靴子 +booth n.货摊，电话亭 +border n.国界，边境 +bore v.烦扰，使厌烦，钻孔 +boring adj.讨厌的 +born adj.出生的，天生的 +borrow v.借，借用 +borrowings n.借款 +bosom n.胸，胸怀 +boss n.上司，老板 +bossy adj.好发号施令的 +both pron.,adj.双方，两 +bother v.打扰，麻烦 n.麻烦 +bottle n.瓶子 +bottle-neck n.影响...的环节 +bottom n.底部，末尾 +bottom-line n.末行数字，结果 +bough n.大树枝 +bounce v.跳起 n.跳跃 +bound v.缚，以...为界 +boundary n.界线，边界 +bourgeois n.资产阶级分子 +bow v.鞠躬，服从 n.弓 +bowl n.碗，钵 +bowling n.保龄球 +box n.箱，盒 v.拳击 +boxer n.拳击运动员 +boxing n.拳击 +boxing-day n.节礼日 +boy n.男孩，小伙子 +boycott v.,n.抵制 +brace n.支撑 v.激励 +bracket n.括号 +brag v.吹嘘，夸口 +brain n.脑子，头脑，智能 +brake n. 制动器 v.刹车 +branch n.树枝，分支，分部 +brand n.牌子，商标 +brandy n.白兰地 +brass n.黄铜 +brave adj.勇敢的 v.冒着 +bravely adv.勇敢地 +bravery n.勇敢 +brazil n.巴西 +brazilian adj.,n.巴西的(人) +breach n.违反(契约) +bread n.面包，生计 +bread-earner n.挣钱养家的人 +breadth n.宽度，大量 +break n.打破，破坏 n.裂口 +breakage n.裂口 +breakdown n.故障，衰竭 +breakthrough n.突破 +breakfast n.早饭 +breast n.乳房，胸脯 +breath n.呼吸，气息 +breathe v.呼吸 +breed v.繁殖，饲养 n.品种 +breeze n.微风 +bribe v.贿赂 +bribery v.贿赂 +brick n.砖 +bride n.新娘 +bridegroom n.新郎 +bridge n.桥梁，桥牌 +bridle n.约束 v.抑制 +brief adj.简短的 +briefing n.简要情况 +briefly adv.简单地，简短地 +bright adj.明亮的，鲜明的 +brighten v.使发光 +brightness n.光辉，明亮 +brilliance n.辉煌，光彩 +brilliant v.辉煌的，杰出的 +brim n.边，边缘 +bring v.拿来，带来 +brink n.边缘 +brisk adj.敏捷的，活跃的 +bristle n.鬃毛 +britain n.不列颠，英国 +british adj.英国的，英属的 +brittle adj.易碎的，脆的 +broad adj.宽的，辽阔的 +broadcast v.,n.广播 +broadcasting n.广播节目 +broaden v.加宽，扩大 +brochure n.产品介绍手册 +broken adj.破碎的，毁坏了的 +broker n.经纪人 +bronze n.青铜 +brood n.一窝 +brook n.小河，溪流 +broom n.扫帚 +brother n.兄弟，同胞 +brotherhood n.兄弟情谊 +brother-in-law n.姻兄(弟) +brow n.眉毛，额 +brown n.,adj.褐色(的) +bruise n.青肿 v.打伤 +brush n.刷子，画笔 v.刷 +brutal adj.野蛮的 +brute n.禽兽，畜生 +bubble n.气泡 +bucket n.水桶 +bud n.芽，蓓蕾 +buddhism n.佛教 +buddhist n.佛教徒 +budget n.预算 +buffalo n.水牛，野牛 +buffet n.冷餐 +bug n.臭虫，虫子 +bugle n.喇叭 +build v.建造，建设 +builder n.建筑工人，建设者 +building n.建筑物，大楼 +bulb n.球形物，灯泡 +bulk n.体积，大半 +bulky adj.庞大的，笨重的 +bull n.公牛 +bullet n.子弹 +bulletin n.公报 +bullion n.金块，金条 +bullish adj.行情看涨的 +bump v.碰，颠簸 n.碰撞 +bumpy adj.颠簸不平的 +bunch n.一束 +bundle n.,v.捆，包 +burden n.担子，负担 +burdensome adj.沉重的 +bureau n.局，司，办公室 +bureaucracy n.官僚主义 +bureaucratic adj.官僚主义的 +burglar n.夜盗，窃贼 +burglary n.盗窃 +burial n.埋葬 +burn v.烧，燃烧，烧伤 +burner n.喷灯 +burnt adj.烧焦的，烧坏的 +burst v.,n.爆炸，破裂 +bury v.掩埋，安葬 +bus n.公共汽车 +bush n.灌木 +bushel n.蒲式耳(重量单位) +business n.行业，买卖，商号 +businesslike adj.事务式的 +busy adj.忙碌的，热闹的 +but prep.但是，除了 +butcher n.屠夫 v.屠宰 +butchery n.肉食店 +butt n.根端 v.顶撞 +butter n.黄油 +butterfly n.蝴蝶 +button n.钮扣，按钮 +buy v.买，购买 +buyer n.购买者 +buzz v.嗡嗡叫 n.嗡嗡声 +by prep.在...旁边，按照 +bygone n.已往的，过时的 +bypass n.旁道，分路 +by-product n.副产品 +cab n.出租汽车 +cabbage n.卷心菜；圆白菜 +cabin n.小屋，船舱 +cabinet n.橱柜，内阁 +cable n.电缆，海底电报 +cafe n.咖啡馆 +cafeteria n.自助餐厅 +cage n.笼子，鸟笼 +cake n.糕，饼 +calculate v.计算，估计 +calculation n.计算(结果) +calculus n.微积分 +calendar n.日历 +calf n.小牛，腿肚子 +calibration n.刻度，核定 +call v.叫，称为，打电话 +calm adj.宁静的，镇静的 +calmly adv.平静地，沉着地 +calorie n.热卡，卡路里 +camel n.骆驼 +camera n.照相机 +camp n.帐篷，野营 n.宿营 +campaign n.战役，运动 +camping n.野营 +campus n.校园 +can v.aux.能，会，可以 +canada n.加拿大 +canadian adj.,n.加拿大的(人) +canal n.运河，渠道 +canary n.金丝雀 +cancel v.删除，取消 +cancellation n.删除，取消 +cancer n.癌 +candid adj.坦白的，直率的 +candidate n.候选人 +candle n.蜡烛 +candy n.糖果 +cane n.手杖，(藤、竹的)茎 +canned adj.罐装的 +cannon n.大炮 +canoe n.独木舟，游艇 +canon n.规范，准则 +canteen n.食堂 +canvas n.帆布，画布 +canvass v.游说 +cap n.帽子，盖子 v.覆盖 +capability n.才能，能力 +capable adj.有能力的 +capacity n.容量，容积，资格 +cape n.披肩，岬，海角 +capita n.人 +capital n.首都，资本 +capital-intensive adj.资本密集型的 +capitalism n.资本主义 +capitalist adj.资本主义的 +capitalization n.资本化 +capitalize v.大写，资本化 +captain n.队长，船长，上尉 +caption n.标题 +captive adj.被俘虏的 n.俘虏 +capture v.,n.俘获，捉拿 +car n.小汽车 +caravan n.车队，大蓬车 +carbon n.碳，复写纸 +card n.卡片，纸牌，名片 +cardboard n.硬纸板 +cardinal adj.主要的 +care n.注意，小心 v.关心 +career n.职业，生涯 +careful adj.小心的，仔细的 +careless adj.粗心的，不关心的 +carelessness n.粗心 +cargo n.货物 +carol n.颂歌 +carpenter n.木匠 +carpet n.地毯 +carriage n.马车，(火车)车厢 +carrier n.运载工具，媒介 +carrot n.胡萝卜 +carry v.搬运，携带 +cart n.手推车 +carton n.纸箱 +cartoon n.漫画，动画片 +cartridge n.弹仓 +carve v.雕刻，切 +carving n.雕塑 +case n.事实，案例，箱子 +cash n.现金 v.兑现 +cashier n.出纳 +cassette n.小盒，磁盘盒 +cast v.掷，投射，铸造 +castle n.城堡 +casual adj.偶然的，随便的 +casualty n.伤亡 +cat n.猫 +catalog n.(商品)目录 +catastrophe n.灾难 +catalyst n.催化剂 +catch v.捕获，染病 n.捉 +category n.种类，范畴 +cater v.提供 +cathedral n.大教堂 +catholic adj.天主教的 +cattle n.牛(总称) +cause n.原因，理由，事业 +caution n.谨慎，告诫 +cautious adj.谨慎的，当心的 +cavalry n.骑兵，马术 +cave n.洞穴，山洞 +cavern n.酒馆 +cavity n.坑，孔穴 +cease v.停止，平息 +ceiling n.天花板 +celebrate v.庆祝 +celebration n.庆祝仪式 +celery n.芹菜 +cell n.细胞，牢房，电池 +cellar n.地窖，地下室 +cement n.水泥 +cemetery n.墓场 +censor v.审查 +censorship n.审查 +cent n.分币 +centigrade adj.摄氏的 +centimeter n.厘米 +central adj.中心的，中央的 +center n.中心 v.集中 +century n.世纪 +cereal n.谷物 +ceremonial adj.仪式的 +ceremony n.仪式，典礼，礼节 +certain adj.确信的，一定的 +certainly adv.一定，当然，行 +certainty n.确实，必然的事 +certificate n.证书，执照 +certification n.证明 +certify v.证明 +chain n.链条，一系列，锁链 +chair n.椅子 +chairman n.主席，董事长 +chairperson n.主席(无性别之分) +chairwoman n.女主席，女董事长 +chalk n.白垩，粉笔 +challenge n.,v.挑战，质问 +challenging adj.具有挑战性的 +chamber n.房间 +champion n.优胜者，冠军 +championship n.锦标(赛) +chance n.机会，可能性 +change n.变化，零钱 v.改变 +changeable adj.变化的 +channel n.沟渠，途径，频道 +chaos n.混乱 +chap n.伙计 +chapter n.章，节 +character n.性格，角色，特牲 +characteristic n.特征，特性 +characteristical adj....特征的 +characterize v.具有...特征 +charcoal n.木炭 +charge v.收费，冲向，控告 +charity n.施舍，仁慈 +charm n.魅力 v.迷惑 +charming adj.迷人的 +chart n.图表 v.制定计划 +charter n.特许证，宪章 +chase v.追逐，驱除 +chat v.聊天 +chatter v.喋喋不休，啁啾 +cheap adj.便宜的，可鄙的 +cheat v.欺骗，作弊 n.骗子 +cheating n.欺骗行为 +check v.检验，核对 n.支票 +check-out n.结帐，离店时限 +check-up n.核对，检查 +cheek n.颊，脸 +cheeky adj.胖乎乎的 +cheer n.喝彩 v.向...喝彩 +cheerful adj.快活的 +cheese n.干酪，奶酪 +chemical adj.化学的 +chemist n.化学家，药剂师 +chemistry n.化学 +cheque n.支票 +cherish v.珍爱，怀有 +cherry n.樱桃 +chess n.国际象棋 +chest n.胸膛，柜子 +chestnut n.栗树，栗子 +chew v.咀嚼 +chick n.小鸡 +chicken n.鸡，鸡肉 +chief adj.首席的，首要的 +chiefly adv.多半，首要地 +child n.孩子，儿童 +childhood n.童年 +childish adj.孩子气的 +childlike adj.孩子似的，天真的 +chill n.寒意 v.冷却 +chilly adj.凉的，冷淡的 +chimney n.烟囱 +chin n.下巴，下颊 +china n.中国 +china n.瓷器，陶瓷 +chinese adj.,n.中国的 +chip n.片，屑，缺口 +chocolate n.巧克力 +choice n.选择，选中的人或物 +choke v.闷死，窒息，阻塞 +choose v.选择，愿意 +chop v.劈，剁 n.带骨肉 +chorus n.合唱队，齐声 +christ n.基督 +christian adj.基督教的n.基督徒 +christianity n.基督教(精神) +christmas n.圣诞节 +church n.教堂 +cif n.(缩)到岸价 +cigar n.雪茄 +cigarette n.卷烟 +cinema n.电影院 +circle n.圆，果 v.画圈于 +circular adj.圆圈的 +circuit n.巡回，电路 +circulate v.循环，流通，流传 +circulation n.循环，销路，周转 +circumference n.周围，圆周 +circumstance n.情况，环境 +circus n.马戏团 +cite v.引证，举例 +citizen n.公民，市民 +citizenship n.公民权 +city n.城市 +civil adj.民用的，民事的 +civilization n.文明，民族文化 +civilize v.使...文明，开化 +claim v.要求，索赔，声称 +clamp n.夹子 v.夹紧 +clap v.排手，鼓掌 +clarify v.弄清(问题) +clarification n.澄清 +clash v.,n.碰撞，冲突 +clasp n.扣子 v.紧握(抱) +class n.阶级，种类，班级 +classic n.经典作品 +classical adj.经典的，古典的 +classification n.分类 +classify v.分类，分等 +classmate n.同班同学 +classroom n.教室 +clatter v.咔嗒响 n.卡嗒响 +clause n.条款，从句 +claw n.爪 +clay n.黏土 +clean adj.清洁的，干的 +clear adj.清楚的，明确的 +clearance n.结关 +clearly adv.清晰地，无疑地 +clench v.咬紧，握紧，决定 +clerk n.办事员，职员，店员 +clever adj.聪明的，灵巧的 +cleverness n.聪明，机灵 +client n.当事人，顾客，用户 +clientele n.顾客(总称) +cliff n.悬崖，峭壁 +climate n.气候 +climax n.顶点，高潮 +climb v.爬，攀登，上升 +cling v.粘住，依附 +clinic n.诊所 +clip n.夹子，卡子 v.夹住 +cloak n.外套，借口 +clock n.时钟 +clockwise adj.,adv.顺时针的 +close v.关闭，结束 n.终结 +closed adj.关闭的，停业的 +close down n.倒闭 +closely adv.紧密地，严密地 +closet n.壁橱 +cloth n.织物，布，衣料 +clothe v.给...着衣 +clothes n.衣服(总称) +clothing n.服装(总称) +cloud n.云 +cloudy adj.多云的 +clown n.小丑，丑角 +club n.俱乐部，会，棍棒 +clue n.线索 +clumsy adj.笨拙的，愚蠢的 +cluster n.群，串 +clutch v.,n.抓紧 +c/o v.(缩)请转交... +coach n.客车，教练 +coal n.煤 +coarse adj.粗糙的，粗的 +coast n.海岸，海滨 +coastal adj.沿海的 +coat n.上衣，涂层 +cock n.公鸡 +cocktail n.鸡尾酒 +code n.法规，代码，密码 +codify v.编码 +coefficient n.系数 +coffee n.咖啡 +coffin n.棺材 +coherence n.凝聚性 +coherent adj.有条理的，粘着的 +cohesion n.凝聚力，团结 +cohesive adj.有粘性的 +coil v.卷曲 n.一卷，线圈 +coin n.硬币，创造新词 +coinage v.重合，一致 +coincide n.巧合，同时发生 +coincidence adj.同时发生的 +coincident adj.冷，冷冰冰的 +coldness n.寒冷，冷淡 +collaborate v.协作，勾结 +collaboration n.协作，通敌 +collapse v.倒塌 v.坍塌 +collar n.领子 +colleague n.同事，同行 +collect v.收集，征收，聚集 +collection n.收集，收藏 +collective n.集体 adj.集体的 +college n.学院 +collide v.猛烈碰撞，冲突 +collision n.猛烈碰拉，冲突 +colonel n.上校 +colonial adj.殖民的，殖民地的 +colonist n.殖民者，移民 +colonist n.殖民主义 +colony n.殖民地 +color n.颜色，色彩，气色 +color-blind adj.色盲的 +colorful adj.色彩丰富的 +colorless adj.无色的 +column n.圆柱，栏 +columnist n.专栏作家 +comb v.梳 n.梳子 +combat v.,n.战斗，斗争 +combination n.混合，组合 +combine v.组合，化合，结合 +come v.来到，出现，发生 +comedian n.喜剧演员 +comedy n.喜剧 +comfort n.舒适，慰藉 v.安慰 +comfortable adj.舒适的，自在的 +comic adj.喜剧的，滑稽的 +command v.,n.命令，控制 +commander n.司令，指挥官 +commemorate n.纪念 +commemoration v.纪念 +commence v.开始 +commend v.称赞，推荐 +commandment n.称赞 +comment n.,v.评论 +commerce n.商业 +commercial adj.商业的，商务的 +commission n.,v.委托，委任 +commit v.委托，犯(错误) +commitment n.责任 +committee n.委员会 +commodity n.商品 +common adj.共同的，普通的 +commonly adv.通常，平常 +commonplace adj.平凡的，平淡的 +commonsense n.常识 +commonwealth n.共同体，联邦 +commune n.公社 +communicate v.传播，通讯 +communication n.通信，通讯系统 +communicative adj.通讯的 +communism n.共产主义 +communist n.共产主义者 +community n.团体，共同体，群体 +compact adj.严密的，紧凑的 +companion n.同伴，伴侣 +company n.公司，同伴 +comparable adj.可比较的 +comparative adj.比较的，相当的 +comparatively adv.比较地 +compare v.比较，比作 +comparison n.比较 +compass n.指南针，圆规 +compatible adj.可兼容的，一致的 +compel v.强迫，逼迫 +compensate v.赔偿，补偿，酬报 +compensation n.赔偿，补偿 +compete v.竞争，比赛 +competent adj.称职的，有能力的 +competition n.竞争，比赛 +competitive adj.竞争的 +competitiveness n.竞争能力 +competitor n.竞争者，对手 +compile v.编(书)，编辑 +complain v.抱怨，控诉 +complaint n.怨言，控告 +complement n.补充，余数 +complete v.完成，结束 +completely adv.完全地，十分 +completion n.完成，完满 +complex adj.综合的，复杂的 +complexity n.复杂性 +compliance n.顺从，应允 +complicate v.使复杂 +complicated adj.错综复杂的 +compliment n.,v.称赞，问候 +complimentary adj.称赞的 +comply v.履行，遵守 +component n.成分，组分 +componential adj.成分的 +compose v.由...组成，作曲 +composed adj.镇静的 +composer n.作曲家 +composite adj.合成的，组合的 +composition n.作文，组成 +compound n.化合物 v.混合 +comprehend v.理解，了解 +comprehension n.理解 +comprehensive adj.综合的，广泛的 +compress v.压缩 +compression n.压缩，凝缩 +comprise v.包括，由...组成 +compromise n.,v.妥协，和解 +compels v.强迫 +compulsory adj.强制的，必修的 +computation n.计算 +compute v.计算 +computer n.计算机 +computerization n.计算机化 +computerize v.使...计算机化 +comrade n.同志 +conceal v.隐瞒，隐藏 +concede v.让步，输 +conceit n.自负，自大 +conceited adj.自负的 +conceive v.想象，怀孕 +concentrate v.集中，浓缩 +concentrated adj.全神贯注的 +concentration n.专心，浓度 +concept n.概念 +conception n.想法，概念 +conceptive adj.概念的 +concern v.涉及，关心 n.商行 +concerned adj.有关的 +concerning prep.关于 +concert n.音乐会 +concerted adj.齐心协力的 +concess v.让步 +concession n.让步，减免，租界 +concise adj.简明的，简要的 +conclude v.结束，缔结，断定 +conclusion n.结束，结论 +conclusive adj.结束的，结论性的 +concrete n.混凝土 adj.具体的 +concur v.同地发生 +concurrence n.合作，并发 +concurrent adj.同时发生的 +condemn v.谴责，判刑 +condemnation n.谴责，判决 +condensation n.凝聚 +condense v.凝结，冷凝，精简 +condenser n.冷凝器，聚光器 +condition n.状态，情形，条件 +conditional adj.有条件的 +conduce v.导致，有益于 +conducive adj.有助于...的 +conduct n.行为，管理 v.为人 +conduction n.传导，传热 +conductor n.(乐队)指挥，售票员 +cone n.锥体，锥形 +confer v.授予，颁布，商议 +conference n.会议 +confess v.坦白，供认 +confession n.供认，自由 +confide v.委托，吐露秘密 +confidence n.信任，信心 +confident adj.确信的，自信的 +confidential adj.机密的 +confine v.限制 +confinement n.限制 +confirm v.证实，确认，批准 +confirmation n.确认 +conflict v.,n.冲突，斗争 +conform v.遵守，使...一致 +conformity n.遵照，一致 +confront v.面对，与...相对 +confrontation n.面对，对峙 +confuse v.混淆，弄糊涂，搅乱 +confusion n.混乱，糊涂 +congestion n.阻塞，消化不良 +congratulate v.祝贺 +congratulation n.祝贺，贺辞 +congress n.(代表)大会，国会 +congressman n.国会议员 +conjunction n.连词，联结 +connect v.连接，联想 +connection n.联系，社会关系 +conquer v.征服，战胜 +conqueror n.征服者，胜利者 +conquest n.征服 +conscience n.良心，良知 +conscientious adj.有良心的 +conscientiously adv.认真地 +conscious adj.意识到的，自觉的 +consciousness n.知觉，意识 +consecutive adj.连续的，连贯的 +consent v.,n.同意，允许 +consequence n.后果，重要性 +consequently adv.因而，所以 +conservation n.保护，保存 +conservative adj.保守的，稳健的 +consider v.考虑，以为，体谅 +considerable adj.相当的，可观的 +considerably adv.相当 +considerate adj.考虑周全的 +consideration n.考虑，照顾 +consign v.委托，托运货物 +consignment n.委托，货物 +consist v.由...组成 +consistency n.一致(性) +consistent adj.始终如一的，符合 +console v.安慰 +consolidate v.团结 +consolidated adj.加固的，统一的 +consolidation n.团结 +consonant adj.响亮的 +conspicuous adj.显眼的，出众的 +conspiracy n.阴谋 +constable adv.警官 +constant adj.不变的，恒定的 +constantly adv.经常地 +constituent adj.组成的 n.成分 +constitute v.组成，构成，设立 +constitution n.宪法，章程 +constitutive adj.宪法的，章程的 +constraint n.强制，拘束 +construct v.建设，建立 +construction n.建设，建筑 +construe v.翻译，解释 +consul n.领事 +consulate n.领事馆 +consult v.咨询，磋商 +consultant n.咨询顾问(公司) +consultation n.咨询 +consume v.消费，消耗 +consumer n.消费者，用户 +consumption n.消费，消耗量 +contact n.,v.接触，联系 +contain v.含有，容纳，抑制 +container n.容器，集装箱 +contemplate v.沉思 +contemplation n.苦思冥想 +contemporarian n.同时代人 +contemporary adj.当代的，同时代的 +contempt n.轻视，蔑视 +contemptuous adj.轻视的 +content n.含量，内容 v.满足 +contest n.,v.争夺，比赛 +contestant n.参赛人 +context n.上下文，语境，环境 +contextual adj.上下文的，环境的 +continent adj.节制的 n.大陆 +continental adj.大陆的 +contingency n.事故，意外 +continual adj.连续的，频繁的 +continuance n.连续 +continue v.继续，连续，依旧 +continuous adj.持续的，不断的 +continuously adv.连续不断地 +contract n.契约，合同 v.订 +contracted adj.合同所规定的 +contractual adj.合同的，契约的 +contradict v.反驳，与...矛盾 +contradiction n.矛盾，反驳 +contrary adj.相反的 n.反面 +contrast n.,v.对照，对比 +contribute v.捐献，贡献，投稿 +contribution n.贡献，捐献物 +control v.,n.控制，管理 +controversy n.论战，论争 +controversial adj.有争议的 +convenience n.方便，便利 +convenient adj.便利的，方便的 +convention n.大会，协定，惯例 +conventional adj.传统的，常规的 +conversant adj.精通的，有交情的 +conversation n.会话，谈话 +converse v.谈话，对话，交往 +conversely adv.相反地 +conversion n.转变，转化，换算 +convert v.转换，改变信仰 +convey v.运输，传达 +conveyance n.运送，传达 +convict n.罪犯 +conviction n.定罪，确信 +convince v.使...确信，信服 +convinced adj.信服的 +cook v.烹调，烧 n.厨师 +cooker n.厨具，厨灶 +cool adj.凉的，冷静的 +coolness n.凉爽，冷淡 +cooperate v.合作，协作 +cooperation n.合作，协作 +cooperative adj.合作的 n.合作社 +coordinate v.协调，配合 +coordination n.协调，配合 +cope v.应付，对付 +copper n.铜 +copy v.抄写，复制 n.副本 +cord n.细绳，电线 +cordial adj.诚恳的，亲切的 +cordially adv.亲切地 +core n.核，核心 +cork n.软木塞 +corn n.谷物，玉米 +corner n.角落，拐角 +corporate n.有限公司 +corporation n.公司 +correct adj.正确的，恰当的 +correction n.修改，校正 +correctly adv.正确地 +correlate v.相关，关联 +correlation n.相互关系 +correspond v.符合，通信，相当于 +correspondence n.相应，通信 +correspondent adj.对应的 n.记者 +corresponding adj.相应的，通信的 +corridor n.走廓 +corrode v.腐蚀 +corrosion n.腐蚀 +corrupt adj.腐败的，腐化的 +corruption n.腐败，腐化 +cosmetics n.化妆品 +cosmic adj.宇宙的 +cosmos n.宇宙 +cosmopolitan n.大都市 +cost n.成本，费用 v.花费 +costly adj.昂贵的 +cottage n.村舍 +cotton n.棉花，棉布，棉纱 +couch n.躺椅 +cough v.,n.咳嗽 +council n.理事会，委员会 +counsel n.劝告，辩护律师 +counsellor n.顾问 +count v.计算，数，认为 +countable adj.可计算的 +countenance n.容貌，支持 +counter n.柜台 adj.相反的 +countermand v.撤回，取消 +countermeasure n.对策 +counter-offer n.还价，还盘 +counterpart n.同类的人或物 +countersign v.副署，会签 +countersignature n.副署，会签 +countless adj.无数的 +country n.国家，乡间，故乡 +countryside n.乡下 +county n.县，郡 +couple n.一对，几个，夫妇 +courage n.勇气，胆量 +courageous adj.勇敢的 +course n.过程，路线，课程 +court n.法庭，宫廷，球场 +courteous adj.有礼貌的 +courtesy n.礼貌，礼仪，好意 +courtyard n.院子 +cousin n.堂(或表)兄弟姐妹 +cover v.盖，掩盖 n.盖子 +coverage n.覆盖率 +covering adj.包括的 +cow n.母牛，奶牛 +coward n.懦夫 +cowardly adv.胆小地 +crab n.蟹 +crack v.使...破裂 n.裂缝 +cracker n.苏打饼干，克力架 +cradle n.摇篮，发源地 +craft n.工艺，手艺，飞机 +craftsman n.手艺人 +craftsmanship n.手艺 +crane n.鹤，起重机 +crash v.碰撞 n.坠毁 +crate n.一箱，篓，筐 +crave v.渴望，恳求 +crawl v.爬行，徐徐行进 +craziness n.疯狂 +crazy adj.疯狂的，迷恋的 +cream n.乳脂，奶油 +creamy adj.奶油的，奶黄色的 +create v.创造，创作，造成 +creation n.创造，创造物 +creative adj.有创造力(性)的 +creature n.家伙，生物 +credit n.信誉，信用 v.相信 +creditworthy adj.有信誉的 +creditworthiness n.商誉 +creek n.小川，小湾 +creep v.爬行，蔓延 +crew n.(飞机等的)全体人员 +cricket n.板球，蟋蟀 +crime n.罪，罪行 +criminal n.罪犯 adj.犯罪的 +crimson adj.,n.深红色(的) +cripple n.跛子 v.使残废 +crisis n.危险，危险期 +crisp adj.松脆的，鲜嫩的 +critic n.评论家，爱挑剔的人 +critical adj.批评的，危急的 +criticism n.批评 +criticize v.批评，评论 +crook n.钩子 +crooked adj.弯曲的，歪的 +crop n.作物，庄稼 +cross n.十字，交叉 v.横过 +crossing n.交叉，十字路口 +crossroads n.交叉路口，十字路 +crouch v.蹲下，缩着 +crow n.乌鸦 v.鸦啼 +crowd n.人群 v.挤满 +crown n.王冠 v.加冕 +crude adj.未加工的，粗糙的 +cruel adj.残酷的，残忍的 +cruelty n.残忍，残酷行为 +cruise v.巡游，巡航 +crumb n.面包屑 +crumble adj.粉碎，崩溃 +crush v.压榨，粉碎 +crust n.面包皮，硬的表面 +crutch n.拐杖 +cry v.,n.叫喊，哭泣 +crystal n.水晶，晶体 +cube n.立方体，三次方 +cubic adj.立方的 +cubism n.立体主义 +cuckoo n.布谷鸟，杜鹃 +cucumber n.黄瓜 +cultivate v.耕作，栽培，培养 +cultivation n.耕作，培养 +cultural adj.文化的 +culture n.文化，养殖 +cunning adj.狡猾的，狡诈的 +cup n.杯子，一杯 +cupboard n.碗橱 +curb v.制止，束缚 +cure v.,n.治疗，矫正 +curiosity n.好奇心，古玩 +curious adj.好奇的，爱打听的 +curl v.卷曲，缭绕 n.卷发 +curly adj.卷曲的，波浪式的 +currency n.通货，货币 +current adj.现令的 n.流 +currently adv.当前，广泛地 +curse n.,v.诅咒，咒骂 +curtail n.削减，剥夺 +curtain n.窗帘，幕布 +curve n.曲线，弯曲 +cushion n.垫子，靠垫 +custody n.保管，监护 +custom n.风俗，习惯 +customary adj.习惯的，通常的 +customer n.顾客，主顾 +customs n.海关 +cut v.割，切，削减，切断 +cutlery n.刀具，餐刀 +cutter n.刀具，裁剪者 +cutting n.切片，剪辑 +cycle n.周期，循环，自行车 +cyclist n.自行车运动员 +cylinder n.圆筒，柱，汽缸 +d/a n.(缩)承兑交单 +dacron n.涤纶 +dad n.爸爸 +dagger n.匕首 +daily adj.每日的 adv.天天 +dainty adj.优雅，考究 +dairy n.奶牛场，乳品商店 +dam n.坝 +damage v.,n.损害，破坏 +damn v.,n.诅咒 +damp adj.潮湿的 n.潮气 +dance v.跳舞 n.舞蹈 +dancer n.舞蹈者，舞蹈演员 +danger n.危险，威胁 +dangerous adj.有危险的 +danish adj.,n.丹麦人(的) +denmark n.丹麦 +dare v.敢，挑战，竟敢 +daring adj.大胆的，勇敢的 +dark adj.黑暗的 n.暗处 +darken v.变黑，转暗 +darkness n.黑暗 +darling n.爱人 adj.心爱的 +dart n.飞标游戏 +dash v.猛冲,泼溅 n.破折号 +data n.(复数)资料，数据 +date n.日期 v.注日期 +dating n.约会 +daughter n.女儿 +daughter-in-law n.儿媳 +dawn n.黎明，开端 +day n.一天，白天 +daybreak n.破晓 +daylight n.日光，白昼 +daytime n.日间 +daze v.耀眼，使迷乱 +dazzle v.使...眼花缭乱 +dazzling adj.令人目眩的 +dead adj.死的 n.死者 +deadline n.期限 +deadly adj.致命的，死一般的 +deaf adj.聋的 +deafen v.使...聋，震聋 +deal v.处理，交易 n.买卖 +dealer n.商人，贩子 +dealing n.交往，生意 +dean n.系主任 +dear adj.亲爱的，敬爱的 +death n.死，死亡 +deathly adj.致死的 +debate v.,n.辩论，讨论 +debit n.借方 +debt n.债，债务 +decade n.十年 +decay v.,n.腐烂，衰败 +deceased adj.已死的 +deceit n.欺骗，欺诈行为 +deceive v.欺骗 +deception n.欺诈 +deceitful adj.欺骗性的 +december n.十二月 +decency n.体面 +decent adj.体面的，象样的 +decide v.决定，判决 +decided adj.明确的，果断的 +decidedly adv.明确地，果断的 +decimal adj.十进制的，小数的 +decision n.决定，决议 +decisive adj.决定性，明确的 +deck n.甲板 +declaration n.宣布，宣告 +declare v.宣布，声明 +decline v.婉谢，推辞 n.衰落 +declining adj.下降的，衰落的 +decompose v.分解，腐烂 +decorate v.装饰 +decoration n.装饰物 +decorative adj.装饰的，装璜的 +decrease v.,n.减少 +decree n.法令 v.判决 +dedicate v.奉献，致力 +deduce v.演绎，推断 +deduct v.减 +deduction n.推断，减少 +deed n.行为，契据 +deem v.以为，认为 +deep adj.深的，深远的 +deepen v.加深，深化 +deeply adv.深深的，深切地 +deer n.鹿 +default n.,v.不履行，不负责 +defeat v.击败 n.失败 +defect n.缺点，缺陷 +defective adj.有缺点的 +defence n.保卫，防御 +defend v.保卫，为...辩护 +defer v.拖延 +defiance n.蔑视，挑战 +defiant adj.无礼的，挑战的 +deficiency n.缺乏 +deficient adj.缺乏的，不足的 +deficit n.赤字 +define v.下定义，界定，规定 +definite adj.明确的，限定的 +definitely adv.明确地，肯定地 +definition n.定义，解释 +definitive adv.定义的 +deflate v.收缩，紧缩 +deflect v.偏斜 +deflection n.偏转，偏斜 +deform v.使变形，使残废 +deformation n.变形 +defray v.支付 +defy v.反抗，蔑视，使不能 +degradation n.降低，恶化 +degrade v.败低，下降，堕落 +degree n.程度，度，学位 +delay v.,n.耽搁，延误 +del credere n.保付 +delegate n.代表 n.委派 +delegation n.代表团 +delete v.删除 +deletion n.删除 +deliberate adj.故意的，审慎的 +deliberately adv.故意地，从容地 +deliberation n.慎重，故意 +delicacy n.精致 +delicate adj.优雅的，精致的 +delicious adj.美味的 +delight n.快乐，乐事 n.喜爱 +delightful adj.令人高兴的 +delinquency n.轻微犯罪 +delinquent adj.拖欠的 +deliver v.交付，递送，讲述 +deliverance n.救助 +delivery n.交付，递送，讲述 +delusion n.错觉 +delusive adj.令人产生错觉的 +demand v.,n.要求，需求 +demanding adj.对人要求严格的 +democracy n.民主，民主政体 +democrat n.民主党人 +democratic adj.民主的 +demolish v.拆除 +demolition n.拆除 +demonstrate v.论证，演示，表明 +demonstration n.示范，表演，示威 +demurrage n.滞期费 +den n.窝 +denial n.拒绝，否定 +denominate v.为...命名 +denomination n.命名 +denote v.表示 +denounce v.谴责，斥责 +dense adj.稠密的，浓厚的 +density n.密度，稠密 +dent n.牙，槽，凹陷 +dentist n.牙科医生 +deny v.否认，拒绝 +depart v.离去，出发，违反 +department n.部，部门，系 +departure n.离开，违背 +depend v.依靠，依赖 +dependability n.可依赖性 +dependable adj.可依赖的 +dependant n.受赡养者 +dependence n.依靠，依赖 +dependent adj.依靠的，随..而定 +depict v.描述，描画 +depiction n.描述 +deplete v.减少，耗尽 +deposit v.存放，储蓄 n.存款 +deposition n.免职，罢官 +depreciate v.降价，贬值，折旧 +depreciation n.折旧，贬值 +depress v.抑制，使人抑郁 +depressed adj.情绪低落的 +depression n.沮丧，萧条 +deprive v.剥夺，丧失 +depth n.深度 +deputy n.代表 adj.副职的 +derivation n.起源，衍生物 +derive v.从...而来，得来 +derrick n.钻塔，井架 +descend v.降临，下来，遗传 +descendant n.子孙，后裔 +descent n.下降，血统 +describe v.描写，作图 +description n.描述，形容 +desert v.遗弃，擅离 n.沙漠 +deserve v.应受，值得 +design v.设计，旨在 n.设计 +designate v.指明，指定 +designation n.指定，委派 +designer n.设计者 +desirable adj.合乎要求的 +desire n.欲望，要求 v.要求 +desk n.课桌，写字台 +desolate adj.荒芜的，凄凉的 +desolation n.荒凉，凄凉 +despair n.,v.绝望 +desperate adj.不顾一切的 +desperation n.绝望 +despise v.鄙视，看不起 +despite prep.不管，任凭 +dessert n.(最后一道)甜食 +destination n.终点，目的地 +destine v.注定，预定 +destiny n.命运，定数 +destroy v.破坏，摧毁，消灭 +destruction n.破坏，毁灭 +destructive adj.破坏性的 +detach v.分离，拆开 +detail n.细节 +detailed adj.详细的，详尽的 +detain v.留住，阻止 +detect v.发现，侦察 +detection n.发现，侦查 +detective n.侦探 +deteriorate v.恶化，败坏 +deterioration n.退化 +determination n.决心，决定 +determine v.决心，决定，测定 +detour v.绕道，绕开 +detract v.降低 +detriment n.损害 +detrimental adj.有害的 +devaluation n.贬值 +devalue v.贬值 +develop v.发展，开发，成长 +developing adj.发展中的 +development n.进展，发展 +deviate v.背离 +deviation n.背离，偏向 +device n.装置，方法 +devil n.魔鬼，恶人 +devise v.设计，计划 +devote v.奉献，贡献 +devoted adj.献身于...的 +devotion n.献身，专心 +devour v.吞吃，吞没 +dew n.露水 +diagnose v.诊断 +diagnosis n.诊断 +diagram n.图表，图解 +dial n.钟盘 v.拨电话 +dialect n.方言 +dialog n.对话，对白 +diameter n.直径 +diamond n.钻石，金刚石 +diary n.日记 +dictate v.口授，命令 +dictation n.口授，听写 +dictator n.独裁者 +dictatorship n.独裁，专政 +diction n.措辞 +dictionary n.词典，字典 +die v.死，消亡 +diesel n.内燃机，柴油机 +diet n.饮食，节食 +differ v.不同，相异 +difference n.差异，差别 +different adj.不同的，各种 +differential adj.有差别的 +differently adv.不同地 +difficult adj.困难的 +difficulty n.困难，难题 +dig v.挖，采掘 +digest v.消化 n.摘要 +digestion n.消化 +digit n.数字 +digital adj.数字的 +dignity n.尊贵，尊严 +dike n.堤 +dilute v.稀释 +diligent adj.勤奋的，用功的 +dim adj.暗淡的，模糊的 +dime n.(美元)一角 +dimension n.维，方面，尺寸 +dimensional adj.尺寸的 +diminish v.减少，缩小 +dine v.用餐 +dining-room n.餐厅 +dingy adj.肮脏的 +dinner n.正餐，晚餐，宴会 +dip v.,n.蘸，浸 +diploma n.毕业文凭，学位证书 +diplomacy n.外交 +diplomat n.外交人员 +diplomatic n.外交的 +direct v.支配，指挥，对准 +direction n.方向，指示，说明 +directive n.命令，指令 +directly adv.直接地，立即 +director n.指导者，导演，领导 +directory n.目录，地址录 +dirt n.尘埃，灰尘，泥土 +dirty adj.肮脏的 +disable v.使残废 +disabled adj.残废的 n.残疾人 +disadvantage n.不利之处 +disadvantageous adj.不利的 +disagree v.意见不合，不符 +disagreement n.不和，不一致 +disallow v.不允许 +disappear v.失踪，消失 +disappearance n.消失 +disappoint v.使...失望 +disappointed adj.失望的，扫兴的 +disappointment n.失望 +disapproval n.不批准 +disaster n.自然灾害，祸患 +disastrous adj.灾难性的 +disburse v.支付 +disbursement n.支付 +disc n.圆盘，唱片 +discard v.,n.丢弃，扔掉 +discern v.操作别，辨明 +discharge v.解除，放出，卸货 +disciplinary adj.纪律的，学科的 +discipline n.训练，纪律 n.锻炼 +disclaim v.放弃，不承认 +disclose v.揭开，透露 +discomfort n.不安，不舒服 +discomfortable adj.不舒服的 +discontinue v.中断 +discount n.,v.折扣 +discourage v.使...泄气，阻止 +discourse n.演说，谈话，话语 +discover v.发现 +discovery n.发现，发现物 +discreet adj.周到的，慎重的 +discreetly adv.慎重地 +discrepancy n.单货不符 +discretion n.慎重 +discriminate v.区别，岐视 +discrimination n.辨别，岐视 +discuss v.讨论 +discussion v.讨论，商议 +disdain v.轻视 +disease n.疾病 +disgrace n.耻辱 v.使受辱 +disgraceful adj.耻辱的，受辱的 +disguise v.,n.伪装，掩饰 +disgust n.厌恶 v.使讨厌 +disgustful adj.令人生厌的 +dish n.盘子，碟子 +dishonorable adj.不名誉的 +dishonor n.耻辱 v.凌辱 +disillusion v.使觉醒，幻灭 +disinclined adj.不愿意的 +disinfectant n.消毒剂 +disintegration n.分散，解体 +dislike v.,n.厌恶 +disloyal adj.不忠的 +disloyalty adj.不忠 +dismal adj.阴郁的，沉闷的 +dismay v.使沮丧 n.沮丧 +dismiss v.解散，开除 +dismissal n.解散，开除 +disobey v.不服从 +disorder n.紊乱，骚乱，失调 +disparity n.不同，悬殊 +dispatch v.迅速派遣 n.快件 +dispel v.驱散 +dispense v.分配，施予 +disperse v.驱散，散布 +displace v.置换，取代 +displacement n.置换，替换物 +display v.,n.陈列，表现 +displease v.使生气，惹怒 +displeasure n.不快 +disposal n.处置，对付 +dispose v.处置，对付，解决 +disposed adj.有...倾向的 +disposition n.布置，处置 +dispute v.争论，质疑 n.争论 +disregard v.,n.无视，不顾 +dissatisfaction n.不满 +dissatisfy v.使不满 +dissimilar adj.不同的 +dissipate v.驱散，消耗，浪费 +dissolve v.溶解，使终结 +distance n.距离，远处 +distant adj.远方的，疏远的 +distillation n.蒸馏 +distinct adj.不同的，明显的 +distinction n.差别，非凡 +distinctly adv.明晰地，清楚地 +distinguish v.辨别，认出 +distinguished adj.尊贵的，尊敬的 +distort v.扭曲，歪曲 +distortion n.曲解，失真，变形 +distract v.分神，迷惑 +distraction n.分心 +distress n.苦恼，不幸 +distribute v.分配，分布，分销 +distribution n.分配，分布 +distributor n.分销商 +distributorship n.分销权 +district v.区，区域，地区 +disturb v.打扰，打乱，使烦恼 +disturbance n.干扰，动乱 +disunite v.使分裂 +disuse v.,n.废止 +ditch n.沟，渠，下水道 +ditto n.同上 +dive v.潜水，跳水，俯冲 +diver n.潜水员，跳水运动员 +diverge v.分歧，离题 +divergence n.分歧 +diverse adj.不同的，分歧的 +diversion n.转移，消遣 +diversity n.多样化 +divert v.使转向，消遣 +divide v.分开，分享，分裂 +divine adj.神的，神圣的 +division n.划分，部分 +divorce v.离婚，使脱离 +dizzy adj.晕眩的 +do v.做，干，足够，制作 +dock n.码头 +doctor n.医生，博士 +doctrine n.教义，学说 +document n.文件，公文 +documentary adj.文化的 +documentation n.提供文件 +dodge v.躲避 +dog n.狗 +doggedly adv.顽固地 +doll n.玩偶，娃娃 +dollar n.元，美元 +domain n.领土，领域 +dome n.圆顶，穹窿 +domestic adj.家里的，国内的 +dominant adj.统治的 +dominate v.统治，支配，占优势 +donate v.捐献 +donation n.捐献 +donkey n.驴，笨蛋 +doom n.命运，判决 v.命定 +door n.门，(一户)人家 +doorway n.门口，门道 +dormitory n.集体宿舍 +dose n.剂量，一服药 +dot n.点，圆点 +double adj.两倍的，双重的 +doubt v.,n.怀疑，疑惑 +doubtful adj.怀疑的，可疑的 +doubtless adv.无疑地，大约 +dough n.面团 +dove n.鸽子 +down adv.向下，下降 +downstairs adv.在楼下 +downtown n.闹市 adv.去市里 +downward adj.向下的，下坡的 +downwards adv.向下，以下 +doze v.打瞌睡 +dozen n.一打 +draft n.草案，草稿，穿堂风 +drag v.拖，拽 +dragon n.龙 +drain v.排水，耗竭，泄 +drainage v.排水系统，污水 +drama n.戏剧，剧本 +dramatic adj.戏剧性的，显著的 +dramatist n.戏剧家 +dramatize v.使戏剧化 +drastic adj.激烈的，严厉的 +draw v.画，拉，吸引 +drawback n.不利，欠缺 +drawer n.抽屉 +drawing n.素描，绘画，图样 +dread v.,n.恐惧，担心 +dreadful adj.可怕的，糟糕的 +dream n.梦，梦想 v.做梦 +dreary adj.疲劳的 +drench v.浸泡，充满 +dress n.服装 v.穿衣 +dressing n.打扮，调味品 +drift v.漂流，游荡 +drill n.钻头，操练 v.训练 +drink v.喝，饮 n.饮料，酒 +drip v.滴下，流下 +drive v.驾驶，乘车 n.车道 +driver n.司机 +droop v.下垂 +drop v.落下 n.滴，下降 +dropout n.中途退出者 +drought n.旱灾 +drown v.淹死 +drug n.药物，麻醉剂 +drugstore n.零食店 +drum n.鼓 v.敲鼓 +drunk adj.喝醉的 +drunkard n.醉鬼 +dry adj.干的，枯燥的 +dubious adj.怀疑的 +duck n.鸭子 +due adj.到期的，预定的 +duke n.公爵 +dull adj.沉闷的，钝的 +duly adv.按期地 +dumb adj.哑的 +dummy n.傀儡 +dump v.倾倒 n.垃圾堆 +dumping n.倾销 +dung n.粪 +dungeon n.地牢 +duplicate adj.二重的，复制的 +durable adj.持久的，耐用的 +duration n.期间，待续时间 +during prep.在...期间 +dusk n.黄昏 +dust n.尘土，粉末 v.掸土 +dustbin n.簸箕 +dusty adj.沾满灰尘的 +duty n.责任，义务，关税 +duty-free adj.免税的 +dwarf n.矮子，侏儒 +dwell v.居住 +dweller n.居住者，住客 +dwelling n.住宅 +dye n.染料 v.染色 +dynamic adj.动力的，动态的 +dynasty n.朝代，王朝 +each adj.,adv.名，每个 +eager adj.热切的，渴望的 +eagle n.鹰 +ear n.耳朵，穗 +earl n.伯爵 +early adj.早的，初期的 +earmark n.标记，特征 +earn v.挣钱，赢得 +earnest adj.认真的，诚恳的 +earnings n.收入，赚得的钱 +earphone n.耳机 +earth n.地球，地上，泥土 +earthly adj.世俗的 +earthquake n.地震 +ease n.安逸，轻易 +easily adv.容易地，安逸地 +east adj.东方的 n.东方 +easter n.复活节 +eastern adj.东的，朝东的 +eastward adv.向东 +easy adj.容易的，轻松的 +easy-going adj.逍遥自在的 +eat v.吃 +eccentric adj.性格怪僻的 +eccentricity n.怪僻 +echo n.回声，反响，共呜 +eclipse n.(日、月)食，蚀 +ecology n.生态学 +economic adj.经济的，经济学的 +economical adj.节省的，经济的 +economically adv.经济上 +economics n.经济学 +economize v.节省 +economy n.经济，节约 +ecstasy n.狂喜 +edge n.边，边缘，刀刃 +edit v.校订，编辑 +edition n.片(本) +editor n.编辑，编者 +editorial n.社论 +educate v.教育 +education n.教育，训练 +educational adj.教育的 +eel n.鳝鱼 +effect n.后果，效力 v.导致 +effective adj.有效的 +effectively adv.有效地 +effectiveness n.有效 +efficiency n.效率，功效 +efficient adj.效率高的 +effort n.努力，尽力，成果 +e. g. (缩)例如 +egg n.卵，蛋，鸡蛋 +eggplant n.茄子 +egypt n.埃及 +egyptian adj.,n.埃及人(的) +eight num.八 +eighteen num.十八 +eighth num.第八，八分之一 +eighty num.八十 +either adj.二者之一 adv.也 +eject v.喷射 +ejection n.喷射 +elaborate v.,adj.详尽阐述 +elaboration n.详尽阐述 +elapse v.(时间)消逝 +elastic adj.弹性的，灵活的 +elasticity n.弹性 +elbow n.肘，弯管 +elder adj.年长的，资格老的 +elect v.选举 adj.当选的 +election n.选举 +electric adj.电的，电力的 +electrical adj.电的 +electrician n.电工 +electricity n.电 +electrify v.充电，电气化 +electron n.电子 +electronic adj.电子的 +electronics n.电子学 +elegance n.优雅 +elegant adj.优雅的，典雅的 +element n.成分，元素 +elemental adj.自然力的，基本的 +elementary adj.基础的，初步的 +elephant n.象 +elevate v.提升，抬高 +elevation n.海拔，提高，崇高 +elevator n.电梯 +eleven num.十一 +eleventh num.第十一 +eliminate v.消灭，删除 +elimination n.消灭，删除 +elliptical adj.椭圆的，省略的 +ellipsis n.省略 +eloquence n.雄辩，口才 +eloquent adj.雄辩的，有口才的 +else adj.别的 adv.否则 +elsewhere adv.在别处 +elusive adj.躲闪的 +email n.電子郵件 +emancipate v.解放 +emancipation n.解放 +embargo n.禁运 +embark v.登陆 +embarrass v.使窘，使为难 +embarrassing adj.令人尴尬的 +embarrassment n.窘迫，尴尬 +embassy n.使馆 +embody v.体现，包含 +embrace v.拥抱，接受，包括 +embroider v.绣 +embroidery v.刺绣(品) +emerge v.出现，暴露 +emergency n.紧急情况，急诊 +emigrant n.移居国外的人 +emigrate v.移居国外，移民 +emigration n.向国外移民 +eminent adj.杰出的，突出的 +emission n.发射，散发 +emit v.发射，散发 +emotion n.感情，情绪 +emotional adj.感情的，激动的 +emperor n.皇帝 +emphasis n.强调，重点，重读 +emphasize v.强调，着重 +emphatic adj.强调的，着重的 +empire n.帝国，财团 +empirical adj.经验的 +employ v.雇用，使用，从事 +employee n.雇员 +employer n.雇主 +employment n.职业，就业 +emptiness n.空虚，空白 +empty adj.空的，空虚的 +enable v.使能够，使可能 +enchant v.迷住，陶醉 +encircle v.环绕，包围 +enclose v.围住，圈起，封入 +enclosure n.围绕，附件 +encounter v.面临，遭遇 +encourage v.鼓舞，鼓励，助长 +encouragement n.鼓舞，鼓励 +encyclopaedia n.百科全书 +end n.结尾 v.终止，结束 +endanger v.危及，危害 +endeavor v.,n.努力，尽力 +ending n.结局 +endless adj.无穷无尽的 +endorse v.背签 +endorsement n.背书 +endow v.资助，赋予，授予 +endurance n.忍耐力，耐用 +endure v.忍受，容忍，持久 +endures n.最终用户 +enemy n.敌人，对手 +energetic adj.精力旺盛的 +energy n.精力，活力，能量 +enforce v.实施，强制 +engage v.从事，雇用，吸引 +engaged adj.占用的，从事..的 +engagement n.约束，约会，婚约 +engine n.发动机，火车头 +engineer n.工程师 +engineering n.工程 +england n.英格兰，英国 +english n.,adj.英国的，英语 +englishman n.英国人 +engrave v.刻上，牢记 +engraving adj.雕刻 +engulf v.吞没 +enhance v.提高，增加 +enhancement n.提高 +enjoy v.欣赏，享有，享受 +enjoyable adj.愉快的 +enjoyment n.享受，乐趣 +enlarge v.扩大，扩展，放大 +enlargement n.扩大 +enlighten v.启发，教导 +enlightening adj.给人启发的 +enormous adj.巨大的，庞大的 +enough adj.,adv.足够(的) +enquire v.询问 +enquiry v.询问 +enrich v.使富裕 +enroll v.登记，招收 +enrolment n.招收 +en route adv.在途中 +ensure v.保证，担保，保护 +entail v.遗留给，引起 +enter v.进入，加入 +enterprise n.事业，企业 +entertain v.招待，使欢乐 +entertainment n.招待，娱乐 +enthusiasm v.热情，热心 +enthusiastic adj.热情的，热心的 +entire adj.完全的，全部的 +entirely adv.完全地，彻底地 +entirety n.全部 +entitle v.给...权利，资格 +entrance n.进入，入口 +entreat v.恳求，请求 +entrust v.委托 +entry n.进入，入口，词条 +enumerate v.列举 +envelop v.包，围绕 +envelope n.信封 +envious adj.嫉妒的 +environment n.环境 +environmental adj.环境的 +envy v.,n.嫉妒，羡慕 +epidemic adj.传染的 n.传染病 +episode n.事件，情节，插曲 +epoch n.时代，纪元 +epoch-making adj.划时代的 +equal adj.相等的，胜任的 +equality n.平等，相等 +equally adv.相等地，相同地 +equation n.等式，方程式 +equator n.赤道 +equilibrium n.平衡，均衡 +equip v.装备，配备 +equipment n.设备，器材，装置 +equivalence n.相等，等值 +equivalent adj.相等的，等值的 +era n.时代，年代 +eradicate v.根除 +eradication n.根除 +erase v.擦掉，抹去 +erasure n.抹去 +erect v.树立，建立，竖立 +erection n.竖立，建立 +erosion n.腐蚀，侵蚀 +err v.犯错误 +errand n.差事，差使 +error n.错误，过失 +erupt v.喷发，爆发 +eruption n.喷发，爆发 +escalator n.电动扶梯 +escape v.逃跑，避免，被遗忘 +escort v.护送 n.护卫队 +especial adj.特别的，专门的 +especially adv.特别地，专门地 +essay n.散文，论文，小品文 +essayist n.散文作家 +essence n.本质，情髓，香精 +essential adj.必需的，本质的 +essentially adj.本质上，实质上 +establish v.建立，设立，确立 +established adj.已建立的 +establishment n.建立，组织 +estate n.房地产，财产 +esteem v.,n.尊重 +estimate v.,n.估算，预算 +estimation n.估算，估计 +etc. (缩)等等 +eternal adj.永恒的，无休止的 +europe n.欧洲 +european n.,adj.欧洲人(的) +evaluate v.估价，评价 +evaluation n.估价，评价 +evaporate v.蒸发，脱水，消失 +evaporation n.蒸发，升华 +eve n.前夕，前夜 +even adj.平坦的，均匀的 +evening n.傍晚，晚上 +evenly adv.平坦地，均匀地 +event n.事件，场合，比赛 +eventful adj.多事的 +eventually adv.最终，终于 +ever adv.曾经，总是，究竟 +everlasting adj.永久的，持久的 +every adj.每个，所有的 +everybody pron.人人，每人 +everyday adj.每日的，日常的 +everyone pron.人人，每人 +everything pron.事事，一切 +everywhere adv.处处，到处 +evidence n.证据，迹象 +evident adj.明显的，明白的 +evidently adv.明显地，显然 +evil adj.坏的，邪恶的 +evolution v.发展，渐进，进化 +evolve v.发展，进化 +ex prep.在...交货 +exact adj.精确的，精密的 +exactly adv.确切地，正是 +exaggerate v.夸张，夸大 +exaggerated adj.言过其辞的 +exaggeration n.夸张 +exalt v.抬高，发扬 +exalted adj.高贵的，得意的 +exam n.考试 +examination n.检查，考试 +examine v.检查，细看，考试 +example n.例子，榜样 +exasperate v.激怒，恶化 +exasperation n.愤慨，加剧 +exceed v.超过，过度 +exceedingly adv.非常，极端地 +excel v.胜过，优于 +excellence n.优秀，卓越 +excellent adj.优秀的，卓越的 +except prep.除...外 v.除外 +exception n.除外，例外 +exceptional adj.异常的，例外的 +excess n.过量，过剩 +excessive adj.过分的，极度的 +exchange v.交换，兑换 n.交易 +excite v.刺激，使兴奋 +excited adj.兴奋的 +excitement n.兴奋，激动 +exciting adj.令人激动的 +exclaim v.呼喊，感叹 +exclamation n.呼喊，感叹 +exclude v.排除，拒绝考虑 +exclusion n.排除 +exclusive adj.独有的 +exclusively adv.独占地 +exclusivity n.独家经营权 +excursion n.短途游览 +excuse v.原谅 n.借口 +execute v.执行，实施，处决 +execution n.执行，处决 +executive adj.执行的 n.执行者 +exemplify v.举例说明 +exempt v.免除 +exercise n.锻炼，练习，运用 +exercise-book n.练习簿 +exert v.尽(力)，发挥 +exertion n.尽力，竭力 +exhaust v.竭尽，用完 +exhausted adj.精疲力竭的 +exhaustion n.用尽，详述 +exhaustive adj.详尽的 +exhibit v.展出,显示 n.展览品 +exhibition n.展览会，表现 +exile v.放逐 n.流亡者 +exist v.存在，生存 +existence n.存在，生存 +existing adj.现存的，已有的 +exit n.出口，安全门，离开 +exonerate v.昭雪，解除 +exoneration n.免罪，免除 +expand v.扩张，膨胀，扩充 +expansion n.扩张，扩大 +expect v.盼望，期待，预料 +expectation v.期待，前程 +expedience n.便利，权宜之计 +expedient adj.方便的，临时的 +expedite v.加快，急送 +expedition n.探险，考察队 +expel v.驱逐，开除 +expend v.花费，消耗 +expenditure n.支出，费用 +expense n.支出，开支 +expensive adj.昂贵的，高价的 +experience n.,v.经历，经验 +experienced adj.有经验的 +experiment n.,v.实验，试验 +experimental adj.实验的 +experimentation n.实验 +expert n.专家，能手 +expertise n.专家队伍(总称) +expiration n.期满 +expire v.到期，断气 +expiry n.逾期 +explain v.解释，说明 +explanation n.说明，解释 +explanatory adj.说明的 +explicit adj.清楚的，明晰的 +explicitly adv.清晰地 +explode v.爆炸，激增 +exploit v.开发，利用，剥削 +exploitation n.开发，利用 +exploration n.勘探，考察 +explore v.勘探，考察 +explorer n.勘探者，探险家 +explosion n.爆炸，爆发，激增 +explosive adj.爆炸性的 n.炸药 +export v.,n.输出，出口 +exportation n.出口 +exporter n.出口商 +expose v.暴露，揭露，陈列 +exposition n.展览会，说明 +exposure n.揭露，曝光 +express v.表达，快递 n.快车 +expression n.表达，措辞，表情 +expressive adj.有表现力的 +expressly adj.明确表示的 +expressway n.高速公路 +exquisite adj.精致的 +extend v.延伸，扩大，给予 +extension n.延伸，电话分机 +extensive adj.广泛的，密集的 +extensively adv.广泛地 +extent n.范围，限度，一大片 +exterior adj.,n.外部(的) +external adj.外部的，对外的 +extinct adj.绝灭的，熄灭的 +extinction n.绝灭，熄灭 +extinguish v.扑灭，熄灯 +extra adj.额外的，外加的 +extract v.取出，榨出，摘录 +extraction n.出身，摘要 +extraordinary n.特别的，格外的 +extravagance n.奢侈，浪费 +extravagant adj.奢侈的，浪费的 +extreme adj.极度的，极端的 +extremely adv.极其，非常 +eye n.眼睛，孔眼，视力 +eyeball n.眼球 +eyebrow n.眉毛 +eyeglass n.眼镜 +eyelid n.眼睑 +eyesight n.视力 +fable n.寓言 +fabric n.织物，结构，组织 +fabricate v.制作，捏造 +fabrication n.制作，虚构 +face n.脸，正面 v.面对 +facilitate v.使便利，使容易 +facility n.方便，设施，便利 +fact n.事实，真相 +faction n.宗派，派别 +factor n.因素，因数，要素 +factory n.工厂，制造厂 +faculty n.本领，学系 +fade v.褪色，枯萎 +fahrenheit n.,adj.华氏(的) +fail v.失败，不及格，不能 +failing adj.缺点 +failure n.失败，疏忽，破产 +faint adj.软弱的，模糊的 +fair adj.公平的 n.交易会 +fairly adj.公平地，相当 +fairy n.妖精，仙女 +faith n.信任，信念 +faithful adj.忠诚的，可靠的 +faithfully adv.忠诚地 +fake adj.冒片的 n.冒牌货 +fall v.落下，跌倒 n.瀑布 +false adj.假的，假造的 +fame n.名声，声誉 +familiarity n.熟悉，相似 +familiar adj.熟悉的，亲近的 +family n.家庭，家属 +famine n.饥荒，饥饿 +famous adj.著名的 +fan n.扇子，...迷 v.扇 +fanatic adj.狂热的，入迷的 +fancy n.幻想，爱好 v.想象 +fantastic adj.奇异的，荒谬的 +far adj.遥远的 adv.远 +fare n.车费 v.饮食 +farewell int.再见 adj.告别的 +farm n.农场，农庄 +farmer n.农夫，农场主 +farmhand n.农工，农场工人 +farmhouse n.农舍 +farming n.农业，种植业 +farther adv.较远，更进一步 +fascinate v.吸引，入迷，蛊惑 +fascination n.入迷 +fascism n.法西斯 +fascist n.法西斯分子 +fashion n.方式，时髦，时装 +fashionable adj.流行的，时髦的 +fast adj.快的 adv.快 +fasten v.捆紧，钉牢 +fat n.脂肪 adj.肥胖的 +fatal adj.致命的 +fate n.命运，厄运，宿命 +father n.父亲，神父，始祖 +father-in-law n.岳父，公公 +fathom v.领会，推测 +fatigue n.,v.(使)疲劳 +fault n.缺点，过失，断层 +faultless adj.完美的 +faulty adj.有缺点的 +favor n.帮助，偏爱 v.宠爱 +favorable adj.赞成的，有利的 +favorably adv.有利地，顺利地 +favorite n.adj.最喜爱的人或物 +fbi 國際刑警 +fear n.,v.害怕，担忧 +fearful adj.可怕的，吓人的 +fearless adj.毫不畏惧的 +feasibility n.可行性 +feasible adj.可行的，做得到的 +feast n.,v.宴会，宴请 +feat n.功绩 +feather n.羽毛 +feature n.相貌，特征，特写 +february n.二月 +federal adj.联邦的 +federation n.联邦 +fee n.费用，酬金 +feeble adj.虚弱的，无力的 +feed v.喂养，吃东西 +feedback n.反馈 +feel v.感到，摸，意识到 +feeling n.知觉，感觉，感情 +fell v.砍到 +fellow n.家伙，同事 +fellowship n.交情，会员资格 +female adj.女性的，雌的 +feminine adj.女性的，妇女的 +fence n.围栏，篱笆 +ferocious adj.凶猛的，野蛮的 +ferrous adj.铁的，含铁的 +ferry n.渡船 v.渡运 +ferryboat n.渡船 +fertile adj.肥沃，多产的 +fertilizer n.肥料，化肥 +fervent adj.强烈的，热烈的 +festival n.节日 adj.喜庆的 +fetch v.去取来，去请来 +feud n.纠纷，封地 +feudal adj.封建的 +feudalism n.封建主义 +fever n.发烧，狂热 +few adj.少的 n.少数 +fiber n.纤维，质地 +fiction n.小说，虚构 +fictional adj.虚构的 +fiddle n.提琴 +field n.田野，战场，场 +fierce adj.凶猛的，猛烈的 +fiery adj.火的 +fifteen num.十五 +fifth num.第五，五分之一 +fifty num.五十 +fig n.无花果 +fight v.打仗，战斗，作斗争 +fighter n.战士 +figurative adj.比喻的，修饰的 +figure n.数字，图形，人物 +file n.档案，纵列，锉刀 +filing n.档案管理 +fill v.装满，充满，补缺 +filling n.充填物，馅 +film n.胶片，电影，薄膜 +filter n.滤器 v.过滤 +filth n.污秽，污物 +filthy adj.污秽的 +final adj.最终的 n.决赛 +finalize v.落实，定下来 +finally adv.最终，终于 +finance n.金融 v.资助 +financial adj.金融的，财政的 +financier n.金融家 +financing n.金融业，财政学 +find v.寻找，找到，发现 +finding n.发现，发现物 +fine adj.好的，精细的 +finger n.手指 +finish v.,n.结束，抛光 +finished adj.制成的 +finite adj.有限的，限定的 +fir n.裘皮 +fire n.火，火灾 v.开火 +fire-engine n.消防车 +fireman n.消防队员 +fireplace n.壁炉 +firework n.焰火 +firm adj.坚固的 n.商号 +firmly adv.坚定地，坚固地 +firmness n.坚定，坚固 +first adj.第一的 adv.首先 +first-rate adj.第一流的 +fish n.鱼 v.捞取，探听 +fisherman n.渔夫 +fishery n.渔业 +fission n.裂变，分裂 +fist n.拳头 +fit adj.适合的，健康的 +fitness n.适合，健康 +fitting adj.适当的 +five num.五 +fix v.固定，确定，修理 +fixed adj.固定的，已确定的 +fixture n.固定物，固定装置 +flag n.旗 +flake n.片，片状物 +flame n.火焰，热情 +flank n.侧面，胁腹 +flannel n.法兰绒 +flap v.拍打 n.垂下物 +flare v.,n.闪烁 +flash n.,v.闪光，闪现 +flask n.瓶，烧瓶 +flat adj.平的，平淡的 +flatten v.弄平，变平 +flatter v.奉承，谄媚 +flavor n.滋味，风趣 +flaw n.裂缝，瑕疵，缺点 +flee v.逃走，消散 +fleece n.羊毛 +fleet n.船队 +flesh n.肌肉，骨肉，果肉 +fleshy adj.肉的 +flexibility n.柔韧，灵活性 +flexible adj.柔韧的，灵活的 +flicker v.闪烁 +flight n.飞，航班，逃走 +fling v.抛，掷 +float v.浮，漂 n.彩车 +flock n.群 v.群集 +flood n.洪水，大量 +floor n.地板，(楼)层 +flour n.面粉 +flourish v.茂盛，兴旺 +flow v.流动 n.流动，流量 +flower n.花，盛期 +flu n.流感 +fluctuate v.波动，起伏 +fluctuation n.波动 +fluency n.流利，流畅 +fluent adj.流利的 +fluid n.液体 adj.流动的 +flush v.(脸)发红 n.红晕 +flute n.长笛，笛子 +flutter v.飘动，振翼 +flux n.流动，变迁 +fly v.飞，驾机 n.苍蝇 +foam n.泡沫 v.起泡 +fob (缩)离岸价 +focus n.焦点，中心 v.集中 +fodder n.饲料 +foe n.敌人，宿敌 +fog n.雾，翳 +foggy adj.有雾的，雾蒙蒙的 +fold v.折叠 n.折痕 +foliage n.叶子(总称) +folk n.人们，乡亲，亲属 +follow v.跟随，听懂，遵循 +follower n.追随者，信徒 +following adj.下列的，其次的 +follow-up n.,adj.后续(的) +fond adj.喜爱..的，慈爱的 +food n.食物，食粮 +foodstuff n.食品 +fool n.蠢人，傻瓜 v.愚弄 +foolish n.愚蠢的，笨的 +foot n.脚，英尺，最下部 +football n.足球 +footing n.立足点，立场 +footstep n.足迹，脚步声 +for prep.给，作...用的 +forbid v.禁止，不许 +forbidden adj.禁止的 +force n.力，力量 v.强迫 +fore adj.前面的adv.在前面 +forecast n.,v.预测，预报 +forefather n.祖先，先辈 +forefinger n.食指 +foregoing adj.先行的，上述的 +forehead n.前额 +foreign adj.外国的，对外的 +foreigner n.外国人，异乡人 +foreman n.领班 +foremost adj.最初的，第一流的 +foresee v.预见，预知 +forest n.森林 +forestry n.林业 +foretell v.预告，预言 +forever adv.永远，总是 +forge v.打铁，锻造，伪造 +forgery n.锻炉，锻造厂 +forget v.忘记，疏忽，没想到 +forgive v.饶恕，原谅，豁免 +fork n.餐叉，岔口 +form n.形状，类型，表格 +formal adj.形式上的，正式的 +formality n.礼节，正式 +format n.格式，样式 +formation n.形成，构成 +former adj.以前的，前者 +formerly adv.从前，以前 +formidable adj.可怕的，难对付的 +formula n.公式 +formulate v.系统阐述 +formulation n.确切表述 +forsake v.遗弃，抛弃 +fort n.堡垒，要塞 +forth adv.向前，向外 +forthcoming adj.即将到来的 +fortitude n.坚毅 +fortnight n.两星期 +fortress n.堡垒，城堡 +fortuity n.偶然事件 +fortunate adj.幸运的，侥幸的 +fortunately adv.幸运地，幸而 +fortune n.运气，财富 +forty num.四十 +forum n.讨论会，座谈会 +forward adj.向前的 adv.向前 +fossil n.化石，守旧者 +foster v.养育，抚养 +foul adj.肮脏的，邪恶的 +found v.创办，使有根据 +foundation n.建立，基金，基础 +founder n.创办人，奠基人 +fountain n.泉，源泉，喷泉 +four num.四 +fourteen num.十四 +fourth num.第四，四分之一 +fowl n.家禽，鸡，禽肉 +fox n.狐狸，狡猾的人 +fraction n.片断，分数 +fractional adj.零碎的，不足的 +fracture n.断裂 v.折断 +fragile adj.易碎的，脆的 +fragment n.碎片，片断 +fragrance n.芬芳，香气 +fragrant adj.香的，芬芳的 +frail adj.脆弱的，虚弱的 +frame n.框架，骨骼 v.构造 +framework n.构架，机构 +france n.法国 +franchise n.特许权 +frank adj.坦率的，真诚的 +frankly adv.坦率地 +free adj.自由的，空闲的 +freedom n.自由，免除 +freely adv.自由地，随意地 +freeze v.结冰，楞住，冻结 +freezer n.冷冻箱 +freight n.货运，货物，运费 +french adj.法国的 n.法语 +frenchman n.法国人 +frequency n.频繁，频率 +frequent adj.频繁的，经常的 +frequently adv.时常，往往 +fresh adj.新鲜的，崭新的 +freshen v.使新鲜，使振作 +freshman n.新人，新生 +fret v.使烦恼 n.烦燥 +friction n.摩擦，摩擦力 +friday n.星期五 +friend n.朋友 +friendly adj.友好的，和气的 +friendship n.友谊，友好 +fright n.恐怖，惊吓 +frighten v.惊吓，吓唬 +frightening adj.令人害怕的 +frightful adj.可怕的 +fringe n.边缘，花边，穗子 +frock n.女上衣，童上装 +frog n.蛙 +from prep.自，从...来 +front n.正面，前线 v.面对 +frontier n.边界，国境，新领域 +frost n.霜，霜冻 +frosty adj.霜的 +frown v.皱眉头，厌恶 +frugal adj.节俭的 +fruit n.果子，水果，成果 +fruitful adj.果实累累的 +frustrate v.阻挠，使灰心 +frustration n.挫折，灰心 +fry v.油煎，炸 +frying-pan n.煎锅 +fuck 渾蛋，辱駡 +fuel n.燃料 +fulfil v.完成，满足要求 +fulfillment n.完成，成就 +full adj.满的，完全的 +fully adv.完全，彻底 +fumble v.摸索 +fun n.娱乐，玩笑，乐趣 +function n.作用，集会，函数 +functional adj.功能的 +fund n.基金，资金，蕴藏 +fundamental adj.基本的，根本的 +funeral n.葬礼 +funny adj.有趣的，好笑的 +fur n.毛皮，裘衣 +furious adj.狂怒的，狂暴的 +furnace n.熔炉 +furnish v.供应，装备，摆家具 +furniture n.家具(总称) +furrow n.犁沟 +further adv.更远，进一步 +furthermore adv.而且 +fury n.狂暴，狂怒 +fuse n.保险丝，导火线 +fuss n.忙乱，大惊小怪的 +fussy adj.爱大惊小怪的 +future n.将来，前途 +futures n.期货 +gain v.获得，赢得 n.收益 +gale n.大风，定期交付 +gallery n.美术馆 +gallon n.加仑 +gallop v.奔驰，飞跑 +gamble v.,n.赌博，投机 +gambler n.赌徒 +game n.游戏，比赛，猎物 +gang n.一群，一帮 +gangster n.匪徒，歹徒 +gaol n.监狱 +gap n.空隙，隔阂，山口 +garage n.车库，汽车修理站 +garbage n.垃圾 +garden n.花园，菜园 +gardener n.园丁 +gardening n.园艺 +garlic n.大蒜 +garment n.衣服，服装 +garrison n.要塞，警备队 +gas n.气体，煤气，汽油 +gasoline n.汽油 +gasp v.,n.喘息，喘气 +gate n.大门，门票收入 +gather v.聚集，收集，采集 +gathering n.集会，聚集 +gauge n.规格，计量表 +gay adj.快活的，快乐的 +gaze v.,n.凝视，注视 +gear n.齿轮，用品 +gem n.宝石 +general adj.一般的，总的 +generalization n.概括 +generalize v.总结，归纳 +generally adv.通常，大概 +generate v.产生，发生，生殖 +generation n.世代，一代人 +generator n.发电机 +generosity n.慷慨，大方 +generous adj.慷慨的，丰盛的 +genius n.天份，才华，天才 +gentle adj.温柔的，温和的 +gentleman n.绅士，先生，君子 +gently adv.轻轻地，温柔地 +genuine adj.真正的，道地的 +geography n.地理学，地形 +geology n.地质学 +geometry n.几何学 +germ n.萌芽，起源，细菌 +german adj.德国的 n.德语 +germany n.德国 +gesture n.姿势，手势，姿态 +get v.获得，记住，到达 +get-together n.集会，聚会 +ghost n.鬼魂，幽灵 +giant n.巨人 adj.巨大的 +gift n.礼品，天赋 +gigantic adj.巨大的 +giggle v.咯咯地笑 +ginger n.姜 +girl n.少女，姑娘 +giver v.给予，付出 n.让步 +glad adj.快乐的，高兴的 +glance v.看一眼 n.一瞥 +glare n.,v.闪耀，瞪眼 +glass n.玻璃，镜子 +glassware n.玻璃制品 +gleam n.微光，闪光 +glide v.,n.滑行，溜 +glimpse v.,n.瞥见 +glisten v.闪光 +glitter v.闪闪发光 +global adj.全世界的，总的 +globalization n.全球化 +globalize v.使...全球化 +globe n.地球，球体，地球仪 +gloom n.黑暗，忧郁 +gloomy adj.阴沉的，忧郁的 +glorious adj.光荣的，辉煌的 +glorify v.颂扬，赞美 +glory n.光荣，壮丽，荣誉 +glossary n.词汇表 +glove n.手套 +glow v.发光，发红 +glue n.胶水 n.粘贴 +glut n.供过于求v.狼吞虎咽 +gnaw v.啃，咬 +gnp n.(缩)国民总收入 +go v.去，进行，打算 +goal n.目标，目的，球门 +goat n.山羊 +god n.神，上帝 +goddess n.女神 +gold n.黄金，金币，金色 +golden adj.黄色的，金黄色的 +golf n.高尔夫球 +good adj.好的，善良的 +good-bye int.再见 +good-looking adj.好看的 +goodness n.优良，天哪 +goodself n.你方 +goods n.货物，商品 +goodwill n.商誉 +goose n.鹅 +gorge n.咽喉，峡谷，山口 +gorgeous adj.绚丽的，了不起的 +gorilla n.大猩猩 +gossip n.闲谈，聊天 +govern v.统制，支配，决定 +government n.编制，政体，政府 +governess n.女家庭教师 +governor n.州长，总督 +gown n.长袍，法衣 +grab v.抓住，攫取 +grace n.优美，文雅，恩惠 +graceful adj.优美的，文雅的 +gracious adj.亲切的，客气的 +grade n.等级，年级 +gradual adj.逐渐的，逐步的 +gradually adv.逐渐地，逐步地 +graduate v.毕业生 v.毕业 +graduation n.毕业 +grain n.谷物，颗粒，一点点 +gram n.克 +grammar n.语法 +grammatical adj.语法的 +gramophone n.留声机 +grand adj.雄伟的，重大的 +grandchild n.(外)孙儿、女 +granddaughter n.孙女，外孙女 +grandfather n.祖父，外祖父 +grandmother n.祖母，外祖母 +grandparent n.(外)祖父(母) +grandson n.孙子，外孙 +granite n.花岗石 +grant v.答应，授予，承认 +grape n.葡萄 +graph n.图象，图解 +grasp v.,n.抓住，领悟 +grass n.草，禾本植物 +grasshopper n.蚱蜢 +grateful adj.感激的，致谢的 +gratify v.使满足，使高兴 +gratifying adj.可喜的 +gratis adj.免费的 +gratitude n.感激，感谢 +grave adj.严肃的，庄重的 +gravel n.砂砾，石子 +gravity n.引力，严肃 +graze v.吃草，擦碰 +grease v.润滑油脂 +great adj.大的，伟大的 +greatly adj.大大地，非常地 +greatness n.伟大，大 +greece n.希腊 +greed n.贪婪，贪心 +greedy adj.贪婪的 +greek n.,adj.希腊人(的) +green adj.绿的，没有经验的 +greengrocer n.蔬菜商 +greenhouse n.温室 +greet v.打招呼 +greeting n.问候，致意 +grey adj.灰色的，阴郁的 +grief n.悲哀，悲伤 +grieve v.使悲伤，伤心 +grim adj.冷酷的，不祥的 +grin v.露齿而笑 +grind v.碾碎，磨快，折磨 +grip v.,n.紧握，吸引 +groan v,,n.呻吟 +grocer n.杂货铺 +grocery n.杂货店 +groove n.槽，沟，常规 +grope v.摸索，探索 +gross adj.总的，粗糙的 +ground n.地面，场，根据 +groundless adj.无根据的 +group n.群，组，团体 +grove n.林子，树丛 +grow v.增长，成长，种植 +growl v.,n.咆哮，嗥叫 +grown adj.已长成的 +grown-up n.成人 adj.成人的 +growth n.增长，发展，生长 +grudge v.嫉妒，吝啬 +grumble v.抱怨，咕哝，发牢骚 +grunt n.,v.(作)呼噜声 +guarantee n.,v.保证，担保 +guard v.警卫，提防 v.哨兵 +guardian n.保护人 +guess v.,n.猜想，推测 +guest n.客人，宾客，旅客 +guesthouse n.宾馆 +guidance n.向导，指导 +guide v.向导，指引 n.导游 +guilt n.犯罪，过失 +guilty adj.有罪的，内疚的 +guitar n.吉它，六弦琴 +gulf n.海湾，鸿沟 +gulp v.吞下 +gum n.树胶，口香糖，牙龈 +gun n.枪，炮 +gunpowder n.火药 +gust n.一阵(大风) +gutter n.街沟 +guy n.家伙 +gymnasium n.体育馆，健身房 +gymnastics n.体操 +gymnast n.体操运动员 +habit n.习惯 +habitual adj.习惯的，惯常的 +haggard adj.消瘦的，憔悴的 +haggle n.争论，讨价还价 +hail v.欢呼 n.冰雹 +hair n.头发，毛发 +haircut n.理发 +hairdress n.美发 +hairpin n.发卡 +hairy adj.毛发的，多毛的 +half n.一半 adv.一半 +halfway adv.半途 +hall n.大厅，会堂 +hallmark n.标志 +halt v.,n.停住 +halve v.对分，减半 +ham n.火腿 +hamburger n.汉堡包 +hammer n.锤子 v.锤击 +hamper v.妨碍 +hand n.手，人手，指针 +handbag n.手袋，手提包 +handbook n.手册 +handful adj.一把，少量 +handicap n.障碍 v.妨碍 +handicapped adj.有残疾的 +handkerchief n.手帕，手绢 +handle v.处理，对待 n.把 +handling n.处理，管理 +handsome adj.漂亮的，得体 +handout n.分发物(印刷品等) +handwriting n.手写，书法，笔迹 +handy adj.方便的，近便的 +hang v.挂，垂，绞死 +hanger n.衣架 +haphazard adj.偶然的 +happen v.发生，碰巧，出事 +happening n.事件 +happily adv.幸运地 +happiness n.幸福 +happy adj.高兴的，幸运的 +harbor n.港口，停泊处 +hard adj.硬的 adv.努力 +harden v.硬化，变硬 +hardly adv.刚刚，几乎不 +hardness n.坚硬，硬度 +hardship n.困苦，艰难 +hardware n.硬件 +hard-working adj.勤劳的 +hardy adj.耐劳的，耐寒的 +hare n.野兔 +harm n.,v.损害，伤害 +harmful adj.有害的 +harmless adj.无害的，无恶意的 +harmonious adj.和睦的，和谐的 +harmony n.融洽，和谐 +harness v.支配，治理 +harsh adj.刺耳的，严厉的 +harvest v.,n.收获 +haste n.急忙，急速 +hasten v.赶紧，加快 +hasty adj.急促的，草率的 +hat n.帽子 +hatch v.孵化，策划 +hate v.恨，憎恶，不愿意 +hateful adj.可恨的，可憎的 +hatred n.憎恶，敌意 +haughty adj.傲慢的 +haul v.拉，拖 n.获得量 +haunt v.萦绕，作崇 +have v.有，不得不，拿 +hawk n.鹰隼 +hay n.干草 +hazard n.危险 +he pron.他 +head n.头，领导 v.率领 +headache n.头疼，头疼的事 +heading n.标题 +headline n.通栏标题 +headlong ad.头向前地，卤莽地 +headmaster n.(中、小学)校长 +headquarters n.司令部，总部 +heal v.治愈，医治 +health n.健康(状况) +healthy adj.健康的 +heap n.一堆，许多 v.堆积 +hear v.听见，听取，听说 +hearing n.听力，审讯 +heart n.心，心肠，中心 +heartfelt adj.衷心的 +hearth n.壁炉，炉边 +heartily adv.精神饱满的 +hearty adj.衷心的，热诚的 +heat n.热，热烈 v.加热 +heated n.激烈的，热烈的 +heating n.取暖，供热 +heave v.起伏，举起，叹气 +heaven n.天空，天堂 +heavily adv.重，沉重的 +heavy adj.星的，繁重的 +hedge n.树篱，套期保值 +hedgehog n.刺猬 +heed v.,n.注意，留心 +heel n.后跟 +height n.高度，顶点 +heighten v.加高，增加 +heir n.继承人 +heiress n.女继承人 +helicopter n.直升飞机 +hell n.地狱，苦境 +hello int.喂，你好 +helmet n.头盔 +help v.,n.帮助，有助于 +helpful adj.有用的 +helpless adj.无用的，无效的 +hemisphere n.半球，领域 +hen n.母鸡 +hence adv.因此，由此 +henceforth adv.今后 +her pron.她的，她(宾格) +herald n.先兆，先驱 +herb n.药草 +herbal adj.草药的 +herd v.放牧 n.(牲畜)群 +here adv.这里，在这里 +hereafter adv.此后 +hereby adv.以此 +herein adv.在此 +hereinafter adv.以下 +hereof adv.在本文件中 +hereto adv.对此 +herewith adv.与此一道 +hero n.英雄，男主角 +heroic adj.英雄的，英勇的 +heroine n.女英雄，女主角 +herself pron.她自己 +hesitant adj.犹豫的 +hesitate v.犹豫，不想 +hesitation n.犹豫，踌躇 +hey int.嗨 +hi int.嗨，你好 +hide v.躲藏，隐瞒，掩盖 +hideous adj.骇人听闻的 +high adj.高的，高度的 +highland n.高地 +highly adv.十分，赞许地 +highway n.公路 +hijack v.拦路抢劫 +hijacker n.栏路抢劫者 +hike n.,v.徒步郊游 +hill n.小山，丘陵 +hillside n.山坡，山腰 +him pron.他(宾格) +himself pron.他自己 +hind adj.后面的，后部的 +hinder v.妨碍，阻止 +hinterland n.内地 +hindrance n.障碍(物) +hinge n.合页，绞链 +hint n.暗示，迹象 v.暗示 +hip n.臀部 +hire v.租，雇佣 +his pron.他的 +hiss v.,n.(发)嘶嘶声 +historian n.历史学家 +historic adj.历史性的 +historical adj.历史的 +history n.历史 +hit v.打，碰，打击 +hitchhike v.搭车旅行 +hitherto adv.迄今，到那时 +hoarse adj.嘶哑的，沙哑的 +hobby n.嗜好，业余爱好 +hoe n.锄头 v.锄 +hoist v.升起，扯起 +hold v.握住，容纳 n.控制 +holder n.持有人，支架 +holding n.支持，控股 +hold-up n.停顿，耽误 +hole n.洞，孔穴 +holiday n.节日，假日 +hollow adj.空心的，凹陷的 +holy adj.神圣的，圣洁的 +home n.家，故乡 adv.回家 +homeless adj.无家可归的 +homely adj.家常的，简便的 +homesick n.思乡的 +homework n.家庭作业 +homogenous adj.同质的，同类的 +honest adj.诚实的，正直的 +honesty n.诚实，正直 +honey n.蜂蜜 +honeymoon n.蜜月 +honor n.荣誉，名誉 v.尊敬 +honorable adj.可尊敬的，体面的 +hook n.钩 v.钩住 +hop v.跳跃 +hope v.,n.希望，愿望 +hopeful adj.有希望的 +hopefully adv.可以指望 +hopeless adj.无望的，绝望的 +horizon n.地平线，视野 +horizontal adj.水平的，横的 +horn n.角，触须，号角 +horrible adj.可怕的，糟透的 +horrify v.使恐惧 +horror n.恐惧，恐怖 +horse n.马 +horsepower n.马力 +hose n.软水管，长统袜 +hospital n.医院 +hospitable adj.好客的 +hospitality n.好客，款待 +host n.一大群，男主人 +hostage n.人质 +hostel n.廉价旅馆 +hostess n.女主人，女主持人 +hostile adj.怀敌意的 +hot adj.热的，辣的 +hotdog n.热狗(面包) +hotel n.旅馆 +hotelling n.旅馆业 +hour n.小时，点钟 +hound n.猎狗 v.追逐 +house n.房子，剧场，家 +household n.户 adj.家庭的 +housekeeper n.看门人，保姆 +housewife n.家庭主妇 +housework n.家务 +hover v.翱翔，盘旋，徘徊 +how adv.如何，多么，怎样 +however adv.可是，然而 +howl v.,n.嚎叫，嚎哭 +hug v.,n.紧抱 +huge adj.庞大的，巨大的 +hull n.豆荚，外壳，船壳 +hum v.哼，嗡嗡叫 +human adj.人的，人类的 +humane adj.人慈的 +humanism n.人道主义 +humanitarian n.慈善家 +humanity n.人类，人性 +humble adj.谦卑的，卑贱的 +humid adj.湿的，潮湿的 +humidity n.湿度，湿气 +humiliate v.使受辱 +humiliation n.羞辱，耻辱 +humor n.幽默(感)，心情 +humorous adj.幽默的，诙谐的 +hundred num.一百 +hundredth num.第一面，百分之一 +hunger n.饥饿，渴望 +hungry adj.饥饿的，渴望的 +hunt v.打猎，搜索，寻找 +hunter n.猎人，搜索者 +hurl v.猛掷，猛投 +hurrah int.好哇 n.喝彩声 +hurry v.赶紧，急忙，急运 +hurt v.使受伤，使痛，伤害 +husband n.丈夫 +hush int.嘘 n.沉默 +hustle v.奔忙 +hut n.小屋 +hydraulic adj.水力的，液压的 +hydroelectric adj.水电的 +hydrogen n.氢，氢气 +hygiene n.卫生 +hymn n.赞美诗，赞歌 +hypocrisy n.伪善 +hypothesis n.假设，前提 +hypothetical adj.假设的 +hysteria n.歇斯底里，癔病 +hysteric adj.亢奋的 +i .我 +ice n.冰，冰块 +ice-cream n.冰淇淋 +ice-bound adj.冰封的 +iceland n.冰岛 +icy adj.冰冷的，结了冰的 +idea n.思想，主意，打算 +ideal adj.理想的 n.理想 +idealism n.理想主义 +idealize v.使理想化 +identical adj.同一的，相同的 +identification n.识别，身分 +identify v.认出，认为...一致 +identity n.认同，同一性 +idiom n.习语，成语 +idiomatic adj.习语的，惯用的 +idiot n.傻子，白痴 +idle adj.空闲的，懒的 +idleness n.闲散，无所事事 +idol n.偶像，被崇拜的人 +i.e. (缩)即，也就是 +if conj.如果，虽然,是否 +ignite v.点燃 +ignorance n.无知，不知道 +ignorant adj.不知道的，无知的 +ignore v.忽视，不理睬 +ill adj.患病的，坏的 +illegal adj.不合法的，非法的 +illegible adj.字迹不清的 +illiteracy n.文盲 +illiterate adj.文盲的 n.文盲 +illness n.疾病，生病 +illuminate v.照亮，启发 +illusion n.幻想，幻觉 +illusive adj.幻觉的 +illustrate v.图解，用图说明 +illustration n.阐明，实例 +image n.图像，影像，形象 +imaginary adj.想象的，虚构的 +imagination n.想象力，想象 +imagine v.想象，猜想 +imitate v.模仿，仿造，模拟 +imitation n.模仿，仿制品 +immaterial adj.无形的，不重要的 +immature adj.不成熟的 +immediate adj.立即的，最近的 +immediately adv.立即，马上 +immense adj.巨大的，极大的 +immerse v.浸泡，埋头于 +immigrant n.移民 +immigrate v.移入 +immigration n.移居入境 +imminent adj.迫切的，危急的 +immoral adj.不道德的 +immortal adj.不朽的 +impact n.冲击，影响 +impart v.给予，告诉 +impartial adj.公证的 +impatience n.不耐烦 +impatient adj.急切的，不耐烦的 +imperative adj.绝对必要的 +imperfect adj.不完善的 +imperialism n.帝国主义 +imperialist n.帝国主义者 +implement v.实行 n.工具 +implementation n.实行，执行 +implication n.暗示，含义 +implied adj.暗含的，暗示的 +implore v.恳求，哀求 +imply v.暗示，意味 +import v.进口,引进 n.进口货 +importance n.重要性，意义 +important adj.重要的，重大的 +importation n.进口 +importer n.进口商 +impose v.征(税)，强加 +imposition n.强迫接受 +impossibility n.不可能性 +impossible adj.不可能的，不妥的 +impost n.进口税，关税 +impractical v.不可行的 +impress v.印，铭刻，产生印象 +impression n.印象，影响，印迹 +impressive adj.给人深刻印象的 +imprison v.关押，监禁 +imprisonment n.监禁，徒刑 +improper adj.不适当的 +improve v.改善，提高 +improvement n.改善，好转 +impulse n.冲击，冲动，脉搏 +impurity n.不纯，杂质 +in prep.在...内，穿戴 +inability n.无能 +inaccessible adj.很难得到的 +inaccurate adj.不准确的，不确切 +inadequate adj.不充足的，不足以 +inasmuch adv.因为，由于 +inaugural adj.开幕的 +inaugurate v.举行开幕、就职典礼 +inauguration n.开幕、就职典礼 +incapable adj.不能的，不会的 +incense v.使发怒 n.香 +incentive n.刺激的，鼓励的 +inch n.英寸 +incident n.事件，事变，插曲 +incidentally adv.偶然地，另外 +inclination n.倾斜，倾向 +incline v.低头，喜欢，倾斜 +inclined adj.倾向于...的 +include v.包括 +inclusion n.包括在内 +inclusive adj.包括在内的 +income n.收入，所得 +incompatibility n.不兼容 +incompatible adj.不相容的 +incomplete adj.不完全的，没完成 +inconsistency n.不一致 +inconsistent adj.不一致的 +inconvenience n.不便，不利 +inconvenient adj.不方便的 +incorporate v.合并，体现 +incorporated adj.有限的 +incorrect adj.不正确的 +incoterms n.(缩)国际贸易术语 +increase v.,n.增加，增长 +increasing adj.不断增长的 +increasingly adv.日益，越来越 +incredible adj.不可信的，惊人的 +incredulous adj.表示怀疑的 +increment n.增值 +incur v.招致，承受 +indebted adj.感激的，感恩的 +indebtedness n.感激 +indeed adv.的确，实际上 +indefinite adj.不明确的，不确定 +indefinitely adv.不明确地 +indemnify v.赔偿，保护 +indent v.(书写)缩行 +independence n.独立，自主 +independent adj.独立的 +independently adv.独立地 +index n.索引，标志，指数 +india n.印度 +indian adj.,n.印度人(的) +indicate v.指明，表示 +indication n.表示，迹象 +indicative adj.表示...的 +indifference n.冷淡，不关心 +indifferent adj.冷淡的，不在乎的 +indigestion n.消化不良 +indignant adj.气愤的，愤慨的 +indignation n.愤慨，气愤 +indirect adj.间接的，侧面的 +indirectly adj.间接地 +indispensable adj.必不可少的 +individual adj.个人的，各自的 +indoor adj.室内的 +indoors adv.在户内，在屋里 +induce v.诱使，引起，归纳 +inducement n.诱导，动机 +induction n.感应，归纳 +indulge v.放纵，放任，纵容 +industrial adj.工业的 +industrialize v.使工业化 +industrialization n.工业化 +industrialized adj.工业化的 +industrious adj.勤劳的，勤奋的 +industry n.工业，产业，勤奋 +ineffective adj.效率低的 +ineffectiveness n.低效率 +inefficiency n.无效力 +inefficient adj.无效的 +inertia n.惯性，惰性，不活动 +inevitable adj.必然的，不可避免 +inevitably adv.必然地 +inexpensive adj.便宜的 +infant n.婴儿，幼儿 +infantry n.步兵 +infect v.感染，传染 +infection n.感染 +infectious adj.传染的 +infer v.推断，推论 +inference n.推断，推论的结果 +inferior adj.低级的 n.下级 +inferiority n.劣势 +infinite adj.无限大的，无穷的 +infinitely adv.无限地，无穷地 +infinitive adj.不定式的 +infinity n. 无限，无数，极多 +inflammable adj.不易燃的 +inflation n.充气，通货膨胀 +inflict v.打击 +influence n.影响，势力(范围) +influential adj.有影响的 +influenza n.流行性感冒 +inform v.通知，告诉，告密 +informal adj.非正式的 +information n.通知，情报，资料 +informative adj.提供资料的 +infrequent adj.不经常的 +infringe v.侵权 +infringement n.侵权 +ingenious adj.灵巧的，精巧的 +ingenious adj.独创的，机智的 +ingenuity n.灵巧，机灵，巧妙 +inhabit v.居住，栖身 +inhabitant n.居民 +inherent adj.生来俱有的 +inherit v.继承，遗传 +initial adj.最初的 +initially adv.最初 +initiate v.发动，开始，使入门 +initiative n.积极性，首创精神 +inject v.注射 +injection n.注射 +injure v.伤害，损害 +injury n.伤害，损害 +injustice n.不公正 +ink n.墨水，油墨 +inland n.内地的，内陆的 +inlet n.水湾，入口 +inn n.客栈 +inner adj.里面的，内心的 +innocence n.清白，天真 +innocent adj.无罪的 +innovate v.革新，变革，创始 +innovation n.革新，创新 +innumerable adj.无数的 +inorganic adj.无机的 +input n.输入，投入 +inquire v.询问 +inquiry n.询问，查询，调查 +insane adj.疯狂的 +insect n.昆虫 +insert v.插入，嵌入 +insertion n.插入 +inside n.里面 adj.里面的 +insider n.知情者 +insight n.洞察力 +insignificant adj.无足轻重的 +insist v.坚持，坚决要求 +insistent adj.紧迫的，坚持的 +insofar adv.在...范围内 +insolvent adj.无偿付能力的 +inspect v.检查，视察，审查 +inspection n.检查，视察 +inspector n.检查员，视察者 +inspiration n.灵感 +inspire v.鼓舞，激励，受启发 +instable adj.不稳定的 +install v.安装，安置 +installation n.安装，装置 +installment n.分期付款 +instance n.例子 +instant adj.立即的，速溶的 +instantly adv.立即，立刻 +instead adv.代替，而是 +instinct n.本能，直觉，天性 +instinctive adj.本能的，天性的 +institute n.(专科)学院 v.建立 +institution n.机构，制度 +instruct v.指导，指示，告知 +instruction n.指导，指示 +instructive adj.指示的，教育的 +instructor n.教员，教练 +instrument n.仪器，乐器，手段 +instrumental adj.仪器的，工具的 +insufficient adj.不充足的 +insulate v.绝缘，隔离，使孤立 +insulation n.隔离，绝缘 +insult v.,adj.侮辱 +insurance n.保险(业)，保障 +insure v.保险，确保 +intangible adj.无形的 +integral adj.组成的，整体的 +integrate v.整合，结合 +integration n.结合，整体 +integrity n.完整性，诚实 +intellect n.理智，才智 +intellectual n.知识分子 +intelligence n.智慧，情报 +intelligent adj.聪明的，明智的 +intend v.打算 +intense adj.强烈的，极度的 +intensity n.强烈，强度 +intensive adj.强化的，密集的 +intent n.意图 adj.专心的 +intention n.意图，目的 +intentional adj.有意的，故意的 +interact v.相互作用，相互影响 +interaction n.相互作用 +intercourse n.交流，往来 +interest n.兴趣，利息，利益 +interested adj.感兴趣的 +interesting adj.有趣的 +interface n.交界，接口 +interfere v.妨碍，干涉 +interference n.干涉，干扰 +interior n.内部，内地，内政 +intermediate adj.中间的 +internal adj.内部的，国内的 +international adj.国际的 +internationalization n.国际化 +internationalize v.使国际化 +interpret v.解释，当...译员 +interpretation n.解释，口译 +interpreter n.译员 +interrupt v.打断，中断 +interruption n.中断，打扰 +interval n.间隔，中间休息 +intervene v.介入，调解 +interview n.,v.会见，面谈 +intimate adj.亲密的，熟悉的 +intimation n.亲密，熟悉 +into prep.到...里面，..成 +intonation n.语调，声调 +introduce v.介绍，引进，采用 +introduction n.介绍，引言 +introductory adj.介绍的，入门的 +intrude v.侵入，强加于 +inundate adj.使充满 +invade v.入侵，侵犯 +invader n.入侵者 +invalid adj.伤残的，无效的 +invalidate v.使无效 +invaluable adj.非常宝贵的 +invariably adv.不变地，总是 +invasion n.侵略，侵袭 +invent v.发明，创造，编造 +invention n.发明，创造 +inventor n.发明者 +inverse adj.相反的，倒转的 +inversely adv.相反地 +invest v.投资，花费 +investigate v.调查，研究 +investigation n.调查 +investment n.投资(额) +invisible adj.看不见的 +invitation n.邀请(信) +invite v.邀请，招致，征求 +invoice n.发票，装货清单 +involve v.使卷入，忙于 +involved adj.涉及的，复杂的 +involvement n.卷入，涉足 +inward adj.里面的，内心的 +inwards adv.向内的 +ireland n.爱尔兰 +iIrish n.,adj.爱尔兰人(的) +iron n.铁，熨斗 v.熨平 +ironical adj.反讽的，讽刺的 +irony n.反讽，讽刺 +irregular adj.不规则的 +irregularity n.不规则 +irresistible adj.不可抗拒的 +irrespective adj.不论，不考虑 +irrevocable adj.不可撤消的 +irrigate v.灌溉 +irrigation n.灌溉 +irritate v.使生气，刺激 +irritation n.刺激，恼怒 +islam n.伊斯兰教，回教 +island n.岛屿 +isolate v.隔离，孤立 +isolation n.隔离，孤立状态 +issue v.发行,发布 n.发行物 +it pron.它 +italian n.,adj.意大利人(的) +italy n.意大利 +itch v.,n.痒，热望 +item n.条款，项目 +itemize v.分列 +its pron.它的 +itself pron.它自己 +ivory n.象牙，象牙色 +jack n.千斤顶，船首旗 +jacket n.短外套，茄克衫 +jail n.监狱 v.监禁 +jam n.果酱，阻塞 +january n.一月 +japan n.日本 +japanese n.,adj.日本人(的) +jar n.罐子，坛子，刺耳声 +jaw n.下颚，下巴 +jazz n.爵士乐 +jealousy n.妒忌 +jealous adj.妒忌的 +jeans n.牛仔裤 +jelly n.果冻 +jeep n.吉普车 +jeopardize v.危及 +jerk n.颠簸，猛推 +jesus n.耶稣 +jet v.喷射 v.喷气发动机 +jettison n.投弃货物 v.抛弃 +jew n.犹太人 +jewel n.珠宝，宝石 +jewelry n.珠宝(总称) +jewish adj.犹太人的 +jingle v.,n.(发)叮当声 +job n.工作，活儿，差使 +jobless adj.失业的 +jog v.慢跑 +join v.连接，加入，参加 +joint n.接着，关节 +joke n.笑话 v.开玩笑 +jot v.匆匆记下 +journal n.刊物，日志 +journalism n.新闻体 +journalist n.记者 +journey n.旅行，旅程 +joy n.高兴，乐事 +joyful adj.令人高兴的 +judge n.法官，裁判 v.审判 +judgement n.判决，意见，判断 +jug n.大壶，罐 +juice n.汁，液 +juicy adj.多汁的 +july n.七月 +jumble n.搞乱，混乱 +jump v.,n.跳跃，跳动 +junction n.连接，结合处，接头 +june n.六月 +jungle n.密林，热带丛林 +junior adj.年少的，低级的 +jupiter n.木屋 +jury n.陪审团，评奖团 +just adv.只，刚才 +justice n.公正，正直 +justifiable adj.有理由的 +justification n.辩护，正当理由 +justify v.认为...有理 +juvenile adj.青少年的 +kangaroo n.带鼠 +keen adj.锋利的，敏捷的 +keep v.保持，保留，防止 +keeper n.保管人，管理员 +keeping n.一致，协调 +kernel n.核(仁)，核心 +kerosene n.煤油 +kettle n.水壶 +key n.钥匙，关键，答案 +keyboard n.键盘 +keyhole n.钥匙孔 +kick v.,n.踢 +kid n.小孩 v.哄骗 +kidnap v.绑架，诱拐 +kidnaper n.绑架者 +kidney n.肾，腰子 +kill v.杀死，杀害 +killer n.杀人者，杀手 +kilo n.(缩)公斤，公里 +kilogram n.公斤 +kilometer n.公里 +kilowatt n.千瓦 +kind n.种类 adj.仁慈的 +kindergarten n.幼儿园 +kindle v.点燃，激发 +kindly adv.仁慈地，好心地 +kindness n.仁慈，好意 +king n.国王 +kingdom n.王国 +kiss v.接吻，亲嘴 +kit n.全套工具、装备 +kitchen n.厨房 +kite n.风筝 +knee n.膝 +kneel v.跪下 +knife n.小刀 +knight n.骑士，爵士 +knit v.编织，皱(眉) +knob n.球形把手 +knock v.敲，击倒 n.敲门声 +knot n.结，树节 v.打结 +know n.知道，认识，懂 +know-how n.专项技术，诀窍 +knowledge n.知识，学识 +knowledgeable adj.博学的 +lab n.(缩)实验室 +label n.标签 v.标明 +laboratory n.实验室 +labor n.劳动，劳动力 +laborer n.劳工，劳动者 +labor-intensive adj.劳动密集型的 +lace n.花边，鞋带 +lack v.,n.缺少 +lad n.少年，小伙子 +ladder n.梯子，阶梯 +lady n.女士，贵妇人，夫人 +lag v.,n.落后，滞后 +lake n.湖，湖泊 +lamb n.羔羊，小羊肉 +lame adj.跛的，站不住脚的 +lamp n.灯 +land n.陆地，土地 v.着陆 +landed adj.卸货的 +landing n.楼梯平台，着陆 +landlady n.女房东 +landlord n.房东，地主 +landscape n.风景(画)，地形 +lane n.小巷，跑道，行车道 +langkap 冷甲(馬來西亞,霹靂洲内一地方名) +language n.语言 +lantern n.灯笼 +lap n.膝盖 +lapse v.(时间)流失 +large adj.大的，巨大的 +largely adv.大部分，基本上 +lark n.云雀，百灵鸟 +laser n.激光 +last adj.最后的 adv.上次 +lasting adj.持久的，持续的 +late adj.迟到的，晚的 +lately adv.近来，最后 +latent adj.潜伏的，潜在的 +later adv.更晚，以后，过后 +lateral adj.横向的，侧向的 +lathe n.车床 +latin n.,adj.拉丁语(的) +latitude n.纬度，活动余地 +latter adj.后面的，后者的 +lattice n.结构，点阵 +laugh v.笑，嘲笑 +laughter n.笑，笑声 +launch v.发射，发动，开始 +laundry n.洗衣店，送洗的衣物 +lavatory n.盥洗室，厕所 +law n.法律，定律 +lawful adj.合法的，法律的 +lawn n.草地，草坪 +lawyer n.律师，法学家 +lay v.放，安排，打基础 +layday n.装卸日期 +layer n.层，层次 +layout n.设计，规划，图案 +laziness n.懒惰 +lazy adj.懒惰的 +l/c n.(缩)信用证 +lead v.引导，领先，率领 +leader n.领导，领袖 +leadership n.领导 +leading adj.领先的，一流的 +leaf n.叶子，页 +leaflet n.传单，单页宣传品 +league n.同盟，协会 +leak v.漏，泄漏 +leakage n.渗漏 +lean v.俯身，倚 adj.瘦的 +leap v.,n.跳跃 adj.闰年的 +learn v.学习，获悉 +learned adj.有学问的 +learner n.学习者，学生 +learning n.学问，学习 +lease v.租凭，出租 n.租约 +least adj.最少的 +leather n.皮革 adj.皮革制的 +leave v.出发，离开 n.休假 +lecture n.,v.演讲，讲课 +lecturer n.演讲者，讲师 +leeway adj.活动余地 +left adj.左的 adv.向左 +left-handed adj.左手的，左侧的 +leftover n.剩余物 +leg n.腿，裤脚 +legal adj.合法的，法律的 +legend n.传说，传奇 +legendary adj.传说的，传奇的 +legislation n.立法，法规 +legitimate adj.合法的，合理的 +legitimation n.合法 +leisure n.闲暇，闲空 +lemon n.柠檬 +lemonade n.柠檬汽水 +lend v.出借，贷款 +lending n.贷款，借款 +length n.长度，期限 +lengthen v.延长，变长 +leninism n.列宁主义 +lens n.透镜，镜片，晶体 +leopard n.豹 +less adj.更少的 adv.较小 +lessen v.减少，变小，变弱 +lesson n.功课，课程，教训 +lest prep.唯恐，以免 +let v.让，使 +letter n.字母，信，函件 +level n.水平，级 v.弄平 +lever n.杠杆 +levy v.征税 n.关税 +liability n.责任，义务，债务 +liable adj.有责任的 +liar n.说谎者 +liberal adj.思想开放的 +liberate v.解放，释放，使自由 +liberation n.解放 +liberty n.自由 +librarian n.图书管理员 +library n.图书馆，藏书 +license n.许可(证)，执照 +lick v.舔 +lid n.盖，脸 +lie v.躺，位于 v.,n.说谎 +lieutenant n.中尉，副职 +life n.生活，生命，一生 +lifetime n.一生 +lift v.举起，吊 n.电梯 +light n.光，灯 adj.明亮的 +lighten v.发亮，使...愉快 +lighter n.打火机 +lighthouse n.灯塔 +lightly adv.轻轻地，轻易地 +lightning n.闪电 +like v.喜欢 prep.像 +likelihood n.可能，相似性 +likely adj.可信的adv.很可能 +likeness n.相像，类似 +likewise adv.同样，照样 +liking n.兴趣，嗜好 +lily n.百合，睡莲 +limb n.肢，树枝 +lime n.石灰 +limestone n.石灰岩 +limit n.界限，限度 v.限制 +limitation n.限制，局限 +limited adj.有限的，限定的 +limousine n.豪华轿车 +limp adj.柔软的 v.跛行 +line n.行，线条，界线 +linear adj.线性的，线状的 +linen n.亚麻(织物) +liner n.班轮，班机 +linger v.徘徊，逗留，拖延 +linguist n.语言学者 +linguistics n.语言学 +lining n.夹里，衬里 +link v.联系，连结 n.纽带 +lion n.狮子 +lioness n.母狮子 +lip n.嘴唇 +lipstick n.口红，唇膏 +liquid n.液体 adj.液体的 +liquor n.烈性酒 +list n.表，名单 v.列表 +listen v.听，听从 +listener n.听者 +literacy n.识字 +literal adj.字面的，不夸张的 +literally adv.简直，字面上 +literary adj.文学的 +literate n.有文化的 +literature n.文学，文献 +litre n.公升 +litter v.乱丢废物 n.废物 +little adj.小的，一点，少的 +live v.居住,生存 adj.活的 +livelihood n.生活 +lively adj.活跃的，热闹的 +liver n.肝 +livestock n.牲畜 +living adj.活着的 n.生计 +living-room n.客厅，起居室 +load n.负载，负担 v.装载 +loaf n.面包 v.游荡 +loan n.贷款 v.出借 +lobby n.前厅 v.游说 +lobster n.龙虾 +local adj.地方的，当地的 +locality n.地点，现场 +locate v.找出，确定地点 +location n.地点，位置 +lock v.锁上 n.锁，绺 +lock-up n.锁，固定资本 +locomotive n.火车头，机车 +locust n.蝗虫 +lodge v.寄宿 +lodging n.住处，住房 +lofty adj.崇高的，高耸的 +log n.原木，航海日志 +logic n.逻辑，论理学 +logical adj.逻辑的 +loneliness n.孤独，寂寞 +lonely adj.孤独的，寂寞的 +lonesome adj.寂寞的 +long adj.长的 adv.长久 +longevity n.长寿 +longing n.渴望，思慕 +longitude n.经度，经线 +long-term adj.长期的 +look v.看，看上去 n.外表 +loom v.隐隐出现 n.织布机 +loop n.环，回路 v.环绕 +loose adj.松的，自由自在的 +loosen v.解开，放松 +lord n.君主，贵族，上帝 +lorry n.卡车，载重汽车 +lose v.失去，丢失，输 +loss n.丧失，失利，损失 +lost adj.失去的 +lot n.许多，地 adv.相当 +lottery n.抽彩，抓阄，彩票 +loud adj.响亮的，大声的 +loudness n.响亮 +loudspeaker n.扬声器，扩音器 +lounge n.休息室 +lovable adj.可爱的 +love v.爱，喜欢 n.爱情 +lovely adj.好看的，可爱的 +lover n.爱人，情人，爱好者 +low adj.低的，低廉的 +lower v.降低，减弱 +loyal adj.忠诚的，忠贞的 +loyalty n.忠诚，忠贞 +lubricate v.润滑 +lubrication n.润滑 +luck n.运气，幸运 +lucky adj.幸运的 +luggage n.行李 +lumber n.木材，木料 +luminous adj.发光的，明晰的 +lump n.块，肿块 +lumpsum n.总数 +lunar adj.月亮的，阴历的 +lunch n.午饭，便餐 +luncheon n.午餐，午宴 +lung n.肺 +luxurious adj.豪华的，奢侈的 +luxury n.奢侈(品) +machine n.机器 +machinery n.机械(总称) +mackintosh n.雨衣 +macroeconomics n.宏观经济学 +mad adj.疯狂的，狂热的 +madam n.夫人，太太，女士 +madman nn.疯子 +madness n.疯狂，疯病 +magazine n.杂志，期刊 +magic n.魔法，魔术，魅力 +magician n.魔术师 +magistrate n.地方法官 +magnet n.磁性，磁铁 +magnetic adj.磁性的 +magnetism n.磁性，磁力，吸引力 +magnificent adj.壮丽的，宏伟的 +magnify v.放大，扩大 +magnitude n.宏大，重要(性) +maid n.女仆，侍女 +maiden n.少女 adj.未婚的 +mail n.邮件 v.邮寄 +mailbox n.信箱 +main adj.主要的 +mainland n.大陆，本土 +mainly adv.主要地，大部分 +mainstream n.主流 +maintain v.维持，保养，坚持 +maintenance n.保养，维修 +maize n.玉米 +majesty n.陛下，雄伟，庄严 +major adj.主要的，多数的 +majority n.多数，过半数 +make v.做，制造 n.种类 +maker n.制造者，制造商 +make-shift adj.临时的n.权宜之计 +make-up n.气质，化妆品 +malady n.病 +malaria n.疟疾 +malaise n.马来西亚 +malaysia n.马来西亚 +male adj.男性的，雄的 +malice n.恶意，恶感 +malicious adj.恶意的 +man n.人，男人，人类 +manage v.管理，处理，设法 +management n.管理(人员)，经营 +manager n.经理 +managerial adj.管理的 +manhood n.男子气 +manifest v.表明 adj.明白的 +manifestation n.表明 +manifesto n.宣言 +manipulate v.操纵，操作，摆布 +manipulation n.操纵，操作 +mankind n.人类 +manly adj.大丈夫的 +manner n.方法，方式，礼貌 +mansion n.宅第，官邸，大厦 +manual adj.用手的 n.手册 +manufacture v.,n.制造 +manufactured adj.制成的 +manufacturer n.制造商 +manuscript n.手稿，原稿 +many adj.许多的 n.许多 +map n.地图 v.筹划 +maple n.枫树 +marble n.大理石，弹子 +march n.三月 +march n.,v.行进，行军 +margin n.余地，边缘 +marginal adj.边缘的，边际的 +marine adj.海的，海生的 +mariner n.海员，水手 +mark n.痕迹，符号，标记 +marked adj.有标记的，标明的 +market n.市场，销路 +marketable adj.有销路的 +marketing n.市场学，营销学 +marketplace n.市场，集市 +marking n.唛头，标记 +marriage n.婚姻，婚礼 +married adj.已婚的 +marry v.娶，嫁，为...主婚 +mars n.火星 +marsh n.沼泽 +marshal n.元帅 +martyr n.烈士，殉道者 +marvel n.奇迹 v.惊奇 +marvellous adj.奇异的，绝妙的 +marxism n.马克思主义 +marxist n.马克思主义者 +masculine adj.男性的，阳性的 +mask n.假面具 v.掩饰 +mass n.堆，大量，群众 +massacre n.,v.屠杀，残杀 +massage n.按摩，推拿 +massive adj.粗大的，厚重的 +mass media n.传媒工具，新闻界 +mast n.桅杆 +master n.主人，大师，硕士 +masterpiece n.杰作 +mat n.垫子，席子 +match n.火柴，对手，比赛 +mate n.伙伴 v.配对 +material n.材料，资料，原料 +materialism n.唯物主义 +materialize v.使具体化，物质化 +mathematical adj.数学的 +mathematics n.数学 +mathematician n.数字家 +maths n.(缩)数学 +matinee n.日场演出 +matter n.事情，物资，毛病 +mattress n.床垫 +mature adj.成熟的，到期的 +maturity n.成熟，到期 +maximize v.增加到最大程度 +maximum n.最大量，极限 +may n.五月 +may v.可以，也许，祝愿 +maybe adv.或许，大概 +mayor n.市长 +me pron.我(宾格) +meadow n.牧场，草地 +meal n.膳食，一顿饭 +mean v.打算，意指 +meaning n.意义，意图 +means n.手段，财力 +meantime adv.同时，在这期间 +meanwhile adv.,n.在这期间 +measure n.尺寸，量具，措施 +measurement n.测量(结果) +meat n.肉 +mechanic n.技工 +mechanical adj.机械的、机动的 +mechanically adv.机械地 +mechanics n.力学，机械学 +mechanism n.机制，机械装置 +medal n.奖章，勋章，纪念章 +medical adj.医学的，医务的 +medicine n.药，医学 +medieval adj.中世纪的 +meditate v.考虑，沉思 +meditation n.考虑，沉思冥想 +mediterranean n.地中海 +medium n.中间，媒介，中庸 +meek adj.温顺的 +meet v.遇到，会见，迎接 +meeting n.会议，集会 +melancholy n.,adj.忧郁(的) +melody n.旋律，曲调 +melon n.瓜，甜瓜 +melt v.熔化，融解 +member n.成员，会员 +membership n.会员资格，全体成员 +memo n.备忘录 +memoir n.回忆录 +memorial adj.纪念的，追悼的 +memorize v.记住，记忆 +memory n.记忆(力)，回忆 +menace v.,n.威胁，恐吓 +mend v.修理，修补，好转 +mental adj.心理的，精神的 +mentality n.心理，意识 +mention v.,n.提及，讲到 +menu n.菜单 +merchandise n.商品，货物 +merchant n.商人 adj.商业的 +mercantile n.商品 +merciful adj.仁慈的，宽大的 +mercury n.水星 +mercury n.汞，水银 +mercy n.宽大，慈悲，怜悯 +mere adj.仅仅的，起码的 +merely adv.仅仅，只 +merge v.合并 +merit n.价值，功绩 v.应得 +mermaid n.美人鱼 +merry adj.欢乐的 +mesh n.网孔，筛眼 +mess n.肮脏，凌乱 v.弄脏 +message n.音讯，消息 +messenger n.通讯员，使者 +metal n.金属 +metallic adj.金属的 +metallurgy n.冶金学 +meter n.量器，仪表 +method n.方法 +methodology n.方法(论) +meticulous adj.小心翼翼的 +meticulously adv.胆小地 +metre n.米，公尺 +metric adj.公制的，米的 +metropolitan n.大都市 +mexican n.,adj.墨西哥人(的) +mexico n.墨西哥 +microeconomics n.微观经济学 +microphone n.扩音器，话筒 +microprocessor n.微处理机 +microscope n.显微镜 +microwave n.微波 +midday n.正午，晌午 +middle n.当中 adj.中部的 +middleman n.中人，中间人 +middling n.中等的，第二流的 +midnight n.午夜 +midst n.中间，中部 +might v.或许，可以 n.力 +mighty adj.强有力的 +migrant adj.迁移的，候鸟的 +migrate v.迁移(海外)，移栖 +migration n.迁移，移居海外 +mild adj.温和的，味淡的 +mile n.英里 +mileage n.里程 +milestone n.里程碑 +military adj.军事的，好斗的 +militia n.民兵(组织) +milk n.奶，乳夜 v.挤奶 +milkman n.送奶人 +milky adj.加奶的，乳白色的 +mill n.磨坊，工厂 v.滚乱 +miller n.磨坊主 +millimetre n.毫米 +million n.百万 +millionaire n.百万富翁 +mince v.切碎，绞碎 +mincer n.粉碎机 +mind n.头脑，智力 v.介意 +mine pron.我的 n.矿山 +miner n.矿工 +mineral n.矿物 adj.矿物的 +mingle v.混合，混入 +miniature n.雏形，缩影，袖珍 +minicomputer n.微型计算机 +minimize v.使减到最小 +minimum n.最少量 adj.最小的 +minister n.教士，部长，大臣 +ministry n.(政府)部 +minor adj.较小的，次要的 +minority n.少数，少数民族 +mint n.造币厂，薄荷 +minus prep.减去 adj.减的 +minute n.分钟，片刻 +miracle n.奇迹，令人惊讶的事 +miraculous adj.奇迹(般)的 +mirror n.镜子 v.反映 +miscarriage n.未到目的地 +miscarry v.未运到(目的地) +mischief n.伤害，恶作剧 +miser n.吝啬鬼，守财奴 +miserable adj.悲惨的，糟糕的 +misery n.痛苦，悲惨，苦难 +misfortune n.不幸 +misgiving n.疑虑，担心 +mishandle v.装卸不慎 +mishap n.事故 +misinterpret v.误解 +mislead v.引入岐途 +miss v.未击中,错过 n.小姐 +missile n.导弹，发射物 +missing adj.丢失的，缺少的 +mission n.使团，使命，天职 +missionary n.传教士 +mist n.薄雾 v.使迷糊 +mistake n.错误，误解 v.搞错 +mistaken adj.搞错了的，误解的 +mister n.先生(缩写为Mr.) +mistress n.女主人，情妇 +misty adj.雾蒙蒙的，有雾的 +misunderstand v.误解，误会 +misunderstanding n.误会，曲解 +mitten n.连指手套，露指手套 +mix v.混合，配料，交往 +mixer n.混合器 +mixture n.混合物，混和 +moan v.,n.呻吟，悲叹 +mob n.暴民，乌合之众 +mobile adj.机动的，流动的 +mobilize v.动员 +mock v.嘲笑，愚弄 +mode n.方式，方法 +model n.模范，模型，模特儿 +moderate adj.适度的 v.缓和 +moderately adv.适度地，适中地 +modern adj.现代的，时髦的 +modernization n.现代化 +modernize v.使...现代化 +modest adj.谦虚的，质朴的 +modesty n.谦虚 +modification n.修改，缓和 +modified adj.改良的，改进的 +modify v.修改，减轻，修饰 +modulate v.调整，改变 +module n.模量，模件 +moist adj.潮湿的 +moisture n.潮气 +molecular adj.分子的 +molecule n.分子 +moment n.时刻，瞬间 +momentary adj.片刻的，瞬间的 +momentous adj.重要的，重大的 +monarch n.君主，王室 +monastery adj.修道院，寺院 +monday n.星期一 +monetary adj.货币的，金融的 +money n.金钱，货币，财富 +monitor n.班长,监视器 v.监视 +monk n.和尚，修道士 +monkey n.猴子 +monopolize v.垄断，独占 +monopoly n.垄断，独占 +monotonous adj.单调的，枯燥的 +monotony n.单调，枯燥 +monster n.怪兽，怪物，魔鬼 +monstrous adj.可怕的，极恶的 +month n.月份 +monthly adj.每月的 n.月刊 +monument n.纪念章，不朽之物 +monumental adj.纪念碑式的 +mood n.心情，心境，情绪 +moon n.月亮 +moonlight n.月光 +moonlighting n.业余干活 +moor v.系泊，把船栓定 +mop n.拖把，墩布 +moral adj.道德的 n.教训 +morale n.士气，斗志 +morality n.道德品质 +more adj.更多的,更 adv.更 +moreover adv.此外，而且 +morning n.早晨，上午 +mortal adj.致命的 +moslem n.,adj.穆斯林 +mosque n.清真寺 +mosquito n.蚊子 +moss n.苔藓，地衣 +most adj.最多的 adv.非常 +mostly adv.主要地，大多 +motel n.汽车旅馆 +moth n.蛾 +mother n.母亲 adj.出生地的 +mother-in-law n.岳母，婆婆 +motion n.运动，议案 +motionless adj.不动的 +motivate v.促进，激发 +motivation n.动机 +motive n.动机 +motor n.发动机 +motorcar n.汽车 +motorcycle n.摩托车 +motorist n.摩托车手 +motorway n.汽车道，高速公路 +motto n.座右铭 +mould n.模子，型，霉菌 +mount n.山，岳 v.登上 +mountain n.山 +mountainous adj.多山的，山一般的 +mourn v.悲悼，哀痛 +mournful adj.悲悼的，哀痛的 +mourning n.哀痛 +mouse n.老鼠 +moustache n.胡子，须 +mouth n.口，嘴巴，河口 +mouthful n.一口，满口 +move v.移动，推动，搬家 +movement n.活动，运动，动作 +movie n.电影(院) +mr. n.(缩)先生 +mrs. n.(缩)夫人，太太 +ms. n.(缩)女士 +much adj.许多的 n.许多 +mud n.泥浆 +muddy adj.泥泞的 +muffle v.裹住，捂住 +muffler n.围巾，消音器 +mug n.(有柄)大杯 +mule n.骡子 +multiple adj.复合的，多次方的 +multiplication n.乘法，增加 +multiply v.乘，增加，繁殖 +multifunction n.多功能的 +multitude n.大批，大群 +municipal adj.市的，市政的 +mumble v.咕哝，嘟囔 +mumps n.腮腺炎 +murder v.,n.谋杀(案) +murderer n.凶手，杀人犯 +murmur v.低声说 +muscle n.筋，肌肉 +muscular adj.肌肉发达的 +muse v.沉思，默想 +museum n.博物馆，陈列馆 +mushroom n.“蘑菇 +music n.音乐，乐曲 +musical adj.音乐的 n.歌舞片 +musician n.音乐家，作曲家 +must v.必须，准是 n.必须 +mustard n.芥末 +mute adj.缄默的 n.哑巴 +mutter v.咕哝，抱怨 +mutton n.羊肉 +mutual adj.相互的，共同的 +my pron.我的 +myriad n.,adj.无数(的) +myself pron.我自己，我亲自 +mysterious adj.神秘的，玄妙的 +mystery n.神秘，奥妙，秘事 +mystic adj.神秘的 +myth n.神话 +mythology n.神话(学) +nail n.钉子，指甲 v.钉 +naive adj.天真的 +naked adj.裸体的，赤裸裸的 +name n.姓名，名称 v.命名 +nameless adj.无名的 +namely adv.即，也就是 +namesake n.名义 +nap n.打盹，小睡 +napkin n.餐巾(纸) +narrate v.叙述 +narration n.叙述 +narrator n.叙述者 +narrow adj.狭窄的，勉强的 +nasty adj.肮脏的，下流的 +nation n.国家，国民，民族 +national adj.民族的，国家的 +nationality n.国籍 +native adj.本国的，出生地的 +natural adj.自然的，通常的 +naturally adv.自然地 +nature n.自然，本性，性质 +naughty adj.淘气的，顽皮的 +nausea v.恶心，讨厌 +naval adj.海军的 +navel n.脐，中心 +navigable adj.可航行的 +navigation n.航行，航海，航空 +navy n.海军 +near adv.近 adj.近的 +nearby adj.,adv.附近(的) +nearly adv.几乎，差不多 +neat adj.整洁的，简洁的 +necessarily adv.必然，当然 +necessary adj.必要的，必然的 +necessitate v.使需要，强迫 +necessity n.必要性，必须品 +neck n.颈，脖子 +necklace n.项链 +need n.需要，贫困 v.需要 +needful adj.必要的 +needle n.针，指针，针叶 +needless adj.不必要的，无用的 +needy adj.贫穷的 +negate v.否定 +negation n.否定 +negative adj.否定的 n.负片 +neglect v.,n.疏忽，忽视 +negligence n.疏忽，过失 +negligent adj.粗心大意的 +negligible adj.微不足道的 +negotiable adj.可谈判的 +negotiate v.谈判，交涉 +negotiation n.谈判 +negro n.黑人(贬义) +neighbor n.邻居，邻国 +neighborhood n.邻里，街坊 +neighboring adj.邻近的，相邻的 +neither conj.既不...又不... +nephew n.侄子，外甥 +nerve n.神经，胆量 +nervous adj.神经(质)的， +nest n.巢，窝 +nestle v.安顿，建巢 +net n.网 adj.净的，纯的 +network n.网络，网状组织 +neutral adj.中立的，中和的 +neutrality n.中立 +neutron n.中子 +never adv.从不，永不，未曾 +nevertheless adv.还是，然而 +new adj.新的，重新的 +news n.新闻，消息 +newspaper n.报纸，新闻纸 +next adv.下一次，然后 +nice adj.令人愉快的 +nickel n.镍，镍币 +nickname n.绰号，诨号 +niece n.侄女，外甥女 +night n.夜，黑夜 +nightgown n.睡衣 +nightingale n.夜莺 +nightmare n.恶梦 +nine num.九 +nineteen num.十九 +ninety num.九十 +ninth num.第九，九分之一 +nitrogen n.氮 +no adv.不,毫不 adj.没有 +no. n.(缩)...号，号码 +nobility n.高贵，庄严 +noble adj.高尚的，贵族的 +nobody prep.谁也不 +nod v.,n.点头 +noise n.噪音，吵嚷声 +noisy adj.吵闹的 +nominal adj.名义上的，票面的 +nominate v.提名，推荐，任命 +nomination n.提名，任命 +none prep.没人，毫无 +nonsense n.废话，谬论 +noon n.中午，正午 +nor conj.也不，也没 +norm n.标准，规范，定额 +normal adj.正常的，标准的 +normalization n.正常化 +normalize v.使正常，使标准化 +normally adv.正常地，通常 +north n.北，北方 adj.北的 +northeast adj.,n.东北(的) +northern adj.北方的，北部的 +northward adj.,adv.向北(的) +northwest adj.,n.西北(的) +nose n.鼻子 +nostril n.鼻孔 +not adv.不 +notable adj.值得注意的 +notably adj.尤其，值得注意地 +note n.笔记，注释，便条 +notebook n.笔记本 +noted adj.著名的 +note-taking n.笔记，笔录 +nothing n.没有东西 adv.毫不 +notice v.留意 n.注意，通知 +noticeable adj.显而易见的 +notification n.通知(书)，布告 +notify v.通知，通告，报告 +notion n.概念，意见，看法 +notorious adj.臭名昭著的 +notwithstanding prep.,conj.尽管 +nought n.零 +noun n.名词 +nourish v.养育，提供养分 +nourishment n.食物，补品 +novel adj.新颖的 n.小说 +novelist n.小说家 +novelette n.中篇小说 +novelty n.新奇，新颖 +november n.十一月 +now adv.n.现在 conj.既然 +nowadays adv.现今，目前 +nowhere adv.哪儿也不 +nuclear adj.核的，原子核的 +nucleus n.(原子)核，核心 +nuisance n.令人讨厌的人或事 +null n.无 +nullify v.使无效，取消 +number n.数字，若干，号码 +numerical adj.数字的 +numerous adj.众多的，大量的 +nun n.修女，尼姑 +nurse n.护士，保姆 v.护理 +nursery n.托儿所，苗圃 +nut n.坚果，螺母 +nylon n.尼龙 +oak n.橡树，栎树 +oar n.橹，桨 +oath n.誓言，誓约 +obedience n.服从，顺从 +obedient adj.服从的，顺从的 +obey v.服从，遵守 +object n.物体，目的 v.反对 +objection n.反对，异议，不愿 +objective n.目标 adj.客观的 +obligation n.义务，责任 +oblige v.责成，使感激 +obliterate adj.删去，抹掉 +oblong adj.椭圆形的 +obscure adj.无名的 v.遮蔽 +observance n.仪式，习惯 +observation n.观察，评述 +observe v.观察，遵守，注视 +observer n.观察员 +obstacle n.障碍(物) +obstinate adj.固执的，顽强的 +obstruction n.堵塞，妨碍 +obtain v.获得 +obtainable adj.可得到的 +obvious adj.明显的 +obviously adv.明显地，显然 +occasion n.场合，盛事，机会 +occasional adj.偶然的，有时的 +occasionally adv.偶而，有时 +occident n.西方 +occidental adj.西方的，西洋的 +occupation n.职业，占有 +occupy v.占据，占领，担任 +occur v.发生，出现，想到 +occurrence n.发生，出现，事件 +ocean n.海洋，大洋 +oceania n.大洋洲 +oceanography n.海洋学 +o'clock adv.点钟 +october n.十月 +odd adj.古怪的，奇数的 +odour n.气味 +of prep..的(表示领属等) +off adv....去 prep.离开 +off-duty adj.不当班的 +offence n.过错，冒犯，攻击 +offend v.冒犯，得罪 +offensive adj.冒犯的，攻击的 +offer v.,n.提供，报盘 +offering n.报盘，提供的货物 +off-grade adj.等外的，质差的 +office n.办公室，事务所 +officer n.军官，警官，官员 +official n.官员 adj.官方的 +offset v.抵消，弥补 +offspring n.子女，子孙 +often adv.经常，常常 +oh int.哦，嗬 +oil n.油，石油 +o.k. adj.,n.(缩)对，行 +old adj.老的，...岁的 +olive n.橄榄(树) +omen n.前兆 +ominous adj.不祥的 +omission n.省略 +omit v.省略，遗漏 +on prep.在...上，关于 +once adv.一度，一次 +one num.,n.一，一个 +oneself pron.自己，自身 +onion n.洋葱 +only adj.唯一的 adv.仅仅 +onset n.攻击，着手 +onto prep.到...上 +onward adv.,adj.向前(的) +opal n.蛋白石 +opaque adj.不透明的 +open adj.开的 v.打开 +opener n.开罐器，起子 +opening n.开始，通路，孔 +opera n.歌剧 +operate v.运转，操作，开刀 +operation n.操作，生效，手术 +operational adj.业务上的，操作的 +operative adj.有效的 +operator n.操作人员，接线员 +opinion n.意见，评论，看法 +opium n.鸦片 +opponent n.对手，敌手 +opportune adj.及时的，凑巧的 +opportunity n.机会，机遇，时机 +oppose v.反对，反抗 +opposite adj.对立的，对面的 +opposition n.敌对，反抗 +oppress v.压抑，压迫，压制 +oppression n.压迫 +optical adj.视觉的，光学的 +optimal adj.最佳的 +optimism n.乐观(主义) +optimistic adj.乐观(主义)的 +optimize v.最佳化 +optimum n.最佳条件 +option n.选择，可选择的东西 +optional adj.可任选的，随意的 +or conj.或者，即，否则 +oral adj.口头的，口的 +orange n.柑桔，橙色 +orbit n.轨道 +orchard n.果园 +orchestra n.管弦乐队，交响乐 +order n.命令，订货，次序 +orderly adj.整齐的 n.勤务员 +ordinarily adv.通常 +ordinary adj.普通的，一般的 +ore n.矿石，矿物 +organ n.器官，风琴 +organic adj.器官的，有机的 +organism n.有机体 +organization n.组织，团体 +organizational adj.组织的 +organize v.组织，筹备，编排 +orient n.东方 v.定方针 +oriental adj.,n.东方的(人) +orientation n.定向，倾向性 +origin n.起源，产地 +original adj.原始的 n.原物 +originality n.独创性 +originally adv.原来，当初 +originate v.起源，首创 +ornament n.装饰(品) +ornamental adj.装饰的 +orphan n.孤儿 +oscillation n.摆动，振动 +other adj.其他的，别的 +otherwise adv.另外的 conj.否则 +ought v.应该，大概 +ounce n.盎司 +our pron.我们的 +ourselves pron.我们自己 +out adv.出外，向外，完 +outbreak n.爆发，发作 +outcome n.结果 +outdoor adj.野外的，露天的 +outdoors adv.在外的，在野外的 +outer adj.外部的，外面的 +outermost adj.最外的 +outland n.偏僻地区 +outlandish adj.外国的 +outlaw n.逃犯，歹徒 +outlay n.费用，支出 +outlet n.出口，销路 +outline n.轮廓，略图，大纲 +outlook n.看法，景色，展望 +output n.出产，产量 +outrage n.暴行 +outrageous adj.残暴的 +outright adj.公然地，直率地 +outset n.开头，起初 +outside n.外部 adv.在外面 +outsider n.局外人 +outskirts n.郊区 +outstanding adj.杰出的，未付款的 +outturn n.卸货情况 +outward adj.,adv.向外(的) +oval adj.椭圆(形)的 +oven n.烤炉，锅灶 +over prep.在...上方，越过 +overall adj.总的，全面的 +overcast adj.多云的 +overcharge v.,n.多收(的)钱 +overcoat n.外套，大衣 +overcome v.征服，克服，压倒 +overestimate v.估计过高 +overextend v.使..承担过多的义务 +overflow v.泛滥，溢出，满怀 +overhead adv.,adj.头上(的) +overhear v.偶然听到，偷听 +overjoy n.使大喜 +overlap v.重叠 +overlapping adj.相互重叠的 +overload v.,n.超载 +overlook v.视察，俯瞰，宽容 +overnight adv.,adj.终夜(的) +overpayment n.多付的款项 +overseas adv.,adj.海外(的) +oversight n.监视，疏忽 +overtake v.赶上，压倒 +overthrow v.推翻，颠覆 +overtime n.超时，加班 +overwhelm v.压倒，淹没 +overwhelming adj.压倒的 +owe v.欠，归功于 +owing adj.该付的 +owl n.猫头鹰 +own adj.自己的 v.拥有 +owner n.物主，所有人 +ownership n.所有权，所有制 +ox n.公牛 +oxide n.氧化物 +oxygen n.氧，氧化 +oyster n.牡蛎，蚝 +pace n.步，速度，步调 +pacific n.太平洋 +pack v.包装，挤满 n.背包 +package n.包裹 v.打包 +packaging n.包装 +packet n.一盒，小件包裹 +packing n.装箱，收拾行李 +pad n.垫，便笺本 +page n.(书)页 +pail n.提桶 +pain n.疼痛，悲痛 v.作痛 +painful adj.痛苦的 +paint n.涂料，油漆 v.刷漆 +painter n.画家，油漆匠 +painting n.画，绘画(艺术) +pair n.对，双，夫妇 +palace n.宫殿 +pale adj.苍白的，淡的 +palm n.手掌，掌心，棕榈树 +pamphlet n.小册子 +pan n.平底锅 +panda n.熊猫 +pane n.窗(门)玻璃 +panel n.镶板，仪表盘，小组 +panic n.,v.恐慌，惊慌 +panorama n.全景 +panoramic adj.全景的 +pant n.,v.喘气 +panther n.豹，美洲豹 +pantry n.配膳室，食品室 +pants n.长裤，衬裤 +paper n.纸，报纸，文件 +papercut n.剪纸，刻纸 +papercutting n.剪纸艺术 +papers n.文件，证书 +par n.(跟)原价相等 +parachute n.降落伞 +parade n.,v.游行 +paradise n.天堂，天国 +paragraph n.段落，节 +parallel adj.平行的，类似的 +paralyse v.使麻痹，惊呆 +parameter n.参数，参量 +parasite n.寄生虫，寄生物 +parcel n.包裹，邮包 +pardon n.,v.原谅，赦免 +parent n.父或母亲，母体 +paris n.巴黎 +parish n.教区 +park n.公园 v.停放车辆 +parking n.停放车辆 +parliament n.议会，国会 +parlimental adj.国会的，议会的 +parlor n.客厅 +parrot n.鹦鹉 +part n.部分，零件，角色 +partial adj.局部的，偏颇的 +partially adv.局部地，部分地 +participant n.参加者，参与者 +participate v.参与，分享 +participation n.参加，参与 +particle n.颗粒，微粒，虚词 +particular adj.特殊的 n.项目 +particularly adv.特别地 +partition v.,n.划分，隔开 +partly adv.部分地 +partner n.伙伴，合伙人，搭档 +partnership n.伙伴关系，合伙 +part-time adj.计时(干活)的 +party n.聚会，政党，一方 +pass v.经过，传给 n.关口 +passable adj.过得去的 +passage n.一段，通过，通道 +passenger n.旅客，乘客 +passion n.激情，热衷 +passionate adj.多情的，热烈的 +passive adj.被动的，消极的 +passport n.护照 +past adj.过去的 n.过去 +past-due adj.过期的 +paste n.浆糊，糊状物 +pastime n.消谴，娱乐 +pasture n.牧场 +pat n.,v.轻拍，抚摸 +patch n.补丁，眼罩 +patent n.专利权，专利证 +path n.小径，路线 +pathetic adj.凄婉动人的 +patience n.耐心，忍耐力 +patient adj.耐心的 n.病人 +patriot n.爱国者 +patriotic adj.爱国的 +patriotism n.爱国主义 +patrol v.巡逻 n.巡逻队 +patron n.赞助人，保护人 +patronage n.保护人身分 +pattern n.模式，式样，图案 +pause v.,n.暂停，中止 +pave v.铺路，为..铺平道路 +pavement n.人行道 +paw n.脚瓜 +pawn v.产卵 +pay v.支付 n.工资 +payable adj.支付给...的 +payment n.支付，付款 +pea n.豌豆 +peace n.和平，平静，和约 +peaceful adj.和平的，平静的 +peach n.桃子 +peacock n.孔雀 +peak n.顶点，巅，山峰 +peanut n.花生 +pear n.梨 +pearl n.珍珠 +peasant n.农民 +peasantry n.农民(总称) +pebble n.鹅卵石 +peck v.啄 +peculiar adj.古怪的，独特的 +peculiarity n.特性，怪癖 +pedal n.踏板 v.骑车 +pedestrian n.行人 +pedlar n.小贩 +peel n.果皮 v.削、剥皮 +peep v.偷看，窥视 +peer n.同行 v.盯，凝视 +peg n.桩 v.(汇率)钉住 +pen n.钢笔，栏，圈 +penalty n.刑罚，处罚，罚款 +pencil n.铅笔 +pending adj.未决的，紧迫的 +penetrate v.贯穿，穿透，弥漫 +penetration n.贯穿，洞察力 +penicillin n.青霉素，盘尼西林 +peninsular n.半岛 +penny n.便士 +pension n.养老金，年金 +people n.人们，人民，人员 +pepper n.胡椒 +per prep.每，由，按照 +perceive v.知觉，觉察，领悟 +percent n.每百，百分之 +percentage n.百分率 +perception n.感觉，理解力 +perch v.栖息 +perfect adj.完美的，完备的 +perfection n.完成，完善 +perfectly adv.完全地，完美地 +perform v.执行，表演 +performance n.执行，演出 +performer n.执行者，表演者 +perfume n.香味，香水 +perhaps adv.也许，多半 +peril n.危难，巨大危险 +perimeter n.周长 +period n.时期，句号 +periodic adj.周期的，定时的 +periodical n.期刊 +peripheral adj.边缘的，周边的 +perish v.死亡，枯萎 +permanence n.永久，持久 +permanent n.永久性的，持久的 +permanently adv.永久地 +permission n.允许，许可 +permissive adj.允许的，许可的 +permit v.允许 n.许可证 +perpendicular adj.垂直的 +perpetual adj.永久的，永恒的 +perplex v.迷惑，难住 +persecute v.迫害 +persecution n.迫害 +persevere v.坚持 +perseverance n.坚持 +persist v.坚持，固执，持续 +persistence n.坚持，持续 +person n.人，人称，身体 +personal adj.私人的，个人的 +personality n.人格，个性，人物 +personally adv.亲自，就个人而言 +personnel n.全体人员，人事部门 +perspective n.展望，观点，透视 +persuade v.说服，劝导 +persuasion n.说服，信念 +pertain v.属于 +pertinence n.中肯 +pertinent adj.中肯的，恰当的 +perturb v.扰乱 +perturbed adj.烦燥不安的 +perusal n.细读 +peruse v.仔细阅读，审查 +pessimist n.悲观(主义) +pessimistic adj.悲观的 +pest n.害虫 +pet n.爱畜，宠儿 +petition v.,n.请愿(书) +petrol n.石油，汽油 +petroleum n.石油 +petty adj.细小的，不重要的 +phase n.阶段，时期，侧面 +phenomenon n.现象，非凡的人 +philosopher n.哲学家 +philosophical adj.哲学上的 +philosophy n.哲学，基本原则 +phone n.电话 v.打电话 +phonetics n.语音学 +photo n.照片 +photograph n.照片 v.拍照 +photographer n.摄影师 +photography n.摄影术 +photostatic adj.静电复印的 +phrase n.词组，短语 +physical adj.身体的，物质的 +physically adv.物质上，身体上 +physician n.内科医生 +physicist n.物理学家 +physics n.物理学 +pianist n.钢琴家 +piano n.钢琴 +pick v.拣，采 n.精华，镐 +pickle n.腌渍品，泡菜 +pickpocket n.扒手，小偷 +picnic n.,v.郊游，野餐 +pictorial n.画报 +picture n.图片，画，照片 +picturesque adj.风景如画的 +pie n.馅饼 +piece n.件，片段，张 +pier n.码头，栈桥 +pig n.猪 +pigeon n.鸽子 +pigment n.色料 +pile n.堆 v.堆积 +pilferage v.偷窃 +pilgrim n.香客，朝圣者 +pilgrimage n.朝圣 +pill n.药片，药丸 +pillar n.柱子 +pillow n.枕头 +pilot n.飞行员，领航员 +pin n.别针，发卡 v.别住 +pinch v.捏，掐，挤痛 +pine n.松树 +pineapple n.菠萝 +pink adj.,n.桃色，粉红色 +pint n.品脱(容量单位) +pioneer n.先驱者 v.倡导 +pioneering n.先驱的 +pious adj.虔诚的 +pipe n.管子，烟斗 +pipeline n.管道，管线 +pirate n.海盗 adj.盗版的 +pistol n.手枪 +piston n.活塞 +pit n.坑，洼，煤矿，桃核 +pitch v.搭帐篷，投掷 +pitcher n.水罐 +pity n.怜悯，惋惜，憾事 +place n.地方，位置 v.放置 +plague n.瘟疫 +plain adj.明白的，朴素的 +plan n.计划,平面图 v.打算 +plane n.水平，平面，飞机 +planet n.行星 +plant n.植物，工厂 v.栽培 +plantation n.种植园 +plaster n.灰泥 v.粘贴 +plastic n.塑料 adj.可塑的 +plastics n.塑料(制品) +plate n.盘子，金属牌 +plateau n.高原，高地 +platform n.讲台，站台，政纲 +platinum n.白金 +play v.玩，扮演，演奏 +player n.选手，演奏者 +playground n.运动场，操场 +playmate n.游伴 +playwright n.剧作家 +plea n.请求，恳求，辩解 +plead v.恳求，辩解 +pleasant adj.令人愉快的 +please v.使高兴，喜欢，请 +pleased adj.高兴的，乐意的 +pleasure n.快乐，乐事，乐趣 +pledge n.暂约，抵押 v.保证 +plenary adj.完全的 +plentiful adj.大量的，丰富的 +plenty n.大量，丰富 +plight n.保证，困境 +plot n.阴谋，情节 v.密谋 +plough n.,v.犁 +pluck v.拔，摘 n.勇气 +plug n.塞子，插头 v.堵住 +plumb v.测锤，垂直 +plumber n.管子工 +plume n.羽毛，羽饰 +plump adj.丰满的 +plunder v.,n.掠夺，抢劫 +plunge v.插进，跳入 +plural adj.复数的 +plus prep.加 n.加号，正号 +ply v.出力，努力从事 +p.m. (缩)下午 +pneumatic adj.气体的，空气的 +pneumonia n.风湿病 +pocket n.衣袋 adj.袖珍的 +poem n.诗歌 +poet n.诗人 +poetry n.诗，诗意，诗艺 +point n.尖，点，分 v.指 +pointed adj.尖的 +poison n.毒，毒药 v.放毒 +poisonous adj.有毒的 +poke v.戳，刺 +poker n.扑克 +polar adj.极的 +polarity n.极性，极端 +pole n.柱，杆，极 +police n.警察(局) +policeman n.警察 +policy n.政策，方针，保险单 +polish v.擦亮，磨光，润色 +polite adj.有礼貌的，客气的 +politeness n.礼貌，客气 +political adj.政治的 +politician n.政治家，政客 +politics n.政治学，政治活动 +poll n.选举投票，民意测验 +pollute v.污染，弄脏 +pollution n.污染 +polymer n.聚合物 +pond n.池塘 +ponder v.考虑，沉思 +pony n.小马 +pool n.水塘，游泳池 +poor adj.穷的，差的 +pop v.,n.砰的一声，爆裂 +popcorn n.爆米花 +pope n.教皇 +popular adj.受欢迎的 +popularity n.名望，知名 +popularize v.普及，宣传 +population n.人口 +porcelain n.瓷，瓷器 +porch n.门廊 +pore n.毛孔 +pork n.猪肉 +porridge n.粥，麦片粥 +port n.港口，港 +portable adj.手提的，经便的 +porter n.搬运工 +portion n.一份，部分 +portrait n.肖像，画像，描写 +portray v.描写，给...画像 +portugal n.葡萄牙 +portuguese n.,adj.葡萄牙人(的) +pose v.作姿态，提供考虑 +position n.位置，地位，处境 +positive adj.明确的，肯定的 +positively adv.断言地，绝对地 +possess v.占有，拥有，控制 +possession n.所有，财产 +possessive adj.所有(格)的 +possibility n.可能性 +possible adj.可能的 +possibly adv.可能，或许 +post n.柱，职位 v.邮寄 +postage n.邮资 +postal adj.邮政的 +postcard n.明信片 +posterity n.子孙，后代 +postman n.邮递员 +post-office n.邮局 +postpone v.推迟，延迟 +postponement n.推迟 +postulate v.假定，主张 +pot n.罐，壶，锅 +potato n.马铃薯，土豆 +potent adj.有效的 +potential adj.潜在的 n.潜力 +potentiality n.潜在性 +poultry n.家禽 +pound n.英镑，磅 v.重击 +pour v.注，灌，倒，涌出 +poverty n.贫穷，缺乏 +powder n.粉末 +power n.力，动力，权力 +powerful adj.有力的，强的 +practicable adj.可行的 +practical adj.实用的，可行的 +practically adj.实际地，几乎 +practice n.练习，习惯，实施 +practise v.练习，习惯于做 +prairie n.大草原 +praise v.,n.赞美，称颂 +pray v.祈祷 +prayer v.祷告，祷文 +preach v.说教，鼓吹，布道 +preacher n.鼓吹者，宣教士 +precaution n.预防，防备 +precede v.在前，高于 +precedence n.领先，优先权 +precedent n.先例，惯例 +preceding adj.前面的，上述的 +precious adj.宝贵的，珍爱的 +precise adj.精确的，严格的 +precisely adv.精确地 +precision n.精确，精度 +predecessor n.前任，原有物 +predict v.预言 +prediction n.预言，预报 +predominance n.优越，杰出 +predominant adj.主要的，有势力的 +preface n.序言，开场白 +prefer v.较喜欢，宁愿 +preferable adj.更喜爱的 +preferably adv.更好地 +preference n.偏爱(之物) +preferential adj.优惠的 +prefix n.前缀 +pregnancy n.怀孕 +pregnant adj.怀孕的 +prejudice n.偏见，成见 +preliminary adj.初步的，预备的 +prelude n.序言，前兆，序曲 +premature adj.早熟的 +premier n.首相，总理 +premises n.建筑物 +premium n.津贴 +preoccupy v.使迷住，专心于 +preparation n.准备，预备 +prepare v.准备，配制 +prepared adj.准备好的，预制的 +preposition n.介词 +prescribe v.命令，规定，开处方 +prescribed adj.规定的 +prescription n.药方 +presence n.出席，在场 +present adj.在场的 n.现在 +presentation n.提出，演出 +presently adv.不久，目前 +preservation n.保藏，保存 +preserve v.保护，保藏，保持 +preset v.预先安排 +preside v.主持 +president n.总统，总经理，校长 +presidential adj.总统的 +press v.压，榨，按 n.印刷 +pressing adj.急迫的 +pressure n.压力，繁忙，紧迫 +prestige n.威望，声望 +presumably adv.也许，大概 +presume v.假定，推测 +pretend v.假装，佯称 +pretense n.借口 +pretentious adj.自负的，虚伪的 +pretty adj.精致的，漂亮的 +prevail v.获胜，流行 +prevailing adj.占上风的 +prevalence n.流行 +prevalent adj.流行的，普遍的 +prevent v.防止，阻碍 +prevention n.防止，预防 +previous adj.早先的，先前的 +previously adv.预先，先前 +prey n.猎物，牺牲品 +price n.价格，代价 v.定价 +price-list n.价格表 +pricing n.定价 +prick v.刺穿 n.刺痛 +pride n.骄傲，自豪，自负 +priest n.教士，神父 +primarily adv.首要地，主要地 +primary adj.首要的，初级的 +prime adj.首要的，第一的 +primitive adj.原始的，简朴的 +prince n.王子，诸侯 +princess n.公主，王妃 +principal adj.重要的，主要的 +principally adv.主要地 +principle n.原则，原理，主义 +print v.印刷，出版 n.字体 +printer n.印刷者 +prior adj.较早的，在前的 +priority n.优先，居先 +prism n.棱镜 +prison n.监狱，牢房 +prisoner n.囚犯 +privacy n.私事，隐私 +private adj.私人的，秘密的 +privilege n.特权 v.给特权 +privileged adj.有特权的 +prize n.奖品，奖赏 +probability n.可能性，概率 +probable adj.很可能的 +probably adv.或许，大概 +probe v.细察，查究 +problem n.课题，难题，问题 +problematic adj.有问题的 +procedure n.手续，程序 +proceed v.前进，继续向前 +proceeding n.进行，诉讼 +proceeds n.收益 +process n.程序，过程 v.处理 +processing n.,adj.加工(的) +procession n.行列，仪仗 +proclaim v.宣布，公布 +procure v.采购 +procurement n.采购 +produce v.生产，制造，创作 +producer n.生产者 +product n.产品，作品 +production n.生产，制造 +productive adj.能生产的，多产的 +productivity n.生产力，生产率 +profess v.表白 +profession n.职业，专业，表白 +professional adj.职业的n.专业人员 +professor n.教授 +proficiency n.熟练，精通 +proficient adj.熟练的，精通的 +profile n.侧面，轮廓 +profit n.利润 v.获益 +profitable adj.有利可图的 +proforma adj.形式的 +profound adj.深奥的，深深的 +program n.节目，规划，项目 +programer n.项目，程序制定者 +programing n.程序编排 +progress n.,v.进步，进展 +progressive adj.前进的，进步的 +prohibit v.禁止，阻止 +prohibition n.禁止，禁令 +prohibitive adj.禁止的 +project n.计划 v.设计，射出 +projection n.射出，投射 +projector n.电影放映机 +proletarian adj.,n.无产阶级 +prolong v.延长 +prominence n.显著，突出 +prominent adj.著名的，显著的 +promise v.允诺，预示 n.诺言 +promising adj.有希望的 +promissory adj.约定的 +promote v.提升，促进，宣传 +promotion n.晋级，提高，促销 +prompt adj.及时的，迅速的 +promptly adv.及时地，敏捷地 +prone adj.俯伏的 +pronoun n.代词 +pronounce v.发音，宣布 +pronunciation n.发音 +proof n.证明，证据，实验 +propaganda n.宣传 +propagate v.繁殖，传播，宣传 +propagation n.繁殖，传播 +propel v.推进，推动 +propellent adj.推进的 +propeller n.推进器，螺旋桨 +proper adj.合适的，本来的 +properly adv.合适地 +property n.财产，地产，特性 +prophesy n.预言 +prophet n.预言家 +proportion n.比例，部分 +proportional adj.成比例的 +proposal n.建议，计划 +propose v.建议，打算，求婚 +proposition n.建议，提议 +proprietor n.所有者，业主 +proprietorship n.业主资格 +prose n.散文 +prosecute v.迫害 +prosecution n.迫害 +prosecutor n.检查官 +prospect n.前景 v.勘探 +prosperity n.繁荣，兴旺 +prosperous adj.繁荣的，兴旺的 +protect v.保护，警戒 +protection n.保护，警戒 +protectionism n.贸易保护主义 +protective adj.保护的 +protein n.蛋白质 +protest v.,n.抗议，反对 +protestant n.清教徒，新教徒 +protocol n.协议，议定书 +prototype n.原型 +protracted adj.延长了的 +proud adj.骄傲的，得意的 +prove v.证明，表明是 +proverb n.谚语，格言 +provide v.供给，提供，准备 +provided conj.只要 +province n.省份，领域 +provincial adj.省级的，省的 +provision n.准备，条款，辎重 +provisional adj.临时的 +provocation n.刺激，煸动 +provoke v.激怒，引起 +proximo adj.下月的 +prudence n.谨慎 +prudent adj.谨慎的 +psychological adj.心理(上)的 +psychologist n.心理学家 +psychology n.心理学，心理状态 +public adj.公众的，公共的 +publication n.出版物，发表 +publicity n.公开 +publicly adv.公开地 +publish v.出版，发表，公布 +publisher n.出版商 +pudding n.布丁 +puff n.一阵 v.喘气 +pull v.拖，拔， 扯 n.牵引 +pulley n.滑轮 +pulse n.脉搏 v.跳动 +pump n.泵 v.抽水，打气 +pumpkin n.南瓜 +punch n.,v.用拳击，冲孔 +punctual adj.准时的，守时的 +punctuality n.准时 +punctuation n.准时 +punish v.处罚，惩罚 +punishment n.处罚，刑罚 +pupil n.小学生，瞳孔 +puppet n.木偶，傀儡 +puppy n.小狗 +purchase v.,n.购买 +purchaser n.买主 +pure adj.纯洁的，纯净的 +purely adv.全然，纯然 +purify v.净化 +purity n.纯粹，纯净 +purple n.紫色 adj.紫色的 +purpose n.目的，用途，意图 +purse n.钱包 +pursuance n.追求，实行 +pursuant n.追逐者 +pursue v.追逐，从事，追求 +pursuit n.追逐，追求，职业 +push v.推，推动 n.推力 +put v.放置，估价，表达 +puzzle v.使困惑 n.难题,谜语 +pyjamas n.睡衣 +pyramid n.金字塔 +qualification n.资格，条件 +qualified adj.有资格的 +qualify v.使合格，使胜任 +qualitative adj.质量的，定性的 +quality n.特性，属性，质量 +quantitative adj.数量的，定量的 +quantity n.量，大量 +quarrel v.,n.争吵 +quart n.夸脱(容量单位) +quarter n.四分之一，一刻钟 +quarterly adj.季度的 n.季刊 +quartz n.石英 +quay n.码头 +queen n.王后，女王 +queer adj.奇妙的，古怪的 +quench v.抑制，熄灭，淬火 +query v.,n.询问 +quest n.寻找，搜索 +question n.问题，疑问 v.询问 +questionnaire n.调查表 +queue n.辫子，队 v.排队 +quick adj.快的，灵敏的 +quicken v.加快，加速，刺激 +quickly adv.快，迅速地 +quiet adj.安静的，轻声的 +quietly adv.安静地，静静地 +quietness n.平静，安定，安静 +quilt n.被子 +quit v.停止，放弃，退出 +quite adv.完全，十分，相当 +quiver v.颤抖 +quiz n.测验，问答比赛 +quota n.定额，配额 +quotation n.引语，语录，报价单 +quote v.引用，引证，报价 +rabbit n.兔子 +race n.种族，竞赛 v.赛跑 +racial adj.种族的，人种的 +rack n.搁班，行李架 +racket n.喧闹，球拍 +radar n.雷达 +radial adj.放射的，辐射的 +radiant adj.发光的 +radiate v.辐射，放射，发光 +radiation n.辐射，发射 +radical adj.基本的，激进的 +radio n.无线电，收音机 +radioactive adj.放射性的 +radioactivity n.放射性 +radish n.萝卜 +radium n.镭 +radius n.半径，活动范围 +rag n.抹布，破衣服 +rage n.盛怒，流行 v.大怒 +raid v.袭击，搜查 +rail n.栏杆，钢轨 +railroad n.铁路 +railway n.铁路，铁路公司 +rain n.雨 v.下雨 +rainbow n.虹 +raincoat n.雨衣 +rainfall n.下雨，降雨量 +rainy adj.有雨的 +raise v.举起，提高，唤起 +rake n.,v.耙 +rally n.,v.集会 +ramble n.漫步 +ranch n.牧场 +random adj.胡乱的，随便的 +range n.射程，范围，一系列 +rank n.军衔，等级 v.排列 +rapid adj.快的，急速的 +rapidly adv.迅速地，急速地 +rapture n.狂喜 +rare adj.稀有的，罕见的 +rarely adv.难得，少有 +rascal n.无赖，恶棍 +rash adj.轻率的，鲁莽的 +rat n.老鼠，耗子 +rate n.比率，速度，费率 +rather adv.相当，颇，宁愿 +ratification n.批准，认可 +ratify v.批准，认可，追认 +ratio n.比，比率 +ration n.理性 +rational adj.合理的，有理性的 +rattle v.,n.嘎吱响 +ravage n.破坏，暴力 +raw adj.生的，未加工的 +ray n.光线，射线，辐射 +razor n.剃须刀 +re prep.关于 +reach v.到达，伸手，够到 +react v.反应，起反应，反抗 +reaction n.反应，反动 +reactionary adj.反动的 +reactor n.反应堆 +read v.读，阅读，朗诵 +reader n.读者，读本 +readily adv.容易地，乐意地 +reading n.读书，读数，读本 +ready adj.准备好的，乐意的 +real adj.真的，纯粹的 +realism n.现实主义，写实主义 +realist n.adj.现实主义者(的) +realistic adj.现实的，实在的 +reality n.现实，真实性 +realization n.实现 +realize v.认识到，实现，执行 +really adv.真正地，果然 +realm n.王国，领域 +reap v.收割，收获 +rear n.后部 adj.后面的 +reason n.原因，理由 v.推论 +reasonable adj.有理的，讲理的 +reasonably adv.合理地，适当地 +reassure v.使...放心 +rebate n.回扣，折扣 +rebel v.起义，反叛 +rebellion n.叛乱，起义 +rebuke v.斥责 +recall v.想到，召回，取消 +recede v.归还，撤回 +receipt n.收到，收据 +receive v.收到，接待， 接见 +receiver n.受领人，听筒 +recent adj.近来的，新近的 +recently adv.近来，最近 +reception n.招待会，欢迎会 +receptionist n.接待员 +recession n.衰退 +recipe n.菜谱，配方 +recipient n.接受者 +reciprocal adj.相互的，互易的 +recitation n.朗诵 +recite v.背诵，朗诵，讲述 +reckless adj.鲁莽的 +reckon v.数，计算，认为 +reclaim v.收回，开垦 +recognition n.认出，承认 +recognize v.认出，识别，承认 +recollect v.回忆，追想 +recollection n.回忆 +recommend v.推荐，介绍，劝告 +recommendation n.推荐(书) +recompense v.,n.回报，赔偿 +reconcile v.使和好，调停 +reconnaissance n.探索，勘查 +record v.记录，录音 n.记录 +recorder n.记录员，录音机 +recourse n.求助 +recover v.寻回，恢复，复原 +recovery n.寻回，恢复 +recreation n.消遣，文娱活动 +recruit v.招募，征兵 +recruitment n.招募 +rectangle n.长方形，矩形 +rectification n.纠正 +rectify v.纠正，订正 +recur v.再发生，复发 +recurrence n.再发生 +red adj.红的 n.红色 +redeem v.买回，赎回 +redound v.增加，促进 +reduce v.减少，贬为 +reduction n.减少，缩减 +reed n.芦苇，芦笛 +reef n.礁石 +reel n.卷，线轴 v.卷绕 +reexport v.再出口 +refer v.查阅，提及 +referee n.裁判员 +reference n.参考(书)，推荐书 +referent n.被谈到的事 +refine v.精炼，精制 +refined adj.精炼的，精的 +refinement n.精炼 +refinery n.精炼厂 +reflect v.反射，反映，反省 +reflection n.反射，映象，反思 +reform v.,n.改革，改造 +refrain v.抑制 +refresh v.使清醒，使振作 +refreshment n.茶点，饮料 +refrigerator n.冰箱 +refuge n.藏身处，避难所 +refugee n.难民 +refund v.再投资,归还 n.退款 +refusal n.拒绝，谢绝 +refuse v.拒绝 n.渣，废物 +refute v.驳斥，反驳 +regard v.认为，尊重，关于 +regarding prep.关于 +regardless adj.,adv.不顾的(地) +regime n.政体，制度 +regiment n.团，大量 +region n.地区，地域，地带 +regional adj.地区的，区域的 +regionalization n.区域化 +regionalize v.使区域化 +register v.登记，注册，挂号 +registered adj.登记的，注册的 +registration n.登记 +regret v.懊悔 n.遗憾 +regretful adj.遗憾的 +regretfully adv.遗憾地 +regrettable adj.可遗憾的 +regular adj.正常的，有规律的 +regularity n.整齐，规律 +regularly adv.整齐地，有规律地 +regulate v.管理，调整 +regulation n.管理，规则，法令 +rehearsal n.排练，彩排 +rehearse v.排练 +reign n.统治 v.统治，盛行 +reimburse v.偿还 +reimbursement n.偿还，还款 +rein n.缰绳 v.驾驭，约束 +reinforce v.增援，加强 +reinforcement n.加强，援兵 +reiterate v.重申 +reject v.拒绝 +rejection n.拒绝 +rejoice v.欢欣，使喜悦 +relate v.叙述，关联，涉及 +related adj.与...有关的 +relation n.关系，得害关系 +relationship n.关系，联系 +relative n.亲戚 adj.有关系的 +relatively adv.比较地，相对地 +relativity n.相关性，相对论 +relax v.松弛，舒张，休息 +relaxation n.放松，松弛 +relay v.转播，中继 +release v.释放，透露，发行 +relevant adj.相关的 +reliability n.可靠性 +reliable adj.可靠的，可依赖的 +reliance n.依靠，信赖 +relief n.解除，减轻，安慰 +relieve v.解除，减轻，换班 +religion n.宗教(信仰) +religious adj.宗教的，信教的 +relinquish v.放弃 +relish n.味道，风味 +reluctance n.不愿，勉强 +reluctant adj.不愿的，勉强的 +rely v.依靠，依赖 +remain n.依旧的，剩余，逗留 +remainder n.剩余部分 +remains n.剩余，遗迹，遗体 +remark v.说起，留意，评论 +remarkable adj.显著的，异常的 +remedy n.药品，治疗(方法) +remember v.记得，想起，记住 +remembrance n.记得，记忆 +remind v.提醒，使想起 +reminiscence n.回想，回忆，怀念 +reminiscent adj.使想起...的 +remit v.汇款，汇出 +remittance n.汇款 +remnant n.残余，残迹 +remote adj.遥远的，疏远的 +remoteness n.遥远，疏远 +removal n.移开，除去，移居 +remove v.移开，除去，罢免 +remuneration n.列举 +renaissance n.(文艺)复兴 +render v.使得，给予，翻译 +renew v.更新，续期 +renewable adj.可续期的 +renewal n.更新，续订 +rent n.租金 v.租 +rental adj.租借的，租金的 +repair v.修理，纠正 +repairmen n.修理，修补，纠正 +repay v.偿付，报答 +repeal v.,n.撤消，废除 +repeat v.重复，背诵 +repeatedly adj.重复地，一再地 +repel v.驱逐，推开 +repent v.后悔，悔悟 +repetition n.重复，反复，复制 +repetitive adj.重复的，反复的 +replace v.归还原处，代替 +replacement n.归回，代替(物) +replenish v.补充 +replenishment n.补充(货物) +reply v.,n.回答，答复 +report v.报告，报导，报道 +reportage n.报告文学 +reporter n.报告人，记者 +represent v.表示，表现，代表 +representation n.表示，代表 +representative adj.代表 +reproach v.,n.责备，指责 +reproduce v.复制，再造，繁殖 +reproduction n.复制(器) +reptile n.爬行动物 +republic n.共和国 +republican n.,adj.共和(派)的 +repudiate n.拒绝接收，拒付 +reputable adj.声誉好的 +reputation n.名声，声誉 +repute n.声誉 v.看作，评价 +request n.请求 +require v.需要，请求 +requirement n.要求，需要 +requisite adj.必要的，需要的 +rescind adj.退还，取消 +rescue v.,n.救援，救出 +research v.,n.调查，研究 +researcher n.调查者，研究人员 +resemblance n.相仿，类似 +resemble v.象，类似 +resent v.不满于，愤恨 +resentful adj.不满的，怨恨的 +resentment n.不满，愤恨 +reservation n.贮存物，预定 +reserve v.贮备，保存，预定 +reservoir n.水库 +reside v.居住，存在 +residence n.住宅，住处 +resident n.居民 +residual adj.剩余的 +resign v.辞职 +resignation n.辞职 +resist v.抵抗，忍住 +resistance n.抵抗，阻力，反感 +resistant n.抵抗的，反对的 +resolute adj.坚决的，果断的 +resolution n.决议，决定，决心 +resolutely adj.坚决地，果断地 +resolve v.决定，解决，分解 +resort v.诉诸，求助 n.胜地 +resource n.资源，机智，策略 +respect v.尊重，重视，尊敬 +respectable adj.可敬的 +respectful adj.恭敬的，尊重的 +respectfully adv.恭敬地 +respective adj.各自的，各个的 +respectively adv.各自，分别地 +respond v.答复，反应，响应 +response v.答复，反应，响应 +responsibility n.责任，职责 +responsible adj.负责的，尽责的 +rest v.休息 n.休息，休止 +restaurant n.饭馆，餐厅 +restless adj.没休息的，不安的 +restock v.重新进货 +restore v.恢复，复原，归还 +restrain v.抑制，制止 +restraint n.抑制，自制 +restrict v.限制，约束 +restriction n.限制，约束 +restrictive n.限制的 +result n.结果，效果，后果 +resultant adj.结果的，合成的 +resume v.继续，再度 +resume n.个人简历，摘要 +retail v.,n.零售 +retailer n.零售商 +retain v.保留，记忆，雇 +retell v.复述 +retire v.退休，退隐，就寝 +retirement n.退休，隐居 +retort v.反驳，回嘴 +retreat v.,n.退却，撤退 +retroactive adj.可追溯的 +return v.回归，归还 n.归来 +reveal v.揭露，透露，显示 +revenge n.,v.报仇，报复 +revenue n.岁入，收入 +reverence n.尊敬，崇敬 +reverse adj.颠倒的，相反的 +revert v.回复到，重议 +review v.,n.检查，复习 +revise v.修改，校订，复习 +revision n.修改，修订 +revival n.复苏，再生 +revive v.苏醒，复苏 +revoke v.废除，取消，撤回 +revolt n.,v.起义，反抗 +revolution n.革命，变革 +revolutionary adj.革命的 +revolve v.旋转，绕行 +reward n.报酬，酬金，报答 +rewarding adj.有收获的 +rheumatism n.风湿病 +rhyme n.韵，脚韵 +rhythm n.韵律，节奏 +rib n.肋，肋骨 +ribbon n.带子，缎带 +rice n.稻子，大米，米饭 +rich adj.富的，富饶的 +richness n.富饶，富有 +rid v.使摆脱，使除去 +riddle n.谜语，谜 +ride v.乘坐，骑 n.乘车 +ridge n.山脉，岭，屋脊 +ridicule n.,v.嘲笑，挖苦 +rediculous adj.可笑的，荒谬的 +rifle n.步枪，来福枪 +right adj.正确的，右的 +righteous adj.正直的，公正的 +rigid adj.僵硬的，严厉的 +rigidity adj.僵硬，严厉，死板 +rigor n.严格，严肃 +rigorous adj.严厉的，酷热的 +rim n.边缘，眼镜架 +ring v.鸣，打铃，打电话 +rinse v.漂洗，润丝 +riot n.,v.骚乱，闹事 +riotous adj.骚乱的，喧扰的 +rip v.撕破，扯碎 +ripe adj.熟的，成熟的 +ripen v.成熟，变热 +ripple n.波纹，涟漪 +rise v.起立，晋级，增长 +risk n.,v.冒险，风险 +risky adj.有风险的，冒险的 +rival n.对手 adj.竞争的 +rivalry n.竞争，对抗 +river n.河，江 +road n.道路，路 +roam v.漫步，漫游 +roar v.,n.吼，怒号，轰鸣 +roast v.烤，炙 adj.烘烤的 +rob v.抢劫，偷 +robber n.强盗 +robbery n.抢劫(案) +robe n.长袍 +robot n.机器人 +robust adj.强壮的，粗壮的 +rock n.岩石 v.摇摆，摇晃 +rock-bottom n.adj.(价格)最低(的) +rocket n.火箭 +rod n.小棒，竿 +role n.角色，作用 +roll v.滚，卷，转动，压平 +roller n.滚筒，压路机 +roman adj.古罗马的n.罗马人 +romance n.浪漫文学，浪漫故事 +romantic adj.浪漫的，好幻想的 +romanticism n.浪漫主义 +rome n.罗马 +roof n.屋顶 +room n.房间，室，空间 +rooster n.公鸡 +root n.根，根源 +rope n.绳，索 +rose n.玫瑰，蔷薇 +rosy adj.玫瑰红的，幻想的 +rot v.腐烂，枯朽 +rotary adj.旋转的 +rotate v.旋转，循环，转流 +rotation n.旋转，更替 +rotten adj.腐烂的，发臭的 +rough adj.粗糙的，粗野的 +roughly adv.大约地，粗略地 +round adj.圆形的adv.在周围 +roundabout adj.迂回的，转弯抹角 +rouse v.唤醒，惊起 +route n.路线，航线 +routine n.日常事务 +row v.划船 n.排，列 +royal adj.王室的，皇家的 +royalty n.皇家，皇族 +rub v.擦，摩擦，涂抹 +rubber n.橡胶，橡皮 +rubbish n.垃圾，废物，废话 +rude adj.粗鲁的，下流的 +rug n.小块地毯 +ruin n.废墟 v.毁坏，破坏 +ruinous adj.毁灭性的 +rule n.法规，常规，统治 +ruler n.统治者，直尺 +ruling adj.统治的 +rumor n.,v.传闻，谣言 +run v.跑，竞选，行驶 +runner n.奔跑者，赛跑运动员 +running adj.连续的 n.经营 +rural adj.农村的 +rush v.,n.冲，冲进 +russia n.俄罗斯，俄语 +russian n.,adj.俄国(人)的 +rust n.锈 v.生锈，衰退 +rusty adj.生锈的 +ruthless adj.无情的，冷酷的 +sack n.麻袋 v.解雇 +sacred adj.神圣的 +sacrifice n.,v.牺牲(品) +sad adj.悲哀的，可悲的 +saddle n.马鞍 +sadly adv.悲哀地，可惜 +sadness n.悲哀 +safe adj.安全的，无风险的 +safely adv.安全地，平安地 +safety n.安全 adj.保险的 +sag v.下跌 +said adj.上述的，该 +sail n.帆 v.行驶，开航 +sailing adj.启航的 n.航行 +sailor n.水手，海员 +saint n.圣人，圣徒 +sake n.缘故，利益 +salad n.色拉，拌凉菜 +salability n.适销性 +salable adj.有销路的，适销的 +salary n.工资，薪水 +sale n.出售，贱卖 +sales n.销售 adj.出售的 +salesman n.售货员，推销员 +salmon n.鲑，大马哈鱼 +salt n.盐 +salty adj.咸的 +salute v.行礼，致敬 +salution n.致敬 +same adj.同样的 +sample n.样品 v.抽样 +sampling n.抽样 +sand n.沙子 +sandwich n.三明治 v.夹入 +sandy adj.沙的，沙色的 +sanitary n.疗养院 +santa Claus n.圣诞老人 +sarcasm n.讽刺，挖苦 +sarcastic adj.讽刺的 +sardine n.沙丁鱼 +satellite n.卫星 +satire n.讽刺作品 +satisfaction n.满足，满意 +satisfactorily adv.圆满地 +satisfactory adj.令人满意的 +satisfy v.满足，使满意，偿还 +saturation n.浸透，饱和 +saturday n.星期六 +saturn n.土星 +sauce n.调味汁，酱油 +saucer n.茶碟 +sausage n.香肠，腊肠 +savage adj.野蛮的，残暴的 +save v.救，拯救，储蓄 +savings n.存款，储蓄额 +saw v.,n.锯 +say v.说 n.发言(权) +scale n.刻度，等级，秤 +scaly adj.鱼鳞状的 +scan v.浏览，细察，扫描 +scandal n.丑闻 +scar n.疤，疤痕 +scarce adj.缺乏的，罕见的 +scarcely adv.几乎没有，将近 +scarcity n.缺乏，不足 +scare v.惊吓 n.惊恐 +scarf n.围巾，头巾 +scarlet adj.n.猩红的，鲜红的 +scatter v.散布，撒播 +scene n.现场，情景，一场戏 +scenery n.风景，布景 +scenic adj.风景如画的 +scent n.气味，香味 +schedule n.时间表 v.排定 +scheme n.计划，方案，图谋 +scholar n.学者 +scholarship n.奖学金，学问 +school n.学校，上学，学系 +schooling n.学校教育 +science n.科学，学科 +scientific adj.科学的 +scientist n.科学家 +scissors n.剪刀 +scoff v.嘲笑，嘲弄 +scold v.,n.训斥，责骂 +scope n.范围 +scorch v.烧焦 +scorching adj.灼热的 +score n.得分，成绩，二十 +scorn n.,v.蔑视，不屑 +scornful adj.蔑视的，轻视的 +scotch n.苏格兰 +scotsman n.苏格兰人 +scottish adj.苏格兰的 +scotland n.苏格兰 +scout n.侦察员，童子军 +scramble v.爬，攀，争夺 +scrap n.碎片，废品，屑 +scrape v.擦，刮，凑集 +scratch v.抓破，挠 n.抓痕 +scream v.,n.尖叫声 +screech v.,n.尖叫(声) +screen n.屏，帘 v.甄别 +screw v.拧 n.螺钉 +screwdriver n.螺丝刀，改锥 +script n.临时单据 +scrub v.擦洗，刷 +scrutiny n.细看，复查 +sculptor n.雕塑家 +sculpture n.雕塑，雕刻 +sea n.海，海洋 +seal v.封 n.图章，封条 +seam n.接缝 +seaman n.海员，水手 +seaport n.海港，港口 +search v.,n.搜查，寻找 +seashore n.海滨 +seaside n.海边 +season n.季节 v.调味 +seasonal adj.季节性的 +seat n.座位，席位 v.就座 +second num.第二 n.第二，秒 +secondary adj.第二的，次要的 +secondhand adj.二手的，间接的 +secondly adv.第二，其次 +secrecy n.秘密(状态) +secret adj.秘密的 n.秘密 +secretariat n.秘书处 +secretary n.秘书，部长，书记 +section n.部分，区域 +sector n.部分，部门 +secure adj.安全的，可靠的 +security n.安全，有价证券 +see v.看见，明白，查看 +seed n.种子 v.播种 +seek v.寻觅，企图获得 +seem v.好象，似乎 +seemingly adv.表面上 +segment n.部分，节，片 +seize v.抓住，夺取，占领 +seizure n.强占，没收 +seldom adv.难得，不常 +select v.挑选 adj.精选的 +selection n.选择，选集 +self n.自己，自身，品质 +selfish adj.自私的，利己的 +sell v.卖，出售 +seller n.卖方 +seminar n.研讨会，学术讲座 +semiconductor n.半导体 +senate n.参议院 +senator n.参议员 +send v.派遣，送，寄出，请 +sender n.寄信人 +senior adj.年长的，老资格的 +sensation n.感觉，感动 +sensational adj.轰动的 +sense n.感官，感觉，见识 +senseless adj.无意义的 +sensible adj.明智的，感知的 +sensitive adj.敏感的 +sensitivity n.灵敏度 +sentence n.句子 v.判决 +sentiment n.感情，情绪 +sentimental adj.多愁善感的 +separate v.分离，分隔，分手 +separately adv.分别地 +separation n.分离，分开 +september n.九月 +sequence n.一连串，顺序 +serene adj.清澈的，晴朗的 +serenity n.晴朗 +series n.系列，从书 +serious adj.慎重的，严重的 +seriously adv.严肃地，严重地 +sermon n.布道，说教 +serpent n.大蛇 +servant n.仆人 +serve v.服务，任职，服役 +service n.服务，公共设施 +serviceable adj.有用的，耐用的 +session n.会议，会期，市，盘 +set v.放，指定 n.全套 +setting n.安置，背景，环境 +settle v.解决，安置，支付 +settlement n.解决，结算 +seven num.七 +seventeen num.十七 +seventh num.第七，七分之一 +seventy num.七十 +several adj.几个 +severe adj.严厉的，苛刻的 +severely adv.严厉地，苛刻地 +sew v.缝纫 +sewing-machine n.缝纫机 +sex n.性，性别 +sexual adj.性的，性感的 +sexuality n.性欲 +shabby adj.褴褛的，不体面的 +shade n.阴影，遮光物，浓淡 +shadow n.影子，阴影 +shadowy adj.有阴影的，模糊的 +shady adj.遮阴的，背阴的 +shaft n.柄，竖井 +shake v.摇动，发抖，握手 +shall v.将 +shallow adj.浅的，浅薄的 +sham n.赝品 v.假冒 +shame n.羞耻，耻辱 +shameful adj.可耻的，丢脸的 +shampoo n.洗发香波 +shape n.形状，轮廓 v.形成 +shapeless adj.不定形的 +share n.份，股份 v.分配 +shark n.鲨鱼 +sharp adj.锐利的，明显的 +sharpen v.削尖，磨快 +sharpener n.铅笔刀，磨石 +sharply adv.尖锐地，敏锐地 +shatter v.粉碎，毁坏 +shave v.剃，修脸 +she pron.她 +shear v.剪毛，切割 +shed v.流下 n.棚子 +sheep n.绵羊 +sheepish adj.胆怯的 +sheer adj.全然的，极薄的 +sheet n.被单，张，大片 +shelf n.架子，搁板 +shell n.壳，英，炮弹，外壳 +shelter n.躲避处，庇护 +shepherd n.牧羊人 +sheriff n.郡长，警官 +shield n.盾牌 v.防护 +shift v.转变 n.转移，轮班 +shilling n.先令 +shine v.发光，照射，照耀 +shiny adj.耀眼的 +ship n.船，舰 v.船运 +shipbuilding n.造船业 +shipmail n.随船带交 +shipment n.船运，一船货 +shipowner n.船主 +shipping n.船运，装运 +shipwreck n.(船只)失事 +shipyard n.船坞 +shirt n.衬衣 +shiver v.发抖 +shock n.震惊，电击 v.震动 +shoe n.鞋 +shoemaker n.鞋匠 +shoot v.射击，发芽 n.嫩芽 +shop n.商店，车间 +shopkeeper n.店主 +shopping n.购物 +shore n.岸，滨 +short adj.短的，矮的 +shortage n.缺少，不足 +shortcoming n.短处，缺点 +shortcut n.捷径 +shorten v.缩短 +shorthand n.速记 +shortly adv.立刻，不久 +shorts n.短裤 +short-weight n.短装，短重 +shot n.射击，弹丸 +should v.应该，会 +shoulder n.肩膀 +shout v.,n.叫喊 +shove v.推，推开 +shovel n.铲子 +show v.显示，表明 n.演出 +shower n.阵雨，淋浴 +showroom n.展室，陈列室 +shrewd adj.机敏的，精明的 +shriek v.,n.尖叫(声) +shrill v.刺耳的 v.尖叫 +shrine n.神龛 +shrimp n.虾 +shrink v.收缩，畏缩 +shroud n.遮蔽物 +shrub n.灌木 +shrug v.,n.耸肩 +shuffle v.拖脚走 +shun v.躲避，躲开 +shut v.关闭，合拢 +shutter n.百叶窗，快门 +shuttle n.梭 v.穿梭 +shy adj.害羞的，腼腆的 +sick adj.有病的，厌恶的 +sickness n.病 +sickle n.镰刀 +side n.边，面，侧面，一方 +sidewalk n.人行道 +sideways adv.侧面地 +siege v.包围，围攻 +sieve n.筛子 +sift v.筛，细查 +sigh v.,n.叹息，叹气 +sight n.视力，情景 +sightseeing n.观光，游览 +sign n.告示，迹象，符号 +signal n.信号 v.做手势 +signature n.签字 +significance n.重要性，意义 +significant adj.重要的，有意义的 +signify v.表示，意味 +signpost n.路标，广告柱 +silence n.寂静，沉默 +silent adj.寂静的，沉默的 +silicon n.硅 +silk n.丝，绸 adj.丝的 +silky adj.丝绸般的 +silly adj.糊涂的，愚蠢的 +silver n.银，银餐具 +similar adj.类似的，相象的 +similarity n.类似，相似 +simple adj.简单的，朴素的 +simplicity n.简单，简朴，单纯 +simplify v.简单化 +simply adv.简单地，仅 +simulate v.假装，佯伪 +simultaneous adj.同时(发生)的 +simultaneously adv.同时地 +sin n.罪，罪恶 +since prep.自从 conj.既然 +sincere adj.真诚的，诚挚的 +sincerely adv.真诚地 +sincerity n.真诚，诚挚 +sinful adj.有罪的，罪恶的 +sing v.唱 +singer n.歌手 +single adj.单个的，单身的 +singular adj.非凡的，单数的 +sink v.沉，下落 n.水槽 +sir n.先生 +siren n.汽笛，报警器 +sister n.姊，妹 +sit v.坐，栖息 +site n.场所，场地 +sitting-room n.起居室 +situate v.位于，坐落在 +situation n.形势，局面 +six num.六 +sixteen num.十六 +sixth num.第六，六分之一 +sixty num.六十 +sizable adj.相当大的 +size n.大小，规模，尺寸 +skate n.冰鞋 v.滑冰 +skating n.滑冰，溜冰 +skeleton n.骨架 +sketch n.素描，速写，草图 +ski n.雪撬 v.滑雪 +skiing n.滑雪 +skill n.技能，技艺 +skillful adj.熟练的 +skim v.撇去，掠过，略谈 +skin n.皮，皮肤 v.剥皮 +skip v.跳过，遗漏 +skirmish n.小冲突 +skirt n.裙子 +skull n.颅骨 +sky n.天，天空 +skyrocket v.猛涨 +skyscraper n.摩天大楼 +slack adj.松驰的，不景气的 +slam v.砰地关上 +slander n.,v.诽谤，污蔑 +slang n.俚语 +slap v.掌击，掴 +slaughter v.,n.屠宰，屠杀 +slave n.奴隶 v.做苦工 +slavery n.奴隶制，奴役 +slay v.屠杀 +sleep v.,n.睡眠 +sleepy adj.欲睡的 +sleet n.雨加雪 +sleeve n.袖子 +slender adj.细长的，苗条的 +slice n.薄片 v.切成薄片 +slide v.滑，溜 +slight adj.轻微的，纤瘦的 +slightly adv.轻微地，稍稍 +slim adj.苗条的 +slip v.滑，滑行，溜走 +slipper n.便鞋，拖鞋 +slippery adj.滑的 +slit v.割裂 n.狭口，裂缝 +slogan n.标语，口号 +slope v.倾斜 n.坡，坡度 +slow adj.慢的，迟钝的 +slowdown n.放慢，迟缓 +slowly adj.慢慢地 +slum n.贫民窟 +slumber n.睡眠，微睡 +slump n.暴跌，不景气 +sly adj.狡猾的 +smack n.滋味 v.劈啪地响 +small adj.小的，不重要的 +smart adj.聪明的，漂亮的 +smash v.打破，粉碎，猛撞 +smell v.嗅,发出气味 n.气味 +smile v.,n.微笑 +smog n.烟雾 +smoke v.冒烟，抽烟 n.烟 +smoker n.抽烟者 +smoking n.抽烟 +smooth adj.平稳的，光滑的 +smoothly adv.顺利地，安稳地 +smuggle v.走私，夹带 +smuggler n.走私者 +smuggling n.走私 +snack n.快餐，小吃 +snail n.蜗牛 +snake n.蛇 +snap v.,n.折断(声) +snatch v.,n.抢夺，攫取 +sneak v.偷偷地逃走、做 +sneakers n.旅游鞋 +sneer v.,n.嘲笑，讥笑 +sneeze v.打喷嚏 +sniff v.嗅，闻 +snob n.势利小人 +snobbery n.势利 +snobbish adj.势利的 +snore v.打鼾 +snow n.雪 v.下雪 +snowman n.雪人 +snowstorm n.暴风雪 +snowy adj.有雪的，下雪的 +so adv.这样，也一样 +soak v.浸，吸水，湿透 +soap n.肥皂 +soar v.急速上升，暴涨 +sob v.,n.呜咽，啜泣 +sober adj.清醒的，冷静的 +so-called adj.所谓的 +soccer n.足球 +sociable adj.善交际的，社交的 +social adj.社会的，社会性的 +socialism n.社会主义 +socialist n.adj.社会主义者、的 +society n.社会，协会，社交界 +sociologist n.社会学家 +sociology n.社会学 +sock n.短袜 +soda n.苏打，碱，苏打水 +sodium n.钠 +sofa n.沙发，软椅 +soft adj.柔软的，温和的 +soften v.使柔软，变软 +softly adv.柔软地，温和地 +softness n.柔软，温和 +software n.软件 +soil n.土壤，国土，污秽 +solar adj.太阳的 +soldier n.士兵，兵 +sole adj.唯一的，单独的 +solely adv.唯一地，只 +solemn adj.正式的，严肃的 +solicitor n.律师 +solid adj.固体的，牢固的 +solidarity n.团结 +solitary adj.独自的，孤独的 +solitude n.寂寞，独居 +solo n.独唱，独奏 +solution n.解决，溶液 +solve v.解答，溶解 +solvency n.偿付能力 +solvent adj.有偿付能力的 +some adj.若干，某一 +somebody pron.某人，重要人物 +somehow adv.以某种方式 +someone pron.有人，某人 +something pron.某事，某物 +sometime adv.日后，曾经 +sometimes adv.有时，不时 +somewhat adv.稍微，有点 +somewhere adv.某地，到某处 +son n.儿子 +song n.歌，歌词，鸟鸣 +son-in-law n.女婿 +sonnet n.十四行诗 +sonyericsson n.索尼愛立信通訊手機公司 +soon adv.不久，很快，早 +soot n.油烟，煤烟 +soothe v.安慰，使镇定 +sophisticated adj.复杂的，先进的 +sophistication n.世故 +sore adj.疼痛的，恼火的 +sorrow n.伤心，悲哀，忧患 +sorrowful adj.悲哀的，忧愁的 +sorry adj.难过的，遗憾的 +sort n.种类 v.分类，拣 +soul v.灵魂，心灵，人 +sound n.声，声音 v.听起来 +soup n.汤 +sour adj.酸的，不高兴的 +source n.来源，出处，源泉 +south n.南,南方 adj.南方的 +southeast n.东南(部) +southern adj.南的，南方的 +southward adj.,adv.向南 +southwest n.西南(部) +souvenir n.纪念品 +sovereign n.君主 adj.主权的 +sovereignty n.主权 +sow v.播种，散布 n.母猪 +soy n.酱油 +space n.空间，太空，空地 +spacecraft n.宇宙飞船 +spaceship n.太空船，宇宙飞船 +spaceshuttle n.航天飞机 +spacious adj.广阔的，宽敞的 +spade n.铲子，铁锹，黑桃 +spain n.西班牙 +span n.跨度；指距 v.跨越 +spanish adj.,n.西班牙人(的) +spare v.腾出时间adj.备用的 +spark n.火花，火星 +sparkle v.发火花，闪耀 +sparrow n.麻雀 +spatial adj.空间的 +speak v.说话，发言，讲 +speaker n.说话者，发言人 +spear n.矛，枪 +special adj.特别的，专门的 +specialist n.专家 +specialize v.专攻，专门研究 +specialized adj.专业的，专门的 +specially adv.特地，专门地 +specialty n.专业，专长 +species n.物种，种类 +specific adj.特殊的，明确的 +specification n.规格，明细表 +specify v.详细说明，指定 +specimen n.标本，样本 +spectacle n.眼镜，场面，壮观 +spectacular adj.壮观的 +spectator n.观众，旁观者 +spectrum n.光谱 +speculate v.推测，投机 +speculation n.推测，投机 +speculator n.投机商 +speech n.演说，语言能力 +speed n.速度 v.飞驰 +speedy adj.快速的 +spell v.拼写，咒语 +spelling n.拼音，拼写 +spend v.花费，消耗 +sphere n.球体，范围，领域 +spice n.香料，调味品 +spicy adj.辛辣的 +spider n.蜘蛛 +spill v.溢出，流出 +spin v.自转，纺 +spiral adj.,n.螺旋(的) +spirit n.精神，心灵 n.酒精 +spiritual adj.精神上的，心灵的 +spit v.吐，倾吐 n.唾液 +spite n.恶意，怨恨 +splash v.溅，泼 +splendid adj.辉煌的，灿烂的 +split v.劈，分割 +spoil v.损坏，宠坏 +spokesman n.发言人 +sponge n.海绵 +sponsor n.发起人，主办者 +sponsorship n.发起，主办 +spontaneous adj.自发的 +spoon n.汤匙 +spoonful adj.一匙的量 +sport v.运动，嬉戏 +sportsman n.运动员 +sportsmanship n.体育精神 +spot n.点，斑，污点，场所 +sprain v.,n.扭伤 +spray n.水雾 v.喷射 +spread v.伸开，散布，传播 +spring v.跳跃，萌芽 n.春季 +sprinkle v.洒，撒，不细雨 +sprout n.幼芽 v.出芽 +spur n.,v.刺激，鼓舞 +spy n.间谍 +square n.正方形，广场，平方 +squash v.压碎 n.果子汁 +squat v.蹲 +squeeze v.压，榨，挤 +s. s. n.(缩)轮船 +squirrel n.松鼠 +stab v.,n.刺，戳 +stability n.稳定性 +stable adj.稳固的，稳定的 +stack n.,v.推放，垛 +stadium n.露天运动场 +staff n.工作人员，棒子 +stage n.舞台，阶段 v.上演 +stagger v.蹒跚 +stagnation n.停滞 +stain n.污点，瑕疵 v.弄脏 +stainless adj.无瑕的，不锈的 +stair n.楼梯 +staircase n.扶手楼梯 +stake n.桩，赌注 +stale adj.陈旧的 +stalk n.主茎，叶柄 +stall n.厩，货摊 +stammer v.,n.口吃，结巴 +stamp n.邮票，图章 v.盖章 +stand v.站立，坐落，忍受 +standard n.标准 adj.标准的 +standardize v.标准化 +standing adj.常务的 n.地位 +standpoint n.立场，观点 +standstill n.停顿 +staple n.钉书钉，主要产品 +stapler n.钉书机 +star n.星 v.主演 +stare n.,v.凝视 +start v.开始，着手，发动 +starting n.出发，开始 +startle v.惊吓，使吃惊 +starvation n.饥饿 +starve v.挨饿，渴求 +state n.状态，国家，州 +statement n.声明，陈述 +statesman n.政治家，国务活动家 +static adj.静止的，静态的 +station n.站，台 v.驻扎 +stationary adj.固定的，稳定的 +stationery n.文具 +statistical adj.统计的 +statistics n.统计(学) +statue n.雕像，铸像 +status n.形势，身分 +statute n.法令，章程，条例 +stay v.停留，暂住，保持 +steadily adv.稳固地，稳步地 +steady adj.平稳的，稳健的 +steak n.牛排，排骨 +steal v.偷窃 +steam n.汽，蒸汽 v.蒸 +steamer n.汽船 +steel n.钢 +steep adj.陡峭的 +steer v.驾驶，行驶 +stem n.茎 +stencil n.复写纸，蜡纸 +step n.脚步，台阶，步骤 +stereo n.立体声 +sterling adj.英镑的 +stern adj.严厉的，坚决的 +stevedore n.码头工人 +stew v.炖，煮 n.炖菜 +steward n.乘务员，男仆 +stewardess n.女乘务员，空姐 +stick n.枝，杆，手杖 v.扎 +sticky adj.黏的 +stiff adj.僵硬的，生硬的 +still adj.静止的 adv.仍旧 +stillness n.寂静，静止 +stimulate v.刺激，使兴奋 +stimulation n.刺激 +sting n.刺痛 v.刺，叮 +stink adj.臭的 +stipulate v.合同规定，约定 +stipulation n.规定 +stir v.搅拌，激起 n.骚动 +stirring adj.动人的 +stitch n.一针 v.缝合 +stock n.存货，股份 v.贮存 +stocking n.长袜 +stomach n.胃 +stone n.石头，石料，宝石 +stony adj.石头多的 +stool n.凳子 +stoop v.弯腰，屈从 n.俯身 +stop v.停止，终止 n.停止 +storage n.贮藏，货栈 +store n.商店 v.贮藏，储备 +storey n.楼层 +storm n.暴风雨，暴怒 +stormy adj.有暴风雨的 +story n.故事，小说，经历 +stout adj.肥胖的，结实的 +stove n.炉子，火炉 +stow v.装载，理舱 +stowage n.装载 +straight adj.直的 adv.笔直地 +straightforward adj.直爽的 +straighten v.弄直 +strain v.拉紧，扭伤，使紧张 +strait n.海峡 +strand n.(绳)股，缕 +strange adj.奇怪的，陌生的 +stranger n.新人，陌生人 +strap n.带，皮带 +strategic adj.战略的 +strategy n.战略，策略，计谋 +straw n.麦杆，稻草，吸管 +strawberry n.草莓 +stray v.迷路 adj.走失的 +streak n.纹理，条纹 +stream n.小溪，流 +streamline n.流线型 v.精简 +street n.大街 +streetcar n.有轨电车 +strength n.力气，力量，强度 +strengthen v.加强，巩固 +stress v.,n.强调，压力 +stretch v.伸展，拉长 n.伸展 +strict adj.严格的，精确的 +strictly adv.严格地，绝对 +stride adv.阔步走 n.阔步 +strife n.冲突，争斗 +strike v.打，攻击，罢工 +striking adj.引人注目的 +string n.细绳，弦，一串 +strip v.剥 n.窄条 +stripe n.条纹 +strive v.努力，奋斗 +stroke n.敲，笔划 v.抚摸 +stroll v.,n.散步，闲逛 +stroller n.散步者 +strong adj.强壮的，强烈的 +strongly adv.强烈地，强有力地 +stronghold n.堡垒，要塞 +structural adj.结构的，组织上的 +structure n.结构，构造，组织 +struggle v.,n.斗争，奋斗 +stubborn adj.顽固的，倔强的 +student n.学生，研究人员 +studio n.画室，工作间 +study v.,n.学习，研究 +stuff n.材料，东西 v.塞满 +stuffy adj.闷热的，不透气的 +stumble v.绊跌 +stump n.树桩，残茬 +stupid adj.愚蠢的，迟钝的 +stupidity n.愚蠢 +sturdy adj.健壮的 +style n.风格，时尚，作风 +stylist n.时装设计师 +subdivide v.细分，再分 +subdue v.战胜，征服 +subject n.题目，学科，主语 +subjective adj.主观的 +subjunctive adj.虚拟的 +submarine adj.海底的 n.潜水艇 +submerge v.浸没，淹没 +submit v.服从，呈交 +subordinate adj.下级的，辅助的 +subordination n.服从 +subscribe v.订购，订阅 +subscription n.预订，订购 +subsequence n.后果 +subsequent adj.以后的，后起的 +subsequently adv.后来，其后 +subsidiary adj.辅助的，次要的 +substance n.物质，实质 +substantial adj.可观的，实质的 +substantiate v.证实 +substitute n.,v.代替，代用品 +substitution n.代替 +subtle adj.敏锐的，微妙的 +subtract v.减去 +subtraction n.减法，减去 +suburb n.郊区，郊外 +suburban adj.郊区的 +subway n.地铁 +succeed v.成功，后继 +success n.成功 +successful adj.成功的 +successfully adv.成功地 +succession n.接连，继任 +successive adj.接连的，连续的 +successor n.继承人，继任者 +such adj.这样的，如此的 +suck v.吮，咂 +sudden adj.突然的，意外的 +suddenly adv.突然，忽然 +suffer v.遭受，受苦，忍受 +suffering n.苦难 +suffice v.足够，满足需要 +sufficient adj.充足的，充分的 +sufficiently adv.充分地，足够地 +suffix n.后缀 +sugar n.糖 +suggest v.建议，暗示 +suggestion n.建议，示意 +suicide n.自杀 +suit n.一身西服，起诉 +suitable adj.合适的，适宜的 +suitcase n.手提箱 +suite n.随员，一套(房间) +sullen adj.板着脸的 +sultry adj.闷热的 +sum n.总数，会计 v.总结 +summarize v.概括，总结 +summary n.概要 adj.概括的 +summer n.夏季 +summit n.顶峰，最高点 +summon v.,n.召唤，召集 +sun n.太阳，阳光 +sunburn v.晒黑 +sunday n.星期日 +sunflower n.葵花 +sunlight n.阳光 +sunny adj.向阳的，晴朗的 +sunrise n.日出 +sunset n.日落 +sunshine n.日照，日光 +super adj.特级的，超级的 +superb adj.华丽的，超等的 +superficial adj.表面的，肤浅的 +superinrtendent n.管理人，负责人 +superior adj.优良的，上级的 +superiority n.优越(性) +supermarket n.超级市场 +supersede v.代替 +supersonic adj.超音速的 +superstition n.迷信 +superstitious adj.迷信的 +supervise v.管理，监督，监考 +supervision n.监督 +supervisor n.监考人，监查 +supper n.晚餐 +supplement n.,v.增补，补充 +supplementary adj.补充的 +supplier n.供应商 +supply v.供应，供给 +support v.支持，资助，支援 +supporter n.支持者 +suppose v.猜想，假设 +supposing conj.假使 +suppress v.镇压，压制，遏止 +suppression n.镇压，压制 +supreme adj.最高的 +surcharge n.附加费，超载 +sure adj.有把握的，一定的 +surely adv.一定，肯定，谅必 +surface n.表面 adj.表面的 +surge n.,v.汹涌，波动 +surgeon n.外科医生 +surgery n.外科(学) +surmise v.,n.猜想，推测 +surname n.姓 +surpass v.超过，胜过 +surplus n.过剩 adj.剩余的 +surprise v.使惊诧 n.惊奇 +surprising adj.惊人的 +surrender v.放弃，交出，投降 +surround v.包围 +surroundings n.环境，周围事物 +survey v.视察，测量 n.调查 +surveyor n.调查人，检验人 +survival n.幸存，遗风 +survive v.幸免于，幸存 +survivor n.幸存者 +suspect v.怀疑 n.嫌疑犯 +suspend v.吊，悬，暂停，停学 +suspense n.暂停，中止 +suspicion n.怀疑，嫌疑 +suspicious adj.可疑的，猜疑的 +sustain v.支撑，遭受 +swallow n.燕子 v.吞咽 +swamp n.沼泽 +swan n.天鹅 +swarm n.群 v.云集 +sway v.摇晃，影响 +swear v.宣誓，诅咒 +sweat v.出汗 n.汗水 +sweater n.运动衫，毛衣 +swede n.瑞典人 +sweden n.瑞典 +swedish adj.,n.瑞典人(的) +sweep v.扫除，席卷 +sweet adj.甜的，甜蜜的 +sweeten v.变甜，加糖 +sweetheart n.心肝，宝贝 +sweetness n.甜味 +swell v.膨胀，肿 +swift adj.快的，迅速的 +swim v.游泳，游 +swing v.摇摆 n.秋千 +swiss n.瑞士人 +switch v.转换 n.开关 +switzerland n.瑞士 +sword n.剑 +syllable n.音节 +symbol n.象征，符号 +symbolize v.象征 +symmetric adj.对称的，匀称的 +symmetry n.对称 +sympathetic adj.同情的，有共鸣的 +sympathize v.同情 +sympathy n.同情，同感，共鸣 +symphony n.交响乐 +symposium n.座谈会，学术讨论会 +symptom n.症状，征兆 +synonym n.同义词 +synthesis n.综合，合成 +synthetic adj.合成的，人造的 +system n.系统，体制，制度 +systematic adj.系统的，有组织的 +systematically adv.有系统地 +table n.桌子，表格 +tablet n.药片 +tabulate v.制表，将...列表 +tack n.图钉 +tackle n.用具，辘轳 v.抓住 +tact n.机敏，圆滑 +tactful adj.机智的，老练的 +tactics n.战术，策略 +tag n.标签，货签 +tail n.尾巴，尾部 +tailor n.裁缝 v.缝制 +take v.拿，带，吃，乘 +take-off n.起飞 +tale n.故事 +talent n.人才，天资 +talk v.谈话 n.讲话，会谈 +talkative adj.罗嗦的 +tall adj.高的 +tally v.吻合，符合 +tame v.驯养，制报 +tan n.黄褐色 v.鞣草 +tangle v.缠绕，纠缠 +tank n.油箱，水箱，坦克 +tanker n.油轮 +tap v.叩击 n.轻敲 +tape n.条，带，磁带 +tape-recorder n.录音机 +tape-recording n.录音 +tar n.沥青，柏油 +target n.目标，对象，靶 +tare n.皮重 +tariff n.关税 +task n.工作，任务 +taste n.味道，趣味 v.品尝 +tasteful adj.有滋味的，好吃的 +tax n.税 v.征税 +taxation n.税(总称)，税务 +taxi n.出租汽车 +tea n.茶，茶叶 +teach v.教，教书，教导 +teacher n.教员，老师 +teaching n.教学，教导 +teacup n.茶杯 +team n.小队 v.协同工作 +teapot n.茶壶 +tear n.眼泪 v.撕，拔 +tease v.取笑，逗乐 +technical adj.技术的，技能的 +technician n.技术员，技师 +technique n.技术，技巧 +technological adj.技术的，工艺的 +technology n.技术，工艺 +tedious adj.腻烦的，乏味的 +teenager n.(十几岁的)少年 +teens n.十多岁 +telefax n.传真 v.发传真 +telegram n.电报 +telegraph n.电报 +telephone n.电话 v.打电话 +telescope n.望远镜 +television n.电视，电视机 +telex n.电传 v.发电传 +tell v.告诉，讲，说出 +teller n.出纳 +temper n.情绪，脾气 +temperature n.温度，体温 +temple n.庙，寺院，太阳穴 +temporary adj.暂时的，临时的 +tempt v.引诱，诱惑 +tempatation n.诱惑，引诱 +ten num.十 +tenant n.房客，承租人 +tend v.趋向，照料，投标 +tendency n.趋势，倾向 +tender n.投标人 adj.温柔的 +tenis n.网球 +tenor n.(支票)限期 +tense adj.紧张的 v.拉紧 +tension n.紧张状态，张力 +tent n.帐篷 +tentative adj.试探性的 +tenth num.第十，十分之一 +term n.期限，学期，术语 +terminable adj.可终止的 +terminal n.终点 adj.末端的 +terminate v.终止，结束 +termination n.终止，结束 +terminology n.术语(总称) +terrace n.平台，台阶 +terrible adj.可怕的，极度的 +terribly adv.可怕地，极 +terrific adj.了不起的，极好的 +terrify v.惊吓，使恐怖 +territory n.领土，领域，地区 +terror n.恐怖，令人恐怖的事 +terrorism n.恐怖主义 +terrorist n.恐怖分子 +test v.,n.测验，试验 +testify v.证明，证实 +testimony n.证据 +text n.正文，课文，原文 +textbook n.课本，教科书 +textile n.纺织品 +textual adj.课文的，正文的 +than conj.比，除...外 +thank v.谢谢，感谢 +thankful adj.感谢的，欣慰的 +thanks n.感谢 int.谢谢 +thanksgiving day ]n.感恩节 +that adj.那,那个 adv.那么 +the (定冠词)那，这 +theatre n.剧场，戏剧，舞台 +theatrical adj.戏剧的 +theft n.偷盗 +their adj.他们的，它们的 +them pron.他(她)们，它们 +theme n.主题，题目 +themselves pron.他们、它们自己 +then adv.当时，然后，那么 +theoretical adj.理论的 +theory n.理论，学说 +there adv.那里，到那里 +thereafter adv.此后，其后 +thereby adv.因此，由此 +therefor adv.为此 +therefore adv.因而，所以 +therefrom adv.由此 +therein adv.在那里，其中 +thereof adv.及其，由此，它的 +thereon adv.关于那 +therewith adv.对此 +thermometer n.温度计 +these pron.这些 +thesis n.论文 +they pron.他(她)们，它们 +thick adj.厚的，浓的 +thicken v.加厚，变浓 +thickness n.厚，厚度，浓 +thief n.窃贼，小偷 +thigh n.大腿 +thin adj.薄的，瘦的 +thing n.东西，事情 +think v.想，相信，认为 +thinking n.思想 +thinker n.思想家 +third num.第三，三分之一 +thirst n.渴，渴望 +thirsty adj.渴的，渴望的 +thirteen num.十三 +thirty num.三十 +this adj.,pron.这，这个 +thorn n.刺，荆棘 +thorough adj.充分的，彻底的 +thoroughly adv.充分地，彻底地 +those pron.,adj.那些 +though conj.虽然，可是 +thought n.想法，思想，关怀 +thoughtful adj.深思的，体贴的 +thoughtless adj.轻率的，粗心的 +thousand num.千 +thrash v.抽打 +thread n.线，思路 +threat n.恐吓，威胁 +threaten v.恐吓，威胁 +three num.三 +threshold n.开端，门槛 +thrift n.节俭 +thrifty adj.节俭的 +thrill v.发抖 n.激动 +thriller n.惊险小说，电影 +thrive v.兴旺，繁荣 +throat n.咽喉 +throne n.王位 +throng n.一群人 v.挤满 +through prep.通过，借助 +throughout prep.贯穿 adv.全部 +throw v.,n.投，扔，抛 +thrust v.强推，插入，刺 +thumb n.拇指 +thumbtack n.按钉，图钉 +thunder n.雷 v.隆隆响 +thunderstorm n.雷雨 +thursday ]n.星期四 +thus adv.如此，这样，因而 +tick n.滴答声 v.打勾号 +ticket n.票，标签，价目单 +tickle v.挠，搔，逗乐 +tide n.潮汐，潮流 v.度过 +tidy adj.整齐的，整洁的 +tie v.捆，打结 n.领带 +tie-up n.(资金)占用，冻结 +tiger n.虎 +tight adj.紧的，密封的 +tighten v.拉紧 +tightly adv.紧紧地，紧密地 +tigress n.母虎 +tile n.瓦，瓷砖 +till prep.直到 +tilt v.,n.倾斜 +timber n.木材 +time n.时间，时候，次数 +timely adj.及时的 +timetable n.时刻表，时间表 +timid adj.胆怯的，害羞的 +tin n.锡，锡器 +tiny adj.微小的 +tip n.梢，尖，小费 +tiptoe v.用脚尖走 +tire v.疲劳，厌倦 +tired adj.疲劳的，厌倦的 +tiresome adj.使人厌倦的 +tissue n.组织，卫生纸 +title n.标题，题目，称号 +to prep.向，到 +toad n.蟾蜍，癞蛤蟆 +toast n.烤面包，祝酒 v.烘 +tobacco n.烟草 +today adv.今天,现在 n.今日 +toe n.脚趾，鞋头 +together adv.共同，一起，同时 +toil v.苦干 +toilet n.卫生间，便桶 +token n.象征，纪念章 +tolerable adj.可容忍的 +tolerance n.宽容，容忍 +tolerant adj.宽容的，宽大的 +tolerate v.容忍，宽容 +toll n.税 +tomato n.蕃茄，西红柿 +tomb n.坟 +tombstone n.墓碑 +tomorrow n.明天 adv.在明天 +ton n.吨 +tone n.语气，腔调，市况 +tongue n.舌，语言 +tonight n.今晚 adv.在今晚 +tonnage n.吨位，吨数 +tonne n.公吨 +too adv.也，非常 +tool n.工具，手段 +tooth n.牙齿 +toothache n.牙疼 +toothbrush n.牙刷 +toothpaste n.牙膏 +top n.顶，盖子 v.高于 +topic n.课题，主题 +torch n.火炬，手电筒 +torment v.,n.折磨，虐待 +torpedo n.鱼雷 +torrent n.激流，山洪 +tortoise n.龟 +torture v.,n.拷打，折磨 +toss v.向上扔，颠簸，辗转 +total adj.总 n.总和，合计 +totally adv.统统，完全地 +touch v.碰，接触，触动 +tough adj.坚韧的，难嚼烂的 +tour n.,v.旅行，周游 +tourism n.旅游业 +tourist n.旅游者，游客 +tow v.,n.拖，牵引 +toward prep.向，对于，将近 +towel n.毛巾 +tower n.塔 v.高耸 +town n.市镇，城市，闹市 +toy n.玩具 +trace n.痕迹，微量 v.追踪 +track n.径赛，轨道，路径 +tractor n.拖拉机 +trade n.贸易，交换 v.经商 +trader n.商人 +trademark n.商标 +tradesman n.商人 +tradition n.传统，惯例 +traditional adj.传统的 +traffic n.交通，交易，运输 +tragedy n.悲剧，惨事，灾难 +tragic adj.悲剧的，悲惨的 +trail v.拖曳，尾随 n.踪迹 +train n.列车，一列 v.训练 +trainee n.受训练者 +trainer n.教练 +training n.训练 +traitor n.叛徒 +tram n.有轨电车 +tramp n.跋涉，流浪者 +trample v.践踏，蹂躏 +tranquil adj.平静的，安宁的 +transact v.交易 +transaction n.交易 +transfer v.转移，转让 +transferable adj.可转让的 +transform v.转变，转化 +transformation n.转化，转变 +transformer n.变压器 +transcient adj.短暂的，瞬时的 +transistor n.晶体管(收音机) +transit v.运输，转运 +transition n.过渡，转变 +translate v.翻译 +translation n.翻译，译文 +translator n.译音 +transmission n.传送，播送 +transmit v.传播，传导，发射 +transparent adj.透明的 +transplant v.移植 +transport v.运送 v.运输 +transportation n.运输，交通 +transship v.转运，转船 +transshipment n.转运 +transverse adj.横向的，横断的 +trap n.陷井，圈套 v.诱捕 +traverse n.,v.横断，横过 +travel v.旅行，传导 +traveler n.旅行者 +tray n.托盘 +tread v.踩，践踏 +treason n.谋反，叛国 +treasure n.财宝，珍宝 v.珍藏 +treasurer n.司库 +treat v.对待，医治，论述 +treatment n.待遇，疗法 +treaty n.条约 +tree n.树 +tremble v.哆嗦，发抖 +tremendous adj.巨大的，惊人的 +trench n.沟，壕 +trend n.走向，趋势 +trial n.审讯，尝试，试验 +triangle n.三角(形) +triangular adj.三角形的，三方的 +tribe n.部落 +tribute n.颂词，献礼 +trick n.诡计，骗局，伎俩 +trickle v.滴下，流下 +tricky adj.巧妙的，狡猾的 +trifle n.小事，琐事 +trigger n.扳机 v.触发 +trim v.修剪，修整 +trip n.旅行，远足 +triple adj.三倍的，三重的 +triplicate n.一式二份 +triumph n.胜利 v.战胜 +triumphant adj.得胜的，得意的 +trivial adj.琐碎的 +trolley n.手推车，电车 +troop n.队，军队 +tropic n.回归线，热带 +tropical adj.热带的 +trot v.,n.小跑，快步走 +trouble n.,v.麻烦 +troublesome adj.讨厌的，麻烦的 +trousers n.裤子 +truck n.卡车，载重汽车 +true adj.真实的，真正的 +truly adv.真正地，确实 +trumpet n.喇叭 +trunk n.树干，躯干，皮箱 +trust n.v.委托，信任，信托 +truth n.真相，真理 +truthful adj.诚实的，真正的 +try v.尝试，审讯 n.尝试 +tub n.浴 缸，木盆 +tube n.管子，试管 +tuberculosis n.结核，肺结核 +tuck v.卷起，塞进 +tuesday ]n.星期二 +tug v.,n.用力拖，拖船 +tuition n.学费 +tulip n.郁金香 +tumble v.跌倒，摔跤，打滚 +tumult n.骚动，暴动，吵闹 +tuna n.金枪鱼 +tune n.调子 v.调谐 +tunnel n.隧道，地道，坑道 +turbine n.汽轮机，涡轮机 +turbulent adj.骚动的 +turk ]n.土耳其人 +turkey n.火鸡adj.,n.土耳其 +turn v.转向，旋转 n.轮流 +turning n.拐角 adj.旋转的 +turnip n.萝卜 +turnover n.周转，营业额 +turtle n.海龟 +tutor n.辅导教师 +twelfth num.第十二 +twelve num.十二 +twentieth num.第二十 +twenty num.二十 +twice adv.两次，两倍 +twig n.细枝 +twilight n.黎明，黄昏，微亮 +twin n.,adj.孪生(的) +twinkle v.,n.闪烁，眨眼 +twist v.拧，扭，搓，歪曲 +two num.二 +type n.类型，典型 v.打字 +typewriter n.打字机 +typhoon n.台风 +typical adj.典型的 +typist n.打字员 +tyranny n.暴政，暴行 +tyrant n.暴君，专制 +tyre n.轮胎 +ugly adj.丑恶的，丑陋的 +ulcer n.溃疡 +ultimate adj.最终的，极限的 +ultimately adv.最后，终究 +ultimo adj.上月的 +ultrasonic adj.超声速的 +ultraviolet adj.紫外的 +umbrella n.伞，保护伞 +unable adj.不能的，不会的 +unacceptable adj.不能接受的 +unaccommodating adj.不青通融的 +unaffordable adj.买不起的 +unanimous adj.一致的 +unavoidable adj.不可避免的 +unbearable adj.不可忍受的 +uncertain adj.不确定的，易变的 +uncertainty n.不定，易变 +uncle n.伯、叔、舅、姑父 +uncomfortable adj.不舒服的 +uncommon adj.罕见的，不常见的 +unconditionally adv.无条件地 +unconscious adj.无知觉的 +uncover v.揭开 +under prep.在...下面 +underestimate v.低估 +undergo v.经受，经历 +undergraduate n.本科生 +underground adj.地下的，秘密的 +underline v.在...下划线，强调 +underlying adj.根本的，在下面的 +undermentioned adj.下述的 +undermine v.破坏 +underneath prep.,adv.在...下面 +undersigned adj.在...下面签名的 +understand n.了解，懂，熟悉 +understanding n.理解，谅解 +undertake v.从事，承担 +undertaking n.事业，许诺 +underwear n.内衣 +underwriter n.保险商，承购人 +undo v.解开，取消 +undoubtedly adv.无容置疑地 +undue adj.过分的，不适当的 +unduly adv.过分地，不适当地 +uneasy adj.不自在的，担心的 +unemloyment n.失业 +unexpected adj.意外的，未料到的 +unfair adj.不公平的 +unfit adj.不合适的 +unfold v.展示，摊开 +unfortunate adj.不幸的，遗憾的 +unfortunately adv.不幸地，不凑巧 +unhappy adj.不幸福的 +uniform adj.均匀的，统一的 +uniformly adv.单调地，一样地 +uninterested adj.不感兴趣的 +union n.联合，联盟，联合会 +unique adj.唯一的 +unit n.单位，个体 +unite v.统一，联合，团结 +united adj.联合的 +united kingdom n.英国，联合王国 +united nations n.联合国 +united states n.美国，合众国 +unity n.统一，团结 +universal adj.宇宙的，普遍的 +universally adv.普遍地 +universe n.宇宙 +university n.大学 +unjust adj.不公正的 +unkind adj.不仁慈的，冷酷的 +unknown adj.未知的 n.未知物 +unlawful adj.不合法的，违法的 +unless prep.除非 +unlike adj.不同的 +unlikely adj.未必的，不象的 +unlimited adj.无限的 +unload v.卸货，卸除 +unlock v.开启，揭开 +unlucky adj.不幸的，倒霉的 +unmerchantable adj.无销路的 +unnecessary adj.不必要的 +unobtainable adj.无法得到的 +unpaid adj.未付的 +unpleasant adj.令人不愉快的 +unprecedented adj.前所未有的 +unprecedentedly adv.空前地 +unreasonable adj.不合理的，贵的 +unsalable adj.不好销售的 +unsatisfactory adj.不令人满意的 +unstable adj.不稳定 +unsuitable adj.不适宜的 +untie v.解开 +until prep.,conj.到...为止 +unusable adj.无法使用的 +unusual adj.不寻常的 +unwarranted adj.无根据的 +unwelcome adj.不受欢迎的 +unwilling adj.不愿意的 +unworkable adj.行不通的 +up adv.向上，起床 +upcreep n.(价格)上涨 +uphold v.支持，维持 +upon prep.在...之上 +upper adj.上部的，较高的 +upright adj.直立的，正直的 +uproar n.喧闹，轰鸣 +upset v.倾覆，打乱，使心烦 +upside n.上面，上部 +upside-down adj.颠倒的，倒置的 +upstairs adv.在楼上，往楼上 +up-to-date adj.时新的，最近的 +upward adv.,adj.向上(的) +uranium n.铀 +urban adj.都市的，城市的 +urge v.敦促，推动 n.冲动 +urgent adj.紧迫的，紧急的 +urgently adv.紧急地 +us pron.我们(宾格) +usage n.使用，惯用法 +use v.使用 n.用途，利用 +useful adj.有用的，有益的 +usefulness n.用处，有效性 +useless adj.无用的 +user n.使用者，用户 +usual adj.通常的，习惯性的 +usually adv.通常，平常 +utensil n.用具，器皿 +utility n.效用，公用事业 +utilization n.利用 +utilize v.利用 +utmost adj.最大的，最高的 +utter v.说,发声 adj.完全的 +utterance n.说话 +vacacy n.空缺，空位 +vacant adj.空的，闲置的 +vacation n.假期 +vaccinate v.接种疫苗 +vaccination n.接种 +vacuum n.真空 +vague adj.含糊的，不清楚的 +vain adj.徒然的，自负的 +vainly adv.徒劳地 +valian n.坏蛋 +valid adj.正当的，有效的 +validity n.有效，确实 +valley n.山谷 +valuable adj.宝贵的，有价值的 +value n.价值 v.评价，估价 +valued adj.宝贵的 +valve n.阀门 +van n.小货车，面包车 +vanish v.消失，消散 +vanity n.虚荣心，浮华 +vapor n.水汽，蒸汽 +variable adj.可变的 n.变量 +variance n.分歧，不一致 +variant adj.不同的，不一致的 +variation n.变化，变更 +varied adj.不同的 +variety n.多样(性)，品种 +various adj.各种各样的 +varnish n.清漆 +vary v.变化，使多样化 +vase n.花瓶 +vast adj.巨大的，宏大的 +vault n.拱顶 +vegetable n.蔬菜，植物 +vehicle n.运载工具 +veil n.面纱，账，托辞 +vein n.静脉，矿脉，脉 +velocity n.速度，速率 +velvet n.丝绒 adj.柔软的 +vender n.商贩 +vengeance n.报复，复仇 +ventilate v.换气，自由讨论 +ventilation n.通风 +venture n.,v.冒险 +venus n.金星 +verb n.动词 +verbal adj.文字的，口头的 +verge n.边缘，界限 +verification n.检验 +verify v.检验，证实 +versatile adj.多才多艺的 +verse n.诗，韵文 +version n.译文，译本，看法 +versus prep.对 +vertical adj.垂直的 +very adv.很，非常 +vessel n.船只，容器，血管 +vest n.背心，汗衫 +veteran n.老手，老兵 +veto v.,n.否决(权) +vex v.使烦恼 +via prep.经由，取道 +vibrate v.振动，战栗 +vibration n.振动，颤动 +vice n.坏事，恶习 +vicinity n.邻近，附近，接近 +vicious adj.邪恶的，不道德的 +victim n.受害者 +victorious adj.胜利的，成功的 +victory n.胜利 +video adj.电视的，视频的 +view n.视域，景色，见解 +viewer n.观察者，电视观众 +viewpoint n.观点，看法 +vigor n.活动，精力，元气 +vigorous adj.精力旺盛的 +villa n.别墅 +village n.村庄 +villain n.坏蛋 +vine n.藤，葡萄树 +vinegar n.醋 +violate v.违犯，违背 +violation n.违犯，侵犯 +violence n.猛烈，暴力，暴行 +violent adj.猛烈的，暴力的 +violet n.紫罗兰，紫色 +violin n.小提琴 +virgin adj.处女的 n.处女 +virtual adj.实质上的 +virtually adj.几乎，差不多 +virtue n.善，美德，优点 +virus n.病毒 +visa n.签证 +viscous adj.粘的 +visible adj.看得见的 +vision n.视觉，视力，想象力 +visit v.,n.访问，参观 +visitor n.客人，来宾，来访者 +visual adj.视觉的 +vital adj.必不可少的 +vitamin n.维生素 +vivid adj.鲜艳的 +vividly adv.生动地 +vividness n.生动(性) +vocabulary n.词汇，词汇表、量 +vocation n.职业 +vogue n.时尚，时髦 +voice n.声音，嗓音 v.吐露 +voiceless adj.无声的 +void adj.空的，无效的 +volcano n.火山 +volley n.,v.齐射 +volleyball n.排球 +volt n.伏特 +voltage n.电压 +volume n.卷，册，量，体积 +voluntary adj.自愿的，志愿的 +volunteer n.志愿者 v.志愿 +vote n.投票(权)，得票数 +voter n.投票人，选举人 +voting adj.有投票权的 +vouch v.担保 +voucher n.凭证，收据 +vow v.,n.许愿，发誓 +vowel n.元音 +voyage n.,v.航行 +vulgar adj.低级趣味的 +vulnerability n.易损性 +vulnerable adj.晚受损害的 +wade v.消，跋涉 +wag v.摇，摆 +wage n.工资 v.进行 +wagon n.货车 +waist n.腰(部) +wait v.等候，伺候 +waiter n.服务员，侍者 +waitress n.女服务员 +waive v.放弃(要求、权利) +wake v.醒来 +waken v.唤醒，使觉醒 +walk v.步行，走 n.散步 +walker n.步行者，散步者 +wall n.墙壁 +wallet n.钱夹 +walnut n.核桃 +wander v.徘徊，离题，迷失 +want v.想要，通辑 n.缺乏 +war n.战争，斗争 +ward n.病房，牢房 +wardrobe n.衣柜 +ware n.货物 +warehouse n.仓库，货栈 +warehousing n.仓储 +warfare n.战争(状态) +warm adj.温暖的，热情的 +warmly adv.热烈地，热情地 +warmth n.温暖，暖和，热烈 +warn v.警告，预先通知 +warning n.警告 +warrant n.许可证，正当理由 +warranted adj.担保的 +warranty n.担保，保证 +warrior n.勇士，战士 +warship n.军舰 +wash v.洗，冲走 +washing-machine n.洗衣机 +wasp n.黄蜂，马蜂 +waste v.浪费 n.垃圾，废料 +wasteful adj.浪费的，挥霍的 +watch v.观看，看过 n.手表 +watchful adj.注意的，警惕的 +water n.水 v.浇水，垂涎 +waterfall n.瀑布 +waterfront n.水边，滩 +waterproof adj.防水的 +watertight adj.不透水的 +watery adj.水汪汪的，淡的 +watt n.瓦特 +wave n.波浪，波 v.挥手 +wavelength n.波长 +waver n.晃动，动摇 +waving adj.波浪状的 +wax n.蜡 v.打蜡 +way n.方法，路，方向 +we pron.我们 +weak adj.弱的，差的 +weakness n.弱点，软弱 +wealth n.财富，丰富 +wealthy adj.富裕的，富庶的 +weapon n.武器 +wear v.穿，戴，磨损，耐久 +weary adj.疲倦的 +weather n.天气 v.经受住 +weave v.编织 +weaver n.织布工，编织者 +web n.网，蛛网，圈套 +wedding n.婚礼 +wedge n.楔子，起因 v.楔住 +wednesday n.星期三 +weed n.杂草 v.除草，清除 +week n.星期，周，工作周 +weekday n.工作日 +weekend n.周末 +weekly adj.每周的 n.周刊 +weep v.哭泣，哀悼 +weigh v.重...，称，权衡 +weight n.重量，重担，重物 +welcome adj.受欢迎的 v.欢迎 +weld v.焊接 +welfare n.福利 +well n.井 adv.好，充分 +well-known adj.有名的，著名的 +west n.西方 adj.向西的 +western adj.西的，西方的 +westerner n.西方人，欧美人 +westward adj.,adv.向西(的) +wet adj.湿的，多雨的 +whale n.鲸 +whaling n.捕鲸(业) +wharf n.码头，停泊处 +what pron.什么 adj.什么的 +whatever pron.无论什么 +wheat n.小麦 +wheel n.轮，车轮 +when adv.何时 +whenever conj.无论何时 +where adv.哪里 +whereabouts n.下落 +whereas conj.而，却 +whereby adv.借此 +wherein adv.在何处 +wherever adv.无论哪里 +whether conj.是否，还是... +which pron.,adj.哪个，那个 +whichever pron.无论哪个 +while n.一会儿 conj.当..时 +whilst conj.当...时，尽管 +whip v.抽打，搅 n.鞭子 +whirl v.,n.旋转，飞转 +whisker n.络腮胡子 +whisky n.威士忌洒 +whisper v.,n.耳语，发飒飒声 +whistle v.吹哨，鸣笛，啸叫 +white adj.白的 n.白色,蛋清 +whitewash v.粉刷，掩饰 +who pron.谁 +whoever pron.无论谁 +whole adj.全部的 n.全部 +wholesale n.,v.批发 +wholesaler n.批发商 +wholesaling n.批发 +wholesome adj.卫生的 +wholly adv.完全，一概 +whom pron.谁(宾格) +whose pron.谁的 +why adv.为什么 +wicked adj.坏的，不道德的 +wide adj.宽的，广阔的 +widely adv.广泛地，非常 +widen v.加宽，扩大 +widespread adj.流传广泛的 +widow n.寡妇 +widower n.鳏夫 +width n.宽度 +wield v.挥动，行使 +wife n.妻子，夫人 +wild adj.野生的，狂暴的 +wilderness n.荒原 +will v.aux.将，愿 n.意志 +willing adj.乐意的，自愿的 +willingly adv.乐意地，自愿地 +willingness n.乐意，自愿 +willow n.柳树 +win v.赢得，成功 +wind n.风，风声 v.绕 +winding adj.弯曲的，蜿蜒的 +windmill n.风车 +window n.窗户 +windowsill n.窗台 +windy adj.刮风的 +wine n.酒，葡萄酒 +winery n.酿酒厂 +wing n.翅膀，翼，派别 +wink v.眨眼，使眼色 +winner n.得胜者，获奖者 +winter n.冬季 +wipe v.擦，抹掉 +wire n.金属线，电线 +wireless adj.,n.无线电 +wisdom n.智慧，明智 +wise adj.智慧的，博学的 +wish v.希望，祝愿，想要 +wit n.机智，才智 +with prep.同...一起，用 +withdraw v.撤消，退出，提款 +withdrawal n.撤退，取款 +wither v.枯萎，凋谢，衰弱 +withhold v.坚持 +within prep.,adv.在...内 +without prep.没有，在...外部 +withstand v.抵挡，顶住 +witness n.目击者,证人 v.目睹 +witty adj.机智的，风趣的 +woe n.悲痛，苦恼 +wolf n.狼 +woman n.妇女，女人 +wonder v.想知道,诧异 n.奇迹 +wonderful adj.奇妙的，精彩的 +wood n.木，木材 +wooden adj.木制的 +woodpecker n.啄木鸟 +woods n.树林 +wool n.羊毛，毛线 +woollen adj.羊毛的，毛织的 +word n.字，词，诺言，音讯 +wording n.措辞 +wordy adj.冗长的，罗嗦的 +work n.劳动，工作，作品 +workable adj.可行的，起作用的 +worker n.工人 +workman n.工作者 +workmanship n.工艺，手艺 +works n.工厂 +workshop n.车间，工场，学习班 +world n.世界，...界，世间 +worldwide adj.,adv.全世界的 +worm n.蠕虫，幼虫 +worry v.,v.烦恼，担心 +worse adj.更坏的，更差的 +worship v.,n.崇拜，礼拜 +worst adj.最坏的，最差的 +worth n.价值 adj.值...的 +worthless adj.不值钱的 +worthwhile adj.值得做的 +worthy adj.值得的，配...的 +wound v.受伤 n.伤口，创伤 +wounded adj.受伤的 n.伤员 +wrap v.包，裹 +wrapper n.(饺子)皮，包装用品 +wrath n.暴怒 +wreath n.花圈，花环 +wreck v.毁坏 n.失事 +wrench v.拧，扭伤 n.扳手 +wrestle v.,n.摔交，搏斗 +wretched adj.可怜的，可耻的 +wring v.拧，扭 +wrinkle n.皱纹 v.折皱 +wrist n.腕 +write v.写，写信，写作 +writer n.作者，作家 +writing n.写作 +written adj.写作的，书面的 +wrong adj.错误的，有毛病的 +wrongly adv.错误地，不正当地 +xerox n.,v.复印 +x-ray n.X射线 v.X光检查 +yacht n.游船，快艇 +yard n.码，庭院，场 +yawn v.,n.打呵欠 +year n.年，年度 +yearly adj.,adv.每年的 +yearn v.向往 +yeast n.酵母 +yell v.,n.叫嚷 +yellow n.,adj.黄色(的) +yes adv.是，好 +yesterday n.昨天 adv.在昨天 +yet adv.仍然，还，尚 +yield v.生产，屈服 n.产量 +yoke n.轭 +yolk n.蛋黄 +you pron.你，你们 +young adj.年轻的 n.青年人 +youngster n.少年 +your pron.你的，你们的 +yourself pron.你(们)自己 +youth n.青春，青年 +youthful adj.年轻的 +zeal n.热情，热忱 +zealous adj.热情的，热心的 +zebra n.斑马 +zero n.零，零度 +zinc n.锌 +zip n.活动，尖啸声 +zipcode n.邮政编码 +zipper n.拉链 +zone n.地带，区域，区 +zoo n.动物园 +zoology n.动物学 \ No newline at end of file diff --git a/homeworks/B20769/homework1/output/.DS_Store b/homeworks/B20769/homework1/output/.DS_Store new file mode 100644 index 0000000000000000000000000000000000000000..1e2650a9a67dc94d9486b0a23312c9abc708e417 GIT binary patch literal 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b/homeworks/B20769/homework2/pygame_ball.py @@ -0,0 +1,89 @@ +# -*- coding: utf-8 -*- +import pygame + +MOU_CON = True + +board = pygame.Rect(280, 400, 80, 5) +#board是rect类的一个实例对象 +#board的上边缘：board.top +#board的左边缘：board.left +#board的右边缘：board.right +circle = [200, 100] +RADIUS = 10 +SPEED = [-5, -5] +WIDTH = 640 +HEIGHT = 480 + +def end_or_not(): + running = True + if circle[1] + RADIUS > HEIGHT: + running = False + # pygame.quit() + return running + +def update_ball(): + if circle[1] - RADIUS <= 0: + SPEED[1] *= -1 + if circle[0] + RADIUS >= WIDTH or circle[0] - RADIUS <= 0: + SPEED[0] *= -1 + if circle[1] + RADIUS >= 400 and circle[0] >= board[0] and circle[0] <= board[0] + 80 : + SPEED[1] *= -1 + + + circle[0] += SPEED[0] + circle[1] += SPEED[1] + + +def draw_surface(screen): + screen.fill([255, 255, 255]) # R G B white + pygame.draw.circle(screen, [255, 0, 0], circle, RADIUS) + pygame.draw.rect(screen, [0, 255, 255], board) + pygame.display.flip() + +def update_board(): + if MOU_CON: + (x, y) = pygame.mouse.get_pos() + board.centerx = x + + +def w_down_cb(): + pass + +def s_down_cb(): + pass + +def a_down_cb(): + if not MOU_CON: + board.centerx -= 5 + +def d_down_cb(): + if not MOU_CON: + board.centerx += 5 + +def main(): + pygame.init() + screen = pygame.display.set_mode([WIDTH, HEIGHT]) + running = True + + while running: + pygame.time.delay(25) # 50ms + update_board() + update_ball() + draw_surface(screen) + running = end_or_not() + for event in pygame.event.get(): + if event.type == pygame.QUIT: + running = False + elif event.type == pygame.KEYDOWN: + if event.key == pygame.K_w: + w_down_cb() + elif event.key == pygame.K_s: + s_down_cb() + elif event.key == pygame.K_a: + a_down_cb() + elif event.key == pygame.K_d: + d_down_cb() + pygame.quit() + +if __name__ == '__main__': + main() diff --git a/homeworks/B20769/homework2/pygame_snake.py b/homeworks/B20769/homework2/pygame_snake.py new file mode 100644 index 0000000..2ee72f2 --- /dev/null +++ b/homeworks/B20769/homework2/pygame_snake.py @@ -0,0 +1,106 @@ +# -*- coding: utf-8 -*- +import pygame +import random + +SCALE = 20 #地图中有多少格 +SIZE = 20 #每一格的大小 +WIDTH = SCALE * SIZE +HEIGHT = SCALE * SIZE + +snake = [[17,3],[18,3],[19,3]] +speed = [-1, 0] +apple = [3,1] + +def end_or_not(): + running = True + if snake.count(snake[0]) >= 2:#判断时候咬到身体 + running = False + n = 0 + for body in snake: + if body[0] < 0 or body[0] >= SCALE or body[1] < 0 or body[1] >= SCALE: + running = False + # pygame.quit() + n += 1 + return running + + +def update_snake(): + new_snake_head = [0,0] + new_snake_head[0] = (snake[0][0] + speed[0]) + new_snake_head[1] = (snake[0][1] + speed[1]) + snake.insert(0, new_snake_head) + if new_snake_head != apple: + snake.pop() + else : + apple[0] = random.randint(0,19) + apple[1] = random.randint(0,19) + +def screen_show(screen): + screen.fill([255,255,255]) + n = 0 + for body in snake: + if n == 0: + pygame.draw.rect(screen, [0, 0, 255], [body[0] * SIZE, body[1] * SIZE, SIZE - 1, SIZE - 1]) + else: + pygame.draw.rect(screen, [0, 255, 0], [body[0] * SIZE, body[1] * SIZE, SIZE - 1, SIZE - 1]) + n += 1 + pygame.draw.circle(screen, [255, 0, 0], [apple[0]*SIZE + SIZE / 2, apple[1]*SIZE + SIZE / 2], SIZE/2) + pygame.display.flip() + +def w_down_cb(): + global speed + if speed[0] != 0: + speed = [0, -1] + +def s_down_cb(): + global speed + if speed[0] != 0: + speed = [0, 1] + +def a_down_cb(): + global speed + if speed[1] != 0: + speed = [-1, 0] + +def d_down_cb(): + global speed + if speed[1] != 0: + speed = [1, 0] + +# def screen_show(screen): +# screen.fill([255,255,255]) +# font = pygame.font.Font(None, 100) +# text = font.render("game over", True, [255,0,0]) +# screen.blit(text, [0,100]) +# # img = pygame.image.load("beach_ball.png") +# # screen.blit(img, [0, 0]) +# pygame.display.flip() + +def main(): + + pygame.init() + screen = pygame.display.set_mode([WIDTH, HEIGHT]) + running = True + if not running: + screen_show(screen) + while running: + pygame.time.delay(200) # 50ms + screen_show(screen) + update_snake() + running = end_or_not() + for event in pygame.event.get(): + if event.type == pygame.QUIT: + running = False + elif event.type == pygame.KEYDOWN: + if event.key == pygame.K_w: + w_down_cb() + elif event.key == pygame.K_s: + s_down_cb() + elif event.key == pygame.K_a: + a_down_cb() + elif event.key == pygame.K_d: + d_down_cb() + pygame.quit() + +if __name__ == '__main__': + main() \ No newline at end of file diff --git "a/homeworks/B20769/homework2/\346\210\252\345\233\276/B20769_day10_homework.png" "b/homeworks/B20769/homework2/\346\210\252\345\233\276/B20769_day10_homework.png" new file mode 100644 index 0000000000000000000000000000000000000000..000e07f19242b2353d21f6d96fa6961debfae38a GIT binary patch literal 116987 zcmb5VbzGC}7e6kk7@!~ml9JL=qr;#}8YE>j8{H|QAX3uc2nFd88!|eD(M&o<2ndrH z&4>{{)aQ9V-{1GY@Ab#M*S7n0-{(4gz0WyO&$X0qUB7?*%9Sg(R8^koUb%7=c;yO_ z$2HQ+Uo5Sys;^vOxuW{)vA$pC#w=OTT}%eoxh1ny!iUjcKL9KWnLby546Oi!2Dv>Y 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.../static/lib/weui/example/index.html | 1957 +++++++++++++ .../lib/weui/example/snapshot/actionSheet.png | Bin 0 -> 55293 bytes .../lib/weui/example/snapshot/button.png | Bin 0 -> 113423 bytes .../static/lib/weui/example/snapshot/cell.png | Bin 0 -> 56627 bytes .../lib/weui/example/snapshot/dialog1.png | Bin 0 -> 16672 bytes .../lib/weui/example/snapshot/dialog2.png | Bin 0 -> 18102 bytes .../static/lib/weui/example/snapshot/grid.png | Bin 0 -> 17002 bytes .../lib/weui/example/snapshot/icons.png | Bin 0 -> 18410 bytes .../lib/weui/example/snapshot/progress.png | Bin 0 -> 9609 bytes .../lib/weui/example/snapshot/qrcode.png | Bin 0 -> 392 bytes .../lib/weui/example/snapshot/result.png | Bin 0 -> 110500 bytes .../static/lib/weui/example/snapshot/text.png | Bin 0 -> 201114 bytes .../lib/weui/example/snapshot/toast1.png | Bin 0 -> 101150 bytes .../lib/weui/example/snapshot/toast2.png | Bin 0 -> 102314 bytes .../static/lib/weui/example/zepto.min.js | 1 + .../homework3/static/lib/weui/style/weui.css | 2545 +++++++++++++++++ .../B20769/homework3/templates/courses.html | 63 + .../B20769/homework3/templates/details.html | 50 + .../B20769/homework3/templates/evas.html | 65 + .../B20769/homework3/templates/index.html | 47 + .../B20769/homework3/templates/materials.html | 58 + homeworks/B20769/homework3/tmp/02.md | 25 + .../B20769_day15_homework.png" | Bin 0 -> 206029 bytes .../B20769_day16_homework1.png" | Bin 0 -> 149072 bytes .../B20769_day16_homework2.png" | Bin 0 -> 61981 bytes .../B20769_day17_homework1.png" | Bin 0 -> 118671 bytes .../B20769_day17_homework2.png" | Bin 0 -> 26205 bytes .../B20769_day17_homework3.png" | Bin 0 -> 145758 bytes .../B20769_day18_homework.png" | Bin 0 -> 277016 bytes .../B20769_day18_homework2.png" | Bin 0 -> 124553 bytes .../B20769_day20_homework1.png" | Bin 0 -> 136266 bytes .../B20769_day20_homework2.png" | Bin 0 -> 135553 bytes .../B20769_day20_homework3.png" | Bin 0 -> 193085 bytes 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"homeworks/B20769/homework3/\346\210\252\345\233\276/B20769_day20_homework1.png" create mode 100644 "homeworks/B20769/homework3/\346\210\252\345\233\276/B20769_day20_homework2.png" create mode 100644 "homeworks/B20769/homework3/\346\210\252\345\233\276/B20769_day20_homework3.png" create mode 100644 "homeworks/B20769/homework3/\346\210\252\345\233\276/B20769_day22_homework.png" create mode 100644 "homeworks/B20769/homework3/\346\210\252\345\233\276/B20769_day23_homework1.png" create mode 100644 "homeworks/B20769/homework3/\346\210\252\345\233\276/B20769_day23_homework2.png" create mode 100644 "homeworks/B20769/homework3/\346\210\252\345\233\276/B20769_day24_homework1.png" create mode 100644 "homeworks/B20769/homework3/\346\210\252\345\233\276/B20769_day24_homework2.png" create mode 100644 "homeworks/B20769/homework3/\346\210\252\345\233\276/B20769_day25_homework1.jpg" create mode 100644 "homeworks/B20769/homework3/\346\210\252\345\233\276/B20769_day25_homework2.jpg" create mode 100644 "homeworks/B20769/homework3/\346\210\252\345\233\276/B20769_day25_homework3.jpg" create mode 100644 "homeworks/B20769/homework3/\346\210\252\345\233\276/B20769_day26_homework.jpg" create mode 100644 "homeworks/B20769/homework3/\346\210\252\345\233\276/B20769_day27_homework.jpg" diff --git a/homeworks/B20769/homework3/README.md b/homeworks/B20769/homework3/README.md new file mode 100644 index 0000000..608aaa2 --- /dev/null +++ b/homeworks/B20769/homework3/README.md @@ -0,0 +1,27 @@ +# uband-s2-feng +uband友班编程课程 + +## 背景 + + +## 需求 +### 0.基本信息 + +头像： + + +### 1.个人简介 + +### 2. xxxx + + + +## 发布 + + +## 其他 + + +## 参考资料 + + diff --git a/homeworks/B20769/homework3/run.py b/homeworks/B20769/homework3/run.py new file mode 100644 index 0000000..fa9b952 --- /dev/null +++ b/homeworks/B20769/homework3/run.py @@ -0,0 +1,61 @@ +from flask import Flask +from flask import render_template +import json + +app = Flask(__name__) + +def read_json_file(filepath): + jsonfile = open(filepath,'r+') + jsontext = jsonfile.read() + data = json.loads(jsontext) + jsonfile.close() + return data + +@app.route('/') +def hello_world(): + # read file + data = read_json_file('static/data/index.json') + return render_template('index.html', data=data) + +@app.route('/details/') +def look_details(student_number): + data = read_json_file('static/data/index.json') + user_data = {} + for item in data: + if student_number == item['student_number']: + user_data = item + break + return render_template('details.html',data=user_data) + +@app.route('/details//materials') +def materials(student_number): + data = read_json_file('static/data/index.json') + user_data = {} + for item in data: + if student_number == item['student_number']: + user_data = item + break + return render_template('materials.html',data=user_data) + +@app.route('/details//courses') +def courses(student_number): + data = read_json_file('static/data/index.json') + user_data = {} + for item in data: + if student_number == item['student_number']: + user_data = item + break + return render_template('courses.html',data=user_data) + +@app.route('/details//evas') +def evas(student_number): + data = read_json_file('static/data/index.json') + user_data = {} + for item in data: + if student_number == item['student_number']: + user_data = item + break + return render_template('evas.html',data=user_data) + +if __name__ == '__main__': + app.run(debug=True) \ No newline at end of file diff --git a/homeworks/B20769/homework3/static/css/app.css b/homeworks/B20769/homework3/static/css/app.css new file mode 100644 index 0000000..2846773 --- /dev/null +++ b/homeworks/B20769/homework3/static/css/app.css @@ -0,0 +1,209 @@ +.logo-page{ + padding-bottom: 14px; + border-bottom: solid 1px #EFEFEF; +} + +.uband-logo{ + width:80px; + height:33px; + display:block; + margin: 0 auto; + padding-top: 5px; +} + +.uband-user-item-img{ + width:68px; + height:68px; + border-radius: 50%; +} +.uband-user-item{ + margin-left: 15px; + margin-right: 15px; + margin-bottom: 10px; + margin-top: 10px; + border: solid #efefef 1px; + border-radius: 6px; +} +.uband-user-label{ + width: 50px; + height: 17px; + background-color: #ff4060; + border-radius: 8px; + font-size: 10px; + color: #fff; + padding: 3px; +} +.uband-user-name{ + font-size: 15px; + +} +.uband-user-disc{ + font-size: 13px; +} +.uband-user-checkins{ + width: 70px; + margin-top: -40px; +} +.uband-user-checkins >p{ + text-align: right; + font-size: 11px; + color: #828282; +} + + +/* details page css*/ +.details-head{ + width:100%; + height:206px; + background-image: url('/static/img/details-background.png'); + background-size: 406px 100%; + padding-top: 20px; +} +.details-head-img-page{ + width: 100%; + height: 108px; +} +.details-head-img{ + width:68px; + height:68px; + border-radius: 50%; + margin:0 auto; + display: block; + margin-top: -16px; + + +} +.back-icon{ + background-image: url('/static/img/back-icon.png'); + background-size: 100%; + height: 16px; + width: 10px; + display: inline-block; + margin-left: 15px; +} +.details-head-desc-page{ + width:100%; + height:98px; + background-color: #fff; + opacity: 0.5; +} +.details-head-name{ + font-size: 18px; + text-align: center; + padding-top: 6px; + +} +.details-head-desc{ + font-size: 12px; + padding-left: 15px; + padding-right: 15px; + padding-top: 8px; +} + +.uband-user-checkins{ + font-size: 14px; + text-align: center; +} + +.details-tabs-head{ + width:100%; + height:35px; + margin-top: 5px; + border-bottom: solid 1px #EFEFEF; +} + + +.details-tab-head{ + width:25%; + font-size: 14px; + text-align: center; + float: left; + color: #333; + +} + +.details-tab-active{ + color: red; +} + +.details-tab{ + min-height: 200px; + margin-left: 15px; + margin-right: 15px; + margin-bottom: 10px; + margin-top: 10px; + border: solid #efefef 1px; + border-radius: 8px; + font-size: 12px; +} + +.uband-course-img{ + width:100px; + height:68px; +} + +.uband-course-name{ + font-size: 18px; +} + + +.uband-course-disc{ + font-size: 13px; +} +.uband-course-student-number{ + width: 100px; + margin-top: -40px; +} +.uband-course-student-number >p{ + text-align: right; + font-size: 13px; + color: #828282; +} +.Uband-evas-title{ + font-size: 18px; + text-align: center; + margin-top: 10px; + margin-bottom: 10px; +} + +.uband-user-eva{ + margin-left: 15px; + margin-right: 15px; + margin-bottom: 10px; + margin-top: 10px; +} +.uband-user-eva-name{ + font-size: 13px; + text-align: top; + margin-top: -20px; + color: #828282; +} +.uband-user-eva-content{ + font-size: 18px; + color: black; +} + +.uband-user-eva-from { + text-align: right; + font-size: 13px; + color: #828282; + margin-top: -40px; + +} + +.uband-mat-item{ + margin-left: 15px; + margin-right: 15px; + margin-bottom: 10px; + margin-top: 10px; + border: solid #efefef 1px; + border-radius: 6px; +} + +.uband-mat-name{ + font-size: 18px; +} + + +.uband-mat-desc{ + font-size: 13px; \ No newline at end of file diff --git a/homeworks/B20769/homework3/static/data/index.json b/homeworks/B20769/homework3/static/data/index.json new file mode 100644 index 0000000..7d385c3 --- /dev/null +++ b/homeworks/B20769/homework3/static/data/index.json @@ -0,0 +1,286 @@ +[ + { + "student_number":"B20769", + "name":"飞鱼", + "disc":"学习使我快乐", + "tags":["Uband-S2学员","工科男"], + "checkins":28, + "head":"/static/img/heads/feiyu1.jpg", + "materials": + [ + { + "title":"Flask", + "desc":"Flask是Python中一个微型的Web开发框架。", + "link":"http://www.pythondoc.com/flask/" + }, + { + "title":"135编辑器", + "desc":"135编辑器是一个微信文章美化工具，操作简单方便，旨在提供丰富的样式，精美的模板。", + "link":"http://www.135editor.com/" + } + ], + + "courses": + [ + { + "head":"/static/img/heads/ubands1.png", + "name":"Uband-S1", + "desc":"创意编程班S1", + "student_number":200, + "link":"http://wechat.gambition.cn/course/list" + }, + { + "head":"/static/img/heads/ubands2.png", + "name":"Uband-S2", + "desc":"创意编程班S2", + "student_number":200, + "link":"http://wechat.gambition.cn/course/list" + }, + { + "head":"/static/img/heads/tongji.jpg", + "name":"同济支部培训班", + "desc":"同济支部培训班", + "student_number":200, + "link":"http://wechat.gambition.cn/course/list" + } + + ], + + "evas": + [ + { + "name":"B20834-晨曦", + "head": "https://ss0.bdstatic.com/70cFuHSh_Q1YnxGkpoWK1HF6hhy/it/u=3736478043,2588358443&fm=26&gp=0.jpg", + "content":"good", + "from":"Uband-S2" + }, + { + "name":"B18355-清蒸", + "head":"/static/img/heads/yangjing.jpg", + "content":"good", + "from":"Uband-S2" + }, + { + "name":"B20840-豆子", + "head":"/static/img/heads/patato.jpg", + "content":"good", + "from":"Uband-S2" + } + ], + "intro":"

\"QQ截图20170818094005.jpg\"/


F

4

之

飞

鱼


个人简介

来自武汉的同济er，本科就读于武汉理工大学车辆工程专业，现在就读于同济大学车辆工程专业，研究生一年级。喜欢接触新鲜事物，虽然有点五音不全，但还是很喜欢唱歌，平时会去跑步，健身，但不喜欢去健身房。喜欢旅游，不只是因为风景有多美，还因为那里有想见的朋友。喜欢吃，作为武汉人的我虽然不能吃辣，但绝对重口味。


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平时喜欢看一些电影，听听音乐，喜欢老歌。基本每天都会坚持锻炼，最多的就是跑步啦。偶尔还会约上三五个好友一起去K歌。 



" + }, + + { + "student_number": "B20834", + "name": "晨曦", + "disc": "唯美食与美女不能辜负", + "tags": ["美食", "旅行"], + "checkins": 28, + "head": "https://ss0.bdstatic.com/70cFuHSh_Q1YnxGkpoWK1HF6hhy/it/u=3736478043,2588358443&fm=26&gp=0.jpg", + "materials": + [ + { + "title": "The definite guide to HTML", + "desc": "学习HTML5的必备经典。", + "link": "https://www.amazon.com/Definitive-Guide-HTML5-Adam-Freeman/dp/1430239603" + }, + { + "title": "JavaScript: The Definitive Guide", + "desc": "A must-have reference for expert JavaScript programmers.", + "link": "http://shop.oreilly.com/product/9780596805531.do" + } + ], + + "courses": + [ + { + "head":"/static/img/heads/ubands1.png", + "name":"Uband-S1", + "desc":"创意编程班S1", + "student_number":200, + "link":"http://wechat.gambition.cn/course/list" + }, + { + "head":"/static/img/heads/ubands2.png", + "name":"Uband-S2", + "desc":"创意编程班S2", + "student_number":200, + "link":"http://wechat.gambition.cn/course/list" + }, + { + "head":"/static/img/heads/spokene.png", + "name": "Uband口语课", + "desc": "Uband口语课", + "student_number":200, + "link": "http://wechat.gambition.cn/course/list" + } + + ], + + "evas": + [ + { + "name":"B20769-飞鱼", + "head":"/static/img/heads/feiyu1.jpg", + "content":"宝妈，有趣、爱学习还有一点自恋的宝妈！", + "from":"Uband-S2" + }, + { + "name":"B18355-清蒸", + "head":"/static/img/heads/yangjing.jpg", + "content":"good", + "from":"Uband-S2" + }, + { + "name":"B20840-豆子", + "head":"/static/img/heads/patato.jpg", + "content":"good", + "from":"Uband-S2" + } + ], + + "intro": "
\"QQ截图20170818094005.jpg\"/


F

4

之

晨

曦


个人简介

本地土著，混迹于国企。爱好运动和旅游，当然还少不了吃吃吃。因为工作的原因，应该算去过国内的大部分城市，从南到北，每到一地最先想去的就是当地有特色的小馆子。


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喜欢打篮球和羽毛球，由于篮球越来越难凑齐小伙伴，所以最近就慢慢转向了羽毛球。无奈天赋不足，不知道有没有同好的小伙伴来切磋一下。



" + }, + + { + "student_number":"B18355", + "name":"清蒸", + "disc":"我爱学习", + "tags":["Uband-S2学员","工科狗"], + "checkins":28, + "head":"/static/img/heads/yangjing.jpg", + "materials": + [ + { + "title":"法语基础", + "desc":"法语基本发音规则，简单单词，实用法语基础。", + "link":"" + }, + { + "title":"python基础编程", + "desc":"python基础编程，python游戏编程，flask架构了解。", + "link":"" + } + ], + + "courses": + [ + { + "head":"/static/img/heads/ubands1.png", + "name":"Uband-S1", + "desc":"创意编程班S1", + "student_number":200, + "link":"http://wechat.gambition.cn/course/list" + }, + { + "head":"/static/img/heads/ubands2.png", + "name":"Uband-S2", + "desc":"创意编程班S2", + "student_number":200, + "link":"http://wechat.gambition.cn/course/list" + }, + { + "head":"/static/img/heads/frenchs1.png", + "name":"Uband-法语", + "desc":"Uband-法语基础班", + "student_number":200, + "link":"http://wechat.gambition.cn/course/list" + }, + { + "head":"/static/img/heads/listen.png", + "name":"Uband-听力", + "desc":"听力训练班8月", + "student_number":200, + "link":"http://wechat.gambition.cn/course/list" + } + + ], + + "evas": + [ + { + "name":"B20769-飞鱼", + "head":"/static/img/heads/feiyu1.jpg", + "content":"超级爱学习的大学霸，机器人大神，膜拜ing。", + "from":"Uband-S2" + }, + { + "name":"B20834-晨曦", + "head": "https://ss0.bdstatic.com/70cFuHSh_Q1YnxGkpoWK1HF6hhy/it/u=3736478043,2588358443&fm=26&gp=0.jpg", + "content":"good", + "from":"Uband-S2" + }, + { + "name":"B20840-豆子", + "head":"/static/img/heads/patato.jpg", + "content":"good", + "from":"Uband-S2" + } + ], + "intro": "
\"QQ截图20170818094005.jpg\"/


F

4

之

清

蒸


个人简介

来自辽阔的大西北～现坐标上海，研究生，本硕均就读于同济大学控制科学与工程系，现在的研究课题是仿人机器人的行走。平时爱好阅读，目标上走遍成都的大街小巷，吃遍各路美食。


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动




灰常喜欢看小说，阅读，偶尔跑跑步，最经常的娱乐活动大概是狼人杀了吧，嘻嘻。其实我也喜欢打麻将啊哈哈。



" + }, + + { + "student_number":"B20840", + "name":"豆子", + "disc":"一个努力中的技术学习者", + "tags":["奶爸","技术学习者"], + "checkins":28, + "head":"/static/img/heads/patato.jpg", + "materials": + [ + { + "title":"学习感悟", + "desc":"一切口头的编程都是空谈，只有认真完成每一次作业和项目才能掌握这门编程语言。", + "link":"" + }, + { + "title":"How browsers work", + "desc":"Behind the scenes of modern web browsers.", + "link":"http://taligarsiel.com/Projects/howbrowserswork1.htm?from=timeline&isappinstalled=0" + } + ], + + "courses": + [ + { + "head":"/static/img/heads/ubands1.png", + "name":"Uband-S1", + "desc":"创意编程班S1", + "student_number":200, + "link":"http://wechat.gambition.cn/course/list" + }, + { + "head":"/static/img/heads/ubands2.png", + "name":"Uband-S2", + "desc":"创意编程班S2", + "student_number":200, + "link":"http://wechat.gambition.cn/course/list" + } + + ], + + "evas": + [ + { + "name":"B20769-飞鱼", + "head":"/static/img/heads/feiyu1.jpg", + "content":"刚刚荣升为奶爸的组长，小公举很可爱！", + "from":"Uband-S2" + }, + { + "name":"B20834-晨曦", + "head": "https://ss0.bdstatic.com/70cFuHSh_Q1YnxGkpoWK1HF6hhy/it/u=3736478043,2588358443&fm=26&gp=0.jpg", + "content":"good", + "from":"Uband-S2" + }, + { + "name":"B18355-清蒸", + "head":"/static/img/heads/yangjing.jpg", + "content":"good", + "from":"Uband-S2" + } + ], + "intro": "
\"QQ截图20170818094005.jpg\"/


F

4

之

豆

子


个人简介

来自湖北，现居费城，曾在avaya，HP，HSBC等公司工作过。刚刚荣升为奶爸，现在一边学编程一边带娃。


业

余

活

动




平时的业余活动比较丰富，诸如：打篮球，游泳，健身，跑步，看美剧。同时我也是GOT粉，nickelback粉!



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https://github.com/weui/weui/issues/15 + // 解决方法: + // 0. .container 去掉 overflow 属性, 但此 demo 下会引发别的问题 + // 1. 参考 http://stackoverflow.com/questions/23757345/android-does-not-correctly-scroll-on-input-focus-if-not-body-element + // Android 手机下, input 或 textarea 元素聚焦时, 主动滚一把 + if (/Android/gi.test(navigator.userAgent)) { + window.addEventListener('resize', function () { + if (document.activeElement.tagName == 'INPUT' || document.activeElement.tagName == 'TEXTAREA') { + window.setTimeout(function () { + document.activeElement.scrollIntoViewIfNeeded(); + }, 0); + } + }) + } + } + function setJSAPI(){ + var option = { + title: 'WeUI, 为微信 Web 服务量身设计', + desc: 'WeUI, 为微信 Web 服务量身设计', + link: "https://weui.io", + imgUrl: 'https://mmbiz.qpic.cn/mmemoticon/ajNVdqHZLLA16apETUPXh9Q5GLpSic7lGuiaic0jqMt4UY8P4KHSBpEWgM7uMlbxxnVR7596b3NPjUfwg7cFbfCtA/0' + }; + + $.getJSON('https://weui.io/api/sign?url=' + encodeURIComponent(location.href.split('#')[0]), function (res) { + wx.config({ + beta: true, + debug: false, + appId: res.appid, + timestamp: res.timestamp, + nonceStr: res.nonceStr, + signature: res.signature, + jsApiList: [ + 'onMenuShareTimeline', + 'onMenuShareAppMessage', + 'onMenuShareQQ', + 'onMenuShareWeibo', + 'onMenuShareQZone', + // 'setNavigationBarColor', + 'setBounceBackground' + ] + }); + wx.ready(function () { + /* + wx.invoke('setNavigationBarColor', { + color: '#F8F8F8' + }); + */ + wx.invoke('setBounceBackground', { + 'backgroundColor': '#F8F8F8', + 'footerBounceColor' : '#F8F8F8' + }); + wx.onMenuShareTimeline(option); + wx.onMenuShareQQ(option); + wx.onMenuShareAppMessage({ + title: 'WeUI', + desc: '为微信 Web 服务量身设计', + link: location.href, + imgUrl: 'https://mmbiz.qpic.cn/mmemoticon/ajNVdqHZLLA16apETUPXh9Q5GLpSic7lGuiaic0jqMt4UY8P4KHSBpEWgM7uMlbxxnVR7596b3NPjUfwg7cFbfCtA/0' + }); + }); + }); + } + function setPageManager(){ + var pages = {}, tpls = $('script[type="text/html"]'); + var winH = $(window).height(); + + for (var i = 0, len = tpls.length; i < len; ++i) { + var tpl = tpls[i], name = tpl.id.replace(/tpl_/, ''); + pages[name] = { + name: name, + url: '#' + name, + template: '#' + tpl.id + }; + } + pages.home.url = '#'; + + for (var page in pages) { + pageManager.push(pages[page]); + } + pageManager + .setPageAppend(function($html){ + var $foot = $html.find('.page__ft'); + if($foot.length < 1) return; + + if($foot.position().top + $foot.height() < winH){ + $foot.addClass('j_bottom'); + }else{ + $foot.removeClass('j_bottom'); + } + }) + .setDefault('home') + .init(); + } + + function init(){ + preload(); + fastClick(); + androidInputBugFix(); + setJSAPI(); + setPageManager(); + + window.pageManager = pageManager; + window.home = function(){ + location.hash = ''; + }; + } + init(); +}); \ No newline at end of file diff --git a/homeworks/B20769/homework3/static/lib/weui/example/images/icon_footer.png b/homeworks/B20769/homework3/static/lib/weui/example/images/icon_footer.png new file mode 100644 index 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